Segment Reporting

12 Months Ended

Oct. 31, 2014

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

The following is a description of our four reporting segments:

• Our North America Truck segment manufactures and distributes Class 4 through 8 trucks, buses, and military vehicles under the International and IC Bus ("IC") brands, along with production of engines under the MaxxForce brand name, in the North America markets that include sales in the U.S., Canada, and Mexico. 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 North America Parts segment provides customers with proprietary products needed to support the International commercial and military truck, IC Bus, MaxxForce engine lines, as well as our other product lines. Our North America Parts segment also provides a wide selection of other standard truck, trailer, and engine aftermarket parts. At October 31, 2014, this segment operated out of twelve regional parts distribution centers, the majority of which provide 24-hour availability and shipment. Also included in the North America Parts 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 Global Operations segment includes businesses that derive their revenue from outside our core North America markets and primarily consists of the IIAA (formerly MWM) engine and truck operations in Brazil and our export truck and parts businesses. The IIAA engine operations produce diesel engines, primarily under contract manufacturing arrangements, as well as under the MWM brand, for sale to OEMs in South America.

• Our Financial Services segment provides retail, wholesale, and lease financing of products sold by the North America Truck and North America 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) from continuing operations attributable to Navistar International Corporation excluding Income tax benefit (expense). Selected financial information is as follows:

• The costs of profit sharing and annual incentive compensation for the Manufacturing operations are included in corporate expenses.

• Interest expense and interest income for the Manufacturing operations are reported in corporate expenses.

• The Financial Services segment finances certain sales to our dealers in North America, which include an interest-free period that varies in length, that are subsidized by our North America Truck and North America Parts segments. Additionally, the Financial Services segment reports intersegment revenues from secured loans to the Manufacturing operations. Certain retail sales financed by the Financial Services segment, primarily NFC, require the Manufacturing operations, primarily the North America Truck segment, to share a portion of any credit losses.

• We allocate "access fees" to the North America Parts segment from the North America Truck segment for certain engineering and product development costs, depreciation expense, and selling, general and administrative expenses incurred by the North America Truck segment based on the relative percentage of certain sales, as adjusted for cyclicality.

• Other than the items discussed above, the selected financial information presented below is presented in accordance with our policies described in Note 1, Summary of Significant Accounting Policies.

The following tables present selected financial information for our reporting segments:

(in millions)	North America Truck			North America Parts		Global Operations			Financial Services(A)		Corporate and Eliminations			Total
Year ended October 31, 2014
External sales and revenues, net	$	6,660		$	2,471	$	1,522		$	153	$	—		$	10,806
Intersegment sales and revenues	420			46		35			79		(580		)	—
Total sales and revenues, net	$	7,080		$	2,517	$	1,557		$	232	$	(580	)	$	10,806
Income (loss) from continuing operations attributable to NIC, net of tax	$	(408	)	$	500	$	(218	)	$	97	$	(593	)	$	(622	)
Income tax expense	—			—		—			—		(26		)	(26		)
Segment profit (loss)	$	(408	)	$	500	$	(218	)	$	97	$	(567	)	$	(596	)
Depreciation and amortization	$	212		$	15	$	32		$	46	$	27		$	332
Interest expense	—			—		—			71		243			314
Equity in income (loss) of non-consolidated affiliates	5			4		—			—		—			9
Capital expenditures(B)	65			6		8			1		8			88

(in millions)	North America Truck			North America Parts		Global Operations			Financial Services(A)		Corporate and Eliminations			Total
Year ended October 31, 2013
External sales and revenues, net	$	6,312		$	2,558	$	1,747		$	158	$	—		$	10,775
Intersegment sales and revenues	486			57		78			75		(696		)	—
Total sales and revenues, net	$	6,798		$	2,615	$	1,825		$	233	$	(696	)	$	10,775
Income (loss) from continuing operations attributable to NIC, net of tax	$	(902	)	$	476	$	(6	)	$	81	$	(506	)	$	(857	)
Income tax benefit	—			—		—			—		171			171
Segment profit (loss)	$	(902	)	$	476	$	(6	)	$	81	$	(677	)	$	(1,028	)
Depreciation and amortization	$	305		$	17	$	32		$	40	$	23		$	417
Interest expense	—			—		—			70		251			321
Equity in income (loss) of non-consolidated affiliates	10			6		(5		)	—		—			11
Capital expenditures(B)	142			2		9			2		12			167

(in millions)	North America Truck			North America Parts		Global Operations			Financial Services(A)		Corporate and Eliminations			Total
Year ended October 31, 2012
External sales and revenues, net	$	7,946		$	2,497	$	2,084		$	168	$	—		$	12,695
Intersegment sales and revenues	442			124		126			91		(783		)	—
Total sales and revenues, net	$	8,388		$	2,621	$	2,210		$	259	$	(783	)	$	12,695
Income (loss) from continuing operations attributable to NIC, net of tax	$	(736	)	$	343	$	(168	)	$	91	$	(2,469	)	$	(2,939	)
Income tax expense	—			—		—			—		(1,780		)	(1,780		)
Segment profit (loss)	$	(736	)	$	343	$	(168	)	$	91	$	(689	)	$	(1,159	)
Depreciation and amortization	$	216		$	16	$	36		$	33	$	22		$	323
Interest expense	—			—		—			88		171			259
Equity in income (loss) of non-consolidated affiliates	(1		)	5		(33		)	—		—			(29		)
Capital expenditures(B)	173			21		50			3		62			309

(in millions)	North America Truck		North America Parts		Global Operations		Financial Services		Corporate and Eliminations		Total
Segment assets, as of:
October 31, 2014	$	2,145	$	682	$	749	$	2,598	$	1,269	$	7,443
October 31, 2013	2,250		716		1,162		2,355		1,832		8,315

_________________________

(A) Total sales and revenues in the Financial Services segment include interest revenues of $170 million, $181 million, and $254 million for 2014, 2013, 2012, respectively.

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

No single customer accounted for more than 10% of consolidated sales and revenues for the years ended October 31, 2014, 2013 and 2012.

Sales and revenues to external customers classified by significant products and services for the years ended October 31, 2014, 2013, and 2012 were as follows:

(in millions)	2014		2013		2012
Sales and revenues:
Trucks	$	7,137	$	6,738	$	8,705
Parts	2,424		2,906		2,886
Engine	1,092		973		936
Financial Services	153		158		168

Information concerning principal geographic areas for the years ended October 31, 2014, 2013, and 2012 were as follows:

(in millions)	2014		2013		2012
Sales and revenues:
United States	$	7,760	$	7,122	$	8,822
Canada	749		791		949
Mexico	657		694		728
Brazil	833		1,121		1,066
Other	807		1,047		1,130

(in millions)	2014		2013
Long-lived assets:(A)
United States	$	1,277	$	1,467
Canada	26		26
Mexico	190		157
Brazil	182		376
Other	15		37

__________________________

(A) Long-lived assets consist of Property and equipment, net, Goodwill, and Intangible assets, net.