<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------- --------
Commission file number 1-9961
----------
TOYOTA MOTOR CREDIT CORPORATION
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3775816
- ---------------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
19001 S. Western Avenue
Torrance, California 90509
- ---------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 787-1310
-----------------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
As of April 30, 1998, the number of outstanding shares of capital
stock, par value $10,000 per share, of the registrant was 91,500, all of which
shares were held by Toyota Motor Sales, U.S.A., Inc.
-1-
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in Millions)
<TABLE>
<CAPTION>
March 31, September 30, March 31,
1998 1997 1997
----------- ------------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS
------
Cash and cash equivalents................. $ 167 $ 177 $ 276
Investments in marketable securities...... 324 305 190
Investments in operating leases, net...... 9,840 10,257 10,690
Finance receivables, net.................. 10,487 8,452 8,450
Receivable from Parent.................... 91 112 -
Other receivables......................... 153 137 64
Deferred charges.......................... 174 164 162
Other assets.............................. 247 183 161
Income taxes receivable................... 93 43 -
------- ------- -------
Total Assets..................... $21,576 $19,830 $19,993
======= ======= =======
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
Notes and loans payable................... $16,097 $14,745 $15,152
Accrued interest.......................... 179 213 190
Accounts payable and accrued expenses..... 1,310 1,072 943
Due to Parent............................. - - 51
Deposits.................................. 242 248 248
Income taxes payable...................... - - 64
Deferred income........................... 509 517 562
Deferred income taxes..................... 1,083 954 785
------- ------- -------
Total Liabilities................... 19,420 17,749 17,995
------- ------- -------
Commitments and Contingencies
Shareholder's Equity:
Capital stock, $l0,000 par value
(100,000 shares authorized; 91,500
issued and outstanding)............. 915 915 915
Retained earnings...................... 1,226 1,159 1,081
Net unrealized gains on marketable
securities.......................... 15 7 2
------- ------- -------
Total Shareholder's Equity.......... 2,156 2,081 1,998
------- ------- -------
Total Liabilities and
Shareholder's Equity............. $21,576 $19,830 $19,993
======= ======= =======
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
-2-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Dollars in Millions)
<TABLE>
<CAPTION> Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
1998 1997 1998 1997
------ ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C>
Financing Revenues:
Leasing................................. $ 645 $ 693 $1,296 $1,390
Retail financing........................ 130 113 256 223
Wholesale and other dealer financing.... 25 22 46 44
------ ------ ------ ------
Total financing revenues................... 800 828 1,598 1,657
Depreciation on operating leases........ 414 445 838 915
Interest expense........................ 239 225 473 452
------ ------ ------ ------
Net financing revenues..................... 147 158 287 290
Other revenues............................. 43 35 85 71
------ ------ ------ ------
Net financing revenues and other revenues.. 190 193 372 361
------ ------ ------ ------
Expenses:
Operating and administrative............ 96 77 179 151
Provision for credit losses............. 41 35 77 65
------ ------ ------ ------
Total expenses............................. 137 112 256 216
------ ------ ------ ------
Income before income taxes................. 53 81 116 145
Provision for income taxes................. 23 34 49 60
------ ------ ------ ------
Net Income................................. $ 30 $ 47 $ 67 $ 85
====== ====== ====== ======
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
-3-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Millions)
<TABLE>
<CAPTION>
Six Months Ended March 31,
--------------------------
1998 1997
------ ------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income............................................ $ 67 $ 85
------ ------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization................... 893 937
Provision for credit losses..................... 77 65
Gain from sale of finance receivables, net...... (2) -
(Decrease) in accrued interest................... (34) (36)
Increase (decrease) in deferred income taxes.... 129 (20)
(Increase) decrease in other assets.............. (99) 42
(Decrease) increase in other liabilities......... (38) 33
------ ------
Total adjustments..................................... 926 1,021
------ ------
Net cash provided by operating activities................ 993 1,106
------ ------
Cash flows from investing activities:
Addition to investments in marketable securities...... (413) (36)
Disposition of investments in marketable securities... 402 201
Addition to investments in operating leases........... (1,956) (2,102)
Disposition of investments in operating leases........ 1,507 1,306
Purchase of finance receivables....................... (8,461) (4,474)
Liquidation of finance receivables.................... 6,243 3,443
Proceeds from sale of finance receivables............. 104 -
------ ------
Net cash used in investing activities.................... (2,574) (1,662)
------ ------
Cash flows from financing activities:
Proceeds from issuance of notes and loans payable..... 2,935 3,864
Payments on notes and loans payable................... (2,114) (2,675)
Net increase (decrease) in commercial paper with
original maturities less than 90 days.............. 750 (527)
------ ------
Net cash provided by financing activities................ 1,571 662
------ ------
Net (decrease) increase in cash and cash equivalents..... (10) 106
Cash and cash equivalents at the beginning of the period. 177 170
------ ------
Cash and cash equivalents at the end of the period....... $ 167 $ 276
====== ======
Supplemental disclosures:
Interest paid......................................... $ 491 $ 475
Income taxes paid..................................... $ 4 $ 4
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
-4-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Interim Financial Data
- -------------------------------
Information pertaining to the three and six months ended March 31, 1998 and
1997 is unaudited. In the opinion of management, the unaudited financial
information reflects all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results for the interim
periods presented. The results of operations for the three and six months
ended March 31, 1998 are not necessarily indicative of those expected for any
other interim period or for a full year. Certain March 1997 accounts have
been reclassified to conform with the March 1998 and September 1997
presentation.
Under an arrangement with Toyota Motor Sales, U.S.A., Inc. ("TMS" or
"Parent"), TMS will provide support to TMCC for certain vehicle disposition
losses incurred during fiscal 1998. TMS support amounts included in the
Consolidated Statement of Income related to this arrangement totaled $25
million for the quarter and six months ended March 31, 1998.
These financial statements should be read in conjunction with the consolidated
financial statements, significant accounting policies and other notes to the
consolidated financial statements included in Toyota Motor Credit
Corporation's ("TMCC's") 1997 Annual Report to the Securities and Exchange
Commission ("SEC")on Form 10-K.
Note 2 - Investments in Operating Leases
- ----------------------------------------
Investments in operating leases, net consisted of the following:
<TABLE>
<CAPTION>
March 31, September 30, March 31,
1998 1997 1997
--------- ------------- ---------
(Dollars in Millions)
<S> <C> <C> <C>
Vehicles.................................. $12,067 $12,557 $13,231
Equipment and other....................... 377 338 301
------- ------- -------
12,444 12,895 13,532
Accumulated depreciation.................. (2,504) (2,535) (2,735)
Allowance for credit losses .............. (100) (103) (107)
------- ------- -------
Investments in operating leases, net..... $ 9,840 $10,257 $10,690
======= ======= =======
</TABLE>
-5-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3 - Finance Receivables
- ----------------------------
Finance receivables, net consisted of the following:
<TABLE>
<CAPTION>
March 31, September 30, March 31,
1998 1997 1997
--------- ------------- ---------
(Dollars in Millions)
<S> <C> <C> <C>
Retail..................................... $6,895 $6,315 $6,030
Finance leases............................. 3,203 1,938 1,982
Wholesale and other dealer loans........... 1,311 885 1,127
------ ------ ------
11,409 9,138 9,139
Unearned income............................ (788) (576) (575)
Allowance for credit losses................ (134) (110) (114)
------ ------ ------
Finance receivables, net................ $10,487 $8,452 $8,450
====== ====== ======
</TABLE>
Finance leases included estimated unguaranteed residual values of
$862 million, $678 million and $771 million at March 31, 1998, September 30,
1997 and March 31, 1997, respectively.
The aggregate balances related to finance receivables 60 or more days past due
totaled $17 million, $17 million and $24 million at March 31, 1998,
September 30, 1997 and March 31, 1997, respectively.
Note 4 - Notes and Loans Payable
- --------------------------------
Notes and loans payable consisted of the following:
<TABLE>
<CAPTION>
March 31, September 30, March 31,
1998 1997 1997
--------- ------------- ---------
(Dollars in Millions)
<S> <C> <C> <C>
Commercial paper, net.................... $ 2,236 $ 1,512 $ 1,913
------- ------- -------
Other senior debt, due in the years
ending September 30,:
1997.................................. - - 1,235
1998.................................. 1,484 2,868 2,762
1999.................................. 1,731 1,324 1,315
2000.................................. 2,395 2,505 2,505
2001.................................. 2,262 2,154 2,158
2002.................................. 2,551 2,660 2,610
Thereafter............................ 3,322 1,606 543
------- ------- -------
13,745 13,117 13,128
Unamortized premium...................... 116 116 111
------- ------- -------
Total other senior debt............... 13,861 13,233 13,239
------- ------- -------
Notes and loans payable............ $16,097 $14,745 $15,152
======= ======= =======
</TABLE>
-6-
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4 - Notes and Loans Payable (Continued)
- --------------------------------
Short-term borrowings include commercial paper and certain medium-term notes
("MTNs"). The weighted average remaining term and weighted average interest
rate of commercial paper was 22 days and 5.60%, respectively, at March 31,
1998. Short-term MTNs with original terms of one year or less, included in
other senior debt, were $472 million at March 31, 1998. The weighted average
interest rate on these short-term MTNs was 5.69% at March 31, 1998, including
the effect of interest rate swap agreements.
The weighted average interest rate on other senior debt was 5.70% at March 31,
1998, including the effect of derivative financial instruments. This rate has
been calculated using rates in effect at March 31, 1998, some of which are
floating rates that reset daily. Approximately 40% of other senior debt at
March 31, 1998 had floating interest rates that were covered by option-based
products. The weighted average strike rate on these option-based products was
6.08% at March 31, 1998. TMCC manages interest rate risk via continuous
adjustment of the mix of fixed and floating rate debt through use of interest
rate swap agreements and option-based products.
Included in Notes and Loans Payable at March 31, 1998 were unsecured notes
denominated in various foreign currencies; concurrent with the issuance of
these notes, TMCC entered into cross currency interest rate swap agreements to
convert these obligations at maturity into U.S. dollar obligations which in
aggregate total a principal amount of $8.1 billion. TMCC's foreign currency
debt was translated into U.S. dollars in the financial statements at the
various foreign currency spot exchange rates in effect at March 31, 1998. The
receivables or payables arising as a result of the differences between the
March 31, 1998 foreign currency spot exchange rates and the contract rates
applicable to the cross currency interest rate swap agreements are classified
in Other Receivables or Accounts Payable and Accrued Expenses, respectively,
and would in aggregate reflect a net payable position of $1.0 billion at
March 31, 1998.
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net Income
- ----------
The following table summarizes TMCC's net income by business segment for the
three and six months ended March 31, 1998 and March 31, 1997:
<TABLE>
<CAPTION> Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
(Dollars in Millions)
Net income:
Financing operations..................... $25 $43 $57 $75
Insurance operations..................... 5 4 10 10
---- ---- ---- ----
Total net income...................... $30 $47 $67 $85
==== ==== ==== ====
</TABLE>
Net income from financing operations decreased 42% and 24% for the quarter and
six months ended March 31, 1998, as compared with the same periods in fiscal
1997 primarily as a result of increased provision for residual value losses
due to higher residual value loss experience as well as higher operating and
administrative expenses and increased provision for credit losses, partially
offset by increased other income.
Net income from insurance operations increased 25% for the quarter ended March
31, 1998 and remained stable for the six months ended March 31, 1998, as
compared with the same periods in fiscal 1997. The increase for the quarter
ended March 31, 1998 reflects increased underwriting profit and higher
investment income, partially offset by higher personnel and operating
expenses.
-8-
<PAGE>
Earning Assets
- --------------
The composition of TMCC's net earning assets (excluding retail receivables and
interests in lease finance receivables sold through securitization
transactions), as of the balance sheet dates reported herein and TMCC's
vehicle lease and retail contract volume and finance penetration for the three
and six months ended March 31, 1998 and March 31, 1997 are summarized below:
<TABLE>
<CAPTION>
March 31, September 30, March 31,
1998 1997 1997
--------- ------------- ---------
(Dollars in Millions)
<S> <C> <C> <C>
Vehicle lease
Investment in operating leases, net..... $9,682 $10,124 $10,583
Finance leases, net..................... 2,567 1,498 1,540
------- ------- -------
Total vehicle leases..................... 12,249 11,622 12,123
Vehicle retail finance receivables, net.. 6,352 5,866 5,586
Vehicle wholesale and other receivables.. 1,960 1,434 1,652
Allowance for credit losses.............. (234) (213) (221)
------- ------- -------
Total net earning assets................. $20,327 $18,709 $19,140
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Total contract volume:
Vehicle lease.......................... 73,000 54,000 135,000 110,000
Vehicle retail......................... 58,000 54,000 110,000 107,000
------- ------- ------- -------
Total..................................... 131,000 108,000 245,000 217,000
======= ======= ======= =======
TMS sponsored contract volume:
Vehicle lease.......................... 26,000 12,000 37,000 31,000
Vehicle retail......................... 9,000 4,000 13,000 6,000
------- ------- ------- -------
Total..................................... 35,000 16,000 50,000 37,000
======= ======= ======= =======
Finance penetration (excluding fleet):
Vehicle lease.......................... 29.3% 19.7% 25.6% 20.8%
Vehicle retail......................... 13.5% 11.4% 12.0% 12.0%
----- ----- ----- -----
Total..................................... 42.8% 31.1% 37.6% 32.8%
===== ===== ===== =====
</TABLE>
-9-
<PAGE>
TMCC's net earning assets increased to $20.3 billion at March 31, 1998 from
$18.7 billion at September 30, 1997 and $19.1 billion at March 31, 1997.
Asset growth from the prior year and for the six months ended March 31, 1998
reflects increased lease, retail and wholesale earning assets. The increase
in the allowance for credit losses corresponds with asset growth.
In October 1996, TMCC created Toyota Lease Trust, a Delaware business trust
(the "Titling Trust"), to act as a lessor and to hold title to leased vehicles
in specified states. TMCC holds an undivided trust interest in lease
contracts owned by the Titling Trust, and such lease contracts are included in
TMCC's lease assets, until such time as the beneficial interests in such
contracts are transferred in connection with a securitization transaction.
Substantially all leases owned by the Titling Trust are classified as finance
receivables due to certain residual value insurance arrangements in place with
respect to such leases, while leases of similar nature originated outside of
the Titling Trust are classified as operating leases. The continued
acquisition of leases by the Titling Trust has changed the composition of
earning assets resulting in an increased mix of finance receivables relative
to operating lease assets due to the classification differences described
above.
TMCC's lease contract volume increased for the quarter and six months ended
March 31, 1998 as compared with the same periods in fiscal 1997 reflecting
higher lease finance penetration, competitive leasing programs and higher
levels of lease programs sponsored by TMS.
TMCC's retail contract volume increased for the quarter and six months ended
March 31, 1998 as compared with the same periods in fiscal 1997 primarily as a
result of higher TMS sponsored special programs.
-10-
<PAGE>
Net Financing Revenue and Other Revenues
- ----------------------------------------
TMCC's net financing revenues decreased 7% and 1% for the quarter and six
months ended March 31, 1998, as compared with the same periods in fiscal 1997
primarily as a result of increased provision for residual value losses, which
is described below under depreciation on operating leases, as well as
increased interest expense, partially offset by increased retail and wholesale
revenues.
The following table summarizes TMCC's other revenues for the three and six
months ended March 31, 1998 and March 31, 1997:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1998 1997 1998 1997
---- ---- ---- ----
(Dollars in Millions)
<S> <C> <C> <C> <C>
Insurance operations revenues............. $35 $31 $69 $62
Gains and servicing fees on assets sold... 7 2 14 5
Investment and other income............... 1 2 2 4
---- ---- ---- ----
Total other revenues................... $43 $35 $85 $71
==== ==== ==== ====
</TABLE>
Other revenues increased 23% and 20% for the quarter and six months ended
March 31, 1998, as compared with the same periods in fiscal 1997 reflecting
increased insurance operations revenues due to higher underwriting revenues
associated with in-force agreements as well as increased investment income.
Also, gains and servicing fee income increased for the quarter and six months
ended March 31, 1998, as compared with the same periods in fiscal 1997 due to
growth in the balance of sold retail receivables and interests in lease
finance receivables. Principal collections related to the lease receivables
sold in September 1997 were used to purchase additional vehicle lease
contracts resulting in gains of approximately $1 million and $2 million for
the quarter and six months ended March 31, 1998. Gains recognized on asset-
backed securitization transactions generally accelerate the recognition of
income on lease and retail contracts, net of servicing fees and other related
deferrals, into the period the assets are sold. Numerous factors can affect
the timing and amounts of these gains, such as the type and amount of assets
sold, the structure of the sale and current financial market conditions.
-11-
<PAGE>
Depreciation on Operating Leases
- --------------------------------
The following table sets forth the items included in TMCC's depreciation on
operating leases for the three and six months ended March 31, 1998 and March
31, 1997:
<TABLE>
<CAPTION> Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
(Dollars in Millions)
Straight-line depreciation on operating leases..... $378 $421 $762 $849
Provision for residual value losses
on operating leases............................ 61 24 101 66
Parent support for certain vehicle disposition
losses......................................... (25) - (25) -
---- ---- ---- ----
Total depreciation on operating leases.......... $414 $445 $838 $915
==== ==== ==== ====
</TABLE>
Straight-line depreciation expense decreased 10% for the quarter and six
months ended March 31, 1998, as compared with the same periods in fiscal 1997
corresponding with a decline in average operating lease assets. As discussed
earlier, the acquisition of leases by the Titling Trust has increased the
ratio of lease finance receivables relative to operating lease assets, which
results in reduced operating lease revenues and depreciation expense.
TMCC is subject to residual value risk in connection with its lease portfolio.
TMCC's residual value risk is a function of the number of off-lease vehicles
returned for disposition and any shortfall between the net disposition
proceeds and the estimated unguaranteed residual values on returned vehicles.
Total unguaranteed residual values related to TMCC's vehicle lease portfolio
declined from approximately $9.0 billion at September 30, 1997 to $8.7 billion
at March 31, 1998 reflecting the acquisition of residual value insurance on an
increasing number of leases in connection with the lease securitization
program. TMCC maintains an allowance for estimated losses on lease vehicles
returned to the Company for disposition at lease termination. The level of
allowance required to cover future vehicle disposition losses is based upon
projected vehicle return rates and projected residual value losses on core
models derived from market information on used vehicle sales, historical
factors, including lease return trends, and general economic factors. The
provision for losses on returned lease vehicles is included in TMCC's
depreciation expense for operating leases and in leasing revenues for direct
finance leases.
-12-
<PAGE>
The increase in the provision for residual value losses on operating leases
for the quarter and six months ended March 31, 1998 reflects increasing off-
lease vehicle return rates as well as higher residual value losses per vehicle
sold at auction. The number of leased vehicles returned to TMCC as a
percentage of the number of lease contracts that as of their origination dates
were scheduled to terminate ("full term return ratio") has increased for each
of the first two quarters of TMCC's 1998 fiscal year. TMCC anticipates that
the full term return ratio will continue at the increased level through the
remainder of the fiscal year and perhaps longer. The full term return ratio
was 36% in the first six months of fiscal 1998 as compared to 14% for the same
period in fiscal 1997. Losses at vehicle disposition increased $36 million
and $60 million for the quarter and six months ended March 31, 1998 as
compared with the same periods in fiscal 1997. TMCC believes that the
increase in vehicle returns and losses is due in part to (i) the relatively
large number of 24 month Toyota vehicle leases maturing during the current
fiscal year, which historically experience higher return rates and losses per
unit than longer term contracts and (ii) the impact of competitive new vehicle
pricing for core Toyota and Lexus models which has put downward pressure on
late model Toyota and Lexus used vehicle prices. In addition, the large
supply of late model used vehicles in the used car market may also be
affecting return rates by depressing market prices. No assurance can be made
that the rate of vehicle returns or disposition losses will not increase
further.
The Company has taken action to reduce vehicle disposition losses by adjusting
the lease purchase mix and developing strategies to maximize proceeds on
vehicles sold through auction; however, no assurance can be given that such
activities or strategies will be successful with regard to future results.
During fiscal 1998, the Company received Parent support for vehicle
disposition losses; no assurance can be provided as to either the level of
Parent support for the remainder of fiscal 1998 or the continuation of the
support arrangement beyond fiscal 1998. TMCC's lease portfolio includes
contracts with terms ranging from 12 to 60 months; the average original
contract term in TMCC's operating lease portfolio was 36 months at March 31,
1998 and 1997.
Interest Expense
- ----------------
Interest expense increased 6% and 5% during the quarter and six months ended
March 31, 1998, as compared with the same periods in fiscal 1997 due to higher
average borrowings outstanding required to fund the growth in average earning
assets, and an increase in the average cost of borrowings. The weighted
average cost of borrowings was 5.88% and 5.85% for the six months ended March
31, 1998 and 1997, respectively.
Operating and Administrative Expenses
- -------------------------------------
Operating and administrative expenses increased 25% and 19% during the quarter
and six months ended March 31, 1998, as compared with the same periods in
fiscal 1997 reflecting primarily additional personnel and operating costs
required to support TMCC's growing customer base as well as growth in the
Company's insurance operations. TMCC anticipates continued growth in expenses
reflecting increasing headcount and operating costs associated with portfolio
growth and expanded customer service activities as well as costs in connection
with technology upgrades and software modifications to address year 2000
issues.
-13-
<PAGE>
Provision for Credit Losses
- ---------------------------
TMCC's provision for credit losses increased 17% and 18% during the quarter
and six months ended March 31, 1998, as compared with the same periods in
fiscal 1997 primarily as a result of less favorable credit loss experience and
earning asset growth. Increased credit losses reflect an increased number of
repossessed accounts, higher losses per repossessed account reflecting a
weaker used vehicle market, aging of the lease portfolio and a higher mix of
used vehicles in the retail portfolio, which historically produce higher
losses than new business. TMCC has not significantly altered its underwriting
standards during the quarter and six months ended March 31, 1998, as compared
with the same periods in fiscal 1997. Allowances for credit losses are
evaluated periodically, considering historical loss experience and other
factors, and are considered adequate to cover expected credit losses as of
March 31, 1998.
Net credit loss experience, excluding net losses on receivables sold subject
to limited recourse provisions, for the three and six months ended March 31,
1998 and 1997 was as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
1998 1997 1998 1997
----- ----- ----- -----
(Dollars in Millions)
<S> <C> <C> <C> <C>
Gross Credit Losses $33.8 $30.8 $62.2 $53.5
Recoveries (3.6) (2.9) (6.9) (5.7)
----- ----- ----- -----
Net Credit Losses............... $30.2 $27.9 $55.3 $47.8
===== ===== ===== =====
Annualized Net Credit Losses
as a % of Average Earning
Assets....................... .61% .59% .57% .51%
</TABLE>
<TABLE>
<CAPTION>
March 31, September 30, March 31,
1998 1997 1997
--------- ------------- ---------
(Dollars in Millions)
<S> <C> <C> <C>
Allowance for Credit Losses..... $234 $213 $221
Allowance for Credit Losses
as a % of Earning Assets..... 1.14% 1.13% 1.14%
</TABLE>
-14-
<PAGE>
Liquidity and Capital Resources
- -------------------------------
The Company requires, in the normal course of business, substantial funding to
support the level of its earning assets. Significant reliance is placed on
the Company's ability to obtain debt funding in the capital markets in
addition to funding provided by earning asset liquidations and cash provided
by operating activities as well as transactions through the Company's asset-
backed securities programs. Debt issuances have generally been in the form of
commercial paper, United States and Euro Medium Term Notes ("MTNs") and
Eurobonds. On occasion, this funding has been supplemented by loans and
equity contributions from TMS.
Commercial paper issuances are used to meet short-term funding needs.
Commercial paper outstanding under TMCC's commercial paper program ranged from
approximately $1.3 billion to $3.0 billion during the first six months of
fiscal 1998, with an average outstanding balance of $2.1 billion. For
additional liquidity purposes, TMCC maintains syndicated bank credit
facilities with certain banks which aggregated $2.0 billion at March 31, 1998.
No loans were outstanding under any of these bank credit facilities during the
first six months of fiscal 1998. TMCC also maintains, along with TMS,
uncommitted, unsecured lines of credit with banks totaling $250 million. At
March 31, 1998, TMCC had issued approximately $22 million in letters of
credit, primarily related to the Company's insurance operations.
Long-term funding requirements are met through the issuance of a variety of
debt securities underwritten in both the United States and international
capital markets. During the first six months of fiscal 1998, TMCC issued
approximately $2.6 billion of MTNs and Eurobonds all of which had original
maturities of one year or more.
The original maturities of all MTNs and Eurobonds outstanding at March 31,
1998 ranged from one to eleven years. At March 31, 1998, the amounts
outstanding under MTNs and Eurobonds, including the effect of foreign currency
translations at March 31, 1998 spot exchange rates, are as follows:
<TABLE>
<CAPTION>
Total
U.S. and
U.S. Foreign Foreign
Currency Currency Currency
Denominated Denominated Denominated
------------- ------------- -------------
<S> <C> <C> <C>
MTNs.............. $5.8 billion $4.5 billion $10.3 billion
Eurobonds......... 1.0 billion 2.6 billion 3.6 billion
------------ ------------ -------------
$6.8 billion $7.1 billion $13.9 billion
============ ============ =============
</TABLE>
-15-
<PAGE>
TMCC anticipates continued use of MTNs in both the United States and
international capital markets. At April 30, 1998, approximately $168 million
was available for issuance under TMCC's United States public MTN program, none
of which was committed for issue by the Company. The maximum aggregate
principal amount authorized to be outstanding at any time under TMCC's Euro
MTN program is $16.0 billion. Approximately $6.7 billion was available for
issuance under the Euro MTN program as of April 30, 1998 of which the Company
has committed to issue approximately $1.0 billion. The United States and Euro
MTN programs may be expanded from time to time to allow for the continued use
of these sources of funding. Additionally, TMCC has registered approximately
$700 million of securities, excluding MTNs, with the SEC which were available
for issuance at April 30, 1998.
TMCC utilizes its asset-backed securitization programs to generate funds for
investment in earning assets. In October 1996, TMCC created Toyota Lease
Trust, a Delaware business trust to act as a lessor and to hold title to
leased vehicles in specified states in connection with its lease
securitization program. TMCC anticipates that the number and principal amount
of leases originated by the Toyota Lease Trust will comprise a significant and
increasing percentage of what otherwise would have been TMCC's lease
portfolio; however, until leases are included in a securitization transaction,
they will continue to be classified as finance receivables on TMCC's balance
sheet. TMCC has entered into agreements to sell approximately $500 million in
interests in lease finance receivables owned by the Toyota Lease Trust in
connection with a lease asset backed securitization transaction which is
scheduled to close in May 1998.
The Company's ratio of earnings to fixed charges was 1.24 for the first six
months of fiscal 1998 compared to 1.32 for the first six months of fiscal
1997. TMCC believes that the decline in the ratio has not affected its ability
to maintain liquidity or access to outside funding sources. The decline in
the ratio is due to several factors including higher interest expense, higher
provisions for residual value and credit losses and increased operating
expenses attributable to TMCC's growing customer base, customer service and
technology initiatives and costs in connection with the year 2000 project.
Cash flows provided by operating, investing and financing activities have been
used primarily to support earning asset growth. During the first six months
of fiscal 1998, cash used to purchase additional investments in operating
leases and finance receivables, totaling $10.4 billion, was partially provided
by the liquidation and sale of earning assets totaling $7.8 billion.
Investing activities resulted in a net cash use of $2.6 billion during the
first six months of fiscal 1998, as the purchase of additional earning assets
exceeded cash provided by the liquidation and sale of earning assets.
Investing activities were also supported by net cash provided by operating and
finance activities totaling $1.0 billion and $1.6 billion, respectively,
during the first six months of fiscal 1998. The Company believes that cash
provided by operating and investing activities as well as access to domestic
and international capital markets, the issuance of commercial paper and asset-
backed securitization transactions will provide sufficient liquidity to meet
its future funding requirements.
-16-
<PAGE>
On April 2, 1998, Moody's affirmed its "Aaa" rating of Japan's debt, but
changed its outlook for Japan's "Aaa" debt rating from "stable" to "negative".
In making the announcement, Moody's cited the uncertainty of the ability of
Japanese authorities to promote a return to economic growth and fiscal
balance. As a result, Moody's also lowered its outlook for all Japanese
companies with a "Aaa" debt rating, including that of Toyota Motor Corporation
("TMC"), TMCC's ultimate parent. Moody's April 2 release stressed, however,
that notwithstanding the change in rating outlook, the rating of Japan is not
on review for possible downgrade and that it maintains its "Aaa" rating on
Japan in view of the country's many fundamental strengths. The release noted
further that a change in outlook merely signifies the identification of
developments that may lead to a formal review of the rating over an 18-month
to two-year horizon. Although Moody's has not made any public announcement to
this effect, if the credit rating of TMC were lowered, the credit rating of
TMCC could also be lowered. To date, Standard & Poor's has not changed its
"AAA" rating of Japan's sovereign debt or the credit rating of TMC.
As discussed more fully in TMCC's 1997 Annual Report on Form 10-K, TMCC uses a
variety of interest rate and currency derivative instruments in managing its
interest rate and foreign currency exchange exposures. TMCC does not utilize
these instruments for trading purposes. Derivative financial instruments used
by TMCC involve, to varying degrees, elements of credit risk in the event a
counterparty should default and market risk as the instruments are subject to
rate and price fluctuations.
Credit exposure of derivative financial instruments is represented by the fair
value of contracts with a positive fair value at March 31, 1998 reduced by the
effects of master netting agreements. The credit exposure of TMCC's
derivative financial instruments at March 31, 1998 was $39 million on an
aggregate notional amount of $21.5 billion. At March 31, 1998 approximately
91% of TMCC's derivative financial instruments, based on notional amounts,
were with commercial banks and investment banking firms assigned investment
grade ratings of "AA" or better by national rating agencies. TMCC does not
anticipate non-performance by any of its counterparties.
As of March 31, 1998, an interest rate increase of 1% (100 basis points) would
raise TMCC's weighted average interest rate, including the effects of interest
rate swap agreements and option-based products, by .70% from 5.69% to an
estimated 6.39% at March 31, 1998. Conversely, an interest rate decrease of
1% (100 basis points) would lower TMCC's weighted average interest rate,
including the effects of interest rate swap agreements and option-based
products, by .88% from 5.69% to an estimated 4.81% at March 31, 1998.
TMCC uses a value-at-risk methodology, in connection with other management
tools, to assess and manage the interest rate risk of aggregated loan and
lease assets and financial liabilities, including interest rate derivatives
and option-based products. Value-at-risk represents the potential losses for
a portfolio from adverse changes in market factors for a specified period of
time and likelihood of occurrence (i.e. level of confidence). TMCC's value-
at-risk methodology incorporates the impact from adverse changes in market
interest rates but does not incorporate any impact from other market changes,
such as foreign currency exchange rates or commodity prices, which do not
affect the value of TMCC's portfolio. The methodology assumes that changes in
interest rates are lognormally distributed. For options and instruments with
non-linear returns, the model uses the Black Scholes method to approximate
changes in fair value. The value-at-risk methodology excludes changes in fair
values related to investments in marketable securities as these amounts are
not significant. TMCC estimates value-at-risk using historical interest rate
volatilities for the past two years and a stratified random sampling
methodology.
-17-
<PAGE>
The value-at-risk of TMCC's portfolio as of March 31, 1998, measured as the
potential 30 day loss in fair value from assumed adverse changes in interest
rates is as follows:
<TABLE>
<CAPTION>
As of
March 31, 1998
----------------
<S> <C>
Mean portfolio value...................... $3,020.0 million
Value-at-risk............................. $26.6 million
Percentage of the mean portfolio value.... 0.9%
Confidence level.......................... 95.0%
</TABLE>
TMCC's calculated value-at-risk exposure represents an estimate of reasonably
possible net losses that would be recognized on its portfolio of financial
instruments assuming hypothetical movements in future market rates and is not
necessarily indicative of actual results which may occur. It does not
represent the maximum possible loss nor any expected loss that may occur,
since actual future gains and losses will differ from those estimated, based
upon actual fluctuations in market rates, operating exposures, and the timing
thereof, and changes in the composition of TMCC's portfolio of financial
instruments during the year.
A reconciliation of the activity of TMCC's derivative financial instruments
for the six months ended March 31, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
Six Months Ended March 31,
------------------------------------------------------------
Cross
Currency
Interest Interest Indexed
Rate Swap Rate Swap Option-based Note Swap
Agreements Agreements Products Agreements
------------ ------------ ------------ ------------
1998 1997 1998 1997 1998 1997 1998 1997
---- ---- ---- ---- ---- ---- ---- ----
(Dollars in Billions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning notional amount....... $6.5 $5.6 $6.3 $6.8 $5.6 $6.2 $2.4 $1.9
Add:
New agreements............... 2.1 1.5 0.3 0.9 1.4 1.6 0.2 0.8
Less:
Terminated agreements........ - - - - - - - -
Expired agreements........... 0.8 0.1 1.1 1.4 1.1 2.3 0.3 0.2
---- ---- ---- ---- ---- ---- ---- ----
Ending notional amount.......... $7.8 $7.0 $5.5 $6.3 $5.9 $5.5 $2.3 $2.5
==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
-18-
<PAGE>
Year 2000 Date Conversion
- -------------------------
In 1997, the Company developed an action plan to identify, evaluate and
implement changes to computer systems and software to address potential year
2000 systems malfunctions associated with time sensitive programs that may not
properly recognize the year 2000. In addition, TMCC has initiated
communications with dealers, financial institutions, and vendors to determine
the extent of risk created by those third parties' failure to remediate their
own year 2000 issues. At present, TMCC cannot determine the effect of failed
remediation efforts by these outside parties. Costs associated with the year
2000 systems and software modifications are expensed as incurred. The total
estimated cost associated with the required modifications to TMCC's systems
and software is not expected to have a material impact on the Company's
results of operations, liquidity or capital resources.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995
The foregoing Business description and Management's Discussion and Analysis
contain various "forward looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, which represent the Company's expectations
or beliefs concerning future events, including the following: that TMCC
anticipates that the rate of vehicle returns will continue at an increased
level through the remainder of the fiscal year and perhaps longer; that
allowances for credit losses are considered adequate to cover expected credit
losses; that TMCC anticipates continued growth in operating expenses
associated with portfolio growth, expanded customer service activities,
technology upgrades and software modifications to address year 2000 issues;
the Company's continued use of MTNs in the United States and the international
capital markets; that TMCC anticipates that the number and principal amount of
leases originated by the Toyota Lease Trust will comprise a significant and
increasing percentage of what otherwise would have been TMCC's lease
portfolio; that the decline in the ratio of earnings to fixed charges has not
affected the Company's ability to maintain liquidity or access to outside
funding sources; that cash provided by operating and investing activities as
well as access to domestic and international capital markets, the issuance of
commercial paper and asset-backed securitization transactions will provide
sufficient liquidity to meet the Company's future funding requirement; that
the total cost associated with required year 2000 issues is not expected to
have a material impact on the Company's results of operations, liquidity or
capital resources.
-19-
<PAGE>
The Company cautions that these statements are further qualified by important
factors that could cause actual results to differ materially from those in the
forward looking statements, including, without limitation, the following:
decline in demand for Toyota and Lexus products; the effect of economic
conditions; a decline in the market acceptability of leasing; the effect of
competitive pricing on interest margins; increases in prevailing interest
rates; changes in pricing due to the appreciation of the Japanese yen against
the United States dollar; the effect of governmental actions; the effect of
competitive pressures on the used car market and residual values and the
continuation of the other factors causing an increase in vehicle returns and
disposition losses; the continuation of, and if continued, the level and type
of special programs offered by TMS; the ability of the Company to successfully
access the United States and international capital markets; the failure of the
Company's action plan to resolve timely year 2000 issues due to non-
performance by outside contractors, failure of third parties to remediate
their year 2000 issues or other factors; increased costs associated with the
Company's debt funding efforts; and the ability of the Company's
counterparties to perform under interest rate and cross currency swap
agreements. Results actually achieved thus may differ materially from
expected results included in these statements.
New Accounting Standards
In February 1998, the FASB issued SFAS No. 132, "Employers Disclosure About
Pensions and Other Postretirement Benefits." SFAS No. 132 standardizes the
disclosure requirements for pension and other postretirement benefits,
requires additional information on changes in the benefit obligations and fair
values of plan assets and eliminates certain previously required disclosures.
The Company does not have a pension plan separate from TMS; all full-time
employees of the Company are eligible to participate in the TMS pension plan.
Benefit obligations and fair values of plan assets for employees of the
Company are not determined separately from TMS. The impact on the Company of
adoption of SFAS No. 132 is not expected to be significant.
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Opinion ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." This SOP provides guidance
on accounting for the costs of computer software developed or obtained for
internal use. This SOP requires that entities capitalize certain internal-use
software costs once certain criteria are met. Currently, the Company
generally expenses the costs of developing or obtaining internal-use software
as incurred. The Company is currently evaluating SOP 98-1, but does not
expect it to have a material impact on its consolidated financial statements.
Review by Independent Public Accountants
With respect to the unaudited consolidated financial information of Toyota
Motor Credit Corporation for the three-month and six-month periods ended
March 31, 1998 and 1997, Price Waterhouse LLP ("Price Waterhouse") reported
that they have applied limited procedures in accordance with professional
standards for a review of such information. However, their separate report
dated May 7, 1998 appearing herein, states that they did not audit and they do
not express an opinion on that unaudited consolidated financial information.
Price Waterhouse has not carried out any significant or additional audit tests
beyond those which would have been necessary if their report had not been
included. Accordingly, the degree of reliance on their report on such
information should be restricted in light of the limited nature of the review
procedures applied. Price Waterhouse is not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for their report on the
unaudited consolidated financial information because that report is not a
"report" or a "part" of the registration statement prepared or certified by
Price Waterhouse within the meaning of Sections 7 and 11 of the Act.
-20-
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Various claims and actions are pending against TMCC and its subsidiaries with
respect to financing activities, taxes and other matters arising from the
ordinary course of business. Certain of these actions are or purport to be
class action suits. Management and internal and external counsel perform
periodic reviews of pending claims and actions to determine the probability of
adverse verdicts and resulting amounts of liability. The amounts of liability
on pending claims and actions as of March 31, 1998 were not determinable;
however, in the opinion of management, the ultimate liability resulting
therefrom should not have a material adverse effect on TMCC's consolidated
financial position or results of operations. The foregoing is a forward
looking statement within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Act of 1934, as amended,
which represents the Company's expectations and beliefs concerning future
events. The Company cautions that its discussion of Legal Proceedings is
further qualified by important factors that could cause actual results to
differ materially from those in the forward looking statement, including but
not limited to the discovery of facts not presently known to the Company or
determinations by judges, juries or other finders of fact which do not accord
with the Company's evaluation of the possible liability from existing
litigation.
ITEM 2. CHANGES IN SECURITIES.
There is nothing to report with regard to this item.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
There is nothing to report with regard to this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
There is nothing to report with regard to this item.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
The exhibits listed on the accompanying Exhibit Index, on page 23,
are filed as part of this report.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by the registrant during
the quarter ended March 31, 1998.
-21-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TOYOTA MOTOR CREDIT CORPORATION
-------------------------------
(Registrant)
Date: May 7, 1998 By /S/ GEORGE E. BORST
-------------------------------
George E. Borst
Senior Vice President and
General Manager
(Principal Executive Officer)
Date: May 7, 1998 By /S/ GREGORY B. WILLIS
-------------------------------
Gregory B. Willis
Vice President
Finance and Administration
(Principal Accounting Officer)
-22-
<PAGE>
EXHIBIT INDEX
Exhibit Method
Number Description of Filing
- ------- ----------- ---------
12.1 Calculation of Ratio of Earnings to Fixed Charges. Filed
Herewith
15.1 Report of Independent Accountants. Filed
Herewith
15.2 Letter regarding unaudited interim financial Filed
information. Herewith
27.1 Financial Data Schedule. Filed
Herewith
-23-
<PAGE>
EXHIBIT 12.1
TOYOTA MOTOR CREDIT CORPORATION
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
1998 1997 1998 1997
---- ---- ---- ----
(Dollars in Millions)
<S> <C> <C> <C> <C>
Consolidated income
before income taxes...................... $ 53 $ 81 $116 $145
---- ---- ---- ----
Fixed charges:
Interest................................. 239 225 473 452
Portion of rent expense
representative of the
interest factor (deemed
to be one-third)...................... 1 1 2 1
---- ---- ---- ----
Total fixed charges......................... 240 226 475 453
---- ---- ---- ----
Earnings available
for fixed charges........................ $293 $307 $591 $598
==== ==== ==== ====
Ratio of earnings to
fixed charges<F1>........................ 1.22 1.36 1.24 1.32
==== ==== ==== ====
<FN>
- -----------------
<F1> In March 1987, TMCC guaranteed payments of principal and interest on
$58 million principal amount of bonds issued in connection with the
Kentucky manufacturing facility of an affiliate. As of March 31, 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.
</FN>
</TABLE>
<PAGE>
EXHIBIT 15.1
Report of Independent Accountants
---------------------------------
To the Board of Directors and Shareholder of
Toyota Motor Credit Corporation
We have reviewed the accompanying consolidated balance sheet and the related
consolidated statements of income and of cash flows of Toyota Motor Credit
Corporation (a wholly owned subsidiary of Toyota Motor Sales, U.S.A., Inc.) and
its subsidiaries as of and for the three-month and six-month periods ended
March 31, 1998 and 1997. This financial information is the responsibility of
the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial information for it to be in
conformity with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing standards,
the consolidated balance sheet as of September 30, 1997, and the related
consolidated statements of income, of shareholder's equity and of cash flows
for the year then ended (not presented herein), and in our report dated
October 31, 1997 we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet information as of September 30, 1997,
is fairly stated in all material respects in relation to the consolidated
balance sheet from which it has been derived.
/S/ PRICE WATERHOUSE LLP
Los Angeles, California
May 7, 1998
<PAGE>
EXHIBIT 15.2
May 7, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We are aware that Toyota Motor Credit Corporation has incorporated by reference
our report dated May 7, 1998 (issued pursuant to the provisions of Statement on
Auditing Standards No. 71) in the Prospectuses constituting part of its
Registration Statements on Form S-3 (Nos. 33-52359 and 333-26717). We are also
aware of our responsibilities under the Securities Act of 1933.
Yours very truly,
/S/ PRICE WATERHOUSE LLP
[ARTICLE] 5
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TOYOTA
MOTOR CREDIT CORPORATION'S MARCH 31, 1998 FINANCIAL STATEMENTS AND
NOTES THERETO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
[/LEGEND]
[MULTIPLIER] 1,000,000
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] SEP-30-1998
[PERIOD-END] MAR-31-1998
[CASH] 167
[SECURITIES] 324
[RECEIVABLES] 20,561<F1>
[ALLOWANCES] 234
[INVENTORY] 0
[CURRENT-ASSETS] 0<F2>
[PP&E] 0
[DEPRECIATION] 0<F3>
[TOTAL-ASSETS] 21,576
[CURRENT-LIABILITIES] 0<F2>
[BONDS] 16,097
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 915
[OTHER-SE] 1,241
[TOTAL-LIABILITY-AND-EQUITY] 21,576
[SALES] 0
[TOTAL-REVENUES] 1,683
[CGS] 0
[TOTAL-COSTS] 1,311<F3>
[OTHER-EXPENSES] 179
[LOSS-PROVISION] 77
[INTEREST-EXPENSE] 0<F3>
[INCOME-PRETAX] 116
[INCOME-TAX] 49
[INCOME-CONTINUING] 67
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 67
[EPS-PRIMARY] 0
[EPS-DILUTED] 0
<FN>
<F1>Receivables include Investments in Operating Leases net of Accumulated
Depreciation and Finance Receivables net of Unearned Income.
<F2>Toyota Motor Credit Corporation's Balance Sheet is not classified into
Current and Long-Term Assets and Liabilities.
<F3>Total Costs includes Interest Expense and Depreciation on Operating
Leases.
</FN>
</TABLE>
