PACCAR 2009 Annual Report Download - page 56

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PACCAR Inc and Subsidiaries
53
K. LEASES
The Company leases certain facilities, computer equipment and aircraft under operating leases. Leases expire at
various dates through the year 2017. Annual minimum rent payments under non-cancelable operating leases having
initial or remaining terms in excess of one year at January 1, 2010, are $27.0, $17.5, $9.7, $6.1, $2.7 and $.5
thereafter. Total rental expenses under all leases amounted to $40.6, $43.3 and $41.1 for 2009, 2008 and 2007,
respectively.
L. COMMITMENTS AND CONTINGENCIES
The Company is involved in various stages of investigations and cleanup actions in different countries related to
environmental matters. In certain of these matters, the Company has been designated as a “potentially responsible
party” by domestic and foreign environmen tal agencies. The Company has an accrual to provide for the estimated
costs to investigate and complete cleanup actions where it is probable that the Company will incur such costs in the
future. Expenditures related to environmental activities in 2009, 2008 and 2007 were $1.3, $3.8, and $1.9, respectively.
While the timing and amount of the ultimate costs associated with future environmental cleanup cannot be
determined, management expects that these matters will not have a significant effect on the Company’s consolidated
financial position.
At December 31, 2009, PACCAR had standby letters of credit of $20.5, which guarantee various insurance and
financing activities. The Company is committed, under specific circumstances, to purchase equipment at a cost of
$53.4 in 2011. At December 31, 2009, PACCAR’s financial services companies, in the normal course of business, had
outstanding commitments to fund new loan and lease transactions amounting to $105.3. The commitments
generally expire in 90 days. At December 31, 2009, the Company had commitments related to the construction of
its engine facility in Columbus, Mississippi of $11.4 in 2010 and $56.2 thereafter. The Company had other
commitments, primarily to purchase production inventory, amounting to $113.7 in 2010 and $183.1 thereafter.
PACCAR is a defendant in various legal proceedings and, in addition, there are various other contingent liabilities
arising in the normal course of business. After consultation with legal counsel, management does not anticipate that
disposition of these proceedings and contingent liabilities will have a material effect on the consolidated financial
statements.
M. EMPLOYEE BENEFITS
Severance Costs: During 2009 and 2008, the Company incurred severance costs as summarized below. These costs
were the result of work force adjustments reflecting low truck demand, primarily in Europe.
2009 2008
Truck and Other:
Cost of sales and revenues $ 19.2 $ 13.1
Sales, general and administrative 6.4 3.4
$ 25.6 $ 16.5
Financial Services:
Sales, general and administrative .3 .8
Total Severance Costs $ 25.9 $ 17.3
At December 31, 2009, the Company had $3.6 accrued for future severance payments expected in the next year,
compared to an accrual of $4.6 at December 31, 2008.
NOTES TO CONSOL I D ATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007 (currencies in millions)