<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended September 30, 1996
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 1-9961
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TOYOTA MOTOR CREDIT CORPORATION
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(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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 787-1310
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Securities registered pursuant to section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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7.55% Fixed Rate Medium-Term
Notes due January 30, 1997 New York Stock Exchange
- ---------------------------------------- -----------------------
Securities registered pursuant to Section 12(g) of the Act: None
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 if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
As of November 30, 1996, 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 Motor Sales, U.S.A., Inc.
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PART I
ITEM 1. BUSINESS.
General
Toyota Motor Credit Corporation ("TMCC") is a wholly-owned subsidiary of
Toyota Motor Sales, USA, Inc. ("TMS") which was incorporated in California in
1982 and commenced operations in 1983. TMCC provides retail leasing, retail
and wholesale financing and certain other financial services to authorized
Toyota and Lexus vehicle and Toyota industrial equipment dealers and their
customers in the United States (excluding Hawaii). TMCC has six wholly-owned
subsidiaries, four of which are engaged in the insurance business, one limited
purpose subsidiary formed primarily to acquire and securitize retail finance
receivables and one newly formed corporation, established in January 1996, to
provide retail and wholesale financing and certain other financial services
to authorized Toyota and Lexus vehicle dealers and their customers in the
Commonwealth of Puerto Rico. See Item 14, Exhibit 21.1. TMCC and its
subsidiaries are collectively referred to as the "Company".
The Company's earnings are primarily impacted by the level of average earning
assets, comprised primarily of investments in operating leases and finance
receivables, and asset yields as well as outstanding borrowings and the cost
of funds. The Company's business is substantially dependent upon the sale of
Toyota and Lexus vehicles in the United States. Changes in the volume of
sales of such vehicles resulting from governmental action, changes in consumer
demand, changes in pricing of imported units due to currency fluctuations, or
other events, could impact the level of finance and insurance operations of
the Company. To date, the level of the Company's operations has not been
restricted by the level of sales of Toyota and Lexus vehicles.
An operating agreement between TMCC and TMS (the "Operating Agreement"),
provides that TMCC will establish its own financing rates and is under no
obligation to TMS to finance wholesale obligations from any dealers or retail
obligations of any customers. In addition, pursuant to the Operating
Agreement, TMS will arrange for the repurchase of new Toyota and Lexus
vehicles financed at wholesale by TMCC at the aggregate cost financed in the
event of dealer default. The Operating Agreement also specifies that TMS will
retain 100% ownership of TMCC as long as TMCC has any funded debt outstanding
and that TMS will make necessary equity contributions or provide other
financial assistance TMS deems appropriate to ensure that TMCC maintains a
minimum coverage on fixed charges of 1.10 times such fixed charges in any
fiscal quarter; the Operating Agreement was amended on May 14, 1996 to reduce
the minimum fixed charge coverage ratio from 1.25 to 1.10. The Operating
Agreement does not constitute a guarantee by TMS of any obligations of TMCC.
The fixed charge coverage provision of the Operating Agreement is solely for
the benefit of the holders of TMCC's commercial paper, and the Operating
Agreement may be amended or terminated at any time without notice to, or the
consent of, holders of other TMCC obligations.
Retail Leasing
TMCC purchases primarily new and used vehicle lease contracts originated by
Toyota and Lexus dealers. TMCC assumes ownership of the leased vehicles and
is generally permitted to take possession of vehicles upon lessee default.
TMCC is responsible for contract collection and administration during the
lease period and for the value of the vehicle at lease maturity if the vehicle
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is not purchased by the lessee or dealer. Off-lease vehicles returned to TMCC
are sold through a network of auction sites located throughout the United
States. TMCC requires lessees to carry fire, theft, collision and liability
insurance on leased vehicles covering the interests of both TMCC and the
lessee. In recent years, TMS has sponsored special lease programs by
supporting reduced lease rates. Leasing revenues contributed 82%, 78% and 71%
to total financing revenues for the fiscal years ended September 30, 1996,
1995 and 1994, respectively.
Retail Financing
TMCC purchases primarily new and used vehicle installment contracts from
Toyota and Lexus dealers. These obligations must first meet TMCC's credit
standards and thereafter TMCC retains responsibility for contract collection
and administration. TMCC acquires security interests in the vehicles financed
and generally can repossess vehicles if customers fail to meet contract
obligations. Substantially all of TMCC's retail financings are non-recourse
which relieves the dealers from financial responsibility in the event of
repossession. TMCC requires retail financing customers to carry fire, theft
and collision insurance on financed vehicles covering the interests of both
TMCC and the customer. In recent years, TMS has sponsored special retail
programs by supporting reduced interest rates. Retail financing revenues
contributed 14%, 18% and 24% to total financing revenues for the fiscal years
ended September 30, 1996, 1995 and 1994, respectively.
A summary of vehicle retail leasing and financing activity follows:
<TABLE>
<CAPTION>
Years Ended September 30,
-------------------------------------------------
1996 1995 1994 1993 1992
--------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Contract volume:
New vehicles......... 430,000 303,000 350,000 256,000 237,000
Used vehicles*....... 75,000 46,000 64,000 56,000 56,000
--------- -------- -------- -------- --------
Total............. 505,000 349,000 414,000 312,000 293,000
========= ======== ======== ======== ========
Average amount financed:
New vehicles......... $21,100 $21,000 $19,900 $17,900 $16,700
Used vehicles*....... $14,400 $14,000 $12,600 $10,400 $9,400
Outstanding portfolio at
period end ($Millions):
New vehicles...... $15,741 $12,852 $11,603 $8,167 $6,910
Used vehicles*.... $1,270 $942 $1,128 $877 $837
Number of accounts 1,069,000 946,000 929,000 750,000 735,000
*Used vehicle data reflects primarily financing activity.
</TABLE>
Finance receivables sold ($1.1 billion as of September 30, 1996) which TMCC
continues to service are excluded from the above table.
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Wholesale Financing
TMCC provides wholesale financing primarily to qualified Toyota and Lexus
dealers to finance inventories of new and used Toyota and Lexus vehicles.
TMCC acquires security interests in vehicles financed at wholesale, and
substantially all such financings are backed by corporate or individual
guarantees from or on behalf of participating dealers. In the event of dealer
default, TMCC has the right to liquidate any assets acquired and seek legal
remedies pursuant to the guarantees. Pursuant to the Operating Agreement, TMS
will arrange for the repurchase of new Toyota and Lexus vehicles financed at
wholesale by TMCC at the aggregate cost financed in the event of dealer
default.
A summary of vehicle wholesale financing activity follows:
<TABLE>
<CAPTION>
Years Ended September 30,
------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Dealer loans ($Millions)....... $8,017 $7,626 $7,055 $6,378 $4,903
Dealer repayments ($Millions).. $8,221 $7,444 $7,032 $6,152 $4,745
Outstanding portfolio at
period end ($Millions)...... $668 $886 $727 $703 $486
Average amount financed
per vehicle................. $19,926 $18,999 $17,530 $16,500 $15,400
</TABLE>
TMCC also makes term loans to dealers for business acquisitions, facilities
refurbishing, real estate purchases and working capital. These loans are
typically secured with liens on real estate, other dealership assets and/or
personal guarantees of the dealers. Wholesale and other dealer financing
revenues contributed 4%, 4% and 5% to total financing revenues for the fiscal
years ended September 30, 1996, 1995 and 1994, respectively.
Insurance
TMCC's insurance subsidiaries provide certain insurance services along with
certain insurance and contractual coverages in connection with the sale and
lease of vehicles. In addition, the insurance subsidiaries insure and
reinsure certain TMS and TMCC risks.
Servicing
TMCC services retail installment obligations which have been sold to third
parties through its asset-backed securities program.
Funding
Funding to support the Company's level of earning assets is provided by access
to the capital markets as well as earning asset liquidations and funds
provided by operating activities. Debt issuances have generally been in the
form of commercial paper, United States and Euro medium-term notes, Eurobonds
and to a lesser extent, the sale of retail finance receivables.
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The Company uses a variety of derivative financial instruments to manage
interest rate and foreign exchange exposures. The derivative instruments
utilized include cross currency and interest rate swap agreements, indexed
note swaps and option-based products. The Company does not use any of these
instruments for trading purposes.
Competition and Government Regulations
TMCC's primary competitors for retail leasing and financing are commercial
banks, savings and loan associations, credit unions, finance companies and
other captive automobile finance companies. Commercial banks and other
captive automobile finance companies also provide wholesale financing for
Toyota and Lexus dealers. TMCC's strategy is to supplement, with competitive
financing programs, the overall commitment of TMS to offer a complete package
of services to authorized Toyota and Lexus dealers and their customers.
The finance and insurance operations of the Company are regulated under both
federal and state law. A majority of the states have enacted legislation
establishing licensing requirements to conduct retail and other finance and
insurance activities. Most states also impose limits on the maximum rate of
finance charges. In certain states, the margin between the present statutory
maximum interest rates and borrowing costs is sufficiently narrow that, in
periods of rapidly increasing or high interest rates, there could be an
adverse effect on the Company's operations in these states if the Company is
unable to pass on the increased interest costs to its customers.
The Company's operations are also subject to regulation under federal and
state consumer protection statutes. The Company continually reviews its
operations to comply with applicable law. Future administrative rulings,
judicial decisions and legislation in this area may require modification of
the Company's business practices and documentation.
Employee Relations
At November 30, 1996, the Company had approximately 2,090 full-time employees.
The Company considers its employee relations to be satisfactory.
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<PAGE>
Toyota Motor Sales, U.S.A., Inc.
TMS was established in 1957 and as of September 30, 1996 is a wholly-owned
subsidiary of Toyota Motor North America, Inc. ("TMA"). TMS is primarily
engaged in the wholesale distribution of automobiles, light trucks, industrial
equipment and related replacement parts and accessories throughout the United
States (excluding Hawaii). Additionally, TMS exports automobiles and related
replacement parts and accessories to Europe, Asia and United States
territories. Through September 30, 1996, TMS manufactured certain automobiles
through Toyota Motor Manufacturing, U.S.A., Inc., and manufactured trucks
through Toyota Auto Body Corporation, Inc. ("TABC"), a wholly owned
subsidiary. Effective October 1, 1996, Toyota Motor Manufacturing North
America, Inc. ("TMMNA") was established to serve as the holding company for
all manufacturing operations in the United States and to coordinate and
support numerous manufacturing related administrative functions previously
carried out independently by various Toyota entities in North America and by
Toyota Motor Corporation ("TMC") in Japan. Both TMMNA and TMS are wholly-
owned subsidiaries of TMA, a holding company owned 100% by TMC which was
established on September 3, 1996.
TMS's corporate headquarters are in Torrance, California, and TMS has port
facilities, regional sales offices and parts distribution centers at other
locations in the United States. Toyota vehicles are distributed throughout
the United States in twelve regions, ten of which are operated by or through
TMS. The remaining two regions are serviced by private distributors which
purchase directly from TMS and distribute to Toyota dealers within their
respective regions. For the year ended September 30, 1996, these two
distributors, Gulf States Toyota, Inc. of Houston, Texas and Southeast Toyota
Distributors, Inc. of Deerfield Beach, Florida, accounted for approximately
32% of the Toyota vehicles sold in the United States (excluding Hawaii).
Lexus vehicles are directly distributed by TMS to Lexus dealers throughout the
United States (excluding Hawaii).
For the year ended September 30, 1996, TMS sold approximately 1,109,000
automobiles and light trucks in the United States (excluding Hawaii), of which
approximately 682,000 were manufactured in the United States; TMS exported
approximately 62,000 automobiles. TMS sales represented approximately 27% of
TMC's worldwide sales volume for the year ended March 31, 1996. For the years
ended September 30, 1996 and 1995, Toyota and Lexus vehicles accounted for
approximately 7.5% and 7.2%, respectively, of all retail automobile and light
truck sales in the United States.
Total revenues for TMS for the fiscal years ended September 30, 1996, 1995 and
1994, aggregated approximately $27.5 billion, $26.2 billion and $23.3 billion,
respectively, of which approximately $24.4 billion, $23.7 billion and $21.5
billion, respectively, were attributable to revenues other than those
associated with financial services. At September 30, 1996, 1995 and 1994, TMS
had total assets of approximately $25.1 billion, $21.1 billion and $19.5
billion, respectively, and net worth in excess of $4.7 billion, $4.6 billion
and $4.3 billion, respectively. TMS had net income of $229 million for the
fiscal year ended September 30, 1996 and net income in excess of $250 million
for the fiscal years ended September 30, 1995 and 1994.
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<PAGE>
ITEM 2. PROPERTIES.
The headquarters of the Company are located in Torrance, California with 34
branch offices located in cities throughout the United States and one branch
office located in the Commonwealth of Puerto Rico. All premises are occupied
under lease.
ITEM 3. LEGAL PROCEEDINGS.
Various claims and actions are pending against TMCC and its subsidiaries with
respect to financing activities, taxes and other matters arising from the
ordinary course of business. Certain of these actions are or purport to be
class action suits, seeking sizeable damages. 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
September 30, 1996 were not determinable; however, in the opinion of
management, the ultimate liability resulting therefrom should not have a
material adverse effect on TMCC's consolidated financial position or results
of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
TMCC is a wholly-owned subsidiary of TMS and, accordingly, all shares of the
Company's stock are owned by TMS. There is no market for TMCC's stock.
No dividends have been declared or paid to date.
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<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
The selected consolidated financial data set forth below were derived from the
audited consolidated financial statements of the Company. Certain prior
period amounts have been reclassified to conform with the current period
presentation.
<TABLE>
<CAPTION>
Years Ended September 30,
--------------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
(Dollars in Millions)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Financing Revenues:
Leasing........................... $2,454 $1,904 $1,230 $ 747 $ 447
Retail financing.................. 415 431 413 468 485
Wholesale and other
dealer financing............... 109 121 86 80 65
------ ------ ------ ------ ------
Total financing revenues.......... 2,978 2,456 1,729 1,295 997
Depreciation on operating leases.. 1,626 1,232 735 381 178
Interest expense.................. 820 716 486 454 450
------ ------ ------ ------ ------
Net financing revenues............ 532 508 508 460 369
Other revenues.................... 136 113 95 80 53
------ ------ ------ ------ ------
Net financing revenues
and other revenues............. 668 621 603 540 422
------ ------ ------ ------ ------
Expenses:
Operating and administrative...... 293 255 232 225 179
Provision for credit losses....... 115 66 78 60 68
------ ------ ------ ------ ------
Total expenses.................... 408 321 310 285 247
------ ------ ------ ------ ------
Income before income taxes........ 260 300 293 255 175
Provision for income taxes........ 108 117 118 97 68
------ ------ ------ ------ ------
Net Income........................ $ 152 $ 183 $ 175 $ 158 $ 107
====== ====== ====== ====== ======
</TABLE>
- -----------------
(Table Continued)
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<PAGE>
<TABLE>
<CAPTION>
September 30,
-----------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
(Dollars in Millions)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Investments in operating
leases, net............ $10,831 $8,148 $6,215 $3,050 $1,699
Finance receivables, net.. $7,463 $7,227 $7,834 $7,226 $6,998
Total assets.............. $19,308 $16,225 $14,791 $11,179 $9,459
Notes and loans payable... $15,014 $12,696 $11,833 $8,833 $7,705
Capital stock<F1>......... $915 $865 $865 $680 $630
Retained earnings<F2>..... $998 $844 $662 $487 $329
RATIO OF EARNINGS TO
FIXED CHARGES<F3>...... 1.32 1.42 1.60 1.56 1.39
<FN>
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<F1> $10,000 par value per share.
<F2> The Company has paid no dividends to date.
<F3> The ratio of earnings to fixed charges was computed by dividing (i) the
sum of income before income taxes and fixed charges by (ii) fixed
charges. Fixed charges consist primarily of interest expense net of
the effect of noninterest-bearing advances. The ratio of earnings to
fixed charges for TMS and subsidiaries was 1.49, 1.74, 1.90, 2.07 and
1.83 for the years ended September 30, 1996, 1995, 1994, 1993 and 1992,
respectively. In March 1987, TMCC guaranteed payments of principal and
interest on $58 million principal amount of bonds issued in connection
with the Kentucky manufacturing facility of an affiliate. As of
September 30, 1996, TMCC has not incurred any fixed charges in
connection with such guarantee and no amount is included in any ratio
of earnings to fixed charges.
</FN>
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Financial Condition and Results of Operations
The composition of TMCC's net earning assets as of the balance sheet dates
reported herein and TMCC's vehicle lease and retail contract volumes and
finance penetration for the fiscal years ended September 30, 1996, 1995 and
1994 are summarized below:
<TABLE>
<CAPTION>
September 30, September 30,
1996 1995
------------- -------------
(Dollars in Millions)
<S> <C> <C>
Lease earning assets, net................ $12,194 $ 9,533
Retail finance receivables, net.......... 5,288 4,784
Wholesale receivables and other
dealer loans.......................... 1,015 1,229
Allowance for credit losses.............. (203) (171)
------- -------
Total earning assets, net............ $18,294 $15,375
======= =======
</TABLE>
<TABLE>
<CAPTION>
Years Ended September 30,
-----------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Contract volume:
Vehicle lease contracts............... 276,000 179,000 204,000
Vehicle retail installment contracts.. 229,000 170,000 210,000
------- ------- -------
Total.................................... 505,000 349,000 414,000
======= ======= =======
Finance penetration...................... 41.2% 31.8% 36.7%
</TABLE>
TMCC's net earning assets as of September 30, 1996 increased from
September 30, 1995 primarily due to growth in lease earning assets. Lease
earning assets, consisting of investments in operating leases, net of
accumulated depreciation, and lease finance receivables, net of unearned
income, increased in fiscal 1996 from fiscal 1995 due to higher lease volume
attributable to special lease programs sponsored by TMS and the increased
acceptance of leasing by retail consumers.
TMS sponsors special lease and retail programs which allow TMCC to offer
reduced monthly payments on certain Toyota and Lexus new vehicles and Toyota
industrial equipment to qualified lease and retail customers. Support amounts
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received from TMS approximate the balances required by TMCC to maintain
revenues at standard program levels and are earned over the expected lease and
retail installment contract terms. The level of sponsored program activity
varies based on TMS marketing strategies and revenues earned vary based on the
mix of Toyota and Lexus vehicles, timing of programs and the level of support
provided. TMCC's revenues earned from TMS sponsored special lease and retail
programs totaled $174 million, $134 million and $54 million for fiscal years
1996, 1995 and 1994, respectively.
TMCC is subject to residual value risk related to all outstanding lease
contracts. TMCC's residual value risk is a function of the number of off-
lease vehicles returned for disposition, and the difference between the amount
of disposition proceeds and the estimated residual value on returned vehicles.
Residual value losses incurred by TMCC in each of the three years ended
September 30, 1996, 1995 and 1994 have not had a material adverse impact on
operations. TMCC actively manages disposition of its lease vehicles by
working with lessees, dealers and auctions through end-of-lease-term
remarketing programs. In addition, returned lease vehicles are inspected and
lessees are charged for excess wear and tear, excess mileage and any damage
to the vehicles. Unguaranteed residual values related to outstanding lease
contracts totaled approximately $8.8 billion and $6.6 billion at September 30,
1996 and 1995, respectively. The percentage of lease vehicles returned to
TMCC which were originally scheduled to mature in the following periods were
14%, 11% and 12% for fiscal 1996, 1995 and 1994, respectively. As the lease
portfolio matures, the Company anticipates that the level of vehicle lease
returns will increase; however, the Company believes that its lease earning
assets are recorded at net realizable value.
Retail finance receivables, net of unearned income, increased in fiscal 1996
from fiscal 1995 due to higher contract volume reflecting increased special
retail programs sponsored by TMS as well as increased average advances per
retail contract.
TMCC's finance penetration represents the percentage of new Toyota and Lexus
vehicle deliveries (excluding fleet) in the United States (excluding Hawaii)
leased or financed by TMCC. Increased penetration for fiscal 1996 as compared
with fiscal 1995 reflects increased volume primarily attributable to a higher
level of TMS sponsored special lease programs. The decline in finance
penetration from fiscal 1994 to 1995 reflects reduced contract volumes
attributable primarily to lower levels of TMS sponsored special lease programs
in fiscal 1995 as well as increased competition in retail financing.
TMCC's total financing revenues increased 21% in fiscal 1996 and 42% in fiscal
1995. The increase in fiscal 1996 reflects growth in operating lease revenues
due to continued growth in market acceptability of leasing as well as TMS
sponsored special lease programs, partially offset by reduced retail financing
and wholesale revenues. Retail financing revenues declined as a result of
reduced average retail receivables outstanding in fiscal 1996 as compared with
fiscal 1995 due to the sale of retail receivables in September 1995 and July
1996. Decline in wholesale revenues reflects reduced financing rates as well
as increased turnover of units financed. The increase in fiscal 1995 revenues
reflects primarily growth in operating lease revenues as well as growth in
retail financing and wholesale revenues.
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Depreciation expense increased 32% and 68% in fiscal 1996 and 1995,
respectively, primarily as a result of the growth in investments in operating
leases.
Interest expense increased 15% and 47% in fiscal 1996 and 1995, respectively.
The increases in fiscal 1996 and 1995 reflect higher average borrowings
outstanding required to fund the growth in earning assets and an increase in
the average cost of borrowings. The weighted average cost of borrowings was
5.90%, 5.78% and 4.94% for the years ended September 30, 1996, 1995 and 1994,
respectively.
Other revenues increased 20% and 19% in fiscal 1996 and 1995, respectively.
The increases in other revenues for fiscal 1996 and 1995 reflect growth in the
Company's insurance operations and increased servicing and other income
related to retail receivables sold.
Operating and administrative expenses increased 15% and 10% in fiscal 1996 and
1995, respectively. The increases reflect primarily additional personnel and
operating costs required to support TMCC's growing customer base as well as
growth in the Company's insurance operations.
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<PAGE>
The provision for credit losses increased 74% and decreased 15% during fiscal
1996 and fiscal 1995, respectively. The increase in fiscal 1996 was primarily
related to the substantial growth in earning assets as well as less favorable
credit loss experience. The decrease in fiscal 1995 reflects a decline in the
level of earning asset growth and a reduction in allowance levels due to
changes in the mix of earning assets and TMCC's favorable credit loss
experience. TMCC will continue to monitor loss levels and place emphasis on
its credit loss exposure.
An analysis of credit losses and the related allowance follows (certain prior
period amounts have been reclassified to conform with the current period
presentation):
<TABLE>
<CAPTION>
Years ended September 30,
------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(Dollars in Millions)
<S> <C> <C> <C> <C> <C>
Allowance for credit losses
at beginning of period......... $171 $164 $121 $107 $ 89
Provision for credit losses....... 115 66 78 60 68
Charge-offs, net of recoveries.... (83) (59) (35) (46) (50)
---- ---- ---- ---- ----
Allowance for credit losses
at end of period............... $203 $171 $164 $121 $107
==== ==== ==== ==== ====
Allowance as a percent of net
investments in operating
leases and net receivables
outstanding.................... 1.10% 1.10% 1.15% 1.16% 1.22%
Losses as a percent of average
net investments in operating
leases and average gross
receivables outstanding........ .47% .38% .27% .42% .56%
Aggregate balances at end of
period for lease rentals
and installments 60
or more days past due.......... $29 $20 $15 $16 $23
Aggregate balances at end of
period for lease rentals
and installments 60 or more
days past due as a percent
of net investments in operating
leases and gross receivables
outstanding.................... .15% .12% .10% .14% .23%
</TABLE>
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<PAGE>
Liquidity and Capital Resources
The Company requires, in the normal course of business, substantial funding
to support the level of its earning assets. Significant reliance is placed
on the Company's ability to obtain debt funding in the capital markets in
addition to funding provided by earning asset liquidations and cash provided
by operating activities. Debt issuances have generally been in the form of
commercial paper, United States and Euro medium-term notes ("MTNs"), Eurobonds
and to a lesser extent, the sale of retail finance receivables in the asset-
backed securities market. On occasion, this funding has been supplemented by
loans and equity contributions from TMS.
Commercial paper issuances are utilized to meet short-term funding needs.
Commercial paper outstanding under TMCC's commercial paper program ranged from
approximately $1.1 billion to $3.2 billion during fiscal 1996. For additional
liquidity purposes, TMCC maintains syndicated bank credit facilities with
certain banks which aggregated $2.0 billion at September 30, 1996. No loans
were outstanding under any of these bank credit facilities during fiscal 1996.
TMCC also maintains, along with TMS, uncommitted, unsecured lines of credit
with banks totaling $250 million to facilitate the issuance of letters of
credit. At September 30, 1996, TMCC had issued approximately $44 million in
letters of credit, primarily related to the Company's insurance operations.
Long-term funding requirements are met through the issuance of a variety of
debt securities underwritten in both the United States and international
capital markets. United States and Euro MTNs with original maturities ranging
from one to eleven years have provided TMCC with a significant source of
funding. During fiscal 1996, TMCC issued approximately $4.7 billion of MTNs
of which approximately $4.1 billion had original maturities of more than one
year. TMCC had approximately $10.1 billion of MTNs outstanding at
September 30, 1996 including the effect of foreign currency translations at
September 30, 1996 spot exchange rates; approximately $4.0 billion of the
$10.1 billion in MTNs was denominated in foreign currencies. In addition to
MTNs, TMCC had approximately $2.6 billion of debt securities outstanding
issued principally in the form of Eurobonds in the international capital
markets at September 30, 1996, including the effect of foreign currency
translations at September 30, 1996 spot exchange rates; approximately $2.1
billion of the $2.6 billion in debt securities was denominated in foreign
currencies.
TMCC anticipates continued use of MTNs in both the United States and
international capital markets. At November 30, 1996, approximately
$780 million was available for issuance under TMCC's United States public MTN
program, none of which was committed for issue by the Company. The maximum
aggregate principal amount authorized to be outstanding at any time under
TMCC's Euro MTN program is $12.0 billion, which was increased in July 1996
from the prior maximum of $9.5 billion. Approximately $2.3 billion was
available for issuance under the Euro MTN program as of November 30, 1996, of
which the Company has committed to issue approximately $250 million. The
United States and Euro MTN programs may be expanded from time to time to allow
for the continued use of these sources of funding. In addition, approximately
$700 million of securities registered with the Securities and Exchange
Commission, excluding MTNs, were available for issuance at November 30, 1996.
In July 1996, TMCC's shelf registration statement relating to $1.5 billion of
asset-backed notes and certificates was declared effective by the SEC. On
July 24, 1996, TMCC received proceeds of approximately $754 million from the
-14-
<PAGE>
sale of a pool of retail receivables and the related offering of certificates
backed by such receivables. Approximately $750 million under the shelf
registration remains available for issuance as of November 30, 1996. The
Company's sale of finance receivables is discussed in Note 6 of the Notes to
the Consolidated Financial Statements.
On October 1, 1996 Toyota Lease Trust ("TLT") was created as a Delaware
business trust for the purpose of titling leases, originated in certain
states, in connection with development of a lease securitization program.
TMCC anticipates its first lease securitization to occur in fiscal 1997.
TMCC utilizes a variety of interest rate and currency derivative financial
instruments to manage interest rate and foreign exchange exposures. The
derivative instruments utilized include cross currency and interest rate
swaps, indexed note swaps and option-based products. TMCC does not use any
of these instruments for trading purposes.
Derivative financial instruments utilized by TMCC involve, to varying degrees,
elements of credit risk in the event a counterparty should default and market
risk as the instruments are subject to rate and price fluctuations. Credit
risk is managed through the use of credit standard guidelines, counterparty
diversification, monitoring of counterparty financial condition and master
netting agreements in place with all derivative counterparties. Market risk
is limited to interest rate risk as foreign currency denominated instruments
are entirely hedged. TMCC uses a value-at-risk methodology, in connection
with other management tools, to assess and manage the interest rate risk of
aggregated loan and lease assets and financial liabilities, including
derivatives and option-based products.
The total notional amount of TMCC's derivative financial instruments at
September 30, 1996 and 1995 was $20.5 billion and $17.4 billion, respectively.
The notional amounts of interest rate and indexed note swap agreements and
option-based products do not represent amounts exchanged by the parties and,
thus, are not a measure of the Company's exposure through its use of
derivatives.
Descriptions of derivative instruments utilized and risk management procedures
as well as a reconciliation of the Company's derivative activities for the
years ended September 30, 1996 and 1995 are included in Note 11 of the Notes
to the Consolidated Financial Statements.
On occasion, TMS has made equity contributions to maintain TMCC's equity
capitalization at certain levels. During the year ended September 30, 1996,
TMS made an equity contribution to TMCC by purchasing, at par value, newly
issued shares of TMCC's capital stock in the amount of $50 million. No equity
contributions were made during fiscal 1995. Also, on occasion, TMS makes
interest-bearing loans to TMCC. There were no loans from TMS during fiscal
1996.
Cash flows provided by operating, investing and financing activities have been
used primarily to support earning asset growth. Cash provided by the
liquidation of earning assets, totaling $13.6 billion and $11.9 billion during
fiscal 1996 and 1995, respectively, was used to purchase additional
investments in operating leases and finance receivables, totaling $19.2
billion and $15.1 billion during fiscal 1996 and 1995, respectively.
Investing activities resulted in a net use of cash of $4.8 billion and
$2.7 billion in fiscal 1996 and 1995, respectively, as the purchase of
-15-
<PAGE>
additional earning assets, primarily investments in operating leases, exceeded
cash provided by the liquidation of earning assets. Net cash provided by
operating activities totaled $2.3 billion and $2.0 billion during fiscal 1996
and 1995, respectively, and net cash provided by financing activities totaled
$2.6 billion and $0.7 billion, during fiscal 1996 and 1995, respectively. The
Company believes that cash provided by operating and investing activities as
well as access to domestic and international capital markets and issuance of
commercial paper will provide sufficient liquidity to meet its future funding
requirements.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995
The foregoing Business description and Management's Discussion and Analysis
contain various "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 represent the Company's expectations
or beliefs concerning future events, including the following: potential
adverse effect on the Company's operations as a result of governmental
regulations; that the Company considers its employee relations to be
satisfactory; the level of lease vehicle returns; that the lease earning
assets on the Company's books are recorded at net realizable value; that the
ultimate liability resulting from pending claims and actions should not have
a material adverse effect on the Company's consolidated financial position or
results of operations; the Company's continued use of MTNs in the United
States and the international capital markets; that the first lease
securitization is expected in fiscal 1997; the sufficiency of the Company's
cash provided by operating, investing and financing activities for the
Company's future liquidity and capital resource needs. The Company cautions
that these statements are further qualified by important factors that could
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; a decline
in the market acceptability of leasing; the effect of competitive pricing on
interest margins; increases in prevailing interest rates; changes in pricing
due to the appreciation of the Japanese yen against the United States dollar;
the effect of governmental actions; the effect of competitive pressures on the
used car market and residual values; 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 United States and international capital
markets; increased costs associated with the Company's debt funding efforts;
and the ability of the Company's counterparties to perform under interest rate
and cross currency swap agreements. Results actually achieved thus may differ
materially from expected results included in these statements.
Recently Enacted Accounting Standards
In March 1995, the Financial Accounting Standards Board issued Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" ("Statement No. 121"). Statement No. 121
establishes accounting standards for the impairment of long-lived assets,
certain identifiable intangibles and goodwill related to those assets to be
held and used and long-lived assets and certain identifiable intangibles to
be disposed of. Statement No. 121 requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In addition,
-16-
<PAGE>
Statement No. 121 requires that certain long-lived assets and intangibles to
be disposed of be reported at the lower of carrying amount or fair value less
cost to sell. Statement No. 121 is effective for fiscal years beginning after
December 15, 1995. The Company has not determined the impact that the
adoption of this accounting standard will have on its financial position or
results of operations. The Company plans to adopt Statement No. 121 in the
first interim period of fiscal 1997.
In June 1996, the Financial Accounting Standard Board issued Statement of
Accounting Standards No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities", effective for transfers
and servicing of financial assets and extinguishments of liabilities occurring
after December 31, 1996. The Company will adopt this Standard during fiscal
1997, as required. Adoption of this Standard is not expected to have a
material impact on the Company's results of operations and financial position.
-17-
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL STATEMENTS
Page
-------
Report of Independent Accountants................................ 19
Consolidated Balance Sheet at September 30, 1996 and 1995........ 20
Consolidated Statement of Income for the
years ended September 30, 1996, 1995 and 1994................. 21
Consolidated Statement of Shareholder's Equity for
the years ended September 30, 1996, 1995 and 1994............. 22
Consolidated Statement of Cash Flows for the
years ended September 30, 1996, 1995 and 1994................. 23
Notes to Consolidated Financial Statements....................... 24 - 50
All schedules have been omitted because they are not required, not
applicable, or the information has been included elsewhere.
-18-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Board of Directors and Shareholder of
Toyota Motor Credit Corporation
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of shareholder's equity and of cash flows
present fairly, in all material respects, the financial position of Toyota
Motor Credit Corporation (a wholly-owned subsidiary of Toyota Motor Sales,
U.S.A., Inc.) and its subsidiaries at September 30, 1996 and 1995, and the
results of their operations and their cash flows for each of the three years
in the period ended September 30, 1996, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
Toyota Motor Credit Corporation's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
/S/ PRICE WATERHOUSE LLP
Los Angeles, California
October 31, 1996
-19-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in Millions)
<TABLE>
<CAPTION>
September 30,
-----------------------
1996 1995
-------- --------
<S> <C> <C>
ASSETS
------
Cash and cash equivalents................. $ 170 $ 101
Investments in marketable securities...... 325 169
Investments in operating leases, net...... 10,831 8,148
Finance receivables, net.................. 7,463 7,227
Receivable from Parent.................... 78 58
Other receivables......................... 193 350
Deferred charges.......................... 131 85
Income taxes receivable................... - 6
Other assets.............................. 117 81
------- -------
Total Assets..................... $19,308 $16,225
======= =======
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
Notes and loans payable................... $15,014 $12,696
Accrued interest.......................... 226 190
Accounts payable and accrued expenses..... 474 298
Deposits.................................. 248 200
Income taxes payable...................... 16 -
Deferred income........................... 612 505
Deferred income taxes..................... 805 627
------- -------
Total Liabilities................... 17,395 14,516
------- -------
Commitments and Contingencies
Shareholder's Equity:
Capital stock, $l0,000 par value
(100,000 shares authorized; issued
and outstanding 91,500 in 1996 and
86,500 in 1995)..................... 915 865
Retained earnings...................... 998 844
------- -------
Total Shareholder's Equity.......... 1,913 1,709
------- -------
Total Liabilities and
Shareholder's Equity............. $19,308 $16,225
======= =======
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
-20-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Dollars in Millions)
<TABLE>
<CAPTION>
Years ended September 30,
----------------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Financing Revenues:
Leasing................................. $2,454 $1,904 $1,230
Retail financing........................ 415 431 413
Wholesale and other dealer financing.... 109 121 86
------ ------ ------
Total financing revenues................... 2,978 2,456 1,729
Depreciation on operating leases........ 1,626 1,232 735
Interest expense........................ 820 716 486
------ ------ ------
Net financing revenues..................... 532 508 508
Other revenues............................. 136 113 95
------ ------ ------
Net financing revenues and other revenues.. 668 621 603
------ ------ ------
Expenses:
Operating and administrative............ 293 255 232
Provision for credit losses............. 115 66 78
------ ------ ------
Total expenses............................. 408 321 310
------ ------ ------
Income before income taxes................. 260 300 293
Provision for income taxes................. 108 117 118
------ ------ ------
Net Income................................. $ 152 $ 183 $ 175
====== ====== ======
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
-21-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY
(Dollars in Millions)
<TABLE>
<CAPTION>
Capital Retained
Stock Earnings Total
------- -------- -------
<S> <C> <C> <C>
Balance at September 30, 1993.......... $680 $487 $1,167
Issuance of capital stock.............. 185 - 185
Net income in 1994..................... - 175 175
---- ---- ------
Balance at September 30, l994.......... 865 662 1,527
Net income in 1995..................... - 183 183
Net unrealized holding loss on
marketable securities............... - (1) (1)
---- ---- ------
Balance at September 30, 1995.......... 865 844 1,709
Issuance of capital stock.............. 50 - 50
Net income in 1996..................... - 152 152
Net unrealized holding gain on
marketable securities............... - 2 2
---- ---- ------
Balance at September 30, 1996.......... $915 $998 $1,913
==== ==== ======
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
-22-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Millions)
<TABLE>
<CAPTION>
Years ended September 30,
---------------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income.......................................... $ 152 $ 183 $ 175
------ ------ ------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.................. 1,646 1,286 743
Provision for credit losses.................... 115 66 78
Gain from sale of finance receivables, net..... (15) (11) -
Increase in accrued interest................... 36 34 8
Increase in deferred income taxes.............. 178 241 108
(Increase) decrease in other assets............ (70) 97 328
Increase in other liabilities.................. 220 99 220
------ ------ ------
Total adjustments................................... 2,110 1,812 1,485
------ ------ ------
Net cash provided by operating activities.............. 2,262 1,995 1,660
------ ------ ------
Cash flows from investing activities:
Addition to investments in marketable
securities....................................... (199) (90) (86)
Disposition of investments in marketable
securities....................................... 45 24 120
Purchase of finance receivables..................... (13,136) (11,005) (10,868)
Liquidation of finance receivables.................. 11,949 10,913 10,224
Proceeds from sale of finance receivables........... 905 650 -
Addition to investments in operating leases......... (6,081) (4,123) (4,468)
Disposition of investments in operating leases...... 1,718 927 525
------ ------ ------
Net cash used in investing activities.................. (4,799) (2,704) (4,553)
------ ------ ------
Cash flows from financing activities:
Proceeds from issuance of capital stock............. 50 - 185
Proceeds from issuance of notes and loans payable... 5,894 5,733 5,150
Payments on notes and loans payable................. (4,587) (4,989) (2,955)
Net increase (decrease) in commercial paper,
with original maturities less than 90 days....... 1,249 (62) 582
------ ------ ------
Net cash provided by financing activities.............. 2,606 682 2,962
------ ------ ------
Net increase (decrease) in cash and cash equivalents... 69 (27) 69
Cash and cash equivalents at the beginning
of the period....................................... 101 128 59
------ ------ ------
Cash and cash equivalents at the end of the
period.............................................. $ 170 $ 101 $ 128
====== ====== ======
Supplemental disclosures:
Interest paid....................................... $778 $643 $475
Income taxes paid................................... $3 $2 $64
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
-23-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Nature of Operations
- -----------------------------
Toyota Motor Credit Corporation ("TMCC") provides retail and wholesale
financing, retail leasing and certain other financial services to
authorized Toyota and Lexus vehicle and Toyota industrial equipment
dealers and their customers in the United States (excluding Hawaii).
TMCC is a wholly-owned subsidiary of Toyota Motor Sales, U.S.A., Inc.
("TMS" or the "Parent"). TMS is primarily engaged in the wholesale
distribution of automobiles, trucks, industrial equipment and related
replacement parts and accessories throughout the United States
(excluding Hawaii). Substantially all of TMS's products are purchased
from Toyota Motor Corporation ("TMC") or its affiliates. TMC
restructured its North American organizations with the establishment of
Toyota Motor Manufacturing North America, Inc. ("TMMNA") on October 1,
1996. TMMNA functions to coordinate and support numerous manufacturing
related administrative functions previously carried out independently
by various Toyota entities in North America and by TMC in Japan. Both
TMMNA and TMS are wholly-owned subsidiaries of Toyota Motor North
America, Inc., a holding company owned 100% by TMC which was
established on September 3, 1996.
TMCC has six wholly-owned subsidiaries, Toyota Motor Insurance
Services, Inc. ("TMIS"), Toyota Motor Insurance Corporation of Vermont
("TMICV"), Toyota Motor Insurance Company ("TMIC"), Toyota Motor Life
Insurance Company ("TLIC"), Toyota Motor Credit Receivables Corporation
("TMCRC") and Toyota Credit De Puerto Rico Corp. ("TCPR"). TMCC and
its wholly-owned subsidiaries are collectively referred to as the
"Company". The insurance subsidiaries provide certain insurance
services along with certain insurance and contractual coverages in
connection with the sale and lease of vehicles. In addition, the
insurance subsidiaries insure and reinsure certain TMS and TMCC risks.
TMCRC, a limited purpose subsidiary, was formed in June 1993 primarily
to acquire retail finance receivables from TMCC for the purpose of
securitizing such receivables. TCPR was established in January 1996 to
provide retail and wholesale financing and certain other financial
services to authorized Toyota and Lexus vehicle dealers and their
customers in Puerto Rico; TCPR commenced operations in October 1996.
The Company's business is substantially dependent upon the sale of
Toyota and Lexus vehicles in the United States. Changes in the volume
of sales of such vehicles resulting from governmental action, changes
in consumer demand, changes in pricing of imported units due to
currency fluctuations, or other events could impact the level of
finance and insurance operations of the Company.
-24-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 - Summary of Significant Accounting Policies
- ---------------------------------------------------
Use of Estimates
----------------
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.
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of TMCC and
its wholly-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated.
Revenue Recognition
-------------------
Revenue from retail financing contracts and finance leases is
recognized using the effective yield method. Revenue from operating
leases is recognized on a straight-line basis over the lease term.
Cash and Cash Equivalents
-------------------------
Cash equivalents, consisting primarily of money market instruments and
debt securities, represent highly liquid investments with original
maturities of three months or less.
Investments in Marketable Securities
------------------------------------
Investments in marketable securities consist of debt and equity
securities. Debt securities designated as held-to-maturity are carried
at amortized cost and are reduced to net realizable value for other
than temporary declines in market value. Debt and equity securities
designated as available-for-sale are carried at fair value with
unrealized gains or losses included in shareholder's equity, net of
applicable taxes. Realized investment gains and losses, which are
determined on the specific identification method, are reflected in
income.
-25-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 - Summary of Significant Accounting Policies (Continued)
- ---------------------------------------------------
Investments in Operating Leases
-------------------------------
TMCC acquires retail leases from Toyota and Lexus vehicle and Toyota
industrial equipment dealers. TMCC is also the lessor on certain
property that it acquires directly. Investments in operating leases
are recorded at cost and depreciated, primarily on a straight-line
basis, over the lease term to the estimated residual value. Gains or
losses on disposal and adjustments to the residual value of underlying
assets are also included in Depreciation Expense.
Allowance for Credit Losses
---------------------------
Allowances for credit losses are established during the period in which
receivables are acquired and are maintained in amounts considered by
management to be appropriate in relation to receivables outstanding
based upon historical loss experience and other factors. Losses are
charged to the allowance for credit losses when it has been determined
that collateral cannot be recovered and any shortfall between proceeds
received and carrying cost of repossessed collateral is charged to the
allowance. Recoveries are credited to the allowance for credit losses.
Deferred Charges
----------------
Deferred charges consist primarily of premiums paid for option-based
products, underwriters' commissions and other debt issuance costs
which are amortized to Interest Expense over the life of the related
instruments on a straight-line basis.
Insurance Operations
--------------------
Revenues from insurance premiums and from providing coverage under
various contractual agreements are earned over the terms of the
respective policies and agreements in proportion to estimated claims
activity. Certain costs of acquiring new business, consisting
primarily of commissions and premium taxes, are deferred and amortized
over the terms of the related policies on the same basis as revenues
are earned. The liability for reported losses and the estimate of
unreported losses is recorded in Accounts Payable and Accrued Expenses.
Commission and fee income are recognized in relation to the level of
services performed.
-26-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 - Summary of Significant Accounting Policies (Continued)
- ---------------------------------------------------
Interest Rate Swap Agreements
-----------------------------
TMCC utilizes interest rate swap agreements in managing its exposure to
interest rate risk. Interest rate swap agreements are executed as an
integral part of specific debt transactions or on a portfolio basis.
The differential paid or received on interest rate swap agreements is
recorded as an adjustment to Interest Expense over the term of the
agreements.
Cross Currency Interest Rate Swap Agreements
--------------------------------------------
TMCC's senior debt issued in foreign currencies is hedged by
concurrently executed cross currency interest rate swap agreements
which involve the exchange of foreign currency principal and interest
obligations for U.S. dollar principal and interest obligations. TMCC's
foreign currency debt is translated into U.S. dollars in the financial
statements at the various foreign currency spot exchange rates in
effect at the balance sheet date. The receivables or payables,
reflecting the differences between the September 30, 1996 foreign
currency spot exchange rates and the contract rates applicable to the
cross currency interest rate swap agreements, are classified in Other
Receivables or Accounts Payable and Accrued Expenses, respectively.
Income Taxes
------------
TMCC uses the liability method of accounting for income taxes under
which deferred tax assets and liabilities are adjusted to reflect
changes in tax rates and laws in the period such changes are enacted
resulting in adjustments to the current period's income statement.
The Company joins with TMS in filing consolidated federal income tax
returns and combined or consolidated income tax returns in certain
states. Federal and state income tax is provided on a separate return
basis. Prior to October 1, 1994, for states where a combined or
consolidated income tax return was filed, state income taxes were
allocated to the Company by TMS based upon the Company's apportionment
factors and income in those states. There was no material effect to
the financial position or results of operations as a result of the
change in the method of allocating state income taxes.
-27-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 - Summary of Significant Accounting Policies (continued)
- ---------------------------------------------------
Reclassifications
-----------------
Certain 1995 and 1994 accounts have been reclassified to conform with
the 1996 presentation.
Note 3 - Investments in Marketable Securities
- ---------------------------------------------
Effective October 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" ("Statement No. 115"). Statement No. 115
addresses the accounting and reporting for investments in all debt
securities and for investments in equity securities that have readily
determinable fair values. The fair value of securities was estimated
using quoted market prices or discounted cash flow analysis.
The estimated fair value and amortized cost of investments in
marketable securities are as follows:
<TABLE>
<CAPTION>
September 30, 1996
--------------------------------
Fair Gross
Cost Value Unrealized Gains
---- ----- ----------------
(Dollars in Millions)
<S> <C> <C> <C>
Available-for-sale securities:
Equity securities................... $133 $135 $2
Asset-backed securities............. 177 177 -
U.S. debt securities................ 2 2 -
---- ---- -----
Total available-for-sale securities.... 312 314 $2
=====
Excess of fair value over cost...... 2 -
---- ----
Available-for-sale securities.......... 314 314
Held-to-maturity securities:
U.S. debt securities................ 11 11
---- ----
Total marketable securities...... $325 $325
==== ====
</TABLE>
-28-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3 - Investments in Marketable Securities (Continued)
- ---------------------------------------------
<TABLE>
<CAPTION>
September 30, 1995
-------------------------------------
Gross Unrealized
Fair -----------------
Cost Value Gains Losses
-------- ------ ----- --------
(Dollars in Millions)
<S> <C> <C> <C> <C>
Available-for-sale securities:
Equity securities................... $115 $114 $1 $(2)
Mortgage-backed securities.......... 33 33 - -
U.S. debt securities................ 12 12 - -
---- ---- ----- ---
Total available-for-sale securities.... 160 159 $1 $(2)
===== ===
Excess of cost over fair value...... (1) -
---- ----
Available-for-sale securities.......... 159 159
Held-to-maturity securities:
U.S. debt securities................ 10 10
---- ----
Total marketable securities...... $169 $169
==== ====
</TABLE>
The contractual maturities of investments in marketable securities at
September 30, 1996 are as follows:
<TABLE>
<CAPTION>
Available-for-Sale Held-to-Maturity
Securities Securities
------------------ ----------------
Fair Fair
Cost Value Cost Value
---- ----- ---- -------
(Dollars in Millions)
<S> <C> <C> <C> <C>
Within one year..................... $ - $ - $ 2 $ 2
After one year through five years... 2 2 9 9
Mutual funds........................ 133 135 - -
Asset-backed securities............. 177 177 - -
---- ---- --- ---
Total............................ $312 $314 $11 $11
==== ==== === ===
</TABLE>
The proceeds from sales of available-for-sale securities were $3 million
and $7 million for the years ended September 30, 1996 and 1995,
respectively. Realized gains and losses on sales of available-for-sale
securities were immaterial for the years ended September 30, 1996 and
1995.
-29-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4 - Investments in Operating Leases
- ----------------------------------------
Investments in operating leases, net consisted of the following:
<TABLE>
<CAPTION>
September 30,
----------------------
1996 1995
------- ------
(Dollars in Millions)
<S> <C> <C>
Vehicles................................. $13,252 $9,864
Equipment and other...................... 268 201
------- ------
13,520 10,065
Accumulated depreciation................. (2,582) (1,838)
Allowance for credit losses.............. (107) (79)
------- ------
Investments in operating leases, net.. $10,831 $8,148
======= ======
</TABLE>
Rental income from operating leases was $2,292 million, $1,734 million
and $1,056 million for the years ended September 30, 1996, 1995 and
1994, respectively. Future minimum rentals on operating leases are as
follows: years ending September 30, 1997 - $2,055 million; 1998 -
$1,274 million; 1999 - $461 million; 2000 - $38 million; and 2001 -
$3 million. A substantial portion of TMCC's operating lease contracts
have historically been terminated prior to maturity; future minimum
rentals as shown above should not be considered as necessarily
indicative of future cash collections.
Note 5 - Finance Receivables
- ----------------------------
Finance receivables, net consisted of the following:
<TABLE>
<CAPTION>
September 30,
---------------------
1996 1995
------ ------
(Dollars in Millions)
<S> <C> <C>
Retail............................... $5,501 $5,050
Finance leases....................... 1,525 1,567
Wholesale and other dealer loans..... 1,015 1,229
------ ------
8,041 7,846
Unearned income...................... (482) (527)
Allowance for credit losses.......... (96) (92)
------ ------
Finance receivables, net.......... $7,463 $7,227
====== ======
</TABLE>
-30-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5 - Finance Receivables (Continued)
- ----------------------------
Contractual maturities at September 30, 1996 are as follows:
<TABLE>
<CAPTION>
Due in the Wholesale
Years Ending and Other
September 30, Retail Dealer Loans
------------- ------ ------------
(Dollars in Millions)
<S> <C> <C>
1997.................. $2,043 $ 814
1998.................. 1,373 63
1999.................. 1,068 36
2000.................. 747 43
2001.................. 260 47
Thereafter............ 10 12
------ ------
Total.............. $5,501 $1,015
====== ======
</TABLE>
Finance leases, net consisted of the following:
<TABLE>
<CAPTION>
September 30,
---------------------
1996 1995
------- -------
(Dollars in Millions)
<S> <C> <C>
Minimum lease payments.................. $ 867 $ 894
Estimated unguaranteed residual values.. 658 673
------ ------
Finance leases....................... 1,525 1,567
Unearned income......................... (270) (261)
Allowance for credit losses............. (19) (17)
------ ------
Finance leases, net.................. $1,236 $1,289
====== ======
</TABLE>
The aggregate balances related to finance receivables 60 or more days
past due totaled $20 million and $16 million at September 30, 1996 and
1995, respectively. Future minimum finance lease payments for each of
the five succeeding years ending September 30, are: 1997 - $309
million; 1998 - $231 million; 1999 - $178 million; 2000 - $118
million and 2001 - $31 million. A substantial portion of TMCC's
finance receivables have historically been repaid prior to contractual
maturity dates; contractual maturities and future minimum lease
payments as shown above should not be considered as necessarily
indicative of future cash collections. The majority of retail and
finance lease receivables do not involve recourse to the dealer in the
event of customer default.
-31-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6 - Sale of Finance Receivables
- ------------------------------------
In June 1996, the Financial Accounting Standard Board issued Statement
of Accounting Standards No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities",
effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996. The
Company will adopt this Standard during fiscal 1997, as required.
Adoption of this Standard is not expected to have a material impact on
the Company's results of operations and financial position.
In the fourth quarters of fiscal 1996 and 1995, the Company sold retail
finance receivables aggregating $782 million and $679 million,
respectively, subject to certain limited recourse provisions. In each
case, TMCC sold its receivables to TMCRC which in turn sold them to a
trust; TMCC remains as servicer and is paid a servicing fee. In a
subordinated capacity, TMCRC retains excess servicing cash flows,
certain cash deposits and, in connection with the fiscal 1993 sale of
finance receivables, a limited interest in the trust. TMCRC's
subordinated interests in excess servicing cash flows, cash deposits,
limited interest in the 1993 trust and other related amounts are held
as restricted assets which are subject to limited recourse provisions.
These restricted assets are not available to satisfy any obligations of
TMCC. Following is a summary of amounts included in Other Receivables:
<TABLE>
<CAPTION>
September 30,
---------------------
1996 1995
---- ----
(Dollars in Millions)
<S> <C> <C>
Excess servicing....................... $34 $32
Other restricted amounts:
Cash deposits....................... 20 14
Limited interest in trust........... 2 7
Allowance for estimated credit
losses on sold receivables.......... (5) (4)
--- ---
Total............................ $51 $49
=== ===
</TABLE>
The pretax gain resulting from the sale of finance receivables totaled
$15 million and $11 million in fiscal 1996 and 1995, respectively,
after providing for an allowance for estimated credit losses. In
addition to the above described transactions, in August 1996 TMCC sold
approximately $150 million of retail finance receivables to World Omni
Retail Funding Inc. in exchange for an interest bearing certificate
secured by a 100% interest in the same receivables.
The outstanding balance of the sold finance receivables which TMCC
continues to service at September 30, 1996 and 1995 totaled $1.1
billion and $762 million, respectively.
-32-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7 - Allowance for Credit Losses
- ------------------------------------
An analysis of the allowance for credit losses follows:
<TABLE>
<CAPTION>
Years ended September 30,
-------------------------
1996 1995 1994
---- ---- ----
(Dollars in Millions)
<S> <C> <C> <C>
Allowance for credit losses
at beginning of period......... $171 $164 $121
Provision for credit losses....... 115 66 78
Charge-offs, net of recoveries.... (83) (59) (35)
---- ---- ----
Allowance for credit losses
at end of period............... $203 $171 $164
==== ==== ====
</TABLE>
Effective October 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment
of a Loan" ("Statement No. 114") and its amendment Statement of
Financial Accounting Standards No. 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures" ("Statement
No. 118"). The Statements apply to loans individually evaluated for
impairment and do not apply to portfolios of small dollar homogenous
loans, such as retail finance receivables, which are collectively
evaluated for impairment. The amount of impaired loans and related
allowance for credit losses as of September 30, 1996 is not material.
-33-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8 - Transactions with Parent
- ---------------------------------
An operating agreement with TMS (the "Operating Agreement") provides
that 100% ownership of TMCC will be retained by TMS as long as TMCC has
any funded debt outstanding and that TMS will provide necessary equity
contributions or other financial assistance it deems appropriate to
ensure that TMCC maintains a minimum coverage on fixed charges of 1.10
times such charges in any fiscal quarter. To maintain TMCC's minimum
coverage pursuant to the Operating Agreement, TMS has made noninterest-
bearing advances and income maintenance payments to TMCC though no such
advances were made in fiscal 1996, 1995 or 1994. The coverage
provision of the Operating Agreement is solely for the benefit of the
holders of TMCC's commercial paper and the Operating Agreement may be
amended or terminated at any time without notice to, or the consent of,
holders of other TMCC obligations. The Operating Agreement does not
constitute a guarantee by TMS of any obligations of TMCC.
TMS provides certain technical and administrative services and incurs
certain expenses on the Company's behalf and, accordingly, allocates
these charges to the Company. The charges, reimbursed by TMCC to TMS,
totaled $12 million, $8 million and $7 million for the years ended
September 30, 1996, 1995 and 1994, respectively. TMS sponsors special
retail and lease programs offered by TMCC; for the years ended
September 30, 1996, 1995 and 1994, TMCC recognized revenue of
$174 million, $134 million and $54 million, respectively, related to
TMS sponsored programs.
TMCC has an arrangement to borrow and invest funds with TMS at short
term market rates. For the year ended September 30, 1996, TMCC had no
borrowings from TMS. For the years ended September 30, 1995 and 1994,
the highest amounts of borrowings from TMS were $34 million and
$161 million, respectively; interest charges related to these
borrowings were immaterial. The Operating Agreement provides that
borrowings from TMS are subordinated to all other indebtedness of TMCC.
For the years September 30, 1996, 1995 and 1994, the highest amounts of
funds invested with TMS were $224 million, $603 million and $326
million, respectively; interest earned on these investments totaled
$5 million, $16 million and $5 million for the years ended
September 30, 1996, 1995 and 1994, respectively.
The Company leases its headquarters facility from TMS; rent expense
paid to TMS for this facility totaled $3 million for each of the years
ended September 30, 1996, 1995 and 1994. TMCC leases a corporate
aircraft to TMS and provides wholesale financing for a TMS affiliate;
for each of the years ended September 30, 1996, 1995 and 1994, TMCC
recognized revenue of $3 million related to these arrangements.
TMIS and TMICV provide certain insurance services, and insurance and
reinsurance coverages, respectively, to TMS. Premiums, commissions and
fees earned on these services for the years ended September 30, 1996,
1995 and 1994 totaled $7 million, $4 million and $7 million,
respectively.
-34-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9 - Notes and Loans Payable
- --------------------------------
Notes and loans payable at September 30, 1996 and 1995, which consisted
of senior debt, included the following:
<TABLE>
<CAPTION>
September 30,
----------------------
1996 1995
------- -------
(Dollars in Millions)
<S> <C> <C>
Commercial paper, net................... $ 2,360 $ 1,442
------- -------
Other senior debt, due in the years
ending September 30,:
1996.............................. - 3,252
1997.............................. 3,211 2,722
1998.............................. 2,760 2,371
1999.............................. 1,384 529
2000.............................. 2,137 1,723
2001.............................. 2,216 330
Thereafter........................ 864 281
------- -------
12,572 11,208
Unamortized premium..................... 82 46
------- -------
Total other senior debt........... 12,654 11,254
------- -------
Notes and loans payable........ $15,014 $12,696
======= =======
</TABLE>
Short-term borrowings include commercial paper and certain medium-term
notes ("MTNs"). The weighted average remaining term of commercial
paper was 31 days and 27 days at September 30, 1996 and 1995,
respectively. The weighted average interest rate on commercial paper
was 5.41% and 6.53% at September 30, 1996 and 1995, respectively.
Short-term MTNs with original terms of one year or less, included in
other senior debt, were $559 million and $444 million at September 30,
1996 and 1995, respectively. The weighted average interest rate on
these short-term MTNs was 5.19% and 5.86% at September 30, 1996 and
1995, respectively, including the effect of interest rate swap
agreements.
The weighted average interest rate on other senior debt was 5.98% and
5.75% at September 30, 1996 and 1995, respectively, including the
effect of interest rate swap agreements and option-based products. The
rates have been calculated using rates in effect at September 30, 1996
and 1995, some of which are floating rates that reset daily.
Approximately 24% of other senior debt at September 30, 1996 had
interest rates, including the effect of interest rate swap agreements,
that were fixed for a period of more than one year. The weighted
-35-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9 - Notes and Loans Payable (Continued)
- --------------------------------
average of these fixed interest rates was 5.83% at September 30, 1996.
Approximately 49% of other senior debt at September 30, 1996 had
floating interest rates that were covered by option-based products. The
weighted average strike rate on these option-based products was 6.18%
at September 30, 1996. TMCC manages interest rate risk via continuous
adjustment of the mix of fixed and floating rate debt through use of
interest rate swap agreements and option-based products.
Included in Notes and Loans Payable at September 30, 1996 and 1995 were
unsecured notes denominated in various foreign currencies as follows:
<TABLE>
<CAPTION>
September 30,
----------------------------
1996 1995
----------- -----------
<S> <C> <C>
Australian dollars.................. 250 million 250 million
British pound sterling.............. 150 million -
Canadian dollars.................... 300 million 775 billion
Dutch guilders...................... 555 million 555 million
European currency units............. - 45 million
French francs....................... 3 billion 1 billion
German deutsche marks............... 1 billion 760 million
Hong Kong dollars................... 150 million 150 million
Italian lire........................ 493 billion 470 billion
Japanese yen........................ 198 billion 218 billion
New Zealand dollar.................. 100 million -
South African rand.................. 250 million -
Swedish kronor...................... 670 million 110 million
Swiss francs........................ 2 billion 1 billion
</TABLE>
Concurrent with the issuance of these unsecured notes, TMCC entered
into cross currency interest rate swap agreements to convert these
obligations at maturity into U.S. dollar obligations which in aggregate
total a principal amount of $6.2 billion. TMCC's foreign currency debt
was translated into U.S. dollars in the financial statements at the
various foreign currency spot exchange rates in effect at September 30,
1996. The receivables or payables arising as a result of the
differences between the September 30, 1996 foreign currency spot
exchange rates and the contract rates applicable to the cross currency
interest rate swap agreements are classified in Other Receivables or
Accounts Payable and Accrued Expenses, respectively, and would in
aggregate total a net payable position of $171 million at
September 30, 1996.
-36-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10 - Fair Value of Financial Instruments
- ---------------------------------------------
In accordance with the requirements of Statement of Financial
Accounting Standards No. 107, "Disclosures about Fair Value of
Financial Instruments" and its amendment, Statement of Financial
Accounting Standards No. 119, "Disclosure about Derivative Financial
Instruments and Fair Value of Financial Instruments", the Company has
provided the estimated fair value of financial instruments using
available market information at September 30, 1996 and 1995, and the
valuation methodologies described below. Considerable judgement was
employed in interpreting market data to develop estimates of fair
value. Accordingly, the estimates presented herein are not necessarily
indicative of the amounts that the Company could realize in a current
market exchange. The use of different market assumptions or valuation
methodologies may have a material effect on the estimated fair value
amounts.
The carrying amounts and estimated fair values of the Company's
financial instruments at September 30, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
September 30,
---------------------------------------------------
1996 1995
------------------------ ------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
----------- ---------- ----------- ----------
(Dollars in Millions)
<S> <C> <C> <C> <C>
Balance sheet financial
instruments:
Assets:
Cash and cash equivalents......... $170 $170 $101 $101
Investments in marketable
securities..................... $325 $325 $169 $169
Retail finance receivables, net... $6,228 $6,121 $5,938 $6,003
Other receivables................. $77 $79 $70 $71
Receivables from cross currency
interest rate swap agreements.. $116 $152 $280 $426
Liabilities:
Notes and loans payable........... $15,014 $15,398 $12,696 $12,736
Payables from cross currency
interest rate swap agreements.. $287 $108 $154 $65
</TABLE>
-37-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10 - Fair Value of Financial Instruments (Continued)
- ---------------------------------------------
<TABLE>
<CAPTION>
September 30,
---------------------------------------------------
1996 1995
------------------------ ------------------------
Contract or Unrealized Contract or Unrealized
Notional Gains/ Notional Gains/
Amount (Losses) Amount (Losses)
----------- ---------- ----------- ----------
(Dollars in Millions)
<S> <C> <C> <C> <C>
Off-balance sheet financial
instruments:
Cross currency interest rate
swap agreements................ $5,642 $72 $4,804 $342
Interest rate swap agreements..... $6,759 $37 $7,049 $29
Option-based products............. $6,220 $26 $3,820 $(1)
Indexed note swap agreements...... $1,924 $(37) $1,721 $11
</TABLE>
The fair value estimates presented herein are based on information
available to management as of September 30, 1996 and 1995. Although
the Company is not aware of any factors that would significantly affect
the estimated fair value amounts, such amounts have not been
comprehensively reevaluated for purposes of these financial statements
since September 30, 1996 and 1995 and, therefore, current estimates of
fair value may differ significantly from the amounts presented herein.
The methods and assumptions used to estimate the fair value of
financial instruments are summarized as follows:
Cash and Cash Equivalents
-------------------------
The carrying amount of cash and cash equivalents approximates market
value due to the short maturity of these investments.
Investments in Marketable Securities
------------------------------------
The fair value of marketable securities was estimated using quoted
market prices or discounted cash flow analysis.
-38-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10 - Fair Value of Financial Instruments (Continued)
- ---------------------------------------------
Retail Finance Receivables
--------------------------
The carrying amounts of $900 million and $1.1 billion of variable rate
finance receivables at September 30, 1996 and 1995, respectively, were
assumed to approximate fair value as these receivables reprice at
prevailing market rates. The fair value of fixed rate finance
receivables was estimated by discounting expected cash flows using the
rates at which loans of similar credit quality and maturity would be
made as of September 30, 1996 and 1995.
Other Receivables
-----------------
The carrying amount and fair value of other receivables are presented
separately from the receivables arising from cross currency interest
rate swap agreements. The fair value of amounts associated with the
sale of finance receivables was estimated by discounting expected cash
flows using quoted market interest rates as of September 30, 1996 and
1995. The carrying amount of the remaining other receivables
approximate market value due to the short maturity of these
instruments.
Notes and Loans Payable
-----------------------
The fair value of notes and loans payable was estimated by discounting
expected cash flows using the interest rates at which debt of similar
credit quality and maturity would be made as of September 30, 1996 and
1995. The carrying amount of commercial paper was assumed to
approximate fair value due to the short maturity of these instruments.
-39-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10 - Fair Value of Financial Instruments (Continued)
- ---------------------------------------------
Cross Currency Interest Rate Swap Agreements
--------------------------------------------
The estimated fair value of TMCC's outstanding cross currency interest
rate swap agreements was derived by discounting expected cash flows
over the remaining term of the agreements using quoted market exchange
rates and quoted market interest rates as of September 30, 1996 and
1995.
Interest Rate Swap Agreements
-----------------------------
The estimated fair value of TMCC's outstanding interest rate swap
agreements was derived by discounting expected cash flows using quoted
market interest rates as of September 30, 1996 and 1995.
Option-based Products
-----------------------
The estimated fair value of TMCC's outstanding option based products
was derived by discounting expected cash flows over the remaining term
of the instruments using market exchange rates and market interest
rates as of September 30, 1996 and 1995.
Indexed Note Swap Agreements
----------------------------
The estimated fair value of TMCC's outstanding indexed note swap
agreements was derived using quoted market prices as of September 30,
1996 and 1995.
Note 11 - Financial Instruments with Off-Balance Sheet Risk
- -----------------------------------------------------------
Inventory Lines of Credit
-------------------------
TMCC has extended inventory floorplan lines of credit to dealers, the
unused portion of which amounted to $1,119 million and $773 million at
September 30, 1996 and 1995, respectively. Security interests are
acquired in vehicles and equipment financed and substantially all such
financings are backed by corporate or individual guarantees from or on
behalf of the participating dealers.
-40-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11 - Financial Instruments with Off-Balance Sheet Risk (Continued)
- -----------------------------------------------------------
Derivative Financial Instruments
--------------------------------
TMCC utilizes a variety of derivative financial instruments to manage
its currency exchange rate risk arising as a result of borrowings
denominated in foreign currencies and its interest rate risk as
explained in this note. TMCC does not enter into these instruments for
trading purposes.
A reconciliation of the activity of TMCC's derivative financial
instruments for the years ended September 30, 1996 and 1995 is as
follows:
<TABLE>
<CAPTION>
September 30,
-----------------------------------------------------------
Cross
Currency
Interest Interest Indexed
Rate Swap Rate Swap Option-based Note Swap
Agreements Agreements Products Agreements
------------ ------------ ------------- ------------
1996 1995 1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ---- ---- ----
(Dollars in Billions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning Notional Amount $4.8 $4.0 $7.1 $7.6 $3.8 $0.5 $1.7 $2.4
Add:
New agreements........ 1.7 1.6 3.1 1.9 3.4 3.3 1.2 0.5
Less:
Expired agreements.... 0.9 0.8 3.4 2.4 1.0 - 1.0 1.2
---- ---- ---- ---- ---- ---- ---- ----
Ending Notional Amount... $5.6 $4.8 $6.8 $7.1 $6.2 $3.8 $1.9 $1.7
==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
-41-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11 - Financial Instruments with Off-Balance Sheet Risk (Continued)
- -----------------------------------------------------------
Interest Rate Risk Management
-----------------------------
TMCC utilizes interest rate swap agreements in managing its exposure to
interest rate fluctuations. Interest rate swap agreements are executed
as an integral part of specific debt transactions or on a portfolio
basis. TMCC's interest rate swap agreements involve agreements to pay
fixed and receive a floating rate, or receive fixed and pay a floating
rate, at specified intervals, calculated on an agreed-upon notional
amount. Interest rate swap agreements may also involve basis swap
contracts which are agreements to exchange the difference between
certain floating interest amounts, such as the net payment based on the
commercial paper rate and the London Interbank Offered Rate ("LIBOR"),
calculated on an agreed-upon notional amount. The original maturities
of the interest rate swap agreements ranged from one to ten years at
September 30, 1996.
TMCC also utilizes option-based products in managing its exposure to
interest rate fluctuations. Option-based products are executed on a
portfolio basis and consist primarily of purchased interest rate cap
agreements and to a lesser extent corridor agreements. Option-based
products are agreements which either grant TMCC the right to receive or
require TMCC to make payments at specified interest rate levels.
Approximately 49% of TMCC's other senior debt at September 30, 1996 had
floating interest rates that were covered by option-based products
which had an average strike rate of 6.18%. The premiums paid for
option-based products are included in Deferred Charges and are
amortized to Interest Expense over the life of the instruments on a
straight-line basis. Amounts receivable under option-based products
are recorded as a reduction to Interest Expense. The original
maturities of the option-based products ranged from two to three years
at September 30, 1996.
-42-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11 - Financial Instruments with Off-Balance Sheet Risk (Continued)
- -----------------------------------------------------------
Interest Rate Risk Management (Continued)
-----------------------------
The aggregate notional amounts of interest rate swap agreements and
option-based products outstanding at September 30, 1996 and 1995 were
as follows:
<TABLE>
<CAPTION>
September 30,
---------------------
1996 1995
---- ----
(Dollars in Billions)
<S> <C> <C>
Fixed rate swaps............................... $2.3 $4.2
Floating rate swaps............................ 3.1 1.3
Basis swaps.................................... 1.4 1.6
---- ----
Total interest rate swap agreements........ $6.8 $7.1
==== ====
Option-based products.......................... $6.2 $3.8
==== ====
</TABLE>
TMCC utilizes indexed note swap agreements in managing its exposure in
connection with debt instruments whose interest rate and/or principal
redemption amounts are derived from other underlying instruments.
Indexed note swap agreements involve agreements to receive interest
and/or principal amounts associated with the indexed notes, denominated
in either U.S. dollars or a foreign currency, and to pay fixed or
floating rates on fixed U.S. dollar liabilities. At September 30,
1996, TMCC was the counterparty to $1.9 billion of indexed note swap
agreements, of which $0.6 billion was denominated in foreign currencies
and $1.3 billion was denominated in U.S. dollars. At September 30,
1995, TMCC was the counterparty to $1.7 billion of indexed note swap
agreements, of which $0.7 billion was denominated in foreign currencies
and $1.0 billion was denominated in U.S. dollars. The original
maturities of the indexed note swap agreements ranged from one to
eleven years at September 30, 1996.
The notional amounts of interest rate and indexed note swap agreements
and option-based products do not represent amounts exchanged by the
parties and, thus, are not a measure of the Company's exposure through
its use of derivatives. The amounts exchanged are calculated based on
the notional amounts and other terms of the derivatives which relate to
interest rates or financial or other indexes.
-43-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11 - Financial Instruments with Off-Balance Sheet Risk (Continued)
- -----------------------------------------------------------
Foreign Exchange Risk Management
--------------------------------
TMCC utilizes cross currency interest rate swap agreements to manage
exposure to exchange rate fluctuations on principal and interest
payments for borrowings denominated in foreign currencies. Notes and
loans payable issued in foreign currencies are hedged by concurrently
executed cross currency interest rate swap agreements which involve the
exchange of foreign currency principal and interest obligations for
U.S. dollar obligations at agreed-upon currency exchange and interest
rates. The aggregate notional amounts of cross currency interest rate
swap agreements at September 30, 1996 and 1995 were $5.6 billion and
$4.8 billion, respectively. The original maturities of the cross
currency interest rate swap agreements ranged from one to ten years at
September 30, 1996.
Credit Risk Management
----------------------
TMCC manages the risk of counterparty default through the use of credit
standard guidelines, counterparty diversification and monitoring of
counterparty financial condition. At September 30, 1996, approximately
80% of TMCC's derivative financial instruments, based on notional
amounts, were with commercial banks and investment banking firms
assigned investment grade ratings of "AA" or better by national rating
agencies. TMCC does not anticipate non-performance by any of its
counterparties and has no reserves related to non-performance as of
September 30, 1996; TMCC has not experienced any counterparty default
during the three years ended September 30, 1996. Additionally, TMCC's
loss in the event of counterparty default is partially mitigated as a
result of master netting agreements in place with all derivative
counterparties which allow the net difference between TMCC and each
counterparty to be exchanged in the event of default.
Credit exposure of derivative financial instruments is represented by
the fair value of contracts with a positive fair value at September 30,
1996 reduced by the effects of master netting agreements. The credit
exposure of TMCC's derivative financial instruments at September 30,
1996 was $205 million on an aggregate notional amount of $20.5 billion.
-44-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11 - Financial Instruments with Off-Balance Sheet Risk (Continued)
- -----------------------------------------------------------
Market Risk
-----------
TMCC's loan and lease portfolios consist of a series of contractually
defined cash flows over the life of the portfolios. The value to TMCC
of the cash flows changes as market interest rates change. TMCC's
asset portfolios are funded by various debt instruments whose cash
flows are modified or hedged by a variety of derivative and option-
based products. The value of TMCC's liability and derivative cash
flows also change as market interest rates change.
TMCC uses a value-at-risk methodology, in connection with other
management tools, to assess the interest rate risk of aggregated loan
and lease assets and financial liabilities, including derivatives and
option based products. TMCC is not subject to currency exchange rate
risk as foreign currency denominated instruments are entirely hedged.
Value-at-risk represents the potential losses for a portfolio from
adverse changes in market factors for a specified period of time and
level of confidence. TMCC estimates value-at-risk using historical
interest rate volatilities for the past two years. The value at risk
of TMCC's portfolio as of September 30, 1996, measured as the potential
30 day loss in value from assumed adverse changes in interest rates
that are estimated to cover 90% of likely market movements, totals
$45.6 million on a mean portfolio value of $3.8 billion; alternatively,
the value at risk represents 1.2% of the mean portfolio value.
As of September 30, 1996, an interest rate increase of 1% (100 basis
points) would raise TMCC's weighted average interest rate, including
the effects of interest rate swap agreements and option-based products,
by .30%, from 5.80% to an estimated 6.10% at September 30, 1996.
Conversely, an interest rate decrease of 1% (100 basis points) would
lower TMCC's weighted average interest rate, including the effects of
interest rate swap agreements and option based products, by .43%, from
5.80% to an estimated 5.37% at September 30, 1996.
-45-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 12 - Pension and Other Benefit Plans
- -----------------------------------------
All full-time employees of the Company are eligible to participate in
the TMS pension plan commencing on the first day of the month following
hire. Benefits payable under this non-contributory defined benefit
pension plan are based upon the employees' years of credited service
and the highest sixty consecutive months' compensation, reduced by a
percentage of social security benefits. For the years ended
September 30, 1996, 1995 and 1994, the Company's pension expense was
$4 million, $2 million and $3 million, respectively. At
September 30, 1996, 1995 and 1994, the accumulated benefit obligation
and plan net assets for employees of the Company were not determined
separately from TMS; however, the plan's net assets available for
benefits exceeded the accumulated benefit obligation. TMS funding
policy is to contribute annually the maximum amount deductible for
federal income tax purposes.
Effective October 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits" ("Statement No. 112"). Statement No. 112 requires accrual,
during the years that the employee renders the necessary service or
when it is probable that a liability has been incurred, of the expected
cost of providing postemployment benefits to former or inactive
employees, their beneficiaries, and covered dependents after employment
but before retirement. This method differs from the Company's previous
practice of accounting for these benefits on a cash basis. The
cumulative effect of the change in accounting principle was not
material to the Company's financial position or results of operations.
-46-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13 - Provision for Income Taxes
- ------------------------------------
The provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
Years ended September 30,
--------------------------
1996 1995 1994
---- ---- ----
(Dollars in Millions)
<S> <C> <C> <C>
Current
Federal........................... $(47) $(97) $ 6
State............................. (23) (27) 4
---- ---- ----
Total current ................. (70) (124) 10
---- ---- ----
Deferred
Federal........................... 129 173 86
State............................. 49 68 22
---- ---- ----
Total deferred................. 178 241 108
---- ---- ----
Provision for income taxes.. $108 $117 $118
==== ==== ====
</TABLE>
The deferred income tax liabilities by jurisdictions are as follows:
<TABLE>
<CAPTION>
September 30,
---------------------
1996 1995
---- ----
(Dollars in Millions)
<S> <C> <C>
Federal........................................ $643 $513
State.......................................... 162 114
---- ----
Net deferred income tax liability........... $805 $627
==== ====
</TABLE>
-47-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13 - Provision for Income Taxes (Continued)
- ------------------------------------
The Company's deferred tax assets and liabilities consisted of the
following:
<TABLE>
<CAPTION>
September 30,
---------------------
1996 1995
----- -----
(Dollars in Millions)
<S> <C> <C>
Assets:
Alternative minimum tax..................... $ 436 $ 339
Provision for losses........................ 116 87
Deferred administrative fees................ 54 47
NOL carryforwards........................... 49 22
Deferred acquisition costs.................. 12 14
Unearned insurance premiums................. 4 4
Revenue recognition......................... 2 2
Other....................................... 3 3
----- -----
Deferred tax assets...................... 676 518
----- -----
Liabilities:
Lease transactions.......................... 1,330 1,049
State taxes................................. 151 96
----- -----
Deferred tax liabilities................. 1,481 1,145
----- -----
Net deferred income tax liability..... $ 805 $ 627
===== =====
</TABLE>
TMCC has state tax net operating loss carryforwards of $609 million
which expire beginning in fiscal 1997 through 2009.
-48-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13 - Provision for Income Taxes (Continued)
- ------------------------------------
A reconciliation between the provision for income taxes computed by
applying the federal statutory tax rate to income before income taxes
and actual income taxes provided is as follows:
<TABLE>
<CAPTION>
Years ended September 30,
-------------------------
1996 1995 1994
---- ---- ----
(Dollars in Millions)
<S> <C> <C> <C>
Provision for income taxes at
federal statutory tax rate......... $ 91 $105 $103
State and local taxes (net of
federal tax benefit)............... 17 26 17
Other, including changes in
applicable state tax rates......... - (14) (2)
---- ---- ----
Provision for income taxes......... $108 $117 $118
==== ==== ====
Effective tax rate.................... 41.52% 39.12% 40.24%
</TABLE>
Note 14 - Lines of Credit/Standby Letters of Credit
- ---------------------------------------------------
To support its commercial paper program, TMCC maintains syndicated bank
credit facilities with certain banks which aggregated $2.0 billion at
September 30, 1996, compared to $1.5 billion as of September 30, 1995.
No loans were outstanding under any of these bank credit facilities as
of September 30, 1996 or 1995.
To facilitate and maintain letters of credit, TMCC maintains, along
with TMS, uncommitted, unsecured lines of credit with banks totaling
$250 million as of September 30, 1996. Approximately $44 million in
letters of credit had been issued, primarily related to the Company's
insurance operations as of September 30, 1996, compared to $86 million
as of September 30, 1995. The letters of credit for the insurance
companies are used to satisfy requirements of certain insurance
carriers and state insurance regulatory agencies.
-49-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 15 - Commitments and Contingent Liabilities
- ------------------------------------------------
At September 30, 1996, the Company was a lessee under lease agreements
for facilities with minimum future commitments as follows: years
ending September 30, 1997 - $9 million; 1998 - $8 million; 1999 -
$6 million; 2000 - $4 million; 2001 - $3 million; thereafter -
$3 million.
TMCC has guaranteed payments of principal and interest on $58 million
principal amount of flexible rate demand pollution control revenue
bonds maturing in 2006, issued in connection with the Kentucky
manufacturing facility of an affiliate.
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. Certain of these actions
are similar to suits which have been filed against other financial
institutions and captive finance companies. The amounts of liability
on these claims and actions as of September 30, 1996 were not
determinable; however, in the opinion of management, the ultimate
liability resulting therefrom should not materially affect TMCC's
consolidated financial position or results of operations.
Note 16 - Selected Quarterly Financial Data (Unaudited)
- -------------------------------------------------------
<TABLE>
<CAPTION>
Total Depreciation
Financing Interest on Operating Net
Revenues Expense Leases Income
---------- -------- ------------ --------
(Dollars in Millions)
<S> <C> <C> <C> <C>
Year Ended September 30, 1996:
First quarter.............. $ 688 $193 $ 370 $ 41
Second quarter............. 724 196 394 36
Third quarter.............. 768 210 416 40
Fourth quarter............. 798 221 446 35
------ ---- ------ ----
Total................... $2,978 $820 $1,626 $152
====== ==== ====== ====
Year Ended September 30, 1995:
First quarter.............. $ 564 $161 $ 277 $ 44
Second quarter............. 601 175 298 45
Third quarter.............. 630 189 313 46
Fourth quarter............. 661 191 344 48
------ ---- ------ ----
Total................... $2,456 $716 $1,232 $183
====== ==== ====== ====
</TABLE>
-50-
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There is nothing to report with regard to this item.
-51-
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth certain information regarding the directors
and executive officers of TMCC as of November 30, 1996.
Name Age Position
---- --- --------
Yoshio Ishizaka........... 56 Director and President, TMCC;
Director and President, TMS;
Director, TMC
Nobu Shigemi.............. 52 Director, Senior Vice President
and Treasurer, TMCC; Group Vice
President, TMS
Douglas West.............. 51 Director, Senior Vice President
and Secretary, TMCC; Senior Vice
President and Secretary, TMS
Wolfgang Jahn............. 58 Director, Senior Vice President
and General Manager, TMCC;
Group Vice President, TMS
Robert Pitts.............. 48 Director and Assistant Secretary,
TMCC; Group Vice President, TMS
Yale Gieszl............... 54 Director, TMCC; Director and
Executive Vice President, TMS
Takashi Nishiyama......... 54 Director, TMCC; Senior Vice
President and Treasurer, TMS
Ryuji Araki............... 56 Director, TMCC; Director, TMC
All directors of TMCC are elected annually and hold office until their
successors are elected and qualified. Officers are elected annually and serve
at the pleasure of the Board of Directors.
Mr. Ishizaka was named Director and President of TMCC and TMS in June 1996.
From January 1990 to May 1996, Mr. Ishizaka was General Manager of the Europe
Division of TMC, and in September 1992, he was named a Director of TMC.
Mr. Ishizaka has been employed with TMC, in various positions, since 1964.
Mr. Shigemi was named Director, Senior Vice President and Treasurer of TMCC
and Group Vice President of TMS in September 1994. From January 1994 to
August 1994, Mr. Shigemi was General Manager of TMC's Finance Division. From
January 1993 to December 1993, he was the Project General Manager of the
Accounting Division of TMC. From February 1982 to December 1992, he worked
in the Tokyo Secretarial Division having been named a manager in February 1983
and Deputy General Manager in February 1990. Mr. Shigemi has been employed
with TMC, in various positions, since 1968.
-52-
<PAGE>
Mr. West was named Director, Senior Vice President and Secretary of TMCC and
Senior Vice President and Secretary of TMS in June 1996. From April 1993 to
May 1996, Mr. West was a Group Vice President of TMS. From April 1989 to
March 1993, Mr. West was a Vice President of TMS. Mr. West has been employed
with TMS, in various positions, since 1982.
Mr. Jahn was named Director and Group Vice President of TMCC in April 1993.
In December 1994, Mr. Jahn was also named General Manager of TMCC and Group
Vice President of TMS and, in July 1995, Senior Vice President of TMCC. From
January 1985 to March 1993, he was a Vice President of TMCC, and from
September 1988 to March 1993, he was also the Assistant Secretary of TMCC.
From January 1987 to March 1993, he held the position of Vice President of
TMS. Mr. Jahn has been employed with TMS and TMCC, in various positions,
since 1973.
Mr. Pitts was named Director and Assistant Secretary of TMCC and Group Vice
President of TMS in April 1993. From January 1984 to March 1993, he was an
executive with TMCC having been named General Manager in January 1984 and Vice
President in April 1989. Mr. Pitts has been employed with TMS and TMCC, in
various positions, since 1971.
Mr. Gieszl was named Director of TMCC in September 1988. He is also a
Director and Executive Vice President of TMS, positions he has held since
December 1989 and June 1992, respectively. From January 1982 to May 1992, he
was a Senior Vice President of TMS. From October 1982 to May 1992, he held
the position of Senior Vice President of TMCC, and from September 1988 to May
1992, he also held the position of Secretary of TMCC. Mr. Gieszl has been
employed with TMS, in various positions, since 1970.
Mr. Nishiyama was named Director of TMCC and Senior Vice President and
Treasurer of TMS in January 1994. From February 1989 to December 1993, he was
General Manager of the Europe and Africa Project Division of TMC. From
February 1986 to January 1989, he was Executive Vice President of Salvador
Caetano S.A. Portugal. Mr. Nishiyama has been employed with TMC, in various
positions, since 1965.
Mr. Araki was named Director of TMCC in September 1995. He has served on
TMC's Board of Directors since September 1992. Mr. Araki has been employed
with TMC, in various positions, since 1962.
ITEM 11. EXECUTIVE COMPENSATION.
Summary Compensation Table
The following table sets forth all compensation awarded to, earned by, or paid
to the Company's Principal Executive Officer and the most highly compensated
executive officers whose salary and bonus for the latest fiscal year exceeded
$100,000, for services rendered in all capacities to the Company for the
fiscal years ended September 30, 1996, 1995 and 1994.
-53-
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation
--------------------------------------------
Other Annual
Name and Fiscal Compensation All
Principal Position Year Salary ($) Bonus ($) ($)<F1> Other ($)<F2>
- --------------------- ------ ---------- --------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Wolfgang Jahn 1996 $233,100 $94,500 $8,500
Principal Executive 1995 $213,800 $98,700 $6,000
Officer 1994 $199,800 $91,300 $7,000
Nobu Shigemi 1996 $316,000 $50,900 $51,700
Senior Vice President 1995 $199,000 $40,500 $47,300
<FN>
- ------------
<F1> The amounts in this column represent housing allowances and relocation costs.
<F2> The amounts in this column represent the Company's allocated contribution under the TMS
Savings Plan (the "Plan"), a tax-qualified 401(k) Plan. Participants in the Plan may
elect, subject to applicable law, to contribute up to 6% of their base compensation on a
pre-tax basis to which the Company adds an amount equal to two-thirds of the employee's
contribution. Participants are vested 25% each year with respect to the Company's
contribution and are fully vested after four years. Subject to the limitations of the
Plan, employee and Company contributions are invested in various investment options at the
discretion of the employee. TMS also maintains a 401(k) Excess Plan, a non-qualified
deferred compensation plan which has similar provisions to the Saving Plan.
</FN>
</TABLE>
Employee Benefit Plan
All full-time employees of the Company are eligible to participate in the TMS
Pension Plan commencing on the first day of the month following hire.
Benefits payable under this non-contributory defined benefit pension plan are
based upon final average compensation, final average bonus and years of
credited service. Final average compensation is defined as the average of the
participant's base rate of pay, plus overtime, during the highest-paid 60
consecutive months prior to the earlier of termination or normal retirement.
Final average bonus is defined as the highest average of the participant's
fiscal year bonus, and basic seniority-based cash bonus for non-managerial
personnel, over a period of 60 consecutive months prior to the earlier of
termination or normal retirement. A participant generally becomes eligible
for the normal retirement benefit at age 62, and may be eligible for early
retirement benefits starting at age 55.
-54-
<PAGE>
The annual normal retirement benefit under the Pension Plan, payable monthly,
is an amount equal to the number of years of credited service (up to 25 years)
multiplied by the sum of (i) 2% of the participant's final average
compensation less 2% of the estimated annual Social Security benefit payable
to the participant at normal retirement and (ii) 1% of the participant's final
average bonus. The normal retirement benefit is subject to reduction for
certain benefits under any union-sponsored retirement plan and benefits
attributable to employer contributions under any defined-contribution
retirement plan maintained by TMS and its subsidiaries or any affiliate that
has been merged into the TMS Pension Plan.
The TMS Supplemental Executive Retirement Plan (TMS SERP) authorizes a benefit
to be paid to eligible executives, including Mr. Jahn. Benefits under the TMS
SERP, expressed as an annuity payable monthly, are based on 2% of the
executive's compensation recognized under the plan after deducting the
executive's primary Social Security benefit, multiplied by the years of
service credited under the plan (up to a maximum of 25), offset by benefits
payable under the TMS Pension Plan. A covered participant's compensation may
include base pay and a percentage (not in excess of 100%) of bonus pay,
depending on the executive's length of service in certain executive positions.
Similarly, years of service credited under the plan are determined by
reference, in part, to the executive's length of service in certain executive
positions. No benefit is payable under the TMS SERP to an executive unless
the executive's termination of employment occurs on a date, after the
executive reaches age 55, that is agreed in writing by the President of TMS
and the executive; and the executive is vested in benefits under the TMS
Pension Plan, or unless the executive accepts an invitation to retire extended
by the President of TMS.
The following pension plan table presents typical annual retirement benefits
under the TMS Pension Plan for various combinations of compensation and years
of credited service for participants who retire at age 62, assuming no final
average bonus and excluding Social Security offset amounts. The amounts are
subject to Federal statutory limitations governing pension calculations and
benefits.
<TABLE>
<CAPTION>
Annual Benefits for
Final Average Years of Credited Service
Annual --------------------------------------
Compensation 15 20 25
------------- -------- -------- --------
<S> <C> <C> <C>
$50,000 $15,000 $20,000 $25,000
$100,000 $30,000 $40,000 $50,000
$150,000 $45,000 $60,000 $75,000
$200,000 $60,000 $80,000 $100,000
$250,000 $75,000 $100,000 $125,000
$300,000 $90,000 $120,000 $150,000
$350,000 $105,000 $140,000 $175,000
$400,000 $120,000 $160,000 $200,000
</TABLE>
Mr. Jahn is a participant in the TMS Pension Plan and the TMS SERP and has 23
years of total credited service as of September 30, 1996, 7 years of which
have been allocated to the Company. Based upon years of credited service
-55-
<PAGE>
allocable to the Company, Mr. Jahn would be entitled to receive and the
Company would be required to pay approximately $26,000 in annual pension
benefits when Mr. Jahn reaches age 62. Mr. Jahn would also be entitled to
receive pension benefits from TMS based upon services to and compensation by
TMS.
Compensation of Directors
No fees are paid to members of the Board of Directors of TMCC for their
services as directors.
Compensation Committee Interlocks and Insider Participation
Members of the Executive Committee of the Board of Directors, which consists
of the directors of the Company other than Mr. Araki, participate in decisions
regarding the compensation of the executive officers of the Company. Certain
of the members of the Executive Committee are current or former executive
officers of the Company. Certain of the members of the Executive Committee
are also current executive officers and directors of TMS and its affiliates
and participate in compensation decisions for those entities.
-56-
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
As of the date hereof, all of TMCC's capital stock is owned by TMS.
ITEM 13. CERTAIN RELATIONSHIPS AND TRANSACTIONS.
Transactions between the Company and its Parent are included in Note 8 of the
Notes to the Consolidated Financial Statements.
-57-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1)Financial Statements
Included in Part II, Item 8 of this Form 10-K. See Index to
Financial Statements on page 18.
(2)Exhibits
The exhibits listed on the accompanying Exhibit Index, starting on
page 60, are filed as part of, or incorporated by reference into,
this Report.
(b)Reports on Form 8-K
There were no reports on Form 8-K filed by the registrant during the
quarter ended September 30, 1996.
-58-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in the City of Torrance,
State of California, on the 23rd day of December, 1996.
TOYOTA MOTOR CREDIT CORPORATION
By /S/ WOLFGANG JAHN
------------------------------
Wolfgang Jahn
Senior Vice President and
General Manager
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities indicated on the 23rd day of December, 1996.
Signature Title
--------- -----
Senior Vice President and General
Manager and Director
/S/ WOLFGANG JAHN (Principal Executive Officer)
- ------------------------------------
Wolfgang Jahn
Senior Vice President/
Treasurer and Director
/S/ NOBU SHIGEMI (Principal Financial Officer)
- ------------------------------------
Nobu Shigemi
Vice President - Finance
and Administration
/S/ PATRICK BREENE (Principal Accounting Officer)
- ------------------------------------
Patrick Breene
/S/ YOSHIO ISHIZAKA Director
- ------------------------------------
Yoshio Ishizaka
/S/ DOUG WEST Director
- ------------------------------------
Doug West
/S/ TAKASHI NISHIYAMA Director
- ------------------------------------
Takashi Nishiyama
-59-
<PAGE>
EXHIBIT INDEX
Method
Exhibit of
Number Description Filing
- ------- ----------- --------
3.1(a) Articles of Incorporation filed with the California
Secretary of State on October 4, 1982. (1)
3.1(b) Certificate of Amendment of Articles of Incorporation
filed with the California Secretary of State on
January 24, 1984. (1)
3.1(c) Certificate of Amendment of Articles of Incorporation
filed with the California Secretary of State on
January 25, 1985. (1)
3.1(d) Certificate of Amendment of Articles of Incorporation
filed with the California Secretary of State on
September 6, 1985. (1)
3.1(e) Certificate of Amendment of Articles of Incorporation
filed with the California Secretary of State on
February 28, 1986. (1)
3.1(f) Certificate of Amendment of Articles of Incorporation
filed with the California Secretary of State on
December 3, 1986. (1)
3.1(g) Certificate of Amendment of Articles of Incorporation
filed with the California Secretary of State on
March 9, 1987. (1)
3.1(h) Certificate of Amendment of Articles of Incorporation
filed with the California Secretary of State on
December 20, 1989. (2)
3.2 Bylaws as amended through January 16, 1993. (11)
4.1 Issuing and Paying Agency Agreement dated August 1,
1990 between TMCC and Bankers Trust Company. (3)
4.2(a) Indenture dated as of August 1, 1991 between TMCC and
The Chase Manhattan Bank, N.A. (4)
- -----------------
(1) Incorporated herein by reference to the same numbered Exhibit filed
with TMCC's Registration Statement on Form S-1, File No. 33-22440.
(2) Incorporated herein by reference to the same numbered Exhibit filed
with TMCC's Report on Form 10-K for the year ended September 30, 1989.
(3) Incorporated herein by reference to Exhibit 4.2 filed with TMCC's
Report on Form 10-K for the year ended September 30, 1990.
(4) Incorporated herein by reference to Exhibit 4.1(a), filed with TMCC's
Registration Statement on Form S-3, File No. 33-52359.
(11) Incorporated herein by reference to the same numbered Exhibit filed
with TMCC's Report on Form 10-K for the year ended September 30, 1993.
-60-
<PAGE>
EXHIBIT INDEX
Method
Exhibit of
Number Description Filing
- ------- ----------- ------
4.2(b) First Supplemental Indenture dated as of
October 1, 1991 among TMCC, Bankers Trust Company
and The Chase Manhattan Bank, N.A. (5)
4.3(a) Amended and Restated Agency Agreement dated as of
July 28, 1994, among TMCC, The Chase Manhattan Bank,
N.A. and Chase Manhattan Bank Luxembourg S.A. (12)
4.3(b) Amendment No. 1 dated July 27, 1995 to the Amended
and Restated Agency Agreement among TMCC, The Chase
Manhattan Bank, N.A. and Chase Manhattan Bank
Luxembourg S.A. (15)
4.3(c) Amendment No. 2 dated July 19, 1996 to the Amended Filed
and Restated Agency Agreement among TMCC, The Chase Herewith
Manhattan Bank, N.A. and Chase Manhattan Bank
Luxembourg S.A.
4.4 TMCC has outstanding certain long-term debt as set
forth in Note 9 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, 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% 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(a) Operating Agreement dated January 16, 1984 between
TMCC and TMS. (24)
10.1(b) Amendment No. 1 to Operating Agreement dated
May 14, 1996 between TMCC and TMS. (18)
- -----------------
(5) Incorporated herein by reference to Exhibit 4.1 filed with TMCC's
Current Report on Form 8-K dated October 16, 1991.
(12) Incorporated herein by reference to Exhibit 4.4(a) filed
with TMCC's Report on Form 10-K for the year ended September 30, 1994.
(15) Incorporated herein by reference to Exhibit 4.4(b) filed
with TMCC's Report on Form 10-K for the year ended September 30, 1995.
(18) Incorporated herein by reference to Exhibit 10.1 filed with TMCC's
Report on Form 10-Q for the quarter ended March 31, 1996.
(24) Incorporated herein by reference to Exhibit 10.1 filed with TMCC's
Registration Statement on Form S-1, File No. 33-22440.
-61-
<PAGE>
EXHIBIT INDEX
Method
Exhibit of
Number Description Filing
- ------- ----------- ------
10.2(a) Financial Service Agreement dated December 21, 1984
between TMCC and World Omni Financial Corporation,
as amended June 6, 1988. (25)
10.2(b) Addendum to Financial Services Agreement dated
January 1, 1991, between TMCC and World Omni Financial
Corporation. (6)
10.2(c) Amendment to Financial Services Agreement dated
March 1, 1992, between TMCC and World Omni Financial
Corporation. (7)
10.2(d) Amendment to Financial Services Agreement dated
March 1, 1994, between TMCC and World Omni Financial
Corporation. (19)
10.2(e) Termination of Financial Services Agreement dated Filed
August 29, 1996 between TMCC and World Omni Financial Herewith
Corporation.
10.3 Form of Pooling and Servicing Agreement among TMCRC,
as Seller, TMCC, as Servicer, and the Chase Manhattan Bank
N.A., as Trustee (including forms of Class A and Class B
Certificates). (8)
10.4 Form of Standard Terms and Conditions of Pooling and
Servicing Agreement. (9)
10.5 Form of Receivables Purchase Agreement. (10)
- ----------------
(6) Incorporated herein by reference to Exhibit 10.2(a) filed with
TMCC's Report on Form 10-K for the year ended September 30, 1991.
(7) Incorporated herein by reference to Exhibit 10.2(b) filed with
TMCC's Report on Form 10-K for the year ended September 30, 1992.
(8) Incorporated herein by reference to Exhibit 4.1 filed with Toyota Auto
Receivables 1993-A Grantor Trust's Registration Statement on Form S-1,
File No. 33-65348.
(9) Incorporated herein by reference to Exhibit 4.2 filed with Toyota Auto
Receivables 1993-A Grantor Trust's Registration Statement on Form S-1,
File No. 33-65348.
(10) Incorporated herein by reference to Exhibit 10.1 filed with Toyota
Auto Receivables 1993-A Grantor Trust's Registration Statement on Form
S-1, File No. 33-65348.
(19) Incorporated herein by reference to Exhibit 10.2(c) filed with
TMCC's Report on Form 10-K for the year ended September 30, 1994.
(25) Incorporated herein by reference to Exhibit 10.2 filed with
TMCC's Registration Statement on Form S-1, File No. 33-22440.
-62-
<PAGE>
EXHIBIT INDEX
Method
Exhibit of
Number Description Filing
- ------- ----------- ------
10.6 Pooling and Servicing Agreement among TMCRC,
as Seller, TMCC, as Servicer, and Bankers Trust Company,
as Trustee (including forms of Class A and Class B
Certificates) dated as of September 1, 1995. (13)
10.7 Receivables Purchase Agreement dated as of September 1,
1995 between TMCC, as Seller, and TMCRC Corporation,
as Purchaser. (14)
10.8 Form of Indemnification Agreement between TMCC and
its directors and officers. (20)
10.9(a) Three-year Credit Agreement (the "Three-year Agreement")
dated as of September 29, 1994 among TMCC, Morgan
Guaranty Trust Company of New York, as agent, and
Bank of America National Trust and Savings Association,
The Bank of Tokyo, Ltd., The Chase Manhattan Bank, N.A.,
Citicorp USA, Inc. and Credit Suisse, as Co-Agents.
Not filed herein as an exhibit, pursuant to Instruction 2
to Item 601 of Regulation S-K under the Securities Act of
1933, is the 364-day Credit Agreement (the "364-day
Agreement") among TMCC and the banks who are party to the
Three-year Agreement. Filed herewith is a
Schedule identifying the 364-day Agreement and setting
forth the material details in which the 364-day
Agreement differs from the Three-year Agreement. TMCC
agrees to furnish a copy of the 364-day Agreement to
the Securities and Exchange Commission upon request. (21)
10.9(b) Amendment No. 1 dated September 28, 1995 to the
Three-year Agreement. (22)
10.9(c) Amendment No. 1 dated September 28, 1995 to the
364-day Agreement. (23)
- ----------------
(13) Incorporated herein by reference to Exhibit 4.1 filed with Toyota Auto
Receivables 1995-A Grantor Trust's Current Report on Form 8-K dated
November 10, 1995, File No. 33-96006.
(14) Incorporated herein by reference to Exhibit 10.1 filed with Toyota
Auto Receivables 1995-A Grantor Trust's Current Report on Form 8-K
dated November 10, 1995, File No. 33-96006.
(20) Incorporated herein by reference to Exhibit 10.6 filed with TMCC's
Registration Statement on Form S-1, File No. 33-22440.
(21) Incorporated herein by reference to Exhibit 10.10 filed with TMCC's
Report on Form 10-K for the year ended September 30, 1994.
(22) Incorporated herein by reference to Exhibit 10.10(a) filed
with TMCC's Report on Form 10-K for the year ended September 30, 1995.
(23) Incorporated herein by reference to Exhibit 10.10(b) filed with TMCC's
Report on Form 10-K for the year ended September 30, 1995.
-63-
<PAGE>
EXHIBIT INDEX
Method
Exhibit of
Number Description Filing
- ------- ----------- ------
10.9(d) Amendment No. 2 dated September 24, 1996 to the Three- Filed
year Agreement. Herewith
10.9(e) Amendment No. 2 dated September 24, 1996 to the 364-day Filed
Agreement. Herewith
10.10 Toyota Motor Sales, U.S.A., Inc. Supplemental
Executive Retirement Plan. (16)
10.11 Toyota Motor Sales, U.S.A., Inc. 401(k)
Excess Plan. (17)
12.1 Calculation of ratio of earnings to fixed charges. Filed
Herewith
21.1 TMCC's list of subsidiaries. Filed
Herewith
23.1 Consent of Independent Accountants. Filed
Herewith
27.1 Financial Data Schedule. Filed
Herewith
- ----------------
(16) Incorporated herein by reference to Exhibit 10.1 filed with TMCC's
Report on Form 10-Q for the quarter ended December 31, 1995.
(17) Incorporated herein by reference to Exhibit 10.2 filed with TMCC's
Report on From 10-Q for the quarter ended December 31, 1995.
-64-
<PAGE>
Exhibit 4.3(c)
Execution Copy
AMENDMENT NO. 2
TO
AMENDED AND RESTATED AGENCY AGREEMENT
in respect of
THE TOYOTA MOTOR CREDIT CORPORATION
EURO MEDIUM-TERM NOTE PROGRAM
This Amendment No. 2, dated as of July 19, 1996, is made to the Amended
and Restated Agency Agreement, dated as of July 28, 1994, among Toyota Motor
Credit Corporation, as Issuer, The Chase Manhattan Bank, as Agent, and Chase
Manhattan Bank Luxembourg S.A., as Paying Agent, as the same has been amended
by Amendment No. 1 thereto dated as of July 27, 1995 (collectively, the
"Agreement"), in respect of Toyota Motor Credit Corporation's Euro Medium-Term
Note Program. Except as otherwise defined herein, capitalized terms used
herein shall have the same meanings ascribed to them in the Agreement.
WHEREAS, effective July 19, 1996 the Company desires to increase the
maximum aggregate principal amount of all Notes from time to time outstanding
under the Program from U.S. $9,500,000,0000 to U.S. $12,000,000,000 (or its
equivalent in other currencies or currency units); and
WHEREAS, the Company, the Agent and the Paying Agent desire to amend the
Agreement to reflect the increase in issuance capacity under the Program and
to make certain additional changes to cure certain ambiguities and/or to
correct or supplement certain provisions of the Agreement in a manner which
shall not adversely affect existing holders of the Notes.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree to amend the Agreement as follows:
A. The Company, the Agent and the Paying Agent hereby agree that effective
July 19, 1996 the maximum aggregate principal amount of all Notes from
time to time outstanding under the Program shall be increased from U.S.
$9,500,000,000 to U.S. $12,000,000,000 (or its equivalent in other
currencies or currency units). Accordingly, all references throughout
the Agreement and in each appended item thereto identifying the maximum
aggregate principal amount of all Notes from time to time outstanding
shall be deemed to refer to U.S. $12,000,000,000 (or its equivalent in
other currencies or currency units).
B. The legal name of "Merrill Lynch International Limited" has been changed
to "Merrill Lynch International". Accordingly, the Company, the Agent
and the Paying Agent hereby agree that all references throughout the
Agreement and in each appended item thereto to the name Merrill Lynch
International Limited or to "MLI" shall be deemed to refer to Merrill
Lynch International.
<PAGE>
C. The legal name of "The Chase Manhattan Bank, N.A." has been changed to
"The Chase Manhattan Bank". Accordingly, the Company, the Agent and the
Paying Agent hereby agree that all references throughout the Agreement
and in each appended item thereto to the name The Chase Manhattan Bank,
N.A. or to the Agent shall be deemed to refer to The Chase Manhattan
Bank.
D. Clause 1 of the Agreement (Definitions and interpretation) is amended as
follows:
1. The definition of "Cedel" is amended by replacing the word
"Cedel" with the words "Cedel Bank". Accordingly, the Company,
the Agent and the Paying Agent hereby agree that all references
throughout the Agreement and in each appended item thereto to the
name Cedel shall be deemed to refer to Cedel Bank as so defined.
2. The definition of "London Stock Exchange" is amended by replacing
the text following the word "means" with "the London Stock
Exchange Limited." Accordingly, the Company, the Agent and the
Paying Agent hereby agree that all references throughout the
Agreement and in each appended item thereto to the name "The
International Stock Exchange of the United Kingdom and the
Republic of Ireland Limited" shall be deemed to refer to the
London Stock Exchange Limited.
3. The definition of "SICOVAM" is amended by replacing the text
following the word "means" with "Sicovam SA and the Intermediaries
financiers habilites authorized to maintain accounts therein."
E. Clause 3(1) is amended as follows:
1. The text of Clause 3(1)(c) is replaced by the following:
"(c) to deliver such Temporary Global Note(s) to the specified
common depositary of Euroclear, Cedel and/or such other
clearing agency as is specified in the related Pricing
Supplement in accordance with the Confirmation against
receipt from such common depositary of confirmation that
such common depositary is holding the Temporary Global
Note(s) in safe custody for the account of Euroclear, Cedel
or such other clearing agency and to instruct Euroclear,
Cedel and/or such other clearing agency (as the case may be)
to credit the Notes represented by such Temporary Global
Note(s), unless otherwise agreed in writing between the
Agent and the Company, to the Agent's distribution account
(or in the case of a syndicated bond issue, the lead
manager's account)."
2. The text following Clause 3(1)(c) is removed.
2
<PAGE>
F. Clause 4(1) is amended as follows:
1. The text of Clause 4(1)(c) is replaced by the following:
"(c) to deliver such Permanent Global Note to the specified
common depositary that is holding the Temporary Global Note
for the time being on behalf of Euroclear, Cedel and/or such
other clearing agency as is specified in the related Pricing
Supplement in exchange for such Temporary Global Note or, in
the case of a partial exchange, after noting the details of
such exchange in the appropriate spaces on both the
Temporary Global Note and the Permanent Global Note, and in
either case against receipt from the common depositary of
confirmation that it is holding the Permanent Global Note in
safe custody for the account of Euroclear, Cedel and/or
such other clearing agency (as the case may be).
2. The text following Clause 4(1)(c) is removed.
G. The text of Clause 5(1)(b) is replaced by the following:
"(b) to deliver such Definitive Note(s) to or to the order of
Euroclear, Cedel and/or to such other clearing agency as is
specified in the related Pricing Supplement either in
exchange for such Global Note or, in the case of a partial
exchange, on entering details of any partial exchange of the
Global Note in the relevant space in Schedule Two of such
Global Note; provided that the Agent shall only permit a
partial exchange of Notes represented by a Permanent Global
Note for Definitive Notes if the Notes which continue to be
represented by such Permanent Global Note are regarded as
fungible by Euroclear, Cedel and/or such other clearing
agency with the Definitive Notes issued in partial exchange
therefor."
H. Clause 11(1) is amended by the replacement of the number "40" with the
number "15" and the addition of the words "and is set forth in the
applicable Pricing Supplement" at the end of such Clause.
I. APPENDIX A (Terms and Conditions) shall be amended and restated in its
entirety as set forth in Exhibit I attached to this Amendment.
J. APPENDIX B (Forms of Global and Definitive Notes, Coupons, Receipts and
Talons) shall be amended as follows:
1. The third paragraph on page II-2 is amended by the replacement
thereof by the following:
3
<PAGE>
"This Temporary Global Note is to be held by a common
depositary for Morgan Guaranty Trust Company of New York,
Brussels Office, as operator of the Euroclear System
("Euroclear"), Cedel Bank, societe anonyme ("Cedel Bank")
and/or such other clearing agency as is specified in the
related Pricing Supplement on behalf of account holders
which have the Notes represented by this Temporary Global
Note credited to their respective securities accounts
therewith from time to time."
2. The second full paragraph on page II-3 is amended by the
replacement of the words "Euroclear or Cedel" in the fourth line
thereof by the words "Euroclear, Cedel and/or such other relevant
clearing agency".
3. The carryover paragraph on page II-4 is amended by the replacement
of the words "Euroclear or Cedel" in the ninth line thereof by
the words "Euroclear, Cedel and/or such other relevant clearing
agency".
4. The signature page, page II-6, is amended by the replacement of
the name "John McGovern" under the first signature line by the
name "Douglas West."
5. The caption under the heading "Schedule Three" on page II-10 is
----------------
amended by the replacement of the words "EUROCLEAR AND CEDEL" by
the words "APPROPRIATE CLEARING SYSTEM."
6. The signature block on page II-11 is amended by the replacement of
the words "[MORGAN GUARANTY TRUST COMPANY OF NEW YORK, Brussels
office, as operator of the Euroclear System] or Cedel Bank,
societe anonyme" with the words [APPROPRIATE CLEARING SYSTEM]."
7. The caption under the heading "CERTIFICATE A" on page II-12 is
amended by the replacement of the words "EUROCLEAR OR CEDEL" by
the words "APPROPRIATE CLEARING SYSTEM."
8. The second full paragraph on page II-15 is amended by the
replacement thereof by the following:
"This Permanent Global Note is to be held by a common
depositary for Morgan Guaranty Trust Company of New York,
Brussels Office, as operator of the Euroclear System
("Euroclear"), Cedel Bank, societe anonyme ("Cedel Bank")
and/or such other clearing agency as is specified in the
related Pricing Supplement on behalf of account holders
which have the Notes represented by this Permanent Global
Note credited to their respective securities accounts
therewith from time to time."
9. The third full paragraph on page II-16 is amended by the
replacement of the words "Euroclear or Cedel" in the fourteenth
and nineteenth lines thereof by the words "Euroclear, Cedel Bank
or such other relevant clearing agency."
4
<PAGE>
10. The signature pages, appearing at pages II-18 and II-25 are
amended by the replacement of the name "John McGovern" under the
first signature line by the name "Douglas West."
K. APPENDIX D (Form of Operating & Administrative Procedures Memorandum)
shall be amended as follows:
1. The last full paragraph on page IV-4 and the first full paragraph
on page IV-5 are amended by the replacement thereof with the
following:
"Issue Date 3:00 p.m. The Agent prepares and authenticates
minus 1 a Temporary Global Note for each
Series of Notes which are to be
purchased by the relevant Purchaser(s)
on the Issue Date. All Temporary
Global Notes are then delivered by the
Agent to a common depositary for
Euroclear, Cedel and/or another
clearing agency specified in the
related Pricing Supplement and
instructions are given by the Agent to
Euroclear, Cedel or such other
clearing agency, as the case may be,
to credit the Notes represented by
such Temporary Global Notes to the
Agent's distribution account. The
Agent further instructs Euroclear,
Cedel or such other clearing agency,
as the case may be, to debit from the
distribution account the principal
amount of Notes of each Series which
each Purchaser has agreed to purchase
and to credit such principal amount to
the account of such Purchaser with,
Euroclear, Cedel or such other
clearing agency, against payment to
the account of the Agent of the
subscription price for the relevant
Notes for value on the Issue Date.
The Company, the Purchaser(s) and the
Agent may agree to arrange for "free
delivery" to be made through the
relevant clearing system if specified
in the relevant Pricing Supplement.
Issue Date Euroclear, Cedel or such other
clearing agency, as the case may be,
debit and credit accounts in
accordance with instructions received
by them.
5
<PAGE>
The Agent pays to the Issuer the
aggregate subscription moneys received
by it to such account of the Company
as shall have been notified to the
Agent from time to time."
2. The second textual paragraph on page IV-7 is amended by the
replacement of the date "July __, 1995" with the date "July __,
1996."
3. Item 19 on page IV-8 is amended by the replacement of the text
thereof with the following:
"19. Applicable "Business Day Convention"
(if different from that in Condition
4(a)(i)) (Fixed Rate Note and Notes
other than Floating Rate Notes): [ ]"
4. Item 20 on page IV-9 is amended by the replacement thereof with
the following:
"20. Applicable definition of "Business
Day" (if different from Condition 4(b)(i))
(Fixed Rate Note and Notes other
than Floating Rate Notes): [ ]"
5. Item 37 on page IV-11 is amended by the replacement of the text
thereof with the following:
"37. Company's Optional Redemption -
[Yes/No] if yes, [ ]
(a) Optional Redemption Date(s): [ ]
(b) Optional Redemption Amount(s)
and method, if any, of calculation
of such amount(s): [ ]
(c) If redeemable in part,
(i) Minimum Redemption
Amount: [ ]
(ii) Higher Redemption Amount: [ ]
(d) The Applicable Period for notice
to Noteholders (if different from
that set out in Condition 5(d)): and [ ]
(e) The Applicable Period for notice
to Agent (if different from that set
out in Condition 5(d)) : [ ]"
6. The second textual paragraph on page IV-15 is amended by the
replacement of the words "[Euroclear/Cedel]" with the words
"[applicable clearing agency]."
6
<PAGE>
7. Item 19 on page IV-16 is amended by the replacement of the text
thereof with the following:
"19. Applicable "Business Day Convention"
(if different from that in Condition
4(a)(i)) (Fixed Rate Note and Notes
other than Floating Rate Notes): [ ]"
8. Item 20 on page IV-17 is amended by the replacement thereof with
the following:
"20. Applicable definition of "Business
Day" (if different from Condition 4(b)(i))
(Fixed Rate Note and Notes other
than Floating Rate Notes): [ ]"
9. Item 37 on page IV-19 is amended by the replacement of the text
thereof with the following:
"37. Company's Optional Redemption -
[Yes/No] if yes, [ ]
(a) Optional Redemption Date(s): [ ]
(b) Optional Redemption Amount(s)
and method, if any, of calculation
of such amount(s): [ ]
(c) If redeemable in part,
(i) Minimum Redemption
Amount: [ ]
(ii) Higher Redemption Amount: [ ]
(d) The Applicable Period for notice
to Noteholders (if different from
that set out in Condition 5(d)): and [ ]
(e) The Applicable Period for notice
to Agent (if different from that set
out in Condition 5(d)): [ ]"
10. Item 19 on page IV-24 is amended by the replacement of the text
thereof with the following:
"19. Applicable "Business Day Convention"
(if different from that in Condition 4(a)(i))
(Fixed Rate Note and Notes other than
Floating Rate Notes): [ ]"
11. Item 20 on page IV-24 is amended by the replacement thereof with
the following:
"20. Applicable definition of "Business
Day" (if different from Condition 4(b)(i))
(Fixed Rate Note and Notes other
than Floating Rate Notes): [ ]"
7
<PAGE>
12. Item 37 on page IV-27 is amended by the replacement of the text
thereof with the following:
"37. Company's Optional Redemption -
[Yes/No] if yes, [ ]
(a) Optional Redemption Date(s): [ ]
(b) Optional Redemption Amount(s)
and method, if any, of calculation
of such amount(s): [ ]
(c) If redeemable in part,
(i) Minimum Redemption
Amount: [ ]
(ii) Higher Redemption Amount: [ ]
(d) The Applicable Period for notice
to Noteholders (if different from
that set out in Condition 5(d)):
and [ ]
(e) The Applicable Period for notice
to Agent (if different from that
set out in Condition 5(d)): [ ]"
13. The responsibility statement in the French language commencing on
page IV-30 is amended and restated in its entirety as set forth in
Exhibit II attached to this Amendment.
14. The Trading Desk Information provided in Annex E is amended and
restated in its entirety as set forth in Exhibit III attached to
this Amendment.
L. APPENDIX E (Form of the Notes) shall be amended and restated in its
entirety as set forth in Exhibit IV attached to this Amendment.
M. This Amendment No. 2 may be executed in one or more counterparts all of
which shall constitute one and the same agreement.
From and after the date hereof, this Amendment No. 2 shall be deemed to
be part of the Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
2 to the Agreement as of the date first written above.
8
<PAGE>
THE COMPANY
Toyota Motor Credit Corporation
19001 South Western Avenue
Torrance, California 90509
Telephone: 310-787-6195
Fax: 310-787-6194
Attention: Corporate Treasury Manager
/S/ WOLFGANG JAHN
- --------------------------------
By: Wolfgang Jahn
Title: Senior Vice President and
General Manager
THE AGENT
The Chase Manhattan Bank
Woolgate House
Coleman Street
P.O. Box 16
London EC2P 2HD
Telephone: 01202 347430
Fax: 01202 347438
Telex: 8954681 CMB G
Attention: Manager, Corporate Trust Operations
/S/ CHRIS KNOWLES
- ----------------------------
By: Chris Knowles
Title: Second Vice President
THE OTHER PAYING AGENT
Chase Manhattan Bank Luxembourg S.A.
5 Rue Plaetis
L-2338
Luxembourg
Telephone: 00 352 462685223
Fax: 00 352 462685380
Telex: 1223 CHAS LU
Attention: Manager, Corporate Trust Operations
/S/ CHRIS KNOWLES
- ----------------------------
By: Chris Knowles
Title: Second Vice President
9
<PAGE>
Exhibit I to Amendment No. 2
to the Amended and Restated
Agency Agreement
TERMS AND CONDITIONS
I-1
<PAGE>
TERMS AND CONDITIONS OF THE NOTES
The following are the Terms and Conditions of the Notes issued on or
after the date of this Offering Circular which (subject to completion and
amendment and to the extent applicable) will be attached to or incorporated by
reference into each global Note and which will be incorporated by reference or
endorsed upon each definitive Note. The applicable Pricing Supplement in
relation to any Notes may specify other terms and conditions which shall, to
the extent so specified or to the extent inconsistent with the following Terms
and Conditions, replace or modify the following Terms and Conditions for the
purpose of such Notes.
This Note is one of a Series (as defined below) of Notes (the "Notes,"
which expression shall mean (i) in relation to any Notes represented by a
global Note, units of the lowest Specified Denomination in the Specified
Currency of the relevant Notes, (ii) definitive Notes issued in exchange (or
partial exchange) for a temporary or permanent global Note, and (iii) any
global Note) issued subject to, and with the benefit of, an Amended and
Restated Agency Agreement dated as of July 28, 1994, as amended (the "Agency
Agreement"), and made between Toyota Motor Credit Corporation ("TMCC", which
reference does not include the subsidiaries of TMCC) and The Chase Manhattan
Bank, London Office, as issuing agent and principal paying agent and, if so
specified in the applicable Pricing Supplement, as calculation agent (the
"Agent", which expression shall include any successor agent or any other
calculation agent specified in the applicable Pricing Supplement) and the
other paying agents named therein (together with the Agent, the "Paying
Agents", which expression shall include any additional or successor paying
agents).
Interest-bearing definitive Notes will (unless otherwise indicated in
the applicable Pricing Supplement) have interest coupons ("Coupons") and, if
indicated in the applicable Pricing Supplement, talons for further Coupons
("Talons") attached on issue. Any reference herein to Coupons or coupons
shall, unless the context otherwise requires, be deemed to include a reference
to Talons or talons. Definitive Notes repayable in installments will have
receipts ("Receipts") for the payment of the installments of principal (other
than the final installment) attached on issue.
As used herein, "Series" means all Notes which are denominated in the
same currency and which have the same Maturity Date or Redemption Month, as
the case may be, Interest/Payment Basis and interest payment dates (if any)
(all as indicated in the applicable Pricing Supplement) and the terms of which
(except for the Issue Date or the Interest Commencement Date (as the case may
be) and/or the Issue Price (as indicated as aforesaid)) are otherwise
identical (including whether or not the Notes are listed) and the expressions
"Notes of the relevant Series" and "holders of Notes of the relevant Series"
and related expressions shall be construed accordingly. As used herein,
"Tranche" means all Notes of the same Series with the same Issue Date and
Interest Commencement Date (if applicable).
If indicated in the applicable Pricing Supplement, TMCC may, from time
to time without the consent of the holders of Notes of a Series, create and
issue further Notes of the same Series.
I-2
<PAGE>
The Pricing Supplement applicable to any particular Note or Notes is
attached hereto or endorsed hereon and supplements these Terms and Conditions
and may specify other terms and conditions which shall, to the extent so
specified or to the extent inconsistent with these Terms and Conditions,
replace or modify these Terms and Conditions for the purposes of such Note or
Notes. References herein to the "applicable Pricing Supplement" shall mean the
Pricing Supplement attached hereto or endorsed hereon.
Copies of the Agency Agreement (which contains the form of Pricing
Supplement) and the Pricing Supplement applicable to any particular Note or
Notes (if listed) are available for inspection at the specified offices of the
Agent and each of the other Paying Agents. The holders of the Notes (the
"Noteholders"), which expression shall, in relation to any Notes represented
by a global Note, be construed as provided in Condition 1, the holders of the
Coupons (the "Couponholders") and the holders of Receipts (the
"Receiptholders") are deemed to have notice of, and are entitled to the
benefit of, all the provisions of the Agency Agreement and the applicable
Pricing Supplement, which are binding on them.
Words and expressions defined in the Agency Agreement, defined elsewhere
in the Offering Circular or used in the applicable Pricing Supplement shall
have the same meanings where used in these Terms and Conditions unless the
context otherwise requires or unless otherwise stated.
1. FORM, DENOMINATION AND TITLE
The Notes in this Series are in bearer form and, in the case of
definitive Notes, serially numbered in the Specified Currency and in the
Specified Denomination(s) specified in the applicable Pricing Supplement.
This Note is a Fixed Rate Note, a Floating Rate Note, a Zero Coupon
Note, a Dual Currency Note or an Indexed Note or any combination of the
foregoing, depending upon the Interest/Payment Basis specified in the
applicable Pricing Supplement. It is also a Partly Paid Note and/or an Indexed
Note (where payment with respect to principal is linked to an Index and/or
formula) if, in each case, the applicable Pricing Supplement so indicates and
the appropriate provisions of these Terms and Conditions will apply
accordingly.
Notes in definitive form are issued with Coupons attached, unless they
are Zero Coupon Notes in which case references to interest (other than
interest due after the Maturity Date), Coupons and Couponholders in these
Terms and Conditions are not applicable.
Except as set out below, title to the Notes, Receipts and Coupons will
pass by delivery. TMCC and any Paying Agent may deem and treat the bearer of
any Note, Receipt or Coupon as the absolute owner thereof (whether or not
overdue and notwithstanding any notice of ownership or writing thereon or
notice of any previous loss or theft thereof) for all purposes but, in the
case of any global Note, without prejudice to the provisions set out in the
next succeeding paragraph.
I-3
<PAGE>
For so long as any of the Notes are represented by a global Note, each
person who is for the time being shown in the records of Morgan Guaranty Trust
Company of New York, Brussels office, as operator of the Euroclear System
("Euroclear") or of Cedel Bank, societe anonyme ("Cedel") and any other
additional or alternative clearance system, including Sicovam, as the holder
of a particular principal amount of Notes (in which regard any certificate or
other document issued by Euroclear or Cedel Bank as to the principal amount of
such Notes standing to the account of any person shall be conclusive and
binding for all purposes except in the case of manifest error) shall be
treated by TMCC, the Agent and any other Paying Agent as the holder of such
principal amount of such Notes for all purposes other than with respect to the
payment of principal or interest on the Notes, the right to which shall be
vested, as against TMCC, the Agent and any other Paying Agent solely in the
bearer of the relevant global Note in accordance with and subject to its terms
(and the expressions "Noteholder" and "holder of Notes" and related
expressions shall be construed accordingly). Notes which are represented by a
global Note will be transferable only in accordance with the rules and
procedures for the time being of Euroclear or of Cedel Bank, as the case may
be.
Any reference herein to Euroclear and/or Cedel Bank shall, whenever the
context so permits, be deemed to include a reference to any additional or
alternative clearance system (including, if applicable, SICOVAM) approved by
TMCC and the Agent.
2. STATUS OF NOTES
The Notes will be unsecured general obligations of TMCC and will rank
pari passu with all other unsecured and unsubordinated indebtedness for
borrowed money of TMCC from time to time outstanding.
3. VALUE AND COMPOSITION OF THE ECU
If the Notes are denominated in ECU, the value and composition of the
ECU in which the Notes are denominated or, if the Notes are Dual Currency
Notes payable in ECU, the value and composition of the ECU in which the Notes
are payable ("ECU"), will be the same as the value and composition of the
European Currency Unit that is from time to time used as the unit of account
of the European Communities (the "EC"). Changes to the ECU may be made by the
EC in which event the ECU will change accordingly. References herein to the
ECU shall be deemed to be references to the ECU as so changed from time to
time.
4. INTEREST
(a) INTEREST ON FIXED RATE NOTES
(i) Each Fixed Rate Note bears interest on its principal amount from
(and including) the Interest Commencement Date which is specified in the
applicable Pricing Supplement at the rate(s) per annum equal to the Fixed
Rate(s) of Interest specified in the applicable Pricing Supplement payable in
arrears on the Fixed Interest Date(s) in each year and on the Maturity Date so
specified if it does not fall on a Fixed Interest Date. The first payment of
interest shall be made on the Fixed Interest Date next following the Interest
Commencement Date and, if the first anniversary of the Interest Commencement
Date is not a Fixed Interest Date, will amount to the Initial
I-4
<PAGE>
Broken Amount specified in the applicable Pricing Supplement. If the Maturity
Date is not a Fixed Interest Date, interest from (and including) the preceding
Fixed Interest Date (or the Interest Commencement Date) to (but excluding) the
Maturity Date will amount to the Final Broken Amount specified in the
applicable Pricing Supplement. Unless specified otherwise in the applicable
Pricing Supplement, the "Following Business Day Convention" will apply to the
payment of all Notes other than Floating Rate Notes, meaning that if the Fixed
Interest Date or Maturity Date would otherwise fall on a day which is not a
Business Day (as defined in Condition 4(b)(i) below), the related payment of
principal or interest will be made on the next succeeding Business Day as if
made on the date such payment was due and no interest will accrue on the
amount so payable for the period from and after such Fixed Interest Date or
Maturity Date, as the case may be. If the "Modified Following Business Day
Convention" is specified in the applicable Pricing Supplement for any Note
(other than a Floating Rate Note), it shall mean that if the Fixed Interest
Date or Maturity Date would otherwise fall on a day which is not a Business
Day (as defined in Condition 4(b)(i) below), the related payment of principal
or interest will be made on the next succeeding Business Day as if made on the
date such payment was due unless it would thereby fall into the next calendar
month in which event the full amount of payment shall be made on the
immediately preceding Business Day. The accrual periods for calculating the
amount of interest due on any Fixed Interest Date shall not be changed unless
specified otherwise in the applicable Pricing Supplement.
(ii) If interest is required to be calculated for a period of less than
a full year, such interest shall be calculated on the basis of a 360-day year
consisting of 12 months of 30 days each and, in the case of an incomplete
month, the number of days elapsed or as otherwise specified in the applicable
Pricing Supplement.
(b) INTEREST ON FLOATING RATE NOTES
(i) Interest Payment Dates
Each Floating Rate Note bears interest on its principal amount (or, if
it is a Partly Paid Note, the amount paid up) from (and including) the
Interest Commencement Date specified in the applicable Pricing Supplement and
such interest will be payable in arrears on each interest payment date (each
an "Interest Payment Date") which (except as otherwise specified in these
Terms and Conditions or the applicable Pricing Supplement) falls the number of
months or other period specified as the Interest Period in the applicable
Pricing Supplement after the preceding Interest Payment Date or, in the case
of the first Interest Payment Date, after the Interest Commencement Date.
Unless specified otherwise in the applicable Pricing Supplement, the "Modified
Following Business Day Convention with adjustment for period end dates" will
apply to Floating Rate Notes, meaning that if any Interest Payment Date would
otherwise fall on a day which is not a Business Day (as defined below), it
shall be postponed to the next day which is a Business Day unless it would
thereby fall into the next calendar month in which event the Interest Payment
Date shall be brought forward to the immediately preceding Business Day. If
the "Following Business Day Convention with adjustment for period end dates"
is specified in the applicable Pricing Supplement with respect to Floating
Rate Notes, it shall mean that if any Interest Payment Date would otherwise
fall on a day which is not a Business Day (as defined below), it shall be
postponed to the next day which is a Business Day. If the accrual periods for
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calculating the amount of interest due on any Interest Payment Date falls on a
day which is not a Business Day (as defined below), this will be specified in
the Pricing Supplement by the notation "no adjustment for period end dates."
In this Condition 4, "Business Day" means (unless otherwise stated in
the applicable Pricing Supplement) a day which is both:
(A) a day (other than a Saturday or a Sunday) on which commercial
banks and foreign exchange markets settle payments in London
and/or any other location specified in the applicable Pricing
Supplement; and
(B) either (1) in relation to Notes denominated in a Specified
Currency other than ECU, a day on which commercial banks and
foreign exchange markets settle payments in the principal
financial center of the country of the relevant Specified Currency
(if other than London) or (2) in relation to Notes denominated in
ECU, an ECU Settlement Date (as defined in the 1991 ISDA
Definitions, as amended and updated as of the Issue Date of this
Note, published by the International Swaps and Derivatives
Association, Inc. (the "ISDA Definitions")). Unless otherwise
provided in the applicable Pricing Supplement, the principal
financial center of any country for the purpose of these Terms
and Conditions shall be as provided in the ISDA Definitions
(except in the case of New Zealand and Luxembourg, where the
principal financial center will be as specified in the Pricing
Supplement).
(ii) Rate of Interest
The Rate of Interest payable from time to time in respect of each
Series of Floating Rate Notes shall be determined in the manner specified in
the applicable Pricing Supplement.
(iii) ISDA Determination
(A) Where ISDA Determination is specified in the applicable Pricing
Supplement as the manner in which the Rate of Interest is to be
determined, the Rate of Interest shall be determined on such dates
and at such rates as would have been determined by TMCC if it had
entered into an interest rate swap transaction governed by an
agreement (regardless of any event of default or termination event
thereunder) in the form of the 1992 ISDA Master Agreement
(Multicurrency - Cross Border) (the "ISDA Agreement") (copyright
1992) and evidenced by a Confirmation (as defined in the ISDA
Agreement) incorporating the ISDA Definitions with the holder of
the relevant Note under which:
(1) the manner in which the Rate of Interest is to be determined
is the "Floating Rate Option";
(2) TMCC is the "Floating Rate Payer";
(3) the Agent or other person specified in the applicable
Pricing Supplement is the "Calculation Agent";
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(4) the Interest Commencement Date is the "Effective Date";
(5) the aggregate principal amount of the Series is the
"Notional Amount";
(6) the relevant Interest Period is the "Designated
Maturity";
(7) the Interest Payment Dates are the "Floating Rate Payer
Payment Dates";
(8) the Margin is the "Spread"; and
(9) all other terms are as specified in the applicable Pricing
Supplement.
(B) When Condition 4(b)(iii)(A) applies, with respect to each relevant
Interest Payment Date:
(1) the amount of interest determined for such Interest Payment
Date shall be the Interest Amount for the relevant Interest
Period for the purposes of these Terms and Conditions as
though calculated under Condition 4(b)(vi) below; and
(2) the Rate of Interest for such Interest Period shall be the
Floating Rate (as defined in the ISDA Definitions)
determined by the Agent (or such other agent specified in
the applicable Pricing Supplement) in accordance with
Condition 4(b)(iii)(A), plus or minus (as indicated in the
applicable Pricing Supplement), the applicable Margin (if
any).
(iv) Screen Determination
Screen Rate Determination: Where Screen Rate Determination is specified
in the applicable Pricing Supplement as the manner in which the Rate of
Interest is to be determined, the Rate of Interest for each Interest Period
will be either:
(x) the quotation; or
(y) the arithmetic mean (rounded, if necessary, to the fourth decimal
place with 0.00005 being rounded upwards) of the offered
quotations,
(expressed as a percentage rate per annum), for deposits in the Specified
Currency for that Interest Period which appears or appear, as the case may be,
on the appropriate page of the Screen as at 11:00 a.m. (London time) on the
Interest Determination Date (as defined below) in question plus or minus (as
specified in the applicable Pricing Supplement) the Margin (if any), all as
determined by the Agent;
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(A) if, in the case of (x) above, no such rate appears or, in the case
of (y) above, fewer than two of such offered rates appear at such
time or if the offered rate or rates which appears or appear, as
the case may be, as at such time do not apply to a period of a
duration equal to the relevant Interest Period, the Rate of
Interest for such Interest Period shall, subject as provided below
and except as otherwise indicated in the applicable Pricing
Supplement, be the arithmetic mean (rounded, if necessary, to the
fourth decimal place with 0.00005 being rounded upwards) of the
offered quotations (expressed as a percentage rate per annum), of
which the Agent is advised by all Reference Banks (as defined
below) as at 11:00 a.m. (London time) on the Interest
Determination Date plus or minus (as specified in the applicable
Pricing Supplement) the Margin (if any), all as determined by the
Agent;
(B) except as otherwise indicated in the applicable Pricing
Supplement, if on any Interest Determination Date to which
Condition 4(b)(iv)(A) applies two or three only of the Reference
Banks advise the Agent of such offered quotations, the Rate of
Interest for the next Interest Period shall, subject as provided
below, be determined as in Condition 4(b)(iv)(A) on the basis of
the rates of those Reference Banks advising such offered
quotations;
(C) if on any Interest Determination Date to which Condition
4(b)(iv)(A) applies one only or none of the Reference Banks
advises the Agent of such rates, the Rate of Interest for the next
Interest Period shall, subject as provided below and except as
otherwise indicated in the applicable Pricing Supplement, be
whichever is the higher of:
(1) the Rate of Interest in effect for the last preceding
Interest Period to which Condition 4(b)(iv)(A) shall have
applied (plus or minus (as specified in the applicable
Pricing Supplement), where a different Margin is to be
applied to the next Interest Period than that which applied
to the last preceding Interest Period, the Margin relating
to the next Interest Period in place of the Margin relating
to the last preceding Interest Period); or
(2) the reserve interest rate (the "Reserve Interest Rate")
which shall be the rate per annum which the Agent determines
to be either (x) the arithmetic mean (rounded, if necessary,
to the fourth decimal place with 0.00005 being rounded
upwards) of the lending rates for the Specified Currency
which banks selected by the Agent in the principal
financial center of the country of the Specified Currency
(which, if Australian dollars, shall be Sydney and if New
Zealand dollars, shall be Wellington) are quoting on the
relevant Interest Determination Date for the next Interest
Period to the Reference Banks or those of them (being at
least two in number) to which such quotations are, in the
opinion of the Agent, being so made plus or minus (as
specified in the applicable Pricing Supplement) the Margin
(if any), or (y) in the event that
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the Agent can determine no such arithmetic mean, the lowest
lending rate for the Specified Currency which banks selected
by the Agent in the principal financial center of the
country of the Specified Currency (which, if Australian
dollars, shall be Sydney and if New Zealand dollars, shall
be Wellington) are quoting on such Interest Determination
Date to leading European banks for the next Interest Period
plus or minus (as specified in the applicable Pricing
Supplement) the Margin (if any), provided that if the banks
selected as aforesaid by the Agent are not quoting as
mentioned above, the Rate of Interest shall be the Rate of
Interest specified in (1) above;
(D) the expression "the appropriate page of the Screen" means such
page, whatever its designation, on which London Interbank Offered
Rates or, if there is only one such rate, that rate for deposits
in the Specified Currency of prime banks that are for the time
being displayed on the Reuters Monitor Money Rates Service or the
appropriate Associated Press-Dow Jones Tele-rate Service, as
specified in the applicable Pricing Supplement;
(E) unless otherwise specified in the applicable Pricing Supplement,
the Reference Banks will be the principal London offices of The
Chase Manhattan Bank, National Westminster Bank PLC, Swiss Bank
Corporation and The Bank of Tokyo, Ltd. TMCC shall procure that,
so long as any Floating Rate Note to which Condition 4(b)(iv)(A)
is applicable remains outstanding, in the case of any bank being
unable or unwilling to continue to act as a Reference Bank, TMCC
shall specify the London office of some other leading bank
engaged in the Eurodollar market to act as such in its place;
(F) the expression "Interest Determination Date" means, unless
otherwise specified in the applicable Pricing Supplement, (x)
other than in the case of Condition 4(b)(iv)(A), with respect to
Notes denominated in any Specified Currency other than sterling,
the second Banking Day in London prior to the commencement of the
relevant Interest Period and, in the case of Condition
4(b)(iv)(A), the second Banking Day in the principal financial
center of the country of the Specified Currency (which, if
Australian dollars, shall be Sydney and if New Zealand dollars,
shall be Wellington) prior to the commencement of the relevant
Interest Period and (y) with respect to Notes denominated in
sterling, the first Banking Day in London of the relevant Interest
Period; and
(G) the expression "Banking Day" means, in respect of any place, any
day on which commercial banks are open for business (including
dealings in foreign exchange and foreign currency deposits) in
that place or, as the case may be, as indicated in the applicable
Pricing Supplement.
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(v) Minimum and/or maximum Rate of Interest
If the applicable Pricing Supplement specifies a minimum Rate of
Interest for any Interest Period, then in no event shall the Rate of Interest
for such period be less than such minimum Rate of Interest. If the applicable
Pricing Supplement specifies a maximum Rate of Interest for any Interest
Period, then in no event shall the Rate of Interest for such Interest Period
be greater than such maximum Rate of Interest.
(vi) Determination of Rate of Interest and calculation of Interest
Amount
The Agent will, at or as soon as practicable after each time at which
the Rate of Interest is to be determined, determine the Rate of Interest
(subject to any minimum or maximum Rate of Interest specified in the
applicable Pricing Supplement) and calculate the amount of interest (the
"Interest Amount") payable on the Floating Rate Notes in respect of each
Specified Denomination for the relevant Interest Period. Each Interest Amount
shall be calculated by applying the Rate of Interest to the Specified
Denomination, multiplying such product by the actual number of days in the
Interest Period concerned divided by 360 (or 365/366 in the case of Floating
Rate Notes denominated in sterling), or such other denominator determined by
the Agent to be customary for such calculation or otherwise specified in the
applicable Pricing Supplement, and rounding the result and figure to the
nearest cent (or its approximate equivalent in the relevant other Specified
Currency), half a cent (or its approximate equivalent in the relevant other
Specified Currency) being rounded upwards. Without prejudice to subparagraph
(viii) below, the determination of the Rate of Interest and calculation of
each Interest Amount by the Agent shall (in the absence of manifest error) be
binding on all parties.
(vii) Notification of Rate of Interest and Interest Amount
The Agent will notify or cause to be notified TMCC and any stock
exchange on which the relevant Floating Rate Notes are listed of the Rate of
Interest and each Interest Amount for each Interest Period and the relevant
Interest Payment Date and will cause the same to be published in accordance
with Condition 16 as soon as possible after their determination but in no
event later than the fourth London Business Day thereafter. Each Interest
Amount and Interest Payment Date so notified may subsequently be amended (or
appropriate alternative arrangements made by way of adjustment) without
publication as aforesaid in the event of an extension or shortening of the
Interest Period in accordance with the provisions hereof. Each stock exchange
on which the relevant Floating Rate Notes are for the time being listed will
be promptly notified of any such amendment. For the purposes of this
subparagraph (vii), the expression "London Business Day" means a day (other
than a Saturday or a Sunday) on which banks and foreign exchange markets are
open for business in London.
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(viii) Certificates to be final
All certificates, communications, opinions, determinations,
calculations, quotations and decisions given, expressed, made or obtained for
the purposes of the provisions of this paragraph (b), by the Agent, shall (in
the absence of manifest error) be binding on TMCC, the Agent, the other Paying
Agents and all Noteholders, Receiptholders and Couponholders and (in the
absence as aforesaid) no liability to TMCC, the Noteholders, the
Receiptholders or the Couponholders shall attach to the Agent in connection
with the exercise or non-exercise by it of its powers, duties and discretions
pursuant to such provisions.
(ix) Limitations on Interest
In addition to any maximum Rate of Interest which may be applicable to
any Floating Rate Note pursuant to Condition 4(b)(v) above, the interest rate
on Floating Rate Notes shall in no event be higher than the maximum rate
permitted by New York law, as the same may be modified by United States law of
general application.
(c) INDEXED NOTES AND DUAL CURRENCY NOTES
In the case of Indexed Notes or Dual Currency Notes, if the Rate of
Interest or amount of interest fails to be determined by reference to an index
and/or a formula or, as the case may be, an exchange rate, such Rate of
Interest or amount of interest payable shall be determined in the manner
specified in the applicable Pricing Supplement.
(d) ZERO COUPON NOTES
When a Zero Coupon Note becomes due and repayable prior to the Maturity
Date and is not paid when due, the amount due and repayable shall be the
Amortized Face Amount of such Note as determined in accordance with Condition
5(f)(iii). As from the Maturity Date, any overdue principal of such Note shall
bear interest at a rate per annum equal to the Accrual Yield set forth in the
applicable Pricing Supplement.
(e) PARTLY PAID NOTES
In the case of Partly Paid Notes (other than Partly Paid Notes which are
Zero Coupon Notes), interest will accrue as aforesaid on the paid up principal
amount of such Notes and otherwise as specified in the applicable Pricing
Supplement.
(f) ACCRUAL OF INTEREST
Each Note (or in the case of the redemption in part only of a Note, such
part to be redeemed) will cease to bear interest (if any) from the due date
for its redemption unless, upon due presentation thereof, payment of principal
is improperly withheld or refused. In such event, interest will continue to
accrue (as well after as before judgment) until whichever is the earlier of
(i) the day on which all sums due in respect of such Note up to that day are
received by or on behalf of the holder of such Note; and (ii) the day on which
the Agent has notified the holder thereof (either in accordance with Condition
16 or individually) of receipt of all sums due in respect thereof up to that
date.
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5. REDEMPTION AND PURCHASE
(a) AT MATURITY
Unless previously redeemed or purchased and canceled as specified below,
Notes will be redeemed by TMCC at their Final Redemption Amount in the
relevant Specified Currency on the Maturity Date specified in the applicable
Pricing Supplement (in the case of a Note other than a Floating Rate Note) or
on the Interest Payment Date falling in the Redemption Month specified in the
applicable Pricing Supplement (in the case of a Floating Rate Note).
(b) REDEMPTION FOR TAX REASONS
TMCC may redeem the Notes of this Series as a whole but not in part at
any time at their Early Redemption Amount, together, if appropriate, with
accrued interest to but excluding the date fixed for redemption, if TMCC shall
determine that as a result of any change in or amendment to the laws (or any
regulations or rulings promulgated thereunder) of the United States of America
or of any political subdivision or taxing authority thereof or therein
affecting taxation, or any change in application or official interpretation of
such laws, regulations or rulings, which amendment or change is effective on
or after the latest Issue Date of the Notes of this Series, TMCC would be
required to pay Additional Amounts, as provided in Condition 9, on the
occasion of the next payment due in respect of the Notes of this Series.
The Notes of this Series are also subject to redemption as a whole but
not in part in the other circumstances described in Condition 9.
Notice of intention to redeem Notes will be given at least once in
accordance with Condition 16 not less than 30 days nor more than 60 days prior
to the date fixed for redemption, provided that no such notice of redemption
shall be given earlier than 90 days prior to the effective date of such change
or amendment and that at the time notice of such redemption is given, such
obligation to pay such Additional Amounts remains in effect. From and after
any redemption date, if monies for the redemption of Notes shall have been
made available for redemption on such redemption date, such Notes shall cease
to bear interest, if applicable, and the only right of the holders of such
Notes and any Receipts or Coupons appertaining thereto shall be to receive
payment of the Early Redemption Amount and, if appropriate, all unpaid
interest accrued to such redemption date.
(c) PRICING SUPPLEMENT
The Pricing Supplement applicable to the Notes of this Series shall
indicate either:
(i) that the Notes of this Series cannot be redeemed prior to their
Maturity Date or, if the Notes of this Series are Floating Rate
Notes, the Interest Payment Date falling in the relevant
Redemption Month (in each case except as otherwise provided in
paragraph (b) above and in Condition 13); or
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(ii) that such Notes will be redeemable at the option of TMCC and/or
the holders of the Notes prior to such Maturity Date or, as the
case may be, the Interest Payment Date falling in the relevant
Redemption Month in accordance with the provisions of paragraphs
(d) and/or (e) below on the date or dates and at the amount or
amounts indicated in the applicable Pricing Supplement.
(d) REDEMPTION AT THE OPTION OF TMCC
If so specified in the applicable Pricing Supplement, TMCC may, having
given:
(i) not more than 60 nor less than 30 days notice to the holders of
the Notes of this Series in accordance with Condition 16, or such
other notice as is specified in the applicable Pricing Supplement;
and
(ii) not less than 15 days before the giving of the notice referred to
in (i) (or such other notice as is specified in the applicable
Pricing Supplement), notice to the Agent;
(which notice shall be irrevocable), repay all or some only of the Notes of
this Series then outstanding on the Optional Redemption Date(s) and at the
Optional Redemption Amount(s) indicated in the applicable Pricing Supplement
together, if appropriate, with accrued interest. In the event of a redemption
of some only of such Notes of this Series, such redemption must be for an
amount being the Minimum Redemption Amount or a Higher Redemption Amount, as
indicated in the applicable Pricing Supplement. In the case of a partial
redemption of definitive Notes of this Series, the Notes of this Series to be
repaid will be selected individually by lot not more than 60 days prior to the
date fixed for redemption and a list of the Notes of this Series called for
redemption will be published in accordance with Condition 16 not less than 30
days prior to such date. In the case of a partial redemption of Notes which
are represented by a global Note, the relevant Notes will be redeemed in
accordance with the rules of Euroclear and/or Cedel. Notes denominated in
sterling or French Franc Notes may not be redeemed pursuant to this paragraph
prior to one year from the Issue Date. Notes denominated in Deutsche Marks may
not be redeemed pursuant to this paragraph prior to two years from the Issue
Date.
(e) REDEMPTION AT THE OPTION OF THE NOTEHOLDERS
Unless otherwise specified in the applicable Pricing Supplement, the
Notes will not be subject to repayment at the option of the Noteholders. Notes
denominated in sterling or French Franc Notes may not be redeemed pursuant to
this paragraph prior to one year from the Issue Date. Notes denominated in
Deutsche Marks may not be redeemed pursuant to this paragraph prior to two
years from the Issue Date.
(f) EARLY REDEMPTION AMOUNTS
For the purposes of paragraph (b) above and Condition 13, Notes will be
redeemed at an amount (the "Early Redemption Amount") calculated as follows:
(i) in the case of Notes with a Final Redemption Amount equal to the
Issue Price, at the Final Redemption Amount thereof; or
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(ii) in the case of Notes (other than Zero Coupon Notes) with a Final
Redemption Amount which is or may be greater or less than the
Issue Price or which is payable in a Specified Currency other than
that in which the Notes are denominated, at the amount set out in
the applicable Pricing Supplement, or if no such amount or manner
is set out in the applicable Pricing Supplement, at their
principal amount; or
(iii) in the case of Zero Coupon Notes, at an amount (the "Amortized
Face Amount") equal to:
(A) the sum of (x) the Reference Price specified in the
applicable Pricing Supplement and (y) the product of the
Accrual Yield specified in the applicable Pricing Supplement
(compounded annually) being applied to the Reference Price
from (and including) the Issue Date to (but excluding) the
date fixed for redemption or (as the case may be) the date
upon which such Note becomes due and repayable; or
(B) if the amount payable in respect of any Zero Coupon Note
upon redemption of such Zero Coupon Note pursuant to
paragraph (b) above or upon its becoming due and repayable
as provided in Condition 13 is not paid or available for
payment when due, the amount due and repayable in respect of
such Zero Coupon Note shall be the Amortized Face Amount of
such Zero Coupon Note calculated as provided above as though
the references in sub-paragraph (A) to the date fixed for
redemption or the date upon which the Zero Coupon Note
becomes due and repayable were replaced by references to
the date (the "Reference Date") which is the earlier of:
(1) the date on which all amounts due in respect of the
Note have been paid;
(2) the date on which the full amount of the moneys
repayable has been received by the Agent and notice to
that effect has been given in accordance with Condition
16.
The calculation of the Amortized Face Amount in
accordance with this sub-paragraph (B) will continue to
be made, after as well as before judgment, until the
Reference Date unless the Reference Date falls on or
after the Maturity Date, in which case the amount due
and repayable shall be the principal amount of such
Note together with interest at a rate per annum equal
to the Accrual Yield.
Unless specified otherwise in the applicable Pricing Supplement, where
any such calculation is to be made for a period of less than a full year, it
shall be made on the basis of a 360-day year consisting of 12 months of 30
days each (or 365/366 days in the case of Notes denominated in sterling) and,
in the case of an incomplete month, the number of days elapsed.
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(g) INSTALLMENTS
Any Note which is repayable in installments will be redeemed in the
Installment Amounts and on the Installment Dates specified in the applicable
Pricing Supplement.
(h) PARTLY PAID NOTES
If the Notes are Partly Paid Notes, they will be redeemed, whether at
maturity, early redemption or otherwise in accordance with the provisions of
this Condition 5 as amended or varied by the applicable Pricing Supplement.
(i) PURCHASES
TMCC may at any time purchase Notes of this Series (provided that, in
the case of definitive Notes, all unmatured Receipts and Coupons appertaining
thereto are surrendered therewith) in the open market at any price. If
purchases are made by tender, tenders must be available to all holders of
Notes of this Series alike.
(j) CANCELLATION
All Notes redeemed or purchased as aforesaid will be canceled forthwith,
together with all unmatured Receipts and Coupons attached thereto or
surrendered or purchased therewith, and may not be resold or reissued.
6. PAYMENTS
(a) METHOD OF PAYMENT
Subject as provided below, payments in a currency other than ECU will be
made by transfer to an account in the Specified Currency (which, in the case
of a payment in Yen to a non- resident of Japan, shall be a non-resident
account) maintained by the payee with, or by a check in the Specified Currency
drawn on, a bank (which, in the case of a payment in Yen to a non-resident of
Japan, shall be an authorized foreign exchange bank) in the principal
financial center of the country of such Specified Currency (which, if
Australian dollars, shall be Sydney and if New Zealand dollars, shall be
Wellington); provided, however, a check may not be delivered to an address in,
and an amount may not be transferred to an account at a bank located in, the
United States of America or its possessions by any office or agency of TMCC,
the Agent or any Paying Agent, except as provided in Condition 6(b).
Payments in ECU will be made by credit or transfer to an ECU account
specified by the payee.
Payments will be subject in all cases to any fiscal or other laws and
regulations applicable thereto in the place of payment, but without prejudice
to the provisions of Condition 9.
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(b) PRESENTATION OF NOTES, RECEIPTS, COUPONS AND TALONS
Payments of principal in respect of definitive Notes will (subject as
provided below) be made in the Specified Currency against surrender of
definitive Notes and payments of interest in respect of the definitive Notes
will (subject as provided below) be made in the Specified Currency against
surrender of Coupons, in each case at the specified office of any Paying Agent
outside the United States of America and its possessions.
In the case of definitive Notes, payments of principal with respect to
installments (if any), other than the final installment, will (subject as
provided below) be made against presentation and surrender of the relevant
Receipt. Each Receipt must be presented for payment of the relevant
installment together with the relevant definitive Note against which the
amount will be payable with respect to that installment. If any definitive
Note is redeemed or becomes repayable prior to the stated Maturity Date (in
the case of a Note other than a Floating Rate Note) or prior to the Interest
Payment Date falling in the Redemption Month (in the case of a Floating Rate
Note) in respect thereof, principal will be payable on surrender of such
definitive Note together with all unmatured Receipts appertaining thereto.
Receipts presented without the definitive Note to which they appertain and
unmatured Receipts do not constitute valid obligations of TMCC.
Upon the date on which any Fixed Rate Notes in definitive form (other
than Dual Currency Notes or Indexed Notes) become due and repayable, such
Notes should be presented for payment together with all unmatured Coupons
appertaining thereto failing which the amount of any missing unmatured Coupon
(or, in the case of payment not being made in full, the same proportion of the
aggregate amount of such missing unmatured Coupon as the sum so paid bears to
the sum due) will be deducted from the sum due for payment. Unless specified
otherwise in the applicable pricing supplement, each amount of principal so
deducted will be paid in the manner mentioned above against surrender of the
related missing Coupon at any time before the expiry of five years after the
Relevant Date (as defined in Condition 15) in respect of such principal
(whether or not such Coupon would otherwise have become void under Condition
15). Upon any Fixed Rate Note becoming due and repayable prior to its Maturity
Date, all unmatured Talons (if any) appertaining thereto will become void and
no further Coupons will be issued in respect thereof.
Upon the date on which any Floating Rate Note, Dual Currency Note or
Indexed Note in definitive form becomes due and repayable, all unmatured
Coupons and Talons (if any) relating thereto (whether or not attached) shall
become void and no payment shall be made in respect thereof.
If the due date for redemption of any Note in definitive form is not a
Fixed Interest Date or an Interest Payment Date, interest (if any) accrued
with respect to such Note from and including the preceding Fixed Interest Date
or Interest Payment Date or, as the case may be, the Interest Commencement
Date shall be payable only against surrender of the relevant definitive Note.
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Payments of principal and interest (if any) in respect of Notes of this
Series represented by any global Note will (subject as provided below) be made
in the manner specified above (except in the case of Notes denominated or
payable in ECU, when payments will be made as provided in Condition 6(c)) and
otherwise in the manner specified in the relevant global Note against
presentation or surrender, as the case may be, of such global Note at the
specified office of the Agent. A record of each payment made against
presentation or surrender of such global Note, distinguishing between any
payment of principal and any payment of interest, will be made on such global
Note by the Agent and such record shall be prima facie evidence that the
payment in question has been made.
The holder of the relevant global Note shall be the only person entitled
to receive payments in respect of Notes represented by such global Note and
TMCC will be discharged by payment to, or to the order of, the holder of such
global Note with respect to each amount so paid. Each of the persons shown in
the records of Euroclear or Cedel as the holder of a particular principal
amount of Notes must look solely to Euroclear and/or Cedel, as the case may
be, for his share of each payment so made by TMCC to, or to the order of, the
holder of the relevant global Note. No person other than the holder of the
relevant global Note shall have any claim against TMCC in respect of payments
due on that global Note.
Notwithstanding the foregoing, payments in respect of the Notes
denominated in U.S. dollars will only be made at the specified office of a
Paying Agent in the United States (which expression, as used herein, means the
United States of America (including the States and the District of Columbia),
its territories, its possessions and other areas subject to its jurisdiction)
if:
(i) TMCC has appointed Paying Agents with specified offices outside the
United States with the reasonable expectation that such Paying Agents
would be able to make payment at such specified offices outside the
United States of the full amount owing in respect of the Notes in the
manner provided above when due;
(ii) payment of the full amount owing in respect of the Notes at such
specified offices outside the United States is illegal or effectively
precluded by exchange controls or other similar restrictions; and
(iii) such payment is then permitted under United States law without
involving, in the opinion of TMCC, adverse tax consequences to TMCC.
(c) PAYMENT IN A COMPONENT CURRENCY
If any payment of principal or interest in respect of a Note is to be
made in ECU and, on the relevant due date, the ECU is neither used as the unit
of account of the EC nor as the currency of the European Union, the Agent
shall, without liability on its part and without having regard to the
interests of individual Noteholders, Receiptholders or Couponholders and after
consultation with TMCC if practicable, choose a currency which was a component
of the ECU when the ECU was most recently used as the unit of account of the
EC (the "Chosen Currency") in which all payments due on that due date with
respect to such Notes, Receipts and Coupons shall be made. Notice of the
Chosen Currency selected by the Agent shall, where practicable, be published
in accordance with Condition 16. The amount of each payment in such Chosen
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Currency shall be computed on the basis of the equivalent of the ECU in that
currency, determined as set out in this paragraph (c), as of the fourth London
Business Day (as defined in Condition 4(b)(vii)) prior to the date on which
such payment is due.
Without prejudice to the preceding paragraph, on the first London
Business Day from which the ECU ceases to be used as the unit of account of
the EC or as the currency of the European Union, the Agent shall, without
liability on its part and without having regard to the interests of individual
Noteholders, Receiptholders or Couponholders and after consultation with TMCC
if practicable, choose a currency which was a component of the ECU when the
ECU was most recently used as the unit of account of the EC (also, the "Chosen
Currency") in which all payments with respect to Notes, Receipts and Coupons
having a due date prior thereto but not yet presented for payment are to be
made. The amount of each payment in such Chosen Currency shall be computed on
the basis of the equivalent of the ECU in that currency, determined as set out
in this paragraph (c), as of such first London Business Day.
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The equivalent of the ECU in the relevant Chosen Currency as of any date
(the "Day of Valuation") shall be determined on the following basis by the
Agent. The component currencies of the ECU for this purpose (the "Components")
shall be the currency amounts which were components of the ECU as of the last
date on which the ECU was used as a unit of account of the EC.
The equivalent of the ECU in the Chosen Currency shall be calculated by,
first, aggregating the U.S. dollar equivalents of the Components, and then,
using the rate used for determining the U.S. dollar equivalents of the
Components in the Chosen Currency as set forth below, calculating the
equivalent in the Chosen Currency of such aggregate amount in U.S. dollars.
The U.S. dollar equivalent of each of the Components shall be determined
by the Agent on the basis of the middle spot delivery quotations prevailing at
11:00 a.m. (London time) on the Day of Valuation, as obtained by the Agent
from one or more leading banks as selected by the Agent in the country of
issue of the Component in question.
If the official unit of any Component is altered by way of combination
or subdivision, the number of units of that Component shall be divided or
multiplied in the same proportion. If two or more Components are consolidated
into a single currency, the amounts of those Components shall be replaced by
an amount in such single currency equal to the sum of the amounts of the
consolidated Components expressed in such single currency. If any Component is
divided into two or more currencies, the amount of that Component shall be
replaced by amounts of such two or more currencies each of which shall be
equal to the amount of the former Component divided by the number of
currencies into which that currency was divided.
If no direct quotations are available for a Component as of a Day of
Valuation from any of the banks selected by the Agent for this purpose because
foreign exchange markets are closed in the country of issue of that currency
or for any other reason, the most recent direct quotations for that currency
obtainable by the Agent shall be used in computing the equivalents of the ECU
on such Day of Valuation; provided, however, that such most recent quotations
may be used only if they were prevailing in the country of issue of such
Component not more than two London Business Days before such Day of Valuation.
If the most recent quotations obtained by the Agent are those which were
so prevailing more than two London Business Days before such Day of Valuation,
the Agent shall determine the U.S. dollar equivalent of such Component on the
basis of cross rates derived from the middle spot delivery quotations for such
Component and for the U.S. dollar prevailing at 11:00 a.m. (London time) on
such Day of Valuation, as obtained by the Agent from one or more leading
banks, as selected by the Agent, in a country other than the country of issue
of such Component. If such most recent quotations obtained by the Agent are
those which were so prevailing not more than two London Business Days before
such Day of Valuation, the Agent shall determine the U.S. dollar equivalent of
such Component on the basis of such cross rates if the Agent judges that the
equivalent so calculated is more representative than the U.S. dollar
equivalent calculated on the basis of such most recent direct quotations.
Unless otherwise determined by the Agent, if there is more than one market for
dealing in any Component by reason of foreign exchange regulations or for any
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other reason, the market to be referred to in respect of such currency shall
be that upon which a non-resident issuer of securities denominated in such
currency would purchase such currency in order to make payments in respect of
such securities.
All choices and determinations made by the Agent for the purposes of
this paragraph (c) shall be at its sole discretion and without having regard
to individual Noteholders, Receiptholders or Couponholders (after consultation
with TMCC if practicable) and shall, in the absence of manifest error, be
conclusive for all purposes and binding on TMCC and all Noteholders,
Receiptholders and Couponholders.
Whenever a payment is to be made in a Chosen Currency as provided in
this paragraph (c), such Chosen Currency shall be deemed to be the Specified
Currency for the purposes of the other provisions of this Condition 6.
(d) PAYMENT BUSINESS DAY
Unless specified otherwise in the applicable Pricing Supplement, if the
date for payment of any amount in respect of any Note, Receipt or Coupon is
not a Payment Business Day in a place of presentation, the holder thereof
shall not be entitled to payment until the next following Payment Business Day
in the relevant place and shall not be entitled to further interest or other
payment in respect of such delay. For these purposes, unless otherwise
specified in the applicable Pricing Supplement, "Payment Business Day" means
any day which is a day (other than a Saturday or Sunday) on which commercial
banks are open for business and foreign exchange markets settle payments in
the relevant place of presentation and a Business Day as defined in Condition
4.
(e) INTERPRETATION OF PRINCIPAL AND INTEREST
Any reference in these Terms and Conditions to principal in respect of
the Notes shall be deemed to include, as applicable:
(i) any Additional Amounts which may be payable under Condition 9
in respect of principal;
(ii) the Final Redemption Amount of the Notes;
(iii) the Early Redemption Amount of the Notes;
(iv) in relation to Notes redeemable in installments, the
Installment Amounts;
(v) any premium and any other amounts which may be payable under or
in respect of the Notes;
(vi) in relation to Zero Coupon Notes, the Amortized Face Amount;
and
(vii) the Optional Redemption Amount(s) (if any) of the Notes.
Any reference in these Terms and Conditions to interest in respect of
the Notes shall be deemed to include, as applicable, any Additional Amounts
which may be payable under Condition 9, except as provided in clause (i)
above.
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7. AGENT AND PAYING AGENTS
The names of the initial Agent and the other initial Paying Agents and
their initial specified offices are set out on the back cover page of the
Offering Circular. In acting under the Agency Agreement, the Agent and the
Paying Agents will act solely as agents of TMCC and do not assume any
obligations or relationships of agency or trust to or with the Noteholders,
Receiptholders or Couponholders, except that (without affecting the
obligations of TMCC to the Noteholders, Receiptholders and Couponholders to
repay Notes and pay interest thereon) funds received by the Agent for the
payment of the principal of or interest on the Notes shall be held in trust by
it for the Noteholders and/or Receiptholders and/or Couponholders until the
expiration of the relevant period of prescription under Condition 15. TMCC
agrees to perform and observe the obligations imposed upon it under the Agency
Agreement and to cause the Agent and the Paying Agents to perform and observe
the obligations imposed upon them under the Agency Agreement. The Agency
Agreement contains provisions for the indemnification of the Agent and the
Paying Agents and for relief from responsibility in certain circumstances, and
entitles any of them to enter into business transactions with TMCC without
being liable to account to the Noteholders, Receiptholders or the
Couponholders for any resulting profit.
TMCC is entitled to vary or terminate the appointment of any Paying
Agent or any other paying agent appointed under the terms of the Agency
Agreement and/or appoint additional or other paying agents and/or approve any
change in the specified office through which any paying agent acts, provided
that:
(i) so long as the Notes of this Series are listed on any stock
exchange, there will at all times be a Paying Agent with a
specified office in each location required by the rules and
regulations of the relevant stock exchange;
(ii) there will at all times be a Paying Agent with a specified office
in a city approved by the Agent in continental Europe; and
(iii) there will at all times be an Agent.
In addition, with respect to Notes denominated in U.S. dollars TMCC
shall forthwith appoint a Paying Agent having a specified office in New York
City in the circumstances described in the final paragraph of Condition 6(b).
Any variation, termination, appointment or change shall only take effect
(other than in the case of insolvency, when it shall be of immediate effect)
after not less than 30 nor more than 45 days prior notice thereof shall have
been given to the Agent and the Noteholders in accordance with Condition 16.
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8. EXCHANGE OF TALONS
On and after the Fixed Interest Date or the Interest Payment Date, as
appropriate, on which the final Coupon comprised in any Coupon sheet matures,
the Talon (if any) forming part of such Coupon sheet may be surrendered at the
specified office of the Agent or any other Paying Agent in exchange for a
further Coupon sheet including (if such further Coupon sheet does not include
Coupons to, and including, the final date for the payment of interest due in
respect of the Note to which it appertains) a further Talon, subject to the
provisions of Condition 15. Each Talon shall, for the purposes of these Terms
and Conditions, be deemed to mature on the Fixed Interest Date or the Interest
Payment Date (as the case may be) on which the final Coupon comprised in the
relative Coupon sheet matures.
9. PAYMENT OF ADDITIONAL AMOUNTS
TMCC will, subject to certain limitations and exceptions (set forth
below), pay to a Noteholder, Receiptholder or Couponholder who is a United
States Alien (as defined below) such amounts ("Additional Amounts") as may be
necessary so that every net payment of principal or interest in respect of the
Notes, Receipts or Coupons after deduction or withholding for or on account of
any present or future tax, assessment or other governmental charge imposed
upon such Noteholder, Receiptholder or Couponholder, or by reason of the
making of such payment, by the United States or any political subdivision or
taxing authority thereof or therein, will not be less than the amount provided
for in the Notes, Receipts or Coupons. However, TMCC shall not be required to
make any payment of Additional Amounts for or on account of:
(a) any tax, assessment or other governmental charge which would not
have been imposed but for (i) the existence of any present or former
connection between such Noteholder, Receiptholder or Couponholder (or between
a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a
power over, such Noteholder, Receiptholder or Couponholder, if such
Noteholder, Receiptholder or Couponholder is an estate, trust, partnership or
corporation) and the United States, including, without limitation, such
Noteholder, Receiptholder or Couponholder (or such fiduciary, settlor,
beneficiary, member, shareholder or possessor) being or having been a citizen
or resident thereof or being or having been present or engaged in trade or
business therein or having or having had a permanent establishment therein,
or (ii) such Noteholder's, Receiptholder's or Couponholder's past or present
status as a personal holding company, foreign personal holding company or
controlled foreign corporation or a private foundation (as those terms are
defined for United States tax purposes) or as a corporation which accumulates
earnings to avoid United States federal income tax;
(b) any estate, inheritance, gift, sales, transfer, personal property
or similar tax, assessment or other governmental charge;
(c) any tax, assessment or other governmental charge that would not
have been so imposed but for the presentation of a Note, Receipt or Coupon
for payment on a date more than 15 days after the date on which such payment
became due and payable or the date on which payment thereof is duly provided
for, whichever occurs later;
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(d) any tax, assessment or other governmental charge which is payable
otherwise than by withholding from payments of principal or interest in
respect of the Notes, Receipts or Coupons;
(e) any tax, assessment or other governmental charge imposed on
interest received by (i) a 10 percent shareholder of TMCC within the meaning
of Internal Revenue Code Section 871(h)(3)(b) or Section 881(c)(3)(b) or (ii)
a bank extending credit pursuant to a loan agreement entered into in the
ordinary course of its trade or business;
(f) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of principal or interest in
respect of any Note, Receipt or Coupon, if such payment can be made without
such withholding by any other Paying Agent with respect to the Notes in a
Western European city;
(g) any tax, assessment or other governmental charge which would not
have been imposed but for the failure to comply with certification,
information of other reporting requirements concerning the nationality,
residence, identity or connection with the United States of the Noteholder,
Receiptholder or Couponholder or of the beneficial owner of such Note, Receipt
or Coupon, if such compliance is required by statute or by regulation of the
United States Treasury Department as a precondition to relief or exemption
from such tax, assessment or other governmental charge; or
(h) any combination of items (a), (b), (c), (d), (e), (f) and (g);
nor shall Additional Amounts be paid to any Noteholder, Receiptholder or
Couponholder who is a fiduciary or partnership or other than the sole
beneficial owner of the Note, Receipt or Coupon to the extent a beneficiary or
settlor with respect to such fiduciary or a member of such partnership or a
beneficial owner of the Note, Receipt or Coupon would not have been entitled
to payment of the Additional Amounts had such beneficiary, settlor, member or
beneficial owner been the holder of the Note, Receipt or Coupon.
The term "United States Alien" means any corporation, individual,
fiduciary or partnership that for United States federal income tax purposes is
a foreign corporation, nonresident alien individual, nonresident alien
fiduciary of a foreign estate or trust, or foreign partnership one or more
members of which is a foreign corporation, nonresident alien individual or
nonresident alien fiduciary of a foreign estate or trust.
If TMCC shall determine that any payment made outside the United States
by TMCC or any of its Paying Agents of the full amount of the next scheduled
payment of either principal or interest due in respect of any Note, Receipt or
Coupon of this Series would, under any present or future laws or regulations
of the United States affecting taxation or otherwise, be subject to any
certification, information or other reporting requirements of any kind, the
effect of which requirements is the disclosure to TMCC, any of its Paying
Agents or any governmental authority of the nationality, residence or identity
(as distinguished from status as a United States Alien) of a beneficial owner
of such Note, Receipt or Coupon who is a United States Alien (other than such
requirements which (i) would not be applicable to a payment made to a
custodian, nominee or other agent of the beneficial owner, or which can be
satisfied by such a custodian, nominee or other agent certifying to the effect
that such beneficial owner is a United States Alien; provided, however, in
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each case that payment by such custodian, nominee or agent to such beneficial
owner is not otherwise subject to any requirements referred to in this
sentence, (ii) are applicable only to payment by a custodian, nominee or other
agent of the beneficial owner to or on behalf of such beneficial owner, or
(iii) would not be applicable to a payment made by any other paying agent of
TMCC), TMCC shall redeem the Notes of this Series as a whole but not in part
at a redemption price equal to the Early Redemption Amount together, if
appropriate, with accrued interest to, but excluding, the date fixed for
redemption, such redemption to take place on such date not later than one year
after the publication of notice of such determination. If TMCC becomes aware
of an event that might give rise to such certification, information or other
reporting requirements, TMCC shall, as soon as practicable, solicit advice of
independent counsel selected by TMCC to establish whether such certification,
information or other reporting requirements will apply and, if such
requirements will apply, TMCC shall give prompt notice of such determination
(a "Tax Notice") in accordance with Condition 16 stating in such notice the
effective date of such certification, information or other reporting
requirements and, if applicable, the date by which the redemption shall take
place. Notwithstanding the foregoing, TMCC shall not redeem Notes if TMCC
shall subsequently determine not less than 30 days prior to the date fixed for
redemption that subsequent payments would not be subject to any such
requirements, in which case TMCC shall give prompt notice of such
determination in accordance with Condition 16 and any earlier redemption
notice shall thereby be revoked and of no further effect.
Notwithstanding the foregoing, if and so long as the certification,
information or other reporting requirements referred to in the preceding
paragraph would be fully satisfied by payment of a backup withholding tax or
similar charge, TMCC may elect prior to publication of the Tax Notice to have
the provisions described in this paragraph apply in lieu of the provisions
described in the preceding paragraph, in which case the Tax Notice shall state
the effective date of such certification, information or reporting
requirements and that TMCC has elected to pay Additional Amounts rather than
redeem the Notes. In such event, TMCC will pay as Additional Amounts such
amounts as may be necessary so that every net payment made following the
effective date of such certification, information or reporting requirements
outside the United States by TMCC or any of its Paying Agents of principal or
interest due in respect of a Note, Receipt or Coupon to a holder who certifies
to the effect that the beneficial owner of such Note, Receipt or Coupon is a
United States Alien (provided that such certification shall not have the
effect of communicating to TMCC or any of its Paying Agents or any
governmental authority the nationality, residence or identity of such
beneficial owner) after deduction or withholding for or on account of such
backup withholding tax or similar charge (other than a backup withholding tax
or similar charge which (i) is imposed as a result of certification,
information or other reporting requirements referred to in the second
parenthetical clause of the first sentence of the preceding paragraph, or (ii)
is imposed as a result of the fact that TMCC or any of its Paying Agents has
actual knowledge that the holder or beneficial owner of such Note, Receipt or
Coupon is not a United States Alien but is within the category of persons,
corporations or other entities described in clause (a)(i) of the third
preceding paragraph, or (iii) is imposed as a result of presentation of such
Note, Receipt or Coupon for payment more than 15 days after the date on which
such payment becomes due and payable or on which payment thereof is duly
provided for, whichever occurs later), will not be less than the amount
provided for in such Note, such Receipt or such Coupon to be then due and
payable. In the event TMCC elects to pay such Additional Amounts, TMCC will
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have the right, at its sole option, at any time, to redeem the Notes of this
Series, as a whole but not in part at a redemption price equal to their Early
Redemption Amount, together, if appropriate, with accrued interest to the date
fixed for redemption including any Additional Amounts required to be paid
under this paragraph. If TMCC has made the determination described in the
preceding paragraph with respect to certification, information or other
reporting requirements applicable to interest only and subsequently makes a
determination in the manner and of the nature referred to in such preceding
paragraph with respect to such requirements applicable to principal, TMCC will
redeem the Notes of this Series in the manner and on the terms described in
the preceding paragraph (except as provided below), unless TMCC elects to have
the provisions of this paragraph apply rather than the provisions of the
immediately preceding paragraph. If in such circumstances the Notes are to be
redeemed, TMCC will be obligated to pay Additional Amounts with respect to
interest, if any, accrued to the date of redemption. If TMCC has made the
determination described in the preceding paragraph and subsequently makes a
determination in the manner and of the nature referred to in such preceding
paragraph that the level of withholding applicable to principal or interest
has been increased, TMCC will redeem the Notes of this Series in the manner
and on the terms described in the preceding paragraph (except as provided
below), unless TMCC elects to have the provisions of this paragraph apply
rather than the provisions of the immediately preceding paragraph. If in such
circumstances the Notes are to be redeemed, TMCC will be obligated to pay
Additional Amounts with respect to the original level of withholding on
principal and interest, if any, accrued to the date of redemption.
10. NEGATIVE PLEDGE
The Notes will not be secured by any mortgage, pledge or other lien.
TMCC shall not pledge or otherwise subject to any lien any property or assets
of TMCC unless the Notes are secured by such pledge or lien equally and
ratably with all other obligations secured thereby so long as such obligations
shall be so secured; provided, however, that such covenant will not apply to
liens securing obligations which do not in the aggregate at any one time
outstanding exceed 5% of Consolidated Net Tangible Assets (as defined below)
of TMCC and its consolidated subsidiaries and also will not apply to:
(a) the pledge of any assets of TMCC to secure any financing by TMCC
of the exporting of goods to or between, or the marketing thereof in,
countries other than the United States in connection with which TMCC reserves
the right, in accordance with customary and established banking practice, to
deposit, or otherwise subject to a lien, cash, securities or receivables, for
the purpose of securing banking accommodations or as the basis for the
issuance of bankers' acceptances or in aid of other similar borrowing
arrangements;
(b) the pledge of receivables payable in currencies other than United
States dollars to secure borrowings in countries other than the United States;
(c) any deposit of assets of TMCC with any surety company or clerk
of any court, or in escrow, as collateral in connection with, or in lieu of,
any bond on appeal by TMCC from any judgment or decree against it, or in
connection with other proceedings in actions at law or in equity by or against
TMCC or in favor of any governmental bodies to secure progress, advance or
other payments in the ordinary course of TMCC's business;
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(d) any lien or charge on any property of TMCC, tangible or
intangible, real or personal, existing at the time of acquisition or
construction of such property (including acquisition through merger or
consolidation) or given to secure the payment of all or any part of the
purchase or construction price thereof or to secure any indebtedness incurred
prior to, at the time of, or within one year after, the acquisition or
completion of construction thereof for the purpose of financing all or any
part of the purchase or construction price thereof;
(e) any lien in favor of the United States of America or any state
thereof or the District of Columbia, or any agency, department or other
instrumentality thereof, to secure progress, advance or other payments
pursuant to any contract or provisions of any statute;
(f) any lien securing the performance of any contract or undertaking
not directly or indirectly in connection with the borrowing of money,
obtaining of advances or credit or the securing of debt, if made and
continuing in the ordinary course of business;
(g) any lien to secure non-recourse obligations in connection with
TMCC's engaging in leveraged or single- investor lease transactions; and
(h) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any l lien, charge or
pledge referred to in clauses (a) through (g) above; provided, however, that
the amount of any and all obligations and indebtedness secured thereby will
not exceed the amount thereof so secured immediately prior to the time of such
extension, renewal or replacement, and that such extension, renewal or
replacement will be limited to all or a part of the property which secured the
charge or lien so extended, renewed or replaced (plus improvements on such
property).
"Consolidated Net Tangible Assets" means the aggregate amount of assets
(less applicable reserves and other properly deductible items) after deducting
therefrom (i) all current liabilities and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles of TMCC and its consolidated subsidiaries, all as set forth on the
most recent balance sheet of TMCC and its consolidated subsidiaries prepared
in accordance with generally accepted accounting principles as practiced in
the United States.
11. CONSOLIDATION OR MERGER
TMCC may consolidate with, or sell, lease or convey all or substantially
all of its assets as an entirety to, or merge with or into any other
corporation provided that in any such case, (i) either TMCC shall be the
continuing corporation, or the successor corporation shall be a corporation
organized and existing under the laws of the United States of America or any
state thereof and such successor corporation shall expressly assume the due
and punctual payment of the principal of and interest (including Additional
Amounts as provided in Condition 9) on all the Notes, Receipts and Coupons,
according to their tenor, and the due and punctual performance and observance
of all of the covenants and conditions of this Note to be performed by TMCC by
an amendment to the Agency Agreement executed by such successor corporation,
TMCC and the Agent, and (ii) immediately after giving effect to such
transaction, no Event of Default under Condition 13, and no event which, with
notice or lapse of time or both, would become such an Event of Default
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shall have happened and be continuing. In case of any such consolidation,
merger, sale, lease or conveyance and upon any such assumption by the
successor corporation, such successor corporation shall succeed to and be
substituted for TMCC, with the same effect as if it had been named herein as
TMCC, and the predecessor corporation, except in the event of a conveyance by
way of lease, shall be relieved of any further obligation under this Note and
the Agency Agreement.
12. MEETINGS, MODIFICATIONS AND WAIVERS
The Agency Agreement contains provisions, which, unless otherwise
provided in the Pricing Supplement, are binding on TMCC, the Noteholders, the
Receiptholders and the Couponholders, for convening meetings of holders of
Notes, Receipts and Coupons to consider matters affecting their interests,
including the modification or waiver of the Terms and Conditions applicable to
the Notes.
The Agency Agreement, the Notes and any Receipts and Coupons attached to
the Notes may be amended by TMCC (and, in the case of the Agency Agreement,
the Agent) (i) for the purpose of curing any ambiguity, or for curing,
correcting or supplementing any defective provision contained therein, or to
evidence the succession of another corporation to TMCC as provided in
Condition 11, (ii) to make any further modifications of the terms of the
Agency Agreement necessary or desirable to allow for the issuance of any
additional Notes (which modifications shall not be materially adverse to
holders of outstanding Notes) or (iii) in any manner which TMCC (and, in the
case of the Agency Agreement, the Agent) may deem necessary or desirable and
which shall not materially adversely affect the interests of the holders of
the Notes, Receipts and Coupons, to all of which each holder of Notes,
Receipts and Coupons shall, by acceptance thereof, consent. In addition, with
the written consent of the holders of not less than a majority in aggregate
principal amount of the Notes then outstanding affected thereby, or by a
resolution adopted by a majority in aggregate principal amount of such
outstanding Notes affected thereby present or represented at a meeting of such
holders at which a quorum is present, as provided in the Agency Agreement
(provided that such resolution shall be approved by the holders of not less
than 25 percent of the aggregate principal amount of Notes affected thereby
then outstanding), TMCC and the Agent may from time to time and at any time
enter into agreements modifying or amending the Agency Agreement or the terms
and conditions of the Notes, Receipts and Coupons for the purpose of adding
any provisions to or changing in any manner or eliminating any provisions of
the Agency Agreement or of modifying in any manner the rights of the holders
of Notes, Receipts and Coupons; provided, however, that no such agreement
shall, without the consent or the affirmative vote of the holder of each Note
affected thereby, (i) change the stated maturity of the principal of or any
installment of interest on any Note, (ii) reduce the principal amount of or
interest on any Note, (iii) change the obligation of TMCC to pay Additional
Amounts as provided in Condition 9, (iv) reduce the percentage in principal
amount of outstanding Notes the consent of the holders of which is necessary
to modify or amend the Agency Agreement or the terms and conditions of the
Notes or to waive any future compliance or past default, or (v) reduce the
percentage in principal amount of outstanding Notes the consent of the holders
of which is required at any meeting of holders of Notes at which a resolution
is adopted. The quorum at any meeting called to adopt a resolution will be
persons holding or representing a majority in aggregate principal amount of
the Notes at the time outstanding affected thereby and at any adjourned
meeting will be one or more persons holding or representing 25 percent in
I-27
<PAGE>
aggregate principal amount of such Notes at the time outstanding affected
thereby. Any instrument given by or on behalf of any holder of a Note in
connection with any consent to any such modification, amendment or waiver will
be irrevocable once given and will be conclusive and binding on all subsequent
holders of such Note. Any modifications, amendments or waivers to the Agency
Agreement or to the terms and conditions of the Notes, Receipts and Coupons
will be conclusive and binding on all holders of Notes, Receipts and Coupons,
whether or not they have given such consent or were present at any meeting,
and whether or not notation of such modifications, amendments or waivers is
made upon the Notes, Receipts and Coupons. It shall not be necessary for the
consent of the holders of Notes under this Condition 12 to approve the
particular form of any proposed amendment, but it shall be sufficient if such
consent shall approve the substance thereof.
Notes authenticated and delivered after the execution of any amendment
to the Agency Agreement, Notes, Receipts or Coupons may bear a notation in
form approved by the Agent as to any matter provided for in such amendment to
the Agency Agreement.
New Notes so modified as to conform, in the opinion of the Agent and
TMCC, to any modification contained in any such amendment may be prepared by
TMCC, authenticated by the Agent and delivered in exchange for the Notes then
outstanding.
For the purposes of this Condition 12 and Condition 13 below, the term
"outstanding" means, in relation to the Notes, all Notes issued under the
Agency Agreement other than (i) those which have been redeemed in full in
accordance with the Agency Agreement or these Terms and Conditions, (ii) those
in respect of which the date for redemption in accordance with these Terms and
Conditions has occurred and the redemption moneys therefor (including all
interest (if any) accrued thereon to the date for such redemption and any
interest (if any) payable under these Terms and Conditions after such date)
have been duly paid to the Agent as provided in the Agency Agreement (and,
where appropriate, notice has been given to the Noteholders in accordance with
Condition 16) and remain available for payment against presentation of the
Notes, (iii) those which have become void under Condition 15, (iv) those which
have been purchased and canceled as provided in Condition 5, (v) those
mutilated or defaced notes which have been surrendered in exchange for
replacement Notes pursuant to Condition 14, (vi) (for the purposes only of
determining how many Notes are outstanding and without prejudice to their
status for any other purpose) those Notes alleged to have been lost, stolen or
destroyed and in respect of which replacement Notes have been issued pursuant
to Condition 14 and (vii) temporary global Notes to the extent that they shall
have been duly exchanged in whole for permanent global Notes or definitive
Notes and permanent global Notes to the extent that they shall have been duly
exchanged in whole for definitive Notes, in each case pursuant to their
respective provisions.
13. DEFAULT AND ACCELERATION
(a) In the event that (each an "Event of Default"):
(i) default shall be made in the payment when due of any
installment of interest or any Additional Amounts on any of the Notes
continued for a period of 30 days after the date when due; or
I-28
<PAGE>
(ii) default shall be made for more than three days in the
payment when due of the principal of any Note (whether at maturity or
upon redemption or otherwise); or
(iii) default in the deposit of any sinking fund payment with
respect to any Note when and as due; or
(iv) TMCC shall fail to perform or observe any other term,
covenant or agreement contained in the Terms and Conditions applicable
to any of the Notes or in the Agency Agreement for a period of 60 days
after the date on which written notice of such failure, requiring TMCC
to remedy the same, first shall have been given to the Agent and TMCC by
the holders of at least 25 percent in aggregate principal amount of the
Notes then outstanding; or
(v) there is an acceleration of, or failure to pay when due and
payable, any indebtedness for money borrowed of TMCC exceeding
$10,000,000 and such acceleration is not rescinded or annulled, or such
indebtedness is not discharged, within 10 days after written notice
thereof has first been given to TMCC and the Agent by the holders of not
less than 10 percent in aggregate principal amount of Notes then
outstanding; or
(vi) the entry by a court having competent jurisdiction of (a) a
decree or order granting relief in respect of TMCC in an involuntary
proceeding under any applicable bankruptcy, insolvency reorganization or
other similar law and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or (b) a decree or order
adjudging TMCC to be insolvent, or approving a petition seeking
reorganization, arrangement, adjustment or composition of TMCC and such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (c) a final and non-appealable order appointing a
custodian, receiver, liquidator, assignee, trustee or other similar
official of TMCC or of any substantial part of the property of TMCC, or
ordering up the winding up or liquidation of the offices of TMCC; or
(vii) the commencement by TMCC of a voluntary proceeding under
any applicable bankruptcy, insolvency, reorganization or other similar
law or of a voluntary proceeding seeking to be adjudicated insolvent or
the consent of TMCC to the entry of a decree or order for relief in an
involuntary proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
insolvency proceedings against it, or the filing by TMCC of a petition
or answer or consent seeking reorganization or relief under any
applicable law, or the consent by TMCC to the filing of such petition or
to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee or similar official of TMCC or any
substantial part of the property of TMCC or the making by TMCC of an
assignment for the benefit of creditors, or the taking of corporate
action by TMCC in furtherance of any such action;
I-29
<PAGE>
then the holder of any Note may, at its option, declare the principal of such
Note and the interest, if any, accrued thereon to be due and payable
immediately by written notice to TMCC and the Agent at its main office in
London, and unless all such defaults shall have been cured by TMCC prior to
receipt of such written notice, the principal of such Note and the interest,
if any, accrued thereon shall become and be immediately due and payable.
At any time after such a declaration of acceleration with respect to the
Notes has been made and before a judgment or decree for payment of the money
due with respect to any Note has been obtained by any Noteholder, such
declaration and its consequences may be rescinded and annulled upon the
written consent of holders of a majority in aggregate principal amount of the
Notes then outstanding, or by resolution adopted by a majority in aggregate
principal amount of the Notes present or represented at a meeting of holders
of the Notes at which a quorum is present, as provided in the Agency
Agreement, if:
(1) TMCC has paid or deposited with the Agent a sum sufficient to pay
(A) all overdue installments of interest on the Notes,
(B) the principal of Notes which has become due otherwise
than by such declaration of acceleration; and
(2) all Events of Default with respect to the Notes, other than the
non-payment of the principal of such Notes which has become due
solely by such declaration of acceleration, have been cured or
waived as provided in paragraph (b) below.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
(b) Any Events of Default by TMCC, other than the events described in
paragraph (a)(i) or (a)(ii) above or in respect of a covenant or provision
which cannot be modified and amended without the written consent of the
holders of all outstanding Notes, may be waived by the written consent of
holders of a majority in aggregate principal amount of the Notes then
outstanding affected thereby, or by resolution adopted by the holders of a
majority in aggregate principal amount of such Notes then outstanding present
or represented at a meeting of holders of the Notes affected thereby at which
a quorum is present, as provided in the Agency Agreement.
14. REPLACEMENT OF NOTES, RECEIPTS, COUPONS AND TALONS
Should any Note, Receipt, Coupon or Talon be mutilated, defaced or
destroyed or be lost or stolen, it may be replaced at the specified office of
the Agent in London (or such other place outside the United States as may be
notified to the Noteholders), in accordance with all applicable laws and
regulations, upon payment by the claimant of the expenses incurred by TMCC and
the Agent in connection therewith and on such terms as to evidence, indemnity,
security or otherwise as TMCC and the Agent may require. Mutilated or defaced
Notes, Receipts, Coupons or Talons must be surrendered before replacements
will be issued.
I-30
<PAGE>
15. PRESCRIPTION
Unless provided otherwise in the applicable pricing supplement, the
Notes, Receipts and Coupons will become void unless presented for payment
within a period of five years from the Relevant Date (as defined below)
relating thereto. Any moneys paid by TMCC to the Agent for the payment of
principal or interest in respect of the Notes and remaining unclaimed for a
period of one year shall forthwith be repaid to TMCC and holders shall
thereafter look only to TMCC for payment thereof. All liability with respect
thereto shall cease when the Notes, Receipts and Coupons become void.
As used herein, the "Relevant Date" means:
(A) the date on which such payment first becomes due; or
(B) if the full amount of the moneys payable has not been received by
the Agent on or prior to such due date, the date on which, the
full amount of such moneys having been so received, notice to that
effect shall have been given to the Noteholders in accordance with
Condition 16.
16. NOTICES
All notices regarding the Notes shall be published in one leading
English language daily newspaper with circulation in London (which is expected
to be the Financial Times in London) or, if this is not practicable, one other
such English language newspaper as TMCC, in consultation with the Agent, shall
decide. In addition, with respect to any Notes quoted on the Paris Bourse, and
so long as that exchange so requires, any notice to the holder of such Notes
or the Coupons relating thereto will be validly given if published in a daily
newspaper of general circulation in Paris (which is expected to be les Echos),
or if this is not practicable, in a newspaper of general circulation in France
as determined by TMCC, in consultation with the Agent. TMCC shall also ensure
that notices are duly published in a manner which complies with the rules and
regulations of any stock exchange on which the Notes are for the time being
listed. Any such notice shall be deemed to have been given on the date of the
first publication.
Until such time as any definitive Notes are issued, there may, so long
as the global Notes for this Series are held in their entirety on behalf of
Euroclear and Cedel Bank, be substituted for such publication in such
newspaper the delivery of the relevant notice to Euroclear and Cedel Bank for
communication by them to the holders of the Notes of this Series. Any such
notice shall be deemed to have been given to the holders of the Notes of this
Series on the seventh day after the day on which the said notice was given to
Euroclear and Cedel Bank, or on such other day as is specified in the
applicable Pricing Supplement.
Notices to be given by any holder of the Notes of this Series shall be
in writing and given by lodging the same, together with the relevant Note or
Notes, with the Agent. While any of the Notes of this Series are represented
by a global Note, such notice may be given by any holder of a Note of this
Series to the Agent via Euroclear and/or Cedel Bank, as the case may be, in
such manner as the Agent and Euroclear and/or Cedel Bank, as the case may be,
may approve for this purpose.
I-31
<PAGE>
17. GOVERNING LAW
The Agency Agreement and the Notes, the Receipts and the Coupons are
governed by, and shall be construed in accordance with, the laws of the State
of New York, United States of America, applicable to agreements made and to be
performed wholly within such jurisdiction.
I-32
<PAGE>
Exhibit II to Amendment No. 2 to the
Amended and Restated Agency
Agreement
AMENDED AND RESTATED RESPONSIBILITY STATEMENT
PERSONNES QUI ASSUMENT
LA RESPONSABILITE DE LA NOTE D'INFORMATION
COMPOSEE DE LA PRESENTE NOTE D'OPERATION (PRICING SUPPLEMENT)
(DE LA NOTE D'INFORMATION AYANT RECU DE LA COB LE
VISA NO. . . DU . . .)
ET DU DOCUMENT DE BASE (OFFERING CIRCULAR)
1. Au nom de l'emetteur
A la connaissance de l'emetteur, les donnees de la presente Note
d'Information sont conformes a la realite et ne comportent pas d'omission de
nature a en alterer la portee.
Aucun element nouveau, (autres que ceux mentionnes dans la presente Note
d'Operation), intervenu depuis.
- - le 17 Juillet, 1996, date du n P96-231 appose par la Commission des
Operations de Bourse sur le Document de Base (Prospectus).
- - (le [ ] date du visa n [ ]appose par la Commission des Operations de
Bourse sur la Note d'Information),
n'est susceptible d'affecter de maniere significative la situation financiere
de l'emetteur dans le contexte de la presente emission.
Toyota Motor Credit Corporation
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[Name and title of signatory]
2. Au nom de la banque presentatrice
Personne assumant la responsabilite de la Note d'Information.
(Name of relevant Dealer/lead manager)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[Name and title of signatory]
a statement in French in respect of the Pricing Supplement in the
following form:
La notice legale sera publiee au Bulletin des Annonces Legales
Obligatoires (BALO) du (date). La presente "Note d'Information" ne peut
etre distribuee en France avant la date effective de cotation de
l'emprunt a la Bourse de Paris et la publicite legale au BALO; and the
registration and visa numbers allocated by the COB in respect of the
Offering Circular and the Pricing Supplement in the following form:
II-1
<PAGE>
COMMISSION DES OPERATIONS DE BOURSE
En vue de la cotation a Paris des obligations, et par application des
articles 6 et 7 de l'ordonnance no. 67-833 du 28 septembre 1967, la Commission
des Operations de Bourse a enregistre le Document de Base sous le no. P96-231
du 17 Juillet,1996 et a appose sur la presente "Note d'Information" la visa
no. ( ) du (date).
II-2
<PAGE>
Exhibit III to Amendment No. 2
to the Amended and Restated
Agency Agreement
ANNEX E
-------
TRADING DESK INFORMATION
------------------------
The Company
-----------
TOYOTA MOTOR CREDIT CORPORATION
19001 South Western Avenue A105
Torrance, California 90509
Telephone No: (310) 787-6195
Fax No: (310) 787-6194
Attention: National Treasury Manager
III-1
<PAGE>
The Dealers
-----------
BANQUE PARIBAS CS FIRST BOSTON LIMITED
33 Wigmore Street One Cabot Square
London W1H OBN London E14 4QJ
Telephone: 0171 355 2000 Telephone: 010 516 4021
Telefax: 0171 895 2555 Telefax: 010 516 3719
Telex: 296723 PBRCAP Telex: 892132 CSFB G
Attention: Euro Medium Term Note Desk Attention: MTN Trading Desk
GOLDMAN SACHS INTERNATIONAL MERRILL LYNCH FINANCE SA
Peterborough Court 96, avenue d'Iena
133 Fleet Street 75116 Paris, France
London EC4A 2BB
Telephone: 0171-774-2295 Telephone: 331-4069
Telefax: 0171-774-5711 Telefax: 605-985
Telex: 94012165 GSHH G Telex: 33149520502
Attention: Euro Medium Term Note Desk Attention: EMTN Trading and
Distribution Desk
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
1 Broadgate MORGAN STANLEY & CO.
London EC2M 7HA INTERNATIONAL LIMITED
25 Cabot Square
Telephone: 0171 256 8256 Canary Wharf
Telefax: 0171 260 2135 London E14 4QA
Telex: 888881 LEHMAN G Telephone: 0171 425-7799
Attention: EMTN Trading Desk Telefax: 0171 425-7999
Telex: 8812564
Attention: Head of Tansaction
Management Group
MERRILL LYNCH INTERNATIONAL
Ropemaker Place
25 Ropemaker Street J.P. MORGAN SECURITIES LTD.
London EC2Y 9LY 60 Victoria Embankment
London EC4Y 0JP
Telephone: 0171 867 3995
Telefax: 0171 867 4327 Telephone: 0171 779 3469
Telex: 8811047 MERLYN G Telefax: 0171 325 8255
Attention: EMTN Trading and Distribution Telex: 8954804 MGLTD G
Desk Attention: Euro Medium Term Note
NOMURA INTERNATIONAL PLC
Nomura House
1, St. Martin's-le-Grand SWISS BANK CORPORATION
London EC1A 4NP 1 High Timber Street
London EC4V 35B
Telephone: 0171 936 2827
Telefax: 0171 583 1832 Telephone: 0171 711 2479
Telex: 883119 NOMURA G Telefax: 0171 711 2411
Attention: Fixed Income Trading Telex: 887434 SBCO G
Attention: MTN Group
III-2
<PAGE>
UBS LIMITED
100 Liverpool Street
London EC2M 2RH
Telephone: 0171 901 4253
Telefax: 0171 901 3795
Telex: 8812800 UBSLTD G
Attention: Euro Medium Term Note Desk
III-3
<PAGE>
Exhibit IV to Amendment No. 1
to the Amended and Restated
Agency Agreement
APPENDIX E
----------
FORM OF THE NOTES
IV-1
<PAGE>
FORM OF THE NOTES
Each Tranche of Notes will initially be represented by one or more
temporary global Notes, without receipts, interest coupons or talons, which
will be delivered to a common depositary for Euroclear and Cedal Bank.
If an interest payment date for any Notes occurs while such Notes are
represented by a temporary global Note, the related interest payment will be
made against presentation of the temporary global Note only to the extent that
certification of non-U.S. beneficial ownership (in the form set out in the
temporary global Note) has been received by Euroclear or Cedel Bank. Interests
in the temporary global Note will be exchangeable for interests in a permanent
global Note and/or for security printed definitive Notes (at the option of
TMCC or as otherwise indicated in the applicable Pricing Supplement) not
earlier than the date (the "Exchange Date") which is 40 days after the date on
which the temporary global Note is issued, provided that certification of
non-U.S. beneficial ownership has been received. No interest payments will be
made on a temporary global Note after the Exchange Date.
Payments of principal or interest (if any) in respect of a permanent
global Note will be made through Euroclear and Cedel Bank against presentation
or surrender, as the case may be, of the permanent global Note without any
requirement for further certification. A permanent global Note will be
exchangeable in whole, but not in part, for security printed definitive Notes
with, where applicable, receipts, interest coupons and talons attached not
earlier than the Exchange Date (i) at the option of TMCC; and (ii) if
specified in the applicable Pricing Supplement, at the option of Noteholders.
If a portion of the Notes continue to be represented by the temporary global
Note after the issuance of definitive Notes, the temporary global Note shall
thereafter be exchangeable only for definitive Notes, subject to certification
of non-U.S. beneficial ownership. Unless specified in the applicable Pricing
Supplement, investors will have no right to require the delivery of definitive
Notes, except in certain limited circumstances such as the closure of the
relevant clearance systems. If the applicable Pricing Supplement provides
investors with the right to require the delivery of definitive Notes, such
delivery may be conditioned on written notice, as specified in the applicable
Pricing Supplement, from Euroclear or Cedel Bank (as the case may be) acting
on instructions of the holders of interest in the temporary or permanent
global Note and/or on the payment of costs in connection with the printing and
distribution of the definitive Notes. No definitive Note delivered in exchange
for a permanent or temporary global Note shall be mailed or otherwise
delivered to any locations in the United States of America in connection with
such exchange. Temporary and permanent global Notes and definitive Notes will
be issued by The Chase Manhattan Bank, London Office, as issuing and (unless
specified otherwise in the applicable Pricing Supplement) principal paying
agent and, if so specified in the applicable Pricing Supplement, as
calculation agent (the "Agent", which expression includes any successor agents
or any other calculation agent specified in the applicable Pricing Supplement)
pursuant to an Amended and Restated Agency Agreement dated as of July 28,
1994, as amended (the "Agency Agreement"), and made between TMCC, the Agent
and the other paying agents named therein (together with the Agent, the
"Paying Agents", which expression includes any additional or successor paying
agents). Until exchanged in full, the holder of an interest in any global Note
shall in all respects be entitled to the same benefits as the holder of
definitive Notes, receipts and interest coupons, except as set out in the
terms and conditions applicable thereto.
IV-2
<PAGE>
If specified in the applicable Pricing Supplement, other clearance
systems (including in the case of Notes listed on the Paris Bourse, Sicovam SA
and Intermediaries financiers habilites authorized to maintain accounts
therein (together, "Sicovam")) capable of complying with the certification
requirements set forth in the temporary global Note may be used in addition to
or in lieu of Euroclear and Cedel Bank.
Temporary and permanent global Notes and definitive Notes will be issued
in bearer form only. The following legend will appear on all global Notes,
definitive Notes, receipts and interest coupons:
"Any United States person (as defined in the Internal Revenue Code
of the United States) who holds this obligation will be subject to
limitations under the United States income tax laws, including
the limitations provided in sections 165(j) and 1287(a) of the
Internal Revenue Code."
The sections referred to provide that United States holders, with
certain exceptions, will not be entitled to deduct any loss on Notes, receipts
or interest coupons and will not be entitled to capital gains treatment of any
gain on any sale, disposition or payment of principal in respect of Notes,
receipts or interest coupons.
The Pricing Supplement relating to each Tranche will contain such of the
following information as is applicable in respect of such Notes (all
references to numbered Conditions being to the Terms and Conditions of the
relevant Notes):
(i) the Series number;
(ii) if not a new Series, the date from which the Tranche of Notes
being issued is to form a single series with the other Notes comprising
that Series;
(iii) the currency (which expression shall include ECU and other
currency units) in which the Notes are denominated and, in the case of
Dual Currency Notes (as defined below), the currency or currencies in
which payment in respect of the Notes is to be made (each a "Specified
Currency");
(iv) the aggregate principal amount of the Notes to be issued;
(v) the interest and/or payment basis (the "Interest/Payment
Basis") of the Notes, which may be one or more of the following:
(a) Notes bearing interest on a fixed rate basis ("Fixed Rate
Notes");
(b) Notes bearing interest on a floating rate basis ("Floating Rate
Notes");
(c) Notes issued on a non-interest bearing basis ("Zero Coupon
Notes");
(d) Notes with respect to which principal and/or interest is
calculated by reference to an index and/or a formula ("Indexed
Notes"); and/or
IV-3
<PAGE>
(e) Notes with respect to which principal and/or interest is
payable in one or more Specified Currencies other than the
Specified Currency in which they are denominated ("Dual
Currency Notes");
(vi) if the Notes are not to have a single specified
Interest/Payment Basis continuously from the Issue Date to the stated
maturity thereof, the dates from (and including) and to (but excluding)
which such Notes will have each specified Interest/Payment Basis;
(vii) the date on which the Notes will be issued (the "Issue Date");
(viii) the denomination(s) of such Notes (each a "Specified
Denomination");
(ix) the price (generally expressed as a percentage of the
principal amount of the Notes) at which the Notes will be issued (the
"Issue Price");
(x) in the case of Notes which are to be issued on a partly paid
basis ("Partly Paid Notes"), the amount of each installment comprising
the Issue Price and the date on which each payment is to be made and the
consequences (if any) of failure to make any such payment;
(xi) in the case of interest-bearing Notes, the date from which such
Notes bear interest (the "Interest Commencement Date"), which may or may
not be the Issue Date;
(xii) in the case of Notes other than Floating Rate Notes, the date
on which such Notes (unless previously redeemed or purchased and
canceled) will be redeemed (the "Maturity Date");
(xiii) in the case of Floating Rate Notes, the month and year in which
the Notes (unless previously redeemed or purchased and canceled) will
be redeemed (the "Redemption Month");
(xiv) the amount at which each Note will be redeemed under (xii) and
(xiii) above (the "Final Redemption Amount"), generally expressed as a
percentage of the principal amount of the Notes and/or, in the case of
Indexed Notes or Dual Currency Notes, as specified in accordance with
(xix) or (xx) below;
(xv) in the case of Notes redeemable in installments:
(a) the date on which each installment is payable (each
an"Installment Date"); and
(b) the amount, generally expressed as a percentage of the
principal amount of the Notes, of each such installment (each
an "Installment Amount");
IV-4
<PAGE>
(xvi) in the case of Fixed Rate Notes (and for subclauses (e) and
(f), Notes other than Floating Rate Notes):
(a) the rate, generally expressed as a percentage rate per annum,
at which the Notes bear interest (the "Fixed Rate of
Interest"), which may remain the same throughout the life of
the Notes or increase and/or decrease;
(b) the date(s) in each year on which interest is payable
throughout the life of the Notes (each a "Fixed Interest
Date");
(c) where the period from the Interest Commencement Date to the
next Fixed Interest Date differs from the period between
subsequent Fixed Interest Dates, the amount of the first
payment of interest (the "Initial Broken Amount");
(d) where the Maturity Date is not a Fixed Interest Date, the
amount of the final payment of interest (the "Final Broken
Amount"); and
(e) the applicable Business Day Convention (if different from that
set out in Condition 4(a)(i));
(f) the applicable definition of "Business Day" (if different from
that set out in Condition 4(b)(i));
(g) any other terms relating to the particular method of
calculating interest for such Notes;
(xvii) in the case of Floating Rate Notes:
(a) the number of months or other period from (and including) the
Interest Commencement Date to (but excluding) the first
Interest Payment Date (as defined in Condition 4(b)(i)) and
from (and including) that and each successive Interest Payment
Date thereafter to (but excluding) the next following Interest
Payment Date (each an "Interest Period"), which may or may not
be the same number of months or other period throughout the
life of the Notes;
(b) the manner in which the rate of interest (the "Rate of
Interest") is to be determined, including:
(1) the date(s) on which the interest rate is to be reset (the
"Reset Date");
(2) where the Rate of Interest is to be determined by
reference to the ISDA Agreement and Confirmation (as
defined and described respectively in Condition 4(b)(iii))
and Condition 4(b)(iii) applies, the "Floating Rate
Option" (as defined below), "Designated Maturity" (as
defined below) and margin (the "Margin") (which Margin may
remain the same throughout the life of the Notes or
increase and/or decrease);
IV-5
<PAGE>
(3) where the Rate of Interest is to be determined as provided
in Condition 4(b)(iv) ("Screen Rate Determination"):
(A) the reference rate (the "Reference Rate") by which
the Rate of Interest is to be determined;
(B) the Margin, if any, (expressed as a percentage rate
per annum) over or under the Reference Rate by which
the Rate of Interest is to be determined (which
Margin may remain the same throughout the life of the
Notes or increase and/or decrease) specifying whether
any such Margin is to be added to, or subtracted
from, the Reference Rate; and
(C) the page, whatever its designation, on which the
Reference Rate is for the time being displayed on the
Reuters Monitor Money Rates Service or the
appropriate Associated Press-Dow Jones Telerate
Service or such other service as is indicated in the
applicable Pricing Supplement; and
(4) where the Rate of Interest is to be calculated otherwise
than by reference to (1) or (2) above, details of the
basis for determination of the Rate of Interest and any
alternative fall-back provisions;
(c) the applicable definition of "Reference Banks" (if
different from that set forth in Condition 4(b)(iv)(E));
and
(d) the applicable definition of "Interest Determination Date"
(if different from that set out in Condition 4(b)(iv)(F));
(e) the applicable Business Day Convention (if different from
that set out in Condition 4(b)(i));
(f) the applicable definition of "Business Day" (if different
from that set out in Condition 4(b)(i));
(g) the minimum Rate of Interest, if any, at which the Notes
will bear interest, which may remain the same throughout
the life of the Notes or increase and/or decrease;
(h) the maximum Rate of Interest, if any, at which the Notes
will bear interest, which may remain the same throughout
the life of the Notes or increase and/or decrease; and
(i) if different from the Agent, details of the agent
responsible for calculating (xvii)(b) above;
(xviii) in the case of Zero Coupon Notes:
(a) the accrual yield in respect of such Notes (the "Accrual
Yield") expressed as a percentage rate per annum;
IV-6
<PAGE>
(b) the reference price attributed to the Notes on issue (the
"Reference Price"); and
(c) any other formula or basis for determining the amount
payable, in each case for the purposes of Condition
5(f)(iii);
(xix) in the case of Indexed Notes:
(a) the index (the "Index") to which amounts payable in
respect of principal and/or interest are linked and/or the
formula (the "Formula") to be used in determining the
amounts of principal and/or interest due;
(b) the agent responsible for calculating the amount of
principal and/or interest due; and
(c) the provisions regarding calculation of principal and/or
interest in circumstances where such calculation by
reference to the Index and/or the Formula is impossible
and/or impracticable;
(xx) in the case of Dual Currency Notes:
(a) the exchange rate(s) or basis of calculating the exchange
rate(s) to be used in determining the amounts of principal
and/or interest payable in the Specified Currencies (the
"Rate(s) of Exchange");
(b) the agent, if any, responsible for calculating the amount
of principal and/or interest payable in the Specified
Currencies;
(c) the provisions regarding calculation of principal and/or
interest in circumstances where such calculation by
reference to the Rate(s) of Exchange is impossible and/or
impracticable; and
(d) the person at whose option any Specified Currency or
Currencies is or are to be or may be payable;
(xxi) in the case of Partly Paid Notes:
(a) the amount of each installment (expressed as a percentage
of the principal amount of each Note) of the Issue Price
for such Notes;
(b) the due date(s) for any subsequent installments of the
Issue Price;
(c) the date (if any) after which a holder shall forfeit any
relevant Partly Paid Notes should payment of any
subsequent installment(s) not be made on or prior to such
date together with accrued interest;
IV-7
<PAGE>
(d) the rate(s) of interest to accrue on the first and any
subsequent installment(s) after the due date for payment
of such installment(s); and
(e) any other relevant information;
(xxii) whether the Notes are to be redeemable at the option of
TMCC (other than for taxation reasons) and/or the Noteholders and, if so:
(a) each date upon which redemption may occur (each an
"Optional Redemption Date") which, in the case of Notes
denominated in sterling or French Franc Notes, may not be
prior to one year from the Issue Date and in the case of
Notes denominated in DM, may not be prior to two years
from the Issue Date;
(b) each redemption amount for the Notes (each an "Optional
Redemption Amount") and/or the method, if any, of
calculating the same; and
(c) in the case of Notes redeemable by TMCC in part, the
minimum principal amount of the Notes permitted to be so
redeemed at any time (the "Minimum Redemption Amount") and
any greater principal amount of the Notes permitted to be
so redeemed at any time (each a "Higher Redemption
Amount"), if any;
(d) the applicable period for notice to noteholders (if
different from that set out in Condition 5(d)); and
(e) the applicable period for notice to the Agent (if
different from that set out in Condition 5(d)),
(xxiii) the redemption amount (the "Early Redemption Amount") with
respect to the Notes payable on redemption for taxation reasons or
following an Event of Default and/or method, if any, of calculating the
same if required to be specified by, or if different from that set out
in, Condition 5(f);
(xxiv) whether talons for future coupons or receipts are to be
attached to definitive Notes on issue and, if so, the date on which such
talons mature;
(xxv) details of the relevant stabilizing manager (if any);
(xxvi) any additional selling restrictions which are required;
(xxvii) details of any other relevant terms of such Notes or
special conditions not inconsistent with the provisions of the Agency
Agreement;
(xxviii) the relevant Euroclear and Cedel Bank Common Code and ISIN
Number;
(xxix) details of any additional or alternative clearance system
(including, if applicable, Sicovam) approved by TMCC and the Agent;
IV-8
<PAGE>
(xxx) whether or not the Notes are to be listed on the London
Stock Exchange, the Paris Bourse or any other agreed stock exchange;
(xxxi) whether the Notes are convertible automatically or at the
option of TMCC and/or the holders of Notes into Notes of another
Interest/Payment Basis, the date(s) upon which such conversion will occur
or such option(s) may be exercised and the Interest/Payment Basis and
other relevant terms;
(xxxii) whether the temporary global Note initially representing
the Notes will be exchangeable for a permanent global Note and/or
definitive Notes and any notice period applicable to an exchange for
definitive Notes;
(xxxiii) method of distribution:
(a) if syndicated, the names of the relevant managers;
(b) if non-syndicated, the name of the relevant dealer;
(xxxiv) whether TMCC may from time to time without the consent of
the Noteholders create and issue further securities having the same
terms and conditions as the Notes described in the Pricing Supplement so
that the same shall be consolidated and form a single series with such
Notes; and (xxxv) in the case of any Notes listed on the Paris Bourse:
(a) the number of Notes to be issued in each Specified
Denomination;
(b) the Sicovam number or, in the case of Partly Paid Notes,
Sicovam numbers, if any;
(c) the name and specified office of any paying agent in
France;
(d) the address in Paris where any relevant documents will be
available for inspection and a list of such documents;
(e) the specialist broker in the case of an issue of French
Franc Notes;
(f) a statement in French signed manually or in facsimile by a
person duly authorized on behalf of TMCC and the relevant
Purchaser or, in the case of a syndicated issue of Notes,
the relevant lead manager accepting responsibility for the
information contained in the Pricing Supplement, in the
following form:
IV-9
<PAGE>
PERSONNES QUI ASSUMENT
LA RESPONSABILITE DE LA NOTE D'INFORMATION
COMPOSEE DE LA PRESENTE NOTE D'OPERATION (PRICING SUPPLEMENT)
(DE LA NOTE D'INFORMATION AYANT RECU DE LA COB LE
VISA NO /DU )
-------- ---------
ET DU DOCUMENT DE BASE (OFFERING CIRCULAR)
1. Au nom de l'emetteur
A la connaissance de l'emetteur, les donnees de la presente Note
d'Information sont conformes a la realite et ne comportent pas
d'omission de nature a en alterer la portee.
Aucun element nouveau, (autres que ceux mentionnes dans la
presente Note d'Operation), intervenu depuis:
- le 17 Juillet 1996, date du n P96-231 appose par la
Commission des Operations de Bourse sur le Document de Base
(Prospectus),
- (le [ ], date du visa no. [ ] appose par la
Commission des Operations de Bourse sur la Note
d'Information),
n'est susceptible d'affecter de maniere significative la
situation financiere de l'emetteur dans le contexte de la
presente emission.
Toyota Motor Credit Corporation
-------------------------------------------------------------
[Name and title of signatory]
2. Au nom de la banque presentatrice
Personne assumant la responsabilite de la Note d'Information.
(Name of relevant Dealer/lead manager)
-------------------------------------------------------------
[Name and title of signatory]
(g) a statement in French in respect of the Pricing Supplement in the
following form:
La notice legale sera publiee au Bulletin des Annonces Legales
Obligatoires (BALO) du (date). La presente "Note d'Information" ne peut
etre distribuee en France avant la date effective de cotation de
l'emprunt a la Bourse de Paris et la publicite legale au BALO; and
IV-10
<PAGE>
(h) the registration and visa numbers allocated by the COB in respect of
the Offering Circular and the Pricing Supplement in the following
form:
COMMISSION DES OPERATIONS DE BOURSE
En vue de la cotation a Paris des obligations, et par application des
articles 6 et 7 de l'ordonnance no. 67-833 du 28 septembre 1967, la
Commission des Operations de Bourse a enregistre le Document de Base
sous le no. P96-231 du 17 Juillet 1996 et a appose sur la
presente "Note d'Information" la visa no. ( ) du (date).
If the applicable Pricing Supplement specifies any modifications to the
Terms and Conditions of the Notes in relation to a particular issue as
described below, it is expected that, to the extent that such modifications
(not being significant for the purposes of section 147 of the Financial
Services Act 1986) relate only to Conditions 1, 3, 4, 5 (except Condition
5(b)), 6, 14 and 16, they will not necessitate the preparation and issue of a
supplementary Offering Circular or listing particulars. If the Terms and
conditions of the Notes are to be modified in any other respect (as would be
the case, for example, for an issue of subordinated Notes), it is expected
that a supplementary Offering Circular or listing particulars or, if
appropriate, further listing particulars describing the modifications will be
prepared and issued.
IV-11
<PAGE>
Exhibit 10.2(e)
WORLD OMNI FINANCIAL CORP.
120 N. W. 12th Avenue
Deerfield Beach, Florida 33442
August 29, 1996
Toyota Motor Credit Corporation
19001 South Western Avenue
Torrance, California 90509
RE: Pooling and Servicing Agreement, dated as of August 1, 1996,
by and among World Omni Retail Funding, Inc., World Omni
Financial Corp. and First Bank National Association, as Trustee
---------------------------------------------------------------
Ladies and Gentlemen:
Reference is hereby made to the above-referenced agreement (the
"Pooling and Servicing Agreement") and to the Purchase Agreement, dated as of
August 1, 1996, by and between you and the undersigned (together with the
Pooling and Servicing Agreement, the "Agreements"). Initially capitalized
terms used herein and not otherwise defined shall have the respective meanings
ascribed thereto in the Pooling and Servicing Agreement.
The Financial Services Agreement, dated December 21, 1984, between
you and the undersigned (the "FSA"), is hereby terminated by mutual rescission
in accordance with Section 11 thereof, and the parties hereto hereby waive the
written notice of termination provided for therein. Each of the parties'
respresentations and indemnities set forth in the FSA shall survive the
termination of the FSA hereby. In additon, the parties hereto hereby
acknowledge and agree that under no circumstances shall this Letter Agreement
be deemed an amendment of the FSA.
The undersigned hereby agrees to indemnify you for any liability
(including attorneys' fees), costs, damages, claims or actions as a result of
the undersigned's misuse of your name and/or logo in fulfilling its
obligations as Servicer under the Pooling and Servicing Agreement.
<PAGE>
If the foregoing accurately reflects your understanding with respect
to the matters contained herein, please acknowledge your agreement hereto by
signing the enclosed copy of this letter and returning it to us.
WORLD OMNI FINANCIAL CORP.
By /S/ ALAN BROWDY
--------------------------
Name: Alan Browdy
Title: Vice President
Accepted and Agreed:
TOYTA MOTOR CREDIT CORPORATION
By /S/ WOLFGANG JAHN
--------------------------
Name: Wolfgang Jahn
Title: Senior Vice President
and General Manager
<PAGE>
Exhibit 10.9(d)
[EXECUTION COPY]
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of September 24, 1996
among TOYOTA MOTOR CREDIT CORPORATION (the "Borrower"), the BANKS listed on
the signature pages hereof (the "Banks") and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent (the "Agent").
W I T N E S E T H :
WHEREAS, the parties hereto have heretofore entered into a Three-
Year Credit Agreement dated as of September 29, 1994, as amended by Amendment
No. 1 to Credit Agreement dated as of September 28, 1995 (the "Agreement");
and
WHEREAS, the parties hereto desire to amend the Agreement as set
forth herein and to restate the Agreement in its entirety to read as set forth
in the Agreement with the amendments specified below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
------------------------
specifically defined herein, each term used herein which is defined in the
Agreement shall have the meaning assigned to such term in the Agreement. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other
similar reference and each reference to "this Agreement" and each other
similar reference contained in the Agreement shall from and after the date
hereof refer to the Agreement as amended hereby.
SECTION 2. Amendment of the Agreement.
---------------------------
(a) Each reference to "1994" in the definition of "Borrower's 1994
Form 10-K" and in Section 4.04(a) is changed to "1995".
(b) Each reference to "1995" in the definition of "Borrower's
Latest Form 10-Q" and in Sections 4.04(b) and (c) is changed to "1996".
(c) The date "September 29, 2000" appearing in the definition of
"Termination Date" is changed to "September 24, 2001".
(d) The definition of "CD Margin" in Section 2.07(b) is amended to
read as follows:
"CD Margin" means 0.225% per annum.
(e) The term "Euro-Dollar Margin" in Section 2.07(c) is amended to
read as follows:
"Euro-Dollar Margin" means 0.10% per annum.
<PAGE>
(f) The first sentence of Section 2.08 is amended to read in its
entirety as follows:
The Borrower shall pay to the Agent for the account of the Banks
ratably a facility fee at the rate of 0.05% per annum.
SECTION 3. Changes in Commitments. With effect from and
-----------------------
including the date this Amended and Restated Credit Agreement becomes
effective in accordance with Section 5 hereof, the Commitment of each Bank
shall be the amount set forth opposite the name of such Bank on the signature
pages hereof, as such amount may be reduced from time to time pursuant to
Section 2.09 of the Agreement. Any Bank whose commitment is changed to zero
shall upon such effectiveness cease to be a Bank party to the Agreement, and
all accrued fees and other amounts payable under the Agreement for the account
of such Bank shall be due and payable on such date; provided that the
provisions of Section 9.03 of the Agreement shall
--------
continue to inure to the benefit of each such Bank.
SECTION 4. Governing Law. This Amended and Restated Credit
--------------
Agreement shall be governed by and construed in accordance with the laws of
the State of New York.
SECTION 5. Counterparts; Effectiveness. This Amended and
----------------------------
Restated Credit Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Amended and Restated Credit
Agreement shall become effective as of the date hereof when the Agent shall
have received duly executed counterparts hereof signed by the Borrower and the
Banks (or, in the case of any party as to which an executed counterpart shall
not have been received, the Agent shall have received telegraphic, telex or
other written confirmation from such party of execution of a counterpart
hereof by such party).
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Credit Agreement to be duly executed as of the date first above
written.
TOYOTA MOTOR CREDIT CORPORATION
By /S/ WOLFGANG JAHN
----------------------------
Title: Senior Vice President
and General Manager
Commitments
- -----------
$100,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /S/ KEVIN J. O'BRIEN
----------------------------
Title: Vice President
$100,000,000 BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION
By /S/ ALAN H. ROCHE
----------------------------
Title: Vice President
$100,000,000 THE BANK OF TOKYO-MITSUBISHI,
LTD., LOS ANGELES BRANCH
By /S/ TETSUJI KANO
----------------------------
Title: Deputy General Manager
$100,000,000 THE CHASE MANHATTAN BANK
By /S/ HIROSHI OHNO
---------------------------
Title: Vice President
3
<PAGE>
$100,000,000 CITICORP USA, INC.
By /S/ ALLEN B. MACOMBER
----------------------------
Title: Global Risk Manager
$100,000,000 CREDIT SUISSE
By /S/ MARK A. SAMPSON
----------------------------
Title: Associate
By /S/ MARILOU PALENZUELA
----------------------------
Title: Member of Senior
Management
$40,000,000 ABN AMRO BANK N.V.
LOS ANGELES INTERNATIONAL BRANCH
By: ABN AMRO North America, Inc.,
as Agent
By /S/ ELLEN M. COLEMAN
----------------------------
Title: Vice President/Director
By /S/ PAUL K. STIMPFL
----------------------------
Title: Vice President
4
<PAGE>
$40,000,000 BANQUE PARIBAS
By /S/ LYNNE A. LUEDERS
----------------------------
Title: Vice President
By /S/ HARRY COLLYNS
----------------------------
Title: Vice President
$40,000,000 BARCLAYS BANK PLC
By /S/ KEITH MACKIE
----------------------------
Title: Director
$40,000,000 DEUTSCHE BANK AG LOS ANGELES
AND/OR CAYMAN ISLANDS BRANCHES
By /S/ OLAF JANKE
----------------------------
Title: Associate
By /S/ J. SCOTT JESSUP
----------------------------
Title: Vice President
$40,000,000 THE LONG-TERM CREDIT BANK
OF JAPAN, LTD., LOS ANGELES AGENCY
By /S/ NOBORU AKAHANE
----------------------------
Title: Deputy General Manager
5
<PAGE>
$40,000,000 THE SAKURA BANK, LIMITED
LOS ANGELES AGENCY
By /S/ DAIJIRO TSUCHIYA
----------------------------
Title: General Manager
$40,000,000 THE SANWA BANK, LIMITED
By /S/ NOBUO KATSUMATA
----------------------------
Title: Assistant Vice President
$40,000,000 SWISS BANK CORPORATION,
NEW YORK BRANCH
By /S/ STEPHANIE W. KIM
----------------------------
Title: Associate Director
By /S/ THOMAS R. SALZANO
----------------------------
Title: Associate Director
Banking Finance Support,
N.A.
$40,000,000 THE TOKAI BANK, LIMITED
LOS ANGELES AGENCY
By /S/ TAKASHI KAWAGUCHI
----------------------------
Title: Assistant General
Manager
6
<PAGE>
$40,000,000 UNION BANK OF SWITZERLAND,
NEW YORK BRANCH
By /S/ C. C. GLOCKLER
----------------------------
Title: Vice President
By /S/ SEIICHI SHINOMIYA
----------------------------
Title: Vice President
- -----------------
Total Commitments
$1,000,000,000
==============
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /S/ KEVIN J. O'BRIEN
----------------------------
Title: Vice President
7
<PAGE>
Exhibit 10.9(e)
[EXECUTION COPY]
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of September 24, 1996
among TOYOTA MOTOR CREDIT CORPORATION (the "Borrower"), the BANKS listed on
the signature pages hereof (the "Banks") and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent (the "Agent").
W I T N E S E T H :
WHEREAS, the parties hereto have heretofore entered into a 364-Day
Credit Agreement dated as of September 29, 1994, as amended by Amendment No. 1
to Credit Agreement dated as of September 28, 1995 (the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement as set
forth herein and to restate the Agreement in its entirety to read as set forth
in the Agreement with the amendments specified below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
------------------------
specifically defined herein, each term used herein which is defined in the
Agreement shall have the meaning assigned to such term in the Agreement. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other
similar reference and each reference to "this Agreement" and each other
similar reference contained in the Agreement shall from and after the date
hereof refer to the Agreement as amended hereby.
SECTION 2. Amendment of the Agreement.
---------------------------
(a) Each reference to "1994" in the definition of "Borrower's 1994
Form 10-K" and in Section 4.04(a) is changed to "1995".
(b) Each reference to "1995" in the definition of "Borrower's
Latest Form 10-Q" and in Sections 4.04(b) and (c) is changed to "1996".
(c) The date "September 27, 1996" appearing in the definition of
"Termination Date" is changed to "September 23, 1997".
(d) The definition of "CD Margin" in Section 2.07(b) is amended to
read as follows:
"CD Margin" means 0.245% per annum.
(e) The term "Euro-Dollar Margin" in Section 2.07(c) is amended to
read as follows:
"Euro-Dollar Margin" means 0.12% per annum.
<PAGE>
(f) The first sentence of Section 2.08 is amended to read in its
entirety as follows:
The Borrower shall pay to the Agent for the account of the Banks
ratably a facility fee at the rate of 0.03% per annum.
SECTION 3. Changes in Commitments. With effect from and
-----------------------
including the date this Amended and Restated Credit Agreement becomes
effective in accordance with Section 5 hereof, the Commitment of each Bank
shall be the amount set forth opposite the name of such Bank on the signature
pages hereof, as such amount may be reduced from time to time pursuant to
Section 2.09 of the Agreement. Any Bank whose commitment is changed to zero
shall upon such effectiveness cease to be a Bank party to the Agreement, and
all accrued fees and other amounts payable under the Agreement for the account
of such Bank shall be due and payable on such date; provided that the
provisions of Section 9.03 of the Agreement shall
--------
continue to inure to the benefit of each such Bank.
SECTION 4. Governing Law. This Amended and Restated Credit
--------------
Agreement shall be governed by and construed in accordance with the laws of
the State of New York.
SECTION 5. Counterparts; Effectiveness. This Amended and
----------------------------
Restated Credit Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Amended and Restated Credit
Agreement shall become effective as of the date hereof when the Agent shall
have received duly executed counterparts hereof signed by the Borrower and the
Banks (or, in the case of any party as to which an executed counterpart shall
not have been received, the Agent shall have received telegraphic, telex or
other written confirmation from such party of execution of a counterpart
hereof by such party).
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Credit Agreement to be duly executed as of the date first above
written.
TOYOTA MOTOR CREDIT CORPORATION
By /S/ WOLFGANG JAHN
----------------------------
Title: Senior Vice President
and General Manager
Commitments
- -----------
$100,000,00 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /S/ KEVIN J. O'BRIEN
----------------------------
Title: Vice President
$100,000,000 BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION
By /S/ ALAN H. ROCHE
----------------------------
Title: Vice President
$100,000,000 THE BANK OF TOKYO-MITSUBISHI,
LTD., LOS ANGELES BRANCH
By /S/ TETSUJI KANO
----------------------------
Title: Deputy General Manager
$100,000,000 THE CHASE MANHATTAN BANK
By /S/ HIROSHI OHNO
----------------------------
Title: Vice President
3
<PAGE>
$100,000,000 CITICORP USA, INC.
By /S/ ALLEN B. MACOMBER
----------------------------
Title: Global Risk Manager
$100,000,000 CREDIT SUISSE
By /S/ MARK A. SAMPSON
----------------------------
Title: Associate
By /S/ MARILOU PALENZUELA
----------------------------
Title: Member of Senior
Management
$40,000,000 ABN AMRO BANK N.V.
LOS ANGELES INTERNATIONAL BRANCH
By: ABN AMRO North America, Inc.,
as Agent
By /S/ ELLEN M. COLEMAN
----------------------------
Title: Vice President/Director
By /S/ PAUL K. SHAMPFL
----------------------------
Title: Vice President
4
<PAGE>
$40,000,000 BANQUE PARIBAS
By /S/ LYNNE A. LUEDERS
----------------------------
Title: Vice President
By /S/ HARRY COLLYNS
----------------------------
Title: Vice President
$40,000,000 BARCLAYS BANK PLC
By /S/ KEITH MACKIE
----------------------------
Title: Director
$40,000,000 DEUTSCHE BANK AG LOS ANGELES
AND/OR CAYMAN ISLANDS BRANCHES
By /S/ OLAF JANKE
----------------------------
Title: Associate
By /S/ J. SCOTT JESSUP
----------------------------
Title: Vice President
$40,000,000 THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES AGENCY
By /S/ NOBORU AKAHANE
----------------------------
Title: Deputy General Manager
5
<PAGE>
$40,000,000 THE SAKURA BANK, LIMITED
LOS ANGELES AGENCY
By /S/ DAIJIRO TSUCHIYA
----------------------------
Title: General Manager
$40,000,000 THE SANWA BANK, LIMITED
By /S/ NOBUO KATSUMATA
----------------------------
Title: Assistant Vice President
$40,000,000 SWISS BANK CORPORATION,
NEW YORK BRANCH
By /S/ STEPHANIE W. KIM
----------------------------
Title: Associate Director
By /S/ THOMAS R. SALZANO
----------------------------
Title: Associate Director
Banking Finance Support,
N.A.
$40,000,000 THE TOKAI BANK, LIMITED
LOS ANGELES AGENCY
By /S/ TAKASHI KAWAGUCHI
----------------------------
Title: Assistant General
Manager
6
<PAGE>
$40,000,000 UNION BANK OF SWITZERLAND,
NEW YORK BRANCH
By /S/ C. C. GLOCKLER
----------------------------
Title: Vice President
By /S/ SEIICHI SHINOMIYA
----------------------------
Title: Vice President
____________________
Total Commitments
$1,000,000,000
==============
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /S/ KEVIN J. O'BRIEN
----------------------------
Title: Vice President
7
<PAGE>
EXHIBIT 12.1
TOYOTA MOTOR CREDIT CORPORATION
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Years Ended September 30,
------------------------------------------
1996 1995 1994 1993 1992
------ ------ ---- ---- ----
(Dollars in Millions)
<S> <C> <C> <C> <C> <C>
Consolidated income
before income taxes...... $ 260 $ 300 $293 $255 $175
------ ------ ---- ---- ----
Fixed Charges
Interest................. 819 716 486 454 450
Portion of rent expense
representative of the
interest factor (deemed
to be one-third)....... 3 2 3 3 2
------ ------ ---- ---- ----
Total fixed charges......... 822 718 489 457 452
------ ------ ---- ---- ----
Earnings available
for fixed charges........ $1,082 $1,018 $782 $712 $627
====== ====== ==== ==== ====
Ratio of earnings to
fixed charges<F1>........ 1.32 1.42 1.60 1.56 1.39
==== ==== ==== ==== ====
<FN>
-----------------
<F1> In March 1987, TMCC guaranteed payments of principal and interest on
$58 million principal amount of bonds issued in connection with the
Kentucky manufacturing facility of an affiliate. As of September 30,
1996, TMCC has not incurred any fixed charges in connection with such
guarantee and no amount is included in any ratio of earnings to fixed
charges. The ratio of earnings to fixed charges for TMS and
subsidiaries was 1.49, 1.74, 1.90, 2.07 and 1.83 for the years ended
September 30, 1996, 1995, 1994, 1993 and 1992, respectively.
</FN>
/TABLE
<PAGE>
<PAGE>
EXHIBIT 21.1
TOYOTA MOTOR CREDIT CORPORATION
LIST OF SUBSIDIARIES
State of
Subsidiary Incorporation
- ---------- -------------
Toyota Motor Insurance Services, Inc. California
Toyota Motor Insurance Agency of Ohio, Inc. Ohio
Toyota Motor Insurance Services of Kentucky, Inc. Kentucky
Toyota Motor Insurance Services of Rhode Island, Inc. Rhode Island
Toyota Motor Insurance Services of Wyoming, Inc. Wyoming
Toyota Motor Insurance Corporation of Vermont Vermont
Toyota Motor Insurance Company Iowa
Toyota Motor Life Insurance Company Iowa
Toyota Motor Credit Receivables Corporation California
Toyota Credit De Puerto Rico Corp. California<PAGE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 33-52359)
of Toyota Motor Credit Corporation of our report dated October 31, 1996
appearing on page 19 of this Form 10-K.
/S/ PRICE WATERHOUSE LLP
Los Angeles, California
December 20, 1996<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TOYOTA MOTOR
CREDIT CORPORATION'S SEPTEMBER 30, 1996 FINANCIAL STATEMENTS AND NOTES THERETO
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 170
<SECURITIES> 325
<RECEIVABLES> 18,497<F1>
<ALLOWANCES> 203
<INVENTORY> 0
<CURRENT-ASSETS> 0<F2>
<PP&E> 0
<DEPRECIATION> 0<F3>
<TOTAL-ASSETS> 19,308
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 15,014
0
0
<COMMON> 915
<OTHER-SE> 998
<TOTAL-LIABILITY-AND-EQUITY> 19,308
<SALES> 0
<TOTAL-REVENUES> 3,114
<CGS> 0
<TOTAL-COSTS> 2,446<F3>
<OTHER-EXPENSES> 293
<LOSS-PROVISION> 115
<INTEREST-EXPENSE> 0<F3>
<INCOME-PRETAX> 260
<INCOME-TAX> 108
<INCOME-CONTINUING> 152
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 152
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Receivables include Investments in Operating Leases net of Accumulated
Depreciation and Finance Receivables net of Unearned Income.
<F2>Toyota Motor Credit Corporation's Balance Sheet is not classified into Current
and Long-Term Assets and Liabilities.
<F3>Total Costs includes Interest Expense and Depreciation on Operating Leases.
</FN>
</TABLE>
