Welcome to the Deere third quarter earnings conference call. (Operator Instructions) I would now like to turn the call over to Ms. Marie Ziegler, Vice President, Investor Relations.

Good morning. Also on today’s call are Jim Field, our new Chief Financial Officer, as well as Susan [Carliss] and Justin [Maravic] from Deere’s Investor Relations staff. Today we will take a closer look at Deere’s third quarter earnings and then spend a few minutes talking about our markets and where we see things headed for the remainder of the year. After that, we will 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 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. Now, for a closer look at the third quarter, here is Susan.

Thank you, Marie. All things considered, John Deere’s third quarter was a good one. The company reported another solidly profitable performance at a time when overall global market conditions remained challenging. That being said, the market for large farm machinery in the U.S. and Canada has held up reasonably well to the benefit of our Ag and Turf operations. Our construction and forestry business despite a small loss showed impressive resilience in one of the worst market environments in memory. Our credit operations had good results while maintaining sound portfolio quality and access to the credit markets. In addition, Deere continued to demonstrate sound execution and real discipline throughout the company curbing expenses, curtailing factory production and shrinking inventories and trade receivables in response to conditions in the retail marketplace. As a result of these factors, beginning with slide three, Deere reported net income for the quarter of $420 million on third quarter net sales and revenues of $5.9 billion. On slide four, total worldwide equipment operations net sales were $5.3 billion down 25% in the quarter versus third quarter 2008. Currency translation on net sales was negative by approximately four points with about six points of positive price realization. Both divisions had positive price realization in the quarter. Our disciplined approach to asset management has helped support pricing in some extremely tough markets. Turning to slide five, worldwide production tonnage was down 24% in the quarter reflecting continuing weak conditions in many of our markets and our focus on managing inventories and trade receivables. Worldwide production tonnage is expected to decrease about 43% in the fourth quarter of 2009 and be down about 22% for the full year. As you will note on slide five, we have provided fourth quarter tonnage by division and region due to the magnitude…

Thank you Susan. We are now ready to begin the Q&A portion of the call. The operator will instruct us on the polling procedure. As a reminder and in consideration of others please limit yourself to one question and a related follow-up. If you have additional questions we ask that you rejoin the queue.

(Operator Instructions) The first question comes from the line of Meredith Taylor - Barclays Capital.

I am hoping you can talk a little bit about how we should think about margins in the fourth quarter in the Ag and Turf business. You talked a little bit about the 30% decremental for the year which suggests about 25% in the fourth quarter. Clearly the costs associated with the consolidation is a drag there but then how should we think about the drag from underproduction in that business and then from the boost of pension guidance, what the split is between Ag and Turf and Construction and Forestry.

First of all let me address your second question. Pension guidance is a funding issue. It does not affect our accruals which are basically unchanged in our guidance. That is a funding decision. Regarding the drag from the change in inventory, it is fairly significant in the fourth quarter but maybe a better way just to help everyone cut to the chase here we are expecting our Ag division will remain profitable but that operating margin implied in our guidance is something around 1% so it is fairly low.

Are there other issues other than the under production I should be thinking about in terms of drag there? Is there a mix issue that will be there as well?

There is always a loss of but clearly the most significant item is very clearly the production changes versus last year when we were in a very strong up production mode and then you correctly guided earlier the repositioning charges.

I might just add when you think about Ag production in the fourth quarter of the year they are going to be shut down about 1/3 of the production days. Just to give you a sort of order of magnitude. They have some pretty significant shut downs.

I appreciated the color you gave in terms of the U.S. and Canada versus the rest of the world. Maybe if you could just give some more color specific to the U.S. how much of a factor the transition to the new 8000 series tractor is in terms of the underproduction in the U.S. Then globally I would appreciate it if you could give a little more color on how we should think about Latin America versus Russia and Europe and just how to think about some of the geographies.

Regarding the change in production of the new 8000R we actually are already in production. It is a very limited factor frankly in the fourth quarter. We actually went back and double checked on that so basically no factor. Regarding the outlook for some of our newer emerging markets you may have noted that our outlook for production tonnage outside the U.S. and Canada actually increased from being down 24%. That really reflects strength in markets in India and in China which admittedly are a smaller part of our business but are very encouraging. A little bit of improvement at the margin in Brazil. So we were actually able to improve our tonnage there. Market outlook for Russia as we talked about continues to be very cautious and is down significantly from where it was last year.

The next question comes from the line of Joel Tiss – Buckingham Research. Joel Tiss – Buckingham Research: I wonder if you could clarify on slide 30-33, double digits it covers everything from 10% to 99%. Could you just give us little teens or twenties or something to help clarify that a little bit?

That has not typically been our practice so I am not going to be able to respond any more definitively than what we have already said. I think it is pretty implicit when you are talking about construction and forestry given where our sales guidance is for the full year that we are still looking at pretty significant year-over-year declines. Joel Tiss – Buckingham Research: The inventories where you expect to be at the end of the year is that pretty much going to be where you need to be for 2010 or do you feel like it is more of an ongoing process or are you going to need to rebuild a little bit as we work into 2010? Is this going to potentially [be where you are]?

I will start with construction equipment. I am going to preface it with obviously we don’t have our guidance for 2010. We are not being cute. Externally we are still obviously developing that picture ourselves inside as well. In construction given where our inventories are ending we believe that we will be able to increase our production next year even if the retail market does not change because we believe we will be in a very good position. At this time we would say the same for our agriculture and turf division although it covers many, many countries. It is our intention to end the year with our inventory positions where we think they need to be. As you think about ending inventory do remember we had a very different set of circumstances this time a year ago regarding the Soviet Union, or I should say the former Soviet Union, and that did have an impact on what we felt we needed to have in terms of work in process and raw material inventories specifically in the U.S. and to some degree even in western Europe. We sold in 2008 approximately $1.9 billion into central Europe and the former Soviet Union. We were expecting to see fairly significant gains in 2009. In order to get those units into the region in time for the spring planting season you really have to be in production in the late fall and over the early part of the winter. So we had our inventories and production plans accordingly. As you know the liquidity crisis hit. We had very strong demand out of the U.S. and Canadian markets and Australia, for example, so we were able to reposition some of that planned production into other markets. So we are really looking at a very different set of factors so bear that in mind as you are thinking about that change. A lot of it really relates to the former Soviet Union.

One other thing, as we look at where we are planning to end the inventories, the other issue we have is we brought on capacity in 2009 at Waterloo. We brought on capacity at Harvester and we brought on capacity in Brazil which gives us some sort of optionality because we can turn up the production and react to up ticks in demand quicker than we could before.

The next question comes from the line of David Raso - ISI Group.

On the fourth quarter production I believe, correct me if I am wrong, the guidance used to be 28% of available production days to be shut down. Now it is 33. Can you please help us understand where the increase is coming? Is it the larger equipment in East Moline and Waterloo? Maybe dovetail that into any comments you have on the order book for Ag particularly the big tractors and combines.

Actually there is no single factory that would stand out in terms of a dramatic change one way or the other. In fact, versus our previous expectation we increased production for our big tractors both for the 8R and the 9000; the 8R introduction has gone very well. That has actually had a little bit of a positive benefit in the fourth quarter but it is really just a series of adjustments.

Did I hear correctly you mentioned construction retail was flat Deere believes it can increase production. Then you made a comment about Ag and Turf in the same regard. Obviously the assumption about retail flat…

I didn’t suggest that they could necessarily increase production. I am sorry for interrupting but rather, we believe our inventories will be correctly positioned there. The markets are so diverse it is hard to make that general observation.

The Ag division has benefited a lot this year from pricing with some of the carryover from last year. What is the early indication on pricing being put out in the field for 2010?

We have actually announced for two products; the early order program on combines in the U.S. we took price increases in the range of about 3.5%. On the new 8R series the indicated increase, and admittedly that is one tractor family, but that is 4-6%. Now as you think about that 4-6% do bear in mind there are feature improvements, new cabs that is phenomenal, better suspension systems on our track models, some higher horse power, so some of that 4-6% when we do our price realization calculation we will end up and reclassified into volume because we try to account for that in volume.

That is the price increase that is out there already that you are also saying so far the introduction of the 8000 has gone relatively well. It is to your expectations?

Absolutely. The 8R.

The next question comes from the line of Jerry Revich - Goldman Sachs

I am wondering if you can discuss some of the initiatives that you and Sam plan to focus on over your first year at the helm here?

Sure, I think one thing important to note is very early on Sam took the reins and he sent out a message about what was not going to change. What is not going to change is our commitment to the SVA model and our commitment to the ORA model. So in that regard, one of the big initiatives really we are focused on right now is basically running this company and producing SVA in this environment. The other thing Sam mentioned is not going to change is our commitment to how we do business in terms of the integrity and the ethics.

Can you talk about now you have construction joint ventures in China and India? Have you reached your targeted scale in the business or are you still looking for additional opportunities? Also can you talk about if you see potential for increased consolidation among your competitors at this point in the cycle?

Actually we would not talk about any of our competitor’s prospects for consolidation. We would tell you we see global infrastructure as an opportunity for us. To that end you are aware we made an investment in a joint venture in China in excavators. Just about a month ago we announced we had a joint venture…

In India. Clearly the prospects for the global infrastructure growth are very encouraging and are a very powerful macroeconomic tailwind we have our eyes on.

The next question comes from the line of Andrew Casey – Wells Fargo Securities. Andrew Casey – Wells Fargo Securities: If I could go back to the comment about market conditions and construction weighing on pricing relative to the prior forecast, does that mean they are less positive or is there likely to be a negative going forward?

I want to emphasize we had positive price realization in the third quarter and that our forecast contemplates positive price realization in the fourth quarter and obviously for the year. Andrew Casey – Wells Fargo Securities: The second thing, on the charges could you clarify how much of the Welland closure falls into Q4?

About $27 million pre-tax. I should clarify that last year in the fourth quarter we also had charges for Welland and they were roughly actually I think $49 million exactly pre-tax. So bear that in mind as you look at your numbers.

The next question comes from the line of Alexander Blanton - Ingalls & Snyder Alexander Blanton - Ingalls & Snyder: Just a clarification first, when you talk about decremental margins throughout the call on the slides is that on the gross margin line or operating margin line?

Operating margin line. Alexander Blanton - Ingalls & Snyder: Secondly, on those fourth quarter charges do you have the per share amount? Obviously it depends on the tax rate you are assuming for the quarter.

Yes, we don’t even give our guidance based on per share amounts so no I don’t have it calculated that way. Alexander Blanton - Ingalls & Snyder: What tax rate should we assume for the fourth quarter?

I did not calculate the math. Our tax rate for the full year works out to 27%. Alexander Blanton - Ingalls & Snyder: That is what you said on the slide but you don’t have a fourth quarter number?

We can run the math. We will run the math and get back to you before the call ends.

The next question comes from the line of Jamie Cook - Credit Suisse.

I don’t think you ever answered David’s question unless I missed it on the order book this year? I don’t think we ever got the granularity. Can you remind us how that compares to last year? My follow-up question is on capital allocation. How do you think about capital allocation going forward? The way I look at it your inventory levels are pretty good. Even in a flat market I would assume next year your earnings should be up so that should mean you should probably generate some pretty good cash flow. How should we think about that and would you think about reinitiating a share repurchase?

I will take your first question and then Jim can answer the second one. In terms of early order programs if you look at it on an absolute basis yes our numbers would be down versus last year which was an extraordinary year. On combines in particular last year we would have been about 70%. That is very atypical. We would normally be 1-2% at this time. Typically the bulk of the orders come in actually in the month of January. This year we are actually at about 20% so we are actually comfortably ahead of where we would have expected to be and certainly any time in the previous five years. That would be true for early order programs we have on spring tillage, planters, air seeding, etc. So we are in very good shape there. In terms of the tractors I mentioned the fact we had actually added some additional production in the fourth quarter for both the new 8R and 9000 series tractors. Effective availability on the 9000 series is now in February 2010 and for the 8R it would be again this is a product you understand we are not even done introducing into the market. So you can still get a product kit yet in this fiscal year like in the last week of October. That one is harder to call because of the product transition.

In terms of capital allocation and that general question I’m not going to get into the business of providing any sort of forecast as to when we might do repurchases or anything like that. Clearly providing a stream of steady cash returns to our shareholder sis something that is very, very important to us and clearly share repurchase is a tool to do that and one that we have looked at in the past and we will continue to look at as a tool in the future.

Our accountants have gotten back to us correctly pointing out our guidance is implying a break even fourth quarter. Tax rate would be not meaningful to calculate in the quarter. Alex, that gets back to your question.

The next question comes from the line of Henry Kirn – UBS.

I wonder if you could chat a little about price discipline in the rest of the world. Are your competitors remaining disciplined in not cutting prices?

Our practice has long been not to comment about our customer’s pricing practices. I would observe we did not change our price guidance for the company for the full year as a result of anything in the farm equipment market. Specifically we talked about tougher conditions in our landscape operations because of what has happened with fertilizer prices and construction and forestry. We did not make any changes in guidance because of that. That is as far as I will go.

How much more run rate is there to take out of SA&G? Could you do more still or are you at the end of the line?

In terms of SA&G everything we know we can do we have implemented or we are in the process of implementing. Some actions you do today take maybe six months to pull the trigger on. We believe we are in pretty good position in terms of the way we are running our businesses. However that is not to say that as we get further into things and we continue to improve our processes and look for new ways to do things more efficiently.

We are very much focused on continuing to look at our cost structure and the opportunities that are available to us. Clearly there are always opportunities. We are committed to going after those.

The next question comes from the line of Ann Duignan - J.P. Morgan.

A line item that you haven’t focused on but your income from equity and affiliates has turned significantly negative relative to last year. Can you just give us some color on what is going on there and how we should think about forecasting that line item?

A lot of that has ticked up from some primarily construction related activities that we would have. As you know the market is very difficult in construction and so I would be very cautious as you go forward and look at that line item.

On Brazil, you did a nice job of presenting the positives in there with government funding, etc. Do you expect repossession of Ag equipment in Brazil to accelerate in the next months given that the Court injunction preventing repossessions is set to expire at the end of August?

First of all that injunction only related to one province. With regard to our activity in many cases we have collateral other than just the underlying equipment so we have taken other collateral beyond the equipment. We will continue with our normal collection procedures and in any event we do not anticipate any significant movement in our reserves one way or the other right now because we think we are adequately reserved and our reserve calculations contemplate being able to get our hands on collateral and recover collateral.

That one state is [inaudible] which is…

That is correct.

We might note we have actually had very good collection experiences in [inaudible] similar to what we would have.

In fact slightly better than we have seen overall in Brazil.

The next question comes from the line of Charlie Rentschler - Wall Street Access.

My first question, you touched on new product introductions but can you give us some more color on the 8R and 9000 relative to other large new rollouts you have seen in the past? Do we need a drum roll here? Is this really exciting stuff?

The 8R is very exciting. The 9000 just to be clear are not a new product. That is an existing product. The 8R we are very excited about. Brand new cab. Much better visibility. Lots more glass. Much improved suspension system. Jim has actually got the list pulled up.

We have basically the smoothest ride in the industry with our link suspension and our independent suspension. We have had a great transmission in there with power shift and IVT. We have the 9 liter power tech engine in there. We are very excited about this product. We are in the middle of a product show in Omaha and we have 4,500 or so professionals from our dealerships are getting to look at this tractor. The feedback is extremely encouraging.

You said that you saw very modest improvement in terms of spending into 2010 but could that change and what could bring about a change there? We all read about congress passing all this stuff. What would it take? Is there any hope that funds will really start to flow at some point?

We really need to differentiate. The funds are flowing from the Federal Stimulus Package. In fact we were reviewing yesterday with our government affairs folks and they were talking about how the Federal spend rate is starting to accelerate as has been anticipated. As you look into 2010 we had originally said we expected the infrastructure portion of the bill you would have about $10 billion in appropriations in 2009 and maybe $25 billion in 2010. The challenge is while the states are benefiting from the federal money that is starting to flow and is expected to increase in 2010. Their own rather precarious financial situations are causing them to pull back on their expenditures. What you have is basically the two are a wash. We would note the spending has helped slow the decline or loss of jobs in the construction industry and so there is some benefit from that although there are still job losses occurring. If you go over the winter months and really into the spring we were losing jobs at about 117,000 a month. That rate seems to be slowing over the last three months to something more like 73,000. Again that is an indication you are starting to see the benefit of some of the stimulus money. It is just unfortunate that because of the state and local budget situations they are not able to see a bigger pop from the monies that are being spent on the government level.

I wonder how the integration of the Ag and Consumer and Commercial business is going. We know about the headcount reduction but how is that transition going?

That transition also occurred concurrently with the roll out of something we call the new global operating model which allows us to provide or is designed to enable us to provide a much crisper focus on the customers and products. I would say in general the integration of the former Commercial and Consumer Equipment division as well as the rollout of the global operating model is occurring in line with our expectations.

The next question comes from the line of Mark Koznarek - Cleveland Research.

A question on some of the upcoming off-highway emissions standards, tier 4A, due in 2011. I know you are not offering anything regarding 2010 but should be expecting any kind of material pick up in R&D or new product development costs, SG&A or anything like that?

We had a pretty significant increase in R&D last year. I think you saw pretty much the major step up really occurred last year. We saw some increase even in our guidance yet this year on R&D. Regarding capital expenditures again the big increase is already behind us where our run rate is about $800 million. We think we are pretty much where we need to be there.

So we are kind of at a run rate is what we are seeing?

Absolutely.

With regard to the pension outlook if you were to run the test today would there be any kind of change to your accruals?

We have not really completed the full actuarial analyses so we wouldn’t necessarily be in a position to answer that question. Having said that, I would offer that last year we posted October 31st an interest rates had spike and the discount rate is a big factor in the calculation of both the pension and the OPEB expense. We would anticipate if interest rates hold where they are today we would see a pretty significant decline in the discount rate which intuitively that would tell you would have some sort of increase in our benefit costs going into next year. We do not have any sort of finite number that we would be willing to share at this point.

The next question comes from the line of Daniel Dowd - Sanford C. Bernstein.

The decremental you are guiding for Q4. Your volume decline is bigger in Q4 than you have for Q3 and that is not surprisingly then that your decrementals are supposed to be higher than they are in Q3. At the same time you have about a $150 million material input cost benefit. Is that $150 million included in your calculation of the decremental or not?

Yes it is. Again, the fact that we have very low levels of production has just a very significant impact on our ability to absorb overhead.

It is important when you think about those decremental margins those are all in decremental margin. So those also include the impact of these reorganization costs. To the extent we have $150 million material goods we have a significant amount of reorganizational costs that are going out the same way.

Do you think your plant managers think the risk to the decremental margin is to the upside or the down side?

We would not be able to speculate on that. Our forecast is our best estimate or best judgment at this time.

Other than the charges, and obviously there is a lot of complexity going on, is there anything specific you are doing in the plants that is different this quarter compared to last quarter or recently?

I would just say you are looking at a much bigger swing year-over-year. Remember last year you had pretty high levels of production. So the issue is overhead absorption and that is just profoundly different in terms of the environment in the fourth quarter versus where we were a year ago. I don’t have anything else to add.

The next question comes from the line of Robert Wertheimer - Morgan Stanley.

On the C&F margin which was better sequentially this quarter versus last. You had a little bit more volume but I don’t think that was it. I was wondering if you can explain whether that was price, materials cost or structural cuts you are continuing to do.

It would be a little bit of benefit certainly from material cost that they had. I would also observe we were starting to pull in some in the third quarter of last year so you have a little bit of compare there. Pricing, you do get a benefit from pricing in the third quarter as we talked about.

We are also seeing a benefit from our efforts to restrain costs in both the SA&G line and in the cost of sales line as we go after the factory overhead.

You have actually talked a lot about production tonnage. I just want to make sure I understand it. You cut a little bit less than expected in this quarter and that was on demand in India and a couple of other areas. In the full year your production tonnage was down about the same. Does that mean basically the up side from those markets was offset by the downside in C&F basically?

In a nutshell, yes. That is fair.

The next question comes from the line of Barry Bannister – Stifel Nicolaus. Barry Bannister – Stifel Nicolaus: Am I to understand there was actually an improvement to your annual net charge offs in the second quarter were about 0.67% and they fell in the third quarter to 0.58%? As well, there was really no deterioration in provisions for credit losses as a percent of the average owned portfolio? In the second quarter it was .75% and now it is only 0.73%?

I think you are far enough into the year you probably get a little bit of rounding making noise. We really have not seen further deterioration. Barry Bannister – Stifel Nicolaus: I heard your TLGP application was denied and you do have a $4 billion funding shortfall in fourth quarter 2010. Are you going to do some sort of large TALF eligible ABS or something to plug that gap?

We are certainly looking at alternatives. As you know the TALF program was extended through March. We are looking at alternatives and when we might come to market with a transaction. That is likely a vehicle we would take advantage of.

I would observe though that we have not had or not issued any money or done any of our funding with effectively the FDIC guarantee since the transaction in December. We have raised a very significant amount of money and we would anticipate this will have absolutely no effect on our funding or our ability to raise the money.

It is important to note too the note we have out there retains the guarantee. Barry Bannister – Stifel Nicolaus: So the $2 billion TLGP [MTN] in Q1 2009 was really just because it was advantageous at the time. It is not something you had counted on to continue?

We had applied for it so I don’t want to say we hadn’t counted on it. We have been able to fund ourselves. We have a host of transactions on that liquidity slide that indicate we have been very successful in funding.

I think the bottom line is we have been able to tap into the market in many different ways throughout the course of the crisis and actually we found the results to be very, very encouraging.

The next question comes from the line of Andrew Obi – Bank of America/Merrill Lynch. Andrew Obi – Bank of America/Merrill Lynch: Just a question and I apologize if you have gone through it already. As I look at SG&A expense and as I look at R&D you seem to have taken guidance up for those expenses for the full year. What drove the decision to increase these expenses in the second half of the year versus your previous guidance?

In the case of SA&G it is really just a change in the currency so the absolute amount is not increasing. In the case of R&D it is also affected by the currency so that inflated a little bit. At the margin a little bit higher spending on IT-4 which as you know you really have no choice about it if you choose to be in the engine business in 2011.

How discretionary was the increase in the D&A expense for the year?

That is just a result of the property plant equipment that is going on. I suspect currency has a little bit of play here as well. Thank you all so much for participating in the call. As usual, Susan, Justin and I will be around the rest of the day to answer your questions.

Thank you. This does conclude today’s conference call. We thank you for your participation and you may now disconnect.