<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 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
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(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 July 31, 1995
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<PAGE> 2
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 Six Months Ended June 30, 1995 and 1994................. 3
Condensed Consolidated Balance Sheets --
June 30, 1995, and December 31, 1994.............................. 4
Condensed Consolidated Statements of Cash Flows --
Six Months Ended June 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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<PAGE> 3
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
PART I--FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS
-----------------------------------------------------------------------------------------------------------------
Consolidated Statements of Income (Unaudited)
(Millions except per share data)
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Three Months Ended Six Months Ended
June 30 June 30
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1995 1994 1995 1994
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<S> <C> <C> <C> <C>
MANUFACTURING:
Revenues
Net sales $1,205.3 $1,070.8 $2,329.0 $2,057.1
Other 1.6 .5 7.5 .9
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1,206.9 1,071.3 2,336.5 2,058.0
Costs and Expenses
Cost of sales 1,040.3 922.5 2,019.0 1,777.5
Selling, general and administrative 83.9 83.6 169.1 160.8
Interest .4 .6 .9 1.1
-----------------------------------------------------------------------------------------------------------------
1,124.6 1,006.7 2,189.0 1,939.4
-----------------------------------------------------------------------------------------------------------------
Manufacturing Income
Before Income Taxes 82.3 64.6 147.5 118.6
FINANCIAL SERVICES:
Revenues 63.1 51.1 123.1 97.9
Costs and Expenses
Interest and other 35.5 25.8 69.1 48.3
Selling, general and administrative 11.4 10.6 22.2 20.9
Provision for losses on receivables 2.0 .4 6.8 2.0
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48.9 36.8 98.1 71.2
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Financial Services Income
Before Income Taxes 14.2 14.3 25.0 26.7
OTHER:
Investment income 6.5 5.8 12.9 10.8
Minority interest and other .5 (5.8) 1.3 (9.2)
-----------------------------------------------------------------------------------------------------------------
Total Income Before Income Taxes 103.5 78.9 186.7 146.9
Income taxes 38.4 28.3 67.3 52.7
-----------------------------------------------------------------------------------------------------------------
Net Income $ 65.1 $ 50.6 $ 119.4 $ 94.2
=================================================================================================================
Weighted average number of
common shares outstanding 38.9 38.9 38.9 38.9
=================================================================================================================
Per Share Data:
Net income $ 1.67 $ 1.30 $ 3.07 $ 2.42
=================================================================================================================
Dividends declared $ .25 $ .25 $ .50 $ .50
=================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE> 4
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
<TABLE>
<CAPTION>
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Condensed Consolidated Balance Sheets June 30 December 31
ASSETS (Millions of Dollars) 1995 1994*
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<S> <C> <C>
MANUFACTURING: (Unaudited)
Current Assets
Cash and equivalents $ 267.7 $ 289.9
Trade receivables, net 298.8 232.9
Marketable securities 251.5 241.7
Inventories 252.2 274.5
Deferred taxes and other current assets 69.6 65.1
---------------------------------------------------------------------------------------------------------------
Total Manufacturing Current Assets 1,139.8 1,104.1
Investments and Other 94.0 88.7
Property, Plant and Equipment, Net 376.2 369.9
---------------------------------------------------------------------------------------------------------------
Total Manufacturing Assets 1,610.0 1,562.7
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FINANCIAL SERVICES:
Cash and equivalents 12.1 21.4
Finance and other receivables,
net of allowance for losses 2,609.1 2,469.6
Less unearned interest (208.5) (194.7)
---------------------------------------------------------------------------------------------------------------
2,400.6 2,274.9
Equipment on operating leases, net 51.3 53.8
Other assets 18.0 15.4
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Total Financial Services Assets 2,482.0 2,365.5
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$4,092.0 $3,928.2
===============================================================================================================
</TABLE>
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<PAGE> 5
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
<TABLE>
<CAPTION>
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June 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 $ 615.2 $ 620.3
Income taxes 20.5 22.5
Dividend payable 77.7
Other .5 1.8
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Total Manufacturing Current Liabilities 636.2 722.3
Long-Term Debt 10.9 11.1
Other 104.1 85.7
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Total Manufacturing Liabilities 751.2 819.1
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FINANCIAL SERVICES:
Accounts payable and accrued expenses 46.8 70.6
Commercial paper and bank loans 826.1 687.7
Long-term debt 1,035.6 999.9
Deferred income taxes and other 138.9 143.5
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Total Financial Services Liabilities 2,047.4 1,901.7
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MINORITY INTEREST 25.6 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 38,859,530 shares 466.3 466.3
Additional paid-in capital 218.5 218.2
Retained earnings 656.4 556.5
Currency translation and other adjustments (73.4) (66.5)
-------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 1,267.8 1,174.5
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$4,092.0 $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)
Six Months Ended June 30 1995 1994
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<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 74.8 $ 101.0
INVESTING ACTIVITIES:
Finance receivables originated (603.3) (564.2)
Collections on finance receivables 474.8 403.3
Net (increase) decrease in wholesale receivables (25.6) 32.0
Marketable securities purchased (752.8) (772.5)
Marketable securities sales and maturities 752.3 775.0
Acquisition of controlling interest in affiliate,
net of cash consolidated 44.3
Acquisition of property, plant and equipment (36.7) (20.3)
Acquisition of equipment for operating leases (5.8) (10.9)
Proceeds from asset disposals 15.5 11.2
Other (3.1) (3.5)
---------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (184.7) (105.6)
FINANCING ACTIVITIES:
Net increase (decrease) in commercial paper and bank loans 146.2 (153.5)
Cash dividends (97.1) (55.0)
Proceeds of long-term debt 243.1 352.8
Payment of long-term debt (205.2) (90.3)
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Net Cash Provided by Financing Activities 87.0 54.0
Effect of exchange rate changes on cash (8.6) (4.2)
---------------------------------------------------------------------------------------------------------------
Net (Decrease) Increase in Cash and Equivalents (31.5) 45.2
Cash and equivalents at beginning of period 311.3 223.2
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Cash and equivalents at end of period $ 279.8 $ 268.4
===============================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE> 7
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
-------------------------------------------------------------------------------
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.
<TABLE>
<CAPTION>
NOTE B--Inventories
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June 30 December 31
1995 1994
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<S> <C> <C>
Inventories at FIFO cost: (Unaudited)
Finished products $206.0 $188.6
Work in process and raw materials 175.0 210.2
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381.0 398.8
Less excess of FIFO cost over LIFO (128.8) (124.3)
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$252.2 $274.5
=============================================================================================
</TABLE>
Under the LIFO method of accounting (used for approximately 82% of June 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 reached a new all-time high for consolidated sales in the
second quarter, and recorded net income of $65.1 million which
represented record earnings from operations. For the first half, net
sales increased 13 percent while net income gained 27 percent
compared to year-earlier amounts. Nearly all of PACCAR's divisions
reported improved results in 1995, which more than offset the
marginally unprofitable Mexican operations.
Manufacturing income before taxes rose 27% for the quarter and 24%
for the year-to-date compared to 1994. All major divisions including
truck, winch, oilfield equipment and auto parts reported improved
sales and profits.
While manufacturing profits increased, gross margin percentages
declined slightly compared to 1994. The effect of severe sales
declines at PACCAR's Mexican affiliate, VILPAC, S.A., offset
percentage improvements attained by the Company's other truck
operations.
Truck backlog levels at the end of the second quarter remained high
in the U.S. and Canada. Operations at plants producing for these
markets continued at near capacity levels.
Among PACCAR's international truck operations, the pending expiration
of a tax incentive helped boost sales and profits in Australia.
However, continuing poor economic conditions in Mexico severely
limited sales for VILPAC.
PACCAR's other product areas include winches, oilfield equipment and
auto parts. All three divisions attained significant profitability
improvements on higher sales for both the second quarter and first
half of 1995 compared to last year. Oilfield equipment results
benefited from consolidation of operations and the acquisition of a
new product line in 1994. For the Auto Parts segment, increases in
comparable store sales drove the improvement in results.
In the Financial Services segment, net finance receivable portfolios
increased by over 5% compared to December 31, 1994, levels, and
advanced more than 18% above prior year balances. Nearly all of
PACCAR's finance and leasing operations attained higher profitability
in the second quarter and first half of 1995 compared to the
corresponding periods of 1994. However, improvements in both the
first and second quarters, attributable to loan and lease portfolio
growth, were offset by higher loan loss provisions and operating
losses recorded in Mexico by VILPAC's financial subsidiary.
-8-
<PAGE> 9
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES:
PACCAR's ratio of manufacturing current assets to current liabilities
at June 30, 1995, improved to 1.79, from 1.53 at year-end.
In the first half of 1995, the Company used cash from operations
together with net borrowings and cash reserves to fund the net
increase in Financial Services receivables, pay the special year-end
and regular quarterly cash dividends, and increase its net investment
in fixed assets and equipment for operating leases. The net increase
in borrowings consisted primarily of commercial paper and short-term
bank loans. The decrease in 1995 of cash from operations is
principally attributable to changes in components of working capital.
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 June 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. The 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 June 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
--------------------------------
(Registrant)
Date August 8, 1995 By /s/ G. D. Hatchel
-------------- -------------------------------
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 six months ended June 30, 1995 and
1994, and the condensed consolidated balance sheets, June 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 279,800
<SECURITIES> 251,500
<RECEIVABLES> 2,699,400
<ALLOWANCES> 0
<INVENTORY> 252,200
<CURRENT-ASSETS> 0
<PP&E> 376,200
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,092,000
<CURRENT-LIABILITIES> 0
<BONDS> 1,046,500
<COMMON> 466,300
0
0
<OTHER-SE> 801,500
<TOTAL-LIABILITY-AND-EQUITY> 4,092,000
<SALES> 2,329,000
<TOTAL-REVENUES> 2,459,600
<CGS> 2,019,000
<TOTAL-COSTS> 2,088,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 6,800
<INTEREST-EXPENSE> 900
<INCOME-PRETAX> 186,700
<INCOME-TAX> 67,300
<INCOME-CONTINUING> 119,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 119,400
<EPS-PRIMARY> 3.07
<EPS-DILUTED> 3.07
</TABLE>
