UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
Date of Report (Date of earliest event reported) September 4, 1998
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PACCAR FINANCIAL CORP.
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(Exact name of Registrant as specified in its charter)
Washington 91-6029712
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
777 - 106th Avenue N.E., Bellevue, Washington 98004
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Address of Principal Executive Offices) (Zipcode)
Registrant's telephone number, including area code: (425) 468-7100
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(Former name, former address and former fiscal year, if changed since
last report)
ITEM 5. OTHER EVENTS.
The Securities and Exchange Commission issued an interpretation requiring
additional disclosures regarding the Year 2000 issue for registration statements
filed after August 4, 1998. The Company does not believe it has a significant
exposure as a result of the Year 2000 issue. Although the disclosure is not
required for 1934 act filings such as the Form 10-Q until the third quarter of
1998, due to an impending registration of debt securities on Form S-3, the
required additional disclosures are attached as Exhibit A hereto and
incorporated by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PACCAR Financial Corp.
(Registrant)
Date: September 4, 1998 By: A. J. Wold
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A. J. Wold
President
EXHIBIT A
The following discussion of the Year 2000 issue contains forward-looking
statements. The following words or phrases such as "believes", "expects", "is
expected", "potential outcomes", "could", "in the unlikely event", "most
reasonably likely worst case scenario" and "the possibility of" are intended to
identify such statements. Forward-looking statements are subject to certain
risks, uncertainties and assumptions that could cause actual results to differ
materially from those predicted.
YEAR 2000 ISSUE
The Year 2000 issue refers to the potential adverse consequences of computer
systems failing because they do not recognize or correctly process a date
falling on or after January 1, 2000. The problem stems from decisions made
decades ago by software developers trying to save scarce storage space by using
only two digits to signify the year. Without corrective action, many systems
will read the Year 2000 as 1900, causing processing errors and systems failures.
As a finance company, the Company relies upon computer processing to originate
and service loans. The Company has identified and evaluated its major internal
systems for Year 2000 compliance. Internal systems have already been modified
to enable the Company to process loans with a termination date after the Year
2000. Some additional software related changes for the systems to operate
properly after the Year 2000 have been identified by the Company and are in
process of being corrected. A team consisting of full-time employees
supplemented with contract staff is working to make the necessary changes. The
Company expects to have its critical systems compliant before the Year 2000.
Total cost to the Company is expected to approximate $2.0 million, of which $0.5
million has been incurred through August 31, 1998. Operating funds will fund
the cost of the project. Since the Company is not a manufacturer, the Company's
reliance on embedded computer systems is limited to facilities related matters,
such as office security systems and telecommunications equipment.
In the unlikely event that the Company's loan system fails as a result of the
Year 2000, the Company is developing a contingency plan which will explore a
combination of alternate Year 2000 compliant systems in place at other PACCAR
finance subsidiaries and manual processes.
The Company also relies on the ability of banks and other financial institutions
participating in the public debt markets to fund its lending activity. If there
is a significant failure of banking systems or systems of other entities within
the public market structure due to the Year 2000 issue, the Company's ability to
access the credit markets and process payments could be adversely affected.
With respect to banks and other financial institutions with which it has
relationships, the Company has sent letters and has received responses
indicating that such banks and other financial institutions already are or will
be compliant by the Year 2000. The Company is in process of confirming with its
vendors for embedded computer systems related to facilities issues such as
office security systems and telecommunications equipment that such vendors will
be Year 2000 compliant.
Although the Company is a collateral based lender with hard copy evidence to
enforce its obligations, the most reasonably likely worst case scenario if all
its systems are not Year 2000 compliant, is that information and reports would
contain inaccuracies that would slow the efficient processing of payments,
result in increased administrative costs to the Company and generally
reduce customer service. The cumulative effect of these potential outcomes is
unknown, but could have a material effect on the Company's financial condition,
the results of operations and liquidity.
The Company has no single customer concentration greater than 2% of assets and
the impact on the Company from a single customer's non-compliance is not
expected to be material. However, if a large number of its major customers
encounter operating problems due to Year 2000 causing them to default on their
obligations, there could be a material impact on the Company due to higher
credit losses and lower interest income.
Management believes it is taking the necessary steps regarding Year 2000
compliance with respect to matters within its control to ensure that the Year
2000 issue will not materially impact the Company. Due to the cyclical nature
of the trucking business, the possibility of a general economic or a trucking
industry specific business downturn has long been factored into the Company's
credit granting decisions. If the United States economy enters into a recession
due to widespread interruption in commercial activity or the effect of diverting
substantial resources to achieve Year 2000 compliance, the Company would likely
experience an increase in credit losses, a reduction in interest income and a
drop in new lending volume.