<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from to
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Commission File No. 0-6394
PACCAR Inc
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(Exact name of registrant as specified in its charter)
Delaware 91-0351110
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
777 - 106th Ave. N.E., Bellevue, WA 98004
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(Address of principal executive offices) (Zip Code)
(206) 455-7400
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $12 par value--38,887,995 shares as of April 30, 1997
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<PAGE>
PACCAR Inc AND SUBSIDIARIES
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INDEX
PAGE
PART I. FINANCIAL INFORMATION: ----
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Statements of Income --
Three Months Ended March 31, 1997 and 1996 . . . . . . . 3
Condensed Consolidated Balance Sheets --
March 31, 1997, and December 31, 1996. . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows --
Three Months Ended March 31, 1997 and 1996 . . . . . . . 6
Notes to Consolidated Financial Statements. . . . . . . . . . 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION . . . . . . . . . . . 9
PART II. OTHER INFORMATION:
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . 11
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
INDEX TO EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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Consolidated Statements of Income (Unaudited)
(Millions Except per Share Amounts)
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Three Months Ended March 31 1997 1996
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MANUFACTURING AND PARTS:
Revenues
Net Sales $1,443.4 $1,027.7
Other 2.1 .2
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1,445.5 1,027.9
Costs and Expenses
Cost of sales 1,255.0 895.0
Selling, general and administrative 123.5 99.7
Interest 4.1 .6
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1,382.6 995.3
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Manufacturing and Parts Income Before Income Taxes 62.9 32.6
FINANCIAL SERVICES:
Revenues 68.1 66.9
Costs and Expenses
Interest and other 36.5 37.3
Selling, general and administrative 12.8 11.8
Provision for losses on receivables 1.7 1.1
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51.0 50.2
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Financial Services Income Before Income Taxes 17.1 16.7
OTHER:
Investment income 5.1 6.2
Other, net 3.6 .3
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Total Income Before Income Taxes 88.7 55.8
Income taxes 30.8 20.1
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Net Income $57.9 $35.7
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Weighted average number of common shares outstanding 38.9 38.9
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Per Share Data:
Net income $1.49 $ .92
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Dividends declared $ .25 $ .25
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See Notes to Consolidated Financial Statements.
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<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
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Condensed Consolidated Balance Sheets March 31 December 31
ASSETS (Millions of Dollars) 1997 1996*
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MANUFACTURING AND PARTS: (Unaudited)
Current Assets
Cash and equivalents $ 174.1 $ 203.0
Trade receivables, net of allowance for losses 594.4 560.5
Marketable securities 293.5 304.9
Inventories 384.9 406.5
Deferred taxes and other current assets 64.7 73.3
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Total Manufacturing and Parts Current Assets 1,511.6 1,548.2
Deferred taxes, goodwill and other 183.8 196.3
Property, plant and equipment, net 701.0 732.6
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Total Manufacturing and Parts Assets 2,396.4 2,477.1
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FINANCIAL SERVICES:
Cash and equivalents 16.6 19.9
Finance and other receivables, net of allowance
for losses 2,953.6 2,972.4
Less unearned interest (227.6) (235.5)
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2,726.0 2,736.9
Equipment on operating leases, net 44.3 44.9
Other assets 23.5 20.0
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Total Financial Services Assets 2,810.4 2,821.7
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$5,206.8 $5,298.8
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<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
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March 31 December 31
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996*
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MANUFACTURING AND PARTS: (Unaudited)
Current Liabilities
Accounts payable and accrued expenses $ 918.8 $ 914.4
Notes payable 314.0 347.4
Dividend payable 58.3
Income taxes and other 49.2 31.4
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Total Manufacturing and Parts Current Liabilities 1,282.0 1,351.5
Long-term debt 26.9 32.9
Other, including deferred taxes 214.5 225.2
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Total Manufacturing and Parts Liabilities 1,523.4 1,609.6
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FINANCIAL SERVICES:
Accounts payable and accrued expenses 36.6 85.1
Commercial paper and bank loans 1,002.8 982.0
Long-term debt 1,112.1 1,112.0
Deferred income taxes and other 146.9 152.1
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Total Financial Services Liabilities 2,298.4 2,331.2
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STOCKHOLDERS' EQUITY
Preferred stock, no par value:
Authorized 1.0 million shares, none issued
Common stock, $12 par value: Authorized 100.0 million
shares, 38.9 million shares issued and outstanding 466.7 466.4
Additional paid-in capital 219.7 219.0
Retained earnings 805.8 757.7
Currency translation and
net unrealized investment gains or losses (107.2) (85.1)
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Total Stockholders' Equity 1,385.0 1,358.0
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$5,206.8 $5,298.8
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* The December 31, 1996 condensed consolidated balance sheet has been derived
from audited financial statements.
See Notes to Consolidated Financial Statements.
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<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
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Condensed Consolidated Statements of Cash Flows (Unaudited)
(Millions of Dollars)
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Three Months Ended March 31 1997 1996
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NET CASH PROVIDED BY OPERATING ACTIVITIES $ 24.9 $ 43.2
INVESTING ACTIVITIES:
Finance receivables originated (309.8) (296.5)
Collections on finance receivables 295.1 269.7
Net decrease in wholesale receivables 11.9 23.8
Marketable securities purchased (397.9) (313.9)
Marketable securities sales and maturities 408.1 332.4
Acquisition of property, plant, and equipment (15.3) (18.1)
Proceeds from asset disposals 8.7 8.7
Other (1.6) (.2)
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Net Cash Provided by (Used in) Investing Activities (.8) 5.9
FINANCING ACTIVITIES:
Cash dividends (68.0) (126.3)
Net increase (decrease) in commercial paper and
bank loans 21.6 (2.8)
Proceeds of long-term debt 121.1 139.8
Payments of long-term debt (124.1) (125.0)
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Net Cash Used in Financing Activities (49.4) (114.3)
Effect of exchange rate changes on cash (6.9) 2.0
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Net Decrease in Cash and Equivalents (32.2) (63.2)
Cash and equivalents at beginning of period 222.9 184.0
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Cash and equivalents at end of period $190.7 $120.8
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See Notes to Consolidated Financial Statements.
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<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
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Notes to Consolidated Financial Statements (Millions of Dollars)
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NOTE A--Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. For further information, refer to the
consolidated financial statements and footnotes included in the Company's annual
report on Form 10-K for the year ended December 31, 1996.
RECLASSIFICATIONS: Certain prior year amounts have been reclassified to conform
to the 1997 presentation.
NOTE B--Inventories
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March 31 December 31
1997 1996
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Inventories at FIFO cost: (Unaudited)
Finished products $297.8 $303.9
Work in process and raw materials 220.9 235.3
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518.7 539.2
Less excess of FIFO cost over LIFO (133.8) (132.7)
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$384.9 $406.5
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Under the LIFO method of accounting (used for approximately 56% of March 31,
1997 inventories), an actual valuation can be made only at the end of each year
based on year-end inventory levels and costs. Accordingly, interim valuations
are based on management's estimates of those year-end amounts. Based on present
estimates of year-end inventory levels, no significant liquidations of LIFO
inventory quantities are expected. Because inventory levels and costs are
subject to many forces beyond management's control, the present estimates are
subject to the final year-end LIFO inventory valuation.
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<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
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Notes to Consolidated Financial Statements (Millions of Dollars)
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NOTE C--Changes in Capital Stock
On April 29, 1997, the Company's stockholders approved an increase in the
authorized common shares to 200 million and a decrease in the par value from $12
to $1 per share. Beginning in the second quarter of 1997, the Company will
reflect this change in its common stock and additional paid-in capital accounts.
All share and per share amounts herein are before split.
Stock Split
The Company's Board of Directors, on April 29, 1997, declared a two for one
split of the common stock (i.e., one additional share for each share held). New
shares will be issued on or before May 21 to stockholders of record at the close
of business on May 9, 1997. Following issuance of the additional shares, net
income per share will be computed using the new number of outstanding shares.
All share and per share amounts herein are before split.
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<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS:
PACCAR recorded higher sales and net income in the first quarter of
1997 compared to year-earlier levels. Consolidated net sales grew 40%
to $1.4 billion compared to $1.0 billion in the first quarter of 1996.
Net income increased by $22.2 million to $57.9 million from the $35.7
million earned in 1996.
The increases were generated primarily as a result of the
consolidation of DAF Trucks N.V., the European truck company acquired
in November 1996.
In the first quarter of 1996, PACCAR recognized an $18 million pretax
charge ($11 million after-tax), primarily to close its Canadian truck
plant. This charge was included in selling, general and administrative
expense. As previously announced, the Company has entered into
negotiations regarding the possibility of reopening the Canadian
plant.
Worldwide truck order backlogs for PACCAR increased during the first
quarter of 1997. North American operations (U.S., Canada and Mexico)
experienced good truck order intake volumes in the first three months
of 1997. DAF Trucks N.V. is also experiencing strong truck orders,
including excellent market response to its new truck model, the 95XF.
PACCAR's financial services operations and other product areas which
include auto parts, winches and oilfield equipment, all showed
favorable comparisons in the first quarter of 1997 versus the first
three months of 1996.
LIQUIDITY AND CAPITAL RESOURCES:
PACCAR's ratio of manufacturing current assets to current liabilities
at March 31, 1997 increased to 1.18 from 1.15 at December 31, 1996.
During the first quarter of 1997 the Company used cash from
operations, net additional borrowings and cash reserves to pay the
special year-end and regular first quarter dividends, and to make
capital additions, net of proceeds from asset disposals.
Other information on liquidity and sources of capital as presented in
the 1996 Annual Report to Stockholders continues to be relevant.
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<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
PART II--OTHER INFORMATION
For Items 1, 2, 3 and 5, there was no reportable information for any of the
three months ended March 31, 1997.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of stockholders was held on April 29, 1997.
(b) The following persons were elected to serve as directors:
CLASS II - TERM EXPIRING IN 2000
--------------------------------
Harold J. Haynes
James C. Pigott
Mark C. Pigott
Other persons whose term of office as a director continued after the
meeting:
CLASS I - TERM EXPIRING IN 1999
-------------------------------
John M. Fluke, Jr.
David J. Hovind
Michael A. Tembreull
Gerald Grinstein
CLASS III - TERM EXPIRING IN 1998
---------------------------------
Dr. Carl H. Hahn
Charles M. Pigott
John W. Pitts
(c) In addition, at the annual meeting the stockholders approved the
PACCAR Inc Senior Executive Incentive Plan, amendments to the
Company's 1991 Long Term Incentive Plan, and an amendment to the
Certificate of Incorporation to increase the authorized common shares
to 200 million and to decrease their par value from $12 to $1 per
share.
The PACCAR Inc Senior Executive Incentive Plan was approved with
34,347,541 shares voted in favor and 568,755 shares voted against the
plan; 477,803 abstentions and 917,400 nonvotes.
The amendments to the Company's 1991 Long Term Incentive Plan were
approved with 25,389,371 shares voted in favor of the amendments, and
8,823,380 shares voted against the amendments; 892,642 abstentions and
1,206,106 nonvotes.
The amendment to the Certificate of Incorporation to increase the
authorized common shares to 200 million and to decrease their par
value from $12 to $1 per share was approved with 35,215,153 shares
voted in favor of the amendment, and 845,058 shares voted against the
amendment; 251,288 abstentions and 0 nonvotes.
The total number of shares of PACCAR Common Stock $12 par value,
outstanding as of March 5, 1997, the record date for the annual
meeting, was 38,884,797.
Reference should be made to the exhibits filed herewith for
descriptions of the plan and amendments which required stockholder
approval.
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<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
(d) None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The exhibits filed herewith are listed in the accompanying
index to exhibits.
(b) The following report on Form 8-K has been filed for the quarter ended
March 31, 1997:
(1) Current report on Form 8-K, amendment No. 2 related to the
acquisition of DAF Trucks N.V. was filed January 30, 1997.
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<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PACCAR INC
-------------------------
(Registrant)
Date May 12, 1997 By /s/ G. D. Hatchel
----------------------- ----------------------------
G. D. Hatchel
Vice President and Controller
(Authorized Officer and
Chief Accounting Officer)
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<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
INDEX TO EXHIBITS
EXHIBIT (IN ORDER OF ASSIGNED INDEX NUMBERS)
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2 Plan of acquisition, reorganization, arrangement, liquidation or
succession:
(a) "Agreement for the Sale and Purchase of the Entire Issued and
Outstanding Share Capital of DAF Trucks N.V." (incorporated by
reference to Form 8-K/A, Amendment No. 1 to Current Report, filed
December 6, 1996).
3 Articles of incorporation and bylaws:
(a) PACCAR Inc Certificate of Incorporation, as amended to April 29, 1997.
(b) PACCAR Inc Bylaws, as amended to April 26, 1994 (incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994).
4 Instruments defining the rights of security holders, including indentures:
(a) Rights agreement dated as of December 21, 1989 between PACCAR Inc and
First Chicago Trust Company of New York setting forth the terms of the
Series A Junior Participating Preferred Stock, no par value per share
(incorporated by reference to Exhibit 1 of the Current Report on Form
8-K of PACCAR Inc, dated December 27, 1989).
(b) Indenture for Senior Debt Securities dated as of December 1, 1983
between PACCAR Financial Corp. and Citibank, N.A., Trustee
(incorporated by reference to Exhibit 4.1 of the Annual Report on Form
10-K of PACCAR Financial Corp. for the year ended December 31, 1983).
(c) First Supplemental Indenture dated as of June 19, 1989 between PACCAR
Financial Corp. and Citibank, N.A., Trustee (incorporated by reference
to Exhibit 4.2 to PACCAR Financial Corp.'s registration statement on
Form S-3, Registration No. 33-29434).
(d) Forms of Medium-Term Note, Series 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).
(e) 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).
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<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
INDEX TO EXHIBITS
EXHIBIT (IN ORDER OF ASSIGNED INDEX NUMBERS)
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(f) Forms of Medium-Term Note, Series H (incorporated by reference to
Exhibits 4.3A and 4.3B to PACCAR Financial Corp.'s Registration
Statement on Form S-3 dated March 11, 1996, Registration
Number 333-01623).
Form of Letter of Representation among PACCAR Financial Corp.,
Citibank, N.A. and the Depository Trust Company, Series H
(incorporated by reference to Exhibit 4.4 to PACCAR Financial Corp.'s
Registration Statement on Form S-3 dated March 11, 1996, Registration
Number 333-01623).
10 Material contracts
(a) PACCAR Inc Incentive Compensation Plan (incorporated by reference to
Exhibit (10)(a) of the Annual Report on Form 10-K for the year ended
December 31, 1980).
(b) PACCAR Inc Deferred Compensation Plan for Directors (incorporated by
reference to Exhibit (10)(b) of the Annual Report on Form 10-K for the
year ended December 31, 1980).
(c) Supplemental Retirement Plan (incorporated by reference to Exhibit
(10)(c) of the Annual Report on Form 10-K for the year ended December
31, 1980).
(d) 1981 Long Term Incentive Plan (incorporated by reference to Exhibit A
of the 1982 Proxy Statement, dated March 25, 1982).
(e) Amendment to 1981 Long Term Incentive Plan (incorporated by reference
to Exhibit (10)(a) of the Quarterly Report on Form 10-Q for the
quarter ended March 31, 1991).
(f) PACCAR Inc 1991 Long-Term Incentive Plan (incorporated by reference to
Exhibit C of the 1997 Proxy Statement, dated March 20, 1997).
(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).
(h) PACCAR Inc Senior Executive Incentive Plan (incorporated by reference
to Exhibit D of the 1997 Proxy Statement, dated March 20, 1997).
27 Financial Data Schedule
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<PAGE>
CERTIFICATE OF INCORPORATION
OF
PACCAR INC
FIRST: The name of this Corporation shall be
"PACCAR Inc".
SECOND: The Corporation's Registered Office shall be at 100 West 10th
Street, Wilmington, Delaware. The Corporation's Registered Agent shall be
the Corporation Trust Company, a corporation, 100 West 10th Street,
Wilmington, Delaware.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The Corporation is authorized to issue 201,000,000 shares of
stock of all classes, consisting of 200,000,000 shares of common stock having
a par value of $1.00 per share and 1,000,000 shares of preferred stock having
no par value. Each holder of record of shares of common stock shall be
entitled to one vote for each share of stock outstanding in his name of
record on the books of the Corporation. The holders of shares of preferred
stock shall have no vote other than as may be provided by resolution of the
Board of Directors. Other than as here expressly provided, the Board of
Directors of the Corporation is expressly granted the authority to fix by
resolution or resolutions, the voting power, designations, preferences and
relative participating optional or other special rights and the
qualifications, limitations or restrictions thereof in respect of any class
or classes of stock or
<PAGE>
Certificate of Incorporation
of PACCAR Inc
Page Two
any shares of any class of stock of the Corporation to the full extent
permitted by the General Corporation Law of the State of Delaware.
FIFTH: The original Bylaws of the Corporation may be adopted by the
incorporator. Thereafter the power to make, alter or repeal Bylaws is
conferred upon the Directors of the Corporation.
SIXTH: The Corporation shall have and may exercise all powers and
rights, including but not limited to the power to indemnify its Directors,
officers, employees and agents, or any of them, in all respects as and to the
full extent authorized or permitted by the General Corporation Law of the
State of Delaware as the same has been heretofore or may be hereafter amended
and by the provisions of this Certificate.
SEVENTH: The affirmative vote of holders of two-thirds (2/3) of the
outstanding shares of stock entitled to vote shall be necessary for the
following corporate actions:
1. The removal, with or without cause, of any Director or the entire
Board of Directors;
2. Amendment of this Certificate of Incorporation;
3. Adoption of an agreement of merger or consolidation;
4. The sale, lease or exchange of all or substantially all of the
Corporation's property and assets;
5. Dissolution of the Corporation; and
6. Approval of a stockholder action to make, alter or repeal the
Bylaws.
<PAGE>
Certificate of Incorporation
of PACCAR Inc
Page Three
EIGHTH: If any "Unfriendly Suitor" (as described below, hereafter
"Suitor") becomes the beneficial owner after the record date for the 1986
stockholders' meeting, directly or indirectly, of twenty percent (20%) or
more of the outstanding shares of stock of the Corporation, then in addition
to the two-thirds (2/3) voting requirement for any transactions described in
paragraphs 3, 4 or 5 of Article SEVENTH (each called "a Business
Combination"), the following shall also be necessary:
1. The cash, or fair market value of other consideration, to be
received per share by stockholders of the Corporation in any
Business Combination in which the Suitor has a direct or indirect
material interest, other than solely as a stockholder of the
Corporation, shall not be less than the highest per share price
(including brokerage commissions and/or soliciting dealers' fees)
paid by the Suitor in acquiring any of its holdings of the
Corporation's common stock.
2. The Suitor shall not have received the benefit, directly or
indirectly of any loans, advances, guarantees, pledges or other
financial assistance or tax benefits provided by the Corporation.
The term Suitor includes any person, corporation, or affiliate and any
party with which the Suitor has a direct or indirect agreement, understanding or
arrangement for the purpose of acquiring, holding or voting stock of the
Corporation.
<PAGE>
Certificate of Incorporation
of PACCAR Inc
Page Four
The affirmative vote of two-thirds (2/3) of the outstanding shares of
stock entitled to vote, other than stock held by the Suitor, shall be
necessary to amend this Article EIGHTH.
NINTH:
1. The number of the directors of the Corporation shall be fixed
from time to time by or pursuant to the Bylaws of the
Corporation. The directors shall be classified, with respect to
the time for which they severally hold office, into three
classes, as nearly equal in number as possible, as shall be
provided in the manner specified in the Bylaws of the
Corporation, one class to be originally elected for a term
expiring at the annual meeting of stockholders to be held in
1987, another class to be originally elected for a term expiring
at the annual meeting of stockholders to be held in 1988, and
another class to be originally elected for a term expiring at the
annual meeting of stockholders to be held in 1989, with each
class to hold office until its successor is elected and
qualified. At each annual meeting of the stockholders of the
Corporation, the successors of the class of directors whose term
expires at that meeting shall be elected to hold office for a
term expiring at the annual meeting of stockholders held in the
third year following the year of their election.
<PAGE>
Certificate of Incorporation
of PACCAR Inc
Page Five
2. Newly created directorships resulting from any increase in the
number of directors and any vacancies on the Board of Directors
resulting from death, resignation, disqualification, removal or
other cause shall be filled by the affirmative vote of a majority
of the remaining directors then in office, even though less than
a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the
remainder of the full term of the class of directors in which the
new directorship was created or the vacancy occurred and until
such director's successor shall have been elected and qualified.
No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
TENTH: Any action required or permitted to be taken by the stockholders
of the Corporation must be effected at a duly called annual or special
meeting of stockholders and may not be effected by any consent in writing by
the stockholders. Except as otherwise required by law and subject to the
rights of the holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation, special meetings
of stockholders of the Corporation may be called only by the Board of
Directors pursuant to a resolution approved by a majority of the entire Board
of Directors.
<PAGE>
Certificate of Incorporation
of PACCAR Inc
Page Six
ELEVENTH: The liability of the Corporation's directors to the
Corporation or its stockholders shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law as amended from time
to time. Any amendment or repeal of this Article ELEVENTH shall not adversely
affect any right or protection of a director for acts or omissions prior to
such amendment or repeal.
TWELFTH:
1. Right to Indemnification. Each person made or threatened to be
made a party to or involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he or she (or a person
of whom he or she is the legal representative) is or was a
director or officer of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee
or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of the
proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity
while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law, as it
now exists or may be amended, against all
<PAGE>
Certificate of Incorporation
of PACCAR Inc
Page Seven
expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered
by a person in connection with a proceeding. The indemnification
shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his
or her heirs, executors and administrators; provided, however,
that, except as provided in paragraph 2 of this Article TWELFTH,
the Corporation shall indemnify any person seeking
indemnification in connection with a proceeding (or part thereof)
initiated by such person only if the proceeding (or part thereof)
was authorized by the Board of Directors of the Corporation. The
right to indemnification conferred in this Article TWELFTH shall
be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any proceeding in
advance of its final disposition; provided, however, that, if the
Delaware General Corporation Law requires, the payment of
expenses incurred by a director or officer in his or her capacity
as a director or officer (and not in any other capacity in which
service was or is rendered by a person while a director or
officer, including, without limitation, service to an employee
benefit plan) in advance of
<PAGE>
Certificate of Incorporation
of PACCAR Inc
Page Eight
the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of
the director or officer, to repay all amounts so advanced if it
shall ultimately be determined that the director or officer is
not entitled to be indemnified under this Article TWELFTH or
otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the
Corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
2. If a claim under paragraph 1 of this Article TWELFTH is not paid
in full by the Corporation within thirty days after a written
claim has been received by the Corporation, the claimant may at
any time thereafter bring suit against the Corporation to recover
the unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the cost and
expense (including attorneys' fees) of prosecuting the claim. It
shall be a defense to an action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding
in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General
<PAGE>
Certificate of Incorporation
of PACCAR Inc
Page Nine
Corporation Law for the Corporation to indemnify the claimant for
the amount claimed, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or
its stockholders) to have made a determination prior to the
commencement of the action that indemnification of the claimant
is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or
its stockholders) that the claimant has not met the applicable
standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard
of conduct.
3. The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition
conferred in this Article TWELFTH shall not be exclusive of any
other right which any person may have or hereafter acquire under
any statute, provision of the Certificate of Incorporation,
bylaw, agreement, vote of stockholders or disinterested directors
or otherwise.
4. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer,
<PAGE>
Certificate of Incorporation
of PACCAR Inc
Page Ten
employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against the expense,
liability or loss under the Delaware General Corporation Law.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND
1996, AND THE CONDENSED CONSOLIDATED BALANCE SHEETS, MARCH 31, 1997, AND
DECEMBER 31, 1996, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 190,700
<SECURITIES> 293,500
<RECEIVABLES> 3,320,400
<ALLOWANCES> 0
<INVENTORY> 384,900
<CURRENT-ASSETS> 0
<PP&E> 701,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,206,800
<CURRENT-LIABILITIES> 0
<BONDS> 1,139,000
0
0
<COMMON> 466,700
<OTHER-SE> 918,300
<TOTAL-LIABILITY-AND-EQUITY> 5,206,800
<SALES> 1,443,400
<TOTAL-REVENUES> 1,513,600
<CGS> 1,255,000
<TOTAL-COSTS> 1,291,500
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,700
<INTEREST-EXPENSE> 4,100
<INCOME-PRETAX> 88,700
<INCOME-TAX> 30,800
<INCOME-CONTINUING> 57,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,900
<EPS-PRIMARY> 1.49
<EPS-DILUTED> 1.49
</TABLE>
