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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [Fee Required]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
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 of incorporation) (I.R.S. Employer Identification No.)
777 - 106TH AVE. N.E., BELLEVUE, WASHINGTON 98004
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (206) 455-7400
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $12 par value
Preferred Stock Purchase Rights
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(Title of Class)
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 periods 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 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. [x]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 1, 1996:
COMMON STOCK, $12 PAR VALUE -- $1,636,758,926
The number of shares outstanding of the issuer's classes of common stock, as of
March 1, 1996:
COMMON STOCK, $12 PAR VALUE -- 38,862,359 SHARES
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the year ended December 31,
1995 are incorporated by reference into Parts I and II.
Portions of the proxy statement for the annual stockholders meeting to be held
on April 30, 1996 are incorporated by reference into Part III.
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PART I
ITEM 1. BUSINESS
(a) General Development of Business
PACCAR Inc (the Company), incorporated under the laws of Delaware in 1971, is
the successor to Pacific Car and Foundry Company which was incorporated in
Washington in 1924. The Company traces its predecessors to Seattle Car
Manufacturing Company formed in 1905.
In the U.S., the Company's manufacturing operations are conducted through
unincorporated manufacturing divisions and a wholly owned subsidiary. Each of
the divisions and the subsidiary are responsible for at least one of the
Company's products. That responsibility includes new product development,
applications engineering, manufacturing and marketing. Outside the U.S., the
Company manufactures and sells through wholly owned foreign subsidiary companies
in Canada, Australia and Mexico, and the United Kingdom through a wholly owned
U.S. subsidiary. In August 1995, the Company acquired the remaining 45%
ownership of VILPAC, S.A. (VILPAC), its Mexican affiliate. An export sales
division generally is responsible for export sales. Product financing and
leasing is offered through U.S. and foreign finance subsidiaries. A U.S.
subsidiary is responsible for retail automotive parts sales.
(b) Financial Information About Industry Segments and Geographic Areas
Information about the Company's industry segments and geographic areas in
response to Items 101(b), (c)(1)(i), and (d) of Regulation S-K appears on
pages 38 and 39 of the Annual Report to Stockholders for the year ended
December 31, 1995 and is incorporated herein by reference.
(c) Narrative Description of Business
The Company has three principal industry segments, (1) manufacture of heavy-
duty trucks and distribution of related parts, (2) automotive parts sales and
related services, and (3) finance and leasing services provided to customers and
dealers. Manufactured products also include industrial winches and oilfield
equipment. The Company competes in the truck parts aftermarket primarily through
its dealer network. It sells general automotive parts and accessories through
retail outlets. The Company's finance and leasing activities are principally
related to Company products and associated equipment.
TRUCKS
The Company designs and manufactures trucks which are marketed under the
Peterbilt, Kenworth, and Foden nameplates in the Class 8 diesel category (having
a minimum gross vehicle weight of 33,000 pounds). These vehicles, which are
built in five plants in the U.S. and one each in Australia, Canada, the United
Kingdom and Mexico, are used worldwide for over-the-road and off-highway
heavy-duty hauling of freight, petroleum, wood products, construction and other
materials. Heavy-duty trucks and related service parts are the largest segment
of the Company's business, accounting for 89% of total 1995 revenues.
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The Company competes in the North American Class 6/7 markets with cab-
over-engine and conventional models. These medium-duty trucks are assembled at
several PACCAR factories in North America. In the third quarter of 1995, the
Company relocated Kenworth North American Class 7 production from Ste. Therese,
Canada to VILPAC, its Mexican subsidiary in Mexicali, Mexico. This line of
business represents a small percentage of the Company's sales to date.
Trucks are sold to independent dealers for resale. The Company's U.S.
independent dealer network consists of 292 outlets. Trucks manufactured in the
U.S. for export are marketed by PACCAR International, a U.S. division. Those
sales are made through a worldwide network of 38 dealers. Trucks manufactured in
Canada, Australia, Mexico and the United Kingdom are marketed domestically
through independent dealers and factory branches; trucks manufactured in these
countries for export are also marketed by PACCAR International.
The Company's trucks are essentially custom products and have a reputation
for high quality. Major components, such as engines, transmissions and axles, as
well as a substantial percentage of other components, are purchased from
component manufacturers pursuant to customer specifications.
Raw materials and other components used in the manufacture of trucks are
purchased from a number of suppliers. The Company is not limited to any single
source for any major component. No significant shortages of materials or
components were experienced in 1995 and none are expected in 1996. Manufacturing
inventory levels are based upon production schedules and orders are placed with
suppliers accordingly.
Replacement truck parts are sold and delivered to the Company's independent
dealers through the PACCAR Parts Division. Parts are both manufactured by PACCAR
and purchased from various suppliers. Replacement parts inventory levels are
determined largely by anticipated customer demand and the need for timely
delivery.
There were six principal competitors in the U.S. Class 8 truck market in
1995. PACCAR's share of that market was approximately 21% of registrations in
1995. The market is highly competitive in price, quality and service, and PACCAR
is not dependent on any single customer for its sales. There are no significant
seasonal variations.
The Kenworth, Peterbilt and Foden trademarks and trade names are recognized
internationally and play an important role in the marketing of the Company's
truck products. The Company engages in a continuous program of trademark and
trade name protection in all marketing areas of the world.
Although the Company's truck products are subject to environmental noise and
emission controls, competing manufacturers are subject to the same controls. The
Company believes the cost of complying with noise and emission controls will not
be detrimental to its business.
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The Company's truck sales backlog (subject to cancellation in certain events)
at year-end 1995 was approximately $2 billion. This compares with $3.1 billion
at year-end 1994. Production of the year-end 1995 backlog is expected to be
completed during 1996.
The number of persons employed by the Company in its truck business at
December 31, 1995 was approximately 10,000.
OTHER MANUFACTURED PRODUCTS
Other products manufactured by the Company account for 3% of total 1995
revenues. This group includes industrial winches and oilfield extraction pumps
and service equipment. Winches are manufactured in two U.S. plants and are
marketed under the Braden, Carco, and Gearmatic nameplates. Oilfield extraction
pumps and service equipment are marketed under the Trico, Kobe, Unidraulic and
Oilmaster nameplates through the Company's wholly owned subsidiary, Trico. In
1995 Trico relocated its headquarters and consolidated its manufacturing to
locations in Texas. The markets for all of these products are highly competitive
and the Company competes with a number of well established firms.
The Braden, Carco, Gearmatic, Trico, Kobe, Unidraulic and Oilmaster
trademarks and trade names are recognized internationally and play an important
role in the marketing of those products. The Company has an ongoing program of
trademark and trade name protection in all relevant marketing areas.
AUTOMOTIVE PARTS
The Company purchases and sells general automotive parts and accessories,
which account for 4% of total 1995 revenues, through 124 retail locations under
the names of Grand Auto and Al's Auto Supply. These locations are supplied from
the Company's distribution warehouses.
FINANCE COMPANIES
In North America, Australia and the United Kingdom, the Company provides
financing principally for its manufactured trucks through five wholly owned
finance companies. These companies provide inventory financing for independent
dealers selling PACCAR products and retail and lease financing for new and used
Class 6, 7 and 8 trucks and other transportation equipment sold by its
independent dealers. Customer contracts are secured by the products financed.
LEASING COMPANIES
PACCAR Leasing Corporation (PLC), a wholly owned subsidiary, franchises
selected PACCAR truck dealers to engage in full service truck leasing under the
PacLease trade name. PLC also leases equipment to and provides managerial and
sales support for its franchisees. A division of PACCAR of Canada Ltd. conducts
similar leasing operations in Canada. RAILEASE Inc, a wholly owned subsidiary,
leases railcars to a railroad.
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GENERAL INFORMATION
PATENTS
The Company owns numerous patents which relate to all product lines. Although
these patents are considered important to the overall conduct of the Company's
business, no patent or group of patents is considered essential to a material
part of the Company's business.
RESEARCH AND DEVELOPMENT
The Company maintains a technical center where product testing and research
and development activities are conducted. Additional product development
activities are conducted within each separate manufacturing division. Amounts
spent on research and development were approximately $37 million in 1995, $35
million in 1994 and $22 million in 1993.
REGULATION
As a manufacturer of highway trucks, the Company is subject to the National
Traffic and Motor Vehicle Safety Act and Federal Motor Vehicle Safety Standards
promulgated by the National Highway Traffic Safety Administration. The Company
believes it is in compliance with the Act and applicable safety standards.
Information regarding the effects that compliance with federal, state and
local provisions regulating the environment have on the Company's capital and
operating expenditures and the Company's involvement in environmental cleanup
activities is included in Management's Discussion and Analysis of Financial
Condition and Results of Operations and the Company's Consolidated Financial
Statements incorporated by reference in Items 7 and 8, respectively.
EMPLOYEES
On December 31, 1995, the Company employed a total of approximately 14,000
persons.
ITEM 2. PROPERTIES
The Company and its subsidiaries own and operate manufacturing plants in five
U.S. states, Canada, Australia, Mexico and the United Kingdom. Several parts
distribution centers, sales and service facilities and finance and
administrative offices are also operated in owned or leased premises in these
five countries. A facility for product testing and research and development is
located in Skagit County, Washington. Retail auto parts sales locations are
primarily in leased premises in five western states. The Company's corporate
headquarters is located in owned premises in Bellevue, Washington.
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The Company considers substantially all of the properties used by its
businesses to be suitable for their intended purposes. Due to improved business
conditions in 1995 in the markets served by the Company's business segments,
many of the Company's manufacturing facilities operated at or near their
productive capacities.
Geographical locations of manufacturing plants within indicated industry
segments are as follows:
<TABLE>
<CAPTION>
United
U.S. Canada Australia Mexico Kingdom
<S> <C> <C> <C> <C> <C>
Trucks 5 1 1 1 1
Other 4 - - - -
</TABLE>
Properties located in Torrance, and Huntington Park, California; Bradford,
Pennsylvania; and Seattle, Washington are being held for sale. These properties
were originally obtained principally as a result of business acquisitions in
1987 and 1988.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are parties to various lawsuits incidental
to the ordinary course of business. Management believes that the disposition of
such lawsuits will not materially affect the Company's consolidated financial
position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 1995.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Common Stock Market Prices and Dividends on page 40 of the Annual Report to
Stockholders for the year ended December 31, 1995 are incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Data on page 41 of the Annual Report to Stockholders for
the year ended December 31, 1995 are incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 21 through 24 of the Annual Report to Stockholders for the
year ended December 31, 1995 is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the registrant and its
subsidiaries, included in the Annual Report to Stockholders for the year ended
December 31, 1995 are incorporated herein by reference:
Consolidated Balance Sheets
-- December 31, 1995 and 1994
Consolidated Statements of Income
-- Years Ended December 31, 1995, 1994 and 1993
Consolidated Statements of Stockholders' Equity
-- Years Ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows
-- Years Ended December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
-- December 31, 1995, 1994 and 1993
Quarterly Results (Unaudited) on page 41 of the Annual Report to Stockholders
for the years ended December 31, 1995 and 1994 are incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The registrant has not had any disagreements with its independent auditors
on accounting or financial disclosure matters.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Item 401(a), (d), (e) and Item 405 of Regulation S-K:
Identification of directors, family relationships, business experience and
compliance with Section 16(a) of the Exchange Act on pages 3 and 4 of the proxy
statement for the annual stockholders meeting of April 30, 1996 is incorporated
herein by reference.
Item 401(b) of Regulation S-K:
Executive Officers of the registrant as of February 1, 1996:
Present Position and Other Position(s)
Name and Age Held During Last Five Years
- ------------ -----------------------------------------------------
Charles M. Pigott (66) Chairman and Chief Executive Officer. Mr. Pigott is
the father of Mark C. Pigott, a director of the
Company and also an executive officer, and brother of
James C. Pigott, a director of the Company.
David J. Hovind (55) President; Executive Vice President from July 1987 to
January 1992.
Mark C. Pigott (41) Vice Chairman; Executive Vice President from December
1993 to January 1995; previously Senior Vice
President. Mr. Pigott is the son of Charles M.
Pigott, a director of the Company and also an
executive officer, and nephew of James C. Pigott, a
director of the Company.
Michael A. Tembreull (49) Vice Chairman; Executive Vice President from January
1992 to January 1995; previously Senior Vice
President.
Gary S. Moore (52) Senior Vice President; General Manager, Kenworth
Truck Company from March 1990 to August 1992.
T. Ron Morton (49) Senior Vice President; President, PACCAR Financial
Corp. since August, 1988.
G. Don Hatchel (51) Vice President, Controller; Assistant Vice President
and Controller from June 1990 to January 1991.
G. Glen Morie (53) Vice President and General Counsel.
Officers are elected annually but may be appointed or removed on interim dates.
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ITEM 11. EXECUTIVE COMPENSATION
Compensation of Directors and Executive Officers and Related Matters on pages
6 through 12 of the proxy statement for the annual stockholders meeting of April
30, 1996 is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Stock ownership information on pages 1 through 3 of the proxy statement for
the annual stockholders meeting of April 30, 1996 is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information on page 5 of the proxy statement for the annual stockholders
meeting of April 30, 1996 is incorporated herein by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) and (2) - The response to this portion of Item 14 is submitted as
a separate section of this report.
(3) Listing of Exhibits (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 (incorpo-
rated 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 Finan-
cial 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).
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(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).
(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).
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(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).
(13) Annual report to security holders
Portions of the 1995 Annual Report to Shareholders have been
incorporated by reference and are filed herewith.
(21) Subsidiaries of the registrant
(23) Consent of independent auditors
(24) Power of attorney
Powers of attorney of certain directors
(27) Financial Data Schedule
(b) No reports on Form 8-K were filed for the three months ended December
31, 1995.
(c) Exhibits
(d) Financial Statement Schedules -- The response to this portion of Item 14
is submitted as a separate section of this report.
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SIGNATURES
Pursuant to the requirements of Section 13 or 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.
PACCAR INC
-------------------------------------
Registrant
/s/ C. M. Pigott
-------------------------------------
C. M. Pigott, Director, Chairman and
Chief Executive Officer
Date: MARCH 25, 1996
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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 indicated.
SIGNATURE
TITLE
/s/ M. A. Tembreull Director and Vice Chairman
- -------------------------------------- (Principal Financial Officer)
M. A. Tembreull
/s/ G. D. Hatchel Vice President and Controller
- -------------------------------------- (Principal Accounting Officer)
G. D. Hatchel
*/s/ M. C. Pigott Director and Vice Chairman
- --------------------------------------
M. C. Pigott
*/s/ D. J. Hovind Director and President
- --------------------------------------
D. J. Hovind
*/s/ J. W. Pitts Director and Chairman of
- -------------------------------------- Audit Committee
J. W. Pitts
*/s/ J. C. Pigott Director and Audit Committee Member
- --------------------------------------
J. C. Pigott
*/s/ J. M. Fluke, Jr. Director and Audit Committee Member
- --------------------------------------
J. M. Fluke, Jr.
*/s/ H. J. Haynes Director
- --------------------------------------
H. J. Haynes
*/s/ J. H. Wiborg Director
- --------------------------------------
J. H. Wiborg
*/s/ R. P. Cooley Director
- --------------------------------------
R. P. Cooley
*/s/ C. H. Hahn Director
- --------------------------------------
C. H. Hahn
*By /s/ C. M. Pigott
- --------------------------------------
C. M. Pigott
Attorney-in-Fact
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ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) AND (2), (c) AND (d)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
CERTAIN EXHIBITS
FINANCIAL STATEMENT SCHEDULES
YEAR ENDED DECEMBER 31, 1995
PACCAR INC AND SUBSIDIARIES
BELLEVUE, WASHINGTON
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FORM 10-K -- ITEM 14(a)(1) AND (2)
PACCAR INC AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of PACCAR Inc and subsidiaries,
included in the Annual Report to Stockholders for the year ended December 31,
1995 are incorporated by reference in Item 8:
Consolidated Balance Sheets
-- December 31, 1995 and 1994
Consolidated Statements of Income
-- Years Ended December 31, 1995, 1994 and 1993
Consolidated Statements of Stockholders' Equity
-- Years Ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows
-- Years Ended December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
-- December 31, 1995, 1994 and 1993
The following consolidated financial statement schedule of PACCAR Inc and
consolidated subsidiaries is included in Item 14(d):
Schedule II -- Allowances for Losses
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
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PACCAR INC AND SUBSIDIARIES
SCHEDULE II - ALLOWANCES FOR LOSSES
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
Additions
Balance at Charged to Balance
Year Ended Beginning Costs and at End
December 31: of Period Expenses Deductions(1) of Period
- ------------ ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
1995
(A)Manufacturing $ 4.3 $ .1 $(1.4) $ 5.8
(B)Financial Services 41.1 14.3 (1.4) 56.8
----- ----- ----- -----
$45.4 $14.4 $(2.8) $62.6
1994
(A)Manufacturing $ 2.2 $ 1.3 $ (.8) $ 4.3
(B)Financial Services 32.9 4.0 (4.2) 41.1
----- ----- ----- -----
$35.1 $ 5.3 $(5.0) $45.4
1993
(A)Manufacturing $ 3.0 $ $ .8 $ 2.2
(B)Financial Services 30.9 9.2 7.2 32.9
----- ----- ----- -----
$33.9 $ 9.2 $ 8.0 $35.1
</TABLE>
(A) Allowance for losses deducted from trade receivables.
(B) Allowance for losses deducted from notes, contracts, and other receivables.
(1) Uncollectible trade receivables, notes, contracts and other receivables
written off, net of recoveries.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(TABLES IN MILLIONS)
RESULTS OF OPERATIONS:
<TABLE>
<CAPTION>
1995 1994 1993
- ---------------------------------------------------
<S> <C> <C> <C>
Income Before Taxes:*
Manufacturing $303.4 $255.1 $160.6
Financial Services 53.3 57.5 40.2
Investment income 27.7 24.1 17.9
Minority interest and
other 15.2 (16.6) 1.1
Income taxes (146.8) (115.6) (77.6)
- ----------------------------------------------------
Net Income $252.8 $204.5 $142.2
- ----------------------------------------------------
- ----------------------------------------------------
</TABLE>
* VILPAC, S.A. IS REPORTED ON A CONSOLIDATED BASIS BEGINNING IN 1994.
OVERVIEW:
Net income in 1995 increased to $252.8 million, or $6.50 per share, compared to
$204.5 million, or $5.26 per share, in 1994. Strong demand for Class 8 trucks,
particularly in the United States and Canada, helped drive sales, net income and
truck unit production to record levels. PACCAR set these records despite the
ongoing difficulties in the Mexican economy.
Manufacturing income before taxes rose to $303.4 million in 1995, compared
to $255.1 million in 1994. The improvement resulted from increased margins and
lower net selling, general and administrative (SG&A) expense. In 1995, SG&A
expense decreased due to lower spending by VILPAC, S.A., the Company's Mexican
subsidiary, partially offset by higher product development costs incurred by the
Truck segment. Results in 1994 also were impacted by costs to consolidate the
Company's oilfield equipment manufacturing operations to locations in Texas.
Financial Services pretax income decreased to $53.3 million in 1995 from
$57.5 million in 1994. While nearly all locations reported improved
profitability, the Mexican operation's loan loss provisions more than offset the
gains.
Minority interest and other in 1995 includes a gain from the favorable
resolution of litigation involving environmental cost reimbursements and the
minority interest share of losses from VILPAC. The 1994 amount represents
primarily the minority interest share of VILPAC earnings before taxes.
After acquiring controlling interest of VILPAC in 1994, PACCAR purchased
the remaining interest in 1995. Accordingly, beginning in 1994, the operations
and financial position of VILPAC have been included in the Company's
consolidated financial statements.
PACCAR's consolidated results are most heavily influenced by the Truck
segment. New orders for Class 8 trucks began to slow in 1995 across the entire
industry. The lower order rate, which has continued into 1996, suggests the
market has returned to more moderate demand levels.
TRUCKS
The Truck segment includes all of the Company's domestic and international truck
manufacturing and related aftermarket parts distribution operations.
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------
<S> <C> <C> <C>
Truck revenues $4,291.6 $4,029.1 $3,130.9
- ------------------------------------------------------------
Pretax Income $321.1 $299.4 $194.0
- ------------------------------------------------------------
</TABLE>
1995 COMPARED TO 1994:
PACCAR's worldwide truck revenues increased 6.5% over 1994 levels to $4.3
billion and income before taxes from truck operations improved 7.2% to $321
million. PACCAR sold more than 54,000 trucks worldwide in 1995, breaking the
previous sales record. Truck segment revenues accounted for approximately 89% of
consolidated totals in both 1995 and 1994.
Higher sales volumes provided most of the $21.7 million improvement in
segment pretax income despite the severe sales decline in Mexico.
Class 8 truck registrations in the United States increased 9% in 1995 to
207,000 units. In spite of capacity constraints at PACCAR's factories in the
United States, the Company attained a market share of 21%, a slight decline from
the 22% market share achieved in 1994.
Revenues and profits from export sales in 1995 through PACCAR International
Division were substantially improved over 1994. The Company continued to seek
ways to expand its geographic coverage of the world truck markets and to
increase market share in markets where its presence is already established.
PACCAR INC AND SUBSIDIARIES
21
<PAGE>
In August 1995, employees at the Company's plant in Canada went on strike.
Since the commencement of the strike, PACCAR has met demand for Class 8 trucks
in Canada with output from its factories in the United States, and expects to be
able to continue this arrangement for as long as required. The Company reduced
the plant work force and believes a protracted labor dispute will not have a
materially adverse impact on future consolidated results.
The percentage of 1995 consolidated revenues from PACCAR operations outside
the United States and Canada declined to 7.5% from 14% in 1994. Mexican
operations accounted for the majority of the decrease. Continuing economic
difficulties in Mexico indicate recovery may occur slowly in that market.
Combined sales and earnings of the Company's truck operations in Australia and
the United Kingdom decreased slightly from 1994.
PACCAR's Truck Parts Division also benefited from the strong overall truck
market in the United States and Canada, experiencing higher sales and profits in
1995. The division added 25 dealer locations in 1995. In addition, the division
increased market coverage by expanding its selection of maintenance and
replacement products common to all makes of medium and heavy duty trucks. Sales
of truck parts provide a solid base of profitability for the truck segment.
In response to the industry-wide slowing in new truck orders, PACCAR
announced build rate and work force reductions at its plants in the Pacific
Northwest and Chillicothe, Ohio. Additional build rate reductions may be
required as demand for new Class 8 trucks in the United States and Canada
returns to more moderate levels from record levels reached in 1995.
1994 COMPARED TO 1993:
Income before taxes and minority interest from PACCAR's worldwide truck
operations was $299.4 million in 1994 on sales of $4.0 billion. In 1993, truck
operations earned $194.0 million on sales of $3.1 billion. The consolidation of
VILPAC in 1994 accounted for approximately 30% of the increase in sales. PACCAR
sold nearly 53,000 trucks worldwide in 1994, compared to 44,000 in 1993. The
Truck segment provided 89% of PACCAR's consolidated revenues in 1994, compared
to 88% in 1993.
In the United States, a larger overall market and similar market share
established the basis for improved results. Reduction in unit costs from higher
plant capacity utilization combined with modest price increases resulted in
improved gross profit margins.
In Canada, a stronger truck market led to higher unit sales and increased
revenues, which were somewhat offset by lower margins due to the decline in the
Canadian dollar.
PACCAR's truck operations outside the United States and Canada provided 14%
of total truck revenues in 1994 compared to 12% in 1993. International truck
operations achieved improved results primarily due to increased market demand
for trucks and related parts in Australia, Mexico and the United Kingdom. While
each of the foreign truck operations was profitable in 1994, the largest share
was in Mexico.
Revenues and profits from export sales through PACCAR International
Division were lower in 1994 than in 1993 due to reduced demand for vehicles in
certain foreign markets.
PACCAR's truck parts revenues and profits increased in 1994, primarily
because of a better overall truck market and expanded market coverage.
AUTO PARTS
The Auto Parts segment consists of the Company's retail auto parts operations,
located on the West Coast.
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------
<S> <C> <C> <C>
Auto Parts revenues $175.3 $172.1 $172.9
- ------------------------------------------------------------
Pretax Income $5.5 $4.2 $2.2
- ------------------------------------------------------------
- ------------------------------------------------------------
</TABLE>
Auto Parts segment revenues grew modestly in 1995, after remaining flat in
1994. In both years, the segment experienced improvements from the addition of
new stores and modest gains in same store sales. In 1994 however, closure of
unprofitable stores offset the increases. The steady growth in profitability has
come from better customer service and expense controls.
22
<PAGE>
OTHER PRODUCTS
PACCAR's other product lines include winches and oilfield equipment. Combined
revenues increased 33% in 1995 and 7% in 1994 primarily due to strong demand in
the winch sector and Trico's addition of a product line purchased from National-
Oilwell in the fourth quarter of 1994. Combined profits from operations
increased in both 1995 and 1994. However, segment pretax income for 1994
declined compared to 1993 due to the accrual for expenses to consolidate Trico's
operations to locations in Texas.
FINANCIAL SERVICES
The Financial Services segment, including PACCAR Financial Corp., PACCAR Leasing
and the Company's finance subsidiaries in Australia, Canada, Mexico and the
United Kingdom, derives earnings primarily from financing the sale of PACCAR
products.
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------
<S> <C> <C> <C>
Financial Services
revenues $257.5 $210.9 $166.6
- ------------------------------------------------------------
Pretax Income $53.3 $57.5 $40.2
- ------------------------------------------------------------
- ------------------------------------------------------------
</TABLE>
1995 COMPARED TO 1994:
The Company's Financial Services operations earned $53.3 million before tax in
1995, down $4.2 million or 7% compared to 1994. Although consolidated loan and
lease portfolios experienced growth in 1995, pretax income declined, primarily
due to higher loan loss provisions in the Mexican finance company.
In 1995, nearly all of PACCAR's finance and leasing operations experienced
record new business volume concurrent with PACCAR's strong heavy duty truck
sales. The overall credit quality of the loan and lease receivable portfolio
continued to be strong in 1995 due to favorable economic conditions and a
continued focus on credit controls. Finance margin rates were lower in 1995 in
response to competitive pressures. The reserve for losses increased in 1995,
reflecting growth in the portfolio and adverse economic conditions in Mexico.
1994 COMPARED TO 1993:
The Company's Financial Services segment earned $57.5 million before taxes in
1994, up 43% from 1993 results. The increase in pretax earnings reflected
portfolio growth and lower provisions for loan losses.
INVESTMENTS
Investment income increased in 1995 due primarily to higher invested balances
and slightly higher interest rates. The increase in 1994 over 1993 was primarily
a result of consolidating VILPAC operations.
LIQUIDITY AND CAPITAL RESOURCES:
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------
<S> <C> <C> <C>
Cash and equivalents $184.0 $311.3 $223.2
Marketable securities 437.3 241.7 235.7
- ------------------------------------------------------------
$621.3 $553.0 $458.9
- ------------------------------------------------------------
- ------------------------------------------------------------
</TABLE>
The Company's total cash and marketable securities amounted to $621 million at
December 31, 1995, up $68 million from December 31, 1994. In 1995, the Company
generated cash from operations of $298 million, down $51 million from 1994 due
to reduced operations at the Mexican and Canadian truck plants and a reduction
in consolidated payables. The Company's liquidity and earnings from investment
of excess cash continue to provide financial stability and strength.
TRUCKS, AUTO PARTS AND OTHER
Cash for working capital, capital expenditures and research and development has
been provided by operations. Management expects this to continue.
Capital expenditures for 1995 totaled $82 million. PACCAR's truck
operations made significant investments in the expansion and modernization of
its facilities, state-of-the-art hardware and software to continually improve
the design and quality of its products and tooling to meet the demands of an
aggressive product development plan. Over the last five years (1991 through
1995), the Company's worldwide capital spending, excluding the Financial
Services segment, totaled over $335 million. During the next several years,
average spending for capital projects at PACCAR is expected to be at similar
levels.
PACCAR INC AND SUBSIDIARIES
23
<PAGE>
Cash generated in foreign operations is generally reinvested in those
operations. During the last two years, some excess cash has been withdrawn in
the form of dividends from the Company's operations in Mexico, Canada and
Australia.
FINANCIAL SERVICES
The Financial Services companies rely heavily on funds borrowed in capital
markets as well as funds generated from collections on loans and leases.
Transactions with PACCAR, such as capital contributions and intercompany loans,
are an additional source of funds.
In 1993, PACCAR Financial Corp. (PFC) filed a shelf registration under
which up to $1 billion of medium-term notes could be issued as needed. At the
end of 1995, $55 million of this registration was still available for issuance.
PFC plans to file another shelf registration during 1996. To reduce exposure to
fluctuations in interest rates, the Financial Services companies pursue a policy
of obtaining funds with interest rate characteristics similar to the
corresponding assets. As a part of this policy, the companies use over-the-
counter interest-rate contracts. The permitted type of interest-rate contracts
and transaction limits have been established by the Company's senior management,
who receive periodic reports on the amount of contracts outstanding.
PACCAR believes its Financial Services companies have sufficient financial
capabilities to continue funding receivables and servicing debt through
internally generated funds, lines of credit and access to public and private
debt markets.
IMPACT OF ENVIRONMENTAL MATTERS:
The Company, its competitors and industry in general are subject to various
federal, state and local requirements relating to the environment. The Company
believes its policies, practices and procedures are designed to prevent
unreasonable risk of environmental damage and that its handling, use and
disposal of hazardous or toxic substances have been in accordance with
environmental laws and regulations enacted at the time such use and disposal
occurred.
Expenditures were approximately $7 million in 1995, $8 million in 1994 and
$9 million in 1993 for costs related to environmental activities. The Company
does not anticipate that the effects on future operations or cash flows would be
materially greater than recent experience.
The Company is involved in various stages of investigations and cleanup
actions related to environmental matters. In certain of these matters, the
Company has been designated as a Potentially Responsible Party by the U.S.
Environmental Protection Agency (EPA) or by a state-level environmental agency.
At certain of these sites, the Company, together with other parties, is
participating with the EPA and other state level agencies both in cleanup
studies and the determination of remedial action, as well as actual remediation
procedures.
The Company's estimated range of reasonably possible costs to complete
cleanup actions, where it is probable that the Company will incur such costs and
such amounts can be reasonably estimated, is between $28 million and $45
million. At December 31, 1995, the reserve established to provide for estimated
future environmental cleanup costs was $42 million.
The Company has been successful in recovering a portion of its
environmental remediation costs from insurers, but does not believe future
recoveries from insurance carriers will be significant.
While the timing and amount of the ultimate costs associated with
environmental cleanup matters cannot be determined, management does not expect
that these matters will have a material adverse effect on the Company's
consolidated financial position.
24
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------
MANUFACTURING: (millions except per share data)
<S> <C> <C> <C>
REVENUES
Net sales $4,572.5 $4,285.1 $3,378.9
Other 18.2 9.1 11.6
- --------------------------------------------------------------------------------
4,590.7 4,294.2 3,390.5
COSTS AND EXPENSES
Cost of sales 3,950.7 3,693.0 2,942.3
Selling, general and administrative 334.6 343.5 285.7
Interest 2.0 2.6 1.9
- --------------------------------------------------------------------------------
4,287.3 4,039.1 3,229.9
- --------------------------------------------------------------------------------
MANUFACTURING INCOME BEFORE INCOME TAXES 303.4 255.1 160.6
FINANCIAL SERVICES:
REVENUES 257.5 210.9 166.6
COSTS AND EXPENSES
Interest and other 143.5 106.8 81.3
Selling, general and administrative 46.4 42.6 35.9
Provision for losses on receivables 14.3 4.0 9.2
- --------------------------------------------------------------------------------
204.2 153.4 126.4
- --------------------------------------------------------------------------------
FINANCIAL SERVICES INCOME BEFORE INCOME TAXES 53.3 57.5 40.2
OTHER:
Investment income 27.7 24.1 17.9
Minority interest and other 15.2 (16.6) 1.1
- --------------------------------------------------------------------------------
TOTAL INCOME BEFORE INCOME TAXES 399.6 320.1 219.8
Income taxes 146.8 115.6 77.6
- --------------------------------------------------------------------------------
NET INCOME $252.8 $204.5 $142.2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net income per average common share outstanding $6.50 $5.26 $3.66
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Weighted average number of common shares outstanding 38.9 38.9 38.9
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
PACCAR INC AND SUBSIDIARIES
25
<PAGE>
CONSOLIDATED BALANCE SHEETS
DECEMBER 31
<TABLE>
<CAPTION>
ASSETS 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING: (millions of dollars)
CURRENT ASSETS
Cash and equivalents $172.0 $289.9
Trade receivables, net of allowance for losses
(1995 - $5.8 and 1994 - $4.3) 227.7 232.9
Marketable securities 437.3 241.7
Inventories 239.5 274.5
Deferred taxes and other current assets 60.1 65.1
- -------------------------------------------------------------------------------
TOTAL MANUFACTURING CURRENT ASSETS 1,136.6 1,104.1
Deferred taxes, goodwill and other 87.3 88.7
Property, plant and equipment, net 422.3 369.9
- -------------------------------------------------------------------------------
TOTAL MANUFACTURING ASSETS 1,646.2 1,562.7
- -------------------------------------------------------------------------------
FINANCIAL SERVICES:
Cash and equivalents 12.0 21.4
Finance and other receivables,
net of allowance for losses
(1995 - $56.8 and 1994 - $41.1) 2,887.7 2,469.6
Less unearned interest (224.4) (194.7)
- -------------------------------------------------------------------------------
2,663.3 2,274.9
Equipment on operating leases, net 49.8 53.8
Other assets 19.2 15.4
- -------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES ASSETS 2,744.3 2,365.5
- -------------------------------------------------------------------------------
$4,390.5 $3,928.2
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING: (MILLIONS OF DOLLARS)
CURRENT LIABILITIES
Accounts payable and accrued expenses $559.1 $609.4
Income taxes 11.6 22.5
Dividend payable 116.6 77.7
Other .5 1.8
- -------------------------------------------------------------------------------
TOTAL MANUFACTURING CURRENT LIABILITIES 687.8 711.4
Long-term debt 10.7 11.1
Other 118.1 96.6
- -------------------------------------------------------------------------------
TOTAL MANUFACTURING LIABILITIES 816.6 819.1
- -------------------------------------------------------------------------------
FINANCIAL SERVICES:
Accounts payable and accrued expenses 70.1 70.6
Commercial paper and bank loans 952.4 687.7
Long-term debt 1,149.6 999.9
Deferred income taxes and other 150.6 143.5
- -------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES LIABILITIES 2,322.7 1,901.7
- -------------------------------------------------------------------------------
MINORITY INTEREST 32.9
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 218.7 218.2
Retained earnings 653.8 556.5
Currency translation and net unrealized investment
adjustments (87.6) (66.5)
- -------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 1,251.2 1,174.5
- -------------------------------------------------------------------------------
$4,390.5 $3,928.2
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
PACCAR INC AND SUBSIDIARIES
27
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
DECEMBER 31
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK, $12 PAR VALUE: (MILLIONS EXCEPT SHARE DATA)
Balance at beginning of year $466.3 $466.3 $446.2
Stock options exercised * *
Retirement of treasury stock (40.7)
Stock dividend declared 60.8
- -------------------------------------------------------------------------------
Balance at end of year $466.3 $466.3 $466.3
- -------------------------------------------------------------------------------
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of year $218.2 $217.9 $2.5
Other, including options exercised and
tax benefit .5 .3
Retirement of treasury stock (2.5)
Stock dividend declared 217.9
- -------------------------------------------------------------------------------
Balance at end of year $218.7 $218.2 $217.9
- -------------------------------------------------------------------------------
RETAINED EARNINGS:
Balance at beginning of year $556.5 $468.6 $741.2
Net income 252.8 204.5 142.2
Cash dividends declared (155.5) (116.6) (67.7)
Retirement of treasury stock (68.4)
Stock dividend declared (278.7)
- -------------------------------------------------------------------------------
Balance at end of year $653.8 $556.5 $468.6
- -------------------------------------------------------------------------------
NET UNREALIZED INVESTMENT ADJUSTMENTS:
Balance at beginning of year $(1.5)
Adjustments 3.7 (1.5)
- -------------------------------------------------------------------------------
Balance at end of year $2.2 $(1.5)
- -------------------------------------------------------------------------------
CURRENCY TRANSLATION ADJUSTMENTS:
Balance at beginning of year $(65.0) $(45.3) $(41.1)
Adjustments (24.8) (19.7) (4.2)
- -------------------------------------------------------------------------------
Balance at end of year $(89.8) $(65.0) $(45.3)
- -------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $1,251.2 $1,174.5 $1,107.5
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SHARES OF CAPITAL STOCK
COMMON STOCK ISSUED, $12 PAR VALUE:
Balance at beginning of year 38,859,281 38,856,574 37,180,386
Stock options exercised 3,078 2,707
Retirement of treasury stock (3,391,084)
Stock dividend declared 5,067,272
- --------------------------------------------------------------------------------
Balance at end of year 38,862,359 38,859,281 38,856,574
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
* LESS THAN .1
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
28
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31
<TABLE>
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES: (MILLIONS OF DOLLARS)
NET INCOME $252.8 $204.5 $142.2
ITEMS INCLUDED IN NET INCOME NOT AFFECTING CASH:
Depreciation and amortization 72.4 63.2 56.7
Provision for losses on financial services receivables 14.3 4.0 9.2
Minority interest (1.8) 13.0
Equity in net income of unconsolidated companies (8.1)
Deferred income tax benefit (4.6) (16.7) (9.4)
Other 5.9 17.1 9.4
CHANGE IN OPERATING ASSETS AND LIABILITIES:
(Increase) decrease in assets other than cash and equivalents:
Receivables .5 (50.9) (21.4)
Inventories 26.0 (68.2) (44.7)
Deferred taxes and other (6.0) (7.6) (4.6)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (48.3) 190.1 52.7
Income taxes (12.9) 1.2 19.9
- ----------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 298.3 349.7 201.9
INVESTING ACTIVITIES:
Finance receivables originated (1,319.8) (1,271.1) (1,059.0)
Collections on finance receivables 1,001.6 851.9 701.7
Net (increase) decrease in wholesale receivables (108.1) 21.7 (54.5)
Marketable securities purchased (2,357.1) (1,533.2) (197.2)
Marketable securities sales and maturities 2,167.0 1,523.7 175.8
Acquisition of controlling interest in affiliate,
net of cash consolidated in 1994 (45.0) 44.3
Acquisition of property, plant and equipment (81.5) (55.0) (82.4)
Acquisition of equipment for operating leases (12.2) (25.6) (26.9)
Proceeds from asset disposals 36.4 27.9 31.5
Other (1.4) (16.1) (15.5)
- ----------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (720.1) (431.5) (526.5)
FINANCING ACTIVITIES:
Cash dividends (116.6) (74.5) (44.0)
Net (decrease) increase in commercial paper and bank loans 269.8 (20.2) 118.2
Proceeds of long-term debt 535.2 543.8 390.7
Payments of long-term debt (383.5) (260.0) (167.6)
Purchase of treasury shares (1.2)
- ----------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 304.9 189.1 296.1
Effect of exchange rate changes on cash (10.4) (19.2) 1.3
- ----------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (127.3) 88.1 (27.2)
Cash and equivalents at beginning of year 311.3 223.2 250.4
- ----------------------------------------------------------------------------------------------------
Cash and equivalents at end of year $184.0 $311.3 $223.2
- ----------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
PACCAR INC AND SUBSIDIARIES
29
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993 (MILLIONS OF DOLLARS)
A. SUMMARY OF ACCOUNTING POLICIES
ORGANIZATION: PACCAR Inc is a multinational company with primary operations
throughout the United States and Canada. The Company's Truck and Financial
Services segments also have operations in Australia, Mexico and the United
Kingdom. The Auto Parts segment operates through retail sites located in the
western United States. The Truck segment represents a substantial portion of
consolidated revenues. Significant portions of Company assets are employed in
financial services activities.
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of the Company and its wholly owned domestic and foreign
subsidiaries. All significant intercompany accounts and transactions are
eliminated in consolidation.
USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
CASH EQUIVALENTS: Cash equivalents consist of all short-term liquid
investments with a maturity at date of purchase of three months or less.
MARKETABLE SECURITIES: The Company's investments in cash equivalents and
marketable securities consist of debt securities categorized as available-for-
sale. These investments are stated at fair value with any unrealized holding
gains or losses, net of tax, included as a component of stockholders' equity
until realized.
The amortized cost of debt securities classified as available-for-sale is
adjusted for amortization of premiums and accretion of discounts to maturity.
Such amortization, accretion and realized gains and losses are included as a
component of other manufacturing revenues in the accompanying consolidated
income statements. Interest and dividend income are included as a component of
investment income. The cost of securities sold is based on the specific
identification method.
INVENTORIES: Inventories are stated at the lower of cost or market. Cost of
all inventories in the United Kingdom and the United States is determined
principally by the last-in, first-out (LIFO) method. Cost of all other
inventories is determined by the first-in, first-out (FIFO) method.
GOODWILL: Goodwill is amortized on a straight-line basis for periods
ranging from 25 to 27 years. At December 31, 1995 and 1994, goodwill amounted to
$24.4 and $25.8, net of accumulated amortization of $10.7 and $9.3,
respectively. Amortization of goodwill totaled $1.4 in 1995 and $1.3 each in
1994 and 1993.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated at
cost. Depreciation of plant and equipment is computed principally by the
straight-line method based upon the estimated useful lives of the various
classes of assets, which range as follows:
Machinery and equipment 5 - 12 years
Buildings 30 - 40 years
ENVIRONMENTAL: Expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing condition
caused by past operations and which do not contribute to current or future
revenue generation are expensed. Liabilities are recorded when it is probable
the Company will be obligated to pay amounts for environmental site evaluation,
remediation or related costs, and such amounts can be reasonably estimated.
INTEREST INCOME AND EXPENSE: Generally, interest income from finance
receivables is recognized using the interest (actuarial) method.
CREDIT LOSSES: The provision for losses on net finance and other
receivables is charged to income in an amount sufficient to maintain the
allowance for losses at a level considered adequate to cover estimated losses.
Receivables are charged to this allowance when, in the judgment of management,
they are deemed uncollectible (usually upon repossession of the collateral).
INTEREST-RATE CONTRACTS: As part of its interest-rate risk management
activities, PACCAR enters into interest-rate contracts which generally involve
the exchange of fixed- and floating-rate interest payment obligations without
the exchange of the underlying principal amounts. These contracts are used to
reduce the effect of interest-rate fluctuations and to effectively change the
interest rate characteristics of debt to better match the Company's receivables.
It is the Company's intent to hold the contracts to maturity. Net amounts paid
or received are reflected as adjustments to interest expense.
30
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993 (MILLIONS OF DOLLARS)
FOREIGN CURRENCY EXCHANGE CONTRACTS: PACCAR enters into foreign currency
exchange contracts to hedge certain U.S. dollar-denominated firm commitments
on a continuing basis for periods consistent with its committed exposures.
Gains and losses on the contracts are deferred and included in measurement of
the related foreign currency transaction when it is completed. As a matter of
policy, the Company does not engage in currency speculation. At December 31,
1995 and 1994, PACCAR had contracts outstanding to purchase $80.7 and $92.0
U.S. dollars, respectively. Substantially all of these contracts related to
Canadian dollars.
RESEARCH AND DEVELOPMENT: Research and development costs are expensed as
incurred. Amounts charged against income were $37 in
1995, $35 in 1994 and $22 in 1993.
NEW ACCOUNTING STANDARD: In March 1995, the Financial Accounting Standards
Board issued SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. PACCAR will adopt SFAS 121 in the
first quarter of 1996. Management believes the effect of adoption will not
materially impact the Company's near-term financial position or results of
operations.
RECLASSIFICATIONS: Certain prior-year amounts have been reclassified to
conform to the 1995 presentation.
B. INVESTMENTS IN DEBT SECURITIES
Investments in debt securities at December 31, 1995, include the following:
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
- ---------------------------------------------------------
<S> <C> <C>
U.S. government securities $174.6 $176.0
Tax-exempt securities 298.7 301.0
Other debt securities 129.0 129.0
- ---------------------------------------------------------
$602.3 $606.0
- ---------------------------------------------------------
- ---------------------------------------------------------
</TABLE>
Investments in debt securities at
December 31, 1994, include the following:
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
- ---------------------------------------------------------
<S> <C> <C>
U.S. government securities $ 14.4 $ 14.2
Tax-exempt securities 367.3 364.9
Other debt securities 156.1 156.1
- ---------------------------------------------------------
$537.8 $535.2
- ---------------------------------------------------------
- ---------------------------------------------------------
</TABLE>
Investments in debt securities are included
in cash and equivalents and marketable securities
as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------
1995 1994
<S> <C> <C>
MANUFACTURING:
Cash and equivalents $163.2 $283.1
Marketable securities 437.3 241.7
FINANCIAL SERVICES:
Cash and equivalents 5.5 10.4
- ---------------------------------------------------------
$606.0 $535.2
- ---------------------------------------------------------
- ---------------------------------------------------------
</TABLE>
The contractual maturities of debt securities
available-for-sale at December 31, 1995, are as follows:
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
- ---------------------------------------------------------
<S> <C> <C>
Due in one year or less $200.6 $200.8
Due after one year
through two years 115.1 115.9
Due two years through
four years 286.6 289.3
- ---------------------------------------------------------
$602.3 $606.0
- ---------------------------------------------------------
- ---------------------------------------------------------
</TABLE>
Gross unrealized holding gains (losses) at December 31, 1995 and 1994, were
$3.7 and $(2.6), respectively. Gross realized gains and losses from the sale of
investments in debt securities for the years ended December 31, 1995 and 1994,
were $.8 and $(.1) in 1995, and $.3 and $(.5), in 1994.
C. Inventories
<TABLE>
<CAPTION>
1995 1994
- ---------------------------------------------------------
<S> <C> <C>
Inventories at FIFO cost:
Finished products $ 201.6 $ 188.6
Work in process and raw
materials 170.5 210.2
- ---------------------------------------------------------
372.1 398.8
Less excess of FIFO cost
over LIFO (132.6) (124.3)
- ---------------------------------------------------------
$239.5 $274.5
- ---------------------------------------------------------
- ---------------------------------------------------------
</TABLE>
Inventories valued using the LIFO method comprised 83% and 82% of consolidated
inventories at FIFO cost at December 31, 1995 and 1994, respectively.
PACCAR INC AND SUBSIDIARIES
31
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993 (MILLIONS OF DOLLARS)
D. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment include the following:
<TABLE>
<CAPTION>
1995 1994
- ---------------------------------------------------------
<S> <C> <C>
Land $ 33.6 $ 24.8
Buildings 323.0 303.3
Machinery and equipment 435.7 388.6
- ---------------------------------------------------------
792.3 716.7
Less allowance for
depreciation (370.0) (346.8)
- ---------------------------------------------------------
$ 422.3 $ 369.9
- ---------------------------------------------------------
- ---------------------------------------------------------
</TABLE>
E. FINANCE AND OTHER RECEIVABLES
The Company's finance and other receivables are
as follows:
<TABLE>
<CAPTION>
1995 1994
- ---------------------------------------------------------
<S> <C> <C>
Retail notes and contracts $1,912.2 $1,644.8
Wholesale financing 240.3 125.9
Direct financing leases 774.2 720.6
Interest and other
receivables 17.8 19.4
- ---------------------------------------------------------
2,944.5 2,510.7
Less allowance for losses (56.8) (41.1)
- ---------------------------------------------------------
2,887.7 2,469.6
Unearned interest:
Retail notes and contracts (121.1) (103.0)
Direct financing leases (103.3) (91.7)
- ---------------------------------------------------------
(224.4) (194.7)
- ---------------------------------------------------------
$2,663.3 $2,274.9
- ---------------------------------------------------------
- ---------------------------------------------------------
</TABLE>
Terms for substantially all finance and other receivables range up to 60
months. Repayment experience indicates some receivables will be paid prior to
contracted maturity, while others will be extended or renewed.
Annual payments due on retail notes and contracts for the five years
beginning January 1, 1996, are $774.4, $543.0, $367.9, $176.0 and $50.9.
Estimated residual values included with direct financing leases amounted to
$52.3 in 1995 and $59.8 in 1994. Annual minimum lease payments due on direct
financing leases for the five years beginning January 1, 1996, are $217.3,
$185.1, $149.8, $102.1 and $47.8 and $19.8 thereafter.
The allowance for losses on finance and other receivables is summarized as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning
of year $41.1 $32.9 $30.9
Provision for losses 14.3 4.0 9.2
Net (losses) recoveries 1.4 4.2 (7.2)
- -------------------------------------------------------------------------
Balance at end of year $56.8 $41.1 $32.9
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
</TABLE>
At December 31, 1995, $31.8 of finance and other receivables were
considered impaired. Included in the allowance for losses is a specific reserve
of $11.3 for estimated losses on these impaired loans. For the year ended
December 31, 1995, the average recorded balance of impaired loans was $19.5. The
Company recognized interest income on those loans of $1.1, all of which was
recognized using the cash basis method of income recognition.
The Company's customers are principally concentrated in the transportation
industry. Generally, financial services receivables are collateralized by
financed equipment.
F. EQUIPMENT ON OPERATING LEASES
Equipment on operating leases is recorded at cost and is depreciated on the
straight-line basis to its estimated residual value. Estimated useful lives are
five years.
<TABLE>
<CAPTION>
1995 1994
- ---------------------------------------------------------
<S> <C> <C>
Trucks and other $ 74.5 $ 72.5
Less allowance for
depreciation (24.7) (18.7)
- ---------------------------------------------------------
$ 49.8 $ 53.8
- ---------------------------------------------------------
- ---------------------------------------------------------
</TABLE>
Original terms of operating leases generally range up to 45 months. Annual
minimum lease payments due on operating leases for each year beginning January
1, 1996, are $12.1, $7.3, $3.0 and $.6.
G. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses include the following:
<TABLE>
<CAPTION>
1995 1994
- ---------------------------------------------------------
<S> <C> <C>
MANUFACTURING:
Accounts payable $293.3 $358.3
Salaries and wages 82.3 78.0
Warranty and self-insurance
reserves 100.5 84.8
Other 83.0 88.3
- ---------------------------------------------------------
$559.1 $609.4
- ---------------------------------------------------------
- ---------------------------------------------------------
FINANCIAL SERVICES:
Accounts payable $47.0 $53.3
Other 23.1 17.3
- ---------------------------------------------------------
$70.1 $70.6
- ---------------------------------------------------------
- ---------------------------------------------------------
</TABLE>
32
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993 (MILLIONS OF DOLLARS)
H. BORROWINGS
<TABLE>
<CAPTION>
Effective
FINANCIAL SERVICES: Rate(s) 1995 1994
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial paper 6.1% $847.6 $622.7
Other short-term
borrowings 7.0% 104.8 65.0
Medium-term debt:
- Fixed rate 6.8% 1,026.7 771.2
- Floating rate 5.8% 122.9 228.7
- -------------------------------------------------------------------------
$2,102.0 $1,687.6
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
</TABLE>
The effective rate is the weighted average rate as of December 31, 1995 and
includes the effects of interest-rate agreements.
Annual maturities of medium-term debt for the five years beginning January
1, 1996, are $464.1, $323.0, $252.3, $103.0 and $7.2, respectively.
At December 31, 1995, there were no restrictions on distributions of
unremitted earnings by the financial services companies to the parent under
terms of the most restrictive loan-agreement provisions.
Interest paid on borrowings was $116.0 in 1995, $76.9 in 1994 and $63.9 in
1993.
The Company has line of credit arrangements of $592.7 which are reviewed
annually for renewal. The unused portion of these credit lines was $525.0 at
December 31, 1995, of which the majority is maintained to support commercial
paper and other short-term borrowings of the financial services companies.
Compensating balances are not required on the lines, and service fees are
immaterial. The weighted average interest rate on short-term borrowings was
6.07%, 6.28% and 3.71% at December 31, 1995, 1994 and 1993, respectively.
The Company enters into various interest-rate contracts, including
interest-rate swap, cap and forward-rate agreements. At December 31, 1995, the
Company had 103 interest-rate contracts outstanding with other financial
institutions. The notional amount of these contracts totaled $868.6, with
amounts expiring annually over the next five years. The notional amount is used
to measure the volume of these contracts and does not represent exposure to
credit loss. In the event of default by a counterparty, the risk in these
transactions is the cost of replacing the interest-rate contract at current
market rates. The Company monitors its positions and the credit ratings of its
counterparties. Management believes the risk of incurring losses is remote, and
that if incurred, such losses would be immaterial.
For interest rate swaps only, the following table presents the notional
amounts, weighted average interest rates, and contractual maturities by type of
interest rate swap at December 31, 1995.
<TABLE>
<CAPTION>
Floating to Floating to Fixed to
Year Fixed Floating Floating Total
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 $359.2 $120.0 $96.0 $575.2
1997 163.7 .9 164.6
1998 37.4 .9 38.3
1999 14.6 14.6
2000 1.1 1.1
- -----------------------------------------------------------------------------
$576.0 $120.0 $97.8 $793.8
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Weighted average pay rate:
6.2% 5.8% 5.8%
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Weighted average receive rate:
5.9% 4.6% 6.6%
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
</TABLE>
The weighted average pay rate substantially represents the Company's net
cost of funds rate after the effect of interest rate swaps, as the weighted
average receive rate offsets pay rates on associated debt obligations.
Floating to fixed rate swaps effectively convert an equivalent amount of
commercial paper and other variable rate debt to fixed rates.
Floating to floating rate swaps effectively convert the floating rate
medium-term debt to a commercial paper index. The low receive rate offsets a low
pay rate on associated variable rate medium-term debt.
Fixed to floating rate swaps effectively convert fixed rate debt to a money
market index.
PACCAR Inc and Subsidiaries
33
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993 (MILLIONS OF DOLLARS)
I. RETIREMENT PLANS
The Company has several defined benefit pension plans, including union-
negotiated and multi-employer plans, which cover a majority of its employees.
Benefits under the plans are generally based on an employee's highest
compensation levels and total years of service. The Company's policy is to fund
its plans based on legal requirements, tax considerations, local practices and
investment opportunities.
Pension expense for all plans was $16.8 in 1995, $14.9 in 1994 and $10.0 in
1993.
The following data relates to all plans of the Company except for certain
multi-employer union-negotiated and supplemental retirement plans.
WEIGHTED AVERAGE ASSUMPTIONS USED IN DETERMINING ACTUARIAL PRESENT
VALUE OF PLAN BENEFIT OBLIGATIONS:
<TABLE>
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------
<S> <C> <C> <C>
Discount rate 7.50% 8.00% 8.00%
Rate of increase
in future
compensation levels 4.75% 5.75% 5.75%
Assumed long-term
rate of return on
plan assets 8.00% 8.00% 8.00%
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
COMPONENTS OF PENSION EXPENSE:
<TABLE>
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------
<S> <C> <C> <C>
Interest cost $19.7 $18.2 $15.4
Service cost 12.4 11.6 9.6
Return on assets (48.9) (2.6) (28.1)
Net amortization
and deferrals 27.2 (17.7) 8.4
- ----------------------------------------------------------------
Net pension expense $10.4 $9.5 $5.3
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FUNDED STATUS AT DECEMBER 31:
1995 1994
- ----------------------------------------------------------------
<S> <C> <C>
Vested benefit
obligation $225.6 $195.2
Accumulated benefit
obligation 228.1 197.4
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Plan assets at fair value $304.1 $246.5
Projected benefit obligation 275.2 240.0
- ----------------------------------------------------------------
Excess of plan assets 28.9 6.5
Unrecognized net asset (6.5) (11.7)
Unrecognized net
experience gain (29.3) (9.1)
Unrecognized prior
service cost 12.6 14.2
- ----------------------------------------------------------------
Prepaid (accrued) pension cost $5.7 $(.1)
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
The Company has unfunded supplemental retirement plans for employees whose
benefits under qualified salaried retirement plans are reduced because of
compensation deferral elections or limitations under federal tax laws. Pension
expense for these plans was $1.8 in 1995, $1.6 in 1994 and $1.2 in 1993. At
December 31, 1995, the projected benefit obligation for these plans was $12.5.
The accumulated benefit obligation of $10.7 has been recognized as a liability
in the balance sheet and is equal to the amount of vested benefits.
The Company has unfunded postretirement medical and life insurance plans
covering approximately one-half of all U.S. employees which reimburse retirees
for approximately 50% of their medical costs from retirement to age 65 and
provide a nominal death benefit. The net unrecorded accumulated postretirement
benefit obligation (APBO) at adoption was $10.1, which is being recognized over
20 years.
The following data relates to unfunded postretirement medical and life
insurance plans.
COMPONENTS OF RETIREE EXPENSE:
<TABLE>
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------
<S> <C> <C> <C>
Interest cost $1.7 $1.6 $1.2
Service cost 1.0 .9 .8
Amortization of
transition obligation .6 .6 .5
- ----------------------------------------------------------------
Net retiree expense $3.3 $3.1 $2.5
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
UNFUNDED STATUS AT DECEMBER 31:
<TABLE>
<CAPTION>
1995 1994
- ----------------------------------------------------------------
<S> <C> <C>
Accumulated benefits:
Actives not eligible to retire $16.4 $13.3
Actives eligible to retire 4.6 4.0
Retirees 4.1 4.1
- ----------------------------------------------------------------
25.1 21.4
Unrecognized net loss (5.0) (3.5)
Unrecognized transition
obligation (7.5) (7.9)
- ----------------------------------------------------------------
Accrued postretirement benefits $12.6 $10.0
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
34
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993 (MILLIONS OF DOLLARS)
Discount rates of 7.5% in 1995 and 8% in 1994 and a long-term medical
inflation rate of 7% in all years were used in calculating the APBO. A 1%
increase in the medical inflation-rate assumption would increase the APBO as of
December 31, 1995, by approximately $3.0 and the 1995 expense provision by
approximately $.4.
The Company has certain defined contribution benefit plans whereby it
generally matches employee contributions of 2% to 5% of base wages.
Provisions for these plans were $11.5 in 1995, $10.9 in 1994, and $9.6 in 1993.
J. LEASES
The Company leases most store locations for its automotive parts sales
operations and various other office space under operating leases. Leases expire
at various dates through the year 2018.
Annual minimum rental payments due under operating leases for the five
years beginning January 1, 1996, are $10.1, $8.3, $6.9, $5.6 and $3.8 and $9.6
thereafter.
Minimum payments on leases have not been reduced by aggregate minimum
sublease rentals of $8.9 receivable under noncancelable subleases.
The Company has operating leases which, in addition to aggregate minimum
annual rentals, provide for additional rental payments based on
sales and certain expenses.
Total rental expenses under all leases for the three years ended December
31, 1995 were $15.1, $13.5 and $13.1, net of sublease rentals of $1.7, $1.5 and
$1.1, respectively.
K. COMMITMENTS AND CONTINGENCIES
The Company is involved in various stages of investigations and cleanup actions
related to environmental matters. In certain of these matters,
the Company has been designated as a Potentially Responsible Party by the U.S.
Environmental Protection Agency or by a state-level environmental agency. The
Company has provided for the estimated costs to investigate and complete cleanup
actions where it is probable that the Company will incur such costs in the
future.
At December 31, 1995, the reserve established to provide for estimated
future environmental cleanup costs was $42. While neither the timing nor the
amount of the ultimate costs associated with environmental matters can be
determined, management does not expect that those matters will have a material
adverse effect on the Company's consolidated financial position.
PACCAR is a defendant in various legal proceedings and, in addition, there
are various other contingent liabilities arising in the normal course of
business. After consultation with legal counsel, management does not anticipate
that disposition of these proceedings and contingent liabilities will have a
material effect on the consolidated financial statements.
At December 31, 1995, PACCAR had standby letters of credit outstanding
totaling $29.8, which guarantee various insurance and financing activities.
PACCAR Inc and Subsidiaries
35
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993 (MILLIONS OF DOLLARS)
L. INCOME TAXES
<TABLE>
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME BEFORE INCOME TAXES:
Domestic $364.6 $250.3 $178.9
Foreign 35.0 69.8 40.9
- -----------------------------------------------------------------------------
$399.6 $320.1 $219.8
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PROVISION FOR INCOME TAXES:
<S> <C> <C> <C>
Current provision:
Federal $121.5 $92.6 $66.5
Foreign 11.9 26.3 12.7
State 18.0 13.4 7.8
- ----------------------------------------------------------------
151.4 132.3 87.0
Deferred provision
(benefit):
Federal and state (6.4) (13.6) (9.2)
Foreign 1.8 (3.1) (.2)
- ----------------------------------------------------------------
(4.6) (16.7) (9.4)
- ----------------------------------------------------------------
$146.8 $115.6 $77.6
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RECONCILIATION OF STATUTORY U.S. TAX TO ACTUAL PROVISION:
<S> <C> <C> <C>
Statutory rate 35% 35% 35%
Statutory tax $139.8 $112.0 $76.9
Effect of:
State income taxes 12.8 10.8 8.1
Foreign tax rates .3 (1.9) (1.6)
FSC benefit (2.0) (1.3) (1.6)
Tax-exempt income (6.3) (4.9) (4.2)
Other 2.2 .9
- ----------------------------------------------------------------
$146.8 $115.6 $77.6
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
COMPONENTS OF DEFERRED TAX ASSETS (LIABILITIES):
At December 31: 1995 1994
- ----------------------------------------------------------------
<S> <C> <C>
ASSETS:
Provisions for accrued
expenses $100.1 $81.0
Allowance for losses on
receivables 20.1 16.2
Other 15.2 9.8
- ----------------------------------------------------------------
135.4 107.0
LIABILITIES:
Asset capitalization and
depreciation (29.7) (26.4)
Financing and leasing
activities (129.8) (124.2)
Other (27.6) (9.2)
- ----------------------------------------------------------------
(187.1) (159.8)
- ----------------------------------------------------------------
Net deferred tax liability $(51.7) $(52.8)
- ----------------------------------------------------------------
- ----------------------------------------------------------------
CLASSIFICATION OF DEFERRED TAX ASSETS AND LIABILITIES:
MANUFACTURING:
Deferred taxes and other
current assets $52.3 $59.2
Investments and other 9.7 .4
FINANCIAL SERVICES:
Deferred income taxes
and other (113.7) (112.4)
- ----------------------------------------------------------------
Net deferred tax liability $(51.7) $(52.8)
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
United States income taxes are not provided on undistributed earnings of the
Company's foreign subsidiaries because of the intent to reinvest these earnings.
The amount of undistributed earnings, which are considered to be indefinitely
reinvested, is approximately $186.2 at December 31, 1995. While the amount of
any federal income taxes on these reinvested earnings, if distributed in the
future, is not presently determinable, it is anticipated that the available
foreign tax credits would substantially offset any potential federal tax
liability.
Cash paid for income taxes was $149.1 in 1995, $130.1 in 1994 and $70.7 in
1993.
36
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993 (MILLIONS OF DOLLARS)
M. FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in determining
its fair value disclosures for financial instruments:
CASH AND EQUIVALENTS: The carrying amount reported in the balance sheet
approximates fair value.
MARKETABLE SECURITIES: Marketable securities consist of debt securities. Fair
values are based on quoted market prices.
FINANCIAL SERVICES NET RECEIVABLES: For floating-rate loans, including
wholesale financings that reprice frequently with no significant change in
credit risk, fair values are based on carrying values. For fixed-rate loans,
fair values are estimated using discounted cash flow analyses based on interest
rates currently being offered for loans with similar terms to borrowers of
similar credit quality. The carrying amount of accrued interest and other
receivables approximates its fair value. Direct financing lease receivables and
the related loss provisions are not included in net receivables.
SHORT- AND LONG-TERM DEBT: The carrying amount of the Company's commercial
paper and short-term bank borrowings and floating-rate long-term debt
approximates its fair value. The fair value of the Company's fixed-rate long-
term debt is estimated using discounted cash flow analyses, based on the
Company's current incremental borrowing rates for similar types of borrowing
arrangements.
OFF-BALANCE-SHEET INSTRUMENTS: Fair values for the Company's interest-rate
contracts are based on costs which would be incurred to terminate existing
agreements and enter into new agreements with similar notional amounts, maturity
dates and counterparties' credit standing at current market interest rates.
Foreign exchange contracts require the Company to exchange foreign currency for
U.S. dollars and generally mature within six months. The fair value of these
foreign exchange contracts is the amount the Company would receive or pay to
terminate the contracts. This amount is calculated using quoted market rates.
The carrying amounts of trade payables and receivables approximate their
fair value and have been excluded from the accompanying table.
The carrying amounts and fair values of the Company's financial instruments
are as follows:
<TABLE>
<CAPTION>
Carrying Fair
1995 Amount Value
- ----------------------------------------------------------------
MANUFACTURING:
<S> <C> <C>
Cash and equivalents $172.0 $172.0
Marketable securities 437.3 437.3
Short-term debt .2 .2
Long-term debt 8.9 8.9
FINANCIAL SERVICES:
Cash and equivalents 12.0 12.0
Net receivables 2,006.0 2,019.3
Commercial paper and
bank loans 952.4 952.4
Long-term debt 1,149.6 1,162.1
</TABLE>
The Company's off-balance-sheet financial instruments, consisting of
interest-rate agreements, represented an additional liability of $3.6, if
recorded at fair value at December 31, 1995.
<TABLE>
<CAPTION>
Carrying Fair
1994 Amount Value
- ----------------------------------------------------------------
MANUFACTURING:
<S> <C> <C>
Cash and equivalents $289.9 $289.9
Marketable securities 241.7 241.7
Short-term debt .7 .7
Long-term debt 9.0 9.0
FINANCIAL SERVICES:
Cash and equivalents 21.4 21.4
Net receivables 1,692.2 1,659.8
Commercial paper and
bank loans 687.7 687.7
Long-term debt 999.9 972.4
</TABLE>
The Company's off-balance-sheet financial instruments, consisting of
interest-rate agreements and foreign exchange contracts, represented additional
assets of $9.0 and $2.0, respectively, if recorded at fair value at December 31,
1994.
PACCAR Inc and Subsidiaries
37
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993 (MILLIONS OF DOLLARS)
N. FOREIGN OPERATIONS AND CURRENCY TRANSLATION
All foreign assets and liabilities are translated into U.S. dollars at current
exchange rates and all income statement amounts are translated at an average of
the month-end rates. Resulting gains
and losses are deferred and classified as a separate component of stockholders'
equity.
In August 1995, PACCAR purchased the remaining 45% interest in VILPAC, S.A.
(VILPAC) for a total cost of $45.0 in cash. The Company used the purchase method
of accounting for the acquisition. Had the transaction occurred January 1, 1995,
the impact on PACCAR's consolidated net income would have been immaterial.
In both 1995 and 1994, the Mexican peso experienced significant devaluation
compared to the U.S. dollar. The effect of the devaluation on U.S. dollar-
denominated accounts maintained by PACCAR's Mexican subsidiary resulted in net
exchange gains. The Company's after-tax share of aggregate net exchange gains
increased net income by $4.8 in 1995 and $3.7 in 1994. Substantially all of
these amounts resulted from the impact of translating the balance sheet of the
Mexican subsidiary. Exchange gains and losses were immaterial in 1993.
Continuing economic difficulties in Mexico indicate recovery may occur slowly in
that market.
In August 1995, employees at the Company's plant in Canada went on strike.
Since the commencement of the strike, PACCAR has met demand for Class 8 trucks
in Canada with output from
its factories in the United States, and expects to be able to continue this
arrangement for as long as required. The Company has reduced the plant work
force and expects a protracted labor dispute will not have a materially adverse
impact on future consolidated results.
O. STOCKHOLDERS' EQUITY
STOCKHOLDER RIGHTS PLAN: The plan provides one right for each share of PACCAR
common stock outstanding. Rights generally become exercisable
if a person publicly announces the intention to acquire 10% or more of PACCAR's
common stock or if a person (Acquiror) acquires such amount of common stock. In
all cases, rights held by the Acquiror are not exercisable. When exercisable,
each right entitles the holder to purchase for one hundred and fifty dollars
from PACCAR a fractional share of newly designated Series A Junior Participating
Preferred Stock. Each such fractional preferred share has dividend, liquidation
and voting rights which are no less than those for a share of common stock.
Under certain circumstances, the rights may become exercisable for shares of
PACCAR common stock or common stock of the Acquiror having a market value equal
to twice the exercise price of the right. Also under certain circumstances, the
Board of Directors may exchange exercisable rights, in whole or in part, for one
share of PACCAR common stock per right. The rights, which expire in the year
2000, may be redeemed at one cent per right, subject to certain conditions. For
this plan, 50,000 preferred shares are reserved for issuance. No shares have
been issued.
P. GEOGRAPHIC AREA AND INDUSTRY SEGMENT DATA
PACCAR operates in three principal industries: Trucks, Auto Parts and Financial
Services.
The Truck segment is composed of the manufacture of trucks and distribution
of related parts which are sold through a network of company-appointed dealers.
The Truck and Financial Services segments derive a large proportion of their
revenues and income before taxes from operations in the United States and
Canada. New orders for heavy duty trucks industry-wide began to slow in 1995.
Recent industry estimates suggest 1996 Class 8 truck registrations in the United
States should be in the range of 150,000 to 160,000 units compared to the record
207,000 units registered in 1995.
Auto Parts is composed of automotive parts sales and related services sold
through company-operated retail stores.
The Financial Services segment is composed of finance and leasing services
provided to truck customers and dealers. Sales among the industry segments and
among geographic areas were insignificant.
Minority interest and other in 1995 includes a pretax gain of $12.1 from
resolution of litigation involving environmental cost reimbursements. The
minority interest share of VILPAC losses in 1995 and profits in 1994 are also
included.
38
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993 (MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
INDUSTRY SEGMENT DATA 1995 1994 1993
- -------------------------------------------------------------------------------
REVENUES:
<S> <C> <C> <C>
Trucks $4,291.6 $4,029.1 $3,130.9
Auto Parts 175.3 172.1 172.9
Financial Services 257.5 210.9 166.6
Other 123.8 93.0 86.7
- -------------------------------------------------------------------------------
$4,848.2 $4,505.1 $3,557.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INCOME BEFORE TAXES:
Trucks $321.1 $ 299.4 $ 194.0
Auto Parts 5.5 4.2 2.2
Financial Services 53.3 57.5 40.2
Other 13.1 4.3 9.1
Corporate expenses,
net of other
revenues (36.3) (52.8) (44.7)
Investment income 27.7 24.1 17.9
Minority interest
and other 15.2 (16.6) 1.1
- -------------------------------------------------------------------------------
$399.6 $ 320.1 $ 219.8
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
DEPRECIATION AND AMORTIZATION:
Trucks $40.9 $ 34.5 $ 27.7
Auto Parts 5.2 5.1 5.4
Financial Services 16.6 15.2 13.8
Other 5.2 4.1 3.7
Corporate 4.5 4.3 6.1
- -------------------------------------------------------------------------------
$72.4 $ 63.2 $ 56.7
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CAPITAL EXPENDITURES:
Trucks $67.3 $ 39.3 $ 72.8
Auto Parts 3.4 2.4 1.2
Financial Services 13.0 25.7 27.0
Other 5.1 11.2 2.7
Corporate 5.0 2.0 5.6
- -------------------------------------------------------------------------------
$93.8 $ 80.6 $ 109.3
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
IDENTIFIABLE ASSETS:
Trucks $753.5 $ 748.9 $ 647.8
Auto Parts 94.4 94.5 98.8
Financial Services 2,744.3 2,365.5 1,947.3
Other 95.1 94.8 73.9
Manufacturing
Cash and
Marketable
Securities 609.3 531.6 441.9
Corporate 93.9 92.9 81.5
- -------------------------------------------------------------------------------
$4,390.5 $3,928.2 $3,291.2
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GEOGRAPHIC AREA DATA 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES:
United States $4,108.8 $3,548.9 $3,003.3
Canada 397.3 364.5 340.2
Other 342.1 591.7 213.6
- -------------------------------------------------------------------------------
$4,848.2 $4,505.1 $3,557.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INCOME BEFORE TAXES:
United States $ 352.5 $276.8 $199.8
Canada 22.8 21.7 21.7
Other 17.7 66.9 24.0
Corporate expenses,
net of other
revenues (36.3) (52.8) (44.7)
Investment income 27.7 24.1 17.9
Minority interest
and other 15.2 (16.6) 1.1
- -------------------------------------------------------------------------------
$ 399.6 $320.1 $219.8
- -------------------------------------------------------------------------------
IDENTIFIABLE ASSETS:
United States $3,069.7 $2,722.1 $2,341.2
Canada 254.2 214.0 197.0
Other 363.4 367.6 229.6
Manufacturing
Cash and
Marketable
Securities 609.3 531.6 441.9
Corporate 93.9 92.9 81.5
- -------------------------------------------------------------------------------
$4,390.5 $3,928.2 $3,291.2
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Export revenues of
U.S. companies $ 263.0 $117.8 $145.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
PACCAR Inc and Subsidiaries
39
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors and Stockholders
PACCAR Inc
We have audited the accompanying consolidated balance sheets of PACCAR Inc and
subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of PACCAR Inc and
subsidiaries at December 31, 1995 and 1994, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Seattle, Washington
February 9, 1996
COMMON STOCK MARKET PRICES AND DIVIDENDS
Common stock of the Company is traded on the Nasdaq National Market under the
symbol PCAR. The table below reflects the range of trading prices as reported by
Nasdaq and cash dividends declared. There were 3,284 record holders of the
common stock at December 31, 1995.
<TABLE>
<CAPTION>
1995 Cash Dividends Stock Price 1994 Cash Dividends Stock Price
Quarter Declared High Low Quarter Declared High Low
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
First $.25 $ 48 $40 3/4 First $.25 $61 3/4 $50
Second .25 51 1/2 41 3/4 Second .25 54 3/4 43 3/4
Third .25 54 5/8 46 1/4 Third .25 52 1/4 45 1/4
Fourth .25 51 3/4 39 1/4 Fourth .25 46 40
Year-End Extra 3.00 Year-End Extra 2.00
- ------------------------------------------------------------------------------------------------
</TABLE>
The Company expects to continue paying regular cash dividends, although
there is no assurance as to future dividends because they are dependent upon
future earnings, capital requirements and financial conditions.
40
<PAGE>
QUARTERLY RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
Quarter
First Second Third Fourth
- -------------------------------------------------------------------------------------------------------------------
1995 (millions except per share data)
<S> <C> <C> <C> <C>
Net Sales $1,123.7 $1,205.3 $1,147.0 $1,096.5
Gross Profit 145.0 165.0 154.7 157.1
Financial Services Income Before Income Taxes 10.6 14.4 14.6 13.7
Net Income 54.3 65.1 68.3 65.1
Weighted Average Number of Common
Shares Outstanding 38.9 38.9 38.9 38.9
Net Income Per Share $1.40 $1.67 $1.76 $1.67
- -------------------------------------------------------------------------------------------------------------------
1994
Net Sales $ 986.3 $1,070.8 $1,114.5 $1,113.5
Gross Profit 131.3 148.3 154.2 158.3
Financial Services Income Before Income Taxes 12.4 14.3 16.0 14.8
Net Income 43.6 50.6 53.2 57.1
Weighted Average Number of Common
Shares Outstanding 38.9 38.9 38.9 38.9
Net Income Per Share $ 1.12 $ 1.30 $ 1.37 $ 1.47
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------
(millions except per share data)
<S> <C> <C> <C> <C> <C>
Net Sales $ 4,572.5 $ 4,285.1 $ 3,378.9 $ 2,576.8 $2,159.6
Financial Services Revenue 257.5 210.9 166.6 161.1 180.2
Net Income 252.8 204.5 142.2 65.2 55.2
Total Assets:
Manufacturing 1,646.2 1,562.7 1,343.9 1,235.7 1,214.6
Financial Services 2,744.3 2,365.5 1,947.3 1,556.4 1,523.0
Long-Term Debt:
Manufacturing 10.7 11.1 11.7 12.5 25.2
Financial Services 1,149.6 999.9 709.1 494.4 483.7
Stockholders' Equity 1,251.2 1,174.5 1,107.5 1,038.4 1,032.3
Per Common Share:
Net Income $ 6.50 $ 5.26 $ 3.66 $ 1.68 $ 1.42
Cash Dividends Declared 4.00 3.00 1.74 1.13 .96
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Net income for 1991 includes a cumulative effect adjustment for a change in the
method of accounting for income taxes of $15.4 million
after-tax ($.40 per share).
PACCAR Inc and Subsidiaries
41
<PAGE>
Exhibit 21
SUBSIDIARIES AND AFFILIATE OF THE REGISTRANT
<TABLE>
<CAPTION>
State or
Country of Names Under Which
Name* Incorporation Subsidiaries Do Business
- -------------------------- ------------- -------------------------
<S> <C> <C>
PACCAR of Canada Ltd. Canada PACCAR of Canada Ltd.
Canadian Kenworth Co.
Peterbilt of Canada
PACCAR Parts of Canada
PACCAR Australia Pty. Ltd. Australia PACCAR Australia Pty. Ltd.
Kenworth Trucks
PACCAR U.K. Ltd. Delaware PACCAR U.K. Ltd.
Foden Trucks
VILPAC S.A. Mexico VILPAC S.A.
Kenworth Mexicana S.A. de C.V.
KENPAR S.A. de C.V.
KENFABRICA, S.A. de C.V.
KENCOM, S.A. de C.V.
PACCAR Financial Corp. Washington PACCAR Financial Corp.
PACCAR Financial Services Ltd. Canada PACCAR Financial Services Ltd.
PACCAR Leasing Corporation Delaware PACCAR Leasing Corporation
PacLease
RAILEASE Inc Washington RAILEASE Inc
Trico Industries, Inc. California Trico Industries, Inc.
PACCAR Sales North America, Inc. Delaware PACCAR Sales North America
PACCAR Automotive, Inc. Washington Grand Auto
Al's Auto Supply
</TABLE>
* The names of some subsidiaries have been omitted. Considered in the aggregate,
omitted subsidiaries would not constitute a significant subsidiary.
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of PACCAR Inc of our report dated February 9, 1996, included in the 1995 Annual
Report to Shareholders of PACCAR Inc.
Our audits also included the consolidated financial statement schedule of PACCAR
Inc listed in item 14(a). This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits. In
our opinion, the financial statement schedule referred to above, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 2-83673) pertaining to the 1981 Long-Term Incentive Plan and in
the Registration Statement (Form S-8 No. 33-47763) pertaining to the 1991 Long-
Term Incentive Plan of PACCAR Inc of our report dated February 9, 1996, with
respect to the consolidated financial statements and schedule of PACCAR Inc
incorporated by reference in the Annual Report (Form 10-K) for the year ended
December 31, 1995.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Seattle, Washington
March 25, 1996
<PAGE>
Exhibit 24
POWER OF ATTORNEY
We, the undersigned directors of PACCAR Inc, a Delaware corporation, hereby
severally constitute and appoint C. M. Pigott, our true and lawful attorney-in-
fact, with full power to sign for us, and in our names in our capacity as
director, a Form 10-K on behalf of the company for the year ending December 31,
1995, to be filed with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, each of the undersigned has executed this power of attorney
as of this 11th day of December 1995.
*/s/ R. P. Cooley */s/ James C. Pigott
- ------------------------------- -------------------------------
R. P. Cooley J. C. Pigott
Director, PACCAR Inc Director, PACCAR Inc
*/s/ John M. Fluke, Jr. */s/ Mark Pigott
- ------------------------------- -------------------------------
J. M. Fluke, Jr. M. C. Pigott
Director, PACCAR Inc Director, PACCAR Inc
*/s/ C. H. Hahn */s/ John W. Pitts
- ------------------------------- -------------------------------
C. H. Hahn J. W. Pitts
Director, PACCAR Inc Director, PACCAR Inc
*/s/ H. J. Haynes */s/ M. A. Tembreull
- ------------------------------- -------------------------------
H. J. Haynes M. A. Tembreull
Director, PACCAR Inc Director, PACCAR Inc
*/s/ D. J. Hovind */s/ James H. Wiborg
- ------------------------------- -------------------------------
D. J. Hovind J. H. Wiborg
Director, PACCAR Inc Director, PACCAR Inc
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF INCOME FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995,
1994, AND 1993, AND FROM THE CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 1995
AND 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> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 184,000
<SECURITIES> 437,300
<RECEIVABLES> 3,178,000
<ALLOWANCES> 62,600
<INVENTORY> 239,500
<CURRENT-ASSETS> 0
<PP&E> 866,800
<DEPRECIATION> 394,700
<TOTAL-ASSETS> 4,390,500
<CURRENT-LIABILITIES> 0
<BONDS> 1,160,300
0
0
<COMMON> 466,300
<OTHER-SE> 784,900
<TOTAL-LIABILITY-AND-EQUITY> 4,390,500
<SALES> 4,572,500
<TOTAL-REVENUES> 4,848,200
<CGS> 3,950,700
<TOTAL-COSTS> 4,094,200
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 14,400
<INTEREST-EXPENSE> 2,000
<INCOME-PRETAX> 399,600
<INCOME-TAX> 146,800
<INCOME-CONTINUING> 252,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 252,800
<EPS-PRIMARY> 6.50
<EPS-DILUTED> 6.50
</TABLE>
