THE NEW NAVISTAR 2017 Annual Report To our stockholders, employees and customers: 2017 was a breakthrough year for Navistar. We achieved full-year profitability for the first time since 2011, and achieved our largest single-year market share gain in the last eight years. We also disrupted the industry by our alliance with Volkswagen Truck & Bus, which accelerates our strategy for the future. This breakthrough year capped a five-year period when our stock’s cumulative total return outperformed not just the overall market, but our sector as a whole. This performance reflects multiple accomplishments. Market Position Improving We have boosted our market position through our smart, steady investment in a renewed product lineup, advanced technologies and industry-leading connected vehicle solutions. We are seeing increased customer interest in our products, due to the performance of our new products and our improved financial viability. Revenues grew six percent to $8.6 billion, thanks to higher truck and bus volumes. Our Core Class 6-8 retail market share grew by 1.5 points over 2016, with growth in every truck segment. We expanded our success with large fleets, more than doubling the number of customers placing orders of more than 500 vehicles. Bus chargeouts remained steady as we invested in an expanded school bus product line for 2018, including diesel, propane and gasoline models. We also announced the introduction of an innovative electric bus to go on sale in 2019. The new International® A26 diesel engine, an all-new 12.4-liter engine, is growing our share in the 13-liter segment of the Class 8 market. Third-party tests confirm that when it is teamed with our long-haul International® LT™ Series, it leads the industry in fuel economy by an average of four percent. It is currently available in the LT Series and our regional-haul RH™ Series, and in 2018, we plan to launch it in our heavy vocational HX™ Series and HV™ Series. Our 2018 product development pipeline is full, including the aforementioned offerings as well as a new medium-duty truck; the updated International® LoneStar®; a re-introduced RE school bus; and a gasoline-powered CE school bus. Toward the end of the calendar year, we will enter the Class 4/5 market with a vehicle that we are co-developing with General Motors. By the end of 2018, we will have an entirely renewed truck lineup. Performance-Driven We have transformed Navistar into a performance-driven company, with improved profitability, reduced costs, improved quality and declining legacy issues. In 2017, our lean-enterprise initiatives progressed across all manufacturing operations, with significant improvements in quality and cost. We further rationalized non-core Page 2 operations by selling the bus parts fabrication business and a fuel injector business line, as well as finalizing plans to cease production of a low-volume engine offering. We cut gross used truck inventory in half from the previous year. And our 2017 warranty expense reached its lowest level since 2009, a reflection of our improved product quality and reliability. These steps and others drove sustained financial progress: 2017 was our fifth consecutive year of adjusted EBITDA improvement. Connected Services Leadership We are a leader in the pursuit of innovative, customer-focused solutions using technologies that are reshaping the trucking industry. The OnCommand® Connection telematics and remote diagnostics platform offers the industry unique benefits. It helps customers with more effective and efficient repairs and maintenance. It is well positioned as the industry’s digital backbone, providing data that is critically important for load matching, platooning and autonomous trucking. And increasingly, it is a platform for offering innovative services to vehicles’ second and third owners, who have traditionally been under-served by truck OEMs. This year, we made a new integrated telematics solution available, as well as electronic Driver Vehicle Inspection Reporting, fuel tax reporting, and over-the-air programming for Cummins engines. We also partnered with Edulog, a leader in pupil transportation technology, to provide comprehensive telematics solutions to the school bus market. In addition, we launched the OnCommand Connection Marketplace, a new, open- architecture, cloud-based e-commerce platform for driver support apps like the OnCommand Connection Electronic Driver Log, which automates federal Hours of Service compliance. Uptime Leadership We are working with the International® dealer network, the industry’s largest, to drive Uptime as a differentiating value proposition. With more than 370,000 vehicles transmitting real-time performance data, OnCommand Connection is a critical tool to help our dealers improve customer Uptime. We have reduced dealer dwell time with improved diagnostics and repair procedures. A growing number of our dealers achieved Diamond EdgeSM certification based on adherence to rigorous service standards. With our leadership in connected services and our network- wide focus on Uptime, we are well-positioned to lead the industry in making unplanned downtime a thing of the past. Page 3 Our New Alliance Changes the Game Our game-changing alliance with Volkswagen Truck & Bus is providing rapid technology innovation and significant advantages in reduced costs. Our alliance is on track to deliver $500 million in savings to Navistar over the first five years. The alliance also allows us to move much more quickly into the advanced technologies that will shape the industry’s future. We are collaborating with Volkswagen on fully integrated, next- generation diesel big bore powertrains, and have announced plans to collaborate on an electric medium-duty truck, an electric school bus and the convergence of our connected vehicle platforms. The alliance solidifies our position as a long-term player in North America, creates new parts sales and growth opportunities, and leverages global scale to achieve significant cost synergies. Looking Forward Thanks to our progress in all these areas, we are steadily moving toward consistent cash flow generation and sustainable profitability. Taking advantage of a strengthening financial position, Navistar recently completed two capital market transactions, which improves the debt maturity profile, yields $200 million of additional liquidity, and will save approximately $25 million in interest this coming year. Looking ahead to 2018, we foresee another strong year, with growth in the Class 8 market and steady sales in Class 6 and 7. As a result, we expect further growth in revenue and earnings, while making additional long-term investments. We anticipate stronger gross margins, due to lower material costs and improved manufacturing efficiencies. And, we will remain focused on the operational excellence that enhances customer and shareholder value. Many thanks to our employees for their hard work and dedication to make this possible. This all adds up to The New Navistar – a company that is stronger than ever and positioned to win. We are firing on all cylinders and working to deliver a breakout year in 2018. We have set our sights to become the number-one truck and bus company in North America. The steps we are taking today will enable us to reach this goal within the next five years. Troy A. Clarke Chairman, President and CEO Page 4 Financial Summary For the Years Ended October 31, (in millions, except per share data) 2017 2016 2015 Sales and revenues, net $ 8,570 $ 8,111 $ 10,140 Segment Results: Truck .......................................................................................... $ (6) $ (189) $ (141) Parts ........................................................................................... 616 640 592 Global Operations ...................................................................... (7) (21) (67) Financial Services ...................................................................... 77 100 98 Income (loss) from continuing operations before income taxes ....... $64$(32) $ (103) Income (loss) from continuing operations, net of tax(A) .................. 29 (97) (187) Net income (loss)(A) ......................................................................... 30 (97) (184) Diluted earnings (loss) per share from continuing operations(A) ..... $ 0.31 $ (1.19) $ (2.29) Diluted earnings (loss) per share(A) .................................................. $ 0.32 $ (1.19) $ (2.25) (A) Amounts attributable to Navistar International Corporation. Annual Meeting Registrar The annual meeting of stockholders will be held at For inquiries regarding name changes, changes of 9:00 a.m. Central time, Tuesday, February 13, 2018, address or missing certificates, please contact our in Navistar’s main auditorium at 2701 Navistar stockholder service provider: Transfer Agent and Drive, Lisle, IL 60532 USA Registrar, Computershare Investor Services by, Regular Mail: P.O. Box 505000, Investor Relations Louisville, KY 40233 USA For Information about stockholder matters, please or Overnight Delivery: 462 South 4th Street, contact the investor relations team: Suite 1600, Louisville, KY, 40202 USA Website: http://www.navistar.com/navistar/investors Website: Telephone: (331) 332-2143 http://www.navistar.com/navistar/investors/financials/ sec SEC Filings Telephone: (888) 884-9359 Filings with the U.S. Securities and Exchange Commission, including the latest 10-K and proxy Stock Trading Information statement, are available online at Navistar International Corporation is listed on the