CONSOLIDATED S TATEMENTS OF C OMPREHENSIVE INC OME NOTES TO C ONSOLID ATED FINANC IAL STATEMENTS  Year Ended December 31,  2011 2010  2009 (millions) Net income  $1,042.3 $457.6   $ 111.9 Other comprehensive income (loss): Unrealized (losses) gains on derivative contracts  Losses arising during the period  (52.9) (76.8) (71.6) Tax effect  18.8 26.2 21.3  Reclassification adjustment  47.7 123.1 119.9 Tax effect  (17.7) (42.0) (35.7) (4.1) 30.5 33.9 Unrealized gains (losses) on investments  Net holding gain (loss)  7.0 (1.2) (.3) Tax effect  (1.9) .5 .1  Reclassification adjustment  1.6 .6 .7 Tax effect  (.6) (.3) (.2) 6.1 (.4) .3 Pension and postretirement  (Losses) gains arising during the period  (281.9) (35.9) 73.0 Tax effect  99.0 12.7 (32.1)  Reclassification adjustment  26.2 16.5 11.2 Tax effect  (9.0) (5.6) (3.9) (165.7) (12.3) 48.2 Foreign currency translation (losses) gains  (96.6) (12.7) 223.6 Net other comprehensive (loss) income  (260.3) 5.1 306.0 Comprehensive Income $ 782.0 $462.7 $ 417.9 See notes to consolidated financial statements. December 31, 2011, 2010 and 2009 (currencies in millions) Description of Operations:  PACCAR Inc (the Company or PACCAR) is a multinational company operating in two  principal segments: (1) the design, manufacture and distribution of light-, medium- and heavy-duty commercial  trucks and related aftermarket parts and (2) finance and leasing products and services provided to customers and  dealers. PACCAR’s sales and revenues are derived primarily from North America and Europe. The Company also  operates in Australia and sells trucks and parts to customers in Asia, Africa and South America. Principles of Consolidation:  The consolidated financial statements include the accounts of the Company and its  wholly owned domestic and foreign subsidiaries. All significant intercompany accounts and transactions are  eliminated in consolidation.  Use of Estimates:  The preparation of financial statements in conformity with accounting principles generally  accepted in the United States requires management to make estimates and assumptions that affect the amounts  reported in the financial statements and accompanying notes. Actual results could differ from those estimates.  A. SIGNIFICANT ACCOUNTING POLICIES 