<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _________ to _________
Commission File No. 0-6394
PACCAR Inc
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 91-0351110
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
777 - 106th Ave. N.E., Bellevue, WA 98004
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(Address of principal executive offices) (Zip Code)
(206) 455-7400
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report)
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for at least the past 90 days. Yes X No_____
---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $12 par value--38,861,153 shares as of October 31, 1995
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FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
________________________________________________________________________________
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I. FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Statements of Income --
Three and Nine Months Ended September 30, 1995 and 1994 . . . . . . . . . . . . . . . 3
Condensed Consolidated Balance Sheets --
September 30, 1995, and December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows --
Nine Months Ended September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION . . . . . . . . . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION:
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . 10
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
INDEX TO EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
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FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
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Consolidated Statements of Income (Unaudited)
(Millions except per share data)
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Three Months Ended Nine Months Ended
September 30 September 30
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1995 1994 1995 1994
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<S> <C> <C> <C> <C>
MANUFACTURING:
Revenues
Net sales $1,147.0 $1,114.5 $3,476.0 $3,171.6
Other 1.2 1.1 8.7 2.0
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1,148.2 1,115.6 3,484.7 3,173.6
Costs and Expenses
Cost of sales 992.3 960.3 3,011.3 2,737.8
Selling, general and administrative 81.7 88.1 250.9 248.9
Interest .5 .8 1.4 1.9
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1,074.5 1,049.2 3,263.6 2,988.6
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing Income
Before Income Taxes 73.7 66.4 221.1 185.0
FINANCIAL SERVICES:
Revenues 65.1 54.9 188.2 152.8
Costs and Expenses
Interest and other 36.4 27.9 105.5 76.2
Selling, general and administrative 11.3 10.4 33.5 31.3
Provision for losses on receivables 2.8 .6 9.6 2.6
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50.5 38.9 148.6 110.1
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Financial Services Income
Before Income Taxes 14.6 16.0 39.6 42.7
OTHER:
Investment income 7.1 6.1 20.1 16.9
Minority interest and other 13.6 (5.2) 14.9 (14.4)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Income Before Income Taxes 109.0 83.3 295.7 230.2
Income taxes 40.7 30.1 108.0 82.8
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Net Income $ 68.3 $ 53.2 $ 187.7 $ 147.4
===================================================================================================================================
Weighted average number of
common shares outstanding 38.9 38.9 38.9 38.9
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Per Share Data:
Net income $ 1.76 $ 1.37 $ 4.83 $ 3.79
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Dividends declared $ .25 $ .25 $ .75 $ .75
===================================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE> 4
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Condensed Consolidated Balance Sheets September 30 December 31
ASSETS (Millions of Dollars) 1995 1994*
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<S> <C> <C>
MANUFACTURING (Unaudited)
Current Assets
Cash and equivalents $ 171.0 $ 289.9
Trade receivables, net 289.4 232.9
Marketable securities 405.0 241.7
Inventories 251.0 274.5
Deferred taxes and other current assets 58.3 65.1
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Total Manufacturing Current Assets 1,174.7 1,104.1
Investments and Other 86.8 88.7
Property, Plant and Equipment, Net 421.3 369.9
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Total Manufacturing Assets 1,682.8 1,562.7
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FINANCIAL SERVICES:
Cash and equivalents 13.1 21.4
Finance and other receivables,
net of allowance for losses 2,756.7 2,469.6
Less unearned interest (211.9) (194.7)
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2,544.8 2,274.9
Equipment on operating leases, net 48.8 53.8
Other assets 19.1 15.4
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Total Financial Services Assets 2,625.8 2,365.5
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$4,308.6 $3,928.2
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</TABLE>
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<PAGE> 5
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
<TABLE>
<CAPTION>
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September 30 December 31
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994*
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<S> <C> <C>
MANUFACTURING (Unaudited)
Current Liabilities
Accounts payable and accrued expenses $ 619.1 $ 620.3
Income taxes 28.4 22.5
Dividend payable 77.7
Other .5 1.8
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Total Manufacturing Current Liabilities 648.0 722.3
Long-Term Debt 10.8 11.1
Other 125.4 85.7
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Total Manufacturing Liabilities 784.2 819.1
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FINANCIAL SERVICES:
Accounts payable and accrued expenses 37.5 70.6
Commercial paper and bank loans 912.8 687.7
Long-term debt 1,105.9 999.9
Deferred income taxes and other 142.2 143.5
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Total Financial Services Liabilities 2,198.4 1,901.7
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MINORITY INTEREST 32.9
STOCKHOLDERS' EQUITY
Preferred stock, no par value:
Authorized 1,000,000 shares, none issued
Common stock, $12 par value: Authorized 100,000,000
shares, issued 38,861,153 shares 466.3 466.3
Additional paid-in capital 218.6 218.2
Retained earnings 715.0 556.5
Currency translation and unrealized investment adjustments (73.9) (66.5)
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Total Stockholders' Equity 1,326.0 1,174.5
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$4,308.6 $3,928.2
=============================================================================================================================
</TABLE>
* The December 31, 1994, condensed consolidated balance sheet has been
derived from audited financial statements.
See Notes to Consolidated Financial Statements.
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<PAGE> 6
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
<TABLE>
<CAPTION>
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Condensed Consolidated Statements of Cash Flows (Unaudited)
(Millions of Dollars)
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Nine Months Ended September 30 1995 1994
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<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $186.4 $172.4
INVESTING ACTIVITIES:
Finance receivables originated (936.7) (877.8)
Collections on finance receivables 721.3 617.8
Net (increase) decrease in wholesale receivables (81.8) 34.4
Marketable securities purchased (1,546.2) (1,073.4)
Marketable securities sales and maturities 1,396.8 1,079.9
Acquisition of additional interest in affiliate,
net of cash consolidated in 1994 (45.0) 44.3
Acquisition of property, plant and equipment (53.4) (32.6)
Acquisition of equipment for operating leases (7.4) (14.8)
Proceeds from asset disposals 21.0 17.5
Other (.2) (5.6)
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Net Cash Used in Investing Activities (531.6) (210.3)
FINANCING ACTIVITIES:
Net increase (decrease) in commercial paper and bank loans 227.2 (98.9)
Cash dividends (106.8) (64.7)
Proceeds of long-term debt 421.2 450.5
Payment of long-term debt (314.0) (154.8)
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Net Cash Provided by Financing Activities 227.6 132.1
Effect of exchange rate changes on cash (9.6) (6.0)
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Net (Decrease) Increase in Cash and Equivalents (127.2) 88.2
Cash and equivalents at beginning of period 311.3 223.2
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Cash and equivalents at end of period $184.1 $311.4
==============================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE> 7
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
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Notes to Consolidated Financial Statements (Millions of Dollars)
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NOTE A--Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. For further information, refer to the
consolidated financial statements and footnotes included in the Company's
annual report on Form 10-K for the year ended December 31, 1994.
Reclassifications: Certain prior year amounts have been reclassified to conform
to the 1995 presentation.
NOTE B--Inventories
<TABLE>
<CAPTION>
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September 30 December 31
1995 1994
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<S> <C> <C>
Inventories at FIFO cost: (Unaudited)
Finished products $198.1 $188.6
Work in process and raw materials 183.8 210.2
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381.9 398.8
Less excess of FIFO cost over LIFO (130.9) (124.3)
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$251.0 $274.5
==================================================================================================================================
</TABLE>
Under the LIFO method of accounting (used for approximately 82% of September
30, 1995, inventories), an actual valuation can be made only at the end of each
year based on year-end inventory levels and costs. Accordingly, interim
valuations are based on management's estimates of those year-end amounts. Based
on present estimates of 1995 year-end inventory levels, no significant
liquidations of LIFO inventory quantities are expected. Because inventory
levels and costs are subject to many forces beyond management's control, the
present estimates are subject to the final year-end LIFO inventory valuation.
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<PAGE> 8
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS:
PACCAR's net income and sales for the third quarter and first nine
months of 1995 posted gains over the corresponding prior year periods.
Net income improved 27% on a sales increase of over 9% for the first
nine months. For the third quarter, net income increased 28% on a 3%
gain in sales.
The Company's earnings for the third quarter and first nine months of
1995 included a $7.5 million after-tax gain from the favorable
resolution of litigation involving insurance reimbursements for
environmental costs incurred in prior years. The nonrecurring gain is
included as a component of minority interest and other in the
accompanying consolidated statements of income.
Manufacturing income before taxes rose 11% for the quarter and more
than 19% year-to-date compared to 1994. While manufacturing gross
profits increased, gross margin percentages declined slightly compared
to 1994. The effect of severe sales declines at VILPAC, S.A., PACCAR's
Mexican truck manufacturing subsidiary, and the work stoppage that
began in August at the Canadian truck plant offset percentage
improvements attained by the Company's other truck operations.
PACCAR's truck production levels have remained at near capacity
through the first nine months of 1995 and the Company has produced
more medium and heavy duty trucks over this period than at any
comparable time in its history. The Company has produced more than
40,000 Class 8 heavy duty trucks worldwide, an increase of 4% compared
to the same period a year ago. The Company expects to continue
production in the United States at approximately the same level for
the remainder of the year, however there has been a general slowing
for Class 8 truck orders throughout the industry, and moderate
downward adjustments in production rates are anticipated for 1996.
In Canada, on August 8, 1995, approximately 850 employees went on
strike at the Company's Ste. Therese, Quebec facility. The Canadian
strike had a modest impact on manufacturing income before taxes in the
third quarter. Given the current trend in new truck orders, PACCAR
expects that if the work stoppage continues, it will have a minimal
effect on fourth quarter earnings.
On August 31, 1995, PACCAR acquired full ownership of VILPAC, its
Mexican subsidiary. The Company had previously owned 55% of the
operation, which produces Kenworth heavy duty trucks for distribution
primarily in Mexico. PACCAR relocated its North American Kenworth
Class 7 production from its Canadian plant to VILPAC during the third
quarter. VILPAC's Class 7 units will now be exported both to the
United States and internationally, as well as supplying the domestic
Mexican market. The first export unit, a Kenworth T300, is scheduled
for delivery to Chile in October.
-8-
<PAGE> 9
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
Combined sales and profits for PACCAR's truck operations in Australia,
Mexico and the United Kingdom in the third quarter and first nine
months were down in comparison to the corresponding periods in 1994.
Continuing economic difficulties in Mexico contributed to VILPAC's
marginally unprofitable results in the third quarter and first nine
months of 1995. In Australia, third quarter sales and profits trailed
the prior year amounts while year-to-date results remained ahead of
last year.
PACCAR's other product areas include auto parts, winches and oilfield
equipment. All three divisions showed improved profits for both the
quarter and first nine months versus their comparable periods in 1994.
Winches and oilfield equipment increased sales in the third quarter
and year-to-date over year-earlier levels. Auto parts sales for the
quarter were comparable to third quarter, 1994 leaving the nine-month
total slightly ahead of last year.
In the Financial Services segment, net finance receivable portfolios
continue to reflect significant growth. September 1995 balances grew
more than 11% over year-end 1994 levels, and 20% over year-earlier
balances. Nearly all of PACCAR's finance and leasing operations
attained higher profitability in the third quarter and first nine
months of 1995 compared to the corresponding periods of 1994.
However, improvements in the current year attributable to loan and
lease portfolio growth, were offset by operating losses resulting from
loan loss provisions recorded in Mexico by VILPAC's financial
subsidiary.
Investment income grew in 1995 as a result of higher overall yields
combined with larger investable balances.
LIQUIDITY AND CAPITAL RESOURCES:
PACCAR's ratio of manufacturing current assets to current liabilities
at September 30, 1995, increased to 1.81 compared to 1.53 at year-end.
In the first nine months of 1995, the Company utilized cash from
operations together with net borrowings to fund the growth in
Financial Services receivables, pay the special year-end and regular
quarterly dividends, and increase its net investment in fixed assets.
Approximately two-thirds of the net borrowings consisted of commercial
paper and short-term bank loans and the balance represented proceeds
from additional long-term debt, net of repayments. The Company also
invested an additional portion of its cash reserves in marketable
securities. As previously mentioned, PACCAR's Mexican affiliate,
VILPAC, became a wholly-owned subsidiary when the Company acquired
full ownership during the third quarter. The exchange rate effect
primarily reflects the impact of the continuing weakness of the
Mexican peso.
Other information on liquidity and sources of capital as presented in
the 1994 Annual Report to Stockholders continues to be relevant.
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<PAGE> 10
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
PART II--OTHER INFORMATION
For Items 1, 2, 3 and 5, there was no reportable information for any of the
three months ended September 30, 1995.
Reportable information in response to Item 4 was previously reported in the
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. Any exhibits filed herewith are listed in the
accompanying index to exhibits.
(b) No reports on Form 8-K have been filed for the quarter ended
September 30, 1995.
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<PAGE> 11
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PACCAR Inc
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(Registrant)
Date November 6, 1995 By /s/ G. D. Hatchel
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G. D. Hatchel
Vice President and Controller
(Authorized Officer and
Chief Accounting Officer)
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<PAGE> 12
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit (in order of assigned index numbers)
3 Articles of incorporation and bylaws:
(a) PACCAR Inc Certificate of Incorporation, as amended to April
27, 1990 (incorporated by reference to the Quarterly Report on
Form 10-Q for the quarter ended March 31, 1990).
(b) PACCAR Inc Bylaws, as amended to April 26, 1994 (incorporated
by reference to the Quarterly Report on Form 10-Q for the
quarter ended March 31, 1994).
4 Instruments defining the rights of security holders, including
indentures:
(a) Rights agreement dated as of December 21, 1989, between PACCAR
Inc and First Chicago Trust Company of New York, setting forth
the terms of the Series A Junior Participating Preferred
Stock, no par value per share (incorporated by reference to
Exhibit 1 of the Current Report on Form 8-K of PACCAR Inc,
dated December 27, 1989).
(b) Indenture for Senior Debt Securities dated as of December 1,
1983, between PACCAR Financial Corp. and Citibank, N.A.,
Trustee (incorporated by reference to Exhibit 4.1 of the
Annual Report on Form 10-K of PACCAR Financial Corp. for the
year ended December 31, 1983).
(c) First Supplemental Indenture dated as of June 19, 1989,
between PACCAR Financial Corp. and Citibank, N.A., Trustee
(incorporated by reference to Exhibit 4.2 to PACCAR Financial
Corp.'s registration statement on Form S-3, Registration No.
33-29434).
(d) Forms of Medium-Term Note, Series E (incorporated by reference
to Exhibits 4.3A, 4.3B and 4.3C to PACCAR Financial Corp.'s
Registration Statement on Form S-3, dated June 23, 1989,
Registration Number 33-29434, and Forms of Medium-Term Note,
Series E, incorporated by reference to Exhibit 4.3B.1 to
PACCAR Financial Corp.'s Current Report on Form 8-K, dated
December 19, 1991, under Commission File Number 0-12553).
Letter of Representation among PACCAR Financial Corp.,
Citibank, N.A., and the Depository Trust Company, Series E,
dated July 6, 1989 (incorporated by reference to Exhibit 4.3
of PACCAR Financial Corp.'s Annual Report on Form 10-K, dated
March 29, 1990, File Number 0-12553).
(e) Forms of Medium-Term Note, Series F (incorporated by reference
to Exhibits 4.3A, 4.3B and 4.3C to PACCAR Financial Corp.'s
Registration Statement on Form S-3, dated May 26, 1992,
Registration Number 33-48118).
Form of Letter of Representation among PACCAR Financial Corp.,
Citibank, N.A., and the Depository Trust Company, Series F
(incorporated by reference to Exhibit 4.4 to PACCAR Financial
Corp.'s Registration Statement on Form S-3, dated May 26,
1992, Registration Number 33-48118).
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<PAGE> 13
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit (in order of assigned index numbers)
(f) Forms of Medium-Term Note, Series G (incorporated by reference
to Exhibits 4.3A and 4.3B to PACCAR Financial Corp.'s
Registration Statement on Form S-3, dated December 8, 1993,
Registration Number 33-51335).
Form of Letter of Representation among PACCAR Financial Corp.,
Citibank, N.A., and the Depository Trust Company, Series G
(incorporated by reference to Exhibit 4.4 to PACCAR Financial
Corp.'s Registration Statement on Form S-3, dated December 8,
1993, Registration Number 33-51335).
10 Material contracts:
(a) PACCAR Inc Incentive Compensation Plan (incorporated by
reference to Exhibit (10)(a) of the Annual Report on Form 10-K
for the year ended December 31, 1980).
(b) PACCAR Inc Deferred Compensation Plan for Directors
(incorporated by reference to Exhibit (10)(b) of the Annual
Report on Form 10-K for the year ended December 31, 1980).
(c) Supplemental Retirement Plan (incorporated by reference to
Exhibit (10)(c) of the Annual Report on Form 10-K for the year
ended December 31, 1980).
(d) 1981 Long Term Incentive Plan (incorporated by reference to
Exhibit A of the 1982 Proxy Statement, dated March 25, 1982).
(e) Amendment to 1981 Long Term Incentive Plan (incorporated by
reference to Exhibit (10)(a) of the Quarterly Report on Form
10-Q for the quarter ended March 31, 1991).
(f) PACCAR Inc 1991 Long-Term Incentive Plan (incorporated by
reference to Exhibit (10)(h) of the Quarterly Report on Form
10-Q for the quarter ended June 30, 1992).
(g) Amended and Restated Deferred Incentive Compensation Plan
(incorporated by reference to Exhibit (10)(g) of the Annual
Report on Form 10-K for the year ended December 31, 1993).
27 Financial Data Schedule.
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER
30, 1995 AND 1994, AND THE CONDENSED CONSOLIDATED BALANCE SHEETS, SEPTEMBER 30,
1995, AND DECEMBER 31, 1994, OF PACCAR INC AND SUBSIDIARIES AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 184,100
<SECURITIES> 405,000
<RECEIVABLES> 2,834,200
<ALLOWANCES> 0
<INVENTORY> 251,000
<CURRENT-ASSETS> 0
<PP&E> 421,300
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,308,600
<CURRENT-LIABILITIES> 0
<BONDS> 1,116,700
<COMMON> 466,300
0
0
<OTHER-SE> 859,700
<TOTAL-LIABILITY-AND-EQUITY> 4,308,600
<SALES> 3,476,000
<TOTAL-REVENUES> 3,672,900
<CGS> 3,011,300
<TOTAL-COSTS> 3,116,800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 9,600
<INTEREST-EXPENSE> 1,400
<INCOME-PRETAX> 295,700
<INCOME-TAX> 108,000
<INCOME-CONTINUING> 187,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 187,700
<EPS-PRIMARY> 4.83
<EPS-DILUTED> 4.83
</TABLE>
