Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 31, 2020 | Jun. 30, 2019 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | ck0000731288 | ||
Entity Registrant Name | PACCAR FINANCIAL CORP | ||
Entity Central Index Key | 0000731288 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 145,000 | ||
Entity Public Float | $ 0 | ||
Entity File Number | 001-11677 | ||
Entity Incorporation, State or Country Code | WA | ||
Entity Tax Identification Number | 91-6029712 | ||
Entity Address, Address Line One | 777 106th Avenue N.E. | ||
Entity Address, City or Town | Bellevue | ||
Entity Address, State or Province | WA | ||
Entity Address, Postal Zip Code | 98004 | ||
City Area Code | 425 | ||
Local Phone Number | 468-7100 | ||
Title of 12(b) Security | Series O Medium-Term Notes$250.0 Million Due August 11, 2021 | ||
Security Exchange Name | NYSE | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Documents Incorporated by Reference | THE REGISTRANT IS A WHOLLY OWNED SUBSIDIARY OF PACCAR INC AND MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS (I) (1) (a) AND (b) OF FORM 10-K AND IS, THEREFORE, FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT. |
STATEMENTS OF INCOME
STATEMENTS OF INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | |||
Interest and fee income | $ 347.8 | $ 277.2 | $ 236.1 |
Operating lease and rental revenues | 389.9 | 406.9 | 392.6 |
Used truck sales and other revenues | 24.3 | 23.4 | 43.7 |
TOTAL INTEREST AND OTHER REVENUES | 762 | 707.5 | 672.4 |
Interest and other borrowing costs | 179.7 | 138.5 | 101.2 |
Depreciation and other rental expenses | 351.6 | 365.4 | 374.9 |
Cost of used truck sales and other expenses | 17 | 17.8 | 40.1 |
Selling, general and administrative expenses | 64.2 | 56.4 | 52.9 |
Provision for losses on receivables | 11.7 | 8.6 | 12 |
TOTAL EXPENSES | 624.2 | 586.7 | 581.1 |
INCOME BEFORE INCOME TAXES | 137.8 | 120.8 | 91.3 |
Income taxes expense (benefit) | 34.6 | 28.3 | (299.9) |
NET INCOME | $ 103.2 | $ 92.5 | $ 391.2 |
STATEMENTS OF COMPREHENSIVE INC
STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | |||
Net income | $ 103.2 | $ 92.5 | $ 391.2 |
Unrealized (losses) income on derivative contracts | |||
(Losses) income arising during the period | (16.2) | 0.7 | 1.2 |
Tax effect | 4 | (0.2) | (0.4) |
Reclassification adjustment | (1.3) | (2.7) | 1.4 |
Tax effect | 0.3 | 0.7 | (0.6) |
Net other comprehensive (loss) income | (13.2) | (1.5) | 1.6 |
Reclassification to retained earnings in accordance with ASU 2018-02 | 0.4 | ||
TOTAL COMPREHENSIVE INCOME | $ 90 | $ 91.4 | $ 392.8 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
ASSETS | ||
Cash | $ 53.3 | $ 74.8 |
Finance and other receivables, net of allowance for losses (2019 - $60.7 and 2018 - $60.7) | 7,126.7 | 6,038.8 |
Due from PACCAR and affiliates | 1,557.2 | 1,581.3 |
Equipment on operating leases, net of accumulated depreciation (2019 - $605.9 and 2018 - $659.7) | 1,427.6 | 1,459 |
Other assets | 276 | 141.4 |
TOTAL ASSETS | 10,440.8 | 9,295.3 |
LIABILITIES | ||
Accounts payable, accrued expenses and other | 457.1 | 362.7 |
Due to PACCAR and affiliates | 13.9 | 9.9 |
Commercial paper | 1,975 | 1,731.6 |
Medium-term notes | 5,535.2 | 4,884.4 |
Deferred taxes and other liabilities | 694.2 | 638.3 |
TOTAL LIABILITIES | 8,675.4 | 7,626.9 |
STOCKHOLDER'S EQUITY | ||
Preferred stock, par value $100 per share, 6% noncumulative and nonvoting, 450,000 shares authorized, 310,000 shares issued and outstanding | 31 | 31 |
Common Stock, par value $100 per share, 200,000 shares authorized, 145,000 shares issued and outstanding | 14.5 | 14.5 |
Additional paid-in capital | 140.9 | 133.9 |
Retained earnings | 1,591.4 | 1,488.2 |
Accumulated other comprehensive (loss) income | (12.4) | 0.8 |
TOTAL STOCKHOLDER'S EQUITY | 1,765.4 | 1,668.4 |
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY | $ 10,440.8 | $ 9,295.3 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Statement Of Financial Position [Abstract] | ||
Finance and other receivables, allowance for losses | $ 60.7 | $ 60.7 |
Equipment on operating leases, accumulated depreciation | $ 605.9 | $ 659.7 |
Preferred stock, par value | $ 100 | $ 100 |
Preferred stock, noncumulative and nonvoting | 6.00% | 6.00% |
Preferred stock, shares authorized | 450,000 | 450,000 |
Preferred stock, shares issued | 310,000 | 310,000 |
Preferred stock, shares outstanding | 310,000 | 310,000 |
Common stock, par value | $ 100 | $ 100 |
Common stock, shares authorized | 200,000 | 200,000 |
Common stock, shares issued | 145,000 | 145,000 |
Common stock, shares outstanding | 145,000 | 145,000 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
OPERATING ACTIVITIES | |||
Net income | $ 103.2 | $ 92.5 | $ 391.2 |
Items included in net income not affecting cash: | |||
Depreciation and amortization | 327.7 | 337 | 356.1 |
Provision for losses on receivables | 11.7 | 8.6 | 12 |
Deferred taxes | 50.6 | 36.2 | (208) |
Administrative fees for services from PACCAR | 7 | 7.1 | 4.5 |
Change in tax-related balances with PACCAR | 6.6 | 96.4 | (112.4) |
Increase in payables and other | 65.5 | 85.9 | 105.6 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 572.3 | 663.7 | 549 |
INVESTING ACTIVITIES | |||
Finance and other receivables originated | (2,593.4) | (2,318.8) | (1,678.7) |
Collections on finance and other receivables | 2,063.4 | 1,760.2 | 1,753.1 |
Net increase in wholesale receivables | (587.7) | (265.2) | (153.5) |
Loans to PACCAR and affiliates | (420) | (656) | (225) |
Collections on loans from PACCAR and affiliates | 477 | 225.5 | 258.5 |
Net (increase) decrease in other receivables and leases to PACCAR and affiliates | (26) | (12.6) | 70.5 |
Acquisition of equipment for operating leases | (523.8) | (398.6) | (501.4) |
Proceeds from disposal of equipment | 163.6 | 283.6 | 170.3 |
Other | (32.8) | (8.2) | (17.5) |
NET CASH USED IN INVESTING ACTIVITIES | (1,479.7) | (1,390.1) | (323.7) |
FINANCING ACTIVITIES | |||
Net increase in short-term commercial paper | 243.2 | 295.1 | 95.7 |
Proceeds from medium-term notes and other commercial paper | 2,042.7 | 1,743.4 | 996.5 |
Payments of medium-term notes and other commercial paper | (1,400) | (1,300) | (1,301.4) |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 885.9 | 738.5 | (209.2) |
NET (DECREASE) INCREASE IN CASH | (21.5) | 12.1 | 16.1 |
CASH AT BEGINNING OF YEAR | 74.8 | 62.7 | 46.6 |
CASH AT END OF YEAR | $ 53.3 | $ 74.8 | $ 62.7 |
STATEMENTS OF STOCKHOLDER'S EQU
STATEMENTS OF STOCKHOLDER'S EQUITY - USD ($) $ in Millions | Total | Preferred Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income |
Beginning balance at Dec. 31, 2016 | $ 31 | $ 14.5 | $ 122.3 | $ 1,004.9 | $ 0.3 | |
Investments from PACCAR | 4.5 | |||||
Net income | $ 391.2 | 391.2 | ||||
Net unrealized (loss) gain | 1.6 | |||||
Ending balance at Dec. 31, 2017 | 1,570.3 | 31 | 14.5 | 126.8 | 1,396.1 | 1.9 |
Investments from PACCAR | 7.1 | |||||
Net income | 92.5 | 92.5 | ||||
Net unrealized (loss) gain | (1.5) | |||||
Reclassification from AOCI to retained earnings in accordance with ASU 2018-02 | 0.4 | (0.4) | 0.4 | |||
Ending balance at Dec. 31, 2018 | 1,668.4 | 31 | 14.5 | 133.9 | 1,488.2 | 0.8 |
Investments from PACCAR | 7 | |||||
Net income | 103.2 | 103.2 | ||||
Net unrealized (loss) gain | (13.2) | |||||
Ending balance at Dec. 31, 2019 | $ 1,765.4 | $ 31 | $ 14.5 | $ 140.9 | $ 1,591.4 | $ (12.4) |
STATEMENTS OF STOCKHOLDER'S E_2
STATEMENTS OF STOCKHOLDER'S EQUITY (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Statement Of Stockholders Equity [Abstract] | |||
Preferred stock, par value | $ 100 | $ 100 | $ 100 |
Common Stock, par value | $ 100 | $ 100 | $ 100 |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | NOTE A – SIGNIFICANT ACCOUNTING POLICIES Description of Operations and Basis of Presentation PACCAR Financial Corp. (the “Company”), is a wholly owned subsidiary of PACCAR Inc (“PACCAR”). The Company primarily provides financing of PACCAR manufactured trucks and related equipment sold by authorized dealers. The Company also finances dealer inventories of transportation equipment and franchises Kenworth and Peterbilt dealerships to engage in full-service and finance leasing. The operations of the Company are fundamentally affected by its relationship with PACCAR. Due to the nature of the Company’s business, customers are concentrated in the transportation industry throughout the United States. Generally, all receivables are collateralized by the equipment being financed. The risk of credit losses related to this concentration has been considered in establishing the allowance for credit losses. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Finance and Other Receivables: Loans – Loans represent fixed or floating rate loans to customers or dealers collateralized by the vehicles purchased and are recorded at amortized cost. Finance leases – Finance leases represent equipment leases to retail customers and dealers. These leases are reported as the sum of minimum lease payments receivable and estimated residual value of the property subject to the contracts, reduced by unearned interest which is shown separately. Dealer wholesale financing – Dealer wholesale financing is floating-rate wholesale loans to Kenworth and Peterbilt dealers for new and used trucks and are recorded at amortized cost. The loans are collateralized by the trucks being financed. Operating lease receivables – Operating lease receivables and other include monthly rentals due on operating leases, unamortized loan and lease origination costs, interest on loans and other amounts due within one year in the normal course of business. Allowance for Credit Losses: The Company continuously monitors the payment performance of its finance receivables. For large retail finance customers and dealers with wholesale financing, the Company regularly reviews their financial statements and makes site visits and phone contact as appropriate. If the Company becomes aware of circumstances that could cause those customers or dealers to face financial difficulty, whether or not they are past due, the customers are placed on a watch list. The Company modifies loans and finance leases in the normal course of its operations. The Company may modify loans and finance leases for commercial reasons or for credit reasons. Modifications for commercial reasons are changes to contract terms for customers that are not considered to be in financial difficulty. Insignificant delays are modifications extending terms up to three months for customers experiencing some short-term financial stress, but not considered to be in financial difficulty. Modifications for credit reasons are changes to contract terms for customers considered to be in financial difficulty. The Company’s modifications typically result in granting more time to pay the contractual amounts owed and charging a fee and interest for the term of the modification. When considering whether to modify customer accounts for credit reasons, the Company evaluates the creditworthiness of the customers and modifies those accounts that the Company considers likely to perform under the modified terms. When the Company modifies loans and finance leases for credit reasons and grants a concession, the modifications are classified as troubled debt restructurings (TDR). The Company does not typically grant credit modifications for customers that do not meet minimum underwriting standards since the Company normally repossesses the financed equipment in these circumstances. When such modifications do occur, they are considered TDRs. On average, modifications extended contractual terms by approximately four months in both 2019 and 2018 and did not have a significant effect on the weighted average term or interest rate of the total portfolio at December 31, 2019 or 2018. The Company has developed a systematic methodology for determining the allowance for credit losses for its two portfolio segments, retail and wholesale. The retail segment consists of retail loans and finance leases, net of unearned interest. The wholesale segment consists of truck inventory financing loans to dealers that are collateralized by trucks and other collateral. The wholesale segment generally has less risk than the retail segment. Wholesale receivables generally are shorter in duration than retail receivables, and the Company requires periodic reporting of the wholesale dealer’s financial condition, conducts periodic audits of the trucks being financed and, in many cases, obtains guarantees or other security such as dealership assets. In determining the allowance for credit losses, retail loans and finance leases are evaluated together since they relate to a similar customer base, their contractual terms require regular payment of principal and interest, generally over 36 to 60 months, and they are secured by the same type of collateral. The allowance for credit losses consists of both specific and general reserves. The Company individually evaluates certain finance receivables for impairment. Finance receivables that are evaluated individually for impairment consist of all wholesale accounts and certain large retail accounts with past due balances or otherwise determined to be at a higher risk of loss. A finance receivable is impaired if it is considered probable the Company will be unable to collect all contractual interest and principal payments as scheduled. In addition, all retail loans and leases which have been classified as TDRs and all customer accounts over 90 days past due are considered impaired. Generally, impaired accounts are on non-accrual status. Impaired accounts classified as TDRs which have been performing for 90 consecutive days are placed on accrual status if it is deemed probable that the Company will collect all principal and interest payments. Impaired receivables are generally considered collateral dependent. Large balance retail and all wholesale impaired receivables are individually evaluated to determine the appropriate reserve for losses. The determination of reserves for large balance impaired receivables considers the fair value of the associated collateral. When the underlying collateral fair value exceeds the Company’s recorded investment, no reserve is recorded. Small balance impaired receivables with similar risk characteristics are evaluated as a separate pool to determine the appropriate reserve for losses using the historical loss information discussed below. The Company evaluates finance receivables that are not individually impaired on a collective basis and determines the general allowance for credit losses for both retail and wholesale receivables based on historical loss information, using past due account data and current market conditions. Information used includes assumptions regarding the likelihood of collecting current and past due accounts, repossession rates, the recovery rate on the underlying collateral based on used truck values and other pledged collateral or recourse. The Company has developed a range of loss estimates for its portfolio based on historical experience, taking into account loss frequency and severity in both strong and weak truck market conditions. A projection is made of the range of estimated credit losses inherent in the portfolio from which an amount is determined as probable based on current market conditions and other factors impacting the creditworthiness of the Company’s borrowers and their ability to repay. After determining the appropriate level of the allowance for credit losses, a provision for losses on finance receivables is charged to income as necessary to reflect management’s estimate of incurred credit losses, net of recoveries, inherent in the portfolio. In determining the fair value of the collateral, the Company uses a pricing matrix and categorizes the fair value as Level 2 in the hierarchy of fair value measurement. The pricing matrix is reviewed quarterly and updated as appropriate. The pricing matrix considers the make, model and year of the equipment as well as recent sales prices of comparable equipment sold individually, which is the lowest unit of account, through wholesale channels to the Company’s dealers (principal market). The fair value of the collateral also considers the overall condition of the equipment. Accounts are charged off against the allowance for credit losses when, in the judgment of management, they are considered uncollectible, which generally occurs upon repossession of the collateral. Typically the timing between the repossession and charge-off is not significant. In cases where repossession is delayed (e.g., for legal proceedings), the Company records a partial charge-off. The charge-off is determined by comparing the fair value of the collateral, less cost to sell, to the recorded investment. Revenue Recognition Interest income from finance and other receivables is recognized using the interest method. Certain loan and lease origination costs are deferred and amortized to interest income over the expected life of the contracts, generally 36 to 60 months, using the straight-line method which approximates the interest method. For operating leases, rental revenue is recognized on a straight-line basis over the lease term. Recognition of interest income and rental revenue is suspended (put on non-accrual status) when the receivable becomes more than 90 days past the contractual due date or earlier if some other event causes the Company to determine that collection is not probable. Accordingly, no finance receivables more than 90 days past due were accruing interest at December 31, 2019 or December 31, 2018. Recognition is resumed if the receivable becomes current by the payment of all amounts due under the terms of the existing contract and collection of remaining amounts is considered probable (if not contractually modified) or if the customer makes scheduled payments for three months and collection of remaining amounts is considered probable (if contractually modified). Payments received while the finance receivable is on non-accrual status are applied to interest and principal in accordance with the contractual terms. The Company recognizes revenue on the sale of used trucks acquired from PACCAR truck division customers as part of new truck sales packages when the used trucks are invoiced and delivered to a customer. Equipment on Operating Leases Equipment on operating leases is recorded at cost and is depreciated on the straight-line basis to its estimated residual value. Residual values are reviewed regularly and adjusted if market conditions warrant. Derivative Financial Instruments: As part of its risk management strategy, the Company enters into derivative contracts to hedge against interest-rate risk. Certain derivative instruments designated as either cash flow hedges or fair value hedges are subject to hedge accounting. Derivative instruments that are not subject to hedge accounting are held as economic hedges. The Company’s policies prohibit the use of derivatives for speculation or trading. At the inception of each hedge relationship, the Company documents its risk management objectives, procedures and accounting treatment. All of the Company’s interest-rate contracts are transacted under International Swaps and Derivatives Association (ISDA) master agreements. Each agreement permits the net settlement of amounts owed in the event of default and certain other termination events. The Company has elected not to offset derivative positions in the balance sheet with the same counterparty under the same agreements and is not required to post or receive collateral. Exposure limits and minimum credit ratings are used to minimize the risks of counterparty default. The Company’s maximum exposure to potential default of its swap counterparties is limited to the asset position of its swap portfolio. The asset position of the Company’s swap portfolio was $1.8 at December 31, 2019. The Company uses regression analysis to assess effectiveness of interest-rate contracts at inception and uses quantitative or qualitative analysis to assess subsequent effectiveness on a quarterly basis. All components of the derivative instrument’s gain or loss are included in the assessment of hedge effectiveness. Hedge accounting is discontinued prospectively when the Company determines that a derivative financial instrument has ceased to be a highly effective hedge. Cash flows from derivative instruments are included in operating activities in the Statements of Cash Flows. Income Taxes The Company is included in the consolidated federal income tax return of PACCAR. Federal income taxes for the Company are determined on a separate return basis, and any related tax liability is paid by the Company to PACCAR and any related tax benefit is paid by PACCAR to the Company. State income taxes, where the Company files combined tax returns with PACCAR, are determined on a blended statutory rate, which is substantially the same as the rate computed on a separate return basis. As of December 31, 2019, the United States Internal Revenue Service has completed examinations of PACCAR’s tax returns for all years through 2014. PACCAR’s tax returns remain subject to examination in other jurisdictions for the years ranging from 2013 through 2018. Preferred Stock The Company’s Articles of Incorporation provide that the 6%, noncumulative, nonvoting preferred stock (100% owned by PACCAR) is redeemable only at the option of the Company’s Board of Directors. New Accounting Pronouncements: In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) The Company elected the package of practical expedients for its leases existing prior to the adoption of this ASU that will retain prior conclusions about lease identification, lease classification and initial direct costs under the new standard. For lessee accounting, the Company elected the short-term lease exemption to not recognize right-of-use assets and lease liabilities for any leases with a duration of twelve months or less. For lessor accounting, the Company elected to exclude taxes collected from customers, such as sales and use and value added, from the measurement of lease income and expense. The new standard requires lessors within the scope of ASC 942 , Financial Services – Depository and Lending The Company offers finance lease and operating lease contracts to retail customers and dealers. The Company accounts for lease and non-lease components of the contract separately based on the relative stand-alone price of each component. Most of the Company’s finance leases contain a Terminal Rental Adjustment Clause, which requires the lessee to guarantee to the Company a stated residual value upon disposition of the equipment at the end of the lease term. Under an operating lease, the lessee has the option to return the equipment to the Company or purchase the equipment at its fair market value at the end of the lease term. The Company determines its estimate of the residual value of leased vehicles by considering the length of the lease term, the truck model, the expected usage of the truck and anticipated market demand. Residual values are reviewed regularly and adjusted if market conditions warrant. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments The FASB also issued the following standards, which are not expected to have a material impact on the Company’s financial statements. STANDARD DESCRIPTION EFFECTIVE DATE 2018-13* Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure January 1, 2020 Requirements for Fair Value Measurement 2018-15* Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s January 1, 2020 Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract 2019-12** Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes January 1, 2021 * The Company will adopt on the effective date. ** The Company will early adopt in 2020. |
Finance and Other Receivables
Finance and Other Receivables | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Finance and Other Receivables | NOTE B – FINANCE AND OTHER RECEIVABLES The Company’s finance and other receivables include the following: December 31 December 31 2019 2018 Retail loans $ 3,774.3 $ 3,372.3 Retail financing leases 1,492.7 1,428.6 Dealer wholesale financing 1,766.7 1,179.0 Dealer master notes 88.7 52.9 Operating lease receivables and other 65.0 66.7 7,187.4 6,099.5 Less allowance for credit losses: Loans and leases (57.0 ) (56.1 ) Dealer wholesale financing (1.9 ) (3.1 ) Operating lease receivables and other (1.8 ) (1.5 ) $ 7,126.7 $ 6,038.8 Annual minimum payments due on loans and finance leases and a reconciliation of the undiscounted cash flows to the net investment in finance leases are as follows: Loans Finance Leases 2020 $ 1,160.8 $ 475.7 2021 952.6 376.3 2022 765.3 289.5 2023 585.4 233.5 2024 302.1 125.6 Thereafter 96.8 72.9 $ 3,863.0 1,573.5 Unguaranteed residual values 70.8 Unearned interest on finance leases (151.6 ) Net investment in finance leases $ 1,492.7 Interest income recognized on finance leases was $64.5 in 2019. Estimated residual values included with finance leases amounted to $70.8 in 2019 and $63.4 in 2018. Experience indicates substantially all of dealer wholesale financing will be repaid within one year. In addition, collection experience indicates that some loans, leases and other finance receivables will be paid prior to contract maturity, while other may be extended or modified. For the following credit quality disclosures, finance receivables are classified into two portfolio segments, wholesale and retail. The retail portfolio is further segmented into dealer retail and customer retail. The dealer wholesale segment consists of truck inventory financing to PACCAR dealers. The dealer retail segment consists of loans and leases to participating dealers and franchises that use the proceeds to fund customers’ acquisition of commercial vehicles and related equipment. The customer retail segment consists of loans and leases directly to customers for the acquisition of commercial vehicles and related equipment. Customer retail receivables are further segregated between fleet and owner/operator classes. The fleet class consists of retail accounts of customers operating more than five trucks. All other customer retail accounts are considered owner/operator. These two classes have similar measurement attributes, risk characteristics and common methods to monitor and assess credit risk. Allowance for Credit Losses The allowance for credit losses is summarized as follows: 2019 Dealer Customer Wholesale Retail Retail Other* Total Balance at January 1 $ 3.1 $ 8.4 $ 47.7 $ 1.5 $ 60.7 (Benefit) provision for losses (.8 ) (.5 ) 10.3 2.7 11.7 Charge-offs (.4 ) (11.1 ) (2.4 ) (13.9 ) Recoveries 2.2 2.2 Balance at December 31 $ 1.9 $ 7.9 $ 49.1 $ 1.8 $ 60.7 2018 Dealer Customer Wholesale Retail Retail Other* Total Balance at January 1 $ 2.4 $ 7.9 $ 46.9 $ 1.2 $ 58.4 Provision for losses .7 .5 6.2 1.2 8.6 Charge-offs (7.9 ) (.9 ) (8.8 ) Recoveries 2.5 2.5 Balance at December 31 $ 3.1 $ 8.4 $ 47.7 $ 1.5 $ 60.7 2017 Dealer Customer Wholesale Retail Retail Other* Total Balance at January 1 $ 2.0 $ 8.5 $ 47.8 $ 1.1 $ 59.4 Provision (benefit) for losses .4 (.6 ) 11.9 .3 12.0 Charge-offs (14.6 ) (.3 ) (14.9 ) Recoveries 1.8 .1 1.9 Balance at December 31 $ 2.4 $ 7.9 $ 46.9 $ 1.2 $ 58.4 * Operating lease and other receivables Information regarding finance receivables evaluated and the associated allowances determined individually and collectively is as follows: Dealer Customer At December 31, 2019 Wholesale Retail Retail Total Recorded investment for impaired finance receivables evaluated individually $ 25.2 $ 25.2 Allowance for impaired finance receivables determined individually $ 2.3 $ 2.3 Recorded investment for finance receivables evaluated collectively $ 1,766.7 $ 1,411.4 $ 3,919.1 $ 7,097.2 Allowance for finance receivables determined collectively $ 1.9 $ 7.9 $ 46.8 $ 56.6 Dealer Customer At December 31, 2018 Wholesale Retail Retail Total Recorded investment for impaired finance receivables evaluated individually $ 15.4 $ 15.4 Allowance for impaired finance receivables determined individually $ 2.1 $ 2.1 Recorded investment for finance receivables evaluated collectively $ 1,179.0 $ 1,256.1 $ 3,582.3 $ 6,017.4 Allowance for finance receivables determined collectively $ 3.1 $ 8.4 $ 45.6 $ 57.1 The recorded investment for finance receivables that are on non-accrual status is as follows: December 31 December 31 2019 2018 Fleet $ 21.8 $ 12.1 Owner/Operator 3.4 3.3 $ 25.2 $ 15.4 Impaired Loans Impaired loans are summarized below. The impaired loans with a specific reserve represent the unpaid principal balance. The recorded investment of impaired loans as of December 31, 2019 and 2018 was not significantly different than the unpaid principal balance. Dealer Customer Retail Owner/ At December 31, 2019 Wholesale Retail Fleet Operator Total Impaired loans with a specific reserve $ 4.6 $ 2.9 $ 7.5 Associated allowance (.9 ) (.6 ) (1.5 ) Net carrying amount of impaired loans with a specific reserve 3.7 2.3 6.0 Impaired loans with no specific reserve 6.7 .4 7.1 Net carrying amount of impaired loans $ 10.4 $ 2.7 $ 13.1 Average recorded investment for impaired loans $ 4.9 $ 9.3 $ 2.9 $ 17.1 Dealer Customer Retail Owner/ At December 31, 2018 Wholesale Retail Fleet Operator Total Impaired loans with a specific reserve $ 5.7 $ 2.9 $ 8.6 Associated allowance (1.0 ) (.9 ) (1.9 ) Net carrying amount of impaired loans with a specific reserve 4.7 2.0 6.7 Impaired loans with no specific reserve 4.4 .3 4.7 Net carrying amount of impaired loans $ 9.1 $ 2.3 $ 11.4 Average recorded investment for impaired loans $ 18.4 $ 2.3 $ 20.7 During the period the loans above were considered impaired, interest income recognized on a cash basis was as follows: 2019 2018 2017 Fleet $ .6 $ 1.1 $ 1.2 Owner/Operator .2 .2 .1 $ .8 $ 1.3 $ 1.3 Credit Quality The Company’s customers are principally concentrated in the transportation industry in the United States. The Company’s portfolio assets are diversified over a large number of customers and dealers with no single customer or dealer balances representing over 10% of the total portfolio assets as of December 31, 2019 and 2018. The Company has contractual arrangements with one customer, Swift Transportation Company, that accounted for 2.8%, 5.9% and 10.4% of total Interest and other revenues for the years ended December 31, 2019, 2018 and 2017, respectively. The Company retains as collateral a security interest in the related equipment. At the inception of each contract, the Company considers the credit risk based on a variety of credit quality factors including prior payment experience, customer financial information, credit-rating agency ratings, loan-to-value ratios and other internal metrics. On an ongoing basis, the Company monitors credit quality based on past due status and collection experience as there is a meaningful correlation between the past due status of customers and the risk of loss. The Company has three credit quality indicators: performing, watch and at-risk. Performing accounts pay in accordance with the contractual terms and are not considered high risk. Watch accounts include accounts 31 to 90 days past due and large accounts that are performing but are considered to be high-risk. Watch accounts are not impaired. At-risk accounts are accounts that are impaired, including TDRs, accounts over 90 days past due and other accounts on non-accrual status. The tables below summarize the Company’s finance receivables by credit quality indicator and portfolio class. Dealer Customer Retail Owner/ At December 31, 2019 Wholesale Retail Fleet Operator Total Performing $ 1,757.9 $ 1,411.4 $ 3,393.6 $ 494.7 $ 7,057.6 Watch 8.8 29.2 1.6 39.6 At-risk 21.8 3.4 25.2 $ 1,766.7 $ 1,411.4 $ 3,444.6 $ 499.7 $ 7,122.4 Dealer Customer Retail Owner/ At December 31, 2018 Wholesale Retail Fleet Operator Total Performing $ 1,177.9 $ 1,256.1 $ 3,037.1 $ 501.2 $ 5,972.3 Watch 1.1 43.3 .7 45.1 At-risk 12.1 3.3 15.4 $ 1,179.0 $ 1,256.1 $ 3,092.5 $ 505.2 $ 6,032.8 The tables below summarize the Company’s finance receivables by aging category. In determining past due status, the Company considers the entire contractual account balance past due when any installment is over 30 days past due. Substantially all customer accounts that were greater than 30 days past due prior to credit modification became current upon modification for aging purposes. Dealer Customer Retail Owner/ At December 31, 2019 Wholesale Retail Fleet Operator Total Current and up to 30 days past-due $ 1,766.7 $ 1,411.4 $ 3,425.2 $ 496.2 $ 7,099.5 31 – 60 days past-due 10.4 2.5 12.9 Greater than 60 days past-due 9.0 1.0 10.0 $ 1,766.7 $ 1,411.4 $ 3,444.6 $ 499.7 $ 7,122.4 Dealer Customer Retail Owner/ At December 31, 2018 Wholesale Retail Fleet Operator Total Current and up to 30 days past-due $ 1,179.0 $ 1,256.1 $ 3,088.4 $ 502.8 $ 6,026.3 31 – 60 days past-due 3.0 1.4 4.4 Greater than 60 days past-due 1.1 1.0 2.1 $ 1,179.0 $ 1,256.1 $ 3,092.5 $ 505.2 $ 6,032.8 Troubled Debt Restructurings The balance of TDRs was $3.2 and $7.8 at December 31, 2019 and 2018, respectively. At modification date, the pre- and post-modification recorded investment balances for finance receivables modified during the period by portfolio class are as follows: 2019 2018 Recorded Investment Recorded Investment Pre-Modification Post-Modification Pre-Modification Post-Modification Fleet $ 1.2 $ 1.2 $ 5.5 $ 5.5 Owner/Operator .1 .1 .6 .6 $ 1.3 $ 1.3 $ 6.1 $ 6.1 The effect on the allowance for credit losses from such modifications was not significant at December 31, 2019 and 2018. There were no finance receivables modified as TDRs during the previous twelve months that subsequently defaulted or subsequently defaulted and were charged off in 2019 and 2018. Repossessions When the Company determines that a customer is not likely to meet its contractual commitments, the Company repossesses the vehicles which serve as collateral for loans, finance leases and equipment under operating leases. The Company records the vehicles as used truck inventory included in Other assets on the Balance Sheets. The balance of repossessed units at December 31, 2019 and 2018 was $7.8 and $1.6, respectively. Proceeds from the sales of repossessed assets were $19.6, $18.8 and $28.2 for the years ended December 31, 2019, 2018 and 2017, respectively. These amounts are included in Proceeds from disposal of equipment on the Statements of Cash Flows. Write-downs of repossessed equipment under operating leases are recorded as impairments and included in Depreciation and other rental expenses on the Statements of Income. |
Equipment On Operating Leases
Equipment On Operating Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Equipment On Operating Leases | NOTE C – EQUIPMENT ON OPERATING LEASES Terms of operating leases at origination and the related depreciation, generally range from three to five years. The total future annual minimum rental payments to be received for equipment on non-cancelable operating leases beginning January 1, 2020 of $760.7 are due as follows: $293.2 in 2020, $227.9 in 2021, $149.8 in 2022, $70.0 in 2023, and $19.8 in 2024 and thereafter. Depreciation expense related to equipment on operating leases was $311.2, $319.7 and $338.9 in 2019, 2018 and 2017, respectively. Substantially all equipment on operating leases is manufactured by PACCAR. |
Transactions with PACCAR and Af
Transactions with PACCAR and Affiliates | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Transactions with PACCAR and Affiliates | NOTE D – TRANSACTIONS WITH PACCAR AND AFFILIATES The Company and PACCAR are parties to a Support Agreement that obligates PACCAR to provide, when required, financial assistance to the Company to ensure that the Company maintains a ratio of earnings to fixed charges (as defined in the Support Agreement) of at least 1.25 to 1 for any fiscal year. The required ratio for the years ended December 31, 2019, 2018 and 2017 was met without assistance. The Support Agreement also requires PACCAR to own, directly or indirectly, all outstanding voting stock of the Company. Periodically, the Company makes loans to, borrows from and has intercompany transactions with PACCAR. In addition, the Company periodically loans funds to certain foreign finance and leasing affiliates of PACCAR. These affiliates have Support Agreements with PACCAR, similar to the Company’s Support Agreement with PACCAR. The foreign affiliates operate in the United Kingdom, the Netherlands, Mexico, Canada and Australia. Loans to these foreign affiliates during 2019 and 2018 were denominated in United States dollars. The foreign affiliates primarily provide financing and leasing of PACCAR manufactured trucks and related equipment sold through the DAF, Kenworth, and Peterbilt independent dealer networks in Europe, Mexico, Canada and Australia. The Company will not make loans to the foreign affiliates in excess of the equivalent of $750.0 United States dollars, unless the amount in excess of such limit is guaranteed by PACCAR. The Company periodically reviews the funding alternatives for these affiliates, and these limits may be revised in the future. Amounts outstanding at December 31, 2019 and 2018, including balances with foreign finance affiliates operating in the United Kingdom, the Netherlands, Mexico, Canada and Australia, are summarized below: December 31 December 31 2019 2018 Due from PACCAR and affiliates Loans due from PACCAR $ 861.0 $ 846.0 Loans due from foreign finance affiliates 651.5 697.5 Tax-related receivable due from PACCAR 16.5 23.1 Receivables 28.2 14.7 $ 1,557.2 $ 1,581.3 Due to PACCAR and affiliates Payables $ 13.9 $ 9.9 $ 13.9 $ 9.9 The Company is included in the consolidated federal income tax return of PACCAR. The tax-related receivable due from PACCAR represents the related tax benefit to be settled with PACCAR. PACCAR has issued letters of credit as of December 31, 2019 in the amount of $1.0 on behalf of the Company to guarantee funds for payment to insured franchisees and customers for any future insurance losses. PACCAR charges the Company for certain administrative services it provides. These costs were charged to the Company based upon the Company’s use of the services and PACCAR’s cost. Fees for the services were $7.0, $7.1 and $4.5 in 2019, 2018 and 2017, respectively, and are included in Additional paid-in capital. The Company’s principal office is located in the corporate headquarters building of PACCAR (owned by PACCAR). The Company also leases office space from one facility owned by PACCAR and four facilities leased by PACCAR. Lease payments for the use of these facilities are included in the above-mentioned administrative services charged by PACCAR. The Company’s employees and PACCAR employees are covered by a defined benefit pension plan sponsored by PACCAR. The assets and liabilities of the plan are reflected on the balance sheets of PACCAR. PACCAR contributes to the plan and allocates the expenses to the Company based principally on the number of eligible plan participants. Expenses for the defined benefit pension plan were $3.4, $3.7 and $3.3 for the years 2019, 2018 and 2017, respectively, and are included in Selling, general and administrative expenses. The Company’s employees and PACCAR employees are also covered by a defined contribution plan, sponsored by PACCAR. Expenses are based on the actual contribution made on the behalf of participating employees. Expenses incurred by the Company for the defined contribution plan were $1.9, $1.6 and $1.5 for the years 2019, 2018 and 2017, respectively, and are included in Selling, general and administrative expenses. |
Stockholder's Equity
Stockholder's Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stockholder's Equity | NOTE E – STOCKHOLDER’S EQUITY Accumulated other comprehensive income (loss) (AOCI) is $(12.4) and $.8 at December 31, 2019 and 2018, respectively and is comprised of the unrealized net (loss) gain on derivative contracts, net of taxes. Changes in and reclassifications out of AOCI during 2019, 2018 and 2017 are as follows: 2019 2018 2017 Balance at beginning of year $ .8 $ 1.9 $ .3 Amounts recorded in AOCI Unrealized (loss) gain on derivative contracts (16.2 ) .7 1.2 Income tax effect 4.0 (.2 ) (.4 ) Amounts reclassified out of AOCI Interest and other borrowing costs (1.3 ) (2.7 ) 1.4 Income taxes .3 .7 (.6 ) Net other comprehensive (loss) income (13.2 ) (1.5 ) 1.6 Reclassification to retained earnings in accordance with ASU 2018-02 .4 Balance at end of year $ (12.4 ) $ .8 $ 1.9 |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | NOTE F – DERIVATIVE FINANCIAL INSTRUMENTS Interest-rate contracts involve the exchange of fixed for floating rate or floating for fixed rate interest payments based on the contractual notional amounts in a single currency. The Company is exposed to interest-rate risk caused by market volatility as a result of its borrowing activities. The objective of these contracts is to mitigate the fluctuations on earnings, cash flows and fair value of borrowings. Net amounts paid or received are reflected as adjustments to interest expense. At December 31, 2019, the notional amount of these contracts totaled $1,089.3 with amounts expiring over the next nine years. Notional maturities for all interest-rate contracts are $190.0 for 2020, $327.1 for 2021, $399.6 for 2022, $31.5 for 2023, $60.0 for 2024 and $81.1 thereafter. The following table presents the balance sheet classification, fair value and gross and net amounts of derivative financial instruments: As of December 31 2019 2018 Interest-rate contracts: Assets Liabilities Assets Liabilities Other assets $ 1.8 $ 4.1 Accounts payable, accrued expenses and other $ 12.7 $ 5.3 Gross amounts recognized in Balance Sheets 1.8 12.7 4.1 5.3 Less amounts not offset in financial instruments (.9 ) (.9 ) (2.4 ) (2.4 ) Pro forma net amount $ .9 $ 11.8 $ 1.7 $ 2.9 Cash Flow Hedges Certain of the Company’s interest-rate contracts have been designated as cash flow hedges. Changes in the fair value of derivatives designated as cash flow hedges are recorded in AOCI. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows is nine years. Amounts in AOCI are reclassified into net income in the same period in which the hedged transaction affects earnings and are presented in the same income statement line as the earnings effect of the hedged transaction. The amount of loss recorded in AOCI at December 31, 2019 that is estimated to be reclassified to interest expense in the following 12 months if interest rates remain unchanged is approximately $2.8, net of taxes. The fixed interest earned on finance receivables will offset the amount recognized in interest expense, resulting in a stable interest margin consistent with the Company’s interest-rate risk management strategy. Fair Value Hedges Changes in the fair value of derivatives designated as fair value hedges are recorded in earnings together with the changes in fair value of the hedged item attributable to the risk being hedged. As of December 31, 2019, the following amounts were recorded on the Balance Sheets related to cumulative basis adjustments for fair value hedges: Cumulative Basis Amount Carrying Amount of Included in the Hedged Balance Sheet Line Item the Hedged Liabilities Carrying Amount Medium-term notes $ 90.5 $ .5 The above table excludes the cumulative basis adjustments on discontinued hedge relationships of $(1.5) as of December 31, 2019. The following table presents the amount of (income) expense on cash flow and fair value hedges recognized in Interest and other borrowing costs on the Statements of Income: As of December 31 2019 2018 (Gain) loss on fair value hedges Derivatives $ (1.9 ) $ (.4 ) Hedged items 3.3 2.2 Gain on cash flow hedges Reclassified from AOCI into income (1.3 ) (2.7 ) $ .1 $ (.9 ) |
Borrowings
Borrowings | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Borrowings | NOTE G – BORROWINGS The carrying amounts of borrowings are summarized as follows: As of December 31 2019 2018 Effective Effective Rate Borrowings Rate Borrowings Commercial paper 1.8 % $ 1,975.0 2.4 % $ 1,731.6 Medium-term notes 2.5 % 5,535.2 2.4 % 4,884.4 2.3 % $ 7,510.2 2.4 % $ 6,616.0 Commercial paper and medium-term notes borrowings were $7,510.2 and $6,616.0 at December 31, 2019 and 2018, respectively. Unamortized debt issuance costs, unamortized discounts and the net effect of fair value hedges were $(16.8) and $(17.8) at December 31, 2019 and 2018, respectively. The effective rate is the weighted average rate as of December 31, 2019 and includes the effects of interest-rate swap agreements. The annual principal maturities of the borrowings are as follows: Commercial Term Paper Notes Total 2020 $ 1,977.0 $ 1,100.0 $ 3,077.0 2021 1,800.0 1,800.0 2022 1,750.0 1,750.0 2023 600.0 600.0 2024 300.0 300.0 $ 1,977.0 $ 5,550.0 $ 7,527.0 Interest expense on borrowings amounted to $168.8, $127.5 and $91.9 for 2019, 2018 and 2017, respectively. Interest paid on borrowings was $164.2, $118.0 and $88.0 in 2019, 2018 and 2017, respectively. In November 2018, the Company filed a shelf registration statement under the Securities Act of 1933. In February 2020, the Company issued $300.0 of medium-term notes under this registration. The registration expires in November 2021 and does not limit the principal amount of debt securities that may be issued during the period. See “Note D – Transactions with PACCAR and Affiliates” for discussion of borrowings from PACCAR. |
Credit Arrangements
Credit Arrangements | 12 Months Ended |
Dec. 31, 2019 | |
Text Block [Abstract] | |
Credit Arrangements | NOTE H – CREDIT ARRANGEMENTS The Company participated with PACCAR and certain other PACCAR affiliates in syndicated credit facilities of $3,000.0 at December 31, 2019. Of this amount, $1,000.0 expires in June 2020, $1,000.0 expires in June 2023 and $1,000.0 expires in June 2024. PACCAR and the Company intend to replace these credit facilities on or before expiration with facilities of similar amounts and duration. Of the $3,000.0 credit facilities, $1,992.0 is available for use by the Company and/or PACCAR and PACCAR Financial Europe. The remaining $1,008.0 is allocated to PACCAR and other non-U.S. PACCAR financial subsidiaries. These credit facilities are used to provide backup liquidity for the Company’s commercial paper and maturing medium-term notes. The Company is liable only for its own borrowings under these credit facilities. There were no borrowings under these credit facilities in 2019. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE I – INCOME TAXES The Company’s effective income tax rate was 25.1% for 2019 compared to 23.4% for 2018, reflecting higher state tax expense in 2019 compared to 2018. The components of the Company’s provision for income taxes include the following: Year ended December 31 2019 2018 2017 Current (benefit) provision Federal $ (26.0 ) $ (8.1 ) $ (95.9 ) State 10.0 .2 4.0 (16.0 ) (7.9 ) (91.9 ) Deferred provision (benefit) Federal 53.5 33.5 (214.2 ) State (2.9 ) 2.7 6.2 50.6 36.2 (208.0 ) Total provision (benefit) for income taxes $ 34.6 $ 28.3 $ (299.9 ) A reconciliation of the statutory U.S. federal tax rate to the effective income tax rate is as follows: Year ended December 31 2019 2018 2017 Statutory rate 21.0 % 21.0 % 35.0 % Effect of: Rate change on U.S. federal deferred taxes (370.8 )% State 4.1 % 2.4 % 7.3 % 25.1 % 23.4 % (328.5 )% Cash paid for income taxes was $2.6, $4.1 and $.1 in 2019, 2018 and 2017, respectively. On December 22, 2017, the U.S. enacted new federal income tax legislation, the Tax Cuts and Jobs Act (“the Tax Act”). The Tax Act lowered the U.S. statutory income tax rate from 35.0% to 21.0%. The Company recorded a provisional amount of $338.5 of deferred tax benefits due to the re-measurement of net deferred tax liabilities at the new lower statutory tax rate. As of December 31, 2018, there have been no further adjustments for the provisional amounts recorded. The tax effects of temporary differences representing deferred tax assets and liabilities are as follows: December 31 December 31 2019 2018 Deferred tax assets: Allowance for losses on receivables $ 15.0 14.8 Derivative liability 2.2 Other 11.6 9.0 Deferred tax liabilities: Depreciation (708.7 ) (656.5 ) Derivative asset (.9 ) Net deferred tax liability $ (679.9 ) $ (633.6 ) |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | NOTE J – FAIR VALUE MEASUREMENTS Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs to valuation techniques used to measure fair value are either observable or unobservable. These inputs have been categorized into the fair value hierarchy described below: Level 1 – Valuations are based on quoted prices that the Company has the ability to obtain in actively traded markets for identical assets or liabilities. Since valuations are based on quoted prices that are readily and regularly available in an active market or exchange traded market, valuation of these instruments does not require a significant degree of judgment. Level 2 – Valuations are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. Level 3 – Valuations are based on model-based techniques for which some or all of the assumptions are obtained from indirect market information that is significant to the overall fair value measurement and which require a significant degree of management judgment. There were no transfers of assets or liabilities between Level 1 and Level 2 of the fair value hierarchy during the year ended December 31, 2019. The Company’s policy is to recognize transfers between levels at the end of the reporting period. Assets and Liabilities Subject to Non-recurring and Recurring Fair Value Measurement Impaired loans and used trucks held for sale are measured on a non-recurring basis. Derivative contracts are measured on a recurring basis. The Company’s assets and liabilities subject to fair value measurements are as follows: December 31 December 31 Level 2 2019 2018 Assets: Impaired loans, net of specific reserves (2019 - nil and 2018 - $.6) $ 2.5 Used trucks held for sale $ 121.9 40.5 Derivative contracts 1.8 4.1 Liabilities: Derivative contracts $ 12.7 $ 5.3 The Company uses the following methods and assumptions to measure fair value for assets and liabilities subject to non-recurring and recurring fair value measurements: Impaired Loans: Impaired loans that are individually evaluated are generally considered collateral dependent. Accordingly, the evaluation of individual reserves on such loans considers the fair value of the associated collateral (estimated sales proceeds less the costs to sell). Used Trucks Held for Sale: The carrying amount of used trucks held for sale is written down as necessary to reflect the fair value less costs to sell. The Company determines the fair value of used trucks from a pricing matrix, which is based on the market approach. The significant observable inputs into the valuation model are recent sales prices of comparable units sold individually, which is the lowest unit of account, and the condition of the vehicles. Used truck impairments related to units held at December 31, 2019 and 2018 were $19.9 and $11.5 during 2019 and 2018, respectively. These assets, which are shown in the above table when they are written down to fair value less costs to sell, are categorized as Level 2 and are included in Other assets on the Balance Sheets. Derivative Financial Instruments: The Company’s derivative financial instruments consist of interest-rate swaps and are carried at fair value. These derivative contracts are traded over the counter and their fair value is determined using industry standard valuation models, which are based on the income approach (i.e., discounted cash flows). The significant observable inputs into the valuation models include interest rates, yield curves and credit default swap spreads. These contracts are categorized as Level 2 and are included in Other assets and Accounts payable, accrued expenses and other on the Balance Sheets. Fair Value Disclosure of Other Financial Instruments For financial instruments that are not recognized at fair value, the Company uses the following methods and assumptions to determine the fair value. These instruments are categorized as Level 2, except cash which is categorized as Level 1 and fixed rate loans which are categorized as Level 3. Cash: Carrying amounts approximate fair value. Net Receivables: For floating rate loans, dealer wholesale financings and operating lease and other trade receivables, carrying values approximate fair values. For fixed rate loans, fair values are estimated using the income approach by discounting cash flows to their present value based on assumptions regarding credit and liquidity risks to approximate current rates for comparable loans. Finance lease receivables and related allowance for credit losses have been excluded from the accompanying table. Commercial Paper and Medium-Term Notes: The carrying amounts of the Company’s commercial paper and variable medium-term notes approximate fair value. For fixed rate debt, fair values are estimated using the income approach by discounting cash flows to their present value based on current rates for comparable debt. The Company’s estimate of fair value for fixed rate loans and debt that are not carried at fair value was as follows: December 31 December 31 2019 2018 Carrying Fair Carrying Fair Amount Value Amount Value Assets: Due from PACCAR $ 821.0 $ 833.9 $ 821.0 $ 815.2 Due from foreign finance affiliates 450.0 458.1 472.0 474.2 Fixed rate loans 3,667.8 3,725.8 3,239.5 3,234.4 Liabilities: Fixed rate debt $ 4,797.1 $ 4,848.3 $ 4,394.4 $ 4,363.2 |
Quarterly Results
Quarterly Results | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Results | NOTE K – QUARTERLY RESULTS (UNAUDITED) QUARTER First Second Third Fourth 2019 Interest and other revenues $ 184.0 $ 189.1 $ 191.9 $ 197.0 Income before income taxes 38.8 39.5 29.5 30.0 Net income 29.6 29.3 21.4 22.9 2018 Interest and other revenues $ 170.5 $ 175.0 $ 178.9 $ 183.1 Income before income taxes 26.6 26.5 33.1 34.6 Net income 20.4 19.8 23.7 28.6 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE L – COMMITMENTS AND CONTINGENCIES The Company is a party to various routine legal proceedings incidental to its business involving the collection of accounts and other matters. The Company believes that any reasonably possible range of losses with respect to these matters in addition to amounts accrued is not material to the Company’s financial statements. At December 31, 2019, the Company has loan and lease commitments of $354.3 expiring within one year. These commitments represent commitments to fund new retail loan and lease contracts. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Description of Operations and Basis of Presentation | Description of Operations and Basis of Presentation PACCAR Financial Corp. (the “Company”), is a wholly owned subsidiary of PACCAR Inc (“PACCAR”). The Company primarily provides financing of PACCAR manufactured trucks and related equipment sold by authorized dealers. The Company also finances dealer inventories of transportation equipment and franchises Kenworth and Peterbilt dealerships to engage in full-service and finance leasing. The operations of the Company are fundamentally affected by its relationship with PACCAR. Due to the nature of the Company’s business, customers are concentrated in the transportation industry throughout the United States. Generally, all receivables are collateralized by the equipment being financed. The risk of credit losses related to this concentration has been considered in establishing the allowance for credit losses. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Finance and Other Receivables | Finance and Other Receivables: Loans – Loans represent fixed or floating rate loans to customers or dealers collateralized by the vehicles purchased and are recorded at amortized cost. Finance leases – Finance leases represent equipment leases to retail customers and dealers. These leases are reported as the sum of minimum lease payments receivable and estimated residual value of the property subject to the contracts, reduced by unearned interest which is shown separately. Dealer wholesale financing – Dealer wholesale financing is floating-rate wholesale loans to Kenworth and Peterbilt dealers for new and used trucks and are recorded at amortized cost. The loans are collateralized by the trucks being financed. Operating lease receivables – Operating lease receivables and other include monthly rentals due on operating leases, unamortized loan and lease origination costs, interest on loans and other amounts due within one year in the normal course of business. |
Allowance for Credit Losses | Allowance for Credit Losses: The Company continuously monitors the payment performance of its finance receivables. For large retail finance customers and dealers with wholesale financing, the Company regularly reviews their financial statements and makes site visits and phone contact as appropriate. If the Company becomes aware of circumstances that could cause those customers or dealers to face financial difficulty, whether or not they are past due, the customers are placed on a watch list. The Company modifies loans and finance leases in the normal course of its operations. The Company may modify loans and finance leases for commercial reasons or for credit reasons. Modifications for commercial reasons are changes to contract terms for customers that are not considered to be in financial difficulty. Insignificant delays are modifications extending terms up to three months for customers experiencing some short-term financial stress, but not considered to be in financial difficulty. Modifications for credit reasons are changes to contract terms for customers considered to be in financial difficulty. The Company’s modifications typically result in granting more time to pay the contractual amounts owed and charging a fee and interest for the term of the modification. When considering whether to modify customer accounts for credit reasons, the Company evaluates the creditworthiness of the customers and modifies those accounts that the Company considers likely to perform under the modified terms. When the Company modifies loans and finance leases for credit reasons and grants a concession, the modifications are classified as troubled debt restructurings (TDR). The Company does not typically grant credit modifications for customers that do not meet minimum underwriting standards since the Company normally repossesses the financed equipment in these circumstances. When such modifications do occur, they are considered TDRs. On average, modifications extended contractual terms by approximately four months in both 2019 and 2018 and did not have a significant effect on the weighted average term or interest rate of the total portfolio at December 31, 2019 or 2018. The Company has developed a systematic methodology for determining the allowance for credit losses for its two portfolio segments, retail and wholesale. The retail segment consists of retail loans and finance leases, net of unearned interest. The wholesale segment consists of truck inventory financing loans to dealers that are collateralized by trucks and other collateral. The wholesale segment generally has less risk than the retail segment. Wholesale receivables generally are shorter in duration than retail receivables, and the Company requires periodic reporting of the wholesale dealer’s financial condition, conducts periodic audits of the trucks being financed and, in many cases, obtains guarantees or other security such as dealership assets. In determining the allowance for credit losses, retail loans and finance leases are evaluated together since they relate to a similar customer base, their contractual terms require regular payment of principal and interest, generally over 36 to 60 months, and they are secured by the same type of collateral. The allowance for credit losses consists of both specific and general reserves. The Company individually evaluates certain finance receivables for impairment. Finance receivables that are evaluated individually for impairment consist of all wholesale accounts and certain large retail accounts with past due balances or otherwise determined to be at a higher risk of loss. A finance receivable is impaired if it is considered probable the Company will be unable to collect all contractual interest and principal payments as scheduled. In addition, all retail loans and leases which have been classified as TDRs and all customer accounts over 90 days past due are considered impaired. Generally, impaired accounts are on non-accrual status. Impaired accounts classified as TDRs which have been performing for 90 consecutive days are placed on accrual status if it is deemed probable that the Company will collect all principal and interest payments. Impaired receivables are generally considered collateral dependent. Large balance retail and all wholesale impaired receivables are individually evaluated to determine the appropriate reserve for losses. The determination of reserves for large balance impaired receivables considers the fair value of the associated collateral. When the underlying collateral fair value exceeds the Company’s recorded investment, no reserve is recorded. Small balance impaired receivables with similar risk characteristics are evaluated as a separate pool to determine the appropriate reserve for losses using the historical loss information discussed below. The Company evaluates finance receivables that are not individually impaired on a collective basis and determines the general allowance for credit losses for both retail and wholesale receivables based on historical loss information, using past due account data and current market conditions. Information used includes assumptions regarding the likelihood of collecting current and past due accounts, repossession rates, the recovery rate on the underlying collateral based on used truck values and other pledged collateral or recourse. The Company has developed a range of loss estimates for its portfolio based on historical experience, taking into account loss frequency and severity in both strong and weak truck market conditions. A projection is made of the range of estimated credit losses inherent in the portfolio from which an amount is determined as probable based on current market conditions and other factors impacting the creditworthiness of the Company’s borrowers and their ability to repay. After determining the appropriate level of the allowance for credit losses, a provision for losses on finance receivables is charged to income as necessary to reflect management’s estimate of incurred credit losses, net of recoveries, inherent in the portfolio. In determining the fair value of the collateral, the Company uses a pricing matrix and categorizes the fair value as Level 2 in the hierarchy of fair value measurement. The pricing matrix is reviewed quarterly and updated as appropriate. The pricing matrix considers the make, model and year of the equipment as well as recent sales prices of comparable equipment sold individually, which is the lowest unit of account, through wholesale channels to the Company’s dealers (principal market). The fair value of the collateral also considers the overall condition of the equipment. Accounts are charged off against the allowance for credit losses when, in the judgment of management, they are considered uncollectible, which generally occurs upon repossession of the collateral. Typically the timing between the repossession and charge-off is not significant. In cases where repossession is delayed (e.g., for legal proceedings), the Company records a partial charge-off. The charge-off is determined by comparing the fair value of the collateral, less cost to sell, to the recorded investment. |
Revenue Recognition | Revenue Recognition Interest income from finance and other receivables is recognized using the interest method. Certain loan and lease origination costs are deferred and amortized to interest income over the expected life of the contracts, generally 36 to 60 months, using the straight-line method which approximates the interest method. For operating leases, rental revenue is recognized on a straight-line basis over the lease term. Recognition of interest income and rental revenue is suspended (put on non-accrual status) when the receivable becomes more than 90 days past the contractual due date or earlier if some other event causes the Company to determine that collection is not probable. Accordingly, no finance receivables more than 90 days past due were accruing interest at December 31, 2019 or December 31, 2018. Recognition is resumed if the receivable becomes current by the payment of all amounts due under the terms of the existing contract and collection of remaining amounts is considered probable (if not contractually modified) or if the customer makes scheduled payments for three months and collection of remaining amounts is considered probable (if contractually modified). Payments received while the finance receivable is on non-accrual status are applied to interest and principal in accordance with the contractual terms. The Company recognizes revenue on the sale of used trucks acquired from PACCAR truck division customers as part of new truck sales packages when the used trucks are invoiced and delivered to a customer. |
Equipment on Operating Leases | Equipment on Operating Leases Equipment on operating leases is recorded at cost and is depreciated on the straight-line basis to its estimated residual value. Residual values are reviewed regularly and adjusted if market conditions warrant. |
Derivative Financial Instruments | Derivative Financial Instruments: As part of its risk management strategy, the Company enters into derivative contracts to hedge against interest-rate risk. Certain derivative instruments designated as either cash flow hedges or fair value hedges are subject to hedge accounting. Derivative instruments that are not subject to hedge accounting are held as economic hedges. The Company’s policies prohibit the use of derivatives for speculation or trading. At the inception of each hedge relationship, the Company documents its risk management objectives, procedures and accounting treatment. All of the Company’s interest-rate contracts are transacted under International Swaps and Derivatives Association (ISDA) master agreements. Each agreement permits the net settlement of amounts owed in the event of default and certain other termination events. The Company has elected not to offset derivative positions in the balance sheet with the same counterparty under the same agreements and is not required to post or receive collateral. Exposure limits and minimum credit ratings are used to minimize the risks of counterparty default. The Company’s maximum exposure to potential default of its swap counterparties is limited to the asset position of its swap portfolio. The asset position of the Company’s swap portfolio was $1.8 at December 31, 2019. The Company uses regression analysis to assess effectiveness of interest-rate contracts at inception and uses quantitative or qualitative analysis to assess subsequent effectiveness on a quarterly basis. All components of the derivative instrument’s gain or loss are included in the assessment of hedge effectiveness. Hedge accounting is discontinued prospectively when the Company determines that a derivative financial instrument has ceased to be a highly effective hedge. Cash flows from derivative instruments are included in operating activities in the Statements of Cash Flows. |
Income Taxes | Income Taxes The Company is included in the consolidated federal income tax return of PACCAR. Federal income taxes for the Company are determined on a separate return basis, and any related tax liability is paid by the Company to PACCAR and any related tax benefit is paid by PACCAR to the Company. State income taxes, where the Company files combined tax returns with PACCAR, are determined on a blended statutory rate, which is substantially the same as the rate computed on a separate return basis. As of December 31, 2019, the United States Internal Revenue Service has completed examinations of PACCAR’s tax returns for all years through 2014. PACCAR’s tax returns remain subject to examination in other jurisdictions for the years ranging from 2013 through 2018. |
Preferred Stock | Preferred Stock The Company’s Articles of Incorporation provide that the 6%, noncumulative, nonvoting preferred stock (100% owned by PACCAR) is redeemable only at the option of the Company’s Board of Directors. |
New Accounting Pronouncements | New Accounting Pronouncements: In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) The Company elected the package of practical expedients for its leases existing prior to the adoption of this ASU that will retain prior conclusions about lease identification, lease classification and initial direct costs under the new standard. For lessee accounting, the Company elected the short-term lease exemption to not recognize right-of-use assets and lease liabilities for any leases with a duration of twelve months or less. For lessor accounting, the Company elected to exclude taxes collected from customers, such as sales and use and value added, from the measurement of lease income and expense. The new standard requires lessors within the scope of ASC 942 , Financial Services – Depository and Lending The Company offers finance lease and operating lease contracts to retail customers and dealers. The Company accounts for lease and non-lease components of the contract separately based on the relative stand-alone price of each component. Most of the Company’s finance leases contain a Terminal Rental Adjustment Clause, which requires the lessee to guarantee to the Company a stated residual value upon disposition of the equipment at the end of the lease term. Under an operating lease, the lessee has the option to return the equipment to the Company or purchase the equipment at its fair market value at the end of the lease term. The Company determines its estimate of the residual value of leased vehicles by considering the length of the lease term, the truck model, the expected usage of the truck and anticipated market demand. Residual values are reviewed regularly and adjusted if market conditions warrant. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments The FASB also issued the following standards, which are not expected to have a material impact on the Company’s financial statements. STANDARD DESCRIPTION EFFECTIVE DATE 2018-13* Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure January 1, 2020 Requirements for Fair Value Measurement 2018-15* Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s January 1, 2020 Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract 2019-12** Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes January 1, 2021 * The Company will adopt on the effective date. ** The Company will early adopt in 2020. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
FASB Issued Standards | The FASB also issued the following standards, which are not expected to have a material impact on the Company’s financial statements. STANDARD DESCRIPTION EFFECTIVE DATE 2018-13* Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure January 1, 2020 Requirements for Fair Value Measurement 2018-15* Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s January 1, 2020 Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract 2019-12** Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes January 1, 2021 * The Company will adopt on the effective date. ** The Company will early adopt in 2020. |
Finance and Other Receivables (
Finance and Other Receivables (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Finance and Other Receivables | The Company’s finance and other receivables include the following: December 31 December 31 2019 2018 Retail loans $ 3,774.3 $ 3,372.3 Retail financing leases 1,492.7 1,428.6 Dealer wholesale financing 1,766.7 1,179.0 Dealer master notes 88.7 52.9 Operating lease receivables and other 65.0 66.7 7,187.4 6,099.5 Less allowance for credit losses: Loans and leases (57.0 ) (56.1 ) Dealer wholesale financing (1.9 ) (3.1 ) Operating lease receivables and other (1.8 ) (1.5 ) $ 7,126.7 $ 6,038.8 |
Annual Minimum Payments Due on Finance Leases and Reconciliation of Undiscounted Cash Flows to Net Investment in Finance Leases | Annual minimum payments due on loans and finance leases and a reconciliation of the undiscounted cash flows to the net investment in finance leases are as follows: Loans Finance Leases 2020 $ 1,160.8 $ 475.7 2021 952.6 376.3 2022 765.3 289.5 2023 585.4 233.5 2024 302.1 125.6 Thereafter 96.8 72.9 $ 3,863.0 1,573.5 Unguaranteed residual values 70.8 Unearned interest on finance leases (151.6 ) Net investment in finance leases $ 1,492.7 |
Allowance for Credit Losses | The allowance for credit losses is summarized as follows: 2019 Dealer Customer Wholesale Retail Retail Other* Total Balance at January 1 $ 3.1 $ 8.4 $ 47.7 $ 1.5 $ 60.7 (Benefit) provision for losses (.8 ) (.5 ) 10.3 2.7 11.7 Charge-offs (.4 ) (11.1 ) (2.4 ) (13.9 ) Recoveries 2.2 2.2 Balance at December 31 $ 1.9 $ 7.9 $ 49.1 $ 1.8 $ 60.7 2018 Dealer Customer Wholesale Retail Retail Other* Total Balance at January 1 $ 2.4 $ 7.9 $ 46.9 $ 1.2 $ 58.4 Provision for losses .7 .5 6.2 1.2 8.6 Charge-offs (7.9 ) (.9 ) (8.8 ) Recoveries 2.5 2.5 Balance at December 31 $ 3.1 $ 8.4 $ 47.7 $ 1.5 $ 60.7 2017 Dealer Customer Wholesale Retail Retail Other* Total Balance at January 1 $ 2.0 $ 8.5 $ 47.8 $ 1.1 $ 59.4 Provision (benefit) for losses .4 (.6 ) 11.9 .3 12.0 Charge-offs (14.6 ) (.3 ) (14.9 ) Recoveries 1.8 .1 1.9 Balance at December 31 $ 2.4 $ 7.9 $ 46.9 $ 1.2 $ 58.4 * Operating lease and other receivables |
Finance Receivables Evaluated and the Associated Allowances Determined Individually and Collectively | Information regarding finance receivables evaluated and the associated allowances determined individually and collectively is as follows: Dealer Customer At December 31, 2019 Wholesale Retail Retail Total Recorded investment for impaired finance receivables evaluated individually $ 25.2 $ 25.2 Allowance for impaired finance receivables determined individually $ 2.3 $ 2.3 Recorded investment for finance receivables evaluated collectively $ 1,766.7 $ 1,411.4 $ 3,919.1 $ 7,097.2 Allowance for finance receivables determined collectively $ 1.9 $ 7.9 $ 46.8 $ 56.6 Dealer Customer At December 31, 2018 Wholesale Retail Retail Total Recorded investment for impaired finance receivables evaluated individually $ 15.4 $ 15.4 Allowance for impaired finance receivables determined individually $ 2.1 $ 2.1 Recorded investment for finance receivables evaluated collectively $ 1,179.0 $ 1,256.1 $ 3,582.3 $ 6,017.4 Allowance for finance receivables determined collectively $ 3.1 $ 8.4 $ 45.6 $ 57.1 |
Recorded Investment for Finance Receivables that are on Non-accrual Status | The recorded investment for finance receivables that are on non-accrual status is as follows: December 31 December 31 2019 2018 Fleet $ 21.8 $ 12.1 Owner/Operator 3.4 3.3 $ 25.2 $ 15.4 |
Impaired Loans and Specific Reserve | Impaired loans are summarized below. The impaired loans with a specific reserve represent the unpaid principal balance. The recorded investment of impaired loans as of December 31, 2019 and 2018 was not significantly different than the unpaid principal balance. Dealer Customer Retail Owner/ At December 31, 2019 Wholesale Retail Fleet Operator Total Impaired loans with a specific reserve $ 4.6 $ 2.9 $ 7.5 Associated allowance (.9 ) (.6 ) (1.5 ) Net carrying amount of impaired loans with a specific reserve 3.7 2.3 6.0 Impaired loans with no specific reserve 6.7 .4 7.1 Net carrying amount of impaired loans $ 10.4 $ 2.7 $ 13.1 Average recorded investment for impaired loans $ 4.9 $ 9.3 $ 2.9 $ 17.1 Dealer Customer Retail Owner/ At December 31, 2018 Wholesale Retail Fleet Operator Total Impaired loans with a specific reserve $ 5.7 $ 2.9 $ 8.6 Associated allowance (1.0 ) (.9 ) (1.9 ) Net carrying amount of impaired loans with a specific reserve 4.7 2.0 6.7 Impaired loans with no specific reserve 4.4 .3 4.7 Net carrying amount of impaired loans $ 9.1 $ 2.3 $ 11.4 Average recorded investment for impaired loans $ 18.4 $ 2.3 $ 20.7 |
Interest Income Recognized on Cash Basis | During the period the loans above were considered impaired, interest income recognized on a cash basis was as follows: 2019 2018 2017 Fleet $ .6 $ 1.1 $ 1.2 Owner/Operator .2 .2 .1 $ .8 $ 1.3 $ 1.3 |
Finance Receivables by Credit Quality Indicator and Portfolio Class | The tables below summarize the Company’s finance receivables by credit quality indicator and portfolio class. Dealer Customer Retail Owner/ At December 31, 2019 Wholesale Retail Fleet Operator Total Performing $ 1,757.9 $ 1,411.4 $ 3,393.6 $ 494.7 $ 7,057.6 Watch 8.8 29.2 1.6 39.6 At-risk 21.8 3.4 25.2 $ 1,766.7 $ 1,411.4 $ 3,444.6 $ 499.7 $ 7,122.4 Dealer Customer Retail Owner/ At December 31, 2018 Wholesale Retail Fleet Operator Total Performing $ 1,177.9 $ 1,256.1 $ 3,037.1 $ 501.2 $ 5,972.3 Watch 1.1 43.3 .7 45.1 At-risk 12.1 3.3 15.4 $ 1,179.0 $ 1,256.1 $ 3,092.5 $ 505.2 $ 6,032.8 |
Financing Receivables by Aging Category | The tables below summarize the Company’s finance receivables by aging category. In determining past due status, the Company considers the entire contractual account balance past due when any installment is over 30 days past due. Substantially all customer accounts that were greater than 30 days past due prior to credit modification became current upon modification for aging purposes. Dealer Customer Retail Owner/ At December 31, 2019 Wholesale Retail Fleet Operator Total Current and up to 30 days past-due $ 1,766.7 $ 1,411.4 $ 3,425.2 $ 496.2 $ 7,099.5 31 – 60 days past-due 10.4 2.5 12.9 Greater than 60 days past-due 9.0 1.0 10.0 $ 1,766.7 $ 1,411.4 $ 3,444.6 $ 499.7 $ 7,122.4 Dealer Customer Retail Owner/ At December 31, 2018 Wholesale Retail Fleet Operator Total Current and up to 30 days past-due $ 1,179.0 $ 1,256.1 $ 3,088.4 $ 502.8 $ 6,026.3 31 – 60 days past-due 3.0 1.4 4.4 Greater than 60 days past-due 1.1 1.0 2.1 $ 1,179.0 $ 1,256.1 $ 3,092.5 $ 505.2 $ 6,032.8 |
Pre-Modification and Post-Modification Recorded Investment Balances by Portfolio Class | At modification date, the pre- and post-modification recorded investment balances for finance receivables modified during the period by portfolio class are as follows: 2019 2018 Recorded Investment Recorded Investment Pre-Modification Post-Modification Pre-Modification Post-Modification Fleet $ 1.2 $ 1.2 $ 5.5 $ 5.5 Owner/Operator .1 .1 .6 .6 $ 1.3 $ 1.3 $ 6.1 $ 6.1 |
Transactions with PACCAR and _2
Transactions with PACCAR and Affiliates (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Amounts Outstanding Including Foreign Finance Affiliates | Amounts outstanding at December 31, 2019 and 2018, including balances with foreign finance affiliates operating in the United Kingdom, the Netherlands, Mexico, Canada and Australia, are summarized below: December 31 December 31 2019 2018 Due from PACCAR and affiliates Loans due from PACCAR $ 861.0 $ 846.0 Loans due from foreign finance affiliates 651.5 697.5 Tax-related receivable due from PACCAR 16.5 23.1 Receivables 28.2 14.7 $ 1,557.2 $ 1,581.3 Due to PACCAR and affiliates Payables $ 13.9 $ 9.9 $ 13.9 $ 9.9 |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Changes in and Reclassifications out of Accumulated Other Comprehensive Income (Loss) | Changes in and reclassifications out of AOCI during 2019, 2018 and 2017 are as follows: 2019 2018 2017 Balance at beginning of year $ .8 $ 1.9 $ .3 Amounts recorded in AOCI Unrealized (loss) gain on derivative contracts (16.2 ) .7 1.2 Income tax effect 4.0 (.2 ) (.4 ) Amounts reclassified out of AOCI Interest and other borrowing costs (1.3 ) (2.7 ) 1.4 Income taxes .3 .7 (.6 ) Net other comprehensive (loss) income (13.2 ) (1.5 ) 1.6 Reclassification to retained earnings in accordance with ASU 2018-02 .4 Balance at end of year $ (12.4 ) $ .8 $ 1.9 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Balance Sheet Classification, Fair Value and Gross and Net Amounts of Derivative Financial Instruments | The following table presents the balance sheet classification, fair value and gross and net amounts of derivative financial instruments: As of December 31 2019 2018 Interest-rate contracts: Assets Liabilities Assets Liabilities Other assets $ 1.8 $ 4.1 Accounts payable, accrued expenses and other $ 12.7 $ 5.3 Gross amounts recognized in Balance Sheets 1.8 12.7 4.1 5.3 Less amounts not offset in financial instruments (.9 ) (.9 ) (2.4 ) (2.4 ) Pro forma net amount $ .9 $ 11.8 $ 1.7 $ 2.9 |
Amount of (Income) Expense on Cash Flow and Fair Value Hedges Recognized In Interest and Other Borrowing Costs on Statements of Income | The following table presents the amount of (income) expense on cash flow and fair value hedges recognized in Interest and other borrowing costs on the Statements of Income: As of December 31 2019 2018 (Gain) loss on fair value hedges Derivatives $ (1.9 ) $ (.4 ) Hedged items 3.3 2.2 Gain on cash flow hedges Reclassified from AOCI into income (1.3 ) (2.7 ) $ .1 $ (.9 ) |
Fair Value Hedging | |
Amounts Recorded on Balance Sheets Related to Cumulative Basis Adjustments for Fair Value Hedges | Changes in the fair value of derivatives designated as fair value hedges are recorded in earnings together with the changes in fair value of the hedged item attributable to the risk being hedged. As of December 31, 2019, the following amounts were recorded on the Balance Sheets related to cumulative basis adjustments for fair value hedges: Cumulative Basis Amount Carrying Amount of Included in the Hedged Balance Sheet Line Item the Hedged Liabilities Carrying Amount Medium-term notes $ 90.5 $ .5 |
Borrowings (Tables)
Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Summary of Borrowings | The carrying amounts of borrowings are summarized as follows: As of December 31 2019 2018 Effective Effective Rate Borrowings Rate Borrowings Commercial paper 1.8 % $ 1,975.0 2.4 % $ 1,731.6 Medium-term notes 2.5 % 5,535.2 2.4 % 4,884.4 2.3 % $ 7,510.2 2.4 % $ 6,616.0 |
Summary Of Annual Maturities | The annual principal maturities of the borrowings are as follows: Commercial Term Paper Notes Total 2020 $ 1,977.0 $ 1,100.0 $ 3,077.0 2021 1,800.0 1,800.0 2022 1,750.0 1,750.0 2023 600.0 600.0 2024 300.0 300.0 $ 1,977.0 $ 5,550.0 $ 7,527.0 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Components Of Provision for Income Taxes | The components of the Company’s provision for income taxes include the following: Year ended December 31 2019 2018 2017 Current (benefit) provision Federal $ (26.0 ) $ (8.1 ) $ (95.9 ) State 10.0 .2 4.0 (16.0 ) (7.9 ) (91.9 ) Deferred provision (benefit) Federal 53.5 33.5 (214.2 ) State (2.9 ) 2.7 6.2 50.6 36.2 (208.0 ) Total provision (benefit) for income taxes $ 34.6 $ 28.3 $ (299.9 ) |
Reconciliation of Statutory U.S. Federal Tax Rate to the Effective Income Tax Rates | A reconciliation of the statutory U.S. federal tax rate to the effective income tax rate is as follows: Year ended December 31 2019 2018 2017 Statutory rate 21.0 % 21.0 % 35.0 % Effect of: Rate change on U.S. federal deferred taxes (370.8 )% State 4.1 % 2.4 % 7.3 % 25.1 % 23.4 % (328.5 )% |
Deferred Tax Assets and Liabilities | The tax effects of temporary differences representing deferred tax assets and liabilities are as follows: December 31 December 31 2019 2018 Deferred tax assets: Allowance for losses on receivables $ 15.0 14.8 Derivative liability 2.2 Other 11.6 9.0 Deferred tax liabilities: Depreciation (708.7 ) (656.5 ) Derivative asset (.9 ) Net deferred tax liability $ (679.9 ) $ (633.6 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Fair Value Measurements | The Company’s assets and liabilities subject to fair value measurements are as follows: December 31 December 31 Level 2 2019 2018 Assets: Impaired loans, net of specific reserves (2019 - nil and 2018 - $.6) $ 2.5 Used trucks held for sale $ 121.9 40.5 Derivative contracts 1.8 4.1 Liabilities: Derivative contracts $ 12.7 $ 5.3 |
Carrying Amount and Fair Value Fixed-Rate Loans and Fixed-Rate Debt | The Company’s estimate of fair value for fixed rate loans and debt that are not carried at fair value was as follows: December 31 December 31 2019 2018 Carrying Fair Carrying Fair Amount Value Amount Value Assets: Due from PACCAR $ 821.0 $ 833.9 $ 821.0 $ 815.2 Due from foreign finance affiliates 450.0 458.1 472.0 474.2 Fixed rate loans 3,667.8 3,725.8 3,239.5 3,234.4 Liabilities: Fixed rate debt $ 4,797.1 $ 4,848.3 $ 4,394.4 $ 4,363.2 |
Quarterly Results (Tables)
Quarterly Results (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information | QUARTER First Second Third Fourth 2019 Interest and other revenues $ 184.0 $ 189.1 $ 191.9 $ 197.0 Income before income taxes 38.8 39.5 29.5 30.0 Net income 29.6 29.3 21.4 22.9 2018 Interest and other revenues $ 170.5 $ 175.0 $ 178.9 $ 183.1 Income before income taxes 26.6 26.5 33.1 34.6 Net income 20.4 19.8 23.7 28.6 |
Significant Accounting Polici_4
Significant Accounting Policies - Additional Information (Detail) | Jan. 01, 2020USD ($) | Dec. 31, 2019USD ($)Segment | Dec. 31, 2018USD ($) |
Accounting Policies [Abstract] | |||
Number of portfolio segments | Segment | 2 | ||
Receivables more than 90 days past due still accruing | $ 0 | $ 0 | |
Interest rate swap portfolio | $ 1,800,000 | ||
Preferred stock dividend percentage | 6.00% | ||
Ownership percentage of PACCAR | 100.00% | ||
Right-of-use asset | $ 2,100,000 | ||
Lease liability | $ 2,200,000 | ||
Subsequent Event | ASU 2016-13 | |||
Accounting Policies [Abstract] | |||
Increase in finance receivable allowance for credit losses | $ 4,600,000 | ||
Cumulative effect adjustment to decrease retained earnings, net of tax | $ 3,500,000 | ||
Internal Revenue Service (IRS) | |||
Accounting Policies [Abstract] | |||
Income tax examination, description | the United States Internal Revenue Service has completed examinations of PACCAR’s tax returns for all years through 2014. PACCAR’s tax returns remain subject to examination in other jurisdictions for the years ranging from 2013 through 2018. | ||
Earliest Tax Year | Internal Revenue Service (IRS) | |||
Accounting Policies [Abstract] | |||
Tax years subject to examination | 2013 | ||
Latest Tax Year | Internal Revenue Service (IRS) | |||
Accounting Policies [Abstract] | |||
Tax years subject to examination | 2018 | ||
Maximum | Loans Receivable | |||
Accounting Policies [Abstract] | |||
Contractual term of regular payment of principal and interest | 60 months | ||
Minimum | Loans Receivable | |||
Accounting Policies [Abstract] | |||
Contractual term of regular payment of principal and interest | 36 months | ||
Extended Maturity | |||
Accounting Policies [Abstract] | |||
Modifications extended contractual terms | 4 months | 4 months |
The Company Adopted Standards (
The Company Adopted Standards (Detail) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Standards Update 2018-13 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
DESCRIPTION | Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement |
EFFECTIVE DATE | Jan. 1, 2020 |
Accounting Standards Update 2018-15 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
DESCRIPTION | Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract |
EFFECTIVE DATE | Jan. 1, 2020 |
Accounting Standards Update 2019-12 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
DESCRIPTION | Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes |
EFFECTIVE DATE | Jan. 1, 2021 |
Finance and Other Receivables_2
Finance and Other Receivables (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Retail loans | $ 3,774.3 | $ 3,372.3 | |||
Retail financing leases | 1,492.7 | 1,428.6 | |||
Dealer wholesale financing | 1,766.7 | 1,179 | |||
Dealer master notes | 88.7 | 52.9 | |||
Operating lease receivables and other | 65 | 66.7 | |||
Total portfolio | 7,187.4 | 6,099.5 | |||
Allowance for credit losses | (60.7) | (60.7) | $ (58.4) | $ (59.4) | |
Total portfolio, net of allowance for credit losses | 7,126.7 | 6,038.8 | |||
Loans and Leases | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Allowance for credit losses | (57) | (56.1) | |||
Dealer | Wholesale | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Allowance for credit losses | (1.9) | (3.1) | (2.4) | (2) | |
Other | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Allowance for credit losses | [1] | $ (1.8) | $ (1.5) | $ (1.2) | $ (1.1) |
[1] | Operating lease and other receivables |
Annual Minimum Payments Due on
Annual Minimum Payments Due on Finance Leases and Reconciliation of Undiscounted Cash Flows to Net Investment in Finance Leases (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total | $ 25.2 | $ 15.4 |
Finance Leases | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
2020 | 475.7 | |
2021 | 376.3 | |
2022 | 289.5 | |
2023 | 233.5 | |
2024 | 125.6 | |
Thereafter | 72.9 | |
Total | 1,573.5 | |
Unguaranteed residual values | 70.8 | |
Unearned interest on finance leases | (151.6) | |
Net investment in finance leases | 1,492.7 | |
Loans Receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
2020 | 1,160.8 | |
2021 | 952.6 | |
2022 | 765.3 | |
2023 | 585.4 | |
2024 | 302.1 | |
Thereafter | 96.8 | |
Total | $ 3,863 |
Finance and Other Receivables -
Finance and Other Receivables - Additional Information (Detail) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019USD ($)Segment | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Financing lease, interest income | $ 64.5 | ||
Number of portfolio segments | Segment | 2 | ||
Troubled debt restructuring | $ 3.2 | $ 7.8 | |
Repossessed inventory | 7.8 | 1.6 | |
Proceeds from sales of repossessed assets | $ 19.6 | $ 18.8 | $ 28.2 |
Customer Concentration Risk | Swift Transportation Company | Financing Receivable | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Percentage of customers diversification in portfolio | 2.80% | 5.90% | 10.40% |
Maximum | Financing Receivable | Credit Concentration Risk | Financial Services | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Percentage of customers diversification in portfolio | 10.00% | 10.00% | |
Finance Leases Financing Receivable | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Estimated residual values included with finance leases | $ 70.8 | $ 63.4 | |
Customer Retail | Fleet | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Recorded investment, subsequently defaulted | $ 0 |
Allowance for Credit Losses (De
Allowance for Credit Losses (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||
Beginning Balance | $ 60.7 | $ 58.4 | $ 59.4 | |
(Benefit) provision for losses | 11.7 | 8.6 | 12 | |
Charge-offs | (13.9) | (8.8) | (14.9) | |
Recoveries | 2.2 | 2.5 | 1.9 | |
Ending Balance | 60.7 | 60.7 | 58.4 | |
Dealer | Wholesale | ||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||
Beginning Balance | 3.1 | 2.4 | 2 | |
(Benefit) provision for losses | (0.8) | 0.7 | 0.4 | |
Charge-offs | (0.4) | |||
Ending Balance | 1.9 | 3.1 | 2.4 | |
Dealer | Retail | ||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||
Beginning Balance | 8.4 | 7.9 | 8.5 | |
(Benefit) provision for losses | (0.5) | 0.5 | (0.6) | |
Ending Balance | 7.9 | 8.4 | 7.9 | |
Customer Retail | ||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||
Beginning Balance | 47.7 | 46.9 | 47.8 | |
(Benefit) provision for losses | 10.3 | 6.2 | 11.9 | |
Charge-offs | (11.1) | (7.9) | (14.6) | |
Recoveries | 2.2 | 2.5 | 1.8 | |
Ending Balance | 49.1 | 47.7 | 46.9 | |
Other | ||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||
Beginning Balance | [1] | 1.5 | 1.2 | 1.1 |
(Benefit) provision for losses | [1] | 2.7 | 1.2 | 0.3 |
Charge-offs | [1] | (2.4) | (0.9) | (0.3) |
Recoveries | [1] | 0.1 | ||
Ending Balance | [1] | $ 1.8 | $ 1.5 | $ 1.2 |
[1] | Operating lease and other receivables |
Finance Receivables Evaluated a
Finance Receivables Evaluated and the Associated Allowances Determined Individually and Collectively (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Recorded investment for impaired finance receivables evaluated individually | $ 25.2 | $ 15.4 |
Allowance for impaired finance receivables determined individually | 2.3 | 2.1 |
Recorded investment for finance receivables evaluated collectively | 7,097.2 | 6,017.4 |
Allowance for finance receivables determined collectively | 56.6 | 57.1 |
Dealer | Wholesale | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Recorded investment for finance receivables evaluated collectively | 1,766.7 | 1,179 |
Allowance for finance receivables determined collectively | 1.9 | 3.1 |
Dealer | Retail | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Recorded investment for finance receivables evaluated collectively | 1,411.4 | 1,256.1 |
Allowance for finance receivables determined collectively | 7.9 | 8.4 |
Customer Retail | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Recorded investment for impaired finance receivables evaluated individually | 25.2 | 15.4 |
Allowance for impaired finance receivables determined individually | 2.3 | 2.1 |
Recorded investment for finance receivables evaluated collectively | 3,919.1 | 3,582.3 |
Allowance for finance receivables determined collectively | $ 46.8 | $ 45.6 |
Recorded Investment for Finance
Recorded Investment for Finance Receivables that are on Non-accrual Status (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Recorded investment of finance receivables that are on non-accrual status | $ 25.2 | $ 15.4 |
Customer Retail | Fleet | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Recorded investment of finance receivables that are on non-accrual status | 21.8 | 12.1 |
Customer Retail | Owner/Operator | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Recorded investment of finance receivables that are on non-accrual status | $ 3.4 | $ 3.3 |
Impaired Loans and Specific Res
Impaired Loans and Specific Reserve (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Financing Receivable, Impaired [Line Items] | ||
Impaired loans with a specific reserve | $ 7.5 | $ 8.6 |
Associated allowance | (1.5) | (1.9) |
Net carrying amount of impaired loans with a specific reserve | 6 | 6.7 |
Impaired loans with no specific reserve | 7.1 | 4.7 |
Net carrying amount of impaired loans | 13.1 | 11.4 |
Average recorded investment for impaired loans | 17.1 | 20.7 |
Dealer | Wholesale | ||
Financing Receivable, Impaired [Line Items] | ||
Average recorded investment for impaired loans | 4.9 | |
Customer Retail | Fleet | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired loans with a specific reserve | 4.6 | 5.7 |
Associated allowance | (0.9) | (1) |
Net carrying amount of impaired loans with a specific reserve | 3.7 | 4.7 |
Impaired loans with no specific reserve | 6.7 | 4.4 |
Net carrying amount of impaired loans | 10.4 | 9.1 |
Average recorded investment for impaired loans | 9.3 | 18.4 |
Customer Retail | Owner/Operator | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired loans with a specific reserve | 2.9 | 2.9 |
Associated allowance | (0.6) | (0.9) |
Net carrying amount of impaired loans with a specific reserve | 2.3 | 2 |
Impaired loans with no specific reserve | 0.4 | 0.3 |
Net carrying amount of impaired loans | 2.7 | 2.3 |
Average recorded investment for impaired loans | $ 2.9 | $ 2.3 |
Interest Income Recognized (Det
Interest Income Recognized (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Interest income recognized: | |||
Interest income recognized on a cash basis | $ 0.8 | $ 1.3 | $ 1.3 |
Customer Retail | Fleet | |||
Interest income recognized: | |||
Interest income recognized on a cash basis | 0.6 | 1.1 | 1.2 |
Customer Retail | Owner/Operator | |||
Interest income recognized: | |||
Interest income recognized on a cash basis | $ 0.2 | $ 0.2 | $ 0.1 |
Financing Receivables by Credit
Financing Receivables by Credit Quality Indicator and Portfolio Class (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Financing Receivable, Recorded Investment [Line Items] | ||
Financing Receivables | $ 7,122.4 | $ 6,032.8 |
Performing | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing Receivables | 7,057.6 | 5,972.3 |
Watch | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing Receivables | 39.6 | 45.1 |
At-risk | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing Receivables | 25.2 | 15.4 |
Dealer | Wholesale | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing Receivables | 1,766.7 | 1,179 |
Dealer | Wholesale | Performing | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing Receivables | 1,757.9 | 1,177.9 |
Dealer | Wholesale | Watch | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing Receivables | 8.8 | 1.1 |
Dealer | Retail | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing Receivables | 1,411.4 | 1,256.1 |
Dealer | Retail | Performing | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing Receivables | 1,411.4 | 1,256.1 |
Customer Retail | Fleet | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing Receivables | 3,444.6 | 3,092.5 |
Customer Retail | Fleet | Performing | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing Receivables | 3,393.6 | 3,037.1 |
Customer Retail | Fleet | Watch | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing Receivables | 29.2 | 43.3 |
Customer Retail | Fleet | At-risk | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing Receivables | 21.8 | 12.1 |
Customer Retail | Owner/Operator | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing Receivables | 499.7 | 505.2 |
Customer Retail | Owner/Operator | Performing | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing Receivables | 494.7 | 501.2 |
Customer Retail | Owner/Operator | Watch | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing Receivables | 1.6 | 0.7 |
Customer Retail | Owner/Operator | At-risk | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing Receivables | $ 3.4 | $ 3.3 |
Financing Receivables by Aging
Financing Receivables by Aging Category (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Financing receivables, current and up to 30 days past due | $ 7,099.5 | $ 6,026.3 |
Financing receivables | 7,122.4 | 6,032.8 |
31 - 60 days past due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Financing receivables, past due | 12.9 | 4.4 |
Greater than 60 days past due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Financing receivables, past due | 10 | 2.1 |
Dealer | Wholesale | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Financing receivables, current and up to 30 days past due | 1,766.7 | 1,179 |
Financing receivables | 1,766.7 | 1,179 |
Dealer | Retail | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Financing receivables, current and up to 30 days past due | 1,411.4 | 1,256.1 |
Financing receivables | 1,411.4 | 1,256.1 |
Customer Retail | Fleet | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Financing receivables, current and up to 30 days past due | 3,425.2 | 3,088.4 |
Financing receivables | 3,444.6 | 3,092.5 |
Customer Retail | Fleet | 31 - 60 days past due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Financing receivables, past due | 10.4 | 3 |
Customer Retail | Fleet | Greater than 60 days past due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Financing receivables, past due | 9 | 1.1 |
Customer Retail | Owner/Operator | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Financing receivables, current and up to 30 days past due | 496.2 | 502.8 |
Financing receivables | 499.7 | 505.2 |
Customer Retail | Owner/Operator | 31 - 60 days past due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Financing receivables, past due | 2.5 | 1.4 |
Customer Retail | Owner/Operator | Greater than 60 days past due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Financing receivables, past due | $ 1 | $ 1 |
Pre - Modification and Post Mod
Pre - Modification and Post Modification Recorded Investment (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Financing Receivable, Modifications [Line Items] | ||
Pre-Modification Recorded Investment | $ 1.3 | $ 6.1 |
Post-Modification Recorded Investment | 1.3 | 6.1 |
Customer Retail | Fleet | ||
Financing Receivable, Modifications [Line Items] | ||
Pre-Modification Recorded Investment | 1.2 | 5.5 |
Post-Modification Recorded Investment | 1.2 | 5.5 |
Customer Retail | Owner/Operator | ||
Financing Receivable, Modifications [Line Items] | ||
Pre-Modification Recorded Investment | 0.1 | 0.6 |
Post-Modification Recorded Investment | $ 0.1 | $ 0.6 |
Equipment on Operating Leases -
Equipment on Operating Leases - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Minimum | |||
Operating Leased Assets [Line Items] | |||
Operating lease term | 3 years | ||
Maximum | |||
Operating Leased Assets [Line Items] | |||
Operating lease term | 5 years | ||
Non Cancelable Operating Leases | |||
Operating Leased Assets [Line Items] | |||
Future annual minimum rental payments | $ 760.7 | ||
2020 | 293.2 | ||
2021 | 227.9 | ||
2022 | 149.8 | ||
2023 | 70 | ||
2024 and thereafter | 19.8 | ||
Depreciation expense | $ 311.2 | $ 319.7 | $ 338.9 |
Transactions with PACCAR and _3
Transactions with PACCAR and Affiliates - Additional Information (Detail) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019USD ($)Facility | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Related Party Transaction [Line Items] | |||
Required ratio of net earnings available for fixed charges to fixed charges | 125.00% | ||
Letter of credit issued | $ 1 | ||
Administrative services fees | $ 7 | $ 7.1 | $ 4.5 |
Number of facilities leased by company | Facility | 4 | ||
Defined benefit pension plan expenses | $ 3.4 | 3.7 | 3.3 |
Defined contribution plan expenses | 1.9 | $ 1.6 | $ 1.5 |
Foreign Finance Affiliates | |||
Related Party Transaction [Line Items] | |||
Loans to foreign affiliates, upper limit | $ 750 |
Amounts Outstanding Including F
Amounts Outstanding Including Foreign Finance Affiliates (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Due from PACCAR and affiliates | ||
Loans due from PACCAR | $ 861 | $ 846 |
Loans due from foreign finance affiliates | 651.5 | 697.5 |
Tax-related receivable due from PACCAR | 16.5 | 23.1 |
Receivables | 28.2 | 14.7 |
Total | 1,557.2 | 1,581.3 |
Due to PACCAR and affiliates | ||
Payables | 13.9 | 9.9 |
Total | $ 13.9 | $ 9.9 |
Stockholder's Equity - Addition
Stockholder's Equity - Additional Information (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Equity [Abstract] | ||
Accumulated other comprehensive (loss) income | $ (12.4) | $ 0.8 |
Changes in and Reclassification
Changes in and Reclassifications out of Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning balance | $ 1,668.4 | $ 1,570.3 | |
Interest and other borrowing costs | (179.7) | (138.5) | $ (101.2) |
Income taxes | (34.6) | (28.3) | 299.9 |
Reclassification to retained earnings in accordance with ASU 2018-02 | 0.4 | ||
Ending balance | 1,765.4 | 1,668.4 | 1,570.3 |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning balance | 0.8 | 1.9 | 0.3 |
Amounts recorded in AOCI related to Unrealized (loss) gain on derivative contracts, before tax | (16.2) | 0.7 | 1.2 |
Amounts recorded in AOCI related to Unrealized (loss) gain on derivative contracts, income tax effect | 4 | (0.2) | (0.4) |
Net other comprehensive (loss) income | (13.2) | (1.5) | 1.6 |
Reclassification to retained earnings in accordance with ASU 2018-02 | 0.4 | ||
Ending balance | (12.4) | 0.8 | 1.9 |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | Amounts reclassified out of AOCI | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Interest and other borrowing costs | (1.3) | (2.7) | 1.4 |
Income taxes | $ 0.3 | $ 0.7 | $ (0.6) |
Derivative Financial Instrume_3
Derivative Financial Instruments - Additional Information (Detail) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Notional amount of interest-rate contracts | $ 1,089.3 |
Interest-rate contracts maturity period | 9 years |
Notional maturities for interest-rate contracts 2020 | $ 190 |
Notional maturities for interest-rate contracts 2021 | 327.1 |
Notional maturities for interest-rate contracts 2022 | 399.6 |
Notional maturities for interest-rate contracts 2023 | 31.5 |
Notional maturities for interest-rate contracts 2024 | 60 |
Notional maturities for interest-rate contracts thereafter | $ 81.1 |
Maximum length of time for which company is hedging its exposure to the variability in future cash flows | 9 years |
Accumulated net loss on interest rate contracts included in AOCI expected to be reclassified to interest expense in the following 12 months | $ 2.8 |
Cumulative basis adjustments on discontinued hedge relationships | $ (1.5) |
Balance Sheet Classification, F
Balance Sheet Classification, Fair Value and Gross and Net Amounts of Derivative Financial Instruments (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Derivatives, Fair Value [Line Items] | ||
Assets gross amount recognized in balance sheets | $ 1.8 | $ 4.1 |
Less amounts not offset in financial instruments | (0.9) | (2.4) |
Pro forma net amount | 0.9 | 1.7 |
Liabilities gross amount recognized in balance sheets | 12.7 | 5.3 |
Less amounts not offset in financial instruments | (0.9) | (2.4) |
Pro forma net amount | 11.8 | 2.9 |
Interest Rate Contract | Other Assets | ||
Derivatives, Fair Value [Line Items] | ||
Assets gross amount recognized in balance sheets | 1.8 | 4.1 |
Interest Rate Contract | Accounts Payable, Accrued Expenses and Other | ||
Derivatives, Fair Value [Line Items] | ||
Liabilities gross amount recognized in balance sheets | $ 12.7 | $ 5.3 |
Amounts Recorded on Balance She
Amounts Recorded on Balance Sheets Related to Cumulative Basis Adjustments For Fair Value Hedges (Detail) - Medium-term Notes $ in Millions | Dec. 31, 2019USD ($) |
Derivative [Line Items] | |
Carrying Amount of the Hedged Liabilities | $ 90.5 |
Cumulative Basis Amount Included in the Carrying Amount | $ 0.5 |
Amount of (Income) Expense on C
Amount of (Income) Expense on Cash Flow and Fair Value Hedges Recognized In Interest and Other Borrowing Costs on Statements of Income (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | ||
Derivatives | $ (1.9) | $ (0.4) |
Hedged items | 3.3 | 2.2 |
Reclassified from AOCI into income | (1.3) | (2.7) |
Total income and expense | $ 0.1 | $ (0.9) |
Summary of Borrowings (Detail)
Summary of Borrowings (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Effective borrowing rate | 2.30% | 2.40% |
Commercial paper | $ 1,975 | $ 1,731.6 |
Medium-term notes | 5,535.2 | 4,884.4 |
Commercial paper and medium-term notes | $ 7,510.2 | $ 6,616 |
Commercial Paper | ||
Debt Instrument [Line Items] | ||
Effective borrowing rate | 1.80% | 2.40% |
Medium-term Notes | ||
Debt Instrument [Line Items] | ||
Effective borrowing rate | 2.50% | 2.40% |
Borrowings - Additional Informa
Borrowings - Additional Information (Detail) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Feb. 29, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | ||||
Commercial paper and medium-term notes | $ 7,510.2 | $ 6,616 | ||
Fair value hedges, unamortized discounts and Unamortized debt issuance costs, net | (16.8) | (17.8) | ||
Interest expense on borrowings | 168.8 | 127.5 | $ 91.9 | |
Interest paid on borrowings | $ 164.2 | $ 118 | $ 88 | |
Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Proceeds from issuance of medium-term notes | $ 300 | |||
Medium-term Notes | ||||
Debt Instrument [Line Items] | ||||
Registration expiration | 2021-11 |
Annual Maturities of Borrowings
Annual Maturities of Borrowings (Detail) $ in Millions | Dec. 31, 2019USD ($) |
Debt Instrument [Line Items] | |
2020 | $ 3,077 |
2021 | 1,800 |
2022 | 1,750 |
2023 | 600 |
2024 | 300 |
Debt, Long-term and Short-term, Combined Amount, Total | 7,527 |
Commercial Paper | |
Debt Instrument [Line Items] | |
2020 | 1,977 |
Debt, Long-term and Short-term, Combined Amount, Total | 1,977 |
Medium-term Notes | |
Debt Instrument [Line Items] | |
2020 | 1,100 |
2021 | 1,800 |
2022 | 1,750 |
2023 | 600 |
2024 | 300 |
Debt, Long-term and Short-term, Combined Amount, Total | $ 5,550 |
Credit Arrangements - Additiona
Credit Arrangements - Additional Information (Detail) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Line of Credit Facility [Line Items] | |
Credit facility available amount | $ 3,000 |
PACCAR Financial Europe | |
Line of Credit Facility [Line Items] | |
Credit facility available amount | 1,992 |
PACCAR and Other non-U.S. PACCAR Financial Subsidiaries | |
Line of Credit Facility [Line Items] | |
Credit facility available amount | 1,008 |
Syndicated revolving loan facility | |
Line of Credit Facility [Line Items] | |
Line of credit, maximum capacity | 3,000 |
Syndicated revolving loan facility | Matures in June 2020 | |
Line of Credit Facility [Line Items] | |
Line of credit, maximum capacity | $ 1,000 |
Line of credit, maturity date | 2020-06 |
Syndicated revolving loan facility | Matures in June 2023 | |
Line of Credit Facility [Line Items] | |
Line of credit, maximum capacity | $ 1,000 |
Line of credit, maturity date | 2023-06 |
Syndicated revolving loan facility | Matures in June 2024 | |
Line of Credit Facility [Line Items] | |
Line of credit, maximum capacity | $ 1,000 |
Line of credit, maturity date | 2024-06 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Effective income tax rate | 25.10% | 23.40% | (328.50%) |
Cash paid for income taxes | $ 2.6 | $ 4.1 | $ 0.1 |
U.S. statutory income tax rate | 21.00% | 21.00% | 35.00% |
Provisional amount of deferred tax benefits | $ 338.5 |
Provision for Income Taxes (Det
Provision for Income Taxes (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current (benefit) provision | |||
Federal | $ (26) | $ (8.1) | $ (95.9) |
State | 10 | 0.2 | 4 |
Current Income Tax Expense (Benefit), Total | (16) | (7.9) | (91.9) |
Deferred provision (benefit) | |||
Federal | 53.5 | 33.5 | (214.2) |
State | (2.9) | 2.7 | 6.2 |
Deferred taxes | 50.6 | 36.2 | (208) |
Total provision (benefit) for income taxes | $ 34.6 | $ 28.3 | $ (299.9) |
Reconciliation of Statutory U.S
Reconciliation of Statutory U.S. Federal Tax Rate to the Effective Income Tax Rates (Detail) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Statutory rate | 21.00% | 21.00% | 35.00% |
Effect of Rate change on U.S. federal deferred taxes | (370.80%) | ||
Effect of State | 4.10% | 2.40% | 7.30% |
Effective income tax rate | 25.10% | 23.40% | (328.50%) |
Deferred Tax Assets and Liabili
Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Allowance for losses on receivables | $ 15 | $ 14.8 |
Derivative liability | 2.2 | |
Other | 11.6 | 9 |
Deferred tax liabilities: | ||
Depreciation | (708.7) | (656.5) |
Derivative asset | (0.9) | |
Net deferred tax liability | $ (679.9) | $ (633.6) |
Assets and Liabilities Fair Val
Assets and Liabilities Fair Value Measurements (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Assets: | ||
Derivative contracts | $ 1.8 | $ 4.1 |
Liabilities: | ||
Derivative contracts | 12.7 | 5.3 |
Fair Value, Inputs, Level 2 | Fair Value Measurements, Nonrecurring | ||
Assets: | ||
Impaired loans, net of specific reserves (2019 - nil and 2018 - $.6) | 2.5 | |
Used trucks held for sale | 121.9 | 40.5 |
Fair Value, Inputs, Level 2 | Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Assets: | ||
Derivative contracts | 1.8 | 4.1 |
Liabilities: | ||
Derivative contracts | $ 12.7 | $ 5.3 |
Assets and Liabilities Fair V_2
Assets and Liabilities Fair Value Measurements (Parenthetical) (Detail) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, specific reserves | $ 1,500,000 | $ 1,900,000 |
Fair Value, Inputs, Level 2 | Fair Value Measurements, Nonrecurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, specific reserves | $ 0 | $ 600,000 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Trucks Inventory | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Used truck impairments | $ 19.9 | $ 11.5 |
Carrying Amount and Fair Value
Carrying Amount and Fair Value for Fixed-Rate Loans and Debt (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Assets: | ||
Due from PACCAR | $ 1,557.2 | $ 1,581.3 |
Due from foreign finance affiliates | 651.5 | 697.5 |
Carrying Amount | ||
Assets: | ||
Due from PACCAR | 821 | 821 |
Due from foreign finance affiliates | 450 | 472 |
Fixed rate loans | 3,667.8 | 3,239.5 |
Liabilities: | ||
Fixed rate debt | 4,797.1 | 4,394.4 |
Fair Value | ||
Assets: | ||
Due from PACCAR | 833.9 | 815.2 |
Due from foreign finance affiliates | 458.1 | 474.2 |
Fixed rate loans | 3,725.8 | 3,234.4 |
Liabilities: | ||
Fixed rate debt | $ 4,848.3 | $ 4,363.2 |
Quarterly Results (Detail)
Quarterly Results (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Interest and other revenues | $ 197 | $ 191.9 | $ 189.1 | $ 184 | $ 183.1 | $ 178.9 | $ 175 | $ 170.5 | $ 762 | $ 707.5 | $ 672.4 |
Income before income taxes | 30 | 29.5 | 39.5 | 38.8 | 34.6 | 33.1 | 26.5 | 26.6 | 137.8 | 120.8 | 91.3 |
Net income | $ 22.9 | $ 21.4 | $ 29.3 | $ 29.6 | $ 28.6 | $ 23.7 | $ 19.8 | $ 20.4 | $ 103.2 | $ 92.5 | $ 391.2 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Commitments And Contingencies Disclosure [Abstract] | |
Other outstanding commitments to fund new loan and lease transactions | $ 354.3 |
Commitments expiration term | 1 year |