10-KPeriod: FY2009

PACCAR INC Annual Report, Year Ended Dec 31, 2009

Filed February 26, 2010For Securities:PCAR

Summary

PACCAR Inc's 2010 10-K filing for the fiscal year ending December 31, 2009, reflects the company's resilience and strategic positioning at the end of a challenging economic period. The report details PACCAR's core businesses in truck manufacturing (under the Kenworth, Peterbilt, and DAF brands) and financial services. Despite the economic headwinds, the company maintained a significant market share and emphasized its commitment to quality and customer service across its global operations. Key financial and operational information presented in this filing provides insight into PACCAR's performance during a period of market contraction. The company's financial services segment, while subject to economic sensitivities, plays a crucial role in supporting truck sales. Investors can look to this report for an understanding of PACCAR's operational structure, market presence, and forward-looking strategies, including the significant investment in a new engine production facility, signaling confidence in future demand.

Financial Highlights

35 data points
Beta

Revenue

$8.09B

Net Income

$111.90M

1.4% Net Margin

EPS (Diluted)

$0.21

Total Assets

$14.57B

Cash & Equivalents

$1.91B

Free Cash Flow

$1.25B

Financial Statements
Beta
Revenue$8.09B
Interest Expense$267.60M
Net Income$111.90M
EPS (Basic)$0.21
EPS (Diluted)$0.21
Shares Outstanding (Basic)545.70M
Shares Outstanding (Diluted)547.35M

Key Highlights

  • 1PACCAR operates with two primary segments: truck manufacturing and financial services, with trucks and aftermarket parts accounting for 86.5% of 2009 net sales.
  • 2The company manufactures heavy-duty diesel trucks under well-recognized brands: Kenworth, Peterbilt, and DAF, with global manufacturing facilities in the US, Europe, Canada, and Australia.
  • 3PACCAR's Financial Services segment provides financing and leasing for its products to customers and dealers, offering inventory financing and retail loan/lease options.
  • 4The company faced a competitive landscape in both truck manufacturing and financial services, with significant market shares in North America (25.1% of U.S. and Canadian Class 8 retail sales) and Europe (14.8% of Western/Central European heavy-duty market).
  • 5A new, world-class PACCAR engine production facility in Columbus, Mississippi, was substantially completed in 2009, with PACCAR engines planned for availability in trucks by summer 2010.
  • 6The company reported a production backlog of $1.4 billion at the end of 2009, with approximately $1.1 billion scheduled for delivery within 90 days, indicating near-term visibility.
  • 7PACCAR's disclosures highlight the cyclical nature of the commercial truck market, its dependence on overall economic activity, and the management of risks associated with currency, interest rates, and credit.

Frequently Asked Questions

PACCAR Inc's primary revenue streams are derived from two principal industry segments: (1) the design, manufacture, and distribution of light-, medium-, and heavy-duty trucks, along with related aftermarket parts, and (2) the provision of finance and leasing products and services to customers and dealers. In 2009, the truck and aftermarket parts segment accounted for approximately 86.5% of total net sales and revenues.

PACCAR's Financial Services segment manages risks through a conservative underwriting approach for new retail business to minimize credit losses. Receivables are secured by the financed or leased products, and the company limits its exposure to any single customer. In case of default, PACCAR repossesses and sells the collateral. The company also provides an allowance for credit losses based on an analysis of estimated losses, considering past due accounts, used truck prices, and the economic climate. Liquidity is managed by matching debt maturities with loan/lease maturities and accessing various funding sources like commercial paper and bank loans.

The substantial completion of PACCAR's new world-class engine production facility in Columbus, Mississippi, in 2009 is a significant strategic development. This facility, alongside initial engine assembly in the Netherlands, was set to make PACCAR engines available in Peterbilt and Kenworth trucks by the summer of 2010. This investment signals PACCAR's commitment to vertical integration, control over a key component, and confidence in future demand for its proprietary engines and trucks.

PACCAR acknowledges that its truck segment sales and margins are cyclical and are strongly influenced by overall economic activity, the availability of capital for customers, and freight transportation volumes. The company also notes that its financial services segment is exposed to credit risk, with credit losses tending to increase during periods of economic weakness due to higher default rates and lower used truck prices. PACCAR actively manages these risks through its business strategies and financial controls.