EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

 

Media Contact:      Roy Wiley, 630-753-2627
Investor Contact:      Heather Kos, 630-753-2406
Web site:      www.Navistar.com/newsroom

NAVISTAR CONTINUES ON PROFITABLE PATH DESPITE

TOUGH MARKET CONDITIONS

 

   

2Q Results Reflect Improved Performance of Core Business

   

Navistar Reaffirms Fiscal 2010 Guidance in $2.75-$3.25 EPS Range

   

2010 MaxxForce Advanced EGR Engines Launching

WARRENVILLE, Ill. (June 9) – Navistar International Corporation (NYSE: NAV) reported solid second-quarter results as reflected by improvements in the performance of its core business as the company continues to navigate the difficult economic climate.

“Our expectations are to be profitable across the business cycle,” said Daniel C. Ustian, Navistar chairman, president and CEO. “The plans we have put in place for our core businesses are on track through the second quarter. We are confident that the foundation is in place to continue to support our profitability and grow our business.”

Even though the industry is at a nearly 50-year low, net income attributable to Navistar International Corporation for the second quarter ended April 30, 2010, was $30 million, equal to $0.42 of diluted earnings per share. As previously reported, earnings for its fiscal year ending Oct. 31, 2010, are expected to be in the range of $2.75 to $3.25 per diluted share. Revenues for the second quarter totaled $2.7 billion.

“We remain confident for the remainder of the year about our ability to deliver fiscal 2010 results in the previously reported range,” said Ustian. “The orders we have received for our 2010-compliant products ensure that the business is well positioned for the rest of the year.”

The company said it is prepared for a successful launch of its MaxxForce® Advanced EGR (exhaust gas recirculation) engines as it continues on its path to meet the latest emissions requirements. During the quarter, key regulatory certifications were obtained for 2010 MaxxForce® 13 and MaxxForce® DT Advanced EGR big bore diesel and mid-range diesel engines.

Other significant milestones achieved in the quarter included improvements in Navistar’s cost structure, which were achieved through reductions in material costs and rationalization of its North American plants to create cost efficiencies in its Class 8 heavy truck and school bus production lines. The company also completed a retail funding alliance with GE Capital


Corporation and GE Capital Commercial, Inc. in which GE will become the preferred source of retail customer financing for equipment offered by the company and its dealers in the United States to help it grow sales of trucks and school buses.

During the quarter, the company also began shipping a limited number of International® MaxxPro® Dash Mine Resistant Ambush Protected (MRAP) vehicles that include the DXM™ independent suspension solution, which were part of an order Navistar received in January from the U.S. military.

Summary Financial Results

 

     Second Quarter     Six Months
     2010    2009     2010    2009
(Dollars in Millions, except per share data)                     

Sales & Revenues

   $ 2,743    $ 2,808      $ 5,552    $ 5,778

Segment Results

          

Truck

     76      56        111      170

Engine

     15      (84     69      105

Parts

     58      115        137      219

Manufacturing Segment Profit

     149      87        317      494

Income Before Taxes

     33      21        71      248

Net Income Attributable to Navistar International Corporation

     30      12        47      246

Diluted Earnings Per Share Attributable to Navistar International Corporation

     0.42      0.16        0.65      3.44

See SEC Regulation G for additional information.

Total net income for the second quarter a year ago was $12 million, equal to $0.16 of diluted earnings per share, including the impact of costs related to the Ford settlement. For the first six months of fiscal 2010, net income was $47 million, equal to $0.65 of diluted earnings per share, compared with year-ago six months net income of $246 million, equal to $3.44 of diluted earnings per share, including the favorable effects from the settlement with Ford.


Segment Results

Truck — For the second quarter ended April 30, 2010, the truck segment realized a profit of $76 million, compared with a year-ago second quarter profit of $56 million, which included substantial U.S. military sales as part of its MRAP vehicle program. The increase was driven primarily by improved commercial performance and continued material and manufacturing cost improvements offset partially by lower military sales. Commercial chargeouts in its traditional North American Class 6-8 truck and school bus business increased by 29 percent for the second quarter and 15 percent for the six-month period. Also contributing to the increase was the value added tax recovery of $30 million in Brazil.

Engine — The engine segment had a $15 million profit in the 2010 second quarter, which reflects increased demand in Brazil and the value added tax recovery of $12 million in Brazil, partially offset by decreased volumes in North America due to the expiration of the company’s contract with Ford to supply diesel engines in the United States and Canada. This is compared with a year-ago second quarter loss of $84 million, which was impacted by the Ford settlement and other related charges as the company began to transition out of its business with Ford. Other factors contributing to second-quarter profit included a 54 percent increase in South American engine shipments over the year-ago second quarter, the impact of consolidation of the company’s Blue Diamond Parts operations and increased intercompany activity aided by sales of its 11-liter and 13-liter MaxxForce engines.

Parts — The parts segment continues to deliver profits due to increased volumes in business in North America, which partially offset the impact of declines in U.S. military sales. The parts segment reported a second-quarter profit of $58 million, compared with a year-ago profit of $115 million, which was positively impacted by strong MRAP volumes.

Financial Services — The financial services segment delivered a profit of $16 million and $28 million, in the second quarter and six months ended April 30, 2010, respectively, compared with a profit of $18 million and $17 million in the year-ago second quarter and six month periods. The second-quarter results were positively impacted by the benefits of decreased interest expense and lower derivative expense offset by a decrease in revenues, as a result of declines in average receivable balances as the economic climate remains challenging to the company’s customers and dealers.


About Navistar

Navistar International Corporation (NYSE: NAV) is a holding company whose subsidiaries and affiliates produce International® brand commercial and military trucks, MaxxForce® brand diesel engines, IC Bus™ brand school and commercial buses, Monaco RV brands of recreational vehicles, and Workhorse® brand chassis for motor homes and step vans. The company also provides truck and diesel engine service parts. Another affiliate offers financing services. Additional information is available at www.Navistar.com/newsroom.

Forward-Looking Statement

Information provided and statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements only speak as of the date of this report and the company assumes no obligation to update the information included in this report. Such forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy. These statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” or similar expressions. These statements are not guarantees of performance or results and they involve risks, uncertainties, and assumptions. For a further description of these factors, see Item 1A, Risk Factors of our Form 10-K for the fiscal year ended October 31, 2009, which was filed on December 21, 2009. Although we believe that these forward-looking statements are based on reasonable assumptions, there are many factors that could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. All future written and oral forward-looking statements by us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. Except for our ongoing obligations to disclose material information as required by the federal securities laws, we do not have any obligations or intention to release publicly any revisions to any forward-looking statements to reflect events or circumstances in the future or to reflect the occurrence of unanticipated events.

-30-


Navistar International Corporation and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

 

     Three Months Ended
April 30,
    Six Months Ended
April 30,
 
     2010     2009     2010     2009  
(in millions, except per share data)                         

Sales and revenues

        

Sales of manufactured products, net

   $ 2,690      $ 2,741      $ 5,448      $ 5,636   

Finance revenues

     53        67        104        142   
                                

Sales and revenues, net

     2,743        2,808        5,552        5,778   
                                

Costs and expenses

        

Costs of products sold

     2,189        2,295        4,451        4,618   

Restructuring charges

     3        (3     (14     55   

Selling, general and administrative expenses

     372        300        710        676   

Engineering and product development costs

     116        130        225        238   

Interest expense

     64        57        131        150   

Other (income) expense, net

     (47     22        (41     (176
                                

Total costs and expenses

     2,697        2,801        5,462        5,561   

Equity in (loss) income of non-consolidated affiliates

     (13     14        (19     31   
                                

Income before income tax benefit (expense)

     33        21        71        248   

Income tax benefit (expense)

     10        (9     2        (2
                                

Net income

     43        12        73        246   

Net income attributable to non-controlling interests

     (13     —          (26     —     
                                

Net income attributable to Navistar International Corporation

   $ 30      $ 12      $ 47      $ 246   
                                

Earnings per share attributable to Navistar International Corporation:

        

Basic

   $ 0.43      $ 0.16      $ 0.66      $ 3.45   

Diluted

     0.42        0.16        0.65        3.44   

Weighted average shares outstanding:

        

Basic

     71.4        70.8        71.3        71.2   

Diluted

     72.8        71.3        72.4        71.5   


Navistar International Corporation and Subsidiaries

Consolidated Balance Sheets

 

     April 30,
2010
    October 31,
2009
 
(in millions, except per share data)    (Unaudited)     (Revised)  

ASSETS

    

Current assets

    

Cash and cash equivalents

   $ 508      $ 1,212   

Marketable securities

     175        —     

Trade and other receivables, net

     754        855   

Finance receivables, net

     1,420        1,706   

Inventories

     1,719        1,666   

Deferred taxes, net

     106        107   

Other current assets

     240        202   
                

Total current assets

     4,922        5,748   

Restricted cash and cash equivalents

     284        485   

Trade and other receivables, net

     38        26   

Finance receivables, net

     1,400        1,498   

Investments in non-consolidated affiliates

     97        62   

Property and equipment (net of accumulated depreciation and amortization of $1,850 and $1,765, at the respective dates)

     1,439        1,467   

Goodwill

     324        318   

Intangible assets (net of accumulated amortization of $112 and $101, at the respective dates)

     272        264   

Deferred taxes, net

     44        52   

Other noncurrent assets

     120        103   
                

Total assets

   $ 8,940      $ 10,023   
                

LIABILITIES, REDEEMABLE EQUITY SECURITIES AND STOCKHOLDERS’ DEFICIT

    

Liabilities

    

Current liabilities

    

Notes payable and current maturities of long-term debt

   $ 1,006      $ 1,136   

Accounts payable

     1,600        1,872   

Other current liabilities

     1,065        1,177   
                

Total current liabilities

     3,671        4,185   

Long-term debt

     3,539        4,156   

Postretirement benefits liabilities

     2,203        2,570   

Deferred taxes, net

     170        142   

Other noncurrent liabilities

     555        599   
                

Total liabilities

     10,138        11,652   

Redeemable equity securities

     11        13   

Stockholders’ deficit

    

Series D convertible junior preference stock

     4        4   

Common stock ($0.10 par value per share, 110.0 shares authorized, 71.2 and 75.4 shares issued at the respective dates)

     7        7   

Additional paid in capital

     2,195        2,181   

Accumulated deficit

     (2,025     (2,072

Accumulated other comprehensive loss

     (1,311     (1,674

Common stock held in treasury, at cost (4.1 and 4.7 shares, at the respective dates)

     (135     (149
                

Total stockholders’ deficit attributable to Navistar International Corporation

     (1,265     (1,703

Stockholders’ equity attributable to non-controlling interests

     56        61   
                

Total stockholders’ deficit

     (1,209     (1,642
                

Total liabilities, redeemable equity securities, and stockholders’ deficit

   $ 8,940      $ 10,023   
                


Navistar International Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

     Six Months Ended
April 30,
 
     2010     2009  
(in millions)             

Cash flows from operating activities

    

Net income

   $ 73      $ 246   

Adjustments to reconcile net income to cash provided by operating activities:

    

Depreciation and amortization

     132        140   

Depreciation of equipment leased to others

     26        27   

Deferred taxes

     11        (2

Amortization of debt issuance costs and discount

     20        8   

Stock-based compensation

     16        11   

Provision for doubtful accounts

     34        28   

Impairment of goodwill and intangibles

     —          7   

Equity in loss of non-consolidated affiliates, net of dividends

     22        16   

Other non-cash operating activities

     34        44   

Changes in other assets and liabilities, exclusive of the effects of businesses acquired and disposed

     (102     (38
                

Net cash provided by operating activities

     266        487   
                

Cash flows from investing activities

    

Purchases of marketable securities

     (663     (354

Sales or maturities of marketable securities

     488        356   

Net change in restricted cash and cash equivalents

     201        (96

Capital expenditures

     (78     (77

Purchase of equipment leased to others

     (25     (18

Proceeds from sales of property and equipment

     6        4   

Investments in non-consolidated affiliates

     (59     (14

Proceeds from sales of affiliates

     3        3   

Acquisition of intangibles

     (11     —     

Business acquisitions, net of cash received

     (2     —     
                

Net cash used in investing activities

     (140     (196
                

Cash flows from financing activities

    

Proceeds from issuance of securitized debt

     245        321   

Principal payments on securitized debt

     (536     (658

Proceeds from issuance of non-securitized debt

     557        259   

Principal payments on non-securitized debt

     (728     (362

Net increase (decrease) in notes and debt outstanding under revolving credit facilities

     (281     71   

Principal payments under financing arrangements and capital lease obligations

     (43     (24

Debt issuance costs

     (22     (2

Proceeds from exercise of stock options

     14        —     

Dividends paid by subsidiaries to non-controlling interest

     (33     —     

Stock repurchases

     —          (29
                

Net cash used in financing activities

     (827     (424
                

Effect of exchange rate changes on cash and cash equivalents

     (3     (10
                

Decrease in cash and cash equivalents

     (704     (143

Cash and cash equivalents at beginning of period

     1,212        861   
                

Cash and cash equivalents at end of the period

   $ 508      $ 718   
                


Navistar International Corporation and Subsidiaries

Segment Reporting

(Unaudited)

We define segment profit (loss) as net income (loss) attributable to Navistar International Corporation excluding income taxes. Selected financial information is as follows:

 

     Truck     Engine     Parts     Financial
Services(A)
    Corporate
and
Eliminations
    Total  
(in millions)                                     

Three Months Ended April 30, 2010

            

External sales and revenues, net

   $ 1,847      $ 444      $ 399      $ 53      $ —        $ 2,743   

Intersegment sales and revenues

     —          233        48        23        (304     —     
                                                

Total sales and revenues, net

   $ 1,847      $ 677      $ 447      $ 76      $ (304   $ 2,743   
                                                

Depreciation and amortization

   $ (40   $ (27   $ (2   $ (7   $ (3   $ (79

Interest expense

     —          —          —          29        35        64   

Equity in (loss) income of non-consolidated affiliates

     (11     (2     —          —          —          (13

Segment profit (loss)

     76        15        58        16        (145     20   

Capital expenditures(B)

     24        11        2        —          2        39   

Three Months Ended April 30, 2009

            

External sales and revenues, net

   $ 1,773      $ 434      $ 534      $ 67      $ —        $ 2,808   

Intersegment sales and revenues

     —          158        43        21        (222     —     
                                                

Total sales and revenues, net

   $ 1,773      $ 592      $ 577      $ 88      $ (222   $ 2,808   
                                                

Depreciation and amortization

   $ 45      $ 32      $ 1      $ 6      $ 4      $ 88   

Interest expense

     —          —          —          38        19        57   

Equity in (loss) income of non-consolidated affiliates

     (10     22        2        —          —          14   

Segment profit (loss)

     56        (84     115        18        (84     21   

Capital expenditures(B)

     19        14        3        1        2        39   

Six Months Ended April 30, 2010

            

External sales and revenues, net

   $ 3,563      $ 1,069      $ 816      $ 104      $ —        $ 5,552   

Intersegment sales and revenues

     1        429        98        47        (575     —     
                                                

Total sales and revenues, net

   $ 3,564      $ 1,498      $ 914      $ 151      $ (575   $ 5,552   
                                                

Depreciation and amortization

   $ (80   $ (53   $ (3   $ (15   $ (7   $ (158

Interest expense

     —          —          —          61        70        131   

Equity in (loss) income of non-consolidated affiliates

     (18     (2     1        —          —          (19

Segment profit (loss)

     111        69        137        28        (300     45   

Capital expenditures(B)

     34        34        4        1        5        78   

Six Months Ended April 30, 2009

            

External sales and revenues, net

   $ 3,834      $ 783      $ 1,019      $ 142      $ —        $ 5,778   

Intersegment sales and revenues

     1        318        98        39        (456     —     
                                                

Total sales and revenues, net

   $ 3,835      $ 1,101      $ 1,117      $ 181      $ (456   $ 5,778   
                                                

Depreciation and amortization

   $ 85      $ 59      $ 3      $ 12      $ 8      $ 167   

Interest expense

     —          —          —          102        48        150   

Equity in (loss) income of non-consolidated affiliates

     (17     44        4        —          —          31   

Segment profit (loss)

     170        105        219        17        (263     248   

Capital expenditures(B)

     33        34        6        1        3        77   

As of April 30, 2010

            

Segment assets

   $ 2,710      $ 1,572      $ 569      $ 3,507      $ 582      $ 8,940   

As of October 31, 2009

            

Segment assets

     2,660        1,517        664        4,136        1,046        10,023   

 

A. Total sales and revenues in the Financial Services segment include interest revenues of $65 million and $135 million for the three and six months ended April 30, 2010, respectively, and $76 million and $158 million for the same period in 2009.
B. Exclusive of purchase of equipment leased to others.


SEC Regulation G

The financial measures presented below are unaudited and non-GAAP. The measures are not in accordance with, or an alternative for, U.S. generally accepted accounting principles (GAAP). The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. However, we believe that non-GAAP reporting, giving effect to the adjustments shown in the reconciliation below, provides meaningful information and therefore we use it to supplement our GAAP reporting by identifying items that may not be related to the core manufacturing business. Management often uses this information to assess and measure the performance of our operating segments. We have chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of operating results, to illustrate the results of operations giving effect to the non-GAAP adjustments shown in the below reconciliations, and to provide an additional measure of performance.

 

     2010 Q2     2009 Q2     2010 Six
Months
    2009 Six
Months
 
     As Reported
With Impacts
    As Reported
With Impacts
    As Reported
With Impacts
    As Reported
With Impacts
 

Sales and revenues, net ($billions)

   $ 2.7      $ 2.8      $ 5.6      $ 5.8   

Manufacturing segment profit ($millions)*

     149        87        317        494   

Below the line items

     (129     (66     (272     (246

Income (loss) excluding income tax

     20        21        45        248   

Income tax benefit (expense)

     10        (9     2        (2

Net Income (loss) attributable to Navistar International Corporation

   $ 30      $ 12      $ 47      $ 246   

Diluted earnings (loss) per share ($s) attributable to Navistar International Corporation

   $ 0.42      $ 0.16      $ 0.65      $ 3.44   

Weighted average shares outstanding: diluted (millions)

     72.8        71.3        72.4        71.5   

 

* Includes: Net income attributable to non-controlling interest in net income of subsidiaries