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 June 30, 2003
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-9961
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TOYOTA MOTOR CREDIT CORPORATION
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3775816
- ---------------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
19001 S. Western Avenue
Torrance, California 90509
- ---------------------------------------- -----------------------
(Address of principal executive offices) (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 is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934).
Yes No X
--- ---
As of June 30, 2003, the number of outstanding shares of capital stock, par
value $10,000 per share, of the registrant was 91,500, all of which shares were
held by Toyota Financial Services Americas Corporation.
- 1 -
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in Millions)
June 30, March 31,
2003 2003
------------ ------------
(Unaudited)
ASSETS
------
Cash and cash equivalents............... $ 735 $ 980
Investments in marketable securities.... 1,388 1,630
Finance receivables, net................ 28,345 26,477
Investments in operating leases, net.... 7,900 8,017
Derivative assets....................... 2,171 1,421
Other assets............................ 563 708
------- -------
Total Assets................... $41,102 $39,233
======= =======
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
Notes and loans payable................. $33,851 $32,099
Derivative liabilities.................. 432 514
Other liabilities....................... 916 869
Income taxes payable.................... 18 26
Deferred income......................... 1,059 996
Deferred income taxes................... 1,890 1,866
------- -------
Total Liabilities................. 38,166 36,370
------- -------
Commitments and Contingencies (See note 7)
Shareholder's Equity:
Capital stock, $l0,000 par value
(100,000 shares authorized;
91,500 issued and outstanding)... 915 915
Retained earnings.................... 1,980 1,930
Accumulated other comprehensive
income............................ 41 18
------- -------
Total Shareholder's Equity........ 2,936 2,863
------- -------
Total Liabilities and
Shareholder's Equity........... $41,102 $39,233
======= =======
See Accompanying Notes to Consolidated Financial Statements.
- 2 -
TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Dollars in Millions)
(Unaudited)
Three Months Ended
June 30,
---------------------------
2003 2002
---------- ----------
Financing Revenues:
Leasing........................................ $ 622 $ 621
Retail financing............................... 290 263
Wholesale and other dealer financing........... 49 40
-------- --------
Total financing revenues.......................... 961 924
Depreciation on leases......................... 458 373
Interest expense............................... 193 217
Derivative fair value adjustments.............. 38 214
-------- --------
Net financing revenues............................ 272 120
Insurance premiums earned and contract
revenues....................................... 45 41
Investment and other income....................... 36 64
-------- --------
Net financing revenues and other revenues......... 353 225
-------- --------
Expenses:
Operating and administrative................... 136 128
Losses related to Argentine Investment......... - 5
Provision for credit losses.................... 109 122
Insurance losses and loss adjustment
expenses.................................... 25 21
-------- --------
Total expenses.................................... 270 276
-------- --------
Income/(Loss) before income taxes................. 83 (51)
Provision/(Benefit) for income taxes.............. 33 (22)
-------- --------
Net Income/(Loss)................................. $ 50 $ (29)
======== ========
See Accompanying Notes to Consolidated Financial Statements.
- 3 -
TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY
(Dollars in Millions)
(Unaudited)
Accumulated
Other
Capital Retained Comprehensive
Stock Earnings Income/(Loss) Total
------- -------- ------------- --------
Balance at March 31, 2002........ $ 915 $ 1,820 $ 16 $ 2,751
------ ------- ---------- -------
Net loss for the three months
ended June 30, 2002........... - (29) - (29)
Change in net unrealized gains
on available-for-sale
marketable securities......... - - (1) (1)
------ -------- ---------- -------
Total Comprehensive Loss......... - (29) (1) (30)
------ -------- ---------- -------
Balance at June 30, 2002.......... $ 915 $ 1,791 $ 15 $ 2,721
====== ======= ========== =======
Balance at March 31, 2003........ $ 915 $ 1,930 $ 18 $ 2,863
------ ------- ---------- -------
Net income for the three months
ended June 30, 2003........... - 50 - 50
Change in net unrealized gains
on available-for-sale
marketable securities......... - - 23 23
------ -------- ---------- -------
Total Comprehensive Income....... - 50 23 73
------ -------- ---------- -------
Balance at June 30, 2003......... $ 915 $ 1,980 $ 41 $ 2,936
====== ======= ========== =======
See Accompanying Notes to Consolidated Financial Statements.
- 4 -
TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Millions)
(Unaudited)
Three Months Ended
June 30,
-------------------------
2003 2002
-------- ---------
Cash flows from operating activities:
Net Income/(Loss)........................................ $ 50 $ (29)
-------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities:
Derivative fair value adjustments.................. 38 214
Depreciation and amortization...................... 458 399
Provision for credit losses........................ 109 122
Gain from sale of finance receivables, net......... - (33)
Gain from sale of marketable securities, net....... (3) -
Loss and reserve related to Argentine Investment... - 5
(Increase) in other assets......................... (702) (612)
Increase in deferred income taxes.................. 9 155
Increase in other liabilities...................... 930 168
-------- ---------
Total adjustments........................................ 839 418
-------- ---------
Net cash provided by operating activities................... 889 389
-------- ---------
Cash flows from investing activities:
Addition to investments in marketable securities......... (222) (535)
Disposition of investments in marketable securities...... 466 234
Acquisition of finance receivables....................... (11,785) (6,596)
Liquidation of finance receivables....................... 9,842 4,598
Proceeds from sale of finance receivables................ - 1,549
Addition to investments in operating leases.............. (769) (960)
Disposition of investments in operating leases........... 442 475
-------- --------
Net cash used in investing activities....................... (2,026) (1,235)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of notes and loans payable........ 1,327 1,933
Payments on notes and loans payable...................... (2,295) (1,443)
Net increase(decrease) in commercial paper............... 1,860 (69)
-------- --------
Net cash provided by financing activities................... 892 421
-------- --------
Net decrease in cash and cash equivalents................... (245) (425)
Cash and cash equivalents at the beginning of the period.... 980 747
-------- --------
Cash and cash equivalents at the end of the period.......... $ 735 $ 322
======== ========
Supplemental disclosures:
Interest paid............................................ $ 171 $ 210
Income taxes paid........................................ $ 32 $ 4
See Accompanying Notes to Consolidated Financial Statements.
- 5 -
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Interim Financial Data
- -------------------------------
The accompanying information pertaining to the three months ended June 30,
2003 and 2002 is unaudited and has been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. 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 months
ended June 30, 2003 are not necessarily indicative of those expected for any
other interim period or for a full year. Certain prior period amounts have
been reclassified to conform with the current period presentation.
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 2003 Annual Report to the Securities and Exchange Commission
("SEC")on Form 10-K. References herein to "TMCC" denote Toyota Motor Credit
Corporation and references herein to "the Company" denote Toyota Motor Credit
Corporation and its consolidated subsidiaries.
Note 2 - Finance Receivables
- ----------------------------
Finance receivables, net consisted of the following:
June 30, March 31,
2003 2003
------------ ------------
(Dollars in Millions)
Retail.................................... $18,331 $16,160
Finance leases............................ 5,617 6,078
Wholesale and other dealer loans.......... 5,705 5,608
------- -------
29,653 27,846
Unearned income........................... (962) (1,043)
------- -------
Finance receivables, net of
unearned income................... $28,691 $26,803
Allowance for credit losses............... (346) (326)
------- -------
Finance receivables, net .............. $28,345 $26,477
======= =======
Finance leases included estimated unguaranteed residual values of $1.8 billion
at both June 30 and March 31, 2003. The aggregate balances related to finance
receivables 60 or more days past due totaled $163 million and $160 million at
June 30 and March 31, 2003, respectively. The majority of retail and finance
lease receivables do not involve recourse to the dealer in the event of
customer default.
- 6 -
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3 - Investments in Operating Leases
- ----------------------------------------
Investments in operating leases, net consisted of the following:
June 30, March 31,
2003 2003
------------ ------------
(Dollars in Millions)
Vehicles.................................. $9,639 $9,687
Equipment and other....................... 719 720
------ ------
10,358 10,407
Accumulated depreciation.................. (2,301) (2,254)
Allowance for credit losses .............. (157) (136)
------ ------
Investments in operating leases, net...... $7,900 $8,017
====== ======
Note 4 - Allowance for Credit Losses
- ------------------------------------
An analysis of the allowance for credit losses follows:
Three months ended
June 30, March 31, June 30,
2003 2003 2002
--------- --------- ----------
(Dollars in Millions)
Allowance for credit losses at
beginning of period............... $ 526 $ 466 $ 283
Provision for credit losses.......... 109 204 122
Charge-offs.......................... (94) (138) (60)
Recoveries........................... 11 11 7
Other adjustments.................... - (17) (1)
------ ------ ------
Allowance for credit losses
at end of period.................. $ 552 $ 526 $ 351
====== ====== ======
At June 30, 2003, the allowance for credit losses consisted of $503 million to
cover probable losses on the Company's owned portfolio and $49 million to
cover probable losses on repossessed collateral in inventory as of the period
end dates shown above. Total repossessed collateral in inventory at June 30
and March 31, 2003, and June 30, 2002 was $118 million, $147 million, and
$144 million, respectively. Repossessed collateral is included in other
assets in the Consolidated Balance Sheet.
- 7 -
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5 - Derivatives and Hedging Activities
- -------------------------------------------
The following table sets forth the items included in the Company's Derivative
fair value adjustments in accordance with Statement of Financial Accounting
Standards No.133, "Accounting for Derivative Instruments and Hedging
Activities" and related amendments ("SFAS 133, as amended"):
Three months ended
June 30, June 30,
2003 2002
--------- ---------
(Dollars in Millions)
Net loss on non-designated derivatives....... $ (36) $ (234)
Net loss for hedges that no longer qualify
as fair value hedges....................... (8) -
Net gain related to the ineffective portion
of the Company's fair value hedges......... 6 20
------ ------
Derivative fair value adjustments............ $ (38) $ (214)
====== ======
- 8 -
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6 - Notes and Loans Payable
- --------------------------------
Notes and loans payable and the related weighted average interest rates are
summarized as follows:
June 30, March 31, June 30, March 31,
2003 2003 2003 <F1> 2003 <F1>
--------- --------- --------- ---------
(Dollars in Millions)
Short-term debt .............. $ 6,695 $ 4,843 1.17% 1.36%
Long-term debt ............... 25,068 26,034 1.36% 1.43%
Fair Value Adjustments <F2>... 2,088 1,222
--------- ---------
Notes and Loans Payable.. $ 33,851 $ 32,099 1.32% 1.42%
========= =========
<FN>
- --------------------
<F1> Includes the effect of U.S. dollar interest rate swap agreements and cross currency interest
rate swap agreements.
<F2> Adjusts debt to fair market value in accordance with SFAS 133, as amended.
</FN>
Unsecured notes denominated in various foreign currencies included in notes and
loans payable totaled approximately $11.4 billion at June 30 and March 31,
2003. Concurrent with the issuance of these unsecured notes, the Company
entered into cross currency interest rate swap agreements to convert these
obligations into variable rate U.S. dollar obligations.
Back-up credit facilities are summarized as follows:
Committed Uncommitted Unused Facilities
------------------ ------------------ ------------------
June 30, March 31, June 30, March 31, June 30, March 31,
2003 2003 2003 2003 2003 2003
-------- -------- -------- -------- -------- --------
(Dollars in Millions)
Syndicated bank credit
facilities.................... $ 4,200 $ 4,200 $ - $ - $ 4,200 $ 4,200
Letters of credit facilities..... - - 60 60 59 59
-------- -------- -------- -------- -------- --------
Total facilities $ 4,200 $ 4,200 $ 60 $ 60 $ 4,259 $ 4,259
======== ======== ======== ======== ======== ========
- 9 -
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7 - Commitments and Contingent Liabilities
- -----------------------------------------------
Guarantees and Comfort Letters
- ------------------------------
TMCC has entered into guarantees or comfort letters on behalf of its
subsidiaries and certain affiliates. As of June 30, 2003, TMCC has not
recorded any liabilities under such guarantees and comfort letters. The
maximum commitment amounts under the guarantees and comfort letters as of June
30, 2003 are summarized in the table below:
Maximum
Commitment
Amount
--------------
(Dollars in Millions)
Guarantees:
Banco Toyota Do Brasil debt.............. $ 30
Toyota Services de Venezuela, C.A.
("TSV") debt......................... 39
Affiliate pollution control
and solid waste disposal bonds...... 148
Comfort Letters:
Toyota Services de Mexico, S.A. de C.V.
("TSM") credit facilities........... 124
TSV office lease........................ 1
------
Total guarantees and comfort letters........ $ 342
======
During the first quarter of fiscal 2004 the Company increased the maximum
commitment amount of TSV debt guaranteed by the Company from $33 million at
March 31, 2003 to $39 million at June 30, 2003. The revised commitment
amount of $39 million is subject to the same terms and conditions as the
guarantees described in Note 16 - Commitments and Contingent Liabilities
included in the Company's 2003 Annual Report on Form 10-K.
During the first quarter of fiscal 2004 the Company executed a new comfort
letter with a Mexican bank on behalf of TSM. Additionally, the Company
increased the total maximum amount of borrowings supported under existing
comfort letters with Mexican banks. After consideration of the new comfort
letter and increases to existing comfort letters, the maximum amount of
borrowings supported by the Company totaled $124 million at June 30, 2003.
Under the comfort letters described in the preceding paragraph, TMCC would be
required to exercise its influence to induce TSM to meet all obligations under
the credit facilities should TSM default on payments as a result of financial
- 10 -
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7 - Commitments and Contingent Liabilities (Continued)
- ------------------------------------------------
insolvency. TMCC is not obligated to make any payments to third parties
should TSM default on its obligations. Maturities for bank loan advances
range from one month to five years. These comfort letters will remain in
effect for as long as any associated TSM loans are outstanding. These comfort
letters may be extended for additional periods by mutual agreements between
TMCC and the banks.
Other Commitments
- -----------------
In addition to the commitments previously discussed, TMCC has also issued
revolving liquidity notes in connection with securitization transactions and
extended lending commitments to dealers for revolving credit facilities. As
of June 30, 2003, no amounts were outstanding under the revolving liquidity
notes. The maximum commitments as of June 30, 2003 are summarized in the table
below:
Maximum
Commitment
Amount
-----------
(Dollars in Millions)
Revolving liquidity notes
related to securitizations................ $ 39
Credit facilities with
dealers and affiliates.................... 3,042
Lease commitments............................. 144
------
Total $3,225
======
During the first quarter of fiscal 2004 Toyota Credit de Puerto Rico Corp.
extended a $90 million revolving line of credit to Toyota de Puerto Rico
Corp., a wholly-owned subsidiary of Toyota Motor Sales, U.S.A., Inc. ("TMS").
The revolving line of credit has a one-year renewable term, with interest due
monthly. Any loans outstanding under this revolving line of credit are not
guaranteed by TMS. The $90 million total commitment and related borrowings of
$35 million are included in the table above under total credit facilities with
dealers and affiliates.
During the first quarter of fiscal 2004 the Company entered into a 15-year
lease agreement with TMS. The lease agreement is for the Company's new
headquarters location in the TMS headquarters complex in Torrance, California.
At June 30, 2003, minimum future commitments under lease agreements to which
the Company is a lessee, including those under the agreement discussed above,
are as follows: fiscal years ending 2004 - $21 million; 2005 - $19 million;
2006 - $17 million; 2007 - $13 million; 2008 - $10 million; 2009 - $8 million;
and thereafter - $56 million.
In the ordinary course of business, the Company enters into agreements
containing indemnification provisions standard in the industry related to
several types of transactions, such as debt funding, derivatives, and
securitization transactions. Performance under these indemnities would occur
upon a breach of the representations, warranties or covenants made or given, or
- 11 -
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7 - Commitments and Contingent Liabilities (Continued)
- ------------------------------------------------
a third party claim. Management periodically evaluates the probability of
having to incur such costs. Due to the difficulty in predicting events which
could cause a breach of these provisions, the Company is not able to estimate
its maximum exposure to future payments that could result from claims made
under such indemnities. The Company has not made any material payments in the
past as a result of these provisions, and as of June 30, 2003 the Company does
not believe it is probable that it will have to make any material payments in
the future. As such, no amounts have been recorded under these indemnifications
as of June 30, 2003.
Various legal actions, governmental proceedings and other claims are pending or
may be instituted or asserted in the future against the Company 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 the Company's business operations, policies and practices. Certain
of these actions are similar to suits which have been filed against other
financial institutions and captive finance companies. Management and internal
and external counsel perform periodic reviews of pending claims and actions to
determine the probability of adverse verdicts and resulting amounts of
liability. The amounts of liability on pending claims and actions as of June
30, 2003 were not determinable; however, in the opinion of management, the
ultimate liability resulting therefrom should not have a material adverse
effect on the Company's consolidated financial position or results of
operations.
- 12 -
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8 - Segment Information
- ----------------------------
Financial results for the Company's operating segments are summarized below:
Three Months Ended
June 30,
------------------
2003 2002
------- -------
(Dollars in Millions)
Assets:
Financing operations................... $40,313 $34,673
Insurance operations................... 1,002 810
Eliminations/reclassifications......... (213) (182)
------- -------
Total assets......................... $41,102 $35,301
======= =======
Gross revenues:
Financing operations................... $ 988 $ 980
Insurance operations................... 54 49
------- -------
Total gross revenues................. $ 1,042 $ 1,029
======= =======
Net income/(loss):
Financing operations................... $ 39 $ (39)
Insurance operations................... 11 10
------- -------
Total net income/(loss)............... $ 50 $ (29)
======= =======
Note 9 - Subsequent Events
- --------------------------
In August 2003, TMCC increased the maximum amount of borrowings supported under
existing comfort letters with Mexican banks on behalf of TSM. As a result, TSM
is allowed to borrow in Mexican Pesos up to a maximum amount equivalent to $131
million U.S. dollars. The revised commitment amount is subject to the same
terms and conditions as the comfort letters described in Note 7 - Commitments
and Contingent Liabilities of the consolidated financial statements.
- 13 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
EARNING ASSETS AND CONTRACT VOLUME
Net Earning Assets
- ------------------
The composition of the Company's net earning assets as of the balance sheet
dates reported is summarized below:
June 30, March 31, June 30,
2003 2003 2002
------------ ------------ ------------
(Dollars in Millions)
Vehicle lease earning assets
Investment in operating leases, net..... $ 7,585 $ 7,679 $ 7,333
Finance leases, net..................... 4,614 4,997 5,794
------- ------- -------
Total vehicle lease earning assets....... 12,199 12,676 13,127
Vehicle retail finance receivables, net.. 18,072 15,873 13,885
Vehicle wholesale and other financing <F1> 6,477 6,407 4,901
Allowance for credit losses <F2>......... (503) (462) (324)
------- ------- -------
Total net earning assets................. $36,245 $34,494 $31,589
======= ======= =======
<FN>
- ----------------------
<F1> For purposes of this table, vehicle wholesale and other financing includes
wholesale financing, real estate loans, working capital loans, revolving credit lines,
and industrial equipment financing.
<F2> Consists of allowance to cover probable losses on the Company's owned portfolio.
</FN>
Net earning assets at June 30, 2003 increased $1.8 billion or 5% compared to
March 31, 2003 and increased $4.7 billion or 15% compared to June 30, 2002.
The growth in earning assets was primarily due to higher levels of both vehicle
retail financing and vehicle wholesale and other financing, partially offset by
a decrease in vehicle lease earning assets. The significant increase in retail
finance receivables primarily resulted from higher contract volume, generated
by an increased use of marketing incentives sponsored by Toyota Motor Sales,
U.S.A., Inc. ("TMS") and higher Toyota and Lexus vehicles sales levels. In
addition, for the three months ended June 30, 2003, TMCC market share (as
defined below under "Contract Volume") increased from 41.8% to 47.9% when
compared to the same period in the prior year. The Company also experienced
growth in the number of vehicle dealers receiving vehicle wholesale financing.
Vehicle lease earning assets decreased due to a general shift in programs
sponsored by TMS from lease to retail as well as an industry-wide shift away
from leasing.
The increase in the allowance for credit losses from March 31, 2003 and June
30, 2002, respectively, resulted from significant increases in charge-off
rates over the prior periods. Refer to the "Provision for Credit Losses"
section of the Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") for further discussion regarding the Company's
delinquency and charge-off experience.
- 14 -
Contract Volume
- ---------------
The composition of the Company's contract volume and market share for the
quarters ended June 30, 2003 and 2002 is summarized below:
Three Months Ended
------------------------
June 30, June 30,
2003 2002
------- --------
Total contract volume:
Vehicle retail....................... 216,000 169,000
Vehicle lease........................ 31,000 44,000
------- -------
Total................................... 247,000 213,000
======= =======
TMS sponsored contract volume:
Vehicle retail....................... 79,000 22,000
Vehicle lease........................ 8,000 2,000
------- -------
Total................................... 87,000 24,000
======= =======
Market share <F1>:
Vehicle retail....................... 39.8% 30.2%
Vehicle lease........................ 8.1% 11.6%
----- -----
Total................................... 47.9% 41.8%
===== =====
<FN>
- --------------------
<F1> Market share represents penetration of Toyota and Lexus vehicle financed sales to consumers,
excluding fleet sales, sales of Toyota Services de Mexico, S.A. de C.V., Toyota Services de
Venezuela, C.A and a private Toyota distributor.
</FN>
Total contract volume increased 16% primarily due to increased vehicle retail
contract volume reflecting the continued use of incentives on new vehicles,
and increases in retail financing programs sponsored by TMS. Vehicle lease
contract volume decreased 30% reflecting a general shift in programs sponsored
by TMS from lease to retail as well as an industry-wide shift away from
leasing.
Total market share increased during the first quarter of fiscal 2004 over the
comparable prior year period as the increase in retail volume more than offset
the overall decline in vehicle lease contract volume.
- 15 -
NET INCOME
- ----------
The table below presents the Company's net income for the three months ended
June 30, 2003 and 2002. The table also presents net income for the three
months ended June 30, 2003 and 2002 excluding the impact of adjustments
calculated in accordance with Statement of Financial Accounting Standards
("SFAS") No. 133 "Accounting for Derivative Instruments and Hedging
Activities" and related amendments ("SFAS 133, as amended"). Management
believes that providing a summary of net income excluding the effects of SFAS
133, as amended, provides useful information to investors for the reasons
explained below, and a more balanced representation of the Company's operating
results. Management uses this measure when analyzing its core operating
results.
Three Months Ended
June 30,
------------------
2003 2002
----- -----
(Dollars in Millions)
Net income........................ $ 50 $ (29)
Impact of application of SFAS 133,
as amended, (net of income tax)... 21 124
----- -----
Net income excluding impact of
application of SFAS 133, as
amended(net of income tax)........ $ 71 $ 95
===== =====
Net income for the first quarter of fiscal 2004 improved significantly over the
comparable period in fiscal 2003 primarily due to lower unfavorable derivative
fair value adjustments in the current period. The reduction in the impact of
adjustments calculated in accordance with SFAS 133, as amended, resulted from
less volatility in interest rates in the current period relative to the
comparable quarter in the prior year.
Net income excluding the impact of the application of SFAS 133, as amended,
decreased $24 million or 25% over the comparable prior year period. The
decrease resulted from the combined effects of higher depreciation expense and
lower investment and other income partially offset by higher financing revenues
and lower interest expense. The more significant fluctuations in the
components of net income are discussed on the following pages of this MD&A
section.
- 16 -
In accordance with SFAS 133, as amended, the effect of market interest rate
movements on portfolio-based derivative instruments and the ineffective
portion of the Company's fair value hedge relationships must be included in
the Company's financial results. Under Generally Accepted Accounting
Principles, the effect of market interest rate movements on the Company's
related earning assets is not included in the Company's financial results.
Management believes that including in the Company's financial results the
effect of market interest rate movements on its portfolio-based derivative
instruments and the ineffective portion of the Company's fair value hedges in
accordance with SFAS 133, as amended, while not including any corresponding
valuation adjustment related to earning assets, does not provide a complete
picture of the economics of the Company's business and its operating
performance. Therefore, the Company reports financial results on a basis that
includes, as well as excludes, the impact of the application of SFAS 133, as
amended.
TOTAL FINANCING REVENUES
- ------------------------
Total financing revenues increased $37 million or 4% for the first quarter of
fiscal 2004 over the comparable prior year period primarily due to higher
retail financing revenues and, to a lesser extent, higher wholesale and other
dealer financing revenues. The increase in retail financing revenues resulted
from an increase in vehicle retail finance receivables partially offset by a
reduction in overall portfolio yields. Wholesale and other dealer financing
revenues increased $9 million or 23% as a result of the growth in the number
of vehicle dealers receiving vehicle wholesale financing partially offset by a
reduction in overall portfolio yields.
DEPRECIATION ON LEASES
- ----------------------
Depreciation expense increased $85 million or 23% over the comparable period
in fiscal 2003. The increase was comprised of a $29 million increase in
straight-line depreciation and a $56 million increase in additional
depreciation expense.
Straight-line depreciation expense is based upon the difference between a
leased vehicle's capitalized cost and the contractual residual value
established at lease origination. Average capitalized costs have continued to
increase while average contractual residual values have declined. The
combination of higher capitalized costs and lower residual values resulted in
an overall increase in the depreciable basis of leased vehicles.
Additional depreciation expense beyond straight-line depreciation is primarily
driven by projected vehicle return rates and projected used vehicle prices.
The continued use of new vehicle incentive programs together with an ongoing
weak economic climate have adversely affected both vehicle return rates and
used vehicle prices. The amount of additional depreciation expense taken
during the three months ended June 30, 2003 was attributable to the combined
impact of these factors.
- 17 -
INTEREST EXPENSE
- ----------------
Interest expense decreased $24 million or 11% for the first quarter of fiscal
2004 over the comparable prior year period due to a general decrease in market
interest rates, partially offset by increased average outstanding debt used to
fund growth in assets. Average outstanding debt was $29 billion and $25
billion at June 30, 2003 and 2002, respectively.
DERIVATIVE FAIR VALUE ADJUSTMENT
- --------------------------------
The following table sets forth the items included in the Company's Derivative
fair value adjustments in accordance with SFAS 133, as amended:
Three months ended
June 30, June 30,
2003 2002
-------- --------
(Dollars in Millions)
Net loss on non-designated derivatives....... $ (36) $ (234)
Net loss for hedges that no longer qualify
as fair value hedges....................... (8) -
Net gain related to the ineffective portion
of the Company's fair value hedges......... 6 20
------- -------
Derivative fair value adjustments............ $ (38) $ (214)
======= =======
The derivative fair value adjustment decreased $176 million from the
comparable period in fiscal 2003 primarily due to the impact of lower interest
rate volatility on the Company's non-designated derivative portfolio.
In the current quarter, the absolute level of interest rates declined slightly
from March 31, 2003, resulting in an unfavorable fair value adjustment of $38
million of which $36 million was attributed to the Company's non-designated
derivative portfolio.
- 18 -
INVESTMENT AND OTHER INCOME
- ---------------------------
The following table summarizes the Company's investment and other income for
the three months ended June 30, 2003 and 2002:
Three Months Ended
June 30,
------------------
2003 2002
------ ------
(Dollars in Millions)
Investment and servicing fee income.... $ 26 $ 23
Gains on assets sold................... - 33
----- -----
Investment income-securitizations... $ 26 $ 56
Investment income-marketable
securities and other income......... 10 8
----- -----
Total Investment and Other Income $ 36 $ 64
===== =====
Investment and other income decreased $28 million or 44% for the quarter ended
June 30, 2003 from the comparable prior year period. The decrease was related
to a reduction in the Company's securitization activity in the current quarter
relative to the comparable prior year period. As the Company's funding needs
were met through the debt capital markets, the Company did not initiate any
securitization transactions in the first quarter of fiscal 2004.
- 19 -
PROVISION FOR CREDIT LOSSES
- ---------------------------
The Company is exposed to credit risk on its owned portfolio. Credit risk is
the risk that customers will not make required payments to the Company in
accordance with their contractual obligation. The Company's level of credit
losses is influenced primarily by two factors: the total number of contracts
that default ("frequency of occurrence") and loss per occurrence ("loss
severity"). The Company maintains an allowance for credit losses to cover
probable losses.
The following tables provide information related to the Company's credit loss
experience:
Three-months Ended
June 30,
-----------------------
2003 2002
------- -------
(Dollars in Millions)
Allowance for credit losses
at beginning of period............... $ 526 $ 283
Provision for credit losses............. 109 122
Charge-offs............................. (94) (60)
Recoveries.............................. 11 7
Other adjustments....................... - (1)
------- -------
Allowance for credit losses
at end of period..................... $ 552 $ 351
======= =======
June 30,
--------------------
2003 2002
------ ------
(Dollars in Millions)
Net credit losses as a percentage
of average earning assets <F1> <F2>.... 0.92% 0.67%
Aggregate balances 60 or more days
past due .............................. $ 198 $ 238
Over-60 day delinquencies as a percentage
of gross earning assets <F1> <F2>....... 0.54% 0.74%
Allowance for credit losses
as a percentage of gross
earning assets <F2> ................... 1.50% 1.21%
<FN>
- --------------------
<F1> Delinquency and charge-off ratios typically fluctuate over time as a portfolio matures. The
information in the preceding table has not been adjusted to eliminate the effect of the growth of
the Company's portfolio.
<F2> For purposes of this table, "earning assets" include earning assets and repossessed
collateral.
</FN>
- 20 -
Charge-offs, net of recoveries, increased $30 million or 57% in the quarter
ended June 30, 2003 over the comparable period in the prior year. Although
charge-offs increased in the most recent quarter, the provision for credit
losses declined $13 million or 11% in the current quarter over the comparable
period in the prior year. The decline in the provision for credit losses
reflects the decline in 60-day contractual delinquency from 0.74% at June 30,
2002 to 0.54% at June 30, 2003.
Net Credit Losses and Delinquency Experience
- --------------------------------------------
The Company's credit loss experience continued to be significantly influenced
by the combined impact of the following factors:
- - The Company's field restructuring
- - Lower used vehicle prices
- - Continued economic weakness
- - Longer term financing
- - Tiered/risk based pricing
The impact of the listed factors to the Company's credit loss experience,
except as discussed below, is consistent with the impact to fiscal 2003
results as discussed in the "Provision for Credit Losses" section of the
Company's 2003 Annual Report on Form 10-K. The impact of the tiered/risk
based pricing program ("tiered pricing"), which was fully implemented as of
March 2001, is now considered to be a lesser contributing factor to higher
credit losses. In prior periods, the increase in the level of credit losses
experienced by the Company was more significantly influenced by the
implementation of tiered pricing. While the implementation of tiered pricing
has resulted in increased overall credit losses, the period-to-period effects
have lessened over time.
Although delinquency rates have improved from June 2002 to June 2003, the
overall level of delinquency remains high relative to the Company's historical
experience. Additionally, the credit loss rate for the three months ended June
30, 2003, was at the upper end of historical experience. Management expects
that the adverse impact of the field restructuring should lessen as a result
of measures taken to improve processes and technology; however, management
remains cautious regarding the near term economic outlook, the benefit of the
actions taken and the potential impact on these factors affecting credit loss
experience. Management believes that the level of reserve at June 30, 2003 is
reasonable in light of current facts and circumstances.
- 21 -
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The objective of the Company's liquidity strategy is to ensure access to the
capital markets so as to meet obligations and other commitments on a timely and
cost-effective basis to support the growth in earning assets. Significant
reliance is placed on the Company's ability to obtain debt and securitization
funding in the capital markets. Debt issuances have generally been in the form
of commercial paper and unsecured term debt. The Company believes that debt
issuances and securitization funding, combined with cash provided by operating,
investing, and financing activities, will provide sufficient liquidity to meet
future funding requirements.
Commercial Paper
- ----------------
Commercial paper issuances are used to meet short-term funding needs.
Commercial paper outstanding under the Company's commercial paper programs
ranged from approximately $4.7 billion to $7.0 billion during the quarter ended
June 30, 2003, with an average outstanding balance of $5.9 billion.
Unsecured Term Debt
- -------------------
Long-term funding requirements are met through the issuance of a variety of
debt securities underwritten in both the United States ("U.S.") and
international capital markets. Medium term notes ("MTNs") and bonds have
provided the Company with significant sources of funding. During the quarter
ended June 30, 2003, the Company issued approximately $1.0 billion of MTNs and
bonds, all of which had original maturities of one year or more. At June 30,
2003, the Company had total MTNs and bonds outstanding of $26.0 billion, of
which $11.4 billion was denominated in foreign currencies. The remaining
maturities of all MTNs and bonds outstanding at June 30, 2003 ranged from less
than one year to ten years.
The Company anticipates continued use of MTNs and bonds in both the U.S. and
international capital markets. To provide for the issuance of debt securities
in the U.S. capital market, the Company maintains a shelf registration with the
Securities and Exchange Commission ("SEC") under which approximately $5.4
billion was available for issuance at July 31, 2003. Under the Company's euro
MTN program, which provides for the issuance of debt securities in the
international capital market, the maximum aggregate principal amount authorized
to be outstanding at any time is $16.0 billion, of which approximately $1.9
billion was available for issuance at July 31, 2003. The U.S. dollar and euro
MTN programs may be expanded from time to time to allow for the continued use
of these sources of funding. In addition, the Company may issue bonds in the
U.S. and international capital markets that are not issued under its MTN
programs.
Securitization Funding
- ----------------------
TMCC's securitization program allows the Company to access an additional
source of funding, further diversifying its investor base to enhance its
liquidity position. TMCC's securitization transactions are completed using
qualifying special purpose entities with the exception of one transaction in
fiscal 2002. The outstanding balance of securitized retail finance
receivables which TMCC continues to service totaled $5.7 billion at June 30,
2003.
- 22 -
For the past three fiscal years, securitization transactions averaged
approximately 29% of the Company's total funding. As of July 31, 2003,
$7.4 billion of securities was available for issuance under the SEC shelf
registration statement. A reduction or termination of TMCC's securitization
activities would cause the Company to seek alternative funding from debt
capital markets. Management does not anticipate any changes in the Company's
ability to access the securization market in the foreseeable future.
Back-Up Liquidity Facilities
- ----------------------------
For additional liquidity purposes, the Company maintains syndicated bank
credit facilities with banks whose commitments aggregated $4.2 billion at June
30, 2003. No amounts were outstanding under the syndicated bank credit
facilities as of June 30, 2003. The 364-day facility is subject to renewal
during September 2003 and the Company expects the facility will be renewed.
The Company maintains uncommitted lines of credit to facilitate issuance of
letters of credit. These lines of credit totaled $60 million as of June 30,
2003 of which approximately $1 million was outstanding.
Credit Ratings
- --------------
Effective August 1, 2003, Moody's Investors Service, Inc. ("Moody's") upgraded
the long-term ratings of Toyota Motor Corporation ("TMC") and its supported
subsidiaries, including TMCC, from Aa1 to Aaa, and retained its stable
outlook. After consideration of the upgrade, Moody's and Standard & Poor's
Ratings, Group, a division of The McGraw-Hill Companies, Inc. ("S&P") ratings
of TMCC were as follows:
Rating Agency Senior Debt Commercial Paper
--------------- ------------- ------------------
S&P AAA A-1+
Moody's Aaa P-1
In March 2003, S&P affirmed the ratings of both senior debt and commercial
paper, while maintaining a negative outlook.
CONTRACTUAL OBLIGATIONS AND CREDIT-RELATED COMMITMENTS
- ------------------------------------------------------
During the first quarter of fiscal 2004 the Company entered into a 15-year
lease agreement with TMS. The lease agreement is for the Company's new
headquarters location in the TMS headquarters complex in Torrance, California.
At June 30, 2003, minimum future commitments under lease agreements to which
the Company is a lessee, including those under the agreement discussed above,
are as follows: fiscal years ending 2004 - $21 million; 2005 - $19 million;
2006 - $17 million; 2007 - $13 million; 2008 - $10 million; 2009 - $8 million;
and thereafter - $56 million.
- 23 -
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
- ------------------------------------------------------------------------
This report contains "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which include estimates,
projections and statements of the Company's beliefs concerning future events,
business plans, objectives, expected operating results, and the assumptions
upon which those statements are based. Forward looking statements include,
without limitation, any statement that may predict, forecast, indicate or
imply future results, performance or achievements, and are typically
identified with words such as "believe", "anticipate", "expect", "estimate",
"project", "should", "intend", "will", "may" or words or phrases of similar
meaning. The Company cautions 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 following: decline in demand
for Toyota and Lexus products; the effect of economic conditions; the effect of
the current political, economic and regulatory risk in Argentina, Mexico,
Venezuela, Brazil and other Latin American and South American countries and the
resulting effect on their economies and monetary and fiscal policies; a decline
in the market acceptability of leasing; the effect of competitive pricing on
interest margins; changes in pricing due to the appreciation of the Japanese
yen against the U.S. dollar; the effect of governmental actions; changes in tax
laws; changes in regulations that affect retail installment lending, leasing or
insurance; the effect of competitive pressures on the used car market and
residual values and the continuation of the other factors causing an increase
in vehicle returns and disposition losses; the continuation of, and if
continued, the level and type of special programs offered by TMS; the ability
of the Company to successfully access the U.S. and international capital
markets; the effects of any rating agency actions; increases in market interest
rates; the implementation of new technology systems; the continuation of
factors causing increased delinquencies and credit losses; the changes in the
fiscal policy of any government agency which increases sovereign risk, monetary
policies exercised by the European Central Bank and other monetary authorities;
increased costs associated with the Company's debt funding or restructuring
efforts; the effect of any military action by or against the U.S., as well as
any future terrorist attacks, including any resulting effects on general
economic conditions, consumer confidence and general market liquidity; with
respect to the effects of litigation matters, the discovery of facts not
presently known to the Company or determination by judges, juries or other
finders of fact which do not accord with the Company's evaluation of the
possible liability from existing litigation; increased losses resulting from
default by any dealers to which the Company has a significant credit exposure;
default by any counterparty to a derivative contract; and performance under any
guaranty or comfort letter issued by the Company. The risks included here are
not exhaustive. New risk factors emerge from time to time and it is not
possible for the Company to predict all such risk factors, nor to assess the
impact such risk factors might have on the Company's business or the extent to
which any factor or combination of factors may cause actual results to differ
materially from those contained in any forward looking statements. Given
these risks and uncertainties, investors should not place undue reliance on
forward looking statements as a prediction of actual results. The Company
will not update the forward looking statements to reflect actual results or
changes in the factors affecting the forward looking statements.
- 24 -
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Value at Risk
- -------------
The Company's primary market risk exposure is interest rate risk, in
particular U.S. dollar London Interbank Offered Rate. The Company uses the
value at risk methodology ("VAR") to measure this risk. The VAR provides an
overview of the Company's exposure to changes in market factors. VAR
represents the potential loss in fair value for the Company's portfolio from
adverse changes in market factors for a 30-day holding period within a 95%
confidence interval using the Monte Carlo simulation technique. The VAR
methodology uses historical interest rate data to assess the potential future
loss.
The Company's VAR methodology incorporates the impact from adverse changes in
market interest rates but does not incorporate the impact from other market
changes, such as foreign currency exchange rates, which do not materially
affect the value of the Company's portfolio. The VAR methodology is applied
to more than 90% of the Company's market risk sensitive positions. Management
believes the positions considered in the analysis are representative of the
Company's total portfolio. The VAR methodology currently does not consider
changes in fair values related to investments in marketable securities and
equipment financing.
The VAR and the average VAR of the Company's portfolio as of, and for the
three months ended, June 30, 2003 measured as the potential 30 day loss in
fair value from assumed adverse changes in interest rates are as follows:
Average for the
As of Three Months Ended
June 30, 2003 June 30, 2003
------------------- -------------------
Mean portfolio value..................... $5.7 billion $5.8 billion
VAR...................................... $32 million $38 million
Percentage of the mean portfolio value... 0.6% 0.7%
Confidence level......................... 95% 95%
The Company's calculated VAR exposure represents an estimate of reasonably
possible net losses that would be recognized on its portfolio of financial
instruments assuming hypothetical movements in future market rates and is not
necessarily indicative of actual results which may occur. It does not
represent the maximum possible loss nor any expected loss that may occur,
since actual future gains and losses will differ from those estimated, based
upon actual fluctuations in market rates, operating exposures, and the timing
thereof, and changes in the composition of the Company's portfolio of
financial instruments during the year.
- 25 -
Market Price Risk
- -----------------
The Company is also exposed to market price risk related to equity investments
included in the investment portfolio of its insurance operations. Investments
in marketable securities consist primarily of equity investments, consisting
primarily of mutual fund investments. These investments are classified as
available for sale in accordance with SFAS No. 115 "Accounting for Certain
Investments in Debt and Equity Securities" ("SFAS 115"). None of the equity
investments are considered trading securities within the meaning of SFAS 115.
A summary of the sensitivity of the fair market value of the Company's equity
investments to an assumed 10% and 20% adverse change in market prices is
presented below.
As of
June 30,
2003
-----------
(Dollars in Millions)
Cost..................................... $ 167
Fair Market Value........................ 183
Net unrealized gain...................... 16
Estimated 10% adverse change in prices... (18)
Estimated 20% adverse change in prices... (37)
These hypothetical scenarios represent an estimate of reasonably possible net
losses that may be recognized on the Company's equity investments assuming
hypothetical movements in future market rates and is not necessarily
indicative of actual results that may occur. Additionally, the hypothetical
scenarios do not represent the maximum possible loss nor any expected loss
that may occur, since actual future gains and losses will differ from those
estimated, based upon actual fluctuations in market rates.
Counterparty Credit Risk
- ------------------------
Counterparty credit risk of derivative instruments is represented by the fair
value of contracts with a positive fair value at June 30, 2003, reduced by the
effects of master netting agreements. At June 30, 2003, aggregate
counterparty credit risk as represented by the fair value of the Company's
derivative instruments was approximately $2.0 billion on an aggregate notional
amount of $44.7 billion.
- 26 -
Review by Independent Accountants
With respect to the unaudited consolidated financial information of Toyota
Motor Credit Corporation for the three-month periods ended June 30, 2003 and
2002, PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") reported that they
have applied limited procedures in accordance with professional standards for a
review of such information. However, their separate report dated August 14,
2003 appearing herein, states that they did not audit and they do not express
an opinion on that unaudited consolidated financial information. Accordingly,
the degree of reliance on their report on such information should be restricted
in light of the limited nature of the review procedures applied.
PricewaterhouseCoopers is not subject to the liability provisions of Section 11
of the Securities Act of 1933 for their report on the unaudited consolidated
financial information because that report is not a "report" or a "part" of the
registration statement prepared or certified by PricewaterhouseCoopers within
the meaning of Sections 7 and 11 of the Act.
ITEM 4. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the reports filed or
submitted under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), is recorded, processed, summarized and reported within the time periods
specified in the Commission's rules and forms.
As of the end of the period of this quarterly report, the Company's Chief
Executive Officer ("CEO") and Chief Financial Officer ("CFO") evaluated the
effectiveness of such disclosure controls and procedures in place pursuant to
Rule 13a-14 of the Exchange Act. Based on the evaluation, the CEO and CFO
concluded that such disclosure controls and procedures are effective.
There has been no change in the Company's internal control over financial
reporting during the Company's most recent fiscal quarter that materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.
- 27 -
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Various legal actions, governmental proceedings and other claims are pending or
may be instituted or asserted in the future against TMCC and its subsidiaries
with respect to matters arising from the ordinary course of business. Certain
of these actions are or purport to be class action suits, seeking sizeable
damages and/or changes in the Company's business operations, policies and
practices. Certain of these actions are similar to suits, which have been
filed against other financial institutions and captive finance companies.
Management and internal and external counsel perform periodic reviews of
pending claims and actions to determine the probability of adverse verdicts and
resulting amounts of liability. The amounts of liability on pending claims and
actions as of June 30, 2003 were not determinable; however, in the opinion of
management, the ultimate liability resulting therefrom should not have a
material adverse effect on the Company's consolidated financial position or
results of operations. The foregoing is a forward looking statement within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Act of 1934, as amended, which represents the Company's
expectations and beliefs concerning future events. The Company cautions that
its discussion of Legal Proceedings is further qualified by important factors
that could cause actual results to differ materially from those in the forward
looking statement, including but not limited to the discovery of facts not
presently known to the Company or determinations by judges, juries or other
finders of fact which do not accord with the Company's evaluation of the
possible liability from existing litigation.
ITEM 2. CHANGES IN SECURITIES
There is nothing to report with regard to this item.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There is nothing to report with regard to this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
There is nothing to report with regard to this item.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits listed on the accompanying Exhibit Index, on page 30,
are filed as part of this report.
(b) Reports on Form 8-K
The following reports on Form 8-K were filed by the registrant during
the quarter ended June 30, 2003:
Date of Report Items Reported
----------------- ---------------------
May 9, 2003 Item 9. Regulation FD Disclosure (the
information was furnished under "Item 12.
Results of Operations and Financial
Condition")
- 28 -
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: August 14, 2003 By /S/ GEORGE E. BORST
-------------------------------
George E. Borst
President and
Chief Executive Officer
(Principal Executive Officer)
Date: August 14, 2003 By /S/ JOHN F. STILLO
-------------------------------
John F. Stillo
Vice President and
Chief Financial Officer
(Principal Financial Officer)
- 29 -
EXHIBIT INDEX
Exhibit Method
Number Description of Filing
- ------- ----------- ---------
12.1 Calculation of Ratio of Earnings to Fixed Charges Filed
Herewith
15.1 Report of Independent Accountants Filed
Herewith
15.2 Letter regarding unaudited interim financial Filed
information 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
- 30 -