Segment Reporting

6 Months Ended

Apr. 30, 2016

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

The following is a description of our four reporting segments:

• Our Truck segment manufactures and distributes Class 4 through 8 trucks, buses, and military vehicles under the International and IC Bus ("IC") brands, and produces engines under our proprietary brand name and parts required to support the military truck lines. This segment sells its products in the U.S., Canada, and Mexico markets, as well as through our export truck business. 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 Parts segment provides customers with proprietary products needed to support the International commercial truck, IC Bus, proprietary engine lines, and export parts business, as well as our other product lines. Our Parts segment also provides a wide selection of other standard truck, trailer, and engine aftermarket parts. Also included in the 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 primarily consists of the IIAA (formerly MWM International Industria De Motores Da America Do Sul Ltda. ("MWM")) engine and truck operations in Brazil. 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. In addition, our Global Operations segment includes the operating results of our joint venture in China with Anhui Jianghuai Automobile Co ("JAC").

• 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) from continuing operations attributable to Navistar International Corporation excluding Income tax benefit (expense). Selected financial information is as follows:

(in millions)	Truck			Parts		Global Operations			Financial Services(A)		Corporate and Eliminations			Total
Three Months Ended April 30, 2016
External sales and revenues, net	$	1,459		$	640	$	64		$	33	$	1		$	2,197
Intersegment sales and revenues	21			7		13			25		(66		)	—
Total sales and revenues, net	$	1,480		$	647	$	77		$	58	$	(65	)	$	2,197
Income (loss) from continuing operations attributable to NIC, net of tax	$	(23	)	$	176	$	(1	)	$	25	$	(173	)	$	4
Income tax expense	—			—		—			—		(16		)	(16		)
Segment profit (loss)	$	(23	)	$	176	$	(1	)	$	25	$	(157	)	$	20
Depreciation and amortization	$	29		$	4	$	4		$	12	$	4		$	53
Interest expense	—			—		—			19		62			81
Equity in income of non-consolidated affiliates	1			1		—			—		—			2
Capital expenditures(C)	19			1		1			—		3			24

(in millions)	Truck			Parts		Global Operations			Financial Services(A)		Corporate and Eliminations			Total
Three Months Ended April 30, 2015
External sales and revenues, net	$	1,933		$	607	$	115		$	35	$	3		$	2,693
Intersegment sales and revenues(B)	33			6		15			25		(79		)	—
Total sales and revenues, net	$	1,966		$	613	$	130		$	60	$	(76	)	$	2,693
Income (loss) from continuing operations attributable to NIC, net of tax	$	(51	)	$	133	$	1		$	22	$	(169	)	$	(64	)
Income tax expense	—			—		—			—		(18		)	(18		)
Segment profit (loss)	$	(51	)	$	133	$	1		$	22	$	(151	)	$	(46	)
Depreciation and amortization	$	47		$	4	$	5		$	12	$	6		$	74
Interest expense	—			—		—			18		57			75
Equity in income (loss) of non-consolidated affiliates	1			1		(1		)	—		—			1
Capital expenditures(C)	24			—		1			2		1			28

(in millions)	Truck			Parts		Global Operations			Financial Services(A)		Corporate and Eliminations			Total
Six Months Ended April 30, 2016
External sales and revenues, net	$	2,540		$	1,202	$	148		$	68	$	4		$	3,962
Intersegment sales and revenues	72			15		21			49		(157		)	—
Total sales and revenues, net	$	2,612		$	1,217	$	169		$	117	$	(153	)	$	3,962
Income (loss) from continuing operations attributable to NIC, net of tax	$	(74	)	$	326	$	(14	)	$	51	$	(318	)	$	(29	)
Income tax expense	—			—		—			—		(11		)	(11		)
Segment profit (loss)	$	(74	)	$	326	$	(14	)	$	51	$	(307	)	$	(18	)
Depreciation and amortization	$	63		$	7	$	9		$	24	$	8		$	111
Interest expense	—			—		—			38		124			162
Equity in income (loss) of non-consolidated affiliates	2			2		(3		)	—		—			1
Capital expenditures(C)	44			2		2			—		5			53

(in millions)	Truck			Parts		Global Operations			Financial Services(A)		Corporate and Eliminations			Total
Six Months Ended April 30, 2015
External sales and revenues, net	$	3,564		$	1,221	$	253		$	71	$	5		$	5,114
Intersegment sales and revenues(B)	72			18		29			49		(168		)	—
Total sales and revenues, net	$	3,636		$	1,239	$	282		$	120	$	(163	)	$	5,114
Income (loss) from continuing operations attributable to NIC, net of tax	$	(69	)	$	278	$	(14	)	$	46	$	(347	)	$	(106	)
Income tax expense	—			—		—			—		(25		)	(25		)
Segment profit (loss)	$	(69	)	$	278	$	(14	)	$	46	$	(322	)	$	(81	)
Depreciation and amortization	$	99		$	7	$	12		$	24	$	11		$	153
Interest expense	—			—		—			38		114			152
Equity in income (loss) of non-consolidated affiliates	3			2		(2		)	—		—			3
Capital expenditures(C)	38			—		3			2		2			45

(in millions)	Truck		Parts		Global Operations		Financial Services		Corporate and Eliminations		Total
Segment assets, as of:
April 30, 2016	$	1,887	$	645	$	370	$	2,284	$	1,002	$	6,188
October 31, 2015	1,876		641		409		2,455		1,311		6,692

_________________________

(A) Total sales and revenues in the Financial Services segment include interest revenues of $42 million and $84 million for the three and six months ended April 30, 2016, respectively, and $44 million and $89 million for the three and six months ended April 30, 2015, respectively.

(B) During the second quarter of 2015, we identified a $35 million adjustment related to the first quarter of 2015 Intersegment sales and revenues. As a result, the Truck segment and Corporate and Eliminations should have reported Intersegment sales and revenues of $39 million and $(89) million, respectively, and reported Total sales and revenues, net, of $1,670 million and $(87) million, respectively, for the three months ended January 31, 2015. The adjustment did not impact the consolidated results for the first or second quarter of 2015.

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