Segment Information

6 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segment Information

Note 13 – Segment Information

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

	Three months ended September 30, 2020
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	2,935	$	-	$	-		$	2,935
Depreciation on operating leases		1,349		-		-			1,349
Interest expense		495		-		-			495
Net financing revenues		1,091		-		-			1,091
Insurance earned premiums and contract revenues		-		238		-			238
Investment and other income, net		23		67		-			90
Net financing and other revenues		1,114		305		-			1,419
Expenses:
Provision for credit losses		65		-		-			65
Operating and administrative expenses		294		95		-			389
Insurance losses and loss adjustment expenses		-		92		-			92
Total expenses		359		187		-			546
Income before income taxes		755		118		-			873
Provision for income taxes		189		29		-			218
Net income	$	566	$	89	$	-		$	655
	Six months ended September 30, 2020
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	5,847	$	-	$	-		$	5,847
Depreciation on operating leases		3,034		-		-			3,034
Interest expense		1,043		-		-			1,043
Net financing revenues		1,770		-		-			1,770
Insurance earned premiums and contract revenues		-		473		-			473
Investment and other income, net		55		211		-			266
Net financing and other revenues		1,825		684		-			2,509
Expenses:
Provision for credit losses		248		-		-			248
Operating and administrative expenses		550		184		-			734
Insurance losses and loss adjustment expenses		-		167		-			167
Total expenses		798		351		-			1,149
Income before income taxes		1,027		333		-			1,360
Provision for income taxes		251		80		-			331
Net income	$	776	$	253	$	-		$	1,029
Total assets at September 30, 2020	$	125,277	$	5,925	$	(135	)	$	131,067

Note 13 – Segment Information (Continued)

	Three months ended September 30, 2019
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	3,018	$	-	$	-		$	3,018
Depreciation on operating leases		1,583		-		-			1,583
Interest expense		619		-		(6	)		613
Net financing revenues		816		-		6			822
Insurance earned premiums and contract revenues		-		232		-			232
Investment and other income, net		38		65		(6	)		97
Net financing and other revenues		854		297		-			1,151
Expenses:
Provision for credit losses		61		-		-			61
Operating and administrative expenses		268		90		-			358
Insurance losses and loss adjustment expenses		-		115		-			115
Total expenses		329		205		-			534
Income before income taxes		525		92		-			617
Provision for income taxes		136		22		-			158
Net income	$	389	$	70	$	-		$	459
	Six months ended September 30, 2019
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	5,981	$	-	$	-		$	5,981
Depreciation on operating leases		3,208		-		-			3,208
Interest expense		1,322		-		(12	)		1,310
Net financing revenues		1,451		-		12			1,463
Insurance earned premiums and contract revenues		-		461		-			461
Investment and other income, net		75		152		(12	)		215
Net financing and other revenues		1,526		613		-			2,139
Expenses:
Provision for credit losses		136		-		-			136
Operating and administrative expenses		514		181		-			695
Insurance losses and loss adjustment expenses		-		228		-			228
Total expenses		650		409		-			1,059
Income before income taxes		876		204		-			1,080
Provision for income taxes		212		50		-			262
Net income	$	664	$	154	$	-		$	818
Total assets at September 30, 2019	$	115,714	$	5,414	$	(1,190	)	$	119,938

Note 13 – Segment Information (Continued)

Insurance operations – Revenue Recognition

For the three and six months ended September 30, 2020 and 2019, approximately 83 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.  

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 six months ended September 30, 2020 and 2019.

We had $2.4 billion and $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 March 31, 2020 and 2019, respectively.  We recognized $180 million and $368 million of these balances in Insurance earned premiums and contract revenues in our Consolidated Statements of Income during the three and six months ended September 30, 2020, respectively, compared to $121 million and $303 million recognized during the same periods in fiscal 2020.  At September 30, 2020, we had unearned insurance premiums and contract revenues of $2.4 billion included in Other liabilities on our Consolidated Balance Sheets, and with respect to this balance we expect to recognize revenue of $370 million during fiscal 2021, and $2 billion thereafter.  At September 30, 2019, we had unearned insurance premiums and contract revenues of $2.3 billion associated with outstanding contracts.