|        |
|--------|
|        |  |  |  |  |
|   |   |   |   |   |

|        |
|--------|
|        |  |
| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

|   |
|---|
|   |  |
| o | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

|                                                                                                                                                 |
|-------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                 |  |
| Delaware                                                                                                                                        | 36-3359573 |
| (State or other jurisdiction of incorporation or organization)                                                                                  | (I.R.S. Employer Identification No.) |
|                                                                                                                                            |   |
| 2701 Navistar Drive,                                                                                                            Lisle, Illinois | 60532 |
| (Address of principal executive offices)                                                                                                        | (Zip Code) |

|                                               |
|-----------------------------------------------|
|                                               |  |  |  |  |  |  |
| Large accelerated filer             |   | o |    | Accelerated filer |   | þ |
| Non-accelerated filer                         |   | o |    | Smaller reporting company |   | o |
| (Do not check if a smaller reporting company) |    |   |   |   |

|        |
|--------|
|        |  |  |  |  |
|   |   |   |   |   |

----

|                                    |
|------------------------------------|
|                                    |  |  |  |
|                               |   |   | Page |
| PART I—Financial Information |
| Item 1.                            | Financial Statements (Unaudited) |   | 5 |
|                               | Consolidated Statements of Operations for the three months ended January 31, 2017 and 2016 |   | 5 |
|                               | Consolidated Statements of Comprehensive Loss for the three months ended January 31, 2017 and 2016 |   | 6 |
|                               | Consolidated Balance Sheets as of January 31, 2017 and October 31, 2016 |   | 7 |
|                               | Condensed Consolidated Statements of Cash Flows for the three months ended January 31, 2017 and   2016 |   | 8 |
|                               | Consolidated Statements of Stockholders' Deficit for the three months ended January 31, 2017 and 2016 |   | 9 |
|                               | Notes to Consolidated Financial Statements |   | 10 |
| Item 2.                       | Management's Discussion and Analysis of Financial Condition and Results of Operations |   | 42 |
| Item 3.                            | Quantitative and Qualitative Disclosures about Market Risk |   | 57 |
| Item 4.                       | Controls and Procedures |   | 57 |
|                               |   |   |   |
| PART II                            |
| Item 1.                            | Legal Proceedings |   | 58 |
| Item 1A.                           | Risk Factors |   | 58 |
| Item 2.                            | Unregistered Sales of Equity Securities and Use of Proceeds |   | 58 |
| Item 3.                            | Defaults upon Senior Securities |   | 58 |
| Item 4.                            | Mine Safety Disclosures |   | 58 |
| Item 5.                            | Other Information |   | 58 |
| Item 6.                            | Exhibits |   | 58 |
|                               | Signature |   | 59 |

----

|         |                                                               |
|---------|---------------------------------------------------------------|
| • | estimates we have made in preparing our financial statements; |

|         |                                                                                                       |
|---------|-------------------------------------------------------------------------------------------------------|
| • | the implementation of our new strategic alliance with Volkswagen Truck & Bus GmbH ("VW T&B"); |

|         |                                                   |
|---------|---------------------------------------------------|
| • | our development of new products and technologies; |

|         |                                                                                         |
|---------|-----------------------------------------------------------------------------------------|
| • | anticipated sales, volume, demand, markets for our products, and financial performance; |

|         |                                                                        |
|---------|------------------------------------------------------------------------|
| • | anticipated performance and benefits of our products and technologies; |

|         |                                                                                                                                                                                                                                                                                                                                                                     |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | our business strategies relating to, and our ability to meet, federal and state regulatory heavy-duty diesel emissions standards applicable to certain of our engines, including the timing and costs of compliance and consequences of noncompliance with such standards, as well as our ability to meet other federal, state and foreign regulatory requirements; |

|         |                                                                                                      |
|---------|------------------------------------------------------------------------------------------------------|
| • | our business strategies and long-term goals, and activities to accomplish such strategies and goals; |

|         |                                                                                                                                                                                                                                                                                                                                        |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | our ability to implement our strategy focused on growing the core business, seeking new sources of revenue, driving operational excellence, leveraging the VW T&B alliance, investing in our people, and improving our financial performance, as well as the results we expect to achieve from the implementation of our strategy; |

|         |                                                   |
|---------|---------------------------------------------------|
| • | our expectations related to new product launches; |

|         |                                                                                      |
|---------|--------------------------------------------------------------------------------------|
| • | anticipated results from the realignment of our leadership and management structure; |

|         |                                                                                              |
|---------|----------------------------------------------------------------------------------------------|
| • | anticipated benefits from acquisitions, strategic alliances, and joint ventures we complete; |

|         |                                                                                                                                                                                                                                    |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | our expectations and estimates relating to restructuring activities, including restructuring charges and timing of cash payments related thereto, and operational flexibility, savings, and efficiencies from such restructurings; |

|         |                                                                                                            |
|---------|------------------------------------------------------------------------------------------------------------|
| • | our expectations relating to the potential effects of anticipated divestitures and closures of businesses; |

|         |                                                                                                       |
|---------|-------------------------------------------------------------------------------------------------------|
| • | our expectations relating to our cost-reduction actions and actions to reduce discretionary spending; |

|         |                                                                         |
|---------|-------------------------------------------------------------------------|
| • | our expectations relating to our ability to service our long-term debt; |

|         |                                                                                         |
|---------|-----------------------------------------------------------------------------------------|
| • | our expectations relating to our wholesale and retail finance receivables and revenues; |

|         |                                                                      |
|---------|----------------------------------------------------------------------|
| • | our expectations and estimates relating to our used truck inventory; |

|         |                                                                                   |
|---------|-----------------------------------------------------------------------------------|
| • | liabilities resulting from environmental, health and safety laws and regulations; |

|         |                                       |
|---------|---------------------------------------|
| • | our anticipated capital expenditures; |

|         |                                                 |
|---------|-------------------------------------------------|
| • | our expectations relating to payments of taxes; |

|         |                                              |
|---------|----------------------------------------------|
| • | our expectations relating to warranty costs; |

|         |                                                |
|---------|------------------------------------------------|
| • | our expectations relating to interest expense; |

|         |                                                                       |
|---------|-----------------------------------------------------------------------|
| • | our expectations relating to impairment of goodwill and other assets; |

|         |                                                   |
|---------|---------------------------------------------------|
| • | costs relating to litigation and similar matters; |

|         |                                                                                                    |
|---------|----------------------------------------------------------------------------------------------------|
| • | estimates relating to pension plan contributions and unfunded pension and postretirement benefits; |

|         |                                          |
|---------|------------------------------------------|
| • | trends relating to commodity prices; and |

|         |                                                                                                                               |
|---------|-------------------------------------------------------------------------------------------------------------------------------|
| • | anticipated trends, expectations, and outlook relating to matters affecting our financial condition or results of operations. |

----

----

|              |                      |
|--------------|----------------------|
| Item 1. | Financial Statements |

|                                                                    |
|--------------------------------------------------------------------|
|                                                                    |  |  |  |  |  |  |  |
|                                                               | Three Months Ended January 31, |
| (in millions, except per share data)                               | 2017 |   | 2016 |
| Sales and revenues                                                 |   |   |   |
| Sales of manufactured products, net                                | $ | 1,629 |  |   | $ | 1,730 |  |
| Finance revenues                                                   | 34 |  |   | 35 |  |
| Sales and revenues, net                                            | 1,663 |  |   | 1,765 |  |
| Costs and expenses                                                 |   |   |   |
| Costs of products sold                                             | 1,370 |  |   | 1,466 |  |
| Restructuring charges                                              | 7 |  |   | 3 |  |
| Asset impairment charges                                           | 2 |  |   | 2 |  |
| Selling, general and administrative expenses                       | 200 |  |   | 205 |  |
| Engineering and product development costs                          | 63 |  |   | 58 |  |
| Interest expense                                                   | 82 |  |   | 81 |  |
| Other income, net                                                  | (8 | ) |   | (22 | ) |
| Total costs and expenses                                           | 1,716 |  |   | 1,793 |  |
| Equity in income (loss) of non-consolidated affiliates             | 3 |  |   | (1 | ) |
| Loss before income tax                                             | (50 | ) |   | (29 | ) |
| Income tax benefit (expense)                                       | (4 | ) |   | 5 |  |
| Net loss                                                           | (54 | ) |   | (24 | ) |
| Less: Net income attributable to non-controlling interests         | 8 |  |   | 9 |  |
| Net loss attributable to Navistar International Corporation        | $ | (62 | ) |   | $ | (33 | ) |
|                                                               |   |   |   |
| Loss per share attributable to Navistar International Corporation: |   |   |   |
| Basic                                                              | $ | (0.76 | ) |   | $ | (0.40 | ) |
| Diluted                                                            | (0.76 | ) |   | (0.40 | ) |
|                                                               |   |   |   |
| Weighted average shares outstanding:                               |   |   |   |
| Basic                                                              | 81.8 |  |   | 81.7 |  |
| Diluted                                                            | 81.8 |  |   | 81.7 |  |

----

|                                                                             |
|-----------------------------------------------------------------------------|
|                                                                             |  |  |  |  |  |  |  |
| (in millions)                                                               | Three Months Ended January 31, |
| 2017                                                                        |  | 2016 |
| Net loss                                                                    | $ | (54 | ) |   | $ | (24 | ) |
| Other comprehensive income (loss):                                          |   |   |   |
| Foreign currency translation adjustment                                     | (12 | ) |   | (33 | ) |
| Defined benefit plans, net of tax                                           | 35 |  |   | 33 |  |
| Total other comprehensive income                                            | 23 |  |   | — |  |
| Comprehensive loss                                                          | (31 | ) |   | (24 | ) |
| Less: Net income attributable to non-controlling interests                  | 8 |  |   | 9 |  |
| Total comprehensive loss attributable to Navistar International Corporation | $ | (39 | ) |   | $ | (33 | ) |

----

|                                                                                                              |
|--------------------------------------------------------------------------------------------------------------|
|                                                                                                              |  |  |  |  |  |  |  |
|                                                                                                         | January 31, 2017 |   | October 31, 2016 |
| (in millions, except per share data)                                                                         |   |   |   |
| ASSETS                                                                                                       | (Unaudited) |   |   |
| Current assets                                                                                               |   |   |   |
| Cash and cash equivalents                                                                                    | $ | 573 |  |   | $ | 804 |  |
| Restricted cash and cash equivalents                                                                         | 49 |  |   | 64 |  |
| Marketable securities                                                                                        | 198 |  |   | 46 |  |
| Trade and other receivables, net                                                                             | 262 |  |   | 276 |  |
| Finance receivables, net                                                                                     | 1,161 |  |   | 1,457 |  |
| Inventories, net                                                                                             | 1,022 |  |   | 944 |  |
| Other current assets                                                                                         | 184 |  |   | 168 |  |
| Total current assets                                                                                         | 3,449 |  |   | 3,759 |  |
| Restricted cash                                                                                              | 48 |  |   | 48 |  |
| Trade and other receivables, net                                                                             | 17 |  |   | 16 |  |
| Finance receivables, net                                                                                     | 202 |  |   | 220 |  |
| Investments in non-consolidated affiliates                                                                   | 53 |  |   | 53 |  |
| Property and equipment (net of accumulated depreciation and amortization of $2,566 and $2,553, respectively) | 1,290 |  |   | 1,241 |  |
| Goodwill                                                                                                     | 38 |  |   | 38 |  |
| Intangible assets (net of accumulated amortization of $140 and $136, respectively)                           | 50 |  |   | 53 |  |
| Deferred taxes, net                                                                                          | 162 |  |   | 161 |  |
| Other noncurrent assets                                                                                      | 85 |  |   | 64 |  |
| Total assets                                                                                                 | $ | 5,394 |  |   | $ | 5,653 |  |
| LIABILITIES and STOCKHOLDERS’ DEFICIT                                                                  |   |   |   |
| Liabilities                                                                                                  |   |   |   |
| Current liabilities                                                                                          |   |   |   |
| Notes payable and current maturities of long-term debt                                                       | $ | 589 |  |   | $ | 907 |  |
| Accounts payable                                                                                             | 1,046 |  |   | 1,113 |  |
| Other current liabilities                                                                                    | 1,131 |  |   | 1,183 |  |
| Total current liabilities                                                                                    | 2,766 |  |   | 3,203 |  |
| Long-term debt                                                                                               | 4,276 |  |   | 3,997 |  |
| Postretirement benefits liabilities                                                                          | 2,990 |  |   | 3,023 |  |
| Other noncurrent liabilities                                                                                 | 691 |  |   | 723 |  |
| Total liabilities                                                                                            | 10,723 |  |   | 10,946 |  |
| Stockholders’ deficit                                                                                  |   |   |   |
| Series D convertible junior preference stock                                                            | 2 |  |   | 2 |  |
| Common stock, $0.10 par value per share (86.8 shares issued and 220 shares authorized at both dates)         | 9 |  |   | 9 |  |
| Additional paid-in capital                                                                                   | 2,496 |  |   | 2,499 |  |
| Accumulated deficit                                                                                          | (5,025 | ) |   | (4,963 | ) |
| Accumulated other comprehensive loss                                                                         | (2,617 | ) |   | (2,640 | ) |
| Common stock held in treasury, at cost (5.1 and 5.2 shares, respectively)                                    | (198 | ) |   | (205 | ) |
| Total stockholders’ deficit attributable to Navistar International Corporation                         | (5,333 | ) |   | (5,298 | ) |
| Stockholders’ equity attributable to non-controlling interests                                         | 4 |  |   | 5 |  |
| Total stockholders’ deficit                                                                            | (5,329 | ) |   | (5,293 | ) |
| Total liabilities and stockholders’ deficit                                                            | $ | 5,394 |  |   | $ | 5,653 |  |

----

|                                                                                           |
|-------------------------------------------------------------------------------------------|
|                                                                                           |  |  |  |  |  |  |  |
|                                                                                      | Three Months Ended January 31, |
| (in millions)                                                                             | 2017 |   | 2016 |
| Cash flows from operating activities                                                      |   |   |   |
| Net loss                                                                                  | $ | (54 | ) |   | $ | (24 | ) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |   |   |   |
| Depreciation and amortization                                                             | 37 |  |   | 39 |  |
| Depreciation of equipment leased to others                                                | 22 |  |   | 19 |  |
| Deferred taxes, including change in valuation allowance                                   | — |  |   | (18 | ) |
| Asset impairment charges                                                                  | 2 |  |   | 2 |  |
| Amortization of debt issuance costs and discount                                          | 10 |  |   | 9 |  |
| Stock-based compensation                                                                  | 7 |  |   | 1 |  |
| Provision for doubtful accounts, net of recoveries                                        | 4 |  |   | 2 |  |
| Equity in loss of non-consolidated affiliates, net of dividends                           | 3 |  |   | 1 |  |
| Other non-cash operating activities                                                       | (3 | ) |   | (5 | ) |
| Changes in other assets and liabilities, exclusive of the effects of businesses disposed  | (6 | ) |   | (128 | ) |
| Net cash provided by (used in) operating activities                                       | 22 |  |   | (102 | ) |
| Cash flows from investing activities                                                      |   |   |   |
| Purchases of marketable securities                                                        | (212 | ) |   | (117 | ) |
| Sales of marketable securities                                                            | 59 |  |   | 115 |  |
| Maturities of marketable securities                                                       | 1 |  |   | 9 |  |
| Net change in restricted cash and cash equivalents                                        | 15 |  |   | (1 | ) |
| Capital expenditures                                                                      | (46 | ) |   | (29 | ) |
| Purchases of equipment leased to others                                                   | (24 | ) |   | (49 | ) |
| Proceeds from sales of property and equipment                                             | 2 |  |   | 14 |  |
| Investments in non-consolidated affiliates                                                | (2 | ) |   | (1 | ) |
| Net cash used in investing activities                                                     | (207 | ) |   | (59 | ) |
| Cash flows from financing activities                                                      |   |   |   |
| Proceeds from issuance of securitized debt                                                | 5 |  |   | 50 |  |
| Principal payments on securitized debt                                                    | (27 | ) |   | (8 | ) |
| Net change in secured revolving credit facilities                                         | (79 | ) |   | (108 | ) |
| Proceeds from issuance of non-securitized debt                                            | 298 |  |   | 42 |  |
| Principal payments on non-securitized debt                                                | (200 | ) |   | (77 | ) |
| Net change in notes and debt outstanding under revolving credit facilities                | (48 | ) |   | (70 | ) |
| Principal payments under financing arrangements and capital lease obligations             | — |  |   | (1 | ) |
| Debt issuance costs                                                                       | (5 | ) |   | (1 | ) |
| Proceeds from financed lease obligations                                                  | 8 |  |   | 7 |  |
| Proceeds from exercise of stock options                                                   | 3 |  |   | — |  |
| Dividends paid by subsidiaries to non-controlling interest                                | (8 | ) |   | (10 | ) |
| Other financing activities                                                                | — |  |   | 1 |  |
| Net cash used in financing activities                                                     | (53 | ) |   | (175 | ) |
| Effect of exchange rate changes on cash and cash equivalents                              | 7 |  |   | 3 |  |
| Decrease in cash and cash equivalents                                                     | (231 | ) |   | (333 | ) |
| Cash and cash equivalents at beginning of the period                                      | 804 |  |   | 912 |  |
| Cash and cash equivalents at end of the period                                            | $ | 573 |  |   | $ | 579 |  |

----

|                                                                                  |
|----------------------------------------------------------------------------------|
|                                                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (in millions)                                                                    | Series D ConvertibleJuniorPreference Stock |   | CommonStock |   | Additional Paid-inCapital |   | AccumulatedDeficit |   | AccumulatedOtherComprehensiveIncome (Loss) |   | CommonStockHeld inTreasury, at cost |   | Stockholders'Equity Attributableto Non-controllingInterests |   | Total |
| Balance as of October 31, 2016                                                   | $ | 2 |  |   | $ | 9 |  |   | $ | 2,499 |  |   | $ | (4,963 | ) |   | $ | (2,640 | ) |   | $ | (205 | ) |   | $ | 5 |  |   | $ | (5,293 | ) |
| Net income (loss)                                                                | — |  |   | — |  |   | — |  |   | (62 | ) |   | — |  |   | — |  |   | 8 |  |   | (54 | ) |
| Total other comprehensive income                                                 | — |  |   | — |  |   | — |  |   | — |  |   | 23 |  |   | — |  |   | — |  |   | 23 |  |
| Stock-based compensation                                                         | — |  |   | — |  |   | 1 |  |   | — |  |   | — |  |   | — |  |   | — |  |   | 1 |  |
| Stock ownership programs                                                         | — |  |   | — |  |   | (4 | ) |   | — |  |   | — |  |   | 7 |  |   | — |  |   | 3 |  |
| Cash dividends paid to non-controlling interest                                  | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | (8 | ) |   | (8 | ) |
| Other                                                                            | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | (1 | ) |   | (1 | ) |
| Balance as of January 31, 2017                                                   | $ | 2 |  |   | $ | 9 |  |   | $ | 2,496 |  |   | $ | (5,025 | ) |   | $ | (2,617 | ) |   | $ | (198 | ) |   | $ | 4 |  |   | $ | (5,329 | ) |
| Balance as of October 31, 2015                                                   | $ | 2 |  |   | $ | 9 |  |   | $ | 2,499 |  |   | $ | (4,866 | ) |   | $ | (2,601 | ) |   | $ | (210 | ) |   | $ | 7 |  |   | $ | (5,160 | ) |
| Net income (loss)                                                                | — |  |   | — |  |   | — |  |   | (33 | ) |   | — |  |   | — |  |   | 9 |  |   | (24 | ) |
| Stock-based compensation                                                         | — |  |   | — |  |   | 2 |  |   | — |  |   | — |  |   | — |  |   | — |  |   | 2 |  |
| Stock ownership programs                                                         | — |  |   | — |  |   | (1 | ) |   | — |  |   | — |  |   | 1 |  |   | — |  |   | — |  |
| Cash dividends paid to non-controlling interest                                  | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | (10 | ) |   | (10 | ) |
| Acquisition of remaining ownership interest from non-controlling interest holder | — |  |   | — |  |   | 1 |  |   | — |  |   | — |  |   | — |  |   | — |  |   | 1 |  |
| Other                                                                            | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | 1 |  |   | 1 |  |
| Balance as of January 31, 2016                                                   | $ | 2 |  |   | $ | 9 |  |   | $ | 2,501 |  |   | $ | (4,899 | ) |   | $ | (2,601 | ) |   | $ | (209 | ) |   | $ | 7 |  |   | $ | (5,190 | ) |

----

----

|                                                                   |
|-------------------------------------------------------------------|
|                                                                   |  |  |  |  |  |  |  |
|                                                              | Three Months Ended January 31, |
| (in millions)                                                     | 2017 |   | 2016 |
| Balance at beginning of period                                    | $ | 818 |  |   | $ | 994 |  |
| Costs accrued and revenues deferred(B)                            | 45 |  |   | 41 |  |
| Currency translation adjustment                                   | — |  |   | (1 | ) |
| Adjustments to pre-existing warranties(A)                         | (17 | ) |   | 5 |  |
| Payments and revenues recognized(B)                               | (95 | ) |   | (117 | ) |
| Balance at end of period                                          | 751 |  |   | 922 |  |
| Less: Current portion                                             | 371 |  |   | 421 |  |
| Noncurrent accrued product warranty and deferred warranty revenue | $ | 380 |  |   | $ | 501 |  |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (A) | Adjustments to pre-existing warranties reflect changes in our estimate of warranty costs for products sold in prior periods. Such adjustments typically occur when claims experience deviates from historic and expected trends. Our warranty liability is generally affected by component failure rates, repair costs, and the timing of failures. Future events and circumstances related to these factors could materially change our estimates and require adjustments to our liability. In addition, new product launches require a greater use of judgment in developing estimates until historical experience becomes available. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (B) | During the third quarter of 2016, we determined that the amortization of loss reserves for Big Bore extended service contracts, which were included within Costs accrued and revenues deferred, should be applied to Payments and revenues recognized. As a result, for the three months ended January 31, 2016, we have reclassified $15 million of amortization of loss reserves in order to conform to our current presentation. The reclassification did not impact our Consolidated Statements of Operations or our Consolidated Balance Sheets. |

----

----

|                              |
|------------------------------|
|                              |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (in millions)                | Balance at October 31, 2016 |   | Additions |   | Payments |   | Adjustments |   | Balance at January 31, 2017 |
| Employee termination charges | $ | 5 |  |   | $ | 6 |  |   | $ | (2 | ) |   | $ | — |  |   | $ | 9 |  |
| Lease vacancy                | 1 |  |   | — |  |   | — |  |   | — |  |   | 1 |  |
| Other                        | 1 |  |   | — |  |   | — |  |   | — |  |   | 1 |  |
| Restructuring liability      | $ | 7 |  |   | $ | 6 |  |   | $ | (2 | ) |   | $ | — |  |   | $ | 11 |  |

|                              |
|------------------------------|
|                              |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (in millions)                | Balance atOctober 31, 2015 |   | Additions |   | Payments |   | Adjustments |   | Balance at January 31, 2016 |
| Employee termination charges | $ | 62 |  |   | $ | 4 |  |   | $ | (22 | ) |   | $ | (2 | ) |   | $ | 42 |  |
| Lease vacancy                | 5 |  |   | — |  |   | (3 | ) |   | — |  |   | 2 |  |
| Other                        | 1 |  |   | — |  |   | — |  |   | — |  |   | 1 |  |
| Restructuring liability      | $ | 68 |  |   | $ | 4 |  |   | $ | (25 | ) |   | $ | (2 | ) |   | $ | 45 |  |

----

|                                       |
|---------------------------------------|
|                                       |  |  |  |  |  |  |  |
| (in millions)                         | January 31, 2017 |   | October 31, 2016 |
| Retail portfolio                      | $ | 391 |  |   | $ | 499 |  |
| Wholesale portfolio                   | 993 |  |   | 1,199 |  |
| Total finance receivables             | 1,384 |  |   | 1,698 |  |
| Less: Allowance for doubtful accounts | 21 |  |   | 21 |  |
| Total finance receivables, net        | 1,363 |  |   | 1,677 |  |
| Less: Current portion, net(A)         | 1,161 |  |   | 1,457 |  |
| Noncurrent portion, net               | $ | 202 |  |   | $ | 220 |  |

|     |                                                                                                                                                                                                                                                |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (A) | The current portion of finance receivables is computed based on contractual maturities. Actual cash collections typically vary from the contractual cash flows because of prepayments, extensions, delinquencies, credit losses, and renewals. |

----

|                                         |
|-----------------------------------------|
|                                         |  |  |  |  |  |  |  |
|                                    | Three Months Ended January 31, |
| (in millions)                           | 2017 |  | 2016 |
| Retail notes and finance leases revenue | $ | 9 |  |   | $ | 10 |  |
| Wholesale notes interest                | 23 |  |   | 26 |  |
| Operating lease revenue                 | 17 |  |   | 16 |  |
| Retail and wholesale accounts interest  | 5 |  |   | 7 |  |
| Gross finance revenues                  | 54 |  |   | 59 |  |
| Less: Intercompany revenues             | 20 |  |   | 24 |  |
| Finance revenues                        | $ | 34 |  |   | $ | 35 |  |

----

|                                                         |
|---------------------------------------------------------|
|                                                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                    | Three Months Ended January 31, 2017 |
| (in millions)                                           | RetailPortfolio |   | WholesalePortfolio |   | Trade andOtherReceivables |   | Total |
| Allowance for doubtful accounts, at beginning of period | $ | 19 |  |   | $ | 2 |  |   | $ | 28 |  |   | $ | 49 |  |
| Provision for doubtful accounts, net of recoveries      | 5 |  |   | — |  |   | 1 |  |   | 6 |  |
| Charge-off of accounts                                  | (3 | ) |   | — |  |   | (1 | ) |   | (4 | ) |
| Other(A)                                                | (2 | ) |   | — |  |   | — |  |   | (2 | ) |
| Allowance for doubtful accounts, at end of period       | $ | 19 |  |   | $ | 2 |  |   | $ | 28 |  |   | $ | 49 |  |

|                                                         |
|---------------------------------------------------------|
|                                                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                    | Three Months Ended January 31, 2016 |
| (in millions)                                           | RetailPortfolio |   | WholesalePortfolio |   | Trade andOtherReceivables |   | Total |
| Allowance for doubtful accounts, at beginning of period | $ | 22 |  |   | $ | 4 |  |   | $ | 22 |  |   | $ | 48 |  |
| Provision for doubtful accounts, net of recoveries      | 2 |  |   | — |  |   | 3 |  |   | 5 |  |
| Charge-off of accounts                                  | (3 | ) |   | — |  |   | (1 | ) |   | (4 | ) |
| Other(A)                                                | (2 | ) |   | — |  |   | (1 | ) |   | (3 | ) |
| Allowance for doubtful accounts, at end of period       | $ | 19 |  |   | $ | 4 |  |   | $ | 23 |  |   | $ | 46 |  |

|     |                                                   |
|-----|---------------------------------------------------|
| (A) | Amounts include impact from currency translation. |

|                                                             |
|-------------------------------------------------------------|
|                                                             |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                        | January 31, 2017 |   | October 31, 2016 |
| (in millions)                                               | RetailPortfolio |   | WholesalePortfolio |   | Total |   | RetailPortfolio |   | WholesalePortfolio |   | Total |
| Impaired finance receivables with specific loss reserves    | $ | 12 |  |   | $ | — |  |   | $ | 12 |  |   | $ | 15 |  |   | $ | — |  |   | $ | 15 |  |
| Impaired finance receivables without specific loss reserves | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |
| Specific loss reserves on impaired finance receivables      | 9 |  |   | — |  |   | 9 |  |   | 8 |  |   | — |  |   | 8 |  |
| Finance receivables on non-accrual status                   | 12 |  |   | — |  |   | 12 |  |   | 15 |  |   | — |  |   | 15 |  |

----

|                                     |
|-------------------------------------|
|                                     |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                | January 31, 2017 |   | October 31, 2016 |
| (in millions)                       | RetailPortfolio |   | WholesalePortfolio |   | Total |   | RetailPortfolio |   | WholesalePortfolio |   | Total |
| Current, and up to 30 days past due | $ | 353 |  |   | $ | 991 |  |   | $ | 1,344 |  |   | $ | 449 |  |   | $ | 1,198 |  |   | $ | 1,647 |  |
| 30-90 days past due                 | 26 |  |   | 1 |  |   | 27 |  |   | 37 |  |   | — |  |   | 37 |  |
| Over 90 days past due               | 12 |  |   | 1 |  |   | 13 |  |   | 13 |  |   | 1 |  |   | 14 |  |
| Total finance receivables           | $ | 391 |  |   | $ | 993 |  |   | $ | 1,384 |  |   | $ | 499 |  |   | $ | 1,199 |  |   | $ | 1,698 |  |

|                        |
|------------------------|
|                        |  |  |  |  |  |  |  |
| (in millions)          | January 31, 2017 |   | October 31, 2016 |
| Finished products      | $ | 628 |  |   | $ | 678 |  |
| Work in process        | 111 |  |   | 46 |  |
| Raw materials          | 283 |  |   | 220 |  |
| Total inventories, net | $ | 1,022 |  |   | $ | 944 |  |

----

|                                                                                                                                                                                   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                   |  |  |  |  |  |  |  |
| (in millions)                                                                                                                                                                     | January 31, 2017 |  | October 31, 2016 |
| Manufacturing operations                                                                                                                                                          |   |   |   |
| Senior Secured Term Loan Credit Facility, as amended, due 2020, net of unamortized discount of $13 and $14, respectively, and unamortized debt issuance costs of $7 at both dates | $ | 1,007 |  |   | $ | 1,009 |  |
| 8.25% Senior Notes, due 2022 net of unamortized discount of $15 at both dates and unamortized debt issuance costs of $15 and $12, respectively                                    | 1,420 |  |   | 1,173 |  |
| 4.50% Senior Subordinated Convertible Notes, due 2018, net of unamortized discount of $9 and $10, respectively, and unamortized debt issuance costs of $1 at both dates           | 190 |  |   | 189 |  |
| 4.75% Senior Subordinated Convertible Notes, due 2019, net of unamortized discount of $21 and $24, respectively, and unamortized debt issuance costs of $4 at both dates          | 386 |  |   | 383 |  |
| Financing arrangements and capital lease obligations                                                                                                                              | 40 |  |   | 42 |  |
| Loan Agreement related to 6.5% Tax Exempt Bonds, due 2040, net of unamortized debt issuance costs of $5 at both dates                                                             | 220 |  |   | 220 |  |
| Financed lease obligations                                                                                                                                                        | 107 |  |   | 52 |  |
| Other                                                                                                                                                                             | 24 |  |   | 28 |  |
| Total Manufacturing operations debt                                                                                                                                               | 3,394 |  |   | 3,096 |  |
| Less: Current portion                                                                                                                                                             | 72 |  |   | 71 |  |
| Net long-term Manufacturing operations debt                                                                                                                                       | $ | 3,322 |  |   | $ | 3,025 |  |

|                                                                                                                                                                   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                   |  |  |  |  |  |  |  |
| (in millions)                                                                                                                                                     | January 31, 2017 |   | October 31, 2016 |
| Financial Services operations                                                                                                                                     |   |   |   |
| Asset-backed debt issued by consolidated SPEs, at fixed and variable rates, due serially through 2022, net of unamortized debt issuance costs of $6 at both dates | $ | 646 |  |   | $ | 753 |  |
| Bank credit facilities, at fixed and variable rates, due dates from 2017 through 2021, net of unamortized debt issuance costs of $2 and $3, respectively          | 655 |  |   | 861 |  |
| Commercial paper, at variable rates, program matures in 2022                                                                                                      | 73 |  |   | 96 |  |
| Borrowings secured by operating and finance leases, at various rates, due serially through 2021                                                                   | 97 |  |   | 98 |  |
| Total Financial Services operations debt                                                                                                                          | 1,471 |  |   | 1,808 |  |
| Less: Current portion                                                                                                                                             | 517 |  |   | 836 |  |
| Net long-term Financial Services operations debt                                                                                                                  | $ | 954 |  |   | $ | 972 |  |

----

----

|                                                    |
|----------------------------------------------------|
|                                                    |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                               | Three Months Ended January 31, |
|                                               | Pension Benefits |   | Health and LifeInsurance Benefits |
| (in millions)                                      | 2017 |   | 2016 |   | 2017 |   | 2016 |
| Service cost for benefits earned during the period | $ | 2 |  |   | $ | 2 |  |   | $ | 1 |  |   | $ | 1 |  |
| Interest on obligation                             | 27 |  |   | 30 |  |   | 12 |  |   | 15 |  |
| Amortization of cumulative loss                    | 29 |  |   | 26 |  |   | 6 |  |   | 8 |  |
| Contractual termination benefits                   | 1 |  |   | — |  |   | — |  |   | — |  |
| Premiums on pension insurance                      | 4 |  |   | 4 |  |   | — |  |   | — |  |
| Expected return on assets                          | (40 | ) |   | (42 | ) |   | (6 | ) |   | (6 | ) |
| Net periodic benefit expense                       | $ | 23 |  |   | $ | 20 |  |   | $ | 13 |  |   | $ | 18 |  |

----

----

|         |                                                                                              |
|---------|----------------------------------------------------------------------------------------------|
| • | Level 1—based upon quoted prices for identical instruments in active markets, |

|         |                                                                                                                                                                                                                                       |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Level 2—based upon quoted prices for similar instruments, prices for identical or similar instruments in markets that are not active, or model-derived valuations, all of whose significant inputs are observable, and |

|         |                                                                            |
|---------|----------------------------------------------------------------------------|
| • | Level 3—based upon one or more significant unobservable inputs. |

----

|                                   |
|-----------------------------------|
|                                   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                              | As of January 31, 2017 |   | As of October 31, 2016 |
| (in millions)                     | Level 1 |   | Level 2 |   | Level 3 |   | Total |   | Level 1 |   | Level 2 |   | Level 3 |   | Total |
| Assets                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Marketable securities:            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury bills               | $ | 15 |  |   | $ | — |  |   | $ | — |  |   | $ | 15 |  |   | $ | 6 |  |   | $ | — |  |   | $ | — |  |   | $ | 6 |  |
| Other                             | 183 |  |   | — |  |   | — |  |   | 183 |  |   | 40 |  |   | — |  |   | — |  |   | 40 |  |
| Derivative financial instruments: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity forward contracts(A)    | — |  |   | 1 |  |   | — |  |   | 1 |  |   | — |  |   | 2 |  |   | — |  |   | 2 |  |
| Foreign currency contracts(A)     | — |  |   | 2 |  |   | — |  |   | 2 |  |   | — |  |   | — |  |   | — |  |   | — |  |
| Interest rate caps(B)             | — |  |   | 1 |  |   | — |  |   | 1 |  |   | — |  |   | 1 |  |   | — |  |   | 1 |  |
| Total assets                      | $ | 198 |  |   | $ | 4 |  |   | $ | — |  |   | $ | 202 |  |   | $ | 46 |  |   | $ | 3 |  |   | $ | — |  |   | $ | 49 |  |
| Liabilities                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivative financial instruments: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency contracts(C)     | $ | — |  |   | $ | 4 |  |   | $ | — |  |   | $ | 4 |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |
| Guarantees                        | — |  |   | — |  |   | 23 |  |   | 23 |  |   | — |  |   | — |  |   | 23 |  |   | 23 |  |
| Total liabilities                 | $ | — |  |   | $ | 4 |  |   | $ | 23 |  |   | $ | 27 |  |   | $ | — |  |   | $ | — |  |   | $ | 23 |  |   | $ | 23 |  |

|     |                                                                                                                                                                        |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (A) | The asset value of commodity forward contracts and foreign currency contracts is included in Other current assets in the accompanying Consolidated Balance Sheets. |

|     |                                                                                                                                   |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|
| (B) | The asset value of interest rate caps is included in Other noncurrent assets in the accompanying Consolidated Balance Sheets. |

|     |                                                                                                                                                                                 |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (C) | The liability value of commodity forward contracts and foreign currency contracts is included in Other current liabilities in the accompanying Consolidated Balance Sheets. |

|                                                               |
|---------------------------------------------------------------|
|                                                               |  |  |  |  |  |  |  |
|                                                          | Three Months Ended January 31, |
| (in millions)                                                 | 2017 |   | 2016 |
| Guarantees, at beginning of period                            | $ | (23 | ) |   | $ | (10 | ) |
| Transfers out of Level 3                                      | — |  |   | — |  |
| Issuances                                                     | (1 | ) |   | (1 | ) |
| Settlements                                                   | 1 |  |   | 1 |  |
| Guarantees, at end of period                                  | $ | (23 | ) |   | $ | (10 | ) |
| Change in unrealized gains on assets (liabilities) still held | $ | — |  |   | $ | — |  |

|                                                    |
|----------------------------------------------------|
|                                                    |  |  |  |  |  |  |  |
| (in millions)                                      | January 31, 2017 |  | October 31, 2016 |
| Level 2 financial instruments                      |   |   |   |
| Carrying value of impaired finance receivables (A) | $ | 12 |  |   | $ | 15 |  |
| Specific loss reserve                              | (9 | ) |   | (8 | ) |
| Fair value                                         | $ | 3 |  |   | $ | 7 |  |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                       |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (A) | Certain impaired finance receivables are measured at fair value on a nonrecurring basis. An impairment charge is recorded for the amount by which the carrying value of the receivables exceeds the fair value of the underlying collateral, net of remarketing costs. Fair values of the underlying collateral are determined by reference to dealer vehicle value publications adjusted for certain market factors. |

----

|                                                                                                 |
|-------------------------------------------------------------------------------------------------|
|                                                                                                 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                            | As of January 31, 2017 |
|                                                                                            | Estimated Fair Value |   | Carrying Value |
| (in millions)                                                                                   | Level 1 |   | Level 2 |   | Level 3 |   | Total |   |
| Assets                                                                                          |   |   |   |   |   |   |   |   |   |
| Retail notes                                                                                    | $ | — |  |   | $ | — |  |   | $ | 137 |  |   | $ | 137 |  |   | $ | 140 |  |
| Notes receivable                                                                                | — |  |   | — |  |   | — |  |   | — |  |   | — |  |
| Liabilities                                                                                     |   |   |   |   |   |   |   |   |   |
| Debt:                                                                                           |   |   |   |   |   |   |   |   |   |
| Manufacturing operations                                                                        |   |   |   |   |   |   |   |   |   |
| Senior Secured Term Loan Credit Facility, as Amended, due 2020                                  | — |  |   | — |  |   | 1,040 |  |   | 1,040 |  |   | 1,007 |  |
| 8.25% Senior Notes, due 2022                                                                    | 1,465 |  |   | — |  |   | — |  |   | 1,465 |  |   | 1,420 |  |
| 4.50% Senior Subordinated Convertible Notes, due 2018(A)                                   | — |  |   | — |  |   | 198 |  |   | 198 |  |   | 190 |  |
| 4.75% Senior Subordinated Convertible Notes, due 2019(A)                                        | — |  |   | — |  |   | 405 |  |   | 405 |  |   | 386 |  |
| Financing arrangements                                                                          | — |  |   | — |  |   | 16 |  |   | 16 |  |   | 35 |  |
| Loan Agreement related to 6.50% Tax Exempt Bonds, due 2040                                 | — |  |   | 229 |  |   | — |  |   | 229 |  |   | 220 |  |
| Financed lease obligations                                                                      | — |  |   | — |  |   | 107 |  |   | 107 |  |   | 107 |  |
| Other                                                                                           | — |  |   | — |  |   | 24 |  |   | 24 |  |   | 24 |  |
| Financial Services operations                                                                   |   |   |   |   |   |   |   |   |   |
| Asset-backed debt issued by consolidated SPEs, at various rates, due serially through 2022      | — |  |   | — |  |   | 645 |  |   | 645 |  |   | 646 |  |
| Bank credit facilities, at fixed and variable rates, due dates from 2017 through 2021           | — |  |   | — |  |   | 643 |  |   | 643 |  |   | 655 |  |
| Commercial paper, at variable rates, program matures in 2022                                    | 73 |  |   | — |  |   | — |  |   | 73 |  |   | 73 |  |
| Borrowings secured by operating and finance leases, at various rates, due serially through 2021 | — |  |   | — |  |   | 98 |  |   | 98 |  |   | 97 |  |

----

|                                                                                                 |
|-------------------------------------------------------------------------------------------------|
|                                                                                                 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                            | As of October 31, 2016 |
|                                                                                            | Estimated Fair Value |   | Carrying Value |
| (in millions)                                                                                   | Level 1 |   | Level 2 |   | Level 3 |   | Total |   |
| Assets                                                                                          |   |   |   |   |   |   |   |   |   |
| Retail notes                                                                                    | $ | — |  |   | $ | — |  |   | $ | 153 |  |   | $ | 153 |  |   | $ | 151 |  |
| Notes receivable                                                                                | — |  |   | — |  |   | 1 |  |   | 1 |  |   | 1 |  |
| Liabilities                                                                                     |   |   |   |   |   |   |   |   |   |
| Debt:                                                                                           |   |   |   |   |   |   |   |   |   |
| Manufacturing operations                                                                        |   |   |   |   |   |   |   |   |   |
| Senior Secured Term Loan Credit Facility, as Amended, due 2020                                  | — |  |   | — |  |   | 1,037 |  |   | 1,037 |  |   | 1,009 |  |
| 8.25% Senior Notes, due 2022                                                                    | 1,180 |  |   | — |  |   | — |  |   | 1,180 |  |   | 1,173 |  |
| 4.50% Senior Subordinated Convertible Notes, due 2018(A)                                        | — |  |   | — |  |   | 189 |  |   | 189 |  |   | 189 |  |
| 4.75% Senior Subordinated Convertible Notes, due 2019(A)                                        | — |  |   | — |  |   | 382 |  |   | 382 |  |   | 383 |  |
| Financing arrangements                                                                          | — |  |   | — |  |   | 17 |  |   | 17 |  |   | 37 |  |
| Loan Agreement related to 6.50% Tax Exempt Bonds, due 2040                                 | — |  |   | 233 |  |   | — |  |   | 233 |  |   | 220 |  |
| Financed lease obligations                                                                      | — |  |   | — |  |   | 52 |  |   | 52 |  |   | 52 |  |
| Other                                                                                           | — |  |   | — |  |   | 26 |  |   | 26 |  |   | 28 |  |
| Financial Services operations                                                                   |   |   |   |   |   |   |   |   |   |
| Asset-backed debt issued by consolidated SPEs, at various rates, due serially through 2017      | — |  |   | — |  |   | 754 |  |   | 754 |  |   | 753 |  |
| Bank credit facilities, at fixed and variable rates, due dates from 2017 through 2021           | — |  |   | — |  |   | 851 |  |   | 851 |  |   | 861 |  |
| Commercial paper, at variable rates, program matures in 2022                                    | 96 |  |   | — |  |   | — |  |   | 96 |  |   | 96 |  |
| Borrowings secured by operating and finance leases, at various rates, due serially through 2021 | — |  |   | — |  |   | 98 |  |   | 98 |  |   | 98 |  |

|     |                                                                                                                                                                                                                                                                                                                                           |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (A) | The carrying value represents the consolidated financial statement amount of the debt which excludes the allocation of the conversion feature to equity, while the fair value is based on internally developed valuation techniques such as discounted cash flow modeling for Level 3 convertible notes which include the equity feature. |

----

----

----

----

----

----

----

----

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Our Truck segment manufactures and distributes Class 4 through 8 trucks, buses, and military vehicles under the International and IC Bus ("IC") brands, and produces engines under our proprietary brand name and parts required to support the military truck lines. This segment sells its products in the U.S., Canada, and Mexico markets, as well as through our export truck business. In an effort to strengthen and maintain our dealer network, this segment occasionally acquires and operates dealer locations for the purpose of transitioning ownership. |

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Our Parts segment provides customers with proprietary products needed to support the International commercial truck, IC Bus, proprietary engine lines, and export parts business, as well as our other product lines. Our Parts segment also provides a wide selection of other standard truck, trailer, and engine aftermarket parts. Also included in the Parts segment are the operating results of BDP, which manages the sourcing, merchandising, and distribution of certain service parts we sell to Ford in North America. |

|         |                                                                                                                                                                                                                                                                                                                                                                                  |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Our Global Operations segment primarily consists of Brazil engine operations which produces diesel engines under contract manufacturing arrangements, as well as under the MWM brand, for sale to OEMs in South America. In addition, our Global Operations segment includes the operating results of our joint venture in China with Anhui Jianghuai Automobile Co ("JAC"). |

|         |                                                                                                                                                                                                                                                                                                                                                                                               |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Our Financial Services segment provides retail, wholesale, and lease financing of products sold by the Truck and Parts segments and their dealers within the U.S. and Mexico, as well as financing for wholesale accounts and selected retail accounts receivable. This segment also facilitates financing relationships in other countries to support our Manufacturing Operations. |

|                                                 |
|-------------------------------------------------|
|                                                 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (in millions)                                   | Truck |   | Parts |   | Global Operations |   | FinancialServices(A) |   | CorporateandEliminations |   | Total |
| Three Months Ended January 31, 2017             |   |   |   |   |   |   |   |   |   |   |   |
| External sales and revenues, net                | $ | 1,017 |  |   | $ | 563 |  |   | $ | 46 |  |   | $ | 34 |  |   | $ | 3 |  |   | $ | 1,663 |  |
| Intersegment sales and revenues                 | 10 |  |   | 7 |  |   | 4 |  |   | 20 |  |   | (41 | ) |   | — |  |
| Total sales and revenues, net                   | $ | 1,027 |  |   | $ | 570 |  |   | $ | 50 |  |   | $ | 54 |  |   | $ | (38 | ) |   | $ | 1,663 |  |
| Income (loss) attributable to NIC, net of tax   | $ | (69 | ) |   | $ | 149 |  |   | $ | (4 | ) |   | $ | 13 |  |   | $ | (151 | ) |   | $ | (62 | ) |
| Income tax expense                              | — |  |   | — |  |   | — |  |   | — |  |   | (4 | ) |   | (4 | ) |
| Segment profit (loss)                           | $ | (69 | ) |   | $ | 149 |  |   | $ | (4 | ) |   | $ | 13 |  |   | $ | (147 | ) |   | $ | (58 | ) |
| Depreciation and amortization                   | $ | 37 |  |   | $ | 3 |  |   | $ | 3 |  |   | $ | 13 |  |   | $ | 3 |  |   | $ | 59 |  |
| Interest expense                                | — |  |   | — |  |   | — |  |   | 20 |  |   | 62 |  |   | 82 |  |
| Equity in income of non-consolidated affiliates | 1 |  |   | 1 |  |   | 1 |  |   | — |  |   | — |  |   | 3 |  |
| Capital expenditures(B)                         | 43 |  |   | — |  |   | 1 |  |   | — |  |   | 2 |  |   | 46 |  |

----

|                                                                   |
|-------------------------------------------------------------------|
|                                                                   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (in millions)                                                     | Truck |   | Parts |   | Global Operations |   | FinancialServices(A) |   | CorporateandEliminations |   | Total |
| Three Months Ended January 31, 2016                               |   |   |   |   |   |   |   |   |   |   |   |
| External sales and revenues, net                                  | $ | 1,081 |  |   | $ | 562 |  |   | $ | 84 |  |   | $ | 35 |  |   | $ | 3 |  |   | $ | 1,765 |  |
| Intersegment sales and revenues                                   | 51 |  |   | 8 |  |   | 8 |  |   | 24 |  |   | (91 | ) |   | — |  |
| Total sales and revenues, net                                     | $ | 1,132 |  |   | $ | 570 |  |   | $ | 92 |  |   | $ | 59 |  |   | $ | (88 | ) |   | $ | 1,765 |  |
| Income (loss) attributable to NIC, net of tax                     | $ | (51 | ) |   | $ | 150 |  |   | $ | (13 | ) |   | $ | 26 |  |   | $ | (145 | ) |   | $ | (33 | ) |
| Income tax benefit                                                | — |  |   | — |  |   | — |  |   | — |  |   | 5 |  |   | 5 |  |
| Segment profit (loss)                                             | $ | (51 | ) |   | $ | 150 |  |   | $ | (13 | ) |   | $ | 26 |  |   | $ | (150 | ) |   | $ | (38 | ) |
| Depreciation and amortization                                     | $ | 34 |  |   | $ | 3 |  |   | $ | 5 |  |   | $ | 12 |  |   | $ | 4 |  |   | $ | 58 |  |
| Interest expense                                                  | — |  |   | — |  |   | — |  |   | 19 |  |   | 62 |  |   | 81 |  |
| Equity in income (loss) of non-consolidated affiliates            | 1 |  |   | 1 |  |   | (3 | ) |   | — |  |   | — |  |   | (1 | ) |
|        Capital expenditures(B) | 25 |  |   | 1 |  |   | 1 |  |   | — |  |   | 2 |  |   | 29 |  |

|                        |
|------------------------|
|                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (in millions)          | Truck |   | Parts |   | Global Operations |   | FinancialServices |   | CorporateandEliminations |   | Total |
| Segment assets, as of: |   |   |   |   |   |   |   |   |   |   |   |
| January 31, 2017       | $ | 1,694 |  |   | $ | 605 |  |   | $ | 354 |  |   | $ | 1,789 |  |   | $ | 952 |  |   | $ | 5,394 |  |
| October 31, 2016       | 1,520 |  |   | 594 |  |   | 407 |  |   | 2,116 |  |   | 1,016 |  |   | 5,653 |  |

|     |                                                                                                                                                                                                     |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (A) | Total sales and revenues in the Financial Services segment include interest revenues of $36 million and $42 million for the three months ended January 31, 2017 and 2016, respectively. |

|     |                                                       |
|-----|-------------------------------------------------------|
| (B) | Exclusive of purchases of equipment leased to others. |

----

|                                                                  |
|------------------------------------------------------------------|
|                                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (in millions)                                                    | Unrealized Gain on Marketable Securities |   | Foreign Currency Translation Adjustments |   | Defined Benefit Plans |   | Total |
| Balance as of October 31, 2016                                   | $ | 1 |  |   | $ | (280 | ) |   | $ | (2,361 | ) |   | $ | (2,640 | ) |
| Other comprehensive loss before reclassifications                | — |  |   | (12 | ) |   | — |  |   | (12 | ) |
| Amounts reclassified out of accumulated other comprehensive loss | — |  |   | — |  |   | 35 |  |   | 35 |  |
| Net current-period other comprehensive income (loss)             | — |  |   | (12 | ) |   | 35 |  |   | 23 |  |
| Balance as of January 31, 2017                                   | $ | 1 |  |   | $ | (292 | ) |   | $ | (2,326 | ) |   | $ | (2,617 | ) |

|                                                                  |
|------------------------------------------------------------------|
|                                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (in millions)                                                    | Unrealized Gain on Marketable Securities |   | Foreign Currency Translation Adjustments |   | Defined Benefit Plans |   | Total |
| Balance as of October 31, 2015                                   | $ | 1 |  |   | $ | (287 | ) |   | $ | (2,315 | ) |   | $ | (2,601 | ) |
| Other comprehensive loss before reclassifications                | — |  |   | (33 | ) |   | — |  |   | (33 | ) |
| Amounts reclassified out of accumulated other comprehensive loss | — |  |   | — |  |   | 33 |  |   | 33 |  |
| Net current-period other comprehensive income (loss)             | — |  |   | (33 | ) |   | 33 |  |   | — |  |
| Balance as of January 31, 2016                                   | $ | 1 |  |   | $ | (320 | ) |   | $ | (2,282 | ) |   | $ | (2,601 | ) |

|                                                    |
|----------------------------------------------------|
|                                                    |  |  |  |  |  |  |  |  |  |  |
|                                               |   |   |   | Three Months Ended January 31, |
|                                               |   | Location in Consolidated Statements of Operations |   | 2017 |   | 2016 |
| Defined benefit plans                              |   |   |   |   |   |   |
| Amortization of actuarial loss                     |   | Selling, general and administrative expenses |   | $ | 35 |  |   | $ | 33 |  |
| Total reclassifications for the period, net of tax |   | $ | 35 |  |   | $ | 33 |  |

----

|                                                                                 |
|---------------------------------------------------------------------------------|
|                                                                                 |  |  |  |  |  |  |  |
|                                                                            | Three Months Ended January 31, |
| (in millions, except per share data)                                            | 2017 |  | 2016 |
| Numerator:                                                                      |   |   |   |
| Net loss attributable to Navistar International Corporation common stockholders | $ | (62 | ) |   | $ | (33 | ) |
|                                                                            |   |   |   |
| Denominator:                                                                    |   |   |   |
| Weighted average shares outstanding:                                            |   |   |   |
| Basic                                                                           | 81.8 |  |   | 81.7 |  |
| Effect of dilutive securities                                                   | — |  |   | — |  |
| Diluted                                                                         | 81.8 |  |   | 81.7 |  |
|                                                                            |   |   |   |
| Net loss per share attributable to Navistar International Corporation:          |   |   |   |
| Basic                                                                           | $ | (0.76 | ) |   | $ | (0.40 | ) |
| Diluted                                                                         | (0.76 | ) |   | (0.40 | ) |

----

|                                                                                             |
|---------------------------------------------------------------------------------------------|
|                                                                                             |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Condensed Consolidating Statement of Operations for the Three Months Ended January 31, 2017 |
| (in millions)                                                                               | NIC |   | Navistar,Inc. |   | Non-GuarantorSubsidiaries |   | Eliminationsand Other |   | Consolidated |
| Sales and revenues, net                                                                     | $ | — |  |   | $ | 1,262 |  |   | $ | 1,028 |  |   | $ | (627 | ) |   | $ | 1,663 |  |
| Costs of products sold                                                                      | — |  |   | 1,104 |  |   | 879 |  |   | (613 | ) |   | 1,370 |  |
| Restructuring charges                                                                       | — |  |   | — |  |   | 7 |  |   | — |  |   | 7 |  |
| Asset impairment charges                                                                    | — |  |   | 2 |  |   | — |  |   | — |  |   | 2 |  |
| All other operating expenses (income)                                                       | 25 |  |   | 216 |  |   | 110 |  |   | (14 | ) |   | 337 |  |
| Total costs and expenses                                                                    | 25 |  |   | 1,322 |  |   | 996 |  |   | (627 | ) |   | 1,716 |  |
| Equity in income (loss) of affiliates                                                       | (37 | ) |   | 23 |  |   | 2 |  |   | 15 |  |   | 3 |  |
| Income (loss) before income tax                                                             | (62 | ) |   | (37 | ) |   | 34 |  |   | 15 |  |   | (50 | ) |
| Income tax expense                                                                          | — |  |   | — |  |   | (4 | ) |   | — |  |   | (4 | ) |
| Net income (loss)                                                                           | (62 | ) |   | (37 | ) |   | 30 |  |   | 15 |  |   | (54 | ) |
| Less: Net income attributable to non-controlling interests                                  | — |  |   | — |  |   | 8 |  |   | — |  |   | 8 |  |
| Net income (loss) attributable to Navistar International Corporation                        | $ | (62 | ) |   | $ | (37 | ) |   | $ | 22 |  |   | $ | 15 |  |   | $ | (62 | ) |

----

|                                                                                                              |
|--------------------------------------------------------------------------------------------------------------|
|                                                                                                              |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Condensed Consolidating Statement of Comprehensive Income (Loss) for the Three Months Ended January 31, 2017 |
| (in millions)                                                                                                | NIC |   | Navistar,Inc. |   | Non-GuarantorSubsidiaries |   | Eliminationsand Other |   | Consolidated |
| Net income (loss)                                                                                            | $ | (62 | ) |   | $ | (37 | ) |   | $ | 30 |  |   | $ | 15 |  |   | $ | (54 | ) |
| Other comprehensive income (loss):                                                                           |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment                                                                      | (12 | ) |   | — |  |   | (12 | ) |   | 12 |  |   | (12 | ) |
| Defined benefit plans, net of tax                                                                            | 35 |  |   | 33 |  |   | 2 |  |   | (35 | ) |   | 35 |  |
| Total other comprehensive income (loss)                                                                      | 23 |  |   | 33 |  |   | (10 | ) |   | (23 | ) |   | 23 |  |
| Comprehensive income (loss)                                                                                  | (39 | ) |   | (4 | ) |   | 20 |  |   | (8 | ) |   | (31 | ) |
| Less: Net income attributable to non-controlling interests                                                   | — |  |   | — |  |   | 8 |  |   | — |  |   | 8 |  |
| Total comprehensive income (loss) attributable to Navistar International Corporation                         | $ | (39 | ) |   | $ | (4 | ) |   | $ | 12 |  |   | $ | (8 | ) |   | $ | (39 | ) |

|                                                                                         |
|-----------------------------------------------------------------------------------------|
|                                                                                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Condensed Consolidating Balance Sheet as of January 31, 2017                            |
| (in millions)                                                                           | NIC |   | Navistar,Inc. |   | Non-GuarantorSubsidiaries |   | Eliminationsand Other |   | Consolidated |
| Assets                                                                                  |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                                                               | $ | 279 |  |   | $ | 32 |  |   | $ | 262 |  |   | $ | — |  |   | $ | 573 |  |
| Marketable securities                                                                   | 163 |  |   | — |  |   | 35 |  |   | — |  |   | 198 |  |
| Restricted cash                                                                         | 16 |  |   | 7 |  |   | 74 |  |   | — |  |   | 97 |  |
| Finance and other receivables, net                                                      | (2 | ) |   | 187 |  |   | 1,540 |  |   | (83 | ) |   | 1,642 |  |
| Inventories                                                                             | — |  |   | 633 |  |   | 397 |  |   | (8 | ) |   | 1,022 |  |
| Investments in non-consolidated affiliates                                              | (7,727 | ) |   | 6,275 |  |   | 51 |  |   | 1,454 |  |   | 53 |  |
| Property and equipment, net                                                             | — |  |   | 737 |  |   | 562 |  |   | (9 | ) |   | 1,290 |  |
| Goodwill                                                                                | — |  |   | — |  |   | 38 |  |   | — |  |   | 38 |  |
| Deferred taxes, net                                                                     | — |  |   | 10 |  |   | 152 |  |   | — |  |   | 162 |  |
| Other                                                                                   | 6 |  |   | 136 |  |   | 178 |  |   | (1 | ) |   | 319 |  |
| Total assets                                                                            | $ | (7,265 | ) |   | $ | 8,017 |  |   | $ | 3,289 |  |   | $ | 1,353 |  |   | $ | 5,394 |  |
| Liabilities and stockholders’ equity (deficit)                                    |   |   |   |   |   |   |   |   |   |
| Debt                                                                                    | $ | 2,216 |  |   | $ | 1,152 |  |   | $ | 1,499 |  |   | $ | (2 | ) |   | $ | 4,865 |  |
| Postretirement benefits liabilities                                                     | — |  |   | 2,835 |  |   | 230 |  |   | — |  |   | 3,065 |  |
| Amounts due to (from) affiliates                                                        | (7,972 | ) |   | 10,748 |  |   | (2,832 | ) |   | 56 |  |   | — |  |
| Other liabilities                                                                       | 3,824 |  |   | (166 | ) |   | (808 | ) |   | (57 | ) |   | 2,793 |  |
| Total liabilities                                                                       | (1,932 | ) |   | 14,569 |  |   | (1,911 | ) |   | (3 | ) |   | 10,723 |  |
| Stockholders’ equity attributable to non-controlling interest                     | — |  |   | — |  |   | 4 |  |   | — |  |   | 4 |  |
| Stockholders’ equity (deficit) attributable to Navistar International Corporation | (5,333 | ) |   | (6,552 | ) |   | 5,196 |  |   | 1,356 |  |   | (5,333 | ) |
| Total liabilities and stockholders’ equity (deficit)                              | $ | (7,265 | ) |   | $ | 8,017 |  |   | $ | 3,289 |  |   | $ | 1,353 |  |   | $ | 5,394 |  |

----

|                                                                                             |
|---------------------------------------------------------------------------------------------|
|                                                                                             |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Condensed Consolidating Statement of Cash Flows for the Three Months Ended January 31, 2017 |
| (in millions)                                                                               | NIC |   | Navistar,Inc. |   | Non-GuarantorSubsidiaries |   | Eliminationsand Other |   | Consolidated |
| Net cash provided by (used in) operating activities                                         | $ | (268 | ) |   | $ | (209 | ) |   | $ | 325 |  |   | $ | 174 |  |   | $ | 22 |  |
| Cash flows from investing activities                                                        |   |   |   |   |   |   |   |   |   |
| Net change in restricted cash and cash equivalents                                          | — |  |   | — |  |   | 15 |  |   | — |  |   | 15 |  |
| Net purchases of marketable securities                                                      | (136 | ) |   | — |  |   | (16 | ) |   | — |  |   | (152 | ) |
| Capital expenditures and purchase of equipment leased to others                             | — |  |   | (55 | ) |   | (15 | ) |   | — |  |   | (70 | ) |
| Other investing activities                                                                  | — |  |   | — |  |   | — |  |   | — |  |   | — |  |
| Net cash used in investing activities                                                       | (136 | ) |   | (55 | ) |   | (16 | ) |   | — |  |   | (207 | ) |
| Cash flows from financing activities                                                        |   |   |   |   |   |   |   |   |   |
| Net borrowings (repayments) of debt                                                         | 245 |  |   | 171 |  |   | (298 | ) |   | (174 | ) |   | (56 | ) |
| Other financing activities                                                                  | 3 |  |   | 8 |  |   | (8 | ) |   | — |  |   | 3 |  |
| Net cash provided by (used in) financing activities                                         | 248 |  |   | 179 |  |   | (306 | ) |   | (174 | ) |   | (53 | ) |
| Effect of exchange rate changes on cash and cash equivalents                                | — |  |   | — |  |   | 7 |  |   | — |  |   | 7 |  |
| Increase (decrease) in cash and cash equivalents                                            | (156 | ) |   | (85 | ) |   | 10 |  |   | — |  |   | (231 | ) |
| Cash and cash equivalents at beginning of the period                                        | 435 |  |   | 117 |  |   | 252 |  |   | — |  |   | 804 |  |
| Cash and cash equivalents at end of the period                                              | $ | 279 |  |   | $ | 32 |  |   | $ | 262 |  |   | $ | — |  |   | $ | 573 |  |

|                                                                                             |
|---------------------------------------------------------------------------------------------|
|                                                                                             |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Condensed Consolidating Statement of Operations for the Three Months Ended January 31, 2016 |
| (in millions)                                                                               | NIC |   | Navistar, Inc. |   | Non-Guarantor Subsidiaries |   | Eliminations and Other |   | Consolidated |
| Sales and revenues, net                                                                     | $ | — |  |   | $ | 1,342 |  |   | $ | 1,200 |  |   | $ | (777 | ) |   | $ | 1,765 |  |
| Costs of products sold                                                                      | — |  |   | 1,204 |  |   | 1,023 |  |   | (761 | ) |   | 1,466 |  |
| Restructuring charges                                                                       | — |  |   | 1 |  |   | 2 |  |   | — |  |   | 3 |  |
| Asset impairment charges                                                                    | — |  |   | — |  |   | 2 |  |   | — |  |   | 2 |  |
| All other operating expenses (income)                                                       | 19 |  |   | 213 |  |   | 108 |  |   | (18 | ) |   | 322 |  |
| Total costs and expenses                                                                    | 19 |  |   | 1,418 |  |   | 1,135 |  |   | (779 | ) |   | 1,793 |  |
| Equity in income (loss) of affiliates                                                       | (14 | ) |   | (13 | ) |   | (1 | ) |   | 27 |  |   | (1 | ) |
| Income (loss) before income tax                                                             | (33 | ) |   | (89 | ) |   | 64 |  |   | 29 |  |   | (29 | ) |
| Income tax benefit (expense)                                                                | — |  |   | 13 |  |   | (8 | ) |   | — |  |   | 5 |  |
| Net income (loss)                                                                           | (33 | ) |   | (76 | ) |   | 56 |  |   | 29 |  |   | (24 | ) |
| Less: Net income attributable to non-controlling interests                                  | — |  |   | — |  |   | 9 |  |   | — |  |   | 9 |  |
| Net income (loss) attributable to Navistar International Corporation                        | $ | (33 | ) |   | $ | (76 | ) |   | $ | 47 |  |   | $ | 29 |  |   | $ | (33 | ) |

----

|                                                                                                              |
|--------------------------------------------------------------------------------------------------------------|
|                                                                                                              |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Condensed Consolidating Statement of Comprehensive Income (Loss) for the Three Months Ended January 31, 2016 |
| (in millions)                                                                                                | NIC |   | Navistar, Inc. |   | Non-Guarantor Subsidiaries |   | Eliminations and Other |   | Consolidated |
| Net income (loss)                                                                                            | $ | (33 | ) |   | $ | (76 | ) |   | $ | 56 |  |   | $ | 29 |  |   | $ | (24 | ) |
| Other comprehensive income (loss):                                                                           |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment                                                                      | (33 | ) |   | — |  |   | (33 | ) |   | 33 |  |   | (33 | ) |
| Defined benefit plans, net of tax                                                                            | 33 |  |   | 32 |  |   | 1 |  |   | (33 | ) |   | 33 |  |
| Total other comprehensive income (loss)                                                                      | — |  |   | 32 |  |   | (32 | ) |   | — |  |   | — |  |
| Comprehensive income (loss)                                                                                  | (33 | ) |   | (44 | ) |   | 24 |  |   | 29 |  |   | (24 | ) |
| Less: Net income attributable to non-controlling interests                                                   | — |  |   | — |  |   | 9 |  |   | — |  |   | 9 |  |
| Total comprehensive income (loss) attributable to Navistar International Corporation                         | $ | (33 | ) |   | $ | (44 | ) |   | $ | 15 |  |   | $ | 29 |  |   | $ | (33 | ) |

|                                                                                         |
|-----------------------------------------------------------------------------------------|
|                                                                                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Condensed Consolidating Balance Sheet as of October 31, 2016                            |
| (in millions)                                                                           | NIC |   | Navistar,Inc. |   | Non-GuarantorSubsidiaries |   | Eliminationsand Other |   | Consolidated |
| Assets                                                                                  |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                                                               | $ | 435 |  |   | $ | 117 |  |   | $ | 252 |  |   | $ | — |  |   | $ | 804 |  |
| Marketable securities                                                                   | 27 |  |   | — |  |   | 19 |  |   | — |  |   | 46 |  |
| Restricted cash                                                                         | 16 |  |   | 6 |  |   | 90 |  |   | — |  |   | 112 |  |
| Finance and other receivables, net                                                      | (1 | ) |   | 171 |  |   | 1,883 |  |   | (84 | ) |   | 1,969 |  |
| Inventories                                                                             | — |  |   | 639 |  |   | 313 |  |   | (8 | ) |   | 944 |  |
| Investments in non-consolidated affiliates                                              | (7,714 | ) |   | 6,253 |  |   | 57 |  |   | 1,457 |  |   | 53 |  |
| Property and equipment, net                                                             | — |  |   | 669 |  |   | 580 |  |   | (8 | ) |   | 1,241 |  |
| Goodwill                                                                                | — |  |   | — |  |   | 38 |  |   | — |  |   | 38 |  |
| Deferred taxes, net                                                                     | — |  |   | 10 |  |   | 150 |  |   | 1 |  |   | 161 |  |
| Other                                                                                   | 2 |  |   | 110 |  |   | 175 |  |   | (2 | ) |   | 285 |  |
| Total assets                                                                            | $ | (7,235 | ) |   | $ | 7,975 |  |   | $ | 3,557 |  |   | $ | 1,356 |  |   | $ | 5,653 |  |
| Liabilities and stockholders’ equity (deficit)                                    |   |   |   |   |   |   |   |   |   |
| Debt                                                                                    | $ | 1,965 |  |   | $ | 1,100 |  |   | $ | 1,841 |  |   | $ | (2 | ) |   | $ | 4,904 |  |
| Postretirement benefits liabilities                                                     | — |  |   | 2,865 |  |   | 233 |  |   | — |  |   | 3,098 |  |
| Amounts due to (from) affiliates                                                        | (7,724 | ) |   | 10,709 |  |   | (3,040 | ) |   | 55 |  |   | — |  |
| Other liabilities                                                                       | 3,822 |  |   | (152 | ) |   | (665 | ) |   | (61 | ) |   | 2,944 |  |
| Total liabilities                                                                       | (1,937 | ) |   | 14,522 |  |   | (1,631 | ) |   | (8 | ) |   | 10,946 |  |
| Stockholders’ equity attributable to non-controlling interest                     | — |  |   | — |  |   | 5 |  |   | — |  |   | 5 |  |
| Stockholders’ equity (deficit) attributable to Navistar International Corporation | (5,298 | ) |   | (6,547 | ) |   | 5,183 |  |   | 1,364 |  |   | (5,298 | ) |
| Total liabilities and stockholders’ equity (deficit)                              | $ | (7,235 | ) |   | $ | 7,975 |  |   | $ | 3,557 |  |   | $ | 1,356 |  |   | $ | 5,653 |  |

----

|                                                                                             |
|---------------------------------------------------------------------------------------------|
|                                                                                             |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Condensed Consolidating Statement of Cash Flows for the Three Months Ended January 31, 2016 |
| (in millions)                                                                               | NIC |   | Navistar,Inc. |   | Non-GuarantorSubsidiaries |   | Eliminationsand Other |   | Consolidated |
| Net cash provided by (used in) operating activities                                         | $ | (309 | ) |   | $ | (332 | ) |   | $ | 226 |  |   | $ | 313 |  |   | $ | (102 | ) |
| Cash flows from investing activities                                                        |   |   |   |   |   |   |   |   |   |
| Net change in restricted cash and cash equivalents                                          | — |  |   | 1 |  |   | (2 | ) |   | — |  |   | (1 | ) |
| Net sales (purchases) of marketable securities                                              | 110 |  |   | — |  |   | (103 | ) |   | — |  |   | 7 |  |
| Capital expenditures and purchase of equipment leased to others                             | — |  |   | (17 | ) |   | (61 | ) |   | — |  |   | (78 | ) |
| Other investing activities                                                                  | — |  |   | — |  |   | 13 |  |   | — |  |   | 13 |  |
| Net cash provided by (used in) investing activities                                         | 110 |  |   | (16 | ) |   | (153 | ) |   | — |  |   | (59 | ) |
| Cash flows from financing activities                                                        |   |   |   |   |   |   |   |   |   |
| Net borrowings (repayments) of debt                                                         | — |  |   | 292 |  |   | (152 | ) |   | (313 | ) |   | (173 | ) |
| Other financing activities                                                                  | — |  |   | 7 |  |   | (9 | ) |   | — |  |   | (2 | ) |
| Net cash provided by (used in) financing activities                                         | — |  |   | 299 |  |   | (161 | ) |   | (313 | ) |   | (175 | ) |
| Effect of exchange rate changes on cash and cash equivalents                                | — |  |   | — |  |   | 3 |  |   | — |  |   | 3 |  |
| Decrease in cash and cash equivalents                                                       | (199 | ) |   | (49 | ) |   | (85 | ) |   | — |  |   | (333 | ) |
| Cash and cash equivalents at beginning of the period                                        | 456 |  |   | 81 |  |   | 375 |  |   | — |  |   | 912 |  |
| Cash and cash equivalents at end of the period                                              | $ | 257 |  |   | $ | 32 |  |   | $ | 290 |  |   | $ | — |  |   | $ | 579 |  |

----

|         |                                                                                       |
|---------|---------------------------------------------------------------------------------------|
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |

----

|                                                             |
|-------------------------------------------------------------|
|                                                             |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                        | Three Months Ended January 31, |   |   |   |   |
| (in millions, except per share data and % change)           | 2017 |   | 2016 |   | Change |   | % Change |
| Sales and revenues, net                                     | $ | 1,663 |  |   | $ | 1,765 |  |   | $ | (102 | ) |   | (6 | )% |
| Costs of products sold                                      | 1,370 |  |   | 1,466 |  |   | (96 | ) |   | (7 | )% |
| Restructuring charges                                       | 7 |  |   | 3 |  |   | 4 |  |   | 133 |  % |
| Asset impairment charges                                    | 2 |  |   | 2 |  |   | — |  |   | — |  % |
| Selling, general and administrative expenses                | 200 |  |   | 205 |  |   | (5 | ) |   | (2 | )% |
| Engineering and product development costs                   | 63 |  |   | 58 |  |   | 5 |  |   | 9 |  % |
| Interest expense                                            | 82 |  |   | 81 |  |   | 1 |  |   | 1 |  % |
| Other income, net                                           | (8 | ) |   | (22 | ) |   | 14 |  |   | (64 | )% |
| Total costs and expenses                                    | 1,716 |  |   | 1,793 |  |   | (77 | ) |   | (4 | )% |
| Equity in income (loss) of non-consolidated affiliates      | 3 |  |   | (1 | ) |   | 4 |  |   | N.M. |  |
| Loss before income tax                                      | (50 | ) |   | (29 | ) |   | (21 | ) |   | 72 |  % |
| Income tax benefit (expense)                                | (4 | ) |   | 5 |  |   | (9 | ) |   | (180 | )% |
| Net loss                                                    | (54 | ) |   | (24 | ) |   | (30 | ) |   | 125 |  % |
| Less: Net income attributable to non-controlling interests  | 8 |  |   | 9 |  |   | (1 | ) |   | (11 | )% |
| Net loss attributable to Navistar International Corporation | $ | (62 | ) |   | $ | (33 | ) |   | $ | (29 | ) |   | 88 |  % |
|                                                        |   |   |   |   |   |   |   |
| Diluted loss per share(A)                                   | $ | (0.76 | ) |   | $ | (0.40 | ) |   | $ | (0.36 | ) |   | 90 |  % |
|                                                        |   |   |   |   |   |   |   |
| Diluted weighted average shares outstanding                 | 81.8 |  |   | 81.7 |  |   | 0.1 |  |   | — |  % |

|      |                 |
|------|-----------------|
| N.M. | Not meaningful. |

|     |                              |
|-----|------------------------------|
| (A) | Amounts attributable to NIC. |

----

|                                |
|--------------------------------|
|                                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                           | Three Months Ended January 31, |   |   |   |   |
| (in millions, except % change) | 2017 |   | 2016 |   | Change |   | % Change |
| Truck                          | $ | 1,027 |  |  | $ | 1,132 |  |   | $ | (105 | ) |   | (9 | )% |
| Parts                          | 570 |  |  | 570 |  |   | — |  |   | — |  % |
| Global Operations              | 50 |  |  | 92 |  |   | (42 | ) |   | (46 | )% |
| Financial Services             | 54 |  |  | 59 |  |   | (5 | ) |   | (8 | )% |
| Corporate and Eliminations     | (38 | ) |   | (88 | ) |   | 50 |  |   | (57 | )% |
| Total                          | $ | 1,663 |  |   | $ | 1,765 |  |   | $ | (102 | ) |   | (6 | )% |

----

|                                |
|--------------------------------|
|                                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                           | Three Months Ended January 31, |   |   |   |   |
| (in millions, except % change) | 2017 |   | 2016 |   | Change |   | % Change |
| Truck segment sales, net       | $ | 1,027 |  |   | $ | 1,132 |  |   | $ | (105 | ) |   | (9 | )% |
| Truck segment loss             | (69 | ) |   | (51 | ) |   | (18 | ) |   | 35 |  % |

----

|                                |
|--------------------------------|
|                                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                           | Three Months Ended January 31, |   |   |   |   |
| (in millions, except % change) | 2017 |   | 2016 |   | Change |   | % Change |
| Parts segment sales, net       | $ | 570 |  |   | $ | 570 |  |   | $ | — |  |   | — |  % |
| Parts segment profit           | 149 |  |   | 150 |  |   | (1 | ) |   | (1 | )% |

|                                      |
|--------------------------------------|
|                                      |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                 | Three Months Ended January 31, |   |   |   |   |
| (in millions, except % change)       | 2017 |  | 2016 |   | Change |   | % Change |
| Global Operations segment sales, net | $ | 50 |  |   | $ | 92 |  |   | $ | (42 | ) |   | (46 | )% |
| Global Operations segment loss       | (4 | ) |   | (13 | ) |   | 9 |  |   | (69 | )% |

|                                          |
|------------------------------------------|
|                                          |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                     | Three Months Ended January 31, |   |   |   |   |
| (in millions, except % change)           | 2017 |   | 2016 |   | Change |   | % Change |
| Financial Services segment revenues, net | $ | 54 |  |   | $ | 59 |  |   | $ | (5 | ) |   | (8 | )% |
| Financial Services segment profit        | 13 |  |   | 26 |  |   | (13 | ) |   | (50 | )% |

----

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |
|                             | Three Months Ended January 31, |   |   |
| (in units)                       | 2017 |  | 2016 |   | Change |   | % Change |
| Core markets (U.S. and Canada)   |   |   |   |   |   |   |   |
| School buses(A)                  | 7,400 |  |   | 6,300 |  |   | 1,100 |  |   | 17 |  % |
| Class 6 and 7 medium trucks      | 19,800 |  |   | 20,700 |  |   | (900 | ) |   | (4 | )% |
| Class 8 heavy trucks             | 32,000 |  |   | 47,700 |  |   | (15,700 | ) |   | (33 | )% |
| Class 8 severe service trucks(B) | 13,700 |  |   | 14,300 |  |   | (600 | ) |   | (4 | )% |
| Total Core markets               | 72,900 |  |   | 89,000 |  |   | (16,100 | ) |   | (18 | )% |
| Combined class 8 trucks          | 45,700 |  |   | 62,000 |  |   | (16,300 | ) |   | (26 | )% |
| Navistar Core retail deliveries  | 10,800 |  |   | 12,800 |  |   | (2,000 | ) |   | (16 | )% |

|     |                                                                                                                            |
|-----|----------------------------------------------------------------------------------------------------------------------------|
| (A) | The School bus retail market deliveries include buses classified as B, C, and D and are being reported on a one-month lag. |

|     |                                                                                                                            |
|-----|----------------------------------------------------------------------------------------------------------------------------|
| (B) | Core retail deliveries include CAT-branded units sold to Caterpillar under our North America supply agreement during 2016. |

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                             | Three Months Ended |
|                             | January 31, 2017 |   | October 31, 2016 |   | July 31, 2016 |   | April 30, 2016 |   | January 31, 2016 |
| Core markets (U.S. and Canada)   |   |   |   |   |   |   |   |   |   |
| Class 6 and 7 medium trucks      | 20 | % |   | 18 | % |   | 20 | % |   | 27 | % |   | 20 | % |
| Class 8 heavy trucks             | 9 | % |   | 13 | % |   | 9 | % |   | 11 | % |   | 10 | % |
| Class 8 severe service trucks(A) | 13 | % |   | 14 | % |   | 12 | % |   | 11 | % |   | 16 | % |
| Combined class 8 trucks          | 10 | % |   | 13 | % |   | 10 | % |   | 11 | % |   | 11 | % |

|     |                                                                                                                                   |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|
| (A) | Retail delivery market share includes CAT-branded units sold to Caterpillar under our North America supply agreement during 2016. |

----

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |
|                             | Three Months Ended January 31, |   |   |
| (in units)                       | 2017 |  | 2016 |   | Change |   | % Change |
| Core markets (U.S. and Canada)   |   |   |   |   |   |   |   |
| School buses(A)                  | 2,100 |  |   | 2,000 |  |   | 100 |  |   | 5 |  % |
| Class 6 and 7 medium trucks      | 6,500 |  |   | 5,300 |  |   | 1,200 |  |   | 23 |  % |
| Class 8 heavy trucks             | 3,700 |  |   | 4,100 |  |   | (400 | ) |   | (10 | )% |
| Class 8 severe service trucks(B) | 2,100 |  |   | 2,400 |  |   | (300 | ) |   | (13 | )% |
| Total Core markets               | 14,400 |  |   | 13,800 |  |   | 600 |  |   | 4 |  % |
| Combined class 8 trucks          | 5,800 |  |   | 6,500 |  |   | (700 | ) |   | (11 | )% |

|     |                                                                                                          |
|-----|----------------------------------------------------------------------------------------------------------|
| (A) | The School bus orders include buses classified as B, C, and D and are being reported on a one-month lag. |

|     |                                                                                                            |
|-----|------------------------------------------------------------------------------------------------------------|
| (B) | Orders include CAT-branded units sold to Caterpillar under our North America supply agreement during 2016. |

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |
|                             | Three Months Ended January 31, |   |   |   |   |
| (in units)                       | 2017 |   | 2016 |   | Change |   | % Change |
| Core markets (U.S. and Canada)   |   |   |   |   |   |   |   |
| School buses(A)                  | 2,400 |  |   | 1,600 |  |   | 800 |  |   | 50 |  % |
| Class 6 and 7 medium trucks      | 6,500 |  |   | 6,100 |  |   | 400 |  |   | 7 |  % |
| Class 8 heavy trucks             | 2,400 |  |   | 13,700 |  |   | (11,300 | ) |   | (82 | )% |
| Class 8 severe service trucks(B) | 5,500 |  |   | 2,800 |  |   | 2,700 |  |   | 96 |  % |
| Total Core markets               | 16,800 |  |   | 24,200 |  |   | (7,400 | ) |   | (31 | )% |
| Combined class 8 trucks          | 7,900 |  |   | 16,500 |  |   | (8,600 | ) |   | (52 | )% |

|     |                                                                                                            |
|-----|------------------------------------------------------------------------------------------------------------|
| (A) | The School bus backlogs include buses classified as B, C, and D and are being reported on a one-month lag. |

|     |                                                                                                              |
|-----|--------------------------------------------------------------------------------------------------------------|
| (B) | Backlogs include CAT-branded units sold to Caterpillar under our North America supply agreement during 2016. |

----

|                                       |
|---------------------------------------|
|                                       |  |  |  |  |  |  |  |  |  |  |  |
|                                  | Three Months Ended January 31, |  |  |
| (in units)                            | 2017 |  | 2016 |  | Change |  | % Change |
| Core markets (U.S. and Canada)        |   |   |   |   |   |   |   |
| School buses(A)                       | 1,800 |  |   | 1,800 |  |   | — |  |   | — |  % |
| Class 6 and 7 medium trucks      | 3,900 |  |   | 3,900 |  |   | — |  |   | — |  % |
| Class 8 heavy trucks             | 2,700 |  |   | 3,600 |  |   | (900 | ) |   | (25 | )% |
| Class 8 severe service trucks(B) | 1,800 |  |   | 1,700 |  |   | 100 |  |   | 6 |  % |
| Total Core markets                    | 10,200 |  |   | 11,000 |  |   | (800 | ) |   | (7 | )% |
| Non "Core" military                   | 200 |  |   | — |  |   | 200 |  |   | N.M. |  |
| Other markets(C)                      | 1,700 |  |   | 1,700 |  |   | — |  |   | — |  % |
| Total worldwide units                 | 12,100 |  |   | 12,700 |  |   | (600 | ) |   | (5 | )% |
| Combined class 8 trucks               | 4,500 |  |   | 5,300 |  |   | (800 | ) |   | (15 | )% |

|     |                                                                                                              |
|-----|--------------------------------------------------------------------------------------------------------------|
| (A) | The School bus chargeouts include buses classified as B, C, and D and are being reported on a one-month lag. |

|     |                                                                                                                |
|-----|----------------------------------------------------------------------------------------------------------------|
| (B) | Chargeouts include CAT-branded units sold to Caterpillar under our North America supply agreement during 2016. |

|     |                                                             |
|-----|-------------------------------------------------------------|
| (C) | Other markets primarily consist of Export Truck and Mexico. |

|                                                                |
|----------------------------------------------------------------|
|                                                                |  |  |  |  |  |  |  |
|                                                           | As of |
| (in millions)                                                  | January 31, 2017 |  | October 31, 2016 |
| Consolidated cash and cash equivalents                         | $ | 573 |  |   | $ | 804 |  |
| Consolidated marketable securities                             | 198 |  |   | 46 |  |
| Consolidated cash, cash equivalents, and marketable securities | $ | 771 |  |   | $ | 850 |  |

|                                                                |
|----------------------------------------------------------------|
|                                                                |  |  |  |  |  |  |  |
|                                                           | As of |
| (in millions)                                                  | January 31, 2017 |   | October 31, 2016 |
| Manufacturing operations                                       | $ | 697 |  |   | $ | 800 |  |
| Financial Services operations                                  | 74 |  |   | 50 |  |
| Consolidated cash, cash equivalents, and marketable securities | $ | 771 |  |   | $ | 850 |  |

----

----

|                                                              |
|--------------------------------------------------------------|
|                                                              |  |  |  |  |  |  |  |  |  |  |  |
|                                                         | Three Months Ended January 31, 2017 |
| (in millions)                                                | ManufacturingOperations(A) |   | Financial Services Operations and Adjustments(A) |   | Consolidated Statement of Cash Flows |
| Net cash provided by (used in) operating activities(B)       | $ | (229 | ) |   | $ | 251 |  |   | $ | 22 |  |
| Net cash provided by (used in) investing activities          | (213 | ) |   | 6 |  |   | (207 | ) |
| Net cash provided by (used in) financing activities(B)       | 188 |  |   | (241 | ) |   | (53 | ) |
| Effect of exchange rate changes on cash and cash equivalents | (1 | ) |   | 8 |  |   | 7 |  |
| Increase (decrease) in cash and cash equivalents             | (255 | ) |   | 24 |  |   | (231 | ) |
| Cash and cash equivalents at beginning of the period         | 761 |  |   | 43 |  |   | 804 |  |
| Cash and cash equivalents at end of the period               | $ | 506 |  |   | $ | 67 |  |   | $ | 573 |  |

|                                                              |
|--------------------------------------------------------------|
|                                                              |  |  |  |  |  |  |  |  |  |  |  |
|                                                              | Three Months Ended January 31, 2016 |
| (in millions)                                                | ManufacturingOperations(A) |  | Financial Services Operations and Adjustments(A) |  | Consolidated Statement of Cash Flows |
| Net cash provided by (used in) operating activities(B)       | $ | (350 | ) |   | $ | 248 |  |   | $ | (102 | ) |
| Net cash used in investing activities                        | (20 | ) |   | (39 | ) |   | (59 | ) |
| Net cash provided by (used in) financing activities(B)       | 44 |  |   | (219 | ) |   | (175 | ) |
| Effect of exchange rate changes on cash and cash equivalents | (7 | ) |   | 10 |  |   | 3 |  |
| Decrease in cash and cash equivalents                        | (333 | ) |   | — |  |   | (333 | ) |
| Cash and cash equivalents at beginning of the period         | 877 |  |   | 35 |  |   | 912 |  |
| Cash and cash equivalents at end of the period               | $ | 544 |  |   | $ | 35 |  |   | $ | 579 |  |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (A) | Manufacturing operations cash flows and Financial Services operations cash flows are not presented in accordance with, and should not be viewed as an alternative to, GAAP. This non-GAAP financial information should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. However, we believe that non-GAAP reporting provides meaningful information and therefore we use it to supplement our GAAP reporting by identifying items that may not be related to the core manufacturing business. Management often uses this information to assess and measure the performance and liquidity of our operating segments. Our Manufacturing operations, for this purpose, include our Truck segment, Global Operations segment, Parts segment, and Corporate items which include certain eliminations. The reconciling differences between these non-GAAP financial measures and our GAAP consolidated financial statements in Item 1, Financial Statements and Supplementary Data, are our Financial Services operations and adjustments required to eliminate certain intercompany transactions between Manufacturing operations and Financial Services operations. Our Financial Services operations cash flows are presented consistent with their treatment in our Condensed Consolidated Statements of Cash Flows and may not be consistent with how they would be treated on a stand-alone basis. We have chosen to provide this supplemental information to allow additional analysis, to illustrate the respective cash flows giving effect to the equity basis cash flow shown above, and to provide an additional measure of performance and liquidity. |

|     |                                                                                                                                                                                                                                                                                                                  |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (B) | Adjustments have been made within Net cash provided by (used in) operating activities and Net cash provided by (used in) financing activities sections to conform to the quarter ended January 31, 2017 presentation. The reclassification did not impact our Consolidated Statements of Cash Flows. |

----

----

|                                       |
|---------------------------------------|
|                                       |  |  |  |  |  |  |  |
|                                  | Three Months Ended January 31, |
| (in millions)                         | 2017 |  | 2016 |
| Loss attributable to NIC, net of tax  | $ | (62 | ) |   | $ | (33 | ) |
| Plus:                                 |   |   |   |
| Depreciation and amortization expense | 59 |  |   | 58 |  |
| Manufacturing interest expense(A)     | 62 |  |   | 62 |  |
| Less:                                 |   |   |   |
| Income tax benefit (expense)          | (4 | ) |   | 5 |  |
| EBITDA                                | $ | 63 |  |  | $ | 82 |  |

|     |                                                                                                                                                                                                                                                                                                                                                     |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (A) | Manufacturing interest expense is the net interest expense primarily generated for borrowings that support the manufacturing and corporate operations, adjusted to eliminate intercompany interest expense with our Financial Services segment. The following table reconciles Manufacturing interest expense to the consolidated interest expense. |

|                                            |
|--------------------------------------------|
|                                            |  |  |  |  |  |  |  |
|                                       | Three Months Ended January 31, |
| (in millions)                              | 2017 |   | 2016 |
| Interest expense                           | $ | 82 |  |   | $ | 81 |  |
| Less:  Financial services interest expense | 20 |  |   | 19 |  |
| Manufacturing interest expense             | $ | 62 |  |   | $ | 62 |  |

|                                                             |
|-------------------------------------------------------------|
|                                                             |  |  |  |  |  |  |  |
|                                                        | Three Months Ended January 31, |
| (in millions)                                               | 2017 |   | 2016 |
| EBITDA (reconciled above)                                   | $ | 63 |  |   | $ | 82 |  |
| Less significant items of:                                  |   |   |   |
| Adjustments to pre-existing warranties(A)                   | (17 | ) |  | 5 |  |
| North America asset impairment charges(B)                   | 2 |  |  | 2 |  |
| Restructuring of North American manufacturing operations(C) | 7 |  |   | — |  |
| Cost reduction and other strategic initiatives              | — |  |  | 3 |  |
| One-time fee received(D)                                    | — |  |  | (15 | ) |
| Total adjustments                                           | (8 | ) |  | (5 | ) |
| Adjusted EBITDA                                             | $ | 55 |  |  | $ | 77 |  |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (A) | Adjustments to pre-existing warranties reflect changes in our estimate of warranty costs for products sold in prior periods. Such adjustments typically occur when claims experience deviates from historic and expected trends. Our warranty liability is generally affected by component failure rates, repair costs, and the timing of failures. Future events and circumstances related to these factors could materially change our estimates and require adjustments to our liability. In addition, new product launches require a greater use of judgment in developing estimates until historical experience becomes available. |

|     |                                                                                                                                                                                                                                                                 |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (B) | During the first quarter of 2017, we recorded $2 million of asset impairment charges relating to certain operating leases. During the first quarter of  2016, we recorded $2 million of asset impairment charges relating to certain long lived assets. |

|     |                                                                                                                                                  |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------|
| (C) | During the first quarter of 2017, we recorded $7 million of restructuring charges related to the 2011 closure of our Chatham, Ontario plant. |

|     |                                                                                                                                            |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|
| (D) | During the first quarter of 2016, we received a $15 million one-time fee from a third party which was recognized in Other income, net. |

----

----

|         |                                           |
|---------|-------------------------------------------|
| • | Pension and Other Postretirement Benefits |

|         |                                 |
|---------|---------------------------------|
| • | Allowance for Doubtful Accounts |

|         |              |
|---------|--------------|
| • | Income Taxes |

|         |                                 |
|---------|---------------------------------|
| • | Impairment of Long-Lived Assets |

|         |                      |
|---------|----------------------|
| • | Contingency Accruals |

|         |             |
|---------|-------------|
| • | Inventories |

----

----

----

|         |                        |
|---------|------------------------|
| Item 1. |  Legal Proceedings |

|               |              |
|---------------|--------------|
| Item 1A. | Risk Factors |

|              |                                                             |
|--------------|-------------------------------------------------------------|
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |

|              |                                 |
|--------------|---------------------------------|
| Item 3. | Defaults upon Senior Securities |

|              |                              |
|--------------|------------------------------|
| Item 4. | Mine Safety Disclosures  |

|              |                   |
|--------------|-------------------|
| Item 5. | Other Information |

|         |          |
|---------|----------|
| Item 6. | Exhibits |

|           |
|-----------|
|           |  |  |  |  |
| Exhibit:  |   | Description |   | Page |
| (10)      |   | Material Contracts |   | E-1 |
| (31.1)    |   | CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |   | E-2 |
| (31.2)    |   | CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |   | E-3 |
| (32.1)    |   | CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |   | E-4 |
| (32.2)    |   | CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |   | E-5 |
| (99.1)    |   | Additional Financial Information (Unaudited) |   | E-6 |
| (101.INS) |   | XBRL Instance Document |   | N/A |
| (101.SCH) |   | XBRL Taxonomy Extension Schema Document |   | N/A |
| (101.CAL) |   | XBRL Taxonomy Extension Calculation Linkbase Document |   | N/A |
| (101.LAB) |   | XBRL Taxonomy Extension Label Linkbase Document |   | N/A |
| (101.PRE) |   | XBRL Taxonomy Extension Presentation Linkbase Document |   | N/A |
| (101.DEF) |   | XBRL Taxonomy Extension Definition Linkbase Document |   | N/A |

----

|        |
|--------|
|        |  |
|   | NAVISTAR INTERNATIONAL CORPORATION |
|   | (Registrant) |
|   | /s/    SAMARA A. STRYCKER |
|   | Samara A. Strycker |
|   | Senior Vice President and Corporate Controller |
|   | (Principal Accounting Officer) |