SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2005

Commission file number 1-4121

DEERE & COMPANY

(Exact name of registrant as specified in its charter)

Delaware		36-2382580
(State of incorporation)		(IRS Employer Identification No.)

One John Deere Place, Moline, Illinois	61265	(309) 765-8000
(Address of principal executive offices)	(Zip Code)	(Telephone Number)

SECURITIES REGISTERED PURSUANT

TO SECTION 12(b) OF THE ACT

Title of each class		Name of each exchange on which registered
Common stock, $1 par value		New York Stock Exchange
5-7/8% Debentures Due 2006 (issued by John Deere B.V., a wholly-owned subsidiary, and guaranteed by Deere & Company)		New York Stock Exchange
8.95% Debentures Due 2019		New York Stock Exchange
8-1/2% Debentures Due 2022		New York Stock Exchange
6.55% Debentures Due 2028		New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

Yes ý No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No ý

The aggregate quoted market price of voting stock of registrant held by nonaffiliates at April 30, 2005 was $15,107,184,789. At November 30, 2005, 236,348,154 shares of common stock, $1 par value, of the registrant were outstanding. Documents Incorporated by Reference . Portions of the proxy statement for the annual meeting of stockholders to be held on February 22, 2006 are incorporated by reference in Part III.

PART I

ITEM 1. BUSINESS.

Products

Deere & Company (Company) and its subsidiaries (collectively called John Deere) have operations which are categorized into four major business segments.

The agricultural equipment segment manufactures and distributes a full line of farm equipment and related service parts -- including tractors; combine, cotton and sugarcane harvesters; tillage, seeding and soil preparation machinery; sprayers; hay and forage equipment; material handling equipment; and integrated agricultural management systems technology.

The commercial and consumer equipment segment manufactures and distributes equipment, products and service parts for commercial and residential uses — including tractors for lawn, garden, commercial and utility purposes; mowing equipment, including walk-behind mowers; golf course equipment; utility vehicles (including those commonly referred to as all-terrain vehicles, or “ATVs”); landscape products and irrigation equipment; and other outdoor power products.

The construction and forestry segment manufactures, distributes to dealers and sells at retail a broad range of machines and service parts used in construction, earthmoving, material handling and timber harvesting — including backhoe loaders; crawler dozers and loaders; four-wheel-drive loaders; excavators; motor graders; articulated dump trucks; landscape loaders; skid-steer loaders; and log skidders, feller bunchers, log loaders, log forwarders, log harvesters and related attachments.

The products and services produced by the segments above are marketed primarily through independent retail dealer networks and major retail outlets.

The credit segment primarily finances sales and leases by John Deere dealers of new and used agricultural, commercial and consumer, and construction and forestry equipment. In addition, it provides wholesale financing to dealers of the foregoing equipment, provides operating loans, finances retail revolving charge accounts, offers certain crop risk mitigation products and invests in wind energy development.

John Deere also provides managed health care plans. John Deere’s worldwide agricultural equipment; commercial and consumer equipment; and construction and forestry operations are sometimes referred to as the “Equipment Operations.” The credit, health care and certain miscellaneous service operations are sometimes referred to as “Financial Services.”

Additional information is presented in the discussion of business segment and geographic area results on pages 17 and 18. The John Deere enterprise has manufactured agricultural machinery since 1837. The present Company was incorporated under the laws of Delaware in 1958.

The Company’s Internet address is http://www.JohnDeere.com. Through that address, the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports are available free of charge as soon as reasonably practicable after they are filed with the Securities and Exchange Commission. The information contained on the Company’s website is not included in, or incorporated by reference into, this Annual Report on Form 10-K.

Market Conditions and Outlook

Company equipment sales are expected to increase by 1 to 3 percent for full-year 2006 and by 11 to 14 percent for the first quarter. Production levels are expected to be down slightly for the year but up about 4 percent in the first quarter. The Company intends to sell its health care operations for a gain of approximately $225 million after-tax. Based on the above, net income is forecast to be around $1.7 billion (approximately $1.5 billion excluding the gain on the sale of the health care operations) for the year and in a range of $175 million to $200 million for the first quarter.

Agricultural Equipment . Although the farm sector is expected to remain in solid financial condition, industry sales in the United States and Canada are forecast to be down 5 to 10 percent in 2006. Factors contributing to the decline include concerns over higher farm input costs, especially for fuel and fertilizer, the absence of United States tax incentives which helped sales in the first part of 2005, and slightly lower cash receipts. Farmers are expected to benefit from debt levels that remain well under control and from rising land values.

In other parts of the world, industry retail sales in Western Europe are forecast to be down about 5 percent for the year. Concerns over higher input costs, government policies and the future direction of farm subsidies are expected to put downward pressure on sales in the region for the year. In South America, industry sales are forecast to be down about 5 percent as a result of a relatively strong Brazilian currency, a reduction in soybean acreage in Brazil and concerns regarding foot-and-mouth disease.

Based on these factors and market conditions, worldwide sales of John Deere agricultural equipment are forecast to be down 2 to 4 percent for the year. Company sales are expected to benefit from a number of newly introduced products, including a line of more-powerful and fuel-efficient large tractors.

Commercial & Consumer Equipment . Sales of John Deere commercial and consumer equipment are forecast to be up 10 to 12 percent for the year with benefit from newly introduced products, an assumed return to more normal weather patterns and a full year of sales from the division’s recent landscapes-business acquisition. Division sales are also expected to be helped by an expanded presence of John Deere products in the mass channel.

Construction & Forestry . Markets for construction equipment are forecast to experience further growth in 2006 as a result of United States economic conditions conducive to a healthy level of construction spending, especially in the nonresidential sector. On this basis, contractors and rental companies are expected to continue updating and expanding their fleets. Forestry equipment markets are projected to remain near last year’s level in the United States and Canada and to be lower in Europe. In this environment, Deere’s worldwide sales of construction and forestry equipment are forecast to rise by 5 to 7 percent for fiscal 2006.

Financial Services . Full-year net income for the Company’s Financial Services operations is forecast to be about $565 million (approximately $340 million excluding the gain on the sale of the health care operations). Net income for the credit operations is expected to improve due to growth in the credit portfolio.

2005 Consolidated Results Compared with 2004

The Company had net income in 2005 of $1,447 million, or $5.87 per share diluted ($5.95 basic), compared with $1,406 million, or $5.56 per share diluted ($5.69 basic), in 2004. Net sales and revenues increased 10 percent to $21,931 million in 2005, compared with $19,986 million in 2004. Net sales of the Equipment Operations increased 10 percent in 2005 to $19,401 million from $17,673 million last year. Net sales in the United States and Canada rose 10 percent in 2005. Outside the United States and Canada, net sales increased by 6 percent excluding currency translation, and by 10 percent on a reported basis.

The Company’s Equipment Operations had net income of $1,096 million in 2005, compared with $1,097 million in 2004. Net income decreased primarily due to higher selling and administrative expenses, increased manufacturing overhead costs related to production system improvements, and higher research and development costs. These factors were partially offset by the margin on higher shipments and lower retirement benefit costs. Improved price realization offset higher raw material costs. In addition, this year’s results benefited from increased interest and investment income, and a lower effective tax rate.

Net income of the Company’s Financial Services operations in 2005 was $345 million, compared with $309 million in 2004. The increase was primarily due to growth in the credit operations portfolio, a lower credit loss provision and increased underwriting margins in health care. Additional information is presented in the following discussion of the credit and “Other” operations.

Additional information on 2005 results is presented on pages 16 - 18.

EQUIPMENT OPERATIONS

Agricultural Equipment

Sales of agricultural equipment, particularly in the United States and Canada, are affected by total farm cash receipts, which reflect levels of farm commodity prices, acreage planted, crop yields and the amount and timing of government payments. Sales are also influenced by general economic conditions, farm land prices, farmers’ debt levels, interest rates, agricultural trends, energy costs and other input costs associated with farming. Weather and climatic conditions can also affect buying decisions of equipment purchasers.

Innovations to machinery and technology also influence buying. For example, larger, more productive equipment is well accepted where farmers are striving for more efficiency in their operations. The Company has developed a comprehensive agricultural management systems approach using advanced technology and global satellite positioning to enable farmers to better control input costs and yields, to improve environmental management and to gather information.

Large, cost-efficient, highly-mechanized agricultural operations account for an important share of worldwide farm output. The large-size agricultural equipment used on such farms has been particularly important to John Deere. A large proportion of the Equipment Operations’ total agricultural equipment sales in the United States is comprised of tractors over 100 horsepower, self-propelled combines, self-propelled cotton pickers, self-propelled forage harvesters and self-propelled sprayers.

Seasonality . Seasonal patterns in retail demand for agricultural equipment result in substantial variations in the volume and mix of products sold to retail customers during various times of the year. Seasonal demand must be estimated in advance, and equipment must be manufactured in anticipation of such demand in order to achieve efficient utilization of manpower and facilities throughout the year. For certain equipment, the Company offers early order discounts to retail customers. Production schedules are based, in part, on these early order programs. The Equipment Operations incur substantial seasonal variation in cash flows to finance production and inventory of equipment. The Equipment Operations also incur costs to finance sales to dealers in advance of seasonal demand. New combine and cotton harvesting equipment is sold under early order programs with waivers of retail finance charges available to customers who take delivery of machines during off-season periods. In the United States and Canada, used equipment trade-ins, of which there are typically several transactions for every new combine and cotton harvesting equipment sale, are supported with a fixed pool of funds available to dealers which are then responsible for all associated inventory and sale costs.

An important part of the competition within the agricultural equipment industry during the past decade has come from a diverse variety of short-line and specialty manufacturers with differing manufacturing and marketing methods. Because of industry conditions, especially the merger of certain large integrated

competitors and the global capability of many competitors, the agricultural equipment business continues to undergo significant change and may become even more competitive.

Commercial and Consumer Equipment

John Deere commercial and consumer equipment includes front-engine lawn tractors, lawn and garden tractors, compact utility tractors, utility tractors, zero-turning radius mowers, front mowers and a variety of utility vehicles. A broad line of associated implements for mowing, tilling, snow and debris handling, aerating, and many other residential, commercial, golf and sports turf care applications are also included. The product line also includes walk-behind mowers and other outdoor power products. Retail sales of these commercial and consumer equipment products are influenced by weather conditions, consumer spending patterns and general economic conditions. To increase asset turnover and reduce the average level of field inventories through the year the production and shipment schedules of the Company’s product lines closely correspond to the seasonal pattern of retail sales.

The division manufactures and sells walk-behind mowers in Europe under the SABO brand as well as the John Deere brand. The division also builds products for sale by mass retailers. Since 1999, the Company has built products for sale through The Home Depot stores and in 2006 will begin selling its products through Lowe’s stores.

John Deere Landscapes, Inc., a unit of the division, distributes irrigation equipment, nursery products and landscape supplies primarily to landscape service professionals.

In addition to the equipment manufactured by the commercial and consumer division, John Deere purchases certain products from other manufacturers for resale.

Seasonality. Retail demand for the division’s equipment normally is higher in the second and third quarters. The division is pursuing a strategy of building and shipping as close to retail demand as possible. Consequently, production, shipping and retail sales normally will be proportionately higher in the second and third quarters of each year.

Construction and Forestry

John Deere construction, earthmoving, material handling and forestry equipment includes a broad range of backhoe loaders, crawler dozers and loaders, four-wheel-drive loaders, excavators, motor graders, articulated dump trucks, landscape loaders, skid-steer loaders, log skidders, log feller bunchers, log loaders, log forwarders, log harvesters and a variety of attachments.

Today, this segment provides sizes of equipment that compete for over 90 percent of the estimated total North American market for those categories of construction, earthmoving and material handling equipment in which it competes. These construction, earthmoving and material handling machines are distributed under the Deere brand name. This segment also provides the most complete line of forestry machines and attachments available in the world. These forestry machines and attachments are distributed under the Deere, Timberjack and Waratah brand names. In addition to the equipment manufactured by the Construction and Forestry division, John Deere purchases certain products from other manufacturers for resale.

The prevailing levels of residential, commercial and public construction and the condition of the forest products industry influence retail sales of John Deere construction, earthmoving, material handling and forestry equipment. General economic conditions, the level of interest rates and certain commodity prices such as those applicable to pulp, paper and saw logs also influence sales.

The Company and Hitachi have a joint venture for the manufacture of hydraulic excavators and track log loaders in the United States and Canada. The Company also distributes Hitachi brands of construction and mining equipment in North, Central and South America. The Company also has supply agreements with Hitachi under which a range of construction, earthmoving, material handling and forestry products manufactured by John Deere in the United States, Canada, Finland and New Zealand are distributed by Hitachi in certain Far East markets.

The division has a number of initiatives in the rent-to-rent, or short-term rental, market for construction, earthmoving and material handling equipment. These include specially designed rental programs for John Deere dealers and expanded cooperation with major, national equipment rental companies.

The Company also owns Nortrax, Inc., Nortrax Investments, Inc. and Ontrac Holdings, Inc. (collectively called Nortrax). Nortrax is an authorized John Deere dealer for construction, earthmoving, material handling and forestry equipment in a variety of markets in the United States and Canada.

Engineering and Research

John Deere makes large expenditures for engineering and research to improve the quality and performance of its products, and to develop new products. Such expenditures were $677 million or 3.5 percent of net sales of equipment in 2005, $612 million or 3.5 percent in 2004, and $577 million, or 4.3 percent in 2003.

Manufacturing

Manufacturing Plants . In the United States and Canada, the Equipment Operations own and operate 20 factory locations and lease and operate another three locations, which contain approximately 29.5 million square feet of floor space. Of these 23 factories, 12 are devoted primarily to agricultural equipment, four to commercial and consumer equipment, one to non-forestry construction equipment, one to construction and forestry equipment, one to engines, two to hydraulic and power train components and two to forestry equipment. Outside the United States and Canada, the Equipment Operations own and operate: agricultural equipment factories in Brazil, China, France, Germany, India, Mexico, the Netherlands and Russia; engine factories in Argentina, France, India and Mexico; a component factory in Spain; commercial and consumer equipment factories in Germany and the Netherlands; and forestry equipment factories in Finland and New Zealand. These factories outside the United States and Canada contain approximately 11.3 million square feet of floor space. The Equipment Operations also have financial interests in other manufacturing organizations, which include agricultural equipment manufacturers in China and the United States, an industrial truck manufacturer in South Africa, the Hitachi joint venture that builds hydraulic excavators and track log loaders in the United States and Canada and a venture that manufactures transaxles and transmissions used in certain commercial and consumer equipment division products. In 2005, the Equipment Operations announced plans to build an additional components factory in China.

The engine factories referred to above manufacture non-road, heavy duty diesel engines mostly for the Company’s Equipment Operations; a significant number of these engines are sold to global original equipment manufacturers.

John Deere’s facilities are well maintained, in good operating condition and are suitable for their present purposes. These facilities, together with both short-term and long-term planned capital expenditures, are expected to meet John Deere’s manufacturing needs in the foreseeable future.

Capacity is adequate to satisfy the Company’s current expectations for retail market demand. The Equipment Operations’ manufacturing strategy involves the implementation of appropriate levels of technology and automation to allow manufacturing processes to remain profitable at varying production levels. Operations are also designed to be flexible enough to accommodate the product design changes required to meet market

conditions. Common manufacturing facilities and techniques are employed in the production of components for agricultural, commercial and consumer and construction and forestry equipment.

In order to utilize manufacturing facilities and technology more effectively, the Equipment Operations pursue continuous improvements in manufacturing processes. These include steps to streamline manufacturing processes and enhance responsiveness to customers. The Company has implemented flexible assembly lines that can handle a wider product mix and deliver products when dealers and customers require them. Additionally, considerable effort is being directed to manufacturing cost reduction through process improvement, product design, advanced manufacturing technology, enhanced environmental management systems, supply management and logistics as well as compensation incentives related to productivity and organizational structure. The Company continues to experience raw materials and fuel cost pressures. The Company has offset and expects to continue to offset any increased costs through the above-described cost reduction measures and through pricing. Significant cost increases, if they occur, could have an adverse effect on our operating results. The Equipment Operations also pursue external sales of selected parts and components that can be manufactured and supplied to third parties on a competitive basis.

Capital Expenditures. The agricultural equipment, commercial and consumer equipment and construction and forestry operations’ capital expenditures totaled $465 million in 2005, compared with $346 million in 2004, and $304 million in 2003. Provisions for depreciation applicable to these operations’ property, plant and equipment during these years were $349 million, $333 million and $306 million, respectively. Capital expenditures for the Equipment Operations in 2006 are currently estimated to be $580 million. The 2006 expenditures will relate primarily to the modernization and restructuring of key manufacturing facilities and will also relate to the development of new products. Future levels of capital expenditures will depend on business conditions.

Patents and Trademarks

John Deere owns a significant number of patents, licenses and trademarks. The Company believes that, in the aggregate, the rights under these patents, licenses and trademarks are generally important to its operations, but does not consider that any patent, license, trademark or related group of them (other than its house trademarks, which include but are not limited to the “John Deere” mark, the leaping deer logo, the “Nothing Runs Like a Deere” slogan and green and yellow equipment colors) is of material importance in relation to John Deere’s business.

Marketing

In the United States and Canada, the Equipment Operations distribute equipment and service parts through the following facilities (collectively called sales branches): one agricultural equipment and one commercial and consumer equipment sales and administration office each supported by seven agricultural equipment and commercial and consumer equipment sales branches; and one construction, earthmoving, material handling and forestry equipment sales and administration office.

In addition, the Equipment Operations operate a centralized parts distribution warehouse in coordination with several regional parts depots in the United States and Canada and have an agreement with a third party to operate a high-volume parts warehouse in Indiana.

The sales branches in the United States and Canada market John Deere products at approximately 3033 dealer locations, most of which are independently owned. Of these, approximately 1600 sell agricultural equipment, while 536 sell construction, earthmoving, material handling and/or forestry equipment. Nortrax owns some of the 536 locations. Commercial and consumer equipment is sold by most John Deere agricultural equipment dealers, a few construction, earthmoving, material handling and forestry equipment dealers, and about 897 commercial and consumer equipment dealers, many of whom also handle competitive

brands and dissimilar lines of products. In addition, certain lawn and garden product lines are sold through various general and mass merchandisers, including The Home Depot and, beginning in 2006, Lowe’s.

Outside the United States and Canada, John Deere agricultural equipment is sold to distributors and dealers for resale in over 160 countries. Sales branches are located in Argentina, Australia, Brazil, Germany, France, Hong Kong, Italy, Mexico Poland, Russia, South Africa, Spain, Switzerland, Turkey, the United Kingdom, and Uruguay. Export sales branches are located in Europe and the United States. Associated companies doing business in China also sell agricultural equipment. Commercial and consumer equipment sales outside the United States and Canada occur primarily in Europe and Australia. Construction, earthmoving, material handling and forestry equipment is sold to distributors and dealers primarily by sales offices located in the United States, Brazil, Singapore and Finland. Some of these dealers are independently owned while the Company owns others.

Trade Accounts and Notes Receivable

Trade accounts and notes receivable arise from sales of goods to dealers. Most trade receivables originated by the Equipment Operations are purchased by Financial Services. The Equipment Operations compensate Financial Services at market rates of interest for these receivables. Additional information appears in Note 8 to the Consolidated Financial Statements.

FINANCIAL SERVICES

Credit Operations

United States and Canada . The Company’s credit subsidiaries (collectively referred to as the Credit Companies) primarily provide and administer financing for retail purchases from John Deere dealers of new equipment manufactured by the Company’s agricultural equipment, commercial and consumer equipment, and construction and forestry divisions and used equipment taken in trade for this equipment. Deere & Company and John Deere Construction & Forestry Company are referred to as the “sales companies.” John Deere Capital Corporation (Capital Corporation), a United States credit subsidiary, purchases retail installment sales and loan contracts (retail notes) from the sales companies. These retail notes are acquired by the sales companies through John Deere retail dealers in the United States. John Deere Credit Inc., a Canadian credit subsidiary, purchases and finances retail notes acquired by John Deere Limited, the Company’s Canadian sales branch. The terms of retail notes and the basis on which the Credit Companies acquire retail notes from the sales companies are governed by agreements with the sales companies. The Credit Companies also finance and service revolving charge accounts, in most cases acquired from and offered through merchants in the agricultural, commercial and consumer, and construction and forestry markets (revolving charge accounts). Further, the Credit Companies finance and service operating loans, in most cases offered through and acquired from farm input providers or through direct relationships with agricultural producers (operating loans). Additionally, the Credit Companies provide wholesale financing for inventories of John Deere engines and John Deere agricultural, commercial and consumer, and construction and forestry equipment owned by dealers of those products (wholesale notes). In the United States, the Credit Companies also offer certain crop risk mitigation products and invest in wind energy development.

Retail notes acquired by the sales companies are immediately sold to the Credit Companies. The Equipment Operations are the Credit Companies’ major source of business, but many retail purchasers of John Deere products finance their purchases outside the John Deere organization.

The Credit Companies offer retail leases to equipment users in the United States. A small number of leases are executed with units of local government. Leases are usually written for periods of two to five years, and frequently contain an option permitting the customer to purchase the equipment at the end of the lease term. Retail leases are also offered in a generally similar manner to customers in Canada through John Deere Credit Inc. and John Deere Limited.

The Credit Companies’ terms for financing equipment retail sales (other than smaller items financed with unsecured revolving charge accounts) provide for retention of a security interest in the equipment financed. The Credit Companies’ guidelines for minimum down payments, which vary with the types of equipment and repayment provisions, are generally not less than 20 percent on agricultural equipment, 10 percent on construction and forestry equipment and 10 percent on lawn and grounds care equipment used for personal use. Finance charges are sometimes waived for specified periods or reduced on certain John Deere products sold or leased in advance of the season of use or in other sales promotions. The Credit Companies generally receive compensation from the sales companies equal to a competitive interest rate for periods during which finance charges are waived or reduced on the retail notes or leases. The cost is accounted for as a deduction in arriving at net sales by the Equipment Operations.

The Company has an agreement with the Capital Corporation to make income maintenance payments to the Capital Corporation such that its ratio of earnings before fixed charges to fixed charges is not less than 1.05 to 1 for any fiscal quarter. For 2005 and 2004, the Capital Corporation’s ratios were 1.88 to 1 and 2.23 to 1, respectively, and never less than 1.74 to 1 and 2.19 to 1 for any fiscal quarter of 2005 and 2004, respectively. The Company has also committed to continue to own at least 51 percent of the voting shares of capital stock of the Capital Corporation and to maintain the Capital Corporation’s consolidated tangible net worth at not less than $50 million. The Company’s obligations to make payments to the Capital Corporation under the agreement are independent of whether the Capital Corporation is in default on its indebtedness, obligations or other liabilities. Further, the Company’s obligations under the agreement are not measured by the amount of the Capital Corporation’s indebtedness, obligations or other liabilities. The Company’s obligations to make payments under this agreement are expressly stated not to be a guaranty of any specific indebtedness, obligation or liability of the Capital Corporation and are enforceable only by or in the name of the Capital Corporation. No payments were necessary under this agreement in 2005 or 2004.

Outside the United States and Canada . The Credit Companies offer equipment financing products in Argentina, Australia, Brazil, Finland, France (through a joint venture), Germany, Italy, Luxembourg, Mexico, New Zealand, Portugal (through a cooperation agreement), South Africa (through a joint venture), Spain, Sweden and the United Kingdom. Retail sales financing outside of the United States and Canada is affected by a variety of customs and regulations.

The Credit Companies also offer to select customers insured international export financing for the purchase of John Deere Products.

Additional information on the Credit Companies appears on pages 17, 18, and 20.

Health Care

In 1985, the Company formed John Deere Health Care, Inc. to commercialize the Company’s expertise in the field of health care benefit management, which had been developed from efforts to manage its own health care costs. John Deere Health Care currently provides health benefit management programs and related administrative services in Illinois, Iowa, Tennessee and Virginia for companies, government entities and individuals as a third-party administrator through its health maintenance organization subsidiary, John Deere Health Plan, Inc. or through its health and accident insurance subsidiary, John Deere Health Insurance, Inc. At October 31, 2005, approximately 480,000 individuals were enrolled in these programs, of which approximately 90,000 were John Deere employees, retirees and their dependents.

The Company recently announced that it has agreed to sell John Deere Health Care to UnitedHealthcare for approximately $500 million. The transaction is subject to certain state and federal regulatory approvals but is projected to close by April 1, 2006.

ENVIRONMENTAL MATTERS

The Company is subject to a wide variety of state, federal and international environmental laws, rules and regulations. These laws, rules and regulations may affect the way the Company conducts its operations, and failure to comply with these regulations could lead to fines and other penalties. The Company is also involved in the evaluation and clean-up of a limited number of sites that it owns. Management does not expect that these matters will have a material adverse effect on the consolidated financial position or results of operations of the Company. With respect to acquired properties, the Company cannot be certain that it has identified all adverse environmental conditions. The Company expects that it will acquire additional properties in the future.

EMPLOYEES

At October 31, 2005, John Deere had approximately 47,400 full-time employees, including approximately 27,000 employees in the United States and Canada. From time to time, John Deere also retains consultants, independent contractors, and temporary and part-time workers. Unions are certified as bargaining agents for approximately 39 percent of John Deere’s United States employees. Most of the Company’s United States production and maintenance workers are covered by a collective bargaining agreement with the United Auto Workers (UAW), with an expiration date of September 30, 2009.

Unions also represent the majority of employees at John Deere manufacturing facilities outside the United States.

EXECUTIVE OFFICERS OF THE REGISTRANT

Following are the names and ages of the executive officers of the Company, their positions with the Company and summaries of their backgrounds and business experience. All executive officers are elected or appointed by the Board of Directors and hold office until the annual meeting of the Board of Directors following the annual meeting of stockholders in each year.

Name, age and office (at December 1, 2005), and year elected to office				Principal occupation during last five years other than office of the Company currently held
Robert W. Lane	56	Chairman, President and Chief Executive Officer	2000	Has held this position for the last five years
Samuel R. Allen	52	Division President	2005	2003-2005 President, Global Financial Services and Corporate Human Resources; 2001-2002 Senior Vice President Global Human Resources and Industrial Relations; 1999-2001 Vice President Region I (Latin America, the Far East, Australia and South Africa)
David C. Everitt	53	Division President	2001	1999-2001 Senior Vice President, Region II (Europe, Africa and the Middle East)
James R. Jenkins	60	Senior Vice President and General Counsel	2000	Has held this position for the last five years
John J. Jenkins	60	Division President	2000	Has held this position for the last five years
Nathan J. Jones	49	Senior Vice President and Chief Financial Officer	1998	Has held this position for the last five years
H. J. Markley	55	Division President	2001	2000-2001 Senior Vice President, Worldwide Human Resources

ITEM 2. PROPERTIES.

See “Manufacturing” in Item 1.

The Equipment Operations own 14 facilities housing sales branches, one centralized parts depot, regional parts depots, transfer houses and warehouses throughout the United States and Canada. These facilities contain approximately 4.6 million square feet of floor space. The Equipment Operations also own and occupy buildings housing sales branches, one centralized parts depot and regional parts depots in Australia, Brazil, Europe and New Zealand. These facilities contain approximately 1.3 million square feet of floor space.

Deere & Company administrative offices, research facilities and certain facilities for health care activities, all of which are owned by John Deere, together contain about 2.4 million square feet of floor space and miscellaneous other facilities total 1.0 million square feet.

Overall, the Company owns approximately 49.7 million square feet of facilities and leases approximately 8.9 million additional square feet in various locations.

ITEM 3. LEGAL PROCEEDINGS.

The Company is subject to various unresolved legal actions which arise in the normal course of its business, the most prevalent of which relate to product liability (including asbestos-related liability), retail credit, software licensing, patent and trademark matters. Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible loss, the Company believes these unresolved legal actions will not have a material effect on its financial statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

(a) The Company’s common stock is listed on the New York Stock Exchange. See the information concerning quoted prices of the Company’s common stock and the number of stockholders in the second table and the sentence following it, and the data on dividends declared and paid per share in the first table, under the caption “Supplemental Information (Unaudited)” in Note 27 to the Consolidated Financial Statements .

(b) Not applicable

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased (2)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (1)
	(thousands)			(thousands)	(millions)
Aug 1 to Aug 31	1,317	$	66.03	1,317	$	281

Sept 1 to Sept 30	2,275	62.80		2,191	143

Oct 1 to Oct 31	990	60.58		990	83

Total	4,582			4,498

(1).		On December 1, 2004, the Company’s board of directors authorized the repurchase of up to $1 billion of Company common stock.

(2).		Total shares purchased in September 2005 included approximately 67 thousand shares received from officers to exercise certain stock option awards and approximately 17 thousand shares received from these officers to pay the associated payroll taxes. All the shares were valued at the market price of $62.53 per share.

On November 30, 2005, the Company’s board of directors authorized the repurchase of up to 26 million additional shares of common stock. As with the previous plan, repurchases under this plan will be made from time to time, at the Company’s discretion, in the open market or though privately-negotiated transactions.

ITEM 6. SELECTED FINANCIAL DATA.

Financial Summary

(Millions of dollars except per share amounts)	2005		2004		2003		2002*		2001*
For the Year Ended October 31:
Total net sales and revenues	$	21,931	$	19,986	$	15,535	$	13,947	$	13,293
Net income (loss)	$	1,447	$	1,406	$	643	$	319	$	(64	)
Net income (loss) per share - basic	$	5.95	$	5.69	$	2.68	$	1.34	$	(.27	)
Net income (loss) per share - diluted	$	5.87	$	5.56	$	2.64	$	1.33	$	(.27	)
Dividends declared per share	$	1.21	$	1.06	$	.88	$	.88	$	.88
At October 31:
Total assets	$	33,637	$	28,754	$	26,258	$	23,768	$	22,663
Long-term borrowings	$	11,739	$	11,090	$	10,404	$	8,950	$	6,561

*In 2002 and 2001, the Company had special charges of $46 million, or $.18 per share, and $217 million, or $.91 per share, respectively, related to costs of closing and restructuring certain facilities in both years and a voluntary early-retirement program in 2001.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

See the information under the caption “Management’s Discussion and Analysis” on pages 16 - 24.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is exposed to a variety of market risks, including interest rates and currency exchange rates. The Company attempts to actively manage these risks. See the information under “Management’s Discussion and Analysis” on page 24 and in Note 25 to the Consolidated Financial Statements.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

See the consolidated financial statements and notes thereto and supplementary data on pages 25 - 50.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company’s principal executive officer and its principal financial officer have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (“the Act”)) were effective as of October 31, 2005, based on the evaluation of these controls and procedures required by Rule 13a-15(b) or 15d-15(b) of the Act.

Management’s Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Deere & Company’s internal control system was designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Deere & Company’s management assessed the effectiveness of the company’s internal control over financial reporting as of October 31, 2005. In making this assessment, it used the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, management believes that, as of October 31, 2005, the Company’s internal control over financial reporting was effective.

The Company’s independent registered public accounting firm has issued an audit report on management’s assessment of the Company’s internal control over financial reporting. That report is included herein.

ITEM 9B. OTHER INFORMATION

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information regarding directors in the proxy statement dated January 12, 2006 (proxy statement), under the captions “Election of Directors,” “Directors Continuing in Office” and in the third paragraph under the caption “Committees - The Audit Review Committee,” is incorporated herein by reference. Information regarding executive officers is presented in Item 1 of this report under the caption “Executive Officers of the Registrant.”

The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer and principal accounting officer. This code of ethics and the Company’s corporate governance policies are posted on the Company’s website at http://www.JohnDeere.com. The Company intends to satisfy disclosure requirements regarding amendments to or waivers from its code of ethics by posting such information on this website. The charters of the Audit Review, Corporate Governance and Compensation committees of the Company’s Board of Directors are available on the Company’s website as well. This information is also available in print free of charge to any person who requests it.

ITEM 11. EXECUTIVE COMPENSATION.

The information in the proxy statement under the captions “Compensation of Executive Officers” and “Compensation of Directors” is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

(a) Securities authorized for issuance under equity compensation plans.

Equity compensation plan information in the proxy statement, under the caption “Equity Compensation Plan Information,” is incorporated herein by reference.

(b) Security ownership of certain beneficial owners.

The information on the security ownership of certain beneficial owners in the proxy statement under the caption “Security Ownership of Certain Beneficial Owners and Management” is incorporated herein by reference.

The information on shares of common stock of the Company beneficially owned by, and under option to (i) each director, (ii) certain named executive officers and (iii) the directors and officers as a group, contained in the proxy statement under the captions “Security Ownership of Certain Beneficial Owners and Management,” “Compensation of Executive Officers-Summary Compensation Table” and “Compensation of Executive Officers-Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR Values” is incorporated herein by reference.

(d) Change in control.

None.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

None.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information in the proxy statement under the caption “Fees Paid to the Independent Registered Public Accounting Firm” is incorporated herein by reference

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

		Page
(1)	Financial Statements

	Statement of Consolidated Income for the years ended October 31, 2005, 2004 and 2003	25

	Consolidated Balance Sheet, October 31, 2005 and 2004	26

	Statement of Consolidated Cash Flows for the years ended October 31, 2005, 2004 and 2003	27

	Statement of Changes in Consolidated Stockholders’ Equity for the years ended October 31, 2003, 2004 and 2005	28

	Notes to Consolidated Financial Statements	29

		Page
(2)	Schedule to Consolidated Financial Statements

	Schedule II - Valuation and Qualifying Accounts for the years ended October 31, 2005, 2004 and 2003	55

(3)	Exhibits

	See the “Index to Exhibits” on pages 56 – 58 of this report.

	Certain instruments relating to long-term borrowings, constituting less than 10 percent of registrant’s total assets, are not filed as exhibits herewith pursuant to Item 601(b)4(iii)(A) of Regulation S-K. Registrant agrees to file copies of such instruments upon request of the Commission.

Financial Statement Schedules Omitted

The following schedules for the Company and consolidated subsidiaries are omitted because of the absence of the conditions under which they are required: I, III, IV and V.

MANAGEMENT’S DISCUSSION AND ANALYSIS

RESULTS OF OPERATIONS FOR THE YEARS ENDED OCTOBER 31, 2005, 2004 AND 2003

OVERVIEW

Organization

The company’s Equipment Operations generate revenues and cash primarily from the sale of equipment to John Deere dealers and distributors. The Equipment Operations manufacture and distribute a full line of agricultural equipment; a variety of commercial and consumer equipment; and a broad range of construction and forestry equipment. The company’s Financial Services primarily provide credit services and managed health care plans. The credit operations primarily finance sales and leases of equipment by John Deere dealers and trade receivables purchased from the Equipment Operations. The health care operations provide managed health care services for the company and certain outside customers. The information in the following discussion is presented in a format that includes information grouped as the Equipment Operations, Financial Services and consolidated. The company also views its operations as consisting of two geographic areas, the U.S. and Canada, and outside the U.S. and Canada.

Trends and Economic Conditions

The company’s businesses are currently affected by the following key trends and economic conditions. Although the farm sector is expected to remain in solid financial condition, industry sales in the U.S. and Canada are forecast to be down 5 to 10 percent in 2006. In other parts of the world, industry retail sales in Western Europe and South America are each forecast to be down approximately 5 percent for the year. The company’s agricultural equipment sales were up 9 percent for 2005 and are forecast to be down approximately 2 to 4 percent in 2006. The company’s commercial and consumer equipment sales declined 4 percent in 2005 reflecting the impact of unfavorable weather conditions. Sales of commercial and consumer equipment are forecast to be up 10 to 12 percent in 2006 benefiting primarily from newly introduced products and an assumed return to more normal weather patterns. Markets for construction equipment are forecast to experience further growth in 2006 as a result of U.S. economic conditions. On this basis, contractors and rental companies are expected to continue updating and expanding their fleets. Forestry equipment markets are projected to remain near last year’s level in the U.S. and Canada and to be lower in Europe. The company’s construction and forestry sales increased 24 percent in 2005 and are forecast to increase 5 to 7 percent in 2006. Net income for the company’s credit operations is expected to improve due to growth in the credit portfolio.

Items of concern include the availability and price of raw materials that require a high content of natural gas and petroleum, and large tires used on some agricultural and construction equipment. Another item of uncertainty affecting farm cash receipts is the potential impact on farm subsidies and farmer confidence in both Europe and the U.S. as a result of the negotiations at the World Trade Organization and budget pressures in both regions. Producing engines that continue to meet high performance standards, yet also comply with increasingly stringent emissions regulations is one of the company’s major priorities. There is also risk related to the success of new product introduction initiatives and customer acceptance of new products.

The company’s 2005 results reflect its strategies for building a business that can produce strong levels of cash flow in all types of conditions. In addition to producing record earnings for the year, the company continued to bring advanced new products to market and fund its global growth plans. In 2005, the company also returned approximately $1.2 billion to stockholders through share repurchases and dividends. Consistent with the company’s focus on disciplined asset management, inventories have been controlled by substantial production cutbacks. This helps set the stage for the successful introduction of important new products in 2006.

2005 COMPARED WITH 2004

CONSOLIDATED RESULTS

Worldwide net income in 2005 was $1,447 million, or $5.87 per share diluted ($5.95 basic), compared with $1,406 million, or $5.56 per share diluted ($5.69 basic), in 2004. Net sales and revenues increased 10 percent to $21,931 million in 2005, compared with $19,986 million in 2004. Net sales of the Equipment Operations increased 10 percent in 2005 to $19,401 million from $17,673 million last year. Net sales in the U.S. and Canada rose 10 percent in 2005. Outside the U.S. and Canada, net sales increased by 6 percent excluding currency translation, and by 10 percent on a reported basis.

Worldwide Equipment Operations, which exclude the Financial Services operations, had an operating profit of $1,842 million in 2005, compared with $1,905 million in 2004. Operating profit decreased primarily due to higher selling and administrative expenses, increased manufacturing overhead costs related to production system improvements, and higher research and development costs. These factors were partially offset by the margin on higher shipments and lower retirement benefit costs. Improved price realization offset higher raw material costs.

The Equipment Operations’ net income was $1,096 million in 2005, compared with $1,097 million in 2004. The same operating factors mentioned above affected these results. However, the decrease in operating profit was substantially offset by increased interest and investment income, and a lower effective tax rate.

Net income of the company’s Financial Services operations in 2005 was $345 million, compared with $309 million in 2004. The increase was primarily due to growth in the credit operations portfolio, a lower credit loss provision and increased underwriting margins in health care. Additional information is presented in the following discussion of the credit and “Other” operations.

The cost of sales to net sales ratio for 2005 was 78.2 percent, compared to 76.8 percent last year. The increase was primarily due to higher raw material costs and increased manufacturing overhead costs, partially offset by improved price realization and lower retirement benefit costs.

Finance and interest income increased this year primarily due to growth in the credit operations portfolio and higher financing rates. Health care premium revenue decreased due to lower enrollment, while claims costs are lower due to unusually high claims in the prior year and the lower enrollment this year.

Other income increased this year primarily due to an increase in service income, increased investment income from marketable securities due to investments made by the Equipment Operations and other miscellaneous gains, partially offset by lower gains on retail note sales and a gain on the sale of an equipment rental company last year. Research and development costs increased this year due to a higher level of new product development and exchange rate fluctuations. Selling, administrative and general expenses increased primarily due to increased marketing expenses, acquisitions of businesses and exchange rate fluctuations. Interest expense increased due to higher average borrowings and borrowing rates. Other operating expenses were higher primarily as a result of an increase in service expenses.

The company has several defined benefit pension plans and defined benefit health care and life insurance plans. The company’s postretirement benefit costs for these plans in 2005 were $538 million, compared to $596 million in 2004. The long-term expected return on plan assets, which is reflected in these costs, was an expected gain of 8.5 percent in both years, or $744 million in 2005, compared to $671 million in 2004. The actual return was a gain of $1,057 million in 2005, compared to a gain of $654 million in 2004. In 2006, the expected return will be approximately 8.4 percent. The total unrecognized losses related to the plans at October 31, 2005 and 2004 were $3,969 million and $5,149 million, respectively. The company expects the decrease in postretirement benefit costs in 2006 to be approximately $75 million pretax, compared with 2005, caused by an increase in the discount rate assumptions and increased funding. The company makes any required contributions to the plan assets under applicable regulations and voluntary contributions from time to time based on the company’s liquidity and ability to make tax-deductible contributions. Total company contributions to the plans were $859 million in 2005 and $1,852 million in 2004, which include direct benefit payments for unfunded plans. These contributions also included voluntary contributions to the U.S. plan assets of $556 million in 2005 and $1,551 million in 2004. Total company contributions in 2006 are expected to be approximately $960 million, including voluntary contributions to U.S. plan assets of approximately $875 million. See the following discussion of “Critical Accounting Policies” for postretirement benefit obligations.

BUSINESS SEGMENT AND GEOGRAPHIC AREA RESULTS

The following discussion relates to operating results by reportable segment and geographic area. Operating profit is income before external interest expense, certain foreign exchange gains or losses, income taxes and corporate expenses. However, operating profit of the credit segment includes the effect of interest expense and foreign exchange gains or losses.

Worldwide Agricultural Equipment Operations

The agricultural equipment segment had an operating profit of $970 million in 2005, compared with $1,072 million in 2004. Net sales increased 9 percent this year due to improved price realization, higher shipments and the translation effect of currency exchange rates. The decrease in operating profit was primarily a result of increases in manufacturing overhead costs, research and development costs, and selling and administrative expenses. Partially offsetting these factors were the margin on higher shipments and lower retirement benefit costs. Improved price realization offset the increase in raw material costs.

Worldwide Commercial and Consumer Equipment Operations

The commercial and consumer equipment segment had an operating profit of $183 million in 2005, compared with $246 million in 2004. Net sales decreased 4 percent for the year reflecting the impact of unfavorable weather conditions on the sale of consumer riding equipment during the critical selling season. The lower operating profit was primarily due to lower shipments and production volumes in response to a weaker retail environment. Improved price realization more than offset an increase in raw material costs.

Worldwide Construction and Forestry Operations

The construction and forestry segment had an operating profit of $689 million in 2005, compared with $587 million in 2004. Sales increased 24 percent for the year reflecting strong activity at the retail level. The operating profit improvement was primarily due to higher sales and efficiencies related to stronger production volumes. Improved price realization offset the impact of higher raw material costs. The results last year included a $30 million pretax gain from the sale of an equipment rental company.

Worldwide Credit Operations

The operating profit of the credit operations was $491 million in 2005, compared with $466 million in 2004. The increase in operating profit was primarily due to growth in the portfolio, as well as a lower credit loss provision, partially offset by lower financing spreads and lower gains on retail note sales. Total revenues of the credit operations increased 13 percent in 2005, primarily reflecting the larger portfolio and higher average finance rates. The average balance of receivables and leases financed was 19 percent higher in 2005, compared with 2004. An increase in average borrowings and higher interest rates in 2005 resulted in a 44 percent increase in interest expense, compared with 2004. The credit operations’ ratio of earnings to fixed charges was 1.86 to 1 in 2005, compared to 2.12 to 1 in 2004.

Worldwide Other Operations

The company’s other operations, which consisted primarily of the health care operations, had an operating profit of $41 million in 2005, compared with $5 million last year. The increase was primarily due to an improved underwriting margin. Last year’s margins were adversely affected by unusually high claims costs.

Equipment Operations in U.S. and Canada

The equipment operations in the U.S. and Canada had an operating profit of $1,298 million in 2005, compared with $1,284 million in 2004. The increase was primarily due to the margin on higher shipments and lower retirement benefit costs. Partially offsetting these factors were increases in manufacturing overhead costs, selling and administrative expenses, and research and development costs. Improved price realization offset the increase in raw material costs. Sales increased due to higher shipments, reflecting strong retail demand in construction and forestry equipment, and improved price realization in all equipment segments. Sales increased 10 percent in 2005 while the physical volume increased 5 percent, compared to 2004.

Equipment Operations outside U.S. and Canada

The equipment operations outside the U.S. and Canada had an operating profit of $544 million in 2005, compared with $621 million in 2004. The decrease was primarily due to the effects of

increases in manufacturing overhead costs, selling and administrative expenses, and research and development costs. Improved price realization substantially offset the increase in raw material costs. Sales increased from the translation effect of currency exchange rates, increased volume and improvements in price realization. Sales were 10 percent higher than last year, while the physical volume increased 3 percent in 2005, compared with 2004.

MARKET CONDITIONS AND OUTLOOK

Company equipment sales are expected to increase by 1 to 3 percent for fiscal year 2006 and by 11 to 14 percent for the first quarter, compared to the same periods in 2005. Production levels are expected to be down slightly for the year, but up about 4 percent in the quarter. As previously announced, the company will sell its health care operations for a gain of approximately $225 million after-tax (see Note 27). Based on the above, net income is forecast to be around $1.7 billion (approximately $1.5 billion excluding the gain on the sale of the health care operations) for the year and in a range of $175 million to $200 million for the first quarter.

Agricultural Equipment. Although the farm sector is expected to remain in solid condition, industry sales in the U.S. and Canada are forecast to be down 5 to 10 percent in 2006. Factors contributing to the decline include concerns over higher farm input costs, especially for fuel and fertilizer, the absence of U.S. tax incentives which helped sales in the first part of 2005, and slightly lower cash receipts. Farmers are expected to benefit from debt levels that remain well under control and from rising land values.

Based on these factors and market conditions, worldwide sales of the company’s agricultural equipment are forecast to be down 2 to 4 percent for the year. Company sales are expected to benefit from a number of newly introduced products, including a line of more powerful and fuel efficient large tractors.

Commercial and Consumer Equipment. Sales of the company’s commercial and consumer equipment are forecast to be up 10 to 12 percent for the year with the benefit from newly introduced products, an assumed return to more normal weather patterns and a full year of sales from the segment’s recent landscapes-business acquisition (see Note 1). Segment sales are also expected to be helped by an expanded presence of the company’s products in the mass channel.

Construction and Forestry. Markets for construction equipment are forecast to experience further growth in 2006 as a result of U.S. economic conditions conducive to a healthy level of construction spending, especially in the nonresidential sector. On this basis, contractors and rental companies are expected to continue updating and expanding their fleets. Forestry equipment markets are projected to remain near last year’s level in the U.S. and Canada and to be lower in Europe. In this environment, the company’s worldwide sales of construction and forestry equipment are forecast to rise by 5 to 7 percent for fiscal 2006.

Financial Services. Fiscal year net income in 2006 for the company’s Financial Services operations, which primarily include its credit and health care operations, is forecast to be about $565 million (approximately $340 million excluding the gain on the sale of the health care operations). Net income for the credit operations is expected to improve due to growth in the credit portfolio.

SAFE HARBOR STATEMENT

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Statements under “Overview,” “Market Conditions and Outlook” and other statements herein that relate to future operating periods are subject to important risks and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect particular lines of business, while others could affect all of the company’s businesses.

Forward looking statements involve certain factors that are subject to change, including for the company’s agricultural equipment segment the many interrelated factors that affect farmers’ confidence, including worldwide demand for agricultural products, world grain stocks, weather and soil conditions, harvest yields, prices realized for commodities and livestock, crop production expenses (most notably fuel and fertilizer costs), availability of transport for crops, the growth of non-food uses for some crops, real estate values, available acreage for farming, the land ownership policies of various governments, changes in government farm programs, international reaction to such programs, animal diseases (including bovine spongiform encephalopathy, commonly known as “mad cow” disease and avian flu), crop pests and diseases (including Asian rust), and the level of farm product exports (including concerns about genetically modified organisms). The success of the fall harvest and the prices realized by farmers for their crops especially affect retail sales of agricultural equipment in the winter.

Factors affecting the outlook for the company’s commercial and consumer equipment segment include weather conditions, general economic conditions in these markets, consumer confidence, consumer borrowing patterns, consumer purchasing preferences, housing starts, and spending by municipalities and golf courses.

The number of housing starts, interest rates and consumer spending patterns are especially important to sales of the company’s construction equipment. The levels of public and non-residential construction also impact the results of the company’s construction and forestry segment. Prices for pulp, lumber and structural panels are important to sales of forestry equipment.

All of the company’s businesses and its reported results are affected by general economic conditions in and the political stability of global markets in which the company operates; production, design and technological difficulties, including capacity and supply constraints and prices, including for supply commodities such as steel and rubber; the success of new product introduction initiatives and customer acceptance of new products; oil and energy prices and supplies; the availability and cost of freight; trade, monetary and fiscal policies of various countries, wars and other international conflicts and the threat thereof; actions by the U.S. Federal Reserve Board and other central banks; actions by the U.S. Securities and Exchange Commission; actions by environmental regulatory agencies, including those related to engine emissions and the risk of global warming; actions by other regulatory bodies; actions by rating agencies;

capital market disruptions; inflation and deflation rates, interest rate levels and foreign currency exchange rates; customer borrowing and repayment practices, and the number of customer loan delinquencies and defaults; actions of competitors in the various industries in which the company competes, particularly price discounting; dealer practices especially as to levels of new and used field inventories; labor relations; changes to accounting standards; the effects of terrorism and the response thereto; and legislation affecting the sectors in which the company operates. Company results are also affected by changes in the level of employee retirement benefits, changes in market values of investment assets and the level of interest rates, which impact retirement benefit costs, and significant changes in health care costs. Other factors that could affect results are changes in company declared dividends, acquisitions and divestitures of businesses, common stock issuances and repurchases, and the issuance and retirement of company debt.

The company’s outlook is based upon assumptions relating to the factors described above, which are sometimes based upon estimates and data prepared by government agencies. Such estimates and data are often revised. The company, however, undertakes no obligation to update or revise its outlook, whether as a result of new developments or otherwise. Further information concerning the company and its businesses, including factors that potentially could materially affect the company’s financial results, is included in other filings with the U.S. Securities and Exchange Commission.

2004 COMPARED WITH 2003

CONSOLIDATED RESULTS

Worldwide net income in 2004 was $1,406 million, or $5.56 per share diluted ($5.69 basic), compared with $643 million, or $2.64 per share diluted ($2.68 basic), in 2003. Net sales and revenues increased 29 percent to $19,986 million in 2004, compared with $15,535 million in 2003. Net sales of the Equipment Operations increased 32 percent in 2004 to $17,673 million from $13,349 million in 2003. Net sales increased primarily due to higher shipments. Net sales in the U.S. and Canada rose 33 percent in 2004. Outside the U.S. and Canada, net sales increased by 20 percent in 2004, excluding currency translation, and by 30 percent on a reported basis.

Worldwide Equipment Operations, which exclude the Financial Services operations, had an operating profit of $1,905 million in 2004, compared with $708 million in 2003. Operating profit increased primarily due to increased shipments and price realization. The increase in operating profit was partially offset by a larger provision for employee bonuses and higher raw material costs. The larger provision for bonuses was driven by the strong performance in the Equipment Operations.

The Equipment Operations’ net income was $1,097 million in 2004, compared with $305 million in 2003. The same operating factors mentioned above affected these results. In addition, the results in 2004 benefited from a lower effective tax rate and a decrease in interest expense.

Net income of the company’s Financial Services operations in 2004 was $309 million, compared with $330 million in 2003. The decrease was primarily due to higher administrative costs, lower credit margins and increased medical claims costs. Additional information is presented in the following discussion of the credit and “Other” operations.

The cost of sales to net sales ratio for 2004 was 76.8 percent, compared to 80.5 percent in 2003. The decrease in the ratio was primarily due to manufacturing efficiencies related to higher production and sales, and improved price realization. Partially offsetting these factors were the higher employee performance bonus provision and increased costs for raw material, such as steel and rubber.

Finance and interest income decreased in 2004 primarily due to a decrease in rental income on operating leases and lower average finance rates. Health care premiums and fees increased, compared to 2003, primarily due to higher insured enrollment, while health care claims and costs increased primarily due to higher medical costs and an increase in enrollment. Other income increased in 2004 primarily due to service income related to Nortrax, Inc., Nortrax Investments, Inc. and Ontrac Holdings, Inc. (collectively called Nortrax), which were consolidated in 2004, and a gain from the sale of the company’s 49 percent ownership in Sunstate Equipment Co., LLC, an equipment rental company. Selling, administrative and general expenses were higher in 2004 primarily due to a higher employee performance bonus provision, the consolidation of Nortrax and foreign currency exchange rate effects. Other operating expenses increased primarily as a result of the consolidation of Nortrax and an increase in service expense.

BUSINESS SEGMENT RESULTS

Worldwide Agricultural Equipment Operations

The agricultural equipment segment had an operating profit of $1,072 million in 2004, compared with $329 million in 2003. Net sales increased 31 percent in 2004 primarily due to higher shipments, reflecting strong retail demand, as well as the translation effect of exchange rates and improved price realization. The operating profit improvement was primarily due to higher worldwide sales, efficiencies related to stronger production volumes, and improved price realization. Offsetting these factors were the higher provision for performance bonuses and increased raw material costs.

Worldwide Commercial and Consumer Equipment Operations

The commercial and consumer equipment segment had an operating profit of $246 million in 2004, compared with $227 million in 2003. Net sales increased 16 percent in 2004 primarily due to higher volumes. The improved operating profit was primarily due to higher sales and production volumes. Partially offsetting these factors were an increase in the performance bonus provision in addition to higher costs for freight and raw materials.

Worldwide Construction and Forestry Operations

The construction and forestry segment had an operating profit of $587 million in 2004, compared with $152 million in 2003. Sales increased 54 percent in 2004. The increase in sales was primarily due to higher volumes. The operating profit improvement was primarily due to higher sales, efficiencies related to stronger production volumes, and improved price realization. Partially offsetting these factors were a larger performance bonus provision and higher raw material costs. The results in 2004 also included a $30 million pretax gain from the sale of an equipment rental company.

Worldwide Credit Operations

The operating profit of the credit operations was $466 million in 2004, compared with $474 million in 2003. Operating profit in 2004 was lower than in 2003 due primarily to higher administrative costs, partly related to a higher provision for performance bonuses in connection with the overall company profitability, and lower margins. Partially offsetting these factors was a lower provision for credit losses, reflecting solid portfolio quality. Total revenues of the credit operations decreased 4 percent in 2004, primarily reflecting lower rental income from operating leases related to the lower level of leases, and lower average finance rates. The average balance of receivables and leases financed was 2 percent higher in 2004, compared with 2003. A decrease in funding rates in 2004 resulted in a 3 percent decrease in interest expense, compared with 2003. The credit operations’ ratio of earnings to fixed charges was 2.12 to 1 in 2004, compared to 2.07 to 1 in 2003.

Worldwide Other Operations

The company’s other operations, which consisted primarily of the health care operations, had an operating profit of $5 million in 2004, compared with $30 million in 2003. The decrease was primarily due to increased medical claims costs and a higher performance bonus provision related to overall company profitability.

CAPITAL RESOURCES AND LIQUIDITY

The discussion of capital resources and liquidity has been organized to review separately, where appropriate, the company’s Equipment Operations, Financial Services operations and the consolidated totals.

EQUIPMENT OPERATIONS

The company’s equipment businesses are capital intensive and are subject to seasonal variations in financing requirements for inventories and certain receivables from dealers. The Equipment Operations sell most of their trade receivables to the company’s credit operations. As a result, the seasonal variations in financing requirements of the Equipment Operations have decreased. To the extent necessary, funds provided from operations are supplemented by external financing sources.

Cash provided by operating activities during 2005 was $1,661 million primarily due to net income adjusted for non-cash provisions and an increase in accounts payable and accrued expenses. The operating cash flows, a decrease in receivables from Financial Services of $1,133 million, a decrease in cash and cash equivalents of $1,016 million, proceeds from maturities and sales of marketable securities of $1,016 million, and proceeds from the issuance of common stock of $154 million (which were the result of the exercise of stock options) were used primarily to purchase marketable securities of $3,175 million, repurchase common stock for $919 million, fund purchases of property and equipment of $467 million, pay dividends to stockholders of $290 million and acquire businesses for $170 million.

Over the last three years, operating activities have provided an aggregate of $4,248 million in cash. In addition, proceeds from maturities and sales of marketable securities were $1,016 million, proceeds from the issuance of common stock were $579 million and the proceeds from sales of businesses were $163 million. The aggregate amount of these cash flows was used mainly to purchase marketable securities of $3,175 million, fund purchases of property and equipment of $1,116 million, repurchase common stock for $1,112 million, pay dividends to stockholders of $747 million, increase receivables from Financial Services by $473 million, decrease borrowings by $433 million and acquire businesses for $373 million. Cash and cash equivalents also decreased $1,306 million over the three-year period.

Trade receivables held by the Equipment Operations increased by $92 million during 2005. The Equipment Operations sell a significant portion of their trade receivables to the credit operations (see following consolidated discussion).

Inventories increased by $136 million in 2005. Most of these inventories are valued on the last-in, first-out (LIFO) method. The ratios of inventories on a first-in, first-out (FIFO) basis, which approximates current cost, to fiscal year cost of sales were 22 percent at October 31, 2005 and 2004.

Total interest-bearing debt of the Equipment Operations was $3,101 million at the end of 2005, compared with $3,040 million at the end of 2004 and $3,304 million at the end of 2003. The ratio of total debt to total capital (total interest-bearing debt and stockholders’ equity) at the end of 2005, 2004 and 2003 was 31 percent, 32 percent and 45 percent, respectively.

During 2005, the Equipment Operations retired $77 million of long-term borrowings.

Capital expenditures for the Equipment Operations in 2006 are estimated to be approximately $580 million.

FINANCIAL SERVICES

The Financial Services’ credit operations rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolios. Their primary sources of funds for this purpose are a combination of commercial paper, term debt, securitization of retail notes through secured financings or sales, and equity capital.

Cash flows from the company’s Financial Services operating activities were $585 million in 2005. Cash provided by financing activities totaled $2,770 million in 2005, representing primarily a $2,372 million increase in long-term borrowings and a $1,718 million increase in short-term borrowings, partially offset by a $1,177 million decrease in borrowings from the Equipment Operations and the payment of $167 million of dividends to Deere & Company. The cash provided by operating and financing activities was used primarily to increase receivables and leases. Cash used by investing activities totaled $3,310 million in 2005, primarily due to receivable and lease acquisitions exceeding collections and sales of equipment on operating leases by $3,302 million. Cash and cash equivalents also increased $48 million.

Over the last three years, the Financial Services operating activities have provided $1,933 million in cash. In addition, an increase in borrowings of $4,485 million, the sale of receivables of $4,407 million and the sale of equipment on operating leases of $1,352 million have provided cash inflows. These amounts have been used mainly to fund receivable and lease acquisitions, which exceeded collections by $11,202 million, and the payment of dividends to Deere & Company of $859 million. Cash and cash equivalents also increased $138 million over the three-year period.

Receivables and leases increased by $3,057 million in 2005, compared with 2004. Acquisition volumes of receivables and leases increased 9 percent in 2005, compared with 2004. The volumes of wholesale notes, leases, trade receivables, retail notes and revolving charge accounts increased approximately 23 percent, 16 percent, 11 percent, 5 percent and 5 percent, respectively. The credit operations had proceeds from sales of receivables of $133 million during 2005, compared with $2,334 million in 2004 (see Note 10). At October 31, 2005 and 2004, net receivables and leases administered, which include receivables previously sold but still administered, were $20,298 million and $18,620 million, respectively.

Trade receivables held by the credit operations decreased by $144 million in 2005. The Equipment Operations sell a significant portion of their trade receivables to the credit operations (see following consolidated discussion).

Total external interest-bearing debt of the credit operations was $15,522 million at the end of 2005, which included $1,474 million of secured borrowings, compared with $11,508 million at the end of 2004 and $11,447 million at the end of 2003. Total external borrowings have increased generally corresponding with the level of the receivable and lease portfolio, the level of cash and cash equivalents and the change in payables owed to the Equipment Operations. The credit subsidiaries’ ratio of total interest-bearing debt to total stockholder’s equity was 7.2 to 1 at the end of 2005, 6.4 to 1 at the end of 2004 and 5.6 to 1 at the end of 2003. The ratio of total interest-bearing debt, excluding secured borrowings, to stockholder’s equity was 6.5 to 1 at October 31, 2005.

The credit operations utilize a revolving bank conduit facility, special purpose entity (SPE), to securitize floating rate retail notes. This facility has the capacity, or “purchase limit, “of up to $2 billion in secured financings or sales outstanding at any time. Multiple bank conduits participate in this facility, which has no final maturity date. Instead, upon the credit operations’ request each bank conduit may elect to renew its commitment on an annual basis. If this facility is not renewed, the credit operations would liquidate the securitizations as the retail notes are collected. At October 31, 2005 $1,755 million was outstanding under the facility of which $695 million was recorded on the balance sheet (see Note 10).

During 2005, the credit operations issued $3,805 million and retired $1,433 million of long-term borrowings, which were primarily medium-term notes.

Capital expenditures for Financial Services in 2006 are estimated to be approximately $290 million, primarily related to the company’s wind energy entities (see Note 1).

CONSOLIDATED

Sources of liquidity for the company include cash and cash equivalents, marketable securities, funds from operations, the issuance of commercial paper and term debt, the securitization of retail notes through secured financings or sales, and committed and uncommitted bank lines of credit.

Because of the multiple funding sources that have been and continue to be available to the company, the company expects to have sufficient sources of liquidity to meet its funding needs. The company’s worldwide commercial paper outstanding at October 31, 2005 and 2004 was approximately $2.2 billion and $1.9 billion, respectively, while the total cash and cash equivalents position was $2.3 billion and $3.2 billion, respectively. The company has for many years accessed diverse funding sources, including short-term and long-term unsecured debt capital markets globally, as well as public and private securitization markets in the U.S. and Canada.

The company also has access to bank lines of credit with various U.S. and foreign banks. Some of the lines are available to both Deere & Company and John Deere Capital Corporation. Worldwide lines of credit totaled $2,594 million at October 31, 2005, $272 million of which were unused. For the purpose of computing unused credit lines, commercial paper and short-term bank borrowings, excluding secured borrowings and the current portion of long-term borrowings, were considered to constitute utilization. Included in the total credit lines at October 31, 2005 were long-term credit facility agreements of $1,250 million, expiring in February 2009, and $625 million, expiring in February 2010, for a total of $1,875 million long-term.

The credit agreement requires the Equipment Operations to maintain a ratio of total debt to total capital (total debt and stockholders’ equity excluding accumulated other comprehensive income (loss)) of 65 percent or less at the end of each fiscal quarter. At October 31, 2005, the ratio was 31 percent. Under this provision, the company’s excess equity capacity and retained earnings balance free of restriction at October 31, 2005 was $5,208 million. Alternatively under this provision, the Equipment Operations had the capacity to incur additional debt of $9,673 million at October 31, 2005.

To access public debt capital markets, the company relies on credit rating agencies to assign short-term and long-term credit ratings to the company’s securities as an indicator of credit quality for fixed income investors. A security rating is not a recommendation by the rating agency to buy, sell or hold company securities. A credit rating agency may change or withdraw company ratings based on its assessment of the company’s current and

future ability to meet interest and principal repayment obligations. Lower credit ratings generally result in higher borrowing costs and reduced access to debt capital markets.

The senior long-term and short-term debt ratings and outlook currently assigned to unsecured company securities by the rating agencies engaged by the company are as follows:

	Senior
	Long-Term	Short-Term	Outlook

Moody’s Investors Service, Inc.	A3	Prime-2	Stable

Standard & Poor’s	A-	A-2	Positive

Marketable securities increased by $2,203 million during 2005. This is primarily due to the Equipment Operations investing a portion of their cash and cash equivalents into marketable securities in 2005. The Equipment Operations marketable securities are in addition to those held by the Financial Services operations.

Trade accounts and notes receivable primarily arise from sales of goods to dealers. Trade receivables decreased by $89 million in 2005. The ratios of trade accounts and notes receivable at October 31 to fiscal year net sales were 16 percent in 2005, compared with 18 percent in 2004. Total worldwide agricultural equipment trade receivables decreased $64 million, commercial and consumer equipment receivables decreased $92 million and construction and forestry receivables increased $67 million. The collection period for trade receivables averages less than 12 months. The percentage of trade receivables outstanding for a period exceeding 12 months was 2 percent at October 31, 2005 and 2004.

Stockholders’ equity was $6,852 million at October 31, 2005, compared with $6,393 million at October 31, 2004. The increase of $459 million resulted primarily from net income of $1,447 million, partially offset by an increase in treasury stock of $703 million and dividends declared of $293 million.

OFF-BALANCE-SHEET ARRANGEMENTS

The company’s credit operations have periodically securitized and sold retail notes to special purpose entities (SPEs) in securitizations of retail notes. The credit operations used these SPEs in a manner consistent with conventional practices in the securitization industry to isolate the retail notes for the benefit of securitization investors. The use of the SPEs enabled these operations to access the highly liquid and efficient securitization markets for the sales of these types of financial assets. The amounts of funding the company chooses to obtain from securitizations reflect such factors as capital market accessibility, relative costs of funding sources and assets available for securitization. The company’s total exposure to recourse provisions related to securitized retail notes, which were sold in prior periods, was $151 million and the total assets held by the SPEs related to these securitizations were $1,923 million at October 31, 2005.

At October 31, 2005, the company had guaranteed approximately $40 million of residual values for two operating leases related to an administrative office and a manufacturing building. The company is obligated at the end of each lease term to pay to the lessor any reduction in market value of the leased property up to the guaranteed residual value. The company recognizes the expense for these future estimated lease payments over the terms of the operating leases and had accrued losses of $10 million related to these agreements at October 31, 2005. The leases have terms expiring in 2006 and 2007.

At October 31, 2005, the company had approximately $145 million of guarantees issued primarily to banks outside the U.S. related to third-party receivables for the retail financing of John Deere equipment. The company may recover a portion of any required payments incurred under these agreements from repossession of the equipment collateralizing the receivables. At October 31, 2005, the company had accrued losses of approximately $2 million under these agreements. The maximum remaining term of the receivables guaranteed at October 31, 2005 was approximately eight years.

The company’s credit operations offer crop insurance products through a managing general agency agreement (MGA) with an insurance company. The credit operations have guaranteed certain obligations under the MGA, including the obligation to pay the insurance company for any uncollected premiums. At October 31, 2005, the maximum exposure for uncollected premiums was approximately $14 million. Substantially all of the insurance risk under the MGA has been mitigated by public (U.S. Department of Agriculture) and private reinsurance. In the event of a complete crop failure on every policy and the default of all the public and private reinsurance, the company would be required to reimburse the insurance company approximately $633 million at October 31, 2005. The company believes the likelihood of this event is extremely remote. At October 31, 2005, the company’s accrued probable losses are approximately $.1 million under this agreement.

AGGREGATE CONTRACTUAL OBLIGATIONS

Most of the company’s contractual obligations to make payments to third parties are debt obligations. In addition, the company has off-balance-sheet obligations for purchases of raw materials, services and property and equipment along with agreements for future lease payments. The payment schedule for these contractual obligations in millions of dollars is as follows:

			Less							More
			than			1-3		3-5		than
	Total		1 year			years		years		5 years
Debt*
Equipment Operations	$	3,058	$	676		$	9	$	522	$	1,851
Financial Services	15,471		6,199		**	5,239		1,874		2,159
Total	18,529		6,875			5,248		2,396		4,010
Purchase obligations	2,567		2,546			12		8		1
Operating leases	358		93			132		59		74
Capital leases	20		12			2		2		4

Contractual obligations	$	21,474	$	9,526		$	5,394	$	2,465	$	4,089

* Principal payments.

** See Note 16.

CRITICAL ACCOUNTING POLICIES

The preparation of the company’s consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect reported amounts of assets, liabilities, revenues and expenses. Changes in these estimates and assumptions could have a significant effect on the financial statements. The accounting policies below are those management believes are the most critical to the preparation of the company’s financial statements and require the most difficult, subjective or complex judgments. The company’s other accounting policies are described in the Notes to the Consolidated Financial Statements.

Sales Incentives

At the time a sale to a dealer is recognized, the company records an estimate of the future sales incentive costs for allowances and financing programs that will be due when the dealer sells the equipment to a retail customer. The estimate is based on historical data, announced incentive programs, field inventory levels and settlement volumes. The final cost of these programs and the amount of accrual required for a specific sale is fully determined when the dealer sells the equipment to the retail customer. This is due to numerous programs available at any particular time and new programs that may be announced after the company records the sale. Changes in the mix and types of programs affect these estimates, which are reviewed quarterly.

The sales incentive accruals at October 31, 2005, 2004 and 2003 were $592 million, $540 million and $444 million, respectively. The increases in 2005 and 2004 were primarily due to the increases in sales.

The estimation of the sales incentive accrual is impacted by many assumptions. One of the key assumptions is the historical percentage of sales incentive costs to settlements from dealers. Over the last five fiscal years, this percent has varied by approximately plus or minus .5 percent, compared to the average sales incentive costs to settlements percentage during that period. Holding other assumptions constant, if this cost experience percentage were to increase or decrease .5 percent, the sales incentive accrual at October 31, 2005 would increase or decrease by approximately $25 million.

Product Warranties

At the time a sale to a dealer is recognized, the company records the estimated future warranty costs. The company generally determines its total warranty liability by applying historical claims rate experience to the estimated amount of equipment that has been sold and is still under warranty based on dealer inventories and retail sales. The historical claims rate is primarily determined by a review of five-year claims costs and current quality developments. Variances in claims experience and the type of warranty programs affect these estimates, which are reviewed quarterly.

The product warranty accruals at October 31, 2005, 2004 and 2003 were $535 million, $458 million and $389 million, respectively. The increases in 2005 and 2004 were primarily due to the increases in sales volume and special warranty programs.

Estimates used to determine the product warranty accruals are significantly affected by the historical percentage of warranty claims costs to sales. Over the last five fiscal years, this loss experience percent has varied by approximately plus or minus .2 percent, compared to the average warranty costs to sales percentage during that period. Holding other assumptions constant, if this estimated cost experience percentage were to increase or decrease .2 percent, the warranty accrual at October 31, 2005 would increase or decrease by approximately $55 million.

Postretirement Benefit Obligations

Pension obligations and other postretirement employee benefit (OPEB) obligations are based on various assumptions used by the company’s actuaries in calculating these amounts. These assumptions include discount rates, health care cost trend rates, expected return on plan assets, compensation increases, retirement rates, mortality rates and other factors. Actual results that differ from the assumptions and changes in assumptions affect future expenses and obligations.

The pension net assets (liabilities) recognized on the balance sheet at October 31, 2005, 2004 and 2003 were $1,986 million, $1,894 million and $(1,419) million, respectively. The OPEB liabilities on these dates were $2,455 million, $2,623 million and $2,385 million, respectively. The increase in the pension net assets and decrease in the OPEB liability during 2005 were primarily related to voluntary company contributions to plan assets. The change from a pension liability to a pension asset during 2004 was primarily due to the elimination of certain minimum pension liabilities as a result of voluntary company contributions and the return on plan assets during 2004.

The effect of hypothetical changes to selected assumptions on the company’s major U.S. retirement benefit plans would be as follows in millions of dollars:

		October 31, 2005		2006
		Increase		Increase
	Percentage	(Decrease)		(Decrease)
Assumptions	Change	PBO/APBO*		Expense
Pension
Discount rate**	+/-.5	$	(384)/422	$	(29)/30
Expected return on assets	+/-.5			(38)/38
OPEB
Discount rate**	+/-.5	(322)/342		(45)/50
Expected return on assets	+/-.5			(7)/7
Health care cost trend rate**	+/-1.0	647/(570)		144/(126)

* Projected benefit obligation (PBO) for pension plans and accumulated postretirement benefit obligation (APBO) for OPEB plans.

** Pretax impact on service cost, interest cost and amortization of gains or losses.

Allowance for Credit Losses

The allowance for credit losses represents an estimate of the losses expected from the company’s receivable portfolio. The level of the allowance is based on many quantitative and qualitative factors, including historical loss experience by product category, portfolio duration, delinquency trends, economic conditions and credit risk quality. The adequacy of the allowance is assessed quarterly. Different assumptions or changes in economic conditions would result in changes to the allowance for credit losses and the provision for credit losses.

The total allowance for credit losses at October 31, 2005, 2004 and 2003 was $194 million, $201 million and $207 million, respectively. The decreases in 2005 and 2004 were primarily due to improved credit quality and delinquency trends.

The assumptions used in evaluating the company’s exposure to credit losses involve estimates and significant judgment. The historical loss experience on the receivable portfolios represents one of the key assumptions involved in determining the allowance for credit losses. Over the last five fiscal years, the average loss experience has fluctuated between 2 basis points and 15 basis points in any given fiscal year over the applicable prior period. Holding other estimates constant, a 5 basis point increase or decrease in estimated loss experience on the receivable portfolios would result in an increase or decrease of approximately $9 million to the allowance for credit losses at October 31, 2005.

Operating Lease Residual Values

The carrying value of equipment on operating leases is affected by the estimated fair values of the equipment at the end of the lease (residual values). Upon termination of the lease, the equipment is either purchased by the lessee or sold to a third party, in which case the company may record a gain or a loss for the difference between the estimated residual value and the sales price. The residual values are dependent on current economic conditions and are reviewed quarterly. Changes in residual value assumptions would affect the amount of depreciation expense and the amount of investment in equipment on operating leases.

The total operating lease residual values at October 31, 2005, 2004 and 2003 were $812 million, $803 million and $913 million, respectively. The changes in 2005 and 2004 were primarily due to the changes in the level of operating leases.

Estimates used in determining end of lease market values for equipment on operating leases significantly impact the amount and timing of depreciation expense. If future market values for this equipment were to decrease 5 percent from the company’s present estimates, the total impact would be to increase the company’s depreciation on equipment on operating leases by approximately $40 million. This amount would be charged to depreciation expense during the remaining lease terms such that the net investment in operating leases at the end of the lease terms would be equal to the revised residual values. Initial lease terms generally range from three to five years.

FINANCIAL INSTRUMENT RISK INFORMATION

The company is naturally exposed to various interest rate and foreign currency risks. As a result, the company enters into derivative transactions to manage certain of these exposures that arise in the normal course of business and not for the purpose of creating speculative positions or trading. The company’s credit operations manage the relationship of the types and amounts of their funding sources to their receivable and lease portfolio in an effort to diminish risk due to interest rate and foreign currency fluctuations, while responding to favorable financing opportunities. Accordingly, from time to time, these operations enter into interest rate swap agreements to manage their interest rate exposure. The company also has foreign currency exposures at some of its foreign and domestic operations related to buying, selling and financing in currencies other than the local currencies. The company has entered into agreements related to the management of these currency transaction risks. The credit risk under these interest rate and foreign currency agreements is not considered to be significant.

Interest Rate Risk

Quarterly, the company uses a combination of cash flow models to assess the sensitivity of its financial instruments with interest rate exposure to changes in market interest rates. The models calculate the effect of adjusting interest rates as follows. Cash flows for financing receivables are discounted at the current prevailing rate for each receivable portfolio. Cash flows for marketable securities are primarily discounted at the treasury yield curve. Cash flows for borrowings are discounted at the treasury yield curve plus a market credit spread for similarly rated borrowers. Cash flows for securitized borrowings are discounted at the industrial composite bond curve for similarly rated borrowers. Cash flows for interest rate swaps are projected and discounted using forecasted rates from the swap yield curve at the repricing dates. The net loss in these financial instruments’ fair values which would be caused by decreasing the interest rates by 10 percent from the market rates at October 31, 2005 and 2004 would have been approximately $39 million and $42 million, respectively.

Foreign Currency Risk

In the Equipment Operations, it is the company’s practice to hedge significant currency exposures. Worldwide foreign currency exposures are reviewed quarterly. Based on the Equipment Operations anticipated and committed foreign currency cash inflows and outflows for the next twelve months and the foreign currency derivatives at year end, the company estimates that a hypothetical 10 percent strengthening of the U.S. dollar relative to other currencies through 2006 would decrease the 2006 expected net cash inflows by $48 million. At last year end, a hypothetical 10 percent weakening of the U.S. dollar under similar assumptions and calculations indicated a potential $18 million adverse effect on the 2005 net cash inflows.

In the Financial Services operations, the company’s policy is to hedge the foreign currency risk if the currency of the borrowings does not match the currency of the receivable portfolio. As a result, a hypothetical 10 percent adverse change in the value of the
U.S. dollar relative to all other foreign currencies would not have a material effect on the Financial Services cash flows.

DEERE & COMPANY

STATEMENT OF CONSOLIDATED INCOME

For the Years Ended October 31, 2005, 2004 and 2003

(In millions of dollars and shares except per share amounts)

	2005		2004		2003
Net Sales and Revenues
Net sales	$	19,401.4	$	17,673.0	$	13,349.1
Finance and interest income	1,439.5		1,195.7		1,275.6
Health care premiums and fees	724.9		766.2		664.5
Other income	364.7		351.2		245.4
Total	21,930.5		19,986.1		15,534.6

Costs and Expenses
Cost of sales	15,163.4		13,567.5		10,752.7
Research and development expenses	677.3		611.6		577.3
Selling, administrative and general expenses	2,218.6		2,117.4		1,744.2
Interest expense	761.0		592.1		628.5
Health care claims and costs	573.9		650.3		536.1
Other operating expenses	380.5		333.5		324.5
Total	19,774.7		17,872.4		14,563.3

Income of Consolidated Group before Income Taxes	2,155.8		2,113.7		971.3
Provision for income taxes	715.1		708.5		336.9
Income of Consolidated Group	1,440.7		1,405.2		634.4

Equity in Income of Unconsolidated Affiliates
Credit	.6		.6		.2
Other	5.5		.3		8.5
Total	6.1		.9		8.7

Net Income	$	1,446.8	$	1,406.1	$	643.1

Per Share Data
Net income – basic	$	5.95	$	5.69	$	2.68
Net income – diluted	$	5.87	$	5.56	$	2.64
Dividends declared	$	1.21	$	1.06	$	.88

Average Shares Outstanding
Basic	243.3		247.2		240.2
Diluted	246.4		253.1		243.3

The notes to consolidated financial statements are an integral part of this statement.

DEERE & COMPANY

CONSOLIDATED BALANCE SHEET

As of October 31, 2005 and 2004

(In millions of dollars except per share amounts)

	2005			2004
ASSETS
Cash and cash equivalents	$	2,258.2		$	3,181.1
Marketable securities	2,449.7			246.7
Receivables from unconsolidated affiliates	18.4			17.6
Trade accounts and notes receivable - net	3,117.8			3,206.9
Financing receivables - net	12,869.4			11,232.6
Restricted financing receivables - net	1,457.9
Other receivables	561.1			663.0
Equipment on operating leases - net	1,335.6			1,296.9
Inventories	2,134.9			1,999.1
Property and equipment - net	2,364.8			2,161.6
Investments in unconsolidated affiliates	106.7			106.9
Goodwill	1,088.5			973.6
Other intangible assets - net	18.3			21.7
Prepaid pension costs	2,662.7			2,493.1
Other assets	430.9			515.4
Deferred income taxes	628.1			528.1
Deferred charges	133.8			109.7

Total Assets	$	33,636.8		$	28,754.0

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES
Short-term borrowings	$	6,883.8		$	3,457.5
Payables to unconsolidated affiliates	140.8			142.3
Accounts payable and accrued expenses	4,384.2			3,973.6
Health care claims and reserves	128.4			135.9
Accrued taxes	214.3			179.2
Deferred income taxes	62.7			62.6
Long-term borrowings	11,738.8			11,090.4
Retirement benefit accruals and other liabilities	3,232.3			3,319.7
Total liabilities	26,785.3			22,361.2

STOCKHOLDERS’ EQUITY
Common stock, $1 par value (authorized – 600,000,000 shares; issued – 268,215,602 shares in 2005 and 2004), at stated value	2,081.7			2,043.5
Common stock in treasury, 31,343,892 shares in 2005 and 21,356,458 shares in 2004, at cost	(1,743.5		)	(1,040.4		)
Unamortized restricted stock compensation	(16.4		)	(12.7		)
Retained earnings	6,556.1			5,445.1
Total	6,877.9			6,435.5
Minimum pension liability adjustment	(108.9		)	(57.2		)
Cumulative translation adjustment	70.6			9.1
Unrealized gain (loss) on derivatives	6.2			(6.4		)
Unrealized gain on investments	5.7			11.8
Accumulated other comprehensive income (loss)	(26.4		)	(42.7		)
Total stockholders’ equity	6,851.5			6,392.8

Total Liabilities and Stockholders’ Equity	$	33,636.8		$	28,754.0

The notes to consolidated financial statements are an integral part of this statement.

DEERE & COMPANY

STATEMENT OF CONSOLIDATED CASH FLOWS

For the Years Ended October 31, 2005, 2004 and 2003

(In millions of dollars)

	2005			2004			2003
Cash Flows from Operating Activities
Net income	$	1,446.8		$	1,406.1		$	643.1
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for doubtful receivables	26.1			51.4			106.8
Provision for depreciation and amortization	636.5			621.0			631.4
Undistributed earnings of unconsolidated affiliates	(4.1		)	20.7			(5.5		)
Provision (credit) for deferred income taxes	(49.3		)	385.0			33.1
Changes in assets and liabilities:
Trade, notes and financing receivables related to sales of equipment	(468.6		)	(863.7		)	497.9
Inventories	(324.1		)	(501.3		)	(72.8		)
Accounts payable and accrued expenses	336.9			872.7			(184.9		)
Retirement benefit accruals/prepaid pension costs	(312.0		)	(1,245.7		)	(175.9		)
Other	(71.6		)	(250.1		)	163.3
Net cash provided by operating activities	1,216.6			496.1			1,636.5

Cash Flows from Investing Activities
Collections of receivables	8,076.5			7,611.6			6,844.0
Proceeds from sales of financing receivables	55.2			2,206.8			1,704.0
Proceeds from maturities and sales of marketable securities	1,065.0			66.7			76.4
Proceeds from sales of equipment on operating leases	399.1			444.4			514.5
Proceeds from sales of businesses	50.0			90.6			22.5
Cost of receivables acquired	(10,488.8		)	(10,493.5		)	(9,421.8		)
Purchases of marketable securities	(3,276.3		)	(79.6		)	(118.2		)
Purchases of property and equipment	(512.6		)	(363.8		)	(309.6		)
Cost of operating leases acquired	(342.0		)	(290.6		)	(258.9		)
Acquisitions of businesses, net of cash acquired	(169.7		)	(192.9		)	(10.6		)
Increase in receivables from unconsolidated affiliates				(68.7		)	(6.8		)
Other	(29.6		)	(.1		)	(32.4		)
Net cash used for investing activities	(5,173.2		)	(1,069.1		)	(996.9		)

Cash Flows from Financing Activities
Increase (decrease) in short-term borrowings	1,814.3			(356.0		)	126.9
Proceeds from long-term borrowings	3,805.4			2,189.5			3,312.9
Principal payments on long-term borrowings	(1,509.7		)	(2,312.7		)	(2,542.7		)
Proceeds from issuance of common stock	153.6			250.8			174.5
Repurchases of common stock	(918.9		)	(193.1		)	(.4		)
Dividends paid	(289.7		)	(246.6		)	(210.5		)
Other	(1.9		)	(.4		)	(1.8		)
Net cash provided by (used for) financing activities	3,053.1			(668.5		)	858.9

Effect of Exchange Rate Changes on Cash	(19.4		)	38.1			71.1

Net Increase (Decrease) in Cash and Cash Equivalents	(922.9		)	(1,203.4		)	1,569.6
Cash and Cash Equivalents at Beginning of Year	3,181.1			4,384.5			2,814.9
Cash and Cash Equivalents at End of Year	$	2,258.2		$	3,181.1		$	4,384.5

The notes to consolidated financial statements are an integral part of this statement.

DEERE & COMPANY

STATEMENT OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY

For the Years Ended October 31, 2003, 2004 and 2005

(In millions of dollars)

	Total Equity			Common Stock		Treasury Stock			Unamortized Restricted Stock			Retained Earnings			Other Comprehensive Income (Loss)

Balance October 31, 2002	$	3,163.2		$	1,957.0	$	(1,322.2	)	$	(17.8	)	$	3,912.6		$	(1,366.4	)
Comprehensive income (loss)
Net income	643.1											643.1
Other comprehensive income (loss)
Minimum pension liability adjustment	(45.9		)												(45.9		)
Cumulative translation adjustment	213.9														213.9
Unrealized gain on derivatives	24.6														24.6
Unrealized gain on investments	5.8														5.8
Total comprehensive income	841.5
Repurchases of common stock	(.4		)			(.4		)
Treasury shares reissued	181.2					181.2
Dividends declared	(211.2		)									(211.2		)
Other stockholder transactions	27.8			30.8					12.0			(15.0		)
Balance October 31, 2003	4,002.1			1,987.8		(1,141.4		)	(5.8		)	4,329.5			(1,168.0		)
Comprehensive income
Net income	1,406.1											1,406.1
Other comprehensive income
Minimum pension liability adjustment	1,020.8														1,020.8
Cumulative translation adjustment	88.3														88.3
Unrealized gain on derivatives	16.0														16.0
Unrealized gain on investments	.2														.2
Total comprehensive income	2,531.4
Repurchases of common stock	(193.1		)			(193.1		)
Treasury shares reissued	294.1					294.1
Dividends declared	(262.2		)									(262.2		)
Other stockholder transactions	20.5			55.7					(6.9		)	(28.3		)
Balance October 31, 2004	6,392.8			2,043.5		(1,040.4		)	(12.7		)	5,445.1			(42.7		)
Comprehensive income
Net income	1,446.8											1,446.8
Other comprehensive income (loss)
Minimum pension liability adjustment	(51.7		)												(51.7		)
Cumulative translation adjustment	61.5														61.5
Unrealized gain on derivatives	12.6														12.6
Unrealized loss on investments	(6.1		)												(6.1		)
Total comprehensive income	1,463.1
Repurchases of common stock	(918.9		)			(918.9		)
Treasury shares reissued	215.8					215.8
Dividends declared	(293.2		)									(293.2		)
Other stockholder transactions	(8.1		)	38.2					(3.7		)	(42.6		)
Balance October 31, 2005	$	6,851.5		$	2,081.7	$	(1,743.5	)	$	(16.4	)	$	6,556.1		$	(26.4	)

The notes to consolidated financial statements are an integral part of this statement.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following are significant accounting policies in addition to those included in other notes to the consolidated financial statements.

Principles of Consolidation

The consolidated financial statements represent the consolidation of all companies in which Deere & Company has a controlling interest. Deere & Company records its investment in each unconsolidated affiliated company (generally 20 to 50 percent ownership) at its related equity in the net assets of such affiliate. Other investments (less than 20 percent ownership) are recorded at cost. Consolidated retained earnings at October 31, 2005 include undistributed earnings of the unconsolidated affiliates of $10 million. Dividends from unconsolidated affiliates were $2 million in 2005, $22 million in 2004 and $3 million in 2003 (see Note 6).

Certain special purpose entities (SPEs) related to the securitization of financing receivables for secured borrowings, which are also variable interest entities (VIEs), are consolidated since the company is the primary beneficiary for these VIEs. Certain other SPEs related to the securitization and sale of financing receivables, which are also VIEs, are not consolidated since the company does not control these entities, and they either meet the requirements of qualified special purpose entities, or the company is not the primary beneficiary. In addition, the specified assets in these unconsolidated VIEs related to securitizations are not the only source of payment for specified liabilities or other interests of these VIEs and, therefore, do not require consolidation (see Note 10).

Certain amounts for prior years have been reclassified to conform with 2005 financial statement presentations.

Structure of Operations

Certain information in the notes and related commentary are presented in a format which includes data grouped as follows:

Equipment Operations — Includes the company’s agricultural equipment, commercial and consumer equipment and construction and forestry operations with Financial Services reflected on the equity basis.

Financial Services — Includes the company’s credit, health care and certain miscellaneous service operations.

Consolidated — Represents the consolidation of the Equipment Operations and Financial Services. References to “Deere & Company” or “the company” refer to the entire enterprise.

Use of Estimates in Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Actual results could differ from those estimates.

Revenue Recognition

Sales of equipment and service parts to dealers are recorded when title and all risk of ownership are transferred to the independent dealer based on the agreement in effect with the dealer. In the U.S. and most international locations, this transfer occurs primarily when goods are shipped to the dealer. In Canada and some other international locations, certain goods are shipped to dealers on a consignment basis under which title and risk of ownership are not transferred to the dealer. Accordingly, in these locations, sales are not recorded until a retail customer has purchased the goods. In all cases, when a sale is recorded by the company, no significant uncertainty exists surrounding the purchaser’s obligation to pay. No right of return exists on sales of equipment. Service parts returns are estimable and accrued at the time a sale is recognized. The company makes appropriate provisions based on experience for costs such as doubtful receivables, sales incentives and product warranty.

Financing revenue is recorded over the lives of the related receivables using the interest method. Deferred costs on the origination of financing receivables are recognized as a reduction in finance revenue over the expected lives of the receivables using the interest method. Income from operating leases is recognized on a straight-line basis over the scheduled lease terms. Health care premiums and fees are recognized as earned over the terms of the policies or contracts.

Sales Incentives

Product Warranties

At the time a sale to a dealer is recognized, the company records the estimated future warranty costs. These costs are usually estimated based on historical warranty claims (see Note 20).

Securitization of Receivables

Certain financing receivables are periodically transferred to SPEs in securitization transactions (see Note 10). For securitizations that qualify as sales of receivables, the gains or losses from the sales are recognized in the period of sale based on the relative fair value of the portion sold and the portion allocated to retained interests. The retained interests are recorded at fair value estimated by discounting future cash flows. Changes in these fair values are recorded after-tax in other comprehensive income, which is part of stockholders’ equity. Other-than-temporary impairments are recorded in net income. For securitizations that qualify as collateral for secured borrowings, no gains or losses are recognized at the time of securitization. These receivables remain on the balance sheet and are classified as “Restricted financing receivables - net.” The company recognizes finance income over the lives of these receivables using the interest method.

Shipping and Handling Costs

Shipping and handling costs related to the sales of the company’s equipment are included in cost of sales.

Advertising Costs

Advertising costs are charged to expense as incurred. This expense was $157 million in 2005, $151 million in 2004 and $144 million in 2003.

Depreciation and Amortization

Property and equipment, capitalized software and other intangible assets are depreciated over their estimated useful lives using the straight-line method. Equipment on operating leases is depreciated over the terms of the leases using the straight-line method. Property and equipment expenditures for new and revised products, increased capacity and the replacement or major renewal of significant items are capitalized. Expenditures for maintenance, repairs and minor renewals are generally charged to expense as incurred.

Receivables and Allowances

All financing and trade receivables are reported on the balance sheet at outstanding principal adjusted for any charge-offs, the allowance for credit losses and doubtful accounts, and any deferred fees or costs on originated financing receivables. Allowances for credit losses and doubtful accounts are maintained in amounts considered to be appropriate in relation to the receivables outstanding based on collection experience, economic conditions and credit risk quality.

Impairment of Long-Lived Assets and Goodwill

The company evaluates the carrying value of long-lived assets (including property and equipment, goodwill and other intangible assets) when events and circumstances warrant such a review. Goodwill is also reviewed for impairment by reporting unit annually. If the carrying value of the long-lived asset is considered impaired, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the asset.

Derivative Financial Instruments

It is the company’s policy that derivative transactions are executed only to manage exposures arising in the normal course of business and not for the purpose of creating speculative positions or trading. The company’s credit operations manage the relationship of the types and amounts of their funding sources to their receivable and lease portfolio in an effort to diminish risk due to interest rate and foreign currency fluctuations, while responding to favorable financing opportunities. The company also has foreign currency exposures at some of its foreign and domestic operations related to buying, selling and financing in currencies other than the local currencies.

All derivatives are recorded at fair value on the balance sheet. Each derivative is designated as either a cash flow hedge or a fair value hedge, or remains undesignated. Changes in the fair value of derivatives that are designated and effective as cash flow hedges are recorded in other comprehensive income and reclassified to the income statement when the effects of the item being hedged are recognized in the income statement. Changes in the fair value of derivatives that are designated and effective as fair value hedges are recognized currently in net income and offset to the extent the hedge was effective by the fair value changes in the hedged item. Changes in the fair value of undesignated hedges are recognized currently in the income statement. All ineffective changes in derivative fair values are recognized currently in net income.

All designated hedges are formally documented as to the relationship with the hedged item as well as the risk-management strategy. Both at inception and on an ongoing basis the hedging instrument is assessed as to its effectiveness. If and when a derivative is determined not to be highly effective as a hedge, or the underlying hedged transaction is no longer likely to occur, or the derivative is terminated the hedge accounting discussed above is discontinued and any past or future changes in the derivative’s fair value that will not be effective as an offset to the income effects of the item being hedged are recognized currently in the income statement (see Note 25 for further information).

Health Care Claims and Reserves

Health care claims and reserves include liabilities for unpaid claims based on estimated costs of settling the claims using past experience adjusted for current trends.

Foreign Currency Translation

The functional currencies for most of the company’s foreign operations are their respective local currencies. The assets and liabilities of these operations are translated into U.S. dollars at the end of the period exchange rates, and the revenues and expenses are translated at weighted-average rates for the period. The gains or losses from these translations are included in other comprehensive income, which is part of stockholders’ equity. Gains or losses from transactions denominated in a currency other than the functional currency of the subsidiary involved and foreign exchange forward contracts and options are included in net income or other comprehensive income. The total foreign exchange pretax net loss for 2005, 2004 and 2003 was $7 million, $26 million and $6 million, respectively.

New Accounting Standard Adopted

In 2005, the company adopted Financial Accounting Standards Board (FASB) Statement No.153, Exchanges of Nonmonetary Assets an amendment of Accounting Principles Board (APB) Opinion No.29. This Statement eliminated the exception to fair value accounting for nonmonetary exchanges of similar productive assets and replaced it with an exception for nonmonetary exchanges that do not have commercial substance. Commercial substance is defined as a transaction that is expected to significantly change future cash flows as a result of the exchange. The effect of the adoption did not have a material effect on the company’s financial position or net income.

New Accounting Standards to be Adopted

In December 2004, the FASB issued Statement No.123 (revised 2004), Share-Based Payment. This Statement eliminated the alternative of accounting for share-based compensation under APB Opinion No.25. The revised standard generally requires the recognition of the cost of employee services for share-based compensation based on the grant date fair value of the equity or liability instruments issued. The effective date for the company is the beginning of fiscal year 2006. The expected impact of the adoption on the company’s net income in fiscal year 2006 will be an expense of approximately $50 million after-tax.

In November 2004, the FASB issued Statement No.151, Inventory Costs an amendment of ARB No.43, Chapter 4. This Statement clarifies that abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) should be recognized as current-period charges. It also requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The effective date is the beginning of fiscal year 2006. In May 2005, the FASB issued Statement No.154, Accounting Changes and Error Corrections a replacement of APB Opinion No.20 and FASB Statement No.3. This statement requires voluntary changes in accounting principles to be recorded retrospectively for prior periods presented rather than a cumulative adjustment in the current period. This treatment would also be required for new accounting pronouncements if there are no specific transition provisions. The accounting for changes in estimates in the current period and the accounting for errors as restatements of prior periods has not changed. The effective date is the beginning of fiscal year 2007. The adoption of these

Statements is not expected to have a material effect on the Company’s financial position or net income.

Stock-Based Compensation

In 2005 and prior years, the company used the intrinsic value method of accounting for its plans in accordance with APB Opinion No.25. No compensation expense for stock options was recognized under this method since the options’ exercise prices were not less than the market prices of the stock at the dates the options were awarded (see Note 22). The stock-based compensation expense recognized in earnings relates to restricted stock awards. For disclosure purposes under FASB Statement No.123, Accounting for Stock-Based Compensation, a binomial lattice options pricing model was used in 2005 to calculate the “fair values” of stock options, replacing the Black-Scholes model that was used in 2004 and 2003. The company believes the binomial lattice option pricing model provides a better estimate of the option’s fair value. Based on these models, the weighted-average fair values of stock options awarded during 2005, 2004 and 2003 were $19.97, $12.40 and $9.55 per option, respectively. For the pro-forma disclosure information, the compensation cost of the stock options that vest from one to three years was recognized on a straight-line basis over the three-year vesting period.

Pro forma net income and net income per share, as if the fair value method in FASB Statement No.123 had been used for stock-based compensation, and the assumptions used were as follows with dollars in millions except per share amounts:

	2005			2004			2003
Net income as reported	$	1,447		$	1,406		$	643
Add:
Stock-based employee compensation costs, net of tax, included in net income	9			5			3
Less:
Stock-based employee compensation costs, net of tax, as if fair value method had been applied	(40		)	(31		)	(32		)
Pro forma net income	$	1,416		$	1,380		$	614

Net income per share:
As reported – basic	$	5.95		$	5.69		$	2.68
Pro forma – basic	$	5.82		$	5.58		$	2.56
As reported – diluted	$	5.87		$	5.56		$	2.64
Pro forma – diluted	$	5.77		$	5.47		$	2.53
Assumptions*
Risk-free interest rate	3.8		%	2.6		%	2.4		%
Dividend yield	1.6		%	1.4		%	1.9		%
Stock volatility	26.4		%	27.8		%	29.8		%
Expected option life in years	7.5			3.2			3.4

* Weighted-averages

Acquisitions

In June 2005, the company acquired United Green Mark, Inc., an entity engaged in the wholesale distribution of irrigation, nursery, lighting and landscape material, mainly in California. The cost of the acquisition was approximately $118 million, including approximately $91 million of goodwill. The preliminary values assigned to major assets and liabilities related to this acquisition in addition to goodwill were approximately $29 million for trade receivables, $20 million for inventories, $4 million for other assets and $26 million for liabilities. This entity is included in the commercial and consumer equipment operations.

In September 2005, the company acquired an additional 48 percent ownership interest in John Deere Equipment Private Ltd., a tractor manufacturer located in India. This acquisition increases the company’s ownership percentage to 98 percent. The cost of the acquisition was $48 million, which includes goodwill of approximately $44 million. The preliminary values assigned to major assets and liabilities related to this acquisition in addition to goodwill were approximately $10 million for trade receivables, $11 million for inventories, $18 million for property and equipment, $12 million for other assets, $18 million for accounts payable and accrued expenses, and $29 million for borrowings. This entity is included in the agricultural equipment operations.

During 2005, the company made investments in the ownership of certain wind energy entities and created a business unit to provide project development, debt financing and other services to those interested in harvesting the wind. The aggregate amount of these investments was not material. This business unit is included in the credit operations.

The goodwill generated in all these acquisitions were the result of the future cash flows and related fair values of the entities acquired exceeding the fair values of the entities identifiable assets and liabilities. Certain long-lived assets are still being evaluated. The results of these operations have been included in the company’s financial statements since the date of the acquisition. The pro forma results of operations as if the acquisitions had occurred at the beginning of the fiscal year would not differ significantly from the reported results.

2. CASH FLOW INFORMATION

For purposes of the statement of consolidated cash flows, the company considers investments with original maturities of three months or less to be cash equivalents. Substantially all of the company’s short-term borrowings, excluding the current maturities of long-term borrowings, mature or may require payment within three months or less.

The Equipment Operations sell most of their trade receivables to Financial Services. These intercompany cash flows are eliminated in the consolidated cash flows.

All cash flows from the changes in trade accounts and notes receivable (see Note 8) are classified as operating activities in the Statement of Consolidated Cash Flows as these receivables arise from the sale of equipment to the company’s customers. Cash flows from financing receivables (see Note 9) that are related to the sale of equipment to the company’s customers are also included in operating activities. The remaining financing receivables are related to the financing of equipment sold by an independent dealer and are included in investing activities.

The company had non-cash operating and investing activities not included in the Statement of Consolidated Cash Flows for the transfer of inventory to equipment under operating leases of approximately $256 million,$208 million and $157 million in 2005, 2004 and 2003, respectively.

Cash payments for interest and income taxes consisted of the following in millions of dollars:

	2005			2004			2003

Interest:
Equipment Operations*	$	377		$	357		$	354
Financial Services	576			395			416
Intercompany eliminations*	(281		)	(241		)	(226		)
Consolidated	$	672		$	511		$	544

Income taxes:
Equipment Operations	$	516		$	395		$	74
Financial Services	214			167			152
Intercompany eliminations	(183		)	(138		)	(142		)
Consolidated	$	547		$	424		$	84

* Includes interest compensation to Financial Services for financing trade receivables.

3. PENSION AND OTHER POSTRETIREMENT BENEFITS

The company has several defined benefit pension plans covering its U.S. employees and employees in certain foreign countries. The company also has several defined benefit health care and life insurance plans for retired employees in the U.S. and Canada. The company uses an October 31 measurement date for these plans.

The worldwide components of net periodic pension cost and the assumptions related to the cost consisted of the following in millions of dollars and in percents:

	2005			2004			2003
Pensions
Service cost	$	144		$	130		$	111
Interest cost	452			454			450
Expected return on plan assets	(684		)	(619		)	(558		)
Amortization of actuarial loss	96			49			40
Amortization of prior service cost	43			41			40
Special early-retirement benefits				3

Net cost	$	51		$	58		$	83

Weighted-average assumptions
Discount rates	5.5		%	6.0		%	6.7		%
Rate of compensation increase	3.9		%	3.9		%	3.9		%
Expected long-term rates of return	8.5		%	8.5		%	8.5		%

The worldwide components of net periodic postretirement benefits cost and the assumptions related to the cost consisted of the following in millions of dollars and in percents:

	2005			2004			2003
Health care and life insurance
Service cost	$	83		$	99		$	88
Interest cost	299			314			287
Expected returns on plan assets	(60		)	(52		)	(39		)
Amortization of actuarial loss	297			304			176
Amortization of prior service cost	(132		)	(129		)	(2		)
Special early-retirement benefits				2

Net cost	$	487		$	538		$	510

Weighted-average assumptions
Discount rates	5.5		%	6.1		%	6.8		%
Expected long-term rates of return	8.5		%	8.5		%	8.5		%

A worldwide reconciliation of the funded status of the benefit plans and the assumptions related to the obligations at October 3l in millions of dollars follow:

	Pensions						Health Care and Life Insurance
	2005			2004			2005			2004
Change in benefit obligations
Beginning of year balance	$	(8,403	)	$	(7,790	)	$	(5,690	)	$	(5,408	)
Service cost	(144		)	(130		)	(83		)	(99		)
Interest cost	(452		)	(454		)	(299		)	(314		)
Actuarial gain (loss)	(19		)	(474		)	578			(209		)
Amendments	(13		)	(3		)	12			92
Benefits paid	530			516			262			260
Special early-retirement benefits				(3		)				(2		)
Foreign exchange and other	19			(65		)	(8		)	(10		)
End of year balance	(8,482		)	(8,403		)	(5,228		)	(5,690		)
Change in plan assets (fair value)
Beginning of year balance	7,635			5,987			686			577
Actual return on plan assets	966			594			91			60
Employer contribution	202			1,548			657			304
Benefits paid	(530		)	(516		)	(262		)	(260		)
Foreign exchange and other	11			22			5			5
End of year balance	8,284			7,635			1,177			686
Plan obligation more than plan assets	(198		)	(768		)	(4,051		)	(5,004		)
Unrecognized actuarial loss	2,186			2,551			1,862			2,768
Unrecognized prior service (credit) cost	187			217			(266		)	(387		)
Net amount recognized	2,175			2,000			(2,455		)	(2,623		)
Minimum pension liability adjustment	(189		)	(106		)
Net asset (liability) recognized	$	1,986		$	1,894		$	(2,455	)	$	(2,623	)

Amounts recognized in balance sheet
Prepaid benefit cost	$	2,663		$	2,493
Accrued benefit liability	(677		)	(599		)	$	(2,455	)	$	(2,623	)
Intangible asset	15			18
Accumulated pretax charge to other comprehensive income	174			88
Net amount recognized	$	2,175		$	2,000		$	(2,455	)	$	(2,623	)

Weighted-average assumptions
Discount rates	5.7		%	5.5		%	6.0		%	5.5		%
Rate of compensation increase	3.8		%	3.9		%

The total accumulated benefit obligations for all pension plans at October 31, 2005 and 2004 was $8,037 million and $7,954 million, respectively.

The accumulated benefit obligations and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were $831 million and $160 million, respectively, at October 31, 2005 and $732 million and $141 million, respectively, at October 31, 2004. The projected benefit obligations and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets were $947 million and $204 million, respectively, at October 31, 2005 and $4,725 million and $3,773 million, respectively, at October 31, 2004.

The benefits expected to be paid from the benefit plans, which reflect expected future years of service, and the Medicare subsidy expected to be received are as follows in millions of dollars.

	Pensions		Health Care and Life Insurance		Health Care Subsidy Receipts*
2006	$	546	$	275	$	11
2007	550		287		14
2008	562		301		15
2009	559		313		17
2010	566		327		18
2011 to 2015	3,081		1,813		109

* Medicare Part D subsidy.

The company expects to contribute approximately $160 million to its pension plans and approximately $800 million to its health care and life insurance plans in 2006, which include direct benefit payments on unfunded plans. These expected contributions also include voluntary contributions to the U.S. pension plans of approximately $115 million and the health care plans of approximately $760 million during 2006.

The annual rates of increase in the per capita cost of covered health care benefits (the health care cost trend rates) used to determine benefit obligations at October 31, 2005 were assumed to be 8.0 percent for 2006 graded down evenly to 5.0 percent for 2009 and all future years. The obligations at October 31, 2004 assumed 9.0 percent for 2005 graded down evenly to 5.0 percent for 2009. An increase of one percentage point in the assumed health care cost trend rate would increase the accumulated postretirement benefit obligations at October 31, 2005 by $658 million and the aggregate of service and interest cost component of net periodic postretirement benefits cost for the year by $56 million. A decrease of one percentage point would decrease the obligations by $579 million and the cost by $48 million.

The discount rate assumptions used to determine the postretirement obligations at October 31, 2005 were based on the Hewitt Yield Curve (HYC), which was designed by Hewitt Associates to provide a means for plan sponsors to value the liabilities of their postretirement benefit plans. The HYC is a hypothetical double A yield curve represented by a series of annualized individual discount rates. Each bond issue underlying the HYC is required to have a rating of Aa or better by Moody’s Investor Service, Inc. or a rating AA or better by Standard & Poor’s. Prior to using the HYC rates, the discount rate assumptions for the postretirement expenses in 2005, 2004 and 2003 and the obligations at October 31, 2004 were based on investment yields available on AA rated long-term corporate bonds.

The following is the percentage allocation for plan assets at October 31:

	Pensions				HealthCare
	2005		2004		2005*		2004
Equity securities	62	%	56	%	44	%	56	%
Debt securities	18		25		42		25
Real estate	3		4		2		4
Other	17		15		12		15

* Allocation affected by a contribution at year end temporarily held in debt securities.

The primary investment objective is to maximize the growth of the pension and health care plan assets to meet the projected obligations to the beneficiaries over a long period of time, and to do so in a manner that is consistent with the company’s earnings strength and risk tolerance. Asset allocation policy is the most important decision in managing the assets and it is reviewed regularly. The asset allocation policy considers the company’s financial strength and long-term asset class risk/return expectations since the obligations are long-term in nature. On an on-going basis, the target allocations for pension assets are approximately 58 percent for equity securities, 17 percent for debt securities, 4 percent for real estate and 21 percent for other and for health care assets are approximately 54 percent for equity securities, 26 percent for debt securities, 3 percent for real estate and 17 percent for other. The assets are well diversified and are managed by professional investment firms as well as by investment professionals who are company employees.

The expected long-term rate of return on plan assets reflects management’s expectations of long-term average rates of return on funds invested to provide for benefits included in the projected benefit obligations. The expected return is based on the outlook for inflation, fixed income returns and equity returns, while also considering historical returns, asset allocation and investment strategy. Although not a guarantee of future results, the average annual return of the company’s U.S. pension fund was 10 percent during the past ten years and 11 percent during the past 20 years.

In 2005, the company created certain Voluntary Employees Beneficiary Association trusts (VEBAs) for the funding of postretirement health care benefits. The future expected asset returns for these VEBAs are lower than the expected return on the other pension and health care plan assets due to investment in a higher proportion of short-term liquid securities. These assets are in addition to the other postretirement health care plan assets that have been funded under Section 401(h) of the U.S. Internal Revenue Code and maintained in a separate account in the company’s pension plan trust.

See Note 23 for defined contribution plans related to employee investment and savings.

4. INCOME TAXES

The provision for income taxes by taxing jurisdiction and by significant component consisted of the following in millions of dollars:

	2005			2004		2003
Current:
U.S.:
Federal	$	446		$	109	$	96
State	33			5		4
Foreign	284			206		200
Total current	763			320		300
Deferred:
U.S.:
Federal	(32		)	306		59
State	(18		)	37		3
Foreign	2			46		(25		)
Total deferred	(48		)	389		37
Provision for income taxes	$	715		$	709	$	337

Based upon location of the company’s operations, the consolidated income before income taxes in the U.S. in 2005, 2004 and 2003 was $1,275 million, $1,253 million and $428 million,

respectively, and in foreign countries was $881 million, $861 million and $543 million, respectively. Certain foreign operations are branches of Deere & Company and are, therefore, subject to U.S., as well as foreign income tax regulations. The pretax income by location and the preceding analysis of the income tax provision by taxing jurisdiction are, therefore, not directly related.

A comparison of the statutory and effective income tax provision and reasons for related differences in millions of dollars follow:

	2005			2004			2003
U.S. federal income tax provision at a statutory rate of 35 percent	$	755		$	740		$	340
Increase (decrease) resulting from:
State and local income taxes, net of federal income tax benefit	10			27			4
Taxes on foreign activities	(6		)	(21		)	(4		)
Nondeductible costs and other-net	(44		)	(37		)	(3		)
Provision for income taxes	$	715		$	709		$	337

In October 2004, the American Jobs Creation Act of 2004 (the Act) was signed into law. The Act introduced a special one-time dividends received deduction on the repatriation of certain foreign earnings to a U.S. taxpayer (repatriation provision), provided certain criteria are met. The deduction is 85 percent of certain foreign earnings that are repatriated. During 2005, the company recognized a tax benefit of approximately $15 million, related to the repatriation of foreign earnings under the Act.

At October 31, 2005, accumulated earnings in certain subsidiaries outside the U.S. totaled $692 million for which no provision for U.S. income taxes or foreign withholding taxes has been made, because it is expected that such earnings will be reinvested overseas indefinitely. Determination of the amount of unrecognized deferred tax liability on these unremitted earnings is not practical.

Deferred income taxes arise because there are certain items that are treated differently for financial accounting than for income tax reporting purposes. An analysis of the deferred income tax assets and liabilities at October 31 in millions of dollars follows:

	2005					2004
	Deferred Tax Assets			Deferred Tax Liabilities		Deferred Tax Assets			Deferred Tax Liabilities
Postretirement benefit accruals	$	997				$	1,017
Prepaid pension costs				$	860				$	778
Accrual for sales allowances	324					304
Tax over book depreciation				231					263
Accrual for employee benefits	185					126
Deferred lease income				154					159
Tax loss and tax credit carryforwards	93					55
Allowance for credit losses	73					79
Minimum pension liability adjustment	65					30
Intercompany profit in inventory	37					36
Undistributed foreign earnings				37					44
Other items	157			59		123			60
Less valuation allowances	(25		)			(1		)

Deferred income tax assets and liabilities	$	1,906		$	1,341	$	1,769		$	1,304

Deere & Company files a consolidated federal income tax return in the U.S., which includes the wholly-owned Financial Services subsidiaries. These subsidiaries account for income taxes generally as if they filed separate income tax returns.

At October 31, 2005, certain tax loss and tax credit carryforwards for $93 million were available with $58 million expiring from 2006 through 2023 and $35 million with an unlimited expiration date.

5. OTHER INCOME AND OTHER OPERATING EXPENSES

The major components of other income and other operating expenses consisted of the following in millions of dollars:

	2005		2004		2003
Other income
Gains from sales of receivables*	$	5	$	50	$	54
Securitization and servicing fee income	48		58		55
Revenues from services	148		103		45
Investment income	38		12		11
Other**	126		128		80
Total	$	365	$	351	$	245

Other operating expenses
Depreciation of equipment on operating leases	$	237	$	239	$	273
Cost of services	96		55		20
Other	48		39		32
Total	$	381	$	333	$	325

* Includes securitization sales (none in 2005) and other sales of receivables.

** Includes gain from the sale of a rental equipment company in 2004.

6. UNCONSOLIDATED AFFILIATED COMPANIES

Unconsolidated affiliated companies are companies in which Deere & Company generally owns 20 percent to 50 percent of the outstanding voting shares. Deere & Company does not control these companies and accounts for its investments in them on the equity basis. The investments in these companies primarily consist of Deere-Hitachi Construction Machinery Corporation (50 percent ownership), Bell Equipment Limited (32 percent ownership) and A&I Products (36 percent ownership). The unconsolidated affiliated companies primarily manufacture or market equipment. Deere & Company’s share of the income of these companies is reported in the consolidated income statement under “Equity in Income (Loss) of Unconsolidated Affiliates.” The investment in these companies is reported in the consolidated balance sheet under “Investments in Unconsolidated Affiliates.”

Combined financial information of the unconsolidated affiliated companies in millions of dollars is as follows:

Operations	2005		2004		2003
Sales	$	1,983	$	1,798	$	1,929
Net income	14		2		23
Deere & Company’s equity in net income	6		1		9

Financial Position			2005		2004
Total assets			$	817	$	839
Total external borrowings			119		173
Total net assets			271		253
Deere & Company’s share of the net assets			107		107

7. MARKETABLE SECURITIES

All marketable securities are classified as available-for-sale, with unrealized gains and losses shown as a component of stockholders’ equity. Realized gains or losses from the sales of marketable securities are based on the specific identification method.

The amortized cost and fair value of marketable securities at October 31 in millions of dollars follow:

	Amortized		Gross		Gross
	Cost		Unrealized		Unrealized		Fair
	Or Cost		Gains		Losses		Value
2005
Equity securities	$	25	$	5	$	1	$	29
U.S. government debt securities	402				3		399
Municipal debt securities	141						141
Corporate debt securities	895		1		4		892
Mortgage-backed debt securities	319				2		317
Asset backed securities	422				2		420
Other debt securities	252						252
Marketable securities	$	2,456	$	6	$	12	$	2,450

2004
Equity securities	$	25	$	3			$	28
U.S.government debt securities	73		2		$	1	74
Corporate debt securities	72		2				74
Mortgage-backed debt securities	70		1				71
Marketable securities	$	240	$	8	$	1	$	247

The contractual maturities of debt securities at October 31, 2005 in millions of dollars follow:

	Amortized		Fair
	Cost		Value
Due in one year or less	$	584	$	583
Due after one through five years	1,340		1,336
Due after five through 10 years	129		127
Due after 10 years	378		375
Debt securities	$	2,431	$	2,421

Actual maturities may differ from contractual maturities because some securities may be called or prepaid. Proceeds from the sales of available-for-sale securities were $943 million in 2005, $34 million in 2004 and $20 million in 2003. Realized gains and losses, unrealized gains and losses, and the increase (decrease) in the net unrealized gains or losses were not material in those years. The unrealized losses that have been continuous for over twelve months were also not material. The unrealized losses at October 31, 2005 and 2004 were primarily the result of an increase in interest rates affecting the fair value of certain debt securities.

8. TRADE ACCOUNTS AND NOTES RECEIVABLE

Trade accounts and notes receivable at October 31 consisted of the following in millions of dollars:

	2005		2004
Trade accounts and notes:
Agricultural	$	1,774	$	1,838
Commercial and consumer	701		793
Construction and forestry	643		576
Trade accounts and notes receivable–net	$	3,118	$	3,207

At October 31, 2005 and 2004, dealer notes included in the previous table were $398 million and $411 million, and the allowance for doubtful trade receivables was $54 million and $56 million, respectively.

The Equipment Operations sell a significant portion of newly originated trade receivables to the credit operations and provide compensation to the credit operations at market rates of interest for these receivables.

Trade accounts and notes receivable primarily arise from sales of goods to dealers. Under the terms of the sales to dealers, interest is charged to dealers on outstanding balances, from the earlier of the date when goods are sold to retail customers by the dealer or the expiration of certain interest-free periods granted at the time of the sale to the dealer, until payment is received by the company. Dealers cannot cancel purchases after the equipment is shipped and are responsible for payment even if the equipment is not sold to retail customers. The interest-free periods are determined based on the type of equipment sold and the time of year of the sale. These periods range from one to 12 months for most equipment. Interest-free periods may not be extended. Interest charged may not be forgiven and interest rates, which exceed the prime rate, are set based on market factors. The company evaluates and assesses dealers on an ongoing basis as to their credit worthiness and generally retains a security interest in the goods associated with these trade receivables. The company is obligated to repurchase goods sold to a dealer upon cancellation or termination of the dealer’s contract for such causes as change in ownership, closeout of the business or default. The company may also in certain circumstances repurchase goods sold to a dealer in order to satisfy a request for goods from another dealer.

Trade accounts and notes receivable have significant concentrations of credit risk in the agricultural, commercial and consumer, and construction and forestry sectors as shown in the previous table. On a geographic basis, there is not a disproportionate concentration of credit risk in any area.

9. FINANCING RECEIVABLES

Financing receivables at October 31 consisted of the following in millions of dollars:

	2005				2004
	Unrestricted		Restricted		Unrestricted
Retail notes:
Equipment:
Agricultural	$	6,730	$	1,405	$	5,713
Commercial and consumer	1,212				1,161
Construction and forestry	2,148		265		1,749
Recreational products	51				75
Total	10,141		1,670		8,698
Wholesale notes	1,238				941
Revolving charge accounts	1,598				1,513
Financing leases (direct and sales-type)	856				803
Operating loans	384				380
Total financing receivables	$	14,217	$	1,670	$	12,335

(continued)

	2005				2004
	Unrestricted		Restricted		Unrestricted
Less:
Unearned finance income:
Equipment notes	$	1,098	$	204	$	834
Recreational product notes	14				22
Financing leases	104				101
Total	1,216		204		957
Allowance for doubtful receivables	132		8		145
Financing receivables – net	$	12,869	$	1,458	$	11,233

Financing receivables have significant concentrations of credit risk in the agricultural, commercial and consumer, and construction and forestry sectors as shown in the previous table. On a geographic basis, there is not a disproportionate concentration of credit risk in any area. The company retains as collateral a security interest in the equipment associated with retail notes, wholesale notes and financing leases.

Financing receivables at October 31 related to the company’s sales of equipment (see Note 2) that were included in the table above were unrestricted and consisted of the following in millions of dollars:

	2005		2004
Retail notes*:
Equipment:
Agricultural	$	970	$	731
Commercial and consumer	74		68
Construction and forestry	553		378
Total	1,597		1,177
Wholesale notes	1,238		941
Sales-type leases	439		355
Total	3,274		2,473
Less:
Unearned finance income:
Equipment notes	196		128
Sales-type leases	46		39
Total	242		167
Financing receivables related to the company’s sales of equipment	$	3,032	$	2,306

* These retail notes generally arise from sales of equipment by company-owned dealers or through direct sales.

Financing receivable installments, including unearned finance income, at October 31 are scheduled as follows in millions of dollars:

	2005				2004
	Unrestricted		Restricted		Unrestricted
Due in months:
0 – 12	$	6,741	$	421	$	5,939
13 – 24	2,845		403		2,486
25 – 36	2,140		360		1,822
37 – 48	1,409		300		1,131
49 – 60	837		164		729
Thereafter	245		22		228
Total	$	14,217	$	1,670	$	12,335

The maximum terms for retail notes are generally seven years for agricultural equipment, seven years for commercial and consumer equipment and five years for construction and forestry equipment. The maximum term for financing leases is generally five years, while the average term for wholesale notes is less than 12 months.

At October 31, 2005 and 2004, the unpaid balances of receivables previously sold by the credit operations were $2,019 million and $3,398 million, respectively. The receivables sold are collateralized by security interests in the related equipment sold to customers. At October 31, 2005 and 2004, worldwide financing receivables administered, which include financing receivables previously sold but still administered, totaled $16,346 million and $14,631million, respectively.

Generally when financing receivables become approximately 120 days delinquent, accrual of finance income is suspended and the estimated uncollectible amount is written off to the allowance for credit losses. Accrual of finance income is resumed when the receivable becomes contractually current and collection doubts are removed. Investments in financing receivables on non-accrual status at October 31, 2005 and 2004 were $74 million and $65 million, respectively.

Total financing receivable amounts 60 days or more past due were $34 million at October 31, 2005, compared with $41 million at October 31, 2004. These past-due amounts represented .24 percent of the receivables financed at October 31, 2005 and .36 percent at October 31, 2004. The allowance for doubtful financing receivables represented .97 percent and 1.28 percent of financing receivables outstanding at October 31, 2005 and 2004, respectively. In addition, at October 31, 2005 and 2004, the company’s credit operations had $184 million of deposits withheld from dealers and merchants available for potential credit losses. An analysis of the allowance for doubtful financing receivables follows in millions of dollars:

	2005			2004			2003
Balance, beginning of the year	$	145		$	149		$	136
Provision charged to operations	19			43			84
Amounts written off	(28		)	(37		)	(56		)
Other changes related to transfers for retail note sales and translation adjustments	4			(10		)	(15		)
Balance, end of the year	$	140		$	145		$	149

10. SECURITIZATION OF FINANCING RECEIVABLES

Secured Borrowings

Beginning in 2005, the credit operations’ new securitizations of financing receivables (retail notes) held by special purpose entities (SPEs) met the criteria for secured borrowings rather than sales of receivables under FASB Statement No.140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. The borrowings related to these securitizations of retail notes are included in short-term borrowings on the balance sheet as shown in the following table. The securitized retail notes are classified as “Restricted financing receivables - net” on the balance sheet. The total restricted assets on the balance sheet related to these securitizations include the restricted financing receivables less an allowance for credit losses, and other assets

representing restricted cash as shown in the following table. In addition to the restricted assets, the creditors of an unconsolidated SPE involved in secured borrowings and sales of receivables related to a $2.0 billion revolving bank conduit facility have recourse to a reserve fund held by the SPE totaling approximately $42 million as of October 31, 2005. A portion of the previous transfers of retail notes to this facility qualified as sales of receivables. As a result, this reserve fund is also included in the maximum exposure to losses for receivables that have been sold, discussed below. The company recognizes finance income on these restricted retail notes using the interest method and provides for credit losses incurred over the lives of the retail notes in the allowance for credit losses.

The total components of consolidated restricted assets related to securitization borrowings at October 31 were as follows in millions of dollars:

	2005
Restricted financing receivables	$	1,466
Allowance for credit losses	(8		)
Other assets	69
Total restricted securitized assets	$	1,527

The components of consolidated secured liabilities related to securitizations at October 31 were as follows in millions of dollars:

	2005
Short-term borrowings	$	1,474
Accrued interest on borrowings	2
Total liabilities related to restricted securitized assets	$	1,476

A portion of the restricted retail notes totaling $816 million on the balance sheet were transferred to SPEs that are not consolidated since the company is not the primary beneficiary, however, the transfers qualified as secured financings rather than as sales. The borrowings related to these restricted retail notes included above are the obligations to these SPEs that are payable as the retail notes are liquidated. The remaining restricted retail notes totaling $650 million were transferred to a SPE that has been consolidated since the company is the primary beneficiary. This SPE is not a qualified SPE under FASB Statement No.140 and, therefore, not exempt from consolidation. These restricted retail notes are the primary assets of the consolidated SPE. The borrowings included above for the consolidated SPE are obligations to the creditors of the SPE that are also payable as the retail notes are liquidated. SPEs utilized in securitizations of retail notes differ from other entities included in the company’s consolidated statements because the assets they hold are legally isolated. For bankruptcy analysis purposes, John Deere Capital Corporation (Capital Corporation), which is included in the company’s credit operations, has sold the receivables to the SPEs in a true sale and the SPEs are separate legal entities from the Capital Corporation. Use of the assets held by the SPEs are restricted by terms of the governing documents. Repayment of the secured borrowings depends primarily on cash flows generated by the restricted assets and the reserve fund mentioned above. At October 31, 2005, the maximum remaining term of the restricted receivables included in the restricted assets was approximately six years.

Sales of Receivables

Prior to 2005 the company periodically sold receivables to special purpose entities (SPEs) in securitizations of retail notes. It retains interest-only strips, servicing rights, and in some cases, reserve accounts and subordinated certificates, all of which are retained interests in the securitized receivables. The retained interests are carried at estimated fair value in “Other receivables” or “Other assets” on the balance sheet. Gains or losses on sales of the receivables depended in part on the previous carrying amount of the financial assets involved in the transfer, allocated between the assets sold and the retained interests based on their relative fair values at the date of transfer. The company generally estimates fair values based on the present value of future expected cash flows using management’s key assumptions as discussed below. The company retains the rights to certain future cash flows and in the U.S. transactions receives annual servicing fees approximating 1 percent of the outstanding balance. No significant balances for servicing assets or liabilities exist because the benefits received for servicing are offset by the costs of providing the servicing. The company’s maximum exposure under recourse provisions related to securitizations at October 31, 2005 and 2004 was $151 million and $218 million, respectively. The recourse provisions include the fair value of the retained interests and all other recourse obligations contractually specified in the securitization agreements. The company does not record the other recourse obligations as liabilities as they are contingent liabilities that are remote at this time. Except for this exposure, the investors and securitization trusts have no recourse to the company for failure of debtors to pay when due. The company’s retained interests are subordinate to investors’ interests, and their values are subject to certain key assumptions as shown below. The total assets of the unconsolidated SPEs related to these securitizations at October 31, 2005 and 2004 were $1,923 million and $3,441 million, respectively.

Pretax gains in millions of dollars on securitized retail notes sold (none in 2005) and key assumptions used to initially determine the fair value of the retained interests were as follows:

	2004			2003
Pretax gains	$	48		$	50
Weighted-average maturities in months	20			21
Average annual prepayment rates	20		%	19		%
Average expected annual credit losses	.38		%	.42		%
Discount rates on retained interests and subordinate tranches	13		%	13		%

Cash flows received from securitization trusts for retail notes sold in millions of dollars were as follows:

	2005		2004		2003
Proceeds from new securitizations			$	2,269	$	1,891
Servicing fees received	$	22	30		24
Other cash flows received	46		66		49

Components of retained interests in securitized retail notes sold at October 31 in millions of dollars follow:

	2005		2004
Interest only strips	$	51	$	70
Reserve accounts held for benefit of securitization entities	69		43
Subordinated certificates	7		16
Retained interests	$	127	$	129

The total retained interests, weighted-average life, weighted-average current key economic assumptions and the sensitivity analysis showing the hypothetical effects on the retained interests from immediate 10 percent and 20 percent adverse changes in those assumptions with dollars in millions were as follows:

	2005			2004
Securitized retail notes sold
Carrying amount/fair value of retained interests	$	127		$	129
Weighted-average life (in months)	14			16
Prepayment speed assumption (annual rate)	19		%	20		%
Impact on fair value of 10% adverse change	$	.7		$	1.8
Impact on fair value of 20% adverse change	$	1.3		$	3.6
Expected credit losses (annual rate)	.48		%	.40		%
Impact on fair value of 10% adverse change	$	.9		$	2.0
Impact on fair value of 20% adverse change	$	1.8		$	4.0
Residual cash flows discount rate (annual)	10		%	13		%
Impact on fair value of 10% adverse change	$	2.6		$	3.6
Impact on fair value of 20% adverse change	$	5.0		$	7.1

These sensitivities are hypothetical changes in fair value and cannot be extrapolated because the relationship of the changes in assumption to the changes in fair value may not be linear. Also, the effect of a variation in a particular assumption is calculated without changing any other assumption, whereas changes in one factor may result in changes in another. Accordingly, no assurance can be given that actual results would be consistent with the results of these estimates.

Principal balances of owned, securitized retail notes sold and total managed retail notes; past due amounts; and credit losses (net of recoveries) as of and for the years ended October 31, in millions of dollars follow:

	Principal		Principal 60 Days or		Net Credit
	Outstanding		More Past Due		Losses

2005
Owned	$	10,223	$	15	$	4
Securitized retail notes sold	1,777		7		3
Managed	$	12,000	$	22	$	7

2004
Owned	$	7,648	$	20	$	9
Securitized retail notes sold	3,215		10		5
Managed	$	10,863	$	30	$	14

The amount of actual and projected future credit losses as a percent of the original balance of securitized retail notes sold (expected static pool losses) were as follows:

	Securitized Retail Notes Sold In
	2004		2003
Actual and Projected Losses (%) as of October 31:
2005	.40	%	.34	%
2004	.59	%	.49	%
2003			.67	%

11. OTHER RECEIVABLES

Other receivables at October 31 consisted of the following in millions of dollars:

	2005		2004
Taxes receivable	$	316	$	424
Receivables relating to securitized retail notes sold	120		113
Other	125		126
Other receivables	$	561	$	663

The credit operations’ receivables related to securitizations are equal to the present value of payments to be received for certain retained interests and deposits made with other entities for recourse provisions under the retail note sales agreements.

12. EQUIPMENT ON OPERATING LEASES

Operating leases arise primarily from the leasing of John Deere equipment to retail customers. Initial lease terms generally range from 36 to 60 months. Net equipment on operating leases totaled $1,336 million and $1,297 million at October 31, 2005 and 2004, respectively. The equipment is depreciated on a straight-line basis over the terms of the leases. The accumulated depreciation on this equipment was $436 million and $468 million at October 31, 2005 and 2004, respectively. The corresponding depreciation expense was $237 million in 2005, $239 million in 2004 and $273 million in 2003.

Future payments to be received on operating leases totaled $628 million at October 31, 2005 and are scheduled as follows in millions of dollars: 2006 – $266, 2007 – $182, 2008 – $109, 2009 – $54 and 2010 – $17.

13. INVENTORIES

Most inventories owned by Deere & Company and its United States equipment subsidiaries are valued at cost, on the “last-in, first-out” (LIFO) basis. Remaining inventories are generally valued at the lower of cost, on the “first-in, first-out” (FIFO) basis, or market. The value of gross inventories on the LIFO basis represented 61 percent of worldwide gross inventories at FIFO value on October 31, 2005 and 2004, respectively. If all inventories had been valued on a FIFO basis, estimated inventories by major classification at October 31 in millions of dollars would have been as follows:

	2005		2004
Raw materials and supplies	$	716	$	589
Work-in-process	425		408
Finished machines and parts	2,126		2,004
Total FIFO value	3,267		3,001
Less adjustment to LIFO value	1,132		1,002
Inventories	$	2,135	$	1,999

14. PROPERTY AND DEPRECIATION

A summary of property and equipment at October 31 in millions of dollars follows:

	Average
	Useful Lives
	(Years)	2005		2004
Equipment Operations
Land		$	79	$	75
Buildings and building equipment	25	1,490		1,419
Machinery and equipment	10	2,961		2,870
Dies, patterns, tools, etc	7	1,039		987
All other	5	589		571
Construction in progress		232		156
Total at cost		6,390		6,078
Less accumulated depreciation		4,113		3,966
Total		2,277		2,112
Financial Services
Land		3		4
Buildings and building equipment	25	38		38
Machinery and equipment	10	7		7
All other	6	53		55
Construction in progress		44
Total at cost		145		104
Less accumulated depreciation		57		54
Total		88		50
Property and equipment-net		$	2,365	$	2,162

Leased property under capital leases amounting to $23 million and $13 million at October 31, 2005 and 2004, respectively, is included in property and equipment.

Property and equipment is stated at cost less accumulated depreciation. Total property and equipment additions in 2005, 2004 and 2003 were $524 million, $365 million and $320 million and depreciation was $357 million, $342 million and $319 million, respectively. Financial Services property and equipment additions included above were $47 million, $18 million and $6 million in 2005, 2004 and 2003 and depreciation was $8 million in all three years. The increase in Financial Services additions in 2005 was primarily due to the wind energy entities (see Note 1).

Capitalized software is stated at cost less accumulated amortization and the estimated useful life is three years. The amounts of total capitalized software costs, including purchased and internally developed software, classified as “Other Assets” at October 31, 2005 and 2004 were $339 million and $315 million, less accumulated amortization of $264 million and $240 million, respectively. Amortization of these software costs was $41 million, in 2005 and $38 million in 2004 and 2003.

The cost of compliance with foreseeable environmental requirements has been accrued and did not have a material effect on the company’s financial position or results of operations.

15. GOODWILL AND OTHER INTANGIBLE ASSETS-NET

The amounts of goodwill by operating segment were as follows in millions of dollars:

	2005*		2004
Agricultural equipment	$	151	$	101
Commercial and consumer equipment	384		299
Construction and forestry	554		574
Total goodwill	$	1,089	$	974

* The changes in goodwill between years for agricultural equipment and commercial and consumer equipment were primarily due to acquisitions (see Note 1). The remaining changes are primarily due to fluctuations in foreign currency exchange rates.

The components of other intangible assets are as follows in millions of dollars:

	2005			2004
Amortized intangible assets:
Gross patents, licenses and other	$	9		$	12
Accumulated amortization	(6		)	(8		)
Net patents, licenses and other	3			4
Unamortized intangible assets:
Intangible asset related to minimum pension liability	15			18
Total other intangible assets-net	$	18		$	22

Other intangible assets, excluding the intangible pension asset, are stated at cost less accumulated amortization and are being amortized over 17 years or less on the straight-line basis. The intangible pension asset is remeasured and adjusted annually. The amortization of other intangible assets is not significant.

16. SHORT-TERM BORROWINGS

Short-term borrowings at October 31 consisted of the following in millions of dollars:

	2005		2004
Equipment Operations
Commercial paper	$	324	$	258
Notes payable to banks	80		19
Long-term borrowings due within one year	274		35
Total	678		312
Financial Services
Commercial paper	1,902		1,629
Notes payable to banks	11		32
Notes payable related to securitizations (see below)	1,474
Long-term borrowings due within one year	2,819		1,485
Total	6,206		3,146
Short-term borrowings	$	6,884	$	3,458

The notes payable related to securitizations for Financial Services are secured by restricted financing receivables (retail notes) on the balance sheet (see Note 10). Although these notes payable are classified as short-term since payment is required if the retail notes are liquidated early, the payment schedule for these borrowings based on the expected liquidation of the retail notes in millions of dollars is as follows: 2006 - $567, 2007 - $397, 2008 - $272, 2009 - $171, 2010 - $60 and later years $7.

The weighted-average interest rates on total short-term borrowings, excluding current maturities of long-term borrowings, at October 31, 2005 and 2004 were 3.9 percent and 2.8 percent, respectively. All of the Financial Services’ short-term borrowings represent obligations of the credit subsidiaries.

Lines of credit available from U.S. and foreign banks were $2,594 million at October 31, 2005. Some of these credit lines are available to both Deere & Company and the Capital Corporation. At October 31, 2005, $272 million of these worldwide lines of credit were unused. For the purpose of computing the unused credit lines, commercial paper and short-term bank borrowings, excluding secured borrowings and the current maturities of long-term borrowings, were considered to constitute utilization.

Included in the above lines of credit are long-term credit facility agreements for $1,250 million, expiring in February 2009, and $625 million, expiring in February 2010, for a total of $1,875 million long-term. The agreements are mutually extendable and the annual facility fee is not significant. The credit agreements have various requirements of the Capital Corporation, including the maintenance of its consolidated ratio of earnings to fixed charges at not less than 1.05 to 1 for each fiscal quarter and the ratio of senior debt, excluding secured borrowings, to total stockholder’s equity at not more than 8 to 1 at the end of any fiscal quarter. The credit agreements also require the Equipment Operations to maintain a ratio of total debt to total capital (total debt and stockholders’ equity excluding accumulated other comprehensive income (loss)) of 65 percent or less at the end of each fiscal quarter according to accounting principles generally accepted in the U.S. in effect at October 31, 2004. At October 31, 2005, the ratio was 31 percent. Under this provision, the company’s excess equity capacity and retained earnings balance free of restriction at October 31, 2005 was $5,208 million. Alternatively under this provision, the Equipment Operations had the capacity to incur additional debt of $9,673 million at October 31, 2005. All the requirements of the credit agreements have been met during the periods included in the financial statements.

Deere & Company has an agreement with the Capital Corporation pursuant to which it has agreed to continue to own at least 51 percent of the voting shares of capital stock of the Capital Corporation and to maintain the Capital Corporation’s consolidated tangible net worth at not less than $50 million. This agreement also obligates Deere & Company to make income maintenance payments to the Capital Corporation such that its consolidated ratio of earnings before fixed charges to fixed charges is not less than 1.05 to 1 for any fiscal quarter. Deere & Company’s obligations to make payments to the Capital Corporation under the agreement are independent of whether the Capital Corporation is in default on its indebtedness, obligations or other liabilities. Further, the company’s obligations under the agreement are not measured by the amount of the Capital Corporation’s indebtedness, obligations or other liabilities. Deere & Company’s obligations to make payments under this agreement are expressly stated not to be a guaranty of any specific indebtedness, obligation or liability of the Capital Corporation and are enforceable only by or in the name of the Capital Corporation. No payments were required under this agreement during the periods included in the financial statements.

17. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses at October 31 consisted of the following in millions of dollars:

	2005		2004
Equipment Operations
Accounts payable:
Trade payables	$	1,213	$	1,246
Dividends payable	74		69
Other	61		62
Accrued expenses:
Employee benefits	914		719
Product warranties	535		458
Dealer sales program discounts	312		287
Dealer sales volume discounts	254		224
Other	682		619
Total	4,045		3,684
Financial Services
Accounts payable:
Deposits withheld from dealers and merchants	184		184
Other	169		196
Accrued expenses:
Interest payable	116		85
Employee benefits	86		60
Other	163		106
Total	718		631
Eliminations*	379		341
Accounts payable and accrued expenses	$	4,384	$	3,974

* Primarily trade receivable valuation accounts which are reclassified as accrued expenses by the Equipment Operations as a result of their trade receivables being sold to Financial Services.

18. LONG-TERM BORROWINGS

Long-term borrowings at October 31 consisted of the following in millions of dollars:

	2005			2004
Equipment Operations**
Notes and debentures:
Medium-term notes:
Average interest rate of 9.2% – 2004				$	20
5-7/8% U.S. dollar notes due 2006: ($250 principal) Swapped $170 to Euro at average variable interest rates of 3.1% – 2004				250		*
7.85% debentures due 2010	$	500		500
6.95% notes due 2014: ($700 principal) Swapped to variable interest rates of 5.2% – 2005, 3.1% – 2004	744		*	786		*
8.95% debentures due 2019	200			200
8-1/2% debentures due 2022	200			200
6.55% debentures due 2028	200			200
8.10% debentures due 2030	250			250
7.125% notes due 2031	300			300
Other notes	29			22
Total	$	2,423		$	2,728

(continued)

	2005			2004
Financial Services**
Notes and debentures:
Medium-term notes due 2005 – 2010: (principal $5,055 - 2005, $3,443 - 2004) Average interest rates of 4.1% – 2005, 3.9% – 2004	$	5,047	*	$	3,459	*
5.125% debentures due in 2006:($600 principal) Swapped $300 to variable interest rates of 2.7% – 2004				620		*
4.5% notes due 2007: ($500 principal) Swapped $300 in 2005 and 2004 to variable interest rates of 4.5% – 2005, 2.4% – 2004	498		*	510		*
3.90% notes due 2008: ($850 principal) Swapped $350 in 2005 and $525 in 2004 to variable interest rates of 4.7% – 2005, 2.6% – 2004	835		*	850		*
6% notes due 2009: ($300 principal) Swapped to variable interest rates of 4.0% – 2005, 1.9% – 2004	308		*	327		*
7% notes due 2012: ($1,500 principal) Swapped $1,225 in 2005 and 2004 to variable interest rates of 4.8% – 2005, 2.9% – 2004,	1,592		*	1,674		*
5.10% debentures due 2013: ($650 principal) Swapped to variable interest rates of 4.8% – 2005, 2.7% – 2004	627		*	658		*
Other notes	409			264
Total	9,316			8,362
Long-term borrowings	$	11,739		$	11,090

* Includes fair value adjustments related to interest rate swaps.

** All interest rates are as of year end.

All of the Financial Services’ long-term borrowings represent obligations of the credit subsidiaries.

The approximate principal amounts of the Equipment Operations’ long-term borrowings maturing in each of the next five years in millions of dollars are as follows: 2006 – $272, 2007 – $7, 2008 – $2, 2009 – $17 and 2010 – $506.

The approximate principal amounts of the credit subsidiaries’ long-term borrowings maturing in each of the next five years in millions of dollars are as follows: 2006 – $2,811, 2007 – $3,004, 2008 – $2,235, 2009 – $1,311 and 2010 – $563.

19. LEASES

At October 31, 2005, future minimum lease payments under capital leases amounted to $20 million as follows: 2006 – $12, 2007 – $1, 2008 – $1, 2009 – $1, 2010 – $1 and later years $4. Total rental expense for operating leases was $111 million in 2005, $102 million in 2004 and $98 million in 2003. At October 31, 2005, future minimum lease payments under operating leases amounted to $358 million as follows: 2006 – $93, 2007 – $88, 2008 – $44, 2009 – $35, 2010 – $24 and later years $74. See Note 20 for operating leases with residual value guarantees.

20. CONTINGENCIES AND COMMITMENTS

The company generally determines its total warranty liability by applying historical claims rate experience to the estimated amount of equipment that has been sold and is still under warranty based on dealer inventories and retail sales. The historical claims rate is primarily determined by a review of five-year claims costs and current quality developments.

A reconciliation of the changes in the warranty liability in millions of dollars follows:

	Warranty Liability
	2005			2004
Beginning of year balance	$	458		$	389
Payments	(453		)	(378		)
Accruals for warranties	530			447
End of year balance	$	535		$	458

The company has guaranteed certain recourse obligations on financing receivables that it has sold. If the receivables sold are not collected, the company would be required to cover those losses up to the amount of its recourse obligation. At October 31, 2005, the maximum amount of exposure to losses under these agreements was $153 million. The estimated credit risk associated with sold receivables totaled $10 million at October 31, 2005. This risk of loss is recognized primarily in the related retained interests recorded on the company’s balance sheet (see Note 10). The company may recover a portion of any required payments incurred under these agreements from the repossession of the equipment collateralizing the receivables. At October 31, 2005, the maximum remaining term of the receivables guaranteed was approximately five years.

At October 31, 2005, the company had approximately $145 million of guarantees issued primarily to overseas banks related to third-party receivables for the retail financing of John Deere equipment. The company may recover a portion of any required payments incurred under these agreements from repossession of the equipment collateralizing the receivables. At October 31, 2005, the company had accrued losses of approximately $2 million under these agreements. The maximum remaining term of the receivables guaranteed at October 31, 2005 was approximately eight years.

The credit operations’ subsidiary, John Deere Risk Protection, Inc., offers crop insurance products through a managing general agency agreement (MGA) with an insurance company (Insurance Carrier) rated “Excellent” by A.M. Best Company. As a managing general agent, John Deere Risk Protection, Inc. will receive commissions from the Insurance Carrier for selling crop insurance to producers. The credit operations have guaranteed

certain obligations under the MGA, including the obligation to pay the Insurance Carrier for any uncollected premiums. At October 31, 2005, the maximum exposure for uncollected premiums was approximately $14 million. Substantially all of the credit operations’ crop insurance risk under the MGA has been mitigated by public and private reinsurance. All private reinsurance companies are rated “Excellent” or higher by A.M. Best Company. In the event of a complete crop failure on every policy written under the MGA in 17 states and the default of the U.S. Department of Agriculture and a syndicate of highly rated reinsurance companies on their reinsurance obligations, the credit operations would be required to reimburse the Insurance Carrier for the maximum exposure under the MGA of approximately $633 million at October 31, 2005. The credit operations believe that the likelihood of the occurrence of substantially all of the events that give rise to the exposure under this MGA is extremely remote and as a result, at October 31, 2005, the credit operations have accrued probable losses of approximately $.1 million under the MGA.

At October 31, 2005, the company had commitments of approximately $314 million for the construction and acquisition of property and equipment. The company had $17 million of restricted investments related to conducting the health care business in various states at October 31, 2005.

The company also had other miscellaneous contingent liabilities totaling approximately $40 million at October 31, 2005, for which it believes the probability for payment is primarily remote.

John Deere B.V., located in the Netherlands, is a consolidated indirect wholly-owned finance subsidiary of the company. The debt securities of John Deere B.V., including those which are registered with the U.S. Securities and Exchange Commission, are fully and unconditionally guaranteed by the company. These registered debt securities due in 2006 totaled $250 million at October 31, 2005 and are included on the consolidated balance sheet.

The company is subject to various unresolved legal actions which arise in the normal course of its business, the most prevalent of which relate to product liability (including asbestos related liability), retail credit, software licensing, patent and trademark matters. Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible loss, the company believes these unresolved legal actions will not have a material effect on its financial statements.

21. CAPITAL STOCK

Changes in the common stock account in millions were as follows:

	Number of
	Shares Issued	Amount
Balance at October 31, 2002	268.2	$	1,957
Other		31
Balance at October 31, 2003	268.2	1,988
Other		56
Balance at October 31,2004	268.2	2,044
Other		38
Balance at October 31, 2005	268.2	$	2,082

The number of common shares the company is authorized to issue is 600 million and the number of authorized preferred shares, none of which has been issued, is 9 million.

A reconciliation of basic and diluted net income per share follows in millions, except per share amounts:

	2005		2004		2003
Net income	$	1,446.8	$	1,406.1	$	643.1
Average shares outstanding	243.3		247.2		240.2
Basic net income per share	$	5.95	$	5.69	$	2.68
Average shares outstanding	243.3		247.2		240.2
Effect of dilutive stock options	3.1		5.9		3.1
Total potential shares outstanding	246.4		253.1		243.3

Diluted net income per share	$	5.87	$	5.56	$	2.64

All stock options outstanding were included in the computation during 2005, 2004 and 2003.

22. STOCK OPTION AND RESTRICTED STOCK AWARDS

The company issues stock options and restricted stock to key employees under plans approved by stockholders. Restricted stock is also issued to nonemployee directors under a plan approved by stockholders. Options are generally awarded with the exercise price equal to the market price and become exercisable in one to three years after grant. Options generally expire 10 years after the date of grant. According to these plans at October 31, 2005, the company is authorized to grant an additional 5.4 million shares related to stock options or restricted stock.

During the last three fiscal years, shares under option in millions were as follows:

	2005				2004				2003
			Exercise				Exercise				Exercise
	Shares		Price*		Shares		Price*		Shares		Price*
Outstanding at beginning of year	18.2		$	46.40	21.2		$	42.57	22.9		$	41.58
Granted-at market	3.8		69.37		3.3		61.64		3.9		45.80
Exercised	(3.7	)	43.06		(6.2	)	41.42		(4.8	)	36.30
Expired or forfeited	(.1	)	59.05		(.1	)	47.55		(.8	)	68.68
Outstanding at end of year	18.2		51.82		18.2		46.40		21.2		42.57
Exercisable at end of year	11.3		44.92		11.3		42.67		13.1		41.80

* Weighted-averages

Options outstanding and exercisable in millions at October 31, 2005 were as follows:

	Options Outstanding				Options Exercisable
		Remaining
Range of		Contractual	Exercise			Exercise
Exercise Prices	Shares	Life (yrs)*	Price*		Shares	Price*
$32.53 – $34.13	.7	2.87	$	32.64	.7	$	32.64
$36.37 – $41.47	1.8	4.07	41.30		1.8	41.30
$42.07 – $46.11	8.1	6.08	43.57		7.0	43.21
$50.97 – $56.50	.7	2.28	55.43		.7	55.43
$61.64 – $69.37	6.9	8.63	65.85		1.1	62.07
Total	18.2				11.3

* Weighted-averages

In 2005, 2004, and 2003, the company granted 268, 879, 241, 860 and 196, 294 shares of restricted stock awards with weighted-average fair values of $69.36, $61.83 and $45.29 per share, respectively. The total compensation expense for the restricted stock plans, which is being amortized over the restricted periods, was $15 million, $8 million and $4 million in 2005, 2004 and 2003, respectively.

23. EMPLOYEE INVESTMENT AND SAVINGS PLANS

The company has defined contribution plans related to employee investment and savings plans primarily in the U.S. Company contributions and costs under these plans were $81 million in 2005, $43 million in 2004 and $25 million in 2003.

24. OTHER COMPREHENSIVE INCOME ITEMS

Other comprehensive income items under FASB Statement No.130, Reporting Comprehensive Income, are transactions recorded in stockholders’ equity during the year, excluding net income and transactions with stockholders. Following are the items included in other comprehensive income (loss) and the related tax effects in millions of dollars:

	Before			Tax			After
	Tax			(Expense)			Tax
	Amount			Credit			Amount
2003
Minimum pension liability adjustment	$	(72	)	$	26		$	(46	)
Cumulative translation adjustment	210			4			214
Unrealized gain (loss) on derivatives:
Hedging loss	(41		)	14			(27		)
Reclassification of realized loss to net income	79			(27		)	52
Net unrealized gain	38			(13		)	25
Unrealized holding gain and net gain on investments*	9			(3		)	6
Total other comprehensive income	$	185		$	14		$	199

2004
Minimum pension liability adjustment	$	1,627		$	(606	)	$	1,021
Cumulative translation adjustment	86			2			88
Unrealized gain (loss) on derivatives:
Hedging loss	(19		)	7			(12		)
Reclassification of realized loss to net income	44			(16		)	28
Net unrealized gain	25			(9		)	16
Unrealized gain on investments:
Holding gain	3			(1		)	2
Reclassification of realized gain to net income	(3		)	1			(2		)
Net unrealized gain
Total other comprehensive income	$	1,738		$	(613	)	$	1,125

2005
Minimum pension liability adjustment	$	(86	)	$	34		$	(52	)
Cumulative translation adjustment	60			1			61
Unrealized gain (loss) on derivatives:
Hedging gain	6			(2		)	4
Reclassification of realized loss to net income	14			(5		)	9
Net unrealized gain	20			(7		)	13
Unrealized holding loss and net loss on investments*	(9		)	3			(6		)
Total other comprehensive income (loss)	$	(15	)	$	31		$	16

* Reclassification of realized gains or losses to net income were not material.

25. FINANCIAL INSTRUMENTS

The fair values of financial instruments which do not approximate the carrying values in the financial statements at October 31 in millions of dollars follow:

	2005				2004
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financing receivables	$	12,869	$	12,696	$	11,233	$	11,173
Restricted financing receivables	$	1,458	$	1,438
Short-term secured borrowings*	$	1,474	$	1,468
Long-term borrowings
Equipment Operations	$	2,423	$	2,774	$	2,728	$	3,149
Financial Services	9,316		9,374		8,362		8,770
Total	$	11,739	$	12,148	$	11,090	$	11,919

* See Note 16.

Fair Value Estimates

Fair values of the long-term financing receivables with fixed rates were based on the discounted values of their related cash flows at current market interest rates. The fair values of the remaining financing receivables approximated the carrying amounts.

Fair values of long-term borrowings and short-term secured borrowings with fixed rates were based on the discounted values of their related cash flows at current market interest rates. Certain long-term borrowings have been swapped to current variable interest rates. The carrying values of these long-term borrowings include adjustments related to fair value hedges.

Derivatives

All derivative instruments are recorded at fair values and classified as either other assets or accounts payable and accrued expenses on the balance sheet (see Note 1).

Interest Rate Swaps

The company enters into interest rate swap agreements primarily to more closely match the fixed or floating interest rates of the credit operations’ borrowings to those of the assets being funded.

Certain interest rate swaps were designated as hedges of future cash flows from commercial paper and variable interest rate borrowings. The effective portion of the fair value gains or losses on these cash flow hedges are recorded in other comprehensive income and subsequently reclassified into interest expense as payments are accrued and the swaps approach maturity. These amounts offset the effects of interest rate changes on the related borrowings. The amount of the gain recorded in other comprehensive income at October 31, 2005 that is expected to be reclassified to interest expense in the next 12 months if interest rates remain unchanged is approximately $4 million after-tax. These swaps mature in up to 44 months.

Certain interest rate swaps were designated as fair value hedges of fixed-rate, long-term borrowings. The effective portion of the fair value gains or losses on these swaps were offset by fair value adjustments in the underlying borrowings.

Any ineffective portions of the gains or losses on all cash flow and fair value interest rate swaps designated as hedges were recognized currently in interest expense and were not material. The amounts of gains or losses reclassified from unrealized in other comprehensive income to realized in earnings as a result of the discontinuance of cash flow hedges were not material. There were no components of cash flow or fair value hedges that were excluded from the assessment of effectiveness.

The company has certain interest rate swap agreements that are not designated as hedges under FASB Statement No.133, Accounting for Derivative Instruments and Hedging Activities, and the fair value gains or losses are recognized currently in earnings. These instruments relate to swaps that are used to facilitate certain borrowings.

Foreign Exchange Forward Contracts, Swaps and Options

The company has entered into foreign exchange forward contracts, swaps and purchased options in order to manage the currency exposure of certain receivables, liabilities, borrowings and expected inventory purchases that were not designated as hedges under FASB Statement No.133. The fair value gains or losses from these foreign currency derivatives are recognized currently in cost of sales or other operating expenses, generally offsetting the foreign exchange gains or losses on the exposures being managed.

The company has designated certain foreign exchange forward contracts and options as cash flow hedges of expected inventory purchases. The effective portion of the fair value gains or losses on these cash flow hedges are recorded in other comprehensive income and subsequently reclassified into cost of sales as the inventory costs are recognized in cost of sales. These amounts offset the effect of the changes in foreign exchange rates on the related inventory purchases. The amount of the loss recorded in other comprehensive income that is expected to be reclassified to cost of sales in the next 12 months is approximately $1 million after-tax. These contracts mature in up to 12 months.

The company has designated cross currency interest rate swaps as fair value hedges of certain long-term borrowings. The effective portion of the fair value gains or losses on these swaps is offset by fair value adjustments in the underlying borrowings in interest expense. The company has also designated foreign exchange forward contracts and currency swaps as cash flow hedges of long-term borrowings. The effective portion of the fair value gains or losses on these forward contracts and swaps is recorded in other comprehensive income and subsequently reclassified into other operating expenses as payments are accrued and these instruments approach maturity. This offsets the exchange rate effects on the borrowing being hedged included in other operating expenses.

Any ineffective portions of the gains or losses on all cash flow and fair value foreign exchange contracts, swaps or options designated as hedges were recognized currently in earnings and were not material. The amounts of gains or losses reclassified from unrealized in other comprehensive income to realized in earnings as a result of the discontinuance of cash flow hedges were not material. There were no components of cash flow or fair value hedges that were excluded from the assessment of effectiveness.

26. SEGMENT AND GEOGRAPHIC AREA DATA FOR THE YEARS ENDED OCTOBER 31, 2005, 2004 AND 2003

The company’s operations are organized and reported in four major business segments described as follows:

The agricultural equipment segment manufactures and distributes a full line of farm equipment and related service parts – including tractors; combine, cotton and sugarcane harvesters; tillage, seeding and soil preparation machinery; sprayers; hay and forage equipment; material handling equipment; and integrated agricultural management systems technology.

The commercial and consumer equipment segment manufactures and distributes equipment, products and service parts for commercial and residential uses – including tractors for lawn, garden, commercial and utility purposes; mowing equipment, including walk-behind mowers; golf course equipment; utility vehicles (including those commonly referred to as all-terrain vehicles, or “ATVs”); landscape products and irrigation equipment; and other outdoor power products.

The construction and forestry segment manufactures, distributes to dealers and sells at retail a broad range of machines and service parts used in construction, earthmoving, material handling and timber harvesting – including backhoe loaders; crawler dozers and loaders; four-wheel-drive loaders; excavators; motor graders; articulated dump trucks; landscape loaders; skid-steer loaders; and log skidders, feller bunchers, log loaders, log forwarders, log harvesters and related attachments.

The products and services produced by the equipment segments are marketed primarily through independent retail dealer networks and major retail outlets.

The credit segment primarily finances sales and leases by John Deere dealers of new and used agricultural, commercial and consumer, and construction and forestry equipment. In addition, it provides wholesale financing to dealers of the foregoing equipment, provides operating loans, finances retail revolving charge accounts, offers certain crop risk mitigation products and invests in wind energy development.

Certain operations do not meet the materiality threshold of FASB Statement No.131, Disclosures about Segments of an Enterprise and Related Information, and have been grouped together as “Other”. The “Other” information primarily consists of the health care operations, as well as certain miscellaneous operations.

Because of integrated manufacturing operations and common administrative and marketing support, a substantial number of allocations must be made to determine operating

segment and geographic area data. Intersegment sales and revenues represent sales of components and finance charges which are generally based on market prices.

Information relating to operations by operating segment in millions of dollars follows. In addition to the following unaffiliated sales and revenues by segment, intersegment sales and revenues in 2005, 2004 and 2003 were as follows: agricultural equipment net sales of $105 million, $88 million and $61 million, construction and forestry net sales of $13 million, $11 million and $9 million, and credit revenues of $237 million, $216 million and $209 million, respectively.

OPERATING SEGMENTS	2005		2004		2003
Net sales and revenues
Unaffiliated customers:
Agricultural equipment net sales	$	10,567	$	9,717	$	7,390
Commercial and consumer equipment net sales	3,605		3,742		3,231
Construction and forestry net sales	5,229		4,214		2,728
Total net sales	19,401		17,673		13,349
Credit revenues	1,450		1,276		1,347
Other revenues*	1,080		1,037		839
Total	$	21,931	$	19,986	$	15,535

* Other revenues are primarily health care operations’ premiums and fee revenue and the Equipment Operations’ revenues for finance and interest income, and other income as disclosed in Note 28, net of certain intercompany eliminations.

Operating profit
Agricultural equipment	$	970		$	1,072		$	329
Commercial and consumer equipment	183			246			227
Construction and forestry	689			587			152
Credit*	491			466			474
Other*	41			5			30
Total operating profit	2,374			2,376			1,212
Interest income	103			64			59
Investment income	25
Interest expense	(211		)	(205		)	(217		)
Foreign exchange loss from equipment operations’ financing activities	(7		)	(10		)	(12		)
Corporate expenses – net	(122		)	(111		)	(62		)
Income taxes	(715		)	(708		)	(337		)
Total	(927		)	(970		)	(569		)
Net income	$	1,447		$	1,406		$	643

* Operating profit of the credit business segment includes the effect of its interest expense and foreign exchange gains or losses. The “Other” operating profit includes health care’s investment income.

Interest income*
Agricultural equipment	$	6		$	6		$	6
Commercial and consumer equipment	5			5			4
Construction and forestry	4			8			8
Credit**	1,241			992			1,000
Corporate	103			64			59
Intercompany**	(281		)	(241		)	(226		)
Total	$	1,078		$	834		$	851

* Does not include finance rental income for equipment on operating leases.

** Includes interest income from Equipment Operations for financing trade receivables.

OPERATING SEGMENTS	2005			2004			2003
Interest expense
Agricultural equipment*	$	138		$	127		$	133
Commercial and consumer equipment*	52			54			48
Construction and forestry*	34			24			19
Credit	607			423			437
Corporate	211			205			218
Intercompany*	(281		)	(241		)	(226		)
Total	$	761		$	592		$	629

* Includes interest compensation to credit operations for financing trade receivables.

*Depreciation and amortization expense**
Agricultural equipment	$	236	$	225	$	213
Commercial and consumer equipment	75		73		69
Construction and forestry	66		65		60
Credit	250		250		281
Other	9		8		8
Total	$	636	$	621	$	631

* Includes depreciation for equipment on operating leases.

Equity in income (loss) of unconsolidated affiliates
Agricultural equipment	$	8		$	2		$	(2	)
Commercial and consumer equipment	(1		)	(2		)	(1		)
Construction and forestry	(2		)				12
Credit	1			1
Total	$	6		$	1		$	9

Identifiable operating assets
Agricultural equipment	$	3,383		$	3,145		$	2,778
Commercial and consumer equipment	1,460			1,330			1,295
Construction and forestry	2,078			1,970			1,461
Credit	19,057			15,937			14,714
Other	405			368			321
Corporate*	7,254			6,004			5,689
Total	$	33,637		$	28,754		$	26,258

* Corporate assets are primarily the Equipment Operations’ prepaid pension costs, deferred income tax assets, marketable securities and cash and cash equivalents as disclosed in Note 28, net of certain intercompany eliminations.

Capital additions
Agricultural equipment	$	333	$	246	$	205
Commercial and consumer equipment	67		64		71
Construction and forestry	77		37		38
Credit	46		4		4
Other	1		14		2
Total	$	524	$	365	$	320

Investment in unconsolidated affiliates
Agricultural equipment	$	20	$	18	$	19
Commercial and consumer equipment	3		4		6
Construction and forestry	80		81		167
Credit	4		4		3
Other					1
Total	$	107	$	107	$	196

The company views and has historically disclosed its operations as consisting of two geographic areas, the U.S. and Canada, and outside the U.S. and Canada, shown below in millions of dollars. No individual foreign country’s net sales and revenues were material for disclosure purposes.

GEOGRAPHIC AREAS	2005		2004		2003
Net sales and revenues
Unaffiliated customers:
U.S. and Canada:
Equipment Operations net sales (90%)*	$	13,511	$	12,332	$	9,249
Financial Services revenues (88%)*	1,991		1,845		1,861
Total	15,502		14,177		11,110
Outside U.S. and Canada:
Equipment Operations net sales	5,890		5,340		4,100
Financial Services revenues	200		214		165
Total	6,090		5,554		4,265
Other revenues	339		255		160
Total	$	21,931	$	19,986	$	15,535

* The percentages indicate the approximate proportion of each amount that relates to the U.S. only and are based upon a three-year average for 2005, 2004 and 2003.

Operating profit
U.S. and Canada:
Equipment Operations	$	1,298	$	1,284	$	386
Financial Services	472		418		469
Total	1,770		1,702		855
Outside U.S. and Canada:
Equipment Operations	544		621		322
Financial Services	60		53		35
Total	604		674		357
Total	$	2,374	$	2,376	$	1,212

Property and equipment
U.S.	$	1,434	$	1,328	$	1,297
Germany	284		276		241
Mexico	195		200		215
Other countries	452		358		323
Total	$	2,365	$	2,162	$	2,076

27. SUPPLEMENTAL INFORMATION (UNAUDITED)

Quarterly information with respect to net sales and revenues and earnings is shown in the following schedule. Such information is shown in millions of dollars except for per share amounts.

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
2005
Net sales and revenues	$	4,127	$	6,622	$	6,005	$	5,177
Income before income taxes	346		895		583		332
Net income	223		604		387		233
Net income per share – basic	.90		2.46		1.60		.97
Net income per share – diluted	.89		2.43		1.58		.96
Dividends declared per share	.28		.31		.31		.31
Dividends paid per share	.28		.28		.31		.31

2004
Net sales and revenues	$	3,484	$	5,877	$	5,418	$	5,207
Income before income taxes	262		742		585		525
Net income	171		477		401		357
Net income per share – basic	.70		1.93		1.61		1.44
Net income per share – diluted	.68		1.88		1.58		1.41
Dividends declared per share	.22		.28		.28		.28
Dividends paid per share	.22		.22		.28		.28

Net income per share for each quarter must be computed independently. As a result, their sum may not equal the total net income per share for the year.

Common stock per share sales prices from New York Stock Exchange composite transactions quotations follow:

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
2005 Market price
High	$	74.73	$	72.49	$	73.98	$	73.85
Low	$	61.47	$	61.01	$	58.70	$	56.99
2004 Market price
High	$	67.41	$	74.93	$	70.49	$	65.95
Low	$	59.20	$	60.00	$	60.60	$	56.72

At October 31, 2005, there were 29, 326 holders of record of the company’s $1 par value common stock.

Dividend and Other Events

The board of directors, at its meeting on November 30, 2005, increased the quarterly cash dividend by more than 25 percent to $.39 per share, payable on February 1, 2006, to stockholders of record on December 31, 2005. The board of directors also authorized the repurchase of up to 26 million additional shares of the company’s common stock. Repurchases of common stock under this plan will be made from time to time, at the company’s discretion, in the open market or through privately negotiated transactions.

On December 6, 2005, the company announced it has signed an agreement to sell all of the stock of its wholly-owned subsidiary, John Deere Health Care, Inc., to UnitedHealthcare for approximately $500 million. The company is projecting to close the sale by April 1, 2006. As of October 31, 2005, John Deere Health Care, Inc. had total assets of approximately $375 million consisting primarily of marketable securities and $250 million of liabilities consisting primarily of accounts payable and accrued expenses, and health care claims and reserves. The company anticipates that a gain on the sale of approximately $350 million pretax or $225 million after-tax will be recognized.

28. SUPPLEMENTAL CONSOLIDATING DATA

INCOME STATEMENT

For the Years Ended October 31, 2005, 2004 and 2003

(In millions of dollars)

	EQUIPMENT OPERATIONS*						FINANCIAL SERVICES
	2005		2004		2003		2005		2004		2003
Net Sales and Revenues
Net sales	$	19,401.4	$	17,673.0	$	13,349.1
Finance and interest income	118.8		83.2		77.6		$	1,601.5	$	1,353.7	$	1,424.0
Health care premiums and fees							745.1		784.8		683.1
Other income	308.1		236.1		145.3		100.9		154.3		145.3
Total	19,828.3		17,992.3		13,572.0		2,447.5		2,292.8		2,252.4

Costs and Expenses
Cost of sales	15,179.3		13,582.3		10,767.5
Research and development expenses	677.3		611.6		577.3
Selling, administrative and general expenses	1,766.8		1,647.6		1,284.7		459.1		477.1		466.3
Interest expense	211.3		205.0		217.6		607.3		423.3		437.2
Interest compensation to Financial Services	223.1		205.1		199.6
Health care claims and costs							573.9		650.3		536.1
Other operating expenses	146.4		97.7		57.8		275.5		271.4		309.0
Total	18,204.2		16,349.3		13,104.5		1,915.8		1,822.1		1,748.6

Income of Consolidated Group before Income Taxes	1,624.1		1,643.0		467.5		531.7		470.7		503.8
Provision for income taxes	527.7		546.4		162.4		187.3		162.1		174.5
Income of Consolidated Group	1,096.4		1,096.6		305.1		344.4		308.6		329.3

Equity in Income of Unconsolidated Subsidiaries and Affiliates
Credit	317.4		306.2		310.5		.6		.6		.2
Other	33.0		3.3		27.5						.2
Total	350.4		309.5		338.0		.6		.6		.4

Net Income	$	1,446.8	$	1,406.1	$	643.1	$	345.0	$	309.2	$	329.7

* Deere & Company with Financial Services on the equity basis.

The supplemental consolidating data is presented for informational purposes. The “Equipment Operations” (Deere & Company with Financial Services on the Equity Basis) reflect the basis of consolidation described in Note 1 to the consolidated financial statements. The consolidated group data in the “Equipment Operations” income statement reflect the results of the agricultural equipment, commercial and consumer equipment and construction and forestry operations. The supplemental “Financial Services” data represent primarily Deere & Company’s credit and health care operations. Transactions between the “Equipment Operations” and “Financial Services” have been eliminated to arrive at the consolidated financial statements.

BALANCE SHEET

As of October 31, 2005 and 2004

(In millions of dollars except per share amounts)

	EQUIPMENT OPERATIONS*						FINANCIAL SERVICES
	2005			2004			2005		2004
ASSETS
Cash and cash equivalents	$	1,943.9		$	2,915.1		$	314.2	$	266.0
Cash equivalents deposited with unconsolidated subsidiaries	179.7			224.4
Cash and cash equivalents	2,123.6			3,139.5			314.2		266.0
Marketable securities	2,158.7						291.0		246.7
Receivables from unconsolidated subsidiaries and affiliates	324.4			1,469.5			.3		.7
Trade accounts and notes receivable - net	873.7			781.5			2,621.6		2,765.8
Financing receivables - net	5.6			64.7			12,863.8		11,167.9
Restricted financing receivables-net							1,457.9
Other receivables	401.2			498.4			159.9		164.6
Equipment on operating leases - net				8.9			1,335.6		1,288.0
Inventories	2,134.9			1,999.1
Property and equipment - net	2,277.3			2,112.3			87.6		49.4
Investments in unconsolidated subsidiaries and affiliates	2,478.4			2,250.2			4.3		4.1
Goodwill	1,088.5			973.6
Other intangible assets - net	18.3			21.6					.1
Prepaid pension costs	2,638.5			2,474.5			24.2		18.6
Other assets	173.5			206.2			257.3		309.1
Deferred income taxes	729.7			656.7			11.1
Deferred charges	102.2			86.8			32.5		23.7

Total Assets	$	17,528.5		$	16,743.5		$	19,461.3	$	16,304.7

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES
Short-term borrowings	$	677.4		$	311.9		$	6,206.4	$	3,145.6
Payables to unconsolidated subsidiaries and affiliates	141.1			142.8			485.7		1,676.3
Accounts payable and accrued expenses	4,044.7			3,683.8			717.9		631.0
Health care claims and reserves							128.4		135.9
Accrued taxes	188.2			162.0			26.1		17.2
Deferred income taxes	11.8			35.9			163.6		155.3
Long-term borrowings	2,423.4			2,728.5			9,315.4		8,361.9
Retirement benefit accruals and other liabilities	3,190.4			3,285.8			41.9		33.9

Total liabilities	10,677.0			10,350.7			17,085.4		14,157.1

STOCKHOLDERS’ EQUITY
Common stock, $1 par value (authorized - 600,000,000 shares; issued - 268,215,602 shares in 2005 and 2004), at stated value	2,081.7			2,043.5			997.8		974.1
Common stock in treasury, 31,343,892 shares in 2005 and 21,356,458 shares in 2004, at cost	(1,743.5		)	(1,040.4		)
Unamortized restricted stock compensation	(16.4		)	(12.7		)
Retained earnings	6,556.1			5,445.1			1,320.9		1,142.7
Total	6,877.9			6,435.5			2,318.7		2,116.8
Minimum pension liability adjustment	(108.9		)	(57.2		)
Cumulative translation adjustment	70.6			9.1			40.9		24.3
Unrealized gain (loss) on derivatives	6.2			(6.4		)	7.4		(5.3		)
Unrealized gain on investments	5.7			11.8			8.9		11.8
Accumulated other comprehensive income (loss)	(26.4		)	(42.7		)	57.2		30.8
Total stockholders’ equity	6,851.5			6,392.8			2,375.9		2,147.6

Total Liabilities and Stockholders’ Equity	$	17,528.5		$	16,743.5		$	19,461.3	$	16,304.7

* Deere & Company with Financial Services on the equity basis.

The supplemental consolidating data is presented for informational purposes. The “Equipment Operations” (Deere & Company with Financial Services on the Equity Basis) reflect the basis of consolidation described in Note 1 to the consolidated financial statements. The supplemental “Financial Services” data represent primarily Deere & Company’s credit and health care operations. Transactions between the “Equipment Operations” and “Financial Services” have been eliminated to arrive at the consolidated financial statements.

STATEMENT OF CASH FLOWS

For the Years Ended October 31, 2005, 2004 and 2003

(In millions of dollars)

	EQUIPMENT OPERATIONS*									FINANCIAL SERVICES
	2005			2004			2003			2005			2004			2003
Cash Flows from Operating Activities
Net income	$	1,446.8		$	1,406.1		$	643.1		$	345.0		$	309.2		$	329.7
Adjustments to reconcile net income to net cash provided by operating activities: Provision for doubtful receivables	13.2			9.3			17.9			12.9			42.1			88.9
Provision for depreciation and amortization	377.4			362.7			341.6			297.9			291.7			329.0
Undistributed earnings of unconsolidated subsidiaries and affiliates	(181.8		)	156.2			(86.9		)	(.6		)	(.5		)	(.4		)
Provision (credit) for deferred income taxes	(40.2		)	374.4			19.8			(9.1		)	10.6			13.3
Changes in assets and liabilities:
Receivables	16.7			(112.9		)	338.6			(4.3		)	35.6			(42.5		)
Inventories	(68.5		)	(293.6		)	84.1
Accounts payable and accrued expenses	295.6			916.0			(162.0		)	78.5			(9.0		)	(29.6		)
Other**	(197.8		)	(1,435.0		)	7.1			(134.9		)	(26.3		)	5.9
Net cash provided by operating activities	1,661.4			1,383.2			1,203.3			585.4			653.4			694.3

Cash Flows from Investing Activities
Collections of receivables				37.0			11.5			27,407.3			24,015.1			19,396.3
Proceeds from sales of financing receivables										132.7			2,333.6			1,941.0
Proceeds from maturities and sales of marketable securities	1,016.0									48.9			66.7			76.4
Proceeds from sales of equipment on operating leases	5.6			.8			.1			393.5			443.6			514.4
Proceeds from sales of businesses	50.0			90.4			22.5						.2
Cost of receivables acquired				(17.3		)	(4.2		)	(30,415.2		)	(27,864.3		)	(22,011.5		)
Purchases of marketable securities	(3,175.4		)							(100.9		)	(79.5		)	(118.2		)
Purchases of property and equipment	(466.9		)	(345.9		)	(303.4		)	(45.7		)	(18.0		)	(6.2		)
Cost of operating leases acquired							(2.8		)	(687.4		)	(571.1		)	(470.9		)
Acquisitions of businesses, net of cash acquired	(169.7		)	(192.9		)	(10.6		)
Decrease (increase) in receivables from unconsolidated affiliates													274.3			(14.5		)
Other	(10.5		)	34.4			9.4			(42.9		)	(37.2		)	(39.3		)
Net cash used for investing activities	(2,750.9		)	(393.5		)	(277.5		)	(3,309.7		)	(1,436.6		)	(732.5		)

Cash Flows from Financing Activities
Increase (decrease) in short-term borrowings	96.7			(63.3		)	(123.2		)	1,717.7			(292.8		)	250.1
Change in intercompany receivables/payables	1,132.7			(1,656.1		)	50.5			(1,177.4		)	1,264.3			(563.2		)
Proceeds from long-term borrowings				10.9			9.1			3,805.4			2,178.7			3,303.8
Principal payments on long-term borrowings	(76.6		)	(267.4		)	(19.0		)	(1,433.0		)	(2,045.2		)	(2,523.7		)
Proceeds from issuance of common stock	153.6			250.8			174.5
Repurchases of common stock	(918.9		)	(193.1		)	(.4		)
Dividends paid	(289.7		)	(246.6		)	(210.5		)	(166.7		)	(444.2		)	(247.9		)
Other	(2.0		)	(.4		)	(1.8		)	23.7			2.7
Net cash provided by (used for) financing activities	95.8			(2,165.2		)	(120.8		)	2,769.7			663.5			219.1

Effect of Exchange Rate Changes on Cash	(22.2		)	27.6			53.1			2.8			10.5			18.0

Net Increase (Decrease) in Cash and Cash Equivalents	(1,015.9		)	(1,147.9		)	858.1			48.2			(109.2		)	198.9
Cash and Cash Equivalents at Beginning of Year	3,139.5			4,287.4			3,429.3			266.0			375.2			176.3
Cash and Cash Equivalents at End of Year	$	2,123.6		$	3,139.5		$	4,287.4		$	314.2		$	266.0		$	375.2

* Deere & Company with Financial Services on the equity basis.

** Primarily related to pension and other postretirement benefits in 2004.

The supplemental consolidating data is presented for informational purposes. The “Equipment Operations” (Deere & Company with Financial Services on the Equity Basis) reflect the basis of consolidation described in Note 1 to the consolidated financial statements. The supplemental “Financial Services” data represent primarily Deere & Company’s credit and health care operations. Transactions between the “Equipment Operations” and “Financial Services” have been eliminated to arrive at the consolidated financial statements.

DEERE & COMPANY

SELECTED FINANCIAL DATA

(Dollars in millions except per share amounts)

	2005			2004			2003			2002			2001			2000			1999			1998			1997			1996
Net sales and revenues	$	21,931		$	19,986		$	15,535		$	13,947		$	13,293		$	13,137		$	11,751		$	13,822		$	12,791		$	11,229

Net sales	19,401			17,673			13,349			11,703			11,077			11,169			9,701			11,926			11,082			9,640

Finance and interest income	1,440			1,196			1,276			1,339			1,445			1,321			1,104			1,007			867			763

Research and development expenses	677			612			577			528			590			542			458			445			412			370

Selling, administrative and general expenses	2,219			2,117			1,744			1,657			1,717			1,505			1,362			1,309			1,321			1,147

Interest expense	761			592			629			637			766			677			557			519			422			402

Income (loss) before goodwill amortization	1,447			1,406			643			372			(13		)	526			264			1,036			978			828

Goodwill amortization - after-tax										53			51			40			25			15			18			11

Net income (loss)	1,447			1,406			643			319			(64		)	486			239			1,021			960			817

Return on net sales	7.5		%	8.0		%	4.8		%	2.7		%	(.6		)%	4.3		%	2.5		%	8.6		%	8.7		%	8.5		%

Return on beginning stockholders’ equity	22.6		%	35.1		%	20.3		%	8.0		%	(1.5		)%	11.9		%	5.9		%	24.6		%	27.0		%	26.5		%

Income (loss) per share before goodwill amortization - basic	$	5.95		$	5.69		$	2.68		$	1.56		$	(.05	)	$	2.24		$	1.14		$	4.26		$	3.85		$	3.18
Net income (loss) per share - basic	5.95			5.69			2.68			1.34			(.27		)	2.07			1.03			4.20			3.78			3.14
Net income (loss) per share - diluted	5.87			5.56			2.64			1.33			(.27		)	2.06			1.02			4.16			3.74			3.11
Dividends declared per share	1.21			1.06			.88			.88			.88			.88			.88			.88			.80			.80
Dividends paid per share	1.18			1.00			.88			.88			.88			.88			.88			.86			.80			.80
Average number of common shares outstanding (in millions)- basic	243.3			247.2			240.2			238.2			235.0			234.3			232.9			243.3			253.7			260.5
- diluted	246.4			253.1			243.3			240.9			236.8			236.0			234.4			245.7			256.6			263.2

Total assets	$	33,637		$	28,754		$	26,258		$	23,768		$	22,663		$	20,469		$	17,578		$	18,002		$	16,320		$	14,653

Trade accounts and notes receivable - net	3,118			3,207			2,619			2,734			2,923			3,169			3,251			4,059			3,334			3,153

Financing receivables - net	12,869			11,233			9,974			9,068			9,199			8,276			6,743			6,333			6,405			5,912

Restricted financing receivables - net	1,458

Equipment on operating leases - net	1,336			1,297			1,382			1,609			1,939			1,954			1,655			1,209			775			430

Inventories	2,135			1,999			1,366			1,372			1,506			1,553			1,294			1,287			1,073			829

Property and equipment - net	2,365			2,162			2,076			1,998			2,052			1,912			1,782			1,700			1,524			1,352

Short-term borrowings:
Equipment Operations	678			312			577			398			773			928			642			1,512			171			223
Financial Services	6,206			3,146			3,770			4,039			5,425			4,831			3,846			3,810			3,604			2,921
Total	6,884			3,458			4,347			4,437			6,198			5,759			4,488			5,322			3,775			3,144

Long-term borrowings:
Equipment Operations	2,423			2,728			2,727			2,989			2,210			1,718			1,036			553			540			626
Financial Services	9,316			8,362			7,677			5,961			4,351			3,046			2,770			2,239			2,083			1,799
Total	11,739			11,090			10,404			8,950			6,561			4,764			3,806			2,792			2,623			2,425

Total stockholders’ equity	6,852			6,393			4,002			3,163			3,992			4,302			4,094			4,080			4,147			3,557

Book value per share	$	28.92		$	25.90		$	16.43		$	13.24		$	16.82		$	18.34		$	17.51		$	17.56		$	16.57		$	13.83

Capital expenditures	$	512		$	364		$	313		$	358		$	495		$	419		$	308		$	438		$	492		$	277

Number of employees (at year end)	47,423			46,465			43,221			43,051			45,069			43,670			38,726			37,002			34,420			33,919

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Deere & Company:

We have audited the accompanying consolidated balance sheets of Deere & Company and subsidiaries (the “Company”) as of October 31, 2005 and 2004, and the related statements of consolidated income, changes in consolidated stockholders’ equity and consolidated cash flows for each of the three years in the period ended October 31, 2005. Our audits also included the financial statement schedule listed in the Index under Part III, Item 15(2). We also have audited management’s assessment, included in Management’s Report on Internal Control over Financial Reporting, that the Company maintained effective internal control over financial reporting as of October 31, 2005, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on these financial statements and financial statement schedule, an opinion on management’s assessment, and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audit of financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 31, 2005 and 2004, and the results of its operations and its cash flows for each of the three years in the period ended October 31, 2005, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also in our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of October 31, 2005, is fairly stated, in all material respects, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 31, 2005, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Deloitte & Touche LLP

Chicago, Illinois

December 16, 2005

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		DEERE & COMPANY

	By:	/s/ R. W. Lane
		R. W. Lane
		Chairman and Chief Executive Officer

Date: 20 December 2005

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated..

Each person signing below also hereby appoints Robert W. Lane, Nathan J. Jones and James H. Becht, and each of them singly, his or her lawful attorney-in-fact with full power to execute and file any and all amendments to this report together with exhibits thereto and generally to do all such things as such attorney-in-fact may deem appropriate to enable Deere & Company to comply with the provisions of the Securities Exchange Act of 1934 and all requirements of the Securities and Exchange Commission.

Signature		Title	Date

/s/ John R. Block		Director	)
	John R. Block		)
			)
			)
/s/ C. C. Bowles		Director	)
	C. C. Bowles		)
			)
			)
/s/ Vance D. Coffman		Director	)
	Vance D. Coffman		)	20 December 2005
			)
			)
/s/ T. Kevin Dunnigan		Director	)
	T. Kevin Dunnigan		)
			)
			)

Signature		Title	Date

/s/ Leonard A. Hadley		Director	)
	Leonard A. Hadley		)
			)
			)
/s/ Dipak C. Jain		Director	)
	Dipak C. Jain		)
		Senior Vice President,	)
/s/ Nathan J. Jones		Chief Financial Officer and	)
	Nathan J. Jones	Chief Accounting Officer	)
			)
			)
/s/ Arthur L. Kelly		Director	)
	Arthur L. Kelly		)
			)
			)
/s/ R. W. Lane		Chairman, Director and	)
	R. W. Lane	Chief Executive Officer	)
			) 20 December 2005
			)
/s/ Antonio Madero B.		Director	)
	Antonio Madero B.		)
			)
			)
/s/ Joachim Milberg		Director	)
	Joachim Milberg		)
			)
			)
/s/ Thomas H. Patrick		Director	)
	Thomas H. Patrick		)
			)
			)
/s/ Aulana L. Peters		Director	)
	Aulana L. Peters		)
			)
			)
/s/ John R. Walter		Director	)
	John R. Walter		)
			)

SCHEDULE II

DEERE & COMPANY AND CONSOLIDATED SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

Column A	Column B		Column C						Column D			Column E
			Additions
	Balance at		Charged to									Balance
	Beginning		costs and			Charged to other accounts			Deductions			at end
Description	of period		expenses			Description	Amount		Description	Amount		of period

YEAR ENDED OCTOBER 31, 2005
Allowance for doubtful receivables:
Equipment Operations
Trade receivable allowances	$	43,248	$	13,218		Bad debt recoveries	$	407	Trade receivable write-offs	$	9,654	$	48,219
						Acquisitions	1,053		Transfers related to trade receivable sales	53
Financial Services
Trade receivable allowances	12,686		(5,759		)	Acquisitions	53		Trade receivable write-offs	1,209		5,771
Financing receivable allowances	145,437		19,350			Other changes	3,281		Financing receivable write-offs	27,735		140,333

Consolidated receivable allowances	$	201,371	$	26,809			$	4,794		$	38,651	$	194,323

YEAR ENDED OCTOBER 31, 2004
Allowance for doubtful receivables:
Equipment Operations
Trade receivable allowances	$	40,698	$	9,288		Bad debt recoveries	$	50	Trade receivable write-offs	$	5,764	$	43,248
									Transfers related to trade receivable sales	1,024

Financial Services
Trade receivable allowances	16,855		(1,476		)	Acquisitions	1,024		Trade receivable write-offs	3,717		12,686
Financing receivable allowances	149,081		43,444						Other changes-primarily retail note sales	10,303
									Financing receivable write-offs	36,785		145,437

Consolidated receivable allowances	$	206,634	$	51,256			$	1,074		$	57,593	$	201,371

YEAR ENDED OCTOBER 31, 2003
Allowance for doubtful receivables:
Equipment Operations
Trade receivable allowances	$	32,723	$	17,912		Bad debt recoveries	$	411	Trade receivable write-offs	$	7,471	$	40,698
									Transfers related to trade receivable sales	2,877
Financial Services
Trade receivable allowances	12,367		4,666			Acquisitions	2,877		Trade receivable write-offs	3,055		16,855
Financing receivable allowances	136,446		84,133						Other changes-primarily retail note sales	14,889
									Financing receivable write-offs	56,609		149,081

Consolidated receivable allowances	$	181,536	$	106,711			$	3,288		$	84,901	$	206,634

INDEX TO EXHIBITS

2.		Not applicable

3.1		Certificate of incorporation, as amended (Exhibit 3.1 to Form 10-K of registrant for the year ended October 31, 1999, Securities and Exchange Commission File Number 1-4121*)

3.2		Certificate of Designation Preferences and Rights of Series A Participating Preferred Stock (Exhibit 3.2 to Form 10-K of registrant for the year ended October 31, 1998, Securities and Exchange Commission File Number 1-4121*)

3.3		Bylaws, as amended (Exhibit 3 to Form 8-K of registrant dated February 23, 2005*)

4.1		Five-Year Credit Agreement among registrant, John Deere Capital Corporation, various financial institutions, JPMorgan Chase Bank as administrative agent, Citibank N.A. and Credit Suisse First Boston as documentation agents, Merrill Lynch Bank USA as co-documentation agent, and Bank of America, N.A. and Deutsche Bank AG, New York Branch as syndication agents, et al, dated as of February 17, 2004 (Exhibit 4.1 to Form 10-Q of registrant for the quarter ended January 31, 2004*)

4.2		Five-Year Credit Agreement among registrant, John Deere Capital Corporation, various financial institutions, JPMorgan Chase Bank N.A. as administrative agent, Citibank N.A. and Credit Suisse First Boston as documentation agents, Merrill Lynch Bank USA as co-documentation agent, and Bank of America, N.A. and Deutsche Bank AG, New York Branch as syndication agents, et al, dated as of February 15, 2005 (Exhibit 4.1 to Form 10-Q of registrant for the quarter ended January 31, 2005*)

4.3		364-Day Credit Agreement among registrant, John Deere Capital Corporation, various financial institutions, JPMorgan Chase Bank N.A. as administrative agent, Citibank N.A. and Credit Suisse First Boston as documentation agents, Merrill Lynch Bank USA as co-documentation agent, and Bank of America, N.A. and Deutsche Bank AG, New York Branch as syndication agents, et al, dated as of February 15, 2005 (Exhibit 4.2 to Form 10-Q of registrant for the quarter ended January 31, 2005*)

4.3		Form of common stock certificate (Exhibit 4.6 to Form 10-K of registrant for the year ended October 31, 1998, Securities and Exchange Commission File Number 1-4121*)

4.4		Rights Agreement dated as of December 3, 1997 between registrant and The Bank of New York (Exhibit 4.4 to Form 10-K of registrant for the year ended October 31, 2002*)

4.5		Terms and Conditions of the Notes, published on May 31, 2002, applicable to theU.S.$3,000,000,000 Euro Medium Term Note Programme of registrant, John Deere CapitalCorporation, John Deere Bank S.A., John Deere Finance S.A., John Deere Credit Limited, John DeereB.V., John Deere Credit Inc. and John Deere Limited (Exhibit 4.5 to Form 10-K of registrant for the yearended October 31, 2002*)

Certain instruments relating to long-term debt constituting less than 10% of the registrant’s total assets, are not filed as exhibits herewith pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. The registrant will file copies of such instruments upon request of the Commission.

9.		Not applicable

10.1		Agreement as amended November 1, 1994 between registrant and John Deere Capital Corporation concerning agricultural retail notes (Exhibit 10.1 to Form 10-K of registrant for the year ended October 31, 1998, Securities and Exchange Commission File Number 1-4121*)

10.2		Agreement as amended November 1, 1994 between registrant and John Deere Capital Corporation relating to lawn and grounds care retail notes (Exhibit 10.2 to Form 10-K of registrant for the year ended October 31, 1998, Securities and Exchange Commission File Number 1-4121*)

10.3		Agreement as amended November 1, 1994 between John Deere Construction Equipment Company, a wholly-owned subsidiary of registrant and John Deere Capital Corporation concerning construction retail notes (Exhibit 10.3 to Form 10-K of registrant for the year ended October 31, 1998, Securities and Exchange Commission File Number 1-4121*)

10.4		Agreement dated July 14, 1997 between the John Deere Construction Equipment Company and John Deere Capital Corporation concerning construction retail notes (Exhibit 10.4 to Form 10-K of registrant for the year ended October 31, 2003*)

10.5		Agreement dated November 1, 2003 between registrant and John Deere Capital Corporation relating to fixed charges ratio, ownership and minimum net worth of John Deere Capital Corporation (Exhibit 10.5 to Form 10-K of registrant for the year ended October 31, 2003*)

10.6		Deere & Company Voluntary Deferred Compensation Plan (Exhibit 10.9 to Form 10-K of registrant for the year ended October 31, 1998, Securities and Exchange Commission File Number 1-4121*)

10.7		John Deere Performance Bonus Plan as amended December 6, 2000 (Exhibit 10.7 to Form 10-K of registrant for the year ended October 31, 2000*)

10.8		John Deere Mid-Term Incentive Bonus Plan (Appendix A to Notice and Proxy Statement of registrant for the annual shareholder meeting on February 26, 2003*)

10.9		1991 John Deere Stock Option Plan (Exhibit 10.9 to Form 10-K of registrant for the year ended October 31, 1999*)

10.10		John Deere Omnibus Equity and Incentive Plan (Exhibit 4.3 to Registration Statement on Form S-8 no. 333-103757 filed March 11, 2003*)

10.11		Form of John Deere Nonqualified Stock Option Grant (Exhibit 10.11 to Form 10-K of registrant for the year ended October 31, 2004*)

10.12		Form of John Deere Restricted Stock Unit Grant

10.13		Form of Nonemployee Director Restricted Stock Grant (Exhibit 10.13 to Form 10-K of registrant for the year ended October 31, 2004*

10.14		John Deere Defined Contribution Restoration Plan as amended December 2005

10.15		John Deere Supplemental Pension Benefit Plan, as amended December 2005

10.16		John Deere Senior Supplementary Pension Benefit Plan as amended December 2005

10.17		John Deere ERISA Supplementary Pension Benefit Plan as amended December 2005

10.18		Nonemployee Director Stock Ownership Plan (Appendix A to Notice and Proxy Statement of registrant for the annual shareholder meeting on February 27, 2002 *)

10.19		Deere & Company Nonemployee Director Deferred Compensation Plan as amended May 26, 1999 (Exhibit 10.16 to Form 10-K of registrant for the year ended October 31, 1999, Securities and Exchange Commission File Number 1-4121*)

10.20		Form of Severance Protection Agreement between registrant and the executive officers (Exhibit 10.1 to Form 10-Q of registrant for the quarter ended April 30, 2000*)

10.21		Early Retirement Agreement dated August 10, 2001 between registrant and Ferdinand F. Korndorf (Exhibit 10.18 to Form 10-K of registrant for the year ended October 31, 2001*)

10.22		Asset Purchase Agreement dated October 29, 2001 between registrant and Deere Capital, Inc. concerning the sale of trade receivables (Exhibit 10.19 to Form 10-K of registrant for the year ended October 31, 2001*)

10.23		Asset Purchase Agreement dated October 29, 2001 between John Deere Construction & Forestry Company and Deere Capital, Inc. concerning the sale of trade receivables (Exhibit 10.20 to Form 10-K of registrant for the year ended October 31, 2001*)

10.24		Factoring Agreement dated September 20, 2002 between John Deere Finance S.A. and John Deere Vertrieb, a branch of Deere & Company, concerning the sale of trade receivables (Exhibit 10.21 to Form 10-K of registrant for the year ended October 31, 2002*)

10.25		Receivables Purchase Agreement dated August 23, 2002 between John Deere Finance S.A. and John Deere Limited (Scotland) concerning the sale of trade receivables (Exhibit 10.22 to Form 10-K of registrant for the year ended October 31, 2002*)

10.26		Joint Venture Agreement dated May 16, 1988 between registrant and Hitachi Construction Machinery Co., Ltd

10.27		Marketing Profit Sharing Agreement dated January 1, 2002 between John Deere Construction and Forestry Equipment Company (n.k.a. John Deere Construction & Forestry Company) and Hitachi Construction Machinery Holding U.S.A. Corporaiton

10.28		Integrated Marketing Agreement dated October 16, 2001 between registrant and Hitachi Construction Machinery Co. Ltd.

12.		Computation of ratio of earnings to fixed charges

13.		Not applicable

14.		Not applicable

16.		Not applicable

18.		Not applicable

21.		Subsidiaries

22.		Not applicable

23.		Consent of Deloitte & Touche LLP

24.		Power of Attorney (included on signature page)

31.1		Rule 13a-14(a)/15d-14(a) Certification

31.2		Rule 13a-14(a)/15d-14(a) Certification

32		Section 1350 Certifications

*Incorporated by reference. Copies of these exhibits are available from the Company upon request.

EXHIBIT 10.12

[Date]

«Name»

«Address1»

«Address2»

«City», «State» «Zip»

«Country»

D ear «nickname»:

I am pleased to advise you that on [Date] (the “grant date”) you were awarded [ ] Restricted Stock Units (RSU’s) pursuant to the John Deere Omnibus Equity and Incentive Plan (Plan). Since this letter agreement, together with the Plan, contains the terms of your grant you should read this letter carefully. Please note that your signature is required at the bottom of page four.

RSU’s are an element of total executive compensation designed as a long-term incentive to encourage ownership and focus thinking on stockholder value.

RSU’s are common stock equivalents and represent the right to receive an equivalent number of shares of Deere & Company (Company) $1 par common stock (Common Stock) if and when certain vesting and retention requirements, as detailed below, are satisfied.

Individual awards are determined by the Deere & Company Board of Directors Compensation Committee (Committee).

Your RSU’s are subject to the following provisions:

(1) Restriction Period . Except as provided in paragraph (5) below, your RSU’s will vest on the third anniversary of the grant date.

In addition, you are required to hold your RSU’s until the earlier of :

(i) the fifth anniversary of the grant date; or

(ii) the first business day in the later of the January or July following your retirement or termination of employment.

When the vesting and retention restrictions on your RSU’s lapse, you will receive a certificate for the shares of common stock represented by your RSU’s (net of any shares withheld for taxes) and your RSU’s will terminate.

You may not sell, transfer, gift, pledge, assign or otherwise alienate the RSU’s while they are subject to the vesting or retention restrictions. Any attempt to do so contrary to the provisions hereof shall be null and void.

(2) Deferral Election . On or prior to the earlier of :

(i) the fourth anniversary of the date of grant of the RSU’s; or

(ii) the date that is twelve months prior to your retirement or termination of employment,

you may irrevocably elect to defer the delivery of the shares of Common Stock that would otherwise be due by virtue of the lapse of the retention restriction set forth in paragraph (1) above. Any deferral election received after the earlier of the above dates shall be null and void and of no effect.

If such deferral election is made, the RSU’s will be converted to shares of Common Stock upon the earlier of :

(i) the tenth (or later, if elected) anniversary of the grant date; or

(ii) five years after the first business day in the later of the January or July following your retirement or termination of employment.

Making the deferral election will defer the conversion for five years (or possibly more, if elected) from the date the conversion would have occurred but for the election. Deferral election forms may be obtained from and returned to the Director, Compensation and Benefits, Deere & Company.

The share certificate (net of any shares withheld for taxes) will be delivered to you as soon as practicable thereafter. The RSU’s shall be retained by you and shall be non-transferable prior to conversion.

(3) Voting Rights . You have no voting rights with respect to the RSU’s.

(4) Dividends and Other Distributions . You are entitled to receive cash payments on the RSU’s equal to any cash dividends paid during the restriction period with respect to the corresponding number of shares of Common Stock. If any stock dividends are paid in shares of Common Stock during the restriction period, you will receive additional RSU’s equal to the number of Common Stock shares paid with respect to the corresponding number of shares of Common Stock.

(5) Termination of Employment . If you terminate employment during the vesting period due to disability or retirement pursuant to the John Deere Pension Plan for Salaried Employees or any successor plan, subject to paragraph (6) below, the RSU’s will continue to vest over the three-year period from the date of grant.

If your employment terminates during the vesting period due to death, a prorated number of the RSU’s will vest based on the number of full months employed after the grant date divided by 36 months. The remaining unvested RSU’s will be forfeited. The retention restrictions will lapse on the first business day in January following your death at which time the vested RSUs shall be converted to shares of common stock notwithstanding any deferral election.

If your employment terminates for cause, or for any other reasons not specifically mentioned herein, all unvested RSU’s held by you at that time shall be forfeited by you.

The Committee may, at its sole discretion, waive any automatic forfeiture provisions or apply new restrictions to the RSU’s. There shall be no acceleration of the lapse of restrictions or deferral of conversions of RSU’s except as permitted by Section 409A of the Internal Revenue Code or by regulations of the Secretary of the United States Treasury.

(6) Non-Compete Condition . In the event that your employment terminates during the 36 month vesting period of the RSU’s with the consent of the Committee or by reason of retirement or disability, your rights to the continued vesting of the RSU’s shall be subject to the conditions that until the RSU’s vest, you shall (a) not engage, either directly or indirectly, in any manner or capacity as advisor, principal, agent, partner, officer, director, employee, member of any association or otherwise, in any business or activity which is at the time competitive with any business or activity conducted by the Company and (b) be available, except in the event of your death, at reasonable times for consultations (which shall not require substantial time or effort) at the request of the Company’s management with respect to phases of the business with which you were actively connected during employment, but such consultations shall not (except if your place of active service was outside of the United States) be required to be performed at any place or places outside of the United States of America or during usual vacation periods or periods of illness or other incapacity. In the event that either of the above conditions is not fulfilled, you shall forfeit all rights to any unvested RSU’s, held on the date of the breach of the condition. Any determination by the Committee, which shall act upon the recommendation of the Chairman, that you are, or have, engaged in a competitive business or activity as aforesaid or have not been available for consultations as aforesaid shall be conclusive.

(7) Conformity with Plan . Your RSU’s award is issued pursuant to Section 5.1 (Other Awards) of the Plan and is intended to conform in all respects with the Plan. Inconsistencies between this letter and the Plan shall be resolved in accordance with the terms of the Plan. By executing and returning the enclosed copy of this letter, you agree to be bound by all the terms of the Plan and restrictions contained in this letter. All definitions stated in the Plan shall be fully applicable to this letter.

(8) Amendment . This Agreement may be amended only by a writing executed by the Company and you that specifically states that it is amending this Agreement. Notwithstanding the foregoing, this Agreement may be amended solely by the Committee by a writing which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to you, and provided that no such amendment adversely affecting your rights hereunder may be made without your written consent. Without limiting the foregoing, the Committee reserves the right to change, by written notice to you, the provisions of the RSU’s or this Agreement in any way it may deem necessary or advisable to carry out the purpose of the grant as a result of any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision, provided that any such change shall be applicable only to RSU’s which are then subject to restrictions as provided herein.

(9) Severability . If all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid. Any part of this Agreement so declared to be unlawful or invalid shall, if possible, be construed in a manner that will give effect to the terms thereof to the fullest extent possible while remaining lawful and valid.

(10) No Employment Rights . Nothing herein confers any right or obligation on you to continue in the employ of the Company or any Subsidiary, nor shall this document affect in any way your right or the right of the Company or any Subsidiary, as the case may be, to terminate your employment at any time.

(11) Change of Control Events . For purposes of Article VII of the Plan as it applies to the RSU’s awarded in this letter, notwithstanding the definitions in Article VII, a “Change of Control” and “Potential Change of Control” shall have the meanings assigned to “Change in Control Events” under Section 409A of the Internal Revenue Code and related regulations of the Secretary of the United States Treasury. Article VII of the Plan shall be administered with respect to the RSU’s so that it complies in all respects with Section 409A and related regulations.

Please execute this letter in the space provided to confirm your understanding and acceptance of this letter agreement. You may make a photocopy for your records if you wish.

	DEERE & COMPANY


By:

	[Name]
	[Title]

The undersigned hereby acknowledges having read the Plan and this letter, and hereby agrees to be bound by all the provisions set forth in the Plan and this letter.



	«Name»

Exhibit 10.14

JOHN DEERE DEFINED CONTRIBUTION RESTORATION PLAN

EFFECTIVE 1 JANUARY 1997

AMENDED: 12 January 2000

EFFECTIVE: 1 January 2000

AMENDED: 28 November 2000

EFFECTIVE: 1 January 2001

TABLE OF CONTENTS

		Page

ARTICLE I. ESTABLISHMENT, PURPOSE AND CONSTRUCTION

1.1	Establishment	66
1.2	Purpose	66
1.3	Effective Date and Plan Year	66
1.4	Application of Plan	66
1.5	Construction	67

ARTICLE II. PARTICIPATION

2.1	Eligibility to Participate	68
2.2	Effect of Transfer	68
2.3	Beneficiaries	68

ARTICLE III. CONTRIBUTIONS

3.1	Salary Deferral Allocations	69
3.2	Employer Matching Allocations	69
3.3	Deferral Elections	69
3.4	FICA Tax	69

ARTICLE IV. ACCOUNTS AND RATE OF RETURN

4.1	Participant Accounts	70
4.2	Rate of Return	70
4.3	Electing a Rate of Return	70
4.4	Qualified Domestic Relations Orders	70

ARTICLE V. VESTING

5.1	Vested Interest	71
5.2	Forfeiture of Non-Vested Balances	71

ARTICLE VI. DISTRIBUTIONS

6.1	Time and Manner	72
6.2	Election	72
6.3	form of Distribution	72

	ARTICLE VII. ADMINISTRATION, AMENDMENT AND TERMINATION

7.1	Employment Rights	73
7.2	Applicable Law	73
7.3	Non-Alienation	73
7.4	Withholding of Taxes	73
7.5	Unsecured Interest. Funding and Rights Against Assets	73
7.6	Effect on Other Benefit Plans	73
7.7	Administration	73
7.8	Amendment, Modification or Termination	73

JOHN DEERE DEFINED CONTRIBUTION RESTORATION PLAN

ARTICLE I. Establishment, Purpose and Construction

1.1 Establishment . Effective 1 January 1997, Deere & Company established the John Deere Restoration Plan (the “Plan”) for the benefit of the salaried employees on its United States payroll and the salaried employees of its United States subsidiaries or affiliates that have adopted the John Deere Savings and Investment Plan (the “SIP”). Deere & Company and its United States subsidiaries and affiliates that have adopted the SIP (jointly the “Company”) are also deemed to have adopted this Plan.

1.2 Purpose . The Company maintains a defined contribution plan, known as the John Deere Savings and Investment Plan, which is intended to be a qualified defined contribution plan which meets the requirements of Section 401(a) and 401(k) of the Internal Revenue Code of 1986 (the “Code”). Section 401(a)(17) of the Code limits the amount of compensation paid to a participant in a qualified defined contribution plan which may be taken into account in determining contributions under such a plan. Section 402(g) of the Code limits the amount of compensation a participant may defer in a qualified defined contribution plan. Section 415 of the Code limits the amount which may be contributed under a qualified defined contribution plan. This Plan is intended to restore contributions which, when combined with the amount actually contributed under the SIP, are reasonably comparable to the contributions which participants in the SIP would have received under such plan if there were no limitations imposed by Sections 401(a)(17), 402(g) and 415 of the Code.

When restoring contributions limited by Sections 401(a)(17) and 402(g) of the Code, the Plan is intended to qualify as an unfunded deferred compensation plan for a select group of management or highly compensated employees, within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”). When restoring contributions limited by Section 415 of the Code, the Plan is intended to qualify as an unfunded “excess benefit plan,” as defined in section 3(36) of ERISA and within the meaning of Section 415 of the Code.

1.3 Effective Date and Plan Year . This Plan shall be effective 1 January 1997. The Plan Year shall be the twelve-month period beginning on 1 November of each year and ending on 31 October of the following year with the exception of the first Plan Year which will start 1 January 1997 and end 31 October 1997.

1.4 Application of Plan . The terms of this Plan are applicable only to eligible employees of the Company as described in Section 2.1 below who become eligible to defer compensation hereunder on or after 1 January 1997.

1.5 Construction . Unless the context clearly indicates otherwise or unless specifically defined herein, all operative terms used in this Plan shall have the meanings specified in the SIP and the words in the masculine gender shall be deemed to include the feminine and neuter genders and the singular shall be deemed to include the plural and vice versa.

ARTICLE II. PARTICIPATION

2.1 Eligibility to Participate . Any employee participating in the Contemporary SIP under Article III of the SIP whose salary deferral and matching contribution under such plan are reduced by the limitation imposed by Sections 401(a)(17), 402(g) and 415 of the Code shall be eligible to participate in the Plan.

2.2 Effect of Transfer . An employee who is a participant in this Plan and who ceases to be an eligible employee as described in Section 2.1 above shall cease participation in the Plan; however, any past contributions and applicable matching contributions will continue to be accounted for as elected by the employee subject to Section 4.2 of this Plan provided such employee continues as an employee on the United States payroll of the Company.

2.3 Beneficiaries . Beneficiaries under this Plan shall be determined in accordance with Section 8.6 of the SIP, however, beneficiaries for this Plan shall be designated on a separate form and may be an individual or individuals other than beneficiaries designated under the SIP.

ARTICLE III. CONTRIBUTIONS

3.1 Salary Deferral Allocations . Pursuant to a salary deferral agreement in force under the SIP any amount of contribution up to 6% of compensation that is restricted by Section 401(a)(17), 402(g) and 415 of the Code shall be allocated to a salary deferral account under this Plan.

3.2 Employer Matching Allocations . Employer matching contributions, if any, corresponding to salary deferral allocations under Section 3.1 above shall be allocated to a matching account under this Plan. Employer matching contributions under this Plan will be determined as shown in Article IV, Section 4.1 of the SIP.

3.3 Deferral Elections . Effective 1 January 1997 or the first day of any subsequent month, an eligible employee may elect to defer compensation by completing a written election no later than the last work day of any month authorizing the Company to defer a percentage of compensation under Section 4.8 of the SIP provided however that such employee is participating in the Contemporary SIP. Such election will remain in force until changed or revoked by the employee or the employee ceases to be eligible to participate according to Article II of this Plan.

3.4 FICA Tax . All salary deferral allocations are subject to FICA tax in the payroll period in which they are deferred. Such FICA taxes will be withheld as necessary from the participant’s compensation prior to any compensation deferral under this Plan or the SIP.

ARTICLE IV. ACCOUNTS AND RATE OF RETURN

4.1..Participant Accounts . Bookkeeping accounts will be maintained for each participant under the Plan and shall be credited with a rate of return as provided in Section 4.2 below. Such rate of return shall be credited as of the end of each business day.

4.2 Rate of Return . The rate of return for a Participant’s account shall be the average of Prime Rate plus two percent as determined by the Federal Reserve statistical release for the month immediately preceding the month for which such rate shall be credited to account balances for deferrals and Employer matching allocations under this Plan.

Alternatively, a Participant may elect a rate of return equal to the average of the S & P 500 Index for the month immediately preceding the month for which such rate shall be credited to account balances for deferrals and Employer matching allocations under this Plan.

4.3 Electing a Rate of Return . A Participant may elect a rate of return for existing and future account balances by directing the Recordkeeper between the 1 ^st and the 20 ^th day of the month prior to the beginning of the calendar quarter for which the election is effective. A Participant may choose either of the above rates of return for any portion of the account in whole percentage increments as long as the minimum value of transfer is $250 or more. The sum of all such portions must equal 100%.

4.4 Qualified Domestic Relations Orders . In the event of a Qualified Domestic Relations Order, a separate account will be established for any qualified alternate payee subject to Article V. No portion of the non-vested Employer Matching Allocations or growth additions thereon may be assigned to the Alternate Payee. The distribution option for an Alternate Payee will be a single lump sum payment paid 180 days following notification of a Qualified Domestic Relations Order in place of the Distribution Options shown in Section 6.3.

ARTICLE V. VESTING

5.1 Vested Interest . Pursuant to Section 4.4 above a Participant shall be fully vested in the portion of the account comprised of Salary Deferral Allocations and growth additions thereon. Furthermore, the Participant shall be 100% vested after attaining three years of service credit on the Employer Matching Allocations and the growth additions thereon. In the event of a Qualified Domestic Relations Order, no portion of non-vested Employer Matching Allocations or the growth additions thereon may be assigned to the alternate payee.

5.2 Forfeiture of Non-Vested Balances . The Participant whose employment is terminated prior to three years of service credit shall forfeit all Employer Matching Allocations and the growth additions thereon.

ARTICLE VI. DISTRIBUTIONS

6.1 Time and Manner .

Distribution of a Participant’s account shall commence as soon as practicable after the valuation date at the end of the month following 30 days after the Participant’s termination of employment or 60 days following a Participant’s death in accordance with the election in 6.2 below and form of distribution shown in 6.3. Termination of employment for the purposes of this Plan shall include retirement and Long Term Disability status on or after 1 November 1998. Distribution must begin no later than 1 January of the year following the year the Participant reaches age 75.

6.2 Election . A Participant shall make an irrevocable election regarding the time and manner of distribution no later than 30 days following termination of employment. Termination of employment for the purposes of this Plan shall include retirement and Long Term Disability status on or after 1 November 1998. If the Participant’s employment is terminated by death, any eligible beneficiary shall make such irrevocable election within 60 days following the Participant’s death. In the event of a Qualified Domestic Relations Order, an alternate payee shall make such irrevocable election no later than 30 days following the earliest to occur of the Participant’s termination of employment or attainment of age 50.

6.3 Form of Distribution .

a. A single lump sum payment

b. A specified dollar amount each year until account balance reaches zero.

c. A decrementing yearly withdrawal over a specific period of time which results in a zero account balance.

In the event of the death of the Participant or a Qualified Domestic Relations Order, such beneficiaries or the Alternate Payee must take distribution as a single lump sum payment within 180 days following the event.

ARTICLE VII. ADMINISTRATION, AMENDMENT AND TERMINATION

7.1. Employment Rights . Nothing under this Plan shall be construed to give any employee the right to continue employment with the Company or to any benefits not specifically provided herein.

7.2 Applicable Law . This Plan, to the extent it is not exempt therefrom, shall be governed and construed in accordance with the applicable provisions of ERISA. To the extent not governed by ERISA, this Plan shall be governed and construed in accordance with the laws of the State of Illinois, exclusive of conflict laws.

7.3 Non-Alienation . Except as provided in Section 10.5 of the SIP and Section 4.4 of this Plan, no right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge. No right or benefit under this Plan shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefits except for such claims as may be made by the Company.

7.4 Withholding of Taxes . The Company, or its designee, may withhold from any payment of benefits under this Plan any income, employment or other taxes required to be withheld, including any taxes for which the Company or its designee may be liable with respect to the payment of such benefits.

7.5 Unsecured Interest, Funding and Rights Against Assets . No participant, surviving spouse, beneficiaries, or qualified alternate payee shall have any interest whatsoever in any specific asset of the Company. To the extent that any person acquires a right to receive payments under this Plan, such rights shall be no greater than the right of any unsecured general creditor of the Company. Account balances shall not be financed through a trust fund or insurance contracts or otherwise unless owned by the Company. Payment of account balances shall be paid in cash from the general funds of the Company. All expenses of administering this Plan shall be borne by the Company.

7.6 Effect on Other Benefit Plans . Amounts payable under this Plan, including Employer matching allocations and growth additions, shall not be considered compensation for purpose of any qualified or non-qualified retirement plan maintained by the Company. The treatment of such amounts under any other plan of the Company shall be determined under the provisions of such plan.

7.7 Administration . This Plan shall be administered by the Company (the “Administrator”). The Administrator shall have the power to construe and interpret this Plan, decide all questions of eligibility and determine the amount, manner, and time of payment of any benefits hereunder. All determinations of the Administrator shall be final, binding, and conclusive on all persons.

7.8 Amendment, Modification or Termination . The Board of Directors of the Company, or, by delegation, the Compensation Committee of the Company, may at any time amend or modify this Plan in their sole discretion, provided that this Plan shall not be

amended or modified so as to reduce or diminish the accounts of participant’s or benefits then currently being paid to any participant, surviving spouse, beneficiary, or former participant without such person’s consent. The power to terminate this Plan shall be reserved to the Board of Directors of Deere & Company. The procedure for amendment or modification of the Plan by either the Board of Directors, or, to the extent so authorized, the Compensation Committee of the Company, as the case may be, shall consist of: the lawful adoption of a written amendment or modification to the Plan by majority vote at a validly held meeting or by unanimous written consent, followed by the filing of such duly adopted amendment or modification by the Secretary with the official records of the Company.

7.9 Withdrawal from Plan. If an adopting subsidiary or affiliate which is participating in this Plan subsequently determines that it no longer wants to participate in this Plan or have its employees participate in this Plan, that subsidiary or affiliate must request permission from Deere & Company to withdraw from participating in this Plan. If the Company grants such permission, such subsidiary or affiliate will immediately thereafter cease to participate in this Plan and its employees will cease to be participants in this Plan unless and until such subsidiary or affiliate thereafter requests permission to again participate in this Plan.

7.10 Definition of Subsidiary or Affiliate. In order for a subsidiary or affiliate of the Company to participate in this Plan, Deere & Company must own, directly or indirectly, at least 80 percent of the outstanding stock of such subsidiary or affiliate.

If during its affiliation with the Plan, a subsidiary or an affiliate’s ownership by the Company falls below the 80 percent required level, such subsidiary or affiliate is automatically dropped from participation in this Plan and its employees are similarly dropped from being participants in this Plan.

If a subsidiary or affiliate of Deere & Company which is covered by this Plan ceases to be a subsidiary or affiliate, the participation in this Plan by the employees of such subsidiary or affiliate shall terminate, and no employees of such former affiliate or subsidiary shall accrue or be entitled to a benefit under this Plan on and after the date such company ceases to be a subsidiary or affiliate of Deere & Company (other than former employees who were receiving benefit payments as of such date).

The John Deere Defined Contribution Restoration Plan, effective as of 1 January 1997 with amendments through 1 January 2001, is further amended, effective as of the dates indicated, by adding the following Article VIII immediately following Article VII.

“ ARTICLE VIII—409A AMENDMENTS

The Plan is amended as set forth in this Article VIII, effective as of the dates indicated, in order to avoid adverse or unintended tax consequences under Section 409A of the Code and the applicable rules and regulations thereunder (“ Section 409A ”) to Participants. Effective as of 1 January 2005 through 31 December 2005, the portion of a Participant’s account under the Plan that is not both earned and vested as of 31 December 2004 (the “ 409A Account ”) shall be subject to this Article VIII and effective as of 1 January 2006, a Participant’s entire account under the Plan (the “ Account ”) shall be subject to this Article VIII. The provisions of this Article VIII shall apply effective as of the dates indicated and shall supersede the other provisions of the Plan to the extent necessary to eliminate inconsistencies between this Article VIII and such other provisions. References to Sections are references to sections in the Plan, unless otherwise provided.

8.1. Salary Deferral Elections.

(a) General Rule . Effective as of 1 January 2005, a Participant’s salary deferral allocation for a calendar year shall be determined, subject to Section 8.1(b), pursuant to such Participant’s salary deferral agreement in effect under the SIP as of 31 December of the preceding calendar year; provided , however , that the salary deferral election under the Plan shall not exceed 6% of the Participant’s compensation. Changes by a Participant during a calendar year to his salary deferral agreement under the SIP shall have no effect on such Participant’s salary deferral allocation under the Plan for such calendar year.

(b) Exceptions . Notwithstanding anything to the contrary in Section 8.1(a):

(i) Effective as of 1 January 2005, a Participant shall be permitted, through 15 March 2005, pursuant to Q&A 21 in Notice 2005-1 promulgated by the U.S. Treasury Department and the Internal Revenue Service, to make a new salary deferral allocation election or increase an existing salary deferral allocation with respect to amounts that have not been paid or that have not become payable at the time of such election; provided that, except as set forth in Section 8.1(b)(ii), the Participant’s salary deferral agreement under the SIP in effect as of 15 March 2005 shall determine such Participant’s salary deferral allocations under the Plan for the remainder of the 2005 calendar year; and provided further that such election with respect to the Plan shall not exceed 6% of the Participant’s compensation and shall be in accordance with procedures established by the Plan Administrator.

(ii) Effective as of 1 January 2005 through 31 December 2005, a Participant shall be permitted to prospectively reduce or cancel his salary deferral allocation election.

(iii) Effective as of 1 January 2005, an Employee who becomes eligible to participate in the Plan during a calendar year shall be permitted, subject to Section 409A, to participate in the Plan during the calendar year in which he first becomes eligible; provided that he submits a salary deferral allocation election in accordance with procedures established by the Plan Administrator by no later than 30 days after the date on which he first becomes eligible.

(iv) Effective as of 1 January 2006, if a Participant receives a distribution of a Hardship Withdrawal under Section 8.4(a) of the SIP, his salary deferral allocations under the Plan shall cease and his election under the Plan shall be cancelled. Following the applicable period of suspension of his salary deferral agreement under the SIP pursuant to Section 8.4(ee) thereof, and at the earliest date permitted under Section 409A, such Participant’s salary deferral agreement under the SIP shall determine his salary deferral allocations under the Plan; provided that the Participant’s salary deferral agreement under the SIP in effect as of 31 December of any calendar year shall determine such Participant’s salary deferral allocations under the Plan for the next following calendar year; and provided further that such election with respect to the Plan shall not exceed 6% of the Participant’s compensation.

8.2. Distributions for Separation from Service Prior to 1 January 2006 .

(a) General Rule . Effective as of 1 January 2005, a Participant who incurs a separation from service as defined in Section 409A (a “ Separation of Service ”) on or prior to 31 December 2005 shall be permitted to elect, pursuant to Sections 6.2 and 6.3 the time and form of distribution of his 409A Account in accordance with procedures established by the Administrator; provided that such election shall be made by no later than 31 December 2005.

(b) No Election . Effective as of 1 January 2005, if a Participant described in this Section 8.2 does not make an election, his 409A Account shall be paid in the form of a single lump sum one year after the Participant’s Separation from Service.

8.3 Distributions for Separation from Service On and After 1 January 2006 .

(a) Participants Retirement Eligible as of 31 December 2005 .

(i) Effective as of 1 December 2005, a Participant who is retirement eligible as provided under the terms of the John Deere Pension Plan for Salaried Employees (“ Retirement Eligible ”) as of 31 December 2005 and incurs a Separation from Service on or after 1 January 2006 shall be permitted to

irrevocably elect, subject to Section 8.3(d), the form of distribution for his Account, pursuant to Section 6.3 and this Section 8.3(a), payable, at the Participant’s election, either (A) six months and one day after his Separation from Service, (B) one or more years after his Separation from Service or (C) on a date specified by the Participant, provided that if such specified date is a date prior to the Participant’s Separation from Service, then such specified date shall be disregarded and the Account shall be distributed on the date that is six months and one day after the Separation from Service. Elections pursuant to this Section 8.3(a)(i) shall be made by no later than 31 December 2005 in accordance with procedures established by the Administrator and shall provide that distribution of the Account shall begin no later than 1 January of the calendar year following the calendar year in which the Participant attains age 75.

(ii) Effective as of 1 January 2006, if a Participant described in Section 8.3(a)(i) does not make an election, his Account shall be paid in accordance with Section 8.3(b).

(b) Participants Retirement Eligible After 31 December 2005 and at Separation . Effective as of 1 January 2006, the Account of a Participant (i) who is not Retirement Eligible as of 31 December 2005 and (ii) whose Separation from Service occurs after 31 December 2005 and subsequent to the date on which he becomes Retirement Eligible shall be paid in five annual installments. The amount and timing of each annual installment shall be determined as follows:

(A) The initial annual installment shall be an amount that is substantially equal to one-fifth of the value of the Participant’s Account determined as of the last valuation date of the month immediately preceding the first anniversary of the Participant’s Separation from Service occurs and shall be paid on the first anniversary of the Separation from Service.

(B) The second annual installment shall be an amount that is substantially equal to one-fourth of the value of the Participant’s Account determined as of the last valuation date of the month immediately preceding the second anniversary of the Participant’s Separation from Service occurs and shall be paid on the second anniversary of the Separation from Service.

(C) The third annual installment shall be an amount that is substantially equal to one-third of the value of the Participant’s Account determined as of the last valuation date of the month immediately preceding the third anniversary of the Participant’s Separation from Service occurs and shall be paid on the third anniversary of the Separation from Service.

(D) The fourth annual installment shall be an amount that is substantially equal to one-half of the value of the Participant’s Account determined as of the last valuation date of the month immediately preceding the fourth

anniversary of the Participant’s Separation from Service occurs and shall be paid on the fourth anniversary of the Separation from Service.

(E) The fifth annual installment shall be an amount that is equal to the entire remaining balance in the Participant’s Account determined as of the last valuation date of the month immediately preceding the fifth anniversary of the Participant’s Separation from Service occurs and shall be paid on the fifth anniversary of the Separation from Service.

(c) Participants Not Retirement Eligible When Separated . Effective as of 1 January 2006, the Account of a Participant (i) who is not Retirement Eligible as of 31 December 2005, and (ii) whose Separation from Service occurs after 31 December 2005 and prior to the date on which he becomes Retirement Eligible shall be paid in a single lump sum on the first anniversary of such Participant’s Separation from Service.

8.4 Death; Qualified Domestic Relations Orders .

(a) Effective as of 1 January 2005 . Effective as of 1 January 2005, upon the death of a Participant, his Account shall be paid as soon as administratively feasible to his beneficiaries. Effective as of 1 January 2005, the amount payable to an alternate payee in a domestic relations order shall be paid as soon as administratively feasible after the order is determined to be qualified.

(b) Effective as of 1 January 2006 . Effective as of 1 January 2006, upon the death of a Participant, his Account shall be paid to his beneficiaries as soon as administratively feasible after the date of death. Effective as of 1 January 2006, the amount payable to an alternate payee in a domestic relations order shall be paid as soon as administratively feasible after the order is determined to be qualified.

8.5 Long Term Disability . Effective as of 1 January 2006, a Participant on Long Term Disability who has not commenced distribution of his 409A Account shall receive a distribution of his 409A Account paid in accordance with Section 8.3(b) beginning on his 65 ^th birthday.

8.6 Provisions Generally Effective 1 January 2005 . Notwithstanding anything in this Article VIII to the contrary, effective, unless otherwise provided, as of 1 January 2005 with respect to the 409A Account of a Participant and 1 January 2006 with respect to the Account:

(a) No Other Elections . Except as set forth in Section 8.2 or Section 8.3(a)(i), effective as of 31 December 2005, no Participant, including, without limitation, a Participant who is Retirement Eligible as of 31 December 2005, shall be permitted to make a distribution election.

(b) Timing of Distributions . Distribution in calendar year 2005 of a Participant’s 409A Account and in calendar year 2006 and later of the Participant’s Account shall be made as soon as administratively practicable after the date set forth in this Article VIII applicable to such distribution and, effective as of 1 October 2005, no later than the time required by Section 409A.

(c) Timing of Elections . Except as otherwise provided in Section 8.6(d), to the extent that any Participant makes a payment election with respect to all or a portion of the amounts previously deferred that are subject to Section 409A, such election shall be deemed to be pursuant to Q&A 19(c) in Notice 2005-1 promulgated by the U.S. Treasury Department and the Internal Revenue Service.

(d) Termination of Participation; Cancellation of Deferral . To the extent that a Participant receives in the 2005 calendar year a distribution of all, or any portion, of his 409A Account or prospectively cancels or reduces in the 2005 calendar year all or any portion of his salary deferral allocation under the SIP, as the case may be, such distribution or cancellation shall be deemed a whole or partial (as the case may be) (i) termination of such Participant’s 409A Account or (ii) cancellation of such Participant’s deferral election under the Plan, each pursuant to Q&A 20(a) of Notice 2005-1 promulgated by the U.S. Treasury Department and the Internal Revenue Service.

(e) Six-Month Delay . Distribution in 2005 of a Participant’s 409A Account and distribution in 2006 of a Participant’s Account shall be made in accordance with the provisions of Section 409A and, to the extent that such payments are issued in connection with a Participant’s Separation from Service for any reason other than death, such payment shall be delayed for six months and one day to the extent the Administrator determines that such delay is necessary to avoid the imposition on any Participant of additional taxes or interest under Section 409A.

(f) Amendments and Modifications . The Vice President, Human Resources and any successor thereof of the Company shall have the unilateral right to amend or modify the Plan, any Participant elections under the Plan and the time and manner of any payment of benefits under the Plan in accordance with Section 409A, in each case, without the consent of any employee or Participant, to the extent that the Vice President, Human Resources and any successor thereof deems such action to be necessary or advisable to avoid the imposition on any Participant of an additional tax or interest under Section 409A. Any determinations of the Vice President, Human Resources or the successor thereof pursuant to this Section 8.6(f) shall be final, conclusive and binding on all parties.”

Exhibit 10.15

JOHN DEERE SUPPLEMENTAL PENSION BENEFIT PLAN

AMENDED: 1 November 198

AMENDED: 24 February 1988

AMENDED: 28 February 1990

AMENDED: 27 February 1991

AMENDED: 29 May 1991

AMENDED: 26 August 1992

AMENDED: 09 December 1992

AMENDED: May 1993 – Effective: 01 July 1993

AMENDED: 08 December 1993 – Effective: 01 July 1993

AMENDED: 07 December 1994

AMENDED: May 1995 – Effective: 01 January 1995

AMENDED: 13 December 1995 – Effective: 01 January 1995

AMENDED: 04 December 1996 – Effective: 01 January 1997

AMENDED: 07 January 1998 – Effective: 01 January 1998

AMENDED: 26 May 1999 - Effective: 26 May 1999

AMENDED: 19 July 1999 - Effective: 01 July 1999

AMENDED: 06 August 1999 – Effective: 01 AugusT 1999

AMENDED: 02 November 1999 – Effective: 01 November 1999

AMENDED: 31 July 2000 –Effective: 01Jan 2000 (Item (1&2) 01 Apr 2000 (Item (3)

(See Resolution for Item explanation)

AMENDED: 29 January 2002 - Effective: 01 January 2002

JOHN DEERE SUPPLEMENTAL PENSION BENEFIT PLAN

TABLE OF CONTENTS

Section			Page

I.	PURPOSE AND ESTABLISHMENT

	1.1	Establishment and Amendment of the Plan	83
	1.2	Purpose	83
	1.3	Cost of Benefits	83
	1.4	Application of Plan	83
	1.5	Administration and Termination	83
	1.6	Nonencumbrance of Benefits	84
	1.7	Employment Rights	84
	1.8	Severability	84
	1.9	Applicable Law	84

II.	DEFINITIONS

	2.1	Definitions	85
	2.2	Gender and Number	88

III.	SUPPLEMENTAL PENSION BENEFIT

	3.1	Eligibility	89
	3.2	Amount	89
	3.3	Limitations	90
	3.4	Reduction for Early Retirement under Contemporary Option	90
	3.5	Commencement and Duration	90
	3.6	Death Prior to Receipt of Lump Sum	91
	3.7	Qualified Domestic Relations Order	92

IV.	DISABILITY BENEFIT

	4.1	Eligibility	93
	4.2	Amount	93
	4.3	Commencement and Duration	93

V.	CHANGE IN CONTROL OF COMPANY

	5.1	Eligibility	94
	5.2	Change in Control of the Company	94
	5.3	Cause	95
	5.4	Good Reason	95
	5.5	Amount	96
	5.6	Commencement and Duration	96
	5.7	Deere & Company Severance Protection	96

Section			Page

VI.	SURVIVOR BENEFITS

	6.1	Death of an active Participant or a Participant on Permanent & Total Disability	97
	6.2	Death of a Retired Participant	97
	6.3	Commencement and Duration	98
	6.4	Survivor Benefit Election After Retirement	98

VII.	FINANCING OF BENEFITS

	7.1	Contractual Obligation	100
	7.2	Unsecured General Creditor	100
	7.3	Funding	100
	7.4	Vesting	100
	7.5	Administration	100
	7.6	Expenses	100
	7.7	Indemnification and Exculpation	101
	7.8	Effect on Other Benefit Plans	101
	7.9	Tax Liability	101

EXHIBIT I			105

JOHN DEERE SUPPLEMENTAL PENSION BENEFIT PLAN

Section 1. Purpose and Establishment

1.1 Establishment and Amendment of the Plan . Deere & Company (the “Company”) established and presently maintains the John Deere Supplemental Pension Benefit Plan (the “Plan”), an unfunded supplemental retirement plan for the benefit of its eligible employees, on 1 November 1978. Said plan is hereby further amended and restated as set forth herein effective as of 1 January 1997.

1.2 Purpose . The purpose of this Plan is to promote the mutual interests of Deere & Company and its Officers and Executives.

1.3 Cost of Benefits . Cost of providing benefits under the Plan will be borne by the Company.

1.4 Application of Plan . The provisions of this Plan as set forth herein are applicable only to the employees of the Company in current employment on or after 1 November 1987, except as specifically provided herein. Except as so provided, any person who was covered under the Plan as in effect on 31 October 1987 and who was entitled to benefits under the provisions of the Plan shall continue to be entitled to the same amount of benefits without change under this Plan. Any person covered under the Plan as in effect 1 November 1987 who is age 55 or above on 1 November 1987 shall be entitled to the larger of the benefit amount in Section 3.2 below or the benefit provided under the John Deere Supplemental Pension Benefit Plan effective prior to 1 November 1987.

1.5 Administration and Termination . The Plan is administered by and shall be interpreted by the Company. The Board of Directors of the Company or the Pension Plan Oversight Committee of the Board may at any time amend or modify this Plan in their sole discretion. In addition, the Deere & Company Compensation Committee shall have the authority to approve all amendments or modifications that:

a. in the Compensation Committee’s judgment are procedural, technical or administrative, but do not result in changes in the control and management of the Plan assets; or

b. in the Compensation Committee’s judgment are necessary or advisable to comply with any changes in the laws or regulations applicable to the Plan; or

c. in the Compensation Committee’s judgment are necessary or advisable to implement provisions conforming to a collective bargaining agreement which has been approved by the Board of Directors; or

d. in the Compensation Committee’s judgment will not result in changes to benefit levels exceeding $5 million dollars per amendment or modification during the first full fiscal year that such changes are effective for the Plan; or

e. are the subject of a specific delegation of authority from the Board of Directors.

Provided, however, that this Plan shall not be amended or modified so as to reduce or diminish the benefit then currently being paid to any employee or surviving spouse of any former employee without such person’s consent. The power to terminate this Plan shall be reserved to the Board of Directors of Deere & Company. The procedure for amendment or modification of the Plan by either the Board of Directors, or, to the extent so authorized, the Pension Plan Oversight Committee, as the case may be, shall consist of: the lawful adoption of a written amendment or modification to the Plan by majority vote at a validly held meeting or by unanimous written consent, followed by the filing of such duly adopted amendment or modification by the Secretary with the official records of the Company.

1.6 Nonencumbrance of Benefits . Except as provided in Article VIII, Section 8 of the John Deere Pension Plan for Salaried Employees, no employee, retired employee, or other beneficiary hereunder shall have any right to assign, alienate, pledge, hypothecate, anticipate, or in any way create a lien upon any part of this Plan, nor shall the interest of any beneficiary or any distributions due or accruing to such beneficiary be liable in any way for the debts, defaults, or obligations of such beneficiary, whether such obligations arise out of contract or tort, or out of duty to pay alimony or to support dependents, or otherwise.

1.7 Employment Rights . Establishment of this Plan shall not be construed to give any Participant the right to be retained by the Company or to any benefits not specifically provided by the Plan.

1.8 Severability . In the event any provision of the Plan shall be held invalid or illegal for any reason, any invalidity or illegality shall not affect the remaining parts of the Plan, but the Plan shall be construed and enforced as if the invalid or illegal provision had never been inserted, and the Company shall have the privilege and opportunity to correct and remedy such questions of invalidity or illegality by amendment as provided in the Plan.

1.9 Applicable Law . This Plan is fully exempt from Titles II, III, and IV of ERISA. The Plan shall be governed and construed in accordance with Title I of ERISA and the laws of the State of Illinois.

Section 2. Definitions

2.1 Definitions . Whenever used in this Plan, it is intended that the following terms have the meanings set forth below:

(a) “Average Pensionable Pay ” of the Traditional Pension Option means the average for each year of the following:

(1) all straight-time salary payments, plus the larger of (i) or (ii) through 31 December 2000 and as of 1 January 2001 plus the larger of (i) or (iii) below:

(i) the amounts paid under the John Deere Profit Sharing Plan and the John Deere Short-Term Incentive Plan prior to 1991 plus the sum of the bonuses paid under the John Deere Performance Bonus Plan for Salaried Employees, the John Deere Health Care,Inc. Annual Performance Award Plan or the John Deere Credit Company Profit Sharing Plan.

(ii) the amount paid prior to 1989 under the John Deere Long-Term Incentive Plan, the John Deere Restricted Stock Plan through 1998, or after 1998 the Pro-rated Yearly Vesting Amount under the John Deere Equity Incentive Plan.

(iii) the target amount under the John Deere Performance Bonus Plan for Salaried Employees, the John Deere Health, Inc. Annual Performance Award Plan or the John Deere Credit Company Profit Sharing Plan.

(2) The annual average of such amounts shall be based on the five (5) highest years, not necessarily consecutive, during the ten (10) years immediately preceding the earliest of the Participant’s retirement, total and permanent disability, or death. The greater of any such short or long-term awards as defined in 2.1(a)(1)(i) or (ii) above paid or vested during the twelve months immediately following the Participant’s retirement, shall be substituted for the lowest such annual short or long-term bonus award used to calculate Average Pensionable Pay, if the result would be a higher pension benefit. All amounts used in calculating the Average Pensionable Pay will be determined before the effect of any salary or bonus deferral or reduction resulting from an election by the Employee under any Company sponsored plan or program, but excluding any matching and/or growth factor, Company contribution, and/or flexible credits provided by the Company under any such plan or program.

(b) “Average Monthly Pensionable Pay” means the Average Pensionable Pay divided by twelve (12).

(d.1) Career Average Pay of the Contemporary Pension Option means the following for those Officers listed in Exhibit 1:

(1) The highest five calendar years of the last ten not necessarily consecutive as of 31 December 1996 plus the greater of short-term bonus or long-term incentive pay received in each of those years as defined in section 2.1(a)(1)(i) or (ii) above.

plus

(2) Base pay and short-term bonuses as defined in Section 2.1(a)(1)(i) above paid beginning 1 January 1997 and thereafter (excluding any long-term incentives as defined in section 2.1(a)(1)(ii) above).

The amounts of all salary, short-term bonus, or other pay received as described in (1) and (2) above will be divided by the number of pay periods in which base pay was received to determine the Career Average Pay.

(d.2) “Career Average Pay” of the Contemporary Pension Option means the following for newly eligible Participants effective the latter of 1 January 1997 or entering Base Salary Grade 13 or above:

(1) The highest five consecutive of the last ten anniversary years or the last 60 months of straight time pay if higher as of 31 December 1996 for Participants with five or more years of continuous employment.

plus

(2) Restorable short-term performance bonuses earned and paid during the years 1992-1996 credited at the rate of 1/120th for each pay period of continuous employment beginning 1 January 1997. Short-term performance bonuses are defined in 2.1(a)(1)(i) of this Plan.

plus

(3) All straight time pay plus short-term performance bonuses paid on or after 1 January 1997 (excluding any long-term incentives such as stock options).

The amounts of salary and bonus derived from (d.2)(1) plus (2) plus (3) above are divided by the number of pay periods in which base pay was received to determine the career average pay. This amount multiplied times 2 transforms career average pay to a monthly equivalent.

(e) “Company” means Deere & Company, a Delaware corporation.

(f) “Contemporary Pension Option” means the benefit provided to Officers Listed in Exhibit 1 who elect the Contemporary Pension Option on or before 15 November 1996, and all other Executives who become Participants on or after 1 January 1997.

(g) “Disability” shall have the same meaning as under the Qualified Retirement Plan or John Deere Long Term Disability Plan for Salaried Employees

(h) “Executive” means an employee base salary grade 13 or above who on 1 January 1997 is a non-officer, or an employee who attains base salary grade 13 or above after 1 January 1997.

(i) “Officer” means employees listed in Exhibit I and by way of their election under the John Deere Pension Plan for Salaried Employees may choose between this Traditional or Contemporary Supplemental Plan option.

(j) “Non-officer” means any employee of the Company who is not an elected officer and does not hold one of the elected positions listed in (i) above.

(k) “Participant” means an Officer as defined in (i) above who has served in such capacity for 36 months or Salary Grade 13 and above Executives who are eligible for participation under the Contemporary Supplemental Plan option on the latter of 1 January 1997 or attainment of base Salary Grade 13.

(l) “Plan Year” means the 12-month period beginning each November 1.

(m) “Pro-rated Yearly Vesting Amount under the John Deere Equity Incentive Plan” means for the purposes of calculating a long term incentive amount under Section 2.1 (a) (1) (ii) of this Plan is one-quarter of each bi-annual EIP Grant allocated to each year following the Grant date multiplied times the Grant Price. In the event an EIP Grant vests and bonus shares are payable during the 12 months immediately following a Participant’s retirement, the actual value of the Grant will be redetermined and allocated equally in one-quarter increments to each of the years following the Grant date which were used to calculate Average Pensionable Pay, if the result would be a higher pension benefit.

(n) “Qualified Retirement Plan” means the John Deere Pension Plan for Salaried Employees which is a qualified plan under Section 401(a) of the Internal Revenue Code. Provisions under this Plan shall in no way alter provisions under the Qualified Retirement Plan.

o) “Retirement Benefit” shall be a single-life annuity or lump sum amount as provided under Section 3 subject to provisions of Section 5.

(p) “Section 162(m) Participant” means a participant who is the CEO or the four highest paid Executives, as reported in the proxy, who is employed on the last day of the fiscal year.

q) “Service” shall have the same meaning in this Plan as “service credit” in the Qualified Retirement Plan. Service credit for benefit purposes in this plan for those Executives not listed in Exhibit I will begin on the latter of 1 January 1997 or attainment of base salary grade 13 or above whichever is later.

(r) “Surviving Spouse” shall mean the legally married spouse of a deceased participant.

(s) “ Traditional Pension Option” means the benefit under this Plan for Officers who (1) are listed in Exhibit 1, and (2) are or become Participants, and (3) who elect the Traditional Pension Option on or before 15 November 1996.

2.2 Gender and Number . Except when otherwise indicated by the context, any masculine term used herein shall also include the feminine, and the singular shall also include the plural.

Section 3. Supplemental Pension Benefit

3.1 Eligibility . A Participant shall be eligible for benefits under the provisions of this Plan who has attained age 60 under the Traditional Pension Option or age 55 under the Contemporary Pension Option or at any age if eligible to retire on 1 January 1997 and retires under the provisions of the Qualified Retirement Plan.

3.2 Amount . Upon termination and election to retire pursuant to 3.1 above, the Participant shall be entitled to a monthly Retirement Benefit as follows:

(1) Traditional Pension Option equals (a) plus (b) below:

(a) 2% of average monthly pensionable pay for each year of service as an Officer.

(b) 1 1/2% of average monthly pensionable pay for each year of service as a non-Officer.

(2) Contemporary Pension Option equals (a) plus (b) below:

(a) 2% of career average pay for each year of service as an Officer or Participant.

(b) 1 1/2% of career average pay for each year of service as a non-Officer prior to the latter of 1 January 1997 or attainment of base salary grade 13 or above, whichever is later.

This amount shall be subject to any reductions for

(1) Early retirement under the Contemporary Pension Option as provided in Section 3.4 of this plan.

(2) Any formula used to calculate the reduction in the retiree’s monthly benefit under the Qualified Retirement Plan.

(3) Survivor benefits described in Section 6.

(4) Provisions shown in Section 3.3 which follows and shall be further reduced by the sum of

(i) the benefit earned under the Qualified Retirement Plan and

(ii) the benefit provided under the John Deere Supplementary Pension Plan.

3.3 Limitations .

(a) The total monthly Retirement Benefit paid under the Traditional Pension Option of this Plan, the Qualified Retirement Plan and the John Deere Supplementary Pension Plan may not exceed 66-2/3% of the Average Monthly Pensionable Pay. If such number is exceeded the amount payable under this Plan shall be reduced.

(b) That part of the retired employee’s monthly benefit which is based on service credit prior to 1 July 1993 (1 January 1994 for employees of John Deere Credit Company, John Deere Health Care, Inc. and John Deere Insurance Group) shall be reduced by 1/2% for each full year in excess of 10 years that the spouse is younger than the employee.

3.4 Reduction for Early Retirement under Contemporary Pension Option . The amount determined in 3.2 above shall be reduced 1/3% per month from the unreduced full benefit age provided in the Contemporary Pension Option of the Qualified Retirement Plan as of the date benefits commence.

3.5 Commencement and Duration . Payment of monthly retirement benefits provided under this Plan shall commence on the first day of any calendar month following the date of retirement as elected under the Qualified Retirement Plan. Benefit payments will be made on the first day of each calendar month thereafter. The last payment will be made the first day of the calendar month in which the Participant dies, subject to the provisions of Section 5.

Alternatively, the Participant may elect to receive a lump sum payment for all or a portion (in 10% increments from 10% to 90%) of the Retirement Benefits payable under this Plan including the 55% joint and survivor annuity equal to 11% of the supplemental benefit payable, adjusted for service accrued through 30 June 1993, or 31 December 1993 in the case of employees of John Deere Credit Company, John Deere Health Care, Inc., or John Deere Insurance Group. Written notice of the Participant’s election to receive a lump sum payment shall be irrevocable, and must be received by the Company within the twelve (12) months prior to payment, but in no event subsequent to the Participant’s date of retirement. The lump sum payment shall be made to Participant twelve (12) months after receipt of notice by the Company but in no event prior to the Participant’s retirement.

Notwithstanding the above, a Section 162(m) Participant whose retirement date coincides with the Company’s fiscal year-end date will not be paid the previously elected lump-sum payment until he is no longer a Section 162(m) Participant.

Effective beginning 1 January 2002 and thereafter, the lump sum will be calculated using an interest rate assumption equal to the average yield in September of the preceding Plan Year on 30-year Treasury Constant Maturities (as published in October by the Internal Revenue Service) and the mortality table shall be based upon a fixed blend of 50% male mortality rates and 50% female mortality rates from the Group Annuity Reserving Table (“GAR”), as set forth in Revenue Ruling 2001-62, in effect at the beginning of the plan year in which payment is made. The age used in the calculation will be the age of the Participant or, in the case of Participant’s death, the surviving spouse’s age on the date payment is made.

Monthly retirement benefits will be redetermined as soon as practicable and increased benefits paid retroactive to the Participant’s date of retirement for:

(a) any eligible long or short-term bonus paid after retirement replacing an earlier bonus award used to calculate average pensionable pay under the Traditional Pension Option

(b) any eligible short-term bonus paid after retirement added to career average earnings used to calculate pension benefits under the Contemporary Pension Option.

3.6 Death Prior to Receipt of Lump Sum. If an active Participant or a Participant on Permanent and Total Disability dies after receipt of notice by the Company pursuant to Section 3.5 of Participant’s irrevocable election to receive a lump sum payment, but before the expiration of twelve (12) months after receipt by the Company of such election, a Surviving Spouse of the Participant who is eligible for a survivor benefit under Section 6 will receive a lump sum survivor’s benefit under Section 6.1 of this Plan. The 55% surviving spouse lump sum benefit will be payable no earlier than twelve (12) months following receipt of notice by the Company of the deceased Participant’s irrevocable election but not before the first day of the month following eligibility for a surviving spouse benefit under the Qualified Retirement Plan.

benefits under Section 6. In the event the retired Participant is unmarried at the date of death or the Surviving Spouse of the deceased Participant is not eligible for survivor benefits under Section 6, the Participant’s full lump sum benefit will be paid to the deceased Participant’s estate. The lump sum benefit will be payable no earlier than twelve (12) months following receipt of notice by the Company of the deceased Participant’s irrevocable election.

3.7 Qualified Domestic Relations Order

Distribution is prohibited under the Plan prior to the Participant’s retirement and, in the event of a Qualified Domestic Relations Order, the Alternate Payee must take distribution as a single lump sum payment within 180 days following the Participant’s retirement under the Plan.

Section 4. Disability Benefit

4.1 Eligibility . An employee who qualifies for a total and permanent disability benefit in accordance with the provisions of the Qualified Retirement Plan or John Deere Long Term Disability Plan for Salaried Employees shall be entitled to a benefit under this Plan upon retirement under a normal retirement under the Qualified Retirement Plan.

4.2 Amount . The amount shall be determined in accordance with 3.2 except that service as an Officer shall be determined for the period of time prior to total and permanent disability as defined in the Qualified Retirement Plan or John Deere Long Term Disability Plan for Salaried Employees.

4.3 Commencement and Duration . In the event of Disability, the payment method shall be the same as that elected pursuant to Section 3.5 of this Plan. In the event of Disability, payments of Retirement Benefits provided under this section shall be made or commence on the same date as Retirement Benefits commence under the normal Retirement Provisions under the Qualified Retirement Plan.

Section 5. Change in Control of Company

5.1 Eligibility . If a Change in Control of the Company (as defined in 5.2 below) shall have occurred, and a participant who has not attained age 60 ceases to be an employee of the Company, such participant shall be eligible for benefits under the provisions of this plan notwithstanding his age at the time of such cessation of employment, unless such cessation of employment is (i) by the Company for “Cause” (as defined in 5.3 below), or (ii) by the participant for other than Good Reason (as defined in 5.4 below). If the participant’s cessation of employment is by reason of Death or Permanent Disability, the participant’s rights under this Plan shall be governed by Section 4 and 6 of this Plan, despite the occurrence of a change in control.

5.2. Change in Control of the Company . A change in control of the Company shall mean a change in control of a nature that would be required to be reported in response to Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as now or hereafter amended (the “Exchange Act”), whether or not the Company is then subject to such reporting requirement; provided, that, without limitation, such a Change in Control shall be deemed to have occurred if:

(i) any “person” (as defined in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13(d-3) under the Exchange Act), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities;

(ii) during any period of two (2) consecutive years (not including any period prior to December 9, 1987) there shall cease to be a majority of the Board comprised as follows: individuals who at the beginning of such period constitute the Board and any new director(s) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved; or

(iii) the shareholders of the Company approve a merger or consolidation of the Company with any other company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 80% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation.

(iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company’s assets.

5.3 Cause . Termination of employment by the Company for “Cause” shall mean termination pursuant to notice of termination setting out the reason for termination upon (i) the willful and continued failure by the participant to substantially perform his duties with the Company after a specific, written demand is developed; (ii) the willful engaging by the participant in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise or (iii) the participant’s conviction of a felony which impairs the participant’s ability substantially to perform his duties with the Company.

An act, or failure to act, shall be deemed “willful” if it is done, or omitted to be done, not in good faith and without reasonable belief that the action or omission was in the best interest of the Company.

5.4 Good Reason . “Good Reason” shall mean the occurrence, without the participant’s express written consent, within 24 months following a Change in Control of the Company, of any one or more of the following:

(i) the assignment to the participant of duties materially inconsistent with the participant’s duties, responsibilities and status prior to the Change in Control or a material reduction or alteration in the scope of the participant’s responsibilities from those in effect prior to the Change in Control;

(ii) a reduction by the Company in the participant’s base salary or profit sharing award as in effect prior to the Change in Control;

(iii) the Company requiring the participant to be based at a location in excess of twenty-five (25) miles from the location where the participant is currently based;

(iv) the failure by the Company or any successor to the Company to continue in effect any other Pension Plans, or its Profit Sharing Plan for Salaried Employees, Short-Term Incentive Bonus Plan, Deferred Compensation Plan, Long-Term Incentive Plan, the John Deere Stock Option Plan or any other of the Company’s employee benefit plans, policies, practices or arrangements applying to the participant or the failure by the Company to continue the participant’s participation therein on substantially the same basis, both in terms of the amount of benefits provided and the level of his or her participation relative to other participants, as existed prior to the Change in Control;

If Good Reason exists, the participant’s right to terminate his or her employment pursuant to this Subsection shall not be affected by temporary or subsequent incapacity due to physical or mental illness. Continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder. Retirement at less than “normal retirement age” as defined in the John Deere Pension Plan for Salaried Employees constitutes a “termination” for purposes of this Subsection.

5.5 Amount . The amount of the benefit payable under this section shall be determined in accordance with Section 3.2.

5.6 Commencement and Duration . Retirement Benefits provided under this section shall be made in a lump sum on the first day of the calendar month following the date the Participant ceases employment with the Company, except as noted in Section 3.5. Calculation of the lump sum payment shall be made in accordance with the terms set forth in Section 3.5

5.7 Deere & Company Severance Protection Agreement

The change in control of Company provisions shown above do not apply in the event a Participant has received and executed a personal Severance Protection Agreement issued by Deere & Company. In order for the Severance Protection Agreement to apply in lieu of the provisions shown in Section 5 above the Agreement must be effective as shown in Article I. Establishment, Term and Purpose of the Deere & Company Severance Protection Agreement.

Section 6. Survivor Benefits

6.1 In the event of the death of an active Participant or a Participant on Permanent and Total Disability , notwithstanding Section 3.1 of this Plan, the surviving spouse shall be eligible for a monthly survivor benefit provided the Participant:

(a) was married and eligible to retire on the date of death under early or normal retirement provisions of the Qualified Retirement Plan or

(b) had been married for at least one year prior to death and was on Total and Permanent Disability as provided in the Qualified Retirement Plan or

(c) was married for at least one year prior to death and Participant had elected the Contemporary Pension Option and was vested under the Qualified Retirement Plan or

(d) was married for at least one year prior to death and the Participant elected the Traditional Pension Option and had three years or more of service as an Officer. The benefit will be reduced 1/3% of 1% for each month the Officer would have been under age 60 at the date this surviving spouse benefit commences.

The surviving spouse benefit under this Plan for a Participant who died prior to retirement as specified in 6.1 will be in the same proportion of the Participant’s benefit under Section 3 of this Plan as the surviving spouse benefit under the Qualified Retirement Plan bears to the Participant’s benefit under Article IV, Section 1 of the Qualified Retirement Plan. The surviving spouse benefit will be payable as a monthly annuity or as a lump sum as of the first of the month following eligibility for a surviving spouse benefit under the Qualified Retirement Plan.

6.2 Death of a Retired Participant . The surviving spouse shall be eligible for a monthly survivor benefit provided:

(a) the Participant is eligible for a retirement benefit under this Plan and

(b) the Participant had not received the lump sum payment provided under Section 3.5 of this Plan and

(1) continuously married before the Participant’s early or normal retirement or

(2) the Participant had elected a surviving spouse benefit under section 6.4 below.

The survivor benefit option elected by the retired Participant under Article IV, Section 1 of the Qualified Retirement Plan shall apply to the survivor benefit payable under this Plan. Any formula used to calculate the reduction in the retiree’s monthly benefit under the Qualified Retirement Plan shall also apply under this Plan.

6.3 Commencement and Duration . Payment of monthly death benefits provided under this section shall commence on the same date that surviving spouse benefits commence under the Qualified Retirement Plan. The last payment will be made on the first day of the month of the Surviving Spouse’s death.

6.4 Survivor Benefit Election After Retirement . A Participant who retired and is receiving benefits under this Plan, for whom no survivor benefit is in effect, may elect a survivor benefit by filing a written application with the Company provided:

(1) The Participant was not married at retirement and has subsequently married, or

(2) The Participant has had a Survivor Benefit provision in effect and has remarried, and

(3) The Participant had not received a lump sum payment provided in Section 3.5 of this Plan.

The Survivor Benefit under this paragraph and any applicable reduction to the retired Participant’s benefit shall be effective with respect to benefits falling due for months commencing with the first day of the month following the month in which the Company receives an application, but in no event before the first day of the month following the month in which the retired Participant has been married to the designated spouse for one year.

On or after 1 July 1999, if the Company is notified of a designated spouse following the first day of the month in which the retired employee has been married to the designated spouse for one year, retroactive reductions and benefit adjustments will be made to the retired Participant’s pension benefit or the survivor’s benefit, in the event of a retired Participant’s death for such late notice. These retroactive reductions will become payable for the period of time based on the date the survivor benefit would have become effective (the first day of the month following the month in which the retired Participant had been married to the designated spouse for one year).

Any surviving spouse benefit election by the retired Participant under Article IV, Section 1 of the Qualified Retirement Plan shall apply to the survivor benefit payable under this Plan. Any formula used to calculate the reduction in the retired

Participant’s monthly benefit under the Qualified Retirement Plan and Sections 3.2, 3.3, and 3.4 of this Plan will also apply.

Section 7. Financing of Benefits

7.1 Contractual Obligation . It is intended that the Company is under a contractual obligation to make the payments under this Plan when due. No benefits under this Plan shall be financed through a trust fund or insurance contracts or otherwise. Benefits shall be paid out of the general funds of the Company.

7.2 Unsecured General Creditor . Neither the Participant nor the Surviving Spouse shall have any interest whatsoever in any specific asset of the Company on account of any benefits provided under this Plan. The Participant’s (or Surviving Spouse’s) right to receive benefit payments under this Plan shall be no greater than the right of any unsecured general creditor of the Company.

7.3 Funding . All amounts paid under this Plan shall be paid in cash from the general assets of the Company. Such amounts shall be reflected on the accounting records of the Company, but shall not be construed to create, or require the creation of, a trust, custodial or escrow account. No Participant shall have any right, title or interest whatever in or to any investment reserves, accounts or funds that the Company may purchase, establish or accumulate to aid in providing the benefits under this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create a trust or fiduciary relationship of any kind between the Company and a Participant or any other person. Neither shall an employee acquire any interest greater than that of an unsecured creditor.

7.4 Vesting . Benefits under this Plan shall become nonforfeitable at the earlier of disability, or retirement under the Traditional Pension Option of the Qualified Retirement Plan after reaching age 60 or after five years of service credit and termination of employment or retirement under the Qualified Retirement Plan Contemporary Pension Option. Notwithstanding the preceding sentence, a Participant or his beneficiary shall have no right to benefits hereunder if the Company determines that he engaged in a willful, deliberate or gross act of commission or omission which is substantially injurious to the finances or reputation of the Company.

7.5 Administration . This Plan shall be administered by the Company which shall have, to the extent appropriate, the same powers, rights, duties and obligations with respect to this Plan as it does with respect to the Qualified Retirement Plan; provided, however, that the determination of the Company as to any questions arising under this Plan, including questions of construction and interpretation shall be final, binding, and conclusive upon all persons.

7.6 Expenses . The expenses of administering the Plan shall be borne by the Company.

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7.7 Indemnification and Exculpation . The agents, officers, directors, and employees of the Company and its affiliates shall be indemnified and held harmless by the Company against and from any and all loss, cost, liability, or expenses that may be imposed upon or reasonably incurred by them in connection with or resulting from any claim, action, suit, or proceeding to which they may be a party or in which they may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by them in settlement (with the Company’s written approval) or paid by them in satisfaction of a judgment in any such action, suit, or proceeding. The foregoing provision shall not be applicable to any person if the loss, cost, liability, or expense is due to such person’s gross negligence of willful misconduct.

7.8 Effect on Other Benefit Plans . Amounts credited or paid under this Plan shall not be considered to be compensation for the purposes of a qualified pension plan or any other benefit plan maintained by the Company. The treatment of such amounts under other employee benefit plans shall be pursuant to the provisions of such plans.

7.9 Tax Liability . The Company may withhold from any payment of benefits hereunder any taxes required to be withheld and such sum as the Company may reasonably estimate to be necessary to cover any taxes for which the Company may be liable and which may be assessed with regard to such payment.

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Effective as of the dates indicated, the John Deere Supplemental Pension Benefit Plan, amended and restated as of 1 January 1997, with amendments through 1 January 2002, is further amended and is clarified with respect to the forms of annuity available under the Plan by adding the following Section 8 immediately following Section 7 thereof.

“ Section 8. 409A Amendments

The Plan is amended as set forth in this Section 8, effective as of the dates indicated, in order to avoid adverse or unintended tax consequences to Participants under Section 409A of the Code and the applicable rules and regulations thereunder (“ Section 409A ”). The provisions of this Section 8 shall apply to that portion of a Participant’s benefit that is not both earned and vested as of 31 December 2004 (the “ 409A Benefit ”) and shall supersede the other provisions of the Plan to the extent necessary to eliminate inconsistencies between this Section 8 and such other provisions. References to Sections are references to sections in the Plan, unless otherwise provided.

8.1. Distribution Elections .

(a) Retirement Eligible and Separated in 2006 . Effective as of 1 December 2005, a Participant who is or will be retirement eligible as provided under the terms of the John Deere Pension Plan for Salaried Employees (“ Retirement Eligible ”) as of 31 December 2006 shall be permitted to irrevocably elect to receive payment of his 409A Benefit in the form of an annuity or a single lump sum; provided that such Participant (i) makes such election by 31 December 2005 in accordance with procedures established by the Company and (ii) incurs a separation from service as defined under Section 409A (“ Separation from Service ”) on or after 1 December 2005 and on or before 31 December 2006. Payment of the 409A Benefit pursuant to this Section 8.1(a) shall be paid or commence to be paid six months and one day after the Participant’s Separation from Service.

(b) Retirement Eligible and Separated in 2005 . Effective as of 1 January 2005, a Participant who incurs a Separation from Service in calendar year 2005 shall be permitted to irrevocably elect to receive payment of his 409A Benefit in the form of an annuity or a single lump sum; provided that the Participant makes such election in accordance with procedures established by the Company and by no later than 31 December 2005. Payment of the 409A Benefit pursuant to this Section 8.1(b) shall (A) if paid in the form of an annuity, commence to be paid upon the Participant’s Separation from Service, or (B) if paid in the form of a single lump sum, be paid upon the Participant’s Separation from Service.

(i) Effective as 1 January 2005, the 409A Benefit of a Participant who is Retirement Eligible as described in Section 8.1(a) or Section 8.1(b) may be paid in the form of a single life annuity or a joint and survivor annuity;

102

provided , however , that if a Participant elects an annuity under the Plan, such Participant shall receive the same form of annuity as elected by the Participant prior to his Separation from Service under the John Deere Pension Plan for Salaried Employees, without regard to the social security level income option.

(ii) Effective as of 1 January 2006, the 409A Benefit of a Participant who elects an annuity pursuant to Section 8.1(a), but who fails to elect a form of annuity under the John Deere Pension Plan for Salaried Employees prior to his Separation from Service, shall receive a single life annuity.

(d) All Other Participants; Default Form of Payment .

(i) The 409A Benefit of a Participant who incurs a Separation from Service on or after 1 January 2006 and is not described in Section 8.1(a), 8.1(b) or Section 8.2 shall be distributed in the form of a single lump sum payment six months and one day after the Participant’s Separation from Service, regardless of any prior election.

(ii) Effective as of 1 January 2006, the 409A Benefit of a Participant described in Section 8.1(a) who fails to make an election pursuant to Section 8.1(a) shall receive his 409A Benefit in the form and at the time specified in Section 8.1(d)(i).

8.2. Death . Effective as of 1 January 2006, the 409A Benefit of any Participant who dies (i) prior to his Separation from Service or (ii) while on Long-Term Disability shall be paid as soon as administratively feasible to the Surviving Spouse (if any) of such Participant in the form of a single lump sum.

8.3 Disability . Effective as of 1 January 2006, a Participant on Long Term Disability shall receive a distribution of his 409A Benefit in a single lump sum on his 65 ^th birthday.

8.4. Survivor Benefit Election After Retirement . Effective as of 1 January 2005, a Participant who is retired and receiving benefits under the Plan and for whom no survivor benefit is in effect shall not be permitted to elect a survivor benefit with respect to his 409A Benefit.

8.5 Additional Requirements of Section 409A . Notwithstanding anything in this Section 8 to the contrary, effective as of 1 January 2005 (unless otherwise provided):

(a) Timing of Distributions . Distribution of a Participant’s 409A Benefit shall be made as soon as administratively feasible after the date set forth in this Section 8 applicable to such distribution, and, effective as of 1 October 2005, no later than the time required by Section 409A.

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(b) Timing of Elections . Except as otherwise provided in Section 8.5(c), to the extent that any Participant makes a payment election on or prior to 31 December 2005 with respect to all or a portion of his 409A Benefit (to the extent previously deferred), such election shall be permitted and deemed to be pursuant to Q&A 19(c) of Notice 2005-1 promulgated by the U.S. Treasury Department and the Internal Revenue Service.

(c) Termination of Participation . To the extent that any Participant receives in the 2005 calendar year a distribution of all, or any portion, of his 409A Benefit, such distribution shall be deemed a whole or partial (as the case may be) termination of such Participant’s 409A Benefit in accordance with Q&A 20(a) of Notice 2005-1 promulgated by the U.S. Treasury Department and the Internal Revenue Service.

(d) Six-Month Delay . Distribution of a Participant’s 409A Benefit shall be made in accordance with the provisions of Section 409A and, to the extent that such payments are issued in connection with a Participant’s Separation from Service for any reason other than death, such payment s shall be delayed for six months and one day to the extent the Administrator determines that such delay is necessary to avoid the imposition on any Participant of additional taxes or interest under Section 409A.

(e) Amendments and Modifications . With respect to a Participant’s 409A Benefit, the Vice President, Human Resources and any successor thereof shall have the unilateral right to amend or modify the Plan, any Participant elections under the Plan and the time and manner of any payment of benefits under the Plan in accordance with Section 409A, in each case, without the consent of any employee or Participant, to the extent that the Vice President, Human Resources and any successor thereof, as the case may be, deems such action to be necessary or advisable to avoid the imposition on any Participant of an additional tax or interest under Section 409A. Any determinations of the Vice President, Human Resources or the successor thereof pursuant to this Section 8.5(e) shall be final, conclusive and binding on all parties. ”

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EXHIBIT I

	TITLES AS OF 1 NOVEMBER 1996	OFFICER SINCE

Hans W. Becherer	Chairman & COO & CEO	26 Apr 1977

Bernard L. Hardiek	President, Worldwide Ag. Equipment Division	26 Aug 1987 (Retired)

Ferdinand F. Korndorf	President, Worldwide Commercial & Consumer Equipment Division	23 Sep 1991

John K. Lawson	Sr. VP, Engineering, Information & Technology	27 Feb 1985

Eugene L. Schotanus	Executive VP Financial Services	29 Jan 1974 (Retired)

Joseph W. England	Sr. VP, Worldwide Parts & Corp. Administration	29 Jan 1974 (Retired)

Pierre E. Leroy	President, Worldwide Industrial Equipment Div.	12 Dec 1985

Michael S. Plunkett	Sr., VP, Engineering, Technology & HR	29 Jan 1980 (Retired)

Frank S. Cottrell	VP, General Counsel & Corporate Secretary	26 Aug 1987

Robert W. Lane	Sr. VP & CFO	16 Jan 1996

John S. Gault	former VP, Engr., Info, & Tech. GM, Harvester	01 Jan 1994

Glen D. Gustafson	former Comptroller Dir., Bus. Planning	28 Jul 1981 (Retired)

Robert W. Porter	Sr. VP, North American Ag. Marketing	16 Nov 1994 (Retired)

105

	TITLES AS OF 1 NOVEMBER 1996	OFFICER SINCE

Adel A. Zakaria	Sr. VP, Worldwide Ag Engr. & Mfg.	01 Apr 1992

James D. White	Sr. VP, Manufacturing	26 Aug 1987

Mark C. Rostvold	Sr. VP, Worldwide Commercial & Consumer Equip. Division	26 Aug 1987 (Retired)

Dennis E. Hoffmann	President John Deere Insurance	05 Dec 1990 (Retired)

Michael P. Orr	President John Deere Credit Company	05 Dec 1990

Richard J. VanBell	President John Deere Health Care	16 Jan 1994 (Retired)

106

Exhibit 10.16

JOHN DEERE

SENIOR SUPPLEMENTARY PENSION BENEFIT PLAN

AS AMENDED AND RESTATED EFFECTIVE: 1 NOVEMBER 1992

AMENDED MAY 1993 - EFFECTIVE 1 JULY 1993

AMENDED 8 DECEMBER 1993 - EFFECTIVE 1 JULY 1993

AMENDED 7 DECEMBER 1994

AMENDED MAY 1995 - EFFECTIVE 1 JANUARY 1995

AMENDED 4 DECEMBER 1996 - EFFECTIVE 1 JANUARY 1997

AMENDED 26 MAY 1999 – EFFECTIVE 26 MAY 1999

AMENDED 19 JULY 1999 – EFFECTIVE 1 JULY 1999

AMENDED 12 JANUARY 2000 - EFFECTIVE 1 JANUARY 2000

AMENDED 31 JULY 2000 -EFFECTIVE 1 JANUARY 2000

AMENDED: 29 JANUARY 2002 - EFFECTIVE: 1 JANUARY 2002

107

JOHN DEERE

SENIOR SUPPLEMENTARY PENSION BENEFIT PLAN

TABLE OF CONTENTS

Article			Page

I.	ESTABLISHMENT, PURPOSE AND CONSTRUCTION

	1.1	Establishment	109
	1.2	Purpose	109
	1.3	Effective Date and Plan Year	109
	1.4	Application of Plan	110
	1.5	Construction	110

II.	PARTICIPATION

	2.1	Eligibility to Participate	111
	2.2	Effect of Transfer	111

III.	SUPPLEMENTARY BENEFITS

	3.1	Eligibility for Benefit	112
	3.2	Amount of Benefit	112
	3.3	Form of Payment and Commencement Date	112
	3.4	Death Prior to Receipt of Lump Sum	113
	3.5	Qualified Domestic Relations Order	114

IV.	ADMINISTRATION OF PLAN

	4.1	Administration	115
	4.2	Amendment, Modification or Termination	115

V.	MISCELLANEOUS

	5.1	Employment Rights	117
	5.2	Applicable Law	117
	5.3	Non-Alienation	117
	5.4	Withholding of Taxes	117
	5.5	Funding and Rights Against Assets	117
	5.6	Effect on Other Benefit Plans	117

108

JOHN DEERE SENIOR SUPPLEMENTARY

PENSION BENEFIT PLAN

Article I. Establishment, Purpose and Construction

1.1 Establishment. Effective 1 November 1985, Deere & Company established the John Deere Supplementary Pension Benefit Plan (the “Former Plan”) for the benefit of the salaried employees on its United States payroll and the salaried employees of its United States subsidiaries or affiliates that chose to adopt the John Deere Pension Plan for Salaried Employees (“Salaried Pension Plan”). Deere & Company and its United States subsidiaries and affiliates that have adopted the Salaried Pension Plan (jointly the “Company”) are also deemed to have adopted the Former Plan. The Company amended and restated the Former Plan, and divided it into two separate plans, effective 1 November 1992. This John Deere Senior Supplementary Pension Benefit Plan (the “Plan”) is one of the two plans which replaced the Former Plan.

1.2 Purpose. The Company maintains a defined benefit pension plan, known as the Salaried Pension Plan, which is intended to be a qualified defined benefit pension plan which meets the requirements of Section 401(a) of the Internal Revenue Code of 1986 (“Code”). Section 401(a)(17) of the Code limits the amount of compensation paid to a participant in a qualified defined benefit pension plan which may be taken into account in determining benefits under such a plan. Section 415 of the Code limits the benefit which may be paid under a qualified defined benefit pension plan. This Plan is intended to provide benefits which, when combined with the benefit actually payable under the Salaried Pension Plan, are reasonably comparable to the benefits which participants in the Salaried Pension Plan would have received under such plan if there were no limitations imposed by Sections 401(a)(17) and 415 of the Code. This Plan is intended to qualify as an unfunded deferred compensation plan for a select group of management or highly compensated employees, within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”).

1.3 Effective Date and Plan Year. This Plan shall be effective 1 November 1992. Participants in the Former Plan who were receiving benefits under the Former Plan as of 31 October 1992, and who are eligible employees as defined in Section 2.1 below, shall receive the same benefit payments under this Plan as they were receiving under the Former Plan as of 31 October 1992. Participants in the Former Plan who were not receiving benefits as of 31 October 1992, and who are eligible employees as defined in Section 2.1 below, shall have no further rights under the Former Plan, but shall be entitled to benefits, if any, only under the terms of this Plan. The Plan Year shall be the twelve-month

109

period beginning on 1 November of each year and ending on 31 October of the following year.

1.4 Application of Plan. The terms of this Plan are applicable only to eligible employees of the Company as described in Section 2.1 below who (i) become eligible to receive benefit payments hereunder on or after 1 November 1992 or (ii) were receiving benefit payments under the Former Plan as of 31 October 1992.

1.5 Construction. Unless the context clearly indicates otherwise or unless specifically defined herein, all operative terms used in this Plan shall have the meanings specified in the Salaried Pension Plan and words in the masculine gender shall be deemed to include the feminine and neuter genders and the singular shall be deemed to include the plural and vice versa.

110

Article II. Participation

2.1 Eligibility to Participate. Any employee participating in the Salaried Pension Plan (or a surviving spouse of such employee) whose retirement benefit upon termination from employment or death under such plan is reduced by application of Article I, Section 14, of the Salaried Pension Plan (or any other provision of the Salaried Pension Plan which limits benefits under the plan as required by Section 415 of the Code) or the limitation on the amount of annual compensation used for determining benefits under the Salaried Pension Plan contained in Article III, Section 2, Paragraph C or Section 2.1, Paragraph B of such plan (or any other provision which limits compensation used in determining benefits under the Salaried Pension Plan as required by Section 401(a)(17) of the Code) shall be eligible to participate in this Plan if the compensation used in any year to calculate the employee’s benefit under the Salaried Pension Plan is equal to or greater than the maximum amount of compensation which can be taken into account under Section 401(a)(17) of the Code for purposes of determining such employee’s benefit under the Salaried Pension Plan.

2.2 Effect of Transfer. An employee who is a participant in this Plan and who ceases to be an eligible employee as described in Section 2.1 above shall cease to be a participant in this Plan upon such employee ceasing to be an eligible employee and shall thereafter be eligible to participate in the John Deere ERISA Supplementary Pension Benefit Plan, provided that such employee continues as a salaried employee on the United States payroll of the Company.

111

Article III. Supplementary Benefits

3.1 Eligibility for Benefit. An eligible employee shall be entitled to a benefit under this Plan in the event that such eligible employee’s employment with the Company terminates by reason of death or retirement, including deferred vested retirement, under the terms of the Salaried Pension Plan.

3.2 Amount of Benefit. The amount of the supplementary benefit payable under this Plan shall be the amount by which (A) exceeds (B) where:

(A) equals the amount of an employee’s monthly pension benefit or survivor benefit payable under the terms of the Salaried Pension Plan as in effect on the date of the employee’s termination, retirement or death, but determined without regard to any limitation on such benefit imposed in order to comply with the limitation on benefits contained in Sections 401(a)(17) or 415 of the Code and based on the employee’s total salary from the Company before the effect of any salary deferral or reduction resulting from an election by the employee under any Company sponsored plan or program; but excluding any matching and/or growth factor Company contributions and/or flexible credits provided by the Company under any such plan or program; and

(B) equals such employee’s actual monthly pension benefit or survivor benefit payable under the Salaried Pension Plan as in effect on the date of such employee’s termination, retirement or death.

The determinations of the amount of (A) and (B) above shall be made using a straight life annuity form.

3.3 Form of Payment and Commencement Date. The supplementary benefit payable under this Plan shall be payable in the same manner and form as the benefit paid to or with respect to an employee under the Salaried Pension Plan and shall automatically commence on or about the same date as payments under the Salaried Pension Plan and shall continue as long as benefits are payable under the Salaried Pension Plan.

112

months prior to payment, but in no event subsequent to the participant’s date of retirement. The lump sum payment shall be made to participant twelve (12) months after receipt of notice by the Company but in no event prior to the participant’s retirement.

3.4 Death Prior to Receipt of Lump Sum

If an active Participant or a Participant on Permanent and Total Disability dies after receipt of notice by the Company pursuant to Section 3.3 of Participant’s irrevocable election to receive a lump sum payment, but before the expiration of twelve (12) months after receipt by the Company of such election, a Surviving Spouse of the Participant who is eligible for a survivor benefit under the Qualified Retirement Plan will receive a lump sum survivor’s benefit under this Plan. The 55% surviving spouse lump sum benefit will be payable no earlier than twelve (12) months following receipt of notice by the Company of the deceased Participant’s irrevocable election but not before the first day of the month following eligibility for a surviving spouse benefit under the Qualified Retirement Plan.

If a retired Participant or a Participant on Permanent and Total Disability subsequently retires under Normal Retirement and dies after receipt of notice by the Company pursuant to Section 3.3 election to receive a lump sum payment, but before the expiration of twelve (12) months after receipt by the Company of such election, a Surviving Spouse of the Participant who is eligible for a survivor benefit under the Qualified Retirement Plan will receive the Participant’s full lump sum benefit under Section 3.3 of this Plan. In the event the retired Participant is unmarried at the date of death or the Surviving Spouse of the deceased Participant is not eligible for survivor benefits under the Qualified Retirement Plan, the Participant’s full lump sum benefit will be paid to the deceased Participant’s estate. The lump sum benefit will be payable no earlier than twelve (12) months following receipt of notice by the Company of the deceased Participant’s irrevocable election.

113

3.5 Qualified Domestic Relations Order

114

Article IV. Administration of Plan

4.1 Administration. This Plan shall be administered by the Company (the “Administrator”). The Administrator shall have the power to construe and interpret this Plan, decide all questions of eligibility and determine the amount, manner and time of payment of any benefits hereunder. All determinations of the Administrator shall be final, binding and conclusive on all persons.

4.2 Amendment, Modification or Termination. The Board of Directors of the Company, or, the Pension Plan Oversight Committee of the Board may at any time amend or modify this Plan in their sole discretion, In addition, the Deere & Company Compensation Committee shall have the authority to approve all amendments or modifications that:

a. in the Compensation Committee’s judgment are procedural, technical or administrative, but do not result in changes in the control and management of the Plan assets; or

b. in the Compensation Committee’s judgment are necessary or advisable to comply with any changes in the laws or regulations applicable to the Plan; or

c. in the Compensation Committee’s judgment are necessary or advisable to implement provisions conforming to a collective bargaining agreement which has been approved by the Board of Directors; or

e. are the subject of a specific delegation of authority from the Board of Directors.

115

the official records of the Company. If a subsidiary or affiliate of Deere & Company that has adopted this Plan ceases to be a subsidiary or affiliate, the participation in this Plan by the employees of such subsidiary or affiliate shall terminate, and no employees of such former affiliate or subsidiary shall accrue or be entitled to a benefit under this Plan on and after the date such company ceases to be a subsidiary or affiliate of Deere & Company (other than former employees who were receiving benefit payments as of such date).

116

Article V. Miscellaneous

5.1 Employment Rights. Nothing under this Plan shall be construed to give any employee the right to continue in employment with the Company or to any benefits not specifically provided herein.

5.2 Applicable Law. This Plan, to the extent it is not exempt therefrom, shall be governed and construed in accordance with the applicable provisions of ERISA. To the extent not governed by ERISA, this Plan shall be governed and construed in accordance with the laws of the State of Illinois, exclusive of conflict laws.

5.3 Non-Alienation. Except as provided in Article VIII, Section 8 of the John Deere Pension Plan for Salaried Employees, no right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be null and void. No right or benefit under this Plan shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefits except for such claims as may be made by the Company.

5.4 Withholding of Taxes. The Company, or its designee, may withhold from any payment of benefits under this Plan any income, employment or other taxes required to be withheld, including any taxes for which the Company or its designee may be liable with respect to the payment of such benefits.

5.5 Funding and Rights Against Assets . The Company shall make all payments due under this Plan in cash from its general assets and benefits payable under this Plan shall not be funded through the use of a trust, insurance contracts or otherwise. All expenses of administering this Plan shall also be borne by the Company. Neither participating employees, nor their surviving spouses, shall have any interest whatsoever in any specific assets of the Company on account of any benefits payable under this Plan and their rights to receive such benefits shall be no greater than the rights of any other unsecured creditor of the Company.

5.6 Effect on Other Benefit Plans . Amounts credited or payable under this Plan shall not be considered compensation for purposes of any qualified retirement plan maintained by the Company. The treatment of such amounts under any other plan of the Company shall be determined under the provisions of such plan.

117

The John Deere Senior Supplementary Pension Benefit Plan, effective as of 1 November 1992, with amendments through 1 January 2002, is further amended effective as of the dates indicated, by adding the following Article VI immediately following Article V thereof.

“ Article VI. 409A Amendments

Notwithstanding anything in the Plan to the contrary, effective as of the dates indicated, the Plan is amended as set forth in this Article VI in order to avoid adverse or unintended tax consequences to Participants under Section 409A of the Code and the applicable rules and regulations thereunder (“ Section 409A ”). The provisions of this Article VI shall apply to that portion of a Participant’s benefit that is not both earned and vested under the Plan as of 31 December 2004 (the “ 409A Benefit ”) and shall supersede the other provisions of the Plan to the extent necessary to eliminate inconsistencies between this Article VI and such other provisions. References to Sections are references to sections in the Plan, unless otherwise provided.

6.1. Distribution Elections .

(a) Retirement Eligible and Separated in 2006 . Effective as of 1 December 2005, a Participant who is or will be retirement eligible as provided under the terms of the John Deere Pension Plan for Salaried Employees (“ Retirement Eligible ”) as of 31 December 2006 shall be permitted to irrevocably elect to receive payment of his 409A Benefit in the form of an annuity or a single lump sum; provided that such Participant (i) makes such election by 31 December 2005 in accordance with procedures established by the Company and (ii) incurs a separation from service as defined under Section 409A (“ Separation from Service ”) on or after 1 December 2005 and on or before 31 December 2006. Payment of the 409A Benefit pursuant to this Section 6.1(a) shall be paid or commence to be paid six months and one day after the Participant’s Separation from Service.

(b) Retirement Eligible and Separated in 2005 . Effective as of 1 January 2005, a Participant who incurs a Separation from Service in calendar year 2005 shall be permitted to irrevocably elect to receive payment of his 409A Benefit in the form of an annuity or a single lump sum; provided that the Participant makes such election in accordance with procedures established by the Company and by no later than 31 December 2005. Payment of the 409A Benefit pursuant to this Section 6.1(b) shall (A) if paid in the form of an annuity, commence to be paid upon the Participant’s Separation from Service, or (B) if paid in the form of a single lump sum, be paid upon the Participant’s Separation from Service.

(i) Effective as 1 January 2005, the 409A Benefit of a Participant who is Retirement Eligible as described in Section 6.1(a) or Section 6.1(b) may

118

be paid in the form of a single life annuity or a joint and survivor annuity; provided , however , that if a Participant elects an annuity under the Plan, such Participant shall receive the same form of annuity as elected by the Participant prior to his Separation from Service under the John Deere Pension Plan for Salaried Employees, without regard to the social security level income option.

(ii) Effective as of 1 January 2006, the 409A Benefit of a Participant who elects an annuity pursuant to Section 6.1(a), but who fails to elect a form of annuity under the John Deere Pension Plan for Salaried Employees prior to his Separation from Service, shall receive a single life annuity.

(d) All Other Participants; Default Form of Payment .

(i) The 409A Benefit of a Participant who incurs a Separation from Service on or after 1 January 2006 and is not described in Section 6.1(a), 6.1(b) or Section 6.2 shall be distributed in the form of a single lump sum payment six months and one day after the Participant’s Separation from Service, regardless of any prior election.

(ii) Effective as of 1 January 2006, the 409A Benefit of a Participant described in Section 6.1(a) who fails to make an election pursuant to Section 6.1(a) shall receive his Benefit in the form and at the time specified in Section 6.1(d)(i).

6.2. Death . Effective as of 1 January 2006, the 409A Benefit of any Participant who dies (i) prior to his Separation from Service or (ii) while on Long-Term Disability shall be paid as soon as administratively feasible to the Surviving Spouse (if any) of such Participant in the form of a single lump sum.

6.3. Disability . Effective as of 1 January 2006, a Participant on Long Term Disability shall receive a distribution of his 409A Benefit in a single lump sum on his 65 ^th birthday.

6.4 Additional Requirements of Section 409A . Notwithstanding anything in this Article 6 to the contrary, effective as of 1 January 2005 (unless otherwise provided):

(a) Timing of Distributions . Distribution of a Participant’s 409A Benefit shall be made as soon as administratively feasible after the date set forth in this Article 6 applicable to such distribution, and, effective as of 1 October 2005, no later than the time required by Section 409A.

(b) Timing of Elections . Except as otherwise provided in Section 6.4(c), to the extent that any Participant makes a payment election on or prior to 31

119

December 2005 with respect to all or a portion of his 409A Benefit (to the extent previously deferred), such election shall be permitted and deemed to be pursuant to Q&A 19(c) of Notice 2005-1 promulgated by the U.S. Treasury Department and the Internal Revenue Service.

(d) Six-Month Delay . Distribution of a Participant’s 409A Benefit shall be made in accordance with the provisions of Section 409A and, to the extent that such payments are issued in connection with a Participant’s Separation from Service for any reason other than death, such payments shall be delayed for six months and one day to the extent the Administrator determines that such delay is necessary to avoid the imposition on any Participant of additional taxes or interest under Section 409A.

(e) Amendments and Modifications . With respect to a Participant’s 409A Benefit, the Vice President, Human Resources and any successor thereof shall have the unilateral right to amend or modify the Plan, any Participant elections under the Plan and the time and manner of any payment of benefits under the Plan in accordance with Section 409A, in each case, without the consent of any employee or Participant, to the extent that the Vice President, Human Resources and any successor thereof, as the case may be, deems such action to be necessary or advisable to avoid the imposition on any Participant of an additional tax or interest under Section 409A. Any determinations of the Vice President, Human Resources or the successor thereto pursuant to this Section 6.4(e) shall be final, conclusive and binding on all parties.”

120

Exhibit 10.17

JOHN DEERE

ERISA SUPPLEMENTARY PENSION BENEFIT PLAN

AS AMENDED AND RESTATED EFFECTIVE: 1 NOVEMBER 1992

AS AMENDED 8 DECEMBER 1993: EFFECTIVE 1 JULY 1993

AS AMENDED: 7 DECEMBER 1994

AS AMENDED MAY 1995 - EFFECTIVE 1 JANUARY 1995

AS AMENDED 4 DECEMBER 1996 - EFFECTIVE 1 JANUARY 1997

AS AMENDED 26 MAY 1999 – EFFECTIVE 26 MAY 1999

AS AMENDED 19 JULY 1999 – EFFECTIVE 1 JULY 1999

AS AMENDED 12 JANUARY 2000 - EFFECTIVE 1 JANUARY 2000

AS AMENDED 31 July 2000-EFFECTIVE 1 January 2000

AMENDED: 29 JANUARY 2002 - EFFECTIVE: 1 JANUARY 2002

121

JOHN DEERE

ERISA SUPPLEMENTARY PENSION BENEFIT PLAN

TABLE OF CONTENTS

Article				Page

I.	ESTABLISHMENT, PURPOSE AND CONSTRUCTION

	1.1	Establishment		123
	1.2	Purpose		123
	1.3	Effective Date and Plan Year		123
	1.4	Application of Plan		124
	1.5	Construction		124

II.	PARTICIPATION

	2.1	Eligibility to Participate		125
	2.2	Effect of Transfer		125

III.	SUPPLEMENTARY BENEFITS

	3.1	Eligibility for Benefit		126
	3.2	Amount of Benefit		126
	3.3	Form of Payment and Commencement Date		126
	3.4	Death Prior to Receipt of Lump Sum		127
	3.5	Qualified Domestic Relations Order		127

IV.	ADMINISTRATION OF PLAN

	4.1		Administration	128
	4.2		Amendment, Modification or Termination	128

V.	MISCELLANEOUS

	5.1		Employment Rights	130
	5.2		Applicable Law	130
	5.3		Non-Alienation	130
	5.4		Withholding of Taxes	130
	5.5		Funding and Rights Against Assets	130
	5.6		Effect on Other Benefit Plans	130

122

JOHN DEERE ERISA SUPPLEMENTARY

PENSION BENEFIT PLAN

(AS AMENDED AND RESTATED EFFECTIVE 1 November 1992)

Article I. Establishment, Purpose and Construction

1.1 Establishment. Effective 1 November 1985, Deere & Company established the John Deere Supplementary Pension Benefit Plan (the “Former Plan”) for the benefit of the salaried employees on its United States payroll and the salaried employees of its United States subsidiaries or affiliates that chose to adopt the John Deere Pension Plan for Salaried Employees (“Salaried Pension Plan”). Deere & Company and its United States subsidiaries and affiliates that have adopted the Salaried Pension Plan (jointly the “Company”) are also deemed to have adopted the Former Plan. The Company amended and restated the Former Plan, and divided it into two separate plans, effective 1 November 1992. This John Deere ERISA Supplementary Pension Benefit Plan (the “Plan”) is one of the two plans which replaced the Former Plan.

1.2 Purpose. The Company maintains a defined benefit pension plan, known as the Salaried Pension Plan, which is intended to be a qualified defined benefit pension plan which meets the requirements of section 401(a) of the Internal Revenue Code of 1986 (“Code”). Section 415 of the Code limits the benefit which may be paid under a qualified defined benefit pension plan. This Plan is intended to provide benefits which, when combined with the benefit actually payable under the Salaried Pension Plan, are reasonably comparable to the benefits which participants in the Salaried Pension Plan would have received under such plan if there were no limitations imposed by section 415 of the Code. This Plan is intended to qualify as an unfunded “excess benefit plan,” as defined in section 3(36) of the Employee Retirement Income Security Act of 1974 (“ERISA”).

123

who are eligible employees as defined in section 2.1 below, shall have no further rights under the Former Plan, but shall be entitled to supplementary pension benefits, if any, only under the terms of this Plan. The Plan Year shall be the twelve-month period beginning on 1 November of each year and ending on 31 October of the following year.

1.4 Application of Plan. The terms of this Plan are applicable only to eligible employees as described in Section 2.1 below who (i) become eligible to receive benefit payments hereunder on or after 1 November 1992, or (ii) were receiving benefit payments under the Former Plan as of 31 October 1992.

1.5 Construction. Unless the context clearly indicates otherwise or unless specifically defined herein, all operative terms used in this Plan shall have the meanings specified in the Salaried Pension Plan, and words in the masculine gender shall be deemed to include the feminine and neuter genders and the singular shall be deemed to include the plural and vice versa.

124

Article II. Participation

2.2 Effect of Transfer. Any employee who is a participant in this Plan and who becomes eligible to participate in the John Deere Senior Supplementary Pension Benefit Plan shall cease to be a participant in this Plan upon becoming a participant in the John Deere Senior Supplementary Pension Benefit Plan.

125

Article III. Supplementary Benefits

3.2 Amount of Benefit. The amount of the supplementary benefit payable under this Plan shall be the amount by which (A) exceeds (B) where:

(B) equals such employee’s actual monthly pension benefit or survivor benefit payable under the Salaried Pension Plan as in effect on the date of such employee’s termination, retirement or death.

The determinations of the amount of (A) and (B) above shall be made using a straight life annuity form.

3.3 Form of Payment and Commencement Date. The supplementary benefit payable under this Plan shall be payable in the same manner and form as the benefit paid to or with respect to an employee under the Salaried Pension Plan, and shall automatically commence on or about the same date as payments under the Salaried Pension Plan. Such benefits payable under this Plan shall continue as long as benefits are payable under the Salaried Pension Plan,

Alternatively, the participant may elect to receive a lump sum payment for all or a portion (in 10% increments from 10% to 90%) of the Retirement benefits payable under this Plan including the 55% joint and survivor annuity equal to 11% of the supplementary benefit payable, adjusted for service accrued through 30 June 1993, or 31 December 1993 in the case of employees of John Deere Credit Company, John Deere Health Care, Inc., or John Deere Insurance Group. Written notice of the participant’s election to receive a lump sum payment shall be irrevocable, and must be received by the Company within the twelve (12) months prior to payment, but in no event subsequent to the participant’s date of retirement. The lump sum payment shall be made to participant twelve (12) months after receipt of notice by the Company but in no event prior to the participant’s retirement.

126

Effective beginning 1 January 2002 and threrafter, the lump sum will be calculated using an interest rate assumption equal to the average yield in September of the preceding Plan Year on 30-year Treasury Constant Maturities (as published in October by the Internal Revenue Service) and the mortality table shall be based upon a fixed blend of 50% male mortality rates and 50% female mortality rates from the Group Annuity Reserving Table (“GAR”), as set forth in Revenue Ruling 2001-62, in effect at the beginning of the plan year in which payment is made. The age used in the calculation will be the age of the Participant or, in the case of Participant’s death, the surviving spouse’s age on the date payment is made.

3.4 Death Prior to Receipt of Lump Sum

If an active Participant or a Participant on Permanent and Total Disability dies after receipt of notice by the company pursuant to Section 3.3 of Participant’s irrevocable election to receive a lump sum payment, but before the expiration of twelve (12) months after receipt by the company of such election, a Surviving Spouse of the Participant who is eligible for a survivor benefit under the Qualified Retirement Plan will receive a lump sum survivor’s benefit under this Plan. The 55% surviving spouse lump sum benefit will be payable no earlier than twelve (12) months following receipt of notice by the company of the deceased Participant’s irrevocable election but not before the first day of the month following eligibility for a surviving spouse benefit under the Qualified Retirement Plan.

If a retired Participant or a Participant on Permanent and Total Disability subsequently retires under Normal Retirement and dies after receipt of notice by the company pursuant to Section 3.3 of Participant’s irrevocable election to receive a lump sum payment, but before the expiration of twelve (12) months after receipt by the Company of such election, a Surviving Spouse of the Participant who is eligible for a survivor benefit under the Qualified Retirement Plan will receive the Participant’s full lump sum benefit under Section 3.3 of this Plan. In the event the retired Participant is unmarried at the date of death or the Surviving Spouse of the deceased Participant is not eligible for survivor benefits under the Qualified Retirement Plan, the Participant’s full lump sum benefit will be paid to the deceased Participant’s estate. The lump sum benefit will be payable no earlier than twelve (12) months following receipt of notice by the Company of the deceased Participant’s irrevocable election.

3.5 Qualified Domestic Relations Order

127

Article IV. Administration of Plan

4.1 Administration. This Plan shall be administered by the Company (the “Administrator”). The Administrator shall have the power to construe and interpret this Plan, decide questions of eligibility and determine the amount, manner and time of payment of any benefits hereunder. All determinations of the Administrator shall be final, binding and conclusive on all persons.

4.2 Amendment, Modification or Termination. The Board of Directors of the Company, or, the Pension Plan Oversight Committee of the Board may at any time amend or modify this Plan in their sole discretion. In addition, the Deere & Company Compensation Committee shall have the authority to approve all amendments or modifications that:

a. in the Compensation Committee’s judgment are procedural, technical or administrative, but do not result in changes in the control and management of the Plan assets; or

b. in the Compensation Committee’s judgment are necessary or advisable to comply with any changes in the laws or regulations applicable to the Plan; or

c. in the Compensation Committee’s judgment are necessary or advisable to implement provisions conforming to a collective bargaining agreement which has been approved by the Board of Directors; or

e. are the subject of a specific delegation of authority from the Board of Directors.

128

the Company. If a subsidiary or affiliate of Deere & Company that has adopted this Plan ceases to be a subsidiary or affiliate, the participation in this Plan by the employees of such subsidiary or affiliate shall terminate, and no employees of such former affiliate or subsidiary shall accrue or be entitled to a benefit under this Plan on and after the date such company ceases to be a subsidiary or affiliate of Deere & Company (other than former employees who were receiving benefit payments as of such date).

129

Article V. Miscellaneous

5.1 Employment Rights. Nothing under this Plan shall be construed to give any employee the right to continue in employment with the Company or to any benefits not specifically provided herein.

5.3 Non-Alienation. Except as provided in Article VIII, Section 8 of the John Deere Pension Plan for Salaried Employees no right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be null and void. No right or benefit under this Plan shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefits except for such claims as may be made by the Company.

5.5 Funding and Rights Against Assets . The Company shall make all payments due under the Plan in cash from its general assets and benefits payable under the Plan shall not be funded through the use of a trust, insurance contracts or otherwise. All expenses of administering this Plan shall also be borne by the Company. Neither participating employees, nor their surviving spouses, shall have any interest whatsoever in any specific assets of the Company on account of any benefits payable under this Plan and their rights to receive such benefits shall be no greater than the rights of any other unsecured creditor of the Company.

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The John Deere ERISA Supplementary Pension Benefit Plan, amended and restated as of 1 November 1992, with amendments through 1 January 2002 is further amended, effective as of the dates indicated, by adding the following Article VI immediately following Article V thereof.

“ Article VI. 409A Amendments

6.1. Distribution Elections .

(a) Retirement Eligible and Separated in 2006 . Effective as of 1 December 2005, a Participant who is or will be retirement eligible as provided under the terms of the John Deere Pension Plan for Salaried Employees (“ Retirement Eligible ”) as of 31 December 2006 shall be permitted to irrevocably elect to receive payment of his 409A Benefit in the form of an annuity or a single lump sum; provided that such Participant (i) makes such election by 31 December 2005 in accordance with procedures established by the Company and (ii) incurs a separation from service as defined under Section 409A (“ Separation from Service ”) on or after 1 December 2005 and on or before 31 December 2006. Payment of the 409A Benefit pursuant to this Section 6.1(a) shall be paid or commence to be paid six months and one day after the Participant’s Separation from Service.

(b) Retirement Eligible and Separated in 2005 . Effective as of 1 January 2005, a Participant who incurs a Separation from Service in calendar year 2005 shall be permitted to irrevocably elect to receive payment of his 409A Benefit in the form of an annuity or a single lump sum; provided that the Participant makes such election in accordance with procedures established by the Company and by no later than 31 December 2005. Payment of the 409A Benefit pursuant to this Section 6.1(b) shall (A) if paid in the form of an annuity, commence to be paid upon the Participant’s Separation from Service, or (B) if paid in the form of a single lump sum, be paid upon the Participant’s Separation from Service.

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(i) Effective as 1 January 2005, the 409A Benefit of a Participant who is Retirement Eligible as described in Section 6.1(a) or Section 6.1(b) may be paid in the form of a single life annuity or a joint and survivor annuity; provided , however , that if a Participant elects an annuity under the Plan, such Participant shall receive the same form of annuity as elected by the Participant prior to his Separation from Service under the John Deere Pension Plan for Salaried Employees, without regard to the social security level income option.

(d) All Other Participants; Default Form of Payment .

6.3. Disability . Effective as of 1 January 2006, a Participant on Long Term Disability shall receive a distribution of his 409A Benefit in a single lump sum on his 65 ^th

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birthday.

6.4 Additional Requirements of Section 409A . Notwithstanding anything in this Article 6 to the contrary, effective as of 1 January 2005 (unless otherwise provided):

(b) Timing of Elections . Except as otherwise provided in Section 6.4(c), to the extent that any Participant makes a payment election on or prior to 31 December 2005 with respect to all or a portion of his 409A Benefit (to the extent previously deferred), such election shall be permitted and deemed to be pursuant to Q&A 19(c) of Notice 2005-1 promulgated by the U.S. Treasury Department and the Internal Revenue Service.

(d) Six-Month Delay . Distribution of a Participant’s 409A Benefit shall be made in accordance with the provisions of Section 409A and, to the extent that such payments are issued in connection with a Participant’s Separation from Service for any reason other than death, such payments shall be delayed for six months and one day to the extent the Administrator determines that such delay is necessary to avoid the imposition on any Participant of additional taxes or interest under Section 409A.

(e) Amendments and Modifications . With respect to a Participant’s 409A Benefit, the Vice President, Human Resources and any successor thereof shall have the unilateral right to amend or modify the Plan, any Participant elections under the Plan and the time and manner of any payment of benefits under the Plan in accordance with Section 409A, in each case, without the consent of any employee or Participant, to the extent that the Vice President, Human Resources and any successor thereof deems such action to be necessary or advisable to avoid the imposition on any Participant of an additional tax or interest under Section 409A. Any determinations of the Vice President, Human Resources or the successor thereof pursuant to this Section 6.4(e) shall be final, conclusive and binding on all parties.”

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Exhibit 10.26

DEERE & COMPANY
HITACHI CONSTRUCTION MACHINERY CO., LTD.
JOINT VENTURE AGREEMENT

This agreement (the “Agreement”) is made and entered into this 16th day of May, 1988 by and between Deere & Company, a Delaware corporation (“Deere”), and Hitachi Construction Machinery Co., Ltd., a Japanese corporation (“Hitachi”).

Recitals

Deere and Hitachi are parties to an agreement dated February 19, 1983 that provides for the distribution by Deere of Hitachi manufactured excavators under the Deere trademark on an exclusive basis in certain size ranges below 33 metric tons. Hitachi has developed a dealer organization in North America that distributes excavators and shovels under the Hitachi trademark, with particular emphasis on excavators and shovels over 33 metric tons in size. Deere and Hitachi are now desirous of entering into a joint venture arrangement for the manufacturing and distribution of excavators which will create manufacturing and marketing efficiencies, provide greater flexibility in responding to changing economic conditions, enable the parties to compete effectively with larger integrated manufacturers of excavators and maximize sales of excavators in North, Central and South America (the “Territory”) through the expansion of the product lines currently being distributed under the Deere and Hitachi trademarks and tradenames.

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Covenants

In consideration of the premises and the mutual covenants of the parties set forth herein, the parties hereto agree as follows:

ARTICLE I
Organization of the Company

l.1 Formation . Deere and Hitachi shall cause to be organized a close corporation (the “Company”) under the General Corporation Law of Delaware. The Certificate of Incorporation and Bylaws of the Company shall be in the forms attached hereto as Exhibits A and B, respectively.

1.2 Name . The name of the Company shall be Deere-Hitachi Construction Machinery Corporation.

1.3 Purposes . The purposes of the Company shall be to (a) establish a facility in North America for the manufacture of excavators, components and repair parts thereof of the types designed and manufactured by Deere in the United States and by Hitachi in Japan; (b) manufacture all or part of such excavators at the facility; (c) expand the product lines of excavators currently being marketed under the Deere and Hitachi tradenames and trademarks; (d) distribute excavators and service parts manufactured or purchased by the Company on an exclusive basis in the Territory; and (e) engage in any other lawful act or activity as provided for by the Certificate of Incorporation and Bylaws of the Company.

1.4 Authorized Capital . As set forth in Exhibit A hereto, the initial authorized capital of the Company shall consist of 1,000 shares of common stock, no par value (the “Shares”).

1.5. Initial Stock Subscription and Use of Funds . (a) Each of Deere and Hitachi (the “Shareholders”) shall subscribe to 500 Shares and pay to the Company therefor the sum of approximately $15.75 million in immediately available funds, or as otherwise agreed by the parties and the board of directors of the Company except that (i) Deere may pay part of its subscription by the

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transfer to the Company of certain machinery and equipment as listed and described on Exhibit C hereto, which for this purpose shall be valued at net book value as of the Closing based on financial statements of Deere which shall be audited in accordance with generally accepted accounting principles applied on a consistent basis and (ii) Hitachi may pay part of its subscription by the transfer to the Company of (A) 70% (1,750,000 shares) of the issued and outstanding shares of Hitachi Construction Machinery (America) Corporation (“HCMA”) which for this purpose shall be valued at net book value as of the Closing based on financial statements of HCMA which shall be audited in accordance with generally accepted accounting principles applied on a consistent basis and (B) 1,999 of the issued and outstanding shares of Marubeni Construction Machinery Canada, Ltd. ("MCMC"), which for this purpose shall be valued at net book value as of the Closing based on financial statements of MCMC which shall be audited in accordance with generally accepted accounting principles applied on a consistent basis.

(b) The Company may purchase from certain companies affiliated with Hitachi or Deere, and Hitachi or Deere shall cause such companies to sell to the Company the machinery and equipment listed and described on Exhibit D, the prices of which shall not include any engineering or technical fees added by the parties.

1.6 Transfer of Shares . Neither Shareholder shall sell, assign, transfer or otherwise dispose of or encumber, by sale, gift, pledge or otherwise any of its Shares without the prior written consent of the other Shareholder. Notwithstanding the foregoing, a Shareholder may sell, transfer or assign its Shares to a wholly-owned subsidiary of the Shareholder, provided that such subsidiary agrees in writing to be bound by this Section 1.6 as though it were a Shareholder and shall take no actions which are contrary to the terms of this Agreement. Each share

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certificate issued by the Company shall bear the following legend:

The shares evidenced by this certificate were issued the pursuant to a certain Joint Venture Agreement dated May 16th, 1988 (the “Agreement”) by and between Deere & Company and Hitachi Construction Machinery Co., Ltd. The Agreement restricts the sale, assignment, transfer or other disposition, or the encumbrance by sale, gift, pledge or otherwise of such shares and any such sale, assignment transfer or other disposition or encumbrance may be made only in accordance with the terms and conditions thereof.

ARTICLE II

Closing

2.1 Time and Place of Closing . The Closing of the payment for the subscriptions referred to in Section 1.5 and the execution of the other agreements referred to in Section 3.1(c) (the “Closing”) shall take place at the offices of Deere at 10:00 a. m., local time on May 31, 1988, or at such other time, date or place as the parties hereto may mutually agree.

2.2 Authorizations, Approvals or Consents . Each of Deere and Hitachi shall use its best efforts to obtain, prior to the date set forth in Section 2.1 for the Closing, any authorization, approval, consent or review from or by governmental authorities, third parties, or the respective boards of directors of the parties that may be necessary or advisable to carry out the transactions contemplated by this Agreement and the exhibits hereto. In no event shall the Closing take place prior to the obtaining or completion of all such authorizations, approvals, consents or reviews.

2.3 Organization of the Company and Stock Subscriptions . Prior to the Closing, each of Deere and Hitachi shall have taken the action set forth in Section 1.1 of this Agreement.

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ARTICLE III

Shareholder Voting

3.1 Agreement to Vote . Each Shareholder shall vote its Shares, use its best efforts to cause members of the board of directors of the Company (the “Board of Directors”) designated by such Shareholder pursuant to Section 4.1 of this Agreement to cast their votes, to effectuate the following matters:

(a) the election of an eight-member Board of Directors in accordance with the provisions of Section 4.1 of this Agreement;

(b) the adoption of Bylaws of the Company in the form attached hereto as Exhibit B; and

(c) the taking of all such action by the Company as is necessary to (i) adopt, ratify and implement all provisions of this Agreement; and (ii) enter into a Manufacturing License Agreement, a Name and Trademark Agreement and a Supply Agreement with each of Deere and Hitachi in the forms attached hereto as Exhibits E, F, G, H, I, and J respectively;. and a Supply Agreement with Deere in the form attached hereto as Exhibit K.

3.2 Meetings of Shareholders . Annual and special meetings of the shareholders of the Company shall be called and held in accordance with the Bylaws of the Company. The Bylaws shall provide that at any meeting of the shareholders of the Company, the holders of two-thirds of the capital stock outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business.

3.3 Matters Requiring Shareholder Approval . The only matters presented for vote of the shareholders of the Company shall be those required by the General Corporation Law of Delaware to be voted on by the shareholders and such other matters as may be agreed upon by the parties; provided that none of the following matters shall be authorized unless it has been

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approved by the affirmative vote of the holders of at least two-thirds of the voting stock of the Company outstanding on the record date for the meeting (or at the time of the meeting if no record date is fixed):

(a) any amendment to the Certificate of Incorporation of the Company;

(b) the merger or consolidation of the Company with another entity including any subsidiary of the Company;

(d) the increase, decrease or any other change in the authorized capital stock of the Company; and

(e) the transfer of substantially all of the assets of the Company or of any of its subsidiaries to any person or entity.

ARTICLE IV

Board of Directors

4.1 Responsibility and Composition . The Board of Directors shall be responsible for the overall management of the business and affairs of the Company and each of its subsidiaries. The Board of Directors shall consist of eight members, four of whom may be designated by Deere (one of whom shall be the President of the Company) and four of whom may be designated by Hitachi. Each of Deere and Hitachi shall have the right to approve or reject the director candidates designated by the other, provided that neither party will unreasonably withhold its approval of any such candidate. In the event that a vacancy on the Board of Directors is caused by the death, resignation or removal of a director prior to the end of such director’s term of office, the Board of Directors shall elect a successor director designated by the Shareholder who had designated the prior occupant of the vacant board seat (subject to the same right of approval or rejection in Deere or Hitachi). Either party may, from time to time, elect to change a director

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or directors which it has designated, and the Board of Directors shall take such action as may be necessary to effectuate such change (subject to the same right of approval or rejection in Deere or Hitachi).

4.2 Meetings of the Board of Directors . Annual, regular and special meetings of the Board of Directors shall be called and held in accordance with the Bylaws of the Company. At any meeting of the Board of Directors, three directors shall constitute a quorum for the transaction of business, provided such quorum shall include at least one director who was designated by Hitachi and at least one director who was designated by Deere.

4.3 Matters Requiring Special Approval . Notwithstanding any other provision in this Agreement to the contrary, any action of the Company or any of its subsidiaries with respect to any of the following matters shall require the approval of at least one director designated by Hitachi and at least one director designated by Deere:

(a) the approval of annual financial statements and policies relating to the investment or allocation of surplus funds and creation of reserve accounts;

(b) the approval of annual business, strategic, and manufacturing plans and annual capital budgets;

(c) the making of any investment in the equity or debt securities of another corporation or in any partnership or other enterprise (other than temporary investment of cash in money market instruments);

(d) the formation, dissolution, merger or consolidation of any subsidiary of the Company;

(e) the making of any material capital expenditure not otherwise provided for in an annual business plan or annual capital budget that has been approved by the Board of Directors pursuant to this Section 4.3;

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(f) the extension of any material credit, including the lending of funds by the Company, to another person or entity other than in the ordinary course of the business of the Company or to a wholly-owned subsidiary of the Company;

(g) the establishment or closure of any place of business of the Company that would be (at the time of establishment) or is (immediately prior to the time of proposed closure) a material part of the business of the Company;

(h) the merger or consolidation of the Company with another entity including any subsidiary of the Company;

(i) the voluntary bankruptcy, liquidation or dissolution of the Company;

(j) the declaration or payment of any dividends;

(k) the issuance of any equity security, including but not limited to any warrant, stock option or convertible debt, to any person or entity;

(1) the transfer of any material asset of the Company or of any of its subsidiaries other than in the ordinary course of business to any Shareholder or to any other person or entity;

(m) the addition of any product line other than excavators and components thereof or the elimination of any product line;

(n) the amendment to the range of models offered to Deere or Hitachi dealers as set forth on Exhibit N; and

(o) any amendment to the Bylaws of the Company.

4.4 Election of Officers . The Board of Directors shall elect officers consisting of a President, Vice-President for Administration, Vice-President for Manufacturing, Vice-President for Deere Marketing, Vice-President for Hitachi Marketing, Vice-President for International Relations and such other officers as provided for in the By-Laws. Deere shall be entitled to nominate the President, the Vice President for Administration, and Vice President for Deere Marketing. Hitachi shall be entitled to nominate the Vice President for

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Manufacturing, the Vice President for Hitachi Marketing, and the Vice President for International Relations.

Each of Deere and Hitachi shall have the right to approve or reject the officer candidates nominated by the other, provided that neither party will unreasonably withhold its approval of any such candidate. The candidates so nominated and approved from time to time shall be elected by the Board of Directors. Either party may, from time to time, elect to change an officer or officers which it has nominated, and the Board of Directors shall take such action as may be necessary to effectuate such change (subject to the same right of approval or rejection in Deere or Hitachi).

4.5 Subsidiaries . The Company shall take such action as is necessary to cause the Boards of Directors of HCMA and MCMC and any other subsidiary of the Company to consist of the President and the Vice Presidents of the Company unless otherwise agreed by the parties. Hitachi shall be entitled to nominate the Presidents of HCMA and MCMC and Deere shall have the right to approve or reject any such candidate provided that Deere will not unreasonably withhold its approval of any such candidate.

ARTICLE V

Accounting and Financial Policies

5.1 Books and Records . The Company shall maintain books and records in accordance with United States generally accepted accounting principles applied on a consistent basis. Such books and records shall be maintained on the accrual method of accounting and shall otherwise comply with the applicable legal requirements and be adequate to permit the filing of tax returns by the Company. Either Shareholder or a representative designated by it shall at all times have the right to inspect and examine the books and records of the Company at its

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headquarter’s office during normal business hours of its operations.

5.2 Financial Reports . Within 90 days after the end of the fiscal year, the Company shall cause to be prepared and distributed to each Shareholder audited financial statements of the Company as of the end of and for such year, all of which shall be prepared in accordance with generally accepted accounting principles applied on a consistent basis.

5.3 Fiscal Year . The fiscal year of the Company shall end on December 31st.

5.4 Appointment of Auditors . The Company shall retain a firm of independent public accountants appointed by the Board of Directors.

5.5 Financial Policies and Dividends . All of the financial policies of the Company, including, but not limited to, the declaration of dividends, compensation and bonus policies for personnel, investment or allocation of surplus funds, and creation of reserve accounts, shall be established by the Board of Directors.

ARTICLE VI

Representations and Warranties of Hitachi

In order to induce Deere to enter into this Agreement and to consummate the transactions contemplated hereby, Hitachi makes the following representations and warranties:

6.1 Organization, Power and Authority . Hitachi is a corporation duly organized and legally existing in good standing under the laws of Japan and has full corporate power and authority necessary to enter into this Agreement and to carry out all of the agreements and transactions contemplated hereby.

6.2 Due Authorization and Absence of Breach . The execution, delivery and performance of this Agreement and each of the other agreements contemplated hereby, and the consummation of the transactions contemplated hereby have been

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duly authorized by all necessary corporate action of Hitachi. This Agreement has been duly executed and delivered by Hitachi and is a valid and binding obligation of Hitachi, enforceable in accordance with its terms. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate any provisions of (i) the charter of Hitachi, (ii) any law, ordinance or regulation, or (iii) any decree or order of any court or administrative or other governmental body which is either applicable to, binding upon or enforceable against Hitachi; (b) result in any breach of or default under any mortgage, contract, agreement, indenture, trust, or other instrument which is either binding upon or enforceable against Hitachi; or (c) violate any legally protected right of any individual or entity or give to any individual or entity a right or claim against Deere.

6.3 Accuracy of Information Furnished by Hitachi . To the knowledge of Hitachi, no representation, statement or information made or furnished by Hitachi in this Agreement and the other information and statements previously furnished in writing by Hitachi, contains any untrue statement of a material fact or omits any material fact necessary to make the information contained therein not misleading. All assets to be contributed by Hitachi to the Company and all assets and liabilities of HCMA and MCMC shall be subject to audit in accordance with United States generally accepted accounting principles prior to the Closing by a certified independent auditor designated by Deere.

6.4 Litigation . There is no action, suit, proceeding or investigation pending or, to the knowledge of Hitachi, threatened or contemplated which questions the legality, validity or propriety of the agreements or transactions contemplated by this Agreement.

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6.5 Hitachi Subsidiaries . Hitachi makes the representations and warranties relating to HCMA and MCMC as set forth on Exhibit L.

ARTICLE VII

Representations and Warranties of Deere

In order to induce Hitachi to enter into this Agreement and to consummate the transactions contemplated hereby, Deere makes the following representation and warranties:

7.1 Organization, Power and Authority . Deere is a corporation duly organized and validly existing under the laws of the State of Delaware, with full corporate power and authority to enter into this Agreement and to carry out all of the agreements and transactions contemplated hereby.

7.2 Due Authorization and Absence of Breach . The execution, delivery and performance of this Agreement and each of the other agreements contemplated hereby have been duly authorized by all necessary corporate action of Deere. This Agreement has been duly executed and delivered by Deere and is a valid and binding obligation of Deere, enforceable in accordance with its terms. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will: (a) conflict with or violate any provision of (i) the charter of Deere, (ii) any law, ordinance or regulation, or (iii) any decree or order of any court or administrative or other governmental body which is either applicable to, binding upon or enforceable against Deere; (b) result in any breach of or default under any mortgage, contract, agreement, indenture, trust or other instrument which is either binding upon or enforceable against Deere; or (c) violate any legally protected right of any individual or entity or give to any individual or entity a right or claim against Hitachi.

7.3 Accuracy of Information Furnished by Deere . To the knowledge of Deere, no representation, statement or information

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made or furnished by Deere in this Agreement and the other information and statements previously furnished in writing by Deere, contains any untrue statement of a material fact or omits any material fact necessary to make the information contained therein not misleading. All assets to be contributed by Deere to the Company shall be subject to audit in accordance with United States generally accepted accounting principles prior to the Closing by a certified independent auditor designated by Hitachi.

7.4 Litigation . There is no action, suit, proceeding or investigation pending or, to the knowledge of Deere, threatened or contemplated which questions the legality, validity or propriety of the agreements or transactions contemplated by this Agreement.

7.5 Good Title to Assets Contributed . Deere has good and marketable title to the assets set forth on Exhibit C, free and clear of all liens, claims, encumbrances, equities or interests of every kind, nature and description whatsoever.

ARTICLE VIII

Other Agreements

8.1 Exclusivity . Except as otherwise agreed in writing, from and after the Closing, neither Deere nor Hitachi nor any of their respective affiliates shall, (1) distribute excavators (including service parts and components therefor) in the Territory, (2) distribute any other product which is either manufactured or distributed by the Company (including service parts and components therefor) in the Territory, (3) license any third party to manufacture excavators (including service parts and components therefor) for distribution in the Territory, or (4) license any third party to manufacture any other product which is either manufactured or distributed by the Company (including service parts and components therefor) for distribution in the Territory, except in accordance with the

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terms and conditions of this Agreement and the exhibits attached hereto. To the extent that it is necessary to manufacture excavators or components locally to preserve distribution in any country, Hitachi and Deere shall meet and mutually decide on any appropriate action or actions to be taken by each party to best preserve the distribution of the products under this Agreement. Hitachi shall use its best efforts to preserve the exclusivity of the Company in the Territory with respect to the products which are the subject of this Agreement, including service parts and components therefor. As an exception to the foregoing exclusivity provision, Hitachi shall have the right to honor its obligations under agreements with dealers in Central or South America, as listed on Exhibit M, which predate the closing date as set forth in Section 2.1. However, it is further agreed that Hitachi shall terminate, or seek to transfer to the Company, upon the approval of the Company, such dealer agreements at the earliest possible legal opportunity. After discussions with Deere and Hitachi, the Company shall evaluate and select the most appropriate distribution systems in Central and South America. Such evaluations may include such matters as financial and legal aspects, past and current sales records, cancellation fee, ability of handling both medium and large excavators, service, and related issues. The Company also will evaluate both Deere and Hitachi dealers in each country of Central and South America. The objective of the Company shall be to create a more efficient distribution system for Hitachi and Deere branded machines. Hitachi shall take appropriate steps to ensure that any interim shipments in Central and South America are for consumption within the respective dealer’s area of responsibility and are reasonably related to the dealer’s market potential and domestic machine population. It is the intention of the parties to resolve all such dealer relationships with the objective of establishing the Company as the exclusive distributor of excavators or any other product which is either

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manufactured or distributed by the Company (including service parts and components for such excavators or other products), in the Territory. As a further exception, Deere and Hitachi shall have the right to manufacture and distribute in the Territory excavators in the mini-excavator class (i.e., typically below 6 metric tons with pivot boom configuration).

8.2 Confidentiality . In connection with the operations of the Company, the parties hereto may make available to the Company certain information designated in writing to be confidential (“Confidential Information”). Except as otherwise provided in this Agreement or the exhibits hereto, all such Confidential Information shall be treated by the Company as confidential and shall not be disclosed to anyone except to those persons having a legitimate business need for such information and subject to the provisions set forth herein. Such Confidential Information shall be and remain at all times the property of the party providing such Confidential Information and neither the Company, nor any of its subsidiaries nor any director, officer or employee of the Company or any of its subsidiaries shall have the right to disclose such Confidential Information to (i) the other party (ii) any affiliate of such other party or (iii) any director, officer, employee, agent or representative of such other party or any of its affiliates. In particular such Confidential Information shall under no circumstances be deemed to be a property right or asset of the Company to which any party or its affiliate is entitled by virtue of its ownership interest in the Company or otherwise. Each party and its affiliates shall not, without the prior written consent of the party providing Confidential Information, disclose any Confidential Information to any third party except as otherwise required by law or government regulation. In the event Confidential Information is furnished by the Company to a third party, the Company shall first require the third party to enter into a written agreement preserving the

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confidentiality of such Confidential Information and limiting its disclosure to persons who have a legitimate business need for such Confidential Information.

8.3 Indemnification .

(a) Each party to this Agreement shall defend, indemnify and hold harmless the other party and the Company from and against any material claim, liability, demand, loss, damage, judgment or other obligation or right of action which may arise as a result of:

(i) breach of this Agreement by the indemnifying party;

(ii) misrepresentation by the indemnifying party to third parties;

(iii) anything done or omitted to be done through the gross negligence or willful misconduct of the indemnifying party or of its officers, directors, employees or agents; or

(iv) any action by any of the indemnifying parties, officers, directors, employees or agents (which are not individuals holding positions of employment in the Company) which action has not been authorized by the Board of Directors of the Company or which binds the Company beyond the scope of this Agreement.

(b) Hitachi shall defend, indemnify and hold harmless Deere and the Company from and against any material claim, liability, demand, loss, damage, judgment or other obligation or right of action arising from acts or omissions of HCMA and MCMC occurring prior to the Closing. Such indemnification shall include, but not be limited to, the following:

(i) obligations to dealers or distributors arising from contractual relationships in existence prior to the Closing;

(ii) obligations related to sales promotion and allowances prior to Closing unless adequately accrued on the books of HCMA and MCMC at Closing;

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(iii) liabilities resulting from the sale of products prior to Closing unless adequately accrued on the book of HCMA and MCMC at Closing including, but not limited to, (A) warranty expenses and administration (such administration to be handled in the same manner and under the same terms as it was prior to Closing), (B) product liability claims and litigation, (C) product recalls and (D) uncollectible receivables; and

(iv) prior service, pension and insurance benefit liabilities for employees transferred to the Company unless adequately accrued on the books of HCMA and MCMC at Closing.

(c) Each party shall use its best efforts to cause the members of the Board of Directors designated by each such party, pursuant to Section 4.1 of this Agreement, to cause the Company to defend, indemnify and hold harmless Deere and Hitachi from and against any material claim, liability, demand, loss, damage, judgment or other obligation or right of action which may arise as a result of any act or omission of the Company or any of its subsidiaries occurring subsequent to the Closing.

(d) In the event that either party shall become obligated to indemnify the other party under this Section 8.3, the parties shall meet to decide how to best satisfy such obligation, taking into account the facts and circumstances giving rise to such obligation and the magnitude of such obligation.

8.4 Improvements, Inventions and Know-How . Except as provided in the Manufacturing License Agreements attached hereto as Exhibits E and F, (a) any and all improvements, inventions and know-how, patentable or unpatentable, which may be developed by the Company during the term of this Agreement shall be the property of the Company. Each party hereto shall use its best efforts to cause the members of the Board of Directors designated by such party, pursuant to Section 4.1 of this Agreement, to cause the Company to grant a non-exclusive royalty free license, to each of Deere and Hitachi to make, use or sell

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any an all such improvements, inventions and know-how, and (b) nothing herein shall grant to either Deere or Hitachi any rights to proprietary technology owned by the other party.

8.5 Financial Protection . It is the intent of the parties to financially structure the Company in such a fashion that neither Hitachi nor Deere shall be financially disadvantaged by the creation of the Company. Transfer pricing between the parties and the Company shall take into account the marketing and product support expenses incurred by either party on behalf of the products sold to and distributed by the Company together with the income properly attributable thereto. This intent shall not be construed as requiring frequent changes in transfer price relationships to preserve perfect equality; rather, such transfer price relationships shall be adjusted only when material and nontransitory inequities are determined to result from the then current transfer price relationships. In that event, the parties shall meet to negotiate proper adjustments and changes. The parties agree to review and consider the need for changes in transfer price relationships at least annually.

8.6 Sources of Components and Parts . With the exception of the incorporation of Deere engines into all Deere-branded excavators models, the Company shall only use the designs and specifications supplied by Deere for the Model 690 and successor models, and the designs and specifications supplied by Hitachi for all remaining models, provided however that the Company shall have the right where cost effective to purchase components and parts for such excavators from third party sources so long as those components and parts meet or exceed the required designs and specifications of Deere or Hitachi, as determined by Deere or Hitachi, respectively.

8.7 Primary Marketing Objective . The parties agree that the primary marketing objectives of the Company shall be:

(a) to maximize the sales of excavators under both the Deere and Hitachi tradenames and trademarks; to simultaneously

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expand the range of models offered to Deere or Hitachi dealers as set forth on Exhibit N; and to maintain and strengthen existing dealer networks.

(b) to identify and develop opportunities for greater distribution efficiencies for both Hitachi and Deere-branded machines through the use of integrated support, administrative, and promotional efforts. Such efficiencies will be implemented in a fashion that minimizes potentially disruptive effects at the dealer level for both Deere and Hitachi dealers. It is contemplated that such efficiencies will eventually include the merger of HCMA and MCMC, and the incorporation of the excavator business of Deere into the Company, subject to Section 4.3(h) of this Agreement.

8.8 Formation Expenses . Except as they may otherwise agree, each party shall bear its own expenses incurred in connection with the formation of the joint venture.

8.9 Liabilities Retained by the Parties . All material existing liabilities of the parties as of the Closing, including all material contingent liabilities arising from acts or omissions of the parties occurring prior to the Closing, shall be retained by the parties. Such liabilities shall include, but not be limited to, the following:

(a) obligations to dealers or distributors arising from contractual relationships in existence prior to the Closing;

(b) obligations related to sales promotion and allowances;

(d) liabilities resulting from the sale of products prior to the Closing, including but not limited to

(i) warranty expense and administration,

(ii) product liability claims and litigation,

(iii) product recalls, and

(iv) uncollectible receivables; and

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(e) prior service, pension and insurance benefit liabilities for employees transferred to the Company.

8.10 Operating Losses . In the event the Company sustains, or is projected to sustain, operating losses which threaten its continued viability, the parties agree to discuss and consider the adoption of appropriate measures to return the Company to a sound financial base. Such measures shall include, but not be limited to, the following:

(a) the revision of transfer prices for goods sold by the parties to the Company,

(b) the contribution by the parties in equal amounts of additional operating capital, and

If, despite the good faith efforts of the parties, such operating losses continue, the parties may agree to terminate the Agreement.

ARTICLE IX

Term and Termination

9.1 Term . This Agreement shall become effective as of the date hereof and shall continue in full force and effect for an indefinite term hereafter unless terminated in accordance with the provisions of this Agreement.

9.2 Termination . Each of Deere and Hitachi shall have the right to terminate this Agreement upon the happening of any of the following events:

(a) the breach of any material provision of this Agreement or any of the other agreements attached hereto as exhibits by the other party that is not cured within 90 days (or such other period or may be established by mutual agreement of the parties) after receipt of written notice of such breach given by the non-breaching party;

(b) the filing by or against the other party of any voluntary or involuntary petition in bankruptcy for corporate

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reorganization or any similar relief, the appointment of a receiver for the other party or its property, a general assignment by the other party for the benefit of its creditors, the inability admitted by the other party in writing to pay its debts as they mature, or the liquidation of the other party;

(c) the performance of this Agreement by the other party is precluded or constrained by causes beyond the control of such party, including without limitation fire, storm, flood, earthquake, explosion, accident, acts of public enemies, war, rebellion, insurrection, labor disputes or shortages, transportation embargo, or failure or delays in transportation, inability to secure raw materials, acts of God, or acts of governmental authority or agency thereof; or

(d) a change in control of either Deere or Hitachi. For purposes of this Section 9.2(d) and Section 9.4 below a “change in control” shall mean a change of nature that would be required to be reported, by a reporting company, in response to Item 5(f) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”); provided that, without limitation, a change in control of a party shall be deemed to have occurred if (i) any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the party or any person who on the date hereof is a director or officer of the party, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of that party representing 30% or more of the combined voting power of the party’s then outstanding securities, or (ii) during any period of two consecutive years during the term of this Agreement, individuals who at the beginning of such period constitute the Board of that party, cease for any reason to constitute at least a majority thereof, unless the election of each director who was not a director at the beginning of such period has been approved in advance by

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directors representing at least two-thirds of the directors then in office who were directors at the beginning of the period.

9.3 Liquidation and Dissolution . In the event that this Agreement is terminated pursuant to Section 9.2 above, the parties shall take such action as is necessary to cause the Board of Directors to adopt a plan of liquidation and dissolution of the Company (the “Plan”). The Plan shall include the return to each shareholder of any Confidential Information provided by such shareholder to the Company and the transfer and assignment by the Company of its interest in any and all inventions, know-how and improvements, patentable or unpatentable, developed by the Company during the term of this Agreement, to the shareholders to be held jointly. The Plan also shall provide that the proceeds of liquidation be applied and distributed in the following order of priority:

(a) to the payment of all of the Company’s liabilities;

(b) to the setting up of any reserves that the Board of Directors deems reasonably necessary to provide funds for any contingent or unforeseen obligations or liabilities of the Company. At the expiration of such period of time as the Board of Directors deems advisable, the balance of such reserves shall be distributed as provided in subsection (c) below; and

The Company may sell any asset of the Company to any shareholder. Any expenses incurred in the liquidation shall be expenses of the Company.

9.4 Products . In the event that this Agreement is terminated for any reason other than because of a material breach of this Agreement by Deere, Hitachi shall (a) for a period of five years following the date of such termination sell to Deere at Deere’s request, the same or substantially the same Deere branded products that the Company purchased from Hitachi or manufactured under the terms of this Agreement prior to its

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termination and (b) for a period of fifteen years following the date of such termination maintain manufacturing capabilities for the purpose of providing Deere with a reasonable stock of service parts for products sold to Deere. Hitachi shall make such sales to Deere on substantially the same terms and conditions set forth in the Supply Agreement attached hereto as Exhibit J, as amended to accommodate an OEM supply arrangement between Hitachi and Deere. Hitachi’s obligations to make such sales to Deere shall terminate upon the happening of (a) the filing by Deere of any voluntary petition in bankruptcy for corporate reorganization or any similar relief and thereafter Deere is unable to provide adequate assurance of its ability to pay for products sold to it by Hitachi as such debts mature and (b) any change in control of Deere that involves any entity which, or person who, is a direct competitor of Hitachi in the manufacture and sale of excavators.

For the purposes of this Section 9.4, the term “change in control” shall have the meaning ascribed to it in Section 9.2(d) above.

ARTICLE X

Miscellaneous

10.1 Binding Effect . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Each party hereto shall use its best efforts to cause the members of the Board of Directors designated by such party pursuant to Section 4.1 of this Agreement, to cause the Company to agree to be bound by all of the terms and conditions of this Agreement as though it were a party hereto.

10.2 Entire Agreement . This instrument and the exhibits attached hereto supersede all prior understandings and agreements of the parties with respect thereto. Any reference

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herein to this Agreement shall be deemed to include the exhibits attached hereto.

10.3 Amendment and Modification . The parties hereto may amend, modify and supplement this Agreement in such manner as may be agreed upon by them in writing.

10.4 Governing Law . This Agreement is executed in English, which shall be the controlling text and this Agreement and all related agreements (unless otherwise agreed) shall be governed by and construed in accordance with the laws of the State of Illinois applicable to contracts made and to be performed therein.

10.5 Severability . If any term, restriction or covenant of this Agreement is deemed illegal or unenforceable under the laws of the State of Illinois (or any other law deemed by a court of competent jurisdiction to be controlling), or if any application of any term, restriction or covenant of this Agreement to any person or circumstance is deemed illegal or unenforceable, the parties shall in good faith negotiate changes to the unenforceable term restriction or covenant so that the original intent of such term restriction or covenant is preserved insofar as is permissible by law.

10.6 Headings . The descriptive headings in this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

10.7 Execution in Counterpart . This Agreement may be executed in any number of counterparts, each of which shall be deemed an original.

10.8 Notices . Any notice, request, information or other document to be given hereunder to any of the parties by any other party shall be in writing and sent by certified or registered mail, return receipt requested, or sent by telex or facsimile transmission, as follows:

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If to Deere, addressed to:

Deere & Company

John Deere Road

Moline, IL 61265

If to Hitachi, addressed to:

Hitachi Construction Machinery Co., Ltd.

Nippon Bldg. No. 6-2, 2-Chome

Ohtemachi, Chiyodo-Ku

Tokyo 100, Japan

Any party may change the address to which notices hereunder are to be sent to it by giving written notice of such change of address in the manner herein provided for giving notice. Any notice given by telex or facsimile transmission shall be deemed to have been given on the date it is sent or the next business day if the date it is sent is not a business day, and any other authorized notice shall be deemed to have been given five (5) business days after the date it is sent.

10.9 Further Assurances . Each of the parties hereto shall execute and deliver any and all additional papers, documents and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of its obligations hereunder to carry out the intent of the parties hereto.

10.10 Arbitration .

(a) Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, which is unresolved within 90 days (or such other period as may be established by mutual agreement of the parties) of first written notification by either party, shall be settled by binding arbitration in accordance with the Commercial Arbitration Rules of the International Chamber of Commerce and judgment upon the

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award rendered may be entered in any court having jurisdiction thereof. Such arbitration shall be conducted by three arbitrators, one selected by each of Deere and Hitachi, and the two arbitrators so selected choosing a third (or, failing agreement on the third, the International Chamber of Commerce choosing a third). Any arbitration shall occur in Paris, France.

(b) Each of Deere and Hitachi hereby expressly submits itself generally and unconditionally to the personal jurisdiction of any United States or state court which sits in the State of Illinois which would have jurisdiction over the subject matter of an action to enforce an arbitration award provided, however, that neither party shall be deemed to have submitted to such jurisdiction unless or until it has been provided with actual notice of the pending of proceedings in such court and given adequate opportunity to appear.

10.11 Assignment . Neither Hitachi nor Deere shall assign its rights or obligations pursuant to this Agreement except with the prior written consent of the other party.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

	DEERE & COMPANY

	By	/s/ Thomas A. Gildehaus
		THOMAS A. GILDEHAUS, EXECUTIVE VICE-PRESIDENT

	HITACHI CONSTRUCTION MACHINERY, CO. LTD.

	By	/s/ H. Okada
		HAJIME OKADA, PRESIDENT

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Exhibit 10.27

MARKETING PROFIT SHARING AGREEMENT

[IMA Implementing Agreement]

THIS MARKETING PROFIT SHARING AGREEMENT (this “Agreement”) is entered into as of the 1st day of January, 2002, by and between John Deere Construction and Forestry Equipment Company (“JDCFC”), a Delaware corporation wholly-owned by Deere & Company (“Deere”) and Hitachi Construction Machinery Holding U.S.A. Corporation (“HHUS”), a Delaware corporation wholly-owned by Hitachi Construction Machinery Co., Ltd, (“HCM”).

WHEREAS, on October 16, 2001, Deere and HCM entered into an Integrated Marketing Agreement (“IMA”) in which they agreed to engage in a joint venture which would integrate their respective marketing organizations in North, Central and South America (“Territory”) for the distribution of certain products as defined in the IMA and ancillary supply agreements (collectively, the “Products”); and

WHEREAS, the new marketing joint venture will be an unincorporated joint undertaking and will be in addition to the existing manufacturing joint venture established by Deere and HCM in an Agreement dated May 16, 1988 (“1988 JV Agreement”); and

WHEREAS JDCFC and HHUS agree to work together to achieve, and take mutual responsibility for, the cost reductions and distribution synergies that will result from the combined marketing organizations; and

WHEREAS, following the integration the parties agreed that all marketing functions previously performed separately by JDCFC, Hitachi Construction Machinery of America (“HCMA”) and Hitachi Construction Machinery of Canada (“HCMC”), would be assumed by JDCFC, utilizing the existing systems and facilities of JDCFC; and

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WHEREAS, the IMA and ancillary supply agreements also provided, among other things, that upon integration of the parties’ marketing organizations profits derived from distribution of Products in the Territory by JDCFC would be shared as follows: JDCFC—60%; HHUS—40%, such profits to be determined in accordance with United States Generally Accepted Accounting Principles (“US GAAP”); and

WHEREAS, the parties desire to provide further definition with respect to their respective rights and obligations in implementing the profit sharing terms of the IMA.

NOW THEREFORE, the parties hereto agree as follows:

1. In accordance with the terms of the IMA, following integration JDCFC will assume sole responsibility for the distribution of Products within the Territory.

2. The Parties anticipate that the integration of their respective marketing organizations will result in substantial cost reductions through, among other things, the sharing of common marketing and product support systems, consolidation of facilities, as well as realization of synergies through integration of their parts distribution systems. It is also anticipated that these benefits will be accomplished by the utilization of systems already in place, or to be put into place at JDCFC, and through the discontinuance of separate systems and operations previously in place at and utilized by HCMA and HCMC.

3. As JDCFC has agreed to assume responsibility for the distribution of Products within the Territory, utilizing its existing assets, facilities, systems, personnel and such Hitachi personnel as may be required. No initial cash capital will be contributed by either party in connection with carrying out the functions of the integrated marketing organization. Accordingly, HHUS and its affiliates, including but not limited to HCMA, HCMC, and Deere-Hitachi, shall not acquire any equity ownership in JDCFC or interests in the tangible or intangible assets of

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JDCFC or its affiliates, and JDCFC and its affiliates shall not acquire any equity ownership in HHUS or interests in the tangible or intangible assets of HHUS or its affiliates, by virtue of the integration of their respective marketing organizations. To provide further clarity, the parties agree that the mutual benefits anticipated by the integration will be realized through, among other things, improved efficiencies, and eliminating duplication and redundancies within their respective organizations, all of which contribute to the basis for the percentages agreed upon for the sharing of the profits derived from the distribution of Products within the Territory.

4. Except as provided in paragraph 8 of this Agreement, the profits and losses derived from distributing Products within the Territory for periods beginning on or after January 1, 2002, shall be shared as follows: JDCFC—60%; HHUS—40%. The Parties acknowledge and agree that the sharing of profits and losses in these percentages is based upon, among other things, the cost reductions agreed upon in the IMA and the synergies achieved from the integration as referred to in the IMA, as well as in paragraph 2 of this Agreement. Accordingly, profit and loss sharing provisions of this Agreement will become effective for Products distributed after the execution of the IMA and at the time the cost reduction provisions become effective, on January 1, 2002. In the event Euclid trucks are not made available due to bankruptcy or other events not attributable to JDCFC or any of its affiliates, the parties agree to increase Deere’s 60 percent split. If the parties cannot agree on a mutually acceptable adjustment, the percentage split shall be determined by arbitration pursuant to the 1988 JV Agreement, section 10.10.

5. Profits and losses from the distribution of Products shall be determined in accordance with US GAAP, and shall take into account the following practices:

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(i) the standard profit by product accounting methods and systems which have been heretofore utilized by Deere, provided that Deere shall provide Hitachi with a description of such standard accounting methods and systems in reasonable details and provided Deere shall have discretionary authority to change such standard accounting methods and systems so long as the new accounting methods and systems are applied consistently within JDCFC and that detailed description of such new methods and systems shall be provided to Hitachi annually; (ii) product or division specific costs shall be directly assigned to such product or division; (iii) allocations of indirect costs shall be in accordance with the standard allocation methods which have heretofore been utilized by Deere provided that: (a) Deere shall provide Hitachi with a description of such standard allocation methods in reasonable detail, (b) such allocation methods use reasonably objective allocation standards, and (c) Deere shall have discretionary authority to change such allocation methods so long as the new allocation methods and systems are applied consistently within Deere and that a detailed description of such new methods and systems shall be provided to Hitachi annually; (iv) all transactions between JDCFC and any of its affiliates shall be conducted on terms and conditions no less favorable to JDCFC than those applicable to arms-length transactions; (v) without limiting 5(i), any gain or loss of JDCFC, Deere or any affiliate of JDCFC or Deere where such gain or loss is not within the scope of the distribution joint venture which is the subject of this Agreement shall not be allocated to the profits and losses subject to sharing hereunder (without limiting the generality of this clause (v), profits and losses attributable to Bell Equipment, Sun State, Deere-Hitachi, IJD, Nortrax, Phoenix, Equipment Savers, Value Parts and Shanghai Leasing currently shall have no impact or effect on the profits and losses subject to sharing hereunder, but subject to inclusion if or when the business of such entity is changed in such a manner that such entity shall become an integral part

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of the distribution business contemplated by the IMA. The gain or loss from the sale, disposition, restructuring or other corporate adjustment of any of the above entities as currently structured shall not be included in the allocation to the business hereunder provided future benefits are not derived by the business hereunder); (vi) the parties acknowledge and agree that profits and losses determined on a pretax basis may be different from the profits and losses determined for purposes of satisfying the requirements of applicable federal, state, or local tax laws and regulations.

6. Profits and losses, as the case may be, as determined pursuant to paragraph 5 of this Agreement, will be distributed to the parties on a pre-income-tax basis. HHUS’s share of any profits as thus determined will be distributed by a direct payment from JDCFC to HHUS, or such other entity as directed by HHUS, provided that such entity is treated as a domestic corporation for U.S. federal income tax purposes. Likewise, if losses are determined to have occurred, HHUS or its designated entity will reimburse JDCFC for HHUS’s share of such losses as thus determined. All such payments will be made annually, prior to December 31, on a pre-income-tax basis. Notwithstanding the foregoing, JDCFC shall distribute to the parties, at least five (5) business days prior to the due date of each quarterly estimated tax payment, an amount in cash at least sufficient to allow JDCFC and HHUS to pay any United States federal, state and local income taxes required to be paid by each party in respect of the profits allocated to such party pursuant to this Agreement, taking into account payments previously made, and the cumulative amount of profit or loss realized during the taxable year. The amount of such payments shall be determined at the highest net applicable marginal rates applicable to either party. Any such amounts paid shall be treated as an advance of amounts otherwise payable pursuant to this Agreement. In no event shall distribution result in a negative balance in the capital accounts as

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defined by the Internal Revenue Code of 1986, as amended (the “Code”). Each party shall be required to repay to JDCFC, within ten (10) business days of receiving notice thereof, the amount of any such overpayments made pursuant to this paragraph, as determined by JDCFC in good faith.

7. The parties acknowledge and agree that it will be necessary to execute a separate agreement for purposes of carrying out the terms of the IMA and this Agreement in Canada, and that such agreement shall be consistent with and not change or otherwise alter the terms of the IMA or this Agreement.

8. Notwithstanding the provisions of paragraph 4 of this Agreement, the parties agree that pretax losses, if any, associated with the distribution of excavators >100MT, shovels, rigid frame haul trucks together with components, attachments and repair parts for such excavators, shovels and haul trucks (“Mining Products”), net of all profits/losses from the distribution of the Mining Products by John Deere Limited in Canada, shall be separately determined as provided in paragraph 4 above, but will not be charged against the profits and/or losses for other Products distributed by JDCFC under the IMA. The parties agree that all losses, if any, from the distribution of Mining Products shall be charged to HHUS, or an entity designated by HHUS, and not charged against the profits or losses attributed to the distribution of other Products under the IMA in arriving at the parties’ profit sharing under this Agreement. All such payments to JDCFC as a result of such loss shall be made annually by December 31.

9. Income statements for Products covered by the IMA and this Agreement, used in determining profits and losses pursuant to this Agreement, will be provided by JDCFC to HHUS monthly. JDCFC shall allow HHUS to have an on-line access to its monthly financial statements to the extent such statements relate to the profits and losses subject to sharing hereunder. JDCFC

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shall use reasonable efforts to respond to HHUS’s inquiries regarding financial and accounting issues relating to such financial statements. Further, HHUS shall have the right to retain KPMG or such other accounting firm which is then the auditor for Hitachi to audit the financial statements and the profit by product methodology, where the frequency of such audit shall not exceed once per year. KPMG will be required to sign a confidentiality agreement prohibiting the sharing of non-excavator/non-Mining Product Profit by Product financial information with HCM, HHUS or any other parties.

10. The parties agree that beginning January 1, 2002, and thereafter all Products (whole goods, components, attachments and service parts), purchased by all Deere affiliated companies, including Deere-Hitachi, from HHUS and its affiliated companies for distribution within the Territory will be sold to such Deere affiliates at the prices and in accordance with the terms of the IMA and pertinent supply agreements, taking into account the cost reduction provisions of the IMA, and also taking into account the currency risk sharing agreements then in effect between the parties that will be applied to pricing of Products from HHUS and its affiliates to Deere-Hitachi and from Deere-Hitachi to JDCFC.

11. This Agreement shall become effective as of the date hereof and shall continue in full force and effect for an indefinite terms hereafter unless terminated in accordance the provisions of the IMA and the 1988 JV Agreement.

12. Each of JDCFC and HHUS shall have the right to terminate this Agreement upon the happening of any of the events enumerated in Section 9.2 of the 1988 JV Agreement provided, however, that this Agreement may not be terminated unless the IMA is also terminated.

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13. The parties to this Agreement and each of their respective affiliates hereby agree to treat the profit-sharing arrangements created by the IMA and this Agreement as a partnership for all U.S. federal, state and local income tax purposes, except as otherwise required by applicable law, and shall file all relevant tax returns, information returns and other relevant filings in a manner consistent with such treatment. JDCFC shall be the “Tax Matters Partner” of the partnership within the meaning of Section 6231 (a)(7) of the Code, shall make all elections for the partnership provided for in the Code, and shall act for and on behalf of the partnership to the extent permitted by Code Sections 6221 through 6233.

14. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

15. This Agreement supersedes all prior understandings and agreements of the parties with respect to the matters covered herein, and shall operate as additions to the IMA and, except as modified by this Agreement, the IMA shall remain in full force and effect.

16. The parties hereto may amend, modify and supplement this Agreement in such manner as may be agreed-upon by them in writing.

17. This Agreement is executed in English, which shall be the controlling text and this Agreement and all related agreements (unless otherwise provided therein) shall be governed by and construed in accordance with the laws of the State of Illinois applicable to contracts made and to be performed therein.

18. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original.

19. If any term, restriction or covenant of this Agreement is deemed illegal or unenforceable under the laws of the State of Illinois (or any other law deemed by a court of

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competent jurisdiction to be controlling), or if any application of any term, restriction or covenant of this Agreement to any person or circumstance is deemed illegal or unenforceable, the parties shall in good faith negotiate changes to the unenforceable term, restriction or covenant so that the original intent of such term, restriction or covenant is preserved insofar as is permissible by law.

20. Any notice, request, information or other document given hereunder to any of the parties by any other party shall be in writing and sent to those persons identified, and in accordance with the terms of Section 10.8 of the 1988 JV Agreement.

21. Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, which is unresolved within 90 days (or such other period as may be established by mutual agreement of the parties) of first written notification by either party, shall be settled by binding arbitration in accordance with the terms of the 1988 JV Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.

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JOHN DEERE CONSTRUCTION AND FORESTRY COMPANY		HITACHI CONSTRUCTION MACHINERY HOLDING U.S.A. CORPORATION

By:	/s/ Roger L. Bridges	By:	/s/ Toru Sakai
Name:	Roger L. Bridges	Name:	Toru Sakai
Title:	Vice President	Title:	President and CEO

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Exhibit 10.28

INTEGRATED MARKETING AGREEMENT

THIS AGREEMENT (“Agreement”) is entered into as of the 16th day of October, 2001, by and between Deere & Company, a Delaware corporation (“Deere”), and Hitachi Construction Machinery Co., Ltd., a Japan corporation (“Hitachi”).

RECITALS

A. On May 16, 1988, Deere and Hitachi (collectively “the Parties”) entered into a Joint Venture Agreement (“J V Agreement”) to establish a facility in North America for the manufacture and distribution of excavators, mining equipment, attachments, components and repair parts (the “Products”) of the types designed and manufactured by Deere in the United States and by Hitachi in Japan.

B. Pursuant to the J V Agreement, the Parties formed a close corporation under the General Corporation Law of Delaware known as Deere-Hitachi Construction Machinery Corporation (“Deere-Hitachi”), and since its formation Deere-Hitachi has carried on the business contemplated by the J V Agreement.

C. The geographic territory for the distribution of the Products produced under the JV Agreement was defined as: North America, Central America and South America (the “Territory”).

D. Marketing of Deere-branded Products produced under the J V Agreement has been and continues to be the responsibility of Deere & Company or one of its subsidiaries (for purposes of this Agreement, John Deere Construction and Forestry Company)(“JDCFC”); marketing of Hitachi-branded Products has been and continues to be the responsibility of Hitachi Construction Machinery (America) Corp. (“HCMA”) and Hitachi Construction Machinery Canada Ltd. (“HCMC”), both subsidiaries of Deere-Hitachi.

E. Deere and Hitachi are now desirous of implementing operational efficiencies in the marketing of the Products within the Territory which will address market share declines in both their distribution channels, allow for greater flexibility in responding to economic conditions, and enable the Parties to compete effectively with larger integrated manufacturers of excavators, as well as certain mining equipment, including mining excavators, shovels and trucks.

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COVENANTS

IN CONSIDERATION of the premises and the mutual covenants of the Parties set forth herein, the Parties hereto agree as follows:

ARTICLE I

Reorganization of Product Marketing within the Territory

1.1 Integration of Marketing Organizations . Deere and Hitachi shall cause the integration of the marketing functions of HCMA, HCMC and JDCFC into a single operating unit responsible for the distribution of products within North America, Central America and South America. Integration shall include the dissolution of HCMA and HCMC and the transfer of their assets to Deere-Hitachi. The parties shall act in good faith and take such actions as are necessary to effectuate the dissolution, transfer of assets and integration of their marketing organizations.

1.2 Operations following Integration . Following the integration of HCMA and HCMC into Deere-Hitachi as provided in Section 1.1, JDCFC shall assume sole responsibility for the distribution of Products within the Territory. It is the intent of the Parties that JDCFC shall function as, and perform the types of services following the Integration as HCMA, HCMC and JDCFC separately performed prior to the Integration. The integration shall commence as soon as practicable after the execution of this Agreement, but no later than 1 January 2002 and be completed by 31 December 2002.

1.3 Purposes . The Parties agree that integration of their respective marketing organizations will result in substantial cost reductions through the sharing of common marketing and product support systems, consolidation of facilities, as well as realize synergies through a common parts distribution system. The purpose of this integration, therefore, is to implement operational efficiencies in the distribution of the Products within the Territory, to address market share declines in both their distribution channels, achieve greater flexibility in responding to economic conditions, and to enable the Parties to compete effectively with larger integrated manufacturers of excavators, as well as mining equipment, including mining excavators, shovels and trucks.

It is the mutual understanding between the Parties that this Agreement will be accomplished by maintaining and expanding the total business in the Territory.

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ARTICLE II

Consolidation of Facilities

2.1 Houston, Toronto and Vancouver . The Houston, Toronto and Vancouver facilities will be closed, and the activities conducted at such facilities shall be assumed by JDCFC at facilities operated by JDCFC. The Parties agree that upon closure of these operations Deere-Hitachi will take the necessary steps to terminate the Toronto and Vancouver leases, and to close the Houston facility.

2.2 Staffing . As the Houston, Toronto and Vancouver operations are closed, the management of JDCFC will determine which of the employees at these facilities will be retained as employees of the integrated organization. The Parties also agree that Hitachi will designate a senior manager who will be appointed to a position within the JDCFC marketing organization, with responsibility for the Hitachi division of JDCFC, and reporting to JDCFC’s Director of North American Operations. Hitachi will also designate an additional senior manager to serve on the Quality Council of JDCFC and reporting directly to the President of JDCFC. JDCFC shall have the right to approve both senior managers designated by Hitachi, provided that such approval is not unreasonably withheld. Additional Hitachi personnel will be assigned to JDCFC to support the integrated excavator and mining business as determined by JDCFC Management.

ARTICLE III

Expansion of Products

3.1 Mining Equipment . The Parties agree that mining equipment, described as rigid frame haul trucks, shovels and excavators greater than 100 metric tons (MT), currently being distributed in the Territory by Deere-Hitachi will be distributed by JDCFC pursuant to the terms of a separate Distribution and Consignment Agreement substantially in the form attached hereto as Exhibit A.

3.2 Euclid Trucks . Euclid-Hitachi Heavy Equipment, Ltd. (“Euclid-Hitachi currently distributes a rigid frame haul truck for use in mining, under the Euclid-Hitachi brand name. The Parties agree that this product will be distributed by Deere-Hitachi and they shall cause Deere-Hitachi to enter into a Distribution and Supply Agreement with Euclid-Hitachi for this purpose substantially in the form attached hereto as Exhibit B. Deere -Hitachi will also supply the Euclid-Hitachi brand rigid frame haul truck to JDCFC for distribution

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through the integrated distribution organization pursuant to a separate Distribution and Consignment Agreement substantially in the form attached hereto as Exhibit C.

3.3 Growth Potential . The Parties acknowledge the importance of supporting the growth and profitability related to the distribution of mining products, and will work toward maintaining and improving the distribution of that product line by adding other complimentary products which may be necessary to grow the business.

3.4 Protection Against Marketing Losses . The Parties agree that operating losses associated with the distribution of excavators > 100 MT, shovels, rigid frame haul trucks together with components, attachments and repair parts for such excavators, shovels and haul trucks (“Mining Products”) shall not be charged against the Integrated Marketing Organization. Accordingly, any such losses shall be charged to Hitachi, and not to the Integrated Marketing Organization in arriving at the Parties’ profit sharing under this Agreement.

ARTICLE IV

Distribution of Product

4.1 Dealer Network . The Parties agree that to accomplish the objectives of an integrated marketing organization it will be necessary to move toward a single unified distribution system comprised of the best qualified retail dealers from both organizations. This will be accomplished by appointing the existing qualified Deere dealer or the qualified consolidating Hitachi dealer to represent a unified product line (possible examples: Wajax, Burress, Rudd, AIS, Formula, Ahern, CMI Alaska, Arnold, Elliot & Franz, Howell, Peco, Romco, Trax GA, or Trax AL). JDCFC will consult with Hitachi in selecting dealers, provided, however, that JDCFC shall have the right to make final decisions in such dealer selections. Dealer selections will be made in a manner that supports a long-term unified distribution channel.

4.2 Timing . Existing open areas will be rationalized immediately following the execution of this Agreement. However, to allow for a smooth transition, the evaluation and unification of the distribution channel will be completed within a period of three (3) years from the date of this Agreement.

4.3 Business Plan . The Parties recognize the importance of proceeding expeditiously toward accomplishing the purposes of the integrated marketing organization and agree to develop a 5-year business plan for the

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organization, and to use their best efforts in achieving the plan.

ARTICLE V

Litigation

5.1 Product Litigation . The procedures for resolving claims and conducting the defense of litigation involving excavators below 100 MT distributed by the integrated marketing organization, as well as the payment of the related costs, shall be those set forth in the Product Liability Sharing Agreement between the Parties dated August 16, 1993.

5.2 Other Litigation . The procedures for resolving claims and conducting the defense of all litigation other than product litigation shall be those set forth in the Product Liability Sharing Agreement between the Parties dated August 16, 1993, provided, however, that all the related costs of product claims and lawsuits involving or related to excavators greater than 100 MT, mining shovels and mining trucks shall be the sole responsibility of and paid by Hitachi. All other litigation costs related to or arising out of implementing this Agreement, including the payment of claims, lawsuits, attorneys and consultants’ and related fees, shall be treated as integration expenses and shared by the Parties in the same proportion as the sharing of profits and/or losses of the integrated marketing organization.

ARTICLE VI

Sharing the Profits of Integration

6.1 General Rule . The profits derived from distributing Product within the Territory for periods beginning on or after January 1, 2002, shall be shared as follows: Deere 60%; Hitachi 40%. The Parties agree that profits from the integrated of Products shall be determined in accordance with Generally Accepted Accounting Principles (“GAPP”). The Parties further agree to distribute such profits in accordance with a methodology preferred by Hitachi, taking into account the method most beneficial to both Parties.

6.2 Pricing . The Parties agree that beginning January 1, 2002, all Products (whole goods, components, attachments and service parts), purchased by all Deere affiliated companies, including Deere-Hitachi, from Hitachi for distribution within the Territory will be sold to such Deere affiliates at the prices and in accordance with the terms of the pertinent Supply Agreement

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between Hitachi and the Deere affiliate, including, but not limited to the Supply Agreement with Deere-Hitachi dated May 16, 1988, as amended; the Component Supply Agreement with Industrias John Deere S.V. de C.V., dated April 28, 1995, as amended; and the Supply Agreement with Industrias John Deere S.A. de C.V., dated May 1, 1996, as amended. The Parties further agree that all agreements between Hitachi and Deere affiliates will be amended to carry into effect the pricing provisions of this IMA.

6.6 Cost Reduction . The Parties agree that to maintain and improve competitiveness in the Territory certain cost reduction initiatives must be implemented for whole goods, components and attachments, and agree that beginning January 1, 2002, Hitachi shall reduce the costs of whole goods, components and attachments in accordance with the Supply Agreement between Hitachi and Deere-Hitachi dated May 16, 1988, as amended.

ARTICLE VII

Organization Structure

7.1 Corporate Governance . HCMA and HCMC will cease their corporate existence upon Integration of the Parties’ marketing organizations, and their functions will be absorbed by JDCFC. The corporate structure and governance of Deere-Hitachi will continue as set forth in the Parties’ J V Agreement dated May 16, 1988, as amended. The corporate structure and governance of JDCFC will not be affected by this Agreement except that Hitachi senior managers and employees shall be appointed to support the integrated operations in accordance with Section 2.2.

ARTICLE VIII

Branding of Products

8.1 Both Deere-branded and Hitachi-branded Products are currently being marketed through the distribution channels of HCMA, HCMC and JDCFC. The Parties agree that during the transition to a unified marketing organization, both brands will continue to be distributed. However, after unification of their respective marketing organizations, the Parties agree to evaluate the desirability of adopting a common excavator product brand (possible example: Deere-Hitachi), except that mining products will continue to be distributed under the Hitachi brand, indefinitely.

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ARTICLE IX

Term and Termination

9.2 Termination . Each of Deere and Hitachi shall have the right to terminate this Agreement upon the happening of any of the events enumerated in Section 9.2 of the J V Agreement dated May 16, 1988, provided however, that this Agreement may not be terminated unless the J V Agreement is also terminated.

9.3 Liquidation and Dissolution . In the event that this Agreement is terminated, the Parties agree that they shall take such action as is necessary to cause the Board of Directors of Deere-Hitachi to adopt a plan of liquidation and dissolution of the J V, including all operations contemplated under this Agreement, all in accordance with the terms of Article IX of the J V Agreement.

ARTICLE X

Miscellaneous

10.1 Binding Effect . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Each party hereto shall use its best efforts to cause the members of the Board of Directors of Deere-Hitachi to cause Deere-Hitachi to agree to be bound by all of the terms and conditions of this Agreement, as well as any ancillary agreements required to give it effect, as though it were a party hereto and thereto.

10.2 Entire Agreement . This instrument and the exhibits attached hereto supersede all prior understandings and agreements of the Parties with respect thereto, and shall operate as additions to their J V Agreement dated May 16, 1988.

10.3 Amendment and Modification . The Parties hereto may amend,

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modify and supplement this Agreement in such manner as may be agreed upon by them in writing.

10.5 Required Approvals . The actions contemplated by this Agreement will be implemented only after any and all necessary reviews, consents or approvals are completed or obtained from the appropriate governmental authorities, if any.

10.6 Execution in Counterpart . This Agreement may be executed in any number of counterparts, each of which shall be deemed an original.

10.7 Headings . The descriptive headings in this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

10.8 Severability . If any term, restriction or covenant of this Agreement is deemed illegal or unenforceable under the laws of the State of Illinois (or any other law deemed by a court of competent jurisdiction to be controlling), or if any application of any term, restriction or covenant of this Agreement to any person or circumstance is deemed illegal or unenforceable, the Parties shall in good faith negotiate changes to the unenforceable term, restriction or covenant so that the original intent of such term, restriction or covenant is preserved insofar as is permissible by law.

10.9 Notices . Any notice, request, information or other document given hereunder to any of the parties by any other party shall be in writing and sent to those persons identified, and in accordance with the terms of Section 10.8 of the Parties J V Agreement dated as of May 16, 1988.

10.10 Arbitration . Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, which is unresolved within 90 days (or such other period as may be established by mutual agreement of the Parties) of first written notification by either party, shall be settled by binding arbitration in accordance with the terms of the Parties’ J V Agreement dated as of May 16, 1988.

10.11 Assignment . Neither Hitachi nor Deere shall assign its rights or obligations pursuant to this Agreement except with the prior written consent of

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the other party.

10.12 Reaffirmation of J V Agreement . The provisions of this Agreement shall constitute additions to the Parties’ J V Agreement dated May 16, 1988, and except as modified by this Agreement, the J V Agreement shall remain in full force and effect.

10.13 Amendments to Supply Agreements . Amendment to the Supply Agreement between Hitachi and Deere-Hitachi dated May 16, 1988, is attached hereto as Exhibit D, and Amendment to the Supply Agreement between Deere and Deere-Hitachi dated May 16, 1988, is attached hereto as Exhibit E.

IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year first above written.

DEERE & COMPANY

By:	/s/ Pierre E. Leroy
	Name:	Pierre E. Leroy
	Title:	President, Worldwide Construction Equipment
		Division & Deere Power Systems Group

HITACHI CONSTRUCTION MACHINERY CO., LTD

By:	/s/ Ryuichi Seguchi
	Name:	Ryuichi Seguchi
	Title:	President & CEO

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EXHIBIT 12

DEERE & COMPANY AND CONSOLIDATED SUBSIDIARIES

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(In thousands of dollars)

	Year Ended October 31
	2005			2004			2003			2002		2001
Earnings:
Income of consolidated group before income taxes	$	2,155,812		$	2,113,673		$	971,277		$	602,705	$		(24,757	)
Dividends received from unconsolidated affiliates	1,948			21,579			3,151			2,236		1,675

Fixed charges excluding capitalized interest	779,175			606,460			643,511			659,263		787,737
Total earnings	$	2,936,935		$	2,741,712		$	1,617,939		$	1,264,204	$	764,655

Fixed charges:

Interest expense of consolidated group including capitalized interest	$		763,171	$	592,802		$		628,647	$	637,571	$		766,254

Portion of rental charges deemed to be interest	18,190			14,368			15,044			22,145		22,030
Total fixed charges	$		781,361	$		607,170	$		643,691	$	659,716	$		788,284

Ratio of earnings to fixed charges*	3.76			4.52			2.51			1.92		**

		The computation of the ratio of earnings to fixed charges is based on applicable amounts of the Company and its consolidated subsidiaries plus dividends received from unconsolidated affiliates. “Earnings” consist of income before income taxes, the cumulative effect of changes in accounting and fixed charges excluding capitalized interest. “Fixed charges” consist of interest on indebtedness, amortization of debt discount and expense, an estimated amount of rental expense that is deemed to be representative of the interest factor, and capitalized interest.

*		The Company has not issued preferred stock. Therefore, the ratios of earnings to combined fixed charges and preferred stock dividends are the same as the ratios presented above.

**		For the year ended October 31, 2001, earnings available for fixed charges coverage were $24 million less than the amount required for a ratio of earnings to fixed charges of 1.0.

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EXHIBIT 21

DEERE & COMPANY

AND CONSOLIDATED SUBSIDIARIES

SUBSIDIARIES OF THE REGISTRANT

As of October 31, 2005

Subsidiary companies of Deere & Company are listed below. Except where otherwise indicated, 100 percent of the voting securities of the companies named is owned directly or indirectly by Deere & Company.

Name of subsidiary		Organized under the laws of
Subsidiaries included in consolidated financial statements *
AGRIS Corporation		Delaware
Arrendadora John Deere S.A. de C.V. (99.9% owned)		Mexico
Banco John Deere S.A.		Brazil
Cameco Do Brasil Comercial LTDA		Brazil
Cameco Industries, Inc.		Louisiana
Chamberlain Holdings Limited		Australia
Deere Capital, Inc.		Nevada
Deere Credit, Inc.		Delaware
Deere Credit Services, Inc.		Delaware
Deere Receivables Corporation		Nevada
Farm Plan Corporation		Delaware
FPC Financial f.s.b.		U.S. Thrift
FPC Receivables, Inc.		Nevada
Industrias John Deere Argentina S.A.		Argentina
John Deere Agricultural Holdings, Inc.		Delaware
John Deere B.V.		Netherlands
John Deere Brasil Participacoes LTDA (99.9% owned)		Brazil
John Deere Bank S.A.		Luxembourg
John Deere Brazil S.A.		Brazil
John Deere Capital Corporation		Delaware
John Deere Central Services GmbH		Germany
John Deere Coffeyville Works Inc.		Delaware
John Deere Commercial Worksite Products Inc.		Tennessee
John Deere Credit Company		Delaware
John Deere Credit Limited (Australia)		Australia
John Deere Cash Management S.A.		Luxembourg
John Deere Construction & Forestry Company		Delaware
John Deere Construction Holdings, Inc.		Delaware
John Deere Consumer Products, Inc.		Delaware
John Deere Credit Inc.		Canada
John Deere Credit OY		Finland
John Deere Distribuidora de Titulo e Valores		Brazil
John Deere Equipment Private Ltd.		India
John Deere Finance S.A.		Luxembourg
John Deere Foreign Sales Corporation Limited		Jamaica
John Deere Forestry Group LLC		Illinois
John Deere Funding Corporation		Nevada
John Deere Health Care, Inc.		Delaware
John Deere Health Plan, Inc.		Illinois

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John Deere Iberica S.A.		Spain
John Deere India Private Ltd.		India
John Deere Intercontinental GmbH		Germany
John Deere International GmbH		Switzerland
John Deere Jilian Harvester Co. Limited (100% owned)		China
John Deere Landscapes, Inc.		Delaware
John Deere-Lanz Verwaltungs A.G. (99.9% owned)		Germany
John Deere Lawn and Grounds Care Holdings, Inc.		Delaware
John Deere Leasing Company		Delaware
John Deere Limited		Canada
John Deere Limited Australia		Australia
John Deere Limited Scotland		Scotland
John Deere Mexico S.A. de C.V.		Mexico
John Deere Polska Sp. Z.o.o.		Poland
John Deere Receivables, Inc.		Nevada
John Deere S.A. de C.V.		Mexico
John Deere S.A.S.		France
John Deere Tianjin International Trading Co., Ltd.		China
John Deere Torreon S.A. de C.V.		Mexico
Maschinenfabrik Kember GmbH & Co. KG		Germany
Motores John Deere S.A. de C.V.		Mexico
Nortrax, Inc.		Delaware
Nortrax Investments, Inc.		Delaware
Ontrac Holdings, Inc.		Canada
Vapormatic Co. Ltd.		United Kingdom
Waratah Forestry Equipment Canada Ltd.		Canada

One hundred forty consolidated subsidiaries and thirty-eight unconsolidated affiliates whose names are omitted, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary.

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Exhibit 23

		[Letterhead]
		Deloitte & Touche LLP
		111S. Wacker Drive
		Chicago, Illinois 60606

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 2-62630, 2-76637, 2-90384, 33-15949, 33-24397, 33-44294, 33-49740, 33-49742, 33-49762, 33-55551, 33-55549, 333-01477, 333-62665, 333-62669, 333-46790, and 333-103757 of Deere & Company and subsidiaries (“Deere & Company”) on Form S-8 and in Registration Statement No. 333-92134 of Deere & Company on Form S-3 of our report dated December 16, 2005, relating to the financial statements and financial statement schedule of Deere & Company, and management’s report on the effectiveness of internal control over financial reporting, appearing in the Annual Report on Form 10-K of Deere & Company for the year ended October 31, 2005, and to the reference to us under the heading “Experts” in the Prospectuses, which are part of such Registration Statements.

DELOITTE & TOUCHE LLP

Chicago, Illinois

December 16, 2005

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Exhibit 31.1

CERTIFICATIONS

I, R. W. Lane, certify that:

1. I have reviewed this annual report on Form 10-K of Deere & Company;

2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: 20 December 2005	By:	/s/ R. W. Lane
		R. W. Lane
		Principal Executive Officer

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Exhibit 31.2

CERTIFICATIONS

I, R. W. Lane, certify that:

1. I have reviewed this annual report on Form 10-K of Deere & Company;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: 20 December 2005	By:	/s/ Nathan J. Jones
		Nathan J. Jones
		Principal Executive Officer

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EXHIBIT 32

STATEMENT PURSUANT TO
18 U.S.C. SECTION 1350
AS REQUIRED BY
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Deere & Company (the “Company”) on Form 10-K for the fiscal year ending October 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certify that to the best of our knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

20 December 2005	/s/ R. W. Lane	Chairman, President and Chief Executive Officer
	R. W. Lane

20 December 2005	/s/ Nathan J. Jones	Senior Vice President and Chief Financial Officer
	Nathan J. Jones

A signed original of this written statement required by Section 906 has been provided to Deere & Company and will be retained by Deere & Company and furnished to the Securities and Exchange Commission or its staff upon request.

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