UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~March 31,~~June 30, 2022

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File No. 001-14817

PACCAR Inc

(Exact name of registrant as specified in its charter)

Delaware	91-0351110
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

777 - 106th Ave. N.E., Bellevue, WA	98004
(Address of principal executive offices)	(Zip Code)

(425) 468-7400

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common stock, $1 par value	PCAR	The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Common Stock, $1 par value — ~~347,683,222~~347,718,742 shares as of ~~April~~July 28, 2022

PACCAR Inc – Form 10-Q

INDEX

		Page
PART I.	FINANCIAL INFORMATION:

ITEM 1.	FINANCIAL STATEMENTS:
	Consolidated Statements of Comprehensive Income – Three and Six Months Ended ~~March 31,~~June 30, 2022 and 2021 (Unaudited)	3
	Consolidated Balance Sheets – ~~March 31,~~June 30, 2022 and December 31, 2021 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows – ~~Three~~Six Months Ended ~~March 31,~~June 30, 2022 and 2021 (Unaudited)	6
	Consolidated Statements of Stockholders’ Equity – Three and Six Months Ended ~~March 31,~~June 30, 2022 and 2021 (Unaudited)	7
	Notes to Consolidated Financial Statements (Unaudited)	8
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3134
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4249
ITEM 4.	CONTROLS AND PROCEDURES	4249

PART II.	OTHER INFORMATION:

ITEM 1.	LEGAL PROCEEDINGS	4350
ITEM 1A.	RISK FACTORS	4350
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	4350
ITEM 6.	EXHIBITS	4351

INDEX TO EXHIBITS		4351

SIGNATURE		4654

- 2 -

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Consolidated Statements of Comprehensive Income (Unaudited)

(Millions, Except Per Share Amounts)

	Three Months Ended						Three Months Ended						Six Months Ended
	March 31						June 30						June 30
	2022			2021			2022			2021			2022			2021
TRUCK, PARTS AND OTHER:
Net sales and revenues	$	6,106.4		$	5,413.5		$	6,786.2		$	5,387.6		$	12,892.6		$	10,801.1

Cost of sales and revenues		5,285.5			4,689.7			5,811.0			4,659.4			11,096.5			9,349.1
Research and development		78.0			80.1			80.4			84.4			158.4			164.5
Selling, general and administrative		148.0			129.9			144.9			132.2			292.9			262.1
Interest and other (income), net		(32.0	)		(13.2	)		(22.4	)		(17.2	)		(54.4	)		(30.4	)
		5,479.5			4,886.5			6,013.9			4,858.8			11,493.4			9,745.3
Truck, Parts and Other Income Before Income Taxes		626.9			527.0			772.3			528.8			1,399.2			1,055.8

FINANCIAL SERVICES:
Interest and fees		132.3			129.9			150.9			132.4			283.2			262.3
Operating lease, rental and other revenues		233.9			302.1			221.6			323.9			455.5			626.0
Revenues		366.2			432.0			372.5			456.3			738.7			888.3

Interest and other borrowing expenses		39.8			42.0			46.4			37.6			86.2			79.6
Depreciation and other expenses		143.5			278.7			145.4			280.5			288.9			559.2
Selling, general and administrative		35.7			31.2			31.9			32.2			67.6			63.4
Provision for losses on receivables		.2			3.7			4.4			(.5	)		4.6			3.2
		219.2			355.6			228.1			349.8			447.3			705.4
Financial Services Income Before Income Taxes		147.0			76.4			144.4			106.5			291.4			182.9
Investment (loss) income		(2.5	)		4.9
Investment income								5.4			5.0			2.9			9.9
Total Income Before Income Taxes		771.4			608.3			922.1			640.3			1,693.5			1,248.6
Income taxes		170.9			137.5			201.7			144.8			372.6			282.3
Net Income	$	600.5		$	470.8		$	720.4		$	495.5		$	1,320.9		$	966.3

Net Income Per Share
Basic	$	1.72		$	1.35		$	2.07		$	1.42		$	3.79		$	2.78
Diluted	$	1.72		$	1.35		$	2.07		$	1.42		$	3.79		$	2.77

Weighted Average Number of Common Shares Outstanding
Basic		348.3			347.6			348.4			347.8			348.3			347.7
Diluted		348.8			348.4			348.8			348.5			348.8			348.5

Comprehensive Income	$	643.9		$	404.7		$	486.4		$	582.3		$	1,130.3		$	987.0

See Notes to Consolidated Financial Statements.

- 3 -

Consolidated Balance Sheets (Millions) (Unaudited)

	March 31		December 31		June 30		December 31
	2022		2021		2022		2021
ASSETS

TRUCK, PARTS AND OTHER:
Current Assets
Cash and cash equivalents	$	3,157.2	$	3,253.6	$	3,135.1	$	3,253.6
Trade and other receivables, net (allowance for losses: 2022 - $.6, 2021 - $.6)		1,927.8		1,575.1		1,959.7		1,575.1
Marketable securities		1,515.2		1,559.4		1,559.2		1,559.4
Inventories, net		2,222.1		1,976.0		2,232.2		1,976.0
Other current assets		720.5		732.9		692.1		732.9
Total Truck, Parts and Other Current Assets		9,542.8		9,097.0		9,578.3		9,097.0

Equipment on operating leases, net		285.5		302.4		250.3		302.4
Property, plant and equipment, net		3,420.0		3,398.1		3,368.0		3,398.1
Other noncurrent assets, net		1,340.7		1,293.0		1,351.2		1,293.0
Total Truck, Parts and Other Assets		14,589.0		14,090.5		14,547.8		14,090.5

FINANCIAL SERVICES:
Cash and cash equivalents		157.7		174.7		96.2		174.7
Finance and other receivables, net (allowance for losses: 2022 - $118.3, 2021 - $116.9)		12,563.9		11,920.8
Finance and other receivables, net (allowance for losses: 2022 - $119.6, 2021 - $116.9)						12,649.2		11,920.8
Equipment on operating leases, net		2,811.3		2,886.5		2,704.9		2,886.5
Other assets		464.2		436.9		590.6		436.9
Total Financial Services Assets		15,997.1		15,418.9		16,040.9		15,418.9
	$	30,586.1	$	29,509.4	$	30,588.7	$	29,509.4

See Notes to Consolidated Financial Statements.

- 4 -

Consolidated Balance Sheets (Millions) (Unaudited)

	March 31			December 31			June 30			December 31
	2022			2021			2022			2021
LIABILITIES AND STOCKHOLDERS' EQUITY

TRUCK, PARTS AND OTHER:
Current Liabilities
Accounts payable, accrued expenses and other	$	4,609.6		$	3,930.9		$	4,537.0		$	3,930.9
Dividend payable					521.1						521.1
Total Truck, Parts and Other Current Liabilities		4,609.6			4,452.0			4,537.0			4,452.0
Residual value guarantees and deferred revenues		309.3			329.1			271.7			329.1
Other liabilities		1,407.0			1,487.6			1,419.2			1,487.6
Total Truck, Parts and Other Liabilities		6,325.9			6,268.7			6,227.9			6,268.7

FINANCIAL SERVICES:
Accounts payable, accrued expenses and other		636.7			624.5			697.0			624.5
Commercial paper and bank loans		3,762.6			3,303.0			3,270.5			3,303.0
Term notes		7,097.4			7,128.8			7,293.8			7,128.8
Deferred taxes and other liabilities		620.2			590.4			581.5			590.4
Total Financial Services Liabilities		12,116.9			11,646.7			11,842.8			11,646.7

STOCKHOLDERS' EQUITY:
Preferred stock, no par value - authorized 1.0 million shares, NaN issued
Common stock, $1 par value - authorized 1.2 billion shares, issued 347.7 and 347.3 million shares		347.7			347.3			347.7			347.3
Additional paid-in capital		167.3			142.0			174.0			142.0
Treasury stock, at cost - .02 million and nil shares		(1.9	)					(1.9	)
Retained earnings		12,507.9			12,025.8			13,109.9			12,025.8
Accumulated other comprehensive loss		(877.7	)		(921.1	)		(1,111.7	)		(921.1	)
Total Stockholders' Equity		12,143.3			11,594.0			12,518.0			11,594.0
	$	30,586.1		$	29,509.4		$	30,588.7		$	29,509.4

See Notes to Consolidated Financial Statements.

- 5 -

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Millions)

	Three Months Ended						Six Months Ended
	March 31						June 30
	2022			2021			2022			2021
OPERATING ACTIVITIES:
Net Income	$	600.5		$	470.8		$	1,320.9		$	966.3
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization:
Property, plant and equipment		74.0			66.9			155.3			133.8
Equipment on operating leases and other		111.7			184.8			227.3			348.6
Provision for losses on financial services receivables		.2			3.7			4.6			3.2
Other, net		(140.7	)		(47.1	)		(158.0	)		(50.7	)
Pension contributions		(6.7	)		(6.2	)		(13.2	)		(12.9	)
Change in operating assets and liabilities:
Trade and other receivables		(381.0	)		(468.2	)		(440.1	)		(334.8	)
Wholesale receivables on new trucks		(327.4	)		26.8			(570.4	)		163.4
Inventories		(230.9	)		(270.9	)		(307.9	)		(843.3	)
Accounts payable and accrued expenses		550.3			655.8			810.3			731.0
Income taxes, warranty and other		209.3			(79.5	)		68.7			(236.9	)
Net Cash Provided by Operating Activities		459.3			536.9			1,097.5			867.7

INVESTING ACTIVITIES:
Originations of retail loans and finance leases		(1,221.0	)		(1,036.2	)		(2,407.0	)		(2,291.7	)
Collections on retail loans and finance leases		974.1			937.5			2,000.6			1,954.6
Net (increase) decrease in wholesale receivables on used equipment		(1.6	)		17.4			(18.7	)		19.1
Purchases of marketable debt securities		(207.7	)		(158.0	)		(515.9	)		(401.8	)
Proceeds from sales and maturities of marketable debt securities		203.9			153.2			426.3			385.8
Payments for property, plant and equipment		(138.4	)		(114.6	)		(266.9	)		(242.4	)
Acquisitions of equipment for operating leases		(230.2	)		(243.1	)		(472.4	)		(550.9	)
Proceeds from asset disposals		188.1			240.9			348.3			473.4
Other, net		26.7			(12.8	)		26.7			(12.8	)
Net Cash Used in Investing Activities		(406.1	)		(215.7	)		(879.0	)		(666.7	)

FINANCING ACTIVITIES:
Payments of cash dividends		(639.4	)		(353.7	)		(757.6	)		(471.8	)
Purchases of treasury stock		(1.9	)		(1.4	)		(1.9	)		(1.4	)
Proceeds from stock compensation transactions		16.7			28.8			18.4			30.1
Net increase (decrease) in commercial paper, short-term bank loans and other		481.6			(383.5	)
Net increase in commercial paper, short-term bank loans and other								116.5			27.4
Proceeds from term debt		631.7			892.5			1,648.3			1,429.7
Payments on term debt		(645.1	)		(691.0	)		(1,369.7	)		(1,665.5	)
Net Cash Used in Financing Activities		(156.4	)		(508.3	)		(346.0	)		(651.5	)
Effect of exchange rate changes on cash and cash equivalents		(10.2	)		(32.5	)		(69.5	)		(19.3	)
Net Decrease in Cash and Cash Equivalents		(113.4	)		(219.6	)		(197.0	)		(469.8	)
Cash and cash equivalents at beginning of period		3,428.3			3,539.6			3,428.3			3,539.6
Cash and cash equivalents at end of period	$	3,314.9		$	3,320.0		$	3,231.3		$	3,069.8

See Notes to Consolidated Financial Statements.

- 6 -

Consolidated Statements of Stockholders’ Equity (Unaudited)

(Millions, Except Per Share Amounts)

	Three Months Ended						Three Months Ended						Six Months Ended
	March 31						June 30						June 30
	2022			2021			2022			2021			2022			2021
COMMON STOCK, $1 PAR VALUE:
Balance at beginning of period	$	347.3		$	346.6		$	347.7		$	347.2		$	347.3		$	346.6
Stock compensation		.4			.6									.4			.6
Balance at end of period		347.7			347.2			347.7			347.2			347.7			347.2

ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of period		142.0			88.5			167.3			124.3			142.0			88.5
Stock compensation		25.3			35.8			6.7			4.6			32.0			40.4
Balance at end of period		167.3			124.3			174.0			128.9			174.0			128.9

TREASURY STOCK, AT COST:
Balance at beginning of period								(1.9	)		(1.4	)
Purchases		(1.9	)		(1.4	)								(1.9	)		(1.4	)
Balance at end of period		(1.9	)		(1.4	)		(1.9	)		(1.4	)		(1.9	)		(1.4	)

RETAINED EARNINGS:
Balance at beginning of period		12,025.8			11,148.5			12,507.9			11,508.0			12,025.8			11,148.5
Net income		600.5			470.8			720.4			495.5			1,320.9			966.3
Cash dividends declared on common stock		(118.4	)		(111.3	)		(118.4	)		(118.3	)		(236.8	)		(229.6	)
Balance at end of period		12,507.9			11,508.0			13,109.9			11,885.2			13,109.9			11,885.2

ACCUMULATED OTHER COMPREHENSIVE LOSS:
Balance at beginning of period		(921.1	)		(1,050.3	)		(877.7	)		(1,116.4	)		(921.1	)		(1,050.3	)
Other comprehensive income (loss)		43.4			(66.1	)
Other comprehensive (loss) income								(234.0	)		86.8			(190.6	)		20.7
Balance at end of period		(877.7	)		(1,116.4	)		(1,111.7	)		(1,029.6	)		(1,111.7	)		(1,029.6	)
Total Stockholders’ Equity	$	12,143.3		$	10,861.7		$	12,518.0		$	11,330.3		$	12,518.0		$	11,330.3

Cash dividends declared on common stock, per share	$	.34		$	.32		$	.34		$	.34		$	.68		$	.66

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 six months ended ~~March 31,~~June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. 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, 2021.

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 March 31,	2022		2021
					Three Months Ended				Six Months Ended
					June 30				June 30
					2022		2021		2022		2021
Additional shares		567,400		792,800		422,500		712,700		497,300		752,300
Antidilutive options		1,092,200		583,000		1,099,900		551,000		1,100,300		583,600

Change in Accounting: In the first quarter of 2022, the Company changed the method of accounting for its U.S. inventories from last-in-first-out (LIFO) to first-in-first-out (FIFO). Inventories valued using the LIFO method comprised 41% of consolidated inventories before deducting the LIFO reserve at December 31, 2021. The Company believes the FIFO method is preferable because it better matches cost with revenues, it results in a more consistent method to value inventory with its foreign subsidiaries and it improves comparability with industry peers. This change increased Retained Earnings by $143.3 million to $11,148.5 million at January 1, 2021. The effects of the change in accounting principle have been retrospectively applied to all periods presented:

The effect of the changes made to the Company’s Consolidated Statements of Comprehensive Income was as follows:

Three Months Ended March 31, 2021	AS ORIGINALLY REPORTED		EFFECT OF CHANGE			AS ADJUSTED
Three Months Ended June 30, 2021								AS ORIGINALLY REPORTED		EFFECT OF CHANGE			AS ADJUSTED
Truck, Parts and Other
Cost of sales and revenues	$	4,690.7	$	(1.0	)	$	4,689.7	$	4,662.7	$	(3.3	)	$	4,659.4
Income Taxes		137.2		.3			137.5		144.1		.7			144.8
Net Income		470.1		.7			470.8		492.9		2.6			495.5

Six Months Ended June 30, 2021	AS ORIGINALLY REPORTED		EFFECT OF CHANGE			AS ADJUSTED
Truck, Parts and Other
Cost of sales and revenues	$	9,353.4	$	(4.3	)	$	9,349.1
Income Taxes		281.3		1.0			282.3
Net Income		963.0		3.3			966.3

The cumulative effect of the changes made to the Company’s Consolidated Balance Sheet was as follows:

December 31, 2021	AS ORIGINALLY REPORTED		EFFECT OF CHANGE		AS ADJUSTED
Truck, Parts and Other
Inventories, net	$	1,768.3	$	207.7	$	1,976.0
Other liabilities		1,436.5		51.1		1,487.6
Retained earnings		11,869.2		156.6		12,025.8

The change in accounting policy did not materially affect basic or diluted net income per share or income before income taxes within the Truck, Parts and Other segments for the three and six months ended ~~March 31,~~June 30, 2021. There was no impact on total net cash provided by operating activities.

- 8 -

Notes to Consolidated Financial Statements (Unaudited)

(Millions, Except Share Amounts)

The following table compares the amounts currently reported to amounts that would have been reported under LIFO in the Consolidated Statements of Comprehensive Income.

Three Months Ended March 31, 2022	AS REPORTED		PRO FORMA UNDER LIFO		EFFECT OF CHANGE
Three Months Ended June 30, 2022								AS REPORTED		PRO FORMA UNDER LIFO		EFFECT OF CHANGE
Truck, Parts and Other
Cost of sales and revenues	$	5,285.5	$	5,296.8	$	(11.3	)	$	5,811.0	$	5,825.6	$	(14.6	)
Income Taxes		170.9		168.1		2.8			201.7		198.1		3.6
Net Income		600.5		592.0		8.5			720.4		709.4		11.0
Net Income Per Share
Basic	$	1.72	$	1.70	$	.02		$	2.07	$	2.04	$	.03
Diluted	$	1.72	$	1.70	$	.02		$	2.07	$	2.03	$	.04

Six Months Ended June 30, 2022	AS REPORTED		PRO FORMA UNDER LIFO		EFFECT OF CHANGE
Truck, Parts and Other
Cost of sales and revenues	$	11,096.5	$	11,122.4	$	(25.9	)
Income Taxes		372.6		366.2		6.4
Net Income		1,320.9		1,301.4		19.5
Net Income Per Share
Basic	$	3.79	$	3.74	$	.05
Diluted	$	3.79	$	3.73	$	.06

The effect of the change to income before income taxes within the Truck, Parts and Other segments for the three and six months ended ~~March 31,~~June 30, 2022 would not be ~~material, and~~material. In addition, there would be no ~~impact~~material effect on ~~total net cash provided by operating activities.~~the Consolidated Statements of Cash Flows.

The following table compares the amounts currently reported to amounts that would have been reported under LIFO in the Consolidated Balance Sheet.

March 31, 2022	AS REPORTED		PRO FORMA UNDER LIFO		EFFECT OF CHANGE
June 30, 2022							AS REPORTED		PRO FORMA UNDER LIFO		EFFECT OF CHANGE
Truck, Parts and Other
Inventories, net	$	2,222.1	$	2,003.1	$	219.0	$	2,232.2	$	1,998.6	$	233.6
Accounts payable, accrued expenses and other		4,609.6		4,555.7		53.9		4,537.0		4,479.5		57.5
Retained earnings		12,507.9		12,342.8		165.1		13,109.9		12,933.8		176.1

New Accounting Pronouncements: The Company adopted the following standards on January 1, 2022, which had no material impact on the Company’s consolidated financial statements.

STANDARD	DESCRIPTION
2021-05	Leases (Topic 842) - Lessors—Certain Leases with Variable Lease Payments
2021-10	Government Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance

The Financial Accounting Standards Board (FASB) also issued the following ~~standard,~~standards, which isare not expected to have a material impact on the Company’s consolidated financial statements.

STANDARD	DESCRIPTION	EFFECTIVE DATE
2022-02*	Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures	January 1, 2023

2022-03*

Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to

Contractual Sale Restrictions

January 1, 2024

* The Company will adopt on the effective date.

- 9 -

Notes to Consolidated Financial Statements (Unaudited)

(Millions, Except Share Amounts)

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.

~~- 9 -~~

~~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 March 31,	2022		2021
					Three Months Ended				Six Months Ended
					June 30				June 30
					2022		2021		2022		2021
Truck
Truck sales	$	4,481.1	$	4,045.0	$	5,130.2	$	3,950.4	$	9,611.3	$	7,995.4
Revenues from extended warranties, operating leases and other		216.0		188.0		206.2		201.8		422.2		389.8
		4,697.1		4,233.0		5,336.4		4,152.2		10,033.5		8,385.2
Parts
Parts sales		1,348.1		1,125.9		1,394.5		1,176.1		2,742.6		2,302.0
Revenues from dealer services and other		40.8		34.8		40.2		35.2		81.0		70.0
		1,388.9		1,160.7		1,434.7		1,211.3		2,823.6		2,372.0
Winch sales and other		20.4		19.8		15.1		24.1		35.5		43.9
Truck, Parts and Other sales and revenues	$	6,106.4	$	5,413.5	$	6,786.2	$	5,387.6	$	12,892.6	$	10,801.1

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. As a practical expedient, 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 weighted average return rate over an eight-year period.

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 truck assets to be returned goods assets and the related return liabilities:

- 10 -

March 31, 2022

December 31, 2021

ASSETS

LIABILITIES

ASSETS

LIABILITIES

Trucks

Other current assets

$
262.2

$
255.7

Accounts payable, accrued expenses and other

$
267.9

$
264.0

Other noncurrent assets, net

375.7

403.6

Other liabilities

396.0

423.9

$
637.9

$
663.9

$
659.3

$
687.9

Parts

Other current assets

$
80.0

$
72.9

Accounts payable, accrued expenses and other

$
188.3

$
172.1

$
80.0

$
188.3

$
72.9

$
172.1

Notes to Consolidated Financial Statements (Unaudited)

(Millions, Except Share Amounts)

	June 30, 2022				December 31, 2021
	ASSETS		LIABILITIES		ASSETS		LIABILITIES
Trucks
Other current assets	$	222.1			$	255.7
Accounts payable, accrued expenses and other			$	226.2			$	264.0
Other noncurrent assets, net		364.9				403.6
Other liabilities				383.0				423.9
	$	587.0	$	609.2	$	659.3	$	687.9
Parts
Other current assets	$	82.3			$	72.9
Accounts payable, accrued expenses and other			$	193.8			$	172.1
	$	82.3	$	193.8	$	72.9	$	172.1

For contracts accounted for as a sale, the Company’s total commitment to acquire trucks at a guaranteed value was ~~$1,172.1~~$1,074.7 at ~~March 31,~~June 30, 2022.

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

~~- 10 -~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~(Millions, Except Share Amounts)~~

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 $~~82.0~~$72.7 at ~~March 31,~~June 30, 2022. The Company expects to recognize approximately $~~26.8~~$16.3 of the remaining deferred revenue in 2022, $~~24.2~~$23.7 in 2023, ~~$15.1~~$14.9 in 2024, $~~12.9~~$12.1 in 2025 and ~~$3.0~~$5.7 in 2026. ~~Total~~For the three and six months ended June 30, 2022, total operating lease revenue from truck sales with RVGs was $~~27.9~~$22.0 and ~~$20.6~~$49.9, respectively compared to $29.7 and $50.3 for the three and six months ended ~~March 31, 2022 and 2021, respectively.~~June 30, 2021. The Company’s total commitment to acquire trucks at a guaranteed value for contracts accounted for as a lease was $~~227.3~~$199.0 at ~~March 31,~~June 30, 2022.

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, 0 finance receivables more than 90 days past due were accruing interest at ~~March 31,~~June 30, 2022 or December 31, 2021. 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.

- 11 -

Notes to Consolidated Financial Statements (Unaudited)

(Millions, Except Share Amounts)

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.

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

Three Months Ended March 31,	2022		2021
					Three Months Ended				Six Months Ended
					June 30, 2022				June 30, 2022
					2022		2021		2022		2021
Finance lease revenues	$	42.9	$	47.7	$	45.0	$	48.4	$	87.9	$	96.1
Operating lease revenues		203.6		209.4		199.7		212.1		403.3		421.5
Total lease revenues	$	246.5	$	257.1	$	244.7	$	260.5	$	491.2	$	517.6

~~- 11 -~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~(Millions, Except Share Amounts)~~

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 March 31, 2022 and December 31, 2021 consisted of the following:~~

UNREALIZED

UNREALIZED

FAIR

At March 31, 2022

COST

GAINS

LOSSES

VALUE

Marketable debt securities

U.S. tax-exempt securities

$
447.3

$
.1

$
7.3

$
440.1

U.S. taxable municipal/ provincial bonds

181.6

.1

6.4

175.3

U.S. corporate securities

212.0

6.9

205.1

U.S. government and agency securities

89.4

.1

1.1

88.4

Non-U.S. corporate securities

441.1

.1

10.1

431.1

Non-U.S. government securities

72.1

1.4

70.7

Other debt securities

100.8

.1

3.0

97.9

Marketable equity securities

15.4

8.8

6.6

Total marketable securities

$
1,559.7

$
.5

$
45.0

$
1,515.2

UNREALIZED

UNREALIZED

FAIR

At December 31, 2021

COST

GAINS

LOSSES

VALUE

Marketable debt securities

U.S. tax-exempt securities

$
431.4

$
1.5

$
.4

$
432.5

U.S. taxable municipal/ provincial bonds

192.2

.6

1.2

191.6

U.S. corporate securities

208.3

.6

1.5

207.4

U.S. government and agency securities

95.9

.6

.1

96.4

Non-U.S. corporate securities

443.9

1.4

2.5

442.8

Non-U.S. government securities

75.2

.1

.3

75.0

Other debt securities

100.4

.3

.7

100.0

Marketable equity securities

15.4

1.3

3.0

13.7

Total marketable securities

$
1,562.7

$
6.4

$
9.7

$
1,559.4

- 12 -

Notes to Consolidated Financial Statements (Unaudited)

(Millions, Except Share Amounts)

Marketable securities at June 30, 2022 and December 31, 2021 consisted of the following:

			UNREALIZED		UNREALIZED		FAIR
At June 30, 2022	COST		GAINS		LOSSES		VALUE
Marketable debt securities
U.S. tax-exempt securities	$	469.7	$	.3	$	7.0	$	463.0
U.S. taxable municipal/ provincial bonds		167.0				8.2		158.8
U.S. corporate securities		229.6		.1		9.3		220.4
U.S. government and agency securities		120.4		.2		1.5		119.1
Non-U.S. corporate securities		440.3				14.7		425.6
Non-U.S. government securities		77.3		.1		2.0		75.4
Other debt securities		98.8				4.1		94.7
Marketable equity securities		15.4				13.2		2.2
Total marketable securities	$	1,618.5	$	.7	$	60.0	$	1,559.2

			UNREALIZED		UNREALIZED		FAIR
At December 31, 2021	COST		GAINS		LOSSES		VALUE
Marketable debt securities
U.S. tax-exempt securities	$	431.4	$	1.5	$	.4	$	432.5
U.S. taxable municipal/ provincial bonds		192.2		.6		1.2		191.6
U.S. corporate securities		208.3		.6		1.5		207.4
U.S. government and agency securities		95.9		.6		.1		96.4
Non-U.S. corporate securities		443.9		1.4		2.5		442.8
Non-U.S. government securities		75.2		.1		.3		75.0
Other debt securities		100.4		.3		.7		100.0
Marketable equity securities		15.4		1.3		3.0		13.7
Total marketable securities	$	1,562.7	$	6.4	$	9.7	$	1,559.4

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 $.4 and ~~$.6~~$1.2 and gross realized losses were ~~$.4~~$.9 and $.1 for the ~~three~~six months periods ended ~~March 31,~~June 30, 2022 and 2021, respectively.

~~There were 0 realized gains (losses) on marketable equity securities for the three months periods ended March 31, 2022.~~

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

	March 31, 2022				December 31, 2021				June 30, 2022				December 31, 2021
	LESS THAN		TWELVE MONTHS		LESS THAN		TWELVE MONTHS		LESS THAN		TWELVE MONTHS		LESS THAN		TWELVE MONTHS
	TWELVE MONTHS		OR GREATER		TWELVE MONTHS		OR GREATER		TWELVE MONTHS		OR GREATER		TWELVE MONTHS		OR GREATER
Fair value	$	1,246.6	$	75.1	$	911.2	$	1.3	$	1,233.6	$	80.0	$	911.2	$	1.3
Unrealized losses		32.6		3.6		6.7				41.7		5.1		6.7

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, 0 allowance for credit losses was recorded at ~~March 31,~~June 30, 2022 and December 31, 2021. 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 ~~March 31,~~June 30, 2022 were as follows:

	AMORTIZED		FAIR		AMORTIZED		FAIR
	COST		VALUE		COST		VALUE
Within one year	$	432.7	$	432.0	$	384.0	$	381.8
One to five years		1,092.0		1,057.9		1,201.9		1,159.3
Six to ten years		5.7		5.6		4.0		3.9
More than ten years		13.9		13.1		13.2		12.0
	$	1,544.3	$	1,508.6	$	1,603.1	$	1,557.0

- 13 -

Notes to Consolidated Financial Statements (Unaudited)

(Millions, Except Share Amounts)

NOTE D - Inventories

Inventories are stated at the lower of cost or market. Cost of inventories is determined principally by the first-in, first-out (FIFO) method.

Inventories include the following:

	March 31		December 31		June 30		December 31
	2022		2021		2022		2021
Finished products	$	749.9	$	676.0	$	792.1	$	676.0
Work in process and raw materials		1,472.2		1,300.0		1,440.1		1,300.0
		2,222.1		1,976.0	$	2,232.2	$	1,976.0

In the first quarter of 2022, the Company changed the method of accounting for its U.S. inventories from last-in-first-out (LIFO) to first-in-first-out (FIFO) and all prior periods have been retrospectively applied. See Note A - Basis of Presentation of this Quarterly Report on Form 10-Q.

~~- 13 -~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~(Millions, Except Share Amounts)~~

NOTE E - Finance and Other Receivables

Finance and other receivables include the following:

	March 31			December 31			June 30			December 31
	2022			2021			2022			2021
Loans	$	6,744.4		$	6,424.7		$	6,720.9		$	6,424.7
Finance leases		3,592.8			3,620.6			3,531.2			3,620.6
Dealer wholesale financing		2,202.5			1,865.8			2,385.8			1,865.8
Operating lease receivables and other		142.5			126.6			130.9			126.6
		12,682.2			12,037.7			12,768.8			12,037.7
Less allowance for losses:
Loans and leases		(111.2	)		(111.5	)		(112.8	)		(111.5	)
Dealer wholesale financing		(3.7	)		(3.3	)		(3.9	)		(3.3	)
Operating lease receivables and other		(3.4	)		(2.1	)		(2.9	)		(2.1	)
	$	12,563.9		$	11,920.8		$	12,649.2		$	11,920.8

Included in Finance and other receivables, net on the Consolidated Balance Sheets is accrued interest receivable (net of allowance for credit losses) of ~~$28.2~~$31.9 and $27.7 as of ~~March 31,~~June 30, 2022 and December 31, 2021, 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. When the Company modifies a loan or finance lease for credit reasons and grants a concession, the modification is classified as a troubled debt restructuring (TDR). 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. When such modifications do occur, they are considered TDRs.

- 14 -

Notes to Consolidated Financial Statements (Unaudited)

(Millions, Except Share Amounts)

On average, modifications extended contractual terms by approximately four months in 2022 and eight months in 2021, and did not have a significant effect on the weighted average term or interest rate of the total portfolio at ~~March 31,~~June 30, 2022 and December 31, 2021.

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.

~~- 14 -~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~(Millions, Except Share Amounts)~~

The Company individually evaluates certain finance receivables for impairment. Finance receivables that are evaluated individually for impairment 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. A finance receivable is impaired if it is considered probable the Company will be unable to collect all contractual interest and principal payments as scheduled. In addition, all retail loans and leases which have been classified as TDRs and all customer accounts over 90 days past due are considered impaired. Generally, impaired accounts are on non-accrual status. Impaired accounts classified as TDRs 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.

Impaired receivables are generally considered collateral dependent. Large balance retail and all wholesale impaired receivables are individually evaluated to determine the appropriate reserve for losses. The determination of reserves for large balance impaired receivables 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 impaired receivables 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 impaired 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.

- 15 -

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 more than five 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.

~~- 15 -~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~(Millions, Except Share Amounts)~~

The allowance for credit losses is summarized as follows:

	2022														2022
	DEALER					CUSTOMER									DEALER							CUSTOMER
	WHOLESALE		RETAIL			RETAIL			OTHER*			TOTAL			WHOLESALE			RETAIL				RETAIL			OTHER*			TOTAL
Balance at January 1	$	3.3	$	7.1		$	104.4		$	2.1		$	116.9		$	3.3		$	7.1			$	104.4		$	2.1		$	116.9
Provision for losses		.4		(1.9	)		1.2			.5			.2			.8			(2.5	)			6.1			.2			4.6
Charge-offs							(2.5	)		(.1	)		(2.6	)									(4.4	)		(.3	)		(4.7	)
Recoveries							1.9						1.9										3.3			.3			3.6
Currency translation and other							1.0			.9			1.9			(.2	)						(1.2	)		.6			(.8	)
Balance at March 31	$	3.7	$	5.2		$	106.0		$	3.4		$	118.3
Balance at June 30															$	3.9		$	4.6		��	$	108.2		$	2.9		$	119.6

	2021														2021
	DEALER					CUSTOMER									DEALER					CUSTOMER
	WHOLESALE		RETAIL			RETAIL			OTHER*			TOTAL			WHOLESALE		RETAIL			RETAIL			OTHER*			TOTAL
Balance at January 1	$	3.4	$	8.4		$	112.0		$	3.2		$	127.0		$	3.4	$	8.4		$	112.0		$	3.2		$	127.0
Provision for losses		.1		(.2	)		3.3			.5			3.7					(.3	)		2.7			.8			3.2
Charge-offs							(3.8	)		(.2	)		(4.0	)							(6.9	)		(.6	)		(7.5	)
Recoveries							1.5						1.5								2.8			.2			3.0
Currency translation and other							(1.3	)		(.1	)		(1.4	)							(.4	)					(.4	)
Balance at March 31	$	3.5	$	8.2		$	111.7		$	3.4		$	126.8
Balance at June 30															$	3.4	$	8.1		$	110.2		$	3.6		$	125.3

*	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 impaired. At-risk accounts are accounts that are impaired, including TDRs, accounts over 90 days past due and other accounts on non-accrual status.

- 16 -

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.

	REVOLVING																REVOLVING
At March 31, 2022	LOANS		2022		2021		2020		2019		2018		PRIOR		TOTAL
At June 30, 2022																	LOANS		2022		2021		2020		2019		2018		PRIOR		TOTAL
Dealer:
Wholesale:
Performing	$	2,197.2													$	2,197.2	$	2,379.6													$	2,379.6
Watch		5.3														5.3		6.2														6.2
	$	2,202.5													$	2,202.5	$	2,385.8													$	2,385.8
Retail:
Performing	$	188.6	$	225.1	$	410.7	$	274.9	$	303.4	$	165.9	$	191.8	$	1,760.4	$	198.3	$	295.1	$	390.7	$	258.6	$	284.3	$	147.0	$	163.3	$	1,737.3
At-risk														1.2		1.2														.9		.9
	$	188.6	$	225.1	$	410.7	$	274.9	$	303.4	$	165.9	$	193.0	$	1,761.6	$	198.3	$	295.1	$	390.7	$	258.6	$	284.3	$	147.0	$	164.2	$	1,738.2
Total dealer	$	2,391.1	$	225.1	$	410.7	$	274.9	$	303.4	$	165.9	$	193.0	$	3,964.1	$	2,584.1	$	295.1	$	390.7	$	258.6	$	284.3	$	147.0	$	164.2	$	4,124.0

Customer retail:
Fleet:
Performing			$	883.7	$	2,685.1	$	1,832.9	$	1,030.2	$	490.7	$	200.5	$	7,123.1			$	1,734.3	$	2,378.3	$	1,634.1	$	841.4	$	365.3	$	139.3	$	7,092.7
Watch				.3		9.8		9.9		3.2		4.4		.5		28.1				1.1		10.0		3.6		8.6		3.6		.8		27.7
At-risk				.5		9.7		5.4		21.7		8.9		2.8		49.0				.6		10.6		14.4		28.8		8.2		1.7		64.3
			$	884.5	$	2,704.6	$	1,848.2	$	1,055.1	$	504.0	$	203.8	$	7,200.2			$	1,736.0	$	2,398.9	$	1,652.1	$	878.8	$	377.1	$	141.8	$	7,184.7
Owner/operator:
Performing			$	139.0	$	565.4	$	349.7	$	191.6	$	91.1	$	30.1	$	1,366.9			$	265.3	$	504.3	$	308.8	$	158.0	$	68.8	$	18.0	$	1,323.2
Watch						1.2		1.2		.8		.6		.1		3.9				.2		.8		.9		.6		.2				2.7
At-risk						.6		1.0		1.2		1.4		.4		4.6						.5		1.0		.9		.8		.1		3.3
			$	139.0	$	567.2	$	351.9	$	193.6	$	93.1	$	30.6	$	1,375.4			$	265.5	$	505.6	$	310.7	$	159.5	$	69.8	$	18.1	$	1,329.2
Total customer retail			$	1,023.5	$	3,271.8	$	2,200.1	$	1,248.7	$	597.1	$	234.4	$	8,575.6			$	2,001.5	$	2,904.5	$	1,962.8	$	1,038.3	$	446.9	$	159.9	$	8,513.9

Total	$	2,391.1	$	1,248.6	$	3,682.5	$	2,475.0	$	1,552.1	$	763.0	$	427.4	$	12,539.7	$	2,584.1	$	2,296.6	$	3,295.2	$	2,221.4	$	1,322.6	$	593.9	$	324.1	$	12,637.9

- 17 -

Notes to Consolidated Financial Statements (Unaudited)

(Millions, Except Share Amounts)

	REVOLVING
At December 31, 2021	LOANS		2021		2020		2019		2018		2017		PRIOR		TOTAL
Dealer:
Wholesale:
Performing	$	1,859.7													$	1,859.7
Watch		6.1														6.1
	$	1,865.8													$	1,865.8
Retail:
Performing	$	201.9	$	434.4	$	315.4	$	311.7	$	176.0	$	118.2	$	96.9	$	1,654.5
Watch				7.0		3.6		9.1		4.6		1.1				25.4
At-risk														1.1		1.1
	$	201.9	$	441.4	$	319.0	$	320.8	$	180.6	$	119.3	$	98.0	$	1,681.0
Total dealer	$	2,067.7	$	441.4	$	319.0	$	320.8	$	180.6	$	119.3	$	98.0	$	3,546.8

Customer retail:
Fleet:
Performing			$	2,851.7	$	1,913.3	$	1,227.0	$	608.4	$	220.4	$	66.5	$	6,887.3
Watch				2.6		6.5		4.3		5.3		.6		.2		19.5
At-risk				6.0		8.5		26.0		10.6		3.3		.4		54.8
			$	2,860.3	$	1,928.3	$	1,257.3	$	624.3	$	224.3	$	67.1	$	6,961.6
Owner/operator:
Performing			$	611.9	$	389.9	$	228.1	$	116.0	$	38.6	$	10.1	$	1,394.6
Watch				.7		.5		.7		.4		.1				2.4
At-risk				.2		1.3		1.5		2.0		.5		.2		5.7
			$	612.8	$	391.7	$	230.3	$	118.4	$	39.2	$	10.3	$	1,402.7
Total customer retail			$	3,473.1	$	2,320.0	$	1,487.6	$	742.7	$	263.5	$	77.4	$	8,364.3

Total	$	2,067.7	$	3,914.5	$	2,639.0	$	1,808.4	$	923.3	$	382.8	$	175.4	$	11,911.1

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						DEALER				CUSTOMER RETAIL
							OWNER/										OWNER/
At March 31, 2022	WHOLESALE		RETAIL		FLEET		OPERATOR		TOTAL
At June 30, 2022											WHOLESALE		RETAIL		FLEET		OPERATOR		TOTAL
Current and up to 30 days past due	$	2,202.5	$	1,761.6	$	7,161.4	$	1,368.3	$	12,493.8	$	2,384.5	$	1,738.2	$	7,144.0	$	1,324.0	$	12,590.7
31 – 60 days past due						22.2		2.8		25.0		1.3				9.6		1.9		12.8
Greater than 60 days past due						16.6		4.3		20.9						31.1		3.3		34.4
	$	2,202.5	$	1,761.6	$	7,200.2	$	1,375.4	$	12,539.7	$	2,385.8	$	1,738.2	$	7,184.7	$	1,329.2	$	12,637.9

	DEALER				CUSTOMER RETAIL
							OWNER/
At December 31, 2021	WHOLESALE		RETAIL		FLEET		OPERATOR		TOTAL
Current and up to 30 days past due	$	1,865.4	$	1,681.0	$	6,939.7	$	1,396.4	$	11,882.5
31 – 60 days past due		.4				9.3		1.8		11.5
Greater than 60 days past due						12.6		4.5		17.1
	$	1,865.8	$	1,681.0	$	6,961.6	$	1,402.7	$	11,911.1

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

	DEALER			CUSTOMER RETAIL						DEALER			CUSTOMER RETAIL
						OWNER/									OWNER/
At March 31, 2022	WHOLESALE	RETAIL		FLEET		OPERATOR		TOTAL
At June 30, 2022										WHOLESALE	RETAIL		FLEET		OPERATOR		TOTAL
Amortized cost basis with a specific reserve				$	37.8	$	4.6	$	42.4				$	45.8	$	3.1	$	48.9
Amortized cost basis with no specific reserve		$	1.1		1.6				2.7		$	.9		9.9		.1		10.9
Total		$	1.1	$	39.4	$	4.6	$	45.1		$	.9	$	55.7	$	3.2	$	59.8

- 18 -

Notes to Consolidated Financial Statements (Unaudited)

(Millions, Except Share Amounts)

	DEALER			CUSTOMER RETAIL
						OWNER/
At December 31, 2021	WHOLESALE	RETAIL		FLEET		OPERATOR		TOTAL
Amortized cost basis with a specific reserve				$	40.3	$	5.7	$	46.0
Amortized cost basis with no specific reserve		$	1.1		4.7				5.8
Total		$	1.1	$	45.0	$	5.7	$	51.8

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

Three Months Ended March 31,	2022		2021
					Three Months Ended				Six Months Ended
					June 30				June 30
					2022		2021		2022		2021
Dealer:
Retail					$	.1	$	.1	$	.1	$	.1
Customer retail:
Fleet	$	.5	$	1.0		1.4	$	1.4	$	1.9	$	2.4
Owner/operator		.1		.1		.1		.1		.2		.2
	$	.6	$	1.1	$	1.6	$	1.6	$	2.2	$	2.7

Troubled Debt Restructurings

The balance of TDRs was ~~$38.3~~$38.1 and $41.6 at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively. At modification date, the pre-modification and post-modification amortized cost basis balances for finance receivables modified during the period by portfolio class are as follows:

Three Months Ended March 31,

2022

2021

AMORTIZED COST BASIS

AMORTIZED COST BASIS

PRE-
MODIFICATION

POST-
MODIFICATION

PRE-
MODIFICATION

POST-
MODIFICATION

Fleet

$
.6

$
.6

$
4.6

$
4.5

Owner/operator

.9

.9

$
.6

$
.6

$
5.5

$
5.4

	Three Months Ended				Six Months Ended
	June 30, 2022				June 30, 2022
	AMORTIZED COST BASIS				AMORTIZED COST BASIS
	PRE- MODIFICATION		POST- MODIFICATION		PRE- MODIFICATION		POST- MODIFICATION
Fleet	$	7.5	$	7.5	$	8.1	$	8.1
	$	7.5	$	7.5	$	8.1	$	8.1

	Three Months Ended				Six Months Ended
	June 30, 2021				June 30, 2021
	AMORTIZED COST BASIS				AMORTIZED COST BASIS
	PRE- MODIFICATION		POST- MODIFICATION		PRE- MODIFICATION		POST- MODIFICATION
Fleet	$	.2	$	.2	$	4.8	$	4.7
Owner/operator		.1		.1		1.0		1.0
	$	.3	$	.3	$	5.8	$	5.7

The effect on the allowance for credit losses from such modifications was not significant at ~~March 31,~~June 30, 2022 and 2021.

TDRs modified during the previous twelve months that subsequently defaulted (i.e., became more than 30 days past due) in the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021 were $.8 and ~~$1.4,~~$1.1, respectively.

There were no0 finance receivables modified as TDRs during the previous twelve months that subsequently defaulted and were charged off in the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, respectively.

- 19 -

Notes to Consolidated Financial Statements (Unaudited)

(Millions, Except Share Amounts)

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 ~~March 31,~~June 30, 2022 and December 31, 2021 was ~~$3.2~~$6.2 and $4.7, respectively. Proceeds from the sales of repossessed assets were ~~$7.8~~$11.3 and ~~$16.1~~$26.9 for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, 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. 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 any 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	2022			2021			2022			2021
Balance at January 1	$	344.3		$	389.7		$	344.3		$	389.7
Cost accruals		73.6			80.5			159.8			157.1
Payments		(88.2	)		(109.6	)		(187.8	)		(206.4	)
Change in estimates for pre-existing warranties		23.1			18.8			49.9			29.7
Currency translation and other		(3.0	)		(2.5	)		(12.2	)		(1.4	)
Balance at March 31	$	349.8		$	376.9
Balance at June 30							$	354.0		$	368.7

DEFERRED REVENUES ON EXTENDED WARRANTIES AND R&M CONTRACTS		2022			2021			2022			2021
Balance at January 1	$	775.2		$	795.8		$	775.2		$	795.8
Deferred revenues		146.1			116.0			303.6			232.5
Revenues recognized		(119.3	)		(117.1	)		(239.2	)		(238.7	)
Currency translation		(9.1	)		(10.0	)		(31.1	)		(6.3	)
Balance at March 31	$	792.9		$	784.7
Balance at June 30							$	808.5		$	783.3

The Company expects to recognize approximately ~~$202.0~~$140.7 of the remaining deferred revenue on extended warranties and R&M contracts in 2022, ~~$261.0~~$252.6 in 2023, ~~$184.8~~$218.0 in 2024, ~~$90.4~~$114.0 in 2025, ~~$35.1~~$57.7 in 2026 and ~~$19.6~~$25.5 thereafter.

~~NOTE G - Stockholders’ Equity~~

~~Comprehensive Income~~

~~The components of comprehensive income are as follow:~~

Three Months Ended March 31,

2022

2021

Net income

$
600.5

$
470.8

Other comprehensive income (loss) (OCI):

Unrealized gains on derivative contracts

36.1

22.3

Tax effect

(9.7
)

(4.1
)

26.4

18.2

Unrealized losses on marketable debt securities

(34.1
)

(6.6
)
Tax effect

8.5

1.6

(25.6
)

(5.0
)
Pension plans

10.3

12.9

Tax effect

(2.4
)

(3.1
)

7.9

9.8

Foreign currency translation gains (losses)

34.7

(89.1
)
Net other comprehensive income (loss)

43.4

(66.1
)
Comprehensive income

$
643.9

$
404.7

- 20 -

Notes to Consolidated Financial Statements (Unaudited)

(Millions, Except Share Amounts)

NOTE G - Stockholders’ Equity

Comprehensive Income

The components of comprehensive income are as follow:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2022			2021			2022			2021
Net income	$	720.4		$	495.5		$	1,320.9		$	966.3
Other comprehensive income (loss) (OCI):
Unrealized gains (losses) on derivative contracts		1.0			(1.1	)		37.1			21.2
Tax effect		(1.2	)		(1.9	)		(10.9	)		(6.0	)
		(.2	)		(3.0	)		26.2			15.2
Unrealized losses on marketable debt securities		(10.4	)		(2.2	)		(44.5	)		(8.8	)
Tax effect		2.6			.6			11.1			2.2
		(7.8	)		(1.6	)		(33.4	)		(6.6	)
Pension plans		19.9			13.4			30.2			26.3
Tax effect		(5.1	)		(3.1	)		(7.5	)		(6.2	)
		14.8			10.3			22.7			20.1
Foreign currency translation (losses) gains		(240.8	)		81.1			(206.1	)		(8.0	)
Net other comprehensive (loss) income		(234.0	)		86.8			(190.6	)		20.7
Comprehensive income	$	486.4		$	582.3		$	1,130.3		$	987.0

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:

DERIVATIVE
CONTRACTS

MARKETABLE
DEBT
SECURITIES

PENSION
PLANS

FOREIGN
CURRENCY
TRANSLATION

TOTAL

Balance at January 1, 2022

$
(13.5
)

$
(1.1
)

$
(269.8
)

$
(636.7
)

$
(921.1
)
Recorded into AOCI

18.1

(25.5
)

3.5

34.7

30.8

Reclassified out of AOCI

8.3

(.1
)

4.4

12.6

Net other comprehensive income (loss)

26.4

(25.6
)

7.9

34.7

43.4

Balance at March 31, 2022

$
12.9

$
(26.7
)

$
(261.9
)

$
(602.0
)

$
(877.7
)

Three Months Ended June 30, 2022	DERIVATIVE CONTRACTS			MARKETABLE DEBT SECURITIES			PENSION PLANS			FOREIGN CURRENCY TRANSLATION			TOTAL
Balance at April 1, 2022	$	12.9		$	(26.7	)	$	(261.9	)	$	(602.0	)	$	(877.7	)
Recorded into AOCI		16.4			(7.6	)		7.9			(240.8	)		(224.1	)
Reclassified out of AOCI		(16.6	)		(.2	)		6.9						(9.9	)
Net other comprehensive (loss) income		(.2	)		(7.8	)		14.8			(240.8	)		(234.0	)
Balance at June 30, 2022	$	12.7		$	(34.5	)	$	(247.1	)	$	(842.8	)	$	(1,111.7	)

Three Months Ended June 30, 2021	DERIVATIVE CONTRACTS			MARKETABLE DEBT SECURITIES			PENSION PLANS			FOREIGN CURRENCY TRANSLATION			TOTAL
Balance at April 1, 2021	$	(11.0	)	$	9.6		$	(568.3	)	$	(546.7	)	$	(1,116.4	)
Recorded into AOCI		(18.6	)		(1.2	)		(1.6	)		81.1			59.7
Reclassified out of AOCI		15.6			(.4	)		11.9						27.1
Net other comprehensive (loss) income		(3.0	)		(1.6	)		10.3			81.1			86.8
Balance at June 30, 2021	$	(14.0	)	$	8.0		$	(558.0	)	$	(465.6	)	$	(1,029.6	)

DERIVATIVE
CONTRACTS

MARKETABLE
DEBT
SECURITIES

PENSION
PLANS

FOREIGN
CURRENCY
TRANSLATION

TOTAL

Balance at January 1, 2021

$
(29.2
)

$
14.6

$
(578.1
)

$
(457.6
)

$
(1,050.3
)
Recorded into AOCI

26.1

(4.5
)

(1.2
)

(89.1
)

(68.7
)
Reclassified out of AOCI

(7.9
)

(.5
)

11.0

2.6

Net other comprehensive income (loss)

18.2

(5.0
)

9.8

(89.1
)

(66.1
)
Balance at March 31, 2021

$
(11.0
)

$
9.6

$
(568.3
)

$
(546.7
)

$
(1,116.4
)

~~Reclassifications out of AOCI were as follows:~~

Three Months Ended

LINE ITEM IN THE CONSOLIDATED STATEMENTS OF

March 31

AOCI COMPONENTS

COMPREHENSIVE INCOME

2022

2021

Unrealized losses (gains) on derivative contracts:

Truck, Parts and Other

Foreign-exchange contracts

Net sales and revenues

$
6.9

$
8.5

Cost of sales and revenues

3.7

2.3

Interest and other (income), net

.3

.2

Commodity contracts

Cost of sales and revenues

4.9

Financial Services

Interest-rate contracts

Interest and other borrowing expenses

(6.6
)

(22.7
)

Pre-tax expense increase (reduction)

9.2

(11.7
)

Tax (benefit) expense

(.9
)

3.8

After-tax expense increase (reduction)

8.3

(7.9
)
Unrealized gains on marketable debt securities:

Marketable debt securities

Investment income

(.1
)

(.6
)

Tax expense

.1

After-tax income increase

(.1
)

(.5
)
Pension plans:

Truck, Parts and Other

Actuarial loss

Interest and other (income), net

5.6

14.2

Prior service costs

Interest and other (income), net

.1

.2

Pre-tax expense increase

5.7

14.4

Tax benefit

(1.3
)

(3.4
)

After-tax expense increase

4.4

11.0

Total reclassifications out of AOCI

$
12.6

$
2.6

Six Months Ended June 30, 2022	DERIVATIVE CONTRACTS			MARKETABLE DEBT SECURITIES			PENSION PLANS			FOREIGN CURRENCY TRANSLATION			TOTAL
Balance at January 1, 2022	$	(13.5	)	$	(1.1	)	$	(269.8	)	$	(636.7	)	$	(921.1	)
Recorded into AOCI		34.5			(33.1	)		11.4			(206.1	)		(193.3	)
Reclassified out of AOCI		(8.3	)		(.3	)		11.3						2.7
Net other comprehensive income (loss)		26.2			(33.4	)		22.7			(206.1	)		(190.6	)
Balance at June 30, 2022	$	12.7		$	(34.5	)	$	(247.1	)	$	(842.8	)	$	(1,111.7	)

- 21 -

Notes to Consolidated Financial Statements (Unaudited)

(Millions, Except Share Amounts)

Six Months Ended June 30, 2021	DERIVATIVE CONTRACTS			MARKETABLE DEBT SECURITIES			PENSION PLANS			FOREIGN CURRENCY TRANSLATION			TOTAL
Balance at January 1, 2021	$	(29.2	)	$	14.6		$	(578.1	)	$	(457.6	)	$	(1,050.3	)
Recorded into AOCI		7.5			(5.7	)		(2.8	)		(8.0	)		(9.0	)
Reclassified out of AOCI		7.7			(.9	)		22.9						29.7
Net other comprehensive income (loss)		15.2			(6.6	)		20.1			(8.0	)		20.7
Balance at June 30, 2021	$	(14.0	)	$	8.0		$	(558.0	)	$	(465.6	)	$	(1,029.6	)

Reclassifications out of AOCI were as follows:

		Three Months Ended
	LINE ITEM IN THE CONSOLIDATED STATEMENTS OF	June 30
AOCI COMPONENTS	COMPREHENSIVE INCOME		2022			2021
Unrealized losses (gains) on derivative contracts:
Truck, Parts and Other
Foreign-exchange contracts	Net sales and revenues	$	8.2		$	5.1
	Cost of sales and revenues		(1.0	)		3.7
	Interest and other (income), net					.1

Commodity contracts	Cost of sales and revenues		5.5
Financial Services
Interest-rate contracts	Interest and other borrowing expenses		(36.5	)		12.2
	Pre-tax expense (reduction) increase		(23.8	)		21.1
	Tax expense (benefit)		7.2			(5.5	)
	After-tax expense (reduction) increase		(16.6	)		15.6
Unrealized gains on marketable debt securities:
Marketable debt securities	Investment income		(.3	)		(.6	)
	Tax expense		.1			.2
	After-tax income increase		(.2	)		(.4	)
Pension plans:
Truck, Parts and Other
Actuarial loss	Interest and other (income), net		9.0			15.3
Prior service costs	Interest and other (income), net		.2			.2
	Pre-tax expense increase		9.2			15.5
	Tax benefit		(2.3	)		(3.6	)
	After-tax expense increase		6.9			11.9
Total reclassifications out of AOCI		$	(9.9	)	$	27.1

- 22 -

Notes to Consolidated Financial Statements (Unaudited)

(Millions, Except Share Amounts)

		Six Months Ended
	LINE ITEM IN THE CONSOLIDATED STATEMENTS OF	June 30
AOCI COMPONENTS	COMPREHENSIVE INCOME		2022			2021
Unrealized losses (gains) on derivative contracts:
Truck, Parts and Other
Foreign-exchange contracts	Net sales and revenues	$	15.1		$	13.6
	Cost of sales and revenues		2.7			6.0
	Interest and other (income), net		.3			.3

Commodity contracts	Cost of sales and revenues		10.4

Financial Services
Interest-rate contracts	Interest and other borrowing expenses		(43.1	)		(10.5	)
	Pre-tax expense (reduction) increase		(14.6	)		9.4
	Tax expense (benefit)		6.3			(1.7	)
	After-tax expense (reduction) increase		(8.3	)		7.7
Unrealized gains on marketable debt securities:
Marketable debt securities	Investment income		(.4	)		(1.2	)
	Tax expense		.1			.3
	After-tax income increase		(.3	)		(.9	)
Pension plans:
Truck, Parts and Other
Actuarial loss	Interest and other (income), net		14.6			29.5
Prior service costs	Interest and other (income), net		.3			.4
	Pre-tax expense increase		14.9			29.9
	Tax benefit		(3.6	)		(7.0	)
	After-tax expense increase		11.3			22.9
Total reclassifications out of AOCI		$	2.7		$	29.7

Stock Compensation Plans

Stock-based compensation expense was ~~$8.2~~$4.3 and ~~$6.8~~$12.5 for the three months and six months ended ~~March 31,~~June 30, 2022, respectively and $2.6 and $9.4 for the three months and six months ended June 30, 2021, respectively.

During the first ~~three~~six months of 2022, the Company issued ~~356,327~~385,904 common shares under deferred and stock compensation arrangements.

Other Capital Stock Changes

During the first ~~three~~six months of 2022, the Company acquired 0 treasury shares under the Company’s common stock repurchase plans. The Company acquired 20,983 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 ~~first~~second quarter of 2022 was ~~22.2%~~21.9% compared to 22.6% for the ~~first~~second quarter of ~~2021,~~2021. The effective tax rate for the first six months of 2022 was 22.0% compared to 22.6% for the same period of 2021. The lower effective tax rate in the second quarter and first half of 2022 was primarily due to the change in mix of income generated in jurisdictions with lower tax rates in 2022 as compared to 2021.

- 23 -

Notes to Consolidated Financial Statements (Unaudited)

(Millions, Except Share Amounts)

NOTE I - Segment Information

PACCAR operates in 3 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, 2021.

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.

~~- 22 -~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~(Millions, Except Share Amounts)~~

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 Financial Services and Truck segments centralized the marketing of used trucks, including those units sold by the Truck segment subject to an RVG. 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 expenses.

Three Months Ended March 31,		2022			2021
							Three Months Ended						Six Months Ended
							June 30						June 30
								2022			2021			2022			2021
Net sales and revenues:
Truck	$	4,835.5		$	4,399.2		$	5,499.5		$	4,295.2		$	10,335.0		$	8,694.4
Less intersegment		(138.4	)		(166.2	)		(163.1	)		(143.0	)		(301.5	)		(309.2	)
External customers		4,697.1			4,233.0			5,336.4			4,152.2			10,033.5			8,385.2
Parts		1,405.3			1,176.2			1,450.6			1,226.4			2,855.9			2,402.6
Less intersegment		(16.4	)		(15.5	)		(15.9	)		(15.1	)		(32.3	)		(30.6	)
External customers		1,388.9			1,160.7			1,434.7			1,211.3			2,823.6			2,372.0
Other		20.4			19.8			15.1			24.1			35.5			43.9
		6,106.4			5,413.5			6,786.2			5,387.6			12,892.6			10,801.1
Financial Services		366.2			432.0			372.5			456.3			738.7			888.3
	$	6,472.6		$	5,845.5		$	7,158.7		$	5,843.9		$	13,631.3		$	11,689.4
Income before income taxes:
Truck	$	276.7		$	270.0		$	422.1		$	256.5		$	698.8		$	526.5
Parts		340.2			251.6			353.3			266.8			693.5			518.4
Other		10.0			5.4			(3.1	)		5.5			6.9			10.9
		626.9			527.0			772.3			528.8			1,399.2			1,055.8
Financial Services		147.0			76.4			144.4			106.5			291.4			182.9
Investment (loss) income		(2.5	)		4.9			5.4			5.0			2.9			9.9
	$	771.4		$	608.3		$	922.1		$	640.3		$	1,693.5		$	1,248.6
Depreciation and amortization:
Truck	$	71.6		$	71.9		$	77.7		$	68.8		$	149.3		$	140.7
Parts		3.2			2.8			3.3			3.0			6.5			5.8
Other		5.7			5.4			6.2			5.3			11.9			10.7
		80.5			80.1			87.2			77.1			167.7			157.2
Financial Services		105.2			171.6			109.7			153.6			214.9			325.2
	$	185.7		$	251.7		$	196.9		$	230.7		$	382.6		$	482.4

~~- 23 -~~

~~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 hedging 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 ~~$65.8~~$123.1 at ~~March 31,~~June 30, 2022.

The Company assesses hedges at inception and on an ongoing basis to determine that 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 that 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.

- 25 -

Notes to Consolidated Financial Statements (Unaudited)

(Millions, Except Share Amounts)

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 ~~March 31,~~June 30, 2022, the notional amount of the Company’s interest-rate contracts was ~~$2,968.8.~~$2,958.1. Notional maturities for all interest-rate contracts are ~~$791.4~~$506.6 for the remainder of 2022, ~~$714.3~~$679.1 for 2023, ~~$552.1~~$664.1 for 2024, ~~$577.5~~$838.6 for 2025, ~~$217.4~~$200.1 for 2026, $61.1 for 2027 and ~~$55.0~~$8.5 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 ~~March 31,~~June 30, 2022, the notional amount of the outstanding foreign-exchange contracts was ~~$2,223.0.~~$2,194.9. Foreign-exchange contracts mature within two years.

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 ~~March 31,~~June 30, 2022, the notional amount of the outstanding commodity contracts was ~~$116.9.~~$83.4. Commodity contracts mature within one year.

- 2426 -

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:

	March 31, 2022						December 31, 2021						June 30, 2022						December 31, 2021
	ASSETS			LIABILITIES			ASSETS			LIABILITIES			ASSETS			LIABILITIES			ASSETS			LIABILITIES
Derivatives designated under hedge accounting:
Interest-rate contracts:
Financial Services:
Other assets	$	24.0					$	30.8					$	70.2					$	30.8
Deferred taxes and other liabilities				$	80.4					$	54.4					$	46.3					$	54.4
Foreign-exchange contracts:
Truck, Parts and Other:
Other current assets		8.9						25.3						51.2						25.3
Accounts payable, accrued expenses and other					49.0						15.8						6.6						15.8
Financial Services:
Other current assets								2.5						.3						2.5
Deferred taxes and other liabilities					14.6						.1						4.5						.1
Commodity contracts:
Truck, Parts and Other:
Other current assets		31.4
Accounts payable, accrued expenses and other											16.9						16.0						16.9
	$	64.3		$	144.0		$	58.6		$	87.2		$	121.7		$	73.4		$	58.6		$	87.2
Derivatives not designated as hedging instruments:
Foreign-exchange contracts:
Truck, Parts and Other:
Other current assets	$	1.5					$	1.0					$	1.2					$	1.0
Accounts payable, accrued expenses and other				$	1.8					$	1.1					$	.5					$	1.1
Financial Services:
Other assets								.1						.2						.1
Deferred taxes and other liabilities					.5						.2						.1						.2
	$	1.5		$	2.3		$	1.1		$	1.3		$	1.4		$	.6		$	1.1		$	1.3
Gross amounts recognized in Balance Sheets	$	65.8		$	146.3		$	59.7		$	88.5		$	123.1		$	74.0		$	59.7		$	88.5
Less amounts not offset in financial instruments:
Truck, Parts and Other:
Foreign-exchange contracts	$	(2.9	)	$	(2.9	)	$	(2.7	)	$	(2.7	)	$	(5.2	)	$	(5.2	)	$	(2.7	)	$	(2.7	)
Financial Services:
Foreign-exchange contracts								(.2	)		(.2	)		(.3	)		(.3	)		(.2	)		(.2	)
Interest-rate contracts		(7.1	)		(7.1	)		(12.8	)		(12.8	)		(11.2	)		(11.2	)		(12.8	)		(12.8	)
Pro forma net amount	$	55.8		$	136.3		$	44.0		$	72.8		$	106.4		$	57.3		$	44.0		$	72.8

- 2527 -

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 March 31,	2022						2021
													Three Months Ended						Six Months Ended
													June 30, 2022						June 30, 2022
	INTEREST-			FOREIGN-			INTEREST-			FOREIGN-			INTEREST-			FOREIGN-			INTEREST-			FOREIGN-
	RATE			EXCHANGE			RATE			EXCHANGE			RATE			EXCHANGE			RATE			EXCHANGE
Truck, Parts and Other:
Net sales and revenues
Cash flow hedges				$	6.9					$	8.5					$	8.2					$	15.1
Cost of sales and revenues
Cash flow hedges					3.7						2.3						(1.0	)					2.7
Derivatives not designated as hedging instruments					(.5	)					(.4	)					.4						(.1	)
Interest and other (income), net
Cash flow hedges					.3						.2												.3
Net investment hedges					(1.3	)					(1.0	)					(1.5	)					(2.8	)
Derivatives not designated as hedging instruments					1.9						(1.4	)					(.6	)					1.3
				$	11.0					$	8.2					$	5.5					$	16.5
Financial Services:
Interest and other borrowing expenses
Cash flow hedges	$	(6.6	)				$	(22.7	)				$	(36.5	)				$	(43.1	)
Fair value hedges		(.1	)					.2						.2						.1
Derivatives not designated as hedging instruments				$	.1					$	(1.8	)				$	.1					$	.2
	$	(6.7	)	$	.1		$	(22.5	)	$	(1.8	)	$	(36.3	)	$	.1		$	(43.0	)	$	.2
Total	$	(6.7	)	$	11.1		$	(22.5	)	$	6.4		$	(36.3	)	$	5.6		$	(43.0	)	$	16.7

	Three Months Ended						Six Months Ended
	June 30, 2021						June 30, 2021
	INTEREST-			FOREIGN-			INTEREST-			FOREIGN-
	RATE			EXCHANGE			RATE			EXCHANGE
Truck, Parts and Other:
Net sales and revenues
Cash flow hedges				$	5.1					$	13.6
Cost of sales and revenues
Cash flow hedges					3.7						6.0
Derivatives not designated as hedging instruments					(8.6	)					(9.0	)
Interest and other (income), net
Cash flow hedges					.1						.3
Net investment hedges					(.7	)					(1.7	)
Derivatives not designated as hedging instruments					3.0						1.6
				$	2.6					$	10.8
Financial Services:
Interest and other borrowing expenses
Cash flow hedges	$	12.2					$	(10.5	)
Fair value hedges		(.1	)					.1
Derivatives not designated as hedging instruments				$	1.4					$	(.4	)
	$	12.1		$	1.4		$	(10.4	)	$	(.4	)
Total	$	12.1		$	4.0		$	(10.4	)	$	10.4

Utilization of commodity hedging was initiated in Q3 2021. The loss from commodity contracts recorded in ~~cost~~Cost of sales and revenue was ~~$4.9~~$5.5 and $10.4 for the three months and six months ended ~~March 31,~~June 30, 2022.

- 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:

	March 31		December 31		June 30		December 31
	2022		2021		2022		2021
Financial Services
Term notes:
Carrying amount of the hedged liabilities	$	431.9	$	472.0	$	395.6	$	472.0
Cumulative basis adjustment included in the carrying amount		24.4		8.7		23.0		8.7

The above table excludes the cumulative basis adjustments on discontinued hedge relationships of ~~$.6~~$6.8 and ~~$.1~~$(.1) as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively.

Cash Flow Hedges

Substantially all of the Company’s interest-rate contracts and some foreign-exchange contracts and all commodity 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 maximum length of time over which the Company is hedging its exposure to the variability in future cash flows is ~~6.3~~6.0 years.

~~- 26 -~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~(Millions, Except Share Amounts)~~

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

Three Months Ended March 31,	2022					2021
											Three Months Ended									Six Months Ended
											June 30, 2022									June 30, 2022
	INTEREST-		FOREIGN-			INTEREST-		FOREIGN-			INTEREST-			FOREIGN-						INTEREST-		FOREIGN-
	RATE		EXCHANGE			RATE		EXCHANGE			RATE			EXCHANGE			COMMODITY			RATE		EXCHANGE			COMMODITY
Gain (loss) recognized in OCI:
Truck, Parts and Other			$	(28.4	)			$	2.1					$	28.5		$	(43.7	)			$	.1		$	(7.8	)
Financial Services	$	19.9		(.5	)	$	33.7		(1.8	)	$	39.8			.2					$	59.7		(.3	)
	$	19.9	$	(28.9	)	$	33.7	$	.3		$	39.8		$	28.7		$	(43.7	)	$	59.7	$	(.2	)	$	(7.8	)


											Three Months Ended									Six Months Ended
											June 30, 2021									June 30, 2021
											INTEREST-			FOREIGN-						INTEREST-		FOREIGN-
											RATE			EXCHANGE			COMMODITY			RATE		EXCHANGE			COMMODITY
(Loss) gain recognized in OCI:
Truck, Parts and Other														$	(11.1	)						$	(9.0	)
Financial Services											$	(10.0	)		(1.1	)				$	23.7		(2.9	)
											$	(10.0	)	$	(12.2	)				$	23.7	$	(11.9	)

Utilization of commodity hedging was initiated in Q3 2021. The pre-tax effects of gain on commodity hedges recognized in other comprehensive income (loss) (OCI) for Truck, Parts and Other was a gain of $35.9 for the three months ended March 31, 2022.

The amount of loss recorded in AOCI at ~~March 31,~~June 30, 2022 that is estimated to be reclassified into earnings in the following 12 months if interest rates and exchange rates remain unchanged is approximately ~~$2.3,~~$3.7, 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.

The amount of gains (losses) reclassified out of AOCI into net income based on the probability that the original forecasted transactions would not occur was ~~$.1~~nil and ~~($.1)~~$.1 for the three months and six months ended ~~March 31,~~June 30, 2022, respectively and ~~2021, respectively.~~$.1 and nil for the same periods ended June 30, 2021.

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 ~~March 31,~~June 30, 2022, the notional amount of the outstanding net investment hedges was $347.0. For the three and six months ended ~~March 31,~~June 30, 2022, the pre-tax gain recognized in OCI for the net investment hedges ~~was $18.2.~~were $17.8 and $36.0, respectively.

- 29 -

Notes to Consolidated Financial Statements (Unaudited)

(Millions, Except Share Amounts)

Derivatives Not Designated As Hedging Instruments

For other risk management purposes, the Company enters into derivative instruments that do not qualify for hedge accounting. These derivative instruments are used to mitigate the risk of market volatility arising from borrowings and foreign currency denominated transactions. Changes in the fair value of derivatives not designated as hedging instruments are recorded in earnings in the period in which the change occurs.

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.

~~- 27 -~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~(Millions, Except Share Amounts)~~

The fair value of U.S. government agency obligations, 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 March 31, 2022	LEVEL 1		LEVEL 2		TOTAL
At June 30, 2022							LEVEL 1		LEVEL 2		TOTAL
Assets:
Marketable debt securities
U.S. tax-exempt securities			$	440.1	$	440.1			$	463.0	$	463.0
U.S. taxable municipal/ provincial bonds				175.3		175.3				158.8		158.8
U.S. corporate securities				205.1		205.1				220.4		220.4
U.S. government and agency securities	$	88.4				88.4	$	119.1				119.1
Non-U.S. corporate securities				431.1		431.1				425.6		425.6
Non-U.S. government securities				70.7		70.7				75.4		75.4
Other debt securities				97.9		97.9				94.7		94.7
Total marketable debt securities	$	88.4	$	1,420.2	$	1,508.6	$	119.1	$	1,437.9	$	1,557.0
Marketable equity securities	$	6.6			$	6.6	$	2.2			$	2.2
Total marketable securities	$	95.0	$	1,420.2	$	1,515.2	$	121.3	$	1,437.9	$	1,559.2
Derivatives
Cross currency swaps			$	20.2	$	20.2			$	62.3	$	62.3
Interest-rate swaps				3.8		3.8				7.9		7.9
Foreign-exchange contracts				10.4		10.4				52.9		52.9
Commodity contracts				31.4		31.4
Total derivative assets			$	65.8	$	65.8			$	123.1	$	123.1
Liabilities:
Derivatives
Cross currency swaps			$	53.9	$	53.9			$	24.9	$	24.9
Interest-rate swaps				26.5		26.5				21.4		21.4
Foreign-exchange contracts				65.9		65.9				11.7		11.7
Commodity contracts										16.0		16.0
Total derivative liabilities			$	146.3	$	146.3			$	74.0	$	74.0

- 2831 -

Notes to Consolidated Financial Statements (Unaudited)

(Millions, Except Share Amounts)

At December 31, 2021	LEVEL 1		LEVEL 2		TOTAL
Assets:
Marketable debt securities
U.S. tax-exempt securities			$	432.5	$	432.5
U.S. taxable municipal/ provincial bonds				191.6		191.6
U.S. corporate securities				207.4		207.4
U.S. government and agency securities	$	96.4				96.4
Non-U.S. corporate securities				442.8		442.8
Non-U.S. government securities				75.0		75.0
Other debt securities				100.0		100.0
Total marketable debt securities	$	96.4	$	1,449.3	$	1,545.7
Marketable equity securities	$	13.7			$	13.7
Total marketable securities	$	110.1	$	1,449.3	$	1,559.4
Derivatives
Cross currency swaps			$	18.2	$	18.2
Interest-rate swaps				12.6		12.6
Foreign-exchange contracts				28.9		28.9
Total derivative assets			$	59.7	$	59.7
Liabilities:
Derivatives
Cross currency swaps			$	33.1	$	33.1
Interest-rate swaps				21.3		21.3
Foreign-exchange contracts				17.2		17.2
Commodity contracts				16.9		16.9
Total derivative liabilities			$	88.5	$	88.5

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, 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:

	March 31, 2022				December 31, 2021				June 30, 2022				December 31, 2021
	CARRYING		FAIR		CARRYING		FAIR		CARRYING		FAIR		CARRYING		FAIR
	AMOUNT		VALUE		AMOUNT		VALUE		AMOUNT		VALUE		AMOUNT		VALUE
Assets:
Financial Services fixed rate loans	$	6,383.0	$	6,237.4	$	6,011.7	$	6,018.2	$	6,377.1	$	6,205.1	$	6,011.7	$	6,018.2
Liabilities:
Financial Services fixed rate debt		6,542.8		6,528.5		6,905.7		6,935.1		7,263.1		7,036.9		6,905.7		6,935.1

- 2932 -

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 for the Company’s defined benefit plans:

Three Months Ended March 31,	2022			2021
							Three Months Ended						Six Months Ended
							June 30						June 30
							2022			2021			2022			2021
Service cost	$	32.5		$	36.0		$	43.3		$	39.4		$	75.8		$	75.4
Interest on projected benefit obligation		19.1			16.6			23.8			16.7			42.9			33.3
Expected return on assets		(48.7	)		(51.1	)		(60.1	)		(51.2	)		(108.8	)		(102.3	)
Amortization of prior service costs		.1			.2			.2			.2			.3			.4
Recognized actuarial loss		5.6			14.2			9.0			15.3			14.6			29.5
Net pension expense	$	8.6		$	15.9		$	16.2		$	20.4		$	24.8		$	36.3

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

During the three months and six months ended ~~March 31,~~June 30, 2022, ~~and 2021,~~ the Company contributed ~~$6.7~~$6.5 and ~~$6.2~~$13.2 to its pension plans, respectively, and $6.7 and $12.9 for the three and six months ended June 30, 2021, 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 European jurisdictions against all major European truck

manufacturers including the Company and certain subsidiaries. These claims and lawsuits include a number of collective proceedings,

including proposed class actions in the United Kingdom, alleging EC-related claims and seeking unspecified damages. In certain

jurisdictions, the limitations period has not yet expired and additional claimants may bring EC-related claims and lawsuits against the

Company or its subsidiaries.

The legal proceedings are continuing to move through the court systems in the various jurisdictions with some larger cases scheduled

for trial in 2022. While the Company believes it has meritorious defenses to all EC-related claims and lawsuits, the final disposition of

all such claims and lawsuits will likely take a significant period of time to resolve and the final outcomes are highly uncertain. The

Company cannot at this time reasonably estimate a range of loss, if any, that may result. An adverse final decision involving significant numbers of DAF truck sales could have a material impact on the Company’s results of operations and cash flows.

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.

- 3033 -

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.

~~First~~Second Quarter Financial Highlights:

•	Worldwide net sales and revenues were ~~$6.47~~$7.16 billion in 2022 compared to ~~$5.85~~$5.84 billion in 2021, primarily due to higher truck and parts revenues.

•	Truck revenues were ~~$4.70~~$5.34 billion in 2022 compared to ~~$4.23~~$4.15 billion in 2021, primarily due to higher truck deliveries and price ~~realization.~~realization in all markets.

•	Parts sales were ~~a record $1.39~~$1.43 billion in 2022 compared to ~~$1.16~~$1.21 billion in 2021 reflecting higher demand and price realization in all markets.

•	Financial Services revenues were ~~$366.2~~$372.5 million in 2022 compared to ~~$432.0~~$456.3 million in 2021, primarily due to lower used truck sales.

•	Net income was ~~$600.5~~$720.4 million ($~~1.72~~2.07 per diluted share) in 2022 compared to ~~$470.8~~$495.5 million ($~~1.35~~1.42 per diluted share) in 2021 due to higher Truck, Parts and Financial Services operating results.

•	Capital investments were ~~$113.5~~$121.0 million in 2022 compared to ~~$94.2~~$120.2 million in 2021.

•	Research and development (R&D) expenses were ~~$78.0~~$80.4 million in 2022 compared to ~~$80.1~~$84.4 million in 2021.

First Six Months Financial Highlights:

•	Worldwide net sales and revenues were $13.63 billion in 2022 compared to $11.69 billion in 2021, primarily due to higher truck and parts revenues.

•	Truck revenues were $10.03 billion in 2022 compared to $8.39 billion in 2021, primarily due to higher truck deliveries in Europe and higher price realization in all markets.

•	Parts sales were $2.82 billion in 2022 compared to $2.37 billion in 2021 reflecting higher demand and price realization in all markets.

•	Financial Services revenues were $738.7 million in 2022 compared to $888.3 million in 2021, primarily due to lower used truck sales.

•	Net income was $1.32 billion ($3.79 per diluted share) in 2022 compared to $966.3 million ($2.77 per diluted share) in 2021 due to higher Truck, Parts and Financial Services operating results.

•	Capital investments were $234.5 million in 2022 compared to $214.4 million in 2021.

•	Research and development (R&D) expenses were $158.4 million in 2022 compared to $164.5 million in 2021.

A DAF CF Electric truck became the first battery electric heavy truck to summit Austria’s highest mountain pass on the Grossglockner High Alpine Road. The vehicle exhibited superb power and maneuverability through 30 miles, 36 hairpin bends and a grade of 12%. The DAF CF Electric is used by customers in applications such as regional distribution, refuse collection and port drayage.

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 ~~$16.00~~$16.04 billion. PFS issued ~~$629.1 million~~$1.63 billion in medium-term notes during the first ~~three~~six months of 2022 to support new business volume and repay maturing debt.

- 34 -

Conflict in Ukraine

In accordance with ~~recent~~ international sanctions, the Company has suspended truck and parts sales into Russia and Belarus. The Company has no factories in Russia and has managed export sales to Russia through independent dealers. In 2021, 2,500 trucks were sold into Russia and Belarus. The Company also sold parts in these markets through a ~~third party~~third-party owned warehouse. The trucks were sold on a fully paid-up basis; accordingly, the Company does not have significant receivables exposure. Inventory balances are not significant. The Company is monitoring the situation closely. At this time, the conflict has not had a significant impact on the results of operations or cash flows of the Company.

Truck Outlook

Truck industry heavy-duty retail sales in the U.S. and Canada in 2022 are expected to be 260,000 to 290,000 units compared to 250,000 in 2021. In Europe, 2022 truck industry registrations for over 16-tonne vehicles are expected to be 270,000 to 300,000 units compared to 278,000 in 2021. In South America, heavy-duty truck industry registrations in 2022 are projected to be 125,000 to 135,000 as compared to 127,000 in 2021.

The Company has been affected by an industry-wide undersupply of semiconductor chips and component parts, and anticipates the shortages will continue to affect deliveries in 2022.

Parts Outlook

In 2022, PACCAR Parts sales are expected to increase ~~12-15%~~13-16% compared to 2021 levels reflecting strong freight demand.

Financial Services Outlook

Based on the truck market outlook, average earning assets in 2022 are expected to increase 3-5% compared to 2021. Current high levels of freight tonnage, freight rates and fleet utilization are contributing to customers’ profitability and cash flow.

~~- 31 -~~

Capital Investments and R&D Outlook

Capital investments in 2022 are expected to be $425 to $475 million and R&D is expected to be $330 to $350 ~~to $400 million~~. million. The Company

is increasing its investment in clean diesel and electric powertrain technologies, autonomous systems, connected vehicle services, next-generation manufacturing and parts distribution capabilities.

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

RESULTS OF OPERATIONS:

The Company’s results of operations for the three months ended ~~March 31,~~June 30, 2022 and 2021 are presented below.

							Three Months Ended						Six Months Ended
							June 30						June 30
($ in millions, except per share amounts)							2022			2021			2022			2021
Three Months Ended March 31,	2022			2021
Net sales and revenues:
Truck	$	4,697.1		$	4,233.0		$	5,336.4		$	4,152.2		$	10,033.5		$	8,385.2
Parts		1,388.9			1,160.7			1,434.7			1,211.3			2,823.6			2,372.0
Other		20.4			19.8			15.1			24.1			35.5			43.9
Truck, Parts and Other		6,106.4			5,413.5			6,786.2			5,387.6			12,892.6			10,801.1
Financial Services		366.2			432.0			372.5			456.3			738.7			888.3
	$	6,472.6		$	5,845.5		$	7,158.7		$	5,843.9		$	13,631.3		$	11,689.4
Income before income taxes:
Income (loss) before income taxes:
Truck	$	276.7		$	270.0		$	422.1		$	256.5		$	698.8		$	526.5
Parts		340.2			251.6			353.3			266.8			693.5			518.4
Other		10.0			5.4			(3.1	)		5.5			6.9			10.9
Truck, Parts and Other		626.9			527.0			772.3			528.8			1,399.2			1,055.8
Financial Services		147.0			76.4			144.4			106.5			291.4			182.9
Investment (loss) income		(2.5	)		4.9
Investment income								5.4			5.0			2.9			9.9
Income taxes		(170.9	)		(137.5	)		(201.7	)		(144.8	)		(372.6	)		(282.3	)
Net income	$	600.5		$	470.8		$	720.4		$	495.5		$	1,320.9		$	966.3
Diluted earnings per share	$	1.72		$	1.35		$	2.07		$	1.42		$	3.79		$	2.77
After-tax return on revenues		9.3	%		8.1	%		10.1	%		8.5	%		9.7	%		8.3	%

- 35 -

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, economic conditions and COVID-19 related factors affecting the Company’s results of operations.

2022 Compared to 2021:

Truck

The Company’s Truck segment accounted for ~~73%~~75% and 74% of revenues in the second quarter and first ~~quarter~~six months of 2022, respectively, compared to 71% and 72% in the second quarter and first ~~quarter~~six months of ~~2021.~~2021, respectively.

The Company’s new truck deliveries are summarized below:

Three Months Ended March 31,	2022	2021	% CHANGE
						Three Months Ended					Six Months Ended
						June 30					June 30
							2022	2021	% CHANGE			2022	2021	% CHANGE
U.S. and Canada	20,700	23,000		(10	)		24,400	22,600		8		45,100	45,600		(1	)
Europe	16,100	13,700		18			15,400	11,800		31		31,500	25,500		24
Mexico, South America, Australia and other	6,200	5,500		13			7,100	5,700		25		13,300	11,200		19
Total units	43,000	42,200		2			46,900	40,100		17		89,900	82,300		9

~~Worldwide~~The increase in new truck deliveries ~~increased slightly~~worldwide in the ~~first~~second quarter ~~of 2022~~ compared to the same period of 2021 was driven by higher deliveries in all markets. The increase in deliveries for the first six months primarily ~~due~~relates to higher deliveries in ~~Europe~~.Europe. The industry-wide undersupply of semiconductor chips and component products ~~continue~~continues to impact deliveries.

~~- 32 -~~

Market share data discussed below is provided by ~~third party~~third-party sources and is measured by either registrations or retail sales for the Company’s dealer network as a percentage of total registrations or retail sales 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.

In the first ~~three~~six months of 2022, industry retail sales in the heavy-duty market in the U.S. and Canada ~~decreased~~were 126,300 units comparable to ~~56,200 units from 60,400~~126,200 units in the same period of 2021. The Company’s heavy-duty truck retail market share was ~~28.8%~~29.4% in the first ~~three~~six months of 2022 compared to ~~28.4%~~29.4% in the first ~~three~~six months of 2021. The medium-duty market was ~~20,800~~42,800 units in the first ~~three~~six months of 2022 compared to ~~24,000~~44,400 units in the same period of 2021. The Company’s medium-duty market share was 9.7% in the first ~~three~~six months of 2022 compared to ~~17.6%~~20.1% in the first ~~three~~six months of 2021.

The over 16‑tonne truck market in Europe in the first ~~three~~six months of 2022 was ~~74,800~~148,600 units compared to ~~74,500~~147,900 units in the first ~~three~~six months of 2021. DAF over 16‑tonne market share was a ~~17.1%~~17.5% in the first ~~three~~six months of 2022 compared to ~~16.6%~~15.7% in the same period of 2021. The 6 to 16‑tonne market in the first ~~three~~six months of 2022 was ~~9,900~~19,200 units compared to ~~10,800~~22,500 units in the same period of 2021. DAF market share in the 6 to 16-tonne market in the first ~~three~~six months of 2022 was~~9.5%~~ 10.1% compared to ~~10.2%~~10.7% in the same period of 2021.

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

									Three Months Ended								Six Months Ended
									June 30								June 30
($ in millions)										2022			2021		% CHANGE			2022			2021		% CHANGE
Three Months Ended March 31,		2022			2021		% CHANGE
Truck net sales and revenues:
U.S. and Canada	$	2,590.6		$	2,555.0			1	$	3,157.0		$	2,543.2			24	$	5,747.6		$	5,098.2			13
Europe		1,450.9			1,124.2			29		1,390.1			994.9			40		2,841.0			2,119.1			34
Mexico, South America, Australia and other		655.6			553.8			18		789.3			614.1			29		1,444.9			1,167.9			24
	$	4,697.1		$	4,233.0			11	$	5,336.4		$	4,152.2			29	$	10,033.5		$	8,385.2			20
Truck income before income taxes	$	276.7		$	270.0			2	$	422.1		$	256.5			65	$	698.8		$	526.5			33
Pre-tax return on revenues		5.9	%		6.4	%				7.9	%		6.2	%				7.0	%		6.3	%

The Company’s worldwide truck net sales and revenues in the ~~first~~second quarter increased to ~~$4.70~~$5.34 billion in 2022 from ~~$4.23~~$4.15 billion in 2021 due to ~~higher~~improved price realization ~~worldwide~~ and higher truck deliveries in all markets. Revenues for the first six months increased to $10.03 billion in 2022 from $8.39 billion in 2021 primarily due to higher truck unit deliveries in Europe and improved price realization in all markets. Favorable second quarter and first six months results were partially offset by unfavorable currency translation effects.

- 36 -

For the second quarter and first six months of 2022, Truck segment income before income taxes and pretax return on revenues reflect the tempering of truck unit deliveries due to the global semiconductor and component supply shortages. In the second quarter and first ~~quarter~~six months of 2022, Truck segment income before ~~income~~ taxes and pretax return on revenues increased ~~slightly from~~to reflect the ~~same period in 2021 due to gains on sales~~impact of ~~used trucks.~~higher truck unit deliveries.

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 ~~March 31,~~June 30, 2022 and 2021 are as follows:

	NET			COST OF						NET			COST OF
	SALES AND			SALES AND			GROSS			SALES AND			SALES AND			GROSS
($ in millions)	REVENUES			REVENUES			MARGIN			REVENUES			REVENUES			MARGIN
Three Months Ended March 31, 2021	$	4,233.0		$	3,840.9		$	392.1
Three Months Ended June 30, 2021										$	4,152.2		$	3,771.3		$	380.9
Increase (decrease)
Truck sales volume		132.4			113.6			18.8			745.6			650.1			95.5
Average truck sales prices		400.5						400.5			630.9						630.9
Average per truck material, labor and other direct costs					390.1			(390.1	)					512.8			(512.8	)
Factory overhead and other indirect costs					46.7			(46.7	)					36.7			(36.7	)
Extended warranties, operating leases and other		38.6			3.8			34.8			23.0			19.0			4.0
Currency translation		(107.4	)		(99.0	)		(8.4	)		(215.3	)		(201.5	)		(13.8	)
Total increase		464.1			455.2			8.9			1,184.2			1,017.1			167.1
Three Months Ended March 31, 2022	$	4,697.1		$	4,296.1		$	401.0
Three Months Ended June 30, 2022										$	5,336.4		$	4,788.4		$	548.0

•	Truck sales volume reflects higher unit deliveries ~~primarily~~ in ~~Europe, partially offset by lower unit deliveries in the U.S. and Canada~~all major markets due to ~~an industry-wide undersupply of semiconductor chips and component products~~.increased demand.

•	Average truck sales prices increased sales by ~~$400.5~~$630.9 million, primarily due to higher price realization worldwide.

•	Average cost per truck increased cost of sales by ~~$390.1~~$512.8 million, primarily reflecting higher raw material, labor and freight costs.

•	Factory overhead and other indirect costs increased ~~$46.7~~$36.7 million, primarily due to higher labor costs, utilities and depreciation.

•	Extended warranties, operating leases and other increased revenues by $23.0 million and cost of sales by $19.0 million primarily due to higher revenues and associated costs from repair and maintenance and service contracts.

•	The currency translation effect on sales and cost of sales primarily reflects a decline in the value of the euro relative to the U.S. dollar.

•	Truck gross margin was 10.3% in the second quarter of 2022 compared to 9.2% in the same period of 2021 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 six months ended June 30, 2022 and 2021 are as follows:

	NET			COST OF
	SALES AND			SALES AND			GROSS
($ in millions)	REVENUES			REVENUES			MARGIN
Six Months Ended June 30, 2021	$	8,385.2		$	7,612.2		$	773.0
Increase (decrease)
Truck sales volume		878.0			763.7			114.3
Average truck sales prices		1,031.4						1,031.4
Average per truck material, labor and other direct costs					902.9			(902.9	)
Factory overhead and other indirect costs					83.4			(83.4	)
Extended warranties, operating leases and other		61.6			22.8			38.8
Currency translation		(322.7	)		(300.5	)		(22.2	)
Total increase		1,648.3			1,472.3			176.0
Six Months Ended June 30, 2022	$	10,033.5		$	9,084.5		$	949.0

•	Truck sales volume reflects higher heavy-duty truck deliveries in all major markets partially offset by lower medium-duty truck deliveries in the U.S. and Canada.

•	Average truck sales prices increased sales by $1.03 billion, primarily due to higher price realization worldwide.

•	Average cost per truck increased cost of sales by $902.9 million, primarily reflecting higher raw material, labor and freight costs.

•	Factory overhead and other indirect costs increased $83.4 million, primarily due to higher labor costs, utilities and depreciation.

- 3337 -

•

Extended warranties, operating leases and other increased revenues by ~~$38.6~~$61.6 million and cost of sales by ~~$3.8~~$22.8 million primarily due to higher revenues and associated costs from repair and maintenance, service contracts and operating leases. In addition, cost of sales and revenues was partially offset by gains on sales of used trucks and lower impairments in Europe due to an improved used truck market.

•	The currency translation effect on sales and cost of sales primarily reflects a decline in the value of the euro relative to the U.S. dollar.

•	Truck gross margin was ~~8.5%~~9.5% in the first ~~quarter~~six months of 2022 compared to ~~9.3%~~9.2% in the same period of 2021 due to the factors noted above.

Truck SG&A expense increased in the ~~first~~second quarter of 2022 to ~~$73.4~~$67.5 million from ~~$61.1~~$63.9 million in 2021, and for the first six months of 2022, Truck SG&A increased to $140.9 million from $125.0 million in 2021. The increase in both periods was primarily due to higher professional expenses, ~~and~~ higher salaries and related ~~expenses.~~expenses and higher sales and marketing costs, partially offset by currency translation effects.

As a percentage of sales, Truck SG&A ~~increased~~decreased to ~~1.6% in the first quarter compared to~~1.3% and 1.4% in the ~~same period~~second quarter and first six months of 2022, respectively, compared to 1.5% in the second quarter and first six months of 2021.

Parts

The Company’s Parts segment accounted for 20% and 21% of revenues in the second quarter and first ~~quarter~~six months of 2022, respectively, compared to 21% and 20% in the second quarter and first ~~quarter~~six months of ~~2021.~~2021, respectively.

									Three Months Ended									Six Months Ended
									June 30									June 30
($ in millions)										2022			2021		% CHANGE				2022				2021		% CHANGE
Three Months Ended March 31,		2022			2021		% CHANGE
Parts net sales and revenues:
U.S. and Canada	$	975.7		$	767.2			27	$	1,030.6		$	809.3			27		$	2,006.3			$	1,576.5			27
Europe		296.1			286.1			3		273.1			288.1			(5	)		569.2				574.2			(1	)
Mexico, South America, Australia and other		117.1			107.4			9		131.0			113.9			15			248.1				221.3			12
	$	1,388.9		$	1,160.7			20	$	1,434.7		$	1,211.3			18		$	2,823.6			$	2,372.0			19
Parts income before income taxes	$	340.2		$	251.6			35	$	353.3		$	266.8			32		$	693.5		��	$	518.4			34
Pre-tax return on revenues		24.5	%		21.7	%				24.6	%		22.0	%					24.6	%			21.9	%

The Company’s worldwide parts net sales and revenues for the ~~first~~second quarter increased to ~~a record $1.39~~$1.43 billion in 2022 from ~~$1.16~~$1.21 billion in ~~2021~~2021. For the first six months, worldwide parts net sales and revenues increased to $2.82 billion in 2022 from $2.37 billion in 2021. The increase in both periods was primarily due to higher demand in all ~~markets.~~markets, partially offset by unfavorable currency translation effects.

For the second quarter and first ~~quarter~~six months of 2022, the increase in Parts segment income before income taxes and pre-tax return on revenues was primarily due to higher sales volume and higher margins, partially offset by unfavorable currency translation effects.

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 ~~March 31,~~June 30, 2022 and 2021 are as follows:

	NET			COST OF						NET			COST OF
	SALES AND			SALES AND			GROSS			SALES AND			SALES AND			GROSS
($ in millions)	REVENUES			REVENUES			MARGIN			REVENUES			REVENUES			MARGIN
Three Months Ended March 31, 2021	$	1,160.7		$	832.8		$	327.9
Three Months Ended June 30, 2021										$	1,211.3		$	868.6		$	342.7
Increase (decrease)
Aftermarket parts volume		118.3			77.1			41.2			136.8			85.7			51.1
Average aftermarket parts sales prices		131.4						131.4			128.3						128.3
Average aftermarket parts direct costs					61.4			(61.4	)					60.9			(60.9	)
Warehouse and other indirect costs					12.7			(12.7	)					13.7			(13.7	)
Currency translation		(21.5	)		(13.7	)		(7.8	)		(41.7	)		(25.2	)		(16.5	)
Total increase		228.2			137.5			90.7			223.4			135.1			88.3
Three Months Ended March 31, 2022	$	1,388.9		$	970.3		$	418.6
Three Months Ended June 30, 2022										$	1,434.7		$	1,003.7		$	431.0

•	Aftermarket parts sales volume increased by ~~$118.3~~$136.8 million and related cost of sales increased by ~~$77.1~~$85.7 million due to higher demand in all markets.

- 38 -

•	Average aftermarket parts sales prices increased sales by $128.3 million primarily due to higher price realization in North America and Europe.

•	Average aftermarket parts direct costs increased $60.9 million due to higher material and freight costs.

•	Warehouse and other indirect costs increased $13.7 million primarily due to higher salaries and related expenses.

•	The currency translation effect on sales and cost of sales primarily reflects a decline in the value of the euro relative to the U.S. dollar.

•	Parts gross margins in the second quarter of 2022 increased to 30.0% from 28.3% in the second quarter of 2021 due to the factors noted above.

The major factors for the changes in Parts segment net sales and revenues, cost of sales and revenues and gross margin between the six months ended June 30, 2021 and 2020 are as follows:

	NET			COST OF
	SALES AND			SALES AND			GROSS
($ in millions)	REVENUES			REVENUES			MARGIN
Six Months Ended June 30, 2021	$	2,372.0		$	1,701.4		$	670.6
Increase (decrease)
Aftermarket parts volume		255.1			162.8			92.3
Average aftermarket parts sales prices		259.7						259.7
Average aftermarket parts direct costs					122.3			(122.3	)
Warehouse and other indirect costs					26.4			(26.4	)
Currency translation		(63.2	)		(38.9	)		(24.3	)
Total increase		451.6			272.6			179.0
Six Months Ended June 30, 2022	$	2,823.6		$	1,974.0		$	849.6

•	Aftermarket parts sales volume increased by $255.1 million and related cost of sales increased by $162.8 million due to higher demand in all markets.

•	Average aftermarket parts sales prices increased sales by ~~$131.4~~$259.7 million primarily due to higher price realization in North America and Europe.

•	Average aftermarket parts direct costs increased ~~$61.4~~$122.3 million due to higher material and freight costs.

•	Warehouse and other indirect costs increased ~~$12.7~~$26.4 million primarily due to higher salaries and related expenses.

~~- 34 -~~

•	The currency translation effect on sales and cost of sales primarily reflects a decline in the value of the euro relative to the U.S. dollar.

•	Parts gross margins in the first ~~quarter~~six months of 2022 increased to 30.1% from 28.3% in the first ~~quarter~~six months of 2021 due to the factors noted above.

Parts SG&A expense increased in the ~~first~~second quarter of 2022 to ~~$54.9~~$54.6 million from ~~$51.7~~$53.0 million in 2021, and for the first six months, Parts SG&A increased to $109.5 million in 2022 from $104.7 million in 2021. The increase in both periods was primarily due to higher salaries and related ~~expenses.~~ expenses, partially offset by lower sales and marketing costs and currency translation effects.

As a percentage of sales, Parts SG&A was ~~4.0%~~3.8% and 3.9% in the second quarter and first ~~quarter~~six months of 2022, respectively, compared to ~~4.5%~~4.4% in the second quarter and first ~~quarter~~six months of 2021.

- 39 -

Financial Services

The Company’s Financial Services segment accounted for 6%5% of revenues in the second quarter and first ~~quarter~~six months of 2022, compared to 7%8% in the second quarter and first ~~quarter~~six months of ~~2021.~~2021, respectively.

								Three Months Ended							Six Months Ended
								June 30							June 30
($ in millions)									2022		2021	% CHANGE				2022		2021	% CHANGE
Three Months Ended March 31,		2022		2021	% CHANGE
New loan and lease volume:
U.S. and Canada	$	836.8	$	734.5		14		$	817.2	$	964.5		(15	)	$	1,654.0	$	1,699.0		(3	)
Europe		350.2		328.9		6			347.8		338.6		3			698.0		667.5		5
Mexico, Australia and other		297.2		208.1		43			333.8		257.3		30			631.0		465.4		36
	$	1,484.2	$	1,271.5		17		$	1,498.8	$	1,560.4		(4	)	$	2,983.0	$	2,831.9		5
New loan and lease volume by product:
Loans and finance leases	$	1,243.9	$	1,032.1		21		$	1,204.7	$	1,300.7		(7	)	$	2,448.6	$	2,332.8		5
Equipment on operating lease		240.3		239.4					294.1		259.7		13			534.4		499.1		7
	$	1,484.2	$	1,271.5		17		$	1,498.8	$	1,560.4		(4	)	$	2,983.0	$	2,831.9		5
New loan and lease unit volume:
Loans and finance leases		9,600		9,160		5			10,130		10,690		(5	)		19,730		19,850		(1	)
Equipment on operating lease		2,880		2,450		18			3,080		2,910		6			5,960		5,360		11
		12,480		11,610		7			13,210		13,600		(3	)		25,690		25,210		2
Average earning assets:
U.S. and Canada	$	8,511.0	$	8,752.5		(3	)	$	8,747.5	$	8,795.4		(1	)	$	8,630.0	$	8,774.0		(2	)
Europe		3,826.5		3,920.3		(2	)		3,853.6		3,841.6					3,843.2		3,880.4		(1	)
Mexico, Australia and other		2,326.7		2,025.3		15			2,520.6		2,080.9		21			2,421.4		2,056.0		18
	$	14,664.2	$	14,698.1				$	15,121.7	$	14,717.9		3		$	14,894.6	$	14,710.4		1
Average earning assets by product:
Loans and finance leases	$	10,073.8	$	9,786.4		3		$	10,273.5	$	10,018.9		3		$	10,174.1	$	9,903.9		3
Dealer wholesale financing		1,671.7		1,721.9		(3	)		2,023.0		1,506.4		34			1,848.3		1,612.8		15
Equipment on lease and other		2,918.7		3,189.8		(8	)		2,825.2		3,192.6		(12	)		2,872.2		3,193.7		(10	)
	$	14,664.2	$	14,698.1				$	15,121.7	$	14,717.9		3		$	14,894.6	$	14,710.4		1
Revenues:
U.S. and Canada	$	168.6	$	189.5		(11	)	$	168.3	$	218.0		(23	)	$	336.9	$	407.5		(17	)
Europe		129.5		182.1		(29	)		124.9		176.0		(29	)		254.4		358.1		(29	)
Mexico, Australia and other		68.1		60.4		13			79.3		62.3		27			147.4		122.7		20
	$	366.2	$	432.0		(15	)	$	372.5	$	456.3		(18	)	$	738.7	$	888.3		(17	)
Revenue by product:
Loans and finance leases	$	118.4	$	118.1				$	128.8	$	122.1		5		$	247.2	$	240.2		3
Dealer wholesale financing		13.9		11.8		18			22.1		10.3		115			36.0		22.1		63
Equipment on lease and other		233.9		302.1		(23	)		221.6		323.9		(32	)		455.5		626.0		(27	)
	$	366.2	$	432.0		(15	)	$	372.5	$	456.3		(18	)	$	738.7	$	888.3		(17	)
Income before income taxes	$	147.0	$	76.4		92		$	144.4	$	106.5		36		$	291.4	$	182.9		59

~~New~~For the second quarter, new loan and lease volume was ~~$1,484.2~~$1,498.8 million in ~~the first quarter of~~ 2022 compared to ~~$1,271.5~~$1,560.4 million in ~~the first quarter of~~ 2021 reflecting lower new loan and lease volume in the U.S. and Canada, partially offset by higher new loan and lease volume in Brasil, Europe and Mexico. For the first half of 2022, new loan and lease unit volume was $2,983.0 million compared to $2,831.9 million in 2021, primarily reflecting higher new loan and lease volume in Brasil, Europe and Mexico, partially offset by lower new loan and lease volume in the U.S. and ~~Canada, Brasil~~Canada. The effect of currency translation decreased new loan and ~~Australia.~~lease volume by $50.5 million and $80.7 million in the second quarter and first half of 2022, primarily due to the lower euro and Australian dollar relative to the U.S. dollar.

In the second quarter of 2022, PFS finance market share onof new PACCAR truck sales was ~~27.7%~~25.0% compared to 27.9% in the second quarter of 2021. In the first six months of 2022, PFS finance market share of new PACCAR truck sales was 26.4% compared to 26.5% in the first ~~quarter of 2022 compared to 24.9% in the first quarter~~six months of 2021.

~~- 35 -~~

In the ~~first~~second quarter of 2022, PFS revenues ~~were $366.2~~decreasedto $372.5 million ~~compared to $432.0~~from $456.3 million in 2021. In the first ~~quarter~~six months of ~~2021, reflecting~~2022, PFS revenues decreased to $738.7 million from $888.3 million in 2021. The decreases for both periods were primarily due to lower used truck sales in Europe and the U.S. The effects of currency translation decreased PFS revenues by ~~$9.4~~$16.7 million and $26.0 million in the second quarter and first ~~quarter~~half of 2022, respectively, primarily due to a ~~weaker~~lower euro relative to the U.S. dollar.

- 40 -

PFS income before income taxes increased to ~~a record $147.0~~ $144.4million in the ~~first~~second quarter of 2022 from ~~$76.4~~ $106.5million in the ~~first~~second quarter of ~~2021,~~2021. In the first six months of 2022, PFS income before income taxes increased to$291.4 million from $182.9 million in 2021. The increase in both periods was primarily due to improved used truck results. The ~~effect~~effects of ~~currency translation~~translating weaker foreign currencies to the U.S. dollar decreased PFS income before income taxes by ~~$2.7~~$5.7 million inand $8.4 million for the second quarter and first ~~quarter~~half of 2022 ~~reflecting~~ , respectively, primarily due to a ~~decline in the value of the~~lower euro relative to the U.S. dollar.

Included in Financial Services “Other assets” on the Company’s Consolidated Balance Sheets are used trucks held for sale, net of impairments, of ~~$72.4~~$99.3 million at ~~March 31,~~June 30, 2022 and $92.1 million at December 31, 2021. 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 gains on used trucks, excluding repossessions, of ~~$35.2~~$34.7 million in the ~~first~~second quarter of 2022 compared to losses of ~~$14.4~~$3.3 million in the ~~first~~second quarter of ~~2021. There were no~~2021, including losses on multiple unit transactions ~~included~~of nil in the ~~first~~second quarter of 2022 compared to ~~$10.8~~$6.1 million in the ~~first~~second quarter of 2021. Used truck losses related to repossessions, which are recognized as credit losses, and used truck gains, which are recognized as credit recoveries, were not significant for either the second quarter of 2022 or 2021.

The Company recognized gains on used trucks, excluding repossessions, of $69.9 million in the first ~~quarter~~six months of 2022 compared to $11.1 million of losses in the first six months of 2021, including losses on multiple unit transactions of $.3 million in the first six months of 2022 compared to $16.9 million in the first six months of 2021. Used truck losses related to repossessions, which are recognized as credit losses, and used truck gains, which are recognized as credit recoveries, were not significant for either the first six months of 2022 or 2021.

The major factors for the changes in interest and fees, interest and other borrowing expenses and finance margin for the three months ended ~~March 31,~~June 30, 2022 and 2021 are outlined below:


($ in millions)	INTEREST AND FEES			INTEREST AND OTHER BORROWING EXPENSES			FINANCE MARGIN			INTEREST AND FEES			INTEREST AND OTHER BORROWING EXPENSES		FINANCE MARGIN
Three Months Ended March 31, 2021	$	129.9		$	42.0		$	87.9
Three Months Ended June 30, 2021										$	132.4		$	37.6	$	94.8
Increase (decrease)
Average finance receivables		5.0						5.0			14.0					14.0
Average debt balances					(.1	)		.1						1.9		(1.9	)
Yields		(1.4	)					(1.4	)		7.3					7.3
Borrowing rates					(2.2	)		2.2						6.9		(6.9	)
Currency translation and other		(1.2	)		.1			(1.3	)		(2.8	)				(2.8	)
Total increase (decrease)		2.4			(2.2	)		4.6
Three Months Ended March 31, 2022	$	132.3		$	39.8		$	92.5
Total increase											18.5			8.8		9.7
Three Months Ended June 30, 2022										$	150.9		$	46.4	$	104.5

•	Average finance receivables increased ~~$449.5~~$1,159.7 million (excluding foreign exchange effects) in the ~~first~~second quarter of 2022 primarily due to higher average loan ~~balances, partially offset by lower~~and dealer wholesale balances.

•	~~Lower~~Average debt balances increased $449.3 million (excluding foreign exchange effects) in the second quarter of 2022, reflecting higher funding requirements for the portfolio, which includes loans, finance leases, dealer wholesale and equipment on operating lease.

•

Higher portfolio yields ~~(4.5%~~(4.9% in 2022 compared to ~~4.6%~~4.5% in 2021) ~~decreased~~increased interest and fees by ~~$1.4~~$7.3 million. The ~~lower~~higher portfolio yields were primarily due to higher market rates in Europe and Brasil, partially offset lower ~~market~~ rates in North America.

•	~~Lower~~Higher borrowing rates ~~(1.5%~~(1.7% in 2022 compared to ~~1.6%~~1.4% in 2021) were primarily due to ~~lower~~higher debt market rates in ~~North America.~~Brasil, Canada and Europe.

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

- 41 -

The major factors for the changes in interest and fees, interest and other borrowing expenses and finance margin between the six months ended June 30, 2022 and 2021 are outlined below:


($ in millions)	INTEREST AND FEES			INTEREST AND OTHER BORROWING EXPENSES		FINANCE MARGIN
Six Months Ended June 30, 2021	$	262.3		$	79.6	$	182.7
Increase (decrease)
Average finance receivables		19.0					19.0
Average debt balances					1.8		(1.8	)
Yields		5.9					5.9
Borrowing rates					4.7		(4.7	)
Currency translation and other		(4.0	)		.1		(4.1	)
Total increase		20.9			6.6		14.3
Six Months Ended June 30, 2022	$	283.2		$	86.2	$	197.0

•	Average finance receivables increased $785.3 million (excluding foreign exchange effects) in the first six months of 2022 primarily due to higher average loan and dealer wholesale balances.

•	Average debt balances increased by $221.0 million (excluding foreign exchange effects) in the first six months of 2022, reflecting higher funding requirements for the portfolio, which includes loans, finance leases, dealer wholesale and equipment on operating lease.

•	Higher portfolio yields (4.8% in 2022 compared to 4.6% in 2021) increased interest and fees by $5.9 million. The higher portfolio yields were primarily due to higher market rates in Europe, Brasil and Mexico, partially offset by lower rates in the U.S.

•	Higher borrowing rates (1.6% in 2022 compared to 1.5% in 2021) were primarily due to higher debt market rates in Brasil, Canada and Mexico, partially offset by lower rates in the U.S.

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

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

					Three Months Ended				Six Months Ended
					June 30				June 30
($ in millions)						2022		2021		2022		2021
Three Months Ended March 31,		2022		2021
Operating lease and rental revenues	$	208.6	$	215.9	$	204.5	$	219.5	$	413.1	$	435.4
Used truck sales		20.6		81.7		12.8		99.5		33.4		181.2
Insurance, franchise and other revenues		4.7		4.5		4.3		4.9		9.0		9.4
Operating lease, rental and other revenues	$	233.9	$	302.1	$	221.6	$	323.9	$	455.5	$	626.0

Depreciation of operating lease equipment	$	112.5	$	165.2	$	124.0	$	153.6	$	236.5	$	318.8
Vehicle operating expenses		10.4		30.9		9.0		26.3		19.4		57.2
Cost of used truck sales		19.7		81.6		12.2		99.6		31.9		181.2
Insurance, franchise and other expenses		.9		1.0		.2		1.0		1.1		2.0
Depreciation and other expenses	$	143.5	$	278.7	$	145.4	$	280.5	$	288.9	$	559.2

- 3642 -

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 ~~March 31,~~June 30, 2022 and 2021 are outlined below:


($ in millions)	OPERATING LEASE, RENTAL AND OTHER REVENUES			DEPRECIATION AND OTHER EXPENSES			LEASE MARGIN			OPERATING LEASE, RENTAL AND OTHER REVENUES			DEPRECIATION AND OTHER EXPENSES			LEASE MARGIN
Three Months Ended March 31, 2021	$	302.1		$	278.7		$	23.4
Three Months Ended June 30, 2021										$	323.9		$	280.5		$	43.4
(Decrease) increase
Used truck sales		(59.9	)		(60.7	)		.8			(85.2	)		(85.9	)		.7
Results on returned lease assets					(63.3	)		63.3						(33.9	)		33.9
Average operating lease assets		(5.8	)		(4.4	)		(1.4	)		(10.3	)		(8.4	)		(1.9	)
Revenue and cost per asset		5.3			(.7	)		6.0			7.5			3.8			3.7
Currency translation and other		(7.8	)		(6.1	)		(1.7	)		(14.3	)		(10.7	)		(3.6	)
Total (decrease) increase		(68.2	)		(135.2	)		67.0			(102.3	)		(135.1	)		32.8
Three Months Ended March 31, 2022	$	233.9		$	143.5		$	90.4
Three Months Ended June 30, 2022										$	221.6		$	145.4		$	76.2

•	~~A lower~~Lower sales volume of used trucks in Europe and the U.S. decreased revenues by ~~$59.9~~$85.2 million and related depreciation and other expenses by ~~$60.7~~$85.9 million.

•	Results on returned lease assets decreased depreciation and other expenses by ~~$63.3~~$33.9 million primarily due to higher gains on sales on returned lease units ~~in 2022 compared to losses in 2021~~ ~~and lower impairments in Europe and the U.S.~~ as a result of higher used truck market values.

•	Average operating lease assets decreased ~~$156.7~~$170.5 million (excluding foreign exchange effects), which decreased revenues by ~~$5.8~~$10.3 million and related depreciation and other expenses by ~~$4.4~~$8.4 million.

•

Revenue per asset increased ~~$5.3~~$7.5 million primarily due to higher rental ~~utilization.~~utilization in the North America. Cost per asset ~~decreased $.7~~increased $3.8 million due to ~~gain on sales of equipment on~~higher operating lease ~~and lower operating lease impairments in Europe.~~depreciation.

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

The major factors for the changes in operating lease, rental and other revenues, depreciation and other expenses and lease margin between the six months ended June 30, 2022 and 2021 are outlined below:


($ in millions)	OPERATING LEASE, RENTAL AND OTHER REVENUES			DEPRECIATION AND OTHER EXPENSES			LEASE MARGIN
Six Months Ended June 30, 2021	$	626.0		$	559.2		$	66.8
(Decrease) increase
Used truck sales		(145.1	)		(146.6	)		1.5
Results on returned lease assets					(97.2	)		97.2
Average operating lease assets		(16.1	)		(12.8	)		(3.3	)
Revenue and cost per asset		12.8			3.1			9.7
Currency translation and other		(22.1	)		(16.8	)		(5.3	)
Total (decrease) increase		(170.5	)		(270.3	)		99.8
Six Months Ended June 30, 2022	$	455.5		$	288.9		$	166.6

•	Lower sales volume of used trucks in Europe and the U.S. decreased revenues by $145.1 million and related depreciation and other expenses by $146.6 million.

•	Results on returned lease assets decreased depreciation and other expenses by $97.2 million primarily due to higher gains on sales on returned lease units as a result of higher used truck market values.

•	Average operating lease assets decreased $166.1 million (excluding foreign exchange effects), which decreased revenues by $16.1 million and related depreciation and other expenses by $12.8 million.

•	Revenue per asset increased $12.8 million primarily due to higher rental utilization. Cost per asset increased $3.1 million due to higher operating lease depreciation.

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

- 43 -

Financial Services SG&A ~~expense was $35.7~~for the second quarter of 2022 decreased to $31.9 million from $32.2 million in the ~~first~~second quarter of ~~2022 compared~~2021 primarily due to ~~$31.2~~decreases in the value of foreign currencies relative to the U.S. dollar. For the first six months, Financial Services SG&A increased to $67.6 million in ~~2021. The increase was~~2022 from $63.4 million in 2021 primarily due to higher salaries and related ~~expenses.~~expenses, partially offset by decreases in the value of foreign currencies relative to the U.S. dollar.

As a percentage of revenues, Financial Services SG&A increased to 8.6% in the second quarter of 2022 from 7.1% in the same period of 2021, and in the first six months, increased to 9.2% in 2022 from 7.1% in 2021. The increases in both periods was primarily driven by lower revenues.

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

											Three Months Ended						Six Months Ended
											June 30, 2022						June 30, 2022
($ in millions)											PROVISION FOR LOSSES ON RECEIVABLES			NET CHARGE- OFFS			PROVISION FOR LOSSES ON RECEIVABLES			NET CHARGE- OFFS
Three Months Ended March 31,	2022						2021
	PROVISION FOR LOSSES ON RECEIVABLES			NET CHARGE- OFFS			PROVISION FOR LOSSES ON RECEIVABLES		NET CHARGE- OFFS
U.S. and Canada	$	(2.5	)	$	(.6	)	$	.4	$	.3	$	(.4	)	$	(.1	)	$	(2.9	)	$	(.7	)
Europe					.2			1.0		.6		.3			.3			.3			.5
Mexico, Australia and other		2.7			1.1			2.3		1.6		4.5			.2			7.2			1.3
	$	.2		$	.7		$	3.7	$	2.5	$	4.4		$	.4		$	4.6		$	1.1

	Three Months Ended					Six Months Ended
	June 30, 2021					June 30, 2021
($ in millions)	PROVISION FOR LOSSES ON RECEIVABLES			NET CHARGE- OFFS		PROVISION FOR LOSSES ON RECEIVABLES		NET CHARGE- OFFS
U.S. and Canada				$	.3	$	.4	$	.6
Europe	$	(.8	)		.5		.2		1.1
Mexico, Australia and other		.3			1.2		2.6		2.8
	$	(.5	)	$	2.0	$	3.2	$	4.5

The provision for losses on receivables ~~decreased to $.2~~was $4.4 million in the ~~first~~second quarter of 2022 ~~from $3.7~~compared to $(.5) million ~~for the same period~~ in 2021, ~~reflecting continued strong~~and in the first six months, the provision for losses on receivables was $4.6 million in 2022 compared to $3.2 million in 2021. The increase in provision for losses in both the second quarter and first half of 2022 compared to 2021 was mainly driven by portfolio ~~performance.~~growth and higher past due balances in Brasil, partially offset by improved portfolio performance in the U.S. and Canada.

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 the Company considers likely to perform under the modified terms. When the Company modifies a loan or finance lease for credit reasons and grants a concession, the modification is classified as a troubled debt restructuring (TDR).

~~- 37 -~~

The post-modification balances of accounts modified during the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021 are summarized below:

	2022					2021					2022					2021
($ in millions)	AMORTIZED COST BASIS		% OF TOTAL PORTFOLIO*			AMORTIZED COST BASIS		% OF TOTAL PORTFOLIO*			AMORTIZED COST BASIS		% OF TOTAL PORTFOLIO*			AMORTIZED COST BASIS		% OF TOTAL PORTFOLIO*
Commercial	$	72.1		2.8	%	$	67.0		2.7	%	$	111.2		2.1	%	$	122.5		2.4	%
Insignificant delay		18.1		.7	%		23.6		1.0	%		41.0		.8	%		34.4		.7	%
Credit – no concession		21.1		.8	%		33.5		1.4	%		41.0		.8	%		40.0		.8	%
Credit – TDR		.6					5.4		.2	%		8.1		.2	%		5.7		.1	%
	$	111.9		4.3	%	$	129.5		5.3	%	$	201.3		3.9	%	$	202.6		4.0	%

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

- 44 -

During the first ~~three~~six months of 2022, total modification activity ~~decreased compared~~of $201.3 million was comparable to $202.6 million for the ~~first three months of 2021, reflecting lower modifications for insignificant delays, Credit – no concession and Credit –TDR, partially offset by higher commercial modifications.~~same period last year. The ~~increase~~decrease in modifications for Commercial reasons primarily reflects ~~higher~~a lower volume of refinancing. The ~~decrease~~increase in modifications for Insignificant delay reflects the ~~impact~~impacts of two fleet customers in the U.S. and an increased number of extensions related to COVID-19 and flooding relief in Australia, partially offset by a reduction of customers requesting payment relief in Italy related to the COVID-19 pandemic ~~during~~in the first ~~three months~~half of 2021. The ~~decrease~~slight increase in modifications for Credit – no concession is primarily due to ~~lower~~higher volumes of refinancing and requests for payment relief in ~~Mexico and~~Brasil, partially offset by a reduction of requests for payment relief in Europe. The ~~decrease~~increase in modifications for Credit –TDR is primarily due to contract modifications in Brasil, partially offset by a reduction of contract modifications related to COVID-19 for customers in Italy.

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

	March 31 2022			December 31 2021			March 31 2021			June 30 2022			December 31 2021			June 30 2021
Percentage of retail loan and lease accounts 30+ days past due:
U.S. and Canada								.1	%								.1	%
Europe		.6	%		.4	%		.6	%		.5	%		.4	%		.3	%
Mexico, Australia and other		1.8	%		1.2	%		1.6	%		1.7	%		1.2	%		1.4	%
Worldwide		.4	%		.3	%		.4	%		.4	%		.3	%		.3	%

Accounts 30+ days past due was .4% at ~~March 31,~~June 30, 2022 compared to .3% at December ~~31, 2021 and .4% at March~~ 31, 2021. 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 ~~$9.4~~$24.7 million of accounts worldwide during the ~~first~~second quarter of 2022, $.4 million during the fourth quarter of 2021 and ~~$4.2~~$1.0 million during the ~~first~~second quarter of 2021 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:

	March 31 2022			December 31 2021			March 31 2021			June 30 2022			December 31 2021			June 30 2021
Pro forma percentage of retail loan and lease accounts 30+ days past due:
U.S. and Canada								.1	%								.1	%
Europe		.6	%		.4	%		.6	%		.5	%		.4	%		.3	%
Mexico, Australia and other		2.3	%		1.2	%		1.7	%		2.9	%		1.2	%		1.4	%
Worldwide		.5	%		.3	%		.4	%		.6	%		.3	%		.3	%

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 ~~March 31,~~June 30, 2022, December 31, 2021 and ~~March 31,~~June 30, 2021. The effect on the allowance for credit losses from such modifications was not significant at ~~March 31,~~June 30, 2022, December 31, 2021 and ~~March 31,~~June 30, 2021.

The Company’s annualized pre-tax return on average assets for Financial Services increased to ~~3.8%~~3.6% in the ~~first~~second quarter of 2022 from ~~2.0%~~2.7% in the same period of 2021, and in the first six months, increased to 3.7% in 2022 from 2.4% in 2021. The increase in both periods was primarily driven by improved used truck results.

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 second quarter and first ~~quarter~~half of 2022 and 2021. Other SG&A increased to ~~$19.7~~$22.9 million for the ~~first~~second quarter of 2022 from ~~$17.1~~$15.3 million for the second quarter of 2021 and increased to $42.6 million for the first ~~quarter~~half of ~~2021,~~2022 from $32.4 million for the first half of 2021. The increase in both periods was primarily due to higher salaries and related expenses.

~~- 38 -~~

For the ~~first~~second quarter, Other (loss) income before income taxes was ~~$10.0~~($3.1) million compared to ~~$5.2~~$5.5 million in ~~2021,~~2021. For the first six months, Other income before tax was $6.9 million compared to $10.9 million in 2021. The decrease in both periods is primarily due to higher salaries and related expenses, partially offset by higher benefit from non-service components of pension ~~expense, partially offset by higher salaries and related expenses.~~expense.

Investment ~~loss~~income for the ~~first~~second quarter ~~was $2.5~~increased to $5.4 million in 2022 from $5.0 million in 2021. For the first six months, investment income decreased to $2.9 million in 2022 from $9.9 million in 2021. For the second quarter and first six months of 2022 investment income from marketable debt securities was higher compared to ~~investment income of $4.9 million~~the same periods in 2021 ~~primarily~~ due to ~~decreases in the value of~~higher yields on South America and U.S. investments, partially offset by unrealized losses on marketable equity ~~securities of $7.1 million.~~securities.

- 45 -

Income Taxes

The effective tax rate for the ~~first~~second quarter of 2022 was ~~22.2%~~21.9% compared to 22.6% for the second quarter of 2021. The effective tax rate for the first six months of 2022 was 22.0% compared to 22.6% for the first ~~quarter~~six months of 2021. The lower effective tax rate in the second quarter and first ~~quarter~~half of 2022 was primarily due to the change in mix of income generated in jurisdictions with lower tax rates in 2022 as compared to 2021.

							Three Months Ended						Six Months Ended
							June 30						June 30
($ in millions)								2022			2021			2022			2021
Three Months Ended March 31,		2022			2021
Domestic income before taxes	$	474.0		$	385.7		$	568.4		$	393.9		$	1,042.4		$	779.6
Foreign income before taxes		297.4			222.6			353.7			246.4			651.1			469.0
Total income before taxes	$	771.4		$	608.3		$	922.1		$	640.3		$	1,693.5		$	1,248.6
Domestic pre-tax return on revenues		14.1	%		12.5	%		14.3	%		12.3	%		14.2	%		12.4	%
Foreign pre-tax return on revenues		9.6	%		8.0	%		11.2	%		9.3	%		10.4	%		8.7	%
Total pre-tax return on revenues		11.9	%		10.4	%		12.9	%		11.0	%		12.4	%		10.7	%

For the second quarter and first ~~quarter~~half of 2022, both domestic and foreign income before income taxes and pre-tax return on revenues increased primarily due to the improved results from Truck, Parts and Financial Services operations.

LIQUIDITY AND CAPITAL RESOURCES:

	March 31		December 31		June 30		December 31
($ in millions)		2022		2021		2022		2021
Cash and cash equivalents	$	3,314.9	$	3,428.3	$	3,231.3	$	3,428.3
Marketable securities		1,515.2		1,559.4		1,559.2		1,559.4
	$	4,830.1	$	4,987.7	$	4,790.5	$	4,987.7

The Company’s total cash and marketable securities at ~~March 31,~~June 30, 2022 decreased ~~$157.6~~$197.2 million from the balances at December 31, 2021. Total cash and marketable securities are primarily intended to provide liquidity while preserving capital.

The change in cash and cash equivalents is summarized below:

($ in millions)
Three Months Ended March 31,		2022		2021
Six Months Ended June 30,								2022		2021
Operating activities:
Net income	$	600.5		$	470.8		$	1,320.9		$	966.3
Net income items not affecting cash		45.2			208.3			229.2			434.9
Changes in operating assets and liabilities, net		(186.4	)		(142.2	)		(452.6	)		(533.5	)
Net cash provided by operating activities		459.3			536.9			1,097.5			867.7
Net cash used in investing activities		(406.1	)		(215.7	)		(879.0	)		(666.7	)
Net cash used in financing activities		(156.4	)		(508.3	)		(346.0	)		(651.5	)
Effect of exchange rate changes on cash and cash equivalents		(10.2	)		(32.5	)		(69.5	)		(19.3	)
Net decrease in cash and cash equivalents		(113.4	)		(219.6	)		(197.0	)		(469.8	)
Cash and cash equivalents at beginning of period		3,428.3			3,539.6			3,428.3			3,539.6
Cash and cash equivalents at end of period	$	3,314.9		$	3,320.0		$	3,231.3		$	3,069.8

Operating activities: Cash provided by operations ~~decreased~~increased by ~~$77.6~~$229.8 million to ~~$459.3~~$1,097.5 million in the first ~~three months~~half of 2022 from ~~$536.9~~$867.7 million in 2021. ~~Lower~~Higher operating cash flows reflect ~~$354.2~~lower cash usage of $535.4 million for inventories, higher net income of $354.6 million and lower cash outflow for payment of income taxes of $80.9 million. Additionally, higher operating cash flows reflect lower cash outflows of $79.3 million for accounts payable and accrued expenses as purchases of goods and services exceeded payments. The higher operating cash flows were partially offset by $733.8 million in wholesale receivables in the Financial Services segment primarily due to increasing wholesale receivables, the first quarter of 2022, and higher cash outflows of $78.8 million for accounts payables as payments exceeded purchases of goods and services. The lower operating cash flows were partially offset by higher cash inflows of $140.7 million from trade receivables, higher net change in derivatives of $70.1 million primarily related to exchange rate fluctuations and lower cash ~~outflows for payment~~receipts from trade and other receivables of ~~income taxes of $50.3~~$105.3 million. ~~Additionally, the lower operating cash flows were offset by RVG contracts accounted for as operating leases for $43.2 million primarily due to fewer equipment returns.~~

- 3946 -

Investing activities: Cash used in investing activities increased by ~~$190.4~~$212.3 million to ~~$406.1~~$879.0 million in the first ~~three months~~half of 2022 from ~~$215.7~~$666.7 million in 2021. Higher net cash used in investing activities reflects ~~higher net originations from retail loans and financing leases of $148.4 million and~~ lower proceeds from asset disposals of ~~$52.8~~$125.1 million, higher net cash used in investing activities of $73.6 million and higher net originations of loans and financing leases of $69.3 million. The higher net cash usage was partially offset by fewer acquisitions of equipment for operating leases of $78.5 million.

Financing activities: Cash used in financing activities decreased by ~~$351.9~~$305.5 to ~~$156.4~~$346.0 million in the first ~~three months~~half of 2022 from ~~$508.3~~$651.5 in 2021. In the first ~~three months~~half of 2022, cash provided by net borrowing activities in 2022 was ~~$468.2~~$395.1 million, ~~$650.2~~$603.5 million higher than the cash used by net borrowing activities of ~~$182.0~~$208.4 million in 2021. The Company paid ~~$639.4~~$757.6 million in dividends in 2022 compared to ~~$353.7~~$471.8 million in 2021 due to a higher ~~extra~~year-end dividend paid in January 2022.

Credit Lines and Other

The Company has line of credit arrangements of ~~$3.66~~$3.67 billion, of which ~~$3.36~~$3.41 billion were unused at ~~March 31,~~June 30, 2022. Included in these arrangements are $3.00 billion of committed bank facilities, of which $1.00 billion expires in June ~~2022,~~2023, $1.00 billion expires in June ~~2024~~2025 and $1.00 billion expires in June ~~2026.~~2027. 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 ~~three~~six months ended ~~March 31,~~June 30, 2022.

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 ~~March 31,~~June 30, 2022, the Company has repurchased $110.0 million of shares under this plan. There were no repurchases made under this plan during the ~~first~~second quarter of 2022.

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.

Investments for manufacturing property, plant and equipment in the first ~~three~~six months of 2022 were $~~110.5~~227.4 million compared to ~~$90.5~~$207.2 million for the same period of 2021. Over the past decade, the Company’s combined investments in worldwide capital projects and R&D totaled $7.21 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 2022, total capital investments for PACCAR are expected to be $425 to $475 million and R&D is expected to be ~~$350~~$330 to ~~$400~~$350 million. The Company is increasing its investment in clean diesel and electric powertrain technologies, autonomous systems, connected vehicle services, next-generation manufacturing and parts distribution capabilities.

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 ~~March 31,~~June 30, 2022 was ~~$5.50~~$5.70 billion. ~~In April 2022, PFC issued $400.0 million of medium-term notes under this registration.~~ The registration expires in November 2024 and does not limit the principal amount of debt securities that may be issued during that period.

As of ~~March 31,~~June 30, 2022, the Company’s European finance subsidiary, PACCAR Financial Europe, had ~~€1.60~~€1.61 billion 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 ~~expires in July 2022 and is~~has been renewed ~~annually~~ through the filing of a new ~~listing.~~listing, which expires in July 2023.

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 ~~March 31,~~June 30, 2022,~~9.32~~ 9.39 billion Mexican pesos were available for issuance.

In August 2018, the Company’s Australian subsidiary, PACCAR Financial Pty. Ltd. (PFPL), 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 as of ~~March 31,~~June 30, 2022 was ~~700.0~~850.0 million Australian dollars.

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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. The total amount of medium-term notes outstanding for PFL Canada as of ~~March 31,~~June 30, 2022 was 150.0 million Canadian dollars.

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.

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; pandemics; global conflicts; litigation, including 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, 2021 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~~six months ended ~~March 31,~~June 30, 2022. For additional information, refer to Item 7A as presented in the 2021 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.

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PART II – OTHER INFORMATION

For Items 3, 4 and 5, there was no reportable information for the ~~three~~six months ended ~~March 31,~~June 30, 2022.

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 2021 Annual Report on Form 10-K. There have been no material changes in the Company’s risk factors during the three months ended ~~March 31,~~June 30, 2022, except for the following:

Conflict in Ukraine

In accordance with ~~recent~~ international sanctions, the Company has suspended truck and parts sales into Russia and Belarus. The Company is monitoring the situation closely. At this time, the conflict has not had a significant impact on the results of operations or cash flows of the Company. The potential impact on the Company’s business will depend on future developments, including the severity and duration of the conflict and its effect on European and global economic conditions.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

For Items 2(a) and (b), there was no reportable information for the three months ended ~~March 31,~~June 30, 2022.

(c)	Issuer purchases of equity securities.

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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:

~~Sixth~~Seventh Amended and Restated Bylaws of PACCAR Inc

8-K

~~December 7,~~

~~2018~~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 O (PACCAR Financial Corp.)

S-3

November 5, 2015

4.2 and 4.3

333-207838

(c)

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

S-3

November 2, 2018

4.2 and 4.3

333-228141

~~- 43 -~~

~~Exhibit Number~~

~~Exhibit Description~~

~~Form~~

~~Date of First Filing~~

~~Exhibit~~

~~Number~~

~~File Number~~

(d)

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

S-3

November 1, 2021

4.3 and 4.4

333-260663

(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 Listing Particulars dated ~~May 9, 201~~July 4, 20198

10-Q

~~August 3, 2018~~October 30, 2019

~~4(h)~~4(i)

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 ~~Listing Particulars~~Information Memorandum dated ~~July 4, 2019~~May 29, 2020

10-Q

~~October 30, 2019~~August 3, 2020

~~4(i)~~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 ~~May 29, 20~~July 15, 202120

10-Q

August ~~3, 2020~~2, 2021

~~4(h)~~4(g)

001-14817

(h)

Terms and Conditions of the Notes applicable to the

~~€2,500,000,000~~ €2,500,000,000 Medium Term Note Programme of PACCAR

Financial Europe B.V. set forth in the Information

Memorandum dated July ~~15, 2021~~13, 2022*

~~10-Q~~

~~August 2, 2021~~

~~4(g)~~

~~01-14817~~

(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

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.

(10)

Material Contracts:

- 51 -

Exhibit Number

Exhibit Description

Form

Date of First Filing

Exhibit

Number

File Number

(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)

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

DEF14A

March 14, 2014

Appendix A

001-14817

(e)

PACCAR Inc Restricted Stock and Deferred Compensation Plan for Non-Employee Directors, Form of Deferred Restricted Stock Unit Agreement for Non-Employee Directors

8-K

December 10, 2007

99.3

001-14817

(f)

Amendment to Compensatory Arrangement with Non-Employee Directors

10-K

February 26, 2015

10(g)

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 19, 2020

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

~~- 44 -~~

~~Exhibit Number~~

~~Exhibit Description~~

~~Form~~

~~Date of First Filing~~

~~Exhibit~~

~~Number~~

~~File Number~~

(l)

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

10-Q

November 4, 2016

10(q)

001-14817

(m)

Memorandum of Understanding, dated as of May 11, 2007, by and among PACCAR Engine Company, the State of Mississippi and certain state and local supporting governmental entities

8-K

May 16, 2007

10.1

001-14817

(n)

Letter Waiver Dated as of July 22, 2008 amending the Memorandum of Understanding, dated as of May 11, 2007, by and among PACCAR Engine Company, the State of Mississippi and certain state and local supporting governmental entities

10-Q

October 27, 2008

10(o)

001-14817

(o)

Second Amendment to Memorandum of Understanding dated as of September 26, 2013, by and among PACCAR Engine Company, the Mississippi Development Authority and the Mississippi Major Economic Impact Authority

10-Q

November 7, 2013

10(u)

001-14817

(p)

Third Amendment to Memorandum of Understanding dated as of November 12, 2019, by and among PACCAR Engine Company, the Mississippi Development Authority and the Mississippi Major Economic Impact Authority

10-K

February 19, 2020

10(r)

001-14817

(q)

Second Amended and Restated PACCAR Inc Restricted Stock and Deferred Compensation Plan for Non-Employee Directors, Form of Amended Deferred Restricted Stock Unit Grant Agreement

10-K

February 26, 2015

10(t)

001-14817

(r)

Second Amended and Restated PACCAR Inc Restricted Stock and Deferred Compensation Plan for Non-Employee Directors, Form of Amended Restricted Stock Grant Agreement

10-K

February 26, 2015

10(u)

001-14817

- 52 -

Exhibit Number

Exhibit Description

Form

Date of First Filing

Exhibit

Number

File Number

(18)

Preferability Letter from Ernst & Young LLP*

(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*

(101.CAL)

Inline XBRL Taxonomy Extension Calculation Linkbase Document*

(101.DEF)

Inline XBRL Taxonomy Extension Definition Linkbase Document*

��

(101.LAB)

Inline XBRL Taxonomy Extension Label Linkbase Document*

(101.PRE)

Inline XBRL Taxonomy Extension Presentation Linkbase Document*

(104)

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

*	filed herewith

- 4553 -

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	~~May 3,~~August 2, 2022	By	/s/ M. T. Barkley
			M. T. Barkley
			Senior Vice President and Controller
			(Authorized Officer and Chief Accounting Officer)

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