PACCAR 2010 Annual Report Download - page 51

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48
A. SI GN IF IC AN T AC CO UN TI NG P OL IC IE S
Description of Operations: PACCAR Inc (the Company or PACCAR) is a multinational company operating in two
principal segments: (1) the design, manufacture and distribution of light-, medium- and heavy-duty commercial
trucks and related aftermarket parts, “Truck” and (2) finance and leasing products and services provided to
customers and dealers, “Financial Services”. PACCAR’s sales and revenues are derived primarily from North America
and Europe. The Company also operates in Australia and South America and sells trucks and parts outside its
primary markets to customers in Asia and Africa.
Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its
wholly owned domestic and foreign subsidiaries. All significant intercompany accounts and transactions are
eliminated in consolidation.
Use of Estimates: The preparation of financial statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Year Ended December 31, 2010 2009 2008
(millions of dollars)
Net income $457.6 $111.9 $1,017.9
Other comprehensive income (loss):
Unrealized (losses) gains on derivative contracts
Losses arising during the period (76.8) (71.6) (85.5)
Tax effect 26.2 21.3 24.7
Reclassification adjustment 123.1 119.9 (17.4)
Tax effect (42.0) (35.7) 4.1
30.5 33.9 (74.1)
Unrealized (losses) gains on investments
Net holding (loss) gain (1.2) (.3) 2.9
Tax effect .5 .1 (.9)
Reclassification adjustment .6 .7 (5.1)
Tax effect (.3) (.2) 1.8
(.4) .3 (1.3)
Pension and postretirement
(Losses) gains arising during the period (35.9) 73.0 (395.1)
Tax effect 12.7 (32.1) 144.7
Reclassification adjustment 16.5 11.2 6.0
Tax effect (5.6) (3.9) (2.1)
(12.3) 48.2 (246.5)
Foreign currency translation (losses) gains (12.7) 223.6 (356.0)
Net other comprehensive income (loss) 5.1 306.0 (677.9)
Comprehensive Income $462.7 $417.9 $ 340.0
See notes to consolidated financial statements.
C O N S O L I D A T E D S T A T E M E N T S O F C O M P R E H E N S I V E I N C O M E
N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
December 31, 2010, 2009 and 2008 (currencies in millions)