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Exhibit 99.1
NEWS RELEASE
Media Contact: Roy Wiley 312/ 836-2627
Investor Contact: Ramona Long 312/ 836-2406
NAVISTAR TO TAKE FOURTH QUARTER CHARGE AGAINST EARNINGS
Restructuring Will Boost Cash Flow And Strengthen Future Earnings Potential
CHICAGO (October 31, 2000) - Navistar International Corporation (NYSE:
NAV), producer of International brand trucks, school buses and engines,
announced today that it will take a pre-tax charge against earnings in the
fourth quarter of approximately $300 million as it restructures operations and
prepares for the launch of a series of new products. The products include a new
line of high performance medium trucks, a new integrated conventional school bus
and a new generation of diesel engines. The restructuring charge will be fully
tax effected as well as significantly reduce the company's obligations under
current incentive and profit sharing plans by as much as $90 million.
The first element of the plan was announced in August when the company
said it would eliminate approximately 1,100 white collar and contract positions
due to the sharp drop in demand for new trucks. The restructuring charge will
include the costs related to this reduction in force as well as some lease
termination expense because the reduction allowed for consolidation of office
space in the Chicago area.
The other significant element of the restructuring includes the
effects of the launch of new medium truck and diesel engine lines, including the
losses on equipment and inventory that will be made obsolete. Additionally, the
charge will include the impact of exiting certain operations, associated charges
for the disposal of certain assets and the sale of targeted company-owned
dealership operations.
John R. Horne, Navistar chairman, president and chief executive
officer, said the productivity initiatives resulting from the restructuring
will increase the company's short-term cash flow position by as much as $60
million and strengthen future earnings potential.
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"We are not just cutting expenses and reducing our headcount, but
restructuring our operations to improve our financial performance in a way that
will add to shareowner value," Horne explained.
The first phase of the new high performance medium truck line will be
unveiled in February. The line, highlighted by a redesigned cab manufactured at
a state of the art highly automated facility, represents the first completely
new line of International vehicles in 20 years. An improved manufacturing
strategy featuring modular assembly and focused plants will result in lower
total labor cost. The severance and benefit costs associated with these changes
are a significant part of the restructuring charge.
The integrated conventional school bus will be produced in a new
facility in Tulsa, Okla. and coupled with a reconfiguration of the company's bus
distribution system will continue International's market leadership position in
this important industry segment. The costs associated with the restructuring of
the bus distribution system are included in the charge.
The new generation of diesel engines encompasses a V-8 diesel engine
and a derivative V-6 diesel engine that will be built at a new facility in
Huntsville, Ala. Production of the new V-8 diesel engine for use in
International trucks will begin early in 2002. The engine manufacturing strategy
and technology improvements require the introduction of new, more efficient
production equipment and processes. The introduction of the new production
processes has resulted in the recognition of a loss on equipment that will be
made obsolete with the introduction of the new diesel engines.
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Horne said the final restructuring charge will be reported on December
5 in conjunction with the release of the company's financial results for the
fiscal year ending October 31, 2000.
"While we cannot control market conditions, we can control how we
respond," Horne said. "The initiatives contained in our restructuring plan will
generate significant operating efficiencies to allow us to continue to build a
healthy business in the downturn and come out even stronger when the market
turns up again. We have made some difficult choices and are focusing on the
truly essential elements that will make us successful."
Navistar International Corporation (NYSE: NAV) is the parent company of
International Truck and Engine Corporation, a leading producer of medium trucks,
school buses, heavy trucks, severe service vehicles, mid-range diesel engines
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. Through its finance subsidiary, the company also provides
financing and liability insurance for its dealers and customers. With world
headquarters in Chicago, Navistar had 1999 sales and revenues of $8.6 billion.
Additional information can be found on the company's web site at
www.nav-international.com.
Forward Looking Statement
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 news release.
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