PACCAR 2009 Annual Report Download - page 28

PACCAR Inc and Subsidiaries
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Financial Services revenues decreased to $1.01 billion in 2009 from $1.26 billion in 2008. The decreased revenues in
2009 resulted from lower earning asset balances in all markets and lower yields in North America and Europe.
Financial Services income before income taxes was $84.6 million in 2009 compared to $216.9 million in 2008. The
decrease of $132.3 million was primarily due to lower finance margin from the reduced finance receivables and net
operating lease income partially offset by a decline in SG&A expense.
Investment income declined to $22.3 million in 2009 compared to $84.6 million in 2008 primarily due to lower
market interest rates.
The 2009 effective income tax rate was 36.1% compared to 30.5% in 2008. The higher rate in 2009 was primarily
due to the tax law change in Mexico. Excluding the retroactive effect of the Mexican tax law change the effective tax
rate was 29.5%.
The Company’s return on revenues was 1.4% in 2009 and 6.8% in 2008.
2008 Compared to 2007:
Consolidated net sales and revenues were $14.97 billion in 2008 compared to $15.22 billion in 2007, reflecting
strong but slowing demand for the Company’s high quality trucks in Europe. The U.S. and Canada truck markets
were lower but there was continued solid aftermarket parts and financial services revenues.
PACCAR achieved net income of $1.02 billion ($2.78 per diluted share) in 2008 compared to $1.23 billion ($3.29
per diluted share) in 2007, the fourth best result in the Company’s 103 year history. Net sales and revenues in the
Truck and Other businesses of $13.71 billion were slightly lower than the $14.03 billion in 2007 as an increase in
European truck sales was more than offset by decreased truck sales in North America and Australia.
Cost of sales and revenues in the Truck and Other businesses were $11.74 billion in 2008, down 1.5% compared to
$11.92 billion in 2007. Cost of sales and revenues declined primarily due to 6% lower truck deliveries partially
offset by the weaker U.S. dollar vs. the euro and higher material costs related to higher crude oil, copper, steel and
other commodities.
Research and development expenditures were $341.8 million in 2008, an increase of 34% from $255.5 million in
2007 due to spending in preparation for EPA engine emission requirements in the U.S. in 2010, expenses related to
the introduction of the Company’s proprietary 12.9 liter engine in North America and increased spending on
vehicle updates in the U.S. and Europe.
SG&A expense for Truck and Other declined to $470.2 million in 2008 compared to $491.4 million in 2007. This
was due to $35.5 million of reductions in worldwide spending partially offset by $14.3 million of foreign currency
translation effects, primarily the euro. The spending reductions resulted from staffing reductions, lower sales and
marketing costs and lower general and administrative spending in the fourth quarter in response to the global
recession. SG&A expense as a percent of revenues decreased to 3.4% in 2008 from 3.5% in 2007.
Financial Services revenues increased to $1.26 billion in 2008 from $1.19 billion in 2007 as increased revenues in
Europe and Mexico more than offset a decrease in the U.S. Financial Services income before taxes was $216.9
million compared to $284.1 million in 2007 as the additional finance margin from asset growth in Europe and
Mexico was reduced by higher provisions for credit losses in the U.S. and Europe.
Investment income declined to $84.6 million in 2008 compared to $95.4 million in 2007 due to lower invested
balances and interest rates.
The 2008 effective income tax rate of 30.5% was comparable to the 30.4% in 2007.
The Company’s return on revenues was 6.8% in 2008 and 8.1% in 2007.