Navistar announced a net loss of $2.8 billion for Q4 2012, compared to a Q4 2011 net income of $255 million.
Current quarter results included increased non-cash tax expense of $2 billion for the increase in deferred tax valuation allowance on U.S. deferred tax assets. The quarter's results also included pre-tax charges of $149 million in additional pre-existing warranty expenses primarily related to EPA 2010 big bore engines, $73 million for cost reduction actions, $16 million in charges for the restructuring of North American manufacturing operations and engineering integration, and $14 million in non-conformance penalties.
The company reported a pre-tax loss of $566 million in Q4 2012 versus a $275 million pre-tax profit in the Q4 2011. Revenues in the quarter were $3.3 billion, down 24 percent from the same period in 2011. The loss was reflective of lower sales, as well as the adjustments to pre-existing warranties and the charges related to the cost-reduction actions.
"We continue to make significant progress on our turnaround and the complexity of this quarter's results is reflective of the actions necessary during this time of transition," said Lewis B. Campbell, Navistar chairman and CEO. "The team has delivered numerous successes, including exceeding our cash guidance, launching the ProStar with the ISX 15-liter ahead of schedule, and moving forward with several opportunities identified during our business reviews. Additionally, with the improvement to our manufacturing footprint by closing our Garland, Texas, manufacturing plant and the completion of workforce reductions in North America and South America, we are positioned to exceed our goal of reducing structural costs by $175 million.
"Unfortunately, we saw a spike in warranty spend in late October and early November for the few remaining engine issues and the cost to take the proactive actions to support our customers and fix those items is higher than we anticipated," Campbell continued. "However, the fact is that customer feedback and positive three- and nine-months-in-service data show today we are delivering the highest quality trucks since the 2010 launch, and quality will continue to be our top priority."
The net loss for fiscal year 2012 was $3.0 billion, versus net income for fiscal 2011 of $1.7 billion.