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Deere sets $240M charge
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August 27, 2001: 9:26 a.m. ET
Company exiting consumer products business in broad restructuring
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NEW YORK (CNNfn) - Deere & Co. expects to take a $240 million pre-tax charge in its fiscal fourth quarter as it exits the consumer products business and restructures its forestry and construction division, the company said Monday.
Deere (DE: Research, Estimates), maker of John Deere tractors, mowers and other agricultural equipment, said the moves are part of a broader restructuring plan to improve profitability. The news comes a week after the Moline, Ill.-based company beat third-quarter earnings expectations, but warned that a prolonged economic slowdown would hurt full-year results.
The company said it plans to stop producing trimmers, blowers and chain saws under the Homelite name. The John Deere line of professional hand-held and portable power equipment for commercial users will continue to be available.
The Homelite division posted a loss of $70 million in 2000 and $30 million during the first nine months of fiscal 2001.
"These actions send a clear signal that we are not content to simply wait for the economy to improve in order to make our businesses more profitable," CEO Robert Lane said.
The restructuring primarily affects John Deere consumer-product operations and employees in the United States and Mexico. The company plans to sell its Chihuahua, Mexico, operation, which employs 1,200, and close some or all operations in Greer and Columbia, S.C., , and Charlotte, N.C..
About 475 U.S. employees will be cut as a result, the company said.
Deere also said it is negotiating to sell Homelite and expects to finalize a deal before the end of October.
The company also announced plans to reduce manufacturing and marketing costs in the worldwide construction and forestry division, including the elimination of about 300 jobs in addition to previously announced reductions in the salaried workforce. Deere also plans to close a forestry equipment factory in Bessemer, Ala., and sell or shutter a fabrication operation in Woodstock, Ontario.
"Significant" reductions in worldwide construction and forestry marketing and manufacturing staffs also are planned, including an Atlanta office. The moves are expected to save about $15 million a year.
Deere's shares ended down 42 cents at $43.95 Friday. 
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Deere & Co.
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