10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2025

or

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

For the transition period from ____ to ____.

Commission File Number 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)

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

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

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $1 par value	PCAR	The Nasdaq Stock Market

Securities registered pursuant to Section 12(g) of the Act: NONE

————————————————————————————————————————————————————

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

As of June 30, 2025, the aggregate market value of the voting stock held by non-affiliates of the registrant was $49.01 billion.

As of January 31, 2026, there were 525,894,443 shares of common stock, $1 par value, of the registrant outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the proxy statement for the annual stockholders meeting to be held on April 28, 2026 are incorporated by reference into Part III of this Form 10-K.

PACCAR Inc – FORM 10-K

INDEX

		Page
PART I		3
ITEM 1.	BUSINESS	3
ITEM 1A.	RISK FACTORS	10
ITEM 1B.	UNRESOLVED STAFF COMMENTS	13
ITEM 1C.	CYBERSECURITY	13
ITEM 2.	PROPERTIES	13
ITEM 3.	LEGAL PROCEEDINGS	13
ITEM 4.	MINE SAFETY DISCLOSURES	13
PART II		14
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	14
ITEM 6.	[RESERVED]	16
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	17
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	34
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	35
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	82
ITEM 9A.	CONTROLS AND PROCEDURES	82
ITEM 9B.	OTHER INFORMATION	82
ITEM 9C.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	82
PART III		83
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	83
ITEM 11.	EXECUTIVE COMPENSATION	83
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	84
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	84
ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	84
PART IV		85
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	85
SIGNATURES		88

The Company’s trucks have a reputation for high quality products, most of which are ordered by dealers according to customer specifications. Some units are ordered by dealers for stocking to meet the needs of certain customers who require immediate delivery or for customers that require the chassis to be fitted with specialized bodies. For a significant portion of the Company’s truck operations, major components, such as engines, transmissions and axles, as well as a substantial percentage of other components, are purchased from component manufacturers pursuant to PACCAR and customer specifications. DAF, which is more vertically integrated, manufactures PACCAR engines and axles and a higher percentage of other components for its heavy truck models. The Company also manufactures engines at its Columbus, Mississippi facility. In 2025, the Company installed PACCAR engines in approximately 29% of the Company’s Kenworth and Peterbilt heavy-duty trucks in the U.S. and Canada and substantially all of the DAF heavy-duty trucks sold throughout the world. Engines not manufactured by the Company are purchased from Cummins Inc. (Cummins). The Company purchased a significant portion of its transmissions from Eaton Corporation Plc. (Eaton) and ZF Friedrichshafen AG (ZF). The Company also purchased a significant portion of North America stampings used for cabs from Magna International Inc. (Magna). The Company has long-term agreements with Cummins, Eaton, ZF and Magna to provide for continuity of supply. A loss of supply from Cummins, Eaton, ZF or Magna, and the resulting interruption in the production of trucks, would have a material effect on the Company’s results. Purchased materials and parts include raw materials, partially processed materials, such as castings, and finished components manufactured by independent suppliers. The Company and its suppliers rely on semiconductors as an essential component in the production of its trucks and aftermarket parts. The Company and its suppliers source semiconductors from various suppliers. Raw materials, partially processed materials and finished components typically make up approximately 85% of the cost of new trucks. The value of finished truck components manufactured by independent suppliers is lower in Europe due to a higher level of vertical integration as compared to North America. In addition to materials, the Company’s cost of sales includes labor and factory overhead, vehicle delivery and warranty. Accordingly, except for certain factory overhead costs such as facilities depreciation, property taxes and utilities, the Company’s cost of sales are highly correlated to sales.

The Company’s DAF subsidiary purchases fully assembled cabs from a competitor, Renault V.I., for its European light-, medium-duty product line pursuant to a joint product development and long-term supply contract. Sales of trucks manufactured with these cabs amounted to approximately 2% of consolidated revenues in 2025. A short-term loss of supply, and the resulting interruption in the production of these trucks, would not have a material effect on the Company’s results of operations. However, a loss of supply for an extended period of time would require the Company to either contract for an alternative source of supply or to manufacture cabs itself.

Other than these components, the Company is not limited to any single source for any significant component, although the sudden inability of a supplier to deliver components could have a temporary adverse effect on production of certain products. Manufacturing inventory levels are based upon production schedules and orders are placed with suppliers accordingly.

Key factors affecting Truck segment earnings include the number of new trucks sold in the markets served and the margins realized on the sales. The Company’s sales of new trucks are dependent on the size of the truck markets served and the Company’s share of those markets. Truck segment sales and margins tend to be cyclical based on the level of overall economic activity, the availability of capital and the amount of freight being transported. The Company’s costs for trucks consist primarily of material costs, which are influenced by the price of commodities such as steel, copper, aluminum and petroleum. The Company utilizes long-term supply agreements to reduce the variability of the unit cost of purchased materials and finished components and engages in hedging activities for some commodities in certain geographical markets. The Company’s spending on research and development varies based on product development cycles and government requirements such as changes to diesel engine emissions and vehicle fuel efficiency standards in the various markets served. The Company maintains rigorous control of selling, general and administrative (SG&A) expenses and seeks to minimize such costs.

There are four principal competitors in the U.S. and Canada commercial truck market. The Company’s share of the U.S. and Canadian Class 8 market was 29.9% of retail sales in 2025, and the Company’s medium-duty market share was 15.9%. In Europe, there are six principal competitors in the commercial truck market, including parent companies to the four competitors of the Company in the U.S. In 2025, DAF had a 13.5% share of the European heavy-duty market and a 9.7% share of the light/medium-duty market. These markets are highly competitive in price, quality and service. PACCAR is not dependent on any single customer for its sales. There are no significant seasonal variations in sales.

The Peterbilt, Kenworth and DAF nameplates are recognized internationally and play an important role in the marketing of the Company’s truck products. The Company engages in a continuous program of trademark and trade name protection in all marketing areas of the world.

The Company’s truck products are subject to noise, emission and safety regulations. Competing manufacturers are subject to the same regulations. The Company believes the cost of complying with these regulations will not be detrimental to its business.

The Company had a total production backlog of $4.9 billion at the end of 2025. Within this backlog, orders scheduled for delivery within three months (90 days) are considered to be firm. The 90‑day backlog approximated $2.6 billion at December 31, 2025, $3.8 billion at December 31, 2024 and $7.6 billion at December 31, 2023. Production of the year-end 2025 backlog is expected to be substantially completed during 2026.

PARTS

The Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles to over 2,000 Kenworth, Peterbilt and DAF dealers and more than 350 TRP, PACCAR's aftermarket parts brand, stores in 99 countries around the world. Aftermarket truck parts are sold and delivered to the Company’s independent dealers through the Company’s 21 strategically located parts distribution centers (PDCs) in the U.S., Canada, Europe, Australia, Mexico and Central and South America. Parts are primarily purchased from various suppliers and also manufactured by the Company. Aftermarket parts inventory levels are determined largely by anticipated customer demand and the need for timely delivery. The Parts segment accounted for 24% of total 2025 net sales and revenues.

Key factors affecting Parts segment earnings include the aftermarket parts sold in the markets served and the margins realized on the sales. Aftermarket parts sales are influenced by the total number of the Company’s trucks in service and the average age and mileage of those trucks. To reflect the benefit the Parts segment receives from costs incurred by the Truck segment, certain factory overhead, research and development, engineering and SG&A expenses are allocated from the Truck segment to the Parts segment. The Company’s cost for parts sold consists primarily of material costs, which are influenced by the price of commodities such as steel, copper, aluminum and petroleum. The Company utilizes long-term supply agreements to reduce the variability of the cost of parts sold. The Company maintains rigorous control of SG&A expenses and seeks to minimize such costs.

FINANCIAL SERVICES

PACCAR Financial Services (PFS) operates in 26 countries in North America, Europe, Australia and South America through wholly owned finance companies operating under the PACCAR Financial trade name. PFS also conducts full-service leasing operations through operating divisions or wholly owned subsidiaries in North America, Germany and Australia under the PacLease trade name. Selected dealers in North America and Australia are franchised to provide full-service leasing. PFS provides its franchisees with equipment financing and administrative support. PFS also operates its own full-service lease outlets. PFS’s retail loan and lease customers consist of small, medium and large commercial trucking companies, independent owner/operators and other businesses and acquire their PACCAR trucks principally from independent PACCAR dealers. PFS accounted for 8% of total net sales and revenues and 51% of total assets in 2025.

PFS is primarily responsible for managing the sales of the Company’s used trucks. The Company’s Financial Services segment sells used trucks returned from matured operating leases in the ordinary course of business and trucks acquired from repossessions. PFS also obtains used trucks from the Truck segment in trades related to new truck sales and trucks returned from residual value guarantees (RVGs). Certain gains and losses from the sale of used trucks are shared with the Truck segment. The Company’s Financial Services segment records revenue on the sale of used trucks received in trade and RVG returns.

The Company’s finance receivables are classified as dealer wholesale, dealer retail and customer retail segments. The dealer wholesale segment consists of truck inventory financing to independent PACCAR dealers. The dealer retail segment consists of loans and leases to participating dealers and franchises, which use the proceeds to fund their customers’ acquisition of trucks and related equipment. The customer retail segment consists of loans and leases directly to customers for their acquisition of trucks and related equipment. Customer retail receivables are further segregated by fleet and owner/operator classes. The fleet class consists of customers operating five or more trucks. All others are considered owner/operators. Similar methods are employed to assess and monitor credit risk for each class.

Finance receivables are secured by the trucks and related equipment being financed or leased. The terms of loan and lease contracts generally range from three to five years depending on the type and use of equipment. Payment is required on dealer inventory financing when the floored truck is sold to a customer or upon maturity of the flooring loan, whichever comes first. Dealer inventory loans generally mature within one year.

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 public and private offerings and, to a lesser extent, bank loans. An additional source of funds is loans from other PACCAR companies. PFS matches the maturity and interest rate characteristics of its debt with the maturity and interest rate characteristics of loans and leases.

Key factors affecting the earnings of the Financial Services segment include the volume of new loans and leases, the yield earned on the loans and leases, the costs of funding investments in loans and leases, the ability to collect the amounts owed to PFS, the volume of used truck sales and used truck prices. New loan and lease volume is dependent on the volume of new trucks sold by Kenworth, Peterbilt and DAF and the share of those truck sales that are financed by the Financial Services segment. The Company’s Financial Services market share is influenced by the extent of competition in the financing market. PFS’s primary competitors include commercial banks and independent finance and leasing companies.

The revenue earned on loans and leases depends on market interest and lease rates and the ability of PFS to differentiate itself from the competition by superior industry knowledge and customer service. Dealer inventory loans have variable rates with rates reset monthly based on an index pertaining to the applicable local market. Retail loan and lease contracts normally have fixed rates over the contract term. PFS obtains funds either through fixed rate borrowings or through variable rate borrowings, a portion of which have been effectively converted to fixed rate through the use of interest-rate contracts. This enables PFS to obtain a stable spread between the cost of borrowing and the yield on fixed rate contracts over the contract term. Included in Financial Services cost of revenues is depreciation on equipment on operating leases. The amount of depreciation on operating leases principally depends on the acquisition cost of leased equipment, the term of the leases, which generally ranges from three to five years, and the residual value of the leases, which generally ranges from 30% to 70%. The margin earned is the difference between the revenues on loan and lease contracts and the direct costs of operation, including interest and depreciation.

PFS incurs credit losses when customers are unable to pay the full amounts due under loan and finance lease contracts. PFS takes a conservative approach to underwriting new retail business in order to minimize credit losses.

The ability of customers to pay their obligations to PFS depends on the state of the general economy, the extent of freight demand, freight rates and the cost of fuel, among other factors. PFS limits its exposure to any one customer, with no one customer or dealer balance representing over 5% of the aggregate portfolio assets. PFS generally requires a down payment and secures its interest in the underlying truck collateral and may require other collateral or guarantees. In the event of default, PFS will repossess the truck and sell it in the open market primarily through its dealer network or PFS used truck centers. PFS will also seek to recover any shortfall between the amounts owed and the amounts recovered from sale of the collateral. The amount of credit losses depends on the rate of default on loans and finance leases and, in the event of repossession, the ability to recover the amount owed from sale of the collateral which is affected by used truck prices and other factors. For over sixty years, PFS’s experience has been that periods of economic weakness result in higher past dues and increased rates of repossession. Used truck prices also tend to fall during periods of economic weakness. As a result, credit losses tend to increase during periods of economic weakness. PFS provides an allowance for credit losses based on specifically identified customer risks and an analysis of estimated losses inherent in the portfolio, considering the amount of past due accounts, the trends of used truck prices and the current and forecasted economic conditions of its geographic markets.

Financial Services SG&A expenses consist primarily of personnel costs associated with originating and servicing the loan and lease portfolios. These costs vary somewhat depending on overall levels of business activity, but given the ongoing nature of servicing activities, tend to be relatively stable.

OTHER BUSINESSES

Other businesses included the manufacturing of industrial winches in two U.S. plants and marketing them under the BRADEN, CARCO and Gearmatic nameplates through October 31, 2024. Sales of industrial winches were less than 1% of total net sales and revenues in 2024 and 2023.

PATENTS

The Company owns numerous patents which relate to all product lines. Although these patents are considered important to the overall conduct of the Company’s business, no patent or group of patents is considered essential to a material part of the Company’s business.

REGULATION

As a manufacturer of highway trucks, the Company is subject to the National Traffic and Motor Vehicle Safety Act and Federal Motor Vehicle Safety Standards promulgated by the National Highway Traffic Safety Administration as well as environmental laws and regulations in the United States, and is subject to similar regulations in all countries where it has operations and where its trucks are distributed. In addition, the Company is subject to certain other licensing requirements to do business in the United States and Europe. The Company believes it is in compliance with laws and regulations applicable to safety standards, the environment and other licensing requirements in all countries where it has operations and where its trucks are distributed.

The Company designs and manufactures engines for use in PACCAR vehicles worldwide. The Company’s operations and products are subject to extensive statutory and regulatory requirements governing greenhouse gas, non-greenhouse gas emissions and batteries. These include standards imposed by the U.S. Environmental Protection Agency (EPA), the European Union, U.S. state regulatory agencies (such as the California Air Resources Board), regulatory agencies in other international markets where the Company operates, and international accords related to climate change including the Paris Agreement. The primary laws and regulations are the EPA’s Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium and Heavy-Duty Engines and Vehicles, EPA’s Low NOx Rule, the Regulation of the European Parliament and of the Council on the Monitoring and Reporting of CO2 Emissions from Fuel Consumption of New Heavy-Duty Vehicles, and the Heavy-Duty Omnibus Regulation and, subject to pending litigation, the Advanced Clean Truck (ACT) regulation of the California Air Resources Board.

The Company continually monitors developments in emissions and climate change-related laws and regulations in the markets in which the Company conducts business. The Company will continue to fund capital and research and development (R&D) projects to meet future emissions and certification requirements through the introduction of new technologies into our products, engines and exhaust after-treatment systems.

The Company’s manufacturing and assembly plants are subject to environmental laws and regulations such as regulating air emissions, water discharges and the handling and disposal of hazardous substances. Failure to comply with these regulations could lead to fines and other penalties. The Company believes in all material respects it is in compliance with the laws and regulations applicable to our plants and operations.

Information regarding the effects that compliance with international, federal, state and local environmental regulations have on the Company’s capital and operating expenditures and the Company’s involvement in environmental matters is included in Item 1A, “Risk Factors” and in Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Company’s Consolidated Financial Statements in Items 7 and 8, respectively.

HUMAN CAPITAL MANAGEMENT

PACCAR is committed to a strong and collaborative culture and the Company’s excellent financial results reflect its outstanding workforce. The Company provides its employees with robust benefit packages, comprehensive training programs, tuition assistance and a work environment that promotes safety and respect. The Company is also embedding artificial intelligence (AI) across its business to drive innovation, profitable growth and enhanced performance for PACCAR’s customers.

On December 31, 2025, the Company had approximately 25,900 employees. Approximately 40% were U.S. employees.

ENVIRONMENTAL AND SUSTAINABILITY LEADERSHIP

Reducing the environmental impact of the Company’s activities and products is an integral part of the Company’s process of continuous improvement. PACCAR’s commitment to the environment is demonstrated in the Company’s energy efficient operations and technologically advanced products. The Company’s environmental management system and policy are designed to focus on the reduction of the environmental impacts of the Company’s activities, products and services.

PACCAR has publicly disclosed greenhouse gas emissions on its website and through CDP (formerly Carbon Disclosure Project) since 2014 and has established greenhouse gas emission reduction targets approved by the Science Based Targets Initiative (SBTi). PACCAR expects to continue to significantly invest in technologies to improve fuel efficiency for its customers, which would also reduce greenhouse gas emissions.

Operations - PACCAR is committed to environmental responsibility in the vehicle production process. PACCAR is continuously looking for ways to reduce waste, reuse materials, conserve energy in its facilities and reduce the environmental impact of our activities. PACCAR’s factories are ISO 14001 certified and more than 80% are zero waste-to-landfill.

Innovative Products - A key element of PACCAR’s environmental strategy is to offer our customers commercial vehicles that reduce environmental impacts. The Company invests in technologies that reduce greenhouse gas emissions such as highly fuel-efficient diesel engines, biofuel engines, as well as next generation electric and hybrid powertrains and battery cell and pack technology. To develop these industry-leading products and technologies, PACCAR makes significant research and development and capital investments every year.

PACCAR’s Zero Emissions Trucks - PACCAR’s research and development efforts include demonstration and development projects for Kenworth, Peterbilt and DAF vehicles, including battery-electric, hydrogen combustion and hybrid technologies. PACCAR is currently producing battery-electric Kenworth, Peterbilt and DAF trucks.

Low Carbon and Renewable Fuels - All truck sales and diesel engine unit sales are certified to use biofuels. PACCAR’s MX-13 and MX-11 engines are certified to use B7 and B100 biofuels in Europe and B20 biofuel in the U.S. Engines used in PACCAR trucks not manufactured by the Company are certified to use up to B20 biofuels.

Advanced Vehicles - PACCAR continued its work on the SuperTruck 3 program, a U.S. Department of Energy (DOE) initiative to develop state-of-the-art zero emissions medium- and heavy-duty trucks, until the cancellation of the program in 2025. The SuperTruck initiative, launched in 2009, has driven significant advancements in heavy-duty truck freight efficiency, and Kenworth and Peterbilt have successfully deployed many of those technologies in production. PACCAR continues to independently advance key battery-electric vehicle technologies and drive towards their implementation.

Remanufacturing - Remanufacturing is the industrial process of returning a previously used component to “like-new” condition. Remanufacturing helps the environment by reducing waste. PACCAR’s aftermarket parts division sells remanufactured engines and many other remanufactured components. PACCAR is investing in additional global engine manufacturing capacity, and has constructed a new engine remanufacturing facility in Columbus, Mississippi. The Company also has engine remanufacturing capacity on its Eindhoven Campus in the Netherlands.

Connected Trucks and Driver Training - PACCAR Connect fleet management system gives fleet customers real-time information on vehicle and driver performance including fuel consumption, fleet utilization, idle time and route optimization. This information enables customers to improve fleet operating efficiency and reduce fuel consumption and CO2 emissions. PACCAR has introduced technologies that train drivers to operate vehicles more efficiently.

Battery Manufacturing - PACCAR, Cummins, Daimler Trucks and EVE Energy have partnered to produce state-of-the-art commercial vehicle batteries in a 21-gigawatt hour (GWh) factory in Marshall County, Mississippi. Along with our joint venture partners, the Company is reviewing the timing of investments as a result of changing market-adoption projections.

OTHER DISCLOSURES

The Company’s filings on Forms 10‑K, 10‑Q and 8‑K and any amendments to those reports can be found on the Company’s website www.paccar.com free of charge as soon as practicable after the report is electronically filed with, or furnished to, the Securities and Exchange Commission (SEC). The information on the Company’s website is not incorporated by reference into this report. In addition, the Company’s reports filed with the SEC can be found at www.sec.gov.

INFORMATION ABOUT THE COMPANY’S EXECUTIVE OFFICERS

Item 401(b) of Regulation S-K:

Information about the Company’s Executive Officers as of February 18, 2026 is as follows:

Name and Age	Present Position and Other Position(s) Held During Last Five Years
Mark C. Pigott (72)	Executive Chairman of the Board of Directors since April 2014; Chairman and Chief Executive Officer from 1997 to April 2014. Mr. Pigott is the brother of John M. Pigott, a director of the Company.
R. Preston Feight (58)	Chief Executive Officer since July 2019.
Kevin D. Baney (55)	President since January 2026; Executive Vice President from January 2025 to December 2025; Senior Vice President from January 2024 to December 2024; Vice President of PACCAR and General Manager of Kenworth Truck Company from August 2019 to December 2023.
C. Michael Dozier (60)	Executive Vice President since January 2023; Senior Vice President from January 2020 to December 2022.
John N. Rich (57)	Executive Vice President and Chief Technology Officer since January 2026; Senior Vice President and Chief Technology Officer from January 2024 to December 2025; Vice President and Chief Technology Officer from March 2021 to December 2023; Prior to that, he worked for 30 years at Ford Motor Company in positions of increasing responsibility including Director of Autonomous Vehicles and Technology; Chief Operating Officer of AV LLC and Executive Director of Global Strategy.
Laura J. Bloch (49)	Senior Vice President since January 2025; Vice President of PACCAR and General Manager of PACCAR Parts from March 2022 to December 2024; Senior Assistant General Manager of Sales and Marketing, PACCAR Parts from August 2021 to February 2022; Assistant General Manager of Sales and Marketing, Kenworth from February 2019 to July 2021.
Brice J. Poplawski (61)	Senior Vice President and Chief Financial Officer since June 2025; Vice President and Controller from May 2023 to June 2025; Senior Operations Controller from July 2020 to April 2023.
Paulo H. Bolgar (57)	Vice President and Chief Human Resources Officer since June 2022; Served as Human Resources Vice President of Americas and Global Business Units and Global R&D for Baxter International, Inc. from January 2020 to May 2022.
Craig R. Gryniewicz (58)	Vice President, Global Financial Services since February 2025; Vice President of PACCAR and President of PACCAR Financial Corp. from February 2019 to January 2024.
A. Lily Ley (60)	Vice President and Chief Information Officer since January 2017.
Jacob J. Montero (42)	Vice President of PACCAR and General Manager of Peterbilt since January 2025; Assistant General Manager of Sales and Marketing, Peterbilt from July 2023 to December 2024; General Sales Manager, Peterbilt from August 2019 to June 2023.
Harald P. Seidel (58)	Vice President of PACCAR and President of DAF Trucks N.V. since August 2022; Director of Finance of DAF Trucks N.V. from October 2017 to July 2022.
Bryan M. Sitko (49)	Vice President and General Manager of PACCAR Parts since January 2025; Assistant General Manager of Operations, Kenworth from June 2022 to December 2024; Assistant General Manager of Sales and Marketing, PACCAR Financial Corp from January 2019 to May 2022.
James W. Walenczak (51)	Vice President of PACCAR and General Manager of Kenworth since January 2024; Assistant General Manager – Sales and Marketing, Kenworth from August 2021 to December 2023; Assistant General Manager – Operations, PACCAR Parts from February 2019 to July 2021.
Michael K. Walton (61)	Vice President and General Counsel since August 2020.
Harry M.B. Wolters (55)	Vice President of PACCAR and General Manager Global Powertrain & Electrification since August 2022; Vice President of PACCAR and President of DAF Trucks N.V. from September 2018 to July 2022.

Officers are appointed by the Board of Directors annually but may be appointed or removed on interim dates.

ITEM 1A. RISK FACTORS.

The following are significant risks which could have a material negative impact on the Company’s financial condition or results of operations.

Business and Industry Risks

Commercial Truck Market Demand is Variable. The Company’s business is highly sensitive to global and national economic conditions as well as economic conditions in the industries and markets it serves. Negative economic conditions and outlook can materially weaken demand for the Company’s equipment and services. The yearly demand for commercial vehicles may increase or decrease more than overall gross domestic product in markets the Company serves, which are principally North America and Europe. Demand for commercial vehicles may also be affected by the introduction of new vehicles and technologies by the Company or its competitors.

Competition and Prices. The Company operates in a highly competitive environment, which could adversely affect the Company’s sales and pricing. Financial results depend largely on the ability to develop, manufacture and market competitive products that profitably meet customer demand.

Production Costs, Capacity and Inflation. The Company’s products are exposed to variability in material and commodity costs. Commodity or component price increases, cost pressures due to inflation, significant shortages of component products and labor availability may adversely impact the Company’s financial results or use of its production capacity. Many of the Company’s suppliers also supply automotive manufacturers, and factors that adversely affect the automotive industry can also have adverse effects on these suppliers and the Company. Supplier delivery performance can be adversely affected if increased demand for these suppliers’ products exceeds their production capacity.

Unexpected events, including natural disasters, extreme weather events, or pandemics, may increase the Company’s cost of doing business or disrupt the Company’s or its suppliers’ operations. The likelihood or severity of these unexpected events may increase due to the effects of climate change.

Transition Risks Related to Climate Change. The Company has ongoing product development programs intended to address changing customer demand in the context of climate change and achieve its targeted reductions in emissions. These involve the continuing development of compliant clean diesel powertrains and the design, manufacture, and sale of alternative powertrain commercial vehicles (e.g., battery-electric, hybrid, hydrogen fuel cell, and hydrogen combustion). The pace of transition from diesel combustion to alternative powertrain commercial vehicles is highly uncertain and will be influenced by:

• the success of the Company’s research and development programs
• customer demand for alternative powertrain vehicles
• advancements in battery-electric, hybrid, hydrogen fuel cell, and hydrogen combustion technology
• the cost of batteries, hydrogen fuel cells and liquid hydrogen
• global regulations requiring the use of alternative powertrain vehicles and/or providing incentives to facilitate the transition to alternative powertrain commercial vehicles
• investments in energy and power infrastructure (e.g., renewable power supply, electric charging services, hydrogen supply and distribution) in key markets, as well as the associated utility costs
• the ability of the supply chain to deliver components, including commodities and raw materials that are unique to alternative powertrain commercial vehicles
• the success of new and existing competitors in developing and selling alternative powertrain commercial vehicles
• litigation or activism by certain regulators, shareholders, environmental groups or other stakeholders.

The Company believes its current strategies, programs and resources are sufficient to address changes in customer demand in the context of climate change and to meet its emissions reduction targets. If the Company is not successful in addressing the risks noted above, there may be a material adverse impact on its business, operations, and financial condition.

Liquidity Risks, Credit Ratings and Costs of Funds. Disruptions or volatility in global financial markets could limit the Company’s sources of liquidity, or the liquidity of customers, dealers and suppliers. A lowering of the Company’s credit ratings could increase the cost of borrowing and adversely affect access to capital markets. The Company’s Financial Services segment obtains funds for its operations from commercial paper, medium-term notes and bank debt. If the markets for commercial paper, medium-term notes and bank debt do not provide the necessary liquidity in the future, the Financial Services segment may experience increased costs or may have to limit its financing of retail and wholesale assets. This could result in a reduction of the number of vehicles the Company is able to produce and sell to customers.

The Financial Services Industry is Highly Competitive. The Company’s Financial Services segment competes with banks, other commercial finance companies and financial services firms which may have lower costs of borrowing, higher leverage or market share goals that result in a willingness to offer lower interest rates, which may lead to decreased margins, lower market share or both. A decline in the Company’s truck unit sales or a decrease in used truck prices are also factors which may affect the Company’s Financial Services segment.

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

Interest-Rate Risks. The Financial Services segment is subject to interest-rate risks, because increases in interest rates can reduce demand for its products, increase borrowing costs and potentially reduce interest margins. PFS uses derivative contracts to match the interest-rate characteristics of its debt to the interest-rate characteristics of its finance receivables in order to mitigate the risk of changing interest rates.

Information Technology, Cybersecurity and AI. The Company relies on information technology systems and networks, some of which are managed by third parties, to process, transmit and store electronic information, and to manage or support a variety of its business processes and activities. Some of the Company’s products include telematics which provide over-the-air software updates, advanced fleet management tools and real-time data on driver and vehicle performance. These computer systems and networks may be subject to disruptions during the process of upgrading or replacing software, databases or components; power outages; hardware failures; computer viruses/malware; or outside parties attempting to disrupt the Company’s business or gain unauthorized access to the Company’s electronic data.

The Company maintains a cybersecurity insurance policy and continues to invest in protections to guard against such events. Despite these safeguards, there remains a risk of system disruptions, unauthorized access and data loss. If the Company’s computer systems were to be damaged, disrupted or breached, it could impact data availability and integrity, result in a theft of the Company’s intellectual property or lead to unauthorized disclosure of confidential information of the Company’s customers, suppliers and employees. Security breaches could also result in a violation of U.S. and international privacy and other laws and subject the Company to various litigations and governmental proceedings. These events could have an adverse impact on the Company’s results of operations and financial condition, damage its reputation, disrupt operations and negatively impact competitiveness in the marketplace.

The Company is deploying AI tools to reduce operational costs and enhance performance for the Company and its customers, including the use of AI in its predictive analytics technology to forecast and implement vehicle service parameters to improve vehicle uptime. The Company's business, financial condition and result of operations may eventually be adversely affected if it fails to integrate these rapidly developing technologies in a timely, cost-effective, compliant and responsible manner.

Political, Regulatory and Economic Risks

Multinational Operations. The Company’s global operations are exposed to political, economic and other risks and events beyond its control in the countries in which the Company operates. The Company may be adversely affected by political instabilities, fuel shortages or interruptions in utility or transportation systems, natural calamities, recessions or slower economic growth, inflation, epidemics and pandemics, wars, geopolitical tensions and conflicts, terrorism and labor strikes. Changes in government monetary or fiscal policies and international trade policies, including tariffs, may impact demand for the Company’s products, financial results and competitive position. PACCAR’s global operations are subject to extensive trade, competition and anti-corruption laws and regulations that could impose significant compliance costs.

Environmental Regulations. The Company’s operations are subject to environmental laws and regulations that impose significant compliance costs. The Company could experience higher research and development and manufacturing costs due to changes in government requirements for its products, including changes in emissions, fuel, greenhouse gas or other regulations.

Emissions Requirements and Reduction Targets. PACCAR’s operations and products are subject to extensive statutory and regulatory requirements governing greenhouse gas and non-greenhouse gas emissions. These include standards imposed by the U.S. Environmental Protection Agency (EPA), the European Union, U.S. state regulatory agencies (such as the California Air Resources Board), regulatory agencies in other international markets where the Company operates, and international accords. The primary laws and regulations are the EPA’s Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium and Heavy-Duty Engines and Vehicles, EPA’s Low NOx Rule, the Regulation of the European Parliament and of the Council on the Monitoring and Reporting of CO2 Emissions from Fuel Consumption of New Heavy-Duty Vehicles, and the Heavy-Duty Omnibus Regulation, Emergency Rulemaking and, subject to pending litigation, the Advanced Clean Truck (ACT) regulation of the California Air Resources Board (CARB). The EU regulations have set CO2 emission reduction targets and require a significant portion of vehicles sold to be zero or near zero emission. Not meeting these targets would result in significant fines by the EU Commission. California's ACT regulation, which has been adopted by several states, requires an increasing percentage of medium- and heavy-duty trucks sold into the state to be zero emission. CARB's authority to enact the ACT regulations has been revoked by the U.S. Congress and President; however, the revocation, is currently being challenged and the outcome is uncertain.

The Company’s product planning is aligned with these statutory and regulatory requirements. Even without legislation to reduce greenhouse gas emissions, PACCAR expects to continue to significantly invest in technologies to improve fuel efficiency for its customers, which would further reduce greenhouse gas emissions.

The Company continually monitors developments in emissions and climate change-related laws and regulations in the markets in which the Company conducts business, and expects that climate change-related laws, regulations, and international accords will continue to evolve. PACCAR cannot reasonably predict whether future laws, regulations, and international accords could materially increase its environmental compliance costs, alter its product development strategy, or impact its business, financial condition, or results of operations.

Recalls, Litigation, Product Liability and Regulatory. The Company’s products are subject to recall for environmental, performance and safety-related issues. Product recalls, lawsuits, regulatory actions or increases in the reserves the Company establishes for contingencies may increase the Company’s costs and lower profits. Due to the international nature of the Company’s business, some products are also subject to international trade regulations, including customs and import/export related laws and regulations, government embargoes and sanctions prohibiting sales to specific persons or countries, as well as anti-corruption laws. The Company’s telematics depend on cellular frequency allocations regulated by government agencies and collected data is subject to various privacy laws and government regulations. The Company’s reputation and its brand names are valuable assets, and claims or regulatory actions, even if unsuccessful or without merit, could adversely affect the Company’s reputation and brand images because of adverse publicity.

Currency Exchange and Translation. The Company’s consolidated financial results are reported in U.S. dollars, while significant operations are denominated in the currencies of other countries. Currency exchange rate fluctuations can affect the Company’s assets, liabilities and results of operations through both translation and transaction risk, as reported in the Company’s financial statements. The Company uses certain derivative financial instruments and localized production of its products to reduce, but not eliminate, the effects of foreign currency exchange rate fluctuations.

Accounting Estimates. In the preparation of the Company’s financial statements in accordance with U.S. generally accepted accounting principles, management uses estimates and makes judgments and assumptions that affect asset and liability values and the amounts reported as income and expense during the periods presented. Certain of these estimates, judgments and assumptions, such as residual values on operating leases, the allowance for credit losses and product warranty are particularly sensitive. If actual results are different from estimates used by management, they may have a material impact on the financial statements. For additional disclosures regarding accounting estimates, see “Critical Accounting Policies” under Item 7 of this Form 10-K.

Taxes. Changes in statutory income tax rates in the countries in which the Company operates impact the Company’s effective tax rate. Changes to other taxes or the adoption of other new tax legislation could affect the Company’s provision for income taxes and related tax assets and liabilities.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 1C. CYBERSECURITY.

The Company maintains a comprehensive cybersecurity management and governance program. The Company’s information security management system is based upon the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF). The Company engages internal and third-party auditors and other professional parties when necessary, as part of its cybersecurity management program. The Company conducts penetration and compromise assessment tests, implements detection and prevention tools, monitors cyber events and has active disaster recovery plans. For third-party IT services, the Company conducts an architectural, privacy and security analysis of their solution. If any gaps are identified, the third-party remediates or mitigates the risk to an acceptable level. The Company simulates potential cyber-attacks and performs incident responses to test preparedness. These exercises are used to train and update the Company’s Incident Response plan, including any gaps identified. The Company conducts yearly information security training for employees and conducts ongoing phishing tests.

The Company’s Security Risk Council, including the Chief Information Security Officer, meets regularly to cover risks, plans and updates to the security program. It briefs the Board of Directors and/or the Audit Committee of the Board of Directors on technology and information security matters. Management and the Board of Directors also receive periodic updates on the status of cybersecurity investments to guard against such events. In the event of a security breach, the Company’s Security Risk Council evaluates its significance and briefs the Board on the event.

The Company has not experienced any notable security incidents that would have a material impact on the results of operations and financial condition of the Company. Some dealers and suppliers have reported they have experienced cyberattacks and those have not caused any material impact to the Company.

ITEM 2. PROPERTIES.

The Company and its subsidiaries own and operate manufacturing plants in four U.S. states, three countries in Europe, and in Australia, Brasil, Canada and Mexico. The Company also has 21 parts distribution centers, many sales and service offices, and finance and administrative offices which are operated in owned or leased premises in these and other locations, including an office in India. Facilities for product testing and research and development are located in the state of Washington and the Netherlands. The Company also has an innovation center in Sunnyvale, California. The Company’s corporate headquarters is located in owned premises in Bellevue, Washington. The Company considers all of the properties used by its businesses to be suitable for their intended purposes.

The Company invests in facilities, equipment and processes to provide manufacturing and warehouse capacity to meet its customers’ needs and improve operating performance.

The following summarizes the number of the Company’s manufacturing plants and parts distribution centers by geographical location within indicated industry segments:

	U.S.		Canada		Australia		Mexico		Europe		Central and <br>So. America
Truck		4		1		1		1		3		1
Parts		7		3		2		1		5		3

ITEM 3. LEGAL PROCEEDINGS.

Refer to Note L – “Commitments and Contingencies” in the Notes to Consolidated Financial Statements (Part II, Item 8) for discussion on litigation matters, which is incorporated by reference herein.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

Stockholder Return Performance Graph

The following line graph compares the yearly percentage change in the cumulative total stockholder return on the Company’s common stock, to the cumulative total return of the Standard & Poor’s Composite 500 Stock Index and the return of the industry peer group of companies identified below (the “Peer Group Index”) for the last five fiscal years ended December 31, 2025. The Peer Group Index includes AGCO Corporation, Caterpillar Inc., Cummins Inc., Daimler Truck Holdings AG (effective January 1, 2022), Deere & Company, Eaton Corporation, Iveco Group N.V. (effective January 1, 2022), Oshkosh Corporation, Terex Corporation, TRATON SE and AB Volvo. Standard & Poor’s has calculated a return for each company in the Peer Group Index weighted according to its respective capitalization at the beginning of each period with dividends reinvested on a monthly basis. Management believes that the identified companies and methodology used in the graph for the Peer Group Index provide a better comparison than other indices available. The comparison assumes that $100 was invested December 31, 2020, in the Company’s common stock and in the stated indices and assumes reinvestment of dividends.

	2020		2021		2022		2023		2024		2025
PACCAR Inc		100		105.63		123.58		191.56		212.27		229.33
S&P 500 Index		100		128.71		105.40		133.10		166.40		196.16
Peer Group Index		100		121.88		132.86		160.50		195.23		248.17

• Use of Proceeds from Registered Securities.

Not applicable.

• Purchases of Equity Securities by the Issuer and Affiliated Purchasers.

On December 4, 2018, PACCAR’s Board of Directors approved the repurchase of up to $500.0 million of the Company’s outstanding common stock. As of December 31, 2025, the Company has repurchased $128.4 million of shares under this plan. There were no repurchases made during the fourth quarter of 2025.

ITEM 6. [Reserved]

ITEM 7. 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 the U.S. and Canada, trucks are sold under the Kenworth and Peterbilt nameplates, in Europe, under the DAF nameplate and in Mexico, 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 derives its earnings primarily from financing or leasing PACCAR products in North America, Europe, Australia and South America.

2025 Financial Highlights

• Worldwide net sales and revenues were $28.44 billion in 2025 compared to $33.66 billion in 2024, primarily due to lower truck revenues, partially offset by higher parts and financial services revenues.
• Truck sales were $19.37 billion in 2025 compared to $24.84 billion in 2024 due to lower truck deliveries in all major markets.
• Parts sales were $6.87 billion in 2025 compared to $6.67 billion in 2024, reflecting higher sales in the U.S. and Canada and Europe.
• Financial Services revenues were $2.21 billion in 2025 compared to $2.10 billion in 2024, primarily due to higher interest income driven by retail portfolio growth and higher portfolio yields.
• In 2025, PACCAR earned net income for the 87th consecutive year. Net income was $2.38 billion ($4.51 per diluted share) in 2025 compared to $4.16 billion ($7.90 per diluted share) in 2024.
• Adjusted net income (non-GAAP), excluding a $264.5 million after-tax charge related to civil litigation in Europe, was $2.64 billion ($5.01 per diluted share). After-tax return on beginning equity (ROE) was 13.6% in 2025, which includes the $264.5 million after-tax charge related to civil litigation in Europe in the first quarter of this year. Excluding the after-tax charge, adjusted ROE (non-GAAP) was 15.1%. This compares to an ROE of 26.2% in 2024. See Reconciliation of GAAP to Non-GAAP Financial Measures on page 31.
• Capital investments were $728.5 million in 2025 compared to $795.8 million in 2024.
• Research and development (R&D) expenses were $445.5 million in 2025 compared to $452.9 million in 2024.

Kenworth constructed a 46,000 square-foot robotic chassis paint facility in Chillicothe, Ohio. PACCAR also completed a new $35 million, 50,000 square-foot engine remanufacturing facility and is enhancing its existing engine factory in Columbus, Mississippi. PACCAR is also enhancing its other engine facility in the Netherlands. PACCAR opened a new 180,000 square-foot Parts Distribution Center (PDC) in Calgary, Canada, to enhance parts delivery to dealers and customers in the region.

The PACCAR Financial Services (PFS) group of companies has operations covering four continents and 26 countries. The global breadth of PFS and its rigorous credit application process support a portfolio of loans and leases with total assets of $22.80 billion. PFS issued $3.12 billion in medium-term notes during 2025 to support new business volume and market share growth and repay maturing debt.

Truck Outlook

Truck industry heavy-duty retail sales in the U.S. and Canada in 2026 are expected to be 230,000 to 270,000 units compared to 232,800 in 2025. In Europe, the 2026 truck industry registrations for over 16-tonne vehicles are expected to be 280,000 to 320,000 units compared to 297,000 in 2025. In South America, heavy-duty truck industry registrations in 2026 are projected to be 100,000 to 110,000 compared to 115,000 in 2025.

The Company's truck and parts products have been negatively affected since March 2025 by import tariffs imposed by the U.S. government and actions taken by other countries. While the Company has taken mitigating actions to reduce the impact, the ongoing impact from import tariffs on truck order intake and profit margins remains unfavorable. The Company's North American truck factories are optimally located to operate under the new Section 232 truck tariffs that began in November 2025. The Company’s tariff exposure is minimized by producing trucks locally for the United States, Canada and Mexico. The Company manufactures its trucks for U.S. customers in its Ohio, Texas, and Washington state factories.

The recent U.S. Environmental Protection Agency announcement reaffirmed the EPA27 NOx limit and could eliminate changes to extended warranty requirements and useful life requirements on new emissions systems. The Company's results could be impacted by changes in tariff policy, including the expected U.S. Supreme Court ruling on the International Emergency Economic Power Acts (IEEPA) tariffs, emissions regulations and improving freight fundamentals.

Parts Outlook

In 2026, PACCAR Parts sales are expected to increase 4-8% compared to 2025, depending on the economic conditions.

Financial Services Outlook

In 2026, average earning assets are expected to be comparable to 2025. The used truck market has been improving, which is reflected in PFS' quarterly results this year. If freight transportation conditions decline due to a weaker economy, then past due accounts, truck repossessions and credit losses would likely increase from the current levels and new business volume and average earning assets would likely decline.

Capital Investments and R&D Outlook

PACCAR's excellent long-term profits, strong balance sheet and consistent focus on quality have enabled the Company to invest $9.2 billion in new and expanded facilities, innovative products and new technologies during the past decade. Capital investments in 2026 are expected to be $725 to $775 million, and R&D is expected to be $450 to $500 million. PACCAR is investing in next generation clean diesel and alternative powertrains, integrated connected vehicle services, flexible manufacturing capabilities and autonomous and advanced driver assistance systems that create value for customers. The Company is embedding artificial intelligence across its business to drive innovation, profitable growth and enhanced performance for the Company's customers. In addition to the capital and R&D investments, the Company expects to continue investing in its U.S.-based battery joint venture, Amplify Cell Technologies.

See the Forward-Looking Statements section of Management’s Discussion and Analysis for factors that may affect these outlooks.

RESULTS OF OPERATIONS:

The Company’s results of operations for the years ended December 31, 2025 and 2024 are presented below. For information on the year ended December 31, 2023, refer to Part II, Item 7 in the 2024 Annual Report on Form 10-K.

( in millions, except per share amounts)
Year Ended December 31,			2024
Net sales and revenues:
Truck	19,365.3		$	24,838.4
Parts	6,873.7			6,666.4
Other	(3.9	)		59.5
Truck, Parts and Other	26,235.1			31,564.3
Financial Services	2,209.7			2,099.5
	28,444.8		$	33,663.8
Income before income taxes:
Truck	870.8		$	2,852.6
Parts	1,668.0			1,704.5
Other*	(346.8	)		13.5
Truck, Parts and Other	2,192.0			4,570.6
Financial Services	485.4			435.6
Investment income	346.1			394.7
Income taxes	(647.7	)		(1,238.9	)
Net income	2,375.8		$	4,162.0
Diluted earnings per share	4.51		$	7.90
After-tax return on revenues	8.4	%		12.4	%

All values are in US Dollars.

* In 2025, Other includes a $350.0 million charge related to civil litigation in Europe (EC-related claims) in the first quarter 2025. In 2024, Other includes a $14.0 million gain on sale of the winch business.

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 impact of 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 and impact from tariffs, fuel prices, freight tonnage and economic conditions affecting the Company’s results of operations.

2025 Compared to 2024:

Truck

The Company’s Truck segment accounted for 68% of revenues in 2025 compared to 74% in 2024.

The Company’s new truck deliveries are summarized below:

Year Ended December 31,	2025	2024	% CHANGE
U.S. and Canada	77,300	106,400		(27	)
Europe	43,800	45,400		(4	)
Mexico, South America, Australia and other	23,100	33,500		(31	)
Total units	144,200	185,300		(22	)

Worldwide new truck deliveries decreased in 2025 compared to 2024, reflecting lower retail demand in all major markets.

Market share data discussed below is provided by third-party sources and is measured by either retail sales or registrations for the Company’s dealer network as a percentage of total retail sales or registrations depending on the geographic market. In the U.S. and Canada, market share is based on retail sales. In Europe, market share is based primarily on registrations.

In 2025, industry retail sales in the heavy-duty market in the U.S. and Canada was 232,800 units compared to 268,100 units in 2024. The Company’s heavy-duty truck retail market share was 29.9% in 2025 compared to 30.7% in 2024. The medium-duty market was 88,400 units in 2025 compared to 110,400 units in 2024. The Company’s medium-duty market share was 15.9% in 2025 compared to 18.0% in 2024.

The over 16-tonne truck market in Europe in 2025 decreased to 297,000 units from 316,100 units in 2024, and DAF’s market share was 13.5% in 2025 compared to 14.4% in 2024. The 6 to 16-tonne market was 40,900 units in 2025 and 50,900 units in 2024. DAF’s market share in the 6 to 16-tonne market in 2025 was 9.7% compared to 9.5% in 2024.

The over 16-tonne truck market in Brasil in 2025 was 86,700 units compared to 97,700 units in 2024, and DAF Brasil's market share was 8.6% in 2025 compared to 9.9% in 2024.

The Company’s worldwide truck net sales and revenues are summarized below:

( in millions)
Year Ended December 31,	2025			2024		% CHANGE
Truck net sales and revenues:
U.S. and Canada	11,354.1		$	15,386.1			(26	)
Europe	4,971.4			4,998.2			(1	)
Mexico, South America, Australia and other	3,039.8			4,454.1			(32	)
	19,365.3		$	24,838.4			(22	)
Truck income before income taxes	870.8		$	2,852.6			(69	)
Pre-tax return on revenues	4.5	%		11.5	%

All values are in US Dollars.

The Company’s worldwide truck net sales and revenues decreased to $19.37 billion in 2025 from $24.84 billion in 2024 primarily due to lower truck unit deliveries in all major markets from lower retail demand. Truck segment income before income taxes and pre-tax return on revenues decreased primarily due to lower truck unit deliveries in all major markets from lower retail demand, reflecting economic conditions as well as higher tariff costs resulting from current trade policies primarily in the U.S.

The major factors for the Truck segment changes in net sales and revenues, cost of sales and revenues and gross margin between 2025 and 2024 are as follows:

	NET			COST OF
	SALES AND			SALES AND			GROSS
($ in millions)	REVENUES			REVENUES			MARGIN
2024	$	24,838.4		$	21,389.8		$	3,448.6
(Decrease) increase
Truck sales volume		(5,333.6	)		(4,489.9	)		(843.7	)
Average truck sales prices		(306.2	)					(306.2	)
Average material, labor and other direct costs					962.2			(962.2	)
Factory overhead and other indirect costs					(188.6	)		188.6
Extended warranties, operating leases and other		41.2			80.0			(38.8	)
Currency translation		125.5			151.3			(25.8	)
Total decrease		(5,473.1	)		(3,485.0	)		(1,988.1	)
2025	$	19,365.3		$	17,904.8		$	1,460.5

• Truck sales volume decreased revenues by $5,333.6 million and costs by $4,489.9 million, primarily reflecting lower truck deliveries in all major markets.

• Average truck sales prices decreased sales by $306.2 million, primarily due to lower price realization in the U.S. and Canada and Europe, reflecting an increased competitive environment, partially offset by tariff price increases in the U.S.

• Average cost per truck increased cost of sales by $962.2 million, primarily reflecting higher regulatory and other truck content, increased tariff costs and product support accruals.

• Factory overhead and other indirect costs decreased $188.6 million, primarily due to lower labor costs, maintenance costs and factory supplies from lower truck build rates.

• Extended warranties, operating leases and other increased revenues by $41.2 million primarily due to a higher portfolio of extended warranty and repair and maintenance (R&M) contracts and higher dealer support services. The increase in cost of sales of $80.0 million reflects the higher warranty and R&M contracts and higher used truck costs, primarily in Europe.

• The currency translation effect on sales and cost of sales primarily reflects an increase in the value of the euro relative to the U.S. dollar, partially offset by the decrease in value of the Brazilian real, Canadian dollar and Australian dollar relative to the U.S. dollar.

• Truck gross margin was 7.5% in 2025 compared to 13.9% in 2024 due to the factors noted above.

Truck SG&A expenses in 2025 decreased to $237.7 million from $254.2 million in 2024. The decrease was primarily due to lower salaries and related expenses, lower professional fees and lower travel and entertainment expenses, partially offset by higher sales and marketing expenses. As a percentage of sales, Truck SG&A was 1.2% in 2025 and 1.0% in 2024.

Parts

The Company’s Parts segment accounted for 24% of revenues in 2025 compared to 20% in 2024.

( in millions)
Year Ended December 31,	2025			2024		% CHANGE
Parts net sales and revenues:
U.S. and Canada	4,748.8		$	4,547.5			4
Europe	1,442.0			1,424.3			1
Mexico, South America, Australia and other	682.9			694.6			(2	)
	6,873.7		$	6,666.4			3
Parts income before income taxes	1,668.0		$	1,704.5			(2	)
Pre-tax return on revenues	24.3	%		25.6	%

All values are in US Dollars.

The Company’s worldwide parts net sales and revenues increased to $6.87 billion in 2025 from $6.67 billion in 2024 primarily due to higher sales in the U.S. and Canada and Europe.

The major factors for the Parts segment changes in net sales and revenues, cost of sales and revenues and gross margin between 2025 and 2024 are as follows:

	NET			COST OF
	SALES AND			SALES AND			GROSS
($ in millions)	REVENUES			REVENUES			MARGIN
2024	$	6,666.4		$	4,604.4		$	2,062.0
(Decrease) increase
Aftermarket parts volume		(143.1	)		(69.6	)		(73.5	)
Average aftermarket parts sales prices		307.3						307.3
Average aftermarket parts direct costs					213.7			(213.7	)
Warehouse and other indirect costs					46.1			(46.1	)
Currency translation		43.1			24.1			19.0
Total increase (decrease)		207.3			214.3			(7.0	)
2025	$	6,873.7		$	4,818.7		$	2,055.0

• Aftermarket parts sales volume decreased by $143.1 million and related cost of sales decreased by $69.6 million. The decrease in parts sales and costs reflects lower sales volume, primarily Europe and Mexico.
• Average aftermarket parts sales prices increased sales by $307.3 million, primarily due to price realization in the U.S. and Canada as well as tariff cost increases in the U.S.
• Average aftermarket parts direct costs increased $213.7 million due to higher material costs and higher tariff costs, primarily in the U.S.
• Warehouse and other indirect costs increased $46.1 million, primarily due to higher indirect costs, including depreciation expense.
• The currency translation effect on sales and cost of sales primarily reflects an increase in the value of the euro relative to the U.S. dollar, partially offset by a decrease in the value of the Australian dollar and Canadian dollar relative to the U.S. dollar.
• Parts gross margin was 29.9% in 2025 compared to 30.9% in 2024 due to the factors noted above.

PFS revenues increased to $2.21 billion in 2025 from $2.10 billion in 2024. The increase was primarily driven by portfolio growth in all markets except Europe. The effects of currency translation decreased PFS revenues by $9.9 million in 2025, primarily due to a decrease in the value of the Mexican peso and Brazilian real relative to the U.S. dollar, partially offset by an increase in the value of the euro relative to the U.S. dollar.

PFS income before income taxes increased to $485.4 million in 2025 from $435.6 million in 2024, due to higher finance margins from a higher loan and finance lease portfolio, and higher operating lease margins from operating lease portfolio, partially offset by a higher provision for losses on receivables. The effect of currency translation decreased PFS income before income taxes by $13.2 million in 2025, primarily due to a decrease in the value of the Mexican peso and Brazilian real relative to the U.S. dollar.

Included in Financial Services, Other assets on the Company’s Consolidated Balance Sheets are used trucks held for sale, net of impairments, of $389.4 million at December 31, 2025 and $396.5 million at December 31, 2024. These trucks are primarily units returned from matured operating leases in the ordinary course of business, and also include trucks acquired from repossessions, through acquisitions of used trucks in trades related to new truck sales and trucks returned from residual value guarantees (RVGs).

The Company recognized losses on used trucks, excluding repossessions, of $38.8 million in 2025 compared to $59.0 million in 2024, including $35.5 million of losses on multiple unit transactions in 2025 compared to $40.3 million in 2024. Used truck losses related to repossessions, which are recognized as credit losses, were $11.5 million in 2025 and $9.8 million in 2024.

The major factors for the changes in interest and fees, interest and other borrowing expenses and finance margin between 2025 and 2024 are outlined below:

($ in millions)	INTEREST <br>AND FEES			INTEREST <br>AND OTHER <br>BORROWING <br>EXPENSES			FINANCE<br>MARGIN
2024	$	1,295.9		$	710.8		$	585.1
Increase (decrease)
Average finance receivables		120.3						120.3
Average debt balances					48.5			(48.5	)
Yields		28.9						28.9
Borrowing rates					31.7			(31.7	)
Currency translation and other		(16.4	)		(8.0	)		(8.4	)
Total increase		132.8			72.2			60.6
2025	$	1,428.7		$	783.0		$	645.7

• Average finance receivables increased $1.60 billion (excluding foreign exchange effects), increasing interest and fees by $120.3 million in 2025, primarily due to higher average loan, finance lease and dealer wholesale balances in the U.S. and Canada, Brasil and Mexico.
• Average debt balances increased $879.3 million (excluding foreign exchange effects), increasing interest and other borrowing costs by $48.5 million in 2025, reflecting higher funding requirements for portfolio growth in loans, finance leases and dealer wholesale receivables.
• Higher portfolio yields (7.4% in 2025 compared to 7.3% in 2024) increased interest and fees by $28.9 million. The higher portfolio yields were primarily due to higher market rates on new portfolio assets, primarily in the U.S. and Brasil.
• Higher borrowing rates (5.1% in 2025 compared to 4.7% in 2024) increased interest and other borrowing expenses by $31.7 million and were primarily due to higher debt market rates in all markets except Canada.
• The currency translation effects reflect a decrease in the value of foreign currencies relative to the U.S. dollar, primarily the Mexican peso and Brazilian real.

The following table summarizes operating lease, rental and other revenues and depreciation and other expenses:

( in millions)
Year Ended December 31,	2025		2024
Operating lease and rental revenues	638.4	$	677.4
Used truck sales	106.8		95.1
Insurance, franchise and other revenues	35.8		31.1
Operating lease, rental and other revenues	781.0	$	803.6
Depreciation of operating lease equipment	470.0	$	544.7
Vehicle operating expenses	71.3		67.8
Cost of used truck sales	109.3		98.1
Insurance, franchise and other expenses	7.0		7.9
Depreciation and other expenses	657.6	$	718.5

All values are in US Dollars.

The major factors for the changes in operating lease, rental and other revenues, depreciation and other expenses and lease margin between 2025 and 2024 are outlined below:

($ in millions)	OPERATING LEASE,<br>RENTAL AND <br>OTHER REVENUES			DEPRECIATION <br>AND OTHER EXPENSES			LEASE<br>MARGIN
2024	$	803.6		$	718.5		$	85.1
Increase (decrease)
Used truck sales		6.8			6.3			.5
Results on returned lease assets					(18.5	)		18.5
Average operating lease assets		(106.2	)		(87.9	)		(18.3	)
Revenue and cost per asset		65.9			28.5			37.4
Currency translation and other		10.9			10.7			.2
Total (decrease) increase		(22.6	)		(60.9	)		38.3
2025	$	781.0		$	657.6		$	123.4

• Used truck sales from used trucks received on trade increased revenues by $6.8 million and increased related depreciation and other expenses by $6.3 million, primarily reflecting improved used truck market prices.
• Results on returned lease assets decreased depreciation and other expenses by $18.5 million, primarily due to lower losses on sale of returned lease units in 2025 and lower impairment on existing used truck inventories.
• Average operating lease assets decreased $221.0 million (excluding foreign exchange effects), which decreased revenues by $106.2 million and related depreciation and other expenses by $87.9 million.
• Revenue per asset increased $65.9 million primarily due to higher average truck values financed. Cost per asset increased $28.5 million due to higher depreciation and operating expenses, mainly in Europe and Mexico.
• The currency translation effects reflect an increase in the value of foreign currencies relative to the U.S. dollar, primarily the euro.

Financial Services SG&A expense of $159.2 million in 2025 was comparable to $159.0 million in 2024. As a percentage of average earning assets, Financial Services SG&A was .7% in 2025 and .8% in 2024.

The following table summarizes the provision for losses on receivables and net charge-offs:

	2025				2024
($ in millions)	PROVISION FOR<br>LOSSES ON<br>RECEIVABLES		NET<br>CHARGE-<br>OFFS		PROVISION FOR<br>LOSSES ON<br>RECEIVABLES		NET<br>CHARGE-<br>OFFS
U.S. and Canada	$	57.4	$	48.2	$	42.5	$	29.4
Europe		9.1		10.3		16.8		15.8
Mexico, Australia, Brasil and other		58.0		26.5		16.3		8.3
	$	124.5	$	85.0	$	75.6	$	53.5

The provision for losses on receivables increased to $124.5 million in 2025 from $75.6 million in 2024, primarily due to a higher provision in Brasil and the U.S., reflecting an increase in 30+ days past due accounts and growth in retail portfolios. Net charge-offs increased to $85.0 million in 2025 from $53.5 million in 2024. The increased charge-offs in the U.S. and Canada were driven by a soft truckload market and included several large fleet customers, which were provisioned for previously. Higher charge-offs in Brasil reflected a decline in market conditions, including elevated interest rates.

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.

The post-modification balances of accounts modified during the years ended December 31, 2025 and 2024 are summarized below:

	2025					2024
($ in millions)	AMORTIZED<br>COST BASIS		% OF TOTAL<br>PORTFOLIO*			AMORTIZED<br>COST BASIS		% OF TOTAL<br>PORTFOLIO*
Commercial	$	428.2		2.8	%	$	441.3		3.1	%
Insignificant delay		395.9		2.5	%		223.0		1.5	%
Credit		351.2		2.2	%		330.2		2.3	%
	$	1,175.3		7.5	%	$	994.5		6.9	%

* Amortized cost basis immediately after modification as a percentage of the year-end retail portfolio balance.

Modification activity increased to $1,175.3 million in 2025 from $994.5 million in 2024. The decrease in modifications for commercial reasons primarily reflects lower volumes of refinancing, primarily in the U.S. The increase related to Insignificant delay modifications reflects an increase in customers requesting payment relief for up to three months, primarily in the U.S. These customers were predominantly not past due at the time of modification and at December 31, 2025. The increase in Credit modifications reflects higher volumes of contract modifications for customers experiencing financial difficulties in Brasil and Mexico due to weaker market conditions, partially offset by lower contract modification volumes in the U.S.

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

At December 31,	2025		2024
Percentage of retail loan and lease accounts 30+ days past due:
U.S. and Canada	1.8	%	1.2	%
Europe	1.0	%	.8	%
Mexico, Australia, Brasil and other	4.6	%	2.0	%
Worldwide	2.4	%	1.3	%

Accounts 30+ days past due increased to 2.4% at December 31, 2025 from 1.3% at December 31, 2024, primarily due to higher past due accounts in Brasil, the U.S. and Mexico. The increased percentage of past due accounts in Brasil and Mexico reflected a decline in market conditions, including elevated interest rates in Brasil. The increased percentage of past due accounts in the U.S. reflected a soft truckload market and included three large fleet customers. 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 $72.9 million and $40.7 million of accounts worldwide during the fourth quarter of 2025 and the fourth quarter of 2024, respectively, which 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:

At December 31,	2025		2024
Pro forma percentage of retail loan and lease accounts 30+ days past due:
U.S. and Canada	2.1	%	1.4	%
Europe	1.1	%	.8	%
Mexico, Australia, Brasil and other	5.8	%	2.6	%
Worldwide	2.8	%	1.6	%

The Company typically requires customers to pay current before granting modifications. The higher pro forma percentage of retail loan and lease accounts 30+ days past due in the U.S. and Canada at December 31, 2025 was primarily due to a modification with an insignificant term extension granted to two large fleet customers in the U.S. The higher pro forma percentage of retail loan and lease accounts 30+ days past due in Mexico, Australia, Brasil and other was primarily due to accounts modified in Brasil and Mexico.

A contract modification that improves the past due status reduces the probability of default. The effect of modifications is included in the Company’s historical loss information used to determine the allowance for credit losses. Modifications of accounts in prior quarters that were more than 30 days past due at the time of modification are included in past dues if they were not performing under the modified terms at December 31, 2025 and 2024. For certain modifications to customers experiencing financial difficulties that are at-risk at December 31, 2025 and 2024, the allowance for credit losses is based on the value of the underlying collateral or a discounted cash flow analysis.

The Company’s annualized pre-tax return on average total assets for Financial Services was 2.1% in 2025 compared to 2.0% in 2024.

Other

Included in Other is sales, income and expenses not attributable to a reportable segment, as well as the Company’s industrial winch manufacturing business through October 31, 2024. Other also includes non-service cost components of pension expense and certain corporate income and expenses. Other sales represent less than 1% of consolidated net sales and revenues for 2025 and 2024. Other SG&A decreased to $81.1 million in 2025 from $84.4 million in 2024, primarily due to lower salaries and related expenses.

Other loss before tax was $346.8 million in 2025 compared to income of $13.5 million in 2024, primarily due to the EC-related charge in the first quarter 2025 which is discussed in Note L of the consolidated financial statements.

Investment income decreased to $346.1 million in 2025 from $394.7 million in 2024, primarily due to lower investment yields from lower market interest rates in the U.S. and Europe, partially offset by an increase in average investment balance, primarily in the U.S.

Income Taxes

In 2025, the effective tax rate was 21.4% compared to 22.9% in 2024, primarily reflecting higher U.S. federal R&D tax credits. Excluding the $350.0 million EC charge and its associated tax benefit, the adjusted 2025 effective tax rate (non-GAAP) was 21.7%.

( in millions)
Year Ended December 31,	2025			2024
Domestic income before taxes	2,095.6		$	3,525.1
Foreign income before taxes	927.9			1,875.8
Total income before taxes	3,023.5		$	5,400.9
Domestic pre-tax return on revenues	13.3	%		18.5	%
Foreign pre-tax return on revenues	7.3	%		12.8	%
Total pre-tax return on revenues	10.6	%		16.0	%

All values are in US Dollars.

In 2025, domestic income before income taxes decreased primarily due to lower Truck operation results, which also reduced domestic pre-tax return on revenues. In 2025, foreign income before income taxes decreased due to lower Truck operation results, mainly Mexico and Brasil, and included the EC-related charge of $350.0 million in the first quarter 2025, which also reduced foreign pre-tax return on revenues. Total pre-tax return on revenues decreased, reflecting lower returns in Truck operations.

LIQUIDITY AND CAPITAL RESOURCES:

( in millions)
At December 31,	2025		2024
Cash and cash equivalents	6,307.9	$	7,060.8
Marketable securities	3,207.7		2,778.8
	9,515.6	$	9,839.6

All values are in US Dollars.

The Company’s total cash and marketable securities at December 31, 2025 decreased $324.0 million from the balances at December 31, 2024. Total cash and marketable securities are primarily intended to provide liquidity while preserving capital.

The change in cash and cash equivalents is summarized below:

( in millions)
Year Ended December 31,	2025		2024
Operating activities:
Net income	2,375.8		$	4,162.0
Net income items not affecting cash	1,345.7			939.5
Pension contributions	(24.5	)		(40.8	)
Changes in operating assets and liabilities, net	718.8			(419.8	)
Net cash provided by operating activities	4,415.8			4,640.9
Net cash used in investing activities	(2,267.2	)		(4,487.3	)
Net cash used in financing activities	(3,082.4	)		(123.1	)
Effect of exchange rate changes on cash and cash equivalents	180.9			(151.4	)
Net decrease in cash and cash equivalents	(752.9	)		(120.9	)
Cash and cash equivalents at beginning of period	7,060.8			7,181.7
Cash and cash equivalents at end of period	6,307.9		$	7,060.8

All values are in US Dollars.

Operating activities: Cash provided by operations decreased by $225.1 million to $4.42 billion in 2025 from $4.64 billion in 2024. The decreased operating cash flow reflects lower net income of $1,786.2 million, partially offset by $406.2 million higher cash provided from net income items not affecting cash, primarily deferred income taxes and the provision for losses on financial services receivables, and higher cash provided from net changes in operating assets and liabilities of $1,138.6 million. The net changes in operating assets and liabilities are mainly due to higher cash provided by wholesale receivables on new trucks in the Financial Services segment of $1,485.8 million and lower cash usage of $253.9 million for inventories, partially offset by decrease in accounts payable and accruals of $712.0 million.

Investing activities: Cash used in investing activities decreased by $2.22 billion to $2.27 billion in 2025 from $4.49 billion in 2024. The decrease in net cash used in investing activities primarily reflects lower net purchases of marketable securities of $628.2 million, lower originations of retail loans and finance leases of $551.8 million, lower net increase in wholesale receivables on equipment of $507.2 million and a decrease in acquisitions of equipment for operating leases of $263.3 million.

Financing activities: Cash used in financing activities was $3,082.4 million in 2025, $2,959.3 million higher than the $123.1 million cash used in 2024, reflecting lower net borrowing activity and slightly lower cash dividends. Cash used in net borrowing activities was $822.6 million in 2025 compared to cash provided by net borrowing activity of $2,118.0 million in 2024. The Company paid $2.27 billion in dividends in 2025 compared to $2.29 billion in 2024.

The effect of exchange rate changes on cash increased cash and cash equivalents by $180.9 million in 2025, reflecting an increase in the value of foreign currencies relative to the U.S. dollar, primarily the euro, the Australian dollar and Brazilian real. In 2024, the effect of exchange rate changes on cash decreased cash and cash equivalents by $151.4 million, reflecting a decrease in the value of foreign currencies relative to the U.S. dollar, primarily the euro, Mexican peso and Brazilian real.

The Company expects to continue paying dividends, although there is no assurance as to future dividends because they are dependent upon future earnings, capital requirements and financial conditions. Cash dividends declared for the last two years were as follows:

QUARTER		2025		2024
First	$	.33	$	.27
Second		.33		.30
Third		.33		.30
Fourth		.33		.30
Year-End Extra (paid in January of the following year)		1.40		3.00
Total dividends declared per share	$	2.72	$	4.17

Credit Lines and Other:

The Company has line of credit arrangements of $5.64 billion, of which $5.28 billion were unused at December 31, 2025. Included in these arrangements are $4.00 billion of committed bank facilities, of which $1.50 billion expires in June 2026, $1.25 billion expires in June 2028 and $1.25 billion expires in June 2030. The Company intends to extend or replace these credit facilities on or before expiration to maintain 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 committed bank facilities for the year ended December 31, 2025.

On December 4, 2018, PACCAR’s Board of Directors approved the repurchase of up to $500.0 million of the Company’s outstanding common stock without expiration. The objective of the repurchase plan is to return value to PACCAR shareholders. As of December 31, 2025, the Company has repurchased $128.4 million shares under this plan. There were no repurchases made during the fourth quarter of 2025.

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.

Investments for manufacturing property, plant and equipment in 2025 were $714.3 million compared to $787.3 million in 2024. Over the past decade, the Company’s combined investments in worldwide capital projects and R&D totaled $9.10 billion and have significantly increased the operating capacity and efficiency of its facilities and enhanced the quality and operating efficiency of the Company’s premium products.

Capital investments in 2026 are expected to be $725 to $775 million, and R&D is expected to be $450 to $500 million. PACCAR is investing in next generation clean diesel and alternative powertrains, electric battery cells, integrated connected vehicle services, flexible manufacturing capabilities, and autonomous and advanced driver assistance systems, that create value for customers. In addition to the capital and R&D investments, the Company expects to continue investing in its U.S.-based battery joint venture, Amplify Cell Technologies.

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.

In November 2024, the Company’s U.S. finance subsidiary, PACCAR Financial Corp. (PFC), filed a shelf registration under the Securities Act of 1933. In February 2026, the Company issued $400.0 million of medium-term notes under this registration. The total amount of medium-term notes outstanding for PFC as of December 31, 2025 was $7.70 billion. The registration expires in November 2027 and does not limit the principal amount of debt securities that may be issued during that period.

As of December 31, 2025, the Company’s European finance subsidiary, PACCAR Financial Europe, had €750.0 million available for issuance under a €2.50 billion medium-term note program listed on the Euro MTF Market of the Luxembourg Stock Exchange. This program renews annually and expires in May 2026.

In August 2021, PACCAR Financial Mexico registered a 10.00 billion Mexican peso program with the Comision Nacional Bancaria y de Valores to issue medium-term notes and commercial paper. The registration expires in August 2026 and limits the amount of commercial paper (up to one year) to 5.00 billion Mexican pesos. At December 31, 2025, 6.00 billion Mexican pesos were available for issuance.

In August 2018, the Company’s Australian subsidiary, PACCAR Financial Pty. Ltd. (PFPL Australia), established a medium-term note program. The program does not limit the principal amount of debt securities that may be issued under the program. The total amount of medium-term notes outstanding for PFPL Australia as of December 31, 2025 was 900.0 million Australian dollars.

In May 2021, the Company’s Canadian subsidiary, PACCAR Financial Ltd. (PFL Canada), established a medium-term note program. The program does not limit the principal amount of debt securities that may be issued under the program. There were no borrowings under this program as of December 31, 2025.

The Company’s Brazilian subsidiary, Banco PACCAR S.A., established a lending program in December 2021 with the local development bank, Banco Nacional de Desenvolvimento Economico e Social (BNDES), for qualified customers to receive preferential conditions and generally market interest rates. This program is limited to 2.51 billion Brazilian reais and has 1.03 billion Brazilian reais outstanding as of December 31, 2025. The Brazilian subsidiary also established a Letra Financeira (LF) program in May 2024 and the program does not limit the principal amount of debt securities that may be issued under the program. A total of 500.0 million Brazilian reais medium-term notes were outstanding as of December 31, 2025.

The Company believes its cash balances and investments, collections on existing finance receivables, committed bank facilities, 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. In the event of a decrease in the Company’s credit ratings or a disruption in the financial markets, the Company may not be able to refinance its maturing debt in the financial markets. In such circumstances, the Company would be exposed to liquidity risk to the degree that the timing of debt maturities differs from the timing of receivable collections from customers. The Company believes its various sources of liquidity, including committed bank facilities, would continue to provide it with sufficient funding resources to service its maturing debt obligations.

Commitments

The following summarizes the Company’s contractual cash commitments at December 31, 2025:

	MATURITY
($ in millions)	WITHIN 1<br>YEAR		1-3<br>YEARS		3-5<br>YEARS		MORE THAN<br>5 YEARS		TOTAL
Borrowings*	$	8,289.9	$	5,655.5	$	1,370.4	$	350.1	$	15,665.9
Interest on debt**		445.2		472.9		94.8		61.3		1,074.2
Purchase obligations		104.7		182.3		161.1		41.5		489.6
Lease liabilities		22.5		29.3		11.2		9.0		72.0
Other obligations		93.2		4.6		.5		6.9		105.2
	$	8,955.5	$	6,344.6	$	1,638.0	$	468.8	$	17,406.9

* Commercial paper included in borrowings is at par value.

** Interest on floating-rate debt is based on the applicable market rates at December 31, 2025.

Total cash commitments for borrowings and interest on term debt were $16.74 billion and were related to the Financial Services segment. As described in Note J of the consolidated financial statements, borrowings consist primarily of term notes and commercial paper issued by the Financial Services segment. The Company expects to fund its maturing Financial Services debt obligations principally from funds provided by collections from customers on loans and lease contracts, as well as from the proceeds of commercial paper and medium-term note borrowings. Purchase obligations are the Company’s contractual commitments to acquire future production inventory and capital equipment. Other obligations primarily include commitments for commodities.

The Company’s other commitments include the following at December 31, 2025:

	COMMITMENT EXPIRATION
($ in millions)	WITHIN 1<br>YEAR		1-3<br>YEARS		3-5<br>YEARS		MORE THAN<br>5 YEARS		TOTAL
Loan and lease commitments	$	812.4							$	812.4
Residual value guarantees		289.7	$	303.9	$	70.4	$	10.1		674.1
Letters of credit		9.8		4.3		.4		15.0		29.5
	$	1,111.9	$	308.2	$	70.8	$	25.1	$	1,516.0

Loan and lease commitments are for funding new retail loan and lease contracts. Residual value guarantees represent the Company’s commitment to acquire trucks at a guaranteed value if the customer decides to return the truck at a specified date in the future.

IMPACT OF ENVIRONMENTAL MATTERS:

The Company, its competitors and industry in general are subject to various domestic and foreign requirements relating to the environment and greenhouse gases. The statutory and regulatory requirements governing greenhouse gas and non-greenhouse gas emissions are included in Item 1A, “Risk Factors – Emissions Requirements and Reduction Targets.” The Company believes its policies, practices and procedures are designed to prevent unreasonable risk of environmental damage and that its handling, use and disposal of hazardous or toxic substances have been in accordance with environmental laws and regulations in effect at the time such use and disposal occurred.

The Company is involved in various stages of investigations and cleanup actions in different countries related to environmental matters. In certain of these matters, the Company has been designated as a “potentially responsible party” by domestic and foreign environmental agencies. The Company has accrued the estimated costs to investigate and complete cleanup actions where it is probable that the Company will incur such costs in the future. Expenditures related to environmental activities in the years ended December 31, 2025 and 2024 were $1.5 million and $4.4 million, respectively. While the timing and amount of the ultimate costs associated with future environmental cleanup cannot be determined, management expects that these matters will not have a significant effect on the Company’s consolidated cash flow, liquidity or financial condition.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES:

This Form 10-K includes “adjusted net income (non-GAAP)” and “adjusted net income per diluted share (non-GAAP)”, which are financial measures that are not in accordance with U.S. generally accepted accounting principles (“GAAP”), since they exclude a charge for EC-related claims. These measures differ from the most directly comparable measures calculated in accordance with GAAP and may not be comparable to similarly titled non-GAAP financial measures used by other companies. In addition, the Form 10-K includes the financial ratios noted below calculated on non-GAAP measures.

Adjustment for the EC-related claims relates to a pre-tax charge of $350.0 million ($264.5 million after-tax) for estimable total costs recorded in Interest and other expenses (income), net in the first quarter 2025.

The Company utilizes these non-GAAP measures to allow investors and management to evaluate operating trends by excluding a significant charge that is not representative of company performance.

Reconciliations from the most directly comparable GAAP measures to adjusted net income (non-GAAP) and adjusted net income per diluted shares (non-GAAP) are as follows:

($ in millions, except per share amounts)	Year Ended December 31, 2025
Net income	$	2,375.8
EC-related claims, net of taxes		264.5
Adjusted net income (non-GAAP)	$	2,640.3
Per diluted share
Net income	$	4.51
EC-related claims, net of taxes		.50
Adjusted net income (non-GAAP)	$	5.01
After-tax return on revenues		8.4	%
EC-related claims, net of taxes		.9	%
After-tax adjusted return on revenues (non-GAAP) *		9.3	%
Tax rate
Effective tax rate		21.4	%
EC-related claims		.3	%
Adjusted effective tax rate (non-GAAP) **		21.7	%
After-tax return on beginning equity		13.6	%
EC-related claims, net of taxes		1.5	%
After-tax adjusted return on beginning equity (non-GAAP) *		15.1	%
* Calculated using adjusted net income.
** Calculated using adjusted pre-tax net income.

CRITICAL ACCOUNTING POLICIES:

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

Operating Leases

Trucks sold pursuant to agreements accounted for as operating leases are disclosed in Note F of the consolidated financial statements. In determining its estimate of the residual value of such vehicles, the Company considers the length of the lease term, the truck model, the expected usage of the truck and anticipated market demand. Operating lease terms generally range from three to five years. The resulting residual values on operating leases generally range between 30% and 70% of the original equipment cost. If the sales price of a truck at the end of the term of the agreement differs from the Company’s estimated residual value, a gain or loss will result.

Future market conditions, changes in government regulations and other factors outside the Company’s control could impact the ultimate sales price of trucks returned under these contracts. Residual values are reviewed regularly and adjusted if market conditions warrant. A decrease in the estimated equipment residual values would increase annual depreciation expense over the remaining lease term.

During 2025, market values on equipment returning upon operating lease maturity were generally lower than the residual values on the equipment in Europe and higher in Mexico, the U.S. and Australia, resulting in an increase in depreciation expense of $16.2 million.

At December 31, 2025, the aggregate residual value of equipment on operating leases in the Financial Services segment and residual value guarantee on trucks accounted for as operating leases in the Truck segment was $1.12 billion. A 10% decrease in used truck values worldwide, if expected to persist over the remaining maturities of the Company’s operating leases, would reduce residual value estimates and result in the Company recording additional depreciation expense of approximately $31.5 million in 2026, $21.8 million in 2027, $29.6 million in 2028, $22.0 million in 2029, and $6.8 million in 2030 and thereafter.

Allowance for Credit Losses

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

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

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

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

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

The adequacy of the allowance is evaluated quarterly based on the most recent past due account information and current and future market conditions. As accounts become past due, the likelihood that they will not be fully collected increases. The Company’s experience indicates the probability of not fully collecting past due accounts ranges between 10% and 90%. Over the past two years, the Company’s year-end 30+ days past due accounts have ranged between 1.3% and 2.4% of loan and lease receivables. Historically, a 100 basis point increase in the 30+ days past due percentage has resulted in an increase in credit losses of 4 to 26 basis points of receivables. At December 31, 2025, 30+ days past dues were 2.4%. If past dues were 100 basis points higher or 3.4% as of December 31, 2025, the Company’s estimate of credit losses would likely have increased by a range of $7 to $40 million depending on the extent of the past dues, the estimated value of the collateral as compared to amounts owed and general economic factors.

Product Warranty

Product warranty, including changes in estimates for pre-existing warranties, is disclosed in Note I of the consolidated financial statements. The expenses related to product warranty are estimated and recorded at the time products are sold based on historical and current data and reasonable expectations for the future regarding the frequency and cost of warranty claims, net of recoveries. Estimates consider product type, geographical differences, labor rates, and any other known factors affecting the number or amount of expected claim payments. For new products with no historical experience, reference to similar products is utilized. Management takes actions to minimize warranty costs through quality-improvement programs; however, actual claim costs incurred could materially differ from the estimated amounts and require adjustments to the reserve. Historically, those adjustments have not been material. Over the past two years, warranty expense as a percentage of Truck, Parts and Other net sales and revenues has ranged between 2.5% and 2.8%. If the 2025 warranty expense had been .2% higher as a percentage of net sales and revenues in 2025, warranty expense would have increased by approximately $52 million.

FORWARD-LOOKING STATEMENTS:

This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements relating to future results of operations or financial position and any other statement that does not relate to any historical or current fact. Such statements are based on currently available operating, financial and other information and 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 or tariffs resulting in higher costs and/or sales restrictions; currency or commodity price fluctuations; lower used truck prices; insufficient or under-utilization of manufacturing capacity; supplier interruptions; insufficient liquidity in the capital markets; fluctuations in interest rates; changes in the levels of the Financial Services segment new business volume due to unit fluctuations in new PACCAR truck sales or reduced market shares; changes affecting the profitability of truck owners and operators; price changes impacting truck sales prices and residual values; insufficient supplier capacity or access to raw materials and components, including semiconductors; labor disruptions; shortages of commercial truck drivers; increased warranty costs; cybersecurity risks to the Company’s information technology systems; use of artificial intelligence and machine learning in business processes; pandemics; climate-related risks; global conflicts; litigation, including EC settlement-related claims; or legislative and governmental regulations. A more detailed description of these and other risks is included under the heading Part I, Item 1A, “Risk Factors” and in Note L in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Currencies are presented in millions for the market risks and derivative instruments sections below.

Interest-Rate Risks - See Note P for a description of the Company’s hedging programs and exposure to interest rate fluctuations. The Company measures its interest-rate risk by estimating the amount by which the fair value of interest-rate sensitive assets and liabilities, including derivative financial instruments, would change assuming an immediate 100 basis point increase across the yield curve as shown in the following table:

Fair Value (Losses) Gains	2025			2024
CONSOLIDATED:
Assets
Cash equivalents and marketable debt securities	$	(58.6	)	$	(49.6	)
FINANCIAL SERVICES:
Assets
Fixed rate loans		(179.8	)		(157.7	)
Interest-rate swaps related to debt					(35.1	)
Liabilities
Fixed rate term debt		202.3			198.9
Interest-rate swaps related to debt		(22.0	)
Total	$	(58.1	)	$	(43.5	)

Currency Risks - The Company enters into foreign currency exchange contracts to hedge its exposure to exchange rate fluctuations of foreign currencies, particularly the Canadian dollar, the euro, the British pound, the Australian dollar, the Brazilian real and the Mexican peso (see Note P for additional information concerning these hedges). Based on the Company’s sensitivity analysis, the potential loss in fair value for such financial instruments from a 10% unfavorable change in quoted foreign currency exchange rates would be a loss of $96.8 related to contracts outstanding at December 31, 2025, compared to a loss of $126.3 at December 31, 2024. These amounts would be largely offset by changes in the values of the underlying hedged exposures.

Commodity Price Risks - The Company enters into commodity forward contracts to hedge the prices of certain commodities used in the production of trucks (see Note P for additional information concerning these hedges). The objective is to reduce the fluctuation in earnings and cash flows associated with adverse movement in commodity prices. Based on the Company’s sensitivity analysis, the potential loss in fair value for such financial instruments from a 10% unfavorable change in quoted commodity prices would be $.9 related to contracts outstanding at December 31, 2025, compared to a loss of nil at December 31, 2024. The Company had no commodity contracts at December 31, 2024.

,

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

CONSOLIDATED STATEMENTS OF INCOME

Year Ended December 31,	2025		2024			2023
	(millions, except per share data)
TRUCK, PARTS AND OTHER:
Net sales and revenues	$	26,235.1	$	31,564.3		$	33,315.5
Cost of sales and revenues		22,736.7		26,069.6			26,894.2
Research and development		445.5		452.9			410.9
Selling, general and administrative		576.6		585.0			604.3
Interest and other expenses (income), net		284.3		(113.8	)		520.4
		24,043.1		26,993.7			28,429.8
Truck, Parts and Other Income Before Income Taxes		2,192.0		4,570.6			4,885.7
FINANCIAL SERVICES:
Interest and fees		1,428.7		1,295.9			1,009.3
Operating lease, rental and other revenues		781.0		803.6			802.6
Revenues		2,209.7		2,099.5			1,811.9
Interest and other borrowing expenses		783.0		710.8			500.6
Depreciation and other expenses		657.6		718.5			590.7
Selling, general and administrative		159.2		159.0			149.0
Provision for losses on receivables		124.5		75.6			31.3
		1,724.3		1,663.9			1,271.6
Financial Services Income Before Income Taxes		485.4		435.6			540.3
Investment income		346.1		394.7			292.2
Total Income Before Income Taxes		3,023.5		5,400.9			5,718.2
Income taxes		647.7		1,238.9			1,117.4
Net Income	$	2,375.8	$	4,162.0		$	4,600.8
Net Income Per Share
Basic	$	4.52	$	7.92		$	8.78
Diluted	$	4.51	$	7.90		$	8.76
Weighted Average Number of Common Shares Outstanding
Basic		525.9		525.3			523.9
Diluted		526.8		526.6			525.0

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Year Ended December 31,		2025			2024			2023
	(millions)
Net income	$	2,375.8		$	4,162.0		$	4,600.8
Other comprehensive income:
Unrealized (losses) gains on derivative contracts
Net (loss) gain arising during the period		(214.7	)		261.1			(174.9	)
Tax effect		45.9			(56.9	)		37.0
Reclassification adjustment		175.6			(200.2	)		111.8
Tax effect		(35.9	)		39.5			(20.0	)
		(29.1	)		43.5			(46.1	)
Unrealized gains on marketable debt securities
Net holding gain		25.5			20.6			43.2
Tax effect		(6.3	)		(5.1	)		(10.8	)
Reclassification adjustment		1.0			(3.0	)		(3.6	)
Tax effect		(.3	)		.7			.9
		19.9			13.2			29.7
Pension plans
Net gain (loss) arising during the period		272.7			230.3			(5.8	)
Tax effect		(65.4	)		(57.2	)		1.8
Reclassification adjustment		5.3			8.6			6.1
Tax effect		(1.4	)		(1.7	)		(1.5	)
		211.2			180.0			.6
Foreign currency translation gain (loss)		574.6			(656.1	)		275.3
Net other comprehensive income (loss)		776.6			(419.4	)		259.5
Comprehensive Income	$	3,152.4		$	3,742.6		$	4,860.3

See notes to consolidated financial statements.

CONSOLIDATED BALANCE SHEETS

December 31,		2024
ASSETS
TRUCK, PARTS AND OTHER:
Current Assets
Cash and cash equivalents	6,046.0	$	6,871.1
Trade and other receivables, net (allowance for losses: 2025 - 1.5, 2024 - 1.2)	1,981.1		1,933.8
Marketable securities	3,207.7		2,778.8
Inventories, net	2,187.5		2,367.1
Other current assets	903.9		751.2
Total Truck, Parts and Other Current Assets	14,326.2		14,702.0
Property, plant and equipment, net	4,505.3		3,985.6
Other noncurrent assets, net	2,701.3		2,319.8
Total Truck, Parts and Other Assets	21,532.8		21,007.4
FINANCIAL SERVICES:
Cash and cash equivalents	261.9		189.7
Finance and other receivables, net (allowance for losses: 2025 - 192.9, 2024 - 145.2)	19,754.5		19,314.3
Equipment on operating leases, net	1,868.6		1,891.4
Other assets	918.4		1,016.1
Total Financial Services Assets	22,803.4		22,411.5
	44,336.2	$	43,418.9

All values are in US Dollars.

CONSOLIDATED BALANCE SHEETS

December 31,			2024
LIABILITIES AND STOCKHOLDERS' EQUITY
TRUCK, PARTS AND OTHER:
Current Liabilities
Accounts payable, accrued expenses and other	4,876.3		$	4,805.1
Dividend payable	735.8			1,573.8
Total Truck, Parts and Other Current Liabilities	5,612.1			6,378.9
Other liabilities	2,278.8			1,954.3
Total Truck, Parts and Other Liabilities	7,890.9			8,333.2
FINANCIAL SERVICES:
Accounts payable, accrued expenses and other	907.7			1,106.4
Commercial paper and bank loans	4,989.5			6,003.8
Term notes	10,646.8			9,891.2
Deferred taxes and other liabilities	637.3			577.4
Total Financial Services Liabilities	17,181.3			17,578.8
STOCKHOLDERS' EQUITY:
Preferred stock, no par value - authorized 1.0 million shares, none issued
Common stock, 1 par value - authorized 1.2 billion shares,   issued 525.4 million and 524.4 million shares	525.4			524.4
Additional paid-in capital	379.2			344.8
Retained earnings	18,696.1			17,751.0
Accumulated other comprehensive loss	(336.7	)		(1,113.3	)
Total Stockholders' Equity	19,264.0			17,506.9
	44,336.2		$	43,418.9

All values are in US Dollars.

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,	2025			2024				2023
	(millions)
OPERATING ACTIVITIES:
Net Income	$	2,375.8		$	4,162.0		$	4,600.8
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization:
Property, plant and equipment		398.2			398.4			415.0
Other assets, net		429.2			518.5			508.9
Provision for losses on financial services receivables		124.5			75.6			31.3
Deferred taxes		333.1			(79.3	)		(303.7	)
Other, net		60.7			26.3			46.5
Pension contributions		(24.5	)		(40.8	)		(27.3	)
Change in operating assets and liabilities:
Decrease (increase) in assets other than cash and cash equivalents:
Receivables:
Trade and other receivables		102.0			156.9			(430.7	)
Wholesale receivables on new trucks		1,007.1			(478.7	)		(1,266.4	)
Inventories		296.4			42.5			(350.7	)
Other assets, net		(102.0	)		(149.3	)		(127.2	)
(Decrease) increase in liabilities:
Accounts payable and accrued expenses		(432.6	)		279.4			375.8
Residual value guarantees and deferred revenues		(36.5	)		(.8	)		(36.8	)
Other liabilities, net		(115.6	)		(269.8	)		754.5
Net Cash Provided by Operating Activities		4,415.8			4,640.9			4,190.0
INVESTING ACTIVITIES:
Originations of retail loans and finance leases		(6,114.9	)		(6,666.7	)		(6,378.2	)
Collections on retail loans and finance leases		5,100.9			4,840.1			4,330.4
Net increase in wholesale receivables on equipment		(4.9	)		(512.1	)		(29.1	)
Purchases of marketable debt securities		(1,785.3	)		(2,068.7	)		(967.2	)
Proceeds from sales and maturities of marketable debt securities		1,448.0			1,103.2			803.6
Payments for property, plant and equipment		(743.0	)		(838.7	)		(695.0	)
Acquisitions of equipment for operating leases		(643.6	)		(906.9	)		(567.5	)
Proceeds from asset disposals		680.8			696.1			614.5
Contributions to joint venture		(201.8	)		(207.6	)
Other, net		(3.4	)		74.0			17.5
Net Cash Used in Investing Activities		(2,267.2	)		(4,487.3	)		(2,871.0	)
FINANCING ACTIVITIES:
Payments of cash dividends		(2,267.1	)		(2,288.5	)		(1,518.6	)
Purchases of treasury stock		(36.1	)		(4.5	)		(3.5	)
Proceeds from stock compensation transactions		43.4			51.9			51.5
Net (decrease) increase in commercial paper, short-term bank loans and other		(1,132.8	)		699.9			1,721.0
Proceeds from term debt		3,146.1			3,891.2			3,085.0
Payments on term debt		(2,835.9	)		(2,473.1	)		(2,233.2	)
Net Cash (Used in) Provided by Financing Activities		(3,082.4	)		(123.1	)		1,102.2
Effect of exchange rate changes on cash and cash equivalents		180.9			(151.4	)		69.6
Net (Decrease) Increase in Cash and Cash Equivalents		(752.9	)		(120.9	)		2,490.8
Cash and cash equivalents at beginning of period		7,060.8			7,181.7			4,690.9
Cash and cash equivalents at end of period	$	6,307.9		$	7,060.8		$	7,181.7

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

December 31,			2024			2023
COMMON STOCK, 1 PAR VALUE:
Balance at beginning of year	524.4		$	523.3		$	522.0
Treasury stock retirement	(.4	)
Stock compensation	1.4			1.1			1.3
Balance at end of year	525.4			524.4			523.3
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of year	344.8			269.1			196.1
Treasury stock retirement	(35.7	)		(4.5	)		(3.5	)
Stock compensation	70.1			80.2			76.5
Balance at end of year	379.2			344.8			269.1
TREASURY STOCK, AT COST:
Balance at beginning of year
Purchases, shares: 2025 - .39; 2024 - .04; 2023 - .05	(36.1	)		(4.5	)		(3.5	)
Retirements	36.1			4.5			3.5
Balance at end of year
RETAINED EARNINGS:
Balance at beginning of year	17,751.0			15,780.3			13,402.4
Net income	2,375.8			4,162.0			4,600.8
Cash dividends declared on common stock,  per share: 2025 - 2.72; 2024 - 4.17; 2023 - 4.24	(1,430.7	)		(2,191.3	)		(2,222.9	)
Balance at end of year	18,696.1			17,751.0			15,780.3
ACCUMULATED OTHER COMPREHENSIVE LOSS:
Balance at beginning of year	(1,113.3	)		(693.9	)		(953.4	)
Other comprehensive income (loss)	776.6			(419.4	)		259.5
Balance at end of year	(336.7	)		(1,113.3	)		(693.9	)
Total Stockholders’ Equity	19,264.0		$	17,506.9		$	15,878.8

All values are in US Dollars.

See notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

A.SIGNIFICANT ACCOUNTING POLICIES

Description of Operations: PACCAR Inc (the Company or PACCAR) is a multinational company operating in three principal segments: (1) the Truck segment includes the design and manufacture of high-quality, light-, medium- and heavy-duty commercial trucks; (2) the Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles; and (3) the Financial Services segment (PFS) includes finance and leasing products and services provided to customers and dealers. PACCAR’s finance and leasing activities are principally related to PACCAR products and associated equipment. PACCAR’s sales and revenues are derived primarily from North America and Europe. The Company also operates in Australia and Brasil and sells trucks and parts to customers in Asia, Africa, the Middle East and South America.Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its wholly owned domestic and foreign subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation.Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition:

Truck, Parts and Other: The Company enters into sales contracts with customers associated with purchases of the Company’s products and services including trucks, parts, product support, and other related services. Generally, the Company recognizes revenue for the amount of consideration it will receive for delivering a product or service to a customer. Revenue is recognized when the customer obtains control of the product or receives benefits of the service. The Company excludes sales taxes, value added taxes and other related taxes assessed by government agencies from revenue. There are no significant financing components included in product or services revenue since generally customers pay shortly after the products or services are transferred. In the Truck and Parts segments, when the Company grants extended payment terms on selected receivables and charges interest, interest income is recognized when earned.

The Company recognizes truck and parts sales as revenues when control of the products is transferred to customers which generally occurs upon shipment, except for certain truck sales which are subject to a residual value guarantee (RVG) by the Company. The standard payment term for trucks and aftermarket parts is typically within 30 days, but the Company may grant extended payment terms on selected receivables. The Company recognizes revenue for the invoice amount adjusted for estimated sales incentives and returns. Sales incentives and returns are estimated based on historical experience and are adjusted to current period revenue when the most likely amount of consideration the Company expects to receive changes or becomes fixed. Truck and parts sales include a standard product warranty which is included in cost of sales. The Company has elected to treat delivery services as a fulfillment activity with revenues recognized when the customer obtains control of the product. Delivery revenue is included in revenues and the related costs are included in cost of sales. For the Parts segment, revenue for remanufactured components (cores) is recognized using the same criteria as other parts sales. When a remanufactured part is sold, a deposit is collected that is repaid if the customer returns a core that meets certain specifications within a defined time period. The deposit received from the customer is recognized as a liability in "Accounts payable, accrued expenses and other" on the Company's Consolidated Balance Sheets. When a customer returns a core, the deposit is repaid and the liability is reversed. The Company is not disclosing truck order backlog, as a significant majority of the backlog has a duration of less than one year.

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

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

At December 31,	2025				2024
	ASSETS		LIABILITIES		ASSETS		LIABILITIES
Trucks
Other current assets	$	83.1			$	116.7
Accounts payable, accrued expenses and other			$	87.2			$	121.7
Other noncurrent assets, net		195.2				135.9
Other liabilities				203.0				144.7
	$	278.3	$	290.2	$	252.6	$	266.4
Parts
Other current assets	$	97.0			$	101.7
Accounts payable, accrued expenses and other			$	239.6			$	244.4
	$	97.0	$	239.6	$	101.7	$	244.4

The Company’s total commitment to acquire trucks at a guaranteed value for contracts accounted for as a sale was $628.5 at December 31, 2025.

Revenues from extended warranties, operating leases and other include optional extended warranty and R&M service contracts which can be purchased for periods generally ranging up to five years. The Company defers revenue based on stand-alone observable selling prices when it receives payments in advance and generally recognizes the revenue on a straight-line basis over the warranty or R&M contract periods. See Note I, Product Support Liabilities, in the Notes to the Consolidated Financial Statements for further information. Also included are truck sales with an RVG accounted for as an operating lease. A liability is created for the residual value obligation with the remainder of the proceeds recorded as deferred revenue. The deferred revenue is recognized on a straight-line basis over the guarantee period, which typically ranges from three to five years. Total operating lease revenue from truck sales with RVGs for the years ended December 31, 2025, 2024 and 2023 was $16.9, $32.6 and $69.7, respectively.

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

Financial Services: The Company’s Financial Services segment products include loans to customers collateralized by the vehicles being financed, finance leases for retail customers and dealers, dealer wholesale financing which includes floating-rate wholesale loans to PACCAR dealers for new and used trucks, and operating leases which include rentals on Company owned equipment. Interest income from finance and other receivables is recognized using the interest method. Certain loan origination costs are deferred and amortized to interest income over the expected life of the contracts using the straight-line method which approximates the interest method.

Operating lease rental revenue is recognized on a straight-line basis over the term of the lease. Customer contracts may include additional services such as excess mileage, repair and maintenance and other services on which revenue is recognized when earned. The Company’s full-service lease arrangements bundle these additional services. Rents for full-service lease contracts are allocated between lease and non-lease components based on the relative stand-alone price of each component. Taxes, such as sales and use and value added, which are collected by the Company from a customer, are excluded from the measurement of lease income and expenses. Rental revenues for the years ended December 31, 2025, 2024 and 2023 were $617.3, $660.7 and $736.9, respectively. Depreciation and related leased unit operating expenses were $530.3, $602.2 and $551.9 for the years ended December 31, 2025, 2024 and 2023, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

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

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

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

The Company determines its estimate of the residual value of leased vehicles by considering the length of the lease term, the truck model, the expected usage of the truck and anticipated market demand. If the sales price of the truck at the end of the agreement differs from the Company’s estimated residual value, a gain or loss will result. Future market conditions, changes in government regulations and other factors outside the Company’s control could impact the ultimate sales price of trucks returned under these contracts. Residual values are reviewed regularly and adjusted if market conditions warrant. Cash and Cash Equivalents: Cash equivalents consist of liquid investments with a maturity at date of purchase of 90 days or less.

Investments in Marketable Securities:

Debt Securities: The Company’s investments in marketable debt securities are classified as available-for-sale. These investments are stated at fair value and may include an allowance for credit losses. Changes in the allowance for credit losses are recognized in the current period earnings and any unrealized gains or losses, net of tax, are included as a component of accumulated other comprehensive income (loss) (AOCI).

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

The Company evaluates its investment in marketable debt securities at the end of each reporting period to determine if a decline in fair value is the result of credit losses or unrealized losses. In assessing credit losses, the Company considers the collectability of principal and interest payments by monitoring changes to issuers’ credit ratings, specific credit events associated with individual issuers as well as the credit ratings of any financial guarantor. The Company considers its intent for selling the security and whether it is more likely than not the Company will be able to hold the security until the recovery of any credit losses and unrealized losses. Charges against the allowance for credit losses occur when a security with credit losses is sold or the Company no longer intends to hold that security.

Equity Securities: Marketable equity securities are traded on active exchanges and are measured at fair value. The realized and unrealized gains (losses) are recognized in investment income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

Equity Method Investment:

In 2024, PACCAR and three partners completed the formation of a U.S.-based battery manufacturing joint venture, Amplify Cell Technologies, with PACCAR owning a 30 percent interest. The joint venture meets the definition of a variable interest entity since the equity-at-risk is not currently sufficient to support the future operations of the joint venture. All significant decisions require majority or super-majority approval of the board. As a result, PACCAR is not the primary beneficiary and the Company uses the equity method to account for the investment. Under the equity method, the original investments in the joint venture are recorded at cost and subsequently adjusted by the Company's share of equity in income or losses. The investment is included in Truck, Parts and Other "Other noncurrent assets, net" on the Company’s Consolidated Balance Sheets. PACCAR's share of the loss is included in Truck, Parts and Other "Interest and other expenses (income), net" on the Company's Consolidated Statements of Income. PACCAR contributed $201.8 and $207.6 for the years ended December 31, 2025 and 2024, respectively and the maximum required contribution is $830.0. The Company's equity method investment was $379.4 and $196.9 at December 31, 2025 and 2024, respectively.

Receivables:

Trade and Other Receivables: The Company’s trade and other receivables are recorded at cost, net of allowances. At December 31, 2025 and 2024, respectively, trade and other receivables included trade receivables from dealers and customers of $1,615.3 and $1,538.0 and other receivables of $365.8 and $395.8 relating primarily to value added tax receivables and supplier allowances and rebates.

Finance and Other Receivables:

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

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

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

Operating lease receivables and other – Operating lease receivables and other include monthly rentals due on operating leases, unamortized loan and lease origination costs, interest on loans and other amounts due within one year in the normal course of business.

Allowance for Credit Losses:

Truck, Parts and Other: The Company historically has not experienced significant losses or past due amounts on trade and other receivables in its Truck, Parts and Other businesses. Accounts are considered past due once the unpaid balance is over 30 days outstanding based on contractual payment terms. Accounts are charged off against the allowance for credit losses when, in the judgment of management, they are considered uncollectible. The allowance for credit losses for Truck, Parts and Other was $1.5 and $1.2 for the years ended December 31, 2025 and 2024, respectively. Net charge-offs were $.1 for the year ended December 31, 2025 and nil for the years ended December 31, 2024 and 2023.

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

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

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

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

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

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

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

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

Accounts are charged off against the allowance for credit losses when, in the judgment of management, they are considered uncollectible, which generally occurs upon repossession of the collateral. Typically the timing between the repossession and charge-off is not significant. In cases where repossession is delayed (e.g., for legal proceedings), the Company records a partial charge-off. The charge-off is determined by comparing the fair value of the collateral, less cost to sell, to the amortized cost basis.Inventories: Inventories are stated at the lower of cost or net realizable value. Cost of inventories is determined principally by the first-in, first-out (FIFO) method. Cost of sales and revenues include shipping and handling costs incurred to deliver products to dealers and customers.Equipment on Operating Leases: The Company’s Financial Services segment leases equipment under operating leases to its customers. In addition, in the Truck segment, equipment sold to customers in Europe subject to an RVG by the Company may be accounted for as an operating lease. Equipment is recorded at cost and is depreciated on the straight-line basis to the lower of the estimated residual value or guarantee value. Lease and guarantee periods generally range from three to five years. Estimated useful lives of the equipment range from three to ten years. The Company reviews residual values of equipment on operating leases periodically to determine that recorded amounts are appropriate.Property, Plant and Equipment: Property, plant and equipment are stated at cost. Depreciation is computed by the straight-line method based on the estimated useful lives of various classes of assets. Certain production tooling and equipment are amortized on a unit of production basis. Long-lived Assets and Goodwill: The Company evaluates the carrying value of property, plant and equipment when events and circumstances warrant a review. Goodwill is tested for impairment at least on an annual basis. There were no significant impairment charges for the three years ended December 31, 2025. Goodwill was $114.2 and $100.7 at December 31, 2025 and 2024, respectively. The increase in value was due to currency translation.

Product Support Liabilities: Product support liabilities include estimated future payments related to product warranties and deferred revenues on optional extended warranties and R&M contracts. The Company generally offers one year warranties covering most of its vehicles and related aftermarket parts. For vehicles equipped with engines manufactured by PACCAR, the Company generally offers two year warranties on the engine. 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 and current data and reasonable expectations for the future regarding the frequency and cost of warranty claims, net of 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 generally on a straight-line basis over the contract period. Warranty and R&M costs on these contracts are recognized as incurred.

Derivative Financial Instruments: As part of its risk management strategy, the Company enters into derivative contracts to hedge against the risks of interest rates, foreign currency rates and commodity prices. Certain derivative instruments designated as fair value hedges, cash flow hedges or net investment hedges are subject to hedge accounting. Derivative instruments that are not subject to hedge accounting are held as derivatives not designated as hedging instruments. 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, commodity as well as 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 agreements 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’s maximum exposure to potential default of its derivative counterparties is limited to the asset position of its derivative portfolio. The asset position of the Company’s derivative portfolio was $63.0 at December 31, 2025.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

The Company assesses hedges at inception and on an ongoing basis to determine if the designated derivatives are highly effective in offsetting changes in fair values or cash flow of the hedged items. Hedge accounting is discontinued prospectively when the Company determines a derivative financial instrument has ceased to be a highly effective hedge. Cash flows from derivative instruments are included in Operating activities in the Consolidated Statements of Cash Flows.Government Grants: The Company receives incentives from U.S. and non-U.S. governmental entities in the form of tax rebates or credits, grants, and loans. The benefit is generally recorded when all conditions attached to the incentive have been met and there is reasonable assurance of the receipt. Government incentives are recorded in accordance with their purpose as a reduction of expense, a reduction of the cost of the capital investment, or other income. The amount of government incentives recorded as a reduction of expenses and the amount of grants receivable for the years ended December 31, 2025, 2024 and 2023 are immaterial.Foreign Currency Translation: For most of the Company’s foreign subsidiaries, the local currency is the functional currency. All assets and liabilities are translated at year-end exchange rates and all income statement amounts are translated at the weighted-average rates for the period. Translation adjustments are recorded in AOCI. The Company uses the U.S. dollar as the functional currency for all but one of its Mexican subsidiaries, which uses the local currency. For the U.S. functional currency entities in Mexico, inventories, cost of sales, property, plant and equipment and depreciation are remeasured at historical rates and resulting adjustments are included in net income.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. New Accounting Pronouncements: In November 2024, the Financial Accounting Standards Board (FASB) issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in this ASU expand the disclosures in the notes to the financial statements about specific cost and expense categories presented on the face of the income statement. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented. The Company is currently evaluating the impact of this update on the related notes to the financial statements.

In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. The amendments in this ASU clarify certain aspects of the guidance on hedge accounting and address several incremental hedge accounting issues arising from the global reference rate reform initiative. This ASU is effective for annual periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The amendments in this ASU should be applied prospectively. The Company is currently evaluating the impact of this update on the Company's consolidated financial statements.

The Company adopted the following standard on January 1, 2025, which had no impact on the Company’s consolidated financial statements. The additional disclosures resulting from the implementation of this ASU are reflected in Note N, Income Taxes, on a retrospective basis.

STANDARD	DESCRIPTION
2023-09	Income Taxes (Topic 740): Improvements to Income Tax Disclosures

The FASB also issued the following standards, which are not expected to have a material impact on the Company's consolidated financial statements.

STANDARD	DESCRIPTION	EFFECTIVE DATE
2025-05*	Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets	January 1, 2026
2025-06*	Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software	January 1, 2028
2025-10*	Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities	January 1, 2029

* The Company will adopt on the effective date.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

B.SALES AND REVENUES

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

Year Ended December 31,	2025			2024		2023
Truck
Truck sales	$	18,272.1		$	23,863.2	$	25,946.4
Revenues from extended warranties, operating leases and other		1,093.2			975.2		900.0
		19,365.3			24,838.4		26,846.4
Parts
Parts sales		6,678.4			6,461.1		6,223.1
Revenues from dealer services and other		195.3			205.3		191.3
		6,873.7			6,666.4		6,414.4
Intersegment eliminations and other*		(3.9	)		59.5		54.7
Truck, Parts and Other sales and revenues	$	26,235.1		$	31,564.3	$	33,315.5

*Includes industrial winch business sales through October 31, 2024.

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

Year Ended December 31,	2025		2024		2023
Finance lease revenues	$	374.7	$	341.8	$	271.5
Operating lease revenues		617.3		660.7		736.9
Total lease revenues	$	992.0	$	1,002.5	$	1,008.4

C.INVESTMENTS IN MARKETABLE SECURITIES

Marketable securities consisted of the following at December 31:

			UNREALIZED		UNREALIZED		FAIR
2025	COST		GAINS		LOSSES		VALUE
Marketable debt securities
U.S. tax-exempt securities	$	341.0	$	3.6	$	.1	$	344.5
U.S. taxable municipal / non-U.S. provincial bonds		417.7		4.2		.3		421.6
U.S. corporate securities		931.7		8.7		.1		940.3
U.S. government securities		433.9		2.5		.2		436.2
Non-U.S. corporate securities		634.8		5.4		.5		639.7
Non-U.S. government securities		212.8		1.3		.3		213.8
Other debt securities		206.4		1.6		.2		207.8
Marketable equity securities		10.0				6.2		3.8
Total marketable securities	$	3,188.3	$	27.3	$	7.9	$	3,207.7
			UNREALIZED		UNREALIZED		FAIR
---	---	---	---	---	---	---	---	---
2024	COST		GAINS		LOSSES		VALUE
Marketable debt securities
U.S. tax-exempt securities	$	304.5	$	.6	$	1.4	$	303.7
U.S. taxable municipal / non-U.S. provincial bonds		381.1		1.2		2.2		380.1
U.S. corporate securities		864.3		3.1		3.2		864.2
U.S. government securities		287.1		.1		1.5		285.7
Non-U.S. corporate securities		606.6		3.5		2.0		608.1
Non-U.S. government securities		163.5		1.4		.6		164.3
Other debt securities		166.4		.8		.8		166.4
Marketable equity securities		10.0				3.7		6.3
Total marketable securities	$	2,783.5	$	10.7	$	15.4	$	2,778.8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

The cost of marketable debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Amortization, accretion, interest and dividend income and realized gains and losses are included in investment income. The cost of securities sold is based on the specific identification method. Gross realized gains were $3.8, $2.1 and $.9, and gross realized losses were $2.1, $4.5 and $4.5 for the years ended December 31, 2025, 2024 and 2023, respectively.

Net unrealized (losses) gains on marketable equity securities recognized in investment income were $(2.5), $1.9 and $3.2 for the years ended December 31, 2025, 2024 and 2023, respectively.

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

At December 31,	2025				2024
	LESS THAN<br>TWELVE<br>MONTHS		TWELVE<br>MONTHS<br>OR GREATER		LESS THAN<br>TWELVE<br>MONTHS		TWELVE<br>MONTHS<br>OR GREATER
Fair value	$	298.5	$	75.5	$	932.9	$	365.5
Unrealized losses		1.0		.7		5.5		6.2

The unrealized losses on marketable debt securities were due to higher yields on certain securities. The Company did not identify any indicators of a credit loss in its assessments. Accordingly, no allowance for credit losses was recorded at December 31, 2025 and December 31, 2024. The Company does not currently intend, and it is more likely than not that it will not be required, to sell the investment securities before recovery of the unrealized losses. The Company expects that the contractual principal and interest will be received on the investment securities.

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

	AMORTIZED		FAIR
Maturities:	COST		VALUE
Within one year	$	565.1	$	566.8
One to five years		2,598.2		2,621.8
Six to ten years		6.2		6.2
More than ten years		8.8		9.1
	$	3,178.3	$	3,203.9

D.INVENTORIES

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

Inventories include the following:

At December 31,	2025		2024
Finished products	$	954.2	$	977.1
Work in process and raw materials		1,233.3		1,390.0
	$	2,187.5	$	2,367.1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

E.FINANCE AND OTHER RECEIVABLES

Finance and other receivables include the following:

At December 31,	2025			2024
Loans	$	10,407.6		$	9,442.4
Finance leases		5,264.6			4,906.6
Dealer wholesale financing		4,126.3			4,944.1
Operating lease receivables and other		148.9			166.4
		19,947.4			19,459.5
Less allowance for losses:
Loans and leases		(187.2	)		(139.2	)
Dealer wholesale financing		(2.8	)		(3.0	)
Operating lease receivables and other		(2.9	)		(3.0	)
	$	19,754.5		$	19,314.3

The net activity of dealer direct loans and dealer wholesale financing on new trucks is shown in the operating section of the Consolidated Statements of Cash Flows since those receivables finance the sale of Company inventory. Dealer wholesale financing decreased $817.8 to $4,126.3 at December 31, 2025, reflecting lower dealer new truck inventory in all markets.

Annual minimum payments due on loans are as follows:

Beginning January 1,	LOANS
2026	$	3,474.6
2027		2,485.2
2028		2,084.6
2029		1,424.9
2030		761.8
Thereafter		176.5
	$	10,407.6

Annual minimum payments due on finance lease receivables and a reconciliation of the undiscounted cash flows to the net investment in finance leases are as follows:

Beginning January 1,	FINANCE<br>LEASES
2026	$	1,711.1
2027		1,429.1
2028		1,105.1
2029		900.2
2030		438.9
Thereafter		203.6
		5,788.0
Unguaranteed residual values		245.9
Unearned interest on finance leases		(769.3	)
Net investment in finance leases	$	5,264.6

Experience indicates substantially all of dealer wholesale financing will be repaid within one year. In addition, repayment experience indicates that some loans, leases and other finance receivables will be paid prior to contract maturity, while others may be extended or modified.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

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

Allowance for Credit Losses: The allowance for credit losses is summarized as follows:

	2025
	DEALER					CUSTOMER
	WHOLESALE			RETAIL		RETAIL			OTHER*			TOTAL
Balance at January 1	$	3.0		$	1.5	$	137.7		$	3.0		$	145.2
Provision for losses		(.5	)		.2		124.7			.1			124.5
Charge-offs							(93.8	)		(.9	)		(94.7	)
Recoveries							9.0			.7			9.7
Currency translation and other		.3					7.9						8.2
Balance at December 31	$	2.8		$	1.7	$	185.5		$	2.9		$	192.9
	2024
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	DEALER						CUSTOMER
	WHOLESALE			RETAIL			RETAIL			OTHER*			TOTAL
Balance at January 1	$	2.7		$	1.9		$	125.1		$	3.3		$	133.0
Provision for losses		.6			(.4	)		75.6			(.2	)		75.6
Charge-offs								(61.2	)		(1.0	)		(62.2	)
Recoveries								7.4			1.3			8.7
Currency translation and other		(.3	)					(9.2	)		(.4	)		(9.9	)
Balance at December 31	$	3.0		$	1.5		$	137.7		$	3.0		$	145.2
	2023
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	DEALER						CUSTOMER
	WHOLESALE			RETAIL			RETAIL			OTHER*			TOTAL
Balance at January 1	$	3.4		$	2.2		$	112.6		$	2.9		$	121.1
Provision for losses		(.6	)		(.3	)		31.8			.4			31.3
Charge-offs		(.2	)					(28.4	)		(1.7	)		(30.3	)
Recoveries								5.6			1.4			7.0
Currency translation and other		.1						3.5			.3			3.9
Balance at December 31	$	2.7		$	1.9		$	125.1		$	3.3		$	133.0

* Operating lease and other trade receivables.

Credit Quality: The Company’s customers are principally concentrated in the transportation industry in North America, Europe, Australia and Brasil. The Company’s portfolio assets are diversified over a large number of customers and dealers with no single customer or dealer balances representing over 5% of the total portfolio assets. The Company retains as collateral a security interest in the related equipment.

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

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

	REVOLVING
At December 31, 2025	LOANS		2025		2024		2023		2022		2021		PRIOR		TOTAL
Amortized cost:
Dealer:
Wholesale:
Performing	$	4,114.6													$	4,114.6
Watch		8.1														8.1
At-risk		3.6														3.6
	$	4,126.3													$	4,126.3
Retail:
Performing	$	228.5	$	590.5	$	567.7	$	506.1	$	306.7	$	134.7	$	119.6	$	2,453.8
Watch				1.5		.8		1.3		.4		.3				4.3
	$	228.5	$	592.0	$	568.5	$	507.4	$	307.1	$	135.0	$	119.6	$	2,458.1
Total dealer	$	4,354.8	$	592.0	$	568.5	$	507.4	$	307.1	$	135.0	$	119.6	$	6,584.4
Customer retail:
Fleet:
Performing			$	4,465.0	$	3,399.5	$	2,060.2	$	919.3	$	254.4	$	68.6	$	11,167.0
Watch				63.7		35.0		63.4		44.8		16.2		.6		223.7
At-risk				70.7		80.0		147.9		50.5		9.0		1.7		359.8
			$	4,599.4	$	3,514.5	$	2,271.5	$	1,014.6	$	279.6	$	70.9	$	11,750.5
Owner/operator:
Performing			$	624.5	$	404.0	$	213.5	$	114.9	$	54.2	$	10.1	$	1,421.2
Watch				5.4		5.5		4.2		3.6		1.6		.3		20.6
At-risk				8.1		3.8		4.0		4.5		1.1		.3		21.8
			$	638.0	$	413.3	$	221.7	$	123.0	$	56.9	$	10.7	$	1,463.6
Total customer retail			$	5,237.4	$	3,927.8	$	2,493.2	$	1,137.6	$	336.5	$	81.6	$	13,214.1
Total	$	4,354.8	$	5,829.4	$	4,496.3	$	3,000.6	$	1,444.7	$	471.5	$	201.2	$	19,798.5
Twelve Months Ended	REVOLVING
December 31, 2025	LOANS		2025		2024		2023		2022		2021		PRIOR		TOTAL
Gross charge-offs:
Customer retail:
Fleet			$	1.3	$	10.6	$	37.6	$	19.7	$	9.0	$	6.8	$	85.0
Owner/operator				.3		2.1		2.6		2.9		.6		.3		8.8
Total			$	1.6	$	12.7	$	40.2	$	22.6	$	9.6	$	7.1	$	93.8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

	REVOLVING
At December 31, 2024	LOANS		2024		2023		2022		2021		2020		PRIOR		TOTAL
Amortized cost:
Dealer:
Wholesale:
Performing	$	4,936.1													$	4,936.1
Watch		7.1														7.1
At-risk		.9														.9
	$	4,944.1													$	4,944.1
Retail:
Performing	$	229.8	$	680.8	$	641.5	$	404.6	$	192.8	$	98.0	$	141.6	$	2,389.1
Watch				2.0		23.1		6.1		2.1		4.6		.4		38.3
	$	229.8	$	682.8	$	664.6	$	410.7	$	194.9	$	102.6	$	142.0	$	2,427.4
Total dealer	$	5,173.9	$	682.8	$	664.6	$	410.7	$	194.9	$	102.6	$	142.0	$	7,371.5
Customer retail:
Fleet:
Performing			$	4,306.5	$	2,991.4	$	1,761.1	$	781.9	$	298.2	$	71.0	$	10,210.1
Watch				11.2		17.6		13.9		5.8		2.1		.9		51.5
At-risk				49.5		196.8		80.8		41.9		6.0		1.5		376.5
			$	4,367.2	$	3,205.8	$	1,855.8	$	829.6	$	306.3	$	73.4	$	10,638.1
Owner/operator:
Performing			$	524.1	$	303.7	$	206.2	$	145.1	$	57.6	$	12.7	$	1,249.4
Watch				2.5		12.1		8.0		2.9		1.3		.4		27.2
At-risk				.9		1.8		2.2		.9		1.0		.1		6.9
			$	527.5	$	317.6	$	216.4	$	148.9	$	59.9	$	13.2	$	1,283.5
Total customer retail			$	4,894.7	$	3,523.4	$	2,072.2	$	978.5	$	366.2	$	86.6	$	11,921.6
Total	$	5,173.9	$	5,577.5	$	4,188.0	$	2,482.9	$	1,173.4	$	468.8	$	228.6	$	19,293.1
Twelve Months Ended	REVOLVING
December 31, 2024	LOANS		2024		2023		2022		2021		2020		PRIOR		TOTAL
Gross charge-offs:
Customer retail:
Fleet			$	.9	$	19.4	$	12.1	$	7.5	$	4.2	$	7.8	$	51.9
Owner/operator				.1		2.4		3.7		1.0		1.3		.8		9.3
Total			$	1.0	$	21.8	$	15.8	$	8.5	$	5.5	$	8.6	$	61.2

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

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

	DEALER				CUSTOMER RETAIL
							OWNER/
At December 31, 2025	WHOLESALE		RETAIL		FLEET		OPERATOR		TOTAL
Current and up to 30 days past due	$	4,117.7	$	2,458.1	$	11,412.2	$	1,428.7	$	19,416.7
31 – 60 days past due		5.0				137.9		16.8		159.7
Greater than 60 days past due		3.6				200.4		18.1		222.1
	$	4,126.3	$	2,458.1	$	11,750.5	$	1,463.6	$	19,798.5
	DEALER				CUSTOMER RETAIL
---	---	---	---	---	---	---	---	---	---	---
							OWNER/
At December 31, 2024	WHOLESALE		RETAIL		FLEET		OPERATOR		TOTAL
Current and up to 30 days past due	$	4,942.1	$	2,427.4	$	10,462.5	$	1,266.9	$	19,098.9
31 – 60 days past due		1.1				71.8		7.9		80.8
Greater than 60 days past due		.9				103.8		8.7		113.4
	$	4,944.1	$	2,427.4	$	10,638.1	$	1,283.5	$	19,293.1

Accounts 31+ days past due increased by $187.6 to $381.8 at December 31, 2025, primarily due to higher past due accounts in Brasil, the U.S. and Mexico. The increase of past due accounts in Brasil and Mexico reflected a decline in market conditions, including elevated interest rates in Brasil. The increase of past due accounts in the U.S. reflected a soft truckload market and included three large fleet customers.

The amortized cost basis of finance receivables that are on non-accrual status was as follows:

	DEALER			CUSTOMER RETAIL
						OWNER/
At December 31, 2025	WHOLESALE		RETAIL	FLEET		OPERATOR		TOTAL
Amortized cost basis with a specific reserve				$	334.2	$	15.5	$	349.7
Amortized cost basis with no specific reserve	$	3.6			18.0		6.2		27.8
Total	$	3.6		$	352.2	$	21.7	$	377.5
	DEALER			CUSTOMER RETAIL
---	---	---	---	---	---	---	---	---	---
						OWNER/
At December 31, 2024	WHOLESALE		RETAIL	FLEET		OPERATOR		TOTAL
Amortized cost basis with a specific reserve				$	350.0	$	5.5	$	355.5
Amortized cost basis with no specific reserve	$	.9			25.8		1.4		28.1
Total	$	.9		$	375.8	$	6.9	$	383.6

Interest income recognized on a cash basis for finance receivables that are on non-accrual status was as follows:

Year Ended December 31,	2025		2024			2023
Customer retail:
Fleet	$	7.7	$	3.3	$	2.2
Owner/operator		.5		.3		.4
	$	8.2	$	3.6	$	2.6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

Customers Experiencing Financial Difficulty: The Company modified $351.2 and $330.2 of finance receivables for customers experiencing financial difficulty during the years ended December 31, 2025 and 2024, respectively. Generally, other than insignificant term extensions and payment delays are modifications extending terms and payment delays for more than three months. The amortized cost basis of finance receivables for other than insignificant term extensions and payment delays for customers in financial difficulty was as follows:

At December 31,	2025			2024
Customer retail:
Fleet	$	173.7		$	183.3
Owner/operator		4.3			.4
	$	178.0		$	183.7
% of total retail portfolio		1.1	%		1.3	%

The credit modifications granted customers additional time to pay. The financial effects of the term extensions added a weighted-average of 8 and 6 months to the life of the modified contracts for the years ended December 31, 2025 and 2024, respectively. The effect of modifications is included in the Company's historical loss information used to determine the allowance for credit losses. For certain modifications to customers experiencing financial difficulties that are at-risk at December 31, 2025 and December 31, 2024, the allowance for credit losses is based on the value of underlying collateral or a discounted cash flow analysis.

There were $145.4 finance receivables modified with customers experiencing financial difficulty during the previous twelve months that had a payment default in the year ended December 31, 2025. There were $3.5 finance receivables modified with customers experiencing financial difficulty during the previous twelve months that had a payment default in the year ended December 31, 2024. The increase in 2025 reflected two large fleet customers in the U.S., one large fleet customer in Brasil and one large fleet customer in Mexico.

Repossessions: When the Company determines a customer is not likely to meet its contractual commitments, the Company repossesses the vehicles which serve as collateral for the loans, finance leases and equipment under operating leases. The Company records the vehicles as used truck inventory included in Financial Services Other assets on the Consolidated Balance Sheets. The balance of repossessed inventory at December 31, 2025 and 2024 was $93.9 and $80.9, respectively.

Proceeds from the sales of repossessed assets were $130.9, $77.2 and $27.7 for the years ended December 31, 2025, 2024 and 2023, respectively. These amounts are included in Proceeds from asset disposals in the 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 expenses on the Consolidated Statements of Income.

F.EQUIPMENT ON OPERATING LEASES

A summary of equipment on operating leases for Truck, Parts and Other and for the Financial Services segment is presented below:

	TRUCK, PARTS AND OTHER						FINANCIAL SERVICES
At December 31,		2025			2024			2025			2024
Equipment on operating leases	$	73.8		$	90.4		$	2,825.3		$	2,858.8
Less allowance for depreciation		(16.5	)		(21.2	)		(956.7	)		(967.4	)
	$	57.3		$	69.2		$	1,868.6		$	1,891.4

Annual minimum lease payments due on Financial Services operating leases beginning January 1, 2026 are $530.6, $397.9, $261.3, $172.1, $47.6 and $.4 thereafter.

Equipment on operating leases for Truck, Parts and Other is included in Truck, Parts and Other "Other noncurrent assets, net" on the Company's Consolidated Balance Sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

When the equipment sold is subject to an RVG, the full sales price is received from the customer. A liability is established for the residual value obligation with the remainder of the proceeds recorded as deferred lease revenue. These amounts, included in Truck, Parts and Other "Other liabilities" on the Company's Consolidated Balance Sheets, are summarized below:

	TRUCK, PARTS AND OTHER
At December 31,		2025		2024
Residual value guarantees	$	45.6	$	60.2
Deferred lease revenues		21.7		20.1
	$	67.3	$	80.3

Annual maturities of the RVGs beginning January 1, 2026 are $20.8, $15.6, $7.1, $.9, $1.2 and nil thereafter. The deferred lease revenue is amortized on a straight-line basis over the RVG contract period. At December 31, 2025, the annual amortization of deferred revenues beginning January 1, 2026 are $10.2, $6.7, $2.8, $2.0 and nil thereafter.

G.PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment included the following:

At December 31,	USEFUL LIVES		2025			2024
Land		$	370.6		$	331.7
Buildings and improvements	10 - 40 years		1,934.6			1,728.7
Machinery, equipment and production tooling	3 - 20 years		6,059.1			5,571.9
Construction in progress			1,028.5			746.1
			9,392.8			8,378.4
Less allowance for depreciation			(4,887.5	)		(4,392.8	)
		$	4,505.3		$	3,985.6

H.ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER

Accounts payable, accrued expenses and other included the following:

At December 31,		2025		2024
Truck, Parts and Other:
Accounts payable	$	1,455.2	$	1,598.7
Accrued expenses		1,056.8		916.5
Product support liabilities		819.3		743.0
Salaries and wages		380.4		397.1
Core deposits payable		336.6		311.8
Right-of-return liabilities		326.8		366.1
Other		501.2		471.9
	$	4,876.3	$	4,805.1

I.PRODUCT SUPPORT LIABILITIES

Changes in product support liabilities are summarized as follows:

WARRANTY RESERVES	2025			2024			2023
Balance at January 1	$	606.1		$	767.0		$	437.7
Cost accruals		580.6			616.2			739.2
Payments		(772.1	)		(917.8	)		(632.4	)
Change in estimates for pre-existing warranties		154.4			163.2			211.9
Currency translation and other		27.2			(22.5	)		10.6
Balance at December 31	$	596.2		$	606.1		$	767.0

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

DEFERRED REVENUES ON EXTENDED WARRANTIES AND R&M CONTRACTS		2025			2024			2023
Balance at January 1	$	1,302.2		$	1,229.1		$	904.9
Deferred revenues		725.4			701.1			812.4
Revenues recognized		(692.9	)		(591.8	)		(507.8	)
Currency translation		76.4			(36.2	)		19.6
Balance at December 31	$	1,411.1		$	1,302.2		$	1,229.1

The Company expects to recognize approximately $452.4 of the remaining deferred revenues on extended warranties and R&M contracts in 2026, $403.6 in 2027, $280.6 in 2028, $176.3 in 2029, $66.5 in 2030 and $31.7 thereafter.

Product support liabilities are included in the accompanying Consolidated Balance Sheets as follows:

	WARRANTY RESERVES				DEFERRED REVENUES
At December 31,		2025		2024		2025		2024
Truck, Parts and Other:
Accounts payable, accrued expenses and other	$	371.4	$	354.3	$	447.9	$	388.7
Other liabilities		224.8		251.8		948.1		901.9
Financial Services:
Accounts payable, accrued expenses and other						4.2		3.9
Deferred taxes and other liabilities						10.9		7.7
	$	596.2	$	606.1	$	1,411.1	$	1,302.2

J.BORROWINGS AND CREDIT ARRANGEMENTS

Financial Services borrowings included the following:

	2025					2024
	EFFECTIVE					EFFECTIVE
At December 31,	RATE			BORROWINGS		RATE			BORROWINGS
Commercial paper		3.5	%	$	4,635.3		4.4	%	$	5,484.9
Bank loans		12.2	%		354.2		11.5	%		518.9
					4,989.5					6,003.8
Term notes		4.7	%		10,646.8		4.2	%		9,891.2
		4.5	%	$	15,636.3		4.5	%	$	15,895.0

Commercial paper and term note borrowings were $15,282.1 and $15,376.1 at December 31, 2025 and 2024, respectively. Unamortized debt issuance costs, unamortized discounts and the net effect of fair value hedges were $(29.6) and $(51.7) at December 31, 2025 and 2024, respectively. The effective rate is the weighted-average rate as of December 31, 2025 and 2024 and includes the effects of interest-rate contracts.

The annual maturities of the Financial Services borrowings are as follows:

	COMMERCIAL		BANK		TERM
Beginning January 1,	PAPER		LOANS		NOTES		TOTAL
2026	$	4,642.0	$	205.8	$	3,442.1	$	8,289.9
2027				92.2		2,530.5		2,622.7
2028				35.7		2,997.1		3,032.8
2029				16.2		1,000.0		1,016.2
2030				4.2		350.0		354.2
Thereafter				.1		350.0		350.1
	$	4,642.0	$	354.2	$	10,669.7	$	15,665.9

Interest paid on borrowings was $692.8, $571.8 and $396.5 in 2025, 2024 and 2023, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

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. Bank loans were primarily issued by Nacional Financiera (NAFIN) and Banco Nacional de Desenvolvimento Economico e Social (BNDES). The medium-term notes are issued by PACCAR Financial Corp. (PFC), PACCAR Financial Europe (PFE), PACCAR Financial Mexico (PFM), PACCAR Financial Pty. Ltd. (PFPL Australia), PACCAR Financial Ltd. (PFL Canada) and Banco PACCAR S.A. (PFB).

In November 2024, the Company’s U.S. finance subsidiary, PFC, filed a shelf registration under the Securities Act of 1933. In February 2026, the Company issued $400.0 of medium-term notes under this registration. The total amount of medium-term notes outstanding for PFC as of December 31, 2025 was $7,700.0. The registration expires in November 2027 and does not limit the principal amount of debt securities that may be issued during that period.

As of December 31, 2025, the Company’s European finance subsidiary, PFE, had €750.0 available for issuance under a €2,500.0 medium-term note program listed on the Euro MTF Market of the Luxembourg Stock Exchange. This program renews annually and expires in May 2026.

In August 2021, PFM registered a 10,000.0 Mexican peso program with the Comision Nacional Bancaria y de Valores to issue medium-term notes and commercial paper. The registration expires in August 2026 and limits the amount of commercial paper (up to one year) to 5,000.0 Mexican pesos. At December 31, 2025, 6,000.0 Mexican pesos were available for issuance.

In August 2018, the Company’s Australian subsidiary, PFPL Australia, established a medium-term note program. The program does not limit the principal amount of debt securities that may be issued under the program. The total amount of medium-term notes outstanding for PFPL Australia as of December 31, 2025 was 900.0 Australian dollars.

In May 2021, the Company’s Canadian subsidiary, PFL Canada, established a medium-term note program. The program does not limit the principal amount of debt securities that may be issued under the program. There were no borrowings under this program as of December 31, 2025.

The Company’s Brazilian subsidiary, PFB, established a lending program in December 2021 with the local development bank, BNDES, for qualified customers to receive preferential conditions and generally market interest rates. This program is limited to 2,514.2 Brazilian reais and has 1,025.9 Brazilian reais outstanding as of December 31, 2025. The Brazilian subsidiary also established a Letra Financeira (LF) program in May 2024, and the program does not limit the principal amount of debt securities that may be issued under the program. A total of 500.0 Brazilian reais medium-term notes were outstanding as of December 31, 2025.

The Company has line of credit arrangements of $5,643.0, of which $5,281.1 were unused at December 31, 2025. Included in these arrangements are $4,000.0 of committed bank facilities, of which $1,500.0 expires in June 2026, $1,250.0 expires in June 2028 and $1,250.0 expires in June 2030. The Company intends to extend or replace these credit facilities on or before expiration to maintain 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 committed bank facilities for the year ended December 31, 2025.

K.LEASES

The Company leases certain facilities and equipment. The Company determines whether an arrangement is or contains a lease at inception. The Company accounts for lease and non-lease components separately. The consideration in the contract is allocated to each separate lease and non-lease component of the contract generally based on the relative stand-alone price of the components. The lease component is accounted for in accordance with the lease standard and the non-lease component is accounted for in accordance with other standards. The Company uses its incremental borrowing rate in determining the present value of lease payments unless the rate implicit in the lease is available. The lease term may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option. Leases that have a term of 12 months or less at the commencement date (“short-term leases”) are not included in the right-of-use assets and the lease liabilities. Lease expense for the short-term leases are recognized on a straight-line basis over the lease term.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

The components of lease expense were as follows:

Year Ended December 31,		2025		2024		2023
Finance lease cost
Amortization of right-of-use assets and interest	$	.7	$	.6	$	1.1
Operating lease cost		24.0		23.4		17.5
Short-term lease cost		2.2		2.7		3.7
Variable lease cost		2.9		2.9		2.4
Total lease cost	$	29.8	$	29.6	$	24.7

Balance sheet information related to leases was as follows:

	2025				2024
At December 31,	OPERATING LEASES		FINANCE LEASES		OPERATING LEASES		FINANCE LEASES
TRUCK, PARTS AND OTHER:
Other noncurrent assets, net	$	58.2	$	.9	$	65.6	$	1.7
FINANCIAL SERVICES:
Other assets		3.6				4.8
Total right-of-use assets	$	61.8	$	.9	$	70.4	$	1.7
TRUCK, PARTS AND OTHER:
Accounts payable, accrued expenses and other	$	17.7	$	.7	$	16.3	$	.7
Other liabilities		42.3		.2		50.6		.9
FINANCIAL SERVICES:
Accounts payable, accrued expenses and other		1.5				1.7
Deferred taxes and other liabilities		1.4				2.9
Total lease liabilities	$	62.9	$	.9	$	71.5	$	1.6

The weighted-average remaining lease term and discount rate were as follows at December 31:

	2025						2024
	OPERATING LEASES			FINANCE LEASES			OPERATING LEASES			FINANCE LEASES
Weighted-average remaining lease term	4.5 years			1.9 years			5.1 years			2.5 years
Weighted-average discount rate		5.2	%		2.3	%		4.6	%		2.0	%

Maturities of lease liabilities are as follows:

Beginning January 1,	OPERATING LEASES			FINANCE LEASES
2026	$	21.8		$	.7
2027		17.3			.1
2028		11.8			.1
2029		6.8
2030		4.4
Thereafter		9.0
Total lease payments		71.1			.9
Less: interest		(8.2	)
Total lease liabilities	$	62.9		$	.9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

Cash flow information related to leases was as follows:

Year Ended December 31,		2025		2024		2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	24.1	$	27.0	$	17.0
Financing cash flows from finance leases		.7		.6		1.1
Right-of-use assets obtained in exchange for lease liabilities
Operating leases		11.4		27.1		39.5
Finance leases		.2				1.3

L.COMMITMENTS AND CONTINGENCIES

At December 31, 2025, PACCAR had standby letters of credit and surety bonds totaling $52.1, from third-party financial institutions, in the normal course of business, which guarantee various insurance, financing and other activities. At December 31, 2025, PACCAR’s financial services companies, in the normal course of business, had outstanding commitments to fund new loan and lease transactions amounting to $812.4. The commitments generally expire in 90 days. The Company had other commitments, primarily to purchase production inventory, equipment and commodities amounting to $194.0, $101.6, $84.2, $74.7, $86.4 and $41.5 for 2026, 2027, 2028, 2029, 2030 and beyond, respectively.

The Company is involved in various stages of investigations and cleanup actions in different countries related to environmental matters. In certain of these matters, the Company has been designated as a “potentially responsible party” by domestic and foreign environmental agencies. The Company has accrued the estimated costs to investigate and complete cleanup actions where it is probable that the Company will incur such costs in the future. Expenditures related to environmental activities for the years ended December 31, 2025, 2024 and 2023 were $1.5, $4.4 and $3.0, respectively.

While the timing and amount of the ultimate costs associated with future environmental cleanup cannot be determined, management expects that these matters will not have a significant effect on the Company’s consolidated financial position.

On July 19, 2016, the European Commission (EC) concluded its investigation of all major European truck manufacturers and reached a settlement with DAF Trucks N.V., DAF Trucks Deutschland GmbH and PACCAR Inc (collectively “the Company”). Following the settlement, certain EC-related claims and lawsuits have been filed in various jurisdictions primarily in Europe against all major European truck manufacturers including the Company and certain subsidiaries. These claims and lawsuits include individual and collective proceedings seeking monetary damages, including class actions in the United Kingdom (U.K.), the Netherlands and Israel. In certain jurisdictions, additional claimants may bring EC-related claims and lawsuits.

Several European courts have issued judgments; some have been favorable while others have been unfavorable and have been appealed. The Company believes it has meritorious defenses to all pending legal claims. In the first quarter 2023, the Company recorded a pre-tax charge of $600.0 ($446.4 after-tax) for the estimable total cost. The Company has settled with a significant majority of claimants and continues to pursue appropriate resolutions. Due to ongoing settlement costs, the Company updated its estimate and recorded an additional pre-tax charge of $350.0 ($264.5 after-tax) for the total estimable remaining costs in Interest and other expenses (income), net in the first quarter of 2025.

PACCAR is also a defendant in various other legal proceedings and, in addition, there are various other contingent liabilities arising in the normal course of business. After consultation with legal counsel, management does not anticipate that disposition of these various other proceedings and contingent liabilities will have a material effect on the consolidated financial statements.

M.EMPLOYEE BENEFITS

Severance Costs: The Company incurred severance expense in 2025, 2024 and 2023 of $31.3, $13.5 and $.6, respectively.

Defined Benefit Pension Plans: The Company has several defined benefit pension plans, which cover a majority of its employees. The Company evaluates its actuarial assumptions on an annual basis and considers changes based upon market conditions and other factors.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

The expected return on plan assets is determined by using a market-related value of assets, which is calculated based on an average of the previous five years of asset gains and losses.

Generally, accumulated unrecognized actuarial gains and losses are amortized using the 10% corridor approach. The corridor is defined as the greater of either 10% of the projected benefit obligation or the market-related value of plan assets. The amortization amount is the excess beyond the corridor divided by the average remaining estimated service life of participants on a straight-line basis.

The Company funds its pensions in accordance with applicable employee benefit and tax laws. The Company contributed $24.5 to its pension plans in 2025 and $40.8 in 2024. The Company expects to contribute in the range of $25 to $75 to its pension plans in 2026, of which $11.3 is estimated to satisfy minimum funding requirements. Annual benefits expected to be paid beginning January 1, 2026 are $160.6, $137.1, $150.6, $154.4, $169.2 and a total of $945.9 for the five years thereafter.

Plan assets are invested in global equity and debt securities through professional investment managers with the objective to achieve targeted risk adjusted returns and maintain liquidity sufficient to fund current benefit payments. Typically, each defined benefit plan has an investment policy that includes a target for asset mix, including maximum and minimum ranges for allocation percentages by investment category. The actual allocation of assets may vary at times based upon rebalancing policies and other factors. The Company periodically assesses the target asset mix by evaluating external sources of information regarding the long-term historical return, volatilities and expected future returns for each investment category. In addition, the long-term rates of return assumptions for pension accounting are reviewed annually to ensure they are appropriate. Target asset mix and forecast long-term returns by asset category are considered in determining the assumed long-term rates of return, although historical returns realized are given some consideration.

The fair value of mutual funds, common stocks and U.S. treasuries is determined using the market approach and is based on the quoted prices in active markets. These securities are categorized as Level 1. The fair value of debt securities is determined using the market approach and is based on the quoted market prices of the securities or other observable inputs. These securities are categorized as Level 2.

The fair value of commingled and pooled trust funds is determined using the market approach and is based on the unadjusted net asset value (NAV) per unit as determined by the sponsor of the fund based on the fair values of underlying investments. These assets are collective investment trusts and pooled funds, and substantially all of these investments have no redemption restrictions or unfunded commitments. Securities measured at NAV per unit as a practical expedient are not classified in the fair value hierarchy.

The following information details the allocation of plan assets by investment type. See Note Q for definitions of fair value levels.

		FAIR VALUE HIERARCHY
At December 31, 2025	TARGET	LEVEL 1		LEVEL 2		TOTAL		MEASURED<br>AT NAV		TOTAL
Equities:
U.S. equities								$	1,083.1	$	1,083.1
Global equities									911.9		911.9
Total equities	45 - 55%								1,995.0		1,995.0
Fixed income:
U.S. fixed income		$	231.0	$	352.9	$	583.9	$	826.7	$	1,410.6
Non-U.S. fixed income					37.7		37.7		575.4		613.1
Total fixed income	45 - 55%		231.0		390.6		621.6		1,402.1		2,023.7
Cash and other					46.3		46.3		.1		46.4
Total plan assets		$	231.0	$	436.9	$	667.9	$	3,397.2	$	4,065.1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

		FAIR VALUE HIERARCHY
At December 31, 2024	TARGET	LEVEL 1		LEVEL 2		TOTAL		MEASURED<br>AT NAV		TOTAL
Equities:
U.S. equities								$	1,072.7	$	1,072.7
Global equities									840.4		840.4
Total equities	45 - 65%								1,913.1		1,913.1
Fixed income:
U.S. fixed income		$	129.1	$	257.7	$	386.8	$	708.8	$	1,095.6
Non-U.S. fixed income					36.4		36.4		490.2		526.6
Total fixed income	35 - 55%		129.1		294.1		423.2		1,199.0		1,622.2
Cash and other					82.8		82.8		.2		83.0
Total plan assets		$	129.1	$	376.9	$	506.0	$	3,112.3	$	3,618.3

The following weighted-average assumptions relate to all pension plans of the Company:

At December 31,	2025			2024
Discount rate		5.5	%		5.5	%
Rate of increase in future compensation levels		3.8	%		3.9	%
Assumed long-term rate of return on plan assets		6.7	%		6.7	%

The components of the change in projected benefit obligation and change in plan assets are as follows:

At December 31,	2025			2024
Change in projected benefit obligation:
Benefit obligation at January 1	$	2,765.9		$	2,903.3
Service cost		95.4			107.6
Interest cost		144.5			135.0
Benefits paid from plan assets		(127.9	)		(119.3	)
Actuarial gain		(49.8	)		(224.0	)
Currency translation and other		48.2			(37.7	)
Participant contributions		.6			1.0
Projected benefit obligation at December 31	$	2,876.9		$	2,765.9
Change in plan assets:
Fair value of plan assets at January 1	$	3,618.3		$	3,494.1
Employer contributions		24.5			40.8
Actual gain on plan assets		478.2			234.0
Benefits paid from plan assets		(127.9	)		(119.3	)
Currency translation and other		71.4			(32.3	)
Participant contributions		.6			1.0
Fair value of plan assets at December 31	$	4,065.1		$	3,618.3
Funded status at December 31	$	1,188.2		$	852.4
At December 31,	2025			2024
---	---	---	---	---	---	---
Amounts recorded on Balance Sheets:
Other noncurrent assets, net	$	1,344.3		$	995.8
Accounts payable, accrued expenses and other		38.8			29.4
Other liabilities		117.3			114.0
Accumulated other comprehensive loss:
Actuarial gain		(293.6	)		(80.2	)
Prior service cost		12.7			10.5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

Of the December 31, 2025 amounts in accumulated other comprehensive loss, $4.0 of unrecognized actuarial loss and $1.6 of unrecognized prior service cost are expected to be amortized into net pension expense in 2026.

The accumulated benefit obligation for all pension plans of the Company was $2,561.9 and $2,389.9 at December 31, 2025 and 2024, respectively.

Information for all plans with an accumulated benefit obligation in excess of plan assets is as follows:

At December 31,	2025		2024
Projected benefit obligation	$	147.2	$	140.4
Accumulated benefit obligation		140.7		126.4
Fair value of plan assets		5.4		4.6

The components of pension expense are as follows:

Year Ended December 31,		2025			2024			2023
Service cost	$	95.4		$	107.6		$	94.0
Interest on projected benefit obligation		144.5			135.0			127.5
Expected return on assets		(251.7	)		(243.7	)		(230.3	)
Amortization of prior service costs		1.4			1.4			1.4
Recognized actuarial loss		1.9			7.2			4.7
Settlement and curtailment costs		2.0
Net pension (gain) expense	$	(6.5	)	$	7.5		$	(2.7	)

The components of net pension expense other than service cost are included in Interest and other expenses (income), net on the Consolidated Statements of Income.

Multi-employer Plans: The Company participates in multi-employer plans in the U.S. and Europe. These are typically under collective bargaining agreements and cover its union-represented employees. The Company’s participation in the following multi-employer plans for the years ended December 31 are as follows:

		PENSION PLAN		COMPANY CONTRIBUTIONS
PENSION PLAN	EIN	NUMBER	SURCHARGE		2025		2024		2023
Metal and Electrical Engineering Industry Pension Fund		135668	Yes	$	49.4	$	48.4	$	46.1
Western Metal Industry Pension Plan	91-6033499	001	Yes		3.5		4.3		4.5
Other plans					.6		1.1		1.2
				$	53.5	$	53.8	$	51.8

The Company contributions shown in the table above approximate the multi-employer pension expense for each of the years ended December 31, 2025, 2024 and 2023, respectively.

Metal and Electrical Engineering Industry Pension Fund is a multi-employer union plan incorporating all DAF employees in the Netherlands and is covered by a collective bargaining agreement that will expire on December 31, 2026. The Company’s contributions were less than 5% of the total contributions to the plan for the last three reporting periods ending December 2025. The plan is required by law (the Netherlands Pension Act) to have a minimum coverage ratio in excess of 104.4% and a policy coverage ratio in excess of 119.1% (weighted coverage ratio of the last 12 months). Because the actual coverage ratio of 125.3% at December 31, 2025 is above the required threshold, the funding improvement plan is no longer required. Based on the previous funding improvement plan, the required coverage of 119.1% was expected to be reached by the end of 2033.

The Western Metal Industry Pension Plan is located in the U.S. and is covered by a collective bargaining agreement that will expire on November 2, 2030. In accordance with the U.S. Pension Protection Act of 2006, the plan continued to be certified as critical (red) for the 2025 plan year and a rehabilitation plan has been implemented requiring additional contributions as long as the plan remains in critical status. Contributions by the Company were 21% and 26% of the total contributions to the plan for the years ended December 31, 2025 and 2024, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

Other plans are principally located in the U.S. and the Company’s contributions to these plans for the years ended December 31, 2025 and 2024 were less than 5% of each plan’s total contributions.

There were no significant changes for the multi-employer plans in the periods presented that affected comparability between periods.

Defined Contribution Plans: The Company maintains several defined contribution benefit plans whereby it contributes designated amounts on behalf of participant employees. The largest plan is for U.S. salaried employees where the Company matches a percentage of employee contributions up to an annual limit. The match was 5% of eligible pay in 2025, 2024 and 2023. Other plans are principally located in Australia, the Netherlands, Canada, United Kingdom and Germany. Expenses for these plans were $68.5, $73.7 and $65.4 in 2025, 2024 and 2023, respectively.

N.INCOME TAXES

The Company’s tax rate is based on income and statutory tax rates in the various jurisdictions in which the Company operates. Tax law requires certain items to be included in or excluded from the Company’s tax returns, and in some cases to be recognized in different times than the items reflected in the Company’s financial statements. As a result, the Company’s annual tax rate reflected in its financial statements is different than that reported in its tax returns. Some of these differences are permanent, such as expenses that are not deductible in the Company’s tax return, and some differences reverse over time, such as depreciation expense. These temporary differences create deferred tax assets and liabilities. The Company establishes valuation allowances for its deferred tax assets if, based on the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The components of the Company’s income before income taxes include the following:

Year Ended December 31,	2025		2024		2023
Domestic	$	2,095.6	$	3,525.1	$	3,913.7
Foreign		927.9		1,875.8		1,804.5
	$	3,023.5	$	5,400.9	$	5,718.2

The components of the Company’s provision for income taxes include the following:

Year Ended December 31,	2025		2024			2023
Current provision:
Federal	$	44.2	$	679.2		$	845.5
State		63.0		158.2			179.8
Foreign		207.4		480.8			395.8
		314.6		1,318.2			1,421.1
Deferred obligation (benefit):
Federal		293.6		(65.8	)		(141.5	)
State		17.4		(7.1	)		(24.4	)
Foreign		22.1		(6.4	)		(137.8	)
		333.1		(79.3	)		(303.7	)
	$	647.7	$	1,238.9		$	1,117.4

Tax benefits recognized for net operating loss (NOL) carryforwards were $9.5, $8.3 and $118.2 for the years ended 2025, 2024 and 2023, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

A reconciliation of the statutory U.S. federal tax rate to the effective income tax rate is as follows:

	2025					2024					2023
Statutory Tax	$	634.9		21.0	%	$	1,134.2		21.0	%	$	1,200.8		21.0	%
Effect of:
Domestic Federal
Tax Credits
Research and development tax credit		(60.4	)	(2.0	)		(48.2	)	(.9	)		(39.5	)	(.7	)
Other		(.3	)				(.5	)
Cross-border tax laws
Foreign-derived intangible income		(6.5	)	(.2	)		(36.0	)	(.7	)		(43.2	)	(.8	)
Other		(3.2	)	(.1	)		(.3	)				3.3
Other Domestic Federal		(18.0	)	(.6	)		(10.8	)	(.2	)		(8.0	)	(.1	)
Domestic state and local income taxes, net of federal income tax effect		66.5		2.2			120.0		2.2			124.0		2.2
Foreign
Brasil
Brasil valuation allowance release												(119.7	)	(2.1	)
Other		(2.0	)	(.1	)		13.5		.2			(6.9	)	(.1	)
Other foreign jurisdictions		36.7		1.2			67.0		1.3			6.6		.1
Total Tax Provision	$	647.7		21.4	%	$	1,238.9		22.9	%	$	1,117.4		19.5	%

The states that contribute to the majority of the effect of the domestic state income tax expense include California, Minnesota, Tennessee, Georgia, Wisconsin and Maryland.

At December 31, 2025, the Company had NOL carryforwards totaling $441.0, consisting of $357.0 attributable to foreign subsidiaries and $84.0 related to U.S. state jurisdictions. The related NOL deferred tax asset was $116.6, against which a $5.9 valuation allowance has been recorded. The NOL carryforwards have varying expirations periods ranging from three years to indefinite, including $313.9 of foreign subsidiaries’ NOLs that do not expire. Some NOLs are subject to certain limitations under applicable laws. The Company evaluates the realizability of its NOL carryforwards on a regular basis, considering both historical results and projected future results.

In July 2025, the One Big Beautiful Bill Act (OBBBA) was enacted in the United States. Key provisions of OBBBA include reinstating a 100% deduction of qualifying research and development costs beginning in 2025, as well as a deduction for previously capitalized research and development costs, and 100% bonus depreciation for qualified property. The Company recognized the income tax timing effects of OBBBA in its 2025 financial statements, including a reduction of $365.8 in deferred tax assets as of December 31, 2025. Also from the OBBBA adoption, the Company became subject to corporate alternative minimum tax (CAMT) and recorded $42.3 of CAMT credit carryforwards at December 31, 2025. These tax credit carryforwards do not expire and are expected to be used to offset future federal income tax liabilities and, accordingly, did not impact the Company’s effective tax rate for 2025.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

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

At December 31,	2025			2024
Assets:
Accrued liabilities	$	308.5		$	308.2
R&D expense capitalization					365.8
NOL, CAMT and other credit carryforwards		170.1			110.3
Inventory adjustments		76.3			62.9
Allowance for losses on receivables		75.6			50.6
Other		159.5			127.5
		790.0			1,025.3
Valuation allowance		(5.9	)		(1.6	)
		784.1			1,023.7
Liabilities:
Financial Services leasing depreciation		(579.6	)		(559.5	)
Depreciation and amortization		(250.0	)		(231.5	)
Postretirement benefit plans		(296.8	)		(210.3	)
Other		(53.9	)		(98.7	)
		(1,180.3	)		(1,100.0	)
Net deferred tax liability	$	(396.2	)	$	(76.3	)

The balance sheet classifications of the Company’s deferred tax assets and liabilities are as follows:

At December 31,	2025			2024
Truck, Parts and Other:
Other noncurrent assets, net	$	230.0		$	485.2
Other liabilities		(170.3	)		(102.7	)
Financial Services:
Other assets		76.1			60.1
Deferred taxes and other liabilities		(532.0	)		(518.9	)
Net deferred tax liability	$	(396.2	)	$	(76.3	)

As of December 31, 2025, the Company intends to indefinitely reinvest its foreign earnings and cash unless such repatriation results in no or minimal tax costs. For the earnings the Company intends to indefinitely reinvest, no deferred tax liabilities for foreign withholding or other taxes have been recorded.

Income taxes paid (net of refunds) for the years ending December 31:

	2025		2024		2023
U.S. federal	$	277.4	$	709.5	$	856.8
U.S. state and local		55.9		137.7		201.3
Foreign:
Mexico		129.2		97.7		69.8
Australia		52.8		74.9		72.0
Canada		46.9		61.9		44.6
Netherlands		26.6		131.0		163.8
Other foreign jurisdictions		57.5		106.0		91.0
Total income tax payments (net of refunds)	$	646.3	$	1,318.7	$	1,499.3

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

	2025			2024			2023
Balance at January 1	$	38.9		$	31.2		$	27.8
Additions for tax positions related to the current year		1.2			9.4			7.7
Additions for tax positions related to prior years		4.3			3.9			2.6
Reductions for tax positions related to prior years		(9.2	)					(1.6	)
Lapse of statute of limitations		(7.3	)		(5.6	)		(5.3	)
Balance at December 31	$	27.9		$	38.9		$	31.2

The Company had $27.9, $38.9 and $31.2 of unrecognized tax benefits, all of which would impact the effective tax rate, if recognized, as of December 31, 2025, 2024 and 2023, respectively.

The Company recognized a $.3 net benefit in 2025, and interest expense of $1.1 and $.8 in 2024 and 2023, respectively. Accrued interest expense and penalties were $2.4, $2.7 and $1.7 as of December 31, 2025, 2024 and 2023, respectively. Interest and penalties are classified as Income taxes in the Consolidated Statements of Income.

The Company believes it is reasonably possible that approximately $8.5 of unrecognized tax benefits, primarily related to research and development tax credits, may be resolved within the next 12 months. As of December 31, 2025, the statute of limitations has lapsed for U.S. federal income tax purposes for all years prior to 2022. The Company’s open years for tax examinations in other major jurisdictions include 2011 through 2025.

O.STOCKHOLDERS’ EQUITY

Accumulated Other Comprehensive Income (Loss): The components of AOCI and the changes in AOCI, net of tax, included in the Consolidated Balance Sheets and the Consolidated Statements of Stockholders’ Equity, consisted of the following:

	DERIVATIVE <br>CONTRACTS			MARKETABLE <br>DEBT <br>SECURITIES			PENSION <br>PLANS		FOREIGN <br>CURRENCY <br>TRANSLATION			TOTAL
Balance at January 1, 2025	$	32.5		$	(.7	)	$	69.7	$	(1,214.8	)	$	(1,113.3	)
Recorded into AOCI		(168.8	)		19.2			207.3		574.6			632.3
Reclassified out of AOCI		139.7			.7			3.9					144.3
Net other comprehensive (loss) income		(29.1	)		19.9			211.2		574.6			776.6
Balance at December 31, 2025	$	3.4		$	19.2		$	280.9	$	(640.2	)	$	(336.7	)
	DERIVATIVE <br>CONTRACTS			MARKETABLE <br>DEBT <br>SECURITIES			PENSION <br>PLANS			FOREIGN <br>CURRENCY <br>TRANSLATION			TOTAL
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Balance at January 1, 2024	$	(11.0	)	$	(13.9	)	$	(110.3	)	$	(558.7	)	$	(693.9	)
Recorded into AOCI		204.2			15.5			173.1			(656.1	)		(263.3	)
Reclassified out of AOCI		(160.7	)		(2.3	)		6.9						(156.1	)
Net other comprehensive income (loss)		43.5			13.2			180.0			(656.1	)		(419.4	)
Balance at December 31, 2024	$	32.5		$	(.7	)	$	69.7		$	(1,214.8	)	$	(1,113.3	)
	DERIVATIVE <br>CONTRACTS			MARKETABLE <br>DEBT <br>SECURITIES			PENSION <br>PLANS			FOREIGN <br>CURRENCY <br>TRANSLATION			TOTAL
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Balance at January 1, 2023	$	35.1		$	(43.6	)	$	(110.9	)	$	(834.0	)	$	(953.4	)
Recorded into AOCI		(137.9	)		32.4			(4.0	)		275.3			165.8
Reclassified out of AOCI		91.8			(2.7	)		4.6						93.7
Net other comprehensive (loss) income		(46.1	)		29.7			.6			275.3			259.5
Balance at December 31, 2023	$	(11.0	)	$	(13.9	)	$	(110.3	)	$	(558.7	)	$	(693.9	)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

Reclassifications out of AOCI during the years ended December 31, 2025, 2024 and 2023 were as follows:

	LINE ITEM IN THE CONSOLIDATED	AMOUNT RECLASSIFIED OUT OF AOCI
AOCI COMPONENTS	STATEMENTS OF INCOME		2025			2024			2023
Unrealized losses (gains) on derivative contracts:
Truck, Parts and Other
Foreign-exchange contracts	Net sales and revenues	$	5.6		$	(12.1	)	$	31.9
	Cost of sales and revenues		(29.9	)		(28.8	)		2.2
	Interest and other expenses (income), net		39.3			(15.6	)		(.9	)
Commodity contracts	Cost of sales and revenues		(.4	)		13.1			4.2
Financial Services
Foreign-exchange contracts	Interest and other borrowing expenses		14.8			(7.3	)		(2.1	)
Interest-rate contracts	Interest and other borrowing expenses		146.2			(149.5	)		76.5
	Pre-tax expense increase (reduction)		175.6			(200.2	)		111.8
	Tax (benefit) expense		(35.9	)		39.5			(20.0	)
	After-tax expense increase (reduction)		139.7			(160.7	)		91.8
Unrealized losses (gains) on marketable debt securities:
Marketable debt securities	Investment income		1.0			(3.0	)		(3.6	)
	Tax (benefit) expense		(.3	)		.7			.9
	After-tax income reduction (increase)		.7			(2.3	)		(2.7	)
Pension plans:
Truck, Parts and Other
Actuarial loss	Interest and other expenses (income), net		1.9			7.2			4.7
Prior service costs	Interest and other expenses (income), net		1.4			1.4			1.4
Settlement and curtailment costs	Interest and other expenses (income), net		2.0
	Pre-tax expense increase		5.3			8.6			6.1
	Tax benefit		(1.4	)		(1.7	)		(1.5	)
	After-tax expense increase		3.9			6.9			4.6
Total reclassifications out of AOCI		$	144.3		$	(156.1	)	$	93.7

Other Capital Stock Changes: The Company purchased and retired .4 million treasury shares in 2025 and nil in 2024 and 2023.

P.DERIVATIVE FINANCIAL INSTRUMENTS

As part of its risk management strategy, the Company enters into derivative contracts to hedge against the risks of interest rates, foreign currency rates and commodity prices.

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 December 31, 2025, the notional amount of the Company’s interest-rate contracts was $4,390.7 with amounts expiring over the next

8.2

years. Notional maturities for all interest-rate contracts are $1,278.9 for 2026, $860.1 for 2027, $833.4 for 2028, $972.5 for 2029, $33.8 for 2030 and $412.0 thereafter.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

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. The Company enters into foreign-exchange contracts as net investment hedges to reduce the foreign currency exposure from its investments in foreign subsidiaries. At December 31, 2025, the notional amount of the outstanding foreign-exchange contracts was $1,668.1. Foreign-exchange contracts typically mature within one year.

Commodity Contracts: The Company enters into commodity forward contracts to hedge the prices of certain commodities used in the production of trucks. The objective is to reduce the fluctuation in earnings and cash flows associated with adverse movement in commodity prices. At December 31, 2025, the notional amount of the outstanding commodity contracts was $10.7. Commodity contracts mature within one year.

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

At December 31,	2025						2024
	ASSETS			LIABILITIES			ASSETS			LIABILITIES
Derivatives designated under hedge accounting:
Interest-rate contracts:
Financial Services:
Other assets	$	50.0					$	132.2
Deferred taxes and other liabilities				$	76.8					$	41.1
Foreign-exchange contracts:
Truck, Parts and Other:
Other current assets		11.9						67.6
Accounts payable, accrued expenses and other					84.3						3.0
Financial Services:
Other assets								5.8
Deferred taxes and other liabilities					4.2
Commodity contracts:
Truck, Parts and Other:
Other current assets		.3
	$	62.2		$	165.3		$	205.6		$	44.1
Derivatives not designated as hedging instruments:
Foreign-exchange contracts:
Truck, Parts and Other:
Other current assets	$	.5					$	1.2
Accounts payable, accrued expenses and other				$	.9					$	2.4
Financial Services:
Other assets		.3						.2
Deferred taxes and other liabilities					.1						.2
	$	.8		$	1.0		$	1.4		$	2.6
Gross amounts recognized in Balance Sheets	$	63.0		$	166.3		$	207.0		$	46.7
Less amounts not offset in financial instruments, subject to enforceable master netting arrangements:
Truck, Parts and Other:
Foreign-exchange contracts	$	(.4	)	$	(.4	)	$	(.9	)	$	(.9	)
Commodity contracts
Financial Services:
Interest-rate contracts		(15.6	)		(15.6	)		(11.4	)		(11.4	)
Net amount	$	47.0		$	150.3		$	194.7		$	34.4

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

The following table presents the amount of loss (gain) from derivative financial instruments recorded in the Consolidated Statements of Comprehensive Income:

Year Ended December 31,	2025					2024						2023
	INTEREST-		FOREIGN-			INTEREST-			FOREIGN-			INTEREST-		FOREIGN-
	RATE		EXCHANGE			RATE			EXCHANGE			RATE		EXCHANGE
Truck, Parts and Other:
Net sales and revenues
Cash flow hedges			$	5.6					$	(12.1	)			$	31.9
Cost of sales and revenues
Cash flow hedges				(29.9	)					(28.8	)				2.2
Derivatives not designated as hedging instruments				(1.5	)										(5.1	)
Interest and other expenses (income), net
Cash flow hedges				39.3						(9.2	)				12.8
Net investment hedges				(12.6	)					(9.8	)				(8.7	)
Derivatives not designated as hedging instruments				12.1						(10.2	)				8.8
			$	13.0					$	(70.1	)			$	41.9
Financial Services:
Interest and other borrowing expenses
Cash flow hedges	$	146.2	$	14.8		$	(149.5	)	$	(5.0	)	$	76.5	$	1.8
Fair value hedges		2.1					9.3						9.8
Derivatives not designated as hedging instruments				(5.2	)					9.7					1.7
	$	148.3	$	9.6		$	(140.2	)	$	4.7		$	86.3	$	3.5
Total	$	148.3	$	22.6		$	(140.2	)	$	(65.4	)	$	86.3	$	45.4

The (gain) loss from commodity contracts recorded in cost of sales and revenue was $(.4), $13.1 and $4.2 for the years ended 2025, 2024 and 2023, respectively.

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 following table presents the amounts recorded on the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges:

At December 31,	2025		2024
Financial Services
Term notes:
Carrying amount of the hedged liabilities	$	753.7	$	543.1
Cumulative basis adjustment increase (decrease) included in the carrying amount		3.9		(8.6	)

The above table excludes the cumulative basis adjustments on discontinued hedge relationships of nil and $(2.9) as of December 31, 2025 and 2024, respectively.

Cash Flow Hedges

Substantially all of the Company’s interest-rate contracts and some foreign-exchange contracts and commodity contracts have been designated as cash flow hedges. Changes in the fair value of derivatives designated as cash flow hedges are recorded in AOCI. Amounts in AOCI are reclassified into net income in the same period in which the hedged transaction affects earnings. The Company elected to exclude the forward premium component (excluded component) on some foreign-exchange cash flow hedges and amortize the excluded component over the life of the derivative instruments. The amortization of the excluded component is recognized in Interest and other expenses (income), net in the Truck, Parts and Other segment and Interest and other borrowing expenses in the Financial Services segment in the Consolidated Statements of Income. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows is

6.9

years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

The following table presents the pre-tax effect of (loss) gain on cash flow hedges recognized in other comprehensive income (loss) (OCI):

Year Ended December 31,	2025						2024				2023
	INTEREST-			FOREIGN-			INTEREST-		FOREIGN-		INTEREST-			FOREIGN-
	RATE			EXCHANGE			RATE		EXCHANGE		RATE			EXCHANGE
(Loss) gain recognized in OCI:
Truck, Parts and Other				$	(35.6	)			$	88.9				$	(65.7	)
Financial Services	$	(162.9	)		(16.9	)	$	176.9		9.2	$	(110.5	)		1.8
	$	(162.9	)	$	(52.5	)	$	176.9	$	98.1	$	(110.5	)	$	(63.9	)

The pre-tax effect of gain (loss) on commodity hedges recognized in other comprehensive income (OCI) for Truck, Parts and Other was $.7, $(13.9) and $(.5) in 2025, 2024 and 2023, respectively.

The amount of loss in AOCI at December 31, 2025 that is estimated to be reclassified into earnings in the following 12 months if interest rates and exchange rates remain unchanged is approximately $40.7, 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.

The amount of losses reclassified out of AOCI into net income based on the probability that the original forecasted transactions would not occur were $.1 for the year ended December 31, 2025, $2.8 for the year ended December 31, 2024 and nil for the year ended December 31, 2023.

Net Investment Hedges

Changes in the fair value of derivatives designated as net investment hedges are recorded in AOCI as an adjustment to the Cumulative Translation Adjustment (CTA). The notional amount of the outstanding net investment hedges was $638.1, $553.8 and $443.6 at December 31, 2025, 2024 and 2023, respectively. The pre-tax (loss) gain recognized in OCI for the net investment hedges was $(101.4), $32.6 and $(8.2) at December 31, 2025, 2024 and 2023, respectively.

Q.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.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

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.

Marketable Equity Securities: The Company’s equity securities are traded on active exchanges and are classified as Level 1.

Derivative Financial Instruments: The Company’s derivative contracts consist of interest-rate swaps, cross currency swaps, foreign currency exchange and commodity 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, forward rates and commodity prices 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 December 31, 2025	LEVEL 1		LEVEL 2		TOTAL
Assets:
Marketable debt securities
U.S. tax-exempt securities			$	344.5	$	344.5
U.S. taxable municipal / non-U.S. provincial bonds				421.6		421.6
U.S. corporate securities				940.3		940.3
U.S. government securities	$	436.2				436.2
Non-U.S. corporate securities				639.7		639.7
Non-U.S. government securities				213.8		213.8
Other debt securities				207.8		207.8
Total marketable debt securities	$	436.2	$	2,767.7	$	3,203.9
Marketable equity securities	$	3.8			$	3.8
Total marketable securities	$	440.0	$	2,767.7	$	3,207.7
Derivatives
Cross currency swaps			$	30.0	$	30.0
Interest-rate swaps				20.0		20.0
Foreign-exchange contracts				12.7		12.7
Commodity contracts				.3		.3
Total derivative assets			$	63.0	$	63.0
Liabilities:
Derivatives
Cross currency swaps			$	67.1	$	67.1
Interest-rate swaps				9.7		9.7
Foreign-exchange contracts				89.5		89.5
Total derivative liabilities			$	166.3	$	166.3

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

At December 31, 2024	LEVEL 1		LEVEL 2		TOTAL
Assets:
Marketable debt securities
U.S. tax-exempt securities			$	303.7	$	303.7
U.S. taxable municipal / non-U.S. provincial bonds				380.1		380.1
U.S. corporate securities				864.2		864.2
U.S. government securities	$	285.7				285.7
Non-U.S. corporate securities				608.1		608.1
Non-U.S. government securities				164.3		164.3
Other debt securities				166.4		166.4
Total marketable debt securities	$	285.7	$	2,486.8	$	2,772.5
Marketable equity securities	$	6.3			$	6.3
Total marketable securities	$	292.0	$	2,486.8	$	2,778.8
Derivatives
Cross currency swaps			$	121.3	$	121.3
Interest-rate swaps				10.9		10.9
Foreign-exchange contracts				74.8		74.8
Total derivative assets			$	207.0	$	207.0
Liabilities:
Derivatives
Cross currency swaps			$	28.7	$	28.7
Interest-rate swaps				12.4		12.4
Foreign-exchange contracts				5.6		5.6
Total derivative liabilities			$	46.7	$	46.7

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, floating-rate wholesale financing, 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 assumptions regarding the credit and market risks to approximate 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 was as follows:

At December 31,	2025				2024
	CARRYING		FAIR		CARRYING		FAIR
	AMOUNT		VALUE		AMOUNT		VALUE
Assets:
Financial Services fixed rate loans	$	9,928.0	$	10,118.4	$	8,900.6	$	8,889.3
Liabilities:
Financial Services fixed rate debt		10,453.1		10,570.6		9,922.2		9,917.6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions, except per share data)

R.STOCK COMPENSATION PLANS

PACCAR has certain plans under which officers and key employees may be granted options to purchase shares of the Company’s authorized but unissued common stock under plans approved by stockholders. Non‑employee directors and certain officers may be granted restricted shares of the Company’s common stock under plans approved by stockholders. Options outstanding under these plans were granted with exercise prices equal to the fair market value of the Company’s common stock at the date of grant. Options expire no later than ten years from the grant date and generally vest after three years. Restricted stock awards generally vest over three years or earlier upon meeting certain age and service requirements.

The Company recognizes compensation cost on these options and restricted stock awards on a straight-line basis over the requisite period the employee is required to render service less estimated forfeitures based on historical experience. The plans contain antidilution provisions. The maximum number of shares of the Company’s common stock authorized for issuance under these plans is 70.0 million shares, and as of December 31, 2025, the maximum number of shares available for future grants was 13.7 million.

The assumptions used in determining the fair value of the option awards for each of the grant years are as follows:

		2025			2024			2023
Risk-free interest rate		4.59	%		4.21	%		3.84	%
Expected volatility		27	%		27	%		26	%
Expected dividend yield		3.9	%		4.4	%		4.5	%
Expected term	6 years			6 years			6 years
Weighted-average grant date fair value of options per share	$	23.44		$	20.08		$	13.17

The estimated fair value of each option award is determined on the date of grant using the Black-Scholes-Merton option pricing model that uses assumptions noted in the table above. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on historical volatility. The dividend yield is based on an estimated future dividend yield using projected net income for the next five years, implied dividends and Company stock price. The expected term is based on the period of time that options granted are expected to be outstanding based on historical experience.

The fair value of options granted was $15.5, $13.5 and $11.9 for the years ended December 31, 2025, 2024 and 2023, respectively. The fair value of options vested was $11.2, $7.4 and $6.8 during the years ended December 31, 2025, 2024 and 2023, respectively.

A summary of activity under the Company’s stock plans is presented below:

		2025		2024		2023
Intrinsic value of options exercised	$	38.9	$	56.8	$	41.2
Cash received from stock option exercises		43.6		52.0		51.7
Tax benefit related to stock award exercises		11.6		8.0		5.4
Stock-based compensation		24.1		22.9		21.2
Tax benefit related to stock-based compensation		2.5		2.1		1.7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions, except per share data)

The summary of options as of December 31, 2025 and changes during the year then ended are presented below:

				PER SHARE		REMAINING		AGGREGATE
	NUMBER			EXERCISE		CONTRACTUAL		INTRINSIC
	OF SHARES			PRICE*		LIFE IN YEARS*		VALUE
Options outstanding at January 1		3,435,800		$	68.77
Granted		660,000			109.13
Exercised		(777,000	)		56.11
Cancelled		(194,000	)		96.72
Options outstanding at December 31		3,124,800		$	78.71		6.68	$	96.3
Vested and expected to vest		3,003,300		$	77.64		6.61	$	95.7
Exercisable		1,266,400		$	57.29		4.71	$	66.1

* Weighted-average

The fair value of restricted shares is determined based upon the stock price on the date of grant. The summary of nonvested restricted shares as of December 31, 2025 and changes during the year then ended is presented below:

	NUMBER			GRANT DATE
NONVESTED SHARES	OF SHARES			FAIR VALUE*
Nonvested awards outstanding at January 1		245,400		$	82.07
Granted		125,700			108.21
Vested		(172,500	)		84.38
Forfeited		(8,600	)		87.29
Nonvested awards outstanding at December 31		190,000		$	97.03

* Weighted-average

As of December 31, 2025, there was $10.7 of total unrecognized compensation cost related to nonvested stock options, which is recognized over a remaining weighted-average vesting period of

1.51

years. Unrecognized compensation cost related to nonvested restricted stock awards of $1.9 is expected to be recognized over a remaining weighted-average vesting period of

1.19

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

Year Ended December 31,	2025	2024	2023
Additional shares	857,500	1,261,900	1,099,000
Antidilutive options	1,330,500	671,000	891,500

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

S.SEGMENT AND RELATED INFORMATION

PACCAR operates in three principal segments: Truck, Parts and Financial Services. The Company’s chief operating decision maker is the Chief Executive Officer (CEO). The CEO has principal executives (Segment Managers) who oversee the major business operations of the Company. The CEO allocates resources and evaluates the performance of its Truck and Parts segments based on operating profits, which excludes investment income, other income and expense, and income taxes. The Financial Services segment’s performance is evaluated based on income before income taxes. Geographic revenues from external customers are presented based on the country of the customer. The accounting policies of the reportable segments are the same as those applied in the consolidated financial statements as described in Note A.

Truck and Parts: The Truck segment includes the design and manufacture of high-quality, light-, medium- and heavy-duty commercial trucks and the Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles, 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 expenses 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. Truck segment assets related to the indirect expense allocation are not allocated to the Parts segment. Other (income) expenses included in the Truck and Parts segments is primarily the effects of foreign currency translation.

Financial Services: The Financial Services segment derives its earnings primarily from financing or leasing of PACCAR products and services provided to truck customers and dealers. Revenues are primarily generated from operations in North America and Europe.

In Europe, the marketing of used trucks, including those units sold by the Truck segment subject to an RVG, is performed by the Financial Services segment. When a customer returns the truck at the end of the RVG contract, the Company’s Truck segment records a reduction in an RVG liability and the Company’s Financial Services segment records a used truck asset and revenue from the subsequent sale. Certain gains and losses from the sale of these used trucks are shared with the Truck segment.

Other: Included in Other is sales, income and expenses not attributable to a reportable segment, as well as the Company’s industrial winch manufacturing business through October 31, 2024. In the fourth quarter of 2024 PACCAR sold its industrial winch business. The resulting gain on sale is included in Truck, Parts and Other "Interest and other expenses (income), net" on the Company's Consolidated Statements of Income. The primary items in Other include non-service cost components of pension expense, certain corporate income and expenses and a charge for civil litigation claims in Europe for 2025 and 2023. Intercompany interest (expense) income on dealer wholesale financing of $(67.2), $(80.9) and $(91.2), and on cash advances with the financial services companies of $11.7, $13.6 and $12.4 for 2025, 2024 and 2023, respectively, are also included.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

Geographic Area Data		2025		2024		2023
Net sales and revenues:
United States	$	15,429.9	$	18,664.5	$	18,841.6
Europe		6,945.9		6,962.6		8,741.4
Other		6,069.0		8,036.7		7,544.4
	$	28,444.8	$	33,663.8	$	35,127.4
Property, plant and equipment, net:
United States	$	2,363.9	$	2,124.1	$	1,950.9
The Netherlands		858.3		697.7		654.0
Belgium		505.8		479.9		550.4
Other		777.3		683.9		624.8
	$	4,505.3	$	3,985.6	$	3,780.1
Equipment on operating leases, net:
Mexico	$	443.8	$	405.4	$	420.2
United States		355.2		507.7		524.9
Spain		223.3		216.6		303.3
France		205.0		204.2		223.5
Poland		167.7		127.7		187.9
Germany		165.0		179.1		247.1
The Netherlands		50.8		62.3		137.8
Other		315.1		257.6		258.3
	$	1,925.9	$	1,960.6	$	2,303.0
	2025
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Business Segment Data	Truck			Parts			Other			Truck, Parts and Other			Financial Services		Total
Net sales and revenues	$	19,748.0		$	6,946.3		$	(3.9	)	$	26,690.4		$	2,209.7	$	28,900.1
Less intersegment		(382.7	)		(72.6	)					(455.3	)				(455.3	)
External Customers	$	19,365.3		$	6,873.7		$	(3.9	)	$	26,235.1		$	2,209.7	$	28,444.8
Cost of sales and revenues		17,904.8			4,818.7			13.2			22,736.7					22,736.7
Research and development		321.7			123.8						445.5					445.5
Selling, general and administrative		237.7			257.8			81.1			576.6			159.2		735.8
Interest and other borrowing expenses														783.0		783.0
Depreciation and other expenses														657.6		657.6
Provision for losses on receivables														124.5		124.5
Other segment expenses, net*		30.3			5.4			248.6			284.3					284.3
	$	870.8		$	1,668.0		$	(346.8	)	$	2,192.0		$	485.4	$	2,677.4
Investment income																346.1
Income (loss) before income taxes	$	870.8		$	1,668.0		$	(346.8	)	$	2,192.0		$	485.4	$	3,023.5
Depreciation and amortization:	$	367.3		$	15.7		$	24.7		$	407.7		$	419.7	$	827.4
Expenditures for long-lived assets:	$	668.8		$	19.4		$	40.1		$	728.3		$	643.7	$	1,372.0

* In 2025, Other includes a $350.0 charge related to civil litigation in Europe (EC-related claims) which is discussed in Note L.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025, 2024 and 2023 (currencies in millions)

	2024
Business Segment Data	Truck			Parts			Other			Truck, Parts and Other			Financial Services		Total
Net sales and revenues	$	25,274.2		$	6,743.9		$	59.5		$	32,077.6		$	2,099.5	$	34,177.1
Less intersegment		(435.8	)		(77.5	)					(513.3	)				(513.3	)
External Customers	$	24,838.4		$	6,666.4		$	59.5		$	31,564.3		$	2,099.5	$	33,663.8
Cost of sales and revenues		21,389.8			4,604.4			75.4			26,069.6					26,069.6
Research and development		343.6			108.7			.6			452.9					452.9
Selling, general and administrative		254.2			246.4			84.4			585.0			159.0		744.0
Interest and other borrowing expenses														710.8		710.8
Depreciation and other expenses														718.5		718.5
Provision for losses on receivables														75.6		75.6
Other segment (income) expenses, net		(1.8	)		2.4			(114.4	)		(113.8	)				(113.8	)
	$	2,852.6		$	1,704.5		$	13.5		$	4,570.6		$	435.6	$	5,006.2
Investment income																394.7
Income before income taxes	$	2,852.6		$	1,704.5		$	13.5		$	4,570.6		$	435.6	$	5,400.9
Depreciation and amortization:	$	374.0		$	14.8		$	24.7		$	413.5		$	503.4	$	916.9
Expenditures for long-lived assets:	$	711.4		$	52.2		$	51.4		$	815.0		$	887.7	$	1,702.7
	2023
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Business Segment Data	Truck			Parts			Other			Truck, Parts and Other			Financial Services		Total
Net sales and revenues	$	27,257.1		$	6,486.5		$	54.7		$	33,798.3		$	1,811.9	$	35,610.2
Less intersegment		(410.7	)		(72.1	)					(482.8	)				(482.8	)
External Customers	$	26,846.4		$	6,414.4		$	54.7		$	33,315.5		$	1,811.9	$	35,127.4
Cost of sales and revenues		22,440.6			4,369.6			84.0			26,894.2					26,894.2
Research and development		306.6			103.5			.8			410.9					410.9
Selling, general and administrative		278.5			238.0			87.8			604.3			149.0		753.3
Interest and other borrowing expenses														500.6		500.6
Depreciation and other expenses														590.7		590.7
Provision for losses on receivables														31.3		31.3
Other segment expenses, net*		20.8			.7			498.9			520.4					520.4
	$	3,799.9		$	1,702.6		$	(616.8	)	$	4,885.7		$	540.3	$	5,426.0
Investment income																292.2
Income (loss) before income taxes	$	3,799.9		$	1,702.6		$	(616.8	)	$	4,885.7		$	540.3	$	5,718.2
Depreciation and amortization:	$	403.5		$	15.0		$	25.3		$	443.8		$	480.1	$	923.9
Expenditures for long-lived assets:	$	584.8		$	65.7		$	33.2		$	683.7		$	582.2	$	1,265.9

* In 2023, Other includes a $600.0 charge related to civil litigation in Europe (EC-related claims) which is discussed in Note L.

Business Segment Data	2025		2024		2023
Segment Assets:
Truck	$	7,966.1	$	7,563.3	$	8,038.5
Parts		2,278.5		2,097.0		1,912.1
Other		2,034.5		1,697.2		1,249.6
Cash and marketable securities		9,253.7		9,649.9		8,659.3
		21,532.8		21,007.4		19,859.5
Financial Services		22,803.4		22,411.5		20,963.9
	$	44,336.2	$	43,418.9	$	40,823.4

management’s report on internal control over

financial reporting

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

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

Management assessed the Company’s internal control over financial reporting as of December 31, 2025, based on criteria for effective internal control over financial reporting described in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on this assessment, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2025.

Ernst & Young LLP, the Independent Registered Public Accounting Firm that audited the financial statements included in this Annual Report, has issued an attestation report on the Company’s internal control over financial reporting. The attestation report is included on page 81.

R. Preston Feight

Chief Executive Officer

report of independent registered public accounting firm

To the Stockholders and the Board of Directors of PACCAR Inc

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of PACCAR Inc (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 18, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

	Product Warranty
Description of the Matter	The Company’s liability for product warranty totaled $596 million at December 31, 2025. As discussed in Note A of the consolidated financial statements, the Company’s liability for product warranty is estimated and recorded at the time products are sold based on historical and current data and reasonable expectations for the future regarding the frequency and cost of warranty claims, net of recoveries. The Company periodically assesses the adequacy of its recorded liabilities and adjusts them as appropriate to reflect actual experience.<br><br><br><br>Auditing the Company’s liability for product warranty is complex due to the significant measurement uncertainty associated with the estimate and the application of significant management judgment, including the inputs used to estimate the number of and cost of future warranty claims. In addition, management formulates an estimate of recoveries from suppliers.
How We Addressed the Matter in Our Audit	We evaluated and tested the design and operating effectiveness of internal controls over the warranty reserve process, including management’s assessment of the assumptions and data underlying the reserve.<br><br><br><br>To evaluate the liability for product warranty, our audit procedures included, among others, testing the completeness and accuracy of the underlying claims, supplier recovery data and assumptions used in the warranty accrual calculation. We also assessed the historical accuracy of management’s estimates through a hindsight analysis.
	/s/ Ernst & Young LLP
---	---
We have served as the Company’s auditor since 1945<br><br>Seattle, Washington
February 18, 2026

report of independent registered public accounting firm

To the Stockholders and the Board of Directors of PACCAR Inc

Opinion on Internal Control Over Financial Reporting

We have audited PACCAR Inc’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, PACCAR Inc (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and our report dated February 18, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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

	/s/ Ernst & Young LLP
Seattle, Washington
February 18, 2026

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

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

ITEM 9A. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures.

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 end 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.

Management’s Report on Internal Control over Financial Reporting.

Management’s Report on Internal Control over Financial Reporting on page 79 and Report of Independent Registered Public Accounting Firm on the Company’s internal control over financial reporting on page 81 for the year ended December 31, 2025, are included in this Form 10-K.

There have been no changes in the Company’s internal controls over financial reporting during the fourth quarter of 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None of the Company’s directors or officers adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s year ended December 31, 2025, as such terms are defined under Item 408(a) of Regulation S-K.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Stock ownership information is included under the captions “STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS” and “STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS” in the proxy statement for the annual stockholders meeting of April 28, 2026 and is incorporated herein by reference.

Information regarding equity compensation plans required by Regulation S‑K Item 201(d) is provided in Item 5 of this Form 10‑K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

No transactions with management and others as defined by Item 404 of Regulation S‑K occurred in 2025.

Information concerning director independence is included under the caption “BOARD GOVERNANCE” in the proxy statement for the annual stockholders meeting of April 28, 2026 and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Our independent registered public accounting firm is Ernst & Young LLP, Seattle, Washington (Auditor Firm ID No. 42).

Principal accounting fees and services information is included under the caption “INDEPENDENT AUDITORS” in the proxy statement for the annual stockholders meeting of April 28, 2026 and is incorporated herein by reference.

Exhibit Number	Exhibit Description		Form	Date of First Filing			Exhibit<br><br>Number		File Number
	(d)	Forms of Medium-Term Note, Series R (PACCAR Financial Corp.)	S-3		November 7, 2024		4.4 and 4.5		333-283056
	(e)	Terms and Conditions of the Notes applicable to the €2,500,000,000 Medium Term Note Programme of PACCAR Financial Europe B.V. set forth in the Information Memorandum dated May 29, 2020	10-Q		August 3, 2020		4(h)		001-14817
	(f)	Terms and Conditions of the Notes applicable to the €2,500,000,000 Medium Term Note Programme of PACCAR Financial Europe B.V. set forth in the Information Memorandum dated July 13, 2022	10-Q		August 2, 2022		4(h)		001-14817
	(g)	Terms and Conditions of the Notes applicable to the €2,500,000,000 Medium Term Note Programme of PACCAR Financial Europe B.V. set forth in the Information Memorandum dated September 20, 2023	10-Q		November 2, 2023		4(g)		001-14817
	(h)	Terms and Conditions of the Notes applicable to the €2,500,000,000 Medium Term Note Programme of PACCAR Financial Europe B.V. set forth in the Information Memorandum dated July 17, 2024	10-Q		October 30, 2024		4(h)		001-14817
	(i)	Terms and Conditions of the Notes applicable to the €2,500,000,000 Medium Term Note Programme of PACCAR Financial Europe B.V. set forth in the Information Memorandum dated May 8, 2025	10-Q		July 31, 2025		4(j)		001-14817
	(j)	Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934	10-K		February 19, 2020		4(j)		001-14817
(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 10, 2012		10(b)		001-14817
	(c)	Third Amended and Restated PACCAR Inc Restricted Stock and Deferred Compensation Plan for Non-Employee Directors	10-Q	May 2, 2024		10(d)		001-14817
	(d)	Form of Deferred Restricted Stock Unit Grant Agreement for Non-Employee Directors	10-Q	July 31, 2024		10(e)		001-14817
	(e)	Form of Restricted Stock Grant Agreement for Non-Employee Directors	10-Q	July 31, 2024		10(f)		001-14817
	(f)	PACCAR Inc Senior Executive Yearly Incentive Compensation Plan*
	(g)	PACCAR Inc Long Term Incentive Plan*
	(h)	PACCAR Inc Long Term Incentive Plan, Form of Stock Option Agreement	10-K	February 19, 2025		10(h)		001-14817
	(i)	PACCAR Inc Long Term Incentive Plan, Form of Restricted Stock Award Agreement*
	(j)	PACCAR Inc Long Term Incentive Plan, Form of Restricted Stock Unit Agreement*
	(k)	PACCAR Inc Savings Investment Plan, Amendment and Restatement effective September 1, 2016	10-Q	November 4, 2016		10(q)		001-14817
	*	Filed herewith
Exhibit Number	Exhibit Description		Form	Date of First Filing		Exhibit<br><br>Number	File Number
---	---	---	---	---	---	---	---
(19)		Insider Trading Policies and Procedures	10-K		February 19, 2025	19	001-14817
(21)		Subsidiaries of the registrant*
(23)		Consent of the independent registered public accounting firm*
(24)		Power of attorney – Powers of attorney of certain directors*
(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:
		Certification pursuant to rule 13a-14(b) and section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. section 1350)*
(97)		PACCAR Inc Incentive Compensation Recovery Policy	10-K		February 21, 2024	97	001-14817
(101.INS)		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document*
(101.SCH)		Inline XBRL Taxonomy Extension Schema with Embedded Linkbases Document*
(104)		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)*
	*	Filed herewith

• Exhibits (Exhibits filed with the Securities and Exchange Commission are not included herein. Copies of exhibits will be furnished to stockholders at a cost of 25¢ per page upon written request addressed to Corporate Secretary, PACCAR Inc, P.O. Box 1518, Bellevue, Washington 98009).
• Financial Statement Schedules – All schedules are omitted because the required matter or conditions are not present or because the information required by the schedules is submitted as part of the consolidated financial statements and notes thereto.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PACCAR Inc
	Registrant
Date: February 18, 2026	/s/ R. Preston Feight
	R. Preston Feight
	Chief Executive Officer

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

Signature	Title
/s/ R. P. Feight	Chief Executive Officer and Director
R. P. Feight	(Principal Executive Officer)
/s/ B. J. Poplawski	Senior Vice President and Chief Financial Officer
B. J. Poplawski	(Principal Financial Officer)
/s/ M. C. Pigott	Executive Chairman and Director
M. C. Pigott
*/s/ P. R. Breber	Director
P. R. Breber
*/s/ A J. Carnwath	Director
A J. Carnwath
*/s/ K. S. Hachigian	Director
K. S. Hachigian
*/s/ B. A. Hill	Director
B. A. Hill
*/s/ B. B. Hulit	Director
B. B. Hulit
*/s/ C. A. Niekamp	Director
C. A. Niekamp
*/s/ J. M. Pigott	Director
J. M. Pigott
*/s/ L. A. S. Pretti	Director
L. A. S. Pretti
*/s/ G. Ramaswamy	Director
G. Ramaswamy
*/s/ M. A. Schultz	Director
M. A. Schultz
*By	/s/ M. C. Pigott
---	---
	M. C. Pigott
	Attorney-in-Fact

EX-10.f

Exhibit 10(f)

SENIOR EXECUTIVE YEARLY INCENTIVE COMPENSATION PLAN

• PURPOSE

The Plan was approved by the Company’s stockholders in 1997, 2002, 2006, 2011 and 2016. The purpose of the Plan is to promote the success of the Company and the creation of shareholder value by

• encouraging senior executives to focus maximum effort on achieving high-quality performance objectives, Company profitability, and continued Company growth, and (b) encouraging the attraction and retention of senior executives with exceptional qualifications.

• ELIGIBILITY

The Company’s chief executive officer and such other senior executives as are designated by the Committee shall be eligible to participate in the Plan.

• ADMINISTRATION

The Plan shall be administered by the Committee. The Committee shall have the authority to interpret the Plan and make all other decisions relating to the administration of the Plan. The Committee may adopt such rules or guidelines as it deems appropriate to administer the Plan. The Committee’s determinations under the Plan shall be final and binding on all persons.

• AWARD DETERMINATION

Incentive awards paid under the Plan will be based solely on the attainment of specified performance goals established by the Committee during the first 90 days of the Plan Year; provided, however, that the Committee may establish or amend goals after the first 90 days for new hires or to reflect significant changes in a participant’s responsibilities. Performance goals will be based on objective criteria specifically defined by the Committee on a Company, business unit or peer group comparison basis, which may include or exclude specified items of an unusual or non-recurring nature and are based on one or more of the following: net income, return on assets, return on net assets, return on sales, return on capital, return on equity, return on revenue, sales growth, market share, cash flow, cost reduction, total shareholder return, economic value added, cash flow return on investment and cash value added. The Committee may also establish performance goals based on subjective and/or objective criteria relating to leadership or strategic

objectives at the Company or business unit level, which may include or exclude specified items of an unusual or non-recurring nature. Performance goals may include a minimum, maximum and target level of performance with the size of individual awards, if any, based on the level attained. Actual goal attainment will be certified in writing by the Committee before payout.

The Committee, in its sole discretion, may reduce or eliminate any award otherwise earned based on an assessment of individual performance, but in no event may any such reduction result in an increase of the award payable to any other participant. The Committee shall determine the amount of any such reduction by taking into account such factors as it deems relevant including, without limitation: (a) performance against other financial or strategic objectives; (b) its subjective assessment of the executive’s overall performance for the year; and (c) prevailing levels of total compensation among similar companies.

The maximum amount that may be paid to any eligible participant in any year under the Plan is $4,500,000.

• CHANGE IN CONTROL

If a Change in Control (as defined in the Plan) occurs and a participant is terminated without Cause within 12 months following the Change in Control, any long term cash award granted to that participant will be payable to the maximum prorated award based on the number of full or partial months completed prior to the Change in Control during the performance period in which the Change in Control occurs. Compensation deferred shall be paid on the earliest date permitted by law. The Committee has discretion to decide that all outstanding options and SARs shall become fully exercisable.

• TERMINATION OF EMPLOYMENT

Participants who retire, resign or are terminated before the end of the Plan Year are not eligible for an award for the Plan Year. In the event of death or disability, payout will be prorated based on actual goal achievement and salary received for the portion of the year worked.

• EMPLOYMENT RIGHTS

Neither the Plan, nor the payment of an award, nor any other action taken pursuant to the Plan, shall constitute or be evidence of any agreement or understanding, express or implied, that the Company or a Subsidiary will employ any individual for any period of time, in any position or at any particular rate of compensation.

• EFFECT OF MATERIAL RESTATEMENTS

The Board, in its sole discretion may recover all or part of an award under the Plan if it determines that all of the following have occurred:

• any award under the Plan has been received by a Section 16 Officer or former Section 16 Officer of the Company;

• the Section 16 Officer engaged in fraud that caused or substantially contributed to material restatement of the Company’s financial statements; and

• the award was based in whole or in part based on financial results that were subsequently subject to the material restatement.

• AMENDMENT OR TERMINATION OF THE PLAN

The Board may alter, amend or terminate the Plan at any time. An amendment of the Plan shall be subject to the approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules. No awards shall be granted under the Plan after the termination thereof.

• EFFECTIVE DATE

The Plan shall be effective as of January 1, 2020.

• DEFINITIONS

• “Board” means the Board of Directors of the Company, as constituted from time to time.

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

• “Change in Control” for purposes of this Plan has the meaning proscribed in the Long Term Incentive Plan.

• “Committee” means the Compensation Committee of the Board.

• “Company” means PACCAR Inc, a Delaware corporation.

• “Exchange Act” means the Securities Exchange Act of 1934, as amended.

• “Long Term Incentive Plan” means the PACCAR Inc Long Term Incentive Plan first adopted by the Board on February 11, 1991 and amended from time-to-time thereafter.

• “Plan” means this amended and restated PACCAR Inc Senior Executive Yearly Incentive Compensation Plan, as it may be amended from time to time.

• “Plan Year” means a calendar year.

• “Section 16 Officer” means an executive officer as defined in section 16 of the Exchange Act.

• “Subsidiary” means an entity in which the Company directly or indirectly owns a majority of all classes of outstanding equity.

  EX-10.g

Exhibit 10(g)

LONG TERM INCENTIVE PLAN

ARTICLE 1. INTRODUCTION.

The Plan was first adopted by the Board on February 11, 1991 and approved by the Company's stockholders on April 30, 1991. Amendments to the Plan were approved by the stockholders in 1997, 2002, 2006, 2011, and 2016. The Plan was further amended on December 9, 2019 (the “2019 Amendment”) by action of the Board. All past Awards granted or made under the Plan that are intended to constitute “performance-based compensation” within the meaning of Code Section 162(m) shall continue to be administered in accordance with their terms and without regard to the 2019 Amendment. The purpose of the Plan is to promote the long term success of the Company and the creation of stockholder value by (a) encouraging Key Employees to focus on critical long range objectives, (b) encouraging the attraction and retention of Key Employees with exceptional qualifications, and (c) linking Key Employees directly to stockholder interests through increased stock ownership. The Plan seeks to achieve this purpose by providing for Awards in the form of Restricted Shares, Stock Units, Options (which may constitute incentive stock options or nonstatutory stock options), stock appreciation rights, or cash. The Plan shall be governed by and construed in accordance with the laws of the State of Washington.

ARTICLE 2. ADMINISTRATION.

The Plan shall be administered by the Committee. The Committee shall (a) select the Key Employees who are to receive Awards under the Plan, (b) determine the type, number, vesting requirements, and other conditions of such Awards (or amendments thereto), (c) interpret the Plan, and (d) make all other decisions relating to the operation of the Plan. The Committee may adopt such rules or guidelines as it deems appropriate to implement the Plan. The Committee's determinations under the Plan shall be final and binding on all persons.

ARTICLE 3. SHARES AVAILABLE FOR GRANTS.

Any Common Shares issued pursuant to the Plan may be authorized but unissued shares or treasury shares. The aggregate number of Restricted Shares, Stock Units, SARs, and Options awarded under the Plan shall not exceed 68,343,750, subject to adjustment pursuant to Article 10. If any Restricted Shares, Stock Units, or Options are forfeited or if any Options terminate for any other reason before being exercised, then the Common Shares covered by such Restricted Shares, Stock Units or Options shall again become available for Awards under the Plan. However, if Options are surrendered upon the exercise of related SARs, then such Options shall not be restored to the pool available for Awards. Any cash-settled dividend equivalents under the Plan shall not be applied against the number of Restricted Shares, Stock Units, or Options available for Awards, while any dividend equivalents that are converted into stock-settled Stock Units shall be applied against such number.

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ARTICLE 4. ELIGIBILITY.

Only Key Employees shall be eligible for designation as Participants. A Key Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company or any of its Subsidiaries shall not be eligible for the grant of an ISO unless the requirements set forth in Section 422(c)(5) of the Code are satisfied.

ARTICLE 5. OPTIONS.

• Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The Stock Option Agreement shall specify whether the Option is an ISO or a NSO. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.

• Transferability. No Option granted under the Plan shall be transferable by the Optionee other than by will, or by a beneficiary designation executed by the Optionee and delivered to the Company, or by the laws of descent and distribution unless the Committee provides otherwise in a nonstatutory stock option agreement. An Option may be exercised during the lifetime of the Optionee only by him or her or by his or her guardian or legal representative unless the Committee provides otherwise in a nonstatutory Stock Option Agreement. No Option or interest therein may be assigned, pledged, or hypothecated by the Optionee during his or her lifetime, whether by operation of law or otherwise, or be made subject to execution, attachment or similar process.

• Number of Shares. Each Stock Option Agreement shall specify the number of Common Shares subject to the Option, provided that the maximum number of Common Shares awarded to any Participant in any year shall be 1,898,437 (subject to adjustment in accordance with Article 10). The Stock Option Agreement shall provide for the adjustment of such number including the maximum number in accordance with Article 10.

• Exercise Price. Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price under an Option shall not be less than the closing price of a Common Share on the date of grant. Subject to adjustment pursuant to Article 10, the Exercise Price of outstanding Options fixed by the Committee shall not be modified.

• Exercisability and Term. Stock options and any SARs granted will vest three (3) years from the January 1 of the year in which the options are granted and may be exercised up to ten (10) years after the date of grant subject to the terms of vesting and exercise set forth in the Stock Option Agreement. Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. A Stock Option Agreement may provide for the accelerated exercise of the Option in the event of the

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• Optionee's death, disability or retirement and may provide for expiration of the Option prior to the end of its term in the event of the termination of the Optionee's service. NSOs may also be awarded in combination with Restricted Shares or Stock Units, and such an Award may provide that the NSOs will not be exercisable unless the related Restricted Shares or Stock Units are forfeited.

• Effect of Change in Control. The Committee may determine, at the time of granting an Option or thereafter, that such Option (and any SARs included therein) shall become fully exercisable as to all Common Shares subject to such Option if a Change in Control occurs. If the Committee finds that there is a reasonable possibility that, within the next six months, a Change in Control will occur with respect to the Company, then the Committee may determine that all outstanding Options (and any SARs included therein) shall become fully exercisable as to all Common Shares subject to such Options.

ARTICLE 6. PAYMENT FOR OPTION SHARES.

• General Rule. The entire Exercise Price of Common Shares issued upon exercise of Options shall be payable in cash at the time when such Common Shares are purchased, except as follows:

• In the case of an ISO granted under the Plan, payment shall be made only pursuant to the express provisions of the applicable Stock Option Agreement. The Stock Option Agreement may specify that payment may be made in any form(s) described in this Article 6.

• In the case of an NSO, the Committee may at any time accept payment in any form(s) described in this Article 6.

• Surrender of Stock. To the extent that this Section 6.2 is applicable, payment for all or any part of the Exercise Price may be made with Common Shares which have already been owned by the Optionee. Such Common Shares shall be valued at their Fair Market Value on the date when the new Common Shares are purchased under the Plan.

• Exercise/Sale. To the extent that this Section 6.3 is applicable, payment may be made by the delivery (in a manner prescribed by the Company) of an irrevocable direction to a securities broker to sell Common Shares and to deliver all or part of the sales proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.

• Exercise/Pledge. To the extent that this Section 6.4 is applicable, payment may be made by the delivery (in a manner prescribed by the Company) of an irrevocable direction to pledge Common Shares to a securities broker or lender, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.

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• Promissory Note. To the extent that this Section 6.5 is applicable, payment for all or any part of the Exercise Price may be made with a full-recourse promissory note; provided that the par value of newly issued Common Shares must be paid in lawful money of the U.S. at the time when such Common Shares are purchased.

• Other Forms of Payment. To the extent that this Section 6.6 is applicable, payment may be made in any other manner that is consistent with applicable laws, regulations, and rules.

ARTICLE 7. STOCK APPRECIATION RIGHTS.

• Grant of SARs. Each Option granted under the Plan may include a SAR. The maximum number of SARs that may be awarded to any Participant in any year shall be 1,898,437 (subject to adjustment in accordance with Article 10). Such SAR shall entitle the Optionee (or any person having the right to exercise the Option after the Optionee’s death) to surrender to the Company, unexercised, all or any part of that portion of the Option which then is exercisable and to receive from the Company Common Shares or cash, or a combination of Common Shares and cash, as the Committee shall determine. If a SAR is exercised, the number of Common Shares remaining subject to the related Option shall be reduced accordingly, and vice versa. The amount of cash and/or the Fair Market Value of Common Shares received upon exercise of a SAR shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Common Shares subject to the surrendered portion of the Option exceeds the Exercise Price. In no event shall any SAR be exercised if such Fair Market Value does not exceed the Exercise Price. A SAR may be included in an ISO only at the time of grant but may be included in a NSO at the time of grant or at any subsequent time.
• Exercise of SARs. A SAR may be exercised to the extent that the Option in which it is included is exercisable, subject to any restrictions imposed by Rule 16b‑3 under the Exchange Act (as amended from time to time). If, on the date when an Option expires, the Exercise Price under such Option is less than the Fair Market Value on such date but any portion of such Option has not been exercised or surrendered, then any SAR included in such Option shall automatically be deemed to be exercised as of such date with respect to such portion. An Option granted under the Plan may provide that it will be exercisable as a SAR only in the event of a Change in Control.

ARTICLE 8. RESTRICTED SHARES AND STOCK UNITS.

• Time, Amount, and Form of Awards. Awards under the Plan may be granted in the form of Restricted Shares, in the form of Stock Units, or in any combination of both. Restricted Shares or Stock Units may also be awarded in combination with NSOs, and such an Award may provide that the Restricted Shares or Stock Units will be forfeited in the event that the related NSOs are exercised. The maximum number of Restricted Shares and/or Stock Units awarded to any Participant in any year shall be 675,000 (subject

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• to adjustment in accordance with Article 10).

• Performance Based Awards. The Committee will establish a performance goal or goals (“Performance Goal”) not later than the 90th day of the Award Year and make a dollar-denominated Award of Restricted Shares or Stock Units on such date (the “Award Grant Date”) subject to achievement of the Performance Goal; provided, however, that the Committee may establish or amend goals after the first 90 days for new hires or to reflect significant changes in a participant’s responsibilities. The period for each Performance Goal will commence on January 1 and end on December 31 of such year (the “Performance Period”). Performance Goals for this purpose will be based on objective criteria specifically defined by the Committee on a Company, business unit or peer group comparison basis, which may include or exclude specified items of an unusual or nonrecurring nature and are based on one or more of the following: earnings per share, net income, return on assets, return on sales, return on capital, return on equity, return on revenue, cash flow, cost reduction, total shareholder return, economic value added, cash flow return on investment, and cash value added. The Committee may also establish performance goals based on subjective and/or objective criteria relating to leadership or strategic objectives at the Company or business unit level, which may include or exclude specified items of an unusual or non-recurring nature.

The Committee, in its sole discretion, may reduce or eliminate any Award otherwise earned based on an assessment of individual performance, but in no event may any such reduction result in an increase of the Award payable to any other Participant. The Committee shall determine the amount of any such reduction by taking into account such factors as it deems relevant including, without limitation: (a) performance against other financial or strategic objectives; (b) its subjective assessment of the executive’s overall performance for the year; and (c) prevailing levels of total compensation among similar companies.

• Evaluation and Vesting Conditions. Within 60 days after the end of the Performance Period, the Committee will certify in writing whether the Performance Goal has been achieved. If the Performance Goal is achieved, the dollar-denominated Award will be settled in Restricted Shares or Stock Units, as applicable, as of the date of certification.

For each Award settled in Restricted Shares or Stock Units, one-fourth shall vest on or after the first day of the month following the first anniversary of the Award Grant Date, and an additional one-fourth on each succeeding first of January, so as to be 100% vested on the fourth January 1 following the Award Grant Date. Such Award may provide for accelerated vesting in the event of the Participant's death, disability, or retirement. The Committee may determine, at any time, that such Award shall become fully vested if a Change in Control occurs.

• Form and Time of Settlement of Stock Units. Settlement of vested Stock Units may be made in the form of cash, in the form of Common Shares, or in

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• any combination of both. Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Common Shares over a series of trading days. Vested Stock Units may be settled in a lump sum or in installments. The distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date consistent with the requirements of Section 409A of the Code if subject to Section 409A of the Code. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Article 10.

• Death of Recipient. Any Stock Units Award that becomes payable after the recipient's death shall be distributed to the recipient's beneficiary or beneficiaries. Each recipient of a Stock Units Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Award recipient's death. If no beneficiary was designated or if no designated beneficiary survives the Award recipient, then any Stock Units Award that becomes payable after the recipient's death shall be distributed to the recipient's estate.

• Creditors' Rights. A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Award Agreement.

ARTICLE 9. VOTING AND DIVIDEND RIGHTS.

• Restricted Shares. The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend, and other rights as the Company's other stockholders. Cash dividends on Restricted Shares reinvested in additional Restricted Shares and any stock dividends paid on Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid. Such additional Restricted Shares attributable to cash dividends that are reinvested shall reduce the number of Common Shares available under Article 3.

• Stock Units. The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan shall carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Common Share while the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Common Shares, or in a combination of both. Prior to distribution, any dividend equivalents which are not paid shall be subject to the same conditions and restrictions as the Stock Units to which they attach.

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ARTICLE 10. PROTECTION AGAINST DILUTION.

• Adjustments. In the event of a subdivision of the outstanding Common Shares, a declaration of a dividend payable in Common Shares, a declaration of a dividend payable in a form other than Common Shares in an amount that has a material effect on the price of Common Shares, a combination or consolidation of the outstanding Common Shares (by reclassification or otherwise) into a lesser number of Common Shares, a recapitalization, a divestiture spin-off or a similar occurrence, the Committee shall make appropriate and proportionate adjustments in one or more of (a) the number, kind and/or class of shares available for future Awards under Article 3, (b) the number, kind and/or class of shares covered by an outstanding Award, (c) the Exercise Price under each outstanding Option and SAR, or (d) the per person per year limitations on Awards under the Plan. Except as provided in this Article 10, a Participant shall have no rights by reason of any issue by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class.
• Reorganizations. In the event that the Company is a party to a merger or other reorganization, outstanding Options, Restricted Shares, and Stock Units shall be subject to the agreement of merger or reorganization. Such agreement may provide, without limitation, for the assumption of outstanding Awards by the surviving corporation or its parent, for their continuation by the Company (if the Company is a surviving corporation), for accelerated vesting, or for settlement in cash.

ARTICLE 11. LONG TERM PERFORMANCE CASH AWARDS.

• The Committee may grant long term performance cash awards to any Participant in its sole discretion. Payment of cash awards will be based on the attainment of specified performance goals over a designated performance period in excess of one year. Performance goals for this purpose will be based on objective criteria specifically defined by the Committee on a Company, business unit or peer group comparison basis, which may include or exclude specified items of an unusual or nonrecurring nature and are based on one or more of the following: earnings per share, net income, return on assets, return on sales, return on capital, return on equity, return on revenue, cash flow, cost reduction, total shareholder return, economic value added, cash flow return on investment, and cash value added. The Committee may also establish performance goals based on subjective and/or objective criteria relating to leadership or strategic objectives at the Company or business unit level, which may include or exclude specified items of an unusual or non-recurring nature.

• The Committee, in its sole discretion, may reduce or eliminate any award otherwise earned based on an assessment of individual performance, but in no event may any such reduction result in an increase of the award payable to any other Participant. The Committee shall determine the amount of any

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• such reduction by taking into account such factors as it deems relevant including, without limitation: (a) performance against other financial or strategic objectives; (b) its subjective assessment of the executive’s overall performance for the year; and (c) prevailing levels of total compensation among similar companies. The maximum amount that may be paid to any eligible Participant in any year with respect to a long term performance cash award is $7,000,000.

• If a Change in Control occurs and a Participant is terminated without Cause within 12 months following the Change in Control, the Participant will be entitled to the maximum prorated award based on the number of full or partial months completed prior to the Change in Control during the performance period in which the Change in Control occurs. Each Participant shall be entitled to be paid the sums in his deferred income and/or stock account on the earliest date permitted by law.

• The Company may grant long term performance awards under other plans or programs consistent with the limitations described in Article 11. Such awards and all stock units credited under the Company's Deferred Incentive Compensation Plan and Deferred Compensation Plan may be settled in the form of Common Shares issued under this Plan. Such Common Shares shall be treated for all purposes under the Plan like Common Shares issued in settlement of Stock Units and shall reduce the number of Common Shares available under Article 3.

• The Committee may permit the deferral of any award and may permit payment on deferrals to be made in cash or shares of Common Stock subject to rules and procedures it may establish which shall comply with Section 409A of the Code for deferrals subject to Section 409A of the Code. These rules may include provisions for crediting dividend equivalents on deferred stock unit accounts and crediting interest on deferred cash accounts.

ARTICLE 12. LIMITATION ON RIGHTS.

• Employment Rights. Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right to remain an employee of the Company or a Subsidiary. The Company and its Subsidiaries reserve the right to terminate the service of any employee at any time, with or without Cause, subject only to a written employment agreement (if any).

• Stockholders' Rights. A Participant shall have no dividend rights, voting rights, or other rights as a stockholder with respect to any Common Shares covered by his or her Award prior to the issuance of the stock, except as expressly provided in Section 9.1. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date when such certificate is issued, except as expressly provided in Articles 8, 9, and 10.

• Regulatory Requirements. Any other provision of the Plan notwithstanding, the obligation of the Company to issue Common Shares under the Plan shall

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• be subject to all applicable laws, rules and regulations, and such approval by any regulatory body as may be required. The Company reserves the right to restrict, in whole or in part, the delivery of Common Shares pursuant to any Award prior to the satisfaction of all legal requirements relating to the issuance of such Common Shares, to their registration, qualification or listing, or to an exemption from registration, qualification or listing.

• Repricing, Exchange, or Cash-Out Prohibited. Except as permitted in Article 10 above:

• no reduction in the Exercise Price of any Award is permitted;

• no previously granted Award may be exchanged for another Award with a lower Exercise Price; and

• no previously granted Award whose Exercise Price is higher than the Fair Market Value of Company stock may be cancelled in exchange for cash or another Award.

ARTICLE 13. WITHHOLDING TAXES.

• General. To the extent required by applicable federal, state, local, or foreign law, the recipient of any payment or distribution under the Plan shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise by reason of the receipt or vesting of such payment or distribution. The Company shall not be required to issue any Common Shares or make any cash payment under the Plan until such obligations are satisfied.
• Share Withholding. The Committee may permit the recipient of any payment or distribution under the Plan to satisfy his or her minimum tax withholding obligations by having the Company withhold a portion of any Common Shares that otherwise would be issued to him or her or by surrendering a portion of any Common Shares that previously were issued to him or her. Such Common Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. Any payment of taxes by assigning Common Shares to the Company may be subject to restrictions, including any restrictions required by rules of the Securities and Exchange Commission.

ARTICLE 14. ASSIGNMENT OR TRANSFER OF AWARDS.

Except as provided in Article 13 and Section 5.2, any Award granted under the Plan shall not be anticipated, assigned, attached, garnished, optioned, transferred, or made subject to any creditor's process, whether voluntarily, involuntarily, or by operation of law. Any act in violation of this Article 14 shall be void. However, this Article 14 shall not preclude a Participant from designating a beneficiary who will receive any undistributed Awards in the event of the Participant's death, nor shall it preclude a transfer by will or by the laws of descent and distribution. In addition, neither this Article 14 nor any other provision of the Plan shall preclude a Participant from transferring or assigning Restricted Shares

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or Stock Units to (a) the trustee of a trust that is revocable by such Participant alone, both at the time of the transfer or assignment and at all times thereafter prior to such Participant's death, or (b) the trustee of any other trust to the extent approved in advance by the Committee in writing. A transfer or assignment of Restricted Shares or Stock Units from such trustee to any person other than such Participant shall be permitted only to the extent approved in advance by the Committee in writing, and Restricted Shares or Stock Units held by such trustee shall be subject to all of the conditions and restrictions set forth in the Plan and in the applicable Stock Award Agreement, as if such trustee were a party to such Agreement.

ARTICLE 15. EFFECT OF MATERIAL RESTATEMENTS

The Board, in its sole discretion, may recover all or part of an award under the Plan if it determines that all of the following have occurred:

• Any Award under the Plan has been received by a Section 16 Officer or former Section 16 Officer of the Company;
• The Section 16 Officer engaged in fraud that caused or substantially contributed to material restatement of the Company’s financial statements; and
• The Award was based in whole or in part on financial results that were subsequently subject to the material restatement.

ARTICLE 16. FUTURE OF THE PLAN.

• Term of the Plan. The Plan shall remain in effect until it is terminated under Section 16.2, except that no ISOs shall be granted after December 6, 2020.
• Amendment or Termination. The Board may, at any time and for any reason, amend or terminate the Plan. An amendment of the Plan shall be subject to the approval of the Company's stockholders only to the extent required by applicable laws, regulations, or rules. No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan, or any amendment thereof, shall not affect any Award previously granted under the Plan.

ARTICLE 17. DEFINITIONS.

• "Award" means any award of an Option (with or without a related SAR), a Restricted Share, a Stock Unit or a long term performance cash award under the Plan.

• "Award Year" means a fiscal year with respect to which an Award may be granted.

• "Board" means the Company's Board of Directors.

• “Cause" means (i) an act of embezzlement, fraud or theft, (ii) the deliberate disregard of the rules of the Company or a Subsidiary, (iii) any unauthorized disclosure of any of the secrets or confidential information of

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• the Company or a Subsidiary, (iv) any conduct which constitutes unfair competition with the Company or a Subsidiary or (v) inducing any customers of the Company or a Subsidiary to breach any contracts with the Company or a Subsidiary.

• "Change in Control" means the occurrence of any of the following events unless otherwise defined in any Stock Award Agreement or Stock Option Agreement. The change in control requirements identified in regulations implementing Section 409A(e)(2) of the Code will prevail over any conflicting provisions of subsections (i) to (iv) below for those nonqualified deferred compensation plans governed by Section 409A of the Code:

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

• Individuals who, as of the date this Plan is approved by the Company's stockholders, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an

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• actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

• The consummation of a reorganization, merger, share exchange, or consolidation (a "Business Combination"), in each case unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 85% of, respectively, the then outstanding Common Shares and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding (1) any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination or (2) the Exempted Interests) beneficially owns, directly or indirectly, 15% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

• The consummation of (A) a complete liquidation or dissolution of the Company or (B) the sale or other disposition of all or substantially all of the Company’s assets, other than to a corporation with respect to which, following such sale or other disposition, (1) more than 85% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common

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• Stock and Outstanding Company Voting Securities, as the case may be, (2) less than 15% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by any Person (excluding (x) any employee benefit plan (or related trust) of the Company or such corporation or (y) the Exempted Interests), except to the extent that such Person owned 15% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities prior to the sale or disposition, and (3) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of the Company or were elected, appointed or nominated by the Board.

• “Code” means the Internal Revenue Code of 1986, as amended.

• “Committee” means the Compensation Committee of the Board.

• “Common Share” means one share of the common stock of the Company.

• “Company” means PACCAR Inc, a Delaware corporation.

• "Exchange Act" means the Securities Exchange Act of 1934, as amended.

• "Exercise Price" means the amount for which one Common Share may be purchased upon exercise of an Option, as specified in the applicable Stock Option Agreement.

• "Fair Market Value" shall mean the closing price of a Common Share on the trading day immediately preceding the date in question.

• "ISO" means an incentive stock option described in Section 422(b) of the Code.

• "Key Employee" means a key common law employee of the Company or of a Subsidiary, as determined by the Committee.

• "NSO" means an employee stock option not described in sections 422 through 424 of the Code.

• "Option" means an ISO or NSO granted under the Plan and entitling the holder to purchase one Common Share.

• "Optionee" means an individual or estate who holds an Option.

• "Participant" means an individual or estate who holds an Award.

• "Plan" means this PACCAR Inc Long Term Incentive Plan, as it may be amended from time to time.

• "Restricted Share" means a Common Share awarded under the Plan.

• "SAR" means a stock appreciation right granted under the Plan.

• “Section 16 Officer” means an executive officer as defined in section 16 of the Exchange Act.

  -13-

• "Stock Award Agreement" means the agreement between the Company and the recipient of a Restricted Share or Stock Unit which contains the terms, conditions, and restrictions pertaining to such Restricted Share or Stock Unit.

• "Stock Option Agreement" means the agreement between the Company and an Optionee which contains the terms, conditions, and restrictions pertaining to his or her Option.

• "Stock Unit" means a bookkeeping entry representing the equivalent of one Common Share awarded under the Plan.

• "Subsidiary" means an entity in which the Company directly or indirectly owns a majority of all classes of outstanding equity.

ARTICLE 18. EXECUTION.

To record the amendment and restatement of the Plan by the Board, the Company has caused its duly authorized officer to affix the corporate name and seal hereto.

-14-

EX-10.i

Exhibit 10(i)

LONG TERM INCENTIVE Plan

RESTRICTED STOCK award Agreement

THIS <award_date> RESTRICTED STOCK AWARD AGREEMENT (the "Agreement"), is entered into as of this <award_date> (the "Award Date") between PACCAR Inc, a Delaware corporation (the "Company"), and <first_name> <last_name> (the "Recipient").

WHEREAS, The Company has established the PACCAR Inc Long Term Incentive Plan (the "LTIP") in order to provide key employees of the Company and its subsidiaries with an opportunity to acquire shares of the Company's common stock, par value $1 per share (the "Common Shares"); and

WHEREAS, the committee of the Board of Directors charged with administering the LTIP (the "Committee") has determined that it would be in the best interests of the Company and its stockholders to grant the Restricted Shares described in this Agreement to the Recipient as an inducement to enter into or remain in the service of the Company and as an incentive for extraordinary efforts during such service;

NOW, THEREFORE, in consideration of the mutual covenants herein contained, it is agreed as follows:

• Award. The Company hereby grants the Recipient <shares_awarded> Common Shares (the "Restricted Shares"), subject to the terms and conditions of the LTIP and this Agreement (the "Award"). The provisions of the LTIP are incorporated into this Agreement by this reference. The Recipient acknowledges having received a copy of the LTIP, read it, and understood its provisions.
• Rights as Stockholder. On and after the Award Date, and except to the extent provided in the LTIP and this Agreement, the Recipient will be entitled to all of the rights of a stockholder with respect to the Restricted Shares, including the right to vote the Restricted Shares and to receive dividends and other distributions payable with respect to the Restricted Shares.
• Vesting.
• Conditions. The Award of Restricted Shares shall vest according to the schedule set forth below provided that the Recipient has been continuously employed in an LTIP-eligible position through the applicable vesting date:

One-fourth shall vest in the calendar year of the Award Date on the first day of the month following certification of the performance goal, and an additional one-fourth on each succeeding first of January, so as to be 100% vested on the third January 1 following the certification.

• Retirement, Death. If Recipient’s employment in an LTIP-eligible position terminates by reason of Recipient’s (i) retirement on or after age 62, (ii) retirement on or after age 55 with 15 years of service (with years of service determined under the terms of the Company’s defined benefit plan) or (iii) death, then all Restricted Shares held by the Grantee shall become fully vested, notwithstanding the provisions of Section 3(a) hereof, provided, however, that in case of Section 3(b)(i) and/or 3(b)(ii) no such vesting shall occur if a Recipient’s employment in an LTIP-eligible position terminates on account of Cause or if the Recipient becomes an employee of, or other service provider to, a Competitor.

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For purposes of this Section 3(b), “Cause” shall mean any of the following conduct: (1) an act of embezzlement, fraud or theft; (2) deliberate disregard of the rules of the Company or a Subsidiary, (3) unauthorized disclosure of any of the secrets or confidential information of the Company or a Subsidiary; (4) any conduct which constitutes unfair competition with the Company or a Subsidiary; (5) inducing any customers of the Company to breach any contracts with the Company or a Subsidiary. For purposes of this Section 3(b), “Competitor” shall mean any company actively engaged in the manufacture, financing or leasing of vehicles or after-market truck parts or any company that provides technology or components to vehicle companies at the time Recipient’s employment in an LTIP-eligible position terminates.

• Change in Control; Disability. Notwithstanding anything in this agreement to the contrary, in the event of (i) a Change in Control as provided in Section 17.5 of the LTIP and Recipient’s termination of employment without Cause within 12 months following the Change of Control, or (ii) Recipient’s disability as determined under the Company’s long-term disability plan (“Disability”) that, in each case, occurs during the Recipient’s employment in an LTIP-eligible position, the Restricted Shares shall immediately vest in full.
• Ownership. On the Vesting Date, Grantee shall own the vested shares of Restricted Stock free and clear of all restrictions imposed by this Agreement (except those imposed by Section 8).
• Forfeiture of Restricted Shares. Except as set forth herein, if Recipient’s employment in an LTIP-eligible position terminates by reason of resignation or termination by the Company voluntarily or involuntarily, all Restricted Shares will be immediately forfeited.
• Terms and Conditions of Distribution. The Company is not required to issue or deliver any certificates for the vested Shares before completing the steps necessary to comply with applicable federal and state securities laws (including any registration requirements and regulations governing short swing trading of securities) and applicable stock exchange rules and practices. The Company will use commercially reasonable efforts to cause compliance with those laws, rules and practices.

If the Recipient dies before the Company has distributed any vested Shares, the Company will distribute certificates to the beneficiary or beneficiaries the Recipient designated, in the proportions the Recipient specified. To be effective, a beneficiary designation must be made in accordance with the applicable Company procedures. If the Recipient failed to designate a beneficiary or beneficiaries, the Company will distribute certificates for the Common Shares to the Recipient's surviving spouse or, if there is none, to his or her estate.

• Stock Certificates. The Company will set up a book entry Restricted Shares account for the Recipient with the Company's transfer agent for the Restricted Shares as soon as practicable. The Company will distribute share certificates to the Recipient or, if applicable, his or her beneficiary, when the Restricted Stock becomes vested in accordance with Section 3 of this Agreement.
• Payment for Shares. The Committee has determined that the services rendered by Recipient to the Company provided value equal to the $1.00 par value of the Vested Shares awarded and, therefore, no cash payment to the Company is required.
• Withholding of Tax. To the extent that this Award results in tax withholding for any federal or state income tax purposes, no later than the date as of which such tax withholding is first required, Recipient shall pay to the Company in cash any federal or state tax required to be

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• withheld with respect to such amount. If the Recipient fails to do so, the Company will withhold Common Shares subject to this Award having a fair market value on the date of withholding equal to the minimum tax withholding obligation. In addition, the Recipient shall be permitted to satisfy the Company’s tax withholding requirements by making a written election (in accordance with such rules and regulations and in such form as the Company may determine) to have the Company withhold Common Shares subject to this Award having a fair market value on the date as of which such tax withholding is first required equal to the minimum tax withholding obligation. With respect to any individual subject to Section 16(b) of the Securities Act of 1934, the Company shall not have any discretion over whether the individual satisfies such tax withholding obligations under this Award with cash or through the withholding of Common Shares subject to the award and such obligation shall be satisfied through the withholding of Common Shares subject to the Award (with no sale of Common Shares on behalf of the holder to satisfy such withholding obligations) or by using cash, as elected by such individual.
• Legality of Issuance; Restrictions on Transfer. No Vested Shares shall be issued unless and until the Company has determined that:
• it and the Recipient have taken any actions required to register the Common Shares under the Securities Act of 1933, as amended (the "Securities Act") or to perfect an exemption from the registration requirements thereof;
• any applicable listing requirement of any stock exchange on which Common Shares are listed has been satisfied; and
• any other applicable provision of state or federal law has been satisfied.
• Regardless of whether the offering and sale of Common Shares under the LTIP have been registered under the Securities Act or have been registered or qualified under the securities laws of any state, the Company may impose restrictions upon the sale, pledge or other transfer of such Common Shares (including the placement of appropriate legends on stock certificates) if, in the judgment of the Company and its counsel, such restrictions are necessary or desirable in order to achieve compliance with the Securities Act, the securities laws of any state or any other law or with restrictions imposed by the Company's underwriters.
• No Registration Rights. The Company may, but shall not be obligated to, register or qualify the issuance of Restricted Shares under the Securities Act or any other applicable law. The Company shall not be obligated to take any affirmative action in order to cause the issuance of Restricted Shares under this Agreement to comply with any law.
• Removal of Legends. If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing Common Shares is no longer required, the holder of such certificate shall be entitled to exchange such certificate for a certificate representing the same number of Common Shares but lacking such legend.
• Investment Intent. In the event that the issuance of Restricted Shares under the LTIP is not registered under the Securities Act but an exemption is available which requires an investment representation or other representation, the Recipient shall represent and agree at the time of exercise that the Common Shares being acquired upon exercising this option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel.

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• No Employment Rights. Nothing in this Agreement shall be construed as giving the Recipient the right to be retained as an employee. The Company reserves the right to terminate the Recipient's service at any time, with or without cause (subject to any employment agreement between the Recipient and the Company).
• Administration. The Committee administers the LTIP and this Agreement. The Committee shall have sole discretion to interpret the LTIP and this Agreement, amend and rescind rules relating to its implementation and make all determinations necessary for administration of the LTIP and this Agreement. The Recipient's rights under this Agreement are expressly subject to the terms and conditions of the LTIP, including continued shareholder approval of the LTIP, and to any guidelines the Company adopts from time to time.
• Entire Agreement. The Award is in all respects subject to the provisions set forth in the LTIP to the same extent and with the same effect as if the provisions of the LTIP were set forth fully herein. In the event that the terms of this Award conflict with the terms of the LTIP, the LTIP shall control. This Agreement is the entire Agreement between the parties to it, and any and all prior oral and written representations are merged into and superseded by this Agreement. This Agreement may be amended only by written agreement between the Recipient and the Company.
• No Limitation on Rights of the Company. The award of Restricted Shares does not and will not in any way affect the right or power of the Company to make adjustments, reclassifications or changes in its capital or business structure, or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.
• Share Adjustments. If there are any changes in the number or value of shares of Common Shares by reason of stock dividends, stock splits, reverse stock splits, recapitalizations, mergers or other events as stated in Article 10 of the LTIP, then proportionate adjustments shall be made to the number of shares of Common Stock (i) issued pursuant to Section 1 and (ii) covered by an unvested grant of restricted stock, in order to prevent dilution or enlargement of rights. This provision does not, however, authorize the delivery of fractional Common Shares under the LTIP.
• Notices. Any notice or other communication required or permitted under the LTIP or this Agreement may be given pursuant to the online or other administrative procedures established by the Company from time to time that are communicated to the Recipient in writing (including electronically). Notice may also be given in writing and must be delivered personally, sent by certified, registered or express mail, or sent by overnight courier, at the sender's expense. Notice will be deemed given when delivered personally or, if mailed, three days after the date of deposit in the United States mail or, if sent by overnight courier, on the regular business day following the date sent. Notice to the Company should be sent to PACCAR Inc, Attention: Corporate Compensation. Notice to the Recipient should be sent to his or her business address.
• Data Privacy. By entering into this Agreement, Recipient:
• agrees to disclose certain personal data requested by the Company to administer the LTIP and expressly consents to the Company's processing such data for purposes of the implementation or administration of the LTIP and this Agreement;
• waives any data privacy rights Recipient may have with respect to such data; and
• authorizes the Company and any of its authorized agents to store and transmit such information in electronic form.

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• Successors. All obligations of the Company under this Agreement will be binding on any successor to the Company, whether the existence of the successor results from a direct or indirect purchase of all or substantially all of the business and/or assets of the Company, or a merger, consolidation, or other event.
• Governing Law. To the extent not preempted by federal law, this Agreement will be construed and enforced in accordance with, and governed by, the laws of the State of Washington as such laws are applied to contracts entered into and performed in such State.
• Limitation on Rights; No Right to Future Awards; Extraordinary Item of Compensation. By entering into this Agreement and accepting the grant of an award evidenced hereby, Recipient acknowledges:
• that the LTIP is discretionary in nature and may be suspended or terminated by the Company at any time;
• that the Award of Restricted Stock is a one-time benefit which does not create any contractual or other right to receive future awards, grants of stock options, or benefits in lieu thereof;
• that all determinations with respect to any such future Awards, including, but not limited to, the times when Awards shall be made, the number of Common Shares to be awarded, and the vesting of any Restricted Stock there under, will be at the sole discretion of the Company;
• that the Recipient's participation in the LTIP is voluntary;
• that the value of the Award is an extraordinary item of compensation which is outside the scope of the Recipient's employment contract, if any;
• that the Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; and
• that the future value of the Commons Shares is unknown and cannot be predicted with certainty.

I agree to the terms and conditions of this restricted stock agreement and acknowledge having received the PACCAR Long Term Incentive Plan.

OPTIONEE SIGNATURE: PACCAR Inc:

By:
	<award_date>		<award_date>
<first_name> <last_name>	Date	VP Human Resources	Date
		Company's Address:
		777 - 106th Avenue N.E.
		P.O. Box 1518
		Bellevue, WA 98009

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Restricted Stock Award Agreement – Page 5

EX-10.j

Exhibit 10(j)

LONG TERM INCENTIVE Plan

RESTRICTED STOCK UNIT Agreement

THIS <award_date> RESTRICTED STOCK UNIT AGREEMENT (the "Agreement"), is entered into as of this <award_date> (the "Award Date") between PACCAR Inc, a Delaware corporation (the "Company"), and <first_name> <last_name> (the "Recipient").

WHEREAS, The Company has established the PACCAR Inc Long Term Incentive Plan (the "LTIP") in order to provide key employees of the Company and its subsidiaries with an opportunity to acquire shares of the Company's common stock, par value $1 per share (the "Common Shares"); and

WHEREAS, the committee of the Board of Directors charged with administering the LTIP (the "Committee") has determined that it would be in the best interests of the Company and its stockholders to grant the Restricted Stock Units described in this Agreement to the Recipient as an inducement to enter into or remain in the service of the Company and as an incentive for extraordinary efforts during such service;

NOW, THEREFORE, in consideration of the mutual covenants herein contained, it is agreed as follows:

• Award. The Company hereby grants the Recipient <stock units_ awarded> stock units (the "Restricted Stock Units"), subject to the terms and conditions of the LTIP and this Agreement (the "Award"). The provisions of the LTIP are incorporated into this Agreement by this reference. The Recipient acknowledges having received a copy of the LTIP, read it, and understood its provisions. Each Restricted Stock Unit constitutes the right, subject to the satisfaction of the terms and conditions of the Plan and this Agreement, to the issuance to the Recipient of one (1) vested Common Share.
• Rights as Stockholder. Prior to the issuance of Common Shares to the Recipient following the satisfaction of the terms and conditions of the Plan and this Agreement, the Recipient has none of the rights and privileges of a stockholder with respect to the Award and has no right to vote or to receive dividends (but may be eligible to receive dividend equivalents as described in Section 4 hereof). A holder of Restricted Stock Units shall have no rights other than those of a general creditor of the Company.
• Vesting.
• Conditions. The Award of Restricted Stock Units shall vest according to the schedule set forth below provided that the Recipient has been continuously employed in an LTIP-eligible position through the applicable vesting date:

One-fourth shall vest in the calendar year of the Award Date on the first day of the month following certification of the performance goal, and an additional one-fourth on each succeeding first of January, so as to be 100% vested on the third January 1 following the certification.

• Retirement; Death. If Recipient’s employment in an LTIP-eligible position terminates by reason of (i) retirement on or after age 62, (ii) retirement on or after age 55 with 15 years of service (with years of service determined under the terms of the Company’s

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• defined benefit plan) or (iii) death, then all Restricted Stock Units held by the Grantee shall become fully vested, notwithstanding the provisions of Section 3(a) hereof; provided, however, that in the case of Section 3(b)(i) and/or 3(b)(ii) no such vesting shall occur if a Recipient’s employment in an LTIP-eligible position terminates on account of Cause or if the Recipient becomes an employee of, or other service provider to, a Competitor.

For purposes of this Section 3(b), “Cause” shall mean any of the following conduct: (1) an act of embezzlement, fraud or theft; (2) deliberate disregard of the rules of the Company or a Subsidiary, (3) unauthorized disclosure of any of the secrets or confidential information of the Company or a Subsidiary; (4) any conduct which constitutes unfair competition with the Company or a Subsidiary; (5) inducing any customers of the Company to breach any contracts with the Company or a Subsidiary. For purposes of this Section 3(b), “Competitor” shall mean any company actively engaged in the manufacture, financing or leasing of vehicles or after-market truck parts or any company that provides technology or components to vehicle companies at the time Recipient’s employment in an LTIP-eligible position terminates.

• Change in Control; Disability. Notwithstanding anything in this agreement to the contrary, in the event of (i) a Change in Control as provided in Section 17.5 of the LTIP and Recipient’s termination of employment without Cause within 12 months following the Change of Control, or (ii) Recipient’s disability as determined under the Company’s long-term disability plan (“Disability”) that, in each case, occurs during the Recipient’s employment in an LTIP-eligible position, the Restricted Stock Units shall immediately vest in full.

• Forfeiture of Restricted Stock Units. Except as set forth herein, if Recipient’s employment in an LTIP-eligible position terminates by reason of resignation or termination by the Company voluntarily or involuntarily, all unvested Restricted Stock Units will be immediately forfeited.

• Dividend Equivalents. Restricted Stock Units will accrue dividend equivalents in the event cash dividends are paid with respect to the Common Shares having a record date on or after the Award Date and prior to the date on which the Restricted Stock Units are settled. Such dividend equivalents will be paid in cash without interest and paid only if and when the underlying Restricted Stock Units vest and are settled. For purposes of clarity, no dividend equivalents shall be paid with respect to any Restricted Stock Units that are settled or terminated prior to the applicable dividend record date.

• Terms and Conditions of Settlement.

(a) With respect to Recipients for whom it is not possible to attain age 65 (or age 55 with 15 years of service) during the vesting schedule of this Award, Restricted Stock Units that vest in accordance with the terms hereof will be settled in the form of Common Shares within thirty (30) days of the applicable date of vesting.

(b) Restricted Stock Units that vest in accordance with the terms hereof will be settled in the form of Common Shares within thirty (30) days following the earliest to occur of the following: (i) the normal vesting dates provided for in Section 3(a), (ii) Recipient’s separation from service within the meaning of Section 409A of the Code on account of retirement on or after age 62, (iii) Recipient’s Disability that qualifies as a disability within the meaning of Section 409A of the Code, (iv) Recipient’s death or (v) a Change

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in Control that qualifies as a change in control event within the meaning of the Treasury Regulations promulgated under Section 409A of the Code; provided, however, that with respect to Section 5(b)(ii), if Recipient is a “specified employee” within the meaning of Section 409A at the time of such separation from service, then settlement of such Recipient’s Restricted Stock Units will instead be made on the date that is six (6) months and one (1) day following the date of Recipient’s separation from service, unless Recipient dies following his or her separation from service prior to such time, in which case, the Restricted Stock Units will be paid in accordance with Section 5(d) hereof. Fractional Shares will not be issued upon the vesting of Restricted Stock Units. Where a fractional Share would be owed to the Employee upon the vesting of Restricted Stock Units, a cash payment equivalent will be paid in place of any such fractional Share using the Fair Market Value on the relevant settlement date.

(c) Subject to Section 409A of the Code, the Company is not required to issue or deliver any Common Share certificates before completing the steps necessary to comply with applicable federal and state securities laws (including any registration requirements and regulations governing short swing trading of securities) and applicable stock exchange rules and practices. The Company will use commercially reasonable efforts to cause compliance with those laws, rules and practices.

(d) If the Recipient dies before the Company has issued any Common Shares, the Company will issue Common Share certificates to the beneficiary or beneficiaries the Recipient designated, in the proportions the Recipient specified. To be effective, a beneficiary designation must be made in accordance with applicable Company procedures. If the Recipient failed to designate a beneficiary or beneficiaries, the Company will issue Common Share certificates to the Recipient’s surviving spouse or, if there is none, to his or her estate.

• Withholding of Tax. To the extent that this Award results in tax withholding for any federal or state tax purposes, no later than the date as of which such tax withholding is first required, Recipient shall pay to the Company in cash any federal or state tax required to be withheld with respect to such amount. If the Recipient fails to do so, the Company will withhold Common Shares subject to this Award having a fair market value on the date of withholding equal to the minimum tax withholding obligation. In addition, the Recipient shall be permitted to satisfy the Company’s tax withholding requirements by making a written election (in accordance with such rules and regulations and in such form as the Company may determine) to have the Company withhold Common Shares subject to this Award having a fair market value on the date as of which such tax withholding is first required equal to the minimum tax withholding obligation. With respect to any individual subject to Section 16(b) of the Securities Act of 1934, the Company shall not have any discretion over whether the individual satisfies such tax withholding obligations under this Award with cash or through the withholding of Common Shares subject to the award and such obligation shall be satisfied through the withholding of Common Shares subject to the Award (with no sale of Common Shares on behalf of the holder to satisfy such withholding obligations) or by using cash, as elected by such individual.
• Legality of Issuance; Restrictions on Transfer. Subject to Section 409A of the Code, no Common Shares shall be issued unless and until the Company has determined that:

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• it and the Recipient have taken any actions required to register the Common Shares under the Securities Act of 1933, as amended (the "Securities Act") or to perfect an exemption from the registration requirements thereof;
• any applicable listing requirement of any stock exchange on which Common Shares are listed has been satisfied; and
• any other applicable provision of state or federal law has been satisfied.
• Regardless of whether the offering and sale of Common Shares under the LTIP have been registered under the Securities Act or have been registered or qualified under the securities laws of any state, the Company may impose restrictions upon the sale, pledge or other transfer of such Common Shares (including the placement of appropriate legends on stock certificates) if, in the judgment of the Company and its counsel, such restrictions are necessary or desirable in order to achieve compliance with the Securities Act, the securities laws of any state or any other law or with restrictions imposed by the Company's underwriters.
• Non-transferability. This Award shall be subject to the transfer restrictions of Article 14 of the LTIP.
• No Registration Rights. The Company may, but shall not be obligated to, register or qualify the issuance of Common Shares under the Securities Act or any other applicable law. The Company shall not be obligated to take any affirmative action in order to cause the issuance of Common Shares under this Agreement to comply with any law.
• Removal of Legends. If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing Common Shares is no longer required, the holder of such certificate shall be entitled to exchange such certificate for a certificate representing the same number of Common Shares but lacking such legend.
• Investment Intent. In the event that the issuance of Common Shares under the LTIP is not registered under the Securities Act but an exemption is available which requires an investment representation or other representation, the Recipient shall represent and agree at the time of exercise that the Common Shares being acquired upon exercising this option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel.
• No Employment Rights. Nothing in this Agreement shall be construed as giving the Recipient the right to be retained as an employee. The Company reserves the right to terminate the Recipient's service at any time, with or without cause (subject to any employment agreement between the Recipient and the Company).
• Administration. The Committee administers the LTIP and this Agreement. The Committee shall have sole discretion to interpret the LTIP and this Agreement, amend and rescind rules relating to its implementation and make all determinations necessary for administration of the LTIP and this Agreement. The Recipient's rights under this Agreement are expressly subject to the terms and conditions of the LTIP, including continued shareholder approval of the LTIP, and to any guidelines the Company adopts from time to time.
• Entire Agreement. The Award is in all respects subject to the provisions set forth in the LTIP to the same extent and with the same effect as if the provisions of the LTIP were set forth fully herein. Subject to compliance with Section 409A of the Code, in the event that the terms of this Award conflict with the terms of the LTIP, the LTIP shall control. This Agreement is

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• the entire Agreement between the parties to it, and any and all prior oral and written representations are merged into and superseded by this Agreement. This Agreement may be amended only by written agreement between the Recipient and the Company.
• No Limitation on Rights of the Company. The award of Restricted Stock Units does not and will not in any way affect the right or power of the Company to make adjustments, reclassifications or changes in its capital or business structure, or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.
• Share Adjustments. If there are any changes in the number or value of shares of Common Shares by reason of stock dividends, stock splits, reverse stock splits, recapitalizations, mergers or other events as stated in Article 10 of the LTIP, then proportionate adjustments shall be made to the number of Common Shares and dividend equivalents issuable hereunder in order to prevent dilution or enlargement of rights. This provision does not, however, authorize the delivery of fractional Common Shares under the LTIP.
• Notices. Any notice or other communication required or permitted under the LTIP or this Agreement may be given pursuant to the online or other administrative procedures established by the Company from time to time that are communicated to the Recipient in writing (including, electronically). Notice may also be given in writing and must be delivered personally, sent by certified, registered or express mail, or sent by overnight courier, at the sender's expense. Notice will be deemed given when delivered personally or, if mailed, three days after the date of deposit in the United States mail or, if sent by overnight courier, on the regular business day following the date sent. Notice to the Company should be sent to PACCAR Inc, Attention: Corporate Compensation. Notice to the Recipient should be sent to his or her business address.
• Data Privacy. By entering into this Agreement, Recipient:
• agrees to disclose certain personal data requested by the Company to administer the LTIP and expressly consents to the Company's processing such data for purposes of the implementation or administration of the LTIP and this Agreement;
• waives any data privacy rights Recipient may have with respect to such data; and
• authorizes the Company and any of its authorized agents to store and transmit such information in electronic form.
• Successors. All obligations of the Company under this Agreement will be binding on any successor to the Company, whether the existence of the successor results from a direct or indirect purchase of all or substantially all of the business and/or assets of the Company, or a merger, consolidation, or other event.
• Governing Law. To the extent not preempted by federal law, this Agreement will be construed and enforced in accordance with, and governed by, the laws of the State of Washington as such laws are applied to contracts entered into and performed in such State.
• Limitation on Rights; No Right to Future Awards; Extraordinary Item of Compensation. By entering into this Agreement and accepting the grant of an award evidenced hereby, Recipient acknowledges:
• that the LTIP is discretionary in nature and may be suspended or terminated by the Company at any time;

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• that the Award of Restricted Stock Units is a one-time benefit which does not create any contractual or other right to receive future awards, grants of stock options, or benefits in lieu thereof;
• that all determinations with respect to any such future Awards, including, but not limited to, the times when Awards shall be made, the number of Common Shares to be awarded, and the vesting of any Restricted Stock Units there under, will be at the sole discretion of the Company;
• that the Recipient's participation in the LTIP is voluntary;
• that the value of the Award is an extraordinary item of compensation which is outside the scope of the Recipient's employment contract, if any;
• that the Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; and
• that the future value of the Commons Shares is unknown and cannot be predicted with certainty.
• Section 409A of the Internal Revenue Code. In the event any amendments to this Agreement or the Plan are reasonably necessary or advisable in order to comply with Section 409A of the Internal Revenue Code, the parties hereby agree to such amendments.

I agree to the terms and conditions of this restricted stock unit agreement and acknowledge having received the PACCAR Long Term Incentive Plan.

RECIPIENT SIGNATURE: PACCAR Inc:

By:
	<award_date>		<award_date>
<first_name> <last_name>	Date	VP Human Resources	Date
		Company's Address:
		777 - 106th Avenue N.E.
		P.O. Box 1518
		Bellevue, WA 98009

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EX-21

Exhibit 21

SUBSIDIARIES OF THE REGISTRANT (a)

Name	State or<br><br>Country of<br><br>Incorporation	Names Under Which Company<br><br>Or Subsidiaries Do Business
PACCAR of Canada Ltd.	Canada	PACCAR of Canada Ltd.
		Canadian Kenworth Company
		Peterbilt of Canada
		PACCAR Parts of Canada
		Kenworth Montreal
PACCAR Australia Pty. Ltd.	Australia	PACCAR Australia Pty. Ltd.
		Kenworth Trucks
		PACCAR Parts
		DAF Trucks Australia
PACCAR Financial Pty. Ltd. (b)	Australia	PACCAR Financial Pty. Ltd.
PACCAR Mexico, S.A. de C.V.	Mexico	PACCAR Mexico, S.A. de C.V.
Kenworth Mexicana, S.A. de C.V. (c)	Mexico	Kenworth Mexicana, S.A. de C.V. KenMex
PACCAR Capital Mexico, S.A. de C.V. (c)	Mexico	PACCAR Capital Mexico, S.A. de C.V.
PACCAR Parts Mexico, S.A. de C.V. (c)	Mexico	PACCAR Parts Mexico, S.A. de C.V.
PacLease Mexicana, S.A. de C.V. (c)	Mexico	PacLease Mexicana, S.A. de C.V.
		PacLease
PACCAR Financial Mexico, S.A. de C.V. (d)	Mexico	PACCAR Financial Mexico, S.A. de C.V.
DAF Caminhões Brasil Indústria Ltda. (e)	Brasil	DAF Brasil
DAF Trucks N.V. (e)	Netherlands	DAF Trucks N.V.
		PACCAR Parts Europe
DAF Trucks Vlaanderen N.V. (f)	Belgium	DAF Trucks Vlaanderen N.V.
DAF Trucks Limited (U.K.) (f)	United Kingdom	DAF Trucks Limited (U.K.)
DAF Trucks Deutschland GmbH (f)	Germany	DAF Trucks Deutschland GmbH
PACCAR Parts Deutschland GmbH (o)	Germany	PACCAR Parts Deutschland GmbH
DAF Trucks France, S.A.R.L. (f)	France	DAF Trucks France, S.A.R.L.
DAF Trucks Norge AS (f)	Norway	DAF Trucks Norge AS
DAF Vehiculos Industriales S.A.U. (f)	Spain	DAF Vehiculos Industriales S.A.U.
DAF Veicoli Industriali S.P.A. (f)	Italy	DAF Veicoli Industriali S.P.A.
DAF Trucks Polska SP.Z.O.O. (f)	Poland	DAF Trucks Polska SP.Z.O.O.
PACCAR Trucks U.K. Ltd. (e)	England and Wales	PACCAR Trucks U.K. Ltd.
PACCAR Parts U.K. Limited (g)	England and Wales	PACCAR Parts U.K. Limited
Leyland Trucks Limited (h)	England and Wales	Leyland Trucks Limited
PACCAR Engine Company	Mississippi	PACCAR Engine Company
PACCAR Financial Corp.	Washington	PACCAR Financial Corp.
		PACCAR Leasing Company

SUBSIDIARIES OF THE REGISTRANT (a)

Name	State or<br><br>Country of<br><br>Incorporation	Names Under Which Company<br><br>Or Subsidiaries Do Business
PACCAR Financial Services Ltd. (i)	Canada	PACCAR Financial Services Ltd.
		PACCAR Leasing Company
PACCAR Financial Ltd. (j)	Canada	PACCAR Financial Ltd.
PACCAR Sales North America, Inc.	Delaware	PACCAR Sales North America, Inc.
PACCAR Holding B.V. (k)	Netherlands	PACCAR Holding B.V.
PACCAR Financial Bulgaria EOOD (m)	Bulgaria	PACCAR Financial Bulgaria EEOD
PACCAR Financial Europe B.V. (e)	Netherlands	PACCAR Financial Europe B.V.
PACCAR Financial Holdings Europe B.V. (l)	Netherlands	PACCAR Financial Holdings Europe B.V.
PACCAR Financial Belux BVBA (m)	Belgium	PACCAR Financial Belux BVBA
PACCAR Financial Deutschland GmbH (m)	Germany	PACCAR Financial Deutschland GmbH
PACCAR Leasing GmbH (m)	Germany	PACCAR Leasing Europe
PACCAR Financial Espana S.L.U. (m)	Spain	PACCAR Financial Espana S.L.U.
PACCAR Financial France S.A.S. (m)	France	PACCAR Financial France S.A.S.
PACCAR Financial Italia S.r.l. (m)	Italy	PACCAR Financial Italia S.r.l.
PACCAR Financial PLC (m)	United Kingdom	PACCAR Financial PLC
PACCAR Financial Nederland B.V. (m)	Netherlands	PACCAR Financial Nederland B.V.
PACCAR Financial Services Europe B.V. (m)	Netherlands	PACCAR Financial Services Europe B.V.
PACCAR Participações Ltda. (l)	Brasil	PACCAR Participações Ltda.
Banco PACCAR S.A. (n)	Brasil	Banco PACCAR S.A.
PACCAR Holdings Panamá, S.A. (k)	Panama	PACCAR Holdings Panamá, S.A.
PACCAR Colombia S.A.S. (k)	Columbia	PACCAR Colombia S.A.S.
PACCAR India Private Limited (k)	India	PACCAR India Private Limited

• The names of some subsidiaries have been omitted. Considered in the aggregate, omitted subsidiaries would not constitute a significant subsidiary. Unless otherwise noted, each subsidiary listed below is a wholly owned direct subsidiary of PACCAR Inc.

• A wholly owned subsidiary of PACCAR Australia Pty. Ltd.

• A wholly owned subsidiary of PACCAR Mexico, S.A. de C.V.

• A wholly owned subsidiary of Truck Acceptance LLC, which is a wholly owned subsidiary of PACCAR Capital Mexico, S.A. de C.V

• A wholly owned subsidiary of PACCAR Holding B.V.

• A wholly owned subsidiary of DAF Trucks N.V.

• A wholly owned subsidiary of PACCAR Trucks U.K. Ltd.

• A wholly owned subsidiary of PACCAR Parts U.K. Limited

• A wholly owned subsidiary of PACCAR of Canada Ltd.

• A wholly owned subsidiary of PACCAR Financial Services Ltd.

• A wholly owned subsidiary of PACCAR Sales North America, Inc.

• A wholly owned subsidiary of PACCAR Financial Europe B.V.

• A wholly owned subsidiary of PACCAR Financial Holdings Europe B.V.

• A wholly owned subsidiary of PACCAR Participações Ltda.

• A wholly owned subsidiary of DAF Trucks N.V., the Company was incorporated on December 27, 2022.

  EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements:

• the Registration Statement (Form S-8 No. 333-190467) pertaining to the PACCAR Inc Savings Investment Plan,
• the Registration Statement (Form S-8 No. 333-139544) pertaining to the PACCAR Inc Savings Investment Plan,
• the Registration Statement (Form S-8 No. 333-120238) pertaining to the PACCAR Inc Restricted Stock and Deferred Compensation Plan for Non-Employee Directors,
• the Registration Statement (Form S-8 No. 333-103706) pertaining to the Long Term Incentive Plan of PACCAR Inc,
• the Registration Statement (Form S-8 No. 333-52230) pertaining to the PACCAR Inc Savings Investment Plan,
• the Registration Statement (Form S-8 No. 333-36712) pertaining to the PACCAR Inc Restricted Stock and Deferred Compensation Plan for Non-Employee Directors,
• the Registration Statement (Form S-8 No. 333-39161) pertaining to the 1991 Long Term Incentive Plan of PACCAR Inc, and
• the Registration Statement (Form S-8 No. 33-47763) pertaining to the 1991 Long Term Incentive Plan of PACCAR Inc;

of our reports dated February 18, 2026, with respect to the consolidated financial statements of PACCAR Inc and the effectiveness of internal control over financial reporting of PACCAR Inc included in this Annual Report (Form 10-K) of PACCAR Inc for the year ended December 31, 2025.

/s/ Ernst & Young LLP

Seattle, Washington

February 18, 2026

EX-24

Exhibit 24

POWER OF ATTORNEY

We, the undersigned directors of PACCAR Inc (the “Company”), a Delaware corporation, hereby severally constitute and appoint M. C. Pigott our true and lawful attorney-in-fact, to sign for us, in our names and in our capacity as directors, an Annual Report on Form 10-K on behalf of the Company for the year ending December 31, 2025 and any amendments thereto, and to file the same with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

IN WITNESS WHEREOF, each of the undersigned has executed this power of attorney as of this 9th day of December, 2025.

/s/ P. R. Breber	/s/ C. A. Niekamp
P. R. Breber	C. A. Niekamp
Director, PACCAR Inc	Director, PACCAR Inc
/s/ A. J. Carnwath	/s/ J. M. Pigott
A. J. Carnwath	J. M. Pigott
Director, PACCAR Inc	Director, PACCAR Inc
/s/ R. P. Feight	/s/ L. A. S. Pretti
R. P. Feight	L. A. S. Pretti
Director, PACCAR Inc	Director, PACCAR Inc
/s/ K. S. Hachigian	/s/ G. Ramaswamy
K. S. Hachigian	G. Ramaswamy
Director, PACCAR Inc	Director, PACCAR Inc
/s/ B. A. Hill	/s/ M. A. Schulz
B. A. Hill	M. A. Schulz
Director, PACCAR Inc	Director, PACCAR Inc
/s/ B. B. Hulit
B. B. Hulit
Director, PACCAR Inc

EX-31.A

Exhibit 31(a)

CERTIFICATION

I, R. Preston Feight, certify that:

• I have reviewed this annual report on Form 10-K of PACCAR Inc;
• 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;
• 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;
• The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
• 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;
• 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;
• 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
• 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
• 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):
• 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
• Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date February 18, 2026

/s/ R. Preston Feight
R. Preston Feight
Chief Executive Officer
(Principal Executive Officer)

EX-31.B

Exhibit 31(b)

CERTIFICATION

I, Brice J. Poplawski, certify that:

• I have reviewed this annual report on Form 10-K of PACCAR Inc;
• 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;
• 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;
• The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
• 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;
• 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;
• 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
• 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
• 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):
• 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
• Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date February 18, 2026

/s/ Brice J. Poplawski
Brice J. Poplawski
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO SECTION 906

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

In connection with the Annual Report of PACCAR Inc (the “Company”) on Form 10-K for the year ended December 31, 2025 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:

• The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
• The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date February 18, 2026	By	/s/ R. Preston Feight
		R. Preston Feight
		Chief Executive Officer
		PACCAR Inc
		(Principal Executive Officer)
	By	/s/ Brice J. Poplawski
		Brice J. Poplawski
		Senior 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.