NAV
$43.28
Navistar International
$.15
.35%
Earnings Details
3rd Quarter July 2020
Wednesday, September 09, 2020 6:34:00 AM
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Summary

Navistar International Beats

Navistar International (NAV) reported a 3rd Quarter July 2020 loss of $0.08 per share on revenue of $1.7 billion. The consensus estimate was a loss of $0.16 per share on revenue of $1.8 billion. The Earnings Whisper number was for a loss of $0.15 per share. Revenue fell 44.9% compared to the same quarter a year ago.

Navistar International Corp is a manufacturer of commercial & military trucks, diesel engines, buses, as well as a provider of service parts for trucks & diesel engines. It also provides retail, wholesale & lease financing services for trucks and parts.

Results
Reported Earnings
($0.08)
Earnings Whisper
($0.15)
Consensus Estimate
($0.16)
Reported Revenue
$1.68 Bil
Revenue Estimate
$1.76 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Navistar Reports Third Quarter 2020 Results

LISLE, Ill., Sept. 9, 2020 /PRNewswire/ -- Navistar International Corporation (NYSE: NAV) today announced a third quarter 2020 net loss of $37 million, or $0.37 per diluted share, compared to third quarter 2019 net income of $156 million, or $1.56 per diluted share.

Revenues in the quarter were $1.7 billion, down 45 percent from third quarter 2019, and Core (Class 6-8 trucks and buses in the United States and Canada) charge outs were down 53 percent. The decrease was primarily driven by the impact of COVID-19, as well as prior year comparable quarter results that were near the peak of the prior industry cycle.

Third quarter 2020 EBITDA was $73 million, compared to $281 million in third quarter 2019. Adjusted EBITDA in third quarter 2020 was $104 million versus $266 million a year ago. Adjusted net income for the quarter was a loss of $8 million compared to income of $147 million in the third quarter last year.

Navistar finished third quarter 2020 with $1.65 billion in consolidated cash, cash equivalents and marketable securities, including $1.6 billion in manufacturing cash, cash equivalents and marketable securities.

"Our fiscal third quarter opened during the middle of many stay-at-home orders and ended with sections of the economy beginning to reopen, and our results certainly reflect this," said Persio Lisboa, president and chief executive officer, Navistar. "While marketplace uncertainties continue, we are accelerating the pace of progress on our Navistar 4.0 strategy for financial improvement, so we can pull forward its benefits and take full advantage of a stronger industry when it arrives." 

The company's Navistar 4.0 strategy lays out a plan to increase the company's EBITDA margins to 12 percent by 2024.

During the quarter, in addition to naming Lisboa president and chief executive officer and Troy Clarke to the new role of executive chairman, the company made several leadership changes aimed at accelerating the pace of the company's Navistar 4.0 progress with a focus on opportunities in advanced technologies. These executive appointments included naming Bob Walsh vice president of Emerging Technologies, Strategy and Planning; appointing Friedrich Baumann president of Sales, Marketing and Aftersales; and adding new global responsibilities to the role of Phil Christman, president of Operations.

Earlier this year, the company took several actions to conserve cash and bolster its liquidity in response to the COVID-19 pandemic. These actions have been successful, as the company ended the third quarter with $1.6 billion of manufacturing cash, allowing it to cease its employee salary deferral program on September 1, several months earlier than initially planned. Additionally, actions taken due to the pandemic drove the company's selling, general and administrative (SG&A) expenses down 29 percent year-over-year, after adjusting for a one-time gain in the prior year. Using learnings gained during COVID-19, the company is pursuing additional sustainable cost savings opportunities.

"We are targeting SG&A costs between 7 percent to 9 percent of revenues," said Walter Borst, chief financial officer, Navistar. "Our focus has moved from temporary cash conservation actions to sustainable cost savings that support our Navistar 4.0 goals and better position us for profitability at all points in the cycle."

With its new leadership, learnings from the COVID-19 pandemic and benefits from previous cost conservation actions in place, the company is redirecting more resources to advanced technologies; leading to several announcements during the quarter.

In autonomous, the company announced a strategic partnership with TuSimple to co-develop SAE Level 4 self-driving trucks targeted for production by 2024. The partnership also includes Navistar taking a minority stake in the company.

In connectivity, the company announced strategic partnerships with fleet management solutions providers Samsara and Geotab to allow International customers to seamlessly add their choice of fleet management solutions without the installation of additional vehicle hardware.

In electric, the company's NEXT eMobility Solutions business unit signed a master services agreement with In-Charge Energy to provide charging infrastructure and consulting services to electric vehicle customers.

The company has been making progress on the construction of its production facility in San Antonio, which is scheduled to open in the spring of 2022. The facility will be capable of building both diesel and fully electric vehicles, and the first vehicle off the line will be an electric truck, entirely built on the main assembly line.

"As a result of the pandemic, we had the opportunity to revisit our investment portfolio and retime noncritical programs, and cancel others," said Lisboa. "By streamlining our investments, we were able to free up significant capacity, which is being redeployed into advanced technology programs and strategic partnerships that accelerate our pace of progress."

SEGMENT REVIEW

Summary of Financial Results:



(Unaudited)


Three Months Ended
July 31,


Nine Months Ended
July 31,

(in millions, except per share data)

2020


2019


2020


2019

Sales and revenues, net

$

1,675



$

3,042



$

5,438



$

8,471


Segment Results:








Truck

$

(22)



$

167



$

(131)



$

183


Parts

97



149



319



437


Global Operations

1



1



(12)



10


Financial Services

10



30



51



93


Loss from continuing operations, net of tax(A)

$

(37)



$

156



$

(111)



$

119


Net income(loss)(A)

(37)



156



(111)



119


Diluted (income) per share(A)

(0.37)



1.56



(1.11)



1.20



________________

(A)   Amounts attributable to Navistar International Corporation.


Truck Segment – In third quarter 2020, the Truck segment net sales were $1.2 billion, a 50 percent decrease compared to third quarter last year. The year-over-year decrease is primarily due to lower volumes driven by weaker industry conditions resulting in part from the COVID-19 pandemic.

The Truck segment incurred a net loss of $22 million in third quarter 2020 compared to a profit of $167 million in third quarter 2019. The year-over-year decrease was a result of lower volumes and a reversal of a non-recurring legal settlement charge in 2019.  

Parts Segment – For third quarter 2020, the Parts segment net sales were $414 million, a 27 percent decrease from third quarter 2019. The decrease is primarily due to lower North America volumes attributable to the COVID-19 impact in the U.S. and Canada and a decrease in Blue Diamond Parts sales.

The Parts segments saw a third quarter profit of $97 million, compared to $149 million in third quarter 2019. The decrease is due to the impact of lower sales volumes, partially offset by lower SG&A expenses.

Global Operations Segment – In third quarter 2020, the Global Operations segment net sales decreased 48 percent to $47 million. The decrease was primarily driven by lower volumes in our South America operations triggered by temporary production stoppages related to COVID-19.

The Global Operation segment recorded a profit of $1 million in the third quarter of 2020 and 2019. The segment benefited from restructuring actions taken earlier this year. 

Financial Services Segment – In third quarter 2020, the Financial Services segment net revenues decreased to $49 million, a 34 percent decrease from third quarter 2019. The decrease was primarily driven by lower average yields due to lower interest rates and lower average finance receivables due to lower volumes.

The Financial Services segment recorded a profit of $10 million in the quarter, compared to $30 million in third quarter 2019. The decrease was primarily driven by the impact of lower revenues, partially offset by lower interest expense resulting from lower borrowing requirements.

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 Navistar International Corporation 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, which was filed on December 17, 2019, and our Quarterly Report on Form 10-Q for the period ended April 30, 2020. 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
July 31,


Nine Months Ended
July 31,

(in millions, except per share data)

2020


2019


2020


2019

Sales and revenues








Sales of manufactured products, net

$

1,639



$

2,996



$

5,310



$

8,330


Finance revenues

36



46



128



141


Sales and revenues, net

1,675



3,042



5,438



8,471


Costs and expenses








Costs of products sold

1,388



2,501



4,541



6,973


Restructuring charges

4





5



1


Asset impairment charges

12



3



25



6


Selling, general and administrative expenses

141



167



493



726


Engineering and product development costs

73



81



237



242


Interest expense

71



76



199



243


Other expense, net

14



25



27



140


Total costs and expenses

1,703



2,853



5,527



8,331


Equity in income of non-consolidated affiliates

2



1





4


Income (loss) before income taxes

(26)



190



(89)



144


Income tax expense

(8)



(29)



(10)



(9)


Net income (loss)

(34)



161



(99)



135


Less: Net income attributable to non-controlling interests

3



5



12



16


Net income (loss) attributable to Navistar International Corporation

$

(37)



$

156



$

(111)



$

119










Net income (loss) per share attributable to Navistar International Corporation








Basic:

$

(0.37)



$

1.57



$

(1.11)



$

1.20


Diluted:

(0.37)



1.56



(1.11)



1.20










Weighted average shares outstanding:








Basic

99.7



99.4



99.6



99.2


Diluted

99.7



99.7



99.6



99.5



 

Navistar International Corporation and Subsidiaries

Consolidated Balance Sheets



July 31,


October 31,

(in millions, except per share data)

2020


2019

ASSETS

(Unaudited)



Current assets




Cash and cash equivalents

$

1,648



$

1,370


Restricted cash and cash equivalents

232



133


Trade and other receivables, net

266



338


Finance receivables, net

1,403



1,923


Inventories, net

896



911


Other current assets

247



277


Total current assets

4,692



4,952


Restricted cash

54



54


Trade and other receivables, net

8



10


Finance receivables, net

250



274


Investments in non-consolidated affiliates

30



31


Property and equipment (net of accumulated depreciation and amortization of $2,328 and $2,488, respectively)

1,241



1,309


Operating lease right of use assets

119




Goodwill

38



38


Intangible assets (net of accumulated amortization of $139 and $142, respectively)

20



25


Deferred taxes, net

115



117


Other noncurrent assets

108



107


Total assets

$

6,675



$

6,917


LIABILITIES and STOCKHOLDERS' DEFICIT




Liabilities




Current liabilities




Notes payable and current maturities of long-term debt

$

865



$

871


Accounts payable

1,154



1,341


Other current liabilities

1,096



1,363


Total current liabilities

3,115



3,575


Long-term debt

4,694



4,317


Postretirement benefits liabilities

2,013



2,103


Other noncurrent liabilities

681



645


Total liabilities

10,503



10,640


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

2,726



2,730


Accumulated deficit

(4,333)



(4,409)


Accumulated other comprehensive loss

(2,100)



(1,912)


Common stock held in treasury, at cost (3.6 and 3.9 shares, respectively)

(135)



(147)


Total stockholders' deficit attributable to Navistar International Corporation

(3,830)



(3,726)


Stockholders' equity attributable to non-controlling interests

2



3


Total stockholders' deficit

(3,828)



(3,723)


Total liabilities and stockholders' deficit

$

6,675



$

6,917



 

Navistar International Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)



Nine Months Ended July 31,

(in millions)

2020


2019

Cash flows from operating activities




Net income (loss)

$

(99)



$

135


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




Depreciation and amortization

103



99


Depreciation of equipment leased to others

43



45


Deferred taxes, including change in valuation allowance

(5)



(41)


Asset impairment charges

25



6


Gain on sales of investments and businesses, net



(56)


Amortization of debt issuance costs and discount

11



15


Stock-based compensation

14



20


Provision for doubtful accounts

13



8


Equity in (income) loss of non-consolidated affiliates, net of dividends



(3)


Write-off of debt issuance costs and discount



6


Other non-cash operating activities

(9)



(6)


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

36



(124)


Net cash provided by operating activities

132



104


Cash flows from investing activities




Maturities of marketable securities



98


Capital expenditures

(115)



(90)


Purchases of equipment leased to others

(69)



(130)


Proceeds from sales of property and equipment

11



12


Proceeds from sales of investments and businesses

10



100


Other investing activities

(4)



1


Net cash used in investing activities

(167)



(9)


Cash flows from financing activities




Proceeds from issuance of securitized debt

316



331


Principal payments on securitized debt

(45)



(300)


Net change in secured revolving credit facilities

(241)



120


Proceeds from issuance of non-securitized debt

622



144


Principal payments on non-securitized debt

(108)



(988)


Net change in notes and debt outstanding under revolving credit facilities

(90)



469


Debt issuance costs

(17)



(9)


Proceeds from financed lease obligations



13


Proceeds from exercise of stock options

3



3


Dividends paid by subsidiaries to non-controlling interest

(13)



(18)


Other financing activities

(2)



(2)


Net cash provided by (used in) financing activities

425



(237)


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

(13)



(7)


Increase (decrease) in cash, cash equivalents and restricted cash

377



(149)


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

1,557



1,445


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

$

1,934



$

1,296



 

Navistar International Corporation and Subsidiaries
Segment Reporting
(Unaudited)

We define segment profit (loss) as net income (loss) attributable to Navistar International Corporation, excluding income tax benefit (expense). 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 July 31, 2020












External sales and revenues, net

$

1,177



$

413



$

46



$

39



$



$

1,675


Intersegment sales and revenues

26



1



1



10



(38)




Total sales and revenues, net

$

1,203



$

414



$

47



$

49



$

(38)



$

1,675


Net income (loss) attributable to NIC

$

(22)



$

97



$

1



$

10



$

(123)



$

(37)


Income tax expense









(8)



(8)


Segment profit (loss)

$

(22)



$

97



$

1



$

10



$

(115)



$

(29)


Depreciation and amortization

$

27



$

1



$

1



$

16



$

2



$

47


Interest expense







16



55



71


Equity in income of non-consolidated affiliates

2











2


Capital expenditures(B)

18



1



1





5



25




(in millions)

Truck


Parts


Global
Operations


Financial
Services(A)


Corporate
and
Eliminations


Total

Three Months Ended July 31, 2019












External sales and revenues, net

$

2,342



$

569



$

82



$

46



$

3



$

3,042


Intersegment sales and revenues

45



2



8



28



(83)




Total sales and revenues, net

$

2,387



$

571



$

90



$

74



$

(80)



$

3,042


Net income (loss) attributable NIC

$

167



$

149



$

1



$

30



$

(191)



$

156


Income tax expense









(29)



(29)


Segment profit (loss)

$

167



$

149



$

1



$

30



$

(162)



$

185


Depreciation and amortization

$

26



$

1



$

3



$

16



$

1



$

47


Interest expense







27



49



76


Equity in income of non-consolidated affiliates



1









1


       Capital expenditures(B)

17



2



1





4



24




(in millions)

Truck


Parts


Global
Operations


Financial
Services(A)


Corporate
and
Eliminations


Total

Nine Months Ended July 31, 2020












External sales and revenues, net

$

3,800



$

1,347



$

154



$

135



$

2



$

5,438


Intersegment sales and revenues

34



3



12



35



(84)




Total sales and revenues, net

$

3,834



$

1,350



$

166



$

170



$

(82)



$

5,438


Net income (loss) attributable to NIC

$

(131)



$

319



$

(12)



$

51



$

(338)



$

(111)


Income tax expense









(10)



(10)


Segment profit (loss)

$

(131)



$

319



$

(12)



$

51



$

(328)



$

(101)


Depreciation and amortization

$

83



$

5



$

5



$

48



$

5



$

146


Interest expense







55



144



199


Equity in income (loss) of non-consolidated affiliates

(1)



1










       Capital expenditures(B)

93



6



3





13



115




(in millions)

Truck


Parts


Global
Operations


Financial
Services(A)


Corporate
and
Eliminations


Total

Nine Months Ended July 31, 2019












External sales and revenues, net

$

6,405



$

1,693



$

223



$

141



$

9



$

8,471


Intersegment sales and revenues

75



5



27



85



(192)




Total sales and revenues, net

$

6,480



$

1,698



$

250



$

226



$

(183)



$

8,471


Net income (loss) attributable to NIC

$

183



$

437



$

10



$

93



$

(604)



$

119


Income tax expense









(9)



(9)


Segment profit (loss)

$

183



$

437



$

10



$

93



$

(595)



$

128


Depreciation and amortization

$

78



$

4



$

7



$

48



$

7



$

144


Interest expense







83



160



243


Equity in income (loss) of non-consolidated affiliates

3



2



(1)







4


       Capital expenditures(B)

69



3



2



2



14



90



_________________________

(A)   Total sales and revenues in the Financial Services segment include interest revenues of $29 million and $103 million for the three and nine months ended July 31, 2020, respectively, and $53 million and $161 million for the three and nine months ended July 31, 2019, respectively.


(B)   Exclusive of purchases of equipment leased to others.



(in millions)

Truck


Parts


Global

Operations


Financial

Services


Corporate

and

Eliminations


Total

Segment assets, as of:












July 31, 2020

$

1,721



$

641



$

202



$

2,285



$

1,826



$

6,675


October 31, 2019

1,705



688



296



2,774



1,454



6,917


 

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 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):
We believe that adjusted EBITDA and Adjusted Net Income (loss), 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 and Cash Equivalents:
Manufacturing cash and cash equivalents represent the Company's consolidated cash and, cash equivalents excluding cash and cash equivalents of our financial services operations. 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
July 31,


Nine Months Ended
July 31,

(in millions)

2020


2019


2020


2019

Net income(loss) attributable to NIC

$

(37)



$

156



$

(111)



$

119


Plus:








Depreciation and amortization expense

47



47



146



144


Manufacturing interest expense(A)

55



49



144



160


Adjusted for:








Income tax (expense) benefit

(8)



(29)



(10)



(9)


EBITDA

$

73



$

281



$

189



$

432




______________________

(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
July 31,


Nine Months Ended
July 31,

(in millions)

2020


2019


2020


2019

Interest expense

$

71



$

76



$

199



$

243


Less:  Financial services interest expense

16



27



55



83


Manufacturing interest expense

$

55



$

49



$

144



$

160




Adjusted EBITDA Reconciliation:



Three Months Ended
July 31,


Nine Months Ended
July 31,

(in millions)

2020


2019


2020


2019

EBITDA (reconciled above)

$

73



$

281



$

189



$

432


Adjusted for significant items of:








Adjustments to pre-existing warranties(A)

9



5



26



7


Asset impairment charges(B)

12



3



25



6


Restructuring of manufacturing operations(C)

4





5



1


MaxxForce Advanced EGR engine lawsuits(D)

(1)



(31)





128


Gain (loss) on sales(E)



3





(56)


Debt refinancing charges(F)



6





6


Pension settlement(G)

7





7



142


Settlement gain(H)



(1)



(1)



(3)


Total adjustments

31



(15)



62



231


Adjusted EBITDA

$

104



$

266



$

251



$

663




Adjusted Net Income (Loss) attributable to NIC:



Three Months Ended
July 31,


Nine Months Ended
July 31,

(in millions)

2020


2019


2020


2019

Net income (loss) attributable to NIC

$

(37)



$

156



$

(111)



$

119


Adjusted for significant items of:








Adjustments to pre-existing warranties(A)

9



5



26



7


Asset impairment charges(B)

12



3



25



6


Restructuring of manufacturing operations(C)

4





5



1


MaxxForce Advanced EGR engine lawsuits(D)

(1)



(31)





128


Gain (loss) on sales(E)



3





(56)


Debt refinancing charges(F)



6





6


Pension settlement(G)

7





7



142


Settlement gain(H)



(1)



(1)



(3)


Total adjustments

31



(15)



62



231


Tax effect (I)

(2)



6



(2)



(41)


Adjusted net income (loss) attributable to NIC

$

(8)



$

147



$

(51)



$

309






_____________________

(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 first nine months of 2020, we recorded $12 million of asset impairment charges related to long lived assets in our Brazil asset group in our Global Operations segment. In the third quarter and first nine months of 2020, we recorded $12 million and $13 million of asset impairment charges related to certain assets under operating leases in our Truck segment. In the third quarter and first nine months of 2019 we recorded $3 million and $6 million, respectively, of asset impairment charges related to certain assets under operating leases in our Truck segment.

(C)

In the third quarter of 2020, we recorded restructuring charges of $4 million and $5 million, respectively, due to restructuring activity throughout the organization. In the first nine months of 2019 we recorded a restructuring charge of $1 million in our Truck segment.

(D) 

In the third quarter and first nine months of 2020 and 2019, we recognized a net benefit of  $1 million and $31 million, respectively, related to the MaxxForce Advanced EGR engine class action settlement and related litigation in our Truck Segment. In the first nine months of 2019, we recognized a charge of $128 million related to the MaxxForce Advanced EGR engine class action settlement and related litigation in our Truck Segment.

(E)

In the third quarter of 2019, we recognized a charge of $3 million in our Truck segment for adjustments to the purchase price of the sale of a majority interest in the Navistar Defense business. In the first nine months of 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) 

In the third quarter and first nine months of 2019, we recorded a charge of $6 million for the write off of debt issuance costs and discounts associated with NFC Term Loan.

(G) 

In the third quarter and first nine months of 2020, we recorded pension settlement accounting charges of $7 million in Other expense, net in Corporate. In the first nine months of 2019, we purchased group annuity contracts for certain retired pension plan participants resulting in plan remeasurements. As a result, we recorded pension settlement accounting charges of $142 million in Other expense, net in Corporate.

(H) 

In the first nine months of 2020, we recorded interest income of $1 million, in Other expense, net derived from the prior year settlement of a business economic loss claim relating to our former Alabama engine manufacturing facility in Corporate. For the same claim, we recorded interest income in Other expense, net of $1 million and $3 million, for the third quarter and first nine months of 2019, respectively.

(I)

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

 

Manufacturing segment cash and cash equivalents reconciliation:



As of July 31, 2020

(in millions)

Manufacturing
Operations


Financial
Services
Operations


Consolidated
Balance Sheet

Total cash, cash equivalents, and marketable securities

$

1,610



$

38



$

1,648














 

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SOURCE Navistar International Corporation