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
January 18, 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 January 18, 1994, the registrant released its financial
statements of the year ended December 31, 1993 and the report thereon
of Deloitte & Touche, Independent Auditors. A copy of such financial
statements and report by Deloitte & Touche is annexed as Exhibit 99 to
this Report and by this reference incorporated herein and made a part
hereof.
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) Exhibit:
23 Consent of Deloitte & Touche, Independent Auditors.
99 Copy of financial statements of Chrysler Financial
Corporation for the year ended December 31, 1993 and
the report thereon of Deloitte & Touche, Independent
Auditors.
<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: January 18, 1994 By: /s/Robert A. Link
--------------------------
Robert A. Link
Secretary
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
No. Description of Exhibit
- ------- ----------------------
23 Consent of Deloitte & Touche, Independent Auditors.
99 Copy of financial statements of Chrysler Financial
Corporation for the year ended December 31, 1993 and the
report of Deloitte & Touche, Independent Auditors.
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement
No. 33-50385 of Chrysler Financial Corporation on Form S-3 of our report
dated January 18, 1994 relating to the financial statements of Chrysler
Financial Corporation for the year ended December 31, 1993 appearing on
Form 8-K of Chrysler Financial Corporation dated January 18, 1994.
/s/ DELOITTE & TOUCHE
Detroit, Michigan
January 18, 1994
EXHIBIT 99
SOUTHFIELD, Mich., January 18 -- Chrysler Financial Corporation (CFC)
today reported 1993 net earnings of $129 million, compared to net earnings
of $231 million in 1992.
John P. Tierney, Chairman of CFC, said the 1993 net earnings decrease
was caused primarily by the adoption of new accounting standards in 1993
and 1992, which adversely affected year-to-year net earnings comparisons by
$81 million, and by higher borrowing costs incurred under the company's
revolving credit agreements.
"Partially offsetting these factors were increased automotive volume
and reduced credit losses," Tierney said.
At December 31, 1993, CFC was managing $28.3 billion in receivables,
down $1.8 billion from a year ago. The company's total assets at December
31, 1993, were $14.4 billion, down $3.1 billion from a year ago. The
decreases in receivables managed and total assets are a result of the
company's continued downsizing of its nonautomotive businesses and assets.
During 1993, CFC completed the sale of substantially all of the
consumer and inventory financing businesses and assets of its Chrysler
First subsidiary, and the sales of Chrysler Capital's rail and marine
operating lease businesses for total cash proceeds of $2.4 billion.
Chrysler Credit, CFC's automotive finance subsidiary, had receivables
managed of $25.0 billion at year end 1993, compared to $22.5 billion a year
ago.
During 1993, Chrysler Credit's automotive financing volume was 516,000
new passenger cars, trucks and minivans which represented 25 percent of
Chrysler's U.S. retail deliveries, compared with 413,000 or 24 percent in
1992.
In 1993, Chrysler Credit also financed at wholesale 1.5 million
vehicles representing 75 percent of Chrysler's U.S. shipments, compared to
1.2 million vehicles or 69 percent in 1992.
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 $3.3 billion of receivables at
December 31, 1993. A year ago, the company's nonautomotive operations were
managing $7.6 billion of receivables.
Chrysler Insurance, the company's property, casualty and inventory
insurance subsidiary, had direct insurance premiums written of $151 million
during 1993, compared to $132 million for the same period a year ago.
CFC in 1993 continued to emphasize and improve its automotive
receivable securitization programs. During the year, the company received
net proceeds of $7.8 billion from 11 placements of U.S. and Canadian
securities backed by retail automotive receivables, and $740 million of
funding from two new long-term revolving arrangements for dealer inventory
financing.
During 1993, all four U.S. rating agencies raised their ratings of
CFC's debt securities and short-term commercial paper to solid investment
grade levels. The company re-established its medium term note program in
April and sold $853 million of notes by year end. In other capital markets
activities, the company raised $1.45 billion in seven underwritten debt
offerings and prepaid under call provisions seven issues of outstanding
debt totalling $905 million.
At the close of the year, the company had commercial paper outstanding
of $2.8 billion, compared to $0.4 billion a year ago, and had no borrowings
outstanding under its U.S. and Canadian bank revolvers, compared to $5.9
billion of borrowings a year ago.
- 0 -
<PAGE>
<TABLE>
<CAPTION>
Chrysler Financial Corporation and Subsidiaries
Highlights
(in millions of dollars)
Year Ended December 31,
1993 1992
<S> <C> <C>
After-Tax Earnings From:
Earnings before changes in accounting principles $ 159 $ 180
Cumulative effect of accounting changes (30) 51
Net earnings $ 129 $ 231
Automotive Financing Volume:
Retail $13,910 $10,853
Wholesale and other 45,856 35,704
Total automotive financing volume $59,766 $46,557
<CAPTION>
December 31,
1993 1992
<S> <C> <C>
Finance Receivables Managed
(Including Receivables Serviced for Others):
Automotive financing:
Retail $16,108 $14,270
Wholesale and other 8,903 8,211
Total automotive financing 25,011 22,481
Nonautomotive financing 3,251 5,712
Receivables held for sale - 1,945
Total finance receivables managed $28,262 $30,138
Debt Payable Within One Year $ 4,080 $ 2,025
Senior Debt Payable After One Year $ 4,328 $ 9,195
Capital Funds:
Subordinated debt payable after one year $ 27 $ 532
Shareholder's investment 3,131 2,998
Total capital funds $ 3,158 $ 3,530
<FN>
Prior period reclassified to conform to current classifications.
See Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Chrysler Financial Corporation and Subsidiaries
Year Ended December 31,
Consolidated Statement of Net Earnings 1993 1992 1991
(in millions of dollars)
<S> <C> <C> <C>
Interest income (Notes 1, 2 and 11):
Automotive financing:
Retail $ 526 $ 669 $ 869
Wholesale and other 463 429 563
Nonautomotive financing 429 841 1,166
Total interest income 1,418 1,939 2,598
Interest expense (Note 6) (791) (1,022) (1,446)
Interest margin 627 917 1,152
Other revenues:
Servicing fee income 214 209 144
Insurance premiums earned (Note 7) 128 132 133
Investment and other income (Note 3) 279 295 346
Interest margin and other revenues 1,248 1,553 1,775
Costs and expenses:
Operating expenses 463 595 614
Provision for credit losses (Note 2) 216 309 421
Insurance losses and adjustment expenses
(Note 7) 108 112 107
Depreciation and other expenses 194 242 231
Total costs and expenses 981 1,258 1,373
Earnings before income taxes and cumulative
effect of changes in accounting principles 267 295 402
Provision for income taxes (Note 8) 108 115 126
Earnings before cumulative effect of changes
in accounting principles 159 180 276
Cumulative effect of changes in accounting
principles (Notes 8 and 12) (30) 51 -
Net Earnings $ 129 $ 231 $ 276
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Chrysler Financial Corporation and Subsidiaries
Consolidated Balance Sheet
December 31,
1993 1992
(in millions of dollars)
<S> <C> <C>
Assets (Notes 1 and 6):
Finance receivables - net (Note 2) $ 8,659 $ 9,638
Retained interests in sold receivables and other
related amounts - net (Notes 2 and 3) 3,738 3,321
Total finance receivables and retained
interests - net 12,397 12,959
Nonautomotive assets held for sale (Note 4) - 2,393
Cash and cash equivalents 265 433
Marketable securities (Note 5) 348 333
Dealership properties leased - net 423 454
Equipment leased to others - net 176 333
Repossessed collateral 269 192
Other assets 524 451
Total Assets $14,402 $17,548
Liabilities:
Debt (Note 6) $ 8,435 $11,752
Accounts payable, accrued expenses and other 1,298 1,270
Amounts due to affiliated companies (Note 11) 24 35
Deferred income taxes (Note 8) 1,514 1,493
Total Liabilities 11,271 14,550
Commitments and contingent liabilities
(Notes 3 and 9)
Shareholder's Investment (Notes 6 and 10):
Common stock - par value $100 a share:
Authorized, issued and outstanding 250,000 shares 25 25
Additional paid-in capital 1,168 1,168
Net earnings retained for use in the business 1,938 1,805
Total Shareholder's Investment 3,131 2,998
Total Liabilities and Shareholder's Investment $14,402 $17,548
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Chrysler Financial Corporation and Subsidiaries
Year Ended December 31,
Consolidated Statement of Cash Flows 1993 1992 1991
(in millions of dollars)
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 129 $ 231 $ 276
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Cumulative effect of changes in
accounting principles 30 (51) -
Gains from receivable sales (127) (146) (159)
Provision for credit losses 216 309 421
Depreciation, amortization and
write-off of intangibles 118 184 150
Change in deferred income taxes and
income taxes payable 35 (71) 206
Change in accounts payable, accrued
expenses and other 26 (219) (629)
Net cash provided by operating activities 427 237 265
Cash Flows From Investing Activities:
Acquisitions of finance receivables (58,034) (48,990) (44,216)
Collections of finance receivables 18,281 20,101 26,871
Proceeds from sales of nonautomotive assets 2,375 903 -
Proceeds from sales of receivables 40,105 31,039 21,262
Other (15) 126 (176)
Net cash provided by investing activities 2,712 3,179 3,741
Cash Flows From Financing Activities:
Change in short-term notes and affiliated
borrowings 2,428 13 (775)
Borrowings under revolving credit
facilities:
Proceeds 4,792 43,917 68,050
Payments (10,716) (44,626) (67,658)
Proceeds from issuance of term debt 2,305 400 4
Repayment of term debt (2,108) (3,189) (3,232)
Redemption of preferred stock - (75) (210)
Other (8) 55 71
Net cash used in financing activities (3,307) (3,505) (3,750)
Change in cash and cash equivalents (168) (89) 256
Cash and cash equivalents at beginning of year 433 522 266
Cash and Cash Equivalents at End of Year $ 265 $ 433 $ 522
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
Chrysler Financial Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note 1 - Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Chrysler
Financial Corporation and its domestic and foreign subsidiaries (the
"Company"). All significant intercompany accounts and transactions have
been eliminated in consolidation. All of the Company's common shares are
owned by Chrysler Corporation (together with its subsidiaries, "Chrysler").
Prior years have been reclassified to conform with current year's
classifications.
Receivable Sales
The Company sells significant amounts of automotive receivables acquired,
in transactions subject to limited recourse provisions. The Company
generally sells its receivables to a trust and remains as servicer for
which it is paid a servicing fee. Normal servicing fees are earned on a
level yield basis over the remaining terms of the related sold finance
receivables. In a subordinated capacity, the Company 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 retail receivables are recognized in the
period in which such sale occurs. In determining the gain or loss for each
qualifying sale of retail receivables, the investment in the sold
receivable pool is allocated between the portion sold and the portion
retained based on their relative fair values on the date of sale. The
receivables sold are removed from the balance sheet caption "Finance
receivables - net", and the Company's retained interests in such
receivables are included in "Retained interests in sold receivables and
other related amounts - net". Gains or losses are reflected in the
consolidated statement of net earnings under the caption, "Investment and
other income". Gains on sales of wholesale receivables are not material.
Income Recognition
Interest income from owned finance receivables 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. Interest accrued on
wholesale, certain lease financing and real estate receivables at the
balance sheet date, is included in 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.
Property and casualty premiums are earned on a straight-line basis over the
term of their respective policies.
Lease Transactions
Leasing operations consist of direct finance leases of vehicles and other
equipment, leveraged leases of major equipment and real estate and
operating leases, all of which are accounted for in accordance with the
classification of the leases. The related revenue is recorded as interest
income. Dealership properties leased to others are stated at cost less
accumulated depreciation of $116 million in 1993 and $108 million in 1992.
Equipment leased to others is stated at cost less accumulated depreciation
of $164 million in 1993 and $190 million in 1992.
<PAGE>
Note 1 - Summary of Significant Accounting Policies - continued
Allowance for Credit Losses
An allowance for credit losses is generally established during the period
in which receivables are acquired. The allowance for credit losses is
maintained at a level deemed appropriate based primarily on loss
experience. Other factors affecting collectibility are also evaluated, and
appropriate adjustments are recorded. Retail automotive receivables 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 collateral when determined to be uncollectible.
Cash Equivalents
Temporary investments of excess borrowed funds with a maturity of less than
three months when purchased are considered to be cash equivalents.
Marketable Securities
Marketable securities, owned by the Company's insurance subsidiaries and
generally held to maturity, are carried at cost, adjusted for amortized
premium or discount on bonds, plus accrued interest.
Repossessed Collateral
Repossessed collateral is carried at the lower of fair value less estimated
selling expenses, or cost. Repossessed collateral carrying costs and gains
or losses from disposition of such assets are recognized in the period
incurred. Real estate owned is carried at the lower of fair value less
estimated selling expenses, or cost. Fair value for real estate owned is
determined by appraisal. Other factors affecting collectibility are also
evaluated, and appropriate adjustments are recorded.
Term Debt and Revolving Credit Fees and Costs
Term debt commissions and expenses are amortized over the life of the
related debt issue in relation to the outstanding principal balances. Up-
front fees and costs incurred in connection with revolving credit
facilities are deferred and amortized over the expected term of the
facilities in relation to commitments outstanding.
Costs in Excess of Net Assets Acquired
Costs in excess of net assets acquired are being amortized on a straight-
line basis over the remaining term of 14 years. The amount of unamortized
goodwill included in "Other Assets" was $15 million and $23 million at
December 31, 1993 and 1992, respectively.
Off-Balance-Sheet Financial Instruments
The Company enters into various interest rate exchange agreements to reduce
its exposure to fluctuations in interest rates as part of its asset and
liability management program. Net interest differentials to be paid or
received related to interest rate exchange agreements are accrued and
included as an adjustment to interest expense.
The Company enters into foreign currency swap agreements to hedge exposure
to debt obligations which call for repayment of principal and interest in
currency other than U.S. or Canadian dollars. The underlying debt
obligations are translated in the accompanying consolidated balance sheet
at the contractual rate of exchange in the respective foreign currency swap
agreement.
<PAGE>
Note 2 - Finance Receivables and Retained Interests
Outstanding balances of "Finance receivables - net" were as follows:
<TABLE>
<CAPTION>
December 31,
1993 1992
(in millions of dollars)
<S> <C> <C>
Automotive:
Retail $3,536 $3,797
Wholesale and other 2,520 2,752
Total automotive 6,056 6,549
Nonautomotive 2,803 3,328
Total finance receivables 8,859 9,877
Less allowance for credit losses (200) (239)
Total finance receivables - net $8,659 $9,638
</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>
December 31,
1993 1992
(in millions of dollars)
<S> <C> <C>
Cash and investments $ 586 $ 526
Senior interests in wholesale receivables 967 562
Subordinated interests in receivables 1,783 1,751
Excess servicing 200 231
Other restricted and securitized assets 496 484
Less allowance for credit losses (294) (233)
Total retained interests in sold receivables
and other related amounts - net $3,738 $3,321
</TABLE>
Changes in the allowance for credit losses, including receivables sold
subject to limited recourse and amounts related to "Nonautomotive assets
held for sale" at December 31, 1992, were as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1992
(in millions of dollars)
<S> <C> <C>
Balance at beginning of year $573 $557
Provision for credit losses 216 309
Net credit losses (197) (310)
Adjustments related to nonautomotive
asset sales (79) -
Other adjustments (19) 17
Balance at end of year $494 $573
</TABLE>
Nonearning finance receivables, including receivables sold subject to
limited recourse, totaled $333 million and $735 million, at year end 1993
and 1992, respectively, which represented 1.21 percent and 2.49 percent of
such receivables outstanding, respectively.
<PAGE>
Note 2 - Finance Receivables and Retained Interests - continued
Contractual maturities of total finance receivables at December 31, 1993
were as follows:
<TABLE>
<CAPTION>
Automotive Nonautomotive Total
(in millions of dollars)
<S> <C> <C> <C>
Past due installments $ 62 $ 25 $ 87
Due in year ending December 31:
1994 3,677 275 3,952
1995 1,207 214 1,421
1996 541 202 743
1997 325 188 513
1998 195 181 376
Thereafter 49 1,718 1,767
Total finance receivables $6,056 $2,803 8,859
Less allowance for credit losses (200)
Total finance receivables - net $ 8,659
</TABLE>
Actual cash flow experience will vary from contractual cash flows due to
future receivable sales and prepayments.
The Company's investment in automotive and nonautomotive direct financing
leases included in "Finance receivables - net" was as follows:
<TABLE>
<CAPTION>
December 31,
1993 1992
(in millions of dollars)
<S> <C> <C>
Aggregate future lease payments $403 $519
Estimated residual values 186 373
Less unearned income (173) (202)
Net investment in direct financing leases $416 $690
</TABLE>
The Company's investment in leveraged leases included in "Finance
receivables - net" and related deferred income taxes, was as follows:
<TABLE>
<CAPTION>
December 31,
1993 1992
(in millions of dollars)
<S> <C> <C>
Rentals receivable (net of principal
and interest on non-recourse debt) $1,425 $1,527
Estimated residual values 834 858
Less: Unearned income (604) (655)
Deferred investment tax credits (96) (108)
Net receivable 1,559 1,622
Less deferred income taxes (1,377) (1,300)
Net investment in leveraged leases $ 182 $ 322
</TABLE>
In accordance with Statement of Financial Accounting Standards (SFAS) No.
13, "Accounting for Leases", the Company revised its calculations of
leveraged lease cash flows to adjust for the enacted tax rate increase in
1993. This change (a) increased earnings before income taxes by $9
million, and (b) increased the provision for income taxes by $20 million,
primarily due to the adjustment of the associated net deferred tax
liabilities (see Note 8 - Income Taxes).
<PAGE>
Note 3 - Sales of Receivables
The Company sells receivables subject to limited recourse provisions.
Outstanding balances of sold finance receivables were as follows:
<TABLE>
<CAPTION>
December 31,
1993 1992
(in millions of dollars)
<S> <C> <C>
Automotive:
Retail $12,027 $10,081
Wholesale 6,356 5,438
Nonautomotive 449 593
Total $18,832 $16,112
</TABLE>
Gains or losses from the sales 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 $127 million, $146 million and
$159 million for the years ended December 31, 1993, 1992 and 1991,
respectively. The provision for credit losses related to such sales
amounted to $135 million, $137 million and $167 million for the years ended
December 31, 1993, 1992 and 1991, respectively.
Note 4 - Nonautomotive Assets Held for Sale
During the first quarter of 1993, the Company realized cash proceeds of
$2.3 billion and a note receivable of approximately $.1 billion from
the sales of certain nonautomotive assets which had been classified
as "Nonautomotive assets held for sale" in the Company's consolidated
balance sheet at December 31, 1992. Proceeds from these sales approximated
the net carrying values of the assets sold, and were used to reduce the
Company's outstanding indebtedness.
Note 5 - Marketable Securities
Marketable securities held by the Company's insurance subsidiaries were as
follows:
<TABLE>
<CAPTION>
December 31,
----------------------------------
1993 1992
---------------- --------------
Market Market
Cost Value Cost Value
---- ------ ---- ------
(in millions of dollars)
<S> <C> <C> <C> <C>
Bonds - Corporate/Public Utility $100 $104 $ 94 $ 97
State/Municipal 14 14 10 10
114 118 104 107
Government securities - United States
and Canada 199 202 193 199
Preferred stocks 9 9 5 5
Short-term notes 26 26 31 31
Total marketable securities $348 $355 $333 $342
</TABLE>
<PAGE>
Note 6 - Debt
Short-term notes outstanding at December 31, 1993 had an average remaining
term of 40 days. Average effective cost of borrowings were as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------
1993 1992
------------------------ ---------------------------
Bank Bank
Borrowings Borrowings
and and
Short-term Term Total Short-term Term Total
Notes Debt Debt Notes Debt Debt
----------- ---- ----- ----------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Average effective cost of
borrowings:
United States operations 8.1% 8.0% 8.0% 5.7% 9.0% 7.3%
Consolidated operations 8.2% 8.8% 8.6% 5.9% 9.7% 7.8%
</TABLE>
Debt outstanding at December 31, 1993 and 1992 was as follows:
<TABLE>
<CAPTION>
Weighted Average December 31,
Interest Rates* at ------------------
Maturity December 31, 1993 1993 1992
- -------- ------------------ ---- ----
(in millions of dollars)
<S> <C> <C> <C>
Short-term notes placed primarily
in the open market:
United States $ 2,513 $ 351
Canada 259 1
Total short-term notes
(primarily commercial paper) 2,772 352
Bank borrowings under revolving
credit facilities:
United States - 5,705
Canada - 219
Total bank borrowings - 5,924
Senior term debt:
United States, due
1993 - 719
1994 9.0% 813 1,010
1995 5.3% 574 142
1996 5.3% 1,053 343
1997 5.2% 197 98
1998 6.0% 696 -
Thereafter 9.1% 1,766 1,898
Total United States 5,099 4,210
Canada, due 1993-1996 12.3% 42 226
Less unamortized discount 2 -
Total senior term debt 5,139 4,436
Subordinated term debt -
United States:
Senior due 1993-1995 5.5% 77 420
Junior subordinated - 165
Total subordinated 77 585
Mexico borrowings and other 447 455
Total debt $ 8,435 $11,752
</TABLE>
*The weighted average interest rates, including the effects of interest
rate exchange agreements, have been calculated on the basis of rates in
effect at December 31, 1993 on $976 million of variable rate debt,
including $926 million senior and $50 million subordinated term debt.
<PAGE>
Note 6 - Debt - continued
Interest paid by the Company for the years ended December 31, 1993, 1992
and 1991 amounted to $847 million, $1,250 million and $1,536 million,
respectively.
The Company has contractual debt maturities of $4.1 billion in 1994
(including $2.8 billion of short-term notes), $.6 billion in 1995, $1.0
billion in 1996, $.2 billion in 1997, $.7 billion in 1998 and $1.8 billion
in years thereafter.
Interest rate exchange agreements have been entered into with major
financial institutions, which are expected to fully perform under the terms
of the agreements. While these agreements are generally used as hedges and
are matched with specific financial instruments, they do involve a degree
of interest rate risk. At December 31, 1993, the notional amount of the
Company's portfolio of interest rate exchange agreements totaled $1,524
million. While notional amount is used to measure the volume of these
agreements, it does not represent exposure to credit loss.
The terms of the Company's foreign currency swap agreements provide for
payment of foreign currency principal and interest obligations in U.S. or
Canadian dollars based on the contractual exchange rate in the respective
agreement. As a result, the underlying debt obligations are recorded at
the contractual rate totaling $535 million at December 31, 1993. If the
debt obligations had been translated at the various exchange rates in
effect at December 31, 1993, the recorded amount would have been $121
million higher.
Credit Facilities
At December 31, 1993, the Company had credit facilities aggregating $5.2
billion, consisting of contractually committed U.S. credit lines of $4.7
billion expiring in August 1995, and $.5 billion of Canadian credit lines
expiring in December 1995. At December 31, 1993 the Company had no
borrowings outstanding under either of these credit facilities.
The Company's U.S. revolving credit facility grants security interests in
substantially all of the Company's U.S. assets and contains restrictive
covenants including restrictions that effectively prevent payment of cash
dividends to Chrysler.
At December 31, 1993, the Company had automotive receivable sale agreements
totaling $2.9 billion, consisting of a $2.5 billion U.S. automotive
receivable sale agreement (of which $1.25 billion expires in September 1994
and $1.25 billion expires in September 1996), and a $.4 billion Canadian
receivable sale agreement which expires in December 1995. At December 31,
1993, none of the Company's receivable sale agreements were utilized.
In addition, up to $750 million of the total commitment under Chrysler's
revolving credit agreement dated June 30, 1993 can be made available to the
Company. As of December 31, 1993, no borrowings were outstanding under
this agreement.<PAGE>
Note 7 - Reinsurance Arrangements
The Company enters into various reinsurance contracts with other insurance
enterprises or reinsurers to reduce the losses that may arise from
catastrophes or other events. Reinsurance contracts do not relieve the
Company from its obligations to policyholders. Failure of reinsurers to
fulfill their obligations could result in losses to the Company.
The amounts reported as "Insurance premiums earned" are net of related
ceded reinsurance premiums of $46 million, $36 million and $39 million for
the years ended December 31, 1993, 1992 and 1991, respectively. Amounts
reported as "Insurance losses and adjustment expenses" are net of related
reinsurance loss and loss adjustment expenses of $38 million, $35 million
and $33 million for the years ended December 31, 1993, 1992 and 1991,
respectively.
Included in "Accounts payable, accrued expenses and other" are net unearned
insurance premiums and net reserves for insurance losses and adjustment
expenses as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1992
(in millions of dollars)
<S> <C> <C>
Direct and assumed unearned premiums $ 69 $ 84
Reinsurance ceded (9) (2)
Net unearned premiums $ 60 $ 82
<CAPTION>
Year Ended December 31,
1993 1992
(in millions of dollars)
<S> <C> <C>
Direct and assumed reserve for insurance losses
and adjustment expenses $221 $192
Reinsurance ceded (48) (40)
Net reserve for insurance losses and adjustment
expenses $173 $152
</TABLE>
Note 8 - Income Taxes
Chrysler Financial Corporation and its U.S. subsidiaries are included in
Chrysler's consolidated U.S. income tax returns. The Company's provision
for income taxes is determined on a separate return basis. Under the Tax
Sharing Agreement between the Company and Chrysler, U.S. income taxes have
been settled substantially without regard to alternative minimum tax or
limitations on utilization of net operating losses and foreign tax credits.
Effective January 1, 1992, the Company adopted SFAS No. 109, "Accounting
for Income Taxes." This Statement mandates use of the liability method of
accounting for deferred income taxes. The principal difference between the
liability method and the method previously used is that under the liability
method deferred tax assets and liabilities are adjusted to reflect changes
in statutory tax rates, as income adjustments, in the period such changes
are enacted. At January 1, 1992, the adjustment of deferred tax assets and
liabilities resulted in a favorable cumulative effect of the change in
accounting principle of $51 million.
Income taxes paid (recovered) by the Company for the years ended December
31, 1993, 1992 and 1991 amounted to $82 million, $172 million and $(55)
million, respectively. Included in these amounts are taxes paid
(recovered) from Chrysler under the Tax Sharing Agreement of $66 million,
$130 million and $(83) million, in 1993, 1992 and 1991, respectively.
<PAGE>
Note 8 - Income Taxes - continued
The provision for income taxes in the consolidated statement of net
earnings includes the following:
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1992 1991
(in millions of dollars)
<S> <C> <C> <C>
Current tax expense (credit):
United States $ 61 $130 $(84)
State and local 3 6 (10)
Foreign 13 20 15
Total current tax expense (credit) 77 156 (79)
Deferred tax (credit) expense:
United States (2) (43) 183
State and local 11 5 19
Foreign - (3) 3
Total deferred tax expense (credit) 9 (41) 205
Effect of restating deferred taxes for
enacted U.S. tax rate increase including
leveraged leases (Note 2) 22 - -
Total provision for income taxes $108 $115 $126
</TABLE>
The provision for income taxes differs from the amount of income tax
determined by applying the U.S. statutory income tax rate to earnings
before income taxes and cumulative effect of changes in accounting
principles, as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1992 1991
(in millions of dollars)
<S> <C> <C> <C>
Tax at U.S. statutory rate $ 93 $101 $ 137
State and local income taxes 9 7 6
Amortization of investment tax credits (2) (5) (9)
Income not subject to taxes (2) (4) (8)
Purchase accounting adjustments (5) 19 7
Leveraged lease rate adjustments (8) (5) (12)
Rate adjustment of U.S. deferred tax
assets and liabilities 22 - -
Other 1 2 5
Total provision for income taxes $108 $115 $ 126
Effective tax rate 40.5% 39.0% 31.3%
Statutory tax rate 35.0% 34.0% 34.0%
</TABLE>
The tax effected temporary differences which comprise deferred tax assets
and liabilities were as follows:
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
---------------------- ---------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Assets Liabilities Assets Liabilities
-------- ----------- -------- -----------
(in millions of dollars)
<S> <C> <C> <C> <C>
Provision for losses $161 $ - $170 $ -
Leasing transactions - 1,611 - 1,597
State and local taxes - 85 - 82
Postretirement benefits other
than pensions 17 - - -
Other 62 58 60 44
Total $240 $1,754 $230 $1,723
</TABLE>
<PAGE>
Note 9 - Commitments and Contingent Liabilities
Various legal actions are pending against Chrysler Financial Corporation
and certain of its subsidiaries, some of which seek damages in large or
unspecified amounts and other relief. The Company believes each proceeding
constitutes routine litigation encountered in the normal course of
business. Although the amount of liability at December 31, 1993 with
respect to such matters cannot be determined, the Company believes the
ultimate resolution of these matters will not have a material adverse
effect on the Company's consolidated financial position. The Company
believes that it has established reserves in an amount sufficient to cover
any losses that may arise as a result of this litigation.
The Company is obligated under terms of noncancelable operating leases for
the majority of its office facilities and equipment, as well as for a
number of dealership facilities which are subleased to Chrysler-authorized
automotive dealers. These leases are generally renewable and provide that
certain expenses related to the properties are to be paid by the lessee.
Future minimum lease commitments under the aforementioned leases with
remaining terms in excess of one year are as follows:
<TABLE>
<CAPTION>
Year Ended December 31, (in millions of dollars)
<S> <C>
1994 $ 48
1995 42
1996 38
1997 33
1998 25
Thereafter 100
Total $286
</TABLE>
Future minimum lease commitments have not been reduced by minimum sublease
rentals of $210 million due in the future under noncancelable subleases.
Rental expense for operating leases for the years ended December 31, 1993,
1992 and 1991 was $58 million, $69 million and $74 million, respectively.
Sublease rentals of $42 million were received in 1993, 1992 and 1991.
Chrysler currently has an unfunded pension obligation. In the event that
termination liabilities with respect to Chrysler's pension plans are
incurred, such liabilities would be the joint and several responsibilities
of Chrysler and certain of its affiliated entities, including the Company
and its subsidiaries. In the judgment of Chrysler's management, the
possibility is remote that termination liabilities with respect to
Chrysler's pension plans will be incurred in the foreseeable future.
<PAGE>
Note 10 - Shareholder's Investment
Shareholder's Investment is summarized as follows:
<TABLE>
<CAPTION>
Net Earnings
Additional Retained for Total
Preferred Common Paid-in Use in the Shareholder's
Stock Stock Capital Business Investment
--------- ------- ---------- ------------ ------------
(in millions of dollars)
<S> <C> <C> <C> <C> <C>
Balance - December 31, 1990 $ 285 $ 25 $1,168 $1,311 $2,789
Net earnings - - - 276 276
Preferred stock redeemed (210) - - - (210)
Preferred stock dividends - - - (14) (14)
Minimum pension liability
in excess of unrecognized
prior service cost - - - 1 1
Balance - December 31, 1991 75 25 1,168 1,574 2,842
Net earnings - - - 231 231
Preferred stock redeemed (75) - - (75)
Preferred stock dividends - - - (1) (1)
Minimum pension liability
in excess of unrecognized
prior service cost - - - 1 1
Balance - December 31, 1992 - 25 1,168 1,805 2,998
Net earnings - - - 129 129
Minimum pension liability
in excess of unrecognized
prior service cost - - - 4 4
Balance - December 31, 1993 $ - $ 25 $1,168 $1,938 $3,131
</TABLE>
Note 11 - Transactions with Affiliates
Since 1968, the Company has had an Income Maintenance Agreement with
Chrysler. The agreement provides for payments to maintain the Company's
required coverage of earnings available for fixed charges at 110 percent.
No payments were required pursuant to the Income Maintenance Agreement for
1993, 1992 or 1991.
Gains and losses from translating assets and liabilities outside the United
States to United States dollar equivalents are credited or charged to
Chrysler in accordance with an agreement indemnifying the Company against
losses incurred as a result of foreign risks. Pursuant to this agreement
Chrysler was charged $10 million in 1993, $20 million in 1992 and was not
charged in 1991.
During 1993, the Company had short-term borrowings aggregating $500 million
from Chrysler. All of these borrowings, including $11 million of interest
expense, were repaid during the year.
Certain business arrangements exist providing for guarantees from Chrysler
to the Company. Pursuant to these arrangements the Company received $8
million, $56 million and $59 million in 1993, 1992 and 1991, respectively.
Pursuant to an agreement between Chrysler and Chrysler Realty Corporation,
the Company received fees of $25 million in 1993, and $28 million in 1992
and 1991. The fees include charges for administrative services rendered in
the management of dealership land and facilities, reimbursement of holding
costs on vacant facilities, reimbursement of charges by the Company to
dealer tenants for rent in amounts less than the Company pays as rent on
certain leased facilities and for rent in amounts less than current market
rent on certain owned facilities.
<PAGE>
Note 11 - Transactions with Affiliates - continued
The Company provides financing related to programs sponsored by Chrysler
for the sale and lease of Chrysler vehicles. Under these programs,
interest rate differentials received from Chrysler are earned on a level
yield basis over the term of the receivables, or if the related receivables
are sold, unearned amounts are included in the calculation of gains or
losses from the sale of retail receivables. In addition, the Company
provides secured financing to Chrysler in the normal course of business.
At December 31, 1993, $1,866 million was outstanding under these
agreements.
Note 12 - Employee Benefit Plans
The Company's retirement programs include pension plans providing
noncontributory benefits and contributory benefits. The noncontributory
pension plans cover substantially all employees of Chrysler Financial
Corporation and certain of its consolidated subsidiaries.
Chrysler Financial Corporation and certain of its consolidated subsidiaries
provide benefits 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
Financial Corporation 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 and the
employee's average salary during the consecutive five years in which salary
was highest in the fifteen years preceding retirement.
Annual payments to the pension trust fund for U.S. plans are in compliance
with the Employee Retirement Income Security Act ("ERISA") of 1974, as
amended. All pension trust fund assets and income accruing thereon are
used solely to administer the plan and pay pension benefits. Plan assets
are invested in a diversified portfolio that primarily consists of equity
and debt securities. Plan assets at December 31, 1993 include 230,437
shares of Chrysler common stock.
Net pension cost was $7 million for 1993, and was $8 million for 1992 and
1991.
The Company provides health and life insurance benefits to substantially
all of its U.S. and Canadian employees. Upon retirement from the Company,
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, 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. This one-time charge represented the immediate recognition of the
OPEB transition obligation of $45 million, partially offset by $16 million
of estimated tax benefits. The OPEB 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 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.
Effective January 1, 1993, the Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." This statement requires the
accrual of benefits provided to former or inactive employees after
employment but prior to retirement. Prior to 1993, the Company accrued for
certain of these benefits at the time an employee's active service ended or
<PAGE>
Note 12 - Employee Benefit Plans - continued
expensed the benefit on the basis of cash expenditures. Adoption of this
accounting standard resulted in the recognition of an after-tax charge of
$1 million for the cumulative effect of this change in accounting principle.
Adoption of SFAS No. 112 is not expected to materially increase annual
expense recognized for these benefits, and there will be no cash impact.
Note 13 - Financial Instruments
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments". The estimated
fair value amounts have been determined by the Company, using available
market information and valuation methodologies as described below.
However, considerable judgment is required in interpreting market data to
develop the estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that the Company could
realize in a current market exchange. The use of different market
assumptions or valuation methodologies may have a material effect on the
estimated fair value amounts.
The carrying amounts and estimated fair values of the Company's financial
instruments were as follows:
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
--------------------- --------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- -------- -----
(in millions of dollars)
<S> <C> <C> <C> <C>
Balance Sheet financial instruments:
Marketable securities $ 348 $ 355 $ 333 $ 342
Finance receivables - net(1)(2) $ 6,684 $ 6,704 $ 7,326 $ 7,346
Retained interests in sold
receivables and other
related amounts - net $ 3,738 $ 3,796 $ 3,321 $ 3,378
Debt(3)(4) $ 8,420 $ 8,704 $11,735 $11,871
<CAPTION>
December 31, 1993 December 31, 1992
-------------------------- ---------------------------
Unrealized Unrealized
Contract or Gains Contract or Gains
Notional Amount (Losses) Notional Amount (Losses)
--------------- ---------- --------------- ----------
(in millions of dollars)
<S> <C> <C> <C> <C>
Off-balance sheet financial
instruments:
Interest rate swaps and
interest rate caps $ 1,524 $ (45) $ 2,265 $ (14)
Foreign currency swap
agreements $ 535 $ 145 $ 750 $ 213
<FN>
(1) The carrying value of finance receivables excludes approximately
$1,975 million and $2,312 million of direct finance and leveraged
leases classified as "Finance receivables - net" in the Company's
Consolidated Balance Sheet at December 31, 1993 and 1992,
respectively.
(2) December 31, 1993 and 1992 includes approximately $3,405 million and
$4,702 million, respectively, of finance receivables which reprice
monthly at current market rates. The carrying value of these finance
receivables approximates fair value.
(3) The carrying value of debt excludes approximately $15 million and $17
million of obligations under capital leases at December 31, 1993 and
1992, respectively.
(4) The carrying amount and fair value of debt is presented net of the
foreign currency swap agreements.
</TABLE>
The carrying value of cash and cash equivalents and accounts payable
approximates market value due to the short maturity of these instruments.
<PAGE>
Note 13 - Financial Instruments - continued
The methods and assumptions used to estimate the fair value of financial
instruments (excluding those financial instruments held for sale at
December 31, 1992) are summarized as follows:
Marketable Securities and Investments
The fair value of marketable securities was estimated using quoted market
prices.
Finance Receivables - 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 maturities would
be made as of December 31, 1993 and 1992, respectively.
Retained Interests in Sold Receivables and Other Related Amounts - Net
The fair values of excess servicing cash flows and other subordinated
amounts due the Company arising from receivable sale transactions were
estimated by discounting expected cash flows.
Total 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 cash
flows.
Interest Rate Swaps and Interest Rate Caps
The fair value of the Company's existing interest rate swaps and interest
rate caps was estimated by discounting net cash flows using quoted market
interest rates.
Foreign Currency Swap Agreements
The estimated fair value of the Company's existing foreign currency swap
agreements was derived by discounting expected cash flows using market
exchange rates and relative market interest rates over the remaining term
of the swap.
The fair value estimates presented herein are based on pertinent
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 significantly from the amounts
presented herein.
Note 14 - Revenues, Earnings and Assets by Business Segment and
Geographical Area
The Company provides financing and insurance products and services through
the following major operating subsidiaries: Chrysler Credit Corporation -
automotive retail, wholesale and fleet financing; Chrysler Capital
Corporation - servicing commercial loans and leases; Chrysler First, Inc. -
secured small business financing; Chrysler Insurance Company - property,
casualty and other insurance; Chrysler Realty Corporation - automotive
dealership facility development and management.
<PAGE>
Note 14 - Revenues, Earnings and Assets by Business Segment and
Geographical Area - continued
Revenues, earnings and assets of finance and insurance operations are as
follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1992 1991
(in millions of dollars)
<S> <C> <C> <C>
Interest income and other revenues:
Finance operations $ 1,878 $ 2,412 $ 3,053
Insurance operations 161 163 168
Consolidated interest income and
other revenues $ 2,039 $ 2,575 $ 3,221
Earnings before income taxes:
Operating earnings:
Finance operations $ 257 $ 310 $ 393
Insurance operations 18 14 18
275 324 411
Amortization of costs in excess of
book value of companies acquired (8) (29) (9)
Consolidated earnings before income taxes $ 267 $ 295 $ 402
<CAPTION>
December 31,
1993 1992 1991
(in millions of dollars)
<S> <C> <C> <C>
Assets:
Finance operations $14,021 $17,164 $20,912
Insurance operations 381 384 368
Consolidated assets $14,402 $17,548 $21,280
</TABLE>
Revenues, earnings and assets by geographical area are as follows:
<TABLE>
<CAPTION>
December 31,
1993 1992 1991
(in millions of dollars)
<S> <C> <C> <C>
Interest income and other revenues:
United States $ 1,854 $ 2,346 $ 2,936
Canada 84 137 203
Mexico 101 92 82
Consolidated interest income
and other revenues $ 2,039 $ 2,575 $ 3,221
Earnings before income taxes:
United States $ 236 $ 251 $ 355
Canada 13 29 36
Mexico 18 15 11
Consolidated earnings before income taxes $ 267 $ 295 $ 402
Assets:
United States $13,410 $16,440 $19,647
Canada 515 670 1,273
Mexico 477 438 360
Consolidated assets $14,402 $17,548 $21,280
</TABLE>
<PAGE>
Note 15 - Selected Quarterly Financial Data - Unaudited
Selected quarterly financial data for the years ended December 31, 1993 and
1992 are as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1993
----------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
(in millions of dollars)
<S> <C> <C> <C> <C>
Total interest income $368 $354 $354 $342
Interest expense $219 $208 $186 $178
Interest margin and other revenues $292 $324 $321 $311
Provision for credit losses $ 46 $ 66 $ 57 $ 47
Provision for income taxes $ 13 $ 18 $ 42* $ 35
Earnings before cumulative effect
of changes in accounting principles $ 37 $ 44 $ 22 $ 56
Cumulative effect of changes in
accounting principles $(30) $ - $ - $ -
Net earnings $ 7 $ 44 $ 22 $ 56
<FN>
*Includes $25 million for increase in statutory tax rate
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1992
----------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
(in millions of dollars)
<S> <C> <C> <C> <C>
Total interest income $531 $491 $471 $446
Interest expense $277 $248 $244 $253
Interest margin and other revenues $398 $395 $391 $369
Provision for credit losses $ 71 $ 71 $ 84 $ 83
Provision for income taxes $ 29 $ 39 $ 29 $ 18
Earnings before cumulative effect
of change in accounting principle $ 60 $ 49 $ 45 $ 26
Cumulative effect of change in
accounting principle $ 51 $ - $ - $ -
Net earnings $111 $ 49 $ 45 $ 26
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
Shareholder and Board of Directors
Chrysler Financial Corporation
Southfield, Michigan
We have audited the accompanying consolidated balance sheet of Chrysler
Financial Corporation (a subsidiary of Chrysler Corporation) and
consolidated subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of net earnings and cash flows for each of the
three years in the period ended December 31, 1993. 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 financial statements present fairly, in all material
respects, the financial position of Chrysler Financial Corporation and
consolidated subsidiaries as of December 31, 1993 and 1992, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1993 in conformity with generally accepted
accounting principles.
As discussed in the notes to the consolidated financial statements, the
Company has adopted recently issued Statements of Financial Accounting
Standards and, accordingly, changed its methods of accounting for
postretirement benefits other than pensions and postemployment benefits in
1993, and its method of accounting for income taxes in 1992.
/s/ DELOITTE & TOUCHE
Detroit, Michigan
January 18, 1994
