October 27, 1999

Navistar Board Approves New Share Repurchase Plan

Producer of International® brand trucks and engines sees industry demand declining from 1999 record levels but still expects strong market

Producer of International® brand trucks and engines sees industry demand declining from 1999 record levels but still expects strong market

CHICAGO, Oct. 27 -- Navistar International Corporation (NYSE: NAV) today announced that its board of directors, based on an anticipated strong operating performance in fiscal 2000, has approved a new share repurchase program for as much as $243 million.

John R. Horne, Navistar chairman, president and chief executive officer, said the new share repurchase program will be made possible through a continuing growth of earnings. He noted that proforma equity, which is used to calculate performance against the company's return on equity incentive compensation target is expected to be approximately $1.35 billion based on the current outlook for 2000.

"The new share repurchase program is consistent with our continuing objective of building and delivering value to our shareowners and confirms our confidence and enthusiasm for our strategic outlook for continued profitable growth in fiscal 2000," Horne said. "Our incentive compensation goal at the 405,000 industry volume level is a 29.9 percent return on equity which is on the 15.5 percent ROE line (after tax average over the business cycle)."

Horne noted that over the past two years, Navistar has returned more than $291 million to shareowners through stock purchases. A total of 6.2 million shares were repurchased in 1998 and 2.8 million shares were repurchased thus far in 1999. Under the new repurchase plan, Navistar cannot purchase more than 4.5 million shares without impairing the use of its tax loss carryforward. Shares will be purchased on the open market from time to time. While Navistar is forecasting lower industry volume for fiscal 2000, demand is expected to remain strong.

The board approved a fiscal 2000 capital spending program of $600 million, including $400 million for the company's next generation vehicle and diesel engine programs, which were previously approved.

"We're committed to shareowner value as evidenced through the stock repurchase plan and customer value as evidenced by the increased capital investment," Horne said. "The repurchase plan is a continuation of our philosophy which has a goal to grow equity by a minimum of $100 million per year."

Navistar's fiscal year ends October 31. For the first nine months of fiscal 1999, Navistar reported record net income of $412 million, or $6.16 per diluted common share. Earnings for the period benefited from a $178 million, or $2.66 per diluted common share, reduction of the company's deferred tax asset valuation allowance relating to increased utilization of net operating loss carryforwards. Results for the fiscal year will be released on December 2.

Navistar International Corporation, headquartered in Chicago, is a leading producer of heavy and medium trucks and school buses and mid-range diesel engines sold under the International® brand. The company is also a private label designer and manufacturer of diesel engines for the truck and van markets. Sales and revenues in fiscal 1998 totaled $7.9 billion. Additional information can be found on the company's web site at www.navistar.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, Year 2000 computer issues 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.


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