UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported): April 6, 2006
NAVISTAR
INTERNATIONAL CORPORATION
(Exact
name of registrant as specified in its charter)
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Delaware
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1-9618
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36-3359573
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(State
or other jurisdiction of
incorporation
or organization)
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(Commission
File No.)
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(I.R.S.
Employer
Identification
No.)
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4201
Winfield Road, P.O. Box 1488, Warrenville, Illinois
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60555
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code (630) 753-5000
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[_]
Written communications pursuant to Rule 425 under the Securities
Act
[_]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
[_]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
[_]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
PAGE
1
ITEM
4.01. CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT
(a)
Dismissal of Current Accountants
On
April
7, 2006, the Audit Committee of the Board of Directors of Navistar International
Corporation (the company) dismissed the
company’s independent registered public accounting firm, Deloitte & Touche
LLP (Deloitte).
The
company has not completed its financial statements or filed its Annual Report
on
Form 10-K for the fiscal year ended October 31, 2005, nor has the company
filed
its Quarterly Report on Form 10-Q for the quarter ended January 31, 2006.
As a
result of Deloitte's dismissal as the company’s independent registered public
accounting firm, Deloitte has not completed its audit nor has it issued its
report with respect to the company’s financial statements for the fiscal year
ended October 31, 2005.
The
audit
reports of Deloitte on the financial statements of the company as of and
for the
two fiscal years ended October 31, 2004 and October 31, 2003 neither contained
any adverse opinion or disclaimer of opinion, nor were such reports qualified
or
modified as to uncertainty, audit scope or accounting principles, except
as
described in the following sentence. The audit report of Deloitte on the
company’s consolidated financial statements for the year ended October 31, 2004
indicated that, as described in Note 23 to such consolidated financial
statements, the consolidated financial statements for the two fiscal years
ended
October 31, 2003 and October 31, 2002 had been restated. As discussed in
Item
4.02 below, the management of the company, with the concurrence of the Audit
Committee, has concluded that the company’s previously issued audited financial
statements and the independent auditors' reports thereon for the years ended
October 31, 2002 through 2004, and all quarterly financial statements for
periods after November 1, 2002, should no longer be relied upon because of
errors in such financial statements.
During
the company’s two most recent fiscal years ended October 31, 2005 and October
31, 2004, and during the subsequent interim period through April 7, 2006,
there
was no disagreement between the company and Deloitte on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope
or
procedure that, if not resolved to Deloitte’s satisfaction, would have caused
Deloitte to make reference to the subject matter of the disagreement in
connection with its audit report.
There
were no “reportable events” as that term is described in Item 304(a)(1)(v) of
Regulation S-K during the fiscal years ended October 31, 2005 and October
31,
2004, or during the subsequent interim period through April 7, 2006, except
as
described in the following paragraphs.
As
disclosed on February 16, 2006, the Board of Directors of the company reassigned
the company’s former Controller
and principal accounting officer. The reassignment of the former Controller
was
in response to Deloitte having advised the Audit Committee that Deloitte
was no
longer willing to rely on the representations of the former Controller.
PAGE 2
Simultaneously
with the reassignment of the company's former Controller and principal
accounting officer, the company also reassigned the former Treasurer of the
company’s finance subsidiary, Navistar Financial Corporation (NFC), to a
position within the company's treasury department in response to Deloitte’s
request that NFC's former Treasurer no longer serve as an officer of NFC
or of
the company.
As
described in the company’s Quarterly Report on Form 10-Q for the period ended
July 31, 2005, the company concluded, as of that date, that there were material
weaknesses in its disclosure controls and procedures due to the lack of a
sufficient quantity of specialized accounting personnel at NFC.
In
connection with the company's ongoing review of accounting matters in connection
with the preparation of its financial statements for fiscal 2005, Deloitte
identified a number of accounting issues that warranted further examination
and
review, including those matters referred to in Item 4.02 below, many of which
are still being reviewed. The outcome of such examination might or might
not
have led Deloitte to expand the scope of its audit had it continued as the
company's independent registered public accounting firm. Deloitte also requested
that the company's Audit Committee initiate an investigation into the propriety
of accounting and auditing confirmation matters relating to vendor rebates
in
fiscal 2005. This investigation is ongoing, and its results might or might
not
have caused Deloitte, had it remained the company's independent registered
public accounting firm, to expand the scope of its audit or to conclude that
the
company’s internal controls have a material weakness.
The
company has authorized Deloitte to respond fully to the inquires of the
successor independent registered public accounting firm concerning the subject
matter of the foregoing.
The
company has requested that Deloitte furnish it with a letter addressed to
the
Securities and Exchange Commission stating whether Deloitte agrees with the
above statements made by the company. The company will amend this Form 8-K
and
attach a copy of such letter as an exhibit promptly after Deloitte furnishes
the
letter to the company.
(b)
Engagement of New Accountants
On
April
6, 2006, the Audit Committee approved the retention of KPMG LLP (KPMG) as
the
company’s independent registered public accounting firm with respect to the
audit of the company’s financial statements for its fiscal years ended October
31, 2005 and October 31, 2006, subject to completion of KPMG’s customary client
acceptance procedures.
During
the company’s two most recent fiscal years ended October 31, 2005 and October
31, 2004, and during the subsequent interim period preceding the engagement
of
KPMG, the company did not consult with KPMG regarding either (i) the application
of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the company’s
financial statements, and neither a written report was provided to the company
nor oral advice was provided that KPMG concluded was an important factor
considered by the company in reaching a decision as to the accounting, auditing
or financial reporting issue; or (ii) any matter that was either the subject
of
a disagreement, as that term is defined in paragraph 304(a)(1)(iv) of Regulation
S-K, or a reportable event required to be reported under paragraph 304(a)(1)(v)
of Regulation S-K.
In
connection with the potential engagement of KPMG, the company disclosed to
KPMG
the nature of the accounting items currently under review by the company
and the
matters described in Item 4.01(a) above, including the reportable event
disclosed therein.
PAGE
3
ITEM
4.02. NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED
AUDIT
REPORT OR COMPLETED INTERIM REVIEW
On
April
6, 2006, the management of the company, with the concurrence of the
Audit
Committee, concluded that the
company’s
previously issued
audited
financial statements and
the
independent auditors' reports thereon for the
years
ended October 31, 2002 through 2004, and all quarterly financial statements
for
periods after November 1, 2002
should no longer be relied upon because of errors in such financial statements.
As previously announced, the company was unable to file its Annual Report
on
Form 10-K for the period ended October 31, 2005 and its Quarterly
Report
on
Form 10-Q for the period
ended January 31, 2006 in a timely manner due to the ongoing review of a
number
of accounting items. Matters
that the
company has identified to date as requiring restatement will
result in certain income and expense items being allocated to different periods
and include
accounting for product development programs; accounting for supplier rebates
and
warranty recoveries; accounting for truck warranty work to be provided by
the
company outside of the terms of contractual arrangements; and shifting of
expense amounts between periods at one of the company’s foundry
operations.
The
company’s review process continues and matters identified at this stage, and any
assessment of the nature, scope or amount of restatements, are preliminary
and
subject to change. The
company’s review will likely result in the identification of additional items
requiring correction in the restated results.
Among
the items being reviewed are whether certain leases should have been accounted
for as capital leases; whether certain affiliates should have been consolidated;
the adequacy of amounts recorded for asbestos liabilities; the timing of
revenue
recognition; the accounting for deferred income tax assets; the accounting
for
customer and vendor settlements; application of depreciation method;
intercompany accounts reconciliations; inventory valuations; accounts payable
at
the company's Canadian and Mexican subsidiaries; and the company's presentation
of reportable business segments.
As
a
result of the need
to
restate the company’s financial statements, management is evaluating whether the
company’s disclosure controls and procedures, including internal controls over
financial reporting, were effective as of the end of fiscal
2005. The
assessment of internal controls over financial reporting may result in the
identification of material weaknesses. The company’s review of internal controls
over financial reporting is ongoing. We do not expect to provide additional
disclosure on these matters until we file our Annual
Report
on Form
10-K
for the
fiscal year ended October 31, 2005.
While
we
have advised Deloitte of these matters, in light of the company’s termination of
Deloitte
as its
independent registered public accounting firm as described in Item
4.01(a)
above,
the Audit Committee has not discussed with Deloitte
the
company’s decision to restate as a result of its conclusions on the matters
disclosed in this Item
4.02.
On
April
7, 2006 the company issued a press release relating to the
matters
discussed in Items 4.01 and 4.02 above,
a copy
of which is attached as Exhibit 99.2 hereto and incorporated herein by
reference.
PAGE
4
ITEM
5.02. DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS.
On
April
7, 2006, the company announced the employment of James A. Blanda as interim
Corporate Controller-Designate. Mr. Blanda, 62, is expected to be elected
interim Corporate Controller by the company’s Board of Directors on April 18,
2006. Mr. Blanda is currently a partner with Tatum LLC, an executive services
and consulting firm, which he joined in 2004. Tatum LLC has made Mr. Blanda
available to the company as a contracted services employee under the terms
of an
Interim Executive Services Agreement, pursuant to which Tatum LLC receives
a fee
of $9,000 per month as compensation for resources provided. Prior to joining
Tatum LLC, Mr. Blanda served as Senior Vice President, Financial Services
and
Chief Financial Officer of the Chicago Stock Exchange, Incorporated, having
joined the Exchange in 1998. Mr. Blanda also served as Vice President and
Corporate Controller of Sears, Roebuck and Co. from 1992 to 1998.
The
material terms of Mr. Blanda’s employment arrangement will be disclosed
subsequent to his appointment by the Board of Directors.
ITEM
9.01. FINANCIAL STATEMENTS AND EXHIBITS
The
following Exhibits are deemed to be filed under the Securities
Exchange Act of 1934, as amended.
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(d)
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Exhibits
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Exhibit
No.
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Description
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Page
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99.1
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Forward-Looking
Statements; Risks and Factors.
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E-1
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99.2
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Press
Release dated April 7, 2006.
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E-6
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
NAVISTAR
INTERNATIONAL CORPORATION
Registrant
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Date:
April 12, 2006
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/s/
Robert C. Lannert
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Robert
C. Lannert
Vice
Chairman and Chief Financial
Officer
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