2 0 2 2 A N N U A L R E P O R T
S T A T E M E N T O F C O M P A N Y B U S I N E S S
S T O C K H O L D E R S ’
I N F O R M A T I O N
PACCAR is a global technology company that designs and manufactures premium
quality light, medium and heavy duty commercial vehicles sold worldwide under
the Kenworth, Peterbilt and DAF nameplates. PACCAR designs and manufactures
diesel engines and other powertrain components for use in its own products and
for sale to third party manufacturers of trucks and buses. PACCAR distributes
aftermarket truck parts to its dealers through a worldwide network of Parts
Distribution Centers. Finance and leasing subsidiaries facilitate the sale of
PACCAR products in many countries worldwide. PACCAR manufactures and
markets industrial winches under the Braden, Carco and Gearmatic nameplates.
PACCAR maintains exceptionally high standards of quality for all of its products:
they are well engineered, highly customized for specific applications and sell in
the premium segments of their markets, where they have a reputation for superior
performance and pride of ownership.
CONTENTS
1
Financial Highlights
52 Notes to Consolidated Financial Statements
3 Message from the Executive Chairman
91
Management’s Report on Internal Control
4 Message from the Chief Executive Officer
Over Financial Reporting
8 PACCAR Operations
26 Financial Charts
27 Stockholder Return Performance Graph
91 Report of Independent Registered Public
Accounting Firm on the Company’s
Consolidated Financial Statements
28 Management’s Discussion and Analysis
93 Report of Independent Registered Public
46 Consolidated Statements of Income
Accounting Firm on the Company’s
47 Consolidated Statements
of Comprehensive Income
48 Consolidated Balance Sheets
Internal Control Over Financial Reporting
94 Market Risks and Derivative Instruments
95 Officers and Directors
50 Consolidated Statements of Cash Flows
96 Divisions and Subsidiaries
51 Consolidated Statements
of Stockholders’ Equity
Corporate Offices
PACCAR Building
777 106th Avenue N.E.
Bellevue, Washington
98004
Mailing Address
P.O. Box 1518
Bellevue, Washington
98009
Telephone
425.468.7400
Facsimile
425.468.8216
Website
www.paccar.com
Stock Transfer
and Dividend
Dispersing Agent
Equiniti Trust Company
Shareowner Services
P.O. Box 64854
St. Paul, Minnesota
55164-0854
800.468.9716
www.shareowneronline.com
PACCAR’s transfer agent
maintains the company’s
shareholder records, issues
stock certificates and
distributes dividends and
IRS Forms 1099. Requests
concerning these matters
should be directed to
Equiniti.
Online Delivery of
Annual Report and Proxy
Statement
PACCAR’s 2022 Annual
Report and the 2023 Proxy
Statement are available on
PACCAR’s website at
www.paccar.com/
2023annualmeeting
Stockholders who hold
PACCAR stock in street
name may inquire of their
bank or broker about the
availability of electronic
delivery of annual
meeting documents.
Trademarks Owned by
PACCAR Inc and its
Subsidiaries
Braden, Carco, DAF,
EPIQ, Gearmatic, Kenmex,
Kenworth, Leyland, Online
Parts Counter, PACCAR,
PACCAR Connect,
PACCAR MX-11, PACCAR
MX-13, PACCAR PX,
PACCAR TX-8, PACCAR
TX-18, PacFuel, PacLease,
PacLink, PacTax, PacTrac,
PacTrainer, Peterbilt,
Peterbilt ARTech, The
World’s Best, TRP,
TruckTech+, SmartNav,
SmartLINQ and UltraLoft.
Independent Auditors
Ernst & Young LLP
Seattle, Washington
SEC Form 10-K
PACCAR’s annual report
to the Securities and
Exchange Commission
will be furnished to
stockholders on request
to the Corporate
Secretary, PACCAR Inc,
P.O. Box 1518, Bellevue,
Washington 98009. It is
also available online at
www.paccar.com/investors/
investor_resources.asp,
under SEC Filings or
on the SEC’s website at
www.sec.gov.
Annual Stockholders’
Meeting
April 25, 2023, 10:30 a.m.
PACCAR Parts Distribution
Center
405 Houser Way North
Renton, Washington
98057
An Equal Opportunity
Employer
This report was printed
on recycled paper.
F I N A N C I A L H I G H L I G H T S
Truck, Parts and Other Net Sales and Revenues
$ 27,314.3
$ 21,834.5
2022
2021
(millions, except per share data)
1
Financial Services Revenues
Total Revenues
Net Income
Total Assets:
Truck, Parts and Other
Financial Services
Financial Services Debt
Stockholders’ Equity
Per Common Share:
Net Income:
Basic
Diluted
Cash Dividends Declared Per Share
1,505.4
28,819.7
3,011.6
16,095.9
17,179.6
11,471.6
13,167.1
1,687.8
23,522.3
1,865.5
14,090.5
15,418.9
10,431.8
11,594.0
$
5.76
$
3.58
5.75
2.80
3.57
1.89
All per share amounts have been restated to give effect to a 50% stock dividend in February 2023.
R E V E N U E S
billions of dollars
N E T I N C O M E
billions of dollars
S T O C K H O L D E R S ’ E Q U I T Y
billions of dollars
32
3.2
12%
16
24
2.4
9%
12
16
1.6
8
0
0.8
0.0
6%
3%
0%
8
4
0
13
14
15
16
17
18
19
20
21
22
13
14
15
16
17
18
19
20
21
22
13
14
15
16
17
18
19
20
21
22
■ Revenues
■ Net Income
■ Stockholders’ Equity
Return on Revenues (percent)
Return on Equity (percent)
32
24
16
8
0
28%
21%
14%
7%
0%
T O O U R S H A R E H O L D E R S
PACCAR is celebrating 117 years of success and delivered record revenues of $28.82 billion and record net income
of $3.01 billion to its shareholders in 2022. The PACCAR team did an excellent job managing the improving global
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logistics landscape and the launch of many new truck models. This is the 84th consecutive year of earning a net
profit — a notable record considering the cyclicality of the capital goods market.
PACCAR achieved very good financial results by continuing to focus on the premium segment of our industry.
The company has enhanced its leadership in developing products and services that reflect the rapidly changing world
with the development of e-commerce, zero emissions vehicles and autonomous trucks.
The company is a recognized environmental leader and is partnering with industry groups to reduce the effects
of climate change. In addition to the production of the company’s battery-electric truck models, PACCAR continues
to emphasize “zero waste to landfill,” solar power generation, water recycling and increasing the recyclable material
content in its trucks.
PACCAR’s excellent year in 2022 is due to many positive factors, including the performance of the new Kenworth
and Peterbilt heavy- and medium-duty vehicles and DAF’s award-winning XD, XF and XG product range that
delivers operational excellence and luxury for its customers. These new truck models were complemented by the
company’s strong business performance in every geographic region. PACCAR’s new trucks have redefined product
quality and operating performance for our industry. PACCAR Parts and PACCAR Financial Services set profit
records in 2022 by deploying innovative technologies that bundle services for our customers. PACCAR Parts
delivered new sales programs to a growing population of connected PACCAR vehicles, built a new Parts Distribution
Center and opened additional TRP stores. PACCAR Financial Services, including PacLease, had a record year,
generating strong new and used truck business in all major markets. PACCAR’s Information Technology Division
unveiled a range of programs to increase annual revenue streams generated from e-commerce and connected vehicle
subscriptions. PACCAR benefits from its global diversification, industry leading independent dealer organizations
and increased investments in all segments of the business.
PACCAR’s superb credit rating of A+/A1 results from consistent profitability, a strong balance sheet and excellent
cash flow. Our shareholders have enjoyed very good returns, with annual dividend growth of 13.9% in the last five
years including a $2.80 per share extra cash dividend paid in early 2023 (before the 50% stock dividend in 2023).
PACCAR is committed to a strong, diverse and inclusive culture and the company’s excellent financial results
reflect its human centered philosophy. I would like to thank our employees for their commitment and dedication,
their many ideas and suggestions to maintain the regular cadence in our daily operations and their personal outreach
to local communities.
M A R K C . P I G O T T
E xecutive Chairman
Februar y 22, 2023
T O O U R S H A R E H O L D E R S
PACCAR had an outstanding year in 2022. The company’s revenues of $28.82 billion and net income of $3.01 billion
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were the highest in the company’s history. The after-tax return on revenue increased to 10.4%. PACCAR has earned an
annual net income for 84 consecutive years. PACCAR’s financial results reflect the company’s industry leading trucks and
powertrains, excellent aftermarket parts and financial services businesses and continued technology leadership.
I am very proud of PACCAR’s outstanding employees who provide our customers with the highest quality, most
efficient and innovative trucks and transportation solutions in the industry.
PACCAR’s financial strength enabled the company to invest $846 million in capital projects and research and
development to expand its range of trucks, enhance its manufacturing operations and grow its global aftermarket parts
and financial services businesses.
In 2022, DAF expanded its new range of heavy-duty trucks in Europe with the introduction of the DAF XD, which
was recognized as the “International Truck of the Year 2023.” This was the second year in a row that DAF has earned this
prestigious award. Kenworth and Peterbilt successfully transitioned to the production of the new heavy- and medium-duty
truck models, which provide excellent reliability and operating efficiency for their customers. PACCAR continues to
develop industry leading advanced vehicle technologies in the areas of zero emissions, autonomous vehicles and
connected services.
PACCAR Parts achieved record sales of $5.76 billion and record pre-tax profits of $1.45 billion. PACCAR’s A+/A1
credit rating supported PACCAR Financial Services’ record pre-tax profits of $588.9 million, including $6.22 billion of
new loan and lease volume.
PACCAR’s strong financial performance generated an industry leading after-tax return on beginning stockholders’
equity of 26% in 2022. Year-end stockholders’ equity was a record $13.17 billion. PACCAR’s financial performance has
enabled the company to declare $8.9 billion in dividends during the last ten years.
INVESTING FOR THE FUTURE — PACCAR’s consistently strong profits and balance sheet have allowed the company to
invest $7.3 billion in capital projects and research and development over the last decade. These investments have
supported the development of advanced new vehicle models, new manufacturing and distribution facilities and innovative
technologies. PACCAR’s investments create transportation solutions that provide our customers with the highest levels of
quality, safety and reliability, as well as the lowest total cost of operation.
In 2022, capital investments were $505 million and research and development expenses were $341 million. These
investments enabled PACCAR’s truck factories to build zero emissions vehicles, supported global production capacity
increases and implemented advanced technologies to enhance manufacturing efficiency, including the expanded use of
automated guided vehicles.
PACCAR made excellent progress in the development of its proprietary autonomous vehicle platform and advanced its
partnership with Aurora to commercialize autonomous vehicles. Peterbilt, Kenworth and DAF continued to enhance their
industry leading connected services offerings that provide valuable vehicle performance data to our customers, while also
providing PACCAR with an increasing stream of recurring revenue.
PACCAR is a leader in the development of battery-electric, hydrogen combustion and hydrogen fuel cell vehicles.
Kenworth, Peterbilt and DAF delivered nearly 200 battery-electric trucks to customers in 2022 and have nine zero
emissions vehicle models in production with a backlog of hundreds of customer units on order.
PACCAR’s three global embedded software development centers and global connected truck teams are providing
proprietary, customer-focused solutions for all parts of the business.
CONTINUOUS IMPROVEMENT — Six Sigma, data analytics, machine learning, Industry 4.0 and lean process development
are integrated into all business activities at PACCAR as well as at many of its suppliers, dealers and customers. These tools
5
help to continuously enhance the creation of state-of-the-art new product designs, customer services and manufacturing
processes. Thousands of PACCAR employees have been trained in the use of these tools and have delivered billions of
dollars in savings in all areas of the company.
INFORMATION TECHNOLOGY — PACCAR’s Information Technology Division (ITD) is an industry leader in innovative
digital technology solutions that enhance the quality of PACCAR business processes and products. These solutions provide
secure, customized products for customers, dealers and suppliers. In 2022, PACCAR’s state-of-the-art connected services
platform, PACCAR Connect, was installed in over 133,000 PACCAR vehicles. This configurable system consists of
proprietary hardware and software that provide robust data security, over-the-air software updates and advanced fleet
management tools. The innovative system enables customers to optimize vehicle performance and cost-effectively integrate
their existing fleet management systems and applications. The ITD team maintains a rigorous focus on ensuring
PACCAR’s leadership in vehicle and infrastructure cybersecurity.
TRUCKS — U.S. and Canadian Class 8 truck industry retail sales in 2022 were 283,500 units and the Mexican market
totaled 25,800 units. European industry 16+ tonne truck registrations were 297,500 units. PACCAR delivered 185,900
trucks in 2022 as customers benefited from PACCAR’s new vehicles and good freight tonnage.
DAF’s European 16+ tonne market share increased to a record 17.3% compared to 15.9% in 2021, while Peterbilt and
Kenworth’s Class 8 retail sales share in the U.S. and Canada increased to 29.8% compared to 29.2% a year earlier. These
market share increases demonstrate the success of the industry leading new trucks recently introduced by DAF, Kenworth
and Peterbilt.
Industry Class 6 and 7 truck retail sales in the U.S. and Canada were 88,300 units. The European 6 to 16-tonne
market was 38,800 units. PACCAR’s market share in the U.S. and Canada medium-duty truck segment was 10.9%.
DAF’s share of the European medium-duty truck market was 9.7%. PACCAR delivered 24,200 medium-duty trucks to
its customers in 2022.
PACCAR Mexico achieved industry leading heavy-duty market share of 33.2%. PACCAR Mexico completed the
introduction of the new Kenworth heavy- and medium-duty products and made capital investments to expand the
production capacity of these new products. PACCAR Mexico received the “Heavy Vehicle Manufacturer of the Year” award,
presented by the National Auto Parts Industry (INA), recognizing quality, innovation and sustainability.
DAF Brasil reported record sales and profits and record 16+ tonne market share of 6.9%, up from 5.7% in 2021. DAF
Brasil’s Ponta Grossa assembly plant produced a record 7,600 trucks and delivered the 25,000th truck produced since DAF
Brasil began operations in 2014.
PACCAR Australia achieved record sales, profits and production volume, with combined Kenworth and DAF
heavy-duty market share of 24.4%. PACCAR Australia launched a major product update, the Kenworth K220, and
implemented manufacturing investments to increase capacity and production efficiency.
A tremendous team effort by the company’s employees and dealer network contributed to industry leading truck, parts
and other gross margins of 14.7%. New technology, process improvements, data analytics and partnership with suppliers
enabled PACCAR to establish industry leading factory and distribution center safety and quality.
PACCAR’s innovation and manufacturing expertise continued to be recognized as the industry leader in 2022. The
new DAF XD truck earned the prestigious “International Truck of the Year 2023” and the DAF XF truck earned the “Fleet
Truck of The Year” award for the fourth consecutive year in the U.K. Kenworth and Peterbilt earned six “Manufacturing
6
Leadership Awards” from the National Association of Manufacturers.
PACCAR PARTS — PACCAR Parts increased annual revenues by 17% to a record $5.76 billion and achieved record pre-tax
profits of $1.45 billion. Dealers and customers benefited from innovative technology solutions, including e-commerce,
managed dealer inventory and global fleet service programs that offer online purchasing, national pricing and centralized
billing. PACCAR Parts is the primary source for aftermarket parts and services for PACCAR vehicles and also offers its
TRP-branded parts for all makes of trucks, trailers and buses. PACCAR dealers expanded TRP aftermarket parts retail
stores to 279 locations in 41 countries. Over seven million heavy-duty trucks operate in North America and Europe. This
large vehicle parc, combined with more than 318,000 PACCAR MX engines installed in Peterbilt and Kenworth trucks in
North America, creates excellent demand for parts and service and moderates the cyclicality of truck sales.
To further enhance its logistics performance for dealers, PACCAR Parts opened a new 260,000 square-foot Parts
Distribution Center in Louisville, Kentucky.
FINANCIAL SERVICES — PACCAR Financial Services’ (PFS) conservative business approach, complemented by PACCAR’s
superb credit rating of A+/A1, excellent business growth and strong dealer network, enabled PFS to achieve a pre-tax
profit record of $588.9 million, 35% higher than the $437.6 million earned in 2021. PACCAR issued $3.05 billion in
medium-term notes at attractive rates during the year. PFS has operations covering 26 countries on four continents. The
global breadth of PFS and its rigorous credit application process support a portfolio of 217,000 trucks and trailers, with
total assets of $17.18 billion. PACCAR Financial and PACCAR Leasing are the preferred funding sources for DAF, Peterbilt
and Kenworth trucks in the markets where PFS operates. PFS opened a new retail used truck center in Madrid, Spain and
now has thirteen strategically located centers around the world. PFS successfully sold over 11,300 premium DAF, Kenworth
and Peterbilt used trucks in 2022.
PACCAR Leasing (PacLease) is one of the largest full-service truck rental and leasing operations in North America,
Germany and Australia. PacLease placed over 7,300 new PACCAR vehicles in service. The PacLease fleet grew to over
40,000 vehicles at the end of 2022. PacLease supports the growth of PACCAR’s zero emissions vehicle sales by offering
customers the opportunity to rent or lease battery-electric trucks and battery chargers.
ENVIRONMENTAL LEADERSHIP — PACCAR is a global environmental leader. PACCAR discloses its comprehensive
sustainability program in the environmental report published by CDP, which evaluates and scores companies on how
effectively they are addressing climate change and the environment. PACCAR earned the highest rating of an “A” score in
2022, which places it in the top 1.5% of the over 18,000 reporting companies from around the world. For the past eight
years, PACCAR has earned an “A” or “A-” score. PACCAR is ranked in the top 8% of peer companies by the S&P Global
Corporate Sustainability Assessment for its environmental, social and governance practices. PACCAR, in partnership with
the Science Based Targets Initiative (SBTi), has committed to vehicle emissions reductions of 25% and 35% from internal
operations by 2030 and is on schedule to meet those objectives. PACCAR’s manufacturing facilities have earned ISO 14001
environmental certification and continued to enhance their zero-waste-to-landfill programs during the year.
PACCAR is a leader in diversity and inclusion and PACCAR was again recognized as a top workplace for women by the
Women in Trucking Association.
A LOOK AHEAD — PACCAR employees enable the company to distinguish itself as a global quality leader in trucks,
technology, financial services and the aftermarket parts business. PACCAR’s strong internal processes, engineering
capabilities and relationships with suppliers contribute to it generating excellent results in global markets.
The economic outlook for 2023 is modest GDP growth in North and South America and Europe. Based on continued
good freight activity, and the customer benefit of replacing older vehicles with the new fuel-efficient DAF, Kenworth and
7
Peterbilt trucks, we forecast 2023 truck markets to be strong. The U.S. and Canada Class 8 truck market in 2023 is
projected to be in the range of 270,000–310,000 vehicles. Retail sales for Class 6-7 trucks are expected to be between
75,000–85,000 vehicles. The European 16+ tonne truck market is forecast to be in the range of 270,000–310,000 vehicles
and medium-duty trucks in the range of 38,000–42,000 units. The South American market is expected to be in the range
of 125,000–135,000 units.
PACCAR Parts’ best-in-class technology and services, combined with the large, aging vehicle parc and good freight
demand in North America and Europe, should provide increasing demand for the company’s aftermarket parts business.
PACCAR Financial is expected to continue to perform well due to its strong market share performance, high quality
portfolio and excellent used truck business.
PACCAR provides the industry’s highest quality and efficient vehicles, operates state-of-the-art factories and delivers
superb customer service in parts and financial services. PACCAR continues to invest in the development of aerodynamic
trucks, next generation clean diesel and zero emissions powertrains, advanced driver assistance systems, autonomous
driving technologies, truck connectivity and data analytics.
PACCAR is well positioned to continue generating excellent results for its customers and shareholders.
P R E S T O N F E I G H T
Chief E xecutive Officer
Februar y 22, 2023
PACCAR Executive Operating Committee
First Row Left to Right: Lily Ley, John Rich, Kevin Baney, Preston Feight, Mike Dozier, Harald Seidel, Laura Bloch, Jason Skoog.
Second Row Left to Right: Michael Barkley, Todd Hubbard, Darrin Siver, Harrie Schippers, Harry Wolters, Mike Walton, Paulo Bolgar.
8
K E N W O R T H T R U C K C O M P A N Y
Kenworth is celebrating 100 years in 2023. Kenworth achieved heavy-duty market
share of 14.8 percent and delivered 47,700 trucks in 2022, led by its new flagship
9
T680 vehicle.
The Kenworth T680 enhances fuel efficiency by up to seven percent with the industry leading PACCAR
Powertrain. Kenworth extended its suite of advanced driver assistance systems, including Lane Keeping Assist
and Torque Assisted Steering, to its Class 8 W990 and T880 models.
Kenworth’s new medium-duty models – the T180, T280, T380 and T480 – provide excellent driver comfort
with a spacious 2.1-meter cab and deliver outstanding productivity in a wide variety
of urban applications.
Kenworth began deliveries of its battery-electric vehicles. The Kenworth zero
emissions vehicles provide a range of up to 200 miles and offer outstanding
performance for local and regional haul, urban delivery and drayage operations.
Kenworth earned the first “Clean Energy Entrepreneur Award” from Clean &
Prosperous Washington. Ten Kenworth T680 hydrogen fuel cell electric vehicles
successfully completed an environmental trial in Southern California that reduced
CO2 emissions by an estimated 75 metric tons per truck annually.
Kenworth launched the PACCAR TX-18 automated transmission for on-highway
and vocational applications. The TX-18 is optimized for integration with PACCAR
MX engines, providing up to 1,850 lb.-ft. of torque.
Kenworth added 41,000 vehicles to PACCAR’s connected truck platform through
the Kenworth TruckTech+ system. Fleet managers and Kenworth dealers receive real-time vehicle and
engine information to optimize uptime and productivity. More than 132,000 Kenworth vehicles are connected to
TruckTech+.
Kenworth Chillicothe began construction of a 105,000 square-foot test building to increase the plant’s
manufacturing capacity. Kenworth’s Chillicothe and Renton plants earned three “Manufacturing Leadership
Awards” from the National Association of Manufacturers in recognition of their innovative engineering and
production technologies.
The Kenworth dealer network grew to 461 locations. Dealers invested a record $313 million in capital projects
to enhance their world-class facilities throughout the United States and Canada.
The Women in Trucking Association recognized Kenworth as a “Top Company for Women to Work for in
Transportation” for the fifth consecutive year. Kenworth fosters a collaborative workplace through year-round
events, education and professional development opportunities.
A Kenworth T680 vehicle transported the U.S. Capitol Christmas Tree for the 2022 tree-lighting ceremony.
For the seventh year in a row, the “Transition Trucking: Driving for Excellence” program awarded a Kenworth
T680 to America’s top military veteran who transitioned from active duty to driving for a commercial fleet.
Since its beginning in 1923 in the rugged forests of the Pacific Northwest, Kenworth has designed and manufactured trucks to operate
in the world’s most challenging conditions. The flagship T680 embraces Kenworth’s legacy as The World’s Best® and utilizes clean
diesel and zero emissions powertrains to deliver superior performance, efficiency and comfort to Kenworth customers.
10
D A F T R U C K S
DAF Trucks N.V. achieved a record 17.3 percent market share in the European
heavy-duty 16+ tonne truck market in 2022. The new DAF XD series earned the
11
prestigious “International Truck of the Year 2023” award.
DAF launched the XD series in 2022, which is designed for urban delivery and vocational applications. The
XD provides up to 450 horsepower with the PACCAR MX-11 engine and features the innovative DAF Digital
Vision System and DAF Corner View technologies that replace sideview mirrors and enhance visibility. The XD
series earned the prestigious “International Truck of the Year 2023” award, the second consecutive win for DAF’s
new truck models. DAF is the first truck manufacturer to utilize new European mass and dimension regulations
that allow a more aerodynamic and spacious vehicle design.
DAF introduced zero emissions XD and XF Electric trucks with driving ranges up to 300 miles. The XD and
XF Electric can be charged in less than two hours and deliver up to 480 horsepower when paired with the
PACCAR EX-D2 electric motor and a high-capacity battery. A DAF CF Electric was the first heavy-duty electric
truck to summit the Grossglockner Alpine Road – the highest mountain pass in Austria. DAF also launched the
XDC and XFC models focused on construction and
vocational applications.
DAF increased market share in the 16+ tonne segment to a
record 17.3 percent with market leadership in the United
Kingdom, the Netherlands, Belgium, Poland, Hungary and
Bulgaria. DAF is the European leader in tractors and the
leading import brand in Germany and France.
The DAF XF won the “Fleet Truck of the Year” award at the U.K. Motor Transport Awards for the fourth
consecutive year. The DAF XG+ earned “Best Diesel Tractor Unit” at the U.K. Fleet News Awards and the
vocational DAF CF was honored as the “Best Rigid Truck.”
DAF sold over 7,500 trucks outside the EU in 2022. DAF is the heavy-duty market leader among European
manufacturers in Taiwan. DAF’s independent global dealer network opened 46 new locations throughout Europe,
South America, Africa, Asia and Oceania, expanding the worldwide network to over 1,150 locations.
DAF continues to invest in its world-class manufacturing facilities. DAF completed an electric vehicle
assembly plant in Eindhoven, the Netherlands. DAF installed a new state-of-the-art rear axle component
production line in its Westerlo, Belgium factory and expanded its Eindhoven engine plant capacity to enhance
operational efficiency.
PACCAR Parts’ TRP all-makes aftermarket parts program consists of over 83,000 truck, bus and trailer parts
and is supported by DAF’s worldwide dealer network. DAF dealers opened eight TRP stores in Europe and Asia,
increasing the total to 95 in those markets.
The award-winning DAF XD is designed for urban settings and provides superior quality, operating efficiency and state-of-the-art
technology to enhance customer operations. The versatile XD range can be customized for a wide variety of applications, including
construction, regional haul and local delivery.
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P E T E R B I L T M O T O R S C O M P A N Y
Peterbilt achieved a 15.0 percent Class 8 market share in 2022 and delivered its 100th
electric vehicle. Peterbilt introduced the limited-edition Model 389X, celebrating one of
13
its iconic traditional trucks.
Peterbilt increased its Class 8 market share to 15.0 percent and delivered over 48,000 vehicles in 2022,
including a record 9,900 next generation Model 579 UltraLoft Sleepers. The aerodynamic Model 579
improves fuel efficiency by up to seven percent and provides best-in-class driver ergonomics and comfort.
Peterbilt also earned a 19.4 percent share in the vocational/refuse market, led by the durable Model 567 and
Low Cab Forward Model 520.
Peterbilt’s three battery-electric vehicle models – the 579EV, 520EV and 220EV – are industry leaders in
zero emissions performance for a wide variety of applications. Peterbilt expanded its range of alternative
powertrain vehicles by adding natural gas versions of the
medium-duty Models 536 and 537.
Peterbilt introduced the Model 389X, a limited edition of
the iconic Model 389. The distinctive Model 389X features
exterior LED lighting and a commemorative chrome dash
plate unique to each vehicle. The Model 389X is available in
day cab and sleeper configurations and is designed for
on-highway and vocational applications.
Peterbilt partnered with the Department of Energy to develop SuperTruck 2, which achieved over 14 miles
per gallon in highway driving with a full trailer. Peterbilt continues to test the Model 579 equipped with
Aurora Driver hardware and software for autonomous driving.
PACCAR’s innovative SmartLINQ system enables Peterbilt fleet customers to seamlessly manage connected
truck services accounts, including remote diagnostics and service management. The system is optimized for
online subscription renewals to deliver excellent customer service.
Peterbilt earned three prestigious “Manufacturing Leadership Awards” from the National Association of
Manufacturers in 2022 for its operations excellence and innovation in engineering and production
technology.
The Peterbilt dealer network invested a record $201 million and grew its sales and service network to a
record 423 locations, including 28 TRP stores. The network continued to enhance its uptime support services
with 152 locations certified as Platinum Service Centers and over 800 mobile service units. The Peterbilt
Technician Institute (PTI) graduated its 100th class in 2022, adding 80 new technicians to the dealer network.
PTI has trained nearly 1,000 technicians since 2015.
The Women in Trucking Association recognized Peterbilt as a “Top Company for Women to Work for in
Transportation” for the fifth year in a row.
The new Peterbilt Model 579 delivers outstanding performance in vocational and on-highway applications. The Model 579 is available
in day cab and sleeper configurations and can be equipped with a wide range of fuel-efficient diesel and zero emissions
battery-electric powertrains to support the operational and environmental goals of Peterbilt customers.
P A C C A R A U S T R A L I A
PACCAR Australia achieved record truck production and launched the new
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Kenworth K220 in 2022. PACCAR Australia has delivered over 79,000 Kenworth and
DAF vehicles operating in one of world’s most demanding environments.
PACCAR Australia delivered a record 4,300 Kenworth and DAF trucks in 2022, including its 900th locally
assembled DAF vehicle. PACCAR is the heavy-duty market leader in Australia with combined Kenworth and
DAF market share of 24.4 percent.
Kenworth introduced the new K220 Cabover in 2022. The K220 improves aerodynamic efficiency by four
percent and features a customizable 15-inch digital dashboard display and the innovative PACCAR Connect
system that transmits real-time over-the-air vehicle performance data. PACCAR Australia installed robotic cab
assembly cells in its Bayswater facility to increase production capacity and enhance quality.
PACCAR Parts Australia achieved record revenues, grew its Fleet Services program by 23 percent and
expanded its TRP all-makes aftermarket business to 14 locations. PACCAR Financial Australia expanded its
portfolio to a record A$1.6 billion. PacLease Australia delivers outstanding full-service lease, rental and contract
maintenance services and is the largest Class 8 truck leasing company in Australia.
The 93 Kenworth and DAF dealer locations invested A$36 million in capital projects in 2022.
Kenworth and DAF trucks are renowned in Australia for their reliability and durability in the most challenging operating conditions.
The limited-edition Kenworth Legend combines traditional styling with modern engines and advanced technology to deliver
best-in-class performance and efficiency.
P A C C A R M E X I C O
PACCAR Mexico continued its market leadership in 2022, achieving a 33.2 percent
share of the Class 8 market in Mexico. PACCAR Mexico has manufactured over
15
350,000 vehicles since its founding in 1959.
PACCAR Mexico produces a broad range of Kenworth and Peterbilt Class 5-8 vehicles for North, Central and
South America in its state-of-the-art 590,000 square-foot production facilities in Mexicali, Mexico. PACCAR
Mexico produced 15,500 vehicles in 2022, including over 5,200 Kenworth and Peterbilt trucks exported to the U.S.
and Canadian markets. PACCAR Mexico earned the “Heavy Vehicle Manufacturer of the Year” award from the
National Auto Parts Industry (INA) in recognition of its industry leading quality, innovation and sustainability.
PACCAR Mexico launched new products in 2022, including the flagship Kenworth T680. The new T680
provides up to a seven percent fuel efficiency improvement, new LED headlamps and advanced driver assistance
systems. PACCAR Mexico also introduced a new range of medium-duty Kenworth models that feature a spacious
2.1-meter cab to enhance driver comfort.
PACCAR Financial Mexico and PacLease Mexicana financed over 52 percent of Kenworth truck retail sales in
Mexico. Kenworth’s 142 dealer locations offer the most extensive parts and service network in Mexico. These
premier facilities deliver an outstanding customer experience.
PACCAR Mexico has produced the most iconic and reliable trucks in Mexico for over 60 years. The Kenworth T880 is
one of the most versatile heavy-duty trucks in the industry, delivering excellent performance in vocational and
on-highway applications.
L E Y L A N D T R U C K S
Leyland Trucks – the United Kingdom’s leading truck manufacturer – celebrated 15
16
years of PACCAR body production and delivered a record 19,800 DAF vehicles to
customers in Europe, Asia, Australia, the Americas and the Middle East.
Leyland’s highly efficient 710,000 square-foot manufacturing facility utilizes a technologically advanced
production system that incorporates a robotic chassis paint facility and delivers engineering designs and
assembly instructions electronically. Leyland celebrated 15 years of PACCAR body production in 2022 and has
delivered more than 13,100 DAF trucks with a PACCAR body to customers. Leyland assembles the full DAF
vehicle range of LF, CF, XD, XF, XG and XG+ trucks for right- and left-hand drive markets.
DAF launched the new LF Global Six vehicle, which delivers up to a seven percent fuel efficiency
improvement and enhanced driving performance. DAF also introduced the 16+ tonne LF Electric vehicle,
expanding its range of zero emissions vehicles.
DAF was the market leader in the U.K. for the 27th consecutive year and achieved a 32 percent market share.
The United Kingdom Motor Transport Awards honored the DAF XF as the “Fleet Truck of the Year” for the
fourth year in a row.
Leyland manufactures the full DAF product range of LF, CF, XD, XF, XG and XG+ models for right- and left-hand drive markets. The new
XD Electric delivers outstanding performance in a variety of urban applications with a zero emissions driving range up to 300 miles.
P A C C A R G L O B A L G R O W T H
PACCAR sells DAF, Kenworth and Peterbilt trucks and parts to customers in 95
countries on six continents. PACCAR expanded its business in South America, Asia
17
and Africa in 2022.
DAF Brasil produced a record 7,600 trucks in 2022 as it celebrated its ninth year of operation. DAF Brasil
achieved a record 6.9 percent market share in the 16+ tonne segment. DAF introduced the CF seven-liter vocational
truck in Brasil and expanded its South American business by delivering 1,000 trucks to customers in Colombia and
Chile. DAF dealers in Brasil have invested over $117 million in 54 service locations, including eight TRP stores.
DAF is the heavy-duty market leader among European manufacturers in Taiwan. DAF achieved record truck sales
in Israel, Colombia, Ecuador and Australia in 2022.
PACCAR sold over 2,700 PACCAR MX engines to leading manufacturers of coaches, buses and specialty vehicles
worldwide. Pierce Manufacturing, a subsidiary of Oshkosh Corporation, selected the PACCAR MX-13 engine to
power its industry leading fire trucks in North America. The PACCAR India Technical Center provides information
technology, engineering and purchasing expertise to PACCAR operations worldwide.
The DAF assembly facility in Taiwan builds the full range of DAF XF, CF and LF models. DAF Brasil has produced over 25,000 trucks as
it celebrates nine years of operation. PACCAR engineering teams in India support the PACCAR truck divisions around the world.
PACCAR engines power buses throughout Europe and Asia.
P A C C A R P A R T S
PACCAR Parts earned a record pre-tax profit of $1.45 billion and record worldwide
18
revenue of $5.76 billion in 2022. PACCAR Parts delivered 2.9 million parts shipments
to over 2,300 DAF, Kenworth, Peterbilt and TRP locations.
PACCAR Parts drives uptime for customers with technology solutions that include the PACCAR Parts 365
Center and Fleet Services program. These solutions support over 2,400 commercial fleets operating 1.3 million
vehicles. PACCAR’s connected vehicle services provide analytical data that enhances customers’ operational
performance.
PACCAR Parts’ global e-commerce program, Online Parts Counter, allows customers 24/7 online access to
more than 1.7 million aftermarket parts and delivers Kenworth Privileges, Peterbilt Preferred, DAF MAX and TRP
all-makes Performance loyalty benefits. PACCAR Parts’ successful TRP aftermarket brand provides parts for all
makes and models of trucks, trailers, buses and engines by offering over 157,000 part numbers. In 2022, TRP
aftermarket parts retail stores expanded to a record 279 locations in 41 countries.
PACCAR Parts operates 18 Parts Distribution Centers (PDCs) globally, delivering industry leading part
availability. PACCAR Parts opened its newest PDC in Louisville, Kentucky in 2022. The Louisville PDC increases
PACCAR’s global capacity to more than 3.4 million square feet of warehouse space.
PACCAR Parts’ 18 global distribution centers and industry leading technology deliver best-in-class customer service. PACCAR Parts’
e-commerce program allows customers 24/7 access. PACCAR Parts’ 365 Center supports customers with roadside assistance, powertrain
support and service management. PACCAR Parts opened its newest PDC in Louisville, Kentucky in 2022.
P A C C A R P O W E R T R A I N
PACCAR MX engines are installed in all DAF 16+ tonne vehicles and over 42 percent
of Kenworth and Peterbilt Class 8 vehicles in North America. PACCAR Powertrain
19
launched the PACCAR TX-18 transmissions and EX electric motors in 2022.
PACCAR is one of the premier diesel engine manufacturers in the world, with over 800,000 square feet of
production facilities in Columbus, Mississippi, Eindhoven, the Netherlands and Ponta Grossa, Brasil. PACCAR’s
MX-11 and MX-13 engines provide customers with excellent fuel economy and superior durability. PACCAR has
delivered over 1.9 million engines, with the Columbus engine facility manufacturing over 307,000 engines since
its opening in 2010. PACCAR has two world-class research and development centers, operating 47 advanced
engine test cells and a climatic chassis dynamometer to enhance engine and powertrain design.
The new PACCAR TX-18 and TX-18 Pro transmissions are designed for demanding heavy haul, vocational
and off-highway applications. The TX-18 transmissions support up to 510 horsepower and 1,850 lb.-ft. of torque
with a PACCAR MX engine. PACCAR introduced its new line of EX electric motors in Europe, which deliver
smooth power and increase the zero emissions driving range to up to 300 miles with a high-capacity battery.
PACCAR EX electric motors are installed in new DAF XD and XF battery-electric vehicles.
PACCAR engine factories are technology leaders in commercial vehicle powertrain production. PACCAR Powertrains are installed in
DAF, Kenworth and Peterbilt vehicles worldwide, where they have earned a reputation for superior reliability, durability and operating
efficiency.
P A C C A R F I N A N C I A L S E R V I C E S
PACCAR Financial Services (PFS) supports the sale of PACCAR trucks worldwide.
20
PFS earned record pre-tax profits of $589 million and achieved retail market share
of 25.6 percent in 2022.
The PFS portfolio is comprised of 217,000 trucks and trailers, with total assets of $17.2 billion. PACCAR’s
excellent balance sheet, complemented by its industry leading A+/A1 credit rating, enabled PFS to issue $3.1
billion in three- and five-year medium-term notes in 2022. PFS supports the sale of Kenworth, Peterbilt and DAF
trucks in 26 countries on four continents. PFS sold 11,300 pre-owned PACCAR trucks worldwide in 2022 by
leveraging its network of 13 used truck centers, including a new used truck center in Madrid, Spain.
PACCAR Financial Corp. (PFC) financed 68 percent of dealers’ new truck inventory and 18.1 percent of
Kenworth and Peterbilt Class 8 trucks sold in the U.S. and Canada. PFC leverages its industry leading online
services platform to generate, fund and service retail loans and leases.
PACCAR Financial Brasil supports the growth of DAF Brasil by providing retail financing for 41 percent of
new DAF trucks sold in Brasil in 2022. PACCAR Financial Europe has $4.4 billion in assets and provides
financial services to DAF dealers and customers in 19 European countries.
PACCAR Financial facilitates the sale of premium-quality new and used PACCAR vehicles worldwide by
offering a full range of financial products and utilizing technology to streamline financing and leasing for
dealers and customers.
P A C C A R L E A S I N G C O M P A N Y
PACCAR Leasing (PacLease) achieved its 33rd consecutive year of profitability with a
worldwide fleet of 40,300 Kenworth, Peterbilt and DAF vehicles.
21
PacLease offers premium Kenworth, Peterbilt and DAF vehicles for full-service lease and rental customers.
PacLease is an industry leader in introducing new technologies and providing innovative and complete
transportation solutions to fleet customers. In 2022, PacLease delivered over 7,300 Kenworth, Peterbilt and DAF
vehicles to customers in North America, Europe and Australia through its global network of 609 locations.
PacLease added zero emissions Kenworth and Peterbilt trucks to its lease and rental fleet in 2022 to support
customers’ operational and environmental goals. PacLease delivered its 4,500th vehicle equipped with the
PACCAR Integrated Powertrain, which combines the fuel efficiency and reliability of the PACCAR MX engine
and the durability of the PACCAR Transmission. PACCAR MX engines power over 60 percent of the new
PacLease Class 8 trucks purchased in 2022.
PacLease Mexico is the largest Class 8 full-service lease provider in Mexico with a fleet of 6,900 trucks and
trailers. PacLease Europe operates a fleet of over 2,900 DAF trucks and trailers. PacLease Australia has the largest
network coverage in the country with 27 locations.
PacLease provides its customers with innovative transportation solutions and premium-quality PACCAR vehicles. PacLease
offers new Peterbilt, Kenworth and DAF trucks with the PACCAR engine and powertrain.
P A C C A R T E C H N I C A L C E N T E R S
PACCAR Technical Centers’ world-class engineering, analysis and validation
22
capabilities accelerate the deployment of advanced technologies such as electric,
autonomous and connected vehicles. The Technical Center in Mount Vernon,
Washington celebrated its 40th anniversary in 2022.
PACCAR’s Technical Centers in Europe, North America and India provide technical leadership in product
development, validation and innovation. Engineers, scientists and technicians with expertise in powertrain and
vehicle development accelerate the launch of new technologically advanced products.
Technical Center computer simulation tools, laboratories and test tracks are used to develop and validate
emerging technologies that support PACCAR products, including hydrogen fuel cell and electric powertrains,
autonomous driving, and connectivity to other road users and surrounding infrastructure. Data analytics tools
based on machine learning provide faster response times and proactively recommend maintenance schedules to
enhance the daily performance of PACCAR vehicles. The climatic chassis dynamometer simulates driving at a
wide range of temperatures, road speeds, grades or altitudes. 3-D rapid prototyping capability, including printing
metal prototypes, drives product innovation.
.
PACCAR Technical Centers in Eindhoven, the Netherlands, Silicon Valley, California, Mount Vernon, Washington and Pune, India
advance the quality and competitiveness of PACCAR products worldwide.
I N F O R M A T I O N T E C H N O L O G Y D I V I S I O N
PACCAR’s Information Technology Division (ITD) is an industry leader in innovative
digital technologies that enhance the quality of PACCAR business processes and
23
products. These technologies systematically connect PACCAR with its customers,
dealers and suppliers.
PACCAR’s innovative wireless telematics system, PACCAR Connect, transmits real-time over-the-air vehicle data
to optimize performance and maximize uptime. PACCAR ITD enhanced PACCAR Connect in 2022 by introducing
an online application that enables customers to manage their connected services subscriptions, access vehicle
performance data, track vehicle locations and schedule preventative maintenance from a single web location.
PACCAR ITD released the Gateway electronic platform for PACCAR Parts’ global dealer network. The platform
provides dealers with access to PACCAR Parts’ best-in-class aftermarket parts services, allows dealers to download
analytics reports and customer information and offers enhanced delivery tracking capabilities.
PACCAR ITD launched a Used Truck Center website for PACCAR Financial in 2022. Customers seeking
premium pre-owned Kenworth, Peterbilt and DAF trucks can search available inventory and select by specifications,
model and price. This superb e-commerce solution enhances PACCAR Financial’s used truck sales and financing.
PACCAR is a leader in applied technology including: Customer Technology Center; augmented reality training guides use a full-scale
hologram; connected truck services increase uptime and productivity; and e-commerce platforms enhance the customer experience.
P A C C A R P H I L A N T H R O P Y
The PACCAR Foundation has contributed $220 million to educational, social
24
services and arts organizations since 1951.
PACCAR’s philanthropy reflects its support of charitable institutions in many countries. PACCAR donates
generously to education, the arts and social services in locations in which its employees work and live worldwide.
PACCAR’s philanthropy recognizes that education is the key to providing people an opportunity to improve
their livelihood. The PACCAR Foundation funds university scholarships and professorships in science, business
and humanities, as well as supports the construction of world-class facilities for students and faculty. PACCAR
supports many institutions, including Washington State University, Mississippi State University and Queen’s
University Belfast.
PACCAR’s philanthropy is focused on health and social well-being, including funding for medical equipment,
cancer research and the United Way. PACCAR employees contribute their time and resources as volunteers and
fundraisers for organizations worldwide.
PACCAR contributes generously to nonprofit organizations that promote diverse and inclusive communities,
including UNCF, YWCA, Landesa, Northwest African American Museum and Page Ahead Children’s Literacy.
PACCAR Philanthropy supports institutions in many locales: PACCAR Environmental Technology Building, Washington State University;
Swedish Hospital Mobile Mammography Truck in Seattle, Washington; Center for Science and Innovation, Seattle University; Van Gogh
Museum, Amsterdam, the Netherlands.
P A C C A R E N V I R O N M E N T A L L E A D E R S H I P
PACCAR is an environmental leader, investing in and delivering technologically
advanced trucks and powertrains, operating resource-efficient factories and
25
responsibly managing its supply chain to further its sustainability goals.
PACCAR earned an “A” rating from CDP in 2022, placing it in the top 1.5 percent of over 18,000 reporting
companies, and has earned an “A” or “A-” rating for the past eight years. PACCAR is internationally recognized
for its innovative trucks and alternative powertrains, including clean diesel, battery-electric, hydrogen and
natural gas. Kenworth, Peterbilt and DAF lead the industry with nine battery-electric models and are increasing
production of zero emissions trucks to meet customer demand.
PACCAR is an environmental leader in its factory operations throughout the world, with all manufacturing
locations being ISO 14001 environmental management system certified and over 80 percent achieving
zero-waste-to-landfill. PACCAR sources the majority of its components from Tier 1 suppliers located in the
same regions as its manufacturing operations. This benefits the environment by shortening inbound supply lines
and utilizing suppliers in countries with strong environmental practices.
PACCAR leads the industry with its innovative zero emissions commercial vehicles that provide a competitive total cost of ownership for
customers operating in a variety of applications.
F I N A N C I A L C H A R T S
26
U.S. AND CANADA
CLASS 8 MARKET SHARE
trucks (000)
320
240
160
80
0
36
27
18
9
0
WESTERN AND CENTRAL EUROPE
16+ TONNE MARKET SHARE
retail sales
32%
trucks (000)
340
registrations
19%
29%
255
26%
170
23%
20%
85
0
17%
15%
13%
11%
13
14
15
16
17
18
19
20
21
22
13
14
15
16
17
18
19
20
21
22
■ Total U.S. and Canada Class 8 Units
■ Total Western and Central Europe
16+ Tonne Units
PACCAR Market Share (percent)
PACCAR Market Share (percent)
T O TA L A S S E T S
billions of dollars
GEOGRAPHIC REVENUE
billions of dollars
36
27
18
9
0
32
24
16
8
0
32
24
16
8
0
13
14
15
16
17
18
19
20
21
22
13
14
15
16
17
18
19
20
21
22
■ Truck, Parts and Other
■ Financial Services
■ United States
■ Rest of World
S T O C K H O L D E R R E T U R N P E R F O R M A N C E G R A P H
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 in the graph (the “Peer Group Index”) for the last
five fiscal years ended December 31, 2022. 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 Peer Group Index
consists of AGCO Corporation, Caterpillar Inc., CNH Industrial N.V., Cummins Inc., Dana Incorporated, Deere &
Company, Eaton Corporation, Navistar International Corporation (from 2017 through 2020), Oshkosh
Corporation, TRATON SE (effective January 1, 2021) and AB Volvo. TRATON SE acquired Navistar International
Corporation in 2021. Meritor Inc. is no longer included in the Peer Group Index of the performance graph due to
its acquisition by Cummins Inc. in 2022. The comparison assumes that $100 was invested December 31, 2017, in
the Company’s common stock and in the stated indices and assumes reinvestment of dividends.
27
PACCAR Inc
S&P 500 Index
Peer Group Index
200
150
100
50
2017
2018
2019
2020
2021
PACCAR Inc
S&P 500 Index
Peer Group Index
2017
100
100
100
2018
84.68
95.62
82.72
2019
122.83
125.72
106.15
2020
137.25
148.85
140.73
2021
144.97
191.58
173.49
200
150
100
50
2022
2022
169.61
156.88
190.49
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S O F F I N A N C I A L
C O N D I T I O N A N D R E S U L T S O F O P E R A T I O N S
28
O V E RV I E W:
PACCAR is a global technology company whose Truck segment includes the design and manufacture of high-quality
light-, medium- and heavy-duty commercial trucks. In North America, trucks are sold under the Kenworth and
Peterbilt nameplates, in Europe, under the DAF nameplate and in Australia and South America, under the Kenworth
and DAF nameplates. The Parts segment includes the distribution of aftermarket parts for trucks and related
commercial vehicles. The Company’s Financial Services segment derives its earnings primarily from financing or leasing
PACCAR products in North America, Europe, Australia and South America. The Company’s Other business includes
the manufacturing and marketing of industrial winches.
On December 6, 2022, the Board of Directors declared a 50% common stock dividend payable on February 7, 2023. For
all years presented, all per share data and dividends have been restated for the effect of the 50% dividend.
2022 Financial Highlights
• Worldwide net sales and revenues were $28.82 billion in 2022 compared to $23.52 billion in 2021, primarily due
to higher truck and parts revenues.
• Truck sales were $21.49 billion in 2022 compared to $16.80 billion in 2021, primarily due to higher truck
deliveries and price realization in all markets.
• Parts sales were $5.76 billion in 2022 compared to $4.94 billion in 2021 reflecting higher demand and price
realization in all markets.
• Financial Services revenues were $1.51 billion in 2022 compared to $1.69 billion in 2021, primarily due to lower
used truck sales.
• In 2022, PACCAR earned net income for the 84th consecutive year. Net income was $3.01 billion ($5.75 per
diluted share) in 2022 compared to $1.87 billion ($3.57 per diluted share) in 2021 reflecting higher Truck, Parts
and Financial Services operating results.
• Capital investments were $505.0 million in 2022 compared to $511.8 million in 2021.
• After-tax return on beginning equity (ROE) was 26.0% in 2022 compared to 17.7% in 2021.
• Research and development (R&D) expenses were $341.2 million in 2022 compared to $324.1 million in 2021.
The new DAF XD truck was named International Truck of the Year 2023 at the IAA truck show in Hannover,
Germany in the third quarter of 2022. The DAF XD truck represents a new generation of distribution and vocational
vehicles. The DAF XD shares many features and design elements with the new DAF XF, XG, and XG+ trucks, which
were named International Truck of the Year 2022.
PACCAR Parts opened a new 260,000 square foot PDC in Louisville, Kentucky in 2022 to further enhance parts
availability for customers and dealers.
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 $17.18 billion. PFS issued $3.05 billion in medium-term notes during 2022 to support new business volume
and repay maturing debt.
Truck Outlook
Heavy-duty truck industry retail sales in the U.S. and Canada in 2023 are expected to be 270,000 to 310,000 units
compared to 283,500 in 2022. In Europe, the 2023 truck industry registrations for over 16-tonne vehicles are expected
to be 270,000 to 310,000 units compared to 297,500 in 2022. In South America, heavy-duty truck industry
registrations in 2023 are projected to be 125,000 to 135,000 compared to 138,300 in 2022.
The Company has been affected by an industry-wide undersupply of component parts and anticipates the shortage
may continue to affect deliveries in 2023.
Parts Outlook
In 2023, PACCAR Parts sales are expected to increase 8-11% compared to 2022 levels reflecting strong freight
demand. If economic conditions were to worsen, lower freight volumes could reduce the demand for replacement
parts, resulting in lower parts revenues and operating results.
29
Financial Services Outlook
In 2023, average earning assets are expected to increase 4-7% compared to 2022. If current freight transportation
conditions decline due to weaker economic conditions, then past due accounts, truck repossessions and credit losses
would likely increase from the current low levels and new business volume would likely decline.
Capital Spending and R&D Outlook
Capital investments in 2023 are expected to be $525 to $575 million, and R&D is expected to be $360 to $410 million.
The Company is increasing its investment in next generation clean diesel and electric powertrain technologies,
autonomous driving systems, connected vehicle services, advanced manufacturing and enhanced distribution
capabilities.
See the Forward-Looking Statements section of Management’s Discussion and Analysis for factors that may affect these
outlooks.
R E S U LT S O F O P E R AT I O N S :
The Company’s results of operations for the years ended December 31, 2022 and 2021 are presented below. For
information on the year ended December 31, 2020, refer to Part II, Item 7 in the 2021 Annual Report on Form 10-K.
($ in millions, except per share amounts)
Year Ended December 31,
Net sales and revenues:
Truck
Parts
Other
Truck, Parts and Other
Financial Services
Income before income taxes:
Truck
Parts
Other
Truck, Parts and Other
Financial Services
Investment income
Income taxes
Net Income
Diluted earnings per share
After-tax return on revenues
2022
2021
$ 21,486.2
5,764.3
63.8
27,314.3
1,505.4
$ 28,819.7
$ 1,753.3
1,446.6
(1.1)
3,198.8
588.9
61.0
(837.1)
$ 3,011.6
5.75
$
$ 16,799.7
4,944.3
90.5
21,834.5
1,687.8
$ 23,522.3
$
804.9
1,110.0
28.3
1,943.2
437.6
15.5
(530.8)
$ 1,865.5
3.57
$
10.4%
7.9%
30
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, fuel prices, freight tonnage, economic conditions and COVID-19 related factors affecting the Company’s
results of operations.
2022 Compared to 2021:
Truck
The Company’s Truck segment accounted for 75% of revenues in 2022 compared to 71% in 2021.
The Company’s new truck deliveries are summarized below:
Year Ended December 31,
U.S. and Canada
Europe
Mexico, South America, Australia and other
Total units
2022
95,600
62,400
27,900
185,900
2021
86,300
53,200
23,200
162,700
% change
11
17
20
14
The increase in new truck deliveries worldwide in 2022 compared to 2021 was driven by higher build rates and
increased demand in all markets. The industry-wide undersupply of component products had an impact on
deliveries.
Market share data discussed below is provided by third-party sources and is measured by either registrations or retail
sales for the Company’s dealer network as a percentage of total registrations or retail sales 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 2022, industry retail sales in the heavy-duty market in the U.S. and Canada increased to 283,500 units from
249,900 units in 2021. The Company’s heavy-duty truck retail market share was 29.8% in 2022 compared to 29.2% in
2021. The medium-duty market was 88,300 units in 2022 compared to 83,700 units in 2021. The Company’s
medium-duty market share was 10.9% in 2022 compared to 19.8% in 2021.
The over 16-tonne truck market in Europe in 2022 increased to 297,500 units from 278,000 units in 2021, and DAF’s
market share was 17.3% in 2022 compared to 15.9% in 2021. The 6 to 16-tonne market was 38,800 units in 2022 and
41,400 units in 2021. DAF’s market share in the 6 to 16-tonne market in 2022 was 9.7% compared to 10.1% in 2021.
The Company’s worldwide truck net sales and revenues are summarized below:
($ in millions)
Year Ended December 31,
Truck net sales and revenues:
U.S. and Canada
Europe
Mexico, South America, Australia and other
Truck income before income taxes
2022
2021
% change
$ 12,521.8
5,866.5
3,097.9
$ 21,486.2
$ 1,753.3
$ 9,877.6
4,489.8
2,432.3
$ 16,799.7
804.9
$
27
31
27
28
118
Pre-tax return on revenues
8.2%
4.8%
The Company’s worldwide truck net sales and revenues increased to $21.49 billion in 2022 from $16.80 billion in 2021
due to higher truck deliveries and improved price realization in all markets, partially offset by unfavorable currency
translation effects. Truck segment income before income taxes and pretax return on revenues reflect higher truck unit
deliveries and improved price realization in all markets. In 2021, Truck segment income before taxes and pretax return
on revenues reflect the tempering of truck unit deliveries due to the global semiconductor and component supply
shortages.
The major factors for the Truck segment changes in net sales and revenues, cost of sales and revenues and gross margin
between 2022 and 2021 are as follows:
31
($ in millions)
2021
Increase (decrease)
Truck sales volume
Average truck sales prices
Average per truck material, labor and other direct costs
Factory overhead and other indirect costs
Extended warranties, operating leases and other
Currency translation
Total increase
2022
net
sales and
revenues
cost of
sales and
revenues
gross
margin
$ 16,799.7
$ 15,485.4
$ 1,314.3
3,052.7
2,380.8
98.9
(845.9)
4,686.5
$ 21,486.2
2,557.3
1,658.2
176.8
106.0
(778.3)
3,720.0
$ 19,205.4
495.4
2,380.8
(1,658.2)
(176.8)
(7.1)
(67.6)
966.5
$ 2,280.8
• Truck sales volume reflects higher heavy-duty truck deliveries in all major markets.
• Average truck sales prices increased sales by $2.38 billion, primarily due to higher price realization worldwide
reflecting inflationary cost increases and the positive effect of new truck models.
• Average cost per truck increased cost of sales by $1.66 billion, primarily reflecting higher raw material, freight,
labor and product support costs.
• Factory overhead and other indirect costs increased $176.8 million, primarily due to higher labor costs, materials,
utilities and depreciation.
• Extended warranties, operating leases and other revenues increased by $98.9 million and cost of sales by $106.0
million, primarily due to higher revenues and associated costs from repairs and maintenance, service contracts
and operating leases. In addition, the increase in cost of sales and revenues was partially offset by gains on sales
of used trucks and lower impairments in Europe due to an improved used truck market.
• The currency translation effect on sales and cost of sales primarily reflects a decline in the value of the euro
relative to the U.S. dollar.
• Truck gross margin was 10.6% in 2022 compared to 7.8% in 2021 due to the factors noted above.
Truck selling, general and administrative expenses (SG&A) in 2022 increased to $280.0 million from $267.9 million
in 2021. The increase was primarily due to higher professional expenses, higher salaries and related expenses and
travel costs, partially offset by currency translation effects. As a percentage of sales, Truck SG&A was 1.3% in 2022
and 1.6% in 2021.
Parts
The Company’s Parts segment accounted for 20% of revenues in 2022 compared to 21% in 2021.
($ in millions)
Year Ended December 31,
Parts net sales and revenues:
U.S. and Canada
Europe
Mexico, South America, Australia and other
Parts income before income taxes
2022
2021
% change
$ 4,087.5
1,141.1
535.7
$ 5,764.3
$ 1,446.6
$ 3,312.4
1,164.6
467.3
$ 4,944.3
$ 1,110.0
23
(2)
15
17
30
Pre-tax return on revenues
25.1%
22.5%
32
The worldwide parts net sales and revenues increased to $5.76 billion in 2022 from $4.94 billion in 2021 primarily
due to higher demand in all markets and higher price realization, partially offset by unfavorable currency
translation effects. The increase in Parts segment income before income taxes and pre-tax return on revenues
was primarily due to higher sales volume and higher margins, partially offset by unfavorable currency
translation effects.
The major factors for the Parts segment changes in net sales and revenues, cost of sales and revenues and gross
margin between 2022 and 2021 are as follows:
($ in millions)
2021
Increase (decrease)
Aftermarket parts volume
Average aftermarket parts sales prices
Average aftermarket parts direct costs
Warehouse and other indirect costs
Currency translation
Total increase
2022
net
sales and
revenues
cost of
sales and
revenues
gross
margin
$ 4,944.3
$ 3,530.4
$ 1,413.9
375.9
609.4
(165.3)
820.0
$ 5,764.3
238.7
286.5
52.6
(98.6)
479.2
$ 4,009.6
137.2
609.4
(286.5)
(52.6)
(66.7)
340.8
$ 1,754.7
• Aftermarket parts sales volume increased by $375.9 million and related cost of sales increased by $238.7 million
primarily due to higher demand in all markets.
• Average aftermarket parts sales prices increased sales by $609.4 million primarily due to higher price realization
in North America and Europe.
• Average aftermarket parts direct costs increased $286.5 million due to higher material and freight costs.
• Warehouse and other indirect costs increased $52.6 million primarily due to higher salaries and related expenses,
costs of supplies and higher shipping costs.
• The currency translation effect on sales and cost of sales primarily reflects a decline in the value of the euro
relative to the U.S. dollar.
• Parts gross margin was 30.4% in 2022 compared to 28.6% in 2021 due to the factors noted above.
Parts SG&A expense in 2022 increased to $216.3 million from $210.3 million in 2021. The increase was primarily
due to higher salaries and related expenses, and higher travel expenses, partially offset by lower sales and
marketing costs and currency translation effects. As a percentage of sales, Parts SG&A was 3.8% in 2022 and 4.3%
in 2021.
Financial Services
The Company’s Financial Services segment accounted for 5% of revenues in 2022 compared to 7% in 2021.
33
($ in millions)
Year Ended December 31,
New loan and lease volume:
U.S. and Canada
Europe
Mexico, Australia, Brasil and other
New loan and lease volume by product:
Loans and finance leases
Equipment on operating lease
New loan and lease unit volume:
Loans and finance leases
Equipment on operating lease
Average earning assets:
U.S. and Canada
Europe
Mexico, Australia, Brasil and other
Average earning assets by product:
Loans and finance leases
Dealer wholesale financing
Equipment on lease and other
Revenues:
U.S. and Canada
Europe
Mexico, Australia, Brasil and other
Revenues by product:
Loans and finance leases
Dealer wholesale financing
Equipment on lease and other
Income before income taxes
2022
2021
% change
$ 3,376.5
1,483.4
1,355.8
$ 6,215.7
$ 5,209.6
1,006.1
$ 6,215.7
42,100
11,600
53,700
$ 8,647.4
3,810.0
2,544.0
$ 15,001.4
$ 10,279.4
1,933.9
2,788.1
$ 15,001.4
$
684.3
498.3
322.8
$ 1,505.4
$
532.0
96.7
876.7
$ 1,505.4
588.9
$
$ 3,338.9
1,316.2
1,016.6
$ 5,671.7
$ 4,683.7
988.0
$ 5,671.7
39,100
11,000
50,100
$ 8,635.2
3,787.1
2,107.6
$ 14,529.9
$ 9,952.1
1,472.6
3,105.2
$ 14,529.9
$
759.9
676.8
251.1
$ 1,687.8
$
481.9
42.5
1,163.4
$ 1,687.8
437.6
$
1
13
33
10
11
2
10
8
5
7
1
21
3
3
31
(10)
3
(10)
(26)
29
(11)
10
128
(25)
(11)
35
New loan and lease volume increased to $6.22 billion in 2022 from $5.67 billion in 2021, primarily reflecting higher
truck new loan and lease volume in Europe and Brasil. The effect of currency translation decreased new loan and lease
volume by $209.3 million, primarily due to the lower euro relative to the U.S. dollar. PFS finance market share of new
PACCAR truck sales was 25.6% in 2022 compared to 26.6% in 2021.
PFS revenues decreased to $1.51 billion in 2022 from $1.69 billion in 2021. The decrease was primarily due to lower
unit volume of used truck sales in Europe and the U.S., partially offset by higher interest and fee income driven by
portfolio growth and higher portfolio yields. The effects of currency translation decreased PFS revenues by $63.0 million
in 2022, primarily due to a lower euro relative to the U.S. dollar.
34
PFS income before income taxes increased to $588.9 million in 2022 from $437.6 million in 2021, primarily due to
improved used truck results and higher finance and lease margins driven by portfolio growth, partially offset by weaker
foreign currencies. The effect of currency translation decreased PFS income before income taxes by $20.1 million in
2022, primarily due to a lower euro 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 $141.7 million at December 31, 2022 and $92.1 million at December 31, 2021. 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 gains on used trucks, excluding repossessions, of $140.1 million in 2022 compared to $30.3
million in 2021, including losses on multiple unit transactions of $.8 million in 2022 compared to $17.7 million in 2021.
Used truck gains in 2022 and 2021 related to repossessions, which are recognized as credit recoveries, were insignificant.
The major factors for the changes in interest and fees, interest and other borrowing expenses and finance margin
between 2022 and 2021 are outlined below:
($ in millions)
2021
Increase (decrease)
Average finance receivables
Average debt balances
Yields
Borrowing rates
Currency translation and other
Total increase
2022
interest
and fees
interest and other
borrowing expenses
finance
margin
$
524.4
$
150.9
$
373.5
61.5
56.1
(13.3)
104.3
628.7
$
13.0
55.0
(2.6)
65.4
216.3
$
61.5
(13.0)
56.1
(55.0)
(10.7)
38.9
412.4
$
• Average finance receivables increased $1.17 billion (excluding foreign exchange effects) in 2022 primarily due to
higher average loan and dealer wholesale balances.
• Average debt balances increased $568.7 million (excluding foreign exchange effects) in 2022, reflecting higher
funding requirements for the portfolio which includes loans, finance leases, dealer wholesale financing and
equipment on operating leases.
• Higher portfolio yields (5.1% in 2022 compared to 4.6% in 2021) increased interest and fees by $56.1 million. The
higher portfolio yields were primarily due to higher market rates in Europe, North America and Brasil.
• Higher borrowing rates (2.0% in 2022 compared to 1.4% in 2021) were primarily due to higher debt market rates.
• The currency translation effects reflect a decrease in the value of foreign currencies relative to the U.S. dollar,
primarily the euro.
The following table summarizes operating lease, rental and other revenues and depreciation and other expenses:
35
($ in millions)
Year Ended December 31,
Operating lease and rental revenues
Used truck sales
Insurance, franchise and other revenues
Operating lease, rental and other revenues
Depreciation of operating lease equipment
Vehicle operating expenses
Cost of used truck sales
Insurance, franchise and other expenses
Depreciation and other expenses
2022
807.2
50.5
19.1
876.8
474.9
33.9
49.3
2.7
560.8
$
$
$
$
2021
$
860.5
284.2
18.7
$ 1,163.4
$
$
597.8
87.2
280.5
3.9
969.4
The major factors for the changes in operating lease, rental and other revenues, depreciation and other expenses and
lease margin between 2022 and 2021 are outlined below:
($ in millions)
2021
(Decrease) increase
Used truck sales
Results on returned lease assets
Average operating lease assets
Revenue and cost per asset
Currency translation and other
Total (decrease) increase
2022
operating lease, rental
and other revenues
depreciation and
other expenses
lease
margin
$ 1,163.4
$
969.4
$
194.0
(228.8)
(39.0)
30.3
(49.2)
(286.7)
876.7
$
(226.3)
(130.4)
(31.6)
16.3
(36.6)
(408.6)
560.8
$
(2.5)
130.4
(7.4)
14.0
(12.6)
121.9
315.9
$
• Lower sales volume of used trucks in Europe and the U.S. decreased revenues by $228.8 million and related
depreciation and other expenses by $226.3 million.
• Results on returned lease assets decreased depreciation and other expenses by $130.4 million primarily due to
higher gains on sales of returned lease units as a result of higher used truck market values.
• Average operating lease assets decreased $137.8 million (excluding foreign exchange effects), which decreased
revenues by $39.0 million and related depreciation and other expenses by $31.6 million.
• Revenue per asset increased $30.3 million primarily due to higher rental utilization. Cost per asset increased
$16.3 million due to higher operating expenses.
• The currency translation effects reflect a decrease in the value of foreign currencies relative to the U.S. dollar,
primarily the euro.
36
Financial Services SG&A expense increased to $133.9 million in 2022 from $129.4 million in 2021. The increase was
primarily due to higher salaries and related expenses, partially offset by decreases in the value of foreign currencies
relative to the U.S. dollar, primarily the euro. As a percentage of average earning assets, Financial Services SG&A was
.9% in both 2022 and 2021.
The following table summarizes the provision for losses on receivables and net charge-offs:
2022
2021
($ in millions)
U.S. and Canada
Europe
Mexico, Australia, Brasil and other
provision for
losses on
receivables
$
$
(5.1)
.8
9.8
5.5
$
net
charge-offs
(.9)
.6
(.4)
(.7)
$
provision for
losses on
receivables
$
(2.2)
(1.7)
4.4
.5
$
$
net
charge-offs
1.0
2.6
4.7
8.3
$
The provision for losses on receivables increased to $5.5 million in 2022 from $.5 million in 2021, mainly driven by
portfolio growth and higher past due balances in Brasil, partially offset by improved portfolio performance in North
America and Europe.
The Company modifies loans and finance leases as a normal part of its Financial Services operations. The Company
may modify loans and finance leases for commercial reasons or for credit reasons. Modifications for commercial
reasons are changes to contract terms for customers that are not considered to be in financial difficulty. Insignificant
delays are modifications extending terms up to three months for customers experiencing some short-term financial
stress, but not considered to be in financial difficulty. Modifications for credit reasons are changes to contract terms
for customers considered to be in financial difficulty. The Company’s modifications typically result in granting more
time to pay the contractual amounts owed and charging a fee and interest for the term of the modification. When
considering whether to modify customer accounts for credit reasons, the Company evaluates the creditworthiness of
the customers and modifies those accounts that the Company considers likely to perform under the modified terms.
When the Company modifies a loan or finance lease for credit reasons and grants a concession, the modification is
classified as a troubled debt restructuring (TDR).
The post-modification balances of accounts modified during the years ended December 31, 2022 and 2021 are
summarized below:
($ in millions)
Commercial
Insignificant delay
Credit - no concession
Credit - TDR
2022
2021
amortized
cost basis
% of total
portfolio*
amortized
cost basis
% of total
portfolio*
$
$
225.4
79.3
48.1
11.7
364.5
2.0%
.7%
.4%
.1%
3.2%
$
$
484.2
63.8
52.3
8.0
608.3
4.8%
.6%
.5%
.1%
6.0%
* Amortized cost basis immediately after modification as a percentage of the year-end retail portfolio balance.
Modification activity decreased to $364.5 in 2022 from $608.3 in 2021. The decrease in modifications for commercial
reasons primarily reflects lower volumes of refinancing. The increase in Insignificant Delay reflects an increase in
customers requesting payment relief for up to three months. The increase in Credit modifications reflects higher
volumes of contract modifications and requests for payment relief primarily in Brasil.
37
The following table summarizes the Company’s 30+ days past due accounts:
At December 31,
Percentage of retail loan and lease accounts 30+ days past due:
U.S. and Canada
Europe
Mexico, Australia, Brasil and other
Worldwide
2022
.1%
.2%
1.6%
.4%
2021
.4%
1.2%
.3%
Accounts 30+ days past due increased to .4% at December 31, 2022 from .3% at December 31, 2021. The Company
continues to focus on maintaining low past due balances.
When the Company modifies a 30+ days past due account, the customer is then generally considered current under
the revised contractual terms. The Company modified $8.9 million and $.4 million of accounts worldwide during the
fourth quarter of 2022 and the fourth quarter of 2021, 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,
Pro forma percentage of retail loan and lease accounts 30+ days past due:
U.S. and Canada
Europe
Mexico, Australia, Brasil and other
Worldwide
2022
.1%
.2%
2.0%
.5%
2021
.4%
1.2%
.3%
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, 2022 and 2021. The
effect on the allowance for credit losses from such modifications was not significant at December 31, 2022 and 2021.
The Company’s annualized pre-tax return on average total assets for Financial Services increased to 3.7% in 2022
from 2.8% in 2021, primarily driven by improved used truck results and higher finance and lease margins.
Other
Other includes the winch business as well as sales, income and expenses not attributable to a reportable segment. Other
also includes non-service cost components of pension expense and a portion of corporate expense. Other sales represent
less than 1% of consolidated net sales and revenues for 2022 and 2021. Other SG&A increased to $96.1 million in 2022
from $69.2 million in 2021 primarily due to higher salaries and related expenses.
38
Other (loss) income before tax was ($1.1) million in 2022 compared to $28.3 million in 2021. The decrease was
primarily due to higher salaries and related expenses, partially offset by lower non-service pension expenses.
Investment income increased to $61.0 million in 2022 from $15.5 million in 2021, primarily driven by higher yields on
investments due to higher market interest rates in all regions as well as higher investment balances.
Income Taxes
In 2022, the effective tax rate was 21.8% compared to 22.2% in 2021. The lower effective tax rate in 2022 was primarily
due to the change in mix of income generated in jurisdictions with lower tax rates in 2022 as compared to 2021.
($ in millions)
Year Ended December 31,
Domestic income before taxes
Foreign income before taxes
Total income before taxes
Domestic pre-tax return on revenues
Foreign pre-tax return on revenues
Total pre-tax return on revenues
2022
$ 2,322.9
1,525.8
$ 3,848.7
2021
$ 1,391.4
1,004.9
$ 2,396.3
14.7%
11.7%
13.4%
11.1%
9.2%
10.2%
In 2022, both domestic and foreign income before income taxes and pre-tax return on revenues increased primarily
due to the improved results from Truck, Parts and Financial Services operations.
L I Q U I D I T Y A N D C A P I TA L R E S O U R C E S :
($ in millions)
At December 31,
Cash and cash equivalents
Marketable securities
2022
$ 4,690.9
1,614.2
$ 6,305.1
2021
$ 3,428.3
1,559.4
$ 4,987.7
The Company’s total cash and marketable securities at December 31, 2022, increased $1.32 billion from the balances
at December 31, 2021. Total cash and marketable securities are primarily intended to provide liquidity while
preserving capital.
The change in cash and cash equivalents is summarized below:
39
($ in millions)
Year Ended December 31,
Operating activities:
Net income
Net income items not affecting cash
Pension contributions
Changes in operating assets and liabilities, net
Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
2022
2021
$ 3,011.6
601.6
(39.1)
(547.1)
3,027.0
(2,033.0)
304.9
(36.3)
1,262.6
3,428.3
$ 4,690.9
$ 1,865.5
715.5
(25.1)
(369.2)
2,186.7
(1,362.7)
(882.9)
(52.4)
(111.3)
3,539.6
$ 3,428.3
Operating activities: Cash provided by operations increased by $840.3 million to $3.03 billion in 2022 from $2.19
billion in 2021. Higher operating cash flows reflect higher net income of $1.15 billion, lower cash usage of $355.3
million for inventories, and $269.9 million of higher deferrals of revenues from extended warranty contracts and
accruals for product support primarily due to higher truck deliveries. Additionally, higher operating cash flows reflect
lower cash outflow of $146.9 million for accounts payable and accrued expenses as purchases of goods and services
exceeded payments. These higher operating cash flows were partially offset by $1.03 billion higher cash used for
wholesale receivables.
Investing activities: Cash used in investing activities increased by $670.3 million to $2.03 billion in 2022 from $1.36
billion in 2021. Higher net cash used in investing activities primarily reflects higher net originations for retail loans
and financing leases of $713.4 million and lower proceeds from asset disposals of $216.4 million. The higher net cash
usage was partially offset by fewer acquisitions of equipment for operating leases of $208.2 million.
Financing activities: Cash provided by financing activities was $304.9 million in 2022 compared to cash used in
financing activities of $882.9 million in 2021. Cash provided by net borrowing activities in 2022 of $1.28 billion was
$1.49 billion higher than the cash used for borrowing activities of $210.9 million in 2021 reflecting higher funding to
support financial services portfolio growth. The Company paid $1.00 billion in dividends in 2022 compared to $708.0
million in 2021 primarily due to a higher extra dividend paid in January 2022.
40
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
First
Second
Third
Fourth
Year-End Extra (paid in January of the following year)
Total dividends declared per share*
2022
.23
.23
.23
.25
1.87
2.80
$
$
2021
.21
.23
.23
.23
1.00
1.89
$
$
*
The sum of quarterly per share amounts do not equal per share amounts reported for the full year due to
rounding.
Credit Lines and Other:
The Company has line of credit arrangements of $3.70 billion, of which $3.36 billion were unused at December 31,
2022. Included in these arrangements are $3.00 billion of committed bank facilities, of which $1.00 billion expires in
June 2023, $1.00 billion expires in June 2025 and $1.00 billion expires in June 2027. 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, 2022.
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, 2022, the Company has repurchased $110.0 million of shares under
this plan. There were no repurchases made under this plan during the year ended December 31, 2022.
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 2022 were $491.2 million compared to $495.6
million in 2021. Over the past decade, the Company’s combined investments in worldwide capital projects and R&D
totaled $7.25 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 2023 are expected to be $525 to $575 million, and R&D is expected to be $360 to $410
million. The Company is increasing its investment in next generation clean diesel and electric powertrain
technologies, autonomous driving systems, connected vehicle services, advanced manufacturing and distribution
capabilities.
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 2021, the Company’s U.S. finance subsidiary, PACCAR Financial Corp. (PFC), filed a shelf registration
under the Securities Act of 1933. The total amount of medium-term notes outstanding for PFC as of December 31,
2022 was $5.85 billion. In January 2023, PFC issued $300.0 million of medium-term notes under this registration.
The registration expires in November 2024 and does not limit the principal amount of debt securities that may be
issued during that period.
41
As of December 31, 2022, the Company’s European finance subsidiary, PACCAR Financial Europe, had €1.12 billion
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 July 2023.
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, 2022, 9.08 billion Mexican pesos were available for issuance.
In August 2018, the Company’s Australian subsidiary, PACCAR Financial Pty. Ltd. (PFPL Australia), registered 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,
2022 was 700.0 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. The total amount of medium-term notes outstanding for PFL Canada as of December 31, 2022 was 150.0
million Canadian dollars.
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, 2022:
($ in millions)
Borrowings*
Purchase obligations
Interest on debt**
Lease liabilities
Other obligations
within
1 year
$ 5,539.9
14.7
152.0
13.8
69.2
$ 5,789.6
maturity
1-3 years
3-5 years
more than
5 years
$ 5,001.9
22.3
186.8
18.5
1.0
$ 5,230.5
$
985.6
2.3
14.3
9.9
.7
$ 1,012.8
$
$
.5
4.7
5.2
total
$ 11,527.4
39.8
353.1
46.9
70.9
$ 12,038.1
* Commercial paper included in borrowings is at par value.
** Interest on floating-rate debt is based on the applicable market rates at December 31, 2022.
42
Total cash commitments for borrowings and interest on term debt were $11.88 billion and were related to the
Financial Services segment. As described in Note J of the consolidated financial statements, borrowings consist
primarily of term notes and commercial paper issued by the Financial Services segment. The Company expects to
fund its maturing Financial Services debt obligations principally from funds provided by collections from customers
on loans and lease contracts, as well as from the proceeds of commercial paper and medium-term note borrowings.
Purchase obligations are the Company’s contractual commitments to acquire future production inventory and capital
equipment. Other obligations primarily include commitments to purchase energy.
The Company’s other commitments include the following at December 31, 2022:
($ in millions)
Loan and lease commitments
Residual value guarantees
Letters of credit
within
1 year
$ 1,363.3
674.6
22.1
$ 2,060.0
commitment expiration
1-3 years
3-5 years
more than
5 years
$
$
384.6
.2
384.8
$
$
63.5
63.5
$
$
11.6
.9
12.5
total
$ 1,363.3
1,134.3
23.2
$ 2,520.8
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.
I M PA C T O F E N V I R O N M E N TA L M AT T E R S :
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 in the 2022 Form 10-K. 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, 2022 and 2021 were $4.6 million and $4.0 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.
C R I T I C A L A C C O U N T I N G P O L I C I E S :
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.
43
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 2022, market values on equipment returning upon operating lease maturity were generally higher than the
residual values on the equipment, resulting in a decrease in depreciation expense of $173.2 million.
At December 31, 2022, 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 $1.74
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 $69.1 million in 2023, $55.8 in 2024, $33.4 in 2025, $12.1 in 2026, $3.8 in
2027 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 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 impairment. Finance receivables that are
evaluated individually for impairment consist of all wholesale accounts and certain large retail accounts with past
due balances or otherwise determined to be at a higher risk of loss. A finance receivable is impaired if it is
considered probable the Company will be unable to collect all contractual interest and principal payments as
scheduled. In addition, all retail loans and leases which have been classified as TDRs and all customer accounts over
90 days past due are considered impaired. Generally, impaired accounts are on non-accrual status. Impaired
accounts classified as TDRs which have been performing for 90 consecutive days are placed on accrual status if it is
deemed probable that the Company will collect all principal and interest payments.
44
Impaired receivables are generally considered collateral dependent. Large balance retail and all wholesale impaired
receivables are individually evaluated to determine the appropriate reserve for losses. The determination of reserves
for large balance impaired receivables considers the fair value of the associated collateral. When the underlying
collateral fair value exceeds the Company’s amortized cost basis, no reserve is recorded. Small balance impaired
receivables with similar risk characteristics are evaluated as a separate pool to determine the appropriate reserve for
losses using the historical loss and economic forecasts information discussed below.
The Company evaluates finance receivables that are not individually impaired 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 information 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 15% and 70%. Over the past two years, the Company’s year-end 30+ days past due accounts have
ranged between .3% and .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 2 to 40 basis points of receivables. At December
31, 2022 , 30+ days past dues were .4%. If past dues were 100 basis points higher or 1.4% as of December 31, 2022,
the Company’s estimate of credit losses would likely have increased by a range of $2 to $44 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 1.6% and 1.9%. If the 2022 warranty expense had been .2% higher as a
percentage of net sales and revenues in 2022, warranty expense would have increased by approximately $55 million.
45
F O RWA R D - L O O K I N G S TAT E M E N T S :
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; pandemics; climate-related risks; global conflicts; litigation, including European Commission (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.
C O N S O L I D A T E D S T A T E M E N T S O F I N C O M E
46
Year Ended December 31,
TRUCK, PARTS AND OTHER:
Net sales and revenues
Cost of sales and revenues
Research and development
Selling, general and administrative
Interest and other (income), net
Truck, Parts and Other Income Before Income Taxes
FINANCIAL SERVICES:
Interest and fees
Operating lease, rental and other revenues
Revenues
Interest and other borrowing expenses
Depreciation and other expenses
Selling, general and administrative
Provision for losses on receivables
Financial Services Income Before Income Taxes
Investment income
Total Income Before Income Taxes
Income taxes
Net Income
Net Income Per Share
Basic
Diluted
Weighted Average Number of Common Shares Outstanding
Basic
Diluted
See notes to consolidated financial statements.
2022
2021
2020
(millions, except per share data)
$ 27,314.3
$ 21,834.5
$ 17,154.3
23,291.0
341.2
592.4
(109.1)
24,115.5
3,198.8
628.7
876.7
1,505.4
216.3
560.8
133.9
5.5
916.5
588.9
19,092.4
324.1
547.4
(72.6)
19,891.3
1,943.2
524.4
1,163.4
1,687.8
150.9
969.4
129.4
.5
1,250.2
437.6
15,072.7
273.9
459.2
(54.1)
15,751.7
1,402.6
527.4
1,046.8
1,574.2
192.1
1,008.0
122.2
28.8
1,351.1
223.1
61.0
3,848.7
837.1
$ 3,011.6
15.5
2,396.3
530.8
$ 1,865.5
35.9
1,661.6
360.4
$ 1,301.2
$
$
5.76
5.75
$
$
3.58
3.57
$
$
2.50
2.50
522.6
523.4
521.7
522.7
520.2
521.2
C O N S O L I D A T E D S T A T E M E N T S O F C O M P R E H E N S I V E I N C O M E
Year Ended December 31,
Net income
Other comprehensive income:
Unrealized gains (losses) on derivative contracts
Net gain (loss) arising during the period
Tax effect
Reclassification adjustment
Tax effect
Unrealized (losses) gains on marketable debt securities
Net holding (loss) gain
Tax effect
Reclassification adjustment
Tax effect
Pension plans
Net gain (loss) arising during the period
Tax effect
Reclassification adjustment
Tax effect
Foreign currency translation (loss) gain
Net other comprehensive (loss) income
Comprehensive Income
See notes to consolidated financial statements.
2022
2021
(millions)
2020
47
$ 3,011.6
$ 1,865.5
$ 1,301.2
17.7
(9.1)
48.0
(8.0)
48.6
(54.9)
13.6
(1.6)
.4
(42.5)
54.2
(14.3)
(33.7)
9.5
15.7
(18.8)
4.7
(2.1)
.5
(15.7)
(105.3)
26.9
87.6
(23.1)
(13.9)
13.6
(3.3)
(2.4)
.6
8.5
170.5
(34.1)
29.6
(7.1)
158.9
(197.3)
(32.3)
$ 2,979.3
343.2
(80.3)
59.5
(14.1)
308.3
(179.1)
129.2
$ 1,994.7
(132.4)
28.4
57.3
(13.7)
(60.4)
115.6
49.8
$ 1,351.0
C O N S O L I D A T E D B A L A N C E S H E E T S
48
A S S E T S
December 31,
TRUCK, PARTS AND OTHER:
Current Assets
Cash and cash equivalents
Trade and other receivables, net (allowance for losses: 2022 - $.6, 2021 - $.6)
Marketable securities
Inventories, net
Other current assets
Total Truck, Parts and Other Current Assets
Equipment on operating leases, net
Property, plant and equipment, net
Other noncurrent assets, net
Total Truck, Parts and Other Assets
FINANCIAL SERVICES:
Cash and cash equivalents
Finance and other receivables, net (allowance for losses: 2022 - $121.1, 2021 - $116.9)
Equipment on operating leases, net
Other assets
Total Financial Services Assets
2022
2021
(millions)
$ 4,544.7
1,919.8
1,614.2
2,198.8
682.0
10,959.5
190.8
3,468.4
1,477.2
16,095.9
146.2
13,791.9
2,612.5
629.0
17,179.6
$ 33,275.5
$ 3,253.6
1,575.1
1,559.4
1,976.0
732.9
9,097.0
302.4
3,398.1
1,293.0
14,090.5
174.7
11,920.8
2,886.5
436.9
15,418.9
$ 29,509.4
C O N S O L I D A T E D B A L A N C E S H E E T S
L I A B I L I T I E S A N D S T O C K H O L D E R S ’ E Q U I T Y
December 31,
TRUCK, PARTS AND OTHER:
Current Liabilities
Accounts payable, accrued expenses and other
Dividend payable
Total Truck, Parts and Other Current Liabilities
Residual value guarantees and deferred revenues
Other liabilities
Total Truck, Parts and Other Liabilities
FINANCIAL SERVICES:
Accounts payable, accrued expenses and other
Commercial paper and bank loans
Term notes
Deferred taxes and other liabilities
Total Financial Services Liabilities
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 522.0 million and 347.3 million shares
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total Stockholders’ Equity
See notes to consolidated financial statements.
2022
2021
(millions)
49
$ 4,511.7
974.6
5,486.3
209.2
1,490.1
7,185.6
826.8
3,604.9
7,866.7
624.4
12,922.8
$ 3,930.9
521.1
4,452.0
329.1
1,487.6
6,268.7
624.5
3,303.0
7,128.8
590.4
11,646.7
522.0
196.1
13,402.4
(953.4)
13,167.1
$ 33,275.5
347.3
142.0
12,025.8
(921.1)
11,594.0
$ 29,509.4
C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S
50
Year Ended December 31,
OPERATING ACTIVITIES:
Net Income
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization:
Property, plant and equipment
Equipment on operating leases and other
Provision for losses on financial services receivables
Deferred taxes
Other, net
Pension contributions
Change in operating assets and liabilities:
(Increase) decrease in assets other than cash and cash equivalents:
Receivables:
Trade and other receivables
Wholesale receivables on new trucks
Inventories
Other assets, net
Increase (decrease) in liabilities:
Accounts payable and accrued expenses
Residual value guarantees and deferred revenues
Other liabilities, net
Net Cash Provided by Operating Activities
INVESTING ACTIVITIES:
Originations of retail loans and finance leases
Collections on retail loans and finance leases
Net (increase) decrease in wholesale receivables on used equipment
Purchases of marketable debt securities
Proceeds from sales and maturities of marketable debt securities
Payments for property, plant and equipment
Acquisitions of equipment for operating leases
Proceeds from asset disposals
Other, net
Net Cash Used in Investing Activities
FINANCING ACTIVITIES:
Payments of cash dividends
Purchases of treasury stock
Proceeds from stock compensation transactions
Net increase (decrease) in commercial paper, short-term bank
loans and other
Proceeds from term debt
Payments on term debt
Net Cash Provided by (Used in) Financing Activities
Effect of exchange rate changes on cash
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
See notes to consolidated financial statements.
2022
2021
(millions)
2020
$ 3,011.6
$ 1,865.5
$ 1,301.2
332.2
458.0
5.5
(208.0)
13.9
(39.1)
(441.7)
(935.4)
(272.7)
(31.9)
840.3
(44.3)
338.6
3,027.0
(5,058.7)
3,888.0
(15.9)
(888.4)
718.1
(525.0)
(865.5)
687.7
26.7
(2,033.0)
270.0
633.3
.5
(208.6)
20.3
(25.1)
(412.9)
90.8
(628.0)
(129.8)
693.4
(82.4)
99.7
2,186.7
(4,570.6)
4,113.3
12.2
(903.1)
727.0
(559.1)
(1,073.7)
904.1
(12.8)
(1,362.7)
249.6
799.4
28.8
.4
20.4
(184.9)
121.8
871.2
(51.9)
(133.8)
(53.6)
(127.8)
146.4
2,987.2
(3,917.3)
3,252.0
53.3
(842.4)
597.8
(550.4)
(1,088.0)
601.9
17.3
(1,875.8)
(1,004.7)
(2.1)
35.7
370.1
3,171.7
(2,265.8)
304.9
(36.3)
1,262.6
3,428.3
$ 4,690.9
(708.0)
(1.5)
37.5
(1,239.8)
(42.1)
53.7
24.7
2,101.1
(2,336.7)
(882.9)
(52.4)
(111.3)
3,539.6
$ 3,428.3
(831.9)
2,150.1
(1,898.5)
(1,808.5)
61.6
(635.5)
4,175.1
$ 3,539.6
C O N S O L I D A T E D S T A T E M E N T S O F S T O C K H O L D E R S ’ E Q U I T Y
December 31,
COMMON STOCK, $1 PAR VALUE:
Balance at beginning of year
Treasury stock retirement
50% stock dividend
Stock compensation
Balance at end of year
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of year
Treasury stock retirement
Stock compensation
Balance at end of year
TREASURY STOCK, AT COST:
Balance at beginning of year
Purchases, shares: 2022 - .04; 2021 - .02; 2020 - .71
Retirements
Balance at end of year
RETAINED EARNINGS:
Balance at beginning of year
Net income
Cash dividends declared on common stock,
per share: 2022 - $2.80; 2021 - $1.89; 2020 - $1.32
50% stock dividend
Cumulative effect of change in accounting principles
Balance at end of year
ACCUMULATED OTHER COMPREHENSIVE LOSS:
Balance at beginning of year
Other comprehensive (loss) income
Balance at end of year
Total Stockholders’ Equity
See notes to consolidated financial statements.
2022
2021
2020
51
(millions, except per share data)
$
347.3
$
346.6
$
174.0
.7
522.0
142.0
(2.1)
56.2
196.1
(2.1)
2.1
.7
347.3
88.5
(1.5)
55.0
142.0
(1.5)
1.5
346.3
(.7)
1.0
346.6
61.4
(41.4)
68.5
88.5
(42.1)
42.1
12,025.8
3,011.6
(1,461.0)
(174.0)
11,148.5
1,865.5
10,539.0
1,301.2
(988.2)
(687.1)
13,402.4
12,025.8
(4.6)
11,148.5
(921.1)
(32.3)
(953.4)
$ 13,167.1
(1,050.3)
129.2
(921.1)
$ 11,594.0
(1,100.1)
49.8
(1,050.3)
$ 10,533.3
52
A .
S I G N I F I C A N T A C C O U N T I N G P O L I C I E S
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 segment, 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. 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 return rates are estimated by using a historical return rate over a nine-year
period.
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 STATEMENTSDecember 31, 2022, 2021 and 2020 (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:
53
At December 31,
2022
2021
assets
liabilities
assets
liabilities
Trucks:
Other current assets
Accounts payable, accrued expenses
and other
Other noncurrent assets, net
Other liabilities
Parts:
Other current assets
Accounts payable, accrued expenses
and other
$
183.0
$
255.7
284.6
467.6
77.7
77.7
$
$
$
$
$
$
$
185.0
298.9
483.9
181.4
181.4
403.6
659.3
72.9
72.9
$
$
$
$
$
$
$
264.0
423.9
687.9
172.1
172.1
The Company’s total commitment to acquire trucks at a guaranteed value for contracts accounted for as a sale was
$971.9 at December 31, 2022.
Revenues from extended warranties, operating leases and other include optional extended warranty and repair and
maintenance (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, 2022, 2021 and 2020 was $105.9, $113.8 and
$104.2, respectively.
Revenue from winch sales and other is primarily derived from the industrial winch business. Winch sales are recognized
when the product is transferred to a customer, which generally occurs upon shipment. Also within this category are
other revenues not attributable to a reportable segment.
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,
2022, 2021 and 2020 were $788.8, $831.6 and $802.3, respectively. Depreciation and related leased unit operating
expenses were $490.0, $665.7 and $776.5 for the years ended December 31, 2022, 2021 and 2020, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
54
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, 2022 or December 31, 2021. Recognition is resumed if the receivable becomes current by the
payment of all amounts due under the terms of the existing contract and collection of remaining amounts is considered
probable (if not contractually modified) or if the customer makes scheduled payments for three months and collection
of remaining amounts is considered probable (if contractually modified). Payments received while the finance receivable
is on non-accrual status are applied to interest and principal in accordance with the contractual terms.
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.
Receivables:
Trade and Other Receivables: The Company’s trade and other receivables are recorded at cost, net of allowances. At
December 31, 2022 and 2021, respectively, trade and other receivables included trade receivables from dealers and
customers of $1,600.1 and $1,276.4 and other receivables of $319.7 and $298.7 relating primarily to value added tax
receivables and supplier allowances and rebates.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions) Finance and Other Receivables:
Loans – Loans represent fixed or floating-rate loans to customers collateralized by the vehicles purchased and are
recorded at amortized cost.
55
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 were $.6 for the years ended December 31, 2022 and 2021. Net charge-offs
were $.2 for the year ended December 31, 2022 and nil for the years ended December 31, 2021 and 2020.
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.
When considering whether to modify customer accounts for credit reasons, the Company evaluates the
creditworthiness of the customers and modifies those accounts that the Company considers likely to perform under
the modified terms. When the Company modifies a loan or finance lease for credit reasons and grants a concession,
the modification is classified as a troubled debt restructuring (TDR). The Company does not typically grant credit
modifications for customers that do not meet minimum underwriting standards since the Company normally
repossesses the financed equipment in these circumstances. When such modifications do occur, they are considered
TDRs.
On average, modifications extended contractual terms by approximately three months in 2022 and eight months in
2021 and did not have a significant effect on the weighted average term or interest rate of the total portfolio at
December 31, 2022 and 2021.
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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions) 56
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 impairment. Finance receivables that are evaluated
individually for impairment consist of all wholesale accounts and certain large retail accounts with past due balances
or otherwise determined to be at a higher risk of loss. A finance receivable is impaired if it is considered probable the
Company will be unable to collect all contractual interest and principal payments as scheduled. In addition, all retail
loans and leases which have been classified as TDRs and all customer accounts over 90 days past due are considered
impaired. Generally, impaired accounts are on non-accrual status. Impaired accounts classified as TDRs which have
been performing for 90 consecutive days are placed on accrual status if it is deemed probable that the Company will
collect all principal and interest payments.
Impaired receivables are generally considered collateral dependent. Large balance retail and all wholesale impaired
receivables are individually evaluated to determine the appropriate reserve for losses. The determination of reserves for
large balance impaired receivables considers the fair value of the associated collateral. When the underlying collateral
fair value exceeds the Company’s amortized cost basis, no reserve is recorded. Small balance impaired receivables with
similar risk characteristics are evaluated as a separate pool to determine the appropriate reserve for losses using the
historical loss information discussed below.
The Company evaluates finance receivables that are not individually impaired 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.
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 market. 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions) 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.
57
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, 2022. Goodwill was $104.1 and $110.6 at
December 31, 2022 and 2021, respectively. The decrease 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 hedged 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 $119.4 at December 31, 2022.
The Company assesses hedges at inception and on an ongoing basis to determine 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, 2022, 2021 and 2020 are immaterial.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions) 58
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.
On December 6, 2022, the Board of Directors declared a 50% common stock dividend payable on February 7, 2023, to
stockholders of record on January 17, 2023, with fractional shares to be paid in cash. This resulted in the issuance of
174,035,361 additional shares and 411 fractional shares paid in cash. For all years presented, net income per share, weighted
average number of common shares outstanding and cash dividends declared per share on common stock have been restated
for the effect of the 50% dividend.
Change in Accounting:
In the first quarter of 2022, the Company changed the method of accounting for its U.S. inventories from last-in-first-
out (LIFO) to first-in-first-out (FIFO). Inventories valued using the LIFO method comprised 41% of consolidated
inventories before deducting the LIFO reserve at December 31, 2021. The Company believes the FIFO method is
preferable because it better matches cost with revenues, it results in a more consistent method to value inventory with
its foreign subsidiaries and it improves comparability with industry peers. This change increased Retained Earnings by
$140.5 to $10,539.0 at January 1, 2020. The effects of the change in accounting principle have been retrospectively
applied to all periods presented:
The effect of the changes made to the Company’s Consolidated Statements of Comprehensive Income was as follows:
Year Ended December 31, 2021
TRUCK, PARTS AND OTHER:
Cost of sales and revenues
Income Taxes
Net Income
Year Ended December 31, 2020
TRUCK, PARTS AND OTHER:
Cost of sales and revenues
Income Taxes
Net Income
as originally
reported
effect of
change
as adjusted
$ 19,110.1
526.5
1,852.1
$
(17.7)
4.3
13.4
$ 19,092.4
530.8
1,865.5
as originally
reported
effect of
change
as adjusted
$ 15,076.4
359.5
1,298.4
$
(3.7)
.9
2.8
$ 15,072.7
360.4
1,301.2
The cumulative effect of the changes made to the Company’s Consolidated Balance Sheet was as follows:
December 31, 2021
TRUCK, PARTS AND OTHER:
Inventories, net
Other liabilities
Retained earnings
as originally
reported
effect of
change
as adjusted
$ 1,768.3
1,436.5
11,869.2
$
207.7
51.1
156.6
$ 1,976.0
1,487.6
12,025.8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
The change in accounting policy did not materially affect basic or diluted net income per share or income before
income taxes within the Truck, Parts and Other segments for the years ended December 31, 2021 and 2020. There was
no impact on total net cash provided by operating activities.
59
The following table compares the amounts currently reported to amounts that would have been reported under LIFO
in the Consolidated Statements of Comprehensive Income.
Year Ended December 31, 2022
TRUCK, PARTS AND OTHER:
Cost of sales and revenues
Income Taxes
Net Income
Net Income Per Share
Basic
Diluted
as reported
pro forma
under lifo
effect of
change
$ 23,291.0
837.1
3,011.6
$ 23,340.4
824.9
2,974.4
$
$
5.76
5.75
$
$
5.69
5.68
$
$
$
(49.4)
12.2
37.2
.07
.07
The effect of the change to income before income taxes within the Truck, Parts and Other segments for the year ended
December 31, 2022 would not be material. In addition, there would be no material effect on the Consolidated
Statements of Cash Flows.
The following table compares the amounts currently reported to amounts that would have been reported under LIFO
in the Consolidated Balance Sheet.
December 31, 2022
TRUCK, PARTS AND OTHER:
Inventories, net
Accounts payable, accrued expenses and other
Retained earnings
as reported
pro forma
under lifo
effect of
change
$ 2,198.8
4,511.7
13,402.4
$ 1,941.7
4,448.4
13,208.6
$
257.1
63.3
193.8
New Accounting Pronouncements:
The Company adopted the following standards on January 1, 2022, which had no material impact on the Company’s
consolidated financial statements.
standard
description
2021-05
Leases (Topic 842) - Lessors - Certain Leases with Variable Lease Payments
2021-10
Government Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance
The Financial Accounting Standards Board (FASB) also issued the following standards, which are not expected to have
a material impact on the Company’s consolidated financial statements.
standard
2022-02*
2022-03*
description
Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings
and Vintage Disclosures
Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities
Subject to Contractual Sale Restrictions
effective date
January 1, 2023
January 1, 2024
* The Company will adopt on the effective date.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
60
B .
S A L E S A N D R E V E N U E S
The following table disaggregates Truck, Parts and Other revenues by major sources:
Year Ended December 31,
Truck
Truck sales
Revenues from extended warranties, operating leases and other
Parts
Parts sales
Revenues from dealer services and other
Winch sales and other
Truck, Parts and Other sales and revenues
$ 20,644.8
841.4
21,486.2
5,596.8
167.5
5,764.3
63.8
$ 27,314.3
The following table summarizes Financial Services lease revenues by lease type:
Year Ended December 31,
Finance lease revenues
Operating lease revenues
Total lease revenues
2022
184.1
788.8
972.9
$
$
C .
I N V E S T M E N T S I N M A R K E TA B L E S E C U R I T I E S
Marketable securities consisted of the following at December 31:
2022
2021
2020
$ 15,989.7
810.0
16,799.7
4,809.7
134.6
4,944.3
90.5
$ 21,834.5
$
2021
187.0
831.6
$ 1,018.6
$ 12,466.9
697.9
13,164.8
3,803.3
109.6
3,912.9
76.6
$ 17,154.3
2020
189.2
802.3
991.5
$
$
2022
Marketable debt securities
U.S. tax-exempt securities
U.S. taxable municipal / non-U.S.
provincial bonds
U.S. corporate securities
U.S. government and agency securities
Non-U.S. corporate securities
Non-U.S. government securities
Other debt securities
Marketable equity securities
Total marketable securities
2021
Marketable debt securities
U.S. tax-exempt securities
U.S. taxable municipal / non-U.S.
provincial bonds
U.S. corporate securities
U.S. government and agency securities
Non-U.S. corporate securities
Non-U.S. government securities
Other debt securities
Marketable equity securities
Total marketable securities
cost
unrealized
gains
unrealized
losses
fair
value
$
452.8
$
191.6
262.5
118.0
467.9
78.9
99.4
10.0
$ 1,681.1
$
.5
.1
.1
.2
.9
$
8.2
$
445.1
10.8
11.6
3.1
17.9
2.7
4.7
8.8
67.8
$
180.8
251.0
115.0
450.0
76.4
94.7
1.2
$ 1,614.2
cost
unrealized
gains
unrealized
losses
fair
value
$
431.4
$
192.2
208.3
95.9
443.9
75.2
100.4
15.4
$ 1,562.7
$
1.5
.6
.6
.6
1.4
.1
.3
1.3
6.4
$
$
.4
1.2
1.5
.1
2.5
.3
.7
3.0
9.7
$
432.5
191.6
207.4
96.4
442.8
75.0
100.0
13.7
$ 1,559.4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (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 $.5, $2.1
and $2.7, and gross realized losses were $2.3, $.4 and $.3 for the years ended December 31, 2022, 2021 and 2020,
respectively.
61
Net realized losses on marketable equity securities were $5.2 for the year ended December 31, 2022 and nil for 2021.
Marketable debt securities with continuous unrealized losses and their related fair values were as follows:
At December 31,
2022
2021
Fair value
Unrealized losses
less than
twelve months
889.2
21.5
$
twelve months
or greater
608.4
37.5
$
less than
twelve months
911.2
6.7
$
twelve months
or greater
1.3
$
The unrealized losses on marketable debt securities above 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, 2022 and December 31, 2021. 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 the contractual principal and interest will be received on the investment securities.
Contractual maturities on marketable debt securities at December 31, 2022 were as follows:
Maturities:
Within one year
One to five years
Six to ten years
More than ten years
D .
I N V E N T O R I E S
Inventories include the following:
At December 31,
Finished products
Work in process and raw materials
amortized
cost
$
447.5
1,207.2
3.3
13.1
$ 1,671.1
fair
value
$
442.4
1,155.8
3.3
11.5
$ 1,613.0
$
2022
871.8
1,327.0
$ 2,198.8
$
2021
676.0
1,300.0
$ 1,976.0
In the first quarter of 2022, the Company changed the method of accounting for its U.S. inventories from last-in-first-
out (LIFO) to first-in-first-out (FIFO) and all prior periods have been restated.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
62
E .
F I N A N C E A N D O T H E R R E C E I VA B L E S
Finance and other receivables include the following:
At December 31,
Loans
Finance leases
Dealer wholesale financing
Operating lease receivables and other
Less allowance for losses:
Loans and leases
Dealer wholesale financing
Operating lease receivables and other
2022
$ 7,229.1
3,786.4
2,772.1
125.4
$ 13,913.0
(114.8)
(3.4)
(2.9)
$ 13,791.9
2021
$ 6,424.7
3,620.6
1,865.8
126.6
$ 12,037.7
(111.5)
(3.3)
(2.1)
$ 11,920.8
Included in Finance and other receivables, net on the Consolidated Balance Sheets is accrued interest receivable (net of
allowance for credit losses) of $44.1 and $27.7 as of December 31, 2022 and December 31, 2021, respectively. 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.
Annual minimum payments due on loans are as follows:
Beginning January 1,
2023
2024
2025
2026
2027
Thereafter
loans
$ 2,482.8
1,799.7
1,390.9
946.3
527.2
82.2
$ 7,229.1
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,
2023
2024
2025
2026
2027
Thereafter
Unguaranteed residual values
Unearned interest on finance leases
Net investment in finance leases
finance
leases
$ 1,427.8
994.7
764.0
438.4
248.6
84.5
$ 3,958.0
258.0
(429.6)
$ 3,786.4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
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.
63
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:
Balance at January 1
Provision for losses
Charge-offs
Recoveries
Currency translation and other
Balance at December 31
Balance at January 1
Provision for losses
Charge-offs
Recoveries
dealer
customer
2022
wholesale
$
3.3
.1
$
retail
7.1
(4.9)
$
$
3.4
$
2.2
$
other*
2.1
(1.7)
(.5)
2.2
.8
2.9
$
$
total
116.9
5.5
(9.0)
9.7
(2.0)
121.1
retail
104.4
12.0
(8.5)
7.5
(2.8)
112.6
$
$
2021
dealer
customer
wholesale
$
3.4
$
retail
8.4
(1.3)
$
retail
112.0
.6
(12.3)
6.2
(2.1)
104.4
$
$
other*
3.2
1.2
(2.5)
.3
(.1)
2.1
$
$
total
127.0
.5
(14.8)
6.5
(2.3)
116.9
Currency translation and other
Balance at December 31
(.1)
3.3
$
$
7.1
$
dealer
customer
2020
Balance at January 1**
Provision for losses
Charge-offs
Recoveries
wholesale
$
4.3
(1.0)
$
retail
9.2
(.8)
$
Currency translation and other
Balance at December 31
.1
3.4
$
$
8.4
$
* Operating lease and other trade receivables.
** The beginning balance has been adjusted for the adoption of ASU 2016-13.
retail
101.4
30.1
(26.6)
5.3
1.8
112.0
$
$
other*
3.7
.5
(1.4)
.4
$
3.2
$
total
118.6
28.8
(28.0)
5.7
1.9
127.0
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
64
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
impaired. At-risk accounts are accounts that are impaired, including TDRs, accounts over 90 days past due and other
accounts on non-accrual status.
The table below summarizes the amortized cost basis of the Company’s finance receivables within each credit quality
indicator by year of origination and portfolio class.
2 0 2 2
2 0 2 1
2 0 2 0
2 0 1 9
2 0 1 8
pri o r
t ota l
revolving
loans
$ 2,766.0
6.1
$ 2,772.1
$
206.2
$
206.2
$ 2,978.3
At December 31, 2022
Dealer:
Wholesale:
Performing
Watch
Retail:
Performing
At-risk
Total dealer
Customer retail:
Fleet:
Performing
Watch
At-risk
Owner/operator:
Performing
Watch
At-risk
Total customer retail
$
$
$
609.7
609.7
609.7
$
$
$
348.6
348.6
348.6
$
$
$
223.1
223.1
223.1
$ 3,558.0
7.5
6.7
$ 3,572.2
$ 1,981.9
7.3
17.7
$ 2,006.9
$ 1,306.5
1.8
18.8
$ 1,327.1
$
478.2
1.8
.4
$
480.4
$ 4,052.6
$
425.9
.9
.8
$
427.6
$ 2,434.5
$
251.2
.4
1.1
$
252.7
$ 1,579.8
$ 2,766.0
6.1
$ 2,772.1
121.1
.7
121.8
121.8
$ 1,871.2
.7
$ 1,871.9
$ 4,644.0
65.6
.5
.5
66.6
6.0
.1
6.1
72.7
$ 7,719.1
22.9
66.8
$ 7,808.8
$ 1,327.5
3.5
3.8
$ 1,334.8
$ 9,143.6
194.5
$13,787.6
$
$
$
$
$
$
$
$
$
241.7
241.7
241.7
603.7
3.4
17.2
624.3
120.9
.3
.8
122.0
746.3
988.0
$
$
$
$
$
$
$
$
$
120.8
120.8
120.8
203.4
2.4
5.9
211.7
45.3
.7
46.0
257.7
378.5
$
$
$
$
$
$
$
$
$
Total
$ 2,978.3
$ 4,662.3
$ 2,783.1
$ 1,802.9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
2 0 2 1
2 0 2 0
2 0 1 9
2 0 1 8
2 0 1 7
pri o r
t ota l
65
revolving
loans
$ 1,859.7
6.1
$ 1,865.8
At December 31, 2021
Dealer:
Wholesale:
Performing
Watch
Retail:
Performing
Watch
At-risk
Total dealer
Customer retail:
Fleet:
Performing
Watch
At-risk
Owner/operator:
Performing
Watch
At-risk
Total customer retail
$
201.9
$
434.4
7.0
$
201.9
$ 2,067.7
$
$
441.4
441.4
$
$
$
315.4
3.6
319.0
319.0
$
$
$
311.7
9.1
320.8
320.8
$ 2,851.7
2.6
6.0
$ 2,860.3
$ 1,913.3
6.5
8.5
$ 1,928.3
$ 1,227.0
4.3
26.0
$ 1,257.3
$
611.9
.7
.2
$
612.8
$ 3,473.1
$
389.9
.5
1.3
$
391.7
$ 2,320.0
$
228.1
.7
1.5
$
230.3
$ 1,487.6
$ 1,859.7
6.1
$ 1,865.8
$ 1,654.5
25.4
1.1
$ 1,681.0
$ 3,546.8
$ 6,887.3
19.5
54.8
$ 6,961.6
$ 1,394.6
2.4
5.7
$ 1,402.7
$ 8,364.3
96.9
1.1
98.0
98.0
66.5
.2
.4
67.1
10.1
.2
10.3
77.4
175.4
$11,911.1
$
$
$
$
$
$
$
$
$
176.0
4.6
180.6
180.6
608.4
5.3
10.6
624.3
116.0
.4
2.0
118.4
742.7
923.3
$
$
$
$
$
$
$
$
$
118.2
1.1
119.3
119.3
220.4
.6
3.3
224.3
38.6
.1
.5
39.2
263.5
382.8
$
$
$
$
$
$
$
$
$
Total
$ 2,067.7
$ 3,914.5
$ 2,639.0
$ 1,808.4
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.
At December 31, 2022
Current and up to 30 days past due
31 – 60 days past due
Greater than 60 days past due
At December 31, 2021
Current and up to 30 days past due
31 – 60 days past due
Greater than 60 days past due
dealer
customer retail
wholesale
retail
$ 2,772.1
$ 1,871.9
$ 2,772.1
$ 1,871.9
owner/
fleet operator
$ 7,768.5
14.7
25.6
$ 7,808.8
$ 1,329.1
3.1
2.6
$ 1,334.8
total
$13,741.6
17.8
28.2
$13,787.6
dealer
customer retail
wholesale
retail
$ 1,865.4
.4
$ 1,681.0
$ 1,865.8
$ 1,681.0
owner/
fleet operator
$ 6,939.7
9.3
12.6
$ 6,961.6
$ 1,396.4
1.8
4.5
$ 1,402.7
total
$ 11,882.5
11.5
17.1
$ 11,911.1
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
66
The amortized cost basis of finance receivables that are on non-accrual status was as follows:
dealer
customer retail
At December 31, 2022
wholesale
retail
Amortized cost basis with a specific reserve
Amortized cost basis with no specific reserve
Total
$
$
.7
.7
dealer
At December 31, 2021
wholesale
retail
Amortized cost basis with a specific reserve
Amortized cost basis with no specific reserve
Total
$
$
1.1
1.1
owner/
fleet operator
33.9
16.2
50.1
$
$
3.6
3.6
customer retail
owner/
fleet operator
40.3
4.7
45.0
$
$
5.7
5.7
$
$
$
$
$
$
$
$
total
37.5
16.9
54.4
total
46.0
5.8
51.8
Interest income recognized on a cash basis for finance receivables that are on non-accrual status was as follows:
Year Ended December 31,
Dealer:
Retail
Customer retail:
Fleet
Owner/operator
2022
2021
2020
$
$
.1
$
.2
$
2.5
.2
2.8
$
3.1
.5
3.8
$
.2
1.6
.2
2.0
Troubled Debt Restructurings: The balance of TDRs was $31.1 and $41.6 at December 31, 2022 and 2021, respectively.
At modification date, the pre-modification and post-modification amortized cost basis balances for finance receivables
modified during the period by portfolio class were as follows:
2022
2021
Fleet
Owner/operator
amortized cost basis
pre-modification post-modification
11.7
11.7
$
$
$
11.7
$
11.7
amortized cost basis
pre-modification post-modification
7.0
1.0
8.0
7.1
1.0
8.1
$
$
$
$
The effect on the allowance for credit losses from such modifications was not significant at December 31, 2022 and
2021.
TDRs modified during the previous twelve months that subsequently defaulted (i.e., became more than 30 days past
due) in the years ended December 31, 2022 and 2021 were nil.
There were no finance receivables modified as TDRs during the previous twelve months that subsequently defaulted and
were charged off for the years ended December 31, 2022 and 2021, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
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, 2022 and 2021 was $9.2 and $4.7,
respectively. Proceeds from the sales of repossessed assets were $20.8, $45.3 and $85.6 for the years ended December 31,
2022, 2021 and 2020, 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.
67
F.
E Q U I P M E N T O N O P E R AT I N G L E A S E S
A summary of equipment on operating leases for Truck, Parts and Other and for the Financial Services segment is
presented below.
At December 31,
Equipment on operating leases
Less allowance for depreciation
truck, parts and other
financial services
2022
251.7
(60.9)
190.8
$
$
2021
400.9
(98.5)
302.4
$
$
2022
$ 3,974.8
(1,362.3)
$ 2,612.5
2021
$ 4,285.6
(1,399.1)
$ 2,886.5
Annual minimum lease payments due on Financial Services operating leases beginning January 1, 2023 are $571.6,
$363.3, $196.2, $85.7, $26.8 and $4.9 thereafter.
When the equipment is sold 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 are summarized below:
At December 31,
Residual value guarantees
Deferred lease revenues
truck, parts and other
2022
162.3
46.9
209.2
$
$
2021
247.0
82.1
329.1
$
$
Annual maturities of the RVGs beginning January 1, 2023 are $58.2, $81.7, $15.3, $6.1, $1.0 and nil thereafter. The
deferred lease revenue is amortized on a straight-line basis over the RVG contract period. At December 31, 2022, the
annual amortization of deferred revenues beginning January 1, 2023 are $26.2, $13.5, $4.2, $3.0 and nil thereafter.
G . P R O P E RT Y, P L A N T A N D E Q U I P M E N T
Property, plant and equipment included the following:
At December 31,
Land
Buildings and improvements
Machinery, equipment and production tooling
Construction in progress
Less allowance for depreciation
useful lives
10 - 40 years
3 - 20 years
$
2022
269.9
1,608.6
5,086.6
424.1
7,389.2
(3,920.8)
$ 3,468.4
$
2021
277.6
1,596.8
5,076.0
313.9
7,264.3
(3,866.2)
$ 3,398.1
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
68
H . A C C O U N T S PAYA B L E , A C C R U E D E X P E N S E S A N D O T H E R
Accounts payable, accrued expenses and other include the following:
At December 31,
Truck, Parts and Other:
Accounts payable
Product support liabilities
Accrued expenses
Right-of-return liabilities
Accrued capital expenditures
Salaries and wages
Other
I .
P R O D U C T S U P P O RT L I A B I L I T I E S
Changes in product support liabilities are summarized as follows:
warranty reserves
Balance at January 1
Cost accruals
Payments
Change in estimates for pre-existing warranties
Currency translation and other
Balance at December 31
deferred revenues on extended warranties and r&m contracts
Balance at January 1
Deferred revenues
Revenues recognized
Currency translation
Balance at December 31
2022
344.3
386.1
(398.7)
111.5
(5.5)
437.7
2022
775.2
629.1
(476.1)
(23.3)
904.9
$
$
$
$
2022
2021
$ 1,665.1
542.9
808.4
366.4
221.2
351.8
555.9
$ 4,511.7
2021
389.7
298.2
(396.3)
58.3
(5.6)
344.3
2021
795.8
487.1
(487.8)
(19.9)
775.2
$
$
$
$
$ 1,393.5
475.0
611.5
436.1
242.2
310.4
462.2
$ 3,930.9
2020
440.0
295.0
(437.2)
84.1
7.8
389.7
2020
801.4
409.9
(438.9)
23.4
795.8
$
$
$
$
The Company expects to recognize approximately $272.7 of the remaining deferred revenues on extended warranties
and R&M contracts in 2023, $273.5 in 2024, $199.6 in 2025, $101.7 in 2026, $38.6 in 2027 and $18.8 thereafter.
Product support liabilities are included in the accompanying Consolidated Balance Sheets as follows:
At December 31,
Truck, Parts and Other:
Accounts payable, accrued expenses and other
Other liabilities
Financial Services:
Accounts payable, accrued expenses and other
Deferred taxes and other liabilities
warranty reserves
2022
2021
$
279.2
158.5
$
215.5
128.8
$
437.7
$
344.3
deferred revenues
2022
263.7
628.8
4.9
7.5
904.9
$
$
2021
259.5
503.2
4.6
7.9
775.2
$
$
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
J .
B O R R O W I N G S A N D C R E D I T A R R A N G E M E N T S
Financial Services borrowings include the following:
69
At December 31,
Commercial paper
Bank loans
Term notes
2022
effective
rate
3.7%
6.7%
2.2%
2.7%
borrowings
$ 3,265.5
339.4
3,604.9
7,866.7
$ 11,471.6
2021
effective
rate
.2%
4.1%
1.5%
1.2%
borrowings
$ 3,025.1
277.9
3,303.0
7,128.8
$ 10,431.8
Commercial paper and term notes borrowings were $11,132.2 and $10,153.9 at December 31, 2022 and 2021,
respectively. Unamortized debt issuance costs, unamortized discounts and the net effect of fair value hedges were
$(55.8) and $(21.6) at December 31, 2022 and 2021, respectively. The effective rate is the weighted average rate as of
December 31, 2022 and 2021 and includes the effects of interest-rate contracts.
The annual maturities of the Financial Services borrowings are as follows:
Beginning January 1,
2023
2024
2025
2026
2027
commercial
paper
$ 3,270.8
$ 3,270.8
bank
loans
95.8
36.1
143.1
54.1
10.3
339.4
$
$
term
notes
$ 2,173.3
2,072.5
2,750.2
621.2
300.0
$ 7,917.2
total
$ 5,539.9
2,108.6
2,893.3
675.3
310.3
$ 11,527.4
Interest paid on borrowings was $169.1, $104.8 and $164.5 in 2022, 2021 and 2020, respectively.
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. 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) and PACCAR Financial Ltd. (PFL Canada).
In November 2021, the Company’s U.S. finance subsidiary, PFC, filed a shelf registration under the Securities Act of
1933. The total amount of medium-term notes outstanding for PFC as of December 31, 2022 was $5,850.0. In January
2023, PFC issued $300.0 of medium-term notes under this registration. The registration expires in November 2024 and
does not limit the principal amount of debt securities that may be issued during that period.
As of December 31, 2022, the Company’s European finance subsidiary, PFE, had €1,117.8 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 July 2023.
In August 2021, PFM registered a 10,000.0 Mexican pesos medium-term note and commercial paper program with the
Comision Nacional Bancaria y de Valores. 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, 2022, 9,079.0 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, 2022 was 700.0 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. The total
amount of medium-term notes outstanding for PFL Canada as of December 31, 2022 was 150.0 Canadian dollars.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
70
The Company has line of credit arrangements of $3,698.0, of which $3,358.6 were unused at December 31, 2022.
Included in these arrangements are $3,000.0 of committed bank facilities, of which $1,000.0 expires in June 2023,
$1,000.0 expires in June 2025 and $1,000.0 expires in June 2027. The Company intends to replace these credit facilities
on or before expiration with facilities of similar amounts and duration. These credit facilities are maintained primarily
to provide backup liquidity for commercial paper borrowings and maturing medium-term notes. There were no
borrowings under the committed bank facilities for the year ended December 31, 2022.
K .
L E A S E S
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.
The components of lease expense were as follows:
Year Ended December 31,
Finance lease cost
Amortization of right-of-use assets
Interest on lease liabilities
Operating lease cost
Short-term lease cost
Variable lease cost
Total lease cost
2022
.9
15.5
2.4
1.2
20.0
$
$
2021
.6
16.3
3.0
1.5
21.4
$
$
2020
.9
.1
16.6
.8
1.7
20.1
$
$
For the years ended December 31, 2022, 2021 and 2020, total rental expenses for all leases were $20.0, $21.4 and $20.1,
respectively.
Balance sheet information related to leases was as follows:
At December 31,
TRUCK, PARTS AND OTHER:
Other noncurrent assets
FINANCIAL SERVICES:
Other assets
Total right-of-use assets
TRUCK, PARTS AND OTHER:
Accounts payable, accrued expenses and other
Other liabilities
FINANCIAL SERVICES:
Accounts payable, accrued expenses and other
Deferred taxes and other liabilities
Total lease liabilities
2022
2021
operating
leases
finance
leases
operating
leases
finance
leases
$
$
$
$
36.9
6.0
42.9
11.3
25.8
1.4
4.4
42.9
$
$
$
2.7
2.7
.8
1.8
$
2.6
$
$
$
$
29.8
6.0
35.8
12.8
17.6
1.5
4.2
36.1
$
$
$
$
.9
.9
.4
.5
.9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
The weighted-average remaining lease term and discount rate were as follows at December 31:
71
2022
2021
operating
leases
4.8 years
1.6%
finance
leases
3.8 years
1.7%
operating
leases
4.6 years
1.1%
finance
leases
2.2 years
2.0%
operating
leases
finance
leases
Weighted-average remaining lease term
Weighted-average discount rate
Maturities of lease liabilities are as follows:
Beginning January 1,
2023
2024
2025
2026
2027
Thereafter
Total lease payments
Less: interest
Total lease liabilities
$
$
13.0
9.6
7.6
5.5
3.8
4.7
44.2
(1.3)
42.9
$
$
.8
.7
.6
.6
2.7
(.1)
2.6
2020
17.2
.1
.9
19.9
.5
Cash flow information related to leases was as follows:
Year Ended December 31,
2022
2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
Right-of-use assets obtained in exchange for lease liabilities
Operating leases
Finance leases
$
15.9
$
16.7
$
1.0
17.0
2.9
.6
8.1
.4
L . C O M M I T M E N T S A N D C O N T I N G E N C I E S
At December 31, 2022, PACCAR had standby letters of credit and surety bonds totaling $32.5, from third-party
financial institutions, in the normal course of business, which guarantee various insurance, financing and other
activities. At December 31, 2022, PACCAR’s financial services companies, in the normal course of business, had
outstanding commitments to fund new loan and lease transactions amounting to $1,363.3. The commitments generally
expire in 90 days. The Company had other commitments, primarily to purchase production inventory, equipment and
energy amounting to $83.2, $17.4, $4.9, $2.2, $.1 and $.5 for 2023, 2024, 2025, 2026, 2027 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, 2022, 2021 and 2020 were $4.6, $4.0 and $1.9,
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
72
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 a number of collective proceedings, including a class action in
the United Kingdom, alleging EC-related claims and seeking monetary damages. In certain jurisdictions, the
limitations period has not yet expired and additional claimants may bring EC-related claims and lawsuits against the
Company or its subsidiaries.
The legal proceedings are continuing to move through the court systems in the various jurisdictions with some larger
cases awaiting judgement in 2023 and others scheduled for trial in upcoming years. On February 7, 2023, the
Competition Appeal Tribunal in the U.K. issued a judgment awarding the claimants monetary damages. The amount
of the judgment is not material to the Company’s business, financial condition or results of operations. The Company
is evaluating its options, including an appeal. While the Company believes it has meritorious defenses to all EC-related
claims and lawsuits, the final disposition of all such claims and lawsuits will likely take a significant period of time to
resolve and the final outcomes are highly uncertain. Considering the complexity of the claims and the different stages
of the proceedings in a variety of jurisdictions, including the recent judgment in the U.K., the Company cannot at this
time reasonably estimate a range of loss that may result. Adverse final decisions involving significant numbers of DAF
truck sales could have a material impact on the Company’s results of operations and cash flows.
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 . E M P L O Y E E B E N E F I T S
Severance Costs: The Company incurred severance expense in 2022, 2021 and 2020 of $.6, $2.6 and $6.1 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.
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 $39.1 to its pension plans in 2022 and $25.1 in 2021. The Company expects to contribute in the range of
$25 to $75 to its pension plans in 2023, of which $20.5 is estimated to satisfy minimum funding requirements. Annual
benefits expected to be paid beginning January 1, 2023 are $120.3, $120.3, $123.5, $129.3, $131.9 and a total of $783.0
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions) 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.
73
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.
At December 31, 2022
Equities:
U.S. equities
Global equities
Total equities
Fixed income:
U.S. fixed income
Non-U.S. fixed income
Total fixed income
Cash and other
Total plan assets
At December 31, 2021
Equities:
U.S. equities
Global equities
Total equities
Fixed income:
U.S. fixed income
Non-U.S. fixed income
Total fixed income
Cash and other
Total plan assets
fair value hierarchy
target
level 1
level 2
total
45 - 65%
measured
at nav
total
$
830.9
795.9
$ 1,626.8
$
830.9
795.9
$ 1,626.8
$
82.2
35 - 55% $
$
82.2
5.8
88.0
$
$
$
258.0
31.4
289.4
86.1
375.5
$
$
$
340.2
31.4
371.6
91.9
463.5
$
605.2
419.4
$ 1,024.6
.3
$ 2,651.7
$
945.4
450.8
$ 1,396.2
92.2
$ 3,115.2
fair value hierarchy
target
level 1
level 2
total
50 - 70%
measured
at nav
total
$ 1,125.7
1,240.8
$ 2,366.5
$ 1,125.7
1,240.8
$ 2,366.5
$
75.9
30 - 50% $
$
75.9
7.1
83.0
$
$
$
303.0
35.1
338.1
89.7
427.8
$
$
$
378.9
35.1
414.0
96.8
510.8
$
803.9
412.2
$ 1,216.1
1.1
$ 3,583.7
$ 1,182.8
447.3
$ 1,630.1
97.9
$ 4,094.5
The following weighted-average assumptions relate to all pension plans of the Company:
At December 31,
Discount rate
Rate of increase in future compensation levels
Assumed long-term rate of return on plan assets
2022
5.0%
3.9%
6.0%
2021
2.6%
3.8%
5.9%
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
74
The components of the change in projected benefit obligation and change in plan assets are as follows:
At December 31,
Change in projected benefit obligation:
Benefit obligation at January 1
Service cost
Interest cost
Benefits paid
Actuarial (gain) loss
Currency translation and other
Participant contributions
Projected benefit obligation at December 31
Change in plan assets:
Fair value of plan assets at January 1
Employer contributions
Actual (loss) gain on plan assets
Benefits paid
Currency translation and other
Participant contributions
Fair value of plan assets at December 31
Funded status at December 31
At December 31,
Amounts recorded on Balance Sheet:
Other noncurrent assets
Account payable, accrued expenses and other
Other liabilities
Accumulated other comprehensive loss:
Actuarial loss
Prior service cost
2022
2021
$ 3,709.6 $ 3,761.9
148.4
65.3
(102.0)
(146.9)
(17.6)
.5
$ 2,567.0 $ 3,709.6
148.5
84.9
(107.7)
(1,190.4)
(78.3)
.4
39.1
(809.6)
(107.7)
(101.5)
.4
$ 4,094.5 $ 3,793.4
25.1
395.8
(102.0)
(18.3)
.5
$ 3,115.2 $ 4,094.5
384.9
$
548.2 $
2022
2021
$
671.2 $
18.0
105.0
97.9
13.0
553.2
19.6
148.7
264.0
5.8
Of the December 31, 2022 amounts in accumulated other comprehensive loss, $2.7 of unrecognized actuarial loss
and $1.4 of unrecognized prior service cost are expected to be amortized into net pension expense in 2023.
The accumulated benefit obligation for all pension plans of the Company was $2,265.1 and $3,276.0 at December
31, 2022 and 2021, respectively.
Information for all plans with an accumulated benefit obligation in excess of plan assets is as follows:
At December 31,
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
$
2022
126.7 $
113.7
6.8
2021
171.5
153.3
13.3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
The components of pension expense are as follows:
75
Year Ended December 31,
Service cost
Interest on projected benefit obligation
Expected return on assets
Amortization of prior service costs
Recognized actuarial loss
Settlement loss
Net pension expense
$
2022
148.5 $
84.9
(215.1)
.7
28.9
2021
148.4 $
65.3
(203.3)
.8
58.7
$
47.9 $
69.9 $
2020
130.4
83.0
(190.6)
1.5
44.2
11.6
80.1
The components of net pension expense other than service cost are included in Interest and other (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
Metal and Electrical Engineering
Industry Pension Fund
Western Metal Industry Pension Plan
Other plans
pension
plan
number
ein
surcharge
2022
2021
2020
company contributions
91-6033499
135668
001
Yes
Yes
$
$
37.1 $
4.0
1.0
42.1 $
38.1 $
4.0
1.1
43.2 $
33.9
3.0
.9
37.8
The Company contributions shown in the table above approximate the multi-employer pension expense for each of the
years ended December 31, 2022, 2021 and 2020, 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 May 31, 2024.
The Company’s contributions were less than 5% of the total contributions to the plan for the last two reporting periods
ending December 2022. The plan is required by law (the Netherlands Pension Act) to have a minimum coverage ratio
in excess of 104.3% and a policy coverage ratio in excess of 118.1% (weighted coverage ratio of the last 12 months).
Because the policy coverage ratio of 110.4% at December 31, 2022 is below the required threshold, a funding
improvement plan remains in place. Based on the funding improvement plan, the required coverage of 118.1% should
be reached by the end of 2026. The funding improvement plan includes a possible reduction in pension benefits and
delays in future benefit increases.
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, 2025. In accordance with the U.S. Pension Protection Act of 2006, the plan continued
to be certified as critical (red) status as of December 31, 2022, and a funding improvement plan has been implemented
requiring additional contributions through 2022 as long as the plan remains in critical status. Contributions by the
Company were 25% and 20% of the total contributions to the plan for the years ended December 31, 2022 and 2021,
respectively.
Other plans are principally located in the U.S. and the Company’s contributions to these plans for the years ended
December 31, 2022 and 2021 were less than 5% of each plan’s total contributions. As of December 31, 2022, one of the
other plans was under a funding rehabilitation plan requiring an increase to the mandated employer surcharge from
5% to 10%, which will be applicable for each succeeding year in which the plan remains in a critical status.
There were no significant changes for the multi-employer plans in the periods presented that affected comparability
between periods.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
76
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
2022, 2021 and 2020. Other plans are located in Australia, the Netherlands, Canada, United Kingdom and Germany.
Expenses for these plans were $56.3, $50.0 and $42.5 in 2022, 2021 and 2020, respectively.
N .
I N C O M E TA X E S
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 the Company’s tax returns at 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,
Domestic
Foreign
2022
$ 2,322.9
1,525.8
$ 3,848.7
2021
$ 1,391.4
1,004.9
$ 2,396.3
2020
$ 1,126.5
535.1
$ 1,661.6
The components of the Company’s provision for income taxes include the following:
Year Ended December 31,
Current provision:
Federal
State
Foreign
Deferred (benefit) provision:
Federal
State
Foreign
2022
2021
2020
$
$
567.0
143.1
335.0
1,045.1
(173.2)
(42.0)
7.2
(208.0)
837.1
$
$
410.0
85.9
243.5
739.4
(176.0)
(29.6)
(3.0)
(208.6)
530.8
$
$
182.5
44.9
132.6
360.0
(10.5)
1.9
9.0
.4
360.4
Tax benefits recognized for net operating loss carryforwards were $3.9, $5.1 and $17.8 for the years ended 2022, 2021
and 2020, respectively.
A reconciliation of the statutory U.S. federal tax rate to the effective income tax rate is as follows:
Statutory rate
Effect of:
State
Research and development tax credit
Tax on foreign earnings
Other, net
2022
21.0%
2.1
(1.0)
.5
(.8)
21.8%
2021
21.0%
2.0
(1.2)
1.1
(.7)
22.2%
2020
21.0%
2.3
(1.4)
.8
(1.0)
21.7%
Based on the Company’s current operations, the Company does not expect that the repatriation of future foreign
earnings will be subject to significant income tax as a result of the U.S. modified territorial system.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
At December 31, 2022, the Company had net operating loss carryforwards of $404.6, of which $352.5 related to foreign
subsidiaries and $52.1 related to states in the U.S. The related deferred tax asset was $119.2, for which a $102.3
valuation allowance has been provided. The carryforward periods range from four years to indefinite, subject to certain
limitations under applicable laws. The future tax benefits of net operating loss carryforwards are evaluated on a regular
basis, including a review of historical and projected operating results.
77
The tax effects of temporary differences representing deferred tax assets and liabilities are as follows:
2022
2021
At December 31,
Assets:
Accrued liabilities
R&D expense capitalization
Net operating loss and tax credit carryforwards
Inventory adjustments
Allowance for losses on receivables
Unrealized investment loss
Other
Valuation allowance
Liabilities:
Financial Services leasing depreciation
Depreciation and amortization
Postretirement benefit plans
Inventory adjustments
Other
Net deferred tax liability
The balance sheet classifications of the Company’s deferred tax assets and liabilities are as follows:
At December 31,
Truck, Parts and Other:
Other noncurrent assets, net
Other liabilities
Financial Services:
Other assets
Deferred taxes and other liabilities
Net deferred tax liability
2022
199.0
(75.5)
51.0
(523.9)
(349.4)
$
$
Cash paid for income taxes was $932.1, $761.1 and $374.0 in 2022, 2021 and 2020, respectively.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
Balance at January 1
Additions for tax positions related to the current year
Additions for tax positions related to prior years
Reductions for tax positions related to prior years
Lapse of statute of limitations
Balance at December 31
2022
26.0
7.4
1.8
(1.6)
(5.8)
27.8
$
$
2021
24.5
6.1
.8
(5.4)
26.0
$
$
$
$
252.2
153.6
128.0
59.5
43.8
16.5
79.1
732.7
(116.2)
616.5
(558.9)
(227.3)
(120.5)
(59.2)
(965.9)
(349.4)
$
210.9
124.9
36.5
.8
71.1
444.2
(109.3)
334.9
(547.1)
(166.8)
(86.5)
(11.5)
(33.2)
(845.1)
(510.2)
2021
51.5
(91.5)
48.4
(518.6)
(510.2)
2020
30.7
5.5
.3
(4.2)
(7.8)
24.5
$
$
$
$
$
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
78
The Company had $27.8, $26.0 and $24.5 of unrecognized tax benefits, of which $27.8, $25.3 and $23.2 would impact
the effective tax rate, if recognized, as of December 31, 2022, 2021 and 2020, respectively.
The Company recognized $.1, $(.4) and $(.7) of expense (income) related to interest in 2022, 2021 and 2020,
respectively. Accrued interest expense and penalties were $.9, $.8 and $1.2 as of December 31, 2022, 2021 and 2020,
respectively. Interest and penalties are classified as income taxes in the Consolidated Statements of Income.
The Company believes it is reasonably possible that approximately $5.7 of unrecognized tax benefits, resulting
primarily from research and development tax credits, will be resolved within the next 12 months. As of December 31,
2022, the United States Internal Revenue Service has completed examinations of the Company’s tax returns for all
years through 2014. The Company’s tax returns for other major jurisdictions remain subject to examination for the
years ranging from 2012 through 2022.
O . S T O C K H O L D E R S ’ E Q U I T Y
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
contracts
marketable
debt
securities
pension
plans
foreign
currency
translation
Balance at January 1, 2022
Recorded into AOCI
Reclassified out of AOCI
Net other comprehensive
income (loss)
Balance at December 31, 2022
Balance at January 1, 2021
Recorded into AOCI
Reclassified out of AOCI
Net other comprehensive
income (loss)
Balance at December 31, 2021
$
$
(13.5)
8.6
40.0
48.6
35.1
$
$
(1.1)
(41.3)
(1.2)
(42.5)
(43.6)
derivative
contracts
marketable
debt
securities
$
$
(29.2)
39.9
(24.2)
15.7
(13.5)
$
$
14.6
(14.1)
(1.6)
(15.7)
(1.1)
$
$
$
$
(269.8)
136.4
22.5
158.9
(110.9)
$
$
(636.7)
(197.3)
(197.3)
(834.0)
pension
plans
foreign
currency
translation
(457.6)
(179.1)
(578.1)
262.9
45.4
308.3
(269.8)
$
$
total
(921.1)
(93.6)
61.3
(32.3)
(953.4)
$
$
total
$ (1,050.3)
109.6
19.6
(179.1)
(636.7)
129.2
(921.1)
$
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
79
total
$ (1,100.1)
(56.5)
106.3
derivative
contracts
marketable
debt
securities
pension
plans
foreign
currency
translation
Balance at January 1, 2020
Recorded into AOCI
Reclassified out of AOCI
Net other comprehensive
(loss) income
Balance at December 31, 2020
$
$
(15.3)
(78.4)
64.5
(13.9)
(29.2)
$
$
6.1
10.3
(1.8)
8.5
14.6
$
$
(517.7)
(104.0)
43.6
(60.4)
(578.1)
$
$
(573.2)
115.6
115.6
(457.6)
49.8
$ (1,050.3)
Reclassifications out of AOCI during the years ended December 31, 2022, 2021 and 2020 were as follows:
aoci components
Unrealized losses and (gains) on derivative contracts:
Truck, Parts and Other
line item in the consolidated statements
of income
amount reclassified out of aoci
2022
2021
2020
Net sales and revenues
Cost of sales and revenues
Interest and other (income), net
Cost of sales and revenues
$
$
19.3
(15.3)
(1.4)
32.0
$
16.6
(1.0)
(.1)
.6
(4.0)
1.7
(4.6)
Foreign-exchange contracts
Commodity contracts
Financial Services
Foreign-exchange contracts
Interest-rate contracts
Interest and other borrowing expenses
Interest and other borrowing expenses
Pre-tax expense increase (reduction)
Tax (benefit) expense
After-tax expense increase (reduction)
Unrealized gains on marketable debt securities:
Marketable debt securities
Investment income
Tax expense
After-tax income increase
Unrealized losses on pension plans:
Truck, Parts and Other
Actuarial loss
Prior service costs
Settlement loss
Interest and other (income), net
Interest and other (income), net
Interest and other (income), net
Pre-tax expense increase
Tax benefit
After-tax expense increase
Total reclassifications out of AOCI
$
7.3
6.1
48.0
(8.0)
40.0
(1.6)
.4
(1.2)
28.9
.7
29.6
(7.1)
22.5
61.3
$
(49.8)
(33.7)
9.5
(24.2)
(2.1)
.5
(1.6)
58.7
.8
59.5
(14.1)
45.4
19.6
$
94.5
87.6
(23.1)
64.5
(2.4)
.6
(1.8)
44.2
1.5
11.6
57.3
(13.7)
43.6
106.3
Other Capital Stock Changes: The Company purchased and retired treasury shares of nil in 2022 and 2021, and .7
million in 2020.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
80
P.
D E R I VAT I V E F I N A N C I A L I N S T R U M E N T S
As part of its risk management strategy, the Company enters into derivative contracts to hedge against the risk 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, 2022, the notional amount of the Company’s interest-rate contracts was $3,023.1. Notional maturities
for all interest-rate contracts are $679.3 for 2023, $604.4 for 2024, $1,039.3 for 2025, $409.1 for 2026, $176.1 for 2027
and $114.9 thereafter.
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, 2022, the notional amount of the outstanding foreign-exchange contracts was $2,250.8.
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, 2022, the notional amount of the
outstanding commodity contracts was $32.3. Commodity contracts mature within one year.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions) The following table presents the balance sheet classification, fair value, gross and pro forma net amounts of derivative
financial instruments:
81
At December 31,
Derivatives designated under hedge accounting:
Interest-rate contracts:
Financial Services:
Other assets
Deferred taxes and other liabilities
Foreign-exchange contracts:
Truck, Parts and Other:
Other current assets
Accounts payable, accrued expenses and other
Financial Services:
Other current assets
Deferred taxes and other liabilities
Commodity contracts:
Truck, Parts and Other:
Other current assets
Accounts payable, accrued expenses and other
Derivatives not designated as hedging instruments:
Foreign-exchange contracts:
Truck, Parts and Other:
Other current assets
Accounts payable, accrued expenses and other
Financial Services:
Other assets
Deferred taxes and other liabilities
Commodity contracts:
Truck, Parts and Other:
Accounts payable, accrued expenses and other
Gross amounts recognized in Balance Sheet
Less amounts not offset in financial instruments:
Truck, Parts and Other:
Foreign-exchange contracts
Commodity contracts
Financial Services:
Foreign-exchange contracts
Interest-rate contracts
Pro forma net amount
2022
2021
assets liabilities
assets liabilities
$ 58.0
$ 30.8
$ 82.6
$ 54.4
9.5
5.1
25.3
2.5
15.8
.1
57.3
1.6
1.5
$ 118.4
.6
$ 97.8
$ 58.6
16.9
$ 87.2
$
1.0
$
1.0
$
.1
$
1.1
.1
.2
$
.4
$ 98.2
$
(.1)
(.5)
(1.8)
(21.5)
$ 74.3
$
1.0
$ 119.4
$
(.1)
(.5)
(1.8)
(21.5)
$ 95.5
.1
.2
$
1.1
$ 59.7
$
1.3
$ 88.5
$ (2.7)
$ (2.7)
(.2)
(12.8)
$ 44.0
(.2)
(12.8)
$ 72.8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
82
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,
2022
2021
2020
interest-
rate
foreign-
exchange
interest-
rate
foreign-
exchange
interest-
rate
foreign-
exchange
Truck, Parts and Other:
Net sales and revenues
Cash flow hedges
Cost of sales and revenues
Cash flow hedges
Derivatives not designated as
hedging instruments
Interest and other (income), net
Cash flow hedges
Net investment hedges
Derivatives not designated as
hedging instruments
Financial Services:
Interest and other borrowing expenses
Cash flow hedges
Fair value hedges
Derivatives not designated as
hedging instruments
Selling, general and administrative
Derivatives not designated as
hedging instruments
Total
$
$
$
$
19.3
$
16.6
$
(4.0)
(15.3)
(1.7)
(1.4)
(5.8)
.8
(4.1)
(1.0)
8.9
(.1)
(3.2)
1.9
23.1
$
7.3
$
(49.8)
.4
$
94.5
1.1
(8.1)
$
(.5)
$
$
6.1
1.0
7.1
7.1
$
$
(.8) $
(4.9) $
(49.4) $
(49.4) $
(.5) $
$
22.6
95.6
95.6
1.7
.7
(4.6)
(5.6)
2.3
(9.5)
9.4
.8
10.2
.7
$
$
$
$
The Company began commodity hedging in 2021. The loss from commodity contracts recorded in cost of sales
and revenue was $31.8 and $.6 for the year ended 2022 and 2021, 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,
Financial Services
Term notes:
Carrying amount of hedged liabilities
Cumulative basis adjustment included in the carrying amount
2022
2021
$ 319.8 $
27.7
472.0
8.7
The above table excludes the cumulative basis adjustments on discontinued hedge relationships of $7.1 and $.1 as of
December 31, 2022 and 2021, respectively.
Cash Flow Hedges
Substantially all of the Company’s interest-rate contracts and some foreign-exchange contracts have been designated as
cash flow hedges. Changes in the fair value of derivatives designated as cash flow hedges are recorded in AOCI. Amounts
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
in AOCI are reclassified into net income in the same period in which the hedged transaction affects earnings. The
maximum length of time over which the Company is hedging its exposure to the variability in future cash flows is 9.9
years.
83
The following table presents the pre-tax effects of gain (loss) on cash flow hedges recognized in other comprehensive
income (loss) (OCI):
Year Ended December 31,
2022
2021
2020
Gain (loss) recognized in OCI:
Truck, Parts and Other
Financial Services
interest-
rate
foreign-
exchange
interest-
rate
foreign-
exchange
interest-
rate
foreign-
exchange
$
$
19.1
19.1
$
$
41.2
(25.5)
15.7
$
$
$
$
(18.5)
(1.9)
(20.4)
83.2
83.2
$
$
(107.3)
(107.3)
$
$
2.8
(.8)
2.0
The pre-tax effects of loss on commodity hedges recognized in other comprehensive income (loss) (OCI) for Truck,
Parts and Other was $17.1 and $8.6 in 2022 and 2021, respectively.
The amount of gain recorded in AOCI at December 31, 2022 that is estimated to be reclassified into earnings in the
following 12 months if interest rates and exchange rates remain unchanged is approximately $18.3, 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 gains (losses) reclassified out of AOCI into net income based on the probability that the original
forecasted transactions would not occur was $1.0 for the year ended December 31, 2022, $.1 for the year ended
December 31, 2021 and nil for year ended December 31, 2020.
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 hedge was
$347.0 and $360.7 at December 31, 2022 and 2021, respectively. The pre-tax gain recognized in OCI for the net
investment hedges was $28.8 and $26.6 at December 31, 2022 and 2021, respectively.
Q . F A I R VA L U E M E A S U R E M E N T S
Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Inputs to valuation techniques used to measure fair value are either
observable or unobservable. These inputs have been categorized into the fair value hierarchy described below.
Level 1 – Valuations are based on quoted prices that the Company has the ability to obtain in actively traded
markets for identical assets or liabilities. Since valuations are based on quoted prices that are readily and regularly
available in an active market or exchange traded market, valuation of these instruments does not require a
significant degree of judgment.
Level 2 – Valuations are based on quoted prices for similar instruments in active markets, quoted prices for
identical or similar instruments in markets that are not active and model-based valuation techniques for which all
significant assumptions are observable in the market.
Level 3 – Valuations are based on model-based techniques for which some or all of the assumptions are obtained
from indirect market information that is significant to the overall fair value measurement and which require a
significant degree of management judgment.
There were no transfer of assets or liabilities between Level 1 and Level 2 of the fair value hierarchy during the year ended
December 31, 2022. The Company’s policy is to recognize transfers between levels at the end of the reporting period.
The Company uses the following methods and assumptions to measure fair value for assets and liabilities subject to
recurring fair value measurements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
84
Marketable Debt Securities: The Company’s marketable debt securities consist of municipal bonds, government
obligations, investment-grade corporate obligations, commercial paper, asset-backed securities and term deposits. The
fair value of U.S. government obligations is determined using the market approach and is based on quoted prices in
active markets and are categorized as Level 1.
The fair value of U.S. government agency obligations, 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, 2022
Assets:
Marketable debt securities
U.S. tax-exempt securities
U.S. taxable municipal / non-U.S. provincial bonds
U.S. corporate securities
U.S. government and agency securities
Non-U.S. corporate securities
Non-U.S. government securities
Other debt securities
Total marketable debt securities
Marketable equity securities
Total marketable securities
Derivatives
Cross currency swaps
Interest-rate swaps
Foreign-exchange contracts
Commodity swaps
Total derivative assets
Liabilities:
Derivatives
Cross currency swaps
Interest-rate swaps
Foreign-exchange contracts
Commodity contracts
Total derivative liabilities
level 1
level 2
total
$
115.0
$
$
$
115.0
1.2
116.2
$
445.1
180.8
251.0
450.0
76.4
94.7
$ 1,498.0
$ 1,498.0
$
$
$
$
49.1
8.9
59.9
1.5
119.4
52.0
30.6
14.8
.8
98.2
$
445.1
180.8
251.0
115.0
450.0
76.4
94.7
$ 1,613.0
1.2
$
$ 1,614.2
$
$
$
$
49.1
8.9
59.9
1.5
119.4
52.0
30.6
14.8
.8
98.2
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
At December 31, 2021
Assets:
Marketable debt securities
U.S. tax-exempt securities
U.S. taxable municipal / non-U.S. provincial bonds
U.S. corporate securities
U.S. government and agency securities
Non-U.S. corporate securities
Non-U.S. government securities
Other debt securities
Total marketable debt securities
Marketable equity securities
Total marketable securities
Derivatives
Cross currency swaps
Interest-rate swaps
Foreign-exchange contracts
Total derivative assets
Liabilities:
Derivatives
Cross currency swaps
Interest-rate swaps
Foreign-exchange contracts
Commodity contracts
Total derivative liabilities
level 1
level 2
total
85
$
96.4
$
$
$
96.4
13.7
110.1
$
432.5
191.6
207.4
442.8
75.0
100.0
$ 1,449.3
$ 1,449.3
$
$
$
$
18.2
12.6
28.9
59.7
33.1
21.3
17.2
16.9
88.5
$
432.5
191.6
207.4
96.4
442.8
75.0
100.0
$ 1,545.7
$
13.7
$ 1,559.4
$
$
$
$
18.2
12.6
28.9
59.7
33.1
21.3
17.2
16.9
88.5
Fair Value Disclosure of Other Financial Instruments
For financial instruments that are not recognized at fair value, the Company uses the following methods and
assumptions to determine the fair value. These instruments are categorized as Level 2, except cash which is categorized
as Level 1 and fixed rate loans which are categorized as Level 3.
Cash and Cash Equivalents: Carrying amounts approximate fair value.
Financial Services Net Receivables: For floating-rate loans, wholesale 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
86
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,
2022
2021
carrying
amount
fair
value
carrying
amount
fair
value
Assets:
Financial Services fixed rate loans
$ 6,859.1
$ 6,582.0
$ 6,011.7
$ 6,018.2
Liabilities:
Financial Services fixed rate debt
8,070.5
7,715.9
6,905.7
6,935.1
R .
S T O C K C O M P E N S AT I O N P L A N S
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. Consequently, the following data has been restated to reflect
the Company’s 50% stock dividend in February 2023. 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, 2022, the maximum
number of shares available for future grants was 16.0 million.
The assumptions used in determining the fair value of the option awards for each of the grant years are as follows:
Risk-free interest rate
Expected volatility
Expected dividend yield
Expected term
Weighted average grant date fair value of options per share
2022
1.86%
26%
4.3%
6 years
$ 9.70
2021
.71%
26%
3.6%
6 years
$ 9.48
2020
1.54%
23%
4.1%
6 years
$ 6.68
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 $8.3, $8.1 and $6.4 for the years ended December 31, 2022, 2021 and 2020,
respectively. The fair value of options vested was $5.6 during the years ended December 31, 2022 and 2021, and
was $5.0 during the year ended December 31, 2020.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions, except per share data)
A summary of activity under the Company’s stock plans is presented below:
87
Intrinsic value of options exercised
Cash received from stock option exercises
Tax benefit related to stock award exercises
Stock-based compensation
Tax benefit related to stock-based compensation
$
2022
17.8
35.8
2.6
17.1
1.7
$
2021
25.4
38.4
4.9
14.7
1.6
$
2020
26.9
53.8
3.8
13.0
1.6
The summary of options as of December 31, 2022 and changes during the year then ended are presented below:
Options outstanding at January 1
Granted
Exercised
Cancelled
Options outstanding at December 31
Vested and expected to vest
Exercisable
* Weighted Average
number
of shares
4,316,800
858,000
(846,700)
(122,900)
4,205,200
4,094,000
1,843,200
per share
exercise
price*
remaining
contractual
life in years*
aggregate
intrinsic
value
$
$
$
$
47.27
62.75
42.31
58.15
51.10
50.79
42.01
6.37
6.30
4.13
$ 62.6
$ 62.2
$ 44.2
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, 2022 and changes during the year then ended is presented below:
nonvested shares
Nonvested awards outstanding at January 1
Granted
Vested
Nonvested awards outstanding at December 31
* Weighted Average
number
of shares
grant date
fair value*
231,800
162,800
(153,100)
241,500
$ 53.44
62.27
52.97
$ 59.69
As of December 31, 2022, there was $6.7 of total unrecognized compensation cost related to nonvested stock options,
which is recognized over a remaining weighted average vesting period of 1.54 years. Unrecognized compensation cost
related to nonvested restricted stock awards of $2.4 is expected to be recognized over a remaining weighted average
vesting period of 1.28 years.
The dilutive and antidilutive options are shown separately in the table below:
Year Ended December 31,
Additional shares
Antidilutive options
2022
769,100
1,653,600
2021
973,300
883,800
2020
911,700
1,029,200
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions, except per share data)
88
S .
S E G M E N T A N D R E L AT E D I N F O R M AT I O N
PACCAR operates in three principal segments: Truck, Parts and Financial Services. The Company 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.
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions) Other: Included in Other is the Company’s industrial winch manufacturing business as well as sales, income and
expenses not attributable to a reportable segment. Other also includes non-service cost components of pension
expense and a portion of corporate expenses. Intercompany interest income (expense) on cash advances with the
financial services companies is included in Other and was $(1.9), $.4 and $1.4 for 2022, 2021 and 2020, respectively.
89
Geographic Area Data
Net sales and revenues:
United States
Europe
Other
Property, plant and equipment, net:
United States
Belgium
The Netherlands
Other
Equipment on operating leases, net:
United States
Spain
Mexico
Germany
France
Poland
United Kingdom
Other
2022
2021
2020
$ 15,379.2
7,486.5
5,954.0
$ 28,819.7
$ 1,831.7
572.8
534.1
529.8
$ 3,468.4
$
846.9
316.3
314.5
280.9
260.7
245.8
87.1
451.1
$ 2,803.3
$ 12,388.8
6,325.4
4,808.1
$ 23,522.3
$ 1,718.5
620.5
516.1
543.0
$ 3,398.1
$ 1,003.0
291.8
285.7
307.1
299.7
337.9
113.7
550.0
$ 3,188.9
$ 10,526.6
4,871.2
3,330.7
$ 18,728.5
$ 1,633.0
596.2
499.0
542.2
$ 3,270.4
$ 1,219.0
310.8
302.3
346.4
349.7
359.4
125.4
571.7
$ 3,584.7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
90
Business Segment Data
Net sales and revenues:
Truck
Less intersegment
External customers
Parts
Less intersegment
External customers
Other
Financial Services
Income (loss) before income taxes:
Truck
Parts
Other
Financial Services
Investment income
Depreciation and amortization:
Truck
Parts
Other
Financial Services
Expenditures for long-lived assets:
Truck
Parts
Other
Financial Services
Segment assets:
Truck
Parts
Other
Cash and marketable securities
Financial Services
2022
2021
2020
$ 22,005.5
(519.3)
21,486.2
$ 17,379.0
(579.3)
16,799.7
$ 13,643.0
(478.2)
13,164.8
5,829.4
(65.1)
5,764.3
63.8
27,314.3
1,505.4
$ 28,819.7
$ 1,753.3
1,446.6
(1.1)
3,198.8
588.9
61.0
$ 3,848.7
$
$
324.9
14.0
23.9
362.8
427.4
790.2
$
466.0
21.1
28.6
515.7
854.8
$ 1,370.5
$ 7,218.1
1,742.1
976.8
6,158.9
16,095.9
17,179.6
$ 33,275.5
5,004.8
(60.5)
4,944.3
3,962.7
(49.8)
3,912.9
90.5
21,834.5
1,687.8
$ 23,522.3
$
804.9
1,110.0
28.3
1,943.2
437.6
15.5
$ 2,396.3
$
$
277.6
12.0
21.9
311.5
591.8
903.3
$
547.2
29.4
24.1
600.7
984.8
$ 1,585.5
$ 6,912.1
1,505.1
860.3
4,813.0
14,090.5
15,418.9
$ 29,509.4
76.6
17,154.3
1,574.2
$ 18,728.5
$
578.2
802.0
22.4
1,402.6
223.1
35.9
$ 1,661.6
$
292.2
10.8
20.8
323.8
725.2
$ 1,049.0
$
556.0
18.4
36.4
610.8
1,046.7
$ 1,657.5
$ 5,971.9
1,255.6
588.7
4,834.0
12,650.2
15,799.8
$ 28,450.0
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2022, 2021 and 2020 (currencies in millions)
M A N A G E M E N T ’ S R E P O R T O N I N T E R N A L C O N T R O L O V E R
F I N A N C I A L R E P O R T I N G
91
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, 2022, 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, 2022.
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 93.
R. Preston Feight
Chief Executive Officer
R E P O R T O F I N D E P E N D E N T R E G I S T E R E D P U B L I C A C C O U N T I N G F I R M
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, 2022 and
2021, 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, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2022, 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, 2022, 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 22, 2023, 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.
R E P O R T O F I N D E P E N D E N T R E G I S T E R E D P U B L I C A C C O U N T I N G F I R M
92
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 $438 million at December 31, 2022. 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.
How We
Addressed
the Matter
in Our Audit
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.
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.
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
evaluating the methodologies and assumptions used in the warranty accrual calculation. We also
assessed the historical accuracy of management’s estimates through a hindsight analysis.
We have served as the Company’s auditor since 1945
Seattle, Washington
February 22, 2023
R E P O R T O F I N D E P E N D E N T R E G I S T E R E D P U B L I C A C C O U N T I N G F I R M
To the Stockholders and the Board of Directors of PACCAR Inc
93
Opinion on Internal Control Over Financial Reporting
We have audited PACCAR Inc’s internal control over financial reporting as of December 31, 2022, 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, 2022,
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, 2022 and 2021, 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, 2022, and the related notes and our report dated February 22,
2023, 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.
Seattle, Washington
February 22, 2023
M A R K E T R I S K S A N D D E R I V A T I V E I N S T R U M E N T S
(currencies in millions)
94
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
C O N S O L I D AT E D :
Assets
Cash equivalents and marketable debt securities
F I N A N C I A L S E RV I C E S:
Assets
Fixed rate loans
Liabilities
Fixed rate term debt
Interest-rate swaps
Total
2022
2021
$
(26.7)
$
(26.7)
(117.4)
(110.5)
136.6
6.4
(1.1)
$
127.6
4.5
(5.1)
$
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 $216.6 related to contracts outstanding at
December 31, 2022, compared to a loss of $210.8 at December 31, 2021. 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 a loss of $2.5 related to contracts outstanding at
December 31, 2022, compared to a loss of $18.4 at December 31, 2021. These amounts would be largely offset by
changes in the values of the underlying hedged exposures.
O F F I C E R S A N D D I R E C T O R S
O F F I C E R S
Mark C. Pigott
Executive Chairman
R. Preston Feight
Chief Executive Officer
Harrie C.A.M. Schippers
President and Chief Financial Officer
C. Michael Dozier
Executive Vice President
Darrin C. Siver
Executive Vice President
Michael T. Barkley
Senior Vice President and Controller
Ronald R. Augustyn (retired 3/1/2023)
Vice President
Kevin D. Baney
Vice President
Laura J. Bloch
Vice President
Paulo H. Bolgar
Vice President and
Chief Human Resources Officer
Brennan G. Gourdie
Vice President
Craig R. Gryniewicz
Vice President
Todd R. Hubbard
Vice President
A. Lily Ley
Vice President and
Chief Information Officer
John N. Rich
Vice President and
Chief Technology Officer
Harald P. Seidel
Vice President
95
Raja Shembekar
Vice President
Daryl E. Simon
Vice President
Jason P. Skoog
Vice President
Michael K. Walton
Vice President and General Counsel
Harry M.B. Wolters
Vice President
Michael K. Kuester
Assistant Vice President
Ulrich Kammholz
Treasurer
Michael R. Beers
Corporate Secretary
D I R E C T O R S
Mark C. Pigott
Executive Chairman
PACCAR Inc (3)
R. Preston Feight
Chief Executive Officer
PACCAR Inc
Dame Alison J. Carnwath
Senior Adviser
Evercore Partners (1, 4)
Franklin L. Feder
Former Chief Executive Officer
Alcoa Latin America & Caribbean
of Alcoa Inc. (1)
Beth E. Ford (retired 4/24/2023)
President and Chief Executive Officer
Land O’Lakes, Inc. (2, 4)
Ganesh Ramaswamy
Executive Vice President,
Industrial and Energy Technology
Baker Hughes Company (2)
Kirk S. Hachigian
Retired Chairman and
Chief Executive Officer
JELD-WEN Holding, Inc. (2)
Roderick C. McGeary
Former Vice Chairman
KPMG LLP (1, 4)
John M. Pigott
Partner
Beta Business Ventures LLC (3)
Mark A. Schulz (Lead Director)
Retired President,
International Operations
Ford Motor Company (3, 4)
Gregory M. E. Spierkel
Former Chief Executive Officer
Ingram Micro Inc. (1, 2)
C O M M I T T E E S O F T H E B O A R D
(1) Audit Committee
(2) Compensation Committee
(3) Executive Committee
(4) Nominating and Governance Committee
96
T R U C K S
Kenworth Truck Company
Division Headquarters:
10630 N.E. 38th Place
Kirkland, Washington 98033
Factories:
Chillicothe, Ohio
Renton, Washington
Peterbilt Motors Company
Division Headquarters:
1700 Woodbrook Street
Denton, Texas 76205
Factory:
Denton, Texas
PACCAR of Canada Ltd.
Markborough Place I
6711 Mississauga Road North
Mississauga, Ontario
L5N 4J8 Canada
Factory:
Ste.-Thérèse, Quebec, Canada
Canadian Kenworth
Company
Division Headquarters:
Markborough Place I
6711 Mississauga Road North
Mississauga, Ontario
L5N 4J8 Canada
Peterbilt of Canada
Division Headquarters:
Markborough Place I
6711 Mississauga Road North
Mississauga, Ontario
L5N 4J8 Canada
DAF Caminhões Brasil
Indústria Ltda.
Avenida Senador Flávio
Carvalho Guimarães, 6000
Bairro Boa Vista
CEP 84072-190
Ponta Grossa, Paraná, Brasil
Factory:
Ponta Grossa, Paraná, Brasil
DAF Trucks N.V.
Hugo van der Goeslaan 1
P.O. Box 90065
5600 PT Eindhoven
The Netherlands
Factories:
Eindhoven, The Netherlands
Westerlo, Belgium
D I V I S I O N S A N D S U B S I D I A R I E S
Leyland Trucks Ltd.
Croston Road
Leyland, Preston
Lancashire PR26 6LZ
United Kingdom
Factory:
Leyland, Lancashire,
United Kingdom
Kenworth Mexicana,
S.A. de C.V.
Calzada Gustavo Vildósola
Castro 2000
Mexicali, Baja California
Mexico
Factory:
Mexicali, Baja California
Mexico
PACCAR
Australia Pty. Ltd.
Division Headquarters:
64 Canterbury Road
Bayswater, Victoria 3153
Australia
Factory:
Bayswater, Victoria, Australia
T R U C K P A R T S
A N D S U P P L I E S
PACCAR Engine Company
1000 PACCAR Drive
Columbus, Mississippi 39701
Factory:
Columbus, Mississippi
PACCAR Parts
Division Headquarters:
750 Houser Way North
Renton, Washington 98057
Distribution Centers:
Atlanta, Georgia
Bayswater, Australia
Brisbane, Australia
Budapest, Hungary
Eindhoven, The Netherlands
Lancaster, Pennsylvania
Las Vegas, Nevada
Louisville, Kentucky
Leyland, United Kingdom
Madrid, Spain
Montreal, Canada
Oklahoma City, Oklahoma
Panama City, Panama
Ponta Grossa, Brasil
Renton, Washington
Rockford, Illinois
San Luis Potosí, Mexico
Toronto, Canada
Dynacraft
Division Headquarters:
3490 Redbud Boulevard
McKinney, Texas 75069
Factories:
Louisville, Kentucky
McKinney, Texas
W I N C H E S
PACCAR Winch Inc
800 East Dallas Street
Broken Arrow, Oklahoma
74012
Factories:
Broken Arrow, Oklahoma
Okmulgee, Oklahoma
P R O D U C T T E S T I N G ,
R E S E A R C H A N D
D E V E L O P M E N T
PACCAR Technical Center
12479 Farm to Market Road
Mount Vernon, Washington
98273
DAF Trucks Test Center
Weverspad 2
5491 RL Sint-Oedenrode
The Netherlands
PACCAR Innovation Center
1277 Reamwood Avenue
Sunnyvale, California 94089
PACCAR India Technical
Center
IT3, 3rd Floor,
Blue Ridge SEZ, S 123,
Rajiv Gandhi Info Tech Park
Hinjewadi, Phase -1, Pune
Maharashtra, 411057 India
PACCAR North Texas
2501 South State Highway 121
Lewisville, Texas 75076
P A C C A R F I N A N C I A L
S E R V I C E S G R O U P
PACCAR Financial Corp.
PACCAR Building
777 106th Avenue N.E.
Bellevue, Washington 98004
PACCAR Leasing Company
Division of PACCAR
Financial Corp.
PACCAR Building
777 106th Avenue N.E.
Bellevue, Washington 98004
PACCAR Financial
Europe B.V.
Hugo van der Goeslaan 1
P.O. Box 90065
5600 PT Eindhoven
The Netherlands
PACCAR Financial
México, S.A. de C.V.
Calzada Gustavo Vildósola
Castro 2000
Mexicali, Baja California
Mexico
PacLease Mexicana
S.A. de C.V.
Calzada Gustavo Vildósola
Castro 2000
Mexicali, Baja California
Mexico
PACCAR Financial
Services Ltd.
Markborough Place I
6711 Mississauga Road North
Mississauga, Ontario
L5N 4J8 Canada
PACCAR Financial
Pty. Ltd.
64 Canterbury Road
Bayswater, Victoria 3153
Australia
PACCAR Financial
PLC
Haddenham Business Park
Pegasus Way
Haddenham HP17 8LJ
United Kingdom
Banco PACCAR S.A.
Avenida Senador Flávio
Carvalho Guimarães, 6000
Bairro Boa Vista
CEP 84072-190
Ponta Grossa, Paraná, Brasil
P A C C A R G L O B A L S A L E S
Division Headquarters:
10630 N.E. 38th Place
Kirkland, Washington 98033
Office:
Shanghai, People’s Republic
of China
S T A T E M E N T O F C O M P A N Y B U S I N E S S
S T O C K H O L D E R S ’
I N F O R M A T I O N
PACCAR is a global technology company that designs and manufactures premium
quality light, medium and heavy duty commercial vehicles sold worldwide under
the Kenworth, Peterbilt and DAF nameplates. PACCAR designs and manufactures
diesel engines and other powertrain components for use in its own products and
for sale to third party manufacturers of trucks and buses. PACCAR distributes
aftermarket truck parts to its dealers through a worldwide network of Parts
Distribution Centers. Finance and leasing subsidiaries facilitate the sale of
PACCAR products in many countries worldwide. PACCAR manufactures and
markets industrial winches under the Braden, Carco and Gearmatic nameplates.
PACCAR maintains exceptionally high standards of quality for all of its products:
they are well engineered, highly customized for specific applications and sell in
the premium segments of their markets, where they have a reputation for superior
performance and pride of ownership.
CONTENTS
1
Financial Highlights
52 Notes to Consolidated Financial Statements
3 Message from the Executive Chairman
91
Management’s Report on Internal Control
4 Message from the Chief Executive Officer
Over Financial Reporting
8 PACCAR Operations
26 Financial Charts
27 Stockholder Return Performance Graph
91 Report of Independent Registered Public
Accounting Firm on the Company’s
Consolidated Financial Statements
28 Management’s Discussion and Analysis
93 Report of Independent Registered Public
46 Consolidated Statements of Income
Accounting Firm on the Company’s
47 Consolidated Statements
of Comprehensive Income
48 Consolidated Balance Sheets
Internal Control Over Financial Reporting
94 Market Risks and Derivative Instruments
95 Officers and Directors
50 Consolidated Statements of Cash Flows
96 Divisions and Subsidiaries
51 Consolidated Statements
of Stockholders’ Equity
Corporate Offices
PACCAR Building
777 106th Avenue N.E.
Bellevue, Washington
98004
Mailing Address
P.O. Box 1518
Bellevue, Washington
98009
Telephone
425.468.7400
Facsimile
425.468.8216
Website
www.paccar.com
Stock Transfer
and Dividend
Dispersing Agent
Equiniti Trust Company
Shareowner Services
P.O. Box 64854
St. Paul, Minnesota
55164-0854
800.468.9716
www.shareowneronline.com
PACCAR’s transfer agent
maintains the company’s
shareholder records, issues
stock certificates and
distributes dividends and
IRS Forms 1099. Requests
concerning these matters
should be directed to
Equiniti.
Online Delivery of
Annual Report and Proxy
Statement
PACCAR’s 2022 Annual
Report and the 2023 Proxy
Statement are available on
PACCAR’s website at
www.paccar.com/
2023annualmeeting
Stockholders who hold
PACCAR stock in street
name may inquire of their
bank or broker about the
availability of electronic
delivery of annual
meeting documents.
Trademarks Owned by
PACCAR Inc and its
Subsidiaries
Braden, Carco, DAF,
EPIQ, Gearmatic, Kenmex,
Kenworth, Leyland, Online
Parts Counter, PACCAR,
PACCAR Connect,
PACCAR MX-11, PACCAR
MX-13, PACCAR PX,
PACCAR TX-8, PACCAR
TX-18, PacFuel, PacLease,
PacLink, PacTax, PacTrac,
PacTrainer, Peterbilt,
Peterbilt ARTech, The
World’s Best, TRP,
TruckTech+, SmartNav,
SmartLINQ and UltraLoft.
Independent Auditors
Ernst & Young LLP
Seattle, Washington
SEC Form 10-K
PACCAR’s annual report
to the Securities and
Exchange Commission
will be furnished to
stockholders on request
to the Corporate
Secretary, PACCAR Inc,
P.O. Box 1518, Bellevue,
Washington 98009. It is
also available online at
www.paccar.com/investors/
investor_resources.asp,
under SEC Filings or
on the SEC’s website at
www.sec.gov.
Annual Stockholders’
Meeting
April 25, 2023, 10:30 a.m.
PACCAR Parts Distribution
Center
405 Houser Way North
Renton, Washington
98057
An Equal Opportunity
Employer
This report was printed
on recycled paper.
2 0 2 2 A N N U A L R E P O R T