Regulation

Navistar to Get 10-K Rolling by October

The venerable truck maker says its 2005 annual report will be issued within the next four months -- which should close out a litany of accounting p...
Stephen TaubJune 4, 2007

Serial late-filer Navistar International said it expects to have its fiscal 2005 annual report ready within the next four months. The company’s 2005 Form 10-K contains restated financials for fiscal years 2003, 2004, and the first three quarters of 2005.

Once the 2005 filing is complete, Navistar said it expects to file annual reports for fiscal 2006 and fiscal 2007 (October 31), by early next calendar year. The maker of trucks and diesel engines also said its wholly-owned finance subsidiary, Navistar Financial, also expects to file its annual reports for 2005, 2006, and 2007 within those same time periods.

The 2005 annual report will include a new audit of the restated financial statements for fiscal years 2003 through 2005. Navistar Chief Financial Officer Bill Caton said in a press release that in addition to expanding and strengthening its internal accounting and audit team, the company has used more than 200 outside consultants, including accountants from other public accounting firms over the last 12 months to help with the restatement process.

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Caton also noted that the company has made significant progress implementing its remediation plan. “We have restructured the [c]orporate [c]ontroller’s department, realigned our finance, accounting and internal audit resources throughout the company and continue to invest in control environment improvements,” Caton said in the press statement.

Navistar’s stock price closed up 4 percent on May 31, when a premature press announcement by Mississippi Republican Rep. Roger Wicker caused the stock to jump. The spike was attributed to Wicker’s press release that touted that a company from his district, Navistar subsidiary International Truck and Engine Corp., won a $623 million contract with the Defense Department. As a matter of policy, the Pentagon reveals contract winners daily at 5:00 pm, after the market closes.

Earlier this year, Navistar was delisted from the New York Stock Exchange for not filing annual reports on time. Currently, the company is quoted on the Pink Sheets is a less liquid exchange compared to the NYSE.

In April 2006, Navistar said it would restate its results for 2002 through 2004 and for the first nine months of fiscal year 2005 as a result of an ongoing review of accounting matters that have prevented the company from filing its 2005 annual report and first quarter 2006 quarterly report on time. In addition, the company fired its long-time auditor, Deloitte & Touche, replacing it with KPMG LLP. Deloitte had served as Navistar’s auditor for 98 years.

Caton said in a press release at the time that the company had identified several items that required restatement, including accounting for anticipated external funding of product development programs; timing of recognition of amounts deemed to be collectible from certain suppliers, including rebates and warranty recoveries; accounting for warranties to be provided by the company outside of the terms of the contractual arrangements; and shifting balances and expense amounts between reporting periods at one of the company’s foundry operations.

On Friday, Navistar said that in addition to the matters disclosed in April 2006, the company’s restatement review process has included the accounting and reporting for derivatives, restructuring related costs, post retirement benefits, the sale of receivables, acquisitions, income tax reserves and foreign currency matters related to its affiliates that operate outside of the United States.