Tony Huegel – Director of Investor Relations James M. Field – Chief Financial Officer & Senior Vice President Marie Ziegler – Vice President & Treasurer Susan Karlix – Manager of Investor Relations

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 stronger performance in 2012. Now, let’s look at the fourth quarter in detail starting with Slide Four. Net sales and revenues were up 20% to $8.6 billion in the quarter. Net income attributable to Deere & Company was $670 million, an increase of 46%. This was the company’s eighth consecutive quarter-over-quarter income record. Total worldwide equipment operations net sales were $7.9 billion, up 20% quarter-over-quarter shown on Slide Five. Price realization in the quarter was positive by three points, while currency translation on net sales was a positive two points. Production tonnage is shown on Slide Six. Worldwide production tonnage was up 13% in the quarter and up 21% for the year in line with our August guidance. Looking ahead to fiscal year 2012 for the company worldwide production tonnage is expected to be up about 16% in the first quarter and up about 12% for the full year. Let’s focus on the first quarter for a minute. The projected tonnage increase of about 16% is against a very tough comparison. In the first quarter of 2011 tonnage was up 41%. In the first quarter of 2012 the US and Canada Ag and turf projected increase in tonnage is a modest 4% versus 39% last year. Last year we had higher production schedules in the first quarter to facilitate the transition into interim tier-4 engine regulations. Combine production in particular was much higher than normal. In the first quarter this year we are transitioning to the new combine models temporarily lowering production capacity. Plus, the new line of combines is heavier than previous models by 10% to 15% on average. If we adjust for the weight and add in the combine mix difference, our US and Canada production tonnage would actually be down slightly in the first quarter, not up 4% as the Slide indicates. Turning to a review of our individual businesses, let’s start with agriculture and turf on Slide Seven. Sales were up 18% in the quarter. Production tonnage was up 8%. Operating profit rose to $868 million, yielding a 14% operating margin and a 22% incremental margin. Higher shipment volumes and improved price realization benefitted results but were partially offset by increased raw material costs, higher manufacturing overhead costs related to new products and higher research and development expenses. Before we review the industry sales outlook, let’s look at some of the fundamentals affecting the Ag business. Slide Eight outlines the US commodity price estimates that underlay our financial forecast. As you can see, US crop prices are forecast to remain strong in the 2012/2013 crop year driven by strong global demand and tight supply. The assumption for more normal higher yields next year accounts for the drop in crop prices in 2012/2013. Slide Nine highlights cash receipts, in our view the most important drivers of a farmers decision to purchase equipment. 2011 US farm cash receipts were at record levels, over 16% higher than the previous record in 2008. The 2012 cash receipts number is down slightly but still extremely strong on a relative basis. This bodes well for the Ag business. This outlook for the EU-27 is shown on Slide 10. 2012/13 farm income is projected to remain stable at the high levels recorded in 2011. Note too that the 2014/2020 common agriculture policy budget is frozen at 2007 through 2013 nominal levels providing sufficient income support. We outline some of the economic fundamentals in a few additional targeted growth markets on Slide 11. On Slide 12, farm net income for Brazil and Argentina is shown. Led by strong commodity prices, 2011 farm net income is about $28 billion in Brazil. With input costs rising, higher yields, and volatility in commodity prices due to global economic uncertainty, 2012 farm net income is forecast to be approximately $17 billion. Very strong farm net income by historical standards. In Argentina, farm income is forecast at about $6.4 billion in 2012 due to lower commodity prices and the impact from La Nina. Our 2012 Ag and turn outlooks are summarized on Slide 13. With farm fundamentals in the United States and Canada still positive, demand continues to be strong especially for high horsepower equipment. Our initial 2012 industry forecast for the region is up 5% to 10%. The EU-27 is projected to be flat with the attractive levels of 2011 as economic concerns in the region dampen positive fundamentals. Our 2012 industry outlook for the CIS countries is for moderate growth after last year’s substantial rise. Moving to Asia, we expect sales to be up strongly again this year. Industry sales in South America are expected to be flat in 2012 in relation to the strong levels of 2011. Remember, the industry outlook does not include all cotton and sugar cane equipment, categories in which Deere has a strong market presence. Globally, coming off of 2011’s high levels, the 2012 industry outlook is for stable commodity prices and farm income. We expect sound farmer confidence and strong equipment demand. Turning to another product category, we expect industry retail sales of turf and utility equipment in the United States and Canada to be up slightly in 2012. Putting this all together on Slide 14, many of you joined us in Lisbon this summer where we introduced over 100 new products. Recently, we had the largest product introduction in company history in Indianapolis and we’ve introduced even more new products elsewhere across the globe. These new products are the direct results of higher levels of R&D and cap ex the last few years. Those innovative products and the productivity enhancements they offer are continuing to drive increased demand for Deere equipment. That’s a chief reason we see Deere sales of worldwide Ag and turf equipment to be up about 15% in 2012. Currency translation is positive by about one point. Operating margins for the division is forecast at approximately 15% which is very strong performance. Unprecedented numbers from our 2012 early order programs support this bullish outlook. Aggregate orders are up 30% to 35% over last year excluding the cotton and combine programs. The cotton early order programs started on the first of November is almost full. The combine early program began one August with basically the same terms as previous years. Although we are managing combine availability this year, order activity has been strong as might be expected in the current large Ag environment. Speaking of combines, Slide 15 focuses on used combine inventory levels in the field. We know this is a topic of interest for many of you and frankly, it is a situation we are monitoring closely and managing aggressively. To set the stage, let’s go back to the first quarter of 2011. Typically, first quarter production of combines for the US and Canadian markets is relatively low because we are just past their use season. However, in the first quarter of 2011 we had high production levels. This was part of our transition plan as we complied with the start of interim tier-4 engine omission regulations. In the US and Canada, nearly all new combine sales come with a trade in. Because production was front end loaded, our dealers accumulated a higher than usual number of used combines in their inventory. These machines typically have higher turnover levels in the fall and as you see in the chart, inventories did indeed decline to nearly the same level of a year ago. In addition, at 31 October, the ratio of our dealer combine inventory to sales of new combines was below the industry. The age distribution of combines was very similar to the industry, a statistic you can check out on www.TractorHouse.com, and used combine pricings was higher than a year ago. We are supporting a further reduction in used combine inventories by carefully managing new combine production schedules as we being out our new combine product line. A decade ago, we started talking about better management of inventories. This meant not only Deere owned inventories but also those of our dealers. Over the past 10 years, you have seen ample evidence of these activities and the significant improvement in returns we are generating from our business. The way we are currently managing new and used combines is yet another example of the philosophy that better asset management leads to a strong healthy business for Deere, its dealers and our owners. One of the products some of you saw firsthand in Lisbon this year, our new 7280R Tractor shown on Slide 16 awarded the European Tractor of the Year 2012 at the Agritechnica show in Hanover Germany earlier this month. The 7280R has state of the art tractor technology. Other highlights from Agritechnica include the 6R Tractor was named Machine of the Year. DLG, the largest producer group in Europe rewarded Deere’s commitment to innovation with five silver medals. John Deere FarmSight which integrates technology equipment to link operators, farm managers and dealers was also highlighted. Our presence at Agritechnica showcased the tremendous impact of John Deere technology helping the company expand its market presence and making customers more productive and profitable. Let’s focus now on construction and forestry on Slide 17. Deere’s net sales were up 34% in the quarter while production tonnage was up 37%. The division’s operating profit rose 61% to $87 million helped by higher shipment and production volumes and improved price realization. These positive factors were partially offset by increased raw material costs of about $40 million and higher research and development expenses of about $15 million associated with the division’s global growth initiatives. On Slide 18, now moving to the economic indicators on the bottom part of the Slide, the underlying fundamentals certainly don’t point to strong recovery and economic growth continues at a slow pace. But C&F is benefitting from replacement demand for very aged fleets, improved sales to independent rental companies as well as strength in the energy and Ag related sectors. Also encouraging, Deere dealers continue to see improvement in rental utilization and used equipment markets. Net sales in construction and forestry are forecast to be up about 15% in fiscal 2012. This follows a 45% increase in sales in 2011 and a 41% increase in 2010, off the extremely depressed levels of 2009. Reflecting caution in Europe, global forestry markets are expected to be flat in 2012 following a 30% plus gain in fiscal 2011 and an increase of about 50% in 2010. The full year operating margin for the C&F division is projected to be about 8%. Slide 19 highlights the October announcement of Deere’s entrance to the important Brazilian construction market. Two new construction factories will be built in Sao Paulo state. One factory will be solely owned by Deere for backhoe loaders and four wheel driver loaders. Deere will partner with Hitachi Construction Machinery on the second factory to manufacturer excavators. Construction of the two factories is expected to begin in early 2012 with production in late 2013. Let’s move now to our financial services operations. Slide 20 shows the full year provision for credit losses at an astoundingly low four basis points. This reflects much lower write offs primarily in the construction and forestry and revolving credit portfolios as well as recoveries of prior year’s write offs and fewer repossessions. Our 2012 financial forecast contemplates the provision for credit losses returning to a more typical level, about 34 basis points as a percentage of the average owned portfolio. For your reference, the 10 year average is about 46 basis points. Moving to Slide 21, worldwide financial services net income attributable to Deere & Company was $122 million in the quarter versus $98 million in 2010. The higher income was primarily due to growth in the portfolio and a lower provision for credit losses. Keep in mind that in last year’s fourth quarter financial services took a pre-tax charge of about $35 million for the write down of wind energy assets. Looking ahead, we are projecting worldwide financial services net income attributable to Deere & Company of about $450 million in 2012. The decrease from fiscal 2011, when income was $471 million is attributable to the provision for losses returning to more typical levels as well as higher selling, administrative and general expenses in support of enterprise growth initiatives. Growth in the portfolio will partially offset these items. Now, on Slide 22 let’s look at receivables and inventories. For the company as a whole, receivables and inventories ended 2011 up roughly $1.1 billion compared to 2010 and are expected to be about $50 million higher in 2012. These increases reflect our strong market outlook for 2012 in growth in emerging markets including higher parts inventories to support rising equipment populations. Other factors include higher inventory needed to facilitate transitions into interim tier-4 and strong Canadian construction equipment markets. Slide 23 and 24 provide details on October retail sales. Let’s turn now to raw material and logistics on Slide 25. Fourth quarter material costs were up about $180 million in comparison with the fourth quarter of 2010. Our 2012 full year forecast assumes an increase of about $500 million versus 2011. About $400 million of the difference is for Ag and turf and about $100 million for C&F. As we have shared in the past, increases or decreases in Deere’s raw materials costs tend to lag by three to six months depending on the particular commodity or type of contract in place. We are encouraged in recent drops in steel prices but they are still above year ago levels, about $100 per ton higher and many forecasts have steel increasing again in the second half of 2012. Our current forecast calls for about two thirds of the $500 million increase in raw material costs to incur in the first half of the year. With about four points of price realization, forecasts for the year we should more than offset the forecast increases. Before moving on to housekeeping items I want to call your attention to the fact that in 2012 the product cost of compliance with interim tier-4 engine regulations will be roughly $475 million higher than in 2011. Looking at R&D expense on Slide 26, R&D was up 18% in the fourth quarter and up 17% for the year 2011. Our 2012 forecast calls for R&D expense to be up about 10%. As stated in previous quarters, R&D spending is expected to remain at high levels for the next few years as we continue product launches with interim tier-4 engines and soon thereafter meet final tier-4 emission standards. Also included in the R&D spend is ongoing new product development expense for our growing global customer base. Moving now to Slide 27, SA&G expense for the equipment operations was up 6% in the fourth quarter. Growth accounted for about three points of the increase. For fiscal year 2011 SA&G expense was up 12%. Growth accounted for about three points. Our fiscal year 2012 forecast calls for SA&G expense to be up about 10% with growth accounting for about four points of the increase. Moving to the income tax rate on Slide 28, the fourth quarter effective tax rate for the equipment operations was about 36%. Our effective tax rate for fiscal 2011 was about 33%, and our forecast for fiscal 2012 calls for an effective tax rate in the range of 33% to 35%. On Slide 29, you see our equipment operations history of strong cash flow. Following an impressive cash flow performance in 2011, $3 billion, we are forecasting cash flow from equipment operations to grow to about $3.6 billion in 2012. As Slide 30 illustrates, fiscal year 2011 capital expenditures were $1.1 billion primarily driven by investments related to interim tier-4. The increase is also related to new product development as well as our expanded presence in global growth markets. Depreciation and amortization was $590 million with pension and OPEB contributions of $120 million. On Slide 31, our fiscal year 2012 forecast calls for capital expenditures to be in the range of $1.2 to $1.3 billion. Depreciation and amortization is forecasted at about $650 million with pension and OPEB contributions of about $450 million. Turning to Slide 32, as we begin a new fiscal year we thought it helpful to review our use of cash priorities. Deere’s worldwide credit operation provides a strategic advantage in funding customer purchases, but this is true only so long as we can access the credit markets on a cost effective basis. One of the key elements to this end is maintaining a single A rating which is our top priority. The rating agencies expect 12 months of debt maturities to be covered by cash and/or untapped credit facilities. This also implies appropriately funding our pension and OPEB benefits which we have done proactively and prudently over the years. In fact, at the end of fiscal 2011 the projected benefit obligation of the US core plans was over 90% funded despite a historically low discount rate. Our second use of cash priority is funding value creating investments in our operations such as the two new construction facilities in Brazil referenced earlier. In fact, in 2011 we announced plan for six new factories in China, Brazil and India. A third priority is to provide for the common stock dividend which we raised twice in the last 12 months. Over time we want to consistently deliver a series of modestly increased dividends while targeting a 25% to 35% payout ratio on average. In this regard, we are mindful of the importance of maintaining the dividend plus not growing it beyond a point that can be comfortably sustained by our cash flow. Share repurchase is our method of deploying excess cash once the previous requirements are met and as long as such repurchase is viewed as value enhancing. Slide 33, addresses unsecured term debt maturities in 2012, approximately $5 billion. We have prefunded about $1 billion of these maturities reflected in our yearend cash balance. On Slide 34 you see a summary of the amounts returned to investors through share repurchase over the last eight years. During the fourth quarter we repurchased 8 million shares for about $575 million. That brings the total number of shares repurchased in 2011 to about 20.8 million shares for about $1.7 billion. Since 2004 repurchases have totaled about 141 million shares at a cost of $7.6 billion or about $54 a share on average. Slide 35 summarizes sources and uses of cash flow since we started the share repurchase program in 2004 and began a run of eight dividend increases. You’ll not that we have returned over $9 billion of cash to shareholders over this time representing about 58% of the cash generated by operations. This accomplishment demonstrates our focus on delivering value to investors. Putting this all together let’s turn to the company outlook on Slide 36. 2012 is projected to be a very good year. Net sales are expected to be up about 15% versus 2011 with positive price realization of about four points and about one point of positive currency translation. Remember, our price realization excludes any interim tier-4 price realizations that we have included in volume. Net income attributable to Deere & Company is projected at about $3.2 billion in 2012 breaking the $3 billion mark for the first time in company history. First quarter net sales are forecast to be up 16% to 18% compared with the first quarter of 2011. This includes about three points of positive currency translation. Again, let’s focus on the first quarter. The quarter is expected to be quite strong by historical standards. Though income is expected to fall short of 2011 here are a few examples of the items restraining profitability in the quarter. Raw material costs are expected to be about $150 million higher than last year’s first quarter. Interim tier-4 costs about $110 million higher. The absorption hit should be about $40 million as inventory levels decrease. In the first quarter 2011 inventory levels increased resulting in a benefit of roughly $130 million. Finally, as a percentage increase over 2011 R&D and SA&G expenses are forecast higher in the first half of 2012 than the second half. We expect four great quarters in 2012 with the pattern of increases and income year-over-year coming in the last three quarters of the year not in the first quarter. In summary, we reported excellent 2011 results, delivering on the investments in R&D, capital, dealer and market development of the recent years. First quarter 2012 will be a good one, although not a record and we anticipate a great full year 2012. In closing, John Deere enters 2012 on a very strong pace. We’re looking for further improvement in the year ahead as a result of some pick up in overall economic conditions and a global farm sector that shows every sign of continuing to charge ahead. Two years ago John Deere rolled out a revised strategy calling for increased growth in profitability. The strategy stresses building on the operational improvements of previous years while investing aggressive in order to extend the John Deere brand to a broader group of customers throughout the world. Our exceptional performance in 2011, exceptional in almost every aspect, provides tangible evidence that we are executing on our plan with the same sort of discipline and rigor that has long been the Hallmark of John Deere. And, it should be pointed out that our achievements took place in the face of tight supply conditions, major new product launches and record investments in our global business. All-in-all it is clear John Deere’s plans for helping feed, clothe and shelter the world’s growing population are on track and moving ahead at an accelerated rate. That’s why we’re so confident about the company’s future prospects and about our ability to deliver enduring value to our investors, customers and other constituents in 2012 and the years beyond.

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