PACCAR facing SEC fine for accounting glitch

Jason Cannon June 4, 2013

861556_4690077250139_711388951_nThe Securities and Exchange Commission Monday said it has charged PACCAR with accounting deficiencies over a span of more than four years.

The Commission alleges, from 2008 to the third quarter of 2012, PACCAR failed to report the operating results of its aftermarket parts business separately from its truck sales business as required under segment reporting guidelines.

Although PACCAR separately reported gross margins for its truck business and its parts business, the SEC says the company did not separately report income before income taxes from truck sales and aftermarket parts sales.

PACCAR Chief Financial Officer Bob Christensen said Tuesday the charges stemmed from how the company reported segment earnings, adding that the company’s revenues were accurate as reported.

“There were no changes in net profit as a result of the review,” he says.

The SEC further alleged PACCAR failed to provide complete information about its respective loan and lease portfolios and overstated some loan and lease originations and collections at two foreign subsidiaries in its statement of cash flows.

PACCAR cooperated fully with the SEC in its investigation and agreed to pay a $225,000 civil penalty without admitting or denying the charges.

The settlement, which is subject to court approval, takes into account that PACCAR and PACCAR Financial Corp. have implemented a number of remedial measures to enhance their internal accounting controls and improve their compliance with Generally Accepted Accounting Principles (GAAP).

Christensen said PACCAR “has enhanced segment reporting and implemented additional procedures for (its) finance business” as a result of the investigation.

“Companies must continually and diligently monitor their internal accounting systems to ensure that the information they are providing investors is accurate and consistent with relevant accounting guidance,” said Michael S. Dicke, Associate Regional Director of the SEC’s San Francisco Regional Office. “The deficient controls and procedures at PACCAR caused inconsistencies in its financial reporting and kept investors and regulators from seeing the company through the eyes of management.”

According to the 14-page SEC complaint, PACCAR’s 2009 annual report showed $68 million in income before taxes for its truck segment. However, the Commission says PACCAR documents and board materials reviewed by senior executives depicted the trucks business with a $474 million loss and the parts business with $542 million profit to arrive at the $68 million figure.

By at least 2008, PACCAR should have been reporting aftermarket parts as a separate segment in its SEC filings, but failed to do so until year-end 2012 the Commission says.

View this article on one page


Do you actively capture and use customer data?


Daimler truck revenue flat, profits jump

Inland Kenworth moves to new site in Albuquerque

Allstate Peterbilt South Dakota dealership lost in fire


Caterpillar engine lawsuits consolidated, new suits continue to be filed

Successful Dealer Award finalist: Truck Centers, Inc.

Volvo truck boss says growth in truck market emerging

Successful Dealer Award

Click here to read about the award and see the nominees for this year's award.