þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 36-3359573 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
2701 Navistar Drive, Lisle, Illinois | 60532 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | þ | Accelerated filer | o | |||
Non-accelerated filer | o | Smaller reporting company | o | |||
(Do not check if a smaller reporting company) |
Page | |||
PART I—Financial Information | |||
Item 1. | 4 | ||
4 | |||
5 | |||
6 | |||
7 | |||
8 | |||
9 | |||
Item 2. | 45 | ||
Item 3. | 63 | ||
Item 4 | 63 | ||
PART II—Other Information | |||
Item 1. | 64 | ||
Item 1A. | 64 | ||
Item 2. | 67 | ||
Item 3. | 67 | ||
Item 4. | 67 | ||
Item 5. | 67 | ||
Item 6. | 68 | ||
69 |
• | estimates we have made in preparing our financial statements; |
• | our development of new products and technologies; |
• | the anticipated sales, volume, demand, and markets for our products; |
• | the anticipated performance and benefits of our products and technologies, including our advanced clean engine solutions; |
• | our business strategies relating to, and our ability to meet federal and state regulatory heavy duty diesel emission standards applicable to certain of our engines, including the timing and costs of compliance and consequences of noncompliance with such standards; |
• | our business strategies and long-term goals, and activities to accomplish such strategies and goals; |
• | anticipated benefits from acquisitions, strategic alliances, and joint ventures we complete; |
• | our expectations relating to the dissolution of our Blue Diamond Truck joint venture with Ford expected in December 2014; |
• | our expectations and estimates relating to restructuring activities, including restructuring and integration charges and timing of cash payments related thereto, and operational flexibility, savings, and efficiencies from such restructurings; |
• | our expectations relating to our cost reduction initiatives, including our voluntary separation program, involuntary reduction in force, and other reductions to reduce discretionary spending; |
• | our expectations relating to our retail finance receivables and retail finance revenues; |
• | our anticipated costs relating to the development of our emissions solutions products; |
• | our anticipated capital expenditures; |
• | our expectations relating to payments of taxes; |
• | our expectations relating to warranty costs; |
• | our expectations relating to interest expenses; |
• | costs relating to litigation and similar matters; |
• | estimates relating to pension plan contributions; |
• | trends relating to commodity prices; and |
• | anticipated trends, expectations, and outlook relating to matters affecting our financial condition or results of operations. |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||
(in millions, except per share data) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Sales and revenues | |||||||||||||||
Sales of manufactured products, net | $ | 3,277 | $ | 3,490 | $ | 9,540 | $ | 9,481 | |||||||
Finance revenues | 42 | 47 | 129 | 154 | |||||||||||
Sales and revenues, net | 3,319 | 3,537 | 9,669 | 9,635 | |||||||||||
Costs and expenses | |||||||||||||||
Costs of products sold | 2,876 | 2,930 | 8,518 | 7,830 | |||||||||||
Restructuring charges | 4 | 56 | 24 | 80 | |||||||||||
Impairment of property and equipment and intangible assets | — | 64 | 38 | 64 | |||||||||||
Selling, general and administrative expenses | 328 | 334 | 1,068 | 1,006 | |||||||||||
Engineering and product development costs | 137 | 141 | 408 | 407 | |||||||||||
Interest expense | 59 | 62 | 182 | 187 | |||||||||||
Other expense (income), net | 5 | (18 | ) | 26 | (39 | ) | |||||||||
Total costs and expenses | 3,409 | 3,569 | 10,264 | 9,535 | |||||||||||
Equity in loss of non-consolidated affiliates | (10 | ) | (22 | ) | (21 | ) | (55 | ) | |||||||
Income (loss) before income taxes | (100 | ) | (54 | ) | (616 | ) | 45 | ||||||||
Income tax benefit | 196 | 1,463 | 410 | 1,458 | |||||||||||
Net income (loss) | 96 | 1,409 | (206 | ) | 1,503 | ||||||||||
Less: Net income attributable to non-controlling interests | 12 | 9 | 35 | 35 | |||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | 84 | $ | 1,400 | $ | (241 | ) | $ | 1,468 | ||||||
Earnings (loss) per share attributable to Navistar International Corporation: | |||||||||||||||
Basic | $ | 1.22 | $ | 19.10 | $ | (3.49 | ) | $ | 20.13 | ||||||
Diluted | 1.22 | 18.24 | (3.49 | ) | 19.04 | ||||||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 68.7 | 73.3 | 69.1 | 73.0 | |||||||||||
Diluted | 68.9 | 76.8 | 69.1 | 77.1 |
(in millions) | Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | 84 | $ | 1,400 | $ | (241 | ) | $ | 1,468 | ||||||
Other comprehensive income (loss) | |||||||||||||||
Foreign currency translation adjustment | (61 | ) | 4 | (139 | ) | 65 | |||||||||
Defined benefit plans (net of tax of $13, $31, $36, and $31, respectively) | 23 | (14 | ) | 63 | 65 | ||||||||||
Total other comprehensive income (loss) | (38 | ) | (10 | ) | (76 | ) | 130 | ||||||||
Total comprehensive income (loss) attributable to Navistar International Corporation | $ | 46 | $ | 1,390 | $ | (317 | ) | $ | 1,598 |
(in millions, except per share data) | July 31, 2012 | October 31, 2011 | |||||
ASSETS | (Unaudited) | ||||||
Current assets | |||||||
Cash and cash equivalents | $ | 547 | $ | 539 | |||
Restricted cash | 125 | 100 | |||||
Marketable securities | 159 | 718 | |||||
Trade and other receivables, net | 822 | 1,219 | |||||
Finance receivables, net | 1,812 | 2,198 | |||||
Inventories | 1,877 | 1,714 | |||||
Deferred taxes, net | 480 | 474 | |||||
Other current assets | 293 | 273 | |||||
Total current assets | 6,115 | 7,235 | |||||
Restricted cash | 154 | 227 | |||||
Trade and other receivables, net | 110 | 122 | |||||
Finance receivables, net | 523 | 715 | |||||
Investments in non-consolidated affiliates | 46 | 60 | |||||
Property and equipment (net of accumulated depreciation and amortization of $2,170 and $2,056 at the respective dates) | 1,646 | 1,570 | |||||
Goodwill | 280 | 319 | |||||
Intangible assets (net of accumulated amortization of $100 and $99, at the respective dates) | 179 | 234 | |||||
Deferred taxes, net | 1,926 | 1,583 | |||||
Other noncurrent assets | 164 | 226 | |||||
Total assets | $ | 11,143 | $ | 12,291 | |||
LIABILITIES and STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||
Liabilities | |||||||
Current liabilities | |||||||
Notes payable and current maturities of long-term debt | $ | 1,416 | $ | 1,379 | |||
Accounts payable | 1,816 | 2,122 | |||||
Other current liabilities | 1,298 | 1,297 | |||||
Total current liabilities | 4,530 | 4,798 | |||||
Long-term debt | 2,996 | 3,477 | |||||
Postretirement benefits liabilities | 3,057 | 3,210 | |||||
Deferred taxes, net | 56 | 59 | |||||
Other noncurrent liabilities | 862 | 719 | |||||
Total liabilities | 11,501 | 12,263 | |||||
Redeemable equity securities | 5 | 5 | |||||
Stockholders’ equity (deficit) | |||||||
Series D convertible junior preference stock | 3 | 3 | |||||
Common stock ($0.10 par value per share, 220.0 shares authorized, and 75.4 shares issued, at both dates) | 8 | 7 | |||||
Additional paid in capital | 2,274 | 2,253 | |||||
Accumulated deficit | (396 | ) | (155 | ) | |||
Accumulated other comprehensive loss | (2,020 | ) | (1,944 | ) | |||
Common stock held in treasury, at cost (6.8 and 4.9 shares, at the respective dates) | (276 | ) | (191 | ) | |||
Total stockholders’ deficit attributable to Navistar International Corporation | (407 | ) | (27 | ) | |||
Stockholders’ equity attributable to non-controlling interests | 44 | 50 | |||||
Total stockholders’ equity (deficit) | (363 | ) | 23 | ||||
Total liabilities and stockholders’ equity (deficit) | $ | 11,143 | $ | 12,291 |
Nine Months Ended July 31, | |||||||
(in millions) | 2012 | 2011 | |||||
Cash flows from operating activities | |||||||
Net income (loss) | $ | (206 | ) | $ | 1,503 | ||
Adjustments to reconcile net income (loss) to cash provided by operating activities: | |||||||
Depreciation and amortization | 209 | 217 | |||||
Depreciation of equipment leased to others | 37 | 28 | |||||
Deferred taxes, including change in valuation allowance | (405 | ) | (1,472 | ) | |||
Impairment of property and equipment and intangible assets | 38 | 73 | |||||
Amortization of debt issuance costs and discount | 31 | 33 | |||||
Stock-based compensation | 16 | 33 | |||||
Provision for doubtful accounts, net of recoveries | — | (5 | ) | ||||
Equity in loss of non-consolidated affiliates, net of dividends | 27 | 57 | |||||
Write-off of debt issuance cost and discount | 8 | — | |||||
Other non-cash operating activities | 5 | (9 | ) | ||||
Changes in other assets and liabilities, exclusive of the effects of businesses acquired and disposed | 586 | 81 | |||||
Net cash provided by operating activities | 346 | 539 | |||||
Cash flows from investing activities | |||||||
Purchases of marketable securities | (672 | ) | (1,109 | ) | |||
Sales or maturities of marketable securities | 1,230 | 1,075 | |||||
Net change in restricted cash and cash equivalents | 48 | 21 | |||||
Capital expenditures | (250 | ) | (291 | ) | |||
Purchase of equipment leased to others | (49 | ) | (35 | ) | |||
Proceeds from sales of property and equipment | 12 | 27 | |||||
Investments in non-consolidated affiliates | (18 | ) | (48 | ) | |||
Proceeds from sales of affiliates | 1 | 6 | |||||
Business acquisitions, net of cash received | (12 | ) | (1 | ) | |||
Acquisition of intangibles | (14 | ) | (15 | ) | |||
Net cash provided by (used in) investing activities | 276 | (370 | ) | ||||
Cash flows from financing activities | |||||||
Proceeds from issuance of securitized debt | 1,155 | 348 | |||||
Principal payments on securitized debt | (1,532 | ) | (560 | ) | |||
Proceeds from issuance of non-securitized debt | 717 | 158 | |||||
Principal payments on non-securitized debt | (582 | ) | (73 | ) | |||
Net decrease in notes and debt outstanding under revolving credit facilities | (195 | ) | (85 | ) | |||
Principal payments under financing arrangements and capital lease obligations | (30 | ) | (81 | ) | |||
Debt issuance costs | (20 | ) | (6 | ) | |||
Purchase of treasury stock | (75 | ) | (11 | ) | |||
Proceeds from exercise of stock options | 2 | 36 | |||||
Dividends paid by subsidiaries to non-controlling interest | (44 | ) | (43 | ) | |||
Other financing activities | (3 | ) | — | ||||
Net cash used in financing activities | (607 | ) | (317 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (7 | ) | 7 | ||||
Increase (decrease) in cash and cash equivalents | 8 | (141 | ) | ||||
Cash and cash equivalents at beginning of the period | 539 | 585 | |||||
Cash and cash equivalents at end of the period | $ | 547 | $ | 444 |
(in millions) | Series D Convertible Junior Preference Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Common Stock Held in Treasury, at cost | Stockholders' Equity Attributable to Noncontrolling Interests | Total | |||||||||||||||||||||||
Balance as of October 31, 2011 | $ | 3 | $ | 7 | $ | 2,253 | $ | (155 | ) | $ | (1,944 | ) | $ | (191 | ) | $ | 50 | $ | 23 | ||||||||||||
Net income (loss) | (241 | ) | 35 | (206 | ) | ||||||||||||||||||||||||||
Total other comprehensive loss | (76 | ) | (76 | ) | |||||||||||||||||||||||||||
Stock-based compensation | 14 | 14 | |||||||||||||||||||||||||||||
Stock ownership programs | (10 | ) | 11 | 1 | |||||||||||||||||||||||||||
Stock repurchase programs | 20 | (95 | ) | (75 | ) | ||||||||||||||||||||||||||
Cash dividends paid to non-controlling interest | (44 | ) | (44 | ) | |||||||||||||||||||||||||||
Increase in ownership interest acquired from non-controlling interest holder | (3 | ) | 3 | — | |||||||||||||||||||||||||||
Other | 1 | (1 | ) | — | |||||||||||||||||||||||||||
Balance as of July 31, 2012 | $ | 3 | $ | 8 | $ | 2,274 | $ | (396 | ) | $ | (2,020 | ) | $ | (276 | ) | $ | 44 | $ | (363 | ) | |||||||||||
Balance as of October 31, 2010 | $ | 4 | $ | 7 | $ | 2,206 | $ | (1,878 | ) | $ | (1,196 | ) | $ | (124 | ) | $ | 49 | $ | (932 | ) | |||||||||||
Net income | 1,468 | 35 | 1,503 | ||||||||||||||||||||||||||||
Total other comprehensive income | 130 | 130 | |||||||||||||||||||||||||||||
Transfer from redeemable equity securities upon exercise or expiration of stock options | 3 | 3 | |||||||||||||||||||||||||||||
Stock-based compensation | 24 | 24 | |||||||||||||||||||||||||||||
Stock ownership programs | 10 | 23 | 33 | ||||||||||||||||||||||||||||
Stock repurchase programs | (11 | ) | (11 | ) | |||||||||||||||||||||||||||
Cash dividends paid to non-controlling interest | (43 | ) | (43 | ) | |||||||||||||||||||||||||||
Impact to additional paid-in capital for valuation allowance release | 45 | 45 | |||||||||||||||||||||||||||||
Other | (1 | ) | 1 | — | |||||||||||||||||||||||||||
Balance as of July 31, 2011 | $ | 3 | $ | 7 | $ | 2,289 | $ | (410 | ) | $ | (1,066 | ) | $ | (112 | ) | $ | 41 | $ | 752 |
Nine Months Ended July 31, | |||||||
(in millions) | 2012 | 2011 | |||||
Balance, at beginning of period | $ | 598 | $ | 506 | |||
Costs accrued and revenues deferred | 353 | 281 | |||||
Adjustments to pre-existing warranties(A)(B) | 255 | 66 | |||||
Payments and revenues recognized | (324 | ) | (288 | ) | |||
Balance at end of period | 882 | 565 | |||||
Less: Current portion | 448 | 254 | |||||
Noncurrent accrued product warranty and deferred warranty revenue | $ | 434 | $ | 311 |
(A) | Adjustments to pre-existing warranties reflect changes in our estimate of warranty costs for products sold in prior periods. Such adjustments typically occur when claims experience deviates from historic and expected trends. Our warranty liability is generally affected by component failure rates, repair costs, and the timing of failures. Future events and circumstances related to these factors could materially change our estimates and require adjustments to our liability. In addition, new product launches require a greater use of judgment in developing estimates until historical experience becomes available. In the first quarter of 2012, we recorded adjustments for changes in estimates of $123 million ($75 million, or $1.07 per diluted share, net of tax). In the second quarter of 2012, we recorded adjustments for changes in estimates of $104 million ($63 million, or $0.92 per diluted share, net of tax). The impacts of income taxes on the adjustments reflect the Company's estimated annual effective tax rate as of July 31, 2012. |
(B) | In the third quarter of 2012, we recognized $10 million of adjustments to pre-existing warranties for a specific warranty issue related to component parts from a supplier. Also during the quarter, we reached agreement for reimbursement from such supplier and recognized a recovery for that amount and recorded a receivable within Other current assets. |
(in millions) | Balance at October 31, 2011 | Additions | Payments | Adjustments | Balance at July 31, 2012 | ||||||||||||||
Employee termination charges | $ | 31 | $ | 2 | $ | (8 | ) | $ | (4 | ) | $ | 21 | |||||||
Employee relocation costs | — | 6 | (6 | ) | — | — | |||||||||||||
Lease vacancy | — | 19 | (2 | ) | 1 | 18 | |||||||||||||
Other | 8 | 2 | (7 | ) | (1 | ) | 2 | ||||||||||||
Restructuring liability | $ | 39 | $ | 29 | $ | (23 | ) | $ | (4 | ) | $ | 41 |
(in millions) | Balance at October 31, 2010 | Additions | Payments | Adjustments | Balance at July 31, 2011 | ||||||||||||||
Employee termination charges | $ | 5 | $ | 25 | $ | (4 | ) | $ | — | $ | 26 | ||||||||
Employee relocation costs | — | 4 | (4 | ) | — | — | |||||||||||||
Other | — | 7 | — | — | 7 | ||||||||||||||
Restructuring liability | $ | 5 | $ | 36 | $ | (8 | ) | $ | — | $ | 33 |
(in millions) | July 31, 2012 | October 31, 2011 | |||||
Retail portfolio | $ | 1,188 | $ | 1,613 | |||
Wholesale portfolio | 1,175 | 1,334 | |||||
Total finance receivables | 2,363 | 2,947 | |||||
Less: Allowance for doubtful accounts | 28 | 34 | |||||
Total finance receivables, net | 2,335 | 2,913 | |||||
Less: Current portion, net(A) | 1,812 | 2,198 | |||||
Noncurrent portion, net | $ | 523 | $ | 715 |
(A) | The current portion of finance receivables is computed based on contractual maturities. Actual cash collections typically vary from the contractual cash flows because of prepayments, extensions, delinquencies, credit losses, and renewals. |
(in millions) | Maturity | July 31, 2012 | October 31, 2011 | ||||||
Variable funding notes ("VFN") | October 2012 | $ | 500 | $ | 500 | ||||
Investor notes | October 2012 | 350 | 350 | ||||||
Investor notes | October 2013 | 224 | — | ||||||
Investor notes | January 2012 | — | 250 | ||||||
Total wholesale note funding | $ | 1,074 | $ | 1,100 |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||
(in millions) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Retail notes and finance leases revenue | $ | 24 | $ | 32 | $ | 76 | $ | 108 | |||||||
Operating lease revenue | 10 | 8 | 30 | 23 | |||||||||||
Wholesale notes interest | 22 | 25 | 67 | 76 | |||||||||||
Retail and wholesale accounts interest | 8 | 8 | 26 | 20 | |||||||||||
Securitization income | — | — | — | 2 | |||||||||||
Gross finance revenues | 64 | 73 | 199 | 229 | |||||||||||
Less: Intercompany revenues | 22 | 26 | 70 | 75 | |||||||||||
Finance revenues | $ | 42 | $ | 47 | $ | 129 | $ | 154 |
Three Months Ended July 31, 2012 | Three Months Ended July 31, 2011 | ||||||||||||||||||||||||||||||
(in millions) | Retail Portfolio | Wholesale Portfolio | Trade and Other Receivables | Total | Retail Portfolio | Wholesale Portfolio | Trade and Other Receivables | Total | |||||||||||||||||||||||
Allowance for doubtful accounts, at beginning of period | $ | 26 | $ | 2 | $ | 17 | $ | 45 | $ | 40 | $ | 2 | $ | 34 | $ | 76 | |||||||||||||||
Provision for doubtful accounts, net of recoveries | 1 | — | — | 1 | (1 | ) | — | (2 | ) | (3 | ) | ||||||||||||||||||||
Charge-off of accounts(A) | (1 | ) | — | (2 | ) | (3 | ) | (2 | ) | — | (4 | ) | (6 | ) | |||||||||||||||||
Allowance for doubtful accounts, at end of period | $ | 26 | $ | 2 | $ | 15 | $ | 43 | $ | 37 | $ | 2 | $ | 28 | $ | 67 |
Nine Months Ended July 31, 2012 | Nine Months Ended July 31, 2011 | ||||||||||||||||||||||||||||||
(in millions) | Retail Portfolio | Wholesale Portfolio | Trade and Other Receivables | Total | Retail Portfolio | Wholesale Portfolio | Trade and Other Receivables | Total | |||||||||||||||||||||||
Allowance for doubtful accounts, at beginning of period | $ | 31 | $ | 2 | $ | 17 | $ | 50 | $ | 58 | $ | 2 | $ | 36 | $ | 96 | |||||||||||||||
Provision for doubtful accounts, net of recoveries | (1 | ) | — | 2 | 1 | (1 | ) | — | (4 | ) | (5 | ) | |||||||||||||||||||
Charge-off of accounts(A) | (4 | ) | — | (4 | ) | (8 | ) | (20 | ) | — | (4 | ) | (24 | ) | |||||||||||||||||
Allowance for doubtful accounts, at end of period | $ | 26 | $ | 2 | $ | 15 | $ | 43 | $ | 37 | $ | 2 | $ | 28 | $ | 67 |
(A) | We repossess sold and leased vehicles on defaulted finance receivables and leases, and place them into Inventories. Losses recognized at the time of repossession and charged against the allowance for doubtful accounts were $1 million and $4 million for the three and nine months ended July 31, 2012, respectively, and $2 million and $17 million for the three and nine months ended July 31, 2011, respectively. |
As of | |||||||||||||||||||||||
July 31, 2012 | October 31, 2011 | ||||||||||||||||||||||
(in millions) | Retail Portfolio | Wholesale Portfolio | Total | Retail Portfolio | Wholesale Portfolio | Total | |||||||||||||||||
Impaired finance receivables with specific loss reserves | $ | 14 | $ | — | $ | 14 | $ | 15 | $ | — | $ | 15 | |||||||||||
Impaired finance receivables without specific loss reserves | 1 | — | 1 | 2 | — | 2 | |||||||||||||||||
Specific loss reserves on impaired finance receivables | 11 | — | 11 | 10 | — | 10 | |||||||||||||||||
Finance receivables on non-accrual status | 11 | — | 11 | 14 | — | 14 |
As of | |||||||||||||||||||||||
July 31, 2012 | October 31, 2011 | ||||||||||||||||||||||
(in millions) | Retail Portfolio | Wholesale Portfolio | Total | Retail Portfolio | Wholesale Portfolio | Total | |||||||||||||||||
Current | $ | 1,116 | $ | 1,172 | $ | 2,288 | $ | 1,515 | $ | 1,328 | $ | 2,843 | |||||||||||
30-90 days past due | 59 | 2 | 61 | 85 | 5 | 90 | |||||||||||||||||
Over 90 days past due | 13 | 1 | 14 | 13 | 1 | 14 | |||||||||||||||||
Total finance receivables | $ | 1,188 | $ | 1,175 | $ | 2,363 | $ | 1,613 | $ | 1,334 | $ | 2,947 |
As of | |||||||
(in millions) | July 31, 2012 | October 31, 2011 | |||||
Finished products | $ | 958 | $ | 873 | |||
Work in process | 203 | 174 | |||||
Raw materials | 716 | 667 | |||||
Total inventories | $ | 1,877 | $ | 1,714 |
(in millions) | Three Months Ended July 31, 2011 | Nine Months Ended July 31, 2011 | |||||
Net revenue | $ | 82 | $ | 161 | |||
Net expenses | 105 | 218 | |||||
Loss before tax expense | (23 | ) | (57 | ) | |||
Net loss | (24 | ) | (58 | ) |
(in millions) | July 31, 2012 | October 31, 2011 | |||||
Manufacturing operations | |||||||
8.25% Senior Notes, due 2021, net of unamortized discount of $28 and $33, respectively | $ | 872 | $ | 967 | |||
3.0% Senior Subordinated Convertible Notes, due 2014, net of unamortized discount of $56 and $73, respectively | 514 | 497 | |||||
Debt of majority-owned dealerships | 75 | 94 | |||||
Financing arrangements and capital lease obligations | 146 | 118 | |||||
Loan Agreement related to 6.5% Tax Exempt Bonds, due 2040 | 225 | 225 | |||||
Promissory Note | 33 | 40 | |||||
Asset-Based Credit Facility | 238 | — | |||||
Other | 43 | 39 | |||||
Total manufacturing operations debt | 2,146 | 1,980 | |||||
Less: Current portion | 356 | 99 | |||||
Net long-term manufacturing operations debt | $ | 1,790 | $ | 1,881 | |||
Financial Services operations | |||||||
Asset-backed debt issued by consolidated SPEs, at fixed and variable rates, due serially through 2019 | $ | 1,299 | $ | 1,664 | |||
Bank revolvers, at fixed and variable rates, due dates from 2013 through 2017 | 857 | 1,072 | |||||
Commercial paper, at variable rates, due serially through 2012 | 53 | 70 | |||||
Borrowings secured by operating and finance leases, at various rates, due serially through 2017 | 57 | 70 | |||||
Total financial services operations debt | 2,266 | 2,876 | |||||
Less: Current portion | 1,060 | 1,280 | |||||
Net long-term financial services operations debt | $ | 1,206 | $ | 1,596 |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||||||||||
Pension Benefits | Health and Life Insurance Benefits | Pension Benefits | Health and Life Insurance Benefits | ||||||||||||||||||||||||||||
(in millions) | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||
Service cost for benefits earned during the period | $ | 5 | $ | 4 | $ | 1 | $ | 2 | $ | 13 | $ | 13 | $ | 5 | $ | 6 | |||||||||||||||
Interest on obligation | 43 | 47 | 20 | 13 | 129 | 141 | 62 | 40 | |||||||||||||||||||||||
Amortization of cumulative loss | 27 | 25 | 10 | — | 82 | 75 | 30 | — | |||||||||||||||||||||||
Amortization of prior service benefit | 1 | 1 | (2 | ) | (7 | ) | 1 | 1 | (4 | ) | (22 | ) | |||||||||||||||||||
Settlements and curtailments | — | — | — | 11 | — | 2 | — | 11 | |||||||||||||||||||||||
Contractual termination benefits | — | 35 | — | 6 | — | 38 | (3 | ) | 6 | ||||||||||||||||||||||
Premiums on pension insurance | — | — | — | — | 1 | 1 | — | — | |||||||||||||||||||||||
Expected return on assets | (49 | ) | (53 | ) | (8 | ) | (10 | ) | (145 | ) | (158 | ) | (26 | ) | (31 | ) | |||||||||||||||
Net postretirement benefits expense | $ | 27 | $ | 59 | $ | 21 | $ | 15 | $ | 81 | $ | 113 | $ | 64 | $ | 10 |
• | Level 1—based upon quoted prices for identical instruments in active markets, |
• | Level 2—based upon quoted prices for similar instruments, prices for identical or similar instruments in markets that are not active, or model-derived valuations, all of whose significant inputs are observable, and |
• | Level 3—based upon one or more significant unobservable inputs. |
As of July 31, 2012 | |||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Assets | |||||||||||||||
Marketable securities: | |||||||||||||||
U.S. Treasury bills | $ | 139 | $ | — | $ | — | $ | 139 | |||||||
Other U.S. and non-U.S. government bonds | — | — | — | — | |||||||||||
Other | 20 | — | — | 20 | |||||||||||
Derivative financial instruments: | |||||||||||||||
Foreign currency contracts | — | 1 | — | 1 | |||||||||||
Commodity contracts | — | — | — | — | |||||||||||
Total assets | $ | 159 | $ | 1 | $ | — | $ | 160 | |||||||
Liabilities | |||||||||||||||
Derivative financial instruments: | |||||||||||||||
Foreign currency contracts | $ | — | $ | 2 | $ | — | $ | 2 | |||||||
Commodity contracts | — | 6 | — | 6 | |||||||||||
Guarantees | — | — | 7 | 7 | |||||||||||
Total liabilities | $ | — | $ | 8 | $ | 7 | $ | 15 |
As of October 31, 2011 | |||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Assets | |||||||||||||||
Marketable securities: | |||||||||||||||
U.S. Treasury bills | $ | 283 | $ | — | $ | — | $ | 283 | |||||||
Other U.S and non-U.S. government bonds | 415 | — | — | 415 | |||||||||||
Other | 20 | — | — | 20 | |||||||||||
Derivative financial instruments: | |||||||||||||||
Commodity contracts | — | — | 1 | 1 | |||||||||||
Foreign currency contracts | — | 3 | — | 3 | |||||||||||
Total assets | $ | 718 | $ | 3 | $ | 1 | $ | 722 | |||||||
Liabilities | |||||||||||||||
Derivative financial instruments: | |||||||||||||||
Commodity contracts | $ | — | $ | 3 | $ | 3 | $ | 6 | |||||||
Cross currency swaps | — | 4 | — | 4 | |||||||||||
Guarantees | — | — | 6 | 6 | |||||||||||
Total liabilities | $ | — | $ | 7 | $ | 9 | $ | 16 |
2012 | 2011 | ||||||||||||||||||||||
(in millions) | Guarantees | Retained interests | Commodity contracts | Guarantees | Retained interests | Commodity contracts | |||||||||||||||||
Three Months Ended July 31 | |||||||||||||||||||||||
Balance at May 1 | $ | 7 | $ | — | $ | — | $ | — | $ | — | $ | 6 | |||||||||||
Total losses (realized/unrealized) included in earnings (A) | — | — | — | — | — | (1 | ) | ||||||||||||||||
Settlements | — | — | — | — | — | (3 | ) | ||||||||||||||||
Balance at July 31 | $ | 7 | $ | — | $ | — | $ | — | $ | — | $ | 2 | |||||||||||
Change in unrealized gains on assets and liabilities still held | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 2 |
Nine Months Ended July 31 | |||||||||||||||||||||||
Balance at November 1 | $ | 6 | $ | — | $ | (2 | ) | $ | — | $ | 53 | $ | 2 | ||||||||||
Total gains (losses) (realized/unrealized) included in earnings (A) | — | — | (1 | ) | — | 1 | 5 | ||||||||||||||||
Transfers into Level 3 | — | — | — | — | — | — | |||||||||||||||||
Transfers out of Level 3 | — | — | 2 | — | — | — | |||||||||||||||||
Issuances | 1 | — | — | — | — | — | |||||||||||||||||
Settlements | — | — | 1 | — | (54 | ) | (5 | ) | |||||||||||||||
Balance at July 31 | $ | 7 | $ | — | $ | — | $ | — | $ | — | $ | 2 | |||||||||||
Change in unrealized gains on assets and liabilities still held | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 2 |
(A) | For commodity contracts, gains (losses) are included in Costs of products sold. For retained interests, gains recognized are included in Finance revenues. |
Level 2 | |||||||
(in millions) | July 31, 2012 | October 31, 2011 | |||||
Finance receivables (A) | $ | 4 | $ | 5 |
(A) | Certain impaired finance receivables are measured at fair value on a nonrecurring basis. An impairment charge is recorded for the amount by which the carrying value of the receivables exceeds the fair value of the underlying collateral, net of remarketing costs. As of July 31, 2012, impaired receivables with a carrying amount of $15 million had specific loss reserves of $11 million and a fair value of $4 million. As of October 31, 2011, impaired receivables with a carrying amount of $15 million had specific loss reserves of $10 million and a fair value of $5 million. Fair values of the underlying collateral are determined by reference to dealer vehicle value publications adjusted for certain market factors. |
As of July 31, 2012 | |||||||||||||||||||
Estimated Fair Value | Carrying Value | ||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Assets | |||||||||||||||||||
Retail notes | $ | — | $ | — | $ | 689 | $ | 689 | $ | 687 | |||||||||
Notes receivable | — | — | 59 | 59 | 61 | ||||||||||||||
Liabilities | |||||||||||||||||||
Debt: | |||||||||||||||||||
Manufacturing operations | |||||||||||||||||||
8.25% Senior Notes, due 2021 | 865 | — | — | 865 | 872 | ||||||||||||||
3.0% Senior Subordinated Convertible Notes, due 2014(A) | 517 | — | — | 517 | 514 | ||||||||||||||
Debt of majority-owned dealerships | — | — | 74 | 74 | 75 | ||||||||||||||
Financing arrangements | — | — | 115 | 115 | 122 | ||||||||||||||
Loan Agreement related to 6.5% Tax Exempt Bonds, due 2040 | — | 236 | — | 236 | 225 | ||||||||||||||
Promissory Note | — | — | 33 | 33 | 33 | ||||||||||||||
Asset-Based Credit Facility | — | — | 238 | 238 | 238 | ||||||||||||||
Other | — | — | 42 | 42 | 43 | ||||||||||||||
Financial Services operations | |||||||||||||||||||
Asset-backed debt issued by consolidated SPEs, at various rates, due serially through 2019 | — | — | 1,301 | 1,301 | 1,299 | ||||||||||||||
Bank revolvers, at fixed and variable rates, due dates from 2013 through 2017 | — | — | 818 | 818 | 857 | ||||||||||||||
Commercial paper, at variable rates, due serially through 2012 | 53 | — | — | 53 | 53 | ||||||||||||||
Borrowings secured by operating and finance leases, at various rates, due serially through 2017 | — | — | 56 | 56 | 57 |
As of October 31, 2011 | |||||||||||||||||||
Estimated Fair Value | Carrying Value | ||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Assets | |||||||||||||||||||
Retail notes | $ | — | $ | — | $ | 954 | $ | 954 | $ | 958 | |||||||||
Notes receivable | — | — | 47 | 47 | 47 | ||||||||||||||
Liabilities | |||||||||||||||||||
Debt: | |||||||||||||||||||
Manufacturing operations | |||||||||||||||||||
8.25% Senior Notes, due 2021 | 1,131 | — | — | 1,131 | 967 | ||||||||||||||
3.0% Senior Subordinated Convertible Notes, due 2014(A) | 633 | — | — | 633 | 497 | ||||||||||||||
Debt of majority-owned dealerships | — | — | 88 | 88 | 94 | ||||||||||||||
Financing arrangements | — | — | 112 | 112 | 114 | ||||||||||||||
Loan Agreement related to 6.5% Tax Exempt Bonds, due 2040 | — | 234 | — | 234 | 225 | ||||||||||||||
Promissory Note | — | — | 39 | 39 | 40 | ||||||||||||||
Asset-Based Credit Facility | — | — | — | — | — | ||||||||||||||
Other | — | — | 26 | 26 | 39 | ||||||||||||||
Financial Services operations | |||||||||||||||||||
Asset-backed debt issued by consolidated SPEs, at various rates, due serially through 2018 | — | — | 1,695 | 1,695 | 1,664 | ||||||||||||||
Bank revolvers, at fixed and variable rates, due dates from 2013 through 2017 | — | — | 1,091 | 1,091 | 1,072 | ||||||||||||||
Commercial paper, at variable rates, due serially through 2012 | 70 | — | — | 70 | 70 | ||||||||||||||
Borrowings secured by operating and finance leases, at various rates, due serially through 2017 | — | — | 70 | 70 | 70 |
(A) | The carrying value represents the financial statement amount of the debt after allocation of the conversion feature to equity, while the fair value is based on quoted market prices for the convertible note which includes the equity feature. |
As of July 31, 2012 | |||||||||||
Asset Derivatives | Liability Derivatives | ||||||||||
(in millions) | Location in Consolidated Balance Sheets | Fair Value | Location in Consolidated Balance Sheets | Fair Value | |||||||
Foreign currency contracts | Other current assets | $ | 1 | Other current liabilities | $ | 2 | |||||
Cross currency swaps | Other current assets | — | Other current liabilities | — | |||||||
Commodity contracts | Other current assets | — | Other current liabilities | 3 | |||||||
Commodity contracts | Other noncurrent assets | — | Other noncurrent liabilities | 3 | |||||||
Total fair value | $ | 1 | $ | 8 | |||||||
As of October 31, 2011 | |||||||||||
Asset Derivatives | Liability Derivatives | ||||||||||
(in millions) | Location in Consolidated Balance Sheets | Fair Value | Location in Consolidated Balance Sheets | Fair Value | |||||||
Foreign currency contracts | Other current assets | $ | 3 | Other current liabilities | $ | — | |||||
Cross currency swaps | Other current assets | — | Other current liabilities | 4 | |||||||
Commodity contracts | Other current assets | 1 | Other current liabilities | 6 | |||||||
Total fair value | $ | 4 | $ | 10 |
Location in Consolidated Statements of Operations | Amount of Gain (Loss) Recognized | ||||||||
(in millions) | Three Months Ended July 31, 2012 | Three Months Ended July 31, 2011 | |||||||
Cross currency swaps | Other expense (income), net | $ | — | $ | — | ||||
Foreign currency contracts | Other expense (income), net | (2 | ) | (1 | ) | ||||
Commodity forward contracts | Costs of products sold | (5 | ) | (1 | ) | ||||
Total loss | $ | (7 | ) | $ | (2 | ) |
Location in Consolidated Statements of Operations | Amount of Gain (Loss) Recognized | ||||||||
(in millions) | Nine Months Ended July 31, 2012 | Nine Months Ended July 31, 2011 | |||||||
Cross currency swaps | Other expense (income), net | $ | 1 | $ | — | ||||
Foreign currency contracts | Other expense (income), net | (5 | ) | — | |||||
Commodity forward contracts | Costs of products sold | (7 | ) | 21 | |||||
Total gain (loss) | $ | (11 | ) | $ | 21 |
• | The Company will incur additional costs associated with this change and there is no assurance that we will implement this strategy within the anticipated timelines. |
• | Our non-binding MOU with Cummins for the Cummins 15L as well as for the SCR after treatment system is subject to the execution of definitive agreements. |
• | Our Truck segment manufactures and distributes a full line of Class 4 through 8 trucks, buses, and military vehicles under the International and IC Bus ("IC") brands. Our Truck segment also produces chassis for motor homes and commercial step-van vehicles under the WCC brand and recreational vehicles. In an effort to strengthen and maintain our dealer network, this segment occasionally acquires and operates dealer locations for the purpose of transitioning ownership. |
• | Our Engine segment designs and manufactures diesel engines for use globally, in Class 3 through 8 vehicles, as well as off-road applications. In North America, these engines primarily go into our Class 6 and 7 medium trucks and buses and Class 8 heavy trucks, and are sold to original equipment manufacturers ("OEMs"). In addition, our Engine segment produces diesel engines in Brazil primarily under the MWM brand for sale to OEMs in South America, as well as contract manufacturing. In all other areas of the world, including North America, engines are sold under the MaxxForce brand name. To control cost and technology, our Engine segment has expanded its operations to include Pure Power Technologies ("PPT"), a components company focused on air, fuel, and aftertreatment systems to meet more stringent Euro and EPA emission standards. Also included in the Engine segment are the operating results of BDP, which manages the sourcing, merchandising, and distribution of certain service parts we sell to Ford in North America. |
• | Our Parts segment provides customers with proprietary products needed to support the International commercial and military truck, IC Bus, WCC chassis, and MaxxForce engine lines. Our Parts segment also provides a wide selection of other standard truck, trailer, and engine aftermarket parts. At July 31, 2012, this segment operated eleven regional parts distribution centers that provide 24-hour availability and shipment. |
• | Our Financial Services segment provides retail, wholesale, and lease financing of products sold by the Truck and Parts segments and their dealers within the U.S. and Mexico, as well as financing for wholesale accounts and selected retail accounts receivable. |
(in millions) | Truck(A) | Engine | Parts(A) | Financial Services(B) | Corporate and Eliminations | Total | |||||||||||||||||
Three Months Ended July 31, 2012 | |||||||||||||||||||||||
External sales and revenues, net | $ | 2,323 | $ | 441 | $ | 513 | $ | 42 | $ | — | $ | 3,319 | |||||||||||
Intersegment sales and revenues | 13 | 399 | 29 | 22 | (463 | ) | — | ||||||||||||||||
Total sales and revenues, net | $ | 2,336 | $ | 840 | $ | 542 | $ | 64 | $ | (463 | ) | $ | 3,319 | ||||||||||
Net income (loss) attributable to NIC | $ | (30 | ) | $ | (47 | ) | $ | 73 | $ | 22 | $ | 66 | $ | 84 | |||||||||
Income tax benefit | — | — | — | — | 196 | 196 | |||||||||||||||||
Segment profit (loss) | $ | (30 | ) | $ | (47 | ) | $ | 73 | $ | 22 | $ | (130 | ) | $ | (112 | ) | |||||||
Depreciation and amortization | $ | 41 | $ | 28 | $ | 2 | $ | 9 | $ | 6 | $ | 86 | |||||||||||
Interest expense | — | — | — | 20 | 39 | 59 | |||||||||||||||||
Equity in income (loss) of non-consolidated affiliates | (12 | ) | 1 | 1 | — | — | (10 | ) | |||||||||||||||
Capital expenditures(C) | 21 | 39 | 6 | 1 | 7 | 74 |
Three Months Ended July 31, 2011 | |||||||||||||||||||||||
External sales and revenues, net | $ | 2,457 | $ | 546 | $ | 487 | $ | 47 | $ | — | $ | 3,537 | |||||||||||
Intersegment sales and revenues | — | 422 | 29 | 26 | (477 | ) | — | ||||||||||||||||
Total sales and revenues, net | $ | 2,457 | $ | 968 | $ | 516 | $ | 73 | $ | (477 | ) | $ | 3,537 | ||||||||||
Net income (loss) attributable to NIC | $ | (75 | ) | $ | 32 | $ | 70 | $ | 30 | $ | 1,343 | $ | 1,400 | ||||||||||
Income tax benefit | — | — | — | — | 1,463 | 1,463 | |||||||||||||||||
Segment profit (loss) | $ | (75 | ) | $ | 32 | $ | 70 | $ | 30 | $ | (120 | ) | $ | (63 | ) | ||||||||
Depreciation and amortization | $ | 37 | $ | 32 | $ | 2 | $ | 8 | $ | 5 | $ | 84 | |||||||||||
Interest expense | — | — | — | 28 | 34 | 62 | |||||||||||||||||
Equity in income (loss) of non-consolidated affiliates | (22 | ) | (1 | ) | 1 | — | — | (22 | ) | ||||||||||||||
Capital expenditures(C) | 15 | 47 | 7 | 1 | 36 | 106 |
Nine Months Ended July 31, 2012 | Truck(A) | Engine | Parts(A) | Financial Services(B) | Corporate and Eliminations | Total | |||||||||||||||||
External sales and revenues, net | $ | 6,830 | $ | 1,301 | $ | 1,409 | $ | 129 | $ | — | $ | 9,669 | |||||||||||
Intersegment sales and revenues | 26 | 1,292 | 98 | 70 | (1,486 | ) | — | ||||||||||||||||
Total sales and revenues, net | $ | 6,856 | $ | 2,593 | $ | 1,507 | $ | 199 | $ | (1,486 | ) | $ | 9,669 | ||||||||||
Net income (loss) attributable to NIC | $ | (160 | ) | $ | (275 | ) | $ | 164 | $ | 75 | $ | (45 | ) | $ | (241 | ) | |||||||
Income tax benefit | — | — | — | — | 410 | 410 | |||||||||||||||||
Segment profit (loss) | $ | (160 | ) | $ | (275 | ) | $ | 164 | $ | 75 | $ | (455 | ) | $ | (651 | ) | |||||||
Depreciation and amortization | $ | 111 | $ | 87 | $ | 8 | $ | 25 | $ | 15 | $ | 246 | |||||||||||
Interest expense | — | — | — | 67 | 115 | 182 | |||||||||||||||||
Equity in income (loss) of non-consolidated affiliates | (27 | ) | 2 | 4 | — | — | (21 | ) | |||||||||||||||
Capital expenditures(C) | 53 | 116 | 18 | 2 | 61 | 250 |
Nine Months Ended July 31, 2011 | |||||||||||||||||||||||
External sales and revenues, net | $ | 6,510 | $ | 1,526 | $ | 1,445 | $ | 154 | $ | — | $ | 9,635 | |||||||||||
Intersegment sales and revenues | 18 | 1,180 | 128 | 75 | (1,401 | ) | — | ||||||||||||||||
Total sales and revenues, net | $ | 6,528 | $ | 2,706 | $ | 1,573 | $ | 229 | $ | (1,401 | ) | $ | 9,635 | ||||||||||
Net income attributable to NIC | $ | 49 | $ | 26 | $ | 200 | $ | 102 | $ | 1,091 | $ | 1,468 | |||||||||||
Income tax benefit | — | — | — | — | 1,458 | 1,458 | |||||||||||||||||
Segment profit (loss) | $ | 49 | $ | 26 | $ | 200 | $ | 102 | $ | (367 | ) | $ | 10 | ||||||||||
Depreciation and amortization | $ | 112 | $ | 91 | $ | 7 | $ | 21 | $ | 14 | $ | 245 | |||||||||||
Interest expense | — | — | — | 84 | 103 | 187 | |||||||||||||||||
Equity in income (loss) of non-consolidated affiliates | (57 | ) | (3 | ) | 5 | — | — | (55 | ) | ||||||||||||||
Capital expenditures(C) | 53 | 131 | 11 | 1 | 95 | 291 |
As of July 31, 2012 | |||||||||||||||||||||||
Segment assets | $ | 2,509 | $ | 1,715 | $ | 708 | $ | 2,898 | $ | 3,313 | $ | 11,143 | |||||||||||
As of October 31, 2011 | |||||||||||||||||||||||
Segment assets | $ | 2,771 | $ | 1,849 | $ | 700 | $ | 3,580 | $ | 3,391 | $ | 12,291 |
(A) | See Note 2, Restructurings and Impairments, for further discussion. |
(B) | Total sales and revenues in the Financial Services segment include interest revenues of $63 million and $195 million for the three and nine months ended July 31, 2012, respectively, and $72 million and $225 million for the three and nine months ended July 31, 2011, respectively. |
(C) | Exclusive of purchases of equipment leased to others. |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||
(in millions, except per share data) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Numerator: | |||||||||||||||
Earnings (loss) attributable to Navistar International Corporation available to common stockholders | $ | 84 | $ | 1,400 | $ | (241 | ) | $ | 1,468 | ||||||
Denominator: | |||||||||||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 68.7 | 73.3 | 69.1 | 73.0 | |||||||||||
Effect of dilutive securities | 0.2 | 3.5 | — | 4.1 | |||||||||||
Diluted | 68.9 | 76.8 | 69.1 | 77.1 | |||||||||||
Earnings (loss) per share attributable to Navistar International Corporation: | |||||||||||||||
Basic | $ | 1.22 | $ | 19.10 | $ | (3.49 | ) | $ | 20.13 | ||||||
Diluted | 1.22 | 18.24 | (3.49 | ) | 19.04 |
(in millions) | NIC | Navistar, Inc. | Non-Guarantor Subsidiaries | Eliminations and Other | Consolidated | ||||||||||||||
Condensed Consolidating Statement of Operations for the Three Months Ended July 31, 2012 | |||||||||||||||||||
Sales and revenues, net | $ | — | $ | 2,007 | $ | 2,941 | $ | (1,629 | ) | $ | 3,319 | ||||||||
Costs of products sold | — | 1,951 | 2,554 | (1,629 | ) | 2,876 | |||||||||||||
Restructuring charges | — | 3 | 1 | — | 4 | ||||||||||||||
Impairment of property and equipment and intangible assets | — | — | — | — | — | ||||||||||||||
All other operating expenses | 18 | 329 | 206 | (24 | ) | 529 | |||||||||||||
Total costs and expenses | 18 | 2,283 | 2,761 | (1,653 | ) | 3,409 | |||||||||||||
Equity in income (loss) of affiliates | (30 | ) | 16 | (11 | ) | 15 | (10 | ) | |||||||||||
Income (loss) before income taxes | (48 | ) | (260 | ) | 169 | 39 | (100 | ) | |||||||||||
Income tax benefit (expense) | 132 | 229 | (187 | ) | 22 | 196 | |||||||||||||
Net income (loss) | 84 | (31 | ) | (18 | ) | 61 | 96 | ||||||||||||
Less: Net income attributable to non-controlling interests | — | — | 12 | — | 12 | ||||||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | 84 | $ | (31 | ) | $ | (30 | ) | $ | 61 | $ | 84 |
(in millions) | NIC | Navistar, Inc. | Non-Guarantor Subsidiaries | Eliminations and Other | Consolidated | ||||||||||||||
Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended July 31, 2012 | |||||||||||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | 84 | $ | (31 | ) | $ | (30 | ) | $ | 61 | $ | 84 | |||||||
Other comprehensive income (loss): | |||||||||||||||||||
Foreign currency translation adjustment | (61 | ) | — | (60 | ) | 60 | (61 | ) | |||||||||||
Defined benefit plans (net of tax of $13, $10, $3, $(13), and $13 respectively) | 23 | 21 | 1 | (22 | ) | 23 | |||||||||||||
Total other comprehensive income (loss) | (38 | ) | 21 | (59 | ) | 38 | (38 | ) | |||||||||||
Total comprehensive income (loss) attributable to Navistar International Corporation | $ | 46 | $ | (10 | ) | $ | (89 | ) | $ | 99 | $ | 46 |
(in millions) | NIC | Navistar, Inc. | Non-Guarantor Subsidiaries | Eliminations and Other | Consolidated | ||||||||||||||
Condensed Consolidating Statement of Operations for the Nine Months Ended July 31, 2012 | |||||||||||||||||||
Sales and revenues, net | $ | — | $ | 6,141 | $ | 8,776 | $ | (5,248 | ) | $ | 9,669 | ||||||||
Costs of products sold | — | 6,151 | 7,577 | (5,210 | ) | 8,518 | |||||||||||||
Restructuring charges | — | 23 | 1 | — | 24 | ||||||||||||||
Impairment of intangible assets | — | — | 38 | — | 38 | ||||||||||||||
All other operating expenses | 57 | 1,020 | 682 | (75 | ) | 1,684 | |||||||||||||
Total costs and expenses | 57 | 7,194 | 8,298 | (5,285 | ) | 10,264 | |||||||||||||
Equity in income (loss) of affiliates | (326 | ) | 384 | (25 | ) | (54 | ) | (21 | ) | ||||||||||
Income (loss) before income taxes | (383 | ) | (669 | ) | 453 | (17 | ) | (616 | ) | ||||||||||
Income tax benefit (expense) | 142 | 243 | — | 25 | 410 | ||||||||||||||
Net income (loss) | (241 | ) | (426 | ) | 453 | 8 | (206 | ) | |||||||||||
Less: Net income attributable to non-controlling interests | — | — | 35 | — | 35 | ||||||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | (241 | ) | $ | (426 | ) | $ | 418 | $ | 8 | $ | (241 | ) |
(in millions) | NIC | Navistar, Inc. | Non-Guarantor Subsidiaries | Eliminations and Other | Consolidated | ||||||||||||||
Condensed Consolidating Statement of Comprehensive Income for the Nine Months Ended July 31, 2012 | |||||||||||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | (241 | ) | $ | (426 | ) | $ | 418 | $ | 8 | $ | (241 | ) | ||||||
Other comprehensive income (loss): | |||||||||||||||||||
Foreign currency translation adjustment | (139 | ) | — | (138 | ) | 138 | (139 | ) | |||||||||||
Defined benefit plans (net of tax of $36, $33, $4, $(37), and $36 respectively) | 63 | 57 | 6 | (63 | ) | 63 | |||||||||||||
Total other comprehensive income (loss) | (76 | ) | 57 | (132 | ) | 75 | (76 | ) | |||||||||||
Total comprehensive income (loss) attributable to Navistar International Corporation | $ | (317 | ) | $ | (369 | ) | $ | 286 | $ | 83 | $ | (317 | ) |
(in millions) | NIC | Navistar, Inc. | Non-Guarantor Subsidiaries | Eliminations and Other | Consolidated | ||||||||||||||
Condensed Consolidating Balance Sheet as of July 31, 2012 | |||||||||||||||||||
Assets | |||||||||||||||||||
Cash and cash equivalents | $ | 252 | $ | 55 | $ | 240 | $ | — | $ | 547 | |||||||||
Marketable securities | 46 | — | 113 | — | 159 | ||||||||||||||
Restricted cash and cash equivalents | 20 | 6 | 253 | — | 279 | ||||||||||||||
Finance and other receivables, net | 4 | 156 | 3,109 | (2 | ) | 3,267 | |||||||||||||
Inventories | — | 737 | 1,172 | (32 | ) | 1,877 | |||||||||||||
Investments in non-consolidated affiliates | (2,527 | ) | 6,303 | 38 | (3,768 | ) | 46 | ||||||||||||
Property and equipment, net | — | 756 | 892 | (2 | ) | 1,646 | |||||||||||||
Goodwill | — | — | 280 | — | 280 | ||||||||||||||
Deferred taxes, net | 230 | 1,878 | 301 | (3 | ) | 2,406 | |||||||||||||
Other | 108 | 160 | 370 | (2 | ) | 636 | |||||||||||||
Total assets | $ | (1,867 | ) | $ | 10,051 | $ | 6,768 | $ | (3,809 | ) | $ | 11,143 | |||||||
Liabilities and stockholders’ equity (deficit) | |||||||||||||||||||
Debt | $ | 1,611 | $ | 418 | $ | 2,617 | $ | (234 | ) | $ | 4,412 | ||||||||
Postretirement benefits liabilities | — | 2,855 | 315 | — | 3,170 | ||||||||||||||
Amounts due to (from) affiliates | (5,851 | ) | 9,940 | (4,165 | ) | 76 | — | ||||||||||||
Other liabilities | 2,775 | (296 | ) | 1,604 | (164 | ) | 3,919 | ||||||||||||
Total liabilities | (1,465 | ) | 12,917 | 371 | (322 | ) | 11,501 | ||||||||||||
Redeemable equity securities | 5 | — | — | — | 5 | ||||||||||||||
Stockholders’ equity attributable to non-controlling interests | — | — | 44 | — | 44 | ||||||||||||||
Stockholders’ equity (deficit) attributable to Navistar International Corporation | (407 | ) | (2,866 | ) | 6,353 | (3,487 | ) | (407 | ) | ||||||||||
Total liabilities and stockholders’ equity (deficit) | $ | (1,867 | ) | $ | 10,051 | $ | 6,768 | $ | (3,809 | ) | $ | 11,143 |
(in millions) | NIC | Navistar, Inc. | Non-Guarantor Subsidiaries | Eliminations and Other | Consolidated | ||||||||||||||
Condensed Consolidating Statement of Cash Flows for the Nine Months Ended July 31, 2012 | |||||||||||||||||||
Net cash provided by (used in) operations | $ | (330 | ) | $ | (362 | ) | $ | 458 | $ | 580 | $ | 346 | |||||||
Cash flows from investment activities | |||||||||||||||||||
Net change in restricted cash and cash equivalents | — | 3 | 45 | — | 48 | ||||||||||||||
Net sales of marketable securities | 383 | — | 175 | — | 558 | ||||||||||||||
Capital expenditures and purchase of equipment leased to others | — | (173 | ) | (126 | ) | — | (299 | ) | |||||||||||
Other investing activities | — | (117 | ) | 86 | — | (31 | ) | ||||||||||||
Net cash provided by (used in) investment activities | 383 | (287 | ) | 180 | — | 276 | |||||||||||||
Cash flows from financing activities | |||||||||||||||||||
Net borrowings (repayments) of debt | (47 | ) | 691 | (643 | ) | (488 | ) | (487 | ) | ||||||||||
Other financing activities | 20 | — | (48 | ) | (92 | ) | (120 | ) | |||||||||||
Net cash provided by (used in) financing activities | (27 | ) | 691 | (691 | ) | (580 | ) | (607 | ) | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | (7 | ) | — | (7 | ) | ||||||||||||
Increase (decrease) in cash and cash equivalents | 26 | 42 | (60 | ) | — | 8 | |||||||||||||
Cash and cash equivalents at beginning of the period | 226 | 13 | 300 | — | 539 | ||||||||||||||
Cash and cash equivalents at end of the period | $ | 252 | $ | 55 | $ | 240 | $ | — | $ | 547 |
(in millions) | NIC | Navistar, Inc. | Non-Guarantor Subsidiaries | Eliminations and Other | Consolidated | ||||||||||||||
Condensed Consolidating Statement of Operations for the Three Months Ended July 31, 2011 | |||||||||||||||||||
Sales and revenues, net | $ | — | $ | 2,072 | $ | 3,260 | $ | (1,795 | ) | $ | 3,537 | ||||||||
Costs of products sold | — | 1,940 | 2,774 | (1,784 | ) | 2,930 | |||||||||||||
Restructuring charges | — | 4 | 52 | — | 56 | ||||||||||||||
Impairment of property and equipment and intangible assets | — | — | 64 | — | 64 | ||||||||||||||
All other operating expenses (income) | 15 | 302 | 230 | (28 | ) | 519 | |||||||||||||
Total costs and expenses | 15 | 2,246 | 3,120 | (1,812 | ) | 3,569 | |||||||||||||
Equity in income (loss) of affiliates | 1,863 | (52 | ) | (9 | ) | (1,824 | ) | (22 | ) | ||||||||||
Income (loss) before income taxes | 1,848 | (226 | ) | 131 | (1,807 | ) | (54 | ) | |||||||||||
Income tax benefit (expense) | (448 | ) | 1,514 | (162 | ) | 559 | 1,463 | ||||||||||||
Net income (loss) | 1,400 | 1,288 | (31 | ) | (1,248 | ) | 1,409 | ||||||||||||
Less: Net income attributable to non-controlling interest | — | — | 9 | — | 9 | ||||||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | 1,400 | $ | 1,288 | $ | (40 | ) | $ | (1,248 | ) | $ | 1,400 |
(in millions) | NIC | Navistar, Inc. | Non-Guarantor Subsidiaries | Eliminations and Other | Consolidated | ||||||||||||||
Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended July 31, 2011 | |||||||||||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | 1,400 | $ | 1,288 | $ | (40 | ) | $ | (1,248 | ) | $ | 1,400 | |||||||
Other comprehensive income (loss): | |||||||||||||||||||
Foreign currency translation adjustment | 4 | — | 4 | (4 | ) | 4 | |||||||||||||
Defined benefit plans (net of tax of $31, $31, $0 $(31), and $31 respectively) | (14 | ) | (19 | ) | 29 | (10 | ) | (14 | ) | ||||||||||
Total other comprehensive income (loss) | (10 | ) | (19 | ) | 33 | (14 | ) | (10 | ) | ||||||||||
Total comprehensive income (loss) attributable to Navistar International Corporation | $ | 1,390 | $ | 1,269 | $ | (7 | ) | $ | (1,262 | ) | $ | 1,390 |
(in millions) | NIC | Navistar, Inc. | Non-Guarantor Subsidiaries | Eliminations and Other | Consolidated | ||||||||||||||
Condensed Consolidating Statement of Operations for the Nine Months Ended July 31, 2011 | |||||||||||||||||||
Sales and revenues, net | $ | — | $ | 5,903 | $ | 9,079 | $ | (5,347 | ) | $ | 9,635 | ||||||||
Costs of products sold | — | 5,493 | 7,620 | (5,283 | ) | 7,830 | |||||||||||||
Restructuring charges | — | 27 | 53 | — | 80 | ||||||||||||||
Impairment of property and equipment and intangible assets | — | — | 64 | — | 64 | ||||||||||||||
All other operating expenses (income) | 56 | 915 | 671 | (81 | ) | 1,561 | |||||||||||||
Total costs and expenses | 56 | 6,435 | 8,408 | (5,364 | ) | 9,535 | |||||||||||||
Equity in income (loss) of affiliates | 1,983 | 292 | (29 | ) | (2,301 | ) | (55 | ) | |||||||||||
Income (loss) before income taxes | 1,927 | (240 | ) | 642 | (2,284 | ) | 45 | ||||||||||||
Income tax benefit (expense) | (459 | ) | 1,515 | (214 | ) | 616 | 1,458 | ||||||||||||
Net income (loss) | 1,468 | 1,275 | 428 | (1,668 | ) | 1,503 | |||||||||||||
Less: Net income attributable to non-controlling interest | — | — | 35 | — | 35 | ||||||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | 1,468 | $ | 1,275 | $ | 393 | $ | (1,668 | ) | $ | 1,468 |
(in millions) | NIC | Navistar, Inc. | Non-Guarantor Subsidiaries | Eliminations and Other | Consolidated | ||||||||||||||
Condensed Consolidating Statement of Comprehensive Income for the Nine Months Ended July 31, 2011 | |||||||||||||||||||
Net income attributable to Navistar International Corporation | $ | 1,468 | $ | 1,275 | $ | 393 | $ | (1,668 | ) | $ | 1,468 | ||||||||
Other comprehensive income: | |||||||||||||||||||
Foreign currency translation adjustment | 65 | — | 65 | (65 | ) | 65 | |||||||||||||
Defined benefit plans (net of tax of $31, $31, $0, $(31), and $31 respectively) | 65 | 51 | 14 | (65 | ) | 65 | |||||||||||||
Total other comprehensive income | 130 | 51 | 79 | (130 | ) | 130 | |||||||||||||
Total comprehensive income attributable to Navistar International Corporation | $ | 1,598 | $ | 1,326 | $ | 472 | $ | (1,798 | ) | $ | 1,598 |
(in millions) | NIC | Navistar, Inc. | Non-Guarantor Subsidiaries | Eliminations and Other | Consolidated | ||||||||||||||
Condensed Consolidating Balance Sheet as of October 31, 2011 | |||||||||||||||||||
Assets | |||||||||||||||||||
Cash and cash equivalents | $ | 226 | $ | 13 | $ | 300 | $ | — | $ | 539 | |||||||||
Marketable securities | 429 | 1 | 288 | — | 718 | ||||||||||||||
Restricted cash and cash equivalents | 20 | 9 | 298 | — | 327 | ||||||||||||||
Finance and other receivables, net | 3 | 154 | 4,070 | 27 | 4,254 | ||||||||||||||
Inventories | — | 650 | 1,113 | (49 | ) | 1,714 | |||||||||||||
Investments in non-consolidated affiliates | (2,094 | ) | 5,818 | 54 | (3,718 | ) | 60 | ||||||||||||
Property and equipment, net | — | 600 | 972 | (2 | ) | 1,570 | |||||||||||||
Goodwill | — | — | 319 | — | 319 | ||||||||||||||
Deferred taxes, net | 31 | 1,912 | 114 | — | 2,057 | ||||||||||||||
Other | 168 | 152 | 416 | (3 | ) | 733 | |||||||||||||
Total assets | $ | (1,217 | ) | $ | 9,309 | $ | 7,944 | $ | (3,745 | ) | $ | 12,291 | |||||||
Liabilities and stockholders’ equity (deficit) | |||||||||||||||||||
Debt | $ | 1,689 | $ | 156 | $ | 3,242 | $ | (231 | ) | $ | 4,856 | ||||||||
Postretirement benefits liabilities | — | 2,981 | 335 | — | 3,316 | ||||||||||||||
Amounts due to (from) affiliates | (5,574 | ) | 9,055 | (3,595 | ) | 114 | — | ||||||||||||
Other liabilities | 2,690 | (194 | ) | 1,717 | (122 | ) | 4,091 | ||||||||||||
Total liabilities | (1,195 | ) | 11,998 | 1,699 | (239 | ) | 12,263 | ||||||||||||
Redeemable equity securities | 5 | — | — | — | 5 | ||||||||||||||
Stockholders’ equity (deficit) attributable to non-controlling interest | — | — | 52 | (2 | ) | 50 | |||||||||||||
Stockholders’ equity (deficit) attributable to Navistar International Corporation | (27 | ) | (2,689 | ) | 6,193 | (3,504 | ) | (27 | ) | ||||||||||
Total liabilities and stockholders’ equity (deficit) | $ | (1,217 | ) | $ | 9,309 | $ | 7,944 | $ | (3,745 | ) | $ | 12,291 |
(in millions) | NIC | Navistar, Inc. | Non-Guarantor Subsidiaries | Eliminations and Other | Consolidated | ||||||||||||||
Condensed Consolidating Statement of Cash Flows for the Nine Months Ended July 31, 2011 | |||||||||||||||||||
Net cash provided by (used in) operations | $ | (254 | ) | $ | 95 | $ | 448 | $ | 250 | $ | 539 | ||||||||
Cash flows from investment activities | |||||||||||||||||||
Net change in restricted cash and cash equivalents | — | 2 | 19 | — | 21 | ||||||||||||||
Net sales (purchases) in marketable securities | 81 | — | (115 | ) | — | (34 | ) | ||||||||||||
Capital expenditures and purchase of equipment leased to others | — | (168 | ) | (158 | ) | — | (326 | ) | |||||||||||
Other investing activities | — | (27 | ) | (4 | ) | — | (31 | ) | |||||||||||
Net cash provided by (used in) investment activities | 81 | (193 | ) | (258 | ) | — | (370 | ) | |||||||||||
Cash flows from financing activities | |||||||||||||||||||
Net borrowings (repayments) of debt | 48 | 161 | (258 | ) | (250 | ) | (299 | ) | |||||||||||
Other financing activities | 25 | — | (43 | ) | — | (18 | ) | ||||||||||||
Net cash provided by (used in) financing activities | 73 | 161 | (301 | ) | (250 | ) | (317 | ) | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | 7 | — | 7 | ||||||||||||||
Increase (decrease) in cash and cash equivalents | (100 | ) | 63 | (104 | ) | — | (141 | ) | |||||||||||
Cash and cash equivalents at beginning of the period | 239 | 22 | 324 | — | 585 | ||||||||||||||
Cash and cash equivalents at end of the period | $ | 139 | $ | 85 | $ | 220 | $ | — | $ | 444 |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
• | In June, we announced our next generation clean engine solution, In-Cylinder Technology Plus ("ICT+") to meet 2010 EPA emissions standards. The ICT+ technology combines Advanced Exhaust Gas Recirculation ("EGR") and urea-based Selective Catalytic Reduction ("SCR"). |
• | In August, we announced that we had agreed to a non-binding memorandum of understanding with Cummins Inc. ("Cummins") for Cummins Emission Solutions to supply its urea-based after-treatment system. The after-treatment system will be combined with our EGR engines to create ICT+ to meet 2010 EPA emissions standards and is expected to help facilitate meeting future green house gas ("GHG") standards. We are expeditiously developing plans and timelines to begin introducing the ICT+ product offering taking into consideration a number of factors including current and projected emission credit balances, ability to utilize non-conformance penalties ("NCPs"), projected volumes, and customer needs. We are targeting a phased-in product introduction plan commencing with the MaxxForce 13-liter in early 2013 followed by the MaxxForce 11-liter engines and then medium engine offerings. |
• | As part of our expanded relationship with Cummins, the Company expects to offer the Cummins ISX15 engine in certain models. The Cummins ISX15 engine will be offered as a part of our North American on-highway truck line-up beginning in December 2012. |
• | In August, to help facilitate the Company's adoption of the ICT+ strategy, support the market transition plan for Class 8 engine sales, and improve financial flexibility, the Company signed a definitive credit agreement relating to a senior secured, term loan credit facility in an aggregate principal amount of $1 billion (the "Term Loan Credit Facility") and borrowed an aggregate principal amount of $1 billion under the Term Loan Credit Facility. In conjunction with the Term Loan Credit Facility transaction, all of the borrowings under the Company's Asset-Based Credit Facility were repaid and Navistar, Inc. entered into an amended and restated asset-based credit agreement in an aggregate principal amount of $175 million. |
• | $123 million and $104 million of charges for adjustments to pre-existing warranties in the first and second quarters of 2012, respectively, |
• | $16 million and $57 million for costs relating to the Company's engineering integration actions in the third quarter and first nine months of 2012, respectively, |
• | $38 million of charges related to the restructuring of North American manufacturing operations in the second quarter of 2012, and |
• | $10 million and $20 million for non-conformance penalties for certain 13L engine sales that did not comply with emission standards in the third quarter and first nine months of 2012, respectively. |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||
(in millions, except per share data) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Income (loss) attributable to Navistar International Corporation | $ | 84 | $ | 1,400 | $ | (241 | ) | $ | 1,468 | ||||||
Plus: | |||||||||||||||
Engineering integration costs, net of tax(A) | (5 | ) | 5 | 34 | 28 | ||||||||||
Restructuring of North American manufacturing operations, net of tax(B) | (14 | ) | 102 | 23 | 102 | ||||||||||
Adjustments to pre-existing warranties, net of tax(C) | (81 | ) | — | 138 | — | ||||||||||
Charges for non-conformance penalties, net of tax(D) | 2 | — | 12 | — | |||||||||||
Less: | |||||||||||||||
Net impact of income tax valuation allowance release(E) | — | 1,476 | 181 | 1,476 | |||||||||||
Adjusted net income (loss) attributable to Navistar International Corporation | $ | (14 | ) | $ | 31 | $ | (215 | ) | $ | 122 | |||||
Diluted earnings (loss) per share attributable to Navistar International Corporation | $ | 1.22 | $ | 18.24 | $ | (3.49 | ) | $ | 19.04 | ||||||
Effect of adjustments on diluted earnings (loss) per share attributable to Navistar International Corporation | (1.42 | ) | (17.84 | ) | 0.38 | (17.46 | ) | ||||||||
Adjusted diluted earnings (loss) per share attributable to Navistar International Corporation | $ | (0.20 | ) | $ | 0.40 | $ | (3.11 | ) | $ | 1.58 | |||||
Diluted weighted shares outstanding | 68.9 | 76.8 | 69.1 | 77.1 |
(A) | Engineering integration costs relate to the consolidation of our truck and engine engineering operations, as well as the relocation of our world headquarters. For the three months ended July 31, 2012, the charges included restructuring charges of $3 million and other related costs of $13 million. The tax impact of the third quarter adjustments was income tax benefit of $21 million. For the nine months ended July 31, 2012, the charges included restructuring charges of $23 million and other related costs of $34 million. The tax impact of the adjustments in the nine months ended July 31, 2012 was income tax benefit of $23 million. For the three and nine months ended July 31, 2011, the charges included restructuring charges of $4 million and $23 million, respectively, and other related costs of $10 million and $17 million, respectively. For the three and nine months ended July 31, 2011, the tax impact of the adjustments was income tax benefits of $9 million and $12 million, respectively. Our manufacturing operations, primarily our Truck segment, recognized charges of $15 million and $34 million relating to these actions in the three and nine months ended July 31, 2012, respectively, compared to $11 million and $32 million in the three and nine months ended July 31, 2011, respectively. For more information, see Note 2, Restructurings and Impairments, to the accompanying consolidated financial statements. |
(B) | Restructuring of North American manufacturing operations are charges primarily related to our ongoing restructuring plans related to our plans to close our Chatham, Ontario heavy truck plant and WCC chassis plant in Union City, Indiana, and to significantly scale back operations at our Monaco recreational vehicle headquarters and motor coach manufacturing plant in Coburg, Oregon. In the second quarter of 2012, the Company incurred charges of $38 million for the impairment of certain intangible assets. For the three and nine months ended July 31, 2012, the associated tax impact of the adjustments was an income tax benefit of $14 million and $15 million, respectively. The Truck and Parts segments recognized charges of $28 million and $10 million, respectively. For the three and nine months ended July 31, 2011, the charges, which primarily impacted the Truck segment, included restructuring charges of $53 million, impairment charges of $64 million related to certain intangible assets and property and equipment, and other charges of $5 million, and the tax impact of these charges was income tax benefit of $20 million. For more information, see Note 2, Restructurings and Impairments, to the accompanying consolidated financial statements. |
(C) | During the first and second quarters of 2012, the Company incurred charges of $123 million and $104 million, respectively, for adjustments to pre-existing warranties. For the three and nine months ended July 31, 2012, the associated tax impact of the adjustments was an income tax benefits of $81 million and $89 million, respectively. For more information, see Note 1, Summary of Significant Accounting Policies, to the accompanying consolidated financial statements. |
(D) | In the three and nine months ended July 31, 2012, the Company recorded charges totaling $10 million and $20 million, respectively, for NCPs for certain 13L engine sales that did not comply with emission standards, recognized in the Engine segment. The tax impact of the adjustments was income tax benefit of $8 million in both periods of 2012. For more information, see Note 12, Commitments and Contingencies, to the accompanying consolidated financial statements. |
(E) | In the nine months ended July 31, 2012, we recognized an income tax benefit of $181 million in the second quarter of 2012 from the release of a significant portion of our income tax valuation allowance on our Canadian deferred tax assets. In the three months ended July 31, 2011, we recognized an income tax benefit of $1.476 billion from the release of a significant portion of our income tax valuation allowance on our domestic deferred tax assets. For more information, see Note 9, Income Taxes, to the accompanying consolidated financial statements. |
Three Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | ||||||||||||||||||||||||||
(in millions, except per share data and % change) | 2012 | 2011 | Change | 2012 | 2011 | Change | |||||||||||||||||||||||
Sales and revenues, net | $ | 3,319 | $ | 3,537 | $ | (218 | ) | (6 | )% | $ | 9,669 | $ | 9,635 | $ | 34 | — | % | ||||||||||||
Costs of products sold | 2,876 | 2,930 | (54 | ) | (2 | )% | 8,518 | 7,830 | 688 | 9 | % | ||||||||||||||||||
Restructuring charges | 4 | 56 | (52 | ) | (93 | )% | 24 | 80 | (56 | ) | (70 | )% | |||||||||||||||||
Impairment of property and equipment and intangible assets | — | 64 | (64 | ) | (100 | )% | 38 | 64 | (26 | ) | (41 | )% | |||||||||||||||||
Selling, general and administrative expenses | 328 | 334 | (6 | ) | (2 | )% | 1,068 | 1,006 | 62 | 6 | % | ||||||||||||||||||
Engineering and product development costs | 137 | 141 | (4 | ) | (3 | )% | 408 | 407 | 1 | — | % | ||||||||||||||||||
Interest expense | 59 | 62 | (3 | ) | (5 | )% | 182 | 187 | (5 | ) | (3 | )% | |||||||||||||||||
Other expense (income), net | 5 | (18 | ) | 23 | N.M. | 26 | (39 | ) | 65 | N.M. | |||||||||||||||||||
Total costs and expenses | 3,409 | 3,569 | (160 | ) | (4 | )% | 10,264 | 9,535 | 729 | 8 | % | ||||||||||||||||||
Equity in loss of non-consolidated affiliates | (10 | ) | (22 | ) | 12 | (55 | )% | (21 | ) | (55 | ) | 34 | (62 | )% | |||||||||||||||
Income (loss) before income taxes | (100 | ) | (54 | ) | (46 | ) | 85 | % | (616 | ) | 45 | (661 | ) | N.M. | |||||||||||||||
Income tax benefit | 196 | 1,463 | (1,267 | ) | (87 | )% | 410 | 1,458 | (1,048 | ) | (72 | )% | |||||||||||||||||
Net income (loss) | 96 | 1,409 | (1,313 | ) | (93 | )% | (206 | ) | 1,503 | (1,709 | ) | N.M. | |||||||||||||||||
Less: Net income attributable to non-controlling interests | 12 | 9 | 3 | 33 | % | 35 | 35 | — | — | % | |||||||||||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | 84 | $ | 1,400 | $ | (1,316 | ) | (94 | )% | $ | (241 | ) | $ | 1,468 | $ | (1,709 | ) | N.M. | |||||||||||
Diluted earnings per share | $ | 1.22 | $ | 18.24 | $ | (17.02 | ) | (93 | )% | $ | (3.49 | ) | $ | 19.04 | $ | (22.53 | ) | N.M. |
N.M. | Not meaningful. |
Total | U.S. and Canada | Rest of World ("ROW") | ||||||||||||||||||||||||||||||||||||||||||
Three Months Ended July 31, | % Change | Three Months Ended July 31, | % Change | Three Months Ended July 31, | % Change | |||||||||||||||||||||||||||||||||||||||
2012 | 2011 | Change | 2012 | 2011 | Change | 2012 | 2011 | Change | ||||||||||||||||||||||||||||||||||||
(in millions, except % change) | ||||||||||||||||||||||||||||||||||||||||||||
Truck | $ | 2,336 | $ | 2,457 | $ | (121 | ) | (5 | )% | $ | 1,968 | $ | 2,058 | $ | (90 | ) | (4 | )% | $ | 368 | $ | 399 | $ | (31 | ) | (8 | )% | |||||||||||||||||
Engine | 840 | 968 | (128 | ) | (13 | )% | 533 | 541 | (8 | ) | (1 | )% | 307 | 427 | (120 | ) | (28 | )% | ||||||||||||||||||||||||||
Parts | 542 | 516 | 26 | 5 | % | 481 | 453 | 28 | 6 | % | 61 | 63 | (2 | ) | (3 | )% | ||||||||||||||||||||||||||||
Financial Services | 64 | 73 | (9 | ) | (12 | )% | 48 | 56 | (8 | ) | (14 | )% | 16 | 17 | (1 | ) | (6 | )% | ||||||||||||||||||||||||||
Corporate and Eliminations | (463 | ) | (477 | ) | 14 | (3 | )% | (458 | ) | (468 | ) | 10 | (2 | )% | (5 | ) | (9 | ) | 4 | (44 | )% | |||||||||||||||||||||||
Total | $ | 3,319 | $ | 3,537 | $ | (218 | ) | (6 | )% | $ | 2,572 | $ | 2,640 | $ | (68 | ) | (3 | )% | $ | 747 | $ | 897 | $ | (150 | ) | (17 | )% |
Total | U.S. and Canada | ROW | ||||||||||||||||||||||||||||||||||||||||||
Nine Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | |||||||||||||||||||||||||||||||||||||||
2012 | 2011 | Change | 2012 | 2011 | Change | 2012 | 2011 | Change | ||||||||||||||||||||||||||||||||||||
(in millions, except % change) | ||||||||||||||||||||||||||||||||||||||||||||
Truck | $ | 6,856 | $ | 6,528 | $ | 328 | 5 | % | $ | 5,810 | $ | 5,591 | $ | 219 | 4 | % | $ | 1,046 | $ | 937 | $ | 109 | 12 | % | ||||||||||||||||||||
Engine | 2,593 | 2,706 | (113 | ) | (4 | )% | 1,687 | 1,577 | 110 | 7 | % | 906 | 1,129 | (223 | ) | (20 | )% | |||||||||||||||||||||||||||
Parts | 1,507 | 1,573 | (66 | ) | (4 | )% | 1,341 | 1,417 | (76 | ) | (5 | )% | 166 | 156 | 10 | 6 | % | |||||||||||||||||||||||||||
Financial Services | 199 | 229 | (30 | ) | (13 | )% | 152 | 181 | (29 | ) | (16 | )% | 47 | 48 | (1 | ) | (2 | )% | ||||||||||||||||||||||||||
Corporate and Eliminations | (1,486 | ) | (1,401 | ) | (85 | ) | 6 | % | (1,470 | ) | (1,370 | ) | (100 | ) | 7 | % | (16 | ) | (31 | ) | 15 | (48 | )% | |||||||||||||||||||||
Total | $ | 9,669 | $ | 9,635 | $ | 34 | — | % | $ | 7,520 | $ | 7,396 | $ | 124 | 2 | % | $ | 2,149 | $ | 2,239 | $ | (90 | ) | (4 | )% |
Three Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | ||||||||||||||||||||||||||
(in millions, except % change) | 2012 | 2011 | Change | 2012 | 2011 | Change | |||||||||||||||||||||||
Truck segment sales - U.S. and Canada | $ | 1,968 | $ | 2,058 | $ | (90 | ) | (4 | )% | $ | 5,810 | $ | 5,591 | $ | 219 | 4 | % | ||||||||||||
Truck segment sales - ROW | 368 | 399 | (31 | ) | (8 | )% | 1,046 | 937 | 109 | 12 | % | ||||||||||||||||||
Total Truck segment sales, net | $ | 2,336 | $ | 2,457 | $ | (121 | ) | (5 | )% | $ | 6,856 | $ | 6,528 | $ | 328 | 5 | % | ||||||||||||
Truck segment profit (loss) | $ | (30 | ) | $ | (75 | ) | $ | 45 | (60 | )% | $ | (160 | ) | $ | 49 | $ | (209 | ) | N.M. |
Three Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | ||||||||||||||||||||||||||
(in millions, except % change) | 2012 | 2011 | Change | 2012 | 2011 | Change | |||||||||||||||||||||||
Engine segment sales - U.S. and Canada | $ | 533 | $ | 541 | $ | (8 | ) | (1 | )% | $ | 1,687 | $ | 1,577 | $ | 110 | 7 | % | ||||||||||||
Engine segment sales - ROW | 307 | 427 | (120 | ) | (28 | )% | 906 | 1,129 | (223 | ) | (20 | )% | |||||||||||||||||
Total Engine segment sales, net | $ | 840 | $ | 968 | $ | (128 | ) | (13 | )% | $ | 2,593 | $ | 2,706 | $ | (113 | ) | (4 | )% | |||||||||||
Engine segment profit (loss) | $ | (47 | ) | $ | 32 | $ | (79 | ) | N.M. | $ | (275 | ) | $ | 26 | $ | (301 | ) | N.M. |
Three Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | ||||||||||||||||||||||||||
(in millions, except % change) | 2012 | 2011 | Change | 2012 | 2011 | Change | |||||||||||||||||||||||
Parts segment sales - U.S. and Canada | $ | 481 | $ | 453 | $ | 28 | 6 | % | $ | 1,341 | $ | 1,417 | $ | (76 | ) | (5 | )% | ||||||||||||
Parts segment sales - ROW | 61 | 63 | (2 | ) | (3 | )% | 166 | 156 | 10 | 6 | % | ||||||||||||||||||
Total Parts segment sales, net | $ | 542 | $ | 516 | $ | 26 | 5 | % | $ | 1,507 | $ | 1,573 | $ | (66 | ) | (4 | )% | ||||||||||||
Parts segment profit | $ | 73 | $ | 70 | $ | 3 | 4 | % | $ | 164 | $ | 200 | $ | (36 | ) | (18 | )% |
Three Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | ||||||||||||||||||||||||||
(in millions, except % change) | 2012 | 2011 | Change | 2012 | 2011 | Change | |||||||||||||||||||||||
Financial Services segment revenues - U.S. and Canada(A) | $ | 48 | $ | 56 | $ | (8 | ) | (14 | )% | $ | 152 | $ | 181 | $ | (29 | ) | (16 | )% | |||||||||||
Financial Services segment revenues - ROW | 16 | 17 | (1 | ) | (6 | )% | 47 | 48 | (1 | ) | (2 | )% | |||||||||||||||||
Total Financial Services segment revenues, net | $ | 64 | $ | 73 | $ | (9 | ) | (12 | )% | $ | 199 | $ | 229 | $ | (30 | ) | (13 | )% | |||||||||||
Financial Services segment profit | $ | 22 | $ | 30 | $ | (8 | ) | (27 | )% | $ | 75 | $ | 102 | $ | (27 | ) | (26 | )% |
(A) | The Financial Services segment does not have Canadian operations. |
Three Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | ||||||||||||||||||||
(in units) | 2012 | 2011(A) | Change | 2012 | 2011(A) | Change | |||||||||||||||||
"Traditional" Markets (U.S. and Canada) | |||||||||||||||||||||||
School buses | 6,200 | 4,600 | 1,600 | 35 | % | 15,200 | 13,300 | 1,900 | 14 | % | |||||||||||||
Class 6 and 7 medium trucks | 16,200 | 16,900 | (700 | ) | (4 | )% | 52,100 | 45,900 | 6,200 | 14 | % | ||||||||||||
Class 8 heavy trucks | 48,600 | 37,500 | 11,100 | 30 | % | 144,500 | 96,000 | 48,500 | 51 | % | |||||||||||||
Class 8 severe service trucks(B) | 11,700 | 10,100 | 1,600 | 16 | % | 32,300 | 27,400 | 4,900 | 18 | % | |||||||||||||
Total "traditional" markets | 82,700 | 69,100 | 13,600 | 20 | % | 244,100 | 182,600 | 61,500 | 34 | % | |||||||||||||
Combined class 8 trucks | 60,300 | 47,600 | 12,700 | 27 | % | 176,800 | 123,400 | 53,400 | 43 | % | |||||||||||||
Navistar "traditional" retail deliveries | 19,600 | 20,100 | (500 | ) | (2 | )% | 56,900 | 49,600 | 7,300 | 15 | % |
(A) | Beginning in the fourth quarter of 2011, our competitors began reporting certain RV and commercial bus chassis units consistently with how we report these units. Industry retail deliveries for School buses for the three and nine months ended July 31, 2011 have been recast to conform accordingly. |
(B) | "Traditional" retail deliveries include CAT-branded units sold to Caterpillar under our North America supply agreement. |
Three Months Ended | |||||||||||||||||||
July 31, 2012 | April 30, 2012 | January 31, 2012 | October 31, 2011 | July 31, 2011 | |||||||||||||||
"Traditional" Markets (U.S. and Canada) | |||||||||||||||||||
School buses | 47 | % | 48 | % | 48 | % | 53 | % | 47 | % | |||||||||
Class 6 and 7 medium trucks | 36 | % | 36 | % | 27 | % | 44 | % | 46 | % | |||||||||
Class 8 heavy trucks | 15 | % | 15 | % | 17 | % | 18 | % | 17 | % | |||||||||
Class 8 severe service trucks(A) | 30 | % | 30 | % | 31 | % | 37 | % | 36 | % | |||||||||
Total "traditional" markets | 24 | % | 24 | % | 22 | % | 29 | % | 29 | % | |||||||||
Combined class 8 trucks | 18 | % | 18 | % | 19 | % | 22 | % | 21 | % |
(A) | Retail delivery market share includes CAT-branded units sold to Caterpillar under our North America supply agreement. |
Three Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | ||||||||||||||||||||
(in units) | 2012 | 2011 | Change | 2012 | 2011 | Change | |||||||||||||||||
"Traditional" Markets (U.S. and Canada) | |||||||||||||||||||||||
School buses | 2,500 | 2,700 | (200 | ) | (7 | )% | 7,800 | 6,300 | 1,500 | 24 | % | ||||||||||||
Class 6 and 7 medium trucks | 4,000 | 6,800 | (2,800 | ) | (41 | )% | 15,700 | 21,200 | (5,500 | ) | (26 | )% | |||||||||||
Class 8 heavy trucks | 5,000 | 6,200 | (1,200 | ) | (19 | )% | 18,700 | 23,200 | (4,500 | ) | (19 | )% | |||||||||||
Class 8 severe service trucks(A) | 3,100 | 3,100 | — | — | % | 10,100 | 10,000 | 100 | 1 | % | |||||||||||||
Total "traditional" markets | 14,600 | 18,800 | (4,200 | ) | (22 | )% | 52,300 | 60,700 | (8,400 | ) | (14 | )% | |||||||||||
Combined class 8 trucks | 8,100 | 9,300 | (1,200 | ) | (13 | )% | 28,800 | 33,200 | (4,400 | ) | (13 | )% |
(A) | Truck segment net orders include CAT-branded units sold to Caterpillar under our North America supply agreement. |
As of July 31 | % Change | ||||||||||
(in units) | 2012 | 2011(A) | Change | ||||||||
"Traditional" Markets (U.S. and Canada) | |||||||||||
School buses | 1,600 | 1,600 | — | — | % | ||||||
Class 6 and 7 medium trucks | 4,400 | 6,800 | (2,400 | ) | (35 | )% | |||||
Class 8 heavy trucks | 7,100 | 12,300 | (5,200 | ) | (42 | )% | |||||
Class 8 severe service trucks(B) | 3,100 | 3,600 | (500 | ) | (14 | )% | |||||
Total "traditional" markets | 16,200 | 24,300 | (8,100 | ) | (33 | )% | |||||
Combined class 8 trucks | 10,200 | 15,900 | (5,700 | ) | (36 | )% |
(A) | Truck segment backlog for School buses as of July 31, 2011 has been recast by 100 units to include military bus units. |
(B) | Truck segment backlog includes CAT-branded units sold to Caterpillar under our North America supply agreement. |
Three Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | ||||||||||||||||||||
(in units) | 2012 | 2011 | Change | 2012 | 2011 | Change | |||||||||||||||||
"Traditional" Markets (U.S. and Canada) | |||||||||||||||||||||||
School buses | 2,900 | 2,200 | 700 | 32 | % | 7,200 | 6,300 | 900 | 14 | % | |||||||||||||
Class 6 and 7 medium trucks | 5,800 | 7,400 | (1,600 | ) | (22 | )% | 17,200 | 19,200 | (2,000 | ) | (10 | )% | |||||||||||
Class 8 heavy trucks | 6,300 | 6,800 | (500 | ) | (7 | )% | 21,500 | 16,700 | 4,800 | 29 | % | ||||||||||||
Class 8 severe service trucks(A) | 3,600 | 3,700 | (100 | ) | (3 | )% | 10,500 | 9,600 | 900 | 9 | % | ||||||||||||
Total "traditional" markets | 18,600 | 20,100 | (1,500 | ) | (7 | )% | 56,400 | 51,800 | 4,600 | 9 | % | ||||||||||||
Non "traditional" military(B) | 500 | 200 | 300 | 150 | % | 1,100 | 700 | 400 | 57 | % | |||||||||||||
"Expansion" markets(C) | 8,000 | 8,600 | (600 | ) | (7 | )% | 22,900 | 21,500 | 1,400 | 7 | % | ||||||||||||
Total worldwide units(D) | 27,100 | 28,900 | (1,800 | ) | (6 | )% | 80,400 | 74,000 | 6,400 | 9 | % | ||||||||||||
Combined class 8 trucks | 9,900 | 10,500 | (600 | ) | (6 | )% | 32,000 | 26,300 | 5,700 | 22 | % | ||||||||||||
Combined military(E) | 500 | 800 | (300 | ) | (38 | )% | 1,900 | 2,100 | (200 | ) | (10 | )% |
(A) | Chargeouts include CAT-branded units sold to Caterpillar under our North America supply agreement. |
(B) | Excludes U.S. and Canada militarized commercial units included in "traditional" markets Class 8 severe service trucks and "expansion" markets. |
(C) | Includes chargeouts related to BDT of 1,600 units during both the three months ended July 31, 2012 and 2011, and 4,800 during both the nine months ended July 31, 2012 and 2011. |
(D) | Excludes chargeouts related to RV towables of 800 units and 700 units during the three months ended July 31, 2012 and 2011, respectively, and 2,200 units during both the nine months ended July 31, 2012 and 2011. |
(E) | Includes military units included within "traditional" markets Class 8 severe service, "expansion" markets, and all units reported as non "traditional" military. |
Three Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | ||||||||||||||||||||
(in units) | 2012 | 2011 | Change | 2012 | 2011 | Change | |||||||||||||||||
OEM sales-South America(A) | 28,600 | 38,200 | (9,600 | ) | (25 | )% | 78,000 | 102,500 | (24,500 | ) | (24 | )% | |||||||||||
Intercompany sales | 20,600 | 22,300 | (1,700 | ) | (8 | )% | 65,600 | 63,100 | 2,500 | 4 | % | ||||||||||||
Other OEM sales | 3,000 | 3,700 | (700 | ) | (19 | )% | 7,200 | 12,600 | (5,400 | ) | (43 | )% | |||||||||||
Total sales | 52,200 | 64,200 | (12,000 | ) | (19 | )% | 150,800 | 178,200 | (27,400 | ) | (15 | )% |
(A) | Includes shipments related to Ford of 100 units and 7,900 units during the three months ended July 31, 2012 and 2011, respectively, and 5,700 units and 18,800 units during the nine months ended July 31, 2012 and 2011, respectively. |
As of | |||||||||||
(in millions) | July 31, 2012 | October 31, 2011 | July 31, 2011 | ||||||||
Consolidated cash and cash equivalents | $ | 547 | $ | 539 | $ | 444 | |||||
Consolidated marketable securities | 159 | 718 | 620 | ||||||||
Consolidated cash, cash equivalents and marketable securities at end of the period | $ | 706 | $ | 1,257 | $ | 1,064 |
Nine Months Ended July 31, 2012 | |||||||||||
(in millions) | Manufacturing Operations | Financial Services Operations and Adjustments | Condensed Consolidated Statement of Cash Flows | ||||||||
Net cash provided by (used in) operating activities | $ | (292 | ) | $ | 638 | $ | 346 | ||||
Net cash provided by (used in) investing activities | 278 | (2 | ) | 276 | |||||||
Net cash provided by (used in) financing activities | 23 | (630 | ) | (607 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (9 | ) | 2 | (7 | ) | ||||||
Increase in cash and cash equivalents | — | 8 | 8 | ||||||||
Cash and cash equivalents at beginning of the period | 488 | 51 | 539 | ||||||||
Cash and cash equivalents at end of the period | $ | 488 | $ | 59 | $ | 547 |
Nine Months Ended July 31, 2011 | |||||||||||
(in millions) | Manufacturing Operations | Financial Services Operations and Adjustments | Condensed Consolidated Statement of Cash Flows | ||||||||
Net cash provided by operating activities | $ | 236 | $ | 303 | $ | 539 | |||||
Net cash used in investing activities | (359 | ) | (11 | ) | (370 | ) | |||||
Net cash used in financing activities | (5 | ) | (312 | ) | (317 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | 7 | — | 7 | ||||||||
Decrease in cash and cash equivalents | (121 | ) | (20 | ) | (141 | ) | |||||
Cash and cash equivalents at beginning of the period | 534 | 51 | 585 | ||||||||
Cash and cash equivalents at end of the period | $ | 413 | $ | 31 | $ | 444 |
• | Pension and Other Postretirement Benefits |
• | Allowance for Doubtful Accounts |
• | Income Taxes |
• | Impairment of Long-Lived Assets |
• | Goodwill |
• | Indefinite-Lived Intangible Assets |
• | Contingency Accruals |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
• | The Company will incur additional costs associated with this change and there is no assurance that we will implement this strategy within the anticipated timelines. |
• | Our non-binding MOU with Cummins for the Cummins 15L as well as for the SCR after treatment system is subject to the execution of definitive agreements. |
• | increasing our vulnerability to general adverse economic and industry conditions; |
• | limiting our ability to use operating cash flow in other areas of our business because we must dedicate a portion of these funds to make significantly higher interest payments on our indebtedness; |
• | limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; |
• | limiting our ability to take advantage of business opportunities as a result of various restrictive covenants in our indebtedness; and |
• | placing us at a competitive disadvantage compared to our competitors that have less debt. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Exhibit: | Page | |||
(3) | Articles of Incorporation and By-Laws | E-1 | ||
(4) | Instruments Defining Rights of Security Holders, including Indentures | E-2 | ||
(10) | Material Contracts | E-3 | ||
(31.1) | CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | E-5 | ||
(31.2) | CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | E-6 | ||
(32.1) | CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | E-7 | ||
(32.2) | CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | E-8 | ||
(99.1) | Additional Financial Information (Unaudited) | E-9 | ||
(101.ING) | XBRL Instance Document | N/A | ||
(101.SCH) | XBRL Taxonomy Extension Schema Document | N/A | ||
(101.CAL) | XBRL Taxonomy Extension Calculation Linkbase Document | N/A | ||
(101.LAB) | XBRL Taxonomy Extension Label Linkbase Document | N/A | ||
(101.PRE) | XBRL Taxonomy Extension Presentation Linkbase Document | N/A | ||
(101.DEF) | XBRL Taxonomy Extension Definition Linkbase Document | N/A |
NAVISTAR INTERNATIONAL CORPORATION | |
(Registrant) | |
/s/ RICHARD C. TARAPCHAK | |
Richard C. Tarapchak | |
Vice President and Controller | |
(Principal Accounting Officer) |
3.1 | Restated Certificate of Incorporation of Navistar International Corporation effective July 1, 1993. Filed as Exhibit 3.2 to Annual Report on Form 10-K for the period ended October 31, 1993, which was dated and filed on January 27, 1994. Commission File No. 001-9618, and amended as of May 4, 1998. | |
3.2 | Certificate of Amendment to Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware effective February 17, 2011. Filed as Exhibit 3.1 to Current Report on Form 8-K, which was dated and filed on February 17, 2011. Commission File No. 001-09618. | |
3.3 | Certificate of Amendment to Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware effective February 21, 2012. Filed as Exhibit 3.1 to Current Report on Form 8-K, which was dated and filed on February 21, 2012. Commission File No. 001-09618. | |
3.4 | Certificate of Retirement of Stock filed with the Secretary of State for the State of Delaware effective July 30, 2003 retiring the Class B common stock of Navistar International Corporation in accordance with the Restated Certificate of Incorporation of Navistar International Corporation. Filed as Exhibit 3.2 to Quarterly Report on Form 10-Q for the period ended July 31, 2003, which was dated and filed on September 12, 2003. Commission File No. 001-09618. | |
3.5 | The Amended and Restated By-Laws of Navistar International Corporation effective March 22, 2012. Filed as Exhibit 3.1 to Current Report on Form 8-K, which was dated and filed on March 22, 2012. Commission File No. 001-09618. | |
3.6 | Certificate of Elimination of Junior Participating Preferred Stock, Series A filed with the Secretary of State for the State of Delaware on June 20, 2012, which has the effect of eliminating the Junior Participating Preferred Stock, Series A originally filed with the Secretary of State for the State of Delaware on July 23, 2007. Filed as Exhibit 3.1 to Current Report on Form 8-K which was dated and filed on June 20, 2012. Commission File No. 001-09618. | |
3.7 | Certificate of Designation, Preferences and Rights of Junior Participating Preferred Stock, Series A filed with the Secretary of State for the State of Delaware on June 20, 2012 establishing the Series A Preferred Stock of Navistar International Corporation in accordance with the Restated Certificate of Incorporation of Navistar International Corporation. Filed as Exhibit 3.2 to Current Report on Form 8-K which was dated and filed on June 20, 2012. Commission File No. 001-09618. |
4.1 | Navistar International Corporation Restated Stock Certificate filed as Exhibit 4.20 to Form 10-Q for the period ended January 31, 2002, which was dated and filed March 11, 2002. Commission File No. 001-9618. | |
4.2 | Indenture, dated as of October 28, 2009, by and among Navistar International Corporation, as Issuer, Navistar, Inc., as Guarantor, and The Bank of New York Mellon Trust Company, as Trustee, for Navistar International Corporation's 8.25% Senior Notes due 2021. Filed as Exhibit 4.1 to Current Report on Form 8-K dated and filed October 28, 2009. Commission File No. 001-09618. | |
4.3 | Indenture, dated as of October 28, 2009, by and between Navistar International Corporation, as Issuer, and The Bank of New York Mellon Trust Company, as Trustee, for Navistar International Corporation's 3.00% Senior Subordinated Convertible Notes due 2014. Filed as Exhibit 4.2 to Current Report on Form 8-K dated and filed October 28, 2009. Commission File No. 001-09618. | |
4.4 | Rights Agreement, dated as of June 19, 2012, by and between Navistar International Corporation and Computershare Shareowner Services LLC, as Rights Agent. Filed as Exhibit 4.1 to Current Report on Form 8-K dated and filed June 20, 2012. Commission File No. 001-09618. |
10.91 | Fourth Amendment to Note Purchase Agreement, dated July 12, 2012, among NFSC, as Seller, NFC, as Servicer, Liberty Street Funding LLC, as a Conduit Purchaser, the Bank of Nova Scotia, as a Managing Agent and a Committed Purchaser, and Bank of America, National Association, as a Managing Agent, the Administrative Agent and a Committed Purchaser. Filed as Exhibit 10.1 to Current Report on Form 8-K dated and filed on July 12, 2012. Commission File No. 001-09618. | |
10.92 | Amendment No. 2 to Series 2010-VFN Indenture Supplement, dated July 12, 2012, between Navistar Financial Dealer Note Master Owner Trust, as Issuer, and The Bank of New York Mellon, as Indenture Trustee. Filed as Exhibit 10.2 to Current Report on Form 8-K dated and filed on July 12, 2012. Commission File No. 001-09618. | |
10.93 | Credit Agreement, dated August 17, 2012, among Navistar, Inc., as Borrower, Navistar International Corporation, the Lenders Party hereto, and J.P. Morgan Chase Bank, N.A., as Administrative Agent and Collateral Agent. Filed as Exhibit 10.1 to Current Report on Form 8-K dated and filed on August 23, 2012. Commission File No. 001-09618. | |
10.94 | Amended and Restated ABL Credit Agreement, dated August 17, 2012, among Navistar, Inc., as Borrower, the Lenders Party hereto, Bank of America, N.A., as Administrative Agent, J.P. Morgan Chase Bank, N.A. and Wells Fargo Capital Finance, LLC, as Syndication Agents, Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC, and Wells Fargo Capital Finance, LLC, as Joint Lead Arrangers and Joint Book Managers, and Credit Suisse Securities (USA) LLC, as Joint Book Manager. Filed as Exhibit 10.2 to Current Report on Form 8-K dated and filed on August 23, 2012. Commission File No. 001-09618. | |
10.95 | Series 2012-VFN Indenture Supplement, dated as of August 29, 2012, between Navistar Financial Dealer Note Master Owner Trust II, as issuing entity, and The Bank of New York Mellon, as indenture trustee. Filed as Exhibit 10.1 to Current Report on Form 8-K dated and filed on August 30, 2012. Commission File No. 001-09618. | |
10.96 | Note Purchase Agreement, dated as of August 29, 2012, among Navistar Financial Securities Corporation, Navistar Financial Corporation, Bank of America, National Association, as a Managing Agent, the Administrative Agent and a Committed Purchaser, The Bank of Nova Scotia, as a Managing Agent and a Committed Purchaser, Liberty Street Funding LLC, as a Conduit Purchaser, Credit Suisse AG, New York Branch, as a Managing Agent, Credit Suisse AG, Cayman Islands Branch, as a Committed Purchaser, and Alpine Securitization Corp., as a Conduit Purchaser. Filed as Exhibit 10.2 to Current Report on Form 8-K dated and filed on August 30, 2012. Commission File No. 001-09618. | |
*10.97 | Employment and Services Agreement, dated August 26, 2012, among the Company, Navistar, Inc. and Lewis B. Campbell. Filed as Exhibit 10.3 to Current Report on Form 8-K dated and filed on August 30, 2012. Commission File No. 001-09618. | |
*10.98 | Indemnification Agreement, dated August 26, 2012, between the Company and Lewis B. Campbell. Filed as Exhibit 10.4 to Current Report on Form 8-K dated and filed on August 30, 2012. Commission File No. 001-09618. | |
*10.99 | Non-Qualified Stock Option Award Agreement and supplement thereto, dated August 26, 2012, between the Company and Lewis B. Campbell. Filed as Exhibit 10.5 to Current Report on Form 8-K dated and filed on August 30, 2012. Commission File No. 001-09618. | |
The following documents of Navistar International Corporation are filed herewith: | ||
*10.100 | Nominating and Governance Committee and Board of Directors approval of changes to non-employee director compensation. |
* | Indicates a management contract or compensatory plan or arrangement required to be filed or incorporated by reference as an exhibit to this report. |
• | $3,500 meeting fee for the chair |
• | $3,000 meeting fee for the vice chair |
• | $2,000 meeting fee for the other members |
• | $3,500 special fee for the chair for any day that he spends more than 3 hours on Special Committee work besides an official Special Committee meeting day |
• | $3,000 special fee for the vice chair for any day that he spends more than 3 hours on Special Committee work besides an official Special Committee meeting day |
• | $2,000 special fee for the other members for any day that they spend more than 3 hours on Special Committee work besides an official Special Committee meeting day |
• | $7,000 special fee for the chair for past services |
• | $6,000 special fee for the vice chair for past services |
• | $4,000 special fee for John Correnti for past services |
1. | I have reviewed this quarterly report on Form 10-Q of Navistar International Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ LEWIS B. CAMPBELL |
Lewis B. Campbell Executive Chairman and Interim Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Navistar International Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ ANDREW J. CEDEROTH |
Andrew J. Cederoth Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ LEWIS B. CAMPBELL |
Lewis B. Campbell Executive Chairman and Interim Chief Executive Officer (Principal Executive Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ ANDREW J. CEDEROTH |
Andrew J. Cederoth Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
Three Months Ended July 31, 2012 | |||||||||||||||
Manufacturing Operations | Financial Services Operations | Adjustments | Consolidated Statement of Operations | ||||||||||||
(in millions) | |||||||||||||||
Sales of manufactured products | $ | 3,277 | $ | — | $ | — | $ | 3,277 | |||||||
Finance revenues | — | 64 | (22 | ) | 42 | ||||||||||
Sales and revenues, net | 3,277 | 64 | (22 | ) | 3,319 | ||||||||||
Costs of products sold | 2,876 | — | — | 2,876 | |||||||||||
Restructuring benefits | 4 | — | — | 4 | |||||||||||
Impairment of property and equipment and intangible assets | — | — | — | — | |||||||||||
Selling, general and administrative expenses | 306 | 24 | (2 | ) | 328 | ||||||||||
Engineering and product development costs | 137 | — | — | 137 | |||||||||||
Interest expense | 40 | 20 | (1 | ) | 59 | ||||||||||
Other expense (income), net | 25 | (1 | ) | (19 | ) | 5 | |||||||||
Total costs and expenses | 3,388 | 43 | (22 | ) | 3,409 | ||||||||||
Equity in loss of non-consolidated affiliates | 10 | — | — | 10 | |||||||||||
Income (loss) before income taxes and equity income from financial services operations | (121 | ) | 21 | — | (100 | ) | |||||||||
Equity income from financial services operations | 13 | (13 | ) | — | |||||||||||
Income (loss) before income taxes | (108 | ) | 21 | (13 | ) | (100 | ) | ||||||||
Income tax benefit (expense) | 204 | (8 | ) | — | 196 | ||||||||||
Net income (loss) | 96 | 13 | (13 | ) | 96 | ||||||||||
Less: Income attributable to non-controlling interests | 12 | — | — | 12 | |||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | 84 | $ | 13 | $ | (13 | ) | $ | 84 |
Nine Months Ended July 31, 2012 | |||||||||||||||
Manufacturing Operations | Financial Services Operations | Adjustments | Consolidated Statement of Operations | ||||||||||||
(in millions) | |||||||||||||||
Sales of manufactured products | $ | 9,540 | $ | — | $ | — | $ | 9,540 | |||||||
Finance revenues | — | 199 | (70 | ) | 129 | ||||||||||
Sales and revenues, net | 9,540 | 199 | (70 | ) | 9,669 | ||||||||||
Costs of products sold | 8,518 | — | — | 8,518 | |||||||||||
Restructuring charges | 24 | — | — | 24 | |||||||||||
Impairment of intangible assets | 38 | — | — | 38 | |||||||||||
Selling, general and administrative expenses | 1,009 | 63 | (4 | ) | 1,068 | ||||||||||
Engineering and product development costs | 408 | — | — | 408 | |||||||||||
Interest expense | 119 | 67 | (4 | ) | 182 | ||||||||||
Other expense (income), net | 94 | (6 | ) | (62 | ) | 26 | |||||||||
Total costs and expenses | 10,210 | 124 | (70 | ) | 10,264 | ||||||||||
Equity in loss of non-consolidated affiliates | 21 | — | — | 21 | |||||||||||
Income (loss) before income taxes and equity income from financial services operations | (691 | ) | 75 | — | (616 | ) | |||||||||
Equity income from financial services operations | 48 | (48 | ) | — | |||||||||||
Income (loss) before income taxes | (643 | ) | 75 | (48 | ) | (616 | ) | ||||||||
Income tax benefit (expense) | 437 | (27 | ) | — | 410 | ||||||||||
Net income (loss) | (206 | ) | 48 | (48 | ) | (206 | ) | ||||||||
Less: Income attributable to non-controlling interests | 35 | — | — | 35 | |||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | (241 | ) | $ | 48 | $ | (48 | ) | $ | (241 | ) |
Condensed Statement of Revenues and Expenses Navistar International Corporation (Manufacturing operations with financial services operations on an after-tax equity basis) | |||||||||||||||
Three Months Ended July 31, 2011(A) | |||||||||||||||
Manufacturing Operations | Financial Services Operations | Adjustments | Consolidated Statement of Operations | ||||||||||||
(in millions) | |||||||||||||||
Sales of manufactured products | $ | 3,490 | $ | — | $ | — | $ | 3,490 | |||||||
Finance revenues | — | 73 | (26 | ) | 47 | ||||||||||
Sales and revenues, net | 3,490 | 73 | (26 | ) | 3,537 | ||||||||||
Costs of products sold | 2,930 | — | — | 2,930 | |||||||||||
Restructuring charges | 56 | — | — | 56 | |||||||||||
Impairment of property and equipment and intangible assets | 64 | — | — | 64 | |||||||||||
Selling, general and administrative expenses | 315 | 20 | (1 | ) | 334 | ||||||||||
Engineering and product development costs | 141 | — | — | 141 | |||||||||||
Interest expense | 38 | 27 | (3 | ) | 62 | ||||||||||
Other expense (income), net | 8 | (4 | ) | (22 | ) | (18 | ) | ||||||||
Total costs and expenses | 3,552 | 43 | (26 | ) | 3,569 | ||||||||||
Equity in loss of non-consolidated affiliates | 22 | — | — | 22 | |||||||||||
Income (loss) before income taxes and equity income from financial services operations | (84 | ) | 30 | — | (54 | ) | |||||||||
Equity income from financial services operations | 20 | — | (20 | ) | — | ||||||||||
Income (loss) before income taxes | (64 | ) | 30 | (20 | ) | (54 | ) | ||||||||
Income tax benefit (expense) | 1,473 | (10 | ) | — | 1,463 | ||||||||||
Net income | 1,409 | 20 | (20 | ) | 1,409 | ||||||||||
Less: Income attributable to non-controlling interests | 9 | — | — | 9 | |||||||||||
Net income attributable to Navistar International Corporation | $ | 1,400 | $ | 20 | $ | (20 | ) | $ | 1,400 |
(A) | Effective with the fourth quarter of 2011, the Company presents manufacturing operations with financial services operations on an after-tax equity basis. Previously, the financial services operations were presented on a pre-tax equity basis. The three months ended July 31, 2011 amounts have been reclassified to conform to this presentation. |
Condensed Statement of Revenues and Expenses Navistar International Corporation (Manufacturing operations with financial services operations on an after-tax equity basis) | |||||||||||||||
Nine Months Ended July 31, 2011(A) | |||||||||||||||
Manufacturing Operations | Financial Services Operations | Adjustments | Consolidated Statement of Operations | ||||||||||||
(in millions) | |||||||||||||||
Sales of manufactured products | $ | 9,481 | $ | — | $ | — | $ | 9,481 | |||||||
Finance revenues | — | 229 | (75 | ) | 154 | ||||||||||
Sales and revenues, net | 9,481 | 229 | (75 | ) | 9,635 | ||||||||||
Costs of products sold | 7,830 | — | — | 7,830 | |||||||||||
Restructuring charges | 79 | 1 | — | 80 | |||||||||||
Impairment of property and equipment and intangible assets | 64 | — | — | 64 | |||||||||||
Selling, general and administrative expenses | 951 | 58 | (3 | ) | 1,006 | ||||||||||
Engineering and product development costs | 407 | — | — | 407 | |||||||||||
Interest expense | 112 | 83 | (8 | ) | 187 | ||||||||||
Other expense (income), net | 40 | (15 | ) | (64 | ) | (39 | ) | ||||||||
Total costs and expenses | 9,483 | 127 | (75 | ) | 9,535 | ||||||||||
Equity in loss of non-consolidated affiliates | 55 | — | — | 55 | |||||||||||
Income (loss) before income taxes and equity income from financial services operations | (57 | ) | 102 | — | 45 | ||||||||||
Equity income from financial services operations | 67 | — | (67 | ) | — | ||||||||||
Income before income taxes | 10 | 102 | (67 | ) | 45 | ||||||||||
Income tax benefit (expense) | 1,493 | (35 | ) | — | 1,458 | ||||||||||
Net income | 1,503 | 67 | (67 | ) | 1,503 | ||||||||||
Less: Income attributable to non-controlling interests | 35 | — | — | 35 | |||||||||||
Net income attributable to Navistar International Corporation | $ | 1,468 | $ | 67 | $ | (67 | ) | $ | 1,468 |
(A) | Effective with the fourth quarter of 2011, the Company presents manufacturing operations with financial services operations on an after-tax equity basis. Previously, the financial services operations were presented on a pre-tax equity basis. The nine months ended July 31, 2011 amounts have been reclassified to conform to this presentation. |
Condensed Statements of Assets, Liabilities, and Stockholders' Deficit Navistar International Corporation (Manufacturing operations with financial services operations on an after-tax equity basis) | |||||||||||||||
As of July 31, 2012 | |||||||||||||||
Manufacturing Operations | Financial Services Operations | Adjustments | Consolidated Balance Sheet | ||||||||||||
(in millions) | |||||||||||||||
Assets | |||||||||||||||
Cash and cash equivalents | $ | 488 | $ | 59 | $ | — | $ | 547 | |||||||
Marketable securities | 139 | 20 | — | 159 | |||||||||||
Restricted cash and cash equivalents | 26 | 253 | — | 279 | |||||||||||
Finance and other receivables, net | 932 | 2,463 | (128 | ) | 3,267 | ||||||||||
Inventories | 1,870 | 7 | — | 1,877 | |||||||||||
Goodwill | 280 | — | — | 280 | |||||||||||
Property and equipment, net | 1,483 | 163 | — | 1,646 | |||||||||||
Investments in and advances to financial services operations | 613 | — | (613 | ) | — | ||||||||||
Investments in non-consolidated affiliates | 46 | — | — | 46 | |||||||||||
Deferred taxes, net | 2,381 | 25 | — | 2,406 | |||||||||||
Other assets | 599 | 37 | — | 636 | |||||||||||
Total assets | $ | 8,857 | $ | 3,027 | $ | (741 | ) | $ | 11,143 | ||||||
Liabilities and stockholders' equity (deficit) | |||||||||||||||
Accounts payable | $ | 1,924 | $ | 20 | $ | (128 | ) | $ | 1,816 | ||||||
Debt | 2,146 | 2,266 | — | 4,412 | |||||||||||
Postretirement benefits liabilities | 3,119 | 51 | — | 3,170 | |||||||||||
Other liabilities | 2,026 | 77 | — | 2,103 | |||||||||||
Total liabilities | 9,215 | 2,414 | (128 | ) | 11,501 | ||||||||||
Redeemable equity securities | 5 | — | — | 5 | |||||||||||
Stockholders' equity attributable to non-controlling interest | 44 | — | — | 44 | |||||||||||
Stockholders' equity (deficit) attributable to controlling interest | (407 | ) | 613 | (613 | ) | (407 | ) | ||||||||
Total liabilities and stockholders' equity (deficit) | $ | 8,857 | $ | 3,027 | $ | (741 | ) | $ | 11,143 |
Condensed Statements of Assets, Liabilities, and Stockholders' Deficit Navistar International Corporation (Manufacturing operations with financial services operations on an after-tax equity basis) | |||||||||||||||
As of October 31, 2011 | |||||||||||||||
Manufacturing Operations | Financial Services Operations | Adjustments | Consolidated Balance Sheet | ||||||||||||
(in millions) | |||||||||||||||
Assets | |||||||||||||||
Cash and cash equivalents | $ | 488 | $ | 51 | $ | — | $ | 539 | |||||||
Marketable securities | 698 | 20 | — | 718 | |||||||||||
Restricted cash and cash equivalents | 29 | 298 | — | 327 | |||||||||||
Finance and other receivables, net | 1,341 | 3,007 | (94 | ) | 4,254 | ||||||||||
Inventories | 1,704 | 10 | — | 1,714 | |||||||||||
Goodwill | 319 | — | — | 319 | |||||||||||
Property and equipment, net | 1,433 | 137 | — | 1,570 | |||||||||||
Investments in and advances to financial services operations | 564 | — | (564 | ) | — | ||||||||||
Investments in non-consolidated affiliates | 60 | — | — | 60 | |||||||||||
Deferred taxes, net | 2,031 | 26 | — | 2,057 | |||||||||||
Other assets | 705 | 28 | — | 733 | |||||||||||
Total assets | $ | 9,372 | $ | 3,577 | $ | (658 | ) | $ | 12,291 | ||||||
Liabilities and stockholders' equity (deficit) | |||||||||||||||
Accounts payable | $ | 2,194 | $ | 22 | $ | (94 | ) | $ | 2,122 | ||||||
Debt | 1,980 | 2,876 | — | 4,856 | |||||||||||
Postretirement benefits liabilities | 3,262 | 54 | — | 3,316 | |||||||||||
Other liabilities | 1,908 | 61 | — | 1,969 | |||||||||||
Total liabilities | 9,344 | 3,013 | (94 | ) | 12,263 | ||||||||||
Redeemable equity securities | 5 | — | — | 5 | |||||||||||
Stockholders' equity attributable to non-controlling interest | 50 | — | — | 50 | |||||||||||
Stockholders' equity (deficit) attributable to controlling interest | (27 | ) | 564 | (564 | ) | (27 | ) | ||||||||
Total liabilities and stockholders' equity (deficit) | $ | 9,372 | $ | 3,577 | $ | (658 | ) | $ | 12,291 |
Condensed Statement of Cash Activity Navistar International Corporation (Manufacturing operations with financial services operations on an after-tax equity basis) | |||||||||||||||
Nine Months Ended July 31, 2012 | |||||||||||||||
Manufacturing Operations | Financial Services Operations | Adjustments | Condensed Consolidated Statement of Cash Flows | ||||||||||||
(in millions) | |||||||||||||||
Cash flows from operating activities | |||||||||||||||
Net income (loss) | $ | (206 | ) | $ | 48 | $ | (48 | ) | $ | (206 | ) | ||||
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | |||||||||||||||
Depreciation and amortization | 207 | 2 | — | 209 | |||||||||||
Depreciation of equipment leased to others | 14 | 23 | — | 37 | |||||||||||
Amortization of debt issuance costs and discount | 22 | 9 | — | 31 | |||||||||||
Deferred income taxes | (405 | ) | — | — | (405 | ) | |||||||||
Impairment of intangible assets | 38 | — | — | 38 | |||||||||||
Equity in loss of non-consolidated affiliates | 22 | — | — | 22 | |||||||||||
Equity in income of financial services affiliates | (48 | ) | — | 48 | — | ||||||||||
Dividends from non-consolidated affiliates | 5 | — | — | 5 | |||||||||||
Change in intercompany receivables and payables | 34 | (34 | ) | — | — | ||||||||||
Other, net | 25 | 590 | — | 615 | |||||||||||
Net cash provided by (used in) operating activities | (292 | ) | 638 | — | 346 | ||||||||||
Cash flows from investing activities | |||||||||||||||
Purchases of marketable securities | (672 | ) | — | — | (672 | ) | |||||||||
Sales or maturities of marketable securities | 1,230 | — | — | 1,230 | |||||||||||
Net change in restricted cash and cash equivalents | 3 | 45 | — | 48 | |||||||||||
Capital expenditures | (248 | ) | (2 | ) | — | (250 | ) | ||||||||
Purchase of equipment leased to others | (3 | ) | (46 | ) | — | (49 | ) | ||||||||
Acquisition of intangibles | (14 | ) | — | — | (14 | ) | |||||||||
Business acquisitions, net of cash received | (12 | ) | — | — | (12 | ) | |||||||||
Other investing activities | (6 | ) | 1 | — | (5 | ) | |||||||||
Net cash provided by (used in) investing activities | 278 | (2 | ) | — | 276 | ||||||||||
Net cash provide by (used in) financing activities | 23 | (630 | ) | — | (607 | ) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (9 | ) | 2 | — | (7 | ) | |||||||||
Increase in cash and cash equivalents | — | 8 | — | 8 | |||||||||||
Cash and cash equivalents at beginning of the period | 488 | 51 | — | 539 | |||||||||||
Cash and cash equivalents at end of the period | $ | 488 | $ | 59 | $ | — | $ | 547 |
Condensed Statement of Cash Activity Navistar International Corporation (Manufacturing operations with financial services operations on an after-tax equity basis) | |||||||||||||||
Nine Months Ended July 31, 2011(A) | |||||||||||||||
Manufacturing Operations | Financial Services Operations | Adjustments | Condensed Consolidated Statement of Cash Flows | ||||||||||||
(in millions) | |||||||||||||||
Cash flows from operating activities | |||||||||||||||
Net income | $ | 1,503 | $ | 67 | $ | (67 | ) | $ | 1,503 | ||||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 214 | 3 | — | 217 | |||||||||||
Depreciation of equipment leased to others | 10 | 18 | — | 28 | |||||||||||
Amortization of debt issuance costs and discount | 21 | 12 | — | 33 | |||||||||||
Deferred income taxes | (1,472 | ) | — | — | (1,472 | ) | |||||||||
Impairment of property and equipment and intangible assets | 73 | — | — | 73 | |||||||||||
Equity in loss of non-consolidated affiliates | 55 | — | — | 55 | |||||||||||
Equity in income of financial services affiliates | (67 | ) | — | 67 | — | ||||||||||
Dividends from non-consolidated affiliates | 2 | — | — | 2 | |||||||||||
Change in intercompany receivables and payables | (30 | ) | 30 | — | — | ||||||||||
Other, net | (73 | ) | 173 | — | 100 | ||||||||||
Net cash provided by operating activities | 236 | 303 | — | 539 | |||||||||||
Cash flows from investing activities | |||||||||||||||
Purchases of marketable securities | (1,109 | ) | — | — | (1,109 | ) | |||||||||
Sales or maturities of marketable securities | 1,075 | — | — | 1,075 | |||||||||||
Net change in restricted cash and cash equivalents | 2 | 19 | — | 21 | |||||||||||
Capital expenditures | (290 | ) | (1 | ) | — | (291 | ) | ||||||||
Purchase of equipment leased to others | 1 | (36 | ) | — | (35 | ) | |||||||||
Other investing activities | (38 | ) | 7 | — | (31 | ) | |||||||||
Net cash used in investing activities | (359 | ) | (11 | ) | — | (370 | ) | ||||||||
Net cash used in financing activities | (5 | ) | (312 | ) | — | (317 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 7 | — | — | 7 | |||||||||||
Decrease in cash and cash equivalents | (121 | ) | (20 | ) | — | (141 | ) | ||||||||
Cash and cash equivalents at beginning of the period | 534 | 51 | — | 585 | |||||||||||
Cash and cash equivalents at end of the period | $ | 413 | $ | 31 | $ | — | $ | 444 |
(A) | Effective with the fourth quarter of 2011, the Company presents manufacturing operations with financial services operations on an after-tax equity basis. Previously, the financial services operations were presented on a pre-tax equity basis. The nine months ended July 31, 2011 amounts have been reclassified to conform to this presentation. |
Summary of significant accounting policies (Variable Interest Entities) (Details) (USD $)
In Millions, unless otherwise specified |
Jul. 31, 2012
|
Oct. 31, 2011
|
---|---|---|
Variable Interest Entity Primary Beneficiary Blue Diamond Parts And Blue Diamond Truck [Member]
|
||
Variable Interest Entity [Line Items] | ||
Assets | $ 250 | $ 306 |
Liabilities | 117 | 158 |
Cash and cash equivalents | 28 | 38 |
Securitizations Treated as Borrowings [Member] | Financial Services [Member]
|
||
Variable Interest Entity [Line Items] | ||
Assets | 1,400 | 1,800 |
Liabilities | 1,200 | 1,500 |
Transaction Does Not Qualify for Sale Accounting [Member] | Financial Services [Member]
|
||
Variable Interest Entity [Line Items] | ||
Assets | 372 | 468 |
Liabilities | $ 132 | $ 216 |
Postretirement benefits Postretirement Benefits Parenthetical (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2012
|
Jul. 31, 2011
|
Jul. 31, 2012
|
Jul. 31, 2011
|
|
Defined Contribution Plan, Cost Recognized | $ 8 | $ 7 | $ 32 | $ 25 |
Investments in and advances to non-consolidated affiliates (Narrative) (Details)
|
Jul. 31, 2012
Minimum [Member]
|
Jul. 31, 2012
Maximum [Member]
|
Sep. 30, 2011
NC2 Global, LLC [Member]
|
Aug. 31, 2011
NC2 Global, LLC [Member]
|
---|---|---|---|---|
Schedule of Equity Method Investments [Line Items] | ||||
Equity Method Investment, Ownership Percentage | 10.00% | 50.00% | 100.00% | 50.00% |
Condensed consolidating guarantor and non-guarantor financial information (Statement of Operations) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2012
|
Jul. 31, 2011
|
Jul. 31, 2012
|
Jul. 31, 2011
|
Oct. 31, 2011
|
Jul. 31, 2012
NIC [Member]
|
Jul. 31, 2011
NIC [Member]
|
Jul. 31, 2012
NIC [Member]
|
Jul. 31, 2011
NIC [Member]
|
Oct. 31, 2011
NIC [Member]
|
Jul. 31, 2012
Navistar, Inc. [Member]
|
Jul. 31, 2011
Navistar, Inc. [Member]
|
Jul. 31, 2012
Navistar, Inc. [Member]
|
Jul. 31, 2011
Navistar, Inc. [Member]
|
Oct. 31, 2011
Navistar, Inc. [Member]
|
Jul. 31, 2012
Non-Guarantor Subsidiaries [Member]
|
Jul. 31, 2011
Non-Guarantor Subsidiaries [Member]
|
Jul. 31, 2012
Non-Guarantor Subsidiaries [Member]
|
Jul. 31, 2011
Non-Guarantor Subsidiaries [Member]
|
Oct. 31, 2011
Non-Guarantor Subsidiaries [Member]
|
Jul. 31, 2012
Consolidation, Eliminations [Member]
|
Jul. 31, 2011
Consolidation, Eliminations [Member]
|
Jul. 31, 2012
Consolidation, Eliminations [Member]
|
Jul. 31, 2011
Consolidation, Eliminations [Member]
|
Oct. 31, 2011
Consolidation, Eliminations [Member]
|
Jul. 31, 2012
Truck [Member]
|
Jul. 31, 2011
Truck [Member]
|
Jul. 31, 2012
Truck [Member]
|
Jul. 31, 2011
Truck [Member]
|
Jan. 31, 2011
Pension And Other Postretirement Contractual Termination Benefits [Member]
Truck [Member]
Location Fort Wayne [Member]
|
|||||||
Condensed Financial Statements, Captions [Line Items] | ||||||||||||||||||||||||||||||||||||
Other Assets | $ 733 | $ 168 | $ 152 | $ 416 | $ (3) | |||||||||||||||||||||||||||||||
Sales and revenues, net | 3,319 | 3,537 | 9,669 | 9,635 | 0 | 0 | 0 | 0 | 2,007 | 2,072 | 6,141 | 5,903 | 2,941 | 3,260 | 8,776 | 9,079 | (1,629) | (1,795) | (5,248) | (5,347) | 2,336 | [1] | 2,457 | [1] | 6,856 | [1] | 6,528 | [1] | ||||||||
Cost of products sold | 2,876 | 2,930 | 8,518 | 7,830 | 0 | 0 | 0 | 0 | 1,951 | 1,940 | 6,151 | 5,493 | 2,554 | 2,774 | 7,577 | 7,620 | (1,629) | (1,784) | (5,210) | (5,283) | ||||||||||||||||
Restructuring Charges | 4 | 56 | 24 | 80 | 0 | 0 | 0 | 0 | 3 | 4 | 23 | 27 | 1 | 52 | 1 | 53 | 0 | 0 | 0 | 0 | 5 | |||||||||||||||
Other Cost and Expense, Operating | 529 | 519 | 1,684 | 1,561 | 18 | 15 | 57 | 56 | 329 | 302 | 1,020 | 915 | 206 | 230 | 682 | 671 | (24) | (28) | (75) | (81) | ||||||||||||||||
Impairment of Long-Lived Assets to be Disposed of | 0 | 64 | 38 | 64 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 64 | 38 | 64 | 0 | 0 | 0 | |||||||||||||||||||
Total Costs and Expenses | 3,409 | 3,569 | 10,264 | 9,535 | 18 | 15 | 57 | 56 | 2,283 | 2,246 | 7,194 | 6,435 | 2,761 | 3,120 | 8,298 | 8,408 | (1,653) | (1,812) | (5,285) | (5,364) | ||||||||||||||||
Equity in loss of non-consolidated affiliates | (10) | (22) | (21) | (55) | (30) | 1,863 | (326) | 1,983 | 16 | (52) | 384 | 292 | (11) | (9) | (25) | (29) | 15 | (1,824) | (54) | (2,301) | (12) | [1] | (22) | [1] | (27) | [1] | (57) | [1] | ||||||||
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest | (100) | (54) | (616) | 45 | (48) | 1,848 | (383) | 1,927 | (260) | (226) | (669) | (240) | 169 | 131 | 453 | 642 | 39 | (1,807) | (17) | (2,284) | ||||||||||||||||
Income Tax Expense (Benefit) | 196 | 1,463 | 410 | 1,458 | 132 | (448) | 142 | (459) | 229 | 1,514 | 243 | 1,515 | (187) | (162) | 0 | (214) | 22 | 559 | 25 | 616 | 0 | [1] | 0 | [1] | 0 | [1] | 0 | [1] | ||||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 96 | 1,409 | (206) | 1,503 | 84 | 1,400 | (241) | 1,468 | (31) | 1,288 | (426) | 1,275 | (18) | (31) | 453 | 428 | 61 | (1,248) | 8 | (1,668) | ||||||||||||||||
Net Income (Loss) Attributable to Noncontrolling Interest | 12 | 9 | 35 | 35 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 12 | 9 | 35 | 35 | 0 | 0 | 0 | 0 | ||||||||||||||||
Net income (loss) attributable to Navistar International Corporation | $ 84 | $ 1,400 | $ (241) | $ 1,468 | $ 84 | $ 1,400 | $ (241) | $ 1,468 | $ (31) | $ 1,288 | $ (426) | $ 1,275 | $ (30) | $ (40) | $ 418 | $ 393 | $ 61 | $ (1,248) | $ 8 | $ (1,668) | $ (30) | [1] | $ (75) | [1] | $ (160) | [1] | $ 49 | [1] | ||||||||
|
Income Taxes (Details) (USD $)
|
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Jul. 31, 2012
|
Jul. 31, 2011
|
Jul. 31, 2012
|
|
Income Taxes [Line Items] | |||
Tax Benefit | $ 173,000,000 | ||
Valuation Allowance, Amount | 14,000,000 | 14,000,000 | |
Valuation Allowance, Deferred Tax Asset, Change in Amount | 181,000,000 | ||
Income Tax Expense (Benefit) | 1,500,000,000 | ||
Adjustments to Additional Paid in Capital, Other | 45,000,000 | ||
Income Taxes Percent Likelihood Of Being Realized Upon Settlement | 50.00% | 50.00% | |
Liability for uncertain tax positions | 14,000,000 | 14,000,000 | |
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | 6,000,000 | 6,000,000 | |
Tax Adjustments, Settlements, and Unusual Provisions | 2,000,000 | 9,000,000 | |
Liability for Uncertain Tax Benefits Time Range | 12 | 12 | |
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Estimated Range of Change, Lower Bound | 0 | 0 | |
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Estimated Range of Change, Upper Bound | $ 25,000,000 | $ 25,000,000 |
Allowance for doubtful accounts (Aging Analysis) (Details) (USD $)
In Millions, unless otherwise specified |
Jul. 31, 2012
|
Oct. 31, 2011
|
---|---|---|
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | $ 2,288 | $ 2,843 |
30-90 days past due | 61 | 90 |
Over 90 days past due | 14 | 14 |
Total finance receivables | 2,363 | 2,947 |
Retail Portfolio [Member]
|
||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 1,116 | 1,515 |
30-90 days past due | 59 | 85 |
Over 90 days past due | 13 | 13 |
Total finance receivables | 1,188 | 1,613 |
Wholesale Portfolio [Member]
|
||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 1,172 | 1,328 |
30-90 days past due | 2 | 5 |
Over 90 days past due | 1 | 1 |
Total finance receivables | $ 1,175 | $ 1,334 |
Fair Value Measurements (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2012
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial instruments measured at fair value, recurring basis | The following tables present the financial instruments measured at fair value on a recurring basis:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial instruments classified within Level 3 | The tables below present the changes for those financial instruments classified within Level 3 of the valuation hierarchy:
_____________
|
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Financial instruments measured at fair value, nonrecurring basis | During the three and nine months ended July 31, 2012 and 2011, there were no purchases or sales of Level 3 financial instruments. Additionally, for the three months ended July 31, 2012 and 2011, there were no issuances of Level 3 financial instruments and there were no transfers into or out of Level 3. The following table presents the financial instruments measured at fair value on a nonrecurring basis:
_____________
|
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Carrying values and estimated fair values of financial instruments | The carrying values and estimated fair values of financial instruments are summarized in the tables below:
_________________________
|
Condensed consolidating guarantor and non-guarantor financial information (Comprehensive Income) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2012
|
Jul. 31, 2011
|
Jul. 31, 2012
|
Jul. 31, 2011
|
|
Net loss attributable to Navistar International Corporation | $ 84 | $ 1,400 | $ (241) | $ 1,468 |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | (61) | 4 | (139) | 65 |
Defined benefit plans | 23 | (14) | 63 | 65 |
Total other comprehensive income | (38) | (10) | (76) | 130 |
Total comprehensive income (loss) attributable to Navistar International Corporation | 46 | 1,390 | (317) | 1,598 |
NIC [Member]
|
||||
Net loss attributable to Navistar International Corporation | 84 | 1,400 | (241) | 1,468 |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | (61) | 4 | (139) | 65 |
Defined benefit plans | (23) | (14) | (63) | 65 |
Total other comprehensive income | (38) | (10) | (76) | 130 |
Total comprehensive income (loss) attributable to Navistar International Corporation | 46 | 1,390 | (317) | 1,598 |
Navistar, Inc. [Member]
|
||||
Net loss attributable to Navistar International Corporation | (31) | 1,288 | (426) | 1,275 |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | 0 | 0 | 0 | 0 |
Defined benefit plans | (21) | (19) | (57) | 51 |
Total other comprehensive income | 21 | (19) | 57 | 51 |
Total comprehensive income (loss) attributable to Navistar International Corporation | (10) | 1,269 | (369) | 1,326 |
Non-Guarantor Subsidiaries [Member]
|
||||
Net loss attributable to Navistar International Corporation | (30) | (40) | 418 | 393 |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | (60) | 4 | (138) | 65 |
Defined benefit plans | (1) | 29 | (6) | 14 |
Total other comprehensive income | (59) | 33 | (132) | 79 |
Total comprehensive income (loss) attributable to Navistar International Corporation | (89) | (7) | 286 | 472 |
Consolidation, Eliminations [Member]
|
||||
Net loss attributable to Navistar International Corporation | 61 | (1,248) | 8 | (1,668) |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | 60 | (4) | 138 | (65) |
Defined benefit plans | 22 | (10) | 63 | (65) |
Total other comprehensive income | 38 | (14) | 75 | (130) |
Total comprehensive income (loss) attributable to Navistar International Corporation | 99 | (1,262) | 83 | (1,798) |
Consolidated Entities [Member]
|
||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||
Defined benefit plans | $ (23) | $ (63) |
Summary of significant accounting policies (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2012
|
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranty Liability | Product Warranty Liability Accrued product warranty and deferred warranty revenue activity is as follows:
_________________________
The amount of deferred revenue related to extended warranty programs was $332 million and $257 million at July 31, 2012 and October 31, 2011, respectively. Revenue recognized under our extended warranty programs was $17 million and $48 million for the three and nine months ended July 31, 2012, respectively, and $13 million and $39 million for the three and nine months ended July 31, 2011, respectively. In the second quarter of 2012, the Truck segment recognized a charge of $24 million related to the extended warranty contracts on our 2010 emission standard MaxxForce Big-Bore engines. The majority of the charge has been included in the adjustments to pre-existing warranties. |
Debt (Details) (USD $)
|
3 Months Ended | |||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2012
|
Jul. 31, 2012
|
Oct. 31, 2011
|
Jul. 31, 2012
Manufacturing [Member]
|
Oct. 31, 2011
Manufacturing [Member]
|
Jul. 31, 2012
Financial Services [Member]
|
Oct. 31, 2011
Financial Services [Member]
|
Jul. 31, 2012
Senior Notes [Member]
Manufacturing [Member]
|
Nov. 02, 2011
Senior Notes [Member]
Manufacturing [Member]
|
Oct. 31, 2011
Senior Notes [Member]
Manufacturing [Member]
|
Jul. 31, 2012
Convertible Subordinated Debt [Member]
Manufacturing [Member]
|
Oct. 31, 2011
Convertible Subordinated Debt [Member]
Manufacturing [Member]
|
Jul. 31, 2012
Debt Of Majority-Owned Dealerships [Member]
Manufacturing [Member]
|
Oct. 31, 2011
Debt Of Majority-Owned Dealerships [Member]
Manufacturing [Member]
|
Jul. 31, 2012
Financing Arrangements and Capital Lease Obligations [Member]
Manufacturing [Member]
|
Oct. 31, 2011
Financing Arrangements and Capital Lease Obligations [Member]
Manufacturing [Member]
|
Jul. 31, 2012
Tax Exempt Bond [Member]
Manufacturing [Member]
|
Oct. 31, 2011
Tax Exempt Bond [Member]
Manufacturing [Member]
|
Jul. 31, 2012
Promissory Note [Member]
Manufacturing [Member]
|
Oct. 31, 2011
Promissory Note [Member]
Manufacturing [Member]
|
Jul. 31, 2012
Asset-Based Credit Facility [Member]
Manufacturing [Member]
|
Jun. 05, 2012
Asset-Based Credit Facility [Member]
Manufacturing [Member]
|
Nov. 30, 2011
Asset-Based Credit Facility [Member]
Manufacturing [Member]
|
Oct. 31, 2011
Asset-Based Credit Facility [Member]
Manufacturing [Member]
|
Jul. 31, 2012
Other [Member]
Manufacturing [Member]
|
Oct. 31, 2011
Other [Member]
Manufacturing [Member]
|
Jul. 31, 2012
Asset-Backed Debt [Member]
Financial Services [Member]
|
Oct. 31, 2011
Asset-Backed Debt [Member]
Financial Services [Member]
|
Jul. 31, 2012
Bank Revolvers [Member]
Financial Services [Member]
|
Oct. 31, 2011
Bank Revolvers [Member]
Financial Services [Member]
|
Jul. 31, 2012
Commercial Paper [Member]
Financial Services [Member]
|
Oct. 31, 2011
Commercial Paper [Member]
Financial Services [Member]
|
Jul. 31, 2012
Borrowings Secured By Operating and Finance Leases [Member]
Financial Services [Member]
|
Oct. 31, 2011
Borrowings Secured By Operating and Finance Leases [Member]
Financial Services [Member]
|
|
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||||||
Line of Credit Facility, Commitment Fee Amount | $ 1,000,000,000 | $ 1,000,000,000 | ||||||||||||||||||||||||||||||||
Debt instrument early redemption amount | 100,000,000 | 50,000,000 | 50,000,000 | |||||||||||||||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 8.25% | 6.50% | ||||||||||||||||||||||||||||||||
Long-term Debt | 2,146,000,000 | 1,980,000,000 | 2,266,000,000 | 2,876,000,000 | 872,000,000 | 967,000,000 | 514,000,000 | 497,000,000 | 75,000,000 | 94,000,000 | 146,000,000 | 118,000,000 | 225,000,000 | 225,000,000 | 33,000,000 | 40,000,000 | 238,000,000 | 138,000,000 | 100,000,000 | 0 | 43,000,000 | 39,000,000 | 1,299,000,000 | 1,664,000,000 | 857,000,000 | 1,072,000,000 | 53,000,000 | 70,000,000 | 57,000,000 | 70,000,000 | ||||
Less: Current portion | 1,416,000,000 | 1,379,000,000 | 356,000,000 | 99,000,000 | 1,060,000,000 | 1,280,000,000 | ||||||||||||||||||||||||||||
Net long-term debt | $ 2,996,000,000 | $ 3,477,000,000 | $ 1,790,000,000 | $ 1,881,000,000 | $ 1,206,000,000 | $ 1,596,000,000 |
Finance receivables (Details) (USD $)
|
3 Months Ended | 0 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2012
segments
|
Oct. 31, 2011
|
Jul. 31, 2012
Financial Services [Member]
|
Oct. 31, 2011
Financial Services [Member]
|
Jul. 31, 2012
TRAC Funding Facility [Member]
|
Oct. 31, 2011
TRAC Funding Facility [Member]
|
Jul. 31, 2012
Retail [Member]
|
Oct. 31, 2011
Retail [Member]
|
Jul. 31, 2012
Wholesale [Member]
|
Oct. 31, 2011
Wholesale [Member]
|
Jul. 31, 2012
Wholesale [Member]
Variable Interest Entity, Primary Beneficiary [Member]
Financial Services [Member]
|
Oct. 31, 2011
Wholesale [Member]
Variable Interest Entity, Primary Beneficiary [Member]
Financial Services [Member]
|
Jul. 31, 2012
Wholesale [Member]
Variable Funding Notes [Member]
Variable Interest Entity, Primary Beneficiary [Member]
Financial Services [Member]
|
Oct. 31, 2011
Wholesale [Member]
Variable Funding Notes [Member]
Variable Interest Entity, Primary Beneficiary [Member]
Financial Services [Member]
|
Jul. 31, 2012
Wholesale [Member]
Investor Notes, Maturing October 2012 [Member]
Variable Interest Entity, Primary Beneficiary [Member]
Financial Services [Member]
|
Oct. 31, 2011
Wholesale [Member]
Investor Notes, Maturing October 2012 [Member]
Variable Interest Entity, Primary Beneficiary [Member]
Financial Services [Member]
|
Jul. 31, 2012
Wholesale [Member]
Investor Notes, Maturing October 2016 [Member]
Variable Interest Entity, Primary Beneficiary [Member]
Financial Services [Member]
|
Oct. 31, 2011
Wholesale [Member]
Investor Notes, Maturing October 2016 [Member]
Variable Interest Entity, Primary Beneficiary [Member]
Financial Services [Member]
|
Jul. 31, 2012
Wholesale [Member]
Investor Notes, Maturing January 2012 [Member]
Variable Interest Entity, Primary Beneficiary [Member]
Financial Services [Member]
|
Oct. 31, 2011
Wholesale [Member]
Investor Notes, Maturing January 2012 [Member]
Variable Interest Entity, Primary Beneficiary [Member]
Financial Services [Member]
|
Jul. 31, 2012
Borrowings Secured By Operating and Finance Leases [Member]
TRAC Funding Facility [Member]
Financial Services [Member]
|
Nov. 02, 2011
Navistar Financial Retail Receivables Corporation [Member]
Financial Services [Member]
|
|||||
Financing Receivable, Recorded Investment [Line Items] | ||||||||||||||||||||||||||
On-balance sheet assets, net of intercompany balances | $ 2,900,000,000 | $ 3,500,000,000 | ||||||||||||||||||||||||
Financing receivable, by class, number of portfolio segments | 2 | |||||||||||||||||||||||||
Loans and Leases Receivable, Gross, Carrying Amount, Covered | 2,363,000,000 | 2,947,000,000 | 1,188,000,000 | 1,613,000,000 | 1,175,000,000 | 1,334,000,000 | ||||||||||||||||||||
Less: Allowance for doubtful accounts | 28,000,000 | 34,000,000 | ||||||||||||||||||||||||
Finance receivables, net | 2,335,000,000 | 2,913,000,000 | ||||||||||||||||||||||||
Less: Current portion, net | 1,812,000,000 | [1] | 2,198,000,000 | [1] | ||||||||||||||||||||||
Noncurrent portion, net | 523,000,000 | 715,000,000 | ||||||||||||||||||||||||
Facility | 1,074,000,000 | 1,100,000,000 | 500,000,000 | 500,000,000 | 350,000,000 | 350,000,000 | 224,000,000 | 0 | 0 | 250,000,000 | 125,000,000 | |||||||||||||||
Unutilized funding | 85,000,000 | 9,000,000 | 320,000,000 | 170,000,000 | ||||||||||||||||||||||
Proceeds from Issuance of Senior Long-term Debt | 224,000,000 | |||||||||||||||||||||||||
Funding facility collateral, retail accounts | 123,000,000 | 174,000,000 | ||||||||||||||||||||||||
Funding facility collateral, cash equivalents | $ 35,000,000 | $ 33,000,000 | ||||||||||||||||||||||||
|
Condensed consolidating guarantor and non-guarantor financial information (Tables)
|
3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2012
|
Jul. 31, 2011
|
Jul. 31, 2012
|
Jul. 31, 2011
|
Oct. 31, 2011
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Statement of Operations |
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Schedule of Condensed Income Statement [Table Text Block] |
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Condensed Consolidating Statements of Comprehensive Income [Table Text Block] |
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Schedule of Condensed Balance Sheet [Table Text Block] |
|
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Schedule of Condensed Cash Flow Statement [Table Text Block] |
|
Postretirement benefits (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 15 Months Ended | 12 Months Ended | 3 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2012
|
Jul. 31, 2011
|
Jul. 31, 2012
|
Jul. 31, 2011
|
Jul. 31, 2012
Pension Benefit [Member]
|
Jul. 31, 2011
Pension Benefit [Member]
|
Jul. 31, 2012
Pension Benefit [Member]
|
Jul. 31, 2011
Pension Benefit [Member]
|
Jul. 31, 2012
Other Postretirement Benefit Plans, Defined Benefit [Member]
|
Jul. 31, 2011
Other Postretirement Benefit Plans, Defined Benefit [Member]
|
Jul. 31, 2012
Other Postretirement Benefit Plans, Defined Benefit [Member]
|
Jul. 31, 2011
Other Postretirement Benefit Plans, Defined Benefit [Member]
|
Jul. 31, 2012
Early Retiree Reinsurance Program [Member]
|
Jul. 31, 2012
Early Retiree Reinsurance Program [Member]
|
Jul. 31, 2011
Early Retiree Reinsurance Program [Member]
|
Oct. 31, 1993
Retiree Supplemental Benefit Trust [Member]
|
Jul. 31, 2011
Facility Closing [Member]
Chatham [Member]
Pension Benefit [Member]
|
Jul. 31, 2011
Facility Closing [Member]
Chatham [Member]
Other Postretirement Benefit Plans, Defined Benefit [Member]
|
Jul. 31, 2011
Facility Closing [Member]
Chatham [Member]
Truck [Member]
|
Jul. 31, 2011
Facility Closing [Member]
Custom Products Operations Union City and Coburg [Member]
Truck [Member]
|
Jul. 31, 2012
Facility Closing [Member]
Custom Products Operations Union City and Coburg [Member]
Truck [Member]
|
Apr. 30, 2012
Pension And Other Postretirement Contractual Termination Benefits [Member]
Chatham [Member]
Truck [Member]
|
Jul. 31, 2011
Pension And Other Postretirement Contractual Termination Benefits [Member]
Custom Products Operations Union City and Coburg [Member]
Truck [Member]
|
Jan. 31, 2011
Pension And Other Postretirement Contractual Termination Benefits [Member]
Location Fort Wayne [Member]
Truck [Member]
|
|
Defined Benefit Plan Disclosure [Line Items] | ||||||||||||||||||||||||
Defined Benefit Plan, Benefits Paid | $ 30 | $ 28 | $ 112 | $ 80 | ||||||||||||||||||||
Defined Benefit Plan, Estimated Future Employer Contributions in Current Fiscal Year | 45 | 45 | ||||||||||||||||||||||
Defined Benefit Plan, Contributions by Plan Participants | 0 | 3 | 5 | |||||||||||||||||||||
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Curtailments | 8 | |||||||||||||||||||||||
Defined Benefit Plan, Cost of Providing Special or Contractual Termination Benefits Recognized During Period | 0 | 35 | 0 | 38 | 0 | 6 | (3) | 6 | 35 | |||||||||||||||
Postemployment Benefits, Period Expense | 13 | 4 | ||||||||||||||||||||||
Defined Contribution Plan, Cost Recognized | 8 | 7 | 32 | 25 | ||||||||||||||||||||
Contribution To The Trust Shares | 25.5 | |||||||||||||||||||||||
Profit Sharing Accruals | 0 | |||||||||||||||||||||||
Defined Benefit Plan, Contributions by Employer | 2 | 1 | ||||||||||||||||||||||
Defined Benefit Plan, Estimated Future Employer Contributions in Next Fiscal Year | 17 | 17 | ||||||||||||||||||||||
Restructuring Charges | $ 4 | $ 56 | $ 24 | $ 80 | $ 48 | $ 5 | $ 10 | $ 33 | $ 5 |
Stockholders' equity (deficit) (Details) (USD $)
|
9 Months Ended | 1 Months Ended | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2012
|
Jul. 31, 2011
|
Sep. 30, 2011
Maximum [Member]
|
Nov. 30, 2011
Accelerated Share Repurchases Program [Member]
|
Oct. 31, 2011
Accelerated Share Repurchases Program [Member]
|
Oct. 31, 2011
October 2011 [Member]
|
Oct. 31, 2011
October 2011 [Member]
Accelerated Share Repurchases Program [Member]
|
Oct. 31, 2011
November 2011 [Member]
|
Nov. 30, 2011
November 2011 [Member]
Accelerated Share Repurchases Program [Member]
|
Jan. 31, 2012
Open Market Share Repurchase Program [Member]
|
Oct. 31, 2011
Open Market Share Repurchase Program [Member]
|
Jul. 31, 2012
Open Market Share Repurchase Program [Member]
|
Jul. 31, 2012
Open Market Share Repurchase Program [Member]
Repurchase of Equity [Member]
|
|
Class of Stock [Line Items] | |||||||||||||
Exercise Price Stockholder Rights Plan | $ 140.00 | ||||||||||||
Redeemable amount per right under Shareholder Rights Plan | 0 | ||||||||||||
Ownership Percentage Stockholder Rights Plan | 15.00% | ||||||||||||
Stock Repurchase Program, Authorized Amount | 175,000,000 | 100,000,000 | |||||||||||
Payments for Repurchase of Common Stock | 75,000,000 | 11,000,000 | 100,000,000 | ||||||||||
Treasury Stock, Shares, Acquired | 2,542,609 | 2,380,952 | 1,905,600 | ||||||||||
Accelerated Share Repurchases, Settlement Payment or Receipt | 80,000,000 | 20,000,000 | |||||||||||
Accelerated Share Repurchases, Initial Price Paid Per Share | $ 33.60 | ||||||||||||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 20,000,000 | $ 75,000,000 | $ 70,000,000 | $ 5,000,000 | |||||||||
Treasury Stock, Additional Shares Acquired | 161,657 |
Financial Instruments and Commodity Contracts (Balance Sheet Location) (Details) (USD $)
In Millions, unless otherwise specified |
Jul. 31, 2012
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Oct. 31, 2011
|
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Other Current Assets [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Asset derivatives | $ 1 | $ 4 |
Other Current Liabilities [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Liability derivatives | 8 | |
Foreign Currency Contract [Member] | Other Current Assets [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Asset derivatives | 1 | 3 |
Foreign Currency Contract [Member] | Other Current Liabilities [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Liability derivatives | 2 | 0 |
Cross Currency Interest Rate Contract [Member] | Other Current Assets [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Asset derivatives | 0 | 0 |
Cross Currency Interest Rate Contract [Member] | Other Current Liabilities [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Liability derivatives | 0 | 4 |
Commodity Contract [Member] | Other Current Assets [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Asset derivatives | 0 | 1 |
Commodity Contract [Member] | Other Current Liabilities [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Liability derivatives | $ 3 | $ 6 |
Inventories (Details) (USD $)
In Millions, unless otherwise specified |
Jul. 31, 2012
|
Oct. 31, 2011
|
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished products | $ 958 | $ 873 |
Work in process | 203 | 174 |
Raw materials | 716 | 667 |
Total inventories | $ 1,877 | $ 1,714 |
Restructuring
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Jul. 31, 2012
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructurings | Restructurings and Impairments 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. Engineering Integration In the first quarter of 2011, the Company committed to a plan for the consolidation of the truck and engine engineering operations as well as the relocation of our world headquarters. The Company is utilizing proceeds from the October 2010 loan agreement related to the 6.5% Tax Exempt Bonds due 2040 to finance the relocation of the Company’s world headquarters and engineering center, the expansion of an existing warehouse facility, and the development of certain industrial facilities to facilitate the consolidation of certain operations. In the first quarter of 2011, the Company finalized the purchase of the property and buildings for the consolidation of the truck and engine engineering operations, as well as the relocation of our world headquarters. The Company continues to develop plans for efficient transitions related to these activities and the optimization of the operations and management structure. In the second quarter of 2012, the Company vacated the premises of its former world headquarters in Warrenville, Illinois and recorded a charge of $16 million, consisting of $19 million for the recognition of the fair value of the lease vacancy obligation, partially offset by $3 million for the reversal of deferred rent expense. This charge was recorded in Corporate and recognized in Restructuring charges. The cash payments associated with the lease vacancy obligation are expected to be completed by the end of 2016. In the first quarter of 2011, the Company committed to a plan to wind-down and transfer certain operations at the Fort Wayne facility. As a result of the restructuring activities, the Truck segment has recognized $34 million of restructuring charges to date, of which $2 million and $5 million was recognized during the three and nine months ended July 31, 2012, respectively, and $4 million and $23 million was recognized during the three and nine months ended July 31, 2011, respectively. To date, the restructuring charges consist of $13 million in personnel costs for employee termination and related benefits, $7 million of charges for pension and other postretirement contractual termination benefits, and $14 million of employee relocation costs. We anticipate additional engineering integration charges to range between $30 million and $40 million through 2013. North American Manufacturing Restructuring Activities and Impairments of Intangible Assets In the third quarter of 2011, the Company committed to plans for the restructuring of certain North American manufacturing operations. Chatham restructuring activities and impairment of property and equipment In the third quarter of 2011, the Company committed to close its Chatham, Ontario heavy truck plant, which had been idled since June 2009 due to an inability to reach a collective bargaining agreement with the Canadian Auto Workers ("CAW"). Under the Company's flexible manufacturing strategy, products previously built in Chatham were transitioned to other assembly plants in North America. The commitment to close the plant was also driven by economic, industry, and operational conditions that rendered the plant uncompetitive. As a result of the restructuring activities, the Truck segment has recognized $48 million of restructuring charges since these actions were commenced, substantially all of which were recognized during the third quarter of 2011. Restructuring charges to date consist of $7 million in personnel costs for employee termination and related benefits, $33 million of charges for pension and other postretirement statutory and contractual termination benefits and related charges, and $8 million of other costs. Ultimate pension and postretirement costs and termination benefits are subject to employee negotiation and acceptance rates. We anticipate additional charges of $30 million to $70 million in future periods. We expect the restructuring charges, excluding pension and other postretirement costs, will be paid over the next year. In the third quarter of 2011, the Truck segment recognized $8 million of charges for impairments of property and equipment at our Chatham facility. The closure of the facility permanently eliminated future cash flows associated with that property and equipment and its carrying values were determined to not be fully recoverable. We utilized the cost approach and market approach to determine the fair value of certain assets within the asset group. The impairment charges reflect the impact of the restructuring activities and closure of the Chatham facility. Custom Products restructuring activities and impairment of intangible assets In the third quarter of 2011, the Company committed to a restructuring plan of its Workhorse Custom Chassis ("WCC") and Monaco RV ("Monaco") recreational vehicles operations (collectively "Custom Products"), including the closure of the Union City, Indiana chassis facility and the wind-down and transfer of certain operations at the RV motor coach plant in Coburg, Oregon. In the second quarter of 2012, the Company decided to discontinue accepting orders for its WCC business and take certain actions to idle the business, which are expected to occur in late 2012. As a result of these restructuring activities relating to Custom Products, the Truck segment has recognized $10 million of restructuring charges to date, of which $5 million was recognized in each of the third and fourth quarters of 2011. To date, the restructuring charges consisted of $6 million in personnel costs for employee termination and related benefits and $4 million of charges due to a curtailment of other postretirement employee benefit plan and postretirement contractual termination benefits. These actions are expected to be completed by the end of 2012. The Company also expects the restructuring charges, excluding other postretirement costs, will be paid over the next two years. In the third quarter of 2011, the Truck segment recognized $51 million of charges for impairments of intangible assets, primarily customer relationships and trade names, associated with the WCC asset group. The asset group was reviewed for recoverability by comparing the carrying value to estimated future undiscounted cash flows and those carrying values were determined to not be fully recoverable. We utilized the income and market approaches to determine the fair value of the asset group. The impairment charges for the asset group reflected market deterioration and reduction in demand below previously anticipated levels. As a result of the decision in the second quarter of 2012 to idle the WCC business, the WCC asset group was again reviewed in the second quarter of 2012 for recoverability and determined not to be recoverable. We determined that the remaining intangible asset balances were fully impaired, and the Truck segment recognized asset impairment charges of $28 million. In addition, the Parts segment recognized a charge of $10 million for the impairment of certain intangible assets of the parts distribution operations related to the WCC business. Other Springfield Assembly Plant Actions In the first quarter of 2011, certain employees at our Springfield Assembly Plant accepted retirement and separation incentive agreements. As a result, the Truck segment recorded $4 million of employee termination charges. Subsequent Event In August 2012, the Company announced that it is taking actions to control spending across the Company with targeted reductions in certain costs. The Company is focusing on continued reductions of the amount of discretionary spending, including but not limited to reductions from efficiencies, or prioritizing or eliminating certain programs or projects. These actions included offering to the majority of the Company's U.S.-based non-represented salaried employees the opportunity to apply for a voluntary separation program ("VSP"). Employees who applied and were accepted in the VSP will receive enhanced exit benefits. Along with the employees who chose to participate in the VSP, through the use of attrition and an involuntary reduction in force, the Company will eliminate additional positions in order to meet our targeted reduction goals. Severance benefits of various amounts, depending on the pay and length of service of the affected employees, will be payable under the reduction in force. The Company expects to complete the VSP and involuntary reduction in force in the fourth quarter of 2012 and estimates that it will incur charges between $40 million and $60 million. Reconciliation of Restructuring Liability The following table summarizes the activity for the nine months ended July 31, 2012 in the restructuring liability, which excludes pension and other postretirement contractual termination benefits:
The following table summarizes the activity for the nine months ended July 31, 2011, in the restructuring liability, which excludes pension and other postretirement contractual termination benefits charges, and the pension curtailment:
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Financial Instruments and Commodity Contracts (Income Statement Location) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2012
|
Jul. 31, 2011
|
Jul. 31, 2012
|
Jul. 31, 2011
|
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized | $ (7) | $ (2) | $ (11) | $ 21 |
Cross Currency Interest Rate Contract [Member] | Other Income, Net [Member]
|
||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized | 0 | 0 | 1 | 0 |
Foreign Currency Contract [Member] | Other Income, Net [Member]
|
||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized | (2) | (1) | (5) | 0 |
Forward Contracts [Member] | Commodity Contract [Member] | Cost of Products Sold [Member]
|
||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized | $ (5) | $ (1) | $ (7) | $ 21 |