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 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. |