Stronger Industry Demand and Company Expansion Set Pace to Hit
FY11 Guidance
WARRENVILLE, Ill.--(BUSINESS WIRE)--
Navistar International Corporation (NYSE: NAV) today reported adjusted
net income for the second quarter, ended April 30, 2011, of $80 million,
equal to $1.02 diluted earnings per share, resulting from stronger
industry demand and company expansion. Including the engineering
integration costs, reported net income attributable to Navistar
International Corporation for the 2011 second quarter was $74 million,
equal to $0.93 diluted earnings per share. The company continues to
execute its strategic plan and is well positioned to achieve fiscal year
2011 guidance.
"The second quarter results represent good earnings and strong cash flow
from operations while building to deliver to our 2011 and beyond
objectives," said Daniel C. Ustian, Navistar chairman, president and
chief executive officer. "We continue to see increasing customer
acceptance of all our engine and vehicle families, confirming we have
the right strategy in place and that we will deliver full year results
toward the higher side of our previous guidance."
Included in the above second-quarter earnings were $19 million in equity
losses from start-up costs related to the company's separate joint
ventures with NC2 and Mahindra. The company continues to
implement its global business strategy and, through its NC2
and Mahindra joint ventures, is producing and selling commercial truck
products in India, Brazil, South Africa and Australia.
Built around second quarter results and the outlook for the remainder of
the year, Navistar tightened its forecasted adjusted net income
attributable to Navistar International Corporation for fiscal year
ending Oct. 31, 2011, to be between $427 million and $465 million, equal
to $5.50 to $6.00 diluted earnings per share, excluding transition costs
associated with the integration of the truck and engine engineering
operation. Additionally, the company confirmed its full year forecast
for manufacturing cash of $1.43 billion.
"In the second quarter, our growth strategy continued to unfold as we
introduced a number of products to the market place," said Ustian. "Our
core business has seen an increase in volume and our military and
service parts continue to deliver strong results. We also delivered
solid results while investing in our future and growing globally."
Navistar earned $43 million, equal to $0.60 diluted earnings per share
in the year-ago second quarter. Sales and revenues for the 2011 second
quarter were $3.4 billion, compared with $2.7 billion in the year-ago
second quarter.
Sales and revenues for the 2011 six months were $6.1 billion, compared
with $5.6 billion in the year-ago six months. For the six months ended
April 30, 2011, adjusted net income attributable to Navistar
International Corporation was $94 million, equal to $1.22 diluted
earnings per share, excluding the impact of engineering integration
costs. Including the engineering integration costs, reported net income
attributable to Navistar International Corporation for the 2011 six
months was $68 million, equal to $0.87 diluted earnings per share.
For the six months ended April 30, 2010, adjusted earnings were $45
million, equal to $0.62 diluted earnings per share, excluding the impact
of benefits from the Ford restructuring and related activity. Including
the restructuring benefit, six months 2010 reported earnings were $62
million, equal to $0.86 diluted earnings per share.
|
Summary Financial Results:
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
|
|
Six Months
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
(Revised)(A) |
|
|
|
(Revised)(A) |
|
(Dollars in Millions, except per share data)
|
|
|
|
|
|
|
|
|
|
Sales and revenues, net
|
|
$
|
3,355
|
|
$
|
2,743
|
|
$
|
6,098
|
|
|
$
|
5,552
|
|
Segment Results:
|
|
|
|
|
|
|
|
Truck
|
|
|
92
|
|
|
76
|
|
|
124
|
|
|
|
111
|
|
Engine
|
|
|
2
|
|
|
15
|
|
|
(6
|
)
|
|
|
69
|
|
Parts
|
|
|
74
|
|
|
58
|
|
|
130
|
|
|
|
137
|
|
Manufacturing segment profit(B) |
|
$
|
168
|
|
$
|
149
|
|
$
|
248
|
|
|
$
|
317
|
|
Income before taxes
|
|
$
|
93
|
|
$
|
46
|
|
$
|
99
|
|
|
$
|
86
|
|
Net income attributable to Navistar International Corporation
|
|
|
74
|
|
|
43
|
|
|
68
|
|
|
|
62
|
|
Diluted earnings per share attributable to Navistar International
Corporation
|
|
|
0.93
|
|
|
0.60
|
|
|
0.87
|
|
|
|
0.86
|
|
Adjusted net income attributable to Navistar International
Corporation(B) |
|
|
80
|
|
|
43
|
|
|
94
|
|
|
|
45
|
|
Adjusted diluted earnings per share attributable to Navistar
International Corporation(B) |
|
|
1.02
|
|
|
0.60
|
|
|
1.22
|
|
|
|
0.62
|
|
(A) Certain amounts have been revised to reflect a retrospective
change in accounting principle. See Note 1, Summary of
significant accounting policies, of our Form 10Q for additional
information.
|
|
(B) Non-GAAP measure, see SEC Regulation G Non-GAAP Reconciliation
for additional information.
|
Segment Results
Truck — For the second quarter ended April 30, 2011, the
truck segment realized a profit of $92 million, compared with a year-ago
second-quarter profit of $76 million. Worldwide chargeouts were up on a
stronger industry, while Navistar continues to introduce new products
such as the International® TerraStar®.
The increase in second-quarter revenues was driven by higher commercial
volumes, favorable pricing due to the use of 2010 emissions-compliant
engines and increased military revenue associated with Mine Resistant
Ambush Protected (MRAP) vehicle deliveries. Improvements in the core
operations were partially offset by increased commodity pressures and
fuel prices of approximately $30 million. Additionally, 2010
second-quarter profits included $30 million of value added tax recovery
in Brazil.
Engine — The engine segment saw improved intercompany sales,
mainly from the big bore product, a commercial truck industry recovery,
and growth in rest-of-world OEM markets, such as Brazil. Segment
profitability quarter-over-quarter decreased primarily due to increased
engineering and warranty costs on legacy products. However, Navistar's
2010 product launch quality is superior to previous product
introductions.
Parts — The parts segment continues to deliver solid profits,
which is reflective of improved overall truck market share and an
expanded engine product offering.
Financial Services — The financial services segment earned $40
million in the second quarter of 2011 compared to $16 million in the
second quarter of 2010. This growth in earnings is due to an improvement
in retail portfolio quality that resulted in a $14 million decrease in
provision for loan losses, as well as the benefit of lower borrowing
costs on more than $1 billion in retail debt refinancings.
About Navistar
Navistar International Corporation (NYSE: NAV) is a holding company
whose subsidiaries and affiliates produce International®
brand commercial and military trucks, MaxxForce® brand diesel
engines, IC Bus™ brand school and commercial buses, Monaco®
RVbrands of recreational vehicles, and Workhorse®
brand chassis for motor homes and step vans. It also is a private-label
designer and manufacturer of diesel engines for the pickup truck, van
and SUV markets. The company also provides truck and diesel engine
service parts. Another affiliate offers financing services. Additional
information is available at www.Navistar.com/newsroom.
Forward-Looking Statement
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 of 1933, as amended, Section 21E of
the Securities Exchange Act of 1934, as amended, 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. For a
further description of these factors, see Item 1A, Risk Factors of our
Form 10-K for the fiscal year ended October 31, 2010, which was filed on
December 21, 2010. 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. All future written and oral forward-looking
statements by us or persons acting on our behalf are expressly qualified
in their entirety by the cautionary statements contained or referred to
above. Except for our ongoing obligations to disclose material
information as required by the federal securities laws, we do not have
any obligations or intention to release publicly any revisions to any
forward-looking statements to reflect events or circumstances in the
future or to reflect the occurrence of unanticipated events.
|
|
|
|
|
|
|
Navistar International Corporation and Subsidiaries
|
|
|
|
Consolidated Statements of Operations
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
April 30,
|
|
Six Months Ended
April 30,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
(in millions, except per share data)
|
|
|
|
(Revised)(A) |
|
|
|
(Revised)(A) |
|
Sales and revenues
|
|
|
|
|
|
|
|
|
|
Sales of manufactured products, net
|
|
$
|
3,298
|
|
|
$
|
2,690
|
|
|
$
|
5,991
|
|
|
$
|
5,448
|
|
|
Finance revenues
|
|
57
|
|
|
53
|
|
|
107
|
|
|
104
|
|
|
Sales and revenues, net
|
|
3,355
|
|
|
2,743
|
|
|
6,098
|
|
|
5,552
|
|
|
Costs and expenses
|
|
|
|
|
|
|
|
|
|
Costs of products sold
|
|
2,701
|
|
|
2,189
|
|
|
4,900
|
|
|
4,451
|
|
|
Restructuring charges (benefit)
|
|
2
|
|
|
3
|
|
|
24
|
|
|
(14
|
)
|
|
Selling, general and administrative expenses
|
|
354
|
|
|
359
|
|
|
672
|
|
|
695
|
|
|
Engineering and product development costs
|
|
137
|
|
|
116
|
|
|
266
|
|
|
225
|
|
|
Interest expense
|
|
62
|
|
|
64
|
|
|
125
|
|
|
131
|
|
|
Other income, net
|
|
10
|
|
|
47
|
|
|
21
|
|
|
41
|
|
|
Total costs and expenses
|
|
3,246
|
|
|
2,684
|
|
|
5,966
|
|
|
5,447
|
|
|
Equity in loss of non-consolidated affiliates
|
|
16
|
|
|
13
|
|
|
33
|
|
|
19
|
|
|
Income before income tax benefit (expense)
|
|
93
|
|
|
46
|
|
|
99
|
|
|
86
|
|
|
Income tax benefit (expense)
|
|
(5
|
)
|
|
10
|
|
|
(5
|
)
|
|
2
|
|
|
Net income
|
|
88
|
|
|
56
|
|
|
94
|
|
|
88
|
|
|
Less: Net income attributable to non-controlling interests
|
|
14
|
|
|
13
|
|
|
26
|
|
|
26
|
|
|
Net income attributable to Navistar International Corporation
|
|
$
|
74
|
|
|
$
|
43
|
|
|
$
|
68
|
|
|
$
|
62
|
|
|
Earnings per share attributable to Navistar International
Corporation:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.01
|
|
|
$
|
0.61
|
|
|
$
|
0.93
|
|
|
$
|
0.87
|
|
|
Diluted
|
|
0.93
|
|
|
0.60
|
|
|
0.87
|
|
|
0.86
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
73.0
|
|
|
71.4
|
|
|
72.8
|
|
|
71.3
|
|
|
Diluted
|
|
78.6
|
|
|
72.8
|
|
|
77.3
|
|
|
72.4
|
|
(A) Starting with the first quarter of 2011, the company changed its
method of accruing for certain incentive compensation specifically
relating to cash bonuses for interim reporting purposes from a ratable
method to a performance-based method. The company believes that the
performance-based method is preferable because it links the accrual of
incentive compensation with the achievement of performance. We have
revised our previously reported Consolidated Statement of Operations for
the three and six months ended April 30, 2010 and our Consolidated
Statement of Stockholders' Deficit, and Condensed Consolidated Statement
of Cash Flows for the six months ended April 30, 2010 on a retrospective
basis to reflect this change in principle based on information that
would have been available as of our previous filing. The change will
have no impact on our annual financial results. See Note 1, Summary
of significant accounting policies of our Form 10Q for additional
information.
|
|
|
|
|
|
|
Navistar International Corporation and Subsidiaries
|
|
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
April 30,
2011
|
|
October 31,
2010
|
|
(in millions, except per share data)
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
390
|
|
|
$
|
585
|
|
|
Marketable securities
|
|
738
|
|
|
586
|
|
|
Trade and other receivables, net
|
|
997
|
|
|
987
|
|
|
Finance receivables, net
|
|
1,983
|
|
|
1,770
|
|
|
Inventories
|
|
1,721
|
|
|
1,568
|
|
|
Deferred taxes, net
|
|
90
|
|
|
83
|
|
|
Other current assets
|
|
281
|
|
|
256
|
|
|
Total current assets
|
|
6,200
|
|
|
5,835
|
|
|
Restricted cash and cash equivalents
|
|
188
|
|
|
180
|
|
|
Trade and other receivables, net
|
|
100
|
|
|
44
|
|
|
Finance receivables, net
|
|
948
|
|
|
1,145
|
|
|
Investments in non-consolidated affiliates
|
|
103
|
|
|
103
|
|
|
Property and equipment (net of accumulated depreciation and
amortization of $2,019 and $1,928, at the respective dates)
|
|
1,486
|
|
|
1,442
|
|
|
Goodwill
|
|
337
|
|
|
324
|
|
|
Intangible assets (net of accumulated amortization of $140 and $124,
at the respective dates)
|
|
280
|
|
|
262
|
|
|
Deferred taxes, net
|
|
20
|
|
|
63
|
|
|
Other noncurrent assets
|
|
304
|
|
|
332
|
|
|
Total assets
|
|
$
|
9,966
|
|
|
$
|
9,730
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Notes payable and current maturities of long-term debt
|
|
$
|
1,370
|
|
|
$
|
632
|
|
|
Accounts payable
|
|
1,907
|
|
|
1,827
|
|
|
Other current liabilities
|
|
1,104
|
|
|
1,130
|
|
|
Total current liabilities
|
|
4,381
|
|
|
3,589
|
|
|
Long-term debt
|
|
3,453
|
|
|
4,238
|
|
|
Postretirement benefits liabilities
|
|
2,015
|
|
|
2,097
|
|
|
Deferred taxes, net
|
|
94
|
|
|
142
|
|
|
Other noncurrent liabilities
|
|
703
|
|
|
588
|
|
|
Total liabilities
|
|
10,646
|
|
|
10,654
|
|
|
Redeemable equity securities
|
|
5
|
|
|
8
|
|
|
Convertible debt
|
|
84
|
|
|
—
|
|
|
Stockholders' deficit
|
|
|
|
|
|
Series D convertible junior preference stock
|
|
3
|
|
|
4
|
|
|
Common stock ($0.10 par value per share, 220.0 and 110.0 shares
authorized at the respective dates, 75.4 shares issued at both dates)
|
|
7
|
|
|
7
|
|
|
Additional paid in capital
|
|
2,154
|
|
|
2,206
|
|
|
Accumulated deficit
|
|
(1,810
|
)
|
|
(1,878
|
)
|
|
Accumulated other comprehensive loss
|
|
(1,056
|
)
|
|
(1,196
|
)
|
|
Common stock held in treasury, at cost (3.1 and 3.6 shares, at the
respective dates)
|
|
(110
|
)
|
|
(124
|
)
|
|
Total stockholders' deficit attributable to Navistar International
Corporation
|
|
(812
|
)
|
|
(981
|
)
|
|
Stockholders' equity attributable to non-controlling interests
|
|
43
|
|
|
49
|
|
|
Total stockholders' deficit
|
|
(769
|
)
|
|
(932
|
)
|
|
Total liabilities and stockholders' deficit
|
|
$
|
9,966
|
|
|
$
|
9,730
|
|
|
|
|
|
|
Navistar International Corporation and Subsidiaries
|
|
Condensed Consolidated Statements of Cash Flows
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Six Months Ended
April 30,
|
|
|
|
2011
|
|
2010
|
|
(in millions)
|
|
|
|
(Revised)(A) |
|
Cash flows from operating activities
|
|
|
|
|
|
Net income
|
|
$
|
94
|
|
|
$
|
88
|
|
|
Adjustments to reconcile net income to cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
143
|
|
|
132
|
|
|
Depreciation of equipment leased to others
|
|
18
|
|
|
26
|
|
|
Deferred taxes
|
|
(5)
|
|
|
11
|
|
|
Amortization of debt issuance costs and discount
|
|
22
|
|
|
20
|
|
|
Stock-based compensation
|
|
31
|
|
|
16
|
|
|
Provision for doubtful accounts, net of recoveries
|
|
(2
|
)
|
|
34
|
|
|
Equity in loss of non-consolidated affiliates, net of dividends
|
|
35
|
|
|
22
|
|
|
Other non-cash operating activities
|
|
7
|
|
|
34
|
|
|
Changes in other assets and liabilities, exclusive of the effects of
businesses acquired and disposed
|
|
(117
|
)
|
|
(117
|
)
|
|
Net cash provided by operating activities
|
|
226
|
|
|
266
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Purchases of marketable securities
|
|
(721
|
)
|
|
(663
|
)
|
|
Sales or maturities of marketable securities
|
|
569
|
|
|
488
|
|
|
Net change in restricted cash and cash equivalents
|
|
(8
|
)
|
|
201
|
|
|
Capital expenditures
|
|
(185
|
)
|
|
(78
|
)
|
|
Purchase of equipment leased to others
|
|
(23
|
)
|
|
(25
|
)
|
|
Proceeds from sales of property and equipment
|
|
23
|
|
|
6
|
|
|
Investments in non-consolidated affiliates
|
|
(27
|
)
|
|
(59
|
)
|
|
Proceeds from sales of affiliates
|
|
6
|
|
|
3
|
|
|
Acquisition of intangibles
|
|
(7
|
)
|
|
(11
|
)
|
|
Business acquisitions, net of cash received
|
|
(1
|
)
|
|
(2
|
)
|
|
Net cash used in investing activities
|
|
(374
|
)
|
|
(140
|
)
|
|
Cash flows from financing activities
|
|
|
|
|
|
Proceeds from issuance of securitized debt
|
|
348
|
|
|
245
|
|
|
Principal payments on securitized debt
|
|
(334
|
)
|
|
(536
|
)
|
|
Proceeds from issuance of non-securitized debt
|
|
61
|
|
|
557
|
|
|
Principal payments on non-securitized debt
|
|
(64
|
)
|
|
(728
|
)
|
|
Net decrease in notes and debt outstanding under revolving credit
facilities
|
|
(12
|
)
|
|
(281
|
)
|
|
Principal payments under financing arrangements and capital lease
obligations
|
|
(48
|
)
|
|
(43
|
)
|
|
Debt issuance costs
|
|
(5
|
)
|
|
(22
|
)
|
|
Proceeds from exercise of stock options
|
|
28
|
|
|
14
|
|
|
Dividends paid by subsidiaries to non-controlling interest
|
|
(32
|
)
|
|
(33
|
)
|
|
Net cash used in financing activities
|
|
(58
|
)
|
|
(827
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
11
|
|
|
(3
|
)
|
|
Decrease in cash and cash equivalents
|
|
(195
|
)
|
|
(704
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
585
|
|
|
1,212
|
|
|
Cash and cash equivalents at end of the period
|
|
$
|
390
|
|
|
$
|
508
|
|
(A) Starting with the first quarter of 2011, the company changed its
method of accruing for certain incentive compensation specifically
relating to cash bonuses for interim reporting purposes from a ratable
method to a performance-based method. The company believes that the
performance-based method is preferable because it links the accrual of
incentive compensation with the achievement of performance. We have
revised our previously reported Consolidated Statement of Operations for
the three and six months ended April 30, 2010 and our Consolidated
Statement of Stockholders' Deficit, and Condensed Consolidated Statement
of Cash Flows for the six months ended April 30, 2010 on a retrospective
basis to reflect this change in principle based on information that
would have been available as of our previous filing. The change will
have no impact on our annual financial results. See Note 1, Summary
of significant accounting policies of our Form 10Q for additional
information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Navistar International Corporation and Subsidiaries
|
|
Segment Reporting
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We define segment profit (loss) as net income (loss) attributable
to Navistar International Corporation excluding income tax
expense. Our results for interim periods are not necessarily
indicative of results for a full year. Selected financial
information is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Truck
|
|
Engine
|
|
Parts
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended April 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales and revenues, net
|
|
$
|
2,262
|
|
|
$
|
524
|
|
|
$
|
512
|
|
|
$
|
57
|
|
|
$
|
—
|
|
|
$
|
3,355
|
|
|
Intersegment sales and revenues(B) |
|
9
|
|
|
431
|
|
|
50
|
|
|
26
|
|
|
(516
|
)
|
|
—
|
|
|
Total sales and revenues, net
|
|
$
|
2,271
|
|
|
$
|
955
|
|
|
$
|
562
|
|
|
$
|
83
|
|
|
$
|
(516
|
)
|
|
$
|
3,355
|
|
|
Net income (loss) attributable to NIC
|
|
$
|
92
|
|
|
$
|
2
|
|
|
$
|
74
|
|
|
$
|
40
|
|
|
$
|
(134
|
)
|
|
$
|
74
|
|
|
Income tax expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
Segment profit (loss)(B)(C) |
|
$
|
92
|
|
|
$
|
2
|
|
|
$
|
74
|
|
|
$
|
40
|
|
|
$
|
(129
|
)
|
|
$
|
79
|
|
|
Depreciation and amortization
|
|
$
|
38
|
|
|
$
|
30
|
|
|
$
|
3
|
|
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
81
|
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
36
|
|
|
62
|
|
|
Equity in income (loss) of non-consolidated affiliates
|
|
(17
|
)
|
|
(2
|
)
|
|
3
|
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
Capital expenditures(D) |
|
22
|
|
|
52
|
|
|
3
|
|
|
—
|
|
|
13
|
|
|
90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended April 30, 2010 (Revised)(E) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales and revenues, net
|
|
$
|
1,847
|
|
|
$
|
444
|
|
|
$
|
399
|
|
|
$
|
53
|
|
|
$
|
—
|
|
|
$
|
2,743
|
|
|
Intersegment sales and revenues
|
|
—
|
|
|
233
|
|
|
48
|
|
|
23
|
|
|
(304
|
)
|
|
—
|
|
|
Total sales and revenues, net
|
|
$
|
1,847
|
|
|
$
|
677
|
|
|
$
|
447
|
|
|
$
|
76
|
|
|
$
|
(304
|
)
|
|
$
|
2,743
|
|
|
Net income attributable to NIC
|
|
$
|
76
|
|
|
$
|
15
|
|
|
$
|
58
|
|
|
$
|
16
|
|
|
$
|
(122
|
)
|
|
$
|
43
|
|
|
Income tax benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
10
|
|
|
Segment profit (loss)(C) |
|
$
|
76
|
|
|
$
|
15
|
|
|
$
|
58
|
|
|
$
|
16
|
|
|
$
|
(132
|
)
|
|
$
|
33
|
|
|
Depreciation and amortization
|
|
$
|
40
|
|
|
$
|
27
|
|
|
$
|
2
|
|
|
$
|
7
|
|
|
$
|
3
|
|
|
$
|
79
|
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|
35
|
|
|
64
|
|
|
Equity in income (loss) of non-consolidated affiliates
|
|
(11
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
Capital Expenditures
|
|
24
|
|
|
11
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
39
|
|
|
Six Months Ended April 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales and revenues, net
|
|
$
|
4,053
|
|
|
$
|
980
|
|
|
$
|
958
|
|
|
$
|
107
|
|
|
$
|
—
|
|
|
$
|
6,098
|
|
|
Intersegment sales and revenues(B) |
|
18
|
|
|
758
|
|
|
99
|
|
|
49
|
|
|
(924
|
)
|
|
—
|
|
|
Total sales and revenues, net
|
|
$
|
4,071
|
|
|
$
|
1,738
|
|
|
$
|
1,057
|
|
|
$
|
156
|
|
|
$
|
(924
|
)
|
|
$
|
6,098
|
|
|
Net income attributable to NIC
|
|
$
|
124
|
|
|
$
|
(6
|
)
|
|
$
|
130
|
|
|
$
|
72
|
|
|
$
|
(252
|
)
|
|
$
|
68
|
|
|
Income tax expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
Segment profit (loss)(B)(C) |
|
$
|
124
|
|
|
$
|
(6
|
)
|
|
$
|
130
|
|
|
$
|
72
|
|
|
$
|
(247
|
)
|
|
$
|
73
|
|
|
Depreciation and amortization
|
|
$
|
75
|
|
|
$
|
59
|
|
|
$
|
5
|
|
|
$
|
13
|
|
|
$
|
9
|
|
|
$
|
161
|
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56
|
|
|
69
|
|
|
125
|
|
|
Equity in income (loss) of non-consolidated affiliates
|
|
(35
|
)
|
|
(2
|
)
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(33
|
)
|
|
Capital expenditures(D) |
|
38
|
|
|
84
|
|
|
4
|
|
|
—
|
|
|
59
|
|
|
185
|
|
|
|
|
Navistar International Corporation and Subsidiaries
|
|
Segment Reporting
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Truck
|
|
Engine
|
|
Parts
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended April 30, 2010 (Revised)(E) |
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales and revenues, net
|
|
$
|
3,563
|
|
|
$
|
1,069
|
|
|
$
|
816
|
|
|
$
|
104
|
|
|
$
|
—
|
|
|
$
|
5,552
|
|
|
Intersegment sales and revenues(B) |
|
1
|
|
|
429
|
|
|
98
|
|
|
47
|
|
|
(575
|
)
|
|
—
|
|
|
Total sales and revenues, net
|
|
$
|
3,564
|
|
|
$
|
1,498
|
|
|
$
|
914
|
|
|
$
|
151
|
|
|
$
|
(575
|
)
|
|
$
|
5,552
|
|
|
Net income attributable to NIC
|
|
$
|
111
|
|
|
$
|
69
|
|
|
$
|
137
|
|
|
$
|
28
|
|
|
$
|
(283
|
)
|
|
$
|
62
|
|
|
Income tax expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
|
Segment profit (loss)(B)(C) |
|
$
|
111
|
|
|
$
|
69
|
|
|
$
|
137
|
|
|
$
|
28
|
|
|
$
|
(285
|
)
|
|
$
|
60
|
|
|
Depreciation and amortization
|
|
$
|
80
|
|
|
$
|
53
|
|
|
$
|
3
|
|
|
$
|
15
|
|
|
$
|
7
|
|
|
$
|
158
|
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|
70
|
|
|
131
|
|
|
Equity in income (loss) of non-consolidated affiliates
|
|
(18
|
)
|
|
(2
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
Capital expenditures(D) |
|
34
|
|
|
34
|
|
|
4
|
|
|
1
|
|
|
5
|
|
|
78
|
|
|
As of April 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets
|
|
$
|
2,623
|
|
|
$
|
1,820
|
|
|
$
|
725
|
|
|
$
|
3,553
|
|
|
$
|
1,245
|
|
|
$
|
9,966
|
|
|
As of October 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets
|
|
2,457
|
|
|
1,715
|
|
|
811
|
|
|
3,497
|
|
|
1,250
|
|
|
9,730
|
|
|
|
(A) Total sales and revenues in the Financial Services segment include
interest revenues of $82 million and $153 million for the three and six
months ended April 30, 2011, respectively, and $65 million and $135
million for the three and six months ended April 30, 2010, respectively.
(B) Beginning in the second quarter of 2011, certain purchases from the
Engine segment by the Parts segment are recorded at market-based
pricing. All other intersegment purchases from the Truck and Engine by
the Parts segment continue to be recorded at standard production cost.
The effect of this change did not have a material impact on our segment
reporting.
(C) In the first quarter of 2011, we began allocating gains and losses
on commodities derivatives to the segment to which the underlying
commodities relate. Previously, the impacts of commodities derivatives
were not material and were recorded within Corporate.
(D) Exclusive of purchase of equipment leased to others.
(E) Certain amounts have been revised to reflect a retrospective change
in accounting principle. See Note 1, Summary of significant
accounting policies of our Form 10Q for additional information.
SEC Regulation G Non-GAAP Reconciliation
The financial measures presented below of adjusted net income and
adjusted diluted earnings per share attributable to Navistar
International Corporation, manufacturing segment profit, and adjusted
manufacturing segment profit are unaudited and not in accordance with,
or an alternative for, financial measures presented in accordance with
U.S. generally accepted accounting principles (GAAP). The non-GAAP
financial information presented herein should be considered supplemental
to, and not as a substitute for, or superior to, financial measures
calculated in accordance with GAAP.
We believe manufacturing segment profit, which includes the segment
profits of our Truck, Engine, and Parts reporting segments, provides
meaningful information of our core manufacturing business and therefore
we use it to supplement our GAAP reporting by identifying items that may
not be related to the core manufacturing business. We have chosen to
provide this supplemental information to investors, analysts and other
interested parties to enable them to perform additional analyses of
operating results, to illustrate the results of operations giving effect
to the non-GAAP adjustments shown in the below reconciliation, and to
provide an additional measure of performance.
In addition, we believe that adjusted net income and adjusted diluted
earnings per share attributable to Navistar International Corporation
and manufacturing segment profit excluding engineering integration costs
and certain restructuring costs, which are not considered to be part of
our ongoing business, improves the comparability of year to year results
and is representative of our underlying performance. We have chosen to
provide this supplemental information to investors, analysts and other
interested parties to enable them to perform additional analyses of
operating results, to illustrate the results of operations giving effect
to the non-GAAP adjustments shown in the below reconciliations, and to
provide an additional measure of performance.
|
|
|
Adjusted net income and diluted earnings per share attributable
to Navistar International Corporation reconciliation:
|
|
|
|
Three Months Ended April 30,
|
|
Six Months Ended April 30,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
Revised(A) |
|
|
|
Revised(A) |
|
(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
Net income attributable to Navistar International Corporation
|
|
$
|
74
|
|
$
|
43
|
|
$
|
68
|
|
$
|
62
|
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
Engineering integration costs(B) |
|
|
6
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
Ford restructuring and related charges (benefits)(C) |
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
Adjusted net income attributable to Navistar International
Corporation
|
|
$
|
80
|
|
$
|
43
|
|
$
|
94
|
|
$
|
45
|
|
|
Diluted earnings per share attributable to Navistar International
Corporation
|
|
$
|
0.93
|
|
$
|
0.60
|
|
$
|
0.87
|
|
$
|
0.86
|
|
|
Effect of adjustments on diluted earnings per share attributable to
Navistar International Corporation
|
|
|
0.09
|
|
|
—
|
|
|
0.35
|
|
|
(0.24
|
)
|
|
Adjusted diluted earnings per share attributable to Navistar
International Corporation
|
|
$
|
1.02
|
|
$
|
0.60
|
|
$
|
1.22
|
|
$
|
0.62
|
|
|
Diluted weighted shares outstanding(C) |
|
|
78.6
|
|
|
72.8
|
|
|
77.3
|
|
|
72.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing segment profit and adjusted manufacturing segment
profit reconciliation:
|
|
|
|
Three Months Ended April 30,
|
|
Six Months Ended April 30,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
Revised(A) |
|
|
|
Revised(A) |
|
(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Navistar International Corporation
|
|
$
|
74
|
|
|
$
|
43
|
|
|
$
|
68
|
|
|
$
|
62
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Financial services segment profit
|
|
|
40
|
|
|
|
16
|
|
|
|
72
|
|
|
|
28
|
|
|
Corporate and eliminations
|
|
|
(129
|
)
|
|
|
(132
|
)
|
|
|
(247
|
)
|
|
|
(285
|
)
|
|
Income taxes
|
|
|
(5
|
)
|
|
|
10
|
|
|
|
(5
|
)
|
|
|
2
|
|
|
Manufacturing segment profit
|
|
$
|
168
|
|
|
$
|
149
|
|
|
$
|
248
|
|
|
$
|
317
|
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
Engineering integration costs(A) |
|
|
3
|
|
|
|
—
|
|
|
|
21
|
|
|
|
—
|
|
|
Ford restructuring and related charges (benefits)(B) |
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(17
|
)
|
|
Adjusted manufacturing segment profit
|
|
$
|
171
|
|
|
$
|
149
|
|
|
$
|
269
|
|
|
$
|
300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) Net income attributable to Navistar International Corporation has
been revised to reflect a retrospective change in accounting principle.
See Note 1, Summary of significant accounting policies of our
Form 10Q for additional information.
(B) Engineering integration costs relate to the consolidation of our
truck and engine engineering operations as well as the move of our world
headquarters. Engineering integration costs include restructuring
charges for activities at our Fort Wayne facility of $1 million and $19
million for the three and six months ended April 30, 2011, respectively.
The restructuring charges recorded are based on restructuring plans that
have been committed to by management and are, in part, based upon
management's best estimates of future events. Changes to the estimates
may require future adjustments to the restructuring liabilities. We also
incurred an additional $5 million and $7 million of other related costs
for the three and six months ended April 30, 2011, respectively.
Operations included in our manufacturing segment recognized $4 million
and $21 million of engineering integration costs for the three and six
months ended April 30, 2011, respectively. We continue to develop plans
for efficient transitions related to these activities and the
optimization of our operations and management structure. For fiscal
2011, we expect to incur approximately $50 million of additional charges
related to these activities.
(C) In the first quarter of 2010, the Company recognized $17 million of
restructuring benefits related to restructuring activity at our IEP and
ICC locations. The restructuring benefit primarily related to the
settlement of a portion of our other contractual costs for $16 million
within the restructuring liability. The charges were included in Restructuring
charges in our Engine segment.
|
|
|
Fiscal 2011 guidance: adjusted net income and diluted earnings
per share attributable to Navistar International Corporation
reconciliation:
|
|
|
|
Lower
|
|
Upper
|
|
(Dollars in Millions, except per share data)
|
|
|
|
|
|
Net income attributable to Navistar International Corporation
|
|
$
|
350
|
|
$
|
388
|
|
Plus: Engineering integration costs(A) |
|
|
77
|
|
|
77
|
|
Adjusted net income attributable to Navistar International
Corporation
|
|
$
|
427
|
|
$
|
465
|
|
|
|
|
|
|
|
Diluted earnings per share attributable to Navistar International
Corporation
|
|
$
|
4.50
|
|
$
|
5.00
|
|
Effect of adjustments on diluted earnings per share attributable to
Navistar International Corporation
|
|
|
1.00
|
|
|
1.00
|
|
Adjusted diluted earnings per share attributable to Navistar
International Corporation
|
|
$
|
5.50
|
|
$
|
6.00
|
|
|
|
|
|
|
|
Approximate diluted weighted shares outstanding(B) |
|
|
77.6
|
|
|
77.6
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2011 guidance: manufacturing segment profit and adjusted
manufacturing segment profit reconciliation:
|
|
|
|
Lower
|
|
Upper
|
|
(Dollars in Millions)
|
|
|
|
|
|
Net income (loss) attributable to Navistar International Corporation
|
|
$
|
350
|
|
|
$
|
388
|
|
|
Less: Financial services segment profit, Corporate and eliminations,
and income taxes
|
|
|
(578
|
)
|
|
|
(615
|
)
|
|
Manufacturing segment profit
|
|
|
928
|
|
|
|
1,003
|
|
|
Plus: Engineering integration costs(A) |
|
|
67
|
|
|
|
67
|
|
|
Adjusted manufacturing segment profit
|
|
$
|
995
|
|
|
$
|
1,070
|
|
|
|
|
|
|
|
|
|
|
|
(A) Engineering integration costs relate to the consolidation of our
truck and engine engineering operations as well as the move of our world
headquarters. We continue to develop plans for efficient transitions
related to these activities and the optimization of our operations and
management structure. We expect to incur approximately $77 million of
engineering integration costs in fiscal 2011 with approximately $67
million of the costs to be recognized by our manufacturing segment and
approximately $10 million of corporate charges.
(B) Approximate diluted weighted shares outstanding based on assumed
average share price of $65 per share during the period.
Navistar International Corporation
Media Contact: Roy Wiley,
630-753-2627
Investor Contact: Heather Kos, 630-753-2406
Web
site: www.Navistar.com/newsroom
Source: Navistar International Corporation
News Provided by Acquire Media