PACCAR 2009 Annual Report Download - page 27

4 RESULTS OF OPERATIONS:
2009 2008 2007
Net sales and revenues:
Truck and Other $ 7,076.7 $ 13,709.6 $ 14,030.4
Financial Services 1,009.8 1,262.9 1,191.3
$ 8,086.5 $ 14,972.5 $ 15,221.7
Income before taxes:
Truck and Other $ 68.1 $ 1,162.5 $ 1,384.8
Financial Services 84.6 216.9 284.1
Investment income 22.3 84.6 95.4
Income taxes (63.1) (446.1) (537.0)
Net Income $ 111.9 $ 1,017.9 $ 1,227.3
Diluted Earnings Per Share $ .31 $ 2.78 $ 3.29
Overview:
PACCAR is a global technology company whose principal businesses include the design, manufacture and distribution
of high-quality, light, medium and heavy duty commercial trucks and related aftermarket parts and the financing
and leasing of its trucks and related equipment. The Company also manufactures and markets industrial winches.
2009 Compared to 2008:
Consolidated net sales and revenues were $8.09 billion in 2009, compared to $14.97 billion in 2008, reflecting the
recessionary conditions that dampened demand for the Company’s products throughout the world.
PACCAR achieved net income for the 71st consecutive year in 2009 under very difficult business conditions. Net
income was $111.9 million ($.31 per diluted share) in 2009 compared to $1.02 billion ($2.78 per diluted share) in
2008. Net income included $41.5 million ($.11 per diluted share) of curtailment gains related to postretirement
health care plans ($66.0 million, pretax) and $11.4 million ($.03 per diluted share) of income tax expense from the
retroactive effects of a new income tax law in Mexico.
Net sales and revenues in the Truck and Other businesses of $7.08 billion in 2009 were 48% lower than the $13.71
billion in 2008. The decrease in sales and revenues for 2009 resulted from lower truck unit and parts sales in all
markets due to lower overall market demand.
Cost of sales and revenues in the Truck and Other businesses were $6.48 billion in 2009 compared to $11.74 billion
in 2008. Cost of sales and revenues declined primarily due to the decrease in worldwide truck deliveries. Cost of sales
included employee severance costs of $19.2 million in 2009 compared to severance costs of $13.1 million in 2008.
Research and development expenditures declined to $199.2 million in 2009 from $341.8 million in 2008 primarily
due to lower spending on engine development and reduced spending for new vehicle development.
Selling, general and administrative (SG&A) expense for Truck and Other declined to $348.4 million in 2009
compared to $470.2 million in 2008. The lower spending was a result of focused efforts to reduce costs in response
to the global economic recession and consisted primarily of reduced staffing, sales and marketing, and travel costs.
Foreign currency translation effects reduced SG&A by $10.8 million. Severance costs included in SG&A were $6.4
million in 2009 compared to $3.4 million in 2008. As a percentage of sales, SG&A increased to 4.9% in 2009 from
3.4% in 2008 due to lower sales volumes.
Interest and other expense, net in 2009 of $43.6 million includes $22.2 million of expense for changes in fair values
of economic hedges and $14.2 million of expense for foreign currency translation adjustments primarily in Mexico
and Canada.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(tables in millions, except truck unit and per share data)