<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 1996
[ ] 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
- ---------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
777 - 106th Ave. N.E., Bellevue, WA 98004
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(206) 455-7400
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(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--38,862,359 shares as of July 31, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
- --------------------------------------------------------------------------------
INDEX
Page
----
PART I. FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Statements of Income --
Three and Six Months Ended June 30, 1996 and 1995 . . . . . 3
Condensed Consolidated Balance Sheets --
June 30, 1996, and December 31, 1995. . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows --
Six Months Ended June 30, 1996 and 1995 . . . . . . . . . . 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
-2-
<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
- ---------------------------------------------
Consolidated Statements of Income (Unaudited)
(Millions except per share data)
- ---------------------------------------------
- ---------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
- -----------------------------------------------------------------------------------------------
1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MANUFACTURING AND PARTS:
Revenues
Net sales $1,033.9 $1,205.3 $2,061.6 $2,329.0
Other 4.6 1.6 4.8 7.5
- -----------------------------------------------------------------------------------------------
1,038.5 1,206.9 2,066.4 2,336.5
Costs and Expenses
Cost of sales 897.4 1,040.3 1,792.4 2,019.3
Selling, general and administrative 82.0 83.9 181.7 168.8
Interest .5 .4 1.1 .9
- -----------------------------------------------------------------------------------------------
979.9 1,124.6 1,975.2 2,189.0
- -----------------------------------------------------------------------------------------------
Manufacturing and Parts Income
Before Income Taxes 58.6 82.3 91.2 147.5
FINANCIAL SERVICES:
Revenues 66.6 63.1 133.5 123.1
Costs and Expenses
Interest and other 36.8 35.5 74.0 69.1
Selling, general and administrative 11.6 11.4 23.4 22.2
Provision for losses on receivables 1.6 2.0 2.7 6.8
- -----------------------------------------------------------------------------------------------
50.0 48.9 100.1 98.1
- -----------------------------------------------------------------------------------------------
Financial Services Income
Before Income Taxes 16.6 14.2 33.4 25.0
OTHER:
Investment income 6.9 6.5 13.1 12.9
Other .4 .5 .7 1.3
- -----------------------------------------------------------------------------------------------
Total Income Before Income Taxes 82.5 103.5 138.4 186.7
Income taxes 30.8 38.4 51.0 67.3
- -----------------------------------------------------------------------------------------------
Net Income $ 51.7 $ 65.1 $ 87.4 $ 119.4
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
Weighted average number of
common shares outstanding 38.9 38.9 38.9 38.9
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
Per Share Data:
Net income $ 1.33 $ 1.67 $ 2.25 $ 3.07
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
Dividends declared $ .25 $ .25 $ .50 $ .50
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
-3-
<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Condensed Consolidated Balance Sheets June 30 December 31
ASSETS (Millions of Dollars) 1996 1995*
- --------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING AND PARTS: (Unaudited)
Current Assets
Cash and equivalents $ 103.7 $ 172.0
Trade receivables, net 269.1 227.7
Marketable securities 454.6 437.3
Inventories 219.3 239.5
Deferred taxes and other current assets 56.7 60.1
- --------------------------------------------------------------------------------
Total Manufacturing and Parts Current Assets 1,103.4 1,136.6
Deferred Taxes, Goodwill and Other 81.7 87.3
Property, Plant and Equipment, Net 445.1 422.3
- --------------------------------------------------------------------------------
Total Manufacturing and Parts Assets 1,630.2 1,646.2
- --------------------------------------------------------------------------------
FINANCIAL SERVICES:
Cash and equivalents 12.2 12.0
Finance and other receivables, net of
allowance for losses 2,894.8 2,887.7
Less unearned interest (225.8) (224.4)
- --------------------------------------------------------------------------------
2,669.0 2,663.3
Equipment on operating leases, net 44.4 49.8
Other assets 19.4 19.2
- --------------------------------------------------------------------------------
Total Financial Services Assets 2,745.0 2,744.3
- --------------------------------------------------------------------------------
$4,375.2 $4,390.5
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
-4-
<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
June 30 December 31
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995*
- --------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING AND PARTS: (Unaudited)
Current Liabilities
Accounts payable and accrued expenses $ 602.8 $ 559.1
Income taxes 13.0 11.6
Dividend payable 116.6
Other .5 .5
- --------------------------------------------------------------------------------
Total Manufacturing and Parts Current Liabilities 616.3 687.8
Long-Term Debt 12.0 10.7
Other 134.3 118.1
- --------------------------------------------------------------------------------
Total Manufacturing and Parts Liabilities 762.6 816.6
- --------------------------------------------------------------------------------
FINANCIAL SERVICES:
Accounts payable and accrued expenses 48.3 70.1
Commercial paper and bank loans 979.2 952.4
Long-term debt 1,120.7 1,149.6
Deferred income taxes and other 143.3 150.6
- --------------------------------------------------------------------------------
Total Financial Services Liabilities 2,291.5 2,322.7
- --------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock, no par value:
Authorized 1.0 million shares, none issued
Common stock, $12 par value: Authorized 100.0 million
shares, issued 38.9 million shares 466.3 466.3
Additional paid-in capital 218.7 218.7
Retained earnings 721.8 653.8
Currency translation and
net unrealized investment adjustments (85.7) (87.6)
- --------------------------------------------------------------------------------
Total Stockholders' Equity 1,321.1 1,251.2
- --------------------------------------------------------------------------------
$4,375.2 $4,390.5
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
* The December 31, 1995 condensed consolidated balance sheet has been derived
from audited financial statements.
See Notes to Consolidated Financial Statements.
-5-
<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Millions of Dollars)
- --------------------------------------------------------------------------------
Six Months Ended June 30 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 131.5 $ 80.3
INVESTING ACTIVITIES:
Finance receivables originated (627.6) (603.3)
Collections on finance receivables 551.2 469.1
Net (increase) decrease in wholesale receivables 66.3 (25.6)
Marketable securities purchased (1,004.4) (758.3)
Marketable securities sales and maturities 983.0 752.3
Acquisition of property, plant and equipment (40.7) (36.7)
Acquisition of equipment for operating leases (3.1) (5.8)
Proceeds from asset disposals 24.3 21.2
Other (1.7) (3.1)
- --------------------------------------------------------------------------------
Net Cash Used in Investing Activities (52.7) (190.2)
FINANCING ACTIVITIES:
Net increase in commercial paper and bank loans 21.4 146.2
Cash dividends (136.0) (97.1)
Proceeds of long-term debt 244.9 243.1
Payment of long-term debt (276.3) (205.2)
- --------------------------------------------------------------------------------
Net Cash (Used in) Provided by Financing Activities (146.0) 87.0
Effect of exchange rate changes on cash (.9) (8.6)
- --------------------------------------------------------------------------------
Net Decrease in Cash and Equivalents (68.1) (31.5)
Cash and equivalents at beginning of period 184.0 311.3
- --------------------------------------------------------------------------------
Cash and equivalents at end of period $ 115.9 $ 279.8
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
-6-
<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements (Millions of Dollars)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 1995.
RECLASSIFICATIONS: Certain prior year amounts have been reclassified to conform
to the 1996 presentation.
<TABLE>
<CAPTION>
NOTE B--Inventories
- --------------------------------------------------------------------------------
June 30 December 31
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Inventories at FIFO cost: (Unaudited)
Finished products $205.4 $201.6
Work in process and raw materials 149.6 170.5
- --------------------------------------------------------------------------------
355.0 372.1
Less excess of FIFO cost over LIFO (135.7) (132.6)
- --------------------------------------------------------------------------------
$219.3 $239.5
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Under the LIFO method of accounting (used for approximately 82% of June 30,
1996, 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 1996 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.
-7-
<PAGE>
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 sales for the second quarter remained at levels similar to
first quarter 1996, but below the record levels achieved in 1995 for
both the quarter and the half. Net income for the second quarter of
1996 decreased 21% to $51.7 million from $65.1 million a year earlier.
First half net income of $87.4 million was 27% below the $119.4
million attained in the corresponding period in 1995.
Manufacturing and Parts income before income taxes decreased 29% for
the quarter and 38% for the half compared to corresponding amounts in
1995. Lower profitability was attributable primarily to a truck
industry downturn which has reduced demand for heavy and medium duty
trucks in most of the markets PACCAR serves, worldwide. Year-to-date
profitability was impacted as well by $18 million in pretax costs to
eliminate excess production capacity. These costs were recognized in
the first quarter and are included as a component of selling, general
and administrative expense.
Among PACCAR's international truck operations, first half
profitability in the United Kingdom compared favorably to the prior
year. Truck production volumes increased modestly in Mexico, but
declined in Australia for both the second quarter and first six months
compared to 1995.
Other product areas for PACCAR include auto parts, winches and
oilfield equipment. The auto parts segment showed improved
profitability on moderately higher sales for both the quarter and
first six months of 1996, while winch and oilfield operations
reflected lower sales and profits for the same periods.
PACCAR's Financial Services Segment pretax earnings for the second
quarter increased 17% over the year-earlier quarter primarily as a
result of the effect of a larger overall portfolio established during
last year's record truck sales. Net loan and lease portfolios at
quarter end have grown 11% compared to balances at June 30, 1995. The
favorable comparison for the first six months of 1996 also resulted in
part from lower credit loss provisions.
In other business, the Board of Directors at its meeting on July 22,
1996, announced that it will elect Mark C. Pigott chairman and chief
executive of PACCAR Inc at its December meeting, to be effective
January 1, 1997.
-8-
<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES:
PACCAR's ratio of manufacturing and parts current assets to current
liabilities at June 30, 1996 improved to 1.79 from 1.65 at December
31, 1995.
In the first half of 1996, the Company used cash from operations
primarily to pay the special year-end and regular quarterly cash
dividends. In addition, approximately $60 million of cash reserves
were used to make capital additions, fund a small net increase in
financial services receivables, invest in additional marketable
securities and reduce combined net long and short term debt.
The increase in cash from operations compared to 1995 was attributable
to changes in components of working capital.
Other information on liquidity and capital resources as presented in
the 1995 Annual Report to Stockholders continues to be relevant.
-9-
<PAGE>
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, 1996
Reportable information in response to Item 4 was previously reported in the
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996.
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
June 30, 1996
-10-
<PAGE>
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 7, 1996 By /s/ G. D. Hatchel
------------------------- --------------------------------
G. D. Hatchel
Vice President and Controller
(Authorized Officer and
Chief Accounting Officer)
-11-
<PAGE>
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).
-12-
<PAGE>
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).
(g) Forms of Medium-Term Note, Series H (incorporated by reference to
Exhibits 4.3A and 4.3B to PACCAR Financial Corp.'s Registration
Statement on Form S-3 dated March 11, 1996, Registration Number
333-01623).
Form of Letter of Representation among PACCAR Financial Corp.,
Citibank, N.A. and the Depository Trust Company, Series H
(incorporated by reference to Exhibit 4.4 to PACCAR Financial Corp.'s
Registration Statement on Form S-3 dated March 11, 1996, Registration
Number 333-01623).
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>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statements of income for the six months ended June 30, 1996 and
1995, and the condensed consolidated balance sheets, June 30, 1996, and December
31, 1995, 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-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 115,900
<SECURITIES> 454,600
<RECEIVABLES> 2,938,100
<ALLOWANCES> 0
<INVENTORY> 219,300
<CURRENT-ASSETS> 0
<PP&E> 445,100
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,375,200
<CURRENT-LIABILITIES> 0
<BONDS> 1,132,700
0
0
<COMMON> 466,300
<OTHER-SE> 854,800
<TOTAL-LIABILITY-AND-EQUITY> 4,375,200
<SALES> 2,061,600
<TOTAL-REVENUES> 2,199,900
<CGS> 1,792,400
<TOTAL-COSTS> 1,866,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,700
<INTEREST-EXPENSE> 1,100
<INCOME-PRETAX> 138,400
<INCOME-TAX> 51,000
<INCOME-CONTINUING> 87,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 87,400
<EPS-PRIMARY> 2.25
<EPS-DILUTED> 2.25
</TABLE>
