Stockholders' Equity

6 Months Ended

Jun. 30, 2019

NOTE I - Stockholders’ Equity

Comprehensive Income

The components of comprehensive income are as follow:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2019			2018			2019			2018
Net income	$	619.7		$	559.6		$	1,248.7		$	1,071.7
Other comprehensive (loss) income (OCI):
Unrealized (losses) gains on derivative contracts		(.6	)		6.8			(16.4	)		2.7
Tax effect		.2			(2.0	)		4.4			(.4	)
		(.4	)		4.8			(12.0	)		2.3
Unrealized gains (losses) on marketable debt securities		5.3			.5			11.5			(2.1	)
Tax effect		(1.3	)		(.1	)		(2.9	)		.5
		4.0			.4			8.6			(1.6	)
Pension plans		9.4			21.3			10.1			23.9
Tax effect		(2.2	)		(5.2	)		(2.3	)		(5.8	)
		7.2			16.1			7.8			18.1
Foreign currency translation gains (losses)		22.5			(196.7	)		31.9			(118.9	)
Net other comprehensive income (loss)		33.3			(175.4	)		36.3			(100.1	)
Comprehensive income	$	653.0		$	384.2		$	1,285.0		$	971.6

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 June 30, 2019	DERIVATIVE CONTRACTS			MARKETABLE DEBT SECURITIES			PENSION PLANS			FOREIGN CURRENCY TRANSLATION			TOTAL
Balance at April 1, 2019	$	(9.6	)	$	2.3		$	(477.2	)	$	(611.0	)	$	(1,095.5	)
Recorded into AOCI		(8.2	)		4.1			2.4			22.5			20.8
Reclassified out of AOCI		7.8			(.1	)		4.8						12.5
Net other comprehensive (loss) income		(.4	)		4.0			7.2			22.5			33.3
Balance at June 30, 2019	$	(10.0	)	$	6.3		$	(470.0	)	$	(588.5	)	$	(1,062.2	)

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	)

Six Months Ended June 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		(30.9	)		8.7			(.7	)		31.9			9.0
Reclassified out of AOCI		18.9			(.1	)		8.5						27.3
Net other comprehensive (loss) income		(12.0	)		8.6			7.8			31.9			36.3
Balance at June 30, 2019	$	(10.0	)	$	6.3		$	(470.0	)	$	(588.5	)	$	(1,062.2	)

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	)

Reclassifications out of AOCI were as follows:

		Three Months Ended
	LINE ITEM IN THE CONSOLIDATED STATEMENTS OF	June 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	$	7.7		$	(2.8	)
	Cost of sales and revenues		(1.6	)		(2.5	)
	Interest and other (income), net		.2			.3
Financial Services
Interest-rate contracts	Interest and other borrowing expenses		5.0			(92.1	)
	Pre-tax expense increase		11.3			(97.1	)
	Tax benefit		(3.5	)		24.3
	After-tax expense increase (reduction)		7.8			(72.8	)
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		5.9			10.1

Prior service costs	Interest and other (income), net		.3			.3
	Pre-tax expense increase		6.2			10.4
	Tax benefit		(1.4	)		(2.5	)
	After-tax expense increase		4.8			7.9
Total reclassifications out of AOCI		$	12.5		$	(64.9	)

		Six Months Ended
	LINE ITEM IN THE CONSOLIDATED STATEMENTS OF	June 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	$	17.1		$	1.8
	Cost of sales and revenues		(3.7	)		(3.6	)
	Interest and other (income), net		.7			(.7	)
Financial Services
Interest-rate contracts	Interest and other borrowing expenses		11.7			(82.8	)
	Pre-tax expense increase (reduction)		25.8			(85.3	)
	Tax benefit		(6.9	)		21.8
	After-tax expense increase (reduction)		18.9			(63.5	)
Unrealized (gains) and losses on marketable debt securities:
Marketable debt securities	Investment income		(.1	)		(.4	)
	Tax expense					.1
	After-tax income increase		(.1	)		(.3	)
Pension plans:
Truck, Parts and Other
Actuarial loss	Interest and other (income), net		10.3			17.8

Prior service costs	Interest and other (income), net		.7			.7
	Pre-tax expense increase		11.0			18.5
	Tax benefit		(2.5	)		(4.4	)
	After-tax expense increase		8.5			14.1
Total reclassifications out of AOCI		$	27.3		$	(49.7	)

Stock Compensation Plans

Stock-based compensation expense was $2.1 and $10.8 for the three and six months ended June 30, 2019, respectively, and $2.0 and $9.0 for the three and six months ended June 30, 2018, respectively.

During the first half of 2019, the Company issued 615,412 common shares under deferred and stock compensation arrangements.

Other Capital Stock Changes

During the first half of 2019, the Company purchased 846,443 treasury shares, of which 836,155 shares were repurchased pursuant to the Company’s common stock repurchase plans approved on July 9, 2018 and December 4, 2018. The Company also acquired 10,288 shares under the Company’s Long-Term Incentive Plan. As of June 30, 2019, the Company has completed the repurchase of $300.0 million of the Company’s common stock under the authorization approved on July 9, 2018. Stock repurchases of $484.0 million remain authorized under the current $500.0 million program approved by the PACCAR Board of Directors on December 4, 2018.