Condensed Consolidating Guarantor and Non-guarantor Financial Information

The following tables set forth condensed consolidating balance sheets as of October 31, 2013, 2012, and 2011, and condensed consolidating statements of operations and condensed consolidating statements of comprehensive income (loss) for the years ended October 31, 2013, 2012, and 2011, and condensed consolidating statements of cash flows for the years ended October 31, 2013, 2012, and 2011. Beginning in the first quarter of 2013, the Company began reporting the operating results of WCC and certain operating results of the Monaco business as discontinued operations. For more information, see Note 2, Discontinued Operations and Other Divestitures. The 2012 and 2011 condensed consolidating statements of operations have been recast 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.



(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Condensed Consolidating Statement of Operations for the Year Ended October 31, 2013
Sales and revenues, net	$	—		$	6,426		$	8,979		$	(4,630	)	$	10,775
Costs of products sold	—			6,629			7,720			(4,588		)	9,761
Restructuring charges	—			15			10			—			25
Asset impairment charges	—			81			16			—			97
All other operating expenses (income)	(208		)	1,180			659			246			1,877
Total costs and expenses	(208		)	7,905			8,405			(4,342		)	11,760
Equity in income (loss) of affiliates	(1,108		)	161			4			954			11
Income (loss) before income taxes	(900		)	(1,318		)	578			666			(974		)
Income tax benefit (expense)	2			244			(75		)	—			171
Earnings (loss) from continuing operations	(898		)	(1,074		)	503			666			(803		)
Loss from discontinued operations, net of tax	—			—			(41		)	—			(41		)
Net income (loss)	(898		)	(1,074		)	462			666			(844		)
Less: Net income attributable to non-controlling interests	—			—			54			—			54
Net income (loss) attributable to Navistar International Corporation	$	(898	)	$	(1,074	)	$	408		$	666		$	(898	)



(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Condensed Consolidating Statement of Comprehensive Income (Loss) for the Year Ended October 31, 2013
Net income (loss) attributable to Navistar International Corporation	$	(898	)	$	(1,074	)	$	408		$	666		$	(898	)
Other comprehensive income (loss):
Foreign currency translation adjustment	(51		)	—			(51		)	51			(51		)
Defined benefit plans (net of tax of $(21), $5, $(26), $21, and $(21), respectively)	552			687			74			(761		)	552
Total other comprehensive income (loss)	501			687			23			(710		)	501
Total comprehensive income (loss) attributable to Navistar International Corporation	$	(397	)	$	(387	)	$	431		$	(44	)	$	(397	)



(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Condensed Consolidating Balance Sheet as of October 31, 2013
Assets
Cash and cash equivalents	$	336		$	72		$	347		$	—		$	755
Marketable securities	581			1			248			—			830
Restricted cash	23			3			65			—			91
Finance and other receivables, net	3			148			2,561			(11		)	2,701
Inventories	—			621			608			(19		)	1,210
Investments in non-consolidated affiliates	(6,123		)	6,600			73			(473		)	77
Property and equipment, net	—			937			807			(3		)	1,741
Goodwill	—			—			184			—			184
Deferred taxes, net	—			13			219			(1		)	231
Other	36			156			304			(1		)	495
Total assets	$	(5,144	)	$	8,551		$	5,416		$	(508	)	$	8,315
Liabilities and stockholders’ equity (deficit)
Debt	$	2,125		$	1,002		$	1,960		$	(2	)	$	5,085
Postretirement benefits liabilities	—			2,407			245			—			2,652
Amounts due to (from) affiliates	(6,988		)	10,846			(3,932		)	74			—
Other liabilities	3,362			646			250			(79		)	4,179
Total liabilities	(1,501		)	14,901			(1,477		)	(7		)	11,916
Redeemable equity securities	4			—			—			—			4
Stockholders’ equity (deficit) attributable to non-controlling interest	—			—			44			—			44
Stockholders’ equity (deficit) attributable to Navistar International Corporation	(3,647		)	(6,350		)	6,849			(501		)	(3,649		)
Total liabilities and stockholders’ equity (deficit)	$	(5,144	)	$	8,551		$	5,416		$	(508	)	$	8,315



(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Condensed Consolidating Statement of Cash Flows for the Year Ended October 31, 2013
Net cash provided by (used in) operations	$	(669	)	$	(355	)	$	401		$	723		$	100
Cash flows from investment activities
Net change in restricted cash and cash equivalents	—			5			65			—			70
Net sales of marketable securities	(267		)	—			(97		)	—			(364		)
Capital expenditures and purchase of equipment leased to others	—			(422		)	(177		)	—			(599		)
Other investing activities	—			87			(4		)	—			83
Net cash used in investment activities	(267		)	(330		)	(213		)	—			(810		)
Cash flows from financing activities
Net borrowings (repayments) of debt	540			409			(40		)	(793		)	116
Other financing activities	30			293			(116		)	70			277
Net cash provided by (used in) financing activities	570			702			(156		)	(723		)	393
Effect of exchange rate changes on cash and cash equivalents	—			—			(15		)	—			(15		)
Increase in cash and cash equivalents	(366		)	17			17			—			(332		)
Cash and cash equivalents at beginning of the year	702			55			330			—			1,087
Cash and cash equivalents at end of the year	$	336		$	72		$	347		$	—		$	755



(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Condensed Consolidating Statement of Operations for the Year Ended October 31, 2012
Sales and revenues, net	$	—		$	7,924		$	11,413		$	(6,642	)	$	12,695
Costs of products sold	—			8,188			9,798			(6,585		)	11,401
Restructuring charges	—			86			21			—			107
Asset impairment charges	—			2			14			—			16
All other operating expenses (income)	(249		)	1,297			968			237			2,253
Total costs and expenses	(249		)	9,573			10,801			(6,348		)	13,777
Equity in income (loss) of affiliates	(3,258		)	536			(34		)	2,727			(29		)
Income (loss) before income taxes	(3,009		)	(1,113		)	578			2,433			(1,111		)
Income tax benefit (expense)	(1		)	(1,987		)	209			(1		)	(1,780		)
Earnings (loss) from continuing operations	(3,010		)	(3,100		)	787			2,432			(2,891		)
Loss from discontinued operations, net of tax	—			—			(71		)	—			(71		)
Net income (loss)	(3,010		)	(3,100		)	716			2,432			(2,962		)
Less: Net income attributable to non-controlling interests	—			—			48			—			48
Net income (loss) attributable to Navistar International Corporation	$	(3,010	)	$	(3,100	)	$	668		$	2,432		$	(3,010	)



(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other		Consolidated
Condensed Consolidating Statement of Comprehensive Income (Loss) for the Year Ended October 31, 2012
Net income (loss) attributable to Navistar International Corporation	$	(3,010	)	$	(3,100	)	$	668		$	2,432	$	(3,010	)
Other comprehensive income (loss):
Foreign currency translation adjustment	(125		)	—			(125		)	125		(125		)
Defined benefit plans (net of tax of $14, $0, $14, $(14), and $14, respectively)	(256		)	(225		)	(31		)	256		(256		)
Total other comprehensive income (loss)	(381		)	(225		)	(156		)	381		(381		)
Total comprehensive income (loss) attributable to Navistar International Corporation	$	(3,391	)	$	(3,325	)	$	512		$	2,813	$	(3,391	)



(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Condensed Consolidating Balance Sheet as of October 31, 2012
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 (deficit) 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



(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Condensed Consolidating Statement of Cash Flows for the Year Ended October 31, 2012
Net cash provided by (used in) operations	$	350		$	(183	)	$	901		$	(458	)	$	610
Cash flows from investment activities
Net change in restricted cash and cash equivalents	(4		)	1			168			—			165
Net sales of marketable securities	115			—			137			—			252
Capital expenditures and purchase of equipment leased to others	—			(213		)	(157		)	—			(370		)
Other investing activities	—			(157		)	108			—			(49		)
Net cash provided by (used in) investment activities	111			(369		)	256			—			(2		)
Cash flows from financing activities
Net borrowings (repayments) of debt	171			594			(1,245		)	549			69
Other financing activities	(156		)	—			115			(91		)	(132		)
Net cash provided by (used in) financing activities	15			594			(1,130		)	458			(63		)
Effect of exchange rate changes on cash and cash equivalents	—			—			3			—			3
Increase in cash and cash equivalents	476			42			30			—			548
Cash and cash equivalents at beginning of the year	226			13			300			—			539
Cash and cash equivalents at end of the year	$	702		$	55		$	330		$	—		$	1,087



(in millions)	NIC		Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Condensed Consolidating Statement of Operations for the Year Ended October 31, 2011
Sales and revenues, net	$	—	$	8,319		$	12,885		$	(7,563	)	$	13,641
Costs of products sold	—		7,775			10,649			(7,487		)	10,937
Restructuring charges	—		33			49			—			82
Asset impairment charges	—		—			13			—			13
All other operating expenses (income)	79		1,263			856			(95		)	2,103
Total costs and expenses	79		9,071			11,567			(7,582		)	13,135
Equity in income (loss) of affiliates	1,759		462			(37		)	(2,255		)	(71		)
Income (loss) before income taxes	1,680		(290		)	1,281			(2,236		)	435
Income tax benefit (expense)	43		1,937			(552		)	(11		)	1,417
Earnings (loss) from continuing operations	1,723		1,647			729			(2,247		)	1,852
Loss from discontinued operations, net of tax	—		—			(74		)	—			(74		)
Net income (loss)	1,723		1,647			655			(2,247		)	1,778
Less: Net income attributable to non-controlling interests	—		—			55			—			55
Net income (loss) attributable to Navistar International Corporation	$	1,723	$	1,647		$	600		$	(2,247	)	$	1,723



(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Condensed Consolidating Statement of Comprehensive Income (Loss) for the Year Ended October 31, 2011
Net income (loss) attributable to Navistar International Corporation	$	1,723		$	1,647		$	600		$	(2,247	)	$	1,723
Other comprehensive income (loss):
Foreign currency translation adjustment	(19		)	—			(11		)	11			(19		)
Defined benefit plans (net of tax of $430, $421, $9, $(430), and $430, respectively)	(729		)	(725		)	(4		)	729			(729		)
Total other comprehensive income (loss)	(748		)	(725		)	(15		)	740			(748		)
Total comprehensive income (loss) attributable to Navistar International Corporation	$	975		$	922		$	585		$	(1,507	)	$	975



(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Condensed Consolidating Statement of Cash Flows for the Year Ended October 31, 2011
Net cash provided by (used in) operations	$	(44	)	$	(66	)	$	556		$	434		$	880
Cash flows from investment activities
Net change in restricted cash and cash equivalents	—			—			(147		)	—			(147		)
Net purchases of marketable securities	(55		)	—			(77		)	—			(132		)
Capital expenditures and purchase of equipment leased to others	—			(264		)	(236		)	—			(500		)
Other investing activities	—			(12		)	(32		)	—			(44		)
Net cash used in investment activities	(55		)	(276		)	(492		)	—			(823		)
Cash flows from financing activities
Net borrowings (repayments) of debt	91			333			48			(434		)	38
Other financing activities	(5		)	—			(133		)	—			(138		)
Net cash provided by (used in) financing activities	86			333			(85		)	(434		)	(100		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(3		)	—			(3		)
Decrease in cash and cash equivalents	(13		)	(9		)	(24		)	—			(46		)
Cash and cash equivalents at beginning of the year	239			22			324			—			585
Cash and cash equivalents at end of the year	$	226		$	13		$	300		$	—		$	539