10-Q

美国

证券和交易委员会

华盛顿特区 20549

表格 10-Q


☒	根据1934年证券交易法第13或第15(d)条规定的季度报告

截至季度结束日期的财务报告九月三十日， 2024

或者


☐	根据1934年证券交易法第13或15(d)条款的过渡报告

过渡期从到

委员会文件号。 001-14817

帕卡公司

(根据其章程规定的注册人准确名称)


特拉华州	91-0351110
（注册或组织的）州或其他司法辖区公司成立或组织）	（纳税人识别号码）

777 - 106th Ave. N.E., 贝尔维尤市, 大单	98004
(主要行政办公室地址)	(邮政编码)

(425) 468-7400

（注册人的电话号码，包括区号）

在法案第12(b)条的规定下注册的证券：


每种类别的证券	交易标的	名称为每个注册的交易所:
每股面值为1美元的普通股	PCAR	纳斯达克股票市场

请在以下复选框中打勾，指示注册人：(1)在前12个月(或注册人被要求提交这些报告的更短期间内)已经提交了1934年证券交易法第13或15(d)条规定需要提交的所有报告；以及(2)在过去的90天内一直受到了此类文件提交要求的限制。是 ☒ 没有 ☐

请在以下复选框中打勾，指示注册人是否已经电子提交了根据Regulation S-T规则405条(本章节的§232.405条)需要提交的所有互动数据文件在过去的12个月内(或注册人被要求提交这些文件的更短期间内)。是 ☒ 没有 ☐

请通过复选标记指示注册者是否为大型加速归档者、加速归档者、非加速归档者、较小的报告公司还是新兴增长公司。请参阅《证券交易法》第12b‑2条中对“大型加速归档者”、“加速归档者”、“较小的报告公司”和“新兴增长公司”的定义。


大型加速报告人	☒	加速文件提交人	☐

非加速文件提交人	☐	较小的报告公司	☐

		新兴成长公司	☐

如果公司无法符合证券交易法第13(a)条规定，使用延长过渡期来遵守任何新的或修订的财务会计准则，请在复选框中指示。 ☐

请勾选“是”，如果报告人是外壳公司（定义见证券交易法规则12b-2）。是 ☐ 没有 ☒

请指出最近一次实际日期后，每个发行人普通股的流通情况。

普通股，面值$1 — 524,300,554 截至2024年10月25日的股票份额

PACCAR Inc — 10-Q 表格

索引


		页面
第一部分	财务信息：

第 1 项。	财务报表：
	综合收益表— 截至2024年9月30日和2023年9月30日的三个月和九个月（未经审计）	3
	合并资产负债表 — 2024 年 9 月 30 日（未经审计）和 2023 年 12 月 31 日	4
	简明合并现金流量表— 截至2024年9月30日和2023年9月30日的九个月（未经审计）	6
	合并股东权益表— 截至2024年9月30日和2023年9月30日的三个月和九个月（未经审计）	7
	合并财务报表附注（未经审计）	8
第 2 项。	管理层对财务状况和经营业绩的讨论和分析	34
第 3 项。	关于市场风险的定量和定性披露	52
第 4 项。	控制和程序	52

第二部分。	其他信息：

第 1 项。	法律诉讼	53
第 1A 项。	风险因素	53
第 2 项。	股权证券的未注册销售、所得款项的使用和发行人购买股权证券	53
第 3 项。	优先证券违约	53
第 4 项。	矿山安全披露	53
第 5 项。	其他信息	53
第 6 项。	展品	54

展品索引		54

签名		56

- 2 -

第一部分 — 金融所有信息

第 1 项。财务报表

Com 的合并报表综合收入（未经审计）

（百万，每股金额除外）


	三个月已结束						九个月已结束
	9 月 30 日						9 月 30 日
	2024			2023			2024			2023
卡车、零件及其他：
净销售额和收入	$	7,703.8		$	8,232.3		$	24,201.1		$	24,723.7

销售成本和收入		6,427.7			6,626.7			19,873.8			19,971.5
研究和开发		115.0			103.5			337.6			302.0
销售、一般和管理		144.3			143.6			434.6			448.3
利息和其他（收入）支出，净额		(24.3	)		(16.3	)		(74.9	)		544.8
		6,662.7			6,857.5			20,571.1			21,266.6
所得税前的卡车、零件和其他收入		1,041.1			1,374.8			3,630.0			3,457.1

金融服务：
利息和费用		334.9			269.8			956.3			716.5
经营租赁、租金和其他收入		201.2			194.3			598.9			610.6
收入		536.1			464.1			1,555.2			1,327.1

利息和其他借款费用		188.4			138.5			520.9			347.8
折旧和其他费用		176.6			146.9			530.5			427.0
销售、一般和管理		42.2			38.7			122.0			110.9
应收账款损失准备金		22.4			6.2			50.2			14.1
		429.6			330.3			1,223.6			899.8
所得税前的金融服务收入		106.5			133.8			331.6			427.3
投资收益		108.7			80.8			290.0			192.5
所得税前总收入		1,256.3			1,589.4			4,251.6			4,076.9
所得税		284.2			360.9			961.6			893.4
净收入	$	972.1		$	1,228.5		$	3,290.0		$	3,183.5

每股净收益
基本	$	1.85		$	2.35		$	6.26		$	6.08
稀释	$	1.85		$	2.34		$	6.25		$	6.07

加权平均已发行普通股数量
基本		525.4			524.1			525.2			523.8
稀释		526.5			525.3			526.5			524.8

综合收益	$	1,111.9		$	1,068.7		$	3,178.5		$	3,199.3

参见合并财务报表附注。

- 3 -

合并资产负债表

（百万）


	9 月 30 日		12 月 31 日
	2024		2023 *
	（未经审计）
资产

卡车、零件及其他：
流动资产
现金和现金等价物	$	6,642.1	$	6,836.7
贸易和其他应收账款，净额（损失备抵金）：2024-美元1.3, 2023 - $.9)		2,199.2		2,198.1
有价证券		2,510.7		1,822.6
库存，净额		2,644.8		2,576.7
其他流动资产		665.9		680.6
卡车、零件和其他流动资产总额		14,662.7		14,114.7

经营租赁的设备，净额		82.9		127.6
财产、厂房和设备，净额		4,040.9		3,780.1
其他非流动资产，净额		2,014.9		1,837.1
卡车、零件和其他资产总计		20,801.4		19,859.5

金融服务：
现金和现金等价物		207.1		345.0
财务和其他应收账款，净额（损失备抵金）：2024-美元146.2, 2023 - $133.0)		19,294.3		17,571.7
经营租赁的设备，净额		1,988.1		2,175.4
其他资产		990.9		871.8
金融服务资产总额		22,480.4		20,963.9
	$	43,281.8	$	40,823.4

* 2023年12月31日的合并资产负债表来自经审计的财务报表。

参见合并财务报表附注。

- 4 -

Consolidated Balance Sheets

(Millions)


	September 30			December 31
	2024			2023 *
	(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY

TRUCK, PARTS AND OTHER:
Current Liabilities
Accounts payable, accrued expenses and other	$	5,235.9		$	5,076.3
Dividend payable					1,675.0
Total Truck, Parts and Other Current Liabilities		5,235.9			6,751.3
Residual value guarantees and deferred revenues		95.7			142.6
Other liabilities		1,978.1			2,121.9
Total Truck, Parts and Other Liabilities		7,309.7			9,015.8

FINANCIAL SERVICES:
Accounts payable, accrued expenses and other		1,161.5			992.3
Commercial paper and bank loans		5,496.6			5,609.9
Term notes		10,023.3			8,624.6
Deferred taxes and other liabilities		627.1			702.0
Total Financial Services Liabilities		17,308.5			15,928.8

STOCKHOLDERS' EQUITY:
Preferred stock, no par value - authorized 1.0 million shares, none issued
Common stock, $1 par value - authorized 1.2 billion shares, issued 524.3 and 523.3 million shares		524.3			523.3
Additional paid-in capital		336.0			269.1
Treasury stock, at cost - .04 million and nil shares		(4.5	)
Retained earnings		18,613.2			15,780.3
Accumulated other comprehensive loss		(805.4	)		(693.9	)
Total Stockholders' Equity		18,663.6			15,878.8
	$	43,281.8		$	40,823.4

* The December 31, 2023 consolidated balance sheet has been derived from audited financial statements.

See Notes to Consolidated Financial Statements.

- 5 -

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Millions)


	Nine Months Ended
	September 30
	2024			2023
OPERATING ACTIVITIES:
Net Income	$	3,290.0		$	3,183.5
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization:
Property, plant and equipment		300.2			308.2
Equipment on operating leases and other		393.5			370.2
Provision for losses on financial services receivables		50.2			14.1
Other, net		(18.6	)		(115.1	)
Pension contributions		(34.7	)		(17.1	)
Change in operating assets and liabilities:
Trade and other receivables		(36.7	)		(518.1	)
Wholesale receivables on new trucks		(837.4	)		(1,006.8	)
Inventories		(86.3	)		(450.0	)
Accounts payable and accrued expenses		499.0			882.1
Income taxes, warranty and other		(324.0	)		352.3
Net Cash Provided by Operating Activities		3,195.2			3,003.3

INVESTING ACTIVITIES:
Originations of retail loans and finance leases		(4,895.9	)		(4,557.4	)
Collections on retail loans and finance leases		3,646.6			3,210.6
Net increase in wholesale receivables on used equipment		(16.9	)		(15.2	)
Purchases of marketable debt securities		(1,356.7	)		(796.7	)
Proceeds from sales and maturities of marketable debt securities		714.8			660.2
Payments for property, plant and equipment		(605.3	)		(497.2	)
Acquisitions of equipment for operating leases		(637.4	)		(401.9	)
Proceeds from asset disposals		521.6			449.0
Other, net		(126.1	)		17.5
Net Cash Used in Investing Activities		(2,755.3	)		(1,931.1	)

FINANCING ACTIVITIES:
Payments of cash dividends		(2,131.1	)		(1,377.3	)
Purchases of treasury stock		(4.5	)		(3.1	)
Proceeds from stock compensation transactions		45.3			43.1
Net increase in commercial paper, short-term bank loans and other		14.3			1,316.9
Proceeds from term debt		3,406.6			2,398.2
Payments on term debt		(2,097.0	)		(2,218.3	)
Net Cash (Used in) Provided by Financing Activities		(766.4	)		159.5
Effect of exchange rate changes on cash and cash equivalents		(6.0	)		(16.3	)
Net (Decrease) Increase in Cash and Cash Equivalents		(332.5	)		1,215.4
Cash and cash equivalents at beginning of period		7,181.7			4,690.9
Cash and cash equivalents at end of period	$	6,849.2		$	5,906.3

See Notes to Consolidated Financial Statements.

- 6 -

Consolidated Statements of Stockholders’ Equity (Unaudited)

(Millions, Except Per Share Amounts)


	Three Months Ended						Nine Months Ended
	September 30						September 30
	2024			2023			2024			2023
COMMON STOCK, $1 PAR VALUE:
Balance at beginning of period	$	524.3		$	522.8		$	523.3		$	522.0
Stock compensation					.3			1.0			1.1
Balance at end of period		524.3			523.1			524.3			523.1

ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of period		329.2			241.8			269.1			196.1
Stock compensation		6.8			16.5			66.9			62.2
Balance at end of period		336.0			258.3			336.0			258.3

TREASURY STOCK, AT COST:
Balance at beginning of period		(4.0	)		(3.0	)
Purchases		(.5	)		(.1	)		(4.5	)		(3.1	)
Balance at end of period		(4.5	)		(3.1	)		(4.5	)		(3.1	)

RETAINED EARNINGS:
Balance at beginning of period		17,798.6			15,095.5			15,780.3			13,402.4
Net income		972.1			1,228.5			3,290.0			3,183.5
Cash dividends declared on common stock		(157.5	)		(141.6	)		(457.1	)		(403.5	)
Balance at end of period		18,613.2			16,182.4			18,613.2			16,182.4

ACCUMULATED OTHER COMPREHENSIVE LOSS:
Balance at beginning of period		(945.2	)		(777.8	)		(693.9	)		(953.4	)
Other comprehensive income (loss)		139.8			(159.8	)		(111.5	)		15.8
Balance at end of period		(805.4	)		(937.6	)		(805.4	)		(937.6	)
Total Stockholders’ Equity	$	18,663.6		$	16,023.1		$	18,663.6		$	16,023.1

Cash dividends declared on common stock, per share	$	.30		$	.27		$	.87		$	.77

See Notes to Consolidated Financial Statements.

- 7 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

NOTE A - Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10‑Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. For further information, refer to the consolidated financial statements and footnotes included in PACCAR Inc’s (PACCAR or the Company) Annual Report on Form 10‑K for the year ended December 31, 2023.

Equity Method Investment: The Company uses the equity method to account for the investment in an advanced battery cell manufacturing joint venture. Under the equity method, the original investments in the joint venture are recorded at cost and subsequently adjusted by the Company’s share of equity income or losses after the date of acquisition. The investment is included in Truck, Parts and Other "Other noncurrent assets, net" on the Company’s Consolidated Balance Sheets as of September 30, 2024.

Earnings per Share: Basic earnings per common share are computed by dividing earnings by the weighted average number of common shares outstanding, plus the effect of any participating securities. Diluted earnings per common share are computed assuming that all potentially dilutive securities are converted into common shares under the treasury stock method.

The dilutive and antidilutive options are shown separately in the table below:


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2024		2023		2024		2023
Additional shares		1,069,000		1,211,900		1,272,700		1,049,000
Antidilutive options		671,600		32,400		671,000		911,700

New Accounting Pronouncements: In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this ASU improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This ASU is effective for annual periods beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments in this ASU should be applied retrospectively to all prior periods presented. The implementation of this ASU will result in additional disclosures and will not have an impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this ASU require entities to disclose certain, specific categories within the rate reconciliation and enhance disclosures regarding income taxes paid and income tax expense. This ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments in this ASU should be applied on a prospective basis; however, retrospective application is permitted. The implementation of this ASU will result in additional disclosures and will not have an impact on the Company’s consolidated financial statements.

The Company adopted ASU 2022-03, Fair Value Measurement (Topic 820)—Fair Value Measurement of Equity Securities Subject to Contractual Sale Restriction on January 1, 2024, which had no material impact on the Company’s consolidated financial statements.

NOTE B – Sales and Revenues

Truck, Parts and Other

The Company enters into sales contracts with customers associated with purchases of the Company’s products and services including trucks, parts, product support, and other related services. Generally, the Company recognizes revenue for the amount of consideration it will receive for delivering a product or service to a customer. Revenue is recognized when the customer obtains control of the product or receives benefits of the service. The Company excludes sales taxes, value added taxes and other related taxes assessed by government agencies from revenue. There are no significant financing components included in product or services revenue since generally customers pay shortly after the products or services are transferred. In the Truck and Parts segment, when the Company grants extended payment terms on selected receivables and charges interest, interest income is recognized when earned.

- 8 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

The following table disaggregates Truck, Parts and Other revenues by major sources:


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2024		2023		2024		2023
Truck
Truck sales	$	5,781.2	$	6,412.4	$	18,423.5	$	19,219.7
Revenues from extended warranties, operating leases and other		245.8		224.0		722.3		658.0
		6,027.0		6,636.4		19,145.8		19,877.7
Parts
Parts sales		1,605.0		1,533.5		4,844.6		4,660.4
Revenues from dealer services and other		52.6		48.7		153.2		143.7
		1,657.6		1,582.2		4,997.8		4,804.1
Winch sales and other		19.2		13.7		57.5		41.9
Truck, Parts and Other sales and revenues	$	7,703.8	$	8,232.3	$	24,201.1	$	24,723.7

The Company recognizes truck and parts sales as revenues when control of the products is transferred to customers which generally occurs upon shipment, except for certain truck sales which are subject to a residual value guarantee (RVG) by the Company. The standard payment term for trucks and aftermarket parts is typically within 30 days, but the Company may grant extended payment terms on selected receivables. The Company recognizes revenue for the invoice amount adjusted for estimated sales incentives and returns. Sales incentives and returns are estimated based on historical experience and are adjusted to current period revenue when the most likely amount of consideration the Company expects to receive changes or becomes fixed. Truck and parts sales include a standard product warranty which is included in cost of sales. The Company has elected to treat delivery services as a fulfillment activity with revenues recognized when the customer obtains control of the product. Delivery revenue is included in revenues and the related costs are included in cost of sales. The Company is not disclosing truck order backlog, as a significant majority of the backlog has a duration of less than one year.

Truck sales with RVGs that allow customers the option to return their truck are accounted for as a sale when the customer does not have an economic incentive to return the truck to the Company, or as an operating lease when the customer does have an economic incentive to return the truck. The estimate of customers’ economic incentive to return the trucks is based on an analysis of historical guaranteed buyback value and estimated market value. When truck sales with RVGs are accounted for as a sale, revenue is recognized when the truck is transferred to the customer less an amount for expected returns. Expected return rates are estimated by using a historical return rate.

Aftermarket parts sales allow for returns which are estimated at the time of sale based on historical data. Parts dealer services and other revenues are recognized as services are performed.

The following table presents the balance sheet classification of the estimated value of the returned goods assets and the related return liabilities:


	September 30, 2024				December 31, 2023
	ASSETS		LIABILITIES		ASSETS		LIABILITIES
Trucks
Other current assets	$	125.4			$	147.3
Accounts payable, accrued expenses and other			$	129.5			$	149.5
Other noncurrent assets, net		164.3				186.7
Other liabilities				173.5				196.4
	$	289.7	$	303.0	$	334.0	$	345.9
Parts
Other current assets	$	92.7			$	86.8
Accounts payable, accrued expenses and other			$	228.3			$	216.3
	$	92.7	$	228.3	$	86.8	$	216.3

The Company’s total commitment to acquire trucks at a guaranteed value for contracts accounted for as a sale was $649.9 at September 30, 2024.

- 9 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

Revenues from extended warranties, operating leases and other include optional extended warranty and repair and maintenance (R&M) service contracts which can be purchased for periods generally ranging up to five years. The Company defers revenue based on stand-alone observable selling prices when it receives payments in advance and generally recognizes the revenue on a straight-line basis over the warranty or R&M contract periods. See Note F, Product Support Liabilities, in the Notes to the Consolidated Financial Statements for further information. Also included are truck sales with an RVG accounted for as an operating lease. A liability is created for the residual value obligation with the remainder of the proceeds recorded as deferred revenue. The deferred revenue is recognized on a straight-line basis over the guarantee period, which typically ranges from three to five years. Deferred revenue related to trucks sold with an RVG was $17.6 at September 30, 2024. The Company expects to recognize approximately $3.5 of the remaining deferred revenue in 2024, $7.6 in 2025, $4.0 in 2026, $1.8 in 2027 and $.7 in 2028. For the three and nine months ended September 30, 2024, total operating lease revenue from truck sales with RVGs was $7.7 and $25.6, respectively, compared to $11.7 and $47.1 for the three and nine months ended September 30, 2023. The Company’s total commitment to acquire trucks at a guaranteed value for contracts accounted for as a lease was $78.0 at September 30, 2024.

Revenue from winch sales and other is primarily derived from the industrial winch business. Winch sales are recognized when the product is transferred to a customer, which generally occurs upon shipment. Also within this category are other revenues not attributable to a reportable segment.

Financial Services

The Company’s Financial Services segment products include loans to customers collateralized by the vehicles being financed, finance leases for retail customers and dealers, dealer wholesale financing which includes floating-rate wholesale loans to PACCAR dealers for new and used trucks, and operating leases which include rentals on Company owned equipment. Interest income from finance and other receivables is recognized using the interest method. Certain loan origination costs are deferred and amortized to interest income over the expected life of the contracts using the straight-line method which approximates the interest method.

Operating lease rental revenue is recognized on a straight-line basis over the term of the lease. Customer contracts may include additional services such as excess mileage, repair and maintenance and other services on which revenue is recognized when earned. The Company’s full-service lease arrangements bundle these additional services. Rents for full-service lease contracts are allocated between lease and non-lease components based on the relative stand-alone price of each component. Taxes, such as sales and use and value added, which are collected by the Company from a customer, are excluded from the measurement of lease income and expenses.

Recognition of interest income and rental revenue is suspended (put on non-accrual status) when the receivable becomes more than 90 days past the contractual due date or earlier if some other event causes the Company to determine that collection is not probable. Accordingly, no finance receivables more than 90 days past due were accruing interest at September 30, 2024 or December 31, 2023. Recognition is resumed if the receivable becomes current by the payment of all amounts due under the terms of the existing contract and collection of remaining amounts is considered probable (if not contractually modified) or if the customer makes scheduled payments for three months and collection of remaining amounts is considered probable (if contractually modified). Payments received while the finance receivable is on non-accrual status are applied to interest and principal in accordance with the contractual terms.

Finance leases are secured by the trucks and related equipment being leased and the lease terms generally range from three to five years depending on the type and use of the equipment. The lessee is required to either purchase the equipment or guarantee to the Company a stated residual value upon the disposition of the equipment at the end of the finance lease term.

Operating lease terms generally range from three to five years. At the end of the operating lease term, the lessee has the option to return the equipment to the Company or purchase the equipment at its fair market value.

The Company determines its estimate of the residual value of leased vehicles by considering the length of the lease term, the truck model, the expected usage of the truck and anticipated market demand. If the sales price of the truck at the end of the agreement differs from the Company’s estimated residual value, 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.

- 10 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

The following table summarizes Financial Services lease revenues by lease type:


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2024		2023		2024		2023
Finance lease revenues	$	86.4	$	72.7	$	253.4	$	194.1
Operating lease revenues		163.7		180.6		501.2		564.1
Total lease revenues	$	250.1	$	253.3	$	754.6	$	758.2

NOTE C - Investments in Marketable Securities

Debt Securities

The Company's investments in marketable debt securities are classified as available-for-sale. These investments are stated at fair value and may include an allowance for credit losses. Changes in the allowance for credit losses are recognized in the current period earnings and any unrealized gains or losses, net of tax, are included as a component of accumulated other comprehensive income (loss) (AOCI).

The Company utilizes third-party pricing services for all of its marketable debt security valuations. The Company reviews the pricing methodology used by the third‑party pricing services, including the manner employed to collect market information. On a quarterly basis, the Company also performs review and validation procedures on the pricing information received from the third‑party providers. These procedures help ensure the fair value information used by the Company is determined in accordance with applicable accounting guidance.

The Company evaluates its investment in marketable debt securities at the end of each reporting period to determine if a decline in fair value is the result of credit losses or unrealized losses. In assessing credit losses, the Company considers the collectability of principal and interest payments by monitoring changes to issuers’ credit ratings, specific credit events associated with individual issuers as well as the credit ratings of any financial guarantor. The Company considers its intent for selling the security and whether it is more likely than not the Company will be able to hold the security until the recovery of any credit losses and unrealized losses. Charges against the allowance for credit losses occur when a security with credit losses is sold or the Company no longer intends to hold that security.

Equity Securities

Marketable equity securities are traded on active exchanges and are measured at fair value. The realized and unrealized gains (losses) are recognized in investment income.

Marketable securities at September 30, 2024 and December 31, 2023 consisted of the following:


			UNREALIZED		UNREALIZED		FAIR
At September 30, 2024	COST		GAINS		LOSSES		VALUE
Marketable debt securities
U.S. tax-exempt securities	$	303.9	$	2.3	$	.7	$	305.5
U.S. taxable municipal / non-U.S. provincial bonds		321.5		3.0		2.3		322.2
U.S. corporate securities		744.5		9.3		1.8		752.0
U.S. government securities		214.1		1.5		.3		215.3
Non-U.S. corporate securities		617.8		6.1		2.1		621.8
Non-U.S. government securities		168.5		2.2		.5		170.2
Other debt securities		117.2		1.3		.7		117.8
Marketable equity securities		10.0				4.1		5.9
Total marketable securities	$	2,497.5	$	25.7	$	12.5	$	2,510.7

- 11 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)


			UNREALIZED		UNREALIZED		FAIR
At December 31, 2023	COST		GAINS		LOSSES		VALUE
Marketable debt securities
U.S. tax-exempt securities	$	312.5	$	1.2	$	3.0	$	310.7
U.S. taxable municipal / non-U.S. provincial bonds		244.9		.8		5.6		240.1
U.S. corporate securities		357.1		1.4		5.2		353.3
U.S. government securities		159.2		.6		1.7		158.1
Non-U.S. corporate securities		529.4		2.3		7.5		524.2
Non-U.S. government securities		141.0		1.5		1.3		141.2
Other debt securities		92.8		.3		2.5		90.6
Marketable equity securities		10.0				5.6		4.4
Total marketable securities	$	1,846.9	$	8.1	$	32.4	$	1,822.6

The cost of marketable debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Amortization, accretion, interest and dividend income and realized gains and losses are included in investment income. The cost of securities sold is based on the specific identification method. Gross realized gains were $1.4 and $.9 and gross realized losses were $3.4 and $3.6 for the nine months periods ended September 30, 2024 and 2023, respectively.

Net unrealized gains on marketable equity securities were $1.5 and $1.1 for the nine months ended September 30, 2024 and 2023, respectively.

Marketable debt securities with continuous unrealized losses and their related fair values were as follows:


	September 30, 2024				December 31, 2023
	LESS THAN		TWELVE MONTHS		LESS THAN		TWELVE MONTHS
	TWELVE MONTHS		OR GREATER		TWELVE MONTHS		OR GREATER
Fair value	$	108.6	$	489.5	$	289.0	$	798.5
Unrealized losses		.1		8.3		1.6		25.2

The unrealized losses on marketable debt securities above were due to higher yields on certain securities. The Company did not identify any indicators of a credit loss in its assessments. Accordingly, no allowance for credit losses was recorded at September 30, 2024 and December 31, 2023. The Company does not currently intend, and it is more likely than not that it will not be required, to sell the investment securities before recovery of the unrealized losses. The Company expects that the contractual principal and interest will be received on the investment securities.

Contractual maturities of marketable debt securities at September 30, 2024 were as follows:


	AMORTIZED		FAIR
	COST		VALUE
Within one year	$	619.1	$	617.7
One to five years		1,859.0		1,878.2
Six to ten years
More than ten years		9.4		8.9
	$	2,487.5	$	2,504.8

- 12 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

NOTE D - Inventories

Inventories are stated at the lower of cost or net realizable value. Cost of inventories is determined principally by the first-in, first-out (FIFO) method. Inventories include the following:


	September 30		December 31
	2024		2023
Finished products	$	1,253.7	$	1,084.0
Work in process and raw materials		1,391.1		1,492.7
	$	2,644.8	$	2,576.7

NOTE E - Finance and Other Receivables

Finance and other receivables include the following:


	September 30			December 31
	2024			2023
Loans	$	9,408.2		$	8,594.7
Finance leases		4,889.3			4,785.7
Dealer wholesale financing		4,973.5			4,147.8
Operating lease receivables and other		169.5			176.5
		19,440.5			17,704.7
Less allowance for losses:
Loans and leases		(140.3	)		(127.0	)
Dealer wholesale financing		(3.0	)		(2.7	)
Operating lease receivables and other		(2.9	)		(3.3	)
	$	19,294.3		$	17,571.7

Included in Finance and other receivables, net on the Consolidated Balance Sheets is accrued interest receivable (net of allowance for credit losses) of $70.0 and $88.4 as of September 30, 2024 and December 31, 2023, respectively. The net activity of dealer direct loans and dealer wholesale financing on new trucks is shown in the operating section of the Condensed Consolidated Statements of Cash Flows since those receivables finance the sale of Company inventory.

Allowance for Credit Losses

The Company continuously monitors the payment performance of its finance receivables. For large retail finance customers and dealers with wholesale financing, the Company regularly reviews their financial statements and makes site visits and phone contact as appropriate. If the Company becomes aware of circumstances that could cause those customers or dealers to face financial difficulty, whether or not they are past due, the customers are placed on a watch list.

The Company modifies loans and finance leases in the normal course of its Financial Services operations. The Company may modify loans and finance leases for commercial reasons or for credit reasons. Modifications for commercial reasons are changes to contract terms for customers that are not considered to be in financial difficulty. Insignificant delays are modifications extending terms up to three months for customers experiencing some short-term financial stress, but not considered to be in financial difficulty. Modifications for credit reasons are changes to contract terms for customers considered to be in financial difficulty. The Company’s modifications typically result in granting more time to pay the contractual amounts owed and charging a fee and interest for the term of the modification.

When considering whether to modify customer accounts for credit reasons, the Company evaluates the creditworthiness of the customers and modifies those accounts that the Company considers likely to perform under the modified terms. The Company does not typically grant credit modifications for customers that do not meet minimum underwriting standards since the Company normally repossesses the financed equipment in these circumstances.

On average, commercial and other modifications extended contractual terms by approximately four months in 2024 and three months in 2023, and did not have a significant effect on the weighted average term or interest rate of the total portfolio at September 30, 2024 and December 31, 2023.

- 13 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

The Company has developed a systematic methodology for determining the allowance for credit losses for its two portfolio segments, retail and wholesale. The retail segment consists of retail loans and sales-type finance leases, net of unearned interest. The wholesale segment consists of truck inventory financing loans to dealers that are collateralized by trucks and other collateral. The wholesale segment generally has less risk than the retail segment. Wholesale receivables generally are shorter in duration than retail receivables, and the Company requires periodic reporting of the wholesale dealer’s financial condition, conducts periodic audits of the trucks being financed and in many cases, obtains guarantees or other security such as dealership assets. In determining the allowance for credit losses, retail loans and finance leases are evaluated together since they relate to a similar customer base, their contractual terms require regular payment of principal and interest, generally over three to five years, and they are secured by the same type of collateral. The allowance for credit losses consists of both specific and general reserves.

The Company individually evaluates certain finance receivables for expected credit losses. Finance receivables that are evaluated individually consist of all wholesale accounts and certain large retail accounts with past due balances or otherwise determined to be at a higher risk of loss. In general, finance receivables that are 90 days past due are placed on non-accrual status. Finance receivables on non-accrual status which have been performing for 90 consecutive days are placed on accrual status if it is deemed probable that the Company will collect all principal and interest payments.

Individually evaluated receivables on non-accrual status are generally considered collateral dependent. Large balance retail and all wholesale receivables on non-accrual status are individually evaluated to determine the appropriate reserve for losses. Generally, the determination of reserves for large balance receivables on non-accrual status considers the fair value of the associated collateral. When the underlying collateral fair value exceeds the Company’s amortized cost basis, no reserve is recorded. Small balance receivables on non-accrual status with similar risk characteristics are evaluated as a separate pool to determine the appropriate reserve for losses using the historical loss information discussed below.

The Company evaluates finance receivables that are not individually evaluated and share similar risk characteristics on a collective basis and determines the general allowance for credit losses for both retail and wholesale receivables based on historical loss information, using past due account data, current market conditions, and expected changes in future macroeconomic conditions that affect collectability. Historical credit loss data provides relevant information of expected credit losses. The historical information used includes assumptions regarding the likelihood of collecting current and past due accounts, repossession rates, and the recovery rate on the underlying collateral based on used truck values and other pledged collateral or recourse.

The Company has developed a range of loss estimates for each of its country portfolios based on historical experience, taking into account loss frequency and severity in both strong and weak truck market conditions. A projection is made of the range of estimated credit losses inherent in the portfolio from which an amount is determined based on current market conditions and other factors impacting the creditworthiness of the Company’s borrowers and their ability to repay. Adjustments to historical loss information are made for changes in forecasted economic conditions that are specific to the industry and markets in which the Company conducts business. The Company utilizes economic forecasts from third-party sources and determines expected losses based on historical experience under similar market conditions. After determining the appropriate level of the allowance for credit losses, a provision for losses on finance receivables is charged to income as necessary to reflect management’s estimate of expected credit losses, net of recoveries, inherent in the portfolio.

In determining the fair value of the collateral, the Company uses a pricing matrix and categorizes the fair value as Level 2 in the hierarchy of fair value measurement. The pricing matrix is reviewed quarterly and updated as appropriate. The pricing matrix considers the make, model and year of the equipment as well as recent sales prices of comparable equipment sold individually, which is the lowest unit of account, through wholesale channels to the Company’s dealers (principal market). The fair value of the collateral also considers the overall condition of the equipment.

Accounts are charged off against the allowance for credit losses when, in the judgment of management, they are considered uncollectible, which generally occurs upon repossession of the collateral. Typically the timing between the repossession and charge-off is not significant. In cases where repossession is delayed (e.g., for legal proceedings), the Company records a partial charge-off. The charge-off is determined by comparing the fair value of the collateral, less cost to sell, to the amortized cost basis.

- 14 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

For the following credit quality disclosures, finance receivables are classified into two portfolio segments, wholesale and retail. The retail portfolio is further segmented into dealer retail and customer retail. The dealer wholesale segment consists of truck inventory financing to PACCAR dealers. The dealer retail segment consists of loans and leases to participating dealers and franchises that use the proceeds to fund customers’ acquisition of commercial vehicles and related equipment. The customer retail segment consists of loans and leases directly to customers for the acquisition of commercial vehicles and related equipment. Customer retail receivables are further segregated between fleet and owner/operator classes. The fleet class consists of customer retail accounts operating five or more trucks. All other customer retail accounts are considered owner/operator. These two classes have similar measurement attributes, risk characteristics and common methods to monitor and assess credit risk.

The allowance for credit losses is summarized as follows:


	2024
	DEALER						CUSTOMER
	WHOLESALE			RETAIL			RETAIL			OTHER*			TOTAL
Balance at January 1	$	2.7		$	1.9		$	125.1		$	3.3		$	133.0
Provision for losses		.4			(.4	)		50.8			(.6	)		50.2
Charge-offs								(38.9	)		(.6	)		(39.5	)
Recoveries								5.7			1.1			6.8
Currency translation and other		(.1	)					(3.9	)		(.3	)		(4.3	)
Balance at September 30	$	3.0		$	1.5		$	138.8		$	2.9		$	146.2


	2023
	DEALER						CUSTOMER
	WHOLESALE			RETAIL			RETAIL			OTHER*			TOTAL
Balance at January 1	$	3.4		$	2.2		$	112.6		$	2.9		$	121.1
Provision for losses		(.8	)		(.8	)		16.3			(.6	)		14.1
Charge-offs								(16.0	)		(1.2	)		(17.2	)
Recoveries								4.3			1.3			5.6
Currency translation and other								1.0			.2			1.2
Balance at September 30	$	2.6		$	1.4		$	118.2		$	2.6		$	124.8

* Operating leases and other trade receivables.

Credit Quality

The Company’s customers are principally concentrated in the transportation industry in North America, Europe, Australia and Brasil. The Company’s portfolio assets are diversified over a large number of customers and dealers with no single customer or dealer balances representing over 5% of the total portfolio assets. The Company retains as collateral a security interest in the related equipment.

At the inception of each contract, the Company considers the credit risk based on a variety of credit quality factors including prior payment experience, customer financial information, credit-rating agency ratings, loan-to-value ratios and other internal metrics. On an ongoing basis, the Company monitors credit quality based on past due status and collection experience as there is a meaningful correlation between the past due status of customers and the risk of loss.

The Company has three credit quality indicators: performing, watch and at-risk. Performing accounts pay in accordance with the contractual terms and are not considered high-risk. Watch accounts include accounts 31 to 90 days past due and large accounts that are performing but are considered to be high‑risk. Watch accounts are not collateral dependent. At-risk accounts are generally collateral dependent, including accounts over 90 days past due and other accounts on non-accrual status.

- 15 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

The tables below summarize the amortized cost basis of the Company’s finance receivables within each credit quality indicator by year of origination and portfolio class and current period gross charge-offs of the Company’s finance receivables by year of origination and portfolio class.


	REVOLVING
At September 30, 2024	LOANS		2024		2023		2022		2021		2020		PRIOR		TOTAL
Amortized cost:
Dealer:
Wholesale:
Performing	$	4,960.7													$	4,960.7
Watch		12.4														12.4
At-risk		.4														.4
	$	4,973.5													$	4,973.5
Retail:
Performing	$	202.0	$	489.2	$	679.6	$	434.3	$	209.9	$	116.2	$	172.9	$	2,304.1
Watch				1.0		25.0		6.7		2.4		5.7		.7		41.5
	$	202.0	$	490.2	$	704.6	$	441.0	$	212.3	$	121.9	$	173.6	$	2,345.6
Total dealer	$	5,175.5	$	490.2	$	704.6	$	441.0	$	212.3	$	121.9	$	173.6	$	7,319.1

Customer retail:
Fleet:
Performing			$	3,526.3	$	3,509.3	$	1,921.9	$	829.7	$	389.1	$	107.8	$	10,284.1
Watch				19.1		41.0		14.1		9.4		3.0		.6		87.2
At-risk				19.7		118.0		83.1		45.0		7.5		3.4		276.7
			$	3,565.1	$	3,668.3	$	2,019.1	$	884.1	$	399.6	$	111.8	$	10,648.0
Owner/operator:
Performing			$	416.3	$	348.0	$	237.8	$	168.7	$	73.9	$	20.0	$	1,264.7
Watch				3.1		12.6		9.6		4.1		2.0		.3		31.7
At-risk				.1		2.0		2.5		1.4		1.4		.1		7.5
			$	419.5	$	362.6	$	249.9	$	174.2	$	77.3	$	20.4	$	1,303.9
Total customer retail			$	3,984.6	$	4,030.9	$	2,269.0	$	1,058.3	$	476.9	$	132.2	$	11,951.9

Total	$	5,175.5	$	4,474.8	$	4,735.5	$	2,710.0	$	1,270.6	$	598.8	$	305.8	$	19,271.0

	REVOLVING
At September 30, 2024	LOANS		2024		2023		2022		2021		2020		PRIOR		TOTAL
Gross charge-offs:
Customer retail:
Fleet			$	.9	$	10.6	$	8.9	$	5.2	$	2.4	$	5.2	$	33.2
Owner/operator				.2		1.3		2.2		.8		.7		.5		5.7
Total			$	1.1	$	11.9	$	11.1	$	6.0	$	3.1	$	5.7	$	38.9

- 16 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)


	REVOLVING
At December 31, 2023	LOANS		2023		2022		2021		2020		2019		PRIOR		TOTAL
Amortized cost:
Dealer:
Wholesale:
Performing	$	4,129.8													$	4,129.8
Watch		18.0														18.0
	$	4,147.8													$	4,147.8
Retail:
Performing	$	280.7	$	789.1	$	520.0	$	291.2	$	162.8	$	161.8	$	125.2	$	2,330.8
	$	280.7	$	789.1	$	520.0	$	291.2	$	162.8	$	161.8	$	125.2	$	2,330.8
Total dealer	$	4,428.5	$	789.1	$	520.0	$	291.2	$	162.8	$	161.8	$	125.2	$	6,478.6

Customer retail:
Fleet:
Performing			$	4,601.7	$	2,667.2	$	1,309.5	$	719.2	$	226.7	$	64.1	$	9,588.4
Watch				46.0		32.0		7.5		5.7		1.3		.9		93.4
At-risk				42.0		31.0		12.9		5.6		1.2		.1		92.8
			$	4,689.7	$	2,730.2	$	1,329.9	$	730.5	$	229.2	$	65.1	$	9,774.6
Owner/operator:
Performing			$	460.9	$	332.9	$	263.6	$	142.1	$	52.8	$	8.6	$	1,260.9
Watch				2.0		3.2		2.2		1.3		.3				9.0
At-risk				.6		1.3		1.1		1.5		.2		.4		5.1
			$	463.5	$	337.4	$	266.9	$	144.9	$	53.3	$	9.0	$	1,275.0
Total customer retail			$	5,153.2	$	3,067.6	$	1,596.8	$	875.4	$	282.5	$	74.1	$	11,049.6

Total	$	4,428.5	$	5,942.3	$	3,587.6	$	1,888.0	$	1,038.2	$	444.3	$	199.3	$	17,528.2

	REVOLVING
At December 31, 2023	LOANS		2023		2022		2021		2020		2019		PRIOR		TOTAL
Gross charge-offs:
Dealer:
Wholesale:	$	.2													$	.2
Total dealer	$	.2													$	.2

Customer retail:
Fleet:			$	1.0	$	9.4	$	5.1	$	4.2	$	4.2	$	.6	$	24.5
Owner/operator:				.5		1.1		1.5		.5				.3		3.9
Total customer retail			$	1.5	$	10.5	$	6.6	$	4.7	$	4.2	$	.9	$	28.4
Total	$	.2	$	1.5	$	10.5	$	6.6	$	4.7	$	4.2	$	.9	$	28.6

- 17 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

The tables below summarize the Company’s finance receivables by aging category. In determining past due status, the Company considers the entire contractual account balance past due when any installment is over 30 days past due. Substantially all customer accounts that were greater than 30 days past due prior to credit modification became current upon modification for aging purposes.


	DEALER				CUSTOMER RETAIL
							OWNER/
At September 30, 2024	WHOLESALE		RETAIL		FLEET		OPERATOR		TOTAL
Current and up to 30 days past due	$	4,967.6	$	2,345.6	$	10,501.2	$	1,281.5	$	19,095.9
31 – 60 days past due		5.4				49.3		13.9		68.6
Greater than 60 days past due		.5				97.5		8.5		106.5
	$	4,973.5	$	2,345.6	$	10,648.0	$	1,303.9	$	19,271.0


	DEALER				CUSTOMER RETAIL
							OWNER/
At December 31, 2023	WHOLESALE		RETAIL		FLEET		OPERATOR		TOTAL
Current and up to 30 days past due	$	4,131.7	$	2,330.8	$	9,656.4	$	1,262.4	$	17,381.3
31 – 60 days past due		15.0				61.0		8.5		84.5
Greater than 60 days past due		1.1				57.2		4.1		62.4
	$	4,147.8	$	2,330.8	$	9,774.6	$	1,275.0	$	17,528.2

The amortized cost basis of finance receivables that are on non-accrual status was as follows:


	DEALER			CUSTOMER RETAIL
						OWNER/
At September 30, 2024	WHOLESALE		RETAIL	FLEET		OPERATOR		TOTAL
Amortized cost basis with a specific reserve				$	269.0	$	6.2	$	275.2
Amortized cost basis with no specific reserve	$	.4			7.6		1.2		9.2
Total	$	.4		$	276.6	$	7.4	$	284.4


	DEALER		CUSTOMER RETAIL
					OWNER/
At December 31, 2023	WHOLESALE	RETAIL	FLEET		OPERATOR		TOTAL
Amortized cost basis with a specific reserve			$	69.8	$	4.3	$	74.1
Amortized cost basis with no specific reserve				22.8		.8		23.6
Total			$	92.6	$	5.1	$	97.7

Interest income recognized on a cash basis for finance receivables that are on non-accrual status was as follows:


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2024		2023		2024		2023
Customer retail:
Fleet	$	.5	$	.4	$	2.6	$	1.0
Owner/operator				.1		.2		.2
	$	.5	$	.5	$	2.8	$	1.2

- 18 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

Customers Experiencing Financial Difficulty

The Company modified $189.0 and $20.0 of finance receivables for customers experiencing financial difficulty during the first nine months of 2024 and 2023, respectively. The amortized cost basis of finance receivables for Other than insignificant term extensions and payment delays to customers in financial difficulty were as follows:


	Three Months Ended						Nine Months Ended
	September 30						September 30
	2024			2023			2024			2023
Customer retail:
Fleet	$	7.8		$	.6		$	106.4		$	7.2
Owner/operator								.4
	$	7.8		$	.6		$	106.8		$	7.2
Annualized % of total retail porfolio		.2	%	<.1		%		1.0	%		.1	%

The modifications granted customers additional time to pay. The financial effects of the term extensions added a weighted-average of 9 and 5 months to the life of the modified contracts for the three months ended September 30, 2024 and 2023, and 7 and 19 months for the nine months ended September 30, 2024 and 2023, respectively. The effect on the allowance for credit losses from such modifications was not significant for the three and nine months ended September 30, 2024 and 2023.

There were $.1 and $3.4 finance receivables modified with customers experiencing financial difficulty during the previous twelve months that had a payment default in the three and nine months ended September 30, 2024. There were no finance receivables modified with customers experiencing financial difficulty on or after January 1, 2023 that had a payment default in the three and nine months ended September 30, 2023.

Repossessions

When the Company determines a customer is not likely to meet its contractual commitments, the Company repossesses the vehicles which serve as collateral for the loans, finance leases and equipment under operating leases. The Company records the vehicles as used truck inventory included in Financial Services Other assets on the Consolidated Balance Sheets. The balance of repossessed inventory at September 30, 2024 and December 31, 2023 was $74.1 and $30.4, respectively.

Proceeds from the sales of repossessed assets were $56.5 and $17.7 for the nine months ended September 30, 2024 and 2023, respectively. These amounts are included in Proceeds from asset disposals in the Condensed Consolidated Statements of Cash Flows. Write-downs of repossessed equipment on operating leases are recorded as impairments and included in Financial Services Depreciation and other expenses on the Consolidated Statements of Comprehensive Income.

NOTE F - Product Support Liabilities

Product support liabilities include estimated future payments related to product warranties and deferred revenues on optional extended warranties and R&M contracts. The Company generally offers one year warranties covering most of its vehicles and related aftermarket parts. For vehicles equipped with engines manufactured by PACCAR, the Company generally offers two year warranties on the engine. Specific terms and conditions vary depending on the product and the country of sale. Optional extended warranty and R&M contracts can be purchased for periods which generally range up to five years. Warranty expenses and reserves are estimated and recorded at the time products or contracts are sold based on historical and current data and reasonable expectations for the future regarding the frequency and cost of warranty claims, net of recoveries. The Company periodically assesses the adequacy of its recorded liabilities and adjusts them as appropriate to reflect actual experience. Revenue from extended warranty and R&M contracts is deferred and recognized to income generally on a straight-line basis over the contract period. Warranty and R&M costs on these contracts are recognized as incurred.

- 19 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

Changes in product support liabilities are summarized as follows:


WARRANTY RESERVES	2024			2023
Balance at January 1	$	767.0		$	437.7
Cost accruals		462.2			484.1
Payments		(679.5	)		(459.9	)
Change in estimates for pre-existing warranties		103.6			186.1
Currency translation and other		2.7			(2.6	)
Balance at September 30	$	656.0		$	645.4


DEFERRED REVENUES ON EXTENDED WARRANTIES AND R&M CONTRACTS		2024			2023
Balance at January 1	$	1,229.1		$	904.9
Deferred revenues		535.0			583.5
Revenues recognized		(444.4	)		(339.7	)
Currency translation		10.1			(5.4	)
Balance at September 30	$	1,329.8		$	1,143.3

The Company expects to recognize approximately $105.6 of the remaining deferred revenue on extended warranties and R&M contracts in 2024, $425.3 in 2025, $341.7 in 2026, $247.1 in 2027, $148.7 in 2028 and $61.4 thereafter.

NOTE G - Stockholders’ Equity

Comprehensive Income

The components of comprehensive income are as follows:


	Three Months Ended						Nine Months Ended
	September 30						September 30
	2024			2023			2024			2023
Net income	$	972.1		$	1,228.5		$	3,290.0		$	3,183.5
Other comprehensive (loss) income (OCI):
Unrealized (losses) gains on derivative contracts		(9.7	)		38.6			27.9			(23.9	)
Tax effect		3.4			(8.8	)		(6.4	)		5.1
		(6.3	)		29.8			21.5			(18.8	)
Unrealized gains on marketable debt securities		35.7			2.5			35.8			6.2
Tax effect		(8.9	)		(.7	)		(8.9	)		(1.6	)
		26.8			1.8			26.9			4.6
Pension plans		2.0			1.4			12.3			4.7
Tax effect		.2			(.7	)		(2.4	)		(1.1	)
		2.2			.7			9.9			3.6
Foreign currency translation gains (losses)		117.1			(192.1	)		(169.8	)		26.4
Net other comprehensive income (loss)		139.8			(159.8	)		(111.5	)		15.8
Comprehensive income	$	1,111.9		$	1,068.7		$	3,178.5		$	3,199.3

- 20 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

Accumulated Other Comprehensive Income (Loss)

The components of AOCI and the changes in AOCI, net of tax, included in the Consolidated Balance Sheets and the Consolidated Statements of Stockholders’ Equity consisted of the following:


Three Months Ended September 30, 2024	DERIVATIVE CONTRACTS			MARKETABLE DEBT SECURITIES			PENSION PLANS			FOREIGN CURRENCY TRANSLATION			TOTAL
Balance at July 1, 2024	$	16.8		$	(13.8	)	$	(102.6	)	$	(845.6	)	$	(945.2	)
Recorded into AOCI		(43.1	)		27.5						117.1			101.5
Reclassified out of AOCI		36.8			(.7	)		2.2						38.3
Net other comprehensive (loss) income		(6.3	)		26.8			2.2			117.1			139.8
Balance at September 30, 2024	$	10.5		$	13.0		$	(100.4	)	$	(728.5	)	$	(805.4	)


Three Months Ended September 30, 2023	DERIVATIVE CONTRACTS			MARKETABLE DEBT SECURITIES			PENSION PLANS			FOREIGN CURRENCY TRANSLATION			TOTAL
Balance at July 1, 2023	$	(13.5	)	$	(40.8	)	$	(108.0	)	$	(615.5	)	$	(777.8	)
Recorded into AOCI		57.5			2.2			(.5	)		(192.1	)		(132.9	)
Reclassified out of AOCI		(27.7	)		(.4	)		1.2						(26.9	)
Net other comprehensive income (loss)		29.8			1.8			.7			(192.1	)		(159.8	)
Balance at September 30, 2023	$	16.3		$	(39.0	)	$	(107.3	)	$	(807.6	)	$	(937.6	)


Nine Months Ended September 30, 2024	DERIVATIVE CONTRACTS			MARKETABLE DEBT SECURITIES			PENSION PLANS			FOREIGN CURRENCY TRANSLATION			TOTAL
Balance at January 1, 2024	$	(11.0	)	$	(13.9	)	$	(110.3	)	$	(558.7	)	$	(693.9	)
Recorded into AOCI		53.2			28.9			4.9			(169.8	)		(82.8	)
Reclassified out of AOCI		(31.7	)		(2.0	)		5.0						(28.7	)
Net other comprehensive income (loss)		21.5			26.9			9.9			(169.8	)		(111.5	)
Balance at September 30, 2024	$	10.5		$	13.0		$	(100.4	)	$	(728.5	)	$	(805.4	)


Nine Months Ended September 30, 2023	DERIVATIVE CONTRACTS			MARKETABLE DEBT SECURITIES			PENSION PLANS			FOREIGN CURRENCY TRANSLATION			TOTAL
Balance at January 1, 2023	$	35.1		$	(43.6	)	$	(110.9	)	$	(834.0	)	$	(953.4	)
Recorded into AOCI		(55.8	)		6.7			.1			26.4			(22.6	)
Reclassified out of AOCI		37.0			(2.1	)		3.5						38.4
Net other comprehensive (loss) income		(18.8	)		4.6			3.6			26.4			15.8
Balance at September 30, 2023	$	16.3		$	(39.0	)	$	(107.3	)	$	(807.6	)	$	(937.6	)

- 21 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

Reclassifications out of AOCI were as follows:


		Three Months Ended
	LINE ITEM IN THE CONSOLIDATED STATEMENTS OF	September 30
AOCI COMPONENTS	COMPREHENSIVE INCOME		2024			2023
Unrealized losses (gains) on derivative contracts:
Truck, Parts and Other
Foreign-exchange contracts	Net sales and revenues	$	(11.4	)	$	13.2
	Cost of sales and revenues		(3.9	)		(9.6	)
	Interest and other (income) expenses, net		3.0			(.9	)

Commodity contracts	Cost of sales and revenues		3.7			4.2
Financial Services
Foreign-exchange contracts	Interest and other borrowing expenses		4.6			(1.6	)
Interest-rate contracts	Interest and other borrowing expenses		54.4			(42.1	)
	Pre-tax expense increase (reduction)		50.4			(36.8	)
	Tax (benefit) expense		(13.6	)		9.1
	After-tax expense increase (reduction)		36.8			(27.7	)
Unrealized gains on marketable debt securities:
Marketable debt securities	Investment income		(.9	)		(.5	)
	Tax expense		.2			.1
	After-tax income increase		(.7	)		(.4	)
Pension plans:
Truck, Parts and Other
Actuarial loss	Interest and other (income) expenses, net		2.5			1.2
Prior service costs	Interest and other (income) expenses, net		.3			.3
	Pre-tax expense increase		2.8			1.5
	Tax benefit		(.6	)		(.3	)
	After-tax expense increase		2.2			1.2
Total reclassifications out of AOCI		$	38.3		$	(26.9	)

- 22 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)


		Nine Months Ended
	LINE ITEM IN THE CONSOLIDATED STATEMENTS OF	September 30
AOCI COMPONENTS	COMPREHENSIVE INCOME		2024			2023
Unrealized losses (gains) on derivative contracts:
Truck, Parts and Other
Foreign-exchange contracts	Net sales and revenues	$	(2.2	)	$	25.2
	Cost of sales and revenues		(28.8	)		1.8
	Interest and other (income) expenses, net		1.6			(.9	)

Commodity contracts	Cost of sales and revenues		9.6			1.8
Financial Services
Foreign-exchange contracts	Interest and other borrowing expenses		(.5	)		(3.6	)
Interest-rate contracts	Interest and other borrowing expenses		(12.5	)		17.9
	Pre-tax expense (reduction) increase		(32.8	)		42.2
	Tax expense (benefit)		1.1			(5.2	)
	After-tax expense (reduction) increase		(31.7	)		37.0
Unrealized gains on marketable debt securities:
Marketable debt securities	Investment income		(2.6	)		(2.8	)
	Tax expense		.6			.7
	After-tax income increase		(2.0	)		(2.1	)
Pension plans:
Truck, Parts and Other
Actuarial loss	Interest and other (income) expenses, net		5.3			3.6
Prior service costs	Interest and other (income) expenses, net		1.0			1.0
	Pre-tax expense increase		6.3			4.6
	Tax benefit		(1.3	)		(1.1	)
	After-tax expense increase		5.0			3.5
Total reclassifications out of AOCI		$	(28.7	)	$	38.4

Stock Compensation Plans

Stock-based compensation expense was $3.4 and $19.5 for the three and nine months ended September 30, 2024, respectively, and $2.5 and $18.4 for the three and nine months ended September 30, 2023, respectively.

During the first nine months of 2024, the Company issued 1,060,285 common shares under deferred and stock compensation arrangements.

Other Capital Stock Changes

During the first nine months of 2024, the Company acquired no treasury shares under the Company’s common stock repurchase plans. The Company acquired 44,808 shares under the Company’s Long-Term Incentive Plan. Stock repurchases of $390.0 million remain authorized under the current $500.0 million program approved by the PACCAR Board of Directors on December 4, 2018.

NOTE H - Income Taxes

The effective tax rate for the third quarter of 2024 was 22.6% compared to 22.7% for the third quarter of 2023. The effective tax rate for the first nine months of 2024 was 22.6% compared to 21.9% for the first nine months of 2023. Included in the first quarter of 2023 was the EC-related charge of $600.0 million, which lowered the effective tax rate.

- 23 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

NOTE I - Segment Information

PACCAR operates in three principal segments: Truck, Parts and Financial Services. The Company evaluates the performance of its Truck and Parts segments based on operating profits, which excludes investment income, other income and expense and income taxes. The Financial Services segment’s performance is evaluated based on income before income taxes. The accounting policies of the reportable segments are the same as those applied in the consolidated financial statements as described in Note A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Truck and Parts

The Truck segment includes the design and manufacture of high-quality, light-, medium- and heavy-duty commercial trucks and the Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles, both of which are sold through the same network of independent dealers. These segments derive a large proportion of their revenues and operating profits from operations in North America and Europe. The Truck segment incurs substantial costs to design, manufacture and sell trucks to its customers. The sale of new trucks provides the Parts segment with the basis for parts sales that may continue over the life of the truck, but are generally concentrated in the first five years after truck delivery. To reflect the benefit the Parts segment receives from costs incurred by the Truck segment, certain expenses are allocated from the Truck segment to the Parts segment. The expenses allocated are based on a percentage of the average annual expenses for factory overhead, engineering, research and development and SG&A expenses for the preceding five years. The allocation is based on the ratio of the average parts direct margin dollars (net sales less material and labor costs) to the total truck and parts direct margin dollars for the previous five years. The Company believes such expenses have been allocated on a reasonable basis. Truck segment assets related to the indirect expense allocation are not allocated to the Parts segment.

Financial Services

The Financial Services segment derives its earnings primarily from financing or leasing of PACCAR products and services provided to truck customers and dealers. Revenues are primarily generated from operations in North America and Europe.

In Europe, the marketing of used trucks, including those units sold by the Truck segment subject to an RVG, is performed by the Financial Services segment. When a customer returns the truck at the end of the RVG contract, the Company’s Truck segment records a reduction in an RVG liability and the Company’s Financial Services segment records a used truck asset and revenue from the subsequent sale. Certain gains and losses from the sale of these used trucks are shared with the Truck segment.

- 24 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

Other

Included in Other is the Company’s industrial winch manufacturing business as well as sales, income and expenses not attributable to a reportable segment. Other also includes non-service cost components of pension expense and a portion of corporate expense.


	Three Months Ended						Nine Months Ended
	September 30						September 30
		2024			2023			2024			2023
Net Sales and revenues:
Truck	$	6,110.8		$	6,772.8		$	19,464.0		$	20,274.5
Less intersegment		(83.8	)		(136.4	)		(318.2	)		(396.8	)
External customers		6,027.0			6,636.4			19,145.8			19,877.7
Parts		1,675.8			1,599.4			5,056.2			4,858.9
Less intersegment		(18.2	)		(17.2	)		(58.4	)		(54.8	)
External customers		1,657.6			1,582.2			4,997.8			4,804.1
Other		19.2			13.7			57.5			41.9
		7,703.8			8,232.3			24,201.1			24,723.7
Financial Services		536.1			464.1			1,555.2			1,327.1
	$	8,239.9		$	8,696.4		$	25,756.3		$	26,050.8
Income (loss) before income taxes:
Truck	$	630.8		$	960.9		$	2,349.7		$	2,803.5
Parts		406.7			412.3			1,276.3			1,270.2
Other*		3.6			1.6			4.0			(616.6	)
		1,041.1			1,374.8			3,630.0			3,457.1
Financial Services		106.5			133.8			331.6			427.3
Investment income		108.7			80.8			290.0			192.5
	$	1,256.3		$	1,589.4		$	4,251.6		$	4,076.9
Depreciation and amortization:
Truck	$	90.7		$	102.1		$	283.7		$	301.1
Parts		2.2			3.6			10.9			10.9
Other		6.1			6.4			18.6			18.7
		99.0			112.1			313.2			330.7
Financial Services		127.8			121.8			380.5			347.7
	$	226.8		$	233.9		$	693.7		$	678.4

* In the first nine months of 2023, Other includes a $600.0 million non-recurring charge related to civil litigation in Europe (EC-related claims) which is discussed in Note M.

- 25 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

NOTE J - Derivative Financial Instruments

As part of its risk management strategy, the Company enters into derivative contracts to hedge against the risks of interest rates, foreign currency rates and commodity prices. Certain derivative instruments designated as fair value hedges, cash flow hedges or net investment hedges are subject to hedge accounting. Derivative instruments that are not subject to hedge accounting are held as derivatives not designated as hedged instruments. The Company’s policies prohibit the use of derivatives for speculation or trading. At the inception of each hedge relationship, the Company documents its risk management objectives, procedures and accounting treatment. All of the Company’s interest-rate, commodity as well as certain foreign-exchange contracts are transacted under International Swaps and Derivatives Association (ISDA) master agreements. Each agreement permits the net settlement of amounts owed in the event of default and certain other termination events. For derivative financial instruments, the Company has elected not to offset derivative positions in the balance sheet with the same counterparty under the same agreements and is not required to post or receive collateral.

Exposure limits and minimum credit ratings are used to minimize the risks of counterparty default. The Company’s maximum exposure to potential default of its derivative counterparties is limited to the asset position of its derivative portfolio. The asset position of the Company’s derivative portfolio was $63.6 at September 30, 2024.

The Company assesses hedges at inception and on an ongoing basis to determine the designated derivatives are highly effective in offsetting changes in fair values or cash flow of the hedged items. Hedge accounting is discontinued prospectively when the Company determines a derivative financial instrument has ceased to be a highly effective hedge. Cash flows from derivative instruments are included in Operating activities in the Condensed Consolidated Statements of Cash Flows.

Interest-Rate Contracts: The Company enters into various interest-rate contracts, including interest-rate swaps and cross currency interest-rate swaps. Interest-rate swaps involve the exchange of fixed for floating rate or floating for fixed rate interest payments based on the contractual notional amounts in a single currency. Cross currency interest-rate swaps involve the exchange of notional amounts and interest payments in different currencies. The Company is exposed to interest-rate and exchange-rate risk caused by market volatility as a result of its borrowing activities. The objective of these contracts is to mitigate the fluctuations on earnings, cash flows and fair value of borrowings. Net amounts paid or received are reflected as adjustments to interest expense.

At September 30, 2024, the notional amount of the Company’s interest-rate contracts was $3,306.8. Notional maturities for all interest-rate contracts are $127.1 for the remainder of 2024, $1,026.7 for 2025, $764.4 for 2026, $610.7 for 2027, $193.8 for 2028, $584.1 for 2029 and thereafter.

Foreign-Exchange Contracts: The Company enters into foreign-exchange contracts to hedge certain anticipated transactions and assets and liabilities denominated in foreign currencies, particularly the Canadian dollar, the euro, the British pound, the Australian dollar, the Brazilian real and the Mexican peso. The objective is to reduce fluctuations in earnings and cash flows associated with changes in foreign currency exchange rates. The Company enters into foreign-exchange contracts as net investment hedges to reduce the foreign currency exposure from its investments in foreign subsidiaries. At September 30, 2024, the notional amount of the outstanding foreign-exchange contracts was $2,052.1. Foreign-exchange contracts typically mature within one year.

Commodity Contracts: The Company enters into commodity forward contracts to hedge the prices of certain commodities used in the production of trucks. The objective is to reduce the fluctuation in earnings and cash flows associated with adverse movement in commodity prices. At September 30, 2024, the notional amount of the outstanding commodity contracts was $6.6. Commodity contracts mature within one year.

- 26 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

The following table presents the balance sheet classification, fair value, gross and pro forma net amounts of derivative financial instruments:


	September 30, 2024						December 31, 2023
	ASSETS			LIABILITIES			ASSETS			LIABILITIES
Derivatives designated under hedge accounting:
Interest-rate contracts:
Financial Services:
Other assets	$	46.2					$	17.3
Deferred taxes and other liabilities				$	92.9					$	131.1
Foreign-exchange contracts:
Truck, Parts and Other:
Other current assets		17.1						1.5
Accounts payable, accrued expenses and other					20.8						21.1
Financial Services:
Deferred taxes and other liabilities					2.6						3.6
Commodity contracts:
Truck, Parts and Other:
Other current assets								1.2
Accounts payable, accrued expenses and other					.7						.8
	$	63.3		$	117.0		$	20.0		$	156.6
Derivatives not designated as hedging instruments:
Foreign-exchange contracts:
Truck, Parts and Other:
Other current assets	$	.3					$	1.0
Accounts payable, accrued expenses and other				$	.3					$	3.4
Financial Services:
Deferred taxes and other liabilities											.1
	$	.3		$	.3		$	1.0		$	3.5
Gross amounts recognized in Balance Sheets	$	63.6		$	117.3		$	21.0		$	160.1
Less amounts not offset in financial instruments:
Truck, Parts and Other:
Foreign-exchange contracts	$	(.2	)	$	(.2	)	$	(1.6	)	$	(1.6	)
Commodity contracts								(.7	)		(.7	)
Financial Services:
Interest-rate contracts		(13.8	)		(13.8	)		(11.9	)		(11.9	)
Pro forma net amount	$	49.6		$	103.3		$	6.8		$	145.9

- 27 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

The following table presents the amount of loss (gain) from derivative financial instruments recorded in the Consolidated Statements of Comprehensive Income:


	Three Months Ended					Nine Months Ended
	September 30, 2024					September 30, 2024
	INTEREST-		FOREIGN-			INTEREST-			FOREIGN-
	RATE		EXCHANGE			RATE			EXCHANGE
Truck, Parts and Other:
Net sales and revenues
Cash flow hedges			$	(11.4	)				$	(2.2	)
Cost of sales and revenues
Cash flow hedges				(3.9	)					(28.8	)
Derivatives not designated as hedging instruments				(.3	)					(.1	)
Interest and other (income) expenses, net
Cash flow hedges				4.2						6.7
Net investment hedges				(2.1	)					(7.7	)
Derivatives not designated as hedging instruments				(2.4	)					(9.9	)
			$	(15.9	)				$	(42.0	)
Financial Services:
Interest and other borrowing expenses
Cash flow hedges	$	54.4	$	4.0		$	(12.5	)	$	(1.0	)
Fair value hedges		2.1					7.2
Derivatives not designated as hedging instruments				6.7						8.9
	$	56.5	$	10.7		$	(5.3	)	$	7.9
Total	$	56.5	$	(5.2	)	$	(5.3	)	$	(34.1	)


	Three Months Ended						Nine Months Ended
	September 30, 2023						September 30, 2023
	INTEREST-			FOREIGN-			INTEREST-		FOREIGN-
	RATE			EXCHANGE			RATE		EXCHANGE
Truck, Parts and Other:
Net sales and revenues
Cash flow hedges				$	13.2				$	25.2
Cost of sales and revenues
Cash flow hedges					(9.6	)				1.8
Derivatives not designated as hedging instruments					.3					(3.7	)
Interest and other (income) expenses, net
Cash flow hedges					3.3					9.5
Net investment hedges					(2.0	)				(6.7	)
Derivatives not designated as hedging instruments					(.4	)				4.5
				$	4.8				$	30.6
Financial Services:
Interest and other borrowing expenses
Cash flow hedges	$	(42.1	)	$	(.8	)	$	17.9	$	(.3	)
Fair value hedges		2.7						7.0
Derivatives not designated as hedging instruments					.7					.6
	$	(39.4	)	$	(.1	)	$	24.9	$	.3
Total	$	(39.4	)	$	4.7		$	24.9	$	30.9

The loss from commodity contracts recorded in Cost of sales and revenues was $3.7 and $9.6 for the three and nine months ended September 30, 2024, respectively and $4.2 and $1.8 for the three and nine months ended September 30, 2023, respectively.

- 28 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

Fair Value Hedges

Changes in the fair value of derivatives designated as fair value hedges are recorded in earnings together with the changes in fair value of the hedged item attributable to the risk being hedged. The following table presents the amounts recorded on the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges:


	September 30			December 31
	2024			2023
Financial Services
Term notes:
Carrying amount of the hedged liabilities	$	497.3		$	128.1
Cumulative basis adjustment included in the carrying amount		(11.6	)		7.1

The above table excludes the cumulative basis adjustments on discontinued hedge relationships of $5.0 and $12.2 as of September 30, 2024 and December 31, 2023, respectively.

Cash Flow Hedges

Substantially all of the Company’s interest-rate contracts and some foreign-exchange contracts have been designated as cash flow hedges. Changes in the fair value of derivatives designated as cash flow hedges are recorded in AOCI. Amounts in AOCI are reclassified into net income in the same period in which the hedged transaction affects earnings. The Company elected to exclude the forward premium component (excluded component) on some foreign-exchange cash flow hedges and amortize the excluded component over the life of the derivative instruments. The amortization of the excluded component is recognized in Interest and other (income) expenses, net in Truck, Parts and Other segment and Interest and other borrowing expenses in Financial Services segment in the Consolidated Statements of Comprehensive Income. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows is 8.2 years.

The following table presents the pre-tax effects of (loss) gain on cash flow hedges recognized in other comprehensive income (loss) (OCI):


	Three Months Ended									Nine Months Ended
	September 30, 2024									September 30, 2024
	INTEREST-			FOREIGN-						INTEREST-			FOREIGN-
	RATE			EXCHANGE			COMMODITY			RATE			EXCHANGE			COMMODITY
(Loss) gain recognized in OCI:
Truck, Parts and Other				$	.1		$	(.6	)				$	47.1		$	(13.6	)
Financial Services	$	(54.9	)		(4.6	)				$	26.7			.5
	$	(54.9	)	$	(4.5	)	$	(.6	)	$	26.7		$	47.6		$	(13.6	)


	Three Months Ended									Nine Months Ended
	September 30, 2023									September 30, 2023
	INTEREST-			FOREIGN-						INTEREST-			FOREIGN-
	RATE			EXCHANGE			COMMODITY			RATE			EXCHANGE			COMMODITY
Gain (loss) recognized in OCI:
Truck, Parts and Other				$	33.7		$	(4.8	)				$	(33.5	)	$	(2.9	)
Financial Services	$	44.9			1.6					$	(33.0	)		3.2
	$	44.9		$	35.3		$	(4.8	)	$	(33.0	)	$	(30.3	)	$	(2.9	)

The amount of loss recorded in AOCI at September 30, 2024 that is estimated to be reclassified into earnings in the following 12 months if interest rates and exchange rates remain unchanged is approximately $2.0, net of taxes. The fixed interest earned on finance receivables will offset the amount recognized in interest expense, resulting in a stable interest margin consistent with the Company’s risk management strategy.

- 29 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

The amount of (loss) gain reclassified out of AOCI into net income based on the probability that the original forecasted transactions would not occur was nil and $(2.8) for the three and nine months ended September 30, 2024, respectively, and nil and $.2 for the same periods ended September 30, 2023.

Net Investment Hedges

Changes in the fair value of derivatives designated as net investment hedges are recorded in AOCI as an adjustment to the Cumulative Translation Adjustment (CTA). At September 30, 2024, the notional amount of the outstanding net investment hedges was $553.8. For the three and nine months ended September 30, 2024, the pre-tax (loss) gain recognized in OCI for the net investment hedges was $(18.2) and $(5.7), respectively, and $13.9 and $10.5 for the same periods ending September 30, 2023.

NOTE K - Fair Value Measurements

Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs to valuation techniques used to measure fair value are either observable or unobservable. These inputs have been categorized into the fair value hierarchy described below.

Level 1 – Valuations are based on quoted prices that the Company has the ability to obtain in actively traded markets for identical assets or liabilities. Since valuations are based on quoted prices that are readily and regularly available in an active market or exchange traded market, valuation of these instruments does not require a significant degree of judgment.

Level 2 – Valuations are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 – Valuations are based on model-based techniques for which some or all of the assumptions are obtained from indirect market information that is significant to the overall fair value measurement and which require a significant degree of management judgment.

The Company uses the following methods and assumptions to measure fair value for assets and liabilities subject to recurring fair value measurements.

Marketable Debt Securities: The Company’s marketable debt securities consist of municipal bonds, government obligations, investment-grade corporate obligations, commercial paper, asset-backed securities and term deposits. The fair value of U.S. government obligations is determined using the market approach and is based on quoted prices in active markets and are categorized as Level 1.

The fair value of non-U.S. government bonds, municipal bonds, corporate bonds, asset-backed securities, commercial paper and term deposits is determined using the market approach and is primarily based on matrix pricing as a practical expedient which does not rely exclusively on quoted prices for a specific security. Significant inputs used to determine fair value include interest rates, yield curves, credit rating of the security and other observable market information and are categorized as Level 2.

Marketable Equity Securities: The Company’s equity securities are traded on active exchanges and are classified as Level 1.

Derivative Financial Instruments: The Company’s derivative contracts consist of interest-rate swaps, cross currency swaps, foreign currency exchange and commodity contracts. These derivative contracts are traded over the counter, and their fair value is determined using industry standard valuation models, which are based on the income approach (i.e., discounted cash flows). The significant observable inputs into the valuation models include interest rates, yield curves, currency exchange rates, credit default swap spreads, forward rates and commodity prices and are categorized as Level 2.

- 30 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

Assets and Liabilities Subject to Recurring Fair Value Measurement

The Company’s assets and liabilities subject to recurring fair value measurements are either Level 1 or Level 2 as follows:


At September 30, 2024	LEVEL 1		LEVEL 2		TOTAL
Assets:
Marketable debt securities
U.S. tax-exempt securities			$	305.5	$	305.5
U.S. taxable municipal / non-U.S. provincial bonds				322.2		322.2
U.S. corporate securities				752.0		752.0
U.S. government securities	$	215.3				215.3
Non-U.S. corporate securities				621.8		621.8
Non-U.S. government securities				170.2		170.2
Other debt securities				117.8		117.8
Total marketable debt securities	$	215.3	$	2,289.5	$	2,504.8
Marketable equity securities	$	5.9			$	5.9
Total marketable securities	$	221.2	$	2,289.5	$	2,510.7
Derivatives
Cross currency swaps			$	27.6	$	27.6
Interest-rate swaps				18.6		18.6
Foreign-exchange contracts				17.4		17.4
Commodity contracts
Total derivative assets			$	63.6	$	63.6
Liabilities:
Derivatives
Cross currency swaps			$	83.6	$	83.6
Interest-rate swaps				9.3		9.3
Foreign-exchange contracts				23.7		23.7
Commodity contracts				.7		.7
Total derivative liabilities			$	117.3	$	117.3

- 31 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)


At December 31, 2023	LEVEL 1		LEVEL 2		TOTAL
Assets:
Marketable debt securities
U.S. tax-exempt securities			$	310.7	$	310.7
U.S. taxable municipal / non-U.S. provincial bonds				240.1		240.1
U.S. corporate securities				353.3		353.3
U.S. government securities	$	158.1				158.1
Non-U.S. corporate securities				524.2		524.2
Non-U.S. government securities				141.2		141.2
Other debt securities				90.6		90.6
Total marketable debt securities	$	158.1	$	1,660.1	$	1,818.2
Marketable equity securities	$	4.4			$	4.4
Total marketable securities	$	162.5	$	1,660.1	$	1,822.6
Derivatives
Cross currency swaps			$	13.2	$	13.2
Interest-rate swaps				4.1		4.1
Foreign-exchange contracts				2.5		2.5
Commodity contracts				1.2		1.2
Total derivative assets			$	21.0	$	21.0
Liabilities:
Derivatives
Cross currency swaps			$	116.6	$	116.6
Interest-rate swaps				14.5		14.5
Foreign-exchange contracts				28.2		28.2
Commodity contracts				.8		.8
Total derivative liabilities			$	160.1	$	160.1

Fair Value Disclosure of Other Financial Instruments

For financial instruments that are not recognized at fair value, the Company uses the following methods and assumptions to determine the fair value. These instruments are categorized as Level 2, except cash which is categorized as Level 1 and fixed rate loans which are categorized as Level 3.

Cash and Cash Equivalents: Carrying amounts approximate fair value.

Financial Services Net Receivables: For floating-rate loans, floating-rate wholesale financing and operating lease and other trade receivables, carrying values approximate fair values. For fixed rate loans, fair values are estimated using the income approach by discounting cash flows to their present value based on assumptions regarding the credit and market risks to approximate current rates for comparable loans. Finance lease receivables and related allowance for credit losses have been excluded from the accompanying table.

Debt: The carrying amounts of Financial Services commercial paper, variable rate bank loans and variable rate term notes approximate fair value. For fixed rate debt, fair values are estimated using the income approach by discounting cash flows to their present value based on current rates for comparable debt.

The Company’s estimate of fair value for fixed rate loans and debt that are not carried at fair value was as follows:


	September 30, 2024				December 31, 2023
	CARRYING		FAIR		CARRYING		FAIR
	AMOUNT		VALUE		AMOUNT		VALUE
Assets:
Financial Services fixed rate loans	$	8,879.9	$	9,034.5	$	8,126.8	$	8,214.4
Liabilities:
Financial Services fixed rate debt		10,036.4		10,119.8		8,720.3		8,693.7

- 32 -


Notes to Consolidated Financial Statements (Unaudited)	(Millions, Except Share Amounts)

NOTE L - Employee Benefit Plans

The Company has several defined benefit pension plans, which cover a majority of its employees. The following information details the components of net pension expense (income) for the Company’s defined benefit plans:


	Three Months Ended						Nine Months Ended
	September 30						September 30
	2024			2023			2024			2023
Service cost	$	25.3		$	23.5		$	80.7		$	70.4
Interest on projected benefit obligation		34.4			32.0			101.4			95.7
Expected return on assets		(60.8	)		(57.8	)		(181.9	)		(172.9	)
Amortization of prior service costs		.3			.3			1.0			1.0
Recognized actuarial loss		2.5			1.3			5.3			3.7
Net pension expense (income)	$	1.7		$	(.7	)	$	6.5		$	(2.1	)

The components of net pension expense other than service cost are included in Interest and other (income) expenses, net on the Consolidated Statements of Comprehensive Income.

During the three and nine months ended September 30, 2024, the Company contributed $2.5 and $34.7 to its pension plans, respectively, and $5.6 and $17.1 for the three and nine months ended September 30, 2023, respectively.

NOTE M – Commitments and Contingencies

On July 19, 2016, the European Commission (EC) concluded its investigation of all major European truck manufacturers and reached a settlement with DAF Trucks N.V., DAF Trucks Deutschland GmbH and PACCAR Inc (collectively “the Company”). Following the settlement, certain EC-related claims and lawsuits have been filed in various jurisdictions primarily in Europe against all major European truck manufacturers including the Company and certain subsidiaries. These claims and lawsuits include a number of collective proceedings, including class actions in the United Kingdom (U.K.) and Israel, alleging EC-related claims and seeking monetary damages. In certain jurisdictions, additional claimants may bring EC-related claims and lawsuits against the Company or its subsidiaries.

The legal proceedings are moving through the court systems. Several European courts have issued judgments; some have been favorable while others have been unfavorable and are being appealed. In the U.K., one class action has been certified by the lower court and the proceeding remains in its preliminary stages. The Company believes it has meritorious defenses to all of the pending legal claims. Since early 2023, the Company has been settling with selected claimants. In the first quarter 2023, the Company recorded a non-recurring pre-tax charge of $600.0 ($446.4 after-tax) for the estimable total cost. The estimate may be adjusted as the legal process continues and settlements occur, which could have a material impact on the Company’s financial results.

PACCAR is also a defendant in various other legal proceedings and, in addition, there are various other contingent liabilities arising in the normal course of business. After consultation with legal counsel, management does not anticipate that disposition of these various other proceedings and contingent liabilities will have a material effect on the consolidated financial statements.

- 33 -

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW:

PACCAR is a global technology company whose Truck segment includes the design and manufacture of high-quality light-, medium- and heavy-duty commercial trucks. In North America, trucks are sold under the Kenworth and Peterbilt nameplates, in Europe, under the DAF nameplate and in Australia and South America, under the Kenworth and DAF nameplates. The Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles. The Company’s Financial Services segment derives its earnings primarily from financing or leasing PACCAR products in North America, Europe, Australia and South America. The Company’s Other business includes the manufacturing and marketing of industrial winches.

Third Quarter Financial Highlights:

•

Worldwide net sales and revenues were $8.24 billion in 2024 compared to $8.70 billion in 2023, primarily due to lower truck revenues, partially offset by higher parts and financial services revenues.

•

Truck revenues were $6.03 billion in 2024 compared to $6.64 billion in 2023, from lower revenues in Europe and the U.S. and Canada.

•

Parts sales were $1.66 billion in 2024 compared to $1.58 billion in 2023, reflecting higher sales in all markets.

•

Financial Services revenues were $536.1 million in 2024 compared to $464.1 million in 2023, primarily due to higher interest income driven by portfolio growth and higher portfolio yields.

•

Net income was $972.1 million ($1.85 per diluted share) in 2024 compared to $1.23 billion ($2.34 per diluted share) in 2023.

•

Capital investments were $183.8 million in 2024 compared to $174.5 million in 2023.

•

Research and development (R&D) expenses were $115.0 million in 2024 compared to $103.5 million in 2023.

First Nine Months Financial Highlights:

•

Worldwide net sales and revenues were $25.76 billion in 2024 compared to $26.05 billion in 2023, primarily due to lower truck revenues, partially offset by higher parts and financial services revenues.

•

Truck revenues were $19.15 billion in 2024, compared to $19.88 billion in 2023, from lower revenues in Europe mostly offset by all other markets.

•

Parts sales were $5.00 billion in 2024 compared to $4.80 billion in 2023, reflecting higher sales in all markets.

•

Financial Services revenues were $1.56 billion in 2024 compared to $1.33 billion in 2023, primarily due to higher interest income driven by portfolio growth and higher portfolio yields.

•

Net income was $3.29 billion ($6.25 per diluted share) in 2024 compared to $3.18 billion ($6.07 per diluted share) in 2023. In 2023, adjusted net income (non-GAAP), excluding a $446.4 million after-tax non-recurring charge related to civil litigation in Europe was $3.63 billion ($6.92 per diluted share). See Reconciliation of GAAP to Non-GAAP Financial Measures on page 50.

•

Capital investments were $567.7 million in 2024 compared to $486.5 million in 2023.

•

Research and development (R&D) expenses were $337.6 million in 2024 compared to $302.0 million in 2023.

PACCAR Parts opened its new 240,000 square-foot Parts Distribution Center (PDC) in Massbach, Germany. This PDC expedites parts delivery to dealers and customers in the region. PACCAR’s 20 PDCs support more than 2,000 DAF, Kenworth and Peterbilt dealer sales, parts and service locations, and over 300 TRP stores.

The PACCAR Financial Services (PFS) group of companies has operations covering four continents and 26 countries. The global breadth of PFS and its rigorous credit application process support a portfolio of loans and leases with total assets of $22.48 billion. PFS issued $3.25 billion in medium-term notes during the first nine months of 2024 to support new business volume and repay maturing debt.

- 34 -

Truck Outlook

Truck industry heavy-duty retail sales in the U.S. and Canada in 2024 are expected to be 250,000 to 270,000 units compared to 297,000 in 2023. Estimates for the U.S. and Canada truck industry heavy-duty retail sales in 2025 are in the range of 250,000 to 280,000 units. In Europe, 2024 truck industry registrations for over 16-tonne vehicles are expected to be 290,000 to 310,000 units compared to 343,300 in 2023. The European truck registrations in the above 16-tonne truck market for 2025 are projected to be in a range of 270,000 to 300,000 units. In South America, heavy-duty truck industry registrations in 2024 are projected to be 110,000 to 120,000 units compared to 105,000 in 2023, and in a similar range for 2025.

Parts Outlook

In 2024, PACCAR Parts sales are expected to increase 3-5% compared to 2023, reflecting stable demand. In 2025, PACCAR Parts sales could increase 3-5% from 2024 levels, depending on the economic conditions.

Financial Services Outlook

In 2024, average earning assets are expected to increase 8-11% compared to 2023. The used truck market has normalized in North America, but remains soft in Europe, which is reflected in PFS’ quarterly results this year. If freight transportation conditions decline due to a weaker economy, then past due accounts, truck repossessions and credit losses would likely increase from the current levels and new business volume would likely decline. In 2025, average earning assets are expected to be comparable to 2024.

Capital Investments and R&D Outlook

PACCAR’s excellent long-term profits, strong balance sheet and consistent focus on quality have enabled the Company to invest $8.4 billion in new and expanded facilities, innovative products and new technologies during the past decade. Capital investments in 2024 are expected to be $760 to $800 million and R&D is expected to be $450 to $470 million. In 2025, capital investments are projected to be $700 to $800 million and R&D is expected to be $480 to $530 million. PACCAR is investing in additional global engine manufacturing capacity, and in the construction of a new engine remanufacturing facility that will be located in Columbus, Mississippi. Truck factory investments include the expansion at Kenworth Chillicothe, Ohio, PACCAR Mexico, and the DAF electric truck assembly plant in Eindhoven, Netherlands. The Company expects to invest $600 to $900 million in its battery joint venture, Amplify Cell Technologies, over the next few years.

See the Forward-Looking Statements section of Management’s Discussion and Analysis for factors that may affect these outlooks.

- 35 -

RESULTS OF OPERATIONS:

The Company’s results of operations for the three and nine months ended September 30, 2024 and 2023 are presented below.


	Three Months Ended						Nine Months Ended
	September 30						September 30
($ in millions, except per share amounts)	2024			2023			2024			2023
Net sales and revenues:
Truck	$	6,027.0		$	6,636.4		$	19,145.8		$	19,877.7
Parts		1,657.6			1,582.2			4,997.8			4,804.1
Other		19.2			13.7			57.5			41.9
Truck, Parts and Other		7,703.8			8,232.3			24,201.1			24,723.7
Financial Services		536.1			464.1			1,555.2			1,327.1
	$	8,239.9		$	8,696.4		$	25,756.3		$	26,050.8
Income before income taxes:
Truck	$	630.8		$	960.9		$	2,349.7		$	2,803.5
Parts		406.7			412.3			1,276.3			1,270.2
Other*		3.6			1.6			4.0			(616.6	)
Truck, Parts and Other		1,041.1			1,374.8			3,630.0			3,457.1
Financial Services		106.5			133.8			331.6			427.3
Investment income		108.7			80.8			290.0			192.5
Income taxes		(284.2	)		(360.9	)		(961.6	)		(893.4	)
Net income	$	972.1		$	1,228.5		$	3,290.0		$	3,183.5
Diluted earnings per share	$	1.85		$	2.34		$	6.25		$	6.07
After-tax return on revenues		11.8	%		14.1	%		12.8	%		12.2	%

* In 2023, Other includes a $600.0 million non-recurring charge related to civil litigation in Europe (EC-related claims) in the first quarter 2023.

The following provides an analysis of the results of operations for the Company’s three reportable segments - Truck, Parts and Financial Services. Where possible, the Company has quantified the impact of factors identified in the following discussion and analysis. In cases where it is not possible to quantify the impact of factors, the Company lists them in estimated order of importance. Factors for which the Company is unable to specifically quantify the impact include market demand, fuel prices, freight tonnage and economic conditions affecting the Company’s results of operations.

2024 Compared to 2023:

Truck

The Company’s Truck segment accounted for 73% of revenues in the third quarter and 74% for first nine months of 2024, respectively, compared to 76% in both the third quarter and first nine months of 2023.

The Company’s new truck deliveries are summarized below:


	Three Months Ended						Nine Months Ended
	September 30						September 30
		2024	2023	% CHANGE				2024	2023	% CHANGE
U.S. and Canada		25,900	27,500		(6	)		84,100	81,000		4
Europe		10,000	14,500		(31	)		33,100	48,300		(31	)
Mexico, South America, Australia and other		9,000	8,100		11			24,200	23,800		2
Total units		44,900	50,100		(10	)		141,400	153,100		(8	)

Worldwide new truck deliveries decreased in the third quarter and first nine months of 2024 compared to the same periods of 2023, primarily due to lower deliveries in Europe.

Market share data discussed below is provided by third-party sources and is measured by either retail sales or registrations for the Company’s dealer network as a percentage of total retail sales or registrations depending on the geographic market. In the U.S. and Canada, market share is based on retail sales. In Europe, market share is based primarily on registrations.

- 36 -

In the first nine months of 2024, industry retail sales in the heavy-duty market in the U.S. and Canada were 198,600 units compared to 225,200 units in the same period of 2023. The Company’s heavy-duty truck retail market share was 31.1% in the first nine months of 2024 compared to 28.4% in the first nine months of 2023. The medium-duty market was 80,800 units in the first nine months of 2024 compared to 78,400 units in the same period of 2023. The Company’s medium-duty market share was 17.2% in the first nine months of 2024 compared to 13.5% in the first nine months of 2023.

The over 16‑tonne truck market in Europe in the first nine months of 2024 was 239,800 units compared to 263,100 units in the first nine months of 2023. DAF over 16‑tonne market share was 14.0% in the first nine months of 2024 compared to 15.9% in the same period of 2023. The 6 to 16‑tonne market in the first nine months of 2024 was 38,900 units compared to 35,800 units in the same period of 2023. DAF market share in the 6 to 16-tonne market in the first nine months of 2024 was 9.1% compared to 9.0% in the same period of 2023.

The over 16-tonne truck market in Brasil in the first nine months of 2024 was 71,500 units compared to 59,500 units in the same period of 2023. DAF Brasil market share for the first nine months of 2024 was 10.0% compared to 9.9% in the same period in 2023.

The Company’s worldwide truck net sales and revenues are summarized below:


	Three Months Ended									Nine Months Ended
	September 30									September 30
($ in millions)		2024			2023		% CHANGE				2024			2023		% CHANGE
Truck net sales and revenues:
U.S. and Canada	$	3,669.3		$	4,006.8			(8	)	$	12,136.2		$	11,715.0			4
Europe		1,123.6			1,558.8			(28	)		3,699.3			5,155.7			(28	)
Mexico, South America, Australia and other		1,234.1			1,070.8			15			3,310.3			3,007.0			10
	$	6,027.0		$	6,636.4			(9	)	$	19,145.8		$	19,877.7			(4	)
Truck income before income taxes	$	630.8		$	960.9			(34	)	$	2,349.7		$	2,803.5			(16	)
Pre-tax return on revenues		10.5	%		14.5	%					12.3	%		14.1	%

The Company’s worldwide truck net sales and revenues in the third quarter decreased to $6.03 billion in 2024 from $6.64 billion in 2023, primarily due to lower truck unit deliveries in Europe and the U.S. and Canada. Revenues for the first nine months decreased to $19.15 billion in 2024 from $19.88 billion in 2023, primarily due to lower truck deliveries in Europe, partially offset by higher truck deliveries and average sales prices in the U.S. and Canada.

In the third quarter and first nine months of 2024, Truck segment income before taxes and pretax return on revenues decreased primarily due to lower truck unit deliveries in Europe. The decrease was partially offset by higher truck unit deliveries in Mexico, South America, Australia and other for the third quarter, and by higher truck unit deliveries in the U.S. and Canada for the first nine months of 2024, respectively.

The major factors for the Truck segment changes in net sales and revenues, cost of sales and revenues and gross margin between the three months ended September 30, 2024 and 2023 are as follows:


	NET			COST OF
	SALES AND			SALES AND			GROSS
($ in millions)	REVENUES			REVENUES			MARGIN
Three Months Ended September 30, 2023	$	6,636.4		$	5,521.5		$	1,114.9
(Decrease) increase
Truck sales volume		(578.2	)		(456.1	)		(122.1	)
Average truck sales prices		(29.5	)					(29.5	)
Average material, labor and other direct costs					174.5			(174.5	)
Factory overhead and other indirect costs					(14.3	)		14.3
Extended warranties, operating leases and other		17.7			33.1			(15.4	)
Currency translation		(19.4	)		(12.7	)		(6.7	)
Total decrease		(609.4	)		(275.5	)		(333.9	)
Three Months Ended September 30, 2024	$	6,027.0		$	5,246.0		$	781.0

•

Truck sales volume decreased revenues by $578.2 million and costs by $456.1 million, primarily reflecting lower truck deliveries in Europe, the U.S. and Canada, partially offset by higher truck deliveries in Mexico, South America and Australia.

- 37 -

•

Average truck sales prices were comparable and decreased $29.5 million.

•

Average truck costs increased $174.5 million, primarily reflecting higher raw material, labor and warranty costs.

•

Factory overhead and other indirect costs decreased $14.3 million, primarily due to lower repair and maintenance costs, factory supplies and depreciation.

•

Extended warranties, operating leases and other increased revenues by $17.7 million primarily due to higher volume of extended warranty and R&M contracts. The increase in extended warranty, operating leases and other cost of $33.1 million reflects higher costs from extended warranty, R&M contracts, and lower used truck results.

•

The currency translation effect on sales and cost of sales primarily reflects a decline in the value of the Brazilian real and Canadian dollar relative to the U.S. dollar, partially offset by the increase in the value of the euro relative to the U.S. dollar.

•

Truck gross margin was 13.0% in the third quarter of 2024 compared to 16.8% in the same period of 2023 due to the factors noted above.

The major factors for the Truck segment changes in net sales and revenues, cost of sales and revenues and gross margin between the nine months ended September 30, 2024 and 2023 are as follows:


	NET			COST OF
	SALES AND			SALES AND			GROSS
($ in millions)	REVENUES			REVENUES			MARGIN
Nine Months Ended September 30, 2023	$	19,877.7		$	16,630.4		$	3,247.3
(Decrease) increase
Truck sales volume		(950.8	)		(770.7	)		(180.1	)
Average truck sales prices		194.2						194.2
Average material, labor and other direct costs					398.2			(398.2	)
Factory overhead and other indirect costs					35.8			(35.8	)
Extended warranties, operating leases and other		59.9			100.6			(40.7	)
Currency translation		(35.2	)		(37.7	)		2.5
Total decrease		(731.9	)		(273.8	)		(458.1	)
Nine Months Ended September 30, 2024	$	19,145.8		$	16,356.6		$	2,789.2

•

Truck sales volume decreased revenues by $950.8 million and costs by $770.7 million, primarily reflecting lower truck deliveries in Europe, partially offset by higher truck deliveries in the U.S. and Canada.

•

Average truck sales prices increased by $194.2 million from modest price realization, primarily in the U.S. and Canada, Mexico and Australia.

•

Average truck costs increased by $398.2 million, primarily reflecting higher raw material and labor costs, partially offset by lower warranty costs.

•

Factory overhead and other indirect costs increased $35.8 million, primarily due to higher labor costs, partially offset by lower factory supplies and utilities costs.

•

Extended warranties, operating leases and other increased revenues by $59.9 million primarily due to higher volume of extended warranty, dealer support services and R&M contracts. The increase in extended warranty, operating leases and other cost of $100.6 million reflects higher costs from dealer support services, extended warranty, R&M contracts, and lower used truck results.

•

The currency translation effect on sales and cost of sales primarily reflects a decline in the value of the Brazilian real, Canadian dollar and the Australian dollar relative to the U.S. dollar, partially offset by the increase in value of the euro relative to the U.S. dollar.

•

Truck gross margin was 14.6% in the first nine months of 2024 compared to 16.3% in the same period of 2023 due to the factors noted above.

Truck selling, general and administrative (SG&A) expense decreased in the third quarter of 2024 to $61.9 million from $71.5 million in 2023, primarily due to lower salaries and related expenses and professional expenses. For the first nine months of 2024, Truck SG&A decreased to $183.3 million from $206.6 million in 2023, primarily due to lower professional expenses.

As a percentage of sales, Truck SG&A was 1.0% for both the third quarter and first nine months of 2024, compared to 1.1% and 1.0% in the third quarter and first nine months of 2023, respectively.

- 38 -

Parts

The Company’s Parts segment accounted for 20% of revenues in the third quarter and first nine months of 2024, compared to 19% for both the third quarter and first nine months of 2023.


	Three Months Ended									Nine Months Ended
	September 30									September 30
($ in millions)		2024			2023		% CHANGE				2024			2023		% CHANGE
Parts net sales and revenues:
U.S. and Canada	$	1,129.2		$	1,099.8			3		$	3,419.1		$	3,348.2			2
Europe		345.5			325.1			6			1,052.9			1,001.5			5
Mexico, South America, Australia and other		182.9			157.3			16			525.8			454.4			16
	$	1,657.6		$	1,582.2			5		$	4,997.8		$	4,804.1			4
Parts income before income taxes	$	406.7		$	412.3			(1	)	$	1,276.3		$	1,270.2
Pre-tax return on revenues		24.5	%		26.1	%					25.5	%		26.4	%

The Company’s worldwide parts net sales and revenues for the third quarter increased to $1.66 billion in 2024 from $1.58 billion in 2023. For the first nine months, worldwide parts net sales and revenues increased to $5.00 billion in 2024 from $4.80 billion in 2023. The increase in both periods was primarily due to higher sales in all markets.

The major factors for the changes in Parts segment net sales and revenues, cost of sales and revenues and gross margin between the three months ended September 30, 2024 and 2023 are as follows:


	NET		COST OF
	SALES AND		SALES AND		GROSS
($ in millions)	REVENUES		REVENUES		MARGIN
Three Months Ended September 30, 2023	$	1,582.2	$	1,083.1	$	499.1
Increase (decrease)
Aftermarket parts volume		26.7		29.5		(2.8	)
Average aftermarket parts sales prices		45.4				45.4
Average aftermarket parts direct costs				40.6		(40.6	)
Warehouse and other indirect costs				4.8		(4.8	)
Currency translation		3.3		1.2		2.1
Total increase (decrease)		75.4		76.1		(.7	)
Three Months Ended September 30, 2024	$	1,657.6	$	1,159.2	$	498.4

•

Aftermarket parts sales volume increased by $26.7 million and related cost of sales increased by $29.5 million primarily reflecting higher sales volume in all markets except the U.S. and Canada.

•

Average aftermarket parts sales prices increased sales by $45.4 million, primarily due to price realization in Europe.

•

Average aftermarket parts direct costs increased $40.6 million due to higher material costs, primarily in the U.S. and Canada and Europe.

•

Warehouse and other indirect costs increased $4.8 million, primarily due to higher salaries and related expenses.

•

The currency translation effect on sales and cost of sales reflects an increase in the value of the euro relative to the U.S dollar, partially offset by a decrease in the value of the Brazilian real relative to the U.S. dollar.

•

Parts gross margins in the third quarter of 2024 decreased to 30.1% from 31.5% in the third quarter of 2023 due to the factors noted above.

- 39 -

The major factors for the changes in Parts segment net sales and revenues, cost of sales and revenues and gross margin between the nine months ended September 30, 2024 and 2023 are as follows:


	NET		COST OF
	SALES AND		SALES AND			GROSS
($ in millions)	REVENUES		REVENUES			MARGIN
Nine Months Ended September 30, 2023	$	4,804.1	$	3,278.4		$	1,525.7
Increase (decrease)
Aftermarket parts volume		55.8		44.9			10.9
Average aftermarket parts sales prices		133.2					133.2
Average aftermarket parts direct costs				116.7			(116.7	)
Warehouse and other indirect costs				11.1			(11.1	)
Currency translation		4.7		(.4	)		5.1
Total increase		193.7		172.3			21.4
Nine Months Ended September 30, 2024	$	4,997.8	$	3,450.7		$	1,547.1

•

Aftermarket parts sales volume increased by $55.8 million and related cost of sales increased by $44.9 million, primarily reflecting higher sales volume in all markets except the U.S. and Canada.

•

Average aftermarket parts sales prices increased sales by $133.2 million, primarily due to price realization in Europe and the U.S. and Canada.

•

Average aftermarket parts direct costs increased $116.7 million due to higher material costs, primarily in the U.S. and Europe.

•

Warehouse and other indirect costs increased $11.1 million, primarily due to higher salaries and related expenses.

•

The currency translation effect on sales reflects an increase in the value of the euro relative to the U.S dollar partially offset by a decrease in the value of the Brazilian real, Canadian dollar and Australian dollar relative to the U.S. dollar.

•

Parts gross margins in the first nine months of 2024 decreased to 31.0% from 31.8% in the first nine months of 2023 due to the factors noted above.

Parts SG&A expense increased in the third quarter of 2024 to $62.5 million from $61.4 million in 2023, and for the first nine months, Parts SG&A increased to $186.4 million in 2024 from $178.6 million in 2023. The increase in both periods was primarily due to higher salaries and related expenses, partially offset by lower sales and marketing costs and professional fees.

As a percentage of sales, Parts SG&A was 3.8% and 3.7% in the third quarter and first nine months of 2024, respectively, compared to 3.9% and 3.7% in the third quarter and first nine months of 2023, respectively.

- 40 -

Financial Services

The Company’s Financial Services segment accounted for 7% of revenues in the third quarter and 6% in the first nine months of 2024, compared to 5% in both the third quarter and first nine months of 2023.


	Three Months Ended							Nine Months Ended
	September 30							September 30
($ in millions)		2024		2023	% CHANGE				2024		2023	% CHANGE
New loan and lease volume:
U.S. and Canada	$	1,079.0	$	1,032.7		4		$	2,973.7	$	2,699.6		10
Europe		336.7		368.6		(9	)		881.0		1,136.9		(23	)
Mexico, Australia, Brasil and other		595.9		500.3		19			1,592.2		1,407.6		13
	$	2,011.6	$	1,901.6		6		$	5,446.9	$	5,244.1		4
New loan and lease volume by product:
Loans and finance leases	$	1,811.1	$	1,737.3		4		$	4,794.0	$	4,768.6		1
Equipment on operating lease		200.5		164.3		22			652.9		475.5		37
	$	2,011.6	$	1,901.6		6		$	5,446.9	$	5,244.1		4
New loan and lease unit volume:
Loans and finance leases		13,110		12,120		8			33,510		34,670		(3	)
Equipment on operating lease		1,720		1,690		2			5,310		5,220		2
		14,830		13,810		7			38,820		39,890		(3	)
Average earning assets:
U.S. and Canada	$	11,621.0	$	9,644.9		20		$	10,974.1	$	9,268.7		18
Europe		4,084.0		4,445.6		(8	)		4,260.3		4,432.2		(4	)
Mexico, Australia, Brasil and other		4,595.3		3,803.2		21			4,443.8		3,447.8		29
	$	20,300.3	$	17,893.7		13		$	19,678.2	$	17,148.7		15
Average earning assets by product:
Loans and finance leases	$	13,908.0	$	12,250.9		14		$	13,568.5	$	11,613.5		17
Dealer wholesale financing		4,225.2		3,148.6		34			3,903.4		2,933.6		33
Equipment on lease and other		2,167.1		2,494.2		(13	)		2,206.3		2,601.6		(15	)
	$	20,300.3	$	17,893.7		13		$	19,678.2	$	17,148.7		15
Revenues:
U.S. and Canada	$	231.8	$	190.6		22		$	661.6	$	559.9		18
Europe		146.0		138.2		6			430.9		413.2		4
Mexico, Australia, Brasil and other		158.3		135.3		17			462.7		354.0		31
	$	536.1	$	464.1		16		$	1,555.2	$	1,327.1		17
Revenues by product:
Loans and finance leases	$	250.1	$	205.0		22		$	723.1	$	547.0		32
Dealer wholesale financing		84.8		64.8		31			233.2		169.5		38
Equipment on lease and other		201.2		194.3		4			598.9		610.6		(2	)
	$	536.1	$	464.1		16		$	1,555.2	$	1,327.1		17
Income before income taxes	$	106.5	$	133.8		(20	)	$	331.6	$	427.3		(22	)

New loan and lease volume was $2.01 billion in the the third quarter of 2024 compared to $1.90 billion in the third quarter of 2023, and for the first nine months of 2024 was $5.45 billion compared to $5.24 billion in 2023. The increase in new loan and lease volume for both periods reflected higher finance market share of new PACCAR truck sales, primarily in the U.S. and Canada and Brasil. The increase in equipment on operating lease volume reflected higher market demand and a higher amount financed per truck in all major markets.

- 41 -

In the third quarter of 2024, PFS finance market share of new PACCAR truck sales was 26.9% compared to 23.7% in the third quarter of 2023. In the first nine months of 2024, PFS finance market share of new PACCAR truck sales was 24.2% compared to 23.4% in the first nine months of 2023.

In the third quarter of 2024, PFS revenues increased to $536.1 million from $464.1 million in 2023. In the first nine months of 2024, PFS revenues increased to $1.56 billion from $1.33 billion in 2023. The increase in both periods was primarily driven by portfolio growth in all markets except Europe.

PFS income before income taxes decreased to $106.5 million in the third quarter of 2024 from $133.8 million in the third quarter of 2023. In the first nine months of 2024, PFS income before income taxes decreased to $331.6 million from $427.3 million in 2023. The decrease in both periods was primarily due to lower operating lease margins, reflecting lower results on returned lease assets, partially offset by higher finance margins from a higher asset portfolio.

Included in Financial Services, Other assets on the Company’s Consolidated Balance Sheets are used trucks held for sale, net of impairments, of $401.7 million at September 30, 2024 and $309.8 million at December 31, 2023. These trucks are primarily units returned from matured operating leases in the ordinary course of business, and also include trucks acquired from repossessions or through acquisitions of used trucks in trades related to new truck sales and trucks returned from residual value guarantees (RVGs).

The Company recognized losses on used trucks, excluding repossessions, of $13.0 million in the third quarter of 2024 compared to gains of $4.3 million in the third quarter of 2023, including $9.7 million of losses on multiple unit transactions in the third quarter of 2024 compared to $3.2 million in the third quarter of 2023. Used truck losses related to repossessions, which are recognized as credit losses, were $2.0 million for the third quarter of 2024 and not significant for the third quarter of 2023.

The Company recognized losses on used trucks, excluding repossessions, of $37.5 million in the first nine months of 2024, compared to gains of $51.2 million in the first nine months of 2023, including losses on multiple unit transactions of $27.7 million in the first nine months of 2024 compared to $4.2 million in the first nine months of 2023. Used truck losses related to repossessions, which are recognized as credit losses, were $8.0 million for the first nine months of 2024 and $2.4 million first nine months of 2023.

The major factors for the changes in interest and fees, interest and other borrowing expenses and finance margin for the three months ended September 30, 2024 and 2023 are outlined below:



($ in millions)	INTEREST AND FEES			INTEREST AND OTHER BORROWING EXPENSES			FINANCE MARGIN
Three Months Ended September 30, 2023	$	269.8		$	138.5		$	131.3
Increase (decrease)
Average finance receivables		53.8						53.8
Average debt balances					30.9			(30.9	)
Yields		20.0						20.0
Borrowing rates					23.4			(23.4	)
Currency translation and other		(8.7	)		(4.4	)		(4.3	)
Total increase		65.1			49.9			15.2
Three Months Ended September 30, 2024	$	334.9		$	188.4		$	146.5

•

Average finance receivables increased $2.86 billion (excluding foreign exchange effects), increasing interest and fees by $53.8 million in the third quarter of 2024, primarily due to higher average loan, finance lease and dealer wholesale balances.

•

Average debt balances increased $2.47 billion (excluding foreign exchange effects), increasing interest and other borrowing costs by $30.9 million in the third quarter of 2024, reflecting higher funding requirements for the portfolio from growth in loans, finance leases and dealer wholesale receivables.

•

Higher portfolio yields (7.4% in 2024 compared to 7.0% in 2023) increased interest and fees by $20.0 million. The higher portfolio yields were primarily due to higher market rates in all markets.

•

Higher borrowing rates (4.9% in 2024 compared to 4.2% in 2023) increased interest and other borrowing expenses by $23.4 million and were primarily due to higher debt market rates in all markets.

- 42 -

•

The currency translation effects reflect a decrease in the value of foreign currencies relative to the U.S. dollar, primarily the Brazilian real and Mexican peso.

The major factors for the changes in interest and fees, interest and other borrowing expenses and finance margin for the nine months ended September 30, 2024 and 2023 are outlined below:



($ in millions)	INTEREST AND FEES			INTEREST AND OTHER BORROWING EXPENSES			FINANCE MARGIN
Nine Months Ended September 30, 2023	$	716.5		$	347.8		$	368.7
Increase (decrease)
Average finance receivables		163.8						163.8
Average debt balances					83.5			(83.5	)
Yields		80.9						80.9
Borrowing rates					93.1			(93.1	)
Currency translation and other		(4.9	)		(3.5	)		(1.4	)
Total increase		239.8			173.1			66.7
Nine Months Ended September 30, 2024	$	956.3		$	520.9		$	435.4

•

Average finance receivables increased $2.99 billion (excluding foreign exchange effects), increasing interest and fees by $163.8 million in the first nine months of 2024, primarily due to higher average loan, finance lease and dealer wholesale balances.

•

Average debt balances increased $2.35 billion (excluding foreign exchange effects), increasing interest and other borrowing expenses by $83.5 million in the first nine months of 2024, reflecting higher funding requirements for the portfolio from growth in loans, finance leases and dealer wholesale receivables.

•

Higher portfolio yields (7.3% in 2024 compared to 6.6% in 2023) increased interest and fees by $80.9 million. The higher portfolio yields were primarily due to higher market rates in all markets.

•

Higher borrowing rates (4.7% in 2024 compared to 3.7% in 2023) increased interest and other borrowing expenses by $93.1 million and were primarily due to higher debt market rates in all markets.

•

The currency translation effects reflect a decrease in the value of foreign currencies relative to the U.S. dollar, primarily the Brazilian real.

The following table summarizes operating lease, rental and other revenues and depreciation and other expenses:


	Three Months Ended				Nine Months Ended
	September 30				September 30
($ in millions)		2024		2023		2024		2023
Operating lease and rental revenues	$	168.4	$	184.1	$	513.4	$	574.9
Used truck sales		25.0		3.1		63.1		15.5
Insurance, franchise and other revenues		7.8		7.1		22.4		20.2
Operating lease, rental and other revenues	$	201.2	$	194.3	$	598.9	$	610.6

Depreciation of operating lease equipment	$	132.5	$	122.2	$	407.8	$	363.0
Vehicle operating expenses		16.4		20.0		51.0		44.2
Cost of used truck sales		25.6		3.2		65.9		16.1
Insurance, franchise and other expenses		2.1		1.5		5.8		3.7
Depreciation and other expenses	$	176.6	$	146.9	$	530.5	$	427.0

- 43 -

The major factors for the changes in operating lease, rental and other revenues, depreciation and other expenses and lease margin between the three months ended September 30, 2024 and 2023 are outlined below:


($ in millions)	OPERATING LEASE, RENTAL AND OTHER REVENUES			DEPRECIATION AND OTHER EXPENSES			LEASE MARGIN
Three Months Ended September 30, 2023	$	194.3		$	146.9		$	47.4
Increase (decrease)
Used truck sales		21.7			22.0			(.3	)
Results on returned lease assets					15.8			(15.8	)
Average operating lease assets		(31.9	)		(26.8	)		(5.1	)
Revenue and cost per asset		19.3			18.4			.9
Currency translation and other		(2.2	)		.3			(2.5	)
Total increase (decrease)		6.9			29.7			(22.8	)
Three Months Ended September 30, 2024	$	201.2		$	176.6		$	24.6

•

Higher sales volume, partially offset by lower market prices of used trucks on trade, increased revenues by $21.7 million and related depreciation and other expenses by $22.0 million.

•

Results on returned lease assets increased depreciation and other expenses by $15.8 million, primarily due to losses on sale of returned lease units in 2024 (compared to gains in 2023) and impairment on existing used truck inventories in Europe as a result of lower used truck market values.

•

Average operating lease assets decreased $337.0 million (excluding foreign exchange effects), which decreased revenues by $31.9 million and related depreciation and other expenses by $26.8 million.

•

Revenue per asset increased $19.3 million primarily due to higher average truck values financed. Cost per asset increased $18.4 million due to higher depreciation and operating expenses, mainly in Europe.

•

The currency translation effects on Operating lease, rental and other revenues reflects a decrease in the value of foreign currencies relative to the U.S. dollar, primarily Mexican peso, partially offset by an increase in the euro.

The major factors for the changes in operating lease, rental and other revenues, depreciation and other expenses and lease margin between the nine months ended September 30, 2024 and 2023 are outlined below:



($ in millions)	OPERATING LEASE, RENTAL AND OTHER REVENUES			DEPRECIATION AND OTHER EXPENSES			LEASE MARGIN
Nine Months Ended September 30, 2023	$	610.6		$	427.0		$	183.6
Increase (decrease)
Used truck sales		47.4			49.5			(2.1	)
Results on returned lease assets					77.4			(77.4	)
Average operating lease assets		(118.9	)		(107.5	)		(11.4	)
Revenue and cost per asset		56.0			79.9			(23.9	)
Currency translation and other		3.8			4.2			(.4	)
Total (decrease) increase		(11.7	)		103.5			(115.2	)
Nine Months Ended September 30, 2024	$	598.9		$	530.5		$	68.4

•

Higher sales volume, partially offset by lower market prices of used trucks on trade, increased revenues by $47.4 million and related depreciation and other expenses by $49.5 million.

•

Results on returned lease assets increased depreciation and other expenses by $77.4 million, primarily due to losses on sale of returned lease units in 2024 (compared to gains in 2023) and impairment on existing used truck inventories in Europe as a result of lower used truck market values.

•

Average operating lease assets decreased $398.1 million (excluding foreign exchange effects), which decreased revenues by $118.9 million and related depreciation and other expenses by $107.5 million.

•

Revenue per asset increased $56.0 million primarily due to higher average truck values financed. Cost per asset increased $79.9 million due to higher depreciation and operating expenses, mainly in Europe.

- 44 -

•

The currency translation effects reflect an increase in the value of foreign currencies relative to the U.S. dollar, primarily the euro.

Financial Services SG&A for the third quarter of 2024 increased to $42.2 million from $38.7 million in the third quarter of 2023. For the first nine months, Financial Services SG&A increased to $122.0 million in 2024 from $110.9 million in 2023. The increase in both periods was primarily due to higher salaries and related expenses and higher professional fees.

As an annualized percentage of average earning assets, Financial Services SG&A was .8% for both the third quarter and first nine months of 2024, and .9% for the same periods in 2023.

The following table summarizes the provision for losses on receivables and net charge-offs:


	Three Months Ended				Nine Months Ended
	September 30, 2024				September 30, 2024
($ in millions)	PROVISION FOR LOSSES ON RECEIVABLES		NET CHARGE- OFFS		PROVISION FOR LOSSES ON RECEIVABLES		NET CHARGE- OFFS
U.S. and Canada	$	10.7	$	5.5	$	26.8	$	15.8
Europe		7.3		6.1		12.6		11.1
Mexico, Australia, Brasil and other		4.4		1.8		10.8		5.8
	$	22.4	$	13.4	$	50.2	$	32.7


	Three Months Ended				Nine Months Ended
	September 30, 2023				September 30, 2023
($ in millions)	PROVISION FOR LOSSES ON RECEIVABLES		NET CHARGE- OFFS		PROVISION FOR LOSSES ON RECEIVABLES		NET CHARGE- OFFS
U.S. and Canada	$	.9	$	1.1	$	2.0	$	3.0
Europe		.5		.6		1.5		1.6
Mexico, Australia, Brasil and other		4.8		3.7		10.6		7.0
	$	6.2	$	5.4	$	14.1	$	11.6

The provision for losses on receivables was $22.4 million in the third quarter of 2024 compared to $6.2 million in 2023, and in the first nine months, the provision for losses on receivables was $50.2 million in 2024 compared to $14.1 million in 2023. The increase in provision for losses in the third quarter and first nine months of 2024 compared to 2023 was primarily driven by portfolio growth, an increase in the Company’s 30+ past due accounts and higher charge-offs in the U.S. and Canada and Europe. The increased charge-offs in the third quarter of 2024 included one large fleet customer in the U.S. and one large fleet customer in Europe. The increased charge-offs in the first nine months of 2024 included three large fleet customers in the U.S. and the same large fleet customer in Europe. The higher charge-offs in both periods also reflected higher average loss severity in all markets from lower used truck market values.

The Company modifies loans and finance leases as a normal part of its Financial Services operations. The Company may modify loans and finance leases for commercial reasons or for credit reasons. Modifications for commercial reasons are changes to contract terms for customers that are not considered to be in financial difficulty. Insignificant delays are modifications extending terms up to three months for customers experiencing some short-term financial stress, but not considered to be in financial difficulty. Modifications for credit reasons are changes to contract terms for customers considered to be in financial difficulty. The Company’s modifications typically result in granting more time to pay the contractual amounts owed and charging a fee and interest for the term of the modification. When considering whether to modify customer accounts for credit reasons, the Company evaluates the creditworthiness of the customers and modifies those accounts that the Company considers likely to perform under the modified terms.

- 45 -

The post-modification balances of accounts modified during the nine months ended September 30, 2024 and 2023 are summarized below:


	2024					2023
($ in millions)	AMORTIZED COST BASIS		% OF TOTAL PORTFOLIO*			AMORTIZED COST BASIS		% OF TOTAL PORTFOLIO*
Commercial	$	324.3		3.0	%	$	134.5		1.4	%
Insignificant delay		167.5		1.6	%		81.8		.9	%
Credit		189.0		1.7	%		20.0		.2	%
	$	680.8		6.3	%	$	236.3		2.5	%

* Amortized cost basis immediately after modification as a percentage of ending retail portfolio, on an annualized basis.

Modification activity increased to $680.8 million in the first nine months of 2024 from $236.3 million in the same period of 2023. The increase in modifications for Commercial reasons primarily reflects higher volumes of refinancing, primarily in the U.S. The increase in both Insignificant delay modifications and Credit modifications reflect higher volumes of contract modifications in the U.S., Brasil and Europe.

The following table summarizes the Company’s 30+ days past due accounts:


	September 30 2024			December 31 2023			September 30 2023
Percentage of retail loan and lease accounts 30+ days past due:
U.S. and Canada		1.1	%		.8	%		.4	%
Europe		.9	%		.5	%		1.4	%
Mexico, Australia, Brasil and other		1.6	%		1.9	%		1.5	%
Worldwide		1.2	%		1.0	%		.8	%

Accounts 30+ days past due was 1.2% at September 30, 2024 compared to 1.0% at December 31, 2023 and .8% at September 30, 2023. The increased percentage of past due accounts as of September 30, 2024 compared to December 31, 2023 is primarily due to two large fleet customers in the U.S. and Canada and two large fleet customers in Europe, partially offset by decreases in past due accounts in Mexico and Australia. The Company continues to focus on maintaining low past due balances.

When the Company modifies a 30+ days past due account, the customer is then generally considered current under the revised contractual terms. The Company modified $18.5 million of accounts worldwide during the third quarter of 2024, $35.0 million during the fourth quarter of 2023 and $21.5 million during the third quarter of 2023 that were 30+ days past due and became current at the time of modification. Had these accounts not been modified and continued to not make payments, the pro forma percentage of retail loan and lease accounts 30+ days past due would have been as follows:


	September 30 2024			December 31 2023			September 30 2023
Pro forma percentage of retail loan and lease accounts 30+ days past due:
U.S. and Canada		1.2	%		.8	%		.4	%
Europe		.9	%		1.8	%		1.4	%
Mexico, Australia, Brasil and other		2.0	%		2.0	%		2.1	%
Worldwide		1.3	%		1.2	%		.9	%

Modifications of accounts in prior quarters that were more than 30 days past due at the time of modification are included in past dues if they were not performing under the modified terms at September 30, 2024, December 31, 2023 and September 30, 2023. The effect on the allowance for credit losses from such modifications was not significant at September 30, 2024, December 31, 2023 and September 30, 2023.

The Company’s annualized pre-tax return on average assets for Financial Services was 1.9% in the third quarter of 2024 compared to 2.7% in the same period of 2023. For the first nine months of 2024, annualized pre-tax return on average assets was 2.1% compared to 3.1% in 2023. The lower returns primarily reflect lower operating lease margin from lower results on returned lease assets.

- 46 -

Other

Other includes the winch business as well as sales, income and expenses not attributable to a reportable segment. Other also includes non-service cost components of pension expense and a portion of corporate expense. Other sales represent less than 1% of consolidated net sales and revenues for both the third quarter and first nine months of 2024 and 2023. Other SG&A increased to $19.9 million for the third quarter of 2024 from $10.7 million for the third quarter of 2023 and increased to $64.9 million for the first nine months of 2024 compared to $63.1 million for the same period of 2023. The increase in both periods was primarily due to higher salaries and related expenses.

For the third quarter of 2024, Other income before income taxes was $3.6 million compared to $1.6 million in 2023 primarily due to lower corporate expenses. For the first nine months of 2024, Other income before tax was $4.0 million compared to loss of $616.6 million in 2023, primarily due to the EC-related charge in the first quarter of 2023, which is discussed in Note M of the consolidated financial statements.

Investment income for the third quarter increased to $108.7 million in 2024 compared to $80.8 million in 2023. For the first nine months, investment income increased to $290.0 million in 2024 from $192.5 million in 2023. The increase in both periods is primarily driven higher investment balances as well as higher yields on investment due to higher market interest rates, primarily in the U.S. and Europe.

Income Taxes


	Three Months Ended						Nine Months Ended
	September 30						September 30
($ in millions)		2024			2023			2024			2023
Domestic income before taxes	$	786.9		$	1,026.5		$	2,783.1		$	2,858.0
Foreign income before taxes		469.4			562.9			1,468.5			1,218.9
Total income before taxes	$	1,256.3		$	1,589.4		$	4,251.6		$	4,076.9
Domestic pre-tax return on revenues		16.9	%		21.4	%		18.8	%		20.1	%
Foreign pre-tax return on revenues		13.1	%		14.4	%		13.4	%		10.3	%
Total pre-tax return on revenues		15.2	%		18.3	%		16.5	%		15.6	%

For the third quarter and first nine months of 2024, domestic income before income taxes decreased primarily due to the lower Truck operation results. For the third quarter of 2024, foreign income before taxes decreased primarily due to lower Truck operation results in Europe. For the first nine months of 2024, foreign income before taxes increased as the first nine months of 2023 included the EC-related charge of $600.0 million which also reduced foreign pre-tax return on revenues in 2023. For the third quarter of 2024, total pre-tax return on revenues decreased reflecting lower returns in Truck and Parts operations. For the first nine months of 2024, total pre-tax return on revenues increased reflecting the EC-related charge in 2023.

LIQUIDITY AND CAPITAL RESOURCES:


	September 30		December 31
($ in millions)		2024		2023
Cash and cash equivalents	$	6,849.2	$	7,181.7
Marketable securities		2,510.7		1,822.6
	$	9,359.9	$	9,004.3

The Company’s total cash and marketable securities at September 30, 2024 increased $355.6 million from the balances at December 31, 2023. Total cash and marketable securities are primarily intended to provide liquidity while preserving capital.

- 47 -

The change in cash and cash equivalents is summarized below:


($ in millions)
Nine Months Ended September 30,		2024		2023
Operating activities:
Net income	$	3,290.0		$	3,183.5
Net income items not affecting cash		725.3			577.4
Changes in operating assets and liabilities, net		(820.1	)		(757.6	)
Net cash provided by operating activities		3,195.2			3,003.3
Net cash used in investing activities		(2,755.3	)		(1,931.1	)
Net cash (used in) provided by financing activities		(766.4	)		159.5
Effect of exchange rate changes on cash and cash equivalents		(6.0	)		(16.3	)
Net (decrease) increase in cash and cash equivalents		(332.5	)		1,215.4
Cash and cash equivalents at beginning of period		7,181.7			4,690.9
Cash and cash equivalents at end of period	$	6,849.2		$	5,906.3

Operating activities: Cash provided by operations increased by $191.9 million to $3,195.2 million in the first nine months of 2024 from $3,003.3 million in 2023. The increased operating cash flow reflects higher net income by $106.5 million and $147.9 million higher cash provided from net income items not affecting cash, primarily deferred income taxes and the provision for losses on financial services receivables, partially offset by higher cash usage from net changes in operating assets and liabilities of $62.5 million. The net changes in operating assets and liabilities are mainly due to decreases in accruals of $1,059.4 million, including the EC-related charge and product support liabilities, partially offset by lower increases in trade and other receivables of $481.4 million, lower cash outflow for inventories of $363.7 million, and lower increases in wholesale receivables on new trucks of $169.4 million in the Financial Services segment.

Investing activities: Cash used in investing activities increased by $824.2 million to $2,755.3 million in the first nine months of 2024 from $1,931.1 million in 2023. The increase in net cash used in investing activities reflects increased purchases of marketable securities, net of proceeds from sales and maturities, of $505.4 million, increased acquisitions of equipment for operating leases of $235.5 million and cash contributed to the battery manufacturing joint venture, Amplify Cell Technologies, of $125.8 million.

Financing activities: Cash used in financing activities was $766.4 million for the first nine months of 2024, $925.9 million higher than the $159.5 million provided in 2023. The increase reflects higher cash dividends and lower net borrowing activity. In the first nine months of 2024, the Company paid $2.13 billion in dividends compared to $1.38 billion in 2023, due to a higher year-end dividend paid in January 2024. Cash provided by borrowing activities was $1.32 billion in 2024, $172.9 million lower than the cash provided by borrowing activities of $1.50 billion in 2023.

Credit Lines and Other

The Company has line of credit arrangements of $5.30 billion, of which $4.73 billion were unused at September 30, 2024. Included in these arrangements are $4.00 billion of committed bank facilities, of which $1.50 billion expires in June 2025, $1.25 billion expires in June 2027 and $1.25 billion expires in June 2029. The Company intends to extend or replace these credit facilities on or before expiration to maintain facilities of similar amounts and duration. These credit facilities are maintained primarily to provide backup liquidity for commercial paper borrowings and maturing medium-term notes. There were no borrowings under the committed bank facilities for the nine months ended September 30, 2024.

On December 4, 2018, PACCAR’s Board of Directors approved the repurchase of up to $500.0 million of the Company’s outstanding common stock. As of September 30, 2024, the Company has repurchased $110.0 million of shares under this plan. There were no repurchases made under this plan during the first nine months of 2024.

Truck, Parts and Other

The Company provides funding for working capital, capital expenditures, R&D, dividends, stock repurchases and other business initiatives and commitments primarily from cash provided by operations. Management expects this method of funding to continue in the future.

- 48 -

Investments for manufacturing property, plant and equipment in the first nine months of 2024 were $562.8 million compared to $471.7 million for the same period of 2023. Over the past decade, the Company’s combined investments in worldwide capital projects and R&D totaled $8.27 billion and have significantly increased the operating capacity and efficiency of its facilities and enhanced the quality and operating efficiency of the Company’s premium products.

In 2024, total capital investments for PACCAR are expected to be $760 to $800 million and R&D is expected to be $450 to $470 million. In 2025, capital investments are expected to be $700 to $800 million and R&D is expected to be $480 to $530 million. The Company is increasing its investment in advanced new trucks and powertrains, enhanced manufacturing capabilities and capacity, and aftermarket distribution capabilities and capacity.

Financial Services

The Company funds its financial services activities primarily from collections on existing finance receivables and borrowings in the capital markets. The primary sources of borrowings in the capital markets are commercial paper and medium-term notes issued in the public markets and, to a lesser extent, bank loans.

In November 2021, the Company’s U.S. finance subsidiary, PACCAR Financial Corp. (PFC), filed a shelf registration under the Securities Act of 1933. The total amount of medium-term notes outstanding for PFC as of September 30, 2024 was $7.15 billion. The registration expires in November 2024 and does not limit the principal amount of debt securities that may be issued during that period. The Company intends to file a new shelf registration in November.

As of September 30, 2024, the Company’s European finance subsidiary, PACCAR Financial Europe, had €599.7 million available for issuance under a €2.50 billion medium-term note program listed on the Euro MTF Market of the Luxembourg Stock Exchange. This program has been renewed through the filing of a new listing, which expires in July 2025.

In August 2021, PACCAR Financial Mexico registered a 10.00 billion Mexican peso program with the Comision Nacional Bancaria y de Valores to issue medium-term notes and commercial paper. The registration expires in August 2026 and limits the amount of commercial paper (up to one year) to 5.00 billion Mexican pesos. At September 30, 2024, 4.07 billion Mexican pesos were available for issuance.

In August 2018, the Company’s Australian subsidiary, PACCAR Financial Pty. Ltd. (PFPL Australia), established a medium-term note program. The program does not limit the principal amount of debt securities that may be issued under the program. The total amount of medium-term notes outstanding for PFPL Australia as of September 30, 2024 was 700.0 million Australian dollars.

In May 2021, the Company’s Canadian subsidiary, PACCAR Financial Ltd. (PFL Canada), established a medium-term note program. The program does not limit the principal amount of debt securities that may be issued under the program. There were no borrowings under this program as of September 30, 2024.

The Company’s Brazilian subsidiary, Banco PACCAR S.A., established a lending program in December 2021 with the local development bank, Banco Nacional de Desenvolvimento Economico e Social (BNDES) for qualified customers to receive preferential conditions and generally market interest rates. The program is limited to 2.51 billion Brazilian reais and has 1.05 billion Brazilian reais outstanding as of September 30, 2024. The Brazilian subsidiary also established a Letra Financeira (LF) program in May 2024 and the program does not limit the principal amount of debt securities that may be issued under the program. A total of 500.0 million Brazilian reais medium-term notes were outstanding as of September 30, 2024.

The Company believes its cash balances and investments, collections on existing finance receivables, committed bank facilities and current investment-grade credit ratings of A+/A1 will continue to provide it with sufficient resources and access to capital markets at competitive interest rates and therefore contribute to the Company maintaining its liquidity and financial stability. In the event of a decrease in the Company’s credit ratings or a disruption in the financial markets, the Company may not be able to refinance its maturing debt in the financial markets. In such circumstances, the Company would be exposed to liquidity risk to the degree that the timing of debt maturities differs from the timing of receivable collections from customers. The Company believes its various sources of liquidity, including committed bank facilities, would continue to provide it with sufficient funding resources to service its maturing debt obligations.

- 49 -

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES:

This Form 10-Q includes “adjusted net income (non-GAAP)” and “adjusted net income per diluted share (non-GAAP)”, which are financial measures that are not in accordance with U.S. generally accepted accounting principles (“GAAP”), since they exclude a charge for EC-related claims. These measures differ from the most directly comparable measures calculated in accordance with GAAP and may not be comparable to similarly titled non-GAAP financial measures used by other companies.

Adjustment for the EC-related claims relates to a pre-tax charge of $600.0 million ($446.4 million after-tax) for estimable total costs recorded in Interest and other (income) expenses, net in the first quarter 2023.

Management utilizes these non-GAAP measures to evaluate the Company’s performance and believes these measures allow investors and management to evaluate operating trends by excluding a significant non-recurring charge that is not representative of underlying operating trends.

Reconciliations from the most directly comparable GAAP measures to adjusted net income (non-GAAP) and adjusted net income per diluted shares (non-GAAP) are as follows:



	Nine Months Ended
($ in millions, except per share amounts)	September 30, 2023
Net income	$	3,183.5
EC-related claims, net of taxes		446.4
Adjusted net income (non-GAAP)	$	3,629.9
Per diluted share
Net income	$	6.07
EC-related claims, net of taxes		.85
Adjusted net income (non-GAAP)	$	6.92
After-tax return on revenues		12.2	%
EC-related claims, net of taxes		1.7	%
After-tax adjusted return on revenues (non-GAAP) *		13.9	%
* Calculated using adjusted net income.

- 50 -

FORWARD-LOOKING STATEMENTS:

This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements relating to future results of operations or financial position and any other statement that does not relate to any historical or current fact. Such statements are based on currently available operating, financial and other information and are subject to risks and uncertainties that may affect actual results. Risks and uncertainties include, but are not limited to: a significant decline in industry sales; competitive pressures; reduced market share; reduced availability of or higher prices for fuel; increased safety, emissions, or other regulations or tariffs resulting in higher costs and/or sales restrictions; currency or commodity price fluctuations; lower used truck prices; insufficient or under-utilization of manufacturing capacity; supplier interruptions; insufficient liquidity in the capital markets; fluctuations in interest rates; changes in the levels of the Financial Services segment new business volume due to unit fluctuations in new PACCAR truck sales or reduced market shares; changes affecting the profitability of truck owners and operators; price changes impacting truck sales prices and residual values; insufficient supplier capacity or access to raw materials and components, including semiconductors; labor disruptions; shortages of commercial truck drivers; increased warranty costs; cybersecurity risks to the Company’s information technology systems; pandemics; climate-related risks; global conflicts; litigation, including European Commission (EC) settlement-related claims; or legislative and governmental regulations. A more detailed description of these and other risks is included under the headings Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2023 and in Part II, Item 1, “Legal Proceedings” and Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes in the Company’s market risk during the three months ended September 30, 2024. For additional information, refer to Item 7A as presented in the 2023 Annual Report on Form 10‑K.

ITEM 4. CONTROLS AND PROCEDURES

The Company’s management, with the participation of the Principal Executive Officer and Principal Financial Officer, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

There have been no changes in the Company’s internal controls over financial reporting that occurred during the fiscal quarter covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

- 52 -

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to Note M – “Commitments and Contingencies” in the Notes to Consolidated Financial Statements (Part I, Item 1) for discussion on litigation matters, which is incorporated by reference herein.

ITEM 1A. RISK FACTORS

For information regarding risk factors, refer to Part I, Item 1A as presented in the 2023 Annual Report on Form 10-K. There have been no material changes in the Company’s risk factors during the three months ended September 30, 2024.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

For Items 2(a) and (b), there was no reportable information for the three months ended September 30, 2024.

(c)

Issuer purchases of equity securities.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None of the Company’s directors or officers adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s quarter ended September 30, 2024, as such terms are defined under Item 408(a) of Regulation S-K.

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ITEM 6. EXHIBITS

Any exhibits filed herewith are listed in the accompanying index to exhibits.

INDEX TO EXHIBITS

     Exhibit Number

     Exhibit Description

     Form

     Date of First Filing

     Exhibit
Number

     File Number

     (3)  (i)

     Articles of Incorporation:

      
     Amended and Restated Certificate of Incorporation of PACCAR Inc 

     8-K

     May 4, 2018

     3(i)

     001-14817

      
     Certificate of Amendment of the Amended and Restated Certificate of Incorporation of PACCAR Inc

     8-K

     April 24, 2020

     3(i)

     001-14817

      
     Certificate of Amendment of the Amended and Restated Certificate of Incorporation of PACCAR Inc

     8-K

     April 29, 2022

     3(i)

     001-14817

          (ii)

     Bylaws:

      
     Seventh Amended and Restated Bylaws of PACCAR Inc

     8-K

     July 26, 2022

     3(ii)

     001-14817

     (4)

     Instruments defining the rights of security holders, including indentures**:

      
     (a)

     Indenture for Senior Debt Securities dated as of November 20, 2009 between PACCAR Financial Corp. and The Bank of New York Mellon Trust Company, N.A.

     S-3

     November 20, 2009

     4.1

     333-163273

      
     (b)

     Forms of Medium-Term Note, Series P (PACCAR Financial Corp.)

     S-3

     November 2, 2018

     4.2 and 4.3

     333-228141

      
     (c) 

     Forms of Medium-Term Note, Series Q (PACCAR Financial Corp.)

     S-3

     November 1, 2021

     4.3 and 4.4

     333-260663

      
     (d)

     Terms and Conditions of the Notes applicable to the €2,500,000,000 Medium Term Note Programme of PACCAR Financial Europe B.V. set forth in the Information  Memorandum dated May 29, 2020

     10-Q

     August 3, 2020

     4(h)

     001-14817

      
     (e)

     Terms and Conditions of the Notes applicable to the €2,500,000,000 Medium Term Note Programme of PACCAR Financial Europe B.V. set forth in the Information Memorandum dated July 15, 2021

     10-Q

     August 2, 2021

     4(g)

     001-14817

      
     (f)

     Terms and Conditions of the Notes applicable to the €2,500,000,000 Medium Term Note Programme of PACCAR Financial Europe B.V. set forth in the Information Memorandum dated July 13, 2022

     10-Q

     August 2, 2022

     4(h)

     001-14817

      
     (g)

     Terms and Conditions of the Notes applicable to the €2,500,000,000 Medium Term Note Programme of PACCAR Financial Europe B.V. set forth in the Information Memorandum dated September 20, 2023

     10-Q

     November 2, 2023

     4(g)

     001-14817

      
     **

     Pursuant to the Instructions to Exhibits, certain instruments defining the rights of holders of long-term debt securities of the Company and its wholly owned subsidiaries are not filed because the total amount of securities authorized under any such instrument does not exceed 10 percent of the Company’s total assets. The Company will file copies of such instruments upon request of the Commission.

- 54 -

     Exhibit Number

     Exhibit Description

     Form

     Date of First Filing

     Exhibit
Number

     File Number

      
     (h)

     Terms and Conditions of the Notes applicable to the €2,500,000,000 Medium Term Note Programme of PACCAR Financial Europe B.V. set forth in the Information Memorandum dated July 17, 2024*

      
     (i)

     Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

     10-K

     February 19, 2020

     4(j)

     001-14817

     (10)

     Material Contracts:

      
     (a)

     PACCAR Inc Amended and Restated Supplemental Retirement Plan

     10-K

     February 27, 2009

     10(a)

     001-14817

      
     (b)

     Amended and Restated Deferred Compensation Plan 

     10-Q

     May 10, 2012

     10(b)

     001-14817

      
     (c)

     Deferred Incentive Compensation Plan (Amended and Restated as of December 31, 2004)

     10-K

     February 27, 2006

     10(b)

     001-14817

      
     (d)

     Third Amended and Restated PACCAR Inc Restricted Stock and Deferred Compensation Plan for Non-Employee Directors

     10-Q

     May 2, 2024

     10(d)

     001-14817

      
     (e)

     Form of Deferred Restricted Stock Unit Grant Agreement for Non-Employee Directors

     10-Q

     July 31, 2024

     10(e)

     001-14817

      
     (f)

     Form of Restricted Stock Grant Agreement for Non-Employee Directors

     10-Q

     July 31, 2024

     10(f)

     001-14817

      
     (g)

     PACCAR Inc Senior Executive Yearly Incentive Compensation Plan

     10-K

     February 19, 2020

     10(g)

     001-14817

      
     (h)

     PACCAR Inc Long Term Incentive Plan

     10-K

     February 22, 2023

     10(h)

     001-14817

      
     (i)

     Amendment One to PACCAR Inc Long Term Incentive Plan, Nonstatutory Stock Option Agreement and Form of Option Grant Agreement

     10-Q

     August 7, 2013

     10(k)

     001-14817

      
     (j)

     PACCAR Inc Long Term Incentive Plan, 2018 Form of Restricted Stock Award Agreement

     10-K

     February 21, 2019

     10(m)

     001-14817

      
     (k)

     PACCAR Inc Long Term Incentive Plan, Form of Restricted Stock Unit Agreement

     10-K

     February 21, 2019

     10(n)

     001-14817

      
     (l)

     PACCAR Inc Savings Investment Plan, Amendment and Restatement effective September 1, 2016

     10-Q

     November 4, 2016

     10(q)

     001-14817

     (31)

     Rule 13a-14(a)/15d-14(a) Certifications:

      
     (a)

     Certification of Principal Executive Officer*

      
     (b)

     Certification of Principal Financial Officer*

     (32)

     Section 1350 Certifications:

      
     Certification pursuant to rule 13a-14(b) and section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. section 1350)*

     (101.INS)

     Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

     (101.SCH)

     Inline XBRL Taxonomy Extension Schema Document*

     (104)

     Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)*

      
     *

     filed herewith

- 55 -

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			PACCAR Inc
			(Registrant)

Date	October 30, 2024	By	/s/ B. J. Poplawski
			B. J. Poplawski
			Vice President and Controller
			(Authorized Officer and Chief Accounting Officer)

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