Navistar Reports Fourth Quarter Results

SEGMENT REPORTING

Summary Financial Results:

Quarter Ended

October 31

Year Ended

October 31

(in millions, except per share data)

2012

2011

2012

2011

Sales and revenues, net

$

3,279

$

4,323

$

12,948

$

13,958

Segment Results:

Truck

$

(160)

$

287

$

(320)

$

336

Engine

(287)

58

(562)

84

Parts

76

87

240

287

Financial Services

16

27

91

129

Income (loss) before income taxes

$

(566)

$

275

$

(1,182)

$

320

Net income (loss) attributable to Navistar International Corporation

(2,769)

255

(3,010)

1,723

Diluted earnings (loss) per share attributable to Navistar International Corporation

(40.13)

3.48

(43.56)

22.64

Navistar International Corporation and Subsidiaries

Consolidated Statements of Operations

Quarter Ended

October 31

Year Ended

October 31

2012

2011

2012

2011

(in millions, except per share data)

Sales and revenues

Sales of manufactured products, net

$

3,240

$

4,277

$

12,780

$

13,758

Finance revenues

39

46

168

200

Sales and revenues, net

3,279

4,323

12,948

13,958

Costs and expenses

Costs of products sold

3,152

3,432

11,670

11,262

Restructuring charges

84

12

108

92

Impairment of property and equipment and intangible assets

6

—

44

64

Selling, general and administrative expenses

376

428

1,444

1,434

Engineering and product development costs

131

125

539

532

Interest expense

77

60

259

247

Other expense (income), net

11

(25)

37

(64)

Total costs and expenses

3,837

4,032

14,101

13,567

Equity in loss of non-consolidated affiliates

(8)

(16)

(29)

(71)

Income (loss) before income taxes

(566)

275

(1,182)

320

Income tax benefit (expense)

(2,190)

—

(1,780)

1,458

Net income (loss)

(2,756)

275

(2,962)

1,778

Less: Net income attributable to non-controlling interests

13

20

48

55

Net income (loss) attributable to Navistar International Corporation

$

(2,769)

$

255

$

(3,010)

$

1,723

Earnings (loss) per share attributable to Navistar International Corporation:

Basic

$

(40.13)

$

3.52

$

(43.56)

$

23.66

Diluted

$

(40.13)

$

3.48

$

(43.56)

$

22.64

Weighted average shares outstanding:

Basic

69.0

72.5

69.1

72.8

Diluted

69.0

73.2

69.1

76.1

Navistar International Corporation and Subsidiaries

Consolidated Balance Sheets

(in millions, except per share data)

October 31,

2012

October 31,

2011

ASSETS

Current assets

Cash and cash equivalents

$

1,087

$

539

Restricted cash

—

100

Marketable securities

466

718

Trade and other receivables, net

749

1,219

Finance receivables, net

1,663

2,198

Inventories

1,537

1,714

Deferred taxes, net

74

474

Other current assets

261

273

Total current assets

5,837

7,235

Restricted cash

161

227

Trade and other receivables, net

94

122

Finance receivables, net

486

715

Investments in non-consolidated affiliates

62

60

Property and equipment, net

1,660

1,570

Goodwill

280

319

Intangible assets, net

171

234

Deferred taxes, net

189

1,583

Other noncurrent assets

162

226

Total assets

$

9,102

$

12,291

LIABILITIES and STOCKHOLDERS’ EQUITY (DEFICIT)

Liabilities

Current liabilities

Notes payable and current maturities of long-term debt

$

1,205

$

1,379

Accounts payable

1,686

2,122

Other current liabilities

1,462

1,297

Total current liabilities

4,353

4,798

Long-term debt

3,566

3,477

Postretirement benefits liabilities

3,405

3,210

Deferred taxes, net

42

59

Other noncurrent liabilities

996

719

Total liabilities

12,362

12,263

Redeemable equity securities

5

5

Stockholders’ equity (deficit)

Series D convertible junior preference stock

3

3

Common stock (86.0 and 75.4 shares issued, respectively; and $.10 par value per share and 220.0 shares authorized at both dates)

9

7

Additional paid in capital

2,440

2,253

Accumulated deficit

(3,165)

(155)

Accumulated other comprehensive loss

(2,325)

(1,944)

Common stock held in treasury, at cost (6.8 and 4.9 shares, respectively)

(272)

(191)

Total stockholders’ deficit attributable to Navistar International Corporation

(3,310)

(27)

Stockholders’ equity attributable to non-controlling interests

45

50

Total stockholders’ equity (deficit)

(3,265)

23

Total liabilities and stockholders’ equity (deficit)

$

9,102

$

12,291

Navistar International Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Year Ended October 31

(in millions)

2012

2011

Net income (loss)

$

(2,962)

$

1,778

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Depreciation and amortization

277

290

Depreciation of equipment leased to others

46

38

Deferred taxes, including change in valuation allowance

1,778

(1,513)

Impairment of property and equipment and intangible assets

44

75

Amortization of debt issuance costs and discount

46

44

Stock-based compensation

19

36

Provision for doubtful accounts, net of recoveries

14

(6)

Equity in loss of non-consolidated affiliates, net of dividends

36

75

Other non-cash operating activities

20

(15)

Changes in other assets and liabilities, exclusive of the effects of businesses acquired and disposed:

Trade and other receivables

454

(212)

Finance receivables

741

8

Inventories

76

(129)

Accounts payable

(399)

247

Other assets and liabilities

420

164

Net cash provided by operating activities

610

880

Cash flows from investing activities

Purchases of marketable securities

(1,209)

(1,562)

Sales or maturities of marketable securities

1,461

1,430

Net change in restricted cash and cash equivalents

165

(147)

Capital expenditures

(309)

(429)

Purchase of equipment leased to others

(61)

(71)

Proceeds from sales of property and equipment

18

32

Investments in non-consolidated affiliates

(42)

(65)

Proceeds from sales of affiliates

1

3

Business acquisitions, net of cash received

(12)

12

Acquisition of intangibles

(14)

(26)

Net cash used in investing activities

(2)

(823)

Cash flows from financing activities

Proceeds from issuance of securitized debt

1,313

599

Principal payments on securitized debt

(1,976)

(708)

Proceeds from issuance of non-securitized debt

1,517

214

Principal payments on non-securitized debt

(616)

(107)

Net increase (decrease) in notes and debt outstanding under revolving credit facilities

(269)

137

Principal payments under financing arrangements and capital lease obligations

(35)

(86)

Debt issuance costs

(57)

(11)

Issuance of common stock

192

—

Purchase of treasury stock

(75)

(125)

Proceeds from exercise of stock options

2

40

Dividends paid by subsidiaries to non-controlling interest

(56)

(53)

Other financing activities

(3)

—

Net cash used in financing activities

(63)

(100)

Effect of exchange rate changes on cash and cash equivalents

3

(3)

Increase (decrease) in cash and cash equivalents

548

(46)

Cash and cash equivalents at beginning of the year

539

585

Cash and cash equivalents at end of the year

$

1,087

$

539

Navistar International Corporation and Subsidiaries

Segment Reporting

(Unaudited)

We define segment profit (loss) as net income (loss) attributable to Navistar International Corporation excluding income tax benefit (expense). Our results from interim periods are not necessarily indicative of results for a full year. Selected financial information is as follows:

(in millions)

Truck

Engine

Parts

Financial

Services^(B)

Corporate

and

Eliminations

Total

Quarter Ended October 31, 2012

External sales and revenues, net

$

2,204

$

454

$

582

$

39

$

—

$

3,279

Intersegment sales and revenues

9

347

30

21

(407)

—

Total sales and revenues, net

$

2,213

$

801

$

612

$

60

$

(407)

$

3,279

Net income (loss) attributable to NIC^(A)

$

(160)

$

(287)

$

76

$

16

$

(2,414)

$

(2,769)

Income tax expense

—

—

—

—

(2,190)

(2,190)

Segment profit (loss)^(A)

$

(160)

$

(287)

$

76

$

16

$

(224)

$

(579)

Depreciation and amortization

$

29

$

31

$

2

$

8

$

7

$

77

Interest expense

—

—

—

21

56

77

Equity in income (loss) of non-consolidated affiliates

(1)

(9)

2

—

—

(8)

Capital expenditures^©

22

32

3

1

1

59

Quarter Ended October 31, 2011

External sales and revenues, net

$

3,180

$

575

$

522

$

46

$

—

$

4,323

Intersegment sales and revenues

30

510

60

16

(616)

—

Total sales and revenues, net

$

3,210

$

1,085

$

582

$

62

$

(616)

$

4,323

Net income (loss) attributable to NIC^(A)

$

287

$

58

$

87

$

27

$

(204)

$

255

Income tax benefit (expense)

—

—

—

—

—

—

Segment profit (loss)^(A)

$

287

$

58

$

87

$

27

$

(204)

$

255

Depreciation and amortization

$

39

$

29

$

2

$

7

$

6

$

83

Interest expense

—

—

—

25

35

60

Equity in income (loss) of non-consolidated affiliates

(16)

(1)

1

—

—

(16)

Capital expenditures^©

30

41

8

1

58

138

Year Ended October 31, 2012

External sales and revenues, net

$

9,034

$

1,755

$

1,991

$

168

$

—

$

12,948

Intersegment sales and revenues

35

1,639

128

91

(1,893)

—

Total sales and revenues, net

$

9,069

$

3,394

$

2,119

$

259

$

(1,893)

$

12,948

Net income (loss) attributable to NIC^(A)

$

(320)

$

(562)

$

240

$

91

$

(2,459)

$

(3,010)

Income tax expense

—

—

—

—

(1,780)

(1,780)

Segment profit (loss)^(A)

$

(320)

$

(562)

$

240

$

91

$

(679)

$

(1,230)

Depreciation and amortization

$

140

$

118

$

10

$

33

$

22

$

323

Interest expense

—

—

—

88

171

259

Equity in income (loss) of non-consolidated affiliates

(28)

(7)

6

—

—

(29)

Capital expenditures^©

75

148

21

3

62

309

(in millions)

Truck

Engine

Parts

Financial

Services^(B)

Corporate

and

Eliminations

Total

Year Ended 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 (loss) attributable to NIC^(A)

$

336

$

84

$

287

$

129

$

887

$

1,723

Income tax benefit

—

—

—

—

1,458

1,458

Segment profit (loss)^(A)

$

336

$

84

$

287

$

129

$

(571)

$

265

Depreciation and amortization

$

151

$

120

$

9

$

28

$

20

$

328

Interest expense

—

—

—

109

138

247

Equity in income (loss) of non-consolidated affiliates

(73)

(4)

6

—

—

(71)

Capital expenditures^©

83

172

19

2

153

429

As of October 31, 2012

Segment assets

$

2,118

$

1,777

$

707

$

2,563

$

1,937

$

9,102

As of October 31, 2011

Segment assets

$

2,771

$

1,849

$

700

$

3,580

$

3,391

$

12,291