PACCAR 2009 Annual Report Download - page 52

PACCAR Inc and Subsidiaries
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Impaired finance and other receivables include accounts that may or may not have a specific reserve and certain
accounts that are placed on non-accrual status. The majority of the loans that have a specific reserve are also on
non-accrual status.
The Company’s Financial Services segment information on impaired finance and other receivables is as follows:
As of and for the Years Ended December 31, 2009 2008
Finance receivables on non-accrual status $ 88.4 $ 59.8
Impaired receivables with specific reserve 38.3 28.5
Impaired receivables with no specific reserve 29.1 34.5
Specific loss reserves on impaired receivables 7.3 4.8
Average balance of impaired receivables 84.9 80.0
Interest recognized on impaired receivables 4.3 2.6
The Company repossesses vehicles which serve as collateral for loans and finance leases and records the vehicles as
used truck inventory included in Financial Services Other Assets on the balance sheet. The Company repossessed
collateral valued at $203.0 and recorded $106.5 of credit losses upon repossession in 2009. Repossessed assets are
typically disposed of promptly after repossession with differences between the estimated market value and the
ultimate sales price resulting in an adjustment to credit losses. The Company sold $213.1 of repossessed assets and
recorded an additional loss of $10.6 in 2009. As of December 31, 2009 and 2008, a total of $28.5 and $41.9
respectively, of repossessed assets were held for sale.
F. EQUIPMENT ON OPERATING LEASES
The Company leases equipment under operating leases to customers in the financial services segment. In addition,
in the truck segment, equipment sold to customers in Europe subject to a residual value guarantee (RVG) is
accounted for as operating leases. Equipment is recorded at cost and is depreciated on the straight-line basis to the
lower of the estimated residual value or guarantee value. Lease and guarantee periods generally range from three to
seven years. Estimated useful lives of the equipment range from five to eight years. The Company reviews residual
values of equipment on operating leases periodically to determine that recorded amounts are appropriate.
A summary of equipment on operating leases for the Truck and Other segment and for the Financial Services
segment is as follows:
truck & other financial services
At December 31, 2009 2008 2009 2008
Equipment on operating leases $ 730.6 $ 610.6 $ 2,090.8 $ 2,053.4
Less allowance for depreciation (226.8) (185.3) (577.6) (518.6)
$ 503.8 $ 425.3 $ 1,513.2 $ 1,534.8
Annual minimum lease payments due on financial services operating leases beginning January 1, 2010, are $383.0,
$254.6, $157.0, $79.7, $27.9 and $2.9 thereafter.
When the equipment is sold subject to an RVG, the full sales price is received from the customer. A liability is
established for the residual value obligation with the remainder of the proceeds recorded as deferred lease revenue.
These amounts are summarized below:
truck & other
At December 31, 2009 2008
Deferred lease revenues $ 239.2 $ 204.8
Residual value guarantees 308.0 266.0
Total $ 547.2 $ 470.8
NOTES TO CONSOLIDATED F INANCIAL STATE M E NTS
December 31, 2009, 2008 and 2007 (currencies in millions)