- For row-crop tractors, Deere ended October with inventories at 21% of trailing 12-month sales. Combine inventories were at low levels, 1% of trailing 12-month sales.
- In Western Europe, sales of John Deere tractors and combines were each up a single digit in October.
- Deere''s retail sales of commercial and consumer equipment in the U.S. and Canada were down a single digit in October.
- Construction and forestry sales in the U.S. and Canada were down double digits on both a first-in-the-dirt and a settlement basis.

Raw materials and freight costs rose approximately $20 million versus last year.

- Spending was up 15% due to the large number of new product launches, especially in the AG division.
- SA&G expense for the equipment operations was up 29%, with about 17 points of that increase coming from global growth initiatives in currency translation.

- Actual shares outstanding at the end of the quarter were 219.8 million.
- On May 30th of this year, Deere''s Board of Directors authorized a new 20 million share repurchase program. The company completed the previous share repurchase program by acquiring about 300,000 shares and acquired about 2.6 million shares under the new program.

- For equipment operations, capital expenditures were $575 million.
- Depreciation and amortization was $429 million.
- The company made $511 million in pension and OPEB contributions.
- For financial services, capital expenditures relating to wind totaled $448 million in 2007.

Fiscal 2007 Highlights

- Net income was $1.822 billion, or $8.01 per share, compared with $1.694 billion, or $7.18 per share, last year.
- Income from continuing operations was $1.822 billion, or $8.01 per share, in comparison with $1.453 billion, or $6.16 per share, a year ago.

- AG incremental margins were constrained by growth investments.
- Commercial and consumer equipment business sales were up 35%, with about $220 million of that increase coming from LESCO.
- Operating profit declined. As expected, LESCO had a small operating loss accounting for most of the decline.
- Fiscal year 2007 ended with an increase in raw material and freight of about $185 million, lower than guidance.

Fiscal 2008 Outlook

- Production tonnage for the worldwide equipment operations is expected to be up about 7% from 2007. For the first quarter of next year, tonnage is expected to increase about 18%, supported by a strong AG market.
- For the first quarter of 2008, the company expects company-wide equipment operations net sales to be up about 25%, with AG contributing the bulk of that increase and with sales from LESCO basically accounting for the rest. Net income is expected to be about $325 million for the quarter.

- The company is forecasting net equipment sales to be up about 12% compared with fiscal year 2007. This includes about two points of net price realization. The estimated net income is approximately $2.1 billion for the year.
- The company expects about 2.9 billion bushels of this year’s U.S. corn crop to be used in ethanol production. This is a modest decline from previous expectation but still increase over last year’s level.

- Outlook for industry sales of agricultural equipment in the U.S. and Canada is up 10% to 15% from 2007. Outlook for South America is up about 10% to 15%.
- In Brazil, uncertainty still exists over the status of government-backed financing programs. In Western Europe 2008 outlook is for industry sales to be flat to up for the fiscal year. In Australia, certain areas have received timely rains. Some expect to see a bit of recovery with the industry to be up 5% to 10% in 2008.
- The company projects 2008 Deere agricultural equipment sales to be up about 17%.
- Strong growth is expected in Central Europe and the CIS, including Russia. In addition, Ningbo Benye, newest acquisition, should contribute about $100 million to 2008 AG revenues.

- The company anticipates commercial and consumer equipment sales to be up about 10%, about eight points of which is related to LESCO. 2007 was successful due to new products and the robust pace of new product introductions should continue in 2008, as exemplified by the exciting new models of zero turning radius mowers, broadening the John Deere line for commercial customers and consumers.
- Net sales in construction and forestry equipment are forecasted to be about flat. This is given the underlying assumption and results primarily from the division’s rapid response to changing market conditions in 2007, which should permit production to more closely align with retail demand in 2008 and an excellent lineup of new products, including skid steer loaders, H-series skidders, and J-series back-hoes.

- Forecasted credit net income for fiscal 2008 is about $375 million, again on the strength of a larger credit portfolio.
- The company expects raw materials and freight costs costs to increase by $150 million to $175 million.
- AG incremental margins will be impacted by additional growth investments, tier three product costs, and tier four engineering costs, and are expected to be about 25%.

- Next year’s pension and OPEB expense is expected to be down by about $125 million, with about 60% of the decrease affecting cost of sales and about 40% of the decrease impacting selling, administrative, and general expense. This decrease results primarily from a higher discount rate and solid asset performance.
- Fiscal year 2008 forecast includes an increase in SA&G expense of about 5% over 2007, of which LESCO adds about $100 million. The company will have higher growth expenses, which will be partially offset by the reduction in pension and OPEB expense.
- The fiscal year 2008 forecast assumes a full-year tax rate of about 35%.

- For equipment operations, capital expenditures are currently forecast to be between $600 million and $700 million. Depreciation and amortization is expected to be about $450 million. The company anticipates funding about $300 million in pension and OPEB contributions over the year.
- For financial services, capital expenditures relating to wind are expected to total about $550 million in 2008 as they build their portfolio.

Key questions from the fourth quarter earnings call conducted by Deere & Company on November 21, 2007.

Jamie Cook (Credit Suisse): Your incremental forecast for the farm division is 25% for 2008. You said there is some growth investment and spending related to tier three and tier four. Can you quantify that and how much that is relative to what you spent in 2007?

Marie Z. Ziegler: I do not have a specific breakdown in terms of how much we are going to spend incrementally on tier three, tier four growth. It is about five points of incremental margin relative to that about normal 30.

Jamie Cook (Credit Suisse): You would get some benefit in 2008 from the plant opening in Montenegro. Could you talk about that?

Marie Z. Ziegler: We will get some benefit from the opening of Montenegro and that factory is up and running and beginning to make the transition between the tractor production that has been in Horizontina that will be gradually moving into the factory at Montenegro. However, we do continue spending at a good rate as we invest to grow in other markets. We do continue to require investments in developing a dealer organization, for example, as we move into Eastern or Central Europe and the CIS.