 IMPACT OF ENVIRONMENTAL MATTERS: The Company, its competitors and industry in general are subject to various domestic and foreign requirements  relating to the environment. The Company believes its policies, practices and procedures are designed to prevent  unreasonable risk of environmental damage and that its handling, use and disposal of hazardous or toxic substances  have been in accordance with environmental laws and regulations enacted at the time such use and disposal  occurred.  The Company is involved in various stages of investigations and cleanup actions in different countries related to  environmental matters. In certain of these matters, the Company has been designated as a “potentially responsible  party” by domestic and foreign environmental agencies. The Company has provided an accrual for the estimated  costs to investigate and complete cleanup actions where it is probable that the Company will incur such costs in the  future. Expenditures related to environmental activities in the years ended December 31, 2011, 2010 and 2009 were  $1.2 million, $1.3 million and $1.3 million, respectively. Management expects that these matters will not have a  significant effect on the Company’s consolidated cash flow, liquidity or financial condition. The Company’s significant accounting policies are disclosed in Note A of the consolidated financial statements. In  the preparation of the Company’s financial statements, in accordance with U.S. generally accepted accounting  principles, management uses estimates and makes judgments and assumptions that affect asset and liability values  and the amounts reported as income and expense during the periods presented. The following are accounting  policies which, in the opinion of management, are particularly sensitive and which, if actual results are different  from estimates used by management, may have a material impact on the financial statements.  Trucks sold pursuant to agreements accounted for as operating leases are disclosed in Note E of the consolidated  financial statements. In determining its estimate of the residual value of such vehicles, the Company considers the  length of the lease term, the truck model, the expected usage of the truck and anticipated market demand.  Operating lease terms generally range from three to seven years. The resulting residual values on operating leases  generally range between 30% and 50% of original equipment cost. If the sales price of the trucks at the end of the  term of the agreement differs from the Company’s estimate, a gain or loss will result.  Future market conditions, changes in government regulations and other factors outside the Company’s control  could impact the ultimate sales price of trucks returned under these contracts. Residual values are reviewed  regularly and adjusted if market conditions warrant. A decrease in the estimated equipment residual values would  increase annual depreciation expense over the remaining lease term.  During 2011, market values on equipment returning upon operating lease maturity were generally higher than the  residual values on the equipment, resulting in a decrease in depreciation expense of $10.2 million. During 2009 and  2010, lower market values on equipment returning upon lease maturity, as well as impairments on existing  operating leases resulted in additional depreciation expense of $59.2 million and $13.1 million, respectively.  At December 31, 2011, the aggregate residual value of equipment on operating leases in the Financial Services  segment and residual value guarantee on trucks accounted for as operating leases in the Truck segment was $1.42  billion. A 10% decrease in used truck values worldwide, expected to persist over the remaining maturities of the  Company’s operating leases, would reduce residual values estimates and result in the Company recording  approximately $36 million of additional depreciation per year. CRITICAL ACCOUNTING POLICIES: Operating Leases