v3.25.2
Transactions Involving Related Parties
 12 Months Ended
Mar. 31, 2025
Related Party Transactions [Abstract]  
Transactions Involving Related Parties Transactions Involving Related Parties
The following tables summarize the income statement and balance sheet impact of transactions with the Parent and affiliated companies:
Years ended March 31,
Income Statement202520242023
(U.S. dollars in millions)
Revenue:
Subsidy income$1,127 $928 $1,036 
Interest expense:
Related party debt11 — — 
General and administrative expenses:
Support Compensation Agreement fees83 67 63 
Benefit plan expenses5 7 8 
Shared services79 71 74 
Lease expense4 4 4 

March 31,
Balance Sheet20252024
(U.S. dollars in millions)
Assets:
Finance receivables, net:
Unearned subsidy income$(731)$(542)
Investment in operating leases, net:
Unearned subsidy income(1,290)(853)
Due from Parent and affiliated companies146 137 
Liabilities:
Debt:
Related party debt1,800 — 
Due to Parent and affiliated companies181 153 
Accrued interest expense:
Related party debt11 — 
Other liabilities:
Accrued benefit expenses65 64 
Operating lease liabilities8 11 
Support Agreements
HMC and AHFC are parties to a Keep Well Agreement, effective as of September 9, 2005. This Keep Well Agreement provides that HMC will (1) maintain (directly or indirectly) at least 80% ownership in AHFC’s voting stock and not pledge (directly or indirectly), or in any way encumber or otherwise dispose of, any such stock of AHFC that it is required to hold (or permit any of HMC’s subsidiaries to do so), (2) cause AHFC to have a positive consolidated tangible net worth with tangible net worth defined as (a) stockholder’s equity less (b) any intangible assets, determined on a consolidated basis in accordance with GAAP, and (3) ensure that AHFC has sufficient liquidity to meet its payment obligations for debt HMC has confirmed in writing is covered by this Keep Well Agreement, in accordance with its terms, or where necessary make available to AHFC, or HMC shall procure for AHFC, sufficient funds to enable AHFC to meet such obligations in accordance with such terms. This Keep Well Agreement is not a guarantee by HMC.
HMC and HCFI are parties to a Keep Well Agreement effective as of September 26, 2005. This Keep Well Agreement provides that HMC will (1)maintain (directly or indirectly) at least 80% ownership in HCFI’s voting stock and not pledge (directly or indirectly), or in any way encumber or otherwise dispose of, any such stock of HCFI that it is required to hold (or permit any of HMC’s subsidiaries to do so), (2) cause HCFI to have a positive consolidated tangible net worth with tangible net worth defined as (a) stockholder’s equity less (b) any intangible assets, determined on a consolidated basis in accordance with generally accepted accounting principles in Canada, and (3) ensure that HCFI has sufficient liquidity to meet its payment obligations for debt HMC has confirmed in writing is covered by this Keep Well Agreement, in accordance with its terms, or where necessary make available to HCFI, or HMC shall procure for HCFI, sufficient funds to enable HCFI to meet such obligations in accordance with such terms. This Keep Well Agreement is not a guarantee by HMC.
Debt programs supported by the Keep Well Agreements consist of the Company’s commercial paper programs, Public MTN Program and HCFI’s private placement debt and loans, if any, under AHFC's and HCFI's syndicated bank credit facilities. In connection with the above agreements, AHFC and HCFI have entered into separate Support Compensation Agreements, where each has agreed to pay HMC a quarterly fee based on the amount of outstanding debt that benefit from the Keep Well Agreements. Support Compensation Agreement fees are recognized in general and administrative expenses.
Incentive Financing Programs
The Company receives subsidy payments from AHM and HCI, which supplement the revenues on financing products offered under incentive programs. Subsidy payments received on retail loans and leases are deferred and recognized as revenue over the term of the related contracts. The unearned balance is recognized as reductions to the carrying value of finance receivables and investment in operating leases. Subsidy payments on dealer loans are received as earned. Refer to Notes 1(e) and 1(f) for additional information.
Related Party Debt
AHFC issues fixed rate short-term debt to AHM to fund AHFC's general corporate operations. Interest rates are based on prevailing rates of debt with comparable terms. Refer to Note 4 for additional information.
Shared Services
The Company shares certain common expenditures with AHM and HCI, including information technology services and facilities. The allocated costs for shared services are included in general and administrative expenses.
Benefit Plans
The Company participates in various employee benefit plans that are sponsored by AHM and HCI. The allocated benefit plan expenses are included in general and administrative expenses. Refer to Note 8 for additional information.
Income taxes
The Company’s U.S. income taxes are recognized on a modified separate return basis pursuant to an intercompany income tax allocation agreement with AHM. Income tax related items are not included in the tables above. Refer to Notes 1(i) and 7 for additional information.
Other
The majority of the amounts due from the Parent and affiliated companies at March 31, 2025 and 2024 were related to incentive financing program subsidies. The majority of the amounts due to the Parent and affiliated companies at March 31, 2025 and 2024 were related to wholesale flooring payable to the Parent. These receivable and payable accounts are non-interest-bearing and short-term in nature and are expected to be settled in the normal course of business.
AHFC leases its premises from AHM and HCFI leases its premises from HCI.
AHFC declared cash dividends to its parent, AHM, of $1.9 billion, $1.5 billion, and $1.3 billion during the fiscal years ended March 31, 2025, 2024 and 2023, respectively.
HCFI declared cash dividends to AHFC of $74 million, $37 million, and $125 million during the fiscal years ended March 31, 2025, 2024, and 2023, respectively.
HCFI declared cash dividends to HCI of $68 million, $34 million, and $114 million during the fiscal years ended March 31, 2025, 2024 and 2023, respectively.