Condensed Consolidating Guarantor and Non-guarantor Financial Information

The following tables set forth condensed consolidating balance sheets as of April 30, 2013 and October 31, 2012, and condensed consolidating statements of operations, condensed consolidating statements of comprehensive income (loss), and condensed consolidating statements of cash flows, all for the three months ended April 30, 2013 and 2012. Beginning in the first quarter of 2013, the Company began reporting the operating results of WCC and certain operating results of Monaco as discontinued operations. For more information, see Note 2, Discontinued Operations and Other Divestitures. The 2012 condensed consolidating statements of operations have been restated to reflect this change.

The information is presented as a result of Navistar, Inc.’s guarantee, exclusive of its subsidiaries, of NIC’s indebtedness under our Senior Notes and obligations under our Loan Agreement related to the Tax Exempt Bonds. Navistar, Inc. is a direct wholly-owned subsidiary of NIC. None of NIC’s other subsidiaries guarantee any of these notes or bonds. The guarantees are "full and unconditional", as those terms are used in Regulation S-X Rule 3-10, except that the guarantees 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 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.



Condensed Consolidating Statement of Operations
For the Three Months Ended April 30, 2013							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Sales and revenues, net	$	—		$	1,493		$	2,293		$	(1,260	)	$	2,526
Costs of products sold	—			1,622			1,987			(1,246		)	2,363
Restructuring charges	—			4			2			—			6
All other operating expenses (income)	(48		)	349			125			57			483
Total costs and expenses	(48		)	1,975			2,114			(1,189		)	2,852
Equity in income (loss) of affiliates	(422		)	50			1			375			4
Income (loss) before income taxes	(374		)	(432		)	180			304			(322		)
Income tax expense	—			(1		)	(21		)	—			(22		)
Earnings (loss) from continuing operations	(374		)	(433		)	159			304			(344		)
Loss from discontinued operations, net of tax	—			—			(21		)	—			(21		)
Net income (loss)	(374		)	(433		)	138			304			(365		)
Less: Net income attributable to non-controlling interests	—			—			9			—			9
Net income (loss) attributable to Navistar International Corporation	$	(374	)	$	(433	)	$	129		$	304		$	(374	)



Condensed Consolidating Statement of Comprehensive Income (Loss)
For the Three Months Ended April 30, 2013							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries		Eliminations and Other			Consolidated
Net income (loss) attributable to Navistar International Corporation	$	(374	)	$	(433	)	$	129	$	304		$	(374	)
Other comprehensive income (loss):
Foreign currency translation adjustment	3			—			2		(2		)	3
Defined benefit plans (net of tax of $1, $-, $1, $(1), and $1 respectively)	40			35			5		(40		)	40
Total other comprehensive income (loss)	43			35			7		(42		)	43
Total comprehensive income (loss) attributable to Navistar International Corporation	$	(331	)	$	(398	)	$	136	$	262		$	(331	)



Condensed Consolidating Statement of Operations
For the Six Months Ended April 30, 2013							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Sales and revenues, net	$	—		$	3,102		$	4,551		$	(2,490	)	$	5,163
Costs of products sold	—			3,217			3,896			(2,464		)	4,649
Restructuring charges	—			4			4			—			8
All other operating expenses (income)	(27		)	580			317			45			915
Total costs and expenses	(27		)	3,801			4,217			(2,419		)	5,572
Equity in income (loss) of affiliates	(524		)	104			(1		)	424			3
Income (loss) before income taxes	(497		)	(595		)	333			353			(406		)
Income tax expense	—			(12		)	(25		)	—			(37		)
Earnings (loss) from continuing operations	(497		)	(607		)	308			353			(443		)
Loss from discontinued operations, net of tax	—			—			(30		)	—			(30		)
Net income (loss)	(497		)	(607		)	278			353			(473		)
Less: Net income attributable to non-controlling interests	—			—			24			—			24
Net income (loss) attributable to Navistar International Corporation	$	(497	)	$	(607	)	$	254		$	353		$	(497	)



Condensed Consolidating Statement of Comprehensive Income (Loss)
For the Six Months Ended April 30, 2013							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries		Eliminations and Other			Consolidated
Net income (loss) attributable to Navistar International Corporation	$	(497	)	$	(607	)	$	254	$	353		$	(497	)
Other comprehensive income (loss):
Foreign currency translation adjustment	20			—			20		(20		)	20
Defined benefit plans (net of tax of $1, $-, $1, $(1), and $1 respectively)	78			70			8		(78		)	78
Total other comprehensive income (loss)	98			70			28		(98		)	98
Total comprehensive income (loss) attributable to Navistar International Corporation	$	(399	)	$	(537	)	$	282	$	255		$	(399	)



Condensed Consolidating Balance Sheet
As of April 30, 2013							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Assets
Cash and cash equivalents	$	218		$	36		$	251		$	—		$	505
Marketable securities	501			—			232			—			733
Restricted cash	25			7			85			—			117
Finance and other receivables, net	8			165			2,806			(12		)	2,967
Inventories	—			725			784			(33		)	1,476
Investments in non-consolidated affiliates	(5,971		)	6,556			43			(576		)	52
Property and equipment, net	—			930			849			(3		)	1,776
Goodwill	—			66			209			—			275
Deferred taxes, net	9			10			237			—			256
Other	51			180			337			(2		)	566
Total assets	$	(5,159	)	$	8,675		$	5,833		$	(626	)	$	8,723
Liabilities and stockholders’ equity (deficit)
Debt	$	1,934		$	1,012		$	1,843		$	(8	)	$	4,781
Postretirement benefits liabilities	—			3,073			351			—			3,424
Amounts due to (from) affiliates	(6,511		)	10,396			(3,958		)	73			—
Other liabilities	3,090			516			624			(74		)	4,156
Total liabilities	(1,487		)	14,997			(1,140		)	(9		)	12,361
Redeemable equity securities	4			—			—			—			4
Stockholders’ equity attributable to non-controlling interests	—			—			35			—			35
Stockholders’ equity (deficit) attributable to Navistar International Corporation	(3,676		)	(6,322		)	6,938			(617		)	(3,677		)
Total liabilities and stockholders’ equity (deficit)	$	(5,159	)	$	8,675		$	5,833		$	(626	)	$	8,723



Condensed Consolidating Statement of Cash Flows
For the Six Months Ended April 30, 2013							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net cash provided by (used in) operations	$	(648	)	$	(288	)	$	222		$	671		$	(43	)
Cash flows from investment activities
Net change in restricted cash and cash equivalents	(1		)	—			45			—			44
Net purchases of marketable securities	(186		)	—			(81		)	—			(267		)
Capital expenditures and purchase of equipment leased to others	—			(304		)	(98		)	—			(402		)
Other investing activities	—			9			40			—			49
Net cash used in investment activities	(187		)	(295		)	(94		)	—			(576		)
Cash flows from financing activities
Net borrowings (repayments) of debt	327			301			(179		)	(671		)	(222		)
Other financing activities	24			263			(23		)	—			264
Net cash provided by (used in) financing activities	351			564			(202		)	(671		)	42
Effect of exchange rate changes on cash and cash equivalents	—			—			(5		)	—			(5		)
Decrease in cash and cash equivalents	(484		)	(19		)	(79		)	—			(582		)
Cash and cash equivalents at beginning of the period	702			55			330			—			1,087
Cash and cash equivalents at end of the period	$	218		$	36		$	251		$	—		$	505



Condensed Consolidating Statement of Operations
For the Three Months Ended April 30, 2012							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Sales and revenues, net	$	—		$	2,172		$	2,974		$	(1,885	)	$	3,261
Costs of products sold	—			2,205			2,555			(1,860		)	2,900
Restructuring charges	—			19			—			—			19
Impairment of intangible assets	—			—			10			—			10
All other operating expenses (income)	14			357			233			(25		)	579
Total costs and expenses	14			2,581			2,798			(1,885		)	3,508
Equity in income (loss) of affiliates	(96		)	271			(6		)	(173		)	(4		)
Income (loss) before income taxes	(110		)	(138		)	170			(173		)	(251		)
Income tax benefit (expense)	(62		)	(63		)	211			37			123
Earnings (loss) from continuing operations	(172		)	(201		)	381			(136		)	(128		)
Loss from discontinued operations, net of tax	—			—			(34		)	—			(34		)
Net income (loss)	(172		)	(201		)	347			(136		)	(162		)
Less: Net income attributable to non-controlling interests	—			—			10			—			10
Net income (loss) attributable to Navistar International Corporation	$	(172	)	$	(201	)	$	337		$	(136	)	$	(172	)



Condensed Consolidating Statement of Comprehensive Income (Loss)
For the Three Months Ended April 30, 2012							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net income (loss) attributable to Navistar International Corporation	$	(172	)	$	(201	)	$	337		$	(136	)	$	(172	)
Other comprehensive income (loss):
Foreign currency translation adjustment	(65		)	—			(65		)	65			(65		)
Defined benefit plans (net of tax of $(12), $(12), $-, $12, and $(12) respectively)	17			16			2			(18		)	17
Total other comprehensive income (loss)	(48		)	16			(63		)	47			(48		)
Total comprehensive income (loss) attributable to Navistar International Corporation	$	(220	)	$	(185	)	$	274		$	(89	)	$	(220	)



Condensed Consolidating Statement of Operations
For the Six Months Ended April 30, 2012							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Sales and revenues, net	$	—		$	4,134		$	5,755		$	(3,619	)	$	6,270
Costs of products sold	—			4,200			4,931			(3,581		)	5,550
Restructuring charges	—			19			—			—			19
Impairment of property and equipment and intangible assets	—			—			10			—			10
All other operating expenses (income)	39			691			459			(51		)	1,138
Total costs and expenses	39			4,910			5,400			(3,632		)	6,717
Equity in income (loss) of affiliates	(296		)	366			(13		)	(68		)	(11		)
Income (loss) before income taxes	(335		)	(410		)	342			(55		)	(458		)
Income tax benefit	10			14			172			3			199
Earnings (loss) from continuing operations	(325		)	(396		)	514			(52		)	(259		)
Loss from discontinued operations, net of tax	—			—			(43		)	—			(43		)
Net income (loss)	(325		)	(396		)	471			(52		)	(302		)
Less: Net income attributable to non-controlling interests	—			—			23			—			23
Net income (loss) attributable to Navistar International Corporation	$	(325	)	$	(396	)	$	448		$	(52	)	$	(325	)



Condensed Consolidating Statement of Comprehensive Income (Loss)
For the Six Months Ended April 30, 2012							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net income (loss) attributable to Navistar International Corporation	$	(325	)	$	(396	)	$	448		$	(52	)	$	(325	)
Other comprehensive income (loss):
Foreign currency translation adjustment	(78		)	—			(78		)	78			(78		)
Defined benefit plans (net of tax of $(24), $(23), $(1), $24, and $(24) respectively)	40			36			5			(41		)	40
Total other comprehensive income (loss)	(38		)	36			(73		)	37			(38		)
Total comprehensive income (loss) attributable to Navistar International Corporation	$	(363	)	$	(360	)	$	375		$	(15	)	$	(363	)



Condensed Consolidating Balance Sheet
As of October 31, 2012							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Assets
Cash and cash equivalents	$	702		$	55		$	330		$	—		$	1,087
Marketable securities	314			—			152			—			466
Restricted cash	24			8			129			—			161
Finance and other receivables, net	5			128			2,859			—			2,992
Inventories	—			691			885			(39		)	1,537
Investments in non-consolidated affiliates	(5,616		)	6,454			54			(830		)	62
Property and equipment, net	—			790			874			(4		)	1,660
Goodwill	—			—			280			—			280
Deferred taxes, net	9			11			243			—			263
Other	83			177			335			(1		)	594
Total assets	$	(4,479	)	$	8,314		$	6,141		$	(874	)	$	9,102
Liabilities and stockholders’ equity (deficit)
Debt	$	1,617		$	1,162		$	1,997		$	(5	)	$	4,771
Postretirement benefits liabilities	—			3,144			367			—			3,511
Amounts due to (from) affiliates	(5,863		)	9,522			(3,743		)	84			—
Other liabilities	3,072			337			748			(77		)	4,080
Total liabilities	(1,174		)	14,165			(631		)	2			12,362
Redeemable equity securities	5			—			—			—			5
Stockholders’ equity attributable to non-controlling interest	—			—			45			—			45
Stockholders’ equity (deficit) attributable to Navistar International Corporation	(3,310		)	(5,851		)	6,727			(876		)	(3,310		)
Total liabilities and stockholders’ equity (deficit)	$	(4,479	)	$	8,314		$	6,141		$	(874	)	$	9,102



Condensed Consolidating Statement of Cash Flows
For the Six Months Ended April 30, 2012							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net cash provided by (used in) operations	$	(463	)	$	(267	)	$	248		$	531		$	49
Cash flows from investment activities
Net change in restricted cash and cash equivalents	6			2			174			—			182
Net purchases in marketable securities	374			—			7			—			381
Capital expenditures and purchase of equipment leased to others	—			(115		)	(89		)	—			(204		)
Other investing activities	—			(104		)	70			—			(34		)
Net cash provided by (used in) investment activities	380			(217		)	162			—			325
Cash flows from financing activities
Net borrowings (repayments) of debt	(50		)	519			(429		)	(440		)	(400		)
Other financing activities	19			—			(38		)	(91		)	(110		)
Net cash provided by (used in) financing activities	(31		)	519			(467		)	(531		)	(510		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(3		)	—			(3		)
Increase (decrease) in cash and cash equivalents	(114		)	35			(60		)	—			(139		)
Cash and cash equivalents at beginning of the period	226			13			300			—			539
Cash and cash equivalents at end of the period	$	112		$	48		$	240		$	—		$	400