<PAGE>
PROSPECTUS SUPPLEMENT
(To Prospectus dated September 3, 1998)
[LOGO]
$2,031,395,000
TOYOTA MOTOR CREDIT CORPORATION
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
-----------------
Toyota Motor Credit Corporation ("TMCC") may offer from time to time up to
$2,031,395,000 aggregate principal amount (except that with respect to Notes
sold at a discount to face, the initial offering price will be used, and with
respect to Notes issued at a premium to face, the face amount shall be used), or
the equivalent thereof in one or more foreign or composite currencies, of its
Medium-Term Notes (the "Notes"). Such Notes are in addition to approximately
$6,968,605,000 aggregate principal amount of TMCC's Medium-Term Notes that were
issued prior to the date of this Prospectus Supplement. Each Note will mature on
a Business Day nine months or more from the date of issue, as selected by the
purchaser and agreed to by TMCC, and may be subject to redemption by TMCC or
repayment at the option of the Holder thereof, in each case, in whole or in
part, prior to its Stated Maturity, as set forth therein and specified in a
pricing supplement hereto (each, a "Pricing Supplement").
The interest rate, if any, or the formula for the determination of any such
interest rate, applicable to each Note, the formula, if any, for determining the
principal amount payable upon maturity of each Note and other variable terms of
the Notes as described herein will be established by TMCC at the date of issue
of such Note and will be set forth therein and specified in a Pricing
Supplement. Interest rates, interest rate and/or principal formulae and such
other variable terms are subject to change by TMCC, but no change will affect
any Note already issued or as to which an offer to purchase has been accepted by
TMCC. Each Note will be issued in fully registered book-entry form (a
"Book-Entry Note") or definitive form (a "Definitive Note"), as set forth in the
applicable Pricing Supplement, in denominations of $1,000 and integral multiples
thereof, unless otherwise specified in the applicable Pricing Supplement. Each
Book-Entry Note will be represented by a global security deposited with or on
behalf of The Depository Trust Company (or such other depositary as is
identified in an applicable Pricing Supplement) (the "Depositary") and
registered in the name of the Depositary or the Depositary's nominee. Interests
in Book-Entry Notes will be shown on, and transfers thereof will be effected
only through, records maintained by the Depositary (with respect to its
participants) and the Depositary's participants (with respect to beneficial
owners). See "Description of Notes--Book-Entry Notes."
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE NOTES, SEE "RISK FACTORS" STARTING ON PAGE S-2.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT, THE PROSPECTUS OR ANY SUPPLEMENT HERETO. ANY
REPRE SENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
PRICE TO PROCEEDS TO
PUBLIC(1) AGENTS' DISCOUNTS AND TMCC(2)(4)
COMMISSIONS(2)(3)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note................... 100% .125% - .750% 99.875% - 99.250%
- ---------------------------------------------------------------------------------------------------------------------------------
Total(5)................... $2,031,395,000 $2,539,244 - $15,235,462 $2,028,855,756 - $2,016,159,538
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Unless otherwise specified in an applicable Pricing Supplement, the Notes
will be issued at 100% of their principal amount.
(2) TMCC will pay a commission ranging from .125% to .750% (or, with respect to
Notes for which the Stated Maturity is in excess of 30 years, such
commission as shall be agreed upon by TMCC and the related Agent at the time
of sale) of the principal amount of a Note, depending upon its Stated
Maturity, to Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Goldman, Sachs & Co., Lehman Brothers Inc., J.P. Morgan
Securities Inc., Morgan Stanley & Co. Incorporated and Salomon Smith Barney
Inc. (each, an "Agent" and collectively, the "Agents") and may sell Notes to
an Agent, as principal, for resale to investors and other purchasers at a
fixed public offering price or at varying prices related to prevailing
market prices at the time of resale, in either case as determined by such
Agent.
(3) TMCC has agreed to indemnify the Agents against, and to provide contribution
with respect to, certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Plan of Distribution."
(4) Before deducting expenses payable by TMCC estimated at $1,548,500.
(5) Or the equivalent thereof in one or more foreign or composite currencies.
---------------------------
The Notes are being offered on a continuing basis by TMCC through the
Agents, who have agreed to use their reasonable efforts to solicit offers to
purchase the Notes. TMCC may also sell Notes to an Agent, as principal, for
resale to investors and other purchasers and has reserved the right to sell
Notes to or through additional agents and directly to investors on its own
behalf. Unless otherwise specified in an applicable Pricing Supplement, the
Notes will not be listed on any securities exchange and there can be no
assurance that the Notes offered by this Prospectus Supplement will be sold or
that there will be a secondary market for the Notes. TMCC reserves the right to
cancel or modify the offer made hereby without notice. TMCC or an Agent, if it
solicits the offer, may reject any offer to purchase Notes in whole or in part.
See "Plan of Distribution."
---------------------------
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
---------------------------
The date of this Prospectus Supplement is September 3, 1998.
<PAGE>
RISK FACTORS
THIS PROSPECTUS SUPPLEMENT DOES NOT DESCRIBE ALL OF THE RISKS OF AN
INVESTMENT IN NOTES, WHETHER RESULTING FROM SUCH NOTES BEING DENOMINATED OR
PAYABLE IN OR DETERMINED BY REFERENCE TO A CURRENCY OR COMPOSITE CURRENCY OTHER
THAN UNITED STATES DOLLARS OR TO ONE OR MORE INTEREST RATES, CURRENCIES OR OTHER
INDICES OR FORMULAS, OR OTHERWISE. TMCC AND THE AGENTS DISCLAIM ANY
RESPONSIBILITY TO ADVISE PROSPECTIVE INVESTORS OF SUCH RISKS AS THEY EXIST AT
THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS THEY CHANGE FROM TIME TO TIME.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS
TO THE RISKS ENTAILED BY AN INVESTMENT IN SUCH NOTES AND THE SUITABILITY OF
INVESTING IN SUCH NOTES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES. SUCH NOTES
ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH
RESPECT TO FOREIGN CURRENCY TRANSACTIONS OR TRANSACTIONS INVOLVING THE
APPLICABLE INTEREST RATE OR CURRENCY INDEX OR OTHER INDICES OR FORMULAS.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER, AMONG OTHER FACTORS, THE
MATTERS DESCRIBED BELOW. IN ADDITION, ADDITIONAL RISK FACTORS RELATING TO A
PARTICULAR ISSUANCE OF NOTES MAY BE DESCRIBED IN THE PRICING SUPPLEMENT RELATING
THERETO.
STRUCTURE RISKS
An investment in Notes with principal or interest determined by reference to
one or more interest rates, currencies (including exchange rates and swap
indices between currencies or currency units), commodities or other indices,
either directly or inversely, entails significant risks not associated with an
investment in a conventional fixed or floating rate debt security. Such risks
include, without limitation, the possibility that such index or indices may be
subject to significant changes, that the resulting interest rate will be less
than that payable on a conventional fixed or floating rate debt security issued
by TMCC at the same time or that no interest will be payable, that the repayment
of principal can occur at times other than that expected by the investor, and
that the investor could lose all or a substantial portion of the principal of
its Note (whether payable at maturity or upon redemption). Such risks depend on
a number of interrelated factors, including financial, economic and political
events, over which TMCC has no control. In addition, if the formula used to
determine the amount of principal or interest payable with respect to a Note
contains a multiple or leverage factor, the effect of any change in such index
or indices will be magnified. In recent years, certain interest rates and other
indices have been highly volatile and such volatility may be expected to
continue in the future. The historical experience of any particular interest
rate or other index should not be taken as an indication of future performance
of such indices during the term of any Note.
Any optional redemption feature of the Notes might affect the market value
of such Notes. Since TMCC may be expected to redeem the Notes when prevailing
interest rates are relatively low, an investor might not be able to reinvest the
redemption proceeds at an effective interest rate as high as the interest rate
on such Notes.
The Notes may not have an established trading market when issued. There can
be no assurance of a secondary market for the Notes or the continued liquidity
of such market if one develops. The secondary market for the Notes will be
affected by a number of factors independent of the creditworthiness of TMCC and
the value of any applicable index or indices, which may include the complexity
and volatility of such index or indices, the method of calculating the principal
or any interest to be paid in respect of such Notes, the time remaining to the
maturity of such Notes, the outstanding amount of such Notes, any redemption
features of such Notes, the amount of other securities linked to such index or
indices and the level, direction and volatility of market interest rates
generally. Such factors also will affect the market value of the Notes. In
addition, certain Notes may be designed for specific investment objectives or
strategies and therefore may have a more limited secondary market and experience
more price volatility than conventional debt securities. Investors may not be
able to sell Notes readily or at prices that will enable investors to realize
their anticipated yield. No investor should purchase Notes unless such investor
understands and is able to bear the risk that certain Notes may not be readily
saleable, that the value of Notes will fluctuate over time and that such
fluctuations may be significant. The prices at which Notes issued at a
substantial discount from their principal amount payable at maturity trade in
the secondary market tend to fluctuate
S-2
<PAGE>
more in relation to general changes in interest rates than do such prices for
conventional interest-bearing securities of comparable maturities.
Investors whose investment activities are subject to legal investment laws
and regulations or to review or regulation by certain authorities may be subject
to restrictions on investments in certain types of debt securities. Investors
should review and consider restrictions prior to investing in the Notes.
ILLIQUIDITY OF NOTES; SECONDARY TRADING IN THE NOTES
No Note will have an established trading market when issued. Unless
otherwise specified in the applicable Pricing Supplement, the Notes will not be
listed on any securities exchange. Each of the Agents may from time to time
purchase and sell Notes in the secondary market, but no Agent is obligated to do
so, and there can be no assurance that there will be a secondary market for the
Notes or liquidity in the secondary market if one develops. From time to time,
each of the Agents may make a market in the Notes but are not obligated to do
so, and any market making may be discontinued at any time. In addition, even if
a secondary market develops for any Notes, transaction costs may be high. As a
result, the spread between bid and asked prices for Notes may be substantial.
DESCRIPTION OF NOTES
The Notes will be issued as a series of debt securities under an Indenture,
dated as of August 1, 1991, as amended by the First Supplemental Indenture,
dated as of October 1, 1991 (the "Indenture"), between TMCC, The Chase Manhattan
Bank and Bankers Trust Company. Bankers Trust Company will act as trustee with
respect to the Notes (the "Trustee"). The following summary of certain
provisions of the Notes and of the Indenture does not purport to be complete and
is qualified in its entirety by reference to the Indenture, a copy of which has
been filed as an exhibit to the Registration Statement of which this Prospectus
Supplement and the accompanying Prospectus are a part. Capitalized terms used
but not defined herein have the meanings given to them in the Indenture or the
Notes, as the case may be. The term "Debt Securities," as used under this
caption, refers to all securities issued and issuable from time to time under
the Indenture and includes the Notes. The following description of Notes will
apply unless otherwise specified in an applicable Pricing Supplement.
GENERAL
All Debt Securities, including the Notes, issued and to be issued under the
Indenture will be unsecured general obligations of TMCC and will rank PARI PASSU
with all other unsecured and unsubordinated indebtedness of TMCC from time to
time outstanding. The Indenture does not limit the aggregate principal amount of
Debt Securities which may be issued thereunder and Debt Securities may be issued
thereunder from time to time as a single series or in two or more separate
series up to the aggregate principal amount from time to time authorized by TMCC
for each series. Prior to the date of this Prospectus Supplement, TMCC has
issued approximately $6,968,605,000 aggregate principal amount of Notes under
the Indenture, $980,200,000 of which was outstanding as of September 3, 1998.
TMCC may, from time to time, without the consent of the Holders of the Notes,
provide for the issuance of Notes or other Debt Securities under the Indenture
in addition to the $2,031,395,000 aggregate principal amount of Notes offered
hereby and the Notes previously issued.
The Notes are currently limited to $9,000,000,000 aggregate principal amount
(except that with respect to Notes sold at a discount to face, the initial
offering price will be used, and with respect to Notes issued at a premium to
face, the face amount shall be used) of which approximately $6,968,605,000
aggregate principal amount have previously been issued. The Notes will be
offered on a continuing basis and will mature on a day nine months or more from
the date of issue, as selected by the purchaser and agreed to by TMCC. Unless
otherwise specified in an applicable Pricing Supplement, interest-bearing Notes
will bear interest at fixed rates (the "Fixed Rate Notes") or at floating rates
(the "Floating Rate Notes"). Notes may be issued at a premium, or at significant
discounts from their principal amount payable at Stated Maturity (or on any
prior date on which the principal or an installment of principal of a Note
S-3
<PAGE>
becomes due and payable, whether by the declaration of acceleration, call for
redemption at the option of TMCC, repayment at the option of the Holder or
otherwise) (each such date, a "Maturity"), and some Notes may not bear interest.
The applicable Pricing Supplement will specify whether a Floating Rate Note
is a Regular Floating Rate/Fixed Rate Note or Inverse Floating Rate Note or
whether its rate of interest is determined by reference to one or more of the CD
Rate, the CMT Rate, the Commercial Paper Rate, the Eleventh District Cost of
Funds Rate, the Federal Funds Rate, LIBOR, the Prime Rate or the Treasury Rate
(each, an "Interest Rate Basis"), or any other interest rate formula, as
adjusted by any Spread and/or Spread Multiplier and will specify such other
terms applicable to such Note. See "Description of Notes." Interest on Fixed
Rate Notes will accrue from their date of issue and, unless otherwise specified
in the applicable Pricing Supplement, will be payable semiannually in arrears on
May 15 and November 15 of each year and at Maturity. Unless otherwise specified
in an applicable Pricing Supplement, the rate of interest on each Floating Rate
Note will be reset daily, weekly, monthly, quarterly, semiannually or annually,
as specified in the applicable Pricing Supplement, and interest on each Floating
Rate Note will accrue from its date of issue and will be payable in arrears
monthly, quarterly, semiannually or annually, as specified in the applicable
Pricing Supplement, and at Maturity. Notes may also be issued with original
issue discount, and such Notes may or may not currently pay interest.
Unless otherwise indicated in a Note or in a foreign currency supplement
hereto (a "Multi-Currency Supplement") or Indexed Note (as defined below)
supplement hereto (an "Indexed Note Supplement"), the Notes will be denominated
in United States dollars and payments of principal of, and premium, if any, and
interest on, the Notes will be made in United States dollars. If any of the
Notes are to be denominated other than in United States dollars or if the
principal of, and interest on, the Notes, and any premium provided for in any
Note, is to be payable in or by reference to a currency (or in composite
currency units or in amounts determined by reference to one or more currencies)
other than that in which such Note is denominated, provisions with respect
thereto will be set forth in such Note and in the applicable Multi-Currency
Supplement or Indexed Note Supplement.
Interest rates, interest rate and/or principal formulae and other variable
terms of the Notes are subject to change by TMCC from time to time, but no such
change will affect any Note already issued or as to which an offer to purchase
has been accepted by TMCC.
Each Note will be issued in fully registered book-entry form (a "Book-Entry
Note") or definitive form (a "Definitive Note"), in denominations of $1,000 and
integral multiples thereof, unless otherwise specified in the applicable Pricing
Supplement. Book-Entry Notes may be transferred or exchanged only through a
participating member of The Depository Trust Company (or such other depositary
as is identified in an applicable Pricing Supplement) (the "Depositary"). See
"Book-Entry Notes." Registration of transfer of Definitive Notes will be made at
the Corporate Trust Office of the Trustee. No service charge will be made by
TMCC, the Trustee or the Security Registrar for any such registration of
transfer or exchange of Notes, but TMCC may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith
(other than exchanges pursuant to the Indenture, not involving any transfer).
Payments of principal of, and premium and interest, if any, on Book-Entry
Notes will be made by TMCC through the Trustee to the Depositary. See
"Book-Entry Notes." In the case of Definitive Notes, payment of principal or
premium, if any, at the Maturity of each Definitive Note will be made in
immediately available funds upon presentation of the Definitive Note at the
Corporate Trust Office of the Trustee in the Borough of Manhattan, The City of
New York, or at such other place as TMCC may designate. Payment of interest due
at Maturity will be made to the person to whom payment of the principal of the
Definitive Note shall be made. Payment of interest due on Definitive Notes other
than at Maturity will be made at the Corporate Trust Office of the Trustee or,
at the option of TMCC, may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the
S-4
<PAGE>
Security Register. Notwithstanding the foregoing, a Holder of $10,000,000 or
more in aggregate principal amount of Definitive Notes having the same Interest
Payment Dates will, at the option of TMCC, be entitled to receive interest
payments (other than at Maturity) by wire transfer of immediately available
funds if appropriate wire transfer instructions have been received in writing by
the Trustee not less than 15 days prior to the applicable Interest Payment Date.
Any such wire transfer instructions received by the Trustee shall remain in
effect until revoked by such Holder.
TRANSACTION AMOUNTS
Interest rates offered by TMCC with respect to the Notes may differ
depending upon the aggregate principal amount of Notes purchased in any single
transaction. TMCC expects generally to distinguish, with respect to such offered
rates, between purchases which are for less than, and purchases which are equal
to or greater than, $250,000. Such different rates may be offered concurrently
at any time. TMCC may also concurrently offer Notes having different variable
terms (as are described herein or in the applicable Pricing Supplement) to
different investors, and such different offers may depend upon whether an
offered purchase is for an aggregate principal amount of Notes at least equal to
or for an amount less than $250,000.
REDEMPTION
Unless otherwise specified in an applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. If provided in an applicable Pricing
Supplement, Notes may be subject to redemption, in whole or in part, prior to
their Stated Maturity at the option of TMCC on notice given not more than 60 nor
less than 30 days prior to the date of redemption, or through operation of a
mandatory or optional sinking fund or analogous provisions. Such Pricing
Supplement will set forth the detailed terms of such redemption, including, but
not limited to, the date after or on which and the price or prices (including
premium, if any) at which such Notes may be redeemed.
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to repayment at the option of the Holders.
INTEREST
GENERAL
Unless otherwise specified in an applicable Pricing Supplement, each Note
will bear interest from the date of issue at the rate per annum or, in the case
of a Floating Rate Note, pursuant to the interest rate formula stated therein
and in the applicable Pricing Supplement until the principal thereof is paid or
made available for payment. Unless otherwise specified in the applicable Pricing
Supplement, interest will be payable in arrears on each date specified in the
applicable Pricing Supplement on which an installment of interest is due and
payable (an "Interest Payment Date") and at Maturity. Unless otherwise specified
in an applicable Pricing Supplement, the first payment of interest on any Note
originally issued between a Regular Record Date and the related Interest Payment
Date will be made on the Interest Payment Date immediately following the next
succeeding Regular Record Date to the registered Holder on such next succeeding
Regular Record Date. Unless otherwise specified in an applicable Pricing
Supplement, a "Regular Record Date" shall be the fifteenth day (whether or not a
Business Day) immediately preceding the related Interest Payment Date.
FIXED RATE NOTES
Unless otherwise specified in an applicable Pricing Supplement, each Fixed
Rate Note will bear interest from, and including, the date of issue, or the most
recent date to which interest has been paid or duly provided for, to, but
excluding, the Interest Payment Date or Maturity, as the case may be, at the
rate per annum stated on the face thereof until the principal amount thereof is
paid or made available for payment. Unless otherwise specified in an applicable
Pricing Supplement, interest on Fixed Rate Notes will be computed on the basis
of a 360-day year of twelve 30-day months.
S-5
<PAGE>
Interest on Fixed Rate Notes will be payable semiannually in arrears on May
15 and November 15 of each year, unless otherwise specified in an applicable
Pricing Supplement, and at Maturity. If any Interest Payment Date or the
Maturity of a Fixed Rate Note falls on a day that is not a Business Day (as
defined below under "Description of Notes--Interest--Floating Rate Notes"), the
related payment of principal, premium, if any, 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
Interest Payment Date or Maturity, as the case may be.
FLOATING RATE NOTES
Unless otherwise specified in an applicable Pricing Supplement, Floating
Rate Notes will be issued as described below. Each applicable Pricing Supplement
will specify certain terms with respect to which such Floating Rate Note is
being delivered, including: whether such Floating Rate Note is a "Regular
Floating Rate Note" (as defined below), an "Inverse Floating Rate Note" (as
defined below) or a "Floating Rate/ Fixed Rate Note" (as defined below); the
Interest Rate Basis or Bases, Initial Interest Rate, Interest Reset Dates,
Interest Reset Period, Interest Payment Dates, Index Maturity, maximum interest
rate and minimum interest rate, if any, and the Spread and/or Spread Multiplier,
if any, and if one or more of the specified Interest Rate Bases is LIBOR, the
Index Currency and the Designated LIBOR Page, as described below.
The interest rate borne by the Floating Rate Notes will be determined as
follows:
(i) Unless such Floating Rate Note is designated as a "Floating
Rate/Fixed Rate Note," an "Inverse Floating Rate Note" or as having an
Addendum attached which specifies different or additional interest payment
terms, such Floating Rate Note will be designated as a "Regular Floating
Rate Note" and, except as described below or in an applicable Pricing
Supplement, bear interest at the rate determined by reference to the
applicable Interest Rate Basis (a) plus or minus the applicable Spread, if
any, and/or (b) multiplied by the applicable Spread Multiplier, if any.
Commencing on the Initial Interest Reset Date, the rate at which interest on
such Regular Floating Rate Note shall be payable shall be reset as of each
Interest Reset Date; provided, however, that the interest rate in effect for
the period from the Original Issue Date to the Initial Interest Reset Date
will be the Initial Interest Rate.
(ii) If such Floating Rate Note is designated as a "Floating Rate/Fixed
Rate Note," then, except as described below or in an applicable Pricing
Supplement, such Floating Rate Note will bear interest at the rate
determined by reference to the applicable Interest Rate Basis (a) plus or
minus the applicable Spread, if any, and/or (b) multiplied by the applicable
Spread Multiplier, if any. Commencing on the Initial Interest Reset Date,
the rate at which interest on such Floating Rate/Fixed Rate Note shall be
payable shall be reset as of each Interest Reset Date; provided, however,
that (x) the interest rate in effect for the period from the Original Issue
Date to the Initial Interest Reset Date will be the Initial Interest Rate;
and (y) unless otherwise specified in the applicable Pricing Supplement, the
interest rate in effect commencing on, and including, the Fixed Rate
Commencement Date to Maturity shall be the Fixed Interest Rate, if such rate
is specified in the applicable Pricing Supplement, or if no such Fixed
Interest Rate is so specified, the interest rate in effect thereon on the
day immediately preceding the Fixed Rate Commencement Date.
(iii) If such Floating Rate Note is designated as an "Inverse Floating
Rate Note," then, except as described below or in an applicable Pricing
Supplement, such Floating Rate Note will bear interest equal to the Fixed
Interest Rate specified in the related Pricing Supplement minus the rate
determined by reference to the Interest Rate Basis (a) plus or minus the
applicable Spread, if any, and/or (b) multiplied by the applicable Spread
Multiplier, if any; provided, however, that the interest rate thereon will
not be less than zero. Commencing on the Initial Interest Reset Date, the
rate at which interest on such Inverse Floating Rate Note is payable shall
be reset as of each Interest Reset Date;
S-6
<PAGE>
provided, however, that the interest rate in effect for the period from the
Original Issue Date to the Initial Interest Reset Date will be the Initial
Interest Rate.
Notwithstanding the foregoing, if such Floating Rate Note is designated as
having an Addendum attached as specified on the face thereof which Addendum
specifies different or additional interest payment terms, such Floating Rate
Note shall bear interest in accordance with the terms described in such Addendum
and the applicable Pricing Supplement.
Unless otherwise provided in the applicable Pricing Supplement, each
Interest Rate Basis shall be the rate determined in accordance with the
applicable provisions below. Except as set forth above or in an applicable
Pricing Supplement, the interest rate in effect on each day shall be (a) if such
day is an Interest Reset Date, the interest rate determined on the Interest
Determination Date (as defined below) immediately preceding such Interest Reset
Date or (b) if such day is not an Interest Reset Date, the interest rate
determined on the Interest Determination Date immediately preceding the next
preceding Interest Reset Date.
Interest on Floating Rate Notes will be determined by reference to an
"Interest Rate Basis," which may be one or more of (i) the "CD Rate," (ii) the
"CMT Rate," (iii) the "Commercial Paper Rate," (iv) the "Eleventh District Cost
of Funds Rate," (v) the "Federal Funds Rate," (vi) "LIBOR," (vii) the "Prime
Rate," (viii) the "Treasury Rate," or (ix) such other Interest Rate Basis or
interest rate formula as may be set forth in the applicable Pricing Supplement;
provided, however, that with respect to a Floating Rate/Fixed Rate Note, the
interest rate commencing on the Fixed Rate Commencement Date and continuing,
unless otherwise specified in the applicable Pricing Supplement, until Maturity
shall be the Fixed Interest Rate, if such rate is specified in the applicable
Pricing Supplement, or if no such Fixed Interest Rate is so specified, the
interest rate in effect thereon on the day immediately preceding the Fixed Rate
Commencement Date. In addition, a Floating Rate Note may bear interest in
respect of the lowest of two or more Interest Rate Bases.
The "Spread" is the number of basis points to be added to or subtracted from
the related Interest Rate Basis or Bases applicable to such Floating Rate Note.
The "Spread Multiplier" is the percentage of the related Interest Rate Basis or
Bases applicable to such Floating Rate Note by which such Interest Rate Basis or
Bases will be multiplied to determine the applicable interest rate on such
Floating Rate Note. The "Index Maturity" is the period to maturity of the
instrument or obligation with respect to which the Interest Rate Basis or Bases
will be calculated. The Spread, Spread Multiplier, Index Maturity and other
variable terms of the Floating Rate Notes are subject to change by TMCC from
time to time, but no such change will affect any Floating Rate Note previously
issued or as to which an offer has been accepted by TMCC.
Each applicable Pricing Supplement will specify whether the rate of interest
on the related Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually, annually or such other specified period (each, an
"Interest Reset Period") and the dates on which such Interest Rate will be reset
(each, an "Interest Reset Date"). Unless otherwise specified in the applicable
Pricing Supplement, the Interest Reset Date will be, in the case of Floating
Rate Notes which reset: (i) daily, each Business Day; (ii) weekly, the Wednesday
of each week (with the exception of weekly reset Treasury Rate Notes which will
reset the Tuesday of each week, except as specified below); (iii) monthly, the
third Wednesday of each month (with the exception of Eleventh District Cost of
Funds Rate Notes, all of which reset monthly, which will reset on the first
calendar day of the month); (iv) quarterly, the third Wednesday of March, June,
September and December of each year; (v) semiannually, the third Wednesday of
the two months specified in the applicable Pricing Supplement; and (vi)
annually, the third Wednesday of the month specified in the applicable Pricing
Supplement; provided however, that, with respect to Floating Rate/Fixed Rate
Notes, the fixed rate of interest in effect for the period from the Fixed Rate
Commencement Date until Maturity shall be the Fixed Interest Rate or the
interest rate in effect on the day immediately preceding the Fixed Rate
Commencement Date, as specified in the applicable Pricing Supplement. If any
Interest Reset Date
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for any Floating Rate Note would otherwise be a day that is not a Business Day,
such Interest Reset Date will be postponed to the next succeeding day that is a
Business Day, except that in the case of a Floating Rate Note as to which LIBOR
is an applicable Interest Rate Basis, if such Business Day falls in the next
succeeding calendar month, such Interest Reset Date will be the immediately
preceding Business Day. As used herein, "Business Day" means, unless otherwise
specified in the applicable Pricing Supplement, any day other than a Saturday or
Sunday or any other day on which banks in the City of New York are generally
authorized or obligated by law or executive order to close and, with respect to
Notes as to which LIBOR is an applicable Interest Rate Basis, is also a London
Business Day. As used herein, "London Business Day" means a day on which
dealings in the Index Currency (as hereinafter defined) are transacted in the
London interbank market.
A Floating Rate Note may also have either or both of the following: (i) a
maximum numerical limitation, or ceiling, on the rate at which interest may
accrue during any interest period and (ii) a minimum numerical limitation, or
floor, on the rate at which interest may accrue during any interest period. In
addition to any maximum interest rate that may be applicable to any Floating
Rate Note pursuant to the above provisions, the interest rate on Floating Rate
Notes will 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.
Each Floating Rate Note will bear interest from the date of issue at the
rates specified therein until the principal thereof is paid or otherwise made
available for payment. Except as provided below or in an applicable Pricing
Supplement, interest will be payable in the case of Floating Rate Notes which
reset: (i) daily, weekly or monthly, on the third Wednesday of each month or on
the third Wednesday of March, June, September and December of each year as
specified in the applicable Pricing Supplement; (ii) quarterly, on the third
Wednesday of March, June, September and December of each year; (iii)
semiannually, on the third Wednesday of the two months of each year specified in
the applicable Pricing Supplement; and (iv) annually, on the third Wednesday of
the month of each year specified in the applicable Pricing Supplement (each, an
"Interest Payment Date") and, in each case, at Maturity. If any Interest Payment
Date for any Floating Rate Note (other than an Interest Payment Date at
Maturity) would otherwise be a day that is not a Business Day, such Interest
Payment Date will be the next succeeding day that is a Business Day except that
in the case of a Floating Rate Note as to which LIBOR is an applicable Interest
Rate Basis, if such Business Day falls in the next succeeding calendar month,
such Interest Payment Date will be the immediately preceding Business Day. If
the Maturity of a Floating Rate Note falls on a day that is not a Business Day,
the payment of principal, premium, if any, and interest will be made on the next
succeeding Business Day, and no interest on such payment shall accrue for the
period from and after such Maturity.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded to the nearest one hundred-thousandth of a percentage point, with
five one millionths of a percentage point rounded upwards (E.G., 9.876545% (or
.09876545) would be rounded to 9.87655% (or .0987655)), and all dollar amounts
used in or resulting from such calculation on Floating Rate Notes will be
rounded to the nearest cent (with one-half cent being rounded upward).
Unless otherwise specified in the applicable Pricing Supplement, interest
payments on Floating Rate Notes will equal the amount of interest accrued from
and including the next preceding Interest Payment Date in respect of which
interest has been paid (or from and including the date of issue, if no interest
has been paid with respect to such Floating Rate Notes), to but excluding the
related Interest Payment Date; provided, however, that the interest payments on
Floating Rate Notes made at Maturity will include interest accrued to but
excluding the date of Maturity.
Except as otherwise specified in the applicable Pricing Supplement, each
Floating Rate Note will accrue interest on an "Actual/360" basis, an
"Actual/Actual" basis, or a "30/360" basis, in each case as specified in the
applicable Pricing Supplement. For Floating Rate Notes calculated on an
Actual/360 basis
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and Actual/Actual basis, accrued interest for each Interest Calculation Period
will be calculated by multiplying (i) the face amount of such Floating Rate
Note, (ii) the applicable interest rate, and (iii) the actual number of days in
the related Interest Calculation Period, and dividing the resulting product by
360 or 365, as applicable (or, with respect to an Actual/Actual basis Floating
Rate Note, if any portion of the related Interest Calculation Period falls in a
leap year, the product of (i) and (ii) above will be multiplied by the sum of
(X) the actual number of days in that portion of the related Interest
Calculation Period falling in a leap year divided by 366 and (Y) the actual
number of days in that portion of such Interest Calculation Period falling in a
non-leap year divided by 365). For Floating Rate Notes calculated on a 30/360
basis, accrued interest for an Interest Calculation Period will be computed on
the basis of a 360-day year of twelve 30-day months, irrespective of how many
days are actually in such Interest Calculation Period. Unless otherwise
specified in the related Pricing Supplement, with respect to any Floating Rate
Note that accrues interest on a 30/360 basis, if any Interest Payment Date or
the date of Maturity falls on a day that is not a Business Day, 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 Interest Payment Date
or Maturity, as the case may be. As used herein, "Interest Calculation Period"
means with respect to any period, the period from and including the most recent
Interest Reset Date (or from and including the original issue date in the case
of the first Interest Reset Date) to but excluding the next succeeding Interest
Reset Date for which accrued interest is being calculated. Unless otherwise
specified in an applicable Pricing Supplement, interest with respect to Notes
for which the interest rate is calculated with reference to two or more Interest
Rate Bases will be calculated in the same manner as if only one of the
applicable Interest Rate Bases applied.
The interest rate applicable to each Interest Reset Period commencing on the
Interest Reset Date with respect to such Interest Reset Period will be the rate
determined on the applicable "Interest Determination Date." Unless otherwise
specified in the applicable Pricing Supplement, the Interest Determination Date
with respect to the CD Rate, the CMT Rate, the Commercial Paper Rate, the
Federal Funds Rate and the Prime Rate will be the second Business Day preceding
each Interest Reset Date for the related Note; the Interest Determination Date
with respect to the Eleventh District Cost of Funds Rate will be the last
working day of the month immediately preceding each Interest Reset Date on which
the Federal Home Loan Bank of San Francisco (the "FHLB of San Francisco")
publishes the Index (as defined below); the Interest Determination Date with
respect to LIBOR will be the second London Business Day preceding each Interest
Reset Date. With respect to the Treasury Rate, unless otherwise specified in an
applicable Pricing Supplement, the Interest Determination Date will be the day
in the week in which the related Interest Reset Date falls on which day Treasury
Bills (as defined below) are normally auctioned (Treasury Bills are normally
sold at auction on Monday of each week, unless that day is a legal holiday, in
which case the auction is normally held on the following Tuesday, except that
such auction may be held on the preceding Friday); provided, however, that if an
auction is held on the Friday of the week preceding the related Interest Reset
Date, the related Interest Determination Date will be such preceding Friday; and
provided, further, that if an auction falls on any Interest Reset Date, then the
related Interest Reset Date will instead be the first Business Day following
such auction. Unless otherwise specified in the applicable Pricing Supplement,
the Interest Determination Date pertaining to a Floating Rate Note the interest
rate of which is determined with reference to two or more Interest Rate Bases
will be the latest Business Day which is at least two Business Days prior to
such Interest Reset Date for such Floating Rate Note on which each Interest Rate
Basis is determinable. Each Interest Rate Basis will be determined and compared
on such date, and the applicable interest rate will take effect on the related
Interest Reset Date.
Unless otherwise provided in the applicable Pricing Supplement, Bankers
Trust Company will be the "Calculation Agent." Upon request of the Holder of any
Floating Rate Note, the Calculation Agent will provide the interest rate then in
effect and, if determined, the interest rate that will become effective as a
result of a determination made for the next Interest Reset Date with respect to
such Floating Rate Note. Unless otherwise specified in the applicable Pricing
Supplement, the "Calculation Date," if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after such
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Interest Determination Date, or, if such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day preceding the applicable
Interest Payment Date or Maturity, as the case may be.
CD RATE NOTES. CD Rate Notes will bear interest at the rates (calculated
with reference to the CD Rate and the Spread and/or Spread Multiplier, if any)
specified in such CD Rate Notes and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date relating to a CD Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the CD Rate (a "CD Rate Interest Determination Date"), the rate on
such date for negotiable certificates of deposit having the Index Maturity
specified in the applicable Pricing Supplement as published by the Board of
Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates" or any successor publication ("H.15(519)") under the
heading "CDs (Secondary Market)," or, if not published by 3:00 P.M., New York
City time, on the related Calculation Date, the rate on such CD Rate Interest
Determination Date for negotiable certificates of deposit of the Index Maturity
specified in the applicable Pricing Supplement as published by the Federal
Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M.
Quotations for U.S. Government Securities" or any successor publication
("Composite Quotations") under the heading "Certificates of Deposit." If such
rate is not yet published in either H.15(519) or Composite Quotations by 3:00
P.M., New York City time, on the related Calculation Date, then the CD Rate on
such CD Rate Interest Determination Date will be calculated by the Calculation
Agent and will be the arithmetic mean of the secondary market offered rates as
of 10:00 A.M., New York City time, on such CD Rate Interest Determination Date,
of three leading nonbank dealers in negotiable United States dollar certificates
of deposit in the City of New York selected by the Calculation Agent for
negotiable certificates of deposit of major United States money market banks in
denominations of $5,000,000 with a remaining maturity closest to the Index
Maturity designated in the applicable Pricing Supplement in an amount that is
representative for a single transaction in that market at that time; provided,
however, that if the dealers so selected by the Calculation Agent are not
quoting as set forth above, the CD Rate with respect to such CD Rate Interest
Determination Date will be the CD Rate in effect on such CD Rate Interest
Determination Date.
CMT RATE NOTES. CMT Rate Notes will bear interest at the rates (calculated
with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any)
specified in such CMT Rate Notes and any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date relating to a CMT Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the CMT Rate (a "CMT Rate Interest Determination Date"), the rate
displayed on the Designated CMT Telerate Page under the caption " . . . Treasury
Constant Maturities . . . Federal Reserve Board Release H.15 . . . Mondays
Approximately 3:45 P.M.," under the column for the Designated CMT Maturity Index
for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT Rate
Interest Determination Date and (ii) if the Designated CMT Telerate Page is
7052, the week, or the month, as applicable, ended immediately preceding the
week in which the related CMT Rate Interest Determination Date occurs. If such
rate is no longer displayed on the relevant page, or if not displayed by 3:00
P.M., New York City time, on the related Calculation Date, then the CMT Rate for
such CMT Rate Interest Determination Date will be such Treasury Constant
Maturity rate for the Designated CMT Maturity Index as published in the relevant
H.15(519). If such rate is no longer published, or if not published by 3:00
P.M., New York City time, on the related Calculation Date, then the CMT Rate for
such CMT Rate Interest Detemination Date will be such Treasury Constant Maturity
rate for the Designated CMT Maturity Index (or other United States Treasury rate
for the Designated CMT Maturity Index) for the CMT Rate Interest Determination
Date with respect to such Interest Reset Date as may then be published by either
the Board of Governors of the Federal Reserve System or the United States
Department of the Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate Page
and published in the relevant H.15(519). If such
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information is not provided by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate for the CMT Rate Interest Determination Date
will be calculated by the Calculation Agent and will be a yield to maturity,
based on the arithmetic mean of the secondary market closing offer side prices
as of approximately 3:30 P.M. (New York City time) on the CMT Rate Interest
Determination Date reported, according to their written records, by three
leading primary United States government securities dealers (each, a "Reference
Dealer") in the City of New York selected by the Calculation Agent (from five
such Reference Dealers selected by the Calculation Agent and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for the
most recently issued direct noncallable fixed rate obligations of the United
States ("Treasury Note") with an original maturity of approximately the
Designated CMT Maturity Index and a remaining term to maturity of not less than
such Designated CMT Maturity Index minus one year. If the Calculation Agent
cannot obtain three such Treasury Note quotations, the CMT Rate for such CMT
Rate Interest Determination Date will be calculated by the Calculation Agent and
will be a yield to maturity based on the arithmetic mean of the secondary market
offer side prices as of approximately 3:30 P.M. (New York City time) on the CMT
Rate Interest Determination Date of three Reference Dealers in The City of New
York (from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury Notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an amount
of at least $100 million. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor lowest
of such quotes will be eliminated; provided however, that if fewer than three
Reference Dealers selected by the Calculation Agent are quoting as described
herein, the CMT Rate will be the CMT Rate in effect on such CMT Rate Interest
Determination Date. If two Treasury Notes with an original maturity as described
in the third preceding sentence, have remaining terms to maturity equally close
to the Designated CMT Maturity Index, the quotes for the CMT Rate Note with the
shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Markets
Limited (or any successor service) on the page designated in the applicable
Pricing Supplement (or any other page as may replace such page on that service
for the purpose of displaying Treasury Constant Maturities as reported in
H.15(519)), for the purpose of displaying Treasury Constant Maturities as
reported in H.15(519). If no such page is specified in the applicable Pricing
Supplement, the Designated CMT Telerate Page shall be 7052, for the most recent
week.
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20, or 30 years) specified
in the applicable Pricing Supplement with respect to which the CMT Rate will be
calculated. If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index shall be 2 years.
COMMERCIAL PAPER RATE NOTES. Commercial Paper Rate Notes will bear interest
at the rates (calculated with reference to the Commercial Paper Rate and the
Spread and/or Spread Multiplier, if any) specified in such Commercial Paper Rate
Notes and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Interest Determination Date relating to a
Commercial Paper Rate Note or any Floating Rate Note for which the interest rate
is determined with reference to the Commercial Paper Rate (a "Commercial Paper
Rate Interest Determination Date"), the Money Market Yield (as defined below) on
such date of the rate for commercial paper having the Index Maturity specified
in the applicable Pricing Supplement as published by the Board of Governors of
the Federal Reserve System in H.15(519) under the heading "Commercial
Paper--Nonfinancial." In the event that such rate is not published by 3:00 P.M.,
New York City time, on the related Calculation Date, then the Commercial Paper
Rate will be the Money
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Market Yield on such Commercial Paper Rate Interest Determination Date of the
rate for commercial paper having the Index Maturity specified in the applicable
Pricing Supplement as published in Composite Quotations under the heading
"Commercial Paper--Nonfinancial" (with an Index Maturity of one month or three
months being deemed to be equivalent to an Index Maturity of 30 days or 90 days,
respectively). If by 3:00 P.M., New York City time, on the related Calculation
Date such rate is not yet published in either H.15(519) or Composite Quotations,
then the Commercial Paper Rate for such Commercial Paper Rate Interest
Determination Date will be calculated by the Calculation Agent and will be the
Money Market Yield of the arithmetic mean of the offered rates at approximately
11:00 A.M., New York City time, on such Commercial Paper Rate Interest
Determination Date of three leading dealers of commercial paper in the City of
New York selected by the Calculation Agent for commercial paper having the Index
Maturity designated in the applicable Pricing Supplement placed for a
nonfinancial issuer whose bond rating is "AA", or the equivalent, from a
nationally recognized securities rating organization; provided, however, that if
the dealers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Commercial Paper Rate determined on such Commercial Paper
Rate Interest Determination Date will be the rate in effect on such Commercial
Paper Rate Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage rounded
upwards to the nearest one hundred-thousandth of a percentage point) calculated
in accordance with the following formula:
<TABLE>
<S> <C> <C>
D X 360
Money Market Yield = ------------- X 100
360 - (D X M)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
ELEVENTH DISTRICT COST OF FUNDS RATE NOTES. Eleventh District Cost of Funds
Rate Notes will bear interest at the rates (calculated with reference to the
Eleventh District Cost of Funds Rate and the Spread and/or Spread Multiplier, if
any) specified in such Eleventh District Cost of Funds Rate Notes and in any
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Eleventh
District Cost of Funds Rate" means, with respect to any Interest Determination
Date relating to an Eleventh District Cost of Funds Rate Note or any Floating
Rate Note for which the interest rate is determined with reference to the
Eleventh District Cost of Funds Rate (an "Eleventh District Cost of Funds Rate
Interest Determination Date"), the rate equal to the monthly weighted average
cost of funds for the calendar month preceding such Eleventh District Cost of
Funds Rate Interest Determination Date as set forth under the caption "11th
District" on Telerate Page 7058 as of 11:00 A.M., San Francisco time, on such
Eleventh District Cost of Funds Rate Interest Determination Date. If such rate
does not appear on Telerate Page 7058 on any related Eleventh District Cost of
Funds Rate Interest Determination Date, the Eleventh District Cost of Funds Rate
for such Eleventh District Cost of Funds Rate Interest Determination Date shall
be the monthly weighted average cost of funds paid by member institutions of the
Eleventh Federal Home Loan Bank District that was most recently announced (the
"Index") by the FHLB of San Francisco as such cost of funds for the calendar
month preceding the date of such announcement. If the FHLB of San Francisco
fails to announce such rate for the calendar month next preceding such Eleventh
District Cost of Funds Rate Interest Determination Date, then the Eleventh
District Cost of Funds Rate for such Eleventh District Cost of Funds Rate
Interest Determination Date will be the Eleventh District Cost of Funds Rate in
effect on such Eleventh District Cost of Funds Rate Interest Determination Date.
"Telerate Page 7058" means the display on the Dow Jones Markets Limited (or any
successor service) on such page (or such other page as may replace such page on
that service for the purpose of displaying the Eleventh District Cost of Funds
Rate) for the purpose of displaying the monthly average cost of funds paid by
member institutions of the Eleventh Federal Home Loan Bank District.
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FEDERAL FUNDS RATE NOTES. Federal Funds Rate Notes will bear interest at
the rates (calculated with reference to the Federal Funds Rate and the Spread
and/or Spread Multiplier, if any) specified in such Federal Funds Rate Notes and
in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Determination Date relating to a
Federal Funds Rate Note or any Floating Rate Note for which the interest rate is
determined with reference to the Federal Funds Rate (a "Federal Funds Rate
Interest Determination Date"), the rate on such date for Federal Funds as
published in H.15(519) under the heading "Federal Funds (Effective)" or, if not
published by 3:00 P.M., New York City time, on the related Calculation Date, the
rate on such Federal Funds Rate Interest Determination Date as published in
Composite Quotations under the heading "Federal Funds/Effective Rate." If such
rate is not published in either H.15(519) or Composite Quotations by 3:00 P.M.,
New York City time, on the related Calculation Date, the Federal Funds Rate for
such Federal Funds Rate Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates for the last
transaction in overnight United States dollar Federal Funds arranged by three
leading brokers of Federal Funds transactions in The City of New York selected
by the Calculation Agent prior to 9:00 A.M., New York City time on such Federal
Funds Rate Interest Determination Date; provided, however that if the brokers so
selected by the Calculation Agent are not quoting as mentioned in this sentence,
the Federal Funds Rate with respect to such Federal Funds Rate Interest
Determination Date will be the Federal Funds Rate in effect on such Federal
Funds Rate Interest Determination Date.
LIBOR NOTES. LIBOR Notes will bear interest at the rates (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any) specified in
such LIBOR Notes and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR"
means the rate determined by the Calculation Agent in accordance with the
following provisions:
(i) With respect to an Interest Determination Date relating to a LIBOR
Note or any Floating Rate Note for which the interest rate is determined
with reference to LIBOR (a "LIBOR Interest Determination Date"), LIBOR will
be either: (a) if "LIBOR Reuters" is specified in the applicable Pricing
Supplement, the arithmetic mean of the offered rates (unless the specified
Designated LIBOR Page (as defined below) by its terms provides only for a
single rate, in which case such single rate shall be used) for deposits in
the Index Currency (as defined below) having the Index Maturity designated
in the applicable Pricing Supplement, commencing on the second London
Business Day immediately following that LIBOR Interest Determination Date,
that appear on the Designated LIBOR Page specified in the applicable Pricing
Supplement as of 11:00 A.M. London time, on that LIBOR Interest
Determination Date, if at least two such offered rates appear (unless, as
aforesaid, only a single rate is required) on such Designated LIBOR Page, or
(b) if "LIBOR Telerate" is specified in the applicable Pricing Supplement,
the rate for deposits in the Index Currency having the Index Maturity
designated in the applicable Pricing Supplement commencing on the second
London Business Day immediately following that LIBOR Interest Determination
Date that appears on the Designated LIBOR Page specified in the applicable
Pricing Supplement as of 11:00 A.M. London time, on that LIBOR Interest
Determination Date. If fewer than two offered rates appear, or no rate
appears, as applicable, LIBOR in respect of the related LIBOR Interest
Determination Date will be determined as if the parties had specified the
rate described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear, or no rate appears, as the case may be, on
the applicable Designated LIBOR Page as specified in clause (i) above, the
Calculation Agent will request the principal London offices of each of four
major reference banks in the London interbank market, as selected by the
Calculation Agent, to provide the Calculation Agent with its offered
quotation for deposits in the Index Currency for the period of the Index
Maturity designated in the applicable Pricing Supplement, commencing on the
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second London Business Day immediately following such LIBOR Interest
Determination Date, to prime banks in the London interbank market at
approximately 11:00 A.M., London time, on such LIBOR Interest Determination
Date and in a principal amount that is representative for a single
transaction in such Index Currency in such market at such time. If at least
two such quotations are provided, LIBOR determined on such LIBOR Interest
Determination Date will be the arithmetic mean of such quotations. If fewer
than two quotations are provided, LIBOR determined on such LIBOR Interest
Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 A.M., (or such other time specified in the applicable
Pricing Supplement), in the applicable Principal Financial Center (as
defined below), on such LIBOR Interest Determination Date by three major
banks in such Principal Financial Center selected by the Calculation Agent
for loans in the Index Currency to leading European banks, having the Index
Maturity designated in the applicable Pricing Supplement and in a principal
amount that is representative for a single transaction in such Index
Currency in such market at such time; provided, however, that if the banks
so selected by the Calculation Agent are not quoting as mentioned in this
sentence, LIBOR determined on such LIBOR Interest Determination Date will be
LIBOR in effect on such LIBOR Interest Determination Date.
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the Index Currency shall be U.S. dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is designated in
the applicable Pricing Supplement, the display on the Reuters Monitor Money
Rates Service on the page designated in the applicable Pricing Supplement (or
such other page as may replace such designated page on that service for the
purpose of displaying London interbank offered rates of major banks) for the
related Index Currency for the purpose of displaying the London interbank rates
of major banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is
designated in the applicable Pricing Supplement, the display on the Dow Jones
Markets Limited (or any successor service) on the page designated in the
applicable Pricing Supplement (or such other page as may replace such designated
page on that service or such other service or services as may be nominated by
the British Bankers' Association for the purpose of displaying London interbank
offered rates for the related Index Currency) for the purpose of displaying the
London interbank rates of major banks for the applicable Index Currency. If
neither LIBOR Reuters nor LIBOR Telerate is specified in the applicable Pricing
Supplement, LIBOR for the applicable Index Currency will be determined as if
LIBOR Telerate (and, if the U.S. dollar is the Index Currency, page 3750) had
been specified.
"Principal Financial Center" means (i) the capital city of the country
issuing the Specified Currency, (except that with respect to ECU, the Principal
Financial Center will be Luxembourg and with respect to Euro, the Principal
Financial Center will be London), or (ii) the capital city of the country to
which the Index Currency, if applicable, relates (or, in the case of ECU,
Luxembourg or Euro, London), except in the case of clause (i) or (ii) above,
with respect to U.S. dollars, Deutsche marks, Canadian dollars, Australian
dollars, Italian lire, Swiss francs and Dutch guilders, the "Principal Financial
Center" shall be The City of New York, Frankfurt, Toronto, Sydney, Milan (solely
in the case of clause (i) above), Zurich and Amsterdam, respectively.
PRIME RATE NOTES. Prime Rate Notes will bear interest at the rates
(calculated with reference to the Prime Rate and the Spread and/or Spread
Multiplier, if any) specified in such Prime Rate Notes and any applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Determination Date relating to a Prime
Rate Note or any Floating Rate Note for which the interest rate is determined
with reference to the Prime Rate (a "Prime Rate Interest Determination Date"),
the rate on such date as such rate is published in H.15(519) under the heading
"Bank Prime Loan." If such rate is not published prior to 3:00 P.M., New York
City time, on the related Calculation
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Date, then the Prime Rate shall be the arithmetic mean of the rates of interest
publicly announced by each bank that appears on the Reuters Screen USPRIME1 Page
(as hereinafter defined) as such bank's prime rate or base lending rate as in
effect for that Prime Rate Interest Determination Date. If fewer than four such
quotations are so provided, then the Prime Rate shall be the arithmetic mean of
the prime rates quoted on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on such Prime Rate
Interest Determination Date by four major money center banks in The City of New
York, if any, that have provided such quotations and by a reasonable number of
banks or trust companies organized and doing business under the laws of the
United States, or any state thereof, having total equity capital of at least
$500 million and being subject to supervision or examination by Federal or state
authority, selected by the Calculation Agent to provide such rate or rates;
provided, however, that if the banks or trust companies selected as aforesaid
are not quoting as mentioned in this sentence, the Prime Rate for such Prime
Rate Interest Determination Date will be the Prime Rate in effect on such Prime
Rate Interest Determination Date.
"Reuters Screen USPRIME1 Page" means the display designated as the
"USPRIME1" page on the Reuters Monitor Money Rates Service (or such other page
as may replace the USPRIME1 page on that service or any successor service for
the purpose of displaying prime rates or base lending rates of major United
States banks).
"Specified Currency" means the currency or composite currency in which a
particular Note is denominated (or, if such currency or composite currency is no
longer legal tender for the payment of public and private debts, such other
currency or composite currency of the relevant country which is then legal
tender for the payment of such debts).
TREASURY RATE NOTES. Treasury Rate Notes will bear interest at the rates
(calculated with reference to the Treasury Rate and the Spread and/or Spread
Multiplier, if any) specified in such Treasury Rate Notes and in any applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date relating to a
Treasury Rate Note or any Floating Rate Note for which the interest rate is
determined by reference to the Treasury Rate (a "Treasury Rate Interest
Determination Date"), the rate applicable to the most recent auction of direct
obligations of the United States ("Treasury Bills") having the Index Maturity
specified in the applicable Pricing Supplement, as such rate is published in
H.15(519) under the heading "Treasury Bills-auction average (investment)" or, if
not published by 3:00 P.M., New York City time, on the related Calculation Date,
the auction average rate (expressed as a bond equivalent yield on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) as
otherwise announced by the United States Department of the Treasury. In the
event that the results of the auction of Treasury Bills having the Index
Maturity designated in the applicable Pricing Supplement are not reported as
provided by 3:00 P.M., New York City time, on the related Calculation Date, or
if no such auction is held in a particular week, then the Treasury Rate will be
calculated by the Calculation Agent and will be a yield to maturity (expressed
as a bond equivalent yield on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 P.M., New York City time,
on such Treasury Rate Interest Determination Date, of three leading primary
United States government securities dealers (which may include one or more of
the Agents or their affiliates) selected by the Calculation Agent, for the issue
of Treasury Bills with a remaining maturity closest to the Index Maturity
designated in the applicable Pricing Supplement; provided, however, that if the
dealers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Treasury Rate with respect to such Treasury Rate Interest
Determination Date will be the Treasury Rate in effect on such Treasury Rate
Interest Determination Date.
OTHER PROVISIONS; ADDENDA
Any provisions with respect to Notes, including the determination of an
Interest Rate Basis, the specification of Interest Rate Basis, calculation of
the interest rate applicable to a Floating Rate Note, its
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Interest Payment Dates or any other matter relating thereto may be modified by
the terms as specified under "Other Provisions" on the face thereof or in an
Addendum relating thereto, if so specified on the face thereof and in the
applicable Pricing Supplement.
ORIGINAL ISSUE DISCOUNT NOTES
Notes may be issued at a price less than their redemption price at Maturity,
resulting in such Notes being treated as if they were issued with original issue
discount for federal income tax purposes ("Original Issue Discount Notes"). Such
Original Issue Discount Notes may currently pay no interest or interest at a
rate which at the time of issuance is below market rates. See "United States
Taxation." Certain additional considerations relating to any Original Issue
Discount Notes may be described in the Pricing Supplement relating thereto.
INDEXED NOTES
Notes also may be issued with the principal amount payable at Maturity,
premium, if any, and/or interest to be paid thereon to be determined with
reference to the price or prices of specified commodities or stocks, interest
rate indices, interest rate or exchange rate swap indices, the exchange rate of
one or more specified currencies (including a composite currency such as ECU)
relative to an indexed currency, or such other price, or exchange rate or other
financial index or indices as may be specified in such Note ("Indexed Notes"),
as set forth in an Indexed Note Supplement. Holders of such Notes may receive a
principal amount at Maturity that is greater than or less than the face amount
of the Notes depending upon the relative value at Maturity of the specified
indexed item. Information as to the method for determining the principal amount
payable at Maturity, if any, and, where applicable, certain historical
information with respect to the specified indexed item or items and special tax
considerations associated with investment in Indexed Notes, will be set forth in
the applicable Indexed Note Supplement. (See "Risk Factors--Structure Risks" for
a description of certain risks associated with Indexed Notes.)
Notwithstanding anything to the contrary contained herein or in the
Prospectus, for purposes of determining the rights of a Holder of a Note indexed
as to principal in respect of voting for or against amendments to the Indenture
and modifications and the waiver of rights thereunder, the principal amount of
such Indexed Note shall be deemed to be equal to the face amount thereof upon
issuance. The method for determining the amount of principal payable at Maturity
will be specified in the applicable Pricing Supplement.
BOOK-ENTRY NOTES
Upon issuance, all Book-Entry Notes having the same Original Issue Date,
Stated Maturity and otherwise having identical terms and provisions will be
represented by a single global security (each, a "Global Security"); provided,
however, that if by reason of the foregoing, a single Global Security would
exceed $200,000,000 in aggregate principal amount, one Global Security will be
issued to represent each $200,000,000 of aggregate principal amount and an
additional Global Security will be issued to represent any remaining principal
amount. Each Global Security representing Book-Entry Notes will be deposited
with, or on behalf of, the Depositary. Except as set forth below, a Global
Security may not be transferred except as a whole by the Depositary to a nominee
of the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any nominee to a successor of
the Depositary or a nominee of such successor.
So long as the Depositary or its nominee is the registered owner of a Global
Security, the Depositary or its nominee, as the case may be, will be the sole
Holder of the Book-Entry Notes represented thereby for all purposes under the
Indenture. Except as otherwise provided in this section, the Beneficial Owners
of the Global Security or Securities representing Book-Entry Notes will not be
entitled to receive physical delivery of Certificated Notes and will not be
considered the Holders thereof for any purpose under the Indenture, and no
Global Security representing Book-Entry Notes shall be exchangeable or
transferrable. Accordingly, each person owning a beneficial interest in a Global
Security must rely on the procedures of
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the Depositary and, if such person is not a participant, on the procedures of
the participant through which such person owns its interest in order to exercise
any rights of a Holder under the Indenture. The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of such
securities in certificated form. Such limits and such laws may impair the
ability to transfer beneficial interests in a Global Security representing
Book-Entry Notes.
The initial Depositary for the Notes will be The Depository Trust Company.
The following is based on information furnished by the Depositary:
The Depositary will act as securities depository for the Book-Entry
Notes. The Book-Entry Notes will be issued as fully registered securities
registered in the name of Cede & Co. (the Depositary's partnership nominee).
The Depositary is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and
a "clearing agency" registered pursuant to the provisions of Section 17A of
the Securities Exchange Act of 1934, as amended. The Depositary holds
securities that its participants ("Participants") deposit with the
Depositary. The Depositary also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement
of securities certificates. Direct Participants include securities brokers
and dealers, banks, trust companies, clearing corporations and certain other
organizations. The Depositary is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc.
Access to the Depositary's system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through
or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participant"). The rules applicable to the
Depositary and its Participants are on file with the Securities and Exchange
Commission.
Purchases of Book-Entry Notes under the Depositary's system must be made
by or through Direct Participants, which will receive a credit for such
Book-Entry Notes on the Depositary's records. The ownership interest of each
actual purchaser of each Book-Entry Note represented by a Global Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written
confirmation from the Depositary of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the
Direct or Indirect Participants through which such Beneficial Owner entered
into the transaction. Transfers of ownership interests in a Global Security
representing Book-Entry Notes are to be accomplished by entries made on the
books of Participants acting on behalf of Beneficial Owners. Beneficial
Owners of a Global Security representing Book-Entry Notes will not receive
Definitive Notes representing their ownership interests therein, except in
the event that use of the book-entry system for such Book-Entry Notes is
discontinued.
To facilitate subsequent transfers, all Global Securities representing
Book-Entry Notes which are deposited with the Depositary are registered in
the name of the Depositary's nominee, Cede & Co. The deposit of Global
Securities with the Depositary and their registration in the name of Cede &
Co. effect no change in beneficial ownership. The Depositary has no
knowledge of the actual Beneficial Owners of the Global Securities
representing the Book-Entry Notes; the Depositary's records reflect only the
identity of the Direct Participants to whose accounts such Book-Entry Notes
are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings
on behalf of their customers and for forwarding all notices concerning the
Notes to their customers.
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Conveyance of notices and other communications by the Depositary to
Direct Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will by
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Book-Entry Notes within an issue are being redeemed, the Depositary's
practice is to determine by lot the amount of the interest of each Direct
Participant in such issue to be redeemed.
Neither the Depositary nor Cede & Co. will consent or vote with respect
to the Global Securities representing the Book-Entry Notes. Under its usual
procedures, the Depositary mails an Omnibus Proxy to TMCC as soon as
possible after the applicable record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Book-Entry Notes are credited on the applicable record date
(identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and interest payments on the Global
Securities representing the Book-Entry Notes will be made to the Depositary.
The Depositary's practice is to credit Direct Participants' accounts on the
applicable payment date in accordance with their respective holdings shown
on the Depositary's records unless the Depositary has reason to believe that
it will not receive payment on such date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers
in bearer form or registered in "street name", and will be the
responsibility of such Participant and not of the Depositary, the Trustee or
TMCC, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of principal, premium, if any, and
interest to the Depositary is the responsibility of TMCC or the Trustee,
disbursement of such payments to Direct Participants shall be the
responsibility of the Depositary, and disbursement of such payments to the
Beneficial Owners shall be the responsibility of Direct and Indirect
Participants.
A Beneficial Owner shall give notice to elect to have its Book-Entry
Notes repaid by TMCC, through its Participant, to the Trustee, and shall
effect delivery of such Book-Entry Notes by causing the Direct Participant
to transfer the Participant's interest in the Global Security or Securities
representing such Book-Entry Notes, on the Depositary's records, to the
Trustee. The requirement for physical delivery of Book-Entry Notes in
connection with a demand for repayment will be deemed satisfied when the
ownership rights in the Global Security or Securities representing such
Book-Entry Notes are transferred by Direct Participants on the Depositary's
records.
The Depositary may discontinue providing its services as securities
depository with respect to the Book-Entry Notes at any time by giving
reasonable notice to TMCC or the Trustee. Under such circumstances, in the
event that a successor securities depository is not obtained, Definitive
Notes are required to be printed and delivered.
TMCC may decide to discontinue use of a system of book-entry transfers
through the Depositary (or a successor securities depository). In that
event, Definitive Notes will be printed and delivered.
If the Depositary is at any time unwilling or unable to continue as
Depositary and a successor Depositary is not appointed by TMCC within 90 days,
TMCC will issue Definitive Notes in exchange for the Notes represented by such
Global Security or Securities. In addition, TMCC may at any time and in its sole
discretion determine to discontinue use of the Global Security and, in such
event, will issue Definitive Notes in exchange for the Notes represented by such
Global Security or Securities. Notes so issued will be issued in denominations
of $1,000 and integral multiples thereof and will be issued in registered form
only, without coupons.
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UNITED STATES TAXATION
Set forth below is a summary of certain United States federal income tax
considerations of importance to Holders of the Notes. The summary concerns
Holders who hold the Notes as capital assets and not special classes of Holders,
such as dealers in securities or currencies, financial institutions, insurance
companies, regulated investment companies, persons who hold the Notes as a
position in a "straddle" or a "hedge" against currency risks or who hedge any
currency risks of holding the Notes, tax-exempt investors, expatriates, U.S.
Holders (as defined below) whose functional currency is other than the United
States dollar or persons who acquire, or for income tax purposes are deemed to
have acquired, the Notes in an exchange, or for property other than cash. The
summary does not discuss Discount Notes (as defined below) which qualify as
"applicable high-yield discount obligations" under Section 163(i) of the Code.
Holders of such Discount Notes may be subject to special rules. The discussion
below is based on existing provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), judicial decisions and administrative rulings and
pronouncements, and existing and proposed Treasury Regulations, including
regulations concerning the treatment of debt instruments issued with original
issue discount ("OID"), all of which are subject to alternative construction or
to change possibly with retroactive effect. Prospective investors are urged to
consult their tax advisors regarding the United States federal tax consequences
of acquiring, holding and disposing of the Notes, as well as any tax
consequences that may arise under the laws of any foreign, state, local or other
taxing jurisdiction.
UNITED STATES TAX CONSIDERATIONS FOR U.S. HOLDERS
GENERAL
As used herein, "U.S. Holder" means a Holder of a Note who holds such Note
either directly or through an entity that is disregarded for United States
federal income tax purposes and who is (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized in
or under the laws of the United States or any political subdivision thereof,
(iii) an estate the income of which is subject to U.S. federal income taxation
regardless of its source, (iv) a trust, if a United States court is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have the authority to control all substantial
decisions of the trust, and (v) any other Holder whose ownership of a Note is
effectively connected with the conduct of a trade or business in the United
States.
PAYMENTS OF INTEREST
Interest on the Notes generally will be taxable to a U.S. Holder as ordinary
interest income at the time it is accrued or received, depending in part on the
U.S. Holder's method of accounting for tax purposes. Under the OID Regulations,
for accrual basis and other electing taxpayers, all payments of interest on a
Note that matures one year or less from its date of issuance will be included in
the stated redemption price at maturity (as defined below) of the Notes and will
be taxed in the manner described below under the heading "Original Issue
Discount."
ORIGINAL ISSUE DISCOUNT
IN GENERAL. A Note, such as an Original Issue Discount Note, which is
issued for an amount less than its stated redemption price at maturity (a
"Discount Note") will generally be considered to have been issued with OID for
federal income tax purposes. OID is the excess of the "stated redemption price
at maturity" of a Note over its "issue price." The "stated redemption price at
maturity" of a Note is the sum of all payments provided by the Note other than
payments of "qualified stated interest." The "issue price" of an issue of Notes
is the initial offering price to the public (excluding bond houses and brokers,
or similar persons or organizations acting in the capacity of underwriters,
placement agents, or wholesalers) at which a substantial amount of such Notes
was sold. "Qualified stated interest" generally is stated interest that is
unconditionally payable in cash or in property (other than debt instruments of
the issuer) or that is constructively received under Section 451 of the Code, at
least annually at a "single fixed rate." A "single fixed rate" is a rate that
appropriately takes into account the length of the interval between payments. If
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the excess between a Note's stated redemption price at maturity and its issue
price is less than a DE MINIMIS amount, I.E., 1/4 of 1 percent of the Note's
stated redemption price at maturity multiplied by the number of complete years
to maturity, the Note will not be considered to have OID. Holders of Notes with
DE MINIMIS OID will generally include such OID in income, as capital gain, on a
pro rata basis as principal payments are made on the Note. If a Note has certain
interest payment characteristics (E.G., teaser rates or interest holidays), then
the Note may also be treated as having OID for federal income tax purposes even
if such Note was issued at an issue price which does not otherwise result in
OID.
ACCRUAL OF OID. U.S. Holders of Notes that mature more than one year from
their date of issuance will be required to include OID in income for federal
income tax purposes as it accrues, regardless of their method of accounting, in
accordance with a constant yield method based on a compounding of interest. This
OID income inclusion may precede the receipt of cash attributable to such
income. The amount of OID includible in income by initial U.S. Holders of Notes
will be the sum of the daily portions of OID with respect to such Notes for each
day during the taxable year or portion of the taxable year in which such U.S.
Holders held such Notes. The amount of OID which accrues in an accrual period
will be an amount equal to the excess (if any) of (a) the product of a Note's
"adjusted issue price" at the beginning of such accrual period and its yield to
maturity (determined on the basis of compounding at the end of each accrual
period and appropriately adjusted to take into account the length of the
particular accrual period) over (b) the sum of the qualified stated interest
payments, if any, allocable to the accrual period. The daily portion of OID will
be determined by allocating to each day in any accrual period a ratable portion
of the amount of OID which accrues during the accrual period. The "adjusted
issue price" of a Note at the beginning of any accrual period will be the sum of
the issue price of such Note plus the OID allocable to all prior accrual periods
reduced by payments on the Note other than payments of qualified stated
interest. An "accrual period" may be of any length and the accrual periods may
vary in length over the term of the debt instrument, provided that each accrual
period is no longer than one year and each scheduled payment of principal or
interest occurs either on the first or final day of the accrual period chosen.
Under these rules, U.S. Holders generally will have to include in income
increasingly greater amounts of OID in successive accrual periods.
REPORTING BY TMCC. TMCC will report annually to the Internal Revenue
Service and to each Holder of a Discount Note the amount of OID accrued with
respect to such Note. Prospective investors are advised to consult their tax
advisors with respect to the particular OID characteristics of a Note.
FLOATING RATE NOTES. The Floating Rate Notes will be treated as either
"variable rate debt instruments" or Contingent Notes (as defined below). Under
the OID Regulations, a Floating Rate Note will qualify as a variable rate debt
instrument if (a) its issue price does not exceed the total noncontingent
principal payments due under such Floating Rate Note by more than a specified DE
MINIMIS amount, (b) it does not provide for stated interest other than stated
interest paid or compounded at least annually at (i) one or more "qualified
floating rates," (ii) a single fixed rate and one or more qualified floating
rates, (iii) a single "objective rate," or (iv) a single fixed rate and a single
objective rate that is a "qualified inverse floating rate," as such terms are
defined under the OID Regulations, (c) it provides that a qualified floating
rate or objective rate in effect at any time during the term of the Note will be
set at a current value of that rate, and (d) except as provided under (a) above,
it does not provide for any payments of principal that are contingent.
A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Floating Rate Note is denominated. Although a multiple of a qualified floating
rate will generally not itself constitute a qualified floating rate, a variable
rate equal to the product of a qualified floating rate and a fixed multiple that
is greater than .65 but not more than 1.35 will constitute a qualified floating
rate. A variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than .65 but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a
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qualified floating rate. In addition, under the OID Regulations, two or more
qualified floating rates that can reasonably be expected to have approximately
the same values throughout the term of the Floating Rate Note (E.G., two or more
qualified floating rates with values within 25 basis points of each other as
determined on the Floating Rate Note's issue date) will be treated as a single
qualified floating rate. Notwithstanding the foregoing, a variable rate that
would otherwise constitute a qualified floating rate but which is subject to one
or more restrictions such as a maximum stated interest rate (I.E., a cap) or a
minimum stated interest rate (I.E., a floor) may, under certain circumstances,
fail to be treated as a qualified floating rate unless such restrictions are
fixed throughout the term of the Note, and are not reasonably expected as of the
issue date (defined under the OID Regulations as the first settlement date or
closing date, whichever is applicable, on which a substantial amount of the debt
instruments in the issue is sold for money) to cause the yield on the Floating
Rate Note to differ significantly from the expected yield determined without the
restrictions. An "objective rate" is a rate that is not itself a qualified
floating rate but which is determined using a single fixed formula and which is
based upon objective financial or economic information. For example, an
objective rate generally includes a rate that is based on one or more qualified
floating rates or on the yield of actively traded personal property. However, an
objective rate does not include a rate based on information that is within the
control of the issuer or a related party, or that is unique to the circumstances
of the issuer or a related party. The OID Regulations also provide that other
variable interest rates may be treated as objective rates if so designated by
the Internal Revenue Service ("IRS") in the future. Despite the foregoing, a
variable rate of interest on a Floating Rate Note will not constitute an
objective rate if it is reasonably expected that the average value of such rate
during the first half of the Floating Rate Note's term will be either
significantly less or significantly greater than the average value of the rate
during the final half of the Floating Rate Note's term. A "qualified inverse
floating rate" is any objective rate where such rate is equal to a fixed rate
minus a qualified floating rate as long as variations in the rate can reasonably
be expected to inversely reflect contemporaneous variations in the qualified
floating rate. The OID Regulations also provide that if a Floating Rate Note
provides for stated interest at a fixed rate for an initial period of one year
or less followed by a variable rate that is either a qualified floating rate or
an objective rate and if the variable rate on the Floating Rate Note's issue
date is intended to approximate the fixed rate (E.G., the value of the variable
rate on the issue date does not differ from the value of the fixed rate by more
than 25 basis points), then the fixed rate and the variable rate together will
constitute either a single qualified floating rate or objective rate, as the
case may be.
If a Floating Rate Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a "variable rate debt instrument" under the OID Regulations, then
any stated interest on that Note which is unconditionally payable in cash or
property (other than debt instruments of TMCC) at least annually will constitute
qualified stated interest. Thus, such a Floating Rate Note will generally not be
treated as having been issued with OID unless its stated principal amount
exceeds its issue price by more than a specified DE MINIMIS amount. The amount
of qualified stated interest and OID, if any, on such a Floating Rate Note will
be determined under the rules generally applicable to fixed rate debt
instruments by assuming that the variable rate is a fixed rate equal to (i) in
the case of a qualified floating rate or qualified inverse floating rate, a
fixed rate equal to the value as of the issue date of the qualified floating
rate or inverse floating rate, or (ii) in the case of an objective rate (other
than a qualified inverse floating rate), a fixed rate that reflects the yield
that is reasonably expected for the Floating Rate Note. The amount of qualified
stated interest allocable to an accrual period will be increased (or decreased)
if the interest actually paid during an accrual period exceeds (or is less than)
the interest assumed to be paid during the accrual period as determined under
the rules described in this paragraph.
In general, any other Floating Rate Note that qualifies as a "variable rate
debt instrument" and does not provide for interest payable at a fixed rate will
be converted into an "equivalent" fixed rate debt instrument for purposes of
determining the amount and accrual of OID and qualified stated interest. Under
the OID Regulations, the "equivalent" fixed rate debt instrument will be an
instrument with terms identical to those provided under the Floating Rate Note,
except that it will substitute (i) for each qualified
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floating rate provided for in the Floating Rate Note, its value as of the issue
date (with appropriate adjustments so that the interval between each interest
adjustment date is the same), (ii) for a qualified inverse floating rate, its
value as of the issue date, and (iii) for an objective rate (other than a
qualified inverse floating rate), a fixed rate that reflects the yield that is
reasonably expected for the Floating Rate Note.
In the case of a Floating Rate Note that qualifies as a "variable rate debt
instrument" and provides for stated interest at a fixed rate in addition to
either one or more qualified floating rates or a qualified inverse floating
rate, the fixed rate will initially be converted into a qualifying floating rate
(or a qualified inverse floating rate, if the Floating Rate Note provides for a
qualified inverse floating rate). Under such circumstances, the qualified
floating rate or qualified inverse floating rate that replaces the fixed rate
must be such that the fair market value of the Floating Rate Note as of its
issue date is approximately the same as the fair market value of an otherwise
identical debt instrument that provides for either the qualified floating rate
or qualified inverse floating rate rather than the fixed rate. Subsequent to
converting the fixed rate into either a qualified floating rate or a qualified
inverse floating rate, the Floating Rate Note will be converted into an
"equivalent" fixed rate debt instrument in the manner described in the previous
paragraph.
Once the Floating Rate Note is converted into an "equivalent" fixed rate
debt instrument pursuant to the foregoing rules, the amount of OID and qualified
stated interest, if any, will be determined for the "equivalent" fixed rate debt
instrument by applying to it the general OID rules, and U.S. Holders of a
Floating Rate Note will account for such OID and qualified stated interest as if
they held the "equivalent" fixed rate debt instrument. For each accrual period
appropriate adjustments will be made to the amount of qualified stated interest
or OID assumed to have been accrued or paid with respect to the "equivalent"
fixed rate debt instrument in the event that such amounts differ from the actual
amount of interest accrued or paid on the Floating Rate Note during the accrual
period.
If a Floating Rate Note does not qualify as a "variable rate debt
instrument" under the OID Regulations, it will be treated as a Contingent Note
(as defined below).
CONTINGENT NOTES
Notes may be issued under circumstances in which the amount and/or timing of
one or more payments of interest or principal on the Notes is contingent
("Contingent Notes"). For example, TMCC may issue Notes under which the total
noncontingent payments are less than the issue price or Indexed Notes under
which interest and/or principal is determined by reference to multiple formulae
based on the values of specified stocks, commodities, foreign currencies or
other such personal property. With some exceptions, the amount of interest that
will accrue on Contingent Notes in each accrual period will be determined under
the "noncontingent bond method." For each issue of Contingent Notes, this method
will require TMCC to determine a comparable yield, a projected payment schedule,
the daily portions of interest accruing in each accrual period, and then to make
appropriate adjustments for any differences between projected and actual
contingent payments made to U.S. Holders of Contingent Notes. TMCC will provide
notice in the applicable Pricing Supplement when it determines that a particular
Note will be a Contingent Note. The applicable Pricing Supplement will also
describe the proper federal income tax treatment of a Contingent Note.
NOTES WITH PUT AND/OR CALL OPTIONS
Certain Notes may be subject to a call option in that they may be redeemable
at the option of TMCC prior to their stated maturity or to a put option in that
they may be repayable at the option of the holder before their stated maturity.
Notes containing such features may be subject to special rules, the application
of which will be described in the related Pricing Supplement.
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MARKET DISCOUNT, ACQUISITION PREMIUM AND BOND PREMIUM
If U.S. Holders acquire Notes at a price below their stated redemption price
at maturity or acquire Notes issued with OID at a price below their adjusted
issue price as of the purchase date, the amount of the difference will be
treated as "market discount." If the market discount exceeds a DE MINIMIS
amount, any gain on the sale, exchange or retirement of the Notes will be
treated as ordinary interest income at the time of the disposition to the extent
of the accrued market discount, unless the U.S. Holders elect to accrue market
discount in income on a current basis (the "current income election"). In
addition, U.S. Holders who do not make the current inclusion election will be
required to defer deductions for a portion of their interest expense on any
indebtedness incurred to purchase or carry such Notes. Market discount is
normally accrued on a straight-line basis, but U.S. Holders may elect to use a
constant yield method of accrual instead.
U.S. Holders who acquire Discount Notes for an amount above the adjusted
issue price may be considered as having purchased such Notes at an "acquisition
premium." The portion of acquisition premium properly allocable to an accrual
period will reduce the amount of OID such U.S. Holders would otherwise be
required to include in income.
Under Treasury Regulations issued on December 31, 1997 and generally
applicable to Notes acquired on or after March 2, 1998, U.S. Holders of Notes
whose tax basis immediately after their acquisition exceeds the sum of all
remaining payments other than qualified stated interest payable on such Notes
will be considered to have purchased such Notes with "bond premium" equal in
amount to such excess and may elect to amortize such bond premium. Electing U.S.
Holders will amortize the bond premium by offsetting it against qualified stated
interest income. The offset will be calculated for each accrual period using
constant yield principles, but the offset for an accrual period will be taken
into account only when the U.S. Holders take the corresponding qualified stated
interest income into consideration under their regular method of accounting. In
case the amount of bond premium available for offset is greater than the
corresponding amount of qualified stated interest, the excess bond premium will
carry forward to future accrual periods. In the case of Floating Rate Notes
acquired with bond premium and treated as "variable rate debt instruments," the
bond premium and its allocation among the accrual periods will be determined by
reference to the "equivalent" fixed rate debt instrument to be constructed as of
the date of acquisition of such Floating Rate Notes.
ELECTION TO TREAT ALL INTEREST AND PREMIUM AS OID
U.S. Holders using the accrual method of accounting for federal income tax
purposes may generally elect to include all interest (including stated interest,
acquisition discount, OID, DE MINIMIS OID, market discount, DE MINIMIS market
discount, and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium on a debt instrument) in income by using the constant yield
method applicable to OID, subject to certain limitations and exceptions.
DISPOSITION OR REPAYMENT OF A NOTE
U.S. Holders of Notes will recognize gain or loss on the sale, redemption,
exchange or other disposition of such Notes. This gain or loss will be measured
by the difference between the amount realized (except to the extent attributable
to accrued interest) and the U.S. Holders' adjusted tax basis in the Notes. U.S.
Holders' adjusted tax basis for determining gain or loss on a sale or
disposition of Notes generally will be their cost increased by any amounts
included in income, other than qualified stated interest, and reduced by any
amortized premium and cash received other than qualified stated interest. Gain
or loss on the sale, exchange or redemption of a Note generally will be
long-term capital gain or loss, taxable to U.S. Holders who are individuals at a
maximum rate of 20 percent (in some cases, possibly 18 percent in taxable years
beginning after December 31, 2000), if the Note has been held as a capital asset
for more than one year, except to the extent that gain represents accrued market
discount or acquisition discount not previously included in the U.S. Holders'
income. Prospective purchasers of Notes should consult their own
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tax advisors concerning the tax consequences of a sale, redemption, exchange or
other disposition of such Notes.
FOREIGN CURRENCY NOTES
Notes may be denominated in, or interest or principal on the Notes may be
determined by reference to, a foreign currency or foreign currency unit
("Foreign Currency Notes"). In this case, for U.S. federal income tax purposes,
U.S. Holders of Foreign Currency Notes may need to determine the United States
dollar equivalent of amounts includible in income and separately calculate any
foreign exchange gain or loss arising from holding a Foreign Currency Note.
INTEREST INCOME AND OID. U.S. Holders who use the cash method of accounting
for tax purposes and receive a payment of qualified stated interest with respect
to a Foreign Currency Note will be required to include in income the United
States dollar value of the foreign currency payment (determined on the date such
payment is received) regardless of whether the payment is in fact converted to
United States dollars at that time. No foreign exchange gain or loss will be
realized with respect to the receipt of such qualified stated interest payments
(other than the gain or loss which may be realized upon disposition of any
foreign currency received).
U.S. Holders on the accrual method of accounting (for accruals of qualified
stated interest and OID) and U.S. Holders on the cash method of accounting (for
accruals of OID only) will be required to include in income the United States
dollar value of the amount of qualified stated interest and OID that has accrued
and is otherwise required to be taken into account with respect to a Foreign
Currency Note during an accrual period. The United States dollar value of such
accrued income will be determined by translating such income at the average
exchange rate for such accrual period or, for accrual periods that span two
taxable years, at the average rate for the partial period within the taxable
year. Alternatively, such U.S. Holders may elect to translate accrued qualified
stated interest or OID into United States dollars at the spot rate in effect on
the last day of such accrual period. If elected, this alternative method must be
applied consistently to all debt instruments held by such U.S. Holders from year
to year.
U.S. Holders of Foreign Currency Notes described in the previous paragraph
may also recognize foreign exchange gain or loss on the receipt of a payment of
accrued interest income. Such exchange gain or loss generally will be measured
by the difference between (a) the United States dollar equivalent of the
interest received translated at the spot rate in effect on the date of payment,
and (b) the United States dollar equivalent of the accrued interest income
translated at the average exchange rates used to include such accrued interest
in income.
PRINCIPAL. With respect to payments of principal on or dispositions of
Foreign Currency Notes, U.S. Holders will recognize foreign exchange gain or
loss measured by the difference between (a) the United States dollar equivalent
of the principal payment received translated at the spot rate on the date of
each payment, and (b) the United States dollar equivalent of the principal
amount paid translated at the spot rate in effect on the date such U.S. Holders
acquired the Notes.
MARKET DISCOUNT. Market discount on a Foreign Currency Note will be
determined in the relevant foreign currency. Accrued market discount pertaining
to Foreign Currency Notes will be taken into income under the same rules
discussed above for Notes other than Foreign Currency Notes and will be
translated into United States dollars on the disposition date. No part of such
accrued market discount will be treated as exchange gain or loss. If a U.S.
Holder makes a current income inclusion (as defined above), the market discount
will be translated into United States dollars on the basis of the average
exchange rate in effect during such accrual period, and the exchange gain or
loss will be determined upon the receipt of any principal payment or upon the
disposition of the Foreign Currency Note in a manner similar to that described
above with respect to accrued interest.
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BOND PREMIUM. If a Foreign Currency Note has bond premium in the hands of
U.S. Holders who have elected to amortize such bond premium, the bond premium
amount calculated under the rules described above will offset corresponding
qualified stated interest income in units of the relevant foreign currency.
Exchange gain or loss will be realized on such bond premium with respect to any
period by treating the amount of bond premium amortized in such period as a
return of principal. U.S. Holders of Foreign Currency Notes with bond premium
who have not elected to amortize such premium will recognize a loss on the sale,
redemption, exchange, retirement or other taxable disposition.
FOREIGN EXCHANGE GAINS AND LOSSES. In general, foreign exchange gain or
loss realized under the rules described above will be considered ordinary income
includible in the taxable income of U.S. Holders, but generally not as interest
income or expense.
DISPOSITIONS OF FOREIGN CURRENCY. Foreign currency received by a U.S.
Holder with respect to a Foreign Currency Note will have a tax basis equal to
its United States dollar value at the time such foreign currency is received.
Foreign currency that is purchased generally will have a tax basis equal to its
United States dollar cost of acquisition. Any gain or loss recognized on a sale
or disposition of foreign currency will be ordinary income or loss.
DUAL AND MULTI-CURRENCY NOTES. Notes may be issued in circumstances where
interest payments on the Notes are denominated in or determined by reference to
one currency and the principal portion of the Notes may be denominated in or
determined by reference to another currency ("Dual Currency Notes"). In
addition, Notes may be issued in circumstances where interest or principal is
denominated in or determined by reference to more than one currency
("Multi-Currency Notes"). The federal income tax treatment of Dual and
Multi-Currency Notes will be described in an applicable Pricing Supplement.
UNITED STATES TAX CONSIDERATIONS FOR FOREIGN PURCHASERS
Set forth below is a summary of certain United States federal income tax
consequences for Foreign Holders of Notes. For purposes of this discussion,
"Foreign Holder" means any Holder of a Note who holds such Note either directly
or through an entity that is disregarded for United States federal income tax
purposes and who is a foreign corporation, a nonresident alien individual, a
nonresident alien fiduciary of a foreign estate or trust, or a foreign
partnership one or more of the members of which is, for United States federal
income tax purposes, a foreign corporation, a nonresident alien individual, or a
nonresident alien fiduciary of a foreign estate or trust.
Assuming certain certification requirements are satisfied (which generally
can be satisfied by providing IRS Form W-8, identifying the beneficial owner of
the instrument as a foreign person and disclosing the Foreign Holder's name and
address), under current United States federal income and estate tax laws:
(a) Payments of principal and interest (including OID) on a Note to a
Foreign Holder will not be subject to United States federal income tax or
withholding tax, provided that, in the case of interest and OID, (i) the
payments are not effectively connected with the conduct of a United States
trade or business, (ii) the Foreign Holder does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of TMCC entitled to vote, (iii) the Foreign Holder is not
(1) a controlled foreign corporation related to TMCC through stock
ownership, (2) a bank receiving interest pursuant to a loan agreement
entered into in the ordinary course of its trade or business, or (3) a
foreign tax exempt organization or a foreign private foundation for United
States federal income tax purposes, and (iv) such interest is not contingent
on TMCC's profits, revenues or on changes in the value of TMCC's property
("Contingent Interest");
(b) A Foreign Holder of a Note will not be subject to United States
federal income tax on gain realized on the sale, exchange or redemption of a
Note unless (i) such gain is effectively connected with the conduct of a
United States trade or business of the Foreign Holder, or (ii) the Foreign
Holder is an individual who is present in the United States for 183 days or
more during the taxable year and
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either (1) such individual's "tax home" for United States federal income tax
purposes is in the United States, or (2) the gain is attributable to an
office or other fixed place of business maintained in the United States by
such individual; and
(c) A Note held by an individual who at the time of death is not a
citizen or resident of the United States (as defined for United States
federal estate tax purposes) will not be subject to United States federal
estate tax as a result of such individual's death, unless (i) the individual
actually or constructively owns 10% or more of the total combined voting
power of all classes of stock of TMCC entitled to vote, (ii) the interest
received on such note is effectively connected with the conduct of a United
States trade or business, or (iii) such Note provided for the payment of
Contingent Interest.
BACKUP WITHHOLDING AND INFORMATION REPORTING
U.S. HOLDERS. Under current United States federal income tax law, a 31%
"backup" withholding is applied to certain interest and principal payments made
to, and to the proceeds of sales before maturity by, certain noncorporate U.S.
Holders. Backup withholding will apply only if (i) such U.S. Holders fail to
supply their taxpayer identification number ("TIN"), (ii) TMCC is notified by
the IRS that such U.S. Holders furnished an incorrect TIN, (iii) TMCC is
notified by the IRS that such U.S. Holders have failed to properly report
payments of interest and dividends or (iv) such U.S. Holders fail to certify,
under penalty of perjury, that they have furnished a correct TIN and have not
been notified by the IRS that they are subject to backup withholding for failure
to report interest and dividend payments.
FOREIGN HOLDERS. New final regulations dealing with withholding tax on
income paid to foreign persons and related matters (the "New Withholding
Regulations") were issued by the Treasury Department on October 6, 1997, and
have been published in the Federal Register. In general, the New Withholding
Regulations do not significantly alter the substantive withholding and
information reporting requirements, but unify current certification procedures
and forms and clarify reliance standards. The New Withholding Regulations will
generally be effective for payments made after December 31, 1999, subject to
certain transition rules. Accordingly, payments made on or before December 31,
1999 will continue to be subject to the regulations that existed before the New
Withholding Regulations were issued.
In the case of payments of interest to Foreign Holders, temporary Treasury
regulations currently in effect provide that the 31% backup withholding of tax
and certain information reporting will not apply to such payments with respect
to which either the requisite certification, as described above, has been
received or an exemption has otherwise been established; provided that neither
TMCC nor its payment agent has actual knowledge that the holder is a United
States person or that the conditions of any other exemption are not in fact
satisfied. These information reporting and backup withholding requirements will
apply, however, to the gross proceeds paid to a Foreign Holder on the
disposition of the Notes by or through a United States office of a United States
or foreign broker, unless the holder certifies to the broker under penalties of
perjury as to its name, address and status as a foreign person or the holder
otherwise establishes an exemption. Information reporting requirements, but not
backup withholding, will also apply to a payment of the proceeds of a
disposition of the Notes by or through a foreign office of a United States
broker or foreign brokers with certain types of relationships to the United
States unless such broker has documentary evidence in its file that the holder
of the Notes is not a United States person, and such broker has no actual
knowledge to the contrary, or the holder establishes an exemption. Neither
information reporting nor backup withholding generally will apply to a payment
of the proceeds of a disposition of the Notes by or through a foreign office of
a foreign broker not subject to the preceding sentence.
For payments made after December 31, 1999, the New Withholding Regulations
provide that to the extent a Foreign Holder certifies on Form W-8 (or a
permitted substitute form) as to such holder's status as a foreign person, the
backup withholding provisions and the information reporting provisions will
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generally not apply. If a Foreign Holder fails to provide such certification,
such holder may be subject to certain information reporting and the 31% backup
withholding tax.
Backup withholding is not an additional tax. The amount of any backup
withholding from a payment to a holder will be allowed as a credit against such
holder's U.S. federal income tax liability and may entitle such holder to a
refund, provided the required information is furnished to the IRS.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis for sale by TMCC through
the Agents, who have agreed to use their reasonable efforts to solicit offers to
purchase the Notes and may also sell Notes to an Agent, as principal, for resale
to investors and other purchasers at varying prices related to prevailing market
prices at the time of resale, as determined by such Agent, or, if so agreed, at
a fixed initial offering price. TMCC also reserves the right to sell Notes
directly on its own behalf or through additional agents, acting either as agent
or principal, on substantially identical terms as those applicable to the
Agents. TMCC reserves the right to withdraw, cancel or modify the offer made
hereby without notice and may reject orders in whole or in part whether placed
directly with TMCC or through one of the Agents. The Agents will have the right,
in their discretion reasonably exercised, to reject in whole or in part any
offer to purchase Notes received by them. TMCC will pay the Agents, in the form
of a discount or otherwise, a commission, ranging from .125% to .750% (or, with
respect to Notes for which the Stated Maturity is in excess of 30 years, such
commission as shall be agreed upon by TMCC and the related Agent at the time of
sale), depending on the Stated Maturity of the Note, of the principal amount of
any Note sold through the Agents.
In addition, the Agents may offer the Notes they have purchased as principal
to other dealers for resale to investors and other purchasers, and may allow any
portion of the discount received in connection with such purchase from TMCC to
such dealers. Unless otherwise indicated in the applicable Pricing Supplement,
any Note sold to an Agent as principal will be purchased by such Agent at a
price equal to 100% of the principal amount thereof less a percentage equal to
the commission applicable to any agency sale of a Note of identical maturity,
and may be resold by the Agent to investors and other purchasers from time to
time in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale or may
be resold to certain dealers as described above. After the initial public
offering of Notes to be resold to investors and other purchasers on a fixed
public offering price basis, the public offering price, concession and discount
may be changed.
Unless otherwise specified in an applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in New York City on the date of settlement.
Each Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). TMCC has agreed to
indemnify the Agents against certain liabilities, including liabilities under
the Securities Act, or to contribute to payments the Agents may be required to
make in respect thereof. TMCC has agreed to reimburse each of the Agents for
certain expenses. In the ordinary course of their respective businesses, the
Agents and their affiliates have engaged and may in the future engage in
investment and commercial banking transactions with TMCC and affiliates of TMCC.
No Note will have an established trading market when issued. Unless
otherwise specified in the applicable Pricing Supplement, the Notes will not be
listed on any securities exchange. (See "Risk Factors--Illiquidity of Notes;
Secondary Trading in the Notes".)
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PROSPECTUS
[LOGO]
TOYOTA MOTOR CREDIT CORPORATION
DEBT SECURITIES
------------------
Toyota Motor Credit Corporation ("TMCC") may offer from time to time its
senior unsecured debt securities consisting of notes, debentures or other
evidences of indebtedness (the "Debt Securities"), in an aggregate principal
amount of not more than $5,031,395,000 (the initial offering price of Debt
Securities sold at a discount to face will be used for purposes of the
limitation and the face amount of Debt Securities sold at a premium to face will
be used for purposes of the limitation) or, if applicable, the equivalent
thereof in any other currency or currencies. The Debt Securities may be offered
as a single series or as two or more separate series in amounts, at prices and
on terms to be determined in light of market conditions at the time of sale and
to be set forth in a Prospectus Supplement or Prospectus Supplements.
The terms of each series of Debt Securities, including, where applicable,
the specific designation, aggregate principal amount, authorized denominations,
maturity, rate or rates and time or times of payment of any interest, any terms
for optional or mandatory redemption or payment of additional amounts or any
sinking fund provisions, the initial public offering price, the proceeds to TMCC
and any other specific terms in connection with the offering and sale of such
series will be set forth in a Prospectus Supplement or Prospectus Supplements.
As used herein, Debt Securities shall include debt securities denominated in
United States dollars or, at the option of TMCC if so specified in an applicable
Prospectus Supplement, in any other currency or in composite currencies or in
amounts determined by reference to an index.
The Debt Securities may be sold directly by TMCC, through agents designated
from time to time or to or through underwriters or dealers. See "Plan of
Distribution." If any agents of TMCC or any underwriters are involved in the
sale of any Debt Securities in respect of which this Prospectus is being
delivered, the names of such agents or underwriters and any applicable
commissions or discounts will be set forth in the applicable Prospectus
Supplement. The net proceeds to TMCC from such sale also will be set forth in
the applicable Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a Prospectus Supplement.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 3, 1998.
<PAGE>
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT
APPROVED OR DISAPPROVED THIS OFFERING NOR HAS THE COMMISSIONER PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT HERETO.
AVAILABLE INFORMATION
TMCC is subject to the informational requirements of the United States
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the United States
Securities and Exchange Commission (the "Commission"). Such reports and other
information can be inspected and copied at the Public Reference Room of the
Commission, at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices at 7 World Trade Center, 13th Floor, New York, New
York 10048 and Citibank Center, Suite 1800, 500 West Madison Street, Chicago,
Illinois 60661-2511. Copies of such material may also be obtained by mail from
the Public Reference Section of the Commission, at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549 at prescribed rates. Copies of such reports and
other information may also be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005, on which an issue of
TMCC's debt securities is listed. Electronic filings made through the Electronic
Gathering Analysis and Retrieval System are publicly available through the
Commission's website at http://www.sec.gov.
TMCC has filed with the Commission a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") under the United States Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus and the accompanying Prospectus Supplement do
not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information, reference is made to the
Registration Statement, which may be examined without charge at the public
reference facilities maintained by the Commission at the Public Reference Room
of the Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies thereof may be obtained from the Commission upon payment of the
prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
TMCC's Annual Report on Form 10-K for the fiscal year ended September 30,
1997 and its Quarterly Reports on Form 10-Q for the quarters ended December 31,
1997, March 31, 1998 and June 30, 1998 are incorporated in and made a part of
this Prospectus. All documents filed by TMCC with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering of the Debt
Securities shall be deemed to be incorporated by reference herein and to be a
part hereof from the date of filing such documents. A statement contained
herein, in a Prospectus Supplement or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
in a Prospectus Supplement or in any subsequently filed document which is
incorporated by reference herein modifies or supersedes such statement. Any such
statements so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
TMCC WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROSPECTUS IS
DELIVERED, ON THE REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE
DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO
THE DOCUMENTS THAT THIS PROSPECTUS INCORPORATES). REQUESTS FOR SUCH COPIES
SHOULD BE DIRECTED TO TOYOTA MOTOR CREDIT CORPORATION, 19001 SOUTH WESTERN
AVENUE, TORRANCE, CALIFORNIA 90509, ATTENTION: TREASURY, TELEPHONE NUMBER (310)
787-1310.
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<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
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) and the Commonwealth of Puerto Rico. TMCC is a wholly owned subsidiary
of Toyota Motor Sales, U.S.A., Inc. ("TMS"). 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). Substantially all of TMS' products are either manufactured
by its affiliates or are purchased from Toyota Motor Corporation ("TMC"), the
indirect parent of TMS, or TMC's affiliates. TMCC and its subsidiaries are
collectively referred to herein as the "Company."
TMCC was incorporated in California on October 4, 1982, and commenced
operations in May 1983. TMCC's principal executive offices are located in the
TMS headquarters complex at 19001 South Western Avenue, Torrance, California
90509, and its telephone number is (310) 787-1310.
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement which accompanies
this Prospectus, the net proceeds from the sale of the Debt Securities will be
added to TMCC's general funds and will be available for the purchase of earning
assets and for the retirement of debt. Such proceeds initially may be used to
reduce short-term borrowings or may be invested in short-term securities.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities may be issued from time to time as a single series or in
two or more separate series. The following description of the terms of the Debt
Securities sets forth certain general terms and provisions of the Debt
Securities to which any Prospectus Supplement may relate. The particular terms
of the Debt Securities offered by any Prospectus Supplement (the "Offered Debt
Securities"), and the extent to which such general provisions may apply to the
Offered Debt Securities, will be described in a Prospectus Supplement relating
to such Offered Debt Securities.
The Debt Securities will be issued under an indenture, dated as of August 1,
1991, as amended and supplemented by a first supplemental indenture dated as of
October 1, 1991, as such indenture may be further amended from time to time (the
"Indenture"), between TMCC and the trustee with respect to one or more series of
Debt Securities designated in the applicable Prospectus Supplement or Prospectus
Supplements (the "Trustee"). The terms of the Debt Securities include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and holders
of the Debt Securities are referred to the Indenture and the Trust Indenture Act
for a statement thereof. The following summary of certain provisions of the Debt
Securities and of the Indenture does not purport to be complete and is qualified
in its entirety by reference to the Indenture, a copy of which has been filed as
an exhibit to the Registration Statement of which this Prospectus is a part.
Capitalized terms used but not defined herein have the meanings given to them in
the Indenture.
THE DEBT SECURITIES WILL BE OBLIGATIONS SOLELY OF TMCC AND WILL NOT BE
OBLIGATIONS OF, OR DIRECTLY OR INDIRECTLY GUARANTEED BY, TMS, TMC OR ANY OF
THEIR AFFILIATES.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and Debt Securities may be issued
thereunder from time to time as a single series or in two or more separate
series up to the aggregate principal amount from time to time authorized by TMCC
for each series. As of the date of this Prospectus, TMCC has authorized the
issuance under the
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<PAGE>
Indenture of up to $12,600,000,000 aggregate principal amount of debt securities
(the initial offering price of Debt Securities sold at a discount to face is
used for purposes of this limitation and the face amount of Debt Securities sold
at a premium to face is used for purposes of this limitation) of which
approximately $7,568,605,000 aggregate principal amount have previously been
issued.
The Debt Securities will be unsecured general obligations of TMCC and will
rank pari passu with all other unsecured and unsubordinated indebtedness of TMCC
from time to time outstanding.
The applicable Prospectus Supplement or Prospectus Supplements will describe
the terms of the Offered Debt Securities, including: (i) the aggregate principal
amount and denominations of such Debt Securities; (ii) the date on which such
Debt Securities will mature; (iii) the date or dates on which the principal of
such Debt Securities is payable, if other than on maturity, or the method of
determination thereof; (iv) the rate or rates per annum (which may be fixed or
variable), or the formula for determining such rate or rates, at which such Debt
Securities will bear interest, if any; (v) the dates on which such interest, if
any, will be payable; (vi) the Place of Payment or transfer with respect to such
Debt Securities; (vii) the provisions for redemption or repayment of such Debt
Securities, if any, including the redemption and/or repayment price or prices
and any remarketing arrangements relating thereto; (viii) the sinking fund
requirements or amortization provisions, if any, with respect to such Debt
Securities; (ix) whether such Debt Securities are denominated or provide for
payment in United States dollars or a foreign currency or units of two or more
currencies; (x) the form (registered or bearer or both) in which such Debt
Securities may be issued and any restrictions applicable to the exchange of one
form for another and to the offer, sale and delivery of Debt Securities in
either form; (xi) if TMCC will pay Additional Amounts in respect of Debt
Securities held by a person who is not a U.S. person in respect of specified
taxes, assessments or other governmental charges, under what circumstances TMCC
will pay such Additional Amounts and whether TMCC has the option to redeem the
affected Debt Securities rather than pay such Additional Amounts; (xii) whether
such Debt Securities will be issued in whole or in part in the form of one or
more global securities and, in such case, the Depositary for such global
securities; (xiii) the title of such Debt Securities, the series of which such
Debt Securities shall be a part and the Trustee with respect to such Debt
Securities; and (xiv) any other terms of such Debt Securities. Reference is made
to the Prospectus Supplement for the terms of the Debt Securities being offered
thereby. The variable terms of the Debt Securities are subject to change from
time to time, but no such change will affect any Debt Security already issued or
as to which an offer to purchase has been accepted by TMCC.
The provisions of the Indenture described above provide TMCC with the
ability, in addition to the ability to issue Debt Securities with terms
different from those of Debt Securities previously issued, to "reopen" a
previous issue or a series of Debt Securities and issue additional Debt
Securities of such issue or series.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and premium and interest, if any, on Debt Securities will be
made at the office of such Paying Agent or Paying Agents as TMCC may designate
from time to time, except that at the option of TMCC payment of any interest may
be made (i) by check mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register or (ii) by wire transfer to
an account maintained by the Person entitled thereto as specified in the
Security Register. Unless otherwise indicated in an applicable Prospectus
Supplement, payment of any installment of interest on Debt Securities will be
made to the Person in whose name such Debt Security is registered at the close
of business on the Regular Record Date for such interest.
Unless otherwise indicated in an applicable Prospectus Supplement, the
Trustee with respect to the Debt Securities of the related series, acting
through its Corporate Trust Office, will be designated
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<PAGE>
as TMCC's sole Paying Agent for payments with respect to Debt Securities of such
series. TMCC may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent or approve a change in the office through which
any Paying Agent acts, except that TMCC will be required to maintain a Paying
Agent in each Place of Payment for such series. All moneys paid by TMCC to a
Paying Agent for the payment of principal of or premium or interest, if any, on
any Debt Security which remain unclaimed at the end of one year after such
principal, premium or interest shall have become due and payable will be repaid
to TMCC, and the Holder of such Debt Security or any coupon will thereafter look
only to TMCC for payment thereof.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in global
form. A Debt Security in global form will be deposited with, or on behalf of, a
Depositary, which will be identified in an applicable Prospectus Supplement. A
global Debt Security may be issued in either registered or bearer form and in
either temporary or permanent form. A Debt Security in global form may not be
transferred except as a whole by the Depositary for such Debt Security to a
nominee of such Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or any such nominee
to a successor of such Depositary or a nominee of such successor. If any Debt
Securities of a series are issuable in global form, the applicable Prospectus
Supplement will describe the circumstances, if any, under which beneficial
owners of interests in any such global Debt Security may exchange such interests
for definitive Debt Securities of such series and of like tenor and principal
amount in any authorized form and denomination, the manner of payment of
principal of, premium and interest, if any, on any such global Debt Security and
the material terms of the depositary arrangement with respect to any such global
Debt Security.
CERTAIN COVENANTS
The Debt Securities will not be secured by mortgage, pledge or other lien.
TMCC has covenanted in the Indenture not to pledge or otherwise subject to any
lien any property or assets of TMCC unless the Debt Securities 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 does 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
does 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;
(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
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<PAGE>
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 provision 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 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.
SUCCESSOR CORPORATION
The Indenture provides that TMCC may consolidate with, or sell, lease or
convey all or substantially all of its assets 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 or any state thereof
and shall expressly assume, by a supplemental indenture, executed and delivered
to each Trustee, in form satisfactory to each Trustee, all of the obligations of
TMCC under the Debt Securities and the Indenture; and (ii) TMCC or such
successor corporation, as the case may be, shall not, immediately after such
merger or consolidation, or such sale, lease or conveyance, be in default in the
performance of any such obligation. Subject to certain limitations in the
Indenture, a Trustee may receive from TMCC an officer's certificate and an
opinion of counsel as conclusive evidence that any such consolidation, merger,
sale, lease or conveyance, and any such assumption, complies with the provisions
of the Indenture.
SUPPLEMENTAL INDENTURES
Supplemental indentures may be entered into by TMCC and the appropriate
Trustee with the consent of the Holders of 66 2/3% in principal amount of any
series of outstanding Debt Securities, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Indenture or of modifying in any manner the rights of the Holders of each such
series affected by such modification or amendment, provided that no supplemental
indenture may, among other things, reduce the principal amount of or interest on
any Debt Securities, change the maturity date of the principal, the interest
payment dates or other terms of payment or reduce the percentage
6
<PAGE>
in principal amount of outstanding Debt Securities of any series the consent of
whose Holders is necessary to modify or alter the Indenture, without the consent
of each Holder of Debt Securities affected thereby. Under certain circumstances,
supplemental indentures may also be entered into without the consent of the
Holders.
EVENTS OF DEFAULT
The Indenture defines an Event of Default with respect to any series of Debt
Securities as being any one of the following events and such other events as may
be established for the Debt Securities of a particular series: (i) default in
payment of principal on the Debt Securities of such series; (ii) default in
payment of any interest on the Debt Securities of such series and continuance of
such default for a period of 30 days; (iii) default in the deposit of any
sinking fund payment with respect to Debt Securities of such series when and as
due; (iv) default in the performance, or breach, of any other covenant or
warranty of TMCC in the Indenture (other than a covenant or warranty included in
the Indenture solely for the benefit of a series of Debt Securities other than
such series) continued for 60 days after appropriate notice; and (v) certain
events of bankruptcy, insolvency or reorganization. No Event of Default with
respect to a particular series of Debt Securities issued under the Indenture
necessarily constitutes an Event of Default with respect to any other series of
Debt Securities issued thereunder. If an Event of Default occurs and is
continuing, the appropriate Trustee or the Holders of at least 25% in aggregate
principal amount of Debt Securities of each series affected thereby may declare
the Debt Securities of such series to be due and payable. Any past default with
respect to a particular series of Debt Securities may be waived by the Holders
of a majority in aggregate principal amount of the outstanding Debt Securities
of such series, except in a case of failure to pay principal of, or premium, if
any, or interest on such Debt Securities for which payment had not been
subsequently made or a default in respect of a covenant or provision of the
Indenture which cannot be modified or amended without the consent of the Holder
of each outstanding Debt Security of such series. TMCC will be required to file
with each Trustee annually an officer's certificate as to the absence of certain
defaults. The appropriate Trustee may withhold notice to Holders of any series
of Debt Securities of any default with respect to such series (except in payment
of principal, premium, if any, or interest) if it in good faith determines that
it is in the interest of such Holders to do so.
Subject to the provisions of the Indenture relating to the duties of a
Trustee in case an Event of Default shall occur and be continuing, a Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such Holders
have offered to such Trustee reasonable indemnity or security against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction. Subject to provisions in the Indenture for the
indemnification of a Trustee and to certain other limitations, the Holders of a
majority in principal amount of the outstanding Debt Securities of any series
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the appropriate Trustee, or exercising
any trust or power conferred on such Trustee with respect to the Debt Securities
of such series.
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture will be discharged with respect to the Debt Securities of any
series upon the satisfaction of certain conditions, including the payment in
full of the principal of, and premium, if any, and interest on all of the Debt
Securities of such series or the deposit with the appropriate Trustee of an
amount in cash or United States government obligations sufficient for such
payment or redemption, in accordance with the Indenture.
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<PAGE>
DEFEASANCE
TMCC may terminate certain of its obligations under the Indenture with
respect to the Debt Securities of any series, including its obligations to
comply with the restrictive covenants set forth in the Indenture (see "Certain
Covenants") with respect to the Debt Securities of such series, on the terms and
subject to the conditions contained in the Indenture, by depositing in trust
with the appropriate Trustee cash or United States government obligations
sufficient to pay the principal of, and premium, if any, and interest on the
Debt Securities of such series to their maturity in accordance with the terms of
the Indenture and the Debt Securities of such series. In such event, the
appropriate Trustee will receive an opinion of counsel stating that such deposit
and termination will not have any federal income tax consequences to the
Holders.
REGARDING THE TRUSTEES
The Indenture contains certain limitations on the right of a Trustee, should
it become a creditor of TMCC, to obtain payment of claims in certain cases, or
to realize on certain property received in respect of any such claim as security
or otherwise. A Trustee is permitted to engage in other transactions with TMCC;
provided, however, that if a Trustee acquires any conflicting interest it must
eliminate such conflict or resign.
The Indenture provides that, in case an Event of Default has occurred and is
continuing, a Trustee is required to use the degree of care and skill of a
prudent person in the conduct of his or her own affairs in the exercise of its
powers.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by and construed in
accordance with the laws of the State of New York.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth TMCC's ratio of earnings to fixed charges for
the periods shown.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30, SEPTEMBER 30,
------------------- ----------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
RATIO OF EARNINGS TO
FIXED CHARGES(1)........ 1.24 1.32 1.31 1.32 1.42 1.60 1.56
</TABLE>
- ------------------------
(1) 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. In March 1987, TMCC guaranteed payments of
principal and interest on $58 million principal amounts of bonds issued in
connection with the Kentucky manufacturing facility of an affiliate. As of
June 30, 1998, 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. Effective June 17, 1998, TMCC has guaranteed payments of principal
and interest on $40 million principal amount of flexible rate demand solid
waste disposal revenue bonds issued by Putnam County, West Virginia,
maturing in June 2028, issued in connection with the West Virginia
manufacturing facility subsidiary of Toyota Motor Manufacturing, U.S.A.,
Inc., an affiliate of TMCC.
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<PAGE>
PLAN OF DISTRIBUTION
TMCC may sell the Debt Securities through underwriters or agents or directly
to purchasers. A Prospectus Supplement will set forth the names of such
underwriters or agents, if any.
The Debt Securities may be sold to underwriters for their own account and
may be resold to the public from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. A Prospectus Supplement will set
forth any underwriting discounts and other items constituting underwriters'
compensation, any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers.
The Debt Securities may be sold directly by TMCC, or through agents
designated by TMCC from time to time. A Prospectus Supplement will set forth any
commission payable by TMCC to such agent. Unless otherwise indicated in the
Prospectus Supplement, any such agent will be acting on a reasonable efforts
basis for the period of its appointment.
The net proceeds to TMCC from the sale of the Debt Securities will be the
purchase price of the Debt Securities less any such discounts or commissions and
the other attributable expenses of issuance and distribution.
TMCC will agree to indemnify underwriters and agents against certain civil
liabilities, including liabilities under the Securities Act, or contribute to
payments underwriters or agents may be required to make in respect thereof.
LEGAL MATTERS
The validity of the Debt Securities offered hereby will be passed upon for
TMCC by Alan Cohen, Esq., General Counsel of TMCC. Unless otherwise specified in
an applicable Prospectus Supplement, O'Melveny & Myers LLP will act as counsel
for the underwriters or agents, if any.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of TMCC for the year ended September
30, 1997, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
With respect to the unaudited consolidated financial information of TMCC for
the three-month periods ended December 31, 1997 and 1996, the three- and
six-month periods ended March 31, 1998 and 1997, and the three- and nine-month
periods ended June 30, 1998 and 1997, incorporated by reference in this
Prospectus, PricewaterhouseCoopers LLP reported that they have applied limited
procedures in accordance with professional standards for a review of such
information. However, their separate reports dated February 12, 1998, May 7,
1998 and August 13, 1998, incorporated by reference herein, state that they did
not audit and they do not express an opinion on that unaudited consolidated
financial information. PricewaterhouseCoopers LLP has not carried out any
significant or additional audit tests beyond those which would have been
necessary if their reports had not been incorporated by reference. Accordingly,
the degree of reliance on their reports on such information should be restricted
in light of the limited nature of the review procedures applied.
PricewaterhouseCoopers LLP is not subject to the liability provisions of section
11 of the Securities Act for their reports on the unaudited consolidated
financial information because those reports are not "reports" or a "part" of the
registration statement prepared or certified by PricewaterhouseCoopers LLP
within the meaning of sections 7 and 11 of the Securities Act.
9
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY TMCC OR
THE AGENTS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF TMCC SINCE THE
DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO
DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
-------------------
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Risk Factors.......................................................... S-2
Description of Notes.................................................. S-3
United States Taxation................................................ S-19
Plan of Distribution.................................................. S-27
PROSPECTUS
Available Information................................................. 2
Incorporation of Certain Documents By Reference....................... 2
Toyota Motor Credit Corporation....................................... 3
Use of Proceeds....................................................... 3
Description of Debt Securities........................................ 3
Ratio of Earnings to Fixed Charges.................................... 8
Plan of Distribution.................................................. 9
Legal Matters......................................................... 9
Experts............................................................... 9
$2,031,395,000
[LOGO]
TOYOTA MOTOR
CREDIT CORPORATION
MEDIUM-TERM NOTES
----------------
PROSPECTUS SUPPLEMENT
-------------------
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
SEPTEMBER 3, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
APPENDIX
DESCRIPTION OF TOYOTA MOTOR CREDIT CORPORATION LOGO
The words "Toyota Motor Credit Corporation" are set forth in red block
capital letters and are surrounded by a red box. Next to the name of the
corporation, inside the box, are the initials "TMCC" in red block capital
letters surrounded by a red box.
