PACCAR 2009 Annual Report Download - page 66

Download and view the complete annual report

Please find page 66 of the 2009 PACCAR annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 79

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79

PACCAR Inc and Subsidiaries
PACCAR’s assets and liabilities subject to recurring fair value measurements, are either Level 1 or Level 2 as follows:
At December 31, 2009 LEVEL 1 LEVEL 2 TOTA L
Assets:
Marketable debt securities $ 6.5 $ 213.0 $ 219.5
Derivative contracts 11.6 11.6
Liabilities:
Derivative contracts 116.6 116.6
At December 31, 2008 level 1 level 2 total
Assets:
Marketable debt securities $ 6.9 $ 168.5 $ 175.4
Derivative contracts 60.4 60.4
Liabilities:
Derivative contracts 173.0 173.0
Other nonfinancial assets that are measured at fair value on a nonrecurring basis are as follows:
At December 31, 2009 2008
LEVEL 2 level 2
Used trucks held for sale:
Truck and Other $ 28.1 $ 27.9
Financial Services 124.7 96.6
$ 152.8 $ 124.5
The carrying amount of used trucks held for sale is written down when appropriate to reflect their fair value. The
fair value of used trucks is determined based on management’s evaluation of factors such as recent sales prices of
comparable units, the condition of the vehicles and the number of similar units to be sold. Used truck write-downs
during 2009 were $34.7. Of the $34.7 recorded in 2009, $18.0 was recorded in cost of sales in the truck segment and
$16.7 was recorded in the financial services segment (credit losses of $4.7 and depreciation and other expense of
$12.0). The amount of used truck write-downs was $23.5 for the year ended December 31, 2008 of which $12.1 was
recorded in cost of sales in the truck segment and $11.4 was recorded in the financial services segment (credit losses
of $9.2 and depreciation and other expense of $2.2).
The Company used the following methods and assumptions to determine the fair value of financial instruments
that are not recognized at fair value as described below.
Cash and Cash Equivalents: Carrying amounts approximate fair value.
Financial Services Net Receivables: For floating-rate loans, wholesale financings, and interest and other receivables,
fair values approximate carrying values. For fixed-rate loans, fair values are estimated using discounted cash flow
analysis based on current rates for comparable loans. Finance lease receivables and related loss provisions have been
excluded from the accompanying table.
Debt: The carrying amounts of financial services commercial paper, variable-rate bank loans and variable-rate term
notes approximate fair value. For fixed-rate debt, fair values are estimated using discounted cash flow analysis based
on current rates for comparable debt.
Trade Receivables and Payables: Carrying amounts approximate fair value.
63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007 (currencies in millions)