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The Company is a holding company. Its principal operating subsidiary is International Truck and Engine Corporation. The Company operates in three principal industry segments: truck, engine and financial services.
I did business with Cummins and Navistar when I was a manufacturing executive. Cummins management impressed me in a positive way while Navistar management seemed sluggish, clueless and sleazy. I was not surprised by Navistar's recent earnings restatement because Navistar asked their suppliers to participate in accounting manipulations that were misleading at best and fraudulent at worst. My company refused to participate. A review of the ten year balance sheet shows what I know from experience. Navistar stretched payments to suppliers to extreme levels in order to reduce their operating capital requirements. This game is at an end. No supplier is going to accept 120 day terms in today's economy. I added up net earnings for this company over the last ten years. The cumulative total was positive $300 million, which is $30 million per year- compared to a market cap of $3.17 billion and debt of $5 billion. Sounds a little thin. The company's book value is NEGATIVE. This quarter's sales were down almost 30% year over year. Tough economic times are ahead and Navistar is positioned in all the wrong places.
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