10-Q

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, 2009

Commission File No. 001-14817

PACCAR Inc

(Exact name of registrant as specified in its charter)

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

(425) 468-7400

(Registrant’s telephone number, including area code)

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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

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

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

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 — 363,508,591 shares as of October 31, 2009

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

INDEX

		Page
PART I. FINANCIAL INFORMATION:
ITEM 1.	FINANCIAL STATEMENTS:
Consolidated Statements of Income— Three and Nine Months Ended September 30, 2009 and 2008 (Unaudited)		3
Consolidated Balance Sheets— September 30, 2009 (Unaudited) and December 31, 2008		4
Condensed Consolidated Statements of Cash Flows— Nine Months Ended September 30, 2009 and 2008 (Unaudited)		6
Notes to Consolidated Financial Statements (Unaudited)		7
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	34
ITEM 4.	CONTROLS AND PROCEDURES	34
PART II. OTHER INFORMATION:
ITEM 1A.	RISK FACTORS	35
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	35
ITEM 6.	EXHIBITS	35
SIGNATURE		36
INDEX TO EXHIBITS		37

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FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Consolidated Statements of Income (Unaudited)	Three Months Ended September 30					Nine Months Ended September 30
(Millions Except Per Share Amounts)	2009			2008		2009			2008
TRUCK AND OTHER:
Net sales and revenues	$	1,758.5		$	3,682.1	$	5,091.2		$	11,085.1
Cost of sales and revenues		1,646.5			3,113.5		4,700.4			9,395.0
Research and development		43.4			88.1		148.5			261.7
Selling, general and administrative		87.4			119.3		255.0			372.9
Curtailment gain		(18.3	)				(66.0	)
Interest and other expense (income), net		5.7			.3		38.8			(1.7	)
		1,764.7			3,321.2		5,076.7			10,027.9
Truck and Other (Loss) Income Before Income Taxes		(6.2	)		360.9		14.5			1,057.2
FINANCIAL SERVICES:
Interest and fees		121.7			174.2		378.5			525.0
Operating lease, rental and other income		120.0			148.6		361.5			445.7
Revenues		241.7			322.8		740.0			970.7
Interest and other borrowing expenses		66.5			102.1		230.8			302.7
Depreciation and other		109.4			113.1		315.8			333.5
Selling, general and administrative		21.1			27.9		63.7			87.0
Provision for losses on receivables		26.6			34.2		80.7			76.0
		223.6			277.3		691.0			799.2
Financial Services Income Before Income Taxes		18.1			45.5		49.0			171.5
Investment income		4.9			22.2		17.8			69.5
Total Income Before Income Taxes		16.8			428.6		81.3			1,298.2
Income taxes		3.8			129.6		15.5			393.4
Net Income	$	13.0		$	299.0	$	65.8		$	904.8
Net Income Per Share:
Basic	$	.04		$	.82	$	.18		$	2.48
Diluted	$	.04		$	.82	$	.18		$	2.47
Weighted Average Common Shares Outstanding:
Basic		363.8			363.0		363.6			364.6
Diluted		365.0			364.8		364.6			366.6
Dividends declared per share	$	.09		$	.18	$	.45		$	.54

See Notes to Consolidated Financial Statements.

-3-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Consolidated Balance Sheets (Millions) ASSETS	September 30 2009		December 31 2008*
	(Unaudited)
TRUCK AND OTHER:
Current Assets
Cash and cash equivalents	$	1,743.9	$	1,899.2
Trade and other receivables, net		655.4		698.7
Marketable debt securities		240.3		175.4
Inventories		629.0		658.1
Deferred taxes and other current assets		256.5		211.7
Total Truck and Other Current Assets		3,525.1		3,643.1
Equipment on operating leases, net		480.8		425.3
Property, plant and equipment, net		1,761.9		1,782.8
Other noncurrent assets		342.3		368.2
Total Truck and Other Assets		6,110.1		6,219.4
FINANCIAL SERVICES:
Cash and cash equivalents		55.3		56.0
Finance and other receivables, net		6,811.3		8,036.4
Equipment on operating leases, net		1,431.4		1,534.8
Other assets		389.3		403.2
Total Financial Services Assets		8,687.3		10,030.4
	$	14,797.4	$	16,249.8

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FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Consolidated Balance Sheets (Millions) LIABILITIES AND STOCKHOLDERS’ EQUITY	September 30 2009			December 31 2008*
	(Unaudited)
TRUCK AND OTHER:
Current Liabilities
Accounts payable and accrued expenses	$	1,505.7		$	1,792.3
Dividend payable					36.3
Total Truck and Other Current Liabilities		1,505.7			1,828.6
Long-term debt		171.9			19.3
Residual value guarantees and deferred revenues		526.2			470.8
Deferred taxes and other liabilities		427.1			636.6
Total Truck and Other Liabilities		2,630.9			2,955.3
FINANCIAL SERVICES:
Accounts payable, accrued expenses and other		258.7			249.2
Commercial paper and bank loans		3,256.5			3,576.2
Term notes		2,941.9			3,889.3
Deferred taxes and other liabilities		676.5			733.1
Total Financial Services Liabilities		7,133.6			8,447.8
STOCKHOLDERS’ EQUITY
Preferred stock, no par value: Authorized 1.0 million shares, none issued
Common stock, $1 par value: Authorized 1.2 billion shares, 363.9 million shares issued		363.9			363.1
Additional paid-in capital		67.1			46.1
Treasury stock - at cost – .41 million shares		(17.4	)		(17.4	)
Retained earnings		4,627.2			4,724.7
Accumulated other comprehensive loss		(7.9	)		(269.8	)
Total Stockholders’ Equity		5,032.9			4,846.7
	$	14,797.4		$	16,249.8

* The December 31, 2008 consolidated balance sheet has been derived from audited financial statements.

See Notes to Consolidated Financial Statements.

-5-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited) (Millions)	Nine Months Ended September 30
	2009			2008
OPERATING ACTIVITIES:
Net income	$	65.8		$	904.8
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization:
Property, plant and equipment		144.7			169.9
Equipment on operating leases and other		342.5			312.3
Provision for losses on financial services receivables		80.7			76.0
Curtailment gain		(66.0	)
Other		(32.2	)		27.9
Pension contributions		(158.7	)		(11.1	)
Change in operating assets and liabilities:
Wholesale receivables on new trucks		495.0			(431.1	)
Sales-type finance leases and dealer direct loans on new trucks		95.5			61.5
Other		(103.3	)		(150.7	)
Net Cash Provided by Operating Activities		864.0			959.5
INVESTING ACTIVITIES:
Retail loans and direct financing leases originated		(1,610.6	)		(1,904.4	)
Collections on retail loans and direct financing leases		2,451.8			2,101.7
Marketable securities purchases		(234.5	)		(546.2	)
Marketable securities sales and maturities		170.3			755.8
Acquisition of property, plant and equipment		(76.3	)		(352.3	)
Acquisition of equipment for operating leases		(536.2	)		(789.5	)
Proceeds from asset disposals		232.4			175.1
Other		(2.3	)		12.8
Net Cash Provided by (Used in) Investing Activities		394.6			(547.0	)
FINANCING ACTIVITIES:
Cash dividends paid		(199.4	)		(563.9	)
Purchase of treasury stock					(230.5	)
Stock compensation transactions		11.3			11.2
Net decrease in commercial paper and short-term bank loans		(522.4	)		(478.2	)
Proceeds from term debt		1,105.8			995.9
Payment of term debt		(1,899.1	)		(572.8	)
Net Cash Used in Financing Activities		(1,503.8	)		(838.3	)
Effect of exchange rate changes on cash		89.2			(36.6	)
Net Decrease in Cash and Cash Equivalents		(156.0	)		(462.4	)
Cash and cash equivalents at beginning of period		1,955.2			1,858.1
Cash and cash equivalents at end of period	$	1,799.2		$	1,395.7

See Notes to Consolidated Financial Statements.

-6-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

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

NOTE A – Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by 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, 2009, are not necessarily indicative of the results that may be expected for the year ending December 31, 2009. 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, 2008.

The Company has evaluated subsequent events through the date the financial statements were issued on November 5, 2009.

NOTE B – Investments in Marketable Securities

The Company’s investments in marketable securities are classified as available-for-sale. These investments are stated at fair value with any unrealized gains or losses, net of tax, included as a component of accumulated other comprehensive loss. The proceeds from sales of marketable securities for the nine months ended September 30, 2009 were $152.0. Gross realized gains and losses for the nine months ended September 30, 2009 were $.7 and $.1, respectively.

The cost of marketable debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Amortization, accretion, interest, dividend income and realized gains and losses are included in investment income. The cost of securities sold is based on the specific identification method.

Marketable debt securities consisted of the following:

At September 30, 2009	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair     Value
U.S. tax-exempt securities	$	151.4	$	1.8			$	153.2
U.S. government securities		6.7		.1				6.8
U.S. corporate securities		17.2		.1				17.3
Non U.S. corporate securities		59.1			$	.1		59.0
Non U.S. government securities		4.0						4.0
	$	238.4	$	2.0	$	.1	$	240.3

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FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

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

At December 31, 2008	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair     Value
U.S. tax-exempt securities	$	167.2	$	1.7	$	.4	$	168.5
Non U.S. corporate securities		4.3				.3		4.0
Non U.S. government securities		2.9						2.9
	$	174.4	$	1.7	$	.7	$	175.4

The fair value of marketable debt securities that have been in a continuous unrealized loss position for 12 months or greater at September 30, 2009 and December 31, 2008 was $5.9 and $16.7 and their unrealized losses were $.1 and $.6, respectively.

Contractual maturities at September 30, 2009, were as follows:

Maturities:	Amortized Cost		Fair     Value
2009	$	9.0	$	9.0
2010 through 2014		208.5		210.4
After 2014		20.9		20.9
	$	238.4	$	240.3

Marketable debt securities included $20.9 and $65.9 of variable rate demand obligations (VRDOs) at September 30, 2009 and December 31, 2008, respectively. VRDOs are debt instruments with long-term scheduled maturities which have interest rates that reset periodically.

NOTE C – Inventories

Inventories include the following:

	September 30 2009			December 31 2008
Finished products	$	376.9		$	394.3
Work in process and raw materials		420.4			421.7
		797.3			816.0
Less LIFO reserve		(168.3	)		(157.9	)
	$	629.0		$	658.1

Inventories are stated at the lower of cost or market. Cost of inventories in the United States is determined principally by the last in, first out (LIFO) method. Cost of all other inventories is determined principally by the first in, first out (FIFO) method.

Under the LIFO method of accounting (used for approximately 50% of September 30, 2009 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.

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FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

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

NOTE D – Finance Receivables

Loans represent fixed- or floating-rate loans to customers collateralized by the vehicles purchased. Retail direct financing and sales-type finance leases are contracts leasing equipment to retail customers and dealers, respectively. 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 on finance leases which is shown separately. Dealer wholesale financing represents floating-rate wholesale loans to PACCAR dealers for new and used trucks. The loans are collateralized principally by the trucks being financed. Interest and other receivables are interest due on loans and leases and other amounts due in the normal course of business. The allowance for losses for loans, leases and other in each geographic region are evaluated together as a group since they relate to a similar customer base and their contractual terms require regular payment of principal and interest primarily over 36 to 60 months and are secured by the same type of collateral. The Company specifically evaluates large accounts with past due balances or that otherwise are deemed to be at a higher risk of credit loss.

Finance and other receivables include the following:

	September 30 2009			December 31 2008
Loans	$	2,960.6		$	3,506.7
Retail direct financing leases		2,332.4			2,558.4
Sales-type finance leases		756.9			817.9
Dealer wholesale financing		1,177.3			1,635.0
Interest and other receivables		127.8			127.3
Unearned interest:
Finance leases		(370.7	)		(430.6	)
		6,984.3			8,214.7
Less allowance for losses:
Loans, leases and other		(163.2	)		(167.1	)
Dealer wholesale financing		(9.8	)		(11.2	)
	$	6,811.3		$	8,036.4

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FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

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

NOTE E – Product Support Liabilities

Product support liabilities consist of amounts accrued to meet product warranty obligations and accrued costs associated with optional extended warranty and repair and maintenance contracts. Warranty expenses and reserves are estimated and recorded at the time products or contracts are sold based on historical data regarding the source, frequency and cost of claims. The Company periodically assesses the adequacy of its recorded liabilities and adjusts them as appropriate to reflect actual experience.

Changes in product support liabilities are summarized as follows:

	2009			2008
Beginning balance, January 1	$	450.4		$	483.3
Cost accruals and revenue deferrals		121.7			232.7
Payments and revenue recognized		(190.1	)		(210.6	)
Currency translation		14.7			(20.1	)
Ending balance, September 30	$	396.7		$	485.3

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FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

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

NOTE F – Stockholders’ Equity

Comprehensive Income

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

	Three Months Ended September 30					Nine Months Ended September 30
	2009		2008			2009		2008
Net income	$	13.0	$	299.0		$	65.8	$	904.8
Other comprehensive income (OCI):
Currency translation gains (losses)		118.8		(271.0	)		233.3		(161.4	)
Derivative contracts increase (decrease)		8.8		(14.8	)		24.7		(8.7	)
Marketable securities increase (decrease)		.2		(4.2	)		.6		(7.0	)
Employee benefit plans amortization		.7		4.9			3.3		6.3
Net other comprehensive income (loss)		128.5		(285.1	)		261.9		(170.8	)
Comprehensive income	$	141.5	$	13.9		$	327.7	$	734.0

The currency translation gains in 2009 are due to the decrease of the U.S. dollar compared to the euro, Canadian dollar, and the Australian dollar. The currency translation losses in 2008 are primarily attributable to changes in the value of the U.S. dollar compared to the euro.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss was comprised of the following:

	September 30 2009			December 31 2008
Currency translation adjustment	$	393.5		$	160.2
Net unrealized loss on derivative contracts		(57.6	)		(82.3	)
Net unrealized investment gains		1.2			.6
Employee benefit plans		(345.0	)		(348.3	)
Total accumulated other comprehensive loss	$	(7.9	)	$	(269.8	)

Stock Compensation Plans

Stock-based compensation expense was $7.5 and $7.6 for the first nine months of 2009 and 2008, respectively. Realized tax benefits related to the excess of deductible amounts over expense recognized amounted to $2.5 and $3.6 for the first nine months of 2009 and 2008, respectively, and have been classified as a financing cash flow.

The Company issued 766,051 additional common shares under deferred and stock compensation arrangements in the nine months ended September 30, 2009.

Other Capital Stock Changes

No share repurchases were completed during the nine months ended September 30, 2009.

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FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

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

NOTE G – Net Income Per Share

The following table shows the additional amounts added to the weighted average basic shares outstanding to calculate diluted earnings per share. These amounts primarily represent the dilutive effect of stock options. Antidilutive options are excluded from the diluted earnings per share calculation and are shown separately in the table below.

	Three Months Ended September 30		Nine Months Ended September 30
	2009	2008	2009	2008
Additional shares	1,155,000	1,618,000	937,000	1,739,000
Antidilutive options	2,370,000	1,400,000	3,760,000	1,400,000

Certain restricted stock awards granted to employees are considered participating securities as these awards contain rights to dividends prior to vesting. Accordingly the restricted shares and the dividends paid on the restricted shares are considered in the calculation of basic earnings per share.

NOTE H – Income Taxes

The effective tax rate was 22.6% and 19.1% for the third quarter and first nine months of 2009 compared to 30.2% and 30.3% for the third quarter and first nine months of 2008. The lower effective tax rate in 2009 reflects a larger percentage benefit from permanent differences such as the R&D tax credit and favorable provision to return adjustments.

NOTE I – Severance Costs

During the third quarter and year-to-date 2009, the Company incurred severance costs as summarized below. These costs were the result of work force adjustments reflecting low truck demand, primarily in Europe.

	Three Months Ended September 30				Nine Months Ended September 30
	2009		2008		2009		2008
Truck and Other:
Cost of sales and revenues	$	7.1	$	3.2	$	21.6	$	4.4
Sales, general and administrative		.4		.2		6.0		.3
	$	7.5	$	3.4	$	27.6	$	4.7
Financial Services:
Sales, general and administrative				.2		.3		.2
Total Severance Costs	$	7.5	$	3.6	$	27.9	$	4.9

At September 30, 2009, the Company had $10.7 accrued for future severance payments expected in the next year, compared to accruals of $6.7 at June 30, 2009 and $4.6 at December 31, 2008.

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FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

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

NOTE J – Segment Information

	Three Months Ended September 30						Nine Months Ended September 30
	2009			2008			2009			2008
Net sales and revenues:
Truck
Total	$	1,867.0		$	3,827.7		$	5,288.2		$	11,429.5
Less intersegment		(125.1	)		(186.0	)		(259.6	)		(461.9	)
External customers		1,741.9			3,641.7			5,028.6			10,967.6
All other		16.6			40.4			62.6			117.5
		1,758.5			3,682.1			5,091.2			11,085.1
Financial Services		241.7			322.8			740.0			970.7
	$	2,000.2		$	4,004.9		$	5,831.2		$	12,055.8
Income (loss) before income taxes:
Truck	$	(21.1	)	$	362.5		$	(32.2	)	$	1,063.6
All other		14.9			(1.6	)		46.7			(6.4	)
		(6.2	)		360.9			14.5			1,057.2
Financial Services		18.1			45.5			49.0			171.5
Investment Income		4.9			22.2			17.8			69.5
	$	16.8		$	428.6		$	81.3		$	1,298.2
Depreciation and amortization:
Truck	$	71.9		$	76.7		$	209.8		$	231.1
All other		2.4			2.6			7.1			7.9
		74.3			79.3			216.9			239.0
Financial Services		98.7			87.5			270.3			243.2
	$	173.0		$	166.8		$	487.2		$	482.2

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. For the three months ended September 30, 2009, All other income (loss) before income taxes included a curtailment gain of $18.3 for the discontinuation of postretirement healthcare related to the permanent closure of the Peterbilt facility in Madison, Tennessee. The second quarter included a curtailment gain of $47.7 from discontinuing subsidies of postretirement medical costs for the majority of its U.S. employees. For the three and nine months ended September 30, 2009 All other income (loss) before income taxes also included $1.5 and $20.6, respectively, for expense related to the net change in value of economic hedges.

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FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

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

NOTE K – Derivative Financial Instruments

Derivative financial instruments are used as hedges to manage exposures to fluctuations in interest rates and foreign currency exchange 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 inception of each hedge relationship, the Company documents its risk management objectives, procedures and accounting treatment. Exposure limits and minimum credit ratings are used to minimize the risks of counterparty default. The Company had no material exposures to default at September 30, 2009.

Interest-Rate Contracts: The Company enters into various interest-rate contracts, including interest-rate swaps and cross currency interest-rate swaps. Interest-rate swaps involve the exchange of fixed for floating rate or floating for fixed rate interest payments based on the contractual notional amounts in a single currency. Cross currency interest-rate swaps involve the exchange of notional amounts and interest payments in different currencies. These contracts are used to manage exposures to fluctuations in interest rates and foreign currency exchange rates. Net amounts paid or received are reflected as adjustments to interest expense.

At September 30, 2009, the notional amount of the Company’s interest-rate contracts was $4,016.7. Notional maturities for all interest-rate contracts are $383.2 for the remainder of 2009, $1,398.6 for 2010, $1,150.9 for 2011, $820.8 for 2012, $33.8 for 2013 and $229.4 for 2014. The majority of these contracts are floating to fixed swaps that effectively convert an equivalent amount of commercial paper and other variable rate debt to fixed rates.

Foreign-Exchange Contracts: The Company enters into foreign-exchange contracts to hedge certain anticipated transactions, assets and liabilities denominated in foreign currencies, particularly the Canadian dollar, the euro, the British pound, the Australian dollar and the Mexican peso. At September 30, 2009, the notional amount of the outstanding foreign-exchange contracts was $202.8. Foreign-exchange contracts mature within one year.

-14-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

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

The following table presents the balance sheet locations and fair value of derivative financial instruments:

	September 30, 2009
	Assets		Liabilities
Derivatives designated under hedge accounting:
Interest-rate contracts:
Financial Services:
Other assets	$	17.7
Deferred taxes and other liabilities			$	120.3
Foreign-exchange contracts:
Truck and Other:
Deferred taxes and other current assets		.3
Accounts payable and accrued expenses				.2
Total	$	18.0	$	120.5
Economic hedges:
Interest-rate contracts:
Financial Services:
Deferred taxes and other liabilities			$	9.0
Foreign-exchange contracts:
Financial Services:
Other assets		.3
Deferred taxes and other liabilities				.1
Total	$	.3	$	9.1

Substantially all of the Company’s interest-rate contracts and some foreign-exchange contracts have been designated as cash flow hedges. The Company uses regression analysis to assess and measure effectiveness of interest-rate contracts. For foreign-exchange contracts, the Company performs quarterly assessments to ensure that critical terms continue to match. Gains or losses on the ineffective portion of cash flow hedges are recognized currently in earnings and were immaterial for 2009.

Hedge accounting is discontinued prospectively when the Company determines that a derivative financial instrument has ceased to be a highly effective hedge.

-15-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

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

Fair Value Hedges

Changes in the fair value of derivatives designated as fair value hedges are recorded in earnings together with the changes in fair value of the hedged item attributable to the risk being hedged. The (income) or expense recognized in earnings related to fair value hedges was all in the Financial Services segment as follows:

	Three Months Ended September 30, 2009			Nine Months Ended September 30, 2009
Interest and other borrowing expenses - interest-rate swaps	$	(2.5	)	$	(8.2	)
Interest and other borrowing expenses - term notes	$	2.6		$	8.8

In addition, the net interest accruals from interest-rate swap settlements are also reported in interest and other borrowing expenses.

Cash Flow Hedges

Changes in the fair value of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive income to the extent such hedges are considered effective.

Amounts in accumulated other comprehensive income 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. Net realized gains and losses from foreign exchange contracts are recognized as an adjustment to cost of sales or to financial services interest expense, consistent with the hedged transaction.

-16-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

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

The following table presents the pre-tax effects of derivative instruments recognized in earnings and Other Comprehensive Income (OCI):

	Three Months Ended September 30, 2009					Nine Months Ended September 30, 2009
	Interest- rate Contracts		Foreign- exchange Contracts			Interest- rate Contracts		Foreign- exchange Contracts
(Gain)/loss recognized in OCI:
Financial Services	$	19.4	$	(.1	)	$	55.8	$	.2
Truck and Other				(.4	)				(.3	)
Total	$	19.4	$	(.5	)	$	55.8	$	(.1	)
(Income)/expense reclassified from Accumulated OCI into income:
Financial Services:
Interest and other borrowing expenses	$	31.5				$	95.0	$	(.1	)
Truck and Other:
Cost of sales				(.5	)				(9.7	)
Interest and other expense (income), net									(1.2	)
Total	$	31.5	$	(.5	)	$	95.0	$	(11.0	)

Of the $57.6 accumulated net loss on derivative contracts included in accumulated other comprehensive loss as of September 30, 2009, $48.5, net of taxes, is expected to be reclassified to interest expense or cost of sales 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 risk management strategy.

Economic Hedges

Changes in the fair value of economic hedges are recorded in earnings in the period in which the change occurs.

The (income) or expense recognized in earnings related to economic hedges is as follows:

	Three Months Ended September 30, 2009					Nine Months Ended September 30, 2009
	Interest- rate Contracts		Foreign- exchange Contracts			Interest- rate Contracts		Foreign- exchange Contracts
Financial Services:
Interest and other borrowing expenses	$	.9	$	1.6		$	15.7	$	2.0
Truck and Other:
Cost of sales				(.1	)				(14.4	)
Interest and other expense (income), net		1.5		(.6	)		4.5		16.5
Total	$	2.4	$	.9		$	20.2	$	4.1

-17-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

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

In addition, the net interest accruals from interest-rate contracts settlements are also reported in interest and other borrowing expenses for Financial Services and interest and other expense (income), net for Truck and Other.

NOTE L – 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. The hierarchy of fair value measurements is described below.

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

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

Level 3 – Valuations are based on model-based techniques for which some or all of the assumptions are obtained from indirect market information that is significant to the overall fair value measurement and which require a significant degree of management judgment. The Company has no financial instruments requiring Level 3 valuation.

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

Marketable Securities: The Company’s marketable debt securities consist of municipal bonds, government obligations, investment-grade corporate obligations, asset-backed securities and term deposits.

The fair value of government obligations and corporate bonds is based on quoted prices in active markets. These are categorized as Level 1.

The fair value of municipal bonds, asset-backed securities, commercial paper and term deposits is estimated using recent transactions, market price quotations, and pricing models that consider, where applicable, interest rates and other observable market information. These are categorized as Level 2.

Derivative Financial Instruments: The Company’s derivative contracts consist of interest-rate contracts and foreign currency exchange contracts.

These derivative contracts are over the counter and their fair value is determined using modeling techniques that include market inputs such as interest rates, yield curves, currency exchange rates and credit default swap spreads. These contracts are categorized as Level 2.

A portion of the Company’s fixed-rate term notes has been converted to variable-rate term notes using fair value hedges for interest-rate risk. Fair value is determined using modeling techniques that include market inputs for interest rates.

-18-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

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

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

At September 30, 2009	Level 1		Level 2		Total
Assets:
Marketable debt securities	$	47.5	$	192.8	$	240.3
Derivative contracts				18.3		18.3
Liabilities:
Term notes				374.1		374.1
Derivative contracts				129.6		129.6
At December 31, 2008	Level 1		Level 2		Total
Assets:
Marketable debt securities	$	6.9	$	168.5	$	175.4
Derivative contracts				60.4		60.4
Liabilities:
Term notes				541.4		541.4
Derivative contracts				173.0		173.0

Other nonfinancial assets that are measured at fair value on a nonrecurring basis are as follows:

	September 30, 2009		December 31, 2008
	Level 2		Level 2
Used Trucks Held for Sale:
Truck and Other	$	40.8	$	27.9
Financial Services		146.8		96.6
	$	187.6	$	124.5

The carrying amount of used trucks held for sale is written down when appropriate to reflect their fair value. The fair value of used trucks is determined based on management’s evaluation of factors such as recent sales prices of comparable units, the condition of the vehicles and the number of similar units to be sold. Used truck write-downs during the quarter and nine months ended September 30, 2009 were $9.7 and $32.3, respectively. Of the $32.3 year-to-date cost, $13.5 was recorded in cost of sales in the truck segment and $18.8 was recorded in the financial services segment (credit losses of $8.4 and operating lease depreciation expense of $10.4). The amount of used truck write-downs was $23.5 for the year ended December 31, 2008 of which amount $12.1 was recorded in cost of sales in the truck segment and $11.4 was recorded in the financial services segment (credit losses of $9.2 and operating lease depreciation expense of $2.2).

-19-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

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

The Company used the following methods and assumptions to determine the fair value of financial instruments that are not recognized at fair value as described below.

Cash and Cash Equivalents: Carrying amounts approximate fair value.

Trade Receivables and Payables: Carrying amounts approximate fair value.

Financial Services Net Receivable: For floating-rate loans, wholesale financings, and interest and other receivables, fair values approximate carrying values. For fixed-rate loans, fair values are estimated using discounted cash flow analysis based on current rates for comparable loans. Finance lease receivables and related loss provisions have been excluded from the accompanying table.

Debt: The carrying amounts of commercial paper, variable-rate banks loans, and variable-rate term notes approximate fair value. For fixed-rate debt, fair values are estimated using discounted cash flow analysis based on current rates for comparable debt.

The carrying amount and fair value of Financial Services fixed-rate loans and fixed-rate debt at September 30, 2009 and December 31, 2008 were as follows:

	September 30, 2009				December 31, 2008
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Financial Services fixed-rate loans	$	2,537.4	$	2,606.7	$	3,011.1	$	3,030.8
Liabilities:
Financial Services fixed-rate debt		1,427.4		1,520.3		752.7		788.1
Truck and Other fixed-rate debt		171.9		195.3		19.3		18.6

-20-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

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

NOTE M – Employee Benefit Plans

PACCAR has several defined benefit pension plans, which cover a majority of its employees.

The following information details the components of net pension expense for the Company’s defined benefit plans:

	Three Months Ended September 30						Nine Months Ended September 30
	2009			2008			2009			2008
Service cost	$	9.1		$	11.8		$	27.1		$	35.7
Interest on projected benefit obligation		18.0			18.6			53.1			56.1
Expected return on assets		(24.0	)		(23.4	)		(69.1	)		(70.6	)
Amortization of prior service costs		.6			.6			1.6			1.8
Recognized actuarial loss		2.4			.7			7.2			2.3
Recognized settlement gain		(.1	)					(.3	)
Curtailment cost								1.9
Net pension expense	$	6.0		$	8.3		$	21.5		$	25.3

During the first nine months of 2009, the Company contributed $158.7 to its pension plans.

The following information details the components of net retiree (income) expense for the Company’s unfunded postretirement medical and life insurance plans:

	Three Months Ended September 30					Nine Months Ended September 30
	2009			2008		2009			2008
Components of Retiree Expense :
Service cost				$	.8				$	2.4
Interest cost	$	(.4	)		1.2	$	.4			3.5
Recognized actuarial gain
Recognized prior service costs										.1
Recognized net initial obligation					.1					.3
Curtailment gain		(18.3	)				(66.0	)
Net retiree (income) expense	$	(18.7	)	$	2.1	$	(65.6	)	$	6.3

The Company recognized a curtailment gain of $18.3 million in the third quarter for the discontinuation of postretirement healthcare related to the permanent closure of the Peterbilt facility in Madison, Tennessee. The second quarter included a curtailment gain of $47.7 from discontinuing subsidies of postretirement medical costs for the majority of its U.S. employees.

-21-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

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

RESULTS OF OPERATIONS:

	Three Months Ended September 30						Nine Months Ended September 30
	2009			2008			2009			2008
Net sales and revenues:
Truck and Other	$	1,758.5		$	3,682.1		$	5,091.2		$	11,085.1
Financial Services		241.7			322.8			740.0			970.7
	$	2,000.2		$	4,004.9		$	5,831.2		$	12,055.8
Income before taxes:
Truck and Other	$	(6.2	)	$	360.9		$	14.5		$	1,057.2
Financial Services		18.1			45.5			49.0			171.5
Investment Income		4.9			22.2			17.8			69.5
Income taxes		(3.8	)		(129.6	)		(15.5	)		(393.4	)
Net Income	$	13.0		$	299.0		$	65.8		$	904.8
Diluted Earnings Per Share	$	.04		$	.82		$	.18		$	2.47

Overview:

PACCAR recorded lower sales and net income in the third quarter and first nine months of 2009 compared to year-earlier levels. Third quarter 2009 net income was $13.0 million ($.04 per diluted share) compared to $299.0 million ($.82 per diluted share) in the third quarter of 2008. First nine months total net sales and revenues were $5.83 billion, 52% lower compared to the first nine months of 2008. First nine months net income was $65.8 million ($.18 per diluted share) compared to $904.8 million ($2.47 per diluted share) in the year-earlier period.

Third quarter results included a one-time net benefit of $14.1 million ($8.9 million, net of tax) from a $18.3 million curtailment gain related to discontinued postretirement healthcare plans for plant employees and $4.2 million of plant closure costs in connection with the permanent closure of the Peterbilt facility in Madison, Tennessee . Year-to-date 2009 results include $66.0 million of curtailment gains related to postretirement health care plans ($41.5 million, net of tax).

Compared to 2008, third quarter and first nine months 2009 total net sales and revenues and income before income taxes were negatively affected by the translation of weaker foreign currencies, primarily the euro and British pound. The translation effect decreased third quarter 2009 sales and revenues by $64.6 million and income before income taxes by $4.7 million compared to the third quarter of 2008. For the first nine months, the translation effect decreased sales and revenues by $423.3 million and income before income taxes by $30.7 million compared to 2008.

-22-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Net sales and revenues in the Truck and Other businesses was $1.76 billion in the third quarter of 2009 compared to $3.68 billion in third quarter of 2008. For the first nine months of 2009, Truck and Other net sales and revenues decreased 54% to $5.09 billion. The decrease in third quarter and year-to-date sales and revenues for 2009 primarily reflects decreased truck unit and part sales in all markets resulting from lower demand for the Company’s products due to the global recession.

Truck and Other Cost of sales and revenues were $1.65 billion in the third quarter of 2009 compared to $3.11 billion in the third quarter of 2008. Cost of sales and revenues were $4.70 billion in the first nine months of 2009, down 50% compared to $9.40 billion in the first nine months of 2008. Cost of sales and revenues declined in both periods primarily due to the decline in world wide truck deliveries. This volume decline was slightly offset by higher costs primarily due to lower fixed cost coverage caused by lower factory production volumes. Also included in cost of sales are severance costs of $7.1 million for the third quarter of 2009 compared to severance costs of $3.2 million in the third quarter of 2008 and $21.6 million in the first nine months of 2009 compared to $4.4 million in the first nine months of 2008.

Research and development (R&D) expenditures decreased to $43.4 million in the third quarter of 2009 from $88.1 million in the third quarter of 2008. R&D was $148.5 million for the first nine months of 2009 compared to $261.7 million in the first nine months of 2008 primarily due to lower spending on engine development programs. R&D spending in the fourth quarter of 2009 is expected to be in the range of $40.0 to $50.0 million.

Selling, general and administrative (SG&A) expense for Truck and Other of $87.4 million in the third quarter and $255.0 year to date declined by $31.9 million and $117.9 million, respectively. The lower spending is a result of focused efforts to reduce costs in response to the global economic recession and consists primarily of lower staffing costs, sales and marketing spending and travel costs. Foreign currency translation effects reduced SG&A by $2.7 million and $15.8 million for the quarter and nine month periods, respectively. Severance costs included in SG&A were $0.4 million in the third quarter of 2009 and $6.0 million in the first nine months of 2009 compared to $0.2 million in the third quarter of 2008 and $0.3 million in the first nine months of 2008. As a percentage of sales, SG&A increased in the third quarter to 5.0% in 2009 from 3.2% in 2008 and increased to 5.0% in the first nine months of 2009 from 3.4% in 2008 due to lower sales volumes.

Financial Services segment revenues for the third quarter of 2009 decreased to $241.7 million from $322.8 million in the third quarter of 2008. Revenues were $740.0 million in the first nine months of 2009, compared to $970.7 million in the first nine months of 2008. The decreased revenues in both the third quarter and the first nine months of 2009 resulted from lower earning asset balances in all markets and lower yields in North America and Europe. Third quarter Financial Services income before income taxes was $18.1 million compared to $45.5 million in 2008. First nine months income before income taxes was $49.0 million compared to $171.5 million. The decrease in both periods was primarily due to less revenues resulting from lower average earning asset balances and yields. In addition there were higher impairments and losses on sales of operating lease vehicles. These were partially offset by lower interest expense on smaller average debt balances, as well as lower operating expenses and provision for losses. The third quarter 2009 provision for losses on receivables declined $7.6 million to $26.6 million from $34.2 million in the prior year reflecting lower charge-offs and a decrease in the allowance for losses due to a decrease in past due accounts and a lower asset base. Year-to-date, the 2009 provision for losses on receivables was $80.7 million compared to the $76.0 million in 2008.

-23-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Investment income declined to $4.9 million and $17.8 million for the third quarter and first nine months of 2009 compared to $22.2 million and $69.5 million for the third quarter and first nine months of 2008 due to lower invested balances and lower market interest rates.

The effective tax rate was 22.6% and 19.1% for the third quarter and first nine months of 2009 compared to 30.2% and 30.3% for the third quarter and first nine months of 2008. The lower effective tax rate in 2009 reflects a larger percentage benefit from permanent differences such as the R&D tax credit and favorable provision to return adjustments.

The Company’s return on revenues was 0.7% and 7.5% for the third quarter of 2009 and 2008, respectively, and was 1.1% and 7.5% for the first nine months of 2009 and 2008, respectively.

Truck

PACCAR’s truck segment, which includes the manufacture and distribution of trucks and related aftermarket parts, accounted for 87% of revenues in the third quarter and 86% in the first nine months of 2009 compared to 91% in the third quarter and the first nine months of 2008. In North America, trucks are sold under the Kenworth and Peterbilt nameplates and, in Europe, under the DAF nameplate.

	Three Months Ended September 30							Nine Months Ended September 30
	2009			2008		% change		2009			2008		% change
Truck net sales and revenues:
U.S. and Canada	$	903.6		$	1,167.0	(23	)	$	2,542.4		$	3,794.2	(33	)
Europe		572.4			1,898.7	(70	)		1,848.9			5,464.3	(66	)
Mexico, Australia and Other		265.9			576.0	(54	)		637.3			1,709.1	(63	)
	$	1,741.9		$	3,641.7	(52	)	$	5,028.6		$	10,967.6	(54	)
Truck (loss) income before taxes	$	(21.1	)	$	362.5	(106	)	$	(32.2	)	$	1,063.6	(103	)
The Company’s new truck deliveries are summarized below:
	Three Months Ended September 30							Nine Months Ended September 30
	2009			2008		% change		2009			2008		% change
United States		7,217			9,335	(23	)		20,010			29,579	(32	)
Canada		1,342			1,603	(16	)		2,842			5,830	(51	)
U.S. and Canada		8,559			10,938	(22	)		22,852			35,409	(35	)
Europe		4,751			18,139	(74	)		16,445			50,808	(68	)
Mexico, Australia and Other		1,991			4,678	(57	)		4,402			14,357	(69	)
Total Units		15,301			33,755	(55	)		43,699			100,574	(57	)

2009 Compared to 2008:

PACCAR’s worldwide truck sales and revenues of $1.74 billion in the third quarter of 2009 decreased compared to the third quarter of 2008 due to lower demand for the Company’s trucks and parts reflecting worldwide recessionary economic conditions. In the first nine months of 2009, PACCAR’s worldwide truck sales and revenues of $5.03 billion compared to $10.97 billion in the first nine months of 2008.

-24-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Sales and revenues in the U.S. and Canada during the three- and nine-month periods ended September 30, 2009 declined compared to the prior periods in 2008 due to lower new truck deliveries which reflected a lower market size. Industry retail sales in the heavy duty market in U.S. and Canada were 32% lower in the first nine months of 2009 compared to the first nine months of 2008.

In the third quarter and first nine months of 2009 European net sales and revenues decreased to $572.4 million and $1,848.9 million, respectively, from 2008. The lower net sales and revenues resulted from the decline in DAF truck deliveries during the third quarter and first nine months of 2009 due to lower truck market demand, truck selling prices and parts sales. DAF’s 2009 market share of the 15 tonne and above market for the first nine months of 2009 was 14.9% compared to 14.1% in 2008.

Sales and revenues in Mexico, Australia and other countries outside the Company’s primary markets declined 54% to $265.9 million in the third quarter of 2009 and 63% to $637.3 million for the first nine months of 2009 due to lower new truck deliveries. Truck unit deliveries in these markets decreased in the third quarter of 2009 and for the first nine months of 2009 compared to 2008, reflecting lower overall market demand.

Truck segment income before income taxes decreased to a loss of $21.1 million in the third quarter of 2009 from $362.5 million of income in the third quarter of 2008. During the first nine months of 2009 the Truck segment recorded a pretax loss of $32.2 million compared to income of $1,063.6 million in 2008. The loss in both periods was due to lower truck sales and margins in all markets somewhat offset by lower research and development spending as well as lower SG&A spending.

Net sales and revenues and gross margins for truck units and aftermarket parts are provided below. The aftermarket parts gross margin includes direct revenues and costs, but excludes certain truck segment costs.

	Three Months Ended September 30								Nine Months Ended September 30
	2009			2008			% change		2009			2008			% change
Net sales and revenues:
Trucks	$	1,264.3		$	3,060.7		(59	)	$	3,635.6		$	9,210.7		(61	)
Aftermarket parts		477.6			581.0		(18	)		1,393.0			1,756.9		(21	)
	$	1,741.9		$	3,641.7		(52	)	$	5,028.6		$	10,967.6		(54	)
Gross Margin:
Trucks	$	(43.2	)	$	357.9		(112	)	$	(82.3	)	$	1,043.3		(108	)
Aftermarket parts		153.4			203.4		(25	)		462.9			622.4		(26	)
	$	110.2		$	561.3		(80	)	$	380.6		$	1,665.7		(77	)
Gross Margin %:
Trucks		(3.4	)%		11.7	%				(2.3	)%		11.3	%
Aftermarket parts		32.1	%		35.0	%				33.2	%		35.4	%
Truck segment		6.3	%		15.4	%				7.6	%		15.2	%

Total truck segment gross margins for the third quarter of 2009 decreased to 6.3% from 15.4% in the third quarter of 2008. Gross margins for the first nine months of 2009 were 7.6% compared to 15.2% in the same period of 2008. Gross margins were negatively impacted primarily by lower truck gross margins. Gross margins on trucks declined to negative 3.4% and 2.3% for the three and nine month periods ended September 30, 2009 primarily due to lower industry demand and lower absorption of fixed costs resulting from lower truck production. 2009 parts gross margins declined from the prior year due to a sales mix shift to lower margin replacement parts and the impact of the recession.

-25-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Truck Outlook

Worldwide recessionary economic conditions are expected to continue to dampen demand for heavy-duty trucks for the fourth quarter of 2009 and result in lower truck segment revenues and income for the Company compared to 2008. The Company’s research and development spending in the fourth quarter of 2009 will focus on engine development and new product programs and are expected to remain below spending in the prior year. For the year, research and development spending in 2009 is expected to be between $190-$200 million, down from the $341.8 million in 2008. The Company also expects fourth quarter 2009 SG&A expenses to be lower than 2008 as it remains focused on aligning the Company expenses to the market conditions. In North America, the Company expects 2009 industry Class 8 retail sales to be in the range of 100,000 -110,000 trucks. Industry retail sales in 2010 are expected to improve somewhat and be in the range of 110,000 -140,000 units, reflecting recent improvements in freight tonnage and manufacturing activity. In Western and Central Europe, the low level of heavy-duty registrations through the third quarter of 2009 is expected to continue and result in full year 2009 heavy-duty registrations in the range of 170,000-180,000 units, a 50% decline from 2008. With economic recovery in Europe expected to lag North America, 2010 heavy-duty registrations in these European markets are estimated to be in the range of 150,000 – 180,000. International markets are expected to remain weak in the fourth quarter of 2009 and into 2010. See the Forward Looking Statement section of Management’s Discussion and Analysis for factors that may affect this outlook.

-26-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Financial Services

The PACCAR Financial Services (PFS) segment, which includes wholly owned subsidiaries in the U.S., Canada, Mexico, Europe and Australia, derives its earnings primarily from financing and leasing PACCAR products.

	Three Months Ended September 30						Nine Months Ended September 30
	2009		2008		% Change		2009		2008		% Change
New loan and lease volume:
U.S. and Canada	$	347.8	$	421.9	(18	)	$	684.7	$	1,311.4	(48	)
Europe		118.5		215.1	(45	)		316.1		747.4	(58	)
Mexico and Australia		81.2		219.6	(63	)		218.4		620.2	(65	)
	$	547.5	$	856.6	(36	)	$	1,219.2	$	2,679.0	(54	)
Average earning assets:
U.S. and Canada	$	4,613.7	$	5,770.5	(20	)	$	4,847.8	$	5,917.3	(18	)
Europe		2,488.0		3,250.9	(23	)		2,579.6		3,066.6	(16	)
Mexico and Australia		1,319.5		1,729.4	(24	)		1,324.5		1,668.6	(21	)
	$	8,421.2	$	10,750.8	(22	)	$	8,751.9	$	10,652.5	(18	)
Average earning assets by product:
Loans and finance leases	$	5,024.5	$	6,388.5	(21	)	$	5,209.5	$	6,501.1	(20	)
Dealer wholesale financing		1,141.9		1,854.9	(38	)		1,266.2		1,697.3	(25	)
Equipment on lease and other		2,254.8		2,507.4	(10	)		2,276.2		2,454.1	(7	)
	$	8,421.2	$	10,750.8	(22	)	$	8,751.9	$	10,652.5	(18	)
Revenue:
U.S. and Canada	$	117.7	$	149.7	(21	)	$	361.0	$	461.5	(22	)
Europe		76.5		111.8	(32	)		236.8		332.4	(29	)
Mexico and Australia		47.5		61.3	(23	)		142.2		176.8	(20	)
	$	241.7	$	322.8	(25	)	$	740.0	$	970.7	(24	)
Revenue by product:
Loans and finance leases	$	109.8	$	142.9	(23	)	$	337.0	$	438.7	(23	)
Dealer wholesale financing		11.9		31.3	(62	)		41.5		86.3	(52	)
Equipment on lease and other		120.0		148.6	(19	)		361.5		445.7	(19	)
	$	241.7	$	322.8	(25	)	$	740.0	$	970.7	(24	)
Income before taxes	$	18.1	$	45.5	(60	)	$	49.0	$	171.5	(71	)

-27-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

2009 Compared to 2008:

Revenues:

Revenues declined in both the third quarter and first nine months of 2009 from lower earning asset balances and lower yields primarily in the U.S., Canada and Europe. Average earning assets declined in the three and nine months ended September 30, 2009 due to the effects of lower new loan and lease volume in all markets and a reduction in dealer wholesale financing of new trucks. New loan and lease volume declined primarily due to lower new PACCAR truck production. In the third quarter of 2009, PFS market share on new PACCAR trucks delivered increased to 30.2% from 28.8% in the third quarter of 2008, reflecting increased financing to high quality fleet customers in North America. Year-to-date, PFS market share was 23.4%, down from 28.2% in the comparable period in 2008 due to an emphasis on improved credit quality and higher margins in the U.S., Canada and Europe.

At September 30,	2009		2008
Percentage of retail loan and lease accounts 30+ days past-due:
U.S. and Canada	2.4	%	2.5	%
Europe	4.8	%	1.6	%
Mexico and Australia	10.2	%	4.9	%
Total	4.4	%	2.7	%

Worldwide PFS accounts 30+ days past-due at September 30, 2009 were 4.4% of portfolio balances compared to 2.7% at September 30, 2008 due to a decline in freight tonnage, freight rates and customer cash flows most significantly in Europe and Mexico. The 4.4% worldwide PFS accounts 30+ days past-due at September 30, 2009 decreased from 4.7% at June 30, 2009 primarily from improvements in the U.S., Canada and Europe.

Interest income and other revenue in the third quarter and nine months of 2009 declined from the corresponding periods in the prior year due to lower average earning assets and lower asset yields summarized as follows:

	Three Months Ended September 30			Nine Months Ended September 30
Interest and fees - 2008	$	174.2		$	525.0
Lower average asset balances		(41.7	)		(103.5	)
Decrease in yield		(10.8	)		(43.0	)
Interest and fees - 2009	$	121.7		$	378.5

The decline in average earning assets was due to lower retail loan and lease new business volume as well as lower dealer wholesale financing due to a decline in dealer inventory levels in all markets. Yield declined primarily due to lower market interest rates.

-28-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Operating lease, rental and other income in the third quarter and nine months of 2009 declined from the corresponding periods in the prior year from lower average assets, lower rental utilization, and a decrease in yields. The decline in average operating lease and other assets was due to lower new business volume. The lower rental utilization reflects the weaker economic environment and the decline in yields was due to lower market rates.

Expenses

Interest and other borrowing expenses decreased in the third quarter and year-to-date from the comparable periods in the prior year due to lower average debt balances and lower borrowing rates as summarized below:

	Three Months Ended September 30			Nine Months Ended September 30
Interest and other borrowing expenses - 2008	$	102.1		$	302.7
Lower average debt balances		(22.6	)		(52.4	)
Lower borrowing rates		(13.0	)		(19.5	)
Interest and other borrowing expenses - 2009	$	66.5		$	230.8

Average debt balances decreased due to the lower level of funding needed to fund the smaller financial services portfolio. Lower borrowing rates were primarily related to lower commercial paper rates.

Third quarter and year-to-date 2009, depreciation and other expenses reflected a lower asset base partially offset by higher depreciation. Third quarter 2009 depreciation was $86.4 million in 2009 compared to $79.8 million in 2008 and year-to-date 2009 depreciation increased to $246.6 million compared to $224.7 million in the prior year. The higher quarterly and year-to-date depreciation results from both higher impairments on existing operating lease assets as well as higher losses on the sale of returned operating lease assets reflecting the impact of lower used truck prices.

Selling, general and administrative (SG&A) expense of $21.1 million in the third quarter declined by $6.8 million and SG&A expense of $63.7 million year-to-date declined by $23.3 million. Lower spending is a result of focused efforts to reduce costs in response to the continued decline in global economic conditions and consists primarily of lower staffing levels and travel costs.

-29-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

The provision for losses on receivables for the third quarter and year-to-date is summarized as follows:

	Three Months Ended September 30, 2009							Nine Months Ended September 30, 2009
	Net Charge-offs		Increase (decrease) in allowance			Provision for losses on receivables		Net Charge-offs		Increase (decrease) in allowance			Provision for losses on receivables
U.S. and Canada	$	17.0	$	(1.8	)	$	15.2	$	49.5	$	(9.9	)	$	39.6
Europe		10.2		(3.4	)		6.8		32.8		(.4	)		32.4
Mexico and Australia		4.7		(0.1	)		4.6		10.6		(1.9	)		8.7
	$	31.9	$	(5.3	)	$	26.6	$	92.9	$	(12.2	)	$	80.7
	Three Months Ended September 30, 2008							Nine Months Ended September 30, 2008
	Net Charge-offs		Increase (decrease) in allowance			Provision for losses on receivables		Net Charge-offs		Increase (decrease) in allowance			Provision for losses on receivables
U.S. and Canada	$	28.4	$	(0.1	)	$	28.3	$	63.9	$	.4		$	64.3
Europe		3.0					3.0		4.3		1.3			5.6
Mexico and Australia		2.7	$	0.2			2.9		4.3		1.8			6.1
	$	34.1	$	0.1		$	34.2	$	72.5	$	3.5		$	76.0

The provision for losses on receivables in the third quarter of 2009 decreased to $26.6 from $34.2 million in the third quarter of 2008. The decrease reflects a reduction in net portfolio charges-offs in the U.S. and Canada, as well as decreases in the allowance for losses due to a declining asset base slightly offset by higher net portfolio charge-offs in Europe, Mexico and Australia. In the first nine months of 2009 the provision for losses was $80.7 million compared to $76.0 in the first nine months of 2008. The increase primarily resulted from higher net charge-offs in Europe which more than offset lower net charge-offs in the U.S. and Canada and the reductions in the allowance for losses.

Financial Services Outlook

Financial Services segment results are principally dependent on the generation of loans and leases, the related spread between the yields on loans and leases and borrowing costs, access to liquidity to generate new business and the level of credit losses. A reduction in average earning assets is expected to continue in the fourth quarter of 2009 and into 2010 as the level of PACCAR truck sales in all markets will likely result in lower new business volume compared to portfolio liquidations and the effect of lower dealer wholesale financing . Recessionary economic conditions are expected to continue to exert pressure on the profit margins and cash flow of truck operators and contribute to high levels of past-due accounts, truck repossessions and voluntary truck returns. These factors are also expected to contribute to lower average earning assets and result in lower fourth quarter 2009 revenue and income compared to the prior year. See the Forward Looking Statement section of Management’s Discussion and Analysis for factors that may affect this outlook.

-30-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Other Business

Included in Truck and Other is the Company’s winch manufacturing business. Sales from this business represent approximately 1% of net sales for 2009 and 2008.

LIQUIDITY AND CAPITAL RESOURCES:

	September 30, 2009		December 31, 2008
Cash and cash equivalents	$	1,799.2	$	1,955.2
Marketable debt securities		240.3		175.4
	$	2,039.5	$	2,130.6

The Company’s total cash and marketable debt securities decreased $91.1 million in 2009 to $2,039.5 million. The Company’s total cash and cash equivalents decreased $156.0 million to $1,799.2 million for the nine months ended September 30, 2009. This was primarily the result of $864.0 million of cash provided by operating activities and $394.6 million of cash provided by investing activities, offset by $1,503.8 million of cash used in financing activities as summarized below.

Nine Months Ended September 30:	2009			2008
Operating activities:
Net Income	$	65.8		$	904.8
Net income items not affecting cash		469.7			586.1
Changes in operating assets and liabilities		328.5			(531.4	)
Net cash provided by operating activities		864.0			959.5
Net cash provided by (used in) investing activities		394.6			(547.0	)
Net cash used in financing activities		(1,503.8	)		(838.3	)
Effect of exchange rate changes on cash		89.2			(36.6	)
Net decrease in cash and cash equivalents		(156.0	)		(462.4	)
Cash and cash equivalents at beginning of the period		1,955.2			1,858.1
Cash and cash equivalents at end of the period	$	1,799.2		$	1,395.7

Cash provided by operations declined to $864.0 million in the first nine months of 2009 compared to $959.5 million in the same period of 2008, primarily due to lower net income of $839.0 million, higher pension contributions of $147.6 million and lower working capital requirements primarily due to higher net cash flows from dealer inventory financing of $926.1 million.

Cash provided by investing activities increased by $941.6 million to $394.6 million in the nine months ended September 30, 2009 compared to the prior year. Investments in capital equipment decreased $529.3 million, proceeds on asset disposals increased $57.3 million, and the Financial Services segment experienced increased net liquidations of $643.9 million from lower new loan and lease originations due to lower demand for truck financing. These cash inflows were partially offset by fewer liquidations of marketable debt securities of $273.8 million in the current period due to lower average marketable securities balances.

-31-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

The cash outflow from financing activities in the first nine months of 2009 of $1,503.8 million was $665.5 million higher than the same period in 2008. This was primarily due to net debt repayments in 2009 compared to net borrowings in 2008 from a declining financial services asset base of $1,260.6 million, offset by the benefit of lower cash dividends paid in 2009 of $364.5 million due to a lower special dividend and a reduction in the regular dividend. PACCAR reduced its regular quarterly dividend from $.18 cents to $.09 cents per share, in the third quarter 2009. In addition, there were no stock repurchases in 2009 compared to $230.5 million in 2008.

The Company has line of credit arrangements of $3.67 billion, of which $3.38 billion was unused at the end of September 2009. Included in these arrangements are $3.0 billion of syndicated bank facilities. Of the $3.0 billion bank facilities, $2.0 billion matures in June 2010 and $1.0 billion matures in June 2012. The Company intends to replace these credit facilities as they expire with facilities of similar amounts and duration. These credit facilities are maintained primarily to provide backup liquidity for commercial paper borrowings and maturing medium-term notes. There were no borrowings under the syndicated bank lines for the nine months ended September 30, 2009.

In November 2008, PACCAR Inc filed a shelf registration under the Securities Act of 1933. In September 2009, the Company issued $120.0 million of floating rate medium-term notes under this registration. The total amount of medium-term notes issued under this registration as of September 30, 2009 is $870.0 million. The registration expires in 2011 and does not limit the principal amount of debt securities that may be issued during the period.

The Company’s U.S. finance subsidiary, PACCAR Financial Corp. (PFC), periodically files shelf registrations under the Securities Act of 1933. The total amount of medium-term notes outstanding for PFC as of September 30, 2009 was $1,148.5 million. The current registration expires in November 2009 and does not limit the principal amount of debt securities that may be issued during the period. PFC intends to file a new shelf registration statement under the Securities Act of 1933 in November 2009.

At September 30, 2009, PACCAR’s European finance subsidiary, PACCAR Financial Europe, had €830 million available for issuance under a €1.5 billion medium-term note program registered with the London Stock Exchange. The program was renewed in the third quarter of 2009 and is renewable annually.

The Company believes its strong liquidity position and AA- investment grade credit rating will continue to provide financial stability and access to capital markets at competitive interest rates.

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

Expenditures for property, plant and equipment in the first nine months of 2009 totaled $76.3 million compared to $352.3 million in 2008. The Company has reduced its planned capital expenditures to reflect current economic conditions. As a result, capital spending in 2009 is expected to be approximately $100 - $125 million compared to $462.8 million in 2008. Research and development spending is expected to be reduced to $190 - $200 million from $341.8 million in 2008. PACCAR’s 2009 capital and research and development spending will continue to focus on manufacturing efficiency improvements, engine development and new product programs.

-32-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Other information on liquidity and capital resources as presented in the 2008 Annual Report to Stockholders continues to be relevant.

FORWARD-LOOKING STATEMENTS:

Certain information presented in this report 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: a significant decline in industry sales; competitive pressures; reduced market share; reduced availability of or higher prices for fuel; increased safety, emissions, or other regulations resulting in higher costs and/or sales restrictions; currency or commodity price fluctuations; lower used truck prices; insufficient or under-utilization of manufacturing capacity; supplier interruptions; insufficient liquidity in the capital markets; fluctuations in interest rates; changes in the levels of the Financial Services segment new business volume due to unit fluctuations in new PACCAR truck sales; changes affecting the profitability of truck owners and operators; price changes impacting equipment costs and residual values; insufficient supplier capacity or access to raw materials; labor disruptions; shortages of commercial truck drivers; increased warranty costs or litigation; or legislative and governmental regulations. A more detailed description of these and other risks is included under the heading Part 1, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

-33-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes in the Company’s market risk during the nine months ended September 30, 2009. For additional information, refer to Item 7A as presented in the 2008 Annual Report on Form 10-K.

ITEM 4. 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 September 30, 2009. 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, including its consolidated subsidiaries, 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 significant changes in the Company’s internal controls over financial reporting that occurred during the fiscal quarter covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

-34-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

PART II-OTHER INFORMATION

For Items 1, 3, 4 and 5, there was no reportable information for the three months ended September 30, 2009.

ITEM 1A. RISK FACTORS

For information regarding risk factors, refer to Part I, Item 1A as presented in the 2008 Annual Report on Form 10-K. There have been no material changes in the Company’s risk factors during the nine months ended September 30, 2009.

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

For items 2(a) and (b), there was no reportable information for the nine months ended September 30, 2009.

(c) Issuer purchases of equity securities.

There were no repurchases of PACCAR’s common stock in the nine months ended September 30, 2009. On October 29, 2007, the Board of Directors approved a plan to repurchase up to $300 million of PACCAR’s outstanding common stock. As of September 30, 2009, $292 million of shares have been repurchased under this plan. On July 8, 2008, PACCAR’s Board of Directors approved a new plan to repurchase up to an additional $300 million of the Company’s outstanding common stock. No repurchases have been made under this plan.

ITEM 6. EXHIBITS

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

-35-

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)
Date November 5, 2009	By	/s/  M.T. Barkley
		M. T. Barkley
		Vice President and Controller
		(Authorized Officer and Chief Accounting Officer)

-36-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

INDEX TO EXHIBITS

Exhibit (in order of assigned index numbers)

(3)  (i) Articles of Incorporation:

(a) Restated Certificate of Incorporation of PACCAR Inc (incorporated by reference to Exhibit 99.3 of the Current Report on Form 8-K of PACCAR Inc dated September 19, 2005).

(b) Certificate of Amendment of Certificate of Incorporation of PACCAR Inc dated April 28, 2008 (incorporated by reference to Exhibit (3)(b) of the Quarterly Report on Form 10-Q for the period ended March 31, 2008).

      (ii) Amended and Restated Bylaws of PACCAR Inc (incorporated by reference to Exhibit 99.4 of the Current Report on Form 8-K of PACCAR Inc dated September 19, 2005).

(4) Instruments defining the rights of security holders, including indentures:

(a) Indenture for Senior Debt Securities dated as of December 1, 1983 and first Supplemental Indenture dated as of September 19, 1989 between PACCAR Financial Corp. and Wilmington Trust Company (incorporated by reference to Exhibit 4.1 of PACCAR Financial Corp.’s Annual Report on Form 10-K dated March 26, 1984, File Number 001-11677 and Exhibit 4.2 of PACCAR Financial Corp.’s Registration Statement on Form S-3 dated September 23, 1989, Registration Number 33-29434), and the Agreement of Resignation, Appointment and Acceptance, dated as of October 31, 2006 (incorporated by reference to PACCAR Financial Corp.’s Form 8-K dated November 3, 2006).

(b) Forms of Medium-Term Note, Series K (incorporated by reference to Exhibits 4.2A and 4.2B to PACCAR Financial Corp.'s Registration Statement on Form S-3 dated December 23, 2003, Registration Number 333-111504).

(c) Forms of Medium-Term Note, Series L (incorporated by reference to Exhibits 4.2A and 4.2B to PACCAR Financial Corp.'s Registration Statement on Form S-3 dated November 7, 2006, Registration Number 333-138464).

(d) Indenture for Senior Debt Securities dated as of November 18, 2008 between PACCAR Inc and Wilmington Trust Company (incorporated by reference to Exhibit 4.1 of PACCAR Inc.’s Registration Statement on Form S-3 dated November 18, 2008, Registration Number 333-155429).

(e) Forms of Medium-Term Note, Series A (incorporated by reference to Exhibits 4.2A and 4.2B to PACCAR Inc’s Registration Statement on Form S-3 dated November 18, 2008, Registration Number 333-155429).

-37-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

INDEX TO EXHIBITS

Exhibit (in order of assigned index numbers)

(f) Terms and Conditions of the Notes applicable to the €1,500,000,000 Euro Medium Term Note Programme of PACCAR Financial Europe B.V. and PACCAR Financial PLC.

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

(10) Material Contracts:

(a) PACCAR Inc Amended and Restated Supplemental Retirement Plan (incorporated by reference to Exhibit 10(a) of the Annual Report on Form 10-K dated February 27, 2009, File Number 001-14817).

(b) Amended and Restated Deferred Compensation Plan (incorporated by reference to Exhibit 10(b) of the Annual Report on Form 10-K dated February 27, 2009, File Number 001-14817).

(c) Deferred Incentive Compensation Plan (Amended and Restated as of December 31, 2004. Incorporated by reference to Exhibit 10(b) of the Annual Report on Form 10-K for the year ended December 31, 2005).

(d) Amended and Restated PACCAR Inc Restricted Stock and Deferred Compensation Plan for Non-employee Directors (incorporated by reference to Exhibit 10(d) of the Annual Report on Form 10-K dated February 27, 2009, File Number 001-14817).

(e) PACCAR Inc Restricted Stock and Deferred Compensation Plan for Non-Employee Directors, Form of Restricted Stock Agreement for Non-Employee Directors (incorporated by reference to Exhibit 10(e) of the Annual Report on Form 10-K dated February 27, 2009, File Number 001-14817).

(f) PACCAR Inc Restricted Stock and Deferred Compensation Plan for Non-Employee Directors, Form of Deferred Restricted Stock Unit Agreement For Non-Employee Directors (incorporated by reference as Exhibit 99.3 to Current Report on Form 8-K of PACCAR Inc dated December 10, 2007).

(g) Amendment to compensatory arrangement with non-employee directors (incorporated by reference to Exhibit (10)(h) of the Quarterly Report on Form 10-Q of PACCAR Inc for the quarter ended September 30, 2005).

(h) PACCAR Inc Senior Executive Yearly Incentive Compensation Plan (incorporated by reference to Appendix B of the 2006 Proxy Statement, dated March 14, 2006).

(i) PACCAR Inc Long Term Incentive Plan (incorporated by reference to Appendix A of the 2006 Proxy Statement, dated March 14, 2006).

-38-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

INDEX TO EXHIBITS

Exhibit (in order of assigned index numbers)

(j) PACCAR Inc Long Term Incentive Plan, Nonstatutory Stock Option Agreement and Form of Option Grant Agreement (incorporated by reference to Exhibit 99.1 of the Current Report on Form 8-K of PACCAR Inc dated January 20, 2005 and filed January 25, 2005).

(k) PACCAR Inc Long Term Incentive Plan, Amended Form of 2006 Restricted Stock Award Agreement (incorporated by reference as Exhibit 99.2 of the Current Report on Form 8-K of PACCAR Inc dated January 31, 2007 and filed February 5, 2007).

(l) PACCAR Inc Long Term Incentive Plan, Form of Restricted Stock Award Agreement (incorporated by reference as Exhibit 99.1 of the Current Report on Form 8-K of PACCAR Inc dated January 31, 2007 and filed February 5, 2007).

(m) PACCAR Inc Long Term Incentive Plan, Amended Form of Share Match Restricted Stock Award Agreement (incorporated by reference as Exhibit 99.3 of the Current Report on Form 8-K of PACCAR Inc dated January 31, 2007 and filed February 5, 2007).

(n) PACCAR Inc Long Term Incentive Plan, 2008 Form of Share Match Restricted Stock Award Agreement (incorporated by reference as Exhibit 99.1 to the Current Report on Form 8-K of PACCAR Inc dated February 5, 2008).

(o) PACCAR Inc Savings Investment Plan, Amendment and Restatement Effective January 1, 2007 (incorporated by reference as Exhibit 10(n) of the Annual Report on Form 10-K dated February 27, 2009, File Number 001-14817).

(p) Amendment to the PACCAR Inc Savings Investment Plan, Effective January 1, 2009 (incorporated by reference as Exhibit 10(o) of the Quarterly Report on Form 10-Q of PACCAR Inc for the quarter ended March 31, 2009, File Number 001-14817).

(q) Amendment to the PACCAR Inc Savings Investment Plan, Effective January 1, 2008.

(r) Memorandum of Understanding, dated as of May 11, 2007, by and among PACCAR Engine Company, the State of Mississippi and certain state and local supporting government entities (incorporated by reference as Exhibit 10.1 to the Current Report on Form 8-K of PACCAR Inc filed May 16, 2007).

(s) Letter Waiver Dated as of July 22, 2008 amending the Memorandum of Understanding, dated as of May 11, 2007, by and among PACCAR Engine Company, the State of Mississippi and certain state and local supporting governmental entities; (Incorporated by reference as Exhibit 10(o) of the Quarterly Report on Form 10-Q of PACCAR Inc for the quarter ended September 30, 2008).

(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 Nine month periods ended September 30, 2009 and 2008.

(b) Statement re: computation of ratio of earnings to fixed charges of the Company pursuant to SEC reporting requirements for each of the five years ended December 31, 2004 -– 2008 (incorporated by reference as Exhibit 12(b) of the Quarterly Report on Form 10-Q of PACCAR Inc for the quarter ended March 31, 2009, File Number 001-14817).

-39-

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

INDEX TO EXHIBITS

Exhibit (in order of assigned index numbers)

(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.

-40-

EX-4.(F)

Exhibit 4(f)

TERMS AND CONDITIONS OF THE NOTES

The following is the text of the terms and conditions which, as supplemented, amended and/or replaced by the relevant Final Terms, will be endorsed on each Note in definitive form issued under the Programme. The terms and conditions applicable to any Note in global form will differ from those terms and conditions which would apply to the Note were it in definitive form to the extent described under “Summary of Provisions Relating to the Notes while in Global Form” below. All capitalised terms that are not defined in the terms and conditions shall have the meanings given to them in the relevant Final Terms. References in the terms and conditions to “Notes” are to the Notes of one Series only, not to all Notes that may be issued under the Programme.

1. Introduction

(a) Programme: PACCAR Financial Europe B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of The Netherlands, having its corporate seat at Eindhoven (“PFE”) and PACCAR Financial PLC, a public limited company incorporated under the laws of England and Wales (“PFP”) have established a Euro Medium Term Note Programme (the “Programme”) for the issuance of up to €1,500,000,000 in aggregate principal amount of notes (the “Notes”).

(b) Final Terms: Notes issued under the Programme are issued in series (each a “Series”) and each Series may comprise one or more tranches (each a “Tranche”) of Notes. Each Tranche is the subject of Final Terms (the “Final Terms”) which supplements these terms and conditions (the “Conditions”). The terms and conditions applicable to any particular Tranche of Notes are these Conditions as supplemented, amended and/or replaced by the relevant Final Terms. In the event of any inconsistency between these Conditions and the relevant Final Terms, the relevant Final Terms shall prevail.

(c) Agency Agreement: The Notes are the subject of and issued pursuant to an amended and restated agency agreement dated 12 August 2009 (the “Agency Agreement”) between PFE, PFP, Citibank, N.A., London Branch as fiscal agent (the “Fiscal Agent,” which expression includes any successor fiscal agent appointed from time to time in connection with the Notes) and the paying agents named therein (together with the Fiscal Agent, the “Paying Agents,” which expression includes any successor or additional paying agents appointed from time to time in connection with the Notes) and with the benefit of a deed of covenant executed by PFE dated 12 August 2009 and a deed of covenant executed by PFP dated 12 August 2009 (each a “Deed of Covenant” and together the “Deeds of Covenant”) in relation to the Notes.

(d) The Notes: All subsequent references in these Conditions to “Notes” are to the Notes which are the subject of the relevant Final Terms. Copies of the relevant Final Terms are available during normal business hours at the Specified Office of the Fiscal Agent or at the office of the Paying Agent in London, the initial Specified Offices of which are set out below.

(e) Summaries: Certain provisions of these Conditions are summaries of the Agency Agreement and are subject to their detailed provisions. The holders of the Notes (the “Noteholders”) and the holders of the related interest coupons, if any, (the “Couponholders” and the “Coupons,” respectively) are bound by, and are deemed to have notice of, all the provisions of the Agency Agreement applicable to them. Copies of the Agency Agreement and the Deed of Covenant are available for inspection during normal business hours at the Specified Offices of each of the Paying Agents, the initial Specified Offices of which are set out below.

2. Interpretation

(a) Definitions: In these Conditions the following expressions have the following meanings:

“Accrual Yield” has the meaning given in the relevant Final Terms;

“Additional Business Centre(s)” means the city or cities specified as such in the relevant Final Terms;

“Additional Financial Centre(s)” means the city or cities specified as such in the relevant Final Terms;

“Business Day” means:

(i) in relation to any sum payable in euro, a TARGET Settlement Day and a day on which commercial banks and foreign exchange markets settle payments generally in each (if any) Additional Business Centre; and

(ii) in relation to any sum payable in a currency other than euro, a day on which commercial banks and foreign exchange markets settle payments generally in London, in the Principal Financial Centre of the relevant currency and in each (if any) Additional Business Centre;

“Business Day Convention,” in relation to any particular date, has the meaning given in the relevant Final Terms and, if so specified in the relevant Final Terms, may have different meanings in relation to different dates and, in this context, the following expressions shall have the following meanings:

(i) “Following Business Day Convention” means that the relevant date shall be postponed to the first following day that is a Business Day;

(ii) “Modified Following Business Day Convention” or “Modified Business Day Convention” means that the relevant date shall be postponed to the first following day that is a Business Day unless that day falls in the next calendar month in which case that date will be the first preceding day that is a Business Day;

(iii) “Preceding Business Day Convention” means that the relevant date shall be brought forward to the first preceding day that is a Business Day;

(iv) “FRN Convention,” “Floating Rate Convention” or “Eurodollar Convention” means that each relevant date shall be the date which numerically corresponds to the preceding such date in the calendar month which is the number of months specified in the relevant Final Terms as the Specified Period after the calendar month in which the preceding such date occurred provided, however, that:

(A) if there is no such numerically corresponding day in the calendar month in which any such date should occur, then such date will be the last day which is a Business Day in that calendar month;

(B) if any such date would otherwise fall on a day which is not a Business Day, then such date will be the first following day which is a Business Day unless that day falls in the next calendar month, in which case it will be the first preceding day which is a Business Day; and

(C) if the preceding such date occurred on the last day in a calendar month which was a Business Day, then all subsequent such dates will be the last day which is a Business Day in the calendar month which is the specified number of months after the calendar month in which the preceding such date occurred; and

(v) “No Adjustment” means that the relevant date shall not be adjusted in accordance with any Business Day Convention;

“Calculation Agent” means the Fiscal Agent or such other Person specified in the relevant Final Terms as the party responsible for calculating the Rate(s) of Interest and Interest Amount(s) and/or such other amount(s) as may be specified in the relevant Final Terms;

“Calculation Amount” has the meaning given in the relevant Final Terms;

“Consolidated Assets” means the aggregate amount of assets (less applicable reserves for depreciation, amortisation, unearned finance charges, allowance for credit losses and other properly deductible items) after deducting therefrom all goodwill, trade names, trademarks, patents, organisation expenses and other like intangibles, all as set forth on the most recent balance sheet of the Issuer and its Subsidiaries and computed in accordance with generally accepted accounting principles;

“Coupon Sheet” means, in respect of a Note, a coupon sheet relating to the Note;

“Day Count Fraction” means, in respect of the calculation of an amount for any period of time (the “Calculation Period”), such day count fraction as may be specified in these Conditions or the relevant Final Terms and:

(i) if “Actual/Actual (ICMA)” is so specified, means:

(a) where the Calculation Period is equal to or shorter than the Regular Period during which it falls, the actual number of days in the Calculation Period divided by the product of (1) the actual number of days in such Regular Period and (2) the number of Regular Periods in any year; and

(b) where the Calculation Period is longer than one Regular Period, the sum of:

(A) the actual number of days in such Calculation Period falling in the Regular Period in which it begins divided by the product of (1) the actual number of days in such Regular Period and (2) the number of Regular Periods in any year; and

(B) the actual number of days in such Calculation Period falling in the next Regular Period divided by the product of (a) the actual number of days in such Regular Period and (2) the number of Regular Periods in any year;

(ii) if “Actual/365” or “Actual/Actual (ISDA)” is so specified, means the actual number of days in the Calculation Period divided by 365 (or, if any portion of the Calculation Period falls in a leap year, the sum of (A) the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365);

(iii) if “Actual/365 (Fixed)” is so specified, means the actual number of days in the Calculation Period divided by 365;

(iv) if “Sterling/FRN” is so specified, means the actual number of days in the Interest Period divided by 365 or, in the case of an Interest Payment Date falling in a leap year, 366;

(v) if “Actual/360” is so specified, means the actual number of days in the Calculation Period divided by 360;

(vi) if “30/360” is so specified, means the number of days in the Calculation Period divided by 360 (the number of days to be calculated on the basis of a year of 360 days with 12 30-day months (unless (i) the last day of the Calculation Period is the 31st day of a month but the first day of the Calculation Period is a day other than the 30th or 31st day of a month, in which case the month that includes that last day shall not be considered to be shortened to a 30-day month, or (ii) the last day of the Calculation Period is the last day of the month of February, in which case the month of February shall not be considered to be lengthened to a 30-day month)); and

(vii) if “30E/360” or “Eurobond Basis” is so specified means, the number of days in the Calculation Period divided by 360 (the number of days to be calculated on the basis of a year of 360 days with 12 30-day months, without regard to the date of the first day or last day of the Calculation Period unless, in the case of the final Calculation Period, the date of final maturity is the last day of the month of February, in which case the month of February shall not be considered to be lengthened to a 30-day month);

“Early Redemption Amount (Tax)” means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms;

“Early Termination Amount” means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, these Conditions or the relevant Final Terms;

“Extraordinary Resolution” has the meaning given in the Agency Agreement;

“Final Redemption Amount” means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms;

“First Interest Payment Date” means the date specified in the relevant Final Terms;

“Fixed Coupon Amount” has the meaning given in the relevant Final Terms;

“Indebtedness” means any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Issuer;

“Interest Amount” means, in relation to a Note and an Interest Period, the amount of interest payable in respect of that Note for that Interest Period;

“Interest Commencement Date” means the Issue Date of the Notes or such other date as may be specified as the Interest Commencement Date in the relevant Final Terms;

“Interest Determination Date” has the meaning given in the relevant Final Terms;

“Interest Payment Date” means the First Interest Payment Date and any other date or dates specified as such in, or determined in accordance with the provisions of, the relevant Final Terms and, if a Business Day Convention is specified in the relevant Final Terms:

(i) as the same may be adjusted in accordance with the relevant Business Day Convention; or

(ii) if the Business Day Convention is the FRN Convention, Floating Rate Convention or Eurodollar Convention and an interval of a number of calendar months is specified in the relevant Final Terms as being the Specified Period, each of such dates as may occur in accordance with the FRN Convention, Floating Rate Convention or Eurodollar Convention at such Specified Period of calendar months following the Interest Commencement Date (in the case of the First Interest Payment Date) or the previous Interest Payment Date (in any other case);

“Interest Period” means each period beginning on (and including) the Interest Commencement Date or any Interest Payment Date and ending on (but excluding) the next Interest Payment Date;

“ISDA Definitions” means the 2000 ISDA Definitions (as amended and updated as at the date of issue of the first Tranche of the Notes of the relevant Series (as specified in the relevant Final Terms) as published by the International Swaps and Derivatives Association, Inc.) or, if so specified in the relevant Final Terms, the 2006 ISDA Definitions (as amended and updated as at the date of issue of the first Tranche of the Notes of the relevant Series (as specified in the relevant Final Terms) as published by the International Swaps and Derivatives Association, Inc.);

“Issuer” means PFE or PFP, as may be specified in the Final Terms;

“Issue Date” has the meaning given in the relevant Final Terms;

“Liens” means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, including but not limited to a security interest arising from a mortgage, encumbrance, pledge, conditional sale or trust receipt, or a lease, consignment or bailment for security purposes. For the purposes of this definition, a Person shall be deemed to be the owner of any Property which it has or holds subject to a conditional sale arrangement, financing lease or other arrangement pursuant to which title to the Property has been retained by or is vested in some other Person for security purposes;

“Margin” has the meaning given in the relevant Final Terms;

“Maturity Date” has the meaning given in the relevant Final Terms;

“Maximum Redemption Amount” has the meaning given in the relevant Final Terms;

“Minimum Redemption Amount” has the meaning given in the relevant Final Terms;

“Optional Redemption Amount (Call)” means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms;

“Optional Redemption Amount (Put)” means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms;

“Optional Redemption Date (Call)” has the meaning given in the relevant Final Terms;

“Optional Redemption Date (Put)” has the meaning given in the relevant Final Terms;

“Participating Member State” means a Member State of the European Communities which adopts the euro as its lawful currency in accordance with the Treaty;

“Payment Business Day” means:

(i) if the currency of payment is euro, any day which is:

(A) a day on which banks in the relevant place of presentation are open for presentation and payment of bearer debt securities and for dealings in foreign currencies; and

(B) in the case of payment by transfer to an account, a TARGET Settlement Day and a day on which dealings in foreign currencies may be carried on in each (if any) Additional Financial Centre; or

(ii) if the currency of payment is not euro, any day which is:

(A) a day on which banks in the relevant place of presentation are open for presentation and payment of bearer debt securities and for dealings in foreign currencies; and

(B) in the case of payment by transfer to an account, a day on which dealings in foreign currencies may be carried on in the Principal Financial Centre of the currency of payment and in each (if any) Additional Financial Centre;

“Person” means any individual, company, corporation, firm, partnership, joint venture, association, organisation, state or agency of a state or other entity, whether or not having separate legal personality;

“Principal Financial Centre” means, in relation to any currency, the principal financial centre for that currency provided, however, that in relation to euro, it means the principal financial centre of such Member State of the European Communities as is selected (in the case of a payment) by the payee or (in the case of a calculation) by the Calculation Agent;

“Property” means any kind of property or asset, whether real, personal or mixed, tangible or intangible;

“Put Option Notice” means a notice which must be delivered to a Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder;

“Put Option Receipt” means a receipt issued by a Paying Agent to a depositing Noteholder upon deposit of a Note with such Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder;

“Rate of Interest” means the rate or rates (expressed as a percentage per annum) of interest payable in respect of the Notes specified in the relevant Final Terms or calculated or determined in accordance with the provisions of these Conditions and/or the relevant Final Terms;

“Redemption Amount” means, as appropriate, the Final Redemption Amount, the Early Redemption Amount (Tax), the Optional Redemption Amount (Call), the Optional Redemption Amount (Put), the Early Termination Amount or such other amount in the nature of a redemption amount as may be specified in, or determined in accordance with the provisions of, the relevant Final Terms;

“Reference Banks” has the meaning given in the relevant Final Terms or, if none, four major banks selected by the Calculation Agent in the market that is most closely connected with the Reference Rate;

“Reference Price” has the meaning given in the relevant Final Terms;

“Reference Rate” has the meaning given in the relevant Final Terms;

“Regular Period” means:

(i) in the case of Notes where interest is scheduled to be paid only by means of regular payments, each period from and including the Interest Commencement Date to but excluding the First Interest Payment Date and each successive period from and including one Interest Payment Date to but excluding the next Interest Payment Date;

(ii) in the case of Notes where, apart from the first Interest Period, interest is scheduled to be paid only by means of regular payments, each period from and including a Regular Date falling in any year to but excluding the next Regular Date, where “Regular Date” means the day and month (but not the year) on which any Interest Payment Date falls; and

(iii) in the case of Notes where, apart from one Interest Period other than the first Interest Period, interest is scheduled to be paid only by means of regular payments, each period from and including a Regular Date falling in any year to but excluding the next Regular Date, where “Regular Date” means the day and month (but not the year) on which any Interest Payment Date falls other than the Interest Payment Date falling at the end of the irregular Interest Period;

“Relevant Date” means, in relation to any payment, whichever is the later of (a) the date on which the payment in question first becomes due and (b) if the full amount payable has not been received in the Principal Financial Centre of the currency of payment by the Fiscal Agent on or prior to such due date, the date on which (the full amount having been so received) notice to that effect has been given to the Noteholders;

“Relevant Financial Centre” has the meaning given in the relevant Final Terms;

“Relevant Screen Page” means the page, section or other part of a particular information service (including, without limitation, the Reuter Money 3000 Service and the Telerate Service) specified as the Relevant Screen Page in the relevant Final Terms, or such other page, section or other part as may replace it on that information service or such other information service, in each case, as may be nominated by the Person providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to the Reference Rate;

“Relevant Time” has the meaning given in the relevant Final Terms;

“Reserved Matter” means any proposal

(i) to change any date fixed for payment of principal or interest in respect of the Notes, to reduce the amount of principal or interest payable on any date in respect of the Notes, to alter the method of calculating the amount of any payment in respect of the Notes or the date for any such payment;

(ii) to effect the exchange or substitution of the Notes for, or the conversation of the Notes into, shares bonds or other obligations or securities of the Issuer or any other Person or body corporate formed or to be formed;

(iii) to change the currency in which amounts due in respect of the Notes are payable;

(iv) to change the quorum required at any Meeting or the majority required to pass an Extraordinary Resolution; or

(v) to amend this definition;

“Restricted Debt” when used with respect to the Issuer or any Subsidiary of the Issuer, means any present or future indebtedness for money borrowed evidenced by any note, bond, debenture or other evidence of indebtedness for money borrowed which is, or is capable of being, listed, quoted or traded on any stock exchange or in any securities market (including, without limitation, any over-the counter market), for which the Issuer or such Subsidiary of the Issuer is liable, directly or indirectly, absolutely or contingently. Restricted Debt shall not include any indebtedness for the payment, redemption or satisfaction of which money (or other Property permitted under the instrument creating or evidencing such indebtedness) in the necessary amount shall have been deposited in trust with a trustee or proper depository at or before the maturity or redemption date thereof. For the purposes of this definition, “indebtedness for money borrowed” shall include, without limitation, obligations created or arising under any conditional sale, financing lease, or other title retention agreement and obligations to pay for Property;

“Specified Currency” has the meaning given in the relevant Final Terms;

“Specified Denomination(s)” has the meaning given in the relevant Final Terms;

“Specified Office” has the meaning given in the Agency Agreement;

“Specified Period” has the meaning given in the relevant Final Terms;

“Subsidiary” means, in relation to any Person (the “first Person”) at any particular time, any other Person (the “second Person”):

(i) whose affairs and policies the first Person controls or has the power to control, whether by ownership of share capital, contract, the power to appoint or remove members of the governing body of the second Person or otherwise; or

(ii) whose financial statements are, in accordance with applicable law and generally accepted accounting principles, consolidated with those of the first Person;

“Talon” means a talon for further Coupons;

“TARGET2” means the Trans-European Automated Real-Time Gross Settlement Express Transfer payment system which utilises a single shared platform and which was launched on 19 November 2007;

“TARGET Settlement Day” means any day on which TARGET2 is open for the settlement of payments in euro;

“Treaty” means the Treaty establishing the European Communities, as amended; and

“Zero Coupon Note” means a Note specified as such in the relevant Final Terms.

(b) Interpretation: In these Conditions:

(i) if the Notes are Zero Coupon Notes, references to Coupons and Couponholders are not applicable;

(ii) if Talons are specified in the relevant Final Terms as being attached to the Notes at the time of issue, references to Coupons shall be deemed to include references to Talons;

(iii) if Talons are not specified in the relevant Final Terms as being attached to the Notes at the time of issue, references to Talons are not applicable;

(iv) any reference to principal shall be deemed to include the Redemption Amount, any additional amounts in respect of principal which may be payable under Condition 12 (Taxation), any premium payable in respect of a Note and any other amount in the nature of principal payable pursuant to these Conditions;

(v) any reference to interest shall be deemed to include any additional amounts in respect of interest which may be payable under Condition 12 (Taxation) and any other amount in the nature of interest payable pursuant to these Conditions;

(vi) references to Notes being “outstanding” shall be construed in accordance with the Agency Agreement;

(vii) if an expression is stated in Condition 2(a) to have the meaning given in the relevant Final Terms, but the relevant Final Terms gives no such meaning or specifies that such expression is “not applicable” then such expression is not applicable to the Notes; and

(viii) any reference to the Agency Agreement shall be construed as a reference to the Agency Agreement as amended and/or supplemented up to and including the Issue Date of the Notes.

3. Form Denomination and Title

The Notes are in bearer form in the Specified Denomination(s) with Coupons and, if specified in the relevant Final Terms, Talons attached at the time of issue. In the case of a Series of Notes with more than one Specified Denomination, Notes of one Specified Denomination will not be exchangeable for Notes of another Specified Denomination. In the case of any Notes which are to be admitted to trading on a regulated market within the European Economic Area or offered to the public in a Member State of the European Economic Area in circumstances which require the publication of a prospectus under the Prospectus Directive, the minimum Specified Denomination shall be €50,000 (or its equivalent in any other currency as at the date of issue of the relevant Notes). Title to the Notes and the Coupons will pass by delivery. The holder of any Note or Coupon shall (except as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any other interest therein, any writing thereon or any notice of any previous loss or theft thereof) and no Person shall be liable for so treating such holder. No Person shall have any right to enforce any term or condition of any Note under the Contracts (Rights of Third Parties) Act 1999.

4. Status of Notes

The Notes constitute direct, general, unconditional, unsubordinated and (without prejudice to the provisions of Condition 5 (Negative Pledge)) unsecured obligations of the Issuer which will at all times rank pari passu among themselves and at least pari passu with all other present and future unsecured and unsubordinated obligations of the Issuer, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application and subject to Condition 5 (Negative Pledge).

5. Negative Pledge

After the date hereof, the Issuer will not itself, and will not permit any Subsidiary of the Issuer to, create, incur or suffer to exist, any Lien on any Property of the Issuer or any Subsidiary of the Issuer securing any Restricted Debt, without effectively providing that the Notes (together with, if the Issuer shall so determine, any other indebtedness of the Issuer or such Subsidiary then existing or thereafter created) shall be secured equally and rateably with (or, at the option of the Issuer, prior to) such secured Restricted Debt, so long as such secured Restricted Debt shall

be so secured, unless, after giving effect thereto, the aggregate amount of all Restricted Debt of the Issuer and its Subsidiaries secured by Liens on Property of the Issuer and its Subsidiaries would not exceed 15% of Consolidated Assets; provided, however, that this Condition 5 shall not apply to, and there shall be excluded from Restricted Debt secured by Liens in any computation under this Condition 5, Restricted Debt secured only by:

(i) Liens on Property of, or on any shares of capital stock of, any corporation existing at the time such corporation becomes a Subsidiary of the Issuer;

(ii) Liens in favour of the Issuer or any Subsidiary of the Issuer or Liens securing any indebtedness of a Subsidiary to the Issuer or of the Issuer or a Subsidiary to a Subsidiary of the Issuer;

(iii) Liens in favour of any governmental body (or surety for any governmental body) to secure progress, advance or other payments pursuant to any contract or provision of any statute or rule of court;

(iv) Liens of any other creditors on Property repossessed in the ordinary course of business which comprises collateral security for defaulted indebtedness or additional Liens created on any such Property for the purpose of protecting the interest of the Issuer therein;

(v) A banker’s Lien or other right of offset in favour of any lender or other holder of Restricted Debt on money deposited with such lender or holder in the ordinary course of business;

(vi) Liens on Property and rentals therefrom existing at the time of acquisition thereof, or to secure the payment of all or any part of the purchase price thereof or construction thereon or to secure any Restricted Debt incurred prior to, at the time of, or within 180 days after the later of the acquisition of such Property of the completion of construction for the purpose of financing all or any part of the purchase price thereof or construction thereon; or

(vii) Any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any Lien referred to in the foregoing clauses (i) through (vi), inclusive; provided, however, that such extension, renewal or replacement Lien shall be limited to all or part of the same Property that secured the Lien extended, renewed or replaced (plus improvements on such Property).

For purposes of this Condition 5 an “acquisition” of Property shall include any transaction or Series of transactions by which the Issuer or a Subsidiary of the Issuer acquires, directly or indirectly, an interest, or an additional interest (to the extent thereof), in such Property, including without limitation an acquisition through merger or consolidation with, or an acquisition of an interest in, a Person owning an interest in such Property.

6. Fixed Rate Note Provisions

(a) Application: This Condition 6 (Fixed Rate Note Provisions) is applicable to the Notes only if the Fixed Rate Note Provisions are specified in the relevant Final Terms as being applicable.

(b) Accrual of interest: The Notes bear interest from the Interest Commencement Date at the Rate of Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 11 (Payments). Each Note will cease to bear interest from the due date for final redemption unless, upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition 6 (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Fiscal Agent has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

(c) Fixed Coupon Amount: The amount of interest payable in respect of each Note for any Interest Period shall be the relevant Fixed Coupon Amount and, if the Notes are in more than one Specified Denomination, shall be the relevant Fixed Coupon Amount in respect of the relevant Specified Denomination.

(d) Calculation of interest amount: The amount of interest payable in respect of each Note for any period for which a Fixed Coupon Amount is not specified shall be calculated by applying the Rate of Interest to the Calculation Amount, multiplying the product by the relevant Day Count Fraction and rounding the resulting figure to the nearest sub-unit of the Specified Currency (half

a sub-unit being rounded upwards) and multiplying such rounded figure by a fraction equal to the Specified Denomination of such Note divided by the Calculation Amount. For this purpose a “sub-unit” means, in the case of any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, in the case of euro, means one cent.

7. Floating Rate Note and Index-Linked Interest Note Provisions

(a) Application: This Condition 7 (Floating Rate Note and Index-Linked Interest Note Provisions) is applicable to the Notes only if the Floating Rate Note Provisions or the Index-Linked Interest Note Provisions are specified in the relevant Final Terms as being applicable.

(b) Accrual of interest: The Notes bear interest from the Interest Commencement Date at the Rate of Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 11 (Payments). Each Note will cease to bear interest from the due date for final redemption unless, upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Fiscal Agent has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

(c) Screen Rate Determination: If Screen Rate Determination is specified in the relevant Final Terms as the manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest applicable to the Notes for each Interest Period will be determined by the Calculation Agent on the following basis:

(i) if the Reference Rate is a composite quotation or customarily supplied by one entity, the Calculation Agent will determine the Reference Rate which appears on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date;

(ii) in any other case, the Calculation Agent will determine the arithmetic mean of the Reference Rates which appear on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date;

(iii) if, in the case of (i) above, such rate does not appear on that page or, in the case of (ii) above, fewer than two such rates appear on that page or if, in either case, the Relevant Screen Page is unavailable, the Calculation Agent will:

(A) request the principal Relevant Financial Centre office of each the Reference Banks to provide a quotation of the Reference Rate at approximately the Relevant Time on the Interest Determination Date to prime banks in the Relevant Financial Centre interbank market in an amount that is representative for a single transaction in that market at that time; and

(B) determine the arithmetic mean of such quotations; and

(iv) if fewer than two such quotations are provided as requested, the Calculation Agent will determine the arithmetic mean of the rates (being the nearest to the Reference Rate, as determined by the Calculation Agent) quoted by major banks in the Principal Financial Centre of the Specified Currency, selected by the Calculation Agent, at approximately 11.00 a.m. (local time in the Principal Financial Centre of the Specified Currency) on the first day of the relevant Interest Period for loans in the Specified Currency to leading European banks for a period equal to the relevant Interest Period and in an amount that is representative for a single transaction in that market at that time,

and the Rate of Interest for such Interest Period shall be the sum of the Margin and the rate or (as the case may be) the arithmetic mean so determined; provided, however, that if the Calculation Agent is unable to determine a rate or (as the case may be) an arithmetic mean in accordance with the above provisions in relation to any Interest Period, the Rate of Interest applicable to the Notes during such Interest Period will be the sum of the Margin and the rate or (as the case may be) the arithmetic mean last determined in relation to the Notes in respect of a preceding Interest Period.

(d) ISDA Determination: If ISDA Determination is specified in the relevant Final Terms as the manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest applicable to the Notes for each Interest Period will be the sum of the Margin and the relevant ISDA Rate where “ISDA Rate” in relation to any Interest Period means a rate equal to the Floating Rate (as defined in the ISDA Definitions) that would be determined by the Calculation Agent under an

interest rate swap transaction if the Calculation Agent were acting as Calculation Agent for that interest rate swap transaction under the terms of an agreement incorporating the ISDA Definitions and under which:

(i) the Floating Rate Option (as defined in the ISDA Definitions) is as specified in the relevant Final Terms;

(ii) the Designated Maturity (as defined in the ISDA Definitions) is a period specified in the relevant Final Terms; and

(iii) the relevant Reset Date (as defined in the ISDA Definitions) is either (A) if the relevant Floating Rate Option is based on the London inter-bank offered rate (LIBOR) for a currency, the first day of that Interest Period or (B) in any other case, as specified in the relevant Final Terms.

(e) Index-Linked Interest: If the Index-Linked Interest Note Provisions are specified in the relevant Final Terms as being applicable, the Rate(s) of Interest applicable to the Notes for each Interest Period will be determined in the manner specified in the relevant Final Terms.

(f) Maximum or Minimum Rate of Interest: If any Maximum Rate of Interest or Minimum Rate of Interest is specified in the relevant Final Terms, then the Rate of Interest shall in no event be greater than the maximum or be less than the minimum so specified.

(g) Calculation of Interest Amount: The Calculation Agent will, as soon as practicable after the time at which the Rate of Interest is to be determined in relation to each Interest Period, calculate the Interest Amount payable in respect of each Note for such Interest Period. The Interest Amount will be calculated by applying the Rate of Interest for such Interest Period to the Calculation Amount, multiplying the product by the relevant Day Count Fraction, rounding the resulting figure to the nearest sub-unit of the Specified Currency (half a sub-unit being rounded upwards) and multiplying such rounded figure by a fraction equal to the Specified Denomination of the relevant note divided by the Calculation amount. For this purpose a “sub-unit” means, in the case of any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, in the case of euro, means one cent.

(h) Calculation of other amounts: If the relevant Final Terms specifies that any other amount is to be calculated by the Calculation Agent, the Calculation Agent will, as soon as practicable after the time or times at which any such amount is to be determined, calculate the relevant amount. The relevant amount will be calculated by the Calculation Agent in the manner specified in the relevant Final Terms.

(i) Publication: The Calculation Agent will cause each Rate of Interest and Interest Amount determined by it, together with the relevant Interest Payment Date, and any other amount(s) required to be determined by it together with any relevant payment date(s) to be notified to the Paying Agents and each listing authority, stock exchange and/or quotation system (if any) by which the Notes have then been admitted to listing, trading and/or quotation as soon as practicable after such determination but (in the case of each Rate of Interest, Interest Amount and Interest Payment Date) in any event not later than the first day of the relevant Interest Period. Notice thereof shall also promptly be given to the Noteholders. The Calculation Agent will be entitled to recalculate any Interest Amount (on the basis of the foregoing provisions) in the event of an extension or shortening of the relevant Interest Period. If the Calculation Amount is less than the minimum Specified Denomination the Calculation Agent shall not be obliged to publish each Interest Amount but instead may publish only the Calculation Amount and the Interest Amount in respect of a Note having the minimum Specified Denomination.

(j) Notifications etc: All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of this Condition by the Calculation Agent will (in the absence of manifest error) be binding on the Issuer, the Paying Agents, the Noteholders and the Couponholders and (subject as aforesaid) no liability to any such Person will attach to the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions for such purposes.

8. Zero Coupon Note Provisions

(a) Application: This Condition 8 (Zero Coupon Note Provisions) is applicable to the Notes only if the Zero Coupon Note Provisions are specified in the relevant Final Terms as being applicable.

(b) Late payment on Zero Coupon Notes: If the Redemption Amount payable in respect of any Zero Coupon Note is improperly withheld or refused, the Redemption Amount shall thereafter be an amount equal to the sum of:

(i) the Reference Price; and

(ii) the product of the Accrual Yield (compounded annually) being applied to the Reference Price on the basis of the relevant Day Count Fraction from (and including) the Issue Date to (but excluding) whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Fiscal Agent has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

9. Dual Currency Note Provisions

(a) Application: This Condition 9 (Dual Currency Note Provisions) is applicable to the Notes only if the Dual Currency Note Provisions are specified in the relevant Final Terms as being applicable.

(b) Rate of Interest: If the rate or amount of interest falls to be determined by reference to an exchange rate, the rate or amount of interest payable shall be determined in the manner specified in the relevant Final Terms.

10. Redemption and Purchase

(a) Scheduled redemption: Unless previously redeemed, or purchased and cancelled, the Notes will be redeemed at their Final Redemption Amount on the Maturity Date, subject as provided in Condition 11 (Payments).

(b) Redemption for tax reasons: The Notes may be redeemed at the option of the Issuer in whole, but not in part:

(i) at any time (if neither the Floating Rate Note Provisions or the Index-Linked Interest Note Provisions are specified in the relevant Final Terms as being applicable); or

(ii) on any Interest Payment Date (if the Floating Rate Note Provisions or the Index-Linked Interest Note Provisions are specified in the relevant Final Terms as being applicable),

on giving not less than 30 nor more than 60 days’ notice to the Noteholders (which notice shall be irrevocable), at their Early Redemption Amount (Tax), together with interest accrued (if any) to the date fixed for redemption, if:

(A) (x) the Issuer has or will become obliged to pay additional amounts as provided or referred to in Condition 12 (Taxation) as a result of any change in, or amendment to, the laws or regulations of The Netherlands or the United States of America or the United Kingdom or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations (including a holding by a court of competent jurisdiction), which change or amendment becomes effective on or after the date of issue of the first Tranche of the Notes; and (y) such obligation cannot be avoided by the Issuer taking reasonable measures available to it; or

(B) the Issuer shall determine that any payment made outside the United States by the Issuer or any Paying Agents in respect of any Note or Coupon appertaining thereto would, under any present or future laws or regulations of the United States affecting taxation or otherwise, be subject to any certification, information or other reporting requirement of U.S. law or regulation with regard to the nationality, residence or identity of a beneficial owner, who is not a U.S. Person, of such instrument or Coupon (other than a requirement that: (x) would not be applicable to a payment made (1) directly to the beneficial owner or (2) to a custodian, nominee or other agent of the beneficial owner; or (y) could be satisfied by the holder, custodian, nominee or other agent certifying that the beneficial owner is not a U.S. Person, provided, however, that in each case referred to in (x)(2) or (y) payment by any such custodian, nominee or agent to the beneficial owner is not otherwise subject to any requirement referred to in this sentence; or (z) would not be applicable to a payment made by at least one paying agent),

provided, however, that no such notice of redemption shall be given earlier than:

(1) where the Notes may be redeemed at any time, 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts if a payment in respect of the Notes were then due; or

(2) where the Notes may be redeemed only on an Interest Payment Date, 60 days prior to the Interest Payment Date occurring immediately before the earliest date on which the Issuer would be obliged to pay such additional amounts if a payment in respect of the Notes were then due.

Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Fiscal Agent (A) a certificate signed by two members of the Board of Management of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred of and (B) (in the case of redemption under Condition 10(b)(A)) an opinion of independent legal advisers of recognised standing to the effect that the Issuer has or will become obliged to pay such additional amounts as a result of such change or amendment. Upon the expiry of any such notice as is referred to in this Condition 10(b), the Issuer shall be bound to redeem the Notes in accordance with this Condition 10(b).

(c) Redemption at the option of the Issuer: If the Call Option is specified in the relevant Final Terms as being applicable, the Notes may be redeemed at the option of the Issuer in whole or, if so specified in the relevant Final Terms, in part on any Optional Redemption Date (Call) at the relevant Optional Redemption Amount (Call) on the Issuer giving not less than 30 nor more than 60 days’ notice to the Noteholders (which notice shall be irrevocable and shall oblige the Issuer to redeem the Notes or, as the case may be, the Notes specified in such notice on the relevant Optional Redemption Date (Call) at the Optional Redemption Amount (Call) plus accrued interest (if any) to such date).

(d) Partial redemption: If the Notes are to be redeemed in part only on any date in accordance with Condition 10(c) (Redemption at the option of the Issuer), the Notes to be redeemed shall be selected by the drawing of lots in such place and in such manner as may be fair and reasonable in the circumstances, taking into account prevailing market practices, subject to compliance with applicable law and the rules of each listing authority, stock exchange and/or quotation system (if any) by which the Notes have then been admitted to listing, trading and/or quotation, and the notice to Noteholders referred to in Condition 10(c) (Redemption at the option of the Issuer) shall specify the serial numbers of the Notes so to be redeemed. If any Maximum Redemption Amount or Minimum Redemption Amount is specified in the relevant Final Terms, then the Optional Redemption Amount (Call) shall in no event be greater than the maximum or be less than the minimum so specified.

(e) Redemption at the option of Noteholders: If the Put Option is specified in the relevant Final Terms as being applicable, the Issuer shall, at the option of the holder of any Note, redeem such Note on the Optional Redemption Date (Put) specified in the relevant Put Option Notice at the relevant Optional Redemption Amount (Put) together with interest (if any) accrued to such date. In order to exercise the option contained in this Condition 10(e), the holder of a Note must, not less than 30 nor more than 60 days before the relevant Optional Redemption Date (Put), deposit with any Paying Agent such Note together with all unmatured Coupons relating thereto and a duly completed Put Option Notice in the form obtainable from any Paying Agent. The Paying Agent with which a Note is so deposited shall deliver a duly completed Put Option Receipt to the depositing Noteholder. No Note, once deposited with a duly completed Put Option Notice in accordance with this Condition 10(e), may be withdrawn; provided, however, that if, prior to the relevant Optional Redemption Date (Put), any such Note becomes immediately due and payable or, upon due presentation of any such Note on the relevant Optional Redemption Date (Put), payment of the redemption moneys is improperly withheld or refused, the relevant Paying Agent shall mail notification thereof to the depositing Noteholder at such address as may have been given by such Noteholder in the relevant Put Option Notice and shall hold such Note at its Specified Office for collection by the depositing Noteholder against surrender of the relevant Put Option Receipt. For so long as any outstanding Note is held by a Paying Agent in accordance with this Condition 10(e), the depositor of such Note and not such Paying Agent shall be deemed to be the holder of such Note for all purposes.

(f) No other redemption: The Issuer shall not be entitled to redeem the Notes otherwise than as provided in paragraphs (a) to (e) above.

(g) Early redemption of Zero Coupon Notes: Unless otherwise specified in the relevant Final Terms, the Redemption Amount payable on redemption of a Zero Coupon Note at any time before the Maturity Date shall be an amount equal to the sum of:

(i) the Reference Price; and

(ii) the product of the Accrual Yield (compounded annually) being applied to the Reference Price from (and including) the Issue Date to (but excluding) the date fixed for redemption or (as the case may be) the date upon which the Note becomes due and payable.

Where such calculation is to be made for a period which is not a whole number of years, the calculation in respect of the period of less than a full year shall be made on the basis of such Day Count Fraction as may be specified in the Final Terms for the purposes of this Condition 10(g) or, if none is so specified, a Day Count Fraction of 30E/360.

(h) Purchase: The Issuer or any of its Subsidiaries may at any time purchase Notes in the open market or otherwise and at any price, provided that all unmatured Coupons are purchased therewith.

(i) Cancellation: All Notes so redeemed or purchased by the Issuer or any of its Subsidiaries and any unmatured Coupons attached to or surrendered with them shall be cancelled and may not be reissued or resold.

11. Payments

(a) Principal: Payments of principal shall be made only against presentation and (provided that payment is made in full) surrender of Notes at the Specified Office of any Paying Agent outside the United States by cheque drawn in the currency in which the payment is due on, or by transfer to an account denominated in that currency (or, if that currency is euro, any other account to which euro may be credited or transferred) and maintained by the payee with, a bank in the Principal Financial Centre of that currency (in the case of a sterling cheque, a town clearing branch of a bank in the City of London). No payments on Notes will be made by mail to an address in the United States of America or by transfer to an account maintained in the United States of America.

(b) Interest: Payments of interest shall, subject to paragraph (h) below, be made only against presentation and (provided that payment is made in full) surrender of the appropriate Coupons at the Specified Office of any Paying Agent outside the United States in the manner described in paragraph (a) above.

(c) Payments in The City of New York: Payments of principal or interest in U.S. dollars may be made at the Specified Office of a Paying Agent in The City of New York if (i) the Issuer has appointed Paying Agents outside the United States with the reasonable expectation that such Paying Agents will be able to make payment of the full amount of the interest on the Notes in U.S. dollars when due, (ii) payment of the full amount of such interest in U.S. dollars at the offices of all such Paying Agents is illegal or effectively precluded by exchange controls or other similar restrictions and (iii) payment is permitted by applicable United States law.

(d) Payments subject to fiscal laws: All payments in respect of the Notes are subject in all cases to any applicable fiscal or other laws and regulations in the place of payment, but without prejudice to the provisions of Condition 12 (Taxation). No commissions or expenses shall be charged to the Noteholders or Couponholders in respect of such payments.

(e) Deductions for unmatured Coupons: If the relevant Final Terms specifies that the Fixed Rate Note Provisions are applicable and a Note is presented without all unmatured Coupons relating thereto:

(i) if the aggregate amount of the missing Coupons is less than or equal to the amount of principal due for payment, a sum equal to the aggregate amount of the missing Coupons will be deducted from the amount of principal due for payment; provided, however, that if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of the aggregate amount of such missing Coupons which the gross amount actually available for payment bears to the amount of principal due for payment;

(ii) if the aggregate amount of the missing Coupons is greater than the amount of principal due for payment:

(A) so many of such missing Coupons shall become void (in inverse order of maturity) as will result in the aggregate amount of the remainder of such missing Coupons (the “Relevant Coupons”) being equal to the amount of principal due for payment; provided, however, that where this sub-paragraph would otherwise require a fraction of a missing Coupon to become void, such missing Coupon shall become void in its entirety; and

(B) a sum equal to the aggregate amount of the Relevant Coupons (or, if less, the amount of principal due for payment) will be deducted from the amount of principal due for payment; provided, however, that, if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of the aggregate amount of the Relevant Coupons (or, as the case may be, the amount of principal due for payment) which the gross amount actually available for payment bears to the amount of principal due for payment.

Each sum of principal so deducted shall be paid in the manner provided in paragraph (a) above against presentation and (provided that payment is made in full) surrender of the relevant missing Coupons.

(f) Unmatured Coupons void: If the relevant Final Terms specifies that this Condition 11(f) is applicable or that the Floating Rate Note Provisions or the Index-Linked Interest Note Provisions are applicable, on the due date for final redemption of any Note or early redemption of such Note pursuant to Condition 10(b) (Redemption for tax reasons), Condition 10(e) (Redemption at the option of Noteholders), Condition 10(c) (Redemption at the option of the Issuer) or Condition 13 (Events of Default), all unmatured Coupons relating thereto (whether or not still attached) shall become void and no payment will be made in respect thereof.

(g) Payments on Business Days: If the due date for payment of any amount in respect of any Note or Coupon is not a Payment Business Day in the place of presentation, the holder shall not be entitled to payment in such place of the amount due until the next succeeding Payment Business Day in such place and shall not be entitled to any further interest or other payment in respect of any such delay.

(h) Payments other than in respect of matured Coupons: Payments of interest other than in respect of matured Coupons shall be made only against presentation of the relevant Notes at the Specified Office of any Paying Agent outside the United States (or in The City of New York if permitted by paragraph (c) above).

(i) Partial payments: If a Paying Agent makes a partial payment in respect of any Note or Coupon presented to it for payment, such Paying Agent will endorse thereon a statement indicating the amount and date of such payment.

(j) Exchange of Talons: On or after the maturity date of the final Coupon which is (or was at the time of issue) part of a Coupon Sheet relating to the Notes, the Talon forming part of such Coupon Sheet may be exchanged at the Specified Office of the Fiscal Agent or at the office of the Paying Agent in London for a further Coupon Sheet (including, if appropriate, a further Talon but excluding any Coupons in respect of which claims have already become void pursuant to Condition 14 (Prescription)). Upon the due date for redemption of any Note, any unexchanged Talon relating to such Note shall become void and no Coupon will be delivered in respect of such Talon.

12. Taxation

(a) Gross up: All payments of principal and interest in respect of the Notes and the Coupons by or on behalf of the Issuer shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or on behalf of The Netherlands, the United States of America or the United Kingdom or any political subdivision therein or any authority therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments, or governmental charges is required by law. In that event, the Issuer shall pay such additional amounts as will result in receipt by the Noteholders and the Couponholders of such amounts as would have been received by them had no such withholding or deduction been required, except that no such additional amounts shall be payable in respect of any Note or Coupon presented for payment:

(i) by or on behalf of a holder which is liable for such taxes, duties, assessments or governmental charges in respect of such Note or Coupon by reason of its having some connection with the jurisdiction by which such taxes, duties, assessments or charges have been imposed, levied, collected, withheld or assessed other than the mere holding of the Note or Coupon; or

(ii) where such withholding or deduction is required to be made pursuant to European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive; or

(iii) by or on behalf of a holder who would have been able to avoid such withholding or deduction by presenting the relevant Note or Coupon to another Paying Agent in a Member State of the EU; or

(iv) more than 30 days after the Relevant Date except to the extent that the holder of such Note or Coupon would have been entitled to such additional amounts on presenting such Note or Coupon for payment on the last day of such period of 30 days;

(v) where such withholding or deduction would not have been imposed but for the holder’s past or present status as a personal holding company, foreign personal holding company or passive foreign investment company with respect to the United States or a corporation that accumulates earnings to avoid U.S. federal income tax; or

(vi) where such withholding or deduction would not have been imposed but for the holder’s past or present status as a “10 per cent. shareholder” of the obligor of the Note as defined in Section 871(h)(3) of the U.S. Internal Revenue Code or any successor provisions, a controlled foreign corporation related to the obligor of the Note or a bank that has invested in the Note as an extension of credit in the ordinary course of its trade or business.

(b) Taxing jurisdiction: If the Issuer becomes subject at any time to any taxing jurisdiction other than The Netherlands (in the case of PFE) or the United Kingdom (in the case of PFP) references in these Conditions to The Netherlands or the United Kingdom (as relevant) shall be construed as references to The Netherlands or the United Kingdom and/or such other jurisdiction.

13. Events of Default

If any of the following events occurs and is continuing:

(a) Non-payment: the Issuer fails to pay any amount of principal in respect of the Notes on the due date for payment thereof or fails to pay any amount of interest in respect of the Notes within 14 days of the due date for payment thereof; or

(b) Breach of other obligations: the Issuer defaults in the performance or observance of any of its other obligations under or in respect of the Notes and such default remains unremedied for 30 days after written notice thereof, addressed to the Issuer by any Noteholder has been delivered to the Issuer or to the Specified Office of the Fiscal Agent; or

(c) Cross-default of Issuer: the Issuer defaults under any Indebtedness, whether such Indebtedness now exists or shall hereafter be created, which default shall have resulted in Indebtedness in an aggregate principal amount exceeding €10,000,000 (or its equivalent in any other currency or currencies) (except that such euro amount shall not apply with respect to a default with respect to Notes of any other Series), becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such acceleration having been rescinded or annulled or such Indebtedness having been discharged within a period of 30 days after there shall have been given, by registered or certified mail, to the Issuer by any Noteholder, a written notice specifying such default and requiring the Issuer to cause such acceleration to be rescinded or annulled or such Indebtedness to be discharged and stating that such notice is a “Notice of Default” under this Condition 13(c); or

(d) Security enforced: a secured party or encumbrancer takes possession, or a receiver, manager or other similar officer is appointed, of the whole or a substantial part of the undertaking, assets and revenues of the Issuer or any of its Subsidiaries; or

(e) Insolvency etc: (i) the Issuer becomes insolvent or admits in writing that it is unable to pay its debts as they fall due, (ii) an administrator (including a bewindvoerder) or liquidator (including a curator) of the Issuer or the whole or a substantial part of the undertaking, assets and revenues of the Issuer is appointed (or application for any such appointment is made including an application for the Issuer to be declared bankrupt (failliet) or to be granted a moratorium of payments (surseance van betaling), unless such application is contested by the Issuer and/or discharged or stayed within 90 days or is cancelled or withdrawn within 90 days after the making thereof), (iii) the Issuer takes any action for a readjustment or deferment of any of its obligations or makes a general assignment or an arrangement or composition (verag) with or for the benefit of its creditors or declares a moratorium in respect of any of its Indebtedness; or

(f) Winding up etc: an order is made or an effective resolution is passed for the winding up, liquidation or dissolution (ontbinding en vereffening) of the Issuer or any of its Subsidiaries (otherwise than, in the case of a Subsidiary of the Issuer, for the purposes of or pursuant to an amalgamation, reorganisation or restructuring whilst solvent); or

(g) Attachment etc: an executory attachment (executorial beslag) or interlocutory attachment (conservatoir beslag) is made on all or a substantial part of the assets of the Issuer, or a similar measure under foreign law is made, unless such application is contested by the Issuer and/or discharged or stayed within 90 days, or is cancelled or withdrawn within 90 days after the making thereof; or

(h) Enforcement proceedings: a distress, attachment, execution or other legal process is levied, enforced or sued out on or against the whole or a substantial part of the property, assets or revenues of the Issuer or any of its Subsidiaries and is not discharged or stayed within 90 days,

(i) Keep Well Agreement etc. not in force: the Keep Well Agreement is not (or is claimed by either party thereto not to be) in full force and effect or is modified, amended or terminated in contravention of the provisions thereof, or the Issuer waives, or fails to take all reasonable steps to exercise, any of its rights under the Keep Well Agreement or PACCAR or the Issuer fails to perform or observe any obligation on its part under the Keep Well Agreement so as to affect materially and adversely the interests of any Noteholder or Couponholder;

then any outstanding Notes of a particular Series may by written notice, addressed by any Noteholder, delivered to the Issuer or to the Specified Office of the Fiscal Agent, be declared immediately due and payable, whereupon they shall become immediately due and payable at their Early Termination Amount together with accrued interest (if any) without further action or formality. Upon payment of the Early Termination Amount, all obligations of the Issuer in respect of payment of the principal amount of the Notes of such Series shall terminate.

14. Prescription

Claims for principal shall become void unless the relevant Notes are presented for payment within ten years of the appropriate Relevant Date. Claims for interest shall become void unless the relevant Coupons are presented for payment within five years of the appropriate Relevant Date.

15. Replacement of Notes and Coupons

If any Note or Coupon is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the Specified Office of the Fiscal Agent (and, if the Notes are then admitted to listing, trading and/or quotation by any listing authority, stock exchange and/or quotation system which requires the appointment of a Paying Agent in any particular place, the Paying Agent having its Specified Office in the place required by such listing authority, stock exchange and/or quotation system), subject to all applicable laws and listing authority, stock exchange and/or quotation system requirements, upon payment by the claimant of the expenses incurred in connection with such replacement and on such terms as to evidence, security, indemnity and otherwise as the Issuer may reasonably require. Mutilated or defaced Notes or Coupons must be surrendered before replacements will be issued.

16. Agents

In acting under the Agency Agreement and in connection with the Notes and the Coupons, the Paying Agents act solely as agents of the Issuer and do not assume any obligations towards or relationship of agency or trust for or with any of the Noteholders or Couponholders.

The initial Paying Agents and their initial Specified Offices are listed below. The initial Calculation Agent (if any) is specified in the relevant Final Terms. The Issuer reserves the right at any time to vary or terminate the appointment of any Paying Agent and to appoint a successor fiscal agent or Calculation Agent and additional or successor paying agents; provided, however, that:

(a) the Issuer shall at all times maintain a Fiscal Agent; and

(b) the Issuer undertakes that it will ensure that it maintains a paying agent in an EU Member State that will not be obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000 or any law implementing or complying with, or introduced in order to conform to, such Directive; and

(c) if a Calculation Agent is specified in the relevant Final Terms, the Issuer shall at all times maintain a Calculation Agent; and

(d) if and for so long as the Notes are admitted to listing, trading and/or quotation by any listing authority, stock exchange and/or quotation system which requires the appointment of a Paying Agent in any particular place, the Issuer shall maintain a Paying Agent having its Specified Office in the place required by such listing authority, stock exchange and/or quotation system.

In addition, the Issuer shall forthwith appoint a Paying Agent in New York City in respect of any Notes denominated in U.S. dollars in the circumstances described in Condition 11(c).

Notice of any change in any of the Paying Agents or in their Specified Offices shall promptly be given to the Noteholders.

17. Meetings of Noteholders; Modification and Waiver

(a) Meetings of Noteholders: The Agency Agreement contains provisions for convening meetings of Noteholders to consider matters relating to the Notes, including the modification of any provision of these Conditions. Any such modification may be made if sanctioned by an Extraordinary Resolution. Such a meeting may be convened by the Issuer and shall be convened by them upon the request in writing of Noteholders holding not less than one-tenth of the aggregate principal amount of the outstanding Notes. The quorum at any meeting convened to vote on an Extraordinary Resolution will be two or more Persons holding or representing one more than half of the aggregate principal amount of the outstanding Notes or, at any adjourned meeting, two or more Persons being or representing Noteholders whatever the principal amount of the Notes held or represented; provided, however, that Reserved Matters may only be sanctioned by an Extraordinary Resolution passed at a meeting of Noteholders at which two or more Persons holding or representing not less than three-quarters or, at any adjourned meeting, one quarter of the aggregate principal amount of the outstanding Notes form a quorum. Any Extraordinary Resolution duly passed at any such meeting shall be binding on all the Noteholders and Couponholders, whether present or not.

In addition, a resolution in writing signed by or on behalf of all Noteholders who for the time being are entitled to receive notice of a meeting of Noteholders will take effect as if it were an Extraordinary Resolution. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Noteholders.

(b) Modification: The Notes and these Conditions may be amended without the consent of the Noteholders or the Couponholders to correct a manifest error. In addition, the parties to the Agency Agreement may agree to modify any provision thereof, but the Issuer shall not agree, without the consent of the Noteholders, to any such modification unless it is of a formal, minor or technical nature, it is made to correct a manifest error or it is, in the opinion of the Issuer, not materially prejudicial to the interests of the Noteholders.

18. Further Issues

The Issuer may from time to time, without the consent of the Noteholders or the Couponholders, create and issue further notes having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest) so as to form a single series with the Notes.

19. Notices

Notices to the Noteholders shall be valid if published in a leading English language daily newspaper published in London (which is expected to be the Financial Times) or, if such publication is not practicable, in a leading English language daily newspaper having general circulation in Europe. Any such notice shall be deemed to have been given on the date of first publication. Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the Noteholders.

20. Currency Indemnity

If any sum due from the Issuer in respect of the Notes or the Coupons or any order or judgment given or made in relation thereto has to be converted from the currency (the “first currency”) in which the same is payable under these Conditions or such order or judgment into another currency (the “second currency”) for the purpose of (a) making or filing a claim or proof against the Issuer, (b) obtaining an order or judgment in any court or other tribunal or (c) enforcing any order or judgment given or made in relation to the Notes, the Issuer shall indemnify each Noteholder, on the written demand of such Noteholder addressed to the Issuer and delivered to the Issuer or to the Specified Office of the Fiscal Agent, against any loss suffered as a result of any discrepancy between (i) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (ii) the rate or rates of exchange at

which such Noteholder may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof.

This indemnity constitutes a separate and independent obligation of the Issuer, shall give rise to a separate and independent cause of action and shall continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under the Note or Coupon or any other judgment or order.

21. Rounding

For the purposes of any calculations referred to in these Conditions (unless otherwise specified in these Conditions or the relevant Final Terms), (a) all percentages resulting from such calculations will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, (b) U.S. dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one half cent being rounded up), (c) all Japanese Yen amounts used in or resulting from such calculations will be rounded downwards to the next lower whole Japanese Yen amount, and (d) all amounts denominated in any other currency used in or resulting from such calculations will be rounded to the nearest two decimal places in such currency, with 0.005 being rounded upwards.

22. Governing Law and Jurisdiction

(a) Governing law: The Notes and any non-contractual obligations arising out of or in connection with the Notes are governed by English law.

(b) English courts: The courts of England have exclusive jurisdiction to settle any dispute (a “Dispute”) arising from or connected with the Notes (including a dispute relating to the existence, validity or termination of the Notes or any non-contractual obligation arising out of or in connection with the Notes) or the consequences of their nullity.

(c) Appropriate forum: The Issuer agrees that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that it will not argue to the contrary.

(d) Rights of the Noteholders to take proceedings outside England: Condition 22(b) (English courts) is for the benefit of the Noteholders only. As a result, nothing in this Condition 22 (Governing law and jurisdiction) prevents any Noteholder from taking proceedings relating to a Dispute (“Proceedings”) in any other courts with jurisdiction. To the extent allowed by law, Noteholders may take concurrent Proceedings in any number of jurisdictions.

(e) Process agent: PFE agrees that the documents which start any Proceedings and any other documents required to be served in relation to those Proceedings may be served on it by being delivered to PFP at Croston Road, Leyland, Preston, Lancs PR5 3LZ, United Kingdom or, if different, its registered office for the time being or at any address of PFE in Great Britain at which process may be served on it in accordance with Part XXIII of the Companies Act 1985. If such Person is not or ceases to be effectively appointed to accept service of process on behalf of PFE, PFE shall, on the written demand of any Noteholder addressed and delivered to PFE or to the Specified Office of the Fiscal Agent appoint a further Person in England to accept service of process on its behalf and, failing such appointment within 15 days, any Noteholder shall be entitled to appoint such a Person by written notice addressed to PFE and delivered to PFE or to the Specified Office of the Fiscal Agent. Nothing in this paragraph shall affect the right of any Noteholder to serve process in any other manner permitted by law. This Condition applies to Proceedings in England and to Proceedings elsewhere.

EX-10.(Q)

Exhibit 10(q)

ARTICLE 15

CONTRIBUTION LIMITATIONS

15.1 Basic Limitation

A Member’s Annual Additions with respect to any calendar year shall in no event exceed his Contribution Limitation for such calendar year.

Effective for calendar years beginning prior to January 1, 2009, in the event that a Member’s Contribution Limitation would be exceeded, his Annual Additions shall be reduced to an amount equal to his Contribution Limitation by reducing the components of his Annual Additions as necessary in the order in which they are listed in Section 15.4(b). Such reduction shall be made in accordance with Sections 15.2 and 15.3 (where applicable).

Effective for calendar years beginning on and after January 1, 2009, in the event that a Member’s Contribution Limitation would be exceeded, his Annual Additions shall be reduced to an amount equal to his Contribution Limitation by reducing the components of his Annual Additions as necessary in accordance with the correction methods specified in Section 6.06(2) and (3) of Revenue Procedure 2008-50 or its successor.

In applying these rules, this Plan and any other plan required to be aggregated with this Plan under Treas. Reg. § 1.415(f)-1 shall be treated as one plan.

15.2 Effect on Future Contributions

Articles 4 and 5 notwithstanding, the Salary Deferrals which a Member is permitted to contribute and his share of Company Contributions shall be reduced prospectively to the extent required by Section 15.1. The aggregate amount of the Company Contributions that otherwise would be made under Article 5 shall be reduced accordingly.

15.3 Effect on Prior Contributions

Effective for calendar years beginning prior to January 1, 2009, if a Member’s Annual Additions exceeds his Contribution Limitation, then such Excess Annual Additions as are attributable to Salary Deferrals and Company Contributions shall be eliminated as follows:

(a) Excess Annual Additions attributable to Salary Deferrals, including investment gains, shall be distributed to the Member.

(b) Excess Annual Additions attributable to Company Contributions shall be transferred to a suspense account. Any earnings, appreciation or losses attributable to the suspense account shall be allocated to such account. All amounts credited to the suspense account shall be applied to reduce Company Contributions for the next calendar year, and for succeeding

calendar years if necessary. Such amounts shall be allocated among Members pursuant to Section 5.1 until the suspense account is exhausted (subject to this Article 15). No Company Contributions shall be made as long as any amount remains in the suspense account.

15.4 Definitions

As used in this Article 15, the following words and phrases shall have the following meanings:

(a) “Affiliate” means any corporation which is a member of a “controlled group of corporations” (within the meaning of IRC section 1563(a), determined without regard to IRC sections 1563(a)(4) and 1563(e)(3)(C), and as modified by IRC section 415(h)) of which group PACCAR Inc is also a member.

(b) “Annual Additions” with respect to any calendar year means the sum of the following:

(1) Employee contributions made by the Member under all qualified defined-contribution or defined-benefit plans maintained by PACCAR Inc or any Affiliate, and any other plan required to be aggregated with this Plan pursuant to Treas. Reg. § 1.415(f)-1, during such calendar year;

(2) Employer contributions and forfeitures allocated to the Member under all qualified defined-contribution plans maintained by PACCAR Inc or any Affiliate, other than this Plan, and any other plan required to be aggregated with this Plan pursuant to Treas. Reg. § 1.415(f)-1, as of any date within such calendar year;

(3) Salary Deferrals contributed by the Member under this Plan during such calendar year; and

(4) Company Contributions allocated to the Member under this Plan as of any date within such calendar year.

(5) Any other amounts required to be included in Annual Additions by Treas. Reg. § 1.415(c)-1(b)

Notwithstanding the foregoing, Annual Additions shall not include any amounts required to be excluded from Annual Additions by Treas. Reg. § 1.415(c)-1(b).

(c) “Compensation” for purposes of this Article 15 only, means compensation as described in Treas. Reg. § 1.415(c)-2(d)(4). Compensation shall also include compensation paid after severance from employment to the extent permitted Treas. Reg. § 1.415(c)-2(e)(3).

(d) “Contribution Limitation” with respect to any calendar year means the lesser of (1) 100 percent of the Member’s Compensation for such calendar year or (2) $40,000 (as adjusted by the Commissioner of the Internal Revenue to reflect increases in the cost-of-living in accordance with section 415(d)(1)(C) of the IRC).

15.5. Incorporation by Reference.

To the extent not otherwise provided herein and to the extent inconsistent with the provisions hereof and except as prohibited by applicable regulations under the IRC, the applicable limitations on contributions under section 415 of the IRC and the final regulations issued April 5, 2007 thereunder, are incorporated by reference and shall control over any contrary or omitted provisions in the Plan.

EX-12.(A)

EXHIBIT 12(a)

PACCAR and Subsidiaries

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

PURSUANT TO SEC REPORTING REQUIREMENTS

(Millions of Dollars)

	Nine Months Ended September 30
	2009		2008
FIXED CHARGES
Interest expense - PACCAR and Subsidiaries (1)	$	229.3	$	299.5
Portion of rentals deemed interest		14.8		13.1
TOTAL FIXED CHARGES	$	244.1	$	312.6
EARNINGS
Income before taxes - PACCAR and Subsidiaries (2)	$	81.3	$	1,298.2
Fixed charges		244.1		312.6
EARNINGS AS DEFINED	$	325.4	$	1,610.8
RATIO OF EARNINGS TO FIXED CHARGES		1.33X		5.15X

(1) Exclusive of interest, if any, paid to PACCAR.

(2) Includes before tax earnings of wholly owned subsidiaries.

EX-31.(A)

EXHIBIT 31(a)

CERTIFICATIONS

I, Mark C. Pigott, Chairman and Chief Executive Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of PACCAR Inc;

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-15(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 control over financial reporting.

Date November 5, 2009

/s/ Mark C. Pigott

Mark C. Pigott

Chairman and Chief Executive Officer

(Principal Executive Officer)

EX-31.(B)

EXHIBIT 31(b)

CERTIFICATIONS

I, Thomas E. Plimpton, Vice Chairman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of PACCAR Inc;

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-15(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 control over financial reporting.

Date November 5, 2009

/s/ Thomas E. Plimpton

Thomas E. Plimpton

Vice Chairman

(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 Quarterly Report of PACCAR Inc (the “Company”) on Form 10-Q for the quarter ended September 30, 2009 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 November 5, 2009	By	/s/ Mark C. Pigott
		Mark C. Pigott Chairman and Chief Executive Officer PACCAR Inc
	By	/s/ Thomas E. Plimpton
		Thomas E. Plimpton Vice Chairman PACCAR Inc (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.