10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2014

Commission File No. 001-11677

PACCAR FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

Washington	91-6029712
(State of incorporation)	(I.R.S. Employer Identification No.)
777 – 106th Ave. N.E., Bellevue, Washington	98004
(Address of principal executive offices)	(Zip code)

(425) 468-7100

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

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

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

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

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

Common Stock, $100 par value – 145,000 shares as of October 31, 2014

THE REGISTRANT IS A WHOLLY OWNED DIRECT SUBSIDIARY OF PACCAR INC (“PACCAR”) AND MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS (H)(1)(a) and (b) OF FORM 10-Q AND IS, THEREFORE, FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.

PACCAR FINANCIAL CORP. – FORM 10-Q

INDEX

		Page
PART I. FINANCIAL INFORMATION:
ITEM 1.	FINANCIAL STATEMENTS:
Statements of Comprehensive Income and Retained Earnings – Three and Nine Months Ended September 30, 2014 and 2013 (Unaudited)			3
Balance Sheets – September 30, 2014 (Unaudited) and December 31, 2013			4
Statements of Cash Flows – Nine Months Ended September 30, 2014 and 2013 (Unaudited)			5
Notes to Financial Statements (Unaudited)			6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		22
ITEM 4.	CONTROLS AND PROCEDURES		30
PART II. OTHER INFORMATION:
ITEM 1.	LEGAL PROCEEDINGS		31
ITEM 1A.	RISK FACTORS		31
ITEM 6.	EXHIBITS		31
SIGNATURES			32
EXHIBIT INDEX			33

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PACCAR FINANCIAL CORP. - FORM 10-Q

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

STATEMENTS OF COMPREHENSIVE INCOME AND RETAINED EARNINGS (Unaudited)

(Millions of Dollars)

	Three Months Ended				Nine Months Ended
	September 30				September 30
	2014		2013		2014		2013
Interest and fee income	$	54.7	$	52.0	$	158.4	$	154.4
Operating lease and rental revenue		83.9		75.8		242.3		216.9
Used truck sales and other revenue		4.8		7.9		17.2		37.9
TOTAL INTEREST AND OTHER REVENUE		143.4		135.7		417.9		409.2
Interest and other borrowing costs		15.1		15.8		45.2		48.5
Depreciation and other rental expenses		67.3		61.0		196.2		175.4
Cost of used truck sales and other expenses		3.1		5.7		11.5		33.6
Selling, general and administrative expenses		11.5		10.8		33.8		32.2
Provision for losses on receivables		.5		1.5		3.4		5.9
TOTAL EXPENSES		97.5		94.8		290.1		295.6
INCOME BEFORE INCOME TAXES		45.9		40.9		127.8		113.6
Income taxes		19.8		15.5		51.0		43.1
NET INCOME	$	26.1	$	25.4	$	76.8	$	70.5
COMPREHENSIVE INCOME	$	29.0	$	25.6	$	79.6	$	74.4
RETAINED EARNINGS AT BEGINNING OF PERIOD	$	845.3	$	740.5	$	794.6	$	695.4
RETAINED EARNINGS AT END OF PERIOD	$	871.4	$	765.9	$	871.4	$	765.9

Earnings per share and dividends per share are not reported because the Company is a wholly owned subsidiary of PACCAR.

See Notes to Financial Statements.

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PACCAR FINANCIAL CORP. - FORM 10-Q

BALANCE SHEETS

(Millions of Dollars)

	September 30 2014		December 31 2013*
	(Unaudited)
ASSETS
Cash	$	30.4	$	33.5
Finance and other receivables, net of allowance for losses (2014 – $56.2 and 2013 – $55.3)		4,781.3		4,528.1
Due from PACCAR and affiliates		1,326.0		1,367.3
Equipment on operating leases, net of accumulated depreciation (2014 – $493.8 and 2013 – $455.8)		1,282.8		1,188.5
Other assets		196.3		130.2
TOTAL ASSETS	$	7,616.8	$	7,247.6
LIABILITIES
Accounts payable, accrued expenses and other	$	226.5	$	211.2
Due to PACCAR and affiliates		25.2		259.4
Commercial paper		1,704.0		1,149.8
Medium-term notes		3,849.5		3,849.9
Deferred taxes and other liabilities		782.9		832.3
TOTAL LIABILITIES	$	6,588.1	$	6,302.6
STOCKHOLDER’S EQUITY
Preferred stock, par value $100 per share, 6% noncumulative and nonvoting, 450,000 shares authorized, 310,000 shares issued and outstanding	$	31.0	$	31.0
Common Stock, par value $100 per share, 200,000 shares authorized, 145,000 shares issued and outstanding		14.5		14.5
Additional paid-in capital		111.7		107.6
Retained earnings		871.4		794.6
Accumulated other comprehensive income (loss)		.1		(2.7	)
TOTAL STOCKHOLDER’S EQUITY	$	1,028.7	$	945.0
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY	$	7,616.8	$	7,247.6

* The December 31, 2013 balance sheet has been derived from audited financial statements.

See Notes to Financial Statements.

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PACCAR FINANCIAL CORP. - FORM 10-Q

STATEMENTS OF CASH FLOWS (Unaudited)

(Millions of Dollars)

	Nine Months Ended September 30
	2014			2013
OPERATING ACTIVITIES
Net income	$	76.8		$	70.5
Items included in net income not affecting cash:
Depreciation and amortization		180.7			162.3
Provision for losses on receivables		3.4			5.9
Deferred taxes		(41.2	)		33.8
Administrative fees for services from PACCAR		4.1			2.8
Increase in payables and other		81.8			26.3
NET CASH PROVIDED BY OPERATING ACTIVITIES		305.6			301.6
INVESTING ACTIVITIES
Finance and other receivables originated		(1,358.7	)		(1,282.7	)
Collections on finance and other receivables		1,187.1			1,133.1
Net (increase) decrease in wholesale receivables		(103.7	)		62.9
Loans to PACCAR and affiliates		(125.0	)		(395.5	)
Collection on loans from PACCAR and affiliates		45.0			220.5
Net decrease (increase) in other receivables and leases to PACCAR and affiliates		32.7			(125.4	)
Acquisition of equipment on operating leases, primarily from PACCAR		(381.7	)		(316.6	)
Proceeds from disposal of equipment		125.5			94.0
Increase in restricted cash		(9.8	)
Acquisition of trucks for lease and other		(56.3	)		(39.8	)
NET CASH USED IN INVESTING ACTIVITIES		(644.9	)		(649.5	)
FINANCING ACTIVITIES
Net increase (decrease) in commercial paper		554.2			(543.9	)
Proceeds from medium-term notes		800.0			1,450.0
Payments of medium-term notes		(800.0	)		(550.0	)
Payments on loans from PACCAR		(218.0	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		336.2			356.1
NET (DECREASE) INCREASE IN CASH		(3.1	)		8.2
CASH AT BEGINNING OF PERIOD		33.5			26.6
CASH AT END OF PERIOD	$	30.4		$	34.8

See Notes to Financial Statements.

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PACCAR FINANCIAL CORP. - FORM 10-Q

Notes to Financial Statements (Unaudited) (Millions of Dollars)

NOTE A – Basis of Presentation

PACCAR Financial Corp. (the “Company”) is a wholly-owned subsidiary of PACCAR Inc (“PACCAR”). The Company primarily provides financing of PACCAR-manufactured trucks and related equipment sold by authorized dealers. The Company also finances dealer inventories of transportation equipment and franchises Kenworth and Peterbilt dealerships to engage in full-service and finance leasing. The operations of the Company are fundamentally affected by its relationship with PACCAR.

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. For further information, refer to the financial statements and footnotes included in PACCAR Financial Corp.’s Annual Report on Form 10-K for the year ended December 31, 2013.

New Accounting Pronouncements:

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. This ASU amends the existing accounting standards for revenue recognition. Under the new revenue recognition model, a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The amendment may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. The Company is currently evaluating the transition alternatives and impact on the Company’s financial statements.

In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This ASU requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if available under the applicable tax jurisdiction. The ASU was effective for annual periods beginning after December 15, 2013 and interim periods within those annual periods. The Company adopted ASU 2013-11 in the first quarter of 2014; the implementation of this amendment did not have an impact on the Company’s financial statements.

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PACCAR FINANCIAL CORP. - FORM 10-Q

Notes to Financial Statements (Unaudited) (Millions of Dollars)

NOTE B – Finance and Other Receivables

The Company’s finance and other receivables include the following:

	September 30 2014			December 31 2013
Retail loans	$	2,594.2		$	2,442.5
Retail direct financing leases		1,623.3			1,577.0
Dealer wholesale financing		681.7			578.0
Dealer master notes		68.9			105.1
Operating lease and other trade receivables		32.0			36.7
Unearned interest on finance leases		(162.6	)		(155.9	)
Total portfolio		4,837.5			4,583.4
Less allowance for losses:
Loans and leases		(52.5	)		(51.5	)
Dealer wholesale financing		(2.8	)		(3.0	)
Operating lease and other trade receivables		(.9	)		(.8	)
Total portfolio, net of allowance for losses	$	4,781.3		$	4,528.1

Recognition of interest income and rental revenue is suspended (put on non-accrual status) when the receivable becomes more than 90 days past the contractual due date or earlier if some other event causes the Company to determine that collection is not probable. Accordingly, no finance receivables more than 90 days past-due were accruing interest at September 30, 2014 or December 31, 2013. 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.

Allowance for Credit Losses

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

On average, modifications extended contractual terms by three months in 2014 and four months in 2013, and did not have a significant effect on the weighted average term or interest rate of the total portfolio at September 30, 2014 and December 31, 2013.

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PACCAR FINANCIAL CORP. - FORM 10-Q

Notes to Financial Statements (Unaudited) (Millions of Dollars)

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

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

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

Impaired receivables are 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 recorded investment, no reserve is recorded. Small balance impaired receivables with similar risk characteristics are evaluated as a separate pool to determine the appropriate reserve for losses using the historical loss information discussed below.

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

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

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PACCAR FINANCIAL CORP. - FORM 10-Q

Notes to Financial Statements (Unaudited) (Millions of Dollars)

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

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

The allowance for credit losses is summarized as follows:

	2014
	Dealer						Customer Retail
	Wholesale			Retail						Other*			Total
Balance at January 1	$	3.0		$	11.5		$	40.0		$	.8		$	55.3
Provision for losses		(.2	)		(.5	)		4.0			.1			3.4
Charge-offs								(3.7	)					(3.7	)
Recoveries								1.2						1.2
Balance at September 30	$	2.8		$	11.0		$	41.5		$	.9		$	56.2
	2013
	Dealer						Customer Retail
	Wholesale			Retail						Other*			Total
Balance at January 1	$	3.9		$	10.7		$	37.1		$	1.1		$	52.8
Provision for losses		(.8	)					6.4			.3			5.9
Charge-offs								(5.1	)		(.1	)		(5.2	)
Recoveries								1.8						1.8
Balance at September 30	$	3.1		$	10.7		$	40.2		$	1.3		$	55.3

* Operating lease and other trade receivables

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PACCAR FINANCIAL CORP. - FORM 10-Q

Notes to Financial Statements (Unaudited) (Millions of Dollars)

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

	Dealer						Customer
At September 30, 2014	Wholesale			Retail			Retail			Total
Recorded investment for impaired finance receivables evaluated individually							$	28.5		$	28.5
Allowance for impaired finance receivables determined individually							$	(1.6	)	$	(1.6	)
Recorded investment for finance receivables evaluated collectively	$	681.7		$	1,314.3		$	2,781.0		$	4,777.0
Allowance for finance receivables determined collectively	$	(2.8	)	$	(11.0	)	$	(39.9	)	$	(53.7	)
	Dealer						Customer
At December 31, 2013	Wholesale			Retail			Retail			Total
Recorded investment for impaired finance receivables evaluated individually							$	19.1		$	19.1
Allowance for impaired finance receivables determined individually							$	(2.0	)	$	(2.0	)
Recorded investment for finance receivables evaluated collectively	$	578.0		$	1,318.8		$	2,630.8		$	4,527.6
Allowance for finance receivables determined collectively	$	(3.0	)	$	(11.5	)	$	(38.0	)	$	(52.5	)

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

	September 30 2014		December 31 2013
Customer Retail:
Fleet	$	27.0	$	17.0
Owner/Operator		1.5		2.1
	$	28.5	$	19.1

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PACCAR FINANCIAL CORP. - FORM 10-Q

Notes to Financial Statements (Unaudited) (Millions of Dollars)

Impaired Loans

Impaired loans with no specific reserves were $15.2 and $7.3 at September 30, 2014 and December 31, 2013, respectively. Impaired loans with a specific reserve are summarized below. The impaired loans with specific reserve represent the unpaid principal balance. The recorded investment of impaired loans as of September 30, 2014 and December 31, 2013 was not significantly different than the unpaid principal balance.

	Dealer		Customer Retail
At September 30, 2014	Wholesale	Retail	Fleet			Owner/ Operator			Total
Impaired loans with specific reserve			$	7.7		$	1.4		$	9.1
Associated allowance				(.7	)		(.3	)		(1.0	)
Net carrying amount of impaired loans			$	7.0		$	1.1		$	8.1
Average recorded investment*			$	13.7		$	1.9		$	15.6
*  Represents the average during the 12 months ended September 30, 2014
	Dealer		Customer Retail
At December 31, 2013	Wholesale	Retail	Fleet			Owner/ Operator			Total
Impaired loans with specific reserve			$	6.5		$	1.9		$	8.4
Associated allowance				(1.0	)		(.5	)		(1.5	)
Net carrying amount of impaired loans			$	5.5		$	1.4		$	6.9
Average recorded investment*			$	13.8		$	3.7		$	17.5

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

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PACCAR FINANCIAL CORP. - FORM 10-Q

Notes to Financial Statements (Unaudited) (Millions of Dollars)

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

	Three Months Ended September 30				Nine Months Ended September 30
	2014		2013		2014		2013
Interest income recognized:
Customer Retail:
Fleet	$	.2	$	.3	$	.6	$	1.0
Owner/Operator		.1		.1		.3		.4
	$	.3	$	.4	$	.9	$	1.4

Credit Quality

The Company’s customers are principally concentrated in the transportation industry in the United States. The Company’s portfolio is diversified over a large number of customers and dealers with no single customer or dealer balance representing over 10% of the total portfolio. The Company retains as collateral a security interest in the related equipment.

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

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

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PACCAR FINANCIAL CORP. - FORM 10-Q

Notes to Financial Statements (Unaudited) (Millions of Dollars)

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

	Dealer				Customer Retail
At September 30, 2014	Wholesale		Retail		Fleet		Owner/ Operator		Total
Performing	$	671.9	$	1,312.9	$	2,357.9	$	420.5	$	4,763.2
Watch		9.8		1.4		2.1		.5		13.8
At-risk						27.0		1.5		28.5
Total	$	681.7	$	1,314.3	$	2,387.0	$	422.5	$	4,805.5
	Dealer				Customer Retail
At December 31, 2013	Wholesale		Retail		Fleet		Owner / Operator		Total
Performing	$	576.9	$	1,313.9	$	2,264.5	$	365.1	$	4,520.4
Watch		1.1		5.0		.9		.2		7.2
At-risk						17.0		2.1		19.1
Total	$	578.0	$	1,318.9	$	2,282.4	$	367.4	$	4,546.7

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

	Dealer				Customer Retail
At September 30, 2014	Wholesale		Retail		Fleet		Owner/ Operator		Total
Current and up to 30 days past-due	$	681.7	$	1,314.3	$	2,385.7	$	421.5	$	4,803.2
31 – 60 days past-due						.6		.2		.8
Greater than 60 days past-due						.7		.8		1.5
Total	$	681.7	$	1,314.3	$	2,387.0	$	422.5	$	4,805.5
	Dealer				Customer Retail
At December 31, 2013	Wholesale		Retail		Fleet		Owner / Operator		Total
Current and up to 30 days past-due	$	578.0	$	1,318.9	$	2,270.7	$	365.7	$	4,533.3
31 – 60 days past-due						1.4		.5		1.9
Greater than 60 days past-due						10.3		1.2		11.5
Total	$	578.0	$	1,318.9	$	2,282.4	$	367.4	$	4,546.7

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PACCAR FINANCIAL CORP. - FORM 10-Q

Notes to Financial Statements (Unaudited) (Millions of Dollars)

Troubled Debt Restructurings

The balance of TDRs was $24.4 at September 30, 2014 and $6.1 at December 31, 2013. At modification date, the pre-modification and post-modification recorded investment balances for finance receivables modified during the period by portfolio class are as follows:

	Three Months Ended September 30, 2014				Nine Months Ended September 30, 2014
	Recorded Investment				Recorded Investment
	Pre-Modification		Post-Modification		Pre-Modification		Post-Modification
Fleet	$	17.6	$	17.6	$	22.0	$	22.0
Owner/Operator						.3		.3
	$	17.6	$	17.6	$	22.3	$	22.3
	Three Months Ended September 30, 2013				Nine Months Ended September 30, 2013
	Recorded Investment				Recorded Investment
	Pre-Modification		Post-Modification		Pre-Modification		Post-Modification
Fleet	$	.2	$	.2	$	.5	$	.5
Owner/Operator						.3		.3
	$	.2	$	.2	$	.8	$	.8

The effect on the allowance for credit losses from such modifications was not significant at September 30, 2014 and 2013.

The post-modification recorded investment of finance receivables modified as TDRs during the previous twelve months that subsequently defaulted (i.e. became more than 30 days past-due) during the period by portfolio class are as follows:

	Nine Months ended September 30
	2014		2013
Fleet			$	.3
Owner/Operator	$	.1
	$	.1	$	.3

The TDRs that subsequently defaulted did not significantly impact the Company’s allowance for credit losses at September 30, 2014 and 2013.

Repossessions

When the Company determines that a customer is not likely to meet its contractual commitments, the Company repossesses the vehicles which serve as collateral for loans, finance leases and equipment on operating leases. The Company records the vehicles as used truck inventory which is included in Other assets on the Balance Sheets. The balance of repossessed inventory at September 30, 2014 and December 31, 2013 was $1.6 and $4.3, respectively.

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PACCAR FINANCIAL CORP. - FORM 10-Q

Notes to Financial Statements (Unaudited) (Millions of Dollars)

Proceeds from the sales of repossessed assets were $16.5 and $13.8 for the nine months ended September 30, 2014 and 2013, respectively. These amounts are included in Proceeds from disposal of equipment on the Statements of Cash Flows. Write-downs of repossessed equipment on operating leases are recorded as impairments and included in Depreciation and other rental expenses on the Statements of Comprehensive Income and Retained Earnings.

Unamortized Loan Origination Costs

The unamortized loan origination costs at September 30, 2014 and December 31, 2013 were $12.9 and $12.8, respectively. These amounts are included in Other assets on the Balance Sheets.

NOTE C – Transactions with PACCAR and Affiliates

The Company and PACCAR are parties to a Support Agreement that obligates PACCAR to provide, when required, financial assistance to the Company to ensure that the Company maintains a ratio of net earnings available for fixed charges to fixed charges (as defined in the Support Agreement) of at least 1.25 to 1 for any fiscal year. The required ratio for the nine months ended September 30, 2014 and full year 2013 was met without assistance. The Support Agreement also requires PACCAR to own, directly or indirectly, all outstanding voting stock of the Company.

Periodically, the Company makes loans to, borrows from and has intercompany transactions with PACCAR. In addition, the Company periodically loans funds to certain foreign finance and leasing affiliates of PACCAR. These various affiliates have Support Agreements with PACCAR, similar to the Company’s Support Agreement with PACCAR. The foreign affiliates operate in the United Kingdom, the Netherlands, Mexico, Canada and Australia, and any resulting currency exposure is fully hedged. The foreign affiliates primarily provide financing and leasing of PACCAR-manufactured trucks and related equipment sold through the DAF, Kenworth and Peterbilt independent dealer networks in Europe, Mexico, Canada and Australia. The Company will not make loans to the foreign affiliates in excess of the equivalent of $500.0 United States dollars, unless the amount in excess of such limit is guaranteed by PACCAR. The Company periodically reviews the funding alternatives for these affiliates, and these limits may be revised in the future.

Amounts outstanding at September 30, 2014 and December 31, 2013, including foreign finance affiliates operating in the United Kingdom, the Netherlands, Mexico, Canada and Australia are summarized below:

	September 30 2014		December 31 2013
Due from PACCAR and affiliates
Loans due from PACCAR	$	775.5	$	653.6
Loans due from foreign finance affiliates		362.0		429.6
Tax-related receivable due from PACCAR		105.0		193.7
Direct financing leases due from affiliate		14.3		14.7
Receivables		69.2		75.7
Total	$	1,326.0	$	1,367.3
Due to PACCAR and affiliates
Loans due to PACCAR			$	218.0
Payables	$	25.2		41.4
Total	$	25.2	$	259.4

-15-

PACCAR FINANCIAL CORP. - FORM 10-Q

Notes to Financial Statements (Unaudited) (Millions of Dollars)

The Company is included in the consolidated federal income tax return of PACCAR. The tax-related receivable due from PACCAR represented the related tax benefit to be settled with PACCAR.

The Company provides direct financing leases to dealer locations operated by an affiliate of PACCAR.

Loans due to PACCAR were nil at September 30, 2014 compared to $218.0 at December 31, 2013. The $218.0 loan, with an effective fixed interest rate of 6.88%, was repaid upon maturity in February 2014.

PACCAR charges the Company for certain administrative services it provides. These costs were charged to the Company based upon the Company’s specific use of the services and PACCAR’s cost. Management considers these charges reasonable and similar to the costs that would be incurred if the Company were on a stand-alone basis.

There were no dividends declared or paid during the first nine months of 2014 and 2013.

The Company’s principal office is located in the corporate headquarters building of PACCAR (owned by PACCAR). The Company also leases office space from another facility owned by PACCAR and five facilities leased by PACCAR.

The Company’s employees and PACCAR employees are covered by a defined benefit pension plan sponsored by PACCAR. The assets and liabilities of the plan are reflected on the balance sheets of PACCAR. PACCAR contributes to the plan and allocates the expenses to the Company based principally on the number of eligible plan participants. Expenses for the defined benefit pension plan are included in Selling, general and administrative expenses.

The Company’s employees and PACCAR employees are also covered by a defined contribution plan sponsored by PACCAR. Expenses incurred by the Company for the defined contribution plan benefits are based on the actual contribution made on the behalf of participating employees and are included in Selling, general and administrative expenses.

NOTE D – Stockholder’s Equity

Preferred Stock

The Company’s Articles of Incorporation provide that the 6% noncumulative, nonvoting preferred stock (100% owned by PACCAR) is redeemable only at the option of the Company’s Board of Directors.

Comprehensive Income

The components of comprehensive income are as follows:

	Three Months Ended September 30				Nine Months Ended September 30
	2014		2013		2014		2013
Net income	$	26.1	$	25.4	$	76.8	$	70.5
Other comprehensive income
Derivative contracts increase		2.9		.2		2.8		3.9
Net other comprehensive income		2.9		.2		2.8		3.9
Total comprehensive income	$	29.0	$	25.6	$	79.6	$	74.4

-16-

PACCAR FINANCIAL CORP. - FORM 10-Q

Notes to Financial Statements (Unaudited) (Millions of Dollars)

Accumulated Other Comprehensive Income

Accumulated other comprehensive income (AOCI) of $.1 and loss of $2.7 at September 30, 2014 and December 31, 2013, respectively, is comprised of the unrealized net income (loss) on derivative contracts, net of taxes. Changes in and reclassifications out of AOCI during the nine months ended September 30, 2014 and 2013 are as follows:

	2014			2013
Balance at January 1	$	(2.7	)	$	(7.7	)
Amounts recorded in AOCI
Unrealized (loss) gain on derivative contracts		(3.1	)		.2
Income tax effect		1.1			(.1	)
Amounts reclassified out of AOCI
Interest and other borrowing costs		7.7			6.2
Income taxes		(2.9	)		(2.4	)
Net other comprehensive income		2.8			3.9
Balance at September 30	$	.1		$	(3.8	)

NOTE E – Fair Value Measurements

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

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

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

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

There were no transfers of assets or liabilities between Level 1 and Level 2 of the fair value hierarchy during the nine months ended September 30, 2014. The Company’s policy is to recognize transfers between levels at the end of the reporting period.

Assets and Liabilities Subject to Non-recurring and Recurring Fair Value Measurement

Impaired loans and used trucks held for sale are measured on a non-recurring basis. Amounts shown below represent the balance of assets measured at fair value as of September 30, 2014 and December 31, 2013. Derivative contracts are measured on a recurring basis. These assets and liabilities are outlined in the table below:

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PACCAR FINANCIAL CORP. - FORM 10-Q

Notes to Financial Statements (Unaudited) (Millions of Dollars)

Level 2	September 30 2014		December 31 2013
Assets:
Impaired loans, net of specific reserves (2014 – nil and 2013 – $.1)	$	12.9	$	7.0
Used trucks held for sale		3.7		8.7
Derivative contracts		2.4		1.6
Liabilities:
Derivative contracts	$	2.3	$	6.0

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

Impaired Loans: Impaired loans are generally considered collateral dependent. Accordingly, the evaluation of individual reserves considers the fair value of the associated collateral (estimated sales proceeds less the costs to sell).

Used Trucks Held for Sale: The carrying amount of used trucks held for sale is written down as necessary to reflect the fair value less costs to sell. The Company determines the fair value of used trucks from a pricing matrix, which is based on the market approach. The significant observable inputs into the valuation model are recent sales prices of comparable units and the condition of the vehicles. Used truck impairments related to units held at September 30, 2014 and 2013 were $.7 and $1.0 during the first nine months of 2014 and 2013, respectively. These assets, which are shown in the above table when they are written down to fair value less costs to sell, are categorized as Level 2 and are included in Other assets on the Balance Sheets.

Derivative Financial Instruments: The Company’s derivative financial instruments consist of interest-rate swaps and are carried at fair value. 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 and credit default swap spreads. These contracts are categorized as Level 2 and are included in Other assets and Accounts payable, accrued expenses and other on the Balance Sheets.

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: Carrying amounts approximate fair value.

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

Commercial Paper and Medium-Term Notes: The carrying amounts of the Company’s commercial paper and variable medium-term notes approximate fair value. For fixed-rate debt, fair values are estimated using the income approach by discounting cash flows to their present value based on current rates for comparable debt.

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PACCAR FINANCIAL CORP. - FORM 10-Q

Notes to Financial Statements (Unaudited) (Millions of Dollars)

The Company’s estimate of fair value for fixed-rate loans and debt that are not carried at fair value at September 30, 2014 and December 31, 2013 was as follows:

	September 30 2014				December 31 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Due from PACCAR	$	670.5	$	674.4	$	550.5	$	554.5
Due from foreign finance affiliates		171.0		172.5		216.0		218.4
Fixed-rate loans		2,529.2		2,558.8		2,393.1		2,413.9
Liabilities:
Due to PACCAR					$	218.0	$	219.7
Fixed-rate debt	$	2,949.5	$	2,962.0		2,749.9		2,774.4

NOTE F – Derivative Financial Instruments

Interest rate contracts 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. The Company is exposed to interest 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. The notional amount is used to measure the volume of these contracts and does not represent exposure to credit loss. In the event of default by the counterparty, the risk in these transactions is the fair value of replacing the interest rate contract at current market rates.

At September 30, 2014, the notional amount of these contracts totaled $1,228.0 with amounts expiring over the next six years. Notional maturities for all interest rate contracts are $101.0 for the remainder of 2014, $325.0 for 2015, $392.0 for 2016, $100.0 for 2017, $250.0 for 2018, $20.0 for 2019 and $40.0 for 2020. The majority of these contracts are floating to fixed rate swaps that effectively convert an equivalent amount of commercial paper and other variable rate debt to fixed rates.

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PACCAR FINANCIAL CORP. - FORM 10-Q

Notes to Financial Statements (Unaudited) (Millions of Dollars)

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

As of September 30, 2014

Interest-rate contracts	Gross Amount Recognized in Balance Sheets		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Other assets	$	2.4	$	(.4	)	$	2.0
Liabilities:
Accounts payable, accrued expenses and other	$	2.3	$	(.4	)	$	1.9

As of December 31, 2013

Interest-rate contracts	Gross Amount Recognized in Balance Sheets		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Other assets	$	1.6	$	(.2	)	$	1.4
Liabilities:
Accounts payable, accrued expenses and other	$	6.0	$	(.2	)	$	5.8

All of the Company’s interest-rate 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.

The Company has elected not to offset derivative positions in the balance sheet with the same counterparty under the same agreement and is not required to post or receive collateral. Exposure limits and minimum credit ratings are used to minimize the risks of counterparty default. The Company had no material exposures to default at September 30, 2014.

Cash Flow Hedges

Substantially all of the Company’s interest rate contracts have been designated as cash flow hedges. The Company uses regression analysis to assess the effectiveness of hedges on a quarterly basis. The change in variable cash flows method or the hypothetical derivative method is used to measure ineffectiveness of interest rate contracts designated as cash flow hedges. Changes in the fair value of derivatives designated as cash flow hedges are recorded in AOCI to the extent such hedges are considered effective. Gains or losses on the ineffective portion of cash flow hedges are recognized in current earnings and were immaterial for the nine months ended September 30, 2014 and 2013. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows is 6.1 years.

Amounts in AOCI are reclassified into net income in the same period in which the hedged transaction affects earnings. Net realized gains and losses from interest rate contracts are recognized as an adjustment to interest expense. As of September 30, 2014, AOCI was $.1, net of tax, and $4.1, net of tax is expected to be reclassified to interest expense in the following 12 months. The fixed interest earned on finance receivables will offset the amount recognized in interest expense, resulting in a stable interest margin consistent with the Company’s interest rate risk management strategy.

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PACCAR FINANCIAL CORP. - FORM 10-Q

Notes to Financial Statements (Unaudited) (Millions of Dollars)

The following table presents the pre-tax effects of derivative instruments designated as cash flow hedges recognized in other comprehensive income (OCI) and expenses reclassified from AOCI into income.

	Three Months Ended					Nine Months Ended
	September 30					September 30
	2014		2013			2014			2013
Pre-tax gain (loss) on derivative contracts recognized in OCI	$	2.0	$	(1.6	)	$	(3.1	)	$	.2
Expenses reclassified out of AOCI into Interest and other borrowing expenses	$	2.7	$	2.0		$	7.7		$	6.2

NOTE G – Income Taxes

The effective income tax rate for the third quarter and first nine months of 2014 was 43.1% and 39.9%, respectively, compared to 37.9% and 37.9% for the third quarter and first nine months of 2013, reflecting higher state tax expenses in the third quarter and first nine months of 2014 compared to 2013.

The Company is included in the consolidated federal income tax return of PACCAR. Federal income taxes for the Company are determined on a separate return basis. State income taxes, where the Company files combined tax returns with PACCAR, are determined on a blended statutory rate, which is substantially the same as the rate computed on a separate return basis.

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PACCAR FINANCIAL CORP. – FORM 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Millions of Dollars)

Results of Operations

	Three Months Ended							Nine Months Ended
	September 30							September 30
	2014		2013		% Change			2014		2013		% Change
New business volume by product:
Retail loans and direct financing leases	$	440.8	$	388.2		14		$	1,168.6	$	1,079.6		8
Equipment on operating leases		150.1		123.8		21			397.2		318.1		25
Dealer master notes		52.6		70.5		(25	)		177.0		193.5		(9	)
	$	643.5	$	582.5		10		$	1,742.8	$	1,591.2		10
Average earning assets by product:
Retail loans and direct financing leases	$	4,043.8	$	3,736.6		8		$	3,963.4	$	3,654.7		8
Equipment on operating leases		1,291.9		1,115.9		16			1,227.0		1,070.8		15
Dealer wholesale financing		662.6		639.8		4			631.6		623.7		1
Dealer master notes		75.4		75.8		(1	)		77.8		80.1		(3	)
	$	6,073.7	$	5,568.1		9		$	5,899.8	$	5,429.3		9
Revenue by product:
Retail loans and direct financing leases	$	49.2	$	45.8		7		$	142.9	$	135.0		6
Equipment on operating leases		83.9		75.8		11			242.3		216.9		12
Dealer wholesale financing		4.4		4.4					12.5		13.5		(7	)
Dealer master notes		.6		.6					1.9		2.0		(5	)
Used truck sales, other revenues and fees		5.3		9.1		(42	)		18.3		41.8		(56	)
	$	143.4	$	135.7		6		$	417.9	$	409.2		2
Income before income taxes	$	45.9	$	40.9		12		$	127.8	$	113.6		13

New Business Volume

New business volume increased 10% for both the third quarter and first nine months of 2014 from the same periods in 2013 due to higher sales of PACCAR trucks in 2014. Equipment on operating lease new business volume in the third quarter and first nine months of 2014 increased $26.3 and $79.1 from the third quarter and first nine months of 2013, attributable to higher operating lease fleet business in the first nine months of 2014. Dealer master note new business volume decreased $17.9 and $16.5 from the third quarter and first nine months of 2013 due to decreased finance volume from dealers.

In the second quarter of 2014, the Company began a program of assigning certain new operating lease contracts to third parties to limit the risk of portfolio concentration with certain large customers. These transactions are accounted for as sales of the related equipment under operating leases and excluded from new business volume. The Company sold equipment with a book value of $2.6 during the third quarter and $19.1 in the first nine months of 2014 and received cash proceeds of $2.6 during the third quarter and $19.5 in the first nine months of 2014. The Company maintains servicing responsibilities for the leases and fees received for servicing are capitalized and recognized over the contract term.

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PACCAR FINANCIAL CORP. - FORM 10-Q

Income Before Income Taxes

The Company’s income before income taxes was $45.9 for the third quarter of 2014 compared to $40.9 for the third quarter of 2013. The increase in income before income taxes for the quarter was primarily the result of a higher finance margin of $3.4 and a higher operating lease margin of $1.8.

The Company’s income before income taxes was $127.8 for the first nine months of 2014 compared to $113.6 for the first nine months of 2013. The increase in income before income taxes for the first nine months was primarily the result of a higher finance margin of $7.3, a higher operating lease margin of $4.6 and higher results from used trucks and other of $1.4.

Revenue and Expenses

The major factors for the change in interest and fee income, interest and other borrowing costs and finance margin for the three months ended September 30, 2014 are outlined in the table below:

	Interest and Fee Income			Interest and Other Borrowing Costs			Finance Margin
Three Months Ended September 30, 2013	$	52.0		$	15.8		$	36.2
Increase (decrease)
Average finance receivables		3.6						3.6
Average receivables from PACCAR and affiliates		.3						.3
Average debt balances					1.3			(1.3	)
Yields		(1.2	)					(1.2	)
Borrowing rates					(2.0	)		2.0
Total increase (decrease)		2.7			(.7	)		3.4
Three Months Ended September 30, 2014	$	54.7		$	15.1		$	39.6

• Average finance receivables increased $329.6 in the third quarter of 2014 as a result of retail portfolio new business volume exceeding repayments.

• Average receivables from PACCAR and affiliates increased $131.4 in the third quarter of 2014 as a result of new loans to affiliated companies exceeding repayments.

• Average debt balances increased $478.1 in the third quarter of 2014. The higher average debt balances reflect funding for the higher average earning asset portfolio, including loans, finance leases and operating leases and increased intercompany loans to affiliated companies.

• Average yields in the third quarter of 2014 were 4.3% compared to 4.4% in the third quarter of 2013. Average borrowing rates in the third quarter of 2014 were 1.1% compared to 1.2% in the third quarter of 2013. The decrease in yields and borrowing rates was due to lower market rates.

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PACCAR FINANCIAL CORP. - FORM 10-Q

The major factors for the change in interest and fee income, interest and other borrowing costs and finance margin for the nine months ended September 30, 2014 are outlined in the table below:

	Interest and Fee Income			Interest and Other Borrowing Costs			Finance Margin
Nine Months Ended September 30, 2013	$	154.4		$	48.5		$	105.9
Increase (decrease)
Average finance receivables		10.1						10.1
Average receivables from PACCAR and affiliates		1.1						1.1
Average debt balances					4.2			(4.2	)
Yields		(7.2	)					(7.2	)
Borrowing rates					(7.5	)		7.5
Total increase (decrease)		4.0			(3.3	)		7.3
Nine Months Ended September 30, 2014	$	158.4		$	45.2		$	113.2

• Average finance receivables increased $314.3 in the first nine months of 2014 as a result of retail portfolio new business volume exceeding repayments.

• Average receivables from PACCAR and affiliates increased $178.9 in the first nine months of 2014 as a result of new loans to affiliated companies exceeding repayments.

• Average debt balances increased $499.1 in the first nine months of 2014. The higher average debt balances reflect funding for the higher average earning asset portfolio, including loans, finance leases and operating leases and increased intercompany loans to affiliated companies.

• Average yields in the first nine months of 2014 were 4.3% compared to 4.5% in first nine months of 2013. Average borrowing rates in the first nine months of 2014 were 1.1% compared to 1.3% in the first nine months of 2013. The decrease in yields and borrowing rates was due to lower market rates.

The major factors for the change in operating lease and rental revenue, depreciation and other rental expenses and operating lease margin for the three months ended September 30, 2014 are outlined in the table below:

	Operating Lease and Rental Revenue		Depreciation and Other Rental Expenses			Operating Lease Margin
Three Months Ended September 30, 2013	$	75.8	$	61.0		$	14.8
Increase (decrease)
Results on returned lease assets				(1.3	)		1.3
Average operating lease assets		6.1		5.0			1.1
Revenue and cost per asset		2.0		2.6			(.6	)
Total increase		8.1		6.3			1.8
Three Months Ended September 30, 2014	$	83.9	$	67.3		$	16.6

• Results on returned lease assets were higher in 2014 compared to 2013 due to higher gains on used trucks reflecting improvement in used truck prices.

• Average operating lease assets increased as a result of a higher volume of equipment placed in service from higher demand for leased vehicles.

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PACCAR FINANCIAL CORP. - FORM 10-Q

• Revenue and cost per asset increased by $2.0 and $2.6, respectively. Operating lease margin per asset decreased by $.6 mainly due to higher vehicle related expenses.

The major factors for the change in operating lease and rental revenue, depreciation and other rental expenses and operating lease margin for the nine months ended September 30, 2014 are outlined in the table below:

	Operating Lease and Rental Revenue		Depreciation and Other Rental Expenses			Operating Lease Margin
Nine Months Ended September 30, 2013	$	216.9	$	175.4		$	41.5
Increase (decrease)
Results on returned lease assets				(5.7	)		5.7
Average operating lease assets		21.1		17.2			3.9
Revenue and cost per asset		4.3		9.3			(5.0	)
Total increase		25.4		20.8			4.6
Nine Months Ended September 30, 2014	$	242.3	$	196.2		$	46.1

• Results on returned lease assets were higher in 2014 compared to 2013 due to higher gains on used trucks reflecting improvement in used truck prices.

• Average operating lease assets increased as a result of a higher volume of equipment placed in service from higher demand for leased vehicles.

• Revenue and cost per asset increased by $4.3 and $9.3, respectively. Operating lease margin per asset decreased by $5.0 due to lower fleet utilization and higher vehicle related expenses.

Used truck sales and other revenue and cost of used trucks sales and other expenses are summarized below for the third quarter and first nine months of 2014 compared to the third quarter and first nine months of 2013:

	Three Months Ended September 30				Nine Months Ended September 30
	2014		2013		2014		2013
Used truck sales and other revenue	$	4.8	$	7.9	$	17.2	$	37.9
Cost of used truck sales and other expenses		3.1		5.7		11.5		33.6
Results from used trucks and other	$	1.7	$	2.2	$	5.7	$	4.3

Results from used trucks and other in the third quarter of 2014 decreased by $.5, reflecting a lower number of used truck units sold. Results from used trucks and other in the first nine months ended September 30, 2014 increased by $1.4, reflecting increased margin per truck sold.

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PACCAR FINANCIAL CORP. - FORM 10-Q

Allowance for Losses

The following table summarizes information on the Company’s allowance for losses on receivables and asset portfolio and presents related ratios:

	Nine Months Ended September 30 2014			Year Ended December 31 2013			Nine Months Ended September  30 2013
Balance at beginning of period	$	55.3		$	52.8		$	52.8
Provision for losses		3.4			2.3			5.9
Charge-offs		(3.7	)		(6.5	)		(5.2	)
Recoveries		1.2			6.7			1.8
Balance at end of period	$	56.2		$	55.3		$	55.3
Ratios:
Charge-offs, net of recoveries ($2.5 in 2014) to average total portfolio ($4,672.8 in 2014) annualized at September 30, 2014		.07	%		-	%		.10	%
Allowance for losses ($56.2 in 2014) to period-end total portfolio ($4,837.5 in 2014)		1.16	%		1.21	%		1.26	%
Period-end retail loan and lease receivables past due over 30 days ($2.3 in 2014) to period-end retail loan and lease receivables ($4,054.9 in 2014)		.06	%		.35	%		.43	%

The provision for losses on receivables in the first nine months of 2014 decreased to $3.4 from $5.9 in the first nine months of 2013 primarily due to improved portfolio performance.

Charge-offs, net of recoveries, decreased $.9 to $2.5 in the first nine months of 2014 from $3.4 in the first nine months of 2013 due to customers’ favorable operating conditions and cash flows.

Retail loan and lease receivables past-due over 30 days at September 30, 2014 was .06% compared to .35% at December 31, 2013 and .43% at September 30, 2013. At September 30, 2014, the Company had $1.6 of specific loss reserves for all accounts considered to be impaired. The Company continues to focus on maintaining low past-due balances.

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

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PACCAR FINANCIAL CORP. - FORM 10-Q

The post-modification balance of accounts modified during the nine months ended September 30, 2014 and 2013 are summarized below:

	Nine Months Ended September 30, 2014					Nine Months Ended September 30, 2013
	Recorded Investment		% of Total Portfolio*			Recorded Investment		% of Total Portfolio*
Commercial	$	107.5		3.0	%	$	159.8		4.9	%
Insignificant Delay		35.2		1.0	%		65.0		2.0	%
Credit – No Concession		3.8		.1	%		2.1		.1	%
Credit – TDR		22.3		.6	%		.8
	$	168.8		4.7	%	$	227.7		7.0	%

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

Total modification activity decreased in the first nine months of 2014 compared to the first nine months of 2013 primarily due to lower commercial modifications and insignificant delay modifications, partially offset by an increase in Credit – TDR modifications. Commercial modifications of $107.5 in 2014 compared to $159.8 in 2013 reflect lower volume of end of contract refinancing in 2014. Insignificant delay modifications decreased to $35.2 in 2014 from $65.0 in 2013 primarily due to fewer fleet customers requesting contract modifications. Credit – TDR modifications increased to $22.3 in 2014 from $.8 in 2013 mainly due to a contract modification of a large customer.

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 $4.0 of accounts during the third quarter of 2014, and no accounts during the fourth quarter of 2013 and the third quarter of 2013 that were 30+ days past-due and became current at the time of modification. Had these accounts not been modified and had they continued to not make payments, the pro forma percentage of retail loan and lease accounts 30+ days past-due would have been as follows:

	September 30 2014			December 31 2013			September 30 2013
Pro forma percentage of retail loan and lease accounts 30+ days past due		.15	%		.35	%		.43	%

Modifications of accounts in prior quarters that were more than 30 days past-due at the time of modification are included in past-dues if they were not performing under the modified terms at September 30, 2014, December 31, 2013 and September 30, 2013. The effect on the allowance for credit losses from such modifications was not significant at September 30, 2014, December 31, 2013 and September 30, 2013. See “Note B – Finance and Other Receivables” for additional discussion regarding the Allowance for Losses.

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PACCAR FINANCIAL CORP. - FORM 10-Q

The Company’s portfolio is concentrated with customers in the heavy- and medium-duty truck transportation industry. The portfolio is comprised of retail loans and leases, dealer wholesale financing and dealer master notes as follows:

	September 30				December 31				September 30
	2014				2013				2013
Retail loans	$	2,594.2	54	%	$	2,442.5	53	%	$	2,374.3	54	%
Retail leases		1,460.7	30	%		1,421.1	31	%		1,327.9	30	%
Dealer wholesale financing		681.7	14	%		578.0	13	%		578.8	13	%
Dealer master notes		68.9	1	%		105.1	2	%		76.9	2	%
Other*		32.0	1	%		36.7	1	%		31.5	1	%
Total portfolio	$	4,837.5	100	%	$	4,583.4	100	%	$	4,389.4	100	%

* Operating lease and other trade receivables

Retail loans increased to $2,594.2 at September 30, 2014 compared to $2,442.5 at December 31, 2013 due to new business volume exceeding collections.

Retail leases increased to $1,460.7 at September 30, 2014 compared to $1,421.1 at December 31, 2013 due to new business volume exceeding collections.

Dealer wholesale financing balances increased to $681.7 at September 30, 2014 compared to $578.0 at December 31, 2013 due to higher dealer new truck inventory.

Dealer master notes decreased to $68.9 at September 30, 2014 compared to $105.1 at December 31, 2013 due to repayments exceeding new business volume. The dealer may pay the loans early or make additional draws up to specified balances of the contracts pledged to the Company. As of September 30, 2014, the underlying pledged contracts were $142.1 upon which the dealers have available $46.7 as potential additional borrowing capacity.

The estimation methods and factors considered for determining the allowance during the periods included in this filing have been consistently applied. There have been no significant changes in customer contract terms during the periods.

The effective income tax rate for the third quarter and first nine months of 2014 was 43.1% and 39.9%, respectively, compared to 37.9% and 37.9% for the third quarter and first nine months of 2013, reflecting higher state tax expenses in the third quarter and first nine months of 2014 compared to 2013.

The Company is included in the consolidated federal income tax return of PACCAR. Federal income taxes for the Company are determined on a separate return basis. State income taxes, where the Company files combined tax returns with PACCAR, are determined on a blended statutory rate, which is substantially the same as the rate computed on a separate return basis.

The Company’s deferred income tax benefit for the first nine months of 2014 was $41.2 compared to a deferred income tax provision of $33.8 for the first nine months of 2013. The Company’s net deferred tax liability decreased to $763.4 at September 30, 2014 from $802.9 at December 31, 2013 due to lower benefits from accelerated depreciation. Deferred taxes are impacted by new business volume and the accelerated depreciation deduction rate under U.S. tax law. The difference in the timing of depreciation for financial statement and income tax purposes does not impact operating results and is not expected to have a significant impact on liquidity in 2014.

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PACCAR FINANCIAL CORP. - FORM 10-Q

Company Outlook

Truck industry Class 8 retail sales in the U.S. in 2014 are expected to be 215,000 – 225,000 units compared to 184,800 units in 2013. Truck industry Class 8 retail sales in the U.S. in 2015 are expected to be 210,000 – 240,000 units. Average earning assets in the fourth quarter are expected to be comparable to current levels and in 2015 may grow based on truck industry forecasts for retail sales. Current levels of freight tonnage, freight rates and fleet utilization are contributing to customers’ profitability and cash flow. If current freight transportation conditions decline due to weaker economic conditions, past-due accounts, truck repossessions and credit losses would likely increase from the current low levels. See the Forward Looking Statements section of Management’s Discussion and Analysis for factors that may affect this outlook.

Funding and Liquidity

The Company’s debt ratings at September 30, 2014 are as follows:

	Standard and Poor’s		Moody’s
Commercial paper		A-1		P-1
Senior unsecured debt		A+		A1

A decrease in these credit ratings could negatively impact the Company’s ability to access capital markets at competitive interest rates and the Company’s ability to maintain liquidity and financial stability.

The Company periodically registers debt securities under the Securities Act of 1933 for offering to the public. In November 2012, the Company filed a shelf registration statement to issue medium-term notes. The shelf registration statement expires in November 2015 and does not limit the principal amount of debt securities that may be issued during the period. The total notional amount of medium-term notes outstanding for the Company as of September 30, 2014 was $3,850.0.

Loans due to PACCAR were nil at September 30, 2014 compared to $218.0 at December 31, 2013. The $218.0 loan, with an effective fixed interest rate of 6.88%, was repaid upon maturity in February 2014.

The Company believes it will be able to fund receivables, service debt and meet its other payment obligations through internally generated funds, access to public and private debt markets, and advances from PACCAR.

The Company participated with PACCAR and certain other PACCAR affiliates in syndicated credit facilities of $3,000.0 at September 30, 2014. Of this amount, $1,000.0 expires in June 2015, $1,000.0 expires in 2018 and $1,000.0 expires in 2019. PACCAR and the Company intend to replace these credit facilities as they expire with facilities of similar amounts. Credit facilities of $1,916.5 are available for use by the Company and/or PACCAR and certain other PACCAR affiliates. The remaining $1,083.5 is allocated to the following subsidiaries: $382.0 is available for use by PACCAR’s United Kingdom and Dutch finance subsidiaries, $285.5 is available for use by PACCAR’s Canadian finance subsidiary, $230.0 is available for use by PACCAR’s Mexican finance subsidiary and $186.0 is available for use by PACCAR’s Australian finance subsidiary.

These credit facilities are used to provide backup liquidity for the Company’s commercial paper and maturing medium-term notes. The Company is liable only for its own borrowings under these credit facilities. There were no borrowings under these credit facilities in the nine months ended September 30, 2014 and the year ended December 31, 2013.

The Company issues commercial paper for a portion of its funding. Some of this commercial paper is converted to fixed interest rate debt through the use of interest rate swaps, which are used to manage interest rate risk. In the event of future disruption in the financial markets, the Company may not be able to issue replacement commercial paper. As a result, the Company is exposed to liquidity risk from the maturity of short-

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PACCAR FINANCIAL CORP. - FORM 10-Q

term borrowings paid to lenders compared to the timing of receivable collections from customers. The Company believes its collections on existing loans and leases, syndicated bank lines, current investment-grade credit ratings of A+/A1 and its ability to borrow from PACCAR, if necessary, 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.

Other information on liquidity, sources of capital, and contractual cash commitments as presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 Annual Report”) continues to be relevant.

Forward Looking Statements

This Form 10-Q 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: national and local economic, political and industry conditions; changes in the levels of new business volume due to unit fluctuations in new PACCAR truck sales or reduced market share; changes in competitive factors; changes affecting the profitability of truck owners and operators; price changes impacting equipment costs and residual values; changes in interest rates and other operating costs; insufficient liquidity in the capital markets and availability of other funding sources; and legislation and governmental regulation.

Item 3 is omitted pursuant to Form 10-Q General Instructions (H)(2)(c).

ITEM 4. CONTROLS AND PROCEDURES

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

There have been no significant changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PACCAR FINANCIAL CORP. - FORM 10-Q

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is a party to various routine legal proceedings incidental to its business involving the collection of accounts and other matters. The Company does not consider such matters to be material with respect to the business or financial condition of the Company as a whole.

ITEM 1A. RISK FACTORS

For information regarding risk factors, refer to Part I, Item 1A as presented in the 2013 Annual Report. There have been no material changes in the Company’s risk factors during the nine months ended September 30, 2014.

Items 2, 3 and 4 are omitted pursuant to Form 10-Q General Instructions (H)(2)(b).

For Item 5, there was no reportable information during the nine months ended September 30, 2014.

ITEM 6. EXHIBITS

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

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PACCAR FINANCIAL CORP. - FORM 10-Q

SIGNATURES

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

	PACCAR Financial Corp.
		(Registrant)
Date    November 6, 2014	By	/s/  Todd R. Hubbard
		Todd R. Hubbard
		President
		(Authorized Officer)
	By	/s/  Gary L. Watkins
		Gary L. Watkins
		Controller
		(Chief Accounting Officer)

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PACCAR FINANCIAL CORP. - FORM 10-Q

EXHIBIT INDEX

Exhibits (in order of assigned index numbers)

Exhibit Number		Exhibit Description	Form	Date of First Filing	Exhibit Number	File Number
(3)		Articles of incorporation and by-laws:
	(a)	Restated Articles of Incorporation of the Company	10-K	March 26, 1985	3.1	001-11677
	(b)	Amendment to Articles of Incorporation of the Company	10-Q	August 13, 1985	19.1	001-11677
	(c)	Restated By-laws of the Company*	10-Q	August 7, 2014	3(c)	001-11677
(4)		Instruments defining the rights of security holders, including indentures:
	(a)	Indenture for Senior Debt Securities dated as of November 20, 2009 between the Company and The Bank of New York Mellon Trust Company, N.A.	10-K	February 26, 2010	4(c)	001-11677
	(b)	Forms of Medium-Term Note, Series M	S-3	November 20, 2009	4.2 and 4.3	333-163273
	(c)	Forms of Medium-Term Note, Series N	S-3	November 7, 2012	4.2 and 4.3	333-184808
	(d)	Form of InterNotes, Series B	S-3	November 7, 2012	4.4	333-184808
(10)		Material contracts:
	(a)	Support Agreement between the Company and PACCAR dated as of June 19, 1989	S-3	June 23, 1989	28.1	33-29434
(12)		Statements re: computation of ratios:
	(a)	Computation of ratio of earnings to fixed charges of the Company pursuant to SEC reporting requirements for the nine month periods ended September 30, 2014 and 2013*
	(b)	Computation of ratio of earnings to fixed charges of the Company pursuant to the Support Agreement between the Company and PACCAR for the nine month periods ended September 30, 2014 and 2013*

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PACCAR FINANCIAL CORP. - FORM 10-Q

EXHIBIT INDEX

Exhibit Number		Exhibit Description	Form	Date of First Filing	Exhibit Number	File Number
(31)		Rule 13a-14(a)/15d-14(a) Certifications:
	(a)	Certification of Principal Executive Officer*
	(b)	Certification of Principal Financial Officer*
(32)		Section 1350 Certifications:
	(a)	Certification pursuant to rule 13a-14(b) and section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. section 1350)*
(101.INS)		XBRL Instance Document*
(101.SCH)		XBRL Taxonomy Extension Schema Document*
(101.CAL)		XBRL Taxonomy Extension Calculation Linkbase Document*
(101.DEF)		XBRL Taxonomy Extension Definition Linkbase Document*
(101.LAB)		XBRL Taxonomy Extension Label Linkbase Document*
(101.PRE)		XBRL Taxonomy Extension Presentation Linkbase Document*

* Filed herewith

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EX-12.A

PACCAR FINANCIAL CORP. - FORM 10-Q

EXHIBIT 12(a)

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

PURSUANT TO SEC REPORTING REQUIREMENTS (1)

(Millions of Dollars)

	Nine Months Ended September 30
	2014		2013
FIXED CHARGES
Interest expense	$	40.1	$	43.8
Portion of rentals deemed interest		1.0		.9
TOTAL FIXED CHARGES	$	41.1	$	44.7
EARNINGS
Income before income taxes	$	127.8	$	113.6
Fixed charges		41.1		44.7
EARNINGS AS DEFINED	$	168.9	$	158.3
RATIO OF EARNINGS TO FIXED CHARGES		4.11X		3.54X

(1) The method of computing the ratio of earnings to fixed charges shown above complies with SEC reporting requirements but differs from the method called for in the Support Agreement between the Company and PACCAR as shown in Exhibit 12(b).

EX-12.B

PACCAR FINANCIAL CORP. - FORM 10-Q

EXHIBIT 12(b)

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

PURSUANT TO THE SUPPORT AGREEMENT

BETWEEN THE COMPANY AND PACCAR

(Millions of Dollars)

	Nine Months Ended September 30
	2014		2013
FIXED CHARGES
Interest expense	$	40.1	$	43.8
Facility and equipment rental		1.1		1.1
TOTAL FIXED CHARGES		41.2	$	44.9
EARNINGS
Income before income taxes	$	127.8	$	113.6
Depreciation		172.3		155.0
		300.1		268.6
FIXED CHARGES		41.2		44.9
EARNINGS AS DEFINED	$	341.3	$	313.5
RATIO OF EARNINGS TO FIXED CHARGES		8.28X		6.98X

EX-31.A

PACCAR Financial Corp.

CERTIFICATIONS

Exhibit 31(a)

I, Ronald E. Armstrong, certify that:

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

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date	November 6, 2014	/s/ Ronald E. Armstrong
		Ronald E. Armstrong
		Chief Executive Officer (Principal Executive Officer)

EX-31.B

PACCAR Financial Corp.

CERTIFICATIONS

Exhibit 31(b)

I, Robert A. Bengston, certify that:

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

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date	November 6, 2014	/s/ Robert A. Bengston
		Robert A. Bengston
		(Principal Financial Officer)

EX-32.A

Exhibit 32(a)

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PACCAR Financial Corp. (the “Company”) on Form 10-Q for the quarter ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certify, pursuant to 18 U.S.C. section 1350, pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge and belief:

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

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

Date	November 6, 2014	By	/s/ Ronald E. Armstrong
			Ronald E. Armstrong
			Chief Executive Officer PACCAR Financial Corp. (Principal Executive Officer)
		By	/s/ Robert A. Bengston
			Robert A. Bengston
			PACCAR Financial Corp. (Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Derivative Financial Instruments - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Notional amount of interest-rate contracts	$ 1,228.0
Interest-rate contracts maturity period	6 years
Notional maturities for interest-rate contracts for the remainder of 2014	101.0
Notional maturities for interest-rate contracts 2015	325.0
Notional maturities for interest-rate contracts 2016	392.0
Notional maturities for interest-rate contracts 2017	100.0
Notional maturities for interest-rate contracts 2018	250.0
Notional maturities for interest-rate contracts 2019	20.0
Notional maturities for interest-rate contracts 2020	40.0
Maximum length of time for which company is hedging its exposure to the variability in future cash flows	6 years 1 month 6 days
Accumulated net loss on interest rate contracts included in AOCL	0.1
Accumulated net loss on interest rate contracts included in AOCL expected to be reclassified to interest expense in the following 12 months	$ 4.1

XML

Components of Other Comprehensive Income (OCI) (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Equity [Abstract]
Net income	$ 26.1	$ 25.4	$ 76.8	$ 70.5
Other comprehensive income
Derivative contracts increase	2.9	0.2	2.8	3.9
Net other comprehensive income	2.9	0.2	2.8	3.9
Total comprehensive income	$ 29.0	$ 25.6	$ 79.6	$ 74.4

XML

Interest Income Recognized (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Financing Receivable, Impaired [Line Items]
Interest income recognized on a cash basis	$ 0.3	$ 0.4	$ 0.9	$ 1.4
Customer Retail | Fleet
Financing Receivable, Impaired [Line Items]
Interest income recognized on a cash basis	0.2	0.3	0.6	1.0
Customer Retail | Owner/Operator
Financing Receivable, Impaired [Line Items]
Interest income recognized on a cash basis	$ 0.1	$ 0.1	$ 0.3	$ 0.4

XML

Income Taxes - Additional Information (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Tax Disclosure [Abstract]
Effective income tax rate	43.10%	37.90%	39.90%	37.90%

XML

Fair Value Measurements - Additional Information (Detail) (Trucks Inventory, USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Trucks Inventory
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Used truck impairments	$ 0.7	$ 1.0

XML

Stockholder's Equity

9 Months Ended

Sep. 30, 2014

Equity [Abstract]

Stockholder's Equity

NOTE D – Stockholder’s Equity

Preferred Stock

The Company’s Articles of Incorporation provide that the 6% noncumulative, nonvoting preferred stock (100% owned by PACCAR) is redeemable only at the option of the Company’s Board of Directors.

Comprehensive Income

The components of comprehensive income are as follows:

	Three Months Ended September 30				Nine Months Ended September 30
	2014		2013		2014		2013
Net income	$	26.1	$	25.4	$	76.8	$	70.5
Other comprehensive income
Derivative contracts increase		2.9		.2		2.8		3.9
Net other comprehensive income		2.9		.2		2.8		3.9
Total comprehensive income	$	29.0	$	25.6	$	79.6	$	74.4

Accumulated Other Comprehensive Income

Accumulated other comprehensive income (AOCI) of $.1 and loss of $2.7 at September 30, 2014 and December 31, 2013, respectively, is comprised of the unrealized net income (loss) on derivative contracts, net of taxes. Changes in and reclassifications out of AOCI during the nine months ended September 30, 2014 and 2013 are as follows:

	2014			2013
Balance at January 1	$	(2.7	)	$	(7.7	)
Amounts recorded in AOCI
Unrealized (loss) gain on derivative contracts		(3.1	)		.2
Income tax effect		1.1			(.1	)
Amounts reclassified out of AOCI
Interest and other borrowing costs		7.7			6.2
Income taxes		(2.9	)		(2.4	)
Net other comprehensive income		2.8			3.9
Balance at September 30	$	.1		$	(3.8	)

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Post-Modification Recorded Investment of Finance Receivables Modified as TDR Modified During Previous Twelve Months that Subsequently Defaulted by Portfolio Class (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Troubled Debt Restructuring, Debtor, Subsequent Periods [Line Items]
Recorded investment, subsequently defaulted	$ 0.1	$ 0.3
Fleet
Troubled Debt Restructuring, Debtor, Subsequent Periods [Line Items]
Recorded investment, subsequently defaulted		0.3
Owner/Operator
Troubled Debt Restructuring, Debtor, Subsequent Periods [Line Items]
Recorded investment, subsequently defaulted	$ 0.1

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Pre and Post Modification Recorded Investment (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Financing Receivable, Modifications [Line Items]
Pre-Modification	$ 17.6	$ 0.2	$ 22.3	$ 0.8
Post-Modification	17.6	0.2	22.3	0.8
Customer Retail | Fleet
Financing Receivable, Modifications [Line Items]
Pre-Modification	17.6	0.2	22.0	0.5
Post-Modification	17.6	0.2	22.0	0.5
Customer Retail | Owner/Operator
Financing Receivable, Modifications [Line Items]
Pre-Modification			0.3	0.3
Post-Modification			$ 0.3	$ 0.3

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Transactions with PACCAR and Affiliates - Additional Information (Detail) (USD $)	9 Months Ended
	Sep. 30, 2014 Facility	Sep. 30, 2013	Dec. 31, 2013
Related Party Transaction [Line Items]
Required ratio of net earnings available for fixed charges to fixed charges	125.00%
Loans due to PACCAR			$ 218,000,000
Fixed interest rate	6.88%
Loan maturity period	2014-02
Dividends declared and paid	0	0
Number of facilities leased by company	5
Foreign Finance Affiliates
Related Party Transaction [Line Items]
Loans to foreign affiliates, upper limit	$ 500,000,000

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Amounts Outstanding Including Foreign Finance Affiliates (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Due from PACCAR and affiliates
Direct financing leases due from affiliate	$ 14.3	$ 14.7
Loans due from affiliates	1,326.0	1,367.3	[1]
Due to PACCAR and affiliates
Loans due to PACCAR		218.0
Loans due to affiliates	25.2	259.4	[1]
PACCAR
Due from PACCAR and affiliates
Loans due from affiliates	775.5	653.6
Foreign Finance Affiliates
Due from PACCAR and affiliates
Loans due from affiliates	362.0	429.6
Tax-related receivable
Due from PACCAR and affiliates
Loans due from affiliates	105.0	193.7
Receivables
Due from PACCAR and affiliates
Loans due from affiliates	69.2	75.7
Payables
Due to PACCAR and affiliates
Loans due to affiliates	$ 25.2	$ 41.4

[1] The December 31, 2013 balance sheet has been derived from audited financial statements.

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Transactions with PACCAR and Affiliates

9 Months Ended

Sep. 30, 2014

Related Party Transactions [Abstract]

Transactions with PACCAR and Affiliates

NOTE C – Transactions with PACCAR and Affiliates

The Company and PACCAR are parties to a Support Agreement that obligates PACCAR to provide, when required, financial assistance to the Company to ensure that the Company maintains a ratio of net earnings available for fixed charges to fixed charges (as defined in the Support Agreement) of at least 1.25 to 1 for any fiscal year. The required ratio for the nine months ended September 30, 2014 and full year 2013 was met without assistance. The Support Agreement also requires PACCAR to own, directly or indirectly, all outstanding voting stock of the Company.

Periodically, the Company makes loans to, borrows from and has intercompany transactions with PACCAR. In addition, the Company periodically loans funds to certain foreign finance and leasing affiliates of PACCAR. These various affiliates have Support Agreements with PACCAR, similar to the Company’s Support Agreement with PACCAR. The foreign affiliates operate in the United Kingdom, the Netherlands, Mexico, Canada and Australia, and any resulting currency exposure is fully hedged. The foreign affiliates primarily provide financing and leasing of PACCAR-manufactured trucks and related equipment sold through the DAF, Kenworth and Peterbilt independent dealer networks in Europe, Mexico, Canada and Australia. The Company will not make loans to the foreign affiliates in excess of the equivalent of $500.0 United States dollars, unless the amount in excess of such limit is guaranteed by PACCAR. The Company periodically reviews the funding alternatives for these affiliates, and these limits may be revised in the future.

Amounts outstanding at September 30, 2014 and December 31, 2013, including foreign finance affiliates operating in the United Kingdom, the Netherlands, Mexico, Canada and Australia are summarized below:

	September 30 2014		December 31 2013
Due from PACCAR and affiliates
Loans due from PACCAR	$	775.5	$	653.6
Loans due from foreign finance affiliates		362.0		429.6
Tax-related receivable due from PACCAR		105.0		193.7
Direct financing leases due from affiliate		14.3		14.7
Receivables		69.2		75.7
Total	$	1,326.0	$	1,367.3
Due to PACCAR and affiliates
Loans due to PACCAR			$	218.0
Payables	$	25.2		41.4
Total	$	25.2	$	259.4

The Company is included in the consolidated federal income tax return of PACCAR. The tax-related receivable due from PACCAR represented the related tax benefit to be settled with PACCAR.

The Company provides direct financing leases to dealer locations operated by an affiliate of PACCAR.

Loans due to PACCAR were nil at September 30, 2014 compared to $218.0 at December 31, 2013. The $218.0 loan, with an effective fixed interest rate of 6.88%, was repaid upon maturity in February 2014.

PACCAR charges the Company for certain administrative services it provides. These costs were charged to the Company based upon the Company’s specific use of the services and PACCAR’s cost. Management considers these charges reasonable and similar to the costs that would be incurred if the Company were on a stand-alone basis.

There were no dividends declared or paid during the first nine months of 2014 and 2013.

The Company’s principal office is located in the corporate headquarters building of PACCAR (owned by PACCAR). The Company also leases office space from another facility owned by PACCAR and five facilities leased by PACCAR.

The Company’s employees and PACCAR employees are covered by a defined benefit pension plan sponsored by PACCAR. The assets and liabilities of the plan are reflected on the balance sheets of PACCAR. PACCAR contributes to the plan and allocates the expenses to the Company based principally on the number of eligible plan participants. Expenses for the defined benefit pension plan are included in Selling, general and administrative expenses.

The Company’s employees and PACCAR employees are also covered by a defined contribution plan sponsored by PACCAR. Expenses incurred by the Company for the defined contribution plan benefits are based on the actual contribution made on the behalf of participating employees and are included in Selling, general and administrative expenses.

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Stockholders' Equity - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Equity [Abstract]
Preferred stock dividend percentage	6.00%
Ownership percentage of PACCAR	100.00%
Accumulated other comprehensive income (loss)	$ 0.1	$ (2.7)	[1]

[1] The December 31, 2013 balance sheet has been derived from audited financial statements.

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Balance Sheet Classification, Fair Value and Gross and Net Amounts of Derivative Financial Instruments (Detail) (Interest Rate Contract, USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Other Assets
Derivatives, Fair Value [Line Items]
Gross Amount Recognized in Balance Sheets	$ 2.4	$ 1.6
Gross Amounts Not Offset in Financial Instruments	(0.4)	(0.2)
Pro Forma Net Amount	2.0	1.4
Accounts Payable and Accrued Liabilities
Derivatives, Fair Value [Line Items]
Gross Amount Recognized in Balance Sheets	2.3	6.0
Gross Amounts Not Offset in Financial Instruments	(0.4)	(0.2)
Pro Forma Net Amount	$ 1.9	$ 5.8

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Statements of Comprehensive Income and Retained Earnings (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014		Sep. 30, 2013
Income Statement [Abstract]
Interest and fee income	$ 54.7	$ 52.0	$ 158.4		$ 154.4
Operating lease and rental revenue	83.9	75.8	242.3		216.9
Used truck sales and other revenue	4.8	7.9	17.2		37.9
TOTAL INTEREST AND OTHER REVENUE	143.4	135.7	417.9		409.2
Interest and other borrowing costs	15.1	15.8	45.2		48.5
Depreciation and other rental expenses	67.3	61.0	196.2		175.4
Cost of used truck sales and other expenses	3.1	5.7	11.5		33.6
Selling, general and administrative expenses	11.5	10.8	33.8		32.2
Provision for losses on receivables	0.5	1.5	3.4		5.9
TOTAL EXPENSES	97.5	94.8	290.1		295.6
INCOME BEFORE INCOME TAXES	45.9	40.9	127.8		113.6
Income taxes	19.8	15.5	51.0		43.1
NET INCOME	26.1	25.4	76.8		70.5
COMPREHENSIVE INCOME	29.0	25.6	79.6		74.4
RETAINED EARNINGS AT BEGINNING OF PERIOD	845.3	740.5	794.6	[1]	695.4
RETAINED EARNINGS AT END OF PERIOD	$ 871.4	$ 765.9	$ 871.4		$ 765.9

[1] The December 31, 2013 balance sheet has been derived from audited financial statements.

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Basis of Presentation

9 Months Ended

Sep. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

NOTE A – Basis of Presentation

PACCAR Financial Corp. (the “Company”) is a wholly-owned subsidiary of PACCAR Inc (“PACCAR”). The Company primarily provides financing of PACCAR-manufactured trucks and related equipment sold by authorized dealers. The Company also finances dealer inventories of transportation equipment and franchises Kenworth and Peterbilt dealerships to engage in full-service and finance leasing. The operations of the Company are fundamentally affected by its relationship with PACCAR.

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. For further information, refer to the financial statements and footnotes included in PACCAR Financial Corp.’s Annual Report on Form 10-K for the year ended December 31, 2013.

New Accounting Pronouncements:

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. This ASU amends the existing accounting standards for revenue recognition. Under the new revenue recognition model, a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The amendment may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. The Company is currently evaluating the transition alternatives and impact on the Company’s financial statements.

In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This ASU requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if available under the applicable tax jurisdiction. The ASU was effective for annual periods beginning after December 15, 2013 and interim periods within those annual periods. The Company adopted ASU 2013-11 in the first quarter of 2014; the implementation of this amendment did not have an impact on the Company’s financial statements.

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Assets and Liabilities Fair Value Measurements (Detail) (Fair Value, Inputs, Level 2, USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Fair Value Measurements, Nonrecurring
Assets:
Impaired loans, net of specific reserves (2014 - nil and 2013 - $.1)	$ 12.9	$ 7.0
Used trucks held for sale	3.7	8.7
Fair Value, Assets and Liabilities Measured on Recurring Basis
Assets:
Derivative contracts	2.4	1.6
Liabilities:
Derivative contracts	$ 2.3	$ 6.0

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Finance Receivables Summary by those Evaluated Collectively and Individually (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Recorded investment for impaired finance receivables evaluated individually	$ 28.5	$ 19.1
Allowance for impaired finance receivables determined individually	(1.6)	(2.0)
Recorded investment for finance receivables evaluated collectively	4,777.0	4,527.6
Allowance for finance receivables determined collectively	(53.7)	(52.5)
Dealer | Wholesale
Financing Receivable, Allowance for Credit Losses [Line Items]
Recorded investment for finance receivables evaluated collectively	681.7	578.0
Allowance for finance receivables determined collectively	(2.8)	(3.0)
Dealer | Retail
Financing Receivable, Allowance for Credit Losses [Line Items]
Recorded investment for finance receivables evaluated collectively	1,314.3	1,318.8
Allowance for finance receivables determined collectively	(11.0)	(11.5)
Customer Retail
Financing Receivable, Allowance for Credit Losses [Line Items]
Recorded investment for impaired finance receivables evaluated individually	28.5	19.1
Allowance for impaired finance receivables determined individually	(1.6)	(2.0)
Recorded investment for finance receivables evaluated collectively	2,781.0	2,630.8
Allowance for finance receivables determined collectively	$ (39.9)	$ (38.0)

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Assets and Liabilities Fair Value Measurements (Parenthetical) (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans, specific reserves	$ 1.0	$ 1.5
Fair Value, Inputs, Level 2 | Fair Value Measurements, Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans, specific reserves		$ 0.1

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Impaired Loans and Specific Reserve (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2014		Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
Impaired loans with specific reserve	$ 9.1		$ 8.4
Associated allowance	(1.0)		(1.5)
Net carrying amount of impaired loans	8.1		6.9
Average recorded investment	15.6	[1]	17.5	[2]
Customer Retail | Fleet
Financing Receivable, Impaired [Line Items]
Impaired loans with specific reserve	7.7		6.5
Associated allowance	(0.7)		(1.0)
Net carrying amount of impaired loans	7.0		5.5
Average recorded investment	13.7	[1]	13.8	[2]
Customer Retail | Owner/Operator
Financing Receivable, Impaired [Line Items]
Impaired loans with specific reserve	1.4		1.9
Associated allowance	(0.3)		(0.5)
Net carrying amount of impaired loans	1.1		1.4
Average recorded investment	$ 1.9	[1]	$ 3.7	[2]

[1] Represents the average during the 12 months ended September 30, 2014

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

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Finance and Other Receivables

9 Months Ended

Sep. 30, 2014

Receivables [Abstract]

Finance and Other Receivables

NOTE B – Finance and Other Receivables

The Company’s finance and other receivables include the following:

	September 30 2014			December 31 2013
Retail loans	$	2,594.2		$	2,442.5
Retail direct financing leases		1,623.3			1,577.0
Dealer wholesale financing		681.7			578.0
Dealer master notes		68.9			105.1
Operating lease and other trade receivables		32.0			36.7
Unearned interest on finance leases		(162.6	)		(155.9	)
Total portfolio		4,837.5			4,583.4
Less allowance for losses:
Loans and leases		(52.5	)		(51.5	)
Dealer wholesale financing		(2.8	)		(3.0	)
Operating lease and other trade receivables		(.9	)		(.8	)
Total portfolio, net of allowance for losses	$	4,781.3		$	4,528.1

Recognition of interest income and rental revenue is suspended (put on non-accrual status) when the receivable becomes more than 90 days past the contractual due date or earlier if some other event causes the Company to determine that collection is not probable. Accordingly, no finance receivables more than 90 days past-due were accruing interest at September 30, 2014 or December 31, 2013. 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.

Allowance for Credit Losses

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

On average, modifications extended contractual terms by three months in 2014 and four months in 2013, and did not have a significant effect on the weighted average term or interest rate of the total portfolio at September 30, 2014 and December 31, 2013.

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

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

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

Impaired receivables are 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 recorded investment, no reserve is recorded. Small balance impaired receivables with similar risk characteristics are evaluated as a separate pool to determine the appropriate reserve for losses using the historical loss information discussed below.

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

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

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

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

The allowance for credit losses is summarized as follows:

	2014
	Dealer						Customer Retail
	Wholesale			Retail						Other*			Total
Balance at January 1	$	3.0		$	11.5		$	40.0		$	.8		$	55.3
Provision for losses		(.2	)		(.5	)		4.0			.1			3.4
Charge-offs								(3.7	)					(3.7	)
Recoveries								1.2						1.2
Balance at September 30	$	2.8		$	11.0		$	41.5		$	.9		$	56.2
	2013
	Dealer						Customer Retail
	Wholesale			Retail						Other*			Total
Balance at January 1	$	3.9		$	10.7		$	37.1		$	1.1		$	52.8
Provision for losses		(.8	)					6.4			.3			5.9
Charge-offs								(5.1	)		(.1	)		(5.2	)
Recoveries								1.8						1.8
Balance at September 30	$	3.1		$	10.7		$	40.2		$	1.3		$	55.3

* Operating lease and other trade receivables

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

	Dealer						Customer
At September 30, 2014	Wholesale			Retail			Retail			Total
Recorded investment for impaired finance receivables evaluated individually							$	28.5		$	28.5
Allowance for impaired finance receivables determined individually							$	(1.6	)	$	(1.6	)
Recorded investment for finance receivables evaluated collectively	$	681.7		$	1,314.3		$	2,781.0		$	4,777.0
Allowance for finance receivables determined collectively	$	(2.8	)	$	(11.0	)	$	(39.9	)	$	(53.7	)
	Dealer						Customer
At December 31, 2013	Wholesale			Retail			Retail			Total
Recorded investment for impaired finance receivables evaluated individually							$	19.1		$	19.1
Allowance for impaired finance receivables determined individually							$	(2.0	)	$	(2.0	)
Recorded investment for finance receivables evaluated collectively	$	578.0		$	1,318.8		$	2,630.8		$	4,527.6
Allowance for finance receivables determined collectively	$	(3.0	)	$	(11.5	)	$	(38.0	)	$	(52.5	)

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

	September 30 2014		December 31 2013
Customer Retail:
Fleet	$	27.0	$	17.0
Owner/Operator		1.5		2.1
	$	28.5	$	19.1

Impaired Loans

Impaired loans with no specific reserves were $15.2 and $7.3 at September 30, 2014 and December 31, 2013, respectively. Impaired loans with a specific reserve are summarized below. The impaired loans with specific reserve represent the unpaid principal balance. The recorded investment of impaired loans as of September 30, 2014 and December 31, 2013 was not significantly different than the unpaid principal balance.

	Dealer		Customer Retail
At September 30, 2014	Wholesale	Retail	Fleet			Owner/ Operator			Total
Impaired loans with specific reserve			$	7.7		$	1.4		$	9.1
Associated allowance				(.7	)		(.3	)		(1.0	)
Net carrying amount of impaired loans			$	7.0		$	1.1		$	8.1
Average recorded investment*			$	13.7		$	1.9		$	15.6
*  Represents the average during the 12 months ended September 30, 2014
	Dealer		Customer Retail
At December 31, 2013	Wholesale	Retail	Fleet			Owner/ Operator			Total
Impaired loans with specific reserve			$	6.5		$	1.9		$	8.4
Associated allowance				(1.0	)		(.5	)		(1.5	)
Net carrying amount of impaired loans			$	5.5		$	1.4		$	6.9
Average recorded investment*			$	13.8		$	3.7		$	17.5

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

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

	Three Months Ended September 30				Nine Months Ended September 30
	2014		2013		2014		2013
Interest income recognized:
Customer Retail:
Fleet	$	.2	$	.3	$	.6	$	1.0
Owner/Operator		.1		.1		.3		.4
	$	.3	$	.4	$	.9	$	1.4

Credit Quality

The Company’s customers are principally concentrated in the transportation industry in the United States. The Company’s portfolio is diversified over a large number of customers and dealers with no single customer or dealer balance representing over 10% of the total portfolio. The Company retains as collateral a security interest in the related equipment.

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

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

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

	Dealer				Customer Retail
At September 30, 2014	Wholesale		Retail		Fleet		Owner/ Operator		Total
Performing	$	671.9	$	1,312.9	$	2,357.9	$	420.5	$	4,763.2
Watch		9.8		1.4		2.1		.5		13.8
At-risk						27.0		1.5		28.5
Total	$	681.7	$	1,314.3	$	2,387.0	$	422.5	$	4,805.5
	Dealer				Customer Retail
At December 31, 2013	Wholesale		Retail		Fleet		Owner / Operator		Total
Performing	$	576.9	$	1,313.9	$	2,264.5	$	365.1	$	4,520.4
Watch		1.1		5.0		.9		.2		7.2
At-risk						17.0		2.1		19.1
Total	$	578.0	$	1,318.9	$	2,282.4	$	367.4	$	4,546.7

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

	Dealer				Customer Retail
At September 30, 2014	Wholesale		Retail		Fleet		Owner/ Operator		Total
Current and up to 30 days past-due	$	681.7	$	1,314.3	$	2,385.7	$	421.5	$	4,803.2
31 – 60 days past-due						.6		.2		.8
Greater than 60 days past-due						.7		.8		1.5
Total	$	681.7	$	1,314.3	$	2,387.0	$	422.5	$	4,805.5
	Dealer				Customer Retail
At December 31, 2013	Wholesale		Retail		Fleet		Owner / Operator		Total
Current and up to 30 days past-due	$	578.0	$	1,318.9	$	2,270.7	$	365.7	$	4,533.3
31 – 60 days past-due						1.4		.5		1.9
Greater than 60 days past-due						10.3		1.2		11.5
Total	$	578.0	$	1,318.9	$	2,282.4	$	367.4	$	4,546.7

Troubled Debt Restructurings

The balance of TDRs was $24.4 at September 30, 2014 and $6.1 at December 31, 2013. At modification date, the pre-modification and post-modification recorded investment balances for finance receivables modified during the period by portfolio class are as follows:

	Three Months Ended September 30, 2014				Nine Months Ended September 30, 2014
	Recorded Investment				Recorded Investment
	Pre-Modification		Post-Modification		Pre-Modification		Post-Modification
Fleet	$	17.6	$	17.6	$	22.0	$	22.0
Owner/Operator						.3		.3
	$	17.6	$	17.6	$	22.3	$	22.3
	Three Months Ended September 30, 2013				Nine Months Ended September 30, 2013
	Recorded Investment				Recorded Investment
	Pre-Modification		Post-Modification		Pre-Modification		Post-Modification
Fleet	$	.2	$	.2	$	.5	$	.5
Owner/Operator						.3		.3
	$	.2	$	.2	$	.8	$	.8

The effect on the allowance for credit losses from such modifications was not significant at September 30, 2014 and 2013.

The post-modification recorded investment of finance receivables modified as TDRs during the previous twelve months that subsequently defaulted (i.e. became more than 30 days past-due) during the period by portfolio class are as follows:

	Nine Months ended September 30
	2014		2013
Fleet			$	.3
Owner/Operator	$	.1
	$	.1	$	.3

The TDRs that subsequently defaulted did not significantly impact the Company’s allowance for credit losses at September 30, 2014 and 2013.

Repossessions

When the Company determines that a customer is not likely to meet its contractual commitments, the Company repossesses the vehicles which serve as collateral for loans, finance leases and equipment on operating leases. The Company records the vehicles as used truck inventory which is included in Other assets on the Balance Sheets. The balance of repossessed inventory at September 30, 2014 and December 31, 2013 was $1.6 and $4.3, respectively.

Proceeds from the sales of repossessed assets were $16.5 and $13.8 for the nine months ended September 30, 2014 and 2013, respectively. These amounts are included in Proceeds from disposal of equipment on the Statements of Cash Flows. Write-downs of repossessed equipment on operating leases are recorded as impairments and included in Depreciation and other rental expenses on the Statements of Comprehensive Income and Retained Earnings.

Unamortized Loan Origination Costs

The unamortized loan origination costs at September 30, 2014 and December 31, 2013 were $12.9 and $12.8, respectively. These amounts are included in Other assets on the Balance Sheets.

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Balance Sheets (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
ASSETS
Cash	$ 30.4	$ 33.5	[1]
Finance and other receivables, net of allowance for losses (2014 - $56.2 and 2013 - $55.3)	4,781.3	4,528.1	[1]
Due from PACCAR and affiliates	1,326.0	1,367.3	[1]
Equipment on operating leases, net of accumulated depreciation (2014 - $493.8 and 2013 - $455.8)	1,282.8	1,188.5	[1]
Other assets	196.3	130.2	[1]
TOTAL ASSETS	7,616.8	7,247.6	[1]
LIABILITIES
Accounts payable, accrued expenses and other	226.5	211.2	[1]
Due to PACCAR and affiliates	25.2	259.4	[1]
Commercial paper	1,704.0	1,149.8	[1]
Medium-term notes	3,849.5	3,849.9	[1]
Deferred taxes and other liabilities	782.9	832.3	[1]
TOTAL LIABILITIES	6,588.1	6,302.6	[1]
STOCKHOLDER'S EQUITY
Preferred stock, par value $100 per share, 6% noncumulative and nonvoting, 450,000 shares authorized, 310,000 shares issued and outstanding	31.0	31.0	[1]
Common Stock, par value $100 per share, 200,000 shares authorized, 145,000 shares issued and outstanding	14.5	14.5	[1]
Additional paid-in capital	111.7	107.6	[1]
Retained earnings	871.4	794.6	[1]
Accumulated other comprehensive income (loss)	0.1	(2.7)	[1]
TOTAL STOCKHOLDER'S EQUITY	1,028.7	945.0	[1]
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$ 7,616.8	$ 7,247.6	[1]

[1] The December 31, 2013 balance sheet has been derived from audited financial statements.

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Assets and Liabilities Fair Value Measurements

Amounts shown below represent the balance of assets measured at fair value as of September 30, 2014 and December 31, 2013. Derivative contracts are measured on a recurring basis. These assets and liabilities are outlined in the table below:

Level 2	September 30 2014		December 31 2013
Assets:
Impaired loans, net of specific reserves (2014 – nil and 2013 – $.1)	$	12.9	$	7.0
Used trucks held for sale		3.7		8.7
Derivative contracts		2.4		1.6
Liabilities:
Derivative contracts	$	2.3	$	6.0

Carrying Amount and Fair Value Fixed-Rate Loans and Fixed-Rate Debt

The Company’s estimate of fair value for fixed-rate loans and debt that are not carried at fair value at September 30, 2014 and December 31, 2013 was as follows:

	September 30 2014				December 31 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Due from PACCAR	$	670.5	$	674.4	$	550.5	$	554.5
Due from foreign finance affiliates		171.0		172.5		216.0		218.4
Fixed-rate loans		2,529.2		2,558.8		2,393.1		2,413.9
Liabilities:
Due to PACCAR					$	218.0	$	219.7
Fixed-rate debt	$	2,949.5	$	2,962.0		2,749.9		2,774.4

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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Oct. 31, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Trading Symbol	ck0000731288
Entity Registrant Name	PACCAR FINANCIAL CORP
Entity Central Index Key	0000731288
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		145,000

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Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2014

Balance Sheet Classification, Fair Value and Gross and Net Amounts of Derivative Financial Instruments

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

As of September 30, 2014

Interest-rate contracts	Gross Amount Recognized in Balance Sheets		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Other assets	$	2.4	$	(.4	)	$	2.0
Liabilities:
Accounts payable, accrued expenses and other	$	2.3	$	(.4	)	$	1.9

As of December 31, 2013

Interest-rate contracts	Gross Amount Recognized in Balance Sheets		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Other assets	$	1.6	$	(.2	)	$	1.4
Liabilities:
Accounts payable, accrued expenses and other	$	6.0	$	(.2	)	$	5.8

Cash Flow Hedging

Gains/Losses of Derivative Financial Instruments

The following table presents the pre-tax effects of derivative instruments designated as cash flow hedges recognized in other comprehensive income (OCI) and expenses reclassified from AOCI into income.

	Three Months Ended					Nine Months Ended
	September 30					September 30
	2014		2013			2014			2013
Pre-tax gain (loss) on derivative contracts recognized in OCI	$	2.0	$	(1.6	)	$	(3.1	)	$	.2
Expenses reclassified out of AOCI into Interest and other borrowing expenses	$	2.7	$	2.0		$	7.7		$	6.2

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Balance Sheets (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Finance and other receivables, allowance for losses	$ 56.2	$ 55.3	[1]
Equipment on operating leases, accumulated depreciation	$ 493.8	$ 455.8	[1]
Preferred stock, par value	$ 100	$ 100	[1]
Preferred stock, noncumulative and nonvoting	6.00%	6.00%	[1]
Preferred stock, shares authorized	450,000	450,000	[1]
Preferred stock, shares issued	310,000	310,000	[1]
Preferred stock, shares outstanding	310,000	310,000	[1]
Common Stock, par value	$ 100	$ 100	[1]
Common Stock, shares authorized	200,000	200,000	[1]
Common Stock, shares issued	145,000	145,000	[1]
Common Stock, shares outstanding	145,000	145,000	[1]

[1] The December 31, 2013 balance sheet has been derived from audited financial statements.

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Income Taxes

9 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

Income Taxes

NOTE G – Income Taxes

The effective income tax rate for the third quarter and first nine months of 2014 was 43.1% and 39.9%, respectively, compared to 37.9% and 37.9% for the third quarter and first nine months of 2013, reflecting higher state tax expenses in the third quarter and first nine months of 2014 compared to 2013.

The Company is included in the consolidated federal income tax return of PACCAR. Federal income taxes for the Company are determined on a separate return basis. State income taxes, where the Company files combined tax returns with PACCAR, are determined on a blended statutory rate, which is substantially the same as the rate computed on a separate return basis.

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Derivative Financial Instruments

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

NOTE F – Derivative Financial Instruments

Interest rate contracts 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. The Company is exposed to interest 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. The notional amount is used to measure the volume of these contracts and does not represent exposure to credit loss. In the event of default by the counterparty, the risk in these transactions is the fair value of replacing the interest rate contract at current market rates.

At September 30, 2014, the notional amount of these contracts totaled $1,228.0 with amounts expiring over the next six years. Notional maturities for all interest rate contracts are $101.0 for the remainder of 2014, $325.0 for 2015, $392.0 for 2016, $100.0 for 2017, $250.0 for 2018, $20.0 for 2019 and $40.0 for 2020. The majority of these contracts are floating to fixed rate swaps that effectively convert an equivalent amount of commercial paper and other variable rate debt to fixed rates.

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

As of September 30, 2014

Interest-rate contracts	Gross Amount Recognized in Balance Sheets		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Other assets	$	2.4	$	(.4	)	$	2.0
Liabilities:
Accounts payable, accrued expenses and other	$	2.3	$	(.4	)	$	1.9

As of December 31, 2013

Interest-rate contracts	Gross Amount Recognized in Balance Sheets		Amount Not Offset in Financial Instruments			Pro Forma Net Amount
Assets:
Other assets	$	1.6	$	(.2	)	$	1.4
Liabilities:
Accounts payable, accrued expenses and other	$	6.0	$	(.2	)	$	5.8

All of the Company’s interest-rate 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.

The Company has elected not to offset derivative positions in the balance sheet with the same counterparty under the same agreement and is not required to post or receive collateral. Exposure limits and minimum credit ratings are used to minimize the risks of counterparty default. The Company had no material exposures to default at September 30, 2014.

Cash Flow Hedges

Substantially all of the Company’s interest rate contracts have been designated as cash flow hedges. The Company uses regression analysis to assess the effectiveness of hedges on a quarterly basis. The change in variable cash flows method or the hypothetical derivative method is used to measure ineffectiveness of interest rate contracts designated as cash flow hedges. Changes in the fair value of derivatives designated as cash flow hedges are recorded in AOCI to the extent such hedges are considered effective. Gains or losses on the ineffective portion of cash flow hedges are recognized in current earnings and were immaterial for the nine months ended September 30, 2014 and 2013. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows is 6.1 years.

Amounts in AOCI are reclassified into net income in the same period in which the hedged transaction affects earnings. Net realized gains and losses from interest rate contracts are recognized as an adjustment to interest expense. As of September 30, 2014, AOCI was $.1, net of tax, and $4.1, net of tax is expected to be reclassified to interest expense in the following 12 months. The fixed interest earned on finance receivables will offset the amount recognized in interest expense, resulting in a stable interest margin consistent with the Company’s interest rate risk management strategy.

The following table presents the pre-tax effects of derivative instruments designated as cash flow hedges recognized in other comprehensive income (OCI) and expenses reclassified from AOCI into income.

	Three Months Ended					Nine Months Ended
	September 30					September 30
	2014		2013			2014			2013
Pre-tax gain (loss) on derivative contracts recognized in OCI	$	2.0	$	(1.6	)	$	(3.1	)	$	.2
Expenses reclassified out of AOCI into Interest and other borrowing expenses	$	2.7	$	2.0		$	7.7		$	6.2

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Recorded Investment for Finance Receivables that are on Non-accrual Status (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Recorded investment of finance receivables that are on non-accrual status	$ 28.5	$ 19.1
Customer Retail | Fleet
Financing Receivable, Recorded Investment [Line Items]
Recorded investment of finance receivables that are on non-accrual status	27.0	17.0
Customer Retail | Owner/Operator
Financing Receivable, Recorded Investment [Line Items]
Recorded investment of finance receivables that are on non-accrual status	$ 1.5	$ 2.1

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Finance and Other Receivables (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013		Sep. 30, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Retail loans	$ 2,594.2	$ 2,442.5
Retail direct financing leases	1,623.3	1,577.0
Dealer wholesale financing	681.7	578.0
Dealer master notes	68.9	105.1
Operating lease and other trade receivables	32.0	36.7
Unearned interest on finance leases	(162.6)	(155.9)
Total portfolio	4,837.5	4,583.4
Allowance for losses	(56.2)	(55.3)		(55.3)	(52.8)
Total portfolio, net of allowance for losses	4,781.3	4,528.1	[1]
Loans and Leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for losses	(52.5)	(51.5)
Dealer Wholesale Financing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for losses	(2.8)	(3.0)
Operating lease and other trade receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for losses	$ (0.9)	$ (0.8)

[1] The December 31, 2013 balance sheet has been derived from audited financial statements.

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Transactions with PACCAR and Affiliates (Tables)

9 Months Ended

Sep. 30, 2014

Related Party Transactions [Abstract]

Amounts Outstanding Including Foreign Finance Affiliates

Amounts outstanding at September 30, 2014 and December 31, 2013, including foreign finance affiliates operating in the United Kingdom, the Netherlands, Mexico, Canada and Australia are summarized below:

	September 30 2014		December 31 2013
Due from PACCAR and affiliates
Loans due from PACCAR	$	775.5	$	653.6
Loans due from foreign finance affiliates		362.0		429.6
Tax-related receivable due from PACCAR		105.0		193.7
Direct financing leases due from affiliate		14.3		14.7
Receivables		69.2		75.7
Total	$	1,326.0	$	1,367.3
Due to PACCAR and affiliates
Loans due to PACCAR			$	218.0
Payables	$	25.2		41.4
Total	$	25.2	$	259.4

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Finance and Other Receivables (Policies)

9 Months Ended

Sep. 30, 2014

Receivables [Abstract]

Finance Receivables Allowance for Credit Losses

Allowance for Credit Losses

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

On average, modifications extended contractual terms by three months in 2014 and four months in 2013, and did not have a significant effect on the weighted average term or interest rate of the total portfolio at September 30, 2014 and December 31, 2013.

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

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

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

Impaired receivables are 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 recorded investment, no reserve is recorded. Small balance impaired receivables with similar risk characteristics are evaluated as a separate pool to determine the appropriate reserve for losses using the historical loss information discussed below.

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

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

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

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Finance and Other Receivables (Tables)

9 Months Ended

Sep. 30, 2014

Receivables [Abstract]

Finance and Other Receivables

The Company’s finance and other receivables include the following:

	September 30 2014			December 31 2013
Retail loans	$	2,594.2		$	2,442.5
Retail direct financing leases		1,623.3			1,577.0
Dealer wholesale financing		681.7			578.0
Dealer master notes		68.9			105.1
Operating lease and other trade receivables		32.0			36.7
Unearned interest on finance leases		(162.6	)		(155.9	)
Total portfolio		4,837.5			4,583.4
Less allowance for losses:
Loans and leases		(52.5	)		(51.5	)
Dealer wholesale financing		(2.8	)		(3.0	)
Operating lease and other trade receivables		(.9	)		(.8	)
Total portfolio, net of allowance for losses	$	4,781.3		$	4,528.1

Allowance for Credit Losses

The allowance for credit losses is summarized as follows:

	2014
	Dealer						Customer Retail
	Wholesale			Retail						Other*			Total
Balance at January 1	$	3.0		$	11.5		$	40.0		$	.8		$	55.3
Provision for losses		(.2	)		(.5	)		4.0			.1			3.4
Charge-offs								(3.7	)					(3.7	)
Recoveries								1.2						1.2
Balance at September 30	$	2.8		$	11.0		$	41.5		$	.9		$	56.2
	2013
	Dealer						Customer Retail
	Wholesale			Retail						Other*			Total
Balance at January 1	$	3.9		$	10.7		$	37.1		$	1.1		$	52.8
Provision for losses		(.8	)					6.4			.3			5.9
Charge-offs								(5.1	)		(.1	)		(5.2	)
Recoveries								1.8						1.8
Balance at September 30	$	3.1		$	10.7		$	40.2		$	1.3		$	55.3

* Operating lease and other trade receivables

Finance Receivables Evaluated and Determined Individually and Collectively

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

	Dealer						Customer
At September 30, 2014	Wholesale			Retail			Retail			Total
Recorded investment for impaired finance receivables evaluated individually							$	28.5		$	28.5
Allowance for impaired finance receivables determined individually							$	(1.6	)	$	(1.6	)
Recorded investment for finance receivables evaluated collectively	$	681.7		$	1,314.3		$	2,781.0		$	4,777.0
Allowance for finance receivables determined collectively	$	(2.8	)	$	(11.0	)	$	(39.9	)	$	(53.7	)
	Dealer						Customer
At December 31, 2013	Wholesale			Retail			Retail			Total
Recorded investment for impaired finance receivables evaluated individually							$	19.1		$	19.1
Allowance for impaired finance receivables determined individually							$	(2.0	)	$	(2.0	)
Recorded investment for finance receivables evaluated collectively	$	578.0		$	1,318.8		$	2,630.8		$	4,527.6
Allowance for finance receivables determined collectively	$	(3.0	)	$	(11.5	)	$	(38.0	)	$	(52.5	)

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

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

	September 30 2014		December 31 2013
Customer Retail:
Fleet	$	27.0	$	17.0
Owner/Operator		1.5		2.1
	$	28.5	$	19.1

Impaired Loans and Specific Reserve

Impaired loans with no specific reserves were $15.2 and $7.3 at September 30, 2014 and December 31, 2013, respectively. Impaired loans with a specific reserve are summarized below. The impaired loans with specific reserve represent the unpaid principal balance. The recorded investment of impaired loans as of September 30, 2014 and December 31, 2013 was not significantly different than the unpaid principal balance.

	Dealer		Customer Retail
At September 30, 2014	Wholesale	Retail	Fleet			Owner/ Operator			Total
Impaired loans with specific reserve			$	7.7		$	1.4		$	9.1
Associated allowance				(.7	)		(.3	)		(1.0	)
Net carrying amount of impaired loans			$	7.0		$	1.1		$	8.1
Average recorded investment*			$	13.7		$	1.9		$	15.6
*  Represents the average during the 12 months ended September 30, 2014
	Dealer		Customer Retail
At December 31, 2013	Wholesale	Retail	Fleet			Owner/ Operator			Total
Impaired loans with specific reserve			$	6.5		$	1.9		$	8.4
Associated allowance				(1.0	)		(.5	)		(1.5	)
Net carrying amount of impaired loans			$	5.5		$	1.4		$	6.9
Average recorded investment*			$	13.8		$	3.7		$	17.5

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

Interest Income Recognized on Cash Basis

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

	Three Months Ended September 30				Nine Months Ended September 30
	2014		2013		2014		2013
Interest income recognized:
Customer Retail:
Fleet	$	.2	$	.3	$	.6	$	1.0
Owner/Operator		.1		.1		.3		.4
	$	.3	$	.4	$	.9	$	1.4

Finance Receivables by Credit Quality Indicator

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

	Dealer				Customer Retail
At September 30, 2014	Wholesale		Retail		Fleet		Owner/ Operator		Total
Performing	$	671.9	$	1,312.9	$	2,357.9	$	420.5	$	4,763.2
Watch		9.8		1.4		2.1		.5		13.8
At-risk						27.0		1.5		28.5
Total	$	681.7	$	1,314.3	$	2,387.0	$	422.5	$	4,805.5
	Dealer				Customer Retail
At December 31, 2013	Wholesale		Retail		Fleet		Owner / Operator		Total
Performing	$	576.9	$	1,313.9	$	2,264.5	$	365.1	$	4,520.4
Watch		1.1		5.0		.9		.2		7.2
At-risk						17.0		2.1		19.1
Total	$	578.0	$	1,318.9	$	2,282.4	$	367.4	$	4,546.7

Financing Receivables by Aging Category

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

	Dealer				Customer Retail
At September 30, 2014	Wholesale		Retail		Fleet		Owner/ Operator		Total
Current and up to 30 days past-due	$	681.7	$	1,314.3	$	2,385.7	$	421.5	$	4,803.2
31 – 60 days past-due						.6		.2		.8
Greater than 60 days past-due						.7		.8		1.5
Total	$	681.7	$	1,314.3	$	2,387.0	$	422.5	$	4,805.5
	Dealer				Customer Retail
At December 31, 2013	Wholesale		Retail		Fleet		Owner / Operator		Total
Current and up to 30 days past-due	$	578.0	$	1,318.9	$	2,270.7	$	365.7	$	4,533.3
31 – 60 days past-due						1.4		.5		1.9
Greater than 60 days past-due						10.3		1.2		11.5
Total	$	578.0	$	1,318.9	$	2,282.4	$	367.4	$	4,546.7

Pre-Modification and Post-Modification Recorded Investment Balances by Portfolio Class

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

	Three Months Ended September 30, 2014				Nine Months Ended September 30, 2014
	Recorded Investment				Recorded Investment
	Pre-Modification		Post-Modification		Pre-Modification		Post-Modification
Fleet	$	17.6	$	17.6	$	22.0	$	22.0
Owner/Operator						.3		.3
	$	17.6	$	17.6	$	22.3	$	22.3
	Three Months Ended September 30, 2013				Nine Months Ended September 30, 2013
	Recorded Investment				Recorded Investment
	Pre-Modification		Post-Modification		Pre-Modification		Post-Modification
Fleet	$	.2	$	.2	$	.5	$	.5
Owner/Operator						.3		.3
	$	.2	$	.2	$	.8	$	.8

Post-Modification Recorded Investment of Finance Receivables Modified as TDRs Modified During Previous Twelve Months that Subsequently Defaulted by Portfolio Class

The post-modification recorded investment of finance receivables modified as TDRs during the previous twelve months that subsequently defaulted (i.e. became more than 30 days past-due) during the period by portfolio class are as follows:

	Nine Months ended September 30
	2014		2013
Fleet			$	.3
Owner/Operator	$	.1
	$	.1	$	.3

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Stockholder's Equity (Tables)

9 Months Ended

Sep. 30, 2014

Equity [Abstract]

Components of Comprehensive Income

The components of comprehensive income are as follows:

	Three Months Ended September 30				Nine Months Ended September 30
	2014		2013		2014		2013
Net income	$	26.1	$	25.4	$	76.8	$	70.5
Other comprehensive income
Derivative contracts increase		2.9		.2		2.8		3.9
Net other comprehensive income		2.9		.2		2.8		3.9
Total comprehensive income	$	29.0	$	25.6	$	79.6	$	74.4

Changes in and Reclassifications out of Accumulated Other Comprehensive Income

Changes in and reclassifications out of AOCI during the nine months ended September 30, 2014 and 2013 are as follows:

	2014			2013
Balance at January 1	$	(2.7	)	$	(7.7	)
Amounts recorded in AOCI
Unrealized (loss) gain on derivative contracts		(3.1	)		.2
Income tax effect		1.1			(.1	)
Amounts reclassified out of AOCI
Interest and other borrowing costs		7.7			6.2
Income taxes		(2.9	)		(2.4	)
Net other comprehensive income		2.8			3.9
Balance at September 30	$	.1		$	(3.8	)

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Changes in and Reclassifications out of Accumulated Other Comprehensive Income (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014		Sep. 30, 2013
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			$ (2.7)	[1]
Amounts reclassified out of AOCI
Net other comprehensive income	2.9	0.2	2.8		3.9
Ending balance	0.1		0.1
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			(2.7)		(7.7)
Amounts recorded in AOCI
Unrealized (loss) gain on derivative contracts			(3.1)		0.2
Income tax effect			1.1		(0.1)
Amounts reclassified out of AOCI
Interest and other borrowing costs			7.7		6.2
Income taxes			(2.9)		(2.4)
Net other comprehensive income			2.8		3.9
Ending balance	$ 0.1	$ (3.8)	$ 0.1		$ (3.8)

[1] The December 31, 2013 balance sheet has been derived from audited financial statements.

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Allowance for Credit Losses (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended							9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 Dealer Wholesale	Sep. 30, 2013 Dealer Wholesale	Sep. 30, 2014 Dealer Retail	Sep. 30, 2013 Dealer Retail	Dec. 31, 2012 Dealer Retail	Sep. 30, 2014 Customer Retail	Sep. 30, 2013 Customer Retail	Sep. 30, 2014 Other		Sep. 30, 2013 Other
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	$ 55.3	$ 52.8	$ 3.0	$ 3.9	$ 11.5	$ 10.7	$ 10.7	$ 40.0	$ 37.1	$ 0.8	[1]	$ 1.1	[1]
Provision for losses	3.4	5.9	(0.2)	(0.8)	(0.5)			4.0	6.4	0.1	[1]	0.3	[1]
Charge-offs	(3.7)	(5.2)						(3.7)	(5.1)			(0.1)	[1]
Recoveries	1.2	1.8						1.2	1.8
Ending Balance	$ 56.2	$ 55.3	$ 2.8	$ 3.1	$ 11.0	$ 10.7	$ 10.7	$ 41.5	$ 40.2	$ 0.9	[1]	$ 1.3	[1]

[1] Operating lease and other trade receivables

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Financing Receivables by Credit Quality Indicator (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	$ 4,805.5	$ 4,546.7
Pass
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	4,763.2	4,520.4
Special Mention
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	13.8	7.2
Substandard
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	28.5	19.1
Dealer | Wholesale
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	681.7	578.0
Dealer | Retail
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	1,314.3	1,318.9
Dealer | Pass | Wholesale
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	671.9	576.9
Dealer | Pass | Retail
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	1,312.9	1,313.9
Dealer | Special Mention | Wholesale
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	9.8	1.1
Dealer | Special Mention | Retail
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	1.4	5.0
Customer Retail | Fleet
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	2,387.0	2,282.4
Customer Retail | Owner/Operator
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	422.5	367.4
Customer Retail | Pass | Fleet
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	2,357.9	2,264.5
Customer Retail | Pass | Owner/Operator
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	420.5	365.1
Customer Retail | Special Mention | Fleet
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	2.1	0.9
Customer Retail | Special Mention | Owner/Operator
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	0.5	0.2
Customer Retail | Substandard | Fleet
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	27.0	17.0
Customer Retail | Substandard | Owner/Operator
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables	$ 1.5	$ 2.1

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Pre-Tax Effects of Derivative Instruments Recognized into Accumulated Other Comprehensive Income (OCI) and into Statements of Income (Detail) (Cash Flow Hedging, USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Pre-tax gain (loss) on derivative contracts recognized in OCI	$ 2.0	$ (1.6)	$ (3.1)	$ 0.2
Interest Expense
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Expenses reclassified out of AOCI into Interest and other borrowing expenses	$ 2.7	$ 2.0	$ 7.7	$ 6.2

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Statements of Cash Flows (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014		Sep. 30, 2013
OPERATING ACTIVITIES
Net income	$ 76.8		$ 70.5
Items included in net income not affecting cash:
Depreciation and amortization	180.7		162.3
Provision for losses on receivables	3.4		5.9
Deferred taxes	(41.2)		33.8
Administrative fees for services from PACCAR	4.1		2.8
Increase in payables and other	81.8		26.3
NET CASH PROVIDED BY OPERATING ACTIVITIES	305.6		301.6
INVESTING ACTIVITIES
Finance and other receivables originated	(1,358.7)		(1,282.7)
Collections on finance and other receivables	1,187.1		1,133.1
Net (increase) decrease in wholesale receivables	(103.7)		62.9
Loans to PACCAR and affiliates	(125.0)		(395.5)
Collection on loans from PACCAR and affiliates	45.0		220.5
Net decrease (increase) in other receivables and leases to PACCAR and affiliates	32.7		(125.4)
Acquisition of equipment on operating leases, primarily from PACCAR	(381.7)		(316.6)
Proceeds from disposal of equipment	125.5		94.0
Increase in restricted cash	(9.8)
Acquisition of trucks for lease and other	(56.3)		(39.8)
NET CASH USED IN INVESTING ACTIVITIES	(644.9)		(649.5)
FINANCING ACTIVITIES
Net increase (decrease) in commercial paper	554.2		(543.9)
Proceeds from medium-term notes	800.0		1,450.0
Payments of medium-term notes	(800.0)		(550.0)
Payments on loans from PACCAR	(218.0)
NET CASH PROVIDED BY FINANCING ACTIVITIES	336.2		356.1
NET (DECREASE) INCREASE IN CASH	(3.1)		8.2
CASH AT BEGINNING OF PERIOD	33.5	[1]	26.6
CASH AT END OF PERIOD	$ 30.4		$ 34.8

[1] The December 31, 2013 balance sheet has been derived from audited financial statements.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE E – Fair Value Measurements

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

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

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

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

There were no transfers of assets or liabilities between Level 1 and Level 2 of the fair value hierarchy during the nine months ended September 30, 2014. The Company’s policy is to recognize transfers between levels at the end of the reporting period.

Assets and Liabilities Subject to Non-recurring and Recurring Fair Value Measurement

Impaired loans and used trucks held for sale are measured on a non-recurring basis. Amounts shown below represent the balance of assets measured at fair value as of September 30, 2014 and December 31, 2013. Derivative contracts are measured on a recurring basis. These assets and liabilities are outlined in the table below:

Level 2	September 30 2014		December 31 2013
Assets:
Impaired loans, net of specific reserves (2014 – nil and 2013 – $.1)	$	12.9	$	7.0
Used trucks held for sale		3.7		8.7
Derivative contracts		2.4		1.6
Liabilities:
Derivative contracts	$	2.3	$	6.0

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

Impaired Loans: Impaired loans are generally considered collateral dependent. Accordingly, the evaluation of individual reserves considers the fair value of the associated collateral (estimated sales proceeds less the costs to sell).

Used Trucks Held for Sale: The carrying amount of used trucks held for sale is written down as necessary to reflect the fair value less costs to sell. The Company determines the fair value of used trucks from a pricing matrix, which is based on the market approach. The significant observable inputs into the valuation model are recent sales prices of comparable units and the condition of the vehicles. Used truck impairments related to units held at September 30, 2014 and 2013 were $.7 and $1.0 during the first nine months of 2014 and 2013, respectively. These assets, which are shown in the above table when they are written down to fair value less costs to sell, are categorized as Level 2 and are included in Other assets on the Balance Sheets.

Derivative Financial Instruments: The Company’s derivative financial instruments consist of interest-rate swaps and are carried at fair value. 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 and credit default swap spreads. These contracts are categorized as Level 2 and are included in Other assets and Accounts payable, accrued expenses and other on the Balance Sheets.

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: Carrying amounts approximate fair value.

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

Commercial Paper and Medium-Term Notes: The carrying amounts of the Company’s commercial paper and variable medium-term notes approximate fair value. For fixed-rate debt, fair values are estimated using the income approach by discounting cash flows to their present value based on current rates for comparable debt.

The Company’s estimate of fair value for fixed-rate loans and debt that are not carried at fair value at September 30, 2014 and December 31, 2013 was as follows:

	September 30 2014				December 31 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Due from PACCAR	$	670.5	$	674.4	$	550.5	$	554.5
Due from foreign finance affiliates		171.0		172.5		216.0		218.4
Fixed-rate loans		2,529.2		2,558.8		2,393.1		2,413.9
Liabilities:
Due to PACCAR					$	218.0	$	219.7
Fixed-rate debt	$	2,949.5	$	2,962.0		2,749.9		2,774.4

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Financing Receivables by Aging Category (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current and up to 30 days past-due	$ 4,803.2	$ 4,533.3
31 - 60 days past-due	0.8	1.9
Greater than 60 days past-due	1.5	11.5
Total	4,805.5	4,546.7
Dealer | Wholesale
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current and up to 30 days past-due	681.7	578.0
Total	681.7	578.0
Dealer | Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current and up to 30 days past-due	1,314.3	1,318.9
Total	1,314.3	1,318.9
Customer Retail | Fleet
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current and up to 30 days past-due	2,385.7	2,270.7
31 - 60 days past-due	0.6	1.4
Greater than 60 days past-due	0.7	10.3
Total	2,387.0	2,282.4
Customer Retail | Owner/Operator
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current and up to 30 days past-due	421.5	365.7
31 - 60 days past-due	0.2	0.5
Greater than 60 days past-due	0.8	1.2
Total	$ 422.5	$ 367.4

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Carrying Amount and Fair Value for Fixed-Rate Loans and Debt (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Assets:
Loans due from affiliates	$ 1,326.0	$ 1,367.3	[1]
Liabilities:
Due to PACCAR		218.0
PACCAR
Assets:
Loans due from affiliates	775.5	653.6
Foreign Finance Affiliates
Assets:
Loans due from affiliates	362.0	429.6
Carrying Amount
Assets:
Fixed-rate loans	2,529.2	2,393.1
Liabilities:
Fixed-rate debt	2,949.5	2,749.9
Carrying Amount | PACCAR
Assets:
Loans due from affiliates	670.5	550.5
Liabilities:
Due to PACCAR		218.0
Carrying Amount | Foreign Finance Affiliates
Assets:
Loans due from affiliates	171.0	216.0
Fair Value
Assets:
Fixed-rate loans	2,558.8	2,413.9
Liabilities:
Fixed-rate debt	2,962.0	2,774.4
Fair Value | PACCAR
Assets:
Loans due from affiliates	674.4	554.5
Liabilities:
Due to PACCAR		219.7
Fair Value | Foreign Finance Affiliates
Assets:
Loans due from affiliates	$ 172.5	$ 218.4

[1] The December 31, 2013 balance sheet has been derived from audited financial statements.

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Finance and Other Receivables - Additional Information (Detail) (USD $)	9 Months Ended		12 Months Ended
	Sep. 30, 2014 Segment	Sep. 30, 2013	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Receivables more than 90 days past due still accruing	$ 0		$ 0
Extension of contractual terms	3 months		4 months
Number of portfolio segments	2
Impaired loans with no specific reserves	15,200,000		7,300,000
Troubled debt restructuring	24,400,000		6,100,000
Repossessed inventory	1,600,000		4,300,000
Proceeds from the sales of repossessed assets	16,500,000	13,800,000
Unamortized loan origination costs	$ 12,900,000		$ 12,800,000
Minimum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Contractual term of regular payment of principal and interest	36 months
Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Contractual term of regular payment of principal and interest	60 months
Maximum | Credit Quality
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of customers diversification in portfolio	10.00%