Transactions with PACCAR and Affiliates

12 Months Ended

Dec. 31, 2023

Related Party Transactions [Abstract]

Transactions with PACCAR and Affiliates

NOTE D – 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 earnings 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 years ended December 31, 2023, 2022 and 2021 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 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, Australia and Brasil. Loans to these foreign affiliates during 2023 and 2022 were denominated in United States dollars. 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, Australia and Brasil. The Company will not make loans to the foreign affiliates in excess of the equivalent of $750.0 U.S. 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 December 31, 2023 and 2022, including balances with foreign finance affiliates operating in the United Kingdom, the Netherlands, Mexico, Canada, Australia and Brasil, are summarized below:

	December 31		December 31
		2023		2022
Due from PACCAR and affiliates
Loans due from PACCAR	$	1,016.0	$	1,261.0
Loans due from foreign finance affiliates		716.0		627.0
Tax-related receivable due from PACCAR				4.4
Receivables		18.7		12.9
	$	1,750.7	$	1,905.3
Due to PACCAR and affiliates
Tax-related payable due to PACCAR	$	1.9
Payables		56.7	$	21.8
	$	58.6	$	21.8

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

PACCAR has issued letters of credit as of December 31, 2023 in the amount of $.9 on behalf of the Company to guarantee funds for payment to insured franchisees and customers for any future insurance losses.

PACCAR charges the Company for certain administrative services it provides. These costs were charged to the Company based upon the Company’s use of the services and PACCAR’s cost. Fees for the services were $7.0 in 2023, $8.6 in 2022 and $8.1 in 2021 and are included in Additional paid-in capital.

The Company’s principal office is located in the corporate headquarters building of PACCAR (owned by PACCAR). The Company also leases office space from five facilities leased by PACCAR. Lease payments for the use of these facilities are included in the above-mentioned administrative services charged 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 were $3.1, $4.9 and $4.3 for the years 2023, 2022 and 2021, respectively, and 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 are based on the actual contribution made on the behalf of participating employees. Expenses incurred by the Company for

the defined contribution plan were $2.0 in 2023 and $1.9 in 2022 and 2021 and are included in Selling, general and administrative expenses.