NAVISTAR INTERNATIONAL CORP - FORM 10-Q - EX-99.1 - EXHIBIT 99.1 - March 7, 2018

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EXHIBIT 99.1
Additional Financial Information (Unaudited)
The following additional financial information is provided based upon the continuing interest of certain stockholders and creditors to assist them in understanding our core Manufacturing operations and our Financial Services operations on an after-tax equity basis. Our Manufacturing operations, for this purpose, include our Truck segment, Parts segment, Global Operations segment, and Corporate items. The Manufacturing operations financial information represents non-GAAP financial measures. These non-GAAP financial measures should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP. The reconciling differences between these non-GAAP financial measures and our U.S. GAAP condensed consolidated financial statements in Item 1, Financial Statements, are our Financial Services operations, which are included on an after-tax equity basis. Certain of our subsidiaries in our Manufacturing operations have debt outstanding with our Financial Services operations (“intercompany debt”). In the condensed statements of assets, liabilities, and stockholders' equity (deficit), the intercompany debt is reflected as accounts payable. The change in the intercompany debt is reflected in Net cash provided by (used in) operating activities in the condensed statements of cash activity.
Condensed Statements of Revenues and Expenses
Navistar International Corporation
(Manufacturing operations with financial services operations on an after-tax equity basis)
 
For the Three Months Ended January 31, 2018
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Consolidated Statement of Operations
Sales of manufactured products
$
1,867

 
$
—

 
$
—

 
$
1,867

Finance revenues
—

 
59

 
(21
)
 
38

Sales and revenues, net
1,867

 
59

 
(21
)
 
1,905

Costs of products sold
1,532

 
—

 
—

 
1,532

Restructuring charges
(3
)
 
—

 
—

 
(3
)
Asset impairment charges
2

 
—

 
—

 
2

Selling, general and administrative expenses
202

 
20

 
—

 
222

Engineering and product development costs
75

 
—

 
—

 
75

Interest expense
58

 
21

 
—

 
79

Other expense (income), net
72

 
(2
)
 
(21
)
 
49

Total costs and expenses
1,938

 
39

 
(21
)
 
1,956

Equity in income of non-consolidated affiliates
—

 
—

 
—

 
—

Income (loss) before equity income from financial services operations and income taxes
(71
)
 
20

 
—

 
(51
)
Equity income from financial services operations
16

 
—

 
(16
)
 
—

Income (loss) before income tax
(55
)
 
20

 
(16
)
 
(51
)
Income tax expense
(11
)
 
(4
)
 
—

 
(15
)
Net income (loss)
(66
)
 
16

 
(16
)
 
(66
)
Less: Net income attributable to non-controlling interests
7

 
—

 
—

 
7

Net income (loss) attributable to Navistar International Corporation
$
(73
)
 
$
16

 
$
(16
)
 
$
(73
)


E-6


Condensed Statements of Revenues and Expenses
Navistar International Corporation
(Manufacturing operations with financial services operations on an after-tax equity basis)
 
For the Three Months Ended January 31, 2017
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Consolidated Statement of Operations
Sales of manufactured products
$
1,629

 
$
—

 
$
—

 
$
1,629

Finance revenues
—

 
54

 
(20
)
 
34

Sales and revenues, net
1,629

 
54

 
(20
)
 
1,663

Costs of products sold
1,370

 
—

 
—

 
1,370

Restructuring charges
7

 
—

 
—

 
7

Asset impairment charges
2

 
—

 
—

 
2

Selling, general and administrative expenses
176

 
25

 
(1
)
 
200

Engineering and product development costs
63

 
—

 
—

 
63

Interest expense
64

 
20

 
(2
)
 
82

Other expense (income), net
13

 
(4
)
 
(17
)
 
(8
)
Total costs and expenses
1,695

 
41

 
(20
)
 
1,716

Equity in income of non-consolidated affiliates
3

 
—

 
—

 
3

Income (loss) before equity income from financial services operations and income taxes
(63
)
 
13

 
—

 
(50
)
Equity income from financial services operations
9

 
—

 
(9
)
 
—

Income (loss) before income tax
(54
)
 
13

 
(9
)
 
(50
)
Income tax expense
—

 
(4
)
 
—

 
(4
)
Net income (loss)
(54
)
 
9

 
(9
)
 
(54
)
Less: Net income attributable to non-controlling interests
8

 
—

 
—

 
8

Net income (loss) attributable to Navistar International Corporation
$
(62
)
 
$
9

 
$
(9
)
 
$
(62
)


E-7


Condensed Statements of Assets, Liabilities, and Stockholders' Equity (Deficit)
Navistar International Corporation
(Manufacturing operations with financial services operations on an after-tax equity basis)
 
As of January 31, 2018
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Consolidated Balance Sheet
Assets
 
 
 
 
 
 
 
Cash and cash equivalents
$
671

 
$
28

 
$
—

 
$
699

Marketable securities
276

 
—

 
—

 
276

Restricted cash
30

 
58

 
—

 
88

Finance and other receivables, net
340

 
1,740

 
(67
)
 
2,013

Inventories
991

 
7

 
—

 
998

Goodwill
38

 
—

 
—

 
38

Property and equipment, net
1,071

 
264

 
—

 
1,335

Investments in and advances to financial services operations
538

 
—

 
(538
)
 
—

Investments in non-consolidated affiliates
55

 
—

 
—

 
55

Deferred taxes, net
125

 
4

 
—

 
129

Other assets
320

 
18

 
—

 
338

Total assets
$
4,455

 
$
2,119

 
$
(605
)
 
$
5,969

Liabilities and stockholders' equity (deficit)
 
 
 
 
 
 
 
Accounts payable
$
1,166

 
$
41

 
$
(67
)
 
$
1,140

Debt
3,649

 
1,472

 
—

 
5,121

Postretirement benefits liabilities
2,525

 
—

 
—

 
2,525

Other liabilities
1,698

 
68

 
—

 
1,766

Total liabilities
9,038

 
1,581

 
(67
)
 
10,552

Stockholders' equity attributable to non-controlling interest
4

 
—

 
—

 
4

Stockholders' equity (deficit) attributable to controlling interest
(4,587
)
 
538

 
(538
)
 
(4,587
)
Total liabilities and stockholders' equity (deficit)
$
4,455

 
$
2,119

 
$
(605
)
 
$
5,969


E-8


Condensed Statements of Assets, Liabilities, and Stockholders' Equity (Deficit)
Navistar International Corporation
(Manufacturing operations with financial services operations on an after-tax equity basis)
 
As of October 31, 2017
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Consolidated Balance Sheet
Assets
 
 
 
 
 
 
 
Cash and cash equivalents
$
666

 
$
40

 
$
—

 
$
706

Marketable securities
370

 
—

 
—

 
370

Restricted cash
24

 
110

 
—

 
134

Finance and other receivables, net
404

 
1,854

 
(69
)
 
2,189

Inventories
850

 
7

 
—

 
857

Goodwill
38

 
—

 
—

 
38

Property and equipment, net
1,083

 
243

 
—

 
1,326

Investments in and advances to financial services operations
517

 
—

 
(517
)
 
—

Investments in non-consolidated affiliates
56

 
—

 
—

 
56

Deferred taxes, net
125

 
4

 
—

 
129

Other assets
312

 
18

 
—

 
330

Total assets
$
4,445

 
$
2,276

 
$
(586
)
 
$
6,135

Liabilities and stockholders' equity (deficit)
 
 
 
 
 
 
 
Accounts payable
$
1,330

 
$
31

 
$
(69
)
 
$
1,292

Debt
3,407

 
1,651

 
—

 
5,058

Postretirement benefits liabilities
2,556

 
—

 
—

 
2,556

Other liabilities
1,726

 
77

 
—

 
1,803

Total liabilities
9,019

 
1,759

 
(69
)
 
10,709

Stockholders' equity attributable to non-controlling interest
4

 
—

 
—

 
4

Stockholders' equity (deficit) attributable to controlling interest
(4,578
)
 
517

 
(517
)
 
(4,578
)
Total liabilities and stockholders' equity (deficit)
$
4,445

 
$
2,276

 
$
(586
)
 
$
6,135


E-9


Condensed Statements of Cash Flows
Navistar International Corporation
(Manufacturing operations with financial services operations on an after-tax equity basis)
 
For the Three Months Ended January 31, 2018
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Condensed Consolidated Statement of Cash Flows
Cash flows from operating activities
 
 
 
 
 
 
 
Net income (loss)
$
(66
)
 
$
16

 
$
(16
)
 
$
(66
)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
37

 
—

 
—

 
37

Depreciation of equipment leased to others
5

 
13

 
—

 
18

Amortization of debt issuance costs and discount
5

 
3

 
—

 
8

Deferred income taxes
7

 
(1
)
 
—

 
6

Asset impairment charges
2

 
—

 
—

 
2

Equity in income of financial services affiliates
(16
)
 
—

 
16

 
—

Dividends from non-consolidated affiliates
3

 
—

 
—

 
3

Change in other intercompany receivables and payables
(1
)
 
1

 
—

 
—

Other, net
(213
)
 
129

 
—

 
(84
)
Net cash provided by (used in) operating activities
(237
)
 
161

 
—

 
(76
)
Cash flows from investing activities
 
 
 
 
 
 
 
Purchases of marketable securities
(61
)
 
—

 
—

 
(61
)
Sales of marketable securities
150

 
—

 
—

 
150

Maturities of marketable securities
5

 
—

 
—

 
5

Net change in restricted cash and cash equivalents
(6
)
 
52

 
—

 
46

Capital expenditures
(30
)
 
—

 
—

 
(30
)
Purchase of equipment leased to others
(19
)
 
(33
)
 
—

 
(52
)
Other investing activities
—

 
3

 
—

 
3

Net cash provided by investing activities
39

 
22

 
—

 
61

Net cash provided by (used in) financing activities
198

 
(192
)
 
—

 
6

Effect of exchange rate changes on cash and cash equivalents
5

 
(3
)
 
—

 
2

Increase (decrease) in cash and cash equivalents
5

 
(12
)
 
—

 
(7
)
Cash and cash equivalents at beginning of the period
666

 
40

 
—

 
706

Cash and cash equivalents at end of the period
$
671

 
$
28

 
$
—

 
$
699


E-10


Condensed Statements of Cash Flows
Navistar International Corporation
(Manufacturing operations with financial services operations on an after-tax equity basis)
 
For the Three Months Ended January 31, 2017
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Condensed Consolidated Statement of Cash Flows
Cash flows from operating activities
 
 
 
 
 
 
 
Net income (loss)
$
(54
)
 
$
9

 
$
(9
)
 
$
(54
)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
36

 
1

 
—

 
37

Depreciation of equipment leased to others
10

 
12

 
—

 
22

Amortization of debt issuance costs and discount
6

 
4

 
—

 
10

Asset impairment charges
2

 
—

 
—

 
2

Equity in income of non-consolidated affiliates
(3
)
 
—

 
—

 
(3
)
Equity in income of financial services affiliates
(9
)
 
—

 
9

 
—

Dividends from non-consolidated affiliates
6

 
—

 
—

 
6

Change in intercompany receivables and payables
10

 
(10
)
 
—

 
—

Other, net
(233
)
 
235

 
—

 
2

Net cash provided by (used in) operating activities
(229
)
 
251

 
—

 
22

Cash flows from investing activities
 
 
 
 
 
 
 
Purchases of marketable securities
(212
)
 
—

 
—

 
(212
)
Sales of marketable securities
59

 
—

 
—

 
59

Maturities of marketable securities
1

 
—

 
—

 
1

Net change in restricted cash and cash equivalents
—

 
15

 
—

 
15

Capital expenditures
(46
)
 
—

 
—

 
(46
)
Purchase of equipment leased to others
(13
)
 
(11
)
 
—

 
(24
)
Other investing activities
(2
)
 
2

 
—

 
—

Net cash provided by (used in) investing activities
(213
)
 
6

 
—

 
(207
)
Net cash provided by (used in) financing activities
188

 
(241
)
 
—

 
(53
)
Effect of exchange rate changes on cash and cash equivalents
(1
)
 
8

 
—

 
7

Increase (decrease) in cash and cash equivalents
(255
)
 
24

 
—

 
(231
)
Cash and cash equivalents at beginning of the period
761

 
43

 
—

 
804

Cash and cash equivalents at end of the period
$
506

 
$
67

 
$
—

 
$
573




E-11

NAVISTAR INTERNATIONAL CORP Reports