Stockholders' Equity

9 Months Ended

Sep. 30, 2019

NOTE I - Stockholders’ Equity

Comprehensive Income

The components of comprehensive income are as follow:

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2019			2018			2019			2018
Net income	$	607.9		$	545.3		$	1,856.6		$	1,617.0
Other comprehensive (loss) income (OCI):
Unrealized losses on derivative contracts		(13.6	)		(8.9	)		(30.0	)		(6.2	)
Tax effect		3.8			2.5			8.2			2.1
		(9.8	)		(6.4	)		(21.8	)		(4.1	)
Unrealized gains (losses) on marketable debt securities		.1			(1.5	)		11.6			(3.6	)
Tax effect		.1			.4			(2.8	)		.9
		.2			(1.1	)		8.8			(2.7	)
Pension plans		11.0			10.2			21.1			34.1
Tax effect		(2.7	)		(2.4	)		(5.0	)		(8.2	)
		8.3			7.8			16.1			25.9
Foreign currency translation losses		(126.5	)		(1.6	)		(94.6	)		(120.5	)
Net other comprehensive loss		(127.8	)		(1.3	)		(91.5	)		(101.4	)
Comprehensive income	$	480.1		$	544.0		$	1,765.1		$	1,515.6

Accumulated Other Comprehensive Income (Loss)

The components of AOCI and the changes in AOCI, net of tax, included in the Consolidated Balance Sheets consisted of the following:

Three Months Ended September 30, 2019	DERIVATIVE CONTRACTS			MARKETABLE DEBT SECURITIES			PENSION PLANS			FOREIGN CURRENCY TRANSLATION			TOTAL
Balance at July 1, 2019	$	(10.0	)	$	6.3		$	(470.0	)	$	(588.5	)	$	(1,062.2	)
Recorded into AOCI		20.0			.3			4.2			(126.5	)		(102.0	)
Reclassified out of AOCI		(29.8	)		(.1	)		4.1						(25.8	)
Net other comprehensive (loss) income		(9.8	)		.2			8.3			(126.5	)		(127.8	)
Balance at September 30, 2019	$	(19.8	)	$	6.5		$	(461.7	)	$	(715.0	)	$	(1,190.0	)

Three Months Ended September 30, 2018	DERIVATIVE CONTRACTS			MARKETABLE DEBT SECURITIES			PENSION PLANS			FOREIGN CURRENCY TRANSLATION			TOTAL
Balance at July 1, 2018	$	3.5		$	(3.4	)	$	(357.5	)	$	(536.3	)	$	(893.7	)
Recorded into AOCI		(5.4	)		(1.2	)		1.0			(1.6	)		(7.2	)
Reclassified out of AOCI		(1.0	)		.1			6.8						5.9
Net other comprehensive (loss) income		(6.4	)		(1.1	)		7.8			(1.6	)		(1.3	)
Balance at September 30, 2018	$	(2.9	)	$	(4.5	)	$	(349.7	)	$	(537.9	)	$	(895.0	)

Nine Months Ended September 30, 2019	DERIVATIVE CONTRACTS			MARKETABLE DEBT SECURITIES			PENSION PLANS			FOREIGN CURRENCY TRANSLATION			TOTAL
Balance at January 1, 2019	$	2.0		$	(2.3	)	$	(477.8	)	$	(620.4	)	$	(1,098.5	)
Recorded into AOCI		(10.9	)		9.0			3.5			(94.6	)		(93.0	)
Reclassified out of AOCI		(10.9	)		(.2	)		12.6						1.5
Net other comprehensive (loss) income		(21.8	)		8.8			16.1			(94.6	)		(91.5	)
Balance at September 30, 2019	$	(19.8	)	$	6.5		$	(461.7	)	$	(715.0	)	$	(1,190.0	)

Nine Months Ended September 30, 2018	DERIVATIVE CONTRACTS			MARKETABLE DEBT SECURITIES			PENSION PLANS			FOREIGN CURRENCY TRANSLATION			TOTAL
Balance at January 1, 2018	$	1.2		$	(1.8	)	$	(375.6	)	$	(417.4	)	$	(793.6	)
Recorded into AOCI		60.4			(2.5	)		5.0			(120.5	)		(57.6	)
Reclassified out of AOCI		(64.5	)		(.2	)		20.9						(43.8	)
Net other comprehensive (loss) income		(4.1	)		(2.7	)		25.9			(120.5	)		(101.4	)
Balance at September 30, 2018	$	(2.9	)	$	(4.5	)	$	(349.7	)	$	(537.9	)	$	(895.0	)

Reclassifications out of AOCI were as follows:

		Three Months Ended
	LINE ITEM IN THE CONSOLIDATED STATEMENTS OF	September 30
AOCI COMPONENTS	COMPREHENSIVE INCOME		2019			2018
Unrealized (gains) and losses on derivative contracts:
Truck, Parts and Other
Foreign-exchange contracts	Net sales and revenues	$	(3.2	)	$	4.3
	Cost of sales and revenues		(.3	)		(1.6	)
	Interest and other (income), net		(.1	)		.5
Financial Services
Interest-rate contracts	Interest and other borrowing expenses		(35.0	)		(3.7	)
	Pre-tax expense reduction		(38.6	)		(.5	)
	Tax expense (benefit)		8.8			(.5	)
	After-tax expense reduction		(29.8	)		(1.0	)
Unrealized (gains) and losses on marketable debt securities:
Marketable debt securities	Investment (income) expense		(.2	)		.1
	Tax expense		.1
	After-tax income (reduction) increase		(.1	)		.1
Pension plans:
Truck, Parts and Other
Actuarial loss	Interest and other (income), net		5.0			8.7

Prior service costs	Interest and other (income), net		.4			.3
	Pre-tax expense increase		5.4			9.0
	Tax benefit		(1.3	)		(2.2	)
	After-tax expense increase		4.1			6.8
Total reclassifications out of AOCI		$	(25.8	)	$	5.9

		Nine Months Ended
	LINE ITEM IN THE CONSOLIDATED STATEMENTS OF	September 30
AOCI COMPONENTS	COMPREHENSIVE INCOME		2019			2018
Unrealized losses and (gains) on derivative contracts:
Truck, Parts and Other
Foreign-exchange contracts	Net sales and revenues	$	13.9		$	6.1
	Cost of sales and revenues		(4.0	)		(5.2	)
	Interest and other (income), net		.6			(.2	)
Financial Services
Interest-rate contracts	Interest and other borrowing expenses		(23.3	)		(86.5	)
	Pre-tax expense reduction		(12.8	)		(85.8	)
	Tax expense		1.9			21.3
	After-tax expense reduction		(10.9	)		(64.5	)
Unrealized gains on marketable debt securities:
Marketable debt securities	Investment income		(.3	)		(.3	)
	Tax expense		.1			.1
	After-tax income reduction		(.2	)		(.2	)
Pension plans:
Truck, Parts and Other
Actuarial loss	Interest and other (income), net		15.3			26.5

Prior service costs	Interest and other (income), net		1.1			1.0
	Pre-tax expense increase		16.4			27.5
	Tax benefit		(3.8	)		(6.6	)
	After-tax expense increase		12.6			20.9
Total reclassifications out of AOCI		$	1.5		$	(43.8	)

Stock Compensation Plans

Stock-based compensation expense was $2.0 and $12.8 for the three and nine months ended September 30, 2019, respectively, and $2.1 and $11.1 for the three and nine months ended September 30, 2018, respectively.

During the first nine months of 2019, the Company issued 799,483 common shares under deferred and stock compensation arrangements.

Other Capital Stock Changes

During the first nine months of 2019, the Company purchased 1,681,534 treasury shares, of which 1,668,945 shares were repurchased pursuant to the Company’s common stock repurchase plans. The Company also acquired 12,589 shares under the Company’s Long-Term Incentive Plan. Stock repurchases of $430.5 million remain authorized under the current $500.0 million program approved by the PACCAR Board of Directors on December 4, 2018.