PACCAR INC Leases Disclosure
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K. |
LEASES |
The Company leases certain facilities and equipment. The Company determines whether an arrangement is or contains a lease at inception. The Company accounts for lease and non-lease components separately. The consideration in the contract is allocated to each separate lease and non-lease component of the contract generally based on the relative stand-alone price of the components. The lease component is accounted for in accordance with the lease standard and the non-lease component is accounted for in accordance with other standards. The Company uses its incremental borrowing rate in determining the present value of lease payments unless the rate implicit in the lease is available. The lease term may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option. Leases that have a term of 12 months or less at the commencement date (“short-term leases”) are not included in the right-of-use assets and the lease liabilities. Lease expense for the short-term leases are recognized on a straight-line basis over the lease term.
The components of lease expense were as follows:
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Year Ended December 31, |
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2020 |
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2019 |
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Finance lease cost |
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Amortization of right-of-use assets |
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$ |
.9 |
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$ |
.9 |
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Interest on lease liabilities |
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.1 |
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.1 |
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Operating lease cost |
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16.6 |
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16.9 |
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Short-term lease cost |
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.8 |
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.7 |
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Variable lease cost |
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1.7 |
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1.8 |
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Total lease cost |
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$ |
20.1 |
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$ |
20.4 |
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For the years ended December 31, 2020, 2019 and 2018, total rental expenses for all leases amounted to $20.1, $20.4 and $35.7, respectively.
Balance sheet information related to leases was as follows:
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At December 31, |
2020 |
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2019 |
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OPERATING LEASES |
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FINANCE LEASES |
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OPERATING LEASES |
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FINANCE LEASES |
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TRUCK, PARTS AND OTHER: |
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Other noncurrent assets |
$ |
30.9 |
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$ |
1.0 |
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$ |
31.7 |
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$ |
1.1 |
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FINANCIAL SERVICES: |
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Other assets |
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9.0 |
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5.2 |
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Total right-of-use assets |
$ |
39.9 |
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$ |
1.0 |
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$ |
36.9 |
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$ |
1.1 |
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TRUCK, PARTS AND OTHER: |
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Accounts payable, accrued expenses and other |
$ |
11.4 |
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$ |
.5 |
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$ |
13.0 |
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$ |
.7 |
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Other liabilities |
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20.3 |
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.5 |
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19.5 |
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.5 |
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FINANCIAL SERVICES: |
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Accounts payable, accrued expenses and other |
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2.0 |
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1.5 |
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Deferred taxes and other liabilities |
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6.6 |
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3.7 |
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Total lease liabilities |
$ |
40.3 |
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$ |
1.0 |
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$ |
37.7 |
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$ |
1.2 |
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The weighted-average remaining lease term and discount rate are as follows at December 31:
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2020 |
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2019 |
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OPERATING LEASES |
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FINANCE LEASES |
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OPERATING LEASES |
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FINANCE LEASES |
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Weighted-average remaining lease term |
5.7 years |
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2.3 years |
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5.1 years |
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2.2 years |
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Weighted-average discount rate |
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1.4 |
% |
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2.5 |
% |
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1.9 |
% |
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4.0 |
% |
Maturities of lease liabilities are as follows:
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Beginning January 1, |
OPERATING LEASES |
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FINANCE LEASES |
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2021 |
$ |
13.7 |
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$ |
.6 |
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2022 |
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10.6 |
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.2 |
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2023 |
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5.8 |
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.2 |
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2024 |
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3.2 |
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.1 |
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2025 |
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2.4 |
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Thereafter |
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6.0 |
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Total lease payments |
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41.7 |
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1.1 |
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Less: interest |
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(1.4 |
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(.1 |
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Total lease liabilities |
$ |
40.3 |
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$ |
1.0 |
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Cash flow information related to leases was as follows:
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Year Ended December 31, |
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2020 |
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2019 |
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Cash paid for amounts included in the measurement of lease liabilities |
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Operating cash flows from operating leases |
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$ |
17.2 |
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$ |
17.0 |
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Operating cash flows from finance leases |
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.1 |
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.2 |
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Financing cash flows from finance leases |
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.9 |
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1.0 |
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Right-of-use assets obtained in exchange for lease liabilities |
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Operating leases |
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19.9 |
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8.9 |
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Finance leases |
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.5 |
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.7 |
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2020 | Feb 17, 2021 | Showing above |
| 2019 | Feb 19, 2020 | |
| 2017 | Feb 21, 2018 | |
| 2016 | Feb 21, 2017 | |
| 2015 | Feb 16, 2016 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.