Cyrus Hall McCormick, “Father of Modern Agriculture” and founder of International Harvester, knew the value of offering equipment to customers on credit. Beginning with the harvest of 1843, he offered farmers four months of credit to buy his machines. Given the seasonal nature of farming, the extension of credit proved to be a major factor in the success of his business.
Prior to World War II, International Harvester (“IH”) extended credit to its customers directly. It was common for much of the company’s annual sales to come in the form of notes receivable. For example, at the end of the 1937 fiscal year, IH held $120 million in notes. With the increased mechanization of farming in war and post-war years, banks and other financial institutions became more involved in financing sales of IH products, and therefore, during the years 1937-1948, the percentage of sales financed by IH declined. In 1949, IH created the International Harvester Credit Corporation (“IHCC”) to provide supplementary financing bought on open account directly from IH and those financed by banks. IHCC handled a large number of notes from dealers, distributors and retail customers. By its 25th anniversary in 1974, IHCC’s retail receivables totaled $2.7 billion, with outstanding receivables of $1.7 billion.
1949: The creation of International Harvester Credit Corporation (IHCC) is announced on March 3. IHCC is incorporated on March 12, and begins operations on April 26.
1956: IHCC reaches a new high net income of $4,761,892 for the fiscal year.
1958: On October 9, IHCC announces a plan to offer $50 million worth of 21-year debentures to the public on October 29th. The 21-year 4⅝ % Senior Debentures are listed on the New York Stock Exchange.
1964: On June 2, IHCC announces a record high net income, with earnings of $3,731,713. President Herman Ebsen attributes the profits to higher outstanding receivables and a more favorable income tax rate.
1972: As part of a general positive trend within IH, IHCC posts record results.
1979: IHCC celebrates its thirtieth year by capping several years of record highs with new records in revenue (up nearly 45%), net income (nearly $70M) and total volume of retail and wholesale notes.
1980: Net income and volume of receivables are both down. The 1980 IHCC annual report attributes this to a six-month UAW strike against IH, and a general downturn in the economy.
1981: For the first time in its existence, IHCC requires income maintenance payments of $56 million from IH. On December 23, most of IHCC’s existing debt is consolidated and converted into $2 billion in term loans.
1981-1983: IHCC undertakes substantial operational and financial restructurings.
1982: During the first quarter, IHCC acquires the leasing and insurance subsidiaries of IH for $46.3 million. In October, IHCC sells its life insurance subsidiary for $12.7 million, realizing a gain of $1.5 million.
1985: On January 3, IHsells its North American agricultural equipment business to Tenneco, Inc. This results in greatly reduced receivables and funding needs for IHCC. On October 31, IHCC completes a refinancing agreement, creating a $1.2 billion revolving credit facility to finance ongoing operations. The new agreement allows for a return of IHCC to the paper market, with a public unit offering of $100 million on December 5, 1985. This is the first commercial paper placement since 1981.
1986: On February 2, IHCC changes its name to Navistar Financial Corporation. In October, a new $500 million fixed rate facility to sell truck retail notes is established.
1987: As part of a move to refocus as a truck finance and insurance company, Navistar Financial Corporation centralizes administrative and accounting functions at the Financial Services Center in Schaumburg, Illinois, and makes an electronic funds transfer system available to all International dealers.
1991: Navistar Financial Corporation increases its return on equity to 15%, the fifth consecutive annual increase, and the highest return in the history of the corporation. As the first step in a new strategic plan for retail information systems, an online credit approval system is developed and implemented.
Navistar Financial Corporation is the wholly-owned finance subsidiary of Navistar, Inc. Navistar Financial Corporation helps customers by providing transportation financing options for Navistar customers and dealers with dependable, consistent service and knowledge. The company is headquartered in Schaumburg, Illinois.
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