<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _________ to _________
Commission File No. 0-6394
PACCAR Inc
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(Exact name of registrant as specified in its charter)
Delaware 91-0351110
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
777 - 106th Ave. N.E., Bellevue, WA 98004
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(Address of principal executive offices) (Zip Code)
(425) 455-7400
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for at least the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $1 par value--77,823,678 shares as of July 31, 1997
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<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
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INDEX
Page
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PART I. FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Statements of Income --
Three and Six Months Ended June 30, 1997 and 1996.................. 3
Condensed Consolidated Balance Sheets --
June 30, 1997, and December 31, 1996............................... 4
Condensed Consolidated Statements of Cash Flows --
Six Months Ended June 30, 1997 and 1996............................ 6
Notes to Consolidated Financial Statements............................ 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION............................ 8
PART II. OTHER INFORMATION:
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.............................. 10
SIGNATURE ............................................................... 11
INDEX TO EXHIBITS ....................................................... 12
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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 data)
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Three Months Ended Six Months Ended
June 30 June 30
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1997 1996 1997 1996
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MANUFACTURING AND PARTS:
Revenues
Net sales $1,588.7 $1,033.9 $3,032.1 $2,061.6
Other 1.8 5.4 3.9 5.6
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1,590.5 1,039.3 3,036.0 2,067.2
Costs and Expenses
Cost of sales 1,366.7 897.4 2,621.7 1,792.4
Selling, general and administrative 130.1 82.0 253.6 181.7
Interest 4.2 .5 8.3 1.1
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1,501.0 979.9 2,883.6 1,975.2
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Manufacturing and Parts Income
Before Income Taxes 89.5 59.4 152.4 92.0
FINANCIAL SERVICES:
Revenues 69.4 66.6 137.5 133.5
Costs and Expenses
Interest and other 37.4 36.7 73.9 74.0
Selling, general and administrative 13.7 11.6 26.5 23.4
Provision for losses on receivables 1.3 1.6 3.0 2.7
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52.4 49.9 103.4 100.1
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Financial Services Income
Before Income Taxes 17.0 16.7 34.1 33.4
OTHER:
Investment income 5.5 5.9 10.6 12.1
Other, net (1.2) .6 2.4 .9
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Total Income Before Income Taxes 110.8 82.6 199.5 138.4
Income taxes 39.3 30.9 70.1 51.0
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Net Income $ 71.5 $ 51.7 $ 129.4 $ 87.4
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Weighted average number of
common shares outstanding 77.8 77.8 77.8 77.8
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Per Share Data:
Net income $ .92 $ .67 $ 1.66 $ 1.13
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Dividends declared and paid $ .150 $ .125 $ .275 $ .250
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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 June 30 December 31
ASSETS (Millions of Dollars) 1997 1996*
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MANUFACTURING AND PARTS: (Unaudited)
Current Assets
Cash and cash equivalents $ 212.1 $ 203.0
Trade and other receivables, net 625.7 560.5
Marketable securities 298.0 304.9
Inventories 403.6 406.5
Deferred taxes and other current assets 67.0 73.3
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Total Manufacturing and Parts Current Assets 1,606.4 1,548.2
Deferred taxes, goodwill and other 180.8 196.3
Property, plant and equipment, net 696.2 732.6
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Total Manufacturing and Parts Assets 2,483.4 2,477.1
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FINANCIAL SERVICES:
Cash and cash equivalents 15.9 19.9
Finance and other receivables, net of allowance for losses 2,938.2 2,972.4
Less unearned interest (225.4) (235.5)
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2,712.8 2,736.9
Equipment on operating leases, net 41.9 44.9
Other assets 23.3 20.0
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Total Financial Services Assets 2,793.9 2,821.7
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$5,277.3 $5,298.8
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<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
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June 30 December 31
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996*
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MANUFACTURING AND PARTS: (Unaudited)
Current Liabilities
Accounts payable and accrued expenses $ 988.6 $ 914.4
Notes payable 9.3 347.4
Dividend payable 58.3
Income taxes and other 28.4 31.4
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Total Manufacturing and Parts Current Liabilities 1,026.3 1,351.5
Long-term debt 326.5 32.9
Other, including deferred taxes 213.0 225.2
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Total Manufacturing and Parts Liabilities 1,565.8 1,609.6
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FINANCIAL SERVICES:
Accounts payable and accrued expenses 42.9 85.1
Commercial paper and bank loans 892.5 982.0
Long-term debt 1,191.3 1,112.0
Deferred income taxes and other 144.6 152.1
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Total Financial Services Liabilities 2,271.3 2,331.2
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STOCKHOLDERS' EQUITY
Preferred stock, no par value:
1.0 million shares authorized, none issued
Common stock, par value $1: authorized 200.0 million
shares, 77.8 million shares issued and outstanding 77.8 466.4
Additional paid-in capital 609.6 219.0
Retained earnings 865.6 757.7
Currency translation and
net unrealized investment gains or losses (112.8) (85.1)
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Total Stockholders' Equity 1,440.2 1,358.0
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$5,277.3 $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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Six Months Ended June 30 1997 1996
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NET CASH PROVIDED BY OPERATING ACTIVITIES $ 125.1 $ 131.5
INVESTING ACTIVITIES:
Finance receivables originated (651.5) (627.6)
Collections on finance receivables 616.1 551.2
Net decrease in wholesale receivables 33.1 66.3
Marketable securities purchased (1,102.9) (1,004.4)
Marketable securities sales and maturities 1,109.6 983.0
Acquisition of property, plant and equipment (38.5) (40.7)
Acquisition of equipment for operating leases (2.5) (3.1)
Proceeds from asset disposals 13.9 24.3
Other (.1) (1.7)
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Net Cash Used in Investing Activities (22.8) (52.7)
FINANCING ACTIVITIES:
Cash dividends (79.7) (136.0)
Net (decrease) increase in notes payable,
commercial paper and bank loans (382.0) 21.4
Proceeds of long-term debt 629.2 244.9
Payment of long-term debt (254.9) (276.3)
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Net Cash Used in Financing Activities (87.4) (146.0)
Effect of exchange rate changes on cash (9.8) (.9)
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Net Increase (Decrease) in Cash and Equivalents 5.1 (68.1)
Cash and equivalents at beginning of period 222.9 184.0
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Cash and equivalents at end of period $ 228.0 $ 115.9
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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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June 30 December 31
1997 1996
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Inventories at FIFO cost: (Unaudited)
Finished products $304.9 $303.9
Work in process and raw materials 232.4 235.3
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537.3 539.2
Less excess of FIFO cost over LIFO (133.7) (132.7)
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$403.6 $406.5
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Under the LIFO method of accounting (used for approximately 55% of June 30,
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
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NOTE C--Changes in Capital Stock
At the Annual Meeting of Stockholders on April 29, 1997, the Company's
stockholders approved an increase in the number of authorized common shares from
100 million to 200 million and a decrease in the par value from $12 to $1 per
share. This change resulted in a transfer of $427.6 million from the common
stock account to the additional paid-in capital account.
On April 29, 1997, the Company's Board of Directors also declared a two for one
split of the common stock (i.e., one additional share for each share held). New
shares were issued on May 21. As a result, $38.9 million was transferred from
additional paid-in capital to common stock. All references in the financial
statements to number of shares and per share amounts have been restated.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS:
PACCAR achieved higher sales and net income for both the second
quarter and the first half of 1997 compared with the same periods last
year. Second quarter net income increased $19.8 million (38%) and
sales improved 54% to $1.6 billion. First half net income grew 48% to
$129.4 million on a 47% gain in sales. Higher sales and earnings this
year were primarily due to the inclusion of DAF Trucks, N.V., the
European truck company acquired late in 1996. First half 1996 net
income includes an $11 million charge, primarily for closure of the
Company's Canadian truck plant.
Manufacturing and Parts income before income taxes increased
$30.1 million or 51% for the quarter and $60.4 million or 66% for the
half compared to corresponding amounts in 1996. New truck order intake
volumes in the U.S. and Canada were good in the second quarter and
backlogs at the end of June increased compared to both the end of 1996
and the end of first quarter 1997. The closure costs recognized in
1996 amounted to $18 million pretax and are reflected as a component
of selling, general and administrative expense. As previously
announced, the Company continues to participate in negotiations
regarding the possibility of reopening the Canadian plant.
Sales and profits for PACCAR's truck manufacturing operations in
Australia and Mexico increased for both the second quarter and first
half compared to 1996.
PACCAR's other product areas, which include auto parts, winches and
oilfield equipment, all showed favorable comparisons in the first half
of 1997 versus the first half of 1996.
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<PAGE>
FORM 10-Q
PACCAR Inc AND SUBSIDIARIES
PACCAR's finance and leasing companies benefited from higher average
outstanding balances of loan and lease receivables during the first
six months of 1997 compared to the first half of 1996. Consequently,
revenues and profits for the segment improved compared to last year's
results for both the first half and second quarter.
LIQUIDITY AND CAPITAL RESOURCES:
PACCAR's ratio of manufacturing and parts current assets to current
liabilities at June 30, 1997 improved to 1.57 from 1.15 at
December 31, 1996. During the second quarter the Company replaced the
two short-term Dutch guilder-denominated notes related to the purchase
of DAF Trucks N.V. with bank funding. The replacement funding was also
denominated in guilders and amounted to NLG 597 million, with terms
that can extend up to five years.
During the first half of 1997, the Company used cash from operations
primarily to pay the special year-end and regular quarterly cash
dividends and to make capital additions. In 1996, PACCAR's largest
financial services subsidiary, PACCAR Financial Corp. (PFC),
registered $1 billion of senior debt securities under the Securities
Act of 1933 for offering to the public. At the end of June 1997,
$375 million of such securities was available for issuance. Upon
issuance of the remaining securities, PFC expects to register
additional senior debt securities for offering to the public.
Other information on liquidity and capital resources 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 June 30, 1997
Reportable information in response to Item 4 was previously reported in the
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. Any exhibits filed herewith are listed in the accompanying
index to exhibits.
(b) No reports on Form 8-K have been filed for the quarter ended June 30,
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
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(Registrant)
Date August 11, 1997 By /s/ G. D. Hatchel
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G. D. Hatchel
Vice President and Controller
(Authorized Officer and
Chief Accounting Officer)
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<PAGE>
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
(incorporated by reference to the Quarterly Report on Form 10-Q for the
quarter ended March 31, 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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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statements of income for the six months ended June 30, 1997 and
1996, and the condensed consolidated balance sheets, June 30, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 228,000
<SECURITIES> 298,000
<RECEIVABLES> 3,338,500
<ALLOWANCES> 0
<INVENTORY> 403,600
<CURRENT-ASSETS> 0
<PP&E> 696,200
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,277,300
<CURRENT-LIABILITIES> 0
<BONDS> 1,517,800
0
0
<COMMON> 77,800
<OTHER-SE> 1,362,400
<TOTAL-LIABILITY-AND-EQUITY> 5,277,300
<SALES> 3,032,100
<TOTAL-REVENUES> 3,173,500
<CGS> 2,621,700
<TOTAL-COSTS> 2,695,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,000
<INTEREST-EXPENSE> 8,300
<INCOME-PRETAX> 199,500
<INCOME-TAX> 70,100
<INCOME-CONTINUING> 129,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 129,400
<EPS-PRIMARY> 1.66
<EPS-DILUTED> 1.66
</TABLE>
