Navistar, Caterpillar Set Framework for on-Going Business Collaboration

WARRENVILLE, Ill.--Aug. 24, 2006--

Pending Litigation Between The Companies Will Be Dismissed

Navistar International Corporation , the nation's largest combined commercial truck and mid-range diesel engine producer, announced today that it has reached an agreement with Caterpillar Inc. on a new ongoing business relationship that includes new licensing and supply agreements.

As part of the agreement, both companies have agreed to dismiss all pending litigation, some of which date back to 2001. Financial terms of the agreement are not being disclosed, but it is anticipated that the agreement will not have a material impact on Navistar's financial position, cash flow or results of operations.

A major component of the agreement involves new supply agreements between the two companies that include on-highway truck engines, fuel injectors, remanufactured components and other products.

"This agreement sets in place the framework for further expansion of our long relationship with Caterpillar," said Daniel C. Ustian, Navistar chairman, president and chief executive officer. "I am extremely pleased that we have been able to reach agreement on issues that were a distraction to both companies, and can concentrate on working together to continue to build a productive and prosperous relationship."

"Navistar is a very important customer to Caterpillar, and I'm pleased we're able to settle our differences and move forward in a positive way," said Jim Owens, Caterpillar chairman and chief executive officer. "This agreement provides a solid foundation for a continued long-term business relationship that benefits us both."

Part of the agreement calls for Caterpillar Remanufacturing to act as International's lead global remanufacturing service provider. Under this new relationship, the parties will examine and explore opportunities to enhance the overall value of International's remanufactured products and services.

"We are pleased to forge an alliance with Caterpillar Remanufacturing," said Phyllis Cochran, International vice president and general manager of the company's parts operations. "We will leverage Caterpillar's product development capabilities to accelerate introduction of reman products at lower cost and improved quality."

"This opportunity is a natural extension to the remanufacturing program that we offer today for Cat branded truck engines," said Steve Fisher, Caterpillar vice president. "We look forward to the opportunity to support International's initiative of increase truck value by offering a world-class remanufactured products program."

Navistar International Corporation is the parent company of International Truck and Engine Corporation. The company produces International(R) brand commercial trucks, mid-range diesel engines, IC brand school buses, Workhorse brand chassis for motor homes and step vans, and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. Navistar is also a provider of truck and diesel engine parts and service sold under the International(R) brand. A wholly owned subsidiary offers financing services. Additional information is available at: www.nav-international.com.