News


Navistar Reports 2019 Fourth Quarter And Full Year Results
- Achieves 1.3 share point growth in Core market share; regains leading position in bus market
- Reports fourth quarter 2019 net income of $102 million, adjusted EBITDA of $219 million
- Reports full-year net income of $221 million, adjusted EBITDA of $882 million
- Delivers seventh consecutive year of adjusted EBITDA improvement
- Generates $263 million of manufacturing free cash flow for the year

LISLE, Ill., Dec. 17, 2019 /PRNewswire/ -- Navistar International Corporation (NYSE: NAV) today announced fourth quarter 2019 net income of $102 million, or $1.02 per diluted share, compared to fourth quarter 2018 net income of $188 million, or $1.89 per diluted share. Navistar reported net income of $221 million, or $2.22 per diluted share for fiscal year 2019, versus net income of $340 million, or $3.41 per diluted share, for fiscal year 2018.

Navistar Logo. (PRNewsFoto/Navistar International Corp.)

Adjusted net income for the fourth quarter was $114 million versus $189 million in the same period one year ago. Adjusted net income for fiscal year 2019 increased 29 percent to $423 million versus $327 million in 2018.

Fourth quarter 2019 adjusted EBITDA was $219 million versus $322 million one year ago. Fiscal year 2019 adjusted EBITDA increased seven percent to $882 million, versus $826 million in 2018. This marks the company's seventh consecutive year of annual growth in adjusted EBITDA.

Revenues in the quarter were $2.8 billion, down 16 percent compared to fourth quarter 2018. The revenue decrease was largely driven by very strong fourth quarter 2018 vehicle chargeouts following supplier production constraints in the third quarter of that year, the impact of the sale of Navistar Defense in December 2018, and lower industry demand in the quarter. Revenue for fiscal year 2019 was up 10 percent to $11.25 billion, led by a 26 percent increase in worldwide chargeouts to 106,500 units for the year. During the year, Navistar's Core market share grew by 1.3 points, to 18.8 percent. The company increased its school bus market share to 35.8 percent, where it is once again the industry leader, increased its Class 6-7 medium duty market share to 27 percent, as well as increased its Class 8 market share to 14.1 percent. This marks the company's third consecutive year of Core market share growth.

Navistar finished fourth quarter 2019 with $1.4 billion in consolidated cash, cash equivalents and marketable securities, and with $1.3 billion in manufacturing cash, cash equivalents and marketable securities.  For the year, the company generated $263 million of manufacturing free cash flow.

"During 2019, we grew adjusted EBITDA and adjusted net income while growing our Core market share to 19 percent, for a total of three points of share gain in the last three years," said Troy A. Clarke, Navistar chairman, president and CEO. "Our Navistar 4.0 strategy builds on this performance and incorporates major investments in the business that will deliver strong benefits for both customers and shareholders."

Navistar 4.0, the company's five-year improvement strategy which was presented at the company's Investor Day in September, lays out a plan to increase the company's EBITDA margins to 12 percent by the end of 2024. The plan commits to advanced operational approaches, including a unified enterprise platform strategy, advanced modular architecture and the most capable manufacturing network in the industry. The company also announced it plans a capital investment of more than $250 million in a new industry benchmark manufacturing facility in San Antonio, Texas, which will have best-in-class lean processes and will be Industry 4.0 ready. This is in addition to the company's June announcement of investing $125 million in its Huntsville, Alabama manufacturing facilities to produce next-generation, big-bore powertrains being developed with Navistar's global alliance partner TRATON GROUP.

In October, Navistar launched NEXT eMobility Solutions, a business unit that is dedicating a world-class, lean engineering team to develop the best products in the electric vehicle space, using a unique consultative philosophy that embraces the full range of customers' needs. Navistar also unveiled a prototype electric version of the International® MV Series medium-duty vehicle. Additionally, the company launched International® 360, a groundbreaking service communications and fleet management platform that delivers seamless, transparent communications with the International® service network.

2020 INDUSTRY AND FINANCIAL GUIDANCE

The company reiterated its 2020 industry guidance and updated the following full-year financial guidance:

  • Industry retail deliveries of Class 6-8 trucks and buses in the United States and Canada are forecasted to be in the range of 335,000 to 365,000 units, with Class 8 retail deliveries between 210,000 and 240,000 units. 
  • Revenues are expected to be in the range of $9.25 billion to $9.75 billion.
  • Adjusted EBITDA is expected to be in the range of $700 million to $750 million.

"With a proven track record of managing costs and improving operating results, Navistar is in a much better position than in the past to do well even during cyclical downturns," Clarke said. "We are taking actions to adjust our business to current market conditions, including reducing production rates and SG&A expenses while restructuring our global and export operations. Building on the strong gains achieved over the last several years, Navistar has a clear roadmap in place for sustained growth that will set it apart from the industry."

SEGMENT REVIEW       


Summary of Financial Results:



(Unaudited)




Quarters Ended
October 31,


Years Ended
October 31,

(in millions, except per share data)

2019


2018


2019


2018

Sales and revenues, net

$

2,780



$

3,317



$

11,251



$

10,250


Segment Results:








Truck

$

86



$

197



$

269



$

397


Parts

161



156



598



569


Global Operations

(10)



4





2


Financial Services

30



26



123



88


Income from continuing operations, net of tax(A)

$

102



$

188



$

221



$

340


Net income(A)

102



188



221



340


Diluted earnings per share(A)

1.02



1.89



2.22



3.41









(A)  

Amounts attributable to Navistar International Corporation.

Truck Segment – For the fourth quarter 2019, the Truck segment recorded a profit of $86 million, compared with a year-ago fourth quarter profit of $197 million. The year-over-year decline was primarily due to an 18 percent decline in the company's Core chargeouts, as well as the impact of the sale of a majority interest in the Navistar Defense business.

For the 2019 fiscal year, the Truck segment recorded a profit of $269 million, compared with a fiscal year 2018 profit of $397 million. The decrease was primarily driven by charges related to a legacy engine class action settlement and the impact of the sale of a majority interest in Navistar Defense. These items were partially offset by higher volumes in the company's Core markets.

Parts Segment — For the fourth quarter 2019, the Parts segment recorded a profit of $161 million, compared with a year-ago fourth quarter profit of $156 million. For the 2019 fiscal year, the Parts segment recorded a profit of $598 million, compared to a fiscal year 2018 profit of $569 million. The results were primarily driven by improved North American operating results, reflecting the company's growing private label business, partially offset by lower Blue Diamond Parts volumes.

Global Operations Segment — For the fourth quarter 2019, the Global Operations segment recorded a loss of $10 million, compared to a year-ago fourth quarter profit of $4 million. The year-over-year change was driven largely by a $14 million restructuring charge related to cost reduction actions, including ceasing production at the company's MWM Argentina engine plant and restructuring activities in Brazil.

For the 2019 fiscal year, the Global Operations segment operated at breakeven compared to a year-ago fiscal year profit of $2 million. The Global Operations segment results decrease was primarily driven by the impact of product mix and an increase in restructuring charges related to cost reduction actions, partially offset by lower SG&A expenses and the impact of the sale of the company's former joint venture in China with JAC.

Financial Services Segment— For the fourth quarter 2019, the Financial Services segment recorded a profit of $30 million, up slightly compared with fourth quarter 2018. The results were primarily driven by lower interest expense due to the payoff of the company's $400 million Term Loan in May.

For the 2019 fiscal year, the Financial Services segment recorded a profit of $123 million, compared to a year-ago fiscal year profit of $88 million. The increase is primarily driven by higher revenue, an improved funding strategy to manage borrowing costs, and higher income from an intercompany loan.

About Navistar
Navistar International Corporation (NYSE: NAV) is a holding company whose subsidiaries and affiliates produce International® brand commercial trucks, proprietary diesel engines, and IC Bus® brand school and commercial buses. An affiliate also provides truck and diesel engine service parts. Another affiliate offers financing services. Additional information is available at www.Navistar.com.

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 ("Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"), 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 the risk factors set forth in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the fiscal year ended October 31, 2019. Although we believe that these forward-looking statements are based on reasonable assumptions, there are many factors that could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. All future written and oral forward-looking statements by us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. Except for our ongoing obligations to disclose material information as required by the federal securities laws, we do not have any obligations or intention to release publicly any revisions to any forward-looking statements to reflect events or circumstances in the future or to reflect the occurrence of unanticipated events.  

Navistar International Corporation and Subsidiaries

Consolidated Statements of Operations



(Unaudited)






For the Quarters
Ended October 31,


For the Years
Ended October 31,

(in millions, except per share data)

2019


2018


2019


2018

Sales and revenues








Sales of manufactured products, net

$

2,731



$

3,275



$

11,061



$

10,090


Finance revenues

49



42



190



160


Sales and revenues, net

2,780



3,317



11,251



10,250


Costs and expenses








Costs of products sold

2,272



2,702



9,245



8,317


Restructuring charges

11





12



(1)


Asset impairment charges

1



3



7



14


Selling, general and administrative expenses

208



215



934



828


Engineering and product development costs

77



75



319



297


Interest expense

69



87



312



327


Other income, net

24



12



164



48


Total costs and expenses

2,662



3,094



10,993



9,830


Equity in income of non-consolidated affiliates





4




Income before income taxes

118



223



262



420


Income tax expense

(10)



(27)



(19)



(52)


Net income

108



196



243



368


Less: Net income attributable to non-controlling interests

6



8



22



28


Net income attributable to Navistar International Corporation

$

102



$

188



$

221



$

340










Earnings per share attributable to Navistar International Corporation:








Basic:

$

1.03



$

1.90



$

2.23



$

3.44


Diluted:

$

1.02



$

1.89



$

2.22



$

3.41


Weighted average shares outstanding:








Basic

99.4



99.1



99.3



98.9


Diluted

99.6



99.7



99.5



99.6


 

Navistar International Corporation and Subsidiaries

Consolidated Balance Sheets



As of October 31,

(in millions, except per share data)

2019


2018

ASSETS




Current assets




Cash and cash equivalents

$

1,370



$

1,320


Restricted cash and cash equivalents

133



62


Marketable securities



101


Trade and other receivables, net

338



456


Finance receivables, net

1,923



1,898


Inventories, net

911



1,110


Other current assets

277



189


Total current assets

4,952



5,136


Restricted cash

54



63


Trade and other receivables, net

10



49


Finance receivables, net

274



260


Investments in non-consolidated affiliates

31



50


Property and equipment, net

1,309



1,370


Goodwill

38



38


Intangible assets, net

25



30


Deferred taxes, net

117



121


Other noncurrent assets

107



113


Total assets

$

6,917



$

7,230


LIABILITIES and STOCKHOLDERS' DEFICIT




Liabilities




Current liabilities




Notes payable and current maturities of long-term debt

$

871



$

946


Accounts payable

1,341



1,606


Other current liabilities

1,363



1,255


Total current liabilities

3,575



3,807


Long-term debt

4,317



4,521


Postretirement benefits liabilities

2,103



2,097


Other noncurrent liabilities

645



731


Total liabilities

10,640



11,156


Stockholders' deficit




Series D convertible junior preference stock

2



2


Common stock, $0.10 par value per share (103.1 shares issued and 220 shares authorized at both dates)

10



10


Additional paid-in capital

2,730



2,731


Accumulated deficit

(4,409)



(4,593)


Accumulated other comprehensive loss

(1,912)



(1,920)


Common stock held in treasury, at cost (3.9 and 4.2 shares, respectively)

(147)



(161)


Total stockholders' deficit attributable to Navistar International Corporation

(3,726)



(3,931)


Stockholders' equity attributable to non-controlling interests

3



5


Total stockholders' deficit

(3,723)



(3,926)


Total liabilities and stockholders' deficit

$

6,917



$

7,230


 

Navistar International Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows



For the Years Ended
October 31,

(in millions)

2019


2018

Cash flows from operating activities




Net income

$

243



$

368


Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

132



140


Depreciation of equipment leased to others

61



71


Deferred taxes, including change in valuation allowance

(31)



4


Asset impairment charges

7



14


Gain on sales of investments and businesses, net

(56)




Amortization of debt issuance costs and discount

19



31


Stock-based compensation

23



32


Provision for doubtful accounts, net of recoveries

4



10


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

(2)



5


Write-off of debt issuance cost and discount

6



43


Other non-cash operating activities

(9)



(23)


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




Trade and other receivables

141



(109)


Finance receivables

(42)



(405)


Inventories

103



(257)


Accounts payable

(250)



317


Other assets and liabilities

101



26


Net cash provided by operating activities

450



267


Cash flows from investing activities




Purchases of marketable securities



(251)


Sales of marketable securities



460


Maturities of marketable securities

102



60


Capital expenditures

(134)



(113)


Purchases of equipment leased to others

(152)



(232)


Proceeds from sales of property and equipment

14



11


Proceeds from (payments for) sales of affiliates

100



(3)


Other investing activities

2



2


Net cash used in investing activities

(68)



(66)


Cash flows from financing activities




Proceeds from issuance of securitized debt

363



339


Principal payments on securitized debt

(316)



(364)


Net change in secured revolving credit facilities

12



135


Proceeds from issuance of non-securitized debt

209



3,248


Principal payments on non-securitized debt

(1,044)



(2,920)


Net change in notes and debt outstanding under revolving credit facilities

527



(10)


Debt issuance costs

(9)



(41)


Proceeds from financed lease obligations

22



63


Proceeds from exercise of stock options

4



8


Dividends paid by subsidiaries to non-controlling interest

(24)



(27)


Other financing activities

(2)



(17)


Net cash provided by (used in) financing activities

(258)



414


Effect of exchange rate changes on cash, cash equivalents and restricted cash

(12)



(10)


Increase in cash, cash equivalents and restricted cash

112



605


Cash, cash equivalents and restricted cash at beginning of the year

1,445



840


Cash, cash equivalents and restricted cash at end of the year

$

1,557



$

1,445


 

Navistar International Corporation and Subsidiaries

Segment Reporting

(Unaudited)


We define segment profit (loss) as net income (loss) attributable to Navistar International Corporation, excluding income tax expense. The following tables present selected financial information for our reporting segments:


(in millions)

Truck


Parts


Global
Operations


Financial
Services(A)


Corporate
and
Eliminations


Total

Three Months Ended October 31, 2019












External sales and revenues, net

$

2,096



$

546



$

86



$

52



$



$

2,780


Intersegment sales and revenues

9



1



7



19



(36)




Total sales and revenues, net

$

2,105



$

547



$

93



$

71



$

(36)



$

2,780


Income (loss) from continuing operations attributable to NIC, net of tax

$

86



$

161



$

(10)



$

30



$

(165)



$

102


Income tax expense









(10)



(10)


Segment profit (loss)

$

86



$

161



$

(10)



$

30



$

(155)



$

112


Depreciation and amortization

$

26



$

1



$

4



$

16



$

2



$

49


Interest expense







22



47



69


Equity in income (loss) of non-consolidated affiliates

(1)



1










Capital expenditures(B)

32



4







8



44



(in millions)

Truck


Parts


Global
Operations


Financial
Services(A)


Corporate
and
Eliminations


Total

Three Months Ended October 31, 2018












External sales and revenues, net

$

2,576



$

631



$

76



$

42



$

(8)



$

3,317


Intersegment sales and revenues

43



2



17



28



(90)




Total sales and revenues, net

$

2,619



$

633



$

93



$

70



$

(98)



$

3,317


Income (loss) from continuing operations attributable to NIC, net of tax

$

197



$

156



$

4



$

26



$

(195)



$

188


Income tax expense









(27)



(27)


Segment profit (loss)

$

197



$

156



$

4



$

26



$

(168)



$

215


Depreciation and amortization

$

30



$

1



$

2



$

14



$

4



$

51


Interest expense







28



59



87


Equity in income (loss) of non-consolidated affiliates



1



(1)








       Capital expenditures(B)

25



1



1





7



34




















(in millions)

Truck


Parts


Global
Operations


Financial
Services(A)


Corporate
and
Eliminations


Total

Year Ended October 31, 2019












External sales and revenues, net

$

8,501



$

2,239



$

309



$

193



$

9



$

11,251


Intersegment sales and revenues

84



6



34



104



(228)




Total sales and revenues, net

$

8,585



$

2,245



$

343



$

297



$

(219)



$

11,251


Income (loss) from continuing operations attributable to NIC, net of tax

$

269



$

598



$



$

123



$

(769)



$

221


Income tax expense









(19)



(19)


Segment profit (loss)

$

269



$

598



$



$

123



$

(750)



$

240


Depreciation and amortization

$

104



$

5



$

11



$

64



$

9



$

193


Interest expense







105



207



312


Equity in income (loss) of non-consolidated affiliates

2



3



(1)







4


       Capital expenditures(B)

101



7



2



2



22



134




















(in millions)

Truck


Parts


Global
Operations


Financial
Services(A)


Corporate
and
Eliminations


Total

Year Ended October 31, 2018












External sales and revenues, net

$

7,386



$

2,399



$

305



$

160



$



$

10,250


Intersegment sales and revenues

104



8



55



97



(264)




Total sales and revenues, net

$

7,490



$

2,407



$

360



$

257



$

(264)



$

10,250


Income (loss) from continuing operations attributable to NIC, net of tax

$

397



$

569



$

2



$

88



$

(716)



$

340


Income tax expense









(52)



(52)


Segment profit (loss)

$

397



$

569



$

2



$

88



$

(664)



$

392


Depreciation and amortization

$

130



$

6



$

10



$

55



$

10



$

211


Interest expense







92



235



327


Equity in income (loss) of non-consolidated affiliates

2



3



(5)








       Capital expenditures(B)

99



2



3



1



8



113




















(in millions)

Truck


Parts


Global
Operations


Financial
Services


Corporate
and

Eliminations


Total

Segment assets, as of:












October 31, 2019

$

1,705



$

688



$

296



$

2,774



$

1,454



$

6,917


October 31, 2018

2,085



636



331



2,648



1,530



7,230













(A)

Total sales and revenues in the Financial Services segment include interest revenues of $208 million and $182 million for the years ended October 31, 2019 and 2018, respectively.



(B)

Exclusive of purchases of equipment leased to others and liabilities related to capital expenditures.

SEC Regulation G Non-GAAP Reconciliation:
The financial measures presented below 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 and are reconciled to the most appropriate GAAP number below.

Earnings (loss) Before Interest, Income Taxes, Depreciation, and Amortization ("EBITDA"):
We define EBITDA as our consolidated net income (loss) attributable to Navistar International Corporation, plus manufacturing interest expense, income taxes, and depreciation and amortization. We believe EBITDA provides meaningful information to the performance of our business and therefore we use it to supplement our GAAP reporting. 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.

Adjusted EBITDA and Adjusted Net Income (loss) attributable to NIC:
We believe that adjusted EBITDA and adjusted Net Income (loss) attributable to NIC, which excludes certain identified items that we do not consider to be part of our ongoing business, improves the comparability of year to year results, and is representative of our underlying performance. Management uses this information to assess and measure the performance of our operating segments. We have chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of operating results, to illustrate the results of operations giving effect to the non-GAAP adjustments shown in the below reconciliations, and to provide an additional measure of performance.

Manufacturing Cash, Cash Equivalents, and Marketable Securities:
Manufacturing cash, cash equivalents, and marketable securities represent the Company's consolidated cash, cash equivalents, and marketable securities excluding cash, cash equivalents, and marketable securities of our financial services operations. We include marketable securities with our cash and cash equivalents when assessing our liquidity position as our investments are highly liquid in nature. We have chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of our ability to meet our operating requirements, capital expenditures, equity investments, and financial obligations.

Structural costs consist of Selling, general and administrative expenses and Engineering and product development costs.

Manufacturing free cash flow consists of Net cash from operating activities and Capital Expenditures, all from our Manufacturing operations.

EBITDA reconciliation:



(Unaudited)






For the Quarters
Ended October 31,


For the Years Ended
October 31,

(in millions)

2019


2018


2019


2018

Income from continuing operations attributable to NIC, net of tax

$

102



$

188



$

221



$

340


Plus:








Depreciation and amortization expense

49



51



193



211


Manufacturing interest expense(A)

47



59



207



235


Adjusted for:








Income tax expense

(10)



(27)



(19)



(52)


EBITDA

$

208



$

325



$

640



$

838















(A)

Manufacturing interest expense is the net interest expense primarily generated for borrowings that support the manufacturing and corporate operations, adjusted to eliminate intercompany interest expense with our Financial Services segment. The following table reconciles Manufacturing interest expense to the consolidated interest expense.

 


(Unaudited)






For the Quarters
Ended October 31,


For the Years
Ended October 31,

(in millions)

2019


2018


2019


2018

Interest expense

$

69



$

87



$

312



$

327


Less:  Financial services interest expense

22



28



105



92


Manufacturing interest expense

$

47



$

59



$

207



$

235



Adjusted EBITDA Reconciliation:



(Unaudited)






For the Quarters
Ended October 31,


For the Years
Ended October 31,

(in millions)

2019


2018


2019


2018

EBITDA (reconciled above)

$

208



$

325



$

640



$

838


Adjusted for significant items of:








Adjustments to pre-existing warranties(A)

(4)



(5)



3



(9)


Asset impairment charges(B)

1



3



7



14


Restructuring of manufacturing operations(C)

13





14



(1)


MaxxForce Advanced EGR engine lawsuits(D)

1





129



1


Gain on sale(E)





(56)




Debt refinancing charges(F)





6



46


Pension settlement(G)





142



9


Settlement gain(H)



(1)



(3)



(72)


Total adjustments

11



(3)



242



(12)


Adjusted EBITDA

$

219



$

322



$

882



$

826



Adjusted Net Income attributable to NIC:



(Unaudited)






For the Quarters
Ended October 31,


For the Years
Ended October 31,

(in millions)

2019


2018


2019


2018

Net income from continuing operations attributable to NIC

$

102



$

188



$

221



$

340


Adjusted for significant items of:








Adjustments to pre-existing warranties(A)

(4)



(5)



3



(9)


Asset impairment charges(B)

1



3



7



14


Restructuring of manufacturing operations(C)

13





14



(1)


MaxxForce Advanced EGR engine lawsuits(D)

1





129



1


Gain on sale(E)





(56)




Debt refinancing charges(F)





6



46


Pension settlement(G)





142



9


Settlement gain(H)



(1)



(3)



(72)


Total adjustments

11



(3)



242



(12)


Tax effect (I)

1



4



(40)



(1)


Adjusted net income attributable to NIC

$

114



$

189



$

423



$

327




















(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 historical 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)

During 2019, we recorded $7 million of asset impairment charges relating to certain assets under operating leases in our Truck segment. During 2018, we recorded $14 million of impairment charges related to the exit of our railcar business in Cherokee, Alabama, certain long-lived assets and certain assets under operating leases in our Truck and Financial Services segments.



(C)

During 2019, we recorded charges of $14 million primarily related to cost reduction actions recorded in Costs of product sold and Restructuring charges in our Global Operations segment. During 2018, we recognized a benefit of $1 million related to adjustments for restructuring charges in our Truck, Global Operations and Corporate segments.



(D)

During 2019, we recognized a net charge of $129 million related to the MaxxForce Advanced EGR engine class action settlement and related litigation in our Truck segment. During 2018, we recognized a charge of $1 million for a jury verdict related to the MaxxForce Advanced EGR engine lawsuits in our Truck segment.



(E)

During 2019, we recognized a gain of $51 million related to the sale of a majority interest in the Navistar Defense business in our Truck segment, and a gain of $5 million related to the sale of our joint venture in China with JAC in our Global Operations segment.





(F)

During 2019, we recorded a charge of $6 million for the write-off of debt issuance costs and discounts associated with the NFC Term Loan. During 2018, we recorded a charge of $46 million for the write off of debt issuance costs and discounts associated with the repurchase of our 8.25% Senior Notes and the refinancing of our previously existing Term Loan.



(G)

During 2019 and 2018, we purchased group annuity contracts for certain retired pension plan participants resulting in plan remeasurements. As a result, we recorded pension settlement charges of $142 million and $9 million respectively, in Other expense, net in Corporate.



(H)

During 2019, we recorded interest income of $3 million in Other expense, net derived from the prior year settlement of a business economic loss claim. During 2018, we settled a business economic loss claim relating to our Alabama engine manufacturing facility from the Deepwater Horizon Settlement Program. As a result, we recorded the net present value of the settlement of $70 million and related interest income of $2 million in Other expense, net.



(I)

Tax effect is calculated by excluding the tax impact of the non-GAAP adjustments from the tax provision calculations. 

 

Manufacturing segment cash, cash equivalents, and marketable securities reconciliation:



As of October 31, 2019

(in millions)

Manufacturing
Operations


Financial
Services
Operations


Consolidated
Balance Sheet

Assets






Cash and cash equivalents

$

1,328



$

42



$

1,370


Marketable securities






Total cash, cash equivalents, and marketable securities

$

1,328



$

42



$

1,370


 

Manufacturing free cash flow reconciliation:


(in millions)


October 31, 2019

Consolidated net cash from operating activities


$

450


Less: Net cash from Financial Services Operations


55


Net cash from Manufacturing Operations(A)


395


Less: Manufacturing capital expenditures


132


Manufacturing free cash flow


$

263















(A) 

Net of adjustments required to eliminate certain intercompany transactions between Manufacturing operations and Financial Services operations.

 

SOURCE Navistar International Corporation

For further information: Media contact, Lyndi McMillan, Lyndi.McMillan@navistar.com, 331-332-3181; Investor contact: Marty Ketelaar, Marty.Ketelaar@navistar.com, 331-332-2706; Web site: www.Navistar.com/newsroom