Navistar International (NAV) 10-Q 2010 Q2 Quarterly report

EXHIBIT 99.1

Additional Financial Information (Unaudited)

The following additional financial information is provided based upon the continuing interest of certain stockholders and creditors to assist them in understanding our core manufacturing business with our financial services operations on a pre-tax equity basis. Our manufacturing operations, for this purpose, include our Truck segment, Engine segment, Parts segment, and Corporate items which includes certain eliminations. The manufacturing operations financial information represents non-GAAP financial measures. The reconciling differences between these non-GAAP financial measures and our GAAP condensed consolidated financial statements in Item 1,Condensed Consolidated Financial Statements, are our financial services operations and adjustments required to eliminate certain intercompany transactions between Manufacturing Operations and Financial Services Operations and to adjust for reclasses. Certain of our subsidiaries in our manufacturing operations have debt outstanding with our financial services operations (“intercompany debt”). In the condensed statements of assets, liabilities, redeemable equity securities, and stockholders’ deficit, the intercompany debt is reflected as accounts payable. The change in the intercompany debt is reflected in the net cash provided by operating activities in the condensed statements of cash activities.

Condensed Statements of Revenues and Expenses

Navistar International Corporation (Manufacturing operations with financial services operations on a pre-tax equity basis)

	Three Months Ended April 30, 2010
	Manufacturing Operations			Financial Services Operations			Adjustments			Consolidated Statement of Operations
(in millions)
Sales of manufactured products	$	2,690		$	—		$	—		$	2,690
Finance revenues		—			76			(23	)		53
Sales and revenues, net		2,690			76			(23	)		2,743
Costs of products sold		2,189			—			—			2,189
Restructuring charges		—			3			—			3
Selling, general and administrative expenses		338			35			(1	)		372
Engineering and product development costs		116			—			—			116
Interest expense		37			29			(2	)		64
Other expense (income), net		(20	)		(7	)		(20	)		(47	)
Total costs and expenses		2,660			60			(23	)		2,697
Equity in loss of non-consolidated affiliates		(13	)		—			—			(13	)
Income before income taxes and equity income from financial services operations		17			16			—			33
Equity income from financial services operations		16			—			(16	)		—
Income before income taxes		33			16			(16	)		33
Income tax benefit		10			—			—			10
Net income (loss)		43			16			(16	)		43
Income attributable to non-controlling interests		(13	)		—			—			(13	)
Net income (loss) attributable to Navistar International Corporation	$	30		$	16		$	(16	)	$	30

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Condensed Statements of Revenues and Expenses

Navistar International Corporation (Manufacturing operations with financial services operations on a pre-tax equity basis)

	Six Months Ended April 30, 2010
	Manufacturing Operations			Financial Services Operations			Adjustments			Consolidated Statement of Operations
(in millions)
Sales of manufactured products	$	5,448		$	—		$	—		$	5,448
Finance revenues		—			151			(47	)		104
Sales and revenues, net		5,448			151			(47	)		5,552
Costs of products sold		4,451			—			—			4,451
Restructuring charges		(17	)		3			—			(14	)
Selling, general and administrative expenses		644			69			(3	)		710
Engineering and product development costs		225			—			—			225
Interest expense		76			61			(6	)		131
Other expense (income), net		7			(10	)		(38	)		(41	)
Total costs and expenses		5,386			123			(47	)		5,462
Equity in loss of non-consolidated affiliates		(19	)		—			—			(19	)
Income before income taxes and equity income from financial services operations		43			28			—			71
Equity income from financial services operations		28			—			(28	)		—
Income before income taxes		71			28			(28	)		71
Income tax benefit		2			—			—			2
Net income (loss)		73			28			(28	)		73
Income attributable to non-controlling interests		(26	)		—			—			(26	)
Net income (loss) attributable to Navistar International Corporation	$	47		$	28		$	(28	)	$	47
	Six Months Ended April 30, 2009
	Manufacturing Operations			Financial Services Operations			Adjustments			Consolidated Statement of Operations
(in millions)
Sales of manufactured products	$	5,636		$	—		$	—		$	5,636
Finance revenues		—			181			(39	)		142
Sales and revenues, net	$	5,636		$	181		$	(39	)	$	5,778
Costs of products sold		4,618			—			—			4,618
Restructuring charges		55			—			—			55
Selling, general and administrative expenses		611			67			(2	)		676
Engineering and product development costs		238			—			—			238
Interest expense		54			102			(6	)		150
Other income, net		(140	)		(5	)		(31	)		(176	)
Total costs and expenses		5,436			164			(39	)		5,561
Equity in income of non-consolidated affiliates		31			—			—			31
Income (loss) before income taxes and equity income from financial services operations		231			17			—			248
Equity income from financial services operations		17			—			(17	)		—
Income (loss) before income taxes		248			17			(17	)		248
Income tax expense		2			—			—			2
Net income (loss)	$	246		$	17		$	(17	)	$	246

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Condensed Statements of Revenues and Expenses

Navistar International Corporation (Manufacturing operations with financial services operations on a pre-tax equity basis)

	Three Months Ended April 30, 2009
	Manufacturing Operations			Financial Services Operations			Adjustments			Consolidated Statement of Operations
(in millions)
Sales of manufactured products	$	2,741		$	—		$	—		$	2,741
Finance revenues		—			88			(21	)		67
Sales and revenues, net	$	2,741		$	88		$	(21	)	$	2,808
Costs of products sold		2,295			—			—			2,295
Restructuring charges		(3	)		—			—			(3	)
Selling, general and administrative expenses		266			34			—			300
Engineering and product development costs		130			—			—			130
Interest expense		23			38			(4	)		57
Other income, net		41			(2	)		(17	)		22
Total costs and expenses		2,752			70			(21	)		2,801
Equity in income of non-consolidated affiliates		14			—			—			14
Income (loss) before income taxes and equity income from financial services operations		3			18			—			21
Equity income from financial services operations		18			—			(18	)		—
Income (loss) before income taxes		21			18			(18	)		21
Income tax benefit (expense)		(9	)		—			—			(9	)
Net income (loss)	$	12		$	18		$	(18	)	$	12

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Condensed Statements of Assets, Liabilities, Redeemable Equity Securities, and Stockholders’ Deficit

Navistar International Corporation (Manufacturing operations with financial services operations on a pre-tax equity basis)

	As of April 30, 2010
	Manufacturing Operations			Financial Services Operations		Adjustments			Consolidated Balance Sheet
(in millions)
Cash and cash equivalents	$	455		$	53	$	—		$	508
Marketable securities		175			—		—			175
Restricted cash and cash equivalents		28			256		—			284
Accounts receivables		951			2,950		(289	)		3,612
Inventories		1,694			25		—			1,719
Investments in financial services operations		448			—		(448	)		—
Investments in non-consolidated affiliates		97			—		—			97
Property and equipment, net		1,312			127		—			1,439
Goodwill and intangible assets, net		596			—		—			596
Other assets		314			46		—			360
Deferred taxes, net		99			51		—			150
Total assets	$	6,169		$	3,508	$	(737	)	$	8,940
Accounts payable	$	1,687		$	202	$	(289	)	$	1,600
Postretirement benefits liabilities		2,273			31		—			2,304
Debt		1,840			2,705		—			4,545
Other liabilities		1,567			122		—			1,689
Redeemable equity securities		11			—		—			11
Stockholders’ equity attributable to non-controlling interest		56			—		—			56
Stockholders’ equity (deficit) attributable to controlling interest		(1,265	)		448		(448	)		(1,265	)
Total liabilities, redeemable equity securities, and stockholders’ equity (deficit)	$	6,169		$	3,508	$	(737	)	$	8,940

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Condensed Statements of Assets, Liabilities, Redeemable Equity Securities, and Stockholders’ Deficit Navistar International Corporation (Manufacturing operations with financial services operations on a pre-tax equity basis)

	As of October 31, 2009
	Manufacturing Operations			Financial Services Operations		Adjustments			Consolidated Balance Sheet
	(Revised)(A)
(in millions)
Cash and cash equivalents	$	1,152		$	60	$	—		$	1,212
Restricted cash and cash equivalents		30			455		—			485
Accounts receivables		915			3,358		(188	)		4,085
Inventories		1,634			32		—			1,666
Investments in financial services operations		423			—		(423	)		—
Investments in non-consolidated affiliates		62			—		—			62
Property and equipment, net		1,345			122		—			1,467
Goodwill and intangible assets, net		582			—		—			582
Deferred taxes, net		102			57		—			159
Other assets		253			52		—			305
Total assets	$	6,498		$	4,136	$	(611	)	$	10,023
Accounts payable	$	1,929		$	131	$	(188	)	$	1,872
Postretirement benefits liabilities		2,635			33		—			2,668
Debt		1,861			3,431		—			5,292
Other liabilities		1,702			118		—			1,820
Redeemable equity securities		13			—		—			13
Stockholders’ equity attributable to non-controlling interests		61			—		—			61
Stockholders’ equity (deficit) attributable to Navistar International Corporation		(1,703	)		423		(423	)		(1,703	)
Total liabilities, redeemable equity securities, and stockholders’ equity (deficit)	$	6,498		$	4,136	$	(611	)	$	10,023

(A) Revised; See Note 1,Summary of significant accounting policies, to the accompanying consolidated financial statements.

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Condensed Statement of Cash Activities

Navistar International Corporation (Manufacturing operations with financial services operations on a pre-tax equity basis)

	Six Months Ended April 30, 2010
	Manufacturing Operations			Financial Services Operations			Adjustments			Condensed Consolidated Statement of Cash Flows
(in millions)
Cash flows from operating activities
Net income	$	73		$	28		$	(28	)	$	73
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization		129			3			—			132
Depreciation of equipment leased to others		14			12			—			26
Amortization of debt issuance costs and discount		13			7			—			20
Deferred income taxes		6			5			—			11
Equity in loss of non-consolidated affiliates		19			—			—			19
Equity in income of financial services affiliates		(28	)		—			28			—
Dividends from non-consolidated affiliates		3			—			—			3
Change in intercompany receivable /payable, net		(154	)		154			—			—
Other, net		(382	)		364			—			(18	)
Net cash provided by (used in) operating activities		(307	)		573			—			266
Cash flows from investing activities
Purchases of marketable securities		(663	)		—			—			(663	)
Sales or maturities of marketable securities		488			—			—			488
Net change in restricted cash and cash equivalents		1			200			—			201
Capital expenditures		(77	)		(1	)		—			(78	)
Purchase of equipment leased to others		(2	)		(23	)		—			(25	)
Acquisition of intangibles		(11	)		—			—			(11	)
Business acquisitions		(2	)		—			—			(2	)
Other investing activities		(54	)		4			—			(50	)
Net cash provided by (used in) investing activities		(320	)		180			—			(140	)
Net cash used in financing activities		(66	)		(761	)		—			(827	)
Effect of exchange rate changes on cash and cash equivalents		(4	)		1			—			(3	)
Increase (decrease) in cash and cash equivalents		(697	)		(7	)		—			(704	)
Cash and cash equivalents at beginning of the period		1,152			60			—			1,212
Cash and cash equivalents at end of the period	$	455		$	53		$	—		$	508

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Condensed Statement of Cash Activities

Navistar International Corporation (Manufacturing operations with financial services operations on a pre-tax equity basis)

	Six Months Ended April 30, 2009
	Manufacturing Operations			Financial Services Operations			Adjustments			Condensed Consolidated Statement of Cash Flows
(in millions)
Cash flows from operating activities
Net income (loss)	$	246		$	11		$	(11	)	$	246
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization		138			2			—			140
Depreciation of equipment leased to others		17			10			—			27
Amortization of debt issuance cost		3			5			—			8
Deferred income taxes		(8	)		6			—			(2	)
Equity in income of non-consolidated affiliates		(31	)		—			—			(31	)
Equity in income (loss) of financial services affiliates		(17	)		—			17			—
Dividends from non-consolidated affiliates		47			—			—			47
Restructuring charges		55			—			—			55
Change in intercompany receivable/payable, net		(96	)		96			—			—
Other, net		(367	)		370			(6	)		(3	)
Net cash provided by (used in) operating activities		(13	)		500			—			487
Cash flows from investing activities
Purchases of marketable securities		(354	)		—			—			(354	)
Sales or maturities of marketable securities		356			—			—			356
Net change in restricted cash and cash equivalents		—			(96	)		—			(96	)
Capital expenditures		(76	)		(1	)		—			(77	)
Purchase of equipment leased to others		—			(18	)		—			(18	)
Other investment activities		(29	)		2			20			(7	)
Net cash provided by (used in) investing activities		(103	)		(113	)		20			(196	)
Net cash (used in) provided by financing activities		(59	)		(345	)		(20	)		(424	)
Effect of exchange rate changes on cash and cash equivalents		(6	)		(4	)		—			(10	)
Increase (decrease) in cash and cash equivalents		(181	)		38			—			(143	)
Cash and cash equivalents at beginning of the period		775			86			—			861
Cash and cash equivalents at end of the period	$	594		$	124		$	—		$	718

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