SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
July 14, 1994
Date of Report ........................................................
(Date of earliest event reported)
CHRYSLER FINANCIAL CORPORATION
.......................................................................
(Exact name of registrant as specified in its charter)
State of Michigan 1-5966 38-0961430
.......................................................................
(State or other jurisdiction (Commission) (IRS Employer
of incorporation) File No.) Identification No.)
27777 Franklin Rd., Southfield, Michigan 48034
..............................................
(Address of principal executive offices)
(810) 948-3060
Registrant's telephone number, including area code....................
<PAGE>
Item 5. Other Events.
On July 14, 1994, the registrant released its financial
statements for six months ended June 30, 1994. A copy of such
financial statements and review report by independent public
accountants is annexed as Exhibit 99 to this Report and by this
reference incorporated herein and made a part hereof.
Deloitte & Touche, the registrant's independent public accountants,
performed a review of the financial statements for the six months
ended June 30, 1994 in accordance with the standards for such review
established by the American Institute of Certified Public Accountants.
The review did not constitute an audit, and accordingly, Deloitte &
Touche did not express an opinion on the aforementioned data.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
Listed below are the financial statements, pro forma financial
information and exhibits, if any, filed as a part of this Report:
(a) Financial statements of businesses acquired;
None
(b) Pro forma financial information:
None
(c) Exhibits:
15 Letter re: unaudited interim financial information.
99 Copy of financial statements of Chrysler Financial
Corporation for the quarter ended June 30, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
CHRYSLER FINANCIAL CORPORATION
Date: July 14, 1994 By: /s/Robert A. Link
--------------------------
Robert A. Link
Secretary
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
No. Description of Exhibit
- - ------- ----------------------
Exhibit
15 Letter re unaudited interim financial information.
99 Copy of financial statements of Chrysler Financial
Corporation for the six months ended June 30, 1994.
Exhibit 15
[Letterhead of Deloitte & Touche]
Deloitte &
Touche
- - ------------------------------------------------------------------------------
Suite 900 Telephone (313) 396-3000
600 Renaissance Center
Detroit, Michigan 48243-1704
July 14, 1994
Chrysler Financial Corporation
27777 Franklin Road
Southfield, Michigan
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of Chrysler Financial Corporation (a subsidiary of
Chrysler Corporation) and its consolidated subsidiaries for the periods ended
June 30, 1994 and 1993, as indicated in our report dated July 14, 1994;
because we did not perform an audit, we expressed no opinion on that
information.
We are aware that our report referred to above, which is included in your Form
8-K dated July 14, 1994, is incorporated by reference in Registration
Statement No. 33-50285 on Form S-3 and Registration Statement No. 33-52421
on Form S-3.
We also are aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that
Act.
/s/ Deloitte & Touche
Exhibit 99
CONTACT: J.R. Ferry
FOR IMMEDIATE RELEASE
---------------------
SOUTHFIELD, Mich., July 14, 1994 -- Chrysler Financial Corporation
(CFC) today reported 1994 second quarter net earnings of $44 million,
compared to net earnings of $44 million in the second quarter of 1993.
John P. Tierney, Chairman of CFC, said the 1994 second quarter
earnings reflect the positive impact of the company's larger automotive
financing portfolio and reduced credit losses. Those factors were offset
by reduced retail automotive margins.
CFC's net earnings for the first six months of 1994 were $91 million,
compared to earnings of $81 million, before the effect of accounting
changes, for the first six months of 1993.
At June 30, 1994, CFC was managing $30.2 billion in receivables, up
$2.9 billion from a year ago. The increase in receivables managed was
caused by a higher volume of automotive financing. The company's total
assets at June 30, 1994, were $15 billion, consistent with levels at June 30,
1993.
Chrysler Credit, CFC's automotive finance operation, was managing
$27.1 billion in receivables at June 30, 1994, compared to $23.7 billion a
year ago.
During the second quarter of 1994, retail automotive financing volume
was 149,000 new passenger cars, trucks and minivans, representing 24
percent of Chrysler's U.S. retail deliveries, compared to 137,000 vehicles,
or 23 percent in the second quarter of 1993.
In the second quarter of 1994, Chrysler Credit also financed at
wholesale 421,000 vehicles representing 75 percent of Chrysler's U.S.
factory shipments, compared to 396,000 vehicles or 75 percent in the second
quarter of 1993.
(more)
(1594)
<PAGE>
- 2 -
CFC's nonautomotive operations, consisting of Chrysler Capital, a
commercial leasing and lending unit, and Chrysler First Business Credit, a
small business loan operation, were managing $3.1 billion in receivables at
June 30, 1994. A year ago, the company's nonautomotive operations were
managing $3.6 billion in receivables.
Chrysler Insurance, an automotive-related insurance operation, had
direct insurance premiums written of $87 million during the first six
months of 1994, compared to $75 million for the same period a year ago.
In 1994 second quarter capital markets activity, CFC received net
proceeds of $1.8 billion from the sale of U.S. automotive receivables and
sold $540 million of medium term notes. At the end of the second quarter,
CFC had commercial paper outstanding of $3.1 billion compared to $1.6
billion a year ago.
All four major credit ratings agencies increased ratings on the U.S.
senior debt of Chrysler Financial during the second quarter. Duff & Phelps
on June 1 raised the ratings to A- from BBB+; Moody's Investor Service on
May 19 to A3 from Baa2; Fitch Investors Service on May 12 to A- from BBB;
and Standard & Poors on April 19 to BBB+ from BBB.
On May 23, 1994, CFC successfully put in place new U.S. and Canadian
bank support facilities which replaced existing facilities scheduled to
expire in 1995. These new facilities remove the collateral requirements,
permit dividends, provide for other less restrictive financial covenants,
result in requested reductions in the total commitments, and reduce both
borrowing rates and commitment fees.
These support facilities consist of $5.2 billion of revolving credit
agreements which expire in May 1998 and $1.7 billion of receivable sale
agreements. As of June 30, 1994, none of these facilities had been
utilized.
- 0 -
<PAGE>
<TABLE>
<CAPTION>
Highlights Chrysler Financial Corporation and Subsidiaries
(in millions of dollars)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
After-Tax Earnings:
Earnings before changes
in accounting principles $ 44 $ 44 $ 91 $ 81
Cumulative effect of changes
in accounting principles - - - (30)
Net earnings $ 44 $ 44 $ 91 $ 51
Automotive Financing Volume:
Retail $ 8,439 $ 6,559
Wholesale and other 26,568 23,178
Total automotive financing
volume $35,007 $29,737
<CAPTION>
_______________________________________________________________________________
June 30,
1994 1993
(unaudited)
<S> <C> <C>
Finance Receivables Managed:
(Including Receivables Serviced for Others)
Automotive financing:
Retail $18,208 $14,878
Wholesale and other 8,930 8,855
Total automotive financing 27,138 23,733
Nonautomotive financing 3,055 3,590
Total finance receivables managed $30,193 $27,323
Debt Payable Within One Year $ 4,203 $ 2,805
Senior Debt Payable After One Year $ 5,154 $ 5,794
Capital Funds:
Subordinated term debt payable after one year $ 27 $ 482
Shareholder's investment 3,215 3,049
Total capital funds $ 3,242 $ 3,531
<FN>
Prior periods reclassified to conform to current classifications.
See Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Chrysler Financial Corporation and Subsidiaries
Consolidated Statement of Net Earnings
(in millions of dollars)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Interest income:
Automotive financing:
Retail $ 129 $ 115 $ 266 $ 246
Wholesale and other 125 129 243 251
Nonautomotive financing 70 110 146 225
Total interest income 324 354 655 722
Interest expense 193 208 378 427
Interest margin 131 146 277 295
Other revenues:
Servicing fee income 60 52 121 103
Insurance premiums earned 34 36 68 69
Investment and other income 54 90 112 149
Interest margin and other
revenues 279 324 578 616
Costs and expenses:
Operating expenses 116 112 230 227
Provision for credit losses 40 66 91 112
Insurance losses and adjustment
expenses 27 32 53 59
Depreciation and other expenses 27 52 60 106
Total costs and expenses 210 262 434 504
Earnings before income taxes and
cumulative effect of changes in
accounting principles 69 62 144 112
Provision for income taxes 25 18 53 31
Earnings before cumulative effect
of changes in accounting principles 44 44 91 81
Cumulative effect of changes in
accounting principles (Note 4) - - - (30)
Net Earnings $ 44 $ 44 $ 91 $ 51
<CAPTION>
Consolidated Statement of Six Months Ended
Shareholder's Investment June 30,
(in millions of dollars) 1994 1993
(unaudited)
<S> <C> <C>
Balance at beginning of period (Note 4) $3,131 $2,998
Net earnings 91 51
Net unrealized holding losses on securities (Note 4) (7) -
Balance at end of period $3,215 $3,049
<FN>
Prior periods reclassified to conform to current classifications.
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Chrysler Financial Corporation and Subsidiaries
Consolidated Balance Sheet
(in millions of dollars)
June 30, December 31, June 30,
Assets: 1994 1993 1993
(unaudited) (unaudited)
<S> <C> <C> <C>
Finance receivables-net (Note 1) $ 9,385 $ 8,659 $ 9,586
Retained interests in sold
receivables and other related
amounts - net (Note 1) 4,049 3,587 3,505
Total finance receivables and
retained interests - net 13,434 12,246 13,091
Cash and cash equivalents 180 265 455
Marketable securities (Note 4) 339 348 329
Dealership properties leased - net 411 423 441
Equipment leased to others - net 121 176 335
Amounts due from affiliated companies 5 - -
Repossessed collateral 254 269 225
Other assets 428 524 509
Total Assets $15,172 $14,251 $15,385
Liabilities:
Debt (Note 3) $ 9,384 $ 8,435 $ 9,081
Accounts payable, accrued
expenses and other 1,047 1,147 1,224
Amounts due to affiliated companies - 24 527
Deferred income taxes 1,526 1,514 1,504
Total Liabilities 11,957 11,120 12,336
Shareholder's Investment 3,215 3,131 3,049
Total Liabilities and
Shareholder's Investment $15,172 $14,251 $15,385
<FN>
Prior periods reclassified to conform to current classifications.
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Chrysler Financial Corporation and Subsidiaries
Consolidated Statement of Cash Flows
(in millions of dollars)
Six Months Ended
June 30,
1994 1993
(unaudited)
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 91 $ 51
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Cumulative effect of changes in accounting
principles - 30
Net gains from receivable sales (41) (69)
Provision for credit losses 91 112
Depreciation and amortization of intangibles 37 67
Change in deferred income taxes 12 27
Change in accounts payable, accrued
expenses and other (27) (52)
Net cash provided by operating activities 163 166
Cash Flows From Investing Activities:
Acquisitions of finance receivables (32,805) (29,225)
Collections of finance receivables 7,902 9,418
Proceeds from sales of receivables 23,756 19,376
Proceeds from sales of nonautomotive assets - 2,267
Other (42) 146
Net cash (used in) provided by investing
activities (1,189) 1,982
Cash Flows From Financing Activities:
Change in short-term notes and affiliated
borrowings 323 1,835
Borrowings under revolving credit facilities:
Proceeds - 4,115
Payments - (7,643)
Proceeds from issuance of term debt 937 663
Repayment of term debt (426) (1,011)
Other 107 (85)
Net cash provided by (used in) financing
activities 941 (2,126)
Change in cash and cash equivalents (85) 22
Cash and cash equivalents at beginning of period 265 433
Cash and Cash Equivalents at End of Period $ 180 $ 455
<FN>
Prior period reclassified to conform to current classifications.
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
Chrysler Financial Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note 1 - Finance Receivables and Retained Interests
Outstanding balances of "Finance receivables - net" were as follows:
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1994 1993 1993
(unaudited) (unaudited)
(in millions of dollars)
<S> <C> <C> <C>
Automotive:
Retail $ 4,592 $ 3,536 $ 3,703
Wholesale and other 2,294 2,520 3,025
Total automotive 6,886 6,056 6,728
Nonautomotive 2,697 2,803 3,092
Total finance receivables 9,583 8,859 9,820
Less allowance for credit losses (198) (200) (234)
Total finance receivables - net $ 9,385 $ 8,659 $ 9,586
</TABLE>
The Company's retained interests in sold receivables and other related amounts
are generally restricted and subject to limited recourse provisions. The
following is a summary of amounts included in "Retained interests in sold
receivables and other related amounts - net":
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1994 1993 1993
(unaudited) (unaudited)
(in millions of dollars)
<S> <C> <C> <C>
Cash and investments $ 636 $ 586 $ 599
Senior interests in wholesale
receivables 1,532 967 716
Subordinated interests in
receivables 1,704 1,783 1,800
Excess servicing 187 200 212
Other restricted and securitized
assets 300 345 434
Less allowance for credit losses (310) (294) (256)
Total retained interests in sold
receivables and other related
amounts - net $ 4,049 $ 3,587 $ 3,505
</TABLE>
<PAGE>
Chrysler Financial Corporation and Subsidiaries
Note 1 - Finance Receivables and Retained Interests (Continued)
The Company's total allowance for credit losses including receivables sold
subject to limited recourse is as follows:
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1994 1993 1993
(unaudited) (unaudited)
(in millions of dollars)
<S> <C> <C> <C>
Allowance for losses deducted from:
Finance receivables $ 198 $ 200 $ 234
Retained interests in sold
receivables and other
related amounts 310 294 256
Total $ 508 $ 494 $ 490
</TABLE>
Note 2 - Sales of Receivables
The Company sells receivables subject to limited recourse provisions.
Outstanding balances of sold finance receivables are as follows:
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1994 1993 1993
(unaudited) (unaudited)
(in millions of dollars)
<S> <C> <C> <C>
Automotive:
Retail $12,286 $12,027 $10,932
Wholesale and other 6,598 6,356 5,798
Nonautomotive 359 449 497
Total $19,243 $18,832 $17,227
</TABLE>
Gains or losses from the sale of retail receivables are recognized in the
period in which such sales occur. Provisions for expected credit losses are
generally provided during the period in which such receivables are acquired.
Since the allowance for credit losses is separately provided prior to the
receivable sales, gains from receivable sales are not reduced for expected
credit losses. Included in "Investment and other income" are gains before
expected credit losses totaling $41 million and $69 million for the six months
ended June 30, 1994 and 1993, respectively. The provision for credit losses
related to such sales amounted to $63 million and $61 million for the six
months ended June 30, 1994 and 1993, respectively.
<PAGE>
Chrysler Financial Corporation and Subsidiaries
Note 3 - Debt
<TABLE>
<CAPTION>
Weighted Average
Interest Rates at June 30, December 31, June 30,
Maturity June 30, 1994 1994 1993 1993
(unaudited) (unaudited)
(in millions of dollars)
<S> <C> <C> <C> <C>
Short-term notes placed primarily
in the open market:
United States $ 2,524 $ 2,513 $ 1,548
Canada 579 259 94
Total short-term notes
(primarily commercial paper) 3,103 2,772 1,642
Revolving bank borrowings under
credit facilities:
United States - - 2,080
Canada - - 316
Total bank borrowings - - 2,396
Senior term debt:
United States, due
1993 - - 147
1994 8.8% 440 813 1,013
1995 5.7% 574 574 142
1996 5.8% 1,094 1,053 644
1997 5.2% 571 197 127
1998 6.1% 812 696 315
Thereafter 8.4% 2,172 1,766 1,666
Total United States 5,663 5,099 4,054
Canada, due 1993-1996 12.2% 39 42 87
Less unamortized discount 2 2 -
Total senior term debt 5,700 5,139 4,141
Subordinated term debt - United States
Senior due 1994-1997 8.3% 27 77 367
Junior subordinated - - 165
Total subordinated 27 77 532
Mexico borrowings and other 554 447 370
Total debt $ 9,384 $ 8,435 $ 9,081
</TABLE>
Credit Facilities
During the second quarter, the Company replaced its existing revolving
credit and receivable sale agreements which were originally scheduled to
expire in 1995. The new agreements provide for lower total commitments,
reductions in borrowing rates and commitment fees and less restrictive
financial covenants, including the relaxation of dividend restrictions and
the removal of security interests in the Company's U.S. assets.
The Company's credit facilities consist of $4.6 billion of U.S. and $.6
billion of Canadian credit facilities which expire in May 1998. The
Company's automotive receivable sale agreements consist of a $1.5 billion
U.S. agreement (of which $.5 billion expires in May 1995, and $1.0 billion
expires in May 1998) and a $.2 billion Canadian agreement (of which $.1
billion expires in May 1995, and $.1 billion expires in May 1998). As of
June 30, 1994 no amounts were outstanding under the Company's revolving
credit or receivable sale agreements.
<PAGE>
Chrysler Financial Corporation and Subsidiaries
Note 3 - Debt (Continued)
In addition, up to $750 million of the total commitment under Chrysler's
revolving credit agreement can be made available to the Company. As of
June 30, 1994, no borrowings were outstanding under this agreement.
The Company has contractual debt maturities of $4.1 billion during the
remainder of 1994 (including $3.1 billion of short-term notes), and $.6
billion in 1995.
Note 4 - Accounting Changes
Investments in Debt and Equity Securities
Effective January 1, 1994, the Company 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 with readily determinable fair values.
At June 30, 1994, the Company had investments in securities with an aggregate
carrying value of $354 million, consisting primarily of commercial paper,
governmental securities and corporate debt. Of these securities, $323 million
were categorized as available-for-sale, and $31 million were categorized as
held-to-maturity. The adjustment of available-for-sale securities to market
value at January 1, 1994 resulted in a $6 million increase to Shareholder's
Investment.
Other Postretirement Benefits
Effective January 1, 1993, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," ("OPEB") which
requires the accrual of such benefits during the years the employees provide
services. The adoption of SFAS No. 106 resulted in an after-tax charge of
$29 million in 1993, which represented the immediate recognition of the OPEB
transition obligation of $45 million, partially offset by $16 million of
estimated tax benefits. Implementation of SFAS No. 106 did not increase the
Company's cash expenditures for postretirement benefits. Recognition of
on-going expenses under OPEB will not materially affect the Company's results
of operations.
Postemployment Benefits
Effective January 1, 1993, the Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." This accounting standard requires the
accrual of benefits provided to former or inactive employees after employment
but prior to retirement. The adoption of this accounting standard resulted in
the recognition of an after-tax charge of $1 million in 1993. Adoption of SFAS
No. 112 has not materially increased the annual expense recognized for these
benefits, and there is no cash impact. Previously reported results for the six
months ended June 30, 1993 have been restated to reflect the adoption of SFAS
No. 112, effective January 1, 1993.
Impairment of a Loan
In May 1993, the Financial Accounting Standards Board issued SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan," which amends SFAS No. 5,
"Accounting for Contingencies", by requiring creditors to evaluate the
collectibility of both contractual interest and principal of receivables when
evaluating the need for a loss accrual. The Company plans to adopt SFAS No.
114 on or before January 1, 1995. The Company has not yet determined the
effect of this new pronouncement on its results of operations and financial
position.
<PAGE>
[Letterhead of Deloitte & Touche]
Deloitte &
Touche
- - ------------------------------------------------------------------------------
Suite 900 Telephone (313) 396-3000
600 Renaissance Center
Detroit, Michigan 48243-1704
INDEPENDENT ACCOUNTANTS' REPORT
Shareholder and Board of Directors
Chrysler Financial Corporation
Southfield, Michigan
We have reviewed the accompanying consolidated balance sheet of Chrysler
Financial Corporation (a subsidiary of Chrysler Corporation) and its
consolidated subsidiaries as of June 30, 1994 and 1993, and the related
consolidated statements of net earnings and cash flows for the three-months
and six-months ended June 30, 1994 and 1993. These financial statements are
the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Chrysler Financial Corporation
and its consolidated subsidiaries as of December 31, 1993, and the related
consolidated statements of net earnings and cash flows for the year then ended
(not presented herein); and in our report dated January 18, 1994, we expressed
an unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of December 31, 1993 is fairly presented, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.
/s/ Deloitte & Touche
July 14, 1994
