Condensed consolidating guarantor and non-guarantor financial information

The following tables set forth condensed consolidating balance sheets as of April 30, 2011 and October 31, 2010, and condensed consolidating statements of operations and condensed consolidating statements of cash flows for the six months ended April 30, 2011 and 2010. The information is presented as a result of Navistar, Inc.’s guarantee, exclusive of its subsidiaries, of NIC’s indebtedness under its 8.25% Senior Notes due 2021 and obligations under our Loan Agreement related to the 6.5% Tax Exempt Bonds due 2040. Navistar, Inc. is a direct wholly-owned subsidiary of NIC. None of NIC’s other subsidiaries guarantee any of these notes. The guarantees are full and unconditional. Separate financial statements and other disclosures concerning Navistar, Inc. have not been presented because management believes that such information is not material to investors. Within this disclosure only, “NIC” includes the consolidated financial results of the parent company only, with all of its wholly-owned subsidiaries accounted for under the equity method. Likewise, “Navistar, Inc.,” for purposes of this disclosure only, includes the consolidated financial results of its wholly-owned subsidiaries accounted for under the equity method and its operating units accounted for on a consolidated basis. “Non-Guarantor Subsidiaries” includes the combined financial results of all other non-guarantor subsidiaries. “Eliminations and Other” includes all eliminations and reclassifications to reconcile to the consolidated financial statements. NIC files a consolidated U.S. federal income tax return that includes Navistar, Inc. and its U.S. subsidiaries. Navistar, Inc. has a tax allocation agreement (“Tax Agreement”) with NIC which requires Navistar, Inc. to compute its separate federal income tax liability and remit any resulting tax liability to NIC. Tax benefits that may arise from net operating losses of Navistar, Inc. are not refunded to Navistar, Inc. but may be used to offset future required tax payments under the Tax Agreement. The effect of the Tax Agreement is to allow NIC, the parent company, rather than Navistar, Inc., to utilize current U.S. taxable losses of Navistar, Inc. and all other direct or indirect subsidiaries of NIC.














	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
(in millions)
Condensed Consolidating Statement of Operations for the Three Months Ended April 30, 2011
Sales and revenues, net	$	—		$	2,144		$	3,238		$	(2,027	)	$	3,355
Costs of products sold	17			1,987			2,681			(1,984		)	2,701
Restructuring charges	—			2			—			—			2
All other operating expenses	17			338			217			(29		)	543
Total costs and expenses	34			2,327			2,898			(2,013		)	3,246
Equity in income (loss) of affiliates	120			219			(10		)	(345		)	(16		)
Income before income tax	86			36			330			(359		)	93
Income tax expense	(12		)	(5		)	(36		)	48			(5		)
Net income	74			31			294			(311		)	88
Less: Net income attributable to non-controlling interests	—			—			14			—			14
Net income attributable to Navistar International Corporation	$	74		$	31		$	280		$	(311	)	$	74



	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
(in millions)
Condensed Consolidating Statement of Operations for the Six Months Ended April 30, 2011
Sales and revenues, net	$	—		$	3,831		$	5,819		$	(3,552	)	$	6,098
Costs of products sold	—			3,553			4,846			(3,499		)	4,900
Restructuring charges	—			23			1			—			24
All other operating expenses	41			613			441			(53		)	1,042
Total costs and expenses	41			4,189			5,288			(3,552		)	5,966
Equity in income (loss) of affiliates	120			344			(20		)	(477		)	(33		)
Income (loss) before income tax	79			(14		)	511			(477		)	99
Income tax benefit (expense)	(11		)	1			(52		)	57			(5		)
Net income (loss)	68			(13		)	459			(420		)	94
Less: Net income attributable to non-controlling interests	—			—			26			—			26
Net income (loss) attributable to Navistar International Corporation	$	68		$	(13	)	$	433		$	(420	)	$	68



	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
(in millions)
Condensed Consolidating Balance Sheet as of April 30, 2011
Assets
Cash and cash equivalents	$	176		$	20		$	194		$	—		$	390
Marketable securities	409			—			329			—			738
Restricted cash and cash equivalents	19			9			160			—			188
Finance and other receivables, net	5			178			3,851			(6		)	4,028
Inventories	—			683			1,103			(65		)	1,721
Investments in non-consolidated affiliates	(2,746		)	5,650			50			(2,851		)	103
Property and equipment, net	—			489			995			2			1,486
Goodwill	—			—			337			—			337
Deferred taxes, net	1			10			109			(10		)	110
Other	248			148			471			(2		)	865
Total assets	$	(1,888	)	$	7,187		$	7,599		$	(2,932	)	$	9,966
Liabilities and stockholders’ equity (deficit)
Debt	$	1,677		$	163		$	3,212		$	(229	)	$	4,823
Postretirement benefits liabilities	—			1,802			262			—			2,064
Amounts due to (from) affiliates	(5,158		)	8,656			(3,582		)	84			—
Other liabilities	2,316			117			1,545			(219		)	3,759
Total liabilities	(1,165		)	10,738			1,437			(364		)	10,646
Redeemable equity securities	5			—			—			—			5
Convertible debt	84			—			—			—			84
Stockholders’ equity attributable to non-controlling interests	—			—			44			(1		)	43
Stockholders’ equity (deficit) attributable to Navistar International Corporation	(812		)	(3,551		)	6,118			(2,567		)	(812		)
Total liabilities and stockholders’ equity (deficit)	$	(1,888	)	$	7,187		$	7,599		$	(2,932	)	$	9,966



	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
(in millions)
Condensed Consolidating Statement of Cash Flows for the Six Months Ended April 30, 2011
Net cash provided by (used in) operations	$	(84	)	$	61		$	142		$	107		$	226
Cash flow from investment activities
Net change in restricted cash and cash equivalents	—			—			(8		)	—			(8		)
Net sales of marketable securities	(34		)	—			(118		)	—			(152		)
Capital expenditures	—			(104		)	(104		)	—			(208		)
Other investing activities	—			(20		)	14			—			(6		)
Net cash provided by (used in) investment activities	(34		)	(124		)	(216		)	—			(374		)
Cash flow from financing activities
Net borrowings (repayments) of debt	27			62			(36		)	(107		)	(54		)
Other financing activities	28			—			(32		)	—			(4		)
Net cash provided by (used in) financing activities	55			62			(68		)	(107		)	(58		)
Effect of exchange rate changes on cash and cash equivalents	—			(1		)	12			—			11
Decrease in cash and cash equivalents during the period	(63		)	(2		)	(130		)	—			(195		)
Cash and cash equivalents at beginning of the period	239			22			324			—			585
Cash and cash equivalents at end of the period	$	176		$	20		$	194		$	—		$	390

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(A)	Certain amounts have been revised to reflect a retrospective change in accounting principle. See Note 1, Summary of significant accounting policies.



	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
(in millions)
Condensed Consolidating Statement of Operations for the Three Months Ended April 30, 2010^(A)
Sales and revenues, net	$	—		$	1,566		$	2,545		$	(1,368	)	$	2,743
Costs of products sold	(5		)	1,425			2,110			(1,341		)	2,189
Restructuring charges	—			—			3			—			3
All other operating expenses	16			341			167			(32		)	492
Total costs and expenses	11			1,766			2,280			(1,373		)	2,684
Equity in income (loss) of affiliates	55			163			(5		)	(226		)	(13		)
Income (loss) before income tax	44			(37		)	260			(221		)	46
Income tax benefit (expense)	(1		)	1			8			2			10
Net income (loss)	43			(36		)	268			(219		)	56
Less: Net income attributable to non-controlling interests	—			—			13			—			13
Net income (loss) attributable to Navistar International Corporation	$	43		$	(36	)	$	255		$	(219	)	$	43

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(A)	Certain amounts have been revised to reflect a retrospective change in accounting principle. See Note 1, Summary of significant accounting policies.



	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
(in millions)
Condensed Consolidating Statement of Operations for the Six Months Ended April 30, 2010^(A)
Sales and revenues, net	$	—		$	3,055		$	5,200		$	(2,703	)	$	5,552
Costs of products sold	(6		)	2,785			4,327			(2,655		)	4,451
Restructuring charges (benefit)	—			(17		)	3			—			(14		)
All other operating expenses	33			673			365			(61		)	1,010
Total costs and expenses	27			3,441			4,695			(2,716		)	5,447
Equity in income (loss) of affiliates	91			314			(8		)	(416		)	(19		)
Income (loss) before income tax	64			(72		)	497			(403		)	86
Income tax benefit (expense)	(2		)	3			(18		)	19			2
Net income (loss)	62			(69		)	479			(384		)	88
Less: Net income attributable to non-controlling interests	—			—			26			—			26
Net income (loss) attributable to Navistar International Corporation	$	62		$	(69	)	$	453		$	(384	)	$	62

_______________


(A)	Certain amounts have been revised to reflect a retrospective change in accounting principle. See Note 1, Summary of significant accounting policies.



	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
(in millions)
Condensed Consolidating Balance Sheet as of October 31, 2010
Assets
Cash and cash equivalents	$	239		$	22		$	324		$	—		$	585
Marketable securities	375			—			211			—			586
Restricted cash and cash equivalents	20			9			151			—			180
Finance and other receivables, net	9			222			3,730			(15		)	3,946
Inventories	—			644			974			(50		)	1,568
Goodwill	—			—			324			—			324
Property and equipment, net	—			443			1,003			(4		)	1,442
Investments in non-consolidated affiliates	(3,006		)	5,290			60			(2,241		)	103
Deferred taxes, net	1			1			146			(2		)	146
Other	266			118			467			(1		)	850
Total assets	$	(2,096	)	$	6,749		$	7,390		$	(2,313	)	$	9,730
Liabilities and stockholders’ equity (deficit)
Debt	$	1,666		$	213		$	3,220		$	(229	)	$	4,870
Postretirement benefits liabilities	—			1,907			272			—			2,179
Amounts due to (from) affiliates	(5,058		)	8,111			(3,140		)	87			—
Other liabilities	2,269			112			1,369			(145		)	3,605
Total liabilities	(1,123		)	10,343			1,721			(287		)	10,654
Redeemable equity securities	8			—			—			—			8
Convertible debt	—			—			—			—			—
Stockholders’ equity attributable to non-controlling interest	—			—			49			—			49
Stockholders’ equity (deficit) attributable to Navistar International Corporation	(981		)	(3,594		)	5,620			(2,026		)	(981		)
Total liabilities and stockholders’ equity (deficit)	$	(2,096	)	$	6,749		$	7,390		$	(2,313	)	$	9,730



	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
(in millions)
Condensed Consolidating Statement of Cash Flows for the Six Months Ended April 30, 2010 (Revised)^(A)
Net cash provided by (used in) operations	$	(556	)	$	(482	)	$	722		$	582		$	266
Cash flow from investment activities
Net change in restricted cash and cash equivalents	1			1			199			—			201
Net increase in marketable securities	(40		)	—			(135		)	—			(175		)
Capital expenditures	—			(23		)	(80		)	—			(103		)
Other investing activities	—			(52		)	(24		)	13			(63		)
Net cash used in investment activities	(39		)	(74		)	(40		)	13			(140		)
Cash flow from financing activities
Net borrowings (repayments) of debt	—			541			(754		)	(595		)	(808		)
Other financing activities	14			—			(33		)	—			(19		)
Net cash provided by (used in) financing activities	14			541			(787		)	(595		)	(827		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(3		)	—			(3		)
Decrease in cash and cash equivalents during the period	(581		)	(15		)	(108		)				(704		)
Cash and cash equivalents at beginning of the period	792			36			384			—			1,212
Cash and cash equivalents at end of the period	$	211		$	21		$	276		$	—		$	508

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(A)	Certain amounts have been revised to reflect a retrospective change in accounting principle. See Note 1, Summary of significant accounting policies.