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. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II—Other Information | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
• | 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 emissions standards applicable to certain of our engines, including the timing and costs of compliance and consequences of noncompliance with such standards, as well as our ability to meet other federal, state and foreign regulatory requirements; |
• | 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 Motor Company 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 the possible effects of anticipated divestitures and closures of businesses; |
• | our expectations relating to our cost-reduction actions, including our voluntary separation program, involuntary reductions in force, and other actions to reduce discretionary spending; |
• | our implementation of a Return-On-Invested Capital methodology; |
• | our realigning our management structure around functional expertise; |
• | our changes to our organizational and segment reporting structures expected to be completed in the near future; |
• | our expectations relating to our ability to service our long-term debt; |
• | our expectations relating to our retail finance receivables and retail finance revenues; |
• | our expectations relating to the availability of sufficient funds to meet operating requirements, capital expenditures, equity |
• | our anticipated costs relating to the development of our emissions solutions products and other product modifications that may be required to meet other federal, state, and foreign regulatory requirements; |
• | our anticipated capital expenditures; |
• | our expectations relating to warranty costs; |
• | our expectations relating to interest expense; |
• | costs relating to litigation and similar matters, including costs associated with the shareholder class action complaints and the derivative complaints; |
• | estimates relating to pension plan contributions and unfunded pension and postretirement benefits; |
• | trends relating to commodity prices; and |
• | anticipated trends, expectations, and outlook relating to matters affecting our financial condition or results of operations. |
Item 1. | Financial Statements |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||
(in millions, except per share data) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Sales and revenues | |||||||||||||||
Sales of manufactured products, net | $ | 2,820 | $ | 3,204 | $ | 7,905 | $ | 9,387 | |||||||
Finance revenues | 41 | 42 | 119 | 129 | |||||||||||
Sales and revenues, net | 2,861 | 3,246 | 8,024 | 9,516 | |||||||||||
Costs and expenses | |||||||||||||||
Costs of products sold | 2,547 | 2,800 | 7,196 | 8,350 | |||||||||||
Restructuring charges | 6 | 4 | 14 | 23 | |||||||||||
Asset impairment charges | 17 | — | 17 | 10 | |||||||||||
Selling, general and administrative expenses | 308 | 322 | 905 | 1,049 | |||||||||||
Engineering and product development costs | 99 | 135 | 310 | 402 | |||||||||||
Interest expense | 76 | 59 | 240 | 182 | |||||||||||
Other expense (income), net | 22 | 12 | (35 | ) | 33 | ||||||||||
Total costs and expenses | 3,075 | 3,332 | 8,647 | 10,049 | |||||||||||
Equity in income (loss) of non-consolidated affiliates | 3 | (10 | ) | 6 | (21 | ) | |||||||||
Loss from continuing operations before income taxes | (211 | ) | (96 | ) | (617 | ) | (554 | ) | |||||||
Income tax benefit (expense) | (16 | ) | 188 | (53 | ) | 387 | |||||||||
Income (loss) from continuing operations | (227 | ) | 92 | (670 | ) | (167 | ) | ||||||||
Income (loss) from discontinued operations, net of tax | (10 | ) | 4 | (40 | ) | (39 | ) | ||||||||
Net income (loss) | (237 | ) | 96 | (710 | ) | (206 | ) | ||||||||
Less: Net income attributable to non-controlling interests | 10 | 12 | 34 | 35 | |||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | (247 | ) | $ | 84 | $ | (744 | ) | $ | (241 | ) | ||||
Amounts attributable to Navistar International Corporation common shareholders: | |||||||||||||||
Income (loss) from continuing operations, net of tax | $ | (237 | ) | $ | 80 | $ | (704 | ) | $ | (202 | ) | ||||
Income (loss) from discontinued operations, net of tax | (10 | ) | 4 | (40 | ) | (39 | ) | ||||||||
Net income (loss) | $ | (247 | ) | $ | 84 | $ | (744 | ) | $ | (241 | ) | ||||
Earnings (loss) per share: | |||||||||||||||
Basic: | |||||||||||||||
Continuing operations | $ | (2.94 | ) | $ | 1.16 | $ | (8.76 | ) | $ | (2.92 | ) | ||||
Discontinued operations | (0.12 | ) | 0.06 | (0.49 | ) | (0.57 | ) | ||||||||
$ | (3.06 | ) | $ | 1.22 | $ | (9.25 | ) | $ | (3.49 | ) | |||||
Diluted: | |||||||||||||||
Continuing operations | $ | (2.94 | ) | $ | 1.16 | $ | (8.76 | ) | $ | (2.92 | ) | ||||
Discontinued operations | (0.12 | ) | 0.06 | (0.49 | ) | (0.57 | ) | ||||||||
$ | (3.06 | ) | $ | 1.22 | $ | (9.25 | ) | $ | (3.49 | ) | |||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 80.6 | 68.7 | 80.4 | 69.1 | |||||||||||
Diluted | 80.6 | 68.9 | 80.4 | 69.1 |
(in millions) | Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | (247 | ) | $ | 84 | $ | (744 | ) | $ | (241 | ) | ||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustment | (91 | ) | (61 | ) | (71 | ) | (139 | ) | |||||||
Defined benefit plans (net of tax of $(1), $13, $(2), and $36 respectively) | 39 | 23 | 117 | 63 | |||||||||||
Total other comprehensive income (loss) | (52 | ) | (38 | ) | 46 | (76 | ) | ||||||||
Total comprehensive income (loss) attributable to Navistar International Corporation | $ | (299 | ) | $ | 46 | $ | (698 | ) | $ | (317 | ) |
(in millions, except per share data) | July 31, 2013 | October 31, 2012 | |||||
ASSETS | (Unaudited) | ||||||
Current assets | |||||||
Cash and cash equivalents | $ | 425 | $ | 1,087 | |||
Restricted cash and cash equivalents | 78 | — | |||||
Marketable securities | 708 | 466 | |||||
Trade and other receivables, net | 777 | 749 | |||||
Finance receivables, net | 1,590 | 1,663 | |||||
Inventories | 1,336 | 1,537 | |||||
Deferred taxes, net | 77 | 74 | |||||
Other current assets | 273 | 261 | |||||
Total current assets | 5,264 | 5,837 | |||||
Restricted cash | 92 | 161 | |||||
Trade and other receivables, net | 30 | 94 | |||||
Finance receivables, net | 381 | 486 | |||||
Investments in non-consolidated affiliates | 80 | 62 | |||||
Property and equipment (net of accumulated depreciation and amortization of $2,393 and $2,228) | 1,714 | 1,660 | |||||
Goodwill | 255 | 280 | |||||
Intangible assets (net of accumulated amortization of $91 and $78) | 143 | 171 | |||||
Deferred taxes, net | 172 | 189 | |||||
Other noncurrent assets | 110 | 162 | |||||
Total assets | $ | 8,241 | $ | 9,102 | |||
LIABILITIES and STOCKHOLDERS’ DEFICIT | |||||||
Liabilities | |||||||
Current liabilities | |||||||
Notes payable and current maturities of long-term debt | $ | 820 | $ | 1,205 | |||
Accounts payable | 1,546 | 1,686 | |||||
Other current liabilities | 1,569 | 1,462 | |||||
Total current liabilities | 3,935 | 4,353 | |||||
Long-term debt | 3,904 | 3,566 | |||||
Postretirement benefits liabilities | 3,285 | 3,405 | |||||
Deferred taxes, net | 38 | 42 | |||||
Other noncurrent liabilities | 1,012 | 996 | |||||
Total liabilities | 12,174 | 12,362 | |||||
Redeemable equity securities | 4 | 5 | |||||
Stockholders’ deficit | |||||||
Series D convertible junior preference stock | 3 | 3 | |||||
Common stock (86.8 and 86.0 shares issued, respectively; and $0.10 par value per share and 220 shares authorized, at both dates) | 9 | 9 | |||||
Additional paid in capital | 2,459 | 2,440 | |||||
Accumulated deficit | (3,909 | ) | (3,165 | ) | |||
Accumulated other comprehensive loss | (2,279 | ) | (2,325 | ) | |||
Common stock held in treasury, at cost (6.4 and 6.8 shares, respectively) | (255 | ) | (272 | ) | |||
Total stockholders’ deficit attributable to Navistar International Corporation | (3,972 | ) | (3,310 | ) | |||
Stockholders’ equity attributable to non-controlling interests | 35 | 45 | |||||
Total stockholders’ deficit | (3,937 | ) | (3,265 | ) | |||
Total liabilities and stockholders’ deficit | $ | 8,241 | $ | 9,102 |
Nine Months Ended July 31, | |||||||
(in millions) | 2013 | 2012 | |||||
Cash flows from operating activities | |||||||
Net loss | $ | (710 | ) | $ | (206 | ) | |
Adjustments to reconcile net loss to cash provided by operating activities: | |||||||
Depreciation and amortization | 225 | 209 | |||||
Depreciation of equipment leased to others | 105 | 37 | |||||
Deferred taxes, including change in valuation allowance | 19 | (405 | ) | ||||
Impairment of property and equipment and intangible assets | 25 | 38 | |||||
Gain on sales of investments and businesses, net | (13 | ) | — | ||||
Amortization of debt issuance costs and discount | 43 | 31 | |||||
Stock-based compensation | 19 | 16 | |||||
Provision for doubtful accounts, net of recoveries | 16 | — | |||||
Equity in loss of non-consolidated affiliates, net of dividends | 5 | 27 | |||||
Write-off of debt issuance cost and discount | 6 | 8 | |||||
Other non-cash operating activities | (60 | ) | 5 | ||||
Changes in other assets and liabilities, exclusive of the effects of businesses acquired and disposed | 354 | 586 | |||||
Net cash provided by operating activities | 34 | 346 | |||||
Cash flows from investing activities | |||||||
Purchases of marketable securities | (1,070 | ) | (672 | ) | |||
Sales or maturities of marketable securities | 828 | 1,230 | |||||
Net change in restricted cash and cash equivalents | (9 | ) | 48 | ||||
Capital expenditures | (136 | ) | (250 | ) | |||
Purchases of equipment leased to others | (351 | ) | (49 | ) | |||
Proceeds from sales of property and equipment | 22 | 12 | |||||
Investments in non-consolidated affiliates | (25 | ) | (18 | ) | |||
Business acquisitions, net of cash received | — | (12 | ) | ||||
Proceeds from sales of affiliates | 50 | 1 | |||||
Acquisition of intangibles | — | (14 | ) | ||||
Net cash provided by (used in) investing activities | (691 | ) | 276 | ||||
Cash flows from financing activities | |||||||
Proceeds from issuance of securitized debt | 279 | 1,155 | |||||
Principal payments on securitized debt | (501 | ) | (1,532 | ) | |||
Proceeds from issuance of non-securitized debt | 390 | 717 | |||||
Principal payments on non-securitized debt | (438 | ) | (582 | ) | |||
Net increase (decrease) in notes and debt outstanding under revolving credit facilities | 87 | (195 | ) | ||||
Principal payments under financing arrangements and capital lease obligations | (55 | ) | (30 | ) | |||
Debt issuance costs | (16 | ) | (20 | ) | |||
Proceeds from financed lease obligations | 276 | — | |||||
Issuance of common stock | 14 | — | |||||
Purchase of treasury stock | — | (75 | ) | ||||
Proceeds from exercise of stock options | 9 | 2 | |||||
Dividends paid by subsidiaries to non-controlling interest | (35 | ) | (44 | ) | |||
Other financing activities | 4 | (3 | ) | ||||
Net cash provided by (used in) financing activities | 14 | (607 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (19 | ) | (7 | ) | |||
Increase (decrease) in cash and cash equivalents | (662 | ) | 8 | ||||
Cash and cash equivalents at beginning of the period | 1,087 | 539 | |||||
Cash and cash equivalents at end of the period | $ | 425 | $ | 547 |
(in millions) | Series D Convertible Junior Preference Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Common Stock Held in Treasury, at cost | Stockholders' Equity Attributable to Non-controlling Interests | Total | |||||||||||||||||||||||
Balance as of October 31, 2012 | $ | 3 | $ | 9 | $ | 2,440 | $ | (3,165 | ) | $ | (2,325 | ) | $ | (272 | ) | $ | 45 | $ | (3,265 | ) | |||||||||||
Net income (loss) | (744 | ) | 34 | (710 | ) | ||||||||||||||||||||||||||
Total other comprehensive income | 46 | 46 | |||||||||||||||||||||||||||||
Transfer from redeemable equity securities upon exercise or expiration of stock options | 1 | 1 | |||||||||||||||||||||||||||||
Stock-based compensation | 14 | 14 | |||||||||||||||||||||||||||||
Stock ownership programs | (9 | ) | 17 | 8 | |||||||||||||||||||||||||||
Cash dividends paid to non-controlling interest | (35 | ) | (35 | ) | |||||||||||||||||||||||||||
Issuance of common stock, net of issuance costs and fees | 14 | 14 | |||||||||||||||||||||||||||||
Deconsolidation of a non-controlling interest | (9 | ) | (9 | ) | |||||||||||||||||||||||||||
Other | (1 | ) | (1 | ) | |||||||||||||||||||||||||||
Balance as of July 31, 2013 | $ | 3 | $ | 9 | $ | 2,459 | $ | (3,909 | ) | $ | (2,279 | ) | $ | (255 | ) | $ | 35 | $ | (3,937 | ) | |||||||||||
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 | ) |
Nine Months Ended July 31, | |||||||
(in millions) | 2013 | 2012 | |||||
Balance at beginning of period | $ | 1,118 | $ | 598 | |||
Costs accrued and revenues deferred | 342 | 353 | |||||
Divestitures | (3 | ) | — | ||||
Currency translation adjustment | (3 | ) | (4 | ) | |||
Adjustments to pre-existing warranties(A)(B) | 252 | 259 | |||||
Payments and revenues recognized | (484 | ) | (324 | ) | |||
Balance at end of period | 1,222 | 882 | |||||
Less: Current portion | 618 | 448 | |||||
Noncurrent accrued product warranty and deferred warranty revenue | $ | 604 | $ | 434 |
(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. |
(B) | In the first quarter of 2013, we recognized $13 million of charges for adjustments to pre-existing warranties for a specific warranty issue related to component parts from a supplier. Also during the first quarter of 2013, we reached agreement for reimbursement from this supplier for this amount and other costs previously accrued. As a result of this agreement, we recognized a recovery of $27 million within Costs of products sold and recorded a receivable within Other current assets. In the second quarter of 2013, we recognized a warranty recovery of $13 million within Loss from discontinued operations, net of tax and recorded a receivable within Other current assets. |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||
(in millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Sales and revenues, net | $ | 3 | $ | 73 | $ | 73 | $ | 153 | |||||||
Loss before income taxes | $ | (10 | ) | $ | (5 | ) | $ | (40 | ) | $ | (62 | ) | |||
Income tax benefit | — | 9 | — | 23 | |||||||||||
Income (loss) from discontinued operations, net of tax | $ | (10 | ) | $ | 4 | $ | (40 | ) | $ | (39 | ) |
(in millions) | Balance at October 31, 2012 | Additions | Payments | Adjustments | Balance at July 31, 2013 | ||||||||||||||
Employee termination charges | $ | 72 | $ | 3 | $ | (54 | ) | $ | (5 | ) | $ | 16 | |||||||
Employee relocation costs | — | 3 | (3 | ) | — | — | |||||||||||||
Lease vacancy | 17 | 6 | (6 | ) | 2 | 19 | |||||||||||||
Other | — | 5 | (4 | ) | — | 1 | |||||||||||||
Restructuring liability | $ | 89 | $ | 17 | $ | (67 | ) | $ | (3 | ) | $ | 36 |
(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) | July 31, 2013 | October 31, 2012 | |||||
Retail portfolio | $ | 841 | $ | 1,048 | |||
Wholesale portfolio | 1,154 | 1,128 | |||||
Total finance receivables | 1,995 | 2,176 | |||||
Less: Allowance for doubtful accounts | 24 | 27 | |||||
Total finance receivables, net | 1,971 | 2,149 | |||||
Less: Current portion, net(A) | 1,590 | 1,663 | |||||
Noncurrent portion, net | $ | 381 | $ | 486 |
(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. |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||
(in millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Retail notes and finance leases revenue | $ | 19 | $ | 24 | $ | 60 | $ | 76 | |||||||
Wholesale notes interest | 21 | 22 | 60 | 67 | |||||||||||
Operating lease revenue | 13 | 10 | 37 | 30 | |||||||||||
Retail and wholesale accounts interest | 8 | 8 | 21 | 26 | |||||||||||
Gross finance revenues | 61 | 64 | 178 | 199 | |||||||||||
Less: Intercompany revenues | (20 | ) | (22 | ) | (59 | ) | (70 | ) | |||||||
Finance revenues | $ | 41 | $ | 42 | $ | 119 | $ | 129 |
Three Months Ended July 31, 2013 | Three Months Ended July 31, 2012 | ||||||||||||||||||||||||||||||
(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 | $ | 22 | $ | 2 | $ | 34 | $ | 58 | $ | 26 | $ | 2 | $ | 17 | $ | 45 | |||||||||||||||
Provision for doubtful accounts, net of recoveries | 2 | — | 3 | 5 | 1 | — | — | 1 | |||||||||||||||||||||||
Charge-off of accounts(A) | (1 | ) | — | — | (1 | ) | (1 | ) | — | (2 | ) | (3 | ) | ||||||||||||||||||
Other(B) | (1 | ) | — | (2 | ) | (3 | ) | — | — | — | — | ||||||||||||||||||||
Allowance for doubtful accounts, at end of period | $ | 22 | $ | 2 | $ | 35 | $ | 59 | $ | 26 | $ | 2 | $ | 15 | $ | 43 |
Nine Months Ended July 31, 2013 | Nine Months Ended July 31, 2012 | ||||||||||||||||||||||||||||||
(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 | $ | 27 | $ | — | $ | 24 | $ | 51 | $ | 31 | $ | 2 | $ | 17 | $ | 50 | |||||||||||||||
Provision for doubtful accounts, net of recoveries | 1 | 2 | 13 | 16 | (1 | ) | — | 2 | 1 | ||||||||||||||||||||||
Charge-off of accounts(A) | (7 | ) | — | — | (7 | ) | (4 | ) | — | (4 | ) | (8 | ) | ||||||||||||||||||
Other(B) | 1 | — | (2 | ) | (1 | ) | — | — | — | — | |||||||||||||||||||||
Allowance for doubtful accounts, at end of period | $ | 22 | $ | 2 | $ | 35 | $ | 59 | $ | 26 | $ | 2 | $ | 15 | $ | 43 |
(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 less than $1 million for both the three and nine months ended July 31, 2013 and $1 million and $4 million for the three and nine months ended July 31, 2012, respectively. |
(B) | Amounts include currency translation. |
July 31, 2013 | October 31, 2012 | ||||||||||||||||||||||
(in millions) | Retail Portfolio | Wholesale Portfolio | Total | Retail Portfolio | Wholesale Portfolio | Total | |||||||||||||||||
Impaired finance receivables with specific loss reserves | $ | 12 | $ | — | $ | 12 | $ | 14 | $ | — | $ | 14 | |||||||||||
Impaired finance receivables without specific loss reserves | 1 | — | 1 | 1 | — | 1 | |||||||||||||||||
Specific loss reserves on impaired finance receivables | 10 | — | 10 | 9 | — | 9 | |||||||||||||||||
Finance receivables on non-accrual status | 9 | — | 9 | 10 | — | 10 |
July 31, 2013 | October 31, 2012 | ||||||||||||||||||||||
(in millions) | Retail Portfolio | Wholesale Portfolio | Total | Retail Portfolio | Wholesale Portfolio | Total | |||||||||||||||||
Current, and up to 30 days past due | $ | 783 | $ | 1,151 | $ | 1,934 | $ | 965 | $ | 1,126 | $ | 2,091 | |||||||||||
30-90 days past due | 49 | 1 | 50 | 72 | 1 | 73 | |||||||||||||||||
Over 90 days past due | 9 | 2 | 11 | 11 | 1 | 12 | |||||||||||||||||
Total finance receivables | $ | 841 | $ | 1,154 | $ | 1,995 | $ | 1,048 | $ | 1,128 | $ | 2,176 |
(in millions) | July 31, 2013 | October 31, 2012 | |||||
Finished products | $ | 764 | $ | 833 | |||
Work in process | 92 | 136 | |||||
Raw materials | 480 | 568 | |||||
Total inventories | $ | 1,336 | $ | 1,537 |
(in millions) | July 31, 2013 | October 31, 2012 | |||||
Manufacturing operations: | |||||||
Senior Secured Term Loan Credit Facility, as Amended, due 2017, net of unamortized discount of $5 and $9, respectively | $ | 693 | $ | 991 | |||
8.25% Senior Notes, due 2021, net of unamortized discount of $23 and $28, respectively | 1,177 | 872 | |||||
3.0% Senior Subordinated Convertible Notes, due 2014, net of unamortized discount of $32 and $50, respectively | 538 | 520 | |||||
Debt of majority-owned dealerships | 54 | 60 | |||||
Financing arrangements and capital lease obligations | 82 | 140 | |||||
Loan Agreement related to 6.5% Tax Exempt Bonds, due 2040 | 225 | 225 | |||||
Promissory Note | 23 | 30 | |||||
Financed lease obligations | 213 | — | |||||
Other | 33 | 67 | |||||
Total Manufacturing operations debt | 3,038 | 2,905 | |||||
Less: Current portion | 116 | 172 | |||||
Net long-term Manufacturing operations debt | $ | 2,922 | $ | 2,733 |
(in millions) | July 31, 2013 | October 31, 2012 | |||||
Financial Services operations: | |||||||
Asset-backed debt issued by consolidated SPEs, at fixed and variable rates, due serially through 2019 | $ | 791 | $ | 994 | |||
Bank revolvers, at fixed and variable rates, due dates from 2013 through 2019 | 837 | 763 | |||||
Commercial paper, at variable rates, matured in 2013 | — | 31 | |||||
Borrowings secured by operating and finance leases, at various rates, due serially through 2017 | 58 | 78 | |||||
Total Financial Services operations debt | 1,686 | 1,866 | |||||
Less: Current portion | 704 | 1,033 | |||||
Net long-term Financial Services operations debt | $ | 982 | $ | 833 |
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) | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||
Service cost for benefits earned during the period | $ | 5 | $ | 5 | $ | 1 | $ | 1 | $ | 15 | $ | 13 | $ | 5 | $ | 5 | |||||||||||||||
Interest on obligation | 36 | 43 | 16 | 20 | 108 | 129 | 47 | 62 | |||||||||||||||||||||||
Amortization of cumulative loss | 31 | 27 | 7 | 10 | 95 | 82 | 22 | 30 | |||||||||||||||||||||||
Amortization of prior service benefit | 1 | 1 | (1 | ) | (2 | ) | 1 | 1 | (3 | ) | (4 | ) | |||||||||||||||||||
Contractual termination benefits | — | — | — | — | — | — | — | (3 | ) | ||||||||||||||||||||||
Premiums on pension insurance | — | — | — | — | 1 | 1 | — | — | |||||||||||||||||||||||
Expected return on assets | (48 | ) | (49 | ) | (8 | ) | (8 | ) | (142 | ) | (145 | ) | (25 | ) | (26 | ) | |||||||||||||||
Net postretirement benefits expense | $ | 25 | $ | 27 | $ | 15 | $ | 21 | $ | 78 | $ | 81 | $ | 46 | $ | 64 |
• | 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. |
July 31, 2013 | October 31, 2012 | ||||||||||||||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
Marketable securities: | |||||||||||||||||||||||||||||||
U.S. Treasury bills | $ | 619 | $ | — | $ | — | $ | 619 | $ | 420 | $ | — | $ | — | $ | 420 | |||||||||||||||
Other | 89 | — | — | 89 | 46 | — | — | 46 | |||||||||||||||||||||||
Derivative financial instruments: | |||||||||||||||||||||||||||||||
Foreign currency contracts | — | 3 | — | 3 | — | — | — | — | |||||||||||||||||||||||
Interest rate caps | — | 2 | — | 2 | — | — | — | — | |||||||||||||||||||||||
Total assets | $ | 708 | $ | 5 | $ | — | $ | 713 | $ | 466 | $ | — | $ | — | $ | 466 | |||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||
Derivative financial instruments: | |||||||||||||||||||||||||||||||
Commodity contracts | $ | — | $ | 2 | $ | — | $ | 2 | $ | — | $ | 4 | $ | — | $ | 4 | |||||||||||||||
Foreign currency contracts | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Guarantees | — | — | 7 | 7 | — | — | 7 | 7 | |||||||||||||||||||||||
Total liabilities | $ | — | $ | 2 | $ | 7 | $ | 9 | $ | — | $ | 4 | $ | 7 | $ | 11 |
Three Months Ended July 31, | |||||||||||||||
2013 | 2012 | ||||||||||||||
(in millions) | Guarantees | Commodity contracts | Guarantees | Commodity contracts | |||||||||||
Balance at May 1 | $ | (7 | ) | $ | — | $ | (7 | ) | $ | — | |||||
Total gains (losses) (realized/unrealized) included in earnings(A) | — | — | — | — | |||||||||||
Transfers out of Level 3 | — | — | — | — | |||||||||||
Issuances | — | — | — | — | |||||||||||
Settlements | — | — | — | — | |||||||||||
Balance at July 31 | $ | (7 | ) | $ | — | $ | (7 | ) | $ | — | |||||
Change in unrealized gains on assets and liabilities still held | $ | — | $ | — | $ | — | $ | — |
Nine Months Ended July 31, | |||||||||||||||
2013 | 2012 | ||||||||||||||
(in millions) | Guarantees | Commodity contracts | Guarantees | Commodity contracts | |||||||||||
Balance at November 1 | $ | (7 | ) | $ | — | $ | (6 | ) | $ | (2 | ) | ||||
Total gains (losses) (realized/unrealized) included in earnings(A) | — | — | — | (1 | ) | ||||||||||
Transfers out of Level 3 | — | — | — | 2 | |||||||||||
Issuances | — | — | (1 | ) | — | ||||||||||
Settlements | — | — | — | 1 | |||||||||||
Balance at July 31 | $ | (7 | ) | $ | — | $ | (7 | ) | $ | — | |||||
Change in unrealized gains on assets and liabilities still held | $ | — | $ | — | $ | — | $ | — |
(A) | For commodity contracts, losses are included in Cost of products sold. |
(in millions) | July 31, 2013 | October 31, 2012 | |||||
Level 2 financial instruments | |||||||
Carrying value of impaired finance receivables (A) | $ | 12 | $ | 14 | |||
Specific loss reserve | 10 | 9 | |||||
Fair value | $ | 2 | $ | 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. Fair values of the underlying collateral are determined by reference to dealer vehicle value publications adjusted for certain market factors. |
July 31, 2013 | |||||||||||||||||||
Estimated Fair Value | Carrying Value | ||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Assets | |||||||||||||||||||
Retail notes | $ | — | $ | — | $ | 437 | $ | 437 | $ | 433 | |||||||||
Notes receivable | — | — | 16 | 16 | 15 | ||||||||||||||
Liabilities | |||||||||||||||||||
Debt: | |||||||||||||||||||
Manufacturing operations | |||||||||||||||||||
Senior Secured Term Loan Credit Facility, as Amended due 2017 | — | — | 676 | 676 | 693 | ||||||||||||||
8.25% Senior Notes, due 2021 | 1,252 | — | — | 1,252 | 1,177 | ||||||||||||||
3.0% Senior Subordinated Convertible Notes, due 2014(A) | 580 | — | — | 580 | 538 | ||||||||||||||
Debt of majority-owned dealerships | — | — | 54 | 54 | 54 | ||||||||||||||
Financing arrangements | — | — | 49 | 49 | 78 | ||||||||||||||
Loan Agreement related to 6.5% Tax Exempt Bonds, due 2040 | — | 237 | — | 237 | 225 | ||||||||||||||
Promissory Note | — | — | 22 | 22 | 23 | ||||||||||||||
Financed lease obligations | — | — | 213 | 213 | 213 | ||||||||||||||
Other | — | — | 32 | 32 | 33 | ||||||||||||||
Financial Services operations | |||||||||||||||||||
Asset-backed debt issued by consolidated SPEs, at various rates, due serially through 2019 | — | — | 792 | 792 | 791 | ||||||||||||||
Bank revolvers, at fixed and variable rates, due dates from 2013 through 2019 | — | — | 813 | 813 | 837 | ||||||||||||||
Borrowings secured by operating and finance leases, at various rates, due serially through 2017 | — | — | 57 | 57 | 58 |
October 31, 2012 | |||||||||||||||||||
Estimated Fair Value | Carrying Value | ||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Assets | |||||||||||||||||||
Retail notes | $ | — | $ | — | $ | 613 | $ | 613 | $ | 618 | |||||||||
Notes receivable | — | — | 27 | 27 | 27 | ||||||||||||||
Liabilities | |||||||||||||||||||
Debt: | |||||||||||||||||||
Manufacturing operations | |||||||||||||||||||
Senior Secured Term Loan Credit Facility, as Amended due 2017 | — | — | 1,047 | 1,047 | 991 | ||||||||||||||
8.25% Senior Notes, due 2021 | 899 | — | — | 899 | 872 | ||||||||||||||
3.0% Senior Subordinated Convertible Notes, due 2014(A) | 514 | — | — | 514 | 520 | ||||||||||||||
Debt of majority-owned dealerships | — | — | 60 | 60 | 60 | ||||||||||||||
Financing arrangements | — | — | 102 | 102 | 136 | ||||||||||||||
Loan Agreement related to 6.5% Tax Exempt Bonds, due 2040 | — | 234 | — | 234 | 225 | ||||||||||||||
Promissory Note | — | — | 29 | 29 | 30 | ||||||||||||||
Other | — | — | 67 | 67 | 67 | ||||||||||||||
Financial Services operations | |||||||||||||||||||
Asset-backed debt issued by consolidated SPEs, at various rates, due serially through 2019 | — | — | 994 | 994 | 994 | ||||||||||||||
Bank revolvers, at fixed and variable rates, due dates from 2013 through 2019 | — | — | 734 | 734 | 763 | ||||||||||||||
Commercial paper, at variable rates, matured in 2013 | 31 | — | — | 31 | 31 | ||||||||||||||
Borrowings secured by operating and finance leases, at various rates, due serially through 2017 | — | — | 79 | 79 | 78 |
(A) | The carrying value represents the consolidated financial statement amount of the debt which excludes the 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. |
July 31, 2013 | |||||||||||
Asset Derivatives | Liability Derivatives | ||||||||||
(in millions) | Location in Consolidated Balance Sheets | Fair Value | Location in Consolidated Balance Sheets | Fair Value | |||||||
Commodity contracts | Other current assets | $ | — | Other current liabilities | $ | 2 | |||||
Foreign currency contracts | Other current assets | 3 | Other current liabilities | — | |||||||
Interest rate caps | Other noncurrent assets | 2 | Other noncurrent liabilities | — | |||||||
Total fair value | $ | 5 | $ | 2 |
October 31, 2012 | |||||||||||
Asset Derivatives | Liability Derivatives | ||||||||||
(in millions) | Location in Consolidated Balance Sheets | Fair Value | Location in Consolidated Balance Sheets | Fair Value | |||||||
Commodity contracts | Other current assets | $ | — | Other current liabilities | $ | 3 | |||||
Commodity contracts | Other noncurrent assets | — | Other noncurrent liabilities | 2 | |||||||
Total fair value | $ | — | $ | 5 |
Location in Consolidated Statements of Operations | Amount of Loss (Gain) Recognized | ||||||||||||||||
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||
(in millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||||
Cross currency swaps | Other expense (income), net | $ | 1 | $ | — | $ | 1 | $ | 1 | ||||||||
Foreign currency contracts | Other expense (income), net | 4 | (2 | ) | 6 | (5 | ) | ||||||||||
Commodity forward contracts | Costs of products sold | 1 | (5 | ) | (1 | ) | (7 | ) | |||||||||
Total loss (gain) | $ | 6 | $ | (7 | ) | $ | 6 | $ | (11 | ) |
(in millions) | Currency | Notional Amount | Maturity | ||||
As of July 31, 2013 | |||||||
Option collar contracts | EUR | € | 8 | July 2013 - October 2013 | |||
Forward exchange contract | CAD | C$ | 50 | October 2013 | |||
Option collar contract | CAD | C$ | 50 | October 2013 | |||
Option collar contract | BRL | US$ | 25 | October 2013 | |||
As of October 31, 2012 | |||||||
Option collar contracts | EUR | € | 25 | October 2012 - April 2013 |
• | 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 concrete mixers under the Continental Mixers brand. 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 trucks and buses. In Brazil, our Engine segment produces diesel engines, primarily under contract manufacturing arrangements, as well as under the MWM brand, for sale to OEMs in South America. In all other areas of the world, including North America, engines are sold under the MaxxForce brand name. 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, MaxxForce engine lines, as well as our other product lines. Our Parts segment also provides a wide selection of other standard truck, trailer, and engine aftermarket parts. At July 31, 2013, 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 | Engine | Parts | Financial Services(A) | Corporate and Eliminations | Total | |||||||||||||||||
Three Months Ended July 31, 2013 | |||||||||||||||||||||||
External sales and revenues, net | $ | 1,909 | $ | 439 | $ | 472 | $ | 41 | $ | — | $ | 2,861 | |||||||||||
Intersegment sales and revenues | 15 | 284 | 19 | 20 | (338 | ) | — | ||||||||||||||||
Total sales and revenues, net | $ | 1,924 | $ | 723 | $ | 491 | $ | 61 | $ | (338 | ) | $ | 2,861 | ||||||||||
Income (loss) from continuing operations attributable to NIC, net of tax | $ | (58 | ) | $ | (86 | ) | $ | 76 | $ | 23 | $ | (192 | ) | $ | (237 | ) | |||||||
Income tax expense | — | — | — | — | (16 | ) | (16 | ) | |||||||||||||||
Segment profit (loss) | $ | (58 | ) | $ | (86 | ) | $ | 76 | $ | 23 | $ | (176 | ) | $ | (221 | ) | |||||||
Depreciation and amortization(B) | $ | 40 | $ | 30 | $ | 3 | $ | 10 | $ | 5 | $ | 88 | |||||||||||
Interest expense | — | — | — | 17 | 59 | 76 | |||||||||||||||||
Equity in income of non-consolidated affiliates | — | 3 | — | — | — | 3 | |||||||||||||||||
Capital expenditures(B)(C) | 16 | 8 | 1 | — | 4 | 29 |
(in millions) | Truck | Engine | Parts | Financial Services(A) | Corporate and Eliminations | Total | |||||||||||||||||
Three Months Ended July 31, 2012 | |||||||||||||||||||||||
External sales and revenues, net | $ | 2,250 | $ | 441 | $ | 513 | $ | 42 | $ | — | $ | 3,246 | |||||||||||
Intersegment sales and revenues | 13 | 399 | 29 | 22 | (463 | ) | — | ||||||||||||||||
Total sales and revenues, net | $ | 2,263 | $ | 840 | $ | 542 | $ | 64 | $ | (463 | ) | $ | 3,246 | ||||||||||
Income (loss) from continuing operations attributable to NIC, net of tax | $ | (26 | ) | $ | (47 | ) | $ | 73 | $ | 22 | $ | 58 | $ | 80 | |||||||||
Income tax benefit | — | — | — | — | 188 | 188 | |||||||||||||||||
Segment profit (loss) | $ | (26 | ) | $ | (47 | ) | $ | 73 | $ | 22 | $ | (130 | ) | $ | (108 | ) | |||||||
Depreciation and amortization(B) | $ | 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(B)(C) | 21 | 39 | 6 | 1 | 7 | 74 |
(in millions) | Truck | Engine | Parts | Financial Services(A) | Corporate and Eliminations | Total | |||||||||||||||||
Nine Months Ended July 31, 2013 | |||||||||||||||||||||||
External sales and revenues, net | $ | 5,080 | $ | 1,309 | $ | 1,516 | $ | 119 | $ | — | $ | 8,024 | |||||||||||
Intersegment sales and revenues | 41 | 898 | 57 | 59 | (1,055 | ) | — | ||||||||||||||||
Total sales and revenues, net | $ | 5,121 | $ | 2,207 | $ | 1,573 | $ | 178 | $ | (1,055 | ) | $ | 8,024 | ||||||||||
Income (loss) from continuing operations attributable to NIC, net of tax | $ | (225 | ) | $ | (251 | ) | $ | 253 | $ | 64 | $ | (545 | ) | $ | (704 | ) | |||||||
Income tax expense | — | — | — | — | (53 | ) | (53 | ) | |||||||||||||||
Segment profit (loss) | $ | (225 | ) | $ | (251 | ) | $ | 253 | $ | 64 | $ | (492 | ) | $ | (651 | ) | |||||||
Depreciation and amortization(B) | $ | 174 | $ | 102 | $ | 8 | $ | 29 | $ | 17 | $ | 330 | |||||||||||
Interest expense | — | — | — | 52 | 188 | 240 | |||||||||||||||||
Equity in income of non-consolidated affiliates | — | 2 | 4 | — | — | 6 | |||||||||||||||||
Capital expenditures(B)(C) | 47 | 77 | 2 | 1 | 9 | 136 |
(in millions) | Truck | Engine | Parts | Financial Services(A) | Corporate and Eliminations | Total | |||||||||||||||||
Nine Months Ended July 31, 2012 | |||||||||||||||||||||||
External sales and revenues, net | $ | 6,677 | $ | 1,301 | $ | 1,409 | $ | 129 | $ | — | $ | 9,516 | |||||||||||
Intersegment sales and revenues | 26 | 1,292 | 98 | 70 | (1,486 | ) | — | ||||||||||||||||
Total sales and revenues, net | $ | 6,703 | $ | 2,593 | $ | 1,507 | $ | 199 | $ | (1,486 | ) | $ | 9,516 | ||||||||||
Income (loss) from continuing operations attributable to NIC, net of tax | $ | (98 | ) | $ | (275 | ) | $ | 164 | $ | 75 | $ | (68 | ) | $ | (202 | ) | |||||||
Income tax benefit | — | — | — | — | 387 | 387 | |||||||||||||||||
Segment profit (loss) | $ | (98 | ) | $ | (275 | ) | $ | 164 | $ | 75 | $ | (455 | ) | $ | (589 | ) | |||||||
Depreciation and amortization(B) | $ | 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(B)(C) | 53 | 116 | 18 | 2 | 61 | 250 |
(in millions) | Truck(B) | Engine | Parts | Financial Services | Corporate and Eliminations | Total | |||||||||||||||||
Segment assets, as of: | |||||||||||||||||||||||
July 31, 2013 | $ | 2,052 | $ | 1,581 | $ | 657 | $ | 2,444 | $ | 1,507 | $ | 8,241 | |||||||||||
October 31, 2012 | $ | 2,118 | $ | 1,777 | $ | 707 | $ | 2,563 | $ | 1,937 | $ | 9,102 |
(A) | Total sales and revenues in the Financial Services segment include interest revenues of $47 million and $140 million for the three and nine months ended July 31, 2013, respectively, and $53 million and $168 million for three and nine months ended July 31, 2012, respectively. |
(B) | The segment assets as of October 31, 2012 includes amounts related to discontinued operations. For more information, see Note 2, Discontinued Operations and Other Divestitures. |
(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) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Numerator: | |||||||||||||||
Amounts attributable to Navistar International Corporation common stockholders: | |||||||||||||||
Income (loss) from continuing operations, net of tax | $ | (237 | ) | $ | 80 | $ | (704 | ) | $ | (202 | ) | ||||
Income (loss) from discontinued operations, net of tax | (10 | ) | 4 | (40 | ) | (39 | ) | ||||||||
Net income (loss) | $ | (247 | ) | $ | 84 | $ | (744 | ) | $ | (241 | ) | ||||
Denominator: | |||||||||||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 80.6 | 68.7 | 80.4 | 69.1 | |||||||||||
Effect of dilutive securities | — | 0.2 | — | — | |||||||||||
Diluted | 80.6 | 68.9 | 80.4 | 69.1 | |||||||||||
Earnings (loss) per share attributable to Navistar International Corporation: | |||||||||||||||
Basic: | |||||||||||||||
Continuing operations | $ | (2.94 | ) | $ | 1.16 | $ | (8.76 | ) | $ | (2.92 | ) | ||||
Discontinued operations | (0.12 | ) | 0.06 | (0.49 | ) | (0.57 | ) | ||||||||
Net income (loss) | $ | (3.06 | ) | $ | 1.22 | $ | (9.25 | ) | $ | (3.49 | ) | ||||
Diluted: | |||||||||||||||
Continuing operations | $ | (2.94 | ) | $ | 1.16 | $ | (8.76 | ) | $ | (2.92 | ) | ||||
Discontinued operations | (0.12 | ) | 0.06 | (0.49 | ) | (0.57 | ) | ||||||||
Net income (loss) | $ | (3.06 | ) | $ | 1.22 | $ | (9.25 | ) | $ | (3.49 | ) |
Condensed Consolidating Statement of Operations | |||||||||||||||||||
For the Three Months Ended July 31, 2013 | Non-Guarantor Subsidiaries | ||||||||||||||||||
(in millions) | NIC | Navistar, Inc. | Eliminations and Other | Consolidated | |||||||||||||||
Sales and revenues, net | $ | — | $ | 1,690 | $ | 2,300 | $ | (1,129 | ) | $ | 2,861 | ||||||||
Costs of products sold | — | 1,669 | 1,996 | (1,118 | ) | 2,547 | |||||||||||||
Restructuring charges | — | 1 | 5 | — | 6 | ||||||||||||||
Asset impairment charges | — | 14 | 3 | — | 17 | ||||||||||||||
All other operating expenses (income) | 28 | 295 | 203 | (21 | ) | 505 | |||||||||||||
Total costs and expenses | 28 | 1,979 | 2,207 | (1,139 | ) | 3,075 | |||||||||||||
Equity in income (loss) of affiliates | (219 | ) | 13 | 3 | 206 | 3 | |||||||||||||
Income (loss) before income taxes | (247 | ) | (276 | ) | 96 | 216 | (211 | ) | |||||||||||
Income tax expense | — | (2 | ) | (14 | ) | — | (16 | ) | |||||||||||
Earnings (loss) from continuing operations | (247 | ) | (278 | ) | 82 | 216 | (227 | ) | |||||||||||
Loss from discontinued operations, net of tax | — | — | (10 | ) | — | (10 | ) | ||||||||||||
Net income (loss) | (247 | ) | (278 | ) | 72 | 216 | (237 | ) | |||||||||||
Less: Net income attributable to non-controlling interests | — | — | 10 | — | 10 | ||||||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | (247 | ) | $ | (278 | ) | $ | 62 | $ | 216 | $ | (247 | ) |
Condensed Consolidating Statement of Comprehensive Income (Loss) | |||||||||||||||||||
For the Three Months Ended July 31, 2013 | Non-Guarantor Subsidiaries | ||||||||||||||||||
(in millions) | NIC | Navistar, Inc. | Eliminations and Other | Consolidated | |||||||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | (247 | ) | $ | (278 | ) | $ | 62 | $ | 216 | $ | (247 | ) | ||||||
Other comprehensive income (loss): | |||||||||||||||||||
Foreign currency translation adjustment | (91 | ) | — | (91 | ) | 91 | (91 | ) | |||||||||||
Defined benefit plans (net of tax of $1, $0, $1, $-1, and $1 respectively) | 39 | 35 | 4 | (39 | ) | 39 | |||||||||||||
Total other comprehensive income (loss) | (52 | ) | 35 | (87 | ) | 52 | (52 | ) | |||||||||||
Total comprehensive income (loss) attributable to Navistar International Corporation | $ | (299 | ) | $ | (243 | ) | $ | (25 | ) | $ | 268 | $ | (299 | ) |
Condensed Consolidating Statement of Operations | |||||||||||||||||||
For the Nine Months Ended July 31, 2013 | Non-Guarantor Subsidiaries | ||||||||||||||||||
(in millions) | NIC | Navistar, Inc. | Eliminations and Other | Consolidated | |||||||||||||||
Sales and revenues, net | $ | — | $ | 4,792 | $ | 6,851 | $ | (3,619 | ) | $ | 8,024 | ||||||||
Costs of products sold | — | 4,886 | 5,892 | (3,582 | ) | 7,196 | |||||||||||||
Restructuring charges | — | 5 | 9 | — | 14 | ||||||||||||||
Asset impairment charges | — | 14 | 3 | — | 17 | ||||||||||||||
All other operating expenses (income) | 1 | 875 | 520 | 24 | 1,420 | ||||||||||||||
Total costs and expenses | 1 | 5,780 | 6,424 | (3,558 | ) | 8,647 | |||||||||||||
Equity in income (loss) of affiliates | (743 | ) | 117 | 2 | 630 | 6 | |||||||||||||
Income (loss) before income taxes | (744 | ) | (871 | ) | 429 | 569 | (617 | ) | |||||||||||
Income tax expense | — | (14 | ) | (39 | ) | — | (53 | ) | |||||||||||
Earnings (loss) from continuing operations | (744 | ) | (885 | ) | 390 | 569 | (670 | ) | |||||||||||
Loss from discontinued operations, net of tax | — | — | (40 | ) | — | (40 | ) | ||||||||||||
Net income (loss) | (744 | ) | (885 | ) | 350 | 569 | (710 | ) | |||||||||||
Less: Net income attributable to non-controlling interests | — | — | 34 | — | 34 | ||||||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | (744 | ) | $ | (885 | ) | $ | 316 | $ | 569 | $ | (744 | ) |
Condensed Consolidating Statement of Comprehensive Income (Loss) | |||||||||||||||||||
For the Nine Months Ended July 31, 2013 | Non-Guarantor Subsidiaries | ||||||||||||||||||
(in millions) | NIC | Navistar, Inc. | Eliminations and Other | Consolidated | |||||||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | (744 | ) | $ | (885 | ) | $ | 316 | $ | 569 | $ | (744 | ) | ||||||
Other comprehensive income (loss): | |||||||||||||||||||
Foreign currency translation adjustment | (71 | ) | — | (71 | ) | 71 | (71 | ) | |||||||||||
Defined benefit plans (net of tax of $2, $0, $2, $-2, and $2 respectively) | 117 | 105 | 12 | (117 | ) | 117 | |||||||||||||
Total other comprehensive income (loss) | 46 | 105 | (59 | ) | (46 | ) | 46 | ||||||||||||
Total comprehensive income (loss) attributable to Navistar International Corporation | $ | (698 | ) | $ | (780 | ) | $ | 257 | $ | 523 | $ | (698 | ) |
Condensed Consolidating Balance Sheet | |||||||||||||||||||
As of July 31, 2013 | Non-Guarantor Subsidiaries | ||||||||||||||||||
(in millions) | NIC | Navistar, Inc. | Eliminations and Other | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Cash and cash equivalents | $ | 149 | $ | 46 | $ | 230 | $ | — | $ | 425 | |||||||||
Marketable securities | 461 | — | 247 | — | 708 | ||||||||||||||
Restricted cash | 24 | 6 | 140 | — | 170 | ||||||||||||||
Finance and other receivables, net | 9 | 160 | 2,620 | (11 | ) | 2,778 | |||||||||||||
Inventories | — | 673 | 689 | (26 | ) | 1,336 | |||||||||||||
Investments in non-consolidated affiliates | (6,242 | ) | 6,569 | 70 | (317 | ) | 80 | ||||||||||||
Property and equipment, net | — | 913 | 804 | (3 | ) | 1,714 | |||||||||||||
Goodwill | — | 66 | 189 | — | 255 | ||||||||||||||
Deferred taxes, net | 9 | 6 | 233 | 1 | 249 | ||||||||||||||
Other | 37 | 168 | 322 | (1 | ) | 526 | |||||||||||||
Total assets | $ | (5,553 | ) | $ | 8,607 | $ | 5,544 | $ | (357 | ) | $ | 8,241 | |||||||
Liabilities and stockholders’ equity (deficit) | |||||||||||||||||||
Debt | $ | 1,941 | $ | 1,004 | $ | 1,780 | $ | (1 | ) | $ | 4,724 | ||||||||
Postretirement benefits liabilities | — | 3,034 | 343 | — | 3,377 | ||||||||||||||
Amounts due to (from) affiliates | (6,619 | ) | 10,623 | (4,076 | ) | 72 | — | ||||||||||||
Other liabilities | 3,093 | 507 | 549 | (76 | ) | 4,073 | |||||||||||||
Total liabilities | (1,585 | ) | 15,168 | (1,404 | ) | (5 | ) | 12,174 | |||||||||||
Redeemable equity securities | 4 | — | — | — | 4 | ||||||||||||||
Stockholders’ equity attributable to non-controlling interests | — | — | 35 | — | 35 | ||||||||||||||
Stockholders’ equity (deficit) attributable to Navistar International Corporation | (3,972 | ) | (6,561 | ) | 6,913 | (352 | ) | (3,972 | ) | ||||||||||
Total liabilities and stockholders’ equity (deficit) | $ | (5,553 | ) | $ | 8,607 | $ | 5,544 | $ | (357 | ) | $ | 8,241 |
Condensed Consolidating Statement of Cash Flows | |||||||||||||||||||
For the Nine Months Ended July 31, 2013 | Non-Guarantor Subsidiaries | ||||||||||||||||||
(in millions) | NIC | Navistar, Inc. | Eliminations and Other | Consolidated | |||||||||||||||
Net cash provided by (used in) operations | $ | (771 | ) | $ | (639 | ) | $ | 382 | $ | 1,062 | $ | 34 | |||||||
Cash flows from investment activities | |||||||||||||||||||
Net change in restricted cash and cash equivalents | (1 | ) | 2 | (10 | ) | — | (9 | ) | |||||||||||
Net purchases of marketable securities | (147 | ) | — | (95 | ) | — | (242 | ) | |||||||||||
Capital expenditures and purchase of equipment leased to others | — | (347 | ) | (140 | ) | — | (487 | ) | |||||||||||
Other investing activities | — | 10 | 37 | — | 47 | ||||||||||||||
Net cash used in investment activities | (148 | ) | (335 | ) | (208 | ) | — | (691 | ) | ||||||||||
Cash flows from financing activities | |||||||||||||||||||
Net borrowings (repayments) of debt | 340 | 688 | (220 | ) | (1,062 | ) | (254 | ) | |||||||||||
Other financing activities | 26 | 277 | (35 | ) | — | 268 | |||||||||||||
Net cash provided by (used in) financing activities | 366 | 965 | (255 | ) | (1,062 | ) | 14 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | (19 | ) | — | (19 | ) | ||||||||||||
Decrease in cash and cash equivalents | (553 | ) | (9 | ) | (100 | ) | — | (662 | ) | ||||||||||
Cash and cash equivalents at beginning of the period | 702 | 55 | 330 | — | 1,087 | ||||||||||||||
Cash and cash equivalents at end of the period | $ | 149 | $ | 46 | $ | 230 | $ | — | $ | 425 |
Condensed Consolidating Statement of Operations | |||||||||||||||||||
For the Three Months Ended July 31, 2012 | Non-Guarantor Subsidiaries | ||||||||||||||||||
(in millions) | NIC | Navistar, Inc. | Eliminations and Other | Consolidated | |||||||||||||||
Sales and revenues, net | $ | — | $ | 2,007 | $ | 2,868 | $ | (1,629 | ) | $ | 3,246 | ||||||||
Costs of products sold | — | 1,951 | 2,478 | (1,629 | ) | 2,800 | |||||||||||||
Restructuring charges | — | 3 | 1 | — | 4 | ||||||||||||||
Asset impairment charges | — | — | — | — | — | ||||||||||||||
All other operating expenses (income) | 18 | 329 | 205 | (24 | ) | 528 | |||||||||||||
Total costs and expenses | 18 | 2,283 | 2,684 | (1,653 | ) | 3,332 | |||||||||||||
Equity in income (loss) of affiliates | (30 | ) | 16 | (11 | ) | 15 | (10 | ) | |||||||||||
Income (loss) before income taxes | (48 | ) | (260 | ) | 173 | 39 | (96 | ) | |||||||||||
Income tax benefit (expense) | 132 | 229 | (195 | ) | 22 | 188 | |||||||||||||
Earnings (loss) from continuing operations | 84 | (31 | ) | (22 | ) | 61 | 92 | ||||||||||||
Income from discontinued operations, net of tax | — | — | 4 | — | 4 | ||||||||||||||
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 |
Condensed Consolidating Statement of Comprehensive Income (Loss) | |||||||||||||||||||
For the Three Months Ended July 31, 2012 | Non-Guarantor Subsidiaries | ||||||||||||||||||
(in millions) | NIC | Navistar, Inc. | Eliminations and Other | Consolidated | |||||||||||||||
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 |
Condensed Consolidating Statement of Operations | |||||||||||||||||||
For the Nine Months Ended July 31, 2012 | Non-Guarantor Subsidiaries | ||||||||||||||||||
(in millions) | NIC | Navistar, Inc. | Eliminations and Other | Consolidated | |||||||||||||||
Sales and revenues, net | $ | — | $ | 6,141 | $ | 8,623 | $ | (5,248 | ) | $ | 9,516 | ||||||||
Costs of products sold | — | 6,151 | 7,409 | (5,210 | ) | 8,350 | |||||||||||||
Restructuring charges | — | 22 | 1 | — | 23 | ||||||||||||||
Asset impairment charges | — | — | 10 | — | 10 | ||||||||||||||
All other operating expenses (income) | 57 | 1,020 | 664 | (75 | ) | 1,666 | |||||||||||||
Total costs and expenses | 57 | 7,193 | 8,084 | (5,285 | ) | 10,049 | |||||||||||||
Equity in income (loss) of affiliates | (326 | ) | 382 | (24 | ) | (53 | ) | (21 | ) | ||||||||||
Income (loss) before income taxes | (383 | ) | (670 | ) | 515 | (16 | ) | (554 | ) | ||||||||||
Income tax benefit (expense) | 142 | 243 | (23 | ) | 25 | 387 | |||||||||||||
Earnings (loss) from continuing operations | (241 | ) | (427 | ) | 492 | 9 | (167 | ) | |||||||||||
Loss from discontinued operations, net of tax | — | — | (39 | ) | — | (39 | ) | ||||||||||||
Net income (loss) | (241 | ) | (427 | ) | 453 | 9 | (206 | ) | |||||||||||
Less: Net income attributable to non-controlling interests | — | — | 35 | — | 35 | ||||||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | (241 | ) | $ | (427 | ) | $ | 418 | $ | 9 | $ | (241 | ) |
Condensed Consolidating Statement of Comprehensive Income (Loss) | |||||||||||||||||||
For the Nine Months Ended July 31, 2012 | Non-Guarantor Subsidiaries | ||||||||||||||||||
(in millions) | NIC | Navistar, Inc. | Eliminations and Other | Consolidated | |||||||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | (241 | ) | $ | (427 | ) | $ | 418 | $ | 9 | $ | (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 | ) | $ | (370 | ) | $ | 286 | $ | 84 | $ | (317 | ) |
Condensed Consolidating Balance Sheet | |||||||||||||||||||
As of October 31, 2012 | Non-Guarantor Subsidiaries | ||||||||||||||||||
(in millions) | NIC | Navistar, Inc. | Eliminations and Other | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Cash and cash equivalents | $ | 702 | $ | 55 | $ | 330 | $ | — | $ | 1,087 | |||||||||
Marketable securities | 314 | — | 152 | — | 466 | ||||||||||||||
Restricted cash | 24 | 8 | 129 | — | 161 | ||||||||||||||
Finance and other receivables, net | 5 | 128 | 2,859 | — | 2,992 | ||||||||||||||
Inventories | — | 691 | 885 | (39 | ) | 1,537 | |||||||||||||
Investments in non-consolidated affiliates | (5,616 | ) | 6,454 | 54 | (830 | ) | 62 | ||||||||||||
Property and equipment, net | — | 790 | 874 | (4 | ) | 1,660 | |||||||||||||
Goodwill | — | — | 280 | — | 280 | ||||||||||||||
Deferred taxes, net | 9 | 11 | 243 | — | 263 | ||||||||||||||
Other | 83 | 177 | 335 | (1 | ) | 594 | |||||||||||||
Total assets | $ | (4,479 | ) | $ | 8,314 | $ | 6,141 | $ | (874 | ) | $ | 9,102 | |||||||
Liabilities and stockholders’ equity (deficit) | |||||||||||||||||||
Debt | $ | 1,617 | $ | 1,162 | $ | 1,997 | $ | (5 | ) | $ | 4,771 | ||||||||
Postretirement benefits liabilities | — | 3,144 | 367 | — | 3,511 | ||||||||||||||
Amounts due to (from) affiliates | (5,863 | ) | 9,522 | (3,743 | ) | 84 | — | ||||||||||||
Other liabilities | 3,072 | 337 | 748 | (77 | ) | 4,080 | |||||||||||||
Total liabilities | (1,174 | ) | 14,165 | (631 | ) | 2 | 12,362 | ||||||||||||
Redeemable equity securities | 5 | — | — | — | 5 | ||||||||||||||
Stockholders’ equity attributable to non-controlling interest | — | — | 45 | — | 45 | ||||||||||||||
Stockholders’ equity (deficit) attributable to Navistar International Corporation | (3,310 | ) | (5,851 | ) | 6,727 | (876 | ) | (3,310 | ) | ||||||||||
Total liabilities and stockholders’ equity (deficit) | $ | (4,479 | ) | $ | 8,314 | $ | 6,141 | $ | (874 | ) | $ | 9,102 |
Condensed Consolidating Statement of Cash Flows | |||||||||||||||||||
For the Nine Months Ended July 31, 2012 | Non-Guarantor Subsidiaries | ||||||||||||||||||
(in millions) | NIC | Navistar, Inc. | Eliminations and Other | Consolidated | |||||||||||||||
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 purchases in 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 |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
• | In December 2012, we met our first major engine strategy milestone with the launch of certain Class 8 truck models featuring the Cummins ISX15 engine (the "Cummins 15L") with the Cummins SCR after-treatment system. |
• | In April 2013, we met another major engine strategy milestone with the receipt of the EPA certification of our MaxxForce 13L Big-Bore engines with the Cummins SCR after-treatment system (the "Certified MaxxForce 13L engine"). Then, later in that same month, we began shipping our International® ProStar® trucks powered by our Certified MaxxForce 13L engine. |
• | Also in April 2013, we received OBD certification for all current applications. |
• | In September 2013, we announced the offering of the Cummins ISB 6.7 liter engine (the "Cummins ISB") in our International® DuraStar® medium-duty trucks and IC Bus™ CE Series school buses. Initial production of DuraStar® and CE Series school buses, with the Cummins ISB, is scheduled to begin during our first quarter of 2014. |
Three Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | ||||||||||||||||||||||||||
(in millions, except per share data and % change) | 2013 | 2012 | Change | 2013 | 2012 | Change | |||||||||||||||||||||||
Sales and revenues, net | $ | 2,861 | $ | 3,246 | $ | (385 | ) | (12 | )% | $ | 8,024 | $ | 9,516 | $ | (1,492 | ) | (16 | )% | |||||||||||
Costs of products sold | 2,547 | 2,800 | (253 | ) | (9 | )% | 7,196 | 8,350 | (1,154 | ) | (14 | )% | |||||||||||||||||
Restructuring charges | 6 | 4 | 2 | 50 | % | 14 | 23 | (9 | ) | (39 | )% | ||||||||||||||||||
Asset impairment charges | 17 | — | 17 | N.M. | 17 | 10 | 7 | 70 | % | ||||||||||||||||||||
Selling, general and administrative expenses | 308 | 322 | (14 | ) | (4 | )% | 905 | 1,049 | (144 | ) | (14 | )% | |||||||||||||||||
Engineering and product development costs | 99 | 135 | (36 | ) | (27 | )% | 310 | 402 | (92 | ) | (23 | )% | |||||||||||||||||
Interest expense | 76 | 59 | 17 | 29 | % | 240 | 182 | 58 | 32 | % | |||||||||||||||||||
Other expense (income), net | 22 | 12 | 10 | 83 | % | (35 | ) | 33 | (68 | ) | N.M. | ||||||||||||||||||
Total costs and expenses | 3,075 | 3,332 | (257 | ) | (8 | )% | 8,647 | 10,049 | (1,402 | ) | (14 | )% | |||||||||||||||||
Equity in income (loss) of non-consolidated affiliates | 3 | (10 | ) | 13 | N.M. | 6 | (21 | ) | 27 | N.M. | |||||||||||||||||||
Loss from continuing operations before income taxes | (211 | ) | (96 | ) | (115 | ) | 120 | % | (617 | ) | (554 | ) | (63 | ) | 11 | % | |||||||||||||
Income tax benefit (expense) | (16 | ) | 188 | (204 | ) | N.M. | (53 | ) | 387 | (440 | ) | N.M. | |||||||||||||||||
Income (loss) from continuing operations | (227 | ) | 92 | (319 | ) | N.M. | (670 | ) | (167 | ) | (503 | ) | 301 | % | |||||||||||||||
Less: Net income attributable to non-controlling interests | 10 | 12 | (2 | ) | (17 | )% | 34 | 35 | (1 | ) | (3 | )% | |||||||||||||||||
Income (loss) from continuing operations(A) | (237 | ) | 80 | (317 | ) | N.M. | (704 | ) | (202 | ) | (502 | ) | 249 | % | |||||||||||||||
Income (loss) from discontinued operations, net of tax | (10 | ) | 4 | (14 | ) | N.M. | (40 | ) | (39 | ) | (1 | ) | 3 | % | |||||||||||||||
Net loss(A) | $ | (247 | ) | $ | 84 | $ | (331 | ) | N.M. | $ | (744 | ) | $ | (241 | ) | $ | (503 | ) | 209 | % | |||||||||
Diluted income (loss) per share:(A) | |||||||||||||||||||||||||||||
Continuing operations | $ | (2.94 | ) | $ | 1.16 | $ | (4.10 | ) | N.M. | $ | (8.76 | ) | $ | (2.92 | ) | $ | (5.84 | ) | 200 | % | |||||||||
Discontinued operations | (0.12 | ) | 0.06 | (0.18 | ) | N.M. | (0.49 | ) | (0.57 | ) | 0.08 | (14 | )% | ||||||||||||||||
$ | (3.06 | ) | $ | 1.22 | $ | (4.28 | ) | N.M. | $ | (9.25 | ) | $ | (3.49 | ) | $ | (5.76 | ) | 165 | % | ||||||||||
Diluted weighted average shares outstanding | 80.6 | 68.9 | 11.7 | 17 | % | 80.4 | 69.1 | 11.3 | 16 | % |
N.M. | Not meaningful. |
(A) | Amounts attributable to Navistar International Corporation. |
(in millions, except % change) | Total | U.S. and Canada | ROW | |||||||||||||||||||||||||||||||||||||||||
Three Months Ended July 31, | % Change | Three Months Ended July 31, | % Change | Three Months Ended July 31, | % Change | |||||||||||||||||||||||||||||||||||||||
2013 | 2012 | Change | 2013 | 2012 | Change | 2013 | 2012 | Change | ||||||||||||||||||||||||||||||||||||
Truck | $ | 1,924 | $ | 2,263 | $ | (339 | ) | (15 | )% | $ | 1,621 | $ | 1,895 | $ | (274 | ) | (14 | )% | $ | 303 | $ | 368 | $ | (65 | ) | (18 | )% | |||||||||||||||||
Engine | 723 | 840 | (117 | ) | (14 | )% | 391 | 533 | (142 | ) | (27 | )% | 332 | 307 | 25 | 8 | % | |||||||||||||||||||||||||||
Parts | 491 | 542 | (51 | ) | (9 | )% | 430 | 481 | (51 | ) | (11 | )% | 61 | 61 | — | — | % | |||||||||||||||||||||||||||
Financial Services | 61 | 64 | (3 | ) | (5 | )% | 40 | 48 | (8 | ) | (17 | )% | 21 | 16 | 5 | 31 | % | |||||||||||||||||||||||||||
Corporate and Eliminations | (338 | ) | (463 | ) | 125 | (27 | )% | (332 | ) | (458 | ) | 126 | (28 | )% | (6 | ) | (5 | ) | (1 | ) | 20 | % | ||||||||||||||||||||||
Total | $ | 2,861 | $ | 3,246 | $ | (385 | ) | (12 | )% | $ | 2,150 | $ | 2,499 | $ | (349 | ) | (14 | )% | $ | 711 | $ | 747 | $ | (36 | ) | (5 | )% |
(in millions, except % change) | Total | U.S. and Canada | ROW | |||||||||||||||||||||||||||||||||||||||||
Nine Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | |||||||||||||||||||||||||||||||||||||||
2013 | 2012 | Change | 2013 | 2012 | Change | 2013 | 2012 | Change | ||||||||||||||||||||||||||||||||||||
Truck | $ | 5,121 | $ | 6,703 | $ | (1,582 | ) | (24 | )% | $ | 4,323 | $ | 5,657 | $ | (1,334 | ) | (24 | )% | $ | 798 | $ | 1,046 | $ | (248 | ) | (24 | )% | |||||||||||||||||
Engine | 2,207 | 2,593 | (386 | ) | (15 | )% | 1,263 | 1,687 | (424 | ) | (25 | )% | 944 | 906 | 38 | 4 | % | |||||||||||||||||||||||||||
Parts | 1,573 | 1,507 | 66 | 4 | % | 1,403 | 1,341 | 62 | 5 | % | 170 | 166 | 4 | 2 | % | |||||||||||||||||||||||||||||
Financial Services | 178 | 199 | (21 | ) | (11 | )% | 120 | 152 | (32 | ) | (21 | )% | 58 | 47 | 11 | 23 | % | |||||||||||||||||||||||||||
Corporate and Eliminations | (1,055 | ) | (1,486 | ) | 431 | (29 | )% | (1,040 | ) | (1,470 | ) | 430 | (29 | )% | (15 | ) | (16 | ) | 1 | (6 | )% | |||||||||||||||||||||||
Total | $ | 8,024 | $ | 9,516 | $ | (1,492 | ) | (16 | )% | $ | 6,069 | $ | 7,367 | $ | (1,298 | ) | (18 | )% | $ | 1,955 | $ | 2,149 | $ | (194 | ) | (9 | )% |
Three Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | ||||||||||||||||||||||||||
(in millions, except % change) | 2013 | 2012 | Change | 2013 | 2012 | Change | |||||||||||||||||||||||
Truck segment sales - U.S. and Canada | $ | 1,621 | $ | 1,895 | $ | (274 | ) | (14 | )% | $ | 4,323 | $ | 5,657 | $ | (1,334 | ) | (24 | )% | |||||||||||
Truck segment sales - ROW | 303 | 368 | (65 | ) | (18 | )% | 798 | 1,046 | (248 | ) | (24 | )% | |||||||||||||||||
Total Truck segment sales, net | $ | 1,924 | $ | 2,263 | $ | (339 | ) | (15 | )% | $ | 5,121 | $ | 6,703 | $ | (1,582 | ) | (24 | )% | |||||||||||
Truck segment loss | $ | (58 | ) | $ | (26 | ) | $ | (32 | ) | 123 | % | $ | (225 | ) | $ | (98 | ) | $ | (127 | ) | 130 | % |
Three Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | ||||||||||||||||||||||||||
(in millions, except % change) | 2013 | 2012 | Change | 2013 | 2012 | Change | |||||||||||||||||||||||
Engine segment sales - U.S. and Canada | $ | 391 | $ | 533 | $ | (142 | ) | (27 | )% | $ | 1,263 | $ | 1,687 | $ | (424 | ) | (25 | )% | |||||||||||
Engine segment sales - ROW | 332 | 307 | 25 | 8 | % | 944 | 906 | 38 | 4 | % | |||||||||||||||||||
Total Engine segment sales, net | $ | 723 | $ | 840 | $ | (117 | ) | (14 | )% | $ | 2,207 | $ | 2,593 | $ | (386 | ) | (15 | )% | |||||||||||
Engine segment loss | $ | (86 | ) | $ | (47 | ) | $ | (39 | ) | 83 | % | $ | (251 | ) | $ | (275 | ) | $ | 24 | (9 | )% |
Three Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | ||||||||||||||||||||||||||
(in millions, except % change) | 2013 | 2012 | Change | 2013 | 2012 | Change | |||||||||||||||||||||||
Parts segment sales - U.S. and Canada | $ | 430 | $ | 481 | $ | (51 | ) | (11 | )% | $ | 1,403 | $ | 1,341 | $ | 62 | 5 | % | ||||||||||||
Parts segment sales - ROW | 61 | 61 | — | — | % | 170 | 166 | 4 | 2 | % | |||||||||||||||||||
Total Parts segment sales, net | $ | 491 | $ | 542 | $ | (51 | ) | (9 | )% | $ | 1,573 | $ | 1,507 | $ | 66 | 4 | % | ||||||||||||
Parts segment profit | $ | 76 | $ | 73 | $ | 3 | 4 | % | $ | 253 | $ | 164 | $ | 89 | 54 | % |
Three Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | ||||||||||||||||||||||||||
(in millions, except % change) | 2013 | 2012 | Change | 2013 | 2012 | Change | |||||||||||||||||||||||
Financial Services segment revenues - U.S. and Canada(A) | $ | 40 | $ | 48 | $ | (8 | ) | (17 | )% | $ | 120 | $ | 152 | $ | (32 | ) | (21 | )% | |||||||||||
Financial Services segment revenues - ROW | 21 | 16 | 5 | 31 | % | 58 | 47 | 11 | 23 | % | |||||||||||||||||||
Total Financial Services segment revenues, net | $ | 61 | $ | 64 | $ | (3 | ) | (5 | )% | $ | 178 | $ | 199 | $ | (21 | ) | (11 | )% | |||||||||||
Financial Services segment profit | $ | 23 | $ | 22 | $ | 1 | 5 | % | $ | 64 | $ | 75 | $ | (11 | ) | (15 | )% |
(A) | The Financial Services segment does not have Canadian operations. |
Three Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | ||||||||||||||||||||
(in units) | 2013 | 2012 | Change | 2013 | 2012 | Change | |||||||||||||||||
"Traditional" Markets (U.S. and Canada) | |||||||||||||||||||||||
School buses(A) | 4,000 | 4,600 | (600 | ) | (13 | )% | 12,800 | 12,500 | 300 | 2 | % | ||||||||||||
Class 6 and 7 medium trucks | 16,300 | 16,200 | 100 | 1 | % | 47,500 | 52,100 | (4,600 | ) | (9 | )% | ||||||||||||
Class 8 heavy trucks | 41,700 | 48,600 | (6,900 | ) | (14 | )% | 120,500 | 144,500 | (24,000 | ) | (17 | )% | |||||||||||
Class 8 severe service trucks(B) | 12,200 | 11,700 | 500 | 4 | % | 33,700 | 32,300 | 1,400 | 4 | % | |||||||||||||
Total "traditional" markets | 74,200 | 81,100 | (6,900 | ) | (9 | )% | 214,500 | 241,400 | (26,900 | ) | (11 | )% | |||||||||||
Combined class 8 trucks | 53,900 | 60,300 | (6,400 | ) | (11 | )% | 154,200 | 176,800 | (22,600 | ) | (13 | )% | |||||||||||
Navistar "traditional" retail deliveries | 12,600 | 18,300 | (5,700 | ) | (31 | )% | 37,700 | 54,500 | (16,800 | ) | (31 | )% |
(A) | Beginning in the first quarter of 2013, the Company began using bus registration data from Polk to report U.S. and Canada School bus retail market deliveries. Additionally, the School bus retail market deliveries include buses classified as B, C and D and are being reported on a one-month lag. These changes are reflected in all periods presented. |
(B) | "Traditional" retail deliveries include CAT-branded units sold to Caterpillar under our North America supply agreement. |
Three Months Ended | |||||||||||||||||||
July 31, 2013 | April 30, 2013 | January 31, 2013 | October 31, 2012 | July 31, 2012 | |||||||||||||||
Class 6 and 7 medium trucks | 24 | % | 26 | % | 25 | % | 34 | % | 36 | % | |||||||||
Class 8 heavy trucks | 12 | % | 12 | % | 11 | % | 13 | % | 15 | % | |||||||||
Class 8 severe service trucks(A) | 18 | % | 22 | % | 26 | % | 30 | % | 30 | % | |||||||||
Combined class 8 trucks | 14 | % | 15 | % | 14 | % | 17 | % | 18 | % |
(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) | 2013 | 2012 | Change | 2013 | 2012 | Change | |||||||||||||||||
"Traditional" Markets (U.S. and Canada) | |||||||||||||||||||||||
School buses(A) | 2,400 | 2,500 | (100 | ) | (4 | )% | 7,000 | 7,800 | (800 | ) | (10 | )% | |||||||||||
Class 6 and 7 medium trucks | 2,500 | 4,000 | (1,500 | ) | (38 | )% | 9,600 | 15,700 | (6,100 | ) | (39 | )% | |||||||||||
Class 8 heavy trucks | 7,700 | 5,000 | 2,700 | 54 | % | 17,900 | 18,700 | (800 | ) | (4 | )% | ||||||||||||
Class 8 severe service trucks(B) | 2,600 | 3,100 | (500 | ) | (16 | )% | 7,000 | 10,100 | (3,100 | ) | (31 | )% | |||||||||||
Total "traditional" markets | 15,200 | 14,600 | 600 | 4 | % | 41,500 | 52,300 | (10,800 | ) | (21 | )% | ||||||||||||
Combined class 8 trucks | 10,300 | 8,100 | 2,200 | 27 | % | 24,900 | 28,800 | (3,900 | ) | (14 | )% |
(A) | U.S. and Canada School buses include buses classified as B, C and D. |
(B) | Truck segment net orders include CAT-branded units sold to Caterpillar under our North America supply agreement. |
As of July 31, | % Change | ||||||||||
(in units) | 2013 | 2012 | Change | ||||||||
"Traditional" Markets (U.S. and Canada) | |||||||||||
School buses(A) | 1,800 | 1,600 | 200 | 13 | % | ||||||
Class 6 and 7 medium trucks | 1,700 | 4,400 | (2,700 | ) | (61 | )% | |||||
Class 8 heavy trucks | 8,700 | 7,100 | 1,600 | 23 | % | ||||||
Class 8 severe service trucks(B) | 2,400 | 3,100 | (700 | ) | (23 | )% | |||||
Total "traditional" markets | 14,600 | 16,200 | (1,600 | ) | (10 | )% | |||||
Combined class 8 trucks | 11,100 | 10,200 | 900 | 9 | % |
(A) | U.S. and Canada School buses include buses classified as B, C and D. |
(B) | Truck segment backlog includes CAT-branded units sold to Caterpillar under our North America supply agreement, and the backlog as of January 31, 2012 was adjusted by 200 units to reflect the inclusion of these CAT-branded units. |
Three Months Ended July 31, | % Change | Nine Months Ended July 31, | % Change | ||||||||||||||||||||
(in units) | 2013 | 2012 | Change | 2013 | 2012 | Change | |||||||||||||||||
"Traditional" Markets (U.S. and Canada) | |||||||||||||||||||||||
School buses(A) | 2,600 | 2,900 | (300 | ) | (10 | )% | 7,100 | 7,200 | (100 | ) | (1 | )% | |||||||||||
Class 6 and 7 medium trucks | 3,400 | 5,800 | (2,400 | ) | (41 | )% | 12,000 | 17,200 | (5,200 | ) | (30 | )% | |||||||||||
Class 8 heavy trucks | 5,900 | 6,300 | (400 | ) | (6 | )% | 15,000 | 21,500 | (6,500 | ) | (30 | )% | |||||||||||
Class 8 severe service trucks(B) | 2,800 | 3,600 | (800 | ) | (22 | )% | 7,300 | 10,500 | (3,200 | ) | (30 | )% | |||||||||||
Total "traditional" markets | 14,700 | 18,600 | (3,900 | ) | (21 | )% | 41,400 | 56,400 | (15,000 | ) | (27 | )% | |||||||||||
Non "traditional" military(C) | 100 | 500 | (400 | ) | (80 | )% | 700 | 1,100 | (400 | ) | (36 | )% | |||||||||||
"Expansion" markets(D) | 8,000 | 7,600 | 400 | 5 | % | 20,500 | 22,100 | (1,600 | ) | (7 | )% | ||||||||||||
Total worldwide units(E) | 22,800 | 26,700 | (3,900 | ) | (15 | )% | 62,600 | 79,600 | (17,000 | ) | (21 | )% | |||||||||||
Combined class 8 trucks | 8,700 | 9,900 | (1,200 | ) | (12 | )% | 22,300 | 32,000 | (9,700 | ) | (30 | )% | |||||||||||
Combined military(F) | 100 | 500 | (400 | ) | (80 | )% | 800 | 1,900 | (1,100 | ) | (58 | )% |
(A) | U.S. and Canada School buses include buses classified as B, C and D. |
(B) | Chargeouts include CAT-branded units sold to Caterpillar under our North America supply agreement, and the chargeouts for the first quarter of 2012 were adjusted by 200 units to reflect the inclusion of these CAT-branded units. |
(C) | Excludes U.S. and Canada militarized commercial units included in "traditional" markets Class 8 severe service trucks and "expansion" markets. |
(D) | Includes chargeouts related to Blue Diamond Truck ("BDT") of 2,800 units and 1,600 units during the three months ended July 31, 2013 and 2012, respectively and 6,700 units and 4,800 units during the nine months ended July 31, 2013 and 2012, respectively. |
(E) | Excludes chargeouts related to: (i) RV towables of 300 units and 800 units during the three months ended July 31, 2013 and 2012, respectively, and 2,000 units and 2,200 units during the nine months ended July 31, 2013 and 2012, respectively, and (ii) units, previously included in "Expansion" markets that were restated as a result of Monaco and WCC being classified as discontinued operations, of 400 units during the three months ended July 31, 2012 and 400 units and 800 units during the nine months ended July 31, 2013 and 2012, respectively. |
(F) | 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) | 2013 | 2012 | Change | 2013 | 2012 | Change | |||||||||||||||||
OEM sales-South America | 31,000 | 28,600 | 2,400 | 8 | % | 87,400 | 78,000 | 9,400 | 12 | % | |||||||||||||
Intercompany sales | 14,900 | 20,600 | (5,700 | ) | (28 | )% | 46,500 | 65,600 | (19,100 | ) | (29 | )% | |||||||||||
Other OEM sales | 2,600 | 3,000 | (400 | ) | (13 | )% | 6,800 | 7,200 | (400 | ) | (6 | )% | |||||||||||
Total sales | 48,500 | 52,200 | (3,700 | ) | (7 | )% | 140,700 | 150,800 | (10,100 | ) | (7 | )% |
(in millions) | July 31, 2013 | October 31, 2012 | July 31, 2012 | ||||||||
Consolidated cash and cash equivalents | $ | 425 | $ | 1,087 | $ | 547 | |||||
Consolidated marketable securities | 708 | 466 | 159 | ||||||||
Consolidated cash, cash equivalents and marketable securities at end of the period | $ | 1,133 | $ | 1,553 | $ | 706 |
Nine Months Ended July 31, 2013 | |||||||||||
(in millions) | Manufacturing Operations | Financial Services Operations and Adjustments | Condensed Consolidated Statement of Cash Flows | ||||||||
Net cash provided by (used in) operating activities | $ | (248 | ) | $ | 282 | $ | 34 | ||||
Net cash used in investing activities | (585 | ) | (106 | ) | (691 | ) | |||||
Net cash provided by (used in) financing activities | 208 | (194 | ) | 14 | |||||||
Effect of exchange rate changes on cash and cash equivalents | (21 | ) | 2 | (19 | ) | ||||||
Increase (decrease) in cash and cash equivalents | (646 | ) | (16 | ) | (662 | ) | |||||
Cash and cash equivalents at beginning of the period | 1,059 | 28 | 1,087 | ||||||||
Cash and cash equivalents at end of the period | $ | 413 | $ | 12 | $ | 425 |
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 | ) | ||||||
Decrease 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 |
• | 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 1A. | Risk Factors |
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 |
Item 6. | Exhibits |
Exhibit: | Page | |||
(4) | E-1 | |||
(10) | E-2 | |||
(31.1) | E-3 | |||
(31.2) | E-4 | |||
(32.1) | E-5 | |||
(32.2) | E-6 | |||
(99.1) | E-7 | |||
(101.INS) | 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 |
Senior Vice President and Controller |
(Principal Accounting Officer) |
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. 001-09618. | |
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. | |
4.5 | Amendment No. 1 to the Rights Agreement, dated as of October 5, 2012, 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 October 10, 2012. Commission File No. 001-09618. | |
4.6 | Amendment No. 2 to the Rights Agreement, dated as of October 5, 2012, between Navistar International Corporation and Computershare Shareowner Services LLC, as rights agent. Filed as Exhibit 4.2 to Current Report on Form 8-K dated and filed October 10, 2012. Commission File No. 001-09618. | |
4.7 | Amendment No. 3 to the Rights Agreement, dated as of October 19, 2012, 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 October 22, 2012. Commission File No. 001-09618. | |
4.8 | Amendment No. 4 to the Rights Agreement, dated as of June 17, 2013, 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 18, 2013. Commission File No. 001-09618. | |
4.9 | Amendment No. 5 to the Rights Agreement, dated as of July 14, 2013, between Navistar International Corporation and Computershare Inc., successor-in-interest to Computershare Shareowner Services LLC, as rights agent. Filed as Exhibit 4.1 to Current Report on Form 8-K dated July 14, 2013 and filed July 15, 2013. Commission File No. 001-09618. | |
4.10 | Form of Indenture for Senior Notes among Navistar International Corporation, Navistar Inc., as guarantor, and The Bank of New York Mellon Trust Company, N.A., as trustee. Filed as Exhibit 4.14 to Registration Statement on Form S-3 dated and filed October 24, 2012. Registration Statement No.: 333-184565-01. |
*10.1 | Amended and Restated Executive Stock Ownership Program. Filed as Exhibit 10.12 to Quarterly Report on Form 10-Q dated and filed on June 10, 2013. Commission File No. 001-09618. | |
*10.2 | Offer Letter to Walter Borst dated June 24, 2013. Filed as Exhibit 10.1 to Current Report on Form 8-K dated and filed on June 27, 2013. Commission File No. 001-09618. | |
10.3 | Amendment No. 1, dated as of July 14, 2013, to the Settlement Agreement, effective as of October 5, 2012, by and among the Company and Carl C. Icahn, Icahn Partners Master Fund LP, Icahn Partners Master Fund II LP, Icahn Partners Master Fund III LP, Icahn Offshore LP, Icahn Partners LP, Icahn Onshore LP, Beckton Corp., Hopper Investments LLC, Barberry Corp., High River Limited Partnership, Icahn Capital LP, IPH GP LLC, Icahn Enterprises Holdings L.P. and Icahn Enterprises G.P. Inc. Filed as Exhibit 10.1 to Current Report on Form 8-K dated July 14, 2013 and filed on July 15, 2013. Commission File No. 001-09618. | |
10.4 | Amendment No. 1, dated as of July 14, 2013, to the Settlement Agreement, effective as of October 5, 2012, by and among the Company and Mark H. Rachesky, M.D., MHR Holdings LLC, MHR Fund Management LLC, MHR Institutional Advisors III LLC, MHR Capital Partners Master Account LP, MHR Capital Partners (100) LP, MHR Advisors LLC, and MHR Institutional Partners III LP. Filed as Exhibit 10.2 to Current Report on Form 8-K dated July 14, 2013 and filed on July 15, 2013. Commission File No. 001-09618. | |
10.5 | Agreement, dated as of July 14, 2013, by and among the Company and Carl C. Icahn, Icahn Partners Master Fund LP, Icahn Partners Master Fund II LP, Icahn Partners Master Fund III LP, Icahn Offshore LP, Icahn Partners LP, Icahn Onshore LP, Beckton Corp., Hopper Investments LLC, Barberry Corp., High River Limited Partnership, Icahn Capital LP, IPH GP LLC, Icahn Enterprises Holdings L.P. and Icahn Enterprises G.P. Inc. Filed as Exhibit 10.3 to Current Report on Form 8-K dated July 14, 2013 and filed on July 15, 2013. Commission File No. 001-09618. | |
10.6 | Agreement, dated as of July 14, 2013, by and among the Company and Mark H. Rachesky, M.D., MHR Holdings LLC, MHR Fund Management LLC, MHR Institutional Advisors III LLC, MHR Capital Partners Master Account LP, MHR Capital Partners (100) LP, MHR Advisors LLC, and MHR Institutional Partners III LP. Filed as Exhibit 10.4 to Current Report on Form 8-K dated July 14, 2013 and filed on July 15, 2013. Commission File No. 001-09618. |
* | Indicates a management contract or compensatory plan or arrangement required to be filed or incorporated by reference as an exhibit to this report. |
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/ TROY A. CLARKE |
Troy A. Clarke President and 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/ WALTER G. BORST |
Walter G. Borst 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/ TROY A. CLARKE |
Troy A. Clarke President and 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/ WALTER G. BORST |
Walter G. Borst Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
For the Three Months Ended July 31, 2013 | |||||||||||||||
(in millions) | Manufacturing Operations | Financial Services Operations | Adjustments | Consolidated Statement of Operations | |||||||||||
Sales of manufactured products | $ | 2,820 | $ | — | $ | — | $ | 2,820 | |||||||
Finance revenues | — | 62 | (21 | ) | 41 | ||||||||||
Sales and revenues, net | 2,820 | 62 | (21 | ) | 2,861 | ||||||||||
Costs of products sold | 2,547 | — | — | 2,547 | |||||||||||
Restructuring charges | 5 | 1 | — | 6 | |||||||||||
Asset impairment charges | 17 | — | — | 17 | |||||||||||
Selling, general and administrative expenses | 286 | 23 | (1 | ) | 308 | ||||||||||
Engineering and product development costs | 99 | — | — | 99 | |||||||||||
Interest expense | 60 | 17 | (1 | ) | 76 | ||||||||||
Other expense (income), net | 43 | (2 | ) | (19 | ) | 22 | |||||||||
Total costs and expenses | 3,057 | 39 | (21 | ) | 3,075 | ||||||||||
Equity in income of non-consolidated affiliates | 3 | — | — | 3 | |||||||||||
Income (loss) before equity income from financial services operations and income taxes | (234 | ) | 23 | — | (211 | ) | |||||||||
Equity income from financial services operations | 16 | — | (16 | ) | — | ||||||||||
Income (loss) from continuing operations before income taxes | (218 | ) | 23 | (16 | ) | (211 | ) | ||||||||
Income tax expense | (9 | ) | (7 | ) | — | (16 | ) | ||||||||
Income (loss) from continuing operations | (227 | ) | 16 | (16 | ) | (227 | ) | ||||||||
Loss from discontinued operations, net of tax | (10 | ) | — | — | (10 | ) | |||||||||
Net income (loss) | (237 | ) | 16 | (16 | ) | (237 | ) | ||||||||
Less: Income attributable to non-controlling interests | 10 | — | — | 10 | |||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | (247 | ) | $ | 16 | $ | (16 | ) | $ | (247 | ) |
For the Nine Months Ended July 31, 2013 | |||||||||||||||
(in millions) | Manufacturing Operations | Financial Services Operations | Adjustments | Consolidated Statement of Operations | |||||||||||
Sales of manufactured products | $ | 7,905 | $ | — | $ | — | $ | 7,905 | |||||||
Finance revenues | — | 178 | (59 | ) | 119 | ||||||||||
Sales and revenues, net | 7,905 | 178 | (59 | ) | 8,024 | ||||||||||
Costs of products sold | 7,196 | — | — | 7,196 | |||||||||||
Restructuring charges | 10 | 4 | — | 14 | |||||||||||
Asset impairment charges | 17 | — | — | 17 | |||||||||||
Selling, general and administrative expenses | 842 | 66 | (3 | ) | 905 | ||||||||||
Engineering and product development costs | 310 | — | — | 310 | |||||||||||
Interest expense | 190 | 52 | (2 | ) | 240 | ||||||||||
Other expense (income), net | 27 | (8 | ) | (54 | ) | (35 | ) | ||||||||
Total costs and expenses | 8,592 | 114 | (59 | ) | 8,647 | ||||||||||
Equity in income of non-consolidated affiliates | 6 | — | — | 6 | |||||||||||
Income (loss) before equity income from financial services operations and income taxes | (681 | ) | 64 | — | (617 | ) | |||||||||
Equity income from financial services operations | 42 | — | (42 | ) | — | ||||||||||
Income (loss) from continuing operations before income taxes | (639 | ) | 64 | (42 | ) | (617 | ) | ||||||||
Income tax expense | (31 | ) | (22 | ) | — | (53 | ) | ||||||||
Income (loss) from continuing operations | (670 | ) | 42 | (42 | ) | (670 | ) | ||||||||
Loss from discontinued operations, net of tax | (40 | ) | — | — | (40 | ) | |||||||||
Net income (loss) | (710 | ) | 42 | (42 | ) | (710 | ) | ||||||||
Less: Income attributable to non-controlling interests | 34 | — | — | 34 | |||||||||||
Net income (loss) attributable to Navistar International Corporation | $ | (744 | ) | $ | 42 | $ | (42 | ) | $ | (744 | ) |
For the Three Months Ended July 31, 2012 | |||||||||||||||
(in millions) | Manufacturing Operations | Financial Services Operations | Adjustments | Consolidated Statement of Operations | |||||||||||
Sales of manufactured products | $ | 3,204 | $ | — | $ | — | $ | 3,204 | |||||||
Finance revenues | 64 | (22 | ) | 42 | |||||||||||
Sales and revenues, net | 3,204 | 64 | (22 | ) | 3,246 | ||||||||||
Costs of products sold | 2,800 | — | — | 2,800 | |||||||||||
Restructuring charges | 4 | — | — | 4 | |||||||||||
Asset impairment charges | — | — | — | — | |||||||||||
Selling, general and administrative expenses | 300 | 24 | (2 | ) | 322 | ||||||||||
Engineering and product development costs | 135 | — | — | 135 | |||||||||||
Interest expense | 40 | 20 | (1 | ) | 59 | ||||||||||
Other expense (income), net | 32 | (1 | ) | (19 | ) | 12 | |||||||||
Total costs and expenses | 3,311 | 43 | (22 | ) | 3,332 | ||||||||||
Equity in loss of non-consolidated affiliates | (10 | ) | — | — | (10 | ) | |||||||||
Income (loss) before equity income from financial services operations and income taxes | (117 | ) | 21 | — | (96 | ) | |||||||||
Equity income from financial services operations | 13 | — | (13 | ) | — | ||||||||||
Income (loss) from continuing operations before income taxes | (104 | ) | 21 | (13 | ) | (96 | ) | ||||||||
Income tax benefit (expense) | 196 | (8 | ) | — | 188 | ||||||||||
Income from continuing operations | 92 | 13 | (13 | ) | 92 | ||||||||||
Income from discontinued operations, net of tax | 4 | — | — | 4 | |||||||||||
Net income | 96 | 13 | (13 | ) | 96 | ||||||||||
Less: Income attributable to non-controlling interests | 12 | — | — | 12 | |||||||||||
Net income attributable to Navistar International Corporation | $ | 84 | $ | 13 | $ | (13 | ) | $ | 84 |
For the Nine Months Ended July 31, 2012 | |||||||||||||||
(in millions) | Manufacturing Operations | Financial Services Operations | Adjustments | Consolidated Statement of Operations | |||||||||||
Sales of manufactured products | $ | 9,387 | $ | — | $ | — | $ | 9,387 | |||||||
Finance revenues | — | 199 | (70 | ) | 129 | ||||||||||
Sales and revenues, net | 9,387 | 199 | (70 | ) | 9,516 | ||||||||||
Costs of products sold | 8,350 | — | — | 8,350 | |||||||||||
Restructuring charges | 23 | — | — | 23 | |||||||||||
Asset impairment charges | 10 | — | — | 10 | |||||||||||
Selling, general and administrative expenses | 990 | 63 | (4 | ) | 1,049 | ||||||||||
Engineering and product development costs | 402 | — | — | 402 | |||||||||||
Interest expense | 119 | 67 | (4 | ) | 182 | ||||||||||
Other expense (income), net | 101 | (6 | ) | (62 | ) | 33 | |||||||||
Total costs and expenses | 9,995 | 124 | (70 | ) | 10,049 | ||||||||||
Equity in loss of non-consolidated affiliates | (21 | ) | — | — | (21 | ) | |||||||||
Income (loss) before equity income from financial services operations and income taxes | (629 | ) | 75 | — | (554 | ) | |||||||||
Equity income from financial services operations | 48 | — | (48 | ) | — | ||||||||||
Income (loss) from continuing operations before income taxes | (581 | ) | 75 | (48 | ) | (554 | ) | ||||||||
Income tax benefit (expense) | 414 | (27 | ) | — | 387 | ||||||||||
Income (loss) from continuing operations | (167 | ) | 48 | (48 | ) | (167 | ) | ||||||||
Loss from discontinued operations, net of tax | (39 | ) | — | — | (39 | ) | |||||||||
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 | ) |
As of July 31, 2013 | |||||||||||||||
(in millions) | Manufacturing Operations | Financial Services Operations | Adjustments | Consolidated Statement of Operations | |||||||||||
Assets | |||||||||||||||
Cash and cash equivalents | $ | 413 | $ | 12 | $ | — | $ | 425 | |||||||
Marketable securities | 674 | 34 | — | 708 | |||||||||||
Restricted cash | 30 | 140 | — | 170 | |||||||||||
Finance and other receivables, net | 807 | 2,057 | (86 | ) | 2,778 | ||||||||||
Inventories | 1,323 | 13 | — | 1,336 | |||||||||||
Goodwill | 255 | — | — | 255 | |||||||||||
Property and equipment, net | 1,506 | 208 | — | 1,714 | |||||||||||
Investments in and advances to financial services operations | 674 | — | (674 | ) | — | ||||||||||
Investments in non-consolidated affiliates | 80 | — | — | 80 | |||||||||||
Deferred taxes, net | 217 | 32 | — | 249 | |||||||||||
Other assets | 492 | 34 | — | 526 | |||||||||||
Total assets | $ | 6,471 | $ | 2,530 | $ | (760 | ) | $ | 8,241 | ||||||
Liabilities and stockholders' equity (deficit) | |||||||||||||||
Accounts payable | $ | 1,596 | $ | 36 | $ | (86 | ) | $ | 1,546 | ||||||
Debt | 3,038 | 1,686 | — | 4,724 | |||||||||||
Postretirement benefits liabilities | 3,328 | 49 | — | 3,377 | |||||||||||
Other liabilities | 2,442 | 85 | — | 2,527 | |||||||||||
Total liabilities | 10,404 | 1,856 | (86 | ) | 12,174 | ||||||||||
Redeemable equity securities | 4 | — | — | 4 | |||||||||||
Stockholders' equity attributable to non-controlling interest | 35 | — | — | 35 | |||||||||||
Stockholders' equity (deficit) attributable to controlling interest | (3,972 | ) | 674 | (674 | ) | (3,972 | ) | ||||||||
Total liabilities and stockholders' equity (deficit) | $ | 6,471 | $ | 2,530 | $ | (760 | ) | $ | 8,241 |
As of October 31, 2012 | |||||||||||||||
(in millions) | Manufacturing Operations | Financial Services Operations | Adjustments | Consolidated Statement of Operations | |||||||||||
Assets | |||||||||||||||
Cash and cash equivalents | $ | 1,059 | $ | 28 | $ | — | $ | 1,087 | |||||||
Marketable securities | 446 | 20 | — | 466 | |||||||||||
Restricted cash | 31 | 130 | — | 161 | |||||||||||
Finance and other receivables, net | 843 | 2,247 | (98 | ) | 2,992 | ||||||||||
Inventories | 1,528 | 9 | — | 1,537 | |||||||||||
Goodwill | 280 | — | — | 280 | |||||||||||
Property and equipment, net | 1,497 | 163 | — | 1,660 | |||||||||||
Investments in and advances to financial services operations | 628 | — | (628 | ) | — | ||||||||||
Investments in non-consolidated affiliates | 62 | — | — | 62 | |||||||||||
Deferred taxes, net | 231 | 32 | — | 263 | |||||||||||
Other assets | 562 | 32 | — | 594 | |||||||||||
Total assets | $ | 7,167 | $ | 2,661 | $ | (726 | ) | $ | 9,102 | ||||||
Liabilities and stockholders' equity (deficit) | |||||||||||||||
Accounts payable | $ | 1,752 | $ | 32 | $ | (98 | ) | $ | 1,686 | ||||||
Debt | 2,905 | 1,866 | — | 4,771 | |||||||||||
Postretirement benefits liabilities | 3,459 | 52 | — | 3,511 | |||||||||||
Other liabilities | 2,311 | 83 | — | 2,394 | |||||||||||
Total liabilities | 10,427 | 2,033 | (98 | ) | 12,362 | ||||||||||
Redeemable equity securities | 5 | — | — | 5 | |||||||||||
Stockholders' equity attributable to non-controlling interest | 45 | — | — | 45 | |||||||||||
Stockholders' equity (deficit) attributable to controlling interest | (3,310 | ) | 628 | (628 | ) | (3,310 | ) | ||||||||
Total liabilities and stockholders' equity (deficit) | $ | 7,167 | $ | 2,661 | $ | (726 | ) | $ | 9,102 |
Nine Months Ended July 31, 2013 | |||||||||||||||
(in millions) | Manufacturing Operations | Financial Services Operations | Adjustments | Consolidated Statement of Operations | |||||||||||
Cash flows from operating activities | |||||||||||||||
Net income (loss) | $ | (710 | ) | $ | 42 | $ | (42 | ) | $ | (710 | ) | ||||
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | |||||||||||||||
Depreciation and amortization | 224 | 1 | — | 225 | |||||||||||
Depreciation of equipment leased to others | 77 | 28 | — | 105 | |||||||||||
Amortization of debt issuance costs and discount | 34 | 9 | — | 43 | |||||||||||
Deferred income taxes | 19 | — | — | 19 | |||||||||||
Impairment of property and equipment and intangible assets | 25 | — | — | 25 | |||||||||||
Gain on sales of investments and businesses, net | (13 | ) | — | — | (13 | ) | |||||||||
Equity in loss of non-consolidated affiliates | (6 | ) | — | — | (6 | ) | |||||||||
Equity in income of financial services affiliates | (42 | ) | — | 42 | — | ||||||||||
Dividends from non-consolidated affiliates | 11 | — | — | 11 | |||||||||||
Change in intercompany receivables and payables | (12 | ) | 12 | — | — | ||||||||||
Other, net | 145 | 190 | — | 335 | |||||||||||
Net cash provided by (used in) operating activities | (248 | ) | 282 | — | 34 | ||||||||||
Cash flows from investing activities | |||||||||||||||
Purchases of marketable securities | (1,057 | ) | (13 | ) | — | (1,070 | ) | ||||||||
Sales or maturities of marketable securities | 828 | — | — | 828 | |||||||||||
Net change in restricted cash and cash equivalents | 1 | (10 | ) | — | (9 | ) | |||||||||
Capital expenditures | (135 | ) | (1 | ) | — | (136 | ) | ||||||||
Purchase of equipment leased to others | (266 | ) | (85 | ) | — | (351 | ) | ||||||||
Other investing activities | 44 | 3 | — | 47 | |||||||||||
Net cash used in investing activities | (585 | ) | (106 | ) | — | (691 | ) | ||||||||
Net cash provided by (used in) financing activities | 208 | (194 | ) | — | 14 | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | (21 | ) | 2 | — | (19 | ) | |||||||||
Decrease in cash and cash equivalents | (646 | ) | (16 | ) | — | (662 | ) | ||||||||
Cash and cash equivalents at beginning of the period | 1,059 | 28 | — | 1,087 | |||||||||||
Cash and cash equivalents at end of the period | $ | 413 | $ | 12 | $ | — | $ | 425 |
Nine Months Ended July 31, 2012 | |||||||||||||||
(in millions) | Manufacturing Operations | Financial Services Operations | Adjustments | Consolidated Statement of Operations | |||||||||||
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 property and equipment and 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 | (12 | ) | — | — | (12 | ) | |||||||||
Other investing activities | (6 | ) | 1 | — | (5 | ) | |||||||||
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 |
Income Taxes
|
9 Months Ended |
---|---|
Jul. 31, 2013
|
|
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We compute on a quarterly basis an estimated annual effective tax rate considering ordinary income and related income tax expense. U.S. results in 2013, as well as certain foreign results in both 2013 and 2012, are excluded from ordinary income due to ordinary losses for which no benefit can be recognized. Ordinary income refers to income (loss) before income tax expense excluding significant unusual or infrequently occurring items. Our effective tax rate in the third quarter and first nine months of 2013 differed from the U.S. statutory rate due to the geographical mix of the jurisdictions recognizing earnings or losses, and the impact from uncertain tax positions. Our effective tax rate for the third quarter of 2012 differed from the U.S. statutory rate due to $173 million of income tax benefit resulting from a third quarter change in the estimated 2012 annual effective tax rate. The tax effect of a significant unusual or infrequently occurring item is recorded in the interim period in which it occurs. Items included in income tax expense in the periods in which they occur include the tax effects of material restructurings and impairments, cumulative effect of changes in tax laws or rates, foreign exchange gains and losses, adjustments to uncertain tax positions, and adjustments to our valuation allowance due to changes in judgment regarding the ability to realize deferred tax assets in future years. We evaluated the need to maintain or establish a valuation allowance for deferred tax assets based on our assessment of whether it is more likely than not that deferred tax benefits will be realized through the generation of future taxable income. Appropriate consideration is given to all available evidence, both positive and negative, in assessing the need for a valuation allowance. We continue to maintain a valuation allowance on our U.S. deferred tax assets, as well as certain foreign deferred tax assets, that we believe, on a more-likely-than-not basis, will not be realized. For all remaining deferred tax assets, while we believe that it is more likely than not that they will be realized, we believe that it is reasonably possible that additional deferred tax asset valuation allowances could be required in the next twelve months. In 2012, our evaluation resulted in the determination that a significant portion of our valuation allowance on our Canadian deferred tax assets could be released. The qualitative and quantitative analysis of current and expected earnings, industry volumes, tax planning strategies, and general business risks resulted in a more likely than not conclusion of being able to realize a significant portion of our Canadian deferred tax assets. We have realized the benefits of the shift in our Canadian business model from a truck manufacturer to a truck distributor, combined with our existing Parts business. As a result of our analysis, we recognized an income tax benefit of $181 million from the release of valuation allowances in the second quarter of 2012. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As of July 31, 2013, the amount of liability for uncertain tax positions was $90 million. If the unrecognized tax benefits are recognized, $84 million would impact our effective tax rate. However, to the extent we continue to maintain a full valuation allowance against certain deferred tax assets, the effect may be in the form of an increase in the deferred tax asset related to our net operating loss carry forward, which would be offset by a full valuation allowance. We recognize interest and penalties related to uncertain tax positions as part of Income tax benefit (expense). For the three and nine months ended July 31, 2013, the total interest and penalties related to our uncertain tax positions were $2 million and $8 million respectively, reflecting the ongoing resolution of audits in various jurisdictions. We have open tax years back to 2001 with various significant taxing jurisdictions including the U.S., Canada, Mexico, and Brazil. In connection with the examination of tax returns, contingencies may arise that generally result from differing interpretations of applicable tax laws and regulations as they relate to the amount, timing, or inclusion of revenues or expenses in taxable income, or the sustainability of tax credits to reduce income taxes payable. We believe we have sufficient accruals for our contingent tax liabilities. Interim tax provisions include amounts considered sufficient to pay assessments that may result from examinations of prior year tax returns, although actual results may differ. While it is probable that the liability for unrecognized tax benefits may increase or decrease during the next twelve months, we do not expect any such change would have a material effect on our financial condition, results of operations, or cash flows. |
Debt - Financial Services Operations (Details) (USD $)
In Millions, unless otherwise specified |
Jul. 31, 2013
|
Oct. 31, 2012
|
Apr. 30, 2013
Financial Services Operations [Member]
|
Jul. 31, 2013
Financial Services Operations [Member]
Secured Debt [Member]
|
Oct. 31, 2012
Financial Services Operations [Member]
Secured Debt [Member]
|
Jul. 31, 2013
Financial Services Operations [Member]
Line of Credit [Member]
|
Oct. 31, 2012
Financial Services Operations [Member]
Line of Credit [Member]
|
Jul. 31, 2013
Financial Services Operations [Member]
Commercial Paper [Member]
|
Oct. 31, 2012
Financial Services Operations [Member]
Commercial Paper [Member]
|
Jul. 31, 2013
Financial Services Operations [Member]
Borrowings Secured By Operating and Finance Leases [Member]
|
Oct. 31, 2012
Financial Services Operations [Member]
Borrowings Secured By Operating and Finance Leases [Member]
|
Jul. 31, 2013
Financial Services Operations [Member]
Debt [Member]
|
Oct. 31, 2012
Financial Services Operations [Member]
Debt [Member]
|
Jul. 31, 2013
Mexico, Pesos
|
Jul. 31, 2013
United States of America, Dollars
|
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Debt Instrument [Line Items] | |||||||||||||||
Long-term Debt | $ 791 | $ 994 | $ 837 | $ 763 | $ 0 | $ 31 | $ 58 | $ 78 | $ 1,686 | $ 1,866 | |||||
Debt, Current | 820 | 1,205 | 704 | 1,033 | |||||||||||
Long-term Debt and Capital Lease Obligations | 3,904 | 3,566 | 982 | 833 | |||||||||||
Debt Instrument, Face Amount | 200 | ||||||||||||||
Commercial Paper | $ 1,000 | $ 79 |
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2013
|
Jul. 31, 2012
|
Jul. 31, 2013
|
Jul. 31, 2012
|
|
Defined benefit plan, tax | $ (1) | $ 13 | $ (2) | $ 36 |
Discontinued Operations
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2013
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Other Divestitures | Discontinued Operations and Other Divestitures The Company is currently evaluating its portfolio of assets to validate their strategic and financial fit. To allow us to increase our focus on our North American core business, we are evaluating product lines, businesses, and engineering programs that fall outside of our core business. We are using Return on Invested Capital ("ROIC") methodology, combined with an assessment of the strategic fit to our core business, to identify areas that are under-performing. For those areas under-performing, we are evaluating whether to fix, divest, or close, and expect to realize incremental benefits from these actions in the near future. Discontinued Operations In the first quarter of 2013, the Company completed the idling of the Workhorse Custom Chassis ("WCC") operations, and in the second quarter of 2013, we completed the divestiture of the WCC business for an immaterial amount. For the three and nine months ended July 31, 2013 and 2012, the operating results of the WCC operations, which were previously included as part of the Truck segment, are reported as discontinued operations in the Consolidated Statements of Operations for all periods presented. In the first quarter of 2013, certain operations of the Monaco recreational vehicle ("RV") business ("Monaco") were determined to be held-for-sale. For the three and nine months ended July 31, 2013 and 2012, the operating results of these certain operations of Monaco, which were previously included as part of the Truck segment, are reported as discontinued operations in the Consolidated Statements of Operations for all periods presented. In May 2013, we divested substantially all of our interest in these operations of Monaco. The cash consideration from the divestiture was $19 million. As a result of the divestiture, we impaired certain assets and recognized a loss totaling $24 million. The loss was included in the Income (loss) from discontinued operations, net of tax. WCC and Monaco were not material to the Company's Consolidated Balance Sheets or Condensed Consolidated Statements of Cash Flows and have not been reclassified in the respective financial statements. The following table summarizes the discontinued operations activity in the Company's Consolidated Statements of Operations:
We generally use a centralized approach to cash management, financing of our Manufacturing operations, and general corporate related functions, and, accordingly, do not allocate debt, interest expense, or corporate overhead to our discontinued businesses. Any debt and related interest expense of a specific entity within a business is recorded by the respective entity. Other Divestitures In 2006 and 2008, we formed two joint ventures with Mahindra & Mahindra Ltd. ("Mahindra") in India, which operated under the names of Mahindra Navistar Automotives Ltd. ("MNAL") and Mahindra-Navistar Engines Private Ltd. ("MNEPL") (collectively, the "Mahindra Joint Ventures"). In February 2013, the Company sold its stake in the Mahindra Joint Ventures to Mahindra for $33 million. As a result of the divestiture, the Company recognized a gain of $26 million in the first nine months of 2013. As part of the transaction, the Company entered into licensing and service agreements with Mahindra. |
Condensed Consolidating Guarantor and Non-Guarantor
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2013
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Condensed Consolidating Guarantor and Non Guarantor Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Guarantor and Non-guarantor Financial Information | Condensed Consolidating Guarantor and Non-guarantor Financial Information The following tables set forth condensed consolidating balance sheets as of July 31, 2013 and October 31, 2012, and condensed consolidating statements of operations, condensed consolidating statements of comprehensive income (loss), and condensed consolidating statements of cash flows, all for the three months ended July 31, 2013 and 2012. Beginning in the first quarter of 2013, the Company began reporting the operating results of WCC and certain operating results of Monaco as discontinued operations. For more information, see Note 2, Discontinued Operations and Other Divestitures. The 2012 condensed consolidating statements of operations have been restated to reflect this change. The information is presented as a result of Navistar, Inc.’s guarantee, exclusive of its subsidiaries, of NIC’s indebtedness under our Senior Notes and obligations under our Loan Agreement related to the Tax Exempt Bonds. Navistar, Inc. is a direct wholly-owned subsidiary of NIC. None of NIC’s other subsidiaries guarantee any of these notes or bonds. The guarantees are "full and unconditional", as those terms are used in Regulation S-X Rule 3-10, except that the guarantees will be automatically released in certain customary circumstances, such as when the subsidiary is sold or all of the assets of the subsidiary are sold, the capital stock is sold, when the subsidiary is designated as an "unrestricted subsidiary" for purposes of the indenture, upon liquidation or dissolution of the subsidiary or upon legal or covenant defeasance, or satisfaction and discharge of the notes. Separate financial statements and other disclosures concerning Navistar, Inc. have not been presented because management believes that such information is not material to investors. Within this disclosure only, "NIC" includes the financial results of the parent company only, with all of its wholly-owned subsidiaries accounted for under the equity method. Likewise, "Navistar, Inc.," for purposes of this disclosure only, includes the consolidated financial results of its wholly-owned subsidiaries accounted for under the equity method and its operating units accounted for on a consolidated basis. "Non-Guarantor Subsidiaries" includes the combined financial results of all other non-guarantor subsidiaries. "Eliminations and Other" includes all eliminations and reclassifications to reconcile to the consolidated financial statements. NIC files a consolidated U.S. federal income tax return that includes Navistar, Inc. and its U.S. subsidiaries. Navistar, Inc. has a tax allocation agreement ("Tax Agreement") with NIC which requires Navistar, Inc. to compute its separate federal income tax liability and remit any resulting tax liability to NIC. Tax benefits that may arise from net operating losses of Navistar, Inc. are not refunded to Navistar, Inc. but may be used to offset future required tax payments under the Tax Agreement. The effect of the Tax Agreement is to allow NIC, the parent company, rather than Navistar, Inc., to utilize current U.S. taxable losses of Navistar, Inc. and all other direct or indirect subsidiaries of NIC.
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Commitments and Contingencies - Commitments and Contingencies (Details)
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3 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | 9 Months Ended | 3 Months Ended | 6 Months Ended | 6 Months Ended | 9 Months Ended | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2013
USD ($)
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Apr. 30, 2010
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Jul. 31, 2013
USD ($)
site
|
Jul. 31, 2012
USD ($)
|
Oct. 31, 2012
|
Jul. 31, 2013
Non-conformance Penalties [Member]
USD ($)
|
Jul. 31, 2012
Non-conformance Penalties [Member]
USD ($)
|
Jul. 31, 2013
Non-conformance Penalties [Member]
USD ($)
|
Jul. 31, 2012
Non-conformance Penalties [Member]
USD ($)
|
Jul. 31, 2013
Pending Litigation [Member]
Disputes [Member]
USD ($)
|
Jul. 31, 2013
Pending Litigation [Member]
FATMA Notice, Trial [Member]
Penalties [Member]
USD ($)
|
Jul. 31, 2013
Pending Litigation [Member]
FATMA Notice, Trial [Member]
Penalties [Member]
BRL
|
Oct. 25, 2011
Pending Litigation [Member]
Lis Franco vs. Syntex and MWM, Trial [Member]
BRL
|
May 31, 2013
Pending Litigation [Member]
Lis Franco vs. Syntex and MWM, Trial [Member]
BRL
|
Dec. 31, 2012
Pending Litigation [Member]
Lis Franco vs. Syntex and MWM, Trial [Member]
BRL
|
Jul. 31, 2013
Pending Litigation [Member]
Lis Franco vs. Syntex and MWM, Trial [Member]
USD ($)
|
Dec. 31, 1999
Pending Litigation [Member]
Lis Franco vs. Syntex and MWM, Trial [Member]
Royalties [Member]
BRL
|
May 30, 2010
Pending Litigation [Member]
Lis Franco vs. Syntex and MWM, Trial [Member]
Royalties [Member]
BRL
|
Dec. 31, 2009
Pending Litigation [Member]
Lis Franco vs. Syntex and MWM, Trial [Member]
Royalties [Member]
BRL
|
Apr. 30, 2013
Damages from Product Defects [Member]
engine
|
Jul. 31, 2013
Damages from Product Defects [Member]
Kruse Technology vs. Ford Motor Company [Member]
patents
|
Apr. 30, 2013
California Air Resources Board (CARB) [Member]
USD ($)
|
Apr. 30, 2013
G E Operating Agreement [Member]
|
Jul. 31, 2013
G E Operating Agreement [Member]
USD ($)
|
Oct. 31, 2012
G E Operating Agreement [Member]
USD ($)
|
Apr. 30, 2013
Minimum [Member]
|
Apr. 30, 2013
Maximum [Member]
|
Jul. 31, 2013
G E Operating Agreement [Member]
USD ($)
|
Jul. 31, 2013
Manufacturing Operations [Member]
Financed lease obligations [Member]
USD ($)
|
Oct. 31, 2012
Manufacturing Operations [Member]
Financed lease obligations [Member]
USD ($)
|
Jul. 31, 2013
Manufacturing Operations [Member]
G E Operating Agreement [Member]
Financed lease obligations [Member]
USD ($)
|
Oct. 31, 2012
Manufacturing Operations [Member]
G E Operating Agreement [Member]
Financed lease obligations [Member]
USD ($)
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Loss Contingencies [Line Items] | ||||||||||||||||||||||||||||||||
Length of Agreement | 3 years | |||||||||||||||||||||||||||||||
Length Of Potential Automatic Extension Years | 1 year | |||||||||||||||||||||||||||||||
Operating Agreement Excess Loss Percentage | 10.00% | |||||||||||||||||||||||||||||||
Off Balance Sheet Finance Receivables | $ 1,400,000,000 | $ 1,200,000,000 | ||||||||||||||||||||||||||||||
Off Balance Sheet Finance Receivables Related Originations | 1,900,000,000 | 1,600,000,000 | ||||||||||||||||||||||||||||||
Payments to Acquire Equipment on Lease | 351,000,000 | 49,000,000 | 185,000,000 | |||||||||||||||||||||||||||||
Long-term Debt | 213,000,000 | 0 | 213,000,000 | 167,000,000 | ||||||||||||||||||||||||||||
Historical losses on finance receivables, measured as percentage of average balance of related finance receivable | 0.30% | 2.10% | ||||||||||||||||||||||||||||||
Available stand-by letters of credit and surety bonds | 61,000,000 | |||||||||||||||||||||||||||||||
Line of Credit Facility, Remaining Borrowing Capacity | 41,000,000 | |||||||||||||||||||||||||||||||
Purchase commitments | 210,000,000 | |||||||||||||||||||||||||||||||
Long Term Purchase Commitment Cancellation Fees | 53,000,000 | |||||||||||||||||||||||||||||||
Number of Contaminated Sites | 3 | |||||||||||||||||||||||||||||||
Number of Contaminated Sites in Sao Paulo, Brazil | 2 | |||||||||||||||||||||||||||||||
Accrual for environmental loss contingencies | 23,000,000 | |||||||||||||||||||||||||||||||
Damages sought, value | 50,000,000 | 1,000,000 | 2,000,000 | 10,850,000 | 25,000,000 | 22,000,000 | 11,000,000 | 42,000,000 | ||||||||||||||||||||||||
Potential patent infringement, number of patents | 3 | |||||||||||||||||||||||||||||||
Estimate of possible loss | 16,000,000 | 74,000,000 | 70,000,000 | |||||||||||||||||||||||||||||
Proceeds from Legal Settlements | 35,000,000 | |||||||||||||||||||||||||||||||
Notice of Violation, number | 7,600 | |||||||||||||||||||||||||||||||
Regulatory Penalty | $ 7,000,000 | $ 10,000,000 | $ 29,000,000 | $ 20,000,000 | $ 2,000,000 | |||||||||||||||||||||||||||
Maximum Non-Conformance Penalty per unit | 4,287 | 3,775 | ||||||||||||||||||||||||||||||
Number of States | 9 | |||||||||||||||||||||||||||||||
10 CARB States | 10 CARB States |
Fair Value Measurements
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements | Fair Value Measurements For assets and liabilities measured at fair value on a recurring and nonrecurring basis, a three-level hierarchy of measurements based upon observable and unobservable inputs is used to arrive at fair value. Observable inputs are developed based on market data obtained from independent sources, while unobservable inputs reflect our assumptions about valuation based on the best information available in the circumstances. Depending on the inputs, we classify each fair value measurement as follows:
The following section describes key inputs and assumptions in our valuation methodologies: Cash Equivalents and Restricted Cash Equivalents—We classify highly liquid investments, with an original maturity of 90 days or less, including U.S. Treasury bills, federal agency securities, and commercial paper, as cash equivalents. The carrying amounts of cash and cash equivalents and restricted cash approximate fair value because of the short-term maturity and highly liquid nature of these instruments. Marketable Securities—Our marketable securities portfolios are classified as available-for-sale and primarily include investments in U.S. government securities and commercial paper with a maturity of greater than 90 days from the date of purchase. We use quoted prices from active markets to determine fair value. Derivative Assets and Liabilities—We measure the fair value of derivatives assuming that the unit of account is an individual derivative transaction and that each derivative could be sold or transferred on a stand-alone basis. We classify within Level 2 our derivatives that are traded over-the-counter and valued using internal models based on observable market inputs. In certain cases, market data is not available and we estimate inputs such as in situations where trading in a particular commodity is not active. Measurements based upon these unobservable inputs are classified within Level 3. For more information regarding derivatives, see Note 11, Financial Instruments and Commodity Contracts. Guarantees—We provide certain guarantees of payments and residual values to specific counterparties. Fair value of these guarantees is based upon internally developed models that utilize current market-based assumptions and historical data. We classify these liabilities within Level 3. For more information regarding guarantees, see Note 12, Commitments and Contingencies. The following table presents the financial instruments measured at fair value on a recurring basis:
The following tables present the changes for those financial instruments classified within Level 3 of the valuation hierarchy:
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The following table presents these financial instruments measured at fair value on a nonrecurring basis:
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In addition to the methods and assumptions we use for the financial instruments recorded at fair value as discussed above, we use the following methods and assumptions to estimate the fair value for our other financial instruments that are not marked to market on a recurring basis. The carrying amounts of Cash and cash equivalents, Restricted cash, and Accounts payable approximate fair values because of the short-term maturity and highly liquid nature of these instruments. Finance receivables generally consist of retail and wholesale accounts and retail and wholesale notes. The carrying amounts of Trade and other receivables and retail and wholesale accounts approximate fair values as a result of the short-term nature of the receivables. The carrying amounts of wholesale notes approximate fair values as a result of the short-term nature of the wholesale notes and their variable interest rate terms. The fair values of these financial instruments are classified as Level 1. Due to the nature of the aforementioned financial instruments, they have been excluded from the fair value amounts presented in the table below. The fair values of our retail notes are estimated by discounting expected cash flows at estimated current market rates. The fair values of our retail notes are classified as Level 3 financial instruments. The fair values of our debt instruments classified as Level 1 were determined using quoted market prices. Our Loan Agreement underlying the 6.5% Tax Exempt Bonds is traded, but is illiquid, and as a result, is classified as Level 2. The fair values of our Level 3 debt instruments are generally determined using internally developed valuation techniques such as discounted cash flow modeling. Inputs such as discount rates and credit spreads reflect our estimates of assumptions that market participants would use in pricing the instrument and may be unobservable. The following tables present the carrying values and estimated fair values of financial instruments:
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Postretirement Benefits - Defined Contribution Plans and Other Contractual Arrangements (Details) (USD $)
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Defined Contribution Plan, Cost Recognized | $ 8 | $ 8 | $ 23 | $ 32 | |
Contribution To The Trust Shares | 25.5 |
Condensed Consolidating Guarantor and Non-Guarantor (Tables)
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Condensed Consolidating Gurantor and Non-Gurantor Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Condensed Income Statement [Table Text Block] |
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Schedule of Condensed Statement 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] |
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Discontinued Operations (Tables)
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Statements of Operations for Discontinued Operations [Table Text Block] | The following table summarizes the discontinued operations activity in the Company's Consolidated Statements of Operations:
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Summary of Significant Accounting Policies (Tables)
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Product Warranty Liability | The following table presents accrued product warranty and deferred warranty revenue activity:
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In the first quarter of 2013, we recorded adjustments for changes in estimates of $40 million, or $0.50 per diluted share. In the second quarter of 2013, we recorded adjustments for changes in estimates of $164 million, or $2.04 per diluted share. In the third quarter of 2013, we recorded adjustments for changes in estimates of $48 million, or $0.60 per diluted share. The impact of income taxes on the 2013 adjustments are not material due to our deferred tax valuation allowances on our U.S. deferred tax assets. In the first quarter of 2012, adjustments for changes in estimates amounted to $123 million, $75 million net of tax or $1.07 per diluted share. In the second quarter of 2012, we recorded adjustments for changes in estimates of $104 million, $63 million net of tax or $0.92. The impact of income taxes on the 2012 adjustments reflect the Company's 2012 estimated annual effective tax rate as of July 31, 2012.
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. |
Finance Receivables - Off-Balance Sheet Securitizations (Details) (Trac Funding Facility [Member], USD $)
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Finance Receivables Retail Accounts Collateral For Borrowed Securities | $ 972 | $ 1,100 |
Cash Collateral for Borrowed Securities | $ 117 | $ 164 |
Fair Value Measurements (Tables)
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial instruments measured at fair value, recurring basis | The following table presents the financial instruments measured at fair value on a recurring basis:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial instruments classified within Level 3 | The following tables present the changes for those financial instruments classified within Level 3 of the valuation hierarchy:
_________________________
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial instruments measured at fair value, nonrecurring basis | The following table presents these financial instruments measured at fair value on a nonrecurring basis:
_________________________
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying values and estimated fair values of financial instruments | he carrying values and estimated fair values of financial instruments:
_________________________
|
Summary of Significant Accounting Policies - Variable Interest Entities (Details) (USD $)
In Millions, unless otherwise specified |
Jul. 31, 2013
|
Oct. 31, 2012
|
---|---|---|
Variable Interest Entity Primary Beneficiary Blue Diamond Parts And Blue Diamond Truck [Member]
|
||
Variable Interest Entity [Line Items] | ||
Liabilities | $ 166 | $ 109 |
Variable Interest Entity, Consolidated, Carrying Amount, Assets | 295 | 246 |
Cash and cash equivalents | 61 | 26 |
Securitizations Treated as Borrowings [Member] | Financial Services Operations [Member]
|
||
Variable Interest Entity [Line Items] | ||
Liabilities | 791 | 914 |
Variable Interest Entity, Consolidated, Carrying Amount, Assets | 1,100 | 1,100 |
Transaction Does Not Qualify for Sale Accounting [Member] | Financial Services Operations [Member]
|
||
Variable Interest Entity [Line Items] | ||
Liabilities | 58 | 157 |
Variable Interest Entity, Consolidated, Carrying Amount, Assets | $ 283 | $ 359 |
Allowance for Doubtful Accounts - Impaired Finance Receivables (Details) (USD $)
In Millions, unless otherwise specified |
9 Months Ended | |||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2013
Retail Portfolio [Member]
|
Jul. 31, 2012
Retail Portfolio [Member]
|
Jul. 31, 2013
Impaired finance receivables with specific loss reserves [Member]
|
Oct. 31, 2012
Impaired finance receivables with specific loss reserves [Member]
|
Jul. 31, 2013
Impaired finance receivables with specific loss reserves [Member]
Retail Portfolio [Member]
|
Oct. 31, 2012
Impaired finance receivables with specific loss reserves [Member]
Retail Portfolio [Member]
|
Jul. 31, 2013
Impaired finance receivables with specific loss reserves [Member]
Wholesale Portfolio [Member]
|
Oct. 31, 2012
Impaired finance receivables with specific loss reserves [Member]
Wholesale Portfolio [Member]
|
Jul. 31, 2013
Impaired financing receivable without specific loss reserves [Member]
|
Oct. 31, 2012
Impaired financing receivable without specific loss reserves [Member]
|
Jul. 31, 2013
Impaired financing receivable without specific loss reserves [Member]
Retail Portfolio [Member]
|
Oct. 31, 2012
Impaired financing receivable without specific loss reserves [Member]
Retail Portfolio [Member]
|
Jul. 31, 2013
Impaired financing receivable without specific loss reserves [Member]
Wholesale Portfolio [Member]
|
Oct. 31, 2012
Impaired financing receivable without specific loss reserves [Member]
Wholesale Portfolio [Member]
|
Jul. 31, 2013
Specific loss reserves on impaired finance receivables [Member]
|
Oct. 31, 2012
Specific loss reserves on impaired finance receivables [Member]
|
Jul. 31, 2013
Specific loss reserves on impaired finance receivables [Member]
Retail Portfolio [Member]
|
Oct. 31, 2012
Specific loss reserves on impaired finance receivables [Member]
Retail Portfolio [Member]
|
Jul. 31, 2013
Specific loss reserves on impaired finance receivables [Member]
Wholesale Portfolio [Member]
|
Oct. 31, 2012
Specific loss reserves on impaired finance receivables [Member]
Wholesale Portfolio [Member]
|
Jul. 31, 2013
Finance receivable non-accrual status [Member]
|
Oct. 31, 2012
Finance receivable non-accrual status [Member]
|
Jul. 31, 2013
Finance receivable non-accrual status [Member]
Retail Portfolio [Member]
|
Oct. 31, 2012
Finance receivable non-accrual status [Member]
Retail Portfolio [Member]
|
Jul. 31, 2013
Finance receivable non-accrual status [Member]
Wholesale Portfolio [Member]
|
Oct. 31, 2012
Finance receivable non-accrual status [Member]
Wholesale Portfolio [Member]
|
|||||
Finance Receivable, Impaired [Line Items] | ||||||||||||||||||||||||||||||
Impaired Financing Receivable, Average Recorded Investment | $ 12 | $ 13 | ||||||||||||||||||||||||||||
Impaired Financing Receivable, Recorded Investment | 12 | [1] | 14 | [1] | 12 | 14 | 0 | 0 | 1 | 1 | 1 | 1 | 0 | 0 | ||||||||||||||||
Specific loss reserves on impaired finance receivables | 10 | 9 | 10 | 9 | 0 | 0 | ||||||||||||||||||||||||
Finance receivables on non-accrual status | $ 9 | $ 10 | $ 9 | $ 10 | $ 0 | $ 0 | ||||||||||||||||||||||||
|
Inventories (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventories | The following table presents the components of Inventories:
|
Financial Instruments and Commodity Contracts - Balance Sheet Location (Details) (USD $)
In Millions, unless otherwise specified |
Jul. 31, 2013
|
Oct. 31, 2012
|
---|---|---|
Other Current Assets [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Asset derivatives | $ 5 | $ 0 |
Other Current Liabilities [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Liability derivatives | 2 | 5 |
Commodity Contract [Member] | Other Current Assets [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Asset derivatives | 0 | 0 |
Commodity Contract [Member] | Other Current Liabilities [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Liability derivatives | 2 | 3 |
Commodity Contract [Member] | Other Assets [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Asset derivatives | 3 | 0 |
Commodity Contract [Member] | Other Liabilities [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Liability derivatives | 0 | 2 |
Interest Rate Cap [Member] | Other Assets [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Asset derivatives | 2 | |
Interest Rate Cap [Member] | Other Liabilities [Member]
|
||
Derivatives, Fair Value [Line Items] | ||
Asset derivatives | $ 0 |
Loss Per Share Attributable to Navistar International Corporation - Basic & Diluted Loss per Share (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2013
|
Jul. 31, 2012
|
Jul. 31, 2013
|
Jul. 31, 2012
|
|
Earnings Per Share [Abstract] | ||||
Income (loss) from continuing operations, net of tax | $ (237) | $ 80 | $ (704) | $ (202) |
Income (loss) from discontinued operations, net of tax | (10) | 4 | (40) | (39) |
Net income (loss) attributable to Navistar International Corporation | $ (247) | $ 84 | $ (744) | $ (241) |
Weighted Average Number of Shares Outstanding, Basic | 80.6 | 68.7 | 80.4 | 69.1 |
Weighted Average Number Diluted Shares Outstanding Adjustment | 0 | 0.2 | 0 | 0 |
Weighted Average Number of Shares Outstanding, Diluted | 80.6 | 68.9 | 80.4 | 69.1 |
Basic: Loss from Continuing Operations (in dollars per share) | $ (2.94) | $ 1.16 | $ (8.76) | $ (2.92) |
Basic: Loss from Discontinued Operations (in dollars per share) | $ (0.12) | $ 0.06 | $ (0.49) | $ (0.57) |
Earnings Per Share, Basic | $ (3.06) | $ 1.22 | $ (9.25) | $ (3.49) |
Diluted: Loss from Continuing Operations (in dollars per share) | $ (2.94) | $ 1.16 | $ (8.76) | $ (2.92) |
Diluted: Loss from Discontinued Operations (in dollars per share) | $ (0.12) | $ 0.06 | $ (0.49) | $ (0.57) |
Earnings Per Share, Diluted | $ (3.06) | $ 1.22 | $ (9.25) | $ (3.49) |
Financial Instruments and Commodity Contracts - Narrative (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 3 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2013
|
Oct. 31, 2012
|
Jul. 31, 2013
Interest Rate Contract [Member]
|
Oct. 31, 2012
Interest Rate Contract [Member]
|
Jul. 31, 2013
Variable Rate [Domain]
|
Jul. 31, 2013
Convertible Subordinated Debt [Member]
|
Oct. 31, 2009
Call Option [Member]
Convertible Subordinated Debt [Member]
Manufacturing Operations [Member]
|
Jul. 31, 2013
Steel Forward Contracts [Member]
Commodity Contract [Member]
|
Oct. 31, 2012
Steel Forward Contracts [Member]
Commodity Contract [Member]
|
Jul. 31, 2013
Diesel Fuel Forward Contracts [Member]
Commodity Contract [Member]
|
Oct. 31, 2012
Diesel Fuel Forward Contracts [Member]
Commodity Contract [Member]
|
|
Derivative [Line Items] | |||||||||||
Debt Instrument, Interest Rate, Effective Percentage | 3.00% | ||||||||||
Payments for Derivative Instrument, Investing Activities | $ 125 | ||||||||||
Derivative, Collateral, Obligation to Return Cash | 1 | ||||||||||
Derivative, Notional Amount | 30 | 39 | 79 | 25 | 61 | 4 | 3 | ||||
Exposure to credit risk | $ 5 | $ 0 |
Restructuring and Impairments - Narrative (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2013
|
Jul. 31, 2012
|
Jul. 31, 2013
|
Jul. 31, 2012
|
Jul. 31, 2013
Truck [Domain]
|
Oct. 31, 2012
Truck [Domain]
Garland Assembly Plant [Member]
Employee Severance [Member]
|
Apr. 30, 2013
Truck [Domain]
Garland Assembly Plant [Member]
Garland plant closure [Member]
|
Apr. 30, 2012
Truck [Domain]
Warrenville [Member]
Accrued Rent Expense, Reversal [Domain]
|
Apr. 30, 2012
Truck [Domain]
Warrenville [Member]
Lease Vacancy [Member]
|
Apr. 30, 2012
Truck [Domain]
Warrenville [Member]
Lease Vacancy Fair Value [Member]
|
Apr. 30, 2012
Truck [Domain]
Workhorse Custom Chassis [Member]
|
Jul. 31, 2013
Engine [Member]
|
Apr. 30, 2012
Parts [Member]
Workhorse Custom Chassis [Member]
|
Oct. 31, 2012
Voluntary Separation Program [Member]
|
Oct. 31, 2012
Voluntary Separation Program [Member]
Pension And Other Postretirement Contractual Termination Benefits [Member]
|
Oct. 31, 2012
Voluntary Separation Program [Member]
Employee Severance [Member]
|
Jul. 31, 2013
Minimum [Member]
Truck [Domain]
Chatham [Member]
|
Jul. 31, 2013
Maximum [Member]
Truck [Domain]
Garland Assembly Plant [Member]
Garland plant closure [Member]
|
Jul. 31, 2013
Maximum [Member]
Truck [Domain]
Chatham [Member]
|
|
Restructuring Cost and Reserve [Line Items] | |||||||||||||||||||
Restructuring charges | $ 6 | $ 4 | $ 14 | $ 23 | $ 4 | $ 22 | $ 3 | $ 16 | $ 19 | $ 73 | $ 7 | $ 66 | |||||||
Asset impairment charges | 17 | 0 | 17 | 10 | |||||||||||||||
Asset Impairment Charges | 24 | 13 | 4 | ||||||||||||||||
Restructuring and Related Cost, Expected Cost | 20 | 10 | 70 | ||||||||||||||||
Impairment of Intangible Assets (Excluding Goodwill) | $ 25 | $ 38 | $ 28 | $ 10 |
Segment Reporting - Segment Assets (Details) (USD $)
In Millions, unless otherwise specified |
Jul. 31, 2013
|
Oct. 31, 2012
|
||||
---|---|---|---|---|---|---|
Segment Reporting Information [Line Items] | ||||||
Segment Assets | $ 8,241 | $ 9,102 | ||||
Truck [Member]
|
||||||
Segment Reporting Information [Line Items] | ||||||
Segment Assets | 2,052 | [1] | 2,118 | [1] | ||
Engine [Member]
|
||||||
Segment Reporting Information [Line Items] | ||||||
Segment Assets | 1,581 | 1,777 | ||||
Parts [Member]
|
||||||
Segment Reporting Information [Line Items] | ||||||
Segment Assets | 657 | 707 | ||||
Financial Services Operations [Member]
|
||||||
Segment Reporting Information [Line Items] | ||||||
Segment Assets | 2,444 | 2,563 | ||||
Corporate And Eliminations [Member]
|
||||||
Segment Reporting Information [Line Items] | ||||||
Segment Assets | $ 1,507 | $ 1,937 | ||||
|
Summary of Significant Accounting Policies (Policies)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2013
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying unaudited consolidated financial statements include the assets, liabilities, and results of operations of our manufacturing operations, which include majority-owned dealers ("Dealcors"), and our financial services operations, including VIEs of which we are the primary beneficiary. The effects of transactions among consolidated entities have been eliminated to arrive at the consolidated amounts. Certain reclassifications were made to prior periods' amounts to conform to the 2013 presentation, which includes the presentation of certain former businesses as discontinued operations. For more information, see Note 2, Discontinued Operations and Other Divestitures. We prepared the accompanying unaudited consolidated financial statements in accordance with United States ("U.S.") generally accepted accounting principles ("U.S. GAAP") for interim financial information and the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X issued by the U.S. Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and notes required by U.S. GAAP for comprehensive annual financial statements. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting policies described in our Annual Report on Form 10-K for the year ended October 31, 2012 and Current Report on Form 8-K filed on March 25, 2013, all of which should be read in conjunction with the disclosures therein. In our opinion, these interim consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial condition, results of operations, and cash flows for the periods presented. Operating results for interim periods are not necessarily indicative of annual operating results. |
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Out-Of-Period Adjustments | Out-Of-Period Adjustments Included in the results of operations for the nine months ended July 31, 2013 are out-of-period adjustments, which represent corrections of prior-period errors related to the accounting for certain sales transactions. In March 2010, we entered into an operating agreement with GE Capital Corporation and GE Capital Commercial, Inc. (collectively “GE”). Under the terms of the agreement, GE became our preferred source of retail customer financing for equipment offered by us and our dealers in the U.S. We provide GE a loss sharing arrangement for certain credit losses. The determination was made that certain sales that were ultimately financed by GE did not qualify for revenue recognition, as we retained substantial risks of ownership in the leased property. As a result, the transactions should have been accounted for as borrowings, resulting in the proceeds from the transfer being recorded as an obligation and amortized to revenue over the term of the financing. In addition, the financed equipment should have been accounted for as operating leases with the equipment transferred from inventory to equipment leased to others and depreciated over the term of the financing. Correcting the errors, which were not material to any of the prior periods, resulted in an $8 million increase to Net income (loss) in our Consolidated Statements of Operations for the nine months ended July 31, 2013. The impact of the correction on our results for the nine months ended July 31, 2013 related to prior periods includes: (i) an $113 million net decrease to both Sales of manufactured products, net and Costs of products sold, which Costs of products sold also included $37 million of additional depreciation expense, and (ii) an $8 million increase to Interest expense. In addition, in our Condensed Consolidated Statements of Cash Flows we recognized Purchases of equipment leased to others of $184 million and Proceeds from financed lease obligations of $201 million related to periods prior to fiscal 2013. The impact of the corrections was not material to any of our Consolidated Balance Sheets. |
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Variable Interest Entities | Variable Interest Entities We have an interest in several VIEs, primarily joint ventures, established to manufacture or distribute products and enhance our operational capabilities. We have determined for certain of our VIEs that we are the primary beneficiary because we have the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and have the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. Accordingly, we include in our consolidated financial statements the assets and liabilities and results of operations of those entities, even though we may not own a majority voting interest. The liabilities recognized as a result of consolidating these VIEs do not represent additional claims on our general assets; rather they represent claims against the specific assets of these VIEs. Assets of these entities are not readily available to satisfy claims against our general assets. We are the primary beneficiary of our Blue Diamond Parts ("BDP") and Blue Diamond Truck ("BDT") joint ventures with Ford Motor Company ("Ford"). As a result, our Consolidated Balance Sheets include assets of $295 million and $246 million and liabilities of $166 million and $109 million as of July 31, 2013 and October 31, 2012, respectively, from BDP and BDT, including $61 million and $26 million of cash and cash equivalents, at the respective dates, which are not readily available to satisfy claims against our general assets. The creditors of BDP and BDT do not have recourse to our general credit. In December 2011, Ford notified the Company of its intention to dissolve the BDT joint venture effective December 2014. We do not expect the dissolution of the BDT joint venture to have a material impact on our consolidated financial statements. Our Financial Services segment consolidates several VIEs. As a result, our Consolidated Balance Sheets include assets of $1.1 billion at both July 31, 2013 and October 31, 2012, and liabilities of $791 million and $914 million as of July 31, 2013 and October 31, 2012, respectively, all of which are involved in securitizations that are treated as borrowings. In addition, our Consolidated Balance Sheets include assets of $283 million and $359 million and related liabilities of $58 million and $157 million as of July 31, 2013 and October 31, 2012, respectively, all of which are involved in transactions that do not qualify for sale accounting treatment, and therefore, are treated as borrowings. Investors that hold securitization debt have a priority claim on the cash flows generated by their respective securitized assets to the extent that the related trusts are entitled to make principal and interest payments. Investors in securitizations of these entities have no recourse to our general credit. We also have an interest in other VIEs, which we do not consolidate because we are not the primary beneficiary. Our financial support and maximum loss exposure relating to these non-consolidated VIEs are not material to our financial condition, results of operations, or cash flows. We use the equity method to account for our investments in entities that we do not control under the voting interest or variable interest models, but where we have the ability to exercise significant influence over operating and financial policies. Equity in loss of non-consolidated affiliates includes our share of the net income (loss) of these entities. |
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Use of estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the periods presented. Significant estimates and assumptions are used for, but are not limited to, pension and other postretirement benefits, allowance for doubtful accounts, income tax contingency accruals and valuation allowances, product warranty accruals, asbestos and other product liability accruals, asset impairment charges, and litigation-related accruals. Actual results could differ from our estimates. |
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Goodwill | Goodwill Goodwill represents the excess of the cost of an acquired business over the amounts assigned to the net assets. We evaluate goodwill and other intangible assets not subject to amortization for impairment annually or more frequently whenever indicators of potential impairment exist. Goodwill is considered impaired when the fair value of a reporting unit is determined to be less than the carrying value including goodwill. The amount of impairment loss is determined based on a comparison of the implied fair value of the goodwill of the reporting unit to the actual carrying value. Intangible assets not subject to amortization are considered impaired when the fair value of the intangible asset is determined to be less than the carrying value. Qualitative factors may be assessed to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If an election is made not to perform the qualitative assessment or the qualitative assessment indicates it is more likely than not that the fair value is less than the carrying amount, we use the present value of estimated future cash flows to establish the estimated fair value of our reporting units as of the testing date. This approach includes many assumptions related to future growth rates, discount rates, market comparables, control premiums and tax rates, among other considerations. Changes in economic and operating conditions impacting these assumptions could result in an impairment of goodwill in future periods. When available and as appropriate, we use comparative market multiples to corroborate the estimated fair value. We have a goodwill balance of $255 million as of July 31, 2013. During the third quarter of 2013, a Brazilian reporting unit with goodwill of $140 million, experienced declines in profitability and the loss of a high volume customer. As a result of these factors as well as slower than expected growth in the Brazilian economy and a weakening of the Brazilian currency we performed an impairment analysis prior to our annual assessment test date of August 1st. Significant judgment is applied when goodwill is assessed for impairment. This judgment includes developing cash flow projections, selecting appropriate discount rates, identifying relevant market comparables, and incorporating general economic and market conditions. The income approach was used in assessing impairment for the reporting unit and is based on discounted cash flows which are derived from internal forecasts and economic expectations. As a result of the goodwill impairment analysis, we determined that the goodwill was not impaired and that the fair value of the reporting unit exceeded its carrying amount by approximately 6%. It is reasonably possible within the next twelve months we could recognize goodwill impairment charges for this reporting unit if we have further declines in profitability due to changes in volume, market pricing, cost, or the business environment. Significant adverse changes to our business environment and future cash flows could cause us to record impairment charges in future periods, which could be material. |
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Warranty | Product Warranty Liability The following table presents accrued product warranty and deferred warranty revenue activity:
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In the first quarter of 2013, we recorded adjustments for changes in estimates of $40 million, or $0.50 per diluted share. In the second quarter of 2013, we recorded adjustments for changes in estimates of $164 million, or $2.04 per diluted share. In the third quarter of 2013, we recorded adjustments for changes in estimates of $48 million, or $0.60 per diluted share. The impact of income taxes on the 2013 adjustments are not material due to our deferred tax valuation allowances on our U.S. deferred tax assets. In the first quarter of 2012, adjustments for changes in estimates amounted to $123 million, $75 million net of tax or $1.07 per diluted share. In the second quarter of 2012, we recorded adjustments for changes in estimates of $104 million, $63 million net of tax or $0.92. The impact of income taxes on the 2012 adjustments reflect the Company's 2012 estimated annual effective tax rate as of July 31, 2012.
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. The amount of deferred revenue related to extended warranty programs was $421 million and $364 million at July 31, 2013 and October 31, 2012, respectively. Revenue recognized under our extended warranty programs was $23 million and $63 million for the three and nine months ended July 31, 2013, respectively, and $17 million and $48 million for the three and nine months ended July 31, 2012, respectively. In the second quarters of 2013 and 2012, the Truck segment recognized charges of $33 million and $24 million, respectively, related to the extended warranty contracts on our 2010 emission standard MaxxForce Big-Bore engines. The majority of these changes are included in the adjustments to pre-existing warranties. |
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Concentration Risks | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recently Issued and Adopted Accounting Standards | Concentration Risks Our financial condition, results of operations, and cash flows are subject to concentration risks related to concentrations of our union employees. As of July 31, 2013, approximately 4,800, or 55%, of our hourly workers and approximately 400, or 6%, of our salaried workers are represented by labor unions and are covered by collective bargaining agreements. Our future operations may be affected by changes in governmental procurement policies, budget considerations, changing national defense requirements, and global, political, regulatory and economic developments in the U.S. and certain foreign countries (primarily Canada, Mexico, and Brazil). Recently Issued and Adopted Accounting Standards There are no recently issued accounting standards for which the Company expects a material impact on our consolidated financial statements. In addition, for the nine months ended July 31, 2013, the Company has not adopted any new accounting guidance that has had a material impact on our consolidated financial statements. |
Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Per Share data, unless otherwise specified |
Jul. 31, 2013
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Oct. 31, 2012
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Intangible assets, accumulated amortization | $ 91 | $ 78 |
Property and equipment, accumulated depreciation and amortization | $ 2,393 | $ 2,228 |
Common stock, par value | $ 0.10 | $ 0.10 |
Common stock, shares authorized | 220 | 220 |
Common stock, shares issued | 86.8 | 86.0 |
Common stock held in treasury, shares | 6.4 | 6.8 |
Consolidated Statements of Stockholders' Equity (Deficit) (USD $)
In Millions |
Total
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Preferred Stock [Member]
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Common Stock [Member]
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Additional Paid-in Capital [Member]
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Retained Earnings [Member]
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Accumulated Other Comprehensive Income (Loss) [Member]
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Treasury Stock [Member]
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Noncontrolling Interest [Member]
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Stockholders' Equity balance at beginning of period at Oct. 31, 2011 | $ 23 | $ 3 | $ 7 | $ 2,253 | $ (155) | $ (1,944) | $ (191) | $ 50 |
Net income (loss) Attributable to Navistar International Corporation | (241) | (241) | ||||||
Net Income (Loss) Attributable to Noncontrolling Interest | 35 | 35 | ||||||
Net income (loss) | (206) | |||||||
Total other comprehensive income (loss) | (76) | (76) | ||||||
Stock-based compensation | 14 | 14 | ||||||
Stock ownership programs | 1 | (10) | 11 | |||||
Stock repurchase programs | (75) | 20 | (95) | |||||
Cash dividends paid to non-controlling interest | (44) | (44) | ||||||
Increase in ownership interest acquired from non-controlling interest holder | 0 | (3) | 3 | |||||
Other | 0 | 1 | (1) | |||||
Stockholders' Equity balance at end of period at Jul. 31, 2012 | (363) | 3 | 8 | 2,274 | (396) | (2,020) | (276) | 44 |
Stockholders' Equity balance at beginning of period at Oct. 31, 2012 | (3,265) | 3 | 9 | 2,440 | (3,165) | (2,325) | (272) | 45 |
Net income (loss) Attributable to Navistar International Corporation | (744) | (744) | ||||||
Net Income (Loss) Attributable to Noncontrolling Interest | 34 | 34 | ||||||
Net income (loss) | (710) | |||||||
Total other comprehensive income (loss) | 46 | 46 | ||||||
Transfer from redeemable equity securities upon exercise or expiration of stock options | 1 | 1 | ||||||
Stock-based compensation | 14 | 14 | ||||||
Stock ownership programs | 8 | (9) | 17 | |||||
Cash dividends paid to non-controlling interest | (35) | (35) | ||||||
Issuance of common stock, net of issuance costs and fees | 14 | 14 | ||||||
Deconsolidation of a non-controlling interest | (9) | (9) | ||||||
Other | (1) | (1) | ||||||
Stockholders' Equity balance at end of period at Jul. 31, 2013 | $ (3,937) | $ 3 | $ 9 | $ 2,459 | $ (3,909) | $ (2,279) | $ (255) | $ 35 |
Restructuring and Impairments
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Jul. 31, 2013
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructurings and Impairments | 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. In the three and nine months ended July 31, 2013, the Company recognized restructuring charges of $6 million and $14 million, respectively, compared to $4 million and $23 million in the three and nine months ended July 31, 2012. Cost-Reductions and Other Strategic Initiatives In the fourth quarter of 2012, we announced actions to control spending across the Company with targeted reductions of certain costs. In addition to the expected integration synergies resulting from ongoing efforts to consolidate our truck and engine engineering operations, as well as the relocation of our world headquarters to Lisle, Illinois, we are focusing on continued reductions in discretionary spending, including but not limited to reductions from efficiencies, and prioritizing or eliminating certain programs or projects. We continue to evaluate options to improve the efficiency and performance of our operations. Our focus is on improving our core North American Manufacturing operations performance. We are evaluating opportunities to restructure our business and rationalize our Manufacturing operations in an effort to optimize our cost structure, which could include, among other actions, additional rationalization of our Manufacturing operations and/or divesting of non-core businesses. We expect these actions will result in additional restructuring and other related charges during 2013, including but not limited to; (i) impairments, (ii) costs for employee and contractor termination and other related benefits, and (iii) charges for pension and other postretirement contractual benefits and pension curtailments. These charges could be significant. In the third quarter of 2013, the Company recorded asset impairment charges of $17 million, of which $13 million was recognized by the Truck segment and $4 million was recognized by the Engine segment. These charges are the result of our ongoing evaluation of our portfolio of assets to validate their strategic and financial fit, which led to the discontinuation of certain engineering programs related to products that were determined to be outside of our core operations or not performing to our expectations. Voluntary separation program and reduction in force In the fourth quarter of 2012, the Company offered the majority of our U.S.-based non-represented salaried employees the opportunity to apply for a voluntary separation program ("VSP"). Along with the employees who chose to participate in the VSP, we used attrition and an involuntary reduction in force to eliminate additional positions in order to meet our targeted reductions goal. In addition to these actions in the U.S., our Brazilian operations utilized an involuntary reduction in force to eliminate positions. As a result of these actions and charges related to the elimination of certain executive positions, the Company recognized restructuring charges of $73 million in the fourth quarter of 2012. The restructuring charges consisted of $66 million in personnel costs for employee termination and related benefits and $7 million of charges for pension and other postretirement contractual termination benefits. The Company expects the restructuring charges, excluding other postretirement costs, will be paid throughout the year. Engineering Integration In 2011, the Company committed to a plan and finalized the purchase of the property and buildings to consolidate its truck and engine engineering operations, as well as the relocation of our world headquarters. The Company is utilizing proceeds from an October 2010 loan agreement related to tax exempt bonds (the "Tax Exempt Bonds") 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 assist with the consolidation of certain operations (the "Loan Agreement"). 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. North American Manufacturing Restructuring Activities and Impairments of Intangible Assets The Company continues to evaluate opportunities to restructure and rationalize its Manufacturing operations in an effort to optimize the cost structure. In the third quarter of 2011, the Company committed to plans for the restructuring of certain North American Manufacturing operations, including the closure of its Chatham, Ontario heavy truck plant and actions related to WCC and Monaco (collectively "Custom Products"). In the fourth quarter of 2012, the Company committed to plans for the closure of its Garland, Texas truck manufacturing operations (the "Garland Facility"). In the second quarter of 2013, the Company reached an agreement to sublease a portion of its manufacturing facility in Cherokee, Alabama (the “Cherokee Facility”). Chatham restructuring activities In the third quarter of 2011, the Company committed to close its Chatham, Ontario heavy truck plant, which had been idled since June 2009. We anticipate additional charges of $20 million to $70 million in future periods, primarily related to pension and postretirement costs and termination benefits, which are subject to employee negotiation and acceptance rates. We expect the previous restructuring charges, excluding pension and other postretirement costs, will be paid over the next year. Custom Products restructuring activities and impairment of intangible assets In the third quarter of 2011, the Company committed to a restructuring plan of Custom Products, including the closure of the Union City, Indiana chassis facility and the wind-down and transfer of certain operations at the Monaco RV motor coach plant in Coburg, Oregon. In the second quarter of 2012, the Company decided to discontinue accepting orders and idle the WCC operations. In the first quarter of 2013, the Company completed the idling of the WCC operations and in the second quarter of 2013, it divested WCC for an immaterial amount. In the second quarter of 2012, as a result of the decision to idle the WCC operations, the WCC asset group was reviewed for recoverability and determined not to be recoverable. We determined that the remaining intangible asset balances were fully impaired, and the Company recognized asset impairment charges of $28 million in Loss from discontinued operations, net of tax. 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. Beginning in the first quarter of 2013, the Company began reporting the operating results of WCC and certain operating results of Monaco as discontinued operations in the Company's Consolidated statements of operations. In March 2013, we completed the divestiture of the WCC business. In May 2013, we divested substantially all of our interest in these operations of Monaco. For more information, see Note 2, Discontinued Operations and Other Divestitures. Garland Facility closure In the fourth quarter of 2012, the Company committed to plans for the closure of the Garland Facility, which resulted in our Truck segment recognizing restructuring charges of $4 million for personnel costs related to employee terminations and related benefits. Beginning in early 2013, the Company began transitioning production from the Garland Facility to other North America operations that produce similar models. In the second quarter of 2013, production at the Garland Facility ceased. During 2013, we recognized $22 million of charges related to the planned closure, primarily from accelerated depreciation of certain assets related to the facility. We anticipate recognizing approximately $10 million of other related charges in the remainder 2013. We expect the restructuring charges relating to employee separation benefits will be paid during 2013. Alabama Facility Sublease In January 2012, the Company began leasing the Cherokee Facility and purchased certain machinery and equipment within the facility. In the second quarter of 2013, we signed an agreement to sublease a portion of the Cherokee Facility. The term of the sublease agreement runs through the remaining term of our operating lease, which ends in 2021. Restructuring Liability The following tables summarize the activity in the restructuring liability, which includes amounts related to discontinued operations and excludes pension and other postretirement contractual termination benefits:
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Condensed Consolidating Guarantor and Non-Guarantor - Statement of Operations (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
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Jul. 31, 2013
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Jul. 31, 2012
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Jul. 31, 2013
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Jul. 31, 2012
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Sales and revenues, net | $ 2,861 | $ 3,246 | $ 8,024 | $ 9,516 |
Costs of products sold | 2,547 | 2,800 | 7,196 | 8,350 |
Restructuring charges | 6 | 4 | 14 | 23 |
Asset impairment charges | 17 | 0 | 17 | 10 |
All other operating expenses (income) | 505 | 528 | 1,420 | 1,666 |
Total costs and expenses | 3,075 | 3,332 | 8,647 | 10,049 |
Equity in loss of non-consolidated affiliates | 3 | (10) | 6 | (21) |
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest | (211) | (96) | (617) | (554) |
Income tax benefit (expense) | (16) | 188 | (53) | 387 |
Earnings (loss) from continuing operations | (227) | 92 | (670) | (167) |
Income (loss) from discontinued operations, net of tax | (10) | 4 | (40) | (39) |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | (237) | 96 | (710) | (206) |
Net Income (Loss) Attributable to Noncontrolling Interest | 10 | 12 | 34 | 35 |
Net income (loss) Attributable to Navistar International Corporation | (247) | 84 | (744) | (241) |
Parent Company [Domain]
|
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Sales and revenues, net | 0 | 0 | 0 | 0 |
Costs of products sold | 0 | 0 | 0 | 0 |
Restructuring charges | 0 | 0 | 0 | 0 |
Asset impairment charges | 0 | 0 | 0 | 0 |
All other operating expenses (income) | 28 | 18 | 1 | 57 |
Total costs and expenses | 28 | 18 | 1 | 57 |
Equity in loss of non-consolidated affiliates | (219) | (30) | (743) | (326) |
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest | (247) | (48) | (744) | (383) |
Income tax benefit (expense) | 0 | 132 | 0 | 142 |
Earnings (loss) from continuing operations | (247) | 84 | (744) | (241) |
Income (loss) from discontinued operations, net of tax | 0 | 0 | 0 | 0 |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | (247) | 84 | (744) | (241) |
Net Income (Loss) Attributable to Noncontrolling Interest | 0 | 0 | 0 | 0 |
Net income (loss) Attributable to Navistar International Corporation | (247) | 84 | (744) | (241) |
Guarantor Subsidiaries [Domain]
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Sales and revenues, net | 1,690 | 2,007 | 4,792 | 6,141 |
Costs of products sold | 1,669 | 1,951 | 4,886 | 6,151 |
Restructuring charges | 1 | 3 | 5 | 22 |
Asset impairment charges | 14 | 0 | 14 | 0 |
All other operating expenses (income) | 295 | 329 | 875 | 1,020 |
Total costs and expenses | 1,979 | 2,283 | 5,780 | 7,193 |
Equity in loss of non-consolidated affiliates | 13 | 16 | 117 | 382 |
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest | (276) | (260) | (871) | (670) |
Income tax benefit (expense) | (2) | 229 | (14) | 243 |
Earnings (loss) from continuing operations | (278) | (31) | (885) | (427) |
Income (loss) from discontinued operations, net of tax | 0 | 0 | 0 | 0 |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | (278) | (31) | (885) | (427) |
Net Income (Loss) Attributable to Noncontrolling Interest | 0 | 0 | 0 | 0 |
Net income (loss) Attributable to Navistar International Corporation | (278) | (31) | (885) | (427) |
Non-Guarantor Subsidiaries [Domain]
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Sales and revenues, net | 2,300 | 2,868 | 6,851 | 8,623 |
Costs of products sold | 1,996 | 2,478 | 5,892 | 7,409 |
Restructuring charges | 5 | 1 | 9 | 1 |
Asset impairment charges | 3 | 0 | 3 | 10 |
All other operating expenses (income) | 203 | 205 | 520 | 664 |
Total costs and expenses | 2,207 | 2,684 | 6,424 | 8,084 |
Equity in loss of non-consolidated affiliates | 3 | (11) | 2 | (24) |
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest | 96 | 173 | 429 | 515 |
Income tax benefit (expense) | (14) | (195) | (39) | (23) |
Earnings (loss) from continuing operations | 82 | (22) | 390 | 492 |
Income (loss) from discontinued operations, net of tax | (10) | 4 | (40) | (39) |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 72 | (18) | 350 | 453 |
Net Income (Loss) Attributable to Noncontrolling Interest | 10 | 12 | 34 | 35 |
Net income (loss) Attributable to Navistar International Corporation | 62 | (30) | 316 | 418 |
Consolidation, Eliminations [Domain]
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Sales and revenues, net | (1,129) | (1,629) | (3,619) | (5,248) |
Costs of products sold | (1,118) | (1,629) | (3,582) | (5,210) |
Restructuring charges | 0 | 0 | 0 | 0 |
Asset impairment charges | 0 | 0 | 0 | 0 |
All other operating expenses (income) | (21) | (24) | 24 | (75) |
Total costs and expenses | (1,139) | (1,653) | (3,558) | (5,285) |
Equity in loss of non-consolidated affiliates | 206 | 15 | 630 | (53) |
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest | 216 | 39 | 569 | (16) |
Income tax benefit (expense) | 0 | 22 | 0 | 25 |
Earnings (loss) from continuing operations | 216 | 61 | 569 | 9 |
Income (loss) from discontinued operations, net of tax | 0 | 0 | 0 | 0 |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 216 | 61 | 569 | 9 |
Net Income (Loss) Attributable to Noncontrolling Interest | 0 | 0 | 0 | 0 |
Net income (loss) Attributable to Navistar International Corporation | $ 216 | $ 61 | $ 569 | $ 9 |
Summary of Significant Accounting Policies
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2013
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Organization and Description of the Business Navistar International Corporation ("NIC"), incorporated under the laws of the State of Delaware in 1993, is a holding company whose principal operating subsidiaries are Navistar, Inc. and Navistar Financial Corporation ("NFC"). References herein to the "Company," "we," "our," or "us" refer collectively to NIC and its consolidated subsidiaries, including certain variable interest entities ("VIEs") of which we are the primary beneficiary. Our fiscal year ends October 31. As such, all references to 2013 and 2012 contained within this Quarterly Report on Form 10-Q relate to our fiscal year, unless otherwise indicated. We operate in four principal industry segments: Truck, Engine, Parts (collectively called "Manufacturing operations"), and Financial Services, which consists of NFC and our foreign finance operations (collectively called "Financial Services operations"). These segments are discussed in Note 13, Segment Reporting. Basis of Presentation and Consolidation The accompanying unaudited consolidated financial statements include the assets, liabilities, and results of operations of our manufacturing operations, which include majority-owned dealers ("Dealcors"), and our financial services operations, including VIEs of which we are the primary beneficiary. The effects of transactions among consolidated entities have been eliminated to arrive at the consolidated amounts. Certain reclassifications were made to prior periods' amounts to conform to the 2013 presentation, which includes the presentation of certain former businesses as discontinued operations. For more information, see Note 2, Discontinued Operations and Other Divestitures. We prepared the accompanying unaudited consolidated financial statements in accordance with United States ("U.S.") generally accepted accounting principles ("U.S. GAAP") for interim financial information and the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X issued by the U.S. Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and notes required by U.S. GAAP for comprehensive annual financial statements. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting policies described in our Annual Report on Form 10-K for the year ended October 31, 2012 and Current Report on Form 8-K filed on March 25, 2013, all of which should be read in conjunction with the disclosures therein. In our opinion, these interim consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial condition, results of operations, and cash flows for the periods presented. Operating results for interim periods are not necessarily indicative of annual operating results. Out-Of-Period Adjustments Included in the results of operations for the nine months ended July 31, 2013 are out-of-period adjustments, which represent corrections of prior-period errors related to the accounting for certain sales transactions. In March 2010, we entered into an operating agreement with GE Capital Corporation and GE Capital Commercial, Inc. (collectively “GE”). Under the terms of the agreement, GE became our preferred source of retail customer financing for equipment offered by us and our dealers in the U.S. We provide GE a loss sharing arrangement for certain credit losses. The determination was made that certain sales that were ultimately financed by GE did not qualify for revenue recognition, as we retained substantial risks of ownership in the leased property. As a result, the transactions should have been accounted for as borrowings, resulting in the proceeds from the transfer being recorded as an obligation and amortized to revenue over the term of the financing. In addition, the financed equipment should have been accounted for as operating leases with the equipment transferred from inventory to equipment leased to others and depreciated over the term of the financing. Correcting the errors, which were not material to any of the prior periods, resulted in an $8 million increase to Net income (loss) in our Consolidated Statements of Operations for the nine months ended July 31, 2013. The impact of the correction on our results for the nine months ended July 31, 2013 related to prior periods includes: (i) an $113 million net decrease to both Sales of manufactured products, net and Costs of products sold, which Costs of products sold also included $37 million of additional depreciation expense, and (ii) an $8 million increase to Interest expense. In addition, in our Condensed Consolidated Statements of Cash Flows we recognized Purchases of equipment leased to others of $184 million and Proceeds from financed lease obligations of $201 million related to periods prior to fiscal 2013. The impact of the corrections was not material to any of our Consolidated Balance Sheets. Variable Interest Entities We have an interest in several VIEs, primarily joint ventures, established to manufacture or distribute products and enhance our operational capabilities. We have determined for certain of our VIEs that we are the primary beneficiary because we have the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and have the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. Accordingly, we include in our consolidated financial statements the assets and liabilities and results of operations of those entities, even though we may not own a majority voting interest. The liabilities recognized as a result of consolidating these VIEs do not represent additional claims on our general assets; rather they represent claims against the specific assets of these VIEs. Assets of these entities are not readily available to satisfy claims against our general assets. We are the primary beneficiary of our Blue Diamond Parts ("BDP") and Blue Diamond Truck ("BDT") joint ventures with Ford Motor Company ("Ford"). As a result, our Consolidated Balance Sheets include assets of $295 million and $246 million and liabilities of $166 million and $109 million as of July 31, 2013 and October 31, 2012, respectively, from BDP and BDT, including $61 million and $26 million of cash and cash equivalents, at the respective dates, which are not readily available to satisfy claims against our general assets. The creditors of BDP and BDT do not have recourse to our general credit. In December 2011, Ford notified the Company of its intention to dissolve the BDT joint venture effective December 2014. We do not expect the dissolution of the BDT joint venture to have a material impact on our consolidated financial statements. Our Financial Services segment consolidates several VIEs. As a result, our Consolidated Balance Sheets include assets of $1.1 billion at both July 31, 2013 and October 31, 2012, and liabilities of $791 million and $914 million as of July 31, 2013 and October 31, 2012, respectively, all of which are involved in securitizations that are treated as borrowings. In addition, our Consolidated Balance Sheets include assets of $283 million and $359 million and related liabilities of $58 million and $157 million as of July 31, 2013 and October 31, 2012, respectively, all of which are involved in transactions that do not qualify for sale accounting treatment, and therefore, are treated as borrowings. Investors that hold securitization debt have a priority claim on the cash flows generated by their respective securitized assets to the extent that the related trusts are entitled to make principal and interest payments. Investors in securitizations of these entities have no recourse to our general credit. We also have an interest in other VIEs, which we do not consolidate because we are not the primary beneficiary. Our financial support and maximum loss exposure relating to these non-consolidated VIEs are not material to our financial condition, results of operations, or cash flows. We use the equity method to account for our investments in entities that we do not control under the voting interest or variable interest models, but where we have the ability to exercise significant influence over operating and financial policies. Equity in loss of non-consolidated affiliates includes our share of the net income (loss) of these entities. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the periods presented. Significant estimates and assumptions are used for, but are not limited to, pension and other postretirement benefits, allowance for doubtful accounts, income tax contingency accruals and valuation allowances, product warranty accruals, asbestos and other product liability accruals, asset impairment charges, and litigation-related accruals. Actual results could differ from our estimates. Goodwill Goodwill represents the excess of the cost of an acquired business over the amounts assigned to the net assets. We evaluate goodwill and other intangible assets not subject to amortization for impairment annually or more frequently whenever indicators of potential impairment exist. Goodwill is considered impaired when the fair value of a reporting unit is determined to be less than the carrying value including goodwill. The amount of impairment loss is determined based on a comparison of the implied fair value of the goodwill of the reporting unit to the actual carrying value. Intangible assets not subject to amortization are considered impaired when the fair value of the intangible asset is determined to be less than the carrying value. Qualitative factors may be assessed to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If an election is made not to perform the qualitative assessment or the qualitative assessment indicates it is more likely than not that the fair value is less than the carrying amount, we use the present value of estimated future cash flows to establish the estimated fair value of our reporting units as of the testing date. This approach includes many assumptions related to future growth rates, discount rates, market comparables, control premiums and tax rates, among other considerations. Changes in economic and operating conditions impacting these assumptions could result in an impairment of goodwill in future periods. When available and as appropriate, we use comparative market multiples to corroborate the estimated fair value. We have a goodwill balance of $255 million as of July 31, 2013. During the third quarter of 2013, a Brazilian reporting unit with goodwill of $140 million, experienced declines in profitability and the loss of a high volume customer. As a result of these factors as well as slower than expected growth in the Brazilian economy and a weakening of the Brazilian currency we performed an impairment analysis prior to our annual assessment test date of August 1st. Significant judgment is applied when goodwill is assessed for impairment. This judgment includes developing cash flow projections, selecting appropriate discount rates, identifying relevant market comparables, and incorporating general economic and market conditions. The income approach was used in assessing impairment for the reporting unit and is based on discounted cash flows which are derived from internal forecasts and economic expectations. As a result of the goodwill impairment analysis, we determined that the goodwill was not impaired and that the fair value of the reporting unit exceeded its carrying amount by approximately 6%. It is reasonably possible within the next twelve months we could recognize goodwill impairment charges for this reporting unit if we have further declines in profitability due to changes in volume, market pricing, cost, or the business environment. Significant adverse changes to our business environment and future cash flows could cause us to record impairment charges in future periods, which could be material. Product Warranty Liability The following table presents accrued product warranty and deferred warranty revenue activity:
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In the first quarter of 2013, we recorded adjustments for changes in estimates of $40 million, or $0.50 per diluted share. In the second quarter of 2013, we recorded adjustments for changes in estimates of $164 million, or $2.04 per diluted share. In the third quarter of 2013, we recorded adjustments for changes in estimates of $48 million, or $0.60 per diluted share. The impact of income taxes on the 2013 adjustments are not material due to our deferred tax valuation allowances on our U.S. deferred tax assets. In the first quarter of 2012, adjustments for changes in estimates amounted to $123 million, $75 million net of tax or $1.07 per diluted share. In the second quarter of 2012, we recorded adjustments for changes in estimates of $104 million, $63 million net of tax or $0.92. The impact of income taxes on the 2012 adjustments reflect the Company's 2012 estimated annual effective tax rate as of July 31, 2012.
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. The amount of deferred revenue related to extended warranty programs was $421 million and $364 million at July 31, 2013 and October 31, 2012, respectively. Revenue recognized under our extended warranty programs was $23 million and $63 million for the three and nine months ended July 31, 2013, respectively, and $17 million and $48 million for the three and nine months ended July 31, 2012, respectively. In the second quarters of 2013 and 2012, the Truck segment recognized charges of $33 million and $24 million, respectively, related to the extended warranty contracts on our 2010 emission standard MaxxForce Big-Bore engines. The majority of these changes are included in the adjustments to pre-existing warranties. Concentration Risks Our financial condition, results of operations, and cash flows are subject to concentration risks related to concentrations of our union employees. As of July 31, 2013, approximately 4,800, or 55%, of our hourly workers and approximately 400, or 6%, of our salaried workers are represented by labor unions and are covered by collective bargaining agreements. Our future operations may be affected by changes in governmental procurement policies, budget considerations, changing national defense requirements, and global, political, regulatory and economic developments in the U.S. and certain foreign countries (primarily Canada, Mexico, and Brazil). Recently Issued and Adopted Accounting Standards There are no recently issued accounting standards for which the Company expects a material impact on our consolidated financial statements. In addition, for the nine months ended July 31, 2013, the Company has not adopted any new accounting guidance that has had a material impact on our consolidated financial statements. |
Summary of Significant Accounting Policies - Product Warranty Liability (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified |
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Jul. 31, 2013
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Apr. 30, 2013
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Jan. 31, 2013
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Jul. 31, 2012
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Apr. 30, 2012
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Jan. 31, 2012
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Jul. 31, 2013
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Jul. 31, 2012
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Jul. 31, 2013
Extended Warranty Programs [Member]
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Jul. 31, 2012
Extended Warranty Programs [Member]
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Jul. 31, 2013
Extended Warranty Programs [Member]
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Jul. 31, 2012
Extended Warranty Programs [Member]
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Oct. 31, 2012
Extended Warranty Programs [Member]
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Jul. 31, 2013
Product Warranty Accrual [Member]
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Apr. 30, 2013
Product Warranty Accrual [Member]
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Jan. 31, 2013
Product Warranty Accrual [Member]
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Apr. 30, 2012
Product Warranty Accrual [Member]
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Jan. 31, 2012
Product Warranty Accrual [Member]
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Jul. 31, 2013
G E Operating Agreement [Member]
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Product Liability Contingency [Line Items] | |||||||||||||||||||||||||||
Sales of manufactured products, net | $ 2,820 | $ 3,204 | $ 7,905 | $ 9,387 | $ (113) | ||||||||||||||||||||||
Product Warranty Accrual, Preexisting Increase Decrease Per Share, Net of Tax | $ 0.60 | $ 2.04 | $ 0.50 | $ 0.92 | $ 1.07 | ||||||||||||||||||||||
Warranty Recoveries | 13 | 27 | |||||||||||||||||||||||||
Accrued Product Warranty And Deferred Warranty Revenue, Standard And Extended Warranty Programs, Roll Forward: | |||||||||||||||||||||||||||
Balance at beginning of period | 1,118 | 598 | 1,118 | 598 | |||||||||||||||||||||||
Costs accrued and revenues deferred | 342 | [1] | 353 | [1] | |||||||||||||||||||||||
Divestitures | (3) | 0 | |||||||||||||||||||||||||
Currency translation adjustment | (3) | (4) | |||||||||||||||||||||||||
Adjustments to pre-existing warranties | 13 | 252 | [2] | 259 | [2] | 48 | [2] | 164 | [2] | 40 | 104 | 123 | |||||||||||||||
Payments and revenues recognized | (484) | (324) | |||||||||||||||||||||||||
Accrued product warranty and deferred warranty revenue at end of period | 1,222 | 882 | 1,222 | 882 | |||||||||||||||||||||||
Less: Current portion | 618 | 448 | 618 | 448 | |||||||||||||||||||||||
Noncurrent accrued product warranty and deferred warranty revenue | 604 | 434 | 604 | 434 | |||||||||||||||||||||||
Product Warranty Accrual, Preexisting Increase (Decrease), net of tax | 63 | 75 | |||||||||||||||||||||||||
Extended Warranty Program: | |||||||||||||||||||||||||||
Deferred Revenue | 421 | 421 | 364 | ||||||||||||||||||||||||
Revenue recognized under extended warranty programs | 23 | 17 | 63 | 48 | |||||||||||||||||||||||
Revenue extended warranty service contracts | $ 33 | $ 24 | |||||||||||||||||||||||||
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Restructuring and Impairments (Tables)
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost [Table Text Block] | The following tables summarize the activity in the restructuring liability, which includes amounts related to discontinued operations and excludes pension and other postretirement contractual termination benefits:
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Debt (Tables)
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Jul. 31, 2013
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt |
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Loss Per Share Attributable to Navistar International Corporation - Narrative (Details) (USD $)
Share data in Millions, except Per Share data, unless otherwise specified |
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Jul. 31, 2013
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Jul. 31, 2012
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Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 29.5 | 26.3 | 28.9 | 28.0 |
Shares related to warrants | 11.3 | 11.3 | 11.3 | 11.3 |
Shares related to convertible notes | 11.3 | 11.3 | 11.3 | 11.3 |
Convertible Debt Securities [Domain]
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Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Debt Instrument, Convertible, Conversion Ratio | 19.891 | |||
Debt Instrument Convertible Conversion Ratio Basis | $ 1,000 | |||
Debt Instrument, Convertible, Conversion Price | $ 50.27 | $ 50.27 | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 11.3 | |||
Warrant [Domain]
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Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Investment Warrants, Exercise Price | $ 60.14 |
Loss Per Share Attributable to Navistar International Corporation (Tables)
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share Reconciliation [Table Text Block] | The following table presents the information used in the calculation of our basic and diluted loss per share for continuing operations, discontinued operations, and net loss, all attributable to Navistar International Corporation:
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Stockholders' Deficit (Details) (USD $)
In Millions, except Share data, unless otherwise specified |
1 Months Ended | 3 Months Ended | 9 Months Ended | 1 Months Ended | 1 Months Ended | 1 Months Ended | 3 Months Ended | 3 Months Ended | |||||||||||||
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Jun. 30, 2012
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Jan. 31, 2013
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Oct. 31, 2012
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Jul. 31, 2013
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Jul. 31, 2012
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Sep. 30, 2011
Maximum [Member]
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Nov. 30, 2011
Accelerated Share Repurchases Program [Member]
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Oct. 31, 2011
Accelerated Share Repurchases Program [Member]
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Oct. 31, 2011
October 2011 [Member]
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Jan. 31, 2012
October 2011 [Member]
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Oct. 31, 2011
October 2011 [Member]
Accelerated Share Repurchases Program [Member]
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Jan. 31, 2012
November 2011 [Member]
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Nov. 30, 2011
November 2011 [Member]
Accelerated Share Repurchases Program [Member]
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Jan. 31, 2012
Open Market Share Repurchase Program [Member]
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Oct. 31, 2011
Open Market Share Repurchase Program [Member]
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Apr. 30, 2012
Open Market Share Repurchase Program [Member]
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Jan. 31, 2012
Open Market Share Repurchase Program [Member]
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Jul. 31, 2013
Preferred Stock [Member]
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Jan. 31, 2013
Common Stock [Member]
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Oct. 31, 2012
Common Stock [Member]
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Jul. 31, 2013
Common Stock [Member]
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Class of Stock [Line Items] | |||||||||||||||||||||
Common stock, dividends, declared per share | 1 | ||||||||||||||||||||
Ownership Percentage Stockholder Rights Plan | 20.00% | ||||||||||||||||||||
Number of securities called by each right | 0.001 | 1 | |||||||||||||||||||
Exercise Price of Stockholder Rights Plan | 140 | ||||||||||||||||||||
Redeemable amount per right under Shareholder Rights Plan | 0.001 | ||||||||||||||||||||
Stock Issued During Period, Shares, New Issues | 763,534 | 10,666,666 | |||||||||||||||||||
Share Price | $ 18.75 | $ 18.75 | |||||||||||||||||||
Proceeds from Issuance of Common Stock | $ 14 | $ 192 | $ 14 | $ 0 | |||||||||||||||||
Stock Repurchase Program, Authorized Amount | 175 | 100 | 75 | ||||||||||||||||||
Treasury Stock, Shares, Acquired | 2,542,609 | 2,380,952 | 1,905,600 | ||||||||||||||||||
Payments for Repurchase of Common Stock | 0 | 75 | 5 | 70 | |||||||||||||||||
Accelerated Share Repurchases, Settlement Payment or Receipt | 80 | 20 | |||||||||||||||||||
Accelerated Share Repurchases, Initial Price Paid Per Share | $ 33.60 | ||||||||||||||||||||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 20 | ||||||||||||||||||||
Treasury Stock, Additional Shares Acquired | 161,657 |
Postretirement Benefits - Defined Benefit Plan (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
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Jul. 31, 2013
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Jul. 31, 2012
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Jul. 31, 2013
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Jul. 31, 2012
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Pension Plans, Defined Benefit [Member]
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Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Defined Benefit Plan, Contributions by Employer | $ 29 | $ 30 | $ 86 | $ 112 |
Defined Benefit Plan, Estimated Future Employer Contributions in Current Fiscal Year | 80 | 80 | ||
Early Retiree Reinsurance Program [Member]
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Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Defined Benefit Plan, Contributions by Plan Participants | $ 0 | $ 0 | $ 0 | $ 3 |