Paccar PCAR · USD

S.SEGMENT AND RELATED INFORMATIONPACCAR operates in three principal segments: Truck, Parts and Financial Services. The Company’s chief operating decision maker is the Chief Executive Officer (CEO). The CEO has principal executives (Segment Managers) who oversee the major business operations of the Company. The CEO allocates resources and evaluates the performance of its Truck and Parts segments based on operating profits, which excludes investment income, other income and expense, and income taxes. The Financial Services segment’s performance is evaluated based on income before income taxes. Geographic revenues from external customers are presented based on the country of the customer. The accounting policies of the reportable segments are the same as those applied in the consolidated financial statements as described in Note A.Truck and Parts: The Truck segment includes the design and manufacture of high-quality, light-, medium- and heavy-duty commercial trucks and the Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles, both of which are sold through the same network of independent dealers. These segments derive a large proportion of their revenues and operating profits from operations in North America and Europe. The Truck segment incurs substantial costs to design, manufacture and sell trucks to its customers. The sale of new trucks provides the Parts segment with the basis for parts sales that may continue over the life of the truck, but are generally concentrated in the first five years after truck delivery. To reflect the benefit the Parts segment receives from costs incurred by the Truck segment, certain expenses are allocated from the Truck segment to the Parts segment. The expenses allocated are based on a percentage of the average annual expenses for factory overhead, engineering, research and development and SG&A expenses for the preceding five years. The allocation is based on the ratio of the average parts direct margin dollars (net sales less material and labor costs) to the total Truck and Parts direct margin dollars for the previous five years. The Company believes such expenses have been allocated on a reasonable basis. Truck segment assets related to the indirect expense allocation are not allocated to the Parts segment. Other (income) expenses included in the Truck and Parts segments is primarily the effects of foreign currency translation.

B.SALES AND REVENUESThe following table disaggregates Truck, Parts and Other revenues by major sources: Year Ended December 31, 2025 2024 2023 Truck Truck sales $ 18,272.1 $ 23,863.2 $ 25,946.4 Revenues from extended warranties, operating leases and other 1,093.2 975.2 900.0 19,365.3 24,838.4 26,846.4 Parts Parts sales 6,678.4 6,461.1 6,223.1 Revenues from dealer services and other 195.3 205.3 191.3 6,873.7 6,666.4 6,414.4 Intersegment eliminations and other* (3.9 ) 59.5 54.7 Truck, Parts and Other sales and revenues $ 26,235.1 $ 31,564.3 $ 33,315.5 *Includes industrial winch business sales through October 31, 2024. The following table summarizes Financial Services lease revenues by lease type: Year Ended December 31, 2025 2024 2023 Finance lease revenues $ 374.7 $ 341.8 $ 271.5 Operating lease revenues 617.3 660.7 736.9 Total lease revenues $ 992.0 $ 1,002.5 $ 1,008.

L.COMMITMENTS AND CONTINGENCIES At December 31, 2025, PACCAR had standby letters of credit and surety bonds totaling $52.1, from third-party financial institutions, in the normal course of business, which guarantee various insurance, financing and other activities. At December 31, 2025, PACCAR’s financial services companies, in the normal course of business, had outstanding commitments to fund new loan and lease transactions amounting to $812.4. The commitments generally expire in 90 days. The Company had other commitments, primarily to purchase production inventory, equipment and commodities amounting to $194.0, $101.6, $84.2, $74.7, $86.4 and $41.5 for 2026, 2027, 2028, 2029, 2030 and beyond, respectively. The Company is involved in various stages of investigations and cleanup actions in different countries related to environmental matters. In certain of these matters, the Company has been designated as a “potentially responsible party” by domestic and foreign environmental agencies. The Company has accrued the estimated costs to investigate and complete cleanup actions where it is probable that the Company will incur such costs in the future. Expenditures related to environmental activities for the years ended December 31, 2025, 2024 and 2023 were $1.5, $4.4 and $3.0, respectively. While the timing and amount of the ultimate costs associated with future environmental cleanup cannot be determined, management expects that these matters will not have a significant effect on the Company’s consolidated financial position.On July 19, 2016, the European Commission (EC) concluded its investigation of all major European truck manufacturers and reached a settlement with DAF Trucks N.V., DAF Trucks Deutschland GmbH and PACCAR Inc (collectively “the Company”). Following the settlement, certain EC-related claims and lawsuits have been filed in various jurisdictions primarily in Europe against all major European truck manufacturers including the Company and certain subsidiaries. These claims and lawsuits include individual and collective proceedings seeking monetary damages, including class actions in the United Kingdom (U.K.), the Netherlands and Israel. In certain jurisdictions, additional claimants may bring EC-related claims and lawsuits.Several European courts have issued judgments; some have been favorable while others have been unfavorable and have beenappealed. The Company believes it has meritorious defenses to all pending legal claims.

N.INCOME TAXES The Company’s tax rate is based on income and statutory tax rates in the various jurisdictions in which the Company operates. Tax law requires certain items to be included in or excluded from the Company’s tax returns, and in some cases to be recognized in different times than the items reflected in the Company’s financial statements. As a result, the Company’s annual tax rate reflected in its financial statements is different than that reported in its tax returns. Some of these differences are permanent, such as expenses that are not deductible in the Company’s tax return, and some differences reverse over time, such as depreciation expense. These temporary differences create deferred tax assets and liabilities. The Company establishes valuation allowances for its deferred tax assets if, based on the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The components of the Company’s income before income taxes include the following: Year Ended December 31, 2025 2024 2023 Domestic $ 2,095.6 $ 3,525.1 $ 3,913.7 Foreign 927.9 1,875.8 1,804.5 $ 3,023.5 $ 5,400.9 $ 5,718.2 The components of the Company’s provision for income taxes include the following: Year Ended December 31, 2025 2024 2023 Current provision: Federal $ 44.2 $ 679.2 $ 845.5 State 63.0 158.2 179.8 Foreign 207.4 480.8 395.8 314.6 1,318.2 1,421.1 Deferred obligation (benefit): Federal 293.6 (65.8 ) (141.5 ) State 17.4 (7.1 ) (24.4 ) Foreign 22.1 (6.4 ) (137.8 ) 333.1 (79.3 ) (303.7 ) $ 647.7 $ 1,238.9 $ 1,117.4 Tax benefits recognized for net operating loss (NOL) carryforwards were $9.5, $8.3 and $118.2 for the years ended 2025, 2024 and 2023, respectively. A reconciliation of the statutory U.S. federal tax rate to the effective income tax rate is as follows: 2025 2024 2023 Statutory Tax $ 634.9 21.0 % $ 1,134.2 21.0 % $ 1,200.8 21.0 % Effect of: Domestic Federal Tax Credits Research and development tax credit (60.4 ) (2.0 ) (48.2 ) (.9 ) (39.5 ) (.7 ) Other (.3 ) (.5 ) Cross-border tax laws Foreign-derived intangible income (6.5 ) (.2 ) (36.0 ) (.7 ) (43.2 ) (.8 ) Other (3.2 ) (.1 ) (.3 ) 3.3 Other Domestic Federal (18.0 ) (.6 ) (10.8 ) (.2 ) (8.0 ) (.1 ) Domestic state and local income taxes, net of federal income tax effect 66.5 2.2 120.0 2.2 124.0 2.2 Foreign Brasil Brasil valuation allowance release (119.7 ) (2.1 ) Other (2.0 ) (.1 ) 13.5 .2 (6.9 ) (.1 ) Other foreign jurisdictions 36.7 1.2 67.0 1.3 6.6 .

K.LEASES The Company leases certain facilities and equipment. The Company determines whether an arrangement is or contains a lease at inception. The Company accounts for lease and non-lease components separately. The consideration in the contract is allocated to each separate lease and non-lease component of the contract generally based on the relative stand-alone price of the components. The lease component is accounted for in accordance with the lease standard and the non-lease component is accounted for in accordance with other standards. The Company uses its incremental borrowing rate in determining the present value of lease payments unless the rate implicit in the lease is available. The lease term may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option. Leases that have a term of 12 months or less at the commencement date (“short-term leases”) are not included in the right-of-use assets and the lease liabilities. Lease expense for the short-term leases are recognized on a straight-line basis over the lease term.The components of lease expense were as follows: Year Ended December 31, 2025 2024 2023 Finance lease cost Amortization of right-of-use assets and interest $ .7 $ .6 $ 1.1 Operating lease cost 24.0 23.4 17.5 Short-term lease cost 2.2 2.7 3.7 Variable lease cost 2.9 2.9 2.4 Total lease cost $ 29.8 $ 29.6 $ 24.7 Balance sheet information related to leases was as follows: 2025 2024 At December 31, OPERATING LEASES FINANCE LEASES OPERATING LEASES FINANCE LEASES TRUCK, PARTS AND OTHER: Other noncurrent assets, net $ 58.2 $ .9 $ 65.6 $ 1.7 FINANCIAL SERVICES: Other assets 3.6 4.8 Total right-of-use assets $ 61.8 $ .9 $ 70.4 $ 1.7 TRUCK, PARTS AND OTHER: Accounts payable, accrued expenses and other $ 17.7 $ .7 $ 16.3 $ .7 Other liabilities 42.3 .2 50.6 .9 FINANCIAL SERVICES: Accounts payable, accrued expenses and other 1.5 1.7 Deferred taxes and other liabilities 1.4 2.9 Total lease liabilities $ 62.9 $ .9 $ 71.5 $ 1.6 The weighted-average remaining lease term and discount rate were as follows at December 31: 2025 2024 OPERATING LEASES FINANCE LEASES OPERATING LEASES FINANCE LEASES Weighted-average remaining lease term 4.5 years 1.9 years 5.1 years 2.5 years Weighted-average discount rate 5.2 % 2.3 % 4.6 % 2.0 % Maturities of lease liabilities are as follows: Beginning January 1, OPERATING LEASES FINANCE LEASES 2026 $ 21.8 $ .7 2027 17.3 .1 2028 11.8 .1 2029 6.8 2030 4.

F.EQUIPMENT ON OPERATING LEASES A summary of equipment on operating leases for Truck, Parts and Other and for the Financial Services segment is presented below: TRUCK, PARTS AND OTHER FINANCIAL SERVICES At December 31, 2025 2024 2025 2024 Equipment on operating leases $ 73.8 $ 90.4 $ 2,825.3 $ 2,858.8 Less allowance for depreciation (16.5 ) (21.2 ) (956.7 ) (967.4 ) $ 57.3 $ 69.2 $ 1,868.6 $ 1,891.4 Annual minimum lease payments due on Financial Services operating leases beginning January 1, 2026 are $530.6, $397.9, $261.3, $172.1, $47.6 and $.4 thereafter. Equipment on operating leases for Truck, Parts and Other is included in Truck, Parts and Other "Other noncurrent assets, net" on the Company's Consolidated Balance Sheets.When the equipment sold is subject to an RVG, the full sales price is received from the customer. A liability is established for the residual value obligation with the remainder of the proceeds recorded as deferred lease revenue. These amounts, included in Truck, Parts and Other "Other liabilities" on the Company's Consolidated Balance Sheets, are summarized below: TRUCK, PARTS AND OTHER At December 31, 2025 2024 Residual value guarantees $ 45.6 $ 60.2 Deferred lease revenues 21.7 20.1 $ 67.3 $ 80.3 Annual maturities of the RVGs beginning January 1, 2026 are $20.8, $15.6, $7.1, $.9, $1.2 and nil thereafter. The deferred lease revenue is amortized on a straight-line basis over the RVG contract period. At December 31, 2025, the annual amortization of deferred revenues beginning January 1, 2026 are $10.2, $6.7, $2.8, $2.0 and nil thereafter.

ITEM 1C. CYBERSECURITY.The Company maintains a comprehensive cybersecurity management and governance program. The Company’s information security management system is based upon the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF). The Company engages internal and third-party auditors and other professional parties when necessary, as part of its cybersecurity management program. The Company conducts penetration and compromise assessment tests, implements detection and prevention tools, monitors cyber events and has active disaster recovery plans. For third-party IT services, the Company conducts an architectural, privacy and security analysis of their solution. If any gaps are identified, the third-party remediates or mitigates the risk to an acceptable level. The Company simulates potential cyber-attacks and performs incident responses to test preparedness. These exercises are used to train and update the Company’s Incident Response plan, including any gaps identified. The Company conducts yearly information security training for employees and conducts ongoing phishing tests. The Company’s Security Risk Council, including the Chief Information Security Officer, meets regularly to cover risks, plans and updates to the security program. It briefs the Board of Directors and/or the Audit Committee of the Board of Directors on technology and information security matters. Management and the Board of Directors also receive periodic updates on the status of cybersecurity investments to guard against such events. In the event of a security breach, the Company’s Security Risk Council evaluates its significance and briefs the Board on the event. The Company has not experienced any notable security incidents that would have a material impact on the results of operations and financial condition of the Company. Some dealers and suppliers have reported they have experienced cyberattacks and those have not caused any material impact to the Company.

D.INVENTORIES Inventories are stated at the lower of cost or net realizable value. Cost of inventories is determined principally by the first-in, first-out (FIFO) method. Inventories include the following: At December 31, 2025 2024 Finished products $ 954.2 $ 977.1 Work in process and raw materials 1,233.3 1,390.0 $ 2,187.5 $ 2,367.