Earnings per share attributable to Navistar International Corporation

The following table shows the information used in the calculation of our basic and diluted earnings per share attributable to Navistar International Corporation:





	Three Months Ended April 30,				Six Months Ended April 30,
	2011		2010		2011		2010
(in millions, expect per share data)			(Revised)^(A)				(Revised)^(A)
Numerator:
Net income attributable to Navistar International Corporation available to common stockholders	$	74	$	43	$	68	$	62
Denominator:
Weighted average shares outstanding:
Basic	73.0		71.4		72.8		71.3
Effect of dilutive securities	5.6		1.4		4.5		1.1
Diluted	78.6		72.8		77.3		72.4
Earnings per share attributable to Navistar International Corporation:
Basic	$	1.01	$	0.61	$	0.93	$	0.87
Diluted	0.93		0.60		0.87		0.86

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(A)	Net income attributable to Navistar International Corporation has been revised to reflect a retrospective change in accounting principle. See Note 1, Summary of significant accounting policies.

The conversion rate on our 3.0% Senior Subordinated Convertible Notes (“Convertible Notes”) is 19.891 shares of common stock per $1,000 principal amount of Convertible Notes, equivalent to an initial conversion price of $50.27 per share of common stock. In connection with the sale of the Convertible Notes, we sold warrants to various counterparties to purchase shares of our common stock from us at an exercise price of $60.14 per share. The Convertible Notes and warrants are anti-dilutive when calculating diluted earnings per share when our average stock price is less than $50.27 and $60.14, respectively.

We also purchased call options in connection with the sale of the Convertible Notes, covering 11.3 million shares at a strike price of $50.27 per share, which are intended to minimize share dilution associated with the Convertible Notes; however under accounting guidance, these call options cannot be utilized to offset the dilution of the Convertible Notes for determining diluted earnings per share as they are anti-dilutive.

The computation of diluted earnings per share also excludes outstanding options and other common stock equivalents in periods where inclusion of such potential common stock instruments would be anti-dilutive in the periods presented.

For the three and six months ended April 30, 2011, 0.6 million and 0.5 million aggregate shares, respectively, were not included in the computation of diluted earnings per share, since they were anti-dilutive.

For both the three and six months ended April 30, 2010, 22.8 million aggregate shares were not included in the computation of diluted earnings per share, since they were anti-dilutive. The 22.8 million shares included 11.3 million shares related to our Convertible Notes and 11.3 million shares related to the related warrants, both of which were anti-dilutive because our average stock price was less than the conversion price on the Convertible Notes and the strike price on the warrants for the three and six months ended April 30, 2010.