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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, 2025


☐	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 (§232.405 of this chapter) 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 — 524,959,425 shares as of April 25, 2025

PACCAR Inc – Form 10-Q

INDEX


		Page
PART I.	FINANCIAL INFORMATION:

ITEM 1.	FINANCIAL STATEMENTS:
	Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2025 and 2024 (Unaudited)	3
	Consolidated Balance Sheets – March 31, 2025 (Unaudited) and December 31, 2024	4
	Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2025 and 2024 (Unaudited)	6
	Consolidated Statements of Stockholders’ Equity – Three Months Ended March 31, 2025 and 2024 (Unaudited)	7
	Notes to Consolidated Financial Statements (Unaudited)	8
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	31
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	46
ITEM 4.	CONTROLS AND PROCEDURES	46

PART II.	OTHER INFORMATION:

ITEM 1.	LEGAL PROCEEDINGS	47
ITEM 1A.	RISK FACTORS	47
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES	47
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	47
ITEM 4.	MINE SAFETY DISCLOSURES	47
ITEM 5.	OTHER INFORMATION	47
ITEM 6.	EXHIBITS	48

INDEX TO EXHIBITS		48

SIGNATURE		50

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Consolidated Statements of Comprehensive Income (Unaudited)

(Millions, Except Per Share Amounts)


	Three Months Ended
	March 31
	2025		2024
TRUCK, PARTS AND OTHER:
Net sales and revenues	$	6,913.7	$	8,235.0

Cost of sales and revenues		5,891.0		6,673.8
Research and development		115.4		105.5
Selling, general and administrative		143.3		147.6
Interest and other expenses (income), net		325.8		(27.0	)
		6,475.5		6,899.9
Truck, Parts and Other Income Before Income Taxes		438.2		1,335.1

FINANCIAL SERVICES:
Interest and fees		343.0		303.4
Operating lease, rental and other revenues		185.0		205.9
Revenues		528.0		509.3

Interest and other borrowing expenses		190.6		160.0
Depreciation and other expenses		159.7		180.3
Selling, general and administrative		38.3		39.0
Provision for losses on receivables		18.3		16.1
		406.9		395.4
Financial Services Income Before Income Taxes		121.1		113.9
Investment income		83.8		85.5
Total Income Before Income Taxes		643.1		1,534.5
Income taxes		138.0		339.2
Net Income	$	505.1	$	1,195.3

Net Income Per Share
Basic	$	.96	$	2.28
Diluted	$	.96	$	2.27

Weighted Average Number of Common Shares Outstanding
Basic		525.9		524.9
Diluted		526.9		526.3

Comprehensive Income	$	655.3	$	1,089.0

See Notes to Consolidated Financial Statements.

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Consolidated Balance Sheets

(Millions)


	March 31		December 31
	2025		2024 *
	(Unaudited)
ASSETS

TRUCK, PARTS AND OTHER:
Current Assets
Cash and cash equivalents	$	5,273.5	$	6,871.1
Trade and other receivables, net (allowance for losses: 2025 - $1.3, 2024 - $1.2)		2,212.4		1,933.8
Marketable securities		2,826.5		2,778.8
Inventories, net		2,375.6		2,367.1
Other current assets		759.7		751.2
Total Truck, Parts and Other Current Assets		13,447.7		14,702.0

Property, plant and equipment, net		4,127.2		3,985.6
Other noncurrent assets, net		2,404.6		2,319.8
Total Truck, Parts and Other Assets		19,979.5		21,007.4

FINANCIAL SERVICES:
Cash and cash equivalents		244.2		189.7
Finance and other receivables, net (allowance for losses: 2025 - $144.6, 2024 - $145.2)		19,611.3		19,314.3
Equipment on operating leases, net		1,868.8		1,891.4
Other assets		1,020.9		1,016.1
Total Financial Services Assets		22,745.2		22,411.5
	$	42,724.7	$	43,418.9

* The December 31, 2024 consolidated balance sheet has been derived from audited financial statements.

See Notes to Consolidated Financial Statements.

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Consolidated Balance Sheets

(Millions)


	March 31			December 31
	2025			2024 *
	(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY

TRUCK, PARTS AND OTHER:
Current Liabilities
Accounts payable, accrued expenses and other	$	5,103.2		$	4,805.1
Dividend payable					1,573.8
Total Truck, Parts and Other Current Liabilities		5,103.2			6,378.9
Other liabilities		2,235.2			1,954.3
Total Truck, Parts and Other Liabilities		7,338.4			8,333.2

FINANCIAL SERVICES:
Accounts payable, accrued expenses and other		1,126.0			1,106.4
Commercial paper and bank loans		5,687.4			6,003.8
Term notes		9,967.6			9,891.2
Deferred taxes and other liabilities		583.2			577.4
Total Financial Services Liabilities		17,364.2			17,578.8

STOCKHOLDERS' EQUITY:
Preferred stock, no par value - authorized 1.0 million shares, none issued
Common stock, $1 par value - authorized 1.2 billion shares, issued 525.0 and 524.4 million shares		525.0			524.4
Additional paid-in capital		382.0			344.8
Treasury stock, at cost - .04 million and nil shares		(4.3	)
Retained earnings		18,082.5			17,751.0
Accumulated other comprehensive loss		(963.1	)		(1,113.3	)
Total Stockholders' Equity		18,022.1			17,506.9
	$	42,724.7		$	43,418.9

* The December 31, 2024 consolidated balance sheet has been derived from audited financial statements.

See Notes to Consolidated Financial Statements.

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Condensed Consolidated Statements of Cash Flows (Unaudited)

(Millions)


	Three Months Ended
	March 31
	2025			2024
OPERATING ACTIVITIES:
Net Income	$	505.1		$	1,195.3
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization:
Property, plant and equipment		99.7			104.2
Other assets		105.4			130.8
Provision for losses on financial services receivables		18.3			16.1
Other, net		36.3			17.9
Pension contributions		(6.5	)		(26.0	)
Change in operating assets and liabilities:
Trade and other receivables		(230.9	)		(240.6	)
Wholesale receivables on new trucks		28.8			(183.4	)
Inventories		33.0			(203.8	)
Accounts payable and accrued expenses		155.9			584.9
Income taxes, warranty and other		165.2			73.6
Net Cash Provided by Operating Activities		910.3			1,469.0

INVESTING ACTIVITIES:
Originations of retail loans and finance leases		(1,332.0	)		(1,438.5	)
Collections on retail loans and finance leases		1,110.0			1,196.8
Net decrease (increase) in wholesale receivables on equipment		23.7			(75.7	)
Purchases of marketable debt securities		(405.1	)		(319.9	)
Proceeds from sales and maturities of marketable debt securities		384.5			294.1
Payments for property, plant and equipment		(165.1	)		(191.3	)
Acquisitions of equipment for operating leases		(160.7	)		(160.5	)
Proceeds from asset disposals		200.2			169.1
Contributions to joint venture		(44.7	)
Other, net		(3.4	)		(.2	)
Net Cash Used in Investing Activities		(392.6	)		(526.1	)

FINANCING ACTIVITIES:
Payments of cash dividends		(1,747.0	)		(1,816.5	)
Purchases of treasury stock		(4.3	)		(4.0	)
Proceeds from stock compensation transactions		22.5			35.4
Net decrease in commercial paper, short-term bank loans and other		(347.0	)		(561.6	)
Proceeds from term debt		697.5			1,015.0
Payments on term debt		(756.4	)		(548.3	)
Net Cash Used in Financing Activities		(2,134.7	)		(1,880.0	)
Effect of exchange rate changes on cash and cash equivalents		73.9			(50.1	)
Net Decrease in Cash and Cash Equivalents		(1,543.1	)		(987.2	)
Cash and cash equivalents at beginning of period		7,060.8			7,181.7
Cash and cash equivalents at end of period	$	5,517.7		$	6,194.5

See Notes to Consolidated Financial Statements.

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Consolidated Statements of Stockholders’ Equity (Unaudited)

(Millions, Except Per Share Amounts)


	Three Months Ended
	March 31
	2025			2024
COMMON STOCK, $1 PAR VALUE:
Balance at beginning of period	$	524.4		$	523.3
Stock compensation		.6			.8
Balance at end of period		525.0			524.1

ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of period		344.8			269.1
Stock compensation		37.2			49.2
Balance at end of period		382.0			318.3

TREASURY STOCK, AT COST:
Balance at beginning of period
Purchases		(4.3	)		(4.0	)
Balance at end of period		(4.3	)		(4.0	)

RETAINED EARNINGS:
Balance at beginning of period		17,751.0			15,780.3
Net income		505.1			1,195.3
Cash dividends declared on common stock		(173.6	)		(141.9	)
Balance at end of period		18,082.5			16,833.7

ACCUMULATED OTHER COMPREHENSIVE LOSS:
Balance at beginning of period		(1,113.3	)		(693.9	)
Other comprehensive income (loss)		150.2			(106.3	)
Balance at end of period		(963.1	)		(800.2	)
Total Stockholders’ Equity	$	18,022.1		$	16,871.9

Cash dividends declared on common stock, per share	$	.33		$	.27

See Notes to Consolidated Financial Statements.

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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 months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. 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, 2024.

Equity Method Investment: In the second quarter of 2024, PACCAR and three partners completed the formation of a U.S. battery manufacturing joint venture, Amplify Cell Technologies, with PACCAR owning a 30 percent interest. The joint venture meets the definition of a variable interest entity since the equity-at-risk is not currently sufficient to support the future operations of the joint venture. All significant decisions require majority or super-majority approval of the board. As a result, PACCAR is not the primary beneficiary and the Company uses the equity method to account for the investment. Under the equity method, the original investments in the joint venture are recorded at cost and subsequently adjusted by the Company’s share of equity in income or losses. The investment is included in Truck, Parts and Other "Other noncurrent assets, net" on the Company’s Consolidated Balance Sheets. PACCAR's share of the loss is included in Truck, Parts and Other "Interest and other expenses (income), net" on the Company's Consolidated Statements of Income. PACCAR contributed $44.7 in the three month period ended March 31, 2025 and the maximum required contribution is $830.0. The Company's equity method investment was $237.6 at March 31, 2025.

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,	2025		2024
Additional shares		1,030,200		1,439,200
Antidilutive options		1,305,900		671,000

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

In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in this ASU expand the disclosures in the notes to the financial statements about specific cost and expense categories presented on the face of the income statement. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented. The Company is currently evaluating the impact of this update on the related notes to the financial statements.

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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 segments, when the Company grants extended payment terms on selected receivables and charges interest, interest income is recognized when earned.

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


Three Months Ended March 31,	2025			2024
Truck
Truck sales	$	4,971.7		$	6,304.7
Revenues from extended warranties, operating leases and other		254.1			236.3
		5,225.8			6,541.0
Parts
Parts sales		1,637.6			1,625.6
Revenues from dealer services and other		52.3			50.3
		1,689.9			1,675.9
Intersegment eliminations and other		(2.0	)		18.1
Truck, Parts and Other sales and revenues	$	6,913.7		$	8,235.0

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

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

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

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

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


	March 31, 2025				December 31, 2024
	ASSETS		LIABILITIES		ASSETS		LIABILITIES
Trucks
Other current assets	$	109.9			$	116.7
Accounts payable, accrued expenses and other			$	114.5			$	121.7
Other noncurrent assets, net		143.6				135.9
Other liabilities				150.8				144.7
	$	253.5	$	265.3	$	252.6	$	266.4
Parts
Other current assets	$	100.8			$	101.7
Accounts payable, accrued expenses and other			$	240.3			$	244.4
	$	100.8	$	240.3	$	101.7	$	244.4

The Company’s total commitment to acquire trucks at a guaranteed value for contracts accounted for as a sale was $572.8 at March 31, 2025.

Revenues from extended warranties, operating leases and other include optional extended warranty and repair and maintenance (R&M) service contracts which can be purchased for periods generally ranging up to five years. The Company defers revenue based on stand-alone observable selling prices when it receives payments in advance and generally recognizes the revenue on a straight-line basis over the warranty or R&M contract periods. See Note F, Product Support Liabilities, in the Notes to the Consolidated Financial Statements for further information. Also included are truck sales with an RVG accounted for as an operating lease. A liability is created for the residual value obligation with the remainder of the proceeds recorded as deferred revenue. The deferred revenue is recognized on a straight-line basis over the guarantee period, which typically ranges from three to five years. Deferred revenue related to trucks sold with an RVG was $24.2 at March 31, 2025. The Company expects to recognize approximately $6.4 of the remaining deferred revenue in 2025, $7.5 in 2026, $4.8 in 2027, $3.3 in 2028 and $2.2 in 2029. For the three months ended March 31, 2025, total operating lease revenue from truck sales with RVGs was $3.1 compared to $9.8 for the three months ended March 31, 2024. The Company’s total commitment to acquire trucks at a guaranteed value for contracts accounted for as a lease was $55.0 at March 31, 2025.

Revenue from intersegment eliminations and other consists of intersegment eliminations and other revenues not attributable to a reportable segment. Also included within this category was revenue from the industrial winch business through October 31, 2024. Winch sales were recognized when the product was transferred to a customer, which generally occurred upon shipment.

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, R&M 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.

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

Recognition of interest income and rental revenue is suspended (put on non-accrual status) when the receivable becomes more than 90 days past the contractual due date or earlier if some other event causes the Company to determine that collection is not probable. Accordingly, no finance receivables more than 90 days past due were accruing interest at March 31, 2025 or December 31, 2024. Recognition is resumed if the receivable becomes current by the payment of all amounts due under the terms of the existing contract and collection of remaining amounts is considered probable (if not contractually modified) or if the customer makes scheduled payments for three months and collection of remaining amounts is considered probable (if contractually modified). Payments received while the finance receivable is on non-accrual status are applied to interest and principal in accordance with the contractual terms.

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

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

The Company determines its estimate of the residual value of leased vehicles by considering the length of the lease term, the truck model, the expected usage of the truck and anticipated market demand. If the sales price of the truck at the end of the agreement differs from the Company’s estimated residual value, a gain or loss will result. Future market conditions, changes in government regulations and other factors outside the Company’s control could impact the ultimate sales price of trucks returned under these contracts. Residual values are reviewed regularly and adjusted if market conditions warrant.

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


Three Months Ended March 31,	2025		2024
Finance lease revenues	$	88.2	$	82.6
Operating lease revenues		150.8		174.9
Total lease revenues	$	239.0	$	257.5

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.

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

Marketable securities at March 31, 2025 and December 31, 2024 consisted of the following:


			UNREALIZED		UNREALIZED		FAIR
At March 31, 2025	COST		GAINS		LOSSES		VALUE
Marketable debt securities
U.S. tax-exempt securities	$	296.6	$	.7	$	.5	$	296.8
U.S. taxable municipal / non-U.S. provincial bonds		400.5		2.7		1.0		402.2
U.S. corporate securities		904.0		6.1		1.5		908.6
U.S. government securities		241.7		1.1		.4		242.4
Non-U.S. corporate securities		605.5		4.6		.9		609.2
Non-U.S. government securities		178.0		1.7		.3		179.4
Other debt securities		180.6		1.2		.6		181.2
Marketable equity securities		10.0				3.3		6.7
Total marketable securities	$	2,816.9	$	18.1	$	8.5	$	2,826.5


			UNREALIZED		UNREALIZED		FAIR
At December 31, 2024	COST		GAINS		LOSSES		VALUE
Marketable debt securities
U.S. tax-exempt securities	$	304.5	$	.6	$	1.4	$	303.7
U.S. taxable municipal / non-U.S. provincial bonds		381.1		1.2		2.2		380.1
U.S. corporate securities		864.3		3.1		3.2		864.2
U.S. government securities		287.1		.1		1.5		285.7
Non-U.S. corporate securities		606.6		3.5		2.0		608.1
Non-U.S. government securities		163.5		1.4		.6		164.3
Other debt securities		166.4		.8		.8		166.4
Marketable equity securities		10.0				3.7		6.3
Total marketable securities	$	2,783.5	$	10.7	$	15.4	$	2,778.8

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 $.9 and $.6 and gross realized losses were $.9 and $1.8 for the three months periods ended March 31, 2025 and 2024, respectively.

Net unrealized gains (losses) on marketable equity securities recognized in investment income were $.4 and $(1.6) for the three months ended March 31, 2025 and 2024, respectively.

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


	March 31, 2025				December 31, 2024
	LESS THAN		TWELVE MONTHS		LESS THAN		TWELVE MONTHS
	TWELVE MONTHS		OR GREATER		TWELVE MONTHS		OR GREATER
Fair value	$	533.3	$	264.7	$	932.9	$	365.5
Unrealized losses		1.6		3.6		5.5		6.2

The unrealized losses on marketable debt securities above were due to higher yields on certain securities. The Company did not identify any indicators of a credit loss in its assessments. Accordingly, no allowance for credit losses was recorded at March 31, 2025 and December 31, 2024. 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.

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

Contractual maturities on marketable debt securities at March 31, 2025 were as follows:


	AMORTIZED		FAIR
	COST		VALUE
Within one year	$	525.9	$	526.0
One to five years		2,275.0		2,288.3
Six to ten years		1.0		1.0
More than ten years		5.0		4.5
	$	2,806.9	$	2,819.8

NOTE D - Inventories

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

Inventories include the following:


	March 31		December 31
	2025		2024
Finished products	$	1,031.9	$	977.1
Work in process and raw materials		1,343.7		1,390.0
	$	2,375.6	$	2,367.1

NOTE E - Finance and Other Receivables

Finance and other receivables include the following:


	March 31			December 31
	2025			2024
Loans	$	9,579.2		$	9,442.4
Finance leases		5,051.5			4,906.6
Dealer wholesale financing		4,947.3			4,944.1
Operating lease receivables and other		177.9			166.4
		19,755.9			19,459.5
Less allowance for losses:
Loans and leases		(138.7	)		(139.2	)
Dealer wholesale financing		(3.0	)		(3.0	)
Operating lease receivables and other		(2.9	)		(3.0	)
	$	19,611.3		$	19,314.3

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.

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

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

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

On average, commercial and other modifications extended contractual terms by approximately four months in 2025 and four months in 2024, and did not have a significant effect on the weighted average term or interest rate of the total portfolio at March 31, 2025 and December 31, 2024.

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

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

Individually evaluated receivables on non-accrual status are generally considered collateral dependent. Large balance retail and all wholesale receivables on non-accrual status are individually evaluated for loss based on the value of the underlying collateral or a discounted cash flow analysis. Small balance receivables on non-accrual status with similar risk characteristics are evaluated as a separate pool to determine the appropriate reserve for losses using the historical loss information discussed below.

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

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

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

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.

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

The allowance for credit losses is summarized as follows:


	2025
	DEALER					CUSTOMER
	WHOLESALE		RETAIL			RETAIL			OTHER*			TOTAL
Balance at January 1	$	3.0	$	1.5		$	137.7		$	3.0		$	145.2
Provision for losses				(.1	)		18.2			.2			18.3
Charge-offs							(23.0	)		(.3	)		(23.3	)
Recoveries							2.2			.1			2.3
Currency translation and other							2.2			(.1	)		2.1
Balance at March 31	$	3.0	$	1.4		$	137.3		$	2.9		$	144.6


	2024
	DEALER					CUSTOMER
	WHOLESALE		RETAIL			RETAIL			OTHER*			TOTAL
Balance at January 1	$	2.7	$	1.9		$	125.1		$	3.3		$	133.0
Provision for losses				(.2	)		15.9			.4			16.1
Charge-offs							(10.4	)		(.4	)		(10.8	)
Recoveries							2.2						2.2
Currency translation and other							(1.2	)					(1.2	)
Balance at March 31	$	2.7	$	1.7		$	131.6		$	3.3		$	139.3

* 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.

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

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

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

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


	REVOLVING
At March 31, 2025	LOANS		2025		2024		2023		2022		2021		PRIOR		TOTAL
Amortized cost:
Dealer:
Wholesale:
Performing	$	4,940.6													$	4,940.6
Watch		6.7														6.7
	$	4,947.3													$	4,947.3
Retail:
Performing	$	227.2	$	120.7	$	648.1	$	595.3	$	379.0	$	175.3	$	201.8	$	2,347.4
Watch				5.9		2.0		13.9		5.7		1.8		3.1		32.4
	$	227.2	$	126.6	$	650.1	$	609.2	$	384.7	$	177.1	$	204.9	$	2,379.8
Total dealer	$	5,174.5	$	126.6	$	650.1	$	609.2	$	384.7	$	177.1	$	204.9	$	7,327.1

Customer retail:
Fleet:
Performing			$	1,027.2	$	4,326.3	$	2,826.7	$	1,492.3	$	556.5	$	255.7	$	10,484.7
Watch				6.3		19.2		48.7		46.0		24.2		2.9		147.3
At-risk				1.5		60.6		157.6		55.3		14.8		2.5		292.3
			$	1,035.0	$	4,406.1	$	3,033.0	$	1,593.6	$	595.5	$	261.1	$	10,924.3
Owner/operator:
Performing			$	159.0	$	517.7	$	277.4	$	183.4	$	113.5	$	45.7	$	1,296.7
Watch						3.9		5.7		4.3		1.7		.9		16.5
At-risk						2.4		5.6		2.8		1.4		1.2		13.4
			$	159.0	$	524.0	$	288.7	$	190.5	$	116.6	$	47.8	$	1,326.6
Total customer retail			$	1,194.0	$	4,930.1	$	3,321.7	$	1,784.1	$	712.1	$	308.9	$	12,250.9

Total	$	5,174.5	$	1,320.6	$	5,580.2	$	3,930.9	$	2,168.8	$	889.2	$	513.8	$	19,578.0

PACCAR INC 10-Q