Company Quick10K Filing
Quick10K
Toyota Motor Credit
10-Q 2019-09-30 Quarter: 2019-09-30
10-Q 2019-06-30 Quarter: 2019-06-30
10-K 2019-03-31 Annual: 2019-03-31
10-Q 2018-12-31 Quarter: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-K 2018-03-31 Annual: 2018-03-31
10-Q 2017-12-31 Quarter: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-K 2017-03-31 Annual: 2017-03-31
10-Q 2016-12-31 Quarter: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-K 2016-03-31 Annual: 2016-03-31
10-Q 2015-12-31 Quarter: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-K 2015-03-31 Annual: 2015-03-31
10-Q 2014-12-31 Quarter: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-K 2014-03-31 Annual: 2014-03-31
10-Q 2013-12-31 Quarter: 2013-12-31
8-K 2019-11-22 Regulation FD, Exhibits
8-K 2019-11-21 Exhibits
8-K 2019-11-08 Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K 2019-06-21 Exhibits
8-K 2019-06-19 Regulation FD, Exhibits
8-K 2019-06-10 Regulation FD, Exhibits
8-K 2019-05-24 Regulation FD, Exhibits
8-K 2019-04-16 Other Events
8-K 2019-04-02 Other Events, Exhibits
8-K 2019-02-22 Regulation FD, Exhibits
8-K 2018-12-17 Enter Agreement, Off-BS Arrangement, Regulation FD, Exhibits
8-K 2018-11-09 Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K 2018-09-14 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-08-21 Regulation FD, Exhibits
8-K 2018-08-06 Other Events, Exhibits
8-K 2018-06-27 Regulation FD, Exhibits
8-K 2018-06-18 Exhibits
8-K 2018-05-24 Regulation FD, Exhibits
8-K 2018-05-15 Regulation FD, Exhibits
8-K 2018-05-01 Other Events
8-K 2018-03-19 Regulation FD, Exhibits
8-K 2018-03-07 Other Events
8-K 2018-02-23 Regulation FD, Exhibits
8-K 2018-01-25 Exhibits
FXNC First National 93
INTZ Intrusion 57
ZENO Zenosense 13
PSCO Public Service Co of Colorado 0
NSPM Northern States Power 0
ICOX Icox Innovations 0
WESTG Westgate Acquisitions 0
MULTI Multi Solutions II 0
PCFG Pacific Gold & Royalty 0
SFR Steadfast Income REIT 0
TMCC 2019-09-30
Part I. Financial Information
Item 1. Financial Statements
Note 1 - Interim Financial Data
Note 2 - Investments in Marketable Securities
Note 3 - Finance Receivables, Net
Note 4 - Investments in Operating Leases, Net
Note 5 - Allowance for Credit Losses
Note 6 - Derivatives, Hedging Activities and Interest Expense
Note 7 - Debt and Credit Facilities
Note 8 - Variable Interest Entities
Note 9 - Commitments and Contingencies
Note 10 - Income Taxes
Note 11 - Related Party Transactions
Note 12 - Fair Value Measurements
Note 13 - Segment Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 tmcc-ex311_9.htm
EX-31.2 tmcc-ex312_8.htm
EX-32.1 tmcc-ex321_6.htm
EX-32.2 tmcc-ex322_7.htm

Toyota Motor Credit Earnings 2019-09-30

TMCC 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 tmcc-10q_20190930.htm 10-Q tmcc-10q_20190930.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File Number 1-9961

 

TOYOTA MOTOR CREDIT CORPORATION

(Exact name of registrant as specified in its charter)

 

 

California

 

95-3775816

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

6565 Headquarters Drive

Plano, Texas

 

75024

(Address of principal executive offices)

 

(Zip Code)

 

Registrant's telephone number, including area code: (469) 486-9300

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Medium-Term Notes, Series B

Stated Maturity Date January 11, 2028

TM/28

New York Stock Exchange

 

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.         

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

As of October 31, 2019, the number of outstanding shares of capital stock, no par value per share, of the registrant was 91,500, all of which shares were held by Toyota Financial Services International Corporation.

Reduced Disclosure Format

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format.

 


TOYOTA MOTOR CREDIT CORPORATION

FORM 10-Q

For the quarter ended September 30, 2019

 

INDEX

 

PART I

3

Item 1. Financial Statements

3

Consolidated Statements of Income

3

Consolidated Statements of Comprehensive Income

3

Consolidated Balance Sheets

4

Consolidated Statements of Shareholder’s Equity

5

Consolidated Statements of Cash Flows

6

Notes to Consolidated Financial Statements

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

44

Item 3. Quantitative and Qualitative Disclosures About Market Risk

69

Item 4. Controls and Procedures

69

PART II

70

Item 1. Legal Proceedings

70

Item 1A. Risk Factors

70

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

70

Item 3. Defaults Upon Senior Securities

70

Item 4. Mine Safety Disclosures

70

Item 5. Other Information

70

Item 6. Exhibits

71

Signatures

72

 


2


 

PART I. FINANCIAL INFORMATION

 

 

ITEM 1. FINANCIAL STATEMENTS

TOYOTA MOTOR CREDIT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in millions)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Financing revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease

 

$

2,197

 

 

$

2,167

 

 

$

4,381

 

 

$

4,293

 

Retail

 

 

638

 

 

 

547

 

 

 

1,227

 

 

 

1,082

 

Dealer

 

 

183

 

 

 

176

 

 

 

373

 

 

 

351

 

Total financing revenues

 

 

3,018

 

 

 

2,890

 

 

 

5,981

 

 

 

5,726

 

Depreciation on operating leases

 

 

1,583

 

 

 

1,662

 

 

 

3,208

 

 

 

3,428

 

Interest expense

 

 

613

 

 

 

702

 

 

 

1,310

 

 

 

1,384

 

Net financing revenues

 

 

822

 

 

 

526

 

 

 

1,463

 

 

 

914

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance earned premiums and contract revenues

 

 

232

 

 

 

226

 

 

 

461

 

 

 

450

 

Investment and other income, net

 

 

97

 

 

 

56

 

 

 

215

 

 

 

96

 

Net financing revenues and other revenues

 

 

1,151

 

 

 

808

 

 

 

2,139

 

 

 

1,460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

61

 

 

 

67

 

 

 

136

 

 

 

156

 

Operating and administrative

 

 

358

 

 

 

348

 

 

 

695

 

 

 

672

 

Insurance losses and loss adjustment expenses

 

 

115

 

 

 

112

 

 

 

228

 

 

 

237

 

Total expenses

 

 

534

 

 

 

527

 

 

 

1,059

 

 

 

1,065

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

617

 

 

 

281

 

 

 

1,080

 

 

 

395

 

Provision for income taxes

 

 

158

 

 

 

87

 

 

 

262

 

 

 

109

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

459

 

 

$

194

 

 

$

818

 

 

$

286

 

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in millions)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income

 

$

459

 

 

$

194

 

 

$

818

 

 

$

286

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses) on available-for-sale

  marketable securities [net of tax provision

  of ($2), ($1), ($5) and ($1), respectively]

 

 

6

 

 

 

1

 

 

 

16

 

 

 

(3

)

Reclassification adjustment for net (gains) losses on

  available-for-sale marketable securities included in

  investment and other income, net [net of tax

provision of $0, $0, $0 and $0, respectively]

 

 

(1

)

 

 

1

 

 

 

(1

)

 

 

1

 

Other comprehensive income (loss)

 

 

5

 

 

 

2

 

 

 

15

 

 

 

(2

)

Comprehensive income

 

$

464

 

 

$

196

 

 

$

833

 

 

$

284

 

 

Refer to the accompanying Notes to Consolidated Financial Statements.

3


TOYOTA MOTOR CREDIT CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in millions except share data)

(Unaudited)

 

 

 

September 30,

 

 

March 31,

 

 

 

2019

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,664

 

 

$

2,198

 

Restricted cash and cash equivalents

 

 

941

 

 

 

985

 

Investments in marketable securities

 

 

3,452

 

 

 

2,908

 

Finance receivables, net

 

 

72,988

 

 

 

70,517

 

Investments in operating leases, net

 

 

37,687

 

 

 

37,927

 

Other assets

 

 

2,206

 

 

 

1,981

 

Total assets

 

$

119,938

 

 

$

116,516

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDER’S EQUITY

 

 

 

 

 

 

 

 

Debt

 

$

95,093

 

 

$

92,922

 

Deferred income taxes

 

 

5,594

 

 

 

5,452

 

Other liabilities

 

 

4,840

 

 

 

4,564

 

Total liabilities

 

 

105,527

 

 

 

102,938

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Refer to Note 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholder’s equity:

 

 

 

 

 

 

 

 

Capital stock, no par value (100,000 shares authorized; 91,500 issued

   and outstanding) at September 30, 2019 and March 31, 2019

 

 

915

 

 

 

915

 

Additional paid-in capital

 

 

2

 

 

 

2

 

Accumulated other comprehensive income

 

 

18

 

 

 

3

 

Retained earnings

 

 

13,476

 

 

 

12,658

 

Total shareholder's equity

 

 

14,411

 

 

 

13,578

 

Total liabilities and shareholder's equity

 

$

119,938

 

 

$

116,516

 

 

The following table presents the assets and liabilities of our consolidated variable interest entities (Refer to Note 8).

  

 

 

September 30,

 

 

March 31,

 

 

 

2019

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

Finance receivables, net

 

$

12,272

 

 

$

11,075

 

Investments in operating leases, net

 

 

4,153

 

 

 

5,307

 

Other assets

 

 

117

 

 

 

192

 

Total assets

 

$

16,542

 

 

$

16,574

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Debt

 

$

12,837

 

 

$

12,401

 

Other liabilities

 

 

11

 

 

 

12

 

Total liabilities

 

$

12,848

 

 

$

12,413

 

 

Refer to the accompanying Notes to Consolidated Financial Statements.

 

4


TOYOTA MOTOR CREDIT CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY

(Dollars in millions)

(Unaudited)

 

 

 

Three Months Ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

other

 

 

 

 

 

 

 

 

 

 

 

Capital

 

 

paid-in

 

 

comprehensive

 

 

Retained

 

 

 

 

 

 

 

stock

 

 

capital

 

 

(loss) income

 

 

earnings

 

 

Total

 

Balance at June 30, 2018

 

$

915

 

 

$

2

 

 

$

(21

)

 

$

11,962

 

 

$

12,858

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

194

 

 

 

194

 

Other comprehensive income, net of tax

 

 

-

 

 

 

-

 

 

 

2

 

 

 

-

 

 

 

2

 

Balance at September 30, 2018

 

$

915

 

 

$

2

 

 

$

(19

)

 

$

12,156

 

 

$

13,054

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

other

 

 

 

 

 

 

 

 

 

 

 

Capital

 

 

paid-in

 

 

comprehensive

 

 

Retained

 

 

 

 

 

 

 

stock

 

 

capital

 

 

(loss) income

 

 

earnings

 

 

Total

 

Balance at March 31, 2018

 

$

915

 

 

$

2

 

 

$

(29

)

 

$

11,992

 

 

$

12,880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative-effect of change in accounting policy

 

 

-

 

 

 

-

 

 

 

12

 

 

 

(122

)

 

 

(110

)

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

286

 

 

 

286

 

Other comprehensive loss, net of tax

 

 

-

 

 

 

-

 

 

 

(2

)

 

 

-

 

 

 

(2

)

Balance at September 30, 2018

 

$

915

 

 

$

2

 

 

$

(19

)

 

$

12,156

 

 

$

13,054

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

other

 

 

 

 

 

 

 

 

 

 

 

Capital

 

 

paid-in

 

 

comprehensive

 

 

Retained

 

 

 

 

 

 

 

stock

 

 

capital

 

 

income

 

 

earnings

 

 

Total

 

Balance at June 30, 2019

 

$

915

 

 

$

2

 

 

$

13

 

 

$

13,017

 

 

$

13,947

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

459

 

 

 

459

 

Other comprehensive income, net of tax

 

 

-

 

 

 

-

 

 

 

5

 

 

 

-

 

 

 

5

 

Balance at September 30, 2019

 

$

915

 

 

$

2

 

 

$

18

 

 

$

13,476

 

 

$

14,411

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

other

 

 

 

 

 

 

 

 

 

 

 

Capital

 

 

paid-in

 

 

comprehensive

 

 

Retained

 

 

 

 

 

 

 

stock

 

 

capital

 

 

income

 

 

earnings

 

 

Total

 

Balance at March 31, 2019

 

$

915

 

 

$

2

 

 

$

3

 

 

$

12,658

 

 

$

13,578

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

818

 

 

 

818

 

Other comprehensive income, net of tax

 

 

-

 

 

 

-

 

 

 

15

 

 

 

-

 

 

 

15

 

Balance at September 30, 2019

 

$

915

 

 

$

2

 

 

$

18

 

 

$

13,476

 

 

$

14,411

 

Refer to the accompanying Notes to Consolidated Financial Statements.

 

5


TOYOTA MOTOR CREDIT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in millions)

(Unaudited)

 

 

Six Months Ended September 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

818

 

 

$

286

 

Adjustments to reconcile net income to net cash provided by operating

   activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,264

 

 

 

3,484

 

Recognition of deferred income

 

 

(1,230

)

 

 

(1,142

)

Provision for credit losses

 

 

136

 

 

 

156

 

Amortization of deferred costs

 

 

352

 

 

 

310

 

Foreign currency and other adjustments to the carrying value of debt, net

 

 

(411

)

 

 

(748

)

Net (gains) losses from investments in marketable securities

 

 

(90

)

 

 

41

 

Net change in:

 

 

 

 

 

 

 

 

Derivative assets

 

 

11

 

 

 

12

 

Other assets and accrued interest

 

 

(75

)

 

 

76

 

Deferred income taxes

 

 

137

 

 

 

81

 

Derivative liabilities

 

 

12

 

 

 

25

 

Other liabilities

 

 

121

 

 

 

167

 

Net cash provided by operating activities

 

 

3,045

 

 

 

2,748

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of investments in marketable securities

 

 

(1,018

)

 

 

(798

)

Proceeds from sales of investments in marketable securities

 

 

183

 

 

 

71

 

Proceeds from maturities of investments in marketable securities

 

 

403

 

 

 

1,908

 

Acquisition of finance receivables

 

 

(15,483

)

 

 

(12,322

)

Collection of finance receivables

 

 

12,628

 

 

 

12,035

 

Net change in wholesale and certain working capital receivables

 

 

428

 

 

 

781

 

Acquisition of investments in operating leases

 

 

(8,521

)

 

 

(8,680

)

Disposals of investments in operating leases

 

 

6,285

 

 

 

5,808

 

Long term loans to affiliates

 

 

(100

)

 

 

(200

)

Payments on long term loans from affiliates

 

 

13

 

 

 

20

 

Other, net

 

 

(16

)

 

 

(19

)

Net cash used in investing activities

 

 

(5,198

)

 

 

(1,396

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of debt

 

 

11,101

 

 

 

15,032

 

Payments on debt

 

 

(10,269

)

 

 

(12,380

)

Net change in commercial paper

 

 

1,751

 

 

 

(2,029

)

Net change in financing support provided by affiliates

 

 

2

 

 

 

(3

)

Dividend paid

 

 

(10

)

 

 

-

 

Net cash provided by financing activities

 

 

2,575

 

 

 

620

 

Net increase in cash and cash equivalents and restricted cash and cash equivalents

 

 

422

 

 

 

1,972

 

Cash and cash equivalents and restricted cash and cash equivalents at the beginning of the period

 

 

3,183

 

 

 

4,759

 

Cash and cash equivalents and restricted cash and cash equivalents at the end of the period

 

$

3,605

 

 

$

6,731

 

Supplemental disclosures:

 

 

 

 

 

 

 

 

Interest paid, net

 

$

1,315

 

 

$

1,048

 

Income taxes paid, net

 

$

45

 

 

$

15

 

 

Refer to the accompanying Notes to Consolidated Financial Statements.

 

 

6


TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

 

 

Note 1 – Interim Financial Data

Basis of Presentation

The information furnished in these unaudited interim consolidated financial statements as of and for the three and six months ended September 30, 2019 and 2018 has been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).  In the opinion of management, the unaudited consolidated financial information reflects all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods presented.  The results of operations for the three and six months ended September 30, 2019 do not necessarily indicate the results which may be expected for the full fiscal year ending March 31, 2020 (“fiscal 2020”).

These financial statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included in Toyota Motor Credit Corporation’s Annual Report on Form 10-K (“Form 10-K”) for the fiscal year ended March 31, 2019 (“fiscal 2019”), which was filed with the Securities and Exchange Commission on June 4, 2019.  References herein to “TMCC” denote Toyota Motor Credit Corporation, and references herein to “we”, “our”, and “us” denote Toyota Motor Credit Corporation and its consolidated subsidiaries.

Certain prior period amounts have been reclassified to conform to current period presentation.  Related party transactions are disclosed in Note 11 – Related Party Transactions.

Other Matters

On April 16, 2019, we announced that we will restructure our field operations over the next two years to better serve our dealer partners by streamlining our field office structure into three regional locations and investing in new technology.  Costs associated with this restructure are not expected to be significant.

TMCC has commenced preparations to launch private label finance services for third-party automotive and mobility companies.  In furtherance of this new business initiative, on August 28, 2019, we entered into an agreement with Mazda Motor of America, Inc. (“Mazda”) pursuant to which we will offer exclusive private label automotive retail, lease, and dealer financing products and services, and vehicle protection products and services, to Mazda customers and dealers in the United States, launching at various times through fiscal year 2021 for an initial term of approximately five years.  We intend to leverage our existing processes and personnel to service the newly originated assets, and we expect to make certain technology investments to support the Mazda program.  TMCC will not acquire any existing Mazda assets or liabilities pursuant to the agreement and we do not expect launch costs to be significant through fiscal year 2021.

7


TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

 

Note 1 – Interim Financial Data (Continued)

Recently Adopted Accounting Guidance

On April 1, 2019, we adopted the following new accounting standards:

Leases

We adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”), along with the subsequently issued guidance amending and clarifying various aspects of the new lease guidance, using the modified retrospective method.  In accordance with that method, the comparative period’s information has not been restated and continues to be reported under the lease accounting guidance in effect for that period.  We also elected to apply the package of practical expedients permitted under the transition guidance of the new standard which allowed us to not reassess our historical lease classification, initial direct costs, and whether or not contracts entered into prior to adoption are or contain leases.  As a lessor, the adoption of ASU 2016-02, did not have a significant impact on our financial statements.  As a lessee, the adoption of ASU 2016-02 added right-of-use (“ROU”) assets of $115 million and operating lease liabilities of $122 million, which are included in Other assets, and in Other liabilities, respectively, in our Consolidated Balance Sheet.  The adoption of this new guidance did not impact our Consolidated Statement of Income and did not result in a cumulative-effect adjustment to opening retained earnings.

Refer to Note 4 – Investments in Operating Leases, Net and Note 9 – Commitments and Contingencies for additional information.

Other Recently Adopted Standards

We adopted ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs, which requires certain premiums on callable debt securities to be amortized to the earliest call date.  The adoption of this guidance did not have a material impact on our consolidated financial statements and related disclosures.

We adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.  The adoption of this guidance did not have an impact on our consolidated financial statements and related disclosures as we no longer have hedge accounting derivatives.

In the second quarter of fiscal 2020, we adopted ASU 2019-07, Codification Updates to Securities and Exchange Commission (“SEC”) SectionsAmendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, “Disclosure Update and Simplification,” and Nos. 33-10231 and 33-10442, “Investment Company Reporting Modernization,” and Miscellaneous Updates.  This guidance was effective upon issuance in July 2019 and aligns the guidance in various SEC sections to the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) with the requirements of certain already effective SEC final rules.  While most of the amendments in this release eliminate outdated or duplicative disclosure requirements, the final rule release amends the interim financial statement requirements to include a reconciliation of changes in shareholder’s equity for each period for which an income statement is required to be filed.  We have disclosed the required information in the Consolidated Statements of Shareholder’s Equity.  The other eliminations or amendments did not have a material impact on our consolidated financial statements and related disclosures.


8


TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

 

Note 1 – Interim Financial Data (Continued)

Accounting Guidance Issued But Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  This guidance introduces a new impairment model based on expected losses rather than incurred losses for certain types of financial instruments.  It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.  The FASB subsequently issued guidance amending and clarifying aspects of the new impairment model.  This ASU is effective for us on April 1, 2020.  We are in the process of developing, refining and testing the models and procedures that will be used to calculate the credit loss reserves in accordance with this new accounting guidance.  We expect this new guidance will result in an increase in our allowance for credit losses with a cumulative-effect adjustment to our opening retained earnings in the period of adoption.  The magnitude of the increase in our allowance for credit losses is under evaluation.  We are currently evaluating the other potential impacts of this guidance on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which modifies disclosure requirements related to fair value measurement.  This ASU is effective for us on April 1, 2020.  The adoption of this guidance will not have a material impact on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software, which aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software.  This ASU is effective for us on April 1, 2020.  We are currently evaluating the potential impacts of this guidance on our consolidated financial statements and related disclosures.

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810), which requires indirect interests held through related parties in common control arrangements to be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests.  This ASU is effective for us on April 1, 2021.  The adoption of this guidance will not have a material impact on our consolidated financial statements and related disclosures.   

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The applicable provisions of this ASU are effective for us on April 1, 2020. We are currently evaluating the potential impacts of this guidance on our consolidated financial statements and related disclosures.

 

9


TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

 

Note 2 – Investments in Marketable Securities

Investments in marketable securities consist of debt securities and equity investments.  We classify all of our debt securities as available-for-sale.  All equity investments are recorded at fair value with changes in fair value included in Investment and other income, net within our Consolidated Statements of Income.

Investments in marketable securities consisted of the following:

 

 

 

September 30, 2019

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

 

cost

 

 

gains

 

 

losses

 

 

value

 

Available-for-sale debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency obligations

 

$

196

 

 

$

8

 

 

$

-

 

 

$

204

 

Municipal debt securities

 

 

9

 

 

 

2

 

 

 

-

 

 

 

11

 

Certificates of deposit

 

 

150

 

 

 

-

 

 

 

-

 

 

 

150

 

Commercial paper

 

 

350

 

 

 

-

 

 

 

-

 

 

 

350

 

Corporate debt securities

 

 

164

 

 

 

10

 

 

 

-

 

 

 

174

 

Mortgage-backed securities: