Why is Deere exiting the Homelite consumer products business?

Deere is exiting the Homelite business because it has been incurring significant pretax operating losses, totaling approximately $70 million in 2000 and $30 million through the first nine months of fiscal 2001. This move is part of a strategy to improve overall financial performance and focus on core competencies.

What are the financial implications of these announcements for Deere?

The company expects these actions to result in a pretax charge of up to $240 million, or approximately $150 million after-tax. This charge will primarily impact the company's fiscal fourth quarter results. However, the long-term goal is to improve profitability and competitiveness.

What specific actions are being taken in the Construction & Forestry division?

The restructuring includes the closure of a forestry-equipment factory in Bessemer, Alabama, and the sale or shutdown of a fabrication operation in Woodstock, Ontario. Additionally, there will be significant reductions in worldwide construction and forestry marketing and manufacturing staffs, including the closure of an office in Atlanta, Georgia. These measures are expected to reduce annual operating costs by about $15 million.

Will these actions affect the John Deere brand's professional equipment lines?

No, the announcement clarifies that the John Deere line of professional hand-held and portable power equipment for commercial users will continue to be available through the company's dealer network. The exit specifically pertains to the Homelite brand's consumer products.

DE 8-K SEC Disclosure — Aug 27, 2001

Summary

Deere & Company (DE) announced significant strategic initiatives on August 27, 2001, aimed at improving financial and operating performance. The most notable actions include the planned exit from the Homelite consumer products business and a substantial restructuring of the Construction & Forestry division. These moves are expected to incur a significant after-tax charge of approximately $150 million, primarily in the fiscal fourth quarter, but are designed to enhance long-term competitiveness and profitability. Investors should note that the company is actively seeking to sell the Homelite operations, which have been a drag on earnings. The restructuring in the Construction & Forestry segment involves plant closures, staff reductions, and cost-saving measures intended to streamline operations and reduce annual operating costs. These decisive actions underscore management's commitment to boosting shareholder value by focusing resources on core competencies and improving profitability.

Key Highlights

1Deere & Company plans to exit the Homelite consumer products business.
2The company will restructure its Construction & Forestry division, including plant shutdowns and staff cuts.
3These actions are expected to result in a pretax charge of up to $240 million, or approximately $150 million after-tax.
4The Homelite business has incurred significant pretax operating losses in prior periods.
5The restructuring aims to reduce annual operating costs in the Construction & Forestry division by about $15 million.
6Deere is actively negotiating to sell the Homelite operations, with a target transition before the end of October.
7These initiatives are part of a broader strategy to improve business performance, profitability, and shareholder value.

DEERE & CO 8-K Report (Aug 27, 2001)

Summary

Key Highlights

Frequently Asked Questions