10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from              to             

Commission File No. 001-11677

PACCAR FINANCIAL CORP.

(Exact name of Registrant as specified in its charter)

Washington	91-6029712
(State of incorporation)	(I.R.S. Employer Identification No.)

777 106^th Avenue N.E., Bellevue, Washington 98004

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code is (425) 468-7100

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

Title of Each Class	Name of Each Exchange on Which Registered
Series M Medium-Term Notes $500.0 Million Due March 15, 2017	New York Stock Exchange

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes:  x    No:  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes:  ¨    No:  x

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:  x    No:  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes:  x    No:  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

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

Large accelerated filer:  ¨            Accelerated filer:  ¨            Non-accelerated filer:  x            Smaller reporting company:  ¨

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

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2013: None

The number of shares outstanding of the registrant’s classes of common stock as of January 31, 2014:

Common Stock, $100 par value—145,000 shares

THE REGISTRANT IS A WHOLLY-OWNED SUBSIDIARY OF PACCAR INC AND MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS (I) (1) (a) AND (b) OF FORM 10-K AND IS, THEREFORE, FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.

INDEX

PART I
Item 1.	Business	3
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	10
Item 2.	Properties	11
Item 3.	Legal Proceedings	11
Item 4.	Mine Safety Disclosures	11
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	11
Item 6.	Selected Financial Data	12
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	27
Item 8.	Financial Statements and Supplementary Data	27
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	52
Item 9A.	Controls and Procedures	52
Item 9B.	Other Information	53
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	53
Item 11.	Executive Compensation	53
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	53
Item 13.	Certain Relationships and Related Transactions, and Director Independence	53
Item 14.	Principal Accountant Fees and Services	53
PART IV
Item 15.	Exhibits and Financial Statement Schedules	54

2

PACCAR Financial Corp.

(Millions of Dollars)

PART I

ITEM 1. BUSINESS

GENERAL

PACCAR Financial Corp.

PACCAR Financial Corp. (the “Company”), a Washington corporation, was incorporated in 1961 as a wholly-owned subsidiary of PACCAR Inc (“PACCAR”) to finance the sale of PACCAR products.

The Company principally provides financing and leasing of PACCAR manufactured trucks and other transportation equipment sold through the Kenworth and Peterbilt independent dealer network in the United States. The Company also finances dealer inventories of new and used transportation equipment. The Company’s PacLease division franchises Kenworth and Peterbilt dealerships to engage in full-service and finance leasing. In selected markets, PacLease directly engages in full-service leasing with its customers through Company-owned stores and through Kenworth and Peterbilt dealerships.

PACCAR

PACCAR is a multinational company operating in three principal segments: (1) the Truck segment includes the design and manufacture of high-quality, light-, medium- and heavy-duty commercial trucks, (2) the Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles and (3) the Financial Services segment derives its earning primarily from financing or leasing PACCAR products in the U.S., Canada, Mexico, Europe and Australia. Light and medium-duty trucks have a gross vehicle weight (GVW) ranging from 16,000 to 33,000 lbs (Class 5 to 7) in North America and 6 to 16 metric tonnes in Europe. Heavy duty trucks have a GVW of over 33,000 lbs (Class 8) in North America and over 16 metric tonnes in Europe. PACCAR’s finance and leasing activities are principally related to PACCAR trucks and associated equipment. Other manufactured products include industrial winches.

PACCAR’s trucks are marketed under the Kenworth, Peterbilt and DAF nameplates. These trucks, which are built in three plants in the United States, three in Europe and one each in Australia, Canada, Mexico and Brasil, are used worldwide for over-the-road and off-highway hauling of freight, petroleum, wood products, construction and other materials. PACCAR competes in the North American Class 5 - 7 markets primarily with Kenworth and Peterbilt conventional models. These trucks are assembled at facilities in Ste. Therese, Canada and in Mexicali, Mexico, which are operated by PACCAR’s wholly-owned subsidiaries located in those countries. PACCAR competes in the European light/medium market with DAF cab-over-engine trucks assembled in the United Kingdom by Leyland, one of PACCAR’s wholly-owned subsidiaries. PACCAR completed construction of its new 300,000 square-foot DAF assembly facility in Ponta Grossa, Brasil in October 2013. Brasil is a major truck market with industry sales above six tonnes in 2013 of 149,000 units. During the fourth quarter of 2013, DAF began truck production in Brasil. During 2013, PACCAR completed construction of a new 280,000 square-foot parts distribution center (PDC) in Eindhoven, the Netherlands, established a PDC in Ponta Grossa, Brasil, and doubled the warehouse space in its Lancaster, Pennsylvania PDC. The Company has 16 PDC’s strategically located to support customers in North America, Europe, Australia and South America. Commercial truck manufacturing and related aftermarket parts distribution accounted for 76% and 16% of total 2013 net sales and revenues, respectively.

Substantially all trucks are sold to independent dealers. The Kenworth and Peterbilt nameplates are marketed and distributed by separate divisions in the U.S. and a foreign subsidiary in Canada. The Kenworth nameplate is also marketed and distributed by foreign subsidiaries in Mexico and Australia. The DAF nameplate is marketed and distributed worldwide by a foreign subsidiary headquartered in the Netherlands and is also marketed and distributed by a foreign subsidiary in Brasil. The decision to operate as a subsidiary or as a division is incidental to PACCAR’s Truck segment operations and reflects legal, tax and regulatory requirements in the various countries where PACCAR operates.

3

PACCAR Financial Corp.

(Millions of Dollars)

Aftermarket truck parts are sold and delivered to Kenworth’s, Peterbilt’s and DAF’s independent dealers through PACCAR’s parts distribution network. Parts are manufactured by PACCAR and purchased from various suppliers. Aftermarket parts inventory levels are determined largely by anticipated customer demand and the need for timely delivery.

There are four principal competitors in the U.S. and Canada commercial truck market. PACCAR’s share of the U.S. and Canadian class 8 market was 28.0% of retail sales in 2013. In Europe there are six principal competitors in the commercial truck market, including parent companies to two competitors of PACCAR in the United States. In 2013, DAF had a record 16.2% share of the Western and Central European heavy-duty market and a record 11.8% share of the light/medium market. These markets are highly competitive in price, quality and service. PACCAR is not dependent on any single customer for its sales. There are no significant seasonal variations in sales.

In addition to the Company, which provides financing, leasing and full-service truck leasing in the United States, PACCAR offers similar financing programs for PACCAR products through other wholly-owned finance subsidiaries in Mexico, Canada, Australia, the United Kingdom and Continental Europe. PACCAR also conducts full-service leasing operations through wholly-owned subsidiaries in Canada, Mexico and Germany.

PACCAR’s common stock is traded on the NASDAQ Global Select Market under the symbol PCAR. PACCAR and the Company are subject to the informational requirements of the Securities Exchange Act of 1934 and, in accordance therewith, file reports and other information with the Securities and Exchange Commission (the “Commission”). All reports, proxy statements and other information filed by PACCAR and the Company with the Commission may be inspected and copied at the public reference facility maintained by the Commission at 100 F Street, N.E., Washington, D.C. 20549 or through the Commission’s internet site at www.sec.gov.

BUSINESS OF THE COMPANY

The Company operates primarily in the industry segment of finance and leasing services provided to customers and dealers in the United States for new Kenworth and Peterbilt trucks, used trucks, truck trailers and allied equipment. The Company’s PacLease division franchises Kenworth and Peterbilt dealerships to engage in full-service and finance leasing. In selected markets, PacLease directly engages in full-service leasing with its customers through Company-owned stores and on a limited basis through Kenworth and Peterbilt dealerships.

The Company conducts business with most Kenworth and Peterbilt dealers in the United States. The volume of the Company’s business is significantly affected by PACCAR’s sales of trucks to its dealers and competition from other financing sources.

As of December 31, 2013, the Company employed 389 full-time employees, none of whom are represented by a collective bargaining agent.

4

PACCAR Financial Corp.

(Millions of Dollars)

THE COMPANY’S PRODUCTS

The Company offers the following products to retail customers:

Retail Contracts and Loans The Company purchases contracts from dealers and receives assignments of the contracts and a first lien security interest in the vehicles financed (“Retail Contracts”). Certain Retail Contracts with third party leasing companies may also include an assignment to the Company of the related lease and rental payments due. Retail Contracts purchased by the Company have fixed or floating interest rates.

The Company also makes loans to the end users of the vehicles financed that are secured by a first lien security interest in the vehicles (“Loans”). Loans have fixed or floating interest rates.

Direct Financing Leases The Company offers direct financing lease contracts where it is treated as the owner of the equipment for tax purposes and generally retains the tax depreciation (“Direct Financing Leases”). The lessee is responsible for the payment of property and sales taxes, licenses, maintenance and other operating costs. The lessee is obligated to maintain the equipment and to insure the equipment against physical damage and liability losses.

Most of the Company’s Direct Financing Leases contain a Terminal Rental Adjustment Clause, which requires the lessee to guarantee to the Company a stated residual value upon disposition of the equipment at the end of the direct financing lease term.

Operating Leases The Company offers operating lease contracts (“Operating Leases”) where the Company owns the equipment. The lessee is responsible for the payment of property and sales taxes, licenses, maintenance and other operating costs. The lessee is obligated to maintain the equipment and to insure the equipment against casualty and liability losses.

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 offers the following products to Kenworth and Peterbilt dealers and PacLease franchisees:

Master Notes Master note contracts (“Master Notes”) are offered to select dealers for new and used trucks. Retail installment contracts originated by the dealer for new or used trucks which meet the Company’s requirement as to form, terms and creditworthiness for Retail Contracts are pledged to the Company as collateral for direct, full recourse loans by the Company to the dealer. The dealer may pay the loans early or make additional draws up to specified balances of the contracts pledged to the Company. Master Notes have fixed or floating interest rates.

Wholesale Contracts The Company provides wholesale financing for new and used truck inventories for dealers (“Wholesale Contracts”). Wholesale Contracts are secured by the inventories financed. The amount of credit extended by the Company for each truck is generally limited to the invoice price of new equipment and to the wholesale value of used equipment. Wholesale Contracts have floating interest rates.

Dealer Loans The Company makes secured loans to selected Kenworth and Peterbilt dealers (“Dealer Loans”). The purpose of these loans includes the financing of real estate, fixed assets, working capital and dealership acquisitions. Dealer Loans have fixed or floating interest rates.

Full-Service Leasing The Company also conducts full-service leasing operations under the PacLease trade name. Selected dealers are franchised to provide full-service leasing, which includes the equipment, maintenance, parts, taxes and licenses all in a combined contract with the customer. The Company provides the franchisees with equipment financing and managerial support. The Company also operates full-service lease outlets in selected markets on its own behalf.

5

PACCAR Financial Corp.

(Millions of Dollars)

Insurance The Company charges a fee to provide insurance coverage, through an unrelated regulated insurance carrier, on new trucks and used trucks inventory to dealers having Wholesale Contracts with the Company.

CUSTOMER CONCENTRATION, PAST-DUE ACCOUNTS AND LOSS EXPERIENCE

Customer Concentration

The Company’s customers are concentrated in the transportation industry throughout the United States. The Company does not have contractual arrangements with any one party (customers, dealers and/or franchises) that account for 10% or more of Finance and Other Receivables asset balances for the years ended December 31, 2013, 2012 and 2011.

The Company has contractual arrangements with one customer, Swift Transportation Corporation, that account for 11.4% ,10.8% and 11.6% of total Interest and Other Revenue for the years ended December 31, 2013, 2012 and 2011, respectively.

Past-Due Receivables and Allowance for Losses

An account is considered past-due by the Company if any portion of an installment is due and unpaid for more than 30 days. In periods of adverse economic conditions, past-due levels, repossessions and credit losses generally increase.

The provision for losses on finance and other receivables is charged to income as necessary to reflect management’s estimate of incurred credit losses, net of recoveries, inherent in the portfolio. Receivables are charged off against the allowance for credit losses when, in the judgment of management, they are considered uncollectible (generally upon repossession of the collateral).

For further discussion of the allowance for losses, see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

COMPETITION AND ECONOMIC FACTORS

The commercial truck and trailer finance and leasing business is highly competitive among banks, commercial finance companies, captive finance companies and leasing companies. Some of these institutions have substantially greater financial resources than the Company and may borrow funds at lower rates.

The dealers are the primary source of contracts acquired by the Company. However, dealers are not required to obtain financing from the Company and they have a variety of other sources that may be used for wholesale and customer financing of trucks. Retail purchasers also have a variety of sources available to finance truck purchases.

The ability of the Company to compete in its market is principally based on the rates, terms and conditions that the Company offers dealers and retail purchasers, as well as the specialized services it provides. Rates, terms and conditions are based on the Company’s desire to provide flexible financing and services to satisfy dealer and customer needs, the ability of the Company to borrow funds at competitive rates and the Company’s need to earn an adequate return on its invested capital. The Company’s business is also affected by changes in market interest rates and used truck values, which in turn are related to general economic conditions, demand for credit, inflation and governmental policies. Seasonality is not a significant factor in the Company’s business.

The volume of receivables available to be acquired by the Company from dealers is largely dependent upon the number of Kenworth and Peterbilt trucks sold in the United States. Sales of medium- and heavy-duty trucks depend on the capital equipment requirements of the transportation industry, which are influenced by growth and cyclical variations in the economy. Medium- and heavy-duty truck sales are also sensitive to economic factors such as fuel costs, interest rates, insurance premiums, federal excise and highway use taxes, taxation on the acquisition and use of capital goods, as well as government regulations.

6

PACCAR Financial Corp.

(Millions of Dollars)

REGULATION AND SIMILAR MATTERS

In certain states, the Company is subject to retail installment sales or installment loan statutes and related regulations, the terms of which vary from state to state. These laws may require the Company to be licensed as a sales finance company and may regulate disclosure of finance charges and other terms of retail installment contracts. The Company is subject to substantive state franchise regulations and federal and state uniform franchise disclosure laws in connection with the offering of PacLease full-service truck leasing and rental franchises to Kenworth and Peterbilt truck dealers. The Company also owns and operates several truck leasing and rental business locations, which are subject to applicable state licensing laws. The Company is also subject to certain provisions of federal law relating to non-discrimination in the granting of credit.

SOURCES OF FUNDS

The Company’s primary sources of funds are medium-term note borrowings and commercial paper proceeds in the public capital markets, collections on loans and leases, retained earnings and to a lesser extent borrowings from PACCAR, bank loans and capital contributions. The Company’s investment in additional receivables is dependent upon its ability to raise funds at competitive rates in the public and private debt markets. The receivables and leases that are financed are either fixed rate or floating rate with terms that generally range from 36 to 60 months.

To reduce the risk of changes in interest rates that could affect interest margins, the Company obtains funds with interest rate characteristics similar to the corresponding assets. Fixed rate assets are primarily funded with fixed and floating rate medium-term notes and commercial paper. Interest rate swaps are combined with commercial paper or floating rate medium-term notes to convert floating rate debt to fixed rate debt to achieve the Company’s match funding objectives. Floating rate assets are funded primarily with commercial paper with maturities of three months or less and floating rate medium-term notes.

As of December 31, 2013, the total notional principal amount of interest rate swap contracts outstanding was $1,243.0, all of which effectively resulted in a net fixed rate payment obligation. These swap contracts are accounted for as cash flow hedges.

The notional amounts are used to measure the volume of these contracts and do not represent exposure to credit loss. The permitted types of interest rate swap contracts, counterparties’ transaction limits and related approval authorizations have been established by the Company’s senior management and Board of Directors. The interest rate contracts outstanding are regularly reported to, and reviewed by, the Company’s senior management.

The Company participated with PACCAR and certain other PACCAR affiliates in syndicated credit facilities of $3,000.0 at December 31, 2013. Of this amount, $1,000.0 expires in June 2014, $1,000.0 expires in 2017 and $1,000.0 expires in 2018. PACCAR and the Company intend to replace these credit facilities as they expire with facilities of similar amounts. Credit facilities of $1,868.3 are available for use by the Company and/or PACCAR and certain other PACCAR affiliates. The remaining $1,131.7 is allocated to the following subsidiaries: $374.5 is available for use by PACCAR’s United Kingdom financial subsidiary, $346.4 is available for use by PACCAR’s Canadian financial subsidiary, $230.6 is available for use by PACCAR’s Mexican financial subsidiaries and $180.2 is available for use by PACCAR’s Australian financial subsidiary. These credit facilities are used to provide backup liquidity for the Company’s commercial paper and maturing medium-term notes. The Company is liable only for its own borrowings under these credit facilities. There were no borrowings under these credit facilities in the year ended December 31, 2013.

7

PACCAR Financial Corp.

(Millions of Dollars)

The Company periodically registers debt securities under the Securities Act of 1933 for offering to the public. In November 2012, the Company filed a shelf registration statement to issue medium-term notes. The shelf registration statement expires in November 2015 and does not limit the principal amount of debt securities that may be issued during the period. As of December 31, 2013, the total principal amount of medium-term notes outstanding for the Company was $3,850.0, of which $800.0 was due within 12 months. See “Note G – Borrowings” in the Notes to the Financial Statements for further information on the Company’s medium-term notes.

RELATIONSHIP WITH PACCAR AND AFFILIATES

General

The operations of the Company are dependent on its relationship with PACCAR. Sales of PACCAR products are the Company’s principal source of its financing business. The Company receives administrative support from and pays dividends to its parent company and periodically borrows funds from or lends money to PACCAR and/or its affiliates. The Company’s principal office is located in the corporate headquarters building of PACCAR (owned by PACCAR). The Company also leases office space from one facility owned by PACCAR and five facilities leased by PACCAR. Since the directors of the Company are all executives of PACCAR and PACCAR is the sole owner of the Company’s outstanding voting common stock, PACCAR can determine the course of the Company’s business.

Periodically, the Company makes loans to, borrows from and has intercompany transactions with PACCAR. The Company had $218.0 outstanding in loans due to PACCAR as of December 31, 2013 and December 31, 2012. The $218.0 loan due to PACCAR was repaid upon maturity in February 2014. The Company had $653.6 and $428.4 outstanding in loans due from PACCAR as of December 31, 2013 and 2012, respectively. In addition, the Company periodically loans funds to certain foreign finance and leasing affiliates of PACCAR. The Company had $429.6 and $360.6 outstanding in loans due from foreign finance and leasing affiliates of PACCAR as of December 31, 2013 and 2012, respectively. These various affiliates have Support Agreements with PACCAR, similar to the Company’s Support Agreement with PACCAR described below. The foreign affiliates operate in the United Kingdom, the Netherlands, Mexico, Canada and Australia, and any resulting currency exposure is fully hedged. The foreign affiliates primarily provide financing and leasing of PACCAR-manufactured trucks and related equipment sold through the DAF, Kenworth and Peterbilt independent dealer networks in Europe, Mexico, Canada and Australia. The Company will not make loans to the foreign affiliates in excess of the equivalent of $500.0 United States dollars, unless the amount in excess of such limit is guaranteed by PACCAR. The Company periodically reviews the funding alternatives for these affiliates, and these limits may be revised in the future.

PACCAR charges the Company for certain administrative services it provides. These costs were charged to the Company based upon the Company’s specific use of the services and PACCAR’s cost. Management considers these charges reasonable and similar to the costs that would be incurred if the Company were on a stand-alone basis. See “Note D – Transactions with PACCAR and Affiliates” in the Notes to the Financial Statements.

Support Agreement

The Company and PACCAR are parties to a Support Agreement that obligates PACCAR to provide, when required, financial assistance to the Company to ensure that the Company maintains a ratio of net earnings available for fixed charges to fixed charges (as defined in the Support Agreement) of at least 1.25 to 1 for any fiscal year.

The required ratio for the years ended December 31, 2013, 2012 and 2011 was met without assistance. The Support Agreement also requires PACCAR to own, directly or indirectly, all outstanding voting stock of the Company. See “Note D – Transactions with PACCAR and Affiliates” in the Notes to Financial Statements.

8

PACCAR Financial Corp.

(Millions of Dollars)

The Company and PACCAR may amend or terminate any or all of the provisions of the Support Agreement upon 30 days notice, with copies of the notice being sent to all nationally recognized statistical rating organizations (“NRSROs”) which have issued ratings with respect to debt of the Company (“Rated Debt”). Such amendment or termination will be effective only if (i) two NRSROs confirm in writing that their ratings with respect to any Rated Debt would remain the same after such amendment or termination, or (ii) the notice of amendment or termination provides that the Support Agreement will continue in effect with respect to Rated Debt outstanding on the effective date of such amendment or termination unless such debt has been paid or defeased pursuant to the indenture or other agreement applicable to such debt, or (iii) the holders of at least two-thirds of the aggregate principal amount of all outstanding Rated Debt with an original maturity in excess of 270 days consent in writing to such amendment or termination, provided that the holders of Rated Debt having an original maturity of 270 days or less shall continue to have the benefits of the Support Agreement until the maturity of such debt.

The Support Agreement expressly states that PACCAR’s commitments to the Company thereunder do not constitute a PACCAR guarantee of payment of any indebtedness or liability of the Company to others and do not create rights against PACCAR in favor of persons other than the Company. There are no guarantees, direct or indirect, by PACCAR of payment of any indebtedness of the Company.

OTHER DISCLOSURES

The Company’s filings on Forms 10-K, 10-Q and 8-K and any amendments to those reports can be obtained through a link on the Company’s website, www.paccarfinancial.com, or PACCAR’s website, www.paccar.com, free of charge as soon as reasonably practicable after the report is electronically filed with, or furnished to, the Commission. The information on the websites is not incorporated by reference into this report.

ITEM 1A. RISK FACTORS

The Company is exposed to certain risks and uncertainties that could have a material adverse impact to the Company’s financial condition and operating results, including:

Sales of PACCAR Products

The Company’s business is substantially dependent upon the sale of PACCAR products and its ability to offer competitive financing in the United States. Changes in the volume of sales of PACCAR products due to a variety of reasons could impact the level of business of the Company. Refer to the “Relationship with PACCAR and Affiliates” section in “Item 1 – Business” and “Note D – Transactions with PACCAR and Affiliates” in the Notes to the Financial Statements for further discussion regarding the Company’s relationship with PACCAR.

Liquidity Risks, Credit Ratings and Costs of Funds

Disruptions or volatility in U.S. financial markets could limit the Company’s sources of liquidity, or the liquidity of customers and dealers. A lowering of the Company’s credit ratings could increase the cost of borrowing and adversely affect access to capital markets. The Company obtains funds for its operations from commercial paper and medium-term note debt. If the markets for medium-term notes and commercial paper do not provide the necessary liquidity in the future, the Company may experience increased costs or may have to limit its financing of retail and wholesale assets.

9

PACCAR Financial Corp.

(Millions of Dollars)

Competitive Risk

The Company competes with banks, other commercial finance companies and financial services firms which may have lower costs of borrowing, higher leverage or market share goals that result in a willingness to offer lower interest rates, which may lead to decreased margins, lower market share or both.

Credit Risk

The Company is exposed to the risk of loss arising from the failure of a customer, dealer or counterparty to meet the terms of the loans, leases and derivative contracts with the Company. Although the financial assets of the Company are secured by underlying equipment collateral, in the event a customer cannot meet its obligations to the Company, there is a risk that the value of the underlying collateral will not be sufficient to recover the amounts owed to the Company, resulting in credit losses.

Interest Rate Risk

The Company is subject to interest rate risks, because increases in interest rates can reduce demand for its products, increase borrowing costs and potentially reduce interest margins. The Company uses derivative contracts to mitigate the risk of changing interest rates.

Residual Value Risk

Residual value risk is the risk that the estimated residual value of leased assets established at lease origination, for the Company’s operating leases and certain direct financing leases, will not be recoverable when the leased asset is returned to the Company. When the market value of these leased assets at contract maturity or at early termination is less than its contractual residual value, the Company will be exposed to a greater risk of loss on the sales of the returned equipment. Refer to the Critical Accounting Policy on “Equipment on Operating Leases” in “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion regarding the Company’s exposure to residual value risk.

Accounting Estimates

In the preparation of the Company’s financial statements, in accordance with U.S. generally accepted accounting principles, management uses estimates and makes judgments and assumptions that affect asset and liability values and the amounts reported as income and expense during the periods presented. Certain of these estimates, judgments and assumptions, such as residual values on operating leases, the allowance for credit losses and the provision for income taxes, are particularly sensitive. If actual results are different from estimates used by management, they may have a material impact on the financial statements.

Information Technology

The Company relies on information technology systems, including the internet and other computer systems, which may be subject to disruptions during the process of upgrading or replacing software, databases or components; power outages; hardware failures; computer viruses; or outside parties attempting to disrupt the Company’s business or gain unauthorized access to the Company’s electronic data. The Company maintains excellent protections to guard against such events. If the Company’s computer systems were to be damaged, disrupted or breached, it could result in negative impact on the Company’s operating results and also could cause reputational damage, business disruption or the disclosure of confidential data.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

10

PACCAR Financial Corp.

(Millions of Dollars)

ITEM 2. PROPERTIES

The Company’s principal office is located in the corporate headquarters building of PACCAR (owned by PACCAR) at 777 106^th Avenue N.E., Bellevue, Washington 98004. The Company owns three full-service leasing facilities in Texas and leases one in Texas and one in Illinois. The Company owns used truck sales facilities in South Carolina and Utah.

Other offices and leasing facilities of the Company are located in leased premises including one facility owned by PACCAR and five facilities leased by PACCAR. The Company considers all its properties to be suitable for their intended purpose. Annual lease rentals for these premises in the aggregate are not material in relation to expenses as a whole.

ITEM 3. LEGAL PROCEEDINGS

The Company is a party to various routine legal proceedings incidental to its business involving the collection of accounts and other matters. The Company does not consider such matters to be material with respect to the business or financial condition of the Company as a whole.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

All outstanding common stock is owned by PACCAR; therefore, there is no trading market in the Company’s common stock.

No dividends were declared in 2013 or 2012. Dividends of $117.0 were declared and paid to PACCAR in 2011.

11

PACCAR Financial Corp.

(Millions of Dollars)

ITEM 6. SELECTED FINANCIAL DATA

The following table summarizes selected financial data for the Company.

Balance Sheet Data

	As of December 31
	2013		2012		2011		2010		2009
Total Assets	$	7,247.6	$	6,537.7	$	5,250.1	$	3,947.9	$	4,208.3
Total Liabilities		6,302.6		5,699.8		4,499.1		3,151.9		3,475.0
Total Stockholder’s Equity		945.0		837.9		751.0		796.0		733.3
Income Statement Data
	Year ended December 31
	2013		2012		2011		2010		2009
Total interest and other revenue	$	545.0	$	510.5	$	429.8	$	412.3	$	426.8
Total expenses		385.6		376.9		317.4		349.1		382.0
Income before income taxes		159.4		133.6		112.4		63.2		44.8
Income taxes		60.2		49.9		44.4		19.1		16.8
Net income	$	99.2	$	83.7	$	68.0	$	44.1	$	28.0
Ratio of Earnings to Fixed Charges Pursuant to SEC Reporting Requirements (1)		3.65x		3.21x		2.72x		1.69x		1.35x
Ratio of Earnings to Fixed Charges Pursuant to the Support Agreement		7.12x		6.18x		4.95x		3.11x		2.30x

(1) For the purposes of this ratio, earnings consist of income before income taxes plus fixed charges. Fixed charges consist of interest expense plus a portion of rent expense (which is considered representative of an interest factor). This method of computing the ratio of earnings to fixed charges complies with SEC reporting requirements (see Exhibit 12(a)) but differs from the method called for in the Support Agreement between the Company and PACCAR (see Exhibit 12(b)).

12

PACCAR Financial Corp.

(Millions of Dollars)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

2013 Compared to 2012:

	Year ended December 31
	2013		2012		% Change
New business volume by product:
Retail loans and direct financing leases	$	1,558.8	$	1,765.6		(12%)
Equipment on operating leases		459.3		463.8		(1%)
Dealer master notes		263.2		279.4		(6%)
	$	2,281.3	$	2,508.8		(9%)
Average earning assets by product:
Retail loans and direct financing leases	$	3,688.5	$	3,251.4		13%
Equipment on operating leases		1,092.1		962.2		14%
Dealer wholesale financing		635.3		785.1		(19%)
Dealer master notes		79.2		82.6		(4%)
	$	5,495.1	$	5,081.3		8%
Revenue by product:
Retail loans and direct financing leases	$	180.9	$	167.7		8%
Equipment on operating leases		294.3		258.6		14%
Dealer wholesale financing		18.1		23.7		(24%)
Dealer master notes		2.6		2.9		(10%)
Used truck sales, other revenues and fees		49.1		57.6		(15%)
	$	545.0	$	510.5		7%
Income before income taxes	$	159.4	$	133.6		19%

New Business Volume

New business volume from retail loans and direct financing leases in 2013 decreased 12% from 2012 due to lower retail sales of PACCAR trucks in 2013 and a lower share of retail sales financed due to increased competition. Financial services market share on new PACCAR trucks was 27.4% and 29.0% in 2013 and 2012, respectively. Dealer master notes new business volume in 2013 decreased $16.2 from 2012, attributable to lower new truck sales resulting in decreased finance volume from dealers.

Income Before Income Taxes

The Company’s income before income taxes was $159.4 in 2013 compared to $133.6 in 2012. The increase in income before income taxes in 2013 was primarily the result of a higher operating lease margin of $9.4, a lower provision for credit losses of $6.8 and a higher finance margin of $6.5.

13

PACCAR Financial Corp.

(Millions of Dollars)

Revenue and Expenses

The major factors for the change in interest and fee income, interest and other borrowing costs and finance margin in 2013 compared to 2012 are summarized below:

	Interest   and Fee Income			Interest and Other    Borrowing Costs			Finance Margin
2012	$	198.5		$	63.7		$	134.8
Increase (decrease)
Average finance receivables		12.7						12.7
Average receivables from PACCAR and affiliates		3.0						3.0
Average debt balances					8.7			(8.7	)
Yields		(7.7	)					(7.7	)
Borrowing rates					(7.2	)		7.2
Total increase		8.0			1.5			6.5
2013	$	206.5		$	65.2		$	141.3

• Average finance receivables in 2013 increased $283.9 as a result of retail portfolio new business volume exceeding repayments, partially offset by a decrease in dealer wholesale financing.

• Average receivables from PACCAR and affiliates increased $387.3 in 2013 as a result of new loans to affiliated companies exceeding repayments.

• Average debt balances increased $661.5 in 2013 and included increased medium-term note funding. The higher average debt balances reflect increased funding for intercompany loans and higher average earning asset portfolio, including loans, finance leases and operating leases.

• Lower market rates resulted in lower yields for finance receivables (4.5% in 2013 and 4.7% in 2012) and lower borrowing rates (1.3% in 2013 and 1.5% in 2012).

The major factors for the change in operating lease and rental revenues, depreciation and other rental expenses and operating lease margin in 2013 compared to 2012 are summarized below:

	Operating Lease and		Depreciation and			Operating
	Rental Revenues		Other Rental Expenses			Lease Margin
2012	$	258.6	$	211.6		$	47.0
Increase (decrease)
Operating lease impairments				.3			(.3	)
Results on returned lease assets				(1.3	)		1.3
Average operating lease assets		34.9		28.2			6.7
Revenue and cost per asset		.8		(.9	)		1.7
Total increase		35.7		26.3			9.4
2013	$	294.3	$	237.9		$	56.4

• Results on returned lease assets were higher in 2013 compared to 2012 due to higher gains on used trucks reflecting some improvement in used truck prices.

• Average operating lease assets increased due to increased demand for the Company’s operating lease product.

• Revenue per asset increased due to higher rental fleet utilization and increased miles driven. Cost per asset decreased reflecting lower vehicle related expenses including fuel costs.

14

PACCAR Financial Corp.

(Millions of Dollars)

Used truck sales and other revenues and Cost of used truck sales and other expenses are summarized below for 2013 compared to 2012:

	Year ended December 31
	2013		2012
Used truck sales and other revenues	$	44.2	$	53.4
Cost of used truck sales and other expenses		37.5		49.7
Results from used trucks and other	$	6.7	$	3.7

Used truck sales and other revenues and Cost of used truck sales and other expenses decreased due to a lower volume of trucks acquired from PACCAR truck division customers as part of new truck sales packages during 2013. Used truck gains increased due to an improvement in truck values in 2013.

The provision for losses on receivables was $2.3 in 2013 compared to $9.1 in 2012 primarily due to higher recoveries of accounts charged off in prior years and a lower portfolio growth of 7% in 2013 compared to 34% in 2012.

Allowance for Losses

	Year ended December 31
	2013			2012
Balance at beginning of period	$	52.8		$	58.8
Provision for losses		2.3			9.1
Charge offs		(6.5	)		(16.9	)
Recoveries		6.7			1.8
Balance at end of period	$	55.3		$	52.8
Ratios:
Charge offs, net of recoveries (-$.2 in 2013) to average total portfolio ($4,403.0 in 2013)		—	%		.37	%
Allowance for losses ($55.3 in 2013) to year-end total portfolio ($4,583.4 in 2013)		1.21	%		1.22	%
Year-end retail loan and lease receivables past due over 30 days, ($13.4 in 2013) to year-end retail loan and lease receivables ($3,863.6 in 2013)		.35	%		.32	%

Retail loan and lease receivables past due over 30 days at December 31, 2013 was .35% compared to .32% at December 31, 2012. The Company continues to focus on maintaining low past-due balances.

Charge offs decreased $10.4 to $6.5 in 2013 from $16.9 in 2012 due to the charge off of one large customer in 2012. The Company modified this customer contract in a troubled debt restructuring which included the satisfaction of a portion of this customer’s account and modification of the remaining receivable. Recoveries increased $4.9 to $6.7 in 2013 from $1.8 in 2012 mainly due to the recoveries from this large customer.

15

PACCAR Financial Corp.

(Millions of Dollars)

The Company modifies loans and finance leases as a normal part of 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 loans and finance leases for credit reasons and grants a concession, the modifications are classified as troubled debt restructurings (TDR).

The post-modification balances of accounts modified during 2013 and 2012 are summarized below:

	Year ended December 31
	2013					2012
	Recorded Investment		% of Total Portfolio*			Recorded Investment		% of Total Portfolio*
Commercial	$	178.1		3.9	%	$	154.1		3.6	%
Insignificant Delay		69.7		1.5	%		44.1		1.0	%
Credit - No Concession		2.1					3.0		.1	%
Credit - TDR		2.6		.1	%		21.3		.5	%
	$	252.5		5.5	%	$	222.5		5.2	%

* Recorded investment immediately after modification as a percentage of ending portfolio

Total modification activity increased in 2013 compared to 2012 due to higher commercial modifications and insignificant delay modifications. Commercial modifications increased to $178.1 in 2013 from $154.1 in 2012 due to higher volume of end-of-contract refinancing in 2013. Insignificant delay modifications increased to $69.7 in 2013 from $44.1 in 2012 primarily due to granting one large fleet customer a one-month extension. This was partially offset by lower credit modifications due to improved portfolio performance. Credit – TDR modifications decreased to $2.6 in 2013 from $21.3 in 2012 as 2012 included a contract modification of a large customer.

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 no accounts during the fourth quarter of 2013 and $3.2 of accounts during the fourth quarter of 2012 that were 30+ days past due and became current at the time of modification. Had these accounts not been modified and had they continued to not make payments, the pro forma percentage of retail loan and lease accounts 30+ days past due would have been as follows:

	As of December 31
	2013			2012
Pro forma percentage of retail loan and lease accounts 30+ days past due		.35	%		.41	%

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 December 31, 2013 and 2012. The effect on the allowance for credit losses from such modifications was not significant at December 31, 2013 and 2012. See “Critical Accounting Policies”, “Note A – Significant Accounting Policies” and “Note B – Finance and Other Receivables” for additional discussion regarding the Allowance for Losses.

16

PACCAR Financial Corp.

(Millions of Dollars)

The Company’s portfolio is concentrated with customers in the heavy- and medium-duty truck transportation industry. The portfolio is comprised of retail loans and leases, dealer wholesale financing and dealer master notes as follows:

	As of December 31
	2013				2012
Retail loans	$	2,442.5	53	%	$	2,242.1	52	%
Retail leases		1,421.1	31	%		1,303.3	30	%
Dealer wholesale financing		578.0	13	%		641.7	15	%
Dealer master notes		105.1	2	%		92.4	2	%
Other*		36.7	1	%		32.4	1	%
Total portfolio	$	4,583.4	100	%	$	4,311.9	100	%

* Operating lease and other trade receivables.

Retail loans and retail leases increased to $2,442.5 and $1,421.1 compared to $2,242.1 and $1,303.3 at December 31, 2013 and 2012, respectively, due to new business volume exceeding collections.

Dealer wholesale financing balances decreased to $578.0 at December 31, 2013 compared to $641.7 at December 31, 2012 due to lower dealer new truck inventory.

Dealer master notes increased to $105.1 at December 31, 2013 compared to $92.4 at December 31, 2012, due to new business volume exceeding repayments. The dealer may pay the loans early or make additional draws up to specified balances of the contracts pledged to the Company. As of December 31, 2013, the underlying pledged contracts were $148.8 upon which the dealers have available $23.1 as a potential additional borrowing capacity.

The estimation methods and factors considered for determining the allowance during the periods included in this filing have been consistently applied and are discussed further under “Critical Accounting Policies”. There have been no significant changes in customer contract terms during the periods.

The Company’s effective income tax rate was 37.8% for 2013 compared to 37.4% for 2012, reflecting higher state tax expenses in 2013.

During 2013, the Company’s deferred income tax provision was $71.8 compared to $46.1 for 2012 due to higher benefits from accelerated depreciation. The Company’s net deferred tax liability increased to $802.9 at December 31, 2013 from $728.2 at December 31, 2012. The increase in the deferred tax liability primarily relates to the high volume of leased equipment placed into service in 2013 for which a fifty percent bonus depreciation deduction was available under U.S. tax law. Deferred taxes are impacted by new business volume and the accelerated depreciation deduction rate under U.S. tax law. The difference in the timing of depreciation for financial statement and income tax purposes does not impact operating results and is not expected to have a significant impact on liquidity in 2014.

17

PACCAR Financial Corp.

(Millions of Dollars)

2012 Compared to 2011:

	Year ended December 31
	2012		2011		% Change
New business volume by product:
Retail loans and direct financing leases	$	1,765.6	$	1,462.6		21%
Equipment on operating leases		463.8		467.7		(1%)
Dealer master notes		279.4		242.7		15%
	$	2,508.8	$	2,173.0		15%
Average earning assets by product:
Retail loans and direct financing leases	$	3,251.4	$	2,572.3		26%
Equipment on operating leases		962.2		799.7		20%
Dealer wholesale financing		785.1		428.8		83%
Dealer master notes		82.6		63.3		30%
	$	5,081.3	$	3,864.1		32%
Revenue by product:
Retail loans and direct financing leases	$	167.7	$	148.4		13	%
Equipment on operating leases		258.6		225.9		14	%
Dealer wholesale financing		23.7		12.4		91	%
Dealer master notes		2.9		2.6		12	%
Used truck sales, other revenues and fees		57.6		40.5		42	%
	$	510.5	$	429.8		19	%
Income before income taxes	$	133.6	$	112.4		19	%

New Business Volume

New business volume from retail loans and direct financing leases in 2012 increased 21% from 2011 due to higher retail sales of PACCAR trucks in 2012. Dealer master notes new business volume in 2012 increased $36.7 from 2011, attributable to higher new truck sales resulting in increased finance volume from dealers.

Income Before Income Taxes

The Company’s income before income taxes was $133.6 in 2012 compared to $112.4 in 2011. The increase in income before income taxes in 2012 was primarily the result of a higher finance margin of $30.9 and a higher operating lease margin of $1.2, partially offset by a higher provision for credit losses of $6.6.

18

PACCAR Financial Corp.

(Millions of Dollars)

Revenue and Expenses

The major factors for the change in interest and fee income, interest and other borrowing costs and finance margin in 2012 compared to 2011 are summarized below:

	Interest   and Fee Income			Interest and Other    Borrowing Costs			Finance Margin
2011	$	172.0		$	68.1		$	103.9
Increase (decrease)
Average finance receivables		49.0						49.0
Average receivables from PACCAR and affiliates		3.5						3.5
Average debt balances					21.8			(21.8	)
Yields		(26.0	)					(26.0	)
Borrowing rates					(26.2	)		26.2
Total increase (decrease)		26.5			(4.4	)		30.9
2012	$	198.5		$	63.7		$	134.8

• Average finance receivables in 2012 increased $1,054.7 as a result of higher dealer wholesale financing, as well as retail portfolio new business volume exceeding repayments.

• Average receivables from PACCAR and affiliates increased $411.3 in 2012 as a result of new loans to affiliated companies exceeding repayments.

• The increase in average debt balances in 2012 of $1,441.4 reflected increased funding for higher average portfolio assets and intercompany loans.

• Lower market rates resulted in lower yields for finance receivables (4.7% in 2012 and 5.5% in 2011) and lower borrowing rates (1.5% in 2012 and 2.4% in 2011).

The major factors for the change in operating lease and rental revenues, depreciation and other rental expenses and operating lease margin in 2012 compared to 2011 are summarized below:

	Operating Lease and   Rental Revenues		Depreciation and   Other  Rental Expenses			Operating   Lease Margin
2011	$	225.9	$	180.1		$	45.8
Increase (decrease)
Operating lease impairments				(.1	)		.1
Results on returned lease assets				5.2			(5.2	)
Average operating lease assets		28.1		22.7			5.4
Revenue and cost per asset		4.6		3.7			.9
Total increase		32.7		31.5			1.2
2012	$	258.6	$	211.6		$	47.0

• Results on returned leased assets were lower in 2012 compared to 2011 due to lower gains on used trucks reflecting some softening in used truck prices.

• Average operating lease assets increased due to increased demand for the Company’s operating lease product.

19

PACCAR Financial Corp.

(Millions of Dollars)

Used truck sales and other revenues and cost of used truck sales and other expenses are summarized below for 2012 compared to 2011:

	Year ended December 31
	2012		2011
Used truck sales and other revenues	$	53.4	$	31.9
Cost of used truck sales and other expenses		49.7		24.2
Results from used trucks and other	$	3.7	$	7.7

Used truck sales and other revenues and cost of used truck sales and other expenses increased due to a higher volume of trucks acquired from PACCAR truck division customers as part of new truck sales packages during 2012. Used truck gains decreased due to a decline in truck values in the second half of 2012.

The provision for losses on receivables in 2012 increased to $9.1 from $2.5 in 2011 primarily due to higher portfolio growth in 2012.

Allowance for Losses

	Year ended December 31
	2012			2011
Balance at beginning of period	$	58.8		$	61.7
Provision for losses		9.1			2.5
Charge offs		(16.9	)		(8.6	)
Recoveries		1.8			3.2
Balance at end of period	$	52.8		$	58.8
Ratios:
Charge offs, net of recoveries ($15.1 in 2012) to average total portfolio ($4,119.1 in 2012)		.37	%		.18	%
Allowance for losses ($52.8 in 2012) to year-end total portfolio ($4,311.9 in 2012)		1.22	%		1.61	%
Year-end retail loan and lease receivables past due over 30 days, ($11.5 in 2012) to year-end retail loan and lease receivables ($3,545.4 in 2012)		.32	%		1.34	%

Retail loan and lease receivables past due over 30 days at December 31, 2012 was .32%, a decrease from 1.34% at December 31, 2011. Included in the December 31, 2011 past-due percentage is 1.04% related to one large customer. Excluding that customer, the past due percentage would have been .30% at December 31, 2011. The allowance for losses as a percentage of the total portfolio decreased to 1.22% at December 31, 2012 from 1.61% as of December 31, 2011, reflecting favorable operating conditions and cash flows for the Company’s customers.

In 2012, charge offs, net of recoveries, increased $9.7 to $15.1 from $5.4 in 2011 due to lower used truck values and the charge off of one large customer. The Company modified this customer contract in a troubled debt restructuring which included a partial satisfaction of this customer’s account and modification of the remaining receivable.

20

PACCAR Financial Corp.

(Millions of Dollars)

The Company modifies loans and finance leases as a normal part of 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 loans and finance leases for credit reasons and grants a concession, the modifications are classified as TDR.

The post modification balances of accounts modified during 2012 and 2011 are summarized below:

	Year ended December 31
	2012					2011
	Recorded Investment		% of Total Portfolio*			Recorded Investment		% of Total Portfolio*
Commercial	$	154.1		3.6	%	$	112.8		3.1	%
Insignificant Delay		44.1		1.0	%		44.8		1.2	%
Credit - No Concession		3.0		.1	%		17.3		.5	%
Credit - TDR		21.3		.5	%		12.9		.4	%
	$	222.5		5.2	%	$	187.8		5.2	%

* Recorded investment immediately after modification as a percentage of ending portfolio

Total modification activity increased in 2012 compared to 2011 primarily due to higher commercial modifications. Commercial modifications increased to $154.1 in 2012 from $112.8 in 2011 due to higher volume of end-of-contract refinancing in 2012. This was partially offset by lower total credit modifications due to improved portfolio performance. Credit – TDR modifications increased to $21.3 in 2012 from $12.9 in 2011 due to a contract modification of a large customer.

When the Company modifies a 30+ days past-due account, the customer is generally considered current under the revised contractual terms. The Company modified $3.2 of accounts during the fourth quarter of 2012 and $.2 of accounts during the fourth quarter of 2011 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:

	As of December 31
	2012		2011
Pro forma percentage of retail loan and lease accounts 30+ days past due		.41%		1.35%

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 December 31, 2012 and 2011. The effect on the allowance for credit losses from such modifications was not significant at December 31, 2012 and 2011. See “Critical Accounting Policies”, “Note A – Significant Accounting Policies” and “Note B – Finance and Other Receivables” for additional discussion regarding the Allowance for Losses.

21

PACCAR Financial Corp.

(Millions of Dollars)

The Company’s portfolio is concentrated with customers in the heavy- and medium-duty truck transportation industry. The portfolio is comprised of retail loans and leases, dealer wholesale financing and dealer master notes as follows:

	As of December 31
	2012				2011
Retail loans	$	2,242.1	52	%	$	1,807.2	49	%
Retail leases		1,303.3	30	%		1,120.4	31	%
Dealer wholesale financing		641.7	15	%		576.5	16	%
Dealer master notes		92.4	2	%		104.2	3	%
Other*		32.4	1	%		33.0	1	%
Total portfolio	$	4,311.9	100	%	$	3,641.3	100	%

* Operating lease and other trade receivables.

Retail loans and retail leases increased to $2,242.1 and $1,303.3 compared to $1,807.2 and $1,120.4 at December 31, 2012 and 2011, respectively, due to new business volume exceeding collections.

Dealer wholesale financing balances increased to $641.7 at December 31, 2012 compared to $576.5 at December 31, 2011, as dealers increased new truck inventory to meet greater market demand.

Dealer master notes decreased to $92.4 compared to $104.2 at December 31, 2012 and 2011, respectively, due to repayments exceeding new business volume. The dealer may pay the loans early or make additional draws up to specified balances of the contracts pledged to the Company. As of December 31, 2012, the underlying pledged contracts were $201.7 upon which the dealers have available $109.3 as a potential additional borrowing capacity.

The estimation methods and factors considered for determining the allowance during the periods included in this filing have been consistently applied and are discussed further under “Critical Accounting Policies”. There have been no significant changes in customer contract terms during the periods.

The Company’s effective income tax rate was 37.4% for 2012, compared to 39.5% for 2011. The 2011 effective tax rate reflected increased state tax expenses.

During 2012, the Company’s deferred income tax provision was $46.1 compared to $207.8 for 2011 due to lower benefits from accelerated depreciation. The Company’s net deferred tax liability increased to $728.2 at December 31, 2012 from $681.4 at December 31, 2011. The increase in the deferred tax liability primarily relates to the high volume of leased equipment placed into service in 2012 for which a fifty percent bonus depreciation deduction was available under U.S. tax law. An extension of fifty percent bonus depreciation through 2013 was enacted on January 2, 2013. Deferred taxes are impacted by new business volume and the accelerated depreciation deduction rate under U.S. tax law. The difference in the timing of depreciation for financial statement and income tax purposes does not impact operating results. The impact on liquidity in 2013 was not significant.

Company Outlook

Average earning assets in 2014 may grow up to 5% as increased new business financing from truck sales exceeds customer collections. Current levels of freight tonnage, freight rates and fleet utilization are contributing to customers’ profitability and cash flow. If current freight transportation conditions decline due to weaker economic conditions, past due accounts, truck repossessions and credit losses would likely increase from current low levels. See the Forward Looking Statement section of Management’s Discussion and Analysis for factors that may affect this outlook.

22

PACCAR Financial Corp.

(Millions of Dollars)

Funding and Liquidity

The Company’s debt ratings at December 31, 2013 are as follows:

	Standard
	and Poor’s		Moody’s
Commercial paper		A-1		P-1
Senior unsecured debt		A+		A1

A decrease in these credit ratings could negatively impact the Company’s ability to access capital markets at competitive interest rates and the Company’s ability to maintain liquidity and financial stability.

The Company periodically registers debt securities under the Securities Act of 1933 for offering to the public. In November 2012, the Company filed a shelf registration statement to issue medium-term notes. The shelf registration statement expires in November 2015 and does not limit the principal amount of debt securities that may be issued during the period. The total notional amount of medium-term notes outstanding for the Company as of December 31, 2013 was $3,850.0.

Loans due to PACCAR were $218.0 at December 31, 2013 and December 31, 2012. The $218.0 loan, with an effective fixed interest rate of 6.88%, was repaid upon maturity in February 2014.

The Company believes it will be able to fund receivables, service debt and meet its other payment obligations through internally generated funds, access to public and private debt markets, and advances from PACCAR.

The Company participated with PACCAR and certain other PACCAR affiliates in syndicated credit facilities of $3,000.0 at December 31, 2013. Of this amount, $1,000.0 expires in June 2014, $1,000.0 expires in 2017 and $1,000.0 expires in 2018. PACCAR and the Company intend to replace these credit facilities as they expire with facilities of similar amounts. Credit facilities of $1,868.3 are available for use by the Company and/or PACCAR and certain other PACCAR affiliates. The remaining $1,131.7 is allocated to the following subsidiaries: $374.5 is available for use by PACCAR’s United Kingdom finance subsidiary, $346.4 is available for use by PACCAR’s Canadian finance subsidiary, $230.6 is available for use by PACCAR’s Mexican finance subsidiaries and $180.2 is available for use by PACCAR’s Australian finance subsidiary.

These credit facilities are used to provide backup liquidity for the Company’s commercial paper and maturing medium-term notes. The Company is liable only for its own borrowings under these credit facilities. There were no borrowings under these credit facilities in the year ended December 31, 2013.

The Company issues commercial paper for a portion of its funding. Some of this commercial paper is converted to fixed interest rate debt through the use of interest rate swaps, which are used to manage interest rate risk. In the event of future disruption in the financial markets, the Company may not be able to issue replacement commercial paper. As a result, the Company is exposed to liquidity risk from the maturity of short-term borrowings paid to lenders compared to the timing of receivable collections from customers. The Company believes its collections on existing loans and leases, syndicated bank lines, current investment-grade credit ratings of A+/A1 and its ability to borrow from PACCAR, if necessary, 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.

23

PACCAR Financial Corp.

(Millions of Dollars)

The following summarizes the Company’s contractual cash commitments at December 31, 2013:

	Maturity
							More than
	Within 1 Year		1-3 Years		3-5 Years		5 Years	Total
Borrowings*	$	1,949.8	$	2,300.0	$	750.0		$	4,999.8
Due to PACCAR		218.0							218.0
Interest on term debt**		36.9		40.4		5.8			83.1
Operating leases		.7		1.1		.4			2.2
Total	$	2,205.4	$	2,341.5	$	756.2		$	5,303.1

* Borrowings also include commercial paper.

** Includes interest on intercompany, fixed- and floating-rate term debt. Interest on floating-rate debt is based on the applicable market rates at December 31, 2013.

As described in “Note G – Borrowings” in the Notes to the Financial Statements, borrowings consist of medium-term notes and commercial paper. The Company has operating leases for office space, truck leasing facilities and office equipment.

In addition, the Company had loan and lease commitments of $311.1 expiring within one year. These commitments represent commitments to fund new retail loan and lease contracts.

Critical Accounting Policies:

The Company’s significant accounting policies are disclosed in “Note A – Significant Accounting Policies” of the financial statements. In the preparation of the Company’s financial statements in accordance with U.S. generally accepted accounting principles, management uses estimates and makes judgments and assumptions that affect asset and liability values and the amounts reported as income and expense during the periods presented. The following are accounting policies which, in the opinion of management, are particularly sensitive and which, if actual results are different from estimates used by management, may have a material impact on the financial statements.

Operating Leases

The accounting for trucks sold pursuant to agreements accounted for as operating leases is disclosed in “Note C – Equipment on Operating Leases” of the financial statements. In determining its estimate of the residual value of such vehicles, the Company considers the length of the lease term, the truck model, the expected usage of the truck and anticipated market demand. Operating lease terms generally range from three to five years. The resulting residual values on operating leases generally range between 30% and 50% of original equipment cost. If the sales price of the trucks at the end of the term of the agreement differs from the Company’s 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. A decrease in the estimated equipment residual values would increase annual depreciation expense over the remaining lease term.

During 2013, 2012 and 2011, market values on equipment returning upon operating lease maturity were generally higher than the residual values on the equipment, resulting in a decrease in depreciation expense of $5.4, $2.6 and $9.1, respectively.

24

PACCAR Financial Corp.

(Millions of Dollars)

At December 31, 2013, the aggregate residual value of equipment on operating leases was $628.7. A 10% decrease in used truck values expected to persist over the remaining maturities of the Company’s operating leases would reduce residual value estimates and result in the Company recording approximately $15.7 of additional depreciation per year.

Allowance for Credit Losses

The allowance for credit losses related to the Company’s loans and finance leases is disclosed in “Note B – Finance and Other Receivables” of the financial statements. 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 direct finance leases, net of unearned interest. The wholesale segment consists of wholesale 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 monthly reporting of the dealer’s financial condition, conducts periodic audits of the trucks being financed and in many cases, obtains personal 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 36 to 60 months 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 impairment. Finance receivables which 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 receivables are 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 recorded investment, 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.

For finance receivables that are not individually impaired, the Company collectively evaluates and determines the general allowance for credit losses for both retail and wholesale receivables based on historical loss information, using past-due account data and current market conditions. Information used includes assumptions regarding the likelihood of collecting current and past-due accounts, repossession rates, 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 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 as probable based on current market conditions and other factors impacting the creditworthiness of the Company’s borrowers and their ability to repay. After determining the appropriate level of the allowance for credit losses, the provision for losses on finance receivables is charged to income as necessary to reflect management’s estimate of incurred credit losses, net of recoveries, inherent in the portfolio.

The adequacy of the allowance is evaluated quarterly based on the most recent past due account information and current market conditions. As accounts become past-due, the likelihood increases they will not be fully collected. The Company’s experience indicates the probability of not fully collecting past-due accounts ranges between 20% and 80%. Over the past three years, the Company’s year-end 30+ days past-due accounts have ranged between .32% and 1.34% of year-end loan and lease receivables.

25

PACCAR Financial Corp.

(Millions of Dollars)

Historically, a 100 basis point increase in the 30+ days past-due percentage has resulted in an increase in credit losses of 5 to 30 basis points of receivables. Past-dues were .35% at December 31, 2013. If past-dues were 100 basis points higher or 1.35% as of December 31, 2013, the Company’s estimate of credit losses would likely have increased by approximately $2 to $7 depending on the extent of the past-dues, the estimated value of the collateral as compared to amounts owed and general economic factors.

Forward Looking Statements

Certain information presented in this Form 10-K contains forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties that may affect actual results. Risks and uncertainties include, but are not limited to: national and local economic, political and industry conditions; changes in the levels of new business volume due to unit fluctuations in new PACCAR truck sales or reduced market share; changes in competitive factors; changes affecting the profitability of truck owners and operators; price changes impacting equipment costs and residual values; changes in interest rates and other operating costs; insufficient liquidity in the capital markets and availability of other funding sources; and legislation and governmental regulation.

26

PACCAR Financial Corp.

(Millions of Dollars)

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk and Derivative Financial Instruments

In the normal course of business, the Company issues various financial instruments that expose the Company to market risk associated with market interest rates. Policies and procedures have been established by the Company to manage these market risks through the use of various derivative financial instruments. The Company does not engage in derivatives trading, market-making or other speculative activities.

The following is a sensitivity analysis for the Company’s assets and liabilities that have interest rate risk. The Company measures its interest-rate risk by estimating the amount by which the fair value of interest rate sensitive assets and liabilities, including derivative financial instruments, would change assuming an immediate 100 basis point increase across the yield curve as shown in the following table:

Fair Value Gains (Losses)

	Year ended December 31
	2013			2012
Assets
Fixed rate loans	$	(48.1	)	$	(44.2	)
Due from PACCAR		(12.3	)		(1.4	)
Due from foreign finance affiliates		(3.7	)		(.9	)
Interest rate swaps related to debt		4.5
Liabilities
Fixed rate debt		58.5			51.4
Interest rate swaps related to debt		8.5			9.0
Due to PACCAR		.5			2.8
Total	$	7.9		$	16.7

The Company’s debt as of December 31, 2013 and 2012 consisted of commercial paper and floating and fixed-rate medium-term notes.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements of the Company and related schedules described under “Item 15 – Exhibits and Financial Statement Schedules” are included following this page.

27

Report of Independent Registered Public Accounting Firm

Board of Directors

PACCAR Inc and PACCAR Financial Corp.

We have audited the accompanying balance sheets of PACCAR Financial Corp. (a wholly-owned subsidiary of PACCAR Inc) as of December 31, 2013 and 2012, and the related statements of income, comprehensive income, cash flows, and stockholder’s equity for each of the three years in the period ended December 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of PACCAR Financial Corp. at December 31, 2013 and 2012, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2013 in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Seattle, Washington

February 27, 2014

28

PACCAR Financial Corp.

STATEMENTS OF INCOME

(Millions of Dollars)

	Year ended December 31
	2013		2012		2011
Interest and fee income	$	206.5	$	198.5	$	172.0
Operating lease and rental revenues		294.3		258.6		225.9
Used truck sales and other revenues		44.2		53.4		31.9
TOTAL INTEREST AND OTHER REVENUE	$	545.0	$	510.5	$	429.8
Interest and other borrowing costs		65.2		63.7		68.1
Depreciation and other rental expenses		237.9		211.6		180.1
Cost of used truck sales and other expenses		37.5		49.7		24.2
Selling, general and administrative expenses		42.7		42.8		42.5
Provision for losses on receivables		2.3		9.1		2.5
TOTAL EXPENSES	$	385.6	$	376.9	$	317.4
INCOME BEFORE INCOME TAXES	$	159.4	$	133.6	$	112.4
Income taxes		60.2		49.9		44.4
NET INCOME	$	99.2	$	83.7	$	68.0

Earnings per share and dividends per share are not reported because the Company is a wholly-owned subsidiary of PACCAR.

STATEMENTS OF COMPREHENSIVE INCOME

(Millions of Dollars)

	Year ended December 31
	2013			2012			2011
Net income	$	99.2		$	83.7		$	68.0
Other comprehensive income
Unrealized losses on derivative contracts
Losses arising during the period					(9.5	)		(16.5	)
Tax effect					3.5			6.2
Reclassification adjustment		8.0			9.9			19.8
Tax effect		(3.0	)		(3.7	)		(7.4	)
Net other comprehensive income		5.0			.2			2.1
TOTAL COMPREHENSIVE INCOME	$	104.2		$	83.9		$	70.1

See Notes to Financial Statements

29

PACCAR Financial Corp.

BALANCE SHEETS

(Millions of Dollars)

	As of December 31
	2013			2012
ASSETS
Cash	$	33.5		$	26.6
Finance and other receivables, net of allowance for losses (2013 - $55.3 and 2012 - $52.8)		4,528.1			4,259.1
Due from PACCAR and affiliates		1,367.3			1,049.8
Equipment on operating leases, net of accumulated depreciation (2013 - $455.8 and 2012 - $355.3)		1,188.5			1,042.2
Other assets		130.2			160.0
TOTAL ASSETS	$	7,247.6		$	6,537.7
LIABILITIES
Accounts payable, accrued expenses and other	$	211.2		$	170.3
Due to PACCAR and affiliates		259.4			253.1
Commercial paper		1,149.8			1,819.6
Medium-term notes		3,849.9			2,701.1
Deferred taxes and other liabilities		832.3			755.7
TOTAL LIABILITIES	$	6,302.6		$	5,699.8
STOCKHOLDER’S EQUITY
Preferred stock, par value $100 per share, 6% noncumulative and nonvoting, 450,000 shares authorized, 310,000 shares issued and outstanding	$	31.0		$	31.0
Common Stock, par value $100 per share, 200,000 shares authorized, 145,000 shares issued and outstanding		14.5			14.5
Additional paid-in capital		107.6			104.7
Retained earnings		794.6			695.4
Accumulated other comprehensive loss		(2.7	)		(7.7	)
TOTAL STOCKHOLDER’S EQUITY	$	945.0		$	837.9
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY	$	7,247.6		$	6,537.7

See Notes to Financial Statements

30

PACCAR Financial Corp.

STATEMENTS OF CASH FLOWS

(Millions of Dollars)

	Year ended December 31
	2013			2012			2011
OPERATING ACTIVITIES
Net income	$	99.2		$	83.7		$	68.0
Items included in net income not affecting cash:
Depreciation and amortization		215.3			186.7			149.4
Provision for losses on receivables		2.3			9.1			2.5
Deferred tax provision		71.8			46.1			207.8
Administrative fees for services from PACCAR		2.9			3.0			1.9
Increase (decrease) in payables and other		35.2			(75.6	)		(106.1	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		426.7			253.0			323.5
INVESTING ACTIVITIES
Finance and other receivables originated		(1,834.7	)		(2,061.1	)		(1,699.8	)
Collections on finance and other receivables		1,487.1			1,417.7			1,187.9
Net decrease (increase) in wholesale receivables		63.7			(65.2	)		(309.5	)
Loans to PACCAR and affiliates		(395.5	)		(466.0	)		(45.0	)
Collections on loans from PACCAR and affiliates		220.5			44.0			82.1
Net (increase) decrease in other receivables and leases to PACCAR and affiliates		(128.6	)		22.6			(34.9	)
Acquisition of equipment on operating leases, primarily from PACCAR		(457.8	)		(463.2	)		(466.6	)
Proceeds from disposal of equipment		135.3			104.7			102.4
Changes in restricted cash					15.0			(15.0	)
Other		10.0			(.7	)		(14.9	)
NET CASH USED IN INVESTING ACTIVITIES		(900.0	)		(1,452.2	)		(1,213.3	)
FINANCING ACTIVITIES
Net (decrease) increase in commercial paper		(669.8	)		40.4			783.6
Proceeds from medium-term notes		1,700.0			1,599.2			549.5
Payments of medium-term notes		(550.0	)		(250.0	)		(323.5	)
Payments (to) from PACCAR					(197.0	)		20.0
Dividends paid								(117.0	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		480.2			1,192.6			912.6
NET INCREASE (DECREASE) IN CASH		6.9			(6.6	)		22.8
CASH AT BEGINNING OF YEAR		26.6			33.2			10.4
CASH AT END OF YEAR	$	33.5		$	26.6		$	33.2

See Notes to Financial Statements

31

PACCAR Financial Corp.

STATEMENTS OF STOCKHOLDER’S EQUITY

(Millions of Dollars)

	Year ended December 31
	2013			2012			2011
PREFERRED STOCK, $100 par value
Balance at beginning of year	$	31.0		$	31.0		$	31.0
Balance at end of year		31.0			31.0			31.0
COMMON STOCK, $100 par value
Balance at beginning of year		14.5			14.5			14.5
Balance at end of year		14.5			14.5			14.5
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of year		104.7			101.7			99.8
Investments from PACCAR		2.9			3.0			1.9
Balance at end of year		107.6			104.7			101.7
RETAINED EARNINGS
Balance at beginning of year		695.4			611.7			660.7
Net income		99.2			83.7			68.0
Dividends paid								(117.0	)
Balance at end of year		794.6			695.4			611.7
ACCUMULATED OTHER COMPREHENSIVE LOSS
Accumulated unrealized net (loss) gain on derivative contracts:
Balance at beginning of year		(7.7	)		(7.9	)		(10.0	)
Net unrealized gain		5.0			.2			2.1
Balance at end of year		(2.7	)		(7.7	)		(7.9	)
TOTAL STOCKHOLDER’S EQUITY	$	945.0		$	837.9		$	751.0

See Notes to Financial Statements

32

PACCAR Financial Corp.

(Millions of Dollars)

NOTE A – SIGNIFICANT ACCOUNTING POLICIES

Description of Operations and Basis of Presentation: PACCAR Financial Corp. (the “Company”), is a wholly-owned subsidiary of PACCAR Inc (“PACCAR”). The Company primarily provides financing of PACCAR-manufactured trucks and related equipment sold by authorized dealers. The Company also finances dealer inventories of transportation equipment and franchises Kenworth and Peterbilt dealerships to engage in full-service and finance leasing. The operations of the Company are fundamentally affected by its relationship with PACCAR.

Due to the nature of the Company’s business, customers are concentrated in the transportation industry throughout the United States. Generally, all receivables are collateralized by the equipment being financed. The risk of credit losses related to this concentration has been considered in establishing the allowance for losses.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Finance and Other Receivables:

Loans – Loans represent fixed- or floating-rate loans to customers or dealers collateralized by the vehicles purchased and are recorded at amortized cost.

Finance leases – Finance leases are retail direct financing leases and sales-type finance leases, which lease equipment to retail customers and dealers. These leases are reported as the sum of minimum lease payments receivable and estimated residual value of the property subject to the contracts, reduced by unearned interest.

Dealer wholesale financing – Dealer wholesale financing is floating-rate wholesale loans to Kenworth and Peterbilt dealers for new and used trucks and are recorded at amortized cost. The loans are collateralized by the trucks being financed.

Operating lease and other trade receivables – Operating lease and other trade receivables are monthly rentals due on operating leases, interest on loans and other amounts due within one year in the normal course of business.

Allowance for 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 as a normal part of its 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. 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.

On average, modifications extended contractual terms by four months in both 2013 and 2012 and did not have a significant effect on the weighted average term or interest rate of the total portfolio at December 31, 2013 or 2012.

33

PACCAR Financial Corp.

(Millions of Dollars)

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 loans and finance leases for credit reasons and grants a concession, the modifications are classified as troubled debt restructurings (TDRs). 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.

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 direct 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 monthly reporting of the wholesale dealer’s financial condition, conducts periodic audits of the trucks being financed and, in many cases, obtains personal 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 36 to 60 months 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 impairment. Finance receivables which 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 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 recorded investment, 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.

For finance receivables that are not individually impaired, the Company collectively evaluates and determines the general allowance for credit losses for both retail and wholesale receivables based on historical loss information, using past-due account data and current market conditions. Information used includes assumptions regarding the likelihood of collecting current and past-due accounts, repossession rates, 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 its portfolio 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 as probable based on current market conditions and other factors impacting the creditworthiness of the Company’s borrowers and their ability to repay. 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 incurred 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 through wholesale channels to the Company’s dealers (principal market). The fair value of the collateral also considers the overall condition of the equipment.

34

PACCAR Financial Corp.

(Millions of Dollars)

Accounts are charged off against the allowance for credit losses when, in the judgment of management, they are considered uncollectible (generally 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 partial charge offs. The charge off is determined by comparing the fair value of the collateral, less cost to sell, to the recorded investment.

Revenue Recognition: 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, generally 36 to 60 months, using the straight-line method which approximates the interest method. For operating leases, rental revenue is recognized on a straight-line basis over the lease term.

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 December 31, 2013 or December 31, 2012. 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.

The Company recognizes revenue on the sale of used trucks acquired from PACCAR truck division customers as part of new truck sales packages when the used trucks are invoiced and delivered to a customer.

Equipment on Operating Leases: Equipment on operating leases is recorded at cost and is depreciated on the straight-line basis to its estimated residual value. Residual values are reviewed regularly and adjusted if market conditions warrant.

Restricted Cash: Restricted cash consists of cash proceeds from the sale of eligible assets set aside for the acquisition of replacement assets under the Company’s like-kind exchange tax program. Restricted cash is classified within Other assets. The changes in restricted cash balances are reflected as an investing activity in the Statements of Cash Flows as they relate to sales and purchases of revenue earning assets.

Derivative Financial Instruments: Derivative financial instruments are used to hedge exposures to fluctuations in interest rates. Certain derivative instruments designated as either cash flow hedges or fair value hedges are subject to hedge accounting. Derivative instruments that are not subject to hedge accounting are held as economic hedges. 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 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. The Company has elected not to offset derivative positions in the balance sheet with the same counterparty under the same master netting agreements. The Company is not required to post or receive collateral under these agreements. Exposure limits and minimum credit ratings are used to minimize the risks of counterparty default. The Company had no material exposures to default at December 31, 2013.

The Company uses regression analysis to assess effectiveness of interest-rate contracts on a quarterly basis. All components of the derivative instrument’s gain or loss are included in the assessment of hedge effectiveness. Gains or losses on the ineffective portion of cash flow hedges are recognized currently in earnings. Hedge accounting is discontinued prospectively when the Company determines that a derivative financial instrument has ceased to be a highly effective hedge.

35

PACCAR Financial Corp.

(Millions of Dollars)

Income Taxes: The Company is included in the consolidated federal income tax return of PACCAR. Federal income taxes for the Company are determined on a separate return basis, and any related tax liability is paid by the Company to PACCAR and any related tax benefit is paid by PACCAR to the Company. State income taxes, where the Company files combined tax returns with PACCAR, are determined on a blended statutory rate, which is substantially the same as the rate computed on a separate return basis. As of December 31, 2013, the United States Internal Revenue Service has completed examinations of PACCAR’s tax returns for all years through 2010. PACCAR’s tax returns remain subject to examination in most jurisdictions for the years ranging from 2010 through 2013.

Preferred Stock: The Company’s Articles of Incorporation provide that the 6%, noncumulative, nonvoting preferred stock (100% owned by PACCAR) is redeemable only at the option of the Company’s Board of Directors.

New Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This ASU requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if available under the applicable tax jurisdiction. The ASU is effective for annual periods beginning after December 15, 2013 and interim periods within those annual periods. The Company does not expect the adoption of the ASU to have an impact on its financial statements.

In July 2013, the FASB issued ASU 2013-10, Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes. The amendments in this ASU permit the Fed Funds Effective Swap Rate (OIS) to be used as a U.S. benchmark interest rate for hedge accounting purposes in addition to U.S. government and London Interbank Offered Rate. The amendments also remove the restriction on using different benchmark rates for similar hedges. The ASU is effective for qualifying new or redesignated hedging relationships entered on or after July 17, 2013. The Company adopted ASU 2013-10 in the third quarter of 2013; the implementation of this amendment did not have an impact on the Company’s financial statements.

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This ASU requires disclosure of additional information about reclassification adjustments from other comprehensive income. The ASU is effective for annual periods beginning on or after January 1, 2013 and interim periods within those annual periods. The Company adopted ASU 2013-02 in the first quarter of 2013. The implementation of this amendment resulted in additional disclosures (see “Note E – Stockholder’s Equity”), but did not have an impact on the Company’s financial statements.

In January 2013, the FASB issued ASU 2013-01 Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, an update of ASU 2012-11, Disclosures about Offsetting Assets and Liabilities. The ASUs require entities with derivatives, repurchase agreements and securities borrowing and lending transactions that are either offset on the balance sheet, or subject to a master netting arrangement, to provide expanded disclosures about the nature of the rights of offset. The updated ASU is effective for annual periods beginning on or after January 1, 2013 and interim periods within those annual periods. The Company adopted ASU 2013-01 in the first quarter of 2013. The implementation of this amendment resulted in additional disclosures (see “Note F – Derivative Financial Instruments”), but did not have an impact on the Company’s financial statements.

36

PACCAR Financial Corp.

(Millions of Dollars)

NOTE B – FINANCE AND OTHER RECEIVABLES

The Company’s finance and other receivables are as follows:

	December 31			December 31
	2013			2012
Retail loans	$	2,442.5		$	2,242.1
Retail direct financing leases		1,577.0			1,451.8
Dealer wholesale financing		578.0			641.7
Dealer master notes		105.1			92.4
Operating lease and other receivables		36.7			32.4
Unearned interest - finance leases		(155.9	)		(148.5	)
Total portfolio	$	4,583.4		$	4,311.9
Less allowance for losses:
Loans and leases		(51.5	)		(47.8	)
Dealer wholesale financing		(3.0	)		(3.9	)
Operating lease and other trade receivables		(.8	)		(1.1	)
Total portfolio, net of allowance for losses	$	4,528.1		$	4,259.1

Annual minimum payments due on loans and leases are as follows:

Beginning January 1, 2014	Loans		Finance leases
2014	$	765.9	$	359.0
2015		628.3		334.3
2016		526.7		324.3
2017		375.5		246.9
2018		211.6		152.6
Thereafter		39.6		108.5

Estimated residual values included with finance leases amounted to $51.4 in 2013 and $47.6 in 2012. Repayment experience indicates substantially all of dealer wholesale financing will be repaid within one year. In addition, experience indicates that some loans, leases and other finance receivables will be paid prior to contract maturity, while others may be extended or modified.

For the following credit quality disclosures, finance receivables are classified as dealer wholesale, dealer retail and customer retail segments. 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. Each individual class has similar measurement attributes, risk characteristics and common methods to monitor and assess credit risk.

37

PACCAR Financial Corp.

(Millions of Dollars)

Allowance for Credit Losses

The allowance for credit losses is summarized as follows:

	2013
	Dealer					Customer Retail
	Wholesale			Retail					Other*			Total
Balance at January 1	$	3.9		$	10.7	$	37.1		$	1.1		$	52.8
Provision for losses		(.9	)		.8		2.6			(.2	)		2.3
Charge offs							(6.4	)		(.1	)		(6.5	)
Recoveries							6.7						6.7
Balance at December 31	$	3.0		$	11.5	$	40.0		$	0.8		$	55.3
	2012
	Dealer					Customer Retail
	Wholesale			Retail					Other*			Total
Balance at January 1	$	3.4		$	9.9	$	44.4		$	1.1		$	58.8
Provision for losses		.5			.8		7.6			.2			9.1
Charge offs							(16.7	)		(.2	)		(16.9	)
Recoveries							1.8						1.8
Balance at December 31	$	3.9		$	10.7	$	37.1		$	1.1		$	52.8
	2011
	Dealer					Customer Retail
	Wholesale			Retail					Other*			Total
Balance at January 1	$	1.5		$	8.2	$	50.8		$	1.2		$	61.7
Provision for losses		1.9			1.7		(1.2	)		.1			2.5
Charge offs							(8.4	)		(.2	)		(8.6	)
Recoveries							3.2						3.2
Balance at December 31	$	3.4		$	9.9	$	44.4		$	1.1		$	58.8

* Operating lease and other trade receivables

38

PACCAR Financial Corp.

(Millions of Dollars)

Information regarding finance receivables evaluated collectively and individually is as follows:

	Dealer						Customer
At December 31, 2013	Wholesale			Retail			Retail			Total
Recorded investment for impaired finance receivables evaluated individually							$	19.1		$	19.1
Allowance for finance receivables evaluated individually							$	(2.0	)	$	(2.0	)
Recorded investment for finance receivables evaluated collectively	$	578.0		$	1,318.8		$	2,630.8		$	4,527.6
Allowance for finance receivables evaluated collectively	$	(3.0	)	$	(11.5	)	$	(38.0	)	$	(52.5	)
	Dealer						Customer
At December 31, 2012	Wholesale			Retail			Retail			Total
Recorded investment for impaired finance receivables evaluated individually				$	.1		$	18.5		$	18.6
Allowance for finance receivables evaluated individually							$	(2.1	)	$	(2.1	)
Recorded investment for finance receivables evaluated collectively	$	641.7		$	1,213.4		$	2,405.8		$	4,260.9
Allowance for finance receivables evaluated collectively	$	(3.9	)	$	(10.7	)	$	(35.0	)	$	(49.6	)

The recorded investment for finance receivables that are on non-accrual status is as follows:

	December 31		December 31
	2013		2012
Dealer:
Wholesale
Retail			$	0.1
Customer Retail:
Fleet	$	17.0		14.0
Owner/Operator		2.1		4.5
	$	19.1	$	18.6

39

PACCAR Financial Corp.

(Millions of Dollars)

Impaired Loans

Impaired loans with no specific reserve were $7.3 and $2.9 at December 31, 2013 and 2012, respectively. Impaired loans with a specific reserve are summarized below. The impaired loans with specific reserve represent the unpaid principal balance. The recorded investment of impaired loans as of December 31, 2013 and 2012 was not significantly different than the unpaid principal balance.

	Dealer		Customer Retail
						Owner/
At December 31, 2013	Wholesale	Retail	Fleet			Operator			Total
Impaired loans with specific reserve			$	6.5		$	1.9		$	8.4
Associated allowance				(1.0	)	$	(.5	)		(1.5	)
Net carrying amount of impaired loans			$	5.5		$	1.4		$	6.9
Average recorded investment			$	13.6		$	3.1		$	16.7
	Dealer		Customer Retail
						Owner/
At December 31, 2012	Wholesale	Retail	Fleet			Operator			Total
Impaired loans with specific reserve			$	9.4		$	4.3		$	13.7
Associated allowance				(.7	)		(1.1	)		(1.8	)
Net carrying amount of impaired loans			$	8.7		$	3.2		$	11.9
Average recorded investment			$	11.3		$	5.4		$	16.7

During the period the loans above were considered impaired, interest income recognized on a cash basis was as follows:

	2013		2012		2011
Interest income recognized:
Dealer:
Wholesale
Retail
Customer Retail:
Fleet	$	1.4	$	.5	$	.6
Owner/Operator		.5		.5		.6
	$	1.9	$	1.0	$	1.2

Credit Quality

The Company’s customers are principally concentrated in the transportation industry in the United States. The Company’s portfolio is diversified over a large number of customers and dealers with no single customer or dealer balance representing over 10% of the total portfolio. The Company has contractual arrangements with one customer, Swift Transportation Corporation, that account for 11.4% ,10.8% and 11.6% of total Interest and Other Revenue for the periods ended December 31, 2013, 2012 and 2011, respectively. 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.

40

PACCAR Financial Corp.

(Millions of Dollars)

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.

The table below summarizes the Company’s finance receivables by credit quality indicator and portfolio class.

	Dealer				Customer Retail
							Owner/
At December 31, 2013	Wholesale		Retail		Fleet		Operator		Total
Performing	$	576.9	$	1,313.9	$	2,264.5	$	365.1	$	4,520.4
Watch		1.1		5.0		.9		.2		7.2
At-risk						17.0		2.1		19.1
Total	$	578.0	$	1,318.9	$	2,282.4	$	367.4	$	4,546.7
	Dealer				Customer Retail
							Owner/
At December 31, 2012	Wholesale		Retail		Fleet		Operator		Total
Performing	$	641.7	$	1,207.1	$	2,008.8	$	385.7	$	4,243.3
Watch				6.3		10.9		.4		17.6
At-risk				.1		14.0		4.5		18.6
Total	$	641.7	$	1,213.5	$	2,033.7	$	390.6	$	4,279.5

41

PACCAR Financial Corp.

(Millions of Dollars)

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

	Dealer				Customer Retail
							Owner/
At December 31, 2013	Wholesale		Retail		Fleet		Operator		Total
Current and up to 30 days past-due	$	578.0	$	1,318.9	$	2,270.7	$	365.7	$	4,533.3
31 – 60 days past-due						1.4		.5		1.9
Greater than 60 days past-due						10.3		1.2		11.5
Total	$	578.0	$	1,318.9	$	2,282.4	$	367.4	$	4,546.7
	Dealer				Customer Retail
							Owner/
At December 31, 2012	Wholesale		Retail		Fleet		Operator		Total
Current and up to 30 days past-due	$	641.7	$	1,213.5	$	2,025.9	$	386.9	$	4,268.0
31 – 60 days past-due						2.2		.7		2.9
Greater than 60 days past-due						5.6		3.0		8.6
Total	$	641.7	$	1,213.5	$	2,033.7	$	390.6	$	4,279.5

Troubled Debt Restructurings

The Company modifies loans and finance leases as a normal part of its operations. The Company’s modifications typically resulted in granting more time to pay the contractual amounts owed and charging a fee and additional interest for the modification. The Company rarely forgives principal or accrued interest and may require principal and accrued interest payments at the time of modification. When the Company modifies loans and finance leases for customers in financial difficulty and grants a concession, the modifications are classified as TDRs. The effect on the allowance for credit losses from such modifications was not significant at December 31, 2013 and 2012.

For the year ended December 31, 2013, there were no changes in the recorded investment for loans and leases modified as TDRs. For the year ended December 31, 2012, the pre-modification and post-modification recorded investments were $29.5 and $21.3, respectively. The decrease in the post-modification recorded investment in 2012 reflects a contract modification of one large customer that resulted in a finance receivable charge off of $8.2.

At modification date, the pre-and post-modification recorded investment balances are as follows:

	2013				2012
	Recorded Investment				Recorded Investment
	Pre-Modification		Post-Modification		Pre-Modification		Post-Modification
Fleet	$	2.3	$	2.3	$	29.2	$	21.0
Owner/Operator		.3		.3		.3		.3
	$	2.6	$	2.6	$	29.5	$	21.3

The balance of TDRs was $6.1 and $11.0 at December 31, 2013 and 2012, respectively.

42

PACCAR Financial Corp.

(Millions of Dollars)

The post-modification recorded investment of finance receivables modified as TDRs during the previous twelve months that subsequently defaulted (i.e. became more than 30 days past-due) during the period by portfolio class are as follows:

	Year ended December 31
	2013		2012
Fleet	$	.2	$	3.6
Owner/Operator
	$	.2	$	3.6

The TDRs that subsequently defaulted did not significantly impact the Company’s allowance for losses at December 31, 2013.

Repossessions

When the Company determines that a customer is not likely to meet its contractual commitments, the Company repossesses the vehicles which serve as collateral for loans, finance leases and equipment on operating lease. The Company records the vehicles as used truck inventory which is included in Other assets on the Balance Sheets. The balance of repossessed inventory at December 31, 2013 and 2012 was $4.3 and $10.4, respectively. Proceeds from the sales of repossessed assets were $19.5, $11.3 and $16.9 for the years ended December 31, 2013, 2012 and 2011, respectively. These amounts are included in Proceeds from disposal of equipment on the Statements of Cash Flows. Write downs of repossessed equipment on operating leases are recorded as impairments and included in Depreciation and other rental expense on the Statements of Income.

Unamortized Loan Origination Costs

The unamortized loan origination costs at December 31, 2013 and 2012 were $12.8 and $12.2, respectively. These amounts are included in Other assets on the Balance Sheets.

NOTE C – EQUIPMENT ON OPERATING LEASES

Terms of operating leases at origination and the related depreciation, generally range from three to five years. The total future annual minimum rental payments to be received for equipment on non-cancelable operating leases beginning January 1, 2014 of $609.2 are due as follows: $243.6 in 2014; $179.6 in 2015; $118.4 in 2016; $55.5 in 2017; $12.1 in 2018 and beyond. Depreciation expense related to equipment on operating leases was $208.8, $179.5 and $147.1 in 2013, 2012 and 2011, respectively. Substantially all equipment on operating leases is manufactured by PACCAR.

NOTE D – TRANSACTIONS WITH PACCAR AND AFFILIATES

The Company and PACCAR are parties to a Support Agreement that obligates PACCAR to provide, when required, financial assistance to the Company to ensure that the Company maintains a ratio of net earnings available for fixed charges to fixed charges (as defined in the Support Agreement) of at least 1.25 to 1 for any fiscal year. The required ratio for the years ended December 31, 2013, 2012 and 2011 was met without assistance. The Support Agreement also requires PACCAR to own, directly or indirectly, all outstanding voting stock of the Company.

Periodically, the Company makes loans to, borrows from and has intercompany transactions with PACCAR. In addition, the Company periodically loans funds to certain foreign finance and leasing affiliates of PACCAR. These various affiliates have Support Agreements with PACCAR, similar to the Company’s Support Agreement with PACCAR. The foreign affiliates operate in the United Kingdom, the Netherlands, Mexico, Canada and Australia, and any resulting currency exposure is fully hedged. The foreign affiliates primarily provide financing and leasing of PACCAR-manufactured trucks and related equipment sold through the DAF, Kenworth,

43

PACCAR Financial Corp.

(Millions of Dollars)

and Peterbilt independent dealer networks in Europe, Mexico, Canada and Australia. The Company will not make loans to the foreign affiliates in excess of the equivalent of $500.0 United States dollars, unless the amount in excess of such limit is guaranteed by PACCAR. The Company periodically reviews the funding alternatives for these affiliates, and these limits may be revised in the future.

Loans due to PACCAR were $218.0 at December 31, 2013 and December 31, 2012. The $218.0 loan due to PACCAR had an effective fixed interest rate of 6.88% and was repaid upon maturity in February 2014. The Company recognized interest expense of $15.0, $16.9 and $26.9 in 2013, 2012 and 2011, respectively, on the borrowings from PACCAR. Cash paid for interest on these borrowings was $15.0, $20.7 and $26.4 in 2013, 2012 and 2011, respectively.

Amounts outstanding at December 31, 2013 and 2012, including foreign finance affiliates operating in the United Kingdom, the Netherlands, Mexico, Canada and Australia, are summarized below:

	December 31		December 31
	2013		2012
Due from PACCAR and affiliates
Loans due from PACCAR	$	653.6	$	428.4
Loans due from foreign finance affiliates		429.6		360.6
Direct financing leases due from affiliate		14.7		13.9
Tax-related receivable due from PACCAR		193.7		181.0
Receivables		75.7		65.9
Total	$	1,367.3	$	1,049.8
Due to PACCAR and affiliates
Loans due to PACCAR	$	218.0	$	218.0
Payables		41.4		35.1
Total	$	259.4	$	253.1

The Company is included in the consolidated federal income tax return of PACCAR. The tax-related receivable due from PACCAR represented the related tax benefit to be settled with PACCAR.

The Company provides direct financing leases to dealer locations operated by an affiliate of PACCAR.

PACCAR has issued letters of credit as of December 31, 2013 in the amount of $4.3 on behalf of the Company to guarantee funds for payment to insured franchisees and customers for any future insurance losses.

PACCAR charges the Company for certain administrative services it provides. These costs were charged to the Company based upon the Company’s specific use of the services and PACCAR’s cost. Management considers these charges reasonable and similar to the costs that would be incurred if the Company were on a stand-alone basis. Fees for services of $2.9, $3.0 and $1.9 in 2013, 2012 and 2011, respectively, were charged to the Company. The Company records the investment as additional paid-in capital.

There were no dividends declared or paid during 2013 and 2012. Dividends in the amount of $117.0 were declared and paid to PACCAR during 2011.

The Company’s principal office is located in the corporate headquarters building of PACCAR (owned by PACCAR). The Company also leases office space from another facility owned by PACCAR and five facilities leased by PACCAR.

44

PACCAR Financial Corp.

(Millions of Dollars)

The Company’s employees and PACCAR employees are covered by a defined benefit pension plan sponsored by PACCAR. The assets and liabilities of the plan are reflected on the balance sheets of PACCAR. PACCAR contributes to the plan and allocates the expenses to the Company based principally on the number of eligible plan participants. Expenses for the defined benefit pension plan were $2.9, $2.7 and $1.9 for the years 2013, 2012 and 2011, respectively, and are included in selling, general and administrative expenses.

The Company’s employees and PACCAR employees are also covered by a defined contribution plan, sponsored by PACCAR. Expenses are based on the actual contribution made on the behalf of participating employees. Expenses incurred by the Company for the defined contribution plan were $1.1, $1.2 and $1.0 for the years 2013, 2012 and 2011, respectively, and are included in selling, general and administrative expenses.

NOTE E – STOCKHOLDER’S EQUITY

Accumulated other comprehensive loss (AOCI) of $2.7 and $7.7 at December 31, 2013 and 2012, respectively, is comprised of the unrealized net loss on derivative contracts, net of taxes. Changes in and reclassifications out of AOCI during the twelve months ended December 31, 2013 are as follows:

	Unrealized Gains (Losses) on Derivative Contracts
Balance at December 31, 2012	$	(7.7	)
Amounts recorded in AOCI
Unrealized gain on derivative contracts
Income tax effect
Amounts reclassified out of AOCI
Interest and other borrowing costs		8.0
Income taxes		(3.0	)
Net other comprehensive income		5.0
Balance at December 31, 2013	$	(2.7	)

NOTE F – DERIVATIVE FINANCIAL INSTRUMENTS

Interest rate contracts 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. The Company is exposed to interest 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. The notional amount is used to measure the volume of these contracts and does not represent exposure to credit loss. In the event of default by the counterparty, the risk in these transactions is the fair value of replacing the interest rate contract at current market rates.

At December 31, 2013, the notional amount of these contracts totaled $1,243.0 with amounts expiring over the next seven years. Notional maturities for all interest rate contracts are $601.0 for 2014, $325.0 for 2015, $272.0 for 2016, $20.0 for 2017, and $25.0 for 2020. The majority of these contracts are floating to fixed rate swaps that effectively convert an equivalent amount of commercial paper and other variable rate debt to fixed rates.

45

PACCAR Financial Corp.

(Millions of Dollars)

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

As of December 31, 2013
Interest-rate contracts	Gross Amount Recognized in Balance Sheets		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Other assets	$	1.6	$	(.2	)	$	1.4
Liabilities
Accounts payable, accrued expenses and other	$	6.0	$	(.2	)	$	5.8
As of December 31, 2012
Interest-rate contracts	Gross Amount Recognized in Balance Sheets		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Other assets
Liabilities
Accounts payable, accrued expenses and other	$	12.5				$	12.5

Cash Flow Hedges

Substantially all of the Company’s interest rate contracts have been designated as cash flow hedges. The Company uses regression analysis to assess the effectiveness of hedges. The change in variable cash flows method or the hypothetical derivative method is used to measure ineffectiveness of interest rate contracts designated as cash flow hedges. Changes in the fair value of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive loss to the extent such hedges are considered effective. Gains or losses on the ineffective portion of cash flow hedges are recognized in current earnings and were immaterial for the years ended December 31, 2013, 2012 and 2011. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows is 6.4 years.

Amounts in accumulated other comprehensive loss are reclassified into net income in the same period in which the hedged transaction affects earnings. Net realized gains and losses from interest rate contracts are recognized as an adjustment to interest expense. As of December 31, 2013, accumulated other comprehensive loss was $2.7, net of tax, and $3.5, net of tax, is expected to be reclassified to interest expense in the following 12 months. 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 interest rate risk management strategy.

46

PACCAR Financial Corp.

(Millions of Dollars)

The following table presents the pre-tax effects of derivative instruments designated as cash flow hedges recognized in other comprehensive income (OCI) and expenses reclassified from AOCI into income.

	Year ended December 31
	2013		2012			2011
Pre-tax loss on derivative contracts recognized in OCI			$	(9.5	)	$	(16.5	)
Expenses reclassified from AOCI into
Interest and other borrowing expenses	$	8.0	$	9.9		$	19.8

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 expense or (income) recognized in earnings related to fair value hedges was included in Interest and other borrowing costs in the Statements of Income as follows:

	Year ended December 31
	2013	2012			2011
Interest-rate swaps		$	(2.3	)	$	.1
Term notes		$	2.1		$	(.3	)

In addition, the net interest income from the settlement of the interest-rate swaps was nil, $.9 and $.1 for the year ended December 31, 2013, 2012 and 2011 is reported in interest and other borrowing costs.

NOTE G – BORROWINGS

Borrowings are summarized as follows:

	2013				2012
	Effective Rate		Borrowings		Effective Rate		Borrowings
Commercial paper		.60%	$	1,149.8		.54%	$	1,819.6
Fixed rate medium-term notes		1.10%		2,749.9		1.26%		2,001.1
Floating rate medium-term notes		.81%		1,100.0		1.09%		700.0
		.93%	$	4,999.7		.94%	$	4,520.7

The fixed-rate medium-term notes of $2,749.9 at December 31, 2013 include a decrease in fair value of $.1 for notes designated as fair value hedges. The fixed-rate medium-term notes of $2,001.1 at December 31, 2012 include an increase in fair value of $1.1 for notes designated as fair value hedges. The effective rate is the weighted average rate as of December 31, 2013 and includes the effects of interest rate swap agreements.

47

PACCAR Financial Corp.

(Millions of Dollars)

The annual principal maturities of the borrowings are as follows:

	Commercial		Term
Beginning January 1, 2014	Paper		Notes
2014	$	1,149.8	$	800.0
2015				1,050.0
2016				1,250.0
2017				500.0
2018				250.0
	$	1,149.8	$	3,850.0

Interest expense on borrowings amounted to $44.2, $42.3, and $37.1 for 2013, 2012 and 2011, respectively. Interest paid on borrowings was $40.8 in 2013, $39.0 in 2012, and $40.0 in 2011.

In November 2012, the Company filed a shelf registration statement under the Securities Act of 1933. The registration expires in the fourth quarter of 2015 and does not limit the principal amount of debt securities that may be issued during the period. The total notional amount of medium-term notes outstanding as of December 31, 2013 was $3,850.0.

See “Note D – Transactions with PACCAR and Affiliates” for discussion of borrowings from PACCAR.

NOTE H – CREDIT ARRANGEMENTS

The Company participated with PACCAR and certain other PACCAR affiliates in syndicated credit facilities of $3,000.0 at December 31, 2013. Of this amount, $1,000.0 expires in June 2014, $1,000.0 expires in 2017 and $1,000.0 expires in 2018. PACCAR and the Company intend to replace these credit facilities as they expire with facilities of similar amounts.

Credit facilities of $1,868.3 are available for use by the Company and/or PACCAR and certain other PACCAR affiliates. The remaining $1,131.7 is allocated to the following subsidiaries: $374.5 is available for use by PACCAR’s United Kingdom financial subsidiary, $346.4 is available for use by PACCAR’s Canadian financial subsidiary, $230.6 is available for use by PACCAR’s Mexican financial subsidiaries and $180.2 is available for use by PACCAR’s Australian financial subsidiary. These credit facilities are used to provide backup liquidity for the Company’s commercial paper and maturing medium-term notes. The Company is liable only for its own borrowings under these credit facilities. There were no borrowings under these credit facilities in the years ended December 31, 2013 and 2012.

NOTE I – INCOME TAXES

The effective income tax rate was 37.8% for 2013 compared to 37.4% for 2012, reflecting higher state tax expense in 2013.

The Company is included in the consolidated federal income tax return of PACCAR. Federal income taxes for the Company are determined on a separate return basis. State income taxes, where the Company files combined tax returns with PACCAR, are determined on a blended statutory rate, which is substantially the same as the rate computed on a separate return basis.

48

PACCAR Financial Corp.

(Millions of Dollars)

The provision for income taxes consisted of the following:

	Year ended December 31
	2013			2012			2011
Current (benefit) provision
Federal	$	(9.7	)	$	(1.4	)	$	(163.5	)
State		(1.9	)		5.2			.1
	$	(11.6	)	$	3.8		$	(163.4	)
Deferred provision
Federal	$	60.9		$	42.9		$	201.1
State		10.9			3.2			6.7
	$	71.8		$	46.1		$	207.8
Total provision for income taxes	$	60.2		$	49.9		$	44.4

A reconciliation between the statutory federal income tax rate to the actual provision for income taxes is shown below:

	Year ended December 31
	2013		2012		2011
Statutory rate		35.0%		35.0%		35.0%
Effect of:
State		3.5%		1.9%		3.9%
Other		(.7%)		.5%		.6%
		37.8%		37.4%		39.5%

Cash paid (received) for income taxes was $4.1 in 2013, $2.2 in 2012 and ($5.2) in 2011.

The tax effects of temporary differences representing deferred tax assets and liabilities are as follows:

	As of December 31
	2013			2012
Deferred tax assets:
Allowance for losses on receivables	$	21.1		$	20.0
Derivative liability		2.2			4.7
Other		9.6			12.1
Deferred tax liabilities:
Asset capitalization and depreciation	$	(835.8	)	$	(765.0	)
Net deferred tax liability	$	(802.9	)	$	(728.2	)

49

PACCAR Financial Corp.

(Millions of Dollars)

NOTE J – 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.

There were no transfers of assets or liabilities between Level 1 and Level 2 of the fair value hierarchy during the year ended December 31, 2013. The Company’s policy is to recognize transfers between levels at the end of the reporting period.

Assets and Liabilities Subject to Non-recurring and Recurring Fair Value Measurement

Impaired loans and used trucks held for sale are measured on a non-recurring basis. Amounts shown below represent the balance of assets measured at fair value during 2013 and 2012. Derivative contracts are measured on a recurring basis. These assets and liabilities are outlined in the table below:

	December 31		December 31
Level 2	2013		2012
Assets:
Impaired loans, net of specific reserves (2013 - $.1 and 2012 - $.2)	$	7.0	$	4.9
Used trucks held for sale		8.7		12.4
Derivative contracts		1.6
Liabilities:
Derivative contracts	$	6.0	$	12.5

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

Impaired Loans: Impaired loans are considered collateral dependent. Accordingly, the evaluation of individual reserves considers the fair value of the associated collateral (estimated sales proceeds less the costs to sell).

Used Trucks Held for Sale: The carrying amount of used trucks held for sale is written down as necessary to reflect the fair value less costs to sell. The Company determines the fair value of used trucks from a pricing matrix, which is based on the market approach. The significant observable inputs into the valuation model are recent sales prices of comparable units and the condition of the vehicles. Used truck impairments related to units held at December 31, 2013 and 2012 were $1.6 and $2.0 during 2013 and 2012, respectively, and were recorded in Depreciation and other rental expenses on the Statements of Income. These assets, which are shown in the above table when they are written down to fair value less costs to sell, are categorized as Level 2 and are included in Other assets on the Balance Sheets.

50

PACCAR Financial Corp.

(Millions of Dollars)

Derivative Financial Instruments: The Company’s derivative financial instruments consist of interest-rate swaps and are carried at fair value. 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 and credit default swap spreads. These contracts are categorized as Level 2 and are included in Other assets and Accounts payable, accrued expenses and other on the Balance Sheets.

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: Carrying amounts approximate fair value.

Net Receivables: For floating-rate loans, wholesale financings 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 current rates for comparable loans. Finance lease receivables and related allowance for credit losses have been excluded from the accompanying table.

Commercial Paper and Medium-Term Notes: The carrying amounts of the Company’s commercial paper and variable medium-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 at December 31, 2013 and December 31, 2012 were as follows:

	December 31				December 31
	2013				2012
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Assets:
Due from PACCAR	$	550.5	$	554.5	$	314.4	$	315.3
Due from foreign finance affiliates		216.0		218.4		216.6		217.0
Fixed rate loans		2,393.1		2,413.9		2,175.6		2,221.7
Liabilities:
Due to PACCAR	$	218.0	$	219.7	$	218.0	$	233.6
Fixed rate debt		2,749.9		2,774.4		2,001.1		2,023.0

51

PACCAR Financial Corp.

(Millions of Dollars)

NOTE K – QUARTERLY RESULTS (UNAUDITED)

	QUARTER
	First		Second		Third		Fourth
2013
Interest and other revenue	$	140.9	$	132.6	$	135.7	$	135.8
Income before income taxes		36.6		36.1		40.9		45.8
Net income		22.7		22.4		25.4		28.7
2012
Interest and other revenue	$	117.0	$	121.1	$	128.7	$	143.7
Income before income taxes		31.8		34.4		35.5		31.9
Net income		19.0		20.7		22.0		22.0

NOTE L – COMMITMENTS AND CONTINGENCIES

The Company is a party to various routine legal proceedings incidental to its business involving the collection of accounts and other matters. The Company believes that any reasonably possible range of losses with respect to these matters in addition to amounts accrued is not material to the Company’s financial statements.

At December 31, 2013, the Company has loan and lease commitments of $311.1 expiring within one year. These commitments represent commitments to fund new retail loan and lease contracts.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

The registrant has not had any disagreements with its independent auditors on accounting or financial disclosure matters.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) as of December 31, 2013. Based on that evaluation, the principal executive officer and principal financial officer of the Company concluded that the disclosure controls and procedures in place at the Company are effective to ensure that information required to be disclosed by the Company in reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported on a timely basis in accordance with applicable rules and regulations. There have been no changes in the Company’s internal control over financial reporting during the fourth quarter that occurred that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

The management of the Company is responsible for establishing and maintaining satisfactory internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

52

PACCAR Financial Corp.

(Millions of Dollars)

Internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Management assessed the Company’s internal control over financial reporting as of December 31, 2013, based on criteria for effective internal control over financial reporting described in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, we concluded that the Company maintained effective internal control over financial reporting as of December 31, 2013.

ITEM 9B. OTHER INFORMATION

Not applicable.

PART III

ITEMS  10, 11, 12 AND 13

These items omitted pursuant to Form 10-K General Instruction (I)(1)(a) and (b).

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

Audit fees charged to the Company were $.8 and $.8 in 2013 and 2012, respectively.

Other Fees

The Company was charged $.1 and $.1 in 2013 and 2012, respectively, by the principal accountant for tax consulting services.

As a wholly-owned, subsidiary of PACCAR, audit and non-audit services provided by the Company’s independent registered public accounting firm are subject to PACCAR’s Audit Committee pre-approval policies and procedures as described in the PACCAR 2013 proxy statement. During the year ended December 31, 2013, all services provided by the independent registered public accounting firm were pre-approved by the PACCAR Audit Committee.

53

PACCAR Financial Corp.

(Millions of Dollars)

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(1) Listing of financial statements

The following financial statements of the Company are included in Item 8:

Statements of Income – Years Ended December 31, 2013, 2012, and 2011

Statements of Comprehensive Income – Years Ended December 31, 2013, 2012, and 2011

Balance Sheets – December 31, 2013 and 2012

Statements of Cash Flows – Years Ended December 31, 2013, 2012, and 2011

Statements of Stockholder’s Equity – Years Ended December 31, 2013, 2012, and 2011

Notes to Financial Statements – December 31, 2013, 2012, and 2011

(2) Listing of financial statement schedules

All schedules are omitted because the required matter or conditions are not present or because the information required by the schedules is submitted as part of the consolidated financial statements and notes thereto.

(3) Listing of Exhibits

The exhibits required by Item 601 of Regulation S-K are listed in the accompanying Exhibit Index.

54

PACCAR Financial Corp.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 Financial Corp.
By	/s/ T. R. Hubbard
	T. R. Hubbard
	President

Date February 27, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant as of the above date and in the capacities indicated.

(1) Principal Executive Officer

/s/ R. E. Armstrong	Chairman
R. E. Armstrong

(2) Principal Financial Officer

/s/ R. A. Bengston	Principal Financial Officer
R. A. Bengston

(3) Principal Accounting Officer

/s/ G. L. Watkins	Controller
G. L. Watkins

(4) A Majority of the Board of Directors

/s/ R. E. Armstrong	Director
R. E. Armstrong
/s/ R. A. Bengston
R. A. Bengston	Director
/s/ T. R. Hubbard	Director
T. R. Hubbard

55

PACCAR Financial Corp.

EXHIBIT INDEX

Exhibits (in order of assigned index numbers)

Exhibit Number		Exhibit Description	Form	Date of First Filing	Exhibit Number	File Number
(3)		Articles of incorporation and by-laws:
	(a)	Restated Articles of Incorporation of the Company	10-K	March 26, 1985	3.1	001-11677
	(b)	Amendment to Articles of Incorporation of the Company	10-Q	August 13, 1985	19.1	001-11677
	(c)	By-laws of the Company	10-Q	October 20, 1983	3.2	001-11677
(4)		Instruments defining the rights of security holders, including indentures:
	(a)	Indenture for Senior Debt Securities dated as of November 20, 2009 between the Company and The Bank of New York Mellon Trust Company, N.A.	10-K	February 26, 2010	4(c)	001-11677
	(b)	Forms of Medium-Term Note, Series M	S-3	November 20, 2009	4.2 and 4.3	333-163273
	(c)	Forms of Medium-Term Note, Series N	S-3	November 7, 2012	4.2 and 4.3	333-184808
	(d)	Form of InterNotes, Series B	S-3	November 7, 2012	4.4	333-184808
(10)		Material contracts:
	(a)	Support Agreement between the Company and PACCAR dated as of June 19, 1989	S-3	June 23, 1989	28.1	33-29434
(12)		Statements re: computation of ratios:
	(a)	Computation of ratio of earnings to fixed charges of the Company pursuant to SEC reporting requirements for the each of the five years ended December 31, 2009 – 2013.*
	(b)	Computation of ratio of earnings to fixed charges of the Company pursuant to the Support Agreement between the Company and PACCAR for the each of the five years ended December 31, 2009 – 2013.*

56

PACCAR Financial Corp.

EXHIBIT INDEX

Exhibit Number		Exhibit Description	Form	Date of First Filing	Exhibit Number	File Number
(23)		Consent of Independent Registered Public Accounting Firm*
(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:
	(a)	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)		XBRL Instance Document*
(101.SCH)		XBRL Taxonomy Extension Schema Document*
(101.CAL)		XBRL Taxonomy Extension Calculation Linkbase Document*
(101.DEF)		XBRL Taxonomy Extension Definition Linkbase Document*
(101.LAB)		XBRL Taxonomy Extension Label Linkbase Document*
(101.PRE)		XBRL Taxonomy Extension Presentation Linkbase Document*

* filed herewith

57

EX-12.(A)

Exhibit 12(a)

PACCAR Financial Corp.

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

PURSUANT TO SEC REPORTING REQUIREMENTS (1)

(Millions of Dollars)

	Year ended December 31
	2013		2012		2011		2010		2009
FIXED CHARGES
Interest expense	$	58.9	$	59.2	$	64.0	$	90.5	$	126.2
Portion of rentals deemed interest		1.2		1.2		1.5		1.7		1.7
TOTAL FIXED CHARGES	$	60.1	$	60.4	$	65.5	$	92.2	$	127.9
EARNINGS
Income before income taxes	$	159.4	$	133.6	$	112.4	$	63.2	$	44.8
Fixed charges		60.1		60.4		65.5		92.2		127.9
EARNINGS AS DEFINED	$	219.5	$	194.0	$	177.9	$	155.4	$	172.7
RATIO OF EARNINGS TO FIXED CHARGES		3.65x		3.21x		2.72x		1.69x		1.35x

(1) The method of computing the ratio of earnings to fixed charges shown above complies with SEC reporting requirements, but differs from the method called for in the Support Agreement between the Company and PACCAR as shown in Exhibit 12(b).

EX-12.(B)

Exhibit 12(b)

PACCAR Financial Corp.

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

PURSUANT TO THE SUPPORT AGREEMENT

BETWEEN THE COMPANY AND PACCAR

(Millions of Dollars)

	Year ended December 31
	2013		2012		2011		2010		2009
FIXED CHARGES
Interest expense	$	58.9	$	59.2	$	64.0	$	90.5	$	126.2
Facility and equipment rental		1.5		1.5		1.9		2.1		2.1
TOTAL FIXED CHARGES	$	60.4	$	60.7	$	65.9	$	92.6	$	128.3
EARNINGS
Income before income taxes	$	159.4	$	133.6	$	112.4	$	63.2	$	44.8
Depreciation		210.0		180.6		148.1		132.4		122.3
		369.4		314.2		260.5		195.6		167.1
FIXED CHARGES		60.4		60.7		65.9		92.6		128.3
EARNINGS AS DEFINED	$	429.8	$	374.9	$	326.4	$	288.2	$	295.4
RATIO OF EARNINGS TO FIXED CHARGES		7.12x		6.18x		4.95x		3.11x		2.30x

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statement (Form S-3 No. 333-184808) of PACCAR Financial Corp. and in the related Prospectus of our report dated February 27, 2014 with respect to the financial statements of PACCAR Financial Corp. included in this Annual Report (Form 10-K) for the year ended December 31, 2013.

/s/ Ernst & Young LLP

Seattle, Washington

February 27, 2014

EX-31.(A)

Exhibit 31(a)

PACCAR Financial Corp.

CERTIFICATIONS

I, Ronald E. Armstrong, certify that:

1. I have reviewed this annual report on Form 10-K of PACCAR Financial Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date February 27, 2014

/s/ Ronald E. Armstrong

Ronald E. Armstrong

Chairman

(Principal Executive Officer)

EX-31.(B)

Exhibit 31(b)

PACCAR Financial Corp.

CERTIFICATIONS

I, Robert A. Bengston, certify that:

1. I have reviewed this annual report on Form 10-K of PACCAR Financial Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date February 27, 2014

/s/ Robert A. Bengston

Robert A. Bengston

(Principal Financial Officer)

EX-32.(A)

Exhibit 32(a)

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350)

In connection with the Annual Report of PACCAR Financial Corp. (the “Company”) on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certify, pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. section 1350), that to the best of our knowledge and belief:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date	February 27, 2014	By	/s/ Ronald E. Armstrong Ronald E. Armstrong Chairman PACCAR Financial Corp. (Principal Executive Officer)
		By	/s/ Robert A. Bengston Robert A. Bengston PACCAR Financial Corp. (Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Financing Receivables by Credit Quality Indicator (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	$ 4,546.7	$ 4,279.5
Pass
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	4,520.4	4,243.3
Special Mention
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	7.2	17.6
Substandard
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	19.1	18.6
Dealer | Wholesale
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	578.0	641.7
Dealer | Wholesale | Pass
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	576.9	641.7
Dealer | Wholesale | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	1.1
Dealer | Retail
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	1,318.9	1,213.5
Dealer | Retail | Pass
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	1,313.9	1,207.1
Dealer | Retail | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	5.0	6.3
Dealer | Retail | Substandard
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables		0.1
Customer Retail | Fleet
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	2,282.4	2,033.7
Customer Retail | Fleet | Pass
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	2,264.5	2,008.8
Customer Retail | Fleet | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	0.9	10.9
Customer Retail | Fleet | Substandard
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	17.0	14.0
Customer Retail | Owner/Operator
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	367.4	390.6
Customer Retail | Owner/Operator | Pass
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	365.1	385.7
Customer Retail | Owner/Operator | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	0.2	0.4
Customer Retail | Owner/Operator | Substandard
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	$ 2.1	$ 4.5

XML

Annual Maturities of Borrowings (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013
Commercial Paper
Long Term Debt Maturities Repayments Of Principal [Line Items]
2014	$ 1,149.8
Debt outstanding	1,149.8
Term Note
Long Term Debt Maturities Repayments Of Principal [Line Items]
2014	800.0
2015	1,050.0
2016	1,250.0
2017	500.0
2018	250.0
Debt outstanding	$ 3,850.0

XML

Derivative Financial Instruments - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of interest-rate contracts	$ 1,243.0
Interest-rate contracts maturity period	7 years
Notional maturities for interest-rate contracts 2014	601.0
Notional maturities for interest-rate contracts 2015	325.0
Notional maturities for interest-rate contracts 2016	272.0
Notional maturities for interest-rate contracts 2017	20.0
Notional maturities for interest-rate contracts 2020	25.0
Maximum length of time for which company is hedging its exposure to the variability in future cash flows	6 years 4 months 24 days
Accumulated net loss on interest rate contracts included in accumulated other comprehensive loss	(2.7)
Accumulated net loss on interest rate contracts included in accumulated other comprehensive loss expected to be reclassified to interest expense in the following 12 months	3.5
Net interest income from settlement of interest-rate swaps		$ 0.9	$ 0.1

XML

Credit Arrangements - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013
Line of Credit Facility [Line Items]
Line of credit, maximum capacity	$ 3,000.0
Credit facility available amount	1,868.3
Foreign Subsidiaries
Line of Credit Facility [Line Items]
Credit facility available amount	1,131.7
Foreign Subsidiaries | PACCAR United Kingdom financial subsidiary
Line of Credit Facility [Line Items]
Credit facility available amount	374.5
Foreign Subsidiaries | PACCAR Canadian financial subsidiary
Line of Credit Facility [Line Items]
Credit facility available amount	346.4
Foreign Subsidiaries | PACCAR Mexican financial subsidiaries
Line of Credit Facility [Line Items]
Credit facility available amount	230.6
Foreign Subsidiaries | PACCAR Australian financial subsidiary
Line of Credit Facility [Line Items]
Credit facility available amount	180.2
Line Of Credit Expires June 2014
Line of Credit Facility [Line Items]
Line of credit, maximum capacity	1,000.0
Line of Credit Expires 2017 | Line Of Credit One
Line of Credit Facility [Line Items]
Line of credit, maximum capacity	1,000.0
Line Of Credit Expires 2018 | Line Of Credit Two
Line of Credit Facility [Line Items]
Line of credit, maximum capacity	$ 1,000.0

XML

Stockholders' Equity - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Stockholders Equity Note [Line Items]
Accumulated other comprehensive loss	$ (2.7)	$ (7.7)

XML

Finance and Other Receivables - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired loans with no specific reserve	$ 7.3	$ 2.9
Pre-modification recorded investment	2.6	29.5
Post-modification recorded investment	2.6	21.3
Finance receivable modification charge off	0	8.2
Troubled debt restructuring	6.1	11.0
Repossessed inventory	4.3	10.4
Proceeds from the sales of repossessed assets	19.5	11.3	16.9
Unamortized loan origination costs	12.8	12.2
Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of customers diversification in portfolio	10.00%
Swift Transportation Corporation
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of interest and other revenue	11.40%	10.80%	11.60%
Finance Leases Financing Receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Estimated residual values included with finance leases	$ 51.4	$ 47.6

XML

Provision for Income Taxes (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Current (benefit) provision
Federal	$ (9.7)	$ (1.4)	$ (163.5)
State	(1.9)	5.2	0.1
Current Income Tax Expense (Benefit), Total	(11.6)	3.8	(163.4)
Deferred provision
Federal	60.9	42.9	201.1
State	10.9	3.2	6.7
Deferred tax provision	71.8	46.1	207.8
Total provision for income taxes	$ 60.2	$ 49.9	$ 44.4

XML

Derivative Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2013

Balance Sheet Classification, Fair Value and Gross and Net Amounts of Derivative Financial Instruments

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

As of December 31, 2013
Interest-rate contracts	Gross Amount Recognized in Balance Sheets		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Other assets	$	1.6	$	(.2	)	$	1.4
Liabilities
Accounts payable, accrued expenses and other	$	6.0	$	(.2	)	$	5.8
As of December 31, 2012
Interest-rate contracts	Gross Amount Recognized in Balance Sheets		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Other assets
Liabilities
Accounts payable, accrued expenses and other	$	12.5				$	12.5

Designated as Hedging Instrument

Gains/Losses of Derivative Financial Instruments

The following table presents the pre-tax effects of derivative instruments designated as cash flow hedges recognized in other comprehensive income (OCI) and expenses reclassified from AOCI into income.

	Year ended December 31
	2013		2012			2011
Pre-tax loss on derivative contracts recognized in OCI			$	(9.5	)	$	(16.5	)
Expenses reclassified from AOCI into
Interest and other borrowing expenses	$	8.0	$	9.9		$	19.8

Fair Value Hedging

Gains/Losses of Derivative Financial Instruments

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 expense or (income) recognized in earnings related to fair value hedges was included in Interest and other borrowing costs in the Statements of Income as follows:

	Year ended December 31
	2013	2012			2011
Interest-rate swaps		$	(2.3	)	$	.1
Term notes		$	2.1		$	(.3	)

XML

Pre-Tax Effects of Derivative Instruments Recognized in Other Comprehensive Income (OCI) and Expenses Reclassified from AOCI into Income (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Derivative [Line Items]
Pre-tax loss on derivative contracts recognized in OCI		$ (9.5)	$ (16.5)
Interest Expense
Derivative [Line Items]
Expenses reclassified from AOCI into Interest and other borrowing expenses	$ 8.0	$ 9.9	$ 19.8

XML

TDR Modified During Previous Twelve Months that Subsequently Defaulted by Portfolio Class (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Troubled Debt Restructuring, Debtor, Subsequent Periods [Line Items]
Recorded investment, subsequently defaulted	$ 0.2	$ 3.6
Fleet
Troubled Debt Restructuring, Debtor, Subsequent Periods [Line Items]
Recorded investment, subsequently defaulted	$ 0.2	$ 3.6

XML

Impaired Loans and Specific Reserve (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Financing Receivable, Impaired [Line Items]
Impaired loans with specific reserve	$ 8.4	$ 13.7
Associated allowance	(1.5)	(1.8)
Net carrying amount of impaired loans	6.9	11.9
Average recorded investment	16.7	16.7
Customer Retail | Fleet
Financing Receivable, Impaired [Line Items]
Impaired loans with specific reserve	6.5	9.4
Associated allowance	(1.0)	(0.7)
Net carrying amount of impaired loans	5.5	8.7
Average recorded investment	13.6	11.3
Customer Retail | Owner/Operator
Financing Receivable, Impaired [Line Items]
Impaired loans with specific reserve	1.9	4.3
Associated allowance	(0.5)	(1.1)
Net carrying amount of impaired loans	1.4	3.2
Average recorded investment	$ 3.1	$ 5.4

XML

Summary of Borrowings (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Effective borrowing rate	0.93%	0.94%
Commercial paper	$ 1,149.8	$ 1,819.6
Medium-term notes	3,849.9	2,701.1
Borrowings Amount	4,999.7	4,520.7
Fixed Rate Medium-Term Notes
Debt Instrument [Line Items]
Effective borrowing rate	1.10%	1.26%
Medium-term notes	2,749.9	2,001.1
Floating Rate Medium-Term Notes
Debt Instrument [Line Items]
Effective borrowing rate	0.81%	1.09%
Medium-term notes	$ 1,100.0	$ 700.0
Commercial Paper
Debt Instrument [Line Items]
Effective borrowing rate	0.60%	0.54%

XML

Assets and Liabilities Fair Value Measurements (Parenthetical) (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans, specific reserves	$ 1.5	$ 1.8
Fair Value Measurements, Nonrecurring | Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans, specific reserves	$ 0.1	$ 0.2

XML

Changes in and Reclassifications out of Accumulated Other Comprehensive Income (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	$ (7.7)
Amounts recorded in AOCI
Unrealized gain on derivative contracts		(9.5)	(16.5)
Income tax effect		3.5	6.2
Amounts reclassified out of AOCI
Interest and other borrowing costs	8.0	9.9	19.8
Income taxes	(3.0)	(3.7)	(7.4)
Net other comprehensive income	5.0	0.2	2.1
Ending balance	(2.7)	(7.7)
Unrealized Gain Loss On Derivatives | Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(7.7)
Amounts recorded in AOCI
Unrealized gain on derivative contracts
Income tax effect
Amounts reclassified out of AOCI
Interest and other borrowing costs	8.0
Income taxes	(3.0)
Net other comprehensive income	5.0
Ending balance	$ (2.7)

XML

Significant Accounting Policies

12 Months Ended

Dec. 31, 2013

Significant Accounting Policies

NOTE A – SIGNIFICANT ACCOUNTING POLICIES

Description of Operations and Basis of Presentation: PACCAR Financial Corp. (the “Company”), is a wholly-owned subsidiary of PACCAR Inc (“PACCAR”). The Company primarily provides financing of PACCAR-manufactured trucks and related equipment sold by authorized dealers. The Company also finances dealer inventories of transportation equipment and franchises Kenworth and Peterbilt dealerships to engage in full-service and finance leasing. The operations of the Company are fundamentally affected by its relationship with PACCAR.

Due to the nature of the Company’s business, customers are concentrated in the transportation industry throughout the United States. Generally, all receivables are collateralized by the equipment being financed. The risk of credit losses related to this concentration has been considered in establishing the allowance for losses.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Finance and Other Receivables:

Loans – Loans represent fixed- or floating-rate loans to customers or dealers collateralized by the vehicles purchased and are recorded at amortized cost.

Finance leases – Finance leases are retail direct financing leases and sales-type finance leases, which lease equipment to retail customers and dealers. These leases are reported as the sum of minimum lease payments receivable and estimated residual value of the property subject to the contracts, reduced by unearned interest.

Dealer wholesale financing – Dealer wholesale financing is floating-rate wholesale loans to Kenworth and Peterbilt dealers for new and used trucks and are recorded at amortized cost. The loans are collateralized by the trucks being financed.

Operating lease and other trade receivables – Operating lease and other trade receivables are monthly rentals due on operating leases, interest on loans and other amounts due within one year in the normal course of business.

Allowance for 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 as a normal part of its 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. 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.

On average, modifications extended contractual terms by four months in both 2013 and 2012 and did not have a significant effect on the weighted average term or interest rate of the total portfolio at December 31, 2013 or 2012.

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 loans and finance leases for credit reasons and grants a concession, the modifications are classified as troubled debt restructurings (TDRs). 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.

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 direct 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 monthly reporting of the wholesale dealer’s financial condition, conducts periodic audits of the trucks being financed and, in many cases, obtains personal 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 36 to 60 months 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 impairment. Finance receivables which 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 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 recorded investment, 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.

For finance receivables that are not individually impaired, the Company collectively evaluates and determines the general allowance for credit losses for both retail and wholesale receivables based on historical loss information, using past-due account data and current market conditions. Information used includes assumptions regarding the likelihood of collecting current and past-due accounts, repossession rates, 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 its portfolio 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 as probable based on current market conditions and other factors impacting the creditworthiness of the Company’s borrowers and their ability to repay. 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 incurred 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 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 (generally 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 partial charge offs. The charge off is determined by comparing the fair value of the collateral, less cost to sell, to the recorded investment.

Revenue Recognition: 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, generally 36 to 60 months, using the straight-line method which approximates the interest method. For operating leases, rental revenue is recognized on a straight-line basis over the lease term.

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 December 31, 2013 or December 31, 2012. 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.

The Company recognizes revenue on the sale of used trucks acquired from PACCAR truck division customers as part of new truck sales packages when the used trucks are invoiced and delivered to a customer.

Equipment on Operating Leases: Equipment on operating leases is recorded at cost and is depreciated on the straight-line basis to its estimated residual value. Residual values are reviewed regularly and adjusted if market conditions warrant.

Restricted Cash: Restricted cash consists of cash proceeds from the sale of eligible assets set aside for the acquisition of replacement assets under the Company’s like-kind exchange tax program. Restricted cash is classified within Other assets. The changes in restricted cash balances are reflected as an investing activity in the Statements of Cash Flows as they relate to sales and purchases of revenue earning assets.

Derivative Financial Instruments: Derivative financial instruments are used to hedge exposures to fluctuations in interest rates. Certain derivative instruments designated as either cash flow hedges or fair value hedges are subject to hedge accounting. Derivative instruments that are not subject to hedge accounting are held as economic hedges. 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 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. The Company has elected not to offset derivative positions in the balance sheet with the same counterparty under the same master netting agreements. The Company is not required to post or receive collateral under these agreements. Exposure limits and minimum credit ratings are used to minimize the risks of counterparty default. The Company had no material exposures to default at December 31, 2013.

The Company uses regression analysis to assess effectiveness of interest-rate contracts on a quarterly basis. All components of the derivative instrument’s gain or loss are included in the assessment of hedge effectiveness. Gains or losses on the ineffective portion of cash flow hedges are recognized currently in earnings. Hedge accounting is discontinued prospectively when the Company determines that a derivative financial instrument has ceased to be a highly effective hedge.

Income Taxes: The Company is included in the consolidated federal income tax return of PACCAR. Federal income taxes for the Company are determined on a separate return basis, and any related tax liability is paid by the Company to PACCAR and any related tax benefit is paid by PACCAR to the Company. State income taxes, where the Company files combined tax returns with PACCAR, are determined on a blended statutory rate, which is substantially the same as the rate computed on a separate return basis. As of December 31, 2013, the United States Internal Revenue Service has completed examinations of PACCAR’s tax returns for all years through 2010. PACCAR’s tax returns remain subject to examination in most jurisdictions for the years ranging from 2010 through 2013.

Preferred Stock: The Company’s Articles of Incorporation provide that the 6%, noncumulative, nonvoting preferred stock (100% owned by PACCAR) is redeemable only at the option of the Company’s Board of Directors.

New Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This ASU requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if available under the applicable tax jurisdiction. The ASU is effective for annual periods beginning after December 15, 2013 and interim periods within those annual periods. The Company does not expect the adoption of the ASU to have an impact on its financial statements.

In July 2013, the FASB issued ASU 2013-10, Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes. The amendments in this ASU permit the Fed Funds Effective Swap Rate (OIS) to be used as a U.S. benchmark interest rate for hedge accounting purposes in addition to U.S. government and London Interbank Offered Rate. The amendments also remove the restriction on using different benchmark rates for similar hedges. The ASU is effective for qualifying new or redesignated hedging relationships entered on or after July 17, 2013. The Company adopted ASU 2013-10 in the third quarter of 2013; the implementation of this amendment did not have an impact on the Company’s financial statements.

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This ASU requires disclosure of additional information about reclassification adjustments from other comprehensive income. The ASU is effective for annual periods beginning on or after January 1, 2013 and interim periods within those annual periods. The Company adopted ASU 2013-02 in the first quarter of 2013. The implementation of this amendment resulted in additional disclosures (see “Note E – Stockholder’s Equity”), but did not have an impact on the Company’s financial statements.

In January 2013, the FASB issued ASU 2013-01 Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, an update of ASU 2012-11, Disclosures about Offsetting Assets and Liabilities. The ASUs require entities with derivatives, repurchase agreements and securities borrowing and lending transactions that are either offset on the balance sheet, or subject to a master netting arrangement, to provide expanded disclosures about the nature of the rights of offset. The updated ASU is effective for annual periods beginning on or after January 1, 2013 and interim periods within those annual periods. The Company adopted ASU 2013-01 in the first quarter of 2013. The implementation of this amendment resulted in additional disclosures (see “Note F – Derivative Financial Instruments”), but did not have an impact on the Company’s financial statements.

XML

Fair Value Measurements - Additional Information (Detail) (Trucks Inventory, USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Trucks Inventory
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Used truck impairments	$ 1.6	$ 2.0

XML

Equipment on Operating Leases - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Minimum
Operating Leased Assets [Line Items]
Operating lease term	3 years
Maximum
Operating Leased Assets [Line Items]
Operating lease term	5 years
Non Cancelable Operating Leases
Operating Leased Assets [Line Items]
Future annual minimum rental payments	$ 609.2
2014	243.6
2015	179.6
2016	118.4
2017	55.5
2018	12.1
Operating Lease | Non Cancelable Operating Leases
Operating Leased Assets [Line Items]
Depreciation expense	$ 208.8	$ 179.5	$ 147.1

XML

Quarterly Results (Tables)

12 Months Ended

Dec. 31, 2013

Quarterly Financial Information

	QUARTER
	First		Second		Third		Fourth
2013
Interest and other revenue	$	140.9	$	132.6	$	135.7	$	135.8
Income before income taxes		36.6		36.1		40.9		45.8
Net income		22.7		22.4		25.4		28.7
2012
Interest and other revenue	$	117.0	$	121.1	$	128.7	$	143.7
Income before income taxes		31.8		34.4		35.5		31.9
Net income		19.0		20.7		22.0		22.0

XML

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2013

Assets and Liabilities Fair Value Measurements

Amounts shown below represent the balance of assets measured at fair value during 2013 and 2012. Derivative contracts are measured on a recurring basis. These assets and liabilities are outlined in the table below:

	December 31		December 31
Level 2	2013		2012
Assets:
Impaired loans, net of specific reserves (2013 - $.1 and 2012 - $.2)	$	7.0	$	4.9
Used trucks held for sale		8.7		12.4
Derivative contracts		1.6
Liabilities:
Derivative contracts	$	6.0	$	12.5

Carrying Amount and Fair Value Fixed-Rate Loans and Fixed-Rate Debt

The Company’s estimate of fair value for fixed-rate loans and debt that are not carried at fair value at December 31, 2013 and December 31, 2012 were as follows:

	December 31				December 31
	2013				2012
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Assets:
Due from PACCAR	$	550.5	$	554.5	$	314.4	$	315.3
Due from foreign finance affiliates		216.0		218.4		216.6		217.0
Fixed rate loans		2,393.1		2,413.9		2,175.6		2,221.7
Liabilities:
Due to PACCAR	$	218.0	$	219.7	$	218.0	$	233.6
Fixed rate debt		2,749.9		2,774.4		2,001.1		2,023.0

XML

Income Taxes - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Taxes [Line Items]
Effective income tax rate	37.80%	37.40%	39.50%
Cash paid (received) for income taxes	$ 4.1	$ 2.2	$ (5.2)

XML

Transactions with PACCAR and Affiliates - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013 Facility	Dec. 31, 2012	Dec. 31, 2011
Related Party Transaction [Line Items]
Required ratio of net earnings available for fixed charges to fixed charges	1.25
Loans due to PACCAR	$ 218.0	$ 218.0
Fixed interest rate	6.88%
Loan maturity period	2014-02
Interest expense on borrowings from PACCAR	15.0	16.9	26.9
Interest paid on borrowings from PACCAR	15.0	20.7	26.4
Letter of credit issued	4.3
Administrative services fees	2.9	3.0	1.9
Dividends declared and paid	0	0	117.0
Number of facilities leased by company	5
Defined benefit pension plan expenses	2.9	2.7	1.9
Defined contribution plan expenses	1.1	1.2	1.0
Foreign Finance Affiliates
Related Party Transaction [Line Items]
Loans to foreign affiliates, upper limit	$ 500.0

XML

Significant Accounting Policies - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2013 Segment	Dec. 31, 2012
Schedule Of Significant Accounting Policies [Line Items]
Extended contractual terms, modifications	4 months	4 months
Number of portfolio segments	2
Preferred stock dividend percentage	6.00%
Ownership Percentage of PACCAR Inc	100.00%
Internal Revenue Service (IRS)
Schedule Of Significant Accounting Policies [Line Items]
Income tax examination, description	the United States Internal Revenue Service has completed examinations of PACCAR’s tax returns for all years through 2010. PACCAR’s tax returns remain subject to examination in most jurisdictions for the years ranging from 2010 through 2013.
Minimum
Schedule Of Significant Accounting Policies [Line Items]
Contractual term of regular payment of principal and interest	36 months
Origination costs, amortization period	36 months
Minimum | Internal Revenue Service (IRS)
Schedule Of Significant Accounting Policies [Line Items]
Tax years subject to examination	2010
Maximum
Schedule Of Significant Accounting Policies [Line Items]
Contractual term of regular payment of principal and interest	60 months
Origination costs, amortization period	60 months
Maximum | Internal Revenue Service (IRS)
Schedule Of Significant Accounting Policies [Line Items]
Tax years subject to examination	2013

XML

Finance and Other Receivables (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
Retail loans	$ 2,442.5	$ 2,242.1
Retail direct financing leases	1,577.0	1,451.8
Dealer wholesale financing	578.0	641.7
Dealer master notes	105.1	92.4
Operating lease and other receivables	36.7	32.4
Unearned interest - finance leases	(155.9)	(148.5)
Total portfolio	4,583.4	4,311.9
Allowance for losses	(55.3)	(52.8)	(58.8)	(61.7)
Total portfolio, net of allowance for losses	4,528.1	4,259.1
Loans and Leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for losses	(51.5)	(47.8)
Dealer Wholesale Financing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for losses	(3.0)	(3.9)
Operating lease and other trade receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for losses	$ (0.8)	$ (1.1)

XML

Statements of Stockholder's Equity (Parenthetical) (USD $)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Preferred stock, par value	$ 100	$ 100	$ 100
Common Stock, par value	$ 100	$ 100	$ 100

XML

Annual Minimum Payment Due on Loans and Leases (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013
Loans Receivable
Leases Future Minimum Payments [Line Items]
2014	$ 765.9
2015	628.3
2016	526.7
2017	375.5
2018	211.6
Thereafter	39.6
Finance Leases Financing Receivable
Leases Future Minimum Payments [Line Items]
2014	359.0
2015	334.3
2016	324.3
2017	246.9
2018	152.6
Thereafter	$ 108.5

XML

Financing Receivables by Aging Category (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current and up to 30 days past-due	$ 4,533.3	$ 4,268.0
31 - 60 days past-due	1.9	2.9
Greater than 60 days past-due	11.5	8.6
Total	4,546.7	4,279.5
Dealer | Wholesale
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current and up to 30 days past-due	578.0	641.7
Total	578.0	641.7
Dealer | Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current and up to 30 days past-due	1,318.9	1,213.5
Total	1,318.9	1,213.5
Customer Retail | Fleet
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current and up to 30 days past-due	2,270.7	2,025.9
31 - 60 days past-due	1.4	2.2
Greater than 60 days past-due	10.3	5.6
Total	2,282.4	2,033.7
Customer Retail | Owner/Operator
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current and up to 30 days past-due	365.7	386.9
31 - 60 days past-due	0.5	0.7
Greater than 60 days past-due	1.2	3.0
Total	$ 367.4	$ 390.6

XML

Borrowings - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Medium term notes	$ 3,849.9	$ 2,701.1
Interest expense on borrowings	44.2	42.3	37.1
Interest paid on borrowings	40.8	39.0	40.0
Medium-term Notes
Debt Instrument [Line Items]
Medium term notes outstanding amount	3,850.0
Registration expiration	Fourth quarter of 2015
Fixed Rate Medium-Term Notes
Debt Instrument [Line Items]
Medium term notes	2,749.9	2,001.1
Increase (decrease) in fair value of notes designated as hedges	$ (0.1)	$ 1.1

XML

Statements of Income (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Interest and fee income	$ 206.5	$ 198.5	$ 172.0
Operating lease and rental revenues	294.3	258.6	225.9
Used truck sales and other revenues	44.2	53.4	31.9
TOTAL INTEREST AND OTHER REVENUE	545.0	510.5	429.8
Interest and other borrowing costs	65.2	63.7	68.1
Depreciation and other rental expenses	237.9	211.6	180.1
Cost of used truck sales and other expenses	37.5	49.7	24.2
Selling, general and administrative expenses	42.7	42.8	42.5
Provision for losses on receivables	2.3	9.1	2.5
TOTAL EXPENSES	385.6	376.9	317.4
INCOME BEFORE INCOME TAXES	159.4	133.6	112.4
Income taxes	60.2	49.9	44.4
NET INCOME	$ 99.2	$ 83.7	$ 68.0

XML

Amounts Outstanding Including Foreign Finance Affiliates (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Due from PACCAR and affiliates
Direct financing leases due from affiliate	$ 14.7	$ 13.9
Loans due from affiliates	1,367.3	1,049.8
Due to PACCAR and affiliates
Loans due to PACCAR	218.0	218.0
Loans due to affiliates	259.4	253.1
PACCAR
Due from PACCAR and affiliates
Loans due from affiliates	653.6	428.4
Foreign Finance Affiliates
Due from PACCAR and affiliates
Loans due from affiliates	429.6	360.6
Tax-related receivable
Due from PACCAR and affiliates
Loans due from affiliates	193.7	181.0
Receivables
Due from PACCAR and affiliates
Loans due from affiliates	75.7	65.9
Payables
Due to PACCAR and affiliates
Loans due to affiliates	$ 41.4	$ 35.1

XML

Statements of Cash Flows (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
OPERATING ACTIVITIES
Net income	$ 99.2	$ 83.7	$ 68.0
Items included in net income not affecting cash:
Depreciation and amortization	215.3	186.7	149.4
Provision for losses on receivables	2.3	9.1	2.5
Deferred tax provision	71.8	46.1	207.8
Administrative fees for services from PACCAR	2.9	3.0	1.9
Increase (decrease) in payables and other	35.2	(75.6)	(106.1)
NET CASH PROVIDED BY OPERATING ACTIVITIES	426.7	253.0	323.5
INVESTING ACTIVITIES
Finance and other receivables originated	(1,834.7)	(2,061.1)	(1,699.8)
Collections on finance and other receivables	1,487.1	1,417.7	1,187.9
Net decrease (increase) in wholesale receivables	63.7	(65.2)	(309.5)
Loans to PACCAR and affiliates	(395.5)	(466.0)	(45.0)
Collections on loans from PACCAR and affiliates	220.5	44.0	82.1
Net (increase) decrease in other receivables and leases to PACCAR and affiliates	(128.6)	22.6	(34.9)
Acquisition of equipment on operating leases, primarily from PACCAR	(457.8)	(463.2)	(466.6)
Proceeds from disposal of equipment	135.3	104.7	102.4
Changes in restricted cash		15.0	(15.0)
Other	10.0	(0.7)	(14.9)
NET CASH USED IN INVESTING ACTIVITIES	(900.0)	(1,452.2)	(1,213.3)
FINANCING ACTIVITIES
Net (decrease) increase in commercial paper	(669.8)	40.4	783.6
Proceeds from medium-term notes	1,700.0	1,599.2	549.5
Payments of medium-term notes	(550.0)	(250.0)	(323.5)
Payments (to) from PACCAR		(197.0)	20.0
Dividends paid	0	0	(117.0)
NET CASH PROVIDED BY FINANCING ACTIVITIES	480.2	1,192.6	912.6
NET INCREASE (DECREASE) IN CASH	6.9	(6.6)	22.8
CASH AT BEGINNING OF YEAR	26.6	33.2	10.4
CASH AT END OF YEAR	$ 33.5	$ 26.6	$ 33.2

XML

Deferred Tax Assets and Liabilities (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Deferred tax assets:
Allowance for losses on receivables	$ 21.1	$ 20.0
Derivative liability	2.2	4.7
Other	9.6	12.1
Deferred tax liabilities:
Asset capitalization and depreciation	(835.8)	(765.0)
Net deferred tax liability	$ (802.9)	$ (728.2)

XML

Finance Receivables Summary by those Evaluated Collectively and Individually (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Recorded investment for impaired finance receivables evaluated individually	$ 19.1	$ 18.6
Allowance for finance receivables evaluated individually	(2.0)	(2.1)
Recorded investment for finance receivables evaluated collectively	4,527.6	4,260.9
Allowance for finance receivables evaluated collectively	(52.5)	(49.6)
Dealer | Wholesale
Financing Receivable, Allowance for Credit Losses [Line Items]
Recorded investment for finance receivables evaluated collectively	578.0	641.7
Allowance for finance receivables evaluated collectively	(3.0)	(3.9)
Dealer | Retail
Financing Receivable, Allowance for Credit Losses [Line Items]
Recorded investment for impaired finance receivables evaluated individually		0.1
Recorded investment for finance receivables evaluated collectively	1,318.8	1,213.4
Allowance for finance receivables evaluated collectively	(11.5)	(10.7)
Customer Retail
Financing Receivable, Allowance for Credit Losses [Line Items]
Recorded investment for impaired finance receivables evaluated individually	19.1	18.5
Allowance for finance receivables evaluated individually	(2.0)	(2.1)
Recorded investment for finance receivables evaluated collectively	2,630.8	2,405.8
Allowance for finance receivables evaluated collectively	$ (38.0)	$ (35.0)

XML

Commitment and Contingencies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
Commitment And Contingencies [Line Items]
Outstanding commitments to fund new loan and lease transactions	$ 311.1
Commitments expiration term	1 year

XML

Finance and Other Receivables (Tables)

12 Months Ended

Dec. 31, 2013

Finance and Other Receivables

The Company’s finance and other receivables are as follows:

	December 31			December 31
	2013			2012
Retail loans	$	2,442.5		$	2,242.1
Retail direct financing leases		1,577.0			1,451.8
Dealer wholesale financing		578.0			641.7
Dealer master notes		105.1			92.4
Operating lease and other receivables		36.7			32.4
Unearned interest - finance leases		(155.9	)		(148.5	)
Total portfolio	$	4,583.4		$	4,311.9
Less allowance for losses:
Loans and leases		(51.5	)		(47.8	)
Dealer wholesale financing		(3.0	)		(3.9	)
Operating lease and other trade receivables		(.8	)		(1.1	)
Total portfolio, net of allowance for losses	$	4,528.1		$	4,259.1

Annual Minimum Payments Due on Loans and Leases

Annual minimum payments due on loans and leases are as follows:

Beginning January 1, 2014	Loans		Finance leases
2014	$	765.9	$	359.0
2015		628.3		334.3
2016		526.7		324.3
2017		375.5		246.9
2018		211.6		152.6
Thereafter		39.6		108.5

Allowance for Credit Losses

The allowance for credit losses is summarized as follows:

	2013
	Dealer					Customer Retail
	Wholesale			Retail					Other*			Total
Balance at January 1	$	3.9		$	10.7	$	37.1		$	1.1		$	52.8
Provision for losses		(.9	)		.8		2.6			(.2	)		2.3
Charge offs							(6.4	)		(.1	)		(6.5	)
Recoveries							6.7						6.7
Balance at December 31	$	3.0		$	11.5	$	40.0		$	0.8		$	55.3
	2012
	Dealer					Customer Retail
	Wholesale			Retail					Other*			Total
Balance at January 1	$	3.4		$	9.9	$	44.4		$	1.1		$	58.8
Provision for losses		.5			.8		7.6			.2			9.1
Charge offs							(16.7	)		(.2	)		(16.9	)
Recoveries							1.8						1.8
Balance at December 31	$	3.9		$	10.7	$	37.1		$	1.1		$	52.8
	2011
	Dealer					Customer Retail
	Wholesale			Retail					Other*			Total
Balance at January 1	$	1.5		$	8.2	$	50.8		$	1.2		$	61.7
Provision for losses		1.9			1.7		(1.2	)		.1			2.5
Charge offs							(8.4	)		(.2	)		(8.6	)
Recoveries							3.2						3.2
Balance at December 31	$	3.4		$	9.9	$	44.4		$	1.1		$	58.8

* Operating lease and other trade receivables

Finance Receivables Evaluated and Determined Individually and Collectively

Information regarding finance receivables evaluated collectively and individually is as follows:

	Dealer						Customer
At December 31, 2013	Wholesale			Retail			Retail			Total
Recorded investment for impaired finance receivables evaluated individually							$	19.1		$	19.1
Allowance for finance receivables evaluated individually							$	(2.0	)	$	(2.0	)
Recorded investment for finance receivables evaluated collectively	$	578.0		$	1,318.8		$	2,630.8		$	4,527.6
Allowance for finance receivables evaluated collectively	$	(3.0	)	$	(11.5	)	$	(38.0	)	$	(52.5	)
	Dealer						Customer
At December 31, 2012	Wholesale			Retail			Retail			Total
Recorded investment for impaired finance receivables evaluated individually				$	.1		$	18.5		$	18.6
Allowance for finance receivables evaluated individually							$	(2.1	)	$	(2.1	)
Recorded investment for finance receivables evaluated collectively	$	641.7		$	1,213.4		$	2,405.8		$	4,260.9
Allowance for finance receivables evaluated collectively	$	(3.9	)	$	(10.7	)	$	(35.0	)	$	(49.6	)

Recorded Investment for Finance Receivables that are on Non-accrual Status

The recorded investment for finance receivables that are on non-accrual status is as follows:

	December 31		December 31
	2013		2012
Dealer:
Wholesale
Retail			$	0.1
Customer Retail:
Fleet	$	17.0		14.0
Owner/Operator		2.1		4.5
	$	19.1	$	18.6

Impaired Loans and Specific Reserve

Impaired loans with no specific reserve were $7.3 and $2.9 at December 31, 2013 and 2012, respectively. Impaired loans with a specific reserve are summarized below. The impaired loans with specific reserve represent the unpaid principal balance. The recorded investment of impaired loans as of December 31, 2013 and 2012 was not significantly different than the unpaid principal balance.

	Dealer		Customer Retail
						Owner/
At December 31, 2013	Wholesale	Retail	Fleet			Operator			Total
Impaired loans with specific reserve			$	6.5		$	1.9		$	8.4
Associated allowance				(1.0	)	$	(.5	)		(1.5	)
Net carrying amount of impaired loans			$	5.5		$	1.4		$	6.9
Average recorded investment			$	13.6		$	3.1		$	16.7
	Dealer		Customer Retail
						Owner/
At December 31, 2012	Wholesale	Retail	Fleet			Operator			Total
Impaired loans with specific reserve			$	9.4		$	4.3		$	13.7
Associated allowance				(.7	)		(1.1	)		(1.8	)
Net carrying amount of impaired loans			$	8.7		$	3.2		$	11.9
Average recorded investment			$	11.3		$	5.4		$	16.7

Interest Income Recognized on Cash Basis

During the period the loans above were considered impaired, interest income recognized on a cash basis was as follows:

	2013		2012		2011
Interest income recognized:
Dealer:
Wholesale
Retail
Customer Retail:
Fleet	$	1.4	$	.5	$	.6
Owner/Operator		.5		.5		.6
	$	1.9	$	1.0	$	1.2

Finance Receivables by Credit Quality Indicator

The table below summarizes the Company’s finance receivables by credit quality indicator and portfolio class.

	Dealer				Customer Retail
							Owner/
At December 31, 2013	Wholesale		Retail		Fleet		Operator		Total
Performing	$	576.9	$	1,313.9	$	2,264.5	$	365.1	$	4,520.4
Watch		1.1		5.0		.9		.2		7.2
At-risk						17.0		2.1		19.1
Total	$	578.0	$	1,318.9	$	2,282.4	$	367.4	$	4,546.7
	Dealer				Customer Retail
							Owner/
At December 31, 2012	Wholesale		Retail		Fleet		Operator		Total
Performing	$	641.7	$	1,207.1	$	2,008.8	$	385.7	$	4,243.3
Watch				6.3		10.9		.4		17.6
At-risk				.1		14.0		4.5		18.6
Total	$	641.7	$	1,213.5	$	2,033.7	$	390.6	$	4,279.5

Financing Receivables by Aging Category

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

	Dealer				Customer Retail
							Owner/
At December 31, 2013	Wholesale		Retail		Fleet		Operator		Total
Current and up to 30 days past-due	$	578.0	$	1,318.9	$	2,270.7	$	365.7	$	4,533.3
31 – 60 days past-due						1.4		.5		1.9
Greater than 60 days past-due						10.3		1.2		11.5
Total	$	578.0	$	1,318.9	$	2,282.4	$	367.4	$	4,546.7
	Dealer				Customer Retail
							Owner/
At December 31, 2012	Wholesale		Retail		Fleet		Operator		Total
Current and up to 30 days past-due	$	641.7	$	1,213.5	$	2,025.9	$	386.9	$	4,268.0
31 – 60 days past-due						2.2		.7		2.9
Greater than 60 days past-due						5.6		3.0		8.6
Total	$	641.7	$	1,213.5	$	2,033.7	$	390.6	$	4,279.5

Pre-Modification and Post-Modification Recorded Investment Balances by Portfolio Class

At modification date, the pre-and post-modification recorded investment balances are as follows:

	2013				2012
	Recorded Investment				Recorded Investment
	Pre-Modification		Post-Modification		Pre-Modification		Post-Modification
Fleet	$	2.3	$	2.3	$	29.2	$	21.0
Owner/Operator		.3		.3		.3		.3
	$	2.6	$	2.6	$	29.5	$	21.3

TDRs Modified During Previous Twelve Months that Subsequently Defaulted by Portfolio Class

TDRs during the previous twelve months that subsequently defaulted (i.e. became more than 30 days past-due) during the period by portfolio class are as follows:

	Year ended December 31
	2013		2012
Fleet	$	.2	$	3.6
Owner/Operator
	$	.2	$	3.6

XML

Recorded Investment for Finance Receivables that are on Non-accrual Status (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Schedule Of Financing Receivables [Line Items]
Recorded investment of finance receivables that are on non-accrual status	$ 19.1	$ 18.6
Dealer | Retail
Schedule Of Financing Receivables [Line Items]
Recorded investment of finance receivables that are on non-accrual status		0.1
Customer Retail | Fleet
Schedule Of Financing Receivables [Line Items]
Recorded investment of finance receivables that are on non-accrual status	17.0	14.0
Customer Retail | Owner/Operator
Schedule Of Financing Receivables [Line Items]
Recorded investment of finance receivables that are on non-accrual status	$ 2.1	$ 4.5

XML

Stockholder's Equity (Tables)

12 Months Ended

Dec. 31, 2013

Changes in and Reclassifications out of Accumulated Other Comprehensive Income

Changes in and reclassifications out of AOCI during the twelve months ended December 31, 2013 are as follows:

	Unrealized Gains (Losses) on Derivative Contracts
Balance at December 31, 2012	$	(7.7	)
Amounts recorded in AOCI
Unrealized gain on derivative contracts
Income tax effect
Amounts reclassified out of AOCI
Interest and other borrowing costs		8.0
Income taxes		(3.0	)
Net other comprehensive income		5.0
Balance at December 31, 2013	$	(2.7	)

XML

Statements of Stockholder's Equity (USD $) In Millions	Total	Preferred Stock	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Balance at Dec. 31, 2010		$ 31.0	$ 14.5	$ 99.8	$ 660.7	$ (10.0)
Net income	68.0				68.0
Investments from PACCAR				1.9
Net unrealized gain						2.1
Dividends paid					(117.0)
Balance at Dec. 31, 2011	751.0	31.0	14.5	101.7	611.7	(7.9)
Net income	83.7				83.7
Investments from PACCAR				3.0
Net unrealized gain						0.2
Balance at Dec. 31, 2012	837.9	31.0	14.5	104.7	695.4	(7.7)
Net income	99.2				99.2
Investments from PACCAR				2.9
Net unrealized gain						5.0
Balance at Dec. 31, 2013	$ 945.0	$ 31.0	$ 14.5	$ 107.6	$ 794.6	$ (2.7)

XML

Statements of Comprehensive Income (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net income	$ 99.2	$ 83.7	$ 68.0
Unrealized losses on derivative contracts
Losses arising during the period		(9.5)	(16.5)
Tax effect		3.5	6.2
Reclassification adjustment	8.0	9.9	19.8
Tax effect	(3.0)	(3.7)	(7.4)
Net other comprehensive income	5.0	0.2	2.1
TOTAL COMPREHENSIVE INCOME	$ 104.2	$ 83.9	$ 70.1

XML

Income Taxes

12 Months Ended

Dec. 31, 2013

Income Taxes

NOTE I – INCOME TAXES

The effective income tax rate was 37.8% for 2013 compared to 37.4% for 2012, reflecting higher state tax expense in 2013.

The Company is included in the consolidated federal income tax return of PACCAR. Federal income taxes for the Company are determined on a separate return basis. State income taxes, where the Company files combined tax returns with PACCAR, are determined on a blended statutory rate, which is substantially the same as the rate computed on a separate return basis.

The provision for income taxes consisted of the following:

	Year ended December 31
	2013			2012			2011
Current (benefit) provision
Federal	$	(9.7	)	$	(1.4	)	$	(163.5	)
State		(1.9	)		5.2			.1
	$	(11.6	)	$	3.8		$	(163.4	)
Deferred provision
Federal	$	60.9		$	42.9		$	201.1
State		10.9			3.2			6.7
	$	71.8		$	46.1		$	207.8
Total provision for income taxes	$	60.2		$	49.9		$	44.4

A reconciliation between the statutory federal income tax rate to the actual provision for income taxes is shown below:

	Year ended December 31
	2013		2012		2011
Statutory rate		35.0%		35.0%		35.0%
Effect of:
State		3.5%		1.9%		3.9%
Other		(.7%)		.5%		.6%
		37.8%		37.4%		39.5%

Cash paid (received) for income taxes was $4.1 in 2013, $2.2 in 2012 and ($5.2) in 2011.

The tax effects of temporary differences representing deferred tax assets and liabilities are as follows:

	As of December 31
	2013			2012
Deferred tax assets:
Allowance for losses on receivables	$	21.1		$	20.0
Derivative liability		2.2			4.7
Other		9.6			12.1
Deferred tax liabilities:
Asset capitalization and depreciation	$	(835.8	)	$	(765.0	)
Net deferred tax liability	$	(802.9	)	$	(728.2	)

XML

Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2013	Jan. 31, 2014	Jun. 30, 2013
Document Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Trading Symbol	ck0000731288
Entity Registrant Name	PACCAR FINANCIAL CORP
Entity Central Index Key	0000731288
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		145,000
Entity Public Float			$ 0

XML

Fair Value Measurements

12 Months Ended

Dec. 31, 2013

Fair Value Measurements

NOTE J – 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.

There were no transfers of assets or liabilities between Level 1 and Level 2 of the fair value hierarchy during the year ended December 31, 2013. The Company’s policy is to recognize transfers between levels at the end of the reporting period.

Assets and Liabilities Subject to Non-recurring and Recurring Fair Value Measurement

Impaired loans and used trucks held for sale are measured on a non-recurring basis. Amounts shown below represent the balance of assets measured at fair value during 2013 and 2012. Derivative contracts are measured on a recurring basis. These assets and liabilities are outlined in the table below:

	December 31		December 31
Level 2	2013		2012
Assets:
Impaired loans, net of specific reserves (2013 - $.1 and 2012 - $.2)	$	7.0	$	4.9
Used trucks held for sale		8.7		12.4
Derivative contracts		1.6
Liabilities:
Derivative contracts	$	6.0	$	12.5

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

Impaired Loans: Impaired loans are considered collateral dependent. Accordingly, the evaluation of individual reserves considers the fair value of the associated collateral (estimated sales proceeds less the costs to sell).

Used Trucks Held for Sale: The carrying amount of used trucks held for sale is written down as necessary to reflect the fair value less costs to sell. The Company determines the fair value of used trucks from a pricing matrix, which is based on the market approach. The significant observable inputs into the valuation model are recent sales prices of comparable units and the condition of the vehicles. Used truck impairments related to units held at December 31, 2013 and 2012 were $1.6 and $2.0 during 2013 and 2012, respectively, and were recorded in Depreciation and other rental expenses on the Statements of Income. These assets, which are shown in the above table when they are written down to fair value less costs to sell, are categorized as Level 2 and are included in Other assets on the Balance Sheets.

Derivative Financial Instruments: The Company’s derivative financial instruments consist of interest-rate swaps and are carried at fair value. 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 and credit default swap spreads. These contracts are categorized as Level 2 and are included in Other assets and Accounts payable, accrued expenses and other on the Balance Sheets.

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: Carrying amounts approximate fair value.

Net Receivables: For floating-rate loans, wholesale financings 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 current rates for comparable loans. Finance lease receivables and related allowance for credit losses have been excluded from the accompanying table.

Commercial Paper and Medium-Term Notes: The carrying amounts of the Company’s commercial paper and variable medium-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 at December 31, 2013 and December 31, 2012 were as follows:

	December 31				December 31
	2013				2012
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Assets:
Due from PACCAR	$	550.5	$	554.5	$	314.4	$	315.3
Due from foreign finance affiliates		216.0		218.4		216.6		217.0
Fixed rate loans		2,393.1		2,413.9		2,175.6		2,221.7
Liabilities:
Due to PACCAR	$	218.0	$	219.7	$	218.0	$	233.6
Fixed rate debt		2,749.9		2,774.4		2,001.1		2,023.0

XML

Balance Sheets (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
ASSETS
Cash	$ 33.5	$ 26.6
Finance and other receivables, net of allowance for losses (2013 - $55.3 and 2012 - $52.8)	4,528.1	4,259.1
Due from PACCAR and affiliates	1,367.3	1,049.8
Equipment on operating leases, net of accumulated depreciation (2013 - $455.8 and 2012 - $355.3)	1,188.5	1,042.2
Other assets	130.2	160.0
TOTAL ASSETS	7,247.6	6,537.7
LIABILITIES
Accounts payable, accrued expenses and other	211.2	170.3
Due to PACCAR and affiliates	259.4	253.1
Commercial paper	1,149.8	1,819.6
Medium-term notes	3,849.9	2,701.1
Deferred taxes and other liabilities	832.3	755.7
TOTAL LIABILITIES	6,302.6	5,699.8
STOCKHOLDER'S EQUITY
Preferred stock, par value $100 per share, 6% noncumulative and nonvoting, 450,000 shares authorized, 310,000 shares issued and outstanding	31.0	31.0
Common Stock, par value $100 per share, 200,000 shares authorized, 145,000 shares issued and outstanding	14.5	14.5
Additional paid-in capital	107.6	104.7
Retained earnings	794.6	695.4
Accumulated other comprehensive loss	(2.7)	(7.7)
TOTAL STOCKHOLDER'S EQUITY	945.0	837.9
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$ 7,247.6	$ 6,537.7

XML

Transactions with PACCAR and Affiliates

12 Months Ended

Dec. 31, 2013

Transactions with PACCAR and Affiliates

NOTE D – TRANSACTIONS WITH PACCAR AND AFFILIATES

The Company and PACCAR are parties to a Support Agreement that obligates PACCAR to provide, when required, financial assistance to the Company to ensure that the Company maintains a ratio of net earnings available for fixed charges to fixed charges (as defined in the Support Agreement) of at least 1.25 to 1 for any fiscal year. The required ratio for the years ended December 31, 2013, 2012 and 2011 was met without assistance. The Support Agreement also requires PACCAR to own, directly or indirectly, all outstanding voting stock of the Company.

Periodically, the Company makes loans to, borrows from and has intercompany transactions with PACCAR. In addition, the Company periodically loans funds to certain foreign finance and leasing affiliates of PACCAR. These various affiliates have Support Agreements with PACCAR, similar to the Company’s Support Agreement with PACCAR. The foreign affiliates operate in the United Kingdom, the Netherlands, Mexico, Canada and Australia, and any resulting currency exposure is fully hedged. The foreign affiliates primarily provide financing and leasing of PACCAR-manufactured trucks and related equipment sold through the DAF, Kenworth, and Peterbilt independent dealer networks in Europe, Mexico, Canada and Australia. The Company will not make loans to the foreign affiliates in excess of the equivalent of $500.0 United States dollars, unless the amount in excess of such limit is guaranteed by PACCAR. The Company periodically reviews the funding alternatives for these affiliates, and these limits may be revised in the future.

Loans due to PACCAR were $218.0 at December 31, 2013 and December 31, 2012. The $218.0 loan due to PACCAR had an effective fixed interest rate of 6.88% and was repaid upon maturity in February 2014. The Company recognized interest expense of $15.0, $16.9 and $26.9 in 2013, 2012 and 2011, respectively, on the borrowings from PACCAR. Cash paid for interest on these borrowings was $15.0, $20.7 and $26.4 in 2013, 2012 and 2011, respectively.

Amounts outstanding at December 31, 2013 and 2012, including foreign finance affiliates operating in the United Kingdom, the Netherlands, Mexico, Canada and Australia, are summarized below:

	December 31		December 31
	2013		2012
Due from PACCAR and affiliates
Loans due from PACCAR	$	653.6	$	428.4
Loans due from foreign finance affiliates		429.6		360.6
Direct financing leases due from affiliate		14.7		13.9
Tax-related receivable due from PACCAR		193.7		181.0
Receivables		75.7		65.9
Total	$	1,367.3	$	1,049.8
Due to PACCAR and affiliates
Loans due to PACCAR	$	218.0	$	218.0
Payables		41.4		35.1
Total	$	259.4	$	253.1

The Company is included in the consolidated federal income tax return of PACCAR. The tax-related receivable due from PACCAR represented the related tax benefit to be settled with PACCAR.

The Company provides direct financing leases to dealer locations operated by an affiliate of PACCAR.

PACCAR has issued letters of credit as of December 31, 2013 in the amount of $4.3 on behalf of the Company to guarantee funds for payment to insured franchisees and customers for any future insurance losses.

PACCAR charges the Company for certain administrative services it provides. These costs were charged to the Company based upon the Company’s specific use of the services and PACCAR’s cost. Management considers these charges reasonable and similar to the costs that would be incurred if the Company were on a stand-alone basis. Fees for services of $2.9, $3.0 and $1.9 in 2013, 2012 and 2011, respectively, were charged to the Company. The Company records the investment as additional paid-in capital.

There were no dividends declared or paid during 2013 and 2012. Dividends in the amount of $117.0 were declared and paid to PACCAR during 2011.

The Company’s principal office is located in the corporate headquarters building of PACCAR (owned by PACCAR). The Company also leases office space from another facility owned by PACCAR and five facilities leased by PACCAR.

The Company’s employees and PACCAR employees are covered by a defined benefit pension plan sponsored by PACCAR. The assets and liabilities of the plan are reflected on the balance sheets of PACCAR. PACCAR contributes to the plan and allocates the expenses to the Company based principally on the number of eligible plan participants. Expenses for the defined benefit pension plan were $2.9, $2.7 and $1.9 for the years 2013, 2012 and 2011, respectively, and are included in selling, general and administrative expenses.

The Company’s employees and PACCAR employees are also covered by a defined contribution plan, sponsored by PACCAR. Expenses are based on the actual contribution made on the behalf of participating employees. Expenses incurred by the Company for the defined contribution plan were $1.1, $1.2 and $1.0 for the years 2013, 2012 and 2011, respectively, and are included in selling, general and administrative expenses.

XML

Equipment On Operating Leases

12 Months Ended

Dec. 31, 2013

Equipment On Operating Leases

NOTE C – EQUIPMENT ON OPERATING LEASES

Terms of operating leases at origination and the related depreciation, generally range from three to five years. The total future annual minimum rental payments to be received for equipment on non-cancelable operating leases beginning January 1, 2014 of $609.2 are due as follows: $243.6 in 2014; $179.6 in 2015; $118.4 in 2016; $55.5 in 2017; $12.1 in 2018 and beyond. Depreciation expense related to equipment on operating leases was $208.8, $179.5 and $147.1 in 2013, 2012 and 2011, respectively. Substantially all equipment on operating leases is manufactured by PACCAR.

XML

Transactions with PACCAR and Affiliates (Tables)

12 Months Ended

Dec. 31, 2013

Amounts Outstanding Including Foreign Finance Affiliates

Amounts outstanding at December 31, 2013 and 2012, including foreign finance affiliates operating in the United Kingdom, the Netherlands, Mexico, Canada and Australia, are summarized below:

	December 31		December 31
	2013		2012
Due from PACCAR and affiliates
Loans due from PACCAR	$	653.6	$	428.4
Loans due from foreign finance affiliates		429.6		360.6
Direct financing leases due from affiliate		14.7		13.9
Tax-related receivable due from PACCAR		193.7		181.0
Receivables		75.7		65.9
Total	$	1,367.3	$	1,049.8
Due to PACCAR and affiliates
Loans due to PACCAR	$	218.0	$	218.0
Payables		41.4		35.1
Total	$	259.4	$	253.1

XML

Quarterly Results

12 Months Ended

Dec. 31, 2013

Quarterly Results

NOTE K – QUARTERLY RESULTS (UNAUDITED)

	QUARTER
	First		Second		Third		Fourth
2013
Interest and other revenue	$	140.9	$	132.6	$	135.7	$	135.8
Income before income taxes		36.6		36.1		40.9		45.8
Net income		22.7		22.4		25.4		28.7
2012
Interest and other revenue	$	117.0	$	121.1	$	128.7	$	143.7
Income before income taxes		31.8		34.4		35.5		31.9
Net income		19.0		20.7		22.0		22.0

XML

Borrowings

12 Months Ended

Dec. 31, 2013

Borrowings

NOTE G – BORROWINGS

Borrowings are summarized as follows:

	2013				2012
	Effective Rate		Borrowings		Effective Rate		Borrowings
Commercial paper		.60%	$	1,149.8		.54%	$	1,819.6
Fixed rate medium-term notes		1.10%		2,749.9		1.26%		2,001.1
Floating rate medium-term notes		.81%		1,100.0		1.09%		700.0
		.93%	$	4,999.7		.94%	$	4,520.7

The fixed-rate medium-term notes of $2,749.9 at December 31, 2013 include a decrease in fair value of $.1 for notes designated as fair value hedges. The fixed-rate medium-term notes of $2,001.1 at December 31, 2012 include an increase in fair value of $1.1 for notes designated as fair value hedges. The effective rate is the weighted average rate as of December 31, 2013 and includes the effects of interest rate swap agreements.

The annual principal maturities of the borrowings are as follows:

	Commercial		Term
Beginning January 1, 2014	Paper		Notes
2014	$	1,149.8	$	800.0
2015				1,050.0
2016				1,250.0
2017				500.0
2018				250.0
	$	1,149.8	$	3,850.0

Interest expense on borrowings amounted to $44.2, $42.3, and $37.1 for 2013, 2012 and 2011, respectively. Interest paid on borrowings was $40.8 in 2013, $39.0 in 2012, and $40.0 in 2011.

In November 2012, the Company filed a shelf registration statement under the Securities Act of 1933. The registration expires in the fourth quarter of 2015 and does not limit the principal amount of debt securities that may be issued during the period. The total notional amount of medium-term notes outstanding as of December 31, 2013 was $3,850.0.

See “Note D – Transactions with PACCAR and Affiliates” for discussion of borrowings from PACCAR.

XML

Assets and Liabilities Fair Value Measurements (Detail) (Fair Value, Inputs, Level 2, USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Fair Value Measurements, Nonrecurring
Assets:
Impaired loans, net of specific reserves (2013 - $.1 and 2012 - $.2)	$ 7.0	$ 4.9
Used trucks held for sale	8.7	12.4
Derivative contracts	1.6
Fair Value, Assets and Liabilities Measured on Recurring Basis
Liabilities:
Derivative contracts	$ 6.0	$ 12.5

XML

Stockholder's Equity

12 Months Ended

Dec. 31, 2013

Stockholder's Equity

NOTE E – STOCKHOLDER’S EQUITY

Accumulated other comprehensive loss (AOCI) of $2.7 and $7.7 at December 31, 2013 and 2012, respectively, is comprised of the unrealized net loss on derivative contracts, net of taxes. Changes in and reclassifications out of AOCI during the twelve months ended December 31, 2013 are as follows:

	Unrealized Gains (Losses) on Derivative Contracts
Balance at December 31, 2012	$	(7.7	)
Amounts recorded in AOCI
Unrealized gain on derivative contracts
Income tax effect
Amounts reclassified out of AOCI
Interest and other borrowing costs		8.0
Income taxes		(3.0	)
Net other comprehensive income		5.0
Balance at December 31, 2013	$	(2.7	)

XML

Derivative Financial Instruments

12 Months Ended

Dec. 31, 2013

Derivative Financial Instruments

NOTE F – DERIVATIVE FINANCIAL INSTRUMENTS

Interest rate contracts 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. The Company is exposed to interest 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. The notional amount is used to measure the volume of these contracts and does not represent exposure to credit loss. In the event of default by the counterparty, the risk in these transactions is the fair value of replacing the interest rate contract at current market rates.

At December 31, 2013, the notional amount of these contracts totaled $1,243.0 with amounts expiring over the next seven years. Notional maturities for all interest rate contracts are $601.0 for 2014, $325.0 for 2015, $272.0 for 2016, $20.0 for 2017, and $25.0 for 2020. The majority of these contracts are floating to fixed rate swaps that effectively convert an equivalent amount of commercial paper and other variable rate debt to fixed rates.

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

As of December 31, 2013
Interest-rate contracts	Gross Amount Recognized in Balance Sheets		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Other assets	$	1.6	$	(.2	)	$	1.4
Liabilities
Accounts payable, accrued expenses and other	$	6.0	$	(.2	)	$	5.8
As of December 31, 2012
Interest-rate contracts	Gross Amount Recognized in Balance Sheets		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Other assets
Liabilities
Accounts payable, accrued expenses and other	$	12.5				$	12.5

Cash Flow Hedges

Substantially all of the Company’s interest rate contracts have been designated as cash flow hedges. The Company uses regression analysis to assess the effectiveness of hedges. The change in variable cash flows method or the hypothetical derivative method is used to measure ineffectiveness of interest rate contracts designated as cash flow hedges. Changes in the fair value of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive loss to the extent such hedges are considered effective. Gains or losses on the ineffective portion of cash flow hedges are recognized in current earnings and were immaterial for the years ended December 31, 2013, 2012 and 2011. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows is 6.4 years.

Amounts in accumulated other comprehensive loss are reclassified into net income in the same period in which the hedged transaction affects earnings. Net realized gains and losses from interest rate contracts are recognized as an adjustment to interest expense. As of December 31, 2013, accumulated other comprehensive loss was $2.7, net of tax, and $3.5, net of tax, is expected to be reclassified to interest expense in the following 12 months. 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 interest rate risk management strategy.

The following table presents the pre-tax effects of derivative instruments designated as cash flow hedges recognized in other comprehensive income (OCI) and expenses reclassified from AOCI into income.

	Year ended December 31
	2013		2012			2011
Pre-tax loss on derivative contracts recognized in OCI			$	(9.5	)	$	(16.5	)
Expenses reclassified from AOCI into
Interest and other borrowing expenses	$	8.0	$	9.9		$	19.8

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 expense or (income) recognized in earnings related to fair value hedges was included in Interest and other borrowing costs in the Statements of Income as follows:

	Year ended December 31
	2013	2012			2011
Interest-rate swaps		$	(2.3	)	$	.1
Term notes		$	2.1		$	(.3	)

In addition, the net interest income from the settlement of the interest-rate swaps was nil, $.9 and $.1 for the year ended December 31, 2013, 2012 and 2011 is reported in interest and other borrowing costs.

XML

Credit Arrangements

12 Months Ended

Dec. 31, 2013

Credit Arrangements

NOTE H – CREDIT ARRANGEMENTS

The Company participated with PACCAR and certain other PACCAR affiliates in syndicated credit facilities of $3,000.0 at December 31, 2013. Of this amount, $1,000.0 expires in June 2014, $1,000.0 expires in 2017 and $1,000.0 expires in 2018. PACCAR and the Company intend to replace these credit facilities as they expire with facilities of similar amounts.

Credit facilities of $1,868.3 are available for use by the Company and/or PACCAR and certain other PACCAR affiliates. The remaining $1,131.7 is allocated to the following subsidiaries: $374.5 is available for use by PACCAR’s United Kingdom financial subsidiary, $346.4 is available for use by PACCAR’s Canadian financial subsidiary, $230.6 is available for use by PACCAR’s Mexican financial subsidiaries and $180.2 is available for use by PACCAR’s Australian financial subsidiary. These credit facilities are used to provide backup liquidity for the Company’s commercial paper and maturing medium-term notes. The Company is liable only for its own borrowings under these credit facilities. There were no borrowings under these credit facilities in the years ended December 31, 2013 and 2012.

XML

Quarterly Results (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Quarterly Results Of Operations [Line Items]
Interest and other revenue	$ 135.8	$ 135.7	$ 132.6	$ 140.9	$ 143.7	$ 128.7	$ 121.1	$ 117.0	$ 545.0	$ 510.5	$ 429.8
Income before income taxes	45.8	40.9	36.1	36.6	31.9	35.5	34.4	31.8	159.4	133.6	112.4
Net income	$ 28.7	$ 25.4	$ 22.4	$ 22.7	$ 22.0	$ 22.0	$ 20.7	$ 19.0	$ 99.2	$ 83.7	$ 68.0

XML

Carrying Amount and Fair Value for Fixed-Rate Loans and Debt (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Assets:
Loans due from affiliates	$ 1,367.3	$ 1,049.8
Liabilities:
Due to PACCAR	218.0	218.0
Foreign Finance Affiliates
Assets:
Loans due from affiliates	429.6	360.6
Carrying Amount
Assets:
Fixed rate loans	2,393.1	2,175.6
Liabilities:
Fixed rate debt	2,749.9	2,001.1
Carrying Amount | PACCAR
Assets:
Loans due from affiliates	550.5	314.4
Liabilities:
Due to PACCAR	218.0	218.0
Carrying Amount | Foreign Finance Affiliates
Assets:
Loans due from affiliates	216.0	216.6
Fair Value
Assets:
Fixed rate loans	2,413.9	2,221.7
Liabilities:
Fixed rate debt	2,774.4	2,023.0
Fair Value | PACCAR
Assets:
Loans due from affiliates	554.5	315.3
Liabilities:
Due to PACCAR	219.7	233.6
Fair Value | Foreign Finance Affiliates
Assets:
Loans due from affiliates	$ 218.4	$ 217.0

XML

Allowance for Credit Losses (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	$ 52.8		$ 58.8		$ 61.7
Provision for losses	2.3		9.1		2.5
Charge offs	(6.5)		(16.9)		(8.6)
Recoveries	6.7		1.8		3.2
Ending Balance	55.3		52.8		58.8
Dealer | Wholesale
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	3.9		3.4		1.5
Provision for losses	(0.9)		0.5		1.9
Ending Balance	3.0		3.9		3.4
Dealer | Retail
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	10.7		9.9		8.2
Provision for losses	0.8		0.8		1.7
Ending Balance	11.5		10.7		9.9
Customer Retail
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	37.1		44.4		50.8
Provision for losses	2.6		7.6		(1.2)
Charge offs	(6.4)		(16.7)		(8.4)
Recoveries	6.7		1.8		3.2
Ending Balance	40.0		37.1		44.4
Other
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1.1	[1]	1.1	[1]	1.2	[1]
Provision for losses	(0.2)	[1]	0.2	[1]	0.1	[1]
Charge offs	(0.1)	[1]	(0.2)	[1]	(0.2)	[1]
Ending Balance	$ 0.8	[1]	$ 1.1	[1]	$ 1.1	[1]

[1] Operating lease and other trade receivables

XML

(Income) or Expense Recognized in Earnings Related to Fair Value Hedges (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Interest Rate Swap
Derivative [Line Items]
(Income) or expense recognized in earnings related to fair value hedges	$ (2.3)	$ 0.1
Term Loan
Derivative [Line Items]
(Income) or expense recognized in earnings related to fair value hedges	$ 2.1	$ (0.3)

XML

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2013

Description of Operations and Basis of Presentation

Description of Operations and Basis of Presentation: PACCAR Financial Corp. (the “Company”), is a wholly-owned subsidiary of PACCAR Inc (“PACCAR”). The Company primarily provides financing of PACCAR-manufactured trucks and related equipment sold by authorized dealers. The Company also finances dealer inventories of transportation equipment and franchises Kenworth and Peterbilt dealerships to engage in full-service and finance leasing. The operations of the Company are fundamentally affected by its relationship with PACCAR.

Due to the nature of the Company’s business, customers are concentrated in the transportation industry throughout the United States. Generally, all receivables are collateralized by the equipment being financed. The risk of credit losses related to this concentration has been considered in establishing the allowance for losses.

Use of Estimates

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Finance and Other Receivables

Finance and Other Receivables:

Loans – Loans represent fixed- or floating-rate loans to customers or dealers collateralized by the vehicles purchased and are recorded at amortized cost.

Finance leases – Finance leases are retail direct financing leases and sales-type finance leases, which lease equipment to retail customers and dealers. These leases are reported as the sum of minimum lease payments receivable and estimated residual value of the property subject to the contracts, reduced by unearned interest.

Dealer wholesale financing – Dealer wholesale financing is floating-rate wholesale loans to Kenworth and Peterbilt dealers for new and used trucks and are recorded at amortized cost. The loans are collateralized by the trucks being financed.

Operating lease and other trade receivables – Operating lease and other trade receivables are monthly rentals due on operating leases, interest on loans and other amounts due within one year in the normal course of business.

Allowance for Losses

Allowance for 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 as a normal part of its 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. 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.

On average, modifications extended contractual terms by four months in both 2013 and 2012 and did not have a significant effect on the weighted average term or interest rate of the total portfolio at December 31, 2013 or 2012.

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 loans and finance leases for credit reasons and grants a concession, the modifications are classified as troubled debt restructurings (TDRs). 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.

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 direct 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 monthly reporting of the wholesale dealer’s financial condition, conducts periodic audits of the trucks being financed and, in many cases, obtains personal 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 36 to 60 months 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 impairment. Finance receivables which 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 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 recorded investment, 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.

For finance receivables that are not individually impaired, the Company collectively evaluates and determines the general allowance for credit losses for both retail and wholesale receivables based on historical loss information, using past-due account data and current market conditions. Information used includes assumptions regarding the likelihood of collecting current and past-due accounts, repossession rates, 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 its portfolio 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 as probable based on current market conditions and other factors impacting the creditworthiness of the Company’s borrowers and their ability to repay. 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 incurred 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 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 (generally 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 partial charge offs. The charge off is determined by comparing the fair value of the collateral, less cost to sell, to the recorded investment.

Revenue Recognition

Revenue Recognition: 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, generally 36 to 60 months, using the straight-line method which approximates the interest method. For operating leases, rental revenue is recognized on a straight-line basis over the lease term.

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 December 31, 2013 or December 31, 2012. 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.

The Company recognizes revenue on the sale of used trucks acquired from PACCAR truck division customers as part of new truck sales packages when the used trucks are invoiced and delivered to a customer.

Equipment on Operating Leases

Equipment on Operating Leases: Equipment on operating leases is recorded at cost and is depreciated on the straight-line basis to its estimated residual value. Residual values are reviewed regularly and adjusted if market conditions warrant.

Restricted Cash

Restricted Cash: Restricted cash consists of cash proceeds from the sale of eligible assets set aside for the acquisition of replacement assets under the Company’s like-kind exchange tax program. Restricted cash is classified within Other assets. The changes in restricted cash balances are reflected as an investing activity in the Statements of Cash Flows as they relate to sales and purchases of revenue earning assets.

Derivative Financial Instruments

Derivative Financial Instruments: Derivative financial instruments are used to hedge exposures to fluctuations in interest rates. Certain derivative instruments designated as either cash flow hedges or fair value hedges are subject to hedge accounting. Derivative instruments that are not subject to hedge accounting are held as economic hedges. 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 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. The Company has elected not to offset derivative positions in the balance sheet with the same counterparty under the same master netting agreements. The Company is not required to post or receive collateral under these agreements. Exposure limits and minimum credit ratings are used to minimize the risks of counterparty default. The Company had no material exposures to default at December 31, 2013.

The Company uses regression analysis to assess effectiveness of interest-rate contracts on a quarterly basis. All components of the derivative instrument’s gain or loss are included in the assessment of hedge effectiveness. Gains or losses on the ineffective portion of cash flow hedges are recognized currently in earnings. Hedge accounting is discontinued prospectively when the Company determines that a derivative financial instrument has ceased to be a highly effective hedge.

Income Taxes

Income Taxes: The Company is included in the consolidated federal income tax return of PACCAR. Federal income taxes for the Company are determined on a separate return basis, and any related tax liability is paid by the Company to PACCAR and any related tax benefit is paid by PACCAR to the Company. State income taxes, where the Company files combined tax returns with PACCAR, are determined on a blended statutory rate, which is substantially the same as the rate computed on a separate return basis. As of December 31, 2013, the United States Internal Revenue Service has completed examinations of PACCAR’s tax returns for all years through 2010. PACCAR’s tax returns remain subject to examination in most jurisdictions for the years ranging from 2010 through 2013.

Preferred Stock

Preferred Stock: The Company’s Articles of Incorporation provide that the 6%, noncumulative, nonvoting preferred stock (100% owned by PACCAR) is redeemable only at the option of the Company’s Board of Directors.

New Accounting Pronouncements

New Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This ASU requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if available under the applicable tax jurisdiction. The ASU is effective for annual periods beginning after December 15, 2013 and interim periods within those annual periods. The Company does not expect the adoption of the ASU to have an impact on its financial statements.

In July 2013, the FASB issued ASU 2013-10, Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes. The amendments in this ASU permit the Fed Funds Effective Swap Rate (OIS) to be used as a U.S. benchmark interest rate for hedge accounting purposes in addition to U.S. government and London Interbank Offered Rate. The amendments also remove the restriction on using different benchmark rates for similar hedges. The ASU is effective for qualifying new or redesignated hedging relationships entered on or after July 17, 2013. The Company adopted ASU 2013-10 in the third quarter of 2013; the implementation of this amendment did not have an impact on the Company’s financial statements.

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This ASU requires disclosure of additional information about reclassification adjustments from other comprehensive income. The ASU is effective for annual periods beginning on or after January 1, 2013 and interim periods within those annual periods. The Company adopted ASU 2013-02 in the first quarter of 2013. The implementation of this amendment resulted in additional disclosures (see “Note E – Stockholder’s Equity”), but did not have an impact on the Company’s financial statements.

In January 2013, the FASB issued ASU 2013-01 Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, an update of ASU 2012-11, Disclosures about Offsetting Assets and Liabilities. The ASUs require entities with derivatives, repurchase agreements and securities borrowing and lending transactions that are either offset on the balance sheet, or subject to a master netting arrangement, to provide expanded disclosures about the nature of the rights of offset. The updated ASU is effective for annual periods beginning on or after January 1, 2013 and interim periods within those annual periods. The Company adopted ASU 2013-01 in the first quarter of 2013. The implementation of this amendment resulted in additional disclosures (see “Note F – Derivative Financial Instruments”), but did not have an impact on the Company’s financial statements.

XML

Borrowings (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Borrowings

Borrowings are summarized as follows:

	2013				2012
	Effective Rate		Borrowings		Effective Rate		Borrowings
Commercial paper		.60%	$	1,149.8		.54%	$	1,819.6
Fixed rate medium-term notes		1.10%		2,749.9		1.26%		2,001.1
Floating rate medium-term notes		.81%		1,100.0		1.09%		700.0
		.93%	$	4,999.7		.94%	$	4,520.7

Summary Of Annual Maturities

The annual principal maturities of the borrowings are as follows:

	Commercial		Term
Beginning January 1, 2014	Paper		Notes
2014	$	1,149.8	$	800.0
2015				1,050.0
2016				1,250.0
2017				500.0
2018				250.0
	$	1,149.8	$	3,850.0

XML

Balance Sheet Classification, Fair Value and Gross and Net Amounts of Derivative Financial Instruments (Detail) (Interest Rate Contract, USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Other Assets
Derivatives, Fair Value [Line Items]
Gross Amount Recognized in Balance Sheets	$ 1.6
Gross Amounts Not Offset in Financial Instruments	(0.2)
Pro Forma Net Amount	1.4
Accounts Payable and Accrued Liabilities
Derivatives, Fair Value [Line Items]
Gross Amount Recognized in Balance Sheets	6.0	12.5
Gross Amounts Not Offset in Financial Instruments	(0.2)
Pro Forma Net Amount	$ 5.8	$ 12.5

XML

Pre and Post Modification Recorded Investment (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Financing Receivable, Modifications [Line Items]
Pre-Modification	$ 2.6	$ 29.5
Post-Modification	2.6	21.3
Customer Retail | Fleet
Financing Receivable, Modifications [Line Items]
Pre-Modification	2.3	29.2
Post-Modification	2.3	21.0
Customer Retail | Owner/Operator
Financing Receivable, Modifications [Line Items]
Pre-Modification	0.3	0.3
Post-Modification	$ 0.3	$ 0.3

XML

Balance Sheets (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Finance and other receivables, allowance for losses	$ 55.3	$ 52.8
Equipment on operating leases, accumulated depreciation	$ 455.8	$ 355.3
Preferred stock, par value	$ 100	$ 100
Preferred stock, noncumulative and nonvoting	6.00%	6.00%
Preferred stock, shares authorized	450,000	450,000
Preferred stock, shares issued	310,000	310,000
Preferred stock, shares outstanding	310,000	310,000
Common Stock, par value	$ 100	$ 100
Common Stock, shares authorized	200,000	200,000
Common Stock, shares issued	145,000	145,000
Common Stock, shares outstanding	145,000	145,000

XML

Finance and Other Receivables

12 Months Ended

Dec. 31, 2013

Finance and Other Receivables

NOTE B – FINANCE AND OTHER RECEIVABLES

The Company’s finance and other receivables are as follows:

	December 31			December 31
	2013			2012
Retail loans	$	2,442.5		$	2,242.1
Retail direct financing leases		1,577.0			1,451.8
Dealer wholesale financing		578.0			641.7
Dealer master notes		105.1			92.4
Operating lease and other receivables		36.7			32.4
Unearned interest - finance leases		(155.9	)		(148.5	)
Total portfolio	$	4,583.4		$	4,311.9
Less allowance for losses:
Loans and leases		(51.5	)		(47.8	)
Dealer wholesale financing		(3.0	)		(3.9	)
Operating lease and other trade receivables		(.8	)		(1.1	)
Total portfolio, net of allowance for losses	$	4,528.1		$	4,259.1

Annual minimum payments due on loans and leases are as follows:

Beginning January 1, 2014	Loans		Finance leases
2014	$	765.9	$	359.0
2015		628.3		334.3
2016		526.7		324.3
2017		375.5		246.9
2018		211.6		152.6
Thereafter		39.6		108.5

Estimated residual values included with finance leases amounted to $51.4 in 2013 and $47.6 in 2012. Repayment experience indicates substantially all of dealer wholesale financing will be repaid within one year. In addition, experience indicates that some loans, leases and other finance receivables will be paid prior to contract maturity, while others may be extended or modified.

For the following credit quality disclosures, finance receivables are classified as dealer wholesale, dealer retail and customer retail segments. 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. Each individual class has similar measurement attributes, risk characteristics and common methods to monitor and assess credit risk.

Allowance for Credit Losses

The allowance for credit losses is summarized as follows:

	2013
	Dealer					Customer Retail
	Wholesale			Retail					Other*			Total
Balance at January 1	$	3.9		$	10.7	$	37.1		$	1.1		$	52.8
Provision for losses		(.9	)		.8		2.6			(.2	)		2.3
Charge offs							(6.4	)		(.1	)		(6.5	)
Recoveries							6.7						6.7
Balance at December 31	$	3.0		$	11.5	$	40.0		$	0.8		$	55.3
	2012
	Dealer					Customer Retail
	Wholesale			Retail					Other*			Total
Balance at January 1	$	3.4		$	9.9	$	44.4		$	1.1		$	58.8
Provision for losses		.5			.8		7.6			.2			9.1
Charge offs							(16.7	)		(.2	)		(16.9	)
Recoveries							1.8						1.8
Balance at December 31	$	3.9		$	10.7	$	37.1		$	1.1		$	52.8
	2011
	Dealer					Customer Retail
	Wholesale			Retail					Other*			Total
Balance at January 1	$	1.5		$	8.2	$	50.8		$	1.2		$	61.7
Provision for losses		1.9			1.7		(1.2	)		.1			2.5
Charge offs							(8.4	)		(.2	)		(8.6	)
Recoveries							3.2						3.2
Balance at December 31	$	3.4		$	9.9	$	44.4		$	1.1		$	58.8

* Operating lease and other trade receivables

Information regarding finance receivables evaluated collectively and individually is as follows:

	Dealer						Customer
At December 31, 2013	Wholesale			Retail			Retail			Total
Recorded investment for impaired finance receivables evaluated individually							$	19.1		$	19.1
Allowance for finance receivables evaluated individually							$	(2.0	)	$	(2.0	)
Recorded investment for finance receivables evaluated collectively	$	578.0		$	1,318.8		$	2,630.8		$	4,527.6
Allowance for finance receivables evaluated collectively	$	(3.0	)	$	(11.5	)	$	(38.0	)	$	(52.5	)
	Dealer						Customer
At December 31, 2012	Wholesale			Retail			Retail			Total
Recorded investment for impaired finance receivables evaluated individually				$	.1		$	18.5		$	18.6
Allowance for finance receivables evaluated individually							$	(2.1	)	$	(2.1	)
Recorded investment for finance receivables evaluated collectively	$	641.7		$	1,213.4		$	2,405.8		$	4,260.9
Allowance for finance receivables evaluated collectively	$	(3.9	)	$	(10.7	)	$	(35.0	)	$	(49.6	)

The recorded investment for finance receivables that are on non-accrual status is as follows:

	December 31		December 31
	2013		2012
Dealer:
Wholesale
Retail			$	0.1
Customer Retail:
Fleet	$	17.0		14.0
Owner/Operator		2.1		4.5
	$	19.1	$	18.6

Impaired Loans

Impaired loans with no specific reserve were $7.3 and $2.9 at December 31, 2013 and 2012, respectively. Impaired loans with a specific reserve are summarized below. The impaired loans with specific reserve represent the unpaid principal balance. The recorded investment of impaired loans as of December 31, 2013 and 2012 was not significantly different than the unpaid principal balance.

	Dealer		Customer Retail
						Owner/
At December 31, 2013	Wholesale	Retail	Fleet			Operator			Total
Impaired loans with specific reserve			$	6.5		$	1.9		$	8.4
Associated allowance				(1.0	)	$	(.5	)		(1.5	)
Net carrying amount of impaired loans			$	5.5		$	1.4		$	6.9
Average recorded investment			$	13.6		$	3.1		$	16.7
	Dealer		Customer Retail
						Owner/
At December 31, 2012	Wholesale	Retail	Fleet			Operator			Total
Impaired loans with specific reserve			$	9.4		$	4.3		$	13.7
Associated allowance				(.7	)		(1.1	)		(1.8	)
Net carrying amount of impaired loans			$	8.7		$	3.2		$	11.9
Average recorded investment			$	11.3		$	5.4		$	16.7

During the period the loans above were considered impaired, interest income recognized on a cash basis was as follows:

	2013		2012		2011
Interest income recognized:
Dealer:
Wholesale
Retail
Customer Retail:
Fleet	$	1.4	$	.5	$	.6
Owner/Operator		.5		.5		.6
	$	1.9	$	1.0	$	1.2

Credit Quality

The Company’s customers are principally concentrated in the transportation industry in the United States. The Company’s portfolio is diversified over a large number of customers and dealers with no single customer or dealer balance representing over 10% of the total portfolio. The Company has contractual arrangements with one customer, Swift Transportation Corporation, that account for 11.4% ,10.8% and 11.6% of total Interest and Other Revenue for the periods ended December 31, 2013, 2012 and 2011, respectively. 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.

The table below summarizes the Company’s finance receivables by credit quality indicator and portfolio class.

	Dealer				Customer Retail
							Owner/
At December 31, 2013	Wholesale		Retail		Fleet		Operator		Total
Performing	$	576.9	$	1,313.9	$	2,264.5	$	365.1	$	4,520.4
Watch		1.1		5.0		.9		.2		7.2
At-risk						17.0		2.1		19.1
Total	$	578.0	$	1,318.9	$	2,282.4	$	367.4	$	4,546.7
	Dealer				Customer Retail
							Owner/
At December 31, 2012	Wholesale		Retail		Fleet		Operator		Total
Performing	$	641.7	$	1,207.1	$	2,008.8	$	385.7	$	4,243.3
Watch				6.3		10.9		.4		17.6
At-risk				.1		14.0		4.5		18.6
Total	$	641.7	$	1,213.5	$	2,033.7	$	390.6	$	4,279.5

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

	Dealer				Customer Retail
							Owner/
At December 31, 2013	Wholesale		Retail		Fleet		Operator		Total
Current and up to 30 days past-due	$	578.0	$	1,318.9	$	2,270.7	$	365.7	$	4,533.3
31 – 60 days past-due						1.4		.5		1.9
Greater than 60 days past-due						10.3		1.2		11.5
Total	$	578.0	$	1,318.9	$	2,282.4	$	367.4	$	4,546.7
	Dealer				Customer Retail
							Owner/
At December 31, 2012	Wholesale		Retail		Fleet		Operator		Total
Current and up to 30 days past-due	$	641.7	$	1,213.5	$	2,025.9	$	386.9	$	4,268.0
31 – 60 days past-due						2.2		.7		2.9
Greater than 60 days past-due						5.6		3.0		8.6
Total	$	641.7	$	1,213.5	$	2,033.7	$	390.6	$	4,279.5

Troubled Debt Restructurings

The Company modifies loans and finance leases as a normal part of its operations. The Company’s modifications typically resulted in granting more time to pay the contractual amounts owed and charging a fee and additional interest for the modification. The Company rarely forgives principal or accrued interest and may require principal and accrued interest payments at the time of modification. When the Company modifies loans and finance leases for customers in financial difficulty and grants a concession, the modifications are classified as TDRs. The effect on the allowance for credit losses from such modifications was not significant at December 31, 2013 and 2012.

For the year ended December 31, 2013, there were no changes in the recorded investment for loans and leases modified as TDRs. For the year ended December 31, 2012, the pre-modification and post-modification recorded investments were $29.5 and $21.3, respectively. The decrease in the post-modification recorded investment in 2012 reflects a contract modification of one large customer that resulted in a finance receivable charge off of $8.2.

At modification date, the pre-and post-modification recorded investment balances are as follows:

	2013				2012
	Recorded Investment				Recorded Investment
	Pre-Modification		Post-Modification		Pre-Modification		Post-Modification
Fleet	$	2.3	$	2.3	$	29.2	$	21.0
Owner/Operator		.3		.3		.3		.3
	$	2.6	$	2.6	$	29.5	$	21.3

The balance of TDRs was $6.1 and $11.0 at December 31, 2013 and 2012, respectively.

The post-modification recorded investment of finance receivables modified as TDRs during the previous twelve months that subsequently defaulted (i.e. became more than 30 days past-due) during the period by portfolio class are as follows:

	Year ended December 31
	2013		2012
Fleet	$	.2	$	3.6
Owner/Operator
	$	.2	$	3.6

The TDRs that subsequently defaulted did not significantly impact the Company’s allowance for losses at December 31, 2013.

Repossessions

When the Company determines that a customer is not likely to meet its contractual commitments, the Company repossesses the vehicles which serve as collateral for loans, finance leases and equipment on operating lease. The Company records the vehicles as used truck inventory which is included in Other assets on the Balance Sheets. The balance of repossessed inventory at December 31, 2013 and 2012 was $4.3 and $10.4, respectively. Proceeds from the sales of repossessed assets were $19.5, $11.3 and $16.9 for the years ended December 31, 2013, 2012 and 2011, respectively. These amounts are included in Proceeds from disposal of equipment on the Statements of Cash Flows. Write downs of repossessed equipment on operating leases are recorded as impairments and included in Depreciation and other rental expense on the Statements of Income.

Unamortized Loan Origination Costs

The unamortized loan origination costs at December 31, 2013 and 2012 were $12.8 and $12.2, respectively. These amounts are included in Other assets on the Balance Sheets.

XML

Reconciliation Between Statutory Federal Income Tax Rate to Actual Provision for Income Taxes (Detail)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Rate Reconciliation [Line Items]
Statutory rate	35.00%	35.00%	35.00%
Effect of State	3.50%	1.90%	3.90%
Effect of Other	(0.70%)	0.50%	0.60%
Effective income tax rate	37.80%	37.40%	39.50%

XML

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Components Of Provision for Income Taxes

The provision for income taxes consisted of the following:

	Year ended December 31
	2013			2012			2011
Current (benefit) provision
Federal	$	(9.7	)	$	(1.4	)	$	(163.5	)
State		(1.9	)		5.2			.1
	$	(11.6	)	$	3.8		$	(163.4	)
Deferred provision
Federal	$	60.9		$	42.9		$	201.1
State		10.9			3.2			6.7
	$	71.8		$	46.1		$	207.8
Total provision for income taxes	$	60.2		$	49.9		$	44.4

Reconciliation Of Statutory and Effective Income Tax Rates

A reconciliation between the statutory federal income tax rate to the actual provision for income taxes is shown below:

	Year ended December 31
	2013		2012		2011
Statutory rate		35.0%		35.0%		35.0%
Effect of:
State		3.5%		1.9%		3.9%
Other		(.7%)		.5%		.6%
		37.8%		37.4%		39.5%

Deferred Tax Assets and Liabilities

The tax effects of temporary differences representing deferred tax assets and liabilities are as follows:

	As of December 31
	2013			2012
Deferred tax assets:
Allowance for losses on receivables	$	21.1		$	20.0
Derivative liability		2.2			4.7
Other		9.6			12.1
Deferred tax liabilities:
Asset capitalization and depreciation	$	(835.8	)	$	(765.0	)
Net deferred tax liability	$	(802.9	)	$	(728.2	)

XML

Interest Income Recognized (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Financing Receivable, Impaired [Line Items]
Interest income recognized on a cash basis	$ 1.9	$ 1.0	$ 1.2
Customer Retail | Fleet
Financing Receivable, Impaired [Line Items]
Interest income recognized on a cash basis	1.4	0.5	0.6
Customer Retail | Owner/Operator
Financing Receivable, Impaired [Line Items]
Interest income recognized on a cash basis	$ 0.5	$ 0.5	$ 0.6

XML

Commitments And Contingencies

12 Months Ended

Dec. 31, 2013

Commitments And Contingencies

NOTE L – COMMITMENTS AND CONTINGENCIES

The Company is a party to various routine legal proceedings incidental to its business involving the collection of accounts and other matters. The Company believes that any reasonably possible range of losses with respect to these matters in addition to amounts accrued is not material to the Company’s financial statements.

At December 31, 2013, the Company has loan and lease commitments of $311.1 expiring within one year. These commitments represent commitments to fund new retail loan and lease contracts.