PACCAR 2009 Annual Report Download - page 47

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44
A. SIGNIFICANT ACCOUNTING POLICIES
Description of Operations: PACCAR Inc (the Company or PACCAR) is a multinational company operating in two
segments: (1) the design, manufacture and distribution of light, medium and heavy duty commercial trucks and
related aftermarket parts and (2) finance and leasing products and services provided to customers and dealers.
PACCAR’s sales and revenues are derived primarily from North America and Europe. The Company also operates in
Australia and sells trucks and parts outside its primary markets to customers in Asia, Africa and South America.
Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its
wholly owned domestic and foreign subsidiaries. All significant intercompany accounts and transactions are
eliminated in consolidation.
Use of Estimates: The preparation of financial statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents: Cash equivalents consist of liquid investments with a maturity at date of purchase of
three months or less.
Trade and Other Receivables: The Company’s trade and other receivables are recorded at cost on the balance sheet
net of allowances.
Year Ended December 31 2009 2008 2007
(millions of dollars)
Net income $111.9 $1,017.9 $1,227.3
Other comprehensive income (loss):
Unrealized (losses) gains on derivative contracts
Losses arising during the period (71.6) (85.5) (32.5)
Tax effect 21.3 24.7 15.9
Reclassification adjustment 119.9 (17.4) (14.8)
Tax effect (35.7) 4.1 5.6
33.9 (74.1) (25.8)
Unrealized (losses) gains on investments
Net holding (loss) gain (.3) 2.9 5.2
Tax effect .1 (.9) (2.1)
Reclassification adjustment .7 (5.1) .2
Tax effect (.2) 1.8 (.1)
.3 (1.3) 3.2
Pension and postretirement
Gains (losses) arising during the period 73.0 (395.1) 87.0
Tax effect (32.1) 144.7 (32.2)
Reclassification adjustment 11.2 6.0 12.7
Tax effect (3.9) (2.1) (4.6)
48.2 (246.5) 62.9
Foreign currency translation gains (losses) 223.6 (356.0) 211.6
Net other comprehensive income (loss) 306.0 (677.9) 251.9
Comprehensive Income $417.9 $ 340.0 $1,479.2
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007 (currencies in millions)