Navistar Reports Second Quarter, First Half Results
16 May 2000
Navistar Reports Record Second Quarter, First Half Results; Per Share Earnings Again Exceed Analyst Estimates NAVISTAR INTERNATIONAL CORPORATION LOGO Navistar International Corporation has aligned its business groups under the International(R) brand as part of its business strategy to deliver more value to customers. (PRNewsFoto)[KC] CHICAGO, IL USA 12/07/1999
CHICAGO, May 16 Navistar International Corporation
, producer of International(R) brand trucks, school buses and
diesel engines, today reported record earnings for the second quarter and
first six months of its fiscal year. It marked the ninth consecutive quarter
that per diluted share earnings have met or exceeded the consensus estimate of
financial analysts.
(Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/19991207/CGTU007 )
The company said that net income for the quarter ended April 30, 2000 rose
to $98 million, or $1.58 per diluted common share, from $96 million, or
$1.42 per diluted common share in the same period a year ago. Net income was
up 2 percent while per diluted share earnings were up 11 percent.
Consolidated sales and revenues from manufacturing and financial services
operations for the second quarter totaled $2.4 billion, up slightly from the
$2.3 billion reported in the second quarter of 1999. Manufacturing gross
margins for the second quarter improved to 18.0 percent from the 1999 second
quarter gross margin of 17.9 percent.
For the first six months of fiscal 2000, Navistar reported net income of
$168 million, or $2.68 per diluted common share, up from $157 million or
$2.33 per diluted common share in the first half of 1999. Consolidated sales
and revenues rose to $4.6 billion from $4.2 billion in the first six months of
1999.
John R. Horne, Navistar chairman, president and chief executive officer,
said the highlight of the record second quarter performance continued to be
strong OEM engine volume and ongoing productivity improvement in all areas.
He noted that the modest gain in year-over-year gross margin was significant
in the face of a highly competitive truck market and the company's aggressive
investment in new product programs.
According to Horne, the record results were achieved despite intense truck
pricing competition that is expected to continue throughout the year. Despite
an industry-wide decline in incoming heavy truck orders, actual industry sales
volume in the first half held up well compared to last year's record levels.
However, Horne noted there was less growth in new truck pricing and a
significant deterioration in used truck pricing that has negatively influenced
trade-in values. Higher diesel fuel prices and higher interest rates are also
affecting the sales environment, he said.
"Significantly, our record earnings and ROE performance was achieved while
we continued to make major investments in truck and engine product
development," Horne said. "We are confident that our engine business will set
another volume record this year and we anticipate continued improvement in
truck operating efficiencies."
Worldwide shipments of International brand medium and heavy trucks and
school buses during the second quarter totaled 35,900 units, compared with the
36,100 units shipped in the second quarter of 1999.
Shipments of mid-range diesel engines to other original equipment
manufacturers during the quarter totaled 83,200 units, up 15 percent from the
72,200 units shipped in the second quarter of 1999.
"After two consecutive record years of truck sales, we are seeing an
easing of demand for heavy trucks as we had forecast last December," Horne
said. "However, we are well positioned with our products and expect to
improve dramatically in both truck and engine operations. Our brand is
getting stronger and our productivity and cost structure continue to improve
as we move relentlessly toward our goal of becoming the best truck and engine
company."
Horne said that plans for producing International's next generation
vehicle at its Springfield, Ohio assembly plant continue on schedule as does
work on a new engine facility in Huntsville, Ala. and a new school bus
facility in Tulsa, Okla. The new next generation medium truck will be
available to customers next March.
Based on its current outlook, Navistar is still forecasting total truck
industry volume in fiscal 2000 in the United States and Canada at 405,000
units, down from 465,500 units in fiscal 1999. Demand for heavy trucks is
expected to reach 245,000 units, while demand for medium trucks is estimated
at 128,000 units with school bus demand forecast at 32,000
units.
NAVISTAR INTERNATIONAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF INCOME (UNAUDITED)
(Millions of dollars, except per share data)
Three Months Ended Six Months Ended
April 30 April 30
2000 1999 2000 1999
Sales and revenues
Sales of manufactured
products $2,313 $2,215 $4,399 $4,052
Finance and insurance
revenue 64 59 133 121
Other income 11 13 22 38
Total sales
and revenues 2,388 2,287 4,554 4,211
Costs and expenses
Cost of products
and services sold 1,908 1,824 3,656 3,368
Postretirement
benefits 61 65 109 114
Engineering and
research expense 76 66 147 124
Sales, general
and administrative
expense 126 123 250 249
Interest expense 33 35 68 67
Other expense 26 20 53 36
Total costs
and expenses 2,230 2,133 4,283 3,958
Income before
income taxes 158 154 271 253
Income tax
expense 60 58 103 96
Net income $98 $96 $168 $157
Earnings per share
Basic $ 1.61 $ 1.44 $ 2.72 $ 2.37
Diluted $ 1.58 $ 1.42 $ 2.68 $ 2.33
Average shares
outstanding (millions)
Basic 61.0 66.2 61.8 66.3
Diluted 61.9 67.5 62.7 67.3
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 April 30
2000 1999
ASSETS
Cash and cash equivalents $480 $181
Marketable securities 195 406
675 587
Receivables, net 2,211 2,611
Inventories 726 646
Property and equipment, net 1,570 1,186
Investments and other assets 304 294
Prepaid and intangible pension assets 313 243
Deferred tax asset, net 850 834
Total assets $6,649 $6,401
LIABILITIES AND SHAREOWNERS' EQUITY
Liabilities
Accounts payable, principally trade 1,264 $1,307
Debt: Manufacturing operations 582 477
Financial services operations 1,640 1,702
Postretirement benefits liability 807 967
Other liabilities 1,052 1,063
Total liabilities 5,345 5,516
Commitments and contingencies
Shareowners' equity
Series D convertible
junior preference stock 4 4
Common stock
(75.3 million shares issued) 2,139 2,139
Common stock held in treasury, at cost (509) (236)
Retained earnings (deficit) (137) (682)
Accumulated other comprehensive loss (193) (340)
Total shareowners' equity 1,304 885
Total liabilities
and shareowners' equity $6,649 $6,401
The Statement of Financial Condition includes the consolidated financial
results of the company's manufacturing operations with its wholly owned
financial services operations.