Exhibit 99.1
Media contact: Roy Wiley 630-753-2627
Investor contact: Mark Oberle 630-753-2406
Web site: www.nav-international.com
NAVISTAR REPORTS SECOND QUARTER, FIRST HALF RESULTS;
PERFORMANCE BEATS CONSENSUS ESTIMATE OF ANALYSTS
Initiatives To Reduce Costs, Return To Full Year Profitability Progressing
Despite Lower Forecast For Industry Class 6-7
WARRENVILLE, Ill.-- May 15, 2003 -- Navistar International Corporation (NYSE: NAV), the nation's largest
commercial truck and mid-range diesel engine producer, today reported a loss from continuing operations of $12
million, equal to ($0.18) per diluted common share, for the three months ended April 30, 2003, compared with a loss
of $2 million or ($0.04) per diluted common share a year earlier. The consensus estimate of security analysts was
for a ($0.29) per share loss.
Consolidated sales and revenues from manufacturing and financial services operations for the second quarter
of 2003 totaled $1.9 billion, compared with the $1.7 billion reported in the second quarter of 2002.
For the first six months of fiscal 2003, Navistar reported a loss from continuing operations of $110
million, or ($1.64) per diluted common share, compared with a loss of $55 million, or ($0.92) per diluted common
share in the first six months of fiscal 2002. Consolidated first half sales and revenues amounted to $3.4 billion,
compared with $3.1 billion in the first six months of 2002.
Daniel C. Ustian, Navistar president and chief executive officer, said, "The economic environment during
the first half of the company's fiscal year was difficult and uncertain, but we continue to expect an improved
market in the second half of the year."
"We still expect a third quarter profit in the range of 20 to 30 cents per share due to increased truck
shipments, continued cost reductions and income from financial services," Ustian said. "Assuming that our industry
forecast materializes, our goal is for the fourth quarter, historically our best quarter, to bring us to modest
profitability for the year. We continue to focus our efforts on reducing our cost structure and returning to
profitability."
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Exhibit 99.1
Navistar Second Quarter 2003 Earnings - Page 2
Ustian noted that the company's manufacturing realignment initiatives and changing demographics of
participants in the company's defined benefit pension plans required an accounting change on how certain pension
costs are amortized. This change reduced pension expense for the second quarter. Because of the accounting change,
certain pension costs will be amortized over a longer period of time and will result in lower expenses on an ongoing
basis.
According to Ustian, the accounting change will significantly offset the increased annual pension expense
arising from the decline in pension plan asset values experienced in the last half of 2002.
Turning to the future, Ustian said that the company has increased market share across the board -- medium,
heavy, severe service and school buses over full year fiscal 2002 figures.
"We expect to improve market share profitably," Ustian said. He added that pricing has improved over 2002
levels, but it has been mostly offset by increases in material costs, primarily related to emissions compliance on
Class 8 engines.
Ustian said medium truck industry demand continues to run below expectations. Because of this, the company
has lowered its North American industry forecast for Class 6-7 trucks to 77,300 units, down from the previous
forecast of 82,000, but still 6 percent ahead of fiscal 2002 volume. The forecast for heavy volume (Class 8) is
unchanged at 156,000 units as is school bus volume at 27,500 units.
"The continued softness in the Class 6-7 market makes the earnings situation for the year more
challenging, but the leading indicators appear to have stabilized," Ustian said. "Continued improvement in leading
indicators signal more consistent ordering patterns. Despite soft market conditions, we have not wavered from our
objective of profitability for the year and continue to implement cost improvements associated with our initial $100
million target."
Worldwide shipments of International brand medium and heavy trucks and school buses during the second
quarter totaled 21,400 units, compared with 18,700 units in the first quarter this year and 20,800 units in the
second quarter of 2002.
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Exhibit 99.1
Navistar Second Quarter 2003 Earnings - Page 3
Shipments of mid-range diesel engines to other original equipment manufacturers during the quarter totaled
95,800 units, compared with 63,300 units in the first quarter and 78,900 units in the second quarter of 2002.
Quarter-over-quarter results were aided by a previously reported comprehensive agreement with Ford Motor
Company concerning termination of the Ford V-6 diesel engine program. While financial terms of the settlement were
not released, the agreement includes compensation to neutralize certain current and future V-6 diesel engine program
related costs, resolution of ongoing pricing related to the V-8 diesel engine program and a release by both parties
of their obligations under the V-6 diesel engine contract. International will continue as Ford's exclusive supplier
of V-8 diesel engines through 2012 for use in its over 8,500 gross vehicle weight pick-up trucks, vans and SUVs for
North America.
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® 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 builds
medium commercial trucks and sells truck and diesel engine service 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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Exhibit 99.1
Navistar Second Quarter 2003 Earnings - Page 4
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 release.
Conference Call Scheduled
The company's conference call with security analysts to discuss the earnings report will be web cast 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
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financial information can be found at http://www.nav-international.com/investor, via the financial and investor
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information link to the overview page. Information provided and statement made on the conference call may include
certain non-GAAP financial measures. A reconciliation to the most appropriate GAAP measures will be available to
investors on the website prior to the start of the call.
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Exhibit 99.1
NAVISTAR INTERNATIONAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF INCOME (UNAUDITED)
(Millions of dollars, except per share data)
Three Months Ended Six Months Ended
April 30 April 30
-------------------------------- ----------------------------------
-------------------------------- ----------------------------------
2003 2002 2003 2002
---- ---- ---- ----
Sales and revenues
Sales of manufactured products $ 1,806 $ 1,596 $ 3,287 $ 2,978
Finance and insurance revenue 53 72 145 149
Other income 5 4 10 10
----------- ----------- ----------- -----------
Total sales and revenues 1,864 1,672 3,442 3,137
----------- ----------- ----------- -----------
Costs and expenses
Cost of products and services sold 1,588 1,382 3,008 2,630
Postretirement benefits expense 71 58 154 116
Engineering and research expense 61 65 118 129
Selling, general and administrative expense 122 128 246 261
Interest expense 33 38 71 77
Other expense 7 6 18 16
----------- ----------- ----------- -----------
Total costs and expenses 1,882 1,677 3,615 3,229
----------- ----------- ----------- -----------
Loss from continuing operations before income taxes (18) (5) (173) (92)
Income tax benefit (6) (3) (63) (37)
----------- ----------- ----------- -----------
Loss from continuing operations (12) (2) (110) (55)
Loss from discontinued operations (2) (2) (3) (5)
----------- ----------- ----------- -----------
Net loss $ (14) $ (4) $ (113) $ (60)
=========== =========== =========== ===========
Basic earnings (loss) per share
Continuing operations $ (0.18) $ (0.04) $ (1.64) $ (0.92)
Discontinued operations (0.03) (0.03) (0.04) (0.08)
------- ------- ------- -------
Net loss $ (0.21) $ (0.07) $ (1.68) $ (1.00)
======= ======= ======= =======
Diluted earnings (loss) per share
Continuing operations $ (0.18) $ (0.04) $ (1.64) $ (0.92)
Discontinued operations (0.03) (0.03) (0.04) (0.08)
------- ------- ------- -------
Net loss $ (0.21) $ (0.07) $ (1.68) $ (1.00)
======= ======= ======= =======
Average shares outstanding (millions)
Basic 68.4 60.4 67.3 60.1
Diluted 68.4 60.4 67.3 60.1
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The Statement of Income includes the consolidated financial results of the company's manufacturing operations with its wholly owned
financial services operations.
05/14/03
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Exhibit 99.1
NAVISTAR INTERNATIONAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF FINANCIAL CONDITION (UNAUDITED)
(Millions of dollars)
AS OF APRIL 30
----------------------------------
2003 2002
-------------- ----------------
ASSETS
- ------
Current assets
Cash and cash equivalents $ 463 $ 558
Marketable securities 85 39
Receivables, net 975 748
Inventories 555 644
Deferred tax asset, net 256 153
Other assets 144 133
--------- ---------
Total current assets 2,478 2,275
--------- ---------
Marketable securities 240 526
Finance and other receivables, net 1,005 931
Property and equipment, net 1,314 1,676
Investments and other assets 323 201
Prepaid and intangible pension assets 61 277
Deferred tax asset, net 1,356 867
--------- ---------
Total assets $ 6,777 $ 6,753
========= =========
LIABILITIES AND SHAREOWNERS' EQUITY
- -----------------------------------
Liabilities
Current liabilities
Notes payable and current maturities of long-term debt $ 250 $ 493
Accounts payable, principally trade 1,018 946
Other liabilities 1,028 745
--------- ---------
Total current liabilities 2,296 2,184
--------- ---------
Debt: Manufacturing operations 882 799
Financial services operations 1,426 1,436
Postretirement benefits liability 1,360 850
Other liabilities 541 392
--------- ---------
Total liabilities 6,505 5,661
--------- ---------
Commitments and contingencies
Shareowners' equity
Series D convertible junior preference stock 4 4
Common stock and additional paid in capital (75.3 million shares issued) 2,120 2,139
Retained earnings (deficit) (906) (244)
Accumulated other comprehensive loss (723) (333)
Common stock held in treasury, at cost (223) (474)
--------- ---------
Total shareowners' equity 272 1,092
--------- ---------
Total liabilities and shareowners' equity $ 6,777 $ 6,753
========= =========
The Statement of Financial Condition includes the consolidated financial results of the company's manufacturing
operations with its wholly owned financial services operations.
05/14/03
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