Segment reporting

9 Months Ended

Jul. 31, 2012

Segment Reporting [Abstract]

Segment reporting

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 WCC brand and recreational vehicles. 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 under the MWM brand for sale to OEMs in South America, as well as contract manufacturing. In all other areas of the world, including North America, engines are sold under the MaxxForce brand name. To control cost and technology, our Engine segment has expanded its operations to include Pure Power Technologies ("PPT"), 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 certain service parts we sell to Ford 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 July 31, 2012, 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.

In June 2012, the Company announced changes to its organizational structure. In August 2012, the Company announced that Daniel C. Ustian, its Chairman, President and Chief Executive Officer, who was the Company's Chief Operating Decision Maker ("CODM"), informed the Board of Directors of his retirement which was effective immediately and his concurrent resignation from the Board of Directors. While there were no changes to the Company's segment reporting through July 31, 2012, the Company continues to assess the impact, if any, that the change in the CODM and ongoing changes to its organization structure will have on the Company's segment reporting.

Segment Profit (Loss)

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

(in millions)	Truck(A)			Engine			Parts(A)		Financial Services(B)		Corporate and Eliminations			Total
Three Months Ended July 31, 2012
External sales and revenues, net	$	2,323		$	441		$	513	$	42	$	—		$	3,319
Intersegment sales and revenues	13			399			29		22		(463		)	—
Total sales and revenues, net	$	2,336		$	840		$	542	$	64	$	(463	)	$	3,319
Net income (loss) attributable to NIC	$	(30	)	$	(47	)	$	73	$	22	$	66		$	84
Income tax benefit	—			—			—		—		196			196
Segment profit (loss)	$	(30	)	$	(47	)	$	73	$	22	$	(130	)	$	(112	)
Depreciation and amortization	$	41		$	28		$	2	$	9	$	6		$	86
Interest expense	—			—			—		20		39			59
Equity in income (loss) of non-consolidated affiliates	(12		)	1			1		—		—			(10		)
Capital expenditures(C)	21			39			6		1		7			74

Three Months Ended July 31, 2011
External sales and revenues, net	$	2,457		$	546		$	487	$	47	$	—		$	3,537
Intersegment sales and revenues	—			422			29		26		(477		)	—
Total sales and revenues, net	$	2,457		$	968		$	516	$	73	$	(477	)	$	3,537
Net income (loss) attributable to NIC	$	(75	)	$	32		$	70	$	30	$	1,343		$	1,400
Income tax benefit	—			—			—		—		1,463			1,463
Segment profit (loss)	$	(75	)	$	32		$	70	$	30	$	(120	)	$	(63	)
Depreciation and amortization	$	37		$	32		$	2	$	8	$	5		$	84
Interest expense	—			—			—		28		34			62
Equity in income (loss) of non-consolidated affiliates	(22		)	(1		)	1		—		—			(22		)
Capital expenditures(C)	15			47			7		1		36			106

Nine Months Ended July 31, 2012	Truck(A)			Engine			Parts(A)		Financial Services(B)		Corporate and Eliminations			Total
External sales and revenues, net	$	6,830		$	1,301		$	1,409	$	129	$	—		$	9,669
Intersegment sales and revenues	26			1,292			98		70		(1,486		)	—
Total sales and revenues, net	$	6,856		$	2,593		$	1,507	$	199	$	(1,486	)	$	9,669
Net income (loss) attributable to NIC	$	(160	)	$	(275	)	$	164	$	75	$	(45	)	$	(241	)
Income tax benefit	—			—			—		—		410			410
Segment profit (loss)	$	(160	)	$	(275	)	$	164	$	75	$	(455	)	$	(651	)
Depreciation and amortization	$	111		$	87		$	8	$	25	$	15		$	246
Interest expense	—			—			—		67		115			182
Equity in income (loss) of non-consolidated affiliates	(27		)	2			4		—		—			(21		)
Capital expenditures(C)	53			116			18		2		61			250

Nine Months Ended July 31, 2011
External sales and revenues, net	$	6,510		$	1,526		$	1,445	$	154	$	—		$	9,635
Intersegment sales and revenues	18			1,180			128		75		(1,401		)	—
Total sales and revenues, net	$	6,528		$	2,706		$	1,573	$	229	$	(1,401	)	$	9,635
Net income attributable to NIC	$	49		$	26		$	200	$	102	$	1,091		$	1,468
Income tax benefit	—			—			—		—		1,458			1,458
Segment profit (loss)	$	49		$	26		$	200	$	102	$	(367	)	$	10
Depreciation and amortization	$	112		$	91		$	7	$	21	$	14		$	245
Interest expense	—			—			—		84		103			187
Equity in income (loss) of non-consolidated affiliates	(57		)	(3		)	5		—		—			(55		)
Capital expenditures(C)	53			131			11		1		95			291

As of July 31, 2012
Segment assets	$	2,509	$	1,715	$	708	$	2,898	$	3,313	$	11,143
As of October 31, 2011
Segment assets	$	2,771	$	1,849	$	700	$	3,580	$	3,391	$	12,291

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(A) See Note 2, Restructurings and Impairments, for further discussion.

(B) Total sales and revenues in the Financial Services segment include interest revenues of $63 million and $195 million for the three and nine months ended July 31, 2012, respectively, and $72 million and $225 million for the three and nine months ended July 31, 2011, respectively.

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

Sales of vehicles and service parts to the U.S. government are reported in our Truck and Parts segments and were 11% of consolidated sales and revenues for the nine months ended July 31, 2011. No single customer accounted for more than 10% of consolidated sales and revenues for the