Navistar Reports $120 Million Fiscal ’07 Loss
Company Aims to Finish Filings in June
By Jonathan S. Reiskin, Associate News Editor
This story appears in the June 9 print edition of Transport Topics.
Truck maker Navistar International Corp. took a substantial step toward completing its $410 million accounting odyssey with the May 29 filing of its fiscal 2007 annual report — which showed a loss for the year — to the Securities and Exchange Commission, marking the first time the company has been up to date since 2005.
The Warrenville, Ill., manufacturer of heavy- and medium-duty trucks and engines said it lost $120 million, or $1.70 a share, for the 12 months ended Oct. 31, but that it expects to turn a profit for its current fiscal year. In fiscal 2006 the company had net income of $301 million, or $4.12 a share.
Fiscal 2007 revenue of $12.3 billion was a 13.4% drop from 2006’s total of $14.2 billion, the result of the sharp decline in North American heavy truck sales.
Daniel Ustian, Navistar chairman and chief executive officer, said in a letter to shareholders that “revenues should exceed $15 billion, and manufacturing profit should reach nearly $1 billion” for the current fiscal year, even though 2008 marks “the trucking industry’s lowest volume in 10 years.”
The company’s chief financial officer said he expected to file quarterly reports for the six months ended April 30 by the end of June. Then the company would be completely up to date with its reporting obligations and management would ask for re-listing of its shares on the New York Stock Exchange.
Navistar’s financial reporting problems date back to 2005, when the company discovered inaccuracies in its records. It fired long-time auditors Deloitte & Touche early the following year, replacing them with KPMG International. As part of the effort to reconstruct its financial results, the company did not file an annual report for fiscal 2005 until December (12-17, p. 5).
By February 2007, the failure to report caused the New York Stock Exchange to de-list the manufacturer’s shares, even though they had been traded there for 98 years. Since then the company’s shares have been traded on the “Pink Sheets,” an over-the-counter market.
Spokeswoman Lisa Evia said company financial managers have already begun discussions with NYSE officials about relisting.
“We want to be on a major exchange again. Once the quarterly reports are fully current there should be no impediment with NYSE,” Evia said.
Fees to auditors, accountants and financial consultants have cost Navistar $410 million for the 2½ years ended April 30, including $234 million during fiscal 2007, the company said in its financial report.
In a May 28 conference call with stock analysts, Ustian and William Caton, chief financial officer, said they anticipated a return to a more typical level of spending on professional fees — $20 million to $30 million a year — in fiscal 2009.
Ustian also reiterated Navistar’s three-pronged approach to operations in coming years: “great products,” competitive cost structure and profitable growth.
In recent years, the company has brought several major new products to the Class 8 market: the ProStar and TranStar tractors aimed mainly at fleets, LoneStar for owner-operators and MaxxForce engines — Navistar’s first in-house 11- and 13-liter models.
Ustian also said Navistar has been pursuing more military business, including mine-resistant, ambush-protected, or MRAP, vehicles and talked of the company’s partnership with Mahindra Group in India.
Now that the company has filed for a recent full year, it is easier to compare Navistar’s size with its three major competitors that also serve the North American Class 8 market.
Paccar Inc., Bellevue, Wash., did slightly more business than Navistar in 2007. During the calendar year, the manufacturer of Kenworth Trucks and Peterbilt Motors earned $1.23 billion on revenue of $14.03 billion. It also had year-end shareholders’ equity, or corporate net worth, of $5.01 billion.
Navistar had a shareholders’ deficit of $734 million, down from a high of $1.85 billion in fiscal 2004.
The two European truck makers with brands in North America, Daimler AG of Germany and Volvo AB of Sweden, are much larger than either Navistar or Paccar.
Last year, Daimler’s worldwide truck division earned operating income of $2.91 billion on revenue of $39.02 billion. When combined with Daimler’s other operations, including Mercedes-Benz cars, the whole corporation earned $5.45 billion on revenue of $136.27 billion. Year-end equity was $53.57 billion.
In North America, Daimler operates through its Freightliner, Sterling and Western Star units.
Volvo’s worldwide truck operations, including Mack Trucks and Volvo Trucks North America, had operating income of $2.25 billion on 2007 revenue of $27.78 billion.
The corporation as a whole — which also manufactures construction equipment, buses and marine and aerospace engines — earned $2.2 billion on revenue of $42.2 billion. Its year-end equity was $12.8 billion.
Stock analyst Kirk Ludtke said he expects Navistar will return to profitability this fiscal year and estimated annual earnings per share of $3.98. He follows the manufacturer for CRT Capital Group, Stamford, Conn. The average estimate compiled by Bloomberg News is $4.42 a share.
Ludtke said the equity figure, which is used in computing book value for shares, is more relevant for Navistar’s finance subsidiary than for the corporation as a whole.
This story appears in the June 9 print edition of Transport Topics.
Truck maker Navistar International Corp. took a substantial step toward completing its $410 million accounting odyssey with the May 29 filing of its fiscal 2007 annual report — which showed a loss for the year — to the Securities and Exchange Commission, marking the first time the company has been up to date since 2005.
The Warrenville, Ill., manufacturer of heavy- and medium-duty trucks and engines said it lost $120 million, or $1.70 a share, for the 12 months ended Oct. 31, but that it expects to turn a profit for its current fiscal year. In fiscal 2006 the company had net income of $301 million, or $4.12 a share.
Fiscal 2007 revenue of $12.3 billion was a 13.4% drop from 2006’s total of $14.2 billion, the result of the sharp decline in North American heavy truck sales.
Daniel Ustian, Navistar chairman and chief executive officer, said in a letter to shareholders that “revenues should exceed $15 billion, and manufacturing profit should reach nearly $1 billion” for the current fiscal year, even though 2008 marks “the trucking industry’s lowest volume in 10 years.”
The company’s chief financial officer said he expected to file quarterly reports for the six months ended April 30 by the end of June. Then the company would be completely up to date with its reporting obligations and management would ask for re-listing of its shares on the New York Stock Exchange.
Navistar’s financial reporting problems date back to 2005, when the company discovered inaccuracies in its records. It fired long-time auditors Deloitte & Touche early the following year, replacing them with KPMG International. As part of the effort to reconstruct its financial results, the company did not file an annual report for fiscal 2005 until December (12-17, p. 5).
By February 2007, the failure to report caused the New York Stock Exchange to de-list the manufacturer’s shares, even though they had been traded there for 98 years. Since then the company’s shares have been traded on the “Pink Sheets,” an over-the-counter market.
Spokeswoman Lisa Evia said company financial managers have already begun discussions with NYSE officials about relisting.
“We want to be on a major exchange again. Once the quarterly reports are fully current there should be no impediment with NYSE,” Evia said.
Fees to auditors, accountants and financial consultants have cost Navistar $410 million for the 2½ years ended April 30, including $234 million during fiscal 2007, the company said in its financial report.
In a May 28 conference call with stock analysts, Ustian and William Caton, chief financial officer, said they anticipated a return to a more typical level of spending on professional fees — $20 million to $30 million a year — in fiscal 2009.
Ustian also reiterated Navistar’s three-pronged approach to operations in coming years: “great products,” competitive cost structure and profitable growth.
In recent years, the company has brought several major new products to the Class 8 market: the ProStar and TranStar tractors aimed mainly at fleets, LoneStar for owner-operators and MaxxForce engines — Navistar’s first in-house 11- and 13-liter models.
Ustian also said Navistar has been pursuing more military business, including mine-resistant, ambush-protected, or MRAP, vehicles and talked of the company’s partnership with Mahindra Group in India.
Now that the company has filed for a recent full year, it is easier to compare Navistar’s size with its three major competitors that also serve the North American Class 8 market.
Paccar Inc., Bellevue, Wash., did slightly more business than Navistar in 2007. During the calendar year, the manufacturer of Kenworth Trucks and Peterbilt Motors earned $1.23 billion on revenue of $14.03 billion. It also had year-end shareholders’ equity, or corporate net worth, of $5.01 billion.
Navistar had a shareholders’ deficit of $734 million, down from a high of $1.85 billion in fiscal 2004.
The two European truck makers with brands in North America, Daimler AG of Germany and Volvo AB of Sweden, are much larger than either Navistar or Paccar.
Last year, Daimler’s worldwide truck division earned operating income of $2.91 billion on revenue of $39.02 billion. When combined with Daimler’s other operations, including Mercedes-Benz cars, the whole corporation earned $5.45 billion on revenue of $136.27 billion. Year-end equity was $53.57 billion.
In North America, Daimler operates through its Freightliner, Sterling and Western Star units.
Volvo’s worldwide truck operations, including Mack Trucks and Volvo Trucks North America, had operating income of $2.25 billion on 2007 revenue of $27.78 billion.
The corporation as a whole — which also manufactures construction equipment, buses and marine and aerospace engines — earned $2.2 billion on revenue of $42.2 billion. Its year-end equity was $12.8 billion.
Stock analyst Kirk Ludtke said he expects Navistar will return to profitability this fiscal year and estimated annual earnings per share of $3.98. He follows the manufacturer for CRT Capital Group, Stamford, Conn. The average estimate compiled by Bloomberg News is $4.42 a share.
Ludtke said the equity figure, which is used in computing book value for shares, is more relevant for Navistar’s finance subsidiary than for the corporation as a whole.
