Segment reporting

The following is a description of our four reporting segments:

•

Our Truck segment manufactures and distributes a full line of Class 4 through 8 trucks, buses and military vehicles under the International and IC Bus (“IC”) brands. Our Truck segment also produces chassis for motor homes and commercial step-van vehicles under the Workhorse Custom Chassis (“WCC”) brand and recreational vehicles under the Monaco family of brands. In an effort to strengthen and maintain our dealer network, this segment occasionally acquires and operates dealer locations for the purpose of transitioning ownership.

•

Our Engine segment designs and manufactures diesel engines for use globally, in Class 3 through 8 vehicles, as well as off-road applications. In North America, these engines primarily go into our Class 6 and 7 medium trucks and buses and Class 8 heavy trucks, and are sold to original equipment manufacturers (“OEMs”). In addition, our Engine segment produces diesel engines in Brazil primarily for distribution in South America under the MWM brand for sale to OEMs. In all other areas of the world, including North America, engines are sold under the MaxxForce brand name. To control cost and technology, Engine has expanded its operations to included Pure Power Technologies, a components company focused on air, fuel, and aftertreatment systems to meet more stringent Euro and EPA emission standards. Also included in the Engine segment are the operating results of BDP, which manages the sourcing, merchandising, and distribution of service parts for vehicles we and Ford sell in North America.

•

Our Parts segment provides customers with proprietary products needed to support the International commercial and military truck, IC bus, WCC chassis, and MaxxForce engine lines. Our Parts segment also provides a wide selection of other standard truck, trailer, and engine aftermarket parts. At April 30, 2011, this segment operated eleven regional parts distribution centers that provide 24-hour availability and shipment.


•	Our Financial Services segment provides retail, wholesale, and lease financing of products sold by the Truck and Parts segments and their dealers within the U.S. and Mexico, as well as financing for wholesale accounts and selected retail accounts receivable.

Corporate contains those items that are not included in our four segments.

Segment Profit (Loss)

We define segment profit (loss) as net income (loss) attributable to Navistar International Corporation excluding income tax benefit (expense). Our results for interim periods are not necessarily indicative of results for a full year. Selected financial information is as follows:



	Truck			Engine			Parts		Financial Services^(A)		Corporate and Eliminations			Total
(in millions)
Three Months Ended April 30, 2011
External sales and revenues, net	$	2,262		$	524		$	512	$	57	$	—		$	3,355
Intersegment sales and revenues^(B)	9			431			50		26		(516		)	—
Total sales and revenues, net	$	2,271		$	955		$	562	$	83	$	(516	)	$	3,355
Net income attributable to NIC	$	92		$	2		$	74	$	40	$	(134	)	$	74
Income tax expense	—			—			—		—		5			5
Segment profit^(B)(C)	$	92		$	2		$	74	$	40	$	(129	)	$	79
Depreciation and amortization	$	38		$	30		$	3	$	6	$	4		$	81
Interest expense	—			—			—		26		36			62
Equity in income (loss) of non-consolidated affiliates	(17		)	(2		)	3		—		—			(16		)
Capital expenditures^(D)	22			52			3		—		13			90



	Truck			Engine			Parts		Financial Services^(A)		Corporate and Eliminations			Total
(in millions)
Three Months Ended April 30, 2010 (Revised)^(E)
External sales and revenues, net	$	1,847		$	444		$	399	$	53	$	—		$	2,743
Intersegment sales and revenues	—			233			48		23		(304		)	—
Total sales and revenues, net	$	1,847		$	677		$	447	$	76	$	(304	)	$	2,743
Net income attributable to NIC	$	76		$	15		$	58	$	16	$	(122	)	$	43
Income tax benefit	—			—			—		—		10			10
Segment profit^(C)	$	76		$	15		$	58	$	16	$	(132	)	$	33
Depreciation and amortization	$	40		$	27		$	2	$	7	$	3		$	79
Interest expense	—			—			—		29		35			64
Equity in loss of non-consolidated affiliates	(11		)	(2		)	—		—		—			(13		)
Capital expenditures^(D)	24			11			2		—		2			39



Six Months Ended April 30, 2011
External sales and revenues, net	$	4,053		$	980		$	958	$	107	$	—		$	6,098
Intersegment sales and revenues^(B)	18			758			99		49		(924		)	—
Total sales and revenues, net	$	4,071		$	1,738		$	1,057	$	156	$	(924	)	$	6,098
Net income (loss) attributable to NIC	$	124		$	(6	)	$	130	$	72	$	(252	)	$	68
Income tax expense	—			—			—		—		5			5
Segment profit (loss)^(B)(C)	$	124		$	(6	)	$	130	$	72	$	(247	)	$	73
Depreciation and amortization	$	75		$	59		$	5	$	13	$	9		$	161
Interest expense	—			—			—		56		69			125
Equity in income (loss) of non-consolidated affiliates	(35		)	(2		)	4		—		—			(33		)
Capital expenditures^(D)	38			84			4		—		59			185



Six Months Ended April 30, 2010 (Revised)^(E)
External sales and revenues, net	$	3,563		$	1,069		$	816	$	104	$	—		$	5,552
Intersegment sales and revenues^(B)	1			429			98		47		(575		)	—
Total sales and revenues, net	$	3,564		$	1,498		$	914	$	151	$	(575	)	$	5,552
Net income attributable to NIC	$	111		$	69		$	137	$	28	$	(283	)	$	62
Income tax benefit	—			—			—		—		2			2
Segment profit^(C)	$	111		$	69		$	137	$	28	$	(285	)	$	60
Depreciation and amortization	$	80		$	53		$	3	$	15	$	7		$	158
Interest expense	—			—			—		61		70			131
Equity in income (loss) of non-consolidated affiliates	(18		)	(2		)	1		—		—			(19		)
Capital expenditures^(D)	34			34			4		1		5			78



As of April 30, 2011
Segment assets	$	2,623	$	1,820	$	725	$	3,553	$	1,245	$	9,966
As of October 31, 2010
Segment assets	2,457		1,715		811		3,497		1,250		9,730

_______________


(A)	Total sales and revenues in the Financial Services segment include interest revenues of $82 million and $153 million for the three and six months ended April 30, 2011, respectively, and $65 million and $135 million for the three and six months ended April 30, 2010, respectively.


(B)	Beginning in the second quarter of 2011, certain purchases from the Engine segment by the Parts segment are recorded at market-based pricing. All other intersegment purchases from the Truck and Engine by the Parts segment continue to be recorded at standard production cost. The effect of this change did not have a material impact on our segment reporting.


(C)	In the first quarter of 2011, we began allocating gains and losses on commodities derivatives to the segment to which the underlying commodities relate. Previously, the impacts of commodities derivatives were not material and were recorded within Corporate.


(D)	Exclusive of purchase of equipment leased to others.


(E)	Certain amounts have been revised to reflect a retrospective change in accounting principle. See Note 1, Summary of significant accounting policies.

The following is information about our two customers from which we derived more than 10% of our consolidated Sales and revenues, net:


•	Sales of vehicles and service parts to the U.S. government were 14% and 12% of consolidated sales and revenues for the three and six months ended April 30, 2011, respectively, and 12% and 11%, for the same periods in 2010, and were recorded in the Truck and Parts segments.


•	Sales of diesel engines, trucks and parts to Ford were 12% of consolidated sales and revenues for the six months ended April 30, 2010, and were recorded in the Truck and Engine segme