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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, 1994
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
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(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 38-2673623
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12000 Chrysler Drive, Highland Park, Michigan 48288-0001
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (313) 956-5741
Securities registered pursuant to Section 12(b) of the Act:
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, Pacific Stock Exchange
$1.00 par value Philadelphia Stock Exchange
13% Debentures Due 1997 New York 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
continued
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The Common Stock of the Registrant is listed for trading on the following
additional stock exchanges:
Montreal Stock Exchange Montreal, Quebec, Canada
Toronto Stock Exchange Toronto, Ontario, Canada
The Stock Exchange, London London, England
Paris Stock Exchange Paris, France
Geneva Stock Exchange Geneva, Switzerland
Basel Stock Exchange Basel, Switzerland
Zurich Stock Exchange Zurich, Switzerland
Frankfurt Stock Exchange Frankfurt, Germany
Tokyo Stock Exchange Tokyo, Japan
Vienna Stock Exchange Vienna, Austria
Berlin Stock Exchange Berlin, Germany
Munich Stock Exchange Munich, Germany
Amsterdam Stock Exchange Amsterdam, Netherlands
Luxembourg Stock Exchange Luxembourg
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. / /
The aggregate market value of voting Common Stock held by nonaffiliates
of the registrant was approximately $17.40 billion as of December 31, 1994.
The registrant had 355,059,062 shares of Common Stock outstanding as of
December 31, 1994.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information in 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, 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, 1994
INDEX
Page No.
--------
PART I.
Item 1. Business 4-14
Item 2. Properties 14-15
Item 3. Legal Proceedings 16-17
Item 4. Submission of Matters to a Vote
of Security Holders 17
Executive Officers of the Registrant 18
(Unnumbered Item)
PART II.
Item 5. Market for the Registrant's Common
Equity and Related Stockholder Matters 19
Item 6. Selected Financial Data 20
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 21-25
Item 8. Financial Statements and Supplementary
Data 26-54
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure 55
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) 55
PART IV.
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K 55-70
SIGNATURES 71-72
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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 wholesale
and retail vehicle financing, servicing nonautomotive leases and loans,
automotive dealership facility development and management, and property,
casualty and other insurance. Chrysler also participates in short-term vehicle
rental activities through certain of its subsidiaries (the "Car Rental
Operations") and manufactures electronics products and systems through its
Chrysler Technologies Corporation subsidiary. Chrysler's principal executive
offices are located at Chrysler Center, 12000 Chrysler Drive, Highland Park,
Michigan 48288-0001. The telephone number of those offices is (313) 956-5741.
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 light-duty, 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, Diamond-Star Motors Corporation
("Diamond-Star").
Although Chrysler currently sells most of its vehicles in the United
States, Canada and Mexico, Chrysler also participates in other international
markets through its wholly owned subsidiary, Chrysler Motors de Venezuela,
S.A., 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 and by Eurostar Automobilwerk Ges.mb.H & Co. KG
("Eurostar"), a joint venture between Chrysler and Steyr-Daimler-Puch
Fahrzeugtechnik of Graz, Austria.
The automotive industry in North America is highly competitive with
respect to a number of factors, including product quality, price, appearance,
size, special options, distribution organization, warranties, reliability, 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 Chrysler. Also, many of Chrysler's competitors have larger worldwide sales
volumes and greater financial resources, which may place Chrysler at a
competitive disadvantage in responding to substantial changes in consumer
preferences, governmental regulations, or adverse economic conditions in North
America.
Chrysler's long-term profitability depends upon its ability to introduce
and market its new products effectively. The success of Chrysler's new products
will depend on a number of factors, including the economy, competition, consumer
acceptance, 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 plan is to focus on its core automotive business. As part of
this plan, Chrysler has sold certain assets and businesses which are not related
to its core automotive business, and may sell other such assets in the future.
The Automotive Industry in the United States
Chrysler's automotive operations, including product design and
development activities, manufacturing operations and sales, are conducted mainly
in North America. Chrysler's principal domestic competitors in the United
States 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 the United States ("transplants"), and there are a number
of other foreign manufacturers that distribute automobiles and light-duty trucks
in the United States.
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Item 1. BUSINESS - CONTINUED Part I - Continued
Automotive Operations - Continued
The Automotive Industry in the United States- Continued
The tables below set forth comparative market share data for domestic
retail sales of cars and trucks for the major domestic manufacturers (including
cars and trucks imported by them) and for foreign-based manufacturers, and unit
sales of passenger cars and trucks (including imports to the United States) by
Chrysler.
Year Ended December 31
--------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(percent of total industry)
U.S. Car Market Share (1):
- --------------------------
U.S. Manufacturers (Including Imports):
General Motors 34.0% 34.1% 34.6% 35.6% 35.6%
Ford 21.6 22.1 21.6 20.1 20.9
Chrysler 9.0 9.8 8.3 8.6 9.3
----- ----- ----- ----- -----
Total U.S. Manufacturers 64.6 66.0 64.5 64.3 65.8
Foreign-Based Manufacturers (2):
Japanese 29.5 29.1 30.1 30.4 27.8
All Other 5.9 4.9 5.4 5.3 6.4
----- ----- ----- ----- -----
Total Foreign-Based Manufacturers 35.4 34.0 35.5 35.7 34.2
----- ----- ----- ----- -----
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 30.9% 31.4% 32.2% 32.9% 34.3%
Ford 30.1 30.5 29.7 28.9 29.2
Chrysler 21.7 21.4 21.1 18.4 17.3
All Other 2.0 1.9 1.8 2.0 2.0
----- ----- ----- ----- -----
Total U.S. Manufacturers 84.7 85.2 84.8 82.2 82.8
Foreign-Based Manufacturers (2):
Japanese 13.5 13.2 13.9 16.5 15.7
All Other 1.8 1.6 1.3 1.3 1.5
----- ----- ----- ----- -----
Total Foreign-Based Manufacturers 15.3 14.8 15.2 17.8 17.2
----- ----- ----- ----- -----
Total 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
Unit Sales: (In thousands)
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U.S. Car Retail Sales (1):
Total Industry 8,990 8,518 8,214 8,174 9,293
Chrysler 812 834 680 703 861
U.S. Truck Retail Sales (1) (3):
Total Industry 6,421 5,681 4,904 4,367 4,854
Chrysler 1,392 1,214 1,033 805 837
- -------------------------
(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.
Competition from foreign car and truck manufacturers, in the form of
both exports to the United States and sales by transplants, has been substantial
in recent years. The market share for foreign passenger cars sold in the United
States (including transplants) was 35.4 percent in 1994, compared to 34.0
percent in 1993. The market share for foreign trucks sold in the United Stated
(including transplants) was 15.3 percent in 1994, compared to 14.8 percent in
1993. 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 16.1
percent of the U.S. passenger car market and 5.6 percent of the U.S. truck
market in 1994, compared to 14.8 percent and 5.4 percent, respectively, in 1993.
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Item 1. BUSINESS - CONTINUED Part I - Continued
Automotive Operations - Continued
The Automotive Industry in the United States - Continued
During the first three months of 1994, Japanese exports to the United
States were subject to voluntary restraints limiting the number of new passenger
cars (excluding station wagons) that could be exported. These restraints were
put in place in 1981 and ended on March 31, 1994. For the 12 months ended March
31, 1994, the Japanese export limit was 1.65 million cars, while actual
shipments during that period were 1.39 million cars. Although the voluntary
restraint agreement has expired, it is unlikely that exports of passenger cars
to the United States from Japan would surpass the 1.65 million level in the near
future given the high assembly capacity put in place in the U. S. by Japanese
manufacturers and the relatively high cost of vehicles imported from Japan due
to the recent appreciation of the Japanese yen in relation to the U.S. dollar.
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 front-wheel-drive minivans, front-wheel-drive mid-size
and large sedans, and rear-wheel-drive vans.
In 1994 and 1993, Chrysler Canada produced 695,606 and 643,356 vehicles,
respectively, the majority of which were sold outside of Canada. Chrysler
Canada's retail sales totaled 247,752 vehicles in 1994 and 226,819 vehicles in
1993, the majority of which were manufactured outside of Canada. Chrysler
Canada's retail unit sales of cars accounted for 15.7 percent and 14.6 percent
of the Canadian car market in 1994 and 1993, respectively. In 1994, retail unit
sales of trucks accounted for 25.7 percent of the Canadian truck market compared
with 26.3 percent in 1993. In 1994, Chrysler Canada ranked third in the
Canadian industry in retail unit sales of both cars and trucks.
Chrysler de Mexico
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. Chrysler Mexico
also distributes in the Mexican market finished vehicles imported from
Chrysler's U.S. and Canadian operations.
Chrysler Mexico's vehicle sales accounted for 13.1 percent of the
Mexican wholesale car market and 19.4 percent of the Mexican wholesale truck
market in 1994, compared with 13.3 percent and 23.6 percent, respectively, in
1993. Within the Mexican industry, Chrysler Mexico's wholesale unit sales
ranked fourth in cars and third in trucks in 1994. In 1994, overall wholesale
industry sales in Mexico are estimated to have been approximately 620,000
units, compared with 604,400 units in 1993, an increase of 2.6 percent.
In 1994, Chrysler Mexico exported 117,489 cars, compared with 104,712
cars in 1993. In 1994, Chrysler Mexico also exported 43,910 trucks, compared
with 36,660 trucks in 1993. In addition, Chrysler Mexico provides certain major
automobile components to Chrysler, including engines and air conditioner
condensers.
The economic uncertainty in Mexico following the devaluation of the Peso
may result in reduced vehicle sales in Mexico in 1995. As a result, exports to
Mexico of Chrysler vehicles manufactured in the U.S. and Canada may decrease,
and sales of vehicles in Mexico may be less profitable in 1995, as compared to
1994. If U.S. and Canada vehicle industry sales continue at present or higher
levels, imports to the U.S. and Canada of Chrysler vehicles manufactured in
Mexico may increase, and such sales may be more profitable in 1995, as compared
to 1994. The devaluation of the Peso did not significantly impact Chrysler's
1994 operating results. Chrysler cannot predict the impact that the devaluation
of the Peso, and the resulting uncertainty surrounding the Mexican economic and
political environments, will have on its operating results in 1995.
North American Free Trade Agreement
The North American Free Trade Agreement ("NAFTA") unites Mexico,
Canada and the United States into the world's largest trading region, a market
with more than 360 million consumers. NAFTA provides for the phase-out of trade
regulations which restricted vehicle imports and exports between Mexico and the
U.S. and Canada. During 1994, trade benefits of NAFTA resulted in commercial
growth between Mexico and the United States as both economies benefitted from
reduced trading restrictions. In December of 1994, however, the value of the
Peso declined significantly in relation to the U.S. Dollar. In addition, the
Canadian Dollar experienced a decline in relation to the U.S. Dollar in January
of 1995. While it is uncertain how these economic events will affect Chrysler
in the short-term, Chrysler's management believes that the fundamentals
of NAFTA will benefit the North American automobile industry in the long-term.
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Item 1. BUSINESS - CONTINUED Part I - Continued
Automotive Operations - Continued
International Operations
Chrysler's automotive operations outside North America consist
primarily of Eurostar's manufacturing operations in Austria and the export of
finished vehicles and component kits produced in North America to independent
foreign distributors and local manufacturers. Chrysler owns an assembly
facility in Venezuela, has equity interests in companies with manufacturing and
assembly facilities in China and Egypt, and has established joint ventures with
certain other foreign manufacturers. Chrysler will continue to focus on growth
opportunities in major markets such as 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 shipped 136,462 vehicles to international markets in 1994, an
increase of 28 percent from 1993. Chrysler sold 70,294 units in European
markets and 66,168 units in other world markets, primarily Japan, Taiwan and the
Middle East. During 1994, Chrysler exported 24,272 kits to worldwide affiliates
for assembly. The majority of the kits were Jeep products shipped to China,
Indonesia and Venezuela. In addition, Chrysler began exporting the Neon and
Cirrus passenger cars in 1994.
Eurostar began production and distribution of Chrysler minivans in March
1992 for the European market. Eurostar sold 38,830 minivans in 1994, compared
to 33,738 in 1993. In 1993, Chrysler entered into an agreement with
Steyr-Daimler-Puch Fahrzeugtechnik to assemble Jeep Grand Cherokees in Austria
for the European and other world markets. Production under the agreement was
launched in the fourth quarter of 1994.
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 growing international sales and
continuing international component sourcing. 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 and Mexican
Peso. 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. At December 31, 1994, Chrysler had currency exchange
agreements for the German Mark, French Franc and Japanese Yen. Chrysler's
operating results may be 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 expected to be transacted in foreign currencies. Generally, these
purchases and sales are committed for the current and forthcoming calendar
year. The currency exchange agreements which provide hedge coverage typically
mature within two years of origination. 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
Chrysler imports and distributes in the United States and Canada
selected models of passenger cars manufactured by MMC in Japan. In 1994,
Chrysler sold 28,849 MMC-manufactured vehicles in the United States,
representing 1.3 percent of Chrysler's U.S. retail vehicle sales. In 1993,
Chrysler sold 69,646 MMC-manufactured vehicles in the United States,
representing 3.4 percent of Chrysler's U.S. retail vehicle sales. In addition
to passenger cars, Chrysler purchases 2.5-liter and 3.0-liter V-6 engines for
use in the production of certain minivans and other vehicles, and intends to buy
approximately 415,000 of these engines from MMC during the 1995 model year.
Diamond-Star produces small sporty cars in the United States for
Chrysler and Mitsubishi Motor Sales of America ("MMSA"). Chrysler sold its 50
percent interest in Diamond-Star to MMC, its partner in the joint venture, in
October 1991. Chrysler subsequently sold its equity interest in MMC, selling
93.9 million shares of MMC stock in 1992 and 1993 for approximately $544 million
in cash, net of related expenses. Pursuant to a distribution agreement that
terminates in July 1999, Chrysler retains the right to purchase a portion of
Diamond-Star's production capacity. In addition, Chrysler will provide engines
and transmissions for use in certain Diamond-Star vehicles. Chrysler's sales of
Diamond-Star cars in 1994 and 1993 represented 1.7 and 2.1 percent,
respectively, of Chrysler's U.S. retail vehicle sales in each period.
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Item 1. BUSINESS - CONTINUED Part I - Continued
Automotive Operations - Continued
Mitsubishi Motors Corporation - Continued
Under the terms of the United States Distribution Agreement ("USDA") in
effect between Chrysler and MMC, which terminates in March 1998, Chrysler and
MMSA share co-exclusive rights to distribute various MMC passenger car and
light-duty truck models which are available for sale in the United States. In
practice, Chrysler and MMSA share the distribution of certain models and
exclusively distribute other models.
Agreements similar to the USDA are in effect covering the Canadian
market. In practice, Chrysler Canada acts as sole distributor of MMC products.
Segment Information
Industry segment and geographic area data for 1994, 1993 and 1992 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 new model introductions has traditionally 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
In 1989, Chrysler changed the organizational structure of its automotive
design and development activities by establishing 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 utilization of platform teams has enabled Chrysler to focus
corporate resources on the continuous improvement of its car and truck
offerings.
In the fall of 1992, Chrysler introduced the first of its all-new
passenger car platforms resulting from the new platform team concept. The
Chrysler Concorde, Dodge Intrepid and Eagle Vision compete in the upper-middle
segment and employ a "cab-forward" design, creating more interior passenger
space without significantly increasing vehicle size or weight. Chrysler's
share of the U.S. basic middle segment was 9.9 percent for 1994, compared to
9.7 percent for 1993. In early 1993, a new Chrysler New Yorker and a touring
derivative called the LHS, which were also based on this platform, were
introduced in the basic large segment.
In 1993, Dodge introduced the first truck designed under the platform
team system, a new full-size Ram pickup. This new pickup also marks the first
full-scale production use of a new "big gas" V-10 engine which was also used as
a basis for the design of the Dodge Viper V-10 engine. In the fall of 1994,
Dodge introduced a Club Cab version of the Ram pickup to pursue another segment
of the growing truck market. Dodge's share of the U.S. full-size pickup truck
market grew to 14.5 percent in 1994 from 7.1 percent in 1993.
In January of 1994, Chrysler introduced the subcompact Dodge and
Plymouth Neon, which provide both driver and passenger airbags and apply
Chrysler's "cab-forward" design used by the upper-middle segment vehicles. A
two-door coupe was added to the lineup in the third quarter of 1994.
Chrysler's share of the U.S. subcompact segment rose to 11.9 percent in 1994
from 11.4 percent in 1993.
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 also applies the "cab-forward"
design. The Cirrus was awarded the Motor Trend Car of the Year Award for its
contemporary styling, roominess, overall quality, and value. A Dodge version
of the vehicle, the Dodge Stratus, will be introduced in the first quarter of
1995. In addition, a Plymouth version of the vehicle, the Plymouth Breeze,
will be added in the 1996 model year.
Chrysler added the Dodge Avenger in the third quarter of 1994 and will
introduce the Chrysler Sebring in the first quarter of 1995. These two-door
coupes compete in the high profile mid-specialty segment and are built
exclusively for Chrysler by Diamond-Star.
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Item 1. BUSINESS - CONTINUED Part I - Continued
Automotive Operations - Continued
Automotive Product Plans - Continued
Chrysler will introduce an all-new minivan in the first half of 1995.
The new Chrysler Town & Country, Dodge Caravan, and Plymouth Voyager will
provide many unique product features, including a driver's side sliding door.
Chrysler held 43.4 percent and 46.7 percent of the U.S. minivan segment in 1994
and 1993, respectively. In spite of increased competition in this segment,
Chrysler sold 513,163 minivans in the United States in 1994, compared to 502,053
in 1993. Worldwide shipments of minivans in 1994 and 1993 were 617,318 and
567,801 units, respectively.
Automotive Marketing
New passenger cars and trucks are sold at retail by dealers who have
sales and service agreements with the manufacturer. The dealers purchase cars,
trucks, parts and accessories from the manufacturer for sale to retail
customers. In the United States, Chrysler had 4,687 dealers at December 31,
1994 compared with 4,726 at December 31, 1993. Chrysler Canada had 607 dealers
at December 31, 1994 compared with 601 dealers at December 31, 1993.
Chrysler's ability to maintain, expand and improve the quality of its
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 purchase
Chrysler's equity investment from the dealer's share of the dealership profits.
Chrysler's equity interest in U.S. and Canadian dealerships totaled $28 million
in 64 dealerships as of December 31, 1994, compared with $37 million in 91
dealerships as of December 31, 1993.
Chrysler continues to focus on quality customer service. The new
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 and electronic components, and processes approximately 80
percent of its requirements for fabricated glass parts.
Chrysler used approximately 1,250 suppliers of productive materials in
1994, compared to approximately 1,380 used in 1993. Chrysler purchases a larger
portion of its materials, parts and other components from unaffiliated suppliers
than do its principal domestic competitors. Chrysler 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, and
Connecticut have adopted such 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 to increase the length of time vehicles are
subject to recall for failure to meet emission standards to 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. This Act also may require production of certain vehicles capable of
operating on fuels other than gasoline or diesel fuel (alternative fuels) under
a pilot test program to be conducted principally in California beginning in the
1996 model year. Chrysler is actively pursuing the development of flexible fuel
vehicles capable of operating on both gasoline and M-85 methanol blend fuels as
well as the development of vehicles capable of operating on compressed natural
gas.
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Item 1. BUSINESS - CONTINUED Part I - Continued
Automotive Operations - Continued
Government Regulation - Continued
Vehicle Regulation - Continued
The California Air Resources Board has received federal approval,
pursuant to the Clean Air Act, for a series of passenger car and light truck
emission standards, effective through the 2003 model year, 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. California also
requires that a specified percentage of each manufacturer's California sales
volume, beginning at two percent in 1998 and increasing to ten percent in 2003,
must 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 19, 1994, the Administrator of the United States
Environmental Protection Agency ("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 (of which
Chrysler is a member) and the Association of International Automobile
Manufacturers. 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. Both New York and Massachusetts have adopted the California general
standards as well as the California ZEV requirement. Connecticut has adopted
the general standards but not the ZEV requirement.
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 fuel economy standards. Under this
Act, a manufacturer earns credits for 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 will generate
sufficient credits over the succeeding three years. Chrysler is in substantial
compliance with existing CAFE requirements and anticipates continued compliance
with such requirements. 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 corporate average fuel economy standards from
their current levels. In addition, the National Highway Traffic Safety
Administration ("NHTSA") has initiated rulemaking to set 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 customer-owned 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 is conducting an engineering analysis of the rear liftgate latches in
Chrysler's 1984-1994 model year minivans (approximately 4 million latches) as a
result of allegations that some latches opened during collisions. Chrysler has
provided NHTSA with extensive information in support of Chrysler's position that
no safety-related defect exists with respect to the latches. If, however, NHTSA
concludes that the information gathered may warrant a formal investigation, it
may issue a Recall Request Letter asking that Chrysler voluntarily repair or
replace the latches. If NHTSA issues such a letter and Chrysler declines to
conduct a recall, NHTSA may proceed with a formal investigation or close the
matter. If NHTSA proceeds with a formal investigation and determines that a
defect exists, it may seek to compel a recall. Chrysler continues to discuss
this matter with NHTSA.
10
11
Item 1. BUSINESS - CONTINUED Part I - Continued
Automotive Operations - Continued
Government Regulation - Continued
Vehicle Regulation - Continued
Chrysler's emissions and safety-related recall costs vary widely from
year to year, and could be significant in future years 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 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 1995 through 1999 will be
approximately $700 million. Of this total, Chrysler estimates that $136 million
will be spent in 1995 and $138 million will be spent in 1996. Substantially all
of these expenditures are included in Chrysler's planned disbursements for new
product development and the acquisition of productive assets over the 1995 to
1999 period. In addition, the extensive federal-state permit program
established by the Clean Air Act may reduce operational flexibility and cause
delays in upgrading of Chrysler's production facilities in the United States.
Clean Air Act
Pursuant to the Clean Air Act, the 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 1992 releases and emissions of chemicals
and toxics by Chrysler were reduced by more than 70 percent from comparable 1987
levels.
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 97 sites
involved in the foregoing matters at December 31, 1994. Chrysler may also incur
remediation costs at an additional 40 of its active or deactivated facilities.
Estimates of future costs of pending 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 may ultimately incur significant expenditures over an extended
period of time in connection with the foregoing environmental matters, and
therefore has established reserves totalling $310 million for the estimated
costs associated with all of its environmental remediation efforts. Chrysler
believes that these reserves will be sufficient to resolve these matters. After
giving effect to these reserves, management believes, based on currently known
facts and circumstances and existing laws and regulations, that the disposition
of these matters will not have a material adverse effect on Chrysler's
consolidated financial position. Future developments could cause Chrysler to
change its estimate of the total costs associated with these matters, and those
changes could be material to Chrysler's consolidated results of operations for
the period in which the developments occur. Chrysler is unable to estimate such
changes in costs, if any, that may be incurred in connection with these matters.
11
12
Item 1. BUSINESS - CONTINUED Part I - Continued
FINANCIAL SERVICES
Chrysler's principal subsidiary, CFC, is a financial services
organization engaged in wholesale and retail vehicle financing, servicing
nonautomotive leases and loans, property, casualty and other insurance, and
automotive dealership facility development and management. All of CFC's stock
is owned by Chrysler. 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 primary objective is to provide financing for automotive dealers
and retail purchasers of Chrysler's products. CFC sells significant amounts of
automotive receivables acquired in transactions subject to limited recourse
provisions. CFC remains as servicer for which it is paid a servicing fee. At
the end of 1994, CFC had nearly 3,100 employees and its portfolio of
receivables managed, which includes receivables owned and serviced for others,
totaled $32.9 billion.
CFC has sold various nonautomotive assets over the last several years,
thereby making CFC more dependant on Chrysler. Thus, lower levels of sales of
Chrysler automotive products could result in a reduction in the level of
finance operations of CFC.
CFC's portfolio of finance receivables managed includes receivables
owned and receivables serviced for others. Receivables serviced for others
primarily represent sold receivables which CFC services for a fee. At December
31, 1994, receivables serviced for others accounted for 61 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:
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(in millions of dollars)
Automotive financing $ 30,092 $ 25,011 $ 22,481 $ 24,220 $ 25,117
Nonautomotive financing 2,775 3,251 7,657 9,486 10,709
-------- -------- -------- -------- --------
Total $ 32,867 $ 28,262 $ 30,138 $ 33,706 $ 35,826
======== ======== ======== ======== ========
Automotive Financing
CFC conducts its automotive finance business principally through its
subsidiaries Chrysler Credit Corporation, Chrysler Credit Canada Ltd., and, in
Mexico, Chrysler Comercial S.A. de C.V., (together "Chrysler Credit").
Chrysler Credit is the major source of automobile and light-duty truck
wholesale (also referred to as dealer "floor plan") and retail financing for
Chrysler dealers and their customers throughout North America. Chrysler Credit
also offers its floor plan 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 Chrysler Credit are conducted through 94
branches in the United States, Canada and Mexico.
CFC's Mexican subsidiary, Chrysler Comercial S.A. de C.V. ("Chrysler
Comercial"), contributed $11 million, $18 million and $15 million in 1994, 1993
and 1992, respectively, to CFC's earnings before income taxes. Chrysler
Comercial's total assets were $433 million and $477 million at December 31, 1994
and 1993, respectively. The economic uncertainty in Mexico following the
devaluation of the Peso may have an unfavorable impact on Chrysler Comercial's
retail and wholesale volume and credit losses.
During 1994 CFC financed or leased approximately 830,000 vehicles at
retail in the United States, including approximately 525,000 new Chrysler
passenger cars and light-duty trucks, representing 24 percent of Chrysler's U.S.
retail and fleet deliveries. In 1994, the average monthly payment for new
vehicle retail installment sale contracts acquired in the United States was
$375. The average percentage of dealer cost financed was 94 percent and the
average original term was 55 months. CFC also financed at wholesale
approximately 1,647,000 new Chrysler passenger cars and light-duty trucks
representing 73 percent of Chrysler's U.S. factory shipments in 1994. Wholesale
vehicle financing accounted for 74 percent of the total automotive financing
volume of CFC in 1994 and represented 31 percent of automotive finance
receivables outstanding at December 31, 1994.
12
13
Item 1. BUSINESS - CONTINUED Part I - Continued
Financial Services - Continued
Nonautomotive Financing
CFC has downsized its nonautomotive operations through sales and
liquidations over the last several years. Chrysler Capital Corporation
("Chrysler Capital") manages nonautomotive leases and loans to clients in over
15 industries throughout the United States. At December 31, 1994, Chrysler
Capital managed $2.3 billion of nonautomotive finance receivables compared to
$2.7 billion at December 31, 1993. In addition, CFC managed a portfolio of
secured small business loans totaling $0.5 billion at December 31, 1994,
compared to $0.6 billion at December 31, 1993.
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 provides physical
damage, garage liability, workers' compensation and property and contents
coverage directly to automotive dealers. Chrysler Insurance also provides
collateral protection and single interest insurance to retail automobile
customers and their financing sources.
Real Estate Management
Chrysler Realty Corporation ("Chrysler Realty"), which is engaged in the
ownership, development and management of Chrysler automotive dealership
properties in the United States, typically purchases, leases or options
dealership facilities and then leases or subleases these facilities to Chrysler
dealers. At December 31, 1994, Chrysler Realty controlled 876 sites (of which
289 were owned by Chrysler Realty).
Funding
During 1994, CFC issued $1.8 billion of term debt and increased the
level of short-term notes outstanding (primarily commercial paper) to $4.3
billion. Receivable sales continued to be a significant source of funding
during 1994, as CFC realized $6.4 billion of net proceeds from the sale of
automotive retail receivables compared to $7.8 billion of net proceeds from the
sale of automotive retail receivables in 1993. In addition, revolving
wholesale receivable sale arrangements provided funding which aggregated $3.8
billion and $4.6 billion at December 31, 1994 and 1993, respectively.
CFC uses derivative financial instruments to manage its exposure arising
from changes in interest rates and currency exchange rates as part of its asset
and liability management program. 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.
Due to changing interest rates, interest rate derivatives are used to
stabilize interest margins. The Company hedges against borrowings denominated
in currencies other than the borrowers' local currency. Such borrowings are
translated in the financial statements at the rates of exchange established
under the related currency exchange agreements. Forward interest rate contracts
are used to manage exposure to fluctuations in funding costs for anticipated
securitizations of retail receivables.
CFC's outstanding debt at December 31, for each of the five most recent
years was as follows:
December 31
--------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(in millions of dollars)
Short-term notes (primarily commercial paper) $ 4,315 $ 2,772 $ 352 $ 339 $ 1,114
Bank borrowings under
revolving credit facilities -- -- 5,924 6,633 6,241
Senior term debt 6,069 5,139 4,436 6,742 9,233
Subordinated term debt 27 77 585 949 1,686
Mexico borrowings and other 260 447 455 518 431
-------- ------- -------- -------- --------
Total $ 10,671 $ 8,435 $ 11,752 $ 15,181 $ 18,705
======== ======= ======== ======== ========
13
14
Item 1. BUSINESS - CONTINUED Part I - Continued
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. In September 1992, Chrysler
announced a realignment of a part of the Car Rental Operations under Pentastar
and the consolidation and phase out of certain of those operations. As part of
that realignment, Chrysler subsequently transferred to Dollar ownership of
General Rent-A-Car ("General"), which also rents cars for business, leisure and
personal use, exclusively through corporate owned locations. Consolidation of
General's operations into those of Dollar's was completed in 1994.
Additionally, 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, 1994, 1993 and 1992, Chrysler spent
$1.3 billion, $1.2 billion, and $1.1 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, 1994, Chrysler had a total of approximately 121,000,
employees worldwide, approximately 97,000 of which were employed in the United
States. 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, 98 percent of hourly and 91 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").
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
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, except the mortgage loan on Chrysler's
Sterling Heights Assembly Plant (Sterling Heights, Michigan).
14
15
Item 2. PROPERTIES - CONTINUED Part I - Continued
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. An assembly plant located in Fenton, Missouri, which
was previously idled in 1991, is being equipped with new machinery and tooling
and will begin producing minivans in 1995. 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 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.
In 1991, Chrysler dedicated its new technology center in Auburn Hills,
Michigan. The initial project, which consisted of 3.3 million square feet of
floor space and included design, vehicle engineering, manufacturing engineering
and pilot build facilities associated with the development of new Chrysler cars
and trucks, was completed and fully occupied in the first half of 1994. In the
third quarter of 1992, the Board of Directors approved a subsequent project to
build an administrative building which is currently under construction. The
administrative building, which will add approximately 1.0 million square feet of
floor space to the facility, is scheduled for completion in the first half of
1996.
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.
FINANCIAL SERVICES
At December 31, 1994, the following facilities were utilized by
CFC in conducting its business:
(a) executive offices of CFC, Chrysler Credit Corporation, Chrysler
Insurance and certain other domestic subsidiaries of CFC in
Southfield, Michigan;
(b) a total of 82 branches of Chrysler Credit located throughout the
United States;
(c) headquarters of remaining Chrysler First Inc. operations in Allentown,
Pennsylvania, and a total of 3 offices of such corporation in the
United States;
(d) headquarters of Chrysler Capital in Stamford, Connecticut and a total
of 12 offices of such corporation located throughout the United
States;
(e) headquarters of Chrysler Realty in Troy, 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, 1994, a total of 289 automobile dealership properties
generally consisting of land and improvements were owned by Chrysler Realty
leased primarily to Chrysler franchised dealers.
15
16
Item 3. LEGAL PROCEEDINGS Part I - Continued
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 that 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 $1.1 billion in compensatory and $1.9 billion in punitive damages
in the aggregate as of December 31, 1994. 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 $312 million of the compensatory and $785 million of the
punitive damages specified above. Pursuant to an indemnification agreement with
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, 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.
Chrysler may ultimately incur significant expenditures over an extended
period of time in connection with the foregoing matters, and therefore has
established reserves which it believes will be sufficient to resolve these
matters. After giving effect to these reserves, management believes, based on
currently known facts and circumstances, that the disposition of these matters
will not have a material adverse effect on Chrysler's consolidated financial
condition. Future developments could cause Chrysler to change its estimate of
the ultimate cost of resolving these matters, and these changes could be
material to Chrysler's consolidated results of operations for the period in
which the developments occur. Chrysler is unable to estimate such changes in
costs, if any, that may be incurred in connection with these matters.
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 97 sites involved in the foregoing
matters at December 31, 1994. Chrysler may also incur remediation costs at an
additional 40 of its active or deactivated facilities.
In particular, 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.
Estimates of future costs of pending 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 may ultimately incur significant expenditures over an extended
period of time in connection with the foregoing environmental matters, and
therefore has established reserves totalling $310 million for the estimated
costs associated with all of its environmental remediation efforts. Chrysler
believes that these reserves will be sufficient to resolve these matters. After
giving effect to these reserves, management believes, based on currently known
facts and circumstances and existing laws and regulations, that the disposition
of these matters will not have a material adverse effect on Chrysler's
consolidated financial position. Future developments could cause Chrysler to
change its estimate of the total costs associated with these matters, and these
changes could be material to Chrysler's consolidated results of operations for
the period in which the developments occur. Chrysler is unable to estimate such
changes in costs, if any, that may be incurred in connection with these matters.
16
17
Item 3. LEGAL PROCEEDINGS - Continued Part I - Continued
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. The Corporation and the named directors
are continuing with the defense of this matter.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None during the fourth quarter ended December 31, 1994.
17
18
EXECUTIVE OFFICERS OF THE REGISTRANT
(AS OF FEBRUARY 2, 1995)
Officer
Name Age Since (1) Present Position
- -------------------- ----- ----------------- ---------------------------------------------------------
R. J. Eaton 54 March 14, 1992 Chairman of the Board and Chief Executive Officer (2)
R. A. Lutz 62 June 3, 1986 President and Chief Operating Officer (2)
T. G. Denomme 55 April 9, 1981 Vice Chairman and Chief Administrative Officer (2)
G. C. Valade 52 June 7, 1990 Executive Vice President and Chief Financial Officer
T. R. Cunningham 48 September 3, 1987 Executive Vice President - Sales and Marketing and General
Manager - Minivan Operations
D. K. Pawley 53 April 11, 1991 Executive Vice President - Manufacturing
R. R. Boltz 49 June 11, 1987 Vice President - Product Strategy and Regulatory Affairs
and General Manager - Small Car Operations
T. P. Capo 43 November 7, 1991 Vice President and Treasurer
J. E. Cappy 60 August 5, 1987 Vice President - Chrysler Technologies and Rental Car
Operations
F. J. Castaing 49 August 5, 1987 Vice President - Vehicle Engineering and General Manager -
Power Train Operations
J. D. Donlon, III 48 January 1, 1992 Vice President and Controller
F. J. Ewasyshyn 42 October 6, 1994 Vice President - Advance Manufacturing and Engineering
T. C. Gale 51 April 4, 1985 Vice President - Product Design and International
Operations
T. Gallagher 52 September 3, 1992 Vice President - Employee Relations
M. M. Glusac 64 July 7, 1994 Vice President - Government Affairs
G. L. Henson 52 August 1, 1994 Vice President - Large & Small Car, Jeep and Truck
Assembly and Stamping Operations
J. E. Herlitz 52 April 7, 1994 Vice President - Product Design
J. P. Holden 43 May 6, 1993 Vice President - Quality, Capacity, and Process Management
H. A. Lewis 52 July 8, 1993 Vice President - Finance Strategy and Planning
R. G. Liberatore 45 January 1, 1993 Vice President - Washington Affairs
A. C. Liebler 52 May 17, 1990 Vice President - Marketing and Communications
C. S. Lobo 46 July 9, 1992 Vice President - President and Managing Director -
Chrysler de Mexico S. A.
W. J. O'Brien 51 September 3, 1987 Vice President, General Counsel and Secretary
K. M. Oswald 45 October 6, 1994 Vice President - Corporate Personnel
E. T. Pappert 55 November 5, 1981 Vice President - Sales and Service
L. C. Richie 53 June 12, 1986 Vice President and General Counsel - Automotive Legal
Affairs
B. I. Robertson 52 February 6, 1992 Vice President - Engineering Technologies and General
Manager - Jeep/Truck Operations
S. T. Rushwin 47 October 6, 1994 Vice President - International Manufacturing and Minivan
Assembly Operations
T. W. Sidlik 45 September 3, 1992 Vice President, Chairman - Chrysler Financial Corporation
T. T. Stallkamp 48 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.
18
19
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 143,000 shareholders of record of Chrysler's common stock at
December 31, 1994. 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.
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
1993
----------------
First Quarter $41.125 $31.750 $0.15
Second Quarter 47.625 37.000 0.15
Third Quarter 49.625 39.500 0.15
Fourth Quarter 58.375 47.625 0.20
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 meet its new
product development and facility modernization spending programs. 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.
19
20
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.
1994 (1) 1993 (2) 1992 (3) 1991 (4) 1990 (5)
---------- ---------- ---------- ---------- ----------
(Dollars and shares in millions except per common share data)
Total revenues $ 52,224 $ 43,600 $ 36,897 $ 29,370 $ 30,620
Earnings (loss) from continuing operations
before cumulative effect of changes
in accounting principles 3,713 2,415 505 (538) 68
Primary earnings per common share 10.11 6.77 1.47 (2.22) 0.30
Net earnings (loss) 3,713 (2,551) 723 (795) 68
Primary earnings (loss) per common share 10.11 (7.62) 2.21 (3.28) 0.30
Fully diluted earnings per common share 9.10 -- 2.13 -- 0.30
Dividends declared per common share 1.10 0.65 0.60 0.60 1.20
Total assets 49,539 43,679 40,690 43,076 46,374
Total debt 13,106 11,451 15,551 19,438 22,900
Convertible preferred stock (in shares) 1.7 1.7 1.7 -- --
- ----------------------------
(1) 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 recently issued U.S. Department of Treasury income tax
regulations, and (2) the reversal of valuation allowances related to tax
benefits associated with net operating loss carryforwards.
(2) Results for the year ended December 31, 1993 include a pretax gain of $205
million ($128 million after applicable income taxes) on the sale of
Chrysler's remaining 50.3 million shares of MMC stock, a pretax gain of
$60 million ($39 million after applicable income taxes) on the sale of
Chrysler's plastics operations, a $4.68 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."
(3) Earnings for the year ended December 31, 1992 include a pretax gain of
$142 million ($88 million after applicable income 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 applicable income taxes) relating to the restructuring of Chrysler's
short-term vehicle rental subsidiaries, and a $110 million pretax charge
($69 million after applicable income taxes) relating to investment losses
experienced by Chrysler Canada.
(4) Results for the year ended December 31, 1991 include a pretax gain of $205
million ($127 million after applicable income taxes) on the sale of
Chrysler's 50 percent equity interest in Diamond-Star, the favorable
effect of a $391 million ($242 million after applicable income 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.
(5) Earnings for the year ended December 31, 1990 include a pretax return to
income of $101 million ($63 million after applicable income taxes)
resulting from a reduction in the estimated costs recognized in 1989 in
connection with the restructuring of Chrysler's automotive operations.
20
21
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF Part II - Continued
FINANCIAL 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
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 a gain on sales of automotive
assets and investments totaling $265 million. Excluding the effects of these
items, Chrysler's pretax earnings for 1993 were $3.6 billion.
Chrysler reported net earnings for 1994 of $3.7 billion, or $10.11 per
common share, compared to a net loss for 1993 of $2.6 billion, or $7.62 per
common share. Net earnings for 1994 included favorable tax adjustments
aggregating $132 million. The net loss for 1993 resulted from a charge of $4.68
billion, or $13.57 per common share, for the cumulative effect of a change in
accounting principle related to the adoption of SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." Also included in
the 1993 results was a charge of $283 million, or $0.82 per common share, 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 sales volume, a reduction in lower-margin fleet sales in
proportion to total retail sales and reduced sales incentives, partially offset
by increased profit-based employee costs. During 1994, Chrysler's worldwide
factory sales of cars increased 2 percent to 1,051,750 units, while worldwide
factory sales of trucks increased 18 percent to 1,710,353 units. Combined U.S.
and Canadian dealers' days supply of vehicles increased to 69 days at December
31, 1994 from 63 days at December 31, 1993.
During 1994, U.S. and Canada vehicle industry retail sales were 16.7
million cars and trucks, an increase of 8 percent from the 15.4 million units
sold in 1993. Despite an increase in its combined car and truck sales,
Chrysler's U.S. and Canada retail market share in 1994 decreased slightly in
comparison to 1993. Decreases in car market share were partially offset by
increases in truck market share, as shown below:
Increase/
1994 1993 (Decrease)
---------- ---------- ----------
U.S. Retail Market (1):
Car sales 811,824 834,132 (22,308)
Car market share 9.0 % 9.8 % (0.8)%
Truck sales 1,392,171 1,213,690 178,481
Truck market share 21.7 % 21.4 % 0.3 %
Combined car and truck sales 2,203,995 2,047,822 156,173
Combined car and truck market share 14.3 % 14.4 % (0.1)%
U.S. and Canada Retail Market (1):
Combined car and truck sales 2,451,747 2,274,641 177,106
Combined car and truck market share 14.7 % 14.8 % (0.1)%
----------------------
(1) All retail sale and market share data include fleet sales.
The decline in Chrysler's U.S. car market share during 1994 resulted
from reduced sales to fleet customers and reduced sales in certain segments
resulting from changeovers to all-new 1995 models. The increase in U.S. truck
market share in 1994 was the result of increased sales of full-size Dodge Ram
pickup trucks introduced in late 1993. Despite increased retail unit sales in
1994, market shares in the minivan and small sport-utility segments decreased
slightly from 1993, principally as a result of market demand in excess of
Chrysler's 1994 production capacity for minivans and Jeep(R) vehicles.
CFC's earnings before income taxes and the cumulative effect of changes
in accounting principles were $315 million in 1994, compared to $267 million in
1993. The increase in 1994 was primarily due to higher volumes of automotive
financing, reduced credit loss provisions and lower costs of bank facilities.
CFC reported net earnings of $195 million and $129 million for 1994 and 1993,
respectively. CFC's net earnings for 1993 included charges totaling $30 million
for the adoptions of SFAS No. 106 and SFAS No. 112.
21
22
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF Part II - Continued
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - Continued
FINANCIAL REVIEW - Continued
During 1994 and 1993, Chrysler continued to take various actions to
strengthen its financial condition, improve liquidity and add to its equity base
in order to ensure its ability to carry out its capital spending plans. During
1994 and 1993, Chrysler contributed a total of $6.1 billion to its pension fund.
At December 31, 1994, Chrysler had plan assets in excess of its projected
pension benefit obligation ("PBO") of $244 million, compared to a PBO in excess
of plan assets of $3.9 billion at December 31, 1992. During 1993, Chrysler
issued 52 million shares of common stock for net proceeds of $1.95 billion.
During 1994 and 1993, Chrysler sold assets and investments for proceeds totaling
approximately $786 million.
Chrysler's revenues and results of operations are principally derived
from the U.S. and Canada automotive marketplace. During 1994, combined U.S. and
Canada automobile industry sales increased 8 percent from the 1993 levels, as
the economic recoveries in the U.S. and Canada continued. Overall, Chrysler
experienced sales growth consistent with the U.S. and Canada automobile
industry. In response to the economic recovery, Chrysler is increasing its
worldwide production capacity by approximately 500,000 units per year by 1996.
Chrysler vehicles manufactured in Mexico represented approximately 9
percent of Chrysler's 1994 worldwide factory car and truck sales. Approximately
two-thirds of these vehicles were exported to the U.S., Canada and other
markets. Sales in Mexico of vehicles manufactured in the U.S. and Canada were
not significant in 1994. The economic uncertainty in Mexico following the
devaluation of the Peso may result in reduced vehicle sales in Mexico in 1995.
As a result, exports to Mexico of Chrysler vehicles manufactured in the U.S. and
Canada may decrease, and sales of vehicles in Mexico may be less profitable in
1995, as compared to 1994. If U.S. and Canada vehicle industry sales continue
at present or higher levels, imports to the U.S. and Canada of Chrysler vehicles
manufactured in Mexico may increase, and such sales may be more profitable in
1995, as compared to 1994. The devaluation of the Peso did not significantly
impact Chrysler's 1994 operating results. Chrysler cannot predict the impact
that the devaluation of the Peso and the resulting uncertainty surrounding the
Mexican economic and political environments will have on its operating results
in 1995.
During the first half of 1995, Chrysler will begin production of its
all-new minivans, and will cease production of its existing minivan models.
Chrysler expects this changeover will result in a decline in minivan production
in 1995 which Chrysler currently estimates at approximately 65,000 units.
Chrysler has benefitted from several factors, including: (1) continuing
economic recoveries (including low interest rates) and strong automobile sales
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 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.
COMPARISON OF SELECTED ELEMENTS OF REVENUES AND EXPENSES
Chrysler's total revenues were as follows:
1994 vs. 1993 1993 vs. 1992
Increase/ Increase/
1994 1993 (Decrease) 1992 (Decrease)
--------- -------- ------------- --------- -------------
(in millions of dollars) (in millions of dollars)
Sales of manufactured products $ 49,363 $ 40,831 21 % $ 33,548 22 %
Finance and insurance income 1,373 1,429 (4)% 1,953 (27)%
Other income 1,488 1,340 11 % 1,396 (4)%
--------- --------- ---------
Total revenues $ 52,224 $ 43,600 20 % $ 36,897 18 %
========= ========= =========
The increase in sales of manufactured products in 1994 primarily
reflects the 12 percent increase in factory unit sales to 2,762,103 units in
1994. The 1993 increase was largely due to a 14 percent increase in factory
unit sales from the 2,175,447 units in 1992. Average revenue per unit, net of
sales incentives, was $17,663, $16,461 and $15,086 in 1994, 1993 and 1992,
respectively. The increases in average revenue per unit in 1994 and 1993 were
principally due to reduced sales incentives and sales of an increased proportion
of trucks to total vehicles.
22
23
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF Part II - Continued
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - Continued
COMPARISON OF SELECTED ELEMENTS OF REVENUES AND EXPENSES - Continued
The decreases in finance and insurance income in 1994 and 1993 were
primarily attributable to reduced nonautomotive financing revenue, resulting
from sales and liquidations of CFC's nonautomotive receivables, partially offset
by increased levels of automotive finance receivables. Total automotive
financing volume in 1994, 1993 and 1992 was $70.4 billion, $59.8 billion and
$46.6 billion, respectively. The increases in automotive financing volume over
the last two years was largely due to higher volumes of wholesale financing
provided to automotive dealers. 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:
1994 1993 1992
------ ------ ------
United States Penetration:
Retail 24 % 25 % 24 %
Wholesale 73 % 75 % 69 %
Number of New Chrysler Vehicles Financed in
the United States (in thousands):
Retail 525 516 413
Wholesale 1,647 1,510 1,199
Other income increased during 1994, as compared to 1993 and 1992, as a
result of increased interest income, reflecting Chrysler's increased cash, cash
equivalents and marketable securities balances in 1994.
Total expenses were as follows:
1994 vs. 1993 1993 vs. 1992
Increase/ Increase/
1994 1993 (Decrease) 1992 (Decrease)
--------- -------- ------------- --------- -------------
(in millions of dollars) (in millions of dollars)
Costs, other than items below $ 38,032 $ 32,382 17 % $ 28,396 14 %
Depreciation of property and equipment 983 969 1 % 969 --
Amortization of special tools 961 671 43 % 641 5 %
Selling and administrative expenses 3,933 3,377 16 % 3,387 --
Pension expense 714 756 (6)% 837 (10)%
Nonpension postretirement benefit
expense 834 768 9 % 369 108 %
Interest expense 937 1,104 (15)% 1,405 (21)%
Gain on sales of automotive assets
and investments -- (265) -- (142) 87 %
Restructuring charge -- -- -- 101 --
--------- --------- --------
Total expenses $ 46,394 $ 39,762 17 % $ 35,963 11 %
========= ========= =========
Costs, other than items below increased over the three years primarily
due to the increases in factory unit sales volume. Included in costs, other than
items below in 1992 is a $110 million investment loss for reducing investments
of Chrysler Canada and certain of its employee benefit plans in a real estate
concern to their estimated net realizable value. Excluding the 1992 investment
loss, costs, other than items below as a percent of net sales of manufactured
products were 77 percent, 79 percent and 84 percent in 1994, 1993 and 1992,
respectively. These improvements were primarily due to lower per unit sales
incentives and increased capacity utilization.
Depreciation of property and equipment remained comparable in 1994,
1993 and 1992. Increases resulting from Chrysler's capital spending program
were offset by reductions at CFC resulting from the sales and downsizing of its
nonautomotive financing operations. Special tooling amortization increased in
1994 over the 1993 and 1992 levels, primarily as a result of the shortening of
the remaining service lives of certain special tools in 1994.
Selling and administrative expenses increased in 1994 from the 1993 and
1992 levels, as a result of increased advertising costs and increased
profit-based employee costs. During 1993, increased profit-based employee
costs were offset by reduced costs at CFC due to the downsizing of its
nonautomotive financing operations.
23
24
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF Part II - Continued
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - Continued
COMPARISON OF SELECTED ELEMENTS OF REVENUES AND EXPENSES - Continued
Pension expense decreased in 1994 due to improved funding of the plans,
partially offset by increases resulting from the reduction in the discount rate
used to measure pension expense in 1994 and benefit increases from Chrysler's
1993 national contracts with its principal bargaining units. Pension expense
decreased in 1993 due to improved funding of the plans. Contributions during
1994, 1993 and 1992 were $2.6 billion, $3.5 billion and $816 million,
respectively.
Nonpension postretirement benefit expense increased slightly in 1994, as
increases resulting from the reduction in the discount rate used to measure
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 increased significantly in 1993 due to
the adoption of SFAS No. 106, which requires that the costs of health and life
insurance benefits for retirees be accrued as expense in the period in which
employees provide services.
The decline in interest expense in 1994 was primarily due to reductions
in CFC's effective cost of borrowings, resulting from CFC's higher levels of
commercial paper, which has lower costs than borrowings under CFC's bank
facilities. The decline in interest expense in 1993 was primarily the result of
CFC's lower average borrowings, reflecting CFC's 1993 sales of its nonautomotive
financing operations, the proceeds from which were used to reduce outstanding
indebtedness. CFC's average effective cost of borrowings was 8.0 percent, 8.6
percent and 7.8 percent in 1994, 1993 and 1992, respectively. The decrease in
CFC's 1994 average effective cost of borrowings reflects lower bank facility
costs and higher levels of commercial paper. The increase in CFC's average
effective cost of borrowings in 1993 as compared to 1992 was primarily due to
the amortization of up-front fees and costs associated with CFC's former bank
facilities, which were replaced in 1994.
The results of operations for 1992 included a restructuring charge of
$101 million relating to the realignment of Chrysler's short-term vehicle rental
subsidiaries under Pentastar Transportation Group and the consolidation and
phase-out of certain of these operations. This restructuring charge included
the write-down of goodwill, lease termination costs, losses associated with the
disposal of tangible assets, and other related charges.
Operating results for 1993 and 1992 included gains on sales of
automotive assets and investments of $265 million and $142 million,
respectively. The 1993 pretax gain was composed 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. The 1992 pretax gain resulted
from the sale of 43.6 million shares of MMC stock.
Chrysler's effective tax rates in 1994, 1993 and 1992 were 36.3 percent,
37.1 percent and 45.9 percent, respectively. The provision for income taxes in
1994 included adjustments aggregating $132 million for: (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 recently issued U.S. Department of Treasury income
tax regulations, and (2) the reversal of valuation allowances related to tax
benefits associated with net operating loss carryforwards. The 1993 provision
for income taxes included a favorable adjustment of Chrysler's deferred tax
assets and liabilities to the increased U.S. federal tax rate. The 1992
effective tax rate was higher than the effective tax rates in 1994 and 1993 as a
result of higher nondeductible expenses, primarily goodwill amortization.
LIQUIDITY AND CAPITAL RESOURCES
Chrysler's combined cash, cash equivalents and marketable securities
totaled $8.4 billion at December 31, 1994 (including $757 million held by CFC),
compared to $5.1 billion and $3.6 billion at December 31, 1993 and 1992,
respectively. The increase in 1994 was the result of cash generated by
operating activities, partially offset by capital expenditures and pension
contributions. The increase in 1993 was the result of cash generated by
operating activities, the issuance of 52 million shares of new common stock and
the sale of assets and investments, partially offset by debt repayments, pension
contributions and capital expenditures.
Chrysler's long-term profitability will depend on its ability to
develop and market its products successfully. Chrysler's expenditures for new
product development and the acquisition of productive assets were $13.7 billion
for the three-year period ended December 31, 1994. Expenditures for these
items during the succeeding three-year period are expected to be at similar or
higher levels. At December 31, 1994, Chrysler had commitments for capital
expenditures, including commitments for assets currently under construction,
totaling approximately $1.0 billion.
24
25
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF Part II - Continued
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
LIQUIDITY AND CAPITAL RESOURCES - CONTINUED
Chrysler's pension assets exceeded its PBO by $244 million at December
31, 1994, compared to a PBO in excess of plan assets of $2.2 billion and $3.9
billion at December 31, 1993 and 1992, respectively. These reductions in the
unfunded pension obligation resulted from Chrysler's contributions of $2.6
billion and $3.5 billion to the pension fund in 1994 and 1993, respectively. In
addition to the contributions in 1994, the projected pension benefit obligation
was reduced by an increase in the discount rate used to measure the
obligation. The favorable impact of the 1993 contributions was partially offset
by increases in the PBO caused by the reduction in the discount rate used to
measure the obligation and pension benefit increases which were included in
Chrysler's new national labor agreements with its principal collective
bargaining units.
During 1994, Chrysler replaced its $1.5 billion revolving credit
agreement, which was to expire in June 1996, with a new $1.7 billion agreement,
expiring in July 1999. The new agreement provides for reduced interest rates
and commitment fees, less restrictive financial covenants and the removal of the
lenders' ability to obtain security interests in Chrysler's assets. None of the
commitment was drawn upon at December 31, 1994.
At December 31, 1994, Chrysler (excluding CFC) had debt maturities
totaling $695 million in 1995, 1996 and 1997. In December 1994, Chrysler's
Board of Directors approved a $1 billion common stock repurchase program
commencing in the first quarter of 1995, subject to market conditions. Chrysler
believes that cash from operations and its cash position will provide sufficient
liquidity to meet its capital expenditure, debt maturity 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 CFC provides.
Term debt borrowings, commercial paper borrowings and receivable sales
are CFC's primary funding sources. During 1994, CFC raised $1.8 billion from
term debt placements and increased the amount of its commercial paper
outstanding by $1.5 billion.
Receivable sales continued to be a significant source of funding for
CFC, which realized $6.4 billion and $7.8 billion of net proceeds from the sale
of automotive retail receivables during 1994 and 1993, respectively. In
addition, CFC's wholesale receivable sale arrangements provided funding which
aggregated $3.8 billion and $4.6 billion at December 31, 1994 and 1993,
respectively.
During 1993 and 1992, $3.3 billion in aggregate cash proceeds were
received from the sale of substantially all of the net assets of the consumer
and inventory financing businesses of Chrysler First Inc. and the sale of
certain assets of Chrysler Capital. Proceeds from these sales were used to
reduce outstanding indebtedness.
At December 31, 1994, CFC had U.S. and Canadian bank facilities
aggregating $5.2 billion and receivable sale agreements totaling $1.7 billion.
At December 31, 1994, no amounts were outstanding under CFC's U.S. and Canadian
bank facilities or receivable sale agreements.
At December 31, 1994, CFC had debt maturities of $5.1 billion in 1995
(including $4.3 billion of commercial paper), $1.7 billion in 1996, and $692
million in 1997. CFC believes that cash provided by operations, receivable
sales and the issuance of term debt and commercial paper will be sufficient to
enable it to meet its funding requirements.
NEW ACCOUNTING STANDARDS
In May 1993, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," effective for
fiscal years beginning after December 15, 1994. In October 1994, the FASB
issued SFAS No. 118, "Accounting by Creditors for Impairment of a Loan--Income
Recognition and Disclosures," as an amendment to SFAS No. 114. These new
accounting standards require creditors to evaluate the collectibility of both
contractual interest and principal of receivables when evaluating the need for a
loss accrual. Chrysler believes that the implementation of these new accounting
standards will not have a material impact on its consolidated operating results
or financial position. Chrysler will adopt these standards effective January 1,
1995, as required.
25
26
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Part II - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
Year Ended December 31
---------------------------------
1994 1993 1992
------- ------- -------
(in millions of dollars)
Sales of manufactured products $ 49,363 $ 40,831 $ 33,548
Finance and insurance income 1,373 1,429 1,953
Other income 1,488 1,340 1,396
--------- --------- ---------
TOTAL REVENUES 52,224 43,600 36,897
--------- --------- ---------
Costs, other than items below (Note 14) 38,032 32,382 28,396
Depreciation of property and
equipment (Note 1) 983 969 969
Amortization of special tools (Note 1) 961 671 641
Selling and administrative expenses 3,933 3,377 3,387
Pension expense (Note 11) 714 756 837
Nonpension postretirement benefit
expense (Note 12) 834 768 369
Interest expense 937 1,104 1,405
Gains on sales of automotive assets
and investments (Note 13) -- (265) (142)
Restructuring charge (Note 14) -- -- 101
--------- --------- ---------
TOTAL EXPENSES 46,394 39,762 35,963
--------- --------- ---------
EARNINGS BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES 5,830 3,838 934
Provision for income taxes (Note 7) 2,117 1,423 429
--------- --------- ---------
EARNINGS BEFORE CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING PRINCIPLES 3,713 2,415 505
Cumulative effect of changes in accounting
principles (Notes 1, 7 and 12) -- (4,966) 218
--------- --------- ---------
NET EARNINGS (LOSS) $ 3,713 $ (2,551) $ 723
Preferred stock dividends (Note 10) 80 80 69
--------- --------- ---------
NET EARNINGS (LOSS) ON COMMON STOCK $ 3,633 $ (2,631) $ 654
========= ========= ==========
PRIMARY EARNINGS (LOSS) PER
COMMON SHARE (Note 10): (in dollars or millions of shares)
Earnings before cumulative effect
of changes in accounting principles $ 10.11 $ 6.77 $ 1.47
Cumulative effect of changes in
accounting principles -- (14.39) 0.74
--------- --------- --------
Net earnings (loss) per common share $ 10.11 $ (7.62) $ 2.21
========= ========= ========
Average common and dilutive
equivalent shares outstanding 359.2 345.1 295.9
FULLY DILUTED EARNINGS PER COMMON
SHARE (Note 10):
Earnings before cumulative effect
of changes in accounting principles $ 9.10 $ -- $ 1.49
Cumulative effect of changes in
accounting principles -- -- 0.64
--------- --------- --------
Net earnings per common share $ 9.10 $ -- $ 2.13
========= ========= ========
Average common and dilutive
equivalent shares outstanding 407.8 -- 339.2
Dividends declared per common share $ 1.10 $ 0.65 $ 0.60
- --------------------------
See notes to consolidated financial statements.
26
27
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31
---------------------------
1994 1993
---------- ----------
(in millions of dollars)
ASSETS:
Cash and cash equivalents (Note 1) $ 5,145 $ 4,040
Marketable securities (Note 1) 3,226 1,055
Accounts receivable - trade and other (less allowance for
doubtful accounts: 1994 - $58 million; 1993 - $52 million) 1,695 1,572
Inventories (Note 2) 3,356 3,629
Prepaid taxes, pension and other expenses 1,330 833
Finance receivables, retained interests in sold receivables and
other related amounts - net (Note 3) 12,563 10,284
Property and equipment (Note 4) 10,839 9,319
Special tools 3,643 3,455
Intangible assets (Note 1) 2,162 4,328
Deferred tax assets (Note 7) 395 2,210
Other assets (Note 11) 5,185 2,954
-------- --------
TOTAL ASSETS $ 49,539 $ 43,679
======== ========
LIABILITIES:
Accounts payable $ 7,826 $ 6,712
Short-term debt (Note 6) 4,645 3,297
Payments due within one year on long-term debt (Note 6) 811 1,283
Accrued liabilities and expenses (Note 5) 5,582 4,650
Long-term debt (Note 6) 7,650 6,871
Accrued noncurrent employee benefits (Notes 1, 11 and 12) 8,595 10,613
Other noncurrent liabilities 3,736 3,417
-------- --------
TOTAL LIABILITIES 38,845 36,843
-------- --------
COMMITMENTS AND CONTINGENT LIABILITIES (Note 8)
SHAREHOLDERS' EQUITY (Note 10): (shares in millions)
Preferred stock - $1 per share par value; authorized 20.0
shares; Series A Convertible Preferred Stock; issued:
1994 and 1993 - 1.7 shares; aggregate liquidation
preference $863 million 2 2
Common stock - $1 per share par value; authorized 1,000.0
shares; issued: 1994 and 1993 - 364.1 shares 364 364
Additional paid-in capital 5,536 5,533
Retained earnings 5,006 1,170
Treasury stock - at cost: 1994 - 9.0 shares; 1993 - 10.4
shares (214) (233)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 10,694 6,836
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 49,539 $ 43,679
======== ========
- --------------------------
See notes to consolidated financial statements.
27
28
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31
--------------------------------------
1994 1993 1992
---------- ---------- ----------
(in millions of dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 3,713 $ (2,551) $ 723
Adjustments to reconcile to net cash provided by operating
activities:
Depreciation and amortization 1,944 1,640 1,610
Provision for restructuring charge -- -- 101
Provision for credit losses 203 209 345
Deferred income taxes 1,065 803 229
Gains on sales of automotive assets and investments -- (265) (142)
Cumulative effect of changes in accounting principles -- 4,966 (218)
Change in receivables (1,158) (2) --
Change in inventories 129 (557) 535
Change in prepaid expenses and other assets (1,898) (1,472) (51)
Change in accounts payable and accrued and other liabilities 2,613 (5) 562
Other 161 47 (8)
-------- --------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 6,772 2,813 3,686
-------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (5,425) (4,700) (18,084)
Sales and maturities of marketable securities 3,519 4,937 17,786
Proceeds from sales of automotive assets and investments 62 461 215
Finance receivables acquired (20,292) (16,809) (17,290)
Finance receivables collected 5,247 9,616 10,705
Proceeds from sales of finance receivables 13,482 7,846 8,043
Proceeds from sales of nonautomotive assets -- 2,375 903
Expenditures for property and equipment (2,666) (1,761) (1,417)
Expenditures for special tools (1,177) (1,234) (872)
Other 313 446 (97)
------- --------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (6,937) 1,177 (108)
------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in short-term debt (less than 90-day maturities) 1,348 2,518 (110)
Proceeds under revolving lines of credit and long-term
borrowings 1,305 6,995 44,597
Payments on revolving lines of credit and long-term borrowings (1,011) (13,592) (48,334)
Proceeds from issuances of common and preferred stock, net of
expenses -- 1,952 836
Dividends paid (399) (281) (225)
Other 27 101 (26)
------- --------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,270 (2,307) (3,262)
------- --------- --------
Change in cash and cash equivalents 1,105 1,683 316
Cash and cash equivalents at beginning of year 4,040 2,357 2,041
------- --------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 5,145 $ 4,040 $ 2,357
======= ========= ========
- --------------------------
See notes to consolidated financial statements.
28
29
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
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 1993 and 1992
have been reclassified to conform with current period classifications.
REVENUE RECOGNITION
Vehicle and parts sales are generally recorded when such products are
shipped to dealers. Provisions for sales allowances and incentives are made at
the time of sale and treated as sales reductions.
Interest income from finance receivables of Chrysler Financial
Corporation ("CFC"), a wholly owned subsidiary, is recognized using the
interest method. Lending fees and certain direct loan origination costs are
deferred and amortized to interest income using the interest method over the
contractual terms of the finance receivables. Recognition of interest income
is generally suspended when a loan becomes contractually delinquent for periods
ranging from 60 to 90 days. Income recognition is resumed when the loan
becomes contractually current, at which time all past due interest income is
recognized.
CFC sells significant amounts of automotive 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. 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 sale of receivables are recognized in the
period that such sales occur. In determining the gain or loss for each
qualifying sale, 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, 1994, the weighted average service lives of assets were 34 years
for buildings (including improvements and building equipment), 14 years for
machinery and equipment and 11 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, and the estimated costs of product warranty are
accrued at the time of sale. Advertising expense was $1.1 billion, $858 million
and $873 million in 1994, 1993 and 1992, respectively. Research and
development costs were $1.3 billion, $1.2 billion and $1.1 billion in 1994, 1993
and 1992, 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.
29
30
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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." This new accounting standard specifies the
accounting and reporting requirements for changes in the fair values of
investments in debt and equity securities which have readily determinable fair
values. Prior to 1994, marketable equity securities were carried at cost, which
approximated market, while debt securities were carried at cost adjusted for
amortized premium or discount. Adoption of this accounting standard did not have
a material effect on Chrysler's financial statements.
Under SFAS No. 115, these debt and equity securities are segregated into
one of the following categories--trading, available-for-sale and
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 recorded 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, 1994, Chrysler had investments in securities (including
cash equivalents) with an aggregate carrying value of $7.9 billion accounted for
in accordance with SFAS No. 115. These securities consisted primarily of
commercial paper, federal government agency securities and corporate debt. 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.
ALLOWANCE FOR CREDIT LOSSES
An allowance for credit losses is generally established during the
period in which finance receivables are acquired. The allowance for credit
losses is maintained at a level deemed appropriate based on loss experience and
other factors. Retail automotive receivables 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
receivables are determined to be impaired.
In May 1993, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," effective for
fiscal years beginning after December 15, 1994. In October 1994, the FASB
issued SFAS No. 118, "Accounting by Creditors for Impairment of a Loan--Income
Recognition and Disclosures," as an amendment to SFAS No. 114. These new
accounting standards require creditors to evaluate the collectibility of both
contractual interest and principal of receivables when evaluating the need for a
loss accrual. Chrysler believes that the implementation of these new accounting
standards will not have a material impact on its consolidated operating results
or financial position. Chrysler will adopt these standards effective January 1,
1995, as required.
INVENTORIES
Inventories are valued at the lower of cost or market. The cost of
approximately 51 percent and 44 percent of inventories at December 31, 1994 and
1993, 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 $723 million and $643 million at December 31, 1994 and 1993,
respectively. Intangible assets also included intangible pension assets of $44
million and $2.1 billion at December 31, 1994 and 1993, respectively.
30
31
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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.
DERIVATIVE FINANCIAL INSTRUMENTS
Chrysler manages risk arising from fluctuations in interest rates and
currency exchange rates by utilizing derivative financial instruments. Chrysler
does not use derivative financial instruments for trading purposes. For the
year ended December 31, 1994, Chrysler adopted SFAS No. 119, "Disclosure about
Derivative Financial Instruments and Fair Value of Financial Instruments."
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 currency
options, to minimize revenue and cost variations which could result from
fluctuations in currency exchange rates. These hedge instruments 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.
CFC utilizes interest rate swaps, interest rate caps, forward interest
rate contracts and currency exchange agreements as part of its asset and
liability management program. Due to changing interest rates, interest rate
exchange agreements, which are treated as off-balance sheet financial
instruments, are utilized to stabilize interest margins. Interest differentials
resulting from interest rate swap and cap agreements are recorded on an accrual
basis as an adjustment to interest expense. In the event of an early
termination of an interest rate exchange agreement designated as a hedge, gains
or losses are deferred and recorded as an adjustment to interest expense over
the remaining term of the underlying debt. Forward interest rate contracts are
periodically 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 the statement of
earnings. Realized gains or losses for hedge instruments are included in the
determination of the gain or loss from the related sale of retail receivables.
CFC and its subsidiaries hedge borrowings denominated in currencies other than
the borrowers' local currency with currency exchange agreements, which are
reflected in the consolidated balance sheet. As a result, such borrowings are
translated in the financial statements at the rates of exchange established
under the related currency exchange agreements.
NOTE 2. INVENTORIES AND COST OF SALES
Inventories, summarized by major classification, were as follows:
December 31
---------------------------
1994 1993
--------- ---------
(in millions of dollars)
Finished products, including service parts $ 1,145 $ 1,016
Raw materials, finished production parts and supplies 1,223 1,177
Vehicles held for short-term lease 988 1,436
-------- -------
Total $ 3,356 $ 3,629
======= =======
Inventories valued on the LIFO basis would have been $328 million and
$259 million higher than reported had they been valued on the FIFO basis at
December 31, 1994 and 1993, respectively.
Total manufacturing cost of sales aggregated $39.0 billion, $33.1
billion and $28.7 billion for 1994, 1993 and 1992, respectively.
31
32
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. FINANCE RECEIVABLES, RETAINED INTERESTS IN SOLD RECEIVABLES AND
OTHER RELATED AMOUNTS
Finance receivables, retained interests in sold receivables and other
related amounts were as follows:
December 31
---------------------------
1994 1993
------- --------
(in millions of dollars)
Automotive financing $ 5,866 $ 4,107
Nonautomotive financing 2,500 2,803
Retained senior interests in wholesale
receivables held in trusts 2,173 967
-------- -------
Total finance receivables 10,539 7,877
Retained interests in sold receivables and
other related amounts 2,548 2,914
Total allowance for credit losses (524) (507)
-------- -------
Total $ 12,563 $ 10,284
======== ========
Retained interests in sold receivables and other related amounts 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. This agreement, which is designated as a
hedge instrument, resulted in no impact on interest income at CFC. At December
31, 1994, CFC was also a party to a forward interest rate contract (notional
amount $500 million) to manage its exposure to fluctuations in funding costs for
an anticipated securitization of retail receivables during the first quarter of
1995.
Contractual maturities of total finance receivables as of December 31,
1994, were (in millions of dollars): 1995 - $5,219; 1996 - $1,371; 1997 -
$1,108; 1998 - $862; 1999 - $549; and 2000 and thereafter - $1,430. Actual cash
flows will vary from contractual cash flows due to future sales of finance
receivables and prepayments.
Changes in the allowance for credit losses were as follows:
Year Ended December 31
-------------------------------------
1994 1993 1992
--------- ------- --------
(in millions of dollars)
Balance at beginning of year $ 507 $ 603 $ 630
Provision for credit losses 203 209 345
Net credit losses (159) (207) (389)
Transfers related to nonautomotive asset sales -- (79) --
Other adjustments (27) (19) 17
------- ------ -----
Balance at end of year $ 524 $ 507 $ 603
======= ====== ======
Nonearning finance receivables, including receivables sold subject to
limited recourse, totaled $282 million and $333 million at December 31, 1994 and
1993, respectively, which represented 0.9 percent and 1.2 percent of such
receivables outstanding, respectively.
NOTE 4. PROPERTY AND EQUIPMENT
Property and equipment, summarized by major classification, were as
follows:
December 31
--------------------------
1994 1993
---------- ----------
(in millions of dollars)
Land $ 410 $ 427
Buildings 4,694 4,501
Machinery and equipment 10,243 9,130
Furniture and fixtures 499 462
Construction in progress 2,100 1,379
------ -----
17,946 15,899
Less accumulated depreciation 7,107 6,580
------ ------
Total $ 10,839 $ 9,319
======== ========
32
33
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. ACCRUED LIABILITIES AND EXPENSES
Accrued liabilities and expenses consisted of the following:
December 31
---------------------------
1994 1993
--------- ---------
(in millions of dollars)
Dealer and customer claims and discounts $ 1,715 $ 1,609
Employee compensation and benefits 2,242 1,653
Accrued payroll and other taxes 401 393
Other 1,224 995
------- -------
Total $ 5,582 $ 4,650
======= =======
NOTE 6. DEBT
Long-term debt consisted of the following:
December 31, 1994
----------------------------- December 31
Weighted Average ------------------------
Interest Rate(1) Maturity 1994 1993
------------- ----------- --------- ---------
(in millions of dollars)
Chrysler, excluding CFC:
Debentures 12.0% 1997-2017 $ 564 $ 564
Notes and other debt 11.4% 1995-2020 1,721 2,352
--------- --------
2,285 2,916
Less amounts due within one year 187 400
--------- --------
Total 2,098 2,516
--------- -------
CFC:
Senior notes and debentures 7.2% 1995-2018 6,069 5,139
Senior subordinated notes and
debentures 8.3% 1995 27 77
Mortgage notes, capital leases and other 80 22
--------- ------
6,176 5,238
Less amounts due within one year 624 883
--------- -------
Total 5,552 4,355
--------- -------
Total long-term debt $ 7,650 $ 6,871
========== ========
- -------------------------
(1) The weighted average interest rates include the effects of
interest rate exchange agreements.
At December 31, 1994, aggregate annual maturities of consolidated debt,
including principal payments on capital leases, were as follows (in millions of
dollars): 1995 - $5,456; 1996 - $1,705; 1997 - $1,009; 1998 - $999; and 1999 -
$1,577.
CFC enters into currency exchange agreements to manage its exposure to
fluctuations in currency exchange rates related to specific funding
transactions. Certain borrowings in U.S. Dollars, German Marks and Swiss Francs
are hedged with currency exchange agreements in the local currency of the
borrowing entity. As a result, such borrowings are translated in the financial
statements at the rates of exchange established under the related currency
exchange agreement. The amount of such borrowings was $734 million. If CFC had
not entered into currency exchange agreements, the amount would have been $220
million higher at December 31, 1994.
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 agreements. The notional amounts are used to measure the volume of
these agreements. The impact on interest expense of interest rate exchange
agreements was immaterial in 1994, 1993 and 1992. Chrysler cannot predict the
impact that such agreements may have on interest expense in the future.
Interest rate swaps related to term debt are matched with specific
obligations, altering the interest rate characteristics of the associated debt.
Interest rate swaps are also utilized to reduce exposure to interest rate
fluctuations on the anticipated issuances of commercial paper. Interest rate
swaps associated with commercial paper are matched with groups of such
obligations on a layered basis. An aggregate of $4.3 billion of commercial
paper was outstanding at December 31, 1994.
33
34
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. DEBT - CONTINUED
The following table summarizes CFC's interest rate derivatives related
to its debt obligations as of December 31, 1994 and 1993:
Notional Amounts Outstanding
and Weighted Average Rates
---------------------------------
December 31
---------------------------------
Variable Maturing
Underlying Financial Instruments Rate Indices Through 1994 1993
---------------------------------------- ------------- -------- --------- ----------
(in millions of dollars)
PAY FIXED INTEREST RATE SWAPS
Commercial paper 1998 $ 500 $ 527
Weighted average pay rate 9.09% 9.08%
Weighted average receive rate Money Market 5.98% 3.20%
Senior notes and debentures 1995 $ 90 $ 190
Weighted average pay rate 9.44% 9.63%
Weighted average receive rate LIBOR 5.81% 3.40%
RECEIVE FIXED INTEREST RATE SWAPS
Senior notes and debentures 2006 $ 126 $ 404
Weighted average pay rate LIBOR 5.84% 3.46%
Weighted average receive rate 9.41% 9.03%
PAY/RECEIVE VARIABLE INTEREST RATE SWAPS
Senior notes and debentures 1999 $ 61 --
Weighted average pay rate LIBOR 6.16% --
Weighted average receive rate Treasury 6.89% --
During 1994, CFC replaced its revolving credit and receivable sale
agreements, which were to expire in 1995, with new agreements providing for
credit lines totaling $5.2 billion and receivable sale agreements totaling $1.7
billion, expiring in 1998. These agreements contain restrictive covenants,
which, among other things, require CFC to maintain a minimum net worth. None of
the commitments were drawn upon at December 31, 1994.
During 1994, Chrysler replaced its $1.5 billion revolving credit
agreement, which was to expire in June 1996, with a new $1.7 billion revolving
credit agreement expiring in July 1999. The new agreement provides for reduced
interest rates and commitment fees, less restrictive financial covenants and the
removal of the lenders' ability to obtain security interests in Chrysler's
assets. None of the commitment was drawn upon at December 31, 1994.
NOTE 7. INCOME TAXES
Effective January 1, 1992, Chrysler adopted SFAS No. 109, "Accounting
for Income Taxes," which resulted in a favorable cumulative effect of the
change in accounting principle of $218 million, or $0.74 per common share.
Earnings before income taxes and the cumulative effect of changes in
accounting principles were attributable to the following sources:
Year Ended December 31
---------------------------------
1994 1993 1992
-------- -------- ---------
(in millions of dollars)
United States $ 5,239 $ 3,191 $ 618
Foreign 591 647 316
-------- -------- -------
Total $ 5,830 $ 3,838 $ 934
======== ======== =======
34
35
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. INCOME TAXES - CONTINUED
The provision for income taxes on earnings before income taxes and the
cumulative effect of changes in accounting principles included the following:
Year Ended December 31
-----------------------------
1994 1993 1992
------ ----- ------
(in millions of dollars)
Currently Payable:
United States $ 876 $ 523 $ 66
Foreign 60 69 123
State and local 116 28 11
----- ------ ------
1,052 620 200
----- ------ ------
Deferred:
United States 820 528 220
Foreign 73 131 (27)
State and local 172 144 36
----- ------ ------
1,065 803 229
----- ------ ------
Total $2,117 $1,423 $ 429
====== ====== ======
Chrysler does not provide for U.S. income tax or foreign withholding
taxes on the undistributed earnings of foreign subsidiaries, as such cumulative
earnings of $1.9 billion are intended to be permanently reinvested in those
operations. It is not practicable to estimate the amount of unrecognized
deferred tax liability for the undistributed foreign earnings.
A reconciliation of income taxes determined using the statutory U.S.
rate (35 percent for 1994 and 1993; 34 percent for 1992) to actual income taxes
provided was as follows:
Year Ended December 31
----------------------------
1994 1993 1992
------- ------ -------
(in millions of dollars)
Tax at U.S. statutory rate $ 2,041 $ 1,343 $ 318
State and local taxes net of federal tax benefit 191 114 33
Recognition of prior years research and development tax credits (100) -- --
Adjustments to reflect current assessment of realizability of
deferred tax assets (32) -- --
Rate adjustment of U.S. deferred tax assets and liabilities -- (72) --
Nondeductible goodwill 27 28 60
Other (10) 10 18
------- ------- --------
Provision for income taxes $ 2,117 $ 1,423 $ 429
======= ======= ========
Effective income tax rate 36.3% 37.1% 45.9%
======= ====== ========
The adjustment to the provision for income taxes for the recognition of
prior years research and development tax credits in 1994 represents 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 recently issued U.S. Department of Treasury income
tax regulations.
35
36
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA-Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. INCOME TAXES - CONTINUED
The tax-effected temporary differences and carryforwards which comprised
deferred tax assets and liabilities were as follows:
December 31, 1994 December 31, 1993
------------------------------- ------------------------------
Deferred Deferred Deferred Deferred
Tax Assets Tax Liabilities Tax Assets Tax Liabilities
------------- ---------------- ----------- ---------------
(in millions of dollars)
Nonpension postretirement benefits $ 2,960 $ -- $2,783 $ --
Pensions 11 1,726 3 488
Accrued expenses 2,471 -- 2,415 --
Lease transactions -- 1,713 -- 1,673
Depreciation -- 1,678 -- 1,665
Tax credit carryforwards 51 -- 342 --
Alternative minimum tax credit carryforwards 751 -- 825 --
State and local taxes 215 105 421 91
NOL carryforwards 109 -- 136 --
Other 193 670 75 641
------- ------- ------- ------
6,761 5,892 7,000 4,558
Valuation allowance (77) -- (146) --
------- ------- ------- ------
Total $ 6,684 $ 5,892 $ 6,854 $4,558
======= ======= ======= ======
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 $313 million at December 31, 1994, and may be
used through the year 2008. The valuation allowance was principally related to
certain subsidiaries' NOL carryforwards. Changes in the valuation allowance
were as follows:
Year Ended December 31
-----------------------------
1994 1993 1992
---- ---- ----
(in millions of dollars)
Balance at beginning of year $146 $130 $107
Provision for unrecognizable deferred tax assets generated -- 36 23
Utilization of NOL carryforwards (25) (20) --
Adjustments to reflect current assessment of realizability of
deferred tax assets (32) -- --
Other (12) -- --
---- ---- ----
Balance at end of year $ 77 $146 $130
==== ==== ====
NOTE 8. COMMITMENTS AND CONTINGENT LIABILITIES
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 would require significant
expenditures. Although the ultimate cost of resolving these matters cannot be
precisely determined, Chrysler maintains reserves which it believes will be
sufficient to resolve these matters. After giving effect to these reserves,
management believes, based on currently known facts and circumstances, that the
disposition of these matters will not have a material adverse effect on
Chrysler's consolidated financial position. Future developments could cause
Chrysler to change its estimate of the ultimate cost of resolving these matters,
and such changes could be material to Chrysler's consolidated results of
operations for the period in which such developments occur. Chrysler is unable
to estimate such changes in costs, if any, which may be required in connection
with these matters.
36
37
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. COMMITMENTS AND CONTINGENT LIABILITIES - CONTINUED
ENVIRONMENTAL MATTERS
The United States Environmental Protection Agency 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.
Chrysler is also a party to a number of lawsuits filed in various jurisdictions
alleging CERCLA or other environmental claims. In virtually all cases,
Chrysler is only one of a number of PRPs who may be found to be jointly and
severally liable. In addition, Chrysler has identified additional active or
deactivated facilities at which it may be responsible for closure activities or
cleaning up hazardous waste. 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 may ultimately incur
significant expenditures over an extended period of time in connection with the
foregoing environmental matters, and therefore maintains reserves for the
estimated costs associated with all of its environmental remediation efforts,
including CERCLA and related matters, expected closure activities and voluntary
environmental cleanup efforts. Chrysler believes that these reserves will be
sufficient to resolve these matters. After giving effect to these reserves,
management believes, based on currently known facts and circumstances and
existing laws and regulations, that the disposition of these matters will not
have a material adverse effect on Chrysler's consolidated financial position.
Future developments could cause Chrysler to change its estimate of the total
costs associated with these matters, and such changes could be material to
Chrysler's consolidated results of operations for the period in which such
developments occur. Chrysler is unable to estimate such changes in costs, if
any, which may be required in connection with these matters.
OTHER MATTERS
The majority of Chrysler's lease payments are for operating leases. At
December 31, 1994, Chrysler had the following minimum rental commitments under
noncancelable operating leases: 1995 - $325 million; 1996 - $263 million; 1997
- - $134 million; 1998 - $61 million; 1999 - $48 million; and 2000 and thereafter
- - $143 million. Future minimum lease commitments have not been reduced by
minimum sublease rentals of $252 million due in the future under noncancelable
subleases.
Rental expense for operating leases, with original expiration dates
beyond one year, was $407 million, $410 million and $383 million in 1994, 1993
and 1992, respectively. Sublease rentals of $60 million, $61 million, and $60
million were received in 1994, 1993, and 1992, respectively.
Chrysler had commitments for capital expenditures, including
commitments for facilities currently under construction, approximating $1.0
billion at December 31, 1994.
At December 31, 1994, Chrysler had guaranteed obligations of others in
the amount of $224 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.
37
38
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
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 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 AMC options outstanding at the date of the AMC
acquisition, was as follows:
Shares Under Option Price
Option Per Share
------------ ------------
(in millions)
Outstanding at January 1, 1992 15.4 $ 7.51 - $68.85
Granted 3.2 16.07 - 32.82
Exercised (3.7) 7.51 - 25.88
Terminated (0.1)
-----
Outstanding at December 31, 1992 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
=====
Shares available for granting options at the end of 1994, 1993 and 1992
were 15.1 million, 1.5 million, and 4.4 million, respectively. At December 31,
1994, 5.6 million options with prices ranging from $16.07 to $54.32 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.
38
39
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
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):
Year Ended December 31
--------------------------------------------
1994 1993 1992
------ ------ ------
(in millions of dollars)
PREFERRED STOCK
Balance at beginning of year $ 2 $ 2 $ --
Shares issued (1992 - 1.7) -- -- 2
------ ------ ------
Balance at end of year $ 2 $ 2 $ 2
====== ====== ======
COMMON STOCK:
Balance at beginning of year $ 364 $ 312 $ 312
Shares issued (1993 - 52.0) -- 52 --
------ ------ ------
Balance at end of year $ 364 $ 364 $ 312
====== ====== ======
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of year $5,533 $3,657 $2,905
Issuance of common stock -- 1,900 --
Issuance of preferred stock -- -- 834
Shares issued under employee benefit plans 3 (24) (82)
------ ------ ------
Balance at end of year $5,536 $5,533 $3,657
====== ====== ======
RETAINED EARNINGS:
Balance at beginning of year $1,170 $3,924 $3,385
Net earnings (loss) 3,713 (2,551) 723
Dividends declared (470) (308) (245)
Adjustment of additional minimum pension liability 626 64 27
Previously unrecognized tax benefit - pension liability -- -- 182
Adjustment of previously recognized tax benefits -- -- (145)
Translation and other adjustments (33) 41 (3)
------ ------ ------
Balance at end of year $5,006 $1,170 $3,924
====== ====== ======
TREASURY STOCK:
Balance at beginning of year $(233) $(357) $ (493)
Shares issued under employee benefit plans (1994 - 1.4;
1993 - 5.8; 1992 - 3.6) 19 124 136
------ ------ ------
Balance at end of year $ (214) $ (233) $ (357)
====== ====== ======
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 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.
39
40
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10. SHAREHOLDERS' EQUITY - CONTINUED
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 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 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,
1994, 97 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
subsidiaries. Benefits are based on a fixed rate for each year of service.
Additionally, contributory benefits and supplemental noncontributory 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 contributory benefits based on the employee's cumulative
contributions and a supplemental noncontributory benefit based on 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 $2.6 billion in 1994, $3.5 billion in 1993 and $816
million in 1992.
At December 31, 1994, plan assets were invested in a diversified
portfolio that consisted primarily of debt and equity securities, including
17.9 million shares of Chrysler common stock with a market value of $879
million. During 1994, $17 million of dividends were received on Chrysler
common stock.
40
41
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. PENSION PLANS - CONTINUED
The components of pension expense were as follows:
Year Ended December 31
-------------------------------------------------------------------------------
1994 1993 1992
-------------------------- ----------------------- ----------------------
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 $ 275 $ 29 $ 304 $ 218 $ 20 $ 238 $ 171 $ 18 $ 189
Interest on projected benefit obligation 833 86 919 779 79 858 742 71 813
Return on plan assets:
Actual return 183 11 194 (1,283) (35) (1,318) (945) 80 (865)
Deferred (loss) gain (1,106) (116) (1,222) 617 (40) 577 492 (156) 336
-------- ------ ------- ------- ---- ------ ------ ----- ------
Expected return (923) (105) (1,028) (666) (75) (741) (453) (76) (529)
Net amortization and other 471 48 519 366 35 401 344 20 364
-------- ------ ------- ------- ---- ------ ------ ----- ------
Total $ 656 $ 58 $ 714 $ 697 $ 59 $ 756 $ 804 $ 33 $ 837
======== ====== ======= ======= ==== ====== ====== ===== ======
During 1994, 1993 and 1992, the cost of voluntary early retirement
programs, which are periodically offered to certain salaried and hourly
employees, was $68 million, $40 million and $48 million, respectively.
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:
December 31
-----------------------------------------------------------------------------------
U.S. Plans Non-U.S. Plans
---------------------------------------- --------------------------------------
1994 1993 1992 1991 1994 1993 1992 1991
------ ------ ------ ------ ------ ------ ------ ------
Discount rate 8.63% 7.38% 8.38% 8.50% 9.75% 8.25% 9.50% 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% 9.50% 9.50%
The increase in the discount rate for U.S. Plans from 7.38 percent as of
December 31, 1993 to 8.63 percent as of December 31, 1994 resulted in a $1.3
billion decrease in the PBO at December 31, 1994 and is expected to result in a
$99 million decrease in the 1995 expense.
41
42
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
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:
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 (liability) recognized in
the consolidated balance sheet $ 3,799 $ (265) $ 3,534 $ 639 $ (10) $ 629 $ 4,163
========= ======== ======= ======= ====== ====== ========
December 31, 1993
-----------------
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 $ 3,563 $ 5,160 $ 8,723 $1,020 $ 4 $1,024 $ 9,747
Nonvested 517 2,090 2,607 12 2 14 2,621
-------- ----- ------- ------- ------ ----- --------
Accumulated benefit obligation 4,080 7,250 11,330 1,032 6 1,038 12,368
Effect of projected future salary increases 237 7 244 18 -- 18 262
-------- ----- ------- ------- ------ ----- --------
PBO 4,317 7,257 11,574 1,050 6 1,056 12,630
Plan assets at fair value 4,599 4,767 9,366 1,062 -- 1,062 10,428
-------- ----- ------- ------- ------ ----- --------
PBO (in excess of) less than plan assets 282 (2,490) (2,208) 12 (6) 6 (2,202)
Unrecognized net loss (gain) 263 1,016 1,279 434 1 435 1,714
Unrecognized prior service cost 258 1,216 1,474 233 -- 233 1,707
Unamortized net obligation at date of adoption 283 858 1,141 6 -- 6 1,147
Adjustment required to recognize
minimum liability -- (3,088) (3,088) -- (1) (1) (3,089)
-------- ----- ------- ------- ------ ----- --------
Net prepaid pension (liability) recognized in
the consolidated balance sheet $ 1,086 $(2,488) $(1,402) $ 685 $ (6) $679 $ (723)
========= ======== ======= ======= ====== ====== ========
Included in other assets on the consolidated balance sheet as of
December 31, 1994 and 1993 was noncurrent prepaid pension expense of $4.1
billion and $1.6 billion, respectively.
42
43
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 $4.68 billion, or $13.57 per common share, in 1993. This charge
represented the immediate recognition of the transition obligation of $7.44
billion, partially offset by $2.76 billion of estimated tax benefits. The
transition obligation is the aggregate amount that would have been accrued in
the years prior to the adoption of SFAS No. 106, had this standard been in
effect for those years. Implementation of SFAS No. 106 did not increase
Chrysler's cash expenditures for postretirement benefits.
Components of nonpension postretirement benefit expense were as
follows:
Year ended December 31
----------------------
1994 1993
---- ----
(in millions of dollars)
Benefits attributed to employees' service $ 178 $ 142
Interest on accumulated nonpension postretirement
benefit obligation 665 626
Net amortization (9) --
------- -------
Total $ 834 $ 768
======== =======
The following table summarizes the components of the nonpension
postretirement benefit obligation recognized in the consolidated balance sheet
at December 31, 1994 and 1993:
Year ended December 31
----------------------
1994 1993
---- ----
(in millions of dollars)
Accumulated nonpension postretirement benefit
obligation ("ANPBO") attributable to:
Retirees $ 4,056 $ 4,550
Active employees eligible for benefits 1,259 1,173
Other active employees 2,837 3,388
-------- --------
Total ANPBO 8,152 9,111
Unrecognized net gains (losses) 218 (1,126)
------- --------
Nonpension postretirement benefit
obligation recognized in the
consolidated balance sheet $ 8,370 $ 7,985
======= ========
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, 1994 and 1993
were:
Year ended December 31
----------------------
1994 1993
---- ----
Discount rate 8.6% 7.5%
Health care inflation rate in following
(or "base") year 7.5% 9.2%
Ultimate health care inflation rate (2001) 5.5% 5.5%
Average health care inflation rate
(base year through 2001) 6.1% 6.3%
The increase in the discount rate to 8.6 percent as of December 31,
1994 resulted in a $1.1 billion decrease in the ANPBO in 1994, and is expected
to result in a $68 million decrease in nonpension postretirement benefit
expense in 1995. During 1994, Chrysler implemented new managed care initiatives
which reduced the expected health care inflation rate for 1995.
A one percentage point increase in the assumed health care inflation
rate in each year would have increased the ANPBO at December 31, 1994 by $1.0
billion and would have increased the aggregate of the service and interest cost
components of nonpension postretirement benefit expense in 1994 by $116
million.
43
44
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 approximately $325 million. The related pretax gains of
approximately $250 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
applicable income taxes). Also during 1993, Chrysler sold its remaining 50.3
million shares of Mitsubishi Motors Corporation ("MMC") stock for net proceeds
of $329 million, resulting in a pretax gain of $205 million ($128 million after
applicable income taxes).
In 1992, Chrysler sold 43.6 million shares of MMC stock for net
proceeds of $215 million, resulting in a pretax gain of $142 million ($88
million after applicable income taxes).
NOTE 14. INVESTMENT ADJUSTMENT AND RESTRUCTURING CHARGE
Included in costs, other than items below for the year ended December
31, 1992 was a pretax charge of $110 million ($69 million after applicable
income taxes) to reduce investments of Chrysler Canada Ltd. and certain of its
employee benefit plans in a real estate investment concern to their estimated
net realizable value.
Earnings for the year ended December 31, 1992 also included a $101
million pretax restructuring charge ($79 million after applicable income taxes)
relating to the realignment of a part of Chrysler's short-term vehicle rental
subsidiaries (the "Car Rental Operations") under Pentastar Transportation
Group, Inc. and to provide for the consolidation and phase out of certain of
those operations. This restructuring charge included the write-down of
goodwill, lease termination costs, losses associated with the disposal of
tangible assets and other related charges.
NOTE 15. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental disclosures to the consolidated statement of cash flows
were as follows:
Year Ended December 31
-------------------------------
1994 1993 1992
---- ---- ----
(in millions of dollars)
Interest paid (net of amounts capitalized):
Chrysler, excluding CFC $ 195 $ 326 $ 406
CFC 733 847 1,250
Interest capitalized 177 176 176
Income taxes paid, net of refunds received 910 535 93
During 1994, CFC acquired $300 million of marketable securities in a
non-cash transaction relating to the securitization of retail receivables.
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.
44
45
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16. FINANCIAL INSTRUMENTS - CONTINUED
Amounts related to Chrysler's financial instruments were as follows:
December 31, 1994 December 31, 1993
----------------- ------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- -------- -------
(in millions of dollars)
BALANCE SHEET FINANCIAL INSTRUMENTS
Marketable securities $ 3,226 $ 3,218 $ 1,055 $ 1,061
Finance receivables and retained interests(1) 10,524 10,494 8,252 8,345
Debt(2) 13,309 13,735 11,550 12,588
Currency exchange agreements(3) 220 241 121 145
- ----------------------
(1) The carrying value of finance receivables excludes $2.0
billion of direct finance and leveraged leases classified as
finance receivables in the consolidated balance sheet at
December 31, 1994 and 1993. The carrying value of retained
interests excludes $41 million and $57 million of retail
lease securities at December 31, 1994 and 1993,
respectively.
(2) The carrying value of debt excludes $17 million and $22
million of obligations under capital leases classified as
debt in the consolidated balance sheet at December 31, 1994
and 1993, respectively.
(3) Currency exchange agreements are recorded on the
consolidated balance sheet as a reduction to the carrying
value of debt.
December 31, 1994 December 31, 1993
------------------------ -------------------------
Contract or Unrealized Contract or Unrealized
Notional Gains/ Notional Gains/
Amount (Losses) Amount (Losses)
---------- ----------- ----------- ---------
(in millions of dollars)
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
Interest rate swaps
With unrealized gains $ 101 $ 4 $ 314 $ 15
With unrealized losses 676 (16) 1,107 (95)
Interest rate caps 134 -- 403 --
Forward interest rate contract 500 1 -- --
Currency forward contracts
With unrealized gains -- -- 1,285 61
With unrealized losses 326 (17) 437 (8)
Purchased currency options 901 (21) 116 2
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, retained interests in sold receivables and
other related amounts - net
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 maturity would be made as of
the date of the consolidated balance sheet. The fair values of excess servicing
cash flows and other amounts due CFC arising from receivable sale transactions
were estimated by discounting expected cash flows.
45
46
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16. FINANCIAL INSTRUMENTS - CONTINUED
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.
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 NOTE 1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES and NOTE 6. DEBT.
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 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NOTE 3.
FINANCE RECEIVABLES, RETAINED INTERESTS IN SOLD RECEIVABLES AND OTHER RELATED
AMOUNTS and NOTE 6. DEBT.
Currency forward contracts and purchased currency options
The fair values of currency forward contracts and purchased currency
options were estimated based on quoted market prices for contracts of similar
terms. Currency forward contracts and purchased currency options are more
fully described in NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
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. Such indirect beneficial
interests are subject to reduction in the event of a counterparty's
nonperformance. If a counterparty had failed to perform at December 31, 1994,
CFC would have been exposed to a $27 million loss.
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 composed of the automotive
operations of Chrysler, which includes the research, design, manufacture,
assembly and sale of cars, trucks and related parts and accessories. The Car
Rental Operations and Chrysler's defense electronics business, Chrysler
Technologies Corporation, each represent less than 10 percent of revenues,
operating profits and identifiable assets, and have been included in the Car
and Truck segment. The Financial Services segment is composed of CFC, which is
engaged in wholesale and retail vehicle financing, property and casualty
insurance, and servicing nonautomotive loans and leases. Information concerning
operations by industry segment was as follows:
46
47
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
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
Car Financial
and Truck Services Consolidated
--------- -------- ------------
(in millions of dollars)
DECEMBER 31, 1994
- -----------------
Revenues:
Unaffiliated customers $ 50,381 $ 1,843 $ 52,224
Intersegment 7 141 --
--------- --------- ---------
Total revenues 50,388 1,984 52,224
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 64 1,944
Capital expenditures 3,796 47 3,843
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
DECEMBER 31, 1992
- -----------------
Revenues:
Unaffiliated customers $ 34,406 $ 2,455 $ 36,897
Intersegment 34 120 --
-------- --------- ---------
Total revenues 34,440 2,575 36,897
Operating earnings 1,159 295 1,336
Interest expense 500 -- 383
Equity in loss of unconsolidated
subsidiaries and affiliates 19 -- 19
Earnings before income taxes 640 295 934
Depreciation/amortization 1,451 159 1,610
Capital expenditures 2,260 29 2,289
Identifiable assets 25,682 17,585 40,690
Liabilities 21,142 14,587 33,152
Interest expense of the Financial Services segment has been netted
against operating earnings, which is consistent with industry practice. The
individual segments do not add to the consolidated amounts due to the
elimination of intersegment transactions.
47
48
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
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:
United Adjmts.
States Canada Other & Elims. Consolidated
------ ------ ----- -------- -------------
(in millions of dollars)
DECEMBER 31, 1994
- -----------------
Revenues:
Unaffiliated customers $ 45,655 $ 3,877 $ 2,692 $ -- $ 52,224
Transfers between geographic areas 7,452 7,301 2,385 (17,138) --
------ -------- -------- ---------- --------
Total revenues 53,107 11,178 5,077 (17,138) 52,224
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
DECEMBER 31, 1992
- -----------------
Revenues:
Unaffiliated customers $ 31,529 $ 2,906 $ 2,462 $ -- $ 36,897
Transfers between geographic areas 5,759 4,611 1,483 (11,853) --
-------- ------- -------- --------- --------
Total revenues 37,288 7,517 3,945 (11,853) 36,897
Earnings before income taxes 618 19 297 -- 934
Identifiable assets 35,174 3,210 2,306 -- 40,690
Transfers between geographic areas are based on prices negotiated
between the buying and selling locations.
48
49
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
CONFORMED
INDEPENDENT AUDITORS' REPORT
Shareholders and Board of Directors
Chrysler Corporation
Highland Park, Michigan
We have audited the accompanying consolidated balance sheet of Chrysler
Corporation and consolidated subsidiaries as of December 31, 1994 and 1993,
and the related consolidated statements of earnings and cash flows for each of
the three years in the period ended December 31, 1994. 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, 1994 and 1993, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1994, in conformity with generally accepted accounting
principles.
As discussed in the notes to the financial statements, the Company adopted new
Statements of Financial Accounting Standards and, accordingly, changed its
method of accounting for certain investments in debt and equity securities in
1994, its method of accounting for postretirement benefits other than
pensions and postemployment benefits in 1993, and its method of accounting
for income taxes in 1992.
Deloitte & Touche LLP
Detroit, Michigan
January 16, 1995
49
50
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
CONFORMED
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 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 Corporation and its subsidiaries 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 the Corporation's policies.
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
50
51
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
SUPPLEMENTAL INFORMATION
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA
(unaudited)
First Quarter Second Quarter Third Quarter Fourth Quarter
------------- -------------- ------------ --------------
1994 1993(1) 1994 1993(2) 1994 1993(3) 1994(4) 1993
---- ------- ---- ------- ----- ------- ------- ----
(in millions of dollars except per-common-share data)
Sales of manufactured products $12,551 $10,238 $12,369 $10,307 $10,938 $8,995 $13,505 $11,291
Finance, insurance and other income 672 666 713 724 721 718 755 661
------- ------- ------- ------- ------- ------- ------- -------
Total revenues 13,223 10,904 13,082 11,031 11,659 9,713 14,260 11,952
Total expenses 11,680 10,024 11,489 9,909 10,596 9,101 12,629 10,728
------- ------- ------- ------- ------- ------- ------- -------
Earnings before income taxes and
cumulative effect of changes in
accounting principles 1,543 880 1,593 1,122 1,063 612 1,631 1,224
Provision for income taxes 605 350 637 437 412 189 463 447
------- ------- ------- ------- ------- ------- ------- -------
Earnings before cumulative effect of
changes in accounting principles 938 530 956 685 651 423 1,168 777
Cumulative effect of changes in
accounting principles -- (4,966) -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Net earnings (loss) $ 938 $(4,436) $ 956 $ 685 $ 651 $ 423 $ 1,168 $ 777
Preferred stock dividends 20 20 20 20 20 20 20 20
------- ------- ------- ------- ------- ------- ------- -------
Net earnings (loss) on
common stock $ 918 $(4,456) $ 936 $ 665 $ 631 $ 403 $ 1,148 $ 757
======= ======= ======= ======= ======= ======= ======= =======
PRIMARY EARNINGS (LOSS) PER
COMMON SHARE:
Earnings before cumulative effect of
changes in accounting principles $ 2.55 $ 1.57 $ 2.61 $ 1.86 $ 1.76 $ 1.13 $ 3.20 $ 2.11
Cumulative effect of changes in
accounting principles -- (15.25) -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Net earnings (loss) per
common share $ 2.55 $(13.68) $ 2.61 $ 1.86 $ 1.76 $ 1.13 $ 3.20 $ 2.11
======= ======= ======= ======= ======= ======= ======= =======
FULLY DILUTED EARNINGS PER
COMMON SHARE $ 2.30 -- $ 2.35 $ 1.69 $ 1.60 $ 1.04 $ 2.86 $ 1.91
======= ======= ======= ======= ======= ======= ======= =======
- -------------------------
(1) Results for the first quarter of 1993 included the unfavorable effects of
changes in accounting principles of $4.68 billion related to the adoption
of SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions," and $283 million related to the adoption of SFAS No. 112,
"Employers' Accounting for Postemployment Benefits."
(2) Earnings for the second quarter of 1993 included a gain of $60 million
($39 million after applicable income taxes) related to the sale of
Chrysler's plastics operations and a gain of $111 million ($70 million
after applicable income taxes) related to the sale of 27 million shares of
Mitsubishi Motors Corporation ("MMC") stock.
(3) Earnings for the third quarter of 1993 included a gain of $94 million
($58 million after applicable income taxes) related to the sale of
Chrysler's remaining 23.3 million shares of MMC stock.
(4) 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
recently issued U.S. Department of Treasury income tax regulations, and
(2) the reversal of valuation allowances related to tax benefits
associated with net operating loss carryforwards.
51
52
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
SUPPLEMENTAL INFORMATION
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
STATEMENT OF EARNINGS
(unaudited)
Year Ended December 31
----------------------------
1994 1993 1992
---- ---- ----
(in millions of dollars)
Sales of manufactured products $49,534 $41,247 $33,409
Equity in earnings of unconsolidated subsidiaries and affiliates 237 187 131
Interest and other income 323 220 215
------- ------- -------
TOTAL REVENUES 50,094 41,654 33,755
------- ------- -------
Costs, other than items below 37,485 32,066 27,424
Depreciation of property and equipment 912 853 802
Amortization of special tools 961 671 641
Selling and administrative expenses 3,146 2,619 2,467
Pension expense 704 749 832
Nonpension postretirement benefit expense 828 762 368
Interest expense 228 361 429
Gain on sales of automotive assets and investments -- (265) (142)
------- ------- -------
TOTAL EXPENSES 44,264 37,816 32,821
------- ------- -------
EARNINGS BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES 5,830 3,838 934
Provision for income taxes 2,117 1,423 429
------- ------- -------
EARNINGS BEFORE CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING PRINCIPLES 3,713 2,415 505
Cumulative effect of changes in accounting principles -- (4,966) 218
------- ------- -------
NET EARNINGS (LOSS) $ 3,713 $ (2,551) $ 723
======= ======= =======
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 Sup-
plemental 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." 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.
52
53
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
SUPPLEMENTAL INFORMATION
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
BALANCE SHEET
(unaudited)
December 31
-----------------
1994 1993
---- ----
(in millions of dollars)
ASSETS:
Cash and cash equivalents $ 4,972 $ 3,777
Marketable securities 2,643 707
Accounts receivable - trade and other (net) 459 805
Inventories 2,645 2,483
Prepaid taxes, pension and other expenses 1,272 713
Property and equipment 10,347 8,820
Special tools 3,643 3,455
Investments in and advances to unconsolidated subsidiaries
and affiliated companies 3,642 3,685
Intangible assets 1,781 3,882
Deferred tax assets 1,951 3,642
Other assets 4,722 2,051
------- -------
TOTAL ASSETS $38,077 $34,020
======= =======
LIABILITIES:
Accounts payable $ 7,403 $ 6,074
Short-term debt 140 100
Payments due within one year on long-term debt 187 399
Accrued liabilities and expenses 5,333 4,422
Long-term debt 2,097 2,281
Accrued noncurrent employee benefits 8,547 10,562
Other noncurrent liabilities 3,676 3,346
------- -------
TOTAL LIABILITIES 27,383 27,184
------- -------
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY: (shares in millions)
Preferred stock - $1 per share par value; authorized
20.0 shares; Series A Convertible Preferred Stock;
issued: 1994 and 1993 - 1.7 shares; aggregate
liquidation preference $863 million 2 2
Common stock - $1 per share par value; authorized
1,000.0 shares; issued: 1994 and 1993 - 364.1 shares 364 364
Additional paid-in capital 5,536 5,533
Retained earnings 5,006 1,170
Treasury stock - at cost: 1994 - 9.0 shares; 1993 -
10.4 shares (214) (233)
------- -------
TOTAL SHAREHOLDERS' EQUITY 10,694 6,836
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $38,077 $34,020
======= =======
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.
53
54
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY Part II - Continued
DATA - Continued
SUPPLEMENTAL INFORMATION
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
STATEMENT OF CASH FLOWS
(unaudited)
Year Ended December 31
--------------------------
1994 1993 1992
---- ---- ----
(in millions of dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $3,713 $(2,551) $ 723
Adjustments to reconcile to net cash provided by operating
activities:
Depreciation and amortization 1,873 1,524 1,443
Equity in earnings of unconsolidated subsidiaries and
affiliates (237) (187) (131)
Deferred income taxes 1,065 803 229
Gain on sales of automotive assets and investments -- (265) (142)
Cumulative effect of changes in accounting principles -- 4,966 (218)
Change in accounts receivable 345 131 (300)
Change in inventories (201) (171) 159
Change in prepaid expenses and other assets (2,095) (1,587) 74
Change in accounts payable and accrued and other liabilities 2,856 365 953
Other 215 224 181
------ ------ ------
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,534 3,252 2,971
------ ------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (3,412) (3,149) (14,188)
Sales and maturities of marketable securities 1,463 3,401 13,925
Proceeds from sales of automotive assets and investments 62 461 215
Expenditures for property and equipment (2,611) (1,738) (1,374)
Expenditures for special tools (1,177) (1,234) (872)
Other 77 (13) (209)
------ ------ ------
NET CASH USED IN INVESTING ACTIVITIES (5,598) (2,272) (2,503)
------ ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in short-term debt (less than 90-day maturities) 40 14 (165)
Proceeds under revolving lines of credit and long-term
borrowings 2 23 39
Payments on revolving lines of credit and long-term borrowings (412) (1,021) (497)
Proceeds from issuances of common and preferred stock, net of
expenses -- 1,952 836
Dividends paid (399) (281) (225)
Other 28 101 48
------ ------ ------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (741) 788 36
------ ------ ------
Change in cash and cash equivalents 1,195 1,768 504
Cash and cash equivalents at beginning of year 3,777 2,009 1,505
------ ------ ------
CASH AND CASH EQUIVALENTS AT END OF YEAR $4,972 $3,777 $2,009
====== ====== ======
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." 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.
54
55
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:
*3-A-1 Copy of Certificate of Incorporation of Chrysler
Corporation, as amended and restated and in effect on May
21, 1987.
*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.
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.
*3-D Copy of Certificate of Designation, Preferences and Rights
of Series A Convertible Preferred Stock.
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.
- -----------------------
*Filed herewith.
55
56
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, Part IV - Continued
AND REPORTS ON FORM 8-K - CONTINUED
4-B-2 Copy of Agreement of Merger and Plan of Reorganization, dated as of
March 6, 1986, among Chrysler Corporation, Chrysler 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 State Street Bank and Trust Company
(successor to Manufacturers Hanover Trust Company), as 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 State Street Bank and Trust Company
(successor to Manufacturers Hanover Trust Company), as 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,
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, 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.
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, 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.
56
57
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, Part IV - Continued
AND REPORTS ON FORM 8-K - CONTINUED
4-F-2 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-3 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-4 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.
4-F-5 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-6 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-7 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 Junioi 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.
57
58
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, Part IV - Continued
AND REPORTS ON FORM 8-K - CONTINUED
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.
*10-B-1 Copy of Chrysler Corporation Incentive Compensation Plan, as
amended and in effect on and after May 19, 1994.
*10-B-2 Copy of Chrysler Corporation Long-Term Performance Plan, as
amended and in effect on and after May 19, 1994.
10-B-3 Copy of Chrysler Supplemental Executive Retirement Plan, as
amended through December 20, 1993. Filed as Exhibit 10-B-3 to
Chrysler Corporation Annual Report on Form 10- K for the year ended
December 31, 1993 and incorporated herein by reference.
*10-B-4 Copy of Chrysler Corporation Discretionary Incentive Compensation
Plan as in effect on and after December 1, 1994.
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
the Chrysler Corporation Annual Report on Form 10-K for the year ended
December 31, 1992 and incorporated herein by reference.
- --------------------
*Filed herewith.
58
59
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, Part IV - Continued
AND REPORTS ON FORM 8-K - CONTINUED
10-C-3 Copy of agreement, dated June 11, 1992, between Chrysler
Corporation and Lee A. Iacocca. Filed as Exhibit 10-C-7 to the
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 the
Chrysler Corporation Annual Report on Form 10-K for the year ended
December 31, 1992 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-E-3 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-E-4 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-E-5 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-E-6 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-G-1 Copy of Revolving Credit Agreement, dated as of May 23, 1994, among
Chrysler Financial Corporation, Chemical Bank, as Agent, the
several commercial banks party thereto as Co-Agents, and Chemical
Securities Inc., as Arranger. Filed as Exhibit 10-A to the Current
Report on Form 8-K of Chrysler Financial Corporation dated May 23,
1994, and incorporated herein by reference.
10-G-2 Copy of Fourth Amended and Restated Commitment Transfer Agreement,
dated as of May 23, 1994, among Chrysler Financial Corporation, the
several financial institutions parties thereto and Chemical Bank, as
agent. Filed as Exhibit 10-B to the Current Report on Form 8-K of
Chrysler Financial Corporation dated May 23, 1994, and incorporated
herein by reference.
10-G-3 Copy of Guarantee Agreement, dated as of May 23, 1994, made by
Chrysler Financial Corporation to and in favor of Guaranteed Parties
as defined therein. Filed as Exhibit 10-C to the Current Report on
Form 8-K of Chrysler Financial Corporation dated May 23, 1994, and
incorporated herein by reference.
10-G-4 Copy of Revolving Credit Agreement, dated as of May 23, 1994,
among Chrysler Credit Canada Ltd., Royal Bank of Canada, as agent,
Canadian Imperial Bank of Commerce and Bank of Nova Scotia, as
co-agents, and the Lenders partes thereto. Filed as Exhibit 10-D to
the Current Report on Form 8-K of Chrysler Financial Corporation dated
May 23, 1994, and incorporated herein by reference.
59
60
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, Part IV - Continued
AND REPORTS ON FORM 8-K - CONTINUED
10-G-5 Copy of Short Term Receivables Purchase Agreement, dated as of
May 23, 1994, among Chrysler Financial Corporation, Chrysler Credit
Corporation, U.S. Auto Receivables Company, American Auto Receivables
Company, Chemical Bank, as agent, the several commercial banks parties
thereto, and Chemical Bank Agency Services Corporation, as
Administrative Agent. Filed as Exhibit 10-E to the Current Report on
Form 8-K of Chrysler Financial Corporation dated May 23, 1994, and
incorporated herein by reference.
10-G-6 Copy of Short Term Participation and Servicing Agreement, dated as of
May 23, 1994, among American Auto Receivables Company, Chrysler Credit
Corporation, the banks and other financial institutions named as
purchasers therein, Chemical Bank, as Agent, and Chemical Bank Agency
Services Corporation, as Administrative Agent. Filed as Exhibit 10-F
to the Current Report on Form 8-K of Chrysler Financial Corporation
dated May 23, 19984, and incorporated herein by reference.
10-G-7 Copy of Short Term Bank Supplement, dated as of May 23, 1994,
among U.S. Auto Receivables Company, Chrysler Credit Corporation and
Manufacturers and Traders Trust Company, as Trustee, to the Pooling
and Servicing Agreement dated as of May 31, 1991 with respect to CARCO
Auto Loan Master Trust Short Term Bank Series. Filed as Exhibit 10-G
to the Current Report on Form 8-K of Chrysler Financial Corporation
dated May 23, 1994, and incorporated herein by reference.
10-G-8 Copy of Long Term Receivables Purchase Agreement, dated as of
May 23, 1994, among Chrysler Financial Corporation, Chrysler Credit
Corporation, U.S. Auto Receivables Company, American Auto Receivables
Company, the several commercial banks parties thereto, Chemical Bank,
as Agent, and Chemical Bank Agency Services Corporation, as
Administrative Agent. Filed as Exhibit 10-H to the Current Report on
Form 8-K of Chrysler Financial Corporation dated May 23, 1994, and
incorporated herein by reference.
10-G-9 Copy of Long Term Participation and Servicing Agreement, dated
as of May 23, 1994, among American Auto Receivables Company, Chrysler
Credit Corporation, the banks and other financial institutions named
as purchasers therein, Chemical Bank, as Agent, and Chemical Bank
Agency Services Corporation, as Administrative Agent. Filed as
Exhibit 10-I to the Current Report on Form 8-K of Chrysler Financial
Corporation dated May 23, 1994, and incorporated herein by reference.
10-G-10 Copy of Long Term Bank Supplement, dated as of May 23, 1994, among
U.S. Auto Receivables Company, Chrysler Credit Corporation and
Manufacturers and Traders Trust Company, as Trustee, to the Pooling
and Servicing Agreement dated as of May 31, 1991 with respect to CARCO
Auto Loan Master Trust Bank Series. Filed as Exhibit 10-J to the
Current Report on Form 8-K of Chrysler Financial Corporation dated
May 23, 1994, and incorporated herein by reference.
10-G-11 Copy of Short Term Receivables Purchase Agreement, dated May
23, 1994, among Chrysler Financial Corporation, Chrysler Credit Canada
Ltd., the chartered banks named therein as purchasers, and Royal Bank
of Canada, as Agent. Filed as Exhibit 10-K to the Current Report on
Form 8-K of Chrysler Financial Corporation dated May 23, 1994, and
incorporated herein by reference.
10-G-12 Copy of Short Term Retail Purchase and Servicing Agreement, dated
May 23, 1994, among Chrysler Credit Canada Ltd., the chartered banks
named therein as parties thereto, and Royal Bank of Canada, as Agent.
Filed as Exhibit 10-L to the Current Report on Form 8-K of Chrysler
Financial Corporation dated May 23, 1994, and incorporated herein by
reference.
10-G-13 Copy of Long Term Receivables Purchase Agreement, dated May 23,
1994, among Chrysler Financial Corporation, Chrysler Credit Canada
Ltd., the chartered banks named therein as purchasers, and Royal Bank
of Canada, as Agent. Filed as Exhibit 10-M to the Current Report on
Form 8-K of Chrysler Financial Corporation dated May 23, 1994, and
incorporated herein by reference.
10-G-14 Copy of Long Term Retail Purchase and Servicing Agreement, dated
May 23, 1994, among Chrysler Credit Canada Ltd., the chartered banks
named therein as parties thereto, and Royal Bank of Canada, as Agent.
Filed as Exhibit 10-N to the Current Report on Form 8-K of Chrysler
Financial Corporation dated May 23, 1994, and incorporated herein by
reference.
60
61
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, Part IV - Continued
AND REPORTS ON FORM 8-K - CONTINUED
10-G-15 Copy of Bank Series 1994-1 Supplement, dated as of May 23, 1994, among
Chrysler Credit Canada Ltd., Royal Bank of Canada, as Agent, the
several banks parties thereto, and The Royal Trust Company, as
Custodian, to the Master Custodial and Servicing Agreement, dated
as of September 1, 1992. Filed as Exhibit 10-O to the Current Report
on Form 8-K of Chrysler Financial Corporation dated May 23, 1994, and
incorporated herein by reference.
10-G-16 Copy of Bank Series 1994-2 Supplement, dated as of May 23, 1994, among
Chrysler Credit Canada Ltd., Royal Bank of Canada, as Agent, the
several banks parties thereto, and The Royal Trust Company, as
Custodian, to the Master Custodial and Servicing Agreement, dated as
of September 1, 1992. Filed as Exhibit 10-P to the Current Report on
Form 8-K of Chrysler Financial Corporation dated May 23, 1994, and
incorporated herein by reference.
10-H-1 Copy of Securitization Closing Agreement, dated as of February 1,
1993, among Chrysler Financial Corporation, certain Sellers,
certain Purchasers, and certain Purchaser Parties. Filed as Exhibit
2-E to the Current Report of Chrysler Financial Corporation on Form
8-K dated February 1, 1993, and incorporated herein by reference.
10-H-2 Copy of First Amendment to Business Asset Purchase Agreement dated as
of January 29, 1993, among NationsBank Financial Services Corporation,
the other Purchasers parties thereto and the Sellers parties
thereto and Chrysler Financial Corporation. Filed as Exhibit 2-D to
the Current Report of Chrysler Financial Corporation on Form 8-K dated
February 1, 1993, and incorporated herein by reference.
10-I Copy of Asset Purchase Agreement, dated as of February 1, 1993, among
Chrysler Rail Transportation Corporation, Chrysler Capital
Transportation Services, Inc. and United States Rail Services, a
division of United States Leasing International, Inc. Filed as
Exhibit 10-IIIIII 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-J-1 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-J-2 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-K-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-K-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-L 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-M 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-N 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.
61
62
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, Part IV - Continued
AND REPORTS ON FORM 8-K - CONTINUED
10-O-1 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-O-2 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-O-3 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-P Copy of Lease Receivables Purchase Agreement, dated September 3,
1993, among CXC Incorporated, Chrysler Systems Inc., and Chrysler
Financial Corporation. Filed as Exhibit 10-UUUU 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 Lease Receivables Purchase Agreement, dated September 22,
1993, among the CIT Group/Equipment Financing, Inc., Chrysler
Systems Inc., and Chrysler Financial Corporation. Filed as Exhibit
10-VVVV 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-R Copy of Asset Purchase Agreement, dated as of July 31, 1993, between
Chrysler Rail Transportation Corporation and General Electric Railcar
Leasing Services Corporation. Filed as Exhibit 10-WWWW 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 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-T Copy of Loan Agreement, dated as of March 31, 1993, between Manatee
Leasing, Inc. and Chrysler Credit Corporation. Filed as Exhibit
10-YYYY 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 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-V-1 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-V-2 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-W Copy of Asset Purchase Agreement, dated as of October 29, 1993,
between Marine Asset Management Corporation and Trico Marine
Assets, Inc. Filed as Exhibit 10-CCCCC to the Quarterly Report on
Form 10-Q of Chrysler Financial Corporation for the quarter ended
September 30, 1993, and incorporated herein by reference.
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63
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, Part IV - Continued
AND REPORTS ON FORM 8-K - CONTINUED
10-X Copy of Asset Purchase Agreement, dated as of December 3, 1993,
between Chrysler Rail Transportation Corporation and Allied Railcar
Company. Filed as Exhibit 10-OOOO 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-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.
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.
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64
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, Part IV - Continued
AND REPORTS ON FORM 8-K - CONTINUED
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 Receivables 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 August 1, 1990,
among Chrysler Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and The Fuji Bank and Trust Company, as
Trustee, with respect to CARCO DEALRs Wholesale Trust 1990-A. Filed
as Exhibit 10-HHH to the Annual Report of Chrysler Financial
Corporation on Form 10-K for the year ended December 31, 1990, and
incorporated herein by reference.
10-LL Copy of Amendment, dated as of September 23, 1991, to the Pooling and
Servicing Agreement, dated August 1, 1990, among Chrysler Auto
Receivables Company, as Seller, Chrysler Credit Corporation, as
Servicer, and The Fuji Bank and Trust Company, as Trustee, with
respect to CARCO DEALRs Wholesale Trust 1990-A. Filed as Exhibit
10-NN to the Annual Report of Chrysler Financial Corporation on Form
10-K for the year ended December 31, 1991, and incorporated herein by
reference.
10-MM Copy of Receivables Purchase Agreement, dated as of August 16,
1990, between Chrysler Auto Receivables Company, as Buyer, and
Chrysler Credit Corporation, as Seller, with respect to CARCO DEALRs
Wholesale Trust 1990-A. Filed as Exhibit 10-III to the Annual Report
of Chrysler Financial Corporation on Form 10-K for the year ended
December 31, 1990, and incorporated herein by reference.
10-NN Copy of Receivables Sales Agreement, dated as of August 16,
1990, between Chrysler Financial Corporation and Chrysler Credit
Corporation, with respect to CARCO DEALRs Wholesale Trust 1990-A.
Filed as Exhibit 10-JJJ to the Annual Report of Chrysler Financial
Corporation on Form 10-K for the year ended December 31, 1990, and
incorporated herein by reference.
10-OO 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-PP 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.
64
65
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, Part IV - Continued
AND REPORTS ON FORM 8-K - CONTINUED
10-QQ Copy of Pooling and Servicing Agreement, dated as of May 1,
1991, among Chrysler Auto Receivables Company, as Seller, Chrysler
Credit Corporation, as Servicer, and The Fuji Bank and Trust Company,
as Trustee, with respect to Select Auto Receivables Trust 1991-1.
Filed as Exhibit 4-A to the Quarterly Report on Form 10-Q of Select
Auto Receivables Trust 1991-1 for the quarter ended September 30,
1991, and incorporated herein by reference.
10-RR Copy of Standard Terms and Conditions of Agreement, dated as of May
1, 1991, between Chrysler Auto Receivables Company, as Seller, and
Chrysler Credit Corporation, as Servicer, with respect to Select Auto
Receivables Trust 1991-1. Filed as Exhibit 4-B to the Quarterly
Report on Form 10-Q of Select Auto Receivables Trust 1991-1 for the
quarter ended September 30, 1991, and incorporated herein by
reference.
10-SS Copy of Purchase Agreement, dated as of May 1, 1991, between
Chrysler Financial Corporation and Chrysler Auto Receivables Company
with respect to Select Auto Receivables Trust 1991-1. Filed as
Exhibit 4-C to the Quarterly Report on Form 10-Q of Select Auto
Receivables Trust 1991-1 for the quarter ended September 30, 1991, and
incorporated herein by reference.
10-TT Copy of Pooling and Servicing Agreement, dated as of May 31,
1991, among Chrysler 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 2 to the CARCO Auto Loan Master Trust Registration
Statement on Form 8-A, and incorporated herein by reference.
10-UU Copy of Pooling and Servicing Agreement, dated as of July 1,
1991, among Chrysler Auto Receivables Company, as Seller, Chrysler
Credit Corporation, as Servicer, and The Fuji Bank and Trust Company,
as Trustee, with respect to Select Auto Receivables Trust 1991-2.
Filed as Exhibit 4-A to the Quarterly Report on Form 10-Q of Select
Auto Receivables Trust 1991-2 for the quarter ended September 30,
1991, and incorporated herein by reference.
10-VV Copy of Standard Terms and Conditions of Agreement, dated as of July
1, 1991, between Chrysler Auto Receivables Company, as Seller, and
Chrysler Credit Corporation, as Servicer, with respect to Select Auto
Receivables Trust 1991-2. Filed as Exhibit 4-B to the Quarterly
Report on Form 10-Q of Select Auto Receivables Trust 1991-2 for the
quarter ended September 30, 1991 and incorporated herein by reference.
10-WW Copy of Purchase Agreement, dated as of July 1, 1991, between
Chrysler Financial Corporation and Chrysler Auto Receivables
Company with respect to Select Auto Receivables Trust 1991-2. Filed
as Exhibit 4-C to the Quarterly Report on Form 10-Q of Select Auto
Receivables Trust 1991-2 for the quarter ended September 30, 1991, and
incorporated herein by reference.
10-XX Copy of Pooling and Servicing Agreement, dated as of September 1,
1991, among Chrysler Auto Receivables Company, as Seller, Chrysler
Credit Corporation, as Servicer, and The Fuji Bank and Trust Company,
as Trustee, with respect to Select Auto Receivables Trust 1991-3.
Filed as Exhibit 4-A to the Quarterly Report on Form 10-Q of Select
Auto Receivables Trust 1991-2 for the quarter ended September 30,
1991, and incorporated herein by reference.
10-YY Copy of Standard Terms and Conditions of Agreement, dated as of
September 1, 1991, between Chrysler Auto Receivables Company, as
Seller, and Chrysler Credit Corporation, as Servicer, with respect to
Select Auto Receivables Trust 1991-3. Filed as Exhibit 4-B to the
Quarterly Report on Form 10-Q of Select Auto Receivables Trust 1991-3
for the quarter ended September 30, 1991, and incorporated herein by
reference.
10-ZZ Copy of Purchase Agreement, dated as of September 1, 1991, between
Chrysler Financial Corporation and Chrysler Auto Receivables Company
with respect to Select Auto Receivables Trust 1991-3. Filed as
Exhibit 4-C to the Quarterly Report on Form 10-Q of Select Auto
Receivables Trust 1991-3 for the quarter ended September 30, 1991, and
incorporated herein by reference.
10-AAA Copy of Pooling and Servicing Agreement, dated as of November 1,
1991, among Chrysler Auto Receivables Company, as Seller, Chrysler
Credit Corporation, as Servicer, and The Fuji Bank and Trust Company,
as Trustee, with respect to Select Auto Receivables Trust 1991-5.
Filed as Exhibit 4-A to the Annual Report on Form 10-K of Select Auto
Receivables Trust 1991-5 for the year ended December 31, 1991, and
incorporated herein by reference.
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66
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, Part IV - Continued
AND REPORTS ON FORM 8-K - CONTINUED
10-BBB Copy of Standard Terms and Conditions of Agreement, dated as of
November 1, 1991, between Chrysler Auto Receivables Company, as
Seller, and Chrysler Credit Corporation, as Servicer, with respect to
Select Auto Receivables Trust 1991-5. Filed as Exhibit 4-B to the
Annual Report on Form 10-K of Select Auto Receivables Trust 1991-5 for
the year ended December 31, 1991, and incorporated herein by
reference.
10-CCC Copy of Purchase Agreement, dated as of November 1, 1991, between
Chrysler Financial Corporation and Chrysler Auto Receivables
Company with respect to Select Auto Receivables Trust 1991-5. Filed
as Exhibit 4-C to the Annual Report on Form 10-K of Select Auto
Receivables Trust 1991-5 for the year ended December 31, 1991, and
incorporated herein by reference.
10-DDD Copy of Pooling and Servicing Agreement, dated as of December 1, 1991,
among U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and LaSalle National Bank, as Trustee, with
respect to CFC-15 Grantor Trust. Filed as Exhibit 10-PPPP to the
Annual Report of Chrysler Financial Corporation on Form 10-K for the
year ended December 31, 1991, and incorporated herein by
reference.
10-EEE Copy of Pooling and Servicing Agreement, dated as of January 1, 1992,
among Chrysler Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and LaSalle National Bank, as Trustee, with
respect to CFC-16 Grantor Trust. Filed as Exhibit 10-QQQQ to the
Annual Report of Chrysler Financial Corporation on Form 10-K for the
year ended December 31, 1991, and incorporated herein by reference.
10-FFF Copy of Standard Terms and Conditions of Agreement, dated as of
January 1, 1992, between Chrysler Auto Receivables Company, as Seller,
and Chrysler Credit Corporation, as Servicer, with respect to CFC-16
Grantor Trust. Filed as Exhibit 10-RRRR to the Annual Report of
Chrysler Financial Corporation on Form 10-K for the year ended
December 31, 1991, and incorporated herein by reference.
10-GGG Copy of Purchase Agreement, dated as of January 1, 1992 between
Chrysler Financial Corporation and Chrysler Auto Receivables Company
with respect to CFC-16 Grantor Trust. Filed as Exhibit 10-SSSS to the
Annual Report of Chrysler Financial Corporation on Form 10-K for the
year ended December 31, 1991, and incorporated herein by reference.
10-HHH Copy of Sale and Servicing Agreement, dated as of January 1,
1992, among Premier Auto Trust 1992-1, as Issuer, U.S. Auto
Receivables Company, as Seller, and Chrysler Credit Corporation, as
Servicer, with respect to Premier Auto Trust 1992-1. Filed as Exhibit
10-QQQQ to the Registration Statement of Chrysler Financial
Corporation, on Form S-2 (Registration Statement No. 33-51302) on
November 24, 1992, and incorporated herein by reference.
10-III Copy of Trust Agreement, dated as of January 1, 1992, between U.S.
Auto Receivables Company and Chemical Bank Delaware, as Owner
Trustee, with respect to Premier Auto Trust 1992-1. Filed as Exhibit
10-RRRR to the Registration Statement of Chrysler Financial
Corporation on Form S-2 (Registration Statement No. 33-51302) on
November 24, 1992, and incorporated herein by reference.
10-JJJ Copy of Purchase Agreement, dated as of January 1, 1992, between
Chrysler Financial Corporation, as Seller, and U.S. Auto Receivables
Company, as Purchaser, with respect to Premier Auto Trust 1992-1.
Filed as Exhibit 10-SSSS to the Registration Statement of Chrysler
Financial Corporation on Form S-2 (Registration Statement No.
33-51302) on November 24, 1992, and incorporated herein by reference.
10-KKK Copy of Pooling and Servicing Agreement, dated as of January 1, 1992,
among Chrysler Financial Corporation, as Master Servicer, Chrysler
First Business Credit Corporation, as Seller, and Security Pacific
National Bank, as Trustee, with respect to U.S. Business Equity Loan
Trust 1992-1. Filed as Exhibit 4-A to the Quarterly Report on Form
10-Q of U.S. Business Equity Loan Trust 1992-1 for the quarter ended
March 31, 1992, and incorporated herein by reference.
10-LLL 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.
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67
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, Part IV - Continued
AND REPORTS ON FORM 8-K - CONTINUED
10-MMM Copy of Indenture, dated as of March 1, 1992, between
Premier Auto Trust 1992-2 and Bankers Trust Company,
with respect to Premier Auto Trust 1992-2 Asset Backed
Notes. Filed as Exhibit 4-A to the Quarterly Report on
Form 10-Q of Premier Auto Trust 1992-2 for the quarter
ended March 31, 1992, and incorporated herein by
reference.
10-NNN Copy of a 6-3/8% Asset Backed Note with respect to Premier Auto
Trust 1992-2 Asset Backed Notes. Filed as Exhibit 4-B to the
Quarterly Report on Form 10-Q of Premier Auto Trust 1992-2 for
the quarter ended March 31, 1992, and incorporated herein by
reference.
10-OOO Copy of Trust Agreement, dated as of March 1, 1992, between U.S.
Auto Receivables Company and Manufacturers Hanover Bank (Delaware)
with respect to Premier Auto Trust 1992-2 Asset Backed Certificates.
Filed as Exhibit 4-C to the Quarterly Report on Form 10-Q of Premier
Auto Trust 1992-2 for the quarter ended March 31, 1992, and
incorporated herein by reference.
10-PPP 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.
10-QQQ 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-RRR 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-SSS 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-TTT 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-UUU 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-VVV 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-WWW 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-XXX 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-YYY 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.
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68
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, Part IV - Continued
AND REPORTS ON FORM 8-K - CONTINUED
10-ZZZ 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.
10-AAAA 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-BBBB 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-CCCC 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-DDDD 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-EEEE Copy of First Amendment dated as of August 24, 1992 to the Series
1991-1 Supplement dated as of May 31, 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-M 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-FFFF 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-GGGG 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-HHHH 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.
10-IIII 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.
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69
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, Part IV - Continued
AND REPORTS ON FORM 8-K - CONTINUED
10-JJJJ 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-KKKK 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-LLLL 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-MMMM 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-NNNN 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-OOOO 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-PPPP Copy of Lease Receivables Purchase Agreement, dated as of December 23,
1992, among Chrysler Systems Leasing Inc., Chrysler Financial
Corporation and Sanwa Business Credit Corporation. Filed as Exhibit
10-TTTT 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-QQQQ 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-RRRR 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.
*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, 1994.
- --------------------
*Filed herewith
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70
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:
A report on Form 8-K, dated December 1, 1994, was filed
during the quarter ended December 31, 1994, reporting the
amendment of the Amended and Restated Rights Agreement,
dated as of December 14, 1990 under Item 5 of such Form
8-K.
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71
CONFORMED
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
February 2, 1995
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:
R. J. Eaton Chairman of the Board February 2, 1995
- ----------- and Chief Executive Officer
R. J. EATON
R. A. Lutz President and Chief February 2, 1995
- ---------- Operating Officer
R. A. LUTZ
Principal financial officer:
G. C. Valade Executive Vice President and February 2, 1995
- ------------ Chief Financial Officer
G. C. VALADE
Principal accounting officer:
J. D. Donlon, III Vice President and February 2, 1995
----------------- Controller
J. D. DONLON, III
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72
CONFORMED
SIGNATURES
Board of Directors:
Lilyan H. Affinito * Director February 2, 1995
- ------------------
LILYAN H. AFFINITO
Robert E. Allen * Director February 2, 1995
- ---------------
ROBERT E. ALLEN
Joseph E. Antonini * Director February 2, 1995
- ------------------
JOSEPH E. ANTONINI
Joseph A. Califano, Jr. * Director February 2, 1995
- -----------------------
JOSEPH A. CALIFANO, JR.
Thomas G. Denomme * Director February 2, 1995
- -----------------
THOMAS G. DENOMME
Robert J. Eaton * Director February 2, 1995
- ---------------
ROBERT J. EATON
Earl G. Graves * Director February 2, 1995
- --------------
EARL G. GRAVES
Kent Kresa * Director February 2, 1995
- ----------
KENT KRESA
Robert J. Lanigan * Director February 2, 1995
- -----------------
ROBERT J. LANIGAN
Robert A. Lutz * Director February 2, 1995
- --------------
ROBERT A. LUTZ
Peter A. Magowan * Director February 2, 1995
- ----------------
PETER A. MAGOWAN
Malcolm T. Stamper * Director February 2, 1995
- ------------------
MALCOLM T. STAMPER
Lynton R. Wilson * Director February 2, 1995
- ----------------
LYNTON R. WILSON
* By R. D. Houtman
-------------------------------
R. D. HOUTMAN
Attorney-in-Fact
February 2, 1995
72