**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM 10-Q**

 

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

 

**For the quarterlyperiod ended March 31, 2004**

 

or

 

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

 

**For transition period from                          to                           **

 

**Commission File No. 0-12553**

 

**PACCARFINANCIAL CORP.**

(Exact name of registrant as specified in itscharter)

 
| **Washington**                                                  |   | **91-6029712**                       |
|-----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of  incorporation or organization) |   | (I.R.S. Employer Identification No.) |
|                                                            |   |                                 |
| **777 – 106th Ave. N.E., Bellevue, WA**                    |   | **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 allreports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90days.  Yes  ý  No  o

 

Indicate by check mark whether the registrant is an accelerated filer(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’sclasses of common stock, as of the latest practicable date:

 

Common Stock, $100 par value—145,000 shares as of April 30, 2004

 

THE REGISTRANT IS A WHOLLY-OWNED INDIRECT SUBSIDIARY OF PACCAR INC ANDMEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS (H)(1)(A) AND (B) OFFORM 10-Q AND IS, THEREFORE, FILING THIS FORM WITH THE REDUCED DISCLOSUREFORMAT.

 

 

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**FORM10-Q**

**PACCARFINANCIAL CORP.**

 

**INDEX**

 
| PART I.  FINANCIAL INFORMATION: |    |                                                                                                          |
|---------------------------------|---------|---------------------------------------------------------------------------------------------------------------|
|                            |    |                                                                                                          |
|                            | ITEM 1. | FINANCIAL  STATEMENTS:                                                                                        |   |   |
|                            |    |                                                                                                          |   |   |
|                            |    | Statements of Income and Retained Earnings—  Three Months Ended March 31, 2004 and 2003 (Unaudited) |   |
|                            |    |                                                                                                          |   |   |   |
|                            |    | Balance Sheets —  March 31, 2004 (Unaudited), and December 31, 2003                            |   |
|                            |    |                                                                                                          |   |   |   |
|                            |    | Statements of Cash Flows —  Three Months Ended March 31, 2004 and 2003 (Unaudited)                  |   |
|                            |    |                                                                                                          |   |   |   |
|                            |    | Notes to Financial Statements (Unaudited)                                                                     |   |
|                            |    |                                                                                                          |   |   |   |
|                            | ITEM 2. | MANAGEMENT’S  DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION                   |   |
|                            |    |                                                                                                          |   |   |
|                            | ITEM 3. | QUANTITATIVE  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                   |   |
|                            |    |                                                                                                          |   |   |
|                            | ITEM 4. | CONTROLS  AND PROCEDURES                                                                                      |   |
|                            |    |                                                                                                          |   |   |
| PART  II. OTHER INFORMATION:    |    |
|                            |    |                                                                                                          |   |   |
|                            | ITEM 6. | EXHIBITS  AND REPORTS ON FORM 8-K                                                                             |   |
|                            |    |                                                                                                          |
| SIGNATURES                      |    |                                                                                                          |
|                            |    |                                                                                                          |
| INDEX TO EXHIBITS               |    |                                                                                                          |

 

2

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**FORM10-Q**

**PACCARFINANCIAL CORP.**

 

**PART I****–FINANCIALINFORMATION**

 

**ITEM 1****.  FINANCIAL STATEMENTS**

 

**Statements of Income and Retained Earnings****(Unaudited)**

(Millions of Dollars)

 
| **Three Months Ended March 31**                        |   | **2004**  |      | **2003** |   |
|-------------------------------------------------------------|--------|-----------|-----------|----------|--------|
|                                                        |   |      |      |     |   |
| Interest and fee income                                     |   | **$**     | **47.4**  |     | $      | 52.3 |   |
| Operating lease and rental income                           |   | **18.3**  |      | 12.8     |   |
| Insurance premiums and other revenue                        |   | **6.3**   |      | 5.5      |   |
| **TOTAL INTEREST AND OTHER REVENUE**                        |   | **72.0**  |      | 70.6     |   |
|                                                        |   |      |      |     |   |
| Interest and other borrowing expenses                       |   | **16.8**  |      | 23.8     |   |
| Depreciation and other operating lease and  rental expenses |   | **15.1**  |      | 9.9      |   |
| Insurance claims and other expenses                         |   | **4.1**   |      | 3.4      |   |
| Selling general and administrative expenses                 |   | **11.1**  |      | 10.4     |   |
| Provision for losses on receivables                         |   | **.5**    |      | 6.1      |   |
| **TOTAL EXPENSES**                                          |   | **47.6**  |      | 53.6     |   |
|                                                        |   |      |      |     |   |
| **INCOME BEFORE INCOME TAXES**                              |   | **24.4**  |      | 17.0     |   |
|                                                        |   |      |      |     |   |
| Income  taxes                                               |   | **9.3**   |      | 6.6      |   |
|                                                        |   |      |      |     |   |
| **NET INCOME**                                              |   | **15.1**  |      | 10.4     |   |
| **RETAINED EARNINGS AT BEGINNING OF PERIOD**                |   | **473.3** |      | 426.0    |   |
| Cash dividends paid                                         |   | **69.0**  |      | —   |   |
|                                                        |   |      |      |     |   |
| **RETAINED EARNINGS  AT END OF PERIOD**                     |   | **$**     | **419.4** |     | $      | 436.4 |   |

 

Earnings per share and dividends per share are not reported because theCompany is a wholly-owned subsidiary of PACCAR Financial Services Corporation.

 

See Notes to Financial Statements.

 

3

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**FORM10-Q**

**PACCARFINANCIAL CORP.**

 

**Balance Sheets******(Millions of Dollars)

 
|                                                                                                                                          |   | **March 31  2004** |        | **December 31  2003*** |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|-------------|-----------------------------|------------|
|                                                                                                                                          |   | **(Unaudited)**         | ** **  |                        | ** ** |
|                                                                                                                                          |   |                    |        |                        |       |
| **ASSETS**                                                                                                                                    |   |                    |        |                        | ** ** |
|                                                                                                                                          |   |                    | ** **  |                        |       |
| Cash                                                                                                                                          |   | **$**                   | **16.0**    | ** **                  | $          | 5.5 |   |
| Finance and other receivables, net of  allowance for losses   (2004 - $66.8 and 2003 - $67.4)                                                 |   | **2,956.2**             | ** **  | 2,976.7                     |       |
| Loans to PACCAR Inc and affiliates                                                                                                            |   | **214.6**               | ** **  | 265.0                       |       |
| Equipment on operating leases, net of  depreciation  (2004 - $50.8 and 2003 - $44.3)                                                          |   | **196.4**               | ** **  | 198.7                       |       |
| Other assets                                                                                                                                  |   | **27.8**                | ** **  | 27.4                        |       |
|                                                                                                                                          |   |                    | ** **  |                        |       |
| **TOTAL ASSETS**                                                                                                                              |   | **$**                   | **3,411.0** | ** **                  | $          | 3,473.3 |   |
|                                                                                                                                          |   |                    | ** **  |                        |       |
| **LIABILITIES**                                                                                                                               |   |                    | ** **  |                        |       |
|                                                                                                                                          |   |                    | ** **  |                        |       |
| Accounts payable, accrued expenses and  other                                                                                                 |   | **$**                   | **120.9**   | ** **                  | $          | 134.4 |   |
| Commercial paper                                                                                                                              |   | **902.5**               | ** **  | 1,014.5                     |       |
| Medium-term notes                                                                                                                             |   | **1,580.0**             | ** **  | 1,480.0                     |       |
| Income taxes – current and deferred                                                                                                      |   | **217.2**               | ** **  | 205.9                       |       |
| **TOTAL LIABILITIES**                                                                                                                         |   | **­­$**       | **2,820.6** | ** **                  | $          | 2,834.8 |   |
|                                                                                                                                          |   |                    |        |                        |       |
| **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 $100 per share,  200,000 shares authorized, 145,000 shares issued and outstanding                                     |   | **14.5**                | ** **  | 14.5                        |       |
| Additional paid-in capital                                                                                                                    |   | **138.8**               | ** **  | 131.9                       |       |
| Retained earnings                                                                                                                             |   | **419.4**               | ** **  | 473.3                       |       |
| Accumulated other comprehensive loss                                                                                                          |   | **(13.3**               | **)**       | (12.2                       | )          |
|                                                                                                                                          |   |                    | ** **  |                        |       |
| **TOTAL STOCKHOLDER’S  EQUITY**                                                                                                          |   | **590.4**               | ** **  | 638.5                       |       |
|                                                                                                                                          |   |                    | ** **  |                        |       |
| **TOTAL LIABILITIES  AND STOCKHOLDER’S EQUITY**                                                                                          |   | **$**                   | **3,411.0** | ** **                  | $          | 3,473.3 |   |

 

----

* The December 31, 2003 balance sheet has been derived fromaudited financial statements.

 

See Notes to Financial Statements.

 

4

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**FORM10-Q**

**PACCARFINANCIAL CORP.**

 

**Statements of Cash Flows****(Unaudited)**

(Millions of Dollars)

 
| **Three Months Ended March 31**                                     |   | **2004**   |       | **2003**   |       |
|--------------------------------------------------------------------------|--------|------------|------------|------------|------------|
|                                                                     |   |       | ** ** |       |       |
| **OPERATING ACTIVITIES**                                                 |   |       | ** ** |       |       |
|                                                                     |   |       | ** ** |       |       |
| Net income                                                               |   | **$**      | **15.1**   | ** ** | $          | 10.4 |   |
| Items included in net income not affecting  cash:                        |   |       | ** ** |       |       |
| Provision for deferred income taxes                                      |   | **(11.8**  | **)**      | (5.9       | )          |
| Depreciation and amortization                                            |   | **10.9**   | ** ** | 7.2        |       |
| Provision for losses on receivables                                      |   | **.5**     | ** ** | 6.1        |       |
| Increase in payables and other                                           |   | **18.5**   | ** ** | 11.1       |       |
|                                                                     |   |       | ** ** |       |       |
| **NET CASH PROVIDED BY OPERATING ACTIVITIES**                            |   | **33.2**   | ** ** | 28.9       |       |
|                                                                     |   |       | ** ** |       |       |
| **INVESTING ACTIVITIES**                                                 |   |       | ** ** |       |       |
|                                                                     |   |       | ** ** |       |       |
| Finance and other receivables originated                                 |   | **(315.9** | **)**      | (211.8     | )          |
| Collections on finance and other  receivables                            |   | **323.9**  | ** ** | 322.7      |       |
| Net increase in wholesale receivables                                    |   | **(2.6**   | **)**      | (54.2      | )          |
| Net decrease (increase) in loans to PACCAR  Inc and affiliates           |   | **50.4**   | ** ** | (5.4       | )          |
| Acquisition of equipment on operating  leases, primarily from PACCAR Inc |   | **(8.9**   | **)**      | (7.5       | )          |
| Acquisition of equipment                                                 |   | **(.1**    | **)**      | —     |       |
| Proceeds from disposal of equipment                                      |   | **3.7**    | ** ** | 1.5        |       |
|                                                                     |   |       | ** ** |       |       |
| **NET CASH PROVIDED BY INVESTING ACTIVITIES**                            |   | **50.5**   | ** ** | 45.3       |       |
|                                                                     |   |       | ** ** |       |       |
| **FINANCING ACTIVITIES**                                                 |   |       | ** ** |       |       |
|                                                                     |   |       | ** ** |       |       |
| Net decrease in commercial paper                                         |   | **(112.0** | **)**      | (121.3     | )          |
| Proceeds from medium-term notes                                          |   | **250.0**  | ** ** | 190.0      |       |
| Payments of medium-term notes                                            |   | **(150.0** | **)**      | (137.2     | )          |
| Dividends paid                                                           |   | **(69.0**  | **)**      | **—** | ** ** |
| Payment of advances from (to) PACCAR Inc                                 |   | **.9**     | ** ** | (1.6       | )          |
| Capital contributions                                                    |   | **6.9**    | ** ** | 5.1        |       |
|                                                                     |   |       | ** ** |       |       |
| **NET CASH USED IN FINANCING ACTIVITIES**                                |   | **(73.2**  | **)**      | (65.0      | )          |
|                                                                     |   |       | ** ** |       |       |
| **NET INCREASE IN CASH**                                                 |   | **10.5**   | ** ** | 9.2        |       |
|                                                                     |   |       | ** ** |       |       |
| **CASH AT BEGINNING OF PERIOD**                                          |   | **5.5**    | ** ** | 9.9        |       |
|                                                                     |   |       | ** ** |       |       |
| **CASH AT END OF PERIOD**                                                |   | **$**      | **16.0**   | ** ** | $          | 19.1 |   |

 

See Notes to Financial Statements.

 

5

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**FORM10-Q**

**PACCARFINANCIAL CORP.**

 
| **Notes to Financial Statements** |   | (Millions of Dollars) |
|-----------------------------------|--------|-----------------------|

 

**NOTE A–Basis ofPresentation**

 

The accompanying unaudited financial statements have been prepared inaccordance with the instructions to Form 10-Q and Article 10 of RegulationS-X. Accordingly, they do not include all of the information and footnotesrequired by generally accepted accounting principles for complete financialstatements. However, in the opinion of management, all adjustments (consistingof normal recurring accruals) considered necessary for a fair presentation havebeen included. For further information, refer to the financial statements andfootnotes included in PACCAR Financial Corp.’s (the “Company”) Annual Report onForm 10-K for the year ended December 31, 2003.

 

*Reclassifications*:Certain prior year amounts have been reclassified to conform to the 2004presentation.

 

**NOTE B–Transactionswith PACCAR Inc and Affiliates**

 

The Company and PACCAR Inc (“PACCAR”) are parties to a SupportAgreement that obligates PACCAR to provide, when required, financial assistanceto the Company to ensure that the Company maintains a ratio of net earningsavailable for fixed charges to fixed charges (as defined) of at least 1.25 to 1for any fiscal year. The required ratio for the three months endedMarch 31, 2004 and full year 2003 was met without assistance. The Companydetermines the amount of PACCAR assistance, if any, at the end of each fiscalyear. The Support Agreement also requires PACCAR to own, directly orindirectly, all outstanding voting stock of the Company.

 

PACCAR Financial Services Corporation (“PFSC”) charges the Company forcertain administrative services it provides and certain services the Companyreceives indirectly from PACCAR. The costs are charged to the Company basedupon the Company’s specific use of the services at PFSC’s or PACCAR’s cost.Management considers these charges similar to the costs that would be incurredif the Company were on a stand-alone basis. PFSC recognizes certain of theseadministrative services as an additional investment in the Company. The Companyrecords the investment as additional paid-in capital. A cash dividend in theamount of $69.0 was declared and paid during the first quarter 2004. There wereno cash dividends declared or paid during 2003.

 

The Company’s principal office is located in the corporate headquartersbuilding of PACCAR (owned by PACCAR). The Company also leases office space fromtwo other facilities owned by PACCAR.

 

The Company’s employees are covered by a defined benefit pension plan,an unfunded post-retirement medical and life insurance plan, and a definedcontribution plan sponsored by PACCAR. Separate allocations of defined benefitplan assets and obligations relating to the Company have not been made.

 

Periodically, the Company borrows funds from PACCAR and makes loans toPACCAR. Loans outstanding to PACCAR were $3.8 and $54.5 at March 31, 2004and December 31, 2003, respectively. Loans outstanding from PACCAR were$.7 at March 31, 2004. There were no loans outstanding from PACCAR atDecember 31, 2003.

 

PACCAR has issued letters of credit as of March 31, 2004 in theamount of $7.9 on behalf of the Company to guarantee funds for payment toinsured franchisees and their customers for any future insurance losses.

 

The Company periodically loans funds to certain foreign finance andleasing affiliates of PACCAR. These various affiliates have Support Agreementswith PACCAR, similar to the Company’s Support Agreement. The

 

6

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foreign affiliates operate in the United Kingdom, the Netherlands,Mexico, Canada and Australia, and any resulting currency exposure is fully hedged.The foreign affiliates provide financing and leasing of trucks and relatedequipment manufactured primarily by PACCAR and sold through PACCAR’sindependent dealer networks in Europe, Mexico, Canada and Australia. TheCompany will not make loans to the foreign affiliates in excess of theequivalent of $300.0 United States dollars, unless the amount in excess of suchlimits is guaranteed by PACCAR. The Company periodically reviews the fundingalternatives for these affiliates, and these limits may be revised in thefuture. There was a total of $210.8 and $210.5 in loans outstanding to foreignaffiliates operating in the United Kingdom and the Netherlands atMarch 31, 2004 and December 31, 2003, respectively.

 

**NOTE C– Stockholder’sEquity**

 

**Preferred Stock**

 

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

 

**Comprehensive Income**

 

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

 
|                                                |   | **Three  Months Ended  March 31** |       |
|-----------------------------------------------------|--------|----------------------------------------|------------|
|                                                |   | **2004**                               |       | **2003** |   |
|                                                |   |                                   |       |   |   |
| Net income                                          |   | **$**                                  | **15.1**   | ** ** | $ | 10.4 |   |
| Other comprehensive income:                         |   |                                   | ** ** |   |   |
| Unrealized net (loss) gain on derivative  contracts |   | **(1.1**                               | **)**      | 4.8 |   |
| Total comprehensive income                          |   | **$**                                  | **14.0**   | ** ** | $ | 15.2 |   |

 

Accumulated other comprehensive loss of $13.3 and $12.2 atMarch 31, 2004 and December 31, 2003, respectively, is comprised ofthe unrealized net loss on derivative contracts.

 

7

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

 

**Resultsof Operations**

 

TheCompany’s net income increased 45% to $15.1 for the first three months of 2004from $10.4 for the first three months of 2003. The profit improvement resultedfrom both a lower provision for losses and a higher finance margin. Theprovision for losses decreased $5.6, or 92%, in the first three months of 2004from $6.1 for the first three months of 2003. The credit loss improvement wasmainly due to a significant reduction in repossessed units. In addition, higherused truck prices contributed to a lower loss per repossession. Alsocontributing to better earnings were higher finance margins earned on financereceivables and operating leases due to more favorable market conditions andenhancements made to pricing and credit practices. Interest income and expensein the first quarter of 2004 were lower primarily due to lower market interestrates. Operating lease revenue and related depreciation have increased due toan increase in equipment on operating leases in the past year.

 

Thefollowing table summarizes the activity in the Company’s allowance for losseson receivables and presents related ratios:

 

##### **Allowancefor Losses**

 
|                                                                                                                                                                         |   | **Three  Months  Ended  March 31** |       | **Year Ended  December 31** |   | **Three  Months  Ended  March 31** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|------------|----------------------------------|--------|-----------------------------------------|--------|
|                                                                                                                                                                         |   | **2004**                                |       | **2003**                         |   | **2003**                                |   |
| Balance at beginning of period                                                                                                                                               |   | **$**                                   | **67.4**   | ** **                       | $      | 66.9                                    |   | $ | 66.9 |   |
| Provision for losses                                                                                                                                                         |   | **.5**                                  | ** ** | 19.6                             |   | 6.1                                     |   |
| Credit losses net of recoveries                                                                                                                                              |   | **(1.1**                                | **)**      | (19.1                            | )      | (6.1                                    | )      |
| Balance at end of period                                                                                                                                                     |   | **$**                                   | **66.8**   | ** **                       | $      | 67.4                                    |   | $ | 66.9 |   |
| Ratios:                                                                                                                                                                      |   |                                    | ** ** |                             |   |                                    |   |
|                                                                                                                                                                         |   |                                    |       |                             |   |                                    |   |
| Credit losses net of recoveries ($1.1 in  2004) to average net receivables and equipment on operating leases ($3,138.9  in 2004) annualized for March 31, 2004 and 2003 |   | **.14**                                 | **%**      | .61                              | %      | .77                                     | %      |
|                                                                                                                                                                         |   |                                    |       |                             |   |                                    |   |
| Allowance for losses ($66.8 in 2004) to  period-end net receivables and equipment on operating leases ($3,164.5 in  2004)                                                    |   | **2.11**                                | **%**      | 2.12                             | %      | 2.08                                    | %      |
|                                                                                                                                                                         |   |                                    |       |                             |   |                                    |   |
| Period-end retail receivables and leases  past due, over 60 days, ($27.6 in 2004) to period-end retail contracts and  lease receivables ($2,686.8 in 2004)                   |   | **1.03**                                | **%**      | 1.15                             | %      | 2.15                                    | %      |

 

8

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**CompanyOutlook**

 

The outlook for the Company is primarily dependent onthe generation of new business and on the level of credit losses experienced.Asset growth is likely, consistent with the anticipated improvement in thegeneral economy and the resulting increase in truck sales. Some economicweakness, as well as high fuel and insurance costs, could exert pressure on theprofit margins of truck operators and cause a return to higher past-dueaccounts and repossessions, which would result in higher credit losses.

 

**Fundingand Liquidity**

 

The Company manages its capital structureconsistent with industry standards. Since 1983, the Company hasregistered debt securities under the Securities Act of 1933 for offering to thepublic. In December 2003, the Company filed a shelf registration statementwhich became effective on January 16, 2004, under which $3,000.0 of medium-termnotes could be issued as needed. As of March 31, 2004, $2,750.0 of suchsecurities were available for issuance.

 

The Company believes that it has sufficient financial capabilities tocontinue funding receivables and servicing debt through internally generatedfunds, access to public and private debt markets, lines of credit and otherfinancial resources.

 

The Company’s investment grade credit ratings continueto provide access to capital markets at competitive interest rates. TheCompany’s debt ratings at March 31, 2004 are as follows:

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

 

The Company participates with PACCAR andcertain other PACCAR affiliates in syndicated credit facilities of $1,500.0 at March 31,2004 of which $750.0 expires inJuly 2004 and $750.0 expires in July 2006. PACCAR intends to replace these credit facilities as they expirewith facilities of similar amounts. Of the$1,500.0 in syndicated credit facilities, $1,350.0 is available for use by theCompany and/or PACCAR and certain other PACCAR affiliates. These creditfacilities are used to provide backup liquidity for the Company’s short-termborrowings. The Company is liable only for its own borrowings under thesecredit facilities. There were no borrowings under these credit facilities inthe three months ended March 31, 2004 and the year ended December 31, 2003.

 

Other information on liquidity, sources of capital, and contractualcash commitments as presented in the Company’s 2003 Annual Report on Form 10-Kcontinues to be relevant.

 

**ForwardLooking Statements**

 

Certain information presented in this Form10-Q contains forward-looking statements made pursuant to the PrivateSecurities Litigation Reform Act of 1995, which are subject to risks anduncertainties that may affect actual results. Risks and uncertainties include,but are not limited to: national and local economic, political and industryconditions; changes in the levels of new business volume due to unitfluctuations in new PACCAR truck sales; changes in competitive factors; changesaffecting the profitability of truck owners and operators; price changesimpacting

 

9

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equipment costs and residual values; changesin costs and availability of external funding sources; and legislation andgovernmental regulation.

 

For item 3, there was no reportable informationduring the three months ended March 31, 2004.

 
| **ITEM 4****.** | **CONTROLS AND  PROCEDURES** |
|-----------------|------------------------------|

 

An evaluation was performed under the supervisionand with the participation of the Company’s management, including the principalexecutive officer and principal financial officer, of the effectiveness of thedesign and operation of the Company’s disclosure controls and procedures (asdefined in rules 13a-15(e) and 15d-15(e) promulgated under the SecuritiesExchange Act of 1934, as amended) as of March 31, 2004 (“EvaluationDate”). Based on that evaluation, the principal executive officer and principalfinancial officer of the Company concluded that the disclosure controls andprocedures in place at the Company were adequate to ensure that informationrequired to be disclosed by the Company, including its consolidatedsubsidiaries (the Company has no subsidiaries), in reports that the Company filesor submits under the Exchange Act, is recorded, processed, summarized andreported on a timely basis in accordance with applicable rules and regulations.There have been no significant changes in the Company’s internal controls overfinancial reporting during the first quarter of 2004 that have materiallyaffected, or are reasonably likely to materially affect, the Company’s internalcontrol over financial reporting.

 

**PART II****–OTHERINFORMATION**

 

For items 1, 2, 3, 4 and 5, there was no reportable information duringthe three months ended March 31, 2004.

 
| **ITEM 6****.** | **EXHIBITS AND  REPORTS ON FORM 8-K** |
|-----------------|---------------------------------------|
|            |                                  |   |
|            | (a)                                   | Exhibits filed as part of this report are listed in the accompanying  Index to Exhibits. |
|            |                                  |   |
|            | (b)                                   | There were no reports on Form 8-K for the quarter ended March 31,  2004. |

 

10

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**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 theundersigned thereunto duly authorized.

 

 
|   |        | **PACCAR Financial  Corp.** |                       |
|--------|-------------|-----------------------------|----------------------------|
|   |        |                        | (Registrant)               |   |
|   |        |                        |                       |   |
|   |        |                        |                       |   |
| Date   | May 7, 2004 |                        |                       | By | /s/ Timothy M. Henebry |   |
|   |        |                        | Timothy M. Henebry         |   |
|   |        |                        | President                  |   |
|   |        |                        | (Authorized Officer)       |   |
|   |        |                        |                       |   |
|   |        |                        |                       |   |
|   |        | By                          | /s/ Brice J. Poplawski     |   |
|   |        |                        | Brice J. Poplawski         |   |
|   |        |                        | Controller                 |   |
|   |        |                        | (Chief Accounting Officer) |   |
|        |             |                             |                            |  |  |  |

 

11

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**INDEX TO EXHIBITS**

 

Exhibits (in order of assigned index numbers)

 
|   | 3.1    |   | Restated Articles of Incorporation of the Company, as amended  (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on  Form 10-K dated March 26, 1985. Amendment incorporated by reference to  Exhibit 19.1 to the Company’s Quarterly Report on Form 10-Q dated  August 13, 1985, File Number 0-12553).                                                                                                              |
|--------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | 3.2    |   | By-laws of the Company, as amended (incorporated by reference to  Exhibit 3.2 to the Company’s Registration Statement on Form 10-Q dated  October 20, 1983, File Number 0-12553).                                                                                                                                                                                                                                                                    |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | 4.1    |   | Indenture for Senior Debt Securities dated as of December 1,  1983 and first Supplemental Indenture dated as of June 19, 1989 between  the Company and Citibank, N.A. (incorporated by reference to Exhibit 4.1 to  the Company’s Annual Report on Form 10-K dated March 26, 1984, File  Number 0-12553 and Exhibit 4.2 to the Company’s Registration Statement on  Form S-3 dated June 23, 1989, Registration Number 33-29434). |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | 4.4    |   | Forms of Medium-Term Note, Series I (incorporated by reference to  Exhibits 4.2A and 4.2B to the Company’s Registration Statement on Form S-3  dated September 10, 1998, Registration Number 333-63153).                                                                                                                                                                                                                                             |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |   | Form of Letter of Representation among the Company, Citibank, N.A.  and The Depository Trust Company, Series I (incorporated by reference to  Exhibit 4.3 to the Company’s Registration Statement on Form S-3 dated  September 10, 1998, Registration Number 333-63153).                                                                                                                                                                             |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | 4.5    |   | Forms of Medium-Term Note, Series J (incorporated by reference to  Exhibits 4.2A and 4.2B to the Company’s Registration Statement on Form S-3  dated March 2, 2000, Registration Number 333-31502).                                                                                                                                                                                                                                                  |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |   | Form of Letter of Representation among the Company, Citibank, N.A.  and The Depository Trust Company, Series J (incorporated by reference to  Exhibit 4.3 to the Company’s Registration Statement on Form S-3 dated  March 2, 2000, Registration Number 333-31502).                                                                                                                                                                                  |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | 4.6    |   | Forms of Medium-Term Note, Series K (incorporated by reference to  Exhibits 4.2A and 4.2B to the Company’s Registration Statement on Form S-3  dated December 23, 2003, Registration Number 333-111504).                                                                                                                                                                                                                                             |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |   | Form of Letter of Representation among the Company, Citibank, N.A.  and The Depository Trust Company, Series K (incorporated by reference to  Exhibit 4.3 to the Company’s Registration Statement on Form S-3 dated  December 23, 2003, Registration Number 333-111504).                                                                                                                                                                             |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | 10.1   |   | Support Agreement between the Company and PACCAR dated as of  June 19, 1989 (incorporated by reference to Exhibit 28.1 to the  Company’s Registration Statement on Form S-3 dated June 23, 1989,  Registration Number 33-29434).                                                                                                                                                                                                                |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | 12.1   |   | Statement re: computation of ratio of earnings to fixed charges of  the Company pursuant to SEC reporting requirements for the three-month  periods ended March 31, 2004 and 2003.                                                                                                                                                                                                                                                                        |

 

12

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|   | 12.2   |   | Statement re: computation of ratio of earnings to fixed charges of  the Company pursuant to the Support Agreement between the Company and PACCAR  for the three-month periods ended March 31, 2004 and 2003. |
|--------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |                                                                                                                                                                                                              |
|   | 12.3   |   | Statement re: computation of ratio of earnings to fixed charges of  PACCAR and subsidiaries pursuant to SEC reporting requirements for the  three-month periods ended March 31, 2004 and 2003.               |
|   |   |   |                                                                                                                                                                                                              |
|   | 31.1   |   | Rule 13a-14(a)/15d-14(a)  Certification - Certification of Principal Executive Officer.                                                                                                                           |
|   |   |   |                                                                                                                                                                                                              |
|   | 31.2   |   | Rule 13a-14(a)/15d-14(a)  Certification - Certification of Principal Financial Officer.                                                                                                                           |
|   |   |   |                                                                                                                                                                                                              |
|   | 32.1   |   | Section 1350  Certifications - Certification pursuant to Rule 13a-14(b) and  Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.  section 1350).                                              |

 

Other exhibits listed in Item 601 of Regulation S-K are not applicable.

 

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