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-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GGFfk9/ntBkBzm8HubMq0ZTxiaFAJmBo8ETM7bWFHgbXJiOIxAIL+hRlkU5o/+k1 ndrsFZVBV6SINaPkzxs/Og== /in/edgar/work/0000912057-00-049185/0000912057-00-049185.txt : 20001114 0000912057-00-049185.hdr.sgml : 20001114 ACCESSION NUMBER: 0000912057-00-049185 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PACCAR INC CENTRAL INDEX KEY: 0000075362 STANDARD INDUSTRIAL CLASSIFICATION: [3711 ] IRS NUMBER: 910351110 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14817 FILM NUMBER: 761537 BUSINESS ADDRESS: STREET 1: 777 106TH AVE NE STREET 2: PO BOX 1518 CITY: BELLEVUE STATE: WA ZIP: 98004 BUSINESS PHONE: 4254557383 MAIL ADDRESS: STREET 1: 777 106TH AVENUE NE STREET 2: PO BOX 1518 CITY: BELLEVUE STATE: WA ZIP: 98004 FORMER COMPANY: FORMER CONFORMED NAME: PACIFIC CAR & FOUNDRY CO DATE OF NAME CHANGE: 19720707 10-Q 1 a2030352z10-q.htm FORM 10-Q Prepared by MERRILL CORPORATION www.edgaradvantage.com QuickLinks -- Click here to rapidly navigate through this document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2000

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

For the transition period from to

Commission File No. 0-6394

PACCAR Inc
(Exact name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		91-0351110 (I.R.S. Employer Identification No.)
777 - 106th Ave. N.E., Bellevue, WA (Address of principal executive offices)		98004 (Zip Code)

(425) 468-7400
(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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 at least the past 90 days. Yes /x/ No / /

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

Common Stock, $1 par value—76,465,693 shares as of October 31, 2000

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Consolidated Statements of Income
(Unaudited)
(Millions except per share data)

		Three Months Ended September 30				Nine Months Ended September 30
		2000		1999		2000			1999
TRUCK AND OTHER:
Net Sales		$	1,647.0	$	2,174.8	$	5,893.2		$	6,424.6
Costs and Expenses
Cost of sales			1,462.1		1,823.7		5,118.6			5,422.1
Selling, general and administrative			92.7		152.4		304.7			443.0
Interest and other, net			.2		.1		(8.9	)		8.7

			1,555.0		1,976.2		5,414.4			5,873.8

Truck and Other Income
	Before Income Taxes		92.0		198.6		478.8			550.8
FINANCIAL SERVICES:
Revenues			128.3		95.3		354.3			269.1
Costs and Expenses
Interest and other			81.6		57.0		222.3			159.1
Selling, general and administrative			15.8		12.5		45.4			39.4
Provision for losses on receivables			10.5		5.9		27.8			13.5

			107.9		75.4		295.5			212.0

Financial Services Income
	Before Income Taxes		20.4		19.9		58.8			57.1
Investment income			11.8		9.3		33.7			26.5

Total Income Before Income Taxes			124.2		227.8		571.3			634.4
Income taxes			31.1		83.1		192.2			230.7

Net Income		$	93.1	$	144.7	$	379.1		$	403.7

Net Income Per Share:
Basic		$	1.22	$	1.85	$	4.93		$	5.16

Diluted		$	1.21	$	1.83	$	4.90		$	5.12

Weighted Average Number of Basic Shares Outstanding			76.4		78.3		76.8			78.2

Dividends declared and paid per share		$	.30	$	.20	$	.90		$	.60

See Notes to Consolidated Financial Statements.

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Consolidated Balance Sheets

(Millions of Dollars)

	September 30 2000			December 31 1999*
	(Unaudited)
ASSETS
TRUCK AND OTHER:
Current Assets
Cash and cash equivalents	$	421.0		$	511.5
Trade and other receivables, net of allowance for losses		546.4			570.2
Marketable securities		496.9			530.7
Inventories		329.4			384.5
Deferred taxes and other current assets		124.7			122.1

Total Truck and Other Current Assets		1,918.4			2,119.0
Equipment on lease, goodwill and other		350.9			356.2
Property, plant and equipment, net		839.1			875.3

Total Truck and Other Assets		3,108.4			3,350.5

FINANCIAL SERVICES:
Cash and cash equivalents		23.9			16.9
Finance and other receivables, net of allowance for losses		5,340.6			4,766.5
Less unearned interest		(362.3	)		(326.3	)

		4,978.3			4,440.2
Equipment on operating leases, net		130.3			91.2
Other assets		38.1			34.2

Total Financial Services Assets		5,170.6			4,582.5

	$	8,279.0		$	7,933.0

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

	September 30 2000			December 31 1999*
	(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
TRUCK AND OTHER:
Current Liabilities
Accounts payable and accrued expenses	$	1,125.1		$	1,259.5
Current portion of long-term debt and commercial paper		61.6			70.1
Dividend payable					125.3
Income taxes		62.5			78.9

Total Truck and Other Current Liabilities		1,249.2			1,533.8
Long-term debt		121.2			182.2
Other, including deferred taxes		443.5			395.7

Total Truck and Other Liabilities		1,813.9			2,111.7

FINANCIAL SERVICES:
Accounts payable, accrued expenses and other		82.7			114.9
Commercial paper and bank loans		2,253.0			2,113.4
Long-term debt		1,670.6			1,292.3
Deferred income taxes and other		200.8			190.1

Total Financial Services Liabilities		4,207.1			3,710.7

STOCKHOLDERS' EQUITY
Preferred stock, no par value: Authorized 1.0 million shares, none issued
Common stock, $1 par value: Authorized 200.0 million shares, 78.5 million shares issued(including 2.0 million treasury shares)		78.5			78.3
Additional paid-in capital		633.5			626.9
Retained earnings		1,890.7			1,580.9
Less treasury shares—at cost		(89.2	)
Accumulated other comprehensive loss		(255.5	)		(175.5	)

Total Stockholders' Equity		2,258.0			2,110.6

	$	8,279.0		$	7,933.0

*: The December 31, 1999 consolidated balance sheet has been derived from audited financial statements.

See Notes to Consolidated Financial Statements.

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

(Millions of Dollars)

			Nine Months Ended September 30
			2000			1999
OPERATING ACTIVITIES:
Net income			$	379.1		$	403.7
Items in net income not affecting cash:
	Depreciation and amortization			95.1			101.0
	Provision for losses on financial services receivables			27.8			13.5
	Gain on sale of property, plant and equipment			(7.4	)		(.3	)
	Deferred tax asset valuation allowance adjustment			(12.4	)
	Other			9.4			(24.0	)
Change in operating assets and liabilities:
	(Increase) decrease in assets other than cash and equivalents:
		Receivables		(55.1	)		(71.4	)
		Inventories		29.4			24.9
		Other		(4.9	)		(6.4	)
	Increase (decrease) in liabilities:
		Accounts payable and accrued expenses		(59.7	)		195.9
		Other		(32.6	)		(1.8	)

Net Cash Provided by Operating Activities				368.7			635.1
INVESTING ACTIVITIES:
Finance receivables originated				(1,837.0	)		(1,706.2	)
Collections on finance receivables				1,325.2			1,197.5
Net increase in wholesale receivables				(26.5	)		(157.8	)
Marketable securities purchased				(206.7	)		(780.6	)
Marketable securities sales and maturities				240.8			710.9
Acquisition of property, plant and equipment				(82.6	)		(170.3	)
Acquisition of equipment for operating leases				(61.0	)		(33.3	)
Proceeds from asset disposals				29.1			45.7
Other				(8.8	)		(18.1	)

Net Cash Used in Investing Activities				(627.5	)		(912.2	)
FINANCING ACTIVITIES:
Cash dividends				(194.6	)		(172.3	)
Purchase of treasury shares				(89.2	)
Stock option transactions				5.5			4.5
Net increase in commercial paper and bank loans				157.2			220.7
Proceeds of long-term debt				804.6			670.6
Payment of long-term debt				(474.1	)		(371.4	)

Net Cash Provided by Financing Activities				209.4			352.1
Effect of exchange rate changes on cash				(34.1	)		(13.1	)

Net (Decrease) Increase in Cash and Equivalents				(83.5	)		61.9
Cash and cash equivalents at beginning of period				528.4			432.4

Cash and cash equivalents at end of period			$	444.9		$	494.3

See Notes to Consolidated Financial Statements.

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Millions of Dollars)

NOTE A—Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three- and nine-month periods ended September 30, 2000, are not necessarily indicative of the results that may be expected for the year ended December 31, 2000. For further information, refer to the consolidated financial statements and footnotes included in the Company's annual report on Form 10-K for the year ended December 31, 1999.

Reclassifications: Certain prior year amounts have been reclassified to conform to the 2000 presentation.

NOTE B—New Accounting Pronouncements

On January 1, 2001, the Company will adopt Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities" as amended. SFAS 133 requires that all derivatives be recognized, at their fair value, as either assets or liabilities on the balance sheet. Accounting for subsequent changes in a derivative's fair value is dependent, among other criteria, on whether it is being used for hedging purposes. At the beginning of the initial period of adoption, SFAS 133 prescribes the use of a cumulative effect adjustment. The Company expects that the effect of the adjustment, which will primarily impact comprehensive income, assets and liabilities, will not be significant. The cumulative effect adjustment on net income, if any, is also not expected to be significant. However, the cumulative effect of adoption cannot be accurately calculated until actual year-end market conditions are known.

The Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) 101, "Revenue Recognition in Financial Statements," in December 1999. The SAB summarizes certain of the SEC staff's views in applying generally accepted accounting principles to revenue recognition in financial statements. In June 2000, the SEC issued SAB 101B, which delays the implementation date of SAB 101 until no later than the fourth quarter of fiscal years beginning after December 15, 1999. The Company does not expect that adoption of this SAB will have a significant impact on its financial statements.

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(In Millions, Except Share Amounts)

NOTE C—Inventories

	September 30 2000			December 31 1999
	(Unaudited)
Inventories at cost:
Finished products	$	215.6		$	203.4
Work in process and raw materials		239.2			305.8

		454.8			509.2
Less LIFO reserve		(125.4	)		(124.7	)

	$	329.4		$	384.5

Under the LIFO method of accounting (used for approximately 44% of September 30, 2000, inventories), an actual valuation can be made only at the end of each year based on year-end inventory levels and costs. Accordingly, interim valuations are based on management's estimates of those year-end amounts. Because inventory levels and costs are subject to many factors beyond management's control, the present estimates are subject to the final year-end LIFO inventory valuation.

NOTE D—Stockholders' Equity

Additional Stock Issuances

On January 1, 2000, approximately 348,000 additional stock options previously granted to PACCAR employees became exercisable. For the nine months ended September 30, 2000, PACCAR issued an additional 213,000 common shares under terms of deferred compensation, employee stock option and nonemployee directors stock compensation arrangements.

Diluted Earnings Per Share (Unaudited)

The following table shows the additional shares added to basic shares outstanding to calculate diluted earnings per share. These amounts represent primarily the dilutive effect of stock options outstanding.

	Three Months Ended September 30		Nine Months Ended September 30
	2000	1999	2000	1999
Additional shares	444,000	559,000	469,000	549,000

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Millions of Dollars)

Comprehensive Income (Unaudited)

The components of comprehensive income, net of any related tax, are as follows:

	Three Months Ended September 30						Nine Months Ended September 30
	2000			1999			2000			1999
Net income	$	93.1		$	144.7		$	379.1		$	403.7
Foreign currency translation adjustments		(40.3	)		12.9			(73.4	)		(20.5	)
Net unrealized gains (losses) on securities		.7			(.7	)		(6.6	)		(3.0	)

Total comprehensive income	$	53.5		$	156.9		$	299.1		$	380.2

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss is comprised of the following:

	September 30 2000			December 31 1999
	(Unaudited)
Accumulated foreign currency translation adjustments	$	(242.5	)	$	(169.1	)
Net unrealized losses on securities		(13.0	)		(6.4	)

Net accumulated other comprehensive loss	$	(255.5	)	$	(175.5	)

Other

During the first half of 2000, PACCAR completed a stock repurchase plan announced in 1999 to purchase two million shares of its outstanding common stock at a total cost of $89.2. All shares were purchased at prevailing market prices.

In September 2000, the board of directors approved a plan to purchase up to an additional two million shares of outstanding common stock. At September 30, 2000, no shares had been purchased under the new plan.

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(Millions of Dollars)

NOTE E—Segment Information (Unaudited)

			Three Months Ended September 30				Nine Months Ended September 30
			2000		1999		2000		1999
Revenues:
	Net sales
		Truck	$	1,632.1	$	2,098.5	$	5,848.9	$	6,207.1
		All other		14.9		76.3		44.3		217.5

				1,647.0		2,174.8		5,893.2		6,424.6
Financial Services revenues				128.3		95.3		354.3		269.1

			$	1,775.3	$	2,270.1	$	6,247.5	$	6,693.7

Income before taxes:
	Truck		$	80.6	$	192.1	$	448.2	$	542.3
	All other			11.4		6.5		30.6		8.5

				92.0		198.6		478.8		550.8
	Financial Services			20.4		19.9		58.8		57.1
	Investment income			11.8		9.3		33.7		26.5

			$	124.2	$	227.8	$	571.3	$	634.4

Included in "All other" is PACCAR's industrial winch manufacturing business and other sales, income and expense not attributable to a reportable segment, including a portion of corporate expense. In 1999, this caption also included the Company's retail auto parts business, which was sold in the fourth quarter of 1999.

NOTE F—Other

Interest expense on Truck and Other external borrowings amounted to $2.8 and $9.6 for the three and nine months ended September 30, 2000, compared to $3.8 and $10.1 for the three and nine months ended September 30, 1999.

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

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

RESULTS OF OPERATIONS:

PACCAR's net income for the third quarter ended September 30, 2000 was $93.1 million compared to $144.7 million for the same period a year ago. Net income for the third quarter and first nine months of 2000 included a $12.4 million benefit resulting from the adjustment of a deferred tax asset valuation allowance related to higher expected utilization of net operating loss (NOL) carryforwards at a European subsidiary. Earnings before the NOL benefit were $80.7 million. Consolidated net sales for the third quarter of 2000 totaled $1.6 billion, compared to $2.2 billion for the same period last year. Third quarter results of operations in both 1999 and 2000 were negatively impacted by the traditional summer holiday factory closures in Europe.

For the first nine months of 2000, PACCAR reported net income of $379.1 million compared to $403.7 million in 1999. Nine-month earnings for 2000 before the NOL benefit were $366.7 million. For the first nine months of 2000, consolidated net sales were $5.9 billion versus $6.4 billion for the comparable period in 1999.

Truck segment net sales in the third quarter of 2000 were $1.6 billion, 22% below the $2.1 billion in the third quarter of 1999. Third quarter Truck segment income before taxes of $80.6 million decreased 58% compared to the $192.1 million earned in the year-earlier period. For the first nine months of 2000, Truck segment net sales of $5.8 billion were 6% below the prior year. Year to date income before taxes reflected a 17% decrease to $448.2 million compared to the $542.3 million earned in 1999.

Truck markets in the United States and Canada were affected by slower growth in freight shipments, higher fuel prices and interest rates, and high levels of new and used truck inventories. Recent industry order volumes for new trucks in the United States and Canada declined to their lowest levels on an annualized basis since 1996. As a result, PACCAR reduced build rates at its U.S. and Canadian facilities. Further build rate reductions may be necessary if new truck order volumes remain at their current levels. Lower build rates and increased competitive pricing pressures reduced Truck and Other gross margin percentages in 2000 compared to the corresponding periods in 1999. The gross margin percentage was also reduced from 1999 levels due to the sale of the auto parts business in the fourth quarter of last year.

The European truck market remains strong. DAF build rates were higher in the third quarter and first nine months of 2000 than in the year-earlier periods. However, the favorable effects of increased deliveries on sales and operating results were mostly offset by the negative effect of a weak euro. DAF plans to increase build rates again in December to meet strong customer demand.

Selling, general and administrative (SG&A) expense declined significantly this year due to two factors. Last year, $24 million and $70 million of SG&A expense in the third quarter and first nine months respectively, were incurred by the auto parts business which was sold in 1999. The balance of the decline is primarily attributable to the Company's aggressive pursuit of cost management strategies in the current year.

Financial Services segment pretax income increased 3% to $20.4 million and $58.8 million for the third quarter and first nine months of 2000 compared to the year-earlier periods. Consolidated net loan and lease portfolios grew by 20% compared to the net balance at September 30, 1999. The larger portfolio contributed to a 35% and 32% increase in Financial Services revenues for third quarter and first nine months 2000 compared to 1999. The benefits of higher finance margins were largely offset by higher loan loss provisions. The provision for losses was $10.5 million for the third quarter of 2000 compared to $5.9 million in 1999 and $27.8 million for the first nine months of 2000 compared to $13.5 million last year due to higher credit losses in the U.S. and Canada as well as growth in the overall portfolio. Higher fuel costs continued to impact operating margins for many truck operators. This contributed to a higher level of past dues and repossessions for PACCAR's U.S. finance subsidiary. Declines in used truck prices further increased credit losses.

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

LIQUIDITY AND CAPITAL RESOURCES:

PACCAR's ratio of Truck and Other current assets to current liabilities at September 30, 2000 moved to 1.54 from 1.38 at December 31, 1999.

The decrease in net cash provided by operating activities compared to the prior year is primarily attributable to reductions in accounts payable and accrued expenses consistent with changes in business volumes in the U.S. and Canada, as well as to differences in the timing of payments. In the first nine months of 2000, PACCAR used cash from operating activities, marketable securities maturities and sales, and cash reserves to pay the special year-end and regular quarterly cash dividends, to make net capital additions, to fund financial services lending activities in excess of outside borrowings and to repurchase 2 million shares of its stock. Capital additions in 1999 included expenditures for the Company's truck plant at Ste. Therese Canada. The effect of exchange rate changes on cash in both years is primarily attributable to changes in the euro in relation to the U.S. dollar.

In September, 2000, PACCAR announced that its Board of Directors approved a plan to purchase an additional two million shares of its outstanding common stock. Purchases will be made from time to time on the open market. At September 30, 2000, no purchases had been made under the plan.

In March 2000, PACCAR's largest financial services subsidiary, PACCAR Financial Corp. (PFC), completed a shelf registration under the Securities Act of 1933 to issue up to $2.5 billion of senior debt securities to the public. At the end of September 2000, $600 million of such securities had been issued. PFC also completed a $1.5 billion bank syndicated credit facility at the beginning of the third quarter of 2000 to provide liquidity to its commercial paper program. At September 30, 2000 PACCAR had total unused lines of credit of $1.5 billion.

Other information on liquidity and sources of capital as presented in the 1999 Annual Report to Stockholders continues to be relevant.

INCOME TAXES:

PACCAR's effective tax rate decreased from approximately 36% in 1999 to 34% for the first nine months and 25% for the third quarter of 2000 primarily due to a $12.4 million benefit arising from higher expected utilization of NOL carryforwards at a European subsidiary acquired in 1998. Continued strong industry demand in Europe and the successful implementation of PACCAR's manufacturing strategy there, combined with changes in the Company's operating structure and other positive operating indicators has reduced the uncertainty regarding expectations of the subsidiary's longer-term profitability.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the Company's market risk during the nine months ended September 30, 2000. For additional information, refer to Item 7a as presented in the 1999 Annual Report to Stockholders.

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

PART II—OTHER INFORMATION

For Items 1, 2 and 3, there was no reportable information for any of the three months ended September 30, 2000. Reportable information in response to Item 4 was previously reported in the quarterly Report on Form 10-Q for the quarter ended June 30, 2000.

ITEM 5. OTHER INFORMATION

Effective September 18, 2000 Wells Fargo Bank Minnesota, N.A. was appointed transfer agent, and registrar.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits. Any exhibits filed herewith are listed in the accompanying index to exhibits.

(b) No reports on Form 8-K have been filed for the quarter ended September 30, 2000.

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

SIGNATURE

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

		PACCAR Inc (Registrant)
	By	/s/ G. D. HATCHEL G. D. Hatchel Vice President and Controller (Authorized Officer and Chief Accounting Officer)
Date November 13, 2000

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

INDEX TO EXHIBITS

Exhibit (in order of assigned index numbers)

3

Articles of incorporation and bylaws:

(a): PACCAR Inc Certificate of Incorporation, as amended to April 29, 1997 (incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended March 31, 1997).
(b): PACCAR Inc Bylaws, as amended to April 26, 1994 (incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended March 31, 1994).

4

Instruments defining the rights of security holders, including indentures:

(a): Rights agreement dated as of December 10, 1998 between PACCAR Inc and First Chicago Trust Company of New York setting forth the terms of the Series A Junior Participating Preferred Stock, no par value per share (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K of PACCAR Inc dated December 21, 1998).
(b): Amendment Number 1 to rights agreement dated as of December 10, 1998 between PACCAR Inc and First Chicago Trust Company of New York appointing Wells Fargo Bank N.A. as successor rights agent, effective as of the close of business September 15, 2000.
(c): Indenture for Senior Debt Securities dated as of December 1, 1983, and first Supplemental Indenture dated as of June 19, 1989, between PACCAR Financial Corp. and Citibank, N.A., Trustee (incorporated by reference to Exhibit 4.1 of the Annual Report on Form 10-K of PACCAR Financial Corp. dated March 26, 1984, File Number 0-12553 and Exhibit 4.2 to PACCAR Financial Corp.'s registration statement on Form S-3 dated June 23, 1989, Registration No. 33-29434).
(d): Forms of Medium-Term Note, Series H (incorporated by reference to Exhibits 4.3A and 4.3B to PACCAR Financial Corp.'s Registration Statement on Form S-3, dated March 11, 1996, Registration Number 333-01623).

Form of Letter of Representation among PACCAR Financial Corp., Citibank, N.A. and the Depository Trust Company, Series H (incorporated by reference to Exhibit 4.4 to PACCAR Financial Corp.'s Registration Statement on Form S-3 dated March 11, 1996, Registration Number 333-01623).

(e): Forms of Medium-Term Note, Series I (incorporated by reference to Exhibits 4.3A and 4.3B to PACCAR Financial Corp.'s Registration Statement on Form S-3 dated September 10, 1998, Registration Number 333-63153).

Form of Letter of Representation among PACCAR Financial Corp., Citibank, N.A. and the Depository Trust Company, Series I (incorporated by reference to Exhibit 4.5 to PACCAR Financial Corp.'s Registration Statement on Form S-3 dated September 10, 1998, Registration Number 333-63153).

(f): Forms of Medium-Term Note, Series J (incorporated by reference to Exhibits 4.2A and 4.2B to PACCAR Financial Corp.'s Registration Statement on Form S-3 dated March 2, 2000, Registration Number 333-31502).

Form of Letter of Representation among PACCAR Financial Corp., Citibank, N.A. and the Depository Trust Company, Series J (incorporated by reference to Exhibit 4.3 to PACCAR Financial Corp.'s Registration Statement on Form S-3 dated March 2, 2000, Registration Number 333-31502).

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

10

Material contracts:

(a): PACCAR Inc Incentive Compensation Plan (incorporated by reference to Exhibit (10)(a) of the Annual Report on Form 10-K for the year ended December 31, 1980).
(b): Amended and Restated Supplemental Retirement Plan.
(c): 1981 Long Term Incentive Plan (incorporated by reference to Exhibit A of the 1982 Proxy Statement, dated March 25, 1982).
(d): Amendment to 1981 Long Term Incentive Plan (incorporated by reference to Exhibit (10)(a) of the Quarterly Report on Form 10-Q for the quarter ended March 31, 1991).
(e): PACCAR Inc 1991 Long-Term Incentive Plan (incorporated by reference to Exhibit C of the 1997 Proxy Statement, dated March 20, 1997).
(f): Amendment to the PACCAR Inc. 1991 Long-Term Incentive Plan.
(g): Amended and Restated Deferred Incentive Compensation Plan.
(h): PACCAR Inc Senior Executive Incentive Plan (incorporated by reference to Exhibit D of the 1997 Proxy Statement, dated March 20, 1997).
(i): PACCAR Inc Restricted Stock and Deferred Compensation Plan for Non-employee Directors (Incorporated by reference to Appendix A of the 2000 Proxy Statement, dated March 16, 2000).

27

Financial Data Schedule

(a): For the nine months ended September 30, 2000.

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ITEM 1. FINANCIAL STATEMENTS

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

PART II—OTHER INFORMATION

ITEM 5. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

SIGNATURE
INDEX TO EXHIBITS
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EXHIBIT 4 (b)

Amendment No. 1
Appointment of Successor Rights Agent

This Amendment No. 1 is made as of August 31, 2000 with reference to the Rights Agent Agreement Dated as of December 10, 1998 (the "Agreement") between PACCAR Inc, a Delaware Corporation (the Company) and First Chicago Trust Company.

Pursuant to Section 21 of the Agreement the Company has exercised its right to remove First Chicago Trust Company as Rights Agent upon 30 days' notice in writing. The Company appoints Wells Fargo Bank Minnesota N.A. as the successor rights agent ("Successor Rights Agent") to First Chicago Trust Company under the Agreement effective as of the close of business September 15, 2000.

Successor Rights Agent represents that it has reviewed the Agreement, that it is eligible to serve as Successor Rights Agent under Section 21 of the Agreement, that it accepts the appointment to act as agent for the Company and the holders of the Rights and agrees to be bound by the Agreement as if it had been originally named as Rights Agent.

IN WITNESS WHEREOF the parties have caused this Amendment No. 1 to be duly executed and attested, all as of the date and year first above written.

Attest:		PACCAR Inc
By	/s/ BRUCE N. HOLLIDAY Name: Bruce N. Holliday Title: Assistant Secretary	By	/s/ JANICE M. D'AMATO Name: Janice M. D'Amato Title: Corporate Secretary
Attest:		WELLS FARGO BANK MINNESOTA, N.A.
By	/s/ SUZANNE SWITS Name: Suzanne Swits Title: Vice President	By	/s/ BEVERLY ROBINSON Name: Beverly Robinson Title: Assistant Vice President

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Amendment No. 1 Appointment of Successor Rights Agent
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EXHIBIT 10 (b)

PACCAR Inc
Supplemental Retirement Plan

SECTION 1. ESTABLISHMENT AND PURPOSE OF THE PLAN

The PACCAR Inc Supplemental Retirement Plan (the "Supplemental Plan"), as established effective January 1, 1975, by PACCAR Inc, a Delaware corporation (the "Company"), is hereby amended and restated effective January 1, 2000. The sole purpose of the Supplemental Plan is to supplement the benefits of certain employees under the PACCAR Inc Retirement Plan as amended (the "Retirement Plan")

SECTION 2. ELIGIBILITY AND PARTICIPATION

Participation in this Supplemental Plan shall be limited to the following classes of members:

(a): All members of the Retirement Plan who, with the Company's approval, have elected to defer all or any portion of their base salary compensation from the Company;
(b): All members of the Retirement Plan who have elected to participate in the Company's nonqualified deferred compensation arrangement for payment of incentive compensation;
(c): All members of the Retirement Plan whose monthly pension, determined in accordance with the Retirement Plan, would, but for the limitations of Section 415 of the Internal Revenue Code and the maximum benefit limitations of the Retirement Plan, exceed the amount of the monthly pension actually payable to such member under the Retirement Plan after the application of such limitations; and
(d): All members of the Retirement Plan whose monthly pension, determined in accordance with the Retirement Plan, would, but for the limitations of Section 401(a) (17), exceed the amount of the monthly pension actually payable to such member under the Retirement Plan after the application of such limitations.

The term "Participant" includes an employee eligible to participate in this Supplemental Plan by reason of paragraphs (a), (b), (c) and/or (d) above. Employees who are participants solely due to (c) shall be defined as "Excess Plan Participants", and the Plan as it applies to these participants shall be an excess benefit plan as defined in Section 3(36) of ERISA.

SECTION 3. PLAN BENEFITS

(a): Supplemental Commencement Date—The Supplemental Commencement Date is the date the Participant elects to commence benefits from this Supplemental Plan. Eligibility for receiving benefits under this Supplemental Plan are the same as under Article 4 of the Retirement Plan.
(b): Supplemental Form of Payment—The Participant shall elect a Supplemental Form of Payment. This election shall be made from the options described in Article 6.1 of the Retirement Plan and in accordance with the election provisions contained in Section 6.2 of the Retirement Plan. If the Participant elects to receive Supplemental Plan benefits as defined in Section 3(e), the Supplemental Form of Payment must be the same as the form of payment elected under the Retirement Plan.
(c): Total Plan Benefit—The Total Plan Benefit shall equal the monthly pension payment which would be payable to such Participant under Article 5 of the Retirement Plan if the maximum benefit limitations of Section 415 of the Internal Revenue Code and of the Retirement Plan did not apply,

if the includable compensation limitations of Section 401(a) (17) of the Internal Revenue Code did not apply, and if the definition of "salary" in the Retirement Plan included deferred base salary and incentive compensation. Deferred base salary and incentive compensation shall be deemed to be included in salary for the year earned. The Total Plan Benefit shall be calculated assuming commencement on the Supplemental Commencement Date, and adjusted as under Section 6.1 of the Retirement Plan to reflect the Supplemental Form of Payment.

(d): Supplemental Plan Benefits—In general, to the extent that the Total Plan Benefit exceeds a Participant's actual monthly pension payment under the Retirement Plan (the Retirement Plan Benefit), the difference shall be payable from the Supplemental Retirement Plan. At the Supplemental Commencement Date, the participant must request one of three payment options, described in Sections 3(e), 3(f) and 3(g).
(e): The member may request to commence benefits under the Retirement Plan and receive a pension payment from the Supplemental Retirement Plan.

The Retirement Plan Benefit is adjusted to reflect the Supplemental Commencement Date and the Supplemental Form of Payment. The difference between the Total Plan Benefit and the adjusted Retirement Plan Benefit is payable from the Supplemental Retirement Plan, commencing on the Supplemental Commencement Date and payable in the Supplemental Form of Payment.

(f): The member may request to commence benefits under the Retirement Plan and receive a lump sum from the Supplemental Retirement Plan, subject to Section 5(b).

The member receives a lump sum which is equal to the actuarial equivalent present value of the Supplemental Retirement Plan Benefit as defined in Section 3(e).

(g)

The member may request to defer commencement of benefits from the Retirement Plan. The member will receive the Total Plan Benefit from the Supplemental Retirement Plan. Payment of this amount will cease at the earlier of the following:

(1): The month preceding the date the member elects to commence benefits under the Retirement Plan;
(2): The month preceding the date that the member could elect to commence benefits under the Retirement Plan and receive a Retirement Plan Benefit, payable in the same form of payment as under the Supplemental Retirement Plan, at least as large as the Total Plan Benefit; or
(3): The month during which the member turns age 70.

The determination of (2) shall be made annually by PACCAR Inc as soon as the Internal Revenue Service publishes the applicable dollar limitation under Section 415(b) (1) (A) for that year.

If the benefit payment ceases due to (1), a new Supplemental Retirement Benefit shall be calculated. This benefit equals the difference between the Supplemental Plan Benefit previously in payment and the benefit payable under the Retirement Plan commencing on the date the member elected to commence benefits from the Retirement Plan and payable in the Supplemental Form of Payment. This benefit will be payable in the Supplemental Form of Payment.

If the Supplemental Retirement Benefit ceases due to (2), no further Supplemental Retirement Benefit shall be paid.

If the benefit ceases due to (3), a new Supplemental Retirement Benefit shall be calculated equal to the difference between the Supplemental Plan Benefit previously in payment and the benefit payable from the Retirement Plan assuming benefit commencement on the first day of the month following the month in which the member turned age 70 and based on the Supplemental Form of Payment. This

benefit shall be payable in the Supplemental Form of Payment or, at the request of the member, may be payable as a lump sum equal to the actuarial equivalent present value of the remaining Supplemental Plan Benefits, subject to Section 5(b).

SECTION 4. SURVIVORS PENSIONS

(a) Death before benefit commencement.

If the member dies before making an election under Section 3(d), the surviving spouse is eligible to receive a Survivor Pension. The spouse's benefit and options under the Supplemental Retirement Plan shall be determined consistently with Section 3. With respect to the spouse, the Total Plan Benefit shall equal the monthly pension payment which would be payable under Article 7 of the Retirement Plan if the maximum benefit limitations of Section 415 of the Internal Revenue Code and of the Retirement Plan did not apply, the Iincludable compensation limitations of 401(a) (17) of the Internal Revenue Code did not apply, and the definition of salary in the Retirement Plan included deferred base salary and incentive compensation. The spouse's Retirement Plan Benefit shall be the actual monthly pension payable under Article 7 of the Retirement Plan.

(b) Death after benefit commencement.

If the member dies after commencing benefits under Section 3(e), the Survivor Pension shall be determined based on the Supplemental Form of Payment.

If the member dies after receiving a lump sum under Section 3(f), no Survivor Pension shall be paid.

If the member dies after commencing benefits under Section 3(g) and before benefits have commenced from the Retirement Plan, the following Survivor Pension shall be paid:

(1): If the Supplemental Form of Payment is a single life pension, no Survivor Pension shall be paid.
(2): If the Supplemental Form of Payment is a 50% joint and survivor pension, the spouse shall receive the excess, if any, of 50% of the Total Plan Benefit over the monthly pension payable to the spouse under the Retirement Plan. Such payment shall be payable to the spouse for life.
(3): If the Supplemental Form of Payment is a 100% joint and survivor pension, the spouse shall receive the excess, if any, of the Total Plan Benefit over the monthly pension payable under the Retirement Plan. Such payment shall be payable to the spouse for life.

If the member dies after commencing benefits under Section 3(g) and after benefits have commenced from the Retirement Plan, for purposes of the calculations defined in (2) and (3) above, the monthly pension payable to the spouse under the Retirement Plan shall be deemed to be the benefit the spouse would have been eligible for had the member elected to receive the Retirement Plan Benefit in the Supplemental Form of Payment, irrespective of the actual form of payment chosen for the Retirement Plan.

Under (2) and (3) above, instead of receiving a lifetime Supplemental Retirement Plan Benefit, the spouse may elect to defer receipt of the Retirement Plan Benefit until the available Retirement Plan Benefit exceeds the Total Plan Survivor Benefit. Determination of the amount and cessation date of the Supplemental Retirement Plan Benefit shall be consistent with the procedures described in Section 3 (g).

Eligibility for a Survivor Pension shall be based on the requirements in Article 7.1 of the Retirement Plan.

SECTION 5. LUMP SUM PAYMENT

(a): Involuntary.

If a member terminates his employment and the present value of his non-forfeitable accrued benefit in the Supplemental Retirement Plan is $3,500 or less, or if a member dies and the present value of his surviving spouse benefit in the Supplemental Retirement Plan is $3,500 or less, the member (or surviving spouse) will receive the actuarial equivalent present value of the entire non-forfeitable benefit. Such distribution may be made with or without the recipient's consent; provided, no distribution may be made under this paragraph after the member's benefits payments have commenced under this plan. For the purpose of determining present values under this section, the Plan shall use the actuarial assumptions stated in Section 5(c).

If a member terminates employment prior to becoming eligible for early retirement under the Retirement Plan, the Supplemental Retirement Plan accrued benefit for this section shall be defined as the difference between the Total Plan Benefit and the member's accrued benefit in the Retirement Plan, both based on an assumed retirement age of 65 and a straight life form of payment.

If the member terminates his employment after becoming eligible for early retirement under the Retirement Plan, the accrued benefit under the Supplemental Plan for purposes of this section shall equal the difference between the Total Plan Benefit and the member's accrued benefit in the Retirement Plan, both based on an immediate retirement assumption and straight life form of payment.

(b): Under Section 3(f) and 3(g), the member may request to receive a lump sum payment in lieu of monthly benefits under this Plan. Acceptance of such request shall be at the sole discretion of the Company. Such request must be in writing and made before any payments under the Plan commence.
(c): For purposes of calculating lump sums under this Plan, the interest rate used shall be 7% per annum, compounded annually, or the Pension Benefit Guaranty Corporation immediate and deferred interest rates in effect for the month of distribution, whichever produces the greater lump sum. For purposes of calculating lump sums under this Plan in the event of a Change of Control, the interest rate used shall be 0% (zero percent). The assumed mortality table for participants shall be the UP-1984 mortality table. The assumed mortality table for spouses shall be the UP-1984 Mortality Table with ages set back three years.

SECTION 6. FUNDING

The Supplemental Plan shall be unfunded, and Supplemental Plan Benefits shall be paid only from the general assets of the Company.

SECTION 7. ADMINISTRATION

The Supplemental Plan shall be administered by the Company. The Company shall make such rules, interpretations and computations as it may deem appropriate; and any decision with respect to the Supplemental Plan, including (without limitation) any determination of eligibility to participate in the Supplemental Plan and any calculation of Supplemental Plan Benefits shall be within the discretion of the Company. The Company's decision shall be upheld by a court of law unless it is arbitrary and

capricious. To the extent not preempted by the Employee Retirement Income Security Act of 1974 (except Parts 2, 3 and 4 of Title I), this Supplemental Plan shall be construed according to the laws of the State of Washington.

SECTION 8. CLAIMS PROCEDURE

The Company will make all determinations as to the rights of any Employee, Participant, Beneficiary or other person under the terms of this Plan. Any Employee, Participant or Beneficiary, or person claiming under them, may make claim for benefit under this Plan by filing written notice with the Company setting forth the substance of the claim. If a claim is wholly or partially denied, the claimant will have the opportunity to appeal the denial by filing with the Company a written request for review within 60 days after receipt of notice of denial. In making an appeal, the claimant may examine pertinent Plan documents and may submit issues and comments in writing.

Denial of a claim or a decision on review will be made in writing by the Company and delivered to the claimant within 60 days after receipt of the claim or request for review, unless special circumstances require an extension of time for processing the claim or review, in which event the Company's decision must be made as soon as possible thereafter, but not beyond an additional 60 days. If no action on an initial claim is taken within 120 days, the claims will be deemed denied for purposes of permitting the claimant to proceed to the review stage.

The denial of a claim or the decision on review will specify the reasons for the denial or decision and will make reference to the pertinent Plan provisions upon which the denial or decision is based. The denial of a claim will also include a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of the claim review procedure herein described. Valid service of any legal process upon the Company shall constitute service of process upon the Plan.

SECTION 9. AMENDMENT AND TERMINATION

The Company expects to continue the Supplemental Plan indefinitely. Future conditions, however, cannot be foreseen, and the Company shall have the authority to amend or to terminate the Supplemental Plan at any time. In the event of an amendment or termination of the Supplemental Plan, a Participant's Supplemental Plan Benefits shall not be less than the Supplemental Plan Benefits to which the Participant would be entitled if the Participant's employment had terminated immediately prior to such amendment or termination of the Supplemental Plan.

SECTION 10. CHANGE OF CONTROL

(a): "Change of Control" shall mean the happening of any of the following events:

(i) The acquisition by any individual, entity or group (within the meaning of section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 15% or more of either (i) the then outstanding COMMON STOCK (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the COMPANY entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that the following acquisitions shall not constitute a CHANGE OF CONTROL: (a) any acquisition directly from the COMPANY, (b) any acquisition by the COMPANY, (c) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the COMPANY or any corporation controlled by the Company, (d) any acquisition by the natural children and grandchildren of Paul Pigott and Theiline McCone Pigott (the "Immediate Pigott Family"), any trust or foundation to which any of the foregoing has transferred or may transfer securities of the COMPANY, the trusts at Bank America Corporation or its successor, holding outstanding COMMON STOCK for descendants of Paul Pigott and Theiline McCone Pigott, any trust established for the primary benefit of any member of the Immediate Pigott Family or any of their respective heirs or legatees, any trust of which any member of the Immediate Pigott Family serves as a trustee (or any affiliate or associate (within the meaning of Rule 12b-2 promulgated under the Exchange Act) of any of the foregoing) (the "Exempted Interests"), or (e) any acquisition by any corporation pursuant to a transaction described in clauses (A), (B) and (C) of subsection (iii) below;

(ii) Individuals who, as of the date hereof, constitute the BOARD (the "Incumbent Board") cease for any reason to constitute at least a majority of the BOARD; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the COMPANY'S stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the BOARD;

(iii) Approval by the stockholders of the COMPANY of a reorganization, merger, share exchange, or consolidation (a "Business Combination"), in each case unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the outstanding COMPANY COMMON STOCK and outstanding COMPANY voting securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 85% of, respectively, the then outstanding COMMON STOCK and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the COMPANY through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the outstanding COMPANY common stock and outstanding company voting securities, as the case may be, (B) no Person (excluding (1) any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination or (2) the Exempted Interests) beneficially owns, directly or indirectly, 15% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the

members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the BOARD, providing for such Business Combination; or

(iv) Approval by the COMPANY'S stockholders of the (A)a complete liquidation or dissolution of the COMPANY or (B) the sale or other disposition of all or substantially all of the COMPANY'S assets, other than to a corporation with respect to which, following such sale or other disposition, (1) more than 85% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the outstanding COMPANY COMMON STOCK and outstanding COMPANY voting securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding COMPANY COMMON STOCK and Outstanding COMPANY Voting Securities, as the case may be, (2) less than 15% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by any Person (excluding (I) any employee benefit plan (or related trust) of the COMPANY or such corporation or (II) the Exempted Interests), except to the extent that such Person owned 15% or more of the Outstanding COMPANY COMMON STOCK or Outstanding COMPANY Voting Securities prior to the sale or disposition, and (C) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the BOARD, providing for such sale or other disposition of assets of the COMPANY or were elected, appointed or nominated by the BOARD.

(b): Notwithstanding any other provision of the Supplemental Plan to the contrary, in the event of a Change of Control of the Company, each Participant shall immediately be fully vested in the benefits set forth in Section 3 which have accrued through the date of the Change of Control and, upon the Change of Control, each Participant (or his Beneficiary) shall be entitled to a lump sum payment in cash in an amount which is the actuarial equivalent of such accrued benefits (as specified in Section 5(c)), which amount shall be paid within 30 days of the Change of Control.
(c): Section 10 is effective December 21, 1989.

SECTION 11. EMPLOYMENT RIGHTS

Nothing in the Supplemental Plan shall be deemed to give any person any right to remain in the employ of the Company or affect any right of the Company to terminate a person's employment with or without cause.

SECTION 12. FORFEITURE OF PARTICIPANT BENEFITS

Benefits payable under the Plan to a Participant will be forfeited if service with the Company is terminated for cause, which is defined to include any of the following conduct: (1) an act of embezzlement, fraud or theft; (2) deliberate disregard of the rules of the Company or a Subsidiary, (3) unauthorized disclosure of any of the secrets or confidential information of the Company; (4) any conduct which constitutes unfair competition with the Company; or (5) inducing any customers of the Company to breach any contracts with the Company. Benefits shall also be forfeited if, after retirement or after termination of services for reasons other than discharge for cause, a Participant fails or refuses to provide advice and counsel to the Company when reasonably requested to do so. The good faith

determination of the Board of Directors of PACCAR Inc of the existence of facts justifying forfeiture is considered conclusive under this Supplemental Plan.

SECTION 13. NO ALIENATION

Benefits payable under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind, either voluntary or involuntary, including any such liability which is for alimony or other payments for the support of a spouse, former spouse or any other relative, prior to actually being received by the person entitled to the Benefit under the terms of the Plan; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to a Benefit payable hereunder shall be void with the exception of payroll taxes paid on the participant's behalf. The Company shall not in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any person entitled to a Benefit hereunder.

SECTION 14. EXECUTION

PACCAR Inc, by its Chairman and Chief Executive Officer, has executed this Plan on December 22, 1999. Amendments executed on October 10, 2000 and November 7, 2000 have been incorporated into this document

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PACCAR Inc Supplemental Retirement Plan

SECTION 1. ESTABLISHMENT AND PURPOSE OF THE PLAN

SECTION 2. ELIGIBILITY AND PARTICIPATION

SECTION 3. PLAN BENEFITS

SECTION 4. SURVIVORS PENSIONS

SECTION 5. LUMP SUM PAYMENT

SECTION 6. FUNDING

SECTION 7. ADMINISTRATION

SECTION 8. CLAIMS PROCEDURE

SECTION 9. AMENDMENT AND TERMINATION

SECTION 10. CHANGE OF CONTROL

SECTION 11. EMPLOYMENT RIGHTS

SECTION 12. FORFEITURE OF PARTICIPANT BENEFITS

SECTION 13. NO ALIENATION

SECTION 14. EXECUTION

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EXHIBIT 10 (f)

Amendment to the PACCAR Inc 1991 Long-Term Incentive Plan.

Article 17.4 of the Plan is amended as follows:

(a): "Change of Control" shall mean the happening of any of the following events:

i) The acquisition by any individual, entity or group (within the meaning of section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 15% or more of either (i) the then outstanding COMMON STOCK (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the COMPANY entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that the following acquisitions shall not constitute a CHANGE OF CONTROL: (a) any acquisition directly from the COMPANY, (b) any acquisition by the COMPANY, (c) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the COMPANY or any corporation controlled by the Company, (d) any acquisition by the natural children and grandchildren of Paul Pigott and Theiline McCone Pigott (the "Immediate Pigott Family"), any trust or foundation to which any of the foregoing has transferred or may transfer securities of the COMPANY, the trusts at Bank America Corporation or its successor, holding outstanding COMMON STOCK for descendants of Paul Pigott and Theiline McCone Pigott, any trust established for the primary benefit of any member of the Immediate Pigott Family or any of their respective heirs or legatees, any trust of which any member of the Immediate Pigott Family serves as a trustee (or any affiliate or associate (within the meaning of Rule 12b-2 promulgated under the Exchange Act) of any of the foregoing) (the "Exempted Interests"), or (e) any acquisition by any corporation pursuant to a transaction described in clauses (A), (B) and (C) of subsection (iii) below;

EXHIBIT 10 (f)

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EXHIBIT 10(g)

PACCAR Inc
DEFERRED INCENTIVE COMPENSATION PLAN

SECTION 1. ESTABLISHMENT AND PURPOSE.

The Plan was adopted by the Company on November 25, 1991, to provide certain employees with an opportunity to defer payment of their bonuses under the Company's year-end Incentive Compensation Program. The Plan is also intended to establish a method of paying bonus awards that will assist the Company in attracting and retaining employees of outstanding achievement and ability.

SECTION 2. DEFINITIONS.

(a) "Account" means the bookkeeping account established pursuant to Section 6 on behalf of an Executive who elects to participate in the Plan.

(b) "Beneficiary" means the person or persons designated by the Executive or by the Plan to receive payment of the Executive's Income Account in the event of the death of the Executive.

(d) "Bonus Award" means the amount of compensation awarded by the Company to an Executive as a bonus under the Company's year-end Incentive Compensation Program.

(e) "Cause" means (i) an act of embezzlement, fraud or theft, (ii) the deliberate disregard of the rules of the Company or a Subsidiary, (iii) any unauthorized disclosure of any of the secrets or confidential information of the Company or a Subsidiary, (iv) any conduct which constitutes unfair competition with the Company or a Subsidiary or (v) inducing any customers of the Company or a Subsidiary to breach any contracts with the Company or a Subsidiary.

(f) "Company" means PACCAR Inc, a Delaware corporation.

(g) "Committee" means the Compensation Committee of the Board.

(h) "Executive" means an employee of the Company or a Subsidiary who is eligible to participate in the Plan under Section 4.

(i) "Incentive Compensation Program" refers to the incentive plan for executives of PACCAR Inc and its eligible subsidiaries who are in grades 41 and above.

(j) "Permanent and Total Disability" is as defined under PACCAR's Long Term Disability Plan.

(k) "Plan" means this PACCAR Inc Deferred Incentive Compensation Plan, as it may be amended from time to time.

(l) "Service" means employment with the Company or any Subsidiary. A transfer among the Company and its Subsidiaries shall not be considered a termination of Service.

(m) "Subsidiary" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations (other than the last corporation in the unbroken chain) owns stock possessing 50 percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

(n) "Year" means a calendar year.

SECTION 3. ADMINISTRATION.

The Committee shall have the authority to administer the Plan in its sole discretion. To this end, the Committee is authorized to construe and interpret the Plan, to promulgate, amend and rescind rules relating to the implementation of the Plan and to make all other determinations necessary or advisable for the administration of the Plan. Subject to the requirements of applicable law, the Committee may designate persons other than members of the Committee to carry out its responsibilities and may prescribe such conditions and limitations as it may deem appropriate. Any determination, decision or action of the Committee in connection with the construction, interpretation or administration of the Plan shall be final, conclusive and binding upon all persons participating in the Plan and any person validly claiming under or through persons participating in the Plan.

SECTION 4. ELIGIBILITY.

An employee of the Company or of a Subsidiary shall be eligible to participate in the Plan for a Year if he or she:

(a) Is eligible to be considered for a bonus that will have been earned in such Year under the Company's Incentive Compensation Program; and

(b) Has attained age 40 on or before January 1 of such Year.

SECTION 5. ELECTION TO PARTICIPATE IN PLAN.

An Executive may elect to participate in the Plan for a Year by filing with the Committee, on or before December 15 of such Year, a written election to defer his or her Bonus Award earned in such Year. The deferral election will become irrevocable after December 15. The deferral election shall apply solely to the Bonus Award, if any, to be earned in the Year in which the election is filed and shall specify the amount or portion of such Bonus Award that is subject to the election (Deferred Award). The amount of the Bonus Award earned in a given Year shall be determined by the Company in the following year.

SECTION 6. ESTABLISHMENT AND TREATMENT OF ACCOUNT.

In the event a Bonus Award is made to an Executive who has filed a timely deferral election with respect to such Bonus Award, the Company shall establish an Account for the Executive. The Account shall be credited with an amount equal to that portion of the Bonus Award which is not payable currently to the Executive because of the terms of the deferral election. A separate Account shall be maintained for each Bonus Award deferred by an Executive, except as the Company may otherwise determine.

Participants may elect to have their Deferred Award allocated to one or both of the two unfunded accounts described below:

(a) Income Account. Means a bookkeeping entry established on behalf of the Executive who elected to participate in the Plan. A deferred Award shall be credited to the Income Account as of January next following the Year in which such bonus Award was earned. Interest shall be credited on the balance in each Income Account, commencing with the date as of which any amount is credited to the Income Account and continuing up to the close of the calendar quarter immediately preceding the date when the last payment from the Income Account is made. Such interest for each calendar quarter during the deferral period shall be credited at a rate equal to the simple combined average of the monthly Aa Industrial Bond yield average for the immediately preceding calendar quarter, as reported in Moody's Bond Record. Such interest shall be compounded quarterly. Such interest shall become a part of the Income Account and shall be paid at the same time or times as the principal balance of the Income Account.

(b) PACCAR Stock Account. Means a bookkeeping entry established on behalf of the Executive who elected to participate in the Plan. A deferred Award shall be credited to the Stock Account as of January next following the Year in which such bonus Award was earned. The initial account balance will be equal to the number of shares of PACCAR Common Stock that the Deferred Award could have purchased at the average closing market price for the first five (5) business days the market is open in January. Thereafter, any dividends earned will be treated as if those dividends had been invested in additional shares at the closing market price on the date the dividends are paid. Account balances will be adjusted pursuant to Article 10 of the Long Term Incentive Plan.

(c) Statements. As soon as practicable after July 1 of each Year (and after such other dates as the Company may determine), the Company shall prepare and deliver to each participating Executive a written statement showing the balance in his or her Income Account as of the applicable date.

SECTION 7. FORM AND TIME OF PAYMENT ACCOUNT.

Distribution of the Income and/or PACCAR Stock Accounts shall be made at such time or times and in such form as the Committee shall determine in its sole discretion. In order to assist the Committee in making such determinations, the following procedures are established:

(a) Request of Form and Time of Payment. An Executive may elect to receive distribution of the Income and/or PACCAR Stock Account at the time and in the manner described in (i) and (ii) below. For payment to be made or commence prior to leaving the Company, a Payment election form must be completed at the time the Deferral Election is made. Otherwise, elections shall be made by filing the prescribed form with the Committee not later than the earlier of (A) 30 days after the Executive's termination of employment with the Company or (B) December 1 of the year before the year in which distribution is to be made or commence. Distribution will be made in accordance with the Executive's election unless the Committee has disapproved the election or has determined that the distribution shall be made at some other time.

(i) Form of Payment. Payment of an Income Account shall be made in cash, either in a lump sum or in annual installments over a period not in excess of 15 years. The amount of any installment to be paid from an Income Account shall be determined by dividing the balance remaining in such Income Account by the number of installments then remaining to be distributed. Payment of the PACCAR Stock Account will be paid in shares of PACCAR Common Stock at the end of the deferral period. The source of shares for this plan will be the Long Term Incentive Plan.

(ii) Time of Payment. Payment of the Income and/or PACCAR Stock Account shall occur or commence on any January, but not later than the first January after the year in which Executive attains age 70¹/2. In the event an Executive who elects installment payments is reemployed by the Company, all installments will be suspended until the Executive's service ends.

(b) Changing a Request. Any request that an approved method of payment be changed, or any request subsequent to the deferral election for distribution prior to termination is subject to approval by the Committee in its sole and absolute discretion. Such request shall be in writing to the Committee and shall set forth the reasons for the request.

(c) Failing to Request. In the event that an Executive fails to make a timely election pursuant to Section 7 (a), distribution of the Income or Stock Account shall be made in full in the first January following sixty (60) days after the Executive's termination of employment. In such

case, the entire account balance in effect as of the distribution date will be distributed to the Executive.

(d) Committee Guidelines. From time to time, the Committee may establish guidelines for its own use in determining what election made pursuant to Section 7 (a) or (b) above shall be disapproved, but such guidelines shall not in any way limit the Committee's sole discretion to determine the terms and form of distribution of the recipient's Cash Account.

(e) Withholding Taxes. All payments under the Plan shall be subject to reduction to reflect the withholding of applicable taxes.

SECTION 8. EFFECT OF DEATH OF EXECUTIVE.

(a) Distribution of Account. Upon the death of a participating Executive, the amount (if any) remaining in his or her Income and/or Stock Account shall be distributed to his or her Beneficiary. The distribution shall be made at the time(s) and in the form specified in the election filed by the Executive under Section 7, unless the Committee determines in its sole discretion that payment shall be made at an earlier date or in a different form. If the Executive did not file an election under Section 7 prior to his or her death, then the distribution shall be made at the time(s) and in the form determined by the Committee in its sole discretion. If a designated Beneficiary dies before receiving payment of his or her entire share of the Executive's Income and/or Stock Account, then the remaining payments shall be made to such Beneficiary's personal representative.

(b) Designation of Beneficiary. Upon commencement of participation in the Plan, each Executive shall, by filing the prescribed form with the Company, name a person or persons as the Beneficiary who will receive any distribution payable under the Plan in the event of the Executive's death. If the Executive has not named a Beneficiary or if none of the named Beneficiaries survives the Executive, then the Executive's personal representative shall be the Beneficiary. The Executive may change his or her Beneficiary designation from time to time. Any designation of a Beneficiary (or an amendment or revocation thereof) shall be effective only if it is made in writing on the prescribed form and is received by the Company prior to the Executive's death. Any other provision of this Subsection (b) notwithstanding, in the case of a married Executive, any designation of a person other than his or her spouse as the sole primary Beneficiary shall be valid only if the spouse consented to such designation in writing.

SECTION 9. FORFEITURE OF ACCOUNTS.

All of an Executive's Income and/or Stock Accounts shall be forfeited in the event that his or her Service ends because of a discharge for Cause or in the event that he or she, after his or her Service ended for any other reason, fails or refuses to provide advice or counsel to the Company or a Subsidiary when reasonably requested to do so. The Committee's good-faith determination of the existence of facts justifying forfeiture shall be conclusive.

SECTION 10. INCOMPETENCE.

If, in the opinion of the Committee, any individual becomes unable to handle properly any amount payable to such individual under the Plan, then the Committee may make such arrangements for payment on such individual's behalf as it determines will be beneficial to such individual, including (without limitation) payment to such individual's guardian, conservator, spouse or dependent.

SECTION 11. EXECUTIVES' RIGHTS UNSECURED.

The Plan is unfunded. The interest under the Plan of any participating Executive, and such Executive's right to receive a distribution of his or her Income and/or Stock Account, shall be an unsecured claim against the general assets of the Company. The Income and/or Stock Accounts shall be bookkeeping entries only, and no Executive shall have an interest in or claim against any specific asset of the Company pursuant to the Plan.

SECTION 12. NONASSIGNABILITY OF INTERESTS.

The interest and property rights of any Executive under the Plan shall not be subject to option nor be assignable either by voluntary or involuntary assignment or by operation of law, including (without limitation) bankruptcy, garnishment, attachment or other creditor's process, and any act in violation of this Section 12 shall be void.

SECTION 13. LIMITATION OF RIGHTS.

(a) No Right to Bonuses. Nothing in the Plan shall be construed to give any Executive any right to be granted a Bonus Award.

(b) No Right to Employment. Neither the Plan nor the deferral of any Bonus Award, nor any other action taken pursuant to the Plan, shall constitute or be evidence of any agreement or understanding, express or implied, that the Company or a Subsidiary will employ an Executive for any period of time, in any position or at any particular rate of compensation.

SECTION 14. DOMESTIC RELATIONS ORDERS.

The procedures established by the Company for the determination of the qualified status of domestic relations orders and for making distributions under qualified domestic relations orders, as provided in Section 206 (d) of ERISA, shall apply to the Plan.

SECTION 15. CLAIMS AND INQUIRIES.

(a) Application for Benefits. Applications for benefits and inquiries concerning the Plan (or concerning present or future rights to benefits under the Plan) shall be submitted to the Committee in writing. An application for benefits shall be submitted on the prescribed form and shall be signed by the Executive or, in the case of a benefit payable after his or her death, by the Beneficiary.

(b) Denial of Application. In the event that an application for benefits is denied in whole or in part, the Committee shall notify the applicant in writing of the denial and of the right to a review of the denial. The written notice shall set forth, in a manner calculated to be understood by the applicant, specific reasons for the denial, specific references to the provisions of the Plan on which the denial is based, a description of any information or material necessary for the applicant to perfect the application, an explanation of why the material is necessary, and an explanation of the review procedure under the Plan. The written notice shall be given to the applicant within a reasonable period of time (not more than 90 days) after the Committee received the application, unless special circumstances require further time for processing and the applicant is advised of the extension. In no event shall the notice be given more than 180 days after the Committee received the application.

(c) Request for Review. An applicant whose application for benefits was denied in whole or in part, or the applicant's duly authorized representative, may appeal the denial by submitting to the Committee a request for a review of the application within 90 days after receiving written notice of the denial from the Committee. The Committee shall give the applicant or his or her representative an opportunity to review pertinent materials, other than legally privileged documents, in preparing the request for a review. The request for a review shall be in writing and addressed to the Committee. The

request for a review shall set forth all of the grounds on which it is based, all facts in support of the request, and any other matters that the applicant deems pertinent. The Committee may require the applicant to submit such additional facts, documents or other material as it may deem necessary or appropriate in making its review.

(d) Decision on Review. The Committee shall act on each request for an appeal within 60 days after receipt, unless special circumstances require further time for processing and the applicant is advised of the extension. In no event shall the decision on review be rendered more than 120 days after the Committee received the request for a review. The Committee shall give prompt written notice of its decision to the applicant. In the event that the Committee confirms the denial of the application for benefits in whole or in part, the notice shall set forth, in a manner calculated to be understood by the applicant, the specific reasons for the decision and specific references to the provisions of the Plan on which the decision is based.

(e) Rules and Interpretations. The Committee shall adopt such rules, procedures and interpretations of the Plan as it deems necessary or appropriate in carrying out its responsibilities under this Section 15.

(f) Exhaustion of Remedies. No legal action for benefits under the Plan shall be brought unless and until the claimant (i) has submitted a written application for benefits in accordance with Subsection (a) above, (ii) has been notified by the Committee that the application is denied, (iii) has filed a written request for a review of the application in accordance with Subsection (c) above and (iv) has been notified in writing that the Committee has affirmed the denial of the application; provided, however, that legal action may be brought after the Committee has failed to take any action on the claim within the time prescribed by Subsections (b) and (d) above, respectively.

SECTION 16. AMENDMENT OR TERMINATION OF THE PLAN.

The Board or appropriate committee thereof, may amend, suspend or terminate the Plan at any time. In the event of a termination of the Plan, the Income and/or Stock Accounts of participating Executives shall be paid at the time(s) and in the form determined under Sections 7 and 8, unless the Committee prescribes an earlier time or different form for the payment of such Income and/or PACCAR Stock Accounts.

SECTION 17. CHANGE OF CONTROL

In the event of a Change of Control of the Company, as defined in the PACCAR Supplemental Retirement Plan, each Executive shall be entitled to the lump sum payment of his or her Income and/or Stock Account. This amount shall be paid within 30 days of the Change of Control.

SECTION 18. CHOICE OF LAW.

The validity, interpretation, construction and performance of the Plan shall be governed by the Employee Retirement Income Security Act of 1974 and, to the extent they are not preempted, by the laws of the State of Washington.

SECTION 19. EXECUTION.

To record the amendment and restatement of the Plan to read as set forth herein, PACCAR Inc by its Chairman, Compensation Committee, has executed this Plan on December 9, 1999.

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PACCAR Inc DEFERRED INCENTIVE COMPENSATION PLAN

SECTION 1. ESTABLISHMENT AND PURPOSE.

SECTION 2. DEFINITIONS.

SECTION 3. ADMINISTRATION.

SECTION 4. ELIGIBILITY.

SECTION 5. ELECTION TO PARTICIPATE IN PLAN.

SECTION 6. ESTABLISHMENT AND TREATMENT OF ACCOUNT.

SECTION 7. FORM AND TIME OF PAYMENT ACCOUNT.

SECTION 8. EFFECT OF DEATH OF EXECUTIVE.

SECTION 9. FORFEITURE OF ACCOUNTS.

SECTION 10. INCOMPETENCE.

SECTION 11. EXECUTIVES' RIGHTS UNSECURED.

SECTION 12. NONASSIGNABILITY OF INTERESTS.

SECTION 13. LIMITATION OF RIGHTS.

SECTION 14. DOMESTIC RELATIONS ORDERS.

SECTION 15. CLAIMS AND INQUIRIES.

SECTION 16. AMENDMENT OR TERMINATION OF THE PLAN.

SECTION 17. CHANGE OF CONTROL

SECTION 18. CHOICE OF LAW.

SECTION 19. EXECUTION.

EX-27 6 a2030352zex-27.txt EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999, AND THE CONSOLIDATED BALANCE SHEETS, SEPTEMBER 30, 2000, AND DECEMBER 31, 1999, OF PACCAR INC AND SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-2000 SEP-30-2000 444,900 496,900 5,524,700 0 329,400 0 839,100 0 8,279,000 0 1,791,800 0 0 78,500 2,179,500 8,279,000 5,893,200 6,247,500 5,118,600 5,340,900 0 27,800 9,600 571,300 192,200 379,100 0 0 0 379,100 4.93 4.90

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