PACCAR 2010 Annual Report Download - page 33

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 The following tables summarize the provision for losses on receivables and net charge-offs.
2010 2009
Provision for Provision for
Net losses on Net losses on
Charge-offs receivables Charge-offs receivables
U.S. and Canada $ 35.7 $ 21.0 $ 63.1 $ 49.0
Europe 27.2 20.9 30.8 28.8
Mexico and Australia 20.4 19.1 14.3 13.0
$ 83.3 $ 61.0 $ 108.2 $ 90.8
The provision for losses on receivables for 2010 of $61.0 million declined $29.8 million, compared to 2009 primarily
from improvements in portfolio quality as well as a decline in the receivable balances. Charge-offs declined in the
U.S. and Canada and Europe due to improvements in economic conditions. Charge-offs increased in Mexico and
Australia due to weakness in the transport industry in Mexico during much of the year. Past-due percentages are
noted below.
At December 31, 2010 2009
Percentage of retail loan and lease accounts 30+ days past-due:
U.S. and Canada 2.1% 1.8%
Europe 2.5% 4.4%
Mexico and Australia 5.8% 9.5%
Total 3.0% 3.8%
Worldwide PFS accounts 30+ days past-due at December 31, 2010 of 3.0% improved from 3.8% at December 31, 2009,
reflecting improvements in Europe, Mexico and Australia, partially offset by a slight increase in the U.S. and Canada.
Included in the U.S. and Canada past-due percentage of 2.1% is 1.1% from one large customer. Excluding that
customer, worldwide PFS accounts 30+ days past-due at December 31, 2010 would have been 2.3%. At December 31,
2010, the Company had $34.9 million of specific loss reserves for this large customer and other accounts considered
to have a high risk of loss. The Company continues to focus on reducing past-due balances. Improving economic
conditions will likely result in slightly lower past-due balances in 2011. When the Company modifies a 30+ days
past-due account, the customer is considered current under the revised contractual terms. The effect on total 30+
days past-dues from such modifications was not significant at December 31, 2010 and 2009.
The Company’s 2010 pretax return on revenue for financial services increased to 15.9 % from 8.4% in 2009 primarily
due to higher lease margin from lower operating lease impairments, a decline in losses on the sale of lease returns
and a lower provision for losses from improving portfolio quality.