PAGE 1

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


      ( X )     QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                            SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 1999

                                       OR

      (   )     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                             SECURITIES EXCHANGE ACT OF 1934

For the transition period from         to

Commission file number 1-9618

                       NAVISTAR INTERNATIONAL CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                        Delaware                                 36-3359573
            -------------------------------                  -------------------
            (State or other jurisdiction of                  (I.R.S. Employer
             incorporation or organization)                  Identification No.)

   455 North Cityfront Plaza Drive, Chicago, Illinois               60611
   --------------------------------------------------        -------------------
         (Address of principal executive offices)                 (Zip Code)

        Registrant's telephone number, including area code (312) 836-2000


     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during the  preceding  12 months and (2) has been  subject to such  filing
requirements for the past 90 days. Yes  X      No
                                      -----       -----

                       APPLICABLE ONLY TO ISSUERS INVOLVED
                        IN BANKRUPTCY PROCEEDINGS DURING
                            THE PRECEDING FIVE YEARS:

     Indicate by check mark whether the  registrant has filed all documents  and
reports  required  to  be filed  by  Sections 12, 13 or 15(d) of the  Securities
Exchange Act  of  1934  subsequent  to the  distribution  of  securities under a
plan confirmed by a court.  Yes       No
                                -----    -----


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     As of May 31, 1999, the number of shares  outstanding  of the  registrant's
common stock was 65,276,869.



<PAGE>


        PAGE 2




                       NAVISTAR INTERNATIONAL CORPORATION
                          AND CONSOLIDATED SUBSIDIARIES
                          -----------------------------


                                      INDEX
                                      -----
                                                                   Page
                                                                 Reference
                                                                 ---------

Part I.  Financial Information:

     Item 1. Financial Statements:

     Statement of Income --
         Three Months and Six Months
           Ended April 30, 1999 and 1998....................         3

     Statement of Financial Condition --
         April 30, 1999, October 31, 1998 and April 30, 1998         4

     Statement of Cash Flow --
         Six Months Ended April 30, 1999 and 1998...........         5

     Notes to Financial Statements..........................         6

     Supplemental Financial Information.....................        10

     Item 2. Management's Discussion and Analysis of Results
             of Operations and Financial Condition..........        12

Part II. Other Information:

     Item 1. Legal Proceedings..............................        19

     Item 4. Submission of Matters to a Vote
               of Security Holders..........................        19

     Item 6. Exhibits and Reports on Form 8-K...............        19

     Signature  ............................................        20


<PAGE>


         PAGE 3
                         PART I - FINANCIAL INFORMATION
                         ------------------------------
<TABLE>
<CAPTION>
 ITEM 1.  Financial Statements

 STATEMENT OF INCOME (Unaudited)
 -------------------------------------------------------------------------------
 Millions of dollars, except per share data
 -------------------------------------------------------------------------------
                                           Navistar International Corporation
                                              and Consolidated Subsidiaries
                                       -----------------------------------------
                                       Three Months Ended       Six Months Ended
                                            April 30                April 30
                                       ------------------       ----------------
                                        1999      1998          1999      1998
                                       ------    ------        ------    ------
<S>                                    <C>       <C>           <C>       <C>
Sales and revenues
Sales of manufactured
  products ........................    $2,215    $1,981        $4,052    $3,653
Finance and insurance revenue .....        59        47           121        92
Other income ......................        13        14            38        24
                                       ------    ------        ------    ------
  Total sales and revenues ........     2,287     2,042         4,211     3,769
                                       ------    ------        ------    ------
Costs and expenses
Cost of products
  and services sold ...............     1,824     1,703         3,368     3,157
Postretirement benefits ...........        65        43           114        88
Engineering and research expense ..        66        46           124        81
Marketing and
  administrative expense ..........       123        97           249       195
Interest expense ..................        35        29            67        46
Other expenses ....................        20        16            36        33
                                       ------    ------        ------    ------
  Total costs and expenses ........     2,133     1,934         3,958     3,600
                                       ------    ------        ------    ------
    Income before income taxes ....       154       108           253       169
    Income tax expense ............        58        41            96        64
                                       ------    ------        ------    ------
Net income ........................        96        67           157       105

Less dividends
  on Series G Preferred stock .....         -         4             -        11
                                       ------    ------        ------    ------
Net income applicable
  to common stock .................    $   96    $   63        $  157    $   94
                                       ======    ======        ======    ======
Earnings per share
     Basic ........................    $ 1.44    $  .90        $ 2.37    $ 1.32
     Diluted ......................    $ 1.42    $  .89        $ 2.33    $ 1.30

Average shares outstanding
  (millions)
     Basic ........................      66.2      69.2          66.3      70.6
     Diluted ......................      67.5      70.5          67.3      71.7


See Notes to Financial Statements.
</TABLE>


<PAGE>


         PAGE 4
<TABLE>
<CAPTION>
STATEMENT OF FINANCIAL CONDITION (Unaudited)
--------------------------------------------------------------------------------
Millions of dollars
--------------------------------------------------------------------------------
                                             Navistar International Corporation
                                                and Consolidated Subsidiaries
                                            ------------------------------------
                                             April 30    October 31    April 30
                                               1999         1998         1998
                                            ----------   ----------   ----------
<S>                                         <C>              <C>        <C>
ASSETS
------------------------------------------
Cash and cash equivalents ................    $  181       $  390        $  453
Marketable securities ....................       406          674           491
                                              ------       ------        ------
                                                 587        1,064           944
Receivables, net .........................     2,611        2,146         2,044
Inventories ..............................       646          505           576
Property, net of accumulated
  depreciation and amortization
  of $1,069, $976 and $930 ...............     1,186        1,106           968
Investments and other assets .............       294          207           205
Prepaid and intangible pension assets ....       243          238           341
Deferred tax asset, net  .................       834          912           871
                                              ------       ------        ------
Total assets .............................    $6,401       $6,178        $5,949
                                              ======       ======        ======
LIABILITIES AND SHAREOWNERS' EQUITY
------------------------------------------
Liabilities
Accounts payable, principally trade ......    $1,307       $1,273        $1,214
Debt: Manufacturing operations ...........       477          450           464
      Financial services operations ......     1,702        1,672         1,592
Postretirement benefits liability ........       967          934           910
Other liabilities ........................     1,063        1,080           977
                                              ------       ------        ------
    Total liabilities ....................     5,516        5,409         5,157
                                              ------       ------        ------
Commitments and contingencies

Shareowners' equity
Series D convertible
  junior preference stock ................    $    4       $    4        $    4
Common stock (75.3, 75.3 and 55.4 million
  shares issued) .........................     2,140        2,139         1,750
Class B Common stock
 (19.9 million shares issued
  at April 30, 1998) .....................         -            -           388
Common stock held in treasury, at cost ...      (236)        (214)         (138)
Retained earnings (deficit) ..............      (683)        (829)       (1,019)
Accumulated other comprehensive loss .....      (340)        (331)         (193)
                                              ------       ------        ------
    Total shareowners' equity ............       885          769           792
                                              ------       ------        ------
Total liabilities and shareowners' equity.    $6,401       $6,178        $5,949
                                              ======       ======        ======

See Notes to Financial Statements.
</TABLE>



<PAGE>


         PAGE 5
 <TABLE>
 <CAPTION>
 STATEMENT OF CASH FLOW (Unaudited)
 ------------------------------------------------------------------------------
 For the Six Months Ended April 30 (Millions of dollars)
 ------------------------------------------------------------------------------
                                                        Navistar International
                                                           Corporation and
                                                      Consolidated Subsidiaries
                                                      -------------------------
                                                         1999            1998
                                                        ------          ------
<S>                                                     <C>             <C>
Cash flow from operations
Net income ...............................              $  157          $  105
Adjustments to reconcile net income
 to cash used in operations:
  Depreciation and amortization ..........                  97              79
  Deferred income taxes ..................                  87              64
  Postretirement benefits funding in excess
    of expense ...........................                  25            (283)
  Other, net .............................                 (29)            (17)
Change in operating assets and liabilities:
  Receivables ............................                (308)           (192)
  Inventories ............................                (139)            (81)
  Prepaid and other current assets .......                 (25)            (11)
  Accounts payable .......................                  10              80
  Other liabilities ......................                 (21)             91
                                                        ------          ------
Cash used in operations ..................                (146)           (165)
                                                        ------          ------
Cash flow from investment programs
Purchase of retail notes and lease
  receivables ............................                (670)           (576)
Collections/sales of retail notes
   and lease receivables .................                 544             520
Purchase of marketable securities ........                (142)           (355)
Sales or maturities of marketable
  securities .............................                 409             223
Capital expenditures .....................                (121)           (124)
Property and equipment leased to others ..                 (39)            (88)
Investment in affiliates .................                 (46)             (2)
Other investment programs, net ...........                 (26)              -
                                                        ------          ------
Cash used in investment programs .........                 (91)           (402)
                                                        ------          ------

Cash flow from financing activities
Issuance of debt .........................                  73             441
Principal payments on debt ...............                (106)            (61)
Net increase in notes and debt
  outstanding under bank revolving credit
  facility and commercial paper programs .                  60             312
Mexican credit facility ..................                  24              54
Repurchase of common stock ...............                 (26)            (84)
Redemption of Series G Preferred Stock ...                   -            (240)
Dividends paid ...........................                   -             (11)
Other, net ...............................                   3               -
                                                        ------          ------
Cash provided by financing activities ....                  28             411
                                                        ------          ------
Cash and cash equivalents
  Decrease during the period .............                (209)           (156)
  At beginning of the year ...............                 390             609
                                                        ------          ------
Cash and cash equivalents
  at end of the period ...................              $  181          $  453
                                                        ======          ======
See Notes to Financial Statements.
</TABLE>


<PAGE>


        PAGE 6

        Navistar International Corporation and Consolidated Subsidiaries
                    Notes to Financial Statements (Unaudited)

Note A.  Summary of Accounting Policies

       Navistar  International  Corporation is a holding company whose principal
operating  subsidiary  is Navistar  International  Transportation  Corp. As used
hereafter,  "company" or "Navistar" refers to Navistar International Corporation
and its consolidated subsidiaries. The consolidated financial statements include
the  results of the  company's  manufacturing  operations  and its wholly  owned
financial  services  subsidiaries.  The  effects  of  transactions  between  the
manufacturing and financial  services  operations have been eliminated to arrive
at the consolidated totals.

       The  accompanying  unaudited  financial  statements have been prepared in
accordance with accounting  policies described in the 1998 Annual Report on Form
10-K and should be read in conjunction with the disclosures therein.

       In the opinion of management,  these interim financial statements reflect
all adjustments,  consisting of normal recurring accruals,  necessary to present
fairly  the  financial  position,  results of  operations  and cash flow for the
periods presented. Interim results are not necessarily indicative of results for
the full year.  Certain 1998 amounts have been  reclassified to conform with the
presentation used in the 1999 financial statements.

       Effective  February  1, 1999, the functional  currency  of the  company's
Mexican  subsidiaries  changed from the U.S.  dollar to the Mexican peso because
Mexico is no longer considered a highly inflationary economy. The effect of this
change was not material.

Note B.  Supplemental Cash Flow Information

       Consolidated  interest  payments  during the first six months of 1999 and
1998 were $68 million and $42 million,  respectively.  Consolidated tax payments
made during the first six months of 1999 were $10 million, and were not material
for the same period last year.

Note C.  Income Taxes

       The benefit of Net Operating Loss (NOL)  carryforwards is recognized as a
deferred tax asset in the Statement of Financial Condition,  while the Statement
of Income  includes  income taxes  calculated at the statutory  rate. The amount
reported  does not  represent  cash  payment of income  taxes except for certain
state income,  foreign  withholding and federal  alternative minimum taxes which
are not  material.  In the  Statement of Financial  Condition,  the deferred tax
asset is  reduced by the  amount of  deferred  tax  expense  or  increased  by a
deferred tax benefit  recorded  during the year.  Until the company has utilized
its significant NOL carryforwards, the cash payment of federal income taxes will
be minimal.


<PAGE>


         PAGE 7

        Navistar International Corporation and Consolidated Subsidiaries
                    Notes to Financial Statements (Unaudited)

Note D.  Inventories
<TABLE>
<CAPTION>

     Inventories are as follows:
                                   April 30         October 31         April 30
Millions of dollars                  1999              1998              1998
-------------------------------------------------------------------------------
<S>                                <C>              <C>                <C>
Finished products..............    $    320         $    223           $    261
Work in process................         114               69                141
Raw materials and supplies.....         212              213                174
                                   --------         --------           --------
Total inventories..............    $    646         $    505           $    576
                                   ========         ========           ========
</TABLE>

Note E.  Financial Instruments

       The company purchases  collateralized  mortgage  obligations  (CMOs) that
have  predetermined   fixed-principal  payment  patterns  which  are  relatively
certain.  At April 30,  1999  these  instruments  totaled  $72  million  and the
unrecognized  gain was not  material.  At quarter  end, $63 million of a Mexican
subsidiary's receivables were pledged as collateral for bank borrowings.

       In November 1998,  Navistar  Financial  Corporation (NFC) sold fixed rate
retail  receivables  on a variable rate basis.  For the protection of investors,
NFC issued an interest rate cap. Under the terms of the agreement, NFC will make
payments if interest rates exceed certain levels. The notional amount of the cap
amortizes based on the expected outstanding principal balance of the sold retail
receivables.  As of April 30, 1999, the notional amount was $490 million and the
interest rate cap had a fair value of $2 million.

       In June 1999,  NFC sold $715  million of retail  notes,  net of  unearned
finance  income,  recognizing a gain of $6 million on the sale.  The proceeds of
$685 million, net of underwriting fees and credit enhancements, were used by NFC
for general working capital purposes.

     In  anticipation  of its June  1999 sale of  retail  receivables,  NFC held
forward  treasury locks with notional  amounts of $500 million.  These positions
were closed in  conjunction  with the pricing of the sale and the resulting gain
was not  material.  In  addition,  the  company  held  Canadian  dollar  forward
contracts with notional  amounts of $40 million and other  derivative  contracts
with notional amounts of $5 million.  The unrealized net loss on these contracts
was not material.

<PAGE>


         PAGE 8

        Navistar International Corporation and Consolidated Subsidiaries
                    Notes to Financial Statements (Unaudited)

Note F.  Earnings  Per Share
<TABLE>
<CAPTION>

       Earnings per share was computed as follows:

                                        Three Months Ended   Six Months Ended
                                              April 30           April 30
                                        ------------------  -------------------
Millions of dollars,
except share and per share data           1999      1998       1999      1998
--------------------------------        --------  --------   --------  --------
<S>                                     <C>       <C>        <C>       <C>
Net income.......................       $     96  $     67   $    157  $    105
Less dividends on
     Series G Preferred Stock....              -         4          -        11
                                        --------  --------   --------  --------
Net income applicable
  to common stock
    (Basic and Diluted)..........       $     96  $     63   $    157  $     94
                                        ========= ========   ========  ========

Average shares outstanding
  (millions)..................
    Basic.....................              66.2      69.2       66.3      70.6
      Dilutive effect
        of options outstanding
        and other dilutive
        securities............               1.3       1.3        1.0       1.1
                                        --------  --------   --------  --------

    Diluted...................              67.5      70.5       67.3      71.7
                                        ========  ========   ========  ========

Earnings per share
  Basic.......................          $   1.44  $    .90   $   2.37  $   1.32
  Diluted.....................          $   1.42  $    .89   $   2.33  $   1.30
</TABLE>


     Unexercised  employee  stock  options to purchase .1 million and .3 million
shares of Navistar common stock during the three months ended April 30, 1999 and
1998, respectively, and to purchase .2 million and .5 million shares of Navistar
common stock during the six months ended April 30, 1999 and 1998,  respectively,
were excluded from the  computation  of diluted shares  outstanding  because the
exercise  prices were greater than the average  market price of Navistar  common
stock.  Additionally,  the  diluted  calculation  excludes  the  effects  of the
conversion  of the Series G preferred  stock as such  conversion  would  produce
anti-dilutive  results.  Subsequent  to April 30, 1999,  $40 million of cash was
used to repurchase .8 million shares of common stock through June 9, 1999.

Note G.  Preferred Share Purchase Rights Plan

       On April 20, 1999, the company's board of directors adopted a shareholder
rights plan  ("Rights  Plan") and  declared a rights  dividend of one  preferred
share  purchase  right (a "Right") for each  outstanding  share of common stock,
(the "Common  Shares"),  of the company to shareowners of record as of the close
of business on May 3, 1999.  Subject to the terms of the Rights Plan, each Right
entitles the registered  holder to purchase from the company one  one-thousandth
of a share of Series A Junior Participating Preferred Stock, of the Company (the
"Preferred  Shares")  at a price of $175 per one  one-thousandth  of a Preferred
Share,  subject to adjustment.  The Rights are  exercisable  only if a person or
group (an "Acquiring Person"), acquires 15%  or more of the  outstanding  Common


<PAGE>


         PAGE 9

        Navistar International Corporation and Consolidated Subsidiaries
                    Notes to Financial Statements (Unaudited)

Note G.  Preferred Share Purchase Rights Plan (continued)

Shares and  commences a tender offer for 15% or more of the  outstanding  Common
Shares. Upon any such occurrence, each Right will entitle its holder (other than
the Acquiring  Person and certain related  parties) to purchase,  at the Right's
then current  exercise price, a number of Common Shares having a market value of
two times such  price.  Similarly,  in the event the  company is  acquired  in a
merger or other business combination and is not the surviving corporation,  each
Right  (other  than Rights  owned by the  Acquiring  Person and certain  related
parties) shall  thereafter be exercisable for a number of shares of common stock
of the acquiring  company  having a market value of two times the exercise price
of the Right.  Subject to certain  conditions,  the Rights are redeemable by the
company's board of directors for $0.01 per Right and are exchangeable for Common
Shares. The Rights have no voting power and initially expire on May 3, 2009.

Note H.  New Accounting Pronouncements

     Effective  November  1,  1998,  Navistar  adopted  Statement  of  Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" which establishes
standards for reporting and display of comprehensive  income and its components.
Financial  statements  for prior periods have been  reclassified  as required by
this statement. Navistar's total comprehensive income was as follows:
<TABLE>
<CAPTION>

                                        Three Months Ended   Six Months Ended
                                              April 30           April 30
                                        ------------------  -------------------
Millions of dollars                       1999      1998      1999       1998
---------------------------------       --------   -------- --------   --------
<S>                                     <C>        <C>      <C>        <C>
Net income                              $     96   $    67   $    157  $    105
Other comprehensive income (loss)              -         1         (9)        2
                                        --------  --------   --------  --------

     Total comprehensive income         $     96  $     68   $    148  $    107
                                        ========  ========   ========  ========
</TABLE>

Note I.  Subsequent Events

       In March  1999,  the  company  announced  that it had  finalized  a joint
venture with a Brazilian diesel engine producer to manufacture diesel engines in
South  America.  In April 1999,  the company  announced that it will invest $250
million to produce new high technology diesel engines in Huntsville, Alabama.

       On June 7, 1999 the company announced that employees represented by Local
127 of the  Canadian  Auto  Workers  voted  to  ratify  a new  three-year  labor
agreement  nearly  five  months  ahead  of  schedule.  The new  contract  is now
effective and extends  through June 1, 2002.  Increased  labor and pension costs
are  expected  to  be  offset  by  work  rule  changes  that  provide  increased
manufacturing flexibility.


<PAGE>


         PAGE 10

        Navistar International Corporation and Consolidated Subsidiaries
                    Notes to Financial Statements (Unaudited)


Supplemental Financial Information


Navistar  International  Corporation (with financial  services  operations on an
equity basis) in millions of dollars:

<TABLE>
<CAPTION>
                                        Three Months Ended   Six Months Ended
                                              April 30           April 30
                                        ------------------  -------------------
Condensed Statement of Income             1999      1998      1999       1998
-------------------------------------   --------  --------  --------   --------
<S>                                     <C>       <C>       <C>        <C>
Sales of manufactured products........  $  2,215  $  1,981  $   4,052  $  3,653
Other income..........................         9        12         28        22
                                        --------  --------   --------  --------
Total sales and revenues..............     2,224     1,993      4,080     3,675
                                        --------  --------   --------  --------

Cost of products sold.................     1,819     1,696      3,353     3,144
Postretirement benefits...............        65        43        114        88
Engineering and research expense......        66        46        124        81
Marketing and administrative expense..       107        88        222       177
Other expenses........................        39        31         74        58
                                        --------  --------   --------  --------
Total costs and expenses..............     2,096     1,904      3,887     3,548
                                        --------  --------   --------  --------


Income before income taxes
  Manufacturing operations............       128        89        193       127
  Financial services operations.......        26        19         60        42
                                        --------  --------   --------  --------
    Income before income taxes........       154       108        253       169
    Income tax expense................        58        41         96        64
                                        --------  --------   --------  --------
Net income............................  $     96  $     67   $    157  $    105
                                        ========   =======   ========  ========
</TABLE>
<TABLE>
<CAPTION>

Condensed Statement                      April 30     October 31       April 30
of Financial Condition                     1999          1998            1998
----------------------                  ---------     ----------       --------
<S>                                     <C>            <C>             <C>
Cash, cash equivalents
  and marketable securities...........  $    432       $    904        $    750
Receivables, net......................       883            441             390
Inventories...........................       626            490             562
Property and equipment, net...........       936            883             764
Equity in nonconsolidated subsidiaries       344            327             327
Other assets..........................       458            368             484
Deferred tax asset, net...............       834            913             871
                                        --------       --------        --------
     Total assets.....................  $  4,513       $  4,326        $  4,148
                                        ========       ========        ========


Accounts payable, principally trade...  $  1,255          1,233        $  1,142
Postretirement benefits liabilities...       959            927             902
Other liabilities.....................     1,414          1,397           1,312
Shareowners' equity...................       885            769             792
                                        --------       --------        --------
     Total liabilities
         and shareowners' equity......  $  4,513       $  4,326        $  4,148
                                        ========       ========        ========
</TABLE>


<PAGE>


         PAGE 11

        Navistar International Corporation and Consolidated Subsidiaries
                    Notes to Financial Statements (Unaudited)


Supplemental Financial Information  (continued)


Navistar  International  Corporation (with financial  services  operations on an
equity basis) in millions of dollars:

<TABLE>
<CAPTION>
                                                           Six Months Ended
                                                               April 30
                                                       ------------------------
Condensed Statement of Cash Flow                         1999            1998
-----------------------------------------------        --------        --------
<S>                                                    <C>             <C>
Cash flow from operations
Net income.....................................        $    157        $    105
Adjustments to reconcile net income
 to cash provided by operations:
  Depreciation and amortization................              75              64
  Deferred income taxes........................              87              64
  Postretirement benefits funding
    in excess of expense.......................              25            (283)
  Equity in earnings of investees,
    net of dividends received..................             (16)              -
Other, net.....................................             (25)             (7)
Change in operating assets and liabilities ....            (147)            102
                                                       --------        --------

Cash provided by operations....................             156              45
                                                       --------        --------
Cash flow from investment programs
Purchase of marketable securities..............            (110)           (330)
Sales or maturities of marketable securities...             375             196
Capital expenditures...........................            (121)           (124)
Receivable from financial services operations              (455)             (8)
Investment in affiliates.......................             (46)             (2)
Other investment programs, net ................             (11)              -
                                                       --------        --------
Cash used in investment programs...............            (368)           (268)
                                                       --------        --------

Cash flow from financing activities............               5              36
                                                       --------        --------

Cash and cash equivalents
Decrease during the period.....................            (207)           (187)
At beginning of the year.......................             351             573
                                                       --------        --------
Cash and cash equivalents at end of the period.        $    144        $    386
                                                       ========        ========
</TABLE>


<PAGE>


       PAGE 12

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
        OF OPERATIONS AND FINANCIAL CONDITION

RESULTS OF OPERATIONS

       Certain  statements  under  this  caption   constitute   "forward-looking
statements"  under the  Reform  Act,  which  involve  risks  and  uncertainties.
Navistar  International  Corporation's  actual results may differ  significantly
from the results  discussed  in such  forward-looking  statements.  Factors that
might cause such a difference  include,  but are not limited to, those discussed
under the heading "Business Environment."

       Second Quarter Ended April 30, 1999
       -----------------------------------

       The  company  reported  net income of $96  million,  or $1.42 per diluted
common  share for the second  quarter  ended April 30, 1999,  compared  with net
income of $67  million,  or $0.89 per diluted  common  share for the  comparable
quarter last year.

       The  company's  manufacturing  operations  reported  income before income
taxes of $128 million  compared  with pretax income of $89 million in the second
quarter of 1998  reflecting  higher sales of trucks and engines.  The  financial
services  operations'  pretax  income  for the  second  quarter  of 1999 was $26
million  compared  with $19 million in the prior year  reflecting  an  increased
volume of trucks financed.

Sales and Revenues. Second quarter 1999 industry retail sales of Class 5 through
8 trucks totaled 122,200 units,  which is 21% higher than the 100,700 units sold
during this period in 1998. Class 8 heavy truck sales of 71,500 units during the
second  quarter  of 1999 were 25% higher  than the 1998  level of 57,200  units.
Industry  sales  of  Class 5, 6 and 7 medium  trucks,  including  school  buses,
increased 16% to 50,600 units.  Industry sales of school buses,  which accounted
for 20% of the medium truck market, increased 5%.

       Sales and revenues for the second quarter of 1999 totaled $2,287 million,
12% higher than the $2,042 million reported for the comparable  quarter in 1998.
Sales of trucks,  mid-range  diesel  engines  and  service  parts for the second
quarter of 1999 totaled $2,215 million compared with $1,981 million reported for
the same period in 1998.

       The company's  market share was  constrained  by the fact that  continued
industry  demand for heavy  trucks  outstripped  capacity.  This  resulted  in a
decrease  in market  share  from 30.7% in 1998 to 28.6% in 1999.  The  company's
retail  deliveries in the combined  United States and Canadian Class 5 through 8
truck market increased 13% over the prior year.  (Sources:  American  Automobile
Manufacturers Association,  Canadian Vehicle Manufacturers Association, and R.L.
Polk & Company.)

       Shipments of mid-range  diesel  engines by the company to other  original
equipment  manufacturers (OEMs) during the second quarter of 1999 totaled 72,200
units, a 29% increase from the same period of 1998. This increase  resulted from
higher  shipments to Ford Motor  Company to meet  consumer  demand for the light
trucks and vans which use this engine.


<PAGE>


         PAGE 13

       Service  parts  sales  of  $223  million  in  the  second quarter of 1999
 increased 3% from the prior year's level.

       Finance and  insurance  revenue of $59  million in the second  quarter of
1999 increased 26% from 1998,  primarily as a result of increased  wholesale and
retail financing activities and increased operating lease balances.

       Six Months Ended April 30, 1999
       -------------------------------

     Pretax  income for the first six months of 1999 was $253  million  compared
with  $169  million  reported  for  the  same  period  of  1998.  The  company's
manufacturing  operations  reported  income  before income taxes of $193 million
during this period,  compared with $127 million  reported in 1998. The financial
services  operations'  pretax  income  for the first six  months of 1999 was $60
million,  an  increase  from  the $42  million  reported  in 1998.  This  change
primarily  reflects  an  increase  in finance  receivable  balances  and a legal
settlement in favor of the company's insurance subsidiary.

       Industry  retail  sales of Class 5 through 8 trucks  during the first six
months of 1999 totaled  227,500  units,  an increase from the 188,800 units sold
during this period in 1998.  Class 8 heavy truck sales of 133,400  units  during
the first six  months of 1999 were 22%  higher  than the 1998  level of  109,600
units. Industry sales of Class 5, 6 and 7 medium trucks, including school buses,
increased 19% to 94,100 units.  Industry sales of school buses,  which accounted
for 20% of the medium truck market, increased 6%.

       Sales and  revenues  during the first six months of 1999  totaled  $4,211
million, an increase of 12% from 1998. Sales of trucks, mid-range diesel engines
and service  parts for the first half of 1999 totaled  $4,052  million  compared
with $3,653 million reported for the same period in 1998.

       Although the company's  retail  deliveries in the combined  United States
and  Canadian  class 5 through 8 truck  market  increased  by 9%, the  company's
market share for the first six months of 1999 decreased to 27.9% from  the 30.8%
reported in 1998.  The company's  market share was  constrained by the fact that
continued industry demand for heavy trucks outstripped capacity.

       The company shipped 130,300 mid-range diesel engines to other OEMs during
the first six months of 1999 which was a 32%  increase  from the same  period of
1998 due to higher shipments to Ford Motor Company.  Service parts sales were 4%
higher than in the same period of 1998.

     Finance and insurance revenue increased $29 million to $121 million for the
first  half of 1999  primarily  as a result of  increased  wholesale  and retail
financing  activities and increased  operating lease  balances.  The increase in
other income is primarily  due to a legal  settlement  in favor of the company's
insurance subsidiary.

Costs and expenses. Manufacturing gross margin was 17.9% of sales for the second
quarter of 1999 compared  with 14.4% for the same period in 1998.  This increase
is  primarily  due to lower  unit  costs and  improved  operating  efficiencies.
Manufacturing  gross margin for the first six months of 1999 was 17.2%  compared
with 13.9% in 1998. This increase is primarily due to lower unit costs, improved
pricing and improved operating efficiencies.


<PAGE>


       PAGE 14

       Consolidated  marketing  and  administrative  expense  increased  to $123
million in the second  quarter of 1999 from $97 million in the second quarter of
1998 and  increased to $249 million for the first half of 1999 from $195 million
in the first half of 1998.  These  increases were primarily due to the marketing
and  operational  implementation  of the company's  integrated  truck and engine
strategies ($17 million and $36 million, respectively).

       Postretirement  benefits  expense  increased to $65 million in the second
quarter of 1999 from $43 million in the second  quarter of 1998 and increased to
$114  million  for the first half of 1999 from $88 million for the first half of
1998. These increases  primarily reflect higher retiree  healthcare  expense ($6
million and $10  million,  respectively)  and higher  supplemental  trust profit
sharing provisions ($12 million and $16 million, respectively) related to higher
profits.

       Engineering  and research  expense  increased $20 million from the second
quarter of 1998 and  increased  $43 million  from the first half of 1998 to $124
million for the first half of 1999. Approximately 75% and 65%, respectively,  of
these  increases  reflect  the  company's  continuing  investment  in  its  next
generation vehicle (NGV) and next generation diesel (NGD) programs.

Liquidity and Capital Resources

       Cash flow is generated from the manufacture and sale of trucks, mid-range
diesel  engines and service  parts as well as product  financing  and  insurance
coverage provided to the company's dealers and retail customers by the financial
services  operations.   The  company's  current  debt  ratings  have  made  bank
borrowings and sales of finance receivables the most economic sources of funding
for the company. Insurance operations are self-funded.

       Cash used in operations  during the first six months of 1999 totaled $146
million  primarily from a net change in operating assets and liabilities of $483
million  offset by net income of $157 million,  $87 million of noncash  deferred
taxes and $93 million of other noncash items, principally depreciation.  The net
change in operating  assets and liabilities  included a $308 million increase in
receivables  primarily  due  to the  increase  in  wholesale  note  and  account
acquisitions  over  liquidations of $299 million.  The $139 million  increase in
inventories resulted primarily from higher production volume.

       Investment  programs used $91 million in cash primarily  reflecting a net
increase in retail notes and lease receivables of $126 million. Other investment
activities used $39 million for property and equipment leased to others and $121
million to fund capital expenditures primarily for the NGV and NGD programs, for
increased  mid-range  diesel  engine  capacity,   and  for  increased  capacity,
infrastructure,  and facility  enhancements  at the Escobedo  plant.  These were
offset by a net decrease in marketable securities of $267 million.

     Cash provided by financing  activities  resulted from a net increase of $60
million in notes and debt  outstanding  under the bank revolving credit facility
and other  commercial  paper programs.  Cash was also provided by $24 million of
borrowings  under the Mexican credit  facility and a $33 million net decrease in
long-term  debt. $26 million of cash was used to repurchase .5 million shares of
common  stock  during  the  second  quarter.  Subsequent  to April  30,  1999 an
additional  $40 million of cash was used to repurchase .8 million shares through
June 9, 1999.


<PAGE>


       PAGE 15

     Through the asset-backed markets,  Navistar Financial Corporation (NFC) has
been able to fund  fixed  rate  retail  note  receivables  at rates  offered  to
companies with  investment  grade ratings.  During the first six months of 1999,
NFC sold  $545  million  of  retail  notes  through  Navistar  Financial  Retail
Receivables Corporation (NFRRC) to a multi-seller  asset-backed commercial paper
conduit sponsored by a major financial institution.

       As of April  30,  1999,  Navistar  Financial  Securities  Corporation,  a
wholly-owned  subsidiary  of NFC,  had a revolving  wholesale  note  trust  that
provides for the funding of $600 million of eligible wholesale notes.

       At April 30,  1999,  available  funding  under the NFC's  bank  revolving
credit facility and the asset-backed  commercial paper facility was $72 million,
of which  $15  million  was used to back  short-term  debt.  The  remaining  $57
million,  when combined with unrestricted  cash and cash  equivalents,  made $70
million available to fund the general business purposes of NFC.

       The company purchases  collateralized  mortgage  obligations  (CMOs) that
have  predetermined   fixed-principal  payment  patterns  which  are  relatively
certain.  At April 30,  1999  these  instruments  totaled  $72  million  and the
unrecognized  gain was not  material.  At quarter  end, $63 million of a Mexican
subsidiary's receivables were pledged as collateral for bank borrowings.

     In November 1998, NFC sold fixed rate retail receivables on a variable rate
basis.  For the protection of investors,  NFC issued an interest rate cap. Under
the terms of the  agreement,  NFC will make  payments if interest  rates  exceed
certain  levels.  The notional amount of the cap amortizes based on the expected
outstanding  principal balance of the sold retail  receivables.  As of April 30,
1999 the notional  amount was $490 million and the interest  rate cap had a fair
value of $2 million.

       In June 1999,  NFC sold $715  million of retail  notes,  net of  unearned
finance income,  through NFRRC. A gain of $6 million was recognized on the sale,
which will be reflected in NFC's third quarter revenues. Following the June 1999
sale of retail receivables,  the remaining shelf registration available to NFRRC
for the public issuance of asset-backed securities was $2,257 million.

     In  anticipation  of its June  1999 sale of  retail  receivables,  NFC held
forward  treasury locks with notional  amounts of $500 million.  These positions
were closed in  conjunction  with the pricing of the sale and the resulting gain
was not  material.  In  addition,  the  company  held  Canadian  dollar  forward
contracts with notional  amounts of $40 million and other  derivative  contracts
with notional amounts of $5 million.  The unrealized net loss on these contracts
was not material.

       Cash  flow  from  the  company's  manufacturing  and  financial  services
operations is currently  sufficient to cover planned investment in the business.
The company had  outstanding  capital  commitments  of $190 million at April 30,
1999, primarily for the NGV and NGD programs.


<PAGE>


       PAGE 16

       In May 1999, Moody's and Duff and Phelps raised the company's senior debt
ratings from Ba1 and BB+ to Baa3 and BBB-, respectively and raised the company's
subordinated  debt ratings from Ba3 and BB- to Ba2 and BB,  respectively.  NFC's
senior debt ratings  increased from Ba1 and BBB- to Baa3 and BBB,  respectively.
NFC's  subordinated  debt  ratings  were also raised from Ba3 and BB+ to Ba2 and
BBB-, respectively.

       It is the  opinion of  management  that,  in the  absence of  significant
unanticipated  cash  demands,  current and  forecasted  cash flow will provide a
basis for financing operating requirements and capital expenditures.  Management
believes that collections on the outstanding  receivables  portfolios as well as
funds  available  from  various  sources  will  permit  the  financial  services
operations  to meet the  financing  requirements  of the  company's  dealers and
customers.

Year 2000

       As of April 30, 1999, the company estimates that it was approximately 87%
complete  with the  conversion or  compliance  checking of its internal  systems
including   significant   applications.   The  company  has  completed  multiple
integration tests of major systems, with continuation of these efforts scheduled
through September 1999.  Navistar currently  anticipates that  the modifications
and  testing  process  of all  significant  applications  will be  substantially
complete by  September  1999,  which is prior to any  anticipated  impact on its
operating systems.

       With  regard to the  supplier  portion  of the  project,  the  company is
currently  assessing  the Year 2000  readiness of  production  and service parts
suppliers  through a supplier survey process designed by an automotive  industry
trade association,  the Automotive Industry Action Group (AIAG).  Suppliers have
been  asked  to  respond  to a  compliance  questionnaire.  Responses  to  these
questionnaires  have been received from  approximately  72% of these  suppliers.
Based on these  responses,  the  company  believes  that the  majority  of these
suppliers  are  making  acceptable  progress  toward  Year 2000  readiness.  The
supplier assurance process is expected to be substantially complete by July 1999
and  contingency  plans are being  developed for all suppliers  with emphasis on
those  identified  as critical.  Assessments  of select  critical  suppliers are
planned to continue through July 1999.

       The company continues to work with its independent  dealers on their year
2000 readiness and to monitor their progress. Compliance of all certified dealer
systems is expected to be substantially complete by December 1999.

       The company's  total cost of the Year 2000 project,  which will be funded
through  operating  cash flows,  is estimated to be $35 million,  including  $25
million  of  estimated   expense  and  $10  million  of  capital   expenditures.
Approximately  $17 million has been  expensed and  approximately  $5 million has
been capitalized through April 30, 1999. The remaining costs are estimated to be
incurred through fiscal year 2000.


<PAGE>


       PAGE 17

       As part  of its  continuous  assessment  process,  each  of the  business
locations  has  identified  the  critical   processes  that  are  essential  for
day-to-day operations. Contingency plans are being developed that define how the
company will continue to operate these critical business  processes in the event
of a Year 2000  problem.  These plans are to identify  when  contingent  actions
should be taken and to ensure that the  resources  necessary for response are in
place.  Preliminary detailed contingency planning is scheduled for completion by
July 1999, allowing time for review,  cataloging and testing prior to activation
in December 1999.

       In addition to a central  Navistar  command  center,  command centers are
being defined for the business  locations,  along with the necessary  procedures
and staffing to manage pre and post Year 2000  activities.  Checklists are being
developed as part of the  contingency  plans that will allow the command centers
to  communicate,  quickly  identify  any Year  2000  problems,  and to  initiate
corrective  actions promptly.  Implementation of the command centers is expected
to begin in August 1999.

       The costs of the Year  2000  project  and the dates on which the  company
believes it will complete the Year 2000  modifications  and testing are based on
management's  best  estimates,   which  have  been  derived  utilizing  numerous
assumptions  regarding  future events,  including the continued  availability of
certain resources,  third party  modification plans and other factors.  However,
there can be no guarantee  that these  estimates  will be  achieved,  and actual
results could differ  materially from those currently  anticipated.  Examples of
factors that might cause such material  differences include, but are not limited
to, the availability and cost of personnel trained in this area, and the ability
to locate and correct all relevant  computer codes and embedded  technology,  as
well as other similar uncertainties. In addition, there can be no guarantee that
the systems or products of other entities,  including the company's  independent
dealers,  on which the company  relies will be converted on a timely  basis,  or
that  a  failure  to  convert  by  another  company,  or a  conversion  that  is
incompatible  with the  company's  systems,  would not have a  material  adverse
effect on the company.

Income Taxes

       The deferred tax assets are net of valuation  allowances since it is more
likely than not that some  portion of the deferred tax asset may not be realized
in  the  future  through  the  generation  of  taxable   income.   Analysis  has
historically  been  performed on an annual basis to determine  the amount of the
deferred tax asset.  Such  analysis is based on the premise that the company is,
and will  continue  to be, a going  concern  and that it is more likely than not
that  deferred tax benefits  will be realized  through the  generation of future
taxable income.  Management  reviews all available  evidence,  both positive and
negative,  to assess the  long-term  earnings  potential of the company  using a
number of  alternatives  to evaluate  financial  results in  economic  cycles at
various industry volume conditions based upon the company's  existing  operating
structure.  Continued  strong  demand in the  United  States  and Canada led the
company to raise its forecast for  industry  demand for heavy and medium  trucks
and school  buses to a  combined  total of  415,000  units.  As a result of this
increase  and  the  continued   successful   implementation   of  the  company's
manufacturing strategy,  changes in the company's operating structure, and other
positive  operating  indicators,  management  has  initiated  a  review  of  its
projected  future  taxable  income and has begun to evaluate the impact of these
changes on its deferred tax asset valuation allowance. This review may result in
a significant  reduction to the allowance.  The company  expects to complete its
evaluation during the third quarter.


<PAGE>


       PAGE 18

Business Environment

       Sales of Class 5  through  8  trucks  have  been  cyclical,  with  demand
affected by such economic factors as industrial production, construction, demand
for consumer  durable  goods,  interest  rates and the earnings and cash flow of
dealers and customers.  Reflecting the stability of the general economy,  demand
for new trucks  remained  strong  during the second  quarter of 1999  although a
decrease in the number of new truck orders has  decreased  the  company's  order
backlog to 55,700  units at April 30, 1999 from 64,300  units at April 30, 1998.
Historically,  retail  deliveries  have been  impacted  by the rate at which new
truck orders are received.  Therefore,  the company continually  evaluates order
receipts and backlog throughout the year and balances  production with demand as
appropriate.

         Strong  demand for  International  brand  trucks  coupled  with  record
industry  demand  continues  to outpace the  capacity  of certain of  Navistar's
suppliers. Accordingly, constraints have been placed on the company's ability to
meet certain customers' demands because of component parts availability.

       Continued  economic  strength in the United States and Canada has led the
company to increase its demand estimates.  The company  currently  projects 1999
United States and Canadian Class 8 heavy truck demand to be 250,000 units, an 8%
increase  from 1998.  Class 5, 6 and 7 medium  truck  demand,  excluding  school
buses, is forecast at 133,000 units, a 5% increase from 1998.  Demand for school
buses is forecast at 32,000 units, consistent with 1998. Mid-range diesel engine
shipments  by the  company  to  original  equipment  manufacturers  in 1999  are
expected to be 273,900  units,  28% higher than in 1998.  The company's  service
parts sales are projected to grow 10% to approximately $935 million.

       In March  1999,  the  company  announced  that it had  finalized  a joint
venture with a Brazilian diesel engine producer to manufacture diesel engines in
South  America.  In April 1999,  the company  announced that it will invest $250
million to produce new high technology diesel engines in Huntsville, Alabama.

       On June 7, 1999 the company announced that employees represented by Local
127 of the  Canadian  Auto  Workers  voted  to  ratify  a new  three-year  labor
agreement  nearly  five  months  ahead  of  schedule.  The  new contract is  now
effective and extends through June 1, 2002.  Increased  labor and pension  costs
are  expected to be offset  by  work  rule  changes   that   provide   increased
manufacturing flexibility.


<PAGE>


     PAGE 19

        Navistar International Corporation and Consolidated Subsidiaries

                           PART II - OTHER INFORMATION
                           ---------------------------

Item 1.       Legal Proceedings

              Incorporated herein by reference from Item 3 - "Legal Proceedings"
              in the  company's  definitive  Form 10-K dated  December 22, 1998,
              Commission File No. 1-9618.

Item 4.       Submission of Matters to a Vote of Security Holders

              The company's  Annual Meeting of Shareowners  was held on February
              23, 1999.  The following  three nominees were elected to the Board
              of Directors to serve three year terms expiring at the 2002 Annual
              Meeting  of  Shareowners.   There  were  no  broker  nonvotes  nor
              abstentions for any of the nominees. The number of votes cast for,
              or withheld, for each nominee for director was as follows:

                                           Shares Voted                Shares
              Nominees                        "FOR"                  "WITHHELD"
              --------                     -----------               ----------

              William F. Andrews            58,199,088               1,084,414
              John D. Correnti              58,204,919               1,078,583
              Allen J. Krowe                58,220,559               1,062,943

              The  names of  the  remaining  directors  who  did not  stand  for
              election  at  the  Annual  Meeting  and  whose  terms of office as
              directors  continue  after such  meeting are John R. Horne, Robert
              C. Lannert,  Y.  Marc  Belton,  Jerry  E.  Dempsey, Dr.  Abbie  J.
              Griffin,  Michael  N.  Hammes, Walter  J. Laskowski and William F.
              Patient.

Item 6.       Exhibits and Reports on Form 8-K
                                                                     10-Q Page
                                                                    -----------
                (a)   Exhibits:

                       3.  Articles of Incorporation and By-Laws.       E-1

                       4.  Instruments Defining The Rights
                           of Security Holders,
                           Including Indentures                         E-2

                (b) Reports on Form 8-K:

                      The  company  filed a current  report on Form 8-K with the
                      Commission   on  April  20,  1999  in  which  the  company
                      announced  the  adoption  of a  preferred  share  purchase
                      rights plan and included a press release  relating,  among
                      other things, to the adoption of the rights plan.


<PAGE>


     PAGE 20


                                    SIGNATURE
                                    ---------

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, thereunto duly authorized.



NAVISTAR INTERNATIONAL CORPORATION
----------------------------------
           (Registrant)





/s/  Mark T. Schwetschenau
-----------------------------------
     Mark T. Schwetschenau
     Vice President and Controller
     (Principal Accounting Officer)


June 11, 1999