PACCAR Announces Strong Quarterly Financial Results; Company Celebrates Centennial in 2005

Business Wire,  July 26, 2005  

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BELLEVUE, Wash. -- "PACCAR Inc (Nasdaq:PCAR) reported outstanding revenues and net income for the second quarter and first half of 2005," said Mark C. Pigott, chairman and chief executive officer. "PACCAR has earned an excellent reputation during its first 100 years as one of the premier global companies by integrating leading-edge information technology throughout its business and delivering superior products and customer support to the growing capital goods and financial services markets. The strong results reflect the innovation and dedication of PACCAR's 21,500 employees worldwide."

"PACCAR's premium global brands -- DAF, Kenworth and Peterbilt -- combined with PACCAR Financial Services, PACCAR Parts and the Information Technology Division, contributed to PACCAR's excellent financial returns. PACCAR's results for the first half of 2005 reflect increased market share in Europe, Mexico and Australia, positive market acceptance of new product introductions, rigorous cost control and PACCAR's balanced global diversification," added Pigott.

PACCAR earned $241.5 million ($1.39 per diluted share) for the second quarter 2005 compared to the $236.5 million ($1.34 per diluted share) earned in the second quarter last year. Second quarter net sales and financial services revenues were a record $3.56 billion, 28 percent higher than the $2.79 billion reported for the comparable period in 2004. The company's second quarter 2005 results marked the 14th consecutive quarter in which the company has achieved higher net income versus the same period in the prior year. Included in PACCAR's second quarter and first-half net income is a one-time charge of $64 million ($.37 per diluted share) for income taxes associated with the repatriation of $1.5 billion of cash from its subsidiaries outside the United States.

Net sales and financial services revenues for the first six months of 2005 increased 30 percent to a record $6.88 billion compared to $5.29 billion last year. For the first six months of 2005, PACCAR reported record net income of $515.5 million ($2.95 per diluted share), a 23 percent increase compared to $418.7 million ($2.37 per diluted share) in 2004. For the first half of 2005, PACCAR's annualized after-tax return on beginning equity was 29.1 percent.

As previously announced, a $1.5 billion cash repatriation from PACCAR's foreign subsidiaries is being made under the American Jobs Creation Act of 2004. "PACCAR has increased its capital investments in information technology, product research and design, manufacturing and logistics," said Pigott. "PACCAR has added 2,700 jobs in the United States since January 1, 2004."

Share Repurchase Update

During the first six months of 2005, PACCAR invested $193.6 million to repurchase 2.83 million of its common shares under a five million share repurchase authorization from its Board of Directors. "PACCAR's repurchase of shares is a positive statement that its shares represent an outstanding long-term investment," noted Mike Tembreull, vice chairman.

PACCAR has achieved an average annual earnings growth rate for the last ten years of over 16 percent compared to the S&P 500's growth rate of 7 percent. "PACCAR has reinforced its position as a leading technology growth company with an impressive record of 66 consecutive years of net income, extraordinary product quality leadership and innovative customer care initiatives," added Tembreull.

Financial Highlights -- Second Quarter

Highlights of PACCAR's financial results during the second quarter of 2005 include:

--Record consolidated sales and revenues of $3.56 billion.

--Record pretax profit of $452.7 million.

--Net income of $241.5 after a one-time tax charge of $64 million for the repatriation of cash from foreign subsidiaries.

--SG&A expense ratio at a record low level of 3.1 percent of sales.

Financial Highlights -- First Half

Financial highlights for the first six months of 2005 include:

--Record consolidated revenues of $6.88 billion.

--Record after-tax profit of $515.5 million.

--An industry-leading after-tax return on equity of 29.1 percent.

--Investment of $193.6 million for the repurchase of 2.83 million common shares.

--Capital expenditures of $114 million.

In its current edition, Industry Week (IW) magazine recognized PACCAR as one of the 50 Best manufacturers in the United States. IW evaluated revenue growth, profit margin, return on assets and inventory turns, as well as other key financial ratios over the past three years, with emphasis on 2004 results. "PACCAR is honored to have Industry Week magazine recognize its outstanding financial and operating performance," said Mark Pigott. "PACCAR rigorously benchmarks its results and operations against industry leaders such as Dell, Microsoft, Illinois Tool Works and Wells Fargo to maintain its world-class performance."

Global Truck Market Update

"Industry truck sales in Europe above 15 tonnes could be slightly higher this year compared to sales during 2004," said Mike Tembreull, vice chairman. "DAF has become the commercial vehicle product quality and resale value leader in Europe and has increased its year-to-date market share to 13.9 percent -- a full percentage point over its record level in 2004. DAF's long-term goal is to achieve over 20 percent market share, which is comparable to PACCAR's Class 8 results in North America," Tembreull noted. To further improve its outstanding European distribution network, DAF Trucks recently began construction of a world-class, full-service dealership in Frankfurt, Germany. Since 1996, DAF has more than doubled its market share in Germany, which is Europe's largest truck market.