Navistar focus of SEC probe
BY FRANCINE KNOWLES Business Reporter firstname.lastname@example.org August 2, 2012 11:44AM
A Navistar employee sorts items inside its new Midwest Parts distribution center during an opening ceremony in Joliet, IL on Monday June 11, 2012. | Matt Marton~Sun-Times Media
Updated: September 4, 2012 6:14AM
Navistar International Corp. is under scrutiny by the U.S. Securities and Exchange Commission, the Lisle-based company disclosed Thursday. The company also announced it will use Cummins Inc. engines in certain trucks to meet federal emissions standards.
Shares fell 13.4 percent, or $3.33, to close at $21.44.
The truck and engine maker said it received a formal letter of inquiry from the regulatory body requesting “information related to certain accounting and disclosure matters.”
The company said it is cooperating fully with the request.
Navistar also said it expects to report a fiscal third-quarter pretax loss of between $80 million and $115 million. Including the impact of engineering integration and non-conformance penalties, Navistar said it expects a pretax loss of between $105 million and $145 million. It withdrew its previously announced full-year guidance and said it will provide an update when it releases its third-quarter results in September.
“We expect to return to profitability in the fourth quarter and believe the company will be in a position to improve margins in 2013 as we realize the benefits of our integration and ongoing cost reduction initiatives,” Navistar Chairman, President and Chief Executive Officer Daniel Ustian said in a release.
Navistar was delisted by the New York Stock Exchange for more than a year, starting in 2007, after it failed to file financial reports for two years. An SEC probe discovered accounting problems, forcing Navistar to restate earnings from 2002 to 2005.
The company said it has entered into a non-binding memorandum of understanding with Cummins Emission Solutions. Navistar said it expects that by combining Cummins aftertreatment system with its existing MaxxForce engines, Navistar’s ICT+ will meet 2010 U.S. Environmental Protection Agency emissions regulations.
“With this clean engine solution, we are taking the best of both technology paths to provide our customers with the cleanest and most fuel efficient engines and trucks on the market and to meet stringent U.S. emission regulations,” Ustian said.
Navistar last month said it would introduce its next generation clean-diesel engine technology to meet 2010 emission standards and position it to meet greenhouse gas rules ahead of 2014 and 2017 requirements.
The announcement followed a ruling in June by a U.S. Appeals Court judge that could have forced Navistar to exit the engine business due to its noncompliance with 2010 standards. That could have cost it billions of dollars in revenue and jeopardized thousands of jobs.