Tony Huegel - Director of Investor Relations Susan Karlix - Manager of Investor Communications Raj Kalathur - Chief Financial Officer.

Andrew Kaplowitz - Barclays Steve Volkmann - Jefferies Steven Fisher - UBS David Raso - Evercore ISI Nicole DeBlase - Morgan Stanley Jamie Cook - Credit Suisse Jerry Revich - Goldman Sachs Mircea Dobre - Robert Baird Ross Gilardi - Bank of America Merrill Lynch Ann Duignan - JPMorgan Adam Uhlman - Cleveland Research.

Good morning and welcome to the Deere and Company's Fourth Quarter Earnings Conference Call. Your lines have been placed on listen-only until the question-and-answer session of today's conference. I would now like to turn the call over to Mr. Tony Huegel, Director of Investor Relations. Thank you. You may begin..

Thanks, Laura. Hello. Also on the call today are Raj Kalathur, our Chief Financial Officer; and Susan Karlix, our Manager of Investor Communications. Today we'll take a closer look at Deere's fourth quarter earnings, then spend some time talking about our markets and our initial outlook for fiscal 2015. After that we'll respond to your questions.

Please note that slides are available to complement the call this morning. They can be accessed on our website at www.johndeere.com. First, a reminder. This call is being broadcast live on the Internet and recorded for future transmission and use by Deere and NASDAQ OMX.

Any other use, recording or transmission of any portion of this copyrighted broadcast without the express written consent of Deere is strictly prohibited. Participants in the call, including the Q&A session, agree that their likeness and remarks in all media may be stored and used as part of the earnings call.

This call includes forward-looking comments concerning the company's plans and projections for the future that are subject to important risks and uncertainties.

Additional information concerning factors that could cause actual results to differ materially is contained in the company's most recent Form 8-K and periodic reports filed with the Securities and Exchange Commission.

This call also may include financial measures that are not in conformance with accounting principles generally accepted in the United States of America or GAAP.

Additional information concerning these measures, including reconciliations to comparable GAAP measures, is included in the release and posted on our website at www.johndeere.com/financialreports under Other Financial Information.

Susan?.

price of about 2 points as well as an unfavorable mix of product as we discussed earlier and tier-4 product cost. Now let's look at a few housekeeping items. Looking at R&D expense on Slide 19, R&D was up about 2% in the fourth quarter and down about 2% for the year. Our 2015 forecast calls for R&D to be about flat with 2014 levels.

Moving now to Slide 20, SA&G expense for the equipment operations was down about 14% in the fourth quarter and down 12% for the full year. Landscapes and Water accounted for about 9 points of the change in the fourth quarter and about 8 points for the year. On Slide 21, our 2015 forecast contemplates SA&G expense being down about 5%.

Landscapes and Water will account for about 2 points of the change in the year-over-year comparison. Turning to Slide 22, pension and OPEB expense was down about $20 million for the quarter and down about $145 million for the full year. Pension and OPEB expense is forecast to be up about $85 million in 2015.

On Slide 23, the equipment operations tax rate was approximately 40% in the fourth quarter primarily due to the impairment charge for our China operations mentioned earlier. The full year 2014 tax rate was about 34%. For 2015, the projected effective tax rate is forecast to be in the range of 34% to 36%.

Slide 24 shows our equipment operations history of strong cash flow. Cash flow from the equipment operations was approximately $4.5 billion in 2014 and is forecast to be about $2.9 billion in 2015. Slide 25 outlines our use of cash priorities, which are unchanged and of no doubt familiar to many of you.

Our number one priority is to manage the balance sheet including liquidity to support a rating that provides access to low-cost and readily available short and long-term funding. Thus Deere is strongly committed to its A rating. Our second use of cash priority is funding value-creating investments in our operations.

Our third priority is to provide for the common stock dividend, which has been raised 114% since 2010. Over time, we want to consistently deliver a series of moderately increased dividends, while targeting at mid-cycle earnings, 25% to 35% payout ratio on average.

In this regard, we are mindful of the importance of maintain the dividend and not raising it beyond a point that can't be sustained by our cash flow. Share repurchase is our preferred method of deploying excess cash once the previous requirements are met and as long as such repurchase is value enhancing.

In 2014, Deere repurchased 31.5 million shares at a cost of $2.7 billion, the highest on record. Cumulatively, from 2004 to 2014, we have returned about 60% of cash from the equipment operations to shareholders through dividends and share repurchases. The 2015 outlook for the first quarter and full year is on Slide 26.

Net sales for the quarter are forecast to be down about 21% compared with 2014. This includes price realization of 2 points. In the year-over-year comparison of first quarter sales, Landscapes and Water account for about 2 points of the change.

When modeling the first quarter, keep in mind that ag division will see a considerable decrease in volume in addition to an unfavorable product and geographical mix versus the first quarter of 2014. The full year forecast calls for net sales to be down about 15%. Price realization is expected to be positive by about 2 points.

Finally, our full year 2015 net income forecast is about $1.9 billion. In closing, there is no question John Deere faces challenging conditions in 2015. Yet, even with a further pull-back in the global agricultural sector, the company expects to remain solidly profitable in the year ahead.

Our earnings forecast reflects the aggressive actions we are taking to control costs and assets and make deep cuts in factory production. And it shows a benefit of having a business lineup that is about more than large farm equipment.

And one other thing, the trends that hold so much promise for John Deere's future translates on population growth, rising living standards and increased demand for grain remain very much intact. They are largely unaffected by the periodic ups and downs of the farm economy.

As a result, we believe John Deere can earn solid returns even in a weak farm economy, deliver financial performance much improved over downturns of the past and see substantial benefits from the world's growing need for food, shelter and infrastructure in the years ahead.

Tony?.

Thank you, Susan. Now we're ready to begin the Q&A portion of the call. The operator will instruct you on the polling procedure. But as a reminder, in consideration of others, please limit yourself to one question and one related follow-up. If you have additional questions, we ask that you rejoin the queue.

Laura?.

[Operator Instructions] Our first question comes from Andrew Kaplowitz. Please state your company name..

This is Barclays, nice quarter. Tony, so Susan talked about your FY '15 guidance being as your definition of trough levels.

But can you talk about your condition level that the market won't go below trough, given a relatively strong upturn we've had over the last several years? Is it because you see Europe and Brazil at very low levels, or do you think North American high horsepower will trough in FY '15?.

As Susan mentioned, as you think about the way we view the business and the below 80% and as you're aware, that would put us below trough levels as we tend to be the business running generally between 80 and 120.

As you think about the obvious question how long will it last, will things get worse, first of all, let's be fair, it is a bit premature to think about what will happen beyond 2015.

But in some of the analysis that's been done internally specifically around from our Chief Economist and again we continue to believe that farm cash receipt is the best indicator of sales in the US and Canada and specifically for large ag it would be tied much more closely to crop cash receipts, which we've seen come down quite a bit recently.

But our Chief Economist had pointed out that much of that increase in the US corn stocks that we've seen is related to a bulk normal weather, and that's resulted in yield really well in excess of trend.

If you look out into 2015 and 2016, so the crop that will be planted this spring, if you assume trend yield, so just normal weather, not above normal weather, but normal weather trend yield, assume demand continues at same pace as 2015, so no increase in demand, holding demand solid, even if you assume acreage stays the same, you would see a drawdown in US corn carryovers as a result of that.

The demand would outpace the production. And of course, as you're probably aware, most analysts now expect US corn farmers to reduce acreage somewhat next year. So if you assume smaller acreage trend yield, that would be very supportive of both corn prices and would likely boost cash receipts..

You've been talking about the end market demand for commodities. That has been growing strongly since '96. And if you look at corn prices are very sensitive at low stocks-to-use ratio levels. And we are talking about even in the '14/'15 period about sub-15% stock-to-use ratio levels.

And as Tony said, at trend yields, it is hard to see how our current large ag forecast for fiscal 2015 can last several years, let alone get worse, unless and again our Chief Economist would say, unless we can predict very good rally years continuously for multiple years..

Can you talk about your share buyback activity? You obviously stepped it up in the quarter quite a bit. But how should we think about it in 2015, given the lower free cash flow you're going to have? It still seems like you have relatively good flexibility on your balance sheet to keep your A rating, given the strong free cash flow in 4Q.

But can you talk about your ability to do more in 2015?.

First, 2015 operating cash flows are still pretty strong. And as you know, Andy, our use of cash priorities, they are well articulated. We remain committed to these priorities. And of course, for share repurchases, it is a use of excess cash. And for that, we desire for repurchases to be value enhancing for our long-term shareholders.

So we are mindful of the current share price relative to our intrinsic value. Now share repurchase decision will continue to be made with these factors in mind. And if you look at 2004 through '14, 60% of equipment operations operating cash flow was returned to shareholders either via dividends or share repurchases.

And over an extended period of time, we expect to continue returning this level of cash to shareholders..

The next question comes from Steve Volkmann. Please state your company name..

It's Jefferies. I'm wondering if we can just get a little more kind of near term and granular here.

Can you just talk about what you're seeing with respect to whatever order reports you might have used as you thought about your forecast for 2015? And I guess I'm trying to think about how much visibility you actually have into this and maybe you can sort of loop in the kind of used equipment question at the same time..

As you look at the early order programs that we based the forecast on, again these would relate to large ag equipment except for large tractors, so things like combines, sprayers, planters, tillage equipment. We've certainly seen a reduction, but keep in mind also that we have seen a number of changes year-over-year in these programs.

So if you think about combines, last year we had an early order window ahead of the typical early order program related to tier-4 transitions. Sprayers also were impacted by transitions. Planters we had a fast start program, so again kind of an extra early order window. So there are a lot of differences year-over-year.

But given that we look at early November, most programs are down 40% or more on the early order program. That again is not making any adjustments for those year-over-year differences where we saw some more aggressive orders early on with these products. But those are types of numbers that we're seeing.

Certainly tractors, as you look at availability on large tractors, that's a bit more challenging, because there we have a significant different year-over-year in our daily build rate. And so availability isn't necessarily that significantly different. The biggest difference would really be on our 8R wheeled tractors.

But outside of that, availability is pretty consistent year-over-year. But again, to be fair, that's on lower daily run rates. If you think about used equipment, certainly as you come through a period, and we talked about this quite a lot, of very strong sales, that's going to result in high levels of used equipment.

And certainly we continue to face that. We are working with our dealers to improve and we continue to improve the used equipment management. We talked last quarter about the certified preowned program that was launched in August. That certain gained some traction and helping with the situation.

But to be candid, we're still facing higher levels of used equipment than what we would desire moving into a year like we are in 2015. But I think in the past, our dealers have demonstrated their ability to move that equipment through the system and certainly we have pool funds in place to help facilitate that as well.

Probably most importantly, as you look at pricing year-over-year, through the year we saw some reduction. We're starting to lap some of that production a bit and saw prices come down a bit in the year. We're starting to lap some of those lower prices.

So most of the large ag equipment, you're plus or minus a single digit in terms of year-over-year pricing. So it has moderated at this point at lease for Deere. We would tell you at least intelligence we show would indicate that our pricing and our inventory levels are in much better shape than the competition..

The next question comes from Steven Fisher. Please state your company name..

It's UBS. Just curious how you guys approached the guidance this year. I think a lot of investors are interested in your perspective as to whether it should be considered conservative, because I think you've been conservative historically, but at the same time there were still some surprises this past year on ag.

Just curious for any additional color you might be able to provide on your approach..

As you think about next year, obviously depending on the market that you're talking about, you have more or less visibility.

Kind of going back to Steve Volkmann's previous question, as you think about large ag in the US and Canada, however, while we don't have full visibility at this point, we certainly have a much better visibility in this market for that large ag equipment than we would in any of our other markets through our early order programs, the availability on large factors, those sorts of things.

And I would tell you that our forecast is very much in line with those expectations. To your point, there's always risk, but we would attempt at this point in the year to come out with what our best estimate is for the market based on what we're seeing in our order books and what we're hearing from dealers and customers..

I would add that the way we're preparing for it is pretty aggressive in terms that we're preparing for a greater fall in ag than what may actually happen. And again, the philosophy if at the end the ag end markets prove to be more resilient and positive, it should be easier for us to walk up with the market.

And if you look at what we're doing in terms of pulling levers, as you heard in Susan's comments, we are pulling levers pretty aggressively whether it is on the expense side, SA&G. If you look at what our forecast was in 2014 at the beginning of the year, 4% down to at the end of the year in 2014 12% and '15 it's going to be further 5% down.

And inventory receivables even at the end of the third quarter, we said we'll be down about $300 million. We were actually down $1.2 billion. And that should show we are actually pulling levers pretty hard on expenses, costs and assets and you can go on with capital expenditures, you'll see a similar trend.

Every agricultural unit is executing our plans to walk down the line. Look at the large ag units, they're implementing crop plants. So we are aggressively reacting to it..

And then just a follow-up on the used inventories question. I know you mentioned, Tony, that maybe they are not coming down as quickly as you'd like.

So I guess to what extent do you think dealers need further incentives to help sell that used equipment and to what extent is Deere considering stepping up to provide those incentives?.

As you know, Steve, we have implemented, especially as it relates to large equipment, a pool fund strategy that's been in place for a number of years now that would provide the incentives that we believe our dealers need to move this equipment. And so we do continue to monitor the level of pool funds available to dealers.

We think they're still at supportive levels.

And so in terms of for us when we move into these lower end-markets, you wouldn't see us necessarily with higher incentive costs related to this, because again theoretically the pool funds are there and already available for our dealers to move this equipment based on what we've contributed with the new equipment sales that have driven the use.

So I would say I wouldn't anticipate higher overall incentive budget as you move year-to-year other than what's natural. You'll naturally see a little bit higher percentage as you move into lower end-markets, but you won't see a huge increase or really much of an increase at all in used incentives necessarily..

The next question comes from David Raso. Please state your company name..

Evercore ISI. A question on the C&F segment. I'm just trying to think through the recent growth rates. You're implying strong incremental margins for next year and you're also implying your inventory and receivables to go up $775 million. That all sounds like a positive view on that market. But then you give a 5% topline for the segment.

Can you square up that kind of inventory and receivable build, but only assuming 5% for your own growth?.

That's a great question and glad you mentioned it, because it does look on the surface like field inventories and our inventories are going up pretty dramatically at least relative to the sales level.

What I would tell you there is there have been some changes in some of the wholesale terms on C&F and really they're changes that better align us to the market. As a result of that, we believe that will result in a little bit higher level of receivable. In fact, most of that increase, the vast majority of that increase is actually receivables.

But I want to stress that not a huge increase in the field inventory levels is really a difference in what gets financed with John Deere financial versus maybe some other outside financing entities..

And then lastly, it's the end of the year on ag. Can you help us with North American dealer inventory? I know you look at used inventory at the dealers as a percent of their trailing 12-month sales.

Can you give us some metrics so we can benchmark throughout the year, like where do you feel you are now and where do you plan to exit the year when you give us this inventory receivable type number for the company of down $375 million? On a production basis, do you feel you will be setting up your dealers to exit 2015 with the appropriate inventory levels?.

That would always be our intention. In fact, I would point out we had very large decrease, especially in the fourth quarter, as we pulled back on production.

So a lot of what maybe some had anticipated in lower receivables and inventory in 2015 actually happened in early 2014, which builds a little bit to the cash flow story in the sense of some pointed out the lower cash flow in '15.

But remember, we ended '14 $500 million higher than what we had been forecasting, and that was all driven by a greater reduction in inventory and receivables than what we had been forecasting. So we've done a lot of work already, but certainly has some additional work as we move through the year.

So absolutely we would expect to have our dealers in good shape from an inventory perspective as we exit 2015. We think we're in pretty decent shape today as it relates to that. In fact if you look in the appendix of the slide, we do talk about some of our inventory as it relates to row crop tractors and combines.

Generally as you know, our large ag equipment, we tend to be about half of what the rest of the industry would have as a percent of sales. We ended this year at 6% the end of October 6% of trailing 12-month sales.

We don't have the October data yet for industry, but if you look at the September data, the rest of the industry will be almost six times the level of inventory we would have on combines at the end of October. And I recognize you get a month of difference there. So I'm assuming that you haven't pulled back their inventory during the month of October.

But that's a significant difference and one that we would expect to continue to maintain..

But on the used side, I think that's clearly the issue, right? Obviously a dealer is telling you to take the used trade in. So his comfort with his used is probably as important as anything right now going into trying to think through '15 going into '16.

Is there any metric you can give us, some sense of dealer used to trailing 12-month sales was, whatever the number was at, say, "the peak", three, four, five months ago, where is it now and where do you expect to be in '15?.

Unfortunately, we'd never disclose that. We would be higher in the bands and certainly would be looking to move those inventory levels toward the bottom end of the band. And unfortunately, I just can't share much more than that. From a competitive perspective, we don't share those details..

The next question comes from Nicole DeBlase. Please state your company name..

It's Morgan Stanley. So my question is around the Sinko. It looks like you guys are only projecting like a 3% year-on-year decline in Sinko net income during 2015.

So I'm just curious with ag down so much, how you're maintaining net income year-on-year and is it possible that we could see a lag impact of this where Sinko net income starts to fall more in 2016?.

As we talked about, certainly there is a little bit of a lag factor in terms of how lower sales would impact the portfolio of John Deere Financial. In fact next year, we would be expecting some increase in the portfolio even with these kinds of decreases.

So as you think about the average life of the note generally is around three years, even though they're five-year notes in most cases, but you'd have an average of about three years. So there is again that kind of tail, as those high sales years continue to benefit the portfolio.

I would also point out that as you think about the slope, and we talked about our structure line, of the structure line for John Deere Financial is much flatter, but you don't tend to see even as you move in and out of cycles as dramatic of an impact on their returns as you go through the cycle.

So while you could argue if you're going to assume lower portfolio growth or reduction in the portfolio, you'd see some lower income. You wouldn't expect to see the type of magnitude that you see on the equipment side..

And then my second question is Section 179, what have you guys embedded in the outlook? Are you expecting reinstatement?.

Not in our outlook. So just as we said in recent conversations, we continue to assume that they're in our forecasting, we're assuming that there is no extension of the tax incentive. Now at the same time, we would also continue to tell you that we believe the odds still favor an acceptable resolution.

Candidly next week will be very telling in terms of whether that will happen this calendar year or whether that's something that will happen in the 2015..

The next question comes from Jamie Cook. Please state your company name..

Credit Suisse. I guess just two questions, one on the pricing front. I think you said about 2%. I know you don't like to disclose what your assumptions are in ag versus construction. I am assuming you'll assume you'll get some pricing on the ag side.

Given the severity of the market, can you just talk about your comfort level? And would you be willing to maintain price even at the risk of losing market share? And then my second question is, I think the implied decrementals on the ag business is like 35%, 40%.

Can you just talk about the cadence? Should the first half be much worse, or do we normalize to that level as we exit the year?.

As you think about pricing into next year, and I would point out both Ag & Turf and Construction & Forestry are contributing to that number. So they're both positive. We would tell you that certainly we feel pretty confident in the forecast that we have with the price realization.

And keep in mind, as you look back over the last decade, it's actually been closer to 3%, actually a little over 3% on average. So we are recognizing a little bit lower level of price realization than what we've seen in the last decade or so on average..

But for example, on the fourth quarter, I think you only got 1%, right? So I don't know if that's reflective of the market got much weaker..

Keep in mind, with tier-4 transitions and so on, some of that is about timing year-over-year of when those hit in terms of the price increases. Generally we would just now start seeing our price increases being effective 1 November. A year ago, you could have seen some products with some earlier price as we moved through the year.

In fact, as we talked about the 8R and 7R tractors, we took a short-term price increase and then another bump when we went to final tier-4 as one example. So sometimes the timing of those will impact the year-over-year quarter. So I wouldn't imply anything by that 1% in the fourth quarter being reflective of lower as we move forward.

As you think about the decremental, certainly as we talked about and Susan strongly hinted at it in her opening comments, remember that in our first quarter in particular, we have a very difficult compare with the first quarter of 2014. I think we talked about it actually on the last quarter call as well.

Because of tier-4 transitions, we shipped a fair number of more combines in particular in the first quarter last year than what we typically would. And that is obviously not going to repeat itself this year. And so it will be a difficult comp. And I would argue that you should expect the decrementals to reflect that in the first quarter for sure..

The next question comes from Jerry Revich. Please state your company name..

It's Goldman Sachs. I'm wondering if you could talk about just dealer inventories. It looks like you're not expecting much of a shift in ag trade receivables in inventories next year. And in the slide deck, you laid out the inventories on a trailing 12-month basis.

But if you switch those around to a forward-looking basis, based on the orders you outlined, you're at about 30% of forward sales in row crop tractors and 8% in combines.

So can you just step us through why we shouldn't expect a more significant reduction in trade receivables in ag compared to the slide that you laid out?.

I think I mentioned it when speaking with David. Keep in mind that when you're looking at the '15, you have to also look at what we did in '14, in particular in the fourth quarter of 2014. So we have dramatically reduced in the fourth quarter the level of inventory both within our Deere inventory as well as our field inventory levels.

And so we've done a lot of work already. We talked about reducing our production to keep our manufacturing in line with what we're seeing in retail demand.

And as importantly, remember that we've done a lot of work in recent years as we have moved to the built-to-order strategy to again really reduce our field inventories in both good years and not so good years.

And so we don't have as much work as perhaps some of our competitors, certainly what we would have had historically in terms of heavy levels of field inventory that needs to get draw down as we move into these cycles.

Part of the strategy in terms of being able to continue to provide the type of strong returns is that we would expect throughout an entire cycle even as we move into a downturn. And so I think as you look at our returns next year, that's reflective of that.

We're very confident in the level of inventory and receivables that we currently have forecasted at the end of 2015. Of course as we go through the year, we'll refine that and we'll make changes as we look and start to get better visibility of what 2016 is going to look like. But at this point, we're very confident in that forecast..

And then I'm wondering if you could talk about on the Financial Services business, just touch on, if you could, the delinquency rates that you're seeing at this point versus a year ago? And I know your loss provision accounting is up slightly.

Can you just flush it out for us a bit more, because obviously you're coming off a very good year?.

I think the short answer to that is as we're certainly forecasting a higher provision level, and Susan mentioned it's really more reflective of the fact that we have been at unsustainbly low, we tried to communicate that repeatedly that we were at unsustainbly low levels.

I would maybe turn that around a little bit and say it is absolutely not or should not be taken as any indication that we have weakness in that portfolio. It continues to be a very strong, very sound portfolio. We're not seeing really increases in our past due rates or anything of that nature.

It's just recognizing that we aren't going to stay at these historically low levels as we move forward. So there's not much more I can say on that..

The next question comes from Mircea Dobre. Please state your company name..

Robert Baird. Just maybe looking to clarify from the prior line of questioning here, your shipments to US and Canadian dealers for 2015, my understanding is that based on where inventory levels currently are should be lagging your retail sales forecast.

Am I interpreting this correctly? Can you maybe frame it?.

Our volumes would be slightly lower, yes, because we are bringing down receivables somewhat in the year. That's the $375 million..

And then my second question, I guess, is on R&D and SG&A. You're guiding for flat R&D and I'm trying to understand why we shouldn't be seeing this line item come down a little bit and SG&A down only maybe like 3% excluding Landscapes and Water, even though the revenue obviously is moving quite a bit lower.

Are there some levers that you can pull there that perhaps you're not discussing at this point?.

Certainly last quarter we talked about it. Raj mentioned in his comments that with R&D, we would be balancing both the desire to pull levers as well as recognizing our need to continue to invest in our business. And so effectively holding that flat is a reflection of that.

As you look at SA&G, while you could potentially argue that you were apparently anticipating a little higher level of reduction. You also have to look back and recognize what we did in '14 and in particular as we started to pull levers in the fourth quarter.

So I would just tell you similar to receivables and inventory continue to look at both of those together in terms of the two years combined. So instead of looking at just what we did in '15, recognize what we did in '14 as well..

On R&D, while it's flat, if you look at within it the components, the portion that's coming off of the emissions, that will be allocated more towards either production innovations or more towards continuous improvement. And the continuous improvement part should help us in the cost reduction side..

The next question comes from Ross Gilardi. Please state your company name..

Bank of America Merrill Lynch. I just had a couple of questions on the Brazilian market. I mean the combine numbers were a little steadier last month.

Do you have any thoughts on that? Are you seeing any stabilization in your order books down in Brazil, or could that have been some pre-buying in anticipation of a hike in FINAME? And then my related question would be on FINAME.

What do you expect to see there?.

I think you're potentially correct in terms of what's going on there. Again, we are looking for the lower end markets. Our Group there would tell you moving more towards typical or more normal levels were coming off still a very high level than 2013. So the market is still strong.

It's still a very attractive market for us, but it is coming down a bit more off of those '14 levels. I wouldn't ever read much into monthly numbers, if you will. Certainly there is some speculation that farmers will be buying ahead of the announcement on FINAME, simply because there is uncertainty.

And generally, what we would expect and what most are expecting is that the FINAME rates will stay close to where they are currently, so flat to up slightly, maybe 50 basis point improvement. That's really what we're assuming is in that realm. I don't think there's anyone assuming they're going to go down.

So that's part of the reason why you may be seeing a little bit of pull ahead now in anticipation of what may happen. So flat to slight increase is what we're anticipating for FINAME..

The next question comes from Ann Duignan. Please state your company name..

JPMorgan. Can we talk a little bit about your outlook for '15 to be trough and 80% below normal or at 80% of normal? The last time you said we hit normal was back in 2006. And clearly, the outlook going into '15 is not 20% below the volume levels we saw in 2006.

So can you just address your comfort level with '15 being the trough and what could go wrong? Where is the downside? You've given us all the upside..

As you think about trough levels, to your point, as we look at the market and to be fair, keep in mind, as you pointed 2006, we adjust what we view as normal levels every year, as we grow our market share, as we enter new markets, those sorts of things. So it isn't a static number as you move forward.

And certainly we've seen growth in our business since 2006. By the way, the A&T forecast would not be at 80%. That should be below 80% in our forecast. I think from a confidence perspective, again it's our best view of the market. It's how we are currently interpreting that.

I think if you look historically as well in prior downturns, to expect another significant step-down next year would imply you'd have three years in a row with pretty strong reductions. That would not be the norm, as you look historically.

In fact there's only really one period if you look from 1965 forward where we saw three sequential years of lower sales. And even in that scenario, one of those years, I think, was less than 1% down. The other two were a little bit higher step function down.

And so given all of that, given how we view the market, given where we had seen things from a historic basis, our view would be that the risk of 2015 sales certainly being down significantly from this level is relatively small..

But what are some of the downside risks?.

I would tell you the biggest downside risk would be that we would have incredibly positive weather again and that you would see trend yields moving forward. J.B. Penn, our Chief Economist, you know well, would say that normal weather even you would see stock levels come down, commodity prices move up. And that would be supportive of cash receipts.

So again, we think that while there's always risk, we think it's really very, very low..

The final question comes from Adam Uhlman. Please state your company name..

It's Cleveland Research. I was wondering if we could through the Ag & Turf revenue outlook, if you can maybe talk about how you're thinking about Deere's revenues in 2015 in comparison to what you forecast the unit volumes for each of the geographies, where you think you might outperform and underperform.

And then wrapped into that, just my question on what your assumption is for parts revenues next year?.

We don't guide on parts revenues, but similar to Financial Services, we would point out that the slope is much flatter on parts. So you move in and out of downturns and upturns, it will fluctuate with the market, but not as dramatically. So I can't say much more than that really on parts.

Generally I would tell you that most of our assumptions, as you think about industry relatively in line, the biggest one that we always talk about with industry is Brazil at this point. Certainly we would continue to anticipate market share growth.

The other thing to always remember with Brazil is that industry outlook is only looking at tractors and combines, not the other markets. And we do have a significant amount of our sales coming from things like sugarcane harvesters and planters and sprayers and that type of equipment. So with that, we're over a little bit and I apologize for that.

So we'll go ahead and bring our call to a close. And we appreciate your participation on the call. And as always, we'll be available the rest of the day to answer any additional questions you may have. Thank you..

Thank you. This does conclude today's conference. We do thank you for your participation. You may disconnect your lines at this time..