Navistar Reports Third Quarter 2018 Results
LISLE, Ill., Sept. 6, 2018 /PRNewswire/ -- Navistar International Corporation (NYSE: NAV) today announced third quarter 2018 net income of $170 million, or $1.71 per diluted share, compared to third quarter 2017 net income of $37 million, or $0.38 per diluted share.
Third quarter 2018 EBITDA was $284 million, versus EBITDA of $160 million in the same period one year earlier. The third quarter of 2018 included $66 million in adjustments, including a $71 million gain from a one-time settlement, $4 million of pre-existing warranty accrual reversals, and $9 million in charges for asset impairments and restructuring costs. Excluding those items, adjusted EBITDA was $218 million in the third quarter of 2018, compared to $194 million in the same period one year ago. While adjusted EBITDA for the third quarter was affected by supplier constraints that delayed deliveries and impacted volumes, the company aggressively managed these headwinds. These vehicles are making their way through the delivery process and will be reflected in fourth quarter sales.
Revenues in the quarter were $2.6 billion, up 18 percent from the same period one year ago, primarily due to a 26 percent increase in Core market (Class 6-8 trucks and buses in the United States and Canada) volumes.
"We had a strong quarter that took full advantage of healthy industry volumes and the market's enthusiasm for our new products," said Troy A. Clarke, Navistar chairman, president and chief executive officer.
Navistar ended third quarter 2018 with $1.12 billion in consolidated cash, cash equivalents and marketable securities. Manufacturing cash, cash equivalents and marketable securities were $1.08 billion at the end of the quarter.
The company had a number of product highlights during its third quarter. Year-over-year growth in Class 8 heavy retail market share, up 2.7 points, was attributable to strong sales of the LT Series on-highway truck and the 12.4-liter A26 engine. International A26 engine market share penetration more than doubled from the year ago quarter, and the engine is now also available in the company's severe service vehicles, the HV Series and HX Series. Additionally, the new MV Series contributed to 66 percent growth in medium-duty orders.
In the school bus segment, the company was the first in the industry to make electronic stability control and collision mitigation technology standard on its IC Bus(® )CE Series and RE Series school buses. With these new standard systems in place, IC Bus has the most robust collision mitigation offering in the industry.
Additionally, the company announced that all new on-highway International(®) trucks will be equipped with an OnCommand(®) Connection telematics device with two free years of service included. The OnCommand Connection device integrates a cellular-enabled hardware platform with a range of technology solutions, including telematics and the OnCommand Connection Advanced Remote Diagnostics platform.
2018 INDUSTRY AND FINANCIAL GUIDANCE
Based on stronger industry conditions, the company raised its 2018 full-year guidance:
-- Industry retail deliveries of Class 6-8 trucks and buses in the United
States and Canada are forecast to be 390,000 to 410,000 units, with
Class 8 retail deliveries of 260,000 to 280,000 units.
-- Navistar revenues are expected to be between $10.1 billion and $10.4
billion.
-- The company's adjusted EBITDA is expected to be between $775 million and
$825 million.
-- Year-end manufacturing cash is expected to be above $1.25 billion.
Additionally, the company forecasts the industry's 2019 retail deliveries of Class 6-8 trucks and buses in the United States and Canada to be in the range of 385,000 to 415,000 units, with Class 8 retail deliveries between 255,000 and 285,000 units.
"Our team has delivered substantial accomplishments this year, including growing Class 8 share, building our backlog and effectively managing costs," Clarke said. "Our progress positions us well for a very strong fourth quarter and another good year in 2019."
SEGMENT REVIEW
Summary of Financial Results:
(Unaudited)
Three Months Ended Nine Months Ended
July 31, July 31,
(in millions, except
per share data) 2018 2017 2018 2017
---- ---- ---- ----
Sales and revenues,
net $2,606 $2,213 $6,933 $5,972
Segment Results:
Truck $165 $7 $200 $(118)
Parts 144 157 413 459
Global Operations 4 3 (2) (8)
Financial Services 23 23 62 51
Income (loss) from
continuing
operations, net of
tax(A) $170 $36 $152 $(106)
Net income (loss)(A) 170 37 152 (105)
Diluted income (loss)
per share from
continuing
operations(A) $1.71 $0.37 $1.53 $(1.16)
Diluted income (loss)
per share(A) 1.71 0.38 1.53 (1.15)
_______________
(A) Amounts attributable to Navistar
International Corporation.
Truck Segment -- Truck segment net sales increased 25 percent to $1.9 billion compared to third quarter 2017, due to higher volumes in Core markets, an increase in military sales and a favorable shift in model mix.
For the third quarter 2018, the Truck segment recorded a profit of $165 million compared to $7 million for the same period one year ago. The improvement was primarily driven by the impact of higher volumes in Core markets and lower charges related to legacy engine litigation recorded in the third quarter of 2017. The segment also benefited from a settlement of a business economic claim. The segment was negatively impacted by industry supplier constraints that resulted in higher company inventory, lower volumes, cost inefficiencies in the assembly process and additional freight costs.
Parts Segment -- Parts segment net sales increased $19 million, to $605 million, compared to third quarter 2017, due to continued double-digit growth of the Fleetrite(TM) brand, partially offset by lower Blue Diamond Parts (BDP) sales.
For the third quarter 2018, the Parts segment recorded a profit of $144 million, down eight percent compared to third quarter 2017, primarily due to lower proprietary parts sales, higher freight-related expenses and intercompany access fees.
Global Operations Segment -- Global Operations net sales increased six percent, to $89 million, compared to third quarter 2017, due primarily to higher engine volumes.
For the third quarter 2018, the Global Operations segment profit was $4 million, comparable to the same period one year ago.
Financial Services Segment -- Financial Services net revenues increased by $3 million to $65 million compared to third quarter 2017, primarily due to higher average portfolio balances in the U.S. and Mexico.
For the third quarter 2018, the Financial Services segment recorded a profit of $23 million, comparable to third quarter 2017. During the quarter, Navistar Financial Corporation issued a $400 million seven-year senior secured Term Loan B.
About Navistar
Navistar International Corporation (NYSE: NAV) is a holding company whose subsidiaries and affiliates produce International(®) brand commercial and military 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 the federal securities laws. 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, 2017, which was filed on December 19, 2017 and our Quarterly Report on Form 10-Q for the quarter ended January 31, 2018, which was filed on March 8, 2018. 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)
Three Months Ended Nine Months Ended
July 31, July 31,
(in millions, except per share data) 2018 2017 2018 2017
---- ---- ---- ----
Sales and revenues
Sales of manufactured products, net $2,566 $2,178 $6,815 $5,870
Finance revenues 40 35 118 102
--- --- --- ---
Sales and revenues, net 2,606 2,213 6,933 5,972
----- ----- ----- -----
Costs and expenses
Costs of products sold 2,096 1,803 5,615 4,949
Restructuring charges 1 (13) (1) (4)
Asset impairment charges 8 6 11 13
Selling, general and administrative
expenses 244 233 686 654
Engineering and product development
costs 72 61 222 189
Interest expense 82 91 240 262
Other income, net (77) (8) (37) (7)
--- --- --- ---
Total costs and expenses 2,426 2,173 6,736 6,056
Equity in income of non-
consolidated affiliates - 1 - 6
--- --- --- ---
Income (loss) from continuing
operations before income taxes 180 41 197 (78)
Income tax expense (3) - (25) (10)
--- --- --- ---
Income (loss) from continuing
operations 177 41 172 (88)
Income from discontinued operations,
net of tax - 1 - 1
--- --- --- ---
Net income (loss) 177 42 172 (87)
Less: Net income attributable to
non-controlling interests 7 5 20 18
--- --- --- ---
Net income (loss) attributable to
Navistar International Corporation $170 $37 $152 $(105)
==== === ==== =====
Amounts attributable to Navistar International Corporation common shareholders:
Income (loss) from continuing
operations, net of tax $170 $36 $152 $(106)
Income from discontinued operations,
net of tax - 1 - 1
Net income (loss) $170 $37 $152 $(105)
==== === ==== =====
Income (loss) per share:
Basic:
Continuing operations $1.72 $0.37 $1.54 $(1.16)
Discontinued operations - 0.01 - 0.01
$1.72 $0.38 $1.54 $(1.15)
===== ===== ===== ======
Diluted:
Continuing operations $1.71 $0.37 $1.53 $(1.16)
Discontinued operations - 0.01 - 0.01
$1.71 $0.38 $1.53 $(1.15)
===== ===== ===== ======
Weighted average shares outstanding:
Basic 99.0 98.3 98.8 91.1
Diluted 99.7 98.6 99.6 91.1
Navistar International Corporation and Subsidiaries
Consolidated Balance Sheets
July 31, October 31,
(in millions, except per share data) 2018 2017
---- ----
ASSETS (Unaudited)
Current assets
Cash and cash equivalents $1,022 $706
Restricted cash and cash equivalents 148 83
Marketable securities 95 370
Trade and other receivables, net 403 391
Finance receivables, net 1,638 1,565
Inventories, net 1,400 857
Other current assets 199 188
--- ---
Total current assets 4,905 4,160
Restricted cash 52 51
Trade and other receivables, net 49 13
Finance receivables, net 259 220
Investments in non-consolidated affiliates 53 56
Property and equipment (net of accumulated
depreciation and amortization of $2,468 and
$2,474, respectively) 1,297 1,326
Goodwill 38 38
Intangible assets (net of accumulated
amortization of $139 and $135, respectively) 30 40
Deferred taxes, net 130 129
Other noncurrent assets 111 102
--- ---
Total assets $6,924 $6,135
====== ======
LIABILITIES and STOCKHOLDERS' DEFICIT
Liabilities
Current liabilities
Notes payable and current maturities of long-
term debt $1,707 $1,169
Accounts payable 1,527 1,292
Other current liabilities 1,075 1,184
----- -----
Total current liabilities 4,309 3,645
Long-term debt 3,893 3,889
Postretirement benefits liabilities 2,378 2,497
Other noncurrent liabilities 678 678
--- ---
Total liabilities 11,258 10,709
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 2,731 2,733
Accumulated deficit (4,781) (4,933)
Accumulated other comprehensive loss (2,138) (2,211)
Common stock held in treasury, at cost (4.2 and
4.6 shares, respectively) (163) (179)
---- ----
Total stockholders' deficit attributable to
Navistar International Corporation (4,339) (4,578)
Stockholders' equity attributable to non-
controlling interests 5 4
--- ---
Total stockholders' deficit (4,334) (4,574)
------ ------
Total liabilities and stockholders' deficit $6,924 $6,135
====== ======
Navistar International Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended July 31,
(in millions) 2018 2017
---- ----
Cash flows from operating activities
Net income (loss) $172 $(87)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 107 113
Depreciation of equipment leased to
others 53 56
Deferred taxes, including change in
valuation allowance (3) (16)
Asset impairment charges 11 13
Gain on sales of investments and
businesses, net - (5)
Amortization of debt issuance costs and
discount 23 36
Stock-based compensation 27 19
Provision for doubtful accounts 6 9
Equity in income of non-consolidated
affiliates, net of dividends 4 1
Write-off of debt issuance costs and
discount 43 4
Other non-cash operating activities (17) (21)
Changes in other assets and liabilities,
exclusive of the effects of businesses
disposed (606) (290)
Net cash used in operating activities (180) (168)
---- ----
Cash flows from investing activities
Purchases of marketable securities (214) (619)
Sales of marketable securities 460 586
Maturities of marketable securities 29 17
Net change in restricted cash and cash
equivalents (66) (25)
Capital expenditures (79) (93)
Purchases of equipment leased to others (142) (96)
Proceeds from sales of property and
equipment 9 32
Investments in non-consolidated
affiliates - (2)
Proceeds from (payments for) sales of
affiliates (3) 6
--- ---
Net cash used in investing activities (6) (194)
--- ----
Cash flows from financing activities
Proceeds from issuance of securitized
debt 32 278
Principal payments on securitized debt (50) (326)
Net change in secured revolving credit
facilities 64 119
Proceeds from issuance of non-
securitized debt 3,210 491
Principal payments on non-securitized
debt (2,669) (368)
Net change in notes and debt outstanding
under revolving credit facilities (52) 23
Principal payments under financing
arrangements and capital lease
obligations - (1)
Debt issuance costs (36) (22)
Proceeds from financed lease obligations 48 49
Issuance of common stock - 256
Stock issuance costs - (11)
Proceeds from exercise of stock options 7 4
Dividends paid by subsidiaries to non-
controlling interest (19) (21)
Other financing activities (17) (3)
Net cash provided by financing
activities 518 468
--- ---
Effect of exchange rate changes on cash
and cash equivalents (16) 1
--- ---
Increase in cash and cash equivalents 316 107
Cash and cash equivalents at beginning
of the period 706 804
--- ---
Cash and cash equivalents at end of the
period $1,022 $911
====== ====
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 Financial Corporate Total
Operations Services(A) and
Eliminations
Three Months Ended July 31, 2018
External sales and revenues,
net $1,894 $603 $68 $40 $1 $2,606
Intersegment sales and
revenues 22 2 21 25 (70) -
Total sales and revenues, net $1,916 $605 $89 $65 $(69) $2,606
====== ==== === === ==== ======
Income (loss) from continuing
operations attributable to
NIC, net of tax $165 $144 $4 $23 $(166) $170
Income tax expense - - - - (3) (3)
Segment profit (loss) $165 $144 $4 $23 $(163) $173
==== ==== === === ===== ====
Depreciation and amortization $31 $2 $3 $14 $1 $51
Interest expense - - - 22 60 82
Equity in income (loss) of
non-consolidated affiliates 1 1 (2) - - -
Capital expenditures(B) 19 - 1 1 5 26
(in millions) Truck Parts Global Financial Corporate Total
Operations Services(A) and
Eliminations
Three Months Ended July 31, 2017
External sales and revenues,
net $1,521 $580 $74 $35 $3 $2,213
Intersegment sales and
revenues 10 6 10 27 (53) -
Total sales and revenues, net $1,531 $586 $84 $62 $(50) $2,213
====== ==== === === ==== ======
Income (loss) from continuing
operations attributable to
NIC, net of tax $7 $157 $3 $23 $(154) $36
Income tax expense - - - - - -
Segment profit (loss) $7 $157 $3 $23 $(154) $36
=== ==== === === ===== ===
Depreciation and amortization $35 $3 $3 $13 $3 $57
Interest expense - - - 24 67 91
Equity in income (loss) of
non-consolidated affiliates 1 1 (1) - - 1
Capital expenditures(B) 21 1 2 - 3 27
(in millions) Truck Parts Global Financial Corporate Total
Operations Services(A) and
Eliminations
---
Nine Months Ended July 31, 2018
External sales and revenues,
net $4,810 $1,768 $229 $118 $8 $6,933
Intersegment sales and
revenues 61 6 38 69 (174) -
Total sales and revenues, net $4,871 $1,774 $267 $187 $(166) $6,933
====== ====== ==== ==== ===== ======
Income (loss) from continuing
operations attributable to
NIC, net of tax $200 $413 $(2) $62 $(521) $152
Income tax expense - - - - (25) (25)
Segment profit (loss) $200 $413 $(2) $62 $(496) $177
==== ==== === === ===== ====
Depreciation and amortization $100 $5 $8 $41 $6 $160
Interest expense - - - 64 176 240
Equity in income (loss) of
non-consolidated affiliates 2 2 (4) - - -
Capital expenditures(B) 74 1 2 1 1 79
(in millions) Truck Parts Global Financial Corporate Total
Operations Services(A) and
Eliminations
---
Nine Months Ended July 31, 2017
External sales and revenues,
net $3,929 $1,747 $186 $102 $8 $5,972
Intersegment sales and
revenues 27 19 18 70 (134) -
Total sales and revenues, net $3,956 $1,766 $204 $172 $(126) $5,972
====== ====== ==== ==== ===== ======
Income (loss) from continuing
operations attributable to
NIC, net of tax $(118) $459 $(8) $51 $(490) $(106)
Income tax expense - - - - (10) (10)
Segment profit (loss) $(118) $459 $(8) $51 $(480) $(96)
===== ==== === === ===== ====
Depreciation and amortization $103 $9 $10 $38 $9 $169
Interest expense - - - 65 197 262
Equity in income of non-
consolidated affiliates 3 3 - - - 6
Capital expenditures(B) 78 2 5 1 7 93
(in millions) Truck Parts Global Financial Corporate Total
Operations Services and
Eliminations
---
Segment assets, as of:
July 31, 2018 $2,264 $645 $335 $2,407 $1,273 $6,924
October 31, 2017 1,621 632 378 2,207 1,297 6,135
_________________________
(A) Total sales and revenues in the Financial Services
segment include interest revenues of $46 million and
$131 million for the three and nine months ended July
31, 2018, respectively, and $45 million and $121 million
for the three and nine months ended July 31, 2017,
respectively.
(B) Exclusive of purchases of equipment leased to others.
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, net of tax, plus manufacturing interest expense, income taxes, and depreciation and amortization. We believe EBITDA provides meaningful information regarding 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:
We believe that adjusted EBITDA, 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.
EBITDA reconciliation:
Three Months Ended Nine Months Ended
July 31, July 31,
(in millions) 2018 2017 2018 2017
---- ---- ---- ----
Income (loss) from continuing
operations attributable to
NIC, net of tax $170 $36 $152 $(106)
Plus:
Depreciation and amortization
expense 51 57 160 169
Manufacturing interest
expense(A) 60 67 176 197
Adjusted for:
Income tax expense (3) - (25) (10)
--- --- --- ---
EBITDA $284 $160 $513 $270
==== ==== ==== ====
______________________
(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:
Three Months Ended Nine Months Ended
July 31, July 31,
(in
millions) 2018 2017 2018 2017
---- ---- ---- ----
Interest
expense $82 $91 $240 $262
Less:
Financial
services
interest
expense 22 24 64 65
Manufacturing
interest
expense $60 $67 $176 $197
=== === ==== ====
Adjusted EBITDA Reconciliation:
Three Months Ended Nine Months Ended
July 31, July 31,
(in
millions) 2018 2017 2018 2017
---- ---- ---- ----
EBITDA
(reconciled
above) $284 $160 $513 $270
---- ---- ---- ----
Adjusted
for
significant
items
of:
Adjustments
to
pre-
existing
warranties(A) (4) 6 (4) (4)
Asset
impairment
charges(B) 8 6 11 13
Restructuring
of
manufacturing
operations(C) 1 (3) (1) 6
EGR
product
litigation(D) - 31 1 31
Gain on
sale(E) - (6) - (6)
Debt
refinancing
charges(F) - - 46 4
Pension
settlement(G) - - 9 -
Settlement
gain(H) (71) - (71) -
--- --- --- ---
Total
adjustments (66) 34 (9) 44
--- --- --- ---
Adjusted
EBITDA $218 $194 $504 $314
==== ==== ==== ====
_____________________
(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 third quarter and first nine months of
2018, we recorded $8 million and $11 million,
respectively, of impairment charges related to
the sale of our railcar business in Cherokee,
Alabama, certain long-lived assets and
certain assets under operating leases in our
Truck and Financial Services segments. In the
third quarter and first nine months of 2017,
we recorded $6 million and $13 million,
respectively, of asset impairment charges
relating to assets held for the sale of our
Conway, Arkansas fabrication business and for
certain assets under operating leases in our
Truck segment.
(C) In the third quarter and first nine months of
2018, we recorded a charge of $1 million and a
benefit of $1 million, respectively, related
to adjustments for restructuring in our Truck,
Global Operations and Corporate segments. In
the third quarter and first nine months of
2017, we recorded a benefit of $3 million and
a charge of $6 million for restructuring in
our Truck segment. In the third quarter of
2017, we recorded $41 million of charges
related to our plan to cease production at our
Melrose Park Facility, a net benefit of $43
million related to the resolution of the
closing agreement for our Chatham, Ontario
plant, and the release of $1 million in OPEB
liabilities in connection with the sale of our
fabrication business in Conway, Arkansas. The
first nine months of 2017 were also impacted
by $7 million of restructuring charges related
to the closure of the Chatham, Ontario plant
and $2 million of restructuring charges in our
Truck and Corporate segments.
(D) In the first nine months of 2018, we recognized
an additional charge of $1 million for a jury
verdict related to the Maxxforce engine EGR
product litigation in our Truck segment. In
the first nine months of 2017, we recognized a
charge of $31 million for a jury verdict
related to the Maxxforce engine EGR product
litigation in our Truck segment.
(E) In the third quarter of 2017, we recognized a
gain of $6 million related to the sale of a
business line in our Parts segment.
(F) In the first nine months of 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. In the first nine months of 2017,
we recorded a charge of $4 million related to
third party fees and debt issuance costs
associated with the repricing of our
previously existing Term Loan.
(G) In the first quarter of 2018, we purchased a
group annuity contract for certain retired
pension plan participants resulting in a plan
remeasurement. As a result, we recorded a
pension settlement accounting charge of $9
million in SG&A expenses.
(H) In the third quarter of 2018, we settled a
business economic loss claim relating to our
Alabama engine manufacturing facility in which
we will receive a net present value of $70
million, net of our fees and costs, from the
Deepwater Horizon Settlement Program. We
recorded the $70 million net present value of
the settlement and related interest income of
$1 million in Other Income, net.
Manufacturing segment cash, cash equivalents, and marketable securities reconciliation:
As of July 31, 2018
-------------------
(in millions) Manufacturing Financial Consolidated
Operations Services Balance Sheet
Operations
----------
Assets
Cash and cash
equivalents $989 $33 $1,022
Marketable securities 95 - 95
--- --- ---
Total cash, cash
equivalents, and
marketable securities $1,084 $33 $1,117
====== === ======
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SOURCE Navistar International Corporation
