Consolidating Guarantor and Non-guarantor Financial Information

The following tables set forth condensed consolidating balance sheets as of October 31, 2017 and 2016, and condensed consolidating statements of operations and comprehensive income (loss) for the years ended October 31, 2017, 2016, and 2015, and condensed consolidating statements of cash flows for the years ended October 31, 2017, 2016, and 2015.

The information is presented as a result of NI’s guarantee, exclusive of its subsidiaries, of NIC’s indebtedness under our Senior Notes. NI is a direct wholly-owned subsidiary of NIC. None of NIC’s other subsidiaries guarantee these notes. The guarantee is "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 respective indentures for the Senior Notes upon liquidation or dissolution of the subsidiary or upon legal or covenant defeasance, or satisfaction and discharge of the notes or bonds. Separate financial statements and other disclosures concerning NI 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, "NI," 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 NI and its U.S. subsidiaries. NI has a tax allocation agreement ("Tax Agreement") with NIC which requires NI 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 NI 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 NI, to utilize current U.S. taxable losses of NI and all other direct or indirect subsidiaries of NIC.



Condensed Consolidating Statement of Operations for the Year Ended October 31, 2017
(in millions)	NIC		Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Sales and revenues, net	$	—	$	6,196		$	5,769		$	(3,395	)	$	8,570
Costs of products sold	—		5,412			4,966			(3,341		)	7,037
Restructuring charges	—		33			(30		)	—			3
Asset impairment charges	—		7			6			—			13
All other operating expenses (income)	113		1,005			393			(52		)	1,459
Total costs and expenses	113		6,457			5,335			(3,393		)	8,512
Equity in income (loss) of affiliates	143		194			3			(334		)	6
Income (loss) before income taxes	30		(67		)	437			(336		)	64
Income tax benefit (expense)	—		41			(51		)	—			(10		)
Income (loss) from continuing operations	30		(26		)	386			(336		)	54
Income from discontinued operations, net of tax	—		—			1			—			1
Net income (loss)	30		(26		)	387			(336		)	55
Less: Net income attributable to non-controlling interests	—		—			25			—			25
Net income (loss) attributable to Navistar International Corporation	$	30	$	(26	)	$	362		$	(336	)	$	30



Condensed Consolidating Statement of Comprehensive Income (Loss) for the Year Ended October 31, 2017
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net income (loss)	$	30		$	(26	)	$	387		$	(336	)	$	55
Other comprehensive income (loss):
Foreign currency translation adjustment	(3		)	—			(3		)	3			(3		)
Unrealized gain on marketable securities, net of tax	(1		)	—			—			—			(1		)
Defined benefit plans, net of tax	433			372			61			(433		)	433
Total other comprehensive income (loss)	429			372			58			(430		)	429
Comprehensive income (loss)	459			346			445			(766		)	484
Less: Net income attributable to non-controlling interests	—			—			25			—			25
Total comprehensive income (loss) attributable to Navistar International Corporation	$	459		$	346		$	420		$	(766	)	$	459



Condensed Consolidating Balance Sheet as of October 31, 2017
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Assets
Cash and cash equivalents	$	425		$	93		$	188		$	—		$	706
Marketable securities	338			—			32			—			370
Restricted cash	16			8			110			—			134
Finance and other receivables, net	1			223			2,055			(90		)	2,189
Inventories	—			543			318			(4		)	857
Investments in non-consolidated affiliates	(6,892		)	6,443			53			452			56
Property and equipment, net	—			802			531			(7		)	1,326
Goodwill	—			—			38			—			38
Deferred taxes, net	—			5			124			—			129
Other	6			138			187			(1		)	330
Total assets	$	(6,106	)	$	8,255		$	3,636		$	350		$	6,135
Liabilities and stockholders’ equity (deficit)
Debt	$	2,232		$	1,165		$	1,661		$	—		$	5,058
Postretirement benefits liabilities	—			2,461			94			—			2,555
Amounts due to (from) affiliates	(7,686		)	10,937			(3,303		)	52			—
Other liabilities	3,926			(105		)	(662		)	(63		)	3,096
Total liabilities	(1,528		)	14,458			(2,210		)	(11		)	10,709
Stockholders’ equity attributable to non-controlling interest	—			—			4			—			4
Stockholders’ equity (deficit) attributable to Navistar International Corporation	(4,578		)	(6,203		)	5,842			361			(4,578		)
Total liabilities and stockholders’ equity (deficit)	$	(6,106	)	$	8,255		$	3,636		$	350		$	6,135



Condensed Consolidating Statement of Cash Flows for the Year Ended October 31, 2017
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net cash provided by (used in) operating activities	$	(244	)	$	(247	)	$	(39	)	$	639		$	109
Cash flows from investing activities
Net change in restricted cash and cash equivalents	—			(2		)	(20		)	—			(22		)
Net purchases of marketable securities	(311		)	—			(13		)	—			(324		)
Capital expenditures and purchase of equipment leased to others	—			(156		)	(83		)	—			(239		)
Other investing activities	(250		)	2			36			255			43
Net cash provided by (used in) investing activities	(561		)	(156		)	(80		)	255			(542		)
Cash flows from financing activities
Net borrowings (repayments) of debt	539			320			(168		)	(642		)	49
Issuance of common stock, net of issuance costs	245			—			255			(255		)	245
Other financing activities	11			59			(29		)	3			44
Net cash provided by (used in) financing activities	795			379			58			(894		)	338
Effect of exchange rate changes on cash and cash equivalents	—			—			(3		)	—			(3		)
Decrease in cash and cash equivalents	(10		)	(24		)	(64		)	—			(98		)
Cash and cash equivalents at beginning of the year	435			117			252			—			804
Cash and cash equivalents at end of the year	$	425		$	93		$	188		$	—		$	706



Condensed Consolidating Statement of Operations for the Year Ended October 31, 2016
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Sales and revenues, net	$	—		$	5,926		$	5,432		$	(3,247	)	$	8,111
Costs of products sold	—			5,358			4,628			(3,174		)	6,812
Restructuring charges	—			3			7			—			10
Asset impairment charges	—			11			16			—			27
All other operating expenses (income)	101			862			398			(61		)	1,300
Total costs and expenses	101			6,234			5,049			(3,235		)	8,149
Equity in income (loss) of affiliates	4			181			2			(181		)	6
Income (loss) before income taxes	(97		)	(127		)	385			(193		)	(32		)
Income tax benefit (expense)	—			20			(55		)	2			(33		)
Income (loss) from continuing operations	(97		)	(107		)	330			(191		)	(65		)
Income (loss) from discontinued operations, net of tax	—			—			—			—			—
Net income (loss)	(97		)	(107		)	330			(191		)	(65		)
Less: Net income attributable to non-controlling interests	—			—			32			—			32
Net income (loss) attributable to Navistar International Corporation	$	(97	)	$	(107	)	$	298		$	(191	)	$	(97	)



Condensed Consolidating Statement of Comprehensive Income (Loss) for the Year Ended October 31, 2016
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net income (loss)	$	(97	)	$	(107	)	$	330		$	(191	)	$	(65	)
Other comprehensive income (loss):
Foreign currency translation adjustment	7			—			7			(7		)	7
Defined benefit plans, net of tax	(46		)	1			(47		)	46			(46		)
Total other comprehensive income (loss)	(39		)	1			(40		)	39			(39		)
Comprehensive income (loss)	(136		)	(106		)	290			(152		)	(104		)
Less: Net income attributable to non-controlling interests	—			—			32			—			32
Total comprehensive income (loss) attributable to Navistar International Corporation	$	(136	)	$	(106	)	$	258		$	(152	)	$	(136	)



Condensed Consolidating Balance Sheet as of October 31, 2016
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Assets
Cash and cash equivalents	$	435		$	117		$	252		$	—		$	804
Marketable securities	27			—			19			—			46
Restricted cash	16			6			90			—			112
Finance and other receivables, net	(1		)	171			1,883			(84		)	1,969
Inventories	—			639			313			(8		)	944
Investments in non-consolidated affiliates	(7,714		)	6,253			57			1,457			53
Property and equipment, net	—			669			580			(8		)	1,241
Goodwill	—			—			38			—			38
Deferred taxes, net	—			10			150			1			161
Other	2			110			175			(2		)	285
Total assets	$	(7,235	)	$	7,975		$	3,557		$	1,356		$	5,653
Liabilities and stockholders’ equity (deficit)
Debt	$	1,965		$	1,100		$	1,841		$	(2	)	$	4,904
Postretirement benefits liabilities	—			2,865			233			—			3,098
Amounts due to (from) affiliates	(7,724		)	10,709			(3,040		)	55			—
Other liabilities	3,822			(152		)	(665		)	(61		)	2,944
Total liabilities	(1,937		)	14,522			(1,631		)	(8		)	10,946
Stockholders’ equity attributable to non-controlling interest	—			—			5			—			5
Stockholders’ equity (deficit) attributable to Navistar International Corporation	(5,298		)	(6,547		)	5,183			1,364			(5,298		)
Total liabilities and stockholders’ equity (deficit)	$	(7,235	)	$	7,975		$	3,557		$	1,356		$	5,653



Condensed Consolidating Statement of Cash Flows for the Year Ended October 31, 2016
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net cash provided by (used in) operating activities	$	(106	)	$	187		$	337		$	(151	)	$	267
Cash flows from investing activities
Net change in restricted cash and cash equivalents	—			1			4			—			5
Net sales of marketable securities	85			—			28			—			113
Capital expenditures and purchase of equipment leased to others	—			(94		)	(154		)	—			(248		)
Other investing activities	—			2			61			—			63
Net cash provided by (used in) investing activities	85			(91		)	(61		)	—			(67		)
Cash flows from financing activities
Net repayments of debt	—			(82		)	(191		)	(69		)	(342		)
Other financing activities	—			22			(253		)	220			(11		)
Net cash provided by (used in) financing activities	—			(60		)	(444		)	151			(353		)
Effect of exchange rate changes on cash and cash equivalents	—			—			45			—			45
Increase (decrease) in cash and cash equivalents	(21		)	36			(123		)	—			(108		)
Cash and cash equivalents at beginning of the year	456			81			375			—			912
Cash and cash equivalents at end of the year	$	435		$	117		$	252		$	—		$	804



Condensed Consolidating Statement of Operations for the Year Ended October 31, 2015
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Sales and revenues, net	$	—		$	7,267		$	7,413		$	(4,540	)	$	10,140
Costs of products sold	—			6,614			6,510			(4,454		)	8,670
Restructuring charges	—			50			26			—			76
Asset impairment charges	—			13			17			—			30
All other operating expenses (income)	88			1,054			399			(68		)	1,473
Total costs and expenses	88			7,731			6,952			(4,522		)	10,249
Equity in income (loss) of affiliates	(96		)	225			2			(125		)	6
Income (loss) before income taxes	(184		)	(239		)	463			(143		)	(103		)
Income tax benefit (expense)	—			1			(52		)	—			(51		)
Income (loss) from continuing operations	(184		)	(238		)	411			(143		)	(154		)
Income from discontinued operations, net of tax	—			—			3			—			3
Net income (loss)	(184		)	(238		)	414			(143		)	(151		)
Less: Net income attributable to non-controlling interests	—			—			33			—			33
Net income (loss) attributable to Navistar International Corporation	$	(184	)	$	(238	)	$	381		$	(143	)	$	(184	)



Condensed Consolidating Statement of Comprehensive Income (Loss) for the Year Ended October 31, 2015
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net income (loss)	$	(184	)	$	(238	)	$	414		$	(143	)	$	(151	)
Other comprehensive income (loss):
Foreign currency translation adjustment	(160		)	—			(160		)	160			(160		)
Defined benefit plans, net of tax	(178		)	(192		)	14			178			(178		)
Total other comprehensive income (loss)	(338		)	(192		)	(146		)	338			(338		)
Comprehensive income (loss)	(522		)	(430		)	268			195			(489		)
Less: Net income attributable to non-controlling interests	—			—			33			—			33
Total comprehensive income (loss) attributable to Navistar International Corporation	$	(522	)	$	(430	)	$	235		$	195		$	(522	)



Condensed Consolidating Statement of Cash Flows for the Year Ended October 31, 2015
(in millions)	NIC			Navistar, Inc.			Non-Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net cash provided by (used in) operating activities	$	87		$	184		$	168		$	(393	)	$	46
Cash flows from investing activities
Net change in restricted cash and cash equivalents	3			(4		)	43			—			42
Net sales of marketable securities	266			—			180			—			446
Capital expenditures and purchase of equipment leased to others	—			(82		)	(116		)	—			(198		)
Other investing activities	—			3			23			—			26
Net cash provided by (used in) investing activities	269			(83		)	130			—			316
Cash flows from financing activities
Net borrowings (repayments) of debt	(2		)	(38		)	(113		)	268			115
Other financing activities	1			(35		)	(108		)	125			(17		)
Net cash provided by (used in) financing activities	(1		)	(73		)	(221		)	393			98
Effect of exchange rate changes on cash and cash equivalents	—			—			(45		)	—			(45		)
Increase in cash and cash equivalents	355			28			32			—			415
Cash and cash equivalents at beginning of the year	101			53			343			—			497
Cash and cash equivalents at end of the year	$	456		$	81		$	375		$	—		$	912