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PAGE 1
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 (FEE REQUIRED)
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 (NO FEE REQUIRED)
For the transition period from to
Commission file number 1-9618
NAVISTAR INTERNATIONAL CORPORATION
----------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3359573
------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
455 North Cityfront Plaza Drive, Chicago, Illinois 60611
-------------------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 836-2000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
- ----------------------------------------------- ------------------------
Common stock, par value $0.10 per share New York Stock Exchange
Chicago Stock Exchange
Pacific Exchange
Preferred stock purchase rights New York Stock Exchange
Chicago Stock Exchange
Pacific Exchange
Cumulative convertible junior preference stock,
Series D (with $1.00 par value per share) New York Stock Exchange
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of December 15, 1999 the aggregate market value of common stock held by
non-affiliates of the registrant was $2,623,024,055.
As of December 15, 1999 the number of shares outstanding of the
registrant's common stock was 62,175,385.
Documents Incorporated by Reference
-----------------------------------
1999 Annual Report to Shareowners (Parts I, II and IV)
1999 Proxy Statement (Parts I and III)
Navistar Financial Corporation 1999 Annual Report on Form 10-K (Part IV)
PAGE 2
NAVISTAR INTERNATIONAL CORPORATION
FORM 10-K
Year Ended October 31, 1999
INDEX
10-K Page
---------
PART I
Item 1. Business........................................... 3
Item 2. Properties......................................... 10
Item 3. Legal Proceedings.................................. 10
Executive Officers of the Registrant............... 11
Item 4. Submission of Matters
to a Vote of Security Holders.................... 11
PART II
Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters.................. 12
Item 6. Selected Financial Data............................ 12
Item 7. Management's Discussion and Analysis
of Results of Operations and Financial Condition. 12
Item 7A. Quantitative and Qualitative Disclosures
about Market Risk................................ 12
Item 8. Financial Statements and Supplementary Data........ 12
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure........... 13
PART III
Item 10. Directors and Executive Officers of the Registrant. 13
Item 11. Executive Compensation............................. 13
Item 12. Security Ownership of Certain Beneficial
Owners and Management............................ 13
Item 13. Certain Relationships and Related Transactions..... 13
PART IV
Item 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K................ 13
SIGNATURES
Principal Accounting Officer.................................. 15
Directors .................................................... 16
POWER OF ATTORNEY................................................ 16
INDEPENDENT AUDITORS' REPORT..................................... 18
INDEPENDENT AUDITORS' CONSENT.................................... 18
SCHEDULE ........................................................ F-1
EXHIBITS ........................................................ E-1
PAGE 3
PART I
ITEM 1. BUSINESS
Navistar International Corporation is a holding company and its principal
operating subsidiary is Navistar International Transportation Corp., referred to
as "Transportation." As used hereafter, "Navistar" or "company" refers to
Navistar International Corporation and its consolidated subsidiaries.
Navistar operates in three principal industry segments: truck, engine
(collectively called "manufacturing operations") and financial services. The
company's truck segment is engaged in the manufacture and marketing of medium
and heavy trucks, including school buses. The company's engine segment is
engaged in the design and manufacture of mid-range diesel engines. The truck
segment operates primarily in the United States (U.S.) and Canada as well as in
Mexico, Brazil and other selected export markets while the engine segment
operates primarily in the U.S. and Brazil. Based on assets and revenues, the
truck and engine segments represent the majority of the company's business
activities. The financial services operations consist of Navistar Financial
Corporation (NFC), its domestic insurance subsidiary and the company's foreign
finance and insurance subsidiaries. Industry and geographic segment data for
1999, 1998 and 1997 is summarized in Note 13 to the Financial Statements, which
is incorporated herein by reference.
PRODUCTS AND SERVICES
The following table illustrates the percentage of the company's sales of
products and services by segment based on dollar amount:
YEARS ENDED OCTOBER 31,
-----------------------------------------
PRODUCT CLASS 1999 1998 1997
- ------------- ---- ---- ----
Class 5, 6 and 7 medium trucks
and school buses............. 32% 33% 33%
Class 8 heavy trucks.............. 37 38 35
Truck service parts............... 8 9 10
--- --- ----
Total truck................ 77 80 78
Engine (including service parts) . 19 17 18
Financial services................ 4 3 4
--- --- ----
Total........................ 100% 100% 100%
=== === ====
The truck segment manufactures and distributes a full line of
diesel-powered trucks and school buses in the common carrier, private carrier,
government/service, leasing, construction, energy/petroleum and student
transportation markets. The truck segment also provides customers with
proprietary products needed to support the International truck and bus lines,
together with a wide selection of other standard truck and trailer aftermarket
parts. The company offers diesel-powered trucks and school buses because of
their improved fuel economy, ease of serviceability and greater durability over
gasoline-powered vehicles.
PAGE 4
The truck and bus manufacturing operations in the U.S., Canada, Mexico and
Brazil consist principally of the assembly of components manufactured by its
suppliers, although the company produces its own mid-range diesel truck engines,
sheet metal components (including cabs) and miscellaneous other parts.
The engine segment designs and manufactures diesel engines for use in the
company's Class 5, 6 and 7 medium trucks and school buses and selected Class 8
heavy truck models, and for sale to original equipment manufacturers (OEMs) in
the U.S. and Mexico. This segment also sells engines for industrial,
agricultural and marine applications. In addition, the engine segment provides
customers with proprietary products needed to support the International engine
lines, together with a wide selection of other standard engine and aftermarket
parts. In February 1999, Navistar acquired a 50% interest in Maxion
International Motores, S.A., the largest producer of diesel engines in South
America. The joint venture produces the current Maxion products in addition to
the Navistar 7.3 liter (7.3L) V-8 Turbo Diesel Engine. Based upon information
published by R.L. Polk & Company, diesel-powered Class 5, 6 and 7 medium truck
and bus shipments represented 90.4% of all medium shipments for fiscal 1999 in
the U.S. and Canada.
The financial services segment provides retail, wholesale and lease
financing of products sold by the truck segment and its dealers within the U.S.
as well as the company's wholesale accounts and selected retail accounts
receivable. NFC's insurance subsidiary provides commercial physical damage and
liability insurance to the truck segment's dealers and retail customers and to
the general public through an independent insurance agency system. The foreign
finance subsidiaries' primary business is to provide wholesale, retail and lease
financing to the Mexican operations' dealers and retail customers.
THE MEDIUM AND HEAVY TRUCK INDUSTRY
The markets in which Navistar competes are subject to considerable
volatility as they move in response to cycles in the overall business
environment and are particularly sensitive to the industrial sector which
generates a significant portion of the freight tonnage hauled. Government
regulation has impacted and will continue to impact trucking operations and the
efficiency and specifications of equipment.
The following table shows industry retail deliveries in the combined U.S.
and Canadian markets for the five years ended October 31, in thousands of units:
YEARS ENDED OCTOBER 31,
----------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Class 5, 6 and 7 medium trucks 179.5 160.0 150.6 145.8 151.8
and school buses.............
Class 8 heavy trucks........... 286.0 232.0 196.8 195.4 228.8
----- ----- ----- ----- -----
Total..................... 465.5 392.0 347.4 341.2 380.6
===== ===== ===== ===== =====
Source: Monthly data derived from materials produced by Ward's
Communications in the U.S. and the Canadian Vehicle Manufacturers Association.
The company's first full year of operations in Mexico was 1997. Industry
retail deliveries of Class 5 through 8 trucks and school buses in the Mexican
market were 23,300 units, 21,800 units and 15,600 units in 1999, 1998 and 1997,
respectively, based on monthly data provided by the Associacion Nacional de
Productores de Autobuses, Camiones y Tractocamiones.
PAGE 5
The company's first full year of operations in Brazil was 1999. Industry
retail deliveries of Class 5 through 8 trucks in the Brazilian market were
44,300 units in 1999.
The Class 5 through 8 truck markets in the U.S., Canada, Mexico and Brazil
are highly competitive. Major U.S. domestic competitors include PACCAR, Ford and
General Motors, as well as foreign-controlled domestic manufacturers, such as
Freightliner and Sterling (DaimlerChrysler), Mack (Renault) and Volvo. In
addition, manufacturers from Japan such as Hino, Isuzu, Nissan and Mitsubishi
are competing in the U.S. and Canadian markets. In Mexico, the major domestic
competitors are Kenmex (PACCAR) and Mercedes (DaimlerChrysler). In Brazil, the
competition is with Mercedes (DaimlerChrysler), Volkswagon, Scania and Volvo.
The intensity of this competition results in price discounting and margin
pressures throughout the industry. In addition to the influence of price, market
position is driven by product quality, engineering, styling, utility and
distribution.
The company's truck segment currently estimates $460 million in capital
spending and $190 million in development expense through 2004 for development of
its next generation vehicles.
TRUCK MARKET SHARE
The company delivered 119,300 Class 5 through 8 trucks, including school
buses, in the U.S. and Canada in fiscal 1999, a 5% increase from the 113,900
units delivered in 1998. Navistar's 1999 market share of 25.6% in the combined
U.S. and Canadian Class 5 through 8 truck market was constrained by the fact
that continued industry demand for heavy and medium trucks outstripped system
capacity. The company's market share in 1998 was 29.1%.
The company delivered 4,800 Class 5 through 8 trucks, including school
buses, in Mexico in 1999, a 17% increase from the 4,100 units delivered in 1998.
Navistar's combined share of the Class 5 through 8 truck market in Mexico was
20.7% in 1999 and 18.7% in 1998.
The company delivered 500 trucks in Brazil in 1999. Navistar's share of the
truck market in Brazil was 1.0% in 1999.
MARKETING AND DISTRIBUTION
Navistar's truck products are distributed in virtually all key markets in
the U.S. and Canada. The company's truck distribution and service network in
these countries was composed of 927, 945 and 954 dealers and retail outlets at
October 31, 1999, 1998 and 1997, respectively. Included in these totals were
517, 524 and 514 secondary and associate locations at October 31, 1999, 1998 and
1997, respectively. The company also has a dealer network in Mexico composed of
60, 44 and 38 dealer locations at October 31, 1999, 1998 and 1997, respectively,
and a dealer network in Brazil composed of 14 dealer locations at October 31,
1999, and six dealer locations at October 31, 1998.
Retail dealer activity is supported by five regional operations in the U.S.
and general offices in Canada, Mexico and Brazil. The company has a national
account sales group, responsible for 94 major U.S. national account customers.
Navistar's network of 15 Used Truck Centers in the U.S. provides trade-in
support to the company's dealers and national accounts group, and markets all
makes and models of reconditioned used trucks to owner-operators and fleet
buyers. Trucks, components and service parts are exported for wholesale and
retail sale to more than 70 countries around the world.
In the U.S. and Canada, the company operates seven regional parts
distribution centers, which allow it to offer 24 hour availability and same day
shipment of the parts most frequently requested by customers. The company also
operates parts distribution centers in Mexico and Brazil.
PAGE 6
ENGINE AND FOUNDRY
Navistar is the leading supplier of mid-range diesel engines in the 160-300
horsepower range according to data supplied by Power Systems Research of
Minneapolis, Minnesota.
Navistar has an agreement to supply its 7.3L electronically controlled
diesel engine to Ford Motor Company (Ford) through the year 2002 for use in
all of Ford's diesel-powered light trucks and vans. Shipments to Ford account
for approximately 91% of the engine segment's 7.3L shipments. Total engine
units shipped reached 374,200 in 1999, a 25% increase over 1998. This excludes
the 48,200 units shipped by Maxion International Motores, S.A., the company's
50% joint venture in Brazil. The company's shipments of engines to all OEMs
totaled 286,500 units in 1999, an increase of 34% from the 213,700 units
shipped in 1998. During 1997, Navistar entered into a 10-year agreement,
effective with model year 2003, to supply Ford with a successor engine to the
current 7.3L product for use in its diesel-powered super duty trucks and
vans (over 8,500 lbs. GVW). In March 1998, the company was selected by Ford to
negotiate an extended agreement to supply diesel engines for certain under
8,500 lbs. GVW light duty trucks and sport utility vehicles, such as the Ford
Expedition, F-150 and F-250 pick-ups and Econoline 150 and 250 van models. To
support this program the company has announced plans to open an engine
assembly operation in Huntsville, Alabama.
The company has approved a plan for up to $500 million in capital spending
over the next four years in order to manufacture a next generation version of
diesel engines. In addition, approximately $120 million of development expense
was approved for the development of these engines. Included in these amounts are
the company's planned investment in Huntsville, Alabama.
FINANCIAL SERVICES
NFC is a financial services organization that provides wholesale, retail
and lease financing of new and used trucks sold by the company and its dealers
in the U.S. NFC also finances the company's wholesale accounts and selected
retail accounts receivable. Sales of new products (including trailers) of other
manufacturers are also financed regardless of whether designed or customarily
sold for use with the company's truck products. During 1999 and 1998, NFC
provided wholesale financing for 96% and 95%, respectively, of the new truck
units sold by the company to its dealers and distributors in the U.S., and
retail and lease financing for 16% of all new truck units sold or leased by the
company to retail customers in both 1999 and 1998.
NFC's wholly owned domestic insurance subsidiary, Harco National Insurance
Company, provides commercial physical damage and liability insurance coverage to
the company's dealers and retail customers and to the general public through an
independent insurance agency system.
Navistar's wholly owned subsidiaries, Arrendadora Financiera Navistar,
Servicios Financieros Navistar and Navistar Comercial, provide wholesale,
retail and lease financing to the truck segment's dealers and customers in
Mexico.
Harbour Assurance Company of Bermuda Limited, a wholly owned subsidiary of
the company, offers a variety of programs to the company, including general
liability insurance, ocean cargo coverage for shipments to and from foreign
distributors and reinsurance coverage for various company policies.
IMPORTANT SUPPORTING OPERATIONS
Navistar International Corporation Canada has an agreement with a
subsidiary of General Electric Capital Canada, Inc. to provide financing for
Canadian dealers and customers.
PAGE 7
RESEARCH AND DEVELOPMENT
Research and development activities, which are directed toward the
introduction of new products and improvements of existing products and processes
used in their manufacture, totaled $207 million, $138 million and $85 million
for 1999, 1998 and 1997, respectively.
BACKLOG
The backlog of unfilled truck orders (subject to cancellation or return in
certain events) at October 31, 1999, 1998 and 1997, was $3,352 million, $4,505
million and $2,360 million, respectively.
Although the backlog of unfilled orders is one of many indicators of market
demand, other factors such as changes in production rates, available capacity,
new product introductions and competitive pricing actions may affect
point-in-time comparisons.
EMPLOYEES
The company employed 18,600, 17,600 and 16,200 individuals at October 31,
1999, 1998 and 1997, respectively, worldwide.
LABOR RELATIONS
At October 31, 1999, the United Automobile, Aerospace and Agricultural
Implement Workers of America (UAW) represented 9,100 of the company's active
employees in the U.S., and the National Automobile, Aerospace, and Agricultural
Implement Workers of Canada (CAW) represented 2,100 of the company's active
employees in Canada. Other unions represented 800 of the company's active
employees in the U.S. and 800 of the company's active employees in Mexico. The
company's master contract with the UAW expires on October 1, 2002. In June 1999,
a new collective bargaining agreement was ratified by the CAW which expires on
June 1, 2002. The contract allows the company to improve productivity through
better use of work assignments and manpower utilization.
PATENTS AND TRADEMARKS
Navistar continuously obtains patents on its inventions and owns a
significant patent portfolio. Additionally, many of the components which
Navistar purchases for its products are protected by patents that are owned or
controlled by the component manufacturer. Navistar has licenses under
third-party patents relating to its products and their manufacture and grants
licenses under its patents. The monetary royalties paid or received under these
licenses are not significant. No particular patent or group of patents is
considered by the company to be essential to its business as a whole.
Navistar's primary trademarks are an important part of its worldwide sales
and marketing efforts and provide instant identification of its products and
services in the marketplace. To support these efforts, Navistar maintains, or
has pending, registrations of its primary trademarks in those countries in which
it does business or expects to do business.
PAGE 8
RAW MATERIALS AND ENERGY SUPPLIES
The company purchases raw materials, parts and components from numerous
outside suppliers, but relies upon some suppliers for a substantial number of
components for its truck and engine products. A majority of the company's
requirements for raw materials and supplies is filled by single-source
suppliers.
The impact of an interruption in supply will vary by commodity. Some parts
are generic to the industry while others are of a proprietary design requiring
unique tooling which would require time to recreate. However, the company's
exposure to a disruption in production as a result of an interruption of raw
materials and supplies is no greater than the industry as a whole. In order to
remedy any losses resulting from an interruption in supply, the company
maintains contingent business interruption insurance for storms, fire and water
damage.
While the company believes that it has adequate assurances of continued
supply, the inability of a supplier to deliver could have an adverse effect on
production at certain of the company's manufacturing locations. The company's
exposure in Mexico and Brazil to an interruption in local supply could result in
an inability to meet local content requirements.
Strong demand for International trucks coupled with record industry demand
continues to outpace Navistar's near term capacity as well as the capacity of
some key suppliers. Process improvements and capacity expansions are being
implemented to enhance the company's ability to meet customer demand for its
products.
Navistar is currently meeting demand for International engines, for both
International truck and OEMs. There are currently no engine component supplier
capacity issues. The expansion of engine capacity in Brazil and in Huntsville,
Alabama will enable Navistar to meet any future external customer needs in the
light truck diesel market for the foreseeable future.
PAGE 9
IMPACT OF GOVERNMENT REGULATION
Truck and engine manufacturers continue to face heavy governmental
regulation of their products, especially in the areas of environment and safety.
The company believes its products comply with all applicable environmental and
safety regulations.
As a diesel engine manufacturer, the company has incurred research,
development and tooling costs to design its engine product lines to meet United
States Environmental Protection Agency (U.S. EPA) and California Air Resources
Board (CARB) emission standards that will come into effect after the turn of the
century. The company intends to provide engines that satisfy CARB's emission
standards effective in 2002 for engines used in vehicles from 8,501 to 14,000
lbs. GVW, as well as heavy-duty engines that comply with more stringent CARB and
U.S. EPA emission standards, promulgated in 1997, for 2004 and later model
years. At the same time, Navistar expects to be able to meet all of the
obligations it agreed to in the Consent Decree signed in October 1998 with the
U.S. EPA and in a Settlement Agreement with CARB concerning alleged excess
emissions of nitrogen oxides.
Rulemaking is currently underway for emission standards for light and
heavy-duty engines for 2004 and later model years. Navistar is actively
participating in these rulemakings to ensure that its products can comply.
In November 1999, CARB promulgated new emission standards for light-duty
diesel engines which cover Navistar's new V-6 diesel engines. On the basis of
available technology, compliance with the 2007 standards is dependent upon the
availability of low sulfur diesel fuel. Navistar believes that CARB has exceeded
its statutory authority in promulgating these emission standards and in November
1999 filed suit to overturn them. Even if the emission standards are not
overturned, Navistar does not believe they will have a material effect on the
company's financial condition or operating results.
Canadian and Mexican heavy-duty engine emission regulations essentially
mirror those of the U.S. EPA, except that compliance in Mexico is conditioned on
availability of low-sulfur diesel fuel. The company's engines comply with
Canadian and Mexican emission regulations, as well as those of Brazil.
Truck manufacturers are also subject to various noise standards imposed by
federal, state and local regulations. The engine is one of a truck's primary
noise sources, and the company, therefore, works closely with OEMs to develop
strategies to reduce engine noise. The company is also subject to the National
Traffic and Motor Vehicle Safety Act (Safety Act) and Federal Motor Vehicle
Safety Standards (Safety Standards) promulgated by the National Highway Traffic
Safety Administration. The company believes it is in compliance with the Safety
Act and the Safety Standards.
Expenditures to comply with various environmental regulations relating to
the control of air, water and land pollution at production facilities and to
control noise levels and emissions from the company's products have not been
material except for two sites formerly owned by the company: Wisconsin Steel in
Chicago, Illinois, and Solar Turbine in San Diego, California. In 1994, the
company recorded a $20 million after-tax charge as a loss of discontinued
operations for environmental liabilities and cleanup cost at these two sites. It
is not expected that the costs of compliance with foreseeable environmental
requirements will have a material effect on the company's financial condition or
operating results.
PAGE 10
ITEM 2. PROPERTIES
In North America, the company owns and operates 10 manufacturing and
assembly operations which contain approximately 10 million square feet of floor
space. Of these 10 facilities, six plants manufacture and assemble trucks, and
four plants are used by the company's engine segment, of which two manufacture
diesel engines and two produce grey iron castings. In addition, the company owns
or leases other significant properties in the U.S. and Canada including vehicle
and parts distribution centers, sales offices and two engineering centers, which
serve the company's truck and engine segments, and its headquarters which is
located in Chicago. The company's truck assembly facility located in Escobedo,
Mexico is encumbered by a lien in favor of certain lenders of the company as
collateral for a $125 million revolving loan agreement.
The truck segment's principal research and engineering facility is located
in Fort Wayne, Indiana, and the engine segment's facility is located in Melrose
Park, Illinois. In addition, certain research is conducted at each of the
company's manufacturing plants.
All of the company's plants are being utilized and have been adequately
maintained, are in good operating condition and are suitable for its current
needs through productive utilization of the facilities. In 1999, the company
announced plans for a new plant in Huntsville, Alabama, to produce new high
technology diesel engines. These facilities, together with planned capital
expenditures, are expected to meet the company's manufacturing needs in the
foreseeable future.
A majority of the activity of the financial services operations is
conducted from its leased headquarters in Rolling Meadows, Illinois. The
financial services operations also lease 6 other office locations in the U.S.
and one in Mexico.
ITEM 3. LEGAL PROCEEDINGS
The company and its subsidiaries are subject to various claims arising in
the ordinary course of business, and are parties to various legal proceedings
which constitute ordinary routine litigation incidental to the business of the
company and its subsidiaries. In the opinion of the company's management, none
of these proceedings or claims are material to the business or the financial
condition of the company.
PAGE 11
EXECUTIVE OFFICERS OF THE REGISTRANT
The following selected information for each of the company's current
executive officers was prepared as of December 15, 1999.
OFFICERS AND POSITIONS WITH
NAME AGE NAVISTAR AND OTHER INFORMATION
- ------------- --- ------------------------------
John R. Horne.......... 61 Chairman, President and Chief Executive
Officer since 1996 and a Director since 1990.
Mr. Horne also is Chairman, President and
Chief Executive Officer of Transportation
since 1995 and a Director since 1987.
Prior to this, Mr. Horne served as President
and Chief Executive Officer, 1995-1996,
President and Chief Operating Officer,
1990-1995.
Robert C. Lannert...... 59 Executive Vice President and Chief Financial
Officer and a Director since 1990.
Mr. Lannert also is Executive Vice President
and Chief Financial Officer of Transportation
since 1990 and a Director since 1987.
Robert A. Boardman..... 52 Senior Vice President and General Counsel
since 1990. Mr. Boardman also is Senior
Vice President and General Counsel of
Transportation since 1990.
Thomas M. Hough....... 54 Vice President and Treasurer since 1992.
Mr. Hough also is Vice President and
Treasurer of Transportation since 1992.
Mark T. Schwetschenau. 43 Vice President and Controller since 1998.
Mr. Schwetschenau also is Vice President
and Controller of Transportation since 1998.
Prior to this, Mr. Schwetschenau served as
Vice President, Finance, Quaker Foods
Division, the Quaker Oats Company, 1995-1997,
and Director, Finance, Convenience Foods
Division, the Quaker Oats Company, 1993-1995.
Steven K. Covey....... 48 Corporate Secretary since 1990. Mr. Covey
also is Associate General Counsel of
Transportation since 1992.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
PAGE 12
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
Navistar International Corporation common stock is listed on the New York
Stock Exchange, the Chicago Stock Exchange and the Pacific Exchange under the
abbreviated stock symbol "NAV." Information regarding high and low market price
per share of common stock for each quarter of 1999 and 1998 is incorporated by
reference from the 1999 Annual Report to Shareowners, page 48, filed as Exhibit
13 to this Form 10-K. There were approximately 51,300 owners of common stock at
October 31, 1999.
Holders of common stock are entitled to receive dividends when and as
declared by the board of directors out of funds legally available therefor,
provided that, so long as any shares of the company's preferred stock and
preference stock are outstanding, no dividends (other than dividends payable in
common stock) or other distributions (including purchases) may be made with
respect to the common stock unless full cumulative dividends, if any, on the
shares of preferred stock and preference stock have been paid. Under the General
Corporation Law of the State of Delaware, dividends may only be paid out of
surplus or out of net profits for the fiscal year in which the dividend is
declared or the preceding fiscal year, and no dividend may be paid on common
stock at any time during which the capital of outstanding preferred stock or
preference stock exceeds the net assets of the company.
The company has not paid dividends on the common stock since 1980. The
company does not expect to pay cash dividends on the common stock in the
foreseeable future, and is subject to restrictions under the indentures for the
$100 million 7% Senior Notes and the $250 million 8% Senior Subordinated
Notes on the amount of cash dividends the company may pay and is subject to
certain debt to equity ratios under the $125 million Mexican credit facility
which may indirectly limit its ability to pay dividends.
ITEMS 6, 7, 7A AND 8
The information required by Items 6-8 is incorporated herein by reference
from the 1999 Annual Report to Shareowners, filed as Exhibit 13 to this Form
10-K as follows:
1999
Annual
Report
Page
----
ITEM 6. SELECTED FINANCIAL DATA....................... 51
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION..................... 2
ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK............... 7
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA... 14
With the exception of the aforementioned information (Part II; Items 5-8)
and the information specified under Items 1 and 14 of this report, the 1999
Annual Report to Shareowners is not to be deemed filed as part of this report.
----------------------------------------------------------
PAGE 13
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEMS 10, 11 , 12 AND 13
Information required by Items 10, 11, 12 and 13 of this Form is
incorporated herein by reference from Navistar's definitive Proxy Statement for
the February 22, 2000 Annual Meeting of Shareowners.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Information required by Part IV (Item 14) of this form is incorporated
herein by reference from Navistar International Corporation's 1999 Annual Report
to Shareowners, filed as Exhibit 13 to this Form 10-K as follows:
1999
Annual
Report
Page
----
Financial Statements
- --------------------
Independent Auditors' Report........................... 13
Statement of Income
for the years ended October 31, 1999, 1998 and 1997. 14
Statement of Comprehensive Income
for the years ended October 31, 1999, 1998 and 1997. 14
Statement of Financial Condition
as of October 31, 1999 and 1998.................... 15
Statement of Cash Flow
for the years ended October 31, 1999, 1998 and 1997. 16
Notes to Financial Statements.......................... 17
Form
10-K
Page
----
Schedule
- --------
II Valuation and Qualifying
Accounts and Reserves....................... F-1
All other 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 in the 1999 Annual Report to Shareowners.
Finance and Insurance Subsidiaries:
The financial statements of Navistar Financial Corporation for the years
ended October 31, 1999, 1998 and 1997 appearing on pages 13 through 45 in the
Annual Report on Form 10-K for Navistar Financial Corporation for the fiscal
year ended October 31, 1999, Commission File No. 1-4146-1, are incorporated
herein by reference and filed as Exhibit 28 to this Form 10-K.
PAGE 14
Form 10-K Page
--------------
Exhibits, Including Those Incorporated by Reference
- ----------------------------------------------------
(3) Articles of Incorporation and By-Laws........ E-1
(4) Instruments Defining the Rights of
Security Holders, Including Indentures..... E-2
(10) Material Contracts........................... E-5
(13) Navistar International Corporation
1999 Annual Report to Shareowners
(only those portions incorporated
herein by reference)....................... *
(21) Subsidiaries of the Registrant............... E-11
(23) Independent Auditors' Consent................ 18
(24) Power of Attorney............................ 16
(27) Financial Data Schedule...................... *
(28) Navistar Financial Corporation
Annual Report on Form 10-K for the
fiscal year ended October 31, 1999......... *
*Filed only electronically with the Securities and Exchange Commission.
All exhibits other than those indicated above are omitted because of the
absence of the conditions under which they are required or because the
information called for is shown in the financial statements and notes thereto in
the 1999 Annual Report to Shareowners.
Exhibits, other than those incorporated by reference, have been included in
copies of this report filed with the Securities and Exchange Commission.
Shareowners of the company will be provided with copies of these exhibits upon
written request to the Corporate Secretary at the address given on the cover
page of this Form 10-K.
Reports on Form 8-K
- -------------------
No reports on Form 8-K were filed for the three months ended October 31,
1999.
PAGE 15
SIGNATURE
NAVISTAR INTERNATIONAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
--------------------
SIGNATURE
Pursuant to the requirements of Section 13 and 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 INTERNATIONAL CORPORATION
- ----------------------------------
(Registrant)
/s/ Mark T. Schwetschenau
- ----------------------------------
Mark T. Schwetschenau December 22, 1999
Vice President and Controller
(Principal Accounting Officer)
PAGE 16
EXHIBIT 24
SIGNATURE
NAVISTAR INTERNATIONAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
--------------------
POWER OF ATTORNEY
Each person whose signature appears below does hereby make, constitute and
appoint John R. Horne, Robert C. Lannert and Mark T. Schwetschenau and each of
them acting individually, true and lawful attorneys-in-fact and agents with
power to act without the other and with full power of substitution, to execute,
deliver and file, for and on such person's behalf, and in such person's name and
capacity or capacities as stated below, any amendment, exhibit or supplement to
the Form 10-K Report making such changes in the report as such attorney-in-fact
deems appropriate.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signature Title Date
- -------------------------- -------------------------------- -----------------
/s/ John R. Horne
- --------------------------
John R. Horne Chairman of the Board, December 22, 1999
President and
Chief Executive Officer,
and Director
(Principal Executive Officer)
/s/ Robert C. Lannert
- --------------------------
Robert C. Lannert Executive Vice President December 22, 1999
and Chief Financial Officer
and Director
(Principal Financial Officer)
/s/ Mark T. Schwetschenau
- --------------------------
Mark T. Schwetschenau Vice President and Controller December 22, 1999
(Principal Accounting
Officer)
/s/ William F. Andrews
- --------------------------
William F. Andrews Director December 22, 1999
PAGE 17
EXHIBIT 24 (CONTINUED)
SIGNATURE
NAVISTAR INTERNATIONAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
---------------
SIGNATURES (Continued)
/s/ Y. Marc Belton
- -------------------------
Y. Marc Belton Director December 22, 1999
/s/ John D. Correnti
- -------------------------
John D. Correnti Director December 22, 1999
/s/ Jerry E. Dempsey
- -------------------------
Jerry E. Dempsey Director December 22, 1999
/s/ Dr. Abbie J. Griffin
- -------------------------
Dr. Abbie J. Griffin Director December 22, 1999
/s/ Michael N. Hammes
- -------------------------
Michael N. Hammes Director December 22, 1999
/s/ Allen J. Krowe
- -------------------------
Allen J. Krowe Director December 22, 1999
/s/ William F. Patient
- -------------------------
William F. Patient Director December 22, 1999
PAGE 18
SIGNATURE
NAVISTAR INTERNATIONAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
---------------
INDEPENDENT AUDITORS' REPORT
Navistar International Corporation:
We have audited the Statement of Financial Condition of Navistar
International Corporation and Consolidated Subsidiaries as of October 31, 1999
and 1998, and the related Statements of Income, Comprehensive Income, and of
Cash Flow for each of the three years in the period ended October 31, 1999, and
have issued our report thereon dated December 13, 1999; such consolidated
financial statements and report are included in your 1999 Annual Report to
Shareowners and are incorporated herein by reference. Our audits also included
the financial statement schedule of Navistar International Corporation and
Consolidated Subsidiaries, listed in Item 14. This financial statement schedule
is the responsibility of the company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
Deloitte & Touche LLP
December 13, 1999
Chicago, Illinois
---------------
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
Navistar International Corporation:
We consent to the incorporation by reference in the Registration
Statements, including post-effective amendments, No. 2-70979, No. 33-26847, No.
333-25783, No. 333-29735, No. 333-29739, No. 333-29301 and No. 333-77781 of
Navistar International Corporation, all on Form S-8, of our reports dated
December 13, 1999, relating to the financial statements and financial statement
schedule of Navistar International Corporation and of the financial statements
of Navistar Financial Corporation, appearing and incorporated by reference in
this Annual Report on Form 10-K of Navistar International Corporation for the
year ended October 31, 1999.
Deloitte & Touche LLP
December 22, 1999
Chicago, Illinois
PAGE 1
SCHEDULE II
NAVISTAR INTERNATIONAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
==========
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED OCTOBER 31, 1999, 1998 AND 1997
(MILLIONS OF DOLLARS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
DESCRIPTION DEDUCTIONS FROM
RESERVES
BALANCE AT ADDITIONS
DESCRIPTION DEDUCTED BEGINNING OF CHARGED TO BALANCE AT END
OF RESERVES FROM YEAR INCOME DESCRIPTION AMOUNT OF YEAR
----------- -------- ------------ ---------- ----------- ------ --------------
Reserves deducted
from assets to
which they
apply:
1999
Uncollectible notes
and accounts
Allowance for Notes and written off and
losses on accounts reserve adjustment,
receivables..... receivable..... $ 33 $ 4 less recoveries.... $ 1 $ 36
1998
Uncollectible notes
and accounts
Allowance for Notes and written off and
losses on accounts reserve adjustment,
receivables..... receivable..... $ 31 $ 3 less recoveries.... $ 1 $ 33
1997
Uncollectible notes
and accounts
Allowance for Notes and written off and
losses on accounts reserve adjustment,
receivables..... receivable..... $ 31 $ 14 less recoveries.... $ 14 $ 31
F-1