December 5, 2000

Navistar Reports That Excluding One-Time Charges and Adjustments, 2000 Earnings Per Share Rose to $5.67 from $5.52 in 1999; Continues to Pursue Strategies to Increase Scale, Boost Shareowner Value

CHICAGO, Dec. 5 -- Navistar International Corporation (NYSE: NAV) today reported that net income for the fourth quarter, excluding an after-tax restructuring charge of $190 million, totaled $85 million, equal to $1.41 per diluted common share, down from $132 million, or $2.04 per diluted common share a year earlier. Consolidated sales and revenues for the fourth quarter amounted to $2.0 billion, compared with $2.6 billion in 1999.

(Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/19991207/CGTU007 )

Fourth quarter income was impacted by extremely weak new and used truck pricing and lower new truck shipments. The company reported a loss of $105 million, or $1.77 per diluted common share for the three months ended October 31, 2000. This loss resulted from a charge against fourth quarter earnings of approximately $300 million pretax to resize the salaried workforce for the anticipated 2001 industry demand and prepare for the launch of a series of new products. Major elements of the restructuring charge include costs associated with a corporate downsizing that eliminated 1,100 positions, asset writedowns, severance and exit costs related to the launch of new medium truck and diesel engines lines.

John R. Horne, Navistar chairman, president and chief executive officer, said fourth quarter results reflect the downturn in demand and the adverse pricing environment in the market but benefited from the reversal of $54 million of profit sharing and incentive compensation accrued in prior quarters.

"Our mid-range diesel engine business continued to produce strong results, truck and engine parts revenues reached a new record and our truck group was able to increase overall market share," Horne said. "With the restructuring behind us and with the introduction of our new line of high performance medium trucks in February, we are well positioned for future growth. Relative to the short term, we, as well as the rest of the industry, have lowered production schedules to bring truck build rates in line with current demand. Pricing should begin to improve when industry dealer inventory is appropriate for current demand."

Consolidated sales and revenues for the year ended October 31, 2000 totaled $8.5 billion, compared with $8.6 billion a year earlier. Excluding the 2000 restructuring charge and 1999 tax valuation allowance adjustment, earnings for the year totaled $349 million, equal to $5.67 per diluted common share, compared with $366 million or $5.52 per diluted common share a year earlier. Net income in 2000, including the restructuring charge, amounted to $159 million, or $2.58 per diluted common share. Net income in 1999 amounted to $544 million, or $8.20 per diluted common share, which included a $178 million reduction of the company's deferred tax asset valuation allowance.

The company's trucks are sold under the International® brand. Market share in the United States and Canada increased to 26.9 percent from 25.6 percent in 1999. Worldwide shipments in 2000 totaled 124,900 trucks and buses, of which 56,500 were medium trucks (Class 5-7 GVW), 23,400 school buses and 45,000 heavy trucks (Class 8 GVW), compared with 1999 shipments of 129,000 trucks and buses of which 55,300 were medium trucks, 21,700 school buses and 52,000 heavy trucks.

Shipments of mid-range diesel engines to other original equipment manufacturers during the year totaled 304,400, a gain of 6 percent over the 286,500 units shipped in 1999. Total worldwide engine shipments rose to 392,900 units from 374,200 in 1999.

Navistar is forecasting total truck industry volume in fiscal 2001 in the United States and Canada at 321,600 units, down from 440,000 units in fiscal 2000. Demand for heavy trucks is expected to reach 181,600 units, while demand for medium trucks is estimated at 108,000 units with school bus demand forecast at 32,000 units.

Horne cited three major factors for the drop in demand for new trucks -- rising diesel fuel prices and interest rates and a huge inventory of used trucks that have depressed prices for trucks being traded for new models.

"International is in a better inventory position than its competitors and our new high performance medium truck that will be introduced next spring should increase our appeal to segments of the market for which life-cycle value is important," Horne said. "Additionally, we will continue to pursue strategies and look for ways to increase our scale and add to shareowner value. 2001 will be a challenging year but it is an opportunity to show that this is a different company and that we will be successful."

Navistar International Corporation (NYSE: NAV) is the parent company of International Truck and Engine Corporation, a leading producer of mid-range diesel engines, medium trucks, school buses, heavy trucks, severe service vehicles, 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. Additional information can be found on the company's web site at www.nav-international.com .

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.

The company's conference call with security analysts to discuss the earnings report will be webcast at 10 a.m. CST today. The webcast can be accessed through Navistar's website at http://www.nav-international.com/investor/ and connecting to the link to the conference call. The conference call can also be accessed through http://www.vcall.com and typing in the NAV ticker symbol. Additional financial information can be found at http://www.nav-international.com/investor, via the Financial and Investor Information link to the Overview page.

NAVISTAR INTERNATIONAL CORPORATION
AND CONSOLIDATED SUBSIDIARIESK
STATEMENT OF INCOME (UNAUDITED)
(Millions of dollars, except per share data)


                                      THREE MONTHS ENDED  TWELVE MONTHS ENDED
                                           OCTOBER 31          OCTOBER 31
                                         2000      1999      2000      1999

    Sales and Revenues

    Sales of manufactured products     $1,879    $2,477    $8,119    $8,326

    Finance and insurance revenue          83        68       288       256

    Other income                           11        12        44        60

    Total sales and revenues            1,973     2,557     8,451     8,642

    Costs and expenses

    Cost of products and services
     sold                              $1,590    $2,014    $6,774    $6,862

    Cost of products sold related to
     restructuring                         20         -        20         -

    All other restructuring costs         286         -       286         -

    Postretirement benefits               (11)       57       146       216

    Engineering and research expense       67        84       280       281

    Sales, general and administrative
     expense                              131       125       488       486

    Interest expense                       41        36       146       135

    Other expense                          18        28        87        71

    Total costs and expenses            2,142     2,344     8,227     8,051

    Income/(loss) before income
     taxes                               (169)      213       224       591

    Income tax benefit/(expense)           64       (81)      (65)      (47)


- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 

    |                                                                        |
    |  Net income/(loss)                $(105)     $132      $159      $544  |
    |  Less: Restructuring charge and                                        |
    |   NOL adjustment                   (190)        -      (190)      178  |
    |                                                                        |
    | Net income without restructuring                                       |
    |  charge and NOL adjustment          $85      $132      $349      $366  |
    |                                                                        |
     - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -


- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 

     |   Earnings/(loss) per share                                           |
     |    Basic                        $(1.77)    $2.08     $2.62     $8.34  |
     |    Diluted                      $(1.77)    $2.04     $2.58     $8.20  |
                                                                             |
     |   Diluted earnings per share without                                  |
     |    restructuring charge and                                           |
     |    NOL adjustment                $1.41     $2.04     $5.67     $5.52  |
     |                                                                       |
     |   Average shares outstanding                                          |
     |   (millions)                                                          |
     |     Basic                         59.4      63.6      60.7      65.2  |
     |     Diluted                       59.4      64.9      61.5      66.4  |

NAVISTAR INTERNATIONAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF FINANCIAL CONDITION (UNAUDITED)
(Millions of dollars)


                                                    AS OF OCTOBER 31
                                                     2000      1999

    ASSETS

    Cash and cash equivalents                        $297      $243
    Marketable securities                             204       333
                                                      501       576
    Receivables, net                                2,542     2,818
    Inventories                                       648       625
    Property and equipment, net                     1,779     1,475
    Investments and other assets                      316       264
    Prepaid and intangible
     pension assets                                   297       274
    Deferred tax asset, net                           862       896


    Total assets                                   $6,945    $6,928

    LIABILITIES AND SHAREOWNERS' EQUITY

    Liabilities
    Accounts payable,
     principally trade                             $1,096    $1,399
    Debt:  Manufacturing
            operations                                572       476
           Financial services operations            2,058     1,791
    Postretirement benefits liability                 782       787
    Other liabilities                               1,123     1,184
    Total liabilities                               5,631     5,637

    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)                      (143)     (297)
    Accumulated other comprehensive loss             (177)     (197)
    Common stock held in treasury, at cost           (509)     (358)
    Total shareowners' equity                       1,314     1,291

    Total liabilities and shareowners' equity      $6,945    $6,928

The Statement of Financial Condition includes the consolidated financial

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

financial services operations. SOURCE Navistar International Corporation


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