PACCAR 2010 Annual Report Download - page 36

Download and view the complete annual report

Please find page 36 of the 2010 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 87

  • 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
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87

Lower market demand in all the Company’s primary markets related to the global economic recession resulted in
lower truck deliveries including decreases of 65% in Europe, 27% in the combined U.S. and Canadian markets and
65% in the Company’s other markets. The lower market demand also resulted in lower average truck selling prices
and lower aftermarket part sales. Factory overhead, warehouse and other indirect costs decreased due to lower
staffing ($157.7 million), supplies and maintenance ($90.7 million), utilities ($28.8 million) and other indirect costs
needed to support lower production volumes. Currency translation reduced sales and cost of sales primarily due to
a weaker euro relative to the U.S. dollar.
Net sales and revenues and gross margins for truck units and aftermarket parts are summarized below. The
aftermarket parts gross margin includes direct revenues and costs, but excludes certain truck segment costs.
2009 2008 % change
Truck net sales and revenues:
Trucks $ 5,103.3 $ 11,281.3 (55)
Aftermarket parts 1,890.7 2,266.1 (17)
$ 6,994.0 $ 13,547.4 (48)
Gross margin:
Trucks $ (46.6) $ 1,141.7 (104)
Aftermarket parts 625.7 795.2 (21)
$ 579.1 $ 1,936.9 (70)
Gross margin %:
Trucks (.9)% 10.1%
Aftermarket parts 33.1 % 35.1%
8.3 % 14.3%
Total Truck segment gross margins for 2009 decreased to 8.3% from 14.3% in 2008. The lower gross margins were
primarily the result of lower truck gross margins. Gross margins on trucks declined to negative .9% in 2009,
reflecting lower industry demand and reduced absorption of fixed costs resulting from the decline in truck
production. 2009 aftermarket parts gross margins declined from the prior year primarily due to a sales mix shift to
lower margin maintenance parts due to efforts by customers to limit costs during recessionary economic conditions.
Truck R&D expenditures declined to $198.5 million in 2009 from $341.3 million in 2008, primarily due to lower
spending on engine development and reduced spending for new vehicle development.
Truck SG&A expense in 2009 declined to $341.3 million compared to $442.7 million in 2008. The lower spending
was a result of focused efforts to reduce costs in response to the global economic recession and consisted primarily
of reduced staffing of $36.6 million, sales and marketing of $28.8 million and travel costs of $7.1 million. Foreign
currency translation effects reduced SG&A by $10.7 million. Severance costs included in SG&A were $5.7 million in
2009 compared to $2.6 million in 2008. As a percentage of sales, SG&A increased to 4.9% in 2009 from 3.3% in
2008 due to lower sales volumes.
