Year-to-Date Financial Highlights

- Net income was $1.133 billion, or $2.56 per share, compared with $862.3 million, or $1.88 per share, last year.
- Worldwide net sales and revenues increased 18% to $13.298 billion.
- Net sales of the equipment operations increased 19% to $11.999 billion compared with $10.081 billion for the respective period last year. Included were positive effects for currency translation and price changes of 7%.

- Equipment net sales in the United States and Canada were up 7%.
- Net sales outside the U.S. and Canada increased by 42%, which included a positive currency-translation effect of 13%.

- Deere''s equipment divisions reported operating profit of $1.559 billion compared with $1.099 billion for the respective period last year. The improvements were largely due to the favorable impact of higher sales and production volumes and improved price realization, partially offset by higher selling, administrative and general expenses and raw-material costs. In addition, a higher effective tax rate had a negative impact on equipment operations'' net income for both periods.
- Financial services reported net income of $184.1 million versus $174.6 million last year.

- Agricultural sales increased 34%, with the improvement due to higher shipment volumes, the favorable effects of currency translation, and improved price realization.
- Operating profit was $1.114 billion compared with $624 million for the respective period last year. Operating profit period was higher primarily due to the favorable impact of higher sales and production volumes and improved price realization, partially offset by higher selling, administrative and general expenses and higher raw-material costs.

- Commercial & Consumer division sales were up 8 11%. LESCO operations, acquired in the third quarter of 2007, accounted for a sales increase of 12%.
- Operating profit was $ $162 million compared with $188 million a year ago. The six-month decline in operating profit was primarily due to higher selling, administrative and general expenses from LESCO, partially offset by higher sales volumes and a more favorable product mix.

- Construction & Forestry sales declined 7%.
- Operating profit was $ $283 million versus $287 million a year ago. Six-month operating profit was down due to lower shipment volumes and higher raw-material costs, mostly offset by improved price realization.

- John Deere Capital Corporation’s net income was $154.5 million compared with net income of $149.5 million for the respective period last year. Net income improved for the six months largely due to growth in the credit portfolio and increased crop insurance income, partially offset by an increase in leverage, increased selling, administrative and general expenses and lower income from receivable sales.

Fiscal 2008 Outlook

- Company equipment sales are projected to increase by about 20% for both the full year and the third quarter of 2008. Included in the forecast are about 5% of currency translation impact for the year and about 4% for the quarter.
- Deere''s net income is forecast to be about $2.2 billion for full-year 2008 and in a range of $550 million to $575 million for the third quarter. Escalating raw-material costs and the availability of various parts and components are expected to have an impact on operations for the balance of the year.

- With support from continuing strength in the global farm sector, worldwide sales of the company''s agricultural equipment are forecast to increase by about 35% for full-year 2008. This includes about 7% related to currency translation.
- On an industry basis, farm machinery sales in the United States and Canada are forecast to be up about 20% for the year, led by an increase in large tractors and combines.
- Industry sales in Western Europe are forecast to be up 3% to 5% for the year. Greater increases are expected in Central Europe and the CIS (Commonwealth of Independent States) countries, including Russia, where demand for productive farm machinery is experiencing rapid growth. South American markets are expected to show further improvement in 2008, with industry sales forecast to increase by about 30%. Despite generally positive conditions in the region, farm machinery demand could be affected by uncertainties over government-backed financing programs in Brazil and by an agricultural-commodity export tax in Argentina. Company sales are being helped by an expanded product line and additional tractor capacity in Brazil, and by rising demand for sugarcane harvesting equipment. Deere''s sales for the year are also expected to move higher in key Asian markets, such as India and China, as well as in Australia, where the farm sector is experiencing a strong recovery.

- John Deere commercial and consumer equipment sales are projected to be up about 4% for the year, including about 6% from a full year of LESCO sales. Sales gains from new products are partially offsetting the impact of the U.S. housing slowdown and weakening economy. Division sales to date have been negatively affected by a late spring in much of the United States.

- U.S. markets for construction and forestry equipment are forecast to remain under continued pressure due to a decline in housing starts, which are expected to reach 60-year lows in 2008. Non-residential construction is projected to remain in line with last year''s relatively healthy levels. Although the U.S. housing sector is negatively affecting forestry equipment markets in the United States and Canada, forestry sales worldwide are expected to rise in 2008.
In this relatively weak environment, Deere''s worldwide sales of construction and forestry equipment are forecast to decline by approximately 3%. Company sales are expected to benefit from new products and from factory-production levels in closer alignment with retail demand.

- Full-year 2008 net income for Deere''s credit operations is forecast to be approximately $350 million. The forecast decrease from 2007 is primarily due to an increase in leverage, an increase in the provision for credit losses and higher costs in support of growth initiatives, partially offset by growth in the credit portfolio and increased crop insurance income.

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.