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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 July 31, 2019
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Consolidated Statement of Operations
Sales of manufactured products
$
2,996

 
$
—

 
$
—

 
$
2,996

Finance revenues
—

 
74

 
(28
)
 
46

Sales and revenues, net
2,996

 
74

 
(28
)
 
3,042

Costs of products sold
2,501

 
—

 
—

 
2,501

Restructuring charges
—

 
—

 
—

 
—

Asset impairment charges
3

 
—

 
—

 
3

Selling, general and administrative expenses
145

 
22

 


 
167

Engineering and product development costs
81

 
—

 
—

 
81

Interest expense
49

 
27

 
—

 
76

Other expense (income), net
58

 
(5
)
 
(28
)
 
25

Total costs and expenses
2,837

 
44

 
(28
)
 
2,853

Equity in income of non-consolidated affiliates
1

 
—

 
—

 
1

Income before equity income from financial services operations and income taxes
160

 
30

 
—

 
190

Equity income from financial services operations
26

 
—

 
(26
)
 
—

Income (loss) before income tax
186

 
30

 
(26
)
 
190

Income tax benefit (expense)
(25
)
 
(4
)
 
—

 
(29
)
Net income (loss)
161

 
26

 
(26
)
 
161

Less: Net income attributable to non-controlling interests
5

 
—

 
—

 
5

Net income (loss) attributable to Navistar International Corporation
$
156

 
$
26

 
$
(26
)
 
$
156


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 Nine Months Ended July 31, 2019
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Consolidated Statement of Operations
Sales of manufactured products
$
8,330

 
$
—

 
$
—

 
$
8,330

Finance revenues
—

 
226

 
(85
)
 
141

Sales and revenues, net
8,330

 
226

 
(85
)
 
8,471

Costs of products sold
6,973

 
—

 
—

 
6,973

Restructuring charges
1

 
—

 
—

 
1

Asset impairment charges
6

 
—

 
—

 
6

Selling, general and administrative expenses
654

 
73

 
(1
)
 
726

Engineering and product development costs
242

 
—

 
—

 
242

Interest expense
160

 
83

 
—

 
243

Other expense (income), net
247

 
(23
)
 
(84
)
 
140

Total costs and expenses
8,283

 
133

 
(85
)
 
8,331

Equity in income of non-consolidated affiliates
4

 
—

 
—

 
4

Income before equity income from financial services operations and income taxes
51

 
93

 
—

 
144

Equity income from financial services operations
74

 
—

 
(74
)
 
—

Income (loss) before income tax
125

 
93

 
(74
)
 
144

Income tax benefit (expense)
10

 
(19
)
 
—

 
(9
)
Net income (loss)
135

 
74

 
(74
)
 
135

Less: Net income attributable to non-controlling interests
16

 
—

 
—

 
16

Net income (loss) attributable to Navistar International Corporation
$
119

 
$
74

 
$
(74
)
 
$
119


E-7


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 July 31, 2018
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Consolidated Statement of Operations
Sales of manufactured products
$
2,566

 
$
—

 
$
—

 
$
2,566

Finance revenues
—

 
65

 
(25
)
 
40

Sales and revenues, net
2,566

 
65

 
(25
)
 
2,606

Costs of products sold
2,096

 
—

 
—

 
2,096

Restructuring charges
1

 
—

 
—

 
1

Asset impairment charges
7

 
1

 
—

 
8

Selling, general and administrative expenses
199

 
23

 
—

 
222

Engineering and product development costs
72

 
—

 
—

 
72

Interest expense
60

 
22

 
—

 
82

Other expense (income), net
(26
)
 
(4
)
 
(25
)
 
(55
)
Total costs and expenses
2,409

 
42

 
(25
)
 
2,426

Income before equity income from financial services operations and income taxes
157

 
23

 
—

 
180

Equity income from financial services operations
17

 
—

 
(17
)
 
—

Income (loss) before income tax
174

 
23

 
(17
)
 
180

Income tax benefit (expense)
3

 
(6
)
 
—

 
(3
)
Net income (loss)
177

 
17

 
(17
)
 
177

Less: Net income attributable to non-controlling interests
7

 
—

 
—

 
7

Net income (loss) attributable to Navistar International Corporation
$
170

 
$
17

 
$
(17
)
 
$
170


E-8


Condensed Statements of Revenues and Expenses
Navistar International Corporation
(Manufacturing operations with financial services operations on an after-tax equity basis)
 
For the Nine Months Ended July 31, 2018
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Consolidated Statement of Operations
Sales of manufactured products
$
6,815

 
$
—

 
$
—

 
$
6,815

Finance revenues
—

 
187

 
(69
)
 
118

Sales and revenues, net
6,815

 
187

 
(69
)
 
6,933

Costs of products sold
5,615

 
—

 
—

 
5,615

Restructuring charges
(1
)
 
—

 
—

 
(1
)
Asset impairment charges
10

 
1

 
—

 
11

Selling, general and administrative expenses
546

 
68

 
(1
)
 
613

Engineering and product development costs
222

 
—

 
—

 
222

Interest expense
176

 
64

 
—

 
240

Other expense (income), net
112

 
(8
)
 
(68
)
 
36

Total costs and expenses
6,680

 
125

 
(69
)
 
6,736

Income before equity income from financial services operations and income taxes
135

 
62

 
—

 
197

Equity income from financial services operations
49

 
—

 
(49
)
 
—

Income (loss) before income tax
184

 
62

 
(49
)
 
197

Income tax benefit (expense)
(12
)
 
(13
)
 
—

 
(25
)
Net income (loss)
172

 
49

 
(49
)
 
172

Less: Net income attributable to non-controlling interests
20

 
—

 
—

 
20

Net income (loss) attributable to Navistar International Corporation
$
152

 
$
49

 
$
(49
)
 
$
152


E-9


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 July 31, 2019
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Consolidated Balance Sheet
Assets
 
 
 
 
 
 
 
Cash and cash equivalents
$
1,112

 
$
48

 
$
—

 
$
1,160

Marketable securities
3

 
—

 
—

 
3

Restricted cash and cash equivalents
34

 
102

 
—

 
136

Finance and other receivables, net
441

 
2,518

 
(56
)
 
2,903

Inventories
1,187

 
8

 
—

 
1,195

Goodwill
38

 
—

 
—

 
38

Property and equipment, net
924

 
366

 
—

 
1,290

Investments in and advances to financial services operations
663

 
—

 
(663
)
 
—

Investments in non-consolidated affiliates
33

 
—

 
—

 
33

Deferred taxes, net
123

 
1

 
—

 
124

Other assets
388

 
24

 
—

 
412

Total assets
$
4,946

 
$
3,067

 
$
(719
)
 
$
7,294

Liabilities and stockholders' equity (deficit)
 
 
 
 
 
 
 
Accounts payable
$
1,793

 
$
69

 
$
(56
)
 
$
1,806

Debt
2,929

 
2,275

 
—

 
5,204

Postretirement benefits liabilities
1,929

 
—

 
—

 
1,929

Other liabilities
1,955

 
60

 
—

 
2,015

Total liabilities
8,606

 
2,404

 
(56
)
 
10,954

Stockholders' equity attributable to non-controlling interest
3

 
—

 
—

 
3

Stockholders' equity (deficit) attributable to controlling interest
(3,663
)
 
663

 
(663
)
 
(3,663
)
Total liabilities and stockholders' equity (deficit)
$
4,946

 
$
3,067

 
$
(719
)
 
$
7,294


E-10


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, 2018
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Consolidated Balance Sheet
Assets
 
 
 
 
 
 
 
Cash and cash equivalents
$
1,261

 
$
59

 
$
—

 
$
1,320

Marketable securities
101

 
—

 
—

 
101

Restricted cash and cash equivalents
34

 
91

 
—

 
125

Finance and other receivables, net
505

 
2,259

 
(101
)
 
2,663

Inventories
1,102

 
8

 
—

 
1,110

Goodwill
38

 
—

 
—

 
38

Property and equipment, net
1,060

 
310

 
—

 
1,370

Investments in and advances to financial services operations
581

 
—

 
(581
)
 
—

Investments in non-consolidated affiliates
50

 
—

 
—

 
50

Deferred taxes, net
117

 
4

 
—

 
121

Other assets
314

 
18

 
—

 
332

Total assets
$
5,163

 
$
2,749

 
$
(682
)
 
$
7,230

Liabilities and stockholders' equity (deficit)
 
 
 
 
 
 
 
Accounts payable
$
1,664

 
$
43

 
$
(101
)
 
$
1,606

Debt
3,426

 
2,041

 
—

 
5,467

Postretirement benefits liabilities
2,097

 
—

 
—

 
2,097

Other liabilities
1,902

 
84

 
—

 
1,986

Total liabilities
9,089

 
2,168

 
(101
)
 
11,156

Stockholders' equity attributable to non-controlling interest
5

 
—

 
—

 
5

Stockholders' equity (deficit) attributable to controlling interest
(3,931
)
 
581

 
(581
)
 
(3,931
)
Total liabilities and stockholders' equity (deficit)
$
5,163

 
$
2,749

 
$
(682
)
 
$
7,230


E-11


Condensed Statements of Cash Flows
Navistar International Corporation
(Manufacturing operations with financial services operations on an after-tax equity basis)
 
For the Nine Months Ended July 31, 2019
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Condensed Consolidated Statement of Cash Flows
Cash flows from operating activities
 
 
 
 
 
 
 
Net income (loss)
$
135

 
$
74

 
$
(74
)
 
$
135

Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
98

 
1

 
—

 
99

Depreciation of equipment leased to others
(2
)
 
47

 
—

 
45

Amortization of debt issuance costs and discount
9

 
6

 
—

 
15

Deferred income taxes
(46
)
 
5

 
—

 
(41
)
Asset impairment charges
6

 
—

 
—

 
6

Gain on sales of investments and businesses, net
(56
)
 
—

 
—

 
(56
)
Equity in income of non-consolidated affiliates
(4
)
 
—

 
—

 
(4
)
Equity in income of financial services affiliates
(74
)
 
—

 
74

 
—

Dividends from non-consolidated affiliates
1

 
—

 
—

 
1

Change in intercompany receivables and payables
(43
)
 
43

 
—

 
—

Other, net
167

 
(263
)
 
—

 
(96
)
Net cash provided by (used in) operating activities
191

 
(87
)
 
—

 
104

Cash flows from investing activities
 
 
 
 
 
 
 
Purchases of marketable securities
—

 
—

 
—

 
—

Sales of marketable securities
—

 
—

 
—

 
—

Maturities of marketable securities
98

 
—

 
—

 
98

Capital expenditures
(88
)
 
(2
)
 
—

 
(90
)
Purchase of equipment leased to others
(3
)
 
(127
)
 
—

 
(130
)
Other investing activities
102

 
11

 
—

 
113

Net cash provided by (used in) investing activities
109

 
(118
)
 
—

 
(9
)
Net cash provided by (used in) financing activities
(447
)
 
210

 
—

 
(237
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(2
)
 
(5
)
 
—

 
(7
)
Decrease in cash, cash equivalents and restricted cash
(149
)
 
—

 
—

 
(149
)
Cash, cash equivalents and restricted cash at beginning of the period
1,295

 
150

 
—

 
1,445

Cash, cash equivalents and restricted cash at end of the period
$
1,146

 
$
150

 
$
—

 
$
1,296


E-12


Condensed Statements of Cash Flows
Navistar International Corporation
(Manufacturing operations with financial services operations on an after-tax equity basis)
 
For the Nine Months Ended July 31, 2018
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Condensed Consolidated Statement of Cash Flows
Cash flows from operating activities
 
 
 
 
 
 
 
Net income (loss)
$
172

 
$
49

 
$
(49
)
 
$
172

Adjustments to reconcile net income (loss) to cash used in operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
106

 
1

 
—

 
107

Depreciation of equipment leased to others
13

 
40

 
—

 
53

Amortization of debt issuance costs and discount
16

 
7

 
—

 
23

Deferred income taxes
(3
)
 
—

 
—

 
(3
)
Asset impairment charges
10

 
1

 
—

 
11

Equity in income of financial services affiliates
(49
)
 
—

 
49

 
—

Dividends from non-consolidated affiliates
4

 
—

 
—

 
4

Change in other intercompany receivables and payables
49

 
(49
)
 
—

 
—

Other, net
(472
)
 
(75
)
 
—

 
(547
)
Net cash used in operating activities
(154
)
 
(26
)
 
—

 
(180
)
Cash flows from investing activities
 
 
 
 
 
 
 
Purchases of marketable securities
(214
)
 
—

 
—

 
(214
)
Sales of marketable securities
460

 
—

 
—

 
460

Maturities of marketable securities
29

 
—

 
—

 
29

Capital expenditures
(78
)
 
(1
)
 
—

 
(79
)
Purchase of equipment leased to others
(62
)
 
(80
)
 
—

 
(142
)
Other investing activities
(2
)
 
8

 
—

 
6

Net cash provided by (used in) investing activities
133

 
(73
)
 
—

 
60

Net cash provided by financing activities
363

 
155

 
—

 
518

Effect of exchange rate changes on cash, cash equivalents and restricted cash
(15
)
 
(1
)
 
—

 
(16
)
Increase in cash, cash equivalents and restricted cash
327

 
55

 
—

 
382

Cash, cash equivalents and restricted cash at beginning of the period
690

 
150

 
—

 
840

Cash, cash equivalents and restricted cash at end of the period
$
1,017

 
$
205

 
$
—

 
$
1,222


E-13