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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, 2020
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Consolidated Statement of Operations
Sales of manufactured products, net
$
1,639

 
$
—

 
$
—

 
$
1,639

Finance revenues
—

 
49

 
(13
)
 
36

Sales and revenues, net
1,639

 
49

 
(13
)
 
1,675

Costs of products sold
1,388

 
—

 
—

 
1,388

Restructuring charges
4

 
—

 
—

 
4

Asset impairment charges
12

 
—

 
—

 
12

Selling, general and administrative expenses
117

 
26

 
(2
)
 
141

Engineering and product development costs
73

 
—

 
—

 
73

Interest expense
58

 
16

 
(3
)
 
71

Other expense (income), net
25

 
(3
)
 
(8
)
 
14

Total costs and expenses
1,677

 
39

 
(13
)
 
1,703

Equity in income of non-consolidated affiliates
2

 
—

 
—

 
2

Income (loss) before equity income from financial services operations and income taxes
(36
)
 
10

 
—

 
(26
)
Equity income from financial services operations
8

 
—

 
(8
)
 
—

Income (loss) before income tax
(28
)
 
10

 
(8
)
 
(26
)
Income tax expense
(6
)
 
(2
)
 
—

 
(8
)
Net income (loss)
(34
)
 
8

 
(8
)
 
(34
)
Less: Net income attributable to non-controlling interests
3

 
—

 
—

 
3

Net income (loss) attributable to Navistar International Corporation
$
(37
)
 
$
8

 
$
(8
)
 
$
(37
)


E-6


 
For the Nine Months Ended July 31, 2020
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Consolidated Statement of Operations
Sales of manufactured products, net
$
5,310

 
$
—

 
$
—

 
$
5,310

Finance revenues
—

 
170

 
(42
)
 
128

Sales and revenues, net
5,310

 
170

 
(42
)
 
5,438

Costs of products sold
4,541

 
—

 
—

 
4,541

Restructuring charges
5

 
—

 
—

 
5

Asset impairment charges
25

 
—

 
—

 
25

Selling, general and administrative expenses
419

 
81

 
(7
)
 
493

Engineering and product development costs
237

 
—

 
—

 
237

Interest expense
148

 
55

 
(4
)
 
199

Other expense (income), net
75

 
(17
)
 
(31
)
 
27

Total costs and expenses
5,450

 
119

 
(42
)
 
5,527

Income (loss) before equity income from financial services operations and income taxes
(140
)
 
51

 
—

 
(89
)
Equity income from financial services operations
40


—

 
(40
)
 
—

Income (loss) before income tax
(100
)
 
51

 
(40
)
 
(89
)
Income tax benefit (expense)
1

 
(11
)
 
—

 
(10
)
Net income (loss)
(99
)
 
40

 
(40
)
 
(99
)
Less: Net income attributable to non-controlling interests
12

 
—

 
—

 
12

Net income (loss) attributable to Navistar International Corporation
$
(111
)
 
$
40

 
$
(40
)
 
$
(111
)


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, 2019
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Consolidated Statement of Operations
Sales of manufactured products, net
$
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

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 expense
(25
)
 
(4
)
 
—

 
(29
)
Net income (loss)
161

 
26

 
(26
)
 
161

Less: Net income (loss) attributable to non-controlling interests
5

 
—

 
—

 
5

Net income attributable to Navistar International Corporation
$
156

 
$
26

 
$
(26
)
 
$
156




E-8


 
For the Nine Months Ended July 31, 2019
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Consolidated Statement of Operations
Sales of manufactured products, net
$
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 (loss) 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-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, 2020
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Consolidated Balance Sheet
Assets
 
 
 
 
 
 
 
Cash and cash equivalents
$
1,610

 
$
38

 
$
—

 
$
1,648

Restricted cash and cash equivalents
45

 
241

 
—

 
286

Finance and other receivables, net
274

 
2,095

 
(442
)
 
1,927

Inventories, net
893

 
3

 
—

 
896

Goodwill
38

 
—

 
—

 
38

Property and equipment, net
914

 
327

 
—

 
1,241

Operating lease right of use assets
118


1


—


119

Investments in and advances to financial services operations
647

 
—

 
(647
)
 
—

Investments in non-consolidated affiliates
30

 
—

 
—

 
30

Deferred taxes, net
113

 
2

 
—

 
115

Other assets
355

 
20

 
—

 
375

Total assets
$
5,037

 
$
2,727

 
$
(1,089
)
 
$
6,675

Liabilities and stockholders' equity (deficit)
 
 
 
 
 
 
 
Accounts payable
$
1,589

 
$
7

 
$
(442
)
 
$
1,154

Debt
3,532

 
2,027

 
—

 
5,559

Postretirement benefits liabilities
2,013

 
—

 
—

 
2,013

Other liabilities
1,731

 
46

 
—

 
1,777

Total liabilities
8,865

 
2,080

 
(442
)
 
10,503

Stockholders' equity attributable to non-controlling interest
2

 
—

 
—

 
2

Stockholders' equity (deficit) attributable to controlling interest
(3,830
)
 
647

 
(647
)
 
(3,830
)
Total liabilities and stockholders' equity (deficit)
$
5,037

 
$
2,727

 
$
(1,089
)
 
$
6,675


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, 2019
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Consolidated Balance Sheet
Assets
 
 
 
 
 
 
 
Cash and cash equivalents
$
1,328

 
$
42

 
$
—

 
$
1,370

Restricted cash and cash equivalents
50

 
137

 
—

 
187

Finance and other receivables, net
348

 
2,423

 
(226
)
 
2,545

Inventories, net
905

 
6

 
—

 
911

Goodwill
38

 
—

 
—

 
38

Property and equipment, net
942

 
367

 
—

 
1,309

Investments in and advances to financial services operations
668

 
—

 
(668
)
 
—

Investments in non-consolidated affiliates
31

 
—

 
—

 
31

Deferred taxes, net
115

 
2

 
—

 
117

Other assets
386

 
23

 
—

 
409

Total assets
$
4,811

 
$
3,000

 
$
(894
)
 
$
6,917

Liabilities and stockholders' equity (deficit)
 
 
 
 
 
 
 
Accounts payable
$
1,554

 
$
13

 
$
(226
)
 
$
1,341

Debt
2,932

 
2,256

 
—

 
5,188

Postretirement benefits liabilities
2,103

 
—

 
—

 
2,103

Other liabilities
1,945

 
63

 
—

 
2,008

Total liabilities
8,534

 
2,332

 
(226
)
 
10,640

Stockholders' equity attributable to non-controlling interest
3

 
—

 
—

 
3

Stockholders' equity (deficit) attributable to controlling interest
(3,726
)
 
668

 
(668
)
 
(3,726
)
Total liabilities and stockholders' equity (deficit)
$
4,811

 
$
3,000

 
$
(894
)
 
$
6,917


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, 2020
(in millions)
Manufacturing Operations
 
Financial Services Operations
 
Adjustments
 
Condensed Consolidated Statement of Cash Flows
Cash flows from operating activities
 
 
 
 
 
 
 
Net income (loss)
$
(99
)
 
$
40

 
$
(40
)
 
$
(99
)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
102

 
1

 
—

 
103

Depreciation of equipment leased to others
(4
)
 
47

 
—

 
43

Amortization of debt issuance costs and discount
5

 
6

 
—

 
11

Deferred income taxes
(5
)
 
—

 
—

 
(5
)
Asset impairment charges
25

 
—

 
—

 
25

Equity in income of financial services affiliates
(40
)
 
—

 
40

 
—

Dividends from financial services operations
30

 
—

 
(30
)
 
—

Change in intercompany receivables and payables
89

 
(89
)
 
—

 
—

Other, net
(405
)
 
459

 
—

 
54

Net cash provided by (used in) operating activities
(302
)
 
464

 
(30
)
 
132

Cash flows from investing activities
 
 
 
 
 
 
 
Capital expenditures
(115
)
 
—

 
—

 
(115
)
Purchase of equipment leased to others
(21
)
 
(48
)
 
—

 
(69
)
Other investing activities
7

 
10

 
—

 
17

Net cash used in investing activities
(129
)
 
(38
)
 
—

 
(167
)
Net cash provided by (used in) financing activities
721

 
(326
)
 
30

 
425

Effect of exchange rate changes on cash, cash equivalents and restricted cash
(13
)
 
—

 
—

 
(13
)
Increase in cash, cash equivalents and restricted cash
277

 
100

 
—

 
377

Cash, cash equivalents and restricted cash at beginning of the period
1,378

 
179

 
—

 
1,557

Cash, cash equivalents and restricted cash at end of the period
$
1,655

 
$
279

 
$
—

 
$
1,934


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, 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 other 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
 
 
 
 
 
 
 
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-13