Navistar International 8K Navistar Provides Update on Its Goal to Achieve $15 Billion | NAV 7 Jun 06

Navistar Analyst Conference Call

June 7, 2006

Navistar Investor Conference call-June 7^th, 2006

Safe Harbor Statement

Information provided and statements contained in this presentation that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act, and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements only speak as of the date of the presentation and the company assumes no obligation to update the information included in the presentation. 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 , including the risk of continued delay in the completion of our financial statements and the consequences thereof, the availability of funds, either through cash on hand or the company's other liquidity sources, to repay any amounts due should any of the company's debt become accelerated, and decisions by suppliers and other vendors to restrict or eliminate customary trade and other credit terms for the company's future orders and other services, which would require the company to pay cash and which could have a material adverse effect on the company's liquidity position and financial condition. 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. For a further description of these and other factors, see Exhibit 99.1 to our Form 8-K filed on April 12, 2006.

Navistar Investor Conference call-June 7^th, 2006

Other Cautionary Legends

•

As announced on April 6, 2006, the company’s previously issued auditedfinancial statements for periods after November 1, 2002 should no longer be relied upon because of errors in such financial statements. Until the company completes the review of its accounts and the restatement of its financial statements, no assurance can be given with respect to the financial statement adjustments and impacts resulting from such review.

•

The financial data presented in this package for the 2005 fourth quarter and the 2006 first and second quarter are preliminary and unaudited and are subject to change based on the completion of our on-going review of accounting matters, the completion of the our 2005 fourth quarter and 2006 first quarter and second quarter financial statements and the completion of the restatement of our financial results for the fiscal years 2002 through 2004 and for the first nine months of fiscal 2005. It is likely that the process of restating the prior year financial statements will require changes to the company’s financial statements for 2006 due to revised application of certain accounting principles and methodologies that individually or in the aggregate may be material.

•	Certain Non-GAAP measures are used throughout this presentation that provide investors with useful and relevant information about the company’s business. A reconciliation to the most appropriate GAAP number is included in the appendix of this presentation.

Navistar Investor Conference call-June 7^th, 2006

Financial Reporting Update

•	Committed to filing financials as soon as possible

•	Team in place led by Bill Caton

•

Jim Blanda – interim corporate controller

•

Strengthened internal accounting department

•

Huron Consulting

•	KPMG accepted audit engagement in April

•	Issues remain as outlined in our April 12^th 8-K

•	Expected timeframe for filing/Aggressive Project Plan

–

2003,2004,2005 restatements-prior to January 2007

–

2006 FYE and quarters-January 2007

Navistar Investor Conference call-June 7^th, 2006

Navistar participants on the call

•	Dan Ustian – Chairman, President, & Chief Executive Officer

•	Bob Lannert-Vice Chairman & Chief Financial Officer

•	Bill Caton – Executive Vice President, Finance

•	Terry Endsley – Vice President & Treasurer

•	Heather Kos – Director of Investor Relations

Navistar Investor Conference call-June 7^th, 2006

Great Products

Competitive Cost

Structure

Profitable Growth

Focused on Creating Shareholder Value

FY 2009 Goal

3 Pronged Strategy

Reliable, Resilient, Ready!

Our strategy enables us to deliver our 2009 goal

•	$15 Billion Revenue Goal

•	$1.5 Billion Pre-Tax

•	>10% Segment Margins in all business

•	Improve cost structure while developing synergistic niche businesses with richer margins

•	Improve conversion rate of operating income into net income

•	Reduce cyclicality

Navistar Investor Conference call-June 7^th, 2006

Strategic Initiatives Update-Create

and DeliverGreat Products

Leveraging what we have and what others have built

•	Launched 8 new products

•	ProStar™ launches in 2007

•	Trucks and buses for the Indian market in 2008

•	MaxxForce™ 11 liter and 13 liter late 2007

•	Focus on quality

•	Engine quality

•	Truck quality

Navistar Investor Conference call-June 7^th, 2006

School districts & local municipalities

Local & regional delivery/beverage, refrigeration, utilities, towing, municipalities & emergency rescue

Construction, waste

management & other
on-off highway
applications fleets and
owner operators

Severe Service – 23.8%

Line-haul, local & regional

delivery

Heavy (LH & RH) – 17.1%

2005 Combined North American Market Share (CL 6-8) – 27%

School Bus

Class 6-7

Combined Class 8

– 18.8%

Class 8

Medium – 39.5%

School Bus Chassis – 64.5%

School Buses Body – 60.7%

On April 6, 2006, the company announced that the company’s previously issued audited financial statements and the independent auditors' reports thereon for the years ended October 31, 2002 through 2004, and all quarterly financial statements for periods after November 1, 2002 should no longer be relied upon because of errors in such financial statements.

Core Truck Products

– Strong in everything we do –

Navistar Investor Conference call-June 7^th, 2006

Strategic Initiatives Update-

Competitive Cost Structure

$6,000 cost reduction in Truck & $600 cost reduction in Engine by 2009

•	Global sourcing (10-20% gross savings/focus on quality)

Mahindra Joint Venture & South America

Other Low Cost Country Sourcing

Engineering-250 engineers hired in India

•	Savings through scale:

–

Engine scale with acquisition in South America

–

Truck scale with Workhorse

•	Strategic Partnerships

Tires – Hankook

•	Labor improvements

Flexibility in the workforce

Favorable work rules

Garland Productivity – 5% less employees while daily build up 8%

Continuous improvement in below the line expenses as well

Navistar Investor Conference call-June 7^th, 2006

*As reported in the 2003 and 2004 Annual Report/10K. On April 6, 2006, the company announced that the company’s previously issued audited financial statements and the independent auditors' reports thereon for the years ended October 31, 2002 through 2004, and all quarterly financial statements for periods after November 1, 2002 should no longer be relied upon because of errors in such financial statements.

2005 Cost of Goods

Sold Composition

Material

2002 Cost of Goods

Sold Composition

Material

Focus is on supply base

Cost structure is more

variable

Key Takeaways

Truck Cost Structure Landscape

Navistar Investor Conference call-June 7^th, 2006

• Strategic Initiatives

• Mahindra International

• South America

• Other Low Cost Country Sourcing

• Scale

• Strategic Partnerships

FY 2009 Opportunities by category

Material

MATERIAL

MANUFACTURING/LABOR

Below the Line Items

• Continuous Improvement

Other

• Pension/OPEB

• Medical

• Interest & Tax Expense

$6,000/unit

incremental
cost
reduction in
Truck and
$600/unit in
Engine by
2009

Increased

Focus

• Design

Executing our Corporate Strategy

Navistar Investor Conference call-June 7^th, 2006

In 2006 we intend to low cost country source

an additional $200 million vs. 2005

Plans to source

$540 Million in 2006

Plans to exceed

$1.1 billion by 2009

Navistar Investor Conference call-June 7^th, 2006

2005 Volume in thousands (000’s) for top 15 manufacturer’s (Classes 4-8)

Source: J.D. Power – LMC; ACT Research &

Internal Company Data

2004

Class 3- 5

Military/Export

India

Workhorse

-Further Scale Opportunities-

Prostar

2003

World Truck Assembly

by Manufacturer Classes 4-8

Navistar Investor Conference call-June 7^th, 2006

100

200

300

400

500

600

The acquisition of MWM has furthered leadership in Mid-range diesel engine production

2005 Volume

World Mid-range Diesel Engine Leader

Navistar Investor Conference call-June 7^th, 2006

Tires

Korea

Stampings

India

Castings

India

12%

Gross

savings

23%

Gross

savings

25%

Gross

savings

Manufacturing Labor Improvements

Year-Over-Year Improvements in Average Annual Cost Per Unit (secondary goal)

2004

2006

(Projected)

2005

25.6%

10.4%

20.0%

Below the Line Items –Increased Focus

Delivering…

World-Class Competitive Costs

Global Sourcing

Buying more materials from lower-cost countries, $200M by end of 2006 (primary goal)

Navistar Investor Conference call-June 7^th, 2006

Strategic Initiatives Update-Deliver

Profitable Growth

Utilizing what we have and what others have built

–	Improve existing markets via Distribution Channel

–	Enter new markets

•

Military

•

Niche products-XT Family, Small Bus, LCF

•

ProStar™

–	Expand through strategic acquisitions and partnerships

•

India, South America, export markets

•

RV Chassis

•

Hybrid, telematics

Navistar Investor Conference call-June 7^th, 2006

World Wide Truck Shipments(3) GVW 6-8

Note: Information shown above is based on Navistar’s fiscal year-end

Operational Update – Truck Shipments

Navistar Investor Conference call-June 7^th, 2006

Market Share (1) – US & Canada School Bus and Class 6-8

Navistar share of Order receipts (5): US & Canada

Note: Information shown above is based on Navistar’s fiscal year-end

Operational Update-Truck Market

Share and Order Receipts

Navistar Investor Conference call-June 7^th, 2006

World Wide Engine Shipments (3)

Note: Information shown above is based on Navistar’s fiscal year-end

Operational Update-Engine Shipments

Navistar Investor Conference call-June 7^th, 2006

DT 466E (I6)

~ 49% market

share leader in
Class 6-7 Truck
and School Bus

70,000 units*

6.0L Power Stroke

~ 50% market

share in heavy
duty diesel
pickup/vans

340,000 units*

Keys to Success - Performance and Quality

For LCF

Class 4-5

10,000 units*

I4 / I6

140,000 units*

60%+ Mid and Full

size pick-up truck
diesel engine
market share

in South America

Complete line of

3 - 7L products

MaxxForce Big Bore

11 and 13 Liter

Big Bore

Late 2007 Launch

*Annualized volumes

Operational Update Engine Group

-The leaders in the markets they serve-

Navistar Investor Conference call-June 7^th, 2006

Operational Update-NFC

•Balances remain favorable

–Wholesale at historical high at $1.6 Billion

–Retail at $3.9 Billion

•With the health of our industry comes additional competitive pressure from local banks and other lenders entering the market

•We are maintaining our competitive position

Navistar Investor Conference call-June 7^th, 2006

*On April 6, 2006, the company announced that the company’s previously issued audited financial statements and the independent auditors' reports thereon for the years ended October 31, 2002 through 2004, and all quarterly financial statements for periods after November 1, 2002 should no longer be relied upon because of errors in such financial statements. The following additional financial information is provided based upon the continuing interest of certain shareowners and creditors to assist them in understanding our core manufacturing business and to separate the debt service requirements of the manufacturing company from those of the finance company.

Improving below-the-line expenses

Focus on continuous improvement

•	Unfunded pension liability of $805 million as of October 31^st, 2004*

•	Unfunded OPEB liability of approximately $1.9 Billion as of October 31^st, 2004*

•	Lowered our retiree to active employee ratio to 2.9 to 1 as of April 30, 2006

•	Active medical expenses have been flat since 2004

•	Lowering the effective tax rate

Navistar Investor Conference call-June 7^th, 2006

n 02/24/06 Obtained $1.5 Billion Bridge loan Facility (floating rate)

n In March Navistar borrowed ~$1.2 billion to $276 million 9.375% senior (exit tender)

$234 million 7.5% senior (exit tender)

$217 million 4.75% convertible notes (98.6% tendered)

$400 million 6.25% senior notes (100% accelerated)

n In June Navistar borrowed an additional $117 million to pay off the remainder of the 9.375%

n Ending manufacturing cash balance and marketable securities expected to be $800 million to $900 million

Manufacturing Debt

Navistar Investor Conference call-June 7^th, 2006

Summary – leveraging what we have

and what others have built

• Creating great products off existing platforms

•

CXT™, MXT™, RXT™, Military, MaxxForce™, Mahindra Class 6-8, CF Series, Bus

•

ProStar

• Building a competitive cost structure

•

Low cost country sourcing

•

Scale

•

Manufacturing productivity

•

Controlling bottom-line expenses

• Delivering profitable growth

•

Military, Export, South America acquisitions, RV

Navistar Investor Conference call-June 7^th, 2006

FY 2003*

FY 2009 Fcst

RV/

Military

Manufacturing Revenues of

~$7.3 Billion

Prior Trough

Manufacturing Revenues of

~$9.5 Billion

Cycle Midpoint

Cyclical vs Non cyclical

Only 20 -25% of business in “High” cyclical area

FY 2004*

FY 2007

Offset:

Parts é

Cost Reductions é

Military é

Workhorse é

Export é

India é

MWM é

$15 Billion Revenue Goal

Next Peak

Manufacturing Revenues*

Navistar Investor Conference call-June 7^th, 2006

Record EPS

Total NA

Industry é

New products and markets will enhance the growth of our business

while our cost structure drives increasing profitability

2007

Total NA Industry

Demand

Offset:

Parts é

Cost Reductions é

Military é

Workhorse é

Export é

India é

MWM é

Reduced Breakeven

>10 % Ave Segment

Margins

2009 Goal

Consolidated Sales and

Revenue of $15 Billion

Great Products

Competitive Cost

Structure

Profitable Growth

3 Pronged Strategy

What it Means for Navistar in 2007

and beyond

Navistar Investor Conference call-June 7^th, 2006

Frequently Asked Questions &

Supplemental Data

Appendix

Navistar Investor Conference call-June 7^th, 2006

Frequently Asked Questions

Q1:	How do you plan on keeping the investment community updated on your operational progress?

A:	With our call on June 7th, we are resuming our quarterly conference calls and we plan to continuously increase the amount of information we can release to the public as permitted throughout the restatement process.

Q2:

How long will it take to restate the financials?

We have put together an aggressive project plan that projects we will file the 2006 10K in mid-January 2007. Shortly before this we intend to file the 2002 through 2004 restatements and the 2005 10K. The targeted completion dates may change as the process of finalizing the financial statements proceeds.

Q3:

What are the areas that will be restated? Can you give us any examples?

Among the items being reviewed are accounting for capital versus operating leases; consolidations of affiliates; the adequacy of amounts recorded for asbestos liabilities; the timing of revenue recognition; the accounting for deferred income tax assets; the accounting for customer and vendor settlements; application of depreciation method; intercompany accounts reconciliations; inventory valuations; accounts payable at the company's Canadian and Mexican subsidiaries; and the company's presentation of reportable business segments.

Matters that the company has identified to date as requiring restatement will result in certain income and expense items being allocated to different periods and include accounting for product development programs; accounting for supplier rebates and warranty recoveries; accounting for truck warranty work to be provided by the company outside of the terms of contractual arrangements; and shifting of expense amounts between periods at one of the company’s foundry operations.

The company’s review process continues and matters identified at this stage and any assessment of the nature, scope or amount of restatements are preliminary and subject to change. The company’s review will likely result in the identification of additional items requiring correction in the restated results.

Q4:

What is the process with the NYSE when you are a late filer?

Navistar is engaged in regular discussions with the NYSE staff regarding the status of the restatement and continued listing through completion of the restatement. Until Navistar is current with its SEC periodic reporting requirements, the NYSE will identify Navistar as a late filer on its website and will disseminate on the consolidated tape an indicator of the company's late-filer status. Under the listing standards of the NYSE, the NYSE may initiate a delisting proceeding when a listed company fails to file its Annual Report on Form 10-K with the SEC in a timely manner. The current standards allow for the NYSE to continue a listing for up to six months from the due date of the filing (i.e., until August 7th, 2006 in the case of Navistar’s 2005 Form 10-K filing), subject to ongoing monitoring by the NYSE. The NYSE, at its sole discretion, may extend the listing for up to an additional six months, depending on the company’s circumstances. Under the rules of the NYSE, Navistar would have the right to a review of any decision to delist by a committee of the NYSE Board of Directors.

Q5:

Why did you change auditors to KPMG?

We are committed to working diligently to complete our restatements and the 2006 10K by January 2007. We engaged KPMG because we believe they are best suited to help us reach that goal. We are pleased that KPMG accepted the audit engagement. They have devoted high caliber individuals, including 4 partners, to this audit. Collectively, we have aggressively established dates for completing the 2006 and 2005 audits and the 2002-2004 restatements. We are confident that their experience in project management will help us through this process. While we work through this process we intend to provide quality information to our investors.

Navistar Investor Conference call-June 7^th, 2006

Frequently Asked Questions

Q6:

What is your class 6-8 industry outlook for 2006?

Our 2006 fiscal year-end industry forecast has been revised upward from 425,000 units to a range of 435,000 to 440,000 units. We believe Heavy will reach 229,000 units and Severe 75,000 units, making total Class 8 trucks 304,000 units. Class 6-7 trucks should range from 106,000 to 108,500 units, and school bus should range from 25,000 to 27,500 units. Our great products, competitive cost structure, and profitable growth strategies are enabling us to take full advantage of this marketplace.

Q7:

Some of the smaller suppliers and at least one other Truck OEM expect the 2007 class 8 market to be down 15 – 20% off from their original projection of 25-30% due to a perceived stronger economy. What are your thoughts on the 2007 industry?

A:	Right now we forecast Class 8 trucks being down 30% and Class 6-7 medium trucks being down 10-15%. Based on the flexibility in our operations, we believe we will be prepared. If the industry decrease is softer then we projected, we will adjust our operations to meet demand.

Q8:

You have a goal to reduce cost by $6000 per truck and $600 per engine by 2009. Can you update us on your progress?

Due to the restatement process, we cannot give progress to the specific goals, but based on our strategic initiatives in global sourcing, growing scale, strategic partnering with others, and a continued focus on manufacturing efficiencies we believe we are on track if not ahead to meet these goals by 2009.

Q9:

What is happening with your military business?

We continue to deliver re-buys on our current contracts. Additionally we are pursuing current opportunities with Tacom by actively participating on bids. Under FTTS, we are on target to deliver a demonstrator vehicle to the military in November 2006. We are also participating on joint light tech vehicle bids.

Q10:

Have you seen any year over year steel price increases in 2006?

A:	For the first six months, our costs reflect $31 million of steel price increases. We have been able to recover these increases in the marketplace.

Navistar Investor Conference call-June 7^th, 2006

Frequently Asked Questions

Q11:

Why did you partner with MAN for your 11 Liter and 13 Liter engines?

We examined several possibilities across the world before deciding to collaborate with MAN on big bore diesels. We chose MAN because they have a great reputation and history in building diesel engines - in fact Rudolf Diesel the inventor of diesel engines made his first engine at MAN. We saw that MAN had developed a state-of the-art big bore diesel engine in Europe from which we could derive a North American engine by leveraging our expertise in advanced emission technologies and our knowledge of the market. We also saw that both companies could achieve significant cost benefits by collaborating and gaining scale in product development and global component sourcing.

Q12:

What is your existing relationship with MAN?

A:	We announced on December 6, 2004, that International and MAN had signed a collaboration pact for design, development, sourcing and manufacturing of components and systems for commercial trucks, including a range of diesel engines.

We announced on February 17, 2005, that we are working together to develop and produce 11 -13 liter diesel engines, which will be available in the fall of 2007.

Since that time we have been collaborating well with MAN and we continue to look for opportunities to work together to develop additional products for other markets.

Q13:

What is your interest rate now and what was it before?

Prior to the bridge facility loan, the average debt interest rate was approximately 7%. Currently the bridge facility carries an interest expense of 3 month Libor plus a spread based on the current credit rating. Our current credit rating has a spread of 500 basis points. The 9 3/8%, 7 ½%, and 6 ¼% Senior Notes and 4 ¾% Convertible Notes, for the most part, have been taken out with bridge loan facility. This equates to approximately $46 million additional interest expense. With our working capital generations, we intend to pay off $400 million of the bridge facility by the end of 2006.

Q14:

Can you give us any update on your statement that you will exceed $5.38 EPS now that you raised your industry guidance from 425,000 units to 435,000-440,000 units?

A:	Our guidance remains at exceeding $5.38 EPS. We will take into consideration the increased industry volume. Additionally, we would like to point out that we expect to hit this guidance despite higher interest and restatement expenses.

Navistar Investor Conference call-June 7^th, 2006

Class 8

Class 6-8

Retail Class 6-8 Industry Landscape

Navistar Investor Conference call-June 7^th, 2006

Orders

Retail Sales

Class 8 Industry Orders and Retail Sales

Navistar Investor Conference call-June 7^th, 2006

Source: Wards, ACT, Polk data combined with Internal Company reports

Industry

Prior FY06

Guidance**

Updated FY06

Guidance*

Bus

26,000

25,000 - 27,500

Medium (Class 6-7)

105,000

106,000 - 108,500

Heavy (Total Class 8)

294,000

304,000

Total Industry Demand

425,000

435,000 - 440,000

*Updated guidance issued on 06/02/06

**Prior Guidance issued on 01/17/06

2006 Industry Guidance

Navistar Investor Conference call-June 7^th, 2006

Source: Wards, ACT, Polk data combined with Internal Company reports

Market Share

Navistar Investor Conference call-June 7^th, 2006

Source: ACT data combined with Internal Company reports

Order Receipts – US & Canada

Navistar Investor Conference call-June 7^th, 2006

Source: Wards, ACT, Polk data combined with Internal Company reports

WW Truck Shipments

Navistar Investor Conference call-June 7^th, 2006

WW Engine Shipments

Navistar Investor Conference call-June 7^th, 2006

Debt, Cash, and Share Schedule

Navistar Investor Conference call-June 7^th, 2006

The adjustment columns below include the activities of the company’s financial

services operations as well as other reporting adjustments, including eliminations.

SEC Regulation G

	Manufacturing Non-GAAP		Adjustment		Consolidated US GAAP
Sales & Revenues
FY03 (as reported)	$	7,294	$	291	$	7,585
FY04 (as reported)	$	9,474	$	250	$	9,724

Debt
10/31/2004 (as reported)	$	1,329	$	1,539	$	2,868
7/31/2005 (as reported)	$	1,803	$	2,087	$	3,890
10/31/2005 (unaudited)	$	1,793	$	1,479	$	3,272
1/31/2006 (unaudited)	$	1,784	$	1,758	$	3,542
4/30/2006 (unaudited)	$	1,904	$	1,972	$	3,876

Cash, Cash Equivalents, Marketable Securities
10/31/2004 (as reported)	$	737	$	123	$	860
10/31/2005 (unaudited)	$	877	$	367	$	1,244
1/31/2006 (unaudited)	$	503	$	288	$	791
4/30/2006 (unaudited)	$	758	$	520	$	1,278

($ millions)

Navistar Investor Conference call-June 7^th, 2006

Definitions

GLOSSARY OF TERMS

1. Market Share - Information is compiled using Wards, ACT and POLK data combined with company internal reports. Market share information reflects retails sales in the United States and Canada for Classes 6-8.

2. Retail Sales - Navistar defines a retail sale as any vehicle sold to the end customer.

3. Shipment - Navistar defines a shipment as it is presented in the supplemental data as any sale to the end customer or to an International dealer. This term may also interchangeable with the the word charge-out.

4. Weight Classes - refers to the maximum amount a loaded truck should weigh - vehicle weight plus payload weight. There are eight classes of Gross Vehicle Weight Ratings (GVWR).

5. Order Receipt-An order receipt is a formal request to build a truck either for an end user ( sold order ) or for a dealer ( stock order ).Our order information comes from ACT Research and our own internal analysis.

Class 6 - 19,501 to 26,000 lb

Class 7 - 26,001 to 33,000 lb

Class 8 - 33,001 lb and above

Navistar International (NAV) 8-KNavistar Provides Update on Its Goal to Achieve $15 Billion