The company said that retail sales of agricultural equipment through the first five months of the year have been lower than anticipated, due to continued low commodity prices and uncertainty over this year's harvest prospects. These factors have been particularly strong in North America, resulting in significantly lower industry sales of four-wheel drive tractors and combines. Recently improved growing conditions have reduced the outlook for increased commodity prices this year. As a result, CNH now expects industry sales of large agricultural equipment to decline by approximately 10 to 15 percent this year as compared to 1999. Industry retail sales in other markets around the world are expected to be relatively unchanged from the company's prior expectations. Further, CNH sales have been impacted by customer and dealer uncertainty regarding availability of products that the company agreed to divest as conditions for regulatory approval of the business merger of New Holland and Case Corporation. In addition to these demand factors, market conditions have made it increasingly difficult for the company to realize planned pricing increases this year.

In its construction equipment business, CNH is also lowering production of some of its product lines in anticipation of lower industry sales, compared to the strong levels of last year, due to the impact of higher interest rates on construction activity. The company now expects overall construction activity in North America to be slightly lower for the balance of 2000, particularly in the housing sector.

"We are reacting quickly to these market conditions and are taking aggressive steps to maintain low inventory levels in this environment," said Jean-Pierre Rosso, chairman and chief executive officer. "In addition, we are accelerating our merger integration actions to achieve our synergies as rapidly as possible, while aggressively pursuing cost reduction programs throughout our operations."

In addition to lowering production of agricultural and construction equipment, CNH also will incur lower margins and certain charges in the second quarter and the full year, primarily due to business conditions in Latin America. These include a writedown of agricultural equipment imported into Brazil from the United States that, because of recently enacted Brazilian government trade financing schemes, now have a significantly lower market value. As a result, CNH is shifting its sourcing strategy in Latin America to focus more on domestically produced products. In addition, Brazilian farmers who financed equipment with loans tied to U.S. dollar indexes are finding it increasingly difficult, following the devaluation of the Brazilian Real, to meet larger loan payments. As a result, the company is increasing its loan loss provisions for Brazil. CNH is also increasing its loan loss provisions in North America due to prolonged weakness in the agriculture sector.

With strong global brands, CNH is a leader in the agricultural equipment, construction equipment and financial services industries and had combined 1999 revenues of approximately $11 billion. CNH sells its products in 160 markets through a network of more than 10,000 dealers and distributors. CNH products are sold under the following brands: Case, Case IH, Fermec, Fiatallis, Fiat-Hitachi, Link-Belt (earth-moving equipment), New Holland, O&K and Steyr.