Segment Information

9 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Segment Information

Note 13 – Segment Information

Financial information for our reportable operating segments is summarized as follows:

	Three Months Ended December 31, 2019
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	3,044	$	-	$	-		$	3,044
Depreciation on operating leases		1,712		-		-			1,712
Interest expense		759		-		(4	)		755
Net financing revenues		573		-		4			577
Insurance earned premiums and contract revenues		-		231		-			231
Investment and other income, net		42		19		(4	)		57
Net financing and other revenues		615		250		-			865
Expenses:
Provision for credit losses		128		-		-			128
Operating and administrative expenses		318		88		-			406
Insurance losses and loss adjustment expenses		-		116		-			116
Total expenses		446		204		-			650
Income before income taxes		169		46		-			215
Provision for income taxes		23		11		-			34
Net income	$	146	$	35	$	-		$	181
	Nine Months Ended December 31, 2019
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	9,025	$	-	$	-		$	9,025
Depreciation on operating leases		4,920		-		-			4,920
Interest expense		2,081		-		(16	)		2,065
Net financing revenues		2,024		-		16			2,040
Insurance earned premiums and contract revenues		-		692		-			692
Investment and other income, net		117		171		(16	)		272
Net financing and other revenues		2,141		863		-			3,004
Expenses:
Provision for credit losses		264		-		-			264
Operating and administrative expenses		832		269		-			1,101
Insurance losses and loss adjustment expenses		-		344		-			344
Total expenses		1,096		613		-			1,709
Income before income taxes		1,045		250		-			1,295
Provision for income taxes		235		61		-			296
Net income	$	810	$	189	$	-		$	999
Total assets at December 31, 2019	$	118,228	$	5,491	$	(1,112	)	$	122,607

Note 13 – Segment Information (Continued)

	Three Months Ended December 31, 2018
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	2,968	$	-	$	-		$	2,968
Depreciation on operating leases		1,717		-		-			1,717
Interest expense		705		-		(6	)		699
Net financing revenues		546		-		6			552
Insurance earned premiums and contract revenues		-		226		-			226
Investment and other income, net		43		31		(6	)		68
Net financing and other revenues		589		257		-			846
Expenses:
Provision for credit losses		110		-		-			110
Operating and administrative expenses		259		88		-			347
Insurance losses and loss adjustment expenses		-		106		-			106
Total expenses		369		194		-			563
Income before income taxes		220		63		-			283
Provision for income taxes		54		15		-			69
Net income	$	166	$	48	$	-		$	214
	Nine Months Ended December 31, 2018
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	8,694	$	-	$	-		$	8,694
Depreciation on operating leases		5,145		-		-			5,145
Interest expense		2,099		-		(16	)		2,083
Net financing revenues		1,450		-		16			1,466
Insurance earned premiums and contract revenues		-		676		-			676
Investment and other income, net		142		38		(16	)		164
Net financing and other revenues		1,592		714		-			2,306
Expenses:
Provision for credit losses		266		-		-			266
Operating and administrative expenses		762		257		-			1,019
Insurance losses and loss adjustment expenses		-		343		-			343
Total expenses		1,028		600		-			1,628
Income before income taxes		564		114		-			678
Provision for income taxes		150		28		-			178
Net income	$	414	$	86	$	-		$	500
Total assets at December 31, 2018	$	115,319	$	4,880	$	(1,077	)	$	119,122

Note 13 – Segment Information (Continued)

Insurance operations – Revenue Recognition

For the three and nine months ended December 31, 2019, approximately 85 percent and 84 percent, respectively, of Insurance earned premiums and contract revenues in the Insurance operations segment were accounted for under the guidance for revenue from contracts with customers.  For the three and nine months ended December 31, 2018, approximately 84 percent of Insurance earned premiums and contract revenues in the Insurance operations segment were accounted for under the guidance for revenue from contracts with customers.

The Insurance operations segment defers contractually determined incentives paid to dealers as contract costs for selling vehicle and payment protection products.  These costs are recorded in Other assets on our Consolidated Balance Sheets and are amortized to Operating and administrative expenses on the Consolidated Statements of Income using a methodology consistent with the recognition of revenue.  The amount of capitalized dealer incentives and the related amortization was not significant to our consolidated financial statements as of and for the three and nine months ended December 31, 2019 and 2018.

We had $2.2 billion of unearned insurance premiums and contract revenues from contracts with customers included in Other liabilities on our Consolidated Balance Sheets as of April 1, 2019 and April 1, 2018, respectively.  We recognized $216 million and $519 million of these balances in Insurance earned premiums and contract revenues in our Consolidated Statements of Income during the three and nine months ended December 31, 2019, compared to $159 million and $504 million recognized during the same periods in fiscal 2019.  At December 31, 2019, we had unearned insurance premiums and contract revenues of $2.3 billion included in Other liabilities on our Consolidated Balance Sheets, and with respect to this balance we expect to recognize revenue of $188 million during fiscal 2020, and $2.1 billion thereafter.  At December 31, 2018 we had unearned insurance premiums and contract revenues of $2.2 billion associated with outstanding contracts.