Paccar Sets $945 Million First-Quarter Charge

[kscarbel2]

Transport Topics  /  March 25, 2016

Paccar Inc. has decided to set aside $945 million for costs related to a wide-ranging European truck price-fixing investigation.

The Bellevue, Washington-based company said in a Securities and Exchange Commission filing that it will include a charge for those costs in its first-quarter earnings relating to the activities of its DAF Truck N.V. unit in Europe. Because the investigation is ongoing, the time when that money is paid is uncertain at this time, Chief Financial Officer Bob Christensen told Transport Topics. The company is cooperating with the investigation.

“Paccar is in excellent financial condition,” Christensen said. The company has generated an average of $1.8 billion in cash from operations over the past 10 years, including a record of $2.5 billion last year. Paccar is committed to continuing to invest in its business and that DAF has the funds available to pay those expenses.

The European Commission five years ago began an investigation of all commercial vehicle makers under its jurisdiction. Eighteen months ago, the regulatory agency issued a statement that said it could seek significant fines against the manufacturers.

“Based on recent developments, the Company will record a charge of 850 million euros,” the SEC filing said. “The Company will continue to evaluate the amount of the charge pending final resolution of the proceeding. The charge is not tax deductible. DAF Trucks N.V. has sufficient liquidity to fund a payment in the amount of the charge.”

Volvo AB and Daimler AG also have set aside funds because of the investigations.

Volkswagen AG’s MAN division said in its 2015 annual report that it is cooperating with authorities but hasn’t yet taken provisions.