Segment Information

9 Months Ended

Sep. 30, 2013

Segment Information

NOTE H – Segment Information

PACCAR operates in three principal segments: Truck, Parts and Financial Services.

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2013			2012			2013			2012
Net sales and revenues:
Truck
Total	$	3,416.6		$	3,016.3		$	9,924.6		$	10,710.1
Less intersegment		(155.4	)		(156.4	)		(460.1	)		(572.1	)
External customers		3,261.2			2,859.9			9,464.5			10,138.0
Parts
Total		726.2			661.4			2,126.0			2,031.1
Less intersegment		(10.9	)		(11.3	)		(33.8	)		(34.4	)
External customers		715.3			650.1			2,092.2			1,996.7
Other		30.1			36.7			92.8			117.8
		4,006.6			3,546.7			11,649.5			12,252.5
Financial Services		293.5			273.5			875.4			801.0
	$	4,300.1		$	3,820.2		$	12,524.9		$	13,053.5
Income (loss) before income taxes:
Truck	$	242.5		$	170.2		$	645.9		$	742.6
Parts		106.5			88.7			311.2			280.2
Other		(4.5	)		(1.7	)		(18.6	)		(6.1	)
		344.5			257.2			938.5			1,016.7
Financial Services		88.2			80.4			249.8			229.1
Investment income		7.3			7.8			21.8			24.9
	$	440.0		$	345.4		$	1,210.1		$	1,270.7
Depreciation and amortization:
Truck	$	89.2		$	75.1		$	250.9		$	233.4
Parts		1.2			1.4			3.9			4.5
Other		2.5			2.6			7.4			7.7
		92.9			79.1			262.2			245.6
Financial Services		113.5			97.1			326.5			276.8
	$	206.4		$	176.2		$	588.7		$	522.4

The Truck segment includes the manufacture of trucks, and the Parts segment includes the distribution of related aftermarket parts, both of which are sold through the same network of independent dealers. These segments derive a large proportion of their revenues and operating profits from operations in North America and Europe. The Truck segment incurs substantial costs to design, manufacture and sell trucks to its customers. The sale of new trucks provides the Parts segment with the basis for parts sales that may continue over the life of the truck, but are generally concentrated in the first five years after truck delivery. To reflect the benefit the Parts segment receives from costs incurred by the Truck segment, certain expenses are allocated from the Truck segment to the Parts segment. The expenses allocated are based on a percentage of the average annual expenses for factory overhead, engineering, research and development and SG&A for the preceding five years. The allocation is based on the ratio of the average parts direct margin dollars (net sales less material and labor costs) to the total truck and parts direct margin dollars for the previous five years. The Company believes such expenses have been allocated on a reasonable basis.

Included in Other is the Company’s industrial winch manufacturing business and other sales, income and expense not attributable to a reportable segment, including a portion of corporate expenses.

The accounting policies of the reportable segments are the same as those applied in the consolidated financial statements as described in Note A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.