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•  Aftermarket parts volume benefited from stronger retail markets, reflecting improving freight volumes and aging truck fleets. This higher market demand resulted in increased aftermarket parts sales volume of $258.8 million and related cost of sales of $157.8 million. 

•  Average aftermarket parts sales prices increased by $69.5 million reflecting improved price realization from improved market demand. 

•  Average aftermarket parts costs increased $41.8 million from higher material costs. 

•  The currency translation effect on sales and cost of sales primarily reflects a stronger euro. 

Net sales and revenues and gross margins for truck units and aftermarket parts are provided below. The aftermarket parts gross margin includes direct revenues and costs, but excludes certain Truck segment costs. 

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Truck gross margins in 2011 reflect the benefits of higher market demand and increased absorption of fixed costs resulting from higher truck production. Aftermarket parts gross margins in 2011 benefited from higher price realization from improved market demand. 

Truck R&D expenditures increased to $287.5 million in 2011 from $238.2 million in 2010. The higher spending in 2011 reflects increased new product development activities, primarily for new truck products for North America and Europe and $8.3 million from higher foreign currencies, primarily the euro. 

Truck SG&A was $415.1 million in 2011 compared to $368.3 million in 2010. The higher spending is due to higher salaries and related expenses of $51.4 million (including $10.1 million from the effect of foreign currencies) to support higher levels of business activity. As a percentage of sales, SG&A decreased to 2.7% in 2011 from 4.0% in 2010 due to higher sales volumes and ongoing cost control. 

