Cat And Navistar Alliance

[Keith Browning]

Quote:

Cat And Navistar To Focus On Global Truck Business And Cooperate On Engine Technologies PEORIA, Ill., June 12

PEORIA, Ill., June 12 /PRNewswire-FirstCall/ -- Caterpillar Inc.
(NYSE: CAT) and Navistar International Corporation (Pink Sheets: NAVZ) have
signed a Memorandum of Understanding (MOU) to pursue global on-highway truck
business opportunities and cooperate on a variety of engine platforms. The
two companies intend to focus on global truck opportunities, including North
American severe service construction trucks, as well as technology development
for engines worldwide.

"We are pleased to be matching the formidable talents and technology
leadership of two industry leaders to serve an expanding base of engine, truck
and equipment customers worldwide," said Jim Owens, Caterpillar Chairman and
Chief Executive Officer. "As the world leader in construction equipment and
diesel engines, Caterpillar is now positioning itself for growth in the
on-highway truck market. This is an important step for Caterpillar and we
look forward to working with Navistar for the continued benefit of our
customers."

"This relationship is a perfect example of Navistar's strategy of growth
through leveraging our own assets and those that others have built," said
Daniel C. Ustian, Navistar Chairman, President and CEO. "In partnership with
Caterpillar we intend to extend our leading-edge product focus that we have in
North America into the rest of the world."

Through this alliance, Caterpillar plans to target a 2010 introduction of
a North American Cat branded heavy-duty truck for severe service applications,
such as road construction, large infrastructure projects and oil and petroleum
development. Concurrent with this new strategic direction, Caterpillar has
determined independently that it will not supply EPA 2010 compliant engines to
truck and other on-highway original equipment manufacturers (OEMs).

"Caterpillar and our dealers will continue to provide product support and
service beyond 2010 for all Caterpillar on-highway engines regardless of truck
brand," said Douglas R. Oberhelman, Caterpillar Group President. "This new
truck -- targeted for 2010 -- will incorporate the legendary quality of
Caterpillar's construction and mining machines and provide construction
customers a one-stop solution. In addition, with nearly 90 percent of our
engine business being off-highway, we'll continue to concentrate on our
substantial and growing opportunities to supply engines in the petroleum,
marine, electric power generation and industrial markets -- as well as produce
engines for our own construction and mining equipment."

The companies have commissioned teams to focus on the truck and engine
opportunities. The initiatives contemplated by the MOU are subject to
completion of due diligence, execution of definitive agreements and regulatory
approvals.


Global Truck Collaboration

The companies intend to work together to develop, manufacture and
distribute commercial trucks in select regions outside of North America. The
product offering would include a full line of medium and heavy-duty trucks in
both conventional and cab over designs.

"The combination of Navistar's truck design, development and manufacturing
expertise and Caterpillar's unparalleled worldwide distribution creates a
significant advantage for global customers through the ability to offer the
right vehicle for the right application through more than 4,700 points of
distribution around the world," said Dee Kapur, President, Navistar Truck
Group. "The North American Caterpillar distribution system provides expanded
reach for severe service trucks with big bore power, a segment where Navistar
has traditionally not been as focused."

"This is a natural extension of Caterpillar's more than 40 years serving
on-highway customers with proven, award winning technology -- combined with
unsurpassed global distribution and product support," said George Taylor,
Director of Caterpillar On-Highway Engines.

In addition to the United States and Canada, Navistar has a substantial
distribution network in Mexico and Latin America. Caterpillar currently sells
on-highway truck engines in Australia and New Zealand, Mexico and throughout
Latin America, as well as in the United Kingdom, Belgium, Russia, China and
South Africa.


Engine Technology

Under the alliance, Caterpillar and Navistar plan to cooperate on engine
development, incorporating "best in class" technologies from both companies.
Caterpillar and Navistar intend to work together on development of mid-range
engines for diesel applications, such as school buses and utility trucks.
This engine development would support each company's stated path not to
utilize urea-based Selective Catalytic Reduction (SCR) technology.

"There are many opportunities for technology sharing and development that
would result in the ability to better meet the worldwide demand for diesel
engines in both on and off-highway applications," said Jack Allen, President,
Navistar Engine Group.

"In the past 15 years, Cat has become significantly less dependent on the
sale of on-highway truck engines in the total contribution of our global
engine profitability," said Oberhelman. "Our global power systems business
has grown significantly -- in fact we supply approximately 400,000 diesel
engines annually outside of the on-highway truck market. We intend to remain
the world leader in clean diesel engines, and this collaboration is a key
enabler."


Remanufacturing Growth and Additional Synergies

Through the alliance, the companies also intend to expand their existing
remanufacturing relationship to include Navistar's recently introduced
MaxxForce on-highway engines. The companies expect to pursue additional
remanufacturing opportunities as new vehicles and engines are developed.
Caterpillar and Navistar plan to explore opportunities to leverage their
scale. Combining raw material and other commodity purchases is just one
example of how the two companies can work together to reduce costs.


About Caterpillar

For more than 80 years, Caterpillar Inc. has been making progress possible
and driving positive and sustainable change on every continent. With 2007
sales and revenues of $44.958 billion, Caterpillar is the world's leading
manufacturer of construction and mining equipment, diesel and natural gas
engines and industrial gas turbines. The company also is a leading services
provider through Caterpillar Financial Services, Caterpillar Remanufacturing
Services, Caterpillar Logistics Services and Progress Rail Services. More
information is available at http://www.cat.com


About Navistar

Navistar International Corporation traces its roots to 1831 and the former
McCormick and International Harvester companies. Today Navistar is the
largest North American producer of mid-range diesel engines and Class 6-8
commercial trucks and buses. Navistar Defense is a leading producer of
advanced armored vehicles and trucks for the U.S. Armed Forces and its allies.
Navistar produces International® brand commercial trucks, MaxxForce brand
diesel engines, IC brand school and commercial buses, and Workhorse brand
chassis for motor homes and step vans, and is a private label designer and
manufacturer of diesel engines for the pickup truck, van and SUV markets.
Navistar is also a provider of truck and diesel engine parts. A wholly owned
subsidiary offers financing services. Additional information is available at:
http://www.navistar.com


CATERPILLAR SAFE HARBOR

Certain statements in this release relate to future events and
expectations and as such constitute forward-looking statements involving known
and unknown factors that may cause actual results of Caterpillar Inc. to be
different from those expressed or implied in the forward-looking statements.
In this context, words such as "will", "would", "expect", "anticipate" or
other similar words and phrases often identify forward-looking statements made
on behalf of Caterpillar. It is important to note that actual results of the
company may differ materially from those described or implied in such
forward-looking statements based on a number of factors and uncertainties,
including, but not limited to, changes in economic conditions; currency
exchange or interest rates; political stability; market acceptance of the
company's products and services; significant changes in the competitive
environment; epidemic diseases; changes in law, regulations and tax rates; and
other general economic, business and financing conditions and factors
described in more detail in the company's Form 10-Q filed with the Securities
and Exchange Commission on May 2, 2008. This filing is available on our
website at http://www.cat.com/secfilings. We do not undertake to update our
forward-looking statements."


NAVISTAR SAFE HARBOR

Information provided and statements contained in this report that are not
purely historical are forward-looking statements within the meaning of Section
27A of the Securities Act, Section 21E of the Exchange Act of 1934, and the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements only speak as of the date of this report and the company assumes no
obligation to update the information included in this report. Such
forward-looking statements include information concerning our possible or
assumed future results of operations, including descriptions of our business
strategy. These statements often include words such as "believe," "expect,"
"anticipate," "intend," "plan," "estimate" or similar expressions. These
statements are not guarantees of performance or results and they involve risks,
uncertainties and assumptions, including the risk of continued delay in the
completion of our financial statements and the consequences thereof, the
availability of funds, either through cash on hand or the company's other
liquidity sources, to repay any amounts due should any of the company's debt
become accelerated, decisions by suppliers and other vendors to restrict or
eliminate customary trade and other credit terms for the company's future
orders and other services, which would require the company to pay cash and
which could have a material adverse effect on the company's liquidity position
and financial condition, and the inability of Navistar and Caterpillar to
reach agreement on the terms of any collaboration and the success of any such
collaboration. Although we believe that these forward-looking statements are
based on reasonable assumptions, there are many factors that could affect our
actual financial results or results of operations and could cause actual
results to differ materially from those in the forward-looking statements.
For a further description of these factors, see Item 1A. Risk Factors of our
Form 10-K for the fiscal year ended October 31, 2007, which was filed on May
29, 2008.


SOURCE Caterpillar Inc.; Navistar International Corporation