May 16, 2001

Navistar Reports Second Quarter, First Half Results; Per Share Earnings On Target With Earlier Estimates

CHICAGO, May 16 -- Navistar International Corporation (NYSE: NAV), producer of International® brand trucks, school buses and diesel engines, today reported that earnings for the three months ended April 30, 2001 totaled $3 million or $0.05 per diluted common share compared with $98 million, or $1.58 per diluted common share a year earlier. The 2001 second quarter results were in line with revised estimates.

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Consolidated sales and revenues from manufacturing and financial services operations for the second quarter of 2001 totaled $1.8 billion, compared with the $2.4 billion reported in the second quarter of 2000. Manufacturing gross margin for the second quarter improved to 13.9 percent from 11.0 percent in the first quarter but was below the gross margin of 18.0 percent recorded in the second quarter a year ago.

For the first six months of fiscal 2001, Navistar reported a loss of $32 million, or $0.53 per diluted common share, compared with year earlier first half earnings of $168 million, or $2.68 per diluted common share. Consolidated sales and revenues amounted to $3.3 billion, compared with $4.6 billion in the first six months of 2000.

The company reported losses in the fourth quarter last year and the first quarter this year. In the fourth quarter last year, the company recorded an operating profit, but a pretax $306 million restructuring charge against fourth quarter earnings resulted in a loss for the quarter.

John R. Horne, Navistar chairman, president and chief executive officer, reiterated that the steps taken last year to strengthen the company and reduce costs played an instrumental role in the return to profitability. He added, however, that the weakness in new and used truck pricing and shipments that began nearly a year ago continues unabated.

"We continue to build for the future by balancing truck production with industry demand and managing our cash as we continue to make fundamental changes in the way we do business," Horne said. "When truck industry demand turns up, we will be well positioned with our products because our brand continues to get stronger and our productivity and cost structure continue to improve."

Worldwide shipments of International brand medium and heavy trucks and school buses during the second quarter totaled 25,049 units, compared with 19,847 units in the first quarter and 35,902 units in the second quarter of 2000.

Shipments of mid-range diesel engines to other original equipment manufacturers during the quarter totaled 85,284 units, up from 73,538 units in the first quarter and 83,167 units in the second quarter of 2000.

Horne said the company would open a new bus plant in Tulsa, Oklahoma in June, the introduction of the International High Performance Truck line continues on target and initial production of a new generation V-8 diesel engine is set to begin later this year.

Navistar International Corporation (NYSE: NAV) is the parent company of International Truck and Engine Corporation, a leading producer of medium trucks, school buses, heavy trucks, severe service vehicles, mid-range diesel engines and parts and service sold under the International® brand. The company also is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. Through its finance subsidiary, the company also provides financing and liability insurance for its dealers and customers. Additional information can be found on the company's web site at .

Forward Looking Statements

Statements contained in this news release that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the company's expectations, hopes, beliefs and intentions on strategies regarding the future. It is important to note that the company's actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including but not limited to general economic, business and financing conditions, labor relations, governmental action, competitor pricing activity, expense volatility, and other risks detailed from time to time in Navistar's Securities and Exchange Commission filings. Navistar assumes no obligation to update the information included in this release.

(Millions of dollars)

                                                         AS OF APRIL 30
                                                       2001            2000

    Cash and cash equivalents                          $ 428          $ 480
    Marketable securities                                 10             89
                                                         438            569
    Receivables, net                                   1,668          2,246
    Inventories                                          718            726
    Property and equipment, net                        1,843          1,566
    Investments and other assets                         333            285
    Restricted cash                                      519             11
    Prepaid and intangible pension assets                305            313
    Deferred tax asset, net                              891            850

    Total assets                                      $6,715         $6,566


    Accounts payable, principally trade               $1,053         $1,240
    Debt: Manufacturing operations                       641            582
    Financial services operations                      1,888          1,640
    Postretirement benefits liability                    817            807
    Other liabilities                                  1,037            993
    Total liabilities                                  5,436          5,262

    Commitments and contingencies

    Shareowners' equity
    Series D convertible junior preference stock           4              4
    Common stock (75.3 million shares issued)          2,139          2,139
    Retained earnings (deficit)                         (177)          (137)
    Accumulated other comprehensive loss                (178)          (193)
    Common stock held in treasury, at cost              (509)          (509)
    Total shareowners' equity                          1,279          1,304

    Total liabilities and shareowners' equity         $6,715         $6,566

The Statement of Financial Condition includes the consolidated financial

results of the company's manufacturing operations with its wholly owned

financial services operations.

(Millions of dollars, except per share data)

                                 Three Months Ended        Six Months Ended
                                      April 30                 April 30
                                  2001        2000         2001       2000

    Sales and Revenues
    Sales of manufactured
      products                   $1,709      $2,313       $3,142     $4,399
    Finance and insurance
      revenue                        69          64          135        133
    Other income                     16          11           24         22
    Total sales and revenues      1,794       2,388        3,301      4,554

    Costs and expenses
    Cost of products and
      services sold              $1,485      $1,908       $2,761     $3,656
    Postretirement benefits          47          61           93        109
    Engineering and research
      expense                        65          76          130        147
    Sales, general and
      administrative expense        137         126          258        250
    Interest expense                 42          33           83         68
    Other expense                    13          26           27         53
    Total costs and expenses      1,789       2,230        3,352      4,283

    Income/(loss) before income
      taxes                           5         158          (51)       271
    Income tax benefit/(expense)     (2)         60           19        103

    Net income (loss)                $3         $98         $(32)      $168

    Earnings/(loss) per share
    Basic                         $0.05       $1.61       $(0.53)     $2.72
    Diluted                       $0.05       $1.58       $(0.53)     $2.68

    Average shares outstanding
    Basic                          59.5        61.0         59.5       61.8
    Diluted                        59.9        61.9         59.5       62.7

The Statement of Income includes the consolidated financial results of the

company's manufacturing operations with its wholly owned financial

services operations.

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