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. 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, 2018.

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.

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.

Included in Other is the Company’s industrial winch manufacturing business as well as sales, income and expense not attributable to a reportable segment. Other also includes non-service cost components of pension (income) expense and a portion of corporate expenses.

	Three Months Ended						Nine Months Ended
	September 30						September 30
		2019			2018			2019			2018
Net sales and revenues:
Truck	$	5,102.6		$	4,677.8		$	15,638.5		$	13,892.5
Less intersegment		(125.2	)		(248.4	)		(341.9	)		(642.3	)
External customers		4,977.4			4,429.4			15,296.6			13,250.2
Parts		1,012.8			974.8			3,066.6			2,911.4
Less intersegment		(11.9	)		(14.7	)		(35.6	)		(43.4	)
External customers		1,000.9			960.1			3,031.0			2,868.0
Other		25.9			27.4			81.2			87.7
		6,004.2			5,416.9			18,408.8			16,205.9
Financial Services		362.8			339.9			1,073.7			1,010.1
	$	6,367.0		$	5,756.8		$	19,482.5		$	17,216.0
Income before income taxes:
Truck	$	481.5		$	391.0		$	1,509.2		$	1,220.2
Parts		207.4			188.5			625.6			574.8
Other		1.1			(5.9	)		(16.4	)		3.1
		690.0			573.6			2,118.4			1,798.1
Financial Services		66.5			78.8			230.8			218.7
Investment income		21.1			16.4			62.2			41.0
	$	777.6		$	668.8		$	2,411.4		$	2,057.8
Depreciation and amortization:
Truck	$	95.8		$	93.6		$	290.5		$	306.9
Parts		2.5			2.3			7.8			6.7
Other		4.1			4.5			12.7			13.4
		102.4			100.4			311.0			327.0
Financial Services		169.7			152.2			481.4			467.4
	$	272.1		$	252.6		$	792.4		$	794.4