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, 2013

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. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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 — 354,091,886 shares as of October 31, 2013

PACCAR Inc - Form 10-Q

INDEX

		Page
PART I. FINANCIAL INFORMATION:
ITEM 1.	FINANCIAL STATEMENTS:
Consolidated Statements of Comprehensive Income — Three and Nine months ended September 30, 2013 and 2012 (Unaudited)			3
Consolidated Balance Sheets — September 30, 2013 (Unaudited) and December  31, 2012			4
Condensed Consolidated Statements of Cash Flows — Nine months ended September  30, 2013 and 2012 (Unaudited)			6
Notes to Consolidated Financial Statements (Unaudited)			7
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		31
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		47
ITEM 4.	CONTROLS AND PROCEDURES		47
PART II. OTHER INFORMATION:
ITEM 1.	LEGAL PROCEEDINGS		47
ITEM 1A.	RISK FACTORS		48
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		48
ITEM 6.	EXHIBITS		48
SIGNATURE			49
INDEX TO EXHIBITS			50

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PACCAR Inc - Form 10-Q

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Consolidated Statements of Comprehensive Income (Unaudited)

(Millions Except Per Share Amounts)

	Three Months Ended				Nine Months Ended
	September 30				September 30
	2013		2012		2013		2012
TRUCK, PARTS AND OTHER:
Net sales and revenues	$	4,006.6	$	3,546.7	$	11,649.5	$	12,252.5
Cost of sales and revenues		3,491.1		3,108.5		10,175.0		10,660.9
Research and development		56.6		66.8		190.5		212.9
Selling, general and administrative		111.1		113.9		341.1		362.2
Interest and other expense (income), net		3.3		.3		4.4		(.2	)
		3,662.1		3,289.5		10,711.0		11,235.8
Truck, Parts and Other Income Before Income Taxes		344.5		257.2		938.5		1,016.7
FINANCIAL SERVICES:
Interest and fees		116.4		115.5		345.2		336.9
Operating lease, rental and other income		177.1		158.0		530.2		464.1
Revenues		293.5		273.5		875.4		801.0
Interest and other borrowing expenses		37.9		40.6		116.2		118.4
Depreciation and other expense		140.2		127.2		423.2		367.5
Selling, general and administrative		23.6		22.6		70.8		70.8
Provision for losses on receivables		3.6		2.7		15.4		15.2
		205.3		193.1		625.6		571.9
Financial Services Income Before Income Taxes		88.2		80.4		249.8		229.1
Investment income		7.3		7.8		21.8		24.9
Total Income Before Income Taxes		440.0		345.4		1,210.1		1,270.7
Income taxes		130.6		111.8		373.0		412.6
Net Income	$	309.4	$	233.6	$	837.1	$	858.1
Net Income Per Share:
Basic	$	.87	$	.66	$	2.36	$	2.41
Diluted	$	.87	$	.66	$	2.36	$	2.41
Weighted Average Common Shares Outstanding:
Basic		354.4		353.7		354.1		355.5
Diluted		355.4		354.3		355.0		356.3
Dividends declared per share	$	.20	$	.20	$	.60	$	.58
Comprehensive Income	$	428.2	$	308.9	$	805.5	$	916.5

See Notes to Consolidated Financial Statements.

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PACCAR Inc - Form 10-Q

Consolidated Balance Sheets (Millions)

	September 30		December 31
	2013		2012*
	(Unaudited)
ASSETS
TRUCK, PARTS AND OTHER:
Current Assets
Cash and cash equivalents	$	1,630.4	$	1,203.2
Trade and other receivables, net		1,093.4		902.1
Marketable debt securities		1,201.1		1,192.7
Inventories, net		893.1		782.4
Other current assets		370.9		331.7
Total Truck, Parts and Other Current Assets		5,188.9		4,412.1
Equipment on operating leases, net		1,016.1		857.9
Property, plant and equipment, net		2,460.9		2,312.9
Other noncurrent assets, net		273.1		249.4
Total Truck, Parts and Other Assets		8,939.0		7,832.3
FINANCIAL SERVICES:
Cash and cash equivalents		80.0		69.2
Finance and other receivables, net		8,694.9		8,298.3
Equipment on operating leases, net		2,191.8		2,030.8
Other assets		405.9		397.2
Total Financial Services Assets		11,372.6		10,795.5
	$	20,311.6	$	18,627.8

* The December 31, 2012 consolidated balance sheet has been derived from audited financial statements.

See Notes to Consolidated Financial Statements.

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PACCAR Inc - Form 10-Q

Consolidated Balance Sheets (Millions)

	September 30			December 31
	2013			2012*
	(Unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
TRUCK, PARTS AND OTHER:
Current Liabilities
Accounts payable, accrued expenses and other	$	2,518.7		$	2,168.3
Current portion of long-term debt		150.0
Total Truck, Parts and Other Current Liabilities		2,668.7			2,168.3
Long-term debt					150.0
Residual value guarantees and deferred revenues		1,070.4			903.5
Other liabilities		671.8			579.5
Total Truck, Parts and Other Liabilities		4,410.9			3,801.3
FINANCIAL SERVICES:
Accounts payable, accrued expenses and other		346.4			309.5
Commercial paper and bank loans		2,642.8			3,562.7
Term notes		5,493.6			4,167.4
Deferred taxes and other liabilities		937.0			940.0
Total Financial Services Liabilities		9,419.8			8,979.6
STOCKHOLDERS’ EQUITY:
Preferred stock, no par value - authorized 1.0 million shares, none issued
Common stock, $1 par value - authorized 1.2 billion shares, issued 354.1 and 353.4 million shares		354.1			353.4
Additional paid-in capital		96.4			56.6
Retained earnings		6,221.5			5,596.4
Accumulated other comprehensive loss		(191.1	)		(159.5	)
Total Stockholders’ Equity		6,480.9			5,846.9
	$	20,311.6		$	18,627.8

* The December 31, 2012 consolidated balance sheet has been derived from audited financial statements.

See Notes to Consolidated Financial Statements.

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PACCAR Inc - Form 10-Q

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Millions)

	Nine Months Ended
	September 30
	2013			2012
OPERATING ACTIVITIES:
Net income	$	837.1		$	858.1
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization:
Property, plant and equipment		150.4			144.6
Equipment on operating leases and other		438.3			377.8
Provision for losses on financial services receivables		15.4			15.2
Other, net		54.3			58.1
Pension contributions		(12.0	)		(93.7	)
Change in operating assets and liabilities:
Trade and other receivables		(185.5	)		(27.6	)
Wholesale receivables on new trucks		(207.3	)		(177.6	)
Sales-type finance leases and dealer direct loans on new trucks		(19.0	)		(112.1	)
Inventories		(117.3	)		(201.0	)
Accounts payable and accrued expenses		511.0			13.9
Residual value guarantees, deferred revenues and other, net		234.9			60.9
Net Cash Provided by Operating Activities		1,700.3			916.6
INVESTING ACTIVITIES:
Retail loans and direct financing leases originated		(2,189.5	)		(2,332.3	)
Collections on retail loans and direct financing leases		1,892.0			1,773.8
Marketable securities purchases		(658.5	)		(498.5	)
Marketable securities sales and maturities		628.5			445.8
Payments for property, plant and equipment		(377.8	)		(334.6	)
Acquisition of equipment for operating leases		(1,004.7	)		(962.7	)
Proceeds from asset disposals		238.7			251.2
Other, net		7.2			(4.9	)
Net Cash Used in Investing Activities		(1,464.1	)		(1,662.2	)
FINANCING ACTIVITIES:
Cash dividends paid		(212.3	)		(455.9	)
Purchase of treasury stock					(162.1	)
Stock compensation transactions		25.7			7.4
Net decrease in commercial paper and short-term bank loans		(912.1	)		(557.9	)
Proceeds from long-term debt		1,884.1			1,951.1
Payments of long-term debt		(565.5	)		(402.6	)
Net Cash Provided by Financing Activities		219.9			380.0
Effect of exchange rate changes on cash		(18.1	)		9.4
Net Increase (Decrease) in Cash and Cash Equivalents		438.0			(356.2	)
Cash and cash equivalents at beginning of period		1,272.4			2,106.7
Cash and cash equivalents at end of period	$	1,710.4		$	1,750.5

See Notes to Consolidated Financial Statements.

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PACCAR Inc - Form 10-Q

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

NOTE A – Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. For further information, refer to the consolidated financial statements and footnotes included in PACCAR Inc’s (the Company) Annual Report on Form 10-K for the year ended December 31, 2012.

Earnings per Share: Basic earnings per common share are computed by dividing earnings by the weighted average number of common shares outstanding, plus the effect of any participating securities. Diluted earnings per common share are computed assuming that all potentially dilutive securities are converted into common shares under the treasury stock method. The dilutive and antidilutive options are shown separately in the table below.

	Three Months Ended				Nine Months Ended
	September 30				September 30
	2013		2012		2013		2012
Additional shares		994,000		689,000		907,000		746,000
Antidilutive options		783,000		2,495,000		873,000		2,552,000

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

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

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

In January 2013, the FASB issued ASU 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, an update to ASU 2011-11, Disclosures about Offsetting Assets and Liabilities.

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PACCAR Inc - Form 10-Q

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

The ASUs require entities with derivatives, repurchase agreements and securities borrowing and lending transactions that are either offset on the balance sheet, or subject to a master netting arrangement, to provide expanded disclosures about the nature of the rights of offset. The updated ASU is effective for annual periods beginning on or after January 1, 2013 and interim periods within those annual periods. The Company adopted ASU 2013-01 in the first quarter of 2013; the implementation of this amendment resulted in additional disclosures (see Note I), but did not have an impact on the Company’s consolidated financial statements.

NOTE B – Investments in Marketable Debt Securities

The Company’s investments in marketable debt 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 Company utilizes third-party pricing services for all of its marketable debt security valuations. The Company reviews the pricing methodology used by the third-party pricing services including the manner employed to collect market information. On a quarterly basis, the Company also performs review and validation procedures on the pricing information received from the third-party providers. These procedures help ensure that the fair value information used by the Company is determined in accordance with applicable accounting guidance.

The Company evaluates its investment in marketable debt securities at the end of each reporting period to determine if a decline in fair value is other than temporary. Realized losses are recognized upon management’s determination that a decline in fair value is other than temporary. The determination of other-than-temporary impairment is a subjective process, requiring the use of judgments and assumptions regarding the amount and timing of recovery. The Company reviews and evaluates its investments at least quarterly to identify investments that have indications of other-than-temporary impairments. It is reasonably possible that a change in estimate could occur in the near term relating to other-than-temporary impairment. Accordingly, the Company considers several factors when evaluating debt securities for other-than-temporary impairment, including whether the decline in fair value of the security is due to increased default risk for the specific issuer or market interest rate risk.

In assessing default risk, the Company considers the collectability of principal and interest payments by monitoring changes to issuers’ credit ratings, specific credit events associated with individual issuers as well as the credit ratings of any financial guarantor, and the extent and duration to which amortized cost exceeds fair value.

In assessing market interest rate risk, including benchmark interest rates and credit spreads, the Company considers its intent for selling the securities and whether it is more likely than not the Company will be able to hold these securities until the recovery of any unrealized losses.

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PACCAR Inc - Form 10-Q

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

Marketable debt securities at September 30, 2013 and December 31, 2012 consisted of the following:

	Amortized		Unrealized		Unrealized		Fair
At September 30, 2013	Cost		Gains		Losses		Value
U.S. tax-exempt securities	$	205.4	$	1.1	$	.1	$	206.4
U.S. corporate securities		79.6		.1				79.7
U.S. government and agency securities		.6						.6
Non-U.S. corporate securities		564.6		1.4		.4		565.6
Non-U.S. government securities		243.6		1.1		.2		244.5
Other debt securities		103.8		.5				104.3
	$	1,197.6	$	4.2	$	.7	$	1,201.1
	Amortized		Unrealized		Unrealized		Fair
At December 31, 2012	Cost		Gains		Losses		Value
U.S. tax-exempt securities	$	217.2	$	1.5	$	.1	$	218.6
U.S. corporate securities		59.8		.3				60.1
U.S. government and agency securities		.8						.8
Non-U.S. corporate securities		447.5		1.4		.2		448.7
Non-U.S. government securities		349.3		5.8		.1		355.0
Other debt securities		108.9		.6				109.5
	$	1,183.5	$	9.6	$	.4	$	1,192.7

The cost of marketable debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Amortization, accretion, interest and dividend income and realized gains and losses are included in investment income. The cost of securities sold is based on the specific identification method. The proceeds from sales and maturities of marketable securities for the nine months ended September 30, 2013 and 2012 were $628.5 and $445.8, respectively. Gross realized gains were $1.7 and $1.9 for the nine months ended September 30, 2013 and 2012, respectively, and gross realized losses were $.5 and $.1 for the nine months ended September 30, 2013 and 2012, respectively.

The fair value of marketable debt securities that have been in an unrealized loss position for less than 12 months at September 30, 2013 was $246.1 and the associated unrealized loss was $.7. The fair value of marketable debt securities that have been in an unrealized loss position for less than 12 months at December 31, 2012 was $291.0 and the associated unrealized loss was $.4. The fair value of marketable debt securities that have been in an unrealized loss position for 12 months or greater at September 30, 2013 was $1.0 and the associated unrealized loss was less than $.1. There were no marketable debt securities that were in an unrealized loss position for 12 months or greater at December 31, 2012.

For the investment securities in gross unrealized loss positions identified above, the Company does not intend to sell the investment securities. It is more likely than not that the Company will not be required to sell the investment securities before recovery of the unrealized losses, and the Company expects that the contractual principal and interest will be received on the investment securities. As a result, the Company recognized no other-than-temporary impairments during the periods presented.

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PACCAR Inc - Form 10-Q

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

Contractual maturities on marketable debt securities at September 30, 2013 were as follows:

	Amortized		Fair
Maturities:	Cost		Value
Within one year	$	530.0	$	531.1
One to five years		667.1		669.5
Six to ten years		.1		.1
More than ten years		.4		.4
	$	1,197.6	$	1,201.1

NOTE C – Inventories

Inventories are stated at the lower of cost or market. Cost of inventories in the U.S. 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.

Inventories include the following:

	September 30			December 31
	2013			2012
Finished products	$	480.6		$	432.0
Work in process and raw materials		583.4			519.8
		1,064.0			951.8
Less LIFO reserve		(170.9	)		(169.4	)
	$	893.1		$	782.4

Under the LIFO method of accounting (used for approximately 48% of September 30, 2013 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.

NOTE D – Finance and Other Receivables

Finance and other receivables include the following:

	September 30			December 31
	2013			2012
Loans	$	3,838.1		$	3,738.2
Direct financing leases		2,621.4			2,489.3
Sales-type finance leases		875.6			916.8
Dealer wholesale financing		1,736.2			1,541.0
Operating lease and other trade receivables		118.9			112.0
Unearned interest on finance leases		(363.6	)		(369.0	)
	$	8,826.6		$	8,428.3
Less allowance for losses:
Loans and leases		(112.1	)		(112.6	)
Dealer wholesale financing		(10.9	)		(11.8	)
Operating lease and other trade receivables		(8.7	)		(5.6	)
	$	8,694.9		$	8,298.3

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PACCAR Inc - Form 10-Q

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

Recognition of interest income and rental revenue is suspended (put on non-accrual status) when the receivable becomes more than 90 days past the contractual due date or earlier if some other event causes the Company to determine that collection is not probable. Accordingly, no finance receivables more than 90 days past due were accruing interest at September 30, 2013 or December 31, 2012. Recognition is resumed if the receivable becomes current by the payment of all amounts due under the terms of the existing contract and collection of remaining amounts is considered probable (if not contractually modified) or if the customer makes scheduled payments for three months and collection of remaining amounts is considered probable (if contractually modified). Payments received while the finance receivable is impaired or on non-accrual status are applied to interest and principal in accordance with the contractual terms.

Allowance for Credit Losses

The Company continuously monitors the payment performance of all its finance receivables. For large retail finance customers and dealers with wholesale financing, the Company regularly reviews their financial statements and makes site visits and phone contact as appropriate. If the Company becomes aware of circumstances that could cause those customers or dealers to face financial difficulty, whether or not they are past due, the customers are placed on a watch list.

The Company modifies loans and finance leases as a normal part of its Financial Services operations. The Company may modify loans and finance leases for commercial reasons or for credit reasons. Modifications for commercial reasons are changes to contract terms for customers that are not considered to be in financial difficulty. Modifications for credit reasons are changes to contract terms for customers considered to be in financial difficulty. The Company’s modifications typically result in granting more time to pay the contractual amounts owed and charging a fee and interest for the term of the modification.

When considering whether to modify customer accounts for credit reasons, the Company evaluates the creditworthiness of the customers and modifies those accounts that the Company considers likely to perform under the modified terms. When the Company modifies loans and finance leases for credit reasons and grants a concession, the modifications are classified as troubled debt restructurings (TDRs). The Company does not typically grant credit modifications for customers that do not meet minimum underwriting standards since the Company normally repossesses the financed equipment in these circumstances. When such modifications do occur, they are considered TDRs.

On average, modifications extended contractual terms by approximately six months in 2013 and seven months in 2012 and did not have a significant effect on the weighted average term or interest rate of the total portfolio at September 30, 2013 and December 31, 2012.

The Company has developed a systematic methodology for determining the allowance for credit losses for its two portfolio segments, retail and wholesale. The retail segment consists of retail loans and direct and sales-type finance leases, net of unearned interest. The wholesale segment consists of truck inventory financing loans to dealers that are collateralized by trucks and other collateral. The wholesale segment generally has less risk than the retail segment. Wholesale receivables generally are shorter in duration than retail receivables, and the Company requires monthly reporting of the wholesale dealer’s financial condition, conducts periodic audits of the trucks being financed and in many cases, obtains personal guarantees or other security such as dealership assets. In determining the allowance for credit losses, retail loans and finance leases are evaluated together since they relate to a similar customer base, their contractual terms require regular payment of principal and interest generally over 36 to 60 months and they are secured by the same type of collateral. The allowance for credit losses consists of both specific and general reserves.

The Company individually evaluates certain finance receivables for impairment. Finance receivables that are evaluated individually for impairment consist of all wholesale accounts and certain large retail accounts with past due balances or otherwise determined to be at a higher risk of loss. A finance receivable is impaired if it is considered probable the Company will be unable to collect all contractual interest and principal payments as scheduled. In addition, all retail loans and leases which have been

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PACCAR Inc - Form 10-Q

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

classified as TDRs and all customer accounts over 90 days past due are considered impaired. Generally, impaired accounts are on non-accrual status. Impaired accounts classified as TDRs which have been performing for 90 consecutive days are placed on accrual status if it is deemed probable that the Company will collect all principal and interest payments.

Impaired receivables are considered collateral dependent. Large balance retail and all wholesale impaired receivables are individually evaluated to determine the appropriate reserve for losses. The determination of reserves for large balance impaired receivables considers the fair value of the associated collateral. When the underlying collateral fair value exceeds the Company’s recorded investment, no reserve is recorded. Small balance impaired receivables with similar risk characteristics are evaluated as a separate pool to determine the appropriate reserve for losses using the historical loss information discussed below.

For finance receivables that are not individually impaired, the Company collectively evaluates and determines the general allowance for credit losses for both retail and wholesale receivables based on historical loss information, using past-due account data and current market conditions. Information used includes assumptions regarding the likelihood of collecting current and past-due accounts, repossession rates, the recovery rate on the underlying collateral based on used truck values and other pledged collateral or recourse. The Company has developed a range of loss estimates for each of its country portfolios based on historical experience, taking into account loss frequency and severity in both strong and weak truck market conditions. A projection is made of the range of estimated credit losses inherent in the portfolio from which an amount is determined as probable based on current market conditions and other factors impacting the creditworthiness of the Company’s borrowers and their ability to repay. After determining the appropriate level of the allowance for credit losses, a provision for losses on finance receivables is charged to income as necessary to reflect management’s estimate of incurred credit losses, net of recoveries, inherent in the portfolio.

In determining the fair value of the collateral, the Company uses a pricing matrix and categorizes the fair value as Level 2 in the hierarchy of fair value measurement. The pricing matrix is reviewed quarterly and updated as appropriate. The pricing matrix considers the make, model and year of the equipment as well as recent sales prices of comparable equipment through wholesale channels to the Company’s dealers (principal market). The fair value of the collateral also considers the overall condition of the equipment.

Accounts are charged-off against the allowance for credit losses when, in the judgment of management, they are considered uncollectable (generally upon repossession of the collateral). Typically the timing between the repossession and charge-off is not significant. In cases where repossession is delayed (e.g., for legal proceedings), the Company records partial charge-offs. The charge-off is determined by comparing the fair value of the collateral, less cost to sell, to the recorded investment.

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

-12-

PACCAR Inc - Form 10-Q

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

The allowance for credit losses is summarized as follows:

	2013
	Dealer						Customer Retail
	Wholesale			Retail						Other*			Total
Balance at January 1	$	11.8		$	13.4		$	99.2		$	5.6		$	130.0
Provision for losses		(.7	)		(.7	)		11.2			5.6			15.4
Charge-offs		(.2	)					(11.1	)		(6.7	)		(18.0	)
Recoveries								4.2			1.0			5.2
Currency translation and other					(.1	)		(4.0	)		3.2			(.9	)
Balance at September 30	$	10.9		$	12.6		$	99.5		$	8.7		$	131.7
	2012
	Dealer						Customer Retail
	Wholesale			Retail						Other*			Total
Balance at January 1	$	11.7		$	11.9		$	106.6		$	8.8		$	139.0
Provision for losses		2.3			1.2			9.3			2.4			15.2
Charge-offs								(17.1	)		(4.8	)		(21.9	)
Recoveries		.1						4.6			.3			5.0
Currency translation and other		(1.7	)		.1			4.0			(.6	)		1.8
Balance at September 30	$	12.4		$	13.2		$	107.4		$	6.1		$	139.1

* Operating lease and other trade receivables.

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

	Dealer				Customer Retail
At September 30, 2013	Wholesale		Retail				Total
Recorded investment for impaired finance receivables evaluated individually	$	9.1			$	49.4	$	58.5
Allowance for impaired finance receivables determined individually		1.5				7.6		9.1
Recorded investment for finance receivables evaluated collectively		1,727.1	$	1,403.3		5,518.8		8,649.2
Allowance for finance receivables determined collectively		9.4		12.6		91.9		113.9
	Dealer				Customer Retail
At December 31, 2012	Wholesale		Retail				Total
Recorded investment for impaired finance receivables evaluated individually	$	3.6	$	.1	$	67.4	$	71.1
Allowance for impaired finance receivables determined individually		2.2				10.8		13.0
Recorded investment for finance receivables evaluated collectively		1,537.4		1,429.6		5,278.2		8,245.2
Allowance for finance receivables determined collectively		9.6		13.4		88.4		111.4

-13-

PACCAR Inc - Form 10-Q

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

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

	September 30		December 31
	2013		2012
Dealer:
Wholesale	$	9.1	$	3.1
Retail				.1
Customer Retail:
Fleet		36.7		42.8
Owner/Operator		9.5		11.7
	$	55.3	$	57.7

Impaired Loans

Impaired loans with no specific reserves were $2.3 and $6.8 at September 30, 2013 and December 31, 2012, respectively. Impaired loans with a specific reserve are summarized below. The impaired loans with specific reserve represent the unpaid principal balance. The recorded investment of impaired loans as of September 30, 2013 and December 31, 2012 was not significantly different than the unpaid principal balance.

	Dealer				Customer Retail
At September 30, 2013	Wholesale			Retail	Fleet			Owner/ Operator			Total
Impaired loans with a specific reserve	$	9.1			$	20.9		$	4.2		$	34.2
Associated allowance		(1.5	)			(2.9	)		(.8	)		(5.2	)
Net carrying amount of impaired loans	$	7.6			$	18.0		$	3.4		$	29.0
Average recorded investment*	$	4.8			$	31.4		$	6.0		$	42.2

* Represents the average during the 12 months ended September 30, 2013.

	Dealer				Customer Retail
At December 31, 2012	Wholesale			Retail	Fleet			Owner/ Operator			Total
Impaired loans with a specific reserve	$	3.6			$	43.9		$	6.8		$	54.3
Associated allowance		(2.2	)			(7.3	)		(1.2	)		(10.7	)
Net carrying amount of impaired loans	$	1.4			$	36.6		$	5.6		$	43.6
Average recorded investment*	$	12.7			$	32.7		$	10.2		$	55.6

* Represents the average during the 12 months ended September 30, 2012.

-14-

PACCAR Inc - Form 10-Q

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

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

	Three Months Ended				Nine Months Ended
	September 30				September 30
	2013		2012		2013		2012
Interest income recognized:
Dealer wholesale					$	.1	$	.1
Customer retail - fleet	$	.5	$	.2		1.8		.9
Customer retail - owner/operator				.2		.4		.6
	$	.5	$	.4	$	2.3	$	1.6

Credit Quality

The Company’s customers are principally concentrated in the transportation industry in North America, Europe and Australia. The Company’s portfolio is diversified over a large number of customers and dealers with no single customer or dealer balance representing over 4% of the total portfolio. The Company retains as collateral a security interest in the related equipment.

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

The Company has three credit quality indicators: performing, watch and at-risk. Performing accounts pay in accordance with the contractual terms and are not considered high risk. Watch accounts include accounts 31 to 90 days past due and large accounts that are performing but are considered to be high-risk. Watch accounts are not impaired. At-risk accounts are accounts that are impaired, including TDRs, accounts over 90 days past-due and other accounts on non-accrual status. The tables below summarize the Company’s finance receivables by credit quality indicator and portfolio class.

	Dealer				Customer Retail
At September 30, 2013	Wholesale		Retail		Fleet		Owner/ Operator		Total
Performing	$	1,681.4	$	1,396.3	$	4,235.2	$	1,256.7	$	8,569.6
Watch		45.7		7.0		20.0		6.9		79.6
At-risk		9.1				39.4		10.0		58.5
	$	1,736.2	$	1,403.3	$	4,294.6	$	1,273.6	$	8,707.7
	Dealer				Customer Retail
At December 31, 2012	Wholesale		Retail		Fleet		Owner/ Operator		Total
Performing	$	1,479.1	$	1,423.3	$	3,878.4	$	1,365.6	$	8,146.4
Watch		58.3		6.3		23.5		10.7		98.8
At-risk		3.6		.1		54.7		12.7		71.1
	$	1,541.0	$	1,429.7	$	3,956.6	$	1,389.0	$	8,316.3

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

-15-

PACCAR Inc - Form 10-Q

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

	Dealer				Customer Retail
At September 30, 2013	Wholesale		Retail		Fleet		Owner/ Operator		Total
Current and up to 30 days past due	$	1,727.8	$	1,403.3	$	4,259.3	$	1,259.2	$	8,649.6
31 – 60 days past due		1.8				20.9		5.6		28.3
Greater than 60 days past due		6.6				14.4		8.8		29.8
	$	1,736.2	$	1,403.3	$	4,294.6	$	1,273.6	$	8,707.7
	Dealer				Customer Retail
At December 31, 2012	Wholesale		Retail		Fleet		Owner/ Operator		Total
Current and up to 30 days past due	$	1,537.0	$	1,429.7	$	3,934.8	$	1,369.0	$	8,270.5
31 – 60 days past due		.5				9.4		7.9		17.8
Greater than 60 days past due		3.5				12.4		12.1		28.0
	$	1,541.0	$	1,429.7	$	3,956.6	$	1,389.0	$	8,316.3

Troubled Debt Restructurings

The balance of TDRs was $19.1 and $38.5 at September 30, 2013 and December 31, 2012, respectively. At modification date, the pre-modification and post-modification recorded investment balances for finance receivables modified during the period by portfolio class are as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2013				September 30, 2013
	Recorded Investment				Recorded Investment
	Pre-Modification		Post-Modification		Pre-Modification		Post-Modification
Fleet	$	1.5	$	1.3	$	9.2	$	8.9
Owner / Operator		.7		.7		1.4		1.4
	$	2.2	$	2.0	$	10.6	$	10.3
	Three Months Ended				Nine Months Ended
	September 30, 2012				September 30, 2012
	Recorded Investment				Recorded Investment
	Pre-Modification		Post-Modification		Pre-Modification		Post-Modification
Fleet	$	14.7	$	13.9	$	45.3	$	43.8
Owner / Operator		.6		.6		2.1		2.1
	$	15.3	$	14.5	$	47.4	$	45.9

The effect on the allowance for credit losses from such modifications was not significant at September 30, 2013 and 2012.

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

	Nine Months Ended
	September 30
	2013		2012
Fleet	$	2.5	$	7.7
Owner / Operator		.2		.5
	$	2.7	$	8.2

-16-

PACCAR Inc - Form 10-Q

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

The TDRs that subsequently defaulted did not significantly impact the Company’s allowance for credit losses at September 30, 2013 and 2012.

Repossessions

When the Company determines that a customer is not likely to meet its contractual commitments, the Company repossesses the vehicles which serve as collateral for loans, finance leases and equipment under operating lease. The Company records the vehicles as used truck inventory which is included in Financial Services other assets on the Consolidated Balance Sheets. The balance of repossessed inventory at September 30, 2013 and December 31, 2012 was $12.1 and $20.9, respectively. Proceeds from the sales of repossessed assets were $44.5 and $48.7 for the nine months ended September 30, 2013 and 2012, respectively. These amounts are included in proceeds from asset disposals in the Condensed Consolidated Statements of Cash Flows. Write-downs of repossessed equipment on operating leases are recorded as impairments and included in Financial Services depreciation and other expense on the Consolidated Statements of Comprehensive Income.

NOTE E – Product Support Liabilities

Product support liabilities are estimated future payments related to product warranties, optional extended warranties and repair and maintenance (R&M) contracts. The Company generally offers one year warranties covering most of its vehicles and related aftermarket parts. Specific terms and conditions vary depending on the product and the country of sale. Optional extended warranty and R&M contracts can be purchased for periods which generally range up to five years. Warranty expenses and reserves are estimated and recorded at the time products or contracts are sold based on historical data regarding the source, frequency and cost of claims, net of any recoveries. The Company periodically assesses the adequacy of its recorded liabilities and adjusts them as appropriate to reflect actual experience. Revenue from extended warranty and R&M contracts is deferred and recognized to income on a straight-line basis over the contract period. Warranty and R&M costs on these contracts are recognized as incurred.

Changes in product support liabilities are summarized as follows:

	2013			2012
Balance at January 1	$	540.7		$	448.7
Cost accruals and revenue deferrals		238.0			234.6
Payments and revenue recognized		(195.4	)		(168.0	)
Currency translation		4.6			1.2
Balance at September 30	$	587.9		$	516.5

-17-

PACCAR Inc - Form 10-Q

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

NOTE F – Stockholders’ Equity

Comprehensive Income

The components of comprehensive income were as follows:

	Three Months Ended			Nine Months Ended
	September 30, 2013			September 30, 2013
Net income	$	309.4		$	837.1
Other comprehensive income (loss) (OCI):
Unrealized (losses) gains on derivative contracts		(3.5	)		9.8
Tax effect		.8			(3.3	)
		(2.7	)		6.5
Unrealized gains (losses) on marketable debt securities		.1			(5.7	)
Tax effect					1.6
		.1			(4.1	)
Employee benefit plans		2.5			36.8
Tax effect		(1.5	)		(12.6	)
		1.0			24.2
Currency translation gains (losses)		120.4			(58.2	)
Net other comprehensive income (loss)		118.8			(31.6	)
Comprehensive income	$	428.2		$	805.5
	Three Months Ended			Nine Months Ended
	September 30, 2012			September 30, 2012
Net income	$	233.6		$	858.1
Other comprehensive income:
Unrealized losses on derivative contracts		(3.3	)		(9.5	)
Tax effect		.9			2.6
		(2.4	)		(6.9	)
Unrealized gains on marketable debt securities		1.1			3.8
Tax effect		(.3	)		(1.1	)
		.8			2.7
Employee benefit plans		5.0			24.1
Tax effect		(2.0	)		(8.1	)
		3.0			16.0
Currency translation gains		73.9			46.6
Net other comprehensive income		75.3			58.4
Comprehensive income	$	308.9		$	916.5

-18-

PACCAR Inc - Form 10-Q

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

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss (AOCI) as of September 30, 2013 and December 31, 2012 and the changes in AOCI, net of tax, included in the Consolidated Balance Sheets, consisted of the following:

	Gains and (Losses) on Derivative Contracts			Unrealized Gains and (Losses) on Marketable Debt Securities			Defined Benefit Pension Plans			Foreign Currency Translation			Total
Balance at December 31, 2012	$	(27.2	)	$	6.6		$	(496.5	)	$	357.6		$	(159.5	)
Amounts recorded in AOCI		27.3			(5.1	)		2.1			(56.2	)		(31.9	)
Amounts reclassified out of AOCI		(20.8	)		1.0			22.1			(2.0	)		.3
Net other comprehensive income (loss)		6.5			(4.1	)		24.2			(58.2	)		(31.6	)
Balance at September 30, 2013	$	(20.7	)	$	2.5		$	(472.3	)	$	299.4		$	(191.1	)

-19-

PACCAR Inc - Form 10-Q

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

Reclassifications out of AOCI during the nine months ended September 30, 2013 are as follows:

AOCI Components	Line Item in the Consolidated Statement of Comprehensive Income	Amount Reclassified Out of AOCI
Gains and losses on cash flow hedges:
Truck, Parts and Other
Foreign-exchange contracts	Cost of sales and revenues	$	(.5	)
	Interest and other expense (income), net		(.2	)
Financial Services
Interest-rate contracts	Interest and other borrowing expenses		(29.1	)
	Pre-tax expense reduction		(29.8	)
	Tax expense		9.0
	After-tax expense reduction		(20.8	)
Unrealized gains and losses on marketable debt securities:
Marketable debt securities	Investment income		1.4
	Tax expense		(.4	)
	After-tax income increase		1.0
Defined benefit pension plans:
Truck, Parts and Other
Prior service costs	Cost of sales and revenues $.8, SG&A $.1		.9
Actuarial loss	Cost of sales and revenues $17.4, SG&A $14.2, R&D $.1		31.7
Financial Services
Actuarial loss	SG&A		1.3
	Pre-tax expense increase		33.9
	Tax benefit		(11.8	)
	After-tax expense increase		22.1
Foreign Currency Translation:
Truck, Parts and Other	Interest and other expense (income), net		(1.1	)
Financial Services	Interest and other borrowing expenses		(.9	)
	Expense reduction		(2.0	)
Total reclassifications out of AOCI		$	.3

Stock Compensation Plans

Stock-based compensation expense was $2.7 and $11.2 for the three and nine months ended September 30, 2013, respectively, and $2.6 and $11.0 for the three and nine months ended September 30, 2012, respectively. Realized tax benefits related to the excess of deductible amounts over expense recognized amounted to $1.1 and $2.7 for the three and nine months ended September 30, 2013, respectively, and nil and $.8 for the three and nine months ended September 30, 2012, respectively, and have been classified as a financing cash flow.

During the first three quarters of 2013, the Company issued 858,515 common shares under deferred and stock compensation arrangements.

NOTE G – Income Taxes

The effective income tax rate in the third quarter of 2013 of 29.7% decreased from 32.4% in the same period of 2012. For the first nine months of 2013, the effective income tax rate of 30.8% decreased from 32.5% in the first nine months of 2012. The decrease in the effective tax rate in both periods of 2013 was primarily due to a higher proportion of income generated in lower taxed jurisdictions.

-20-

PACCAR Inc - Form 10-Q

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

NOTE H – Segment Information

PACCAR operates in three principal segments: Truck, Parts and Financial Services.

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2013			2012			2013			2012
Net sales and revenues:
Truck
Total	$	3,416.6		$	3,016.3		$	9,924.6		$	10,710.1
Less intersegment		(155.4	)		(156.4	)		(460.1	)		(572.1	)
External customers		3,261.2			2,859.9			9,464.5			10,138.0
Parts
Total		726.2			661.4			2,126.0			2,031.1
Less intersegment		(10.9	)		(11.3	)		(33.8	)		(34.4	)
External customers		715.3			650.1			2,092.2			1,996.7
Other		30.1			36.7			92.8			117.8
		4,006.6			3,546.7			11,649.5			12,252.5
Financial Services		293.5			273.5			875.4			801.0
	$	4,300.1		$	3,820.2		$	12,524.9		$	13,053.5
Income (loss) before income taxes:
Truck	$	242.5		$	170.2		$	645.9		$	742.6
Parts		106.5			88.7			311.2			280.2
Other		(4.5	)		(1.7	)		(18.6	)		(6.1	)
		344.5			257.2			938.5			1,016.7
Financial Services		88.2			80.4			249.8			229.1
Investment income		7.3			7.8			21.8			24.9
	$	440.0		$	345.4		$	1,210.1		$	1,270.7
Depreciation and amortization:
Truck	$	89.2		$	75.1		$	250.9		$	233.4
Parts		1.2			1.4			3.9			4.5
Other		2.5			2.6			7.4			7.7
		92.9			79.1			262.2			245.6
Financial Services		113.5			97.1			326.5			276.8
	$	206.4		$	176.2		$	588.7		$	522.4

The Truck segment includes the manufacture of trucks, and the Parts segment includes the distribution of related aftermarket parts, both of which are sold through the same network of independent dealers. These segments derive a large proportion of their revenues and operating profits from operations in North America and Europe. The Truck segment incurs substantial costs to design, manufacture and sell trucks to its customers. The sale of new trucks provides the Parts segment with the basis for parts sales that may continue over the life of the truck, but are generally concentrated in the first five years after truck delivery. To reflect the benefit the Parts segment receives from costs incurred by the Truck

-21-

PACCAR Inc - Form 10-Q

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

segment, certain expenses are allocated from the Truck segment to the Parts segment. The expenses allocated are based on a percentage of the average annual expenses for factory overhead, engineering, research and development and SG&A for the preceding five years. The allocation is based on the ratio of the average parts direct margin dollars (net sales less material and labor costs) to the total truck and parts direct margin dollars for the previous five years. The Company believes such expenses have been allocated on a reasonable basis.

Included in Other is the Company’s industrial winch manufacturing business and other sales, income and expense not attributable to a reportable segment, including a portion of corporate expenses.

The accounting policies of the reportable segments are the same as those applied in the consolidated financial statements as described in Note A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

NOTE I – Derivative Financial Instruments

As part of its risk management strategy, the Company enters into derivative contracts to hedge against interest rate and foreign currency risk. Certain derivative instruments designated as either cash flow hedges or fair value hedges are subject to hedge accounting. Derivative instruments that are not subject to hedge accounting are held as economic hedges. The Company’s policies prohibit the use of derivatives for speculation or trading. At the inception of each hedge relationship, the Company documents its risk management objectives, procedures and accounting treatment.

All of the Company’s interest-rate contracts and certain foreign exchange contracts are transacted under International Swaps and Derivatives Association (ISDA) master agreements. Each agreement permits the net settlement of amounts owed in the event of default and certain other termination events. For derivative financial instruments, the Company has elected not to offset derivative positions in the balance sheet with the same counterparty under the same agreement and is not required to post or receive collateral. Exposure limits and minimum credit ratings are used to minimize the risks of counterparty default. The Company had no material exposures to default at September 30, 2013.

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

Interest-Rate Contracts: The Company enters into various interest-rate contracts, including interest-rate swaps and cross currency interest-rate swaps. Interest-rate swaps involve the exchange of fixed for floating rate or floating for fixed rate interest payments based on the contractual notional amounts in a single currency. Cross currency interest-rate swaps involve the exchange of notional amounts and interest payments in different currencies. The Company is exposed to interest-rate and exchange-rate risk caused by market volatility as a result of its borrowing activities. The objective of these contracts is to mitigate the fluctuations on earnings, cash flows and fair value of borrowings. Net amounts paid or received are reflected as adjustments to interest expense.

At September 30, 2013, the notional amount of the Company’s interest-rate contracts was $3,597.0. Notional maturities for all interest-rate contracts are $217.7 for the remainder of 2013, $1,227.9 for 2014, $1,146.5 for 2015, $760.0 for 2016, $217.2 for 2017 and $27.7 thereafter. 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.

-22-

PACCAR Inc - Form 10-Q

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

Foreign-Exchange Contracts: The Company enters into foreign-exchange contracts to hedge certain anticipated transactions and assets and liabilities denominated in foreign currencies, particularly the Canadian dollar, the euro, the British pound, the Australian dollar, the Brazilian real and the Mexican peso. The objective is to reduce fluctuations in earnings and cash flows associated with changes in foreign currency exchange rates. At September 30, 2013, the notional amount of the outstanding foreign-exchange contracts was $451.7. Foreign-exchange contracts mature within one year.

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

	September 30, 2013				December 31, 2012
	Assets		Liabilities		Assets		Liabilities
Derivatives designated under hedge accounting:
Interest-rate contracts:
Financial Services:
Other assets	$	30.3			$	4.6
Deferred taxes and other liabilities			$	71.0			$	111.7
Foreign-exchange contracts:
Truck, Parts and Other:
Other current assets		.2				.2
Accounts payable, accrued expenses and other				2.6				.1
Total	$	30.5	$	73.6	$	4.8	$	111.8
Economic hedges:
Interest-rate contracts:
Financial Services:
Deferred taxes and other liabilities							$	.6
Foreign-exchange contracts:
Truck, Parts and Other:
Other current assets	$	.2			$	.3
Accounts payable, accrued expenses and other			$	.5				.2
Financial Services:
Other assets		.2
Deferred taxes and other liabilities				1.4				.4
Total	$	.4	$	1.9	$	.3	$	1.2

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PACCAR Inc - Form 10-Q

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

The following tables present the balance sheet classification of the gross and pro forma net amounts of derivative financial instruments:

As of September 30, 2013	Gross Amount Recognized in Balance Sheet		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Truck, Parts and Other
Foreign-exchange contracts	$	.4	$	(.1	)	$	.3
Financial Services
Interest-rate contracts		30.3		(12.3	)		18.0
Foreign-exchange contracts		.2					.2
Total derivative assets	$	30.9	$	(12.4	)	$	18.5
Liabilities:
Truck, Parts and Other
Foreign-exchange contracts	$	3.1	$	(.1	)	$	3.0
Financial Services
Interest-rate contracts		71.0		(12.3	)		58.7
Foreign-exchange contracts		1.4					1.4
Total derivative liabilities	$	75.5	$	(12.4	)	$	63.1
As of December 31, 2012	Gross Amount Recognized in Balance Sheet		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Truck, Parts and Other
Foreign-exchange contracts	$	.5				$	.5
Financial Services
Interest-rate contracts		4.6	$	(2.6	)		2.0
Total derivative assets	$	5.1	$	(2.6	)	$	2.5
Liabilities:
Truck, Parts and Other
Foreign-exchange contracts	$	.3				$	.3
Financial Services
Interest-rate contracts		112.3	$	(2.6	)		109.7
Foreign-exchange contracts		.4					.4
Total derivative liabilities	$	113.0	$	(2.6	)	$	110.4

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PACCAR Inc - Form 10-Q

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 expense or (income) recognized in earnings related to fair value hedges was included in interest and other borrowing expenses in the Financial Services segment of the Consolidated Statements of Comprehensive Income as follows:

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2013			2012			2013			2012
Interest-rate swaps	$	.2		$	(2.4	)	$	.5		$	(4.0	)
Term notes		(.2	)		3.2			(.6	)		4.7

Cash Flow Hedges

Substantially all of the Company’s interest-rate contracts and some foreign-exchange contracts have been designated as cash flow hedges. Changes in the fair value of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive loss to the extent such hedges are considered effective. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows is 6.6 years.

Amounts in accumulated other comprehensive loss are reclassified into net income in the same period in which the hedged transaction affects earnings. Net realized gains and losses from interest-rate contracts are recognized as an adjustment to interest expense. 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. The ineffective portions were nil and a gain of $.2 during the third quarter of 2013 and 2012, and were gains of $.1 and $.4 during the first nine months of 2013 and 2012, respectively.

The following table presents the pre-tax effects of derivative instruments recognized in OCI:

	Three Months Ended				Nine Months Ended
	September 30, 2013				September 30, 2013
	Interest-Rate		Foreign-Exchange		Interest-Rate			Foreign-Exchange
	Contracts		Contracts		Contracts			Contracts
Loss (gain) recognized in OCI:
Truck, Parts and Other			$	4.6				$	1.7
Financial Services	$	33.1			$	(41.3	)
	$	33.1	$	4.6	$	(41.3	)	$	1.7
	Three Months Ended				Nine Months Ended
	September 30, 2012				September 30, 2012
	Interest-Rate		Foreign-Exchange		Interest-Rate			Foreign-Exchange
	Contracts		Contracts		Contracts			Contracts
Loss recognized in OCI:
Truck, Parts and Other			$	1.3				$	2.2
Financial Services	$	5.7			$	29.4
	$	5.7	$	1.3	$	29.4		$	2.2

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PACCAR Inc - Form 10-Q

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

Expense (income) reclassified out of accumulated other comprehensive loss into income:

	Three Months Ended September 30, 2013					Nine Months Ended September 30, 2013
	Interest-Rate		Foreign-Exchange			Interest-Rate			Foreign-Exchange
	Contracts		Contracts			Contracts			Contracts
Truck, Parts and Other:
Cost of sales and revenues			$	1.8					$	(.5	)
Interest and other expense (income), net				(.5	)					(.2	)
Financial Services:
Interest and other borrowing expenses	$	32.8				$	(29.1	)
	$	32.8	$	1.3		$	(29.1	)	$	(.7	)
	Three Months Ended					Nine Months Ended
	September 30, 2012					September 30, 2012
	Interest-Rate		Foreign-Exchange			Interest-Rate			Foreign-Exchange
	Contracts		Contracts			Contracts			Contracts
Truck, Parts and Other:
Cost of sales and revenues			$	1.6					$	4.3
Interest and other expense (income), net				.4						.4
Financial Services:
Interest and other borrowing expenses	$	1.6				$	17.7
	$	1.6	$	2.0		$	17.7		$	4.7

The amount of loss recorded in accumulated other comprehensive loss at September 30, 2013 that is estimated to be reclassified to interest expense or cost of sales in the following 12 months if interest rates and exchange rates remain unchanged is approximately $23.8, net of taxes. The fixed interest earned on finance receivables will offset the amount recognized in interest expense, resulting in a stable interest margin consistent with the Company’s risk management strategy.

Economic Hedges

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

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PACCAR Inc - Form 10-Q

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

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

	Three Months Ended						Nine Months Ended
	September 30, 2013						September 30, 2013
	Interest-Rate			Foreign-Exchange			Interest-Rate			Foreign-Exchange
	Contracts			Contracts			Contracts			Contracts
Truck, Parts and Other:
Cost of sales and revenues				$	(1.3	)				$	(.9	)
Interest and other expense (income), net					.4						.8
Financial Services:
Interest and other borrowing expenses	$	(.1	)		(4.3	)	$	(1.5	)		(8.9	)
	$	(.1	)	$	(5.2	)	$	(1.5	)	$	(9.0	)
	Three Months Ended						Nine Months Ended
	September 30, 2012						September 30, 2012
	Interest-Rate			Foreign-Exchange			Interest-Rate			Foreign-Exchange
	Contracts			Contracts			Contracts			Contracts
Truck, Parts and Other:
Cost of sales and revenues										$	(.3	)
Interest and other expense (income), net				$	2.0						(.4	)
Financial Services:
Interest and other borrowing expenses	$	1.6			(.5	)	$	1.5			.6
	$	1.6		$	1.5		$	1.5		$	(.1	)

NOTE J – Fair Value Measurements

Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs to valuation techniques used to measure fair value are either observable or unobservable. These inputs have been categorized into the fair value hierarchy described below.

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

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

Level 3 – Valuations are based on model-based techniques for which some or all of the assumptions are obtained from indirect market information that is significant to the overall fair value measurement and which require a significant degree of management judgment.

There were no transfers of assets or liabilities between Level 1 and Level 2 of the fair value hierarchy during the nine months ended September 30, 2013. The Company’s policy is to recognize transfers between levels at the end of the reporting period.

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PACCAR Inc - Form 10-Q

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

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

Marketable Debt Securities: The Company’s marketable debt securities consist of municipal bonds, government obligations, investment-grade corporate obligations, commercial paper, asset-backed securities and term deposits. The fair value of U.S. government obligations is determined using the market approach and is based on quoted prices in active markets and are categorized as Level 1.

The fair value of non-U.S. government bonds, municipal bonds, corporate bonds, asset-backed securities, commercial paper, and term deposits is determined using the market approach and is primarily based on matrix pricing as a practical expedient which does not rely exclusively on quoted prices for a specific security. Significant inputs used to determine fair value include interest rates, yield curves, credit rating of the security and other observable market information and are categorized as Level 2.

Derivative Financial Instruments: The Company’s derivative contracts consist of interest-rate swaps, cross currency swaps and foreign currency exchange contracts. These derivative contracts are traded over the counter, and their fair value is determined using industry standard valuation models, which are based on the income approach (i.e., discounted cash flows). The significant observable inputs into the valuation models include interest rates, yield curves, currency exchange rates, credit default swap spreads and forward spot rates and are categorized as Level 2.

Assets and Liabilities Subject to Recurring Fair Value Measurement

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

At September 30, 2013	Level 1		Level 2		Total
Assets:
Marketable debt securities
U.S. tax-exempt securities			$	206.4	$	206.4
U.S. corporate securities				79.7		79.7
U.S. government and agency securities	$	.4		.2		.6
Non-U.S. corporate securities				565.6		565.6
Non-U.S. government securities				244.5		244.5
Other debt securities				104.3		104.3
Total marketable debt securities	$	.4	$	1,200.7	$	1,201.1
Derivatives
Cross currency swaps			$	26.8	$	26.8
Interest-rate swaps				3.5		3.5
Foreign-exchange contracts				.6		.6
Total derivative assets			$	30.9	$	30.9
Liabilities:
Derivatives
Cross currency swaps			$	42.9	$	42.9
Interest-rate swaps				28.1		28.1
Foreign-exchange contracts				4.5		4.5
Total derivative liabilities			$	75.5	$	75.5

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PACCAR Inc - Form 10-Q

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

At December 31, 2012	Level 1		Level 2		Total
Assets:
Marketable debt securities
U.S. tax-exempt securities			$	218.6	$	218.6
U.S. corporate securities				60.1		60.1
U.S. government and agency securities	$	.6		.2		.8
Non-U.S. corporate securities				448.7		448.7
Non-U.S. government securities				355.0		355.0
Other debt securities				109.5		109.5
Total marketable debt securities	$	.6	$	1,192.1	$	1,192.7
Derivatives
Cross currency swaps			$	3.0	$	3.0
Interest-rate swaps				1.6		1.6
Foreign-exchange contracts				.5		.5
Total derivative assets			$	5.1	$	5.1
Liabilities:
Derivatives
Cross currency swaps			$	74.1	$	74.1
Interest-rate swaps				38.2		38.2
Foreign-exchange contracts				.7		.7
Total derivative liabilities			$	113.0	$	113.0

Fair Value Disclosure of Other Financial Instruments

For financial instruments that are not recognized at fair value, the Company uses the following methods and assumptions to determine the fair value. These instruments are categorized as Level 2, except cash which is categorized as Level 1 and fixed-rate loans which are categorized as Level 3.

Cash and Cash Equivalents: Carrying amounts approximate fair value.

Financial Services Net Receivables: For floating-rate loans, wholesale financings, and operating lease and other trade receivables, carrying values approximate fair values. For fixed-rate loans, fair values are estimated using the income approach by discounting cash flows to their present value based on current rates for comparable loans. Finance lease receivables and related allowance for credit losses have been excluded from the accompanying table.

Debt: The carrying amounts of financial services commercial paper, variable-rate bank loans and variable-rate term notes approximate fair value. For fixed-rate debt, fair values are estimated using the income approach by discounting cash flows to their present value based on current rates for comparable debt.

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PACCAR Inc - Form 10-Q

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

The Company’s estimate of fair value for fixed-rate loans and debt that are not carried at fair value at September 30, 2013 and December 31, 2012 was as follows:

	September 30, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Financial Services fixed-rate loans	$	3,482.6	$	3,537.4	$	3,361.7	$	3,434.8
Liabilities:
Truck, Parts and Other fixed-rate debt		150.0		153.5		150.0		160.6
Financial Services fixed-rate debt		4,029.0		4,076.6		3,277.2		3,350.5

NOTE K – Employee Benefit Plans

The Company has several defined benefit pension plans, which cover a majority of its employees. The following information details the components of net pension expense for the Company’s defined benefit plans:

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2013			2012			2013			2012
Service cost	$	18.3		$	16.0		$	55.0		$	48.0
Interest on projected benefit obligation		20.2			20.3			60.6			61.0
Expected return on assets		(29.8	)		(27.6	)		(89.4	)		(82.8	)
Amortization of prior service costs		.3			.3			.9			1.1
Recognized actuarial loss		11.0			10.8			33.0			32.4
Net pension expense	$	20.0		$	19.8		$	60.1		$	59.7

During the three and nine months ended September 30, 2013, the Company contributed $5.9 and $12.0 to its pension plans, respectively, and $8.3 and $93.7 for the three and nine months ended September 30, 2012, respectively.

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PACCAR Inc - Form 10-Q

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

OVERVIEW:

PACCAR is a global technology company whose Truck segment includes the design and manufacture of high-quality, light-, medium- and heavy-duty commercial trucks. In North America, trucks are sold under the Kenworth and Peterbilt nameplates, in Europe, under the DAF nameplate and in Australia and South America, under the Kenworth and DAF nameplates. The Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles. The Company’s Financial Services segment (PFS) derives its earnings primarily from financing or leasing PACCAR products in North America, Europe and Australia. The Company’s Other business is the manufacturing and marketing of industrial winches.

Consolidated net sales and revenues in the third quarter and first nine months of 2013 were $4.30 billion and $12.52 billion compared to $3.82 billion and $13.05 billion from the same periods in 2012. Truck unit sales increased in the third quarter of 2013 to 35,400 units from 31,100 units in the third quarter of 2012 primarily due to higher industry retail sales in the U.S., Canada and Europe, partially offset by lower retail sales in Mexico and South America. Truck unit sales decreased in the first nine months of 2013 to 100,700 units from 108,700 units in the same period last year, primarily due to lower industry retail sales in the U.S., Canada and South America, partially offset by higher industry retail sales in Europe. Aftermarket parts sales in the third quarter of 2013 were a record $715.3 million compared to $650.1 million in the third quarter in 2012 primarily due to strong demand worldwide. Aftermarket parts sales in the first nine months of 2013 were $2.09 billion compared to $2.00 billion in the same period of 2012.

Third quarter 2013 net income was $309.4 million ($.87 per diluted share) compared to $233.6 million ($.66 per diluted share) in the third quarter of 2012. The third quarter 2013 results reflect higher Truck segment sales, record Parts sales and record Financial Services segment pre-tax income. For the first nine months of 2013, net income was $837.1 million ($2.36 per diluted share) compared to $858.1 million ($2.41 per diluted share) in the first nine months of 2012. The year-to-date 2013 results reflect lower sales in the Truck segment in the first half of 2013, partially offset by record Parts sales and record Financial Services segment pre-tax income.

In October 2013, PACCAR began production of DAF trucks at its new DAF assembly plant in Ponta Grossa, Brasil. The new 300,000 square foot facility on 569 acres is a high-technology, environmentally friendly plant that will assemble premium-quality DAF XF, CF and LF vehicles. The factory will build DAF trucks for Brasil and the rest of the South American market. The above six tonne truck market in Brasil is projected to be over 145,000 units in 2013, with steady growth expected in future years.

PACCAR completed a new parts distribution center in Brasil and an expansion of the Lancaster, Pennsylvania distribution center that doubled its warehouse space.

Kenworth and Peterbilt continue to launch new products, and in November 2013, production will begin on the Kenworth T880 and the Peterbilt Model 567 trucks, which are designed for the vocational market.

In the third quarter and first nine months of 2013, the Company’s research and development expenses (R&D) were $56.6 million and $190.5 million compared to $66.8 million and $212.9 million in the third quarter and first nine months of 2012, respectively. R&D declined as new truck models and engines began production. R&D is focused on engine and new vehicle development.

Truck and Parts Outlook

Truck industry Class 8 retail sales in the U.S. and Canada in 2013 are expected to be 205,000-215,000 units compared to 224,900 units in 2012, reflecting the ongoing replacement of the aging truck population and an improving housing sector. Estimates for the U.S. and Canada truck industry Class 8 retail sales for 2014 are in the range of 210,000-240,000 units, driven primarily by ongoing fleet replacement and some expansion of industry fleet capacity reflecting modest overall economic growth.

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PACCAR Inc - Form 10-Q

In Europe, the 2013 truck industry registrations for over 16-tonne vehicles are expected to be 215,000-225,000 units compared to 221,500 units in 2012. Some customers are purchasing Euro 5 vehicles ahead of the introduction of the Euro 6 emission requirement in 2014. Estimates for 2014 over 16-tonne truck industry registrations in Europe are in the range of 200,000-230,000 units reflecting the impact of the pull-forward of industry truck purchases in 2013.

In 2014, Parts industry aftermarket sales are expected to grow 3-7%, reflecting modest economic growth in the U.S. and Canada and Europe.

Capital investments in 2013 are expected to be $425 to $475 million and include the completion of the truck factory in Brasil and the development of new products and services worldwide. R&D in 2013 is expected to be $250 to $260 million, focused on comprehensive product development programs and enhanced manufacturing operating efficiency. In 2014, capital investments are expected to be $350 to $400 million and R&D is expected to be $225 to $275 million, as PACCAR will continue to focus on enhanced manufacturing operating efficiencies and investing in new products and services.

Financial Services Outlook

Based on the truck market outlook, average earning assets in the fourth quarter are expected to be slightly higher than current levels, and in 2014 may grow further based on truck industry forecasts. Current levels of freight tonnage, freight rates and fleet utilization are contributing to customers’ profitability and cash flow. If current freight transportation conditions decline due to weaker economic conditions, past due accounts, truck repossessions and credit losses would likely increase from the current low levels.

See the Forward Looking Statement section of Management’s Discussion and Analysis for factors that may affect the Truck, Parts and Financial Services outlook.

RESULTS OF OPERATIONS:

	Three Months Ended						Nine Months Ended
	September 30						September 30
($ in millions, except per share amounts)	2013			2012			2013			2012
Net sales and revenues:
Truck	$	3,261.2		$	2,859.9		$	9,464.5		$	10,138.0
Parts		715.3			650.1			2,092.2			1,996.7
Other		30.1			36.7			92.8			117.8
Truck, Parts and Other		4,006.6			3,546.7			11,649.5			12,252.5
Financial Services		293.5			273.5			875.4			801.0
	$	4,300.1		$	3,820.2		$	12,524.9		$	13,053.5
Income (loss) before taxes:
Truck	$	242.5		$	170.2		$	645.9		$	742.6
Parts		106.5			88.7			311.2			280.2
Other		(4.5	)		(1.7	)		(18.6	)		(6.1	)
Truck, Parts and Other		344.5			257.2			938.5			1,016.7
Financial Services		88.2			80.4			249.8			229.1
Investment income		7.3			7.8			21.8			24.9
Income taxes		(130.6	)		(111.8	)		(373.0	)		(412.6	)
Net income	$	309.4		$	233.6		$	837.1		$	858.1
Diluted earnings per share	$	.87		$	.66		$	2.36		$	2.41
Return on Revenues		7.2	%		6.1	%		6.7	%		6.6	%

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PACCAR Inc - Form 10-Q

The following provides an analysis of the results of operations for the Company’s three reportable segments, Truck, Parts and Financial Services. Where possible, the Company has quantified the factors identified in the following discussion and analysis. In cases where it is not possible to quantify the impact of factors, the Company lists them in estimated order of importance. Factors for which the Company is unable to specifically quantify the impact include market demand, fuel prices, freight tonnage and economic conditions affecting the Company’s results of operations.

2013 Compared to 2012:

Truck

The Company’s Truck segment accounted for 75.8% and 75.6% of revenues in the third quarter and first nine months of 2013 compared to 74.9% and 77.7% in the third quarter and first nine months of 2012.

($ in millions)	Three Months Ended September 30									Nine Months Ended September 30
	2013			2012			% Change			2013			2012			% Change
Truck net sales and revenues:
U.S. and Canada	$	1,880.8		$	1,431.2			31		$	5,333.3		$	5,860.8			(9	)
Europe		876.1			755.9			16			2,556.6			2,368.6			8
Mexico, South America, Australia and Other		504.3			672.8			(25	)		1,574.6			1,908.6			(17	)
	$	3,261.2		$	2,859.9			14		$	9,464.5		$	10,138.0			(7	)
Truck income before income taxes	$	242.5		$	170.2			42		$	645.9		$	742.6			(13	)
Pre-tax return on revenues		7.4	%		6.0	%					6.8	%		7.3	%

The Company’s worldwide truck net sales and revenues in the third quarter of 2013 of $3.26 billion increased from the third quarter of 2012 due to higher truck deliveries in the U.S. and Canada ($449.6 million) and Europe ($120.2 million), partially offset by lower truck deliveries in Mexico ($70.1 million), Australia ($63.7 million) and South America ($51.0 million). In the first nine months of 2013, the Company’s worldwide truck sales and revenues decreased compared to the same period in 2012, due to lower market demand in the U.S. and Canada ($527.5 million) and South America ($355.8 million), partially offset by higher market demand in Europe ($188.0 million).

For the third quarter of 2013, Truck segment income before income taxes reflects higher truck unit deliveries in the U.S. and Canada and Europe. For the first nine months of 2013, Truck segment income before income taxes reflects lower truck unit deliveries and price realization due to slower economic growth.

The third quarter and first nine months of 2013 Truck income before income taxes was also affected by the translation of weaker foreign currencies, primarily the Australian and Canadian dollars, partially offset by a stronger euro. Truck income before income taxes decreased by $.5 million and $8.0 million, respectively, due to the translation effect of currencies in the third quarter and first nine months of 2013.

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PACCAR Inc - Form 10-Q

The Company’s new truck deliveries are summarized below:

	Three Months Ended September 30							Nine Months Ended September 30
	2013		2012		% Change			2013		2012		% Change
U.S.		15,700		12,200		29			43,700		49,000		(11	)
Canada		2,500		2,100		19			7,800		8,800		(11	)
U.S. and Canada		18,200		14,300		27			51,500		57,800		(11	)
Europe		12,000		10,200		18			33,700		32,200		5
Mexico, South America, Australia and Other		5,200		6,600		(21	)		15,500		18,700		(17	)
Total units		35,400		31,100		14			100,700		108,700		(7	)

The truck markets in the U.S. and Canada and Europe improved in the third quarter of 2013 compared to 2012, partially offset by the impact of lower markets in Mexico, South America and Australia.

In the first nine months of 2013, industry retail sales in the heavy-duty market in the U.S. and Canada decreased to 153,000 units compared to 169,600 units in the same period of 2012. The Company’s heavy-duty truck retail market share was 27.9% in the first nine months of 2013 compared to 29.0% in the same period of 2012. The medium-duty market was 48,800 units in the first nine months of 2013 compared to 48,900 units in the same period of 2012. The Company’s medium-duty market share was 14.9% in both the first nine months of 2013 and 2012.

The over 16-tonne truck market in Western and Central Europe was 157,200 units in the first nine months of 2013 compared to 168,200 units in the same period of 2012. The Company’s market share was 15.9% in the first nine months of 2013 compared to 16.0% in the same period of 2012. The 6- to 16-tonne market in the first nine months of 2013 was 39,200 units compared to 42,400 units in the same period of 2012. DAF market share in the 6- to 16-tonne market in the first nine months of 2013 was 11.3% compared to 11.6% in the same period of 2012.

The major factors for the change in net sales and revenues, cost of sales and revenues, and gross margin for the three months ended September 30, 2013 for the Truck segment are as follows:

($ in millions)	Net Sales			Cost of Sales			Gross Margin
Three Months Ended September 30, 2012	$	2,859.9		$	2,592.2		$	267.7
Increase (decrease)
Truck delivery volume		329.1			286.1			43.0
Average truck sales prices		(18.6	)					(18.6	)
Average per truck material, labor and other direct costs					(48.4	)		48.4
Factory overhead and other indirect costs					17.4			(17.4	)
Operating lease income and depreciation expense		70.5			66.2			4.3
Currency translation		20.3			18.6			1.7
Total increase		401.3			339.9			61.4
Three Months Ended September 30, 2013	$	3,261.2		$	2,932.1		$	329.1

• Truck delivery volume reflects higher truck deliveries in the U.S. and Canada and Europe, partially offset by lower deliveries in Mexico and South America.

• Average truck sales prices decreased sales by $18.6 million reflecting lower price realization, primarily in Europe.

• Average truck cost decreased $48.4 million primarily due to lower material and labor costs.

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PACCAR Inc - Form 10-Q

• Factory overhead and other indirect costs increased $17.4 million primarily due to higher depreciation expense ($5.7 million) and salaries and related costs ($7.0 million).

• Operating lease income and depreciation expense increased primarily due to a higher volume of operating leases in Europe.

• Truck gross margin in the third quarter of 2013 of 10.1% increased from 9.4% in the same period in 2012 primarily from higher truck volume and lower average material and labor costs as noted above.

The major factors for the change in net sales and revenues, cost of sales and revenues, and gross margin for the nine months ended September 30, 2013 for the Truck segment are as follows:

($ in millions)	Net Sales			Cost of Sales			Gross Margin
Nine Months Ended September 30, 2012	$	10,138.0		$	9,078.2		$	1,059.8
Increase (decrease)
Truck delivery volume		(713.5	)		(591.7	)		(121.8	)
Average truck sales prices		(87.0	)					(87.0	)
Average per truck material, labor and other direct costs					(77.3	)		77.3
Factory overhead and other indirect costs					4.2			(4.2	)
Operating lease income and depreciation expense		112.4			107.2			5.2
Currency translation		14.6			21.1			(6.5	)
Total decrease		(673.5	)		(536.5	)		(137.0	)
Nine Months Ended September 30, 2013	$	9,464.5		$	8,541.7		$	922.8

• Truck delivery volume reflects lower truck deliveries in the U.S. and Canada and South America.

• Average truck sales prices decreased sales by $87.0 million, reflecting decreased price realization from lower market demand.

• Average truck cost decreased $77.3 million primarily due to lower direct labor and material costs.

• Factory overhead and other indirect costs increased $4.2 million, primarily due to higher depreciation expense.

• Operating lease income and depreciation expense increased due to a higher volume of operating leases in Europe.

• Truck gross margin in the first nine months of 2013 of 9.8% decreased from 10.5% in the same period in 2012 primarily from lower truck volume as noted above.

Truck SG&A of $51.1 million in the third quarter of 2013 decreased from $53.4 million in the third quarter of 2012. The lower spending for the third quarter of 2013 is primarily due to lower sales and marketing expenses of $2.4 million. In the first nine months of 2013, Truck SG&A was $154.6 million compared to $174.7 million in the first nine months of 2012. The lower spending for the first nine months of 2013 was primarily due to lower sales and marketing expenses of $13.0 million and ongoing cost controls.

As a percentage of sales, Truck SG&A decreased to 1.6% in the third quarter of 2013 compared to 1.9% for the same period in 2012 and decreased to 1.6% in the first nine months of 2013 as compared to 1.7% for the same period in 2012.

-35-

PACCAR Inc - Form 10-Q

Parts

The Company’s Parts segment accounted for 16.6% and 16.7% of revenues in the third quarter and first nine months of 2013 compared to 17.0% and 15.3% in the third quarter and first nine months of 2012.

($ in millions)	Three Months Ended September 30								Nine Months Ended September 30
	2013			2012			% Change		2013			2012			% Change
Parts net sales and revenues:
U.S. and Canada	$	424.1		$	388.8			9	$	1,215.5		$	1,156.9			5
Europe		202.7			174.5			16		607.3			585.5			4
Mexico, South America, Australia and Other		88.5			86.8			2		269.4			254.3			6
	$	715.3		$	650.1			10	$	2,092.2		$	1,996.7			5
Parts income before income taxes	$	106.5		$	88.7			20	$	311.2		$	280.2			11
Pre-tax return on revenues		14.9	%		13.6	%				14.9	%		14.0	%

The Company’s worldwide parts net sales and revenues increased in the third quarter and the first nine months of 2013 primarily due to higher aftermarket demand worldwide. The increase in Parts segment income before taxes and pre-tax return on revenues in the third quarter and first nine months of 2013 was primarily due to higher sales, gross margins and cost control.

The major factors for the change in net sales and revenues, cost of sales and revenues, and gross margin for the three months ended September 30, 2013 for the Parts segment are as follows:

($ in millions)	Net Sales			Cost of Sales		Gross Margin
Three Months Ended September 30, 2012	$	650.1		$	487.7	$	162.4
Increase (decrease)
Aftermarket parts volume		62.0			39.5		22.5
Average aftermarket parts sales prices		(2.8	)				(2.8	)
Average aftermarket parts direct costs					3.1		(3.1	)
Warehouse and other indirect costs					.5		(.5	)
Currency translation		6.0			3.6		2.4
Total increase		65.2			46.7		18.5
Three Months Ended September 30, 2013	$	715.3		$	534.4	$	180.9

• Higher market demand in all markets resulted in increased aftermarket parts sales volume of $62.0 million and related cost of sales by $39.5 million.

• Average aftermarket parts sales prices decreased sales by $2.8 million reflecting lower price realization.

• Average aftermarket parts direct costs increased $3.1 million from higher material costs.

• Parts gross margins in the third quarter of 2013 of 25.3% increased from 25.0% in the third quarter of 2012 due to the factors noted above.

-36-

PACCAR Inc - Form 10-Q

The major factors for the change in net sales and revenues, cost of sales and revenues, and gross margin for the nine months ended September 30, 2013 for the Parts segment are as follows:

($ in millions)	Net Sales		Cost of Sales		Gross Margin
Nine Months Ended September 30, 2012	$	1,996.7	$	1,491.7	$	505.0
Increase (decrease)
Aftermarket parts volume		65.4		40.4		25.0
Average aftermarket parts sales prices		24.5				24.5
Average aftermarket parts direct costs				15.7		(15.7	)
Warehouse and other indirect costs				4.5		(4.5	)
Currency translation		5.6		4.3		1.3
Total increase		95.5		64.9		30.6
Nine Months Ended September 30, 2013	$	2,092.2	$	1,556.6	$	535.6

• Higher market demand in all markets resulted in increased aftermarket parts sales volume of $65.4 million and related cost of sales by $40.4 million.

• Average aftermarket parts sales prices increased sales by $24.5 million reflecting improved price realization.

• Average aftermarket parts direct costs increased $15.7 million due to higher material costs.

• Warehouse and other indirect costs increased $4.5 million primarily due to higher costs from warehouse capacity expansion to support sales volume.

• Parts gross margins in the first nine months of 2013 of 25.6% increased from 25.3% in the first nine months of 2012 due to the factors noted above.

Parts SG&A was $51.1 million in the third quarter of 2013 compared to $51.2 million in the third quarter of 2012. In the first nine months of 2013, Parts SG&A was $152.9 million compared to $155.9 million in the first nine months of 2012.

As a percentage of sales, Parts SG&A decreased to 7.1% in the third quarter of 2013 from 7.9% in the third quarter of 2012, reflecting higher sales volumes. For the first nine months of 2013, Parts SG&A as a percentage of sales was 7.3%, down from 7.8% in the first nine months of 2012, due to lower sales and marketing expenses.

-37-

PACCAR Inc - Form 10-Q

Financial Services

The Company’s Financial Services segment accounted for 6.8% and 7.0% of revenues in the third quarter and first nine months of 2013 compared to 7.2% and 6.1% in the third quarter and first nine months of 2012.

($ in millions)	Three Months Ended September 30							Nine Months Ended September 30
	2013		2012		% Change			2013		2012		% Change
New loan and lease volume:
U.S. and Canada	$	666.2	$	735.5		(9	)	$	1,847.2	$	2,124.1		(13	)
Europe		196.2		202.3		(3	)		586.7		646.0		(9	)
Mexico and Australia		213.9		224.1		(5	)		650.8		570.5		14
	$	1,076.3	$	1,161.9		(7	)	$	3,084.7	$	3,340.6		(8	)
New loan and lease volume by product:
Loans and finance leases	$	842.0	$	902.2		(7	)	$	2,417.1	$	2,621.1		(8	)
Equipment on operating leases		234.3		259.7		(10	)		667.6		719.5		(7	)
	$	1,076.3	$	1,161.9		(7	)	$	3,084.7	$	3,340.6		(8	)
New loan and lease unit volume:
Loans and finance leases		8,240		8,970		(8	)		23,360		25,940		(10	)
Equipment on operating leases		2,190		2,600		(16	)		6,430		6,830		(6	)
		10,430		11,570		(10	)		29,790		32,770		(9	)
Average earning assets:
U.S. and Canada	$	6,385.6	$	6,109.7		5		$	6,277.0	$	5,791.4		8
Europe		2,457.2		2,197.7		12			2,406.1		2,263.8		6
Mexico and Australia		1,786.5		1,613.7		11			1,767.1		1,510.1		17
	$	10,629.3	$	9,921.1		7		$	10,450.2	$	9,565.3		9
Average earning assets by product:
Loans and finance leases	$	6,883.2	$	6,323.0		9		$	6,820.9	$	6,080.5		12
Dealer wholesale financing		1,491.4		1,600.5		(7	)		1,441.3		1,585.0		(9	)
Equipment on lease and other		2,254.7		1,997.6		13			2,188.0		1,899.8		15
	$	10,629.3	$	9,921.1		7		$	10,450.2	$	9,565.3		9
Revenue:
U.S. and Canada	$	156.5	$	149.5		5		$	470.8	$	427.9		10
Europe		75.7		67.2		13			221.9		210.1		6
Mexico and Australia		61.3		56.8		8			182.7		163.0		12
	$	293.5	$	273.5		7		$	875.4	$	801.0		9
Revenue by product:
Loans and finance leases	$	102.4	$	100.2		2		$	305.2	$	290.3		5
Dealer wholesale financing		14.0		15.3		(8	)		40.0		46.6		(14	)
Equipment on lease and other		177.1		158.0		12			530.2		464.1		14
	$	293.5	$	273.5		7		$	875.4	$	801.0		9
Income before income taxes	$	88.2	$	80.4		10		$	249.8	$	229.1		9

In the third quarter and first nine months, new loan and lease volume decreased 7% and 8% to $1.08 billion and $3.08 billion, respectively, compared to the third quarter and first nine months of 2012. The lower volume in the third quarter and first nine months of 2013 primarily reflects lower market shares. In the third quarter of 2013, PFS market share on new PACCAR trucks decreased to 29.0% from 33.1% for the same period in 2012, primarily due to lower market share in the U.S. and Canada and Europe. For the first nine months of 2013, PFS market share was 29.0% compared to 29.8% for the same period in 2012.

-38-

PACCAR Inc - Form 10-Q

The increase in PFS revenues in the third quarter and first nine months ended September 30, 2013 primarily resulted from higher average earning asset balances, partially offset by lower yields. PFS income before income taxes increased to $88.2 million and $249.8 million in the third quarter and first nine months of 2013 compared to $80.4 million and $229.1 million in the same periods in 2012 primarily due to higher finance and lease margin.

The major factors for the change in interest and fees, interest and other borrowing expenses and finance margin for the three months ended September 30, 2013 are outlined in the table below:

($ in millions)	Interest and Fees			Interest and  Other Borrowing Expenses			Finance Margin
Three Months Ended September 30, 2012	$	115.5		$	40.6		$	74.9
Increase (decrease)
Average finance receivables		8.7						8.7
Average debt balances					2.5			(2.5	)
Yields		(6.0	)					(6.0	)
Borrowing rates					(5.7	)		5.7
Currency translation		(1.8	)		.5			(2.3	)
Total increase (decrease)		.9			(2.7	)		3.6
Three Months Ended September 30, 2013	$	116.4		$	37.9		$	78.5

• Average finance receivables increased $.4 billion from retail portfolio new business volume exceeding repayments, partially offset by a decrease in dealer wholesale financing, primarily in the U.S. and Canada.

• Average debt balances increased $.5 billion in the third quarter of 2013 and included increased medium-term note funding. The higher average debt balances reflect funding for the higher average earning asset portfolio, including loans, finance leases and equipment on operating leases.

• Lower market rates resulted in lower portfolio yields (5.6% in 2013 compared to 5.9% in 2012) and lower borrowing rates (1.9% in 2013 compared to 2.2% in 2012).

The major factors for the change in interest and fees, interest and other borrowing expenses and finance margin for the nine months ended September 30, 2013 are outlined in the table below:

($ in millions)	Interest and Fees			Interest and  Other Borrowing Expenses			Finance Margin
Nine Months Ended September 30, 2012	$	336.9		$	118.4		$	218.5
Increase (decrease)
Average finance receivables		26.3						26.3
Average debt balances					10.7			(10.7	)
Yields		(15.5	)					(15.5	)
Borrowing rates					(13.4	)		13.4
Currency translation		(2.5	)		.5			(3.0	)
Total increase (decrease)		8.3			(2.2	)		10.5
Nine Months Ended September 30, 2013	$	345.2		$	116.2		$	229.0

• Average finance receivables increased $.6 billion from retail portfolio new business volume exceeding repayments, partially offset by a decrease in dealer wholesale financing, primarily in the U.S. and Canada.

• Average debt balances increased $.7 billion in the first nine months of 2013 and included increased medium-term note funding. The higher average debt balances reflect funding for the higher average earning asset portfolio, including loans, finance leases and equipment on operating leases.

-39-

PACCAR Inc - Form 10-Q

• Lower market rates resulted in lower portfolio yields (5.6% in 2013 compared to 5.9% in 2012) and lower borrowing rates (2.0% in 2013 compared to 2.2% in 2012).

The following table summarizes operating lease, rental and other income and depreciation and other expense:

	Three Months Ended				Nine Months Ended
($ in millions)	September 30				September 30
	2013		2012		2013		2012
Operating lease revenues	$	168.3	$	146.9	$	488.8	$	431.8
Used truck sales and other		8.8		11.1		41.4		32.3
Operating lease, rental and other income	$	177.1	$	158.0	$	530.2	$	464.1
Depreciation on operating lease	$	110.3	$	94.5	$	317.4	$	270.0
Vehicle operating expenses		24.0		23.3		71.6		72.4
Cost of used truck sales and other		5.9		9.4		34.2		25.1
Depreciation and other expense	$	140.2	$	127.2	$	423.2	$	367.5

The major factors for the change in operating lease, rental and other income, depreciation and other expense and lease margin for the three months ended September 30, 2013 are outlined in the table below:

($ in millions)	Operating Lease, Rental and Other Income			Depreciation and Other Expense			Lease Margin
Three Months Ended September 30, 2012	$	158.0		$	127.2		$	30.8
Increase (decrease)
Operating lease impairments					(.1	)		.1
Used truck sales and other		(2.3	)		(3.5	)		1.2
Results on returned lease assets					(.4	)		.4
Average operating lease assets		15.6			12.2			3.4
Revenue and cost per asset		3.8			3.0			.8
Currency translation		2.0			1.8			.2
Total increase		19.1			13.0			6.1
Three Months Ended September 30, 2013	$	177.1		$	140.2		$	36.9

• Used truck sales and other revenues decreased operating lease, rental and other income by $2.3 million and decreased depreciation and other expense by $3.5 million, reflecting a lower number of used truck units sold.

• Average operating lease assets increased $257.1 million, which increased income by $15.6 million and related depreciation and other expense by $12.2 million, as a result of higher demand for leased vehicles.

• Revenue and cost per asset increased $3.8 million and $3.0 million, respectively, reflecting the higher demand for leased vehicles and the related costs for higher fleet utilization.

-40-

PACCAR Inc - Form 10-Q

The major factors for the change in operating lease, rental and other income, depreciation and other expense and lease margin for the nine months ended September 30, 2013 are outlined in the table below:

($ in millions)	Operating Lease, Rental and Other Income		Depreciation and Other Expense			Lease Margin
Nine Months Ended September 30, 2012	$	464.1	$	367.5		$	96.6
Increase (decrease)
Operating lease impairments				(.4	)		.4
Used truck sales and other		9.1		9.1
Results on returned lease assets				3.2			(3.2	)
Average operating lease assets		43.7		34.4			9.3
Revenue and cost per asset		10.7		7.1			3.6
Currency translation		2.6		2.3			.3
Total increase		66.1		55.7			10.4
Nine Months Ended September 30, 2013	$	530.2	$	423.2		$	107.0

• Used truck sales and other revenues increased operating lease, rental and other income by $9.1 million and increased depreciation and other expense by $9.1 million, reflecting a higher number of used truck units sold.

• Average operating lease assets increased $288.2 million, which increased income by $43.7 million and related depreciation and other expense by $34.4 million, as a result of higher demand for leased vehicles.

• Revenue and cost per asset increased $10.7 million and $7.1 million, respectively, reflecting the higher demand for leased vehicles and the related costs for higher fleet utilization.

The following tables summarize the provision for losses on receivables and net charge-offs:

	Three Months Ended					Nine Months Ended
($ in millions)	September 30, 2013					September 30, 2013
	Provision For Losses on Receivables			Net Charge-Offs		Provision For Losses on Receivables		Net Charge-Offs
U.S. and Canada	$	1.7		$	1.3	$	5.7	$	3.7
Europe		1.5			1.6		7.2		9.6
Mexico and Australia		.4			.2		2.5		.6
	$	3.6		$	3.1	$	15.4	$	13.9
($ in millions)	Three Months Ended September 30, 2012					Nine Months Ended September 30, 2012
	Provision For Losses on Receivables			Net Charge-Offs		Provision For Losses on Receivables		Net Charge-Offs
U.S. and Canada	$	(.4	)	$	2.7	$	2.6	$	5.7
Europe		1.9			1.4		7.6		5.5
Mexico and Australia		1.2			1.5		5.0		5.7
	$	2.7		$	5.6	$	15.2	$	16.9

-41-

PACCAR Inc - Form 10-Q

The provision for losses on receivables was $3.6 million for the third quarter of 2013, an increase of $.9 million compared to the same period in 2012, reflecting higher provisions in the U.S. and Canada due to portfolio growth, partially offset by lower provisions in Mexico and Australia due to fewer units with losses. The provision for losses on receivables was $15.4 million for the first nine months of 2013, an increase of $.2 million compared to the same period in 2012, due to higher provisions in the U.S. and Canada due to portfolio growth, partially offset by lower provisions in Mexico and Australia reflecting improved portfolio quality.

The Company modifies loans and finance leases as a normal part of its Financial Services operations. The Company may modify loans and finance leases for commercial reasons or for credit reasons. Modifications for commercial reasons are changes to contract terms for customers that are not considered to be in financial difficulty. Insignificant delays are modifications extending terms up to three months for customers experiencing some short term financial stress, but not considered to be in financial difficulty. Modifications for credit reasons are changes to contract terms for customers considered to be in financial difficulty. The Company’s modifications typically result in granting more time to pay the contractual amounts owed and charging a fee and interest for the term of the modification. When considering whether to modify customer accounts for credit reasons, the Company evaluates the creditworthiness of the customers and modifies those accounts that the Company considers likely to perform under the modified terms. When the Company modifies loans and finance leases for credit reasons and grants a concession, the modifications are classified as troubled debt restructurings (TDR).

The post-modification balance of accounts modified during the nine months ended September 30, 2013 and 2012 are summarized below:

($ in millions)
Nine Months Ended September 30,	2013					2012
	Recorded Investment		% of  Total Portfolio*			Recorded Investment		% of Total Portfolio*
Commercial	$	205.5		3.9	%	$	168.0		3.5	%
Insignificant delay		96.7		1.9	%		46.4		1.0	%
Credit - no concession		20.9		.4	%		30.9		.6	%
Credit - TDR		10.3		.2	%		45.9		.9	%
	$	333.4		6.4	%	$	291.2		6.0	%

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

During the first nine months of 2013 total modification activity increased slightly compared to 2012 due to higher modifications for commercial reasons and insignificant delays, partially offset by lower credit modifications. The increase in commercial modifications primarily reflect higher levels of additional equipment financed and end-of-contract modifications. The higher modifications for insignificant delays were mainly due to granting two customers in Australia extensions primarily due to business disruptions arising from flooding and granting one large fleet customer in the U.S. a one-month extension.

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

	September 30 2013			December 31 2012			September 30 2012
Percentage of retail loan and lease accounts
30+ days past due:
U.S. and Canada		.4	%		.3	%		.7	%
Europe		1.1	%		1.0	%		1.0	%
Mexico and Australia		1.6	%		1.5	%		1.8	%
Worldwide		.7	%		.6	%		.9	%

-42-

PACCAR Inc - Form 10-Q

Worldwide PFS accounts 30+ days past due were .7% at September 30, 2013 and have increased .1% from December 31, 2012. The Company continues to focus on maintaining low past-due balances.

When the Company modifies a 30+ days past-due account, the customer is then generally considered current under the revised contractual terms. The Company modified $8.1 million of accounts worldwide during the third quarter of 2013, $11.5 million during the fourth quarter of 2012 and $10.5 million during the third quarter of 2012 that were 30+ days past-due and became current at the time of modification. Had these accounts not been modified and continued to not make payments, the pro forma percentage of retail loan and lease accounts 30+ days past due would have been as follows:

	September 30 2013			December 31 2012			September 30 2012
Pro forma percentage of retail loan and lease accounts
30+ days past due:
U.S. and Canada		.4	%		.4	%		.7	%
Europe		1.2	%		1.3	%		1.0	%
Mexico and Australia		2.2	%		1.9	%		2.8	%
Worldwide		.8	%		.8	%		1.1	%

Modifications of accounts in prior quarters that were more than 30 days past due at the time of modification are included in past-dues if they were not performing under the modified terms at September 30, 2013, December 31, 2012 and September 30, 2012. The effect on the allowance for credit losses from such modifications was not significant at September 30, 2013, December 31, 2012 and September 30, 2012.

For the third quarter and first nine months of 2013, the Company’s 2013 pre-tax return on revenue for Financial Services was 30.1% and 28.5% compared to 29.4% and 28.6% for the same periods of 2012.

Other

Other includes the winch business as well as sales, income and expenses not attributable to a reportable segment, including a portion of corporate expense. Other sales represent approximately 1% of consolidated net sales and revenues for the third quarter and first nine months of 2013 and 2012. Other SG&A was $9.0 million and $33.6 million in the third quarter and first nine months of 2013 compared to $9.4 million and $31.6 million in the third quarter and first nine months of 2012, respectively. Other income (loss) before tax was a loss of $4.5 million and a loss of $18.6 million in the third quarter and first nine months of 2013 compared to a loss of $1.7 million and a loss of $6.1 million in the same periods of 2012. The higher loss was primarily due to lower income before tax from the winch business.

Investment income was $7.3 million and $21.8 million in the third quarter and first nine months of 2013 compared to $7.8 million and $24.9 million, respectively, in the same time period of 2012. The lower investment income in the third quarter and first nine months of 2013 primarily reflects lower yields on investments from lower market interest rates.

The effective income tax rate in the third quarter of 2013 of 29.7% decreased from 32.4% in the same period of 2012. For the first nine months of 2013, the effective income tax rate of 30.8% decreased from 32.5% in the first nine months of 2012. The decrease in the effective tax rate in both periods of 2013 was primarily due to a higher proportion of income generated in lower taxed jurisdictions.

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PACCAR Inc - Form 10-Q

	Three Months Ended						Nine Months Ended
($ in millions)	September 30						September 30
	2013			2012			2013			2012
Domestic income before taxes	$	226.9		$	137.5		$	568.3		$	608.3
Foreign income before taxes		213.1			207.9			641.8			662.4
Total income before taxes	$	440.0		$	345.4		$	1,210.1		$	1,270.7
Domestic pre-tax return on revenues		10.4	%		7.9	%		9.3	%		9.4	%
Foreign pre-tax return on revenues		10.0	%		10.0	%		10.0	%		10.1	%
Total pre-tax return on revenues		10.2	%		9.0	%		9.7	%		9.7	%

During the third quarter of 2013, improvements in truck and parts sales in the U.S. contributed to higher third quarter domestic income before taxes and pre-tax return on revenues.

During the first nine months of 2013, domestic and foreign income before taxes were lower than the same period in 2012 primarily due to lower first half 2013 Truck segment operations, which were partially off-set by improvements in the third quarter, primarily domestic Truck segment operations.

LIQUIDITY AND CAPITAL RESOURCES:

	September 30		December 31
($ in millions)	2013		2012
Cash and cash equivalents	$	1,710.4	$	1,272.4
Marketable debt securities		1,201.1		1,192.7
	$	2,911.5	$	2,465.1

The Company’s total cash and marketable debt securities at September 30, 2013 increased $446.4 million from the balances at December 31, 2012 due primarily to an increase in cash and cash equivalents.

The change in cash and cash equivalents is summarized below:

($ in millions)
Nine Months Ended September 30,	2013			2012
Operating activities:
Net income	$	837.1		$	858.1
Net income items not affecting cash		658.4			595.7
Pension contributions		(12.0	)		(93.7	)
Changes in operating assets and liabilities		216.8			(443.5	)
Net cash provided by operating activities		1,700.3			916.6
Net cash used in investing activities		(1,464.1	)		(1,662.2	)
Net cash provided by financing activities		219.9			380.0
Effect of exchange rate changes on cash		(18.1	)		9.4
Net increase (decrease) in cash and cash equivalents		438.0			(356.2	)
Cash and cash equivalents at beginning of the period		1,272.4			2,106.7
Cash and cash equivalents at end of the period	$	1,710.4		$	1,750.5

Operating activities: Cash provided by operations increased $783.7 million to $1,700.3 million in the first nine months of 2013, primarily due to an improvement in working capital and $81.7 million in lower pension contributions. Higher operating cash flow reflects $497.1 million higher inflow for purchases of goods and services in accounts payable and accrued expenses in excess of payments and a lower

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PACCAR Inc - Form 10-Q

increase in inventories of $83.7 million. In addition, there was a $63.4 million lower increase in Financial Services segment wholesale receivables, sales-type leases and dealer direct loans, and depreciation of equipment on operating leases was higher by $60.5 million. These cash inflows were partially offset by $21.0 million of lower net income and a $91.5 million decrease in cash receipts for sales of goods and services in accounts receivable exceeding sales.

Investing activities: Cash used in investing activities of $1,464.1 million in the first nine months of 2013 decreased $198.1 million from the cash used in the first nine months of 2012. Net new loan and lease originations in the Financial Services segment in the first nine months of 2013 were $261.0 million lower, partially offset by $43.2 million of higher cash used for acquisitions of property, plant and equipment.

Financing activities: Cash provided by financing activities decreased to $219.9 million from $380.0 million in the first nine months of 2012. In the first nine months of 2013, the Company issued $1.88 billion of medium-term debt, $67.0 million less than the first nine months of 2012. The proceeds were used to repay medium-term debt of $565.5 million and to reduce outstanding balances on commercial paper and bank loans by $912.1 million, resulting in cash provided by borrowing activities of $406.5 million, $584.1 million lower than the cash provided by borrowing activities of $990.6 million in the first nine months of 2012. In both periods, cash provided by net borrowings was used to fund growth in the Financial Services portfolios. These lower amounts of cash provided by borrowing activities were partially offset by no purchases of treasury stock in the first nine months of 2013, compared to $162.1 million purchased in the first nine months of 2012. In addition, the Company paid $212.3 million of dividends in the first nine months of 2013, a decrease of $243.6 million compared to $455.9 million in the same period of 2012; the higher dividends paid in 2012 reflect a special dividend declared in 2011 and paid in early 2012.

Credit Lines and Other

The Company has line of credit arrangements of $3.67 billion, of which $3.42 billion were unused at September 30, 2013. Included in these arrangements are $3.0 billion of syndicated bank facilities, of which $1.0 billion matures in June 2014, $1.0 billion matures in June 2017 and $1.0 billion matures in June 2018. 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 facilities for the nine months ended September 30, 2013.

In December 2011, PACCAR Inc filed a shelf registration under the Securities Act of 1933. The current registration expires in the fourth quarter of 2014 and does not limit the principal amount of debt securities that may be issued during the period. The total amount of medium-term notes outstanding for PACCAR Inc as of September 30, 2013 was $500.0 million.

In December 2011, PACCAR’s Board of Directors approved the repurchase of $300.0 million of the Company’s common stock, and as of September 30, 2013, $192.0 million of shares have been repurchased pursuant to the authorization.

Truck, Parts and Other

The Company provides funding for working capital, capital expenditures, R&D, dividends, stock repurchases and other business initiatives and commitments primarily from cash provided by operations. Management expects this method of funding to continue in the future. The current portion of long-term debt was $150.0 million as of September 30, 2013.

Investments for property, plant and equipment in the first nine months of 2013 totaled $294.8 million compared to $353.1 million in the first nine months of 2012 as the Company invested in new products and building a new DAF factory in Brasil. Capital investments in 2013 are expected to be approximately $425 to $475 million. Spending on R&D in 2013 is expected to be $250 to $260 million. PACCAR will continue to focus on new product programs, engine development and manufacturing efficiency improvements. In 2014, capital investments are expected to be $350 to $400 million and R&D is expected to be $225 to $275 million, as PACCAR will continue to focus on enhanced manufacturing operating efficiencies and investing in new products and services.

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PACCAR Inc - Form 10-Q

The Company conducts business in the countries of Spain, Italy, Portugal, Ireland and Greece, which have been experiencing significant financial stress. As of September 30, 2013, the Company had finance and trade receivables in these countries of approximately 1% of consolidated total assets. As of September 30, 2013, the Company did not have any marketable debt security investments in corporate or sovereign government securities in these countries. In addition, the Company had no derivative counterparty credit exposures in these countries as of September 30, 2013.

Financial Services

The Company funds its financial services activities primarily from collections on existing finance receivables and borrowings in the capital markets. The primary sources of borrowings in the capital markets are commercial paper and medium-term notes issued in the public markets and, to a lesser extent, bank loans. An additional source of funds is loans from other PACCAR companies.

The Company issues commercial paper for a portion of its funding in its Financial Services segment. Some of this commercial paper is converted to fixed interest rate debt through the use of interest rate swaps, which are used to manage interest rate risk. In the event of a future significant disruption in the financial markets, the Company may not be able to issue replacement commercial paper. As a result, the Company is exposed to liquidity risk from the shorter maturity of short-term borrowings paid to lenders compared to the longer timing of receivable collections from customers. The Company believes its cash balances and investments, collections on existing finance receivables, syndicated bank lines and current investment-grade credit ratings of A+/A1 will continue to provide it with sufficient resources and access to capital markets at competitive interest rates and therefore contribute to the Company maintaining its liquidity and financial stability. A decrease in these credit ratings could negatively impact the Company’s ability to access capital markets at competitive interest rates and the Company’s ability to maintain liquidity and financial stability.

In November 2012, the Company’s U.S. finance subsidiary, PACCAR Financial Corp. (PFC), filed a shelf registration statement under the Securities Act of 1933 effective for a three year period. The total amount of medium-term notes outstanding for PFC as of September 30, 2013 was $3.6 billion. The registration expires in the fourth quarter of 2015 and does not limit the principal amount of debt securities that may be issued during that period.

As of September 30, 2013, the Company’s European finance subsidiary, PACCAR Financial Europe, had €418.3 million available for issuance under a €1.50 billion medium-term note program registered with the London Stock Exchange. The program was renewed in the second quarter of 2013 and is renewable annually through the filing of a new prospectus.

In April 2011, PACCAR Financial Mexico registered a 10.00 billion peso medium-term note and commercial paper program with the Comision Nacional Bancaria y de Valores. The registration expires in 2016 and limits the amount of commercial paper (up to one year) to 5.00 billion pesos. At September 30, 2013, 7.64 billion pesos remained available for issuance.

PACCAR believes its Financial Services companies will be able to continue funding receivables, servicing debt and paying dividends through internally generated funds, access to public and private debt markets and lines of credit.

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;

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PACCAR Inc - Form 10-Q

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, 2012.

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, 2013. For additional information, refer to Item  7A as presented in the 2012 Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

The Company’s management, with the participation of the Principal Executive Officer and Principal Financial Officer, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

There have been no 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.

PART II – OTHER INFORMATION

For Items 3, 4 and 5, there was no reportable information for the nine months ended September 30, 2013.

ITEM 1. LEGAL PROCEEDINGS

The Company and its subsidiaries are parties to various lawsuits incidental to the ordinary course of business. Management believes that the disposition of such lawsuits will not materially affect the Company’s business or financial condition.

On June 3, 2013, the Company and PFC entered into a settlement with the United States Securities and Exchange Commission (“SEC”) that fully resolves the previously reported SEC investigation into the Company’s financial reporting from 2008 to 2011. See Legal Proceedings in the Company’s Form 10-Q for the second quarter of 2013 for additional details.

The National Labor Relations Board (“NLRB”) proceeding concerning compensation of former employees of the Peterbilt plant in Madison, Tennessee has been finally resolved in favor of the Company. See Legal Proceedings in the Company’s Form 10-Q for the first quarter of 2013 for additional details.

In January 2011, the European Union (EU) Competition Commission commenced an investigation of all major European commercial vehicle manufacturers, including subsidiaries of the Company, concerning whether such companies participated in agreements or concerted practices to coordinate their commercial policy in the EU. The Company’s subsidiaries are cooperating fully with the EU Competition Commission.

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PACCAR Inc - Form 10-Q

ITEM 1A. RISK FACTORS

For information regarding risk factors, refer to Part I, Item 1A as presented in the 2012 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, 2013.

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, 2013.

(c) Issuer purchases of equity securities.

On December 6, 2011, the Company’s Board of Directors approved a plan to repurchase up to $300 million of the Company’s outstanding common stock. As of September 30, 2013, $192.0 million of shares have been repurchased under this plan. There were no repurchases made under this plan during the first nine months of 2013.

ITEM 6. EXHIBITS

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

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PACCAR Inc - Form 10-Q

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 7, 2013	By	/s/    M. T. Barkley
		M. T. Barkley
		Vice President and Controller
		(Authorized Officer and Chief Accounting Officer)

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PACCAR Inc - Form 10-Q

INDEX TO EXHIBITS

Exhibit (in order of assigned index numbers)

Exhibit Number		Exhibit Description	Form	Date of First Filing	Exhibit Number	File Number
(3)    (i)		Articles of Incorporation:
	(a)	Restated Certificate of Incorporation of PACCAR Inc	8-K	September 19, 2005	99.3	001-14817
	(b)	Certificate of Amendment of Certificate of Incorporation of PACCAR Inc dated April 28, 2008	10-Q	May 2, 2008	3(b)	001-14817
(ii)		Bylaws:
	(a)	Second Amended and Restated Bylaws of PACCAR Inc	8-K	July 13, 2012	3(ii)	001-14817
(4)		Instruments defining the rights of security holders, including indentures:
	(a)	Indenture for Senior Debt Securities dated as of November 20, 2009 between PACCAR Financial Corp. and The Bank of New York Mellon Trust Company, N.A.	10-K	February 26, 2010	4(c)	001-11677
	(b)	Forms of Medium-Term Note, Series M (PACCAR Financial Corp.)	S-3	November 20, 2009	4.2 and 4.3	333-163273
	(c)	Forms of Medium-Term Note, Series N (PACCAR Financial Corp.)	S-3	November 7, 2012	4.2 and 4.3	333-184808
	(d)	Form of InterNotes, Series B (PACCAR Financial Corp.)	S-3	November 7, 2012	4.4	333-184808
	(e)	Indenture for Senior Debt Securities dated as of November 18, 2008 between PACCAR Inc and Wilmington Trust Company	S-3	November 18, 2008	4.1	333-155429
	(f)	Forms of Medium-Term Note, Series A	S-3	November 18, 2008	4.2A and 4.2B	333-155429
	(g)	Indenture for Senior Debt Securities dated as of December 19, 2011 between PACCAR Inc and The Bank of New York Mellon Trust Company, N.A.	S-3	December 19, 2011	4.1	333-178607
	(h)	Forms of Medium-Term Note, Series B (Fixed- and Floating-Rate)	S-3	December 19, 2011	4.2A and 4.2B	333-178607

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PACCAR Inc - Form 10-Q

Exhibit Number		Exhibit Description	Form	Date of First Filing	Exhibit Number	File Number
	(i)	Terms and Conditions of the Notes applicable to the €1,500,000,000 Medium Term Note Programme of PACCAR Financial Europe B.V.*
	(j)	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	10-K	February 27, 2009	10(a)	001-14817
	(b)	Amended and Restated Deferred Compensation Plan	10-Q	May 5, 2012	10(b)	001-14817
	(c)	Deferred Incentive Compensation Plan (Amended and Restated as of December 31, 2004)	10-K	February 27, 2006	10(b)	001-14817
	(d)	Amended and Restated PACCAR Inc Restricted Stock and Deferred Compensation Plan for Non-Employee Directors	10-K	February 27, 2009	10(d)	001-14817
	(e)	PACCAR Inc Restricted Stock and Deferred Compensation Plan for Non-Employee Directors, Form of Restricted Stock Agreement for Non-Employee Directors	10-K	February 27, 2009	10(e)	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	8-K	December 10, 2007	99.3	001-14817
	(g)	Amendment to Compensatory Arrangement with Non-Employee Directors	10-K	February 29, 2012	10(g)	001-14817
	(h)	PACCAR Inc Senior Executive Yearly Incentive Compensation Plan	DEF14A	March 10, 2011	Appendix B	001-14817
	(i)	PACCAR Inc Long Term Incentive Plan	DEF14A	March 10, 2011	Appendix A	001-14817
	(j)	PACCAR Inc Long Term Incentive Plan, Nonstatutory Stock Option Agreement and Form of Option Grant Agreement	8-K	January 25, 2005	99.1	001-14817

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PACCAR Inc - Form 10-Q

Exhibit Number		Exhibit Description	Form	Date of First Filing	Exhibit Number	File Number
	(k)	Amendment One to PACCAR Inc Long Term Incentive Plan, Nonstatutory Stock Option Agreement and Form of Option Grant Agreement	10-Q	August 7, 2013	10(k)	001-14817
	(l)	PACCAR Inc Long Term Incentive Plan, 2014 Form of Nonstatutory Stock Option Agreement	10-Q	August 7, 2013	10(l)	001-14817
	(m)	PACCAR Inc Long Term Incentive Plan, Form of Restricted Stock Award Agreement	8-K	February 5, 2007	99.1	001-14817
	(n)	PACCAR Inc Long Term Incentive Plan, 2010 Form of Restricted Stock Award Agreement	10-K	February 26, 2010	10(m)	001-14817
	(o)	PACCAR Inc Long Term Incentive Plan, Alternate Form of Restricted Stock Award Agreement	10-K	March 1, 2011	10(n)	001-14817
	(p)	PACCAR Inc Long Term Incentive Plan, 2008 Form of Share Match Restricted Stock Award Agreement	8-K	February 5, 2008	99.1	001-14817
	(q)	PACCAR Inc Long Term Incentive Plan, 2011 Form of Share Match Restricted Stock Award Agreement	10-K	March 1, 2011	10(p)	001-14817
	(r)	PACCAR Inc Savings Investment Plan, Amendment and Restatement effective January 1, 2009	10-K	March 1, 2011	10(r)	001-14817
	(s)	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	8-K	May 16, 2007	10.1	001-14817
	(t)	Letter Waiver Dated as of July 22, 2008 amending the Memorandum of Understanding, dated as of May 11, 2007, by and among PACCAR Engine Company, the State of Mississippi and certain state and local supporting governmental entities	10-Q	October 27, 2008	10(o)	001-14817

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PACCAR Inc - Form 10-Q

Exhibit Number		Exhibit Description	Form	Date of First Filing	Exhibit Number	File Number
	(u)	Second Amendment to Memorandum of Understanding dated as of September 26, 2013, by and among PACCAR Engine Company, the Mississippi Development Authority and the Mississippi Major Economic Impact Authority*
(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, 2013 and 2012*
	(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, 2008 - 2012	10-K	February 27, 2013	12(a)	001-14817
(31)		Rule 13a-14(a)/15d-14(a) Certifications:
	(a)	Certification of Principal Executive Officer*
	(b)	Certification of Principal Financial Officer*
(32)		Section 1350 Certifications:
	(a)	Certification pursuant to rule 13a-14(b) and section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. section 1350)*
(101.INS)		XBRL Instance Document*
(101.SCH)		XBRL Taxonomy Extension Schema Document*
(101.CAL)		XBRL Taxonomy Extension Calculation Linkbase Document*
(101.DEF)		XBRL Taxonomy Extension Definition Linkbase Document*
(101.LAB)		XBRL Taxonomy Extension Label Linkbase Document*
(101.PRE)		XBRL Taxonomy Extension Presentation Linkbase Document*

* filed herewith

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EX-4.(I)

Exhibit 4(i)

TERMS AND CONDITIONS OF THE NOTES

The following is the text of the terms and conditions which, as completed 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 (the “Issuer”) has 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 completes these terms and conditions (the “Conditions”). The terms and conditions applicable to any particular Tranche of Notes are these Conditions as completed by the relevant Final Terms.

(c) Agency Agreement: The Notes are the subject of and issued pursuant to an amended and restated agency agreement dated 24 May 2013 (the “Agency Agreement”) between the Issuer and 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 the Issuer dated 24 May 2013 (the “Deed of Covenant”) in relation to the Notes.

(d) The Notes: All subsequent references in these Conditions to “Notes” are to the Notes that 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” means the amount as specified 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,” means in relation to any particular date, the business day convention specified 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” means the amount specified 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 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 the Final Terms and/or determined in accordance with these Conditions;

“EURIBOR” means, in respect of any specified currency and any specified period, the interest rate benchmark known as the Euro zone interbank offered rate which is calculated and published by a designated distributor (currently Thomson Reuters) in accordance with the requirements from time to time of the European Banking Federation based on estimated interbank borrowing rates for a number of designated currencies and maturities which are provided, in respect of each such currency, by a panel of contributor banks (details of historic EURIBOR rates can be obtained from the designated distributor);

“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 the relevant Final Terms;

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

“Fixed Coupon Amount” means the amount specified 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” means the date specified in the relevant Final Terms;

“Interest Payment Date” means the First Interest Payment Date and any other date or dates specified as such in 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 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.) or, if so specified in the relevant Final Terms, 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.);

“Issue Date” means the date specified in the relevant Final Terms;

“LIBOR” means, in respect of any specified currency and any specified period, the London inter-bank offered rate for that currency and period displayed on the appropriate page (being currently Reuters screen page LIBOR01 or LIBOR02) on the information service which publishes that rate;

“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” means the margin specified in the relevant Final Terms;

“Maturity Date” means the date specified in the relevant Final Terms;

“Maximum Redemption Amount” means the amount specified in the relevant Final Terms;

“Minimum Redemption Amount” means the amount specified 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 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 the relevant Final Terms;

“Optional Redemption Date (Call)” means the date specified in the relevant Final Terms;

“Optional Redemption Date (Put)” means the date specified in the relevant Final Terms;

“Participating Member State” means a Member State of the European Communities that 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 that 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 and/or calculated or determined in accordance with the provisions of these Conditions;

“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 the relevant Final Terms;

“Reference Banks” means the reference banks specified 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” means the reference price specified in the relevant Final Terms;

“Reference Rate” means EURIBOR or LIBOR as specified in the relevant Final Terms in respect of the currency and period specified 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” means the relevant financial centre specified 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) 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” means the time specified 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” means the currency specified in the relevant Final Terms;

“Specified Denomination(s)” means the denomination(s) specified in the relevant Final Terms;

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

“Specified Period” means the period specified 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 11 (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 11 (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 a meaning as specified in the relevant Final Terms, but the relevant Final Terms does not so specify 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. The minimum Specified Denomination shall be €100,000 (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 arrears on each Interest Payment Date, subject as provided in Condition 10 (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 Provisions

(a) Application: This Condition 7 (Floating Rate Note Provisions) is applicable to the Notes only if the Floating 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 10 (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) 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.

(f) 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.

(g) 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 the London Stock Exchange 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.

(h) 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. 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 10 (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 the Floating Rate Note Provisions are specified in the relevant Final Terms as not being applicable); or

(ii) on any Interest Payment Date (if the Floating Rate 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 11 (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 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 (other than reporting requirements pursuant to Sections 1471 to 1474 of the Internal Revenue Code), 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 and (B) (in the case of redemption under Condition 9(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 9(b), the Issuer shall be bound to redeem the Notes in accordance with this Condition 9(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 9(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 the London Stock Exchange and the notice to Noteholders referred to in Condition 9(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 9(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 9(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 9(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 9(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.

10. 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 11 (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 10(f) is applicable or that the Floating Rate Note Provisions are applicable, on the due date for final redemption of any Note or early redemption of such Note pursuant to Condition 9(b) (Redemption for tax reasons), Condition 9(e) (Redemption at the option of Noteholders), Condition 9(c) (Redemption at the option of the Issuer) or Condition 12 (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 13 (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.

11. 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 or the United States of America 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 or agreement of the Issuer. 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; or

(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; or

(vii) where such withholding or deduction is required by the rules under Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986 (the “Code”) (or any amended or successor provisions), pursuant to any inter-governmental agreement, or implementing legislation adopted by another jurisdiction in connection with these provisions of the Code, or pursuant to any agreement with the U.S. Internal Revenue Service (“FATCA withholding”) as a result of a holder, beneficial owner or an intermediary that is not an agent of the Issuer not being entitled to receive payments free of FATCA withholding.

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

12. 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 12(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 (akkoord) 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.

13. 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.

14. 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, subject to all applicable laws and requirements of the London Stock Exchange, 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.

15. 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 and trading on the London Stock Exchange and it 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 the London Stock Exchange.

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 10(c).

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

16. 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.

17. 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.

18. 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.

19. 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.

20. 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.

21. 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 21(b) (English courts) is for the benefit of the Noteholders only. As a result, nothing in this Condition 21 (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: The Issuer 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 PACCAR Financial PLC at Croston Road, Leyland, Preston, Lancs PR5 3LZ, United Kingdom or, if different, its registered office for the time being. If such Person is not or ceases to be effectively appointed to accept service of process on behalf of the Issuer, the Issuer shall, on the written demand of any Noteholder addressed and delivered to the Issuer 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 the Issuer and delivered to the Issuer 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.(U)

Exhibit 10(u)

SECOND AMENDMENT TO

MEMORANDUM OF UNDERSTANDING

This Second Amendment to Memorandum of Understanding (the “Second Amendment”) is entered into by and between the undersigned for the purpose of amending certain of the terms and conditions of that certain Memorandum of Understanding, (the “MOU”) dated as of May 11, 2007, by and among the State of Mississippi, the Mississippi Development Authority (“MDA”), the Mississippi Major Economic Impact Authority (“MMEIA”), together with MDA, acting for and on behalf of the State, the Mississippi Department of Environmental Quality, the Mississippi Department of Employment Security, Lowndes County, Mississippi, the Lowndes County Industrial Development Authority, Oktibbeha County, Mississippi, and East Mississippi Community College, and PACCAR Engine Company (“PACCAR”), a Mississippi corporation, and its permitted successors and assigns.

WHEREAS, the Parties executed the MOU effective as of the Effective Date; and

WHEREAS, the MOU was amended by that certain Letter Waiver dated as of July 22, 2008; and

WHEREAS, the Company has constructed the Project in the County and State for the purpose of manufacturing and assembling engines and components thereof with an investment in excess of $433,800,000; and

WHEREAS, due to global economic conditions since the signing of the MOU, the market for the engines produced at the Project has been adversely affected; and

WHEREAS, the Parties wish to amend certain of the terms of the MOU under the terms set forth herein;

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants, promises and agreements herein contained, and other good and valuable consideration, the Parties agree as follows:

ARTICLE I

RECITALS

The Parties agree that the foregoing Recitals are true and correct, and are hereby incorporated in and made a part of this Second Amendment.

ARTICLE II

DEFINITIONS

Capitalized terms used herein and not otherwise defined have the meanings set forth in the MOU.

ARTICLE III

EXTENSION OF JOBS COMMITMENT

Section 2.01(c) of the MOU is hereby deleted in its entirety and replaced with the following:

(c) to create and maintain for a period of ten (10) years at least five hundred (500) new full-time jobs, each eligible job consisting of an employee of the Company working on the Project Site a minimum of thirty-five (35) hours per week, and meeting reasonable criteria established by MMEIA, which criteria shall include, but not be limited to, the requirement that such jobs must be held by persons eligible for employment in the United States under applicable state and federal law, and the requirement that the average annual wage and taxable benefits of such jobs shall be at least one hundred twenty-five percent (125%) of the most

Second Amendment to Memorandum of Understanding—Page 2

recently published average annual wage of the State or the most recently published average annual wage of the County as determined by the MDES, whichever is the lesser (the “Jobs”), no later than December 31, 2015 (the “Jobs Commitment”).

ARTICLE IV

RATIFICATION.

Except as specifically amended hereby, all terms and conditions of the MOU are ratified and confirmed. By the terms of the MOU, the only parties required to execute this Second Amendment are MDA, MMEIA and PACCAR.

ARTICLE V

COUNTERPARTS.

This Second Amendment may be executed in several separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same agreement.

IN WITNESS WHEREOF, the Parties have executed this Second Amendment on the date of acknowledgment of their respective signatures, to be effective as of the date when signed by all parties hereto.

[signature pages follow]

Second Amendment to Memorandum of Understanding—Page 3

MISSISSIPPI DEVELOPMENT AUTHORITY
By:	/s/ Brent Christensen
	Brent Christensen
	Executive Director

STATE OF MISSISSIPPI	)
	)
COUNTY OF HINDS	)

Before me, the undersigned, a Notary Public, in and for said county, in said state, personally appeared Brent Christensen, Executive Director of the Mississippi Development Authority, whose name is signed to the foregoing Agreement, and who is known to me, being first duly sworn, acknowledged before me on this day that, being informed of the contents of said Agreement, makes oath that he, as such official and with full authority, has read the foregoing Agreement and knows the contents thereof, executed the same voluntarily for and as the act of said Mississippi Development Authority on this date.

Subscribed and sworn to before me on this the 6th day of Sept., 2013.

/s/ Kay L. Troxler

NOTARY PUBLIC

My commission expires:

        7-15-14

[SEAL]

Second Amendment to Memorandum of Understanding—Page 4

MISSISSIPPI MAJOR ECONOMIC IMPACT AUTHORITY
By:	/s/ Brent Christensen
	Brent Christensen
	Executive Director

STATE OF MISSISSIPPI	)
	)
COUNTY OF HINDS	)

Before me, the undersigned, a Notary Public, in and for said county, in said state, personally appeared Brent Christensen, Executive Director of the Mississippi Major Economic Impact Authority whose name is signed to the foregoing Agreement, and who is known to me, being first duly sworn, acknowledged before me on this day that, being informed of the contents of said Agreement, makes oath that he, as such official and with full authority, has read the foregoing Agreement and knows the contents thereof, executed the same voluntarily for and as the act of said Mississippi Major Economic Impact on this date.

Subscribed and sworn to before me on this the 6th day of Sept., 2013.

/s/ Kay L. Troxler

NOTARY PUBLIC

My commission expires:

        7-15-14

[SEAL]

Second Amendment to Memorandum of Understanding—Page 5

PACCAR ENGINE COMPANY a Mississippi corporation
By:	/s/ Darrin C. Siver
	Darrin C. Siver
	Vice President

STATE OF TEXAS	)
	)  ss.
COUNTY OF DENTON	)

This instrument was acknowledged before me on the 26th day of September, 2013, by Darrin C. Siver, Vice President of PACCAR Engine Company, a Mississippi corporation, on its behalf.

/s/ Valarie K. Andrew
Notary Public, State of Texas
My Commission Expires:	10/16/2016

[SEAL]

Second Amendment to Memorandum of Understanding—Page 6

EX-12.(A)

PACCAR Inc

EXHIBIT 12(a)

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

PURSUANT TO SEC REPORTING REQUIREMENTS

(Millions of Dollars)

Nine Months Ended September 30	2013		2012
FIXED CHARGES
Interest expense	$	118.4	$	121.9
Portion of rentals deemed interest		3.5		3.4
TOTAL FIXED CHARGES	$	121.9	$	125.3
EARNINGS
Income before taxes	$	1,210.1	$	1,270.7
Fixed charges		117.3		119.9
EARNINGS AS DEFINED	$	1,327.4	$	1,390.6
RATIO OF EARNINGS TO FIXED CHARGES		10.89X		11.10X

EX-31.(A)

EXHIBIT 31(a)

CERTIFICATIONS

I, Mark C. Pigott, 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 7, 2013	/s/    Mark C. Pigott
	Mark C. Pigott
	Chairman and Chief Executive Officer
	(Principal Executive Officer)

EX-31.(B)

EXHIBIT 31(b)

CERTIFICATIONS

I, Robert J. Christensen, 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 7, 2013	/s/    Robert J. Christensen
	Robert J. Christensen
	Executive Vice President and
	Chief Financial Officer
	(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, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certify, pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. section 1350), that to the best of our knowledge and belief:

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

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

Date November 7, 2013	By	/s/    Mark C. Pigott
		Mark C. Pigott
		Chairman and Chief Executive Officer
		PACCAR Inc
		(Principal Executive Officer)
	By	/s/    Robert J. Christensen
		Robert J. Christensen
		Executive Vice President and
		Chief Financial Officer
		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.

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Basis of Presentation (Tables)

9 Months Ended

Sep. 30, 2013

Dilutive and Antidilutive Options

The dilutive and antidilutive options are shown separately in the table below.

	Three Months Ended				Nine Months Ended
	September 30				September 30
	2013		2012		2013		2012
Additional shares		994,000		689,000		907,000		746,000
Antidilutive options		783,000		2,495,000		873,000		2,552,000

XML

Derivative Financial Instruments - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of interest-rate contracts	$ 3,597.0		$ 3,597.0
Notional maturities for interest-rate contracts 2013	217.7		217.7
Notional maturities for interest-rate contracts 2014	1,227.9		1,227.9
Notional maturities for interest-rate contracts 2015	1,146.5		1,146.5
Notional maturities for interest-rate contracts 2016	760.0		760.0
Notional maturities for interest-rate contracts 2017	217.2		217.2
Notional maturities for interest-rate contracts thereafter	27.7		27.7
Maximum length of future cash flow hedges			6 years 7 months 6 days
Recognized gain (loss) on the ineffective portion	0	0.2	0.1	0.4
Accumulated net loss on derivative contracts included in accumulated other comprehensive loss expected to be reclassified to interest expense or cost of sales in the following 12 months			23.8
Foreign-exchange contracts
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of interest-rate contracts	$ 451.7		$ 451.7
Foreign-exchange contracts maturity period			Within one year

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Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Preferred stock, no par value	$ 0	$ 0	[1]
Preferred stock, authorized	1,000,000	1,000,000	[1]
Preferred stock, issued	0	0	[1]
Common stock, par value	$ 1	$ 1	[1]
Common stock, authorized	1,200,000,000	1,200,000,000	[1]
Common stock, issued	354,100,000	353,400,000	[1]

[1] The December 31, 2012 consolidated balance sheet has been derived from audited financial statements.

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Product Support Liabilities

9 Months Ended

Sep. 30, 2013

Product Support Liabilities

NOTE E - Product Support Liabilities

Product support liabilities are estimated future payments related to product warranties, optional extended warranties and repair and maintenance (R&M) contracts. The Company generally offers one year warranties covering most of its vehicles and related aftermarket parts. Specific terms and conditions vary depending on the product and the country of sale. Optional extended warranty and R&M contracts can be purchased for periods which generally range up to five years. Warranty expenses and reserves are estimated and recorded at the time products or contracts are sold based on historical data regarding the source, frequency and cost of claims, net of any recoveries. The Company periodically assesses the adequacy of its recorded liabilities and adjusts them as appropriate to reflect actual experience. Revenue from extended warranty and R&M contracts is deferred and recognized to income on a straight-line basis over the contract period. Warranty and R&M costs on these contracts are recognized as incurred.

Changes in product support liabilities are summarized as follows:

	2013			2012
Balance at January 1	$	540.7		$	448.7
Cost accruals and revenue deferrals		238.0			234.6
Payments and revenue recognized		(195.4	)		(168.0	)
Currency translation		4.6			1.2
Balance at September 30	$	587.9		$	516.5

XML

Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2013

Balance Sheet Classifications and Fair Value of Derivative Financial Instruments

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

	September 30, 2013				December 31, 2012
	Assets		Liabilities		Assets		Liabilities
Derivatives designated under hedge accounting:
Interest-rate contracts:
Financial Services:
Other assets	$	30.3			$	4.6
Deferred taxes and other liabilities			$	71.0			$	111.7
Foreign-exchange contracts:
Truck, Parts and Other:
Other current assets		.2				.2
Accounts payable, accrued expenses and other				2.6				.1
Total	$	30.5	$	73.6	$	4.8	$	111.8
Economic hedges:
Interest-rate contracts:
Financial Services:
Deferred taxes and other liabilities							$	.6
Foreign-exchange contracts:
Truck, Parts and Other:
Other current assets	$	.2			$	.3
Accounts payable, accrued expenses and other			$	.5				.2
Financial Services:
Other assets		.2
Deferred taxes and other liabilities				1.4				.4
Total	$	.4	$	1.9	$	.3	$	1.2

Balance Sheet Classification of Gross and Proforma Net Amounts of Derivative Financial Instruments

The following tables present the balance sheet classification of the gross and pro forma net amounts of derivative financial instruments:

As of September 30, 2013	Gross Amount Recognized in Balance Sheet		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Truck, Parts and Other
Foreign-exchange contracts	$	.4	$	(.1	)	$	.3
Financial Services
Interest-rate contracts		30.3		(12.3	)		18.0
Foreign-exchange contracts		.2					.2
Total derivative assets	$	30.9	$	(12.4	)	$	18.5
Liabilities:
Truck, Parts and Other
Foreign-exchange contracts	$	3.1	$	(.1	)	$	3.0
Financial Services
Interest-rate contracts		71.0		(12.3	)		58.7
Foreign-exchange contracts		1.4					1.4
Total derivative liabilities	$	75.5	$	(12.4	)	$	63.1
As of December 31, 2012	Gross Amount Recognized in Balance Sheet		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Truck, Parts and Other
Foreign-exchange contracts	$	.5				$	.5
Financial Services
Interest-rate contracts		4.6	$	(2.6	)		2.0
Total derivative assets	$	5.1	$	(2.6	)	$	2.5
Liabilities:
Truck, Parts and Other
Foreign-exchange contracts	$	.3				$	.3
Financial Services
Interest-rate contracts		112.3	$	(2.6	)		109.7
Foreign-exchange contracts		.4					.4
Total derivative liabilities	$	113.0	$	(2.6	)	$	110.4

Cash Flow Hedging

Gains/Losses of Derivative Financial Instruments

The following table presents the pre-tax effects of derivative instruments recognized in OCI:

	Three Months Ended				Nine Months Ended
	September 30, 2013				September 30, 2013
	Interest-Rate		Foreign-Exchange		Interest-Rate			Foreign-Exchange
	Contracts		Contracts		Contracts			Contracts
Loss (gain) recognized in OCI:
Truck, Parts and Other			$	4.6				$	1.7
Financial Services	$	33.1			$	(41.3	)
	$	33.1	$	4.6	$	(41.3	)	$	1.7
	Three Months Ended				Nine Months Ended
	September 30, 2012				September 30, 2012
	Interest-Rate		Foreign-Exchange		Interest-Rate			Foreign-Exchange
	Contracts		Contracts		Contracts			Contracts
Loss recognized in OCI:
Truck, Parts and Other			$	1.3				$	2.2
Financial Services	$	5.7			$	29.4
	$	5.7	$	1.3	$	29.4		$	2.2

Expense (income) reclassified out of accumulated other comprehensive loss into income:

	Three Months Ended September 30, 2013					Nine Months Ended September 30, 2013
	Interest-Rate		Foreign-Exchange			Interest-Rate			Foreign-Exchange
	Contracts		Contracts			Contracts			Contracts
Truck, Parts and Other:
Cost of sales and revenues			$	1.8					$	(.5	)
Interest and other expense (income), net				(.5	)					(.2	)
Financial Services:
Interest and other borrowing expenses	$	32.8				$	(29.1	)
	$	32.8	$	1.3		$	(29.1	)	$	(.7	)
	Three Months Ended					Nine Months Ended
	September 30, 2012					September 30, 2012
	Interest-Rate		Foreign-Exchange			Interest-Rate			Foreign-Exchange
	Contracts		Contracts			Contracts			Contracts
Truck, Parts and Other:
Cost of sales and revenues			$	1.6					$	4.3
Interest and other expense (income), net				.4						.4
Financial Services:
Interest and other borrowing expenses	$	1.6				$	17.7
	$	1.6	$	2.0		$	17.7		$	4.7

Economic Hedges

Gains/Losses of Derivative Financial Instruments

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

	Three Months Ended						Nine Months Ended
	September 30, 2013						September 30, 2013
	Interest-Rate			Foreign-Exchange			Interest-Rate			Foreign-Exchange
	Contracts			Contracts			Contracts			Contracts
Truck, Parts and Other:
Cost of sales and revenues				$	(1.3	)				$	(.9	)
Interest and other expense (income), net					.4						.8
Financial Services:
Interest and other borrowing expenses	$	(.1	)		(4.3	)	$	(1.5	)		(8.9	)
	$	(.1	)	$	(5.2	)	$	(1.5	)	$	(9.0	)
	Three Months Ended						Nine Months Ended
	September 30, 2012						September 30, 2012
	Interest-Rate			Foreign-Exchange			Interest-Rate			Foreign-Exchange
	Contracts			Contracts			Contracts			Contracts
Truck, Parts and Other:
Cost of sales and revenues										$	(.3	)
Interest and other expense (income), net				$	2.0						(.4	)
Financial Services:
Interest and other borrowing expenses	$	1.6			(.5	)	$	1.5			.6
	$	1.6		$	1.5		$	1.5		$	(.1	)

Financial Services | Fair Value Hedge

Gains/Losses of Derivative Financial Instruments

The expense or (income) recognized in earnings related to fair value hedges was included in interest and other borrowing expenses in the Financial Services segment of the Consolidated Statements of Comprehensive Income as follows:

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2013			2012			2013			2012
Interest-rate swaps	$	.2		$	(2.4	)	$	.5		$	(4.0	)
Term notes		(.2	)		3.2			(.6	)		4.7

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(Income) or Expense Recognized in Earnings Related to Fair Value Hedges (Detail) (Financial Services, USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Financial Services
Derivative [Line Items]
Interest and other borrowing expenses - interest-rate swaps	$ 0.2	$ (2.4)	$ 0.5	$ (4.0)
Interest and other borrowing expenses - term notes	$ (0.2)	$ 3.2	$ (0.6)	$ 4.7

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Investments in Marketable Debt Securities (Tables)

9 Months Ended

Sep. 30, 2013

Marketable Debt Securities

Marketable debt securities at September 30, 2013 and December 31, 2012 consisted of the following:

	Amortized		Unrealized		Unrealized		Fair
At September 30, 2013	Cost		Gains		Losses		Value
U.S. tax-exempt securities	$	205.4	$	1.1	$	.1	$	206.4
U.S. corporate securities		79.6		.1				79.7
U.S. government and agency securities		.6						.6
Non-U.S. corporate securities		564.6		1.4		.4		565.6
Non-U.S. government securities		243.6		1.1		.2		244.5
Other debt securities		103.8		.5				104.3
	$	1,197.6	$	4.2	$	.7	$	1,201.1
	Amortized		Unrealized		Unrealized		Fair
At December 31, 2012	Cost		Gains		Losses		Value
U.S. tax-exempt securities	$	217.2	$	1.5	$	.1	$	218.6
U.S. corporate securities		59.8		.3				60.1
U.S. government and agency securities		.8						.8
Non-U.S. corporate securities		447.5		1.4		.2		448.7
Non-U.S. government securities		349.3		5.8		.1		355.0
Other debt securities		108.9		.6				109.5
	$	1,183.5	$	9.6	$	.4	$	1,192.7

Contractual Maturities of Marketable Debt Securities

Contractual maturities on marketable debt securities at September 30, 2013 were as follows:

	Amortized		Fair
Maturities:	Cost		Value
Within one year	$	530.0	$	531.1
One to five years		667.1		669.5
Six to ten years		.1		.1
More than ten years		.4		.4
	$	1,197.6	$	1,201.1

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Reclassifications Out of Accumulated Other Comprehensive Income (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Accumulated Other Comprehensive Income (Loss) [Line Items]
Gains and Losses on cash flow hedges, after-tax expense reduction	$ (20.8)
Unrealized gains and losses on marketable debt securities, after-tax income increase	1.0
Defined benefit pension plans, actuarial (loss), pre-tax expense	22.1
Foreign Currency Translation, pre-tax expense reduction	(2.0)
Total reclassifications out of AOCI	0.3
Available-for-sale Securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Unrealized gains and losses on marketable debt securities, tax expense	(0.4)
Unrealized gains and losses on marketable debt securities, after-tax income increase	1.0
Available-for-sale Securities | Investment Income
Accumulated Other Comprehensive Income (Loss) [Line Items]
Unrealized gains and losses on marketable debt securities, pre-tax expense	1.4
Truck, Parts and Other
Accumulated Other Comprehensive Income (Loss) [Line Items]
Defined benefit pension plans, prior service costs, pre-tax expense	0.9
Defined benefit pension plans, actuarial (loss), pre-tax expense	31.7
Truck, Parts and Other | Cost of sales and revenues
Accumulated Other Comprehensive Income (Loss) [Line Items]
Defined benefit pension plans, prior service costs, pre-tax expense	0.8
Defined benefit pension plans, actuarial (loss), pre-tax expense	(17.4)
Truck, Parts and Other | Interest and other expense (income) , net
Accumulated Other Comprehensive Income (Loss) [Line Items]
Foreign Currency Translation, pre-tax expense reduction	(1.1)
Truck, Parts and Other | SG&A
Accumulated Other Comprehensive Income (Loss) [Line Items]
Defined benefit pension plans, prior service costs, pre-tax expense	0.1
Defined benefit pension plans, actuarial (loss), pre-tax expense	(14.2)
Truck, Parts and Other | Foreign-exchange contracts | Cost of sales and revenues
Accumulated Other Comprehensive Income (Loss) [Line Items]
Gains and Losses on cash flow hedges, pre-tax expense reduction	(0.5)
Truck, Parts and Other | Foreign-exchange contracts | Interest and other expense (income) , net
Accumulated Other Comprehensive Income (Loss) [Line Items]
Gains and Losses on cash flow hedges, pre-tax expense reduction	(0.2)
Financial Services
Accumulated Other Comprehensive Income (Loss) [Line Items]
Gains and Losses on cash flow hedges, pre-tax expense reduction	(29.8)
Gains and Losses on cash flow hedges, tax expense	9.0
Financial Services | Interest and other borrowing expenses
Accumulated Other Comprehensive Income (Loss) [Line Items]
Foreign Currency Translation, pre-tax expense reduction	(0.9)
Financial Services | SG&A
Accumulated Other Comprehensive Income (Loss) [Line Items]
Defined benefit pension plans, actuarial (loss), pre-tax expense	1.3
Financial Services | Pre-tax expense increase
Accumulated Other Comprehensive Income (Loss) [Line Items]
Defined benefit pension plans, actuarial (loss), pre-tax expense	33.9
Financial Services | Tax benefit
Accumulated Other Comprehensive Income (Loss) [Line Items]
Defined benefit pension plans, actuarial (loss), pre-tax expense	(11.8)
Financial Services | After-tax expense increase
Accumulated Other Comprehensive Income (Loss) [Line Items]
Defined benefit pension plans, actuarial (loss), pre-tax expense	22.1
Financial Services | Interest Rate Contract | Interest and other borrowing expenses
Accumulated Other Comprehensive Income (Loss) [Line Items]
Gains and Losses on cash flow hedges, pre-tax expense reduction	$ (29.1)

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Pre-Tax Effects of Derivative Instruments Recognized in OCI (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Interest Rate Contract
Derivative [Line Items]
Loss (gain) recognized in OCI	$ 33.1	$ 5.7	$ (41.3)	$ 29.4
Expense (income) reclassified out of accumulated other comprehensive (loss) income into income	32.8	1.6	(29.1)	17.7
Interest Rate Contract | Financial Services
Derivative [Line Items]
Loss (gain) recognized in OCI	33.1	5.7	(41.3)	29.4
Interest Rate Contract | Financial Services | Interest and other borrowing expenses
Derivative [Line Items]
Expense (income) reclassified out of accumulated other comprehensive (loss) income into income	32.8	1.6	(29.1)	17.7
Foreign-exchange contracts
Derivative [Line Items]
Loss (gain) recognized in OCI	4.6	1.3	1.7	2.2
Expense (income) reclassified out of accumulated other comprehensive (loss) income into income	1.3	2.0	(0.7)	4.7
Foreign-exchange contracts | Truck, Parts and Other
Derivative [Line Items]
Loss (gain) recognized in OCI	4.6	1.3	1.7	2.2
Foreign-exchange contracts | Truck, Parts and Other | Cost of sales and revenues
Derivative [Line Items]
Expense (income) reclassified out of accumulated other comprehensive (loss) income into income	1.8	1.6	(0.5)	4.3
Foreign-exchange contracts | Truck, Parts and Other | Interest and other (expense) income, net
Derivative [Line Items]
Expense (income) reclassified out of accumulated other comprehensive (loss) income into income	$ (0.5)	$ 0.4	$ (0.2)	$ 0.4

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Summary of Impaired Loans and Specific Reserve (Detail) (Financial Services, USD $) In Millions, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2013		Dec. 31, 2012
Financing Receivable, Impaired [Line Items]
Impaired loans with a specific reserve	$ 34.2		$ 54.3
Associated allowance	(5.2)		(10.7)
Net carrying amount of impaired loans	29.0		43.6
Average recorded investment	42.2	[1]	55.6	[2]
Dealer wholesale financing
Financing Receivable, Impaired [Line Items]
Impaired loans with a specific reserve	9.1		3.6
Associated allowance	(1.5)		(2.2)
Net carrying amount of impaired loans	7.6		1.4
Average recorded investment	4.8	[1]	12.7	[2]
Retail | Fleet
Financing Receivable, Impaired [Line Items]
Impaired loans with a specific reserve	20.9		43.9
Associated allowance	(2.9)		(7.3)
Net carrying amount of impaired loans	18.0		36.6
Average recorded investment	31.4	[1]	32.7	[2]
Retail | Owner/Operator
Financing Receivable, Impaired [Line Items]
Impaired loans with a specific reserve	4.2		6.8
Associated allowance	(0.8)		(1.2)
Net carrying amount of impaired loans	3.4		5.6
Average recorded investment	$ 6.0	[1]	$ 10.2	[2]

[1] Represents the average during the 12 months ended September 30, 2013.

[2] Represents the average during the 12 months ended September 30, 2012.

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Dilutive and Antidilutive Options (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Additional shares	994,000	689,000	907,000	746,000
Antidilutive options	783,000	2,495,000	873,000	2,552,000

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Employee Benefit Plans (Tables)

9 Months Ended

Sep. 30, 2013

Components of Pension Expense

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

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2013			2012			2013			2012
Service cost	$	18.3		$	16.0		$	55.0		$	48.0
Interest on projected benefit obligation		20.2			20.3			60.6			61.0
Expected return on assets		(29.8	)		(27.6	)		(89.4	)		(82.8	)
Amortization of prior service costs		.3			.3			.9			1.1
Recognized actuarial loss		11.0			10.8			33.0			32.4
Net pension expense	$	20.0		$	19.8		$	60.1		$	59.7

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Components of Comprehensive Income, Net of Related Tax (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Comprehensive Income (Loss) [Line Items]
Net income	$ 309.4	$ 233.6	$ 837.1	$ 858.1
Other comprehensive income (loss)
Unrealized (losses) gains on derivative contracts, before tax	(3.5)	(3.3)	9.8	(9.5)
Unrealized (losses) gains on derivative contracts, tax	0.8	0.9	(3.3)	2.6
Net current period OCI, gains and losses on cash flow hedges	(2.7)	(2.4)	6.5	(6.9)
Unrealized gains (losses) on marketable debt securities, before tax	0.1	1.1	(5.7)	3.8
Unrealized gains (losses)on marketable debt securities, tax		(0.3)	1.6	(1.1)
Net current period OCI, unrealized gains and losses on available-for-sales securities	0.1	0.8	(4.1)	2.7
Employee benefit plans, before tax	2.5	5.0	36.8	24.1
Employee benefit plans, tax	(1.5)	(2.0)	(12.6)	(8.1)
Employee benefit plans, net of tax	1.0	3.0	24.2	16.0
Currency translation gains (losses)	120.4	73.9	(58.2)	46.6
Net other comprehensive income (loss)	118.8	75.3	(31.6)	58.4
Comprehensive income	$ 428.2	$ 308.9	$ 805.5	$ 916.5

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Finance and Other Receivables - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended			9 Months Ended	12 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Sep. 30, 2013 Financial Services	Dec. 31, 2012 Financial Services	Sep. 30, 2013 Financial Services Minimum Loans Receivable	Sep. 30, 2013 Financial Services Maximum Loans Receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Modifications extended contractual terms				6 months	7 months
Receivable, collection period						36 months	60 months
Impaired Loans	$ 2.3		$ 6.8
Percentage of portfolio	4.00%
Loans accounted for as troubled debt restructurings				19.1	38.5
Repossessed inventory	12.1		20.9
Proceeds from the sales of repossessed assets	$ 44.5	$ 48.7

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Finance Receivables by Credit Quality Indicator and Portfolio Class (Detail) (Financial Services, USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	$ 8,707.7	$ 8,316.3
Pass
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	8,569.6	8,146.4
Special Mention
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	79.6	98.8
Substandard
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	58.5	71.1
Dealer wholesale financing
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	1,736.2	1,541.0
Dealer wholesale financing | Pass
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	1,681.4	1,479.1
Dealer wholesale financing | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	45.7	58.3
Dealer wholesale financing | Substandard
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	9.1	3.6
Retail | Dealer
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	1,403.3	1,429.7
Retail | Dealer | Pass
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	1,396.3	1,423.3
Retail | Dealer | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	7.0	6.3
Retail | Dealer | Substandard
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables		0.1
Retail | Fleet
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	4,294.6	3,956.6
Retail | Fleet | Pass
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	4,235.2	3,878.4
Retail | Fleet | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	20.0	23.5
Retail | Fleet | Substandard
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	39.4	54.7
Retail | Owner/Operator
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	1,273.6	1,389.0
Retail | Owner/Operator | Pass
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	1,256.7	1,365.6
Retail | Owner/Operator | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	6.9	10.7
Retail | Owner/Operator | Substandard
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	$ 10.0	$ 12.7

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Reclassifications Out of Accumulated Other Comprehensive Income (Parenthetical) (Detail) (Truck, Parts and Other, USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Accumulated Other Comprehensive Income (Loss) [Line Items]
Defined benefit pension plans, prior service costs, pre-tax expense	$ 0.9
Defined benefit pension plans, actuarial (loss), pre-tax expense	(31.7)
Cost of sales and revenues
Accumulated Other Comprehensive Income (Loss) [Line Items]
Defined benefit pension plans, prior service costs, pre-tax expense	0.8
Defined benefit pension plans, actuarial (loss), pre-tax expense	17.4
SG&A
Accumulated Other Comprehensive Income (Loss) [Line Items]
Defined benefit pension plans, prior service costs, pre-tax expense	0.1
Defined benefit pension plans, actuarial (loss), pre-tax expense	14.2
R&D
Accumulated Other Comprehensive Income (Loss) [Line Items]
Defined benefit pension plans, actuarial (loss), pre-tax expense	$ 0.1

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Inventories Table (Detail) (Truck, Parts and Other, USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Truck, Parts and Other
Inventory [Line Items]
Finished products	$ 480.6	$ 432.0
Work in process and raw materials	583.4	519.8
Inventory, Gross, Total	1,064.0	951.8
Less LIFO reserve	(170.9)	(169.4)
Inventories, net	$ 893.1	$ 782.4	[1]

[1] The December 31, 2012 consolidated balance sheet has been derived from audited financial statements.

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TDRs Modified During Previous Twelve Months that Subsequently Defaulted (Detail) (Financial Services, USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Troubled Debt Restructuring, Subsequent Default [Line Items]
Recorded Investment, subsequently defaulted	$ 2.7	$ 8.2
Retail | Fleet | Post-modification
Troubled Debt Restructuring, Subsequent Default [Line Items]
Recorded Investment, subsequently defaulted	2.5	7.7
Retail | Owner/Operator | Post-modification
Troubled Debt Restructuring, Subsequent Default [Line Items]
Recorded Investment, subsequently defaulted	$ 0.2	$ 0.5

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2013

Financial Assets and Liabilities Subject to Recurring Fair Value Measurements

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

At September 30, 2013	Level 1		Level 2		Total
Assets:
Marketable debt securities
U.S. tax-exempt securities			$	206.4	$	206.4
U.S. corporate securities				79.7		79.7
U.S. government and agency securities	$	.4		.2		.6
Non-U.S. corporate securities				565.6		565.6
Non-U.S. government securities				244.5		244.5
Other debt securities				104.3		104.3
Total marketable debt securities	$	.4	$	1,200.7	$	1,201.1
Derivatives
Cross currency swaps			$	26.8	$	26.8
Interest-rate swaps				3.5		3.5
Foreign-exchange contracts				.6		.6
Total derivative assets			$	30.9	$	30.9
Liabilities:
Derivatives
Cross currency swaps			$	42.9	$	42.9
Interest-rate swaps				28.1		28.1
Foreign-exchange contracts				4.5		4.5
Total derivative liabilities			$	75.5	$	75.5

At December 31, 2012	Level 1		Level 2		Total
Assets:
Marketable debt securities
U.S. tax-exempt securities			$	218.6	$	218.6
U.S. corporate securities				60.1		60.1
U.S. government and agency securities	$	.6		.2		.8
Non-U.S. corporate securities				448.7		448.7
Non-U.S. government securities				355.0		355.0
Other debt securities				109.5		109.5
Total marketable debt securities	$	.6	$	1,192.1	$	1,192.7
Derivatives
Cross currency swaps			$	3.0	$	3.0
Interest-rate swaps				1.6		1.6
Foreign-exchange contracts				.5		.5
Total derivative assets			$	5.1	$	5.1
Liabilities:
Derivatives
Cross currency swaps			$	74.1	$	74.1
Interest-rate swaps				38.2		38.2
Foreign-exchange contracts				.7		.7
Total derivative liabilities			$	113.0	$	113.0

Carrying Amount and Fair Value of Financial Services Fixed-Rate Loans and Fixed-Rate Debt

The Company’s estimate of fair value for fixed-rate loans and debt that are not carried at fair value at September 30, 2013 and December 31, 2012 was as follows:

	September 30, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Financial Services fixed-rate loans	$	3,482.6	$	3,537.4	$	3,361.7	$	3,434.8
Liabilities:
Truck, Parts and Other fixed-rate debt		150.0		153.5		150.0		160.6
Financial Services fixed-rate debt		4,029.0		4,076.6		3,277.2		3,350.5

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Basis of Presentation

9 Months Ended

Sep. 30, 2013

Basis of Presentation

NOTE A - Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. For further information, refer to the consolidated financial statements and footnotes included in PACCAR Inc’s (the Company) Annual Report on Form 10-K for the year ended December 31, 2012.

Earnings per Share: Basic earnings per common share are computed by dividing earnings by the weighted average number of common shares outstanding, plus the effect of any participating securities. Diluted earnings per common share are computed assuming that all potentially dilutive securities are converted into common shares under the treasury stock method. The dilutive and antidilutive options are shown separately in the table below.

	Three Months Ended				Nine Months Ended
	September 30				September 30
	2013		2012		2013		2012
Additional shares		994,000		689,000		907,000		746,000
Antidilutive options		783,000		2,495,000		873,000		2,552,000

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

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

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

In January 2013, the FASB issued ASU 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, an update to ASU 2011-11, Disclosures about Offsetting Assets and Liabilities. The ASUs require entities with derivatives, repurchase agreements and securities borrowing and lending transactions that are either offset on the balance sheet, or subject to a master netting arrangement, to provide expanded disclosures about the nature of the rights of offset. The updated ASU is effective for annual periods beginning on or after January 1, 2013 and interim periods within those annual periods. The Company adopted ASU 2013-01 in the first quarter of 2013; the implementation of this amendment resulted in additional disclosures (see Note I), but did not have an impact on the Company’s consolidated financial statements.

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Inventories

9 Months Ended

Sep. 30, 2013

Inventories

NOTE C - Inventories

Inventories are stated at the lower of cost or market. Cost of inventories in the U.S. 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.

Inventories include the following:

	September 30			December 31
	2013			2012
Finished products	$	480.6		$	432.0
Work in process and raw materials		583.4			519.8
		1,064.0			951.8
Less LIFO reserve		(170.9	)		(169.4	)
	$	893.1		$	782.4

Under the LIFO method of accounting (used for approximately 48% of September 30, 2013 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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Stockholders' Equity

9 Months Ended

Sep. 30, 2013

Stockholders' Equity

NOTE F – Stockholders’ Equity

Comprehensive Income

The components of comprehensive income were as follows:

	Three Months Ended			Nine Months Ended
	September 30, 2013			September 30, 2013
Net income	$	309.4		$	837.1
Other comprehensive income (loss) (OCI):
Unrealized (losses) gains on derivative contracts		(3.5	)		9.8
Tax effect		.8			(3.3	)
		(2.7	)		6.5
Unrealized gains (losses) on marketable debt securities		.1			(5.7	)
Tax effect					1.6
		.1			(4.1	)
Employee benefit plans		2.5			36.8
Tax effect		(1.5	)		(12.6	)
		1.0			24.2
Currency translation gains (losses)		120.4			(58.2	)
Net other comprehensive income (loss)		118.8			(31.6	)
Comprehensive income	$	428.2		$	805.5
	Three Months Ended			Nine Months Ended
	September 30, 2012			September 30, 2012
Net income	$	233.6		$	858.1
Other comprehensive income:
Unrealized losses on derivative contracts		(3.3	)		(9.5	)
Tax effect		.9			2.6
		(2.4	)		(6.9	)
Unrealized gains on marketable debt securities		1.1			3.8
Tax effect		(.3	)		(1.1	)
		.8			2.7
Employee benefit plans		5.0			24.1
Tax effect		(2.0	)		(8.1	)
		3.0			16.0
Currency translation gains		73.9			46.6
Net other comprehensive income		75.3			58.4
Comprehensive income	$	308.9		$	916.5

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss (AOCI) as of September 30, 2013 and December 31, 2012 and the changes in AOCI, net of tax, included in the Consolidated Balance Sheets, consisted of the following:

	Gains and (Losses) on Derivative Contracts			Unrealized Gains and (Losses) on Marketable Debt Securities			Defined Benefit Pension Plans			Foreign Currency Translation			Total
Balance at December 31, 2012	$	(27.2	)	$	6.6		$	(496.5	)	$	357.6		$	(159.5	)
Amounts recorded in AOCI		27.3			(5.1	)		2.1			(56.2	)		(31.9	)
Amounts reclassified out of AOCI		(20.8	)		1.0			22.1			(2.0	)		.3
Net other comprehensive income (loss)		6.5			(4.1	)		24.2			(58.2	)		(31.6	)
Balance at September 30, 2013	$	(20.7	)	$	2.5		$	(472.3	)	$	299.4		$	(191.1	)

Reclassifications out of AOCI during the nine months ended September 30, 2013 are as follows:

AOCI Components	Line Item in the Consolidated Statement of Comprehensive Income	Amount Reclassified Out of AOCI
Gains and losses on cash flow hedges:
Truck, Parts and Other
Foreign-exchange contracts	Cost of sales and revenues	$	(.5	)
	Interest and other expense (income), net		(.2	)
Financial Services
Interest-rate contracts	Interest and other borrowing expenses		(29.1	)
	Pre-tax expense reduction		(29.8	)
	Tax expense		9.0
	After-tax expense reduction		(20.8	)
Unrealized gains and losses on marketable debt securities:
Marketable debt securities	Investment income		1.4
	Tax expense		(.4	)
	After-tax income increase		1.0
Defined benefit pension plans:
Truck, Parts and Other
Prior service costs	Cost of sales and revenues $.8, SG&A $.1		.9
Actuarial loss	Cost of sales and revenues $17.4, SG&A $14.2, R&D $.1		31.7
Financial Services
Actuarial loss	SG&A		1.3
	Pre-tax expense increase		33.9
	Tax benefit		(11.8	)
	After-tax expense increase		22.1
Foreign Currency Translation:
Truck, Parts and Other	Interest and other expense (income), net		(1.1	)
Financial Services	Interest and other borrowing expenses		(.9	)
	Expense reduction		(2.0	)
Total reclassifications out of AOCI		$	.3

Stock Compensation Plans

Stock-based compensation expense was $2.7 and $11.2 for the three and nine months ended September 30, 2013, respectively, and $2.6 and $11.0 for the three and nine months ended September 30, 2012, respectively. Realized tax benefits related to the excess of deductible amounts over expense recognized amounted to $1.1 and $2.7 for the three and nine months ended September 30, 2013, respectively, and nil and $.8 for the three and nine months ended September 30, 2012, respectively, and have been classified as a financing cash flow.

During the first three quarters of 2013, the Company issued 858,515 common shares under deferred and stock compensation arrangements.

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Finance and Other Receivables

9 Months Ended

Sep. 30, 2013

Finance and Other Receivables

NOTE D - Finance and Other Receivables

Finance and other receivables include the following:

	September 30			December 31
	2013			2012
Loans	$	3,838.1		$	3,738.2
Direct financing leases		2,621.4			2,489.3
Sales-type finance leases		875.6			916.8
Dealer wholesale financing		1,736.2			1,541.0
Operating lease and other trade receivables		118.9			112.0
Unearned interest on finance leases		(363.6	)		(369.0	)
	$	8,826.6		$	8,428.3
Less allowance for losses:
Loans and leases		(112.1	)		(112.6	)
Dealer wholesale financing		(10.9	)		(11.8	)
Operating lease and other trade receivables		(8.7	)		(5.6	)
	$	8,694.9		$	8,298.3

Recognition of interest income and rental revenue is suspended (put on non-accrual status) when the receivable becomes more than 90 days past the contractual due date or earlier if some other event causes the Company to determine that collection is not probable. Accordingly, no finance receivables more than 90 days past due were accruing interest at September 30, 2013 or December 31, 2012. Recognition is resumed if the receivable becomes current by the payment of all amounts due under the terms of the existing contract and collection of remaining amounts is considered probable (if not contractually modified) or if the customer makes scheduled payments for three months and collection of remaining amounts is considered probable (if contractually modified). Payments received while the finance receivable is impaired or on non-accrual status are applied to interest and principal in accordance with the contractual terms.

Allowance for Credit Losses

The Company continuously monitors the payment performance of all its finance receivables. For large retail finance customers and dealers with wholesale financing, the Company regularly reviews their financial statements and makes site visits and phone contact as appropriate. If the Company becomes aware of circumstances that could cause those customers or dealers to face financial difficulty, whether or not they are past due, the customers are placed on a watch list.

The Company modifies loans and finance leases as a normal part of its Financial Services operations. The Company may modify loans and finance leases for commercial reasons or for credit reasons. Modifications for commercial reasons are changes to contract terms for customers that are not considered to be in financial difficulty. Modifications for credit reasons are changes to contract terms for customers considered to be in financial difficulty. The Company’s modifications typically result in granting more time to pay the contractual amounts owed and charging a fee and interest for the term of the modification.

When considering whether to modify customer accounts for credit reasons, the Company evaluates the creditworthiness of the customers and modifies those accounts that the Company considers likely to perform under the modified terms. When the Company modifies loans and finance leases for credit reasons and grants a concession, the modifications are classified as troubled debt restructurings (TDRs). The Company does not typically grant credit modifications for customers that do not meet minimum underwriting standards since the Company normally repossesses the financed equipment in these circumstances. When such modifications do occur, they are considered TDRs.

On average, modifications extended contractual terms by approximately six months in 2013 and seven months in 2012 and did not have a significant effect on the weighted average term or interest rate of the total portfolio at September 30, 2013 and December 31, 2012.

The Company has developed a systematic methodology for determining the allowance for credit losses for its two portfolio segments, retail and wholesale. The retail segment consists of retail loans and direct and sales-type finance leases, net of unearned interest. The wholesale segment consists of truck inventory financing loans to dealers that are collateralized by trucks and other collateral. The wholesale segment generally has less risk than the retail segment. Wholesale receivables generally are shorter in duration than retail receivables, and the Company requires monthly reporting of the wholesale dealer’s financial condition, conducts periodic audits of the trucks being financed and in many cases, obtains personal guarantees or other security such as dealership assets. In determining the allowance for credit losses, retail loans and finance leases are evaluated together since they relate to a similar customer base, their contractual terms require regular payment of principal and interest generally over 36 to 60 months and they are secured by the same type of collateral. The allowance for credit losses consists of both specific and general reserves.

The Company individually evaluates certain finance receivables for impairment. Finance receivables that are evaluated individually for impairment consist of all wholesale accounts and certain large retail accounts with past due balances or otherwise determined to be at a higher risk of loss. A finance receivable is impaired if it is considered probable the Company will be unable to collect all contractual interest and principal payments as scheduled. In addition, all retail loans and leases which have been classified as TDRs and all customer accounts over 90 days past due are considered impaired. Generally, impaired accounts are on non-accrual status. Impaired accounts classified as TDRs which have been performing for 90 consecutive days are placed on accrual status if it is deemed probable that the Company will collect all principal and interest payments.

Impaired receivables are considered collateral dependent. Large balance retail and all wholesale impaired receivables are individually evaluated to determine the appropriate reserve for losses. The determination of reserves for large balance impaired receivables considers the fair value of the associated collateral. When the underlying collateral fair value exceeds the Company’s recorded investment, no reserve is recorded. Small balance impaired receivables with similar risk characteristics are evaluated as a separate pool to determine the appropriate reserve for losses using the historical loss information discussed below.

For finance receivables that are not individually impaired, the Company collectively evaluates and determines the general allowance for credit losses for both retail and wholesale receivables based on historical loss information, using past-due account data and current market conditions. Information used includes assumptions regarding the likelihood of collecting current and past-due accounts, repossession rates, the recovery rate on the underlying collateral based on used truck values and other pledged collateral or recourse. The Company has developed a range of loss estimates for each of its country portfolios based on historical experience, taking into account loss frequency and severity in both strong and weak truck market conditions. A projection is made of the range of estimated credit losses inherent in the portfolio from which an amount is determined as probable based on current market conditions and other factors impacting the creditworthiness of the Company’s borrowers and their ability to repay. After determining the appropriate level of the allowance for credit losses, a provision for losses on finance receivables is charged to income as necessary to reflect management’s estimate of incurred credit losses, net of recoveries, inherent in the portfolio.

In determining the fair value of the collateral, the Company uses a pricing matrix and categorizes the fair value as Level 2 in the hierarchy of fair value measurement. The pricing matrix is reviewed quarterly and updated as appropriate. The pricing matrix considers the make, model and year of the equipment as well as recent sales prices of comparable equipment through wholesale channels to the Company’s dealers (principal market). The fair value of the collateral also considers the overall condition of the equipment.

Accounts are charged-off against the allowance for credit losses when, in the judgment of management, they are considered uncollectable (generally upon repossession of the collateral). Typically the timing between the repossession and charge-off is not significant. In cases where repossession is delayed (e.g., for legal proceedings), the Company records partial charge-offs. The charge-off is determined by comparing the fair value of the collateral, less cost to sell, to the recorded investment.

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

The allowance for credit losses is summarized as follows:

	2013
	Dealer						Customer Retail
	Wholesale			Retail						Other*			Total
Balance at January 1	$	11.8		$	13.4		$	99.2		$	5.6		$	130.0
Provision for losses		(.7	)		(.7	)		11.2			5.6			15.4
Charge-offs		(.2	)					(11.1	)		(6.7	)		(18.0	)
Recoveries								4.2			1.0			5.2
Currency translation and other					(.1	)		(4.0	)		3.2			(.9	)
Balance at September 30	$	10.9		$	12.6		$	99.5		$	8.7		$	131.7
	2012
	Dealer						Customer Retail
	Wholesale			Retail						Other*			Total
Balance at January 1	$	11.7		$	11.9		$	106.6		$	8.8		$	139.0
Provision for losses		2.3			1.2			9.3			2.4			15.2
Charge-offs								(17.1	)		(4.8	)		(21.9	)
Recoveries		.1						4.6			.3			5.0
Currency translation and other		(1.7	)		.1			4.0			(.6	)		1.8
Balance at September 30	$	12.4		$	13.2		$	107.4		$	6.1		$	139.1

* Operating lease and other trade receivables.

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

	Dealer				Customer Retail
At September 30, 2013	Wholesale		Retail				Total
Recorded investment for impaired finance receivables evaluated individually	$	9.1			$	49.4	$	58.5
Allowance for impaired finance receivables determined individually		1.5				7.6		9.1
Recorded investment for finance receivables evaluated collectively		1,727.1	$	1,403.3		5,518.8		8,649.2
Allowance for finance receivables determined collectively		9.4		12.6		91.9		113.9
	Dealer				Customer Retail
At December 31, 2012	Wholesale		Retail				Total
Recorded investment for impaired finance receivables evaluated individually	$	3.6	$	.1	$	67.4	$	71.1
Allowance for impaired finance receivables determined individually		2.2				10.8		13.0
Recorded investment for finance receivables evaluated collectively		1,537.4		1,429.6		5,278.2		8,245.2
Allowance for finance receivables determined collectively		9.6		13.4		88.4		111.4

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

	September 30		December 31
	2013		2012
Dealer:
Wholesale	$	9.1	$	3.1
Retail				.1
Customer Retail:
Fleet		36.7		42.8
Owner/Operator		9.5		11.7
	$	55.3	$	57.7

Impaired Loans

Impaired loans with no specific reserves were $2.3 and $6.8 at September 30, 2013 and December 31, 2012, respectively. Impaired loans with a specific reserve are summarized below. The impaired loans with specific reserve represent the unpaid principal balance. The recorded investment of impaired loans as of September 30, 2013 and December 31, 2012 was not significantly different than the unpaid principal balance.

	Dealer				Customer Retail
At September 30, 2013	Wholesale			Retail	Fleet			Owner/ Operator			Total
Impaired loans with a specific reserve	$	9.1			$	20.9		$	4.2		$	34.2
Associated allowance		(1.5	)			(2.9	)		(.8	)		(5.2	)
Net carrying amount of impaired loans	$	7.6			$	18.0		$	3.4		$	29.0
Average recorded investment*	$	4.8			$	31.4		$	6.0		$	42.2

* Represents the average during the 12 months ended September 30, 2013.

	Dealer				Customer Retail
At December 31, 2012	Wholesale			Retail	Fleet			Owner/ Operator			Total
Impaired loans with a specific reserve	$	3.6			$	43.9		$	6.8		$	54.3
Associated allowance		(2.2	)			(7.3	)		(1.2	)		(10.7	)
Net carrying amount of impaired loans	$	1.4			$	36.6		$	5.6		$	43.6
Average recorded investment*	$	12.7			$	32.7		$	10.2		$	55.6

* Represents the average during the 12 months ended September 30, 2012.

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

	Three Months Ended				Nine Months Ended
	September 30				September 30
	2013		2012		2013		2012
Interest income recognized:
Dealer wholesale					$	.1	$	.1
Customer retail - fleet	$	.5	$	.2		1.8		.9
Customer retail - owner/operator				.2		.4		.6
	$	.5	$	.4	$	2.3	$	1.6

Credit Quality

The Company’s customers are principally concentrated in the transportation industry in North America, Europe and Australia. The Company’s portfolio is diversified over a large number of customers and dealers with no single customer or dealer balance representing over 4% of the total portfolio. The Company retains as collateral a security interest in the related equipment.

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

The Company has three credit quality indicators: performing, watch and at-risk. Performing accounts pay in accordance with the contractual terms and are not considered high risk. Watch accounts include accounts 31 to 90 days past due and large accounts that are performing but are considered to be high-risk. Watch accounts are not impaired. At-risk accounts are accounts that are impaired, including TDRs, accounts over 90 days past-due and other accounts on non-accrual status. The tables below summarize the Company’s finance receivables by credit quality indicator and portfolio class.

	Dealer				Customer Retail
At September 30, 2013	Wholesale		Retail		Fleet		Owner/ Operator		Total
Performing	$	1,681.4	$	1,396.3	$	4,235.2	$	1,256.7	$	8,569.6
Watch		45.7		7.0		20.0		6.9		79.6
At-risk		9.1				39.4		10.0		58.5
	$	1,736.2	$	1,403.3	$	4,294.6	$	1,273.6	$	8,707.7

	Dealer				Customer Retail
At December 31, 2012	Wholesale		Retail		Fleet		Owner/ Operator		Total
Performing	$	1,479.1	$	1,423.3	$	3,878.4	$	1,365.6	$	8,146.4
Watch		58.3		6.3		23.5		10.7		98.8
At-risk		3.6		.1		54.7		12.7		71.1
	$	1,541.0	$	1,429.7	$	3,956.6	$	1,389.0	$	8,316.3

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

	Dealer				Customer Retail
At September 30, 2013	Wholesale		Retail		Fleet		Owner/ Operator		Total
Current and up to 30 days past due	$	1,727.8	$	1,403.3	$	4,259.3	$	1,259.2	$	8,649.6
31 – 60 days past due		1.8				20.9		5.6		28.3
Greater than 60 days past due		6.6				14.4		8.8		29.8
	$	1,736.2	$	1,403.3	$	4,294.6	$	1,273.6	$	8,707.7

	Dealer				Customer Retail
At December 31, 2012	Wholesale		Retail		Fleet		Owner/ Operator		Total
Current and up to 30 days past due	$	1,537.0	$	1,429.7	$	3,934.8	$	1,369.0	$	8,270.5
31 – 60 days past due		.5				9.4		7.9		17.8
Greater than 60 days past due		3.5				12.4		12.1		28.0
	$	1,541.0	$	1,429.7	$	3,956.6	$	1,389.0	$	8,316.3

Troubled Debt Restructurings

The balance of TDRs was $19.1 and $38.5 at September 30, 2013 and December 31, 2012, respectively. At modification date, the pre-modification and post-modification recorded investment balances for finance receivables modified during the period by portfolio class are as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2013				September 30, 2013
	Recorded Investment				Recorded Investment
	Pre-Modification		Post-Modification		Pre-Modification		Post-Modification
Fleet	$	1.5	$	1.3	$	9.2	$	8.9
Owner / Operator		.7		.7		1.4		1.4
	$	2.2	$	2.0	$	10.6	$	10.3
	Three Months Ended				Nine Months Ended
	September 30, 2012				September 30, 2012
	Recorded Investment				Recorded Investment
	Pre-Modification		Post-Modification		Pre-Modification		Post-Modification
Fleet	$	14.7	$	13.9	$	45.3	$	43.8
Owner / Operator		.6		.6		2.1		2.1
	$	15.3	$	14.5	$	47.4	$	45.9

The effect on the allowance for credit losses from such modifications was not significant at September 30, 2013 and 2012.

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

	Nine Months Ended
	September 30
	2013		2012
Fleet	$	2.5	$	7.7
Owner / Operator		.2		.5
	$	2.7	$	8.2

The TDRs that subsequently defaulted did not significantly impact the Company’s allowance for credit losses at September 30, 2013 and 2012.

Repossessions

When the Company determines that a customer is not likely to meet its contractual commitments, the Company repossesses the vehicles which serve as collateral for loans, finance leases and equipment under operating lease. The Company records the vehicles as used truck inventory which is included in Financial Services other assets on the Consolidated Balance Sheets. The balance of repossessed inventory at September 30, 2013 and December 31, 2012 was $12.1 and $20.9, respectively. Proceeds from the sales of repossessed assets were $44.5 and $48.7 for the nine months ended September 30, 2013 and 2012, respectively. These amounts are included in proceeds from asset disposals in the Condensed Consolidated Statements of Cash Flows. Write-downs of repossessed equipment on operating leases are recorded as impairments and included in Financial Services depreciation and other expense on the Consolidated Statements of Comprehensive Income.

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Financing Receivables by Aging Category (Detail) (Financial Services, USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current and up to 30 days past due	$ 8,649.6	$ 8,270.5
31 - 60 days past due	28.3	17.8
Greater than 60 days past due	29.8	28.0
Financing Receivables	8,707.7	8,316.3
Dealer wholesale financing
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current and up to 30 days past due	1,727.8	1,537.0
31 - 60 days past due	1.8	0.5
Greater than 60 days past due	6.6	3.5
Financing Receivables	1,736.2	1,541.0
Retail | Dealer
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current and up to 30 days past due	1,403.3	1,429.7
Financing Receivables	1,403.3	1,429.7
Retail | Fleet
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current and up to 30 days past due	4,259.3	3,934.8
31 - 60 days past due	20.9	9.4
Greater than 60 days past due	14.4	12.4
Financing Receivables	4,294.6	3,956.6
Retail | Owner/Operator
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current and up to 30 days past due	1,259.2	1,369.0
31 - 60 days past due	5.6	7.9
Greater than 60 days past due	8.8	12.1
Financing Receivables	$ 1,273.6	$ 1,389.0

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Marketable Debt Securities (Detail) (Truck, Parts and Other, USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 1,197.6	$ 1,183.5
Unrealized Gains	4.2	9.6
Unrealized Losses	0.7	0.4
Fair Value	1,201.1	1,192.7	[1]
U.S. tax-exempt securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	205.4	217.2
Unrealized Gains	1.1	1.5
Unrealized Losses	0.1	0.1
Fair Value	206.4	218.6
U.S. corporate securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	79.6	59.8
Unrealized Gains	0.1	0.3
Fair Value	79.7	60.1
U.S. government and agency securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	0.6	0.8
Fair Value	0.6	0.8
Non-U.S. corporate securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	564.6	447.5
Unrealized Gains	1.4	1.4
Unrealized Losses	0.4	0.2
Fair Value	565.6	448.7
Non-U.S. government securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	243.6	349.3
Unrealized Gains	1.1	5.8
Unrealized Losses	0.2	0.1
Fair Value	244.5	355.0
Other debt securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	103.8	108.9
Unrealized Gains	0.5	0.6
Fair Value	$ 104.3	$ 109.5

[1] The December 31, 2012 consolidated balance sheet has been derived from audited financial statements.

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Inventories - Additional Information (Detail)	Sep. 30, 2013
Inventory [Line Items]
Percentage of inventories valued using LIFO method of accounting	48.00%

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Recorded Investment for Finance Receivables that are on Non-accrual Status (Detail) (Financial Services, USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Schedule Of Financing Receivables [Line Items]
Recorded investment of finance receivables that are on non-accrual status	$ 55.3	$ 57.7
Dealer wholesale financing
Schedule Of Financing Receivables [Line Items]
Recorded investment of finance receivables that are on non-accrual status	9.1	3.1
Retail | Dealer
Schedule Of Financing Receivables [Line Items]
Recorded investment of finance receivables that are on non-accrual status		0.1
Retail | Fleet
Schedule Of Financing Receivables [Line Items]
Recorded investment of finance receivables that are on non-accrual status	36.7	42.8
Retail | Owner/Operator
Schedule Of Financing Receivables [Line Items]
Recorded investment of finance receivables that are on non-accrual status	$ 9.5	$ 11.7

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Balance Sheet Classification of Gross and Proforma Net Amounts of Derivative Financial Instruments (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Derivative Instruments [Line Items]
Assets, Amount Recognized in Balance Sheet	$ 30.9	$ 5.1
Assets,Amounts Not Offset in Financial Instruments	(12.4)	(2.6)
Assets, Pro Forma Net Amount	18.5	2.5
Liabilities, Amount Recognized in Balance Sheet	75.5	113.0
Liabilities, Amounts Not Offset in Financial Instruments	(12.4)	(2.6)
Liabilities, Pro Forma Net Amount	63.1	110.4
Foreign-exchange contracts
Derivative Instruments [Line Items]
Liabilities, Amount Recognized in Balance Sheet	1.4
Liabilities, Pro Forma Net Amount	1.4
Truck, Parts and Other | Foreign-exchange contracts
Derivative Instruments [Line Items]
Assets, Amount Recognized in Balance Sheet	0.4	0.5
Assets,Amounts Not Offset in Financial Instruments	(0.1)
Assets, Pro Forma Net Amount	0.3	0.5
Liabilities, Amount Recognized in Balance Sheet	3.1	0.3
Liabilities, Amounts Not Offset in Financial Instruments	(0.1)
Liabilities, Pro Forma Net Amount	3.0	0.3
Financial Services | Foreign-exchange contracts
Derivative Instruments [Line Items]
Assets, Amount Recognized in Balance Sheet	0.2
Assets, Pro Forma Net Amount	0.2
Liabilities, Amount Recognized in Balance Sheet		0.4
Liabilities, Pro Forma Net Amount		0.4
Financial Services | Interest Rate Contract
Derivative Instruments [Line Items]
Assets, Amount Recognized in Balance Sheet	30.3	4.6
Assets,Amounts Not Offset in Financial Instruments	(12.3)	(2.6)
Assets, Pro Forma Net Amount	18.0	2.0
Liabilities, Amount Recognized in Balance Sheet	71.0	112.3
Liabilities, Amounts Not Offset in Financial Instruments	(12.3)	(2.6)
Liabilities, Pro Forma Net Amount	$ 58.7	$ 109.7

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Stockholders' Equity - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Stockholders Equity Note [Line Items]
Stock-based compensation expense	$ 2.7	$ 2.6	$ 11.2	$ 11.0
Stock-based compensation expense realized tax benefits from the excess of deductible amounts over expense recognized	$ 1.1		$ 2.7	$ 0.8
Additional common shares issued under deferred and stock compensation arrangements			858,515

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Changes in Product Support Liabilities (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Product Liability Contingency [Line Items]
Beginning balance	$ 540.7	$ 448.7
Cost accruals and revenue deferrals	238.0	234.6
Payments and revenue recognized	(195.4)	(168.0)
Currency translation	4.6	1.2
Ending balance	$ 587.9	$ 516.5

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Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
ASSETS
Cash and cash equivalents	$ 1,710.4	$ 1,272.4
Total Assets	20,311.6	18,627.8	[1]
STOCKHOLDERS' EQUITY:
Preferred stock, no par value - authorized 1.0 million shares, none issued			[1]
Common stock, $1 par value - authorized 1.2 billion shares, issued 354.1 and 353.4 million shares	354.1	353.4	[1]
Additional paid-in capital	96.4	56.6	[1]
Retained earnings	6,221.5	5,596.4	[1]
Accumulated other comprehensive loss	(191.1)	(159.5)	[1]
Total Stockholders' Equity	6,480.9	5,846.9	[1]
Liabilities and Equity	20,311.6	18,627.8	[1]
Truck, Parts and Other
ASSETS
Cash and cash equivalents	1,630.4	1,203.2	[1]
Trade and other receivables, net	1,093.4	902.1	[1]
Marketable debt securities	1,201.1	1,192.7	[1]
Inventories, net	893.1	782.4	[1]
Other current assets	370.9	331.7	[1]
Total Truck, Parts and Other Current Assets	5,188.9	4,412.1	[1]
Equipment on operating leases, net	1,016.1	857.9	[1]
Property, plant and equipment, net	2,460.9	2,312.9	[1]
Other noncurrent assets, net	273.1	249.4	[1]
Total Assets	8,939.0	7,832.3	[1]
Current Liabilities
Accounts payable, accrued expenses and other	2,518.7	2,168.3	[1]
Current portion of long-term debt	150.0
Total Truck, Parts and Other Current Liabilities	2,668.7	2,168.3	[1]
Long-term debt		150.0	[1]
Residual value guarantees and deferred revenues	1,070.4	903.5	[1]
Other liabilities	671.8	579.5	[1]
Total Liabilities	4,410.9	3,801.3	[1]
Financial Services
ASSETS
Cash and cash equivalents	80.0	69.2	[1]
Finance and other receivables, net	8,694.9	8,298.3	[1]
Equipment on operating leases, net	2,191.8	2,030.8	[1]
Other assets	405.9	397.2	[1]
Total Assets	11,372.6	10,795.5	[1]
Current Liabilities
Accounts payable, accrued expenses and other	346.4	309.5	[1]
Commercial paper and bank loans	2,642.8	3,562.7	[1]
Term notes	5,493.6	4,167.4	[1]
Deferred taxes and other liabilities	937.0	940.0	[1]
Total Liabilities	$ 9,419.8	$ 8,979.6	[1]

[1] The December 31, 2012 consolidated balance sheet has been derived from audited financial statements.

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Derivative Financial Instruments

9 Months Ended

Sep. 30, 2013

Derivative Financial Instruments

NOTE I – Derivative Financial Instruments

As part of its risk management strategy, the Company enters into derivative contracts to hedge against interest rate and foreign currency risk. Certain derivative instruments designated as either cash flow hedges or fair value hedges are subject to hedge accounting. Derivative instruments that are not subject to hedge accounting are held as economic hedges. The Company’s policies prohibit the use of derivatives for speculation or trading. At the inception of each hedge relationship, the Company documents its risk management objectives, procedures and accounting treatment.

All of the Company’s interest-rate contracts and certain foreign exchange contracts are transacted under International Swaps and Derivatives Association (ISDA) master agreements. Each agreement permits the net settlement of amounts owed in the event of default and certain other termination events. For derivative financial instruments, the Company has elected not to offset derivative positions in the balance sheet with the same counterparty under the same agreement and is not required to post or receive collateral. Exposure limits and minimum credit ratings are used to minimize the risks of counterparty default. The Company had no material exposures to default at September 30, 2013.

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

Interest-Rate Contracts: The Company enters into various interest-rate contracts, including interest-rate swaps and cross currency interest-rate swaps. Interest-rate swaps involve the exchange of fixed for floating rate or floating for fixed rate interest payments based on the contractual notional amounts in a single currency. Cross currency interest-rate swaps involve the exchange of notional amounts and interest payments in different currencies. The Company is exposed to interest-rate and exchange-rate risk caused by market volatility as a result of its borrowing activities. The objective of these contracts is to mitigate the fluctuations on earnings, cash flows and fair value of borrowings. Net amounts paid or received are reflected as adjustments to interest expense.

At September 30, 2013, the notional amount of the Company’s interest-rate contracts was $3,597.0. Notional maturities for all interest-rate contracts are $217.7 for the remainder of 2013, $1,227.9 for 2014, $1,146.5 for 2015, $760.0 for 2016, $217.2 for 2017 and $27.7 thereafter. 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 and assets and liabilities denominated in foreign currencies, particularly the Canadian dollar, the euro, the British pound, the Australian dollar, the Brazilian real and the Mexican peso. The objective is to reduce fluctuations in earnings and cash flows associated with changes in foreign currency exchange rates. At September 30, 2013, the notional amount of the outstanding foreign-exchange contracts was $451.7. Foreign-exchange contracts mature within one year.

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

	September 30, 2013				December 31, 2012
	Assets		Liabilities		Assets		Liabilities
Derivatives designated under hedge accounting:
Interest-rate contracts:
Financial Services:
Other assets	$	30.3			$	4.6
Deferred taxes and other liabilities			$	71.0			$	111.7
Foreign-exchange contracts:
Truck, Parts and Other:
Other current assets		.2				.2
Accounts payable, accrued expenses and other				2.6				.1
Total	$	30.5	$	73.6	$	4.8	$	111.8
Economic hedges:
Interest-rate contracts:
Financial Services:
Deferred taxes and other liabilities							$	.6
Foreign-exchange contracts:
Truck, Parts and Other:
Other current assets	$	.2			$	.3
Accounts payable, accrued expenses and other			$	.5				.2
Financial Services:
Other assets		.2
Deferred taxes and other liabilities				1.4				.4
Total	$	.4	$	1.9	$	.3	$	1.2

The following tables present the balance sheet classification of the gross and pro forma net amounts of derivative financial instruments:

As of September 30, 2013	Gross Amount Recognized in Balance Sheet		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Truck, Parts and Other
Foreign-exchange contracts	$	.4	$	(.1	)	$	.3
Financial Services
Interest-rate contracts		30.3		(12.3	)		18.0
Foreign-exchange contracts		.2					.2
Total derivative assets	$	30.9	$	(12.4	)	$	18.5
Liabilities:
Truck, Parts and Other
Foreign-exchange contracts	$	3.1	$	(.1	)	$	3.0
Financial Services
Interest-rate contracts		71.0		(12.3	)		58.7
Foreign-exchange contracts		1.4					1.4
Total derivative liabilities	$	75.5	$	(12.4	)	$	63.1
As of December 31, 2012	Gross Amount Recognized in Balance Sheet		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Truck, Parts and Other
Foreign-exchange contracts	$	.5				$	.5
Financial Services
Interest-rate contracts		4.6	$	(2.6	)		2.0
Total derivative assets	$	5.1	$	(2.6	)	$	2.5
Liabilities:
Truck, Parts and Other
Foreign-exchange contracts	$	.3				$	.3
Financial Services
Interest-rate contracts		112.3	$	(2.6	)		109.7
Foreign-exchange contracts		.4					.4
Total derivative liabilities	$	113.0	$	(2.6	)	$	110.4

Fair Value Hedges

Changes in the fair value of derivatives designated as fair value hedges are recorded in earnings together with the changes in fair value of the hedged item attributable to the risk being hedged. The expense or (income) recognized in earnings related to fair value hedges was included in interest and other borrowing expenses in the Financial Services segment of the Consolidated Statements of Comprehensive Income as follows:

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2013			2012			2013			2012
Interest-rate swaps	$	.2		$	(2.4	)	$	.5		$	(4.0	)
Term notes		(.2	)		3.2			(.6	)		4.7

Cash Flow Hedges

Substantially all of the Company’s interest-rate contracts and some foreign-exchange contracts have been designated as cash flow hedges. Changes in the fair value of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive loss to the extent such hedges are considered effective. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows is 6.6 years.

Amounts in accumulated other comprehensive loss are reclassified into net income in the same period in which the hedged transaction affects earnings. Net realized gains and losses from interest-rate contracts are recognized as an adjustment to interest expense. 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. The ineffective portions were nil and a gain of $.2 during the third quarter of 2013 and 2012, and were gains of $.1 and $.4 during the first nine months of 2013 and 2012, respectively.

The following table presents the pre-tax effects of derivative instruments recognized in OCI:

	Three Months Ended				Nine Months Ended
	September 30, 2013				September 30, 2013
	Interest-Rate		Foreign-Exchange		Interest-Rate			Foreign-Exchange
	Contracts		Contracts		Contracts			Contracts
Loss (gain) recognized in OCI:
Truck, Parts and Other			$	4.6				$	1.7
Financial Services	$	33.1			$	(41.3	)
	$	33.1	$	4.6	$	(41.3	)	$	1.7
	Three Months Ended				Nine Months Ended
	September 30, 2012				September 30, 2012
	Interest-Rate		Foreign-Exchange		Interest-Rate			Foreign-Exchange
	Contracts		Contracts		Contracts			Contracts
Loss recognized in OCI:
Truck, Parts and Other			$	1.3				$	2.2
Financial Services	$	5.7			$	29.4
	$	5.7	$	1.3	$	29.4		$	2.2

Expense (income) reclassified out of accumulated other comprehensive loss into income:

	Three Months Ended September 30, 2013					Nine Months Ended September 30, 2013
	Interest-Rate		Foreign-Exchange			Interest-Rate			Foreign-Exchange
	Contracts		Contracts			Contracts			Contracts
Truck, Parts and Other:
Cost of sales and revenues			$	1.8					$	(.5	)
Interest and other expense (income), net				(.5	)					(.2	)
Financial Services:
Interest and other borrowing expenses	$	32.8				$	(29.1	)
	$	32.8	$	1.3		$	(29.1	)	$	(.7	)
	Three Months Ended					Nine Months Ended
	September 30, 2012					September 30, 2012
	Interest-Rate		Foreign-Exchange			Interest-Rate			Foreign-Exchange
	Contracts		Contracts			Contracts			Contracts
Truck, Parts and Other:
Cost of sales and revenues			$	1.6					$	4.3
Interest and other expense (income), net				.4						.4
Financial Services:
Interest and other borrowing expenses	$	1.6				$	17.7
	$	1.6	$	2.0		$	17.7		$	4.7

The amount of loss recorded in accumulated other comprehensive loss at September 30, 2013 that is estimated to be reclassified to interest expense or cost of sales in the following 12 months if interest rates and exchange rates remain unchanged is approximately $23.8, net of taxes. The fixed interest earned on finance receivables will offset the amount recognized in interest expense, resulting in a stable interest margin consistent with the Company’s risk management strategy.

Economic Hedges

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

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

	Three Months Ended						Nine Months Ended
	September 30, 2013						September 30, 2013
	Interest-Rate			Foreign-Exchange			Interest-Rate			Foreign-Exchange
	Contracts			Contracts			Contracts			Contracts
Truck, Parts and Other:
Cost of sales and revenues				$	(1.3	)				$	(.9	)
Interest and other expense (income), net					.4						.8
Financial Services:
Interest and other borrowing expenses	$	(.1	)		(4.3	)	$	(1.5	)		(8.9	)
	$	(.1	)	$	(5.2	)	$	(1.5	)	$	(9.0	)
	Three Months Ended						Nine Months Ended
	September 30, 2012						September 30, 2012
	Interest-Rate			Foreign-Exchange			Interest-Rate			Foreign-Exchange
	Contracts			Contracts			Contracts			Contracts
Truck, Parts and Other:
Cost of sales and revenues										$	(.3	)
Interest and other expense (income), net				$	2.0						(.4	)
Financial Services:
Interest and other borrowing expenses	$	1.6			(.5	)	$	1.5			.6
	$	1.6		$	1.5		$	1.5		$	(.1	)

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Condensed Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012
OPERATING ACTIVITIES:
Net income	$ 837.1		$ 858.1
Depreciation and amortization:
Property, plant and equipment	150.4		144.6
Other, net	54.3		58.1
Pension contributions	(12.0)		(93.7)
Change in operating assets and liabilities:
Trade and other receivables	(185.5)		(27.6)
Wholesale receivables on new trucks	(207.3)		(177.6)
Sales-type finance leases and dealer direct loans on new trucks	(19.0)		(112.1)
Inventories	(117.3)		(201.0)
Accounts payable and accrued expenses	511.0		13.9
Residual value guarantees, deferred revenues and other, net	234.9		60.9
Net Cash Provided by Operating Activities	1,700.3		916.6
INVESTING ACTIVITIES:
Retail loans and direct financing leases originated	(2,189.5)		(2,332.3)
Collections on retail loans and direct financing leases	1,892.0		1,773.8
Marketable securities purchases	(658.5)		(498.5)
Marketable securities sales and maturities	628.5		445.8
Payments for property, plant and equipment	(377.8)		(334.6)
Acquisition of equipment for operating leases	(1,004.7)		(962.7)
Proceeds from asset disposals	238.7		251.2
Other, net	7.2		(4.9)
Net Cash Used in Investing Activities	(1,464.1)		(1,662.2)
FINANCING ACTIVITIES:
Cash dividends paid	(212.3)		(455.9)
Purchase of treasury stock			(162.1)
Stock compensation transactions	25.7		7.4
Net decrease in commercial paper and short-term bank loans	(912.1)		(557.9)
Proceeds from long-term debt	1,884.1		1,951.1
Payments of long-term debt	(565.5)		(402.6)
Net Cash Provided by Financing Activities	219.9		380.0
Effect of exchange rate changes on cash	(18.1)		9.4
Net Increase (Decrease) in Cash and Cash Equivalents	438.0		(356.2)
Cash and cash equivalents at beginning of period	1,272.4		2,106.7
Cash and cash equivalents at end of period	1,710.4		1,750.5
Financial Services
Depreciation and amortization:
Equipment on operating leases and other	438.3		377.8
Provision for losses on financial services receivables	15.4		15.2
FINANCING ACTIVITIES:
Cash and cash equivalents at beginning of period	69.2	[1]
Cash and cash equivalents at end of period	$ 80.0

[1] The December 31, 2012 consolidated balance sheet has been derived from audited financial statements.

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Expense or (Income) Recognized in Earnings Related to Economic Hedges (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Interest Rate Contract
Derivative [Line Items]
(Income) or expense recognized in earnings related to economic hedges	$ (0.1)	$ 1.6	$ (1.5)	$ 1.5
Interest Rate Contract | Financial Services | Interest and other borrowing expenses
Derivative [Line Items]
(Income) or expense recognized in earnings related to economic hedges	(0.1)	1.6	(1.5)	1.5
Foreign-exchange contracts
Derivative [Line Items]
(Income) or expense recognized in earnings related to economic hedges	(5.2)	1.5	(9.0)	(0.1)
Foreign-exchange contracts | Truck, Parts and Other | Cost of sales and revenues
Derivative [Line Items]
(Income) or expense recognized in earnings related to economic hedges	(1.3)		(0.9)	(0.3)
Foreign-exchange contracts | Truck, Parts and Other | Interest and other (expense) income, net
Derivative [Line Items]
(Income) or expense recognized in earnings related to economic hedges	0.4	2.0	0.8	(0.4)
Foreign-exchange contracts | Financial Services | Interest and other borrowing expenses
Derivative [Line Items]
(Income) or expense recognized in earnings related to economic hedges	$ (4.3)	$ (0.5)	$ (8.9)	$ 0.6

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Consolidated Statements of Comprehensive Income (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Investment income	$ 7.3	$ 7.8	$ 21.8	$ 24.9
Net sales and revenues	4,300.1	3,820.2	12,524.9	13,053.5
Income Before Income Taxes	440.0	345.4	1,210.1	1,270.7
Income taxes	130.6	111.8	373.0	412.6
Net Income	309.4	233.6	837.1	858.1
Net Income Per Share:
Basic	$ 0.87	$ 0.66	$ 2.36	$ 2.41
Diluted	$ 0.87	$ 0.66	$ 2.36	$ 2.41
Weighted Average Common Shares Outstanding:
Basic	354.4	353.7	354.1	355.5
Diluted	355.4	354.3	355.0	356.3
Dividends declared per share	$ 0.20	$ 0.20	$ 0.60	$ 0.58
Comprehensive Income	428.2	308.9	805.5	916.5
Truck, Parts and Other
Net sales and revenues	4,006.6	3,546.7	11,649.5	12,252.5
Cost of sales and revenues	3,491.1	3,108.5	10,175.0	10,660.9
Research and development	56.6	66.8	190.5	212.9
Selling, general and administrative	111.1	113.9	341.1	362.2
Interest and other expense (income), net	3.3	0.3	4.4	(0.2)
Costs and Expenses, Total	3,662.1	3,289.5	10,711.0	11,235.8
Income Before Income Taxes	344.5	257.2	938.5	1,016.7
Financial Services
Interest and fees	116.4	115.5	345.2	336.9
Operating lease, rental and other income	177.1	158.0	530.2	464.1
Revenues	293.5	273.5	875.4	801.0
Interest and other borrowing expenses	37.9	40.6	116.2	118.4
Depreciation and other expense	140.2	127.2	423.2	367.5
Selling, general and administrative	23.6	22.6	70.8	70.8
Provision for losses on receivables	3.6	2.7	15.4	15.2
Costs and Expenses, Total	205.3	193.1	625.6	571.9
Income Before Income Taxes	$ 88.2	$ 80.4	$ 249.8	$ 229.1

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Income Taxes - Additional Information (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Income Taxes [Line Items]
Effective tax rate	29.70%	32.40%	30.80%	32.50%

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Investments in Marketable Debt Securities - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Marketable securities sales and maturities	$ 628.5	$ 445.8
Gross realized gains from sales of marketable securities	1.7	1.9
Gross realized loss from sales of marketable securities	0.5	0.1
Marketable debt securities in an unrealized loss position for greater than 12 months	1.0		0
Marketable debt securities in an unrealized loss position for greater than 12 months, unrealized losses			0
Marketable debt securities in an unrealized loss position for less than 12 months	246.1		291.0
Marketable debt securities in an unrealized loss position for less than 12 months, unrealized losses	0.7		0.4
Maximum
Schedule of Available-for-sale Securities [Line Items]
Marketable debt securities in an unrealized loss position for greater than 12 months, unrealized losses	$ 0.1

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2013

Segment Reporting Information by Segment

	Three Months Ended September 30						Nine Months Ended September 30
	2013			2012			2013			2012
Net sales and revenues:
Truck
Total	$	3,416.6		$	3,016.3		$	9,924.6		$	10,710.1
Less intersegment		(155.4	)		(156.4	)		(460.1	)		(572.1	)
External customers		3,261.2			2,859.9			9,464.5			10,138.0
Parts
Total		726.2			661.4			2,126.0			2,031.1
Less intersegment		(10.9	)		(11.3	)		(33.8	)		(34.4	)
External customers		715.3			650.1			2,092.2			1,996.7
Other		30.1			36.7			92.8			117.8
		4,006.6			3,546.7			11,649.5			12,252.5
Financial Services		293.5			273.5			875.4			801.0
	$	4,300.1		$	3,820.2		$	12,524.9		$	13,053.5
Income (loss) before income taxes:
Truck	$	242.5		$	170.2		$	645.9		$	742.6
Parts		106.5			88.7			311.2			280.2
Other		(4.5	)		(1.7	)		(18.6	)		(6.1	)
		344.5			257.2			938.5			1,016.7
Financial Services		88.2			80.4			249.8			229.1
Investment income		7.3			7.8			21.8			24.9
	$	440.0		$	345.4		$	1,210.1		$	1,270.7
Depreciation and amortization:
Truck	$	89.2		$	75.1		$	250.9		$	233.4
Parts		1.2			1.4			3.9			4.5
Other		2.5			2.6			7.4			7.7
		92.9			79.1			262.2			245.6
Financial Services		113.5			97.1			326.5			276.8
	$	206.4		$	176.2		$	588.7		$	522.4

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Product Support Liabilities - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2013
Minimum
Product Liability Contingency [Line Items]
Warranty period	1 year
Maximum
Product Liability Contingency [Line Items]
Warranty period	5 years

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Balance Sheet Classifications and Fair Value of Derivative Financial Instruments (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
ASSETS
Derivative assets	$ 30.9	$ 5.1
LIABILITIES
Derivative liabilities	75.5	113.0
Interest Rate Contract | Financial Services
ASSETS
Derivative assets	30.3	4.6
LIABILITIES
Derivative liabilities	71.0	112.3
Foreign-exchange contracts
LIABILITIES
Derivative liabilities	1.4
Foreign-exchange contracts | Financial Services
ASSETS
Derivative assets	0.2
LIABILITIES
Derivative liabilities		0.4
Foreign-exchange contracts | Truck, Parts and Other
ASSETS
Derivative assets	0.4	0.5
LIABILITIES
Derivative liabilities	3.1	0.3
Designated as Hedging Instrument
ASSETS
Derivative assets	30.5	4.8
LIABILITIES
Derivative liabilities	73.6	111.8
Designated as Hedging Instrument | Interest Rate Contract | Financial Services | Other Assets
ASSETS
Derivative assets	30.3	4.6
Designated as Hedging Instrument | Interest Rate Contract | Financial Services | Deferred Taxes And Other Liabilities
LIABILITIES
Derivative liabilities	71.0	111.7
Designated as Hedging Instrument | Foreign-exchange contracts | Truck, Parts and Other | Deferred taxes and other current assets
ASSETS
Derivative assets	0.2	0.2
Designated as Hedging Instrument | Foreign-exchange contracts | Truck, Parts and Other | Accounts Payable and Accrued Liabilities
LIABILITIES
Derivative liabilities	2.6	0.1
Not Designated as Hedging Instrument
ASSETS
Derivative assets	0.4	0.3
LIABILITIES
Derivative liabilities	1.9	1.2
Not Designated as Hedging Instrument | Interest Rate Contract | Financial Services | Deferred Taxes And Other Liabilities
LIABILITIES
Derivative liabilities		0.6
Not Designated as Hedging Instrument | Foreign-exchange contracts | Financial Services | Other Assets
ASSETS
Derivative assets	0.2
Not Designated as Hedging Instrument | Foreign-exchange contracts | Financial Services | Deferred Taxes And Other Liabilities
LIABILITIES
Derivative liabilities	1.4	0.4
Not Designated as Hedging Instrument | Foreign-exchange contracts | Truck, Parts and Other | Deferred taxes and other current assets
ASSETS
Derivative assets	0.2	0.3
Not Designated as Hedging Instrument | Foreign-exchange contracts | Truck, Parts and Other | Accounts Payable and Accrued Liabilities
LIABILITIES
Derivative liabilities	$ 0.5	$ 0.2

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Summary of Impaired Loans and Specific Reserve (Cash Basis Method) (Detail) (Financial Services, USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Interest income recognized:
Interest income recognized on a cash basis	$ 0.5	$ 0.4	$ 2.3	$ 1.6
Dealer wholesale financing
Interest income recognized:
Interest income recognized on a cash basis			0.1	0.1
Retail | Fleet
Interest income recognized:
Interest income recognized on a cash basis	0.5	0.2	1.8	0.9
Retail | Owner/Operator
Interest income recognized:
Interest income recognized on a cash basis		$ 0.2	$ 0.4	$ 0.6

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Allowance for Credit Losses (Detail) (Financial Services, USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	$ 130.0		$ 139.0
Provision for losses	15.4		15.2
Charge-offs	(18.0)		(21.9)
Recoveries	5.2		5.0
Currency translation and other	(0.9)		1.8
Ending Balance	131.7		139.1
Dealer wholesale financing
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	11.8		11.7
Provision for losses	(0.7)		2.3
Charge-offs	(0.2)
Recoveries			0.1
Currency translation and other			(1.7)
Ending Balance	10.9		12.4
Retail | Dealer
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	13.4		11.9
Provision for losses	(0.7)		1.2
Currency translation and other	(0.1)		0.1
Ending Balance	12.6		13.2
Retail | Customer
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	99.2		106.6
Provision for losses	11.2		9.3
Charge-offs	(11.1)		(17.1)
Recoveries	4.2		4.6
Currency translation and other	(4.0)		4.0
Ending Balance	99.5		107.4
Other
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	5.6	[1]	8.8	[1]
Provision for losses	5.6	[1]	2.4	[1]
Charge-offs	(6.7)	[1]	(4.8)	[1]
Recoveries	1.0	[1]	0.3	[1]
Currency translation and other	3.2	[1]	(0.6)	[1]
Ending Balance	$ 8.7	[1]	$ 6.1	[1]

[1] Operating lease and other trade receivables.

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Finance Receivables Summary by those Evaluated Collectively and Individually (Detail) (Financial Services, USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Recorded investment for impaired finance receivables evaluated individually	$ 58.5	$ 71.1
Allowance for impaired finance receivables determined individually	9.1	13.0
Recorded investment for finance receivables evaluated collectively	8,649.2	8,245.2
Allowance for finance receivables determined collectively	113.9	111.4
Dealer wholesale financing
Financing Receivable, Allowance for Credit Losses [Line Items]
Recorded investment for impaired finance receivables evaluated individually	9.1	3.6
Allowance for impaired finance receivables determined individually	1.5	2.2
Recorded investment for finance receivables evaluated collectively	1,727.1	1,537.4
Allowance for finance receivables determined collectively	9.4	9.6
Retail | Dealer
Financing Receivable, Allowance for Credit Losses [Line Items]
Recorded investment for impaired finance receivables evaluated individually		0.1
Recorded investment for finance receivables evaluated collectively	1,403.3	1,429.6
Allowance for finance receivables determined collectively	12.6	13.4
Retail | Customer
Financing Receivable, Allowance for Credit Losses [Line Items]
Recorded investment for impaired finance receivables evaluated individually	49.4	67.4
Allowance for impaired finance receivables determined individually	7.6	10.8
Recorded investment for finance receivables evaluated collectively	5,518.8	5,278.2
Allowance for finance receivables determined collectively	$ 91.9	$ 88.4

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Segment Information

9 Months Ended

Sep. 30, 2013

Segment Information

NOTE H – Segment Information

PACCAR operates in three principal segments: Truck, Parts and Financial Services.

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2013			2012			2013			2012
Net sales and revenues:
Truck
Total	$	3,416.6		$	3,016.3		$	9,924.6		$	10,710.1
Less intersegment		(155.4	)		(156.4	)		(460.1	)		(572.1	)
External customers		3,261.2			2,859.9			9,464.5			10,138.0
Parts
Total		726.2			661.4			2,126.0			2,031.1
Less intersegment		(10.9	)		(11.3	)		(33.8	)		(34.4	)
External customers		715.3			650.1			2,092.2			1,996.7
Other		30.1			36.7			92.8			117.8
		4,006.6			3,546.7			11,649.5			12,252.5
Financial Services		293.5			273.5			875.4			801.0
	$	4,300.1		$	3,820.2		$	12,524.9		$	13,053.5
Income (loss) before income taxes:
Truck	$	242.5		$	170.2		$	645.9		$	742.6
Parts		106.5			88.7			311.2			280.2
Other		(4.5	)		(1.7	)		(18.6	)		(6.1	)
		344.5			257.2			938.5			1,016.7
Financial Services		88.2			80.4			249.8			229.1
Investment income		7.3			7.8			21.8			24.9
	$	440.0		$	345.4		$	1,210.1		$	1,270.7
Depreciation and amortization:
Truck	$	89.2		$	75.1		$	250.9		$	233.4
Parts		1.2			1.4			3.9			4.5
Other		2.5			2.6			7.4			7.7
		92.9			79.1			262.2			245.6
Financial Services		113.5			97.1			326.5			276.8
	$	206.4		$	176.2		$	588.7		$	522.4

The Truck segment includes the manufacture of trucks, and the Parts segment includes the distribution of related aftermarket parts, both of which are sold through the same network of independent dealers. These segments derive a large proportion of their revenues and operating profits from operations in North America and Europe. The Truck segment incurs substantial costs to design, manufacture and sell trucks to its customers. The sale of new trucks provides the Parts segment with the basis for parts sales that may continue over the life of the truck, but are generally concentrated in the first five years after truck delivery. To reflect the benefit the Parts segment receives from costs incurred by the Truck segment, certain expenses are allocated from the Truck segment to the Parts segment. The expenses allocated are based on a percentage of the average annual expenses for factory overhead, engineering, research and development and SG&A for the preceding five years. The allocation is based on the ratio of the average parts direct margin dollars (net sales less material and labor costs) to the total truck and parts direct margin dollars for the previous five years. The Company believes such expenses have been allocated on a reasonable basis.

Included in Other is the Company’s industrial winch manufacturing business and other sales, income and expense not attributable to a reportable segment, including a portion of corporate expenses.

The accounting policies of the reportable segments are the same as those applied in the consolidated financial statements as described in Note A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

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Employee Benefit Plans - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Employee Benefits Disclosure [Line Items]
Contribution to pension plans	$ 5.9	$ 8.3	$ 12.0	$ 93.7

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Contractual Maturities of Marketable Debt Securities (Detail) (Truck, Parts and Other, USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Truck, Parts and Other
Amortized Cost Maturities:
Within one year	$ 530.0
One to five years	667.1
Six to ten years	0.1
More than ten years	0.4
Amortized Cost	1,197.6	1,183.5
Fair Value Maturities:
Within one year	531.1
One to five years	669.5
Six to ten years	0.1
More than ten years	0.4
Fair Value	$ 1,201.1	$ 1,192.7	[1]

[1] The December 31, 2012 consolidated balance sheet has been derived from audited financial statements.

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Pre- and Post-Modification Recorded Investment Balances for Finance Receivables Modified by Portfolio Class (Detail) (Financial Services, USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Financing Receivable, Modifications [Line Items]
Pre-Modification Recorded Investment	$ 2.2	$ 15.3	$ 10.6	$ 47.4
Post-Modification Recorded Investment	2.0	14.5	10.3	45.9
Retail | Fleet
Financing Receivable, Modifications [Line Items]
Pre-Modification Recorded Investment	1.5	14.7	9.2	45.3
Post-Modification Recorded Investment	1.3	13.9	8.9	43.8
Retail | Owner/Operator
Financing Receivable, Modifications [Line Items]
Pre-Modification Recorded Investment	0.7	0.6	1.4	2.1
Post-Modification Recorded Investment	$ 0.7	$ 0.6	$ 1.4	$ 2.1

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Employee Benefit Plans

9 Months Ended

Sep. 30, 2013

Employee Benefit Plans

NOTE K – Employee Benefit Plans

The Company has several defined benefit pension plans, which cover a majority of its employees. The following information details the components of net pension expense for the Company’s defined benefit plans:

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2013			2012			2013			2012
Service cost	$	18.3		$	16.0		$	55.0		$	48.0
Interest on projected benefit obligation		20.2			20.3			60.6			61.0
Expected return on assets		(29.8	)		(27.6	)		(89.4	)		(82.8	)
Amortization of prior service costs		.3			.3			.9			1.1
Recognized actuarial loss		11.0			10.8			33.0			32.4
Net pension expense	$	20.0		$	19.8		$	60.1		$	59.7

During the three and nine months ended September 30, 2013, the Company contributed $5.9 and $12.0 to its pension plans, respectively, and $8.3 and $93.7 for the three and nine months ended September 30, 2012, respectively.

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Income Taxes

9 Months Ended

Sep. 30, 2013

Income Taxes

NOTE G – Income Taxes

The effective income tax rate in the third quarter of 2013 of 29.7% decreased from 32.4% in the same period of 2012. For the first nine months of 2013, the effective income tax rate of 30.8% decreased from 32.5% in the first nine months of 2012. The decrease in the effective tax rate in both periods of 2013 was primarily due to a higher proportion of income generated in lower taxed jurisdictions.

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Investments in Marketable Debt Securities

9 Months Ended

Sep. 30, 2013

Investments in Marketable Debt Securities

NOTE B - Investments in Marketable Debt Securities

The Company’s investments in marketable debt 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 Company utilizes third-party pricing services for all of its marketable debt security valuations. The Company reviews the pricing methodology used by the third-party pricing services including the manner employed to collect market information. On a quarterly basis, the Company also performs review and validation procedures on the pricing information received from the third-party providers. These procedures help ensure that the fair value information used by the Company is determined in accordance with applicable accounting guidance.

The Company evaluates its investment in marketable debt securities at the end of each reporting period to determine if a decline in fair value is other than temporary. Realized losses are recognized upon management’s determination that a decline in fair value is other than temporary. The determination of other-than-temporary impairment is a subjective process, requiring the use of judgments and assumptions regarding the amount and timing of recovery. The Company reviews and evaluates its investments at least quarterly to identify investments that have indications of other-than-temporary impairments. It is reasonably possible that a change in estimate could occur in the near term relating to other-than-temporary impairment. Accordingly, the Company considers several factors when evaluating debt securities for other-than-temporary impairment, including whether the decline in fair value of the security is due to increased default risk for the specific issuer or market interest rate risk.

In assessing default risk, the Company considers the collectability of principal and interest payments by monitoring changes to issuers’ credit ratings, specific credit events associated with individual issuers as well as the credit ratings of any financial guarantor, and the extent and duration to which amortized cost exceeds fair value.

In assessing market interest rate risk, including benchmark interest rates and credit spreads, the Company considers its intent for selling the securities and whether it is more likely than not the Company will be able to hold these securities until the recovery of any unrealized losses.

Marketable debt securities at September 30, 2013 and December 31, 2012 consisted of the following:

	Amortized		Unrealized		Unrealized		Fair
At September 30, 2013	Cost		Gains		Losses		Value
U.S. tax-exempt securities	$	205.4	$	1.1	$	.1	$	206.4
U.S. corporate securities		79.6		.1				79.7
U.S. government and agency securities		.6						.6
Non-U.S. corporate securities		564.6		1.4		.4		565.6
Non-U.S. government securities		243.6		1.1		.2		244.5
Other debt securities		103.8		.5				104.3
	$	1,197.6	$	4.2	$	.7	$	1,201.1
	Amortized		Unrealized		Unrealized		Fair
At December 31, 2012	Cost		Gains		Losses		Value
U.S. tax-exempt securities	$	217.2	$	1.5	$	.1	$	218.6
U.S. corporate securities		59.8		.3				60.1
U.S. government and agency securities		.8						.8
Non-U.S. corporate securities		447.5		1.4		.2		448.7
Non-U.S. government securities		349.3		5.8		.1		355.0
Other debt securities		108.9		.6				109.5
	$	1,183.5	$	9.6	$	.4	$	1,192.7

The cost of marketable debt securities is adjusted for amortization of premiums and accretion of discounts to maturity.  Amortization, accretion, interest and dividend income and realized gains and losses are included in investment income. The cost of securities sold is based on the specific identification method. The proceeds from sales and maturities of marketable securities for the nine months ended September 30, 2013 and 2012 were $628.5 and $445.8, respectively. Gross realized gains were $1.7 and $1.9 for the nine months ended September 30, 2013 and 2012, respectively, and gross realized losses were $.5 and $.1 for the nine months ended September 30, 2013 and 2012, respectively.

The fair value of marketable debt securities that have been in an unrealized loss position for less than 12 months at September 30, 2013 was $246.1 and the associated unrealized loss was $.7. The fair value of marketable debt securities that have been in an unrealized loss position for less than 12 months at December 31, 2012 was $291.0 and the associated unrealized loss was $.4. The fair value of marketable debt securities that have been in an unrealized loss position for 12 months or greater at September 30, 2013 was $1.0 and the associated unrealized loss was less than $.1. There were no marketable debt securities that were in an unrealized loss position for 12 months or greater at December 31, 2012.

For the investment securities in gross unrealized loss positions identified above, the Company does not intend to sell the investment securities. It is more likely than not that the Company will not be required to sell the investment securities before recovery of the unrealized losses, and the Company expects that the contractual principal and interest will be received on the investment securities. As a result, the Company recognized no other-than-temporary impairments during the periods presented.

Contractual maturities on marketable debt securities at September 30, 2013 were as follows:

	Amortized		Fair
Maturities:	Cost		Value
Within one year	$	530.0	$	531.1
One to five years		667.1		669.5
Six to ten years		.1		.1
More than ten years		.4		.4
	$	1,197.6	$	1,201.1

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Segment Reporting Information by Segment (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Segment Reporting Information [Line Items]
Net sales and revenues	$ 4,300.1	$ 3,820.2	$ 12,524.9	$ 13,053.5
Investment income	7.3	7.8	21.8	24.9
Income before income taxes	440.0	345.4	1,210.1	1,270.7
Depreciation and amortization	206.4	176.2	588.7	522.4
Truck, Parts and Other
Segment Reporting Information [Line Items]
Net sales and revenues	4,006.6	3,546.7	11,649.5	12,252.5
Income before income taxes	344.5	257.2	938.5	1,016.7
Depreciation and amortization	92.9	79.1	262.2	245.6
Truck, Parts and Other | Trucks
Segment Reporting Information [Line Items]
Revenue	3,416.6	3,016.3	9,924.6	10,710.1
Income before income taxes	242.5	170.2	645.9	742.6
Depreciation and amortization	89.2	75.1	250.9	233.4
Truck, Parts and Other | Trucks | Parts and Trucks
Segment Reporting Information [Line Items]
Revenue	(155.4)	(156.4)	(460.1)	(572.1)
Truck, Parts and Other | Trucks | Revenues From External Customers
Segment Reporting Information [Line Items]
Net sales and revenues	3,261.2	2,859.9	9,464.5	10,138.0
Truck, Parts and Other | Parts
Segment Reporting Information [Line Items]
Revenue	726.2	661.4	2,126.0	2,031.1
Income before income taxes	106.5	88.7	311.2	280.2
Depreciation and amortization	1.2	1.4	3.9	4.5
Truck, Parts and Other | Parts | Parts and Trucks
Segment Reporting Information [Line Items]
Revenue	(10.9)	(11.3)	(33.8)	(34.4)
Truck, Parts and Other | Parts | Revenues From External Customers
Segment Reporting Information [Line Items]
Net sales and revenues	715.3	650.1	2,092.2	1,996.7
Truck, Parts and Other | Other products
Segment Reporting Information [Line Items]
Net sales and revenues	30.1	36.7	92.8	117.8
Income before income taxes	(4.5)	(1.7)	(18.6)	(6.1)
Depreciation and amortization	2.5	2.6	7.4	7.7
Financial Services
Segment Reporting Information [Line Items]
Net sales and revenues	293.5	273.5	875.4	801.0
Income before income taxes	88.2	80.4	249.8	229.1
Depreciation and amortization	$ 113.5	$ 97.1	$ 326.5	$ 276.8

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Changes in Accumulated Other Comprehensive Income by Component (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013		Sep. 30, 2012
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance, gains and losses on cash flow hedges			$ (27.2)
Amounts recorded in AOCI, gains and losses on cash flow hedges			27.3
Amounts reclassified out of AOCI, gains and losses on cash flow hedges			(20.8)
Net current period OCI, gains and losses on cash flow hedges	(2.7)	(2.4)	6.5		(6.9)
Ending balance, gains and losses on cash flow hedges	(20.7)		(20.7)
Beginning balance, unrealized gains and losses on available-for-sales securities			6.6
Amounts recorded in AOCI, unrealized gains and losses on available-for-sales securities			(5.1)
Amounts reclassified out of AOCI, unrealized gains and losses on available-for-sales securities			1.0
Net current period OCI, unrealized gains and losses on available-for-sales securities	0.1	0.8	(4.1)		2.7
Ending balance, unrealized gains and losses on available-for-sales securities	2.5		2.5
Beginning balance, defined benefit pension plans			(496.5)
Amounts recorded in AOCI, defined benefit pension plans			2.1
Amounts reclassified out of AOCI, defined benefit pension plans			22.1
Employee benefit plans, net of tax	1.0	3.0	24.2		16.0
Ending balance, defined benefit pension plans	(472.3)		(472.3)
Beginning balance, foreign currency translation			357.6
Amounts recorded in AOCI, foreign currency translation			(56.2)
Amounts reclassified out of AOCI, foreign currency translation			(2.0)
Net current period OCI, foreign currency translation	120.4	73.9	(58.2)		46.6
Ending balance, foreign currency translation	299.4		299.4
Beginning balance			(159.5)	[1]
Amounts recorded in AOCI			(31.9)
Amounts reclassified out of AOCI			0.3
Net current period OCI			(31.6)
Ending balance	$ (191.1)		$ (191.1)

[1] The December 31, 2012 consolidated balance sheet has been derived from audited financial statements.

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Finance and Other Receivables (Detail) (Financial Services, USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012		Sep. 30, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 3,838.1	$ 3,738.2
Direct financing leases	2,621.4	2,489.3
Sales-type finance leases	875.6	916.8
Dealer wholesale financing	1,736.2	1,541.0
Operating lease and other trade receivables	118.9	112.0
Unearned interest on finance leases	(363.6)	(369.0)
Loans and Leases Receivable, Net of Deferred Income, Total	8,826.6	8,428.3
Less allowance for losses	(131.7)	(130.0)		(139.1)	(139.0)
Finance and other receivables, net	8,694.9	8,298.3	[1]
Loans and leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Less allowance for losses	(112.1)	(112.6)
Dealer wholesale financing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Less allowance for losses	(10.9)	(11.8)		(12.4)	(11.7)
Operating lease and other trade receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Less allowance for losses	$ (8.7)	$ (5.6)

[1] The December 31, 2012 consolidated balance sheet has been derived from audited financial statements.

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Financial Assets and Liabilities Subject to Recurring Fair Value Measurements (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Derivative assets	$ 18.5	$ 2.5
Derivative liabilities	63.1	110.4
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Marketable debt securities	1,201.1	1,192.7
Derivative assets	30.9	5.1
Derivative liabilities	75.5	113.0
Fair Value, Measurements, Recurring | U.S. tax-exempt securities
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Marketable debt securities	206.4	218.6
Fair Value, Measurements, Recurring | U.S. corporate securities
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Marketable debt securities	79.7	60.1
Fair Value, Measurements, Recurring | U.S. government and agency securities
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Marketable debt securities	0.6	0.8
Fair Value, Measurements, Recurring | Non-U.S. corporate securities
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Marketable debt securities	565.6	448.7
Fair Value, Measurements, Recurring | Non-U.S. government securities
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Marketable debt securities	244.5	355.0
Fair Value, Measurements, Recurring | Other debt securities
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Marketable debt securities	104.3	109.5
Fair Value, Measurements, Recurring | Cross currency swaps
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Derivative assets	26.8	3.0
Derivative liabilities	42.9	74.1
Fair Value, Measurements, Recurring | Interest-rate swaps
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Derivative assets	3.5	1.6
Derivative liabilities	28.1	38.2
Fair Value, Measurements, Recurring | Foreign-exchange contracts
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Derivative assets	0.6	0.5
Derivative liabilities	4.5	0.7
Level 1 | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Marketable debt securities	0.4	0.6
Level 1 | Fair Value, Measurements, Recurring | U.S. government and agency securities
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Marketable debt securities	0.4	0.6
Level 2 | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Marketable debt securities	1,200.7	1,192.1
Derivative assets	30.9	5.1
Derivative liabilities	75.5	113.0
Level 2 | Fair Value, Measurements, Recurring | U.S. tax-exempt securities
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Marketable debt securities	206.4	218.6
Level 2 | Fair Value, Measurements, Recurring | U.S. corporate securities
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Marketable debt securities	79.7	60.1
Level 2 | Fair Value, Measurements, Recurring | U.S. government and agency securities
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Marketable debt securities	0.2	0.2
Level 2 | Fair Value, Measurements, Recurring | Non-U.S. corporate securities
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Marketable debt securities	565.6	448.7
Level 2 | Fair Value, Measurements, Recurring | Non-U.S. government securities
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Marketable debt securities	244.5	355.0
Level 2 | Fair Value, Measurements, Recurring | Other debt securities
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Marketable debt securities	104.3	109.5
Level 2 | Fair Value, Measurements, Recurring | Cross currency swaps
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Derivative assets	26.8	3.0
Derivative liabilities	42.9	74.1
Level 2 | Fair Value, Measurements, Recurring | Interest-rate swaps
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Derivative assets	3.5	1.6
Derivative liabilities	28.1	38.2
Level 2 | Fair Value, Measurements, Recurring | Foreign-exchange contracts
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Derivative assets	0.6	0.5
Derivative liabilities	$ 4.5	$ 0.7

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Inventories (Tables)

9 Months Ended

Sep. 30, 2013

Inventories Table

Inventories include the following:

	September 30			December 31
	2013			2012
Finished products	$	480.6		$	432.0
Work in process and raw materials		583.4			519.8
		1,064.0			951.8
Less LIFO reserve		(170.9	)		(169.4	)
	$	893.1		$	782.4

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Fair Value Measurements

9 Months Ended

Sep. 30, 2013

Fair Value Measurements

NOTE J – Fair Value Measurements

Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs to valuation techniques used to measure fair value are either observable or unobservable. These inputs have been categorized into the fair value hierarchy described below.

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

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

Level 3 – Valuations are based on model-based techniques for which some or all of the assumptions are obtained from indirect market information that is significant to the overall fair value measurement and which require a significant degree of management judgment.

There were no transfers of assets or liabilities between Level 1 and Level 2 of the fair value hierarchy during the nine months ended September 30, 2013. The Company’s policy is to recognize transfers between levels at the end of the reporting period.

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

Marketable Debt Securities: The Company’s marketable debt securities consist of municipal bonds, government obligations, investment-grade corporate obligations, commercial paper, asset-backed securities and term deposits. The fair value of U.S. government obligations is determined using the market approach and is based on quoted prices in active markets and are categorized as Level 1.

The fair value of non-U.S. government bonds, municipal bonds, corporate bonds, asset-backed securities, commercial paper, and term deposits is determined using the market approach and is primarily based on matrix pricing as a practical expedient which does not rely exclusively on quoted prices for a specific security. Significant inputs used to determine fair value include interest rates, yield curves, credit rating of the security and other observable market information and are categorized as Level 2.

Derivative Financial Instruments: The Company’s derivative contracts consist of interest-rate swaps, cross currency swaps and foreign currency exchange contracts. These derivative contracts are traded over the counter, and their fair value is determined using industry standard valuation models, which are based on the income approach (i.e., discounted cash flows). The significant observable inputs into the valuation models include interest rates, yield curves, currency exchange rates, credit default swap spreads and forward spot rates and are categorized as Level 2.

Assets and Liabilities Subject to Recurring Fair Value Measurement

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

At September 30, 2013	Level 1		Level 2		Total
Assets:
Marketable debt securities
U.S. tax-exempt securities			$	206.4	$	206.4
U.S. corporate securities				79.7		79.7
U.S. government and agency securities	$	.4		.2		.6
Non-U.S. corporate securities				565.6		565.6
Non-U.S. government securities				244.5		244.5
Other debt securities				104.3		104.3
Total marketable debt securities	$	.4	$	1,200.7	$	1,201.1
Derivatives
Cross currency swaps			$	26.8	$	26.8
Interest-rate swaps				3.5		3.5
Foreign-exchange contracts				.6		.6
Total derivative assets			$	30.9	$	30.9
Liabilities:
Derivatives
Cross currency swaps			$	42.9	$	42.9
Interest-rate swaps				28.1		28.1
Foreign-exchange contracts				4.5		4.5
Total derivative liabilities			$	75.5	$	75.5

At December 31, 2012	Level 1		Level 2		Total
Assets:
Marketable debt securities
U.S. tax-exempt securities			$	218.6	$	218.6
U.S. corporate securities				60.1		60.1
U.S. government and agency securities	$	.6		.2		.8
Non-U.S. corporate securities				448.7		448.7
Non-U.S. government securities				355.0		355.0
Other debt securities				109.5		109.5
Total marketable debt securities	$	.6	$	1,192.1	$	1,192.7
Derivatives
Cross currency swaps			$	3.0	$	3.0
Interest-rate swaps				1.6		1.6
Foreign-exchange contracts				.5		.5
Total derivative assets			$	5.1	$	5.1
Liabilities:
Derivatives
Cross currency swaps			$	74.1	$	74.1
Interest-rate swaps				38.2		38.2
Foreign-exchange contracts				.7		.7
Total derivative liabilities			$	113.0	$	113.0

Fair Value Disclosure of Other Financial Instruments

For financial instruments that are not recognized at fair value, the Company uses the following methods and assumptions to determine the fair value. These instruments are categorized as Level 2, except cash which is categorized as Level 1 and fixed-rate loans which are categorized as Level 3.

Cash and Cash Equivalents: Carrying amounts approximate fair value.

Financial Services Net Receivables: For floating-rate loans, wholesale financings, and operating lease and other trade receivables, carrying values approximate fair values. For fixed-rate loans, fair values are estimated using the income approach by discounting cash flows to their present value based on current rates for comparable loans. Finance lease receivables and related allowance for credit losses have been excluded from the accompanying table.

Debt: The carrying amounts of financial services commercial paper, variable-rate bank loans and variable-rate term notes approximate fair value. For fixed-rate debt, fair values are estimated using the income approach by discounting cash flows to their present value based on current rates for comparable debt.

The Company’s estimate of fair value for fixed-rate loans and debt that are not carried at fair value at September 30, 2013 and December 31, 2012 was as follows:

	September 30, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Financial Services fixed-rate loans	$	3,482.6	$	3,537.4	$	3,361.7	$	3,434.8
Liabilities:
Truck, Parts and Other fixed-rate debt		150.0		153.5		150.0		160.6
Financial Services fixed-rate debt		4,029.0		4,076.6		3,277.2		3,350.5

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2013

Components of Comprehensive Income, Net of Related Tax

The components of comprehensive income were as follows:

	Three Months Ended			Nine Months Ended
	September 30, 2013			September 30, 2013
Net income	$	309.4		$	837.1
Other comprehensive income (loss) (OCI):
Unrealized (losses) gains on derivative contracts		(3.5	)		9.8
Tax effect		.8			(3.3	)
		(2.7	)		6.5
Unrealized gains (losses) on marketable debt securities		.1			(5.7	)
Tax effect					1.6
		.1			(4.1	)
Employee benefit plans		2.5			36.8
Tax effect		(1.5	)		(12.6	)
		1.0			24.2
Currency translation gains (losses)		120.4			(58.2	)
Net other comprehensive income (loss)		118.8			(31.6	)
Comprehensive income	$	428.2		$	805.5
	Three Months Ended			Nine Months Ended
	September 30, 2012			September 30, 2012
Net income	$	233.6		$	858.1
Other comprehensive income:
Unrealized losses on derivative contracts		(3.3	)		(9.5	)
Tax effect		.9			2.6
		(2.4	)		(6.9	)
Unrealized gains on marketable debt securities		1.1			3.8
Tax effect		(.3	)		(1.1	)
		.8			2.7
Employee benefit plans		5.0			24.1
Tax effect		(2.0	)		(8.1	)
		3.0			16.0
Currency translation gains		73.9			46.6
Net other comprehensive income		75.3			58.4
Comprehensive income	$	308.9		$	916.5

Changes in Accumulated Other Comprehensive Income by Component

The components of accumulated other comprehensive loss (AOCI) as of September 30, 2013 and December 31, 2012 and the changes in AOCI, net of tax, included in the Consolidated Balance Sheets, consisted of the following:

	Gains and (Losses) on Derivative Contracts			Unrealized Gains and (Losses) on Marketable Debt Securities			Defined Benefit Pension Plans			Foreign Currency Translation			Total
Balance at December 31, 2012	$	(27.2	)	$	6.6		$	(496.5	)	$	357.6		$	(159.5	)
Amounts recorded in AOCI		27.3			(5.1	)		2.1			(56.2	)		(31.9	)
Amounts reclassified out of AOCI		(20.8	)		1.0			22.1			(2.0	)		.3
Net other comprehensive income (loss)		6.5			(4.1	)		24.2			(58.2	)		(31.6	)
Balance at September 30, 2013	$	(20.7	)	$	2.5		$	(472.3	)	$	299.4		$	(191.1	)

Reclassifications Out of Accumulated Other Comprehensive Income

Reclassifications out of AOCI during the nine months ended September 30, 2013 are as follows:

AOCI Components	Line Item in the Consolidated Statement of Comprehensive Income	Amount Reclassified Out of AOCI
Gains and losses on cash flow hedges:
Truck, Parts and Other
Foreign-exchange contracts	Cost of sales and revenues	$	(.5	)
	Interest and other expense (income), net		(.2	)
Financial Services
Interest-rate contracts	Interest and other borrowing expenses		(29.1	)
	Pre-tax expense reduction		(29.8	)
	Tax expense		9.0
	After-tax expense reduction		(20.8	)
Unrealized gains and losses on marketable debt securities:
Marketable debt securities	Investment income		1.4
	Tax expense		(.4	)
	After-tax income increase		1.0
Defined benefit pension plans:
Truck, Parts and Other
Prior service costs	Cost of sales and revenues $.8, SG&A $.1		.9
Actuarial loss	Cost of sales and revenues $17.4, SG&A $14.2, R&D $.1		31.7
Financial Services
Actuarial loss	SG&A		1.3
	Pre-tax expense increase		33.9
	Tax benefit		(11.8	)
	After-tax expense increase		22.1
Foreign Currency Translation:
Truck, Parts and Other	Interest and other expense (income), net		(1.1	)
Financial Services	Interest and other borrowing expenses		(.9	)
	Expense reduction		(2.0	)
Total reclassifications out of AOCI		$	.3

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Finance and Other Receivables (Tables)

9 Months Ended

Sep. 30, 2013

Finance and Other Receivables

Finance and other receivables include the following:

	September 30			December 31
	2013			2012
Loans	$	3,838.1		$	3,738.2
Direct financing leases		2,621.4			2,489.3
Sales-type finance leases		875.6			916.8
Dealer wholesale financing		1,736.2			1,541.0
Operating lease and other trade receivables		118.9			112.0
Unearned interest on finance leases		(363.6	)		(369.0	)
	$	8,826.6		$	8,428.3
Less allowance for losses:
Loans and leases		(112.1	)		(112.6	)
Dealer wholesale financing		(10.9	)		(11.8	)
Operating lease and other trade receivables		(8.7	)		(5.6	)
	$	8,694.9		$	8,298.3

Allowance for Credit Losses

The allowance for credit losses is summarized as follows:

	2013
	Dealer						Customer Retail
	Wholesale			Retail						Other*			Total
Balance at January 1	$	11.8		$	13.4		$	99.2		$	5.6		$	130.0
Provision for losses		(.7	)		(.7	)		11.2			5.6			15.4
Charge-offs		(.2	)					(11.1	)		(6.7	)		(18.0	)
Recoveries								4.2			1.0			5.2
Currency translation and other					(.1	)		(4.0	)		3.2			(.9	)
Balance at September 30	$	10.9		$	12.6		$	99.5		$	8.7		$	131.7
	2012
	Dealer						Customer Retail
	Wholesale			Retail						Other*			Total
Balance at January 1	$	11.7		$	11.9		$	106.6		$	8.8		$	139.0
Provision for losses		2.3			1.2			9.3			2.4			15.2
Charge-offs								(17.1	)		(4.8	)		(21.9	)
Recoveries		.1						4.6			.3			5.0
Currency translation and other		(1.7	)		.1			4.0			(.6	)		1.8
Balance at September 30	$	12.4		$	13.2		$	107.4		$	6.1		$	139.1

* Operating lease and other trade receivables.

Finance Receivables Summary by those Evaluated Collectively and Individually

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

	Dealer				Customer Retail
At September 30, 2013	Wholesale		Retail				Total
Recorded investment for impaired finance receivables evaluated individually	$	9.1			$	49.4	$	58.5
Allowance for impaired finance receivables determined individually		1.5				7.6		9.1
Recorded investment for finance receivables evaluated collectively		1,727.1	$	1,403.3		5,518.8		8,649.2
Allowance for finance receivables determined collectively		9.4		12.6		91.9		113.9
	Dealer				Customer Retail
At December 31, 2012	Wholesale		Retail				Total
Recorded investment for impaired finance receivables evaluated individually	$	3.6	$	.1	$	67.4	$	71.1
Allowance for impaired finance receivables determined individually		2.2				10.8		13.0
Recorded investment for finance receivables evaluated collectively		1,537.4		1,429.6		5,278.2		8,245.2
Allowance for finance receivables determined collectively		9.6		13.4		88.4		111.4

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

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

	September 30		December 31
	2013		2012
Dealer:
Wholesale	$	9.1	$	3.1
Retail				.1
Customer Retail:
Fleet		36.7		42.8
Owner/Operator		9.5		11.7
	$	55.3	$	57.7

Summary of Impaired Loans and Specific Reserve

The recorded investment of impaired loans as of September 30, 2013 and December 31, 2012 was not significantly different than the unpaid principal balance.

	Dealer				Customer Retail
At September 30, 2013	Wholesale			Retail	Fleet			Owner/ Operator			Total
Impaired loans with a specific reserve	$	9.1			$	20.9		$	4.2		$	34.2
Associated allowance		(1.5	)			(2.9	)		(.8	)		(5.2	)
Net carrying amount of impaired loans	$	7.6			$	18.0		$	3.4		$	29.0
Average recorded investment*	$	4.8			$	31.4		$	6.0		$	42.2

* Represents the average during the 12 months ended September 30, 2013.

	Dealer				Customer Retail
At December 31, 2012	Wholesale			Retail	Fleet			Owner/ Operator			Total
Impaired loans with a specific reserve	$	3.6			$	43.9		$	6.8		$	54.3
Associated allowance		(2.2	)			(7.3	)		(1.2	)		(10.7	)
Net carrying amount of impaired loans	$	1.4			$	36.6		$	5.6		$	43.6
Average recorded investment*	$	12.7			$	32.7		$	10.2		$	55.6

* Represents the average during the 12 months ended September 30, 2012.

Summary of Interest Income Recognized on Cash Basis

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

	Three Months Ended				Nine Months Ended
	September 30				September 30
	2013		2012		2013		2012
Interest income recognized:
Dealer wholesale					$	.1	$	.1
Customer retail - fleet	$	.5	$	.2		1.8		.9
Customer retail - owner/operator				.2		.4		.6
	$	.5	$	.4	$	2.3	$	1.6

Finance Receivables by Credit Quality Indicator and Portfolio Class

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

	Dealer				Customer Retail
At September 30, 2013	Wholesale		Retail		Fleet		Owner/ Operator		Total
Performing	$	1,681.4	$	1,396.3	$	4,235.2	$	1,256.7	$	8,569.6
Watch		45.7		7.0		20.0		6.9		79.6
At-risk		9.1				39.4		10.0		58.5
	$	1,736.2	$	1,403.3	$	4,294.6	$	1,273.6	$	8,707.7

	Dealer				Customer Retail
At December 31, 2012	Wholesale		Retail		Fleet		Owner/ Operator		Total
Performing	$	1,479.1	$	1,423.3	$	3,878.4	$	1,365.6	$	8,146.4
Watch		58.3		6.3		23.5		10.7		98.8
At-risk		3.6		.1		54.7		12.7		71.1
	$	1,541.0	$	1,429.7	$	3,956.6	$	1,389.0	$	8,316.3

Financing Receivables by Aging Category

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

	Dealer				Customer Retail
At September 30, 2013	Wholesale		Retail		Fleet		Owner/ Operator		Total
Current and up to 30 days past due	$	1,727.8	$	1,403.3	$	4,259.3	$	1,259.2	$	8,649.6
31 – 60 days past due		1.8				20.9		5.6		28.3
Greater than 60 days past due		6.6				14.4		8.8		29.8
	$	1,736.2	$	1,403.3	$	4,294.6	$	1,273.6	$	8,707.7

	Dealer				Customer Retail
At December 31, 2012	Wholesale		Retail		Fleet		Owner/ Operator		Total
Current and up to 30 days past due	$	1,537.0	$	1,429.7	$	3,934.8	$	1,369.0	$	8,270.5
31 – 60 days past due		.5				9.4		7.9		17.8
Greater than 60 days past due		3.5				12.4		12.1		28.0
	$	1,541.0	$	1,429.7	$	3,956.6	$	1,389.0	$	8,316.3

Pre- and Post-Modification Recorded Investment Balances for Finance Receivables Modified by Portfolio Class

At modification date, the pre-modification and post-modification recorded investment balances for finance receivables modified during the period by portfolio class are as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2013				September 30, 2013
	Recorded Investment				Recorded Investment
	Pre-Modification		Post-Modification		Pre-Modification		Post-Modification
Fleet	$	1.5	$	1.3	$	9.2	$	8.9
Owner / Operator		.7		.7		1.4		1.4
	$	2.2	$	2.0	$	10.6	$	10.3
	Three Months Ended				Nine Months Ended
	September 30, 2012				September 30, 2012
	Recorded Investment				Recorded Investment
	Pre-Modification		Post-Modification		Pre-Modification		Post-Modification
Fleet	$	14.7	$	13.9	$	45.3	$	43.8
Owner / Operator		.6		.6		2.1		2.1
	$	15.3	$	14.5	$	47.4	$	45.9

TDRs Modified During Previous Twelve Months that Subsequently Defaulted

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

	Nine Months Ended
	September 30
	2013		2012
Fleet	$	2.5	$	7.7
Owner / Operator		.2		.5
	$	2.7	$	8.2

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Oct. 31, 2013
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Trading Symbol	PCAR
Entity Registrant Name	PACCAR INC
Entity Central Index Key	0000075362
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		354,091,886

XML

Product Support Liabilities (Tables)

9 Months Ended

Sep. 30, 2013

Changes in Product Support Liabilities

Changes in product support liabilities are summarized as follows:

	2013			2012
Balance at January 1	$	540.7		$	448.7
Cost accruals and revenue deferrals		238.0			234.6
Payments and revenue recognized		(195.4	)		(168.0	)
Currency translation		4.6			1.2
Balance at September 30	$	587.9		$	516.5

XML

Components of Pension Expense (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Schedule of Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets [Line Items]
Service cost	$ 18.3	$ 16.0	$ 55.0	$ 48.0
Interest on projected benefit obligation	20.2	20.3	60.6	61.0
Expected return on assets	(29.8)	(27.6)	(89.4)	(82.8)
Amortization of prior service costs	0.3	0.3	0.9	1.1
Recognized actuarial loss	11.0	10.8	33.0	32.4
Net pension expense	$ 20.0	$ 19.8	$ 60.1	$ 59.7

XML

Carrying Amount and Fair Value of Financial Services Fixed-Rate Loans and Fixed-Rate Debt (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Financial Services
Assets, carrying amount
Fixed-rate loans, carrying amount	$ 3,482.6	$ 3,361.7
Liabilities, carrying amount
Fixed-rate debt, carrying amount	4,029.0	3,277.2
Assets, Fair Value
Fixed-rate loans, Fair Value	3,537.4	3,434.8
Liabilities, Fair Value
Fixed-rate debt, Fair Value	4,076.6	3,350.5
Truck, Parts and Other
Liabilities, carrying amount
Fixed-rate debt, carrying amount	150.0	150.0
Liabilities, Fair Value
Fixed-rate debt, Fair Value	$ 153.5	$ 160.6