PACCAR 2010 Annual Report Download - page 61

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H. PR OD UC T SU PP OR T LIA BI LI TI ES
Product support liabilities include reserves related to product warranties, optional extended warranties and repair
and maintenance (R&M) contracts. The Company generally offers one-year warranties covering most of its vehicles
and related aftermarket parts. Specific terms and conditions vary depending on the product and the country of sale.
Optional extended warranty and R&M contracts can be purchased for periods which generally range up to five
years. Warranty expenses and reserves are estimated and recorded at the time products or contracts are sold based on
historical data regarding the source, frequency and cost of claims, net of any recoveries. PACCAR periodically
assesses the adequacy of its recorded liabilities and adjusts them as appropriate to reflect actual experience.
Changes in warranty and R&M reserves are summarized as follows:
At December 31, 2010 2009 2008
Beginning balance $ 386.4 $ 450.4 $ 483.3
Cost accruals and revenue deferrals 172.4 169.0 312.3
Payments and revenue recognized (171.3) (245.6) (304.6)
Currency translation (15.3) 12.6 (40.6)
$ 372.2 $ 386.4 $ 450.4
Warranty and R&M reserves are included in the accompanying Consolidated Balance Sheets as follows:
At December 31, 2010 2009
Truck and Other:
Accounts payable, accrued expenses and other $ 231.3 $ 230.8
Other liabilities 83.2 84.3
Financial Services:
Deferred taxes and other liabilities 57.7 71.3
$ 372.2 $ 386.4
I. B OR RO WI NG S AN D CR ED IT A RR AN GE ME NT S
Truck and Other long-term debt at December 31, 2010 and 2009 consisted of $150.0 of notes with an effective
interest rate of 6.9% which mature in 2014 and $23.5 and $22.3, respectively of non-interest bearing notes which
mature in September 2011.
Financial Services borrowings include the following:
EFFECTIVE EFFECTIVE
At December 31, RATE 2010 RATE 2009
Commercial paper 2.2% $ 2,126.4 2.8% $ 2,695.6
Bank loans:
Medium-term 7.8% 245.3 7.6% 315.6
2,371.7 3,011.2
Term notes 4.6% 2,730.8 4.8% 2,889.3
3.8% $ 5,102.5 4.0% $ 5,900.5
The term notes of $2,730.8 at December 31, 2010 and $2,889.3 at December 31, 2009 include an increase in fair
value of $9.6 and $19.6, respectively, for notes designated to fair value hedges. The effective rate is the weighted
average rate as of December 31, 2010 and 2009, and includes the effects of interest rate contracts.
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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)