PACCAR 2009 Annual Report Download - page 5

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TO OUR SHAREHOLDERS
PACCAR had a reasonably successful year in 2009, even as the worst recession in
decades had a negative impact on the company’s financial results. The company has
earned an impressive 71 consecutive years of net income. This remarkable achievement
was due to our 15,000 outstanding employees who delivered industry-leading product
quality, innovation and outstanding operating efficiency. PACCAR benefited from its
global diversification, superior financial strength and good results from aftermarket
parts and financial services. PACCAR’s $327 million of capital investments and research
and development in 2009 enhanced its manufacturing capability and new product
introductions, such as PACCAR’s MX engine for the North America market. PACCAR
delivered 61,000 trucks to its customers and sold $1.9 billion of aftermarket parts.
PACCAR maintained its excellent S&P credit rating of AA- as a result of consistent
profitability, a strong balance sheet and good cash flow. Looking ahead to 2010,
underlying economic indicators, impacted by high unemployment, low auto production
and weak home construction, will result in a challenging year for our industry. There may
be some sales improvement due to aging of the truck fleet, modest economic growth and
the positive impact of new engine emission regulations in the U.S. and Canada.
Net income of $111.9 million on revenues of $8.1 billion was a significant
accomplishment in the very difficult economy. PACCAR declared regular dividends of
$.54 per share. Regular quarterly cash dividends have increased over 240% in the last
10 years. Shareholder equity increased to a record $5.1 billion.
Industry Class 8 truck sales in North America, including
Mexico, declined to 119,000 vehicles compared to
179,000 the prior year. This is the lowest truck market
since 1991. Over 1,700 fleets went out of business due
to lower freight volume and rates, reduced credit and
the recession. The European heavy truck market in 2009
was 168,000 vehicles, compared to 330,000 in 2008, as
the recession caused the industry to abruptly decline in
the fourth quarter of 2008. Many of our competitors
are aggressively discounting their vehicles to survive in
the challenging market.
PACCAR’s financial performance in 2009 was
constrained due to lower sales and margins even though
the company proactively implemented comprehensive