Annual Report — [x] Reg. S-K Item 405 — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K405 Annual Report -- [x] Reg. S-K Item 405 86 496K
2: EX-11 Statement re: Computation of Earnings Per Share 2± 10K
3: EX-12 Statement re: Computation of Ratios 2± 10K
4: EX-21 Subsidiaries of the Registrant 5 29K
5: EX-23 Consent of Experts or Counsel 1 9K
6: EX-24 Power of Attorney 12 22K
7: EX-27 Financial Data Schedule (Pre-XBRL) 1 8K
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FORM 10-K -- ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
/X/ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
/ /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-9161
CHRYSLER CORPORATION
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE
(State or other jurisdiction of
incorporation or organization)
1000 CHRYSLER DRIVE, AUBURN HILLS, MICHIGAN
(Address of principal executive offices)
38-2673623
(I.R.S. Employer
Identification No.)
48326-2766
(Zip Code)
(810) 576-5741
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
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NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------------------------------ ------------------------------------------
Common Stock, $1.00 par value; New York Stock Exchange
Rights to Purchase Junior Participating Chicago Stock Exchange
Cumulative Preferred Stock, $1.00 Pacific Stock Exchange
par value Philadelphia Stock Exchange
10.95% Debentures Due 2017 New York Stock Exchange
10.40% Notes Due 1999 New York Stock Exchange
Auburn Hills Trust Guaranteed
Exchangeable Certificates Due 2020 New York Stock Exchange
The Common Stock of the Registrant is listed for trading on the following
additional stock exchanges:
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Montreal Stock Exchange Montreal, Quebec, Canada
Toronto Stock Exchange Toronto, Ontario, Canada
The Stock Exchange, London London, England
Paris Stock Exchange Paris, France
The Swiss Stock Exchange Zurich, Switzerland
Frankfurt Stock Exchange Frankfurt, Germany
Tokyo Stock Exchange Tokyo, Japan
Berlin Stock Exchange Berlin, Germany
Munich Stock Exchange Munich, Germany
Amsterdam Stock Exchange Amsterdam, Netherlands
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
The aggregate market value of voting Common Stock held by nonaffiliates of
the registrant was approximately $20.85 billion as of December 31, 1995.
The registrant had 378,314,267 shares of Common Stock outstanding as of
December 31, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information in Chrysler Corporation's definitive Proxy Statement for
its 1996 Annual Meeting of Stockholders, which will be filed with the Securities
and Exchange Commission pursuant to Regulation 14A, not later than 120 days
after the end of the fiscal year, is incorporated by reference in Part III
(Items 10, 11, 12 and 13) of this Form 10-K.
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CHRYSLER CORPORATION
FORM 10-K
YEAR ENDED DECEMBER 31, 1995
INDEX
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PAGE NO.
--------
PART I.
Item 1. Business...................... 3 - 17
Item 2. Properties.................... 17 - 18
Item 3. Legal Proceedings............. 18 - 21
Item 4. Submission of Matters to a
Vote of Security Holders...... 21
Executive Officers of the Registrant
(Unnumbered Item) .............................. 21
PART II.
Item 5. Market for the Registrant's
Common Equity and Related
Stockholder Matters........... 22
Item 6. Selected Financial Data....... 23
Item 7. Management's Discussion and
Analysis of Financial
Condition and Results of
Operations.................... 24 - 31
Item 8. Financial Statements and
Supplementary Data............ 32 - 65
Item 9. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure...... 66
PART III.
Items 10, 11, 12 and 13. (Incorporated by reference
from Chrysler Corporation's
definitive Proxy Statement
which will be filed with the
Securities and Exchange
Commission, pursuant to
Regulation 14A, not later than
120 days after the end of the
fiscal year).................. 66
PART IV.
Item 14. Exhibits, Financial Statement
Schedules and Reports on Form
8-K........................... 66 - 83
SIGNATURES................................................................................. 84 - 85
2
PART I
--------
ITEM 1. BUSINESS
--------
CHRYSLER CORPORATION
--------------------
GENERAL
-------
Chrysler Corporation was incorporated under the laws of the State of
Delaware on March 4, 1986, and is the surviving corporation following mergers
with a number of its operating subsidiaries, including Chrysler Motors
Corporation which was originally incorporated in 1925.
Chrysler Corporation and its consolidated subsidiaries ("Chrysler") operate
in two principal industry segments: automotive operations and financial
services. Automotive operations include the research, design, manufacture,
assembly and sale of cars, trucks and related parts and accessories. Financial
services include the operations of Chrysler Financial Corporation and its
consolidated subsidiaries ("CFC"), which are engaged principally in providing
consumer and dealer automotive financing for Chrysler's products. Chrysler also
participates in short-term vehicle rental activities through certain of its
subsidiaries (the "Car Rental Operations") and engages in aircraft modification
and the manufacture of electronics products and systems through its Chrysler
Technologies Corporation subsidiary. Chrysler's principal executive offices are
located at Chrysler World Headquarters, 1000 Chrysler Drive, Auburn Hills,
Michigan 48326-2766. The telephone number of those offices is (810) 576-5741.
AUTOMOTIVE OPERATIONS
---------------------
Chrysler manufactures, assembles and sells cars and trucks under the brand
names Chrysler, Dodge, Plymouth, Eagle and Jeep(R), and related automotive parts
and accessories, primarily in the United States, Canada and Mexico ("North
America"). Passenger cars are offered in various size classes and models.
Chrysler produces trucks in pickup, sport-utility and van/wagon models, which
constitute the largest segments of the truck market. Chrysler also purchases and
distributes certain passenger cars manufactured in Japan by Mitsubishi Motors
Corporation ("MMC"), as well as cars manufactured in the United States by MMC's
subsidiary, Mitsubishi Motors Manufacturing of America ("MMMA"), formerly
Diamond-Star Motors Corporation.
Although Chrysler currently sells most of its vehicles in the United
States, Canada and Mexico, Chrysler also participates in other international
markets through its subsidiaries, Chrysler Motors de Venezuela, S.A., Chrysler
Japan Sales Limited ("CJSL"), Chrysler do Brasil Comercial Exportadora
Importadora Ltda., and Chrysler Sales & Services (Thailand) Ltd., and indirectly
through its minority investments in Beijing Jeep Corporation, Ltd. and Arab
American Vehicles Company. Chrysler sells to independent distributors in Europe
and other world markets vehicles which are produced in North America by Chrysler
and in Austria by Eurostar Automobilwerk Ges.mb.H & Co. KG ("Eurostar"), a joint
venture between Chrysler and Steyr-Daimler-Puch Fahrzeugtechnik ("Steyr") in
Graz, Austria.
Chrysler's strategy is to focus on its core automotive business. As part of
this strategy, Chrysler has sold certain assets and businesses which are not
related to its core automotive business, and is exploring the sale of other such
assets and businesses in the near term.
THE AUTOMOTIVE INDUSTRY IN NORTH AMERICA
----------------------------------------
The automotive industry in North America is highly competitive with respect
to a number of factors, including vehicle quality, price, development and
introduction time, appearance, size, special options, distribution organization,
warranties, reliability, safety, fuel economy, dealer service and financing
terms. As a result, Chrysler's ability to increase vehicle prices and to use
retail sales incentives effectively are significantly affected by the pricing
actions and sales programs of its principal competitors. Moreover, the
introduction of new products by other manufacturers may adversely affect the
market shares of competing products made by
3
ITEM 1. BUSINESS -- CONTINUED PART I -- CONTINUED
---------------------
AUTOMOTIVE OPERATIONS -- CONTINUED
----------------------------------
THE AUTOMOTIVE INDUSTRY IN NORTH AMERICA -- CONTINUED
-----------------------------------------------------
Chrysler. Recently, Chrysler has been very successful in bringing new products
to market, in greatly reduced vehicle development time. However, many of
Chrysler's competitors have larger worldwide sales volumes and greater financial
resources, which may, over time, place Chrysler at a competitive disadvantage in
responding to new competitor offerings, substantial changes in consumer
preferences, governmental regulations, or adverse economic conditions in North
America.
Chrysler's long-term profitability will depend significantly on its ability
to continue its capital expenditure and vehicle development programs and market
its products successfully. The success of Chrysler's new vehicles will depend on
a number of factors, including general economic conditions, competition,
consumer acceptance, product quality, new product development, the effect of
governmental regulation and the strength of Chrysler's marketing and dealer
networks. As both Chrysler and its competitors plan to introduce new products,
Chrysler cannot predict the market shares its new products will achieve.
Moreover, Chrysler is substantially committed to its product plans and would be
adversely affected by events requiring a major shift in product development.
Chrysler's principal competitors in North America are General Motors
Corporation and Ford Motor Company. In addition, a number of foreign automotive
companies own and operate manufacturing and/or assembly facilities in North
America ("transplants"), and there are a number of other foreign manufacturers
that distribute automobiles and light-duty trucks in North America.
4
ITEM 1. BUSINESS -- CONTINUED PART I -- CONTINUED
---------------------
AUTOMOTIVE OPERATIONS -- CONTINUED
----------------------------------
UNITED STATES
--------------
The tables below set forth comparative market share data for retail sales
of cars and trucks in the United States for the major manufacturers (including
cars and trucks imported by them) and for foreign-based manufacturers, and unit
sales of passenger cars and trucks (including imports) by Chrysler.
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YEAR ENDED DECEMBER 31
---------------------------------------------
1995 1994 1993 1992 1991
----- ----- ----- ----- -----
(PERCENT OF TOTAL INDUSTRY)
U.S. Car Market Share(1):
-------------------------
U.S. Manufacturers (Including Imports):
General Motors................................. 33.9% 34.0% 34.1% 34.6% 35.6%
Ford........................................... 20.7 21.6 22.1 21.6 20.1
Chrysler....................................... 9.1 9.0 9.8 8.3 8.6
----- ----- ----- ----- -----
Total U.S. Manufacturers..................... 63.7 64.6 66.0 64.5 64.3
Foreign-Based Manufacturers(2):
Japanese....................................... 29.7 29.5 29.1 30.1 30.4
All Other...................................... 6.6 5.9 4.9 5.4 5.3
----- ----- ----- ----- -----
Total Foreign-Based Manufacturers............ 36.3 35.4 34.0 35.5 35.7
----- ----- ----- ----- -----
Total..................................... 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
U.S. Truck Market Share(1)(3):
------------------------------
U.S. Manufacturers (Including Imports):
General Motors................................. 29.9% 30.9% 31.4% 32.2% 32.9%
Ford........................................... 31.9 30.1 30.5 29.7 28.9
Chrysler....................................... 21.3 21.7 21.4 21.1 18.4
All Other...................................... 2.0 2.0 1.9 1.8 2.0
----- ----- ----- ----- -----
Total U.S. Manufacturers..................... 85.1 84.7 85.2 84.8 82.2
Foreign-Based Manufacturers(2):
Japanese....................................... 12.7 13.5 13.2 13.9 16.5
All Other...................................... 2.2 1.8 1.6 1.3 1.3
----- ----- ----- ----- -----
Total Foreign-Based Manufacturers............ 14.9 15.3 14.8 15.2 17.8
----- ----- ----- ----- -----
Total..................................... 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
(IN THOUSANDS)
Unit Sales(1):
---------------
U.S. Car Retail Sales:
Total Industry................................. 8,635 8,990 8,518 8,214 8,174
Chrysler....................................... 786 812 834 680 703
U.S. Truck Retail Sales(3):
Total Industry................................. 6,481 6,421 5,681 4,904 4,367
Chrysler....................................... 1,378 1,392 1,214 1,033 805
-------------------------
(1) All U.S. retail sales data are based on publicly available information on
manufacturers from the American Automobile Manufacturers Association and
data on foreign company imports from Ward's Automotive Reports, a trade
publication.
(2) "Foreign-Based Manufacturers" include imports and vehicles assembled and
sold in the United States by foreign companies.
(3) U.S. truck retail market share includes minivans.
5
ITEM 1. BUSINESS -- CONTINUED PART I -- CONTINUED
---------------------
AUTOMOTIVE OPERATIONS -- CONTINUED
----------------------------------
UNITED STATES -- CONTINUED
--------------------------
Competition from foreign car and truck manufacturers, in the form of both
exports to the United States and sales by transplants, is substantial. The
market share for foreign passenger cars sold in the United States
(including transplants) was 36.3 percent in 1995, compared to 35.4 percent in
1994. The market share for foreign trucks sold in the United States (including
transplants) was 14.9 percent in 1995, compared to 15.3 percent in 1994.
Vehicles assembled in the United States by Japanese manufacturers have
significantly contributed to the market share obtained by foreign-based
manufacturers. Japanese transplant sales accounted for approximately 18.5
percent of the U.S. passenger car market and 5.3 percent of the U.S. truck
market in 1995, compared to 16.1 percent and 5.6 percent, respectively, in 1994.
CHRYSLER CANADA LTD.
--------------------
Chrysler's consolidated subsidiary, Chrysler Canada Ltd. ("Chrysler
Canada"), operates manufacturing and assembly facilities and sales and
distribution networks in Canada. Chrysler Canada, whose operations are
substantially integrated with Chrysler's U.S. operations, manufactures
components and assembles minivans, mid-size and large sedans, and full-size
vans.
In 1995 and 1994, Chrysler Canada shipped 540,493 and 692,615 vehicles,
respectively, the majority of which were sold outside of Canada. Chrysler
Canada's retail sales totaled 225,122 vehicles in 1995 and 247,752 vehicles in
1994, the majority of which were manufactured outside of Canada. Chrysler
Canada's retail unit sales of cars accounted for 14.6 percent and 15.7 percent
of the Canadian car market in 1995 and 1994, respectively. In 1995, retail unit
sales of trucks accounted for 25.8 percent of the Canadian truck market compared
with 25.7 percent in 1994. In 1995, Chrysler Canada ranked third in the Canadian
industry in retail unit sales of both cars and trucks.
CHRYSLER DE MEXICO S.A.
-----------------------
Chrysler's consolidated subsidiary, Chrysler de Mexico S.A. ("Chrysler
Mexico"), operates assembly and manufacturing facilities in Mexico, producing
vehicles and components for both Mexican and export markets. In addition,
Chrysler Mexico provides certain major automobile components to Chrysler,
including engines and air conditioning condensers.
Chrysler Mexico manufactured 207,004 vehicles in 1995 and 238,888 vehicles
in 1994. Of these totals, 26,503 vehicles and 77,832 vehicles were sold in
Mexico in 1995 and 1994, respectively. Sales of vehicles exported to Mexico were
not significant in 1995 or 1994. The decrease in vehicles manufactured and sold
in Mexico was primarily attributable to unfavorable economic conditions in
Mexico, commencing with the devaluation of the Mexican peso in December 1994.
Chrysler's operating results will continue to be adversely affected to the
extent that the unfavorable economic conditions in Mexico continue.
Chrysler Mexico's vehicle sales accounted for 14.6 percent of the Mexican
wholesale car market and 16.9 percent of the Mexican wholesale truck market in
1995, compared with 13.1 percent and 19.4 percent, respectively, in 1994. Within
the Mexican industry, Chrysler Mexico's wholesale unit sales ranked fourth in
both cars and trucks in 1995. In 1995, overall wholesale industry sales in
Mexico are estimated to have been approximately 235,500 units, compared with
620,000 units in 1994, a decrease of 62.0 percent. Although Chrysler expects the
economic conditions in Mexico to improve slightly in 1996, Chrysler cannot
predict when the Mexican automotive industry sales will return to predevaluation
levels.
INTERNATIONAL OPERATIONS
------------------------
Chrysler's automotive operations in Europe consist primarily of
manufacturing operations in Austria, where Jeep Grand Cherokees and Chrysler
Voyagers are produced, and the export of finished vehicles and
6
ITEM 1. BUSINESS -- CONTINUED PART I -- CONTINUED
---------------------
AUTOMOTIVE OPERATIONS -- CONTINUED
----------------------------------
INTERNATIONAL OPERATIONS -- CONTINUED
-------------------------------------
component kits produced in North America to independent foreign distributors and
local manufacturers. In addition, Chrysler opened a parts distribution center in
1995 and will open a European Headquarters Office in Brussels, Belgium in 1996.
Chrysler's Latin American operations include an assembly facility in
Venezuela. During 1995, Chrysler established wholly owned distribution companies
in Brazil and Argentina and announced its intent to establish a manufacturing
facility in Argentina to produce vehicles for sale in South America. Production
of the Chrysler Neon will begin in Venezuela in 1996 and the Jeep Grand Cherokee
will be produced in Argentina beginning in 1997.
Chrysler's automotive operations in Asia consist of both manufacturing and
assembly of Jeep vehicles in Beijing, China and assembly of component kits in
Malaysia and Indonesia. During 1995, Chrysler expanded its presence in Asia by
purchasing a majority interest in its Japanese distributor (CJSL), opening a
parts distribution center in Singapore and entering into a joint-venture in
Thailand to sell Chrysler products. In addition, Chrysler received a license to
build a plant in Vietnam, where assembly of Dakota pickup trucks is anticipated.
Chrysler also has an equity interest in a company with manufacturing and
assembly facilities in Egypt.
Chrysler expects to continue to focus on growth opportunities in major
markets such as Western Europe, Japan and China and will explore developing
markets in South America, Eastern Europe and the Asia-Pacific region. New
manufacturing and joint venture operations could be established if market
conditions, sales levels and profitability opportunities are consistent with
Chrysler's corporate objectives.
Chrysler's expansion strategy in international markets includes integrating
international and North American product development which enables Chrysler to
make European and right-hand-drive versions available overseas shortly after
left-hand-drive versions debut in the U.S. During 1995, right-hand-drive and
diesel engine options have been added to many product lines to enhance product
acceptance and growth opportunities in international markets. By the end of
1996, five right-hand-drive models (Chrysler Neon, Chrysler Voyager and Jeep
Cherokee, Grand Cherokee and Wrangler) will be available in certain markets,
such as the United Kingdom, Australia, South Africa and Japan.
Chrysler shipped 168,860 vehicles to international markets in 1995, an
increase of 23 percent from 1994. Chrysler sold 90,016 units in European markets
and 78,844 units in other world markets, primarily Japan, Taiwan and the Middle
East. In addition, Chrysler exported 40,892 kits to worldwide affiliates for
assembly in 1995, compared to 24,272 kits in 1994. The majority of the kits were
Jeep products shipped to China, Indonesia and Venezuela.
Eurostar sold 37,063 minivans in 1995, compared to 38,830 in 1994. The
decline in minivan sales was primarily attributable to the launch of Chrysler's
all-new minivans at the Graz, Austria assembly plant in the third quarter of
1995. In addition, Chrysler, under an assembly agreement with Steyr, began
production of Jeep Grand Cherokees in Austria during the fourth quarter of 1994
for European and other world markets.
Chrysler presently does not have significant risks related to changes in
currency exchange rates as Chrysler is primarily a North American automotive
company. Chrysler does, however, have international component sourcing and
growing international sales. When Chrysler sells vehicles outside the United
States or purchases components from suppliers outside the United States,
transactions are frequently denominated in currencies other than U.S. dollars.
The primary foreign currencies in which Chrysler has activities are the German
mark, French franc, Japanese yen, Canadian dollar, Mexican peso, Taiwan dollar,
Austrian schilling and British pound. To the extent possible, receipts and
disbursements in a specific currency are offset against each other. In addition,
Chrysler periodically initiates hedging activities by entering into currency
exchange agreements, consisting primarily of currency forward contracts and
purchased currency options, to minimize revenue and cost variations which could
result from fluctuations in currency exchange rates. Chrysler also
7
ITEM 1. BUSINESS -- CONTINUED PART I -- CONTINUED
---------------------
AUTOMOTIVE OPERATIONS -- CONTINUED
----------------------------------
INTERNATIONAL OPERATIONS -- CONTINUED
-------------------------------------
utilizes written currency options to effectively close out existing purchased
currency options. At December 31, 1995, Chrysler had currency exchange
agreements for the German mark, French franc, Japanese yen and British pound.
Chrysler's operating results are affected by changes in currency exchange rates
during the period in which transactions are executed, to the extent that hedge
coverage does not exist. However, the impact of any changes in currency exchange
rates on unhedged transactions is not expected to be material to Chrysler's
operating results or financial position.
Chrysler does not use derivative financial instruments for trading
purposes. Chrysler's hedging activities are based upon purchases and sales which
are exposed to foreign currency risk. The currency exchange agreements which
provide hedge coverage typically mature within two years of origination,
consistent with the underlying purchase or sales commitment. These hedging
instruments are periodically modified as existing commitments are fulfilled and
new commitments are made. Chrysler's management believes that its hedging
activities have been effective in reducing Chrysler's limited risks related to
currency exchange fluctuations.
MITSUBISHI MOTORS CORPORATION
-----------------------------
Under the terms of the United States Distribution Agreement ("USDA") in
effect between Chrysler and MMC, which terminates in March 1998, Chrysler
imports and distributes selected models of passenger cars manufactured by MMC in
Japan. In 1995, Chrysler sold 14,823 MMC-manufactured vehicles in the United
States, representing less than one percent of Chrysler's U.S. retail vehicle
sales. In 1994, Chrysler sold 28,849 MMC-manufactured vehicles in the United
States, representing slightly more than one percent of Chrysler's U.S. retail
vehicle sales. An agreement similar to the USDA is in effect covering the
Canadian market. Chrysler's imported vehicles have posted relatively low sales
in recent years. As a result, during 1996, Chrysler and MMC plan to consider an
early termination of the existing USDA.
In addition to passenger cars, Chrysler purchases 2.5-liter and 3.0-liter
V-6 engines from MMC for use in the production of certain minivans and other
vehicles. Chrysler purchased approximately 372,000 such engines during 1995.
MMMA produces small sporty cars in the United States for Chrysler and Mitsubishi
Motor Sales of America. Pursuant to a distribution agreement that terminates in
July 1999, Chrysler retains the right to purchase vehicles up to a specific
maximum allocation that has been agreed to by the parties for each model year.
In addition, Chrysler will provide engines and transmissions for use in
certain MMMA vehicles. Chrysler's sales of MMMA-manufactured vehicles in 1995
and 1994 represented 3.7 and 1.7 percent, respectively, of Chrysler's U.S.
retail vehicle sales volume in each period. Chrysler does not anticipate any
major changes to its MMMA distribution agreement during 1996.
Chrysler previously owned an equity interest in both MMC and MMMA. Chrysler
sold its 50 percent interest in MMMA to MMC, its partner in the joint venture,
in October 1991. Chrysler subsequently sold its equity interest in MMC in 1992
and 1993.
SEGMENT INFORMATION
-------------------
Industry segment and geographic area data for 1995, 1994 and 1993 are
summarized in Part II, Item 8, Notes to Consolidated Financial Statements, Note
17.
SEASONAL NATURE OF BUSINESS
---------------------------
Reflecting retail sales fluctuations of a seasonal nature, production
varies from month to month in the automotive business. In addition, the
changeover period related to model year introductions has traditionally
8
ITEM 1. BUSINESS -- CONTINUED PART I -- CONTINUED
---------------------
AUTOMOTIVE OPERATIONS -- CONTINUED
----------------------------------
SEASONAL NATURE OF BUSINESS -- CONTINUED
----------------------------------------
occurred in the third quarter of each year. Accordingly, third quarter operating
results are generally less favorable than those in the other quarters of the
year.
AUTOMOTIVE PRODUCT PLANS
------------------------
Chrysler's automotive design and development activities are organized into
cross-functional product development groups called "platform teams." The
platform team system is designed to improve communications, reduce the design
and development time of new vehicles, improve product quality, and reduce the
cost of developing new vehicle lines. The platform team concept has contributed
significantly to Chrysler's success in recent years.
Chrysler introduced an all-new compact car marketed as the Chrysler Cirrus
in the third quarter of 1994. The Cirrus offers newly designed engines, includes
driver and passenger airbags, and utilizes Chrysler's "cab-forward" design. The
Cirrus received the Motor Trend Car of the Year Award in 1995. A Dodge version
of the vehicle, the Dodge Stratus, was introduced in the first quarter of 1995.
In addition, a Plymouth version of the vehicle, the Plymouth Breeze, was added
in the 1996 model year.
Chrysler added the Dodge Avenger in the third quarter of 1994 and
introduced the Chrysler Sebring in the first quarter of 1995. These two-door
coupes compete in the mid-specialty segment and are built exclusively for
Chrysler by MMMA.
Chrysler introduced its all-new minivan in the first quarter of 1995. The
new Chrysler Town & Country, Dodge Caravan, and Plymouth Voyager provide many
unique product features, including a driver's side sliding door. Despite its
classification as a truck, the Dodge Caravan was named the Motor Trend Car of
the Year in 1996. Chrysler held 42.1 percent and 43.4 percent of the U.S.
minivan segment in 1995 and 1994, respectively. In spite of increased
competition in this segment and reduced availability due to model changeover,
retail sales of Chrysler minivans in the United States were 493,997 in 1995,
compared to 513,163 in 1994.
The Chrysler Sebring convertible, which utilizes "cab-forward" styling in a
convertible model, was added to Chrysler's product lineup in the 1996 model
year.
In January 1996, Chrysler announced its intent to produce the Plymouth
Prowler convertible as a 1997 1/2 model unique to the Plymouth brand. The
Prowler draws on the heritage of "street rods" for its retro styling cues, but
offers all the technology and customer convenience of a '90s production car. As
a small volume niche vehicle, the Prowler will serve as a technology testbed for
aluminum body and chassis applications.
Chrysler will begin production of a substantially redesigned Jeep Wrangler
in early 1996. It includes an all-new suspension, front and rear, an all-new
interior with an integrated instrument panel, and improved front and rear
passenger accommodations, while maintaining Wrangler's traditional exterior
styling and rugged appearance. Also included are driver and passenger airbags.
In March 1996, Chrysler will launch the new Viper GTS, a coupe version of
the original Viper roadster which was the first vehicle developed under
Chrysler's platform team system. In addition, the Dodge Dakota pickup truck will
undergo a major renewal for the 1997 model year.
AUTOMOTIVE MARKETING
--------------------
New passenger cars and trucks are sold at retail by dealers who have sales
and service agreements with Chrysler. The dealers purchase cars, trucks, parts
and accessories from Chrysler for sale to retail customers. In the United
States, Chrysler had 4,652 dealers at December 31, 1995 compared with 4,687 at
December 31,
9
ITEM 1. BUSINESS -- CONTINUED PART I -- CONTINUED
---------------------
AUTOMOTIVE OPERATIONS -- CONTINUED
----------------------------------
AUTOMOTIVE MARKETING -- CONTINUED
---------------------------------
1994. Chrysler Canada had 609 dealers at December 31, 1995 compared with 607
dealers at December 31, 1994.
The quality and strength of Chrysler's dealer organization will have an
important impact on future sales. Chrysler maintains programs to provide
dealership operating capital through equity investments where sufficient private
capital is not available. The programs anticipate that the dealer receiving such
assistance will eventually use its share of the dealership profits to purchase
Chrysler's equity investment. Chrysler's equity interest in U.S. and Canadian
dealerships totaled $22 million in 51 dealerships as of December 31, 1995,
compared with $28 million in 64 dealerships as of December 31, 1994.
Chrysler continues to focus on quality customer service. A redesigned
customer satisfaction survey process provides Chrysler and its franchised
dealers continuous customer feedback regarding dealer sales, service and parts
operations. In addition, the Chrysler Customer Center is designed to promote
customer satisfaction and communicate customer concerns to dealers and
internally to vehicle platform teams.
MANUFACTURED AND PURCHASED COMPONENTS AND MATERIALS
---------------------------------------------------
Chrysler continues to focus on its core automotive business. Chrysler
manufactures most of its requirements for engines, transmissions and transaxles,
certain body stampings, electronic components, and fabricated glass parts.
Chrysler purchases materials, parts and other components from numerous
unaffiliated suppliers. Chrysler used approximately 1,150 suppliers of
productive materials in 1995, compared to approximately 1,250 used in 1994.
Interruptions in production or delivery of these productive materials could
adversely affect Chrysler. Chrysler purchases a larger portion of its productive
materials from unaffiliated suppliers than do its principal competitors and
expects to continue purchasing its requirements for these items rather than
manufacturing them.
GOVERNMENT REGULATION
---------------------
VEHICLE REGULATION
------------------
Fuel economy, safety and emissions regulations and standards applicable to
motor vehicles have been issued from time to time under a number of federal
statutes, including the National Traffic and Motor Vehicle Safety Act of 1966
(the "Safety Act"), the Clean Air Act, Titles I and V of the Motor Vehicle
Information and Cost Savings Act and the Noise Control Act of 1972. In addition,
the State of California has promulgated exhaust emission standards, some of
which are more stringent than the federal standards. Other states may, under the
Clean Air Act, adopt vehicle emission standards identical to those adopted by
the State of California. The States of New York, Massachusetts, Connecticut,
Maine, and New Jersey have also adopted California standards and several other
states are considering similar action. Federal courts have generally upheld New
York and Massachusetts' adoption of the California standards.
Vehicle Emissions Standards
Under the Clean Air Act, auto manufacturers are required, among other
things, to significantly reduce tailpipe emissions of polluting gases from
automobiles and light trucks and are obligated to recall vehicles for failure to
meet emission standards for a period of ten years or 100,000 miles, whichever
occurs first. This Act imposes standards for model years through 2003 that
require further significant reductions in motor vehicle emissions and directs
the U.S. Environmental Protection Agency ("EPA") to study the need for much more
stringent emissions standards beginning as early as the 2004 model year. This
Act also directs the EPA to
10
ITEM 1. BUSINESS -- CONTINUED PART I -- CONTINUED
---------------------
AUTOMOTIVE OPERATIONS -- CONTINUED
----------------------------------
GOVERNMENT REGULATION -- CONTINUED
----------------------------------
VEHICLE REGULATION -- CONTINUED
-------------------------------
Vehicle Emissions Standards -- Continued
review the Federal Test Procedure used to measure vehicle tailpipe emissions.
The EPA has issued a Notice of Proposed Rulemaking to impose additional test
requirements, potentially increasing the stringency of the test. This Act also
may require production of certain vehicles capable of operating on fuels other
than gasoline or diesel fuel (alternative fuels) under the Clean Fuel Vehicle
Program beginning in the 1998 model year. Chrysler is actively pursuing the
development of flexible fuel vehicles capable of operating on both gasoline and
either methanol or ethanol blend fuels, as well as the development of vehicles
capable of operating on compressed natural gas and liquid petroleum gas.
The California Air Resources Board ("CARB") has received federal approval,
pursuant to the Clean Air Act, for its Low Emission Vehicle Program for a series
of passenger car and light truck emission standards that are more stringent than
those prescribed by the Clean Air Act for the corresponding periods of time.
These California standards are intended to promote the development of various
classes of low-emission vehicles. Included in this program is a requirement that
a specified percentage of each manufacturer's California light-duty production
volume, beginning at two percent in 1998 and increasing to ten percent in 2003,
be zero-emission vehicles ("ZEVs") that produce no emissions of regulated
pollutants. Chrysler has entered into a consortium of vehicle manufacturers,
electric utilities and the U.S. Department of Energy to develop new battery
technology for use in electric vehicles which would qualify as ZEVs and has
built a limited number of experimental prototype electric vehicles using
existing advanced battery technology. On December 21, 1995, the CARB directed
its staff to finalize a plan to modify the ZEV mandate for model years 1998 -
2002. If adopted, the plan would suspend the ZEV mandate until model year 2003,
and the program will be replaced by market-based action along with continued
research and development on ZEVs as well as a ZEV demonstration program in
California.
On December 19, 1994, the Administrator of the EPA responded to a petition
filed by the Ozone Transport Commission ("OTC"), a group of 12 Northeast states
and the District of Columbia. The response held that the states comprising the
OTC must either adopt the California vehicle emissions standards or a 49 state
program advocated by the American Automobile Manufacturers Association ("AAMA")
(of which Chrysler is a member) and the Association of International Automobile
Manufacturers ("AIAM"). The Administrator's decision does not require the states
that adopt California's general vehicle emission standards to adopt California's
ZEV requirement, but permits the states to adopt the ZEV requirement if they
elect to do so. New York, Massachusetts and Maine have adopted the California
general standards as well as the California ZEV requirement. Connecticut and New
Jersey have adopted the general standards but not the ZEV requirement. The EPA
issued a Notice of Proposed Rulemaking on October 10, 1995, detailing a
voluntary 49 state National Low Emission Vehicle Program which might form the
basis of a 49 state program of the type advocated by AAMA and AIAM.
The Clean Air Act also requires full implementation of on-board diagnostic
systems ("OBD") on 1996 model year light-duty vehicles. California has its own
OBD requirements which are more stringent than the federal requirements. These
OBD requirements are of concern because they may cause increased warranty costs
and additional recalls.
CAFE
The Motor Vehicle Information and Cost Savings Act, as amended by the
Energy Policy and Conservation Act, requires vehicle manufacturers to provide
vehicles that comply with federally mandated Corporate Average Fuel Economy
("CAFE") standards. Under this Act, a manufacturer earns credits for
11
ITEM 1. BUSINESS -- CONTINUED PART I -- CONTINUED
---------------------
AUTOMOTIVE OPERATIONS -- CONTINUED
----------------------------------
GOVERNMENT REGULATION -- CONTINUED
----------------------------------
VEHICLE REGULATION -- CONTINUED
-------------------------------
CAFE -- Continued
exceeding the applicable fuel economy standards; however, fuel economy credits
earned on cars may not be used for trucks. Failure to meet the average fleet
fuel economy standards can result in the imposition of penalties unless a
manufacturer has sufficient fuel economy credits from the preceding three years
or projects that it will generate sufficient credits over the succeeding three
years. Chrysler is in substantial compliance with passenger car CAFE
requirements and anticipates continued compliance with such requirements.
Chrysler anticipates compliance with light-duty truck CAFE through the use of
carryback and carryforward credits. In addition, the Energy Tax Act of 1978
imposes a graduated "Gas Guzzler" tax on automobiles with a fuel economy rating
below specified levels.
From time to time there have been federal legislative and administrative
initiatives that would increase CAFE standards from their current levels. In
addition, the National Highway Traffic Safety Administration ("NHTSA") has
initiated rulemaking to set more stringent light truck CAFE standards for the
1998-2006 model years. A significant increase in those requirements could be
costly to Chrysler and could result in significant restrictions on the products
Chrysler offers.
Vehicle Safety
Under the Safety Act, NHTSA is required to establish federal motor vehicle
safety standards that are practicable, meet the need for motor vehicle safety
and are stated in objective terms. NHTSA has announced its intention to upgrade
certain existing standards and to establish additional standards in the future.
Chrysler expects to be able to comply with those standards.
Vehicle Recalls
Under the Clean Air Act, the EPA may require manufacturers to recall and
repair vehicles that fail to meet emission standards established under that Act.
Similarly, the Act authorizes the State of California to require recalls for
vehicles that fail to meet its emissions standards.
The Safety Act authorizes NHTSA to investigate reported vehicle problems
and to order a recall if it determines that a safety-related defect exists.
NHTSA conducted an engineering analysis of the rear liftgate latches in
Chrysler's 1984-1995 model year minivans (approximately 4 million vehicles) as a
result of allegations that some latches open during collisions. On October 25,
1995, NHTSA closed this investigation and announced that it was satisfied with
Chrysler's voluntary service action to replace the latches in these minivans.
Chrysler began its latch replacement service action in September 1995 and
expects to complete it by the end of 1996.
Chrysler's emissions and safety-related recall costs vary widely from year
to year, and could be significant in future periods, depending on the corrective
action required to remedy a particular condition and the number of vehicles
involved.
STATIONARY SOURCE REGULATION
----------------------------
Chrysler's assembly, manufacturing and other operations are subject to
substantial environmental regulation under the Clean Air Act, the Clean Water
Act, the Resource Conservation and Recovery Act, the Pollution Prevention Act of
1990 and the Toxic Substances Control Act, as well as a substantial volume of
state legislation paralleling and, in some cases, imposing more stringent
obligations than the federal requirements. These regulations impose severe
restrictions on air and water-born discharges of pollution from
12
ITEM 1. BUSINESS -- CONTINUED PART I -- CONTINUED
---------------------
AUTOMOTIVE OPERATIONS -- CONTINUED
----------------------------------
GOVERNMENT REGULATION -- CONTINUED
----------------------------------
STATIONARY SOURCE REGULATION -- CONTINUED
-----------------------------------------
Chrysler facilities, the handling of hazardous materials at Chrysler facilities
and the disposal of wastes from Chrysler operations. Chrysler is faced with many
similar requirements in its operations in Canada and is facing increased
governmental regulation and environmental enforcement in Mexico.
While Chrysler is unable to predict the exact level of expenditures that
will be required to develop and implement new technology in its North American
facilities, since federal and state requirements are not fully defined, Chrysler
expects its capital requirements for the period 1996 through 2000 will be
approximately $500 million. Of this total, Chrysler estimates that $130 million
will be spent in 1996 and $60 million will be spent in 1997. Substantially all
of these expenditures are included in Chrysler's planned disbursements for new
product development and the acquisition of productive assets over the 1996 to
2000 period. In addition, the extensive federal-state permit program established
by the Clean Air Act may reduce operational flexibility and cause delays in
upgrading Chrysler's production facilities in the United States.
Clean Air Act
Pursuant to the Clean Air Act, states are required to amend their
implementation plans to require more stringent limitations and other controls on
the quantity of pollutants which may be emitted into the atmosphere to achieve
national ambient air quality standards established by the EPA. In addition, the
Clean Air Act requires reduced emissions of substances that are classified as
hazardous, toxic or that contribute to acid deposition, imposes comprehensive
permit requirements for manufacturing facilities in addition to those required
by various states, and expands federal authority to impose severe penalties and
criminal sanctions. The Clean Air Act also allows states to adopt standards more
stringent than those required by the Clean Air Act. Most recent reports filed
with the EPA pursuant to the Superfund Amendments and Reauthorization Act of
1986 indicate that, for calendar year 1994, releases and emissions of chemicals
and toxins by Chrysler were reduced by more than 70 percent from comparable 1987
levels, even though vehicle production increased more than 10% during this
period.
Environmental Liabilities
The EPA and various state agencies have notified Chrysler that it may be a
potentially responsible party ("PRP") for the cost of cleaning up hazardous
waste storage or disposal facilities pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA") and other federal and state
environmental laws. A number of lawsuits allege that Chrysler violated CERCLA or
other environmental laws and seek to recover costs associated with remedial
action. In most instances, Chrysler is only one of a number of PRPs who may be
found to be jointly and severally liable for remediation costs at the 101 sites
involved in the foregoing matters at December 31, 1995. Chrysler may also incur
remediation costs at an additional 45 of its active or deactivated facilities.
Chrysler's reserves for these environmental matters totalled $271 million as of
December 31, 1995. Chrysler periodically evaluates and revises estimates for
environmental liabilities based on expenditures against established reserves and
the availability of additional information.
Estimates of future costs of such environmental matters are necessarily
imprecise due to numerous uncertainties, including the enactment of new laws and
regulations, the development and application of new technologies, the
identification of new sites for which Chrysler may have remediation
responsibility and the apportionment and collectibility of remediation costs
among responsible parties. Chrysler establishes reserves for these environmental
matters when the loss is probable and reasonably estimable. It is reasonably
possible that final resolution of some of these matters may require Chrysler to
make significant expenditures, in excess of established reserves, over an
extended period of time and in a range of amounts that cannot be reasonably
13
ITEM 1. BUSINESS -- CONTINUED PART I -- CONTINUED
---------------------
AUTOMOTIVE OPERATIONS -- CONTINUED
----------------------------------
GOVERNMENT REGULATION -- CONTINUED
----------------------------------
STATIONARY SOURCE REGULATION -- CONTINUED
-----------------------------------------
Environmental Liabilities -- Continued
estimated. Although the final resolution of any such matters could have a
material effect on Chrysler's consolidated operating results for the particular
reporting period in which an adjustment of the estimated liability is recorded,
Chrysler believes that any resulting liability should not materially affect its
consolidated financial position.
FINANCIAL SERVICES
------------------
CFC, Chrysler's wholly owned subsidiary, is a financial services
organization that provides retail and lease financing for vehicles, dealer
inventory and other financing needs, dealer property and casualty insurance and
dealership facility development and management primarily for Chrysler dealers
and their customers. CFC, a Michigan corporation, is the continuing corporation
resulting from a merger on June 1, 1967 of a financial services subsidiary of
Chrysler into a newly acquired, previously unaffiliated finance company
incorporated in 1926.
CFC's portfolio of finance receivables managed includes receivables owned
and receivables serviced for others. Receivables serviced for others include
securitized automotive receivables and retail leases. At December 31, 1995,
receivables serviced for others accounted for 66 percent of CFC's portfolio of
receivables managed. Total finance receivables managed at the end of each of the
five most recent years were as follows:
[Enlarge/Download Table]
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
(IN MILLIONS OF DOLLARS)
Automotive financing........................... $35,696 $29,962 $25,011 $22,481 $24,220
Nonautomotive financing........................ 2,391 2,775 3,251 7,657 9,486
------- ------- ------- ------- -------
Total.......................................... $38,087 $32,737 $28,262 $30,138 $33,706
======= ======= ======= ======= =======
Due to the significant and increasing portion of CFC's business that
relates to Chrysler, lower levels of production and sales of Chrysler automotive
products would likely result in a reduction in the level of finance operations
of CFC.
Automotive Financing
CFC is the major source of wholesale and retail financing for Chrysler
vehicles throughout North America. CFC also offers dealers working capital
loans, real estate and equipment financing and financing plans for fleet buyers,
including daily rental car companies independent of, and affiliated with,
Chrysler. The automotive financing operations of CFC are conducted through 95
branches in the United States, Canada (Chrysler Credit Canada Ltd.) and Mexico
(Chrysler Comercial S.A. de C.V.).
During 1995, CFC financed or leased approximately 1,031,000 new and used
vehicles at retail in the United States, including approximately 594,000 new
Chrysler passenger cars and light-duty trucks, representing 27 percent of
Chrysler's U.S. retail and fleet deliveries. In 1995, the average monthly
payment for new vehicle retail installment sale contracts acquired in the United
States was $364. The average new contract balance was $18,934 and the average
original term was 52 months. In the U.S., CFC also financed approximately
1,632,000 new Chrysler passenger cars and light-duty trucks at wholesale
representing 74 percent of Chrysler's U.S. factory shipments in 1995.
14
ITEM 1. BUSINESS -- CONTINUED PART I -- CONTINUED
---------------------
FINANCIAL SERVICES -- CONTINUED
-------------------------------
Nonautomotive Financing
-----------------------
CFC conducts its nonautomotive finance business through its subsidiaries,
Chrysler Capital Corporation and Chrysler First Inc. At December 31, 1995, the
nonautomotive receivables managed throughout the United States consisted of $712
million of commercial loans and leases and $1.7 billion of leveraged leases.
Automotive Insurance
--------------------
Chrysler Insurance Company and its subsidiaries ("Chrysler Insurance")
provide specialized insurance coverages for automotive dealers and their
customers in the United States and Canada. Chrysler Insurance's property and
casualty business includes physical damage, garage liability, workers'
compensation and property and contents coverage provided directly to automotive
dealers. Chrysler Insurance also provides vehicle collateral protection and
single interest insurance to retail customers and their financing sources.
Automobile Dealership Management
--------------------------------
Chrysler Realty Corporation ("Chrysler Realty"), is engaged in the
ownership, development and management of Chrysler automotive dealership
properties in the United States. Chrysler Realty typically purchases, leases or
options dealership facilities and then leases or subleases these facilities to
Chrysler dealers. At December 31, 1995, Chrysler Realty controlled 840 sites (of
which 271 were owned by Chrysler Realty).
Funding
--------
Receivable sales are a significant source of funding. Net proceeds from the
sale of automotive retail receivables were $6.5 billion during 1995 compared to
$6.4 billion in 1994. Securitization of revolving wholesale account balances
provided funding which aggregated $6.7 billion and $3.8 billion at December 31,
1995 and 1994, respectively. During 1995, CFC issued $4.3 billion of term debt
(primarily medium term notes), repaid term debt of $1.1 billion and reduced the
level of commercial paper by $1.9 billion.
During the second quarter of 1995, CFC entered into new revolving credit
facilities which replaced its existing U.S. and Canadian revolving credit and
receivable sale facilities. The new facilities which total $8.0 billion consist
of a $2.4 billion facility expiring in May 1996 and a $5.6 billion facility
expiring in May 2000. As of December 31, 1995, no amounts were outstanding under
these facilities.
CFC uses derivative financial instruments to manage funding costs and its
exposure arising from changes in interest rates and currency exchange rates.
These derivative financial instruments include interest rate swaps, interest
rate caps, forward interest rate contracts and currency exchange agreements. CFC
does not use derivative financial instruments for trading purposes.
15
ITEM 1. BUSINESS -- CONTINUED PART I -- CONTINUED
---------------------
FINANCIAL SERVICES -- CONTINUED
-------------------------------
Funding -- Continued
--------------------
CFC's outstanding debt at December 31, in each of the five most recent
years was as follows:
[Enlarge/Download Table]
DECEMBER 31
--------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------ ------- -------
(IN MILLIONS OF DOLLARS)
Short-term notes (primarily commercial paper)... $ 2,435 $ 4,315 $2,772 $ 352 $ 339
Bank borrowings under revolving credit
facilities.................................... -- -- -- 5,924 6,633
Senior term debt................................ 9,234 6,069 5,139 4,436 6,742
Subordinated term debt.......................... -- 27 77 585 949
Mexico borrowings and other..................... 100 260 447 455 518
------- ------- ------ ------- -------
Total........................................... $11,769 $10,671 $8,435 $11,752 $15,181
======= ======= ====== ======= =======
CAR RENTAL OPERATIONS
---------------------
Through its Pentastar Transportation Group, Inc. ("Pentastar") subsidiary,
Chrysler owns Thrifty Rent-A-Car System, Inc. ("Thrifty"), and Dollar Systems,
Inc. ("Dollar", formerly Dollar Rent A Car Systems, Inc.). Both Thrifty and
Dollar are engaged in leasing vehicles to independent businesses they have
licensed to use their trade names, systems and technologies in the daily rental
of cars for business, personal and leisure use. They also maintain and operate a
number of their own locations. Snappy Car Rental, Inc., which engages in renting
automobiles on a short-term basis, was sold in September 1994.
RESEARCH AND DEVELOPMENT
------------------------
For the years ended December 31, 1995, 1994 and 1993, Chrysler spent $1.4
billion, $1.3 billion, and $1.2 billion, respectively, for company-sponsored
research and development activities. These activities relate to the development
of new products and services and the improvement of existing products and
services, as well as compliance with standards that have been and are being
promulgated by the government.
EMPLOYEES
---------
At December 31, 1995, Chrysler had a total of approximately 126,000
employees worldwide. Of this total, approximately 85,000 hourly workers and
29,000 salaried workers were employed in the United States and Canada. In the
United States and Canada, approximately 95 percent of Chrysler's hourly
employees and 22 percent of its salaried employees are represented by unions. Of
these represented employees, 97 percent of hourly and 90 percent of salaried
employees are represented by the United Automotive, Aerospace, and Agricultural
Implement Workers of America ("UAW") or the National Automobile, Aerospace and
Agricultural Implement Workers of Canada ("CAW"). The existing national
agreements with the UAW and CAW will expire in September of 1996. Chrysler
cannot predict the outcome of negotiations with the UAW and CAW as to the
renewal of these agreements.
In 1993, Chrysler negotiated three-year national agreements with the UAW
and CAW in the United States and Canada, respectively, without an interruption
of production. The UAW contract provides for essentially the same levels of
wages and benefits as negotiated by Chrysler's major domestic competitors. The
UAW contract retains the job and income security protection program and health
care coverage. The job and income security benefit caps were negotiated at the
previous contract amount of $612 million with new Supplemental Unemployment
Benefits Contingency Accounts of $106 million. The contract also adopted
16
ITEM 1. BUSINESS -- CONTINUED PART I -- CONTINUED
---------------------
EMPLOYEES -- CONTINUED
----------------------
provisions expected to abate future increases in labor costs including Cost of
Living Allowance diversions, lower new hire rates, and a broadened approach to
managed health care.
Chrysler's pension plans, group life, and health care benefits for active,
inactive, and retired employees generally follow the structure of benefits
common to the automotive industry. See Part II, Item 8, Notes to Consolidated
Financial Statements, Notes 1, 11 and 12 for further information on
postemployment benefits, pension plans, and nonpension postretirement benefits.
INTELLECTUAL PROPERTY
---------------------
Chrysler has intellectual property rights, including patents, proprietary
technology, trademarks, trade dress, service marks, copyrights, and licenses
under such rights of others, relating to its businesses, products, and
manufacturing equipment and processes. Chrysler grants licenses to others under
its intellectual property rights and receives fees and royalties under some of
these licenses. While Chrysler does not consider any particular intellectual
property right to be essential, it does consider the aggregate of such rights
very important to the overall conduct of its businesses.
ITEM 2. PROPERTIES
----------
AUTOMOTIVE OPERATIONS
---------------------
The statements concerning ownership of Chrysler's properties are made
without regard to taxes or assessment liens, rights of way, contracts, easements
or like encumbrances or questions of survey and are based on the records of
Chrysler. Chrysler knows of no material defects in title to, or adverse claims
against, any of such properties, nor any existing material liens or encumbrances
against Chrysler or its properties.
Chrysler's manufacturing plants include a foundry, machining plants, metal
stamping plants, engine plants, transmission plants, electronic parts plants, an
air conditioning equipment plant, glass fabricating plants and other component
parts plants. In addition to Michigan, manufacturing plants in the United States
are located in Alabama, Indiana, New York, Ohio, Texas and Wisconsin.
Chrysler's U.S. passenger car assembly plants are located in Sterling
Heights and Detroit, Michigan; Belvidere, Illinois and Newark, Delaware. The
U.S. truck assembly plants are located in Warren and Detroit, Michigan; Fenton,
Missouri; and Toledo, Ohio. Parts depots, warehouses and sales offices are
situated in various sections of the United States, while Chrysler's principal
engineering and research facilities and its general offices are located in
Auburn Hills, Michigan.
Automotive properties outside the U.S. are owned or leased principally by
Chrysler Canada and Chrysler Mexico. Other manufacturing and assembly plants of
subsidiaries outside the U.S. are located in Venezuela and Austria.
Chrysler's technology center in Auburn Hills, Michigan consists of 3.4
million square feet of floor space and includes design, vehicle engineering,
manufacturing engineering and pilot build facilities associated with the
development of new Chrysler cars and trucks. The technology center was completed
and fully occupied in the first half of 1994. The facility was subsequently
expanded by approximately 1.0 million square feet of floor space and includes an
administrative building, which serves as Chrysler's World Headquarters and
principal place of business. The expansion is scheduled for completion in the
first half of 1996. In the fourth quarter of 1994, the Board of Directors
approved a project to build a new Powertrain Test Center. The Powertrain Test
Center will include powertrain test cells, its related support laboratories,
emissions development and road test simulators. The building will add
approximately 430,000 square feet of floor space to the facility and is
scheduled for completion in the year 2000.
17
ITEM 2. PROPERTIES -- CONTINUED PART I -- CONTINUED
-------------------------------
AUTOMOTIVE OPERATIONS -- CONTINUED
----------------------------------
In the opinion of management, Chrysler's properties include facilities
which are suitable and adequate for the conduct of its present assembly and
component plant requirements. The annual productive capacity of Chrysler's
worldwide automotive operations was approximately 2.6 million units in 1995,
compared to 2.4 million units in 1994. Chrysler's worldwide assembly plants
operated at 95 percent of capacity in 1995, compared to 110 percent of capacity
in 1994 (with capacity determined based on two eight-hour shifts). Capacity
utilization in 1995 was lower than 1994 primarily as a result of the changeover
and launch of Chrysler's all-new minivans during 1995. The launch of Chrysler's
all-new minivans was substantially complete by the end of 1995.
FINANCIAL SERVICES
------------------
At December 31, 1995, the following facilities were utilized by CFC in
conducting its business:
(a) executive offices of CFC, Chrysler Insurance and certain other domestic
subsidiaries of CFC in Southfield, Michigan;
(b) a total of 83 branches and 3 customer service centers of CFC located
throughout the United States;
(c) headquarters of Chrysler First Inc. in Allentown, Pennsylvania, and a
total of 3 offices in the United States;
(d) headquarters of Chrysler Capital in Stamford, Connecticut;
(e) headquarters of Chrysler Realty in Auburn Hills, Michigan; and
(f) a total of 12 offices used as headquarters and branch offices in Canada
and Mexico.
All of the facilities described above were leased by CFC.
At December 31, 1995, a total of 271 automobile dealership properties
generally consisting of land and improvements, were owned by Chrysler Realty and
leased primarily to Chrysler franchised dealers.
ITEM 3. LEGAL PROCEEDINGS
-------------------------
Chrysler and its subsidiaries are parties to various legal proceedings,
including some purporting to be class actions, and some which demand large
monetary damages or other relief which, if granted, would require significant
expenditures. Chrysler believes that each of the product and environmental
proceedings described below constitutes ordinary routine litigation incidental
to the business conducted by Chrysler. See also Note 8 of Notes To Consolidated
Financial Statements.
PRODUCT MATTERS
---------------
Many of the legal proceedings seek damages for personal injuries claimed to
have resulted from alleged defects in the design or manufacture of products
distributed by Chrysler. The complaints filed in those matters specify
approximately $1.2 billion in compensatory and $932 million in punitive damages
in the aggregate as of December 31, 1995. These amounts represent damages sought
by plaintiffs and, therefore, do not necessarily constitute an accurate measure
of Chrysler's ultimate cost to resolve those matters. Further, many complaints
do not specify a dollar amount of damages or specify only the jurisdictional
minimum. These amounts may vary significantly from one period to the next
depending on the number of new complaints filed or pending cases resolved in a
given period.
Numerous complaints seek damages for personal injuries sustained in
accidents involving alleged rollovers of Jeep CJ vehicles. These complaints
represent approximately $302 million of the compensatory and $755 million of the
punitive damages specified above. Pursuant to an indemnification agreement with
18
ITEM 3. LEGAL PROCEEDINGS -- CONTINUED PART I -- CONTINUED
--------------------------------------
PRODUCT MATTERS -- CONTINUED
----------------------------
Chrysler, Renault has agreed to indemnify Chrysler against a portion of certain
costs arising from accidents involving alleged Jeep CJ vehicle rollovers that
occurred between April 1, 1985 and March 31, 1994.
Many of the remaining complaints seek compensatory and punitive damages for
personal injuries sustained in accidents involving alleged defects in occupant
restraint systems, seats, heater cores, liftgate latches, or various other
components in several different vehicle models. Some complaints seek repair of
the vehicles or compensation for the alleged reduction in vehicle value.
Five purported class action lawsuits seeking unspecified economic damages
in connection with rear liftgate latches on Chrysler's 1984-1994 model year
minivans have been consolidated in Federal District Court in San Francisco.
Chrysler previously announced a voluntary owner service action to replace those
latches. The parties agreed to a proposed settlement that requires Chrysler to
achieve a 60% response rate to its service action by December 31, 1996, or spend
$14 million on consumer notices and incentives aimed at increasing the response
rate. Chrysler will also be required to pay $5.2 million in attorneys fees and
costs. Notices were sent to class members in September 1995 following the
Court's preliminary approval of the settlement. On November 30, 1995, the Court
approved the consolidated settlement as fair, reasonable and adequate to protect
the interests of the class members. Certain parties have objected to the
settlement ruling, but no date has been set for a hearing on those objections.
Four purported class action lawsuits were filed against Chrysler in the
second half of 1995 alleging defects in the antilock braking system (ABS) found
in some of its 1991-1995 model year vehicles. The lawsuits seek compensatory and
punitive damages, restitution, repair, and/or profits from vehicle sales.
Litigation is subject to many uncertainties, and the outcome of individual
matters is not predictable with assurance. It is reasonably possible that the
final resolution of some of these matters may require Chrysler to make
expenditures, in excess of established reserves, over an extended period of time
and in a range of amounts that cannot be reasonably estimated. Although the
final resolution of any such matters could have a material effect on Chrysler's
consolidated operating results for the particular reporting period in which an
adjustment of the estimated liability is recorded, Chrysler believes that any
resulting liability should not materially affect its consolidated financial
position.
ENVIRONMENTAL MATTERS
---------------------
The EPA and various state agencies have notified Chrysler that it may be a
PRP for the cost of cleaning up hazardous waste storage or disposal facilities
pursuant to the CERCLA and other federal and state environmental laws. A number
of lawsuits allege that Chrysler violated CERCLA or other environmental laws and
seek to recover costs associated with remedial action. In most instances,
Chrysler is only one of a number of PRPs who may be found to be jointly and
severally liable for remediation costs at the 101 sites involved in the
foregoing matters at December 31, 1995. Chrysler may also incur remediation
costs at an additional 45 of its active or deactivated facilities. Chrysler's
reserves for these environmental matters totalled $271 million as of December
31, 1995. Chrysler periodically evaluates and revises estimates for
environmental liabilities based on expenditures against established reserves and
the availability of additional information.
The Indiana Department of Environmental Management initiated an
administrative proceeding in August 1985 alleging improper disposal of waste at
a Chrysler facility in Indianapolis. This proceeding, which seeks to require
Chrysler to conduct a site assessment and undertake remedial action, may result
in the imposition of civil penalties in excess of $100,000.
The State of Wisconsin filed a lawsuit in February 1995 against Chrysler
Outboard Corporation, a Chrysler subsidiary subsequently merged into Chrysler,
alleging improper disposal of hazardous waste in 1969. This lawsuit, which seeks
unspecified damages, may result in the imposition of civil penalties in excess
of $100,000.
19
ITEM 3. LEGAL PROCEEDINGS -- CONTINUED PART I -- CONTINUED
--------------------------------------
ENVIRONMENTAL MATTERS -- CONTINUED
----------------------------------
Estimates of future expenditures in connection with these environmental
matters are necessarily imprecise due to numerous uncertainties, including the
enactment of new laws and regulations, the development and application of new
technologies and the apportionment and collectibility of remediation costs among
responsible parties. Chrysler establishes reserves for these environmental
matters when the loss is probable and reasonably estimable. It is reasonably
possible that final resolution of some of these matters could require Chrysler
to make significant expenditures, in excess of established reserves, over an
extended period of time and in a range of amounts that cannot be reasonably
estimated. Although the final resolution of any such matters could have a
material effect on Chrysler's consolidated operating results for the particular
reporting period in which an adjustment of the estimated liability is recorded,
Chrysler believes that any resulting liability should not materially affect its
consolidated financial position.
OTHER MATTERS
-------------
In December 1990 and January 1991, eight class action lawsuits were
commenced by separate plaintiffs against Chrysler and certain of its directors
in the Court of Chancery of the State of Delaware for New Castle County,
Delaware. The Complaints in these suits are very similar and allege that the
directors breached their fiduciary duties to stockholders by amending Chrysler's
Share Purchase Rights Plan in a manner designed to entrench themselves in office
and to impair the right of stockholders to avail themselves of offers to
purchase their shares by an acquiror not favored by management. The Complaints
ask for (a) certification of the class, (b) rescission of and an injunction
against implementation of the Rights Plan amendments, (c) an order that Chrysler
cooperate with Kirk Kerkorian, the holder of 9.8% of Chrysler's common stock at
the time the complaints were filed, and take steps to enhance its attractiveness
as a merger/acquisition candidate, and (d) damages and costs. On January 9,
1991, the eight suits were consolidated into one. On January 28, 1991, Chrysler
filed an Answer and Affirmative Defenses in the consolidated case. On March 7,
1991, the parties agreed to allow an Amended Complaint to be filed which
purports to assert a derivative claim brought on behalf of Chrysler, in addition
to class action claims as originally filed. In this regard, the Amended
Complaint alleges injury to Chrysler as a direct result of violations of
fiduciary duties by the individual defendants. On July 25, 1991, Chrysler filed
a motion to dismiss the consolidated lawsuit. On July 27, 1992, the Court
entered a memorandum opinion dismissing the complaint as to all claims for
relief other than rescission. Chrysler later filed a Motion for Reargument which
was denied on August 11, 1992. On June 6, 1995, Chrysler entered into a
Memorandum of Understanding which contemplates settlement of the litigation. The
Memorandum is subject to several conditions, including satisfactory completion
of discovery as to the fairness of the proposed settlement, and the settlement
itself is subject to Court approval. The Memorandum also contemplates that the
settlement, if approved, will consist of Chrysler's action in December 1994
further amending its Rights Plan. A hearing on the settlement has been scheduled
by the Court for February 26, 1996.
In April 1995, thirty four class action lawsuits were commenced by separate
plaintiffs against Chrysler, certain of its current and former directors and, in
some cases, Tracinda Corporation, a holding company wholly owned by Kirk
Kerkorian and the beneficial owner of more than 13% of the outstanding common
stock of Chrysler as of December 31, 1995, and its affiliates, in the Court of
Chancery of the State of Delaware for New Castle County, Delaware. The
Complaints in these suits fall into two general categories: (a) those which
allege that the directors breached their fiduciary duties to stockholders by
failing to negotiate with Tracinda regarding its proposal to acquire all of the
outstanding stock of Chrysler not then owned by it; and (b) those which allege
that the directors breached their fiduciary duties to stockholders by
contemplating, planning and/or effecting Tracinda's proposal at a time when the
market price of Chrysler's stock was depressed and did not reflect its true
value. The Complaints in the former category ask for, among other things, (a) an
injunction or an order obligating the Board of Directors to undertake an
evaluation of alternatives, including measures with respect to Chrysler's Rights
Plan, designed to maximize shareholder value, (b) a declaration that the
defendants have breached their fiduciary duties to the plaintiffs, (c)
compensatory damages and interest, and (d) costs and fees. The Complaints in the
latter category ask for, among other things, (a) a declaration that the
transaction proposed by Tracinda is unfair, unjust and inequitable, (b) an
injunction against implementation of the transaction proposed by Tracinda and
any improper
20
ITEM 3. LEGAL PROCEEDINGS -- CONTINUED PART I -- CONTINUED
------------------------------
OTHER MATTERS -- CONTINUED
--------------------------
device which impedes maximization of shareholder value, (c) damages and
interest, (d) costs and fees, and (e) such other relief as may be just and
proper. Four of these actions have subsequently been dismissed without prejudice
by the plaintiffs.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
----------------------------------------------------
None during the three months ended December 31, 1995.
EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
(AS OF JANUARY 19, 1996)
[Enlarge/Download Table]
OFFICER
NAME AGE SINCE(1) PRESENT POSITION
---------------------- --- ------------------- ------------------------------------------------------
R. J. Eaton........... 55 March 14, 1992 Chairman of the Board and Chief Executive Officer(2)
R. A. Lutz............ 63 June 3, 1986 President and Chief Operating Officer(2)
T. G. Denomme......... 56 April 9, 1981 Vice Chairman and Chief Administrative Officer(2)
G. C. Valade.......... 53 June 7, 1990 Executive Vice President and Chief Financial Officer
T. R. Cunningham...... 49 September 3, 1987 Executive Vice President -- Sales and Marketing and
General Manager -- Minivan Operations
D. K. Pawley.......... 54 April 11, 1991 Executive Vice President -- Manufacturing
R. R. Boltz........... 50 June 11, 1987 Vice President -- Product Strategy and Regulatory
Affairs and General Manager -- Small Car Operations
T. P. Capo............ 44 November 7, 1991 Vice President and Treasurer
J. E. Cappy........... 61 August 5, 1987 Vice President -- Chrysler Technologies and Rental Car
Operations
F. J. Castaing........ 50 August 5, 1987 Vice President -- Vehicle Engineering and General
Manager -- Power Train Operations
J. D. Donlon, III..... 49 January 1, 1992 Vice President and Controller
F. J. Ewasyshyn....... 43 October 6, 1994 Vice President -- Advance Manufacturing Engineering
W. F. Fountain, Jr.... 51 August 1, 1995 Vice President -- Government Affairs
T. C. Gale............ 52 April 4, 1985 Vice President -- Product Design and International
Operations
T. Gallagher.......... 53 September 3, 1992 Vice President -- Employee Relations
G. L. Henson.......... 53 August 1, 1994 Vice President -- Large & Small Car, Jeep and Truck
Assembly and Stamping Operations
J. E. Herlitz......... 53 April 7, 1994 Vice President -- Product Design
J. P. Holden.......... 44 May 6, 1993 Vice President -- Quality, Capacity, and Process
Management
H. A. Lewis........... 53 July 8, 1993 Vice President -- Finance Strategy and Planning
R. G. Liberatore...... 46 January 1, 1993 Vice President -- Washington Affairs
A. C. Liebler......... 53 May 17, 1990 Vice President -- Marketing and Communications
C. S. Lobo............ 47 July 9, 1992 Vice President -- President and Managing Director --
Chrysler de Mexico S. A.
W. J. O'Brien......... 52 September 3, 1987 Vice President, General Counsel and Secretary
K. M. Oswald.......... 46 October 6, 1994 Vice President -- Corporate Personnel
E. T. Pappert......... 56 November 5, 1981 Vice President -- Sales and Service
L. C. Richie.......... 54 June 12, 1986 Vice President and General Counsel -- Automotive Legal
Affairs
B. I. Robertson....... 53 February 6, 1992 Vice President -- Engineering Technologies and General
Manager -- Jeep/Truck Operations
S. T. Rushwin......... 48 October 6, 1994 Vice President -- International Manufacturing and
Minivan Assembly Operations
T. W. Sidlik.......... 46 September 3, 1992 Vice President, Chairman -- Chrysler Financial
Corporation
T. T. Stallkamp....... 49 May 1, 1990 Vice President -- Procurement and Supply and General
Manager -- Large Car Operations
-------------------------
(1) The "Officer Since" date shown is the date from which the named individual
has served continuously as an officer of either Chrysler Corporation or the
former Chrysler Motors Corporation which, effective December 31, 1989, was
merged with and into Chrysler Corporation.
(2) Also a member of the Board of Directors.
There are no family relationships, as defined for reporting purposes,
between any of the executive officers named above and there is no arrangement or
understanding between any of the executive officers named above and any other
person pursuant to which he was selected as an officer. All of the executive
officers named above, except Messrs. Eaton and Henson have been in the employ of
Chrysler Corporation or its subsidiaries for more than five years. During the
last five years, and immediately preceding employment by Chrysler Corporation,
Messrs. Eaton and Henson were high level executives at General Motors
Corporation.
21
PART II
-------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
-----------------------------------------------------
RELATED STOCKHOLDER MATTERS
---------------------------
Chrysler's common stock is listed on the stock exchanges specified on pages
1 and 2 of this Form 10-K under the trading symbol (C). There were approximately
136,000 shareholders of record of Chrysler's common stock at December 31, 1995.
The following table sets forth the high and low sale prices of Chrysler's common
stock as reported on the composite tape and the quarterly dividends declared for
the last two years.
[Download Table]
DIVIDENDS
1995 HIGH LOW DECLARED
-------------- ------- ------- ---------
First Quarter $53.375 $38.250 $0.40
Second Quarter 52.500 39.000 0.50
Third Quarter 58.125 47.250 0.50
Fourth Quarter 55.625 47.125 0.60
[Download Table]
DIVIDENDS
1994 HIGH LOW DECLARED
-------------- ------- ------- ---------
First Quarter $63.500 $48.125 $0.20
Second Quarter 55.375 44.625 0.25
Third Quarter 51.250 43.125 0.25
Fourth Quarter 51.500 43.375 0.40
Dividends on the common stock are payable at the discretion of the
Chrysler's Board of Directors out of funds legally available therefor.
Chrysler's ability to pay dividends in the future will depend upon its
financial results, liquidity and financial condition and its ability to
continue its capital expenditure and vehicle development programs and market
its vehicles successfully. Chrysler's ability to pay dividends is also affected
by the provision in its credit agreement that it must maintain a ratio of
indebtedness to total capitalization (each as defined) at the end of each
quarter at certain specified levels.
22
ITEM 6. SELECTED FINANCIAL DATA PART II -- CONTINUED
-----------------------
The table below summarizes recent financial information for Chrysler. For
further information, refer to Chrysler's consolidated financial statements and
notes thereto presented under Item 8 of this Form 10-K.
[Enlarge/Download Table]
1995(1) 1994(2) 1993(3) 1992(4) 1991(5)
------- ------- ------- ------- -------
(DOLLARS AND SHARES IN MILLIONS EXCEPT PER COMMON
SHARE DATA)
Total revenues............................... $53,195 $52,235 $43,600 $36,897 $29,370
Earnings (loss) before cumulative effect of
changes in accounting principles........... 2,121 3,713 2,415 505 (538)
Primary earnings (loss) per common share... 5.55 10.11 6.77 1.47 (2.22)
Net earnings (loss).......................... 2,025 3,713 (2,551) 723 (795)
Primary earnings (loss) per common share... 5.30 10.11 (7.62) 2.21 (3.28)
Fully diluted earnings per common share.... 5.11 9.10 -- 2.13 --
Dividends declared per common share.......... 2.00 1.10 0.65 0.60 0.60
Total assets................................. 53,756 49,539 43,679 40,690 43,076
Total debt................................... 14,193 13,106 11,451 15,551 19,438
Convertible preferred stock (in shares)...... 0.1 1.7 1.7 1.7 --
-------------------------
(1) Earnings for the year ended December 31, 1995 were reduced by a $263 million
charge ($162 million after taxes) for costs associated with production
changes at Chrysler's Newark assembly plant and a $115 million charge ($71
million after taxes) for a voluntary minivan owner service action. Net
earnings in 1995 also include an after-tax charge of $96 million for the
cumulative effect of a change in accounting principle related to the
consensus reached on Emerging Issues Task Force ("EITF") Issue 95-1,
"Revenue Recognition on Sales with a Guaranteed Minimum Resale Value."
(2) Earnings for the year ended December 31, 1994 include favorable adjustments
to the provision for income taxes aggregating $132 million. These
adjustments related to: (1) the recognition of tax credits related to
expenditures in prior years for qualifying research and development
activities, in accordance with an Internal Revenue Service settlement which
was based on U.S. Department of Treasury income tax regulations issued in
1994, and (2) the reversal of valuation allowances related to tax benefits
associated with net operating loss carryforwards.
(3) Results for the year ended December 31, 1993 include a pretax gain of $205
million ($128 million after taxes) on the sale of Chrysler's remaining 50.3
million shares of MMC stock, a pretax gain of $60 million ($39 million after
taxes) on the sale of Chrysler's plastics operations, a $4.7 billion
after-tax charge for the adoption of Statement of Financial Accounting
Standards ("SFAS") No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," and a $283 million after-tax charge for the
adoption of SFAS No. 112, "Employers' Accounting for Postemployment
Benefits."
(4) Earnings for the year ended December 31, 1992 include a pretax gain of $142
million ($88 million after taxes) on the sale of 43.6 million shares of MMC
stock, a $218 million favorable effect of a change in accounting principle
relating to the adoption of SFAS No. 109, "Accounting for Income Taxes," a
$101 million pretax charge ($79 million after taxes) relating to the
restructuring of Chrysler's short-term vehicle rental subsidiaries, and a
$110 million pretax charge ($69 million after taxes) relating to investment
losses experienced by Chrysler Canada.
(5) Results for the year ended December 31, 1991 include a pretax gain of $205
million ($127 million after taxes) on the sale of Chrysler's 50 percent
equity interest in Mitsubishi Motors Manufacturing of America, the favorable
effect of a $391 million ($242 million after taxes) noncash, nonrecurring
credit provision relating to a plant capacity adjustment and a $257 million
after-tax charge for the cumulative effect of a change in accounting
principle related to the timing of the recognition of the costs of sales
incentive programs.
23
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL PART II -- CONTINUED
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
The following discussion and analysis should be read in conjunction with
the consolidated financial statements and notes thereto.
FINANCIAL REVIEW
----------------
1995 COMPARED WITH 1994
-----------------------
Chrysler reported earnings before income taxes and the cumulative effect of
a change in accounting principle of $3.4 billion in 1995, compared with $5.8
billion in 1994. Net earnings for 1995 were $2.0 billion, or $5.11 per fully
diluted common share, compared with $3.7 billion, or $9.10 per fully diluted
common share in 1994. Earnings in 1994 represented an all-time record for
Chrysler. Earnings in 1995 were the third best in Chrysler's history. Earnings
in 1995 were reduced by a $263 million charge ($162 million after income taxes)
for costs associated with production changes at Chrysler's Newark assembly plant
and a $115 million charge ($71 million after income taxes) for a voluntary
minivan owner service action. Net earnings in 1995 also include a charge of $96
million, or $0.24 per fully diluted common share, for the cumulative effect of a
change in accounting principle related to the consensus reached on Emerging
Issues Task Force Issue 95-1, "Revenue Recognition on Sales with a Guaranteed
Minimum Resale Value." Net earnings for 1994 included favorable tax adjustments
aggregating $132 million.
Chrysler also reported earnings before income taxes of $1,659 million in
the fourth quarter of 1995, compared with $1,631 million in the fourth quarter
of 1994. Earnings before income taxes for the fourth quarter of 1995 represented
an all-time record for Chrysler and earnings before income taxes for the fourth
quarter of 1994 were the second best in Chrysler's history. Net earnings for the
fourth quarter of 1995 were $1,040 million, or $2.67 per fully diluted common
share, compared with $1,168 million, or $2.86 per fully diluted common share in
the fourth quarter of 1994. Net earnings for the fourth quarter of 1994 included
favorable tax adjustments aggregating $132 million. Net earnings for the fourth
quarter of 1994 represented an all-time record for Chrysler and net earnings for
the fourth quarter of 1995 were the second best quarter in Chrysler's history.
Chrysler's worldwide factory car and truck shipments in the fourth quarter of
1995 were 741,770 units, an increase of 16,824 units or 2 percent from fourth
quarter 1994 levels.
The lower operating results for full year 1995 compared with 1994 resulted
primarily from lower minivan shipments and costs associated with the launch of
Chrysler's all-new minivans, higher sales incentives and material costs, a lower
mix of higher-margin vehicles, lower factory shipments in Mexico and the costs
associated with production changes at the Newark assembly plant.
Chrysler's worldwide factory car and truck shipments in 1995 were 2,673,539
units, a decrease of 88,564 units or 3 percent from 1994 levels. Minivan factory
shipments in 1995 were 555,824 units, a decrease of 121,652 units from 1994
levels. The decline in minivan factory shipments was primarily attributable to
the launch of Chrysler's all-new minivans at its assembly plants in Fenton,
Missouri; Windsor, Ontario; and Graz, Austria. By the end of 1995, the launch of
Chrysler's all-new minivans was substantially complete. Minivan factory
shipments in the fourth quarter of 1995 were 167,615 units as compared with
167,839 units in the fourth quarter of 1994.
Chrysler's revenues and results of operations are derived principally from
the U.S. and Canada automotive marketplaces. Retail sales of new cars and trucks
in the U.S. and Canada were 16.3 million units in 1995, compared with 16.7
million units in 1994, a decrease of 2 percent. This decrease was primarily due
to a slowdown in economic growth caused primarily by increases in interest
rates. As a result, Chrysler increased retail sales incentives and lowered
production during 1995.
24
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL PART II -- CONTINUED
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS -- CONTINUED
------------------------------------------------
FINANCIAL REVIEW -- CONTINUED
-----------------------------
1995 COMPARED WITH 1994 -- CONTINUED
------------------------------------
Chrysler's U.S. and combined U.S. and Canada retail sales and market share
data for 1995 and 1994 were as follows:
[Download Table]
INCREASE/
1995 1994 (DECREASE)
--------- --------- ----------
U.S. Retail Market(1):
Car sales................................... 786,180 811,824 (25,644)
Car market share............................ 9.1% 9.0% 0.1%
Truck sales (including minivans)............ 1,378,163 1,392,171 (14,008)
Truck market share.......................... 21.3% 21.7% (0.4)%
Combined car and truck sales................ 2,164,343 2,203,995 (39,652)
Combined car and truck market share......... 14.3% 14.3% --
U.S. and Canada Retail Market(1):
Combined car and truck sales................ 2,389,465 2,451,747 (62,282)
Combined car and truck market share......... 14.7% 14.7% --
-------------------------
(1) All retail sales and market share data include fleet sales.
The decline in Chrysler's U.S. truck market share during 1995 was primarily
due to a decrease in retail sales of Chrysler's minivans largely offset by a net
increase in retail sales of Chrysler's other truck models. The decrease in
minivan retail sales was primarily due to the launch of Chrysler's all-new
minivans. With the completion of the minivan launch and the launch of Chrysler's
full-size Dodge Ram pickup truck at two additional facilities, Chrysler believes
it is well positioned to meet the growing demand for trucks.
Chrysler manufactured 207,004 vehicles and 238,888 vehicles in Mexico in
1995 and 1994, respectively. Of these totals, 26,503 vehicles and 77,832
vehicles were sold in Mexico in 1995 and 1994, respectively. Sales of vehicles
exported to Mexico were not significant in 1995 or 1994. The decrease in
vehicles manufactured and sold in Mexico was primarily attributable to
unfavorable economic conditions in Mexico, commencing with the devaluation of
the Mexican peso in December 1994. Chrysler's operating results will continue to
be adversely affected to the extent that the unfavorable economic conditions in
Mexico continue. Although Chrysler expects economic conditions in Mexico to
improve slightly in 1996, Chrysler cannot predict when Mexican automotive
industry sales will return to predevaluation levels.
In the fourth quarter of 1995, the Emerging Issues Task Force ("EITF") of
the Financial Accounting Standards Board reached a consensus on EITF Issue 95-1,
"Revenue Recognition on Sales with a Guaranteed Minimum Resale Value." The
consensus on EITF Issue 95-1 (the "consensus") affects Chrysler's accounting
treatment for vehicle sales (principally to non-affiliated rental car companies)
for which Chrysler conditionally guarantees the minimum resale value of the
vehicles. In accordance with the consensus, these vehicle sales are accounted
for as operating leases with the related revenues and costs deferred at the time
of shipment. A portion of the deferred revenues and costs is recognized over the
corresponding guarantee period, with the remainder recognized at the end of the
guarantee period. The average guarantee period for these vehicles is
approximately nine months. Chrysler changed its accounting treatment in
accordance with the consensus effective January 1, 1995 which resulted in the
recognition of an after-tax charge of $96 million for the cumulative effect of
this change in accounting principle. The ongoing effect of this accounting
change was not material to 1995 earnings.
CFC's earnings before income taxes were $522 million in 1995, compared with
$315 million in 1994. CFC's net earnings were $339 million in 1995, compared
with $195 million in 1994. The increase in earnings
25
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL PART II -- CONTINUED
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS -- CONTINUED
-----------------------------------
FINANCIAL REVIEW -- CONTINUED
-----------------------------
1995 COMPARED WITH 1994 -- CONTINUED
------------------------------------
in 1995 was primarily attributable to higher levels of automotive financing,
lower operating expenses and lower costs of bank facilities.
For the past three years, Chrysler has benefitted from several factors,
including: (1) favorable economic conditions in the U.S. and Canada, where
Chrysler's sales are concentrated, (2) a cost advantage in comparison to
vehicles manufactured in Japan (or vehicles containing significant material
components manufactured in Japan) as a result of favorable exchange rates
between the Japanese yen and the U.S. dollar, and (3) a continuing shift in U.S.
and Canada consumer preferences toward trucks, as Chrysler manufactures a higher
proportion of trucks to total vehicles than its principal competitors in the
U.S. and Canada. A significant deterioration of any of these factors could
adversely affect Chrysler's operating results. In addition, Chrysler has
benefitted from a strategy of focusing resources on its core automotive business
and an aggressive capital expenditure and vehicle development program that has
resulted in the replacement of substantially all of its car and truck offerings
over the last four years. Chrysler's long-term profitability will depend
significantly on its ability to continue its capital expenditure and vehicle
development programs and market its vehicles successfully.
1994 COMPARED WITH 1993
Chrysler reported earnings before income taxes and the cumulative effect of
changes in accounting principles of $5.8 billion in 1994, compared with $3.8
billion in 1993. The earnings in 1993 included gains on sales of automotive
assets and investments totaling $265 million.
Chrysler reported net earnings for 1994 of $3.7 billion, compared to a net
loss for 1993 of $2.6 billion. Net earnings for 1994 included favorable tax
adjustments aggregating $132 million. The net loss for 1993 resulted from a
charge of $4.7 billion for the cumulative effect of a change in accounting
principle related to the adoption of Statement of Financial Accounting Standards
("SFAS") No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." Also included in the 1993 results was a charge of $283 million for
the cumulative effect of a change in accounting principle relating to the
adoption of SFAS No. 112, "Employers' Accounting for Postemployment Benefits"
and a $72 million favorable adjustment of Chrysler's deferred tax assets and
liabilities as a result of the increased U.S. federal income tax rate.
The improvement in earnings in 1994 over 1993 was primarily the result of
an increase in shipments, a reduction in lower-margin fleet shipments in
proportion to total retail sales and reduced sales incentives, partially offset
by increased profit-based employee compensation costs. Chrysler's worldwide
factory car and truck shipments in 1994 were 2,762,103 units, an increase of
286,365 units or 12 percent from 1993 levels.
26
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL PART II -- CONTINUED
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS -- CONTINUED
------------------------------------------------
COMPARISON OF SELECTED ELEMENTS OF REVENUES AND EXPENSES
--------------------------------------------------------
Chrysler's total revenues were as follows:
[Enlarge/Download Table]
1995 VS. 1994 1994 VS. 1993
INCREASE/ INCREASE/
1995 1994 (DECREASE) 1993 (DECREASE)
------- ------- ------------- ------- -------------
(IN MILLIONS OF (IN MILLIONS OF DOLLARS)
DOLLARS)
Sales of manufactured products.......... $49,601 $49,363 -- $40,831 21%
Finance and insurance revenues.......... 1,589 1,384 15% 1,429 (3)%
Other revenues.......................... 2,005 1,488 35% 1,340 11%
------- ------- -------
Total revenues........................ $53,195 $52,235 2% $43,600 20%
======= ======= =======
The increase in sales of manufactured products in 1995 as compared with
1994 primarily reflects an increase in average revenue per unit, net of sales
incentives, from $17,663 to $18,305, largely offset by a 3 percent decrease in
factory shipments. The increase in average revenue per unit in 1995 as compared
with 1994 was primarily due to pricing actions, partially offset by higher sales
incentives. The increase in sales of manufactured products in 1994 as compared
with 1993 was primarily due to a 12 percent increase in factory shipments and an
increase in average revenue per unit, net of sales incentives, from $16,461 to
$17,663. The increase in average revenue per unit in 1994 as compared with 1993
was principally due to reduced sales incentives and sales of an increased
proportion of trucks to total vehicles.
The increase in finance and insurance revenues in 1995 as compared with
1994 was primarily attributable to higher levels of automotive financing volume.
The decrease in finance and insurance revenues in 1994 as compared with 1993 was
primarily attributable to reduced nonautomotive financing revenue, resulting
from sales and liquidations of CFC's nonautomotive receivables, partially offset
by increased levels of automotive financing volume. Total automotive financing
volume in 1995, 1994 and 1993 was $81.9 billion, $70.4 billion and $59.8
billion, respectively. The increases in automotive financing volume over the
last two years reflects higher retail lease penetration and higher levels of
dealer financing.
Financing support provided in the United States by CFC for new Chrysler
vehicle retail deliveries (including fleet) and wholesale vehicle sales to
dealers and the number of vehicles financed during the last three years were as
follows:
[Enlarge/Download Table]
1995 1994 1993
----- ----- -----
United States Penetration:
Retail............................................................... 27% 24% 25%
Wholesale............................................................ 74% 73% 75%
Number of New Chrysler Vehicles Financed in the United States (in
thousands):
Retail............................................................... 594 525 516
Wholesale............................................................ 1,632 1,647 1,510
Other revenues increased in 1995 as compared with 1994 primarily as a
result of increased interest income, reflecting Chrysler's higher average cash,
cash equivalents and marketable securities balances and higher interest rates as
well as the recognition of lease revenue as a result of the accounting change
for vehicle sales with guaranteed minimum resale values. Other revenues
increased in 1994 as compared with 1993 primarily as a result of increased
interest income, reflecting Chrysler's higher average cash, cash equivalents and
marketable securities balances and higher interest rates.
27
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL PART II -- CONTINUED
------------------------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS -- CONTINUED
------------------------------------------------
COMPARISON OF SELECTED ELEMENTS OF REVENUES AND EXPENSES -- CONTINUED
---------------------------------------------------------------------
Chrysler's total expenses were as follows:
[Enlarge/Download Table]
1995 VS. 1994 1994 VS. 1993
INCREASE/ INCREASE/
1995 1994 (DECREASE) 1993 (DECREASE)
------- ------- ------------- ------- -------------
(IN MILLIONS OF (IN MILLIONS OF DOLLARS)
DOLLARS)
Costs, other than items below............ $41,304 $38,032 9 % $32,382 17 %
Depreciation of property and equipment... 1,100 994 11 % 969 3 %
Amortization of special tools............ 1,120 961 17 % 671 43 %
Selling and administrative expenses...... 4,064 3,933 3 % 3,377 16 %
Pension expense.......................... 405 714 (43)% 756 (6)%
Nonpension postretirement benefit
expense................................ 758 834 (9)% 768 9 %
Interest expense......................... 995 937 6 % 1,104 (15)%
Gains on sales of automotive assets and
investments............................ -- -- -- (265) --
------- ------- -------
Total expenses...................... $49,746 $46,405 7 % $39,762 17 %
======= ======= =======
Costs, other than items below increased in 1995 as compared with 1994
primarily as a result of increased product costs, costs associated with the
changeover and launch of Chrysler's all-new minivans and costs associated with
production changes at the Newark assembly plant, partially offset by the effect
of a decrease in factory shipments of 3 percent. The increase in product costs
in 1995 resulted primarily from higher material costs (including increased
product content) and higher warranty costs. Warranty costs in 1995 included a
charge of $115 million related to a voluntary minivan owner service action and
the effect of enhanced warranty programs. Costs, other than items below
increased in 1994 as compared with 1993 primarily due to a 12 percent increase
in factory shipments. Costs, other than items below as a percent of sales of
manufactured products were 83 percent, 77 percent and 79 percent in 1995, 1994
and 1993, respectively.
Depreciation of property and equipment in 1995 increased as compared with
1994 primarily as a result of higher levels of property and equipment in use.
Depreciation of property and equipment in 1994 was comparable to 1993 as
increases resulting from higher levels of property and equipment in use were
largely offset by reductions at CFC resulting from the sales and downsizing of
its nonautomotive financing operations. Special tooling amortization increased
in 1995 as compared with 1994 primarily as a result of increased tooling costs
for Chrysler's new products. Special tooling amortization increased in 1994 as
compared with 1993 primarily as a result of the shortening of the remaining
service lives of certain special tools in 1994.
Selling and administrative expenses increased in 1995 as compared with 1994
primarily as a result of advertising costs related to Chrysler's all-new
minivans, sedans and coupes. Selling and administrative expenses increased in
1994 as compared with 1993 primarily as a result of increased advertising and
profit-based employee compensation costs.
Pension expense decreased in 1995 as compared with 1994 due to improved
funding of the pension plans and an increase in the discount rate used to
determine 1995 pension expense. Pension expense decreased in 1994 as compared
with 1993 due to improved funding of the pension plans, partially offset by
increases resulting from a reduction in the discount rate used to determine 1994
pension expense and benefit increases from Chrysler's 1993 national contracts
with its principal bargaining units. Chrysler's contributions to the pension
fund during 1995, 1994 and 1993 were $838 million, $2.6 billion and $3.5
billion, respectively.
Nonpension postretirement benefit expense decreased in 1995 as compared
with 1994 primarily as a result of an increase in the discount rate used to
determine 1995 nonpension postretirement benefit expense and favorable health
care inflation experience. Nonpension postretirement benefit expense increased
slightly in
28
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL PART II -- CONTINUED
------------------------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS -- CONTINUED
------------------------------------------------
COMPARISON OF SELECTED ELEMENTS OF REVENUES AND EXPENSES -- CONTINUED
---------------------------------------------------------------------
1994 as compared with 1993, as increases resulting from a reduction in the
discount rate used to determine nonpension postretirement benefit expense in
1994 were partially offset by cost savings associated with the implementation of
new managed care initiatives. Nonpension postretirement benefit expense is
expected to increase in 1996 primarily as a result of a reduction in the
discount rate used to determine this expense.
Interest expense increased slightly in 1995 as compared with 1994 primarily
as a result of higher levels of term debt at CFC largely offset by a decrease in
average non-CFC debt levels. The decline in interest expense in 1994 as compared
with 1993 was primarily due to reductions in CFC's effective cost of borrowings,
resulting from higher levels of commercial paper, which have lower costs than
borrowings under CFC's bank facilities. CFC's average effective cost of
borrowings was 7.9 percent, 8.0 percent and 8.6 percent in 1995, 1994 and 1993,
respectively.
In 1995, Chrysler recorded a $263 million provision for costs associated
with production changes at its Newark assembly plant. The plant ended production
of Chrysler's LeBaron convertibles in July 1995. In addition, Newark production
of the Chrysler Concorde and Dodge Intrepid was reduced to one shift in August
1995 and will end prior to the production of a new vehicle in the fall of 1997.
The provision includes the recognition of supplemental unemployment benefits,
job security benefits and other related employee costs, and the write-down of
certain equipment and tooling. The provision is included in Costs, other than
items below in the consolidated statement of earnings.
Operating results for 1993 included gains on sales of automotive assets and
investments of $265 million. The 1993 pretax gain was comprised of a $205
million gain on the sales of an aggregate of 50.3 million shares of MMC stock
and a $60 million gain on the sale of Chrysler's plastics operations.
Chrysler's effective tax rates in 1995, 1994 and 1993 were 38.5 percent,
36.3 percent and 37.1 percent, respectively. The provision for income taxes in
1994 included favorable adjustments aggregating $132 million, including $100
million for the recognition of tax credits related to expenditures in prior
years for qualifying research and development activities. The 1993 provision for
income taxes included a favorable adjustment of Chrysler's deferred tax assets
and liabilities resulting from an increased U.S. federal tax rate.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Chrysler's combined cash, cash equivalents and marketable securities
totaled $8.1 billion at December 31, 1995 (including $1.2 billion held by CFC
and Car Rental Operations), compared with $8.4 billion at December 31, 1994
(including $756 million held by CFC and Car Rental Operations). At December 31,
1995, $394 million of CFC's combined cash, cash equivalents and marketable
securities were limited for use in its insurance operations in accordance with
various statutory requirements. The decrease in Chrysler's consolidated combined
cash, cash equivalents and marketable securities in 1995 was the result of
capital expenditures, net finance receivables acquired and common stock
repurchases, largely offset by cash generated by operating activities and cash
provided by an increase in long-term debt. The increase in Chrysler's
consolidated combined cash, cash equivalents and marketable securities of $3.3
billion in 1994 was the result of cash generated by operating activities,
partially offset by capital expenditures and pension contributions.
Chrysler's long-term profitability will depend significantly on its ability
to continue its capital expenditure and vehicle development programs and market
its vehicles successfully. Chrysler's expenditures for new product development
and the acquisition of productive assets were $14.9 billion for the three-year
period ended December 31, 1995. Expenditures for these items during the
succeeding three-year period are expected to be at similar or higher levels. At
December 31, 1995, Chrysler had commitments for capital expenditures, including
commitments for assets currently under construction, totaling approximately $1.2
billion.
29
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL PART II -- CONTINUED
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS -- CONTINUED
------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES -- CONTINUED
--------------------------------------------
In December 1994, Chrysler's Board of Directors approved a $1 billion
common stock repurchase program commencing in the first quarter of 1995. In
September 1995, Chrysler's Board of Directors approved an increase in the
program to $2 billion to be completed by the end of 1996, depending on market
conditions. During 1995, Chrysler repurchased 23 million shares of its common
stock under this program at a cost of $1.1 billion (including $23 million in
unsettled repurchases). In addition, holders of the Series A Convertible
Preferred Stock converted 1.6 million shares of preferred stock into 44.1
million shares of common stock during 1995.
In the second quarter of 1995, Chrysler increased its quarterly dividend
from $0.40 to $0.50 per common share. In the fourth quarter of 1995, Chrysler
increased its quarterly dividend from $0.50 to $0.60 per common share, the
highest dividend rate in Chrysler's history.
At December 31, 1995, Chrysler (excluding CFC) had aggregate debt
maturities of $469 million through 1998. During 1995, Chrysler redeemed its $300
million 13% Debentures Due 1997 and repaid $185 million of other debt. In
December 1995, Thrifty issued $450 million of long-term debt ($190 million of
6.6% notes and $260 million of floating rate notes which at December 31, 1995
had a weighted average interest rate of 6.7%). At December 31, 1995, Chrysler
had a $1.7 billion revolving credit agreement which expires in July 1999. None
of the commitment was drawn upon at December 31, 1995. Chrysler believes that
cash from operations and its cash position will be sufficient to enable it to
meet its capital expenditure, debt maturity, common stock repurchase, dividend
payment and other funding requirements.
Chrysler's ability to market its products successfully depends
significantly on the availability of vehicle financing for its dealers and, to a
lesser extent, the availability of financing for retail and fleet customers,
both of which are provided by CFC.
Term debt, commercial paper and receivable sales are CFC's primary funding
sources. CFC increased its term debt outstanding by $3.1 billion and $880
million during 1995 and 1994, respectively. CFC's commercial paper outstanding
decreased by $1.9 billion during 1995 and increased by $1.5 billion in 1994. CFC
realized $6.5 billion and $6.4 billion of net proceeds from the sales of
automotive retail receivables during 1995 and 1994, respectively. In addition,
securitization of revolving wholesale account balances provided funding for CFC
which aggregated $6.7 billion and $3.8 billion at December 31, 1995 and 1994,
respectively.
At December 31, 1995, CFC had debt maturities of $4.1 billion in 1996
(including $2.4 billion of short-term notes), $3.0 billion in 1997, and $2.1
billion in 1998. During the second quarter of 1995, CFC entered into new
revolving credit facilities which replaced its existing U.S. and Canadian
revolving credit and receivable sale facilities. The new facilities, which total
$8.0 billion, consist of a $2.4 billion facility expiring in May 1996 and a $5.6
billion facility expiring in May 2000. As of December 31, 1995, no amounts were
outstanding under these facilities. CFC believes that cash provided by
operations, receivable sales, access to term debt markets and the issuance of
commercial paper will provide sufficient liquidity to meet its debt maturity and
other funding requirements.
Chrysler's strategy is to focus on its core automotive business. As part of
this strategy, Chrysler has sold certain assets and businesses in past years
which are not related to its core automotive business, and is exploring the sale
of other such assets and businesses in the near term.
NEW ACCOUNTING STANDARDS
------------------------
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," effective for fiscal years beginning after December 15, 1995. This
Statement establishes accounting standards for the impairment of long-lived
assets, certain identifiable
30
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL PART II -- CONTINUED
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS -- CONTINUED
------------------------------------------------
NEW ACCOUNTING STANDARDS -- CONTINUED
-------------------------------------
intangibles, and goodwill related to those assets to be held and used and
long-lived assets and certain identifiable intangibles to be disposed of. The
Statement requires that long-lived assets and certain identifiable intangibles
to be held and used by an entity be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. In addition, the Statement requires that certain long-lived
assets and identifiable intangibles to be disposed of be reported at the lower
of carrying amount or fair value less cost to sell. Chrysler believes that the
implementation of this new accounting standard will not have a material impact
on its consolidated operating results or financial position. Chrysler will adopt
this accounting standard on January 1, 1996, as required.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation," effective for fiscal years beginning after December 15, 1995.
This Statement encourages entities to use a fair value based method of
accounting for stock-based compensation plans. This Statement also requires
certain disclosures about stock-based employee compensation arrangements
regardless of the method used to account for them. Pro forma disclosures are
required for entities that continue to apply the provisions of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." The
pro forma amounts will reflect the difference between compensation cost, if any,
included in net income and the related cost measured by the fair value based
method as defined in this Statement, including tax effects, if any, that would
have been recognized in the income statement if the fair value method had been
used. Chrysler intends to adopt this Statement on a disclosure only basis.
Chrysler will adopt this accounting standard on January 1, 1996, as required.
31
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA
------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31
-----------------------------
1995 1994 1993
------- ------- -------
(IN MILLIONS OF DOLLARS)
Sales of manufactured products................................... $49,601 $49,363 $40,831
Finance and insurance revenues................................... 1,589 1,384 1,429
Other revenues................................................... 2,005 1,488 1,340
------- ------- -------
TOTAL REVENUES 53,195 52,235 43,600
------- ------- -------
Costs, other than items below (Note 14).......................... 41,304 38,032 32,382
Depreciation of property and equipment (Note 1).................. 1,100 994 969
Amortization of special tools (Note 1)........................... 1,120 961 671
Selling and administrative expenses.............................. 4,064 3,933 3,377
Pension expense (Note 11)........................................ 405 714 756
Nonpension postretirement benefit expense (Note 12).............. 758 834 768
Interest expense................................................. 995 937 1,104
Gains on sales of automotive assets and investments (Note 13).... -- -- (265)
------- ------- -------
TOTAL EXPENSES 49,746 46,405 39,762
------- ------- -------
EARNINGS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES 3,449 5,830 3,838
Provision for income taxes (Note 7).............................. 1,328 2,117 1,423
------- ------- -------
EARNINGS BEFORE CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES 2,121 3,713 2,415
Cumulative effect of changes in accounting principles (Notes 1
and 12)........................................................ (96) -- (4,966)
------- ------- -------
NET EARNINGS (LOSS) $ 2,025 $ 3,713 $(2,551)
Preferred stock dividends (Note 10).............................. 21 80 80
------- ------- -------
NET EARNINGS (LOSS) ON COMMON STOCK $ 2,004 $ 3,633 $(2,631)
======= ======= =======
(IN DOLLARS OR MILLIONS OF
SHARES)
PRIMARY EARNINGS (LOSS) PER COMMON SHARE (NOTE 10):
Earnings before cumulative effect of changes in accounting
principles.................................................. $ 5.55 $ 10.11 $ 6.77
Cumulative effect of changes in accounting principles.......... (0.25) -- (14.39)
------- ------- -------
Net earnings (loss) per common share........................... $ 5.30 $ 10.11 $ (7.62)
======= ======= =======
Average common and dilutive equivalent shares outstanding...... 378.1 359.2 345.1
FULLY DILUTED EARNINGS PER COMMON SHARE (NOTE 10):
Earnings before cumulative effect of changes in accounting
principles.................................................. $ 5.35 $ 9.10 $ --
Cumulative effect of changes in accounting principles.......... (0.24) -- --
------- ------- -------
Net earnings per common share.................................. $ 5.11 $ 9.10 $ --
======= ======= =======
Average common and dilutive equivalent shares outstanding...... 396.1 407.8 --
DIVIDENDS DECLARED PER COMMON SHARE.............................. $ 2.00 $ 1.10 $ 0.65
See notes to consolidated financial statements.
32
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
[Enlarge/Download Table]
DECEMBER 31
------------------
1995 1994
------- -------
(IN MILLIONS OF
DOLLARS)
ASSETS:
Cash and cash equivalents (Note 1)........................................ $ 5,543 $ 5,145
Marketable securities (Note 1)............................................ 2,582 3,226
Accounts receivable -- trade and other (less allowance for doubtful
accounts: $58 million in 1995 and 1994)................................. 2,003 1,695
Inventories (Notes 1 and 2)............................................... 4,448 3,356
Prepaid taxes, pension and other expenses................................. 985 1,330
Finance receivables and retained interests in sold receivables (Note 3)... 13,623 12,433
Property and equipment (Note 4)........................................... 12,595 11,073
Special tools............................................................. 3,566 3,643
Intangible assets (Note 1)................................................ 2,082 2,162
Deferred tax assets (Note 7).............................................. 490 395
Other assets (Note 11).................................................... 5,839 5,081
------- -------
TOTAL ASSETS $53,756 $49,539
======= =======
LIABILITIES:
Accounts payable.......................................................... $ 8,290 $ 7,826
Short-term debt (Note 6).................................................. 2,674 4,645
Payments due within one year on long-term debt (Note 6)................... 1,661 811
Accrued liabilities and expenses (Note 5)................................. 7,032 5,582
Long-term debt (Note 6)................................................... 9,858 7,650
Accrued noncurrent employee benefits (Notes 1, 11 and 12)................. 9,217 8,595
Other noncurrent liabilities.............................................. 4,065 3,736
------- -------
TOTAL LIABILITIES 42,797 38,845
------- -------
SHAREHOLDERS' EQUITY (Note 10): (shares in millions)
Preferred stock -- $1 per share par value; authorized 20.0 shares; Series
A Convertible Preferred Stock; issued and outstanding: 1995 and 1994 --
0.1 and 1.7 shares, respectively (aggregate liquidation preference $68
million and $863 million, respectively)................................. * 2
Common stock -- $1 per share par value; authorized 1,000.0 shares; issued:
1995 and 1994 -- 408.2 and 364.1 shares, respectively................... 408 364
Additional paid-in capital................................................ 5,506 5,536
Retained earnings......................................................... 6,280 5,006
Treasury stock -- at cost: 1995 -- 29.9 shares; 1994 -- 9.0 shares........ (1,235) (214)
------- -------
TOTAL SHAREHOLDERS' EQUITY 10,959 10,694
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $53,756 $49,539
======= =======
-------------------------
* Less than $1 million
See notes to consolidated financial statements.
33
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31
--------------------------------
1995 1994 1993
-------- -------- --------
(IN MILLIONS OF DOLLARS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)........................................... $ 2,025 $ 3,713 $ (2,551)
Adjustments to reconcile to net cash provided by operating
activities:
Depreciation and amortization............................ 2,220 1,955 1,640
Provision for credit losses.............................. 372 203 209
Deferred income taxes.................................... 186 1,065 803
Cumulative effect of changes in accounting principles.... 96 -- 4,966
Gains on sales of automotive assets and investments...... -- -- (265)
Change in receivables.................................... 848 (1,158) (2)
Change in inventories.................................... (435) 129 (557)
Change in prepaid expenses and other assets.............. (702) (1,898) (1,472)
Change in accounts payable and accrued and other
liabilities............................................ 2,089 2,613 (5)
Other.................................................... 243 161 47
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 6,942 6,783 2,813
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities....................... (5,410) (5,425) (4,700)
Sales and maturities of marketable securities............ 6,122 3,519 4,937
Finance receivables acquired............................. (24,437) (20,149) (16,809)
Finance receivables collected............................ 5,040 5,236 9,616
Proceeds from sales of finance receivables............... 16,310 13,482 7,846
Proceeds from sales of nonautomotive assets.............. -- -- 2,375
Proceeds from sales of automotive assets and
investments............................................ -- 62 461
Expenditures for property and equipment.................. (3,060) (2,847) (1,761)
Expenditures for special tools........................... (1,049) (1,177) (1,234)
Other.................................................... 585 351 446
-------- -------- --------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (5,899) (6,948) 1,177
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in short-term debt (less than 90-day
maturities)............................................ (1,971) 1,348 2,518
Proceeds under long-term borrowings and revolving lines
of credit.............................................. 4,731 1,305 6,995
Payments on long-term borrowings and revolving lines of
credit................................................. (1,687) (1,011) (13,592)
Proceeds from issuance of common stock, net of
expenses............................................... -- -- 1,952
Repurchases of common stock (Note 10).................... (1,047) -- --
Dividends paid........................................... (710) (399) (281)
Other.................................................... 39 27 101
-------- -------- --------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (645) 1,270 (2,307)
-------- -------- --------
Change in cash and cash equivalents........................... 398 1,105 1,683
Cash and cash equivalents at beginning of year................ 5,145 4,040 2,357
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR...................... $ 5,543 $ 5,145 $ 4,040
======== ======== ========
See notes to consolidated financial statements.
34
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------
CONSOLIDATION AND FINANCIAL STATEMENT PRESENTATION
The consolidated financial statements of Chrysler Corporation and its
consolidated subsidiaries ("Chrysler") include the accounts of all significant
majority-owned subsidiaries and entities. Intercompany accounts and transactions
have been eliminated in consolidation. Amounts for 1994 and 1993 have been
reclassified to conform with current period classifications.
ESTIMATES
The preparation of Chrysler's financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
In the fourth quarter of 1995, the Emerging Issues Task Force ("EITF") of
the Financial Accounting Standards Board ("FASB") reached a consensus on EITF
Issue 95-1, "Revenue Recognition on Sales with a Guaranteed Minimum Resale
Value." The consensus on EITF Issue 95-1 (the "consensus") affects Chrysler's
accounting treatment for vehicle sales (principally to non-affiliated rental car
companies) for which Chrysler conditionally guarantees the minimum resale value
of the vehicles. In accordance with the consensus, these vehicle sales are
accounted for as operating leases with the related revenues and costs deferred
at the time of shipment. A portion of the deferred revenues and costs is
recognized over the corresponding guarantee period, with the remainder
recognized at the end of the guarantee period. The average guarantee period for
these vehicles is approximately nine months. Chrysler changed its accounting
treatment in accordance with the consensus effective January 1, 1995 which
resulted in the recognition of an after-tax charge of $96 million, or $0.25 per
common share, for the cumulative effect of this change in accounting principle.
The ongoing effect of this accounting change was not material to 1995 earnings.
Vehicle and parts sales are generally recognized when such products are
shipped to dealers, except for sales under which Chrysler conditionally
guarantees the minimum resale value of the vehicles. Provisions for sales
allowances and incentives are recognized at the time the related sale is
recognized and are treated as revenue reductions.
Finance revenue from finance receivables of Chrysler Financial Corporation
("CFC"), a wholly owned subsidiary, is recognized using the interest method.
Certain loan and lease origination costs are deferred and amortized to finance
revenue over the contractual terms. Recognition of finance revenue is generally
suspended when a loan or lease becomes contractually delinquent for periods
ranging from 60 to 90 days. Finance revenue recognition is resumed when the loan
or lease becomes contractually current, at which time all past due finance
revenue is recognized.
CFC sells significant amounts of automotive retail and wholesale
receivables in transactions subject to limited recourse provisions. CFC
generally sells its receivables to a trust and remains as servicer, for which it
is paid a servicing fee. Normal servicing fees are earned on a level yield basis
over the remaining terms of the related sold receivables. In a subordinated
capacity, CFC retains excess servicing cash flows, a limited interest in the
principal balances of the sold receivables and certain cash deposits provided as
credit enhancements for investors. Gains or losses from the sales of retail
receivables are recognized in the period in which such sales
35
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
---------------------------------------------------------------
REVENUE RECOGNITION -- CONTINUED
occur. In determining the gain or loss for each qualifying sale of retail
receivables, the investment in the sold receivable pool is allocated between the
portion sold and the portion retained, based on their relative fair values on
the date of sale.
DEPRECIATION AND TOOL AMORTIZATION
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is generally provided on a straight-line basis. At December 31,
1995, the weighted average service lives of assets were 34 years for buildings
(including improvements and building equipment), 14 years for machinery and
equipment and 10 years for furniture and fixtures. Special tooling costs are
amortized over the years that a model using that tooling is expected to be
produced, and within each year based on the units produced. Amortization is
deducted directly from the asset account. During any given model year, special
tools will contain tooling with varying useful lives.
Effective April 1, 1994, Chrysler revised the estimated service lives of
certain special tools and property and equipment. These revisions were based on
updated assessments of the service lives of the related assets and resulted in
the recognition of additional amortization of special tools of $246 million in
1994 and lower depreciation of property and equipment of $45 million in 1994.
PRODUCT-RELATED COSTS
Expenditures for advertising, sales promotion and other product-related
costs are expensed as incurred. Provisions for product warranty costs are
recognized at the time the related sale is recognized. Advertising expense was
$1.2 billion, $1.1 billion and $858 million in 1995, 1994 and 1993,
respectively. Research and development costs were $1.4 billion, $1.3 billion and
$1.2 billion in 1995, 1994 and 1993, respectively.
CASH AND CASH EQUIVALENTS
Highly liquid investments with a maturity of three months or less at the
date of purchase are classified as cash equivalents.
MARKETABLE SECURITIES
Effective January 1, 1994, Chrysler adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." Adoption of this accounting standard did not have a
material effect on Chrysler's financial statements.
Under SFAS No. 115, debt and equity securities with readily determinable
fair values are segregated into one of the following categories -- trading,
available-for-sale or held-to-maturity. Trading securities and
available-for-sale securities are carried at their fair values. Changes in the
fair values of trading securities are recorded in the statement of earnings.
Changes in the fair values of available-for-sale securities are recognized as a
component of shareholders' equity until such securities are sold.
Held-to-maturity securities are carried at cost adjusted for amortized premium
or discount.
At December 31, 1995 and 1994, Chrysler had investments in securities
(including cash equivalents) with an aggregate carrying value of $7.3 billion
and $7.9 billion, respectively, accounted for in accordance with SFAS No. 115.
These securities consisted primarily of commercial paper, federal government
agency
36
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
---------------------------------------------------------------
MARKETABLE SECURITIES -- CONTINUED
securities and corporate debt. At December 31, 1995, securities categorized as
available-for-sale and held-to-maturity totaled $6.6 billion and $677 million,
respectively. At December 31, 1994, securities categorized as available-for-sale
and held-to-maturity totaled $5.5 billion and $2.4 billion, respectively.
Substantially all such securities have maturities within one year.
On December 29, 1995, CFC transferred all of its securities classified as
held-to-maturity to available-for-sale. At the date of transfer, the amortized
cost and unrealized gain of the securities transferred totaled $283 million and
$9 million, respectively. This transfer resulted from CFC conducting a one-time
reassessment of the classification of securities held in accordance with FASB
Special Report, "A Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities."
ALLOWANCE FOR CREDIT LOSSES
An allowance for credit losses is generally established during the period
in which receivables or vehicle leases are acquired. The allowance for credit
losses is maintained at a level deemed appropriate, based primarily on loss
experience. Other factors affecting collectibility are also evaluated and
appropriate adjustments are recorded. Retail automotive receivables and vehicle
leases not supported by a dealer guaranty are charged to the allowance for
credit losses net of the estimated value of repossessed collateral at the time
of repossession. Nonautomotive finance receivables are reduced to the estimated
fair value of the collateral when such loans are deemed to be impaired.
INVENTORIES
Inventories are valued at the lower of cost or market. The cost of
approximately 42 percent and 51 percent of inventories at December 31, 1995 and
1994, respectively, was determined on a Last-In, First-Out ("LIFO") basis. The
balance of inventory cost was determined on a First-In, First-Out ("FIFO")
basis.
INTANGIBLE ASSETS
The purchase price of companies in excess of the value of net identifiable
assets acquired ("goodwill") is amortized on a straight-line basis over periods
of up to 40 years. The amount is reported net of accumulated amortization of
$767 million and $723 million at December 31, 1995 and 1994, respectively.
Chrysler periodically evaluates the carrying value of goodwill for impairment.
Such evaluations are based principally on the projected, undiscounted cash flows
of the operations to which the goodwill relates.
POSTEMPLOYMENT BENEFITS
Effective January 1, 1993, Chrysler adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits," which required the accrual of benefits
provided to former or inactive employees after employment but prior to
retirement. Prior to 1993, Chrysler accrued for certain of these benefits at the
time an employee's active service ended and expensed certain other benefits on
the basis of cash expenditures. Adoption of this accounting standard resulted in
the recognition of an after-tax charge of $283 million, or $0.82 per common
share, for the cumulative effect of this change in accounting principle.
37
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
---------------------------------------------------------------
DERIVATIVE FINANCIAL INSTRUMENTS
Chrysler manages risk arising from fluctuations in interest rates and
currency exchange rates by using derivative financial instruments. Chrysler does
not use derivative financial instruments for trading purposes.
When Chrysler sells vehicles outside the United States or purchases
components from suppliers outside the United States, transactions are frequently
denominated in currencies other than U.S. dollars. Periodically, Chrysler
initiates hedging activities by entering into currency exchange agreements,
consisting principally of currency forward contracts and purchased options, to
minimize revenue and cost variations which could result from fluctuations in
currency exchange rates. These instruments, consistent with the underlying
purchase or sale commitments, typically mature within two years of origination.
The currency exchange agreements are treated as off-balance sheet financial
instruments, with related gains and losses recorded in the settlement of the
underlying transactions. In the event of an early termination of a currency
exchange agreement designated as a hedge, the gain or loss continues to be
deferred and is included in the settlement of the underlying transaction.
Chrysler also uses written currency options to effectively close out existing
purchased options, both of which are then carried at fair value. Previously
unrecognized gains and losses on the purchased options continue to be deferred
and are included in the settlement of the underlying transaction.
CFC utilizes interest rate swaps, interest rate caps, forward interest rate
contracts and currency exchange agreements to manage funding costs and exposure
arising from changes in interest and currency exchange rates. Interest
differentials resulting from interest rate swap agreements used to change the
interest rate characteristics of CFC's debt are recorded on an accrual basis as
an adjustment to interest expense. Interest rate swaps are either matched with
specific term debt obligations or with groups of commercial paper on a layered
basis. Forward interest rate contracts are used to manage exposure to
fluctuations in funding costs for anticipated securitizations of retail
receivables. Unrealized gains or losses on forward interest rate contracts that
qualify for hedge accounting treatment are deferred. Unrealized gains or losses
on forward interest rate contracts that do not qualify for hedge accounting
treatment are included in other revenues. Realized gains or losses for hedge
instruments are included in the determination of the gain or loss from the
related sales of retail receivables. In the event of an early termination of an
interest rate exchange agreement designated as a hedge, the gain or loss is
deferred and recorded as an adjustment to interest expense over the remaining
term of the underlying debt. In addition, CFC enters into currency exchange
agreements to manage its exposure to fluctuations in currency exchange rates
related to specific borrowings denominated in currencies other than the local
currency of the borrowing entity. As a result, such borrowings are translated in
the consolidated balance sheet at the rates of exchange established under the
related currency exchange agreement.
NOTE 2. INVENTORIES AND COST OF SALES
-------------------------------------
Inventories, summarized by major classification, were as follows:
[Download Table]
DECEMBER 31
-------------------
1995 1994
------ ------
(IN MILLIONS OF
DOLLARS)
Finished products, including service parts................ $1,232 $1,145
Raw materials, finished production parts and supplies..... 1,456 1,223
Vehicles held for short-term lease........................ 1,760 988
------ ------
Total................................................ $4,448 $3,356
====== ======
38
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. INVENTORIES AND COST OF SALES -- CONTINUED
--------------------------------------------------
Inventories valued on the LIFO basis would have been $334 million and $328
million higher than reported had they been valued on the FIFO basis at December
31, 1995 and 1994, respectively.
Beginning in 1995, vehicles held for short-term lease include the carrying
value of vehicles for which Chrysler conditionally guarantees the minimum resale
value of the vehicles.
Total manufacturing cost of sales aggregated $41.7 billion, $39.0 billion
and $33.1 billion for 1995, 1994 and 1993, respectively.
NOTE 3. FINANCE RECEIVABLES AND RETAINED INTERESTS IN SOLD RECEIVABLES
----------------------------------------------------------------------
Finance receivables and retained interests in sold receivables were as
follows:
[Download Table]
DECEMBER 31
--------------------
1995 1994
------- -------
(IN MILLIONS OF
DOLLARS)
Automotive financing..................................... $ 7,875 $ 5,734
Nonautomotive financing.................................. 2,391 2,500
Retained senior interests in wholesale receivables held
in trusts.............................................. 935 2,173
------- -------
Total finance receivables........................... 11,201 10,407
Retained interests in sold receivables................... 3,039 2,548
Total allowance for credit losses........................ (617) (522)
------- -------
Total............................................... $13,623 $12,433
======= =======
Retained interests in sold receivables are generally restricted and subject
to limited recourse provisions. At December 31, 1994, CFC was a party to an
interest rate cap agreement related to $134 million of its retained interests.
At December 31, 1994, CFC was also party to a forward interest rate contract
(notional amount $500 million) to manage its exposure to fluctuations in funding
costs.
Contractual maturities of total finance receivables as of December 31,
1995, were (in millions of dollars): 1996 - $4,271; 1997 - $1,703; 1998 -
$1,603; 1999 - $1,042; 2000 - $623; and 2001 and thereafter - $1,959. Actual
cash flows will vary from contractual maturities due to future sales of finance
receivables, prepayments and charge-offs.
Changes in the allowance for credit losses were as follows:
[Enlarge/Download Table]
YEAR ENDED
DECEMBER 31
-----------------------
1995 1994 1993
----- ----- -----
(IN MILLIONS OF
DOLLARS)
Balance at beginning of year......................................... $ 522 $ 507 $ 603
Provision for credit losses.......................................... 372 203 209
Net credit losses.................................................... (252) (159) (207)
Transfers related to nonautomotive asset sales....................... -- -- (79)
Other adjustments.................................................... (25) (29) (19)
----- ----- -----
Balance at end of year............................................... $ 617 $ 522 $ 507
===== ===== =====
39
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. FINANCE RECEIVABLES AND RETAINED INTERESTS IN SOLD RECEIVABLES --
CONTINUED
-------------------------------------------------------------------------
Nonearning finance receivables, including receivables sold subject to
limited recourse, totaled $333 million and $282 million at December 31, 1995 and
1994, respectively, which represented 1.0 percent and 0.9 percent of such
receivables outstanding, respectively.
NOTE 4. PROPERTY AND EQUIPMENT
------------------------------
Property and equipment, summarized by major classification, were as
follows:
[Enlarge/Download Table]
DECEMBER 31
-------------------
1995 1994
------- -------
(IN MILLIONS OF
DOLLARS)
Land..................................................................... $ 399 $ 410
Buildings................................................................ 5,171 4,694
Machinery and equipment.................................................. 12,458 10,578
Furniture and fixtures................................................... 549 499
Construction in progress................................................. 1,891 2,100
------- -------
20,468 18,281
Less accumulated depreciation 7,873 7,208
------- -------
Total............................................................... $12,595 $11,073
======= =======
NOTE 5. ACCRUED LIABILITIES AND EXPENSES
----------------------------------------
Accrued liabilities and expenses consisted of the following:
[Enlarge/Download Table]
DECEMBER 31
-------------------
1995 1994
------ ------
(IN MILLIONS OF
DOLLARS)
Customer and dealer allowances and claims................................ $2,097 $1,715
Employee compensation and benefits....................................... 1,892 2,242
Deferred revenue related to vehicles sold with guaranteed minimum resale
values................................................................. 991 --
Other.................................................................... 2,052 1,625
------ ------
Total............................................................... $7,032 $5,582
====== ======
40
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. DEBT
------------
Debt consisted of the following:
[Enlarge/Download Table]
DECEMBER 31
-----------------------------------------------
WEIGHTED
AVERAGE
INTEREST
MATURITY RATE(1)
--------- ------------
1995 1995 1994 1995 1994
--------- ---- ---- ------- -------
(IN MILLIONS OF
DOLLARS)
Chrysler, excluding CFC:
Short-term debt.................................. 6.7% 5.3% $ 160 $ 150
Long-term debt payable within one year........... 49 187
------- -------
Total debt payable within one year............ 209 337
------- -------
Debentures....................................... 2017 11.0% 12.0% 265 564
Notes and other debt............................. 1996-2020 10.1% 11.4% 1,950 1,534
------- -------
Total long-term debt.......................... 2,215 2,098
------- -------
Total....................................... 2,424 2,435
------- -------
CFC:
Short-term debt (primarily commercial paper)..... 6.2% 6.4% 2,514 4,495
Long-term debt payable within one year........... 1,612 624
------- -------
Total debt payable within one year............ 4,126 5,119
------- -------
Senior notes and debentures...................... 1996-2018 7.2% 7.3% 7,625 5,475
Mortgage notes, capital leases and other......... 18 77
------- -------
Total long-term debt.......................... 7,643 5,552
------- -------
Total....................................... 11,769 10,671
------- -------
Total Chrysler:
Total long-term debt............................. $ 9,858 $ 7,650
======= =======
Total debt....................................... $14,193 $13,106
======= =======
-------------------------
(1) The weighted average interest rates include the effects of interest rate
exchange agreements.
At December 31, 1995, aggregate annual maturities of consolidated debt,
including principal payments on capital leases, were as follows (in millions of
dollars): 1996-$4,335; 1997-$2,973; 1998-$2,354; 1999-$1,804; and 2000-$925.
CFC enters into currency exchange agreements to manage its exposure to
fluctuations in currency exchange rates related to specific borrowings
denominated in currencies other than the local currency of the borrowing entity.
As a result, such borrowings are translated in the consolidated balance sheet at
the rates of exchange established under the related currency exchange agreement.
The reported amount of such borrowings was $330 million. If CFC had not entered
into currency exchange agreements, the amount would have been $175 million
higher at December 31, 1995.
To mitigate risks associated with changing interest rates on certain of its
debt, CFC has entered into interest rate exchange agreements. CFC manages
exposure to counterparty credit risk by entering into such agreements only with
major financial institutions that are expected to fully perform under the terms
of such
41
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. DEBT -- CONTINUED
-------------------------
agreements. The notional amounts are used to measure the volume of these
agreements and do not represent exposure to credit loss. The impact of interest
rate exchange agreements on interest expense was immaterial in 1995, 1994 and
1993.
The following table summarizes CFC's interest rate derivatives related to
its debt:
[Enlarge/Download Table]
NOTIONAL AMOUNTS
OUTSTANDING AND
WEIGHTED AVERAGE
RATES
--------------------
DECEMBER 31
VARIABLE MATURING --------------------
UNDERLYING FINANCIAL INSTRUMENTS RATE INDICES THROUGH 1995 1994
------------------------------------------- ------------ -------- ------ -----
(IN MILLIONS OF
DOLLARS)
PAY FIXED INTEREST RATE SWAPS
Short-term notes......................... 1998 $ 250 $ 500
Weighted average pay rate............. 9.08% 9.09%
Weighted average receive rate......... Money Market 5.86% 5.98%
Senior notes and debentures.............. 1997 $ 74 $ 90
Weighted average pay rate............. 7.38% 9.44%
Weighted average receive rate......... LIBOR 6.59% 5.81%
RECEIVE FIXED INTEREST RATE SWAPS
Senior notes and debentures.............. 2006 $ 750 $ 126
Weighted average pay rate............. LIBOR 7.54% 5.84%
Weighted average receive rate......... 8.27% 9.41%
VARIABLE INTEREST RATE SWAPS
Senior notes and debentures.............. 1999 $1,611 $ 61
Weighted average pay rate............. LIBOR 5.93% 6.16%
Weighted average receive rate......... Treasury 6.08% 6.89%
During the second quarter of 1995, CFC entered into new revolving credit
facilities which replaced its existing U.S. and Canadian revolving credit and
receivable sale facilities. The new facilities, which total $8.0 billion,
consist of a $2.4 billion facility expiring in May 1996 and a $5.6 billion
facility expiring in May 2000. As of December 31, 1995, no amounts were
outstanding under these facilities.
At December 31, 1995, Chrysler had a $1.7 billion revolving credit
agreement which expires in July 1999. None of the commitment was drawn upon at
December 31, 1995.
42
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. INCOME TAXES
--------------------
Earnings before income taxes and the cumulative effect of changes in
accounting principles were attributable to the following sources:
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31
----------------------------
1995 1994 1993
------ ------ ------
(IN MILLIONS OF DOLLARS)
United States................................................... $3,179 $5,239 $3,191
Foreign......................................................... 270 591 647
------ ------ ------
Total...................................................... $3,449 $5,830 $3,838
====== ====== ======
The provision for income taxes included the following:
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31
----------------------------
1995 1994 1993
------ ------ ------
(IN MILLIONS OF DOLLARS)
Currently Payable:
United States................................................. $ 879 $ 876 $ 523
Foreign....................................................... 63 60 69
State and local............................................... 200 116 28
------ ------ ------
1,142 1,052 620
------ ------ ------
Deferred:
United States................................................. 167 820 528
Foreign....................................................... 48 73 131
State and local............................................... (29) 172 144
------ ------ ------
186 1,065 803
------ ------ ------
Total...................................................... $1,328 $2,117 $1,423
====== ====== ======
Chrysler does not provide for U.S. income taxes or foreign withholding
taxes on the undistributed earnings of foreign subsidiaries, as such cumulative
earnings of $2.1 billion are intended to be permanently reinvested in those
operations. It is not practicable to estimate the amount of unrecognized
deferred tax liability for these undistributed foreign earnings.
43
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. INCOME TAXES -- CONTINUED
---------------------------------
A reconciliation of income taxes determined using the statutory U.S. rate
of 35 percent to actual income taxes provided was as follows:
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31
--------------------------
1995 1994 1993
------ ------ ------
(IN MILLIONS OF DOLLARS)
Tax at U.S. statutory rate.......................................... $1,207 $2,041 $1,343
State and local taxes, net of federal tax benefit................... 116 191 114
Recognition of prior years' research and development tax credits.... -- (100) --
Adjustments to reflect assessment of realizability of deferred tax
assets............................................................ (29) (32) --
Rate adjustment of U.S. deferred tax assets and liabilities......... -- -- (72)
Other............................................................... 34 17 38
------ ------ ------
Total provision for income taxes............................... $1,328 $2,117 $1,423
====== ====== ======
Effective income tax rate...................................... 38.5% 36.3% 37.1%
====== ====== ======
The adjustment to the provision for income taxes for the recognition of
prior years' research and development tax credits in 1994 represented the tax
benefits related to expenditures in prior years for qualifying research and
development activities, in accordance with an Internal Revenue Service
settlement which was based on U.S. Department of Treasury income tax regulations
issued in 1994.
The tax-effected temporary differences and carryforwards which comprised
deferred tax assets and liabilities were as follows:
[Enlarge/Download Table]
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------------------- -----------------------------
DEFERRED DEFERRED DEFERRED DEFERRED
TAX ASSETS TAX LIABILITIES TAX ASSETS TAX LIABILITIES
---------- --------------- ---------- ---------------
(IN MILLIONS OF DOLLARS)
Nonpension postretirement benefits............. $3,121 $ -- $2,960 $ --
Pensions....................................... 8 1,966 11 1,726
Accrued expenses............................... 2,698 2 2,471 --
Lease transactions............................. -- 1,734 -- 1,713
Depreciation................................... -- 1,769 -- 1,678
Tax credit carryforwards....................... 211 -- 51 --
Alternative minimum tax credit carryforwards... 282 -- 751 --
State and local taxes.......................... 160 109 215 105
Net operating loss ("NOL") carryforwards....... 77 -- 109 --
Other.......................................... 346 825 193 670
----- ----- ------ -------
6,903 6,405 6,761 5,892
Valuation allowance............................ (3) -- (77) --
----- ----- ------ -------
Total..................................... $6,900 $6,405 $6,684 $ 5,892
====== ====== ====== =======
Chrysler's tax credit carryforwards expire at various dates through the
year 2009; alternative minimum tax credit carryforwards have no expiration
dates. NOL carryforwards totaled $218 million at December 31,
44
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. INCOME TAXES -- CONTINUED
---------------------------------
1995, and may be used through the year 2008. The valuation allowance was
principally related to a subsidiary's NOL carryforwards. Changes in the
valuation allowance were as follows:
[Enlarge/Download Table]
YEAR ENDED
DECEMBER 31
--------------------
1995 1994 1993
---- ---- ----
(IN MILLIONS OF
DOLLARS)
Balance at beginning of year............................................ $ 77 $146 $130
Provision for unrecognizable deferred tax assets generated.............. -- -- 36
Utilization of NOL carryforwards........................................ (45) (25) (20)
Adjustments to reflect assessment of realizability of deferred tax
assets................................................................ (29) (32) --
Other................................................................... -- (12) --
----- ----- -----
Balance at end of year.................................................. $ 3 $ 77 $146
===== ===== =====
NOTE 8. COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS
-----------------------------------------------------
LITIGATION
----------
Various claims and legal proceedings have been asserted or instituted
against Chrysler, including some purporting to be class actions, and some which
demand large monetary damages or other relief which could result in significant
expenditures. Litigation is subject to many uncertainties, and the outcome of
individual matters is not predictable with assurance. It is reasonably possible
that the final resolution of some of these matters may require Chrysler to make
expenditures, in excess of established reserves, over an extended period of time
and in a range of amounts that cannot be reasonably estimated. The term
"reasonably possible" is used herein to mean that the chance of a future
transaction or event occurring is more than remote but less than likely.
Although the final resolution of any such matters could have a material effect
on Chrysler's consolidated operating results for the particular reporting period
in which an adjustment of the estimated liability is recorded, Chrysler believes
that any resulting liability should not materially affect its consolidated
financial position.
ENVIRONMENTAL MATTERS
Chrysler is subject to potential liability under government regulations and
various claims and legal actions which are pending or may be asserted against
Chrysler concerning environmental matters. Estimates of future costs of such
environmental matters are necessarily imprecise due to numerous uncertainties,
including the enactment of new laws and regulations, the development and
application of new technologies, the identification of new sites for which
Chrysler may have remediation responsibility and the apportionment and
collectibility of remediation costs among responsible parties. Chrysler
establishes reserves for these environmental matters when the loss is probable
and reasonably estimable. It is reasonably possible that final resolution of
some of these matters may require Chrysler to make significant expenditures, in
excess of established reserves, over an extended period of time and in a range
of amounts that cannot be reasonably estimated. Although the final resolution of
any such matters could have a material effect on Chrysler's consolidated
operating results for the particular reporting period in which an adjustment of
the estimated liability is recorded, Chrysler believes that any resulting
liability should not materially affect its consolidated financial position.
45
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS -- CONTINUED
------------------------------------------------------------------
POSSIBLE DISPOSITION OF ASSETS AND BUSINESSES
Chrysler's strategy is to focus on its core automotive business. As part of
this strategy, Chrysler has sold certain assets and businesses in past years
which are not related to its core automotive business, and is exploring the sale
of other such assets and businesses in the near term. Although Chrysler cannot
reasonably estimate the gains or losses that may result from the sales of such
assets and businesses, if any, such gains or losses could have a material effect
on Chrysler's consolidated operating results. However, Chrysler believes that
such gains or losses should not materially affect its consolidated financial
position.
CONCENTRATIONS
At December 31, 1995, Chrysler had a total of approximately 126,000
employees worldwide. Of this total, approximately 85,000 hourly workers and
29,000 salaried workers were employed in the U.S. and Canada. In the U.S. and
Canada, approximately 95 percent of Chrysler's hourly employees and 22 percent
of its salaried employees are represented by unions. Of these represented
employees, 97 percent of hourly and 90 percent of salaried employees are
represented by the United Automotive, Aerospace, and Agricultural Implement
Workers of America ("UAW") or the National Automobile, Aerospace, and
Agricultural Implement Workers of Canada ("CAW"). The existing national
agreements with the UAW and CAW will expire in September of 1996.
OTHER MATTERS
The majority of Chrysler's lease payments are for operating leases. At
December 31, 1995, Chrysler had the following minimum rental commitments under
noncancelable operating leases: 1996-$341 million; 1997-$182 million; 1998-$99
million; 1999-$77 million; 2000-$61 million; and 2001 and thereafter-$201
million. Future minimum lease commitments have not been reduced by minimum
sublease rentals of $218 million due in the future under noncancelable
subleases.
Rental expense for operating leases with original expiration dates beyond
one year was $436 million, $407 million and $410 million in 1995, 1994 and 1993,
respectively. Sublease rentals of $58 million, $60 million, and $61 million were
received in 1995, 1994 and 1993, respectively.
Chrysler had commitments for capital expenditures, including commitments
for assets currently under construction, approximating $1.2 billion at December
31, 1995.
At December 31, 1995, Chrysler had guaranteed obligations of others in the
amount of $301 million, none of which were secured by collateral.
NOTE 9. STOCK OPTIONS AND PERFORMANCE-BASED COMPENSATION
--------------------------------------------------------
The Chrysler Corporation 1991 Stock Compensation Plan (the "1991 Plan")
provides that Chrysler may grant stock options to officers, key employees and
nonemployee directors and also may grant reload stock options (which are options
granted when outstanding options are exercised by payment in stock), stock
appreciation rights (payable in cash or stock, at the sole discretion of the
Stock Option Committee) and limited stock appreciation rights (payable in cash
in the event of a change in control). The 1991 Plan also provides for awarding
restricted stock units and performance stock units, which reward service for
specified periods or attainment of performance objectives. The Chrysler
Corporation Stock Option Plan (the "Plan"), initially adopted in 1972 and
readopted in 1982, was amended to incorporate certain features of the 1991 Plan.
46
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9. STOCK OPTIONS AND PERFORMANCE-BASED COMPENSATION -- CONTINUED
---------------------------------------------------------------------
Under the Plan and the 1991 Plan, outstanding options, consisting of
ten-year nonqualified stock options, have exercise prices of not less than the
market value of Chrysler common stock at the date of grant. Options generally
become exercisable on up to 40 percent of the shares after one year from the
date of grant, 70 percent after two years and 100 percent after three years.
Information with respect to options granted under the Plan and the 1991 Plan,
including the conversion of American Motors Corporation ("AMC") options
outstanding at the date of the AMC acquisition, was as follows:
[Download Table]
SHARES UNDER OPTION PRICE
OPTION PER SHARE
------------ ------------
(IN MILLIONS)
Outstanding at January 1, 1993................... 14.8 $11.75 - $68.85
Granted........................................ 3.0 36.88 - 56.44
Exercised...................................... (6.4) 11.75 - 44.13
Terminated..................................... (0.2)
----
Outstanding at December 31, 1993................. 11.2 11.75 - 56.44
Granted........................................ 3.3 44.75 - 62.19
Exercised...................................... (1.3) 11.75 - 47.32
Terminated..................................... (0.1)
----
Outstanding at December 31, 1994................. 13.1 11.75 - 62.19
Granted........................................ 3.7 43.19 - 57.00
Exercised...................................... (1.9) 11.75 - 47.75
Terminated..................................... (0.2)
----
Outstanding at December 31, 1995................. 14.7 11.75 - 62.19
====
Shares available for granting options at the end of 1995, 1994 and 1993
were 11.2 million, 15.1 million, and 1.5 million, respectively. At December 31,
1995, 6.2 million options with prices ranging from $43.19 to $57.00 were not yet
exercisable under the terms of the Plan and the 1991 Plan.
In addition to the Plan and the 1991 Plan, Chrysler has programs under
which additional compensation is paid to hourly and salaried employees based
upon various measures of Chrysler's performance. Such performance-based
compensation programs include incentive compensation and profit sharing paid to
certain hourly and salaried employees.
47
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10. SHAREHOLDERS' EQUITY
-----------------------------
Information with respect to shareholders' equity was as follows (shares in
millions):
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31
----------------------------
1995 1994 1993
------- ------ -------
(IN MILLIONS OF DOLLARS)
PREFERRED STOCK:
Balance at beginning of year.................................... $ 2 $ 2 $ 2
Conversions into common stock................................ (2) -- --
------- ------ -------
Balance at end of year.......................................... $ * $ 2 $ 2
======= ====== =======
COMMON STOCK:
Balance at beginning of year.................................... $ 364 $ 364 $ 312
Conversions of preferred stock............................... 44 -- --
Shares issued................................................ -- -- 52
------- ------ -------
Balance at end of year.......................................... $ 408 $ 364 $ 364
======= ====== =======
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of year.................................... $ 5,536 $5,533 $ 3,657
Conversions of preferred stock............................... (42) -- --
Issuance of common stock..................................... -- -- 1,900
Shares issued under employee benefit plans................... 12 3 (24)
------- ------ -------
Balance at end of year.......................................... $ 5,506 $5,536 $ 5,533
======= ====== =======
RETAINED EARNINGS:
Balance at beginning of year.................................... $ 5,006 $1,170 $ 3,924
Net earnings (loss).......................................... 2,025 3,713 (2,551)
Dividends declared........................................... (777) (470) (308)
Adjustment of additional minimum pension liability........... (42) 626 64
Translation and other adjustments............................ 68 (33) 41
------- ------ -------
Balance at end of year.......................................... $ 6,280 $5,006 $ 1,170
======= ====== =======
TREASURY STOCK:
Balance at beginning of year.................................... $ (214) $ (233) $ (357)
Repurchases of common stock.................................. (1,047) -- --
Shares issued under employee benefit plans (1995 -- 1.8; 1994
-- 1.4; 1993 -- 5.8)........................................ 26 19 124
------- ------ -------
Balance at end of year $(1,235) $ (214) $ (233)
======= ====== =======
-------------------------
* Less than $1 million
During December 1994, Chrysler's Board of Directors approved a $1 billion
common stock repurchase program commencing in the first quarter of 1995. In
1995, Chrysler's Board of Directors approved an increase in the program to $2
billion to be completed by the end of 1996, depending on market conditions. In
1995, Chrysler repurchased 23 million shares of its common stock under this
program at a cost of $1,070 million (including $23 million in unsettled
repurchases).
The annual dividend on the Series A Convertible Preferred Stock (the
"Preferred Stock") is $46.25 per share. The Preferred Stock is convertible,
unless previously redeemed, at a rate (subject to adjustment in
48
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10. SHAREHOLDERS' EQUITY -- CONTINUED
------------------------------------------
certain events) of 27.78 shares of common stock for each share of Preferred
Stock. The Preferred Stock is not redeemable prior to January 22, 1997.
Thereafter, Chrysler may redeem the Preferred Stock, in whole or in part, at
$523.13 per share of Preferred Stock for the period ending December 31, 1997 and
thereafter declining ratably annually to $500.00 per share after December 31,
2001, plus accrued and unpaid dividends. During 1995, holders of substantially
all of the Preferred Stock converted their shares into shares of common stock.
In February 1988, the Board of Directors declared and distributed a
dividend of one Preferred Share Purchase Right (a "Right") for each then
outstanding share of Chrysler's common stock and authorized the distribution of
one Right with respect to each subsequently issued share of common stock. Each
Right, as most recently amended, entitles a shareholder to purchase one
one-hundredth of a share of Junior Participating Cumulative Preferred Stock of
Chrysler at a price of $120. The Rights are attached to the common stock and are
not represented by separate certificates or exercisable until the earliest to
occur of (i) 10 days following the time (the "Stock Acquisition Time") of a
public announcement or communication to Chrysler that a person or group of
persons has acquired or obtained the right to acquire 15 percent or more of
Chrysler's outstanding common stock, and (ii) 10 business days after a person or
group of persons announces or commences a tender offer that would result, if
successful, in the bidder owning 15 percent or more of Chrysler's outstanding
common stock. If the acquiring person or group acquires 15 percent or more of
the common stock (except pursuant to a tender offer made for all of Chrysler's
common stock, and determined by Chrysler's independent directors to be fair and
in the best interests of Chrysler and its shareholders) each Right (other than
those held by the acquiror) will entitle its holder to buy, for $120, a number
of shares of Chrysler's common stock having a market value of $240. Similarly,
if after the Stock Acquisition Time, Chrysler is acquired in a merger or other
business combination and is not the surviving corporation, or 50 percent or more
of its assets, cash flow or earning power is sold, each Right (other than those
held by the surviving or acquiring company) will entitle its holder to purchase,
for $120, shares of the surviving or acquiring company having a market value of
$240. Chrysler's directors may redeem the Rights at $0.05 per Right, and may
amend the Rights or extend the time during which the Rights may be redeemed,
only prior to the Stock Acquisition Time. Additionally, at any time after a
person or group acquires 15 percent or more, but less than 50 percent, of
Chrysler's common stock, Chrysler's directors may exchange the Rights (other
than those held by the acquiror), in whole or in part, at an exchange ratio of
one share of common stock (or a fractional share of preferred stock with
equivalent voting rights) per Right. The Rights will expire on February 22,
1998.
Of the 1.0 billion shares of authorized common stock at December 31, 1995,
53 million shares were reserved for issuance under Chrysler's various employee
benefit plans and the conversion of the Preferred Stock.
Primary earnings (loss) per common share amounts were computed by dividing
earnings (loss) after deduction of preferred stock dividends by the average
number of common and dilutive equivalent shares outstanding. Fully diluted
per-common-share amounts assume conversion of the Preferred Stock, the
elimination of the related preferred stock dividend requirement, and the
issuance of common stock for all other potentially dilutive equivalents
outstanding. Fully diluted per-common-share amounts are not applicable for loss
periods.
NOTE 11. PENSION PLANS
----------------------
Chrysler's pension plans provide noncontributory and contributory benefits.
The noncontributory pension plans cover substantially all of the hourly and
salaried employees of Chrysler and certain of its consolidated
49
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. PENSION PLANS -- CONTINUED
-----------------------------------
subsidiaries. Benefits are based on a fixed rate for each year of service.
Additionally, contributory benefits are provided to substantially all salaried
employees of Chrysler and certain of its consolidated subsidiaries under the
Salaried Employees' Retirement Plan. This plan provides benefits based on the
employee's cumulative contributions, years of service during which employee
contributions were made, and the employee's average salary during the
consecutive five years in which salary was highest in the 15 years preceding
retirement.
Contributions to the pension trust fund for U.S. plans are in compliance
with the Employee Retirement Income Security Act of 1974, as amended. All
pension trust fund assets and income accruing thereon are used solely to pay
pension benefits and administer the plans. Chrysler made pension fund
contributions totaling $838 million in 1995, $2.6 billion in 1994 and $3.5
billion in 1993.
At December 31, 1995, plan assets were invested in a diversified portfolio
that consisted primarily of debt and equity securities, including 11.9 million
shares of Chrysler common stock with a market value of $658 million. During
1995, $29 million of dividends were received on Chrysler common stock.
The components of pension expense were as follows:
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31
-----------------------------------------------------------------------------------------
1995 1994 1993
--------------------------- --------------------------- ---------------------------
NON- NON- NON-
U.S. U.S. U.S. U.S. U.S. U.S.
PLANS PLANS TOTAL PLANS PLANS TOTAL PLANS PLANS TOTAL
------- ----- ------- ------- ----- ------- ------- ----- -------
(IN MILLIONS OF DOLLARS)
Service cost -- benefits
earned during the year..... $ 233 $ 20 $ 253 $ 275 $ 29 $ 304 $ 218 $ 20 $ 238
Interest on projected benefit
obligation................. 903 90 993 833 86 919 779 79 858
Return on plan assets:
Actual return.............. (2,572) (168) (2,740) 183 11 194 (1,283) (35 ) (1,318)
Deferred (loss) gain....... 1,465 67 1,532 (1,106) (116) (1,222) 617 (40 ) 577
-------- ------ -------- -------- ------ -------- -------- ----- --------
Expected return............ (1,107) (101) (1,208) (923) (105) (1,028) (666) (75 ) (741)
Net amortization and other... 328 39 367 471 48 519 366 35 401
-------- ------ -------- -------- ------ -------- -------- ----- --------
Total.................. $ 357 $ 48 $ 405 $ 656 $ 58 $ 714 $ 697 $ 59 $ 756
======== ====== ======== ======== ====== ======== ======== ===== ========
During 1995, 1994 and 1993, the cost of voluntary early retirement
programs, which are periodically offered to certain salaried and hourly
employees, was $21 million, $68 million and $40 million, respectively, and is
included in pension expense.
50
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. PENSION PLANS -- CONTINUED
-----------------------------------
Pension expense is determined using assumptions at the beginning of the
year. The projected benefit obligation ("PBO") is determined using the
assumptions at the end of the year. Assumptions used to determine pension
expense and the PBO were:
[Enlarge/Download Table]
DECEMBER 31
------------------------------------------------------------------------
U.S. PLANS NON-U.S. PLANS
------------------------------------ --------------------------------
1995 1994 1993 1992 1995 1994 1993 1992
------ ------ ------ ------ ----- ----- ----- -----
Discount rate............... 7.00% 8.63% 7.38% 8.38% 8.25% 9.75% 8.25% 9.50%
Rate of increase in future
compensation levels....... 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%
Long-term rate of return on
plan assets............... 10.00% 10.00% 10.00% 10.00% 9.00% 9.00% 9.00% 9.50%
The decrease in the discount rate for U.S. Plans from 8.63 percent as of
December 31, 1994 to 7.00 percent as of December 31, 1995 resulted in a $1.7
billion increase in the PBO at December 31, 1995 and is expected to result in an
$89 million increase in 1996 pension expense.
51
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. PENSION PLANS -- CONTINUED
-----------------------------------
The following table presents a reconciliation of the funded status of the
plans with amounts recognized in the consolidated balance sheet:
[Enlarge/Download Table]
DECEMBER 31, 1995
--------------------------------------------------------------------------
U.S. PLANS NON-U.S. PLANS
----------------------------- --------------------------------
ASSETS ACCUM. ASSETS ACCUM.
EXCEED BENEFITS EXCEED BENEFITS
ACCUM. EXCEED U.S. ACCUM. EXCEED NON-U.S.
BENEFITS ASSETS TOTAL BENEFITS ASSETS TOTAL TOTAL
-------- -------- ------- -------- -------- ---------- -------
(IN MILLIONS OF DOLLARS)
Actuarial present value of benefits:
Vested................................... $ 9,644 $ 376 $10,020 $1,132 $ 9 $1,141 $11,161
Nonvested................................ 2,622 79 2,701 23 1 24 2,725
-------- ------ -------- ------- ----- ------- --------
Accumulated benefit obligation............. 12,266 455 12,721 1,155 10 1,165 13,886
Effect of projected future salary
increases................................ 252 9 261 12 2 14 275
-------- ------ -------- ------- ----- ------- --------
PBO........................................ 12,518 464 12,982 1,167 12 1,179 14,161
Plan assets at fair value.................. 13,353 86 13,439 1,218 -- 1,218 14,657
-------- ------ -------- ------- ----- ------- --------
PBO (in excess of)/less than plan assets... 835 (378) 457 51 (12) 39 496
Unrecognized net loss/(gain)............... 1,292 79 1,371 485 (1) 484 1,855
Unrecognized prior service cost............ 1,258 39 1,297 187 -- 187 1,484
Unamortized net obligation at date of
adoption................................. 855 1 856 4 4 8 864
Adjustment required to recognize minimum
liability................................ -- (114) (114) -- (1) (1) (115)
-------- ------ -------- ------- ----- ------- --------
Net prepaid pension asset/(liability)
recognized in the consolidated balance
sheet.................................... $ 4,240 $ (373) $ 3,867 $ 727 $(10) $ 717 $ 4,584
======== ====== ======== ======= ===== ======= ========
[Enlarge/Download Table]
DECEMBER 31, 1994
--------------------------------------------------------------------------
U.S. PLANS NON-U.S. PLANS
----------------------------- --------------------------------
ASSETS ACCUM. ASSETS ACCUM.
EXCEED BENEFITS EXCEED BENEFITS
ACCUM. EXCEED U.S. ACCUM. EXCEED NON-U.S.
BENEFITS ASSETS TOTAL BENEFITS ASSETS TOTAL TOTAL
-------- -------- ------- -------- -------- ---------- -------
(IN MILLIONS OF DOLLARS)
Actuarial present value of benefits:
Vested................................... $ 7,909 $ 256 $ 8,165 $ 866 $ 8 $ 874 $ 9,039
Nonvested................................ 2,284 50 2,334 18 -- 18 2,352
-------- ------ -------- ------- ----- ------- --------
Accumulated benefit obligation............. 10,193 306 10,499 884 8 892 11,391
Effect of projected future salary
increases................................ 252 4 256 5 1 6 262
-------- ------ -------- ------- ----- ------- --------
PBO........................................ 10,445 310 10,755 889 9 898 11,653
Plan assets at fair value.................. 10,896 45 10,941 956 -- 956 11,897
-------- ------ -------- ------- ----- ------- --------
PBO (in excess of)/less than plan assets... 451 (265) 186 67 (9) 58 244
Unrecognized net loss/(gain)............... 1,027 4 1,031 365 (2) 363 1,394
Unrecognized prior service cost............ 1,324 44 1,368 202 -- 202 1,570
Unamortized net obligation at date of
adoption................................. 997 1 998 5 4 9 1,007
Adjustment required to recognize minimum
liability................................ -- (49) (49) -- (3) (3) (52)
-------- ------ -------- ------- ----- ------- --------
Net prepaid pension asset/(liability)
recognized in the consolidated balance
sheet.................................... $ 3,799 $ (265) $ 3,534 $ 639 $(10) $ 629 $ 4,163
======== ====== ======== ======= ===== ======= ========
52
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. PENSION PLANS -- CONTINUED
-----------------------------------
Included in other assets on the consolidated balance sheet as of December
31, 1995 and 1994 was noncurrent prepaid pension expense of $4.7 billion and
$4.1 billion, respectively.
NOTE 12. NONPENSION POSTRETIREMENT BENEFITS
-------------------------------------------
Chrysler provides health and life insurance benefits to substantially all
of its hourly and salaried employees and those of certain of its consolidated
subsidiaries. Upon retirement from Chrysler, employees may become eligible for
continuation of these benefits. However, benefits and eligibility rules may be
modified periodically. Prior to 1993, the expense recognized for these benefits
was based primarily on cash expenditures for the period. Effective January 1,
1993, Chrysler adopted SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," which requires the accrual of such benefits
during the years employees provide services. The adoption of this accounting
standard resulted in an after-tax charge of $4.7 billion, or $13.57 per common
share, in 1993. Implementation of SFAS No. 106 did not increase Chrysler's cash
expenditures for postretirement benefits.
Components of nonpension postretirement benefit expense were as follows:
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31
------------------------
1995 1994 1993
---- ---- ----
(IN MILLIONS OF DOLLARS)
Benefits attributed to employees' service........................... $136 $178 $142
Interest on accumulated nonpension postretirement benefit
obligation........................................................ 670 665 626
Net amortization.................................................... (48) (9) --
---- ---- ----
Total........................................................ $758 $834 $768
==== ==== ====
The following table summarizes the components of the nonpension
postretirement benefit obligation recognized in the consolidated balance sheet
at December 31, 1995 and 1994:
[Enlarge/Download Table]
DECEMBER 31
--------------------
1995 1994
------- ------
(IN MILLIONS OF
DOLLARS)
Accumulated nonpension postretirement benefit obligation ("ANPBO")
attributable to:
Retirees............................................................. $ 4,798 $4,056
Active employees eligible for benefits............................... 1,761 1,259
Other active employees............................................... 3,273 2,837
------- ------
Total ANPBO....................................................... 9,832 8,152
Unrecognized negative prior service cost............................. 237 360
Unrecognized net loss................................................ (1,344) (142)
------- ------
Total........................................................... $ 8,725 $8,370
======= ======
53
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12. NONPENSION POSTRETIREMENT BENEFITS -- CONTINUED
--------------------------------------------------------
Nonpension postretirement benefit expense is determined using assumptions
at the beginning of the year. The ANPBO is determined using the assumptions at
the end of the year. Assumptions at December 31, 1995, 1994 and 1993 were:
[Enlarge/Download Table]
DECEMBER 31
--------------------------
1995 1994 1993
---- ---- ----
Discount rate.................................................... 7.0% 8.6% 7.5%
Health care inflation rate in following (or "base") year......... 7.5% 7.5% 9.2%
Ultimate health care inflation rate (2002)(1).................... 5.4% 5.5% 5.5%
Average health care inflation rate (base year through 2002)...... 5.8% 6.1% 6.3%
-------------------------
(1) Rate decreases annually through the year 2002
The decrease in the discount rate from 8.6 percent to 7.0 percent as of
December 31, 1995 resulted in a $1.6 billion increase in the ANPBO in 1995, and
is expected to result in a $124 million increase in nonpension postretirement
benefit expense in 1996.
A one percentage point increase in the assumed health care inflation rate
in each year would have increased the ANPBO at December 31, 1995 by $1.2 billion
and would have increased the aggregate of the service and interest cost
components of nonpension postretirement benefit expense in 1995 by $105 million.
NOTE 13. SALES OF AUTOMOTIVE ASSETS AND INVESTMENTS
---------------------------------------------------
During 1994, Chrysler sold its wire harness operations and certain of its
soft trim operations, and entered into five-year supply agreements with each of
the purchasers. Aggregate net proceeds from the sales and the supply agreements
were $315 million. The related pretax gains of $254 million were deferred and
are being recognized over the periods of the respective supply agreements.
In 1993, Chrysler sold its plastics operations for net proceeds of $132
million. The sale resulted in a pretax gain of $60 million ($39 million after
income taxes). Also during 1993, Chrysler sold its remaining 50.3 million shares
of Mitsubishi Motors Corporation stock for net proceeds of $329 million,
resulting in a pretax gain of $205 million ($128 million after income taxes).
NOTE 14. SPECIAL PLANT PROVISION
--------------------------------
During 1995, Chrysler recorded a $263 million provision ($162 million after
income taxes) for costs associated with production changes at its Newark
assembly plant. The plant ended production of Chrysler's LeBaron convertibles in
July 1995. In addition, Newark production of the Chrysler Concorde and Dodge
Intrepid was reduced to one shift in August 1995 and will end prior to
production of a new vehicle in the fall of 1997. The provision includes the
recognition of supplemental unemployment benefits, job security benefits and
other related employee costs, and the write-down of certain equipment and
tooling. The provision is included in Costs, other than items below in the
consolidated statement of earnings.
54
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15. SUPPLEMENTAL CASH FLOW INFORMATION
-------------------------------------------
Supplemental disclosures to the consolidated statement of cash flows were
as follows:
[Download Table]
YEAR ENDED DECEMBER 31
----------------------
1995 1994 1993
---- ---- ----
(IN MILLIONS OF
DOLLARS)
Interest paid (net of amounts capitalized):
Chrysler, excluding CFC $105 $195 $326
CFC 847 733 847
Interest capitalized 204 177 176
Income taxes paid, net of refunds received 944 910 535
CFC acquired $250 million and $300 million of asset-backed securities in
non-cash transactions relating to the securitization of retail receivables
during 1995 and 1994, respectively.
NOTE 16. FINANCIAL INSTRUMENTS
------------------------------
The estimated fair values of financial instruments have been determined by
Chrysler using available market information and the valuation methodologies
described below. However, considerable judgment is required in interpreting
market data to develop the estimates of fair value. Accordingly, the estimates
presented herein may not be indicative of the amounts that Chrysler could
realize in a current market exchange. The use of different assumptions or
valuation methodologies may have a material effect on the estimated fair value
amounts.
Amounts related to Chrysler's financial instruments were as follows:
[Enlarge/Download Table]
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------- -------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ------- -------- -------
(IN MILLIONS OF DOLLARS)
BALANCE SHEET FINANCIAL INSTRUMENTS
Marketable securities................................. $ 2,582 $ 2,583 $ 3,226 $ 3,218
Finance receivables and retained interests(1)......... 11,823 11,827 10,569 10,535
Debt.................................................. 14,368 15,331 13,326 13,752
Currency exchange agreements(2)....................... 175 200 220 241
-------------------------
(1) The carrying value of finance receivables and retained interests excludes
$1,800 million and $1,864 million of direct finance and leveraged leases
classified as finance receivables in the consolidated balance sheet at
December 31, 1995 and 1994, respectively.
(2) Currency exchange agreements are recorded on the consolidated balance sheet
as a net reduction to the carrying value of debt.
55
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16. FINANCIAL INSTRUMENTS -- CONTINUED
-------------------------------------------
[Enlarge/Download Table]
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------------- -------------------------
CONTRACT OR UNREALIZED CONTRACT OR UNREALIZED
NOTIONAL GAINS/ NOTIONAL GAINS/
AMOUNT (LOSSES) AMOUNT (LOSSES)
----------- ---------- ----------- ----------
(IN MILLIONS OF DOLLARS)
OTHER FINANCIAL INSTRUMENTS
Interest rate swaps
With unrealized gains......................... $ 750 $ 26 $ 101 $ 4
With unrealized losses........................ 1,935 (33) 676 (16)
Interest rate caps............................... -- -- 134 --
Forward interest rate contract................... -- -- 500 1
Currency forward contracts
With unrealized gains......................... 573 14 -- --
With unrealized losses........................ 885 (26) 326 (17)
Purchased currency options(1)
With unrealized gains......................... 328 23 -- --
With unrealized losses........................ 418 (10) 901 (21)
-------------------------
(1) Includes purchased currency options with a notional amount of $351 million
which have been effectively closed out with written currency options also
with a notional amount of $351 million.
The carrying values of cash and cash equivalents, accounts receivable and
accounts payable approximated fair values due to the short-term maturities of
these instruments.
The methods and assumptions used to estimate the fair values of other
financial instruments are summarized as follows:
Marketable securities
---------------------
The fair values of marketable securities were estimated using quoted market
prices.
Finance receivables and retained interests in sold receivables
--------------------------------------------------------------
The carrying value of variable-rate finance receivables was assumed to
approximate fair value since they are priced at current market rates. The fair
value of fixed-rate finance receivables was estimated by discounting expected
cash flows using rates at which loans of similar maturities would be made as of
the date of the consolidated balance sheet. The fair values of excess servicing
cash flows and other subordinated amounts due CFC arising from receivable sale
transactions were estimated by discounting expected cash flows.
Debt
----
The fair value of public debt was estimated using quoted market prices. The
fair value of other long-term debt was estimated by discounting future cash
flows using rates currently available for debt with similar terms and remaining
maturities.
56
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16. FINANCIAL INSTRUMENTS -- CONTINUED
-------------------------------------------
Currency exchange agreements
----------------------------
The fair values of currency exchange agreements were estimated by
discounting the expected cash flows using market exchange rates and relative
market interest rates over the remaining terms of the agreements. Currency
exchange agreements are more fully described in Notes 1 and 6.
Interest rate exchange agreements
---------------------------------
The fair values of interest rate swaps, interest rate caps and forward
interest rate contracts were estimated by discounting expected cash flows using
quoted market interest rates. Interest rate exchange agreements are more fully
described in Notes 1, 3 and 6.
Currency forward and option contracts
-------------------------------------
The fair values of currency forward and option contracts were estimated
based on quoted market prices for contracts of similar terms. Currency forward
and option contracts are more fully described in Note 1.
Although not a counterparty to certain derivative financial instruments
entered into between securitization trusts and third parties, CFC receives an
indirect beneficial interest from such instruments.
The fair value estimates presented herein were based on information
available as of the date of the consolidated balance sheet. Although management
is not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been revalued since the date of the
consolidated balance sheet and, therefore, current estimates of fair value may
differ from the amounts presented herein.
NOTE 17. INDUSTRY SEGMENT AND GEOGRAPHIC AREA DATA
--------------------------------------------------
INDUSTRY SEGMENT DATA
---------------------
Chrysler operates in two principal industry segments: Car and Truck and
Financial Services. The Car and Truck segment is comprised of the automotive
operations of Chrysler, which includes the research, design, manufacture,
assembly and sale of cars, trucks and related parts and accessories. Based on
assets, revenues and earnings, automotive operations represent the majority of
Chrysler's business activities. The Financial Services segment is comprised of
CFC, which is engaged principally in retail and lease financing for vehicles,
dealer inventory and other financing needs, dealer property and casualty
insurance, and dealership facility development and management. Chrysler also
participates in short-term vehicle rental activities through its Car Rental
Operations and engages in aircraft modification and the manufacture of
electronics products and systems through its Chrysler Technologies Corporation
subsidiary ("CTC"). The Car Rental Operations and CTC, each represent less than
10 percent of revenues, operating profits and identifiable assets, and have been
included in the Car and Truck segment. Chrysler's operations are conducted
primarily in North America including the United States, Canada and Mexico.
57
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
-------------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17. INDUSTRY SEGMENT AND GEOGRAPHIC AREA DATA -- CONTINUED
---------------------------------------------------------------
INDUSTRY SEGMENT DATA -- CONTINUED
----------------------------------
Information concerning operations by industry segment was as follows:
[Enlarge/Download Table]
CAR FINANCIAL
AND TRUCK SERVICES CONSOLIDATED
--------- --------- ------------
(IN MILLIONS OF DOLLARS)
DECEMBER 31, 1995
--------------------
Revenues:
Unaffiliated customers...................................... $50,966 $ 2,229 $ 53,195
Intersegment................................................ 13 210 --
------ ------ ------
Total revenues................................................ 50,979 2,439 53,195
Operating earnings............................................ 3,191 522 3,539
Interest expense.............................................. 275 -- 101
Equity in earnings of unconsolidated subsidiaries and
affiliates.................................................. 11 -- 11
Earnings before income taxes.................................. 2,927 522 3,449
Depreciation/amortization..................................... 2,139 81 2,220
Capital expenditures.......................................... 3,774 335 4,109
Identifiable assets........................................... 38,358 17,835 53,756
Liabilities................................................... 30,701 14,533 42,797
DECEMBER 31, 1994
-----------------
Revenues:
Unaffiliated customers...................................... $50,381 $ 1,854 $ 52,235
Intersegment................................................ 7 141 --
------ ------ ------
Total revenues................................................ 50,388 1,995 52,235
Operating earnings............................................ 5,829 315 6,023
Interest expense.............................................. 311 -- 190
Equity in loss of unconsolidated subsidiaries and
affiliates.................................................. 3 -- 3
Earnings before income taxes.................................. 5,515 315 5,830
Depreciation/amortization..................................... 1,880 75 1,955
Capital expenditures.......................................... 3,796 228 4,024
Identifiable assets........................................... 36,001 16,648 49,539
Liabilities................................................... 28,580 13,375 38,845
DECEMBER 31, 1993
-----------------
Revenues:
Unaffiliated customers...................................... $41,681 $ 1,919 $ 43,600
Intersegment................................................ 34 120 --
------ ------ ------
Total revenues................................................ 41,715 2,039 43,600
Operating earnings............................................ 4,050 267 4,200
Interest expense.............................................. 445 -- 328
Equity in loss of unconsolidated subsidiaries and
affiliates.................................................. 34 -- 34
Earnings before income taxes.................................. 3,571 267 3,838
Depreciation/amortization..................................... 1,530 110 1,640
Capital expenditures.......................................... 2,977 18 2,995
Identifiable assets........................................... 32,492 14,251 43,679
Liabilities................................................... 28,787 11,120 36,843
Interest expense of the Financial Services segment has been netted against
operating earnings, which is consistent with industry practice. Certain line
items do not add to the consolidated amounts due to the elimination of
intersegment transactions.
58
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17. INDUSTRY SEGMENT AND GEOGRAPHIC AREA DATA -- CONTINUED
---------------------------------------------------------------
GEOGRAPHIC AREA DATA
--------------------
Information concerning operations by principal geographic area was as
follows:
[Enlarge/Download Table]
UNITED ADJMTS.
STATES CANADA OTHER AND ELIMS. CONSOLIDATED
------- ------- ------ ---------- ------------
(IN MILLIONS OF DOLLARS)
DECEMBER 31, 1995
-----------------
Revenues:
Unaffiliated customers................ $47,289 $ 3,834 $2,072 $ -- $ 53,195
Transfers between geographic areas.... 6,888 5,913 2,919 (15,720) --
------- ------- ------ -------- -------
Total revenues.......................... 54,177 9,747 4,991 (15,720) 53,195
Earnings before income taxes............ 3,179 78 192 -- 3,449
Identifiable assets..................... 46,794 4,531 2,431 -- 53,756
Net assets.............................. 8,411 1,310 1,238 -- 10,959
DECEMBER 31, 1994
-----------------
Revenues:
Unaffiliated customers................ $45,655 $ 3,888 $2,692 $ -- $ 52,235
Transfers between geographic areas.... 7,452 7,301 2,385 (17,138) --
------- ------- ------ -------- -------
Total revenues.......................... 53,107 11,189 5,077 (17,138) 52,235
Earnings before income taxes............ 5,239 208 383 -- 5,830
Identifiable assets..................... 42,752 3,977 2,810 -- 49,539
DECEMBER 31, 1993
-----------------
Revenues:
Unaffiliated customers................ $37,847 $ 3,349 $2,404 $ -- $ 43,600
Transfers between geographic areas.... 6,571 6,807 1,934 (15,312) --
------- ------- ------ -------- -------
Total revenues.......................... 44,418 10,156 4,338 (15,312) 43,600
Earnings before income taxes............ 3,191 329 318 -- 3,838
Identifiable assets..................... 37,474 3,750 2,455 -- 43,679
Transfers between geographic areas are based on prices negotiated between
the buying and selling locations.
59
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
[Download Table]
----------------------------------------------------------------
Suite 900 Telephone: (313) 396-3000
600 Renaissance Center
LOGO Detroit, Michigan 48243-1704
INDEPENDENT AUDITORS' REPORT
Shareholders and Board of Directors
Chrysler Corporation
Auburn Hills, Michigan
We have audited the accompanying consolidated balance sheet of Chrysler
Corporation and consolidated subsidiaries as of December 31, 1995 and 1994, and
the related consolidated statements of earnings and cash flows for each of the
three years in the period ended December 31, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Chrysler Corporation and
consolidated subsidiaries at December 31, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
As discussed in the notes to the financial statements, in 1995 the Company
changed its method of accounting for sales of vehicles for which it has
guaranteed a minimum resale value.
DELOITTE & TOUCHE LLP
January 18, 1996
LOGO
60
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
MANAGEMENT REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTING
Chrysler's management is responsible for preparing the financial statements
and other financial information in this Annual Report. This responsibility
includes maintaining the integrity and objectivity of financial data and the
presentation of Chrysler's results of operations and financial position in
accordance with generally accepted accounting principles. The financial
statements include amounts that are based on management's best estimates and
judgments.
Chrysler's financial statements have been audited by Deloitte & Touche LLP,
independent auditors. Their audits were conducted in accordance with generally
accepted auditing standards and included consideration of the internal control
system and tests of transactions as part of planning and performing their
audits.
Chrysler maintains a system of internal controls that provides reasonable
assurance that its records reflect its transactions in all material respects and
that significant misuse or loss of assets will be prevented. Management believes
the system of internal controls is adequate to accomplish these objectives on a
continuous basis. Chrysler maintains a strong internal auditing program that
independently assesses the effectiveness of the internal controls and recommends
possible improvements. Management considers the recommendations of the General
Auditor and Deloitte & Touche LLP concerning the system of internal controls and
takes appropriate actions to respond to these recommendations.
The Board of Directors, acting through its Audit Committee composed solely
of nonemployee directors, is responsible for determining that management
fulfills its responsibilities in the preparation of financial statements and the
maintenance of internal controls. In fulfilling its responsibility, the Audit
Committee recommends independent auditors to the Board of Directors for
appointment by the shareholders. The Audit Committee also reviews the
consolidated financial statements and adequacy of internal controls. The Audit
Committee meets regularly with management, the General Auditor and the
independent auditors. Both the independent auditors and the General Auditor have
full and free access to the Audit Committee, without management representatives
present, to discuss the scope and results of their audits and their views on the
adequacy of internal controls and the quality of financial reporting.
It is the business philosophy of Chrysler to obey the law and to require
that its employees conduct their activities according to the highest standards
of business ethics. Management reinforces this philosophy by numerous actions,
including issuing a Code of Ethical Behavior and maintaining a Business
Practices Committee and a Business Practices Office to support compliance with
Chrysler's policies.
[Enlarge/Download Table]
R. J. Eaton G. C. Valade
-------------------------------------------- --------------------------------------------
R. J. EATON G. C. VALADE
Chairman of the Board and Executive Vice President and
Chief Executive Officer Chief Financial Officer
61
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
SUPPLEMENTAL INFORMATION
------------------------
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA
(unaudited)
[Enlarge/Download Table]
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
----------------- ----------------- ----------------- -----------------
1995(1) 1994 1995(2) 1994 1995(2) 1994 1995 1994(3)
------- ------- ------- ------- ------- ------- ------- -------
(IN MILLIONS OF DOLLARS EXCEPT PER-COMMON-SHARE DATA)
Sales of manufactured products..... $12,829 $12,551 $11,653 $12,369 $11,184 $10,938 $13,935 $13,505
Finance, insurance & other
revenues......................... 784 673 863 715 825 724 1,122 760
------- ------- ------- ------- ------- ------- ------- -------
Total revenues................. 13,613 13,224 12,516 13,084 12,009 11,662 15,057 14,265
Total expenses................. 12,643 11,681 12,278 11,491 11,427 10,599 13,398 12,634
------- ------- ------- ------- ------- ------- ------- -------
Earnings before income taxes and
cumulative effect of changes in
accounting principles.......... 970 1,543 238 1,593 582 1,063 1,659 1,631
Provision for income taxes......... 378 605 103 637 228 412 619 463
------- ------- ------- ------- ------- ------- ------- -------
Earnings before cumulative effect
of changes in accounting
principles....................... 592 938 135 956 354 651 1,040 1,168
Cumulative effect of changes in
accounting principles............ (96) -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Net earnings................... $ 496 $ 938 $ 135 $ 956 $ 354 $ 651 $ 1,040 $ 1,168
Preferred stock dividends.......... 14 20 3 20 2 20 2 20
------- ------- ------- ------- ------- ------- ------- -------
Net earnings on common stock... $ 482 $ 918 $ 132 $ 936 $ 352 $ 631 $ 1,038 $ 1,148
======= ======= ======= ======= ======= ======= ======= =======
PRIMARY EARNINGS PER COMMON SHARE:
Earnings before cumulative effect
of changes in accounting
principles....................... $ 1.59 $ 2.55 $ 0.35 $ 2.61 $ 0.91 $ 1.76 $ 2.70 $ 3.20
Cumulative effect of changes in
accounting principles............ (0.26) -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Net earnings per common share...... $ 1.33 $ 2.55 $ 0.35 $ 2.61 $ 0.91 $ 1.76 $ 2.70 $ 3.20
======= ======= ======= ======= ======= ======= ======= =======
FULLY DILUTED EARNINGS PER COMMON
SHARE:
Earnings before cumulative effect
of changes in accounting
principles....................... $ 1.46 $ 2.30 $ 0.34 $ 2.35 $ 0.90 $ 1.60 $ 2.67 $ 2.86
Cumulative effect of changes in
accounting principles............ (0.23) -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Net earnings per common share...... $ 1.23 $ 2.30 $ 0.34 $ 2.35 $ 0.90 $ 1.60 $ 2.67 $ 2.86
======= ======= ======= ======= ======= ======= ======= =======
-------------------------
(1) Previously reported results for the first quarter of 1995 have been restated
to include a $96 million charge for the cumulative effect of a change in
accounting principle related to the consensus reached on Emerging Issues
Task Force ("EITF") Issue 95-1, "Revenue Recognition on Sales with a
Guaranteed Minimum Resale Value." The ongoing effect of this accounting
change was not material to Chrysler's 1995 quarterly results. First quarter
results also included a $115 million pretax charge for a voluntary minivan
owner service action.
(2) Results for the second quarter of 1995 included a $232 million pretax
provision for costs associated with production changes at Chrysler's Newark
assembly plant. The provision includes the recognition of supplemental
unemployment benefits, job security benefits and other related employee
costs, and the write-down of certain equipment and tooling. During the third
quarter of 1995, this provision was increased by $31 million to $263
million, primarily reflecting changes in the estimate for job security
benefit costs.
(3) Earnings for the fourth quarter of 1994 included favorable adjustments to
the provision for income taxes aggregating $132 million. These adjustments
related to: (1) the recognition of tax credits related to expenditures in
prior years for qualifying research and development activities, in
accordance with an Internal Revenue Service settlement which was based on
U.S. Department of Treasury income tax regulations issued in 1994, and (2)
the reversal of valuation allowances related to tax benefits associated with
net operating loss carryforwards.
62
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
SUPPLEMENTAL INFORMATION
------------------------
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
STATEMENT OF EARNINGS
(unaudited)
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31
---------------------------------
1995 1994 1993
------- ------- -------
(IN MILLIONS OF DOLLARS)
Sales of manufactured products.............................. $49,747 $49,534 $41,247
Equity in earnings of unconsolidated subsidiaries and
affiliates................................................ 535 237 187
Interest income and other revenues.......................... 688 323 220
------- ------- -------
TOTAL REVENUES 50,970 50,094 41,654
------- ------- -------
Costs, other than items below............................... 40,653 37,485 32,066
Depreciation of property and equipment...................... 1,012 912 853
Amortization of special tools............................... 1,120 961 671
Selling and administrative expenses......................... 3,408 3,146 2,619
Pension expense............................................. 380 704 749
Nonpension postretirement benefit expense................... 752 828 762
Interest expense............................................ 196 228 361
Gains on sales of automotive assets and investments......... -- -- (265)
------- ------- -------
TOTAL EXPENSES 47,521 44,264 37,816
------- ------- -------
EARNINGS BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 3,449 5,830 3,838
Provision for income taxes.................................. 1,328 2,117 1,423
------- ------- -------
EARNINGS BEFORE CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES 2,121 3,713 2,415
Cumulative effect of changes in accounting principles....... (96) -- (4,966)
------- ------- -------
NET EARNINGS (LOSS) $ 2,025 $ 3,713 $(2,551)
======= ======= =======
This Supplemental Information, "Chrysler (with CFC and Car Rental Operations on
an Equity Basis)," reflects the results of operations of Chrysler with its
investments in Chrysler Financial Corporation ("CFC") and its investments in
short-term vehicle rental subsidiaries (the "Car Rental Operations") accounted
for on an equity basis rather than as consolidated subsidiaries. This
Supplemental Information does not purport to present results of operations in
accordance with generally accepted accounting principles because it does not
comply with Statement of Financial Accounting Standards ("SFAS") No. 94,
"Consolidation of All Majority-Owned Subsidiaries." Because the operations of
CFC and the Car Rental Operations are different in nature than Chrysler's
manufacturing operations, management believes that this disaggregated financial
data enhances an understanding of the consolidated financial statements.
63
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
SUPPLEMENTAL INFORMATION
------------------------
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
BALANCE SHEET
(unaudited)
[Enlarge/Download Table]
DECEMBER 31
--------------------
1995 1994
------- -------
(IN MILLIONS OF
DOLLARS)
ASSETS:
Cash and cash equivalents.............................................. $ 4,980 $ 4,972
Marketable securities.................................................. 1,908 2,643
Accounts receivable -- trade and other (net)........................... 816 459
Inventories............................................................ 3,762 2,645
Prepaid taxes, pension and other expenses.............................. 948 1,272
Property and equipment................................................. 11,717 10,347
Special tools.......................................................... 3,566 3,643
Investments in and advances to unconsolidated subsidiaries and
affiliated companies................................................. 3,755 3,642
Intangible assets...................................................... 1,718 1,781
Deferred tax assets.................................................... 1,978 1,951
Other assets........................................................... 5,327 4,722
------- -------
TOTAL ASSETS $40,475 $38,077
======= =======
LIABILITIES:
Accounts payable....................................................... $ 7,654 $ 7,403
Short-term debt........................................................ 140 140
Payments due within one year on long-term debt......................... 48 187
Accrued liabilities and expenses....................................... 6,741 5,333
Long-term debt......................................................... 1,763 2,097
Accrued noncurrent employee benefits................................... 9,156 8,547
Other noncurrent liabilities........................................... 4,014 3,676
------- -------
TOTAL LIABILITIES 29,516 27,383
------- -------
SHAREHOLDERS' EQUITY: (shares in millions)
Preferred stock -- $1 per share par value; authorized 20.0 shares;
Series A Convertible Preferred Stock; issued and outstanding: 1995
and 1994 -- 0.1 and 1.7 shares, respectively (aggregate liquidation
preference $68 million and $863 million, respectively)............... * 2
Common stock -- $1 per share par value; authorized 1,000.0 shares;
issued: 1995 and 1994 -- 408.2 and 364.1 shares, respectively........ 408 364
Additional paid-in capital............................................. 5,506 5,536
Retained earnings...................................................... 6,280 5,006
Treasury stock -- at cost: 1995 -- 29.9 shares; 1994 -- 9.0 shares..... (1,235) (214)
------- -------
TOTAL SHAREHOLDERS' EQUITY 10,959 10,694
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $40,475 $38,077
======= =======
-------------------------
* Less than $1 million
This Supplemental Information, "Chrysler (with CFC and Car Rental
Operations on an Equity Basis)," reflects the financial position of Chrysler
with its investments in CFC and the Car Rental Operations accounted for on an
equity basis rather than as consolidated subsidiaries. This Supplemental
Information does not purport to present financial position in accordance with
generally accepted accounting principles because it does not comply with SFAS
No. 94, "Consolidation of All Majority-Owned Subsidiaries." The financial
covenant contained in Chrysler's revolving credit facility is based on this
Supplemental Information. In addition, because the operations of CFC and the Car
Rental Operations are different in nature than Chrysler's manufacturing
operations, management believes that this disaggregated financial data enhances
an understanding of the consolidated financial statements.
64
ITEM 8. FINANCIAL STATEMENTS AND PART II -- CONTINUED
------------------------
SUPPLEMENTARY DATA -- CONTINUED
-------------------------------
SUPPLEMENTAL INFORMATION
------------------------
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
STATEMENT OF CASH FLOWS
(unaudited)
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31
-----------------------------
1995 1994 1993
------- ------- -------
(IN MILLIONS OF DOLLARS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss).............................................. $ 2,025 $ 3,713 $(2,551)
Adjustments to reconcile to net cash provided by operating
activities:
Depreciation and amortization............................... 2,132 1,873 1,524
Equity in earnings of unconsolidated subsidiaries and
affiliates................................................ (535) (237) (187)
Deferred income taxes....................................... 186 1,065 803
Cumulative effect of changes in accounting principles....... 96 -- 4,966
Gains on sales of automotive assets and investments......... -- -- (265)
Change in accounts receivable............................... (358) 345 131
Change in inventories....................................... (460) (201) (171)
Change in prepaid expenses and other assets................. (631) (2,095) (1,587)
Change in accounts payable and accrued and other
liabilities............................................... 2,094 2,856 365
Dividends received from CFC................................. 335 40 --
Other....................................................... 333 175 224
------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,217 7,534 3,252
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities............................. (2,971) (3,412) (3,149)
Sales and maturities of marketable securities.................. 3,736 1,463 3,401
Proceeds from sales of automotive assets and investments....... -- 62 461
Expenditures for property and equipment........................ (2,712) (2,611) (1,738)
Expenditures for special tools................................. (1,049) (1,177) (1,234)
Other.......................................................... (9) 77 (13)
------- ------- -------
NET CASH USED IN INVESTING ACTIVITIES (3,005) (5,598) (2,272)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in short-term debt (less than 90-day maturities)........ -- 40 14
Proceeds from long-term borrowings............................. -- 2 23
Payments on long-term borrowings............................... (485) (412) (1,021)
Proceeds from issuance of common stock, net of expenses........ -- -- 1,952
Repurchases of common stock.................................... (1,047) -- --
Dividends paid................................................. (710) (399) (281)
Other.......................................................... 38 28 101
------- ------- -------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (2,204) (741) 788
------- ------- -------
Change in cash and cash equivalents.............................. 8 1,195 1,768
Cash and cash equivalents at beginning of year................... 4,972 3,777 2,009
------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF YEAR......................... $ 4,980 $ 4,972 $ 3,777
======= ======= =======
This Supplemental Information, "Chrysler (with CFC and Car Rental
Operations on an Equity Basis)," reflects the cash flows of Chrysler with its
investments in CFC and the Car Rental Operations accounted for on an equity
basis rather than as consolidated subsidiaries. This Supplemental Information
does not purport to present cash flows in accordance with generally accepted
accounting principles because it does not comply with SFAS No. 94,
"Consolidation of All Majority-Owned Subsidiaries." Because the operations of
CFC and the Car Rental Operations are different in nature than Chrysler's
manufacturing operations, management believes that this disaggregated financial
data enhances an understanding of the consolidated financial statements.
65
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS PART II -- CONTINUED
---------------------------------------------
ON ACCOUNTING AND FINANCIAL DISCLOSURE
--------------------------------------
None.
PART III
--------
Items 10, 11, 12, and 13
Information required by Part III (Items 10, 11, 12, and 13) of this Form
10-K is incorporated by reference from Chrysler Corporation's definitive Proxy
Statement for its 1995 Annual Meeting of Stockholders, which will be filed with
the Securities and Exchange Commission, pursuant to Regulation 14A, not later
than 120 days after the end of the fiscal year, all of which information is
hereby incorporated by reference in, and made part of, this Form 10-K, except
that the information required by Item 10 with respect to executive officers of
the Registrant is included in Part I of this report.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
----------------------------------------
AND REPORTS ON FORM 8-K
-----------------------
(a) The following documents are filed as part of this report:
1. Financial Statements
Financial statements filed as part of this Form 10-K are listed under
Part II, Item 8.
2. Financial Statement Schedules
No schedules are included because they are not required under the
instructions contained in Regulation S-X or because the information called
for is shown in the financial statements and notes thereto.
3. Exhibits:
[Download Table]
3-A-1 Copy of Certificate of Incorporation of Chrysler Corporation, as amended
and restated and in effect on May 21, 1987. Filed as Exhibit 3-A-1 to
Chrysler Corporation Annual Report on Form 10-K for the year ended December
31, 1994, and incorporated herein by reference.
3-A-2 Copy of Certificate of Amendment of Certificate of Incorporation of
Chrysler Corporation dated May 19, 1994, as in effect on May 20, 1994.
Filed as Exhibit 3-A-2 to Chrysler Corporation Annual Report on Form 10-K
for the year ended December 31, 1994 and incorporated herein by reference.
3-B Copy of By-Laws of Chrysler Corporation, as amended as of June 10, 1993.
Filed as Exhibit 3-B to Chrysler Corporation Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1993, and incorporated herein by
reference.
3-C Copy of Certificate of Designation for Chrysler Corporation Junior
Participating Cumulative Preferred Stock. Filed as Exhibit 3-C to Chrysler
Corporation Annual Report on Form 10-K for the year ended December 31, 1994
and incorporated herein by reference.
3-D Copy of Certificate of Designation, Preferences and Rights of Series A
Convertible Preferred Stock. Filed as Exhibit 3-D to Chrysler Corporation
Annual Report on Form 10-K for the year ended December 31, 1994 and
incorporated herein by reference.
66
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, PART IV -- CONTINUED
----------------------------------------
AND REPORTS ON FORM 8-K -- CONTINUED
------------------------------------
[Download Table]
4-A Certificate of Incorporation and By-Laws of Chrysler Corporation. See
Exhibits 3-A through 3-D above.
4-B-1 Copy of Certificate of Ownership and Merger merging Chrysler Motors
Corporation into Chrysler Corporation, effective on December 31, 1989.
Filed as Exhibit 4-B-1 to Chrysler Corporation Annual Report on Form 10-K
for the year ended December 31, 1989, and incorporated herein by reference.
4-B-2 Copy of Agreement of Merger and Plan of Reorganization, dated as of March
6, 1986, among Chrysler Corporation, Chrysler Holding Corporation (now
Chrysler Corporation) and New Chrysler, Inc., annexed as Exhibit A to
Registration Statement No. 33-4537 on Form S-4 of Chrysler Holding
Corporation (now Chrysler Corporation), and incorporated herein by
reference.
4-C-1 Copy of Rights Agreement, dated as of February 4, 1988, and amended and
restated as of December 14, 1990, between Chrysler Corporation and First
Chicago Trust Company of New York (formerly Morgan Shareholder Services
Trust Company), as Rights Agent, relating to Rights to purchase Chrysler
Corporation Junior Participating Cumulative Preferred Stock. Filed as
Exhibit 1 to Chrysler Corporation Current Report on Form 8-K, dated
December 14, 1990, and incorporated herein by reference.
4-C-2 Amendment No. 1, dated as of December 1, 1994, to the Rights Agreement,
dated as of February 4, 1988, and amended and restated as of December 14,
1990, between Chrysler Corporation and First Chicago Trust Company of New
York (formerly known as Morgan Shareholder Services Trust Company), as
Rights Agent. Filed as Exhibit 1 to Chrysler Corporation Current Report on
Form 8-K, dated December 1, 1994, and incorporated herein by reference.
4-D-1 Conformed copy of Indenture, dated as of July 15, 1987, between Chrysler
Corporation and Manufacturers Hanover Trust Company, as Trustee, United
States Trust Company of New York, as successor Trustee, relating to Debt
Securities, Appendix B thereto relating to 10.95% Debentures Due 2017 and
Appendix C thereto relating to 10.40% Notes Due 1999. Filed as Exhibit
4-D-1 to Chrysler Corporation Annual Report on Form 10-K for the year ended
December 31, 1987, and incorporated herein by reference.
4-D-2 Conformed copy of Indenture, dated as of March 1, 1985, between Chrysler
Corporation and Manufacturers Hanover Trust Company, as Trustee, United
States Trust Company of New York, as successor Trustee, relating to Debt
Securities and Appendix B thereto relating to 13% Debentures Due 1997.
Filed as Exhibit 4-B to Chrysler Corporation Annual Report on Form 10-K for
the year ended December 31, 1985, and incorporated herein by reference.
4-D-3 Form of Supplemental Indenture, dated as of May 30, 1986, between Chrysler
Holding Corporation (now Chrysler Corporation), Chrysler Corporation and
Manufacturers Hanover Trust Company, as Trustee, United States Trust
Company of New York, as successor Trustee, relating to Debt Securities.
Filed as Exhibit 4-E-2 to the Post-Effective Amendment No. 1 to
Registration Statement No. 33-4537 on Form S-4 of Chrysler Holding
Corporation (now Chrysler Corporation), and incorporated herein by
reference.
4-D-4 Copy of Supplemental Indenture, dated as of December 31, 1989, between
Chrysler Corporation and Manufacturers Hanover Trust Company, as Trustee,
United States Trust Company of New York, as successor Trustee, relating to
Debt Securities. Filed as Exhibit 4-D-4 to Chrysler Corporation Annual
Report on Form 10-K for the year ended December 31, 1989, and incorporated
herein by reference.
67
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, PART IV -- CONTINUED
----------------------------------------
AND REPORTS ON FORM 8-K -- CONTINUED
------------------------------------
[Download Table]
4-D-5 Conformed copy of Third Supplemental Indenture, dated as of May 1, 1990,
between Chrysler Corporation and Manufacturers Hanover Trust Company, as
Trustee, United States Trust Company of New York, as successor Trustee,
relating to Debt Securities and Appendix D to Indenture dated as of March
1, 1985 between Chrysler Corporation and Manufacturers Hanover Trust
Company relating to Debentures Due 2020. Filed as Exhibit 4-D-5 to Chrysler
Corporation Annual Report on Form 10-K for the year ended December 31,
1990, and incorporated herein by reference.
4-D-6 Conformed copy of Trust Agreement, dated as of May 1, 1990, between
Chrysler Corporation and Manufacturers Hanover Bank (Delaware), Trustee,
relating to the Auburn Hills Trust. Filed as Exhibit 4-D-6 to Chrysler
Corporation Annual Report on Form 10-K for the year ended December 31,
1990, and incorporated herein by reference.
4-E Copy of $1,675,000,000 Revolving Credit Agreement, dated as of July 29,
1994, among Chrysler Corporation, the several Banks party to the Agreement
and Chemical Bank, as Agent for the Banks. Filed as Exhibit 4E to the
Chrysler Corporation Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994 and incorporated herein by reference.
4-F-1 Copy of Indenture, dated as of June 15, 1984, between Chrysler Financial
Corporation and Manufacturers Hanover Trust Company, as Trustee, United
States Trust Company of New York, as successor Trustee, related to Senior
Debt Securities of Chrysler Financial Corporation. Filed as Exhibit (1) to
the Current Report of Chrysler Financial Corporation on Form 8-K, dated
June 26, 1984, and incorporated herein by reference.
4-F-2 Copy of Supplemental Indenture, dated as of August 24, 1995, between
Chrysler Financial Corporation and the United States Trust Company of New
York, as Trustee, to the Indenture, dated as of June 15, 1984, related to
Senior Debt Securities of Chrysler Financial Corporation. Filed as Exhibit
4-K to the Current Report of Chrysler Financial Corporation on Form 8-K,
dated August 24, 1995, and incorporated herein by reference.
4-F-3 Copy of Indenture, dated as of September 15, 1986, between Chrysler
Financial Corporation and Manufacturers Hanover Trust Company, Trustee,
United States Trust Company of New York, as Successor Trustee, related to
Chrysler Financial Corporation Senior Debt Securities. Filed as Exhibit 4-E
to the Quarterly Report of Chrysler Financial Corporation on Form 10-Q for
the quarter ended September 30, 1986, and incorporated herein by reference.
4-F-4 Copy of Amended and Restated Indenture, dated as of September 15, 1986,
between Chrysler Financial Corporation and Manufacturers Hanover Trust
Company, Trustee, United States Trust Company of New York, as Successor
Trustee, related to Chrysler Financial Corporation Senior Debt Securities.
Filed as Exhibit 4-H to the Quarterly Report of Chrysler Financial
Corporation on Form 10-Q for the quarter ended June 30, 1987, and
incorporated herein by reference.
4-F-5 Copy of Indenture, dated as of February 15, 1988, between Chrysler
Financial Corporation and Manufacturers Hanover Trust Company, Trustee,
United States Trust Company of New York, as Successor Trustee, related to
Chrysler Financial Corporation Senior Debt Securities. Filed as Exhibit 4-A
to Registration No. 33-23479 of Chrysler Financial Corporation, and
incorporated herein by reference.
68
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, PART IV -- CONTINUED
----------------------------------------
AND REPORTS ON FORM 8-K -- CONTINUED
------------------------------------
[Download Table]
4-F-6 Copy of First Supplemental Indenture, dated as of March 1, 1988, between
Chrysler Financial Corporation and Manufacturers Hanover Trust Company,
Trustee, United States Trust Company of New York, as successor Trustee, to
the Indenture, dated as of February 15, 1988, between such parties, related
to Chrysler Financial Corporation Senior Debt Securities. Filed as Exhibit
4-L to the Annual Report of Chrysler Financial Corporation on Form 10-K for
the year ended December 31, 1987, and incorporated herein by reference.
4-F-7 Copy of the Second Supplemental Indenture, dated as of September 7, 1990,
between Chrysler Financial Corporation and Manufacturers Hanover Trust
Company, Trustee, United States Trust Company of New York, as Successor
Trustee, to the Indenture, dated as of February 15, 1988, between such
parties, related to Chrysler Financial Corporation Senior Debt Securities.
Filed as Exhibit 4-M to the Quarterly Report of Chrysler Financial
Corporation on Form 10-Q for the quarter ended September 30, 1990, and
incorporated herein by reference.
4-F-8 Copy of Third Supplemental Indenture, dated as of May 4, 1992, between
Chrysler Financial Corporation and United States Trust Company of New York,
as Successor Trustee, to the Indenture, dated as of February 15, 1988
between such parties, relating to Chrysler Financial Corporation Senior
Debt Securities. Filed as Exhibit 4-N to the Quarterly Report of Chrysler
Financial Corporation on Form 10-Q for the quarter ended June 30, 1992, and
incorporated herein by reference.
4-G-1 Copy of Indenture, dated as of February 15, 1988, between Chrysler
Financial Corporation and IBJ Schroder Bank & Trust Company, Trustee,
related to Chrysler Financial Corporation Subordinated Debt Securities.
Filed as Exhibit 4-B to Registration No. 33-23479 of Chrysler Financial
Corporation, and incorporated herein by reference.
4-G-2 Copy of First Supplemental Indenture, dated as of September 1, 1989,
between Chrysler Financial Corporation and IBJ Schroder Bank & Trust
Company, Trustee, to the Indenture, dated as of February 15, 1988, between
such parties, related to Chrysler Financial Corporation Subordinated Debt
Securities. Filed as Exhibit 4-N to the Current Report of Chrysler
Financial Corporation on Form 8-K dated September 1, 1989 and filed
September 13, 1989, and incorporated herein by reference.
4-H-1 Copy of Indenture, dated as of February 15, 1988, between Chrysler
Financial Corporation and Irving Trust Company, Trustee, related to
Chrysler Financial Corporation Junior Subordinated Debt Securities. Filed
as Exhibit 4-C to Registration No. 33-23479 of Chrysler Financial
Corporation, and incorporated herein by reference.
4-H-2 Copy of First Supplemental Indenture dated as of September 1, 1989, between
Chrysler Financial Corporation and Irving Trust Company, Trustee, to the
Indenture, dated as of February 15, 1988, between such parties, related to
Chrysler Financial Corporation Junior Subordinated Debt Securities. Filed
as Exhibit 4-O to the Current Report of Chrysler Financial Corporation on
Form 8-K dated September 1, 1989 and filed on September 13, 1989, and
incorporated herein by reference.
10-A-1 Copy of Chrysler Corporation Stock Option Plan, as amended and in effect on
and after December 8, 1983 and before May 14, 1986, assumed by Chrysler
Corporation (formerly Chrysler Holding Corporation). Filed as Exhibit
10-D-8 to Chrysler Corporation Annual Report on Form 10-K for the year
ended December 31, 1983, and incorporated herein by reference.
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10-A-2 Copy of Chrysler Corporation Stock Option Plan, as amended and in effect on
and after May 14, 1986 and before November 5, 1987, assumed by Chrysler
Corporation (formerly Chrysler Holding Corporation). Filed as Exhibit
10-A-8 to Chrysler Corporation Annual Report on Form 10-K for the year
ended December 31, 1986, and incorporated herein by reference.
10-A-3 Copy of Chrysler Corporation Stock Option Plan, as amended and in effect on
and after November 5, 1987 and before February 4, 1988. Filed as Exhibit
10-A-8 to Chrysler Corporation Annual Report on Form 10-K for the year
ended December 31, 1987, and incorporated herein by reference.
10-A-4 Copy of Chrysler Corporation Stock Option Plan, as amended and in effect on
and after February 4, 1988 and before June 7, 1990. Filed as Exhibit 10-A-9
to Chrysler Corporation Annual Report on Form 10-K for the year ended
December 31, 1987, and incorporated herein by reference.
10-A-5 Copy of Chrysler Corporation Stock Option Plan, as amended and in effect on
and after June 7, 1990. Filed as Exhibit 10-A-10 to Chrysler Corporation
Annual Report on Form 10-K for the year ended December 31, 1990 and
incorporated herein by reference.
10-A-6 Copy of Chrysler Corporation Stock Option Plan, as amended through December
2, 1993. Filed as Exhibit 10-A-6 to the Chrysler Corporation Annual Report
on Form 10-K for the year ended December 31, 1993 and incorporated herein
by reference.
10-A-7 Copy of American Motors Corporation 1980 Stock Option Plan as in effect on
August 5, 1987. Filed as Exhibit 28-B to Post-Effective Amendment No. 1 on
Form S-8 to Registration Statement No. 33-15544 on Form S-4 of Chrysler
Corporation, and incorporated herein by reference.
10-A-8 Copy of Chrysler Corporation 1991 Stock Compensation Plan, as in effect on
and after May 16, 1991 and before December 2, 1993. Filed as Exhibit
10-A-32 to the Chrysler Corporation Annual Report on Form 10-K for the year
ended December 31, 1991, and incorporated herein by reference.
10-A-9 Copy of Chrysler Corporation 1991 Stock Compensation Plan, as amended and
in effect on and after December 2, 1993 and before May 19, 1994. Filed as
Exhibit 10-A-9 to the Chrysler Corporation Annual Report on Form 10-K for
the year ended December 31, 1993 and incorporated herein by reference.
10-A-10 Copy of Chrysler Corporation 1991 Stock Compensation Plan, as amended and
in effect on and after May 19, 1994. Filed as Exhibit 10-A-10 to Chrysler
Corporation Annual Report on Form 10-K for the year ended December 31, 1994
and incorporated herein by reference.
10-A-11 Copy of Chrysler Corporation 1991 Stock Compensation Plan, as amended and
in effect on and after May 31, 1995. Filed as Exhibit 2 to Chrysler
Corporation Solicitation/Recommendation Statement on Schedule 14D-9 dated
July 6, 1995 and incorporated herein by reference.
10-B-1 Copy of Chrysler Corporation Incentive Compensation Plan, as amended and in
effect on and after May 31, 1995. Filed as Exhibit 10-B-1 to Chrysler
Corporation Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1995 and incorporated herein by reference.
10-B-2 Copy of Chrysler Corporation Long-Term Performance Plan, as amended and in
effect on and after May 19, 1994. Filed as Exhibit 10-B-2 to Chrysler
Corporation Annual Report on Form 10-K for the year ended December 31, 1994
and incorporated herein by reference.
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AND REPORTS ON FORM 8-K -- CONTINUED
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10-B-3 Copy of Chrysler Supplemental Executive Retirement Plan, as amended through
May 31, 1995. Filed as Exhibit 17 to Chrysler Corporation
Solicitation/Recommendation Statement on Schedule 14D-9 dated July 6, 1995
and incorporated herein by reference.
10-B-4 Copy of Chrysler Corporation Discretionary Incentive Compensation Plan as
in effect on and after May 31, 1995. Filed as Exhibit 10-B-4 to Chrysler
Corporation Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1995 and incorporated herein by reference.
10-B-5 Copy of Chrysler Corporation Long-Term Incentive Plan, as amended and in
effect on and after May 31, 1995. Filed as Exhibit 10-B-5 to Chrysler
Corporation Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1995 and incorporated herein by reference.
10-C-1 Copy of agreement, dated July 12, 1990, between Chrysler Corporation and
Lee A. Iacocca. Filed as Exhibit 10-C-5 to Chrysler Corporation Annual
Report on Form 10-K for the year ended December 31, 1990 and incorporated
herein by reference.
10-C-2 Copy of agreement, dated June 22, 1992 between Chrysler Corporation and Lee
A. Iacocca, amending agreement dated July 12, 1990, between Chrysler
Corporation and Lee A. Iacocca. Filed as Exhibit 10-C-6 to Chrysler
Corporation Annual Report on Form 10-K for the year ended December 31, 1992
and incorporated herein by reference.
10-C-3 Copy of agreement, dated June 11, 1992, between Chrysler Corporation and
Lee A. Iacocca. Filed as Exhibit 10-C-7 to Chrysler Corporation Annual
Report on Form 10-K for the year ended December 31, 1992 and incorporated
herein by reference.
10-C-4 Copy of agreement, dated March 14, 1992, between Chrysler Corporation and
Robert J. Eaton. Filed as Exhibit 10-C-8 to Chrysler Corporation Annual
Report on Form 10-K for the year ended December 31, 1992 and incorporated
herein by reference.
10-C-5 Copy of Employment Agreement, dated as of June 1, 1995, between Chrysler
Corporation and Robert J. Eaton. Filed as Exhibit 12 to Chrysler
Corporation Solicitation/Recommendation Statement on Schedule 14D-9 dated
July 6, 1995 and incorporated herein by reference.
10-C-6 Copy of Employment Agreement, dated as of June 1, 1995, between Chrysler
Corporation and Robert A. Lutz. Filed as Exhibit 13 to Chrysler Corporation
Solicitation/Recommendation Statement on Schedule 14D-9 dated July 6, 1995
and incorporated herein by reference.
10-C-7 Copy of Employment Agreement dated as of June 1, 1995 between Chrysler
Corporation and Thomas G. Denomme. Filed as Exhibit 14 to Chrysler
Corporation Solicitation/Recommendation Statement on Schedule 14D-9 dated
July 6, 1995 and incorporated herein by reference.
10-C-8 Copy of Employment Agreement dated as of June 1, 1995 between Chrysler
Corporation and Gary C. Valade. Filed as Exhibit 15 to Chrysler Corporation
Solicitation/Recommendation Statement on Schedule 14D-9 dated July 6, 1995
and incorporated herein by reference.
10-C-9 Form of Employment Continuation Agreement, dated as of July 6, 1995,
between Chrysler Corporation and each of Robert J. Eaton, Robert A. Lutz,
Thomas G. Denomme and Gary C. Valade. Filed as Exhibit 10-C-9 to Chrysler
Corporation Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1995 and incorporated herein by reference.
71
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, PART IV -- CONTINUED
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10-C-10 Form of Employment Continuation Agreement, dated as of July 6, 1995,
between Chrysler Corporation and each Executive Officer of Chrysler
Corporation other than Messrs. Eaton, Lutz, Denomme and Valade. Filed as
Exhibit 10-C-10 to Chrysler Corporation Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1995 and incorporated herein by
reference.
10-D Conformed copy of Participation Agreement for Sale and Leaseback Financing
of Chrysler Technology Center Facilities among Chrysler Corporation,
Manufacturers Hanover Bank (Delaware), as Trustee, and AH Service
Corporation, dated as of May 1, 1990. Filed as Exhibit 10-E-11 to Chrysler
Corporation Annual Report on Form 10-K for the year ended December 31, 1990
and incorporated herein by reference.
10-E-1 Copy of Income Maintenance Agreement made December 20, 1968 among Chrysler
Financial Corporation, Chrysler Corporation and Chrysler Motors Corporation
(now dissolved). Filed as Exhibit 13-D to Registration Statement No.
2-32037 of Chrysler Financial Corporation, and incorporated herein by
reference.
10-E-2 Copy of Agreement made April 19, 1971 among Chrysler Financial Corporation,
Chrysler Corporation and Chrysler Motors Corporation (now dissolved),
amending the Income Maintenance Agreement among such parties. Filed as
Exhibit 13-B to Registration Statement No. 2-40110 of Chrysler Financial
Corporation and Chrysler Corporation, and incorporated herein by reference.
10-F-1 Copy of Agreement made May 29, 1973 among Chrysler Financial Corporation,
Chrysler Corporation and Chrysler Motors Corporation (now dissolved),
further amending the Income Maintenance Agreement among such parties. Filed
as Exhibit 5-C to Registration Statement No. 2-49615 of Chrysler Financial
Corporation, and incorporated herein by reference.
10-F-2 Copy of Agreement made as of July 1, 1975 among Chrysler Financial
Corporation, Chrysler Corporation and Chrysler Motors Corporation (now
dissolved), further amending the Income Maintenance Agreement among such
parties. Filed as Exhibit D to the Annual Report of Chrysler Financial
Corporation on Form 10-K for the year ended December 31, 1975, and
incorporated herein by reference.
10-G Copy of Agreement made June 4, 1976 between Chrysler Financial Corporation
and Chrysler Corporation further amending the Income Maintenance Agreement
between such parties. Filed as Exhibit 5-H to Registration Statement No.
2-56398 of Chrysler Financial Corporation, and incorporated herein by
reference.
10-H Copy of Agreement made March 27, 1986 between Chrysler Financial
Corporation, Chrysler Holding Corporation (now Chrysler Corporation) and
Chrysler Corporation further amending the Income Maintenance Agreement
among such parties. Filed as Exhibit 10-F to the Annual Report of Chrysler
Financial Corporation on Form 10-K for the year ended December 31, 1986,
and incorporated herein by reference.
10-I Copy of Short Term Revolving Credit Agreement, dated as of May 1, 1995,
among Chrysler Financial Corporation, Chrysler Credit Canada Ltd., the
several commercial banks party thereto, as Managing Agents, Royal Bank of
Canada, as Canadian Administrative Agent, and Chemical Bank, as
Administrative Agent. Filed as Exhibit 10-G to the Quarterly Report of
Chrysler Financial Corporation on Form 10-Q for the quarter ended June 30,
1995, and incorporated herein by reference.
72
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, PART IV -- CONTINUED
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AND REPORTS ON FORM 8-K -- CONTINUED
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10-J Copy of Long Term Revolving Credit Agreement, dated as of May 1, 1995,
among Chrysler Financial Corporation, Chrysler Credit Canada Ltd., the
several commercial banks party thereto, as Managing Agents, Royal Bank of
Canada, as Canadian Administrative Agent, and Chemical Bank, as
Administrative Agent. Filed as Exhibit 10-H to the Quarterly Report of
Chrysler Financial Corporation on Form 10-Q for the quarter ended June 30,
1995, and incorporated herein by reference.
10-K Copy of Fifth Amended and Restated Commitment Transfer Agreement, dated as
of May 1, 1995, among Chrysler Financial Corporation, the several financial
institutions parties thereto and Chemical Bank, as agent. Filed as Exhibit
10-I to the quarterly report of Chrysler Financial Corporation on Form 10-Q
for the quarter ended June 30, 1995, and incorporated herein by reference.
10-L Copy of Amended and Restated Trust Agreement, dated as of April 1, 1993,
among Premier Auto Receivables Company, Chrysler Financial Corporation and
Chemical Bank Delaware, as Owner Trustee, with respect to Premier Auto
Trust 1993-2. Filed as Exhibit 4.1 to the Quarterly Report of Premier Auto
Trust 1993-2 on Form 10-Q for the quarter ended June 30, 1993, and
incorporated herein by reference.
10-M Copy of Indenture, dated as of April 1, 1993, between Premier Auto Trust
1993-2 and Bankers Trust Company, as Indenture Trustee, with respect to
Premier Auto Trust 1993-2. Filed as Exhibit 4.2 of the Quarterly Report of
Premier Auto Trust 1993-2 on Form 10-Q for the quarter ended June 30, 1993,
and incorporated herein by reference.
10-N-1 Copy of Amended and Restated Trust Agreement, dated as of June 1, 1993,
among Premier Auto Receivables Company, Chrysler Financial Corporation and
Chemical Bank Delaware, as Owner Trustee, with respect to Premier Auto
Trust 1993-3. Filed as Exhibit 4.1 to the Quarterly Report of Premier Auto
Trust 1993-3 on Form 10-Q for the quarter ended June 30, 1993, and
incorporated herein by reference.
10-N-2 Copy of Indenture, dated as of June 1, 1993, between Premier Auto Trust
1993-3 and Bankers Trust Company, as Indenture Trustee. Filed as Exhibit
4.2 to the Quarterly Report of Premier Auto Trust 1993-3 on Form 10-Q for
the quarter ended June 30, 1993, and incorporated herein by reference.
10-O Copy of Series 1993-1 Supplement, dated as of February 1, 1993, among U.S.
Auto Receivables Company, as Seller, Chrysler Credit Corporation, as
Servicer, and Manufacturers and Traders Trust Company, as Trustee, with
respect to CARCO Auto Loan Master Trust. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated March 15, 1993, and incorporated
herein by reference.
10-P Copy of Receivables Purchase Agreement, made as of April 7, 1993, among
Chrysler Credit Canada Ltd., Chrysler Financial Corporation and Association
Assets Acquisition Inc., with respect to CARS 1993-1. Filed as Exhibit
10-OOOO to the Quarterly Report on Form 10-Q of Chrysler Financial
Corporation for the quarter ended September 30, 1993, and incorporated
herein by reference.
10-Q Copy of Receivables Purchase Agreement, made as of June 29, 1993, among
Chrysler Credit Canada Ltd., Chrysler Financial Corporation and Associated
Assets Acquisition Inc., with respect to CARS 1993-2. Filed as Exhibit
10-PPPP to the Quarterly Report on Form 10-Q of Chrysler Financial
Corporation for the quarter ended September 30, 1993, and incorporated
herein by reference.
73
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, PART IV -- CONTINUED
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AND REPORTS ON FORM 8-K -- CONTINUED
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10-R Copy of Pooling and Servicing Agreement, dated as of August 1, 1993, among
Auto Receivables Corporation, Chrysler Credit Canada Ltd., Montreal Trust
Company of Canada and Chrysler Financial Corporation, with respect to CARCO
1993-1. Filed as Exhibit 10-QQQQ to the Quarterly Report on Form 10-Q of
Chrysler Financial Corporation for the quarter ended September 30, 1993,
and incorporated herein by reference.
10-S Copy of Standard Terms and Conditions of Agreement, dated as of August 1,
1993, among Auto Receivables Corporation, Chrysler Credit Canada Ltd. and
Chrysler Financial Corporation, with respect to CARCO 1993-1. Filed as
Exhibit 10-RRRR to the Quarterly Report on Form 10-Q of Chrysler Financial
Corporation for the quarter ended September 30, 1993, and incorporated
herein by reference.
10-T Copy of Purchase Agreement, dated as of August 1, 1993, between Chrysler
Credit Canada Ltd., and Auto Receivables Corporation, with respect to CARCO
1993-1. Filed as Exhibit 10-SSSS to the Quarterly Report on Form 10-Q of
Chrysler Financial Corporation for the quarter ended September 30, 1993,
and incorporated herein by reference.
10-U Copy of Amended and Restated Loan Agreement, dated as of June 1, 1993,
between Chrysler Realty Corporation and Chrysler Credit Corporation. Filed
as Exhibit 10-XXXX to the Quarterly Report on Form 10-Q of Chrysler
Financial Corporation for the quarter ended September 30, 1993, and
incorporated herein by reference.
10-V Copy of Origination and Servicing Agreement, dated as of June 4, 1993,
among Chrysler Leaserve, Inc., General Electric Capital Auto Lease, Inc.,
Chrysler Credit Corporation and Chrysler Financial Corporation. Filed as
Exhibit 10-ZZZZ to the Quarterly Report on Form 10-Q of Chrysler Financial
Corporation for the quarter ended September 30, 1993, and incorporated
herein by reference.
10-W Copy of Amended and Restated Trust Agreement, dated as of September 1,
1993, among Premier Auto Receivables Company, Chrysler Financial
Corporation and Chemical Bank Delaware, as Trustee, with respect to Premier
Auto Trust 1993-5. Filed as Exhibit 4.1 to the Quarterly Report of Premier
Auto Trust 1993-5 on Form 10-Q for the quarter ended September 30, 1993,
and incorporated herein by reference.
10-X Copy of Indenture, dated as of September 1, 1993, between Premier Auto
Trust 1993-5 and Bankers Trust Company, as Indenture Trustee, with respect
to Premier Auto Trust 1993-5. Filed as Exhibit 4.2 to the Quarterly Report
of Premier Auto Trust 1993-5 on Form 10-Q for the quarter ended September
30, 1993, and incorporated herein by reference.
10-Y Copy of Secured Loan Purchase Agreement, dated as of December 15, 1993,
among Chrysler Credit Canada Ltd., Leaf Trust and Chrysler Financial
Corporation. Filed as Exhibit 10-PPPP to the Annual Report on Form 10-K of
Chrysler Financial Corporation for the year ended December 31, 1993, and
incorporated herein by reference.
10-Z Copy of Series 1993-2 Supplement, dated as of November 1, 1993, among U.S.
Auto Receivables Company, as Seller, Chrysler Credit Corporation, as
Servicer, and Manufacturers and Traders Trust Company, as Trustee, with
respect to CARCO Auto Loan Master Trust. Filed as Exhibit 3 to the
Registration Statement on Form 8-A of CARCO Auto Loan Master Trust dated
December 6, 1993, and incorporated herein by reference.
74
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, PART IV -- CONTINUED
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AND REPORTS ON FORM 8-K -- CONTINUED
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10-AA-1 Copy of Amended and Restated Trust Agreement, dated as of November 1, 1993,
among Premier Auto Receivables Company, Chrysler Financial Corporation and
Chemical Bank Delaware, as Owner Trustee, with respect to Premier Auto
Trust 1993-6. Filed as Exhibit 4-A to the Annual Report on Form 10-K of
Premier Auto Trust 1993-6 for the year ended December 31, 1993, and
incorporated herein by reference.
10-AA-2 Copy of Indenture, dated as of November 1, 1993, between Premier Auto Trust
1993-6 and The Fuji Bank and Trust Company, as Indenture Trustee, with
respect to Premier Auto Trust 1993-6. Filed as Exhibit 4-B to the Annual
Report on Form 10-K of Premier Auto Trust 1993-6 for the year ended
December 31, 1993, and incorporated herein by reference.
10-BB Copy of Secured Loan Purchase Agreement, dated as of March 29, 1994, among
Chrysler Credit Canada Ltd., Leaf Trust and Chrysler Financial Corporation.
Filed as Exhibit 10-ZZZ to the Quarterly Report of Chrysler Financial
Corporation on Form 10-Q for the quarter ended March 31, 1994, and
incorporated herein by reference.
10-CC-1 Copy of Amended and Restated Trust Agreement, dated as of February 1, 1994,
among Premier Auto Receivables Company, Chrysler Financial Corporation and
Chemical Bank Delaware, as Owner Trustee, with respect to Premier Auto
Trust 1994-1. Filed as Exhibit 4.1 to the Quarterly Report on Form 10-Q of
Premier Auto Trust 1994-1 for the quarter ended March 31, 1994, and
incorporated herein by reference.
10-CC-2 Copy of Indenture, dated as of February 1, 1994, between Premier Auto Trust
1994-1 and The Fuji Bank and Trust Company, as Indenture Trustee, with
respect to Premier Auto Trust 1994-1. Filed as Exhibit 4.2 to the Quarterly
Report on Form 10-Q of Premier Auto Trust 1994-1 for the quarter ended
March 31, 1994, and incorporated herein by reference.
10-DD Copy of Secured Loan Purchase Agreement, dated as of July 6, 1994, among
Chrysler Credit Canada Ltd., Leaf Trust and Chrysler Financial Corporation.
Filed as Exhibit 10-BBBB to the Quarterly Report on Form 10-Q of Chrysler
Financial Corporation for the quarter ended June 30, 1994, and incorporated
herein by reference.
10-EE-1 Copy of Amended and Restated Trust Agreement, dated as of May 1, 1994,
among Premier Auto Receivables Company, Chrysler Financial Corporation and
Chemical Bank, Delaware, as Owner Trustee, with respect to Premier Auto
Trust 1994-2. Filed as Exhibit 4.1 to the Quarterly Report on Form 10-Q of
Premier Auto Trust 1994-2 for the Quarter ended June 30, 1994, and
incorporated herein by reference.
10-EE-2 Copy of Indenture, dated as of May 1, 1994, between Premier Auto Trust
1994-2 and The Fuji Bank and Trust Company, as Indenture Trustee, with
respect to Premier Auto Trust 1994-2. Filed as Exhibit 4.2 to the Quarterly
Report on Form 10-Q of Premier Auto Trust 1994-2 for the quarter ended June
30, 1994, and incorporated herein by reference.
10-FF-1 Copy of Amended and Restated Trust Agreement, dated as of June 1, 1994,
among Premier Auto Receivables Company, Chrysler Financial Corporation and
Chemical Bank, Delaware, with respect to Premier Auto Trust 1994-3. Filed
as Exhibit 4.1 to the Quarterly Report on Form 10-Q of Premier Auto Trust
1994-3 for the quarter ended June 30, 1994, and incorporated herein by
reference.
10-FF-2 Copy of Indenture, dated as of June 1, 1994, between Premier Auto Trust
1994-3 and The Fuji Bank and Trust Company, as Indenture Trustee, with
respect to Premier Auto Trust 1994-3. Filed as Exhibit 4.2 to the Quarterly
Report on Form 10-Q of Premier Auto Trust 1994-3 for the quarter ended June
30, 1994, and incorporated herein by reference.
75
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, PART IV -- CONTINUED
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AND REPORTS ON FORM 8-K -- CONTINUED
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10-GG-1 Copy of Master Receivables Purchase Agreement among Chrysler Credit Canada
Ltd., CORE Trust and Chrysler Financial Corporation, dated as of November
29, 1994. Filed as Exhibit 10-FFF to the Annual Report of Chrysler
Financial Corporation on Form 10-K for the year ended December 31, 1994,
and incorporated herein by reference.
10-GG-2 Copy of Terms Schedule among Chrysler Credit Canada Ltd., CORE Trust and
Chrysler Financial Corporation dated as of December 2, 1994, with respect
to the sale of retail automotive receivables to CORE Trust. Filed as
Exhibit 10-GGG to the Annual Report of Chrysler Financial Corporation on
Form 10-K for the year ended December 31, 1994, and incorporated herein by
reference.
10-HH Copy of Terms Schedule among Chrysler Credit Canada Ltd., CORE Trust and
Chrysler Financial Corporation dated as of December 22, 1994, with respect
to the sale of retail automotive receivables to CORE Trust. Filed as
Exhibit 10-HHH to the Annual Report of Chrysler Financial Corporation on
Form 10-K for the year ended December 31, 1994, and incorporated herein by
reference.
10-II Copy of Asset Purchase Agreement dated as of December 14, 1994, between
Chrysler Capital Income Partners, L.P. and First Union Commercial
Corporation. Filed as Exhibit 10-III to the Annual Report of Chrysler
Financial Corporation on Form 10-K for the year ended December 31, 1994,
and incorporated herein by reference.
10-JJ Copy of Purchase Agreement, dated as of December 15, 1994, among Chrysler
Financial Corporation, Premier Auto Receivables Company and ABN AMRO Bank,
N.V., as Agent with respect to the sale of retail automotive receivables to
Windmill Funding Corporation. Filed as Exhibit 10-JJJ to the Annual Report
of Chrysler Financial Corporation on Form 10-K for the year ended December
31, 1994, and incorporated herein by reference.
10-KK Copy of Pooling and Servicing Agreement, dated as of October 1, 1990, among
Chrysler Auto Receivables Company, as Seller, Chrysler Credit Corporation,
as Servicer, and The Fuji Bank and Trust Company, as Trustee, related to
Money Market Auto Loan Trust 1990-1. Filed as Exhibit 4-A to the
Registration of Certain Classes of Securities Report of Money Market Auto
Loan Trust 1990-1 on Form 8-A, and incorporated herein by reference.
10-LL Copy of Amendment No. 1 to the Pooling and Servicing Agreement, dated as of
June 29, 1992, among Chrysler Auto Receivables Company, as Seller, Chrysler
Credit Corporation, as Servicer, and The Fuji Bank and Trust Company, as
Trustee, with respect to Money Market Auto Loan Trust 1990-1. Filed as
Exhibit 4-B to the Quarterly Report of Money Market Auto Loan Trust 1990-1
on Form 10-Q for the quarter ended June 30, 1992, and incorporated herein
by reference.
10-MM Copy of First Amendment, dated as of November 8, 1991, to the Series 1991-3
Supplement, dated as of June 30, 1991, among Chrysler Credit Corporation,
as Servicer, U.S. Auto Receivables Company, as Seller, and Manufacturers
and Traders Trust Company, as Trustee, with respect to CARCO Auto Loan
Master Trust. Filed as Exhibit 4-H to the Quarterly Report on Form 10-Q of
CARCO Auto Loan Master Trust for the quarter ended March 31, 1992, and
incorporated herein by reference.
10-NN Copy of Indenture, dated as of May 1, 1992, between Premier Auto Trust
1992-3 and Bankers Trust Company with respect to Premier Auto Trust 1992-3.
Filed as Exhibit 4-A to the Quarterly Report on Form 10-Q of Premier Auto
Trust 1992-3 for the quarter ended June 30, 1992, and incorporated herein
by reference.
76
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, PART IV -- CONTINUED
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AND REPORTS ON FORM 8-K -- CONTINUED
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10-OO Copy of a 5.90% Asset Backed Note with respect to Premier Auto Trust
1992-3. Filed as Exhibit 4-B to the Quarterly Report on Form 10-Q of
Premier Auto Trust 1992-3 for the quarter ended June 30, 1992, and
incorporated herein by reference.
10-PP Copy of Trust Agreement, dated as of April 1, 1992, as amended and restated
as of May 1, 1992, between Premier Auto Receivables Company and
Manufacturers Hanover Bank (Delaware) with respect to Premier Auto Trust
1992-3. Filed as Exhibit 4-C to the Quarterly Report on Form 10-Q of
Premier Auto Trust 1992-3 for the quarter ended June 30, 1992, and
incorporated herein by reference.
10-QQ Copy of Receivables Purchase Agreement, dated as of April 15, 1992, between
Chrysler Credit Canada Ltd., Chrysler Financial Corporation and Associated
Assets Acquisition Inc. with respect to Canadian Auto Receivables
Securitization 1992-1. Filed as Exhibit 10-IIIII to the Registration
Statement on Form S-2 of Chrysler Financial Corporation (Registration
Statement No. 33-51302) on November 24, 1992, and incorporated herein by
reference.
10-RR Copy of Indenture, dated as of July 1, 1992, between Premier Auto Trust
1992-4 and Bankers Trust Company with respect to Premier Auto Trust 1992-4.
Filed as Exhibit 4-A to the Quarterly Report on Form 10-Q of Premier Auto
Trust 1992-4 for the quarter ended September 30, 1992, and incorporated
herein by reference.
10-SS Copy of 5.05% Asset Backed Note with respect to Premier Auto Trust 1992-4.
Filed as Exhibit 4-B to the Quarterly Report on Form 10-Q of Premier Auto
Trust 1992-4 for the quarter ended September 30, 1992, and incorporated
herein by reference.
10-TT Copy of Trust Agreement, dated as of July 1, 1992, between Premier Auto
Receivables Company and Chemical Bank Delaware, with respect to Premier
Auto Trust 1992-4. Filed as Exhibit 4-C to the Quarterly Report on Form
10-Q of Premier Auto Trust 1992-4 for the quarter ended September 30, 1992,
and incorporated herein by reference.
10-UU Copy of Receivables Purchase Agreement, dated as of August 18, 1992,
between Chrysler Credit Ltd., Chrysler Financial Corporation and Associated
Assets Acquisition Inc. with respect to Canadian Auto Receivables
Securitization 1992-2. Filed as Exhibit 10-OOOOO to the Registration
Statement on Form S-2 of Chrysler Financial Corporation (Registration
Statement No. 33-51302) on November 24, 1992, and incorporated herein by
reference.
10-VV Copy of Indenture, dated as of September 1, 1992, between Premier Auto
Trust 1992-5 and Bankers Trust Company with respect to Premier Auto Trust
1992-5. Filed as Exhibit 4-A to the Quarterly Report on Form 10-Q of
Premier Auto Trust 1992-5 for the quarter ended September 30, 1992, and
incorporated herein by reference.
10-WW Copy of a 4.55% Asset Backed Note with respect to Premier Auto Trust
1992-5. Filed as Exhibit 4-B to the Quarterly Report on Form 10-Q of
Premier Auto Trust 1992-5 for the quarter ended September 30, 1992, and
incorporated herein by reference.
10-XX Copy of Trust Agreement, dated as of September 1, 1992, between Premier
Auto Receivables Company and Manufacturers Hanover Bank (Delaware) with
respect to Premier Auto Trust 1992-5. Filed as Exhibit 4-C to the Quarterly
Report on Form 10-Q of Premier Auto Trust 1992-5 for the quarter ended
September 30, 1992, and incorporated herein by reference.
77
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, PART IV -- CONTINUED
----------------------------------------
AND REPORTS ON FORM 8-K -- CONTINUED
------------------------------------
[Download Table]
10-YY Copy of Series 1992-2 Supplement to the Pooling and Servicing Agreement,
dated as of October 1, 1992, among U.S. Auto Receivables Company, as
Seller, Chrysler Credit Corporation, as Servicer, and Manufacturers and
Traders Trust Company, as Trustee, with respect to CARCO Auto Loan Master
Trust, Series 1992-2. Filed as Exhibit 3 to Form 8-A of CARCO Auto Loan
Master Trust on October 30, 1992, and incorporated herein by reference.
10-ZZ Copy of Master Custodial and Servicing Agreement, dated as of September 1,
1992 between Chrysler Credit Canada Ltd. and The Royal Trust Company, as
Custodian. Filed as Exhibit 10-TTTTT to the Registration Statement on Form
S-2 of Chrysler Financial Corporation (Registration Statement No. 33-51302)
on November 24, 1992, and incorporated herein by reference.
10-AAA Copy of Series 1995-1 Supplement, dated as of September 20, 1995, among
Chrysler Credit Canada Ltd., The Royal Trust Company, Pure Trust, Auto
Receivables Corporation and Chrysler Financial Corporation, to the Master
Custodial and Servicing Agreement, dated as of September 1, 1992. Filed as
Exhibit 10-NNN to the Quarterly Report of Chrysler Financial Corporation on
Form 10-Q for the quarter ended September 30, 1995, and incorporated herein
by reference.
10-BBB Copy of Trust Indenture, dated as of September 1, 1992, among Canadian
Dealer Receivables Corporation and Montreal Trust Company of Canada, as
Trustee. Filed as Exhibit 10-UUUUU to the Registration Statement on Form
S-2 of Chrysler Financial Corporation (Registration Statement No. 33-51302)
on November 24, 1992, and incorporated herein by reference.
10-CCC Copy of Servicing Agreement, dated as of October 20, 1992, between Chrysler
Leaserve, Inc. (a subsidiary of General Electric Capital Auto Lease, Inc.)
and Chrysler Credit Corporation, with respect to the sale of Gold Key
Leases. Filed as Exhibit 10-YYYYY to the Registration Statement on Form S-2
of Chrysler Financial Corporation (Registration Statement No. 33-51302) on
November 24, 1992, and incorporated herein by reference.
10-DDD Copy of Second Amendment dated as of August 24, 1992 to the Series 1991-3
Supplement dated as of June 30, 1991, among U.S. Auto Receivables Company
("USA"), as seller (the "Seller"), Chrysler Credit Corporation, as servicer
(the "Servicer") and Manufacturers and Traders Trust Company, as trustee
(the "Trustee"), to the Pooling and Servicing Agreement dated as of May 31,
1991, as assigned by Chrysler Auto Receivables Company to USA on August 8,
1991, as amended by the First Amendment dated as of August 6, 1992, among
the Seller, the Servicer and the Trustee, with respect to CARCO Auto Loan
Master Trust. Filed as Exhibit 4-O to the Quarterly Report on Form 10-Q of
CARCO Auto Loan Master Trust for the quarter ended September 30, 1992, and
incorporated herein by reference.
10-EEE Copy of Sale and Servicing Agreement, dated as of November 1, 1992, among
Premier Auto Receivables Company, as Seller, Chrysler Credit Corporation,
as Servicer, and Premier Auto Trust 1992-6, as Purchaser, with respect to
Premier Auto Trust 1992-6. Filed as Exhibit 10-PPPPPP to the Annual Report
of Chrysler Financial Corporation on Form 10-K for the year ended December
31, 1992, and incorporated herein by reference.
10-FFF Copy of Trust Agreement, dated as of November 1, 1992, among ML Asset
Backed Corporation, Premier Auto Receivables Company and Chemical Bank
Delaware as Owner Trustee, with respect to Premier Auto Trust 1992-6. Filed
as Exhibit 10-QQQQQQ to the Annual Report of Chrysler Financial Corporation
on Form 10-K for the year ended December 31, 1992, and incorporated herein
by reference.
78
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, PART IV -- CONTINUED
----------------------------------------
AND REPORTS ON FORM 8-K -- CONTINUED
------------------------------------
[Download Table]
10-GGG Copy of Sale and Servicing Agreement, dated as of January 1, 1993, among
Premier Auto Receivables Company, as Seller, Chrysler Credit Corporation,
as Servicer, and Premier Auto Trust 1993-1, as Purchaser, with respect to
Premier Auto Trust 1993-1. Filed as Exhibit 10-RRRRRR to the Annual Report
of Chrysler Financial Corporation on Form 10-K for the year ended December
31, 1992, and incorporated herein by reference.
10-HHH Copy of Trust Agreement, dated as of January 1, 1993, among ML Asset Backed
Corporation, Premier Auto Receivables Company and Chemical Bank Delaware,
as Owner Trustee, with respect to Premier Auto Trust 1993-1. Filed as
Exhibit 10-SSSSSS to the Annual Report of Chrysler Financial Corporation on
Form 10-K for the year ended December 31, 1992, and incorporated herein by
reference.
10-III Copy of Receivables Purchase Agreement, dated as of November 25, 1992,
between Chrysler Credit Canada Ltd., Chrysler Financial Corporation and
Associated Assets Acquisitions Inc. with respect to Canadian Auto
Receivables Securitization 1992-3. Filed as Exhibit 10-TTTTTT to the Annual
Report of Chrysler Financial Corporation on Form 10-K for the year ended
December 31, 1992, and incorporated herein by reference.
10-JJJ Copy of Purchase Agreement, dated as of January 25, 1993, among Chrysler
Credit Canada Ltd., Auto 1 Limited Partnership and Chrysler Financial
Corporation, with respect to Auto 1 Trust. Filed as Exhibit 10-UUUUUU to
the Annual Report of Chrysler Financial Corporation on Form 10-K for the
year ended December 31, 1992, and incorporated herein by reference.
10-KKK Copy of Master Lease Agreement, dated as of January 25, 1993, among
Chrysler Credit Canada Ltd., Chrysler Canada Ltd. and Auto 1 Limited
Partnership, with respect to Auto 1 Trust. Filed as Exhibit 10-VVVVVV to
the Annual Report of Chrysler Financial Corporation on Form 10-K for the
year ended December 31, 1992, and incorporated herein by reference.
10-LLL Copy of Amended and Restated Trust Agreement, dated as of August 1, 1993,
among Premier Auto Receivables Company, Chrysler Financial Corporation and
Chemical Bank Delaware, as Owner Trustee, with respect to Premier Auto
Trust 1993-4. Filed as Exhibit 4.1 to the Quarterly Report on Form 10-Q of
Premier Auto Trust 1993-4 for the quarter ended September 30, 1993, and
incorporated herein by reference.
10-MMM Copy of Indenture, dated as of August 1, 1993, between Premier Auto Trust
1993-4 and Bankers Trust Company, as Indenture Trustee, with respect to
Premier Auto Trust 1993-4. Filed as Exhibit 4.2 to the Quarterly Report on
Form 10-Q of Premier Auto Trust 1993-4 for the quarter ended September 30,
1993, and incorporated herein by reference.
10-NNN Copy of Amended and Restated Trust Agreement, dated as of August 1, 1994,
among Premier Auto Receivables Company, Chrysler Financial Corporation and
Chemical Bank Delaware, as Owner Trustee, with respect to Premier Auto
Trust 1994-4. Filed as Exhibit 4.1 to the Quarterly Report on Form 10-Q of
Premier Auto Trust 1994-4 for the quarter ended September 30, 1994, and
incorporated herein by reference.
10-OOO Copy of Indenture, dated as of August 1, 1994, between Premier Auto Trust
1994-4 and Bankers Trust Company, as Indenture Trustee. Filed as Exhibit
4.2 to the Quarterly Report on Form 10-Q of Premier Auto Trust 1994-4 for
the quarter ended September 30, 1994, and incorporated herein by reference.
79
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, PART IV -- CONTINUED
----------------------------------------
AND REPORTS ON FORM 8-K -- CONTINUED
------------------------------------
[Download Table]
10-PPP Copy of Receivables Purchase Agreement, dated as of February 28, 1995,
among Chrysler Financial Corporation, Premier Auto Receivables Company and
ABN AMRO Bank, N.V., with respect to the sale of retail automotive
receivables to Windmill Funding Corporation. Filed as Exhibit 10-GGGG to
the Quarterly Report on Form 10-Q of Chrysler Financial Corporation for the
quarter ended March 31, 1995, and incorporated herein by reference.
10-QQQ Copy of Series 1994-1 Supplement, dated as of September 30, 1994, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit Corporation, as
Servicer, and Manufacturers and Traders Trust Company, as Trustee, with
respect to CARCO Auto Loan Master Trust, Series 1994-1. Filed as Exhibit 3
to the Registration Statement on Form 8-A of CARCO Auto Loan Master Trust
dated November 23, 1994, and incorporated herein by reference.
10-RRR Copy of Series 1994-2 Supplement, dated as of October 31, 1994, among U.S.
Auto Receivables Company, as Seller, Chrysler Credit Corporation, as
Servicer, and Manufacturers and Traders Trust Company, as Trustee, with
respect to CARCO Auto Loan Master Trust 1994-2. Filed as Exhibit 3 to the
Registration Statement on Form 8-A of CARCO Auto Loan Master Trust dated
December 22, 1994, and incorporated herein by reference.
10-SSS Copy of Series 1994-3 Supplement, dated as of November 30, 1994, among U.S.
Auto Receivables Company, as Seller, Chrysler Credit Corporation, as
Servicer, and Manufacturers and Traders Trust Company, as Trustee, with
respect to CARCO Auto Loan Master Trust, Series 1994-3. Filed as Exhibit
4-W to the Annual Report on Form 10-K of CARCO Auto Loan Master Trust for
the year ended December 31, 1994, and incorporated herein by reference.
10-TTT Copy of Series 1995-1 Supplement, dated as of December 31, 1994, among U.S.
Auto Receivables Company, as Seller, Chrysler Credit Corporation, as
Servicer, and Manufacturers and Traders Trust Company, as Trustee, with
respect to CARCO Auto Loan Master Trust, Series 1995-1. Filed as Exhibit 3
to the Registration Statement on Form 8-A of CARCO Auto Loan Master Trust
dated January 19, 1995, and incorporated herein by reference.
10-UUU Copy of Series 1995-2 Supplement, dated as of February 28, 1995, among U.S.
Auto Receivables Company, as Seller, Chrysler Credit Corporation, as
Servicer, and Manufacturers and Traders Trust Company, as Trustee, with
respect to CARCO Auto Loan Master Trust 1995-2. Filed as Exhibit 3 to CARCO
Auto Loan Master Trust's Registration Statement on Form 8-A dated March 27,
1995, and incorporated herein by reference.
10-VVV Copy of Amended and Restated Trust Agreement, dated as of February 1, 1995,
among Premier Auto Receivables Company, Chrysler Financial Corporation and
Chemical Bank Delaware, as Owner Trustee, with respect to Premier Auto
Trust 1995-1. Filed as Exhibit 4.1 to the Quarterly Report on Form 10-Q for
the quarter ended March 31, 1995 of Premier Auto Trust 1995-1, and
incorporated herein by reference.
10-WWW Copy of Indenture, dated as of February 1, 1995, between Premier Auto Trust
1995-1 and The Bank of New York, as Indenture Trustee, with respect to
Premier Auto Trust 1995-1. Filed as Exhibit 4.2 to the Quarterly Report on
Form 10-Q for the quarter ended March 31, 1995 of Premier Auto Trust
1995-1, and incorporated herein by reference.
80
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, PART IV -- CONTINUED
----------------------------------------
AND REPORTS ON FORM 8-K -- CONTINUED
------------------------------------
[Download Table]
10-XXX Copy of Sale and Servicing Agreement, dated as of February 1, 1995, among
Premier Auto Trust 1995-1, Chrysler Credit Corporation and Chrysler
Financial Corporation, with respect to Premier Auto Trust 1995-1. Filed as
Exhibit 4.3 to the Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995 of Premier Auto Trust 1995-1, and incorporated herein by
reference.
10-YYY Copy of Amended and Restated Trust Agreement, dated as of April 1, 1995,
among Premier Auto Receivables Company, Chrysler Financial Corporation and
Chemical Bank Delaware, as Owner Trustee, with respect to Premier Auto
Trust 1995-2. Filed as Exhibit 4.1 to the Quarterly Report on Form 10-Q for
the quarter ended June 30, 1995 of Premier Auto Trust 1995-2, and
incorporated herein by reference.
10-ZZZ Copy of Indenture, dated as of April 1, 1995, between Premier Auto Trust
1995-2 and The Bank of New York, as Indenture Trustee, with respect to
Premier Auto Trust 1995-2. Filed as Exhibit 4.2 to the Quarterly report on
Form 10-Q for the quarter ended June 30, 1995 of Premier Auto Trust 1995-2,
and incorporated herein by reference.
10-AAAA Copy of Sale and Servicing Agreement, dated as of April 1, 1995, among
Premier Auto Trust 1995-2, Chrysler Credit Corporation and Chrysler
Financial Corporation, with respect to Premier Auto Trust 1995-2. Filed as
Exhibit 4.3 to the Quarterly Report on Form 10-Q for the quarter ended June
30, 1995 of Premier Auto Trust 1995-2, and incorporated herein by
reference.
10-BBBB Copy of Series 1995-3 Supplement, dated as of April 30, 1995, among U.S.
Auto Receivables Company, Chrysler Credit Corporation and Manufacturers and
Traders Trust Company, as Trustee, with respect to CARCO Auto Loan Master
Trust 1995-3. Filed as Exhibit 4-Z to the Quarterly Report on Form 10-Q for
the quarter ended June 30, 1995 of CARCO Auto Loan Master Trust, and
incorporated herein by reference.
10-CCCC Copy of Series 1995-4 Supplement, dated as of April 30, 1995, among U.S.
Auto Receivables Company, Chrysler Credit Corporation and Manufacturers and
Traders Trust Company, as Trust, with respect to CARCO Auto Loan Master
Trust Series 1995-4. Filed as Exhibit 4-AA to the Quarterly Report on Form
10-Q for the quarter ended June 30, 1995 of CARCO Auto Loan Master Trust,
and incorporated herein by reference.
10-DDDD Copy of Series 1995-4A Supplement, dated as of April 30, 1995, among U.S.
Auto Receivables Company, Chrysler Credit Corporation and Manufacturers and
Traders Trust Company, as Trustee, with respect to CARCO Auto Loan Master
Trust Series 1995-4A. Filed as Exhibit 4-BB to the Quarterly Report on Form
10-Q for the quarter ended June 30, 1995 of CARCO Auto Loan Master Trust,
and incorporated herein by reference.
10-EEEE Copy of Master Receivables Purchase Agreement, made as of July 24, 1995,
among Chrysler Credit Canada Ltd., The Royal Trust Company and Chrysler
Financial Corporation, with respect to Pure Trust 1995-1. Filed as Exhibit
10-RRRR to the Quarterly Report on Form 10-Q of Chrysler Financial
Corporation for the quarter ended September 30, 1995, and incorporated
herein by reference.
10-FFFF Copy of Terms Schedule, dated as of July 24, 1995, among Chrysler Credit
Canada Ltd., The Royal Trust Company and Chrysler Financial Corporation,
with respect to Pure Trust 1995-1. Filed as Exhibit 10-SSSS to the
Quarterly Report on Form 10-Q of Chrysler Financial Corporation for the
quarter ended September 30, 1995, and incorporated herein by reference.
81
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, PART IV -- CONTINUED
----------------------------------------
AND REPORTS ON FORM 8-K -- CONTINUED
------------------------------------
[Download Table]
10-GGGG Copy of Receivables Purchase Agreement, dated as of December 14, 1995,
among Chrysler Financial Corporation, Premier Auto Receivables Company,
Chrysler Credit Corporation, and ABN AMRO Bank N.V., as Agent, with respect
to the sale of retail automotive receivables to Windmill Funding
Corporation, Series 1995-2. Filed as Exhibit 10-KKKK to the Annual Report
on Form 10-K of Chrysler Financial Corporation for the year ended December
31, 1995, and incorporated herein by reference.
10-HHHH Copy of Certificate of Trust of Premier Auto Trust 1995-3. Filed as Exhibit
3 to the Quarterly Report on Form 10-Q of Premier Auto Trust 1995-3 for the
quarter ended September 30, 1995, and incorporated herein by reference.
10-IIII Copy of Amended and Restated Trust Agreement, dated as of July 1, 1995,
among Premier Auto Receivables Company, Chrysler Financial Corporation and
Chemical Bank Delaware, as Owner Trustee, with respect to Premier Auto
Trust 1995-3. Filed as Exhibit 4.1 to the Quarterly Report on Form 10-Q of
Premier Auto Trust 1995-3 for the quarter ended September 30, 1995, and
incorporated herein by reference.
10-JJJJ Copy of Indenture, dated as of July 1, 1995, between Premier Auto Trust
1995-3 and The Bank of New York, as Indenture Trustee, with respect to
Premier Auto Trust 1995-3. Filed as Exhibit 4.2 to the Quarterly Report on
Form 10-Q of Premier Auto Trust 1995-3 for the quarter ended September 30,
1995, and incorporated herein by reference.
10-KKKK Copy of Sale and Servicing Agreement, dated as of July 1, 1995, among
Premier Auto Trust 1995-3, Chrysler Credit Corporation and Chrysler
Financial Corporation, with respect to Premier Auto Trust 1995-3. Filed as
Exhibit 4.3 to the Quarterly Report on Form 10-Q of Premier Auto Trust
1995-3 for the quarter ended September 30, 1995, and incorporated herein by
reference.
10-LLLL Copy of Terms Schedule among Chrysler Credit Canada Ltd., CORE Trust and
Chrysler Financial Corporation, dated as of December 14, 1995, with respect
to CORE Trust 1995-1. Filed as Exhibit 10-PPPP to the Annual Report on Form
10-K of Chrysler Financial Corporation for the year ended December 31,
1995, and incorporated herein by reference.
10-MMMM Copy of Agreement and Plan of Merger, dated as of December 31, 1995,
between Chrysler Financial Corporation and Chrysler Credit Corporation,
providing for the merger of these two corporations on December 31, 1995,
with Chrysler Financial Corporation being the surviving corporation. Filed
as Exhibit 10-QQQQ to the Annual Report on Form 10-K of Chrysler Financial
Corporation for the year ended December 31, 1995, and incorporated herein
by reference.
*11 Statement regarding computation of earnings per common share.
*12 Statement regarding computation of ratios of earnings to fixed charges and
preferred stock dividends.
*21 Subsidiaries of the Registrant.
*23 Consent of Deloitte & Touche LLP, independent auditors for Chrysler
Corporation.
*24 Powers of Attorney executed by officers and directors who signed this
Annual Report on Form 10-K by an attorney-in-fact.
*27 Financial Data Schedule for year ended December 31, 1995.
-------------------------
* Filed herewith
82
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, PART IV -- CONTINUED
----------------------------------------
AND REPORTS ON FORM 8-K -- CONTINUED
------------------------------------
In lieu of filing certain instruments with respect to the long-term debt of the
type described in Item 601(b)(4) of Regulation S-K with respect to the long-term
debt of Chrysler Corporation and its consolidated subsidiaries, Chrysler
Corporation agrees to furnish a copy of such instruments to the Securities and
Exchange Commission on request.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the three months ended December
31, 1995.
83
SIGNATURES
----------
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
CHRYSLER CORPORATION
By R. J. EATON
----------------------------------
R. J. EATON
Chairman of the Board
and Chief Executive Officer
January 19, 1996
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Principal executive officers:
[Enlarge/Download Table]
R. J. EATON Chairman of the Board January 19, 1996
------------------------------------ and Chief Executive Officer
R. J. EATON
R. A. LUTZ President and Chief Operating January 19, 1996
------------------------------------ Officer
R. A. LUTZ
Principal financial officer:
G. C. VALADE Executive Vice President January 19, 1996
------------------------------------ and Chief Financial Officer
G. C. VALADE
Principal accounting officer:
J. D. DONLON, III Vice President and Controller January 19, 1996
------------------------------------
J. D. DONLON, III
Board of Directors:
LILYAN H. AFFINITO* Director January 19, 1996
------------------------------------
LILYAN H. AFFINITO
ROBERT E. ALLEN* Director January 19, 1996
------------------------------------
ROBERT E. ALLEN
JOSEPH A. CALIFANO, JR.* Director January 19, 1996
------------------------------------
JOSEPH A. CALIFANO, JR.
THOMAS G. DENOMME* Director January 19, 1996
------------------------------------
THOMAS G. DENOMME
ROBERT J. EATON* Director January 19, 1996
------------------------------------
ROBERT J. EATON
84
[Download Table]
EARL G. GRAVES* Director January 19, 1996
------------------------------------
EARL G. GRAVES
KENT KRESA* Director January 19, 1996
------------------------------------
KENT KRESA
ROBERT J. LANIGAN* Director January 19, 1996
------------------------------------
ROBERT J. LANIGAN
ROBERT A. LUTZ* Director January 19, 1996
------------------------------------
ROBERT A. LUTZ
PETER A. MAGOWAN* Director January 19, 1996
------------------------------------
PETER A. MAGOWAN
MALCOLM T. STAMPER* Director January 19, 1996
------------------------------------
MALCOLM T. STAMPER
LYNTON R. WILSON* Director January 19, 1996
------------------------------------
LYNTON R. WILSON
* By R. D. HOUTMAN
----------------------------------
R. D. HOUTMAN
Attorney-in-Fact
January 19, 1996
85
EXHIBIT INDEX
[Enlarge/Download Table]
EXHIBIT
NO. DESCRIPTION PAGE
------- ----------- ----
*11 Statement regarding computation of earnings per common share.
*12 Statement regarding computation of ratios of earnings to fixed charges and
preferred stock dividends.
*21 Subsidiaries of the Registrant.
*23 Consent of Deloitte & Touche LLP, independent auditors for Chrysler Corporation.
*24 Powers of Attorney executed by officers and directors who signed this Annual
Report on Form 10-K by an attorney-in-fact.
*27 Financial Data Schedule for year ended December 31, 1995.
-------------------------
* Filed herewith
86
Dates Referenced Herein and Documents Incorporated by Reference
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