PACCAR 2012 Annual Report Download - page 41

Worldwide PFS accounts 30+ days past due at December 31, 2011 of 1.5% improved from 3.0% at December 31, 2010.
Included in the U.S. and Canada past-due percentage of 1.1% is .8% from one large customer. Excluding that customer,
worldwide PFS accounts 30+ days past due at December 31, 2011 would have been .9%. At December 31, 2011, the
Company had $27.9 million of specific loss reserves for this large customer and other accounts considered at risk.
The Company continues to focus on maintaining low past-due balances.
When the Company modifies a 30+ days past-due account, the customer is then generally considered current under the
revised contractual terms. The Company modified $4.5 million of accounts worldwide during the fourth quarter of
2011 and $20.8 million during the fourth quarter of 2010 that were 30+ days past-due and became current at the
time of modification. Of these modifications, $4.4 million during the fourth quarter of 2011 and $14.2 million during
the fourth quarter of 2010 were in Mexico and Australia. Had these accounts not been modified and continued to
not make payments, the pro forma percentage of retail loan and lease accounts 30+ days past due would have been
as follows:
At December 31, 2011 2010
Pro forma percentage of retail loan and lease accounts 30+ days past-due:
U.S. and Canada 1.1% 2.3%
Europe 1.0% 2.5%
Mexico and Australia 3.8% 6.8%
Total 1.5% 3.3%
Modifications of accounts in prior quarters that were more than 30 days past due at the time of modification are
included in past-dues if they were not performing under the modified terms at December 31, 2011, and
December 31, 2010. The effect on the allowance for credit losses from such modifications was not significant at
December 31, 2011 and December 31, 2010.
The Company’s 2011 pretax return on revenue for Financial Services increased to 23.0% from 15.9% in 2010
primarily due to higher finance and lease margins. The higher finance margin reflects a lower cost of funds and a
larger finance receivable portfolio. The higher lease margin is primarily due to improved results on the sales of
operating lease units.
Other
Other includes the winch business as well as sales, income and expenses not attributable to a reportable segment,
including a portion of corporate expense. Sales represent approximately 1% of consolidated net sales and revenues
for 2011 and 2010. Other SG&A was $37.7 million in 2011 and $24.5 million in 2010. The increase is primarily due
to higher salaries and related expenses of $12.1 million. Other income (loss) before tax was a loss of $26.5 million
in 2011 compared to a loss of $15.3 million in 2010.
Investment income was $38.2 million in 2011 compared to $21.1 million in 2010. The higher investment income in
2011 reflects higher average investment balances and higher yields on investments.
The 2011 effective income tax rate was 30.8% compared to 30.7% in 2010.
($ in millions)
Year Ended December 31, 2011 2010
Domestic income before taxes $ 607.0 $ 186.3
Foreign income before taxes 899.9 474.0
Total income before taxes $ 1,506.9 $ 660.3
Domestic pre-tax return on revenues 8.2% 4.4%
Foreign pre-tax return on revenues 10.0% 7.8%
Total pre-tax return on revenues 9.2% 6.4%
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