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PACCAR INC Annual Report, Year Ended Dec 31, 2003

Filing Date
Filed March 12, 2004
Period End
December 31, 2003
Security
PCAR
In the record · 2016–202610-K1110-Q328-K87

PCAR filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 87 current reports (8-K) between 2016 and 2026.

  1. FY2017 annual report10-K · Feb ’18Feb ’18
  2. Leadership change8-K · Apr ’21Apr ’21
  3. Leadership change8-K · Sep ’25Sep ’25

01—Abstract

Summary

Summary of the 10-K filed March 12, 2004. Cited figures are marked; the original filing is the authoritative source.

PACCAR Inc (Nasdaq: PCAR) closed fiscal 2003 with its strongest results in several years.

Net income rose 42% to $526.5 milliona ($2.99 diluted EPS, restated for the 50% stock dividend) on revenues of $8.19 billion, up from $372.0 million and $7.22 billion in 2002. The improvement was driven mainly by higher truck sales and margins in Europe (DAF and Foden sales up 32%) and Australia, a $485 million revenue benefit from the stronger euro, and a sharp rebound in Financial Services pre-tax income to a record $123.6 million on lower credit losses. Management also reported SG&A as a record-low 4.5% of Truck and Other sales.

The balance sheet is solid. Cash and marketable securities totaled $1.72 billionb, and the Company carries an AA- credit rating and a $1.5 billion multiyear bank facility. Most of the $3.8 billion in consolidated borrowings sits in Financial Services and funds the captive finance and leasing book, while Truck and Other debt is minimal at roughly $41.5 million.

Shareholders' equity grew to $3.25 billionc, helped by a $278 million currency translation gain. Looking ahead, management expects North American medium- and heavy-duty truck demand to rise 10% to 15% in 2004 as aging fleets are replaced, and European heavy-duty demand to be slightly better than 2003, contingent on euro-zone economic conditions.

Key risks flagged in the filing include economic weakness, high fuel and insurance costs pressuring truck operators' margins, and possible reversals in past-due accounts and repossessions in Financial Services. The Company also disclosed a $1.9 billiond total truck backlog at year-end 2003, and a 50% stock dividend payable in February 2004.

02—Key points

Key Highlights

  1. Net income up 42% to $526.5 million, or $2.99 per diluted share, versus $372.0 million ($2.13) in 2002
  2. Total revenues rose 13% to $8.19 billion; Truck and Other sales reached $7.72 billion, with Europe now about 35% of Truck and Other sales (31% in 2002)
  3. Financial Services pre-tax income hit a record $123.6 million (up 71%), driven by higher finance margins and credit losses falling to $24.2 million from $51.1 million
  4. Liquidity is strong: $1.72 billion in cash and marketable securities, a $1.5 billion bank facility, and an AA- credit rating
  5. Truck and Other SG&A fell to a record-low 4.5% of sales, while Class 8 market share in the U.S. and Canada held at about 23.5%
  6. Year-end truck backlog of $1.9 billion (of which $1.5 billion is firm within 90 days) supports 2004 production; North American demand is expected to rise 10% to 15%
  7. A 50% stock dividend was declared in December 2003 and paid in February 2004, with all share and per-share data restated accordingly

03—Questions

Frequently Asked Questions

  1. How profitable was PACCAR in 2003 and what drove the improvement?

    Net income was $526.5 million ($2.99 diluted EPS), up from $372.0 million in 2002. The gain came from higher truck sales and margins in Europe and Australia, a roughly $485 million revenue boost from a stronger euro, cost reductions, and a rebound in Financial Services earnings on lower credit losses.

  2. What is the outlook for PACCAR's truck business in 2004?

    Management expects North American medium- and heavy-duty truck demand to rise 10% to 15% in 2004 as customers replace aging fleets. European heavy-duty demand is expected to be slightly better than 2003, though this depends on euro-zone economic conditions. Capital spending on product development and technology is also expected to increase.

  3. How much debt does PACCAR carry, and is it a risk to investors?

    Most of the roughly $3.8 billion in borrowings belongs to the Financial Services segment, which funds truck financing and leasing through commercial paper and medium-term notes. Truck and Other debt is minimal at about $41.5 million. Financial Services borrowings are structured to match the interest-rate profile of the assets they fund, and management believes the segment can keep funding itself through cash flows and capital markets access.

  4. What risks does the filing highlight for investors?

    The filing points to economic weakness and high fuel and insurance costs, which could squeeze truck operators' margins and lead to more past-due accounts and repossessions in Financial Services. Currency movements also matter, since the euro's strength contributed significantly to 2003 results. Environmental cleanup costs are estimated at $22.0 million to $51.1 million, but management does not expect them to be material.

  5. Is PACCAR paying dividends and what is its capital return policy?

    Cash dividends declared were $1.37 per share in 2003 (restated), including a $0.80 year-end extra, up from $1.00 in 2002. A 50% stock dividend was paid in February 2004. Management expects to continue regular cash dividends, though future payments depend on earnings, capital needs and financial conditions.

04—Continue

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