Segment Information

6 Months Ended

Sep. 30, 2019

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, 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)

	Three Months Ended September 30, 2018
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	2,890	$	-	$	-		$	2,890
Depreciation on operating leases		1,662		-		-			1,662
Interest expense		707		-		(5	)		702
Net financing revenues		521		-		5			526
Insurance earned premiums and contract revenues		-		226		-			226
Investment and other income, net		51		10		(5	)		56
Net financing and other revenues		572		236		-			808
Expenses:
Provision for credit losses		67		-		-			67
Operating and administrative expenses		262		86		-			348
Insurance losses and loss adjustment expenses		-		112		-			112
Total expenses		329		198		-			527
Income before income taxes		243		38		-			281
Provision for income taxes		77		10		-			87
Net income	$	166	$	28	$	-		$	194
	Six Months Ended September 30, 2018
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	5,726	$	-	$	-		$	5,726
Depreciation on operating leases		3,428		-		-			3,428
Interest expense		1,394		-		(10	)		1,384
Net financing revenues		904		-		10			914
Insurance earned premiums and contract revenues		-		450		-			450
Investment and other income, net		99		7		(10	)		96
Net financing and other revenues		1,003		457		-			1,460
Expenses:
Provision for credit losses		156		-		-			156
Operating and administrative expenses		503		169		-			672
Insurance losses and loss adjustment expenses		-		237		-			237
Total expenses		659		406		-			1,065
Income before income taxes		344		51		-			395
Provision for income taxes		96		13		-			109
Net income	$	248	$	38	$	-		$	286
Total assets at September 30, 2018	$	117,265	$	4,955	$	(1,160	)	$	121,060

Note 13 – Segment Information (Continued)

Insurance operations – Revenue Recognition

For the three and six months ended September 30, 2019 and 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 six months ended September 30, 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 $121 million and $303 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, 2019, compared to $178 million and $345 million recognized during the same periods in fiscal 2019.  At September 30, 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 $362 million during fiscal 2020, and $1.9 billion thereafter.  At September 30, 2018 we had unearned insurance premiums and contract revenues of $2.2 billion associated with outstanding contracts.