EXHIBIT 99.1
Additional Financial Information (Unaudited)
The following additional financial information is provided based upon the continuing interest of certain stockholders and creditors to assist them in understanding our core manufacturing business with our financial services operations on a pre-tax equity basis. Our manufacturing operations, for this purpose, include our Truck segment, Engine segment, Parts segment, and Corporate items. The manufacturing operations financial information represents non-GAAP financial measures. The reconciling differences between these non-GAAP financial measures and our GAAP consolidated financial statements in Item 8 are our financial services operations, which are included on a pre-tax equity basis. Certain of our subsidiaries in our manufacturing operations have debt outstanding with our financial services operations (“intercompany debt”). In the condensed statements of assets, liabilities and stockholders’ deficit, the intercompany debt is reflected as accounts payable. The change in the intercompany debt is reflected in the net cash provided by operating activities in the condensed statements of cash activities.
We revised our previously reported condensed statements of assets, liabilities, redeemable equity securities, and stockholders’ deficit as of October 31, 2007 to give effects to recording stock options as redeemable equity securities, which have been classified as mezzanine equity. The redeemable equity securities were previously included inStockholders’ deficit. In June 2007 we amended the terms of then-outstanding stock option awards to allow for cash settlement in the event of a change in control and when certain other conditions exist. In accordance with EITF Topic No. D-98,Classification and Measurement of Redeemable Securities, the amended stock options’ intrinsic values should have been re-measured at the modification date and should have been recorded asRedeemable equity securities, which are classified as mezzanine equity on the consolidated statements of assets, liabilities, redeemable equity securities, and stockholders’ deficit. To record the amount reported as mezzanine equity, we recorded a corresponding reduction ofStockholders’ deficitin the amount of $139 million. The corrections had no effect on our previously reported condensed statements of operations and condensed statements of cash activities and are not considered material to any previously reported consolidated financial statements.
We have revised our previously reported condensed statements of cash activities for the years ended October 31, 2007 and 2006 to reflect the correction of errors identified in those statements. The errors were primarily related to the incorrect allocation of the effect of exchange rates on cash and cash equivalents where amounts previously reported in theEffect of exchange rates on cash and cash equivalents are now reported inOther, net inNet cash provided by (used in) operating activitiesand reclassifications fromNet cash provided by operating activities toNet cash used in investing activities. The corrections had no effect on our previously reportedcondensed statements of assets, liabilities and stockholders’ deficitorcondensed statements of revenuesand expenses, and are not considered material to any previously reported condensed statements of cash activities.
Condensed Statements of Revenues and Expenses
Navistar International Corporation (with financial services operations on a pre-tax equity basis)
For the years ended October 31 | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Sales of manufactured products, net | $ | 14,399 | $ | 11,910 | $ | 13,878 | ||||||
Costs of products sold | 11,930 | 10,131 | 11,703 | |||||||||
Asset impairment | 358 | — | — | |||||||||
Selling, general and administrative expenses | 1,309 | 1,352 | 1,234 | |||||||||
Engineering and product development costs | 380 | 382 | 453 | |||||||||
Other expenses, net | 209 | 246 | 240 | |||||||||
Total costs and expenses | 14,186 | 12,111 | 13,630 | |||||||||
Income (loss) before income taxes—Manufacturing operations | 213 | (201 | ) | 248 | ||||||||
—Financial services operations | (22 | ) | 128 | 147 | ||||||||
Income (loss) before income taxes | 191 | (73 | ) | 395 | ||||||||
Income tax expense | (57 | ) | (47 | ) | (94 | ) | ||||||
Net income (loss) | $ | 134 | $ | (120 | ) | $ | 301 | |||||
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Condensed Statements of Assets, Liabilities, and Stockholders’ Deficit
Navistar International Corporation (with financial services operations on a pre-tax equity basis)
As of October 31 | ||||||||
2008 | 2007 | |||||||
(in millions) | (Revised) | |||||||
Cash and cash equivalents | $ | 775 | $ | 716 | ||||
Accounts receivable | 1,069 | 788 | ||||||
Inventories | 1,566 | 1,380 | ||||||
Investments in and advances to financial services operations | 387 | 397 | ||||||
Investments in and advances to non-consolidated affiliates | 156 | 154 | ||||||
Property and equipment, net | 1,390 | 1,980 | ||||||
Goodwill and intangible assets, net | 529 | 639 | ||||||
Other assets | 185 | 331 | ||||||
Deferred taxes, net | 67 | 123 | ||||||
Total assets | $ | 6,124 | $ | 6,508 | ||||
Accounts payable | $ | 2,162 | $ | 1,888 | ||||
Postretirement benefits liabilities | 1,628 | 1,310 | ||||||
Debt—manufacturing operations | 1,834 | 2,028 | ||||||
Other liabilities | 1,852 | 2,016 | ||||||
Redeemable equity securities | 143 | 140 | ||||||
Stockholders’ deficit | (1,495 | ) | (874 | ) | ||||
Total liabilities and stockholders’ deficit | $ | 6,124 | $ | 6,508 | ||||
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Condensed Statements of Cash Activities
Navistar International Corporation (with financial services operations on a pre-tax equity basis)
For the years ended October 31 | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | (Revised) | (Revised) | ||||||||||
Cash flow from operating activities: | ||||||||||||
Net income (loss) | $ | 134 | $ | (120 | ) | $ | 301 | |||||
Adjustments to reconcile net income (loss) to cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 333 | 312 | 317 | |||||||||
Depreciation of equipment leased to others | 44 | 40 | 34 | |||||||||
Deferred taxes | 82 | 39 | (3 | ) | ||||||||
Impairment of property and equipment | 372 | — | — | |||||||||
Equity in loss (income) of financial services operations | 22 | (128 | ) | (147 | ) | |||||||
Equity in income of non-consolidated affiliates | (71 | ) | (74 | ) | (99 | ) | ||||||
Dividends from financial services operations | 25 | 400 | — | |||||||||
Dividends from non-consolidated affiliates | 85 | 111 | 83 | |||||||||
Other, net | (597 | ) | (411 | ) | 10 | |||||||
Net cash provided by operating activities | 429 | 169 | 496 | |||||||||
Cash flow from investing activities: | ||||||||||||
Purchases of marketable securities | (42 | ) | (221 | ) | (179 | ) | ||||||
Sales or maturities of marketable securities | 46 | 351 | 134 | |||||||||
Net change in restricted cash and cash equivalents | 7 | 24 | 1 | |||||||||
Capital expenditures | (168 | ) | (309 | ) | (228 | ) | ||||||
Acquisitions, net of cash acquired | — | (7 | ) | (54 | ) | |||||||
Contributions to NFC | (60 | ) | — | — | ||||||||
Other investment activities | 1 | 92 | (25 | ) | ||||||||
Net cash used in investing activities | (216 | ) | (70 | ) | (351 | ) | ||||||
Net cash provided by (used in) financing activities | (133 | ) | (480 | ) | 140 | |||||||
Effect of exchange rate changes on cash and cash equivalents | (21 | ) | 19 | 17 | ||||||||
Increase (decrease) in cash and cash equivalents | 59 | (362 | ) | 302 | ||||||||
Cash and cash equivalents at beginning of the year | 716 | 1,078 | 776 | |||||||||
Cash and cash equivalents at end of the year | $ | 775 | $ | 716 | $ | 1,078 | ||||||
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