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Navistar Wins Department of Defense Contract for Afghanistan Rebuilding Program

Navistar International Corp. has won a contract from the U.S. Army Tank-Automotive and Armaments Command (TACOM) to provide vehicles for the Afghanistan National Army to conduct operations in support of rebuilding and providing stability in Afghanistan. The contract has a potential value of $467 million.

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WARRENVILLE, IL — Navistar International Corp. has won a contract from the U.S. Army Tank-Automotive and Armaments Command (TACOM) to provide vehicles for the Afghanistan National Army to conduct operations in support of rebuilding and providing stability in Afghanistan. The contract has a potential value of $467 million.

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The first order from the new three-year contract totals $61.8 million for 374 vehicles as part of a $311.5 million firm fixed price contract. Overall, the contract calls for International Truck and Engine Corp. (Navistar is the parent company of International Truck and Engine Corp.) to supply up to a total of 2,781 vehicles, including 2,400 general transport trucks and 381 specialty vehicles, such as dump, water, recovery and hazardous material trucks. In addition, International will supply all required spare parts necessary to support two years of scheduled maintenance.

Daniel Ustian, Navistar chairman, president and CEO, said the new military contract affords the company the opportunity to achieve planned incremental growth without incurring new investment expenses because the trucks will be built utilizing existing 7000 series platforms. Truck cabs will be produced at the company’s Springfield, Ohio, plant with final assembly taking place at the company’s plant in Garland, Texas. In-line mid-range duty diesel engines will be produced at the company’s engine assembly plant in Melrose Park, Ill.

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According to Ustian, revenues and income from the first phase of the new contract will have a minimal impact on 2005 and the company reaffirmed its guidance for 2005 of revenues between $11 billion to $11.3 billion with earnings in the range of $4.60 to $5 per diluted common share.

International already has nine additional contracts with the U.S. government for more than 1,000 units that are expected to generate approximately $100 million in revenues. These contracts encompass severe service trucks and buses that will be used in the Iraq reconstruction effort. The company established a subsidiary, International Military and Government, LLC, to focus on military and government opportunities. The company has also been selected to compete for a contract to repower the military HMMWV (“Humvee”) and currently has bids out for other U.S. and foreign government military contracts.

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International has also been awarded a contract for the modeling simulation phase of the army’s future tactical truck system (FTTS) – advance concept technology demonstration (ALTD). This program will assess key technologies and emerging future army sustainment concepts. Additionally, the company has been awarded a contract to deliver armored personnel carriers to the Israel Ministry of Defense.

For more information, go to: www.nav-international.com.

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