PACCAR’s strong long-term financial performance has enabled the company to distribute over $3.6 billion in dividends during the last 10 years. PACCAR’s average annual total shareholder return over the last decade was 14.6%, versus 2.9% for the Standard & Poor’s 500 Index. INVESTING FOR THE FUTURE  — PACCAR’s excellent long-term profits, strong balance sheet, and intense focus on quality, technology and productivity have allowed the company to invest $4.6 billion since 2001 in capital projects, new products and processes. Productivity and efficiency improvement of 5-7% annually and capacity improvements of over 40% in the last five years have enhanced the capability of the company’s manufacturing and parts facilities. PACCAR is recognized as one of the leading applied technology companies in the industry, and innovation continues to be a cornerstone of its success. PACCAR has integrated new technology to profitably support its business, as well as its dealers, customers and suppliers. 

In 2011, capital investments were $535 million and research and development expenses were $288 million, as PACCAR invested in global expansion initiatives to enhance manufacturing efficiency and accelerate new PACCAR product development. PACCAR’s Mississippi engine factory has produced over 18,000 PACCAR MX engines for Kenworth and Peterbilt trucks. Customers benefit from the engine’s excellent fuel economy and reliability. 

PACCAR has increased its investment in the BRIC countries (Brasil, Russia, India, China). The company has begun construction of the new DAF factory in Ponta Grossa, Brasil, which is planned to commence truck production in 2013. PACCAR Parts opened a new distribution center and DAF expanded its sales office in Moscow. The company launched the PACCAR Technical Center in Pune, India, with KPIT, a leading technology solutions company. The Center will focus on engineering, information technology and component sourcing. In China, the world’s largest truck market, PACCAR increased its purchasing team and continues to examine joint venture opportunities. 

SIX SIGMA  — Six Sigma is integrated into all business activities at PACCAR and has been adopted at 245 of the company’s suppliers and many of the company’s 

dealers and customers. Its statistical methodology is critical in the development of new product designs, customer services and manufacturing processes. Six Sigma has delivered over $1.8 billion in cumulative savings in all facets of the company. Nearly 13,000 employees have been trained in Six Sigma and 16,900 projects have been implemented since its inception. Six Sigma, in conjunction with Supplier Quality, has been vital to improving logistics performance and component quality from company suppliers. 

INFORMATION TECHNOLOGY  — PACCAR’s Information Technology Division (ITD) and its 680 innovative employees are an important competitive asset for the company. PACCAR’s use of information technology is centered on developing and integrating software and hardware that enhance the quality and efficiency of all products and operations throughout the company. In 2011, PACCAR earned the number one technology position in InformationWeek  magazine’s Top 500 Companies list. Nearly 26,000 dealers, customers, suppliers and employees have experienced the company’s Technology Centers highlighting surface computing, tablet PCs, an electronic leasing and finance office, and an electronic service analyst. 

TRUCKS  — U.S. and Canadian Class 8 industry retail sales in 2011 were 197,000 units, and the Mexican market totaled 19,000. The European Union (EU) industry 15+ tonne sales were 244,000 units. 

PACCAR’s Class 8 retail sales in the U.S. and Canada achieved a record market share of 28.1% in 2011. DAF achieved a record 15.5% share in the 15+ tonne truck market in Europe. Industry Class 6 and 7 truck retail sales in the U.S. and Canada were 61,000 units, a 49% increase from the previous year. In the EU, the 6- to 15-tonne market was 57,000 units, up 12% over 2010. PACCAR’s North American and European market shares in the medium duty truck segment were good, as the company delivered 21,200 medium duty trucks and tractors in 2011. 

A tremendous team effort by the company’s purchasing, materials, engineering and production employees contributed to improved product quality and manufacturing efficiency during the year. The teams performed admirably and exceeded customer 

