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


                                    FORM 10-K


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

                   For the fiscal year ended October 31, 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 1-4146-1
                                -----------------


                         NAVISTAR FINANCIAL CORPORATION
             (Exact name of Registrant as specified in its charter)

            Delaware                                  36-2472404
(State or other jurisdiction of                    (I.R.S. Employer
 incorporation or organization)                   Identification No.)

           2850 West Golf Road
        Rolling Meadows, Illinois                        60008
(Address of principal executive offices)               (Zip Code)

         Registrant's telephone number, including area code 847-734-4000

        Securities registered pursuant to Section 12(b) of the Act: None

        Securities registered pursuant to Section 12(g) of the Act: None

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__


As of November 30, 1999, the number of shares  outstanding  of the  registrant's
common stock was 1,600,000.


THE   REGISTRANT  IS  A  WHOLLY-OWNED   SUBSIDIARY  OF  NAVISTAR   INTERNATIONAL
TRANSPORTATION  CORP. AND MEETS THE CONDITIONS SET FORTH IN GENERAL  INSTRUCTION
I(1) (a) AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.


<PAGE>


                         NAVISTAR FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                                    FORM 10-K

                           Year Ended October 31, 1999

                                      INDEX
                                                                           Page
PART I

Item  1.  Business (A)..................................................    1
Item  2.  Properties (A)................................................    1
Item  3.  Legal Proceedings.............................................    1
Item  4.  Submission of Matters to a Vote of
          Security Holders (A)..........................................    1

PART II

Item  5.  Market for the Registrant's Common Equity and
          Related Stockholder Matters...................................    1
Item  6.  Selected Financial Data (A)...................................    1
Item  7.  Management's Discussion and Analysis of Financial
          Condition and Results of Operations (A).......................    2
Item  7A. Quantitative and Qualitative Disclosures About Market Risk....   10
Item  8.  Financial Statements..........................................   12
          Statement of Financial Reporting Responsibility...............   37
          Independent Auditors' Report..................................   38
          Supplementary Financial Data..................................   39
Item  9.  Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure...........................   42

PART III

Item 10. Directors and Executive Officers of the
         Registrant (A).................................................   42
Item 11. Executive Compensation (A).....................................   42
Item 12. Security Ownership of Certain Beneficial Owners
         and Management (A).............................................   42
Item 13. Certain Relationships and Related
         Transactions (A)...............................................   42

PART IV

Item 14. Exhibits, Financial Statement Schedules and
         Reports on Form 8-K............................................   42

SIGNATURES   - Principal Accounting Officer ............................   43
             - Directors................................................   44
POWER OF ATTORNEY.......................................................   44
INDEX TO EXHIBITS.......................................................  E-1

(A)- Omitted  or amended  as the  registrant  is a  wholly-owned  subsidiary  of
     Navistar  International  Transportation  Corp. and meets the conditions set
     forth  in  General  Instructions  I(1)  (a) and (b) of  Form  10-K  and is,
     therefore, filing this Form with the reduced disclosure format.


<PAGE>





                                     PART I


Item 1.    Business

     The registrant, Navistar Financial Corporation ("NFC"), was incorporated in
Delaware in 1949 and is a  wholly-owned  subsidiary  of  Navistar  International
Transportation  Corp.  ("Transportation"),  which is  wholly-owned  by  Navistar
International Corporation ("Navistar"). As used herein, the "Corporation" refers
to Navistar Financial  Corporation and its wholly-owned  subsidiaries unless the
context otherwise requires.

     The  Corporation  is a  commercial  financing  organization  that  provides
wholesale,  retail and lease financing in the United States for sales of new and
used trucks sold by Transportation and Transportation's dealers. The Corporation
also finances  wholesale  accounts and selected  retail  accounts  receivable of
Transportation.   Sales  of  new   products   (including   trailers)   of  other
manufacturers  are also financed  regardless of whether  designed or customarily
sold for use with  Transportation's  truck  products.  Harco National  Insurance
Company, NFC's wholly-owned  insurance subsidiary,  provides commercial physical
damage and liability insurance coverage to  Transportation's  dealers and retail
customers,  and to the general public through an  independent  insurance  agency
system.

Item 2.    Properties

     The Corporation's  properties  principally  consist of office equipment and
leased  office  space in Rolling  Meadows,  Illinois;  Columbus,  Ohio;  Duluth,
Georgia;  Plano, Texas; Mt. Laurel, New Jersey; and San Ramon,  California.  The
office  equipment  owned and in use by the  Corporation  is not  significant  in
relation to the total assets of the Corporation.

Item 3.    Legal Proceedings

     There were no  material  pending  legal  proceedings  other than  ordinary,
routine litigation incidental to the business of the Corporation.

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

     Intentionally omitted. See the index page of this Report for explanation.

                                     PART II


Item 5.    Market for the Registrant's Common Equity and
           Related Stockholder Matters

     See Note 13 to Consolidated Financial Statements.

Item 6.    Selected Financial Data

     Intentionally omitted. See the index page of this Report for explanation.



<PAGE>


Item 7.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations

     Certain   statements   under  this   caption,   which   involve  risks  and
uncertainties,  constitute  "forward-looking  statements"  under the  Securities
Reform  Act.  Navistar  Financial   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  headings  "Year  2000",   "Business  Outlook"  and
"Quantitative and Qualitative Disclosures About Market Risk."

Financing Volume

     In response to the continued strong U.S. economy, customer demand for Class
5 through 8 trucks in  fiscal  1999 was 19% and 34%  higher  than 1998 and 1997,
respectively.  The strong  economy  continued to contribute to high liquidity in
the commercial financing markets,  which gives the Corporation's  customers more
financing alternatives. This continuing, highly competitive financing market has
caused  the  Corporation  to  increase  marketing  efforts  for its  retail  and
wholesale  financing  products and services and to reduce  finance rates offered
during the fiscal year.

     Financing  support  provided to retail  customers over the last three years
was as follows:

                                               1999        1998        1997
                                               ----        ----        ----
Retail and Lease Financing: ($ millions)
Finance market share of new International
   trucks sold in the U.S.                    16.4%       16.0%       13.2%

Purchases of receivables and
   equipment leased to others                $1,526      $1,397      $1,036

Serviced retail notes and lease
   financing balances (including
   sold notes) at October 31                 $3,003      $2,579      $2,253


     As a result of the Corporation's higher finance market share and the higher
truck industry demand in 1999,  purchases of receivables and equipment leased to
others were 9% above 1998. During fiscal 1999 the serviced portfolio grew 16% to
$3.0 billion.  Purchases of receivables  and equipment  leased to others in 1998
grew 14% above 1997 as a result of the  higher  finance  market  share and truck
industry demand.


<PAGE>


Item 7.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (continued)


Financing Volume (continued)

     Financing support provided to Transportation's  dealers over the last three
years was as follows:

                                               1999        1998        1997
                                               ----        ----        ----
Wholesale Financing: ($ millions)
Percent of wholesale financing of
   new International trucks sold to
   Transportation's dealers in the U.S.         96%         95%         94%

Purchases of receivables                     $4,188      $3,813      $2,773

Serviced wholesale note balances
   (including sold notes) at
   October 31                                $1,226      $1,039        $691


     In spite of the strong liquidity in the commercial  financing  market,  the
Corporation's   finance   percentage  of  new   International   trucks  sold  to
Transportation's  dealers increased slightly to 96% from 95% and 94% in 1998 and
1997,  respectively.  In response to the strong industry  demand,  the volume of
receivables purchased in 1999 was 10% higher than 1998 which was 38% higher than
1997.

Results of Operations

     The components of net income over the last three years were as follows:

                                               1999        1998        1997
                                               ----        ----        ----
Income before income taxes: ($ millions)
     Finance operations                       $96.4       $79.2       $68.6
     Insurance operations                       5.0         6.0         6.0
                                              -----       -----       -----
        Income before income taxes            101.4        85.2        74.6
     Taxes on income                           38.9        32.3        28.9
                                               ----       -----       -----
        Net income                            $62.5       $52.9       $45.7
                                              =====       =====       =====

Return on average equity                       22.1%       18.5%       16.1%

     The Corporation's 1999 return on average equity was a record 22.1% in 1999,
compared with 18.5% and 16.1% in 1998 and 1997, respectively.  The increase over
1998 was due primarily to higher finance receivable balances,  resulting from an
increase in  Transportation's  sales, and a higher level of average  outstanding
accounts  payable to affiliates  which  proportionately  lowered debt levels and
interest  expense.  This was offset,  in part, by a higher provision for losses,
higher costs to service the larger  portfolio,  and the  competitive  commercial
financing market which continued to put pressure on retail and wholesale finance
margins.  The 1998  increase  over 1997 is primarily  due to the higher level of
wholesale and retail financing,  partially offset by lower financing margins and
higher costs to service the larger portfolio.


<PAGE>


Item 7.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (continued)


Results of Operations - Finance Operations:

     Retail note and lease financing  revenue for 1999 was $161 million compared
with $136  million  and $106  million  in 1998 and 1997,  respectively.  The 18%
growth in fiscal 1999 is due to higher retail financing activities and continued
growth in lease  financing,  offset in part by lower yields.  Included in retail
note and lease financing revenue is operating lease revenue of $62 million,  $46
million  and $29  million  in 1999,  1998 and  1997,  respectively.  The  higher
operating lease revenue is the result of an increase in vehicles under operating
leases due to a market shift toward lease financing.  For operating leases,  the
Corporation   recognizes  the  entire  lease  payment  as  revenue  and  records
depreciation expense on the assets under lease. Also included in retail note and
lease  finance  revenue  are gains on sales of retail  note  receivables  of $12
million, $15 million and $13 million in 1999, 1998 and 1997,  respectively.  The
lower gains on sales of retail note  receivables  in fiscal 1999  resulted  from
lower retail note margins and increased credit spreads in the capital market.

     In fiscal 1999 wholesale  note revenue  increased 45% to $63 million versus
1998, primarily as a result of the higher level of wholesale financing activity,
offset in part by lower yields in response to the lower average  prime  interest
rate in 1999 and the competitive  commercial  financing  market.  Wholesale note
revenue  increased 20% in 1998 to $43 million as a result of the higher level of
wholesale  financing  activity,  offset in part by lower  yields in  response to
competitive commercial financing market.

     Borrowing  costs  increased  7% in 1999 to $95 million  from $88 million in
1998 primarily due to higher average receivable funding requirements,  offset in
part by a higher level of average outstanding accounts payable to affiliates and
lower average interest rates. The higher level of average  outstanding  accounts
payable to  affiliates  reduced  debt  levels and  resulted  in a  reduction  in
borrowing costs of $13 million for fiscal year 1999. The Corporation's  weighted
average  interest  rate on all debt was 5.6% in 1999 and 6.4% in 1998 and  1997.
The decrease in the Corporation's  weighted average interest rate is primarily a
result  of the  decrease  in  market  interest  rates  and a  lower  outstanding
subordinated  term debt balance.  Borrowing  costs  increased 21% in 1998 to $88
million  from $73 million in 1997  primarily  due to higher  average  receivable
funding requirements. The ratio of debt to equity was 6.1:1, 5.8:1, and 4.3:1 at
October 31, 1999, 1998 and 1997, respectively.

     Credit,  collection and administrative expenses increased to $43 million in
1999  from $36  million  and $31  million  in 1998 and 1997,  respectively.  The
increase in 1999  compared  with 1998 and 1997 was primarily due to higher costs
to service the larger portfolio and costs associated with year 2000 initiatives.





<PAGE>


Item 7.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (continued)


Results of Operations - Finance Operations (continued)

     The provision for losses on receivables totaled $6 million in 1999 compared
with $1 million in 1998 and $3 million in 1997. The increase in 1999 compared to
1998 is primarily due to a non-recurring  loss recovery in 1998 and the increase
in serviced finance receivable  balances.  Notes and account write-offs,  net of
recoveries, including sold notes, were $5 million in 1999, less than one million
in 1998 and $2  million in 1997.  The  Corporation's  allowance  for losses as a
percentage of serviced  finance  receivables  was .55%, .64% and .72% at October
31, 1999, 1998 and 1997, respectively.

     Depreciation  and other  expenses in 1999 increased to $44 million from $30
million in 1998 and $19 million in 1997. The increase is primarily the result of
a larger investment in equipment under operating leases.

     Insurance Operations:

     Harco National Insurance  Company's  ("Harco") pretax income was $5 million
in 1999 and $6 million in both 1998 and 1997.  Harco's gross premiums written in
1999 were $47 million,  consistent  with 1998 and 2% below 1997.  The  insurance
industry  continues to be over capitalized which results in a highly competitive
market and places pressure on Harco's volume and margins. The ratio of losses to
earned premiums was 72% during 1999, compared to 70% in 1998 and 1997.


Liquidity and Funds Management

     The Corporation has  traditionally  obtained the funds to provide financing
to  Transportation's  dealers and retail  customers  from sales of  receivables,
commercial paper, short and long-term bank borrowings, medium and long-term debt
and equity capital.  The  Corporation's  current debt ratings have made sales of
finance  receivables the most economical  source of funding.  The  Corporation's
insurance  operation  generates its funds through internal operations and has no
external borrowings.

     In May 1999,  Moody's and Duff and Phelps raised the  Corporation's  senior
debt ratings from Ba1 and BBB- to Baa3 and BBB, respectively, while also raising
the subordinated debt ratings from Ba3 and BB+ to Ba2 and BBB-, respectively. In
January 1998,  Standard and Poors raised the  Corporation's  senior debt ratings
from BB to BB+, while the subordinated  debt ratings were also raised from B+ to
BB-.




<PAGE>


Item 7.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (continued)


Liquidity and Funds Management (continued)

     Operations  provided $654 million of cash in 1999  primarily as a result of
an increase in accounts  payable to affiliates.  The cash provided by operations
was used  primarily  for investing  activities  of $637  million,  of which $410
million supported wholesale note and account financing,  and to pay dividends of
$60 million.  Financing activities,  excluding dividends,  provided $68 million.
During 1999, the purchase of $1,526 million of retail  receivables and equipment
leased to others was funded  primarily  with $1,192 million of proceeds from the
sale of receivables, principal collections on retail notes and lease receivables
of $88  million,  and $68  million  net  increase  in total  debt.  See also the
"Statements of Consolidated Cash Flow" on page 14.

     Over the last three years, operations provided an aggregate of $864 million
in cash and proceeds from the sale of retail receivables totaled $3,102 million.
These amounts were used principally to fund the purchase of finance  receivables
and equipment  leased to others of $3,661,  net of principal  collections on the
receivables, and to pay dividends of $157 million.

     Receivable  sales were a  significant  source of funding in 1999,  1998 and
1997.  Through the asset-backed  public market and private  placement sales, the
Corporation  has been able to fund fixed rate retail note  receivables  at rates
offered to companies with investment  grade ratings.  During fiscal 1999, in two
separate sales,  the Corporation sold a total of $1,260 million of retail notes,
net of unearned finance income,  through Navistar  Financial Retail  Receivables
Corporation  ("NFRRC"),  a  wholly  owned  subsidiary  of the  Corporation.  The
Corporation sold $545 million of retail notes in November 1998 to a multi-seller
asset-backed commercial paper conduit sponsored by a major financial institution
and $715 million of retail notes in June 1999 to an owner trust which,  in turn,
issued securities which were sold to investors. During fiscal 1998 and 1997, the
Corporation sold $1,001 and $987 million, respectively, of retail notes, through
"NFRRC",  to owner trusts,  which in turn,  issued securities which were sold to
investors.  The aggregate shelf registration  available to NFRRC for issuance of
asset-backed securities is $2,257 million.

     At October 31, 1999, Navistar Financial Securities  Corporation ("NFSC"), a
wholly-owned subsidiary of the Corporation, had a revolving wholesale note trust
that provides for the funding of $600 million of wholesale  notes.  All eligible
wholesale notes are sold to the trust through NFSC.  During 1999, a $100 million
tranche of investor  certificates  matured. As of October 31, 1999, the trust is
comprised of three $200 million  tranches of investor  certificates  maturing in
2003, 2004 and 2008.

     During  fiscal  1999,   1998  and  1997,  the   Corporation   entered  into
sale/leaseback  agreements  involving  vehicles subject to retail finance leases
and operating  leases with end users.  Total  proceeds  were $160 million,  $144
million and $111 million in 1999, 1998 and 1997,  respectively.  The outstanding
capital lease obligations at October 31, 1999 were $323 million.




<PAGE>


Item 7.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (continued)


Liquidity and Funds Management (continued)

     The  Corporation  has a $925 million bank revolving  credit  facility and a
$400 million asset-backed  commercial paper ("ABCP") program supported by a bank
liquidity facility,  which mature in March 2001. See Note 10 to the Consolidated
Financial Statements for further discussion.

     As of October 31, 1999,  available  funding under the bank revolving credit
facility  and the ABCP program was $87  million,  of which $35 million  provided
funding backup for the outstanding  short-term  debt. The remaining $52 million,
when  combined with  unrestricted  cash and cash  equivalents,  made $90 million
available to fund the general business purposes of the Corporation.

     The  Corporation  manages its exposure to fluctuations in interest rates by
limiting  the  amount  of fixed  rate  assets  funded  with  variable  rate debt
generally  by  selling  fixed  rate  receivables  on a fixed  rate  basis and by
utilizing   derivative   financial   instruments.   These  derivative  financial
instruments may include forward contracts, interest rate swaps and interest rate
caps.

     As of October 31,  1999,  the  Corporation  had a total of $500  million of
forward  interest rate contracts  outstanding in anticipation of a November 1999
sale of retail  receivables and a $75 million forward  starting swap contract in
anticipation of a March 2000 sale of retail receivables. These forward contracts
were entered into to reduce  exposure to future changes in interest  rates.  The
Corporation  closes the forward  contract  positions  on the pricing date of the
sale and any gain or loss is  included  in the gain on the sale of  receivables.
The unrealized loss was immaterial at October 31, 1999.

     In November 1998, the Corporation  sold fixed rate retail  receivables to a
multi-seller   asset-backed  commercial  paper  conduit  sponsored  by  a  major
financial institution on a variable rate basis. For the protection of investors,
the  Corporation  issued an interest  rate cap. The  notional  amount of the cap
amortizes based on the expected outstanding principal balance of the sold retail
receivables.  Under the terms of the cap agreement,  the  Corporation  will make
payments if interest rates exceed certain levels. As of October 31, 1999 the cap
had a notional amount of $374 million and a fair value of $1 million.

     In November 1999, the Corporation sold $533 million of retail notes, net of
unearned  finance  income,  through  NFRRC  to  two  multi-seller   asset-backed
commercial  paper  conduits  sponsored by a major  financial  institution.  A $2
million gain will be recognized  in fiscal year 2000.  Lower retail note margins
and  increased  credit spreads in the capital  market have  reduced the realized
gains on sales of receivables in fiscal 1999 and 2000.





<PAGE>


Item 7.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (continued)


Year 2000

     The  Corporation  has identified  all  significant  information  technology
("IT") applications that required remediation,  which in some cases involved the
replacement of systems,  to ensure Year 2000  compliance.  Internal and external
resources were used to make the required modifications and to test for Year 2000
compliance.  As of November 30, 1999, the  Corporation is 100% complete with the
modifications  and testing  process of all  significant IT systems.  Total costs
connected  with the  remediation  of the  Corporation's  significant  IT systems
totaled  $2  million  in  1999,  $3  million  in 1998  and $1  million  in 1997.
Approximately  25% of the total costs,  representing  investment in purchased IT
systems,  were capitalized and will be depreciated over three to five years. The
total cost of the Year 2000 project has not had nor is it  anticipated to have a
material impact on the Corporation's financial position or results of operations
and has been funded through operating cash flows.

     While certain aspects of the  Corporation's  businesses  could operate on a
manual  basis for a period of time,  in the  event the  Corporation  experiences
interruptions due to the transition to the Year 2000, the Corporation  currently
believes  that the most  reasonably  likely  worst  case  scenario  would be the
inability to sustain its current  level of  performance  and  customer  service.
Additionally,  a significant  failure of the banking  systems or key entities in
the financial markets could adversely affect the Corporation's ability to access
various credit and money markets.

     The  Corporation  has  received  written  assurances  from its  significant
suppliers of cash  management  services that they will be able to operate in the
Year 2000 and beyond,  without  interruption  in service.  While the Corporation
believes  that it does  not  have  significant  exposure  to  other  significant
suppliers' Year 2000 problems,  it has collected compliance assurances from such
other significant suppliers.

     As part of its continuous  assessment process, the Corporation has prepared
contingency  plans for  critical  business  processes  that will be placed  into
effect in the event of a Year 2000 problem. These plans identify when contingent
actions  should be taken  and  identify  the  resources  necessary  for a proper
response.  Review and testing of the contingency plans will continue through the
remainder of 1999, along with the necessary  training of people that will manage
through the crossover into the Year 2000.

     Checklists have been established for each of the contingency plans, against
which status will be measured as the crossover  occurs.  The first priority will
be to determine  that  computing  platforms,  data base  management  systems and
communication  networks  for  both  voice  and data  are  functioning  properly.
Immediately following,  a series of production  applications have been scheduled
to run, with the  objective  being to quickly  identify any remaining  Year 2000
problems, and to initiate corrective actions promptly.



<PAGE>


Item 7.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (continued)


Year 2000 (continued)

     A Year 2000 command center structure has been established to facilitate the
management of activities and communications. Staffing has been identified, along
with the  procedures  to manage the  implementation  of the defined pre and post
-Year 2000 activities.

     The  Corporation  is using its best  efforts  to ensure  that the Year 2000
impact  on  its  critical  systems and processes will  not affect its  level  of
performance and customer service.  However, in the event that the Corporation is
unable to implement  adequate  contingency  plans in the event  problems  arise,
there  could  be a  material  adverse  effect  on  the  Corporation's  business,
financial position or results of operations.


New Accounting Standards


     In March 1998,  the  American  Institute of  Certified  Public  Accountants
issued Statement of Position 98-1, "Accounting for the Cost of Computer Software
Development or Obtained for Internal Use." This statement defines whether or not
certain costs related to the development or acquisition of internal use software
should be expensed or  capitalized  and is effective for fiscal years  beginning
after  December  15,  1998.  The  company  will adopt this  statement  effective
November 1, 1999. At planned fiscal year 2000 spending levels,  adoption of this
statement  will  not  have a  material  impact  on the  results  of  operations,
financial condition and cash flow.

     In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133,  "Accounting  for Derivative  Instruments  and Hedging  Activities," to
establish  accounting and reporting standards for derivative  instruments.  This
statement requires recognition of all derivative instruments in the statement of
financial  condition as either  assets or  liabilities,  measured at fair value.
This statement additionally requires changes in the fair value of derivatives to
be recorded each period in current earnings or comprehensive  income,  depending
on the intended use of the  derivatives.  In June 1999, the FASB issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of
the  Effective  Date of FASB  Statement  No.  133,"  which  amends  SFAS  133 by
deferring its effective date for one year, to those fiscal years beginning after
June 15,  2000.  The  Corporation  is  currently  assessing  the impact of these
statements on its results of operations, financial condition and cash flow.




<PAGE>


Item 7.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (continued)


Business Outlook

     The truck industry in 2000 is forecasted to decrease approximately 13% from
1999. The competitive  commercial financing market will continue to put pressure
on the  Corporation's  retail and  wholesale  financing  activity  and  margins.
Increased volatility in the capital markets is likely to put additional pressure
on the funding  rates  offered to the  Corporation  in the  asset-backed  public
market, commercial paper markets and other debt financing markets.

     Management  believes  that  collections  on  the  outstanding   receivables
portfolio plus cash available from the  Corporation's  various  funding  sources
will  permit   Navistar   Financial  to  meet  the  financing   requirements  of
Transportation's dealers and retail customers through 2000 and beyond.


Item 7A.   Quantitative and Qualitative Disclosures About Market Risk

     The  Corporation is exposed to market risk primarily due to fluctuations in
interest  rates.  Interest rate risk arises from the funding of a portion of the
Corporation's  fixed  rate  receivables  with  floating  rate  debt and from the
Corporation's investment in fixed income securities. The Corporation has managed
exposure to interest  rate changes by funding  floating  rate  receivables  with
floating  rate debt and fixed rate  receivables  with fixed rate debt,  floating
rate debt and equity  capital.  Management  has reduced the net  exposure  which
results from the funding of fixed rate  receivables  with  floating rate debt by
generally  selling fixed rate receivables on a fixed rate basis and by utilizing
derivative  financial  instruments.  The  Corporation  does  not use  derivative
financial instruments for trading purposes.

     The  Corporation  maintains  investments  in  marketable  securities.   The
securities  are  classified  as  available  for  sale  and are  recorded  on the
Statements of  Consolidated  Financial  Condition at fair value with  unrealized
gains or losses reported as a separate component of shareowner's  equity, net of
applicable  deferred  taxes.  As of  October  31,  1999,  the fair  value of the
Corporation's  marketable  securities portfolio was $102 million,  consisting of
$81 million  invested  in debt  securities  and $21  million  invested in equity
securities.




<PAGE>


Item 7A.   Quantitative and Qualitative Disclosures About Market Risk
           (continued)


     The  Corporation  measures its  interest  rate risk by  estimating  the net
amount  by which  the fair  value of all  interest  rate  sensitive  assets  and
liabilities,  including derivative financial  instruments,  would be impacted by
selected  hypothetical changes in market interest rates. Assuming a hypothetical
10% increase in interest  rates as of October 31, 1999,  the  estimated net fair
asset value would decrease by approximately $5 million.

     Equity price risk arises when the  Corporation  could incur economic losses
due to adverse changes in a particular stock index or price.  The  Corporation's
investments  in equity  securities are exposed to equity price risk and the fair
value of the portfolio is correlated to the S&P 500.  Management  estimates that
an immediate 10% change in the S&P 500 would affect the fair value of its equity
securities by approximately $2 million.


<PAGE>


Item 8.    Financial Statements and Supplementary Data                     Page


   Navistar Financial Corporation and Subsidiaries:

     Consolidated Financial Statements:
        Statements of Consolidated Income and Retained Earnings
           for the years ended October 31, 1999, 1998 and 1997.............  13
        Statements of Comprehensive Income for the years
           ended October 31, 1999, 1998 and 1997...........................  13
        Statements of Consolidated Financial Condition as of
           October 31, 1999 and 1998 ......................................  14
        Statements of Consolidated Cash Flow for the years ended
           October 31, 1999, 1998 and 1997.................................  15
        Notes to Consolidated Financial Statements.........................  16
     Statement of Financial Reporting Responsibility.......................  37
     Independent Auditors' Report..........................................  38
     Supplementary Financial Data..........................................  39



<PAGE>


                 Navistar Financial Corporation and Subsidiaries
 ------------------------------------------------------------------------------


             Statements of Consolidated Income and Retained Earnings
 ------------------------------------------------------------------------------
                               Millions of Dollars
<TABLE>
<CAPTION>
   For the years ended October 31                    1999       1998       1997
   ----------------------------------------------------------------------------
<S>                                                <C>        <C>        <C>
   Revenues
        Retail notes and lease financing.......... $161.3     $135.8     $105.8
        Wholesale notes...........................   62.8       43.3       36.1
        Accounts..................................   35.6       33.3       31.2
        Servicing fee income......................   23.8       21.6       20.0
        Insurance premiums earned.................   35.7       32.3       33.3
        Marketable securities.....................    8.8        9.6        8.5
                                                   ------     ------     ------
            Total.................................  328.0      275.9      234.9
                                                   ------     ------     ------

   Expenses
        Cost of borrowing:
            Interest expense......................   88.6       81.0       65.9
            Other.................................    6.1        7.1        7.0
                                                   ------     ------     ------
            Total.................................   94.7       88.1       72.9

        Credit, collection and administrative.....   42.5       36.1       31.0
        Provision for losses on receivables.......    6.2        0.8        2.5
        Insurance claims and underwriting.........   39.1       35.6       35.1
        Depreciation expense and other............   44.1       30.1       18.8
                                                   ------     ------     ------
            Total.................................  226.6      190.7      160.3
                                                   ------     ------     ------

   Income Before Taxes............................  101.4       85.2       74.6

   Taxes on Income................................   38.9       32.3       28.9
                                                   ------     ------     ------

   Net Income.....................................   62.5       52.9       45.7

   Retained Earnings
        Beginning of year.........................  109.0      113.1      107.4
        Dividends paid............................  (60.3)     (57.0)     (40.0)
                                                   ------     ------     ------
        End of year............................... $111.2     $109.0     $113.1
                                                   ======     ======     ======

                       Statements of Comprehensive Income
-------------------------------------------------------------------------------

   For the years ended October 31                    1999       1998       1997
   ----------------------------------------------------------------------------

   Net Income..................................... $ 62.5     $ 52.9     $ 45.7
   Other comprehensive (loss) income, net of tax:
        Unrealized (losses)gains on marketable
        securities (net of tax of $(1.9),
        $(0.7) and $1.5)..........................   (3.2)      (1.2)       2.4
        Minimum pension liability adjustment
        (net of tax of $(0.1), $(0.6) and $0.0)...   (0.2)      (1.0)       0.0
                                                   ------     ------     ------
   Other comprehensive (loss) income, net of tax..   (3.4)      (2.2)       2.4
                                                   ------     ------     ------
   Comprehensive Income........................... $ 59.1     $ 50.7     $ 48.1
                                                   ======     ======     ======

</TABLE>
                 See Notes to Consolidated Financial Statements.


<PAGE>


                 Navistar Financial Corporation and Subsidiaries
-------------------------------------------------------------------------------

                 Statements of Consolidated Financial Condition
-------------------------------------------------------------------------------
                               Millions of Dollars

<TABLE>
<CAPTION>
As of October 31                                            1999         1998
-------------------------------------------------------------------------------

<S>                                                     <C>           <C>
ASSETS

Cash and Cash Equivalents...............................$   38.6      $   14.1
Marketable Securities...................................   101.7         108.0
Receivables
     Finance receivables................................ 2,075.9       1,523.7
     Allowance for losses...............................   (13.4)        (12.8)
                                                        --------      --------
         Receivables, net............................... 2,062.5       1,510.9

Amounts Due from Sales of Receivables...................   244.5         245.9
Equipment on Operating Leases, Net......................   266.7         217.7
Repossessions...........................................    21.0          14.4
Other Assets............................................   114.1         101.9
                                                        --------      --------

Total Assets............................................$2,849.1      $2,212.9
                                                        ========      ========


LIABILITIES AND SHAREOWNER'S EQUITY

Short-Term Debt.........................................$   34.5      $   21.8
Net Accounts Payable to Affiliates......................   706.9         136.8
Other Liabilities.......................................    49.5          57.1
Senior and Subordinated Debt............................ 1,675.8       1,611.2
Dealers' Reserves.......................................    24.2          24.0
Unpaid Insurance Claims and Unearned Premiums...........    77.9          80.5

Commitments and Contingencies...........................      -              -

Shareowner's Equity
     Capital stock (Par value $1.00, 1,600,000 shares
          issued and outstanding) and paid-in capital...   171.0         171.0
   Retained earnings....................................   111.2         109.0
     Accumulated other comprehensive (loss) income......    (1.9)          1.5
                                                        --------      --------
         Total..........................................   280.3         281.5
                                                        --------      --------

Total Liabilities and Shareowner's Equity...............$2,849.1      $2,212.9
                                                        ========      ========
</TABLE>




                 See Notes to Consolidated Financial Statements.

<PAGE>


                 Navistar Financial Corporation and Subsidiaries
-------------------------------------------------------------------------------


                      Statements of Consolidated Cash Flow
-------------------------------------------------------------------------------
                               Millions of Dollars

<TABLE>
<CAPTION>
For the years ended October 31                       1999       1998      1997
-------------------------------------------------------------------------------
<S>                                              <C>        <C>        <C>
Cash Flow From Operations

     Net income.................................. $  62.5    $  52.9   $  45.7
       Adjustments to reconcile net income to
         cash provided from operations:
       Gains on sales of receivables.............   (11.5)     (15.3)    (13.4)
       Depreciation and amortization.............    47.1       35.4      22.5
       Provision for losses on receivables.......     6.2        0.8       2.5
       Increase in accounts payable
         to affiliates...........................   570.1        5.3     107.0
       Other.....................................   (20.8)     (10.5)    (22.3)
                                                  -------    -------   -------
              Total..............................   653.6       68.6     142.0
                                                  -------    -------   -------

Cash Flow From Investing Activities

     Proceeds from sold retail notes............. 1,191.6      952.6     958.2
     Purchase of retail notes and
       lease receivables.........................(1,417.2)  (1,262.8)   (969.7)
     Principal collections on retail notes and
         lease receivables.......................    88.1      116.4      93.8
     Acquisitions over cash collections of
         wholesale notes and accounts receivable.  (410.3)    (105.8)    (59.9)
     Purchase of marketable securities...........   (53.1)     (43.1)    (65.3)
     Proceeds from sales and maturities of
         marketable securities...................    57.1       50.3      84.8
     Purchase of equipment leased to others......  (108.7)    (134.2)    (66.3)
     Sale of equipment leased to others..........    15.2        8.9      23.8
                                                  -------    -------   -------
              Total..............................  (637.3)    (417.7)     (0.6)
                                                  -------    -------   -------

Cash Flow From Financing Activities

     Net increase (decrease) in short-term debt..    12.7     (119.2)     41.6
     Net increase (decrease) in bank
         revolving credit facility usage.........    25.0      422.0    (311.0)
     Net increase (decrease) in asset-backed
         commercial paper facility usage.........     4.4        6.0     (15.3)
     Principal payments on long-term debt........  (133.3)     (43.6)    (21.6)
     Proceeds from long-term debt................   159.7      144.3     208.9
     Dividends paid to Transportation............   (60.3)     (57.0)    (40.0)
                                                  -------    -------   -------
              Total..............................     8.2      352.5    (137.4)
                                                  -------    -------   -------

Increase in Cash and Cash Equivalents............    24.5        3.4       4.0

Cash and Cash Equivalents at Beginning of Year...    14.1       10.7       6.7
                                                  -------    -------   -------

Cash and Cash Equivalents at End of Year......... $  38.6    $  14.1   $  10.7
                                                  =======    =======   =======

Supplementary disclosure of cash flow information:
     Interest paid............................... $  92.3    $  80.4   $  59.7
     Income taxes paid........................... $  39.4    $  36.4   $  23.8

</TABLE>

          See Notes to Consolidated Financial Statements.


<PAGE>




                 NAVISTAR FINANCIAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                   FOR THE THREE YEARS ENDED OCTOBER 31, 1999

                               MILLIONS OF DOLLARS



1. SUMMARY OF ACCOUNTING POLICIES


Principles of Consolidation

     The  consolidated  financial  statements  include the  accounts of Navistar
Financial Corporation ("NFC") and its wholly-owned subsidiaries ("Corporation").
All significant intercompany accounts and transactions have been eliminated. All
of  the  Corporation's   capital  stock  is  owned  by  Navistar   International
Transportation  Corp.  ("Transportation"),  which is  wholly-owned  by  Navistar
International Corporation ("Navistar").

Nature of Operations

     The  Corporation  is a  commercial  financing  organization  that  provides
retail, wholesale and lease financing of products sold by Transportation and its
dealers  within the United  States.  The  Corporation  also provides  commercial
physical damage and liability insurance coverage to Transportation's dealers and
retail  customers and to the general  public  through an  independent  insurance
agency system.

Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Revenue on Receivables

     Revenue from finance  receivables is recognized  using the interest method.
Revenue on operating leases is recognized on a straight-line basis over the life
of the lease. Recognition of revenue is suspended when management determines the
collection of future income is not probable.  Income  recognition  is resumed if
collection doubts are removed.



<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


1. SUMMARY OF ACCOUNTING POLICIES (continued)


Allowance for Losses on Receivables

     The allowance for losses on receivables is established  through a charge to
the provision for losses. The allowance is an estimate of the amount required to
absorb  losses  on  existing  receivables  that may  become  uncollectible.  The
allowance  is  maintained  at an  amount  management  considers  appropriate  in
relation  to the  outstanding  receivables  portfolio  based on such  factors as
overall  portfolio  quality,  historical  loss  experience and current  economic
conditions.

     Under various agreements,  Transportation and its dealers may be liable for
a portion of customer  losses or may be required to repurchase  the  repossessed
collateral at the receivable  principal value. The Corporation's  losses are net
of these benefits.  Receivables are charged off to the allowance for losses when
the receivable is determined to be uncollectible.

Receivable Sales

     The  Corporation  securitizes  and sells  receivables to public and private
investors  with  limited  recourse.  The  Corporation  continues  to service the
receivables, for which a servicing fee is received. Servicing fees are earned on
a level  yield  basis over the terms of the  related  sold  receivables  and are
included in servicing fee income.  Gains or losses on sales of  receivables  are
credited or charged to financing revenue in the period in which the sales occur.
An adequate  allowance  for credit  losses is provided  prior to the  receivable
sales.

Insurance Operations

     Insurance  premiums  written by the  Corporation's  wholly-owned  insurance
subsidiary, Harco National Insurance Company ("Harco"), are earned on a pro rata
basis  over the  terms of the  policies.  Commission  costs  and  premium  taxes
incurred in acquiring  business are deferred and  amortized on the same basis as
related premiums are earned.  The liability for unpaid insurance claims includes
provisions  for reported  claims and an estimate of  unreported  claims based on
past experience. Such provisions include an estimate of loss adjustment expense.
The estimated  liability for unpaid insurance  claims is regularly  reviewed and
updated. Any change in such estimate is reflected in current operations.




<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


1. SUMMARY OF ACCOUNTING POLICIES (continued)


Insurance Operations (continued)

     Harco  limits  its  exposure  on  any  single  loss  occurrence  by  ceding
reinsurance to other insurance enterprises.  Reinsurance receivables,  including
amounts related to unpaid insurance claims and prepaid reinsurance premiums, are
reported as other assets in the Statements of Consolidated Financial Condition.

Income Taxes

     Navistar  and its  subsidiaries  file a  consolidated  federal  income  tax
return, which includes Transportation and the Corporation.  Federal income taxes
for the Corporation are computed on a separate consolidated return basis and are
payable to Transportation.

Cash and Cash Equivalents

     Cash and  cash  equivalents  include  money  market  funds  and  marketable
securities  with original  maturities  of three months or less,  except for such
securities  held by the  insurance  operations  which are included in marketable
securities.

Marketable Securities

     Marketable securities are classified as available-for-sale and are reported
at fair value. The difference  between amortized cost and fair value is recorded
as an adjustment to accumulated other  comprehensive  income,  net of applicable
deferred  taxes.  The fair  value of  marketable  securities  is based on quoted
market prices, when available. If a quoted price is not available, fair value is
estimated using quoted market prices for similar financial instruments.

Derivative Financial Instruments

     All derivative financial instruments,  such as forward contracts,  interest
rate swaps and interest rate caps, are held for purposes other than trading. The
Corporation's policy prohibits the use of derivative  financial  instruments for
speculative  purposes.  The  Corporation  generally  uses  derivative  financial
instruments to reduce its exposure to interest rate volatility.

     The  Corporation  may use forward  contracts to hedge the fair value of its
fixed rate receivables  against changes in market interest rates in anticipation
of the sale of such receivables.  The principal balance of receivables  expected
to be sold by the  Corporation  equals or exceeds  the  notional  amount of open
forward  contracts.  The  Corporation  may use  interest  rate  swaps to  reduce
exposure to interest  rate  changes  when it sells fixed rate  receivables  on a
variable  rate  basis.  Gains or losses  incurred  with the  closing  of forward
contracts  and interest  rate swaps are included in the net gain or loss on sale
of receivables.



<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


1. SUMMARY OF ACCOUNTING POLICIES (continued)

Derivative Financial Instruments (continued)

     For the protection of investors,  the  Corporation  may write interest rate
caps  when  fixed  rate  receivables  are sold on a  variable  rate  basis.  The
Corporation  will make payments  under the terms of the written caps if interest
rates exceed  certain  levels.  The written caps are recorded at fair value with
subsequent changes in fair value recognized in income.

New Accounting Standards

     Effective November 1, 1998, the Corporation  adopted Statement of Financial
Accounting  Standards ("SFAS") 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.

     In March 1998,  the  American  Institute of  Certified  Public  Accountants
issued Statement of Position 98-1, "Accounting for the Cost of Computer Software
Development or Obtained for Internal Use." This statement defines whether or not
certain costs related to the development or acquisition of internal use software
should be expensed or  capitalized  and is effective for fiscal years  beginning
after  December  15,  1998.  The  company  will adopt this  statement  effective
November 1, 1999. At planned fiscal year 2000 spending levels,  adoption of this
statement  will  not  have a  material  impact  on the  results  of  operations,
financial condition and cash flow.

     In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133,  "Accounting  for Derivative  Instruments  and Hedging  Activities," to
establish  accounting and reporting standards for derivative  instruments.  This
statement requires recognition of all derivative instruments in the statement of
financial  condition as either  assets or  liabilities,  measured at fair value.
This statement additionally requires changes in the fair value of derivatives to
be recorded each period in current earnings or comprehensive  income,  depending
on the intended use of the  derivatives.  In June 1999, the FASB issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of
the  Effective  Date of FASB  Statement  No.  133,"  which  amends  SFAS  133 by
deferring its effective date for one year, to those fiscal years beginning after
June 15,  2000.  The  Corporation  is  currently  assessing  the impact of these
statements on its results of operations, financial condition and cash flow.

Reclassification

     Certain  prior year  amounts  have been  reclassified  to conform  with the
presentation used in the 1999 financial statements.




<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


2. TRANSACTIONS WITH AFFILIATED COMPANIES


Wholesale Notes, Wholesale Accounts and Retail Accounts

     In   accordance   with  the   agreements   between  the   Corporation   and
Transportation  relating to financing of wholesale notes, wholesale accounts and
retail accounts, the Corporation receives interest income from Transportation at
agreed upon  interest  rates  applied to the average  outstanding  balances less
interest amounts paid by dealers on wholesale notes and wholesale accounts.  The
Corporation  purchases  wholesale notes and accounts from  Transportation at the
principal amount of the receivables.  Revenue collected from  Transportation was
$71.5 in 1999, $67.2 in 1998 and $54.7 in 1997.

Retail Notes and Lease Financing

     In accordance with agreements  between the Corporation and  Transportation,
Transportation  may be liable for certain losses on the finance  receivables and
may be required to  repurchase  the  repossessed  collateral  at the  receivable
principal value.  Losses recorded by Transportation  were $3.5 in 1999, $10.7 in
1998 and $10.1 in 1997.

Support Agreements

     Under  provisions  of certain  public and private  financing  arrangements,
agreements  with  Transportation  and Navistar  provide  that the  Corporation's
consolidated  income before interest expense and income taxes will be maintained
at  not  less  than  125%  of  its  consolidated  interest  expense.  No  income
maintenance  payments were required  during the three-year  period ended October
31, 1999.

Administrative Expenses

     The Corporation pays a fee to Transportation  for data processing and other
administrative services based on the actual cost of services performed.
The amount of the fee was $2.6 in 1999 and 1998 and $2.1 in 1997.

Accounts Payable

     Accounts  payable to  affiliates,  which are  obligated  to be repaid  upon
request,  were  $706.9,  $136.8 and $131.5 at October 31,  1999,  1998 and 1997,
respectively.  The  higher  level of  average  outstanding  accounts  payable to
affiliates reduced debt levels and resulted in a reduction in borrowing costs of
$12.5 for fiscal 1999. The reduction in borrowing costs for fiscal 1998 and 1997
was not material.


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


3. INDUSTRY SEGMENTS


     Effective  November  1,  1998,  the  Corporation   adopted  SFAS  No.  131,
"Disclosure  about Segments of an Enterprise and Related  Information."  Segment
data  for 1998 and 1997 has  been  restated.  Under  the  provisions  of the new
standard,  the Corporation has two reportable  segments:  finance and insurance.
Information by industry segment is summarized as follows:

                                            1999          1998          1997
-------------------------------------------------------------------------------

Revenues:
  Finance operations....................$  283.8      $  234.3       $  193.5
  Insurance operations..................    44.2          41.6           41.4
                                         -------       -------        -------
    Total revenues......................$  328.0        $275.9       $  234.9
                                         =======       =======        =======

Income before taxes:
  Finance operations....................$   96.4      $   79.2       $   68.6
  Insurance operations..................     5.0           6.0            6.0
                                         -------       -------        -------
       Total income before taxes........$  101.4        $ 85.2       $  74.6
                                         =======       =======        =======

Assets at end of year:
  Finance operations....................$2,707.1      $2,067.0       $1,659.3
  Insurance operations..................   142.0         145.9          151.3
                                         -------       -------        -------
    Total assets at end of year.........$2,849.1      $2,212.9       $1,810.6
                                         =======       =======        =======


4. MARKETABLE SECURITIES


     The following table sets forth, by type of security, the amortized cost and
estimated fair values at October 31:

                                                  1999                1998
                                        ---------------------------------------
                                         Amortized   Fair     Amortized   Fair
                                           Cost      Value      Cost      Value
-------------------------------------------------------------------------------

U.S. government and
    agency securities...................$  23.7    $  23.4   $  21.7    $  23.2
Mortgage and
    asset-backed securities.............   31.7       31.3      38.2       38.7
Corporate debt and other securities.....   26.5       26.4      28.4       28.6
                                        -------    -------   -------    -------
    Total debt securities...............   81.9       81.1      88.3       90.5

Equity securities.......................   20.8       20.6      15.6       17.5
                                        -------    -------   -------    -------
    Total...............................$ 102.7    $ 101.7   $ 103.9    $ 108.0
                                        =======    =======   =======    =======

     Net unrealized gains and (losses) on marketable  securities were $(1.0) and
$4.1 at October 31, 1999 and 1998, respectively.

<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


4. MARKETABLE SECURITIES (continued)


     Contractual  maturities of marketable  debt  securities at October 31, 1999
are as follows:

                                                        Amortized         Fair
                                                           Cost          Value
-------------------------------------------------------------------------------

Due in one year or less.................................    $ 7.1        $ 7.1
Due after one year through five years...................     27.4         27.4
Due after five years through ten years..................      8.5          8.4
Due after ten years.....................................      7.2          6.9
                                                           ------       ------
                                                             50.2         49.8
Mortgage- and asset-backed securities...................     31.7         31.3
                                                           ------       ------
    Total debt securities...............................    $81.9        $81.1
                                                           ======       ======

     Actual  maturities may differ from the  contractual  maturities  because of
prepayments.

     Proceeds from sales or maturities  of marketable  securities  available for
sale were $57.1  during 1999 and $50.3  during  1998.  The related net  realized
gains were $3.2 and $3.3 in 1999 and 1998, respectively.

     All marketable  securities at October 31, 1999 and 1998 were held by Harco,
of which  $10.6 and $12.6,  respectively,  were on deposit  with  various  state
departments of insurance or otherwise restricted as to use.


5. FINANCE RECEIVABLES


     Finance receivable balances,  net of unearned finance income, at October 31
are summarized as follows:

                                                             1999         1998
-------------------------------------------------------------------------------

Retail notes and lease financing........................ $1,039.7       $915.9

Wholesale notes.........................................    528.7        224.9

Accounts:
     Retail.............................................    437.7        312.9
     Wholesale..........................................     69.8         70.0
                                                         --------     --------
         Total..........................................    507.5        382.9
                                                         --------     --------
              Total finance receivables................. $2,075.9     $1,523.7
                                                         ========     ========



<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


5. FINANCE RECEIVABLES (continued)

     Contractual  maturities of finance  receivables  including unearned finance
income at October 31, 1999, are summarized as follows:

                                                 Retail   Wholesale   Accounts
--------------------------------------------------------------------------------

Due in fiscal year:
    2000   ................................    $  313.5    $ 336.8     $ 507.5
    2001   ................................       251.0      191.9           -
    2002   ................................       244.8          -           -
    2003   ................................       188.3          -           -
    2004   ................................       147.7          -           -
Due after 2004.............................        48.8          -           -
                                               --------    -------     -------
       Gross finance receivables...........     1,194.1      528.7       507.5
Unearned finance income....................       154.4          -           -
                                               --------    -------     -------
       Total finance receivables...........    $1,039.7    $ 528.7     $ 507.5
                                               ========    =======     =======

     The actual cash  collections  from  finance  receivables  may vary from the
contractual cash flows because of sales,  prepayments,  extensions and renewals.
The contractual maturities,  therefore,  should not be regarded as a forecast of
future collections.

     The  Corporation's  primary  business is to provide  wholesale,  retail and
lease   financing   for  new  and  used  trucks  sold  by   Transportation   and
Transportation's  dealers,  and as a result the  Corporation's  receivables  and
leases have significant  concentration in the trucking industry. On a geographic
basis, there is not a disproportionate  concentration of credit risk in any area
of the United States. The Corporation  retains as collateral a security interest
in the equipment associated with wholesale notes, retail notes and leases.

     The Corporation  sells finance  receivables to public and private investors
with limited  recourse  provisions.  Outstanding sold receivable net balances at
October 31 are as follows:

                                                           1999          1998
-------------------------------------------------------------------------------

Retail notes.......................................    $1,696.0      $1,445.4
Wholesale notes....................................       600.0         700.0
                                                       --------      --------
     Total.........................................    $2,296.0      $2,145.4
                                                       ========      ========


     The  Corporation  has two  wholly-owned  subsidiaries,  Navistar  Financial
Retail  Receivables  Corporation  ("NFRRC")  and Navistar  Financial  Securities
Corporation  ("NFSC"),  which have a limited  purpose of  purchasing  retail and
wholesale  receivables,  respectively,  and transferring an undivided  ownership
interest in such notes to investors.






<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


5. FINANCE RECEIVABLES (continued)


     During fiscal 1999, in two separate sales,  the Corporation sold a total of
$1,260 of retail notes,  net of unearned  finance  income,  through  NFRRC.  The
Corporation  sold  $545 of  retail  notes  in  November  1998 to a  multi-seller
asset-backed commercial paper conduit sponsored by a major financial institution
and $715 of retail notes in June 1999 to an owner trust which,  in turn,  issued
securities  which  were sold to  investors.  The  aggregate  shelf  registration
available to NFRRC for issuance of asset-backed securities is $2,257.

     At October 31,  1999,  NFSC has in place a revolving  wholesale  note trust
that  provides for the funding of $600 of wholesale  notes.  During 1999, a $100
tranche of investor  certificates  matured.  As of October 31, 1999 the trust is
comprised of three $200 tranches of investor certificates maturing in 2003, 2004
and 2008.

     NFRRC and NFSC have  limited  recourse  on the sold  receivables  and their
assets are  available  to satisfy  the claims of their  creditors  prior to such
assets becoming available to the Corporation or affiliated companies.  The terms
of receivable  sales require the  Corporation to maintain cash reserves with the
trusts and conduits as credit enhancement.  The use of cash reserves held by the
trusts and  conduits  is  restricted  under the terms of the  securitized  sales
agreements.  The maximum exposure under all receivable sale recourse  provisions
at October  31, 1999 was  $257.3;  however,  management  believes  the  recorded
reserves for losses are adequate.

     The following is a summary of amounts included in Amounts Due from Sales of
Receivables as of October 31:

                                                               1999        1998
-------------------------------------------------------------------------------

Cash held and invested by trusts..........................   $111.6      $100.4
Subordinated retained interests in wholesale receivables..     96.8       114.5
Subordinated retained interests in retail receivables.....     41.4        34.9
Interest only receivables.................................      7.5         8.7
Allowance for credit losses...............................    (12.8)      (12.6)
                                                             ------      ------
     Total................................................   $244.5      $245.9
                                                             ======      ======




<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


6. INVESTMENT IN OPERATING LEASES


         Operating leases at year-end were as follows:

                                                          1999            1998
-------------------------------------------------------------------------------

Investment in operating leases:
   Vehicles and other equipment, at cost..............  $353.7          $271.1
   Less:  Accumulated depreciation....................   (87.0)          (53.4)
                                                        ------          ------
      Net investment in operating leases..............  $266.7          $217.7
                                                        ======          ======


     Future minimum  rentals on operating  leases are as follows:  2000,  $67.7;
2001, $57.7; 2002, $44.4; 2003, $27.3; 2004, $10.6; and $1.8 thereafter. Each of
these assets is depreciated on a straight-line  basis over the term of the lease
in an amount  necessary to reduce the leased  vehicle to its estimated  residual
value at the end of the lease term.


7. ALLOWANCE FOR LOSSES


     The allowance for losses on receivables is summarized as follows:

                                                        1999     1998     1997
-------------------------------------------------------------------------------

Total allowance for losses at beginning of year....... $25.4    $24.5    $24.0
Provision for losses..................................   6.2      0.8      2.5
Net (losses) recoveries (charged)
     credited to allowance............................  (5.4)     0.1     (2.0)
                                                       -----    -----    -----
         Total allowance for losses at end of year.... $26.2    $25.4    $24.5
                                                       =====    =====    =====


Allowance pertaining to:
     Owned notes...................................... $13.4    $12.8    $12.0
     Sold notes.......................................  12.8     12.6     12.5
                                                       -----    -----    -----
         Total........................................ $26.2    $25.4    $24.5
                                                       =====    =====    =====




<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


8. TAXES ON INCOME


         Taxes on income are summarized as follows:
                                                        1999     1998     1997
-------------------------------------------------------------------------------

Current:
     Federal.......................................... $30.6    $24.7    $29.6
     State and local..................................   4.9      3.3      4.1
                                                       -----    -----    -----
         Total current................................  35.5     28.0     33.7

Deferred (primarily Federal)..........................   3.4      4.3     (4.8)
                                                       -----    -----    -----
         Total........................................ $38.9    $32.3    $28.9
                                                       =====    =====    =====

     The  effective  tax rate of  approximately  38% in each of the three  years
ended October 31, 1999 differs from the statutory United States Federal tax rate
of 35% primarily  because of state and local income taxes.  The net deferred tax
liability  is included  in other  liabilities  on the  Statements  of  Financial
Condition.  Deferred  tax assets and  liabilities  at October 31  comprised  the
following:
                                                              1999       1998
-------------------------------------------------------------------------------

Deferred tax assets:
     Other postretirement benefits..........................  $3.1       $2.9
     Unrealized losses on marketable securities.............   0.4          -
                                                              ----       ----
         Total deferred tax assets..........................   3.5        2.9

Deferred tax liabilities:
     Depreciation and other.................................   9.2        5.8
     Unrealized gains on marketable securities..............     -        1.5
                                                              ----       ----
         Total deferred tax liabilities.....................   9.2        7.3
                                                              ----       ----
         Net deferred tax liabilities.......................  $5.7       $4.4
                                                              ====       ====


9. SHORT-TERM DEBT


     Commercial  paper is issued by the  Corporation  with  varying  terms.  The
Corporation also has short-term borrowings with various banks on a non-committed
basis.  Compensating  cash balances and  commitment  fees are not required under
these agreements.

         Information regarding short-term debt is as follows:
                                                        1999     1998     1997
-------------------------------------------------------------------------------

Aggregate obligations outstanding:
     Daily average................................... $ 16.6   $106.1   $109.7
     Maximum month-end balance.......................   50.8    148.8    145.0

Weighted average interest rate:
     On average daily borrowing......................   5.7%     6.1%     6.1%
     At October 31...................................   5.7%     6.1%     6.1%

<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


9. SHORT-TERM DEBT (continued)


     Unused  commitments under the Corporation's  bank revolving credit facility
and bank liquidity facility supporting the asset-backed commercial paper program
are used as backup for outstanding  short-term  borrowings.  See also Note 10 to
the Consolidated Financial Statements.


10. SENIOR AND SUBORDINATED DEBT


     Senior and  subordinated  debt  outstanding  at October 31 is summarized as
follows:
                                                         1999            1998
-------------------------------------------------------------------------------

Bank revolving credit facility, at variable
     rates, due March 2001..........................   $ 840.0        $ 815.0

Funding under asset-backed commercial
     paper program ("ABCP"), at variable
     rates, due March 2001..........................     412.7          400.7

Capital lease obligations, 4.10% to 6.34%,
     due serially through 2006......................     323.1          213.3

Subordinated term debt:
     Senior Notes, 8 7/8%, due November 1998........         -           82.2
     Senior Notes, 9%, due June 2002................     100.0          100.0
                                                      --------       --------
              Total senior and subordinated debt....  $1,675.8       $1,611.2
                                                      ========       ========


         The weighted average interest rate on total debt,  including short-term
debt and the effect of discounts and related amortization,  was 5.6% in 1999 and
6.4% in 1998 and 1997. The aggregate annual  maturities and required payments of
senior and subordinated debt are as follows:

                   Fiscal year ended October 31

                   2000                               $   73.5
                   2001                                1,341.1
                   2002                                  171.9
                   2003                                   67.8
                   2004                                   21.2
                   2005 and thereafter                     0.3
                                                      --------
                      Total                           $1,675.8
                                                      ========


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


10. SENIOR AND SUBORDINATED DEBT (continued)

     At October 31, 1999, the  Corporation  had a $925  contractually  committed
bank  revolving  credit  facility  and a $400 ABCP  program  supported by a bank
liquidity facility. Available funding under the ABCP program is comprised of the
$400 liquidity facility plus $14 of trust certificates issued in connection with
the  formation  of the ABCP trust.  Under the terms of the ABCP  program,  Truck
Retail  Instalment  Paper  Company  ("TRIP"),  a  special  purpose  wholly-owned
subsidiary  of  the  Corporation,   purchases  eligible   receivables  from  the
Corporation.  All  assets  of  TRIP  are  pledged  to a  trust  that  funds  the
receivables with A1/P1 rated commercial paper.

     Available  funding under the bank  revolving  credit  facility and the ABCP
program  was $87,  of which $35  provided  funding  backup  for the  outstanding
short-term  debt at October 31,  1999.  the  remaining  $52 when  combined  with
unrestricted  cash and cash  equivalents  made $90 available to fund the general
business purposes of the Corporation at October 31, 1999. Under the terms of the
bank revolving credit facility, the Corporation is required to maintain tangible
net  worth at a minimum  of $175 and a debt to  tangible  net worth  ratio of no
greater  than 7 to 1.  The  bank  revolving  credit  agreement  grants  security
interests in substantially all of the Corporation's  assets to the Corporation's
debt  holders.  Compensating  cash  balances  are not  required  under  the bank
revolving credit facility. Facility fees are paid quarterly regardless of usage.

     During fiscal 1999 and 1998, the  Corporation  entered into  sale/leaseback
agreements  involving  vehicles  subject to retail finance and operating  leases
with end users. The balances are classified  under senior and subordinated  debt
as capital  lease  obligations.  In  connection  with the sale and  leaseback of
certain of its leasing  portfolio  assets,  the  Corporation and its subsidiary,
Harco Leasing,  Inc. ("HLC"), have established Navistar Leasing Company ("NLC"),
a Delaware  business trust.  NLC holds legal title to leased vehicles and is the
lessor on substantially all leases originated by the Corporation.  The assets of
NLC  have  been  and will  continue  to be  allocated  into  various  beneficial
interests  issued by NLC. HLC owns one such  beneficial  interest in NLC and HLC
has transferred  other  beneficial  interests  issued by NLC to purchasers under
sale/leaseback  agreements.  Neither the beneficial interests held by purchasers
under  sale/leaseback  agreements or the assets represented  thereby,  nor legal
interest in any assets of NLC,  are  available to HLC,  the  Corporation  or its
creditors.





<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


11. POSTRETIREMENT BENEFITS


     The  Corporation  provides  postretirement  benefits  to a majority  of its
employees.  Costs  associated with  postretirement  benefits include pension and
postretirement  health care  expenses  for  employees,  retirees  and  surviving
spouses and dependents.

     Generally, the pension plans are non-contributory. The Corporation's policy
is to fund its  pension  plans  in  accordance  with  applicable  United  States
government regulations.  At October 31, 1999, all legal funding requirements had
been met.

Postretirement Expense

     Net periodic benefit cost included in the Statements of Consolidated Income
is composed of the following:

                                    Pension Benefits         Other Benefits
-------------------------------------------------------  ---------------------
                                  1999    1998    1997    1999    1998    1997
-------------------------------------------------------  ---------------------

Service cost for benefits
     earned during the period....  $ 0.7  $ 1.0  $ 0.8    $0.3   $ 0.4   $ 0.4
Interest cost on obligation......    3.4    3.1    3.0     1.0     0.8     0.9
Net amortization costs and other.    0.2    0.1      -     0.1       -       -
Less expected return on assets...   (5.0)  (4.7)  (4.0)   (0.7)   (0.7)   (0.5)
                                   -----  -----  -----    ----   -----   -----
Net postretirement.
     (income) expense              $(0.7) $(0.5) $(0.2)   $0.7   $ 0.5   $ 0.8
                                   =====  =====  =====    ====   =====   =====


     "Amortization  costs" include  amortization of cumulative  gains and losses
over the expected  remaining  service life of employees and  amortization of the
initial transition  liability over 15 years and amortization of plan amendments.
Plan amendments are recognized over the remaining service life of employees.



<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


11. POSTRETIREMENT BENEFITS (continued)


Postretirement Expense (continued)

     The funded  status of the  Corporation's  plans as of October  31, 1999 and
1998  and  a  reconciliation  with  amounts  recognized  in  the  Statements  of
Consolidated Financial Condition are as follows:

                                      Pension Benefits          Other Benefits
                                   ---------------------     ------------------
                                      1999       1998          1999        1998
--------------------------------------------------------     ------------------

Change in benefit obligation
Benefit obligation at beginning
   of year........................   $51.5      $44.0        $14.0       $11.6
Service cost......................     0.7        1.0          0.3         0.4
Interest on obligation............     3.4        3.1          1.0         0.8
Actuarial net loss (gain).........    (4.4)       6.1            -         1.5
Benefits paid.....................    (2.7)      (2.7)        (0.4)       (0.3)
                                     -----      -----        -----       -----
Benefit obligation at end
   of year........................   $48.5      $51.5        $14.9       $14.0
                                     =====      =====        =====       =====

Change in plan asset
Fair value of plan assets at
   beginning of year..............   $53.0      $50.1        $ 6.7       $ 4.4
Actual return on plan assets......     3.4        5.3          1.1         0.4
Employer contribution.............       -          -          0.3         2.1
Benefits paid.....................    (2.5)      (2.4)        (0.3)       (0.2)
                                     -----      -----       ------       -----
Fair value of plan assets at
   year-end.......................   $53.9      $53.0        $ 7.8       $ 6.7
                                     =====      =====        =====       =====

Funded status.....................   $ 5.4      $ 1.5        $(7.0)      $(7.3)
Unrecognized actuarial net
   (gain) loss....................    (4.0)      (1.1)         2.2         2.8
Unrecognized transition amount....     0.1        0.1            -           -
Unrecognized prior service cost...     0.4        0.4            -           -
                                     -----      -----        -----       -----
Net amount recognized.............   $ 1.9      $ 0.9        $(4.8)      $(4.5)
                                     =====      =====        =====       =====

Amounts recognized in the
   Statements of Consolidated
   Financial Condition
   consists of:
      Prepaid benefit cost........   $ 3.5      $ 2.4        $   -       $   -
      Accrued benefit liability...    (3.5)      (3.1)        (4.8)       (4.5)
      Intangible asset............       -          -            -           -
      Accumulated reduction in
         shareowner's equity......     1.9        1.6            -           -
                                     -----      -----        -----       -----
            Net amount recognized.   $ 1.9      $ 0.9        $(4.8)      $(4.5)
                                     =====      =====        =====       =====



<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


11. POSTRETIREMENT BENEFITS (continued)


Postretirement Expense (continued)

     The  accumulated  reduction  in  shareowner's  equity  is  recorded  in the
Statement of Financial Condition net of deferred income taxes of $0.7 at October
31, 1999.

     The projected benefit  obligation,  accumulated benefit obligation and fair
value of plan assets for the pension plan with accumulated  benefit  obligations
in excess of plan assets were $3.5, $3.5, and $0.0, respectively,  as of October
31, 1999, and $3.3, $3.1 and $0.0, respectively, as of October 31, 1998.

     The weighted  average rate  assumptions  used in  determining  expenses and
benefit obligations were:

                                       Pension Benefits       Other Benefits
-------------------------------------------------------------------------------
                                      1999   1998   1997     1999   1998   1997
-------------------------------------------------------------------------------

Discount rate used to determine
   present value of benefit
   obligation at year-end...........  7.8%   6.7%   7.2%     8.0%   7.1%   7.4%
Expected long-term rate of
   return on plan asset for
   the year.........................  9.6%   9.6%   9.6%    10.8%  10.8%  11.1%
Expected rate of increase in
   future compensation levels.......  3.5%   3.5%   3.5%      N/A    N/A    N/A


     For 1999,  the weighted  average rate of increase in the per capita cost of
covered  health care benefits is projected to be 9.7%.  The rate is projected to
decrease to 5.0% by the year 2005 and remain at that level each year thereafter.
The effect of changing the health care cost trend rate is as follows:

                                                1-Percentage-     1-Percentage-
                                                Point Increase   Point Decrease
-------------------------------------------------------------------------------

 Effect on total of service and interest cost
    components...................................   $0.3             $(0.2)
 Effect on postretirement benefit obligation.....    2.3              (1.9)




<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


12. LEASES


     The Corporation is obligated under non-cancelable  operating leases for the
majority of its office  facilities  and  equipment.  These leases are  generally
renewable and provide that property taxes and  maintenance  costs are to be paid
by the lessee.  At October 31, 1999,  future  minimum  lease  commitments  under
non-cancelable  operating  leases with remaining terms in excess of one year are
as follows:

               Year Ended October 31,
               2000..................................          $ 1.9
               2001..................................            1.8
               2002..................................            1.6
               2003..................................            1.6
               2004..................................            1.5
               Thereafter............................            2.0
                                                               -----
               Total.................................          $10.4
                                                               =====


13. SHAREOWNER'S EQUITY


     The number of authorized shares of capital stock as of October 31, 1999 and
1998, was 2,000,000 of which 1,600,000 shares were issued and  outstanding.  All
of the issued and outstanding  capital stock is owned by  Transportation  and no
shares are  reserved  for officers  and  employees,  or for  options,  warrants,
conversions and other rights.



<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


14. FINANCIAL INSTRUMENTS


Fair Value of Financial Instruments

     The  carrying  amounts  and  estimated  fair  values  of the  Corporation's
financial instruments were as follows:

                                               1999                  1998
                                       ----------------------------------------
                                       Carrying     Fair     Carrying     Fair
                                         Value      Value      Value      Value
-------------------------------------------------------------------------------

Financial assets:
   Finance receivables:
      Retail notes...................  $  851.9  $  858.6    $  775.3  $  797.6
      Wholesale notes and accounts...   1,036.2   1,036.2       607.8     607.8
   Amounts due from sales of
      receivables....................     244.5     242.5       245.9     243.8

Financial liabilities:
   Senior and subordinated debt.......  1,352.7   1,353.7     1,397.9   1,401.4

     The carrying amount of cash and cash equivalents  approximates  fair value.
The cost and fair value of marketable securities are disclosed in Note 4.

     The fair  value of retail  notes is  estimated  by  discounting  the future
contractual cash flows using an estimated discount rate reflecting current rates
paid to purchasers of similar types of receivables with similar credit, interest
rate and  prepayment  risks.  For  wholesale  notes  and  retail  and  wholesale
accounts,  all of which reprice monthly,  the carrying amounts  approximate fair
value as a result of the short-term nature of the receivables.

     The fair value of cash deposits included above in amounts due from sales of
receivables  approximates their carrying value. The fair values of other amounts
due from sales of receivables were derived by discounting expected cash flows at
estimated current market rates.

     For fixed rate debt,  the fair value is  estimated  based on quoted  market
prices where available and, where not available, on quoted market prices of debt
with similar characteristics.

     The estimated fair values for all other financial  instruments  approximate
their carrying  values due to the short-term  nature or variable  interest terms
inherent in the financial instruments.


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


14. FINANCIAL INSTRUMENTS (continued)


Derivatives Held or Issued for Purposes Other Than Trading

     The  Corporation  manages its exposure to fluctuations in interest rates by
limiting  the  amount  of fixed  rate  assets  funded  with  variable  rate debt
generally  by  selling  fixed  rate  receivables  on a fixed  rate  basis and by
utilizing   derivative   financial   instruments.   These  derivative  financial
instruments may include forward contracts, interest rate swaps and interest rate
caps.  The fair value of these  instruments  is  subject  to market  risk as the
instruments  may become less  valuable  due to changes in market  conditions  or
interest rates. The Corporation manages exposure to counter-party credit risk by
entering into derivative financial instruments with major financial institutions
that can be expected to fully  perform under the terms of such  agreements.  The
Corporation does not require  collateral or other security to support derivative
financial  instruments with credit risk. The Corporation's  counter-party credit
exposure is limited to the fair value of contracts with a positive fair value at
the reporting date. At October 31, 1999, the Corporation's  derivative financial
instruments had a negative net fair value.  Notional amounts are used to measure
the volume of derivative financial  instruments and do not represent exposure to
credit loss.

     The Corporation enters into derivative financial  instruments to manage its
exposure to  fluctuations  in the fair value of retail notes  anticipated  to be
sold. The  Corporation  manages such risk by entering into forward  contracts to
sell fixed debt  securities  or forward  interest rate swaps whose fair value is
highly correlated with that of the Corporation's receivables. Income recognition
of changes in the fair value of the derivatives is deferred until the derivative
instruments  are  closed.  Gains or losses  incurred  with the  closing of these
agreements  are  included  as a  component  of the  gain  or  loss  on  sale  of
receivables.   As  of  October  31,  1999,   outstanding   derivative  financial
instruments consisted of the following:

                                                       Notional
                                                        Amount       Fair Value
-------------------------------------------------------------------------------

 Forward interest rate contracts in anticipation of
   November 1999 sale of retail receivables............  $500          $ 0.0
 Forward starting swap contract in anticipation of
   March 2000 sale of retail receivables...............  $ 75          $(0.2)








<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


14. FINANCIAL INSTRUMENTS (continued)

     In November 1998, the Corporation  sold fixed rate retail  receivables to a
multi-seller   asset-backed  commercial  paper  conduit  sponsored  by  a  major
financial institution on a variable rate basis. For the protection of investors,
the  Corporation  issued an interest  rate cap. The  notional  amount of the cap
amortizes based on the expected outstanding principal balance of the sold retail
receivables.  Under the terms of the cap agreement,  the  Corporation  will make
payments if interest rates exceed certain levels. As of October 31, 1999 the cap
had a  notional  amount of $374  million  and a fair  value of $1  million.  The
interest  rate  cap is  recorded  at fair  value  with  changes  in  fair  value
recognized in income.


15. COMPREHENSIVE INCOME

     The components of accumulated  other  comprehensive  income (loss),  net of
taxes, are as follows:

                                                                  Accumulated
                                    Unrealized       Minimum        Other
                                  Gains (Losses)     Pension     Comprehensive
                                   On Securities    Liability     Income (Loss)
-------------------------------------------------------------------------------

Balance at October 31, 1996          $ 1.3            $   -          $ 1.3
     Change in 1997                    2.4                -            2.4
                                     -----            -----          -----
Balance at October 31, 1997            3.7                -            3.7
     Change in 1998                   (1.2)            (1.0)          (2.2)
                                     -----            -----          -----
Balance at October 31, 1998            2.5             (1.0)           1.5
     Change in 1999                   (3.2)            (0.2)          (3.4)
                                     -----            -----          -----
Balance at October 31, 1999          $(0.7)           $(1.2)         $(1.9)
                                     =====            =====          =====



16. LEGAL PROCEEDINGS


     The Corporation is subject to various claims arising in the ordinary course
of business, and is party to various legal proceedings which constitute ordinary
routine litigation incidental to the business of the Corporation. In the opinion
of the  Corporation's  management,  none of  these  proceedings  or  claims  are
material to the business or the financial condition of the Corporation.



<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MILLIONS OF DOLLARS


17. SUBSEQUENT EVENT

     In  November  1999,  the  Corporation  sold  $533 of retail  notes,  net of
unearned  finance  income,  through  NFRRC  to  two  multi-seller   asset-backed
commercial  paper conduits  sponsored by a major financial  institution.  A $2.2
million gain was recognized in November 1999.


18. QUARTERLY FINANCIAL INFORMATION  (unaudited)

<TABLE>
<CAPTION>
                                                    1999
                           ----------------------------------------------------
                              1st        2nd        3rd        4th      Fiscal
                            Quarter    Quarter    Quarter    Quarter     Year
-------------------------------------------------------------------------------
<S>                          <C>       <C>         <C>        <C>       <C>
Revenues..................   $79.2     $79.2       $85.1      $84.5     $328.0
Interest expense..........    22.2      21.5        20.6       24.3       88.6
Provision for losses
     on receivables.......     1.3       1.9         1.3        1.7        6.2
Net income................    14.5      15.0        17.7       15.3       62.5



                                                    1998
                           ----------------------------------------------------
                              1st        2nd        3rd        4th      Fiscal
                            Quarter    Quarter    Quarter    Quarter     Year
-------------------------------------------------------------------------------

Revenues..................   $62.6     $64.1       $79.3      $69.9     $275.9
Interest expense..........    15.7      20.3        23.2       21.8       81.0
Provision for losses
     on receivables.......     0.4       0.8        (2.6)       2.2        0.8
Net income................    13.4      10.7        17.7       11.1       52.9
</TABLE>




<PAGE>



-------------------------------------------------------------------------------

                 Navistar Financial Corporation and Subsidiaries



                 Statement of Financial Reporting Responsibility
-------------------------------------------------------------------------------



     Management  of  Navistar  Financial  Corporation  and its  subsidiaries  is
responsible  for the  preparation  and for the integrity and  objectivity of the
accompanying  financial  statements  and  other  financial  information  in this
report. The financial statements have been prepared in accordance with generally
accepted   accounting   principles  and  include   amounts  that  are  based  on
management's estimates and judgments.

     The  accompanying  financial  statements  have been  audited by  Deloitte &
Touche LLP,  independent  auditors.  Management has made available to Deloitte &
Touche LLP all the Corporation's  financial records and related data, as well as
the minutes of Directors' meetings. Management believes that all representations
made to Deloitte & Touche LLP during its audit were valid and appropriate.

     Management is  responsible  for  establishing  and  maintaining a system of
internal controls throughout its operations that provides  reasonable  assurance
as to the integrity and reliability of the financial statements,  the protection
of assets from  unauthorized use and the execution and recording of transactions
in accordance with management's  authorization.  The system of internal controls
which  provides  for  appropriate  division of  responsibility  is  supported by
written policies and procedures that are updated by management as necessary. The
system is tested  and  evaluated  regularly  by the  parent  Company's  internal
auditors as well as by the independent  auditors in connection with their annual
audit of the financial statements.  The independent auditors conduct their audit
in accordance with generally  accepted auditing standards and perform such tests
of transactions  and balances as they deem necessary.  Management  considers the
recommendations of its internal auditors and independent auditors concerning the
Corporation's  system of internal  controls and takes the necessary actions that
are  cost-effective  in  the  circumstances  to  respond  appropriately  to  the
recommendations presented.  Management believes that the Corporation's system of
internal controls accomplishes the objectives set forth in the first sentence of
this paragraph.




John J. Bongiorno
President and Chief Executive Officer




Phyllis E. Cochran
Vice President and Controller



<PAGE>




                 Navistar Financial Corporation and Subsidiaries

-------------------------------------------------------------------------------

                          Independent Auditors' Report



Navistar Financial Corporation:

We have audited the accompanying  consolidated  financial statements of Navistar
Financial  Corporation and its  subsidiaries as of October 31, 1999 and 1998 and
for each of the three years in the period ended October 31, 1999, listed in Item
8.  These  consolidated  financial  statements  are  the  responsibility  of the
Corporation's  management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the  accompanying  consolidated  financial  statements  present
fairly, in all material  respects,  the financial position of Navistar Financial
Corporation and its subsidiaries as of October 31, 1999 and 1998 and the results
of their  operations  and their  cash  flow for each of the  three  years in the
period ended October 31, 1999 in conformity with generally  accepted  accounting
principles.





/s/DELOITTE & TOUCHE LLP
   Deloitte & Touche LLP
   December 13, 1999
   Chicago, Illinois



<PAGE>




                          SUPPLEMENTARY FINANCIAL DATA


                Five Year Summary of Financial and Operating Data

                           Dollar amounts in millions

<TABLE>
<CAPTION>

                              1999       1998       1997       1996       1995
-------------------------------------------------------------------------------
<S>                        <C>        <C>        <C>        <C>        <C>
Results of Operations:
   Revenues............... $  328.0   $  275.9   $  234.9   $  252.8   $  228.2
   Net income ............     62.5       52.9       45.7       49.4       36.2
   Dividends paid ........     60.3       57.0       40.0       26.0        9.0

   Percent of net income to
      average shareowner's
      equity..............     22.1%      18.5%      16.1%      18.1%      15.0%

Financial Data:
   Finance receivables,
      net................. $2,062.5   $1,510.9   $1,211.2   $1,193.6   $1,370.9
   Total assets ..........  2,849.1    2,212.9    1,810.6    1,793.8    1,874.7

   Total debt ............  1,710.3    1,633.0    1,223.7    1,305.8    1,330.3
   Shareowner's equity ...    280.3      281.5      287.8      279.7      256.7

   Debt to equity ratio ..    6.1:1      5.8:1      4.3:1      4.7:1      5.2:1
   Senior debt to capital
      funds ratio.........    4.2:1      3.1:1      2.1:1      3.2:1      3.4:1


Number of employees at
   October 31.............      399        394        358        352        360
</TABLE>

<PAGE>





                    SUPPLEMENTARY FINANCIAL DATA (Continued)



Gross Finance Receivables and Leases Acquired
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
($ Millions)                    1999      1998      1997      1996      1995
-------------------------------------------------------------------------------
<S>                           <C>       <C>       <C>       <C>       <C>
Wholesale notes.............. $4,188.5  $3,812.8  $2,772.8  $2,705.8  $2,979.4

Retail notes and leases:
     New.....................  1,519.7   1,358.0     976.2   1,064.1   1,075.0
     Used ...................    286.4     309.2     270.3     281.7     242.3
                              --------  --------  --------  --------  --------
         Total...............  1,806.1   1,667.2   1,246.5   1,345.8   1,317.3
                              --------  --------  --------  --------  --------

     Total .................. $5,994.6  $5,480.0  $4,019.3  $4,051.6  $4,296.7
                              ========  ========  ========  ========  ========
</TABLE>



Serviced (including sold notes) Retail Notes and
Leases With Installments Past Due Over 60 Days
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
At October 31 ($ Millions)        1999      1998      1997      1996      1995
-------------------------------------------------------------------------------
<S>                             <C>       <C>       <C>       <C>        <C>
Original amount of notes
     and leases................ $ 40.4    $ 33.6    $ 31.8    $ 14.0     $ 4.2
Balance of notes and leases....   17.9      16.5      16.2       8.0       2.2
Balance as a percent of
     total outstanding.........  0.53%     0.57%     0.64%     0.32%     0.10%
</TABLE>



Retail Note and Lease Repossessions (including sold notes)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                  1999      1998      1997      1996      1995
-------------------------------------------------------------------------------
<S>                              <C>       <C>       <C>       <C>       <C>
Retail note and lease
     repossessions acquired as
     a percentage of average
     serviced retail note and
     lease balances............  1.82%     2.26%     2.69%     3.08%     0.92%
</TABLE>



<PAGE>


                    SUPPLEMENTARY FINANCIAL DATA (Continued)




Credit Loss Experience on Serviced (including sold notes) Receivables
-------------------------------------------------------------------------------
<TABLE>
<CAPTION.
($ Millions)                      1999      1998      1997      1996      1995
-------------------------------------------------------------------------------

<S>                               <C>       <C>       <C>       <C>       <C>
Net losses (recoveries):
   Retail notes and leases ....   $5.5      $ .2      $2.2      $5.1      $ .3
   Wholesale notes ............    (.2)      (.3)      (.2)      (.2)      (.9)
   Accounts....................     .1         -         -         -       (.2)
                                  ----      ----      ----      ----      ----
       Total ..................   $5.4      $(.1)     $2.0      $4.9      $(.8)
                                  ====      ====      ====      ====      ====


Percent net losses (recoveries)
     to liquidations:
     Retail notes and leases ..   .41%       .02%      .18%      .48%      .03%
     Wholesale notes ..........     -       (.01)     (.01)     (.01)     (.03)
         Total ................   .10%         -       .05%      .13%     (.02)%


Percent net losses (recoveries)
   to related average gross
   receivables outstanding:
     Retail notes and leases ..   .18%       .01%      .09%      .22%      .02%
     Wholesale notes ..........  (.02)      (.04)     (.02)     (.02)     (.13)
     Accounts..................   .02          -         -         -      (.05)
         Total ................   .12%         -       .06%      .14%     (.03)%

</TABLE>



<PAGE>




Item 9.  Changes in and Disagreements With Accountants on
         Accounting and Financial Disclosure

            None

                                    PART III


Items 10, 11, 12 and 13

         Intentionally  omitted.  See the index  page  of  this  Report  for
         explanation.

                                     PART IV


Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

Financial Statements

     See Index to Financial Statements in Item 8.

Financial Statement Schedules

     All schedules are omitted  because of the absence of the  conditions  under
which  they are  required  or  because  information  called  for is shown in the
financial statements and notes thereto.

Exhibits, Including Those Incorporated By Reference

     See Index to Exhibits.

Reports on Form 8-K

     No reports on Form 8-K were filed for the three  months  ended  October 31,
1999.


<PAGE>






                                    SIGNATURE




     Pursuant  to the  requirements  of  Section  13 or 15(d) 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 FINANCIAL CORPORATION
                                            (Registrant)




    By:   /s/PHYLLIS E. COCHRAN                            December 22, 1999
             Phyllis E. Cochran
             Vice President and Controller
             (Principal Accounting Officer)