Ann Duignan – JP Morgan Henry Kern – UBS Jerry Revich – Goldman Sachs Andy Casey – Wells Fargo Securities, LLC David Raso – ISI Group Eli Lustgarten – Longbow Research Andy Kaplowitz – Barclays Capital Jamie Cook – Credit Suisse Seth Weber – RBC Capital Markets Analyst for [Kim Fine] – Citigroup Andrew Obin – Bank of America Merrill Lynch

Welcome to Deere’s fourth quarter earnings conference call. Your lines have been placed on listen only until the question and answer session of today’s conference. I would now like to turn the call over to Mr. Tony Huegel, Director of Investor Relations.

Also on the call today are Jim Field, our Chief Financial Officer; Marie Ziegler, Vice President and Treasurer; and Susan Karlix, our Manager of Investor Communications. Today we’ll take a closer look at Deere’s fourth quarter earnings, then spend some time talking about our markets and the outlook for 2012. After that we’ll respond to your questions. Please note that slides are available to compliment the call this morning. 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 by Deere and [Thompson Riders]. 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. Additional information concerning factors that could cause actual results to differ materially is contained in the company’s most recent Form 8K and periodic reports filed with the Securities & Exchange Commission. 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 included in the release and posted on our website at www.JohnDeere.com/financialreports under other financial information. Now, here’s Susan.

Today John Deere wrapped up 2011 with the announcement of our fourth quarter results. It was an excellent quarter which capped an exceptional year. Profits and sales were the highest ever for a fourth quarter. The improvement was broad based but led by Ag and turf. Our other divisions construction, forestry, and John Deere Financial had dramatically higher results as well. Deere’s performance for both the quarter and full year reflected strong customer demand for our products as well as the skillful execution of our business plans which are aimed at expanding our global competitive position. During the year these plans moved ahead at an aggressive rate. We introduced an unprecedented number of products, announced plans for new factories in China, Brazil, and India and invested a record amount in future growth, well over $2 billion of spending for R&D and capital projects. For the year as a whole, John Deere registered its highest ever level of sales, earnings, and cash flow. Operating margin were an impressive 13% resulting in an equally impressive return on operating assets of almost 30% with inventories at standard costs. We also produced a record amount of economic profit or SVA, $2.5 billion. That’s fully $800 million more of our previous best in 2010. There is simply no better testament to our success in delivering a high level of profit from a lean slate of productive assets. Further, in an endorsement of John Deere’s exceptional talent pool, the company again was named Fortune Magazine List of Top Companies for Leadership Development on both a US and global basis. That says something important about our deep bench of top leaders and the sustainable nature of our talent. 2011 was in summary a memorable year. One that positions John Deere for what we see as an even…

Now we’re ready to begin the Q&A portion of the call. The operator will instruct you on the polling procedure but, as a reminder, in consideration of others please limit yourself to one question and one related follow up. If you have additional questions we ask that you rejoin the queue.

(Operator Instructions) Your first question comes from Ann Duignan – JP Morgan. Ann Duignan – JP Morgan: I don’t really have that many questions, I thought it was a pretty clean quarter a pretty clean outlook. Maybe you could just talk a little bit about the increase in SG&A year-over-year? You called out 4% of the 10% for growth, can you just talk a little bit about what the remainder of the increase is?

Growth obviously is the biggest piece of the increase and basically the remainder would be higher marketing expenses in line with higher sales.

A little bit of higher incentive comp reflecting our good performance for the full year and a little bit of exchange.

Then the ongoing inflationary increases. Ann Duignan – JP Morgan: So no other big majors?

I think the big headline in there is the growth expenditures of the 4% and the rest of it is really the increase marketing expenses related with the volume, normal inflationary increases and those sorts of things. Ann Duignan – JP Morgan: Then as a follow up, just your European outlook and I think a lot of us were over at Agritechnica last week which was very successful and frankly the BDMA is calling for sales in Europe to be down slightly next year just given the strength this year. How much of an impact are you guys seeing right now from the macro environment on farm sentiment or farmer sentiment in Europe? Or, is it just a little bit of cautiousness as we head into 2012 given the unknowns?

We just surveyed our customer base and the feedback is that the mood is pretty good. It’s stable with this year and we also see buying intentions as being pretty stable. Clearly, the environment is something that we’re all watching but there has not been an indication of any major issues at this point affecting farmer sentiment. Again, that’s reflected in our flat outlook for Europe.

For Deere, the early order programs are very strong as well, they’re up significantly in Europe so shaping up to be a pretty decent year.

Your next question comes from Henry Kern – UBS. Henry Kern – UBS: The pricing looks strong, is it possible to give some color by product line or geography?

No, I’m sorry we don’t tend to get that detailed in the pricing. As we said this last year, both divisions are contributing to that positive price realization. Henry Kern – UBS: In terms of European demand, are you seeing any impact to the credit availability to your customers?

We have not observed any issues yet in credit availability. Again, we’re monitoring the situation but unlike what happened in 2008 where financing dried up, that is absolutely not been the case.

Your next question comes from Jerry Revich – Goldman Sachs. Jerry Revich – Goldman Sachs: Tony, can you flesh out for us your comments on new product sales? How much industry outgrowth are you targeting for your business from new product sales and perhaps highlight a couple of the most meaningful pieces?

We’ve clearly talked about with the new products specifically in Europe. We haven’t talked specific market share gain goals in Europe but certainly has we roll out additional products and continue to further develop that market we would expect some increase there in market share. I think probably the best thing we can point to in terms of what we’ve done is we look at Brazil. We’ve talked about in the past our expectation to improve share especially on tractors and as you look at it over the fiscal year we ended our fiscal year with tractor market share at 19% which prior year was at 15% market share so a very nice four point gain and that is with positive price realization for the year in Brazil. So I think we would expect to continue that momentum as we move forward. Jerry Revich – Goldman Sachs: Tony, the first part of the question when you roll all that up what kind of contribution do you have to your business versus your industry forecast?

Well certainly if you roll up all the individual pieces of outlook and you look at what we’re forecasting, certainly we would expect to outperform the market. Jerry Revich – Goldman Sachs: And in North America your industry forecast implies cap ex share farmer revenue moves higher next year. Can you talk about the drivers of the pick up or is your view shaded by the fact that you’re going to have some higher tractor capacity next year?

Our view is certainly shaded by the fact that we have had a very strong early order program as Susan indicated. Many products were up 30% to 35%. We’ve seen strong demand for cotton harvesting equipment, we sold out in almost a month or virtually sold out, and even combines there’s good demand so we are very encouraged by what we see.

Your next question comes from Andy Casey – Wells Fargo Securities, LLC. Andy Casey – Wells Fargo Securities, LLC: Question on the construction and forestry margin performance in the quarter, outside of the material costs can you talk about the cost headwinds seen in Q4?

In addition to the material costs, R&D was up about $15 million and about half of that was related to growth so there and then of course, interim tier-4 costs is about $15 million and SA&G was about $10. Andy Casey – Wells Fargo Securities, LLC: Then if we could kind of push that forward into the 2012 outlook, if I go through the math on your comments, it looks like incremental margins is expected to be around 20% in Ag and turf and then kind of mid 12% range in construction and forestry. Is the difference between the two more related to a bigger proportion of product transition costs hitting construction or is there also a drag on SA&G related to the Brazilian expansion.

Probably the big headline item in there is we’re in the midst of starting up three facilities in India, China and Brazil and with that comes an expense load that the sales end will come later. I will say that’s probably the single largest factor that would account for the difference.

Your next question comes from David Raso – ISI Group. David Raso – ISI Group: My question relates to price versus costs. One of the concerns folks had out there was about ’12 costs and I guess first clarification as how you define price versus cost in what you gave us. The 4% pricing implies about $1.2 billion of price, $500 million of raw and freight higher costs but then when you said $475 also of interim tier-4 costs historically when you have increased features as you call it, and you get a higher selling point for that machine you don’t call it price?

Correct. David Raso – ISI Group: So when I look at the $1.2, that’s $1.2 in a way versus the $500 million but then when you give $475 I’m also going to get a higher selling price that you don’t call price but we can define it as we want, how much of that $475 is being recaptured?

Effectively with the price realization that we’re looking at it’s all covered but as we talked about with interim tier-4 with the large Ag equipment and our large equipment in general we’re recovering most or all of that in year one. What we have talked about is we move into 2012 we will have some smaller equipment where we will not be covering 100% of that in year one. But obviously when you look at, to your point, the price realization alone covers both the interim tier-4 as well as the material cost increases that we have in the forecast.

As we said before, our full intention by the time we’re done with this, is to get all that recovered. David Raso – ISI Group: I’m just talking ’12, if you just do the $1.2 and that has to cover all raw and even all the interim tier-4 you’ve already got $0.35 of EPS growth just from that. But obviously, some of the $475 you think you’re going to get back. You said not all of it but is it half, is it $300 million? What kind of number do you think you’d get of the $475?

I mean most of it, but again keep in mind to your point, the $475 the price increases we’re talking related to interim tier-4 as we introduce that new product is not included in that four points of price realization. We would count that in volume. David Raso – ISI Group: Tony, the reason I ask is if you even got say $300 of the $475 and let me define that as price, your price versus cost gives you about $0.85 of earnings growth just recapturing that small amount of the interim tier-4 and your guidance is basically saying $1 to $1.20 of EPS growth.

We have not disclosed specifically what we’re recovering in a given year in interim tier-4 but again, we will recover most of it in year one but not all of it on the smaller product but eventually we will recover that. I just don’t have any more I can say to it. David Raso – ISI Group: You can get to your guidance almost from this price versus cost essentially with no help from volume at all?

Okay.

Your next question comes from Eli Lustgarten – Longbow Research. Eli Lustgarten – Longbow Research: I just want to make sure I understood the clarification, you said the first quarter EPS versus last year will be down, and one of the things you cited was $130 million positive absorption in the first quarter of ’11 and $40 million negative absorption because of inventory change. Is that correct?

First of all we talked about the net income would be lower, we didn’t talk to EPS. So just to be clear, but yes that’s correct the absorption impact on inventory changes year-over-year is $40 million in the first quarter. Eli Lustgarten – Longbow Research: Year-over-year is $40 million?

Correct. Eli Lustgarten – Longbow Research: You handled most of the used combine issue for us but there was something that we thought allocation would be down 15% to 20% to North America and we thought it would go overseas. Is production relatively flat in combines for the year or up? And is the allocation different around the world? I just want to make sure I understood that?

Actually, we’re not going to talk about specific products production schedules as is typical, but given the very strong sales outlook, production outlook that we have for the full year I think it’s fair to assume that the combine changes that you’re looking at are probably too high. But beyond that that’s what we’re going to say. Eli Lustgarten – Longbow Research: The combine production will be up or down in 2012 is what I’m really going towards?

I will concede that right now based on what we are seeing we will be down a little bit versus 2011. That’s consistent again with what Susan’s opening remarks were. Eli Lustgarten – Longbow Research: Can you help us with the 16% gain in construction equipment sales year-over-year? What’s driving that and there’s got to be a good portion in pricing but given the sluggishness that’s going on in most of the markets and you’ve had pretty good recovery the last couple of years, can you help us with some color on how you get 16% upturn in demand this year?

Actually, that was your third question and I am going to ask that you get back in queue on that. We’ll be happy to talk a little bit about construction and we are looking for replacement demand is really the big driver of what we’re seeing. Good rental markets, we’re seeing good activity outside of the US including Canada and some other markets, overseas markets and that’s really what’s driving that.

Your next question comes from Andy Kaplowitz – Barclays Capital. Andy Kaplowitz – Barclays Capital: In terms of price cost are you seeing better pricing Tony than you would have expected in the market in North America given it’s so strong? Especially as you go forward, I know you’ve given us the numbers but is the market continuing to be stronger than people think and that gives you more leverage on pricing?

No, I don’t know that I would characterize it that way. I think I would simply say that that’s part of our normal plans. We’ve seen obviously some higher costs. We continue to review from the market perspective and the value that we’re delivering. We have consistently taken and obtained positive price realization. Actually, if you look over the last decade, we’ve had over three points of positive price realization on an annual basis over that period of time so it’s really just a continuation of what we’ve been doing over the last decade.

I’d just like to chime in that when we look at the price of our machines, we’re really looking at the value that we’re delivering to our customers and the productivity new features and that’s really what drives our pricing decisions. Andy Kaplowitz – Barclays Capital: If I could ask you about Latin America or South America, again flat for 2012 when do you guys think sort of the overall market can get better there? I mean obviously it’s still strong versus historical standards but when do you think we can have growth there? Any color you can give us would be helpful.

Sure, and I would say first of all it is a very strong market especially for large equipment so a flat outlook into 2012 bodes well for that year and as I pointed out for John Deere we’re continuing to outperform the market. The other thing to keep in mind is the outlook really looks at tractors and combine so it doesn’t consider product categories like cotton and sugar cane where we have a very good market presence in those products. So again, I think the outlook would imply a very strong 2012 for Brazil.

Maybe one final point, do recall that on the government sponsored MDA program really have reached market saturation and are starting to see small tractor sales decline some as the accessibility under that program – many customers have already taken advantage of that and that’s a smaller segment.

Your next question comes from Jamie Cook – Credit Suisse. Jamie Cook – Credit Suisse: Two quick follow up questions, one with regards to mix did you give the mix contribution to the margins on the farm equipment side? Then my second question relates to material costs, I guess I’m surprised by the $500 million increase so can you just give a little more color and talk about your assumptions for material costs, steel, etc. for the back half of the year?

I would say on the first question I assume you’re referring to the large versus small Ag? Jamie Cook – Credit Suisse: Yes.

It’s basically flat year-over-year so just like last year we had about a point of positive margin last year relative to the mix large being a healthier portion of the sales and what would typically be the case and this year again, we’re seeing about a point of margin benefit large versus small Ag so year-over-year it’s a push. From a raw material perspective, and you’re right it probably surprises some people that we’re looking at $500 million increase and it’s really mostly related to steel and steel related components but also tires and inbound logistics would also be part of that. And while steel prices have come down in recent months, it still is as you look at that year-over-year we’re still about $100 a ton higher year-over-year and really as you look out into the second half of the year obviously that’s a little bit tougher to forecast but as you look at some of the analysts that we follow actually have steel prices coming back up in the second half of the year. So as Susan’s comments indicated certainly the first half of the year will get the bulk of that increase but at this point we’ll still expect to see some increases through the rest of the year. The other thing I would talk to is if you look at when we talk about steel a lot of times we talk about hot rolled steels and plate steel which certainly would impact our construction and forestry division more than Ag, that’s been pretty slow to come down but then as you move into tires for example, natural rubber if you look first at pricing late summer 2011 versus 2010 that’s still up 15% even though it’s come down considerably off of peak levels. Synthetic rubber is still up 35% over last summer of 2010. So while prices have come down off the peak they’re still higher than year ago levels.

Your next question comes from Seth Weber – RBC Capital Markets. Seth Weber – RBC Capital Markets: On the construction growth forecast maybe can you just give us a little bit of a sense for how much of the growth do you think is expected to come from these second tier rental companies starting to step up? And I think I thought I heard you say that that’s started already but if there’s any color on who is buying the equipment?

I really would have to repeat what we cited earlier Seth, we don’t have comments on any specific independent rental company but there’s no question that we’ve seen a step up in rental activity and we expect to see a further step up in 2012. Seth Weber – RBC Capital Markets: But that’s coming from not just the big national guys, it’s the second tier and independents as well?

We’re seeing a broad range of activity. I can’t say it’s all proportional but a broad range of activity. Seth Weber – RBC Capital Markets: Then I guess just lastly, any sticking points in the supply chain that you would highlight?

As a general rule on a day in day out basis there’s always challenges that we work through but nothing that’s creating any major issues at this point.

Your next question comes from Analyst for [Kim Fine] – Citigroup. Analyst for [Kim Fine] – Citigroup: I had a quick question first on just following up on IT-4 costs, what did they come in at for 2011 on total?

$155 [inaudible]. Analyst for [Kim Fine] – Citigroup: Then with regards to your free cash flow for 2012 being higher than last year, do you envision using some of that to actually pay down debt or do you think you’ll be able to refinance the maturities mostly in the financial services business as they come due and those the free cash flow can be deployed to other uses?

Our [inaudible] includes portfolio growth and so we would not be in a position to be paying down debt so that would not be a use for our cash flow.

We’ve stated that we intend to lever the credit company at 7.5 to 1 and we’ll maintain that kind of leverage.

Your final question comes from Andrew Obin – Bank of America Merrill Lynch. Andrew Obin – Bank of America Merrill Lynch: Just two short questions, first in terms of your industry forecast for North America for five to 10, what are you implying for the industry production of combine and tractors?

That would be all the further we could get to Andrew is the five to 10 for the industry total. Andrew Obin – Bank of America Merrill Lynch: But you conceded your combines would be down, would industry combines be down?

Again, we’ve made the comment that we’re going to make which is industry overall up five to 10. Andrew Obin – Bank of America Merrill Lynch: The second follow up question is on this absorption on inventory, could you tell us what product this sort of production where you were destocking versus stocking in Q1 of last year versus Q1 of 2012, what that refers to specifically?

We talked a lot about the combines and in the first quarter last year for instance, 30% of the annual production volume was in the first quarter for combines last year. This year it will be more a more normal distribution which would be about 15%. So, that’s just one example of some of the products where we’re doing that and of course you almost would have to go product line by product line. But that’s what’s causing that absorption hit. Andrew Obin – Bank of America Merrill Lynch: But is that fair that combines would be the most significant contributor?

I don’t think we want to get into that level of detail on that Andrew.

There were a host of products that were affected by product transitions both this year and last year related to IT-4 and this enormous launch of new products that we have. So it is fair to say that it is broad based.

That concludes our call for the day. As always, we’ll be around so we look forward to your questions throughout the day. Thank you.

That concludes today’s conference call. Thank you for your participation. You may disconnect.