Loss per share attributable to Navistar International Corporation

9 Months Ended

Jul. 31, 2012

Earnings Per Share [Abstract]

Loss per share attributable to Navistar International Corporation

Earnings (Loss) Per Share Attributable to Navistar International Corporation

The following table shows the information used in the calculation of our basic and diluted earnings (loss) per share attributable to Navistar International Corporation:

	Three Months Ended July 31,				Nine Months Ended July 31,
(in millions, except per share data)	2012		2011		2012			2011
Numerator:
Earnings (loss) attributable to Navistar International Corporation available to common stockholders	$	84	$	1,400	$	(241	)	$	1,468
Denominator:
Weighted average shares outstanding:
Basic	68.7		73.3		69.1			73.0
Effect of dilutive securities	0.2		3.5		—			4.1
Diluted	68.9		76.8		69.1			77.1
Earnings (loss) per share attributable to Navistar International Corporation:
Basic	$	1.22	$	19.10	$	(3.49	)	$	20.13
Diluted	1.22		18.24		(3.49		)	19.04

The conversion rate on our Convertible Notes is 19.891 shares of common stock per $1,000 principal amount of Convertible Notes, equivalent to an initial conversion price of $50.27 per share of common stock. In connection with the sale of the Convertible Notes, we sold warrants to various counterparties to purchase shares of our common stock from us at an exercise price of $60.14 per share. The Convertible Notes and warrants are anti-dilutive when calculating diluted earnings per share when our average stock price is less than $50.27 and $60.14, respectively.

We also purchased call options in connection with the sale of the Convertible Notes, covering 11.3 million shares at an exercise price of $50.27 per share, which are intended to minimize share dilution associated with the Convertible Notes; however under accounting guidance, these call options cannot be utilized to offset the dilution of the Convertible Notes for determining diluted earnings per share as they are anti-dilutive.

The computation of diluted earnings per share also excludes outstanding options and other common stock equivalents in periods where inclusion of such potential common stock instruments would be anti-dilutive.

For the three months ended July 31, 2012, 26.0 million shares were not included in the computation of diluted earnings per share, since they were anti-dilutive, as our average stock price during the period was less than the strike price. Of these 26.0 million shares not included, 11.3 million shares were related to the warrants and 11.3 million shares were related to the Convertible Notes.

For the nine months ended July 31, 2012, no dilutive securities were included in the computation of diluted loss per share since they would have been anti-dilutive due to the net loss attributable to Navistar International Corporation. The aggregate shares not included were 28.0 million for the nine months ended July 31, 2012.

For the three and nine months ended July 31, 2011, aggregate shares not included in the computation of diluted earnings per share since they would have been anti-dilutive were 12.1 million and 0.6 million, respectively. Of the 12.1 million shares not included, 11.3 million shares were related to the warrants and were anti-dilutive because our average stock price was less than the strike price on the warrants for the three months ended July 31, 2011.