Toyota 2011 Annual Report Download - page 65

Lending Commitments
Contractual Obligations and Commitments
Off-Balance-Sheet Arrangements
0822
Financial Section and
Investor Information
Business and
Performance Review
Special FeatureMessage/Vision
Management and
Corporate Information
Toyota’s financial services operations issue credit
cards to customers. As customary for credit card
businesses, Toyota maintains credit facilities with
holders of credit cards issued by Toyota. These
facilities are used upon each holder’s requests up
to the limits established on an individual holder’s
basis. Although loans made to customers through
these facilities are not secured, for the purposes
of minimizing credit risks and of appropriately
establishing credit limits for each individual credit
card holder, Toyota employs its own risk manage-
ment policy which includes an analysis of
information provided by financial institutions in
alliance with Toyota. Toyota periodically reviews
and revises, as appropriate, these credit limits.
Outstanding credit facilities with credit card
holders were ¥261.7 billion as of March 31, 2011.
Toyota’s financial services operations maintain
credit facilities with dealers. These credit facilities
may be used for business acquisitions, facilities
refurbishment, real estate purchases, and working
capital requirements. These loans are typically
collateralized with liens on real estate, vehicle
inventory, and/or other dealership assets, as
appropriate. Toyota obtains a personal guarantee
from the dealer or corporate guarantee from the
dealership when deemed prudent. Although the
loans are typically collateralized or guaranteed, the
value of the underlying collateral or guarantees
may not be sufficient to cover Toyota’s exposure
under such agreements. Toyota prices the credit
facilities according to the risks assumed in entering
into the credit facility. Toyota’s financial services
operations also provide financing to various
multi-franchise dealer organizations, referred to as
dealer groups, often as part of a lending consortium,
for wholesale inventory financing, business
acquisitions, facilities refurbishment, real estate
purchases, and working capital requirements.
Toyota’s outstanding credit facilities with dealers
totaled ¥1,590.6 billion as of March 31, 2011.
Credit Facilities with Credit Card Holders
Credit Facilities with Dealers
Management's Discussion and Analysis of Financial Condition and Results of Operations
For information regarding debt obligations, capital
lease obligations, operating lease obligations and
other obligations, including amounts maturing in
each of the next five years, see notes 13, 22 and 23
to the consolidated financial statements. In addition,
as part of Toyota’s normal business practices,
Toyota enters into long-term arrangements with
Toyota enters into certain guarantee contracts
with its dealers to guarantee customers’ payments
of their installment payables that arise from
installment contracts between customers and
Toyota dealers, as and when requested by Toyota
dealers. Guarantee periods are set to match the
maturity of installment payments, and as of March
31, 2011, ranged from one month to 35 years.
However, they are generally shorter than the
access funds from external sources in large
amounts and at relatively low costs. Toyota’s
ability to maintain its high credit ratings is subject
to a number of factors, some of which are not
within Toyota’s control. These factors include
The following tables summarize Toyota’s contractual obligations and commercial commitments as of
March 31, 2011.
suppliers for purchases of certain raw materials,
components and services. These arrangements
may contain fixed/minimum quantity purchase
requirements. Toyota enters into such arrange-
ments to facilitate an adequate supply of these
materials and services.
useful lives of products sold. Toyota is required to
execute its guarantee primarily when customers
are unable to make required payments.
The maximum potential amount of future
payments as of March 31, 2011 is ¥1,662.2 billion.
Liabilities for these guarantees of ¥20.4 billion
have been provided as of March 31, 2011. Under
these guarantee contracts, Toyota is entitled to
recover any amounts paid by it from the customers
whose obligations it guaranteed.
general economic conditions in Japan and the
other major markets in which Toyota does
business, as well as Toyota’s successful
implementation of its business strategy.
Yen in millions
Payments Due by Period
Total
Less than
1 year
1 to 3
years
3 to 5
years
5 years
and after
Contractual Obligations:
Short-term borrowings (note 13)
Loans ¥ 1,140,066 ¥1,140,066 ¥ — ¥ — ¥ —
Commercial paper 2,038,943 2,038,943 — — —
Long-term debt* (note 13) 9,200,130 2,768,544 3,368,754 1,995,139 1,067,693
Capital lease obligations (note 13) 21,917 4,283 4,751 2,977 9,906
Non-cancelable operating lease obligations
(note 22) 44,179 9,198 13,126 8,709 13,146
Commitments for the purchase of property,
plant and other assets (note 23) 83,506 37,304 25,513 6,262 14,427
Total ¥12,528,741 ¥5,998,338 ¥3,412,144 ¥2,013,087 ¥1,105,172
* “Long-term debt” represents future principal payments.
Toyota uses its securitization program as part of
its funding through special purpose entities for its
financial services operations. Toyota is consid-
ered the primary beneficiary of these special
purpose entities and therefore consolidates them.
Toyota has not entered into any off-balance sheet
securitization transactions during fiscal 2011.
Guarantees
65TOYOTA ANNUAL REPORT 2011