Navistar International (NAV) 8-K Navistar Reports 1Q Profit, Before Engineering

NYSE: NAV

1

1st Quarter 2011 Earnings Presentation

March 9

th

, 2011

Exhibit 99.2

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2

2

Safe Harbor

Statement

Information provided and statements contained in this presentation that are not purely historical are

forward-looking

statements

within

the

meaning

of

Section

27A

of

the

Securities

Act

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, 2010, which was filed on

December 21, 2010.  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.

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3

Other Cautionary Notes

•

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.

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4

Agenda

•

Q1 financials

•

Strategic update

•

Driving shareowner value

MaxxForce

MaxxForce

®

®

15

15

CT630

CT610

Armored Light  Truck

Armored Light  Truck

MRAP Wrecker

MNAL 40/31

5

Strategy -

Leveraging What We Have and

What Others Have Built

Note:   This slide contains non-GAAP information, please see the REG G in

appendix for a detailed reconciliation.   2011 FY Guidance does not include

Engineering Integration Impact or potential Valuation Allowance release

Key Takeaways for Q1 and Full Year

Operating days

One time items

UAW Settlement

Engineering Integration

Product Development

Loss of Ford volumes

Expect to perform at high end of

guidance

Q1

2011 Guidance

Truck Industry Units

51,700

240K

To

260K

Revenue

($Billions)

$2.7

$13.6

To

$14.3

Adj. Mfg. Segment

Profit

($Millions)

$98

$962

To

$1,070

Adj. Diluted EPS

Attributable to NIC

$0.16

$5.00

To

$6.00

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$240

$248

$126

$85

$0

$50

$100

$150

$200

$250

$300

$350

$400

Q1 2010

Q1 2011

Truck

Parts

$2,251

$2,410

$366

$333

$192

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Q1 2010

Q1 2011

Base

Military

NA Ford

15,300

13,600

4,800

5,900

0

5,000

10,000

15,000

20,000

25,000

Q1 2010

Q1 2011

Traditional

Expansionary

18,400

21,300

30,700

27,700

24,700

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Q1 2010

Q1 2011

All Other

OEM Sales South America

US and Canada Ford

Q1 2011 Information

Consolidated

Revenues

($

in

millions)

Quarterly Truck  Chargeouts

Quarterly Engine Shipments

20,100

49,000

Military

Revenues

($

in

millions)

19,500

73,800

$2,809

$2,743

$366

$333

Key Drivers Q/Q:

•

OEM  business

•

Business

Key drivers Q/Q:

•

chargeouts

decreased 11%

•

business grew by

23% driven by

global growth and

niche recovery

Key drivers Q/Q:

•

traditional volume

offset by

collection of

emissions pricing

•

and global

business

•

Loss of Ford

business offset

by increased

engine OEM

business in N.A.

Traditional

Expansionary

Increase

in

N.A.

Loss of Ford

Reduced

Increased

niche

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Quarterly Adjusted Diluted Earnings

per share *

Excludes:

2011 Engineering Integration Costs

2010 Ford Settlement and Related Charges/Benefit

Q1 2011 Information

$0.03

$0.16

$0.00

$0.05

$0.10

$0.15

$0.20

Q1 2010

Q1 2011

Volume

1

st

Quarter

Quarterly

Average for

Next 3 

quarters

Fiscal Year

2011

Traditional NA

Industry

52K

~70K

260K

Class 8

Market Share

19%

~27%

25%

OEM Diesels

28K

~44K

>160K

Military Revenues

$333M

~$550M

~$2B

UAW impacts**

($7M)

NA

($7M)

Manufacturing

Flexibility

Efficiency

$20M

~$20M

~$80M

Product

Development

$129M

~$110M

Slightly up

Joint Venture

Profit / (Loss)

($15)

Profitable

Breakeven

Global units

(incl. NC²

& MNAL)

4K

~ 9K

~30K

*

*

* Represents non GAAP measurements, see SEC Reg G non-GAAP reconciliation for detailed reconciliation. 

**UAW restructuring of $4M and Ramp up inefficiencies of $3M.

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8

Great Products

Q1 2011 Product Launches

Global

MNAL 40 & 31 ton tractor

CAT SS (NAFTA)

CAT Australia

MaxxForce

MaxxForce

®

®

13

13

MaxxForce

MaxxForce

®

®

15

15

CT610

Armored Light Truck

MNAL 40

MRAP Wrecker

CT610

Mahindra-Navistar

North America

Submitted 0.2g NOx

In-

cylinder D-certification for

MaxxForce

®

13

TerraStar™

4X4

MaxxForce

®

15

Launch

Military

MRAP Wrecker

Armored Light Truck

Medium

Truck

Great Products –

Market Share

Severe Service

Truck

Heavy

Truck

FY08

55%

FY09

61%

FY10

59%

Q1’11

51%

FY GOAL

60%

FY08

36%

FY09

35%

FY10

38%

Q1‘11

36%

FY GOAL

38%

FY08

27%

FY09

34%

FY10

33%

Q1‘11

29%

FY08

19%

FY09

25%

FY10

24%

Q1‘11

17%

Class 8

School

Bus

(U.S. & Canada)

School Bus & Combined Class 6-8 Market Share –

FY08:          ; FY09:           ; FY10:

Q1’11;

Note:   Market share based on brand and Severe Service truck market share excludes military

19%

Market Share

Q1 ‘11

FY GOAL

25%

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10

Great Products

Combined Class 8 Market Share

FY08

22%

FY09

28%

FY10

26%

Q1‘11

19%

FY Goal

25%

Key Takeaways

•

Customers gaining experience

•

13L going better than expected

•

15L will impact 2

nd

half of year

•

Orders coming in as planned

•

Big Bore engine production expected to

increase in second half of year

Class 8 Market Share

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

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11

Market Recovering

*Traditional is defined as U.S. and Canada Class 6-8, Truck

and School Bus

Traditional Industry

Normal Range

2011 Guidance

240k to 260k*

25% -

35%

Traditional

Industry

Orders

Nov 2010

32,000

Dec  2010

29,200

Jan  2011

30,300

Feb  2011

25,900

Total

(1

four

months)

117,400

Annualized

“Orders”

352,200

Production

rates

significantly

increasing

up to 40% 

over the

course of the

year

st

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12

Great Products -

School Bus

Government Spending

12

US & Canada

Industry ~15K

Mexico, Colombia

Other Latin America

Industry 20k+

Brazil & Mercosur

Industry 35k+

18,000

18,000

8,000

0

5,000

10,000

15,000

20,000

25,000

30,000

Today

Tomorrow

Type C/D

Type A

School Bus Industry

Commercial Industry Growth Opportunity

28,200

24,500

24,400

22,600

20,900

18,000

5,200

4,100

0

5,000

10,000

15,000

20,000

25,000

30,000

FY 2006

FY 2007

FY 2008

FY 2009

FY 2010

FY 2011

Est

Q1  2010

Q1 2011

Bus Retail Sales Industry

13

Navistar Defense

Sustainable Revenue

2008

2009

2010

2011

> $2B

> $2B

> $2B

Clear sight on $2.0B

•

U.S. and FMS

$1.3B

Continue at lower rate (-)

•

Foreign Direct

$0.3B

U.K./Canada/26 countries (+/-)

•

Parts & Services

$0.5B

Continue w/more vehicles (+/-)

•

Capability Insertion

$0.1B

Increasing (+)

•

Total

$2.2B

2011

2012

2013

2014+

~$2.0 Billion Revenue

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14

Navistar Defense Outlook

Domestic US Markets

Accessible International Markets

Excluded International Markets

Sustainment of 30,000+

Vehicle Fleet

•

Slowing U.S. Defense Budgets, but ND Participates in 26 Countries

•

Tighter budgets provide advantages to commercially-based contractors

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15

Arriving in Theater

250 MaxxPro Recovery Vehicles

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16

Latin America

Latin America

India

India

40T/49T

25T Tipper

31T

2011 Global Truck

Australia

Australia

CT610

Brazil

Brazil

9800

South Africa

South Africa

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17

Leveraging Assets: Differentiated

Distribution

Currently 410 Branded Sales or Service Points

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18

Mahindra-Navistar:  Reset the Standard

HyderabAd

BangalorE

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19

•

Moving from focused facilities to

flexible manufacturing to minimize

logistics cost

•

School bus:  All assembly in Tulsa

•

Huntsville: Ability to produce

V8/I6/DT engines on same line

•

Labor agreement

Competitive Cost Structure

Completed Actions

Next Steps to increase Shareholder Value

•

Leveraging assets

•

Integrated Product Development

Center

Product  Development

FY 2010

FY 2011

$464M

Slightly up

Q1 $109M

Q1 $129M

EAP

GAP

CAP

SAP

TBP

HEP

CBP

MPP

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20

20

*Note: Costs related to steel, precious metals, resins, and petroleum products

Competitive Cost Structure

Controlling our Destiny

2011 Actions

–

Navistar has mitigated a

significant portion of 2011 market

risk

•

Systematic hedging

•

Supplier negotiations

•

Commodity surcharges

–

Within a range, commodities

volatility has been factored into

2011 guidance

–

Hedging efforts continued for

FY2012

–

Pricing Actions

Commodities

Market Profile

2009

Average

2010

High

March 11

Spot

Sheet steel

($/short ton)

$482

$699

$861

Scrap steel

($/long ton)

$260

$473

$480

Crude oil

($/bbl)

$62

$91

$95

Platinum

($/troy oz.)

$1203

$1754

$1829

Natural Rubber

($/lb)

$0.82

$2.25

$2.34

Copper

($/lb)

$2.41

$4.23

$4.55

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21

Controlling our Destiny

”You’re on

allocation“...

is not in our

vocabulary.

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22

Two Customer Friendly Solutions are

Better Than One

•

Customer Friendly Solution

•

Easily Replaceable (cartridge)

•

Flexible System

•

Weight

•

Service interval

•

EGNR offers technical advantages compared to Urea

SCR

•

Unlimited storage life (no decomposition)

•

No solid deposits

•

No freezing issues

EGNR

EGR

“In-Cylinder”

–

0.2

Nox

Status

update

Submitted 0.2 Nox

certification February 2011

EPA rewards providers

for cleaning up the

environment sooner

Advanced EGR provides the platform for

continued emissions improvement

The best technology will continue to

improve…

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23

Differentiation and Leadership

Continue to invest in break through technologies

ECO Motors -

OPOC

Driving Shareowner Value

•

Liquidity Update

•

2011 Guidance Update

•

Driving shareowner

value-ROIC

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25

Q1 Manufacturing Cash Update

Note:  This slide contains non-GAAP information, please see the Reg G in appendix for detailed reconciliation.

($ millions)

October 31, 2010 ending manufacturing cash and marketable securities

1

$1,100

Adjusted manufacturing EBITDA

$72

Change in net working capital

($298)

Capital expenditures

($95)

Other cash flows

($17)

January 31, 2011 ending manufacturing cash and marketable securities

1

$762

Forecasted October 31, 2011 ending manufacturing cash and marketable securities

$1.2B to $1.4B

1

Includes cash from the consolidation of minority interests.

2

Net Working Capital represents A/R, Inventory, Other Current Assets, A/P & Other Current Liabilities.

2

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26

Navistar Financial Corporation (NFC) –

U.S. 

Leveraging Assets & Controlling Our Destiny

•

Liquidity is strong: $730M total availability as of 1/31/11

–

Dealer floor plan structures refinanced with > $477M of liquidity

•

Retail portfolio originations and balances will continue to decline as

Navistar Capital (new GE Capital program) handles new acquisitions

–

Q1

2011

profitability

of

$32M

and

service

leverage

has

improved

(6:1)

Retail Notes

Bank Facility

•

$810M facility

–

Funding for retail notes,

wholesale notes, retail

accounts, and dealer open

accounts

–

Matures December 2012

On balance sheet

•

Situation as of Jan 31, 2011

–

~$1.1B funding facility

(NFSC)

–

$477M available

•

NFSC wholesale trust

–

Bank conduit portion renewed

August 2010

–

Public portions mature

January 2012 and October

2012

On balance sheet

•

Broader product offering

•

Enhanced ability to support

large fleets

•

Better access to less

expensive capital

Note:  $32 million of profitability is for total financial services

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27

Truck

•

North America Industry

+

Stronger in 2nd Half

•

Class 8 Market Share

–

/ +

Building Experience in 1st Half / Gains in 2nd Half

•

Class 4/5 and 6/7 Share

+

Improves Throughout 2011

•

Core Business Performance      

+ +

Trends with Volume / Manage Commodities

•

Global Growth

+

Volume Growth as Distribution Expands

•

Military Revenue

–

/ +

Trends Toward ~$2B

Engine

+

OEM

Volume

Growth –

Increases

in

2 

Half

Parts

+

Continued Growth

Other Items

•

Facility Integration

–

Engineering Integration/Transition

•

Labor Costs

–

UAW/Chatham

FY 2011 Profitability Drivers

27

TIMING

(Throughout 2011)

IMPACT

(compared to 2010)

nd 

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Business Drivers

Q1 Impacts

Full Year Impact

Truck

Traditional Industry

Volumes low

Order intake strong –

projects strong Q2-Q4

Class 8 Market Share

19% share

Ramps up through 2011 toward 25% goal

Military Revenue

Timing/mix

On path to meet target (~$2B)

Cost Structure

Low volume/UAW

Realize benefit as volume strengthens

Global Business

Investing

Volume grows throughout the year

Engine

OEM Engine Business

Low volume

Growth through 2011

Parts

Parts Business

On path

On path

2011 Guidance Update

0

10,000

20,000

30,000

40,000

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Worldwide Chargeouts

Traditional

Expansionary

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29

Driving Shareholder Value

CONFIDENTIAL and Proprietary to Navistar

29

$(5.00)

$-

$5.00

$10.00

$15.00

$20.00

$25.00

150

200

250

300

350

400

450

500

Traditional Industry Volume (Thousands of Units)

.

2009

Actual *

Notes:

* 2008 and 2009 exclude certain charges, see Reg.

G in Appendix for GAAP reconcilation.

** Please see 2011 Guidance Slide in Appendix for

additional assumptions

2010

Actual

2008

Actual *

Original $1.6B  Segment

Profit Goal

@ 415kunits

$1.8B  Segment Profit    

Goal

@ 350k

units

2011 Guidance

$5 -

$6 Per Share

Not

Included:

-

Engineering Integration Costs

-

Valuation Allowance

-

Mfg

Footprint Rationalization

Orignal wedge assumed a share count of 72.5M shares 

and a Tax Rate of 25% .

Wedge assumes attainment of mature global growth by

the end of calendar year 2013.

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Appendix

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31

2011 Guidance

*This slide contains non-GAAP information, please see the Reg G in appendix for detailed reconciliation.

**   FY2010 includes $10M ($0.14) of cost for UAW agreement

*** 2011 Guidance does not include Engineering Integration Impact or potential Valuation Allowance release

2010 Actual            Guidance ***

Truck Industry Units

191,300

240,000

to

260,000

Revenue ($ Billions)

$12.1

$13.6

to

$14.3

($ Millions (excluding EPS))

Adj. Mfg. Segment Profit*

$741

$962

to

$1,070

Fin. Services, Corporate, Elims*

$(495)

$(500)

to

$(515)

Adj. Profit Excluding Tax

$246

$462

to

$555

Adj. Net Income attributable to NIC*

$223

$388

to

$465

Tax Rate

9.4%

16%

to

17%

Adj. Diluted EPS attributable to NIC*

$3.05**

$5.00

to

$6.00

# of shares

73.2M

~77.6M 

Mfg. Segment Cash ($ Billions)*

$1.1

$1.2         to        $1.4

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32

Market Share –

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

Navistar

Q1

Q2

Q3

Q4

Full Year

Q1

Q2

Q3

Q4

Full Year

Q1

Q2

Q3

Q4

Full Year

Bus (School)

56%

60%

61%

66%

61%

60%

63%

52%

59%

59%

51%

51%

Medium (Class 6-7)

30%

39%

33%

39%

35%

33%

44%

36%

37%

38%

36%

36%

   Heavy (LH & RH)

24%

23%

29%

24%

25%

23%

22%

30%

20%

24%

17%

17%

Severe Service

32%

36%

33%

33%

34%

34%

35%

35%

29%

33%

29%

29%

Combined Class 8

26%

27%

30%

27%

28%

26%

26%

31%

22%

26%

19%

19%

Combined Market Share

30%

35%

36%

36%

34%

31%

35%

34%

30%

33%

26%

26%

2011

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

2010

2009

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33

Truck Chargeouts

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

Fiscal year 2009

Q1

Q2

Q3

Q4

Full Year 2009

BUS

2,700

3,100

3,500

4,500

13,800

MEDIUM

3,200

3,400

2,700

3,700

13,000

HEAVY

6,100

3,200

4,500

5,300

19,100

SEVERE

2,800

2,700

2,800

2,600

10,900

TOTAL

14,800

12,400

13,500

16,100

56,800

MILITARY (U.S. & Foreign)

2,500

2,100

1,200

2,000

7,800

EXPANSIONARY

2,400

1,900

2,300

4,600

11,200

WORLD WIDE TRUCK

19,700

16,400

17,000

22,700

75,800

Fiscal year 2010

Q1

Q2

Q3

Q4

Full Year 2010

BUS

3,100

3,100

2,300

3,900

12,400

MEDIUM

3,900

5,300

3,900

5,400

18,500

HEAVY

5,200

4,600

6,400

5,400

21,600

SEVERE

3,100

3,000

1,800

2,800

10,700

TOTAL

15,300

16,000

14,400

17,500

63,200

MILITARY (U.S. & Foreign)

900

900

1,600

1,200

4,600

EXPANSIONARY

3,900

4,500

4,600

6,100

19,100

WORLD WIDE TRUCK

20,100

21,400

20,600

24,800

86,900

Fiscal year 2011

Q1

Q2

Q3

Q4

Full Year 2011

BUS

2,000

2,000

MEDIUM

4,600

4,600

HEAVY

4,700

4,700

SEVERE

2,300

2,300

TOTAL

13,600

0

0

0

13,600

MILITARY (U.S. & Foreign)

600

600

EXPANSIONARY

5,300

5,300

WORLD WIDE TRUCK

19,500

0

0

0

19,500

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34

World Wide Engine Shipments

Navistar

Q1

Q2

Q3

Q4

Full Year

OEM sales - South America

19,400

22,500

26,100

31,200

99,200

Ford sales - U.S. and Canada

12,600

26,400

22,900

39,600

101,500

Other OEM sales

4,500

2,400

1,800

2,600

11,300

Intercompany sales

14,400

12,600

12,800

17,500

57,300

Total Shipments

50,900

63,900

63,600

90,900

269,300

Navistar

Q1

Q2

Q3

Q4

Full Year

OEM sales - South America

30,700

34,600

33,600

33,900

132,800

Ford sales - U.S. and Canada

24,700

200

-

-

24,900

Other OEM sales

2,000

3,600

3,700

4,900

14,200

Intercompany sales

16,400

17,700

15,600

18,800

68,500

Total Shipments

73,800

56,100

52,900

57,600

240,400

Navistar

Q1

Q2

Q3

Q4

Full Year

OEM sales - South America

27,700

27,700

Ford sales - U.S. and Canada

-

-

Other OEM sales

4,400

4,400

Intercompany sales

16,900

16,900

Total Shipments

49,000

-

-

-

49,000

2011

2010

2009

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35

Order Receipts –

U.S. & Canada

Percentage

2011

2010

Change

Change

1,500

1,600

(100)

(6)

7,600

7,100

500

7

Class 8 heavy trucks

7,700

6,200

1,500

24

Class 8 severe service trucks

2,800

3,400

(600)

(18)

19,600

18,300

1,300

7

10,500

9,600

900

9

Three Months Ended

January 31,

Total "Traditional" Markets

Combined Class 8 (Heavy and Severe Service)

"Traditional" Markets

School buses

Class 6 and 7 medium trucks

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International

Dealer

Stock

Inventory

(Units)

*

U.S. and Canada Dealer Stock Inventory

*Includes U.S. and Canada Class 4-8 and school bus inventory, but does not include U.S. IC Bus or Workhorse Custom Chassis inventory.

Excludes the US portion of IC Bus

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Frequently Asked Questions

Q1:

How does vertical integration of a big bore engine impact warranty?

A:

With

the

transition

to

100%

MaxxForce

engines

we will assume an increased responsibility for engine

warranty,

which

was

previously

absorbed

by

our

suppliers

and

reflected

in

our

material

costs.

The

impact of this change will increase warranty expense and decrease material costs. 

Q2:

What is the breakdown of your South American engine business in 2010 (broken down by

automotive, agricultural/other, and truck)? What do you expect your breakout to be in 2012?

A:

Q3:

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.

Q4:

How many Dealcor dealers did you have as of January 31, 2011?

A:

Of

our

276

primary

NAFTA

dealers,

we

have

ownership

interest

in

11

DealCor

dealers

as of

January

31,

2011.

We

expect

to

further

reduce

our

number

of

Dealcor

dealers

in 2011.

Application

2010 FY

2012 FY

Pick-ups/SUV’s

35%

30%

Trucks

23%

27%

Tractors

20%

8%

Buses

11%

22%

Industrial/Marine

6%

5%

GenSets

5%

8%

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38

Frequently Asked Questions

Q5:

How do you fund your wholesale business?

A:

We

primarily

finance

our

wholesale

portfolio

through

traditional

private

or

public

securitizations,

and

through our bank facility.

Q6:

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.

Q7:

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.

Q8:

How is your NFC portfolio performing?

A:

Repossessions, past due accounts and losses peaked in 2008 and have continued to show

improvement since then.

NFC’s retail portfolio in the U.S. is in run-off mode now that Navistar Capital,

the

new

GE

Capital

retail

program,

is

financing

retail

customers.

Performance

of

this

portfolio

improved considerably in 2010 and in the first quarter of 2011.

Q9:

What is your total amount of capacity at NFC?

A:

Total availability in our U.S. funding facilities is more than $730 million as of January 31, 2011.

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Frequently Asked Questions

Q10:

What is the status of the retail financing alliance with GE Capital in the United States?

A:

Navistar

Capital

–

the

alliance

we

formed

with

GE

Capital

to

support

the

sale

of

Navistar

products

–

is

off to a great start and progressing consistent with expectations.

Q11:   What is included in Financial Services Segment Profit, Corporate and Eliminations?

A:

Financial Services Segment Profit, Corporate and Eliminations, as presented, consist of the Finance

Services segment and Corporate and Eliminations as shown in the Segment Reporting footnote of our

annual and quarterly reports (10K & 10Q).  The primary drivers of Corporate and Eliminations are

Corporate SG&A, pension and OPEB expense excluding amounts allocated to the segments, annual

incentive, manufacturing interest expense, and the elimination of intercompany sales and profit

between segments.

Q12:

How does the latest Ground Combat Vehicle (GCV) program announcement affect Navistar?

A:

Navistar was not originally part of the GCV program and is not currently one of the three bidders

participating in the program.

Q13:

What is the current Joint Light Tactical Vehicle (JLTV) program status?

A:

As part of the Technology Development (TD) phase, Navistar and BAE delivered right-hand drive

prototypes to Australia on June 21 following delivery of prototypes to the U.S. in May.

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Frequently Asked Questions

Q14:

What

is

the

status

of

any

MaxxPro

®

Dash

rolling

chassis

orders?

A:

At this time, we stand ready to support any needs from the military should they choose to retrofit the

remainder

of

the

MaxxPro

fleet

with

DXM™

independent

suspension.

To

date,

Navistar

has

been

contracted

to

produce

8,014

MaxxPro

units,

which

includes

1,305

MaxxPro

Dash

units

with DXM™

independent

suspension

and

1,222

DXM™

retrofit

kits.

Q15:

What are your margins for military vehicles?

A:

We do not break margins out specific to our military vehicles. These numbers are reported as part of

our Truck Group financials.

Q16    How will the changing DOD budget affect Navistar in FY 2011?

A:

Navistar

continues

to

pursue

a

number

of

U.S.

and

foreign

military

opportunities and is confident in its

annual $2 billion revenue goal.  In addition, the company now has more than 30,000 vehicles in

operation throughout the world.  These vehicles will require parts and sustainment support throughout

their lifecycles.

Q17:

What are the 2010 emissions requirements?

A:

The rules allow manufacturers to go to a maximum of 0.50 NOx, through the use of credits, if they

reduced

earlier

with

advanced

technology;

manufacturers

need

to

be

at

0.20

NOx

if

they chose not to

introduce advanced technologies to reduce their emissions earlier.

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41

Frequently Asked Questions

Q18:

What will Navistar do to meet the 0.20 NOx emissions when its credits are depleted?

A:

Navistar remains committed to its strategy of providing solutions that let customers focus on their

business, not emissions regulations.

Solutions under development are multi-pronged and include our

prime path of in-cylinder solutions along with application-specific solutions such as the Amminex metal

ammine-based

NOx

reductant

delivery

system

which

Navistar

announced

in

December

2009.

We

submitted an application for the 0.20 NOx 13L EGR engine to the EPA.

Q19:

What is the current net operating loss total, and why is there still a valuation allowance against

deferred tax assets?

A:

The Company has U.S. federal net operating losses (NOLs) available with an undiscounted cash

value

totaling

$161

million

as

of

October

31,

2010.

In

addition,

we

have

state

NOLs

valued

at

$85

million and foreign NOLs valued at $85 million, for a total undiscounted cash value of $331

million.

(The $25 million

reduction in our financial statement NOL deferred tax component relates to

stock option accounting.)

A substantial

portion

of

these

NOL

assets

are

subject

to

a

valuation

allowance.

In

addition

to the

deferred tax assets attributable to the NOLs, we have other deferred tax assets arising from temporary

book-tax differences subject to a valuation allowance, for a total balance of deferred tax assets

subject to a valuation allowance of $1.8 billion.

Under U.S. GAAP rules, when the Company is able to

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42

Frequently Asked Questions

demonstrate sufficient earnings (both historically and in the future) to absorb these future deductions,

the

Company

will

release

its

valuation

allowances.

If

U.S.

operations

continue

to

improve,

we

believe it

is reasonably possible that the Company may release all or a portion of its U.S. valuation allowance in

the next twelve months.

The release of our U.S. valuation allowance would not directly impact our U.S. cash tax payments,

which are expected to remain low until such time as we have exhausted our NOLs and tax credits.

Q20:

How has recent tax legislation affected Navistar?

A:

The Worker, Homeownership, and Business Assistance Act of 2009 provided an opportunity to

carry

back

alternative

minimum

tax

net

operating

losses

from

the

Company’s

2010

fiscal

year

and to

receive

a

refund

of

alternative

minimum

tax

(AMT)

payments

made

in

the

prior

five

fiscal

years.

The

Company expects to receive a refund of $29 million of AMT credits as a result of this legislation.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the Tax

Relief

Act)

extends

current

tax

rules

in

several

areas,

which

if

not

extended,

could

have

adversely

impacted

the

Company’s

tax

results.

In

addition,

the

Act

provides

the

opportunity

for

businesses

to

fully depreciate

qualifying

property

purchased

through

the

end

of

2011

(50%

first

year

depreciation

for

purchases in 2012), which could benefit both Navistar and its customers. 

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Frequently Asked Questions

Q21:

How will $1.8 billion of deferred tax assets be used to offset future taxable income?

A:

Simply put, deferred tax assets represent the value of future tax deductions attributable to items that

have

already

been

expensed

or

deducted

for

book

purposes.

The

most

commonly

understood

component of deferred tax assets is the value of our net operating losses, which will serve to

immediately reduce taxable income in the future.

In addition, we have several other major

components

of

deferred

taxes

which

will

reduce

taxable

income

in

the

future.

For

example,

the

Company

has

accrued

significant

OPEB,

pension

and

other

employee

benefit

expenses

during

prior

years

based

on

expected

payments

to

be

made

in

the

future.

As

these

payments

are

made, the

Company will realize tax deductions to offset future taxable income.

Q22:

What is your expected 2011 pension and OPEB GAAP expense?

A:

Assuming no further containment actions and no curtailment events, we anticipate 2011 pension and

OPEB GAAP expense will not exceed 2010 levels.

Q23:

What are your expected 2011 and beyond pension funding requirements?

A:

Current forecasts indicate that we may need to contribute approximately $180 million in 2011. We

believe the recently enacted pension funding relief legislation Preservation of Access to Care for

Medicare Beneficiaries and Pension Relief Act of 2010 will materially reduce the amount of required

cash

contributions

into

our

major

US

defined

benefit

plans

over

the

next

five

years.

Although

certain

specific

regulations

related

to

funding

relief

have

not

yet

been

defined,

we

anticipate

that

minimum

required cash contributions will be reduced between $300 and $400 million for the years 2012 through

2014 compared with our estimate of minimum required cash contributions before funding relief.

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44

Frequently Asked Questions

Q24:

What causes the variance between manufacturing cash interest payments and GAAP

interest expense?

A: 

The main variance between cash and GAAP interest results from our manufacturing segment’s

$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 which are

amortized

over

the

life

of

each

note

($36

million),

amortization

of

the original issue discount of

the high yield notes ($37 million) and amortization of the embedded call option in the

convertible notes ($114 million).

The timing of interest payments also impacts this

variance.

Interest payments on the high yield notes are semi-annual due in May and

November.

Interest payments on the convertible notes are also semi-annual due in April and

October.

As a result of this and other non-cash interest expense, the first quarter of FY 2011

showed a variance of approximately $9 million between cash and GAAP interest.

Q25:

What are the $225 million of Recovery Zone Facility Revenue Bonds (RZFB) Series 2010

due October 15, 2040 being used for?

A:

We are using the proceeds to invest in our product development strategy and our HQ

consolidation. Great

products are a key pillar of our three pronged strategy. Streamlining and

improving our product development processes will continue to provide competitive advantages

for us in the marketplace.

The funding from RZFB will allow us to consolidate many facilities

into

a

new

facility

and

make

necessary

renovations

to

that

facility.

Additionally

we will invest in

an

existing

facility,

which

includes

investments

in

equipment and technology that will help us

create and improve our product development process and thus shareholder value.

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Frequently Asked Questions

Q26:

Why did you use Recovery Zone Facility Bonds (RZFB) financing?

A:

The

RZFBs

are

a

cost

effective,

long-term

form

of

capital

that

is

complementary

to

our

capital

structure.

The

bonds

have

a

30

year

maturity

and

a

fixed

rate

coupon

of

6.50%

per

annum.

They

are callable at par any time after 10 years (October 15, 2020).

Issuing bonds

in

the

tax-exempt

market

gave

us

exposure

to

a

new

source

of

investors that

we

wouldn’t otherwise have access to if not for the RZFB program.

Q27:

What should we assume for capital expenditures in fiscal 2011?

A:

We

plan

to

continue

capital

spending

within

the

traditionally

guided

range

of

$250

-

$350

million

for

products and development.

There is capital spending related to Engineering Integration not

included in the range that is fully funded through RZFB.

Q28:

How do you think about accounting vs. economic dilution on your convertible debt?

A:

Please

see

the

presentation

on

the

IR

website

(http://ir.navistar.com/dilution.cfm)

entitled

Dilution

overview resulting from the Convertible Notes issued on October 2009.

Q29:

How does your Class 8 industry compare to        A:

ACT Research?

Reconciliation to ACT

ACT*

204,500

204,500

CY to FY adjustment

(20,000)

(16,000)

Other misc. specialty vehicles  Included in ACT

(8,500)

(5,000)

Total (ACT comparable Class 8 to Navistar)

176,000

183,500

Navistar Industry Retail Deliveries Combined Class 8

160,000

172,000

Navistar difference from ACT:

16,000

11,500

9.1%

6.3%

*Source:

ACT

N.A.

Commercial

Vehicle

Outlook

-

February,

2011

U.S. and Canadian Class 8 Truck Sales

2011

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46

($ in millions)

Note:

Manufacturing

cash

flow

is

a

non-GAAP

presentation.

See

SEC

Reg

G

–

non-GAAP

reconciliation.

Manufacturing Cash Flow

Beginning Mfg. Cash

1

Balance

Fiscal 2009

Fiscal 2010

Q1 2011

October 31, 2008

$777

October 31, 2009

$1,152

October 31, 2010

$1,100

Approximate Cash Flows:

From Operations

$534

$409

($214)

Dividends from NFC

$0

$0

$0

From Investing / (Cap Ex)

($284)

($350)

($113)

From Financing / (Debt Pay Down)

$36

($110)

($13)

Exchange Rate Effect

$9

($1)

$2

Net Cash Flow

$295

($52)

($338)

Blue Diamond Consolidation

$80

$0

$0

Ending Mfg. Cash

1

Balance:

October 31, 2009

2

$1,152

October 31, 2010

$1,100

January 31, 2011

$762

1

Cash = Cash, Cash Equivalents & Marketable Securities

2

Includes cash from the consolidation of minority interests

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Outstanding Debt Balances

January 31,

2011

October 31,

2010

(in millions)

Manufacturing operations

8.25%

Senior

Notes,

due

2021,

net

of

unamortized

discount

of

$35

and

$37

million

at

the

respective dates

966

$            

965

$            

3.0% Senior Subordinated Convertible Notes, due 2014, net of unamortized discount of $99

and $114 at the respective dates

481

476

Debt of majority owned dealership

84

66

Financing arrangements and capital lease obligations 

178

221

Loan Agreement related to 6.5% Tax Exempt Bonds, due 2040

225

225

Other

31

33

Total manufacturing operations debt

1,965

$          

1,986

$          

Less: Current portion

(134)

(145)

Net long-term manufacturing operations debt

1,831

$          

1,841

$          

Financial services operations  

Asset-backed debt issued by consolidated SPEs, at variable rates, due serially through 2018

1,615

$          

1,731

$          

Bank

revolvers,

at

fixed

and

variable

rates,

due

dates

from

2010

through

2016

908

974

Revolving retail warehouse facility, at variable rates, due 2010

-

-

Commercial Paper, at variable rates, due serially through 2011

29

67

Borrowing secured by operating and finance leases, at various rate, due serially through 2017

97

112

Total financial services operations debt

2,649

$          

2,884

$          

Less: Current portion

(614)

(487)

Net long-term financial services operations debt

2,035

$          

2,397

$          

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SEC Regulation G Non-GAAP

Reconciliation

The financial measures presented below are unaudited and not in accordance with, or an alternative for, financial

measures presented in accordance with 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. 

Manufacturing Segment Results:

We believe manufacturing segment results, which includes the segment results of our Truck, Engine,

and Parts reporting segments, provides meaningful information of

our core manufacturing business 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 below reconciliation, and  to provide an

additional measure of performance.

Adjusted Net Income and Diluted Earnings Per Share Attributable To Navistar International Corporation and Adjusted

Manufacturing Segment Profit:

We believe that adjusted net income and diluted earnings per share attributable to Navistar

International Corporation and adjusted manufacturing segment profit excluding engineering integration costs, certain restructuring

costs, and certain impairment charges, which are not considered to be part of our ongoing business, improves the comparability of year

to year results and is representative of our underlying performance. Management 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 below reconciliations, and  to provide an additional measure of performance.

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SEC Regulation G Non-GAAP

Reconciliation

Adjusted Manufacturing Earnings Before Interest, Income Taxes, Depreciation, and Amortization (“EBITDA”):

Adjusted

manufacturing segment EBITDA is defined as our consolidated net income (loss) from continuing operations minus the net income (loss)

from our financial services operations plus interest expense, income taxes and depreciation and amortization. EBITDA is a measure

commonly used and is presented to aid in developing an understanding of the ability of our operations to generate cash for debt service

and taxes, as well as cash for investments in working capital, capital expenditures and other liquidity needs. This information is

presented as a supplement to the other data provided because it provides information which we believe is useful to investors for

additional analysis. EBITDA should not be considered in isolation or as a substitute for net income, cash flows from operating activities

or other consolidated operations or cash flow statement data prepared in accordance with GAAP or as a measure of our profitability or

liquidity as determined in accordance with GAAP.

Manufacturing

Cash

Flow

and

Manufacturing

Cash,

Cash

Equivalents,

and

Marketable

Securities:

Manufacturing

cash

flow

is

used

and is presented to aid in developing an understanding of the ability of our operations to generate cash for debt service and taxes, as

well as cash for investments in working capital, capital expenditures and other liquidity needs. This information is presented as a

supplement to the other data provided because it provides information which we believe is useful to investors for additional analysis.

Our manufacturing cash flow is prepared with manufacturing marketable securities being treated as a cash equivalent. Manufacturing

cash, cash equivalents, and marketable securities represents the

Company’s consolidated cash, cash equivalents, and marketable

securities excluding cash, cash equivalents, and marketable securities of our financial services operations. We include marketable

securities with our cash and cash equivalents when assessing our

liquidity position as our investments are highly liquid in nature. 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

below reconciliation, and  to provide an additional measure of performance.

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SEC Regulation G –

EPS vs. Traditional Industry

(A) Revised Target sales and revenues, net  –  Projections based on $17-18B of GAAP revenue and $2-3B of Non-GAAP revenue related to Navistar's share of non-consolidated affiliates.

Original

Target

Revised

Target

U.S. & Canada Industry

414,500

350,000

Sales and Revenues, Net

(A)

$15 +

$20 +

Diluted earnings per share attributable to Navistar International Corporation

$  11.46

$  12.31

Approximate diluted weighted shares outstanding

~ 72.5

~ 72.5

(Dollars in Millions)

Net income (loss) attributable to Navistar International Corporation

$     825

$     892

Less: Financial services segment profit, Corporate and eliminations, and income taxes

(775)

(888)

Manufacturing segment profit

$  1,600

$  1,780

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SEC Regulation G

Three Months Ended January 31, 2011

($ millions)

Net income (loss) attributable to NIC

($6)

Add back income taxes

$0

Income before income taxes

($6)

Less equity income from financial service operations

($32)

Income before income taxes and equity income from financial service operations

($38)

Add back manufacturing interest expense

$36

Manufacturing EBIT

($2)

Add

back

manufacturing

depreciation

and

amortization

1

$74

Adjusted manufacturing EBITDA

$72

1

Includes

depreciation

of

equipment

leased

to

others

and

excludes

debt

issuance

cost/discount

amortization

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SEC Regulation G –

2011 Guidance

Lower

Upper

(Dollars in Millions, except per share data)

Net income attributable to Navistar International Corporation

$          311

$           388

Plus: Engineering integration costs

(A)

77

77

Adjusted net income attributable to Navistar International Corporation

$          388

$           465

Less: Income taxes

(74)

(90)

Adjusted Profit Excluding Tax

$          462

$           555

Diluted earnings per share attributable to Navistar International Corporation

$         4.00

$          5.00

Effect of adjustments on diluted earnings per share attributable

to Navistar International Corporation

1.00

1.00

Adjusted diluted earnings per share attributable to Navistar International Corporation

$         5.00

$          6.00

Approximate diluted weighted shares outstanding

(B)

77.6

77.6

Lower

Upper

(Dollars in Millions)

Net income (loss) attributable to Navistar International Corporation

$          311

$           388

Less: Financial services segment profit, Corporate and eliminations, and income taxes

(584)

(615)

Manufacturing segment profit

895

1,003

Plus: Engineering integration costs

(A)

67

67

Adjusted manufacturing segment profit

$          962

$        1,070

Fiscal 2011 guidance: adjusted net income and diluted earnings per share attributable to Navistar International Corporation

reconciliation:

Fiscal 2011 guidance: manufacturing segment profit and adjusted manufacturing segment profit reconciliation:

(A)Engineering integration costs relate to the consolidation of our truck and engine engineering operations. We continue to develop plans for efficient transitions related to these activities and evaluate other options to continue the optimization of our operations and 

     management structure. We expect to incur approximately $77 million of engineering integration costs in fiscal 2011 with approximately $67 million of the costs to be recognized by our manufacturing segment and approximately $10 million of corporate charges. 

                  (B)  Approximate diluted weighted shares outstanding based on assumed average share price of $65 per share during the period.

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SEC Regulation G –

Q1 2011 vs. Q1 2010 Comparison

(A)

Engineering integration costs relate to the consolidation of our

truck and engine engineering operations. The $18 million of

charges relates to restructuring activities at our Fort Wayne

facility.

The

charges

were

included

in

Restructuring

charges

in

our Truck segment. The restructuring charges recorded are

based on restructuring plans that have been committed to by

management and are, in part, based upon management’s best

estimates of future events. Changes to the estimates may

require future adjustments to the restructuring liabilities. We

continue to develop plans for efficient transitions related to

these activities and evaluate other options to continue the

optimization of our operations and management structure.

(B)

Ford restructuring and related charges (benefits) are charges

and benefits recognized in 2010 related to restructuring activity

at our Indianapolis Casting Corporation and Indianapolis

Engine Plant.  In the first quarter of 2010, the Company

recognized $17 million of restructuring benefits related to

restructuring activity at these locations. The restructuring

benefit primarily related to the settlement of a portion of our

other contractual costs for $16 million within the restructuring

liability.

The

charges

were

included

in

Restructuring

charges

in

our Engine segment.

(C)

For the three months ended January 31, 2011, on a GAAP

basis, no dilutive securities were included in the computation of

diluted loss per share because they were anti-dilutive since

there was a net loss attributable to Navistar International

Corporation. The diluted weighted shares outstanding for the

computation of adjusted diluted income per share have been

adjusted for the impact of dilutive securities.

2011

2010

(Dollars in Millions, except per share data)

Net income (loss) attributable to Navistar International Corporation

$         (6)

$        19

Plus:

Engineering integration costs

(A)

18

-

Ford restructuring and related charges (benefits)

(B)

-

(17)

Adjusted net income attributable to Navistar International Corporation

$        12

$          2

Diluted earnings (loss) per share attributable to Navistar International Corporation

$    (0.08)

$     0.26

Effect

of

adjustments

on

diluted

earnings

per

share

attributable

to

Navistar

International

Corporation

0.24

(0.23)

Adjusted diluted earnings per share attributable to Navistar International Corporation

$     0.16

$     0.03

Diluted weighted shares outstanding

(C)

75.9

72.1

2011

2010

(Dollars in Millions)

Net income (loss) attributable to Navistar International Corporation

$         (6)

$        19

Less:

Financial services segment profit

$        32

$        12

Corporate and eliminations

(118)

(153)

Income taxes

-

(8)

Manufacturing segment profit

80

168

Plus:

Engineering integration costs

(A)

18

-

Ford restructuring and related charges (benefits)

(B)

-

(17)

Adjusted manufacturing segment profit

$        98

$      151

Adjusted net income and diluted earnings per share attributable to Navistar International Corporation reconciliation:

Three Months Ended

January 31,

Manufacturing segment profit and adjusted manufacturing segment profit reconciliation:

Three Months Ended

January 31,

NYSE: NAV

54

54

SEC Regulation G –

Fiscal Year Comparison

2009

2008

(Dollars in Millions, except per share data)

Net income (loss) attributable to Navistar International Corporation

$          320

$           134

Plus:

Ford settlement, restructuring and related charges (benefits)

(A)

(157)

36

Impairment of property, plant, and equipment

(B)

31

358

Write-off of debt issuance costs

(C)

11

-

Adjusted net income attributable to Navistar International Corporation

$          205

$           528

Adjusted diluted earnings per share attributable to Navistar International Corporation

$         2.86

$          7.21

Diluted weighted shares outstanding

71.8

73.2

2010

2009

2008

(Dollars in Millions, except per share data)

Net income attributable to Navistar International Corporation

$       223

$       320

$        134

Less: Income taxes

(23)

(37)

(57)

Profit Excluding Tax

$       246

$       357

$        191

Less:

Financial services segment profit (loss)

95

40

(24)

Corporate and eliminations

(590)

(519)

(478)

Manufacturing segment profit

741

836

693

Plus:

Ford settlement, restructuring and related charges (benefits)

(A)

-

(160)

37

Impairment of property, plant, and equipment

(B)

-

31

358

Adjusted manufacturing segment profit

$       741

$       707

$     1,088

Adjusted net income and diluted earnings per share attributable to Navistar International Corporation reconciliation:

Manufacturing segment profit and adjusted manufacturing segment profit reconciliation:

(A)  Ford settlement, restructuring and related charges (benefits) include the impact of our settlement with Ford in 2009 as well as charges and benefits recognized related to restructuring activity at our

Indianapolis Casting Corporation and Indianapolis Engine Plant. The charges and benefits were recognized in our Engine segment with the exception of $3 million of income tax expense and $1 million

of income tax benefit related to the settlement in 2009 and 2008 respectively.  

(B)  Impairment of property, plant, and equipment in 2008 are related to impairments to the asset groups in the Engine segment’s VEE Business Unit. The 2009 impairments relate to charges recognized

by the Truck segment for impairments related to asset groups at our Chatham and Conway facilities

(C)  The write-off of debt issuance costs in 2009 relate to charges related to the Company’s refinancing.

NYSE: NAV

55

55

SEC Regulation G –

Manufacturing Cash Fiscal Year Comparison

January 31, 2011

October 31,

2010

October 31,

2009

October 31, 2008

(Dollars in Millions)

Manufacturing segment cash and cash equivalents

372

534

1,152

775

Financial services segment cash and cash equivalents

27

51

60

86

Consolidated cash and cash equivalents

399

585

1,212

861

Manufacturing marketable securities

(A)

390

566

-

2

Financial services segment marketable securities

20

20

-

Consolidated marketable securities

410

586

-

2

Manufacturing segment cash and cash equivalents

372

534

1,152

775

Manufacturing marketable securities

390

566

2

Manufacturing segment cash, cash equivalents, and marketable securities

762

1,100

1,152

777

Manufacturing cash, cash equivalents, and marketable securities reconciliation:

$

$

$

$

-

-

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

(A)  Manufacturing marketable securities as of October 31, 2008 of $2 million were included in Other current assets for financial reporting.

NYSE: NAV

56

56

SEC Regulation G –

Adjusted Manufacturing Earnings

January 31, 2011

(Dollars in Millions)

Net income (loss) attributable to Navistar International Corporation

(6)

Plus: income taxes

-

Income before income taxes

(6)

Less: equity income from financial services operations

32

Income before income taxes and equity income from financial services operations

(38)

Plus: manufacturing segment interest expense

36

Manufacturing earnings before interest and income taxes (“EBIT”)

(2)

74

Adjusted manufacturing segment EBITDA

72

Adjusted manufacturing earnings before interest, income taxes, depreciation, and amortization (“EBITDA”):

(A)  Includes depreciation of equipment leased to others and excludes debt issuance cost and discount amortization.

$

$

Plus:

manufacturing

segment

depreciation

and

interest

expense

(A)

NYSE: NAV

57

57

SEC Regulation G –

Manufacturing Cash

* Marketable Securities not included in FY2010 10K.

Manufacturing

Operations

Financial

Services

Operations

Adjustments

Condensed

Consolidated

Cash Flows

(Dollars in Millions)

Cash flows from operations

534

704

-

1,238

Cash flows from investing / capital expenditures:

(284)

50

22

(212)

Cash flows from financing / debt pay down

36

(780)

(20)

(764)

Effect of exchange rate changes

9

-

-

9

Net cash flows

295

(26)

2

271

Blue Diamond Consolidation

80

-

-

80

Beginning cash, cash equivalents and marketable securities balance

777

86

(2)

861

Ending cash, cash equivalents and marketable securities balance

1,152

60

-

1,212

Manufacturing

Operations

Financial

Services

Operations

Adjustments

Condensed

Consolidated

Cash Flows

(Dollars in Millions)

Cash

flows

from

operations

Cash flows from investing / capital expenditures:

(350)

492

(576)

(434)

Cash flows from financing / debt pay down

(110)

(1,180)

(10)

(1,300)

Effect of exchange rate changes

(1)

1

-

-

Net cash flows

(52)

11

(586)

(627)

Beginning cash, cash equivalents and marketable securities balance

1,152

60

-

1,212

Ending cash, cash equivalents balance*

1,100

71

(586)

585

Manufacturing cash flow reconciliation for the year ended October 31, 2009:

Manufacturing cash flow reconciliation for the year ended October 31, 2010:

409

698

-

1,107

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

NYSE: NAV

58

58

SEC Regulation G –

Manufacturing Cash

Manufacturing

Operations

Financial

Services

Operations

Adjustments

Condensed

Consolidated

Cash Flows

(Dollars in Millions)

Cash flows from operations

(214)

219

-

5

Cash flows from investing / capital expenditures:

(113)

-

176

63

Cash flows from financing / debt pay down

(13)

(244)

-

(257)

Effect of exchange rate changes

2

1

-

3

Net cash flows

(338)

(24)

176

(186)

Beginning cash, cash equivalents and marketable securities balance

1,100

71

(586)

585

Ending cash, cash equivalents and marketable securities balance

762

47

(410)

399

Manufacturing cash flow reconciliation for the three months ended January 31, 2010:

$

$

$

$

$

$

$

$