LISLE, Ill.--(BUSINESS WIRE)--Navistar International Corporation (NYSE:NAV) today announced strong fourth quarter and full-year earnings performance reflecting the company’s continued execution of its strategy. Drivers of this performance included higher revenues and improved margins in its core North America truck business; sustained military sales; and an engine business that returned to profitability in the second half of the year. The company also saw revenues from outside of North America grow to more than $3 billion, as well as ongoing benefits from its engineering integration.
“We are pleased that we have finished the year strong and delivered solid fourth quarter results across all segments,” said Daniel C. Ustian, Navistar chairman, president and chief executive officer. “Not only did we deliver on 2011 commitments, we continued to invest in our strategy and set the foundation for a strong 2012.”
Reported net income for the fourth quarter ended October 31, 2011, of $255 million, equal to $3.48 diluted earnings per share, versus a year-ago net income of $44 million, equal to $0.61 diluted earnings per share. Adjusted net income for the fourth quarter 2011 was $247 million, or $3.37 diluted earnings per share.
Net income for fiscal year 2011 was $1.7 billion, equal to $22.64 diluted earnings per share, versus net income for fiscal 2010 of $223 million, equal to $3.05 diluted earnings per share. Adjusted net income was $402 million, or $5.28 diluted earnings per share. Adjustments impacting both the fourth quarter and fiscal year 2011 include the net impact of an income tax valuation allowance release, costs associated with the restructuring of North American manufacturing operations, engineering integration and the impact of the Medicare Part D court ruling.
In the fourth quarter, the company saw increases in worldwide unit chargeouts in both its traditional North American and global businesses while maintaining a strong market share position. The company purchased 2.7 million shares of its stock in the fourth quarter and ended the year with a manufacturing cash balance of $1.2 billion. Navistar is on track to complete the full $175 million stock repurchase program in early 2012.
“We expect the industry to continue its steady recovery,” said Ustian. “We will continue to leverage our market leading North American businesses, invest in new products and expand further into global markets, while effectively controlling our costs.”
| Summary Financial Results: | |||||||||||||
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(in millions, except per share data) |
Fourth Quarter | Years Ended | |||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||
| Sales and revenues, net | $ | 4,323 | $ | 3,372 | $ | 13,958 | $ | 12,145 | |||||
| Segment Results: | |||||||||||||
| Truck | $ | 287 | $ | 86 | $ | 336 | $ | 424 | |||||
| Engine | 58 | (17 | ) | 84 | 51 | ||||||||
| Parts | 87 | 77 | 287 | 266 | |||||||||
| Manufacturing segment profit(A) | $ | 432 | $ | 146 | $ | 707 | $ | 741 | |||||
| Income before income taxes | $ | 275 | $ | 56 | $ | 320 | $ | 290 | |||||
| Net income attributable to Navistar International Corporation | 255 | 44 | 1,723 | 223 | |||||||||
| Diluted earnings per share attributable to Navistar International Corporation | 3.48 | 0.61 | 22.64 | 3.05 | |||||||||
| Adjusted income attributable to Navistar International Corporation(A) | 247 | 44 | 402 | 223 | |||||||||
| Adjusted diluted earnings per share attributable to Navistar International Corporation(A) | 3.37 | 0.61 | 5.28 | 3.05 | |||||||||
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(A) Non-GAAP measure, see Regulation G Non-GAAP Reconciliation for additional information. |
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Segment Results
Truck — For the fourth quarter 2011, the truck segment recorded $287 million in manufacturing segment profit, compared with a year-ago fourth quarter manufacturing segment profit of $86 million. For the fiscal year 2011, the truck segment recorded an adjusted profit of $509 million, excluding charges of $173 million for the restructuring of its North American manufacturing operations and engineering integration, compared with a fiscal year 2010 profit of $424 million.
Fiscal 2011 included a full-year revenue increase of 19 percent supported by record volume in Latin America, improved product mix, increased Class 8 and Class 6/7 truck chargeouts and improved pricing mainly through the use of the company’s proprietary 2010 engines. The segment also saw strong cost performance as a result of a solid order board, improved logistics performance and utilization of the company’s flexible manufacturing strategy.
This was all achieved in a year of lower military revenue, continued global investment, higher commodity costs, and increased product development costs to support future growth.
Engine — For the fourth quarter 2011, the engine segment recorded $58 million in profit, compared with a year-ago fourth quarter loss of $17 million. For the fiscal year 2011, the engine segment posted a profit of $84 million compared to a prior year profit of $51 million. The increase in year-over-year profit was driven by strong intercompany sales and margins from MaxxForce® Big-Bore engines and continued strong performance in South America, partially offset by increased engineering product development and higher adjustments to pre-existing warranties.
Parts — For the fourth quarter 2011, the parts segment recorded $87 million in profit, compared with a year-ago fourth quarter profit of $77 million. For the fiscal year, Navistar’s commercial parts business grew 17 percent, reflecting the company’s growth in truck and engine market share, the overall improvement in industry volume, and an increase in all-makes sales. Total parts segment profit in fiscal 2011 was $287 million, compared with a year-ago profit of $266 million.
Financial Services — For the fourth quarter 2011, the financial services segment recorded $27 million in profit, compared with a year-ago fourth quarter profit of $34 million. During fiscal year 2011, the segment earned $129 million, compared to $95 million in fiscal year 2010. The increase in year-over-year profits included decreased administrative costs and a lower provision for credit losses, slightly offset by a lower net interest margin. Liquidity remains strong and on better terms than previously available.
Corporate — The impact of higher taxes reduced earnings by approximately $0.29 a share, prior to the positive impact of the valuation adjustment.
About Navistar
Navistar International Corporation (NYSE: NAV) is a holding company whose subsidiaries and affiliates produce International® brand commercial and military trucks, MaxxForce® brand diesel engines, IC Bus™ brand school and commercial buses, Monaco® RV brands of recreational vehicles, and Workhorse® brand chassis for motor homes and step vans. It also is a private-label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The company also provides truck and diesel engine service parts. Another affiliate offers financing services. Additional information is available at www.Navistar.com/newsroom.
Forward-Looking Statement
Information provided and statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements only speak as of the date of this report and the company assumes no obligation to update the information included in this report. Such forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy. These statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” or similar expressions. These statements are not guarantees of performance or results and they involve risks, uncertainties, and assumptions. For a further description of these factors, see Item 1A, Risk Factors of our Form 10-K for the fiscal year ended October 31, 2011, which was filed on December 20, 2011. Although we believe that these forward-looking statements are based on reasonable assumptions, there are many factors that could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. All future written and oral forward-looking statements by us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. Except for our ongoing obligations to disclose material information as required by the federal securities laws, we do not have any obligations or intention to release publicly any revisions to any forward-looking statements to reflect events or circumstances in the future or to reflect the occurrence of unanticipated events.
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Navistar International Corporation and Subsidiaries Consolidated Statements of Operations |
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Three Months Ended October 31, |
For the Years Ended October 31, |
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| 2011 | 2010 | 2011 | 2010 | ||||||||||||||
| Revised(A) | |||||||||||||||||
| (in millions, except per share data) | |||||||||||||||||
| Sales of manufactured products, net | $ | 4,277 |
$ |
3,316 |
$ | 13,758 | $ | 11,926 | |||||||||
| Finance revenues | 46 | 56 | 200 | 219 | |||||||||||||
| Sales and revenues, net | 4,323 | 3,372 | $ | 13,958 | $ | 12,145 | |||||||||||
| Costs of products sold | 3,432 | 2,765 | 11,262 | 9,741 | |||||||||||||
| Restructuring charges (benefit) | 12 | 8 | 92 | (15 | ) | ||||||||||||
| Impairment of property and equipment and intangible assets | — | — | 64 | — | |||||||||||||
| Selling, general and administrative expenses | 428 | 331 | 1,434 | 1,406 | |||||||||||||
| Engineering and product development costs | 125 | 126 | 532 | 464 | |||||||||||||
| Interest expense | 60 | 64 | 247 | 253 | |||||||||||||
| Other expense (income), net | (25 | ) | 4 | (64 | ) | (44 | ) | ||||||||||
| Total costs and expenses | 4,032 | 3,298 | 13,567 | 11,805 | |||||||||||||
| Equity in loss of non-consolidated affiliates | (16 | ) | (18 | ) | (71 | ) | (50 | ) | |||||||||
| Income before income tax | 275 | 56 | 320 | 290 | |||||||||||||
| Income tax benefit (expense) (B) | — | (6 | ) | 1,458 | (23 | ) | |||||||||||
| Net income | 275 | 50 | 1,778 | 267 | |||||||||||||
| Less: Net income attributable to non-controlling interests | 20 | 6 | 55 | 44 | |||||||||||||
| Net income attributable to Navistar International Corporation | $ | 255 |
$ |
44 |
$ | 1,723 | $ | 223 | |||||||||
| Earnings per share attributable to Navistar International Corporation: | |||||||||||||||||
| Basic | $ | 3.52 |
$ |
0.62 |
$ | 23.66 | $ | 3.11 | |||||||||
| Diluted | 3.48 | 0.61 | 22.64 | 3.05 | |||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||
| Basic | 72.5 | 72.2 | 72.8 | 71.7 | |||||||||||||
| Diluted | 73.2 | 73.6 | 76.1 | 73.2 | |||||||||||||
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(A) Starting with the first quarter of 2011, the company changed its method of accruing for certain incentive compensation specifically relating to cash bonuses for interim reporting purposes from a ratable method to a performance-based method. The company believes that the performance-based method is preferable because it links the accrual of incentive compensation with the achievement of performance. We have revised our previously reported Consolidated Statement of Operations for the three months ended October 31, 2010 on a retrospective basis to reflect this change in principle based on information that would have been available as of our previous filing. The change has no impact on our annual financial results. |
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(B) In the fourth quarter of 2011, certain out-of-period adjustments were recorded related to the partial release of the company's income tax valuation allowance. The adjustments of approximately $61 million primarily related to the classification of a deferred tax item and resulted in the company recognizing an additional income tax benefit. The company should have recognized the income tax benefit for this amount in the third quarter of 2011 with the release of a portion of the company's income tax valuation allowance. Correcting the error was not material to any of the related periods. |
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Navistar International Corporation and Subsidiaries Consolidated Balance Sheets |
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| As of October 31, | ||||||||
| 2011 | 2010 | |||||||
| (in millions, except per share data) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 539 | $ | 585 | ||||
| Restricted cash and cash equivalents | 100 | — | ||||||
| Marketable securities | 718 | 586 | ||||||
| Trade and other receivables, net | 1,219 | 987 | ||||||
| Finance receivables, net | 2,198 | 1,770 | ||||||
| Inventories | 1,714 | 1,568 | ||||||
| Deferred taxes, net | 474 | 83 | ||||||
| Other current assets | 273 | 256 | ||||||
| Total current assets | 7,235 | 5,835 | ||||||
| Restricted cash and cash equivalents | 227 | 180 | ||||||
| Trade and other receivables, net | 122 | 44 | ||||||
| Finance receivables, net | 715 | 1,145 | ||||||
| Investments in non-consolidated affiliates | 60 | 103 | ||||||
| Property and equipment, net | 1,570 | 1,442 | ||||||
| Goodwill | 319 | 324 | ||||||
| Intangible assets, net | 234 | 262 | ||||||
| Deferred taxes, net | 1,583 | 63 | ||||||
| Other noncurrent assets | 226 | 332 | ||||||
| Total assets | $ | 12,291 | $ | 9,730 | ||||
| LIABILITIES and STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Notes payable and current maturities of long-term debt | $ | 1,379 | $ | 632 | ||||
| Accounts payable | 2,122 | 1,827 | ||||||
| Other current liabilities | 1,297 | 1,130 | ||||||
| Total current liabilities | 4,798 | 3,589 | ||||||
| Long-term debt | 3,477 | 4,238 | ||||||
| Postretirement benefits liabilities | 3,210 | 2,097 | ||||||
| Deferred taxes, net | 59 | 142 | ||||||
| Other noncurrent liabilities | 719 | 588 | ||||||
| Total liabilities | 12,263 | 10,654 | ||||||
| Redeemable equity securities | 5 | 8 | ||||||
| Stockholders’ equity (deficit) | ||||||||
| Series D convertible junior preference stock | 3 | 4 | ||||||
| Common stock ($0.10 par value per share, 220.0 and 110.0 shares authorized, at the respective dates, 75.4 shares issued at both dates) | 7 | 7 | ||||||
| Additional paid in capital | 2,253 | 2,206 | ||||||
| Accumulated deficit | (155 | ) | (1,878 | ) | ||||
| Accumulated other comprehensive loss | (1,944 | ) | (1,196 | ) | ||||
| Common stock held in treasury, at cost (4.9 and 3.6 shares, at the respective dates) | (191 | ) | (124 | ) | ||||
| Total stockholders’ deficit attributable to Navistar International Corporation | (27 | ) | (981 | ) | ||||
| Stockholders’ equity attributable to non-controlling interest | 50 | 49 | ||||||
| Total stockholders’ equity (deficit) | 23 | (932 | ) | |||||
| Total liabilities and stockholders’ equity (deficit) | $ | 12,291 | $ | 9,730 | ||||
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Navistar International Corporation and Subsidiaries Consolidated Statements of Cash Flows |
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For the Years Ended October 31, |
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| 2011 | 2010 | |||||||
| (in millions) | ||||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 1,778 | $ | 267 | ||||
| Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
| Depreciation and amortization | 290 | 265 | ||||||
| Depreciation of equipment leased to others | 38 | 51 | ||||||
| Deferred taxes, including change in valuation allowance | (1,513 | ) | 17 | |||||
| Impairment of property and equipment and intangible assets | 75 | — | ||||||
| Amortization of debt issuance costs and discounts | 44 | 38 | ||||||
| Stock-based compensation | 36 | 24 | ||||||
| Provision for doubtful accounts, net of recoveries | (6 | ) | 29 | |||||
| Equity in loss of affiliated companies, net of dividends | 75 | 55 | ||||||
| Other non-cash operating activities | (15 | ) | 61 | |||||
| Changes in operating assets and liabilities, exclusive of the effects of businesses acquired and disposed: | ||||||||
| Trade and other receivables | (212 | ) | (136 | ) | ||||
| Finance receivables | 8 | 546 | ||||||
| Inventories | (129 | ) | 122 | |||||
| Accounts payable | 247 | (72 | ) | |||||
| Other assets and liabilities | 164 | (160 | ) | |||||
| Net cash provided by operating activities | 880 | 1,107 | ||||||
| Cash flows from investing activities | ||||||||
| Purchases of marketable securities | (1,562 | ) | (1,876 | ) | ||||
| Sales or maturities of marketable securities | 1,430 | 1,290 | ||||||
| Net change in restricted cash and cash equivalents | (147 | ) | 515 | |||||
| Capital expenditures | (429 | ) | (234 | ) | ||||
| Purchase of equipment leased to others | (71 | ) | (45 | ) | ||||
| Proceeds from sales of property and equipment | 32 | 23 | ||||||
| Investments in and advances to non-consolidated affiliates | (65 | ) | (97 | ) | ||||
| Proceeds from sales of affiliates | 3 | 7 | ||||||
| Acquisition of intangibles | (26 | ) | (15 | ) | ||||
| Business acquisitions, net of escrow received | 12 | (2 | ) | |||||
| Net cash used in investing activities | (823 | ) | (434 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of securitized debt | 599 | 1,460 | ||||||
| Principal payments on securitized debt | (708 | ) | (1,579 | ) | ||||
| Proceeds from issuance of non-securitized debt | 214 | 687 | ||||||
| Principal payments on non-securitized debt | (107 | ) | (883 | ) | ||||
| Net increase (decrease) in notes and debt outstanding under revolving credit facilities | 137 | (866 | ) | |||||
| Principal payments under financing arrangements and capital lease obligations | (86 | ) | (62 | ) | ||||
| Debt issuance costs | (11 | ) | (35 | ) | ||||
| Purchases of treasury stock | (125 | ) | — | |||||
| Proceeds from exercise of stock options | 40 | 35 | ||||||
| Dividends paid by subsidiaries to non-controlling interest | (53 | ) | (57 | ) | ||||
| Net cash used in financing activities | (100 | ) | (1,300 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | (3 | ) | — | |||||
| Decrease in cash and cash equivalents | (46 | ) | (627 | ) | ||||
| Cash and cash equivalents at beginning of the year | 585 | 1,212 | ||||||
| Cash and cash equivalents at end of the year | $ | 539 | $ | 585 | ||||
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Navistar International Corporation and Subsidiaries Segment Reporting (Unaudited) |
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We define segment profit (loss) as net income attributable to Navistar International Corporation (“NIC”), excluding income tax benefit (expense). Selected financial information is as follows: |
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| Truck(A) | Engine(B) | Parts |
Financial Services(C) |
Corporate and Eliminations |
Total | |||||||||||||||||
| (in millions) | ||||||||||||||||||||||
| October 31, 2011 | ||||||||||||||||||||||
| External sales and revenues, net | $ | 9,690 | $ | 2,101 | $ | 1,967 | $ | 200 | $ | — | $ | 13,958 | ||||||||||
| Intersegment sales and revenues | 48 | 1,690 | 188 | 91 | (2,017 | ) | — | |||||||||||||||
| Total sales and revenues, net | $ | 9,738 | $ | 3,791 | $ | 2,155 | $ | 291 | $ | (2,017 | ) | $ | 13,958 | |||||||||
| Net income attributable to NIC | $ | 336 | $ | 84 | $ | 287 | $ | 129 | $ | 887 | $ | 1,723 | ||||||||||
| Income tax benefit | — | — | — | — | 1,458 | 1,458 | ||||||||||||||||
| Segment profit (loss)(D)(E)(F) | $ | 336 | $ | 84 | $ | 287 | $ | 129 | $ | (571 | ) | $ | 265 | |||||||||
| Depreciation and amortization | $ | 151 | $ | 120 | $ | 9 | $ | 28 | $ | 20 | $ | 328 | ||||||||||
| Interest expense | — | — | — | 109 | 138 | 247 | ||||||||||||||||
| Equity in (loss) income of non-consolidated affiliates | (73 | ) | (4 | ) | 6 | — | — | (71 | ) | |||||||||||||
| Segment assets | 2,771 | 1,849 | 700 | 3,580 | 3,391 | 12,291 | ||||||||||||||||
| Capital expenditures(G) | 83 | 172 | 19 | 2 | 153 | 429 | ||||||||||||||||
| October 31, 2010 | ||||||||||||||||||||||
| External sales and revenues, net | $ | 8,205 | $ | 2,031 | $ | 1,690 | $ | 219 | $ | — | $ | 12,145 | ||||||||||
| Intersegment sales and revenues | 2 | 955 | 195 | 90 | (1,242 | ) | — | |||||||||||||||
| Total sales and revenues, net | $ | 8,207 | $ | 2,986 | $ | 1,885 | $ | 309 | $ | (1,242 | ) | $ | 12,145 | |||||||||
| Net income attributable to NIC | $ | 424 | $ | 51 | $ | 266 | $ | 95 | $ | (613 | ) | $ | 223 | |||||||||
| Income tax expense | — | — | — | — | (23 | ) | (23 | ) | ||||||||||||||
| Segment profit (loss) | $ | 424 | $ | 51 | $ | 266 | $ | 95 | $ | (590 | ) | $ | 246 | |||||||||
| Depreciation and amortization | $ | 160 | $ | 106 | $ | 7 | $ | 28 | $ | 15 | $ | 316 | ||||||||||
| Interest expense | — | — | — | 113 | 140 | 253 | ||||||||||||||||
| Equity in (loss) income of non-consolidated affiliates | (51 | ) | (2 | ) | 3 | — | — | (50 | ) | |||||||||||||
| Segment assets | 2,457 | 1,715 | 811 | 3,497 | 1,250 | 9,730 | ||||||||||||||||
| Capital expenditures(G) | 82 | 116 | 8 | 2 | 26 | 234 | ||||||||||||||||
(A) In 2011, the Truck segment profit included $173 million of charges related to the restructuring of its North American manufacturing operations and engineering integration costs.
(B) In 2011, the Engine segment recognized a $10 million gain on the extinguishment of a liability related to an equipment financing transaction. Previously, such gains were not material and were recorded within Corporate.
(C) Total sales and revenues in the Financial Services segment include interest revenues of $285 million, and $270 million for 2011 and 2010, respectively.
(D) Beginning in the second quarter of 2011, certain purchases from the Engine segment by the Parts segment are recorded at market-based pricing. All other intersegment purchases from the Truck and Engine segments by the Parts segment continue to be recorded at standard production cost. The effect of this change did not have a material impact on our segment reporting.
(E) In the first quarter of 2011, we began allocating gains and losses on commodities derivatives to the segments to which the underlying commodities relate. Previously, the impacts of commodities derivatives were not material and were recorded within Corporate.
(F) Effective with the fourth quarter of 2011, the company’s master intercompany agreement was amended to provide the ability to adjust fees and rates paid by the Truck and Parts segment to the Financial Services segment for changes in the Financial Services segments capital structure. In the fourth quarter of 2011 as a result of the amendment, the Financial Services segment refunded the Truck and Parts segments $11 million for financing fees.
(G) Exclusive of purchases of equipment leased to others.
SEC Regulation G Non-GAAP Reconciliation
The financial measures presented below of adjusted income and adjusted diluted earnings per share attributable to Navistar International Corporation, manufacturing segment profit, and adjusted manufacturing segment profit are unaudited and not in accordance with, or an alternative for, financial measures presented in accordance with U.S. generally accepted accounting principles (GAAP). The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
We believe manufacturing segment profit, which includes the segment profits of our Truck, Engine, and Parts reporting segments, provides meaningful information of our core manufacturing business and therefore we use it to supplement our GAAP reporting by identifying items that may not be related to the core manufacturing business. We have chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of operating results, to illustrate the results of operations giving effect to the non-GAAP adjustments shown in the below reconciliation, and to provide an additional measure of performance.
In addition, we believe that adjusted income and adjusted diluted earnings per share attributable to Navistar International Corporation and manufacturing segment profit excluding certain items, which are not considered to be part of our ongoing business, improves the comparability of year to year results and is representative of our underlying performance. We have chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of operating results, to illustrate the results of operations giving effect to the non-GAAP adjustments shown in the reconciliations below, and to provide an additional measure of performance.
Adjustments included in the following schedules have not been adjusted to reflect their income tax effect as the adjustments are intended to represent the impact on the company’s consolidated statement of operations without the incremental income tax effect that would result from the release of the income tax valuation allowance. The charges related to our Canadian operations would not be impacted as a full income tax valuation allowance remains for Canada.
| Adjusted net income attributable to Navistar International Corporation reconciliation: | ||||||
| October 31, 2011 | ||||||
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(in millions) |
Three |
Years |
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| Net income attributable to Navistar International Corporation | $ | 255 | $ | 1,723 | ||
| Plus: | ||||||
| Engineering integration costs(A) | 23 | 64 | ||||
| Restructuring of North American manufacturing operations(B) | 5 | 127 | ||||
| Medicare Part D ruling related to prior period (C) | 15 | 15 | ||||
| Less: | ||||||
| Income tax valuation allowance release(D) | 51 | $ | 1,527 | |||
| Adjusted income attributable to Navistar International Corporation | $ | 247 | $ | 402 | ||
| Adjusted diluted earnings per share attributable to Navistar International Corporation reconciliation: | ||||||||
| October 31, 2011 | ||||||||
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(in millions, except per share data) |
Three |
Years |
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| Diluted earnings per share attributable to Navistar International Corporation | $ | 3.48 | $ | 22.64 | ||||
| Effect of adjustments on diluted earnings per share attributable to Navistar International Corporation | (0.11 | ) | (17.36 | ) | ||||
| Adjusted income attributable to Navistar International Corporation | $ | 3.37 | $ | 5.28 | ||||
| Diluted weighted shares outstanding | 73.2 | 76.1 | ||||||
| Manufacturing segment profit and adjusted manufacturing segment profit reconciliation: | ||||||||||||||||
| Three Months Ended October 31, | Years Ended October 31, | |||||||||||||||
| (in millions) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
| Revised(E) | ||||||||||||||||
| Net income attributable to Navistar International Corporation | $ | 255 | $ | 44 | $ | 1,723 | $ | 223 | ||||||||
| Less: | ||||||||||||||||
| Financial services segment profit | 27 | 34 | 129 | 95 | ||||||||||||
| Corporate and eliminations | (204 | ) | (130 | ) | (571 | ) | (590 | ) | ||||||||
| Income tax benefit (expense) | — | (6 | ) | 1,458 | (23 | ) | ||||||||||
| Manufacturing segment profit | $ | 432 | $ | 146 | $ | 707 | $ | 741 | ||||||||
| Plus: | ||||||||||||||||
| Engineering integration costs(A) | 18 | — | 51 | — | ||||||||||||
|
Restructuring of North American manufacturing operations(B) |
5 | — | 124 | — | ||||||||||||
| Adjusted manufacturing segment profit | $ | 455 | $ | 146 | $ | 882 | $ | 741 | ||||||||
| Adjusted Truck segment profit reconciliation: | |||
| (in millions) |
Year Ended |
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| Truck segment profit | $ | 336 | |
| Plus: | |||
| Engineering integration costs(A) | 49 | ||
|
Restructuring of North American manufacturing operations(B) |
124 | ||
| Adjusted Truck segment profit | $ | 509 | |
(A) Engineering integration costs relate to the consolidation of our truck and engine engineering operations as well as the move of our world headquarters. These costs include restructuring charges for activities at our Fort Wayne facility of $6 million and $29 million for the three months and year ended October 31, 2011, respectively. We also incurred an additional $17 million and $35 million of other related costs for the three months and year ended October 31, 2011, respectively. Our manufacturing segment recognized $18 million and $51 million of the engineering integration costs for the three months and year ended October 31, 2011, respectively. The Truck segment recognized $49 million of the engineering integration costs for the year ended October, 31, 2011.
(B) Restructuring of North American manufacturing operations are charges primarily related to our plans to close our Chatham, Ontario heavy truck plant and Workhorse chassis plant in Union City, Indiana, and to significantly scale back operations at our Monaco recreational vehicle headquarters and motor coach manufacturing plant in Coburg, Oregon. These costs include restructuring charges of $5 million and $58 million for the three months and year ended October 31, 2011. We also incurred an additional $5 million of other related costs for the year ended October 31, 2011. In addition, the company recognized $64 million of impairment charges related to certain intangible assets and property plant and equipment primarily related to these facilities. The Truck segment recognized $5 million and $124 million of restructuring of North American manufacturing operation charges for the three months and year ended October 31, 2011.
(C) In the fourth quarter of 2011, the company had an unfavorable ruling related to a 2010 administrative change the company made to the prescription drug program under the OPEB plan affecting plan participants who are Medicare eligible. As a result the company recognized approximately $15 million of expense for postretirement benefits.
(D) In the third quarter of 2011, we recognized an income tax benefit of $1.476 billion from the release of a portion of our income tax valuation allowance. In the fourth quarter of 2011, we recognized an additional income tax benefit of $61 million related to the release of a portion of our income tax valuation allowance. As domestic earnings are now taxable with the release of the income tax valuation allowance we recognized $10 million of domestic income tax expense for 2011 that would not have been recognized had we not released a portion of the allowance. The $10 million of domestic income taxes were netted against the total benefit of $1.537 billion from the release of a portion of the income tax valuation allowance.
(E) Starting with the first quarter of 2011, the company changed its method of accruing for certain incentive compensation, specifically relating to cash bonuses, for interim reporting purposes from a ratable method to a performance-based method. This change did not have an impact on our annual financial results. We have revised our previously reported Quarterly Condensed Consolidated Statements of Operations and Financial Data on a retrospective basis to reflect this change in principle based on information that would have been available as of our previous filing.