Segment Reporting

12 Months Ended

Oct. 31, 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., 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 NIC, excluding income tax expense. Selected financial information from our Consolidated Statements of Operations and our Consolidated Balance Sheets 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 Truck and 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 Truck segment, to share a portion of any credit losses.

• We allocate "access fees" to the Parts segment from the Truck segment for certain engineering and product development costs, depreciation expense, and SG&A expenses incurred by the 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)	Truck			Parts		Global Operations			Financial Services(A)		Corporate and Eliminations			Total
Year Ended October 31, 2016
External sales and revenues, net	$	5,271		$	2,398	$	296		$	135	$	10		$	8,110
Intersegment sales and revenues	132			29		45			100		(305		)	1
Total sales and revenues, net	$	5,403		$	2,427	$	341		$	235	$	(295	)	$	8,111
Income (loss) from continuing operations attributable to NIC, net of tax	$	(189	)	$	640	$	(21	)	$	100	$	(627	)	$	(97	)
Income tax expense	—			—		—			—		(33		)	(33		)
Segment profit (loss)	$	(189	)	$	640	$	(21	)	$	100	$	(594	)	$	(64	)
Depreciation and amortization	$	129		$	13	$	18		$	50	$	15		$	225
Interest expense	—			—		—			80		247			327
Equity in income (loss) of non-consolidated affiliates	5			4		(3		)	—		—			6
Capital expenditures(B)	97			2		4			2		11			116

(in millions)	Truck			Parts		Global Operations			Financial Services(A)		Corporate and Eliminations			Total
Year Ended October 31, 2015
External sales and revenues, net	$	7,055		$	2,475	$	455		$	145	$	10		$	10,140
Intersegment sales and revenues	158			38		51			96		(343		)	—
Total sales and revenues, net	$	7,213		$	2,513	$	506		$	241	$	(333	)	$	10,140
Income (loss) from continuing operations attributable to NIC, net of tax	$	(141	)	$	592	$	(67	)	$	98	$	(669	)	$	(187	)
Income tax expense	—			—		—			—		(51		)	(51		)
Segment profit (loss)	$	(141	)	$	592	$	(67	)	$	98	$	(618	)	$	(136	)
Depreciation and amortization	$	173		$	14	$	23		$	51	$	20		$	281
Interest expense	—			—		—			74		233			307
Equity in income (loss) of non-consolidated affiliates	5			4		(3		)	—		—			6
Capital expenditures(B)	92			3		4			4		12			115

(in millions)	Truck			Parts		Global Operations			Financial Services(A)		Corporate and Eliminations			Total
Year Ended October 31, 2014
External sales and revenues, net	$	7,255		$	2,493	$	905		$	153	$	—		$	10,806
Intersegment sales and revenues	218			58		35			79		(390		)	—
Total sales and revenues, net	$	7,473		$	2,551	$	940		$	232	$	(390	)	$	10,806
Income (loss) from continuing operations attributable to NIC, net of tax	$	(380	)	$	528	$	(274	)	$	97	$	(593	)	$	(622	)
Income tax expense	—			—		—			—		(26		)	(26		)
Segment profit (loss)	$	(380	)	$	528	$	(274	)	$	97	$	(567	)	$	(596	)
Depreciation and amortization	$	216		$	15	$	28		$	46	$	27		$	332
Interest expense	—			—		—			71		243			314
Equity in income of non-consolidated affiliates	5			4		—			—		—			9
Capital expenditures(B)	65			6		8			1		8			88

(in millions)	Truck		Parts		Global Operations		Financial Services		Corporate and Eliminations		Total
Segment assets, as of:
October 31, 2016	$	1,520	$	594	$	407	$	2,116	$	1,016	$	5,653
October 31, 2015	1,876		641		409		2,448		1,275		6,649

_________________________

(A) Total sales and revenues in the Financial Services segment include interest revenues of $167 million, $175 million, and $170 million for the years ended October 31, 2016, 2015, and 2014, 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, 2016, 2015 and 2014.

Sales and revenues to external customers classified by significant products and services were as follows:

	For the Years Ended October 31,
(in millions)	2016		2015		2014
Sales and revenues:
Trucks	$	5,176	$	6,845	$	7,137
Parts	2,216		2,399		2,424
Engine	583		751		1,092
Financial Services	136		145		153

Information concerning principal geographic areas is presented as follows:

	For the Years Ended October 31,
(in millions)	2016		2015		2014
Sales and revenues:(A)
United States	$	6,186	$	7,699	$	7,760
Canada	604		774		749
Mexico	575		653		657
Brazil	240		383		833
Other	506		631		807

	As of October 31,
(in millions)	2016		2015
Long-lived assets:(B)
United States	$	999	$	1,126
Canada	20		19
Mexico	202		186
Brazil	103		98
Other	8		11

__________________________

(A) During 2016, we identified certain sales included in Brazil which should have been classified as Other. As a result, for the year ended October 31, 2015 we have reclassified $103 million of sales. Also during 2016, we identified certain parts sales which were included in United States which should have been classified as Other due to a 2015 change in our segment reporting presentation. As a result, for the year ended October 31, 2015 we have reclassified $23 million of sales. These reclassifications did not impact our Consolidated Statements of Operations or our segment sales and revenues.

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