Condensed Consolidating Guarantor and Non-guarantor Financial Information

The following tables set forth condensed consolidating balance sheets as of July 31, 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 July 31, 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 July 31, 2013							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Sales and revenues, net	$	—		$	1,690		$	2,300		$	(1,129	)	$	2,861
Costs of products sold	—			1,669			1,996			(1,118		)	2,547
Restructuring charges	—			1			5			—			6
Asset impairment charges	—			14			3			—			17
All other operating expenses (income)	28			295			203			(21		)	505
Total costs and expenses	28			1,979			2,207			(1,139		)	3,075
Equity in income (loss) of affiliates	(219		)	13			3			206			3
Income (loss) before income taxes	(247		)	(276		)	96			216			(211		)
Income tax expense	—			(2		)	(14		)	—			(16		)
Earnings (loss) from continuing operations	(247		)	(278		)	82			216			(227		)
Loss from discontinued operations, net of tax	—			—			(10		)	—			(10		)
Net income (loss)	(247		)	(278		)	72			216			(237		)
Less: Net income attributable to non-controlling interests	—			—			10			—			10
Net income (loss) attributable to Navistar International Corporation	$	(247	)	$	(278	)	$	62		$	216		$	(247	)



Condensed Consolidating Statement of Comprehensive Income (Loss)
For the Three Months Ended July 31, 2013							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net income (loss) attributable to Navistar International Corporation	$	(247	)	$	(278	)	$	62		$	216		$	(247	)
Other comprehensive income (loss):
Foreign currency translation adjustment	(91		)	—			(91		)	91			(91		)
Defined benefit plans (net of tax of $1, $0, $1, $-1, and $1 respectively)	39			35			4			(39		)	39
Total other comprehensive income (loss)	(52		)	35			(87		)	52			(52		)
Total comprehensive income (loss) attributable to Navistar International Corporation	$	(299	)	$	(243	)	$	(25	)	$	268		$	(299	)



Condensed Consolidating Statement of Operations
For the Nine Months Ended July 31, 2013							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Sales and revenues, net	$	—		$	4,792		$	6,851		$	(3,619	)	$	8,024
Costs of products sold	—			4,886			5,892			(3,582		)	7,196
Restructuring charges	—			5			9			—			14
Asset impairment charges	—			14			3			—			17
All other operating expenses (income)	1			875			520			24			1,420
Total costs and expenses	1			5,780			6,424			(3,558		)	8,647
Equity in income (loss) of affiliates	(743		)	117			2			630			6
Income (loss) before income taxes	(744		)	(871		)	429			569			(617		)
Income tax expense	—			(14		)	(39		)	—			(53		)
Earnings (loss) from continuing operations	(744		)	(885		)	390			569			(670		)
Loss from discontinued operations, net of tax	—			—			(40		)	—			(40		)
Net income (loss)	(744		)	(885		)	350			569			(710		)
Less: Net income attributable to non-controlling interests	—			—			34			—			34
Net income (loss) attributable to Navistar International Corporation	$	(744	)	$	(885	)	$	316		$	569		$	(744	)



Condensed Consolidating Statement of Comprehensive Income (Loss)
For the Nine Months Ended July 31, 2013							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net income (loss) attributable to Navistar International Corporation	$	(744	)	$	(885	)	$	316		$	569		$	(744	)
Other comprehensive income (loss):
Foreign currency translation adjustment	(71		)	—			(71		)	71			(71		)
Defined benefit plans (net of tax of $2, $0, $2, $-2, and $2 respectively)	117			105			12			(117		)	117
Total other comprehensive income (loss)	46			105			(59		)	(46		)	46
Total comprehensive income (loss) attributable to Navistar International Corporation	$	(698	)	$	(780	)	$	257		$	523		$	(698	)



Condensed Consolidating Balance Sheet
As of July 31, 2013							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Assets
Cash and cash equivalents	$	149		$	46		$	230		$	—		$	425
Marketable securities	461			—			247			—			708
Restricted cash	24			6			140			—			170
Finance and other receivables, net	9			160			2,620			(11		)	2,778
Inventories	—			673			689			(26		)	1,336
Investments in non-consolidated affiliates	(6,242		)	6,569			70			(317		)	80
Property and equipment, net	—			913			804			(3		)	1,714
Goodwill	—			66			189			—			255
Deferred taxes, net	9			6			233			1			249
Other	37			168			322			(1		)	526
Total assets	$	(5,553	)	$	8,607		$	5,544		$	(357	)	$	8,241
Liabilities and stockholders’ equity (deficit)
Debt	$	1,941		$	1,004		$	1,780		$	(1	)	$	4,724
Postretirement benefits liabilities	—			3,034			343			—			3,377
Amounts due to (from) affiliates	(6,619		)	10,623			(4,076		)	72			—
Other liabilities	3,093			507			549			(76		)	4,073
Total liabilities	(1,585		)	15,168			(1,404		)	(5		)	12,174
Redeemable equity securities	4			—			—			—			4
Stockholders’ equity attributable to non-controlling interests	—			—			35			—			35
Stockholders’ equity (deficit) attributable to Navistar International Corporation	(3,972		)	(6,561		)	6,913			(352		)	(3,972		)
Total liabilities and stockholders’ equity (deficit)	$	(5,553	)	$	8,607		$	5,544		$	(357	)	$	8,241



Condensed Consolidating Statement of Cash Flows
For the Nine Months Ended July 31, 2013							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net cash provided by (used in) operations	$	(771	)	$	(639	)	$	382		$	1,062		$	34
Cash flows from investment activities
Net change in restricted cash and cash equivalents	(1		)	2			(10		)	—			(9		)
Net purchases of marketable securities	(147		)	—			(95		)	—			(242		)
Capital expenditures and purchase of equipment leased to others	—			(347		)	(140		)	—			(487		)
Other investing activities	—			10			37			—			47
Net cash used in investment activities	(148		)	(335		)	(208		)	—			(691		)
Cash flows from financing activities
Net borrowings (repayments) of debt	340			688			(220		)	(1,062		)	(254		)
Other financing activities	26			277			(35		)	—			268
Net cash provided by (used in) financing activities	366			965			(255		)	(1,062		)	14
Effect of exchange rate changes on cash and cash equivalents	—			—			(19		)	—			(19		)
Decrease in cash and cash equivalents	(553		)	(9		)	(100		)	—			(662		)
Cash and cash equivalents at beginning of the period	702			55			330			—			1,087
Cash and cash equivalents at end of the period	$	149		$	46		$	230		$	—		$	425



Condensed Consolidating Statement of Operations
For the Three Months Ended July 31, 2012							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Sales and revenues, net	$	—		$	2,007		$	2,868		$	(1,629	)	$	3,246
Costs of products sold	—			1,951			2,478			(1,629		)	2,800
Restructuring charges	—			3			1			—			4
Asset impairment charges	—			—			—			—			—
All other operating expenses (income)	18			329			205			(24		)	528
Total costs and expenses	18			2,283			2,684			(1,653		)	3,332
Equity in income (loss) of affiliates	(30		)	16			(11		)	15			(10		)
Income (loss) before income taxes	(48		)	(260		)	173			39			(96		)
Income tax benefit (expense)	132			229			(195		)	22			188
Earnings (loss) from continuing operations	84			(31		)	(22		)	61			92
Income from discontinued operations, net of tax	—			—			4			—			4
Net income (loss)	84			(31		)	(18		)	61			96
Less: Net income attributable to non-controlling interests	—			—			12			—			12
Net income (loss) attributable to Navistar International Corporation	$	84		$	(31	)	$	(30	)	$	61		$	84



Condensed Consolidating Statement of Comprehensive Income (Loss)
For the Three Months Ended July 31, 2012							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net income (loss) attributable to Navistar International Corporation	$	84		$	(31	)	$	(30	)	$	61		$	84
Other comprehensive income (loss):
Foreign currency translation adjustment	(61		)	—			(60		)	60			(61		)
Defined benefit plans (net of tax of $(13), $(10), $(3), $13, and $(13) respectively)	23			21			1			(22		)	23
Total other comprehensive income (loss)	(38		)	21			(59		)	38			(38		)
Total comprehensive income (loss) attributable to Navistar International Corporation	$	46		$	(10	)	$	(89	)	$	99		$	46



Condensed Consolidating Statement of Operations
For the Nine Months Ended July 31, 2012							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Sales and revenues, net	$	—		$	6,141		$	8,623		$	(5,248	)	$	9,516
Costs of products sold	—			6,151			7,409			(5,210		)	8,350
Restructuring charges	—			22			1			—			23
Asset impairment charges	—			—			10			—			10
All other operating expenses (income)	57			1,020			664			(75		)	1,666
Total costs and expenses	57			7,193			8,084			(5,285		)	10,049
Equity in income (loss) of affiliates	(326		)	382			(24		)	(53		)	(21		)
Income (loss) before income taxes	(383		)	(670		)	515			(16		)	(554		)
Income tax benefit (expense)	142			243			(23		)	25			387
Earnings (loss) from continuing operations	(241		)	(427		)	492			9			(167		)
Loss from discontinued operations, net of tax	—			—			(39		)	—			(39		)
Net income (loss)	(241		)	(427		)	453			9			(206		)
Less: Net income attributable to non-controlling interests	—			—			35			—			35
Net income (loss) attributable to Navistar International Corporation	$	(241	)	$	(427	)	$	418		$	9		$	(241	)



Condensed Consolidating Statement of Comprehensive Income (Loss)
For the Nine Months Ended July 31, 2012							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net income (loss) attributable to Navistar International Corporation	$	(241	)	$	(427	)	$	418		$	9		$	(241	)
Other comprehensive income (loss):
Foreign currency translation adjustment	(139		)	—			(138		)	138			(139		)
Defined benefit plans (net of tax of $(36), $(33), $(4), $37, and $(36) respectively)	63			57			6			(63		)	63
Total other comprehensive income (loss)	(76		)	57			(132		)	75			(76		)
Total comprehensive income (loss) attributable to Navistar International Corporation	$	(317	)	$	(370	)	$	286		$	84		$	(317	)



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 Nine Months Ended July 31, 2012							Non-Guarantor Subsidiaries
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net cash provided by (used in) operations	$	(330	)	$	(362	)	$	458		$	580		$	346
Cash flows from investment activities
Net change in restricted cash and cash equivalents	—			3			45			—			48
Net purchases in marketable securities	383			—			175			—			558
Capital expenditures and purchase of equipment leased to others	—			(173		)	(126		)	—			(299		)
Other investing activities	—			(117		)	86			—			(31		)
Net cash provided by (used in) investment activities	383			(287		)	180			—			276
Cash flows from financing activities
Net borrowings (repayments) of debt	(47		)	691			(643		)	(488		)	(487		)
Other financing activities	20			—			(48		)	(92		)	(120		)
Net cash provided by (used in) financing activities	(27		)	691			(691		)	(580		)	(607		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(7		)	—			(7		)
Increase (decrease) in cash and cash equivalents	26			42			(60		)	—			8
Cash and cash equivalents at beginning of the period	226			13			300			—			539
Cash and cash equivalents at end of the period	$	252		$	55		$	240		$	—		$	547