Navistar Reports 2016 Fourth Quarter Results
- Reports fourth quarter 2016 net loss of $34 million, or 42 cents per share, on revenues of $2.1 billion
- Generates $112 million of adjusted EBITDA in the fourth quarter
- Delivers fourth consecutive year of adjusted EBITDA improvement
- Improves full-year adjusted EBITDA margins by 140 basis points

LISLE, Ill., Dec. 20, 2016 /PRNewswire/ -- Navistar International Corporation (NYSE: NAV) today announced a fourth quarter 2016 net loss of $34 million, or $0.42 per diluted share, compared to a fourth quarter 2015 net loss of $50 million, or $0.61 per diluted share. Revenues in the quarter were $2.1 billion.

Fourth quarter 2016 EBITDA was $95 million versus EBITDA of $86 million in the same period one year ago. This year's fourth quarter included $9 million in net charges for asset impairments and restructurings, and $8 million in pre-existing warranty adjustments. As a result, adjusted fourth quarter 2016 EBITDA was $112 million.

Revenues in the quarter declined 17 percent compared to fourth quarter 2015. The revenue decrease was largely driven by an 18 percent decline in the company's Core (Class 6-8 trucks and buses in the United States and Canada) charge-outs, to 13,000 units. This decline largely reflects continued softening of Class 8 industry volumes in the U.S. and Canadian markets.  

Navistar finished the fourth quarter 2016 with $850 million in consolidated cash, cash equivalents and marketable securities and $800 million in manufacturing cash, cash equivalents and marketable securities.

"In the fourth quarter and throughout the full year, we've demonstrated our ability to lower our break-even point and improve our operations," said Troy A. Clarke, Navistar president and chief executive officer. "We recorded our fourth consecutive year of adjusted EBITDA improvement and significantly improved our adjusted EBITDA margin year on year, despite a substantial decline in revenues primarily due to the challenging conditions in the Class 8 market."

During the fourth quarter, the company launched the International® LT Series, its new flagship line of Class 8 over-the-road trucks featuring advanced technologies that deliver unrivaled fuel efficiency, best-in-class uptime and unparalleled driver appeal. It also announced plans for a wide-ranging strategic alliance with Volkswagen Truck & Bus, which includes an equity investment in Navistar, strategic technology and supply collaboration and a procurement joint venture.

"We continued to invest and launch new products in 2016 and had our third consecutive year of record Parts profits," Clarke said. "We also saw solid truck and bus order share performance, which positions us for higher retail market share in the future. As for our pending alliance with Volkswagen Truck & Bus, we are excited by the opportunities it will provide."

Navistar provided an update on its pending strategic alliance, confirming that all appropriate regulatory filings have been made, and that it has already received antitrust approvals in the United States and Poland. In addition, other regulatory approvals are pending, and other agreements between the parties that constitute closing conditions remain on track, including final terms for the procurement joint venture and the companies' first powertrain collaboration, the details of which will be announced soon after the closure of the alliance. The company expects the transaction to close in the first quarter of calendar year 2017.

As for full-year 2016 results, Navistar reported a net loss of $97 million, or $1.19 per diluted share, versus a net loss of $184 million, or $2.25 per diluted share, for fiscal year 2015. Fiscal year 2016 adjusted EBITDA was $508 million, versus $494 million adjusted EBITDA for 2015. Full-year adjusted EBITDA margins increased 140 basis points to 6.3 percent. Revenue for the fiscal year 2016 was $8.1 billion, compared to $10.1 billion in fiscal year 2015.

"Although we expect tough industry conditions to continue through the first half of 2017, we see further opportunities to continue to reduce our break-even point, including leveraging some early cost synergies from the Volkswagen Truck & Bus alliance," Clarke said. "The alliance announcement has been positively received by our customers, which when combined with our ongoing cadence of new product offerings, confirms our confidence in our improving standing in the market."

The company provided the following guidance:

  • Retail deliveries of Class 6-8 trucks and buses in the United States and Canada are forecast to be in the range of 305,000 units to 335,000 units for fiscal year 2017.
  • Full-year 2017 revenues are expected to be similar to 2016.
  • Full-year 2017 adjusted EBITDA is expected to be higher than 2016.
  • Fiscal year end 2017 manufacturing cash is expected to be about $800 million, including the capital injection from Volkswagen Truck & Bus.

 

Summary of Financial Results:



(Unaudited)





For the Quarters Ended
October 31,


For the Years Ended
October 31,


(in millions, except per share data)

2016


2015


2016


2015


Sales and revenues, net

$

2,063



$

2,488



$

8,111



$

10,140


Segment Results:








Truck

$

(61)



$

(36)



$

(189)



$

(141)


Parts

162



163



640



592


Global Operations

(2)



(27)



(21)



(67)


Financial Services

23



26



100



98


Loss from continuing operations, net of tax(A)

$

(34)



$

(51)



$

(97)



$

(187)


Net loss(A)

(34)



(50)



(97)



(184)


Diluted loss per share from continuing operations(A)

$

(0.42)



$

(0.62)



$

(1.19)



$

(2.29)


Diluted loss per share(A)

$

(0.42)



$

(0.61)



$

(1.19)



$

(2.25)
























__________________

(A)  

Amounts attributable to Navistar International Corporation.

Truck Segment – For the fourth quarter 2016, the Truck segment recorded a loss of $61 million, compared with a year-ago fourth quarter loss of $36 million. The year-over-year change was primarily due to increased used truck losses and a mix shift to units with lower margins in our Core market, partially offset by lower adjustments to pre-existing warranties and the non-recurrence of restructuring charges recorded in the prior year from a voluntary separation program.

For the 2016 fiscal year, the Truck segment recorded a loss of $189 million, compared with a fiscal year 2015 loss of $141 million. The increase in segment loss was primarily driven by higher adjustments to pre-existing warranties of $70 million, increased used truck losses, lower Mexico margins due to the strengthening of the U.S. dollar, and lower export volumes. These impacts were partially offset by improved purchasing and structural costs.

Parts Segment — For the fourth quarter 2016, the Parts segment recorded profits of $162 million, similar to the year-ago fourth quarter, as cost-reduction initiatives and lower intercompany access fees offset the impact of the expected decline of our Blue Diamond Parts, LLC joint venture with Ford.  

For the 2016 fiscal year, the Parts segment recorded record profits of $640 million, compared to a fiscal year 2015 profit of $592 million. The 8-percent increase was primarily driven by margin improvements in the U.S. market, cost-reduction initiatives, and lower intercompany access fees, partially offset by unfavorable movements in foreign currency exchange rates.

Global Operations Segment — For the fourth quarter 2016, the Global Operations segment recorded a loss of $2 million, compared to a year-ago fourth quarter loss of $27 million. The year-over-year improvement was primarily driven by ongoing actions to lower the company's break-even point in its South American engine business to offset the impact of the ongoing downturn in Brazil's economy.

For the 2016 fiscal year, the Global Operations segment recorded a loss of $21 million compared to a year-ago fiscal year loss of $67 million. The Global Operations segment results improved by 69 percent, primarily due to lower manufacturing and structural costs as a result of the company's prior year restructuring and cost reduction efforts and foreign currency exchange rates.

Financial Services Segment— For the fourth quarter 2016, the Financial Services segment recorded a profit of $23 million, compared with fourth quarter 2015 profit of $26 million. The year-over-year change was primarily driven by the impact on interest expense of higher interest rates, partially offset by our cost reduction initiatives.

For the 2016 fiscal year, the Financial Services segment recorded a profit of $100 million, slightly higher than in fiscal year 2015. The increase is primarily driven by operating lease early terminations, decreases in the provision for loan losses in Mexico and cost reduction initiatives. These increases were partially offset by a decrease in revenue and an increase in interest expense due to rate increases.

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, 2016. 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)

2016


2015


2016


2015

Sales and revenues








Sales of manufactured products, net

$

2,030



$

2,451



$

7,976



$

9,995


Finance revenues

33



37



135



145


Sales and revenues, net

2,063



2,488



8,111



10,140


Costs and expenses








Costs of products sold

1,744



2,093



6,812



8,670


Restructuring charges

(1)



54



10



76


Asset impairment charges

10



15



27



30


Selling, general and administrative expenses

198



204



802



908


Engineering and product development costs

66



62



247



288


Interest expense

81



80



327



307


Other (income) expense, net

(14)



7



(76)



(30)


Total costs and expenses

2,084



2,515



8,149



10,249


Equity in income of non-consolidated affiliates

3





6



6


Loss from continuing operations before income taxes

(18)



(27)



(32)



(103)


Income tax expense

(8)



(14)



(33)



(51)


Loss from continuing operations

(26)



(41)



(65)



(154)


Income from discontinued operations, net of tax



1





3


Net loss

(26)



(40)



(65)



(151)


Less: Net income attributable to non-controlling interests

8



10



32



33


Net loss attributable to Navistar International Corporation

$

(34)



$

(50)



$

(97)



$

(184)










Amounts attributable to Navistar International Corporation common shareholders:







Loss from continuing operations, net of tax

$

(34)



$

(51)



$

(97)



$

(187)


Income from discontinued operations, net of tax



1





3


Net loss

$

(34)



$

(50)



$

(97)



$

(184)










Earnings (loss) per share:








Basic:








Continuing operations

$

(0.42)



$

(0.62)



$

(1.19)



$

(2.29)


Discontinued operations



0.01





0.04



$

(0.42)



$

(0.61)



$

(1.19)



$

(2.25)


Diluted:








Continuing operations

$

(0.42)



$

(0.62)



$

(1.19)



$

(2.29)


Discontinued operations



0.01





0.04



$

(0.42)



$

(0.61)



$

(1.19)



$

(2.25)


Weighted average shares outstanding:








Basic

81.7



81.6



81.7



81.6


Diluted

81.7



81.6



81.7



81.6


                                           


Navistar International Corporation and Subsidiaries
Consolidated Balance Sheets  



As of October 31,

(in millions, except per share data)

2016


2015

ASSETS




Current assets




Cash and cash equivalents

$

804



$

912


Restricted cash and cash equivalents

64




Marketable securities

46



159


Trade and other receivables, net

276



429


Finance receivables, net

1,457



1,779


Inventories, net

944



1,135


Deferred taxes, net



36


Other current assets

168



170


Total current assets

3,759



4,620


Restricted cash

48



121


Trade and other receivables, net

16



13


Finance receivables, net

220



216


Investments in non-consolidated affiliates

53



66


Property and equipment, net

1,241



1,345


Goodwill

38



38


Intangible assets, net

53



57


Deferred taxes, net

161



128


Other noncurrent assets

64



45


Total assets

$

5,653



$

6,649


LIABILITIES and STOCKHOLDERS' DEFICIT




Liabilities




Current liabilities




Notes payable and current maturities of long-term debt

$

907



$

1,108


Accounts payable

1,113



1,301


Other current liabilities

1,183



1,377


Total current liabilities

3,203



3,786


Long-term debt

3,997



4,147


Postretirement benefits liabilities

3,023



2,995


Deferred taxes, net



14


Other noncurrent liabilities

723



867


Total liabilities

10,946



11,809


Stockholders' deficit




Series D convertible junior preference stock

2



2


Common stock, $0.10 par value per share (86.8 shares issued and 220 shares authorized at both dates)

9



9


Additional paid-in capital

2,499



2,499


Accumulated deficit

(4,963)



(4,866)


Accumulated other comprehensive loss

(2,640)



(2,601)


Common stock held in treasury, at cost (5.2 and 5.3 shares, respectively)

(205)



(210)


Total stockholders' deficit attributable to Navistar International Corporation

(5,298)



(5,167)


Stockholders' equity attributable to non-controlling interests

5



7


Total stockholders' deficit

(5,293)



(5,160)


Total liabilities and stockholders' deficit

$

5,653



$

6,649


 

Navistar International Corporation and Subsidiaries
Consolidated Statements of Cash Flows



For the Years Ended
October 31,

(in millions)

2016


2015

Cash flows from operating activities




Net loss

$

(65)



$

(151)


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




Depreciation and amortization

146



205


Depreciation of equipment leased to others

79



76


Deferred taxes, including change in valuation allowance

(9)



(18)


Asset impairment charges

27



30


Loss on sales of investments and businesses, net

2




Amortization of debt issuance costs and discount

37



37


Stock-based compensation

16



10


Provision for doubtful accounts, net of recoveries

13



(9)


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

6



6


Write-off of debt issuance cost and discount



4


Other non-cash operating activities

(12)



(35)


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




Trade and other receivables

134



103


Finance receivables

251



(58)


Inventories

205



131


Accounts payable

(193)



(208)


Other assets and liabilities

(370)



(77)


Net cash provided by operating activities

267



46


Cash flows from investing activities




Purchases of marketable securities

(485)



(887)


Sales of marketable securities

555



1,247


Maturities of marketable securities

43



86


Net change in restricted cash and cash equivalents

5



42


Capital expenditures

(116)



(115)


Purchases of equipment leased to others

(132)



(83)


Proceeds from sales of property and equipment

24



22


Investments in non-consolidated affiliates

(2)



1


Proceeds from sales of affiliates

41



7


Acquisition of intangibles



(4)


Net cash provided by (used in) investing activities

(67)



316


Cash flows from financing activities




Proceeds from issuance of securitized debt

413



549


Principal payments on securitized debt

(346)



(501)


Net change in secured revolving credit facilities

(148)



(22)


Proceeds from issuance of non-securitized debt

222



1,212


Principal payments on non-securitized debt

(315)



(990)


Net change in notes and debt outstanding under revolving credit facilities

(149)



(106)


Principal payments under financing arrangements and capital lease obligations

(3)



(2)


Debt issuance costs

(16)



(25)


Proceeds from financed lease obligations

22



33


Proceeds from exercise of stock options



1


Dividends paid by subsidiaries to non-controlling interest

(34)



(36)


Other financing activities

1



(15)


Net cash provided by (used in) financing activities

(353)



98


Effect of exchange rate changes on cash and cash equivalents

45



(45)


Increase (decrease) in cash and cash equivalents

(108)



415


Cash and cash equivalents at beginning of the year

912



497


Cash and cash equivalents at end of the year

$

804



$

912


 


Navistar International Corporation and Subsidiaries
Segment Reporting
(Unaudited)


We define segment profit (loss) as net income (loss) from continuing operations 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, 2016












External sales and revenues, net

$

1,345



$

607



$

75



$

33



$

2



$

2,062


Intersegment sales and revenues

51



6



12



25



(93)



1


Total sales and revenues, net

$

1,396



$

613



$

87



$

58



$

(91)



$

2,063


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

$

(61)



$

162



$

(2)



$

23



$

(156)



$

(34)


Income tax expense









(8)



(8)


Segment profit (loss)

$

(61)



$

162



$

(2)



$

23



$

(148)



$

(26)


Depreciation and amortization

$

37



$

3



$

5



$

13



$

3



$

61


Interest expense







21



60



81


Equity in income of non-consolidated affiliates

2



1









3


Capital expenditures(B)

27





2



1



3



33


 

(in millions)

Truck


Parts


Global
Operations


Financial
Services(A)


Corporate
and
Eliminations


Total

Three Months Ended October 31, 2015












External sales and revenues, net

$

1,706



$

640



$

102



$

37



$

3



$

2,488


Intersegment sales and revenues

37



9



13



21



(80)




Total sales and revenues, net

$

1,743



$

649



$

115



$

58



$

(77)



$

2,488


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

$

(36)



$

163



$

(27)



$

26



$

(177)



$

(51)


Income tax expense









(14)



(14)


Segment profit (loss)

$

(36)



$

163



$

(27)



$

26



$

(163)



$

(37)


Depreciation and amortization

$

34



$

3



$

5



$

14



$

4



$

60


Interest expense







17



63



80


Equity in income (loss) of non-consolidated affiliates

1



1



(2)








       Capital expenditures(B)

34



2





2



5



43


 

(in millions)

Truck


Parts


Global
Operations


Financial
Services(A)


Corporate
and
Eliminations


Total

Year Ended October 31, 2016












External sales and revenues, net

$

5,271



$

2,398



$

296



$

135



$

10



$

8,110


Intersegment sales and revenues

132



29



45



100



(305)



1


Total sales and revenues, net

$

5,403



$

2,427



$

341



$

235



$

(295)



$

8,111


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

$

(189)



$

640



$

(21)



$

100



$

(627)



$

(97)


Income tax expense









(33)



(33)


Segment profit (loss)

$

(189)



$

640



$

(21)



$

100



$

(594)



$

(64)


Depreciation and amortization

$

129



$

13



$

18



$

50



$

15



$

225


Interest expense







80



247



327


Equity in income (loss) of non-consolidated affiliates

5



4



(3)







6


Capital expenditures(B)

97



2



4



2



11



116


 

(in millions)

Truck


Parts


Global Operations


Financial
Services(A)


Corporate
and
Eliminations


Total

Year Ended October 31, 2015












External sales and revenues, net

$

7,055



$

2,475



$

455



$

145



$

10



$

10,140


Intersegment sales and revenues

158



38



51



96



(343)




Total sales and revenues, net

$

7,213



$

2,513



$

506



$

241



$

(333)



$

10,140


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

$

(141)



$

592



$

(67)



$

98



$

(669)



$

(187)


Income tax expense









(51)



(51)


Segment profit (loss)

$

(141)



$

592



$

(67)



$

98



$

(618)



$

(136)


Depreciation and amortization

$

173



$

14



$

23



$

51



$

20



$

281


Interest expense







74



233



307


Equity in income (loss) of non-consolidated affiliates

5



4



(3)







6


       Capital expenditures(B)

92



3



4



4



12



115


 


(in millions)

Truck


Parts


Global
Operations


Financial

Services


Corporate

and

Eliminations


Total

Segment assets, as of:












October 31, 2016

$

1,520



$

594



$

407



$

2,116



$

1,016



$

5,653


October 31, 2015

1,876



641



409



2,448



1,275



6,649



__________________________

(A)  

Total sales and revenues in the Financial Services segment include interest revenues of $40 million and $167 million for the three months and year ended October 31, 2016, respectively, and $40 million and $175 million for the three months and year ended October 31, 2015, 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) from continuing operations attributable to Navistar International Corporation, net of tax, 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:

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.

Adjusted EBITDA margin:

We define Adjusted EBITDA margin as a percentage of the Company's consolidated sales and revenues. 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 represents 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 consists of Selling, general and administrative expenses and Engineering and product development costs.

EBITDA reconciliation:



(Unaudited)






For the Quarters Ended
October 31,


For the Years
Ended October 31,

(in millions)

2016


2015


2016


2015

Loss from continuing operations attributable to NIC, net of tax

$

(34)



$

(51)



$

(97)



$

(187)


Plus:








Depreciation and amortization expense

61



60



225



281


Manufacturing interest expense(A)

60



63



247



233


Less:








Income tax expense

(8)



(14)



(33)



(51)


EBITDA

$

95



$

86



$

408



$

378



_________________________

(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)

2016


2015


2016


2015

Interest expense

$

81



$

80



$

327



$

307


Less:  Financial services interest expense

21



17



80



74


Manufacturing interest expense

$

60



$

63



$

247



$

233


 

Adjusted EBITDA Reconciliation:


(Unaudited)






For the Quarters Ended
October 31,


For the Years Ended
October 31,

(in millions)

2016


2015


2016


2015

EBITDA (reconciled above)

$

95



$

86



$

408



$

378


Less significant items of:








Adjustments to pre-existing warranties(A)

8



40



78



4


North America asset impairment charges(B)

10



8



26



20


Global asset impairment charges(C)



7



1



10


Restructuring of North American manufacturing operations(D)





7




Cost reduction and other strategic initiatives(E)

(1)



54



3



72


Gain on settlement(F)







(10)


Brazil truck business actions(G)







6


Debt refinancing charges(H)



14





14


One-time fee received(I)





(15)




Total adjustments

17



123



100



116


Adjusted EBITDA

$

112



$

209



$

508



$

494



________________________

(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 fourth quarter of 2016, we recorded $8 million of asset impairment charges related to certain operating leases. Additionally, in 2016 we recorded charges of $17 million related to certain long-lived assets. During the fourth quarter and year ended October 31, 2015, we recorded $6 million and $11 million, respectively, of asset impairment charges related to certain long-lived assets. Additionally, in 2015 we recorded $9 million of asset impairment charges related to certain operating leases.

(C)

During 2016, we determined that $1 million of trademark asset carrying value was impaired. In the fourth quarter of 2015, we recognized a total non-cash charge of $7 million for the impairment of certain intangible and long-lived assets in the Global Operations segment. Also in 2015, we recognized a total non-cash charge of $3 million for the impairment of the carrying value of a trademark asset.

(D)  

During 2016 we recorded $7 million of restructuring charges related to the 2011 closure of our Chatham, Ontario plant.

(E)   

Cost reduction and other strategic initiatives relates to costs associated with the divestiture of non-strategic facilities and efforts to optimize our cost structure. In 2015, we had $72 million of cost reduction and other strategic initiatives primarily consisting of restructuring charges. In the fourth quarter of 2015, we offered the majority of our U.S.-based non-represented salaried employees the opportunity to apply for a VSP, which resulted in $37 million of restructuring charges. In addition, in the fourth quarter and year ended October 31, 2015, we incurred restructuring charges of $10 million and $23 million, respectively, related to cost reduction actions, including a reduction-in-force in the U.S. and Brazil.

(F)   

During 2015, we recognized a $10 million net gain related to the settlement of a customer dispute in our Global Operations segment. The $10 million net gain for the settlement included restructuring charges of $4 million.

(G)  

During 2015, we recorded $6 million in inventory charges to right size the Brazil Truck business.

(H)   

During the fourth quarter of 2015, we recorded $14 million of third party fees and unamortized debt issuance costs associated with the refinancing of our Amended Term Loan Credit Facility with a new Senior Secured Term Loan Credit Facility.

(I)    

During 2016, we received a $15 million one-time fee from a third party.

 

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



As of October 31, 2016

(in millions)

Manufacturing
Operations


Financial
Services
Operations


Consolidated
Balance Sheet

Assets






Cash and cash equivalents

$

761



$

43



$

804


Marketable securities

39



7



46


Total cash, cash equivalents, and marketable securities

$

800



$

50



$

850


 

SOURCE Navistar International Corporation

For further information: Media contact: Jim Spangler, Jim.Spangler@navistar.com, 331-332-5833, Investor contact: Ryan Campbell, Ryan.Campbell@navistar.com, 331-332-7280, Website: www.Navistar.com/newsroom


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