Navistar International (NAV) 8-K Information provided and statements contained in this presentation that are not purely historical

Investor & Analyst Day

Melrose Park

January 19, 2010

EXHIBIT 99.1

Safe Harbor

Statement

2

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 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 presentation and the Company assumes no obligation to update the information

included in this 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. For a further description of

these factors, see Item

1A, Risk Factors, included within our Form 10-K for the 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.

Other Cautionary Legends

3

•

The financial information herein contains audited and unaudited

information and has been prepared by management in good faith

and based on data currently available to the Company.  

•

Certain Non-GAAP measures are used in this presentation to assist

the reader in understanding our core manufacturing business.

We

believe this information is useful and relevant to assess and

measure the performance of our core manufacturing business as it

illustrates manufacturing performance without regard to selected

historical legacy costs (i.e. pension and other postretirement costs).

It also excludes financial services and other expenses 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.

A reconciliation to the most appropriate GAAP

number is included in the appendix of this presentation.

Dan Ustian

Chairman, President and Chief

Executive Officer

Navistar Strategy to Create

Shareholder Value

•

Postretirement

•

Capital structure

•

Labor legacy

5

2009 –

lowest

point in 47 years

Industry Environment

Navistar Environment

•

Focus is on reducing impact of

cyclicality

–

Non-traditional/expansion markets

–

Grow parts

•

Improve cost structure while developing

synergistic niche businesses with richer

margins

•

Improve conversion rate of operating

income into net income

•

Controlling our Destiny

Strategy: Leveraging What We Have and

What Others Have Built

6

Overall Theory to Success

•

Must Lead, Not Follow

–

Competitors are European-based and

Class 8-concentrated

–

Technologies similar

•

Navistar

–

Leader in products, technology and innovation

–

Breadth in product/markets/global

7

Overall Theory to Success

•

Medium, Severe Service and Bus are

differentiated

•

Heavy Truck is sometimes treated as a

commodity

–

Same engine, axles and transmission

–

Mexico price premium:  +10%

–

Europe price premium:  +20%

•

Strategy to differentiate to improve price

8

Strategy Includes

•

Product

–

Medium

–

Bus: school/commercial

–

Heavy:

ProStar

®

/LoneStar

®

–

Niche markets

–

Military

–

Big bore

–

Global

•

Cost Structure

–

Scale

–

Manufacturing

–

SG&A

–

EGR technology

–

Postretirement

•

Growth

–

Mahindra

–

ROW global

–

Military sales

–

Global bus

–

Diesel

9

Converting What it is to What it Can Be

Challenge –

Why take on so many initiatives?

•

“Just do what others do like focus on cost,

price, SG&A”

•

Doesn’t work for Navistar

–

We could only shrink so much with our legacy

costs

–

The ability to price requires product/brand/time

–

People

10

Management Team

Daniel C. Ustian

Chairman,

President and

Chief Executive

Officer

A. J. Cederoth

Executive Vice

President and Chief

Financial Officer

11

Management Team

12

Status/Next Steps…

Objective

Status

Next

$15 billion revenue at

peak

2008 at low industry

•

$20+ billion

$1.6 billion segment

profit at peak industry

Ready –

when market

returns

•

Global impacts

Profitable at bottom

(while investing)

2008/2009/2010 while

we invest in the future

Cash

Best results in N.A.

industry

•

Improve core margins

while growing global

business

Postretirement

Contained

•

Permanent fix

Capital structure

Finalized 

•

Where to invest excess

cash

13

Revenue

14

2002 -

$6.8B Revenue

2008 -

$15B Revenue

2009 -

$12.5B Revenue

Future -

$20B+ Revenue

Original Goal -

$15B+

Revenue

$15 billion

Earnings Per Share vs. Industry Volume

2010 Guidance Range

15

FY2009

Actual

R&D

$433M

Postretirement

$233M

Manufacturing

Cash

$1.2B

This presentation is 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 above, 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 above reconciliations and

to provide an additional measure of performance.

Postretirement

16

•

Contained

Majority of new entrants closed in 1996

Annual service cost is decreasing

•

2009 higher cost caused by 2008 market decline

Revised investment strategy/investment advisor

FY2009 return 15.8% for pension plan and 15.6% for OPEB

Expect cost to improve/neutral

Need funding improvement

•

Aggressive cost control, without service cuts (health care)

Cost contained

FY2008

FY2009

FY2010

Forecast

Future

Goal

Total defined benefits expense (income)

($42)

$233

~$185 to $200

Even Lower

($ in millions)

Capital Structure & Cash

Summary of Capital

Reduced balance sheet risk

and increased financial

flexibility

Manufacturing debt is cost

effective:  6.34% cash APR

Maintained modest leverage

levels set to improve with truck

cycle rebound

Achieved low cost/little to no

dilution while eliminating

uncertainty and risk

17

Future Cash Options

Our high yield bonds give us the

flexibility to pre pay at least a

portion of the outstanding balance

at any time before maturity.

Invest

Pension

Perceptions versus Reality

18

•

UAW/CAW

•

UAW/CAW can be

competitive

•

Military –

predominantly

specialized chassis

•

Military

MRAP

Commercial vehicle

•

Capital structure

•

Capital structure (low cost/

no dilution)

•

Navistar big bore strategy

risk

•

Big bore opportunity

•

2010 EGR engine will have

increased heat and

decreased fuel economy

•

2010 EGR engine will have

better performance and

lower heat rejection

•

Everyone else going urea

based SCR risk

•

Opportunity

2010 Outlook -

$1.75 to $2.25 EPS

2010 vs. 2009

Note

Industry U.S. &

Canada

+5% to 10%

1

half

flat/3

qtr

down/4

qtr

up

Diesel

Ford concluded 1/1/2010

1   3-4 months 2010 engine

transition

Military revenue

Down $700M to $900M

$500M Truck $200M Parts

Interest expense

GAAP interest expense up

$61M

Cash interest expense down

$6M in FY2010

Truck margins

•

Same as 2009 in 1   half

•

Up in 2    half

•

Same as 2009 in 1   half

•

Up in 2    half

Global/Niche

markets

Up in 2    half

Mahindra launch 1   half

NC2 –

2011+

R&D

Similar

Other

2010 launch costs $50M

Mostly 1   half

19

nd

nd

st

st

st

rd

th

nd

st

st

st

Strategy to Lead

Advanced EGR In-Cylinder

NOx

Reduction

Military sustainable at $2B

20

Combined

34% Market Share

FY 2009

Agenda

•

Jack Allen, President, N. A. Truck Group

•

Archie Massicotte, President, Navistar Defense

•

Dee Kapur, President, Truck Group

•

Eric Tech, President, Engine Group

•

A. J. Cederoth, EVP & CFO

•

Q & A

•

Product and Technology Tour

21

Jack Allen

President,

North America Truck Group

Leveraging What We Have and What

Others Have Built

23

•

Great Products

Lead –

Differentiate / Innovate

•

Costs

Scale / Partners / Manufacturing

•

Growth

Market Share

End Customer

10% Return on Sales

North America Businesses

24

Market share based on brand

*Note: Excludes U.S. Military deliveries.

Medium

•

Depressed Industry Sales

•

Best Distribution Network

•

Great Products -

Differentiated

–

Broad Application

–

Proprietary Engines

•

Manufacturing

–

Need Competitive Cost

•

EGR Technology

•

Order Share

•

New Markets / Products

25

Medium Industry

Normal Range

Medium

26

•

Depressed Industry Sales

•

Best Distribution Network

•

Great Products -

Differentiated

–

Broad Application

–

Proprietary Engines

•

Manufacturing

–

Need Competitive Cost

•

EGR Technology

•

Order Share

•

New Markets / Products

International Dealer Network

Medium

27

•

Depressed Industry Sales

•

Best Distribution Network

•

Great Products -

Differentiated

–

Broad Application

–

Proprietary Engines

•

Manufacturing

–

Need Competitive Cost

•

EGR Technology

•

Order Share

•

New Markets / Products

Medium

28

Springfield

•

Depressed Industry Sales

•

Best Distribution Network

•

Great Products -

Differentiated

–

Broad Application

–

Proprietary Engines

•

Manufacturing

–

Need Competitive Cost

•

EGR Technology

•

Order Share

•

New Markets / Products

Medium

29

•

Depressed Industry Sales

•

Best Distribution Network

•

Great Products -

Differentiated

–

Broad Application

–

Proprietary Engines

•

Manufacturing

–

Need Competitive Cost

•

EGR Technology

•

Order Share

•

New Markets / Products

Medium

30

Retail Market

Share:  35%

Last 4 months

Order Share:  54%

•

Depressed Industry Sales

•

Best Distribution Network

•

Great Products -

Differentiated

–

Broad Application

–

Proprietary Engines

•

Manufacturing

–

Need Competitive Cost

•

EGR Technology

•

Order Share

•

New Markets / Products

Medium

31

Electric

Vehicles

Class 4 / 5

•

Depressed Industry Sales

•

Best Distribution Network

•

Great Products -

Differentiated

–

Broad Application

–

Proprietary Engines

•

Manufacturing

–

Need Competitive Cost

•

EGR Technology

•

Order Share

•

New Markets / Products

Class 4/5

Class 6/7

Medium Market Trends

Severe

•

Depressed Industry Sales

•

Great Products -

Differentiated

•

Manufacturing

–

Cost / Quality @ Garland

•

#1 Market Position

•

EGR Technology

•

Order share

•

New Products

32

Severe Industry

Normal Range

Severe

33

•

Depressed Industry Sales

•

Great Products -

Differentiated

•

Manufacturing

–

Cost / Quality @ Garland

•

#1 Market Position

•

EGR Technology

•

Order share

•

New Products

Severe

•

Depressed Industry Sales

•

Great Products -

Differentiated

•

Manufacturing

–

Cost / Quality @ Garland

•

#1 Market Position

•

EGR Technology

•

Order share

•

New Products

34

Garland

Severe

•

Depressed Industry Sales

•

Great Products -

Differentiated

•

Manufacturing

–

Cost / Quality @ Garland

•

#1 Market Position

•

EGR Technology

•

Order share

•

New Products

35

Severe Share*

*Excludes U.S. Military deliveries.

Severe

•

Depressed Industry Sales

•

Great Products -

Differentiated

•

Manufacturing

–

Cost / Quality @ Garland

•

#1 Market Position

•

EGR Technology

•

Order share

•

New Products

36

Severe

•

Depressed Industry Sales

•

Great Products -

Differentiated

•

Manufacturing

–

Cost / Quality @ Garland

•

#1 Market Position

•

EGR Technology

•

Order share

•

New Products

37

*Excludes military

Retail Market

Retail Market

Share:  34%*

Share:  34%*

Last 4 months

Last 4 months

Order Share:  44%

Order Share:  44%

Severe

•

Depressed Industry Sales

•

Great Products -

Differentiated

•

Manufacturing

–

Cost / Quality @ Garland

•

#1 Market Position

•

EGR Technology

•

Order share

•

New Products

38

Bus

•

Lowest Industry

•

Products –

Differentiated

–

Integrated Chassis / Body

–

Proprietary Engines

•

Manufacturing

–

Rationalize Operations

•

EGR Strategy

•

New Products / Markets

39

School Bus Industry

Bus

40

•

Lowest Industry

•

Products –

Differentiated

–

Integrated Chassis / Body

–

Proprietary Engines

•

Manufacturing

–

Rationalize Operations

•

EGR Strategy

•

New Products / Markets

Bus

41

Cost Structure

Tulsa         Conway

•

Lowest Industry

•

Products –

Differentiated

–

Integrated Chassis / Body

–

Proprietary Engines

•

Manufacturing

–

Rationalize Operations

•

EGR Strategy

•

New Products / Markets

Bus

42

•

Lowest Industry

•

Products –

Differentiated

–

Integrated Chassis / Body

–

Proprietary Engines

•

Manufacturing

–

Rationalize Operations

•

EGR Strategy

•

New Products / Markets

Bus

43

•

Lowest Industry

•

Products –

Differentiated

–

Integrated Chassis / Body

–

Proprietary Engines

•

Manufacturing

–

Rationalize Operations

•

EGR Strategy

•

New Products / Markets

Heavy

•

Depressed Industry Sales

•

ProStar

®

/ LoneStar

®

–

Fuel Economy

–

ATD Truck of the Year

•

Manufacturing

–

Cost competitive

–

Cab Relocation

•

Proprietary Engines

–

11L –

15L

–

Parts & Service

•

EGR

–

Fuel Economy

–

Vehicle Improvements

•

Order Share

44

Heavy Industry

Normal Range

Heavy

45

•

Depressed Industry Sales

•

ProStar

®

/ LoneStar

®

–

Fuel Economy

–

ATD Truck of the Year

•

Manufacturing

–

Cost competitive

–

Cab Relocation

•

Proprietary Engines

–

11L –

15L

–

Parts & Service

•

EGR

–

Fuel Economy

–

Vehicle Improvements

•

Order Share

Heavy

46

2003

•

Depressed Industry Sales

•

ProStar

®

/ LoneStar

®

–

Fuel Economy

–

ATD Truck of the Year

•

Manufacturing

–

Cost competitive

–

Cab Relocation

•

Proprietary Engines

–

11L –

15L

–

Parts & Service

•

EGR

–

Fuel Economy

–

Vehicle Improvements

•

Order Share

Heavy

47

2010

•

Depressed Industry Sales

•

ProStar

®

/ LoneStar

®

–

Fuel Economy

–

ATD Truck of the Year

•

Manufacturing

–

Cost competitive

–

Cab Relocation

•

Proprietary Engines

–

11L –

15L

–

Parts & Service

•

EGR

–

Fuel Economy

–

Vehicle Improvements

•

Order Share

Heavy

48

•

Depressed Industry Sales

•

ProStar

®

/ LoneStar

®

–

Fuel Economy

–

ATD Truck of the Year

•

Manufacturing

–

Cost competitive

–

Cab Relocation

•

Proprietary Engines

–

11L –

15L

–

Parts & Service

•

EGR

–

Fuel Economy

–

Vehicle Improvements

•

Order Share

Heavy

49

•

Depressed Industry Sales

•

ProStar

®

/ LoneStar

®

–

Fuel Economy

–

ATD Truck of the Year

•

Manufacturing

–

Cost competitive

–

Cab Relocation

•

Proprietary Engines

–

11L –

15L

–

Parts & Service

•

EGR

–

Fuel Economy

–

Vehicle Improvements

•

Order Share

Heavy

50

•

Depressed Industry Sales

•

ProStar

®

/ LoneStar

®

–

Fuel Economy

–

ATD Truck of the Year

•

Manufacturing

–

Cost competitive

–

Cab Relocation

•

Proprietary Engines

–

11L –

15L

–

Parts & Service

•

EGR

–

Fuel Economy

–

Vehicle Improvements

•

Order Share

Retail Market

Share:  25%

Last 4 months

Order Share:  28%

Growth:  End Customer

51

Controlling Our Destiny

Replicating

Success

of

Navistar

Integrated

Solutions

IC Bus

Integrated Chassis & Body

Vehicle Performance

Quality Enhancement

One Stop:  Sales, Parts, Service

Transaction Control

New Integrated Products

Continental Mixers

Monaco RV

61% Market Share

10% ROS

Concrete Mixers: 

Market Overview

Market

Rear discharge

Industry Characteristics

Share

(Rear discharge mixers)

52

Concrete Mixer Industry

Rear discharge

bridge saver

Front discharge

Cyclical market

2009 historic industry low

Market driven by residential and

commercial construction

McNeilus

70%

Continental

15%

Terex

6%

Others

9%

Continental: Leverage Navistar

Scale and Expertise

53

Business Improvement

Operational Improvements

•

Vehicle Integration      

•

EGR Engines

•

Parts and Service

•

Global Sales

Market Share Growth

10%+ ROS

•

Leverage International

Dealer Network

•

Material Costs

•

Body / Chassis Integration

•

SGA

Towables

Motorized

Recreational Vehicles:  Monaco

Class A Industry

•

Cyclical market

•

Lowest industry in 30 years

•

Market drivers: life style, consumer

confidence, discretionary income

Market

High end Class A

motorhome

Lower priced gas

Multiple price point

towables

–

Under capitalized competitors

–

Low purchasing power

–

Poor relative quality

–

Inconsistent service

–

Low parts sales

–

Fragmented

Industry Characteristics

54

2009 CY Oct YTD Retail Share

12%

88%

Monaco RV: Leverage Navistar

Scale and Expertise

55

Business Improvement

Operational Improvements

•

Vehicle Integration      

•

Aerodynamics

•

EGR Engines

•

Parts and Service

Share Market Growth

10%+ ROS

•

Proprietary Engines

•

Material Costs

•

Overhead

•

SGA

New Chassis

56

Class 4 / 5

LCOE

Enablers to Future Integrated Products

EGR:  Myth’s & Reality

•

Engines run hot with EGR        not true

•

Engines with EGR lose fuel economy         not true

•

Navistar won’t be ready with 0.5g engines and then

with 0.2g engines         not true

•

SCR is more environmentally clean          not true

•

15L gap in production will hurt Navistar                       

in 2010         not true

57

2010 Heavy:

Industry & Engine Transition

58

Summary/Conclusions

•

Goal 10% ROS

•

Market positioned for recovery

•

Differentiated product growing leadership position

•

Cost structure in place to achieve profitability

•

Growth opportunities in each segment leveraging

scale, assets and expertise

•

Advanced EGR on track

–

Testing & certification

–

New order share up significantly

–

15L transition plan

59

Archie Massicotte

President,

Navistar Defense

Leveraging What We Have and What

Others Have Built

61

Leveraging Assets/Controlling our Destiny

Leveraging Assets/Controlling our Destiny

Great Products 

Commercial platforms

MRAP success

Partnerships

Best

Cost

Manufacturing capacity

Purchasing scale

Parts & Service

infrastructure

Commercial synergies

Business Growth

Sustainment services

Spare parts business

Strategic influence

Global sales

Sustainable at $2B for 2010 and Beyond

Leveraging our Assets

Controlling our Destiny

$2B

Global Opportunities

Fielded Fleet

2010 Base

62

Navistar Defense Growth > 27,000* units in 6 years

(*units projected thru 2010)

63

Leveraging What We Have

64

School Bus

Class 6 and 7

Combined Class 8

19,000 to 22,000

19,000 to 22,000

units per year

units per year

Engines

38,000 to 78,000

38,000 to 78,000

units per year

units per year

37,000 to 73,000

37,000 to 73,000

units per year

units per year

269,000 to

269,000 to

460,000

460,000

units per year

units per year

Government Acquisition Landscape

65

•

MRAP

•

TSV (Husky)

•

MilCOTS

Evaluation Criteria:

-

Survivability

-

Delivery

-

Product features

-

Relationship with

customer less important

Urgent Need

•

FMTV

•

HMMVW

Evaluation Criteria:

-

Price

-

Manufacturing capability

-

Delivery

-

Incumbent engrained in

product and government

-

Relationship with

customer more important

Program of Record

•

Supporting the soldier

with the right part at the

right place at the right

time, every time.

•

Operational readiness

•

Vehicle maintenance

•

Capability insertion

•

Repair/Rebuild/Reset

•

72% of life cycle costs

are support and

sustainment

Sustainment

Life Cycle Support

•

Vehicles only part of the story

•

Majority of program opportunity is post acquisition

•

Sustainment activities leverage commercial investments

DOD budget to shift from procurement to operation and maintenance (RESET)

66

(Information from Defence

Acquisition University)

(based on Navistar historical information)

Program Years

Sustainment –

Mission Readiness

•

Initial fielding

•

Field support

•

Training

•

Logistics

•

Spare parts

•

Resets

•

Repower

•

Services

•

Capability insertion

67

Armored Cab for

Afghanistan

Bar Armor

Independent

Suspension

Capability Insertion

Emergency Egress

Windows

Husky Limited Slip

Differential Upgrade

68

Operation Enduring Freedom (OEF) -

Afghanistan

•

President Obama ordered the deployment of an additional 30,000 troops

Deployment will be staged over the next six months, with the full additional

complement being in-country by summer 2010.

U.S. troop total ~ 100,000

•

NATO Secretary General Rasmussen stating that he expects NATO allies to

contribute at least an additional 5,000 troops in 2010

•

There are currently ~ 185,000 personnel in the Afghan army and police

NATO commanders hope to raise this number to 231,000

by October

2010

Eventual objective is a total of 400,000 Afghan National Security Forces

Vehicle and Sustainment Opportunities

69

Afghanistan (Current & Future)

FMS MaxxPro

®

Afghan National Army

UK Wrecker

UK Husky

MaxxPro

®

Wrecker

Afghan National Police

70

MRAPs

in Afghanistan

Joint Requirements Oversight Council increased MRAP acquisition objective

by 4,000

Joint

Program

Office

(JPO)

-

highest

priorities

1)

Full Mission Capable (FMC) readiness for every MRAP

•

MRAP overall

readiness

is

95%

-

including OEF

Sustainment activities contribute to this high readiness rate

2)

Urgent fielding of ISS capable vehicles

•

Dash ISS upgrade kits

•

MaxxPro

®

base model ISS rolling chassis

•

New Dash production

•

Focus

on

facilities

and

sustainment

infrastructure

–

turn

key

71

MRAP Deployment & Enhancement

Building Blocks

Dash production with

ISS upgrade

Fielded Dash

ISS upgrade

ISS upgrade

via rolling chassis

BDAR or value

based decision for

all

variants

72

~ $2.0 -

$2.2 Billion Revenue

Navistar Defense 2009 and 2010 Sales Mix

U.S. and FMS

Vehicles

Direct Foreign

Vehicles

Services

Parts

2009

~ $3 Billion Revenue

Parts

Capability

Insertion

Vehicles

2010

U.S. and FMS

Vehicles

Direct Foreign

Vehicles

Services

Parts

Firm

Orders

~ $1 Billion Revenue

Opportunity (strong confidence)

~ $1.0 -

$1.2 Billion Revenue

73

Clear Path to $2B in 2010

Tactical / MilCOTS

•

7000 MV

•

AFMTV

•

MilCOTS

–

Canada

•

MTV

•

FMS –

UK (TSV)

•

FMS –

MXT

•

FMS –

Other

•

5000 MV

•

TACOM –

other

urgent

requirements

Sustainment

•Spare parts

•Maintenance

•Reset

•Repower

•Refurbishments

•Field Service

Representatives

•Sustainment

services

•Integrated logistics

MRAP

•FMS sales

•New vehicle sales

•Capability

insertions/ retrofits

•Spares

•Maintenance

•Sustainment

services

MRAP ISS

•Dash upgrades

•ISS kits

•Rolling chassis

•Spares

•Field service

Representatives

•Sustainment

74

Beyond 2010

•

Continue to leverage our unique value proposition/commercial

investments (Engineering, Manufacturing, Sustainment)

•

Support fielded products

•

Pursue US tactical vehicle fleet competitions

JLTV (Joint Light Tactical Vehicles)

FMTV (Family of Medium Tactical Vehicles)

M915 –

Line haul tractors  

HMMWV

•

Pursuing vehicle leads in over 20 countries

•

Strategic partnerships

Tatra

(Czech Republic)

BAE

Bumar

(Poland)

FHTV (Family of Heavy Tactical

Vehicles)

HEMTT (Heavy Expanded Mobility

Tactical Truck)

HET (Heavy Equipment Transporter )

75

Navistar Defense Revenue (in $millions)

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

FY2007

FY2008

FY2009

FY2010 (est.)

Vehicles

Sustainment

Navistar Defense Growth > 27,000* units in 6 years

(*units projected thru 2010)

76

Dee Kapur

President,

Truck Group

Great Products:

The foundation for success

•

N.A. Market share growth

•

Customer-focused EGR

solution

•

Quality improvements

•

Integrated vehicle and body

solutions for the end

customer

•

A successful defense

business –

leveraging assets

78

Global Picture of Success: 3-5 Years

•

Leading products

tailored to specific

global markets

•

Integrated powertrain

•

Leveraging Navistar

technology

•

Lean and efficient

•

~1.5 million target market

•

10-20% share

•

150-300K vehicles

•

$3-5 Billion revenue

79

Headlines

China Eclipsed the U.S.

as the world’s top auto

market in 2009

MAN to Buy Stake in China's

Sinotruck

($780M)

MAN AG Buys Volkswagen’s

Brazilian Truck, Bus Unit

($1.58B)

Daimler, India Hero to invest

$1.1B in trucks JV

TATA’s

World Trucks Storm In

80

Global Demand

2008 Global Market

U.S./Canada Market           =       359,000

Rest of World

=    1,858,000

Sources: Compilation of JD Powers 2008, World

Truck Manufacturers Report, Econometrix

81

Global GDP Growth

82

Note:  2007 Truck prices are estimated retail prices (McKinsey, Booz, Monitor)

Australia

South Africa

Turkey

Middle

East

India

Russia

Mercosur

Other

LA

Mexico

China

Western

Europe

North

America

= Avg. Hvy

price <$50K

= Avg. Hvy

price   $50-100K

= Avg. Hvy

price $100-150K

= Avg. Hvy

price >$150K

Global Pricing and Operating

Margins of Leading Manufacturers

83

Australia

South Africa

Middle

East

India

Russia

Mercosur

Other

LA

Mexico

China

North

America

5% -

7%

8% -

10%

> 11%

Global EBIT Margins

Note:

2007

EBIT

estimated

are

based

on

Navistar

historical

data

and

2007

Company Annual Reports

84

Recipe for Global Growth

•

Leverage assets with strategic partners

•

Widest distribution

•

Not only trucks; also buses

Mahindra-Navistar

NOTE: J.V. Pending -

MOU with San Marino (Neobus) for

integrated commercial bus body J.V. assembly plant in

Mexico

85

Historical –

Global Footprint

9800

•

Leverage historical

“International”

distribution

86

Growth –

Addition of MNAL

9800

+

•

Leverage historical

“International”

distribution

•

Expand in to Indian

subcontinent/Asia

87

Growth –

Addition of NC²

9800

+

+

•

Leverage historical

“International”

distribution

•

Expand in to Indian

subcontinent/Asia

•

Leverage CAT brand/

distribution/customer base

88

Growth –

China and Western Europe

9800

+

+

+

•

Leverage historical

“International”

distribution

•

Expand in to Indian

subcontinent/Asia

•

Leverage CAT brand/

distribution/customer base

•

Complete footprint with

JAC/China

89

MNAL Launch

•

Full range of benchmark cabover

products

•

Proprietary dump bodies and buses

•

Proprietary engines

•

Cost structure tailored to local market

90

Mahindra Navistar Market Goals

Industry Volume

256,000

310,000

375,000

426,000

459,000

91

MNAL Launch

92

India Opportunity

•

Tata Motors

currently has

about 60 percent

of India's truck

and bus market

(Source: Reuters)

vs.

•

260 –

310 hp

•

Proprietary powertrain/

5-7% fuel economy

•

Contemporary driving

dynamics/cab comfort –

productivity

227 hp

Cummins B

93

st

China Market

Note:  Mahindra FY –

April to March

Mahindra/Navistar J.V. is a 51% -

49% joint venture

JAC Partner:  Expect DA by 1

half 2010

But can you make money in China?

In a good year, GM makes around a billion dollars profit in China

GM China President, Kevin Wale, 2009

94

China Truck Sales (6 ton and up)

•

Technology, including engines

•

Cost structure tailored to local market

•

Industry expected to be 800,000 units this year

Global Bus Opportunity

•

Navistar

Technology/Resources

•

Neobus

local skills/

manufacturing/marketing

•

Navistar

Technology/Resources/

marketing

•

Neobus

local skills/

manufacturing

•

Navistar

Technology/Resources

•

MNAL local skills/

manufacturing/marketing

95

ROW

U.S. / Canada

Latin America

Leveraging for NC

²

Success

•

Deploy N.A. technology for select markets

•

Derive market specific technology and deploy

•

Leverage MNAL assets into equivalent markets

•

Leverage JAC assets

96

Global Picture of Success: 3-5 Years

•

Leading products

tailored to specific

global markets

•

Integrated powertrain

•

Leveraging Navistar

technology

•

Cost leadership

•

~1.5 million target market

•

10-20% share

•

150-300K vehicles

•

$3-5 Billion revenue

97

Eric Tech

President,

Engine Group

Competitive Cost

Competitive Cost

Structure

Structure

Profitable

Profitable

Growth

Growth

Great Products

Great Products

Differentiation

Strategic Pillars

Controlling Our

Destiny

Leveraging

Assets

Worldwide Leader in 3L to 15L Diesel Engines

99

Support Truck Group with World-Class Engines and

Technology

Diversify North American Customer Base

Build on South American Growth

Grow and Diversify Globally

Engine Growth Strategy: Key Principles

100

Grow with Truck

Niche Segments

North American Growth and Diversification

101

Global Growth

102

The Importance of China

Navistar is well positioned for success in China

China Trends

High Growth Rate

Engine Performance

Requirements

Emissions Regulations

Navistar Provides…

Right Engines

Right Performance

Right Technology

Euro III

Projected Emission Regulations

Euro IV

Euro V

2011

2014

103

3.5 Tons and above

Sources: China Business Update; China Association of Automobile Manufacturers

South American Growth

104

Controlling Costs

Cost Imperative:  Control Key Technology Systems Cost

EPA 04

EPA 07

EPA 10

105

Base

Engine

Base

Engine

Base

Engine

Technology

Technology

Systems

Systems

Technology

Technology

Systems

Systems

Technology

Technology

Systems

Systems

Engine Systems Cost

Controlling Technology Development

Current

Future

Black Box            

Seamless Integration

106

Fuel Systems

Air Systems

Aftertreatment

Controlling Our Destiny

Old Reality

New  Reality

107

Pure Power Technologies

Building Blocks

•

Fuel System Business

•

Re-Man and New

Injector Business

Skilled Workforce

Engineering Staff

Intellectual Property

Fuel Systems Plant

R&D Center

Continental Fuel Systems

Amminex

•

Aftertreatment

System

•

EGNR Technology

•

Complements

MaxxForce

Advanced

EGR Technology

Holley

•

Air management

•

Advanced EGR

valve

•

Facilitates OBD

Integration

EGNR Technology

Advanced EGR Valve

108

Control Cost          Control Technology

Control Destiny

Emissions Technology Advantage

Prime Path –

Advanced EGR

Navistar Uniquely Positioned to Adapt Product Attributes

109

Fuel System

Air Management

Controls

Heat

Management

Advanced EGR

EGNR

When

combined

with

Exhaust

Gas

NOx

Reduction

(EGNR) …

Greater

Flexibility

Strategic Pillars

Worldwide Leader in 3L to 15L Diesel Engines

Competitive Cost

Competitive Cost

Structure

Structure

Profitable

Profitable

Growth

Growth

Great Products

Great Products

Differentiation

Controlling Our

Destiny

Leveraging

Assets

110

A. J. Cederoth

Executive Vice President and

Chief Financial Officer

Capital Structure –

Refinance to Create Value

•

Refinanced $1.5 billion -

Long-term structure with

staggered maturities

–

5 year/12 year

–

No dilution until $60

•

Manufacturing debt is cost

effective:  6.34% cash APR

112

NIC -

Status

NFC -

Status

•

2009 systematic refinancing

•

Three year bank facility in place

•

Position to fund expansion

NIC –

What’s Next

NFC -

What’s Next

•

Focus on strategy execution

•

2010 –

Challenge is fleet financing

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

2007

2008

2009

2010 Fcst

Future

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

2003

2004

2005

2006

Revenue Goal:  $20 Billion at next peak

113

$12.6B-$13.1B

$20B

FY2010

Industry

Growth

Global

Contingency

Future

Manufacturing Segment Profit

114

$700M-$750M

$1.8B

FY2010

Industry

Margin

Growth

Contingency

Future

Earnings Per Share vs. Industry Volume

2010 Guidance Range

115

This presentation is 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 above, 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 above reconciliations and to provide an additional measure of performance.

Summary:  FY 2010 Guidance

116

Note:  Diluted EPS assumes shares of approximately 72.5M

2010

Guidance

U.S. and Canada Industry

195,000

215,000

($billions)

Sales and revenues, net

12.6

$          

13.1

$          

($millions)

Manufacturing segment profit

700

750

Below the line items

(553)

(547)

Income excluding income tax

147

203

Income tax benefit (expense)

(20)

(40)

Net Income

127

$           

163

$           

Diluted earnings per share ($'s)

1.75

$          

2.25

$          

•

Growing the business

•

Diversification is working

•

Improving core margins

•

Right sized headcount for

economy

•

Aggressive actions to

contain health care

•

Year-end manufacturing

cash flow approximately

$1.1B (neutral to positive)

Status/Next Steps…

Objective

Status

Next

$15.0 billion Revenue

at peak

2008 at low industry

$20+ billion

$1.6 billion Segment

Profit at peak industry

Ready –

when market

returns

Global impacts

Profitable at bottom

(while investing)

2008/2009/2010 while

we invest in the future

Cash

Best results in N.A.

industry

Improve core margins

while growing global

business

Postretirement

Contained

Permanent fix

Capital structure

Finalized 

Where to invest excess

cash

117

•

Focus is on reducing impact of cyclicality

–

Non-traditional/expansion markets

–

Grow parts

•

Improve cost structure while developing synergistic niche

businesses with richer margins

•

Improve conversion rate of operating income into net

income

•

Controlling our Destiny

Strategy: Leveraging What We Have and

What Others Have Built

118

Q&A

Appendix

Date

Financial Services Actions

Completed

April

$300 million –

Retail Securitization

August

$650 million –

Wholesale Renewal

October

$100 million –

Retail Accounts Renewal

November

$350 million –

Wholesale TALF Deal

December

$815 million –

NFC Bank Refinance

December

$300 million –

Asset Sale

Navistar’s 2009 Refinancing

Plan is Complete

Date

Manufacturing Action

Completed

October

$1.5 billion –

NIC Refinancing

121

Traditional U.S. and Canada Retail Sales

Class 6 –

8 Industry Landscape

Industry

FY99

FY00

FY01

FY02

FY03

FY04

FY 05

FY06

FY 07

FY08

FY09

School Bus

33,800

33,900

27,900

27,400

29,200

26,200

26,800

28,200

24,500

24,400

22,600

20,000

23,000

Class 6-7 -

Medium

126,000

129,600

96,000

72,700

74,900

99,200

104,600

110,400

88,500

59,600

39,800

45,000

54,000

Combined Class 8 (Heavy & Severe Service)

286,000

258,300

163,700

163,300

159,300

219,300

282,900

316,100

206,000

160,100

119,400

130,000

138,000

Total Industry Demand

445,800

421,800

287,600

263,400

263,400

344,700

414,300

454,700

319,000

244,100

181,800

195,000

215,000

FY 10

Actual

Guidance

Historical Information

United

States

and

Canadian

Class

6-8

Truck

Industry

-

Retail

Sales

Volume

122

100,000

200,000

300,000

400,000

500,000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Fcst

U.S.

and

Canada

Class

6-8

Retail

Industry

Market Share –

U.S. & Canada School Bus and

Class 6-8

123

Navistar

1st Q

2nd Q

3rd Q

4th Q

1st Q

2nd Q

3rd Q

4th Q

1st Q

2nd Q

3rd Q

4th Q

Full Year

Bus (School)

60%

60%

59%

59%

60%

57%

57%

48%

58%

55%

56%

60%

61%

66%

61%

Medium (Class 6-7)

37%

34%

34%

37%

36%

34%

35%

39%

35%

36%

30%

39%

33%

39%

35%

Heavy (LH & RH)

16%

12%

15%

17%

15%

16%

15%

19%

25%

19%

24%

23%

29%

24%

25%

Severe Service

24%

28%

26%

32%

27%

35%

36%

34%

41%

37%

45%

49%

41%

47%

45%

Combined Class 8

18%

17%

19%

22%

19%

23%

23%

25%

30%

25%

31%

33%

33%

32%

32%

Combined Market Share

25%

25%

27%

31%

27%

29%

29%

30%

35%

31%

33%

38%

37%

39%

36%

Navistar

1st Q

2nd Q

3rd Q

4th Q

1st Q

2nd Q

3rd Q

4th Q

1st Q

2nd Q

3rd Q

4th Q

Full Year

Bus (School)

60%

60%

59%

59%

60%

57%

57%

48%

58%

55%

56%

60%

61%

66%

61%

Medium (Class 6-7)

37%

34%

34%

37%

36%

34%

35%

39%

35%

36%

30%

39%

33%

39%

35%

Heavy (LH & RH)

16%

12%

15%

17%

15%

16%

15%

19%

25%

19%

24%

23%

29%

24%

25%

Severe Service

23%

26%

24%

28%

25%

28%

26%

26%

29%

27%

32%

36%

33%

33%

34%

Combined Class 8

18%

16%

19%

21%

18%

20%

19%

21%

26%

22%

26%

28%

30%

27%

28%

Combined Market Share

25%

25%

27%

31%

26%

27%

27%

28%

32%

29%

30%

35%

35%

36%

34%

Market Share -

U.S. & Canada School Bus and Class 6-8

2007

2008

2007

2008

2009

2009

Full Year

Full Year

Full Year

Full Year

Truck Chargeouts

Note:  Information shown below is based on Navistar’s fiscal year

124

Fiscal Year 2007

1Q07

2Q07

3Q07

4Q07

Full Year 2007

BUS

3,400

4,100

3,200

3,900

14,600

MEDIUM

9,700

6,800

5,600

6,600

28,700

HEAVY

7,000

4,500

2,600

3,300

17,400

SEVERE

3,900

3,300

3,500

3,700

14,400

TOTAL

24,000

18,700

14,900

17,500

75,100

MILITARY (U.S. & Foreign)

600

900

700

1,000

3,200

EXPANSIONARY

9,100

8,700

9,000

8,500

35,300

WORLD WIDE TRUCK

33,700

28,300

24,600

27,000

113,600

Fiscal year 2008

1Q08

2Q08

3Q08

4Q08

Full Year 2008

BUS

3,100

3,300

2,700

4,400

13,500

MEDIUM

3,700

6,300

5,800

4,500

20,300

HEAVY

2,600

3,900

4,500

7,800

18,800

SEVERE

2,400

3,400

3,300

3,700

12,800

TOTAL

11,800

16,900

16,300

20,400

65,400

MILITARY (U.S. & Foreign)

1,600

2,200

2,300

2,600

8,700

EXPANSIONARY

5,900

8,100

8,400

5,700

28,100

WORLD WIDE TRUCK

19,300

27,200

27,000

28,700

102,200

Fiscal year 2009

1Q09

2Q09

3Q09

4Q09

Full Year 2009

BUS

2,700

3,100

3,500

4,500

13,800

MEDIUM

3,200

3,400

2,600

3,800

13,000

HEAVY

6,100

3,200

4,500

5,300

19,100

SEVERE

2,800

2,700

2,800

2,700

11,000

TOTAL

14,800

12,400

13,400

16,300

56,900

MILITARY (U.S. & Foreign)

2,500

2,100

1,200

2,000

7,800

EXPANSIONARY

2,400

1,900

2,400

5,400

12,100

WORLD WIDE TRUCK

19,700

16,400

17,000

23,700

76,800

World Wide Engine Shipments

Navistar

1st Q

2nd Q

3rd Q

4th Q

Full Year

Ford

60,000

56,200

65,400

53,500

235,100

Other OEM's (All Models)

21,000

26,400

29,100

27,700

104,200

Engine Shipments to Truck Group

23,100

12,100

13,700

16,500

65,400

Total Shipments

104,100

94,700

108,200

97,700

404,700

Navistar

1st Q

2nd Q

3rd Q

4th Q

Full Year

Ford

47,000

55,300

25,200

24,500

152,000

Other OEM's (All Models)

25,900

31,500

34,100

37,100

128,600

Engine Shipments to Truck Group

12,900

15,700

20,000

16,300

64,900

Total Shipments

85,800

102,500

79,300

77,900

345,500

Navistar

1st Q

2nd Q

3rd Q

4th Q

Full Year

Ford

14,100

29,000

26,200

44,300

113,600

Other OEM's (All Models)

22,500

22,200

24,600

29,100

98,400

Engine Shipments to Truck Group

14,300

12,700

12,800

17,500

57,300

Total Shipments

50,900

63,900

63,600

90,900

269,300

2008

2007

2009

125

Order Receipts –

U.S. & Canada

126

Percentage

2009

2008

Change

Change

18,300

11,900

6,400

54

15,100

19,400

(4,300)

(22)

Class 8 heavy trucks

19,900

22,600

(2,700)

(12)

Class 8 severe service trucks

14,100

23,100

(9,000)

(39)

67,400

77,000

(9,600)

(12)

34,000

45,700

(11,700)

(26)

* Includes

3,000

and

9,600

units

for

the

years

ended

October

31,

2009

and

2008,

respectively,

related

to

U.S.

military

contracts.

Total "Traditional" Markets*

Order Receipts: U.S. & Canada (Units)

Combined Class 8 (Heavy and Severe Service)

"Traditional" Markets

School buses

Class 6 and 7 medium trucks

Year Ended

October 31,

Frequently Asked Questions

127

Q1:

What should we assume for capital expenditures in 2010? 

A:

For 2010, excluding our NFC and Dealcor acquisition of vehicles for leasing, we expect our capital

expenditures to be below our normal $250 million to $350 million range. We continue to fund our

strategic programs.

Q2:

What is in your Dealcor debt? 

A:

Dealcor debt is comprised of wholesale (floor plan) financing and also retail financing on lease and

rental fleets for company owned dealers.

Q3:

What causes the variance between manufacturing cash interest payments and GAAP interest

expense?

A: 

The main variance between cash and GAAP interest results from the recent issuance of new

manufacturing debt.  In October 2009 our manufacturing company issued $1 billion of senior unsecured

high yield notes and $570 million of senior subordinated convertible notes.  As a result of this issuance,

future manufacturing interest expense will be higher than cash interest payments due to the

amortization of debt issuance costs ($36 million in total amortized over the life of each note),

amortization of the original issue discount of the high yield notes ($37 million) and amortization of the

embedded call option in the convertible notes ($125 million).  In FY 2010 this variance will be much

larger due to the timing of interest payments on the high yield notes.  Interest payment dates are in May

and November starting in May 2010.  Therefore, we will only have one cash payment this fiscal year

even though expense will show the full year's amount.  As a result of this and other non-cash interest

expense, FY 2010 may show a variance of approximately $67 million between cash and GAAP interest.

Frequently Asked Questions

Q4:

What do you finance at Navistar Finance Corporation (NFC)?

A:

NFC is a commercial financing organization that provides wholesale, retail and lease financing for sales

of new and used trucks and buses sold by the company. NFC also finances the company’s wholesale

accounts and selected retail accounts receivable. Sales of new truck related equipment (including

trailers) of other manufacturers are also financed.

Q5:

What percentage of truck purchases do you fund?

A:

We consistently fund about 95% of floor plan inventory for our dealers in the U.S. and approximately 9%

of retail purchases.

Q6:

When is the next refinancing due at NFC?

A:

Our TRIP facility, which we use as a warehouse for our retail notes, is due for renewal in June 2010.

Q7:

How do you fund retail notes?

A:

Retail notes are primarily funded by a bank revolver and a revolving warehouse facility that we call TRIP,

which

doesn’t

mature

until

2010.

These

notes

are

ultimately

sold

to

either

a

conduit

facility

or

into

a

public securitization.

Q8:

Are there any requirements for NFC leverage?

A:

NFC is compliant with our revolver leverage covenant of 6 to 1. This ratio calculation excludes qualified

retail and lease securitization debt.

128

Frequently Asked Questions

Q9:

How are your securitization rates determined?

A:

Portfolio performance, deal structure and market conditions affect pricing, as well as the type of asset

being

financed

(for

example

dealer

floor

plan

inventory

versus

a

customer

purchase).

Q10:

What is your NFC funding strategy?

A:

We

use

three

or

four

primary

funding

sources.

For

longer-term

retail

truck

notes

that

finance

the

sale

of

trucks to end customers, we finance those in the term securitization markets in either public or private

deals. We primarily finance our wholesale portfolio in traditional private or public securitizations. We also

have a combination of revolving type facilities that often warehouse assets until they can be financed

permanently.

Q11:

How are your dealers doing?

A:

We think our dealers, which have always been one of our strengths, are well positioned. We traditionally

have

not

had

any

significant

dealer

losses

and

expect

that

trend

to

continue

in

the

future.

Q12:

Are your customer interest rates going to increase?

A:

Like all lenders, we need to achieve a profitability threshold to ensure our continued access to capital,

and

that

means

pricing

our

rates

in

line

with

the

marketplace.

So,

yes,

as

the

cost

of

financing

has

increased for all companies, we have passed on some of the cost increase to our dealers and

customers.

Q13:

What kind of rates do you charge your dealers and customers?

A:

Generally, our rates vary (those with higher credit risk have always had to pay higher interest rates) and

are usually in line with the market.

129

Frequently Asked Questions

130

Q14:

How do you make your credit decisions? Do you require a certain credit score? 

A:

We factor in a variety of criteria in our credit scoring model such as business model, company history,

down payment, etc. 

Q15:

What is your total amount of capacity at NFC? 

A:

Total availability in our funding facilities is more than $700 million as of October 31, 2009.  

Q16: What was your Class 6/7 net order intake for July 2009 to December 2009?

A:

For the period of July 2009 to December 2009, our Class 6/7 total net order intake was 14,037 for the

six month period, accounting for about 50% of overall orders in the industry.

Q17:

What was your Class 8 net order intake for July 2009 to December 2009? What was your 

Class 8 backlog as of December 2009?

A:

For the period of July 2009 to December 2009, our Class 8 total net order intake was 20,181 for the

six month period, accounting for about 31% of overall orders in the industry. The backlog of Class 8

trucks was 11,155.

Frequently Asked Questions

Q18:

What is the current JLTV status?

A:

Navistar and BAE just completed the Critical Design Review (CDR). The CDR was completed as part

of the 27-month JLTV Technology Development (TD) contract received in October 2008. The CDR

marks the completion of the design process and the start of vehicle integration, assembly, test and

checkout (IAT&C) activities to deliver test vehicles to the government by May 2010. Australia and India

have also joined the program and interest has been expressed by Canada, Israel and Britain.

Q19:

What changes have occurred in Defense spending due to the increase in troops heading to

Afghanistan?

A:

According to a Pentagon reprogramming document signed on December 1, the Defense Department is

shifting $2.7 billion from the Mine Resistant Ambush Protected vehicle fund. Approximately $1.8 billion

will go to the MRAP account for government furnished equipment, engineering change proposals, and

initial logistics support for operating forces in Afghanistan. Last week, the Joint Requirements Oversight

Council also increased the acquisition objective for Mine Resistant Ambush Protected (MRAP) vehicles

by 4,000 units. Approximately 1,300 of these vehicles may be category I MRAPs. Navistar has more

than

6,400

CAT

I

MaxxPro

MRAPs

in

theater.

Q20:

What is the process now that the Government Accountability Office (GAO) has upheld the FMTV

protests waged by Navistar and BAE?

A:

The GAO has recommended that the Army re-evaluate Oshkosh under the capability factor and

Navistar

under

the

past

performance

factor.

The

Army

has

60

days

from December 14 to comply with

the GAO’s recommendations.

Price and capability are of equal importance in evaluating the FMTV

program. Past performance is the third area for evaluation.

131

Frequently Asked Questions

Q21:

What are the 2010 emissions requirements?

A:

The

rules

allow

manufacturers

to

go

to

0.5

NOx

if

they

clean

up

the

environment

earlier

with

advanced

technology;

manufacturers

need

to

be

at

0.2

NOx

if

they

choose

not

to

introduce

advanced

technologies earlier. 

Q22:

How has The American Recovery and Reinvestment Act of 2009 and The Worker,

Homeownership, and Business Assistance Act of 2009 affected Navistar?

A:

Two of the business tax incentives had a direct effect on Navistar in FY2009:

A)  The legislation provides for additional depreciation deductions equal to 50% of the cost of non-

real property fixed assets placed in service during calendar year 2009. 

B)   In lieu of claiming the additional depreciation deductions described in (A) above, the legislation

would allow Navistar to accelerate the realization of tax credits earned in prior years. 

Navistar intends to accelerate the realization of tax credits earned in prior years.  The amount

expected to be realized is immaterial to the Company’s financial statements.

We expect the direct effect on Navistar in FY2010 as follow:

The

Act

also

provides

for

the

carryback

of

net

operating

losses

incurred

in

tax

years

beginning

in

2009,

which

would

entitle

the

Company

to

a

refund

of

AMT

taxes

paid

in

prior

years.

If

the

Company

incurs

a tax

net

operating

loss

in

FY2010,

it

will

pursue

the

refund

of

AMT

credits

to

the

maximum

amount

allowable by law.

132

Frequently Asked Questions

133

Q23:

How would President Obama’s tax proposals impact Navistar, if enacted?

A:

The President’s proposals would have anti-competitive implications for multinational companies, such

as Navistar. In the near term we would not anticipate a material adverse impact on our financial

statements due to the fact that we currently have a full valuation allowance against a large portion of

our deferred tax assets and are still utilizing U.S. net operating losses.  Over the long term we would

anticipate adverse U.S. tax implications for our international businesses, requiring actions to be taken

by Navistar to address these implications.  

Certain material proposals impacting multinational corporations include:

•Deferral of deductions deemed related to unremitted foreign earnings

•Limitations on the use of disregarded entities in foreign jurisdictions

•Limitations on foreign tax credits

Q24:

What makes up our consolidated tax expense?

A:

Our pre-tax operating profit reflects our worldwide operations, consequently our tax expense reflects the

impact of differing tax positions throughout the world. In general, we currently have a full valuation

allowance against our U.S. and Canadian operations.  Consequently, our tax expense in those

jurisdictions is generally limited to current state taxes and alternative minimum taxes.  Our Brazilian and

Mexican operations are profitable and as a result we accrue taxes in those jurisdictions.  

Frequently Asked Questions

134

Q25:

Your tax footnote in the 10K discloses gross deferred tax assets of $2.2 billion.  How will those

assets be used to offset future taxable income? 

A:

The most commonly understood component of deferred tax assets is the value of our net operating

losses, which was reported as $268 million as of October 31, 2009.  We continue to offset current

taxable income by these net operating losses both in the U.S. for federal and state tax purposes and in

Canada and Brazil.  In addition, we have several other major components of deferred taxes which will

reduce taxable income in the future.  For example, to date the Company has accrued OPEB, pension

and other employee benefit liabilities during prior years.  As those employee benefits are paid, the

company will realize a deduction against its future taxable income.  Similarly, the Company has accrued

significant reserves for warranty and product liability obligations.  As payments are made against those

reserves the Company will realize a deduction against its future taxable income.

Q26:

How much value of net operating losses remains, and why is there still a valuation allowance

against deferred tax assets?

A:

The Company has approximately $288 million of U.S. federal net operating losses available to offset

future taxable income. Applying a federal tax rate of 35%, these losses have a value of $101 million. In

addition the value of our state and foreign NOLs are $82 million and $102 million, respectively, for a

total value of $285 million. (U.S. GAAP rules require an adjustment to these balances for stock option

accounting.)

A substantial portion of these NOLs are subject to a valuation allowance. In addition to these deferred

tax assets we have other deferred tax assets subject to a valuation allowance of $1.8 billion, for a total 

balance of deferred tax assets subject to a valuation allowance of $2.1 billion. Under U.S. GAAP rules,

when the Company is able to demonstrate sufficient earnings (both historically and in the future) to

absorb these future deductions, the Company is able to release these valuation allowances.

Frequently Asked Questions

135

Q27:

What is your expected 2010 pension and OPEB GAAP expense?

A:

We anticipate 2010 pension and OPEB GAAP expense of approximately $185 to $200 million.  In

2009, pension and OPEB GAAP expense was $233 million. 

Q28:

What are your expected 2010 and beyond pension funding requirements?

A:

Current forecasts indicate that we may need to contribute approximately $153 million in 2010.  From

2011 through 2013, the Company will be required to contribute at least $275 million per year to the

plans depending on asset performance and discount rates in the next several years. 

SEC Regulation G

DEBT

YE 2006

YE 2007

YE 2008

YE 2009

(in millions)

Manufacturing operations

Facilities due 2012

-

$             

1,330

$      

1,330

$       

-

$                  

8.25% Senior Notes, due 2021, net of unamortized discount of $37 million at October 31, 2009

-

-

-

963

3.0% Senior Subordinated Convertibel Notes, due 2014

-

-

-

570

Debt of majority owned dealership

484

267

157

148

Financing arrangements and capital lease obligations 

401

369

306

271

7.5% Senior Notes, due 2011

15

15

15

15

9.95% Senior Notes, due 2011

11

8

6

4

Bridge Loan Facility (Libor + 500)

1,500

-

-

-

4.75% Subordinated Exchangeable Notes, due 2009

1

1

1

-

Other

60

39

19

4

Total manufacturing operations debt

2,472

2,029

1,834

1,975

Financial services operations  

Asset-backed debt issued by consolidated SPEs, at variable rates, due serially through 2016

3,104

$      

2,748

$      

2,076

$       

1,227

$           

Bank revolvers, at fixed and variable rates, due dates from 2010 through 2015

1,426

1,354

1,370

1,518

Revolving retail warehouse facility, at variable rates, due 2010

500

500

500

500

Commercial Paper, at variable rates, due serially through 2010

28

117

162

52

  Borrowing secured by operating and finance leases, at various rate, due serially through 2016

116

133

132

134

Total financial services operations debt

5,174

$      

4,852

$      

4,240

$       

3,431

$           

Cash & Cash Equivalents

YE 2006

YE 2007

YE 2008

YE 2009

Manufacturing non-GAAP (Unaudited)

1,078

$      

716

$         

775

$          

1,152

$           

*

Financial Services non-GAAP (Unaudited)

79

61

86

60

Consolidated US GAAP (Audited)

1,157

$      

777

$         

861

$          

1,212

$           

Manufacturing Cash & Cash Equivalents non-GAAP (Unaudited)

1,078

$      

716

$         

775

$          

1,152

$           

*

Manufacturing Marketable Securities non-GAAP (Unaudited)

136

6

2

-

Manufacturing Cash, Cash Equivalents & Marketable Securities non-GAAP (Unaudited)

1,214

$      

722

$         

777

$          

1,152

$           

*Includes increase in cash and cash equivalents from consolidating Blue Diamond Truck and Blue Diamond Parts

Audited

136

This presentation is 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 above, 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 above reconciliations and to provide an additional

measure of performance.

SEC Regulation G –

Goal Reconciliation

137

2010

2009

Original

Revised

target

@ 350k

Industry

Target

@ 414.5k

Industry

U.S. and Canada Industry

350,000

414,500

($billions)

Sales and revenues, net

$ 20 +

$ 15 +

($millions)

Manufacturing segment profit

1,780

1,600

Below the line items

(590)

(500)

Income excluding income tax

1,190

1,100

Income tax expense

(298)

(275)

Net Income

892

$          

825

$          

Diluted earnings per share ($'s)

12.31

$       

11.46

$       

Weighted average shares outstanding: diluted (millions)

~ 72.5

~ 72.5

SEC Regulation G –

Fiscal Year Comparison

138

2010

2009

2008

Non GAAP

Non GAAP

As Reported

Non GAAP

Non GAAP

As Reported

Guidance

Without

Impacts

Impacts

With Impacts

Without

Impacts

Impacts

With Impacts

U.S. and Canada Industry

195,000

215,000

181,800

244,100

($billions)

Sales and revenues, net

12.6

$          

13.1

$          

11.6

$          

14.7

$          

($millions)

Manufacturing segment profit *

(excluding items listed below)

700

$           

750

$           

707

$           

-

$           

707

$           

1,088

$        

-

$           

1,088

$        

Ford settlement net of related charges

160

160

(37)

(37)

Impairment of property, plant and equipment

(31)

(31)

(358)

(358)

Manufacturing segment profit

700

750

707

129

836

1,088

(395)

693

Below the line items

(excluding items listed below)

(553)

(547)

(468)

(468)

(502)

(502)

Write-off of debt issuance cost

(11)

(11)

-

Below the line items

(553)

(547)

(468)

(11)

(479)

(502)

-

(502)

Income (loss) excluding income tax

147

203

239

118

357

586

(395)

191

Income tax benefit (expense)

(20)

(40)

(34)

(3)

(37)

(58)

1

(57)

Net Income (loss)

127

$           

163

$           

205

$           

115

$           

320

$           

528

$           

(394)

$         

134

$           

Diluted earnings (loss) per share ($'s)

1.75

$          

2.25

$          

2.86

$          

1.60

$          

4.46

$          

7.21

$          

(5.39)

$        

1.82

$          

Weighted average shares outstanding: diluted (millions)

~ 72.5

~ 72.5

71.8

71.8

73.2

73.2

* Includes: minority interest in net income of subsidiaries net of tax; extraordinary gain net of tax

This presentation is 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 above, 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

above reconciliations and to provide an additional measure of performance.