10:05 am - Looking at the company's outlook now. For the fourth quarter we can expect to see net sales up about 16%. For the full year, net sales should be up about 7%, above previous guidance of 6%. Net income should be around $1.7 billion for the year, up from a previous estimate of $1.55 billion

10:07 am - agriculture equip division had a 16% rise in net sales, and 73% jump in operating profit

10:08 am - in western Europe agriculture equipment retail sales should be up 2%, in Australia the numbers should be down 20 to 25%, basically due to serious drought conditions. worldwide net sales projected up 16%

10:10 am - now looking at commercial and consumer equipment- net sales up 15%, operating profit up 63%. for the full year, net sales projected up 11%

10:12 am - moving now to construction and forestry - net sales were down 20% and operating profit was down 41%. for the full year, net sales are now projected to be down 12%, down 1% from a previous estimate of -11%. most of this can be attributed to weak housing starts this year

10:14 am - dividends to equipment operations - YTD 2007 dividends running at $448 million higher compared to YTD 2006 - includes a special dividend of $230 million in Q2

10:16 am - July retail sales in US and Canada

• utility tractors industry was flat, Deere was down a single digit
• row crop tractors - industry was up 20%, Deere was flat
• 4WD tractors - industry was up 4%, and Deere was down double digits
• Combines - industry was up 3%,and Deere was down a single digit

10:18 am - July retail sales in Western Europe

• tractor and combines were up double digits in July

10:19 am - Looking now at raw material and freight

• third quarter up $75 million vs Q3 2006
• fiscal year 2007 forecast: up $200 million , which is unchanged from previous estimates
  

10:20 am - Q3 2007 tax rate was 34%, full year 2007 assumes a tax rate of 33%, unchanged from previous estimates

10:21 am - at end of quarter 221.9 million shares outstanding

~ moving now to Q&A portion of the call ~

10:22 am - Stephen from JP Morgan - On Agriculture margins - margins came out better than had expected - can they give a sense of if that was true for the company as well... Yes, the performance was better than the company had anticipated. The company still sees a fair amount of upside in the ag. business

10:25 am - Andy @ Wachovia Capital Markets - looking at agricultural equip market - Company seems to see strong demand looking ahead, but what constraints have they seen? Right now they don't see any supply chain constraints. Have been adding some machine tooling in a few markets to help keep up with demand.

10:29 am - Anne @ Bear Stearns - Looking for a little more color on the company's investment in Brazil and China. Looking at China, still waiting for gov't approvals on acquisitions in that country. Expect to see benefit from income during its second quarter there. In Brazil, they are in a limited build mode in their new factory there. All things are on track there, and expect to ramp up production over the fall and into the winter. The expect it will reverse what has been a margin draw up to this point, so far there is not really any production, so as production picks up, we should see margins improve

10:31 am - David @ Citigroup - looking at construction.... now that we see further decrease in receivables... how much has already been done in Q3? Most of that has already been done

10:33 am - Andrew - Not sure from where.... are we seeing any impact on farmer behavior in reaction to the recent credit troubles in the market? So far, we have not seen impacts, but there is still changes happening rapidly. Company points out that farmers typically use cash to fund their purchases

10:36 am - Terry @ Goldman Sachs - looking again at Agriculture margins - what do they see as incrementals? looking out? Second quarters are usually really strong, fourth quarter are typically not that strong. For the full year, incremental profit full year. On other should be 25%, or close to it. Terry didn't seem to agree with that math, thinks it will be up in the lower 30% range.

10:40 am - Michael (not sure from where) - company is showing low 20s in credit losses... what areas do they seem these in? keeping a closer eye on construction and forestry, and consumer. Have not seen any deterioration from what they estimated going into the year.

10:45 am - Daniel from Bernstein - wanted to touch base on US commodity price estimates - projections show good amount of volatility.. what are they seeing in the marketplace... seen nearby futures coming in a little bit, but overall, futures are still at great levels. But are any of the company's estimates based on the company's views of ethanol consumption, acreage, or something other than futures? Company seems to be basing most of the estimates on the futures market, but futures and actual agriculture activities are linked

10:50 am - Charley - looking for some details on new products - starting next week the company will be announcing the new products to the dealers, but do not want to make any comments on the new product lines at this time. Do they see the corn market staying strong for more than just into 2008? Yes, based on long term futures market, it looks like price expectations are going to be good.

10:52 am - David @ UBS - The $200 increase in Ag. inventories... how much is in Brazil? Bulk of that increase is actually more directed at North America.

10:55 am - Robert @ W Baird - On price realization - during the quarter can we assume price realization was stronger internationally? No, we definitely should not assume that.

10:59 am - Barry - what % of average credit portfolio is Brazilian related? Company has 800 million as of July in Brazilian. Historically, about 80% of the years profit was made in the first 3 quarters of the year... their forecast is a little under what it would be if you assumed that were to be the case again this year... is it mostly housing that is leading to a cautious estimate? Not really... tax has a big impact on difference

and that brings the call to a close

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.