**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 

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

 

**For thequarterly period ended March 31, 2003**

 

**or**

 

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

 

**For transition period from                    to                    **

 

**Commission File No. 0-12553**

 

**PACCAR FINANCIAL CORP.**

(Exact name of registrant as specified in its charter)

 

| **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 markwhether the registrant: (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.   Yes  ý   No  o

 

Indicate by check markwhether the registrant is an accelerated filer (as defined in Rule 12b-2 of theExchange Act).  Yes  o   No  ý

 

Indicatethe number of shares outstanding of each of the issuer’s classes of commonstock, as of the latest practicable date:

 

Common Stock, $100 par value—145,000 shares as of April 30, 2003

 

THE REGISTRANT IS AWHOLLY-OWNED INDIRECT SUBSIDIARY OF PACCAR INC AND MEETS THE CONDITIONS SETFORTH IN GENERAL INSTRUCTIONS (H)(1)(A) AND (B) OF FORM 10-Q AND IS, THEREFORE,FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.

 

 

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**FORM 10-Q**

**PACCAR FINANCIAL CORP.**

 

**PART I–FINANCIAL INFORMATION**

 

**ITEM 1.  FINANCIAL STATEMENTS**

 

**Statementsof Income and Retained Earnings (Unaudited)**

(Millions of Dollars)

 
| **Three Months Ended March 31**                             |   | **2003**  |       | **2002** |       |
|-------------------------------------------------------------|--------|-----------|------------|----------|------------|
|                                                        |   |      |       |     |       |
| Interest  and fee income                                    |   | **$**     | **52.3**   |     | $          | 59.4 |   |
| Operating  lease and rental income                          |   | **10.1**  |       | 6.3      |       |
| Insurance  premiums and other revenue                       |   | **5.5**   |       | 4.6      |       |
|                                                        |   |      |       |     |       |
| **TOTAL  INTEREST AND OTHER REVENUE**                       |   | **67.9**  |       | 70.3     |       |
|                                                        |   |      |       |     |       |
| Interest  and other borrowing expenses                      |   | **23.8**  |       | 32.9     |       |
| Depreciation  and other operating lease and rental expenses |   | **7.2**   |       | 4.4      |       |
| Insurance  claims and underwriting expenses                 |   | **3.2**   |       | 3.0      |       |
| Selling  general and administrative expenses                |   | **10.6**  |       | 10.6     |       |
| Provision  for losses on receivables                        |   | **6.1**   |       | 15.8     |       |
|                                                        |   |      |       |     |       |
| **TOTAL  EXPENSES**                                         |   | **50.9**  |       | 66.7     |       |
|                                                        |   |      |       |     |       |
| **INCOME  BEFORE INCOME TAXES**                             |   | **17.0**  |       | 3.6      |       |
|                                                        |   |      |       |     |       |
| Income taxes                                                |   | **6.6**   |       | 1.5      |       |
|                                                        |   |      | ** ** |     | ** ** |
| **NET INCOME**                                              |   | **10.4**  |       | 2.1      |       |
|                                                        |   |      |       |     |       |
| **RETAINED  EARNINGS AT BEGINNING OF PERIOD**               |   | **426.0** |       | 409.7    |       |
|                                                        |   |      |       |     |       |
| **RETAINED EARNINGS AT END OF PERIOD**                      |   | **$**     | **436.4**  |     | $          | 411.8 |   |

 

Earnings per share anddividends per share are not reported because the Company is a wholly-ownedsubsidiary of PACCAR Financial Services Corporation.

 

See Notes to FinancialStatements.

 

2

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**Balance Sheets**

(Millions of Dollars)

 
|                                                                                                                                          |       | **March 31  2003** |        | **December 31  2002*** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|-------------|------------------------|--------|
|                                                                                                                                          |       |               | ** **  |                   |   |
| **ASSETS**                                                                                                                                    |       | **(Unaudited)**    |        |                   |   |
|                                                                                                                                          |       |               | ** **  |                   |   |
| Cash                                                                                                                                          |       | **$**              | **19.1**    | ** **             | $      | 9.9 |   |
| Finance and other receivables, net of allowance for  losses of $66.9 ($66.9 in 2002)                                                          |       | **3,089.5**        | ** **  | 3,156.2                |   |
| Loans to PACCAR Inc and affiliates                                                                                                            |       | **197.4**          | ** **  | 192.0                  |   |
| Equipment on operating leases, net of depreciation  of $30.7 ($26.8 in 2002)                                                                  |       | **123.4**          | ** **  | 122.3                  |   |
| Equipment held for sale                                                                                                                       |       | **11.4**           | ** **  | 10.6                   |   |
| Other assets                                                                                                                                  |       | **22.7**           | ** **  | 20.5                   |   |
|                                                                                                                                          |       |               | ** **  |                   |   |
| **TOTAL  ASSETS**                                                                                                                             |       | **$**              | **3,463.5** | ** **             | $      | 3,511.5 |   |
|                                                                                                                                          |       |               | ** **  |                   |   |
| **LIABILITIES**                                                                                                                               |       |               | ** **  |                   |   |
|                                                                                                                                          |       |               | ** **  |                   |   |
| Accounts payable and accrued expenses                                                                                                         |       | **$**              | **63.9**    | ** **             | $      | 63.7 |   |
| Payable for finance receivables acquired                                                                                                      |       | **50.9**           | ** **  | 50.5                   |   |
| Derivative liability                                                                                                                          |       | **46.6**           | ** **  | 52.2                   |   |
| Commercial paper                                                                                                                              |       | **999.3**          | ** **  | 1,120.6                |   |
| Medium-term notes and other borrowings                                                                                                        |       | **1,536.8**        | ** **  | 1,484.0                |   |
| Income taxes – current and deferred                                                                                                      |       | **189.8**          | ** **  | 184.6                  |   |
|                                                                                                                                          |       |               | ** **  |                   |   |
| **TOTAL  LIABILITIES**                                                                                                                        |       | **2,887.3**        | ** **  | 2,955.6                |   |
|                                                                                                                                          |       |               | ** **  |                   |   |
| **STOCKHOLDER’S  EQUITY**                                                                                                                |       |               | ** **  |                   |   |
|                                                                                                                                          |       |               | ** **  |                   |   |
| Preferred stock, par value $100 per share, 6%  noncumulative and nonvoting, 450,000 shares authorized, 310,000 shares issued  and outstanding |       | **31.0**           | ** **  | 31.0                   |   |
| Common stock, par value $100 per share, 200,000  shares authorized, 145,000 shares issued and outstanding                                     |       | **14.5**           | ** **  | 14.5                   |   |
| Paid-in capital                                                                                                                               | ** ** | **121.1**          | ** **  | 116.0                  |   |
| Retained earnings                                                                                                                             |       | **436.4**          | ** **  | 426.0                  |   |
| Accumulated other comprehensive loss                                                                                                          |       | **(26.8**          | **)**       | (31.6                  | )      |
|                                                                                                                                          |       |               | ** **  |                   |   |
| **TOTAL  STOCKHOLDER’S EQUITY**                                                                                                          |       | **576.2**          | ** **  | 555.9                  |   |
|                                                                                                                                          |       |               | ** **  |                   |   |
| **TOTAL  LIABILITIES AND STOCKHOLDER’S EQUITY**                                                                                          |       | **$**              | **3,463.5** | ** **             | $      | 3,511.5 |   |

 

----

*The December 31, 2002balance sheet has been derived from the audited financial statements.

 

See Notes to FinancialStatements.

 

3

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

(Millions of Dollars)

 
| **Three Months Ended March 31**                                   |       | **2003**   |       | **2002**   |   |
|-------------------------------------------------------------------|------------|------------|------------|------------|--------|
|                                                              |       |       | ** ** |       |   |
| **OPERATING  ACTIVITIES**                                         |       |       | ** ** |       |   |
|                                                              |       |       | ** ** |       |   |
| Net income                                                        |       | **$**      | **10.4**   | ** ** | $      | 2.1 |   |
| Items included in net income not affecting cash:                  |       |       | ** ** |       |   |
| Provision for losses on receivables                               |       | **6.1**    | ** ** | 15.8       |   |
| Deferred taxes provision                                          |       | **(5.9**   | **)**      | (4.0       | )      |
| Depreciation and amortization                                     | ** ** | **7.2**    | ** ** | 4.1        |   |
| Increase in payables and other                                    |       | **11.1**   | ** ** | 5.3        |   |
|                                                              |       |       | ** ** |       |   |
| **NET  CASH PROVIDED BY OPERATING ACTIVITIES**                    |       | **28.9**   | ** ** | 23.3       |   |
|                                                              |       |       | ** ** |       |   |
| **INVESTING  ACTIVITIES**                                         |       |       | ** ** |       |   |
|                                                              |       |       | ** ** |       |   |
| Finance and other receivables originated                          |       | **(211.8** | **)**      | (215.9     | )      |
| Collections on finance and other receivables                      |       | **322.7**  | ** ** | 348.1      |   |
| Net (increase) decrease in wholesale receivables                  |       | **(54.2**  | **)**      | 3.6        |   |
| Net (increase) decrease in loans to PACCAR Inc and  affiliates    |       | **(5.4**   | **)**      | 14.1       |   |
| Acquisition of equipment                                          |       | **(7.5**   | **)**      | (8.4       | )      |
| Proceeds from disposal of equipment                               |       | **1.5**    | ** ** | 1.2        |   |
|                                                              |       |       | ** ** |       |   |
| **NET  CASH PROVIDED BY INVESTING ACTIVITIES**                    |       | **45.3**   | ** ** | 142.7      |   |
|                                                              |       |       | ** ** |       |   |
| **FINANCING  ACTIVITIES**                                         |       |       | ** ** |       |   |
|                                                              |       |       | ** ** |       |   |
| Net decrease in commercial paper and other  short-term borrowings |       | **(121.3** | **)**      | (228.9     | )      |
| Proceeds from medium-term notes and other borrowings              |       | **190.0**  | ** ** | 150.0      |   |
| Payments of medium-term notes and other borrowings                | ** ** | **(137.2** | **)**      | (97.8      | )      |
| Payment of advances from PACCAR Inc                               |       | **(1.6**   | **)**      | **—** |   |
| Capital contributions                                             |       | **5.1**    | ** ** | 5.9        |   |
|                                                              |       |       | ** ** |       |   |
| **NET  CASH USED IN FINANCING ACTIVITIES**                        |       | **(65.0**  | **)**      | (170.8     | )      |
|                                                              |       |       | ** ** |       |   |
| **NET  INCREASE (DECREASE) IN CASH**                              |       | **9.2**    | ** ** | (4.8       | )      |
|                                                              |       |       | ** ** |       |   |
| **CASH  AT BEGINNING OF PERIOD**                                  |       | **9.9**    | ** ** | 18.5       |   |
|                                                              |       |       | ** ** |       |   |
| **CASH  AT END OF PERIOD**                                        |       | **$**      | **19.1**   | ** ** | $      | 13.7 |   |

 

See Notes to FinancialStatements.

 

4

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

 

**NOTE A–Basis ofPresentation**

 

Theaccompanying unaudited financial statements have been prepared in accordancewith the instructions to Form 10-Q and Article 10 of Regulation S-X.Accordingly, they do not include all of the information and footnotes requiredby generally accepted accounting principles for complete financial statements.However, in the opinion of management, all adjustments (consisting of normalrecurring accruals) considered necessary for a fair presentation have beenincluded. 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, 2002.

 

*Reclassifications*: Certain prior year amounts have beenreclassified to conform to the 2003 presentation.

 

**NOTEB–Transactions with PACCAR Inc and Affiliates**

 

TheCompany and PACCAR Inc (“PACCAR”) are parties to a Support Agreement thatobligates PACCAR to provide, when required, financial assistance to the Companyto ensure that the Company maintains a ratio of net earnings available forfixed charges to fixed charges (as defined) of at least 1.25 to 1 for anyfiscal year. The Support Agreement also requires PACCAR to own, directly orindirectly, all outstanding voting stock of the Company. The required ratio forthe three months ended March 31, 2003 and full year 2002 was met withoutassistance. The Company determines the amount of PACCAR assistance, if any, atthe end of each fiscal year.

 

PACCARFinancial Services Corporation (“PFSC”) charges the Company for certainadministrative services it provides and certain services the Company receivesindirectly from PACCAR. The costs are charged to the Company based upon theCompany’s specific use of the services at PFSC’s or PACCAR’s cost. Managementconsiders these charges reasonable and not significantly different from thecosts that would be incurred if the Company were on a stand-alone basis. PFSCrecognizes certain of these administrative services as an additional investmentin the Company. The Company records the investment as paid-in capital. Therewere no cash dividends declared or paid during the first three months of 2003or 2002. A cash dividend in the amount of $11.0 was declared and paid duringthe second quarter 2002.

 

Periodically,the Company borrows funds from PACCAR and makes loans to PACCAR. Loansoutstanding to PACCAR were $45.0 and $38.7 at March 31, 2003 and December 31,2002, respectively. Loans outstanding from PACCAR were $1.3 and $2.9 at March31, 2003 and December 31, 2002, respectively.

 

PACCARhas issued letters of credit as of March 31, 2003 in the amount of $7.9 onbehalf of the Company to guarantee funds for payment to insured franchisees andtheir customers for any future insurance losses.

 

TheCompany periodically loans funds to certain foreign finance and leasingaffiliates of PACCAR. These various affiliates have Support Agreements withPACCAR, similar to the Company’s Support Agreement. The foreign affiliatesoperate in the United Kingdom, the Netherlands, Mexico, Canada and Australia,and any resulting currency exposure is fully hedged. The foreign affiliatesprovide financing and leasing of trucks and related equipment manufacturedprimarily by PACCAR and sold through PACCAR’s independent dealer networks inEurope, Mexico, Canada and Australia. The Company will not make loans to theforeign affiliates in excess of the equivalent of $300.0 United States dollars,unless the amount in excess of such limits is guaranteed by PACCAR. The Companyperiodically reviews the funding alternatives for theseaffiliates, and these limits may be revised in thefuture. There was a total of $152.4 and $153.3 in loans outstanding to

 

5

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foreign affiliatesoperating in the United Kingdom, the Netherlands and Mexico at March 31, 2003 and December 31, 2002,respectively.

 

**NOTE C–PreferredStock**

 

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

 

**NOTE D–OtherComprehensive Income**

 

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

 
|                                         |   | **Three  Months Ended  March 31** |     |
|----------------------------------------------|--------|-----------------------------------|----------|
|                                         |   | **2003**                          |     | **2002** |   |
| Net  income                                  |   | **$**                             | **10.4** |   | $ | 2.1 |   |
| Other  comprehensive income:                 |   |                              |     |   |   |
| Unrealized  net gain on derivative contracts |   | **4.8**                           |     | 11.1 |   |
| Net  other comprehensive income              |   | **4.8**                           |     | 11.1 |   |
| Total  comprehensive income                  |   | **$**                             | **15.2** |   | $ | 13.2 |   |

 

Accumulatedother comprehensive loss of $26.8 and $31.6 at March 31, 2003 and December 31,2002, respectively, is comprised of the unrealized net loss on derivativecontracts.

 

6

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**Item 2.****           MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS**(Millions of Dollars)

 

**Results ofOperations:**

 

The Company’s net incomeof $10.4 for the first three months of 2003 was $8.3 higher than the firstthree months of 2002.  The maincontributor to the profit improvement was lower credit losses resulting in alower provision for losses.  Theprovision for losses decreased by $9.7 to $6.1 in the first three months of2003. Credit losses have improved due to fewer repossessions and higher usedtruck prices resulting in a lower loss per repossession. Also contributing tobetter earnings were higher margins earned on finance receivables and operatingleases due to competitive market conditions and enhancements made to pricingand credit practices.

 

The following tablesummarizes the activity in the Company’s allowance for losses on receivablesand presents related ratios:

 

 

**Allowancefor Losses**

 
|                                                                                                                                |   | **Three  Months  EndedMarch 312003** |       | **Year Ended  December 312002** |   | **Three  Months  EndedMarch 31  2002** |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|------------|---------------------------------|--------|----------------------------------------|--------|
| Balance at beginning of period                                                                                                      |   | **$**                                | **66.9**   | ** **                      | $      | 66.2                                   |   | $ | 66.2 |   |
|                                                                                                                                |   |                                 |       |                            |   |                                   |   |
| Provision for losses                                                                                                                |   | **6.1**                              | ** ** | 42.2                            |   | 15.8                                   |   |
|                                                                                                                                |   |                                 |       |                            |   |                                   |   |
| Credit losses net of recoveries                                                                                                     |   | **(6.1**                             | **)**      | (41.5                           | )      | (15.5                                  | )      |
|                                                                                                                                |   |                                 |       |                            |   |                                   |   |
| Balance at end of period                                                                                                            |   | **$**                                | **66.9**   | ** **                      | $      | 66.9                                   |   | $ | 66.5 |   |
|                                                                                                                                |   |                                 |       |                            |   |                                   |   |
| Ratios:                                                                                                                             |   |                                 | ** ** |                            |   |                                   |   |
|                                                                                                                                |   |                                 |       |                            |   |                                   |   |
| Credit losses net of recoveries to average netreceivables and equipment on operatingleases (annualized for March 31, 2003 and 2002) |   | **0.77**                             | **%**      | 1.29                            | %      | 1.95                                   | %      |
|                                                                                                                                |   |                                 |       |                            |   |                                   |   |
| Allowance for losses to period-end netreceivables and equipment on operatingleases                                                  |   | **2.08**                             | **%**      | 2.04                            | %      | 2.07                                   | %      |
|                                                                                                                                |   |                                 |       |                            |   |                                   |   |
| Period-end retail receivables and leases pastdue (over 60 days) to period-end retailcontracts and lease receivables                 |   | **2.15**                             | **%**      | 1.91                            | %      | 2.85                                   | %      |

 

The level of creditlosses in the future is dependent on various factors including, among otherthings, overall economic conditions, fuel prices and other operating costs forcustomers, freight volumes and used truck values.

 

7

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**Funding andLiquidity:**

 

Since1983, the Company has registered debt securities under the Securities Act of1933 for offering to the public. In 2000, the Company filed a shelfregistration statement under which $2,500.0 of medium-term notes could beissued as needed. As of March 31, 2003, $440.0 of such securities wereavailable for issuance. The Company plans to file a new shelf registrationstatement prior to the end of 2003.

 

TheCompany believes that it has sufficient financial capabilities to continuefunding receivables and servicing debt through internally generated funds,lines of credit, access to public and private debt markets, and other financialresources.

 

TheCompany participates with PACCAR and other PACCAR affiliates in syndicatedcredit facilities of $1,275.0 at March31, 2003 which are entirelyavailable for use by the Company. These credit facilities are used to providebackup liquidity for the Company’s short-term borrowings. The Company is liableonly for its own borrowings under these credit facilities. There were noborrowings under these credit facilities in the three months ended March 31, 2003 and the year ended December 31, 2002.

 

Otherinformation on liquidity, sources of capital, and contractual cash commitmentsas presented in the Company’s 2002 Annual Report on Form 10-K continues to berelevant.

 

**Forward LookingStatements:**

 

Certain information presented in this Form 10-Q containsforward-looking statements made pursuant to the Private Securities LitigationReform Act of 1995. These statements are subject to risks and uncertaintiesthat may affect actual results. The risks and uncertainties include, but arenot limited to national and local economic, political and industry conditions;changes in the levels of new business volume due to unit fluctuations in newPACCAR truck sales; changes in competitive factors; changes affecting theprofitability of truck owners and operators; price changes impacting equipmentcosts and residual values; changes in costs and availability of externalfunding sources; and legislation and governmental regulation.

 

8

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**Item 3.****           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK**

 

There have been nomaterial changes in the Company’s market risk during the three months endedMarch 31, 2003.  For additionalinformation, refer to Item 7a of the Company’s December 31, 2002 Annual Reporton Form 10-K.

 

**Item 4.****           CONTROLS AND PROCEDURES**

 

TheCompany’s principal executive officer and principal financial officer evaluatedthe Company’s disclosure controls and procedures (as defined in rule 13a-14(c)and 15d-14(c) under the Securities Exchange Act of 1934, as amended) as of adate within 90 days before the filing of this quarterly report (the EvaluationDate). Based on that evaluation, the principal executive officer and principalfinancial officer of the Company concluded that, as of the Evaluation Date, thedisclosure controls and procedures in place at the Company were adequate toensure that information required to be disclosed by the Company, including anyconsolidated subsidiaries (the Company has no subsidiaries), in reports thatthe Company files or submits under the Exchange Act, is recorded, processed,summarized and reported on a timely basis in accordance with applicable rulesand regulations. There have been no significant changes in the Company’sinternal controls or in other factors that could significantly affect internalcontrols subsequent to the Evaluation Date.

 

**PART II—OTHERINFORMATION**

 

Foritems 1, 2, 3, 4 and 5, there was no reportable information during the threemonths ended March 31, 2003.

 

**Item 6.****           EXHIBITS AND REPORTS ON FORM 8-K**

 

(a)**         **Exhibits filed as part of this report are listedin the accompanying Exhibit Index.

 

(b)**        **There were no reports on Form 8-K for the quarterended March 31, 2003.

 

9

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**SIGNATURES**

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 

 
|   |         |   | **PACCAR  Financial Corp.** |                       |
|--------|--------------|--------|-----------------------------|----------------------------|
|   |         |   | (Registrant)                |
|   |         |   |                        |
|   |         |   |                        |
| Date   | May 12, 2003 |   | By                          | /s/ Timothy M. Henebry     |   |
|   |         |   |                        | Timothy M. Henebry         |
|   |         |   |                        | President                  |
|   |         |   |                        | (Authorized Officer)       |
|   |         |   |                        |
|   |         |   |                        |
|   |         |   | By                          | /s/ Barry E. Prather       |   |
|   |         |   |                        | Barry E. Prather           |
|   |         |   |                        | Controller                 |
|   |         |   |                        | (Chief Accounting Officer) |

 

10

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**CERTIFICATIONS**

I, Mark C. Pigott,Chairman, certify that:

 

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

 

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

 

3.                                       Basedon my knowledge, the financial statements, and other financial informationincluded in this quarterly report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this quarterly report;

 

4.                                       Theregistrant’s other certifying officers and I are responsible for establishingand maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

 

a)         designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

 

b)        evaluatedthe effectiveness of the registrant’s disclosure controls and procedures as ofa date within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

 

c)         presentedin this quarterly report our conclusions about the effectiveness of thedisclosure controls and procedures based on our evaluation as of the EvaluationDate;

 

5.                                       Theregistrant’s other certifying officers and I have disclosed, based on our mostrecent evaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

 

a)         allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

b)        anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls; and

 

6.                                       Theregistrant’s other certifying officers and I have indicated in this quarterlyreport whether or not there were significant changes in internal controls or inother factors that could significantly affect internal controls subsequent tothe date of our most recent evaluation, including any corrective actions withregard to significant deficiencies and material weaknesses.

 
| Date   | May  12, 2003 |   |                           |
|--------|---------------|--------|--------------------------------|
|   |          |   | /s/ Mark C. Pigott             |
|   |          |   | Mark C. Pigott                 |
|   |          |   | Chairman                       |
|   |          |   | (Principal Executive  Officer) |

 

11

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**CERTIFICATIONS**

 

I, Michael A. Tembreull,Vice Chairman, certify that:

 

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

 

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

 

3.                                       Basedon my knowledge, the financial statements, and other financial informationincluded in this quarterly report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this quarterly report;

 

4.                                       Theregistrant’s other certifying officers and I are responsible for establishingand maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

 

a)         designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

 

b)        evaluatedthe effectiveness of the registrant’s disclosure controls and procedures as ofa date within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

 

c)         presentedin this quarterly report our conclusions about the effectiveness of thedisclosure controls and procedures based on our evaluation as of the EvaluationDate;

 

5.                                       Theregistrant’s other certifying officers and I have disclosed, based on our mostrecent evaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

 

a)         allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

b)        anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls; and

 

6.                                       Theregistrant’s other certifying officers and I have indicated in this quarterlyreport whether or not there were significant changes in internal controls or inother factors that could significantly affect internal controls subsequent tothe date of our most recent evaluation, including any corrective actions withregard to significant deficiencies and material weaknesses.

 
| Date   | May  12, 2003 |   |                           |
|--------|---------------|--------|--------------------------------|
|   |          |   | /s/ Michael A.  Tembreull      |
|   |          |   | Michael A. Tembreull           |
|   |          |   | Vice Chairman                  |
|   |          |   | (Principal Financial  Officer) |

 

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**EXHIBITINDEX**

 

Exhibit(in order of assigned index numbers)

 

3.1           RestatedArticles of Incorporation of the Company, as amended (incorporated by referenceto 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’sQuarterly Report on Form 10-Q dated August 13, 1985, File Number 0-12553).

 

3.2           By-Lawsof the Company, as amended (incorporated by reference to Exhibit 3.2 to theCompany’s Registration Statement on Form 10-Q dated October 20, 1983, FileNumber 0-12553).

 

4.1           Indenturefor Senior Debt Securities dated as of December 1, 1983 and first SupplementalIndenture 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 onForm 10-K dated March 26, 1984, File Number 0-12553 and Exhibit 4.2 to theCompany’s Registration Statement on Form S-3 dated June 23, 1989, RegistrationNumber 33-29434).

 

4.4           Forms ofMedium-Term Note, Series I (incorporated by reference to Exhibits 4.2A and 4.2Bto 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 byreference to Exhibit 4.3 to the Company’s Registration Statement on Form S-3dated September 10, 1998, Registration Number 333-63153).

 

4.5           Forms ofMedium-Term Note, Series J (incorporated by reference to Exhibits 4.2A and 4.2Bto 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 byreference to Exhibit 4.3 to the Company’s Registration Statement on Form S-3dated March 2, 2000, Registration Number 333-31502).

 

10.1         SupportAgreement between the Company and PACCAR dated as of June 19, 1989  (incorporated by reference to Exhibit 28.1to the Company’s Registration Statement on Form S-3 dated June 23, 1989,Registration Number 33-29434).

 

12.1         Statementre: computation of ratio of earnings to fixed charges of the Company pursuantto SEC reporting requirements for the three-month periods ended March 31, 2003and 2002.

 

12.2         Statementre: computation of ratio of earnings to fixed charges of the Company pursuantto the Support Agreement between the Company and PACCAR for the three-monthperiods ended March 31, 2003 and 2002.

 

12.3         Statementre: computation of ratio of earnings to fixed charges of PACCAR andsubsidiaries pursuant to SEC reporting requirements for the three-month periodsended March 31, 2003 and 2002.

 

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99.1         Certification pursuant tosection 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. section 1350).

 

99.2         Certification pursuant tosection 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. section 1350).

 

 

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

 

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