1. Covering Analyst: Colin Bourdin colinbourdin@comcast.net

2. Company Overview ›Founded by John Deere himself in 1837 ›In 1848 moved headquarters to Moline, Illinois where it resides today ›Modern day company was incorporated under laws of Delaware in 1958 ›John Deere leading manufacturer of agricultural machinery in the world with a 44.2% market share ›Second largest manufacturer of Construction machinery in the world with a 7.1% market share

3. Deere’s Products ›Agriculture & Turf equipment – 75% - Crop harvesting, turf & utility, hay & forage, crop care, and tractors ›Construction & Forestry – 18% - Excavators, loaders, dump trucks, and skidders ›Financial Services – 6% - Financing for sales & leases by dealers of A&T and C&F equipment

4. Deere’s Services ›Global satellite positioning technologies ›Intelligent Solutions Group - telematics - John Deere Farmsight – virtually linking equipment with farmers - John Deere Water – water management solutions and field connect soil sensing system

5. Business Growth Strategies ›Sustainable SVS growth strategy – expanding more into six key geographic areas - 2012 opened new distribution centers in India, South Africa, Argentina, Sweden, Germany - 2013 building new factories in Brazil, China, and India - Expanding Financial Services into India, Chile, Thailand, Russia, and China ›New Product Innovations - Intelligent Solutions group – keeping Deere on forefront of technology - New products in A&T and C&F – meeting Tier-4 standards

6. Industry Overview ›Agricultural Machinery Industry – 1.5% growth to 2017 - Mature and innovation focused on improving existing products - Consolidation of farming – industry dominated by large conglomerates - Need for immense technological change – Tier 4 and more efficiency - Profitability has increased Construction Machinery Industry – 5.7% growth to 2017 - Equipment for residential, commercial, highway, other infrastructure - Sustained by strong international demand where infrastructure growing - Domestic demand expected to increase

7. Industry Market Share

8. Industry Macroeconomic Influences ›Agriculture Machinery - Increase in population, urbanization, and industrialization - Climate – 2012 Drought - Commodity prices and Farmer’s Cash Receipts - Price of Steel and interest rates Construction Machinery - Increase in population, urbanization, industrialization - Real Estate Market - Interest rates and government spending on infrastructure

9. Svigals Portfolio ›11/29/2006 originally purchased 36 shares of DE for $96.27 per share ›12/4/2007 2:1 stock split ›12/4/2007 sold 16 shares at $87.38 per share ›11/10/2011 sold 20 shares at $74.24 per share

10. Revenue Model ›Percentage of Revenue method for Product Segments ›A&T – slowed year over year growth - High commodity prices and farm cash receipts expected to continue - Demand from emerging markets expected to increase - 2013 sales supported by early order program - 2013 sales negatively effected from delayed effects of drought - 2014 sales increase from new factories - Continued expansion and new products increase A%T as % of revenue

11. Revenue Model cont. ›C&F : Slowed year over year growth - Improvement in U.S. real estate market increase 2013 sales and beyhond - Continued increase in urbanization and industrialization – higher demand - Rising prices for minerals/metals in 2013 and 2014 expected to drive mining activity - New C&F factories in Brazil and China commence production in 2014 ›Financial Services - Improved credit conditions in 2013 - Increased demand in A&T and C&F lower percentage of total revenue

12. Working Capital Model ›Projected as percentage of revenue

13. DCF Assumptions ›COGS: Increase in 2013 due to rising price of steel and decreasing after due to decreasing price of steel ›SG&A: Higher in 2013 due to 5000 new employees, new plants, lower in future years ›R&D: Continued increase ›Capital Expenditures: Rise in line with revenue ›Depreciation: Increasing PP&E, increasing % of revenue

14. DCF ›Projected as percentage of revenue

15. Beta

16. Growth Rates ›Due to 10.5% increase in FCF in 2017 choose to do 5% intermediate growth rate ›Choose 3% terminal growth rate as a conservative/ in line with GDP projection into perpetuity

17. DCF Valuation Summary

18. Comparable Analysis ›Comparables screened for similar industry and business segments, size, growth rates, % revenue domestic vs. international, beta, debt/EV, EV/EBITDA, and P/E ›Caterpillar (40%) – similar size, international presence, business segments, P/E, beta, debt/EV, EV/Revenue, EV/EBITDA ›CNH Global (40%) – largest competitor to Deere in Agriculture Machinery and similar in business segments, EBITDA growth rate, debt/EV, P/E ›Cummings (10%) – Different business segments but similar revenue growth rates, EV/EBITDA, EV/EBITDA – CapEx ›AGCO (10%) – Smaller market cap and EV/Revenue and EV/EBITDA very small although most similar growth rates and similar P/E

19. Multiples ›EV/Revenue not included because AGCO’s is not comparable and would bring down overall valuation

20. Final Valuation

21. Questions?

22. Recommendation ›I recommend a hold to the Svigals Portfolio as Deere is undervalued ›Largest manufacturer in Agricultural industry – most trusted name ›Exponential increase in population, urbanization, industrialization make growth in industry inevitable ›Strongly positioned in fastest growing countries on Earth ›Housing market situated for a comeback ›Historically strong earnings, dividend growth, and yield – 14.5% annual dividend growth over last 5 years; current 2.1% dividend yield ›Not to mention Warren Buffet bought 4 million shares of DE last quarter