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Related Party Transactions

12 Months Ended

Mar. 31, 2022

Note 12 – Related Party Transactions

The tables below show the financial statement line items and amounts included in our Consolidated Statements of Income and on our Consolidated Balance Sheets under various related party agreements or relationships:


	Years ended March 31,
	2022			2021			2020
Net financing revenues:
Manufacturer's subvention and other revenues	$	1,746		$	1,997		$	2,065
Depreciation on operating leases	$	(75	)	$	(113	)	$	(59	)

Interest expense:
Credit support fees, interest and other expenses	$	99		$	117		$	96

Voluntary protection contract revenues and insurance earned premiums:
Voluntary protection contract revenues and insurance earned premiums	$	168		$	173		$	181

Investment and other income, net:
Interest and other income	$	3		$	18		$	26

Expenses:
Operating and administrative	$	82		$	91		$	102

Note 12 – Related Party Transactions (Continued)

	March 31,			March 31,
	2022			2021
Assets:
Cash and cash equivalents
Commercial paper	$	100		$	6

Investments in marketable securities
Commercial paper	$	-		$	196

Finance receivables, net
Accounts receivable	$	90		$	140
Deferred retail subvention income	$	(875	)	$	(1,156	)

Investments in operating leases, net
Investments in operating leases, net	$	(212	)	$	(236	)
Deferred lease subvention income	$	(923	)	$	(1,528	)

Other assets
Notes receivable	$	789		$	869
Other receivables, net	$	80		$	83

Liabilities:
Other liabilities
Unearned voluntary protection contract revenues and insurance earned premiums	$	374		$	352
Other payables, net	$	394		$	306
Notes payable	$	8		$	19

TMCC receives subvention payments from TMNA which result in a gross monthly subvention receivable. As of March 31, 2022 and 2021, the subvention receivable from TMNA was $66 million and $184 million, respectively. We have a master netting agreement with TMNA which allows us to net settle payments for shared services and subvention transactions. Under this agreement, as of March 31, 2022 and March 31, 2021, respectively, we had a net amount payable to TMNA which is recorded in Other payables, net in Other liabilities.

Our Board of Directors declared and paid cash dividends of $700 million to TFSIC during fiscal 2021.

Note 12 – Related Party Transactions (Continued)

Financing Support Arrangements with Affiliates

TMCC is party to a credit support agreement with TFSC (the “TMCC Credit Support Agreement”). The TMCC Credit Support Agreement requires TFSC to maintain certain ownership, net worth maintenance, and debt service provisions with respect to TMCC, but is not a guarantee by TFSC of any securities or obligations of TMCC. In conjunction with this credit support agreement, TMCC has agreed to pay TFSC a semi-annual fee based on a fixed rate applied to the weighted average outstanding amount of securities entitled to credit support.

TCPR is the beneficiary of a credit support agreement with TFSC containing provisions similar to the TMCC Credit Support Agreement described above.

In addition, TMCC receives support from and provides financing support to TFSC and other affiliates in the form of promissory notes and various loan and credit facility agreements. As of March 31, 2022 and 2021, total financing support available from affiliates totaled approximately $8.5 billion and $8.6 billion, respectively. These amounts include a $5.0 billion three-year revolving credit facility with TMS which currently expires in fiscal 2025. As of March 31, 2022 and 2021, total financing support available to affiliates totaled approximately $8.0 billion and $7.1 billion, respectively. TMCC’s increased financing support provided to Toyota Finance New Zealand Limited to $250 million in April 2021 and to TFSB to $1.0 billion in August 2021. Additionally, TMCC entered into a financing support agreement with Toyota Finance Corporation (“TFC”) for $100 million in August 2021. The amounts outstanding under these agreements are recorded in Other assets and Other liabilities on our Consolidated Balance Sheets at March 31, 2022 and 2021.

In November 2021, in accordance with the financing support agreement, TFC borrowed from TMCC in Japanese Yen a principal amount equivalent to $100 million, to be used for general corporate purposes, with an interest rate of 0.0175% and repayment date of November 2023. The note receivable is translated into U.S. dollars using the applicable exchange rate at the transaction date and retranslated at each balance sheet date using the exchange rate in effect at that date. The resulting transaction gains and losses are included in Investment and Other Income in our Consolidated Statements of Income.

In April 2022, TMCC entered into a revolving credit facility with Toyota Financial Services Colombia (“TFSCO”), pursuant to which TFSCO is entitled to borrow a maximum principal amount equivalent to $49 million.

Other Financing Support Provided to Affiliates

TMCC provides wholesale financing, real estate and working capital loans to certain dealerships that were consolidated with another affiliate under the accounting guidance for variable interest entities. TMCC also pays these dealers origination fees. These costs represent direct costs incurred in connection with the acquisition of retail and lease contracts, including subvention and other cash incentive programs.

TMCC has guaranteed the payments of principal and interest with respect to the bonds of manufacturing facilities of certain affiliates. The nature, business purpose, and amounts of these guarantees are described in Note 9 – Commitments and Contingencies.

TMCC and TFSB are parties to a master participation agreement pursuant to which TMCC agreed to purchase no more than $60 million per year of residential mortgage loans originated by TFSB that meet specified credit underwriting guidelines. At March 31, 2022 and 2021, we had $8 million and $15 million, respectively, in loan participations outstanding that had been purchased by TMCC under this agreement.

Note 12 – Related Party Transactions (Continued)

Shared Service Arrangements with Affiliates

TMCC is subject to the following shared service agreements:

•

TMCC incurs costs under various shared service agreements with TMNA and other affiliates. Services provided by affiliates under the shared service agreements include certain technological and administrative services, such as information systems support, facilities, insurance coverage, human resources and other corporate services. TMCC may also participate and incur costs in shared marketing efforts with TMNA.

•

TMCC provides various services to its subsidiaries and affiliates, including certain administrative and corporate services, operational support, information systems support, facilities, treasury, and vendor management services.

•

TMCC provides various services to TFSB, including marketing, administrative, systems, and operational support in exchange for TFSB making available certain financial products and services to TMCC’s customers and dealers meeting TFSB’s credit standards. TMCC is party to a master netting agreement with TFSB, which allows TMCC to net settle payments for shared services between TMCC and TFSB.

•

TMCC is a party to expense reimbursement agreements with TFSB and TFSC related to costs incurred by TMCC or these affiliates on behalf of the other party in connection with TMCC’s provision of services to these affiliates or the provision by these affiliates of certain financial products and services to our customers and dealers in support of TMCC’s customer loyalty strategy and programs, and other brand and sales support.

•

TMCC receives support from and provides support to TFSC and other affiliates in the form of promissory notes and various loan and credit facility agreements, including a revolving credit facility with TMS, which may be used for general corporate purposes.

•

TMCC and TFSB are parties to a services agreement, entered into July 2021, wherein TMCC will subservice loans on behalf of TFSB.

Note 12 – Related Party Transactions (Continued)

Operational Support Arrangements with Affiliates

•

TMCC and TCPR provide various wholesale financing to dealers, which result in us having payables to TMNA and Toyota de Puerto Rico Corp.

•

TMCC is party to a lease agreement with TMNA for our headquarters facility in Plano, Texas, expiring in 2032, our CSC located in Cedar Rapids, Iowa, expiring in 2029, and our Dallas Data Center expiring in 2026. The lease commitments are described in Note 9 – Commitments and Contingencies.

•

Subvention receivable represents amounts due from TMNA and other affiliates in support of retail and lease subvention and other cash incentive programs offered by TMCC. Deferred subvention income represents the unearned portion of amounts received from these transactions, and manufacturers’ subvention and other revenues primarily represent the earned portion of such amounts.

•

Investment in operating leases includes contractual residual value support received from affiliates which are recognized as an offset to depreciation expense over the life of the contract.

•

TMCC is a participating employer in certain retirement, post-retirement medical care and life insurance benefits sponsored by TMNA. Refer to Note 10 – Pension and Other Benefit Plans for additional information.

•

TMCC is party to agreements with TMNA and other affiliates relating to the team member vehicle benefit program, which allows team members to lease Toyota and Lexus vehicles on terms exclusive to the benefit program. TMNA serves as the chief administrator of the program. TMCC acquires and services team member leases after origination. A portion of the vehicles used for the team member vehicle benefit program are acquired from TMNA. TMCC receives a per vehicle contribution from participating affiliates to assist with the costs of its contribution to the benefit program, and TMCC pays a per vehicle participation fee to TMNA to participate in the benefit program.

•

Affiliate voluntary protection contract revenues and insurance earned premiums primarily represent revenues from TMIS for coverage and related administrative services provided to TMNA and other affiliates. This includes contractual indemnity coverage for limited warranties on certified Toyota and Lexus pre-owned vehicles and related administrative services for TMNA’s certified pre-owned vehicle program and umbrella liability policy. TMIS also provides umbrella liability insurance to TMNA and other affiliates covering certain dollar value layers of risk above various primary or self-insured retentions. On all layers in which TMIS has provided coverage, 99 percent of the risk has been ceded to a reinsurer.