Segment and Related Information

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Segment and Related Information

S. 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.

In Europe, the Financial Services and Truck segments centralized the marketing of used trucks, including those units sold by the Truck segment subject to an RVG. Beginning in the fourth quarter of 2019, when a customer returns the truck at the end of the RVG contract, the Company’s Truck segment records a reduction in an RVG liability and the Company’s Financial Services segment records a used truck asset and revenue from the subsequent sale. Certain gains and losses from the sale of these used trucks are shared with the Truck segment. Revenues from the sale of used trucks from the Truck segment in Europe in prior periods are immaterial.  

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

expenses. Intercompany interest income (expense) on cash advances to the financial services companies is included in Other and was $1.4, $.3 and $(.3) for 2020, 2019 and 2018, respectively.

Geographic Area Data		2020		2019		2018
Net sales and revenues:
United States	$	10,526.6	$	15,119.3	$	13,165.7
Europe		4,871.2		6,104.7		6,071.9
Other		3,330.7		4,375.7		4,258.1
	$	18,728.5	$	25,599.7	$	23,495.7
Property, plant and equipment, net:
United States	$	1,633.0	$	1,556.4	$	1,353.8
Belgium		596.2		395.7		237.4
The Netherlands		499.0		399.8		397.8
Other		542.2		531.9		491.9
	$	3,270.4	$	2,883.8	$	2,480.9
Equipment on operating leases, net:
United States	$	1,219.0	$	1,390.1	$	1,405.1
Poland		359.4		343.5		327.8
France		349.7		315.0		246.8
Germany		346.4		358.3		361.0
Spain		310.8		276.1		249.8
Mexico		302.3		320.5		306.4
United Kingdom		125.4		113.6		130.3
Other		571.7		531.0		614.4
	$	3,584.7	$	3,648.1	$	3,641.6

Business Segment Data		2020			2019			2018
Net sales and revenues:
Truck	$	13,643.0		$	20,403.5		$	18,863.1
Less intersegment		(478.2	)		(414.0	)		(676.1	)
External customers		13,164.8			19,989.5			18,187.0
Parts		3,962.7			4,073.1			3,896.2
Less intersegment		(49.8	)		(48.2	)		(57.3	)
External customers		3,912.9			4,024.9			3,838.9
Other		76.6			105.3			112.7
		17,154.3			24,119.7			22,138.6
Financial Services		1,574.2			1,480.0			1,357.1
	$	18,728.5		$	25,599.7		$	23,495.7
Income (loss) before income taxes:
Truck	$	581.4		$	1,904.9		$	1,672.1
Parts		799.3			830.8			768.6
Other		18.2			(17.7	)		2.7
		1,398.9			2,718.0			2,443.4
Financial Services		223.1			298.9			305.9
Investment income		35.9			82.3			60.9
	$	1,657.9		$	3,099.2		$	2,810.2
Depreciation and amortization:
Truck	$	292.2		$	381.9		$	406.2
Parts		10.8			10.2			9.2
Other		20.8			20.3			18.4
		323.8			412.4			433.8
Financial Services		725.2			664.9			620.3
	$	1,049.0		$	1,077.3		$	1,054.1
Expenditures for long-lived assets:
Truck	$	556.0		$	664.9		$	778.5
Parts		18.4			46.2			29.4
Other		36.4			51.0			38.8
		610.8			762.1			846.7
Financial Services		1,046.7			1,378.6			1,085.1
	$	1,657.5		$	2,140.7		$	1,931.8
Segment assets:
Truck	$	5,971.9		$	5,609.0		$	5,347.3
Parts		1,255.6			1,172.1			1,090.9
Other		398.7			339.2			345.0
Cash and marketable securities		4,834.0			5,169.4			4,299.6
		12,460.2			12,289.7			11,082.8
Financial Services		15,799.8			16,071.4			14,399.6
	$	28,260.0		$	28,361.1		$	25,482.4