UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2006

or

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

For the transition period from to

Commission File No. 001-14817

PACCAR Inc

(Exact name of registrant as specified in its charter)

Delaware		91-0351110
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

777 - 106th Ave. N.E., Bellevue, WA		98004
(Address of principal executive offices)		(Zip Code)

(425) 468-7400

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer ý

Accelerated filer o

Non-accelerated filer o

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

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

Common Stock, $1 par value—166,207,932 shares as of June 30, 2006

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Consolidated Statements of Income (Unaudited)

(Millions Except Per Share Amounts)

	Three Months Ended				Six Months Ended
	June 30				June 30
	2006		2005		2006		2005

TRUCK AND OTHER:
Net sales and revenues	$	3,936.6	$	3,372.9	$	7,575.8	$	6,527.5

Cost of sales and revenues	3,353.9		2,876.4		6,452.8		5,566.1
Selling, general and administrative	112.6		105.9		222.2		213.0
Interest and other expense, net	.2		2.2		.6		3.0
	3,466.7		2,984.5		6,675.6		5,782.1
Truck and Other Income Before Income Taxes	469.9		388.4		900.2		745.4

FINANCIAL SERVICES:
Revenues	231.4		182.5		443.9		353.9

Interest and other	138.9		102.5		266.8		198.8
Selling, general and administrative	23.4		20.0		46.6		41.5
Provision for losses on receivables	9.4		10.1		16.0		16.4
	171.7		132.6		329.4		256.7
Financial Services Income Before Income Taxes	59.7		49.9		114.5		97.2

Investment income	18.6		14.4		34.2		26.2
Total Income Before Income Taxes	548.2		452.7		1,048.9		868.8

Income taxes	178.3		211.2		337.0		353.3
Net Income	$	369.9	$	241.5	$	711.9	$	515.5

Net Income Per Share:
Basic	$	2.22	$	1.40	$	4.25	$	2.97
Diluted	$	2.21	$	1.39	$	4.23	$	2.95

Weighted Average Common Shares Outstanding:
Basic	166.7		173.0		167.4		173.5
Diluted	167.6		174.1		168.4		174.6
Dividends declared per share	$	.30	$	.21	$	.55	$	.41

See Notes to Consolidated Financial Statements.

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Consolidated Balance Sheets

	June 30		December 31
	2006		2005*
	(Millions of Dollars)
	(Unaudited)
ASSETS
TRUCK AND OTHER:
Current Assets
Cash and cash equivalents	$	1,309.9	$	1,624.4
Trade and other receivables, net	878.5		582.2
Marketable debt securities	810.9		591.4
Inventories	506.0		495.5
Deferred taxes and other current assets	218.8		214.9
Total Truck and Other Current Assets	3,724.1		3,508.4
Equipment on operating leases, net	399.0		361.0
Property, plant and equipment, net	1,216.7		1,143.0
Other noncurrent assets	433.2		347.1
Total Truck and Other Assets	5,773.0		5,359.5

FINANCIAL SERVICES:
Cash and cash equivalents	48.8		74.5
Finance and other receivables, net	7,768.0		7,262.5
Equipment on operating leases, net	885.4		845.9
Other assets	266.7		173.0
Total Financial Services Assets	8,968.9		8,355.9
	$	14,741.9	$	13,715.4

	June 30			December 31
	2006			2005*
	(Millions of Dollars)
	(Unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
TRUCK AND OTHER:
Current Liabilities
Accounts payable and accrued expenses	$	2,172.2		$	1,834.9
Current portion of long-term debt and commercial paper				8.6
Dividend payable				338.7
Total Truck and Other Current Liabilities	2,172.2			2,182.2
Long-term debt	21.2			20.2
Residual value guarantees and deferred revenues	454.8			410.4
Deferred taxes and other liabilities	391.8			344.0
Total Truck and Other Liabilities	3,040.0			2,956.8

FINANCIAL SERVICES:
Accounts payable, accrued expenses and other	213.3			168.9
Commercial paper and bank loans	3,492.7			3,568.6
Term debt	3,091.6			2,657.5
Deferred taxes and other liabilities	483.2			462.5
Total Financial Services Liabilities	7,280.8			6,857.5

STOCKHOLDERS’ EQUITY
Preferred stock, no par value: Authorized 1.0 million shares, none issued
Common stock, $1 par value: Authorized 400.0 million shares, 170.1 million shares issued	170.1			169.4
Additional paid-in capital	172.8			140.6
Treasury stock - at cost - 3.9 million shares	(275.1		)	(35.1		)
Retained earnings	4,091.1			3,471.5
Accumulated other comprehensive income	262.2			154.7
Total Stockholders’ Equity	4,421.1			3,901.1
	$	14,741.9		$	13,715.4

* The December 31, 2005 consolidated balance sheet has been derived from audited financial statements.

See Notes to Consolidated Financial Statements.

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Millions)

Six Months Ended June 30	2006			2005

OPERATING ACTIVITIES:

Net income	$	711.9		$	515.5
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization:
Property, plant and equipment	76.4			65.3
Equipment on operating leases and other	131.8			116.6
Provision for losses on financial services receivables	16.0			16.4
Other	9.2			(45.3		)
Change in operating assets and liabilities:
Wholesale receivables on new trucks	34.8			(210.6		)
Sales-type finance leases and dealer direct loans on new trucks	(32.0		)	(8.6		)
Other	(12.6		)	68.2
Net Cash Provided by Operating Activities	935.5			517.5

INVESTING ACTIVITIES:
Retail loans and direct financing leases originated	(1,590.4		)	(1,418.9		)
Collections on retail loans and direct financing leases	1,223.6			993.4
Marketable securities purchases	(886.8		)	(755.8		)
Marketable securities maturities and sales	664.9			697.0
Acquisition of property, plant and equipment	(111.8		)	(113.8		)
Acquisition of equipment for operating leases	(260.2		)	(237.9		)
Proceeds from asset disposals	85.0			38.8
Other	(1.1		)	(.6		)
Net Cash Used in Investing Activities	(876.8		)	(797.8		)

FINANCING ACTIVITIES:
Cash dividends paid	(430.8		)	(418.6		)
Purchase of treasury stock	(251.4		)	(193.6		)
Stock option transactions	29.0			16.1
Net (decrease) increase in commercial paper and bank loans	(157.1		)	593.2
Proceeds from long-term debt	1,117.0			342.6
Payment of long-term debt	(745.3		)	(343.3		)
Net Cash Used in Financing Activities	(438.6		)	(3.6		)
Effect of exchange rate changes on cash	39.7			(107.6		)
Net Decrease in Cash and Cash Equivalents	(340.2		)	(391.5		)
Cash and cash equivalents at beginning of period	1,698.9			1,614.7
Cash and cash equivalents at end of period	$	1,358.7		$	1,223.2

See Notes to Consolidated Financial Statements.

FORM 10-Q

PACCAR Inc AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

(Millions)

NOTE A—Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles 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 generally accepted accounting principles 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 six month periods ended June 30, 2006, are not necessarily indicative of the results that may be expected for the year ended December 31, 2006. For further information, refer to the consolidated financial statements and footnotes included in the Company’s annual report on Form 10-K for the year ended December 31, 2005.

NOTE B—Inventories

	June 30			December 31
	2006			2005

Inventories at cost:
Finished products	$	323.5		$	299.3
Work in process and raw materials	320.7			330.1
	644.2			629.4
Less LIFO reserve	(138.2		)	(133.9		)
	$	506.0		$	495.5

Under the LIFO method of accounting (used for approximately 48% of June 30, 2006, inventories), an actual valuation can be made only at the end of each year based on year-end inventory levels and costs. Accordingly, interim valuations are based on management’s estimates of those year-end amounts.

NOTE C—Finance Receivables

	June 30			December 31
	2006			2005

Loans	$	4,049.0		$	3,745.9
Retail direct financing leases	2,105.6			1,881.8
Sales-type finance leases	730.9			701.2
Dealer wholesale financing	1,414.6			1,402.8
Interest and other receivables	92.4			86.6
Unearned interest:
Loans	(118.9		)	(103.6		)
Finance leases	(347.6		)	(307.0		)
	7,926.0			7,407.7
Less allowance for losses	(158.0		)	(145.2		)
	$	7,768.0		$	7,262.5

NOTE D—Product Support Liabilities

Product support liabilities consist of amounts accrued to meet product warranty obligations and deferred revenue and accrued costs associated with optional extended warranty and repair and maintenance contracts. PACCAR periodically assesses the adequacy of its recorded liabilities and adjusts them as appropriate to reflect actual experience.

Changes in product support liabilities are summarized as follows:

	2006			2005

Beginning balance, January 1	$	358.9		$	348.8
Cost accruals and revenue deferrals	138.3			137.0
Payments and revenue recognized	(118.1		)	(114.9		)
Translation	16.3			(22.6		)
Ending balance, June 30	$	395.4		$	348.3

NOTE E—Stockholders’ Equity

Comprehensive Income

The components of comprehensive income, net of any related tax, were as follows:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2006			2005			2006			2005

Net income	$	369.9		$	241.5		$	711.9		$	515.5
Other comprehensive income (loss):
Foreign currency translation gains (losses)	70.6			(82.5		)	92.4			(155.5		)
Derivative contracts increase (decrease)	3.5			(10.4		)	17.8			3.7
Marketable securities (decrease) increase	(1.0		)	.4			(2.7		)	.4
Net other comprehensive income (loss)	73.1			(92.5		)	107.5			(151.4		)
Comprehensive Income	$	443.0		$	149.0		$	819.4		$	364.1

Total comprehensive income increased for the three and six month periods ended June 30, 2006 compared to the corresponding periods in 2005. Higher levels of net income together with foreign currency translation gains and unrealized gains on derivative contracts increased comprehensive income in 2006 compared to 2005. Foreign currency translation adjustments in 2006 resulted primarily from changes in the values of the euro, Canadian dollar and British pound relative to the U.S. dollar.

Accumulated Other Comprehensive Income

Accumulated other comprehensive income was comprised of the following:

	June 30			December 31
	2006			2005

Foreign currency translation gains	$	248.2		$	155.8
Net unrealized gain on derivative contracts	38.5			20.7
Net unrealized investment losses	(3.7		)	(1.0		)
Minimum pension liability	(20.8		)	(20.8		)
Total accumulated other comprehensive income	$	262.2		$	154.7

Notes to Consolidated Financial Statements (Unaudited)

(Millions Except Share Amounts)

Other Capital Stock Changes

In the six months ended June 30, 2006, PACCAR issued 743,111 additional common shares under terms of stock compensation plans for employees and non-employee directors, including 43,157 restricted shares with a fair value of $3.1, which were awarded in April of 2006 to certain officers of the Company.

Stock-based compensation expense included in second quarter net income was $2.0 in 2006 and $1.9 in 2005. Stock-based compensation expense included in net income for the first six months of 2006 and 2005 was $3.4 and $3.3, respectively. As of June 30, 2006, there was $10.7 of unamortized compensation cost related to unvested stock option awards, which is expected to be recognized over a remaining weighted-average vesting period of 1.5 years. As of June 30, 2006, unamortized compensation cost related to all unvested restricted stock awards was $3.4, which is expected to be recognized over a remaining weighted-average vesting period of 1.5 years.

Realized tax benefits of $11.4 related to the excess of deductible amounts over the compensation cost recognized have been classified as a financing inflow in the cash flow statement in accordance with FAS No. 123(R).

In July 2006, the Board of Directors adopted a resolution to retire the 3,914,084 treasury shares of the Company’s common stock. In a subsequent resolution, the Board declared a 50% common stock dividend to stockholders of record at the close of business on July 27, 2006, with fractional shares to be paid in cash. Following issuance of the additional shares, net income per share will be computed using the new number of outstanding shares and all prior periods will be restated. All share and per share amounts herein are stated on a before-stock-dividend basis.

Diluted Earnings Per Share

The following table shows the additional amounts added to weighted average basic shares outstanding to calculate diluted earnings per share. These amounts represent the dilutive effect of stock options. Antidilutive shares (where assumed per share option exercise proceeds exceed the average common stock market price for the period) are excluded from the diluted earnings per share calculation and are shown separately in the table below.

	Three Months Ended		Six Months Ended
	June 30		June 30
	2006	2005	2006	2005

Additional shares	872,800	1,096,100	916,300	1,119,900
Excluded antidilutive shares	817,500	407,100	821,000	407,100

Notes to Consolidated Financial Statements (Unaudited)

(Millions)

NOTE F—Segment Information

	Three Months Ended						Six Months Ended
	June 30						June 30
	2006			2005			2006			2005

Net sales and revenues:
Truck
Total	$	3,980.6		$	3,484.6		$	7,718.9		$	6,677.4
Less intersegment	(76.3		)	(136.3		)	(205.6		)	(196.8		)
External customers	3,904.3			3,348.3			7,513.3			6,480.6
All other	32.3			24.6			62.5			46.9
	3,936.6			3,372.9			7,575.8			6,527.5
Financial Services	231.4			182.5			443.9			353.9
	$	4,168.0		$	3,555.4		$	8,019.7		$	6,881.4

Income (loss) before income taxes:
Truck	$	468.5		$	386.6		$	896.6		$	745.5
All other	1.4			1.8			3.6			(.1		)
	469.9			388.4			900.2			745.4
Financial Services	59.7			49.9			114.5			97.2
Investment income	18.6			14.4			34.2			26.2
	$	548.2		$	452.7		$	1,048.9		$	868.8

Included in “All other” are PACCAR’s industrial winch manufacturing business and other sales, income and expense not attributable to a reportable segment, including a portion of corporate expense.

NOTE G—Employee Benefit Plans

PACCAR has several defined benefit pension plans, which cover a majority of its employees. The Company also provides coverage of approximately 50% of medical costs for the majority of its U.S. employees from retirement until age 65.

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

	Three Months Ended						Six Months Ended
	June 30						June 30
	2006			2005			2006			2005

Components of Pension Expense:
Service cost	$	13.3		$	11.5		$	24.9		$	22.5
Interest on projected benefit obligation	15.7			16.3			29.9			29.6
Expected return on assets	(19.4		)	(20.2		)	(37.1		)	(36.2		)
Amortization of prior service costs	1.0			2.0			2.0			2.9
Recognized actuarial loss	3.4			2.8			6.0			5.2
Net pension expense	$	14.0		$	12.4		$	25.7		$	24.0

During the first six months of 2006, the Company contributed $84.0 to its pension plans.

The following information details the components of net periodic retiree cost for the Company’s unfunded postretirement medical and life insurance plans:

	Three Months Ended				Six Months Ended
	June 30				June 30
	2006		2005		2006		2005
Components of Retiree Expense:
Service cost	$	.9	$	.8	$	1.9	$	1.6
Interest cost	1.1		1.0		2.1		2.0
Recognized actuarial loss	.3		.3		.6		.6
Recognized net initial obligation	.1		.2		.2		.3
Net retiree expense	$	2.4	$	2.3	$	4.8	$	4.5

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

RESULTS OF OPERATIONS:

PACCAR’s results for the second quarter and first half of 2006 set new records for revenues and profits. Net sales and revenues increased 17% to $4.17 billion for the quarter and $8.02 billion for the first half, compared to 2005. Second quarter 2006 net income was $369.9 million ($2.21 per share diluted), up 53% from the $241.5 million ($1.39 per share diluted) earned in the second quarter of 2005. First half net income increased 38% to $711.9 million. Net income for the second quarter and first half of 2005 included a $64.0 million tax provision ($.37 per share) related to the repatriation of $1.5 billion in foreign earnings.

Truck segment net sales and revenues in the second quarter of 2006 increased 17% to $3.90 billion compared to $3.35 billion in the second quarter of 2005. First half 2006 Truck segment net sales increased 16% to $7.51 billion. Second quarter 2006 Truck segment income before taxes was up 21% to $468.5 million compared to the $386.6 million recorded in the year-earlier period. First half 2006 Truck segment income before taxes of $896.6 million increased 20% from the $745.5 million earned in the first half of 2005.

Truck segment results in the second quarter and first half of 2006 benefited from higher production rates and aftermarket parts sales volumes due to increased demand. Movements in foreign currency exchange rates did not have a significant impact on second quarter results. For the first half, consolidated sales were reduced by $122.1 million and pretax income declined by $16.1 million due to an increase in the value of the U.S. dollar.

Gross margins of 14.8% in the second quarter and first half of 2006 were up slightly compared to 14.7% in the second quarter and first half of 2005. Selling, general and administrative (SG&A) expense increased $6.7 million for the quarter and $9.2 million year-to-date compared to the same periods in the prior year. The increase for both periods was due primarily to costs associated with supporting business growth. As a percent of sales, however, SG&A decreased to a record low of 2.9% for the second quarter and first half of 2006, compared to year earlier levels of 3.1% and 3.3%, respectively.

Demand for heavy-duty trucks in the U.S. and Canada has improved compared to 2005, with industry retail sales expected to reach 310,000–320,000 trucks. European heavy-duty registrations for 2006 are projected to be slightly higher than 2005 at approximately 260,000 units. Both markets are being affected by engine emissions regulations. In Europe, effective October 1, 2006, all new truck registrations will be required to comply with Euro 4 emissions standards. In the U.S. and Canada, effective January 1, 2007, all new diesel engines manufactured will be required to comply with EPA 2007 engine emissions standards. In both markets, conversion to the new engine emissions standards will increase the end-user vehicle cost. Management believes 2006 volumes are being somewhat affected by a “pull forward” of vehicle sales in Europe in the first three quarters of 2006 and in the U.S. and Canada prior to the January 1, 2007 deadline. Management’s heavy-duty market projections for 2007 in the U.S. and Canada range from 200,000 to 250,000 and from 230,000 to 260,000 for Western Europe.

PART II—OTHER INFORMATION

For Items 1, 3 and 5, there was no reportable information for any of the three months ended June 30, 2006.

ITEM 1A. RISK FACTORS

For information regarding risk factors, refer to Part I, Item 1A as presented in the 2005 Annual Report on Form 10-K. There has been no material changes in the Company’s risk factors during the three months ended June 30, 2006.

ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS

For Items 2(a) and (b), there was no reportable information for any of the three months ended June 30, 2006.

On October 25, 2005 PACCAR’s Board of Directors approved a plan to repurchase from time to time on the open market, up to five million shares of the Company’s outstanding common stock. The following are details of repurchases under this plan for the period covered by this report:

					(d) Maximum
	(a) Total			(c) Total number	number of shares
	number of	(b) Average		of shares	that may yet
	shares	price paid		purchased as	be purchased
Period	purchased	per share		part of the plan	under the plan

April 1-30, 2006	208,000	$	69.93	208,000	1,756,916
May 1-31, 2006	166,000	$	74.75	166,000	1,590,916
June 1-30, 2006	505,000	$	74.57	505,000	1,085,916
Total	879,000	$	73.51	879,000	1,085,916

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Reportable information in response to Item 4 was previously reported in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2006.

ITEM 6. EXHIBITS

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

INDEX TO EXHIBITS

Exhibit (in order of assigned index numbers)

3 Articles of incorporation and bylaws:

(a) Restated Certificate of Incorporation of PACCAR Inc (incorporated by reference to Exhibit 99.3 of the Current Report on Form 8-K of PACCAR Inc dated September 19, 2005).

(b) Amended and Restated Bylaws of PACCAR Inc (incorporated by reference to Exhibit 99.4 of the Current Report on Form 8-K of PACCAR Inc dated September 19, 2005).

4 Instruments defining the rights of security holders, including indentures:

(a) Rights agreement dated as of December 10, 1998, between PACCAR Inc and First Chicago Trust Company of New York setting forth the terms of the Series A Junior Participating Preferred Stock, no par value per share (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K of PACCAR Inc dated December 21, 1998).

(b) Amendment Number 1 to rights agreement dated as of December 10, 1998, between PACCAR Inc and First Chicago Trust Company of New York appointing Wells Fargo Bank N.A. as successor rights agent, effective as of the close of business September 15, 2000 (incorporated by reference to Exhibit (4)(b) of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2000).

(c) Indenture for Senior Debt Securities dated as of December 1, 1983, and first Supplemental Indenture dated as of June 19, 1989, between PACCAR Financial Corp. and Citibank, N.A., Trustee (incorporated by reference to Exhibit 4.1 of the Annual Report on Form 10-K of PACCAR Financial Corp. dated March 26, 1984, File Number 0-12553 and Exhibit 4.2 to PACCAR Financial Corp.’s registration statement on Form S-3 dated June 23, 1989, Registration Number 33-29434).

(d) Forms of Medium-Term Note, Series J (incorporated by reference to Exhibits 4.2A and 4.2B to PACCAR Financial Corp.’s Registration Statement on Form S-3 dated March 2, 2000, Registration Number 333-31502).

Form of Letter of Representation among PACCAR Financial Corp., Citibank, N.A. and the Depository Trust Company, Series J (incorporated by reference to Exhibit 4.3 to PACCAR Financial Corp.’s Registration Statement on Form S-3 dated March 2, 2000, Registration Number 333-31502).

(e) Forms of Medium-Term Note, Series K (incorporated by reference to Exhibits 4.2A and 4.2B to PACCAR Financial Corp.’s Registration Statement on Form S-3 dated December 23, 2003, Registration Number 333-111504).

Form of Letter of Representation among PACCAR Financial Corp., Citibank, N.A. and the Depository Trust Company, Series K (incorporated by reference to Exhibit 4.3 to PACCAR Financial Corp.’s Registration Statement on Form S-3 dated December 23, 2003, Registration Number 333-111504).

10 Material contracts:

(a) Amended and Restated Supplemental Retirement Plan (as incorporated by reference to Exhibit (10)(b) of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2000) and Amendment dated December 19, 2005 (incorporated by reference to Exhibit (10)(a) of the Annual Report on Form 10-K for the year ended December 31, 2005).

(b) Deferred Incentive Compensation Plan (Amended and Restated as of December 31, 2004) (incorporated by reference to Exhibit (10)(b) of the Annual Report on Form 10-K for the year ended December 31, 2005).

(c) PACCAR Inc Restricted Stock and Deferred Compensation Plan for Non-employee Directors (incorporated by reference to Appendix C of the 2004 Proxy Statement of PACCAR Inc, dated March 15, 2004) and Amendment to Section 4 (incorporated by reference to Exhibit 99.1 of Current Report on Form 8-K dated September 19, 2005).

(d) PACCAR Inc Long Term Incentive Plan (incorporated by reference to Appendix A of the 2006 Proxy Statement, dated March 14, 2006).

(e) PACCAR Inc Senior Executive Yearly Incentive Compensation Plan (incorporated by reference to Appendix B of the 2006 Proxy Statement, dated March 14, 2006).

(f) Compensatory arrangement with K. R. Gangl dated February 1, 1999 and attached amendment dated February 18, 1999 (incorporated by reference to Exhibit (10)(g) of the Annual Report on Form 10-K for the year ended December 31, 2004).

(g) PACCAR Inc Long Term Incentive Plan, Nonstatutory Stock Option Agreement and Form of Option Grant Agreement (incorporated by reference to Exhibit 99.1 of Form 8-K dated January 20, 2005 and filed January 25, 2005).

(h) PACCAR Inc Long Term Incentive Plan, Form of 2006 Restricted Stock Award Agreement (incorporated by reference as Exhibit 99.1 of Form 8-K dated and filed May 1, 2006).

(i) PACCAR Inc Long Term Incentive Plan, Form of Share Match Restricted Stock Award Agreement (incorporated by reference as Exhibit 99.2 of Form 8-K dated and filed May 1, 2006).

(j) Amendment to compensatory arrangement with non-employee directors (incorporated by reference to Exhibit (10)(h) of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2005).

(k) PACCAR Inc Savings Investment Plan (incorporated by reference to Exhibit (10)(i) of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2005).

Certain instruments relating to medium-term debt constituting less than 10% of the registrant’s total assets are not filed as exhibits herewith pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. The registrant will file copies of such instruments upon request of the Commission.

PART I. FINANCIAL INFORMATION:

ITEM 1.	FINANCIAL STATEMENTS:

Consolidated Statements of Income —
Three and Six Months Ended June 30, 2006 and 2005 (unaudited)

Consolidated Balance Sheets —
June 30, 2006 (unaudited) and December 31, 2005

Condensed Consolidated Statements of Cash Flows —
Six Months Ended June 30, 2006 and 2005 (unaudited)

Notes to Consolidated Financial Statements (unaudited)

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

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 4.	CONTROLS AND PROCEDURES

PART II. OTHER INFORMATION:

ITEM 1A.	RISK FACTORS

ITEM 2.	UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

ITEM 6.	EXHIBITS

SIGNATURE

INDEX TO EXHIBITS

		PACCAR Inc
		(Registrant)

Date	July 28, 2006	By	/s/ R. E. Armstrong
			R. E. Armstrong
			Vice President and Controller
			(Authorized Officer and
			Chief Accounting Officer)