Exhibit 99.1
NEWS RELEASE
Media Contact: Roy Wiley 630-753-2627
Investor Contact: Ramona Long 630-753-2406
Web site: WWW.NAV-INTERNATIONAL.COM
NAVISTAR THIRD QUARTER RESULTS MEET CURRENT FORECAST;
SOFTNESS IN DEMAND CONTINUES FOR MEDIUM TRUCKS;
FORECASTS RETURN TO PROFITABILITY IN 2003
Forecast For Industry Class 6-7 Volume Reduced;
Loss Seen For Fiscal 2002 As Transformation Strategy Remains On Target
WARRENVILLE, Ill. -- August 16, 2002 - As previously forecast, Navistar International Corporation (NYSE:
NAV), the nation's largest commercial truck, school bus and mid-range diesel engine producer, today reported a
loss for both the three and nine months ended July 31, 2002, as demand for commercial trucks continues to be
soft.
For the three months ended July 31, 2002, the company reported a net loss of $16 million, equal to
($0.27) per diluted common share, compared with earnings of $2 million or $0.03 per diluted common share a year
ago. Consolidated sales and revenues from manufacturing and financial services operations for the third quarter
totaled $1.6 billion, consistent with the same period in 2001.
John R. Horne, chairman and chief executive officer of Navistar, said that in addition to continued weak
demand for new trucks, results for the third quarter were impacted by a number of unusual and nonrecurring items
that totaled $30 million pretax or $0.31 cents per share after taxes. These included the inability of a major
supplier to supply pre-emission engines, product recall expenses, the weaker than expected Brazilian exchange
rate and costs associated with the six week strike at the company's Chatham, Ontario, Canada heavy truck assembly
plant.
Horne noted that without the unusual items, the company would have reported profit in the third quarter
on flat truck and engine sales. Worldwide shipments of International brand heavy and medium trucks and school
buses during the third quarter totaled 19,800 units, down slightly from the 20,600 units shipped in the third
quarter of 2001. Shipments of mid-range diesel engines to other original equipment manufacturers during the
quarter totaled 73,400 units, down 8 percent from the third quarter last year.
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Page Two/3Q Earnings
Manufacturing gross margins in the third quarter declined to 12.2 percent from 14.2 percent in the third
quarter last year. The $30 million in unusual and nonrecurring charges reduced gross margins by 1.5 percent.
According to Horne, with weak demand expected to continue over the next several months, the company
could experience a fourth quarter loss of ($0.20) to ($0.25) per share from continuing operations. Horne
emphasized that even if the truck industry demand does not increase in 2003, the company expects to be profitable
for the full year 2003.
Horne said the company continues to work on a number of actions aimed at fixed cost reductions and
improved operating efficiencies, and cited two such examples as the discontinuance of operations at the
Springfield body plant and the secondary production line at the Springfield assembly plant.
"As these actions are finalized and decisions made on additional fixed cost reductions, it is likely
that there will be a restructuring charge in the fourth quarter," Horne said.
For the first nine months of fiscal 2002, Navistar reported a loss of $76 million, or ($1.27) per
diluted common share, compared with a loss of $30 million, or ($0.51) per diluted common share in the first nine
months of 2001. Consolidated sales and revenues for the first nine months of fiscal 2002 declined slightly to
$4.7 billion from $4.9 billion in the same period in 2001. Manufacturing gross margin for the nine months was
12.5 percent compared with 13.1 percent last year.
"While these are challenging times, I am more excited about the future potential of our business than at
any time since I became chairman," Horne said. "We now have the products and processes to be a great company but
we need to continue our focus to take costs out of our operations so that we have a flexible cost structure and
which will make us a stronger, much more profitable company at any part of the cycle."
The company has lowered its previous industry forecast of 101,500 medium trucks for the year ending
October 31, 2002, to 97,500, including 75,000 Class 6-7 trucks. School bus demand remains unchanged at 26,000
units as does the forecast for Class 8 heavy trucks at 156,000 units.
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Page Three/3Q Earnings
The decline in medium truck demand was attributed in part to reluctance by leasing companies to commit
to new orders until there are more definitive signs of economic recovery. The continued strong demand for heavy
trucks is the result of pre-buy activity in advance of the new emissions standards that take effect October 1.
While the company is increasing production of heavy trucks at its Chatham plant to 65 units per day from 39 units
per day, it has also issued a l2 week advance layoff alert effective November 1. The alert is required under
Canadian law and could impact up to 500 workers as demand for heavy trucks is expected to decrease in the first
half of 2003.
Horne said the new contract with the Canadian Auto Workers gives the company flexibility to schedule
production with up to nine hours of overtime per week. The company has the option to close the plant in June
2003. Negotiations with the United Auto Workers have just begun and Horne said the company hopes to achieve an
agreement that provides the company with an affordable cost structure that includes production flexibility and
manageable health care costs.
"While these are challenging times, I am more excited about the future potential of our business than at
any time since I became chairman," Horne said. "We now have the products and processes to be a great company but
we need to continue our focus to take costs out of our operations so that we have a flexible cost structure and
which will make us a stronger, much more profitable company at any part of the cycle."
Navistar's fiscal year ends October 31 and therefore the company is not required to certify its
financial statements until September 16, or 45 days after the end of the third quarter. The company has started
the internal review process and will communicate its plan to the audit committee of the board of directors.
Currently, the company anticipates to certify its financial statements as required by the Securities and Exchange
Commission.
Headquartered in Warrenville, Illinois, Navistar International Corporation (NYSE: NAV) is the parent
company of International Truck and Engine Corporation, a leading producer of mid-range diesel engines, medium
trucks, heavy trucks, severe service vehicles and a provider of parts and service sold under the International(R)
brand. IC Corporation, a wholly owned subsidiary, produces school buses. The company also is a private label
designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. Additionally, through a
joint venture with Ford Motor Company, the company will build medium commercial trucks and currently sells truck
and diesel engine services parts. International Truck and Engine has the broadest distribution network in the
industry. Financing for customers and dealers is provided through a wholly owned subsidiary. Additional
information can be found on the company's web site at WWW.NAV-INTERNATIONAL.COM
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Page Four/3Q Earnings
Forward Looking Statements
Statements contained in this news release that are not purely historical are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the
company's expectations, hopes, beliefs and intentions on strategies regarding the future. It is important to
note that the company's actual future results could differ materially from those projected in such
forward-looking statements because of a number of factors, including but not limited to general economic,
business and financing conditions, labor relations, governmental action, competitor pricing activity, expense
volatility, and other risks detailed from time to time in Navistar's Securities and Exchange Commission
filings. Navistar assumes no obligation to update the information included in this news release.
Conference Call Scheduled
The company's conference call with security analysts to discuss the earnings report will be webcast at 10 a.m.
CDT today. The web cast can be accessed through Navistar's website at
http://www.nav-international.com/investor/ and connecting to the link to the conference call. Additional
financial information can be found at HTTP://WWW.NAV-INTERNATIONAL.COM/INVESTOR, via the financial and investor
information link to the overview page.
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NAVISTAR INTERNATIONAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF INCOME (UNAUDITED)
(Millions of dollars, except per share data)
Three Months Ended Nine Months Ended
July 31 July 31
-------------------------------- ----------------------------------
2002 2001 2002 2001
---- ---- ---- ----
Sales and Revenues
Sales of manufactured products $ 1,527 $ 1,516 $ 4,518 $ 4,658
Finance and insurance revenue 61 70 210 224
Other income 6 11 16 35
------------- ----------- ------------- -------------
Total sales and revenues 1,594 1,597 4,744 4,917
------------- ----------- ------------- -------------
Costs and expenses
Cost of products and services sold 1,357 1,318 4,001 4,098
Restructuring adjustment - - (1) -
Postretirement benefits expense 58 44 174 137
Engineering and research expense 61 58 190 188
Sales, general and administrative expense 116 135 379 393
Interest expense 39 42 117 125
Other expense 2 7 20 34
------------- ----------- ------------- -------------
Total costs and expenses 1,633 1,604 4,880 4,975
------------- ----------- ------------- -------------
Income (loss) before income taxes (39) (7) (136) (58)
Income tax expense (benefit) (23) (9) (60) (28)
------------- ----------- ------------- -------------
Net income (loss) $ (16) $ 2 $ (76) $ (30)
============= =========== ============= =============
Earnings (loss) per share
Basic $(0.27) $0.03 $(1.27) $(0.51)
Diluted $(0.27) $0.03 $(1.27) $(0.51)
Average shares outstanding (millions)
Basic 60.6 59.5 60.2 59.5
Diluted 60.6 60.2 60.2 59.5
- ----------------------------------------------------------------------------------------------------------------------------
The Statement of Income includes the consolidated financial results of the company's manufacturing operations with its
wholly owned financial services operations.
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NAVISTAR INTERNATIONAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF FINANCIAL CONDITION (UNAUDITED)
(Millions of dollars)
AS OF JULY 31
---------------------------------------------
2002 2001
------------------- --------------------
ASSETS
Cash and cash equivalents $ 547 $ 392
Marketable securities 266 458
------------ ------------
813 850
Receivables, net 1,873 1,758
Inventories 714 659
Property and equipment, net 1,514 1,885
Investments and other assets 362 344
Prepaid and intangible pension assets 277 308
Deferred tax asset, net 1,005 885
------------ ------------
Total assets $ 6,558 $ 6,689
============ ============
LIABILITIES AND SHAREOWNERS' EQUITY
Liabilities
Accounts payable, principally trade $ 932 $ 876
Debt: Manufacturing operations 921 971
Financial services operations 1,684 1,753
Postretirement benefits liability 1,122 856
Other liabilities 851 954
------------ ------------
Total liabilities 5,510 5,410
------------ ------------
Commitments and contingencies
Shareowners' equity
Series D convertible junior preference stock 4 4
Common stock (75.3 million shares issued) 2,139 2,139
Retained earnings (deficit) (261) (175)
Accumulated other comprehensive loss (361) (180)
Common stock held in treasury, at cost (473) (509)
------------ ------------
Total shareowners' equity 1,048 1,279
------------ ------------
Total liabilities and shareowners' equity $ 6,558 $ 6,689
============ ============
- --------------------------------------------------------------------------------------------------------------------------------
The Statement of Financial Condition includes the consolidated financial results of the company's manufacturing operations
with its wholly owned financial services operations.
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