Navistar Reports First Quarter Results as
Truck Market Remains Soft; Lowers Forecast of 2001 Total
Industry Demand to 280,000 Units;
Introduction of Industry's First High Performance Medium Truck and Joint
Venture with Ford Provide Substantial Opportunities for Future Growth
CHICAGO, Feb. 16 In line with analyst expectations,
Navistar International Corporation , producer of International(R)
brand trucks, school buses and engines, today reported a first quarter loss as
industry demand for new trucks remained soft.
(Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/19991207/CGTU007 )
The company said it lost $35 million, or $0.58 per diluted common share
for the quarter ended January 31, 2001, compared with record earnings of
$70 million, or $1.10 per diluted common share in the first quarter a year
ago. The consensus estimate of Wall Street security analysts was that the
company would lose $0.61 cents per share.
Consolidated sales and revenues from the company's manufacturing and
financial services operations for the first quarter totaled $1.5 billion,
compared with $2.2 billion in the first quarter of 2000.
John R. Horne, Navistar chairman, president and chief executive officer,
said that continued weak, new and used truck pricing and lower new truck
shipments impacted results in the first quarter.
"While we have made fundamental changes in the way we do business and we
look for further productivity improvements in our core businesses, first
quarter results were influenced by challenges that are beyond the industry,"
Horne said. "Extremely low used truck values, record high diesel fuel prices
and high interest rates caused many truck buyers to defer purchases."
Horne said that until dealer inventory is at levels that reflect current
demand, the company intends to keep production levels below retail sales
demand. He added that dealer inventory adjustments should be completed by the
end of the second quarter or into the third quarter.
Horne said that the company has lowered its forecast for total truck
industry volume in fiscal 2001 in the United States and Canada to 280,000
units, down from the 321,600 units it forecast last December. Demand for
medium trucks is unchanged at 108,000 units but demand for heavy trucks should
decline to 144,000 units, down from the previous forecast of 181,600 units,
and school bus demand is forecast at 28,000 units, down from 32,000 units.
"While leading indicators such as truck tonnage seem to be stabilizing,
the year will still be challenging with real improvement expected in the
fourth quarter," Horne said.
Turning to the future, Horne said two major events announced within the
last week overshadow first quarter results and more accurately reflect the
promising long-term outlook for the company.
"Within a period of seven days, we announced the most significant joint
venture in our history and we held the biggest new product introduction in the
past 25 years" Horne said.
On February 12, Navistar and Ford announced that they intend to form a
joint venture to build commercial trucks in Mexico and distribute service
parts. The two companies also will explore opportunities for greater
cooperation in diesel engines for potential applications in Ford's full range
of truck products.
"This new alliance with our largest customer will yield tremendous
benefits of scale necessary to compete in today's consolidating marketplace."
Horne said. "It gives us the opportunity to provide our dealers and customers
with a broader array of products and services."
On February 13, the company introduced the industry's first High
Performance truck before 2,500 customers, dealers and financial analysts.
"With these trucks, International will set a new benchmark in delivering
to customers the lowest operating and maintenance costs and highest resale
value," Horne said. "Our new lineup are designed and built to perform on a
higher level and the initial reaction from our dealers and customers is
extremely gratifying."
The high performance medium truck will be available to customers in
April.
Navistar International Corporation is a leading producer of
medium trucks, school buses, heavy trucks, severe service vehicles and mid-
range diesel engines sold under the International(R) brand. The company is
also a private label designer and manufacturer of diesel engines for the
truck, van and SUV markets. With world headquarters in Chicago, Navistar had
sales and revenues of $8.5 billion in 2000. Additional information can be
found on the company's web site at http://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, 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.
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 SUBSIDIARIES
STATEMENT OF INCOME (UNAUDITED)
(Millions of dollars, except per share data)
Three Months Ended
January 31
2001 2000
Sales and Revenues
Sales of manufactured products $1,433 $2,086
Finance and insurance revenue 79 69
Other income 10 11
Total sales and revenues 1,522 2,166
Costs and expenses
Cost of products and services sold $1,276 $1,748
Postretirement benefits 46 48
Engineering and research expense 65 71
Sales, general and administrative expense 121 124
Interest expense 41 35
Other expense 29 27
Total costs and expenses 1,578 2,053
Income/(loss) before income taxes (56) 113
Income tax benefit/(expense) 21 (43)
Net income (loss) $(35) $70
Earnings/(loss) per share
Basic $(0.58) $1.12
Diluted $(0.58) $1.10
Average shares outstanding (millions)
Basic 59.5 62.6
Diluted 59.5 63.7
The Statement of Income includes the consolidated financial results of the
company's manufacturing operations with its wholly owned financial
services operations.
NAVISTAR INTERNATIONAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF FINANCIAL CONDITION (UNAUDITED)
(Millions of dollars)
AS OF JANUARY 31
2001 2000
ASSETS
Cash and cash equivalents $432 $461
Marketable securities 127 216
559 677
Receivables, net 1,762 2,339
Inventories 705 711
Property and equipment, net 1,816 1,518
Investments and other assets 271 219
Restricted cash 406 47
Prepaid and intangible pension assets 304 284
Deferred tax asset, net 911 800
Total assets $6,734 $6,595
LIABILITIES AND SHAREOWNERS' EQUITY
Liabilities
Accounts payable, principally trade $993 $1,257
Debt: Manufacturing operations 645 492
Financial services operations 1,881 1,813
Postretirement benefits liability 793 795
Other liabilities 1,142 921
Total liabilities 5,454 5,278
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) (178) (234)
Accumulated other comprehensive loss (176) (192)
Common stock held in treasury, at cost (509) (400)
Total shareowners' equity 1,280 1,317
Total liabilities and shareowners' equity $6,734 $6,595
The Statement of Financial Condition includes the consolidated financial
results of the company's manufacturing operations with its wholly owned
financial services operations.
