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A Wells notice is a letter sent by the SEC when it plans to bring an enforcement action against a person or company. On the call, Bill Kozek, Navistar’s president of truck and parts, offered no detail on the notification or Navistar’s response, but acknowledged it had been received.
“…we really can’t comment on this as it may develop into pending litigation,” he says. “There’s an opportunity for us to respond. We’re kind of in that process right now, so it really wouldn’t benefit us, nor I think the process, from really talking too much about it at this time.”
The SEC is investigating Navistar and former chief executive Dan Ustian’s alleged violations of disclosure and transparency of financial statement regulations, but the company has also come under fire over Environmental Protection Agency (EPA) certifications and disclosures related to Ustian’s departure three years ago. Subpoenas over the EPA matter date back to 2012 as the agency looks into whether the Navistar misrepresented its efforts to earn EPA certification for its engines.
Monday, U.S. Magistrate Judge Sidney I. Schenkier issued an order requiring production of a second set of documents Navistar claimed to be privileged in response to investigative subpoenas issued by SEC staff.
Navistar has the option to formally respond to the Wells notice with a “submission,” which could detail why the company believes the SEC should drop its case, among other things. The SEC has 180 days after issuing a Wells notice to decide whether or not to proceed with enforcement action.
Navistar announced Wednesday its 12th consecutive negative quarter, posting a third quarter 2015 net loss of $28 million, compared to a third quarter 2014 net loss of $2 million.
“We feel good about our position entering the 2016 buying season, especially with larger fleets,” Clarke says. “Jeff Sass, our new head of sales, has brought an even greater sense of urgency and focused action in the first three months he has been on board. As a result, we’re entering the buying season in conversations with all top-100 fleets and we feel encouraged by the response we’re getting.”
Navistar’s truck segment recorded a loss of $36 million, compared with a year-ago third quarter loss of $3 million. Clarke says the truck segment’s loss increase was primarily driven by a benefit for adjustments to pre-existing warranties in the third quarter of 2014 and an increase in our used truck reserves of $10 million. In the third quarter of 2015, the truck segment recorded charges for adjustments to pre-existing warranties of $3 million compared to a benefit for adjustments to pre-existing warranties of $32 million in the third quarter of 2014.
The parts segment recorded a profit of $151 million, up 10 percent compared to third quarter 2014, primarily due to margin improvements in our commercial markets and the impact of cost improvement initiatives, the company says.
