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, 2000
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-9961
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TOYOTA MOTOR CREDIT CORPORATION
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3775816
- ---------------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
19001 S. Western Avenue
Torrance, California 90509
- ---------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 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, 2000, 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-
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in Millions)
March 31, September 30, March 31,
2000 1999 1999
------------ ------------- ------------
(Unaudited) (Unaudited)
ASSETS
------
Cash and cash equivalents................. $ 159 $ 180 $ 161
Investments in marketable securities...... 424 450 441
Finance receivables, net.................. 16,957 13,856 12,198
Investments in operating leases, net...... 8,393 8,605 9,091
Receivable from Parent and Affiliate...... 60 717 481
Other receivables......................... 333 366 222
Deferred charges.......................... 126 131 135
Other assets.............................. 239 242 222
Income taxes receivable................... - 31 35
------- ------- -------
Total Assets..................... $26,691 $24,578 $22,986
======= ======= =======
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
Notes and loans payable................... $20,291 $18,565 $17,174
Accrued interest.......................... 176 161 143
Accounts payable and accrued expenses..... 1,451 1,096 1,156
Deposits.................................. 183 201 225
Income taxes payable...................... 81 - -
Deferred income........................... 657 636 586
Deferred income taxes..................... 1,430 1,554 1,401
------- ------- -------
Total Liabilities................... 24,269 22,213 20,685
------- ------- -------
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...................... 1,492 1,435 1,366
Accumulated other comprehensive
income.............................. 15 15 20
------- ------- -------
Total Shareholder's Equity.......... 2,422 2,365 2,301
------- ------- -------
Total Liabilities and
Shareholder's Equity............. $26,691 $24,578 $22,986
======= ======= =======
See Accompanying Notes to Consolidated Financial Statements.
-2-
TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Dollars in Millions)
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
2000 1999 2000 1999
------ ------ ------ ------
(Unaudited)
Financing Revenues:
Leasing................................. $ 599 $ 599 $1,182 $1,219
Retail financing........................ 194 162 377 323
Wholesale and other dealer financing.... 37 25 68 49
------ ------ ------ ------
Total financing revenues................... 830 786 1,627 1,591
Depreciation on leases.................. 367 427 750 858
Interest expense........................ 317 220 594 460
------ ------ ------ ------
Net financing revenues..................... 146 139 283 273
Insurance premiums earned and contract
revenues................................ 34 30 68 58
Investment and other income................ 4 20 26 44
------ ----- ------ ------
Net financing revenues and other revenues.. 184 189 377 375
------ ------ ------ ------
Expenses:
Operating and administrative............ 102 95 193 178
Provision for credit losses............. 31 30 60 59
Insurance losses and loss adjustment
expenses............................. 20 15 38 30
------ ------ ------ ------
Total expenses............................. 153 140 291 267
------ ------ ------ ------
Income before income taxes................. 31 49 86 108
Provision for income taxes................. 6 21 29 45
------ ------ ------ ------
Net Income................................. $ 25 $ 28 $ 57 $ 63
====== ====== ====== ======
See Accompanying Notes to Consolidated Financial Statements.
-3-
TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY
(Dollars in Millions)
Accumulated
Other
Capital Retained Comprehensive
Stock Earnings Income Total
------- -------- ------------- -------
Balance at September 30, 1998.... $ 915 $ 1,303 $ 13 $2,231
------ ------- ---------- ------
Net income for the six months
ended March 31, 1999.......... - 63 - 63
Change in net unrealized gains
on available-for-sale
marketable securities......... - - 7 7
------ -------- ---------- ------
Total Comprehensive Income....... - 63 7 70
------ -------- ---------- ------
Balance at March 31, 1999........ $ 915 $ 1,366 $ 20 $2,301
====== ======= ========== ======
Balance at September 30, 1999.... $ 915 $ 1,435 $ 15 $2,365
------ ------- ---------- ------
Net income for the six months
ended March 31, 2000.......... - 57 - 57
Change in net unrealized gains
on available-for-sale
marketable securities......... - - - -
------ -------- ---------- ------
Total Comprehensive Income....... - 57 - 57
------ -------- ---------- ------
Balance at March 31, 2000........ $ 915 $ 1,492 $ 15 $2,422
====== ======= ========== ======
See Accompanying Notes to Consolidated Financial Statements.
-4-
TOYOTA MOTOR CREDIT CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Millions)
Six Months Ended March 31,
--------------------------
2000 1999
------ ------
(Unaudited)
Cash flows from operating activities:
Net income............................................ $ 57 $ 63
------ ------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization................... 800 878
Provision for credit losses..................... 60 59
Gain from sale of finance receivables, net...... (1) (6)
Realized loss on asset impairment............... 14 -
Decrease in other assets........................ 142 297
Increase (decrease) in accrued interest......... 15 (33)
(Decrease) increase in deferred income taxes.... (124) 17
Increase (decrease) in other liabilities........ 123 (49)
------ ------
Total adjustments..................................... 1,029 1,163
------ ------
Net cash provided by operating activities................ 1,086 1,226
------ ------
Cash flows from investing activities:
Addition to investments in marketable securities...... (376) (335)
Disposition of investments in marketable securities... 382 339
Purchase of finance receivables....................... (12,334) (9,189)
Liquidation of finance receivables.................... 9,132 7,513
Proceeds from sale of finance receivables............. 27 931
Addition to investments in operating leases........... (1,637) (1,684)
Disposition of investments in operating leases........ 1,119 1,515
Change in receivable from Parent and Affiliate........ 590 (206)
------ ------
Net cash used in investing activities.................... (3,097) (1,116)
------ ------
Cash flows from financing activities:
Proceeds from issuance of notes and loans payable..... 3,599 3,923
Payments on notes and loans payable................... (3,189) (3,150)
Net increase (decrease) in commercial paper with
original maturities less than 90 days.............. 1,580 (878)
------ ------
Net cash provided by (used in) financing activities...... 1,990 (105)
------ ------
Net (decrease) increase in cash and cash equivalents..... (21) 5
Cash and cash equivalents at the beginning of the period. 180 156
------ ------
Cash and cash equivalents at the end of the period....... $ 159 $ 161
====== ======
Supplemental disclosures:
Interest paid......................................... $ 568 $ 516
Income taxes paid..................................... $ 16 $ 10
See Accompanying Notes to Consolidated Financial Statements.
-5-
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, 2000 and
1999 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, 2000 are not necessarily indicative of those expected for any
other interim period or for a full year. Certain March 1999 accounts have
been reclassified to conform with the March 2000 and September 1999
presentation.
These financial statements should be read in conjunction with the consolidated
financial statements, significant accounting policies and other notes to the
consolidated financial statements included in TMCC's 1999 Annual Report to the
Securities and Exchange Commission ("SEC") on Form 10-K.
-6-
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 - Finance Receivables
- ----------------------------
Finance receivables, net consisted of the following:
March 31, September 30, March 31,
2000 1999 1999
--------- ------------- ---------
(Dollars in Millions)
Retail..................................... $10,773 $ 9,524 $ 8,753
Finance leases............................. 5,456 4,065 2,813
Wholesale and other dealer loans........... 2,021 1,292 1,468
------- ------- -------
18,250 14,881 13,034
Unearned income............................ (1,140) (888) (703)
Allowance for credit losses................ (153) (137) (133)
------- ------- -------
Finance receivables, net................ $16,957 $13,856 $12,198
======= ======= =======
Finance leases included estimated unguaranteed residual values of
$1,075 million, $823 million and $651 million at March 31, 2000, September 30,
1999 and March 31, 1999, respectively.
The aggregate balances related to finance receivables 60 or more days past due
totaled $23 million, $20 million and $16 million at March 31, 2000,
September 30, 1999 and March 31, 1999, respectively.
Note 3 - Investments in Operating Leases
- ----------------------------------------
Investments in operating leases, net consisted of the following:
March 31, September 30, March 31,
2000 1999 1999
--------- ------------- ---------
(Dollars in Millions)
Vehicles.................................. $10,036 $10,246 $11,047
Equipment and other....................... 592 548 499
------- ------- -------
10,628 10,794 11,546
Accumulated depreciation.................. (2,174) (2,124) (2,363)
Allowance for credit losses .............. (61) (65) (92)
------- ------- -------
Investments in operating leases, net...... $ 8,393 $ 8,605 $ 9,091
======= ======= =======
-7-
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4 - Notes and Loans Payable
- --------------------------------
Notes and loans payable consisted of the following:
March 31, September 30, March 31,
2000 1999 1999
--------- ------------- ---------
(Dollars in Millions)
Commercial paper, net.................... $ 3,492 $ 1,427 $ 1,484
Extendible commercial notes, net......... 147 146 -
------- ------- -------
Other senior debt, due in the years
ending September 30,:
1999.................................. - - 986
2000.................................. 1,671 4,077 3,003
2001.................................. 3,971 3,213 3,204
2002.................................. 2,601 2,718 2,517
2003.................................. 2,527 2,095 1,772
2004.................................. 2,916 2,466 1,812
Thereafter............................ 2,890 2,336 2,305
------- ------- -------
16,576 16,905 15,599
Unamortized premium...................... 76 87 91
------- ------- -------
Total other senior debt............... 16,652 16,992 15,690
------- ------- -------
Notes and loans payable............ $20,291 $18,565 $17,174
======= ======= =======
Short-term borrowings include commercial paper, extendible commercial notes
and certain medium-term notes ("MTNs"). The weighted average remaining term
and weighted average interest rate of commercial paper was 37 days and 6.05%,
respectively, at March 31, 2000. The weighted average remaining term and
weighted average interest rate on extendible commercial notes at
March 31, 2000 was 23 days and 6.12%, respectively. Short-term MTNs with
original terms of one year or less, included in other senior debt, were $1.5
billion at March 31, 2000. The weighted average interest rate on these short-
term MTNs was 6.17% at March 31, 2000, including the effect of interest rate
swap agreements.
The weighted average interest rate on other senior debt was 6.07% at March 31,
2000, including the effect of interest rate swap agreements. This rate has
been calculated using rates in effect at March 31, 2000, some of which are
floating rates that reset periodically. Approximately 58.8% of other senior
debt at March 31, 2000 had interest rates including the effect of interest
rate swap agreements that were fixed. The weighted average of these fixed
interest rates was 6.48% at March 31, 2000.
Approximately 39.4% of total debt at March 31, 2000 had floating interest
rates that were covered by option-based products. The weighted average strike
rate on these option-based products was 6.06% at March 31, 2000. TMCC manages
interest rate risk through continuous adjustment of the mix of fixed and
floating rate debt using interest rate swap agreements and option-based
products.
-8-
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4 - Notes and Loans Payable (continued)
- --------------------------------------------
Included in notes and loans payable at March 31, 2000 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 $7.5 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, 2000. The
receivables or payables arising as a result of the differences between the
March 31, 2000 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 in aggregate reflect a net payable position of $903 million at March 31,
2000.
Note 5 - Related Party Transactions
- -----------------------------------
TMCC has an arrangement to borrow from and invest funds with Toyota Motor
Sales, U.S.A., Inc. ("TMS" or "Parent") at short term market rates. For the
six months ended March 31, 2000 and 1999, the highest amounts of funds,
included in Receivable from Parent and Affiliate, invested with TMS were
$759 million and $2.0 billion, respectively. Interest earned on these
investments totaled $4 million and $9 million for the three months ended
March 31, 2000 and 1999, respectively, and $10 million and $25 million for the
six months ended March 31, 2000 and 1999, respectively.
Note 6 - Commitments and Contingent Liabilities
- -----------------------------------------------
As of March 31, 2000, TMCC has guaranteed payments of principal, interest and
premiums, if any, on $165.5 million principal amount of bonds issued in
connection with the manufacturing facilities of certain of its affiliates.
Effective July 1999, TMCC authorized the guarantee of up to $50 million of the
debt of Toyota Credit Argentina S.A. ("TCA"), of which $40 million has been
guaranteed as of March 31, 2000.
-9-
TOYOTA MOTOR CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7 - Segment Information
- ----------------------------
Financial results for the Company's operating segments are summarized below:
Three Months Ended Six Months Ended
March 31, March 31,
------------------ -----------------
- ---
2000 1999 2000 1999
------ ------- -------- --------
(Dollars in Millions)
Assets:
Financing operations.............. $ 26,232 $ 22,590 $ 26,232 $ 22,590
Insurance operations.............. 772 649 772 649
Eliminations/reclassifications.... (313) (253) (313) (253)
-------- -------- -------- --------
Total assets.................... $ 26,691 $ 22,986 $ 26,691 $ 22,986
======== ======== ======== ========
Gross revenues:
Financing operations.............. $ 830 $ 800 $ 1,644 $ 1,623
Insurance operations.............. 38 36 77 70
-------- -------- -------- --------
Total gross revenues............ $ 868 $ 836 $ 1,721 $ 1,693
======== ======== ======== ========
Net income:
Financing operations.............. $ 14 $ 23 $ 41 $ 51
Insurance operations.............. 11 5 16 12
-------- -------- -------- --------
Total net income................ $ 25 $ 28 $ 57 $ 63
======== ======== ======== ========
Note 8 - Subsequent Events
- --------------------------
Effective April 1, 2000, TMCC has guaranteed payments of principal, interest
and premiums, if any, on $20.5 million principal amount of flexible rate
demand solid waste disposal revenue bonds issued by Putnam County, West
Virginia maturing in April 2030, issued in connection with the West Virginia
manufacturing facility of an affiliate.
On April 18, 2000, Toyota Motor Corporation announced its plans to establish
Toyota Financial Services Corporation ("TFS"), a Japanese corporation that
will eventually oversee Toyota's worldwide financial service operations,
including those in the United States. TFS is scheduled to assume ownership of
TMCC, currently a subsidiary of TMS, on October 1, 2000.
In March 2000, certain nationally recognized statistical rating organizations
placed several classes of TMCC's lease securitizations under review for
possible downgrade as a result of higher than expected residual value losses.
In April 2000, TMCC announced that it will make a cash capital contribution
totaling $102 million to Toyota Leasing, Inc., a wholly-owned subsidiary of
TMCC, for deposit into the reserve funds of the lease securitizations under
review. TMCC also announced that a portion of the monthly excess cash flows in
the transactions will be retained in these reserve funds to supplement the
capital contribution. As a result of TMCC's stated intentions, the rating
organizations affirmed the original credit ratings for the lease asset-backed
securities.
-10-
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 operating segment for the
three and six months ended March 31, 2000 and March 31, 1999:
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
2000 1999 2000 1999
---- ---- ---- ----
(Dollars in Millions)
Net income:
Financing operations................ $14 $23 $41 $51
Insurance operations................ 11 5 16 12
--- --- --- ---
Total net income................. $25 $28 $57 $63
=== === === ===
Net income from financing operations decreased 39% and 20% for the quarter and
six months ended March 31, 2000, respectively, as compared with the same
periods in fiscal 1999 primarily due to lower interest margin as a result of
higher interest expense, lower investment and other income and higher
operating and administrative expenses, partially offset by lower depreciation
on leases and higher financing revenues.
Net income from insurance operations increased $6 million and $4 million for
the quarter and six months ended March 31, 2000,respectively, as compared with
the same periods in fiscal 1999, primarily due to lower provision for income
taxes reflecting a modification of tax allocation treatment for intercompany
insurance income which resulted in elimination of previously provided income
tax and reduction of current income tax by $7 million.
-11-
Earning Assets
- --------------
The composition of TMCC's net earning assets (which excludes 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, 2000 and March 31, 1999 are
summarized below:
March 31, September 30, March 31,
2000 1999 1999
--------- ------------- ---------
(Dollars in Millions)
Vehicle lease
Investment in operating leases, net..... $ 8,048 $ 8,290 $ 8,841
Finance leases, net..................... 4,454 3,315 2,271
------ ------- -------
Total vehicle leases..................... 12,502 11,605 11,112
Vehicle retail finance receivables, net.. 10,115 8,916 8,143
Vehicle wholesale and other receivables.. 2,947 2,142 2,259
Allowance for credit losses.............. (214) (202) (225)
------- ------- -------
Total net earning assets................. $25,350 $22,461 $21,289
======= ======= =======
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ------------------
2000 1999 2000 1999
------- ------- ------- -------
Total contract volume:
Vehicle lease.......................... 69,000 56,000 126,000 111,000
Vehicle retail......................... 104,000 72,000 189,000 128,000
------- ------- ------- -------
Total..................................... 173,000 128,000 315,000 239,000
======= ======= ======= =======
TMS sponsored contract volume:
Vehicle lease.......................... 17,000 12,000 31,000 17,000
Vehicle retail......................... 13,000 11,000 18,000 14,000
------- ------- ------- -------
Total..................................... 30,000 23,000 49,000 31,000
======= ======= ======= =======
Finance penetration (excluding fleet):
Vehicle lease.......................... 18.8% 18.6% 17.0% 17.3%
Vehicle retail......................... 18.8% 16.6% 17.4% 13.7%
----- ----- ----- ----
Total..................................... 37.6% 35.2% 34.4% 31.0%
===== ===== ===== =====
-12-
TMCC's net earning assets increased to $25.4 billion at March 31, 2000 from
$22.5 billion at September 30, 1999 and $21.3 billion at March 31, 1999. Asset
growth from September 30, 1999 and March 31, 1999, reflects primarily higher
vehicle retail and finance lease contract volume, as well as increased
wholesale earning assets. The increase in retail earning assets was partially
offset by the sale of $989 million of retail finance receivables in July 1999.
Wholesale earning assets increased from September 30, 1999 and March 31, 1999,
due to an increase in the number of dealers receiving wholesale financing from
TMCC. The allowance for credit losses increased from September 30, 1999
reflecting asset growth and is deemed adequate to cover expected losses based
on current and historical credit loss experience, portfolio composition and
other factors.
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, 2000, as compared with the same periods in fiscal 1999 reflecting
strong sales of Toyota and Lexus vehicles as well as higher levels of programs
sponsored by TMS.
TMCC's retail contract volume increased for the quarter and six months ended
March 31, 2000, as compared with the same periods in fiscal 1999 primarily due
to higher finance penetration on strong sales of Toyota and Lexus vehicles, as
well as an increase in used vehicle financing.
-13-
Net Financing Revenues and Other Revenues
- -----------------------------------------
TMCC's net financing revenues increased 5% and 4% for the quarter and six
months ended March 31, 2000, as compared with the same periods in fiscal 1999
primarily due to lower depreciation on leases, described below under
Depreciation on Leases, and increased retail and wholesale revenue,
substantially offset by higher interest expense. TMCC's continued use of the
Titling Trust to purchase leases has caused a shift in the composition of
earning assets from operating leases to finance receivables, as discussed
earlier, and has resulted in increased revenues from finance leases and
reduced operating lease revenues and depreciation on operating leases.
Insurance premiums earned and contract revenues increased 13% and 17% for the
quarter and six months ended March 31, 2000, respectively, as compared with
the same periods in fiscal 1999 due to higher underwriting revenues associated
with in-force agreements.
The following table summarizes TMCC's investment and other income for the
three and six months ended March 31, 2000 and March 31, 1999:
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
2000 1999 2000 1999
---- ---- ---- ----
(Dollars in Millions)
Investment income...................... $11 $ 9 $22 $19
Servicing fee income................... 7 10 17 19
Gains on assets sold................... - 1 1 6
Asset impairment....................... (14) - (14) -
---- ---- ---- ----
Investment and other income......... $ 4 $20 $26 $44
==== ==== ==== ====
The decrease in investment and other income for the quarter and six months
ended March 31, 2000 as compared with the same periods in fiscal 1999 was
primarily due to the permanent impairment of assets retained in the sale of
interests in lease finance receivables resulting from higher than expected
residual value losses. In addition, TMCC expects a decrease in investment and
other income for the quarter ended June 30,2000 resulting from the discounting
of cash deposited into the reserve funds of the Company's lease
securitizations as described in Note 8 of the Notes to the Consolidated
Financial Statements.
Investment income increased 22% and 16% for the quarter and six months ended
March 31, 2000, respectively, as compared with the same periods in fiscal 1999
primarily due to increased interest income.
Servicing fee income decreased 30% and 10% for the quarter and six months
ended March 31, 2000, respectively, as compared with the same periods in
fiscal 1999 due to the reduction in the combined balance of sold interests in
lease finance and sold retail receivables as well as a temporary waiver of
servicing fee income related to the fiscal 1997 sale of interests in lease
finance receivables.
Gains on assets sold decreased by $5 million for the six months ended
March 31, 2000, as compared with the same period in fiscal 1999 reflecting a
decrease in the amount of finance receivables sold. 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, key assumptions used and current financial
market conditions.
-14-
Depreciation on Leases
- ----------------------
The following table sets forth the items included in TMCC's depreciation on
leases for the three and six months ended March 31, 2000 and 1999:
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
2000 1999 2000 1999
---- ---- ---- ----
(Dollars in Millions)
Straight-line depreciation on operating leases... $323 $351 $644 $712
Provision for residual value losses.............. 44 76 106 146
---- ---- ---- ----
Total depreciation on leases.................. $367 $427 $750 $858
==== ==== ==== ====
Straight-line depreciation expense decreased 8% and 10% for the quarter and
six months ended March 31, 2000, as compared with the same periods in fiscal
1999 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 on
operating leases.
TMCC is subject to residual value risk in connection with its lease portfolio.
TMCC's residual value exposure 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. If the market value of a leased vehicle at contract
termination is less than its contract residual value, the vehicle is more
likely to be returned to TMCC. A higher rate of vehicle returns exposes TMCC
to a higher risk of aggregate losses.
Total unguaranteed residual values related to TMCC's vehicle lease portfolio
increased from approximately $6.5 billion at September 30, 1999 to $7.1
billion at March 31, 2000. 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
derived from market information on used vehicle sales, historical factors,
including lease return trends, and general economic factors.
The decrease in the provision for residual value losses for the quarter and
six months ended March 31, 2000 as compared with the same periods in fiscal
1999 reflects reduced losses at vehicle disposition of $15 million and $18
million, respectively, as well as management's estimate that current reserve
levels are considered adequate to cover expected losses at vehicle disposition
as of March 31, 2000. The number of returned leased vehicles sold by TMCC
during a specified period as a percentage of the number of lease contracts
that as of their origination dates were scheduled to terminate ("full term
return ratio") was 52% in the first six months of fiscal 2000 as compared to
48% for the same period in fiscal 1999 while per unit residual value loss
rates have improved for the same period.
-15-
TMCC believes that industry-wide record levels of incentives on new vehicles
and a large supply of late model off-lease vehicles have put downward pressure
on used car prices. In addition, TMCC's increased vehicle return rates
reflect the impact of competitive new vehicle pricing for core Toyota and
Lexus models. Return rates and losses may also be affected by the amount and
types of accessories or installed optional equipment included in leased
vehicles. Although vehicle loss rates are typically the result of a
combination of factors, to the extent certain types of optional equipment
depreciate more quickly than the value of the base vehicle, leased vehicles
having a greater portion of their manufacturer's suggested retail price
attributable to such optional equipment will experience relatively higher
levels of loss. TMCC expects the large supply of vehicles coming off-lease to
continue through fiscal 2000 and that the full term return ratio and losses
will remain at or near current levels.
The Company has taken action to reduce vehicle disposition losses by
developing strategies to increase dealer and lessee purchases of off-lease
vehicles, expanding marketing of off-lease vehicles through the internet and
maximizing proceeds on vehicles sold through auction. In addition, TMCC
implemented a new residual value setting policy for new model year 1999 Toyota
vehicles that separately calculates the residual value applicable to the base
vehicle and the residual value applicable to certain specified optional
accessories and optional equipment.
TMCC's lease portfolio includes contracts with original terms ranging from 12
to 60 months; the average original contract term in TMCC's lease portfolio was
41 months and 39 months at March 31, 2000 and 1999, respectively.
Interest Expense
- ----------------
Interest expense increased 44% and 29% for the quarter and six months ended
March 31, 2000, as compared with the same periods in fiscal 1999 primarily due
to higher average cost of borrowings and increased average debt outstanding.
The weighted average cost of borrowings was 6.07% and 5.36% for the six months
ended March 31, 2000 and 1999, respectively. Continuing increases in market
interest rates are expected to negatively impact the interest margin on TMCC's
outstanding portfolio.
Operating and Administrative Expenses
- -------------------------------------
Operating and administrative expenses increased 7% and 8% for the quarter and
six months ended March 31, 2000, as compared with the same periods in fiscal
1999 reflecting expenses associated with technology-related projects, as well
as costs to support TMCC's growing customer base.
-16-
Provision for Credit Losses
- ---------------------------
TMCC's provision for credit losses remained relatively stable for the quarter
and six months ended March 31, 2000, as compared with the same periods in
fiscal 1999. 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, 2000.
In April 2000, TMCC completed the national launch of an expanded tiered
pricing program for retail vehicle contracts. The objective of the expanded
program is to better match customer risk with contract rates charged to allow
profitable purchases of a wider range of risk levels. A pilot program for
expanded tiered pricing for lease vehicle contracts is underway.
Implementation of these expanded programs is expected to both increase
contract yields and increase credit losses in connection with purchases of
higher risk contracts.
Net credit loss experience, excluding net losses on receivables sold subject
to limited recourse provisions, for the three and six months ended March 31,
2000 and 1999, was as follows:
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
2000 1999 2000 1999
----- ----- ----- -----
(Dollars in Millions)
Gross Credit Losses............. $ 31 $ 29 $ 57 $ 56
Recoveries...................... (5) (4) (9) (9)
----- ----- ----- -----
Net Credit Losses............... $ 26 $ 25 $ 48 $ 47
===== ===== ===== =====
Annualized Net Credit Losses
as a % of Average Earning
Assets....................... .42% .47% .39% .45%
The allowance for credit losses and the allowance for credit losses as a
percent of net earning assets as of the balance sheet dates reported herein
are summarized below:
March 31, September 30, March 31,
2000 1999 1999
--------- ------------- ---------
(Dollars in Millions)
Allowance for Credit Losses..... $214 $202 $225
Allowance for Credit Losses
as a % of Earning Assets..... 0.84% 0.89% 1.05%
-17-
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, extendible commercial notes, domestic and euro medium-term
notes ("MTNs"), and bonds.
Commercial paper issuances and extendible commercial notes are used to meet
short-term funding needs. Commercial paper outstanding under TMCC's commercial
paper program ranged from approximately $1.5 billion to $3.6 billion during
the first six months of fiscal 2000, with an average outstanding balance of
$2.5 billion. The outstanding balance of extendible commercial notes at March
31, 2000 totaled $148 million. For additional liquidity purposes, TMCC
maintains syndicated bank credit facilities with certain banks which
aggregated $2.7 billion at March 31, 2000. No loans were outstanding under
any of these bank credit facilities during the first six months of fiscal
2000. TMCC also maintains uncommitted, unsecured lines of credit with banks
totaling $175 million, of which $100 million is maintained along with TMS. At
March 31, 2000, TMCC and TMS had issued approximately $13 million in letters
of credit in connection with these uncommitted, unsecured lines of credit.
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. Domestic and euro MTNs and bonds have provided TMCC with
significant sources of funding. During the first six months of fiscal 2000,
TMCC issued approximately $2.6 billion of domestic and euro MTNs and bonds,
all of which had original maturities of one year or more.
The original maturities of all MTNs and bonds outstanding at March 31, 2000
ranged from one to eleven years. As of March 31, 2000, TMCC had total MTNs
and bonds outstanding of $16.1 billion, of which $6.6 billion was denominated
in foreign currencies.
TMCC anticipates continued use of MTNs and bonds in both the United States and
international capital markets. The Company maintains a shelf registration
with the SEC providing for the issuance of MTNs and other debt securities. At
April 30, 2000 approximately $5.8 billion was available for issuance under
this registration statement. The maximum aggregate principal amount
authorized to be outstanding at any time under TMCC's euro MTN program is
$16.0 billion. Approximately $4.4 billion was available for issuance under
the euro MTN program as of April 30, 2000 of which TMCC had committed to issue
approximately $102 million. The United States and euro MTN programs may be
expanded from time to time to allow for the continued use of these sources of
funding. In addition, TMCC may issue bonds in the domestic and international
capital market that are not issued under its domestic or euro MTN programs.
Additionally, TMCC uses its asset-backed securitization programs to generate
funds for investment in earning assets. As described earlier, leases are
purchased by the Toyota Lease Trust to maintain a pool of assets available for
sale in connection with TMCC's lease securitization program. However, until
leases are included in a securitization transaction, they continue to be
classified as finance receivables on TMCC's balance sheet. In addition, TMCC
maintains a shelf registration statement with the SEC relating to the issuance
of asset-backed notes secured by, and certificates representing interests in,
retail receivables. As of April 30, 2000, $1.5 billion remained available for
issuance under the registration statement.
-18-
In March 2000, certain nationally recognized statistical rating organizations
placed several classes of TMCC's lease securitizations under review for
possible downgrade as a result of higher than expected residual value losses.
In April 2000, TMCC announced that it will make a cash capital contribution
totaling $102 million to Toyota Leasing, Inc., a wholly-owned subsidiary of
TMCC, for deposit into the reserve funds of the lease securitizations under
review. TMCC also announced that a portion of the monthly excess cash flows in
the transactions will be retained in these reserve funds to supplement the
capital contribution. As a result of TMCC's stated intentions, the rating
organizations affirmed the original credit ratings for the lease asset-backed
securities. TMCC's long term unsecured ratings were unaffected by these
recent events. TMCC does not believe that the rating organization actions
have had a material adverse effect on its liquidity or access to capital
markets.
TMCC's ratio of earnings to fixed charges was 1.14 for the first six months of
fiscal 2000 compared to 1.23 for the first six months of fiscal 1999. 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, lower
investment and other income as well as higher operating and administrative
expenses attributable to technology projects and TMCC's growing customer base.
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 2000, cash used to purchase additional finance receivables and
investments in operating leases, totaling $14.0 billion, was partially
provided by the liquidation and sale of earning assets totaling $10.3 billion.
Investing activities resulted in a net cash use of $3.1 billion during the
first six months of fiscal 2000, 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
financing activities totaling $1.1 billion and $2.0 billion, respectively,
during the first six months of fiscal 2000. 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
extendible commercial notes, and asset-backed securitization transactions will
provide sufficient liquidity to meet its future funding requirements.
-19-
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
expects a decrease in investment and other income for the quarter ended June
30,2000 resulting from the discounting of cash deposited into the reserve fund
of the Company's lease securitizations; that current reserve levels are
considered adequate to cover expected losses at vehicle disposition; that TMCC
believes that industry-wide record levels of incentives on new vehicles and
large supply of late model off-lease vehicles have put downward pressure on
used car prices; that TMCC expects the large supply of vehicles coming off-
lease to continue through fiscal 2000 and that the full term return ratio and
losses will remain at or near current levels; that continuing increases in
market interest rates are expected to negatively impact the interest margin on
the existing portfolio; that the implementation of the expanded tiered pricing
program is expected to both increase contract yields and increase credit
losses in connection with purchases of higher risk contracts; that allowances
for credit losses are considered adequate to cover expected credit losses;
that TMCC anticipates continued use of MTNs and bonds in the United States and
the international capital markets; that TMCC may issue bonds in the domestic
and international capital markets that are not issued under its MTN programs;
that TMCC does not believe that the rating organizations actions have had a
material adverse effect on its liquidity or access to capital markets; that
the decline in the ratio of earnings to fixed charges has not affected TMCC'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
extendible commercial notes, and asset-backed securitization transactions will
provide sufficient liquidity to meet TMCC's future funding requirements.
The Company cautions that the forward looking statements referred to above
involve known and unknown risks, uncertainties and other 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 effects of any rating
agency actions; the monetary policies exercised by the European Central Bank
and other monetary authorities; increased costs associated with the Company's
debt funding efforts; with respect to the effects of litigation matters, the
discovery of facts not presently known to the Company or determination by
judges, juries or other finders of fact which do not accord with the Company's
evaluation of the possible liability from existing litigation; 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, and the Company
will not update the forward looking statements to reflect actual results or
changes in the factors affecting the forward looking statements.
-20-
New Accounting Standards
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities",
effective for fiscal years beginning after June 15, 1999. SFAS No. 133
requires companies to record derivatives on the balance sheet as assets and
liabilities, measured at fair value. Gains and losses resulting from changes
in the values of those derivatives would be accounted for as either components
of earnings or accumulated other comprehensive income depending on the use of
the derivative and whether it qualifies for hedge accounting. In June 1999,
the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133", which defers the effective date of SFAS No. 133 to fiscal years
beginning after June 15, 2000. The Company has not determined the impact that
adoption of this standard will have on its consolidated financial statements.
The Company plans to adopt SFAS No. 133 by October 1, 2000, as required.
-21-
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As discussed more fully in TMCC's 1999 Annual Report on Form 10-K, TMCC uses a
variety of interest rate and currency derivative financial instruments to
manage interest rate and currency exchange exposures. TMCC does not use 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, 2000 reduced by the
effects of master netting agreements. The credit exposure of TMCC's
derivative financial instruments at March 31, 2000 was $97 million on an
aggregate notional amount of $36.8 billion. At March 31, 2000 approximately
96% 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.
Changes in interest rates may impact TMCC's future weighted average interest
rate on outstanding debt as a result of floating rate liabilities. As of
March 31, 2000, 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 .51% from 6.11% to an estimated
6.62% at March 31, 2000. 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 .61%
from 6.11% to an estimated 5.50% at March 31, 2000.
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 value-at-risk methodology excludes
changes in fair values related to investments in marketable securities as
these amounts are not significant.
The value-at-risk methodology uses four years of historical interest rate data
to build a database of prediction errors in forward rates for a one month
holding period. These prediction errors are then applied randomly to current
forward rates through a Monte Carlo process to simulate 500 potential future
yield curves. The portfolio is then re-priced with these curves to develop a
distribution of future portfolio values. Options in the portfolio are priced
with current market implied volatilities and the simulated yield curves using
the Black Scholes method. The lowest portfolio value at the 95% confidence
interval is compared with the current portfolio value to derive the value-at-
risk number.
-22-
The value-at-risk and the average value-at-risk of TMCC's portfolio as of
March 31, 2000 and for the six months ended March 31, 2000, measured as the
potential 30 day loss in fair value from assumed adverse changes in interest
rates are as follows:
Average for the
As of Six Months Ended
March 31, 2000 March 31, 2000
----------------- ------------------
Mean portfolio value..................... $4,990.0 million $4,370.0 million
Value-at-risk............................ $116.4 million $111.2 million
Percentage of the mean portfolio value... 2.3% 2.5%
Confidence level......................... 95.0% 95.0%
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, 2000 and 1999 is as follows:
Six Months Ended March 31,
------------------------------------------------------------
Cross
Currency
Interest Interest Indexed
Rate Swap Rate Swap Option-based Note Swap
Agreements Agreements Products Agreements
------------ ------------ ------------ ------------
2000 1999 2000 1999 2000 1999 2000 1999
---- ---- ---- ---- ---- ---- ---- ----
(Dollars in Billions)
Beginning notional amount....... $8.8 $9.0 $ 9.0 $7.3 $6.9 $6.3 $1.3 $0.8
Add:
New agreements............... 0.9 - 11.2 3.2 2.8 0.9 0.2 0.5
Less:
Terminated agreements........ - - 0.3 - - - -
Expired agreements........... 1.9 0.3 1.1 1.8 1.3 0.7 - 0.2
---- ---- ----- ---- ---- ---- ---- ----
Ending notional amount.......... $7.8 $8.7 $19.1 $8.4 $8.4 $6.5 $1.5 $1.1
==== ==== ===== ==== ==== ==== ==== ====
-23-
Review by Independent 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, 2000 and 1999, PricewaterhouseCoopers LLP ("PricewaterhouseCoopers")
reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their
separate report dated May 12, 2000 appearing herein, states that they did not
audit and they do not express an opinion on that unaudited consolidated
financial information. Accordingly, the degree of reliance on their report on
such information should be restricted in light of the limited nature of the
review procedures applied. PricewaterhouseCoopers is not subject to the
liability provisions of Section 11 of the Securities Act of 1933 for their
report on the unaudited consolidated financial information because that report
is not a "report" or a "part" of the registration statement prepared or
certified by PricewaterhouseCoopers within the meaning of Sections 7 and 11 of
the Act.
-24-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Various legal actions, governmental proceedings and other claims are pending
or may be instituted or asserted in the future against TMCC and its
subsidiaries with respect to matters arising from the ordinary course of
business. Certain of these actions are or purport to be class action suits,
seeking sizeable damages. Certain of these actions are similar to suits which
have been filed against other financial institutions and captive finance
companies. Management and internal and external counsel perform periodic
reviews of pending claims and actions to determine the probability of adverse
verdicts and resulting amounts of liability. The amounts of liability on
pending claims and actions as of March 31, 2000 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 27,
are filed as part of this report.
(b) Reports on Form 8-K
The following reports on Form 8-K were filed during the quarter ended
March 31, 2000, none of which contained financial statements.
Date of Report Items Reported
---------------- -------------------------------------------
January 12, 2000 Item 7 - Financial Statements, Pro Forma
Financial Information and Exhibits
-25-
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 12, 2000 By /S/ MICHAEL DEADERICK
---------------------------------
Michael Deaderick
Group Vice President - Operations
Date: May 12, 2000 By /S/ ROBERT M. ALLEN
---------------------------------
Robert M. Allen
Vice President
Finance and Affiliated Operations
(Principal Accounting Officer)
-26-
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
-27-