Condensed consolidating guarantor and non-guarantor financial information

The following tables set forth condensed consolidating balance sheets as of January 31, 2012 and October 31, 2011, and condensed consolidating statements of operations and condensed consolidating statements of cash flows for the three months ended January 31, 2012 and 2011. 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", as those terms are used in Regulation S-X Rule 3-10, except that an individual subsidiary's guarantee will be automatically released in certain customary circumstances, such as when the subsidiary is sold or all of the assets of the subsidiary are sold, the capital stock is sold, when the subsidiary is designated as an "unrestricted subsidiary" for purposes of the indenture, upon liquidation or dissolution of the subsidiary or upon legal or covenant defeasance or satisfaction and discharge of the notes. 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 January 31, 2012
Sales and revenues, net	$	—		$	1,962		$	2,824		$	(1,734	)	$	3,052
Costs of products sold	—			1,994			2,424			(1,720		)	2,698
All other operating expenses (income)	26			335			234			(27		)	568
Total costs and expenses	26			2,329			2,658			(1,747		)	3,266
Equity in income (loss) of affiliates	(200		)	96			(8		)	105			(7		)
Income (loss) before income tax	(226		)	(271		)	158			118			(221		)
Income tax benefit (expense)	73			76			(34		)	(34		)	81
Net income (loss)	(153		)	(195		)	124			84			(140		)
Less: Net income attributable to non-controlling interests	—			—			13			—			13
Net income (loss) attributable to Navistar International Corporation	$	(153	)	$	(195	)	$	111		$	84		$	(153	)



	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
(in millions)
Condensed Consolidating Statement of Operations for the Three Months Ended January 31, 2011
Sales and revenues, net	$	—		$	1,687		$	2,581		$	(1,525	)	$	2,743
Costs of products sold	(17		)	1,566			2,165			(1,515		)	2,199
All other operating expenses (income)	23			274			225			(23		)	499
Total costs and expenses	6			1,861			2,391			(1,538		)	2,720
Equity in income (loss) of affiliates	—			122			(10		)	(129		)	(17		)
Income (loss) before income tax	(6		)	(52		)	180			(116		)	6
Income tax benefit (expense)	—			6			(16		)	10			—
Net income (loss)	(6		)	(46		)	164			(106		)	6
Less: Net income attributable to non-controlling interest	—			—			12			—			12
Net income (loss) attributable to Navistar International Corporation	$	(6	)	$	(46	)	$	152		$	(106	)	$	(6	)



	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
(in millions)
Condensed Consolidating Balance Sheet as of January 31, 2012
Assets
Cash and cash equivalents	$	151		$	52		$	285		$	—		$	488
Marketable securities	181			—			258			—			439
Restricted cash and cash equivalents	19			10			126			—			155
Finance and other receivables, net	4			158			3,440			(8		)	3,594
Inventories	—			716			1,244			(44		)	1,916
Investments in non-consolidated affiliates	(2,313		)	6,004			54			(3,684		)	61
Property and equipment, net	—			693			980			(2		)	1,671
Goodwill	—			—			312			—			312
Deferred taxes, net	92			1,900			122			—			2,114
Other	142			160			455			(4		)	753
Total Assets	$	(1,724	)	$	9,693		$	7,276		$	(3,742	)	$	11,503
Liabilities and Stockholders’ Equity (Deficit)
Debt	$	1,598		$	295		$	2,873		$	(233	)	$	4,533
Postretirement benefits liabilities	—			2,956			327			—			3,283
Amounts due to (from) affiliates	(5,795		)	9,517			(3,799		)	77			—
Other liabilities	2,704			(254		)	1,523			(96		)	3,877
Total Liabilities	(1,493		)	12,514			924			(252		)	11,693
Redeemable equity securities	5			—			—			—			5
Stockholders’ equity attributable to non-controlling interests	—			—			45			(4		)	41
Stockholders’ equity (deficit) attributable to Navistar International Corporation	(236		)	(2,821		)	6,307			(3,486		)	(236		)
Total Liabilities and Stockholders’ Equity (Deficit)	$	(1,724	)	$	9,693		$	7,276		$	(3,742	)	$	11,503



	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
(in millions)
Condensed Consolidating Balance Sheet as of October 31, 2011
Assets
Cash and cash equivalents	$	226		$	13		$	300		$	—		$	539
Marketable securities	429			1			288			—			718
Restricted cash and cash equivalents	20			9			298			—			327
Finance and other receivables, net	3			154			4,070			27			4,254
Inventories	—			650			1,113			(49		)	1,714
Investments in non-consolidated affiliates	(2,094		)	5,818			54			(3,718		)	60
Property and equipment, net	—			600			972			(2		)	1,570
Goodwill	—			—			319			—			319
Deferred taxes, net	31			1,912			114			—			2,057
Other	168			152			416			(3		)	733
Total Assets	$	(1,217	)	$	9,309		$	7,944		$	(3,745	)	$	12,291
Liabilities and Stockholders’ Equity (Deficit)
Debt	$	1,689		$	156		$	3,242		$	(231	)	$	4,856
Postretirement benefits liabilities	—			2,981			335			—			3,316
Amounts due to (from) affiliates	(5,574		)	9,055			(3,595		)	114			—
Other liabilities	2,690			(194		)	1,717			(122		)	4,091
Total Liabilities	(1,195		)	11,998			1,699			(239		)	12,263
Redeemable equity securities	5			—			—			—			5
Stockholders’ equity attributable to non-controlling interest	—			—			52			(2		)	50
Stockholders’ equity (deficit) attributable to Navistar International Corporation	(27		)	(2,689		)	6,193			(3,504		)	(27		)
Total Liabilities and Stockholders’ Equity (Deficit)	$	(1,217	)	$	9,309		$	7,944		$	(3,745	)	$	12,291



	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
(in millions)
Condensed Consolidating Statement of Cash Flows for the Three Months Ended January 31, 2012
Net cash provided by (used in) operations	$	(269	)	$	(68	)	$	160		$	296		$	119
Cash flows from investment activities
Net change in restricted cash and cash equivalents	—			—			172			—			172
Net sales of marketable securities	248			—			31			—			279
Capital expenditures	—			(74		)	(54		)	—			(128		)
Other investing activities	—			(104		)	82			—			(22		)
Net cash provided by (used in) investment activities	248			(178		)	231			—			301
Cash flows from financing activities
Net borrowings (repayments) of debt	(77		)	285			(387		)	(205		)	(384		)
Other financing activities	23			—			(26		)	(91		)	(94		)
Net cash provided by (used in) financing activities	(54		)	285			(413		)	(296		)	(478		)
Effect of exchange rate changes on cash and cash equivalents	—			—			7			—			7
Increase (decrease) in cash and cash equivalents	(75		)	39			(15		)	—			(51		)
Cash and cash equivalents at beginning of the period	226			13			300			—			539
Cash and cash equivalents at end of the period	$	151		$	52		$	285		$	—		$	488



	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
(in millions)
Condensed Consolidating Statement of Cash Flows for the Three Months Ended January 31, 2011
Net cash provided by (used in) operations	$	(375	)	$	(207	)	$	256		$	331		$	5
Cash flows from investment activities
Net change in restricted cash and cash equivalents	1			(2		)	10			—			9
Net purchases in marketable securities	258			—			(82		)	—			176
Capital expenditures	—			(56		)	(53		)	—			(109		)
Other investing activities	—			(16		)	3			—			(13		)
Net cash provided by (used in) investment activities	259			(74		)	(122		)	—			63
Cash flows from financing activities
Net borrowings (repayments) of debt	20			291			(233		)	(331		)	(253		)
Other financing activities	15			—			(19		)	—			(4		)
Net cash provided by (used in) financing activities	35			291			(252		)	(331		)	(257		)
Effect of exchange rate changes on cash and cash equivalents	—			—			3			—			3
Increase (decrease) in cash and cash equivalents	(81		)	10			(115		)	—			(186		)
Cash and cash equivalents at beginning of the period	239			22			324			—			585
Cash and cash equivalents at end of the period	$	158		$	32		$	209		$	—		$	399