NOTE G - Stockholders’ Equity

Comprehensive Income

The components of comprehensive income are as follows:

	Three Months Ended						Six Months Ended
	June 30						June 30
		2018			2017			2018			2017
Net income	$	559.6		$	373.0		$	1,071.7		$	683.3
Other comprehensive income (loss) (OCI):
Unrealized gains (losses) on derivative contracts		6.8			11.6			2.7			(2.0	)
Tax effect		(2.0	)		(3.1	)		(.4	)		.9
		4.8			8.5			2.3			(1.1	)
Unrealized gains (losses) on marketable debt securities		.5			(.5	)		(2.1	)		2.9
Tax effect		(.1	)		.1			.5			(1.2	)
		.4			(.4	)		(1.6	)		1.7
Pension plans		21.3			(1.4	)		23.9			2.5
Tax effect		(5.2	)					(5.8	)		(1.3	)
		16.1			(1.4	)		18.1			1.2
Foreign currency translation (losses) gains		(196.7	)		126.1			(118.9	)		201.1
Net other comprehensive (loss) income		(175.4	)		132.8			(100.1	)		202.9
Comprehensive income	$	384.2		$	505.8		$	971.6		$	886.2

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 June 30, 2018	DERIVATIVE CONTRACTS			MARKETABLE DEBT SECURITIES			PENSION PLANS			FOREIGN CURRENCY TRANSLATION			TOTAL
Balance at April 1, 2018	$	(1.3	)	$	(3.8	)	$	(373.6	)	$	(339.6	)	$	(718.3	)
Recorded into AOCI		77.6			.4			8.2			(196.7	)		(110.5	)
Reclassified out of AOCI		(72.8	)					7.9						(64.9	)
Net other comprehensive income (loss)		4.8			.4			16.1			(196.7	)		(175.4	)
Balance at June 30, 2018	$	3.5		$	(3.4	)	$	(357.5	)	$	(536.3	)	$	(893.7	)

Three Months Ended June 30, 2017	DERIVATIVE CONTRACTS			MARKETABLE DEBT SECURITIES			PENSION PLANS			FOREIGN CURRENCY TRANSLATION			TOTAL
Balance at April 1, 2017	$	(13.9	)	$	1.8		$	(411.5	)	$	(634.4	)	$	(1,058.0	)
Recorded into AOCI		(28.2	)		(.3	)		(5.7	)		126.1			91.9
Reclassified out of AOCI		36.7			(.1	)		4.3						40.9
Net other comprehensive income (loss)		8.5			(.4	)		(1.4	)		126.1			132.8
Balance at June 30, 2017	$	(5.4	)	$	1.4		$	(412.9	)	$	(508.3	)	$	(925.2	)

Six Months Ended June 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		65.8			(1.3	)		4.0			(118.9	)		(50.4	)
Reclassified out of AOCI		(63.5	)		(.3	)		14.1						(49.7	)
Net other comprehensive income (loss)		2.3			(1.6	)		18.1			(118.9	)		(100.1	)
Balance at June 30, 2018	$	3.5		$	(3.4	)	$	(357.5	)	$	(536.3	)	$	(893.7	)

Six Months Ended June 30, 2017	DERIVATIVE CONTRACTS			MARKETABLE DEBT SECURITIES			PENSION PLANS			FOREIGN CURRENCY TRANSLATION			TOTAL
Balance at January 1, 2017	$	(4.3	)	$	(.3	)	$	(414.1	)	$	(709.4	)	$	(1,128.1	)
Recorded into AOCI		(74.1	)		2.0			(7.8	)		201.1			121.2
Reclassified out of AOCI		73.0			(.3	)		9.0						81.7
Net other comprehensive (loss) income		(1.1	)		1.7			1.2			201.1			202.9
Balance at June 30, 2017	$	(5.4	)	$	1.4		$	(412.9	)	$	(508.3	)	$	(925.2	)

Reclassifications out of AOCI during the three months ended June 30, 2018 and 2017 are as follows:

		Three Months Ended
	LINE ITEM IN THE CONSOLIDATED STATEMENTS OF	June 30
AOCI COMPONENTS	COMPREHENSIVE INCOME		2018			2017
Unrealized (gains) and losses on derivative contracts:
Truck, Parts and Other
Foreign-exchange contracts	Net sales and revenues	$	(2.8	)	$	12.1
	Cost of sales and revenues		(2.5	)		(1.3	)
	Interest and other (income), net		.3			.6
Financial Services
Interest-rate contracts	Interest and other borrowing expenses		(92.1	)		40.0
	Pre-tax expense (reduction) increase		(97.1	)		51.4
	Tax expense (benefit)		24.3			(14.7	)
	After-tax expense (reduction) increase		(72.8	)		36.7
Unrealized gains on marketable debt securities:
Marketable debt securities	Investment income					(.1	)
	Tax expense
	After-tax income increase					(.1	)
Pension plans:
Truck, Parts and Other
Actuarial loss	Interest and other (income), net		10.1			5.9

Prior service costs	Interest and other (income), net		.3			.3
	Pre-tax expense increase		10.4			6.2
	Tax benefit		(2.5	)		(1.9	)
	After-tax expense increase		7.9			4.3
Total reclassifications out of AOCI		$	(64.9	)	$	40.9

Reclassifications out of AOCI during the six months ended June 30, 2018 and 2017 are as follows:

		Six Months Ended
	LINE ITEM IN THE CONSOLIDATED STATEMENTS OF	June 30
AOCI COMPONENTS	COMPREHENSIVE INCOME		2018			2017
Unrealized losses and (gains) on derivative contracts:
Truck, Parts and Other
Foreign-exchange contracts	Net sales and revenues	$	1.8		$	16.3
	Cost of sales and revenues		(3.6	)		(1.2	)
	Interest and other (income), net		(.7	)		.6
Financial Services
Interest-rate contracts	Interest and other borrowing expenses		(82.8	)		85.8
	Pre-tax expense (reduction) increase		(85.3	)		101.5
	Tax expense (benefit)		21.8			(28.5	)
	After-tax expense (reduction) increase		(63.5	)		73.0
Unrealized gains on marketable debt securities:
Marketable debt securities	Investment income		(.4	)		(.4	)
	Tax expense		.1			.1
	After-tax income increase		(.3	)		(.3	)
Pension plans:
Truck, Parts and Other
Actuarial loss	Interest and other (income), net		17.8			12.6

Prior service costs	Interest and other (income), net		.7			.6
	Pre-tax expense increase		18.5			13.2
	Tax benefit		(4.4	)		(4.2	)
	After-tax expense increase		14.1			9.0
Total reclassifications out of AOCI			(49.7	)		81.7

Stock Compensation Plans

Stock-based compensation expense was $2.0 and $9.0 for the three months and six months ended June 30, 2018, respectively, and $1.9 and $9.0 for the three months and six months ended June 30, 2017, respectively.

During the first half of 2018, the Company issued 377,361 common shares under deferred and stock compensation arrangements.

Other Capital Stock Changes

During the first half of 2018, the Company purchased 1,467,454 treasury shares, of which 1,454,746 shares were repurchased pursuant to the $300 million common stock repurchase plan approved on September 23, 2015. The Company also acquired 12,708 shares under the Company’s Long-Term Incentive Plan.