Not too many people would guess Paccar Incorporated to be “a high-tech growth company.” But that is how Mark C. Pigott, the 46 year-old chairman and CEO, describes his family-run, Seattle-based, heavy-duty truck manufacturing company. The growth part, at least, is undeniable. In March, Paccar made Business Week’s list of 50 top-performing companies, with an industry-leading 24% average annual sales and 40% profit growth over the previous three years. A record 108,000 trucks were delivered, compared to 93,800 in 1998. Paccar has made a profit in each of the last 30 years, including continuous distribution of dividends over that same period, however, its stock price has declined from a high of $63 in 1999 to just under $39 in mid-2000. This in the face of first-quarter revenues that came in at $2.2 billion, 7% higher than over the same period in 1999. Was this decline the result of an efficient market system that reacted predictably to bad news? Or was Paccar’s stock decline understandable, in light of the seasonal nature of the heavy truck manufacturing industry? Or was it something more fundamental – a problem uniquely Paccar’s: a weak balance sheet, too much incurred debt, a money-draining subsidiary, slow-moving inventory? Could there be something else? This report will seek to understand this apparent anomaly, by analyzing Paccar’s 1999 annual report, including its audited financials and performing other trend and ratio analyses over a longer period of time. This analysis will also compare and contrast Paccar’s industry performance with other heavy-truck manufacturers. Finally, if applicable, this report, of which only the first segment is hereby presented, will offer recommendations and other concluding remarks. But first, a little history of the company is in order.HISTORYPaccar has been in business since 1905, when William Pigott, Sr. founded Seattle Car Manufacturin...
