Segment and Related Information

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Segment and Related Information

R. SEGMENT AND RELATED INFORMATION

PACCAR operates in three principal segments: Truck, Parts and Financial Services. The Company evaluates the performance of its Truck and Parts segments based on operating profits, which excludes investment income, other income and expense and income taxes. The Financial Services segment’s performance is evaluated based on income before income taxes. Geographic revenues from external customers are presented based on the country of the customer. The accounting policies of the reportable segments are the same as those applied in the consolidated financial statements as described in Note A.

Truck and Parts: The Truck segment includes the design and manufacture of high-quality, light-, medium- and heavy-duty commercial trucks and the Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles, 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 expenses 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. Truck segment assets related to the indirect expense allocation are not allocated to the Parts segment.

Financial Services: The Financial Services segment derives its earnings primarily from financing or leasing of PACCAR products and services provided to truck customers and dealers. Revenues are primarily generated from operations in North America and Europe.

Other: Included in Other is the Company’s industrial winch manufacturing business. Also within this category are other sales, income and expense not attributable to a reportable segment, including a portion of corporate expenses. Intercompany interest income on cash advances to the financial services companies is included in Other and was $.5, $.9 and $.7 for 2015, 2014 and 2013, respectively.

Geographic Area Data	2015		2014		2013
Net sales and revenues:
United States	$	11,408.3	$	10,106.3	$	8,147.6
Europe		4,515.9		4,835.7		4,967.2
Other		3,190.9		4,055.0		4,009.0
	$	19,115.1	$	18,997.0	$	17,123.8
Property, plant and equipment, net:
United States	$	1,140.5	$	1,132.0	$	1,183.1
The Netherlands		438.7		517.4		620.0
Other		597.2		663.9		710.2
	$	2,176.4	$	2,313.3	$	2,513.3
Equipment on operating leases, net:
United States	$	1,287.9	$	1,226.6	$	1,153.8
Mexico		330.0		346.9		361.6
Germany		321.9		347.0		404.1
United Kingdom		321.3		342.2		414.9
Other		1,111.9		977.8		994.0
	$	3,373.0	$	3,240.5	$	3,328.4

Business Segment Data	2015			2014			2013
Net sales and revenues:
Truck	$	15,568.6		$	15,330.4		$	13,627.7
Less intersegment		(786.1	)		(736.4	)		(624.8	)
External customers		14,782.5			14,594.0			13,002.9
Parts		3,104.7			3,125.9			2,868.3
Less intersegment		(44.6	)		(48.4	)		(46.1	)
External customers		3,060.1			3,077.5			2,822.2
Other		100.2			121.3			123.8
		17,942.8			17,792.8			15,948.9
Financial Services		1,172.3			1,204.2			1,174.9
	$	19,115.1		$	18,997.0		$	17,123.8
Income before income taxes:
Truck	$	1,440.3		$	1,160.1		$	936.7
Parts		555.6			496.7			416.0
Other		(43.2	)		(31.9	)		(26.5	)
		1,952.7			1,624.9			1,326.2
Financial Services		362.6			370.4			340.2
Investment income		21.8			22.3			28.6
	$	2,337.1		$	2,017.6		$	1,695.0
Depreciation and amortization:
Truck	$	399.8		$	415.0		$	352.9
Parts		6.2			5.9			5.3
Other		14.9			11.8			10.2
		420.9			432.7			368.4
Financial Services		486.2			485.0			442.3
	$	907.1		$	917.7		$	810.7
Expenditures for long-lived assets:
Truck	$	660.0		$	504.9		$	812.9
Parts		24.9			9.9			6.8
Other		17.7			12.1			20.8
		702.6			526.9			840.5
Financial Services		1,044.4			935.3			931.2
	$	1,747.0		$	1,462.2		$	1,771.7
Segment assets:
Truck	$	4,472.3		$	4,871.1		$	5,123.3
Parts		793.3			787.2			748.4
Other		211.6			106.1			298.5
Cash and marketable securities		3,378.0			2,937.1			2,925.2
		8,855.2			8,701.5			9,095.4
Financial Services		12,254.6			11,917.3			11,630.1
	$	21,109.8		$	20,618.8		$	20,725.5