UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended ~~December 31, 2013~~June 30, 2014

[ ] 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 (State or other jurisdiction of incorporation or organization)	95-3775816 (I.R.S. Employer Identification No.)

19001 S. Western Avenue Torrance, California (Address of principal executive offices)	90501 (Zip Code)

Registrant's telephone number, including area code: (310) 468-1310

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 x No __ ___

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Yes x No __ ___

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

Large accelerated filer __ Accelerated filer __

Large accelerated filer __		Accelerated filer __
Non-accelerated filer x ~~Smaller reporting company __~~		Smaller reporting company __

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes __ No x

As of ~~January~~July 31, 2014, 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 Americas 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 ~~December 31, 2013~~

June 30, 2014

INDEX

~~INDEX~~
PART I ~~...................................................................................................................................................................................~~		3

	Item 1. Financial ~~Statements..............................................................................................................................................~~Statements	3
	Consolidated Statement of ~~Income.....................................................................................................................................~~Income	3
	Consolidated Statement of Comprehensive ~~Income...........................................................................................................~~Income	3
	Consolidated Balance ~~Sheet................................................................................................................................................~~Sheet	4
	Consolidated Statement of Shareholder’s ~~Equity...............................................................................................................~~Equity	5
	Consolidated Statement of Cash ~~Flows..............................................................................................................................~~Flows	6
	Notes to Consolidated Financial ~~Statements......................................................................................................................~~Statements	7
	Item 2. Management’s Discussion and ~~Analysis...............................................................................................................~~Analysis	4642
	Item 3. Quantitative and Qualitative Disclosures About Market ~~Risk..............................................................................~~Risk	7267
	Item 4. Controls and ~~Procedures.......................................................................................................................................~~Procedures	72

~~PART II .................................................................................................................................................................................~~		7367

PART II	68

Item 1. Legal ~~Proceedings.................................................................................................................................................~~Proceedings	7368
	Item 1A. Risk ~~Factors...........................................................................................................................................................~~Factors	7368
	Item 2. Unregistered Sales of Equity Securities and Use of ~~Proceeds..............................................................................~~Proceeds	7368
	Item 3. Defaults Upon Senior ~~Securities...........................................................................................................................~~Securities	7368
	Item 4. Mine Safety ~~Disclosures.......................................................................................................................................~~Disclosures	7368
	Item 5. Other ~~Information.................................................................................................................................................~~Information	7471
	Item 6. ~~Exhibits.................................................................................................................................................................~~Exhibits	7471
Signatures	~~Signatures..............................................................................................................................................................................~~	7570
Exhibit Index	~~Exhibit Index.........................................................................................................................................................................~~	7671

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)

Three Months Ended Nine Months Ended
December 31, December 31,
(Dollars in millions) 2013
20121
2013
20121
Financing revenues:
Operating lease $ 1,290 $ 1,197 $ 3,754 $ 3,541
Retail 475 514 1,436 1,571
Dealer 111 110 326 328
Total financing revenues 1,876 1,821 5,516 5,440

Depreciation on operating leases 1,033 907 2,950 2,653
Interest expense 386 284 1,236 625
Net financing revenues 457 630 1,330 2,162

Insurance earned premiums and contract revenues 141 140 423 435
Investment and other income, net 68 63 88 136
Net financing revenues and other revenues 666 833 1,841 2,733

Expenses:
Provision for credit losses 63 88 102 107
Operating and administrative 240 229 700 674
Insurance losses and loss adjustment expenses 57 77 196 231
Total expenses 360 394 998 1,012

Income before income taxes 306 439 843 1,721
Provision for income taxes 113 156 315 635

Net income $ 193 $ 283 $ 528 $ 1,086
1 Certain prior period amounts have been reclassified to conform to the current period presentation.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)

Three Months Ended Nine Months Ended
December 31, December 31,
(Dollars in millions) 2013 2012 2013 2012
Net income $ 193 $ 283 $ 528 $ 1,086
Other comprehensive (loss) income, net of tax:
Net unrealized gains (losses) on available-for-sale
marketable securities [net of tax (provision)
benefit of ($1), $13, $20 and ($22), respectively] 2 (22) (36) 31
Reclassification adjustment for net (gains) losses on
available-for-sale marketable securities included in
investment and other income, net [net of tax
provision (benefit) of $4, $0, ($11) and $2, respectively] (7) - 18 (5)
Other comprehensive (loss) income (5) (22) (18) 26
Comprehensive income $ 188 $ 261 $ 510 $ 1,112
See accompanying Notes to Consolidated Financial Statements.

TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)

	Three Months Ended
	June 30,
(Dollars in millions)	2014		2013
Financing revenues:
Operating lease	$	1,403	$	1,209
Retail		456		478
Dealer		101		108
Total financing revenues		1,960		1,795

Depreciation on operating leases		1,100		951
Interest expense		130		536
Net financing revenues		730		308

Insurance earned premiums and contract revenues		153		139
Investment and other income, net		35		6
Net financing revenues and other revenues		918		453

Expenses:
Provision for credit losses		38		11
Operating and administrative		233		227
Insurance losses and loss adjustment expenses		70		71
Total expenses		341		309

Income before income taxes		577		144
Provision for income taxes		213		53

Net income	$	364	$	91


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
	Three Months Ended
	June 30,
(Dollars in millions)	2014			2013
Net income	$	364		$	91
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on available-for-sale
marketable securities [net of tax (provision) benefit of
($27) and $31, respectively]		42			(54	)
Reclassification adjustment for net (gains) losses on
available-for-sale marketable securities
included in investment and other income, net [net of
tax provision (benefit) of $5 and ($10), respectively]		(7	)		16
Other comprehensive income (loss)		35			(38	)
Comprehensive income	$	399		$	53

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited)

(Dollars in millions) December 31, 2013 March 31, 2013
ASSETS

Cash and cash equivalents $ 2,900 $ 4,723
Restricted cash 480 491
Investments in marketable securities 4,450 5,397
Finance receivables, net 66,126 62,567
Investments in operating leases, net 23,541 20,384
Other assets 2,154 1,740
Total assets $ 99,651 $ 95,302

LIABILITIES AND SHAREHOLDER'S EQUITY

Debt $ 82,693 $ 78,832
Deferred income taxes 6,561 6,236
Other liabilities 2,995 2,677
Total liabilities 92,249 87,745

Commitments and contingencies (See Note 12)

Shareholder's equity:
Capital stock, no par value (100,000 shares authorized; 91,500 issued
and outstanding) at December 31, 2013 and March 31, 2013 915 915
Additional paid-in-capital 2 2
Accumulated other comprehensive income 193 211
Retained earnings 6,292 6,429
Total shareholder's equity 7,402 7,557
Total liabilities and shareholder's equity $ 99,651 $ 95,302

TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited)

(Dollars in millions)	June 30, 2014		March 31, 2014
ASSETS

Cash and cash equivalents	$	5,364	$	3,815
Restricted cash and cash equivalents		992		1,721
Investments in marketable securities		5,036		5,389
Finance receivables, net		65,267		65,176
Investments in operating leases, net		26,518		24,769
Other assets		1,513		1,870
Total assets	$	104,690	$	102,740

LIABILITIES AND SHAREHOLDER'S EQUITY

Debt	$	86,560	$	85,367
Deferred income taxes		6,890		6,747
Other liabilities		3,103		2,888
Total liabilities		96,553		95,002

Commitments and contingencies (See Note 12)

Shareholder's equity:
Capital stock, no par value (100,000 shares authorized; 91,500 issued
and outstanding) at June 30, 2014 and March 31, 2014		915		915
Additional paid-in capital		2		2
Accumulated other comprehensive income		235		200
Retained earnings		6,985		6,621
Total shareholder's equity		8,137		7,738
Total liabilities and shareholder's equity	$	104,690	$	102,740

The following table presents the assets and liabilities of our consolidated variable interest entities. The assets of any variable interest entity can only be used to settle obligations of that respective variable interest entity, and the creditors (or beneficial interest holders) do not have recourse to us or to our other assets. These assets and liabilities are included in the consolidated balance sheet above.entities (See Note 10).

(Dollars in millions)	December 31, 2013		March 31, 2013			June 30, 2014		March 31, 2014
ASSETS
Finance receivables, net	$	8,064	$	7,556		$	10,754	$	9,501
Investments in operating leases, net		210		434			-		156
Other assets		9		12			3		7
Total assets	$	8,283	$	8,002		$	10,757	$	9,664

LIABILITIES
Debt	$	7,195	$	7,009		$	9,112	$	8,158
Other liabilities		1		1			2		2
Total liabilities	$	7,196	$	7,010		$	9,114	$	8,160

See accompanying Notes to Consolidated Financial Statements.	See accompanying Notes to Consolidated Financial Statements.				See accompanying Notes to Consolidated Financial Statements.

Table of Contents

TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDER’S EQUITY
(Unaudited)

Accumulated
other
Capital Additional comprehensive Retained
(Dollars in millions) stock paid-in capital income earnings Total

Balance at March 31, 2012 $ 915 $ 2 $ 160 $ 6,585 $ 7,662

Net income for the nine months ended
December 31, 2012 - - - 1,086 1,086
Other comprehensive income, net
of tax - - 26 - 26
Dividend - - - (744) (744)
Balance at December 31, 2012 $ 915 $ 2 $ 186 $ 6,927 $ 8,030

Balance at March 31, 2013 $ 915 $ 2 $ 211 $ 6,429 $ 7,557

Net income for the nine months ended
December 31, 2013 - - - 528 528
Other comprehensive loss, net
of tax - - (18) - (18)
Dividend - - - (665) (665)
Balance at December 31, 2013 $ 915 $ 2 $ 193 $ 6,292 $ 7,402

See accompanying Notes to Consolidated Financial Statements.

TOYOTA MOTOR CREDIT CORPORATION

CONSOLIDATED STATEMENT OF SHAREHOLDER’S EQUITY

(Unaudited)

(Dollars in millions)	Capital stock		Additional paid-in capital		Accumulated other comprehensive income			Retained earnings		Total

Balance at March 31, 2013	$	915	$	2	$	211		$	6,429	$	7,557

Net income for the three months ended
June 30, 2013		-		-		-			91		91
Other comprehensive loss, net of tax		-		-		(38	)		-		(38	)
Balance at June 30, 2013	$	915	$	2	$	173		$	6,520	$	7,610

Balance at March 31, 2014	$	915	$	2	$	200		$	6,621	$	7,738

Net income for the three months ended
June 30, 2014		-		-		-			364		364
Other comprehensive income, net of tax		-		-		35			-		35
Balance at June 30, 2014	$	915	$	2	$	235		$	6,985	$	8,137

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended December 31,
(Dollars in millions) 2013 2012
Cash flows from operating activities:
Net income $ 528 $ 1,086
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 2,974 2,665
Recognition of deferred income (943) (886)
Provision for credit losses 102 107
Amortization of deferred costs 422 404
Foreign currency and other adjustments to the carrying value of debt, net (243) (628)
Net realized loss (gain) from sales and other-than-temporary impairment on securities 29 (7)
Net change in:
Restricted cash 11 100
Derivative assets 9 19
Other assets (See Note 8) and accrued income (73) 14
Deferred income taxes 334 629
Derivative liabilities (4) (49)
Other liabilities 344 190
Net cash provided by operating activities 3,490 3,644
Cash flows from investing activities:
Purchase of investments in marketable securities (2,679) (3,932)
Proceeds from sales of investments in marketable securities 411 242
Proceeds from maturities of investments in marketable securities 3,159 3,291
Acquisition of finance receivables (19,924) (19,841)
Collection of finance receivables 17,846 17,074
Net change in wholesale and certain working capital receivables (1,481) (1,819)
Acquisition of investments in operating leases (10,803) (7,386)
Disposals of investments in operating leases 5,179 4,066
Advances to affiliates (3,419) (4,035)
Repayments from affiliates 3,040 3,407
Other, net (23) (14)
Net cash used in investing activities (8,694) (8,947)
Cash flows from financing activities:
Proceeds from issuance of debt 14,025 12,723
Payments on debt (12,380) (10,670)
Net change in commercial paper 2,425 3,672
Advances from affiliates 91 49
Repayments to affiliates (115) (2,059)
Dividend paid (665) (744)
Net cash provided by financing activities 3,381 2,971
Net decrease in cash and cash equivalents (1,823) (2,332)
Cash and cash equivalents at the beginning of the period 4,723 5,060
Cash and cash equivalents at the end of the period $ 2,900 $ 2,728
Supplemental disclosures:
Interest paid $ 876 $ 985
Income taxes received, net $ (39) $ (3)

See accompanying Notes to Consolidated Financial Statements.

TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

	Three Months Ended June 30,
(Dollars in millions)	2014			2013
Cash flows from operating activities:
Net income	$	364		$	91
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,108			960
Recognition of deferred income		(352	)		(300	)
Provision for credit losses		38			11
Amortization of deferred costs		150			140
Foreign currency and other adjustments to the carrying value of debt, net		75			(494	)
Net realized (gain) loss from sales and other-than-temporary impairment on securities		(12	)		26
Net change in:
Restricted cash		(31	)		(13	)
Derivative assets		(38	)		11
Other assets (Note 8) and accrued income		9			27
Deferred income taxes		121			76
Derivative liabilities		(3	)		48
Other liabilities		220			114
Net cash provided by operating activities		1,649			697
Cash flows from investing activities:
Purchase of investments in marketable securities		(919	)		(1,055	)
Proceeds from sales of investments in marketable securities		81			155
Proceeds from maturities of investments in marketable securities		1,258			1,255
Acquisition of finance receivables		(6,591	)		(6,505	)
Collection of finance receivables		6,270			5,957
Net change in wholesale and certain working capital receivables		243			(800	)
Acquisition of investments in operating leases		(4,297	)		(3,370	)
Disposals of investments in operating leases		1,610			1,817
Advances to affiliates		(728	)		(1,152	)
Repayments from affiliates		1,110			832
Cash un-restricted/(restricted) to acquire finance receivables and investment in operating leases		760			-
Other, net		(4	)		(9	)
Net cash used in investing activities		(1,207	)		(2,875	)
Cash flows from financing activities:
Proceeds from issuance of debt		5,645			5,336
Payments on debt		(2,356	)		(4,350	)
Net change in commercial paper		(2,183	)		(713	)
Advances from affiliates		1			-
Net cash provided by financing activities		1,107			273
Net increase (decrease) in cash and cash equivalents		1,549			(1,905	)
Cash and cash equivalents at the beginning of the period		3,815			4,723
Cash and cash equivalents at the end of the period	$	5,364		$	2,818
Supplemental disclosures:
Interest paid	$	299		$	325
Income taxes paid (received), net	$	19		$	(24	)

See accompanying Notes to Consolidated Financial Statements.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1 – Interim Financial Data

Basis of Presentation

The information furnished in these unaudited interim financial statements for the three ~~and nine~~ months ended ~~December 31,~~June 30, 2014 and 2013 ~~and 2012~~ has been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). In the opinion of management, the unaudited 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 nine~~ months ended ~~December 31, 2013~~June 30, 2014 do not necessarily indicate the results which may be expected for the full fiscal year ending March 31, ~~2014~~2015 (“fiscal ~~2014”~~2015”).

These financial statements should be read in conjunction with the Consolidated Financial Statements, significant accounting policies, and other notes to the 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, ~~2013~~2014 (“fiscal ~~2013”~~2014”), which was filed with the Securities and Exchange Commission (“SEC”) on ~~June 14, 2013.~~May 29, 2014. 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 the current period presentation. Related party transactions presented in the Consolidated Financial Statements are disclosed in Note 14 – Related Party Transactions of the Notes to Consolidated Financial Statements.

~~Derivatives~~

~~Offsetting of Derivatives~~

The accounting guidance permits the net presentation on the Consolidated Balance Sheet of derivative receivables and derivative payables with the same counterparty and the related cash collateral when a legally enforceable master netting agreement exists. When we meet this condition, we elect to present such balances on a net basis. We use master netting agreements to mitigate counterparty credit risk in derivative transactions. A master netting agreement is a contract with a counterparty that permits multiple transactions governed by that contract to be cancelled and settled with a single net balance paid to either party in the event of default or other termination event outside the normal course of business, such as a ratings downgrade of either party to the contract.

Our reciprocal collateral agreements require the transfer of cash collateral to the party in a net asset position across all transactions governed by the master netting agreement. Upon default, the collateral agreement grants the party in a net asset position the right to set-off amounts receivable against any posted collateral.

~~TOYOTA MOTOR CREDIT CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~Note 1 – Interim Financial Data (Continued)~~

New Accounting Guidance

In ~~July 2013,~~May 2014, the Financial Accounting Standards Board (“FASB”) issued new guidance ~~which~~on the recognition of revenue from contracts with customers. This comprehensive standard will replace all existing revenue recognition guidance. This accounting guidance is effective for us on April 1, 2017. We are currently evaluating the impact of this guidance on our consolidated financial statements.

Recently Adopted Accounting Guidance

In April 2014, we adopted new FASB accounting guidance that requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. ~~This accounting guidance is effective for us on April 1, 2014.~~ The adoption of this guidance ~~will~~did not have a material impact on our consolidated financial statements ~~as our current disclosure is consistent with the requirements of the new guidance.~~.

In ~~February 2013, the~~April 2014, we adopted new FASB ~~issued new~~accounting guidance ~~for~~related to the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, except for certain obligations addressed within existing guidance in U.S. GAAP. Specifically,arrangements. Pursuant to the new guidance, ~~requires~~ an entity is required to measure these obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. Additionally, the guidance requires ~~an entity to disclose~~disclosure of the nature and amount of the obligation as well as other information about those obligations within the footnotes to its financial statements. Currently no such recognition, measurement, and disclosure requirement exists under U.S. GAAP. This accounting guidance is effective for us on April 1, 2014. The adoption of this guidance will not have a material impact on our consolidated financial statements.

~~Recently Adopted Accounting Guidance~~

In July 2013, we adopted new FASB accounting guidance which permits the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) to be used as a benchmark interest rate for hedge accounting purposes. The new guidance also removes the restriction on using different benchmark rates for similar hedges. The adoption of this guidance did not have a material impact on our consolidated financial statements.

~~In April 2013~~, we adopted new FASB accounting guidance that requires disclosures about offsetting assets and liabilities for derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions. The guidance retains the current U.S. GAAP model that allows companies the option to present net in their balance sheets derivatives that are subject to a legally enforceable netting arrangement with the same party, where rights of set-off are available, including in the event of default or bankruptcy. However, the guidance adds new disclosure requirements to improve transparency in the reporting of how companies mitigate credit risk, including disclosure of related collateral pledged or received. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In April 2013, we adopted new FASB accounting guidance that requires us to disclose significant amounts reclassified out of each component of accumulated other comprehensive income and the affected income statement line item, only if the item reclassified is required to be reclassified to net income in its entirety. The adoption of this guidance did not have a material impact on our consolidated financial statements.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 2 – Fair Value Measurements

Recurring Fair Value Measurements

The following tables summarize our financial assets and financial liabilities measured at fair value on a recurring basis as of ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013,~~2014, by level within the fair value hierarchy. Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

~~In instances where we meet the accounting guidance for set-off criteria, we elect to net derivative assets and derivative liabilities and the related cash collateral received and paid.~~

Derivative assets were reduced by a counterparty credit valuation adjustment of $1 million as of ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013.~~2014. Derivative liabilities were reduced by a non-performance credit valuation adjustment of less than $1 million as of ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013.~~2014.

As of December 31, 2013
Fair value measurements on a recurring basis
Counterparty
netting & Fair
(Dollars in millions) Level 1 Level 2 Level 3 collateral value
Cash equivalents:
Money market instruments $ 553 $ 444 $ - $ - $ 997
Certificates of deposit - 1,338 - - 1,338
Cash equivalents total 553 1,782 - - 2,335
Available-for-sale securities:
Debt instruments:
U.S. government and agency obligations 28 57 2 - 87
Municipal debt securities - 14 - - 14
Certificates of deposit - 1,533 - - 1,533
Commercial paper - 125 - - 125
Foreign government debt securities - 3 - - 3
Corporate debt securities - 144 9 - 153
Mortgage-backed securities:
U.S. government agency - 64 - - 64
Non-agency residential - - 5 - 5
Non-agency commercial - - 50 - 50
Asset-backed securities - - 23 - 23
Equity instruments:
Fixed income mutual funds:
Short-term sector fund - 44 - - 44
U.S. government sector fund - 337 - - 337
Municipal sector fund - 21 - - 21
Investment grade corporate sector fund - 310 - - 310
High-yield sector fund - 43 - - 43
Real return sector fund - 268 - - 268
Mortgage sector fund - 558 - - 558
Asset-backed securities sector fund - 49 - - 49
Emerging market sector fund - 64 - - 64
International sector fund - 170 - - 170
Equity mutual fund 529 - - - 529
Available-for-sale securities total 557 3,804 89 - 4,450
Derivative assets:
Foreign currency swaps - 927 67 - 994
Interest rate swaps - 375 3 - 378
Counterparty netting and collateral - - - (1,323) (1,323)
Derivative assets total - 1,302 70 (1,323) 49
Assets at fair value 1,110 6,888 159 (1,323) 6,834
Derivative liabilities:
Foreign currency swaps - (348) (14) - (362)
Interest rate swaps - (656) - - (656)
Counterparty netting and collateral - - - 1,005 1,005
Liabilities at fair value - (1,004) (14) 1,005 (13)
Net assets at fair value $ 1,110 $ 5,884 $ 145 $ (318) $ 6,821

As of June 30, 2014

	Fair value measurements on a recurring basis
								Counterparty
								netting &			Fair
(Dollars in millions)	Level 1		Level 2			Level 3		collateral			value
Cash equivalents:
Money market instruments	$	805	$	950		$	-	$	-		$	1,755
U.S. government and agency obligations		-		337			-		-			337
Certificates of deposit		-		2,931			-		-			2,931
Commercial paper		-		157			-		-			157
Cash equivalents total		805		4,375			-		-			5,180
Restricted cash equivalents - money market instruments		317		-			-		-			317
Available-for-sale securities:
Debt instruments:
U.S. government and agency obligations		507		623			2		-			1,132
Municipal debt securities		-		12			-		-			12
Certificates of deposit		-		914			-		-			914
Commercial paper		-		329			-		-			329
Corporate debt securities		-		132			12		-			144
Mortgage-backed securities:
U.S. government agency		-		59			-		-			59
Non-agency residential		-		-			5		-			5
Non-agency commercial		-		-			40		-			40
Asset-backed securities		-		-			29		-			29
Equity instruments:
Fixed income mutual funds:
Short-term sector fund		-		45			-		-			45
U.S. government sector fund		-		337			-		-			337
Municipal sector fund		-		23			-		-			23
Investment grade corporate sector fund		-		323			-		-			323
High-yield sector fund		-		46			-		-			46
Real return sector fund		-		285			-		-			285
Mortgage sector fund		-		533			-		-			533
Asset-backed securities sector fund		-		51			-		-			51
Emerging market sector fund		-		69			-		-			69
International sector fund		-		173			-		-			173
Equity mutual fund		487		-			-		-			487
Available-for-sale securities total		994		3,954			88		-			5,036
Derivative assets:
Foreign currency swaps		-		944			78		-			1,022
Interest rate swaps		-		375			3		-			378
Counterparty netting and collateral		-		-			-		(1,313	)		(1,313	)
Derivative assets total		-		1,319			81		(1,313	)		87
Assets at fair value		2,116		9,648			169		(1,313	)		10,620
Derivative liabilities:
Foreign currency swaps		-		(180	)		-		-			(180	)
Interest rate swaps		-		(454	)		-		-			(454	)
Counterparty netting and collateral		-		-			-		631			631
Liabilities at fair value		-		(634	)		-		631			(3	)
Net assets at fair value	$	2,116	$	9,014		$	169	$	(682	)	$	10,617

Table of Contents

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 2 – Fair Value Measurements (Continued)

As of March 31, 2014

	Fair value measurements on a recurring basis
								Counterparty
								netting &			Fair
(Dollars in millions)	Level 1		Level 2			Level 3		collateral			value
Cash equivalents:
Money market instruments	$	730	$	694		$	-	$	-		$	1,424
Certificates of deposit		-		1,437			-		-			1,437
Commercial paper		-		708			-		-			708
Cash equivalents total		730		2,839			-		-			3,569
Restricted cash equivalents - money market instruments		1,077		-			-		-			1,077
Available-for-sale securities:
Debt instruments:
U.S. government and agency obligations		398		252			2		-			652
Municipal debt securities		-		11			-		-			11
Certificates of deposit		-		1,599			-		-			1,599
Commercial paper		-		507			-		-			507
Corporate debt securities		-		157			12		-			169
Mortgage-backed securities:
U.S. government agency		-		60			-		-			60
Non-agency residential		-		-			5		-			5
Non-agency commercial		-		-			43		-			43
Asset-backed securities		-		-			27		-			27
Equity instruments:
Fixed income mutual funds:
Short-term sector fund		-		44			-		-			44
U.S. government sector fund		-		327			-		-			327
Municipal sector fund		-		22			-		-			22
Investment grade corporate sector fund		-		316			-		-			316
High-yield sector fund		-		45			-		-			45
Real return sector fund		-		274			-		-			274
Mortgage sector fund		-		520			-		-			520
Asset-backed securities sector fund		-		50			-		-			50
Emerging market sector fund		-		66			-		-			66
International sector fund		-		171			-		-			171
Equity mutual fund		481		-			-		-			481
Available-for-sale securities total		879		4,421			89		-			5,389
Derivative assets:
Foreign currency swaps		-		804			70		-			874
Interest rate swaps		-		358			3		-			361
Counterparty netting and collateral		-		-			-		(1,186	)		(1,186	)
Derivative assets total		-		1,162			73		(1,186	)		49
Assets at fair value		2,686		8,422			162		(1,186	)		10,084
Derivative liabilities:
Foreign currency swaps		-		(252	)		-		-			(252	)
Interest rate swaps		-		(553	)		-		-			(553	)
Counterparty netting and collateral		-		-			-		799			799
Liabilities at fair value		-		(805	)		-		799			(6	)
Net assets at fair value	$	2,686	$	7,617		$	162	$	(387	)	$	10,078

Note 2 – Fair Value Measurements (Continued)

As of March 31, 2013
Fair value measurements on a recurring basis
Counterparty
netting & Fair
(Dollars in millions) Level 1 Level 2 Level 3 collateral value
Cash equivalents:
Money market instruments $ 900 $ 608 $ - $ - $ 1,508
Certificates of deposit - 1,945 - - 1,945
Commercial paper - 798 - - 798
Cash equivalents total 900 3,351 - - 4,251
Available-for-sale securities:
Debt instruments:
U.S. government and agency obligations 42 62 - - 104
Municipal debt securities - 16 - - 16
Certificates of deposit - 2,041 - - 2,041
Commercial paper - 495 - - 495
Foreign government debt securities - 3 - - 3
Corporate debt securities - 124 4 - 128
Mortgage-backed securities:
U.S. government agency - 87 - - 87
Non-agency residential - - 5 - 5
Non-agency commercial - - 51 - 51
Asset-backed securities - - 13 - 13
Equity instruments:
Fixed income mutual funds:
Short-term sector fund - 43 - - 43
U.S. government sector fund - 312 - - 312
Municipal sector fund - 22 - - 22
Investment grade corporate sector fund - 327 - - 327
High-yield sector fund - 42 - - 42
Real return sector fund - 293 - - 293
Mortgage sector fund - 648 - - 648
Asset-backed securities sector fund - 47 - - 47
Emerging market sector fund - 66 - - 66
International sector fund - 170 - - 170
Equity mutual fund 484 - - - 484
Available-for-sale securities total 526 4,798 73 - 5,397
Derivative assets:
Foreign currency swaps - 1,076 63 - 1,139
Interest rate swaps - 568 12 - 580
Counterparty netting and collateral - - - (1,661) (1,661)
Derivative assets total - 1,644 75 (1,661) 58
Assets at fair value 1,426 9,793 148 (1,661) 9,706
Derivative liabilities:
Foreign currency swaps - (123) (8) - (131)
Interest rate swaps - (766) - - (766)
Counterparty netting and collateral - - - 892 892
Derivative liabilities total - (889) (8) 892 (5)
Embedded derivative liabilities - - (12) - (12)
Liabilities at fair value - (889) (20) 892 (17)
Net assets at fair value $ 1,426 $ 8,904 $ 128 $ (769) $ 9,689

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 2 – Fair Value Measurements (Continued)

Transfers between levels of the fair value hierarchy are recognized at the end of their respective reporting periods. ~~During the three and nine months ended December 31, 2013, certain corporate debt securities~~There were ~~transferred from Level 2 to Level 3 due to reduced transparency of inputs for these instruments. Additionally,~~no transfers between levels during the nine months ended December 31, 2013, there was a $2 million transfer from the corporate debt securities asset class to the U.S. government and agency obligations asset class within the Level 3 debt instruments due to a reclassification of an existing debt instrument. During the three months ended ~~December 31, 2012, there were no transfers between levels. During the nine months ended December 31, 2012, $53 million of U.S. government~~June 30, 2014 and agency obligations were valued using quoted prices for identical securities traded in an active market and were transferred from Level 2 to Level 1. Additionally, during the nine months ended December 31, 2012, certain available-for-sale debt instruments were transferred from Level 2 to Level 3 due to reduced transparency of market price quotations for these and/or comparable instruments.2013.

The following tables summarize the reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs for the three ~~and nine~~ months ended ~~December 31, 2013~~June 30, 2014 and ~~2012:~~2013:

Three Months Ended ~~December 31, 2013~~June 30, 2014

Fair value measurements using significant unobservable inputs (Level 3)
Total net
assets
Available-for-sale securities Derivative instruments, net (liabilities)

U.S. Total Total
government Corporate Mortgage- Asset- available- Interest Foreign derivative
and agency debt backed backed for-sale rate currency Embedded assets
(Dollars in millions) obligations securities securities securities securities swaps swaps derivatives (liabilities)
Fair value, October 1, 2013 $ 2 $ 2 $ 54 $ 19 $ 77 $ 13 $ 50 $ (9) $ 54 $ 131
Total gains
Included in earnings - - - - - 3 8 9 20 20

Included in other
comprehensive income
- - - - - - - - - -
Purchases, issuances, sales, and
settlements
Purchases - - 3 5 8 - - - - 8
Issuances - - - - - - - - - -
Sales - - - - - - - - - -
Settlements - - (2) (1) (3) (13) (5) - (18) (21)
Transfers in to Level 3 - 7 - - 7 - - - - 7
Transfers out of Level 3 - - - - - - - - - -
Fair value, December 31, 2013 $ 2 $ 9 $ 55 $ 23 $ 89 $ 3 $ 53 $ - $ 56 $ 145
The amount of total gains
for the period included in
earnings attributable to the
change in unrealized gains or
losses related to assets still held
at the reporting date $ - $ 8 $ - $ 8 $ 8

	Fair value measurements using significant unobservable inputs (Level 3)

																									Total net
																									assets
		Available-for-sale securities													Derivative instruments, net										(liabilities)

		U.S.										Total									Total
		government		Corporate		Mortgage-			Asset-			available-			Interest			Foreign			derivative
		and agency		debt		backed			backed			for-sale			rate			currency			assets
(Dollars in millions)		obligations		securities		securities			securities			securities			swaps			swaps			(liabilities)
Fair value, April 1, 2014		$	2	$	12	$	48		$	27		$	89		$	3		$	70		$	73		$	162
Total gains
Included in earnings			-		-		-			-			-			1			13			14			14
Included in other comprehensive income			-		-		1			-			1			-			-			-			1
Purchases, issuances, sales, and
settlements
Purchases			-		-		1			3			4			-			-			-			4
Issuances			-		-		-			-			-			-			-			-			-
Sales			-		-		(2	)		-			(2	)		-			-			-			(2	)
Settlements			-		-		(3	)		(1	)		(4	)		(1	)		(5	)		(6	)		(10	)
Transfers in to Level 3			-		-		-			-			-			-			-			-			-
Transfers out of Level 3			-		-		-			-			-			-			-			-			-
Fair value, June 30, 2014		$	2	$	12	$	45		$	29		$	88		$	3		$	78		$	81		$	169
The amount of total gains for the period included in earnings attributable to the change in unrealized gains or losses related to assets still held at the reporting date															$	1		$	13		$	14		$	14

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 2 – Fair Value Measurements (Continued)

Three Months Ended December 31, 2012

Fair value measurements using significant unobservable inputs (Level 3)
Total net
assets
Available-for-sale securities Derivative instruments, net (liabilities)

Total Total
Corporate Mortgage- Asset- available- Interest Foreign derivative
debt backed backed for-sale rate currency Embedded assets
(Dollars in millions) securities securities securities securities swaps swaps derivatives (liabilities)
Fair value, October 1, 2012 $ 4 $ 31 $ 9 $ 44 $ 12 $ 74 $ (23) $ 63 $ 107
Total gains
Included in earnings - - - - - 6 10 16 16

Included in other
comprehensive income
- - - - - - - - -
Purchases, issuances, sales, and
settlements

Purchases - 2 - 2 - - - - 2
Issuances - - - - - - - - -
Sales - - - - - - - - -
Settlements - (3) (1) (4) (1) (12) - (13) (17)
Transfers in to Level 3 - - - - - - - - -
Transfers out of Level 3 - - - - - - - - -
Fair value, December 31, 2012 $ 4 $ 30 $ 8 $ 42 $ 11 $ 68 $ (13) $ 66 $ 108
The amount of total gains
for the period included in
earnings attributable to the
change in unrealized gains or
losses related to assets still held
at the reporting date $ - $ 6 $ 4 $ 10 $ 10

Note 2 – Fair Value Measurements (Continued)

Three Months Ended June 30, 2013

	Fair value measurements using significant unobservable inputs (Level 3)
																								Total net
																								assets
	Available-for-sale securities											Derivative instruments, net												(liabilities)

									Total												Total
	Corporate		Mortgage-			Asset-			available-			Interest			Foreign						derivative
	debt		backed			backed			for-sale			rate			currency			Embedded			assets
(Dollars in millions)	securities		securities1			securities			securities			swaps			swaps			derivatives			(liabilities)
Fair value, April 1, 2013	$	4	$	56		$	13		$	73		$	12		$	55		$	(12	)	$	55		$	128
Total (losses)/ gains
Included in earnings		-		-			-			-			(1	)		(22	)		5			(18	)		(18	)
Included in other comprehensive income		-		(3	)		-			(3	)		-			-			-			-			(3	)
Purchases, issuances, sales, and settlements
Purchases		-		-			7			7			-			-			-			-			7
Issuances		-		-			-			-			-			-			-			-			-
Sales		-		-			-			-			-			-			-			-			-
Settlements		-		-			(1	)		(1	)		-			(10	)		-			(10	)		(11	)
Transfers in to Level 3		-		-			-			-			-			-			-			-			-
Transfers out of Level 3		-		-			-			-			-			-			-			-			-
Fair value, June 30, 2013	$	4	$	53		$	19		$	76		$	11		$	23		$	(7	)	$	27		$	103
The amount of total losses for the period included in earnings attributable to the change in unrealized gains or losses related to assets still held at the reporting date												$	(1	)	$	(19	)	$	(1	)	$	(21	)	$	(21	)

1 Certain prior period amounts have been reclassified to conform to the current year presentation.

Nine Months Ended December 31, 2013

Fair value measurements using significant unobservable inputs (Level 3)
Total net
assets
Available-for-sale securities Derivative instruments, net (liabilities)

U.S. Total Total
government Corporate Mortgage- Asset- available- Interest Foreign derivative
and agency debt backed backed for-sale rate currency Embedded assets
(Dollars in millions) obligations securities securities securities securities swaps swaps derivatives (liabilities)
Fair value, April 1, 2013 $ - $ 4 $ 56 $ 13 $ 73 $ 12 $ 55 $ (12) $ 55 $ 128
Total gains (losses)
Included in earnings - - - - - 5 15 12 32 32
Included in other comprehensive income - - (3) - (3) - - - - (3)
Purchases, issuances, sales, and
settlements

Purchases - - 5 12 17 - - - - 17
Issuances - - - - - - - - - -
Sales - - - - - - - - - -
Settlements - - (3) (2) (5) (14) (17) - (31) (36)
Transfers in to Level 3 2 7 - - 9 - - - - 9
Transfers out of Level 3 - (2) - - (2) - - - - (2)
Fair value, December 31, 2013 $ 2 $ 9 $ 55 $ 23 $ 89 $ 3 $ 53 $ - $ 56 $ 145
The amount of total (losses)/gains
for the period included in
earnings attributable to the
change in unrealized gains or
losses related to assets still held
at the reporting date $ (2) $ 17 $ - $ 15 $ 15

~~TOYOTA MOTOR CREDIT CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

Note 2 – Fair Value Measurements (Continued)

Nine Months Ended December 31, 2012

Fair value measurements using significant unobservable inputs (Level 3)
Total net
assets
Available-for-sale securities Derivative instruments, net (liabilities)

Total Total
Corporate Mortgage- Asset- available- Interest Foreign derivative
debt backed backed for-sale rate currency Embedded assets
(Dollars in millions) securities securities securities securities swaps swaps derivatives (liabilities)
Fair value, April 1, 2012 $ 1 $ 19 $ 1 $ 21 $ 13 $ 69 $ (24) $ 58 $ 79
Total gains
Included in earnings - - - - 1 23 11 35 35

Included in other
comprehensive income
- 1 - 1 - - - - 1
Purchases, issuances, sales, and
settlements

Purchases - 5 1 6 - - - - 6
Issuances - - - - - - - - -
Sales - (3) (1) (4) - - - - (4)
Settlements - (5) (4) (9) (3) (24) - (27) (36)
Transfers into Level 3 3 13 11 27 - - - - 27
Transfers out of Level 3 - - - - - - - - -
Fair value, December 31, 2012 $ 4 $ 30 $ 8 $ 42 $ 11 $ 68 $ (13) $ 66 $ 108
The amount of total gains
for the period included
in earnings attributable to the
change in unrealized gains or
losses related to assets still held
at the reporting date $ 1 $ 21 $ 1 $ 23 $ 23

Nonrecurring Fair Value Measurements

Nonrecurring fair value measurements consist of Level 3 net finance receivables that ~~are individually evaluated for impairment. These assets~~ are not measured at fair value on a recurring basis, but are subject to fair value adjustments utilizing the fair value of the underlying collateral, if collateral dependent, when there is evidence of impairment. For these assets, we record the fair value on a nonrecurring basis and disclose changes in fair value during the reporting period. ~~Total~~These nonrecurring fair value measurements ~~of $202 million and $208 million~~ were ~~recorded~~not significant as of ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013, respectively.~~2014.

The total change in fair value of financial instruments subject to nonrecurring fair value measurements for which a fair value adjustment has been included in the Consolidated Statement of Income consisted of net gains on net finance receivables within the dealer products portfolio segment of $3 million for the three and nine months ended December 31, 2013, and $2 million for the three and nine months ended December 31, 2012.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 2 – Fair Value Measurements (Continued)

Level 3 Fair Value Measurements ~~at December 31, 2013 and March 31, 2013~~

At December 31, 2013, our Level 3 financial instruments subject to recurring fair value measurement consisted of available-for-sale securities of $89 million, derivative assets of $70 million and derivative liabilities of $14 million. At March 31, 2013, our Level 3 financial instruments subject to recurring fair value measurement consisted of available-for-sale securities of $73 million, derivative assets of $75 million and derivative liabilities of $20 million. The fair value measurements of Level 3 financial assets and liabilities subject to recurring and nonrecurring fair value measurement, and the corresponding change in the fair value measurements of these assets and liabilities, were not significant to our Consolidated Balance Sheet or Consolidated Statement of Income as of and for the three ~~and nine~~ months ended ~~December 31, 2013~~June 30, 2014 and as of and for the year ended March 31, ~~2013.~~2014.

Financial Instruments

The following tables provide information about assets and liabilities not carried at fair value on a recurring basis in our Consolidated Balance Sheet:

					Fair value measurement hierarchy										Fair value measurement hierarchy
			Carrying								Total Fair		Carrying								Total Fair
(Dollars in millions)	(Dollars in millions)		value		Level 1		Level 2		Level 3		Value		value		Level 1		Level 2		Level 3		Value
As of December 31, 2013
As of June 30, 2014

Financial assets	Financial assets
	Finance receivables, net
		Retail loan	$	49,213	$	-	$	-	$	49,649	$	49,649
		Commercial		163		-		-		151		151
		Wholesale		9,968		-		-		10,017		10,017
		Real estate		4,601		-		-		4,540		4,540
		Working capital		1,831		-		-		1,834		1,834
Finance receivables, net
Retail loan													$	49,228	$	-	$	-	$	49,675	$	49,675
Commercial														184		-		-		169		169
Wholesale														9,056		-		-		9,094		9,094
Real estate														4,591		-		-		4,603		4,603
Working capital														1,845		-		-		1,837		1,837

Financial liabilities	Financial liabilities
	Commercial paper		$	27,012	$	-	$	27,012	$	-	$	27,012
	Unsecured notes and loans payable			48,486		-		48,619		760		49,379
	Secured notes and loans payable			7,195		-		-		7,201		7,201
Commercial paper													$	25,524	$	-	$	25,524	$	-	$	25,524
Unsecured notes and loans payable														51,924		-		52,333		745		53,078
Secured notes and loans payable														9,112		-		-		9,119		9,119

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 2 - Fair Value Measurements (Continued)	Note 2 - Fair Value Measurements (Continued)												Note 2 - Fair Value Measurements (Continued)

					Fair value measurement hierarchy											Fair value measurement hierarchy
			Carrying								Total Fair			Carrying								Total Fair
(Dollars in millions)	(Dollars in millions)		value		Level 1		Level 2		Level 3		Value			value		Level 1		Level 2		Level 3		Value
As of March 31, 2013
As of March 31, 2014

Financial assets	Financial assets
	Finance receivables, net
		Retail loan	$	47,312	$	-	$	-	$	48,313	$	48,313
		Commercial		134		-		-		126		126
		Wholesale		8,620		-		-		8,644		8,644
		Real estate		4,531		-		-		4,480		4,480
		Working capital		1,695		-		-		1,708		1,708
Finance receivables, net
Retail loan														$	48,892	$	-	$	-	$	49,392	$	49,392
Commercial															174		-		-		160		160
Wholesale															9,344		-		-		9,391		9,391
Real estate															4,601		-		-		4,552		4,552
Working capital															1,802		-		-		1,807		1,807

Financial liabilities	Financial liabilities
	Commercial paper		$	24,590	$	-	$	24,590	$	-	$	24,590
	Unsecured notes and loans payable			47,233		-		47,901		874		48,775
	Secured notes and loans payable			7,009		-		-		7,016		7,016
Commercial paper														$	27,709	$	-	$	27,709	$	-	$	27,709
Unsecured notes and loans payable															49,500		-		49,697		736		50,433
Secured notes and loans payable															8,158		-		-		8,165		8,165

The carrying value of each class of finance receivables is presented including accrued interest and deferred fees and costs, net of deferred income and the allowance for credit ~~losses; the~~losses. The amount excludes related party ~~transactions~~receivables of ~~$93~~$90 million and ~~$40~~$89 million at ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013~~2014 and direct finance leases of ~~$257~~$273 million and ~~$235~~$274 million at ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013,~~2014, respectively.

The carrying value of unsecured notes and loans payable represents the sum of unsecured notes and loans payable and carrying value adjustment as described in Note 9 - Debt.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 3 – Investments in Marketable Securities

We classify all of our investments in marketable securities as available-for-sale. The amortized cost and estimated fair value of investments in marketable securities and related unrealized gains and losses were as follows:

				December 31, 2013								June 30, 2014
				Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized			Fair
(Dollars in millions)	(Dollars in millions)			cost		gains		losses		value		cost		gains		losses			value
Available-for-sale securities:	Available-for-sale securities:
	Debt instruments:
		U.S. government and agency obligations		$	87	$	1	$	(1)	$	87
		Municipal debt securities			14		-		-		14
		Certificates of deposit			1,533		-		-		1,533
		Commercial paper			125		-		-		125
		Foreign government debt securities			3		-		-		3
		Corporate debt securities			151		4		(2)		153
		Mortgage-backed securities:
			U.S. government agency		64		1		(1)		64
			Non-agency residential		4		1		-		5
			Non-agency commercial		51		-		(1)		50
		Asset-backed securities			23		-		-		23
	Equity instruments:
		Fixed income mutual funds:
			Short-term sector fund		41		3		-		44
			U.S. government sector fund		343		-		(6)		337
			Municipal sector fund		21		-		-		21
			Investment grade corporate sector fund		284		28		(2)		310
			High-yield sector fund		36		7		-		43
			Real return sector fund		275		-		(7)		268
			Mortgage sector fund		567		-		(9)		558
			Asset-backed securities sector fund		40		9		-		49
			Emerging market sector fund		64		1		(1)		64
			International sector fund		170		1		(1)		170
		Equity mutual fund			241		288		-		529
Debt instruments:
U.S. government and agency obligations												$	1,130	$	2	$	-		$	1,132
Municipal debt securities													11		1		-			12
Certificates of deposit													914		-		-			914
Commercial paper													329		-		-			329
Corporate debt securities													138		6		-			144
Mortgage-backed securities:
U.S. government agency													57		2		-			59
Non-agency residential													4		1		-			5
Non-agency commercial													40		1		(1	)		40
Asset-backed securities													29		-		-			29
Equity instruments:
Fixed income mutual funds:
Short-term sector fund													41		4		-			45
U.S. government sector fund													330		7		-			337
Municipal sector fund													21		2		-			23
Investment grade corporate sector fund													286		37		-			323
High-yield sector fund													38		8		-			46
Real return sector fund													278		7		-			285
Mortgage sector fund													523		10		-			533
Asset-backed securities sector fund													41		10		-			51
Emerging market sector fund													64		5		-			69
International sector fund													171		2		-			173
Equity mutual fund													210		277		-			487
Total investments in marketable securities	Total investments in marketable securities			$	4,137	$	344	$	(31)	$	4,450	$	4,655	$	382	$	(1	)	$	5,036

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 3 – Investments in Marketable Securities (Continued)	Note 3 – Investments in Marketable Securities (Continued)											Note 3 – Investments in Marketable Securities (Continued)

					March 31, 2013								March 31, 2014
				Amortized		Unrealized		Unrealized		Fair			Amortized		Unrealized		Unrealized			Fair
(Dollars in millions)	(Dollars in millions)			cost		gains		losses		value			cost		gains		losses			value
Available-for-sale securities:	Available-for-sale securities:
	Debt instruments:
		U.S. government and agency obligations		$	101	$	3	$	-	$	104
		Municipal debt securities			14		2		-		16
		Certificates of deposit			2,040		1		-		2,041
		Commercial paper			495		-		-		495
		Foreign government debt securities			3		-		-		3
		Corporate debt securities			122		6		-		128
		Mortgage-backed securities:
			U.S. government agency		83		4		-		87
			Non-agency residential		4		1		-		5
			Non-agency commercial		50		1		-		51
		Asset-backed securities			13		-		-		13
	Equity instruments:
		Fixed income mutual funds:
			Short-term sector fund		40		3		-		43
			U.S. government sector fund		296		16		-		312
			Municipal sector fund		19		3		-		22
			Investment grade corporate sector fund		273		54		-		327
			High-yield sector fund		34		8		-		42
			Real return sector fund		284		9		-		293
			Mortgage sector fund		663		-		(15)		648
			Asset-backed securities sector fund		38		9		-		47
			Emerging market sector fund		63		3		-		66
			International sector fund		163		7		-		170
		Equity mutual fund			259		225		-		484
Debt instruments:
U.S. government and agency obligations													$	652	$	1	$	(1	)	$	652
Municipal debt securities														10		1		-			11
Certificates of deposit														1,599		-		-			1,599
Commercial paper														507		-		-			507
Corporate debt securities														164		6		(1	)		169
Mortgage-backed securities:
U.S. government agency														60		1		(1	)		60
Non-agency residential														4		1		-			5
Non-agency commercial														44		1		(2	)		43
Asset-backed securities														27		-		-			27
Equity instruments:
Fixed income mutual funds:
Short-term sector fund														41		3		-			44
U.S. government sector fund														329		-		(2	)		327
Municipal sector fund														21		1		-			22
Investment grade corporate sector fund														283		33		-			316
High-yield sector fund														38		7		-			45
Real return sector fund														275		-		(1	)		274
Mortgage sector fund														519		1		-			520
Asset-backed securities sector fund														40		10		-			50
Emerging market sector fund														65		1		-			66
International sector fund														170		2		(1	)		171
Equity mutual fund														217		264		-			481
Total investments in marketable securities	Total investments in marketable securities			$	5,057	$	355	$	(15)	$	5,397		$	5,065	$	333	$	(9	)	$	5,389

The fixed income mutual funds include investments in funds that are privately placed and ~~which are~~ managed by an open-end investment management company (the “Trust”). The total fair value of private placement fixed income mutual funds was $1.9 billion and ~~$2.0~~$1.8 billion at ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013,~~2014, respectively. We may redeem shares during any 90 day period solely in cash up to the lesser of $250 thousand or 1 percent of the Trust’s asset value at the beginning of such period. Although the Trust will normally redeem all shares for cash, it may, in unusual circumstances, redeem amounts exceeding the lesser of the two amounts described above, in whole or in part, by payment in kind of securities held by the respective fund.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 3 – Investments in Marketable Securities (Continued)

Unrealized Losses on Securities

~~The following table presents~~At June 30, 2014 and March 31, 2014, the ~~fair value and gross~~ unrealized losses of investments in marketable securities ~~that had been~~ in a ~~continuous unrealized~~ loss position ~~for less than twelve consecutive months.~~were not significant. These unrealized losses are recorded in ~~Accumulated~~accumulated other comprehensive income, net of applicable taxes in our Consolidated Statement of Shareholder's ~~Equity:~~

Less than 12 months as of
December 31, 2013 March 31, 2013
Fair Unrealized Fair Unrealized
(Dollars in millions) value losses value losses
Available-for-sale securities:
Debt instruments:
U.S. government and agency
obligations $ 43 $ (1) $ - $ -
Corporate debt securities 81 (2) - -
Mortgage backed securities:
U.S. government agency 30 (1) - -
Non-agency commercial 17 (1) - -
Equity instruments:
Fixed income mutual funds:
U.S. government sector fund 337 (6) - -
Investment grade corporate sector fund 310 (2) - -
Real return sector fund 268 (7) - -
Mortgage sector fund 558 (9) 532 (12)
Emerging market sector fund 64 (1) - -
International sector fund 170 (1) - -
Total investments in marketable
securities $ 1,878 $ (31) $ 532 $ (12)

At December 31, 2013, the unrealized losses of investments that had been in a loss position for 12 consecutive months or more were not significant. At March 31, 2013, total gross unrealized losses and the fair value of investments that had been in a continuous unrealized loss position for 12 consecutive months or more were $3 million and $116 million, respectively.Equity.

Realized Gains and Losses on Securities

The following table represents realized gains and losses by transaction type for the following:

	Three Months Ended
	June 30,
(Dollars in millions)	2014			2013
Available-for-sale securities:
Realized gains on sales		$	12		$	5
Realized losses on sales		$	-		$	(1	)
Other-than-temporary impairment		$	-		$	(30	)

Other-than-temporary impairment write-downs were not significant during the three ~~and nine~~ months ended ~~December 31, 2013 and 2012:~~

Three Months Ended Nine Months Ended
December 31, December 31,
(Dollars in millions) 2013 2012 2013 2012
Available-for-sale securities:
Realized gains on sales $ 12 $ - $ 28 $ 9
Realized losses on sales $ - $ - $ (3) $ (2)
Impairment write-downs $ (1) $ - $ (54) $ -

June 30, 2014. Substantially all of the other-than-temporary impairment write-downs of ~~$1 million and $54~~$30 million during the three ~~and nine~~ months ended ~~December 31,~~June 30, 2013 ~~respectively,~~, were related to fixed income mutual funds.

~~TOYOTA MOTOR CREDIT CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~Note 3 – Investments in Marketable Securities (Continued)~~

Contractual Maturities ~~and Yields~~

The fair value and contractual maturities of ~~investments in marketable securities~~available-for-sale debt instruments at ~~December 31, 2013~~June 30, 2014 are summarized in the following table. ~~Prepayments~~Actual maturities may ~~cause actual maturities to~~ differ from ~~scheduled maturities.~~contractual maturities because certain borrowers have the right to call or prepay certain obligations.

Due in 1 Year or Due after 1 Year Due after 5 Years Due after
less through 5 years through 10 years 10 years Total
(Dollars in millions) Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
Available-for-Sale Securities:
Debt instruments:
U.S. government and
   agency obligations $ - - % $ 65 1.50 % $ 21 1.61 % $ 1 3.57 % $ 87 1.55 %
Municipal debt securities 2 2.39 - - 1 5.57 11 5.69 14 5.18
Certificates of deposit 1,533 0.29 - - - - - - 1,533 0.29
Commercial paper 125 0.23 - - - - - - 125 0.23
Foreign government debt
   securities 3 2.93 - - - - - - 3 2.93
Corporate debt
   securities 7 4.14 49 4.31 71 3.55 26 4.39 153 3.97
Mortgage-backed securities:
   U.S. government agency - - - - 4 3.91 60 3.24 64 3.28
   Non-agency residential - - - - - - 5 10.17 5 10.17
   Non-agency commercial - - 3 1.87 1 3.64 46 3.35 50 3.29
Asset-backed securities - - 5 0.75 4 1.87 14 2.54 23 1.97
Debt instruments total 1,670 0.31 122 2.62 102 3.15 163 3.75 2,057 0.86

Equity instruments:
Fixed income mutual funds 1,864 5.56
Equity mutual fund 529 4.29
Equity instruments total - - - - 2,393 5.28
Total fair value $ 1,670 0.31 % $ 122 2.62 % $ 102 3.15 % $ 163 3.75 % $ 4,450 3.24 %
Total amortized cost $ 1,670 $ 119 $ 104 $ 162 $ 4,137

Yields are based on the amortized cost balances of securities held at December 31, 2013. Yields are derived by aggregating the monthly result of interest and dividend income (including the effect of related amortization of premiums and accretion of discounts) divided by amortized cost. Equity instruments do not have a stated maturity date.

	June 30, 2014
(Dollars in millions)	Amortized cost		Fair value
Available-for-sale debt instruments:
Due within 1 year	$	2,249	$	2,251
Due after 1 year through 5 years		154		156
Due after 5 years through 10 years		66		67
Due after 10 years		53		57
Mortgage-backed and asset-backed securities1		130		133
Total	$	2,652	$	2,664

1 Mortgage-backed and asset-backed securities are shown separately because these securities do not have a single maturity date.

Securities on Deposit

In accordance with statutory requirements, we had on deposit with state insurance authorities U.S. debt securities with amortized cost and fair value of $6 million at both ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013.~~2014.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 4 – Finance Receivables, Net

Finance receivables, net consist of retail and dealer accounts including accrued interest and deferred fees and costs, net of ~~deferred income and~~ the allowance for credit ~~losses.~~losses and deferred income. Pledged receivables represent retail loan receivables that have been sold for legal purposes to securitization trusts but continue to be included in our consolidated financial statements. Cash flows from these pledged receivables are available only for the repayment of debt issued by these trusts and other obligations arising from the securitization transactions. They are not available for payment of our other obligations or to satisfy claims of our other creditors.

(Dollars in millions)	(Dollars in millions)		December 31, 2013		March 31, 2013		June 30, 2014			March 31, 2014
Retail receivables	Retail receivables		$	41,969	$	40,508	$	39,305		$	40,216
Pledged retail receivables	Pledged retail receivables			8,172		7,669		10,908			9,633
Dealer financing	Dealer financing			16,590		14,995		15,670			15,925
				66,731		63,172		65,883			65,774

Deferred origination (fees) and costs, net	Deferred origination (fees) and costs, net			656		634		648			651
Deferred income	Deferred income			(874)		(794)		(883	)		(863	)
Allowance for credit losses	Allowance for credit losses
	Retail and pledged retail receivables			(291)		(338)
	Dealer financing			(96)		(107)
		Total allowance for credit losses		(387)		(445)
Retail and pledged retail receivables								(293	)		(298	)
Dealer financing								(88	)		(88	)
Total allowance for credit losses								(381	)		(386	)
Finance receivables, net	Finance receivables, net		$	66,126	$	62,567	$	65,267		$	65,176

Finance receivables, net and retail receivables presented in the previous table includes direct finance leases, net of ~~$257~~$273 million and ~~$235~~$274 million at ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013,~~2014, respectively.

Credit Quality Indicators

We are exposed to credit risk on our finance receivables. Credit risk is the risk of loss arising from the failure of customers or dealers to meet the terms of their contracts with us or otherwise fail to perform as agreed.

Retail Loan and Commercial Portfolio Segments

Retail loan and commercial portfolio segments each consist of one class of finance receivables. While we use various credit quality metrics to develop our allowance for credit losses on the retail loan and commercial portfolio segments, we primarily utilize the aging of the individual accounts to monitor the credit quality of these finance receivables. Based on our experience, the payment status of borrowers is the strongest indicator of the credit quality of the underlying receivables. Payment status also impacts charge-offs.

Individual borrower accounts for each class of finance receivables within the retail loan and commercial portfolio segments are segregated into one of four aging categories based on the number of days outstanding. The aging for each class of finance receivables is updated quarterly.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 4 – Finance Receivables, Net (Continued)

Dealer Products Portfolio Segment

For the three classes of finance receivables within the dealer products portfolio segment (wholesale, real estate and working capital), all loans outstanding for an individual dealer or dealership group, ~~and~~which includes affiliated entities, are aggregated and evaluated collectively by dealer or ~~dealership~~dealer group. This reflects the interconnected nature of financing provided to our individual dealer and dealer group customers, and their affiliated entities.

When assessing the credit quality of the finance receivables within the dealer products portfolio segment, we segregate the finance receivables account balances into four categories representing distinct credit quality indicators based on internal risk assessments. The internal risk assessments for all finance receivables within the dealer products portfolio segment are updated on a monthly basis.

The four credit quality indicators are:

Performing – Account not classified as either Credit Watch, At Risk or Default

Credit Watch – Account designated for elevated attention

At Risk – Account where there is an increased likelihood that default may exist based on qualitative and quantitative factors

Default – Account is not currently meeting contractual obligations or we have temporarily waived certain contractual requirements

The tables below present each credit quality indicator by class of finance receivables as of ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013:~~2014:

		Retail Loan				Commercial								Retail Loan						Commercial
(Dollars in millions)	(Dollars in millions)	December 31, 2013		March 31, 2013		December 31, 2013		March 31, 2013						June 30, 2014			March 31, 2014			June 30, 2014			March 31, 2014

Aging of finance receivables:	Aging of finance receivables:
	Current	$	48,908	$	47,236	$	413	$	362
	30-59 days past due		634		454		8		6
	60-89 days past due		130		87		1		1
	90 days or greater past due		47		31		-		-
Current															$	49,078		$	48,828		$	446		$	432
30-59 days past due																522			459			8			6
60-89 days past due																121			90			1			1
90 days or greater past due																37			33			-			-
Total	Total	$	49,719	$	47,808	$	422	$	369						$	49,758		$	49,410		$	455		$	439

		Wholesale				Real Estate				Working Capital				Wholesale						Real Estate						Working Capital
(Dollars in millions)	(Dollars in millions)	December 31, 2013		March 31, 20131		December 31, 2013		March 31, 2013		December 31, 2013		March 31, 2013		June 30, 2014			March 31, 2014			June 30, 2014			March 31, 2014			June 30, 2014			March 31, 2014

Credit quality indicators:	Credit quality indicators:
	Performing	$	8,974	$	7,740	$	4,036	$	3,968	$	1,727	$	1,616
	Credit Watch		1,059		915		591		583		115		80
	At Risk		35		33		20		28		26		28
	Default		1		1		-		1		6		2
Performing															$	8,145		$	8,129		$	3,977		$	3,791		$	1,741		$	1,642
Credit Watch																972			1,282			644			855			104			158
At Risk																31			24			23			12			25			25
Default																1			1			5			-			2			6
Total	Total	$	10,069	$	8,689	$	4,647	$	4,580	$	1,874	$	1,726		$	9,149		$	9,436		$	4,649		$	4,658		$	1,872		$	1,831
1 Certain prior period amounts have been reclassified to conform to the current period presentation.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 4 – Finance Receivables, Net (Continued)	Note 4 – Finance Receivables, Net (Continued)													Note 4 – Finance Receivables, Net (Continued)

Impaired Finance Receivables	Impaired Finance Receivables													Impaired Finance Receivables

The following table summarizes the information related to our impaired loans by class of finance receivables as of December 31, 2013 and March 31, 2013:
The following table summarizes the information related to our impaired loans by class of finance receivables as of June 30, 2014 and March 31, 2014:														The following table summarizes the information related to our impaired loans by class of finance receivables as of June 30, 2014 and March 31, 2014:

		Impaired								Individually Evaluated				Impaired												Individually Evaluated
		Finance Receivables				Unpaid Principal Balance				Allowance				Finance Receivables						Unpaid Principal Balance						Allowance
		December 31,		March 31,		December 31,		March 31,		December 31,		March 31,		June 30,			March 31,			June 30,			March 31,			June 30,			March 31,
(Dollars in millions)		2013		2013		2013		2013		2013		2013		2014			2014			2014			2014			2014			2014

Impaired account balances individually evaluated for impairment with an allowance:	Impaired account balances individually evaluated for impairment with an allowance:													Impaired account balances individually evaluated for impairment with an allowance:

Wholesale		$	17	$	16	$	17	$	16	$	1	$	3		$	21		$	13		$	21		$	13		$	2	$	1
Real estate			27		33		27		33		7		7			27			27			27			27			7		8
Working capital			23		24		23		24		22		23			22			23			22			23			22		22
Total		$	67	$	73	$	67	$	73	$	30	$	33		$	70		$	63		$	70		$	63		$	31	$	31

Impaired account balances individually evaluated for impairment without an allowance:	Impaired account balances individually evaluated for impairment without an allowance:													Impaired account balances individually evaluated for impairment without an allowance:

Wholesale		$	70	$	66	$	70	$	66						$	49		$	51		$	49		$	51
Real estate			91		97		91		97							96			90			96			90
Working capital			4		5		4		5							4			4			4			4
Total		$	165	$	168	$	165	$	168						$	149		$	145		$	149		$	145

Impaired account balances aggregated and evaluated for impairment:	Impaired account balances aggregated and evaluated for impairment:													Impaired account balances aggregated and evaluated for impairment:

Retail loan		$	345	$	415	$	341	$	410						$	312		$	322		$	308		$	318
Commercial			1		1		1		1							1			1			1			1
Total		$	346	$	416	$	342	$	411						$	313		$	323		$	309		$	319

Total impaired account balances:	Total impaired account balances:													Total impaired account balances:

Retail loan		$	345	$	415	$	341	$	410						$	312		$	322		$	308		$	318
Commercial			1		1		1		1							1			1			1			1
Wholesale			87		82		87		82							70			64			70			64
Real estate			118		130		118		130							123			117			123			117
Working capital			27		29		27		29							26			27			26			27
Total		$	578	$	657	$	574	$	652						$	532		$	531		$	528		$	527

As of ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013,~~2014, the impaired finance receivables balance for accounts in the dealer products portfolio segment that were on nonaccrual status was ~~$58~~$73 million and ~~$69~~$54 million, ~~respectively. There~~respectively and there were no charge-offs against the allowance for credit ~~losses and therefore,~~losses. Therefore, the impaired finance receivables balance is equal to the unpaid principal balance.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 4 – Finance Receivables, Net (Continued)

The following table summarizes the average ~~balance of~~impaired finance receivables ~~determined to be impaired~~ as of the balance sheet date and the interest income recognized on ~~impaired finance receivables for~~these loans during the three ~~and nine~~ months ended ~~December 31, 2013~~June 30, 2014 and ~~2012:~~2013:

		Average Impaired Finance Receivables								Interest Income Recognized								Average Impaired Finance Receivables						Interest Income Recognized
		Three Months Ended December 31,				Nine Months Ended December 31,				Three Months Ended December 31,				Nine Months Ended December 31,				Three Months Ended June 30,						Three Months Ended June 30,
(Dollars in millions)	(Dollars in millions)	2013		2012		2013		2012		2013		2012		2013		2012		2014			2013			2014			2013

Impaired account balances individually evaluated for impairment with an allowance:	Impaired account balances individually evaluated for impairment with an allowance:																	Impaired account balances individually evaluated for impairment with an allowance:

Wholesale		$	15	$	32	$	17	$	24	$	-	$	-	$	-	$	-		$	17		$	20		$	-		$	-
Real estate			31		34		33		85		-		-		1		1			27			36			-			-
Working capital			23		29		24		24		-		-		1		1			23			24			-			1
Total		$	69	$	95	$	74	$	133	$	-	$	-	$	2	$	2		$	67		$	80		$	-		$	1

Impaired account balances individually evaluated for impairment without an allowance:	Impaired account balances individually evaluated for impairment without an allowance:																	Impaired account balances individually evaluated for impairment without an allowance:

Wholesale		$	61	$	63	$	61	$	63	$	1	$	-	$	1	$	1		$	50		$	60		$	-		$	-
Real estate			92		99		93		50		1		-		3		2			93			96			1			1
Working capital			4		1		5		1		-		-		-		-			4			5			-			-
Total		$	157	$	163	$	159	$	114	$	2	$	-	$	4	$	3		$	147		$	161		$	1		$	1

Impaired account balances aggregated and evaluated for impairment:	Impaired account balances aggregated and evaluated for impairment:																	Impaired account balances aggregated and evaluated for impairment:

Retail loan		$	355	$	458	$	379	$	473	$	7	$	10	$	22	$	29		$	317		$	402		$	6		$	8
Commercial			1		1		1		1		-		-		-		-			1			1			-			-
Total		$	356	$	459	$	380	$	474	$	7	$	10	$	22	$	29		$	318		$	403		$	6		$	8

Total impaired account balances:	Total impaired account balances:																	Total impaired account balances:

Retail loan		$	355	$	458	$	379	$	473	$	7	$	10	$	22	$	29		$	317		$	402		$	6		$	8
Commercial			1		1		1		1		-		-		-		-			1			1			-			-
Wholesale			76		95		78		87		1		-		1		1			67			80			-			-
Real estate			123		133		126		135		1		-		4		3			120			132			1			1
Working capital			27		30		29		25		-		-		1		1			27			29			-			1
Total		$	582	$	717	$	613	$	721	$	9	$	10	$	28	$	34		$	532		$	644		$	7		$	10

~~Interest~~The primary source of interest income recognized on the loans in the table above is from performing troubled debt restructurings. In addition, interest income recognized using a cash-basis method of accounting during the three ~~and nine~~ months ended ~~December 31,~~June 30, 2014 and 2013 was not ~~significant.~~significant.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 4 – Finance Receivables, Net (Continued)

Troubled Debt Restructuring

For accounts not under bankruptcy protection, the amount of finance receivables modified as a troubled debt restructuring during the three ~~and nine~~ months ended ~~December 31,~~June 30, 2014 and 2013 ~~and 2012 is~~was not significant for each class of finance receivables. Troubled debt restructurings for ~~these~~non-bankrupt accounts within the retail loan class of finance receivables are comprised exclusively of contract term extensions that reduce the monthly payment due from the ~~customer, while~~customer. Troubled debt restructurings for accounts within the commercial class of finance receivables consist of contract term extensions, interest rate adjustments, or a combination of the two. For the three classes of finance receivables within the dealer products portfolio segment, troubled debt restructurings include contract term extensions, interest rate adjustments, waivers of loan covenants, or any combination of the three. Troubled debt restructurings of accounts not under bankruptcy protection did not include forgiveness of principal during the three ~~and nine~~ months ended ~~December 31, 2013~~June 30, 2014 and ~~2012.~~2013.

We ~~recognize~~consider finance receivables under bankruptcy protection within the retail loan and commercial classes as troubled debt restructurings as of the date we receive notice of a customer filing for bankruptcy protection, regardless of the ultimate outcome of the bankruptcy proceedings. The bankruptcy court may impose modifications as part of the proceedings, including interest rate adjustments and forgiveness of principal. For the three ~~and nine~~ months ended ~~December 31,~~June 30, 2014 and 2013, ~~and 2012,~~ the financial impact of troubled debt restructurings related to accounts under bankruptcy protection was not significant to our Consolidated Statement of Income and Consolidated Balance Sheet.

Payment Defaults

Finance receivables modified as troubled debt restructurings for which there was a subsequent payment default during the three ~~and nine~~ months ended ~~December 31,~~June 30, 2014 and 2013, ~~and 2012,~~ and for which the modification occurred within twelve months of the payment default, were not significant for all classes of ~~such~~ receivables.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 5 – Investments in Operating Leases, Net

Investments in operating leases, net consist of vehicle and equipment leases, net of deferred fees and costs, deferred income, accumulated depreciation and the allowance for credit losses. Pledged investments in operating leases represent beneficial interests in a pool of certain vehicle leases that have been sold for legal purposes to securitization trusts but continue to be included in our consolidated financial statements. Cash flows from these pledged investments in operating leases are available only for the repayment of debt issued by these trusts and other obligations arising from the securitization transactions. They are not available for payment of our other obligations or to satisfy claims of our other creditors.

Investments in operating leases, net consisted of the following:	Investments in operating leases, net consisted of the following:				Investments in operating leases, net consisted of the following:

(Dollars in millions)	December 31, 2013		March 31, 2013			June 30, 2014			March 31, 2014
Investments in operating leases	$	29,405	$	25,957		$	33,324		$	31,023
Pledged investments in operating leases		324		630			-			248
		29,729		26,587			33,324			31,271
Deferred origination (fees) and costs, net		(128)		(125)			(160	)		(146	)
Deferred income		(782)		(609)			(903	)		(826	)
Accumulated depreciation		(5,209)		(5,387)			(5,677	)		(5,462	)
Allowance for credit losses		(69)		(82)			(66	)		(68	)
Investments in operating leases, net	$	23,541	$	20,384		$	26,518		$	24,769

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 6 – Allowance for Credit Losses

The following table provides information related to our allowance for credit losses on finance receivables and investments in operating leases:

Three Months Ended Nine Months Ended
December 31, December 31,
(Dollars in millions) 2013 2012 2013 2012
Allowance for credit losses at beginning of period $ 467 $ 549 $ 527 $ 619
Provision for credit losses 63 88 102 107
Charge-offs, net of recoveries (74) (77) (173) (166)
Allowance for credit losses at end of period $ 456 $ 560 $ 456 $ 560

	Three Months Ended
	June 30,
(Dollars in millions)	2014				2013
Allowance for credit losses at beginning of period		$	454			$	527
Provision for credit losses			38				11
Charge-offs, net of recoveries			(45	)			(37	)
Allowance for credit losses at end of period		$	447			$	501

Charge-offs are shown net of recoveries of ~~$19~~$22 million and ~~$64~~$24 million for the three ~~and nine~~ months ended ~~December 31,~~June 30, 2014 and 2013, ~~respectively, and recoveries of $18 million and $59 million for the three and nine months ended December 31, 2012,~~ respectively.

Allowance for Credit Losses and Finance Receivables by Portfolio Segment

The following tables provide information related to our allowance for credit losses and finance receivables by portfolio segment for the three ~~and nine~~ months ended ~~December 31, 2013~~June 30, 2014 and ~~2012:~~2013:

For the Three ~~and Nine~~ Months Ended ~~December 31, 2013~~June 30, 2014

(Dollars in millions)	(Dollars in millions)	Retail Loan		Commercial		Dealer Products		Total			Retail Loan			Commercial		Dealer Products		Total

Allowance for Credit Losses for Finance Receivables:	Allowance for Credit Losses for Finance Receivables:									Allowance for Credit Losses for Finance Receivables:

Beginning balance, October 1, 2013		$	290	$	4	$	102	$	396
Beginning balance, April 1, 2014											$	296		$	2	$	88	$	386
Charge-offs			(74)		-		-		(74)			(52	)		-		-		(52	)
Recoveries			14		-		-		14			16			-		-		16
Provisions			59		(2)		(6)		51			31			-		-		31
Ending balance, December 31, 2013		$	289	$	2	$	96	$	387

Beginning balance, April 1, 2013		$	333	$	5	$	107	$	445
Charge-offs			(190)		(1)		-	$	(191)
Recoveries			49		-		-		49
Provisions			97		(2)		(11)		84
Ending balance, December 31, 2013		$	289	$	2	$	96	$	387
Ending balance, June 30, 2014											$	291		$	2	$	88	$	381

Ending balance: Individually evaluated for impairment	Ending balance: Individually evaluated for impairment	$	-	$	-	$	30	$	30		$	-		$	-	$	31	$	31
Ending balance: Collectively evaluated for impairment	Ending balance: Collectively evaluated for impairment	$	289	$	2	$	66	$	357		$	291		$	2	$	57	$	350

Gross Finance Receivables:	Gross Finance Receivables:

Ending balance, December 31, 2013		$	49,719	$	422	$	16,590	$	66,731
Ending balance, June 30, 2014											$	49,758		$	455	$	15,670	$	65,883
Ending balance: Individually evaluated for impairment	Ending balance: Individually evaluated for impairment	$	-	$	-	$	232	$	232		$	-		$	-	$	219	$	219
Ending balance: Collectively evaluated for impairment	Ending balance: Collectively evaluated for impairment	$	49,719	$	422	$	16,358	$	66,499		$	49,758		$	455	$	15,451	$	65,664

The ending balance of gross finance receivables collectively evaluated for impairment includes approximately ~~$345~~$312 million and $1 million of finance receivables within the retail loan and commercial portfolio segments, respectively, that are specifically identified as impaired. These amounts are aggregated with their respective portfolio segments when determining the allowance for credit losses as of ~~December 31, 2013,~~June 30, 2014, as they are deemed to be ~~not significant~~insignificant for individual ~~evaluation. We~~evaluation and we have determined that the allowance for credit losses would not be materially different if the amounts had been individually evaluated for impairment. The ending balance of gross finance receivables for the dealer products portfolio segment collectively evaluated for impairment as of June 30, 2014 includes $862 million in receivables which are guaranteed by Toyota Motor Sales, U.S.A., Inc. (“TMS”) and $148 million in receivables which are guaranteed by private Toyota distributors. These receivables are related to certain Toyota and Lexus dealers and other third parties to which we provided financing at the request of TMS or such private distributors.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 6 – Allowance for Credit Losses (Continued)

For the Three ~~and Nine~~ Months Ended ~~December 31, 2012~~June 30, 2013

(Dollars in millions) Retail Loan Commercial Dealer Products Total

Allowance for Credit Losses for Finance Receivables:

Beginning balance, October 1, 2012 $ 333 $ 5 $ 122 $ 460
Charge-offs (79) - - (79)
Recoveries 13 1 - 14
Provisions 89 (1) (4) 84
Ending balance, December 31, 2012 $ 356 $ 5 $ 118 $ 479

Beginning balance, April 1, 2012 $ 395 $ 10 $ 119 $ 524
Charge-offs (188) (1) - (189)
Recoveries 46 1 - 47
Provisions 103 (5) (1) 97
Ending balance, December 31, 2012 $ 356 $ 5 $ 118 $ 479

Ending balance: Individually evaluated for
   impairment $ - $ - $ 43 $ 43
Ending balance: Collectively evaluated for
   impairment $ 356 $ 5 $ 75 $ 436

Gross Finance Receivables:

Ending balance, December 31, 2012 $ 47,880 $ 362 $ 14,937 $ 63,179
Ending balance: Individually evaluated for
    impairment $ - $ - $ 259 $ 259
Ending balance: Collectively evaluated for
    impairment $ 47,880 $ 362 $ 14,678 $ 62,920

(Dollars in millions)	Retail Loan			Commercial			Dealer Products		Total

Allowance for Credit Losses for Finance Receivables:

Beginning balance, April 1, 2013	$	333		$	5		$	107	$	445
Charge-offs		(49	)		(1	)		-		(50	)
Recoveries		19			-			-		19
Provisions		6			(1	)		5		10
Ending balance, June 30, 2013	$	309		$	3		$	112	$	424

Ending balance: Individually evaluated for impairment	$	-		$	-		$	35	$	35
Ending balance: Collectively evaluated for impairment	$	309		$	3		$	77	$	389

Gross Finance Receivables:

Ending balance, June 30, 2013	$	48,347		$	379		$	15,793	$	64,519
Ending balance: Individually evaluated for impairment	$	-		$	-		$	240	$	240
Ending balance: Collectively evaluated for impairment	$	48,347		$	379		$	15,553	$	64,279

The ending balance of gross finance receivables collectively evaluated for impairment includes approximately ~~$444~~$389 million and $1 million of finance receivables within the retail loan and commercial portfolio segments, respectively, that are specifically identified as impaired. These amounts are aggregated with their respective portfolio segments when determining the allowance for credit losses as of ~~December 31, 2012,~~June 30, 2013, as they are deemed to be ~~not significant~~insignificant for individual ~~evaluation. We~~evaluation and we have determined that the allowance for credit losses would not be materially different if the amounts had been individually evaluated for impairment. The ending balance of gross finance receivables for the dealer products portfolio segment collectively evaluated for impairment as of June 30, 2013 includes $824 million in receivables which are guaranteed by TMS and $156 million in receivables which are guaranteed by private Toyota distributors. These receivables are related to certain Toyota and Lexus dealers and other third parties to which we provided financing at the request of TMS or such private distributors.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 6 – Allowance for Credit Losses (Continued)

Past Due Finance Receivables and Investments in Operating Leases

(Dollars in millions)	(Dollars in millions)	December 31, 2013			March 31, 2013			June 30, 2014		March 31, 2014
Aggregate balances 60 or more days past due	Aggregate balances 60 or more days past due
	Finance receivables		$	178		$	119
	Operating leases			47			36
Finance receivables								$	160	$	125
Operating leases									45		36
Total	Total		$	225		$	155	$	205	$	161

Substantially all retail, direct finance lease, and operating lease receivables do not involve recourse to the dealer in the event of customer default. Finance and operating lease receivables 60 or more days past due include accounts in bankruptcy and exclude accounts for which vehicles have been repossessed.

Past Due Finance Receivables by Class

The following tables summarize the aging of finance receivables by class as of ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013:~~2014:

(Dollars in millions)	30 - 59 Days Past Due			60 - 89 Days Past Due			90 Days or Greater Past Due			Total Past Due			Current			Total Finance Receivables			90 Days or Greater Past Due and Accruing

As of June 30, 2014

Retail loan		$	522		$	121		$	37		$	680		$	49,078		$	49,758		$	37
Commercial			8			1			-			9			446			455			-
Wholesale			-			-			-			-			9,149			9,149			-
Real estate			4			-			1			5			4,644			4,649			-
Working capital			-			-			-			-			1,872			1,872			-
Total		$	534		$	122		$	38		$	694		$	65,189		$	65,883		$	37

(Dollars in millions)	30 - 59 Days Past Due			60 - 89 Days Past Due			90 Days or Greater Past Due			Total Past Due			Current			Total Finance Receivables			90 Days or Greater Past Due and Accruing

As of March 31, 2014

Retail loan		$	459		$	90		$	33		$	582		$	48,828		$	49,410		$	33
Commercial			6			1			-			7			432			439			-
Wholesale			-			-			-			-			9,436			9,436			-
Real estate			4			1			-			5			4,653			4,658			-
Working capital			-			-			-			-			1,831			1,831			-
Total		$	469		$	92		$	33		$	594		$	65,180		$	65,774		$	33

(Dollars in millions)
30 - 59 Days
Past Due
60 - 89 Days
Past Due
90 Days
or Greater
Past Due
Total Past
Due
Current
Total
Finance Receivables
90 Days or Greater Past Due and Accruing

As of December 31, 2013

Retail loan $ 634 $ 130 $ 47 $ 811 $ 48,908 $ 49,719 $ 47
Commercial 8 1 - 9 413 422 -
Wholesale - - - - 10,069 10,069 -
Real estate - - - - 4,647 4,647 -
Working capital - - - - 1,874 1,874 -
Total $ 642 $ 131 $ 47 $ 820 $ 65,911 $ 66,731 $ 47

(Dollars in millions) 30 - 59 Days Past Due 60 - 89 Days Past Due
90 Days
or Greater
Past Due
Total Past
Due
Current
Total
Finance Receivables
90 Days or Greater Past Due and Accruing

As of March 31, 2013

Retail loan $ 454 $ 87 $ 31 $ 572 $ 47,236 $ 47,808 $ 31
Commercial 6 1 - 7 362 369 -
Wholesale - - - - 8,689 8,689 -
Real estate - - - - 4,580 4,580 -
Working capital - - - - 1,726 1,726 -
Total $ 460 $ 88 $ 31 $ 579 $ 62,593 $ 63,172 $ 31

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 7 – Derivatives, Hedging Activities and Interest Expense

Derivative Instruments

We use derivatives as part of our risk management strategy to hedge interest rate and foreign currency risks. We enter into derivative transactions with the intent to reduce long term fluctuations in cash flows and fair value adjustments of assets and liabilities caused by market movements. Gains and losses on derivatives are recorded in interest expense. Our use of derivatives is limited to the management of interest rate and foreign currency risks.

Our derivative activities are authorized and monitored by our Asset-Liability Committee (“ALCO”), which provides a framework for financial controls and governance to manage market risks. We use internal models for analyzing and incorporating data from internal and external sources in developing various hedging strategies. We incorporate the resulting hedging strategies into our overall risk management strategies.

~~Our approach to asset-liability management involves hedging our risk exposures so that changes in interest rates have a limited effect on our cash flows.~~ Our liabilities consist mainly of fixed and floating rate debt, denominated in various currencies, which we issue in the global capital markets, while our assets consist primarily of U.S. dollar denominated, fixed rate receivables. We enter into interest rate swaps and foreign currency swaps to hedge the interest rate and foreign currency risks that result from the different characteristics of our assets and liabilities. Our ~~resulting asset liability profile~~use of derivative transactions is ~~consistent with~~intended to reduce long-term fluctuations in cash flows and fair value adjustments of assets and liabilities caused by market movements. All of our derivative activities are authorized and monitored by our management and the ~~overall risk management strategy directed by the ALCO.~~Asset Liability Committee which provides a framework for financial controls and governance to manage market risk.

Credit Risk Related Contingent Features

Certain of our derivative contracts are governed by International Swaps and Derivatives Association (“ISDA”) Master Agreements. Substantially all of these ISDA Master Agreements contain reciprocal ratings triggers providing either party with an option to terminate the agreement at market value in the event of a ratings downgrade of the other party below a specified threshold. As of ~~December 31, 2013,~~June 30, 2014, we have daily valuation and collateral exchange arrangements with all of our counterparties. Our collateral agreements with substantially all our counterparties include a zero threshold, full collateralization arrangement.

The aggregate fair value of derivative instruments that contain credit risk related contingent features that were in a net liability position at ~~December 31, 2013~~June 30, 2014 was ~~$13~~$3 million, excluding adjustments made for our own non-performance risk. ~~Since we fully collateralize without regard to credit ratings, we~~We would not be required to post additional collateral to the counterparties with which we were in a net liability position at ~~December 31, 2013,~~June 30, 2014 if our credit ratings were to ~~decline.~~decline since we fully collateralize without regard to credit ratings with these counterparties. In order to settle all derivative instruments that were in a net liability position at ~~December 31, 2013,~~June 30, 2014, excluding adjustments made for our own non-performance risk, we would be required to pay ~~$13~~$3 million.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 7 – Derivatives, Hedging Activities and Interest Expense (Continued)

~~Impact of~~ Derivative ~~Activities~~Activity Impact on Financial Statements

The following tables show the financial statement line item and amount of our derivative assets and liabilities that are reported in the Consolidated Balance Sheet at ~~December 31, 2013~~June 30, 2014 and March 31, 2013. Derivative assets and liabilities are shown before and after netting and collateral adjustments, by accounting designation and by contract type. As permitted by the accounting guidance, where a legally enforceable master netting agreement exists, we have elected to net derivative assets and derivative liabilities and the related cash collateral. Our embedded derivative contracts do not meet the accounting guidance permitting netting and are therefore presented gross.2014.

Hedge accounting Non-hedge Total
As of December 31, 2013 derivatives accounting derivatives
Notional Fair Notional Fair Notional Fair
(Dollars in millions) value value value
Other assets
Interest rate swaps $ 465 $ 31 $ 24,402 $ 347 $ 24,867 $ 378
Foreign currency swaps 1,182 470 6,992 524 8,174 994
Total $ 1,647 $ 501 $ 31,394 $ 871 $ 33,041 $ 1,372

Counterparty netting and collateral (1,323)
Carrying value of derivative contracts – Other assets $ 49

Other liabilities
Interest rate swaps $ - $ - $ 55,265 $ 656 $ 55,265 $ 656
Interest rate caps - - 50 - 50 -
Foreign currency swaps 157 10 3,866 352 4,023 362
Total $ 157 $ 10 $ 59,181 $ 1,008 $ 59,338 $ 1,018

Counterparty netting and collateral (1,005)
Carrying value of derivative contracts – Other liabilities $ 13

As of June 30, 2014		Hedge accounting derivatives				Non-hedge accounting derivatives				Total
(Dollars in millions)		Notional		Fair value		Notional		Fair value		Notional		Fair value
Other assets
Interest rate swaps	$	465	$	21	$	27,382	$	357	$	27,847	$	378
Foreign currency swaps		852		351		7,646		671		8,498		1,022
Total	$	1,317	$	372	$	35,028	$	1,028	$	36,345	$	1,400

Counterparty netting and collateral												(1,313	)
Carrying value of derivative contracts – Other assets											$	87

Other liabilities
Interest rate swaps	$	-	$	-	$	57,536	$	454	$	57,536	$	454
Interest rate caps		-		-		50		-		50		-
Foreign currency swaps		157		11		3,472		169		3,629		180
Total	$	157	$	11	$	61,058	$	623	$	61,215	$	634

Counterparty netting and collateral												(631	)
Carrying value of derivative contracts – Other liabilities											$	3

All derivative contracts shown above are subject to master netting agreements. Collateral represents cash received or deposited under reciprocal arrangements that we have entered into with our derivative counterparties.

As of ~~December 31, 2013,~~June 30, 2014, we held collateral of ~~$794~~$928 million which offset derivative assets, and we posted collateral of ~~$476~~$246 million which offset derivative liabilities. We also posted collateral of $10 million which we did not use to offset derivative liabilities.

Table of Contents

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 7 – Derivatives, Hedging Activities and Interest Expense (Continued)

As of March 31, 2014	Hedge accounting derivatives				Non-hedge accounting derivatives				Total
(Dollars in millions)	Notional		Fair value		Notional		Fair value		Notional		Fair value
Other Assets
Interest rate swaps	$	465	$	25	$	25,942	$	336	$	26,407	$	361
Foreign currency swaps		852		342		7,374		532		8,226		874
Total	$	1,317	$	367	$	33,316	$	868	$	34,633	$	1,235

Counterparty netting and collateral held												(1,186	)
Carrying value of derivative contracts – Other assets											$	49

Other liabilities
Interest rate swaps	$	-	$	-	$	57,689	$	553	$	57,689	$	553
Interest rate caps		-		-		50		-		50		-
Foreign currency swaps		157		14		3,822		238		3,979		252
Total	$	157	$	14	$	61,561	$	791	$	61,718	$	805

Counterparty netting and collateral held												(799	)
Carrying value of derivative contracts – Other liabilities											$	6

As of March 31, 2014, we held collateral of $718 million which offset derivative assets, and posted collateral of $331 million which offset derivative liabilities. We also held collateral of ~~$32~~$5 million which we did not use to offset derivative assets and we posted collateral of $9$3 million which we did not use to offset derivative liabilities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 7 – Derivatives, Hedging Activities and Interest Expense (Continued)

Hedge accounting Non-hedge Total
As of March 31, 2013 derivatives accounting derivatives
Notional Fair Notional Fair Notional Fair
(Dollars in millions) value value value
Other Assets
Interest rate swaps $ 465 $ 44 $ 22,336 $ 536 $ 22,801 $ 580
Foreign currency swaps 1,246 491 7,498 648 8,744 1,139
Total $ 1,711 $ 535 $ 29,834 $ 1,184 $ 31,545 $ 1,719

Counterparty netting and collateral (1,661)
Carrying value of derivative contracts – Other assets $ 58

Other liabilities
Interest rate swaps $ - $ - $ 51,342 $ 766 $ 51,342 $ 766
Interest rate caps - - 50 - 50 -
Foreign currency swaps 790 29 3,103 102 3,893 131
Embedded derivatives - - 64 12 64 12
Total $ 790 $ 29 $ 54,559 $ 880 $ 55,349 $ 909

Counterparty netting and collateral (892)
Carrying value of derivative contracts – Other liabilities $ 17

All derivative contracts shown above are subject to master netting agreements, with the exception of embedded derivative contracts. Collateral represents cash received or deposited under reciprocal arrangements that we have entered into with our derivative counterparties. As of March 31, 2013, we held collateral of $953 million which offset derivative assets, and we posted collateral of $184 million which offset derivative liabilities. We also held collateral of $3 million which we did not use to offset derivative assets, and we posted collateral of $6 million which we did not use to offset derivative liabilities.

~~TOYOTA MOTOR CREDIT CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

Note 7 – Derivatives, Hedging Activities and Interest Expense (Continued)

The following table summarizes the components of interest expense, including the location and amount of gains orand losses on derivative instruments and related hedged items, for the three ~~and nine~~ months ended ~~December 31,~~June 30, 2014 and 2013 ~~and 2012~~ as reported in our Consolidated Statement of Income:

			Three Months Ended					Nine Months Ended			Three Months Ended
			December 31,					December 31,			June 30,
(Dollars in millions)	(Dollars in millions)			2013		2012		2013		2012	2014			2013
Interest expense on debt	Interest expense on debt		$	325	$	330	$	963	$	1,014	$	321		$	318
Interest expense on hedge accounting derivatives	Interest expense on hedge accounting derivatives			(18)		(25)		(67)		(79)		(15	)		(24	)
Interest expense on non-hedge accounting foreign currency	Interest expense on non-hedge accounting foreign currency
	swaps			(54)		(64)		(159)		(198)
swaps												(55	)		(51	)
Interest expense on non-hedge accounting interest rate swaps	Interest expense on non-hedge accounting interest rate swaps			39		85		166		283		37			66
		Interest expense on debt and derivatives		292		326		903		1,020
Interest expense on debt and derivatives												288			309

Loss on hedge accounting derivatives:	Loss on hedge accounting derivatives:
	Interest rate swaps			5		5		15		10
	Foreign currency swaps			32		37		16		148
		Loss on hedge accounting derivatives		37		42		31		158
Interest rate swaps												5			6
Foreign currency swaps												(1	)		44
Loss on hedge accounting derivatives												4			50
Less hedged item: change in fair value of fixed rate debt	Less hedged item: change in fair value of fixed rate debt			(38)		(44)		(34)		(166)		(4	)		(51	)
		Ineffectiveness related to hedge accounting derivatives		(1)		(2)		(3)		(8)
Ineffectiveness related to hedge accounting derivatives												-			(1	)

(Gain) loss from foreign currency transactions and non-hedge	(Gain) loss from foreign currency transactions and non-hedge
accounting derivatives:	accounting derivatives:
		Gain on foreign currency transactions		(87)		(189)		(185)		(37)
		Loss (gain) on foreign currency swaps		153		224		384		(14)
		Loss (gain) on interest rate swaps		29		(75)		137		(336)
Loss (gain) on non-hedge accounting foreign currency transactions												80			(450	)
(Gain) loss on non-hedge accounting foreign currency swaps												(155	)		566
(Gain) loss on non-hedge accounting interest rate swaps												(83	)		112
Total interest expense	Total interest expense		$	386	$	284	$	1,236	$	625	$	130		$	536

Interest expense on debt and derivatives represents net interest settlements and changes in accruals. Gains and losses from hedge accounting derivatives and foreign currency transactions exclude net interest settlements and changes in accruals.

The ~~following table summarizes the~~ relative fair value allocation of derivative credit ~~valuation~~value adjustments within interest ~~expense:~~expense is not significant for the three months ended June 30, 2014 and 2013 as we fully collateralize our derivatives without regard to credit ratings.

Three Months Ended Nine Months Ended
December 31, December 31,
(Dollars in millions) 2013 2012 2013 2012
Gains related to hedge accounting derivatives $ - $ (1) $ - $ (2)
Total credit valuation adjustment allocated to interest expense $ - $ (1) $ - $ (2)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 8 – Other Assets and Other Liabilities	Note 8 – Other Assets and Other Liabilities				Note 8 – Other Assets and Other Liabilities

Other assets and other liabilities consisted of the following:	Other assets and other liabilities consisted of the following:				Other assets and other liabilities consisted of the following:

(Dollars in millions)	December 31, 2013		March 31, 2013			June 30, 2014		March 31, 2014
Other assets:

Notes receivable from affiliates	$	1,309	$	931		$	790	$	1,172
Used vehicles held for sale		194		265			136		139
Deferred charges		112		120			115		116
Income taxes receivable		-		13
Derivative assets		49		58			87		49
Other assets		490		353			385		394
Total other assets	$	2,154	$	1,740		$	1,513	$	1,870

Other liabilities:

Unearned insurance premiums and contract revenues	$	1,639	$	1,528		$	1,705	$	1,665
Derivative liabilities		13		17			3		6
Accounts payable and accrued expenses		867		685			834		746
Deferred income		316		255			357		332
Other liabilities		160		192			204		139
Total other liabilities	$	2,995	$	2,677		$	3,103	$	2,888

~~The change~~Included in total other assets is a non-cash movement related to used vehicles held for sale ~~includes~~that was excluded from operating activities and investing activities in the consolidated statement of cash flows. The amount of the non-cash ~~activities of $71 million~~movement was not significant for the three months ended June 30, 2014 and $80 million for the ~~nine~~three months ended ~~December 31, 2013 and 2012, respectively.~~ June 30, 2013.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 9 – Debt

Debt and the related weighted average contractual interest rates are summarized as follows:

					Weighted average
					contractual interest rates
(Dollars in millions)	June 30, 2014		March 31, 2014		June 30, 2014	March 31, 2014
Commercial paper	$	25,524	$	27,709	0.17%		0.18%
Unsecured notes and loans payable		51,496		49,075	1.96%		1.99%
Secured notes and loans payable		9,112		8,158	0.54%		0.54%
Carrying value adjustment		428		425
Total debt	$	86,560	$	85,367	1.28%		1.26%

Note 9 – Debt

Debt and the related weighted average contractual interest rates are summarized as follows:

Weighted average
contractual interest rates
December 31, March 31, December 31, March 31,
(Dollars in millions) 2013 2013 2013 2013
Commercial paper $ 27,012 $ 24,590 0.19 % 0.24 %
Unsecured notes and loans payable 47,938 46,707 1.98 % 2.19 %
Secured notes and loans payable 7,195 7,009 0.55 % 0.60 %
Carrying value adjustment 548 526
Total debt $ 82,693 $ 78,832 1.27 % 1.43 %

The commercial paper balance includes unamortized premiums and discounts. As of ~~December 31, 2013,~~June 30, 2014, our commercial paper had a weighted average remaining maturity of 7883 days, while our notes and loans payable mature on various dates through fiscal 2047. Weighted average contractual interest rates are calculated based on original notional or par value before consideration of premium or discount.

The carrying value of our unsecured notes and loans payable at ~~December 31, 2013~~June 30, 2014 included ~~$18.0~~$18.5 billion of unsecured floating rate debt with contractual interest rates ranging from 0 percent to ~~6.0~~3.5 percent and ~~$30.5~~$33.4 billion of unsecured fixed rate debt with contractual interest rates ranging from 0.5 percent to 9.4 percent. The carrying value of our unsecured notes and loans payable at March 31, ~~2013~~2014 included ~~$16.8~~$17.6 billion of unsecured floating rate debt with contractual interest rates ranging from 0 percent to ~~6.0~~3.3 percent and ~~$30.4~~$31.9 billion of unsecured fixed rate debt with contractual interest rates ranging from 0.5 percent to 9.4 percent. Upon issuance of fixed rate notes, we generally elect to enter into interest rate swaps to convert fixed rate payments on notes to floating rate payments.

Included in unsecured notes and loans payable are notes and loans denominated in various foreign currencies, unamortized premiums and discounts and the effects of foreign currency transaction gains and losses on non-hedged or de-designated foreign currency denominated notes and loans payable. At ~~December 31, 2013~~both June 30, 2014 and March 31, ~~2013,~~2014, the carrying ~~values~~value of these foreign currency denominated notes payable ~~were $12.5 billion and $13.2 billion, respectively.~~was $12.6 billion. Concurrent with the issuance of these foreign currency unsecured notes, we entered into currency swaps in the same notional amount to convert non-U.S. currency payments to U.S. dollar denominated payments.

Our secured notes and loans payable are denominated in U.S. dollars and consist of both fixed and variable rate debt with interest rates ranging from 0.4 percent to 1.6 percent at ~~December 31, 2013~~both June 30, 2014 and ~~0.4 and 1.9 percent at~~ March 31, ~~2013.~~2014. Secured notes and loans are issued by on-balance sheet securitization trusts, as further discussed in Note 10 – Variable Interest Entities. These notes are repayable only from collections on the underlying pledged retail finance receivables and the beneficial interests in investments in operating leases and from related credit enhancements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 10 – Variable Interest Entities

Consolidated Variable Interest Entities

We use one or more special purpose entities that are considered Variable Interest Entities (“VIEs”) to issue asset-backed securities to third party bank-sponsored asset-backed securitization vehicles and to investors in securitization transactions. The securities issued by these VIEs are backed by the cash flows related to retail finance receivables and beneficial interests in investments in operating leases (“Securitized Assets”). We hold variable interests in the VIEs that could potentially be significant to the VIEs. We determined that we are the primary beneficiary of the securitization trusts because (i) our servicing responsibilities for the Securitized Assets give us the power to direct the activities that most significantly impact the performance of the VIEs, and (ii) our variable interests in the VIEs give us the obligation to absorb losses and the right to receive residual returns that could potentially be significant.

The following tables show the assets and liabilities related to our VIE securitization transactions that were included in our financial statements as of ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013:~~2014:

	December 31, 2013													June 30, 2014

			VIE Assets							VIE Liabilities						VIE Assets						VIE Liabilities
			Gross		Net											Gross		Net
(Dollars in millions)	Restricted Cash		Securitized Assets			Securitized Assets		Other Assets		Debt		Other Liabilities		Restricted Cash		Securitized Assets		Securitized Assets		Other Assets		Debt		Other Liabilities

Retail finance receivables	$	459	$	8,172		$	8,064	$	3	$	7,133	$	1	$	675	$	10,908	$	10,754	$	3	$	9,112	$	2
Investments in operating leases		21		324			210		6		62		-
Total	$	480	$	8,496		$	8,274	$	9	$	7,195	$	1	$	675	$	10,908	$	10,754	$	3	$	9,112	$	2

March 31, 2013

VIE Assets VIE Liabilities
Gross Net
(Dollars in millions)
Restricted
Cash

Securitized
Assets

Securitized
Assets

Other
Assets
Debt
Other
Liabilities

Retail finance receivables $ 458 $ 7,669 $ 7,556 $ 3 $ 6,738 $ 1
Investment in operating leases 33 630 434 9 271 -
Total $ 491 $ 8,299 $ 7,990 $ 12 $ 7,009 $ 1

~~TOYOTA MOTOR CREDIT CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~Note 10 – Variable Interest Entities (Continued)~~

	March 31, 2014

			VIE Assets						VIE Liabilities
			Gross		Net
(Dollars in millions)	Restricted Cash		Securitized Assets		Securitized Assets		Other Assets		Debt		Other Liabilities

Retail finance receivables	$	624	$	9,633	$	9,501	$	3	$	8,146	$	2
Investment in operating leases		20		248		156		4		12		-
Total	$	644	$	9,881	$	9,657	$	7	$	8,158	$	2

Restricted cash shown in the table above represents collections from the underlying Securitized Assets and certain reserve deposits held by TMCC for the ~~VIEs.~~VIEs and is included as part of the Restricted Cash and Cash Equivalents on our Consolidated Balance Sheet. Gross Securitized Assets represent finance receivables and beneficial interests in investments in operating leases securitized for the asset-backed securities issued. Net Securitized Assets are presented net of deferred fees and costs, deferred income, accumulated depreciation and the allowance for credit losses. Other Assets represent used vehicles held for sale that were repossessed by or returned to TMCC for the benefit of the VIEs. The related debt of these consolidated VIEs is presented net of ~~$686~~$1,383 million and ~~$466~~$1,169 million of securities retained by TMCC at ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013,~~2014, respectively. Other Liabilities represents accrued interest on the debt of the consolidated VIEs.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 10 – Variable Interest Entities (Continued)

The assets of the VIEs and the restricted cash held by TMCC serve as the sole source of repayment for the asset-backed securities issued by these entities. Investors in the notes issued by the VIEs do not have recourse to us or our other assets, with the exception of customary representation and warranty repurchase provisions and indemnities.

As the primary beneficiary of these entities, we are exposed to credit, residual value, interest rate, and prepayment risk from the Securitized Assets on the VIEs. However, our exposure to these risks did not change as a result of the transfer of the assets to the VIEs. We may also be exposed to interest rate risk arising from the secured notes issued by the VIEs.

In addition, we entered into interest rate swaps with certain special purpose entities that issue variable rate debt. Under the terms of these swaps, the special purpose entities are obligated to pay TMCC a fixed rate of interest on certain payment dates in exchange for receiving a floating rate of interest on notional amounts equal to the outstanding balance of the secured debt. This arrangement enables the special purpose entities to mitigate the interest rate risk inherent in issuing variable rate debt that is secured by fixed rate Securitized Assets.

The transfers of the Securitized Assets to the special purpose entities in our securitizations are considered to be sales for legal purposes. However, the Securitized Assets and the related debt remain on our Consolidated Balance Sheet. We recognize financing revenue on the Securitized Assets and interest expense on the secured debt issued by the special purpose entities. We also maintain an allowance for credit losses on the Securitized Assets to cover estimated probable credit losses using a methodology consistent with that used for our non-securitized asset portfolio. The interest rate swaps between TMCC and the special purpose entities are considered intercompany transactions and therefore are eliminated in our consolidated financial statements.

Non-consolidated Variable Interest Entities

We provide lending to Toyota ~~and Lexus~~ dealers through the Toyota Dealer Investment Group’s Dealer Capital Program (“TDIG Program”) operated by our affiliate, ~~Toyota Motor Sales, USA, Inc. (“TMS”).~~TMS, which has an equity position in these dealerships. Dealers participating in this program have been determined to be ~~VIEs due~~VIEs. We do not consolidate the dealerships in this program as we are not the primary beneficiary and any exposure to ~~TMS’s equity position in~~loss is limited to the ~~dealerships.~~amount of the credit facility. At ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013,~~2014, amounts due from these dealers that are classified as finance receivables, net in the Consolidated Balance Sheet and revenues received during the three months ended June 30, 2014 and 2013 from these dealers under the TDIG Program were not significant.

We doalso have other lending relationships and a joint venture which have been determined to be VIEs but these relationships are not ~~consolidate the dealerships in this program~~consolidated as we are not the primary ~~beneficiary of~~beneficiary. All amounts under these ~~dealerships. Additionally, any exposure to loss is limited to the amount of the credit facility extended to these dealers.~~relationships were not significant.

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Note 11 – Liquidity Facilities and Letters of Credit

For additional liquidity purposes, we maintain syndicated bank credit facilities with certain banks.

364 Day Credit Agreement, Three Year Credit Agreement and Five Year Credit Agreement

In fiscal 2013, TMCC, TCPR and other Toyota affiliates were parties to a $3.8 billion 364 day syndicated bank credit facility, a $3.8 billion three year syndicated bank credit facility and a $3.8 billion five year syndicated bank credit facility, expiring in fiscal 2014, 2016, and 2018, respectively. In November 2013, ~~these agreements were terminated and~~ TMCC, TCPR and other Toyota affiliates entered into a $4.3 billion 364 day syndicated bank credit facility, a $4.3 billion three year syndicated bank credit facility and a $4.3 billion five year syndicated bank credit facility, expiring in fiscal 2015, 2017, and 2019, respectively.

The ability to make draws is subject to covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets. These agreements may be used for general corporate purposes and none were drawn upon as of ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013.~~2014.

Other Unsecured Credit Agreements

TMCC has entered into additional unsecured credit facilities with various banks. As of ~~December 31, 2013,~~June 30, 2014, TMCC had committed bank credit facilities totaling ~~$5.4~~$6.0 billion of which ~~$1.0 billion,~~ $2.4 billion, ~~$1.9~~$2.6 billion, $400 million, $375 million and ~~$150~~$175 million mature in fiscal ~~2014,~~ 2015, 2016, 2017, 2018 and ~~2017,~~2020, respectively.

These credit agreements contain covenants, and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets. These credit facilities were not drawn upon as of ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013.~~2014. We are in compliance with the covenants and conditions of the credit agreements described ~~above.~~above.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 12 – Commitments and Contingencies

Commitments and Guarantees

We have entered into certain commitments and guarantees for which the maximum unfunded amounts are summarized in the table below:

(Dollars in millions)	(Dollars in millions)		December 31, 2013		March 31, 2013		June 30, 2014		March 31, 2014
Commitments:	Commitments:
	Credit facilities commitments with
		vehicle and industrial equipment dealers	$	1,137	$	1,106
	Minimum lease commitments			66		74
Credit facilities commitments with
vehicle and industrial equipment dealers							$	1,247	$	1,295
Minimum lease commitments								58		62
Total commitments	Total commitments			1,203		1,180		1,305		1,357
	Guarantees of affiliate pollution control and solid waste
		disposal bonds		100		100
Guarantees of affiliate pollution control and solid waste
disposal bonds								100		100
Total commitments and guarantees	Total commitments and guarantees		$	1,303	$	1,280	$	1,405	$	1,457

Wholesale financing demand note facilities are not considered to be contractual commitments as they are not binding arrangements under which TMCC is required to perform.

We are party to a 15-year lease agreement, which expires in 2018, with TMS for our headquarters location in the TMS headquarters complex in Torrance, California. Minimum lease commitments include ~~$32~~$28 million and ~~$37~~$30 million for facilities leases with affiliates at ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013,~~2014, respectively. At ~~December 31, 2013,~~June 30, 2014, minimum future commitments under lease agreements to which we are a lessee, including those under the TMS lease, are as follows (dollars in millions):

	Future minimum
Years ending March 31,	lease payments		Future minimum lease payments
2014	$	5
2015		19	$	14
2016		18		18
2017		13		14
2018		8		8
2019				3
Thereafter		3		1
Total	$	66	$	58

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 12 – Commitments and Contingencies (Continued)

Commitments

We provide fixed and variable rate credit facilities to vehicle and industrial equipment dealers. These credit facilities are typically used for facilities refurbishment, real estate purchases, and working capital requirements. These loans are generally collateralized with liens on real estate, vehicle inventory, and/or other dealership assets, as appropriate. We obtain a personal guarantee from the vehicle or industrial equipment dealer or a corporate guarantee from the dealership when deemed prudent. Although the loans are typically collateralized or guaranteed, the value of the underlying collateral or guarantees may not be sufficient to cover our exposure under such agreements. Our credit facility pricing reflects market conditions, the competitive environment, the level of dealer support required for the facility, and the credit worthiness of each dealer. Amounts drawn under these facilities are reviewed for collectability on a quarterly basis, in conjunction with our evaluation of the allowance for credit losses. We also provide financing to various multi-franchise dealer organizations, often as part of a lending consortium, for wholesale, working capital, real estate, and business acquisitions.

Guarantees and Other Contingencies

TMCC has guaranteed bond obligations totaling $100 million in principal that were issued by Putnam County, West Virginia and Gibson County, Indiana to finance the construction of pollution control facilities at manufacturing plants of certain TMCC affiliates. The bonds mature in the following fiscal years ending March 31: 2028 - $20 million; 2029 - $50 million; 2030 - $10 million; 2031 - $10 million; and 2032 - $10 million. TMCC would be required to perform under the guarantees in the event of non-payment on the bonds and other related obligations. TMCC is entitled to reimbursement by the affiliates for any amounts paid. TMCC receives an annual fee of $78 thousand for guaranteeing such payments. TMCC has not been required to perform under any of these affiliate bond guarantees as of ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013.~~2014.

Indemnification

In the ordinary course of business, we enter into agreements containing indemnification provisions standard in the industry related to several types of transactions, including, but not limited to, debt funding, derivatives, securitization transactions, and our vendor and supplier agreements. Performance under these indemnities would occur upon a breach of the representations, warranties or covenants made or given, or a third party claim. In addition, we have agreed in certain debt and derivative issuances, and subject to certain exceptions, to gross-up payments due to third parties in the event that withholding tax is imposed on such payments. In addition, certain of our funding arrangements ~~would~~may require us to pay lenders for increased costs due to certain changes in laws or regulations. Due to the difficulty in predicting events which could cause a breach of the indemnification provisions or trigger a gross-up or other payment obligation, we are not able to estimate our maximum exposure to future payments that could result from claims made under such provisions. We have not made any material payments in the past as a result of these provisions, and as of ~~December 31, 2013,~~June 30, 2014, we determined that it is not probable that we will be required to make any material payments in the future. As of ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013,~~2014, no amounts have been recorded under these indemnifications.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 12 – Commitments and Contingencies (Continued)

Litigation and Governmental Proceedings

Various legal actions, governmental proceedings and other claims are pending or may be instituted or asserted in the future against us with respect to matters arising in the ordinary course of business. Certain of these actions are or purport to be class action suits, seeking sizeable damages and/or changes in our business operations, policies and practices. Certain of these actions are similar to suits that have been filed against other financial institutions and captive finance companies. We perform periodic reviews of pending claims and actions to determine the probability of adverse verdicts and resulting amounts of liability. We establish accruals for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. When we are able, we also determine estimates of reasonably possible loss or range of loss, whether in excess of any related accrued liability or where there is no accrued liability. Given the inherent uncertainty associated with legal matters, the actual costs of resolving legal claims and associated costs of defense may be substantially higher or lower than the amounts for which accruals have been established. Based on available information and established accruals, we do not believe it is reasonably possible that the results of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial condition or results of operations.

The Consumer Financial Protection Bureau (the “CFPB”), together with the U.S. Department of Justice (the “DOJ”), have requested us to provide certain information about our purchases of auto loans from dealers and discretionary pricing practices. Neither the CFPB nor the DOJ has alleged any wrongdoing on our part. At this time, we are uncertain whether we will be subject to regulatory actions, and given the preliminary state of this inquiry, we are unable to estimate the amount or range of potential loss in the event any such actions are taken.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 13 – Income Taxes

Our effective tax rate was 37 percent for ~~both~~ the three ~~and nine~~ months ended ~~December 31, 2013~~June 30, 2014 and ~~36 and 37 percent for the three and nine months ended December 31, 2012, respectively.~~2013. Our provision for income taxes for the ~~three and nine months ended December 31, 2013~~first quarter of fiscal 2015 was ~~$113~~$213 million ~~and $315 million, respectively,~~ compared to ~~$156 million and $635~~$53 million for the same ~~periods~~period in fiscal ~~2013.~~2014. The ~~decrease~~increase in the provision is consistent with the ~~decrease~~increase in our income before tax for the first three ~~and nine~~ months ~~ended December 31, 2013~~of fiscal 2015 compared to the same ~~periods~~period in fiscal ~~2013.~~2014.

Tax-related Contingencies

As of ~~December 31, 2013,~~June 30, 2014, we remain under IRS examination for fiscal 2015 and 2014. The IRS examination for fiscal 2013 and 2012 were concluded in the first quarter of fiscal ~~years ended March 31, 2012 and March 31, 2013, as well as for the current fiscal year~~.2015.

We periodically review our uncertain tax positions. Our assessment is based on many factors including the ongoing IRS audits. For the quarter ended ~~December 31, 2013,~~June 30, 2014, our assessment did not result in a material change in unrecognized tax benefits.

Our deferred tax assets were ~~$1.2~~$1.1 billion and $1.3 billion at ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013,~~2014, respectively, and were primarily due to the deferred deduction of allowance for credit losses and cumulative federal ~~and state~~ tax loss carryforwards that expire in varying amounts through fiscal 2034. The total deferred tax ~~asset related to the capital loss carryforward~~liability at June 30, 2014, net of these deferred tax assets, was ~~reduced by a valuation allowance of $1 million as of December~~$6.9 billion compared with $6.7 billion at March 31, ~~2013.~~2014. Realization with respect to the federal ~~and state~~ tax loss carryforwards is dependent on generating sufficient income prior to expiration of the loss carryforwards. Although realization is not assured, management believes ~~that apart from the valuation allowance,~~ it is more likely than not that the deferred tax assets will be realized. The amount of the deferred tax assets considered realizable could be reduced if management’s estimates change. ~~A valuation allowance was previously established for~~

On August 1, 2014, the New Jersey Tax Court issued its opinion in a ~~portion~~case involving TMCC which is favorable to TMCC. While it is possible that the State of New Jersey will appeal this decision, the ~~state~~decision may result in a release of FIN 48 liability and related accrued interest in the second quarter. We do not expect this decision to have a significant impact on the effective tax ~~loss carryforward that management had determined would not be realizable. The total deferred tax liability at December 31, 2013, net~~rate or on our Consolidated Statement of ~~these deferred tax assets, was $6.6 billion compared to $6.2 billion at March 31, 2013.~~Income and our Consolidated Balance Sheet.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 14 – Related Party Transactions

As of ~~December 31, 2013,~~June 30, 2014, there were no material changes to our related party agreements or relationships as described in our fiscal ~~2013~~2014 Form ~~10-K, except as described below.~~10-K. The following tables summarize amounts included in our Consolidated Statement of Income and Consolidated Balance Sheet under various related party agreements or relationships:

		Three Months Ended				Nine Months Ended				Three Months Ended
		December 31,				December 31,				June 30,
(Dollars in millions)	(Dollars in millions)		2013		2012		2013		2012	2014			2013
Net financing revenues:	Net financing revenues:
	Manufacturers’ subvention support and other revenues	$	251	$	238	$	733	$	700
	Credit support fees incurred	$	(21)	$	(18)	$	(61)	$	(53)
	Foreign exchange loss on loans payable to affiliates	$	-	$	-	$	-	$	(39)
	Interest expense on loans payable to affiliates	$	(1)	$	(1)	$	(2)	$	(5)
Manufacturers’ subvention support and other revenues										$	273		$	232
Credit support fees incurred										$	(21	)	$	(20	)
Interest expense on loans payable to affiliates										$	(1	)	$	-

Insurance earned premiums and contract revenues:	Insurance earned premiums and contract revenues:
	Affiliate insurance premiums and contract revenues	$	33	$	36	$	99	$	128
Affiliate insurance premiums and contract revenues										$	32		$	33

Investments and other income, net:	Investments and other income, net:
	Interest earned on notes receivable from affiliates	$	1	$	1	$	4	$	4
Interest earned on notes receivable from affiliates										$	1		$	1

Expenses:	Expenses:
	Shared services charges and other expenses	$	15	$	16	$	45	$	48
	Employee benefits expense	$	9	$	7	$	27	$	22
Shared services charges and other expenses										$	16		$	14
Employee benefits expense										$	6		$	9

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Note 14 – Related Party Transactions (Continued)

(Dollars in millions)	(Dollars in millions)	December 31, 2013		March 31, 2013		June 30, 2014			March 31, 2014
Assets:	Assets:
Cash and cash equivalents
Cash and cash equivalents in affiliates' commercial paper						$	50		$	-

Investments in marketable securities	Investments in marketable securities
	Investments in affiliates commercial paper	$	-	$	2
Investments in affiliates' commercial paper						$	16		$	-

Finance receivables, net	Finance receivables, net
	Accounts receivable from affiliates	$	78	$	22
	Direct finance lease receivables from affiliates	$	6	$	6
	Notes receivable under home loan programs	$	15	$	18
	Deferred retail subvention income from affiliates	$	(776)	$	(699)
Accounts receivable from affiliates						$	76		$	74
Direct finance receivables from affiliates						$	6		$	6
Notes receivable under home loan programs						$	14		$	15
Deferred retail origination costs paid to affiliates						$	1		$	1
Deferred retail subvention income from affiliates						$	(785	)	$	(768	)

Investments in operating leases, net	Investments in operating leases, net
	Leases to affiliates	$	7	$	7
	Deferred lease subvention income from affiliates	$	(761)	$	(604)
Leases to affiliates						$	7		$	7
Deferred lease subvention income from affiliates						$	(887	)	$	(806	)

Other assets	Other assets
	Notes receivable from affiliates	$	1,309	$	931
	Other receivables from affiliates	$	2	$	1
	Subvention support receivable from affiliates	$	118	$	88
Notes receivable from affiliates						$	790		$	1,172
Other receivables from affiliates						$	1		$	2
Subvention support receivable from affiliates						$	164		$	159

Liabilities:	Liabilities:
Other liabilities	Other liabilities
	Unearned affiliate insurance premiums and contract revenues	$	246	$	235
	Accounts payable to affiliates	$	51	$	192
	Notes payable to affiliate	$	24	$	48
Unearned affiliate insurance premiums and contract revenues						$	244		$	244
Accounts payable to affiliates						$	236		$	216
Notes payable to affiliate						$	23		$	22

Shareholder’s Equity:	Shareholder’s Equity:
	Dividends paid	$	665	$	1,487
	Stock-based compensation	$	2	$	2
Dividends paid						$	-		$	665
Stock-based compensation						$	2		$	2

~~Accounts receivable from affiliates~~

~~Accounts receivable from affiliates at December 31, 2013 included transactions with entities that were consolidated with another affiliate under the accounting guidance for variable interest entities.~~

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 15 – Segment Information

Financial information for our reportable operating segments for the three ~~and nine~~ months ended ~~December 31,~~June 30, 2014 and 2013 is summarized as follows (dollars in millions):

Finance Insurance Intercompany
Fiscal 2014: operations operations eliminations Total
Three Months Ended December 31, 2013

Total financing revenues $ 1,869 $ - $ 7 $ 1,876
Insurance earned premiums and contract revenues - 148 (7) 141
Investment and other income, net 22 46 - 68
Total gross revenues 1,891 194 - 2,085

Less:
Depreciation on operating leases 1,033 - - 1,033
Interest expense 386 - - 386
Provision for credit losses 63 - - 63
Operating and administrative expenses 190 50 - 240
Insurance losses and loss adjustment expenses - 57 - 57
Provision for income taxes 82 31 - 113
Net income $ 137 $ 56 $ - $ 193

Nine Months Ended December 31, 2013

Total financing revenues $ 5,495 $ - $ 21 $ 5,516
Insurance earned premiums and contract revenues - 444 (21) 423
Investment and other income, net 56 32 - 88
Total gross revenues 5,551 476 - 6,027

Less:
Depreciation on operating leases 2,950 - - 2,950
Interest expense 1,236 - - 1,236
Provision for credit losses 102 - - 102
Operating and administrative expenses 553 147 - 700
Insurance losses and loss adjustment expenses - 196 - 196
Provision for income taxes 267 48 - 315
Net income $ 443 $ 85 $ - $ 528

Total assets at December 31, 2013 $ 96,665 $ 3,651 $ (665) $ 99,651

Fiscal 2015:	Finance operations		Insurance operations			Intercompany eliminations			Total
Three Months Ended June 30, 2014

Total financing revenues	$	1,960	$	-		$	-		$	1,960
Insurance earned premiums and contract revenues		-		153			-			153
Investment and other income, net		20		15			-			35
Total gross revenues		1,980		168			-			2,148

Less:
Depreciation on operating leases		1,100		-			-			1,100
Interest expense		130		-			-			130
Provision for credit losses		38		-			-			38
Operating and administrative expenses		180		53			-			233
Insurance losses and loss adjustment expenses		-		70			-			70
Provision for income taxes		196		17			-			213
Net income	$	336	$	28		$	-		$	364

Total assets at June 30, 2014	$	101,641	$	3,855		$	(806	)	$	104,690

Fiscal 2014:
Three Months Ended June 30, 2013

Total financing revenues	$	1,788	$	-		$	7		$	1,795
Insurance earned premiums and contract revenues		-		146			(7	)		139
Investment and other income, net		12		(6	)		-			6
Total gross revenues		1,800		140			-			1,940

Less:
Depreciation on operating leases		951		-			-			951
Interest expense		536		-			-			536
Provision for credit losses		11		-			-			11
Operating and administrative expenses		180		47			-			227
Insurance losses and loss adjustment expenses		-		71			-			71
Provision for income taxes		45		8			-			53
Net income	$	77	$	14		$	-		$	91

Total assets at June 30, 2013	$	92,530	$	3,540		$	(715	)	$	95,355

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~~TOYOTA MOTOR CREDIT CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

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~~Note 15 – Segment Information (Continued)~~

~~Financial information for our reportable operating segments for the three and nine months ended December 31, 2012 is summarized as follows (dollars in millions):~~

Finance1
Insurance Intercompany
Fiscal 2013: operations operations eliminations Total
Three Months Ended December 31, 2012

Total financing revenues $ 1,815 $ - $ 6 $ 1,821
Insurance earned premiums and contract revenues - 146 (6) 140
Investment and other income, net 12 51 - 63
Total gross revenues 1,827 197 - 2,024

Less:
Depreciation on operating leases 907 - - 907
Interest expense 284 - - 284
Provision for credit losses 88 - - 88
Operating and administrative expenses 182 47 - 229
Insurance losses and loss adjustment expenses - 77 - 77
Provision for income taxes 126 30 - 156
Net income $ 240 $ 43 $ - $ 283

Nine Months Ended December 31, 2012

Total financing revenues $ 5,422 $ - $ 18 $ 5,440
Insurance earned premiums and contract revenues - 453 (18) 435
Investment and other income, net 33 103 - 136
Total gross revenues 5,455 556 - 6,011

Less:
Depreciation on operating leases 2,653 - - 2,653
Interest expense 625 - - 625
Provision for credit losses 107 - - 107
Operating and administrative expenses 542 132 - 674
Insurance losses and loss adjustment expenses - 231 - 231
Provision for income taxes 560 75 - 635
Net income $ 968 $ 118 $ - $ 1,086

Total assets at December 31, 2012 $ 90,184 $ 3,454 $ (463) $ 93,175
1 Certain prior period amounts have been reclassified to conform to the current period presentation.

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

Cautionary Statement Regarding Forward-Looking Information

Certain statements contained in this Form 10-Q or incorporated by reference herein are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and currently available information. However, since these statements are based on factors that involve risks and uncertainties, our performance and results may differ materially from those described or implied by such forward-looking statements. Words such as “believe,” “anticipate,” “expect,” “estimate,” “project,” “should,” “intend,” “will,” “may” or words or phrases of similar meaning are intended to identify forward-looking statements. We caution that the forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause actual results to differ materially from those in the forward-looking statements, including, without limitation, the risk factors set forth in “Item 1A. Risk Factors” of our Annual Report on Form 10-K (“Form 10-K”) for the fiscal year ended March 31, ~~2013~~2014 (“fiscal ~~2013”~~2014”), including the following:

Changes in general business, economic, and ~~economic~~geopolitical conditions, as well as in consumer demand and the competitive environment in the automotive markets in the United States;

A decline in TMS sales volume and the level of TMS sponsored subvention programs;

Increased competition from other financial institutions seeking to increase their share of financing ~~for~~ Toyota, Scion and Lexus vehicles;

Fluctuations in interest rates and currency exchange rates;

Fluctuations in the value of our investment securities or market prices;

Changes or disruptions in our funding environment or access to the global capital markets;

Failure or changes in commercial soundness of our counterparties and other financial institutions;

Changes in our credit ratings and those of TMC;

Changes in the laws and regulatory requirements, including as a result of recent financial services legislation, ~~federal and state regulatory examinations and investigations,~~ and related costs;

Natural disasters, changes in fuel prices, manufacturing disruptions and production suspensions of Toyota, Lexus and Scion vehicles models and related parts supply;

Operational risks, including security breaches or cyber attacks;

Challenges related to the relocation of our corporate headquarters to Plano, Texas;

Revisions to the estimates and assumptions for our allowance for credit losses;

Changes in prices of used vehicles and their effect on residual values of our off-lease vehicles and return rates;

The failure of a customer or dealer to meet the terms of any contract with us, or otherwise fail to perform as agreed; and

Recalls announced by TMS and the perceived quality of Toyota, Lexus and Scion vehicles.

Forward-looking statements speak only as of the date they are made. We will not update the forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking statements.

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OVERVIEW

Key Performance Indicators and Factors Affecting Our Business

In our finance operations, we generate revenue, income, and cash flows by providing retail financing, leasing, and dealer financing to vehicle and industrial equipment dealers and their customers. We measure the performance of our financing operations using the following metrics: financing volume, market share, financial leverage, financing margins, operating expense, residual value and credit loss metrics.

In our insurance operations, we generate revenue through marketing, underwriting, and claims administration related to covering certain risks of vehicle dealers and their customers. We measure the performance of our insurance operations using the following metrics: investment income, issued agreement volume, number of agreements in force, and loss metrics.

Our financial results are affected by a variety of economic and industry factors, including but not limited to, new and used vehicle markets, Toyota, Lexus and Scion sales volume, new vehicle incentives, consumer behavior, employment levels, our ability to respond to changes in interest rates with respect to both contract pricing and funding, the actual or perceived quality, safety or reliability of Toyota, Lexus and Scion vehicles, the financial health of the dealers we finance, and competitive pressure. Changes in these factors can influence financing and lease contract volume, the number of financing and lease contracts that default and the loss per occurrence, our inability to realize originally estimated contractual residual values on leased vehicles, the volume and performance of our insurance operations, and our gross margins on financing and leasing volume. Changes in the volume of ~~vehicles~~vehicle sales, vehicle dealers’ utilization of our insurance programs, or the level of coverage purchased by affiliates could materially impact our insurance operations. Additionally, our funding programs and related costs are influenced by changes in the global capital markets, prevailing interest rates, and our credit ratings and those of our parent companies, which may affect our ability to obtain cost effective funding to support earning asset growth.

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Fiscal ~~2014~~2015 First ~~Nine~~Three Months Operating Environment

During the first ~~nine months~~quarter of the fiscal year ending March 31, ~~2014~~2015 (“fiscal ~~2014”~~2015”), modest economic growth in the United States (“U.S.”) continued ~~at a moderate pace,~~ as ~~labor market conditions continued to show signs of improvement. The housing sector~~employment rates improved, ~~as housing starts continued to trend higher and~~ home prices ~~rose compared to the same period in fiscal 2013. Consumer spending improved as~~increased and consumer confidence strengthened. In addition, sales of motor vehicles improved compared to the same period in fiscal ~~2013.~~2014. While the overall U.S. economy has shown positive trends during the first ~~nine months~~quarter of fiscal ~~2014, the impact of U.S. fiscal policies and uncertainty in certain global economies may weigh on the U.S. economy in the near future.~~2015, consumer debt levels rose as consumers experienced greater access to credit.

Conditions in the global capital markets were generally stable during ~~most of~~ the first ~~nine months~~quarter of fiscal 2014. However, the U.S. capital markets and interest rate environment experienced periods of increased volatility due to the prospect of changes to U.S. monetary policy, including the tapering of purchases of U.S. government securities and mortgage-backed security instruments by the Federal Reserve announced2015, although experiencing a slight decrease in ~~December 2013. Despite these conditions, we~~long term rates. We continue to maintain broad global access to both domestic and international markets. Future changes in interest and foreign exchange rates could continue to result in volatility in our interest expense, ~~impacting~~which could affect our results of operations.

Industry-wide vehicle sales in the United States increased and sales incentives throughout the auto industry ~~increased~~remained elevated during the first ~~nine months~~quarter of fiscal ~~2014~~2015 as compared to the same period in the prior year. Vehicle sales by Toyota Motor Sales, USA, Inc. (“TMS”) increased 8 percent in the first ~~nine months~~quarter of fiscal ~~2014~~2015 compared to the same period in fiscal ~~2013.~~2014. The increase in TMS sales was attributable to ~~new product launches and return of~~strong consumer demand for new vehicles. In addition, we are currently experiencing a greater increase in lease volume as compared to retail volume.

Used vehicle values remained strong during the first ~~nine months~~quarter of fiscal ~~2014 compared to the same period in the prior year, despite slight declines.~~2015. However, it remains uncertain whether the used vehicle market will continue to be as strong as it has been in the past few years. Declines in used vehicle values and a higher proportion of lease volume as compared to retail volume could affect return rates, depreciation expense and credit losses.

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RESULTS OF OPERATIONS

Fiscal 2014 Summary
Fiscal 2015 First Quarter Summary

	Three Months Ended				Nine Months Ended				Three Months Ended
	December 31,				December 31,				June 30,
(Dollars in millions)	2013		2012		2013		2012		2014		2013
Net income:
Finance operations1	$	137	$	240	$	443	$	968	$	336	$	77
Insurance operations1		56		43		85		118		28		14
Total net income	$	193	$	283	$	528	$	1,086	$	364	$	91

1	Refer to Note 15 - Segment Information of the Notes to Consolidated Financial Statement for the total asset balances of our finance and insurance operations.

Our consolidated net income was ~~$528 million and $193~~$364 million for the first ~~nine months and third~~ quarter of fiscal ~~2014, respectively,~~2015, compared to ~~$1,086 million and $283~~$91 million for the same ~~periods~~period in fiscal ~~2013.~~2014. The ~~decrease for the first nine months of fiscal 2014~~increase was primarily due to ~~an increase~~a decrease of ~~$611~~$406 million in our interest expense driven by ~~valuation losses~~gains on derivatives ~~an increase of $297~~as compared to losses in the prior year. In addition, total financing revenues increased by $165 million, ~~in depreciation on operating leases and a decline of $48 million in investment and other income,~~ partially offset by an increase ~~in total financing revenues~~ of ~~$76 million and a decline of $320 million in the provision for income taxes. The decrease for the third quarter of fiscal 2014 was primarily due to an increase of $126~~$149 million in depreciation on operating leases and an increase of ~~$102 million in our interest expense driven by valuation losses on derivatives, partially offset by an increase in total financing revenues of $55 million, a decrease of $43~~$160 million in the provision for income ~~taxes and a decrease of $25 million in our provision for credit losses.~~taxes.

Our overall capital position ~~taking into account the payment of a $665 million dividend in September 2013 to Toyota Financial Services Americas Corporation (“TFSA”), decreased by $0.2~~increased $0.4 billion, ~~from March 31, 2013,~~ bringing total shareholder’s equity to ~~$7.4~~$8.1 billion at ~~December~~June 30, 2014, as compared to March 31, ~~2013.~~2014. Our debt increased to ~~$82.7~~$86.6 billion at ~~December 31, 2013~~June 30, 2014 from ~~$78.8~~$85.4 billion at March 31, ~~2013.~~2014. Our debt-to-equity ratio ~~increased to 11.2~~of 10.6 at ~~December 31, 2013 compared~~June 30, 2014 remained relatively consistent with a ratio of ~~10.4~~11.0 at March 31, ~~2013.~~2014.

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Finance Operations	Finance Operations

		Three Months Ended						Nine Months Ended						Three Months Ended
		December 31,				Percentage		December 31,				Percentage		June 30,				Percentage
(Dollars in millions)	(Dollars in millions)		2013	20121		Change		2013		20121		Change		2014		2013		Change
Financing revenues:	Financing revenues:
Operating lease	Operating lease	$	1,290	$	1,197	8	%	$	3,754	$	3,541	6	%	$	1,403	$	1,209		16	%
Retail2			475		514	(8)	%		1,436		1,571	(9)	%
Retail1															456		478		(5	)%
Dealer	Dealer		104		104	-	%		305		310	(2)	%		101		101		-	%
Total financing revenues	Total financing revenues		1,869		1,815	3	%		5,495		5,422	1	%		1,960		1,788		10	%

Investment and other income, net			22		12	83	%		56		33	70	%
Investment and other income															20		12		67	%
Gross revenues from finance operations	Gross revenues from finance operations		1,891		1,827	4	%		5,551		5,455	2	%		1,980		1,800		10	%

Less:	Less:
Depreciation on operating leases															1,100		951		16	%
Interest expense															130		536		(76	)%
Provision for credit losses															38		11		245	%
Operating and administrative expenses															180		180		-	%
Provision for income taxes															196		45		336	%
Net income from finance operations														$	336	$	77		336	%
	Depreciation on operating leases		1,033		907	14	%		2,950		2,653	11	%
	Interest expense		386		284	36	%		1,236		625	98	%
	Provision for credit losses		63		88	(28)	%		102		107	(5)	%
	Operating and administrative expenses		190		182	4	%		553		542	2	%
	Provision for income taxes		82		126	(35)	%		267		560	(52)	%
Net income from finance
	operations	$	137	$	240	(43)	%	$	443	$	968	(54)	%

1 Certain prior period amounts have been reclassified to conform to the current period presentation.
2 Includes direct finance lease revenues.
1 Includes direct finance lease revenues.

Our finance operations reported net income of ~~$443 million and $137~~$336 million for the first ~~nine months and third~~ quarter of fiscal ~~2014, respectively,~~2015, compared to ~~$968 million and $240~~$77 million for the same ~~periods~~period in fiscal ~~2013.~~2014. Finance operations results for the first ~~nine months~~quarter of fiscal ~~2014 decreased~~2015 increased as compared to the same period in fiscal ~~2013~~2014 primarily due to ~~an increase~~a decrease of ~~$611~~$406 million in interest expense driven by ~~valuation losses~~gains on derivatives ~~and~~as compared to losses in the prior year. In addition, total financing revenues increased by $172 million, partially offset by an increase of $297 million in depreciation on operating leases, partially offset by a decline of $293 million in the provision for income taxes. Finance operations results for the third quarter of fiscal 2014 decreased as compared to the same period in fiscal 2013 primarily due to an increase of $126$149 million in depreciation on operating leases and an increase of ~~$102 million in interest expense driven by valuation losses on derivatives, partially offset by an increase of $54 million in total financing revenues, a decline of $44~~$151 million in the provision for income ~~taxes and a decline of $25 million in the provision for credit losses.~~taxes.

Financing Revenues

Total financing revenues increased ~~1 percent and 3 percent~~10% during the first ~~nine months and third~~ quarter of fiscal ~~2014~~2015 as compared to the same ~~periods~~period in fiscal ~~2013~~2014 due to the following factors:

Operating lease revenues increased ~~6 percent and 8~~16 percent in the first ~~nine months and third~~ quarter of fiscal ~~2014, respectively,~~2015, as compared to the same ~~periods~~period in fiscal ~~2013,~~2014, primarily due to higher average outstanding earning asset balances, partially offset by lower portfolio yields.

Retail contract revenues decreased ~~9 percent and 8~~5 percent in the first ~~nine months and third~~ quarter of fiscal ~~2014, respectively,~~2015, as compared to the same ~~periods~~period in fiscal ~~2013,~~2014, primarily due to a decrease in our portfolio yields, partially offset by higher average outstanding earning asset balances.

Dealer financing revenues ~~decreased 2 percent~~remained unchanged in the first ~~nine months of fiscal 2014 and were consistent in the third~~ quarter of fiscal ~~2014,~~2015 as compared to the same ~~periods~~period in fiscal ~~2013, primarily due to a decrease in our portfolio yields, partially offset by higher average outstanding earning asset balances.~~2014.

Our total portfolio, which includes operating lease, retail, and dealer financing, had a yield of ~~4.0 percent and~~ 3.8 percent during the first ~~nine months and third~~ quarter of fiscal ~~2014, respectively,~~2015 compared to ~~4.6 and 4.5~~4.0 percent for the same ~~periods~~period in fiscal ~~2013 due primarily to decreases in our retail portfolio yields.~~ 2014. Lower yields were the result of the maturity of higher yielding earning assets being replaced by lower yielding earning assets during the first ~~nine months and third~~ quarter of fiscal ~~2014.~~2015.

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Depreciation on Operating Leases

Depreciation on operating leases increased ~~11 percent and 14~~16 percent during the first ~~nine months and third~~ quarter of fiscal ~~2014, respectively,~~2015, as compared to the same ~~periods~~period in fiscal ~~2013.~~2014. The increase in depreciation was primarily attributable to an increase in average operating lease units outstanding ~~coupled with a decline in used vehicle values~~ during the first ~~nine months and third~~ quarter of fiscal ~~2014~~2015 as compared to the same ~~periods~~period in fiscal ~~2013.~~2014.

Interest Expense

Our liabilities consist mainly of fixed and floating rate debt, denominated in various currencies, which we issue in the global capital markets, while our assets consist primarily of U.S. dollar denominated, fixed rate receivables. We enter into interest rate swaps and foreign currency swaps to hedge the interest rate and foreign currency risks that result from the different characteristics of our assets and liabilities. The following table summarizes the consolidated components of interest expense:

	Three Months Ended				Nine Months Ended				Three Months Ended
	December 31,				December 31,				June 30,
(Dollars in millions)	2013		2012		2013		2012		2014			2013
Interest expense on debt	$	325	$	330	$	963	$	1,014	$	321		$	318
Interest expense on derivatives		(33)		(4)		(60)		6		(33	)		(9	)
Interest expense on debt and derivatives		292		326		903		1,020		288			309

Ineffectiveness related to hedge accounting derivatives		(1)		(2)		(3)		(8)		-			(1	)
Gain on non-hedge accounting foreign currency transactions		(87)		(189)		(185)		(37)
Loss (gain) on non-hedge accounting foreign currency swaps		153		224		384		(14)
Loss (gain) on non-hedge accounting interest rate swaps		29		(75)		137		(336)
Loss (gain) on non-hedge accounting foreign currency transactions										80			(450	)
(Gain) loss on non-hedge accounting foreign currency swaps										(155	)		566
(Gain) loss on non-hedge accounting interest rate swaps										(83	)		112
Total interest expense	$	386	$	284	$	1,236	$	625	$	130		$	536

During the first ~~nine months~~quarter of fiscal ~~2014,~~2015, total interest expense ~~increased~~decreased to ~~$1,236~~$130 million from ~~$625~~$536 million during the same period of fiscal ~~2013.~~2014. The primary driver of the ~~increase~~decrease in total interest expense was a decrease in swap rates in the first quarter of fiscal 2015, resulting in gains on foreign currency swaps net of the associated foreign currency transactions and non-hedge accounting interest rate swaps. During the first quarter of fiscal 2014, we experienced an increase in swap rates ~~during the first nine months of fiscal 2014,~~ resulting in ~~valuation~~ losses on non-hedge accounting interest rate swaps and foreign currency swaps net of the associated foreign currency transactions and was partially offset by a decrease in interest expense on debt. Although the notional amount of debt increased during the first nine months of fiscal 2014 compared to the same period in fiscal 2013, the average interest rate on our outstanding debt declined due to the combined effects of higher interest rates on maturing debt and lower interest rates on newly issued debt. During the third quarter of fiscal 2014, interest expense increased to $386 million from $284 million during the same period of fiscal 2013 primarily as a result of swap rate increases causing a valuation loss on our non-hedge accounting interest rate swaps.transactions.

Interest expense on debt primarily represents net interest settlements and changes in accruals on secured and unsecured notes and loans payable and commercial paper, and includes amortization of discount and premium, debt issuance costs, and basis adjustments. Interest expense on debt ~~decreased~~increased slightly to ~~$963 million and $325~~$321 million during the first ~~nine months and third~~ quarter of fiscal ~~2014~~2015 from ~~$1,014 million and $330~~$318 million in the same ~~periods~~period in fiscal ~~2013~~2014 primarily as a result of higher debt balances, partially offset by a lower weighted average interest rate on our debt ~~portfolio, partially offset by higher debt balances.~~portfolio.

Interest expense on derivatives represents net interest settlements and changes in accruals on both hedge and non-hedge accounting interest rate and foreign currency derivatives. During the first ~~nine months and third~~ quarter of fiscal ~~2014,~~2015, we recorded net interest income of ~~$60 million and~~ $33 million, ~~respectively,~~ compared to net interest ~~expense of $6 million and net interest~~ income of $4$9 million ~~respectively,~~ during the same ~~periods~~period of fiscal ~~2013.~~2014. The increase in interest income on derivatives was due to lower average 3-month LIBOR compared to the first quarter of fiscal 2014.

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Gain or loss on foreign currency transactions represents the revaluation of foreign currency denominated debt transactions for which hedge accounting has not been elected. We use foreign currency swaps to economically hedge these foreign currency transactions. During the first ~~nine months and third~~ quarter of fiscal ~~2014,~~2015, we experienced ~~losses~~a decrease in swap rates, resulting in a gain of ~~$199 million and $66~~$75 million on our foreign currency transactions net of the associated foreign currency swaps. ~~The losses~~We recorded a loss of $116 million during the ~~first nine months~~same period of fiscal 2014, ~~resulted from~~as a result of an increase in swap ~~rates in certain foreign currencies in which our currency swaps are denominated. During the first nine months and third quarter of fiscal 2013, we~~rates.

We recorded a gain of ~~$51 million and a loss of $35 million, respectively, on our foreign currency transactions net of the associated foreign currency swaps.~~

~~We recorded valuation losses of $137 million and $29~~$83 million on non-hedge accounting interest rate swaps during the first ~~nine months and third~~ quarter of fiscal 2014, respectively, as a result of increases in U.S. dollar swap rates. We recorded valuation gains of $336 million and $75 million on non-hedge accounting interest rate swaps during the first nine months and third quarter of fiscal 2013, respectively,2015 as a result of a decrease in U.S dollar swap rates. During the first quarter of fiscal 2014, U.S. dollar swap ~~rates.~~rates increased resulting in a loss of $112 million.

Future changes in interest and foreign exchange rates could continue to result in significant volatility in our interest expense, thereby affecting our results of operations.

Provision for Credit Losses

We recorded a provision for credit losses of ~~$102 million and $63~~$38 million for the first ~~nine months and third~~ quarter of fiscal ~~2014,~~2015, compared to ~~$107 million and $88~~$11 million for the same ~~periods~~period in fiscal ~~2013.~~2014. The ~~decrease~~increase in the provision for credit losses for fiscal ~~2014~~2015 was due to ~~lower~~slightly higher default frequency ~~as a result of improved delinquency levels. Lower default frequency was partially offset by higher~~and loss severity ~~driven by declines~~compared to the same period in ~~used vehicle values.~~fiscal 2014. The overall credit quality of our consumer portfolio ~~in the first nine months of fiscal 2014~~has continued to benefit from our continued focus on purchasing practices and collection efforts.

Operating and Administrative Expenses

Operating and administrative expenses increased during the first ~~nine months and third~~ quarter of fiscal ~~2014~~2015 compared to the same ~~periods~~period in fiscal ~~2013~~2014 primarily ~~due to~~reflecting increases ~~in employee expenses.~~across various general expense categories.

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Insurance Operations	Insurance Operations

The following table summarizes key results of our Insurance Operations:	The following table summarizes key results of our Insurance Operations:													The following table summarizes key results of our Insurance Operations:

		Three Months Ended						Nine Months Ended							Three Months Ended
		December 31,				Percentage		December 31,				Percentage			June 30,					Percentage
(Dollars in millions)	(Dollars in millions)	2013		2012		Change		2013		2012		Change			2014		2013			Change
Agreements (units in thousands)	Agreements (units in thousands)
	Issued		427		379	13	%		1,361		1,161	17	%
	In force		5,968		5,751	4	%		5,968		5,751	4	%
Issued																500		449			11	%
Average in force																6,078		5,805			5	%

Insurance earned premiums and contract revenues	Insurance earned premiums and contract revenues	$	148	$	146	1	%	$	444	$	453	(2)	%		$	153	$	146			5	%
Investment and other income, net	Investment and other income, net		46		51	(10)	%		32		103	(69)	%			15		(6	)		350	%
Gross revenues from insurance
	operations		194		197	(2)	%		476		556	(14)	%
Gross revenues from insurance operations																168		140			20	%

Less:	Less:
Insurance losses and loss
	adjustment expenses		57		77	(26)	%		196		231	(15)	%
Operating and administrative
	expenses		50		47	6	%		147		132	11	%
Insurance losses and loss adjustment expenses																70		71			(1	)%
Operating and administrative expenses																53		47			13	%
Provision for income taxes	Provision for income taxes		31		30	3	%		48		75	(36)	%			17		8			113	%
Net income from insurance operations	Net income from insurance operations	$	56	$	43	30	%	$	85	$	118	(28)	%		$	28	$	14			100	%

Our insurance operations reported net income of ~~$85 million and $56~~$28 million for the first ~~nine months and third~~ quarter of fiscal ~~2014,~~2015, compared to ~~$118 million and $43~~$14 million for the same ~~periods~~period in fiscal ~~2013.~~2014. The ~~decrease~~increase in net income ~~for the first nine months of fiscal 2014~~ was primarily attributable to a ~~$71~~$21 million ~~decrease~~increase in investment and other income ~~a $15 million increase in operating and administrative expenses~~ and a $9 million decrease in insurance earned premiums and contract revenues, partially offset by a $35 million decrease in insurance losses and loss adjustment expenses and a $27 million decrease in provision for income taxes. The increase in net income for the third quarter of fiscal 2014 was attributable to a $20 million decrease in insurance losses and loss adjustment expenses and a $2$7 million increase in insurance earned premiums and contract revenues, partially offset by a $5$9 million ~~decrease~~increase in ~~investment~~provision for income taxes and ~~other income,~~ a $3$6 million increase in operating and administrative ~~expenses and a $1 million increase in provision for income taxes.~~expenses.

Agreements issued increased by ~~17 percent and 13~~11 percent during the first ~~nine months and third~~ quarter of fiscal ~~2014~~2015 compared to the same period in fiscal ~~2013.~~2014. The increase was primarily due to the ~~overall~~launch of our tire and wheel product in December 2013. The increase inwas also driven by higher TMS vehicle sales as well as improved sales effectiveness. The average number of agreements in force ~~which represent active insurance policies written and contracts issued,~~ increased by 45 percent ~~at December 31, 2013~~during the first quarter of fiscal 2015 compared to the ~~prior year,~~same period in fiscal 2014 primarily due to ~~an increase in the number of prepaid maintenance agreements issued.~~increased issuances.

Our insurance operations reported insurance earned premiums and contract revenues of ~~$444 million and $148~~$153 million for the first ~~nine months and third~~ quarter of fiscal ~~2014,~~2015, compared to ~~$453 million and~~ $146 million for the same ~~periods~~period in fiscal ~~2013.~~2014. Insurance earned premiums and contract revenues represent revenues from agreements in force and are affected by sales volume as well as the level, age, and mix of agreements in force. Our insurance earned premiums and contract revenues ~~decreased slightly for~~increased during the first ~~nine months~~quarter of fiscal ~~2014,~~2015, compared to the same period in fiscal ~~2013, primarily due a decrease~~2014 in correlation with the average number of agreements in force during the period. Our insurance earned premiums and contract revenues increased slightly for the third quarter of fiscal 2014, compared to the same period in fiscal 2013, primarily due to an increase in the average number of agreements in ~~force during the period.~~

force.

Our insurance operations reported investment and other income of ~~$32 million and $46~~$15 million for the first ~~nine months and third~~ quarter of fiscal ~~2014,~~2015, compared to ~~$103 million~~a loss in investment and ~~$51~~other income of $6 million for the same ~~periods~~period in fiscal ~~2013.~~2014. Investment and other income consists primarily of dividend and interest income, realized gains and losses and other-than-temporary ~~impairments~~impairment on available-for-sale securities, if any. In the first quarter of fiscal 2015, we had an insignificant amount of other-than-temporary impairment on available-for-sale securities compared to $30 million of other-than-temporary impairment for the same period in fiscal 2014. The impairment recognized in the first quarter of the prior year related to our fixed income mutual funds and resulted from interest rate volatility. The decrease in ~~investment and other income for~~other-than-temporary impairments during the first ~~nine months and third~~ quarter of fiscal 2014 were due to other-than-temporary impairment write-downs of $54 million and $1 million, respectively, for various fund investments and fixed income securities resulting from interest rate volatility, as well as2015 was partially offset by a decrease in dividend income due to overall lower yields and ~~interest income and~~lower net realized gains on available-for-sale securities. ~~Continued volatility~~Volatility in interest rates could result in further declines in the market value of investments and may result in additional ~~future write-downs if conditions indicate that additional investments are other-than-temporarily impaired.~~ other-than-temporary impairment charges.

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Our insurance operations reported insurance losses and loss adjustment expenses of ~~$196 million and $57~~$70 million for the first ~~nine months and third~~ quarter of fiscal ~~2014, compared to $231 million and $77~~2015, which is consistent with $71 million for the same ~~periods~~period in fiscal ~~2013.~~2014. Insurance losses and loss adjustment expenses incurred are a function of the amount of covered risks, the frequency and severity of claims associated with the agreements in force, and the level of risk retained by our insurance operations. Insurance losses and loss adjustment expenses include amounts paid and accrued for reported losses, estimates of losses incurred but not reported, and any related claim adjustment expenses. The decrease in insurance losses and loss adjustment expenses for the first nine months and third quarter of fiscal 2014 compared to the same periods in fiscal 2013 was primarily due to lower losses on our inventory insurance, prepaid maintenance and vehicle service agreement products. The decrease in our inventory insurance losses was primarily due to higher levels of losses as a result of the occurrence of Hurricane Sandy in October 2012, which caused wide-spread flooding and power outages across large portions of the Northeastern United States. The decrease in our prepaid maintenance losses was primarily due to a decrease in claim frequency as a result of the expiration of affiliate agreements issued in support of special TMS sales and customer loyalty programs. The decrease in losses attributable to our vehicle service agreements was primarily due to lower claim frequency as a result of enhanced focus on loss mitigation.

Our insurance operations reported operating and administrative expenses of ~~$147 million and $50~~$53 million for the first ~~nine months and third~~ quarter of fiscal ~~2014,~~2015, compared to ~~$132 million and~~ $47 million for the same ~~periods~~period in fiscal ~~2013.~~2014. The increase was attributable to higher product expenses ~~general operating expenses~~ and insurance dealer back-end program expenses, ~~which~~partially offset by a decrease in general operating expenses. Insurance dealer back-end program expenses are incentives or expense reduction programs we provide to dealers based on their sales volume or underwriting performance.

Provision for Income Taxes

Our total provision for income taxes for the first ~~nine months and third~~ quarter of fiscal ~~2014~~2015 was ~~$315~~$213 million ~~and $113 million, respectively,~~ compared to ~~$635 million and $156~~$53 million for the same ~~periods~~period in fiscal ~~2013.~~2014. Our effective tax rate was 37 percent for ~~both~~ the first ~~nine months and third~~ quarter of both fiscal ~~2014~~2015 and ~~37 percent and 36 percent for the first nine months and third quarter of~~ fiscal ~~2013, respectively.~~2014. The change in our provision for income taxes is consistent with the change in our income before tax in the first ~~nine months and third~~ quarter of fiscal ~~2014~~2015 compared to the same ~~periods~~period in fiscal ~~2013.~~2014.

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FINANCIAL CONDITION

Vehicle Financing Volume and Net Earning Assets	Vehicle Financing Volume and Net Earning Assets												Vehicle Financing Volume and Net Earning Assets

The composition of our vehicle contract volume and market share is summarized below:

	Three Months Ended						Nine Months Ended							Three Months Ended
	December 31,				Percentage		December 31,				Percentage			June 30,						Percentage
(units in thousands):	2013		2012		Change		2013		2012		Change			2014			2013			Change
TMS new sales volume1	425		401		6	%	1,342		1,244		8	%			477			441			8	%

Vehicle financing volume2
Vehicle financing volume:2
New retail contracts	167		160		4	%	545		536		2	%			176			176			-	%
Used retail contracts	73		74		(1)	%	233		217		7	%			72			78			(8	)%
Lease contracts	107		79		35	%	340		238		43	%			139			108			29	%
Total	347		313		11	%	1,118		991		13	%			387			362			7	%

TMS subvened vehicle financing volume (units included in the above table):	TMS subvened vehicle financing volume (units included in the above table):												TMS subvened vehicle financing volume (units included in the above table):
New retail contracts	92		94		(2)	%	321		305		5	%			116			101			15	%
Used retail contracts	19		28		(32)	%	65		68		(4)	%			18			24			(25	)%
Lease contracts	99		62		60	%	313		193		62	%			127			97			31	%
Total	210		184		14	%	699		566		23	%			261			222			18	%

TMS subvened vehicle financing volume as a percent of vehicle financing volume:	TMS subvened vehicle financing volume as a percent of vehicle financing volume:												TMS subvened vehicle financing volume as a percent of vehicle financing volume:
New retail contracts	55.1	%	58.8	%			58.9	%	56.9	%					65.9	%		57.4	%
Used retail contracts	26.0	%	37.8	%			27.9	%	31.3	%					25.0	%		30.8	%
Lease contracts	92.5	%	78.5	%			92.1	%	81.1	%					91.4	%		89.8	%
Overall subvened contracts	60.5	%	58.8	%			62.5	%	57.1	%					67.4	%		61.3	%

Market share:3
Retail contracts	39.0	%	39.9	%			40.5	%	43.0	%					36.9	%		39.9	%
Lease contracts	25.2	%	19.7	%			25.3	%	19.1	%					28.9	%		24.3	%
Total	64.2	%	59.6	%			65.8	%	62.1	%					65.8	%		64.2	%

Represents total domestic TMS sales of new Toyota, Lexus and Scion vehicles excluding sales under dealer rental car and commercial fleet programs and sales of a private Toyota distributor. TMS new sales volume iswas comprised of approximately 85% Toyota (including Scion) and 15% Lexus vehicles for the first ~~nine months of fiscal 2014 and 81% Toyota and 19% Lexus vehicles for the third~~ quarter of fiscal ~~2014.~~2015. TMS new sales volume iswas comprised of approximately ~~85%~~87% Toyota (including Scion) and ~~15%~~13% Lexus vehicles for the first ~~nine months of fiscal 2013 and 83% Toyota and 17% Lexus vehicles for the third~~ quarter of fiscal ~~2013.~~2014.

Total financing volume iswas comprised of approximately ~~81%~~80% Toyota ~~16%~~(including Scion), 17% Lexus, and 3% non-Toyota/Lexus vehicles for the first ~~nine months of fiscal 2014 and approximately 78% Toyota, 19% Lexus, and 3% non-Toyota/Lexus vehicles third~~ quarter of fiscal ~~2014. Total financing volume is comprised of~~2015 and approximately 82% Toyota (including Scion), 15% Lexus, and 3% non-Toyota/Lexus vehicles for the first ~~nine months of fiscal 2013 and 81% Toyota, 16% Lexus, and 3% non-Toyota/Lexus for the third~~ quarter of fiscal ~~2013.~~2014.

3	Represents the percentage of total domestic TMS sales of new Toyota, Lexus and Scion vehicles financed by us, excluding ~~non-Toyota/Lexus sales,~~ sales under dealer rental car and commercial fleet programs and sales of a private Toyota distributor.

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Vehicle Financing Volume

The volume of our retail and lease contracts, which are acquired primarily from Toyota and Lexus vehicle dealers, is dependent upon TMS sales volume and ~~subvention.~~subvention. Vehicle sales by TMS increased 8 percent ~~and 6 percent~~ for the first ~~nine months and third~~ quarter of fiscal ~~2014, respectively,~~2015 compared to the same ~~periods~~period in fiscal ~~2013~~2014 driven by ~~new product and model launches and~~ higher consumer demand.

Our financing volume increased 137 percent and market share also increased in the first ~~nine months~~quarter of fiscal ~~2014~~2015 compared to the same period in fiscal ~~2013.~~2014. The increase in volume was driven primarily by the ~~increase in~~increased consumer demand and an increase in ~~retail and lease~~ subvention. Lease volume increased more significantly than retail volume in the first ~~nine months and third~~ quarter of fiscal ~~2014~~ 2015 due primarily to a higher focus by TMS on lease subvention compared to the same ~~periods~~period in fiscal ~~2013.~~2014.

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The composition of our net earning assets is summarized below:

(Dollars in millions)	June 30, 2014			March 31, 2014			Percentage Change
Net Earning Assets
Finance receivables, net
Retail finance receivables, net1		$	49,685		$	49,340		1	%
Dealer financing, net2			15,582			15,836		(1	)%
Total finance receivables, net			65,267			65,176		-	%
Investments in operating leases, net			26,518			24,769		7	%
Net earning assets		$	91,785		$	89,945		2	%

Dealer Financing
(Number of dealers serviced)
Toyota and Lexus dealers2			1,003			1,001		-	%
Vehicle dealers outside of the
Toyota/Lexus dealer network			483			482		-	%
Industrial equipment dealers			137			137		-	%
Total number of dealers receiving
wholesale financing			1,623			1,620		-	%

Dealer inventory outstanding (units in thousands)			308			327		(6	)%

The composition of our net earning assets is summarized below:
Percentage
(Dollars in millions) December 31, 2013 March 31, 2013 Change
Net Earning Assets
Finance receivables, net

Retail finance receivables, net1
$ 49,632 $ 47,679 4 %
Dealer financing, net 16,494 14,888 11 %
Total finance receivables, net 66,126 62,567 6 %
Investments in operating leases, net 23,541 20,384 15 %
Net earning assets $ 89,667 $ 82,951 8 %

Dealer Financing
(Number of dealers serviced)
Toyota and Lexus dealers2
1,003 996 1 %
Vehicle dealers outside of the
Toyota/Lexus dealer network 479 480 - %
Industrial equipment dealers 139 140 (1) %
Total number of dealers receiving
wholesale financing 1,621 1,616 - %

Dealer inventory outstanding (units in thousands) 350 300 17 %

1 Includes direct finance leases.

2 Includes wholesale and other credit arrangements in which we participate as part of a syndicate of lenders.

Retail Contract Volume and Earning Assets

Our ~~new~~ retail contract volume ~~increased 2 percent~~decreased and ~~4 percent~~our retail finance receivables, net were relatively consistent during the first ~~nine months and third~~ quarter of fiscal ~~2014, respectively,~~2015 as compared to the same ~~periods~~period in fiscal 2013. In addition, our used retail contract volume increased 7 percent during the first nine months of fiscal 2014 and decreased 1 percent during the third quarter of fiscal 2014 compared to the same periods in fiscal 2013. The increase in new and used vehicle financing volume during the first nine months of fiscal 2014 contributed to the increase in retail finance receivables, net at December 31, 2013.2014.

Lease Contract Volume and Earning Assets

Our vehicle lease contract volume during the first ~~nine months and third~~ quarter of fiscal ~~2014~~2015 increased 4329 percent ~~and 35 percent, respectively,~~ as compared to the same ~~periods~~period in fiscal ~~2013~~2014. Much of the increase during the first ~~nine months and third~~ quarter of fiscal ~~2014~~2015 was attributable to an increase in TMS sales and a higher focus on lease subvention, ~~during the periods,~~ resulting in a 157 percent increase in investments in operating leases, net at ~~December 31, 2013~~June 30, 2014 as compared to the balance at March 31, ~~2013.~~2014.

Dealer Financing and Earning Assets

Dealer financing, net ~~increased 11~~decreased 1 percent from March 31, ~~2013,~~2014, primarily due to ~~an increase~~decreases in dealer inventory outstanding. The total number of dealers receiving wholesale financing was relatively consistent with March 31, ~~2013.~~2014.

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Residual Value Risk

The primary factors affecting our exposure to residual value risk are the levels at which residual values are established at lease inception, current economic conditions and outlook, projected end-of-term market values, and the resulting impact on vehicle lease return rates and loss severity.

~~We periodically~~On a quarterly basis, we review the estimated end-of-term ~~residual~~market values of leased vehicles to assess the appropriateness of our carrying values. To the extent the estimated end-of-term market value of a leased vehicle is lower than the residual value established at lease inception, the ~~estimated~~ residual value of the leased vehicle is adjusted downward so that the carrying value at lease end will approximate the estimated end-of-term market value. ~~These~~For operating leases, adjustments are made on a straight-line basis over ~~time for~~the remaining terms of the lease contracts and are included in depreciation on operating leases ~~by recording depreciation expense~~ in the Consolidated Statement of ~~Income. Gains or losses on vehicles sold~~Income as a change in accounting estimate. For direct finance leases, adjustments are made at the time of assessment and are recorded as a reduction of direct finance lease ~~termination are also recorded~~revenues which is included in ~~depreciation expense~~our retail revenues in the Consolidated Statement of Income.

Depreciation on Operating Leases

		Three Months Ended						Nine Months Ended						Three Months Ended
		December 31,				Percentage		December 31,				Percentage		June 30,						Percentage
		2013		20121		Change		2013		20121		Change		2014			2013			Change
Depreciation on operating	Depreciation on operating
	leases (dollars in millions)	$	1,033	$	907	14	%	$	2,950	$	2,653	11	%
leases (dollars in millions)															$	1,100		$	951		16	%
Average operating lease units	Average operating lease units
	outstanding (in thousands)		881		810	9	%		853		798	7	%

1 Certain prior period amounts have been reclassified to conform to the current period presentation.
outstanding (in thousands)																974			827		18	%

Depreciation expense on operating leases increased 1116 percent ~~and 14 percent~~ during the first ~~nine months and third~~ quarter of fiscal ~~2014~~2015 as compared to the same ~~periods~~period in fiscal ~~2013,~~2014, due primarily to an increase in the average operating lease units outstanding ~~over the same periods and~~. As a ~~decline in used vehicle values during the first nine months~~result of ~~fiscal 2014. The level of~~recent increasing lease ~~maturities during the first nine months of fiscal 2014 increased as compared to the same period in fiscal 2013. Lease~~volume, lease maturities are expected to continue to remain higher than our historical ~~pattern for~~levels. In addition, our lease volume currently includes more shorter term leases. This trend, coupled with the ~~next few years as a result of the recent increase in leasing volume. This increase~~continued lease portfolio growth, could affect return rates, ~~used vehicle values~~residual value risk and depreciation expense.

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Credit Risk

Credit Loss Experience

The overall credit quality of our consumer portfolio ~~in the first nine months of fiscal 2014~~ continued to benefit from our ~~continued~~ focus on purchasing practices and collection efforts. In addition, subvention contributes to our overall portfolio quality, as subvened contracts typically ~~are of better~~have higher credit ~~quality~~scores than non-subvened contracts.

			December 31,			March 31,			December 31,					June 30,			March 31,			June 30,
			2013			2013			2012					2014			2014			2013
Net charge-offs as a percentage of average gross earning assets 1	Net charge-offs as a percentage of average gross earning assets 1											Net charge-offs as a percentage of average gross earning assets 1
		Finance receivables		0.29	%		0.29	%		0.31	%		Finance receivables		0.21	%		0.31	%		0.19	%
		Operating leases		0.19	%		0.18	%		0.17	%		Operating leases		0.15	%		0.19	%		0.11	%
		Total		0.27	%		0.27	%		0.28	%		Total		0.20	%		0.28	%		0.17	%

Default frequency as a percentage of outstanding contracts	Default frequency as a percentage of outstanding contracts			1.13	%		1.23	%		1.27	%	Default frequency as a percentage of outstanding contracts			1.22	%		1.17	%		1.21	%
Average loss severity per unit	Average loss severity per unit		$	6,208		$	5,737		$	5,508		Average loss severity per unit		$	6,293		$	6,341		$	6,226

Aggregate balances for accounts 60 or more days past due as a	Aggregate balances for accounts 60 or more days past due as a											Aggregate balances for accounts 60 or more days past due as a
	percentage of gross earning assets 2											percentage of gross earning assets 2
		Finance receivables 3		0.27	%		0.19	%		0.27	%		Finance receivables 3		0.24	%		0.19	%		0.22	%
		Operating leases 3		0.20	%		0.18	%		0.23	%		Operating leases 3		0.17	%		0.15	%		0.18	%
		Total		0.25	%		0.19	%		0.26	%		Total		0.22	%		0.18	%		0.21	%

1	Net charge-off ratios have been annualized using ~~nine~~three month results for the periods ended ~~December 31, 2013~~June 30, 2014 and ~~2012.~~June 30, 2013.

2	Substantially all retail, direct finance lease and operating lease receivables do not involve recourse to the dealer in the event of customer default.

3	Includes accounts in bankruptcy and excludes accounts for which vehicles have been repossessed.

The level of credit losses primarily reflects two factors: default frequency and loss severity. Net charge-offs as a percentage of average gross earning assets ~~remained relatively consistent at 0.27~~increased from 0.17 percent at ~~December 31,~~June 30, 2013 ~~compared~~ to ~~0.28~~0.20 percent at ~~December 31, 2012.~~

June 30, 2014 due to slightly higher default frequency and loss severity. Default frequency as a percentage of outstanding contracts ~~decreased to 1.13~~remained relatively consistent at 1.22 percent during the first ~~nine months~~quarter of fiscal ~~2014~~2015 compared to ~~1.27~~1.21 percent during the same period in fiscal 2013. The improvement in default frequency was driven by our continued focus on collection efforts and general improvement in overall portfolio quality. Default frequency was higher for the fiscal year ended March 31, 2013 compared to the first nine months of fiscal 2014 due to units lost or damaged in Hurricane Sandy in the latter half of fiscal 2013.

2014. Our average loss severity for the first ~~nine months~~quarter of fiscal ~~2014~~2015 was ~~affected by the decline in used vehicle values~~slightly higher compared to the first ~~nine months~~quarter of fiscal ~~2013. Severity~~2014. Our delinquencies for the first ~~nine months~~quarter of fiscal 2015 were 0.22 percent which is consistent with the first quarter of fiscal 2014 ~~was also~~but slightly higher ~~than severity for the fiscal~~compared to year ended March 31, ~~2013~~2014 due to ~~the receipt of vehicle insurance proceeds related to Hurricane Sandy during fiscal 2013, which resulted in lower severity per unit.~~seasonality.

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Allowance for Credit Losses

We maintain an allowance for credit losses to cover probable and estimable losses as of the balance sheet date resulting from the non-performance of our customers and dealers under their contractual obligations. The determination of the allowance involves significant assumptions, complex analyses, and management judgment.

The allowance for credit losses for our consumer portfolio is established through a process that estimates probable losses incurred as of the balance sheet date based upon consistently applied statistical analyses of portfolio data. This process utilizes delinquency migration analysis, in which historical delinquency and credit loss experience is applied to the current aging of the portfolio, and incorporates current and expected trends and other relevant factors, including used vehicle market conditions, economic conditions, unemployment rates, purchase quality mix, and operational factors. This process, along with management judgment, is used to establish the allowance to cover probable and estimable losses incurred as of the balance sheet date. Movement in any of these factors would cause changes in estimated probable losses.

The allowance for credit losses for our dealer portfolio is established by first aggregating dealer financing receivables into loan-risk pools, which are determined based on the risk characteristics of the loan (e.g. secured by either vehicles and industrial equipment, real estate or dealership assets, or unsecured). We then analyze dealer pools using an internally developed risk rating system. In addition, we have established procedures that focus on managing high risk loans in our dealer portfolio. Our field operations management and special assets group are consulted each quarter to determine if any specific dealer loan is considered impaired. If impaired loans are identified, specific reserves are established, as appropriate, and the loan is removed from the loan-risk pool for separate monitoring.

The following table provides information related to our allowance for credit losses for the three ~~and nine~~ months ended ~~December 31, 2013~~June 30, 2014 and ~~2012:~~2013:

	Three Months Ended
	June 30,
(Dollars in millions)	2014				2013
Allowance for credit losses at beginning of period		$	454			$	527
Provision for credit losses			38				11
Charge-offs, net of recoveries1			(45	)			(37	)
Allowance for credit losses at end of period		$	447			$	501

Three Months Ended Nine Months Ended
December 31, December 31,
(Dollars in millions) 2013 2012 2013 2012
Allowance for credit losses at beginning of period $ 467 $ 549 $ 527 $ 619
Provision for credit losses 63 88 102 107
Charge-offs, net of recoveries1
(74) (77) (173) (166)
Allowance for credit losses at end of period $ 456 $ 560 $ 456 $ 560

1 Charge-offs are shown net of recoveries of ~~$19~~$22 million and ~~$64~~$24 million for the three ~~and nine~~ months ended ~~December 31,~~June 30, 2014 and June 30, 2013, ~~respectively, and recoveries of $18 million and $59 million for the three and nine months ended December 31, 2012,~~ respectively.

During the first ~~nine months~~quarter of fiscal ~~2014,~~2015, our allowance for credit losses decreased ~~$71~~$7 million from ~~$527~~$454 million at March 31, ~~2013. Despite recent higher loss severity, the~~2014. The decline in our allowance for credit losses ~~during the first nine months of fiscal 2014~~ was due largely to ~~favorable delinquency and default frequency in relation to our historical patterns.~~lower loss experience primarily driven by loss severity.

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LIQUIDITY AND CAPITAL RESOURCES

Liquidity risk is the risk relating to our ability to meet our financial obligations when they come due. Our liquidity strategy is to ensure that we maintain the ability to fund assets and repay liabilities in a timely and cost-effective manner, even in adverse market conditions. Our strategy includes raising funds via the global capital markets, and through loans, credit facilities, and other transactions, as well as generating liquidity from our ~~balance sheet.~~earning assets. This strategy has led us to develop a borrowing base that is diversified by market and geographic distribution, investor type, and financing structure, among other factors.

The following table summarizes the components of our outstanding funding sources at carrying value:

(Dollars in millions)	December 31, 2013		March 31, 2013		June 30, 2014		March 31, 2014
Commercial paper1	$	27,012	$	24,590	$	25,524	$	27,709
Unsecured notes and loans payable2		47,938		46,707		51,496		49,075
Secured notes and loans payable		7,195		7,009		9,112		8,158
Carrying value adjustment3		548		526		428		425
Total debt	$	82,693	$	78,832	$	86,560	$	85,367

1	Includes unamortized premium/discount.

2	Includes unamortized premium/discount and the effects of foreign currency transaction gains and losses on non-hedged or de-designated notes and loans payable which are denominated in foreign currencies.

3	Represents the effects of fair value adjustments to debt in hedging relationships, accrued redemption premiums, and the unamortized fair value adjustments on the hedged item for terminated fair value hedge accounting relationships.

Liquidity management involves forecasting and maintaining sufficient capacity to meet our cash needs, including unanticipated events. To ensure adequate liquidity through a full range of potential operating environments and market conditions, we conduct our liquidity management and business activities in a manner that will preserve and enhance funding stability, flexibility and diversity. Key components of this operating strategy include a strong focus on developing and maintaining direct relationships with commercial paper investors and wholesale market funding providers, and maintaining the ability to sell certain assets when and if conditions warrant.

We develop and maintain contingency funding plans and regularly evaluate our liquidity position under various operating circumstances, allowing us to assess how we will be able to operate through a period of stress when access to normal sources of capital is constrained. The plans project funding requirements during a potential period of stress, specify and quantify sources of liquidity, and outline actions and procedures for effectively managing through the problem period. In addition, we monitor the ratings and credit exposure of the lenders that participate in our credit facilities to ascertain any issues that may arise with potential draws on these facilities if that contingency becomes warranted.

We maintain broad access to a variety of domestic and global markets and may choose to realign our funding activities depending upon market conditions, relative costs, and other factors. We believe that our funding sources, combined with operating and investing activities, provide sufficient liquidity to meet future funding requirements and business growth. Our funding volume is primarily based on expected net change in earning assets and debt maturities.

For liquidity purposes, we hold cash in excess of our immediate funding needs. These excess funds are invested in short-term, highly liquid and investment grade money market instruments, which provide liquidity for our short-term funding needs and flexibility in the use of our other funding sources. We maintained excess funds ranging from ~~$4.3~~$5.6 billion to ~~$7.3~~$9.0 billion with an average balance of ~~$5.3~~$7.2 billion for the ~~third~~first quarter of fiscal ~~2014.~~2015.

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We may lend to or borrow from affiliates on terms based upon a number of business factors such as funds availability, cash flow timing, relative cost of funds, and market access capabilities.

Credit support is provided to us by our indirect parent Toyota Financial Services Corporation (“TFSC”), and, in turn to TFSC by Toyota Motor Corporation (“TMC”). Taken together, these credit support agreements provide an additional source of liquidity to us, although we do not rely upon such credit support in our liquidity planning and capital and risk management. The credit support ~~agreement from TMC is~~agreements are not a guarantee by TMC or TFSC of any securities or obligations of ~~TFSC. The credit support agreement from~~ TFSC ~~is not a guarantee by TFSC of any securities of TMCC.~~or TMCC, respectively.

TMC’s obligations under its credit support agreement with TFSC rank pari passu with TMC’s senior unsecured debt obligations. Refer to Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations “Liquidity and Capital Resources” in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2013~~2014 for further discussion.

We routinely monitor global financial conditions and our financial exposure to our global counterparties. Specifically, we focus on those countries experiencing significant economic, fiscal or political strain and the corresponding likelihood of default. During the reporting period, we identified countries for which these conditions exist: Portugal, Ireland, Italy, Greece, Spain, Cyprus, Russia, Ukraine and certain other countries. We do not currently have exposure to these or other ~~European~~ sovereign counterparties. As of ~~December 31, 2013,~~June 30, 2014, our gross non-sovereign exposures to investments in marketable securities and derivatives counterparty positions in the countries identified were not material, either individually or collectively. We also maintained a total of ~~$18.4~~$19.0 billion in committed syndicated and bilateral credit facilities for our liquidity purposes as of ~~December 31, 2013.~~June 30, 2014. As of ~~December 31, 2013,~~June 30, 2014, less than 3 percent of such commitments were from counterparties in the countries identified. Refer to the “Liquidity and Capital Resources - Liquidity Facilities and Letters of Credit” section and “Item 1A. Risk Factors - The failure or commercial soundness of our counterparties and other financial institutions may have an effect on our liquidity, operating results or financial condition” in our fiscal ~~2013~~2014 Form 10-K for further discussion.

Commercial Paper

Short-term funding needs are met through the issuance of commercial paper in the United States. Commercial paper outstanding under our commercial paper programs ranged from approximately ~~$25.6~~$24.8 billion to ~~$27.5~~$28.1 billion during the quarter ended ~~December 31, 2013,~~June 30, 2014, with an average outstanding balance of $26.6 billion. Our commercial paper programs are supported by the liquidity facilities discussed under the heading “Liquidity Facilities and Letters of Credit.” We believe we have ample capacity to meet our short-term funding requirements and manage our liquidity.

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Unsecured Notes and Loans Payable

The following table summarizes the components of our unsecured notes and loans payable:

(Dollars in millions)
U.S. medium
term notes
("MTNs")
and domestic
bonds

Euro
MTNs
("EMTNs")
Eurobonds Other
  Total unsecured notes and loans payable5
Balance at March 31, 20131
$ 26,716 $ 13,598 $ 803 $ 5,777 $ 46,894
Issuances during the nine months
     ended December 31, 2013
7,650 2

2,242 3
-
650 4
10,542
Maturities and terminations
     during the nine months
     ended December 31, 2013 (5,545) (2,647) - (900) (9,092)
Balance at December 31, 20131
$ 28,821 $ 13,193 $ 803 $ 5,527 $ 48,344

(Dollars in millions)	U.S. medium term notes ("MTNs") and domestic bonds			Euro MTNs ("EMTNs")			Eurobonds		Other		Total unsecured notes and loans payable3
Balance at March 31, 20141	$	29,744		$	13,523		$	480	$	5,577	$	49,324
Issuances during the three months
ended June 30, 2014		3,525	2		-			-		-		3,525
Maturities and terminations
during the three months
ended June 30, 2014		(1,100	)		(81	)		-		-		(1,181	)
Balance at June 30, 20141	$	32,169		$	13,442		$	480	$	5,577	$	51,668

Amounts represent par values and as such exclude unamortized premium/discount, foreign currency transaction gains and losses on debt denominated in foreign currencies, fair value adjustments to debt in hedge accounting relationships, accrued redemption premiums, and the unamortized fair value adjustments on the hedged item for terminated hedge accounting relationships. Par values of non-U.S. currency denominated notes are determined using foreign exchange rates applicable as of the issuance dates.

2	MTNs and domestic bonds issued during the first ~~nine~~three months of fiscal ~~2014~~2015 had terms to maturity ranging from approximately 1 year to 1015 years, and had interest rates at the time of issuance ranging from 0.2 percent to ~~2.0~~3.0 percent.

3	EMTNs issued during the first nine months of fiscal 2014 had terms to maturity ranging from approximately 1 year to 7 years, and had interest rates at the time of issuance ranging from 0.5 percent to 3.8 percent.

4	~~Consists of long-term borrowings, with terms to maturity ranging from approximately 1 year to~~ 3 ~~years, and had interest rates at the time of issuance ranging from 0.1 percent to 0.5 percent.~~

5	Consists of fixed and floating rate ~~debt.~~debt and other obligations. Upon the issuance of fixed rate debt and other obligations, we generally elect to enter into pay float interest rate swaps. Refer to “Derivative Instruments” for further discussion.

We maintain a shelf registration statement with the SEC to provide for the issuance of debt securities in the U.S. capital ~~markets.~~markets to retail and institutional investors. We qualify as a well-known seasoned issuer under SEC rules, which allows us to issue under our registration statement an unlimited amount of debt securities during the three year period ending March 2015. Debt securities issued under the U.S. shelf registration statement are issued pursuant to the terms of an indenture which requires TMCC to comply with certain covenants, including negative pledge provisions. We are in compliance with these covenants.

Our EMTN program, shared with our affiliates Toyota Motor Finance (Netherlands) B.V., Toyota Credit Canada Inc. and Toyota Finance Australia Limited (TMCC and such affiliates, the “EMTN Issuers”), provides for the issuance of debt securities in the international capital markets. In September 2013, the EMTN Issuers renewed the EMTN program for a one year period. The maximum aggregate principal amount authorized under the EMTN Program to be outstanding at any time is €50 billion, or the equivalent in other currencies, of which ~~€33~~€31.7 billion was available for issuance at ~~December 31, 2013.~~June 30, 2014. The authorized amount is shared among all EMTN Issuers. The authorized aggregate principal amount under the EMTN program may be increased from time to time. Debt securities issued under the EMTN program are issued pursuant to the terms of an agency agreement. Certain debt securities issued under the EMTN program are subject to negative pledge provisions. Debt securities issued under our EMTN program prior to October 2007 are also subject to cross-default provisions. We are in compliance with these covenants.

In addition, we may issue other debt securities or enter into other unsecured financing arrangements through the global capital markets.

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Secured Notes and Loans Payable

Overview

Asset-backed securitization of our earning asset portfolio provides us with an alternative source of funding. We securitize finance receivables and beneficial interests in investments in operating leases (“Securitized Assets”) using a variety of structures. Our securitization transactions involve the transfer of Securitized Assets to bankruptcy-remote special purpose entities. These bankruptcy-remote entities are used to ensure that the Securitized Assets are isolated from the claims of creditors of TMCC and that the cash flows from these assets are available solely for the benefit of the investors in these asset-backed securities. Investors in asset-backed securities do not have recourse to our other assets, and neither TMCC nor our affiliates guarantee these obligations. We are not required to repurchase or make reallocation payments with respect to the Securitized Assets that become delinquent or default after securitization. As seller and servicer of the Securitized Assets, we are required to repurchase or make a reallocation payment with respect to the underlying assets that are subsequently discovered not to have met specified eligibility requirements. This repurchase obligation is customary in securitization transactions.

We service the Securitized Assets in accordance with our customary servicing practices and procedures. Our servicing duties include collecting payments on Securitized Assets and submitting them to a trustee for distribution to security holders and other interest holders. We prepare monthly servicer certificates on the performance of the Securitized Assets, including collections, investor distributions, delinquencies, and credit losses. We also perform administrative services for the special purpose entities.

Our use of special purpose entities in securitizations is consistent with conventional practice in the securitization market. None of our officers, directors, or employees holds any equity interests or receives any direct or indirect compensation from our special purpose entities. These entities do not own our stock or the stock of any of our affiliates. Each special purpose entity has a limited purpose and generally is permitted only to purchase assets, issue asset-backed securities, and make payments to the security holders, other interest holders and certain service providers as required under the terms of the transactions.

Our securitizations are structured to provide credit enhancement to reduce the risk of loss to security holders and other interest holders in the asset-backed securities. Credit enhancement may include some or all of the following:

~~Overcollateralization:~~Overcollateralization: The principal of the Securitized Assets that exceeds the principal amount of the related secured debt.

Excess ~~spread:~~spread: The expected interest collections on the Securitized Assets that exceed the expected fees and expenses of the special purpose entity, including the interest payable on the debt, net of swap settlements, if any.

Cash reserve ~~funds:~~funds: A portion of the proceeds from the issuance of asset-backed securities may be held by the securitization trust in a segregated reserve fund and may be used to pay principal and interest to security holders and other interest holders if collections on the underlying receivables are insufficient.

Yield supplement arrangements:Additional overcollateralization may be provided to supplement the future contractual interest payments from pledged receivables with relatively low contractual interest rates.

Subordinated notes:The subordination of principal and interest payments on subordinated notes may provide additional credit enhancement to holders of senior notes.

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In addition to the credit enhancement described above, we may enter into interest rate swaps with our special purpose entities that issue variable rate debt. Under the terms of these swaps, the special purpose entities are obligated to pay TMCC a fixed rate of interest on payment dates in exchange for receiving a floating rate of interest on notional amounts equal to the outstanding balance of the secured debt. This arrangement enables the special purpose entities to mitigate the interest rate risk inherent in issuing variable rate debt that is secured by fixed rate Securitized Assets.

Securitized Assets and the related debt remain on our Consolidated Balance Sheet. We recognize financing revenue on the Securitized Assets. We also recognize interest expense on the secured debt issued by the special purpose entities and maintain an allowance for credit losses on the Securitized Assets to cover estimated probable credit losses using a methodology consistent with that used for our non-securitized asset portfolio. The interest rate swaps between TMCC and the special purpose entities are considered intercompany transactions and therefore are eliminated in our consolidated financial statements.

The following are asset-backed securitization transactions that we have executed.

Public Term Securitization

We maintain shelf registration statements with the SEC to provide for the issuance of securities backed by Securitized Assets in the U.S. capital markets. We regularly sponsor public securitization trusts that issue securities backed by retail finance receivables, including registered securities that we retain. Funding obtained from our public term securitization transactions is repaid as the underlying Securitized Assets amortize. None of these securities have defaulted, experienced any events of default or failed to pay principal in full at maturity. As of ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013,~~2014, we did not have any outstanding lease securitization transactions registered with the SEC.

During fiscal 2014, we entered into a public term securitization transaction whereby we agreed to use the proceeds solely to acquire retail and lease contracts financing new Toyota and Lexus vehicles of certain specified “green” models. The terms of the securitization transaction are consistent with the terms of our other similar transactions except that the proceeds we received are included in Restricted cash and cash equivalents in our Consolidated Balance Sheet. As of June 30, 2014 and March 31, 2014, the amount of proceeds in Restricted cash and cash equivalents from this transaction were $0.3 billion and $1.1 billion, respectively.

Amortizing Asset-backed Commercial Paper Conduits

We have executed private securitization transactions of Securitized Assets with bank-sponsored multi-seller asset-backed conduits. The related debt will be repaid as the underlying Securitized Assets amortize.

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Liquidity Facilities and Letters of Credit

For additional liquidity purposes, we maintain syndicated credit facilities with certain banks.

364 Day Credit Agreement, Three Year Credit Agreement and Five Year Credit Agreement

In ~~fiscal~~November 2013, TMCC, ~~TCPR and other~~ Toyota affiliates were parties to a $3.8 billion 364 day syndicated bank credit facility, a $3.8 billion three year syndicated bank credit facility and a $3.8 billion five year syndicated bank credit facility, expiring in fiscal 2014, 2016, and 2018, respectively. In November 2013, these agreements were terminated and TMCC, TCPRCredit de Puerto Rico Corp. (“TCPR”) and other Toyota affiliates entered into a $4.3 billion 364 day syndicated bank credit facility, a $4.3 billion three year syndicated bank credit facility and a $4.3 billion five year syndicated bank credit facility, expiring in fiscal 2015, 2017, and 2019, respectively.

Other Unsecured Credit Agreements

Credit Ratings

The cost and availability of unsecured financing is influenced by credit ratings, which are intended to be an indicator of the creditworthiness of a particular company, security, or obligation. Lower ratings generally result in higher borrowing costs as well as reduced access to capital markets. Credit ratings are not recommendations to buy, sell, or hold securities, and are subject to revision or withdrawal at any time by the assigning credit rating organization. Each credit rating organization may have different criteria for evaluating risk, and therefore ratings should be evaluated independently for each organization. Our credit ratings depend in part on the existence of the credit support agreements of TFSC and TMC. See “Item 1A. Risk Factors - Our borrowing costs and access to the unsecured debt capital markets depend significantly on the credit ratings of TMCC and its parent companies and our credit support ~~arrangements”~~arrangements” in our fiscal ~~2013~~2014 Form 10-K.

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DERIVATIVE INSTRUMENTS

Risk Management Strategy

Accounting for Derivative Instruments

All derivative instruments are recorded on the balance sheet at fair value, taking into consideration the effects of legally enforceable master netting agreements that allow us to net settle positive and negative positions and offset cash collateral held with the same counterparty on a net basis. Changes in the fair value of derivatives are recorded in interest expense in the Consolidated Statement of Income.

We categorize derivatives as those designated for hedge accounting (“hedge accounting derivatives”) and those that are not designated for hedge accounting (“non-hedge accounting derivatives”). At the inception of a derivative contract, we may elect to designate a derivative as a hedge accounting derivative.

We may also, from time-to-time, issue debt which can be characterized as hybrid financial instruments. These obligations often contain an embedded derivative which may require bifurcation. Changes in the fair value of the bifurcated embedded derivative are reported in interest expense in the Consolidated Statement of Income. As of June 30, 2014 and March 31, 2014, we had no outstanding embedded derivatives that are required to be bifurcated. Refer to Note 1 – Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements in our fiscal ~~2013~~2014 Form 10-K, and Note 7 – Derivatives, Hedging Activities and Interest Expense in this Form 10-Q for additional information.

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Derivative Assets and Liabilities

The following table summarizes our derivative assets and liabilities, which are included in other assets and other liabilities in the Consolidated Balance Sheet:

(Dollars in millions)	December 31, 2013		March 31, 2013		June 30, 2014			March 31, 2014
Gross derivatives assets, net of credit valuation adjustment	$	1,372	$	1,719	$	1,400		$	1,235
Less: Counterparty netting and collateral		(1,323)		(1,661)		(1,313	)		(1,186	)
Derivative assets, net	$	49	$	58	$	87		$	49

Gross derivative liabilities, net of credit valuation adjustment	$	1,018	$	897	$	634		$	805
Less: Counterparty netting and collateral		(1,005)		(892)		(631	)		(799	)
Derivative liabilities, net	$	13	$	5	$	3		$	6
Embedded derivative liabilities	$	-	$	12

Collateral represents cash received or deposited under reciprocal arrangements that we have entered into with our derivative counterparties. As of ~~December 31, 2013,~~June 30, 2014, we held collateral of ~~$794~~$928 million which offset derivative assets and we posted collateral of ~~$476~~$246 million which offset derivative liabilities. We also posted collateral of $10 million which we did not use to offset derivative liabilities. As of March 31, 2014, we held collateral of ~~$32~~$718 million which offset derivative assets and posted collateral of $331 million which offset derivative liabilities. We held collateral of $5 million which we did not use to offset derivative assets and we posted collateral of $9 million which we did not use to offset derivative liabilities. As of March 31, 2013, we held collateral of $953 million which offset derivative assets, and we posted collateral of $184 million which offset derivative liabilities. We held collateral of $3 ~~million which we did not use to offset derivative assets, and we posted collateral of $6~~ million which we did not use to offset derivative liabilities. Refer to the “Interest Expense” section for discussion on changes in derivatives.

Derivative Counterparty Credit Risk

We manage derivative counterparty credit risk by maintaining policies for entering into derivative contracts, exercising our rights under our derivative contracts, requiring the posting of collateral and actively monitoring our exposure to counterparties.

All of our derivative counterparties to which we had credit exposure at ~~December 31, 2013~~June 30, 2014 were assigned investment grade ratings by a credit rating organization. Our counterparty credit risk could be adversely affected by deterioration of the global economy and financial distress in the banking industry.

Our International Swaps and Derivatives Association (“ISDA”) Master Agreements contain reciprocal collateral arrangements which help mitigate our exposure to the credit risk associated with our counterparties. As of ~~December 31, 2013,~~June 30, 2014, we have daily valuation and collateral exchange arrangements with all of our counterparties. Our collateral agreements with substantially all our counterparties include a zero threshold, full collateralization requirement, which has significantly reduced counterparty credit risk exposure. Under our ISDA Master Agreements, cash is the only permissible form of collateral. Neither we nor our counterparties are required to hold collateral in a segregated account. Our collateral ~~arrangements~~agreements include legal right of offset provisions, pursuant to which collateral amounts are netted against derivative assets or derivative liabilities, the net amount of which ~~are~~is included in other assets or other liabilities in our Consolidated Balance Sheet.

In addition, many of our ISDA Master Agreements contain reciprocal ratings triggers providing either party with an option to terminate the agreement and related transactions at market value in the event of a ratings downgrade below a specified threshold. Refer to “Part I. Item 1A. Risk Factors” in our fiscal ~~2013~~2014 Form 10-K for further discussion.

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A summary of our net counterparty credit exposure by credit rating (net of collateral held) is presented below:

(Dollars in millions)	December 31, 2013		March 31, 2013		June 30, 2014		March 31, 2014
Credit Rating
AA	$	-	$	1
A		50		56	$	85	$	49
BBB		-		2		3		1
Total net counterparty credit exposure	$	50	$	59	$	88	$	50

We exclude credit valuation adjustments of $1 million at ~~December 31, 2013~~June 30, 2014 and March 31, ~~2013,~~2014, related to non-performance risk of our counterparties. All derivative credit valuation adjustments are recorded in interest expense in our Consolidated Statement of Income. Refer to “Note 2 – Fair Value Measurements” of the Notes to the Consolidated Financial Statements for further discussion.

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NEW ACCOUNTING STANDARDS

Refer to Note 1 – Interim Financial Data of the Notes to Consolidated Financial Statements.

~~OFF-BALANCE SHEET~~OFF-BALANCE-SHEET ARRANGEMENTS

Guarantees

TMCC has guaranteed the payments of principal and interest on bonds relating to manufacturing facilities of certain affiliates. Refer to Note 12 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for further discussion.

Lending Commitments

A description of our lending commitments is included under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Off-Balance Sheet Arrangements” and Note 15 - Related Party Transactions of the Notes to Consolidated Financial Statements in our fiscal ~~2013~~2014 Form 10-K, as well as above in Note 12 - Commitments and Contingencies of the Notes to Consolidated Financial Statements.

Indemnification

Refer to Note 12 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for a description of agreements containing indemnification provisions.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have omitted this section pursuant to General Instruction H(2) of Form 10-Q.

ITEM 4. CONTROLS AND PROCEDURES

Our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) evaluated the effectiveness of our “disclosure controls and procedures” as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this report. Based on this evaluation, the CEO and CFO concluded that the disclosure controls and procedures were effective as of ~~December 31, 2013,~~June 30, 2014, to ensure that information required to be disclosed in reports filed under the Exchange Act was recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules, regulations, and forms and that such information is accumulated and communicated to our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures.

There have been no changes in our internal control over financial reporting that occurred during the three months ended ~~December 31, 2013~~June 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Litigation

ITEM 1A. RISK FACTORS

There are no material changes from the risk factors set forth under “Item 1A. Risk Factors” in our fiscal ~~2013~~2014 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We have omitted this section pursuant to General Instruction H(2) of Form 10-Q.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

We have omitted this section pursuant to General Instruction H(2) of Form 10-Q.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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ITEM 5. OTHER INFORMATION

Disclosure of Iranian Activities under Section 13(r) of the Securities Exchange Act of 1934

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Section 13(r) requires an issuer to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with designated natural persons or entities involved in terrorism or the proliferation of weapons of mass destruction. Disclosure is required even where the activities, transactions or dealings are conducted outside the U.S. by non-U.S. affiliates in compliance with applicable law, and whether or not the activities are sanctionable under U.S. law.

As of the date of this report, we are not aware of any activity, transaction or dealing by us or any of our affiliates during the quarter ended ~~December 31, 2013~~June 30, 2014 that requires disclosure in this report under Section 13(r) of the Exchange Act, except as set forth below. For affiliates that we do not control and that are our affiliates solely due to their common control by our parent Toyota Motor Corporation (“TMC”), a Japanese corporation, we have relied upon TMC for information regarding their activities, transactions and dealings.

TMC has informed us that during ~~the~~ quarter ended ~~December 31, 2013, Tokyo~~ June 30, 2014:

Toyota ~~Motor Co.~~Tourist International, Inc., ~~Ltd.~~ (“~~Tokyo~~ Toyota ~~Motor”~~Tourist”), a ~~wholly owned indirect~~majority-owned subsidiary of TMC, ~~performed maintenance services for Toyota vehicles owned by~~obtained three visas from the Iranian ~~Embassy~~embassy in ~~Japan.~~Japan in connection with certain travel arrangements.

These activities contributed an insignificant amount toin gross revenues and net profit to TMC. TMC believes that these transactions would not subject it or its affiliates to U.S. sanctions. As of the date of this report, TMC has informed us that ~~Tokyo~~ Toyota ~~Motor may, if requested by~~Tourist intends to cease conducting the Iranian Embassy in Japan, continue to perform maintenance services relating to vehicles owned by such Embassy, in accordance with applicable laws and regulations, in order to honor TMC’s commitment to the safety and reliability of its vehicles.activities described above.

ITEM 6. EXHIBITS

See Exhibit Index on page ~~76.~~71.

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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 the undersigned thereunto duly authorized.

	TOYOTA MOTOR CREDIT CORPORATION
	(Registrant)

Date: ~~February~~August 12, 2014	By ~~/S/ MICHAEL GROFF~~/s/ Michael Groff

	Michael Groff
	President and
	Chief Executive Officer
	(Principal Executive Officer)

Date: ~~February~~August 12, 2014	By ~~/S/ CHRIS BALLINGER~~/s/ Chris Ballinger

	Chris Ballinger
	Senior Vice President and
	Chief Financial Officer
	~~(Principal~~(Principal Financial Officer)

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EXHIBIT INDEX

Exhibit Number Description
Method of
Filing

3.1 Restated Articles of Incorporation filed with the California Secretary of State on April 1, 2010 (1)

3.2 Bylaws as amended through December 8, 2000 (2)

4.1(a) Indenture dated as of August 1, 1991 between TMCC and The Chase Manhattan Bank, N.A (3)

4.1(b) First Supplemental Indenture dated as of October 1, 1991 among TMCC, Bankers Trust Company and The Chase Manhattan Bank, N.A (4)

4.1(c) Second Supplemental Indenture, dated as of March 31, 2004, among TMCC, JPMorgan Chase Bank (as successor to The Chase Manhattan Bank, N.A.) and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company) (5)

4.1(d) Third Supplemental Indenture, dated as of March 8, 2011 among TMCC, The Bank of New York Mellon Trust Company, N.A., as trustee, and Deutsche Bank Trust Company Americas, as trustee. (6)

4.1(e) Agreement of Resignation and Acceptance dated as of April 26, 2010 between Toyota Motor Credit Corporation, The Bank of New York Mellon and The Bank of New York Trust Company, N.A. (1)

4.2(a) Amended and Restated Agency Agreement, dated September 13, 2013, among Toyota Motor Credit Corporation, Toyota Motor Finance (Netherlands) B.V., Toyota Credit Canada Inc., Toyota Finance Australia Limited and The Bank of New York Mellon. (7)

Exhibit Number	Description	Method of Filing

3.1	Restated Articles of Incorporation filed with the California Secretary of State on April 1, 2010	(1)

3.2	Bylaws as amended through December 8, 2000	(2)

4.1(a)	Indenture dated as of August 1, 1991 between TMCC and The Chase Manhattan Bank, N.A	(3)

4.1(b)	First Supplemental Indenture dated as of October 1, 1991 among TMCC, Bankers Trust Company and The Chase Manhattan Bank, N.A	(4)

4.1(c)	Second Supplemental Indenture, dated as of March 31, 2004, among TMCC, JPMorgan Chase Bank (as successor to The Chase Manhattan Bank, N.A.) and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company)	(5)

4.1(d)	Third Supplemental Indenture, dated as of March 8, 2011 among TMCC, The Bank of New York Mellon Trust Company, N.A., as trustee, and Deutsche Bank Trust Company Americas, as trustee.	(6)

4.1(e)	Agreement of Resignation and Acceptance dated as of April 26, 2010 between Toyota Motor Credit Corporation, The Bank of New York Mellon and The Bank of New York Trust Company, N.A.	(1)

4.2(a)	Amended and Restated Agency Agreement, dated September 13, 2013, among Toyota Motor Credit Corporation, Toyota Motor Finance (Netherlands) B.V., Toyota Credit Canada Inc., Toyota Finance Australia Limited and The Bank of New York Mellon.	(7)

~~_______________~~

(1)	Incorporated herein by reference to the same numbered Exhibit filed with our Annual Report on Form 10-K for the fiscal year ended March 31, 2010, Commission File Number 1-9961.

(2)	Incorporated herein by reference to the same numbered Exhibit filed with our Quarterly Report on Form 10-Q for the three months ended December 31, 2000, Commission File Number 1-9961.

(3)	Incorporated herein by reference to Exhibit 4.1(a), filed with our Registration Statement on Form S-3, File Number 33-52359.

(4)	Incorporated herein by reference to Exhibit 4.1 filed with our Current Report on Form 8-K dated October 16, 1991, Commission File Number 1-9961.

(5)	Incorporated herein by reference to Exhibit 4.1(c) filed with our Registration Statement on Form S-3, Commission File No. 333-113680.

(6)	Incorporated herein by reference to Exhibit 4.2 filed with our Current Report on Form 8-K dated March 9, 2011, Commission File Number 1-9961.

(7)	Incorporated herein by reference to Exhibit 4.1 filed with our Current Report on Form 8-K dated September 13, 2013, Commission File Number 1-9961.

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EXHIBIT INDEX

Exhibit Number Description
Method of
Filing

4.2(b) Amended and Restated Note Agency Agreement, dated September 13, 2013, among Toyota Motor Credit Corporation, The Bank of New York Mellon (Luxembourg) S.A. and The Bank of New York Mellon, acting through its London branch. (8)

4.3(a) Sixth Amended and Restated Agency Agreement dated September 28, 2006, among TMCC, JP Morgan Chase Bank, N.A. and J.P. Morgan Bank Luxembourg S.A. (9)

4.3(b) Amendment No.1, dated as of March 4, 2011, to the Sixth Amended and Restated Agency Agreement among TMCC, The Bank of New York Mellon, acting through its London branch, as agent, and The Bank of New York Luxembourg S.A., as paying agent. (10)

4.4 TMCC has outstanding certain long-term debt as set forth in Note 9 - Debt of the Notes to Consolidated Financial Statements. Not filed herein as an exhibit, pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934, is any instrument which defines the rights of holders of such long-term debt, where the total amount of securities authorized thereunder does not exceed 10 percent of the total assets of TMCC and its subsidiaries on a consolidated basis. TMCC agrees to furnish copies of all such instruments to the Securities and Exchange Commission upon request.

10.1
364 Day Credit Agreement, dated as of November 22, 2013, among Toyota Motor Credit Corporation, (“TMCC”), Toyota Credit de Puerto Rico Corp. (“TCPR”), Toyota Motor Finance (Netherlands) B.V. (“TMFNL”), Toyota Financial Services (UK) PLC (“TFS(UK)”), Toyota Leasing GMBH (“TLG”), Toyota Credit Canada Inc. (“TCCI”) and Toyota Kreditbank GMBH (“TKG”), as Borrowers, each lender party thereto, and BNP Paribas, as Administrative Agent, Swing Line Agent and Swing Line Lender, BNP Paribas Securities Corp. (“BNPP Securities”), Citigroup Global Markets Inc. (“CGMI”), Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPFS”) and The Bank of Tokyo-Mitsubishi UFJ, Ltd. (“BTMU”), as Joint Lead Arrangers and Joint Book Managers, Citibank, N.A. (“Citibank”) and Bank of America, N.A. (“Bank of America”), as Swing Line Lenders, and Citibank, Bank of America, and BTMU, as Syndication Agents.

(11)

~~_______________~~

Exhibit Number	Description	Method of Filing

4.2(b)	Amended and Restated Note Agency Agreement, dated September 13, 2013, among Toyota Motor Credit Corporation, The Bank of New York Mellon (Luxembourg) S.A. and The Bank of New York Mellon, acting through its London branch.	(8)

4.3(a)	Sixth Amended and Restated Agency Agreement dated September 28, 2006, among TMCC, JP Morgan Chase Bank, N.A. and J.P. Morgan Bank Luxembourg S.A.	(9)

4.3(b)	Amendment No.1, dated as of March 4, 2011, to the Sixth Amended and Restated Agency Agreement among TMCC, The Bank of New York Mellon, acting through its London branch, as agent, and The Bank of New York Luxembourg S.A., as paying agent.	(10)

4.4	TMCC has outstanding certain long-term debt as set forth in Note 9 - Debt of the Notes to Consolidated Financial Statements. Not filed herein as an exhibit, pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934, is any instrument which defines the rights of holders of such long-term debt, where the total amount of securities authorized thereunder does not exceed 10 percent of the total assets of TMCC and its subsidiaries on a consolidated basis. TMCC agrees to furnish copies of all such instruments to the Securities and Exchange Commission upon request.

10.1	364 Day Credit Agreement, dated as of November 22, 2013, among Toyota Motor Credit Corporation, (“TMCC”), Toyota Credit de Puerto Rico Corp. (“TCPR”), Toyota Motor Finance (Netherlands) B.V. (“TMFNL”), Toyota Financial Services (UK) PLC (“TFS(UK)”), Toyota Leasing GMBH (“TLG”), Toyota Credit Canada Inc. (“TCCI”) and Toyota Kreditbank GMBH (“TKG”), as Borrowers, each lender party thereto, and BNP Paribas, as Administrative Agent, Swing Line Agent and Swing Line Lender, BNP Paribas Securities Corp. (“BNPP Securities”), Citigroup Global Markets Inc. (“CGMI”), Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPFS”) and The Bank of Tokyo- Mitsubishi UFJ, Ltd. (“BTMU”) as Joint Lead Arrangers and Joint Book Managers, Citibank, N.A. (“Citibank”) and Bank of America, N.A. (“Bank of America”), as Swing Line Lenders, and Citibank, Bank of America, and BTMU as Syndication Agents.	(11)

(8)	Incorporated herein by reference to Exhibit 4.2 filed with our Current Report on Form 8-K dated September 13, 2013, Commission File No. 1-9961.

(9)	Incorporated herein by reference to Exhibit 4.1 filed with our Current Report on Form 8-K dated September 28, 2006, Commission File No. 1-9961.

(10)	Incorporated herein by reference to Exhibit 4.1 filed with our Current Report on Form 8-K dated March 4, 2011, Commission File No. 1-9961.

(11)	Incorporated herein by reference to Exhibit 10.1 filed with our Current Report on Form 8-K dated November 25, 2013, Commission File No. 1-9961.

7772

Table of Contents

EXHIBIT INDEX

Exhibit Number Description
Method of
Filing

10.2
Three Year Credit Agreement, dated as of November 22, 2013, among TMCC, TCPR, TMFNL, TFS(UK), TLG, TCCI and TKG, as Borrowers, each lender party thereto, and BNP Paribas, as Administrative Agent, Swing Line Agent and Swing Line Lender, BNPP Securities, CGMI, MLPFS, and BTMU, as Joint Lead Arrangers and Joint Book Managers, Citibank and Bank of America, as Swing Line Lenders, and Citibank, Bank of America, and BTMU, as Syndication Agents.

(12)

10.3
Five Year Credit Agreement, dated as of November 22, 2013, among TMCC, TCPR, TMFNL, TFS(UK), TLG, TCCI and TKG, as Borrowers, each lender party thereto, and BNP Paribas, as Administrative Agent, Swing Line Agent and Swing Line Lender, BNPP Securities, CGMI, MLPFS, and BTMU, as Joint Lead Arrangers and Joint Book Managers, Citibank and Bank of America, as Swing Line Lenders, and Citibank, Bank of America, and BTMU, as Syndication Agents.

(13)

12.1 Calculation of ratio of earnings to fixed charges
Filed
Herewith

31.1 Certification of Chief Executive Officer
Filed
Herewith

31.2 Certification of Chief Financial Officer
Filed
Herewith

32.1 Certification pursuant to 18 U.S.C. Section 1350
Furnished
Herewith

32.2 Certification pursuant to 18 U.S.C. Section 1350
Furnished
Herewith

101.INS XBRL instance document
Filed
Herewith

101.CAL XBRL taxonomy extension calculation linkbase document
Filed
Herewith

101.DEF XBRL taxonomy extension definition linkbase document
Filed
Herewith

Exhibit Number

Description

Method of Filing


10.2		Three Year Credit Agreement, dated as of November 22, 2013, among TMCC, TCPR, TMFNL, TFS(UK), TLG, TCCI and TKG as Borrowers, each lender party thereto, and BNP Paribas, as Administrative Agent, Swing Line Agent and Swing Line Lender, BNPP Securities, CGMI, MLPFS, and BTMU, as Joint Lead Arrangers and Joint Book Managers, Citibank and Bank of America, as Swing Line Lenders, and Citibank, Bank of America, and BTMU as Syndication Agents.		(12)


10.3	Five Year Credit Agreement, dated as of November 22, 2013, among TMCC, TCPR, TMFNL, TFS(UK), TLG, TCCI and TKG, as Borrowers, each lender party thereto, and BNP Paribas, as Administrative Agent, Swing Line Agent and Swing Line Lender, BNPP Securities, CGMI, MLPFS, and BTMU, as Joint Lead Arrangers and Joint Book Managers, Citibank and Bank of America, as Swing Line Lenders, and Citibank, Bank of America, and BTMU, as Syndication Agents.	(13)

12.1	Calculation of ratio of earnings to fixed charges	Filed Herewith

31.1	Certification of Chief Executive Officer	Filed Herewith

31.2	Certification of Chief Financial Officer	Filed Herewith

32.1	Certification pursuant to 18 U.S.C. Section 1350	Furnished Herewith

32.2	Certification pursuant to 18 U.S.C. Section 1350	Furnished Herewith

101.INS	XBRL instance document	Filed Herewith

101.CAL	XBRL taxonomy extension calculation linkbase document	Filed Herewith

101.DEF	XBRL taxonomy extension definition linkbase document	Filed Herewith

~~_______________~~

(12)	Incorporated herein by reference to Exhibit 10.2 filed with our Current Report on Form 8-K dated November 25, 2013, Commission File No. 1-9961.

(13)	Incorporated herein by reference to Exhibit 10.3 filed with our Current Report on Form 8-K dated November 25, 2013, Commission File No. 1-9961.

7873

Table of Contents

EXHIBIT INDEX

Exhibit

Number

Description

Method of Filing

~~Filing~~


101.LAB	XBRL taxonomy extension labels linkbase document	Filed Herewith

101.PRE	XBRL taxonomy extension presentation linkbase document	Filed Herewith

101.SCH	XBRL taxonomy extension schema document	Filed Herewith

Note 2 – Fair Value Measurements (Continued)

Three Months Ended December 31, 2012

		Fair value measurements using significant unobservable inputs (Level 3)
																		Total net
																		assets
		Available-for-sale securities								Derivative instruments, net								(liabilities)

								Total								Total
		Corporate		Mortgage-		Asset-		available-		Interest		Foreign				derivative
		debt		backed		backed		for-sale		rate		currency		Embedded		assets
(Dollars in millions)		securities		securities		securities		securities		swaps		swaps		derivatives		(liabilities)
Fair value, October 1, 2012		$	4	$	31	$	9	$	44	$	12	$	74	$	(23)	$	63	$	107
Total gains
	Included in earnings		-		-		-		-		-		6		10		16		16
	Included in other comprehensive income		-		-		-		-		-		-		-		-		-
Purchases, issuances, sales, and settlements
	Purchases		-		2		-		2		-		-		-		-		2
	Issuances		-		-		-		-		-		-		-		-		-
	Sales		-		-		-		-		-		-		-		-		-
	Settlements		-		(3)		(1)		(4)		(1)		(12)		-		(13)		(17)
Transfers in to Level 3			-		-		-		-		-		-		-		-		-
Transfers out of Level 3			-		-		-		-		-		-		-		-		-
Fair value, December 31, 2012		$	4	$	30	$	8	$	42	$	11	$	68	$	(13)	$	66	$	108
The amount of total gains
for the period included in
earnings attributable to the
change in unrealized gains or
losses related to assets still held
at the reporting date										$	-	$	6	$	4	$	10	$	10

Nine Months Ended December 31, 2013

		Fair value measurements using significant unobservable inputs (Level 3)
																				Total net
																				assets
		Available-for-sale securities										Derivative instruments, net								(liabilities)

		U.S.								Total								Total
		government		Corporate		Mortgage-		Asset-		available-		Interest		Foreign				derivative
		and agency		debt		backed		backed		for-sale		rate		currency		Embedded		assets
(Dollars in millions)		obligations		securities		securities		securities		securities		swaps		swaps		derivatives		(liabilities)
Fair value, April 1, 2013		$	-	$	4	$	56	$	13	$	73	$	12	$	55	$	(12)	$	55	$	128
Total gains (losses)
	Included in earnings		-		-		-		-		-		5		15		12		32		32
	Included in other comprehensive income		-		-		(3)		-		(3)		-		-		-		-		(3)
Purchases, issuances, sales, and settlements
	Purchases		-		-		5		12		17		-		-		-		-		17
	Issuances		-		-		-		-		-		-		-		-		-		-
	Sales		-		-		-		-		-		-		-		-		-		-
	Settlements		-		-		(3)		(2)		(5)		(14)		(17)		-		(31)		(36)
Transfers in to Level 3			2		7		-		-		9		-		-		-		-		9
Transfers out of Level 3			-		(2)		-		-		(2)		-		-		-		-		(2)
Fair value, December 31, 2013		$	2	$	9	$	55	$	23	$	89	$	3	$	53	$	-	$	56	$	145
The amount of total (losses)/gains
for the period included in
earnings attributable to the
change in unrealized gains or
losses related to assets still held
at the reporting date												$	(2)	$	17	$	-	$	15	$	15

Note 2 – Fair Value Measurements (Continued)

Nine Months Ended December 31, 2012

		Fair value measurements using significant unobservable inputs (Level 3)
																		Total net
																		assets
		Available-for-sale securities								Derivative instruments, net								(liabilities)

								Total								Total
		Corporate		Mortgage-		Asset-		available-		Interest		Foreign				derivative
		debt		backed		backed		for-sale		rate		currency		Embedded		assets
(Dollars in millions)		securities		securities		securities		securities		swaps		swaps		derivatives		(liabilities)
Fair value, April 1, 2012		$	1	$	19	$	1	$	21	$	13	$	69	$	(24)	$	58	$	79
Total gains
	Included in earnings		-		-		-		-		1		23		11		35		35
	Included in other comprehensive income		-		1		-		1		-		-		-		-		1
Purchases, issuances, sales, and settlements
	Purchases		-		5		1		6		-		-		-		-		6
	Issuances		-		-		-		-		-		-		-		-		-
	Sales		-		(3)		(1)		(4)		-		-		-		-		(4)
	Settlements		-		(5)		(4)		(9)		(3)		(24)		-		(27)		(36)
Transfers into Level 3			3		13		11		27		-		-		-		-		27
Transfers out of Level 3			-		-		-		-		-		-		-		-		-
Fair value, December 31, 2012		$	4	$	30	$	8	$	42	$	11	$	68	$	(13)	$	66	$	108
The amount of total gains
for the period included
in earnings attributable to the
change in unrealized gains or
losses related to assets still held
at the reporting date										$	1	$	21	$	1	$	23	$	23


				Less than 12 months as of
				December 31, 2013				March 31, 2013
				Fair		Unrealized		Fair		Unrealized
(Dollars in millions)				value		losses		value		losses
Available-for-sale securities:
	Debt instruments:
		U.S. government and agency
			obligations	$	43	$	(1)	$	-	$	-
		Corporate debt securities			81		(2)		-		-
		Mortgage backed securities:
			U.S. government agency		30		(1)		-		-
			Non-agency commercial		17		(1)		-		-
	Equity instruments:
		Fixed income mutual funds:
			U.S. government sector fund		337		(6)		-		-
			Investment grade corporate sector fund		310		(2)		-		-
			Real return sector fund		268		(7)		-		-
			Mortgage sector fund		558		(9)		532		(12)
			Emerging market sector fund		64		(1)		-		-
			International sector fund		170		(1)		-		-
	Total investments in marketable
		securities		$	1,878	$	(31)	$	532	$	(12)

		Due in 1 Year or				Due after 1 Year				Due after 5 Years				Due after
			less			through 5 years				through 10 years				10 years					Total
(Dollars in millions)		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
Available-for-Sale Securities:
Debt instruments:
	U.S. government and
	agency obligations	$	-	-	%	$	65	1.50	%	$	21	1.61	%	$	1	3.57	%	$	87	1.55	%
	Municipal debt securities		2	2.39			-	-			1	5.57			11	5.69			14	5.18
	Certificates of deposit		1,533	0.29			-	-			-	-			-	-			1,533	0.29
	Commercial paper		125	0.23			-	-			-	-			-	-			125	0.23
	Foreign government debt
	securities		3	2.93			-	-			-	-			-	-			3	2.93
	Corporate debt
	securities		7	4.14			49	4.31			71	3.55			26	4.39			153	3.97
	Mortgage-backed securities:
	U.S. government agency		-	-			-	-			4	3.91			60	3.24			64	3.28
	Non-agency residential		-	-			-	-			-	-			5	10.17			5	10.17
	Non-agency commercial		-	-			3	1.87			1	3.64			46	3.35			50	3.29
	Asset-backed securities		-	-			5	0.75			4	1.87			14	2.54			23	1.97
Debt instruments total			1,670	0.31			122	2.62			102	3.15			163	3.75			2,057	0.86

Equity instruments:
	Fixed income mutual funds																		1,864	5.56
	Equity mutual fund																		529	4.29
Equity instruments total			-				-				-				-				2,393	5.28
Total fair value		$	1,670	0.31	%	$	122	2.62	%	$	102	3.15	%	$	163	3.75	%	$	4,450	3.24	%
Total amortized cost		$	1,670			$	119			$	104			$	162			$	4,137


		Hedge accounting				Non-hedge				Total
As of December 31, 2013		derivatives				accounting derivatives				Total
		Notional		Fair		Notional		Fair		Notional		Fair
(Dollars in millions)		Notional		value		Notional		value		Notional		value
Other assets
Interest rate swaps		$	465	$	31	$	24,402	$	347	$	24,867	$	378
Foreign currency swaps			1,182		470		6,992		524		8,174		994
	Total	$	1,647	$	501	$	31,394	$	871	$	33,041	$	1,372

Counterparty netting and collateral													(1,323)
	Carrying value of derivative contracts – Other assets											$	49

Other liabilities
Interest rate swaps		$	-	$	-	$	55,265	$	656	$	55,265	$	656
Interest rate caps			-		-		50		-		50		-
Foreign currency swaps			157		10		3,866		352		4,023		362
	Total	$	157	$	10	$	59,181	$	1,008	$	59,338	$	1,018

Counterparty netting and collateral													(1,005)
	Carrying value of derivative contracts – Other liabilities											$	13

		Finance		Insurance		Intercompany
Fiscal 2014:		operations		operations		eliminations		Total
Three Months Ended December 31, 2013

Total financing revenues		$	1,869	$	-	$	7	$	1,876
Insurance earned premiums and contract revenues			-		148		(7)		141
Investment and other income, net			22		46		-		68
Total gross revenues			1,891		194		-		2,085

Less:
	Depreciation on operating leases		1,033		-		-		1,033
	Interest expense		386		-		-		386
	Provision for credit losses		63		-		-		63
	Operating and administrative expenses		190		50		-		240
	Insurance losses and loss adjustment expenses		-		57		-		57
	Provision for income taxes		82		31		-		113
Net income		$	137	$	56	$	-	$	193

Nine Months Ended December 31, 2013

Total financing revenues		$	5,495	$	-	$	21	$	5,516
Insurance earned premiums and contract revenues			-		444		(21)		423
Investment and other income, net			56		32		-		88
Total gross revenues			5,551		476		-		6,027

Less:
	Depreciation on operating leases		2,950		-		-		2,950
	Interest expense		1,236		-		-		1,236
	Provision for credit losses		102		-		-		102
	Operating and administrative expenses		553		147		-		700
	Insurance losses and loss adjustment expenses		-		196		-		196
	Provision for income taxes		267		48		-		315
Net income		$	443	$	85	$	-	$	528

Total assets at December 31, 2013		$	96,665	$	3,651	$	(665)	$	99,651

		Finance1		Insurance		Intercompany
Fiscal 2013:		operations		operations		eliminations		Total
Three Months Ended December 31, 2012

Total financing revenues		$	1,815	$	-	$	6	$	1,821
Insurance earned premiums and contract revenues			-		146		(6)		140
Investment and other income, net			12		51		-		63
Total gross revenues			1,827		197		-		2,024

Less:
	Depreciation on operating leases		907		-		-		907
	Interest expense		284		-		-		284
	Provision for credit losses		88		-		-		88
	Operating and administrative expenses		182		47		-		229
	Insurance losses and loss adjustment expenses		-		77		-		77
	Provision for income taxes		126		30		-		156
Net income		$	240	$	43	$	-	$	283

Nine Months Ended December 31, 2012

Total financing revenues		$	5,422	$	-	$	18	$	5,440
Insurance earned premiums and contract revenues			-		453		(18)		435
Investment and other income, net			33		103		-		136
Total gross revenues			5,455		556		-		6,011

Less:
	Depreciation on operating leases		2,653		-		-		2,653
	Interest expense		625		-		-		625
	Provision for credit losses		107		-		-		107
	Operating and administrative expenses		542		132		-		674
	Insurance losses and loss adjustment expenses		-		231		-		231
	Provision for income taxes		560		75		-		635
Net income		$	968	$	118	$	-	$	1,086

Total assets at December 31, 2012		$	90,184	$	3,454	$	(463)	$	93,175
1 Certain prior period amounts have been reclassified to conform to the current period presentation.

Exhibit Number	Description	Method of Filing

3.1	Restated Articles of Incorporation filed with the California Secretary of State on April 1, 2010	(1)

3.2	Bylaws as amended through December 8, 2000	(2)

4.1(a)	Indenture dated as of August 1, 1991 between TMCC and The Chase Manhattan Bank, N.A	(3)

4.1(b)	First Supplemental Indenture dated as of October 1, 1991 among TMCC, Bankers Trust Company and The Chase Manhattan Bank, N.A	(4)

4.1(c)	Second Supplemental Indenture, dated as of March 31, 2004, among TMCC, JPMorgan Chase Bank (as successor to The Chase Manhattan Bank, N.A.) and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company)	(5)

4.1(d)	Third Supplemental Indenture, dated as of March 8, 2011 among TMCC, The Bank of New York Mellon Trust Company, N.A., as trustee, and Deutsche Bank Trust Company Americas, as trustee.	(6)

4.1(e)	Agreement of Resignation and Acceptance dated as of April 26, 2010 between Toyota Motor Credit Corporation, The Bank of New York Mellon and The Bank of New York Trust Company, N.A.	(1)

4.2(a)	Amended and Restated Agency Agreement, dated September 13, 2013, among Toyota Motor Credit Corporation, Toyota Motor Finance (Netherlands) B.V., Toyota Credit Canada Inc., Toyota Finance Australia Limited and The Bank of New York Mellon.	(7)

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS