Key questions from the second quarter earnings call conducted by Deere & Company on May 14, 2008.

Ann Duignan (Bear Stearns): How much of the increase have you already seen versus how much are you just baking in just in case?

Marie Z. Ziegler: We have a fairly large range on our raw material costs for the full year, $400 million to $500 million, given that we are halfway through the year. Year to date we have seen $110 million so you are looking for approximately $300 million plus in the second half of the year. This is a rapidly evolving situation and somewhere in the range of $400 million to $500 million is our best estimate at this point.

Ann Duignan (Bear Stearns): Where exactly have you seen the ramp up?

Marie Z. Ziegler: Our forecast would assume that we would see some ramp up in the third quarter and more in the fourth quarter and it is coming from a variety of commodity groups.

Andrew Obin (Merrill Lynch): Could you comment on the currency impact in agricultural equipment?

Marie Z. Ziegler: The currency impacts for the company are balanced in terms of the trade flows. What is coming from the United States into Europe is well offset by what is coming from Manheim and back into the US but there is still a currency translation impact because the foreign currency denominated sales and operating profit translate into higher dollars and that amount for the ag division is about $60 million in the second quarter and about $150 million now is anticipated in the forecast for the full year.

Andrew Obin (Merrill Lynch): Looking at the tonnage number for construction and forestry, it seems that you still were able to get positive pricing in the quarter and in the segment. Is that a fair estimate?

Marie Z. Ziegler: Yes, price realization was positive in the quarter for that division.

Jamie Cook (Credit Suisse): Could you talk about your margins on the overseas front?

Marie Z. Ziegler: Overseas operations are performing well and the Montenegro is “fully ramped up.” They are operating where we had anticipated they would be. When you look at the margins, though, overseas, you do have to bear in mind that overseas is where a lot of our growth opportunities are occurring in the near term and so they are somewhat disproportionally hit by higher SA&G as we are working to develop future opportunities in these markets.

Jamie Cook (Credit Suisse): You said that the ag incremental margins are now expected to be about 20%. Last quarter you were saying 20% to 25%. Is that a number that you would be happy with on a longer term basis?

Marie Z. Ziegler: One of the things that have happened is we had a strong back order position which is a good thing. It gives us comfort and confidence in our production schedules but that is also price protected. We have instituted some interim price increases in the ag division which candidly because of the back order position will not have much impact on fiscal 2008 which will be more evident in fiscal 2009 and it is our intention to longer term improve those increment margins.

Terry Darling (Goldman Sachs): In the second half of the year price raw material balance will go negative for you and there is some sort of a reversion. What order of magnitude that might be?

Marie Z. Ziegler: What we have announced so far for large tractors for example would be 3% in the United States. We have not made any comments yet on several other product lines because basically on the combines we are fully ordered out because of the earlier program. That is all that we have announced at this point but we would have the ability to watch what is happening in the markets. The other point that we want to talk about is the technology that we are putting into our products that adds value and to our customers make some more productivity.

Terry Darling (Goldman Sachs): Is this 2% price net of raw materials or is that just on a year over year basis net of discounts?

Marie Z. Ziegler: It is price net of discounts. We always treat those things separately.

Terry Darling (Goldman Sachs): If you are pushing price another 3% which on a half year basis would be $300 million or $400 million, as you move into 2009, you go from a negative trade off to a neutral trade off, is that correct?

Marie Z. Ziegler: That is a degree of speculation we should not enter into. I would go back and point out that over time our objective is the 30% incremental margin and we are working to deliver that over a long period of time.

Bill Ratzburg: 2% is all the divisions’ blended average so we are going to expect to get better than that on the ag side of the business.