Toyota Motor Credit Corporation Reports Record Second Quarter Operating Net Income
TORRANCE, Calif., Nov. 1 -- Toyota Motor Credit Corporation (TMCC), which is marketed under the brands of Toyota Financial Services (TFS) and Lexus Financial Services (LFS), today announced fiscal second quarter operating net income of $73 million, an increase of $49 million (204%) over the comparable prior year period. For the six months ended September 30, 2001, operating net income was $118 million, an increase of $71 million (151%) over the same period in the prior year. The strong financial performance is primarily attributable to asset and revenue growth and improvement in net interest margin, partially offset by higher credit and disposition losses. Operating net income excludes the effect of market value changes related to derivative hedging contracts.
Finance volume of $4.4 billion was strong for the quarter, exceeding the comparable prior year period by $769 million (21%). As of September 30, 2001, managed net earning assets totaled $33.1 billion, an increase of $3.4 billion (11%) from a year earlier. ``We are pleased with our performance through the second quarter and are on track for a record year,'' said George Borst, President and CEO. ``We continue to improve our overall market share penetration of Toyota and Lexus financed sales to consumers as well as our penetration of wholesale financing for Toyota and Lexus dealers over the prior year.''
Due in part to a phased implementation of a tiered pricing structure which matches customer risk with contract rates charged to allow profitable purchases of a wider range of risk levels, 60+ day delinquency increased to .26%, up 5 bp from June 30, 2001 and up 6 bp from September 30, 2000. Net charge-offs totaled .50% for the three months ended September 30, 2001, a decrease of 2 bp from the quarter ended June 30, 2001 but an increase of 8 bp over the same period in the prior year.
Net income including the effect of mark to market adjustments on derivative contracts for the three month and six month periods ending September 30, 2001 totaled $21 million and $71 million, respectively. TMCC uses derivative contracts as part of its interest rate risk management program. The mark to market adjustments are determined in accordance with Financial Accounting Standards Board Pronouncement Numbers 133 and 138.
TFS and LFS are the finance and insurance brands for Toyota and Lexus respectively in the United States. They primarily offer retail auto financing and leasing, and wholesale auto financing through Toyota Motor Credit Company and extended service contracts through Toyota Motor Insurance Services (TMIS). TFS/LFS currently employs over 2,600 associates nationwide, and has managed assets in excess of $33 billion. It is part of a worldwide network of comprehensive financial services offered by Toyota Financial Services Corporation, a wholly-owned subsidiary of Toyota Motor Corporation.
This news release contains certain forward-looking statements that are
subject to risks and uncertainties.
The factors which may cause future
results to differ materially from expectations are discussed in the
Form 10-KT for the transitional year ended March 31, 2001, filed with the
Securities and Exchange Commission.
TMCC undertakes no obligation to update
or revise any forward-looking statements.
Toyota Motor Credit Corporation
Financial Highlights
Condensed Financial Information ($ Millions)
% Change Six Months
Three Months Ended or at Prior Ended or at
9/30/01 6/30/01 9/30/00 Year 9/30/01 9/30/00 % Change
Revenues:
Net Financing
Revenues $234 $204 $148 58% $438 $340 29%
Other
Revenues 72 58 72 0% 130 69 88%
Expenses:
Operating
Costs &
Other 147 134 125 18% 281 250 12%
Provision
for Credit
Losses 51 50 46 11% 101 75 35%
Operating
Net Income $73 $45 $24 204% $118 $47 151%
Net
Income (1) $21 $50 $24 -13% $71 $47 51%
Key Data ($ Millions)
Contract Volume
Retail $2,918 $2,700 $2,071 41% $5,618 $3,848 46%
Lease 1,454 1,667 1,532 -5% 3,121 2,925 7%
Total
Volume $4,372 $4,367 $3,603 21% $8,739 $6,773 29%
Credit Quality
60+ Day
Contractual
Delinquency 0.26% 0.21% 0.20% 0.26% 0.20%
Credit
Loss
Ratio 0.50% 0.52% 0.42% 0.51% 0.38%
Balance Sheet
Information
Net Earning
Assets (2) (3)
Retail $11,160 $9,315 $10,229 9%
Lease 13,431 13,485 12,860 4%
Floorplan
& Other 3,950 4,244 3,043 30%
Total $28,541 $27,044 $26,132 9%
Allowance
for Credit
Losses $248 $231 $230
% of Average
Earning
Assets 0.86% 0.85% 0.87%
Total
Assets $32,079 $29,693 $28,036
Notes
and loans
payable (4) $25,199 $22,200 $21,098
Capital
Stock $915 $915 $915
Retained
Earnings $1,648 $1,631 $1,539
Managed Information
Managed Net Earning
Assets (2) (3)
Retail $15,496 $14,248 $12,080 28%
Lease 13,668 13,984 14,593 -6%
Floorplan
& Other 3,950 4,244 3,043 30%
Total $33,114 $32,476 $29,716 11%
(1) After SFAS 133/138 mark to market adjustment (net of income tax
effect) of $(52) million and $5 million for the three months ended
September 30, 2001 and June 30, 2001, respectively and $(47) million
for the six months ended September 30, 2001. SFAS 133/138 did not
apply to the three months and six months ended September 30, 2000.
(2) Includes securitized retail and lease assets.
(3) Net of allowance for credit losses.
(4) Notes and Loans Payable at September 30, 2001 includes notes payable
related to securitized finance receivables structured as
collateralized borrowings.