Prospectus Supplement
(To Prospectus dated January 25, 1996)
$300,000,000
CHRYSLER FINANCIAL CORPORATION [logotype]
5-7/8% Notes Due February 7, 2001
Interest on the Notes is payable semiannually on each February 7 and
August 7, beginning August 7, 1996. The Notes are not redeemable prior to
maturity and will mature on February 7, 2001.
The Notes will be issued only in fully registered form and will be
represented by one or more Global Securities registered in the name of a
nominee of The Depository Trust Company, as depositary (the "Depositary").
Beneficial interests in the Notes will be shown on, and transfers thereof will
be effected only through, the records maintained by the Depositary's
participants. Except as described in "Description of Notes - Book-Entry
System," owners of beneficial interests in the Notes will not be entitled to
receive Notes in definitive form and will not be considered the holders
thereof. The Notes will trade in the Depositary's Same-Day Funds Settlement
System until maturity, and secondary market trading activity will therefore
settle in immediately available funds. All payments of principal and interest
will be made by Chrysler Financial Corporation (the "Company") in immediately
available funds. See "Description of Notes -- Same-Day Settlement and Payment."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===============================================================================
Price to Underwriting Proceeds to the
Public (1) Discount (2) Company (1)(3)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note........ 99.463% .500% 98.963%
Total........... $298,389,000 $1,500,000 $296,889,000
<FN>
===============================================================================
(1) Plus accrued interest, if any, from January 30, 1996.
(2) The Company has agreed to indemnify the several Underwriters against
certain liabilities under the Securities Act of 1933. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $175,000.
</TABLE>
----------------
The Notes are offered subject to receipt and acceptance by the
Underwriters, to prior sale and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of the Global Securities will be made through the
facilities of the Depositary on or about January 30, 1996.
----------------
Bear, Stearns & Co. Inc. J.P. Morgan Securities Inc.
The date of this Prospectus Supplement is January 25, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA NOR HAS THE
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Debt Securities set forth in the
Prospectus, to which description reference is hereby made.
General
The Notes are to be issued under an Indenture dated as of February 15,
1988, as amended (the "Indenture"), between the Company and Manufacturers
Hanover Trust Company, which has been succeeded by United States Trust Company
of New York as successor Trustee (the "Trustee").
The Notes will be limited to an aggregate principal amount of
$300,000,000 and will mature on February 7, 2001. Under the Indenture, any
payment of principal or interest required to be made in respect of a Note on a
date that is not a Business Day for such Note need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on such date, and no additional interest shall accrue as a
result of such delayed payment. The Notes will bear interest at the rate of
5-7/8% per annum from January 30, 1996 or from the most recent Interest Payment
Date to which interest has been paid or provided for, payable semiannually in
arrears on each February 7 and August 7 or, if such day is not a Business Day,
on the next succeeding Business Day, beginning August 7, 1996, and at maturity
to the persons in whose names the Notes (or any Predecessor Securities) are
registered at the close of business on January 23 or July 23, as the case may
be, immediately preceding such Interest Payment Date or, in the case of
interest payable at maturity, to the persons to whom principal shall be
payable. Interest payments on the Notes will be computed on the basis of a
360-day year of twelve 30-day months.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, on which banking institutions in The City of New York are not
authorized or obligated by law to close.
The Notes are not redeemable at the option of the Company prior to
maturity and do not provide for any sinking fund.
The Notes will be issued in registered form and will rank pari passu with
all existing and future unsecured and unsubordinated indebtedness of the
Company. The Notes, which upon issuance will be represented by one or more
Global Securities, are being offered in denominations of $1,000 and any
integral multiple thereof. Payment of the purchase price of a Note may be made,
and payment of the principal of and interest on the Notes will be made, only in
U.S. dollars.
See the Prospectus for a further description of the Trustee, the
Indenture and the Notes, including the covenants, modification provisions and
events of default relating to the Notes.
Book-Entry System
Upon issuance, the Notes will be represented by one or more Global
Securities deposited with, or on behalf of, the Depositary. The Global
Securities representing the Notes will be registered in the name of a nominee
of the Depositary. Upon issuance, the Depositary will credit, on its book-entry
registration and transfer system, the respective principal amounts of the Notes
represented by the Global Securities to the accounts of institutions that have
accounts with the Depositary ("participants"), and ownership of beneficial
interests in the Global Securities will be limited to participants or persons
that may hold interests through participants. Except under the circumstances
described in the Prospectus under "Description of Debt Securities -- Global
Securities," the Notes will not be issuable in definitive form. As long as the
Notes are represented by Global Securities, the Depositary's nominee will be
considered the sole owner or holder of the Notes for all purposes under the
Indenture, and the beneficial owners of the Notes will be entitled only to
those rights and benefits afforded to them in accordance with the following
summary and with the Depositary's regular operating procedures. So long as the
Depositary or its nominee is the sole owner of the Global Securities, principal
and interest payments on the Notes will be made to the Depositary or its
nominee, as the case may be, as the registered owner or holder of the Global
Securities representing the Notes. The Company expects that the Depositary,
upon receipt of any payment of principal or interest in respect of the Global
Securities, will credit immediately participants' accounts with payments in
amounts proportionate to their respective interests in the principal amount of
the Global Securities as shown on the records of the Depositary.
The Depositary has advised the Company as follows: the Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934, as amended. The Depositary was created to hold securities for its
participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the
need for physical movements of securities certificates. The Depositary's
participants include securities brokers and dealers (including the
Underwriters), banks, trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) own the Depositary.
Access to the Depositary's book-entry system is also available to other
entities, such as banks, brokers, dealers and trust companies, that clear
through or maintain a custodial relationship with a participant, either
directly or indirectly.
See "Description of Debt Securities -- Global Securities" in the
accompanying Prospectus for additional information concerning the book-entry
system.
Same-Day Settlement and Payment
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers
is generally settled in clearing-house or next-day funds. In contrast, the
Notes will trade in the Depositary's Same-Day Funds Settlement System until
maturity, and secondary market trading activity in the Notes will therefore be
required by the Depositary to settle in immediately available funds. No
assurance can be given as to the effect, if any, of settlement in immediately
available funds on trading activity in the Notes.
UNDERWRITING
The Underwriters named below have severally agreed to purchase from the
Company the following respective principal amount of the Notes:
<TABLE>
<CAPTION>
Principal
Amount
Underwriter of Notes
----------- --------
<S> <C>
Bear, Stearns & Co. Inc. ........... $150,000,000
J.P. Morgan Securities Inc. ........ 150,000,000
------------
Total .......................... $300,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent. In the event of
default by one of the Underwriters, the Underwriting Agreement provides that in
certain circumstances the commitment of the non-defaulting Underwriter may be
increased or the Underwriting Agreement may be terminated.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the Notes to the public initially at the public offering price
set forth on the cover page of this Prospectus Supplement and to certain
dealers at such price less a concession of .300% of the principal amount of the
Notes; that the Underwriters and such dealers may allow a discount of .250% of
such principal amount on sales to certain other dealers; and that after the
initial public offering the public offering price and concession and discount
to dealers may be changed by the Underwriters.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including civil liabilities under the Securities Act of
1933, or contribute to payments which the Underwriters may be required to make
in respect thereof.
In the ordinary course of their respective businesses, affiliates of J.P.
Morgan Securities Inc. have engaged, and may in the future engage, in
commercial banking and investment banking transactions with the Company.
<PAGE>
PROSPECTUS
- ----------
CHRYSLER FINANCIAL CORPORATION [logotype]
Debt Securities and Warrants
Chrysler Financial Corporation (the "Company") may offer from time to
time its debt securities consisting of senior debentures, notes, bonds and/or
other evidences of indebtedness ("Debt Securities"), and warrants to purchase
Debt Securities ("Warrants") up to an aggregate initial public offering price
of approximately $7,364,000,850 or the equivalent thereof in one or more
foreign currencies or composite currencies. Debt Securities and Warrants may be
offered, separately or together, in separate series in amounts, at prices and
on terms to be set forth in supplements to this Prospectus. Unless otherwise
provided in any such supplement, the Debt Securities and Warrants will be sold
only for U.S. dollars, and the principal of and any interest on the Debt
Securities will likewise be payable only in U.S. dollars.
The Debt Securities will rank pari passu in right of payment with all
existing and future unsecured and unsubordinated indebtedness of the Company.
See "Description of Debt Securities."
Debt Securities of a series may be issuable in registered form without
coupons ("Registered Securities"), in bearer form with coupons attached
("Bearer Securities") or in the form of one or more global securities (each a
"Global Security"). Warrants of a series may be issuable in registered form
("Registered Warrants") and may be issuable in bearer form ("Bearer Warrants").
Bearer Securities and Bearer Warrants will be offered only to non-United States
persons and to offices located outside the United States of certain United
States financial institutions.
The terms of the Debt Securities and/or Warrants in respect of which this
Prospectus is being delivered, including, where applicable, the specific
designation, aggregate principal amount, currency, denominations, maturity,
premium, rate (which may be fixed or variable) and time of payment of interest,
the nature of any liens securing the Debt Securities, terms for redemption at
the option of the Company or the holder, terms for sinking fund payments, terms
for exercising the Warrants, the initial public offering price, the names of,
and the principal amounts to be purchased by, underwriters and the compensation
of any agents and underwriters and other terms in connection with the offering
and sale of such Debt Securities and/or Warrants are set forth in the
accompanying Prospectus Supplement (the "Prospectus Supplement").
The Company may offer and sell Debt Securities and Warrants, separately
or together, to or through underwriters, and also may offer and sell Debt
Securities and Warrants, separately or together, directly to other purchasers
or through agents. See "Plan of Distribution." If any agents of the Company or
any underwriters are involved in the sale of any Debt Securities in respect of
which this Prospectus is being delivered, the names of such agents or
underwriters and any applicable commissions or discounts will be set forth in
the applicable Prospectus Supplement. The net proceeds to the Company from such
sale also will be set forth in the applicable Prospectus Supplement. This
Prospectus may not be used to consummate sales of Debt Securities or Warrants
unless accompanied by a Prospectus Supplement.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is January 25, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company and Chrysler Corporation are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, file reports and other information with
the Securities and Exchange Commission (the "Commission"). Such reports and
other information may be inspected and copies may be obtained at the principal
office of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington D.C. 20549 and at the following regional offices of the Commission:
Northwestern Atrium Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661-2511; and Seven World Trade Center, 13th Floor, New York, New
York, 10048. Copies of such material can be obtained from the Public Reference
Section of the Commission at Room 1024 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Reports and other information concerning the
Company can be inspected at the offices of the New York Stock Exchange, Inc.,
20 Broad Street, New York, New York 10005, on which certain of the Company's
debt securities are listed.
The Company has filed with the Commission a Registration Statement under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Debt Securities and Warrants offered hereby. This Prospectus does not
contain all of the information included in the Registration Statement and the
exhibits and schedules thereto. For further information with respect to the
Company and the Debt Securities and Warrants, reference is hereby made to the
Registration Statement and the exhibits and schedules thereto.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for its fiscal year ended
December 31, 1995, which was previously filed with the Commission pursuant to
the Exchange Act, is incorporated herein by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Debt Securities and Warrants
shall be deemed to be incorporated by reference into this Prospectus and to be
a part hereof from the date of filing such documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein, in the accompanying Prospectus
Supplement or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superceded shall not be deemed, except
as so modified or superceded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon written or oral request, a copy of any and
all documents incorporated by reference as a part of the Registration
Statement, other than exhibits to such documents unless such exhibits are
specifically incorporated by reference into the information that the Prospectus
incorporates. Requests should be directed to: Office of the Secretary, Chrysler
Financial Corporation, 27777 Franklin Road, Southfield, Michigan 48034
(telephone: (810) 948-3058).
These securities have not been approved or disapproved by the
Commissioner of Insurance for the State of North Carolina, nor has the
Commissioner of Insurance ruled upon the accuracy or the adequacy of this
Prospectus or any Prospectus Supplement hereto.
<PAGE>
CHRYSLER FINANCIAL CORPORATION
General
The Company is a financial services organization that principally
provides consumer and dealer automotive financing. The Company provides retail
and lease financing for vehicles, dealer inventory and other financing needs,
dealer property and casualty insurance, and dealership facility development and
management, primarily for Chrysler Corporation dealers and their customers. All
of the Company's common stock is owned by Chrysler Corporation, a Delaware
corporation (together with its subsidiaries, "Chrysler"). The Company's primary
objective is to provide financing for automotive dealers and retail purchasers
of Chrysler's products. The Company sells significant amounts of automotive
receivables acquired in transactions subject to limited recourse provisions.
The Company remains as servicer of such receivables for which it is paid a
servicing fee. At December 31, 1995, the Company had approximately 3,300
employees and its portfolio of receivables managed, which includes receivables
owned and serviced for others, totaled $38.1 billion. The Company's executive
offices are located at 27777 Franklin Road, Southfield, Michigan 48034;
telephone (810) 948-3060.
This Prospectus contains brief summaries of certain more detailed
information contained in documents incorporated herein by reference. Such
summaries are qualified in their entirety by the more detailed information
contained in the incorporated documents.
Company Operations
The Company's portfolio of finance receivables managed includes
receivables owned and receivables serviced for others. Receivables serviced for
others primarily represent sold receivables which the Company services for a
fee. At December 31, 1995, receivables serviced for others accounted for 66% of
the Company's portfolio of receivables managed. Total finance receivables
managed at December 31 of each of the five most recent years were as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
(in millions of dollars)
<S> <C> <C> <C> <C> <C>
Automotive financing ........ $35,696 $29,962 $25,011 $22,481 $24,220
Nonautomotive financing ..... 2,391 2,775 3,251 7,657 9,486
------- ------- ------- ------- -------
Total ....................... $38,087 $32,737 $28,262 $30,138 $33,706
======= ======= ======= ======= =======
</TABLE>
Automotive Financing. The Company conducts its automotive financing
business through Chrysler Financial Corporation in the United States, Chrysler
Credit Canada Ltd. in Canada, and Chrysler Comercial S.A. de C.V. ("Chrysler
Comercial") in Mexico. The Company is the major source of car and truck
wholesale financing and retail financing for Chrysler vehicles throughout North
America. The Company also offers dealers working capital loans, real estate and
equipment financing and financing plans for fleet buyers, including daily
rental car companies, independent of, and affiliated with, Chrysler. The
automotive financing operations of the Company are conducted through 95
branches in the United States, Canada and Mexico.
During 1995, the Company financed or leased approximately 1,031,000 new
and used vehicles at retail in the United States, including approximately
594,000 new Chrysler cars and trucks representing 27 percent of Chrysler's U.S.
retail and fleet deliveries. During 1995, the Company financed approximately
2,536,000 new and used vehicles at wholesale in the United States, including
approximately 1,632,000 new Chrysler cars and trucks representing 74 percent of
Chrysler's U.S. factory shipments.
Nonautomotive Financing. The Company conducts its nonautomotive finance
business through its subsidiaries, Chrysler Capital Corporation and Chrysler
First Inc. At December 31, 1995, the nonautomotive receivables managed
throughout the United States consisted of $0.7 billion of commercial loans and
leases and $1.7 billion of leveraged leases.
<PAGE>
Risk Factors
Prior to deciding to invest in the Debt Securities, potential purchasers
should carefully consider the following factors, together with the information
herein contained and incorporated herein by reference.
Liquidity and Capital Resources. The Company has significant liquidity
requirements. If cash provided by operations, borrowings under bank credit
lines, continued receivable sales and the placement of term debt does not
provide the necessary liquidity, the Company would be required to restrict its
financing of Chrysler products and dealers. A significant reduction in such
financing support would have a material adverse effect on the Company and
Chrysler. Additionally, an impairment of the Company's ability to sell or
securitize its receivables, a reduction in Chrysler's automotive product sales,
and a variety of other factors could affect the Company's ability to repay its
debt at maturity. See, "Chrysler Financial Corporation Selected Consolidated
Financial Data -- Liquidity and Capital Resources."
Relationship with Chrysler. Due to the significant portion of the
Company's business that relates to Chrysler and the Company's increasing
dependence upon Chrysler, lower levels of production and sales of Chrysler
automotive products would likely result in a reduction in the level of finance
operations of the Company. Chrysler's long-term profitability will depend
significantly on its ability to continue its capital expenditure and vehicle
development programs and market its vehicles successfully. See "Information
Concerning Chrysler Corporation."
<PAGE>
CHRYSLER FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data of the Company for each of the last
five years ended December 31, 1995 have been derived from the audited
consolidated financial statements of the Company. The consolidated financial
statements as of December 31, 1995 and 1994 and for each of the last three
years in the period ended December 31, 1995 and the report of Deloitte & Touche
LLP thereon are incorporated herein by reference. The following selected
consolidated financial data should be read in conjunction with such
consolidated financial statements, related notes and other financial
information incorporated herein by reference.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
(dollars in millions)
<S> <C> <C> <C> <C> <C>
Earnings Statement Data:(1)
Total finance revenue ..................................... $ 1,631 $ 1,368 $ 1,418 $ 1,939 $ 2,598
Interest expense .......................................... 910 754 791 1,022 1,446
Net interest margin ....................................... 721 614 627 917 1,152
Other revenues ............................................ 808 627 621 636 623
Operating expenses ........................................ 424 497 463 595 614
Provision for credit losses ............................... 342 203 216 309 421
Earnings before income taxes and cumulative effect of
changes in accounting principles ........................ 522 315 267 295 402
Net earnings(2) ........................................... 339 195 129 231 276
<CAPTION>
December 31,
-----------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
(dollars in millions)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:(1)
Finance receivables -- net ................................ $12,644 $12,423 $ 9,626 $10,200 $15,579
Retained interests in sold receivables -- net ............. 2,733 2,251 2,620 2,759 2,885
Cash and cash equivalents ................................. 476 174 265 433 522
Marketable securities ..................................... 674 583 348 333 298
Assets held for sale ...................................... -- -- -- 2,393 --
Amounts due from affiliated companies ..................... -- 66 -- -- 67
Repossessed collateral .................................... 194 162 269 192 182
Dealership properties leased -- net ....................... 363 407 423 454 469
Vehicles leased -- net .................................... 397 130 -- -- --
Other assets .............................................. 354 452 700 784 1,278
------- ------- ------- ------- -------
Total assets .......................................... $17,835 $16,648 $14,251 $17,548 $21,280
======= ======= ======= ======= =======
Short-term notes (primarily commercial paper) ............. $ 2,435 $ 4,315 $ 2,772 $ 352 $ 339
Bank borrowings ........................................... -- -- -- 5,924 6,633
Senior term debt .......................................... 9,234 6,069 5,139 4,436 6,742
Subordinated term debt .................................... -- 27 77 585 949
Other debt ................................................ 100 260 447 455 518
Accounts payable, accrued expenses and other .............. 1,236 1,155 1,147 1,270 1,777
Amounts due to affiliated companies ....................... 29 -- 24 35 --
Deferred income taxes ..................................... 1,499 1,549 1,514 1,493 1,480
------- ------- ------- ------- -------
Total liabilities ..................................... 14,533 13,375 11,120 14,550 18,438
------- ------- ------- ------- -------
Shareholder's investment:
Preferred ............................................... -- -- -- -- 75
Common(3) ............................................... 3,302 3,273 3,131 2,998 2,767
------- ------- ------- ------- -------
Total shareholder's investment ........................ 3,302 3,273 3,131 2,998 2,842
------- ------- ------- ------- -------
Total liabilities and shareholder's investment ........ $17,835 $16,648 $14,251 $17,548 $21,280
======= ======= ======= ======= =======
<FN>
- ----------------
(1) Prior periods reclassified to conform to current classifications.
(2) Net earnings for 1993 included a $30 million after-tax charge from the
adoption of Statement of Financial Accounting Standards ("SFAS") No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions" and
SFAS No. 112, "Employers' Accounting for Postemployment Benefits," while
1992 net earnings included a $51 million favorable after-tax adjustment
from the adoption of SFAS No. 109, "Accounting for Income Taxes" and an
after-tax one-time $24 million charge for the write-off of goodwill.
(3) The Company declared cash dividends totaling $335 million in respect of its
common stock during 1995 and $40 million during 1994. The Company declared
no cash dividends in respect of its common stock during 1993, 1992 or 1991.
</TABLE>
Financial Review
The Company had net earnings of $339 million in 1995 compared to $195
million and $129 million in 1994 and 1993, respectively. The increase in net
earnings for the year ended December 31, 1995 reflects higher levels of
automotive financing, lower operating expenses and lower costs of bank
facilities. Net earnings for 1993 included charges totaling $30 million from
the adoption of Statement of Financial Accounting Standards ("SFAS") No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," and
SFAS No. 112, "Employers' Accounting for Post Employment Benefits."
Total assets at December 31, 1995 increased to $17.8 billion from $16.6
billion at December 31, 1994. Total debt outstanding at December 31, 1995 was
$11.8 billion compared to $10.7 billion at December 31, 1994. During 1995, the
Company issued $4.3 billion of term debt compared to $1.8 billion during 1994.
The Company's debt-to-equity ratio was 3.6 to 1 at December 31, 1995 compared
to 3.3 to 1 at December 31, 1994.
The Company's portfolio of receivables managed, which includes
receivables owned and receivables serviced for others, totaled $38.1 billion at
December 31, 1995, up from $32.7 billion at December 31, 1994. The increase in
receivables managed reflects higher volumes of automotive receivables acquired.
Receivables serviced for others totaled $25.2 billion at December 31, 1995
compared to $20.1 billion at December 31, 1994.
The Company's total allowance for credit losses, including receivables
sold subject to limited recourse provisions and operating leases, totaled $578
million and $512 million at December 31, 1995 and 1994, respectively. The
increase in total allowance for credit losses reflects higher levels of
automotive retail receivables and higher automotive retail credit loss
experience. The total allowance for credit losses as a percentage of related
finance receivables managed was 1.69 percent and 1.66 percent at December 31,
1995 and 1994, respectively. Nonearning finance receivables, including
receivables sold subject to limited recourse provisions, increased to $333
million at year-end 1995 from $282 million at year-end 1994.
The increase in net credit losses during 1995 to average gross
receivables outstanding is primarily related to retail automotive financing.
Net credit loss experience, including net losses on receivables sold subject to
limited recourse provisions, for the years ended December 31, 1995, 1994 and
1993 was as follows:
<TABLE>
<CAPTION>
Net Credit Losses
-----------------------------
December 31,
-----------------------------
1995 1994 1993
----- ----- -----
(in millions of dollars)
<S> <C> <C> <C>
Automotive financing ............ $ 229 $ 117 $ 109
Nonautomotive financing ......... 23 41 88
----- ----- -----
Total ....................... $ 252 $ 158 $ 197
===== ===== =====
<CAPTION>
Net Credit Losses to Average
Gross Receivables Outstanding
-----------------------------
December 31,
-----------------------------
1995 1994 1993
----- ----- -----
(in millions of dollars)
<S> <C> <C> <C>
Automotive financing ............ .70% .42% .44%
Nonautomotive financing ......... .69% 1.05% 1.73%
Total ....................... .70% .50% .66%
</TABLE>
The Company's Mexican subsidiary, Chrysler Comercial, had total assets of
$245 million and $433 million at December 31, 1995 and 1994, respectively. The
decline in Chrysler Comercial's assets reflects the devaluation of the peso in
1994 and its negative impact on Chrysler Comercial's retail and wholesale
lending activities. The Company believes its reserves for Mexican credit losses
and a Chrysler support agreement entered into during September 1995 are
adequate to cover expected losses.
Liquidity and Capital Resources
Term debt, commercial paper and receivable sales represent the Company's
primary funding sources. The Company issued $4.3 billion of term debt
(primarily medium term notes) and repaid term debt of $1.1 billion during 1995.
The Company also reduced the amount of commercial paper it had outstanding by
$1.9 billion as of December 31, 1995 compared to December 31, 1994.
Receivable sales continued to be a significant source of funding. Net
proceeds from the sales of automotive retail receivables were $6.5 billion
during 1995, as compared to $6.4 billion for 1994. Securitization of revolving
wholesale account balances provided funding which aggregated $6.7 billion and
$3.8 billion at December 31, 1995 and 1994, respectively.
As of December 31, 1995, the Company had contractual debt maturities of
$4.1 billion in 1996 (including $2.4 billion of short-term notes with an
average remaining term of 45 days), $3.0 billion in 1997, $2.1 billion in 1998,
$1.4 billion in 1999, $0.8 billion in 2000, and $0.4 billion in years
thereafter.
During the second quarter of 1995, the Company entered into agreements
providing for new revolving credit facilities which replaced its existing
United States and Canadian revolving credit and receivable sale facilities. The
new facilities which total $8.0 billion consist of a $2.4 billion facility
expiring in May 1996 and a $5.6 billion facility expiring in May 2000. These
facilities include $0.8 billion allocated to Chrysler Credit Canada Ltd. As of
December 31, 1995, no amounts were outstanding under these facilities.
The Company paid $335 million and $40 million in dividends to Chrysler
during 1995 and 1994, respectively.
For additional information regarding the results of operations and
financial condition of the Company, see the Company's Annual Report on Form
10-K for the year ended December 31, 1995, which is incorporated by reference
into this Prospectus.
New Accounting Standard
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
effective for fiscal years beginning after December 15, 1995. This statement
establishes accounting standards for the impairment of long-lived assets,
certain identifiable intangibles, and goodwill related to those assets to be
held and used and long-lived assets and certain identifiable intangibles to be
disposed. The statement requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In addition, the statement
requires that certain long-lived assets and intangibles to be disposed of be
reported at the lower of carrying amount or fair value less cost to sell. The
Company does not expect the adoption of this accounting standard to materially
impact its results of operations or financial position. The Company will adopt
this accounting standard effective January 1, 1996, as required.
<PAGE>
INFORMATION CONCERNING CHRYSLER CORPORATION
The Company's results of operations depend significantly upon the results
of operations of Chrysler. Chrysler is subject to the informational
requirements of the Exchange Act, and in accordance therewith files reports and
other information with the Commission. Such reports and other information can
be inspected and copied at the public reference facilities of the Commission
referred to above under "Available Information."
The results of operations and balance sheet data set forth below for
Chrysler reflect the full consolidation of the accounts of all significant
majority-owned subsidiaries and entities over which Chrysler has a controlling
financial interest, and, for each of the last three years ended December 31,
1995, have been derived from the audited consolidated financial statements of
Chrysler.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1995 1994 1993
-------- -------- --------
Results of Operations Data (in millions of dollars)
<S> <C> <C> <C>
Sales of manufactured products ............................ $ 49,601 $ 49,363 $ 40,831
Finance and insurance revenues ............................ 1,589 1,384 1,429
Other revenues ............................................ 2,005 1,488 1,340
-------- -------- --------
Total Revenues ............................................ 53,195 52,235 43,600
-------- -------- --------
Total Expenses ............................................ 49,746 46,405 39,762
-------- -------- --------
Earnings Before Income Taxes and Cumulative Effect of
Changes in Accounting Principles ........................ 3,449 5,830 3,838
Provision for income taxes ................................ 1,328 2,117 1,423
-------- -------- --------
Earnings Before Cumulative Effect of Changes in
Accounting Principles ................................... 2,121 3,713 2,415
Cumulative effect of changes in accounting principles ..... (96) -- (4,966)
-------- -------- --------
Net Earnings (Loss) ....................................... $ 2,025 $ 3,713 $ (2,551)
Preferred stock dividends ................................. 21 80 80
-------- -------- --------
Net Earnings (Loss) on Common Stock ....................... $ 2,004 $ 3,633 $ (2,631)
======== ======== ========
<CAPTION>
December 31,
----------------------------------
1995 1994 1993
-------- -------- --------
Balance Sheet Data (in millions of dollars)
<S> <C> <C> <C>
Cash, cash equivalents and marketable securities .......... $ 8,125 $ 8,371 $ 5,095
Total assets .............................................. 53,756 49,539 43,679
Total debt ................................................ 14,193 13,106 11,451
Shareholders' equity ...................................... 10,959 10,694 6,836
</TABLE>
Results of Operations
Chrysler reported earnings before income taxes and the cumulative effect
of a change in accounting principle of $3.4 billion in 1995, compared with $5.8
billion in 1994. Net earnings for 1995 were $2.0 billion, or $5.11 per fully
diluted common share, compared with $3.7 billion, or $9.10 per fully diluted
common share in 1994. Earnings in 1994 represented an all-time record for
Chrysler. Earnings in 1995 were the third best in Chrysler's history. Earnings
in 1995 were reduced by a $263 million charge ($162 million after income taxes)
for costs associated with production changes at Chrysler's Newark assembly
plant and a $115 million charge ($71 million after income taxes) for a
voluntary minivan owner service action. Net earnings in 1995 also include a
charge of $96 million, or $0.24 per fully diluted common share, for the
cumulative effect of a change in accounting principle related to the consensus
reached on Emerging Issues Task Force Issue 95-1, "Revenue Recognition on Sales
with a Guaranteed Minimum Resale Value." Net earnings for 1994 included
favorable tax adjustments aggregating $132 million.
Chrysler also reported earnings before income taxes of $1,659 million in
the fourth quarter of 1995, compared with $1,631 million in the fourth quarter
of 1994. Earnings before income taxes for the fourth quarter of 1995
represented an all-time record for Chrysler and earnings before income taxes
for the fourth quarter of 1994 were the second best in Chrysler's history. Net
earnings for the fourth quarter of 1995 were $1,040 million, or $2.67 per fully
diluted common share, compared with $1,168 million, or $2.86 per fully diluted
common share in the fourth quarter of 1994. Net earnings for the fourth quarter
of 1994 included favorable tax adjustments aggregating $132 million. Net
earnings for the fourth quarter of 1994 represented an all-time record for
Chrysler and net earnings for the fourth quarter of 1995 were the second best
quarter in Chrysler's history. Chrysler's worldwide factory car and truck
shipments in the fourth quarter of 1995 were 741,770 units, an increase of
16,824 units or 2 percent from fourth quarter 1994 levels.
The lower operating results for full year 1995 compared with 1994
resulted primarily from lower minivan shipments and costs associated with the
launch of Chrysler's all-new minivans, higher sales incentives and material
costs, a lower mix of higher-margin vehicles, lower factory shipments in Mexico
and the costs associated with production changes at the Newark assembly plant.
Chrysler's worldwide factory car and truck shipments in 1995 were
2,673,539 units, a decrease of 88,564 units or 3 percent from 1994 levels.
Minivan factory shipments in 1995 were 555,824 units, a decrease of 121,652
units from 1994 levels. The decline in minivan factory shipments was primarily
attributable to the launch of Chrysler's all-new minivans at its assembly
plants in Fenton, Missouri; Windsor, Ontario; and Graz, Austria. By the end of
1995, the launch of Chrysler's all-new minivans was substantially complete.
Minivan factory shipments in the fourth quarter of 1995 were 167,615 units as
compared with 167,839 units in the fourth quarter of 1994.
Chrysler's revenues and results of operations are derived principally
from the U.S. and Canada automotive marketplaces. Retail sales of new cars and
trucks in the U.S. and Canada were 16.3 million units in 1995, compared with
16.7 million units in 1994, a decrease of 2 percent. This decrease was
primarily due to a slowdown in economic growth caused primarily by increases in
interest rates. As a result, Chrysler increased retail sales incentives and
lowered production during 1995.
Chrysler's U.S. and combined U.S. and Canada retail sales and market
share data for 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
Increase/
1995 1994 (Decrease)
--------- --------- -------
<S> <C> <C> <C>
U.S. Retail Market(1):
Car sales ............................... 786,180 811,824 (25,644)
Car market share ........................ 9.1% 9.0% 0.1 %
Truck sales (including minivans) ........ 1,378,163 1,392,171 (14,008)
Truck market share ...................... 21.3% 21.7% (0.4)%
Combined car and truck sales ............ 2,164,343 2,203,995 (39,652)
Combined car and truck market share ..... 14.3% 14.3% --
U.S. and Canada Retail Market(1):
Combined car and truck sales ............ 2,389,465 2,451,747 (62,282)
Combined car and truck market share ..... 14.7% 14.7% --
<FN>
- ----------------
(1) All retail sales and market share data include fleet sales.
</TABLE>
The decline in Chrysler's U.S. truck market share during 1995 was
primarily due to a decrease in retail sales of Chrysler's minivans largely
offset by a net increase in retail sales of Chrysler's other truck models. The
decrease in minivan retail sales was primarily due to the launch of Chrysler's
all-new minivans.
Chrysler manufactured 207,004 vehicles and 238,888 vehicles in Mexico in
1995 and 1994, respectively. Of these totals, 26,503 vehicles and 77,832
vehicles were sold in Mexico in 1995 and 1994, respectively. Sales of vehicles
exported to Mexico were not significant in 1995 or 1994. The decrease in
vehicles manufactured and sold in Mexico was primarily attributable to
unfavorable economic conditions in Mexico, commencing with the devaluation of
the Mexican peso in December 1994. Chrysler's operating results will continue
to be adversely affected to the extent that the unfavorable economic conditions
in Mexico continue. Although Chrysler expects economic conditions in Mexico to
improve slightly in 1996, Chrysler cannot predict when Mexican automotive
industry sales will return to predevaluation levels.
In the fourth quarter of 1995, the Emerging Issues Task Force ("EITF") of
the Financial Accounting Standards Board reached a consensus on EITF Issue
95-1, "Revenue Recognition on Sales with a Guaranteed Minimum Resale Value."
The consensus on EITF Issue 95-1, (the "consensus") affects Chrysler's
accounting treatment for vehicle sales (principally to non-affiliated rental
car companies) for which Chrysler conditionally guarantees the minimum resale
value of the vehicles. In accordance with the consensus, these vehicle sales
are accounted for as operating leases with the related revenues and costs
deferred at the time of shipment. A portion of the deferred revenues and costs
is recognized over the corresponding guarantee period, with the remainder
recognized at the end of the guarantee period. The average guarantee period for
these vehicles is approximately nine months. Chrysler changed its accounting
treatment in accordance with the consensus effective January 1, 1995 which
resulted in the recognition of an after-tax charge of $96 million for the
cumulative effect of this change in accounting principle. The ongoing effect of
this accounting change was not material to 1995 earnings.
For the past three years, Chrysler has benefitted from several factors,
including: (1) favorable economic conditions in the U.S. and Canada, where
Chrysler's sales are concentrated, (2) a cost advantage in comparison to
vehicles manufactured in Japan (or vehicles containing significant material
components manufactured in Japan) as a result of favorable exchange rates
between the Japanese yen and the U.S. dollar, and (3) a continuing shift in
U.S. and Canada consumer preferences toward trucks, as Chrysler manufactures a
higher proportion of trucks to total vehicles than its principal competitors in
the U.S. and Canada. A significant deterioration of any of these factors could
adversely affect Chrysler's operating results. In addition, Chrysler has
benefitted from a strategy of focusing resources on its core automotive
business and an aggressive capital expenditure and vehicle development program
that has resulted in the replacement of substantially all of its car and truck
offerings over the last four years. Chrysler's long-term profitability will
depend significantly on its ability to continue its capital expenditure and
vehicle development programs and market its vehicles successfully.
Liquidity and Capital Resources
Chrysler's combined cash, cash equivalents and marketable securities
totaled $8.1 billion at December 31, 1995 (including $1.2 billion held by the
Company and Car Rental Operations), compared with $8.4 billion at December 31,
1994 (including $756 million held by the Company and car rental operations). At
December 31, 1995, $394 million of the Company's combined cash, cash
equivalents and marketable securities were limited for use in its insurance
operations in accordance with various statutory requirements. The decrease in
Chrysler's consolidated combined cash, cash equivalents and marketable
securities in 1995 was the result of capital expenditures, net finance
receivables acquired and common stock repurchases, largely offset by cash
generated by operating activities and cash provided by an increase in long-term
debt. The increase in Chrysler's consolidated combined cash, cash equivalents
and marketable securities of $3.3 billion in 1994 was the result of cash
generated by operating activities, partially offset by capital expenditures and
pension contributions.
Chrysler's long-term profitability will depend significantly on its
ability to continue its capital expenditure and vehicle development programs
and market its vehicles successfully. Chrysler's expenditures for new product
development and the acquisition of productive assets were $14.9 billion for the
three-year period ended December 31, 1995. Expenditures for these items during
the succeeding three-year period are expected to be at similar or higher
levels. At December 31, 1995, Chrysler had commitments for capital
expenditures, including commitments for assets currently under construction,
totaling approximately $1.2 billion.
In December 1994, Chrysler's Board of Directors approved a $1 billion
common stock repurchase program commencing in the first quarter of 1995. In
September 1995, Chrysler's Board of Directors approved an increase in the
program to $2 billion to be completed by the end of 1996, depending on market
conditions. During 1995, Chrysler repurchased 23 million shares of its common
stock under this program at a cost of $1.1 billion (including $23 million in
unsettled repurchases). In addition, holders of the Series A Convertible
Preferred Stock converted 1.6 million shares of preferred stock into 44.1
million shares of common stock during 1995.
In the second quarter of 1995, Chrysler increased its quarterly dividend
from $0.40 to $0.50 per common share. In the fourth quarter of 1995, Chrysler
increased its quarterly dividend from $0.50 to $0.60 per common share, the
highest dividend rate in Chrysler's history.
Chrysler's ability to market its products successfully depends
significantly on the availability of vehicle financing for its dealers and, to
a lesser extent, the availability of financing for retail and fleet customers,
both of which are provided by the Company.
Chrysler's strategy is to focus on its core automotive business. As part
of this strategy, Chrysler has sold certain assets and businesses in past years
which are not related to its core automotive business, and is exploring the
sale of other such assets and businesses in the near term.
Financing by the Company
The Company provided inventory financing for approximately 74 percent of
the vehicles Chrysler sold to dealers in the United States in 1995. The Company
also provided financing for approximately 27 percent of Chrysler's U.S. retail
and fleet deliveries in 1995.
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges of the Company Consolidated and
Chrysler Consolidated for each of the last five years were as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
The Company Consolidated....... 1.56x 1.41x 1.33x 1.28x 1.27x
Chrysler Consolidated.......... 3.45x 5.52x 3.62x 1.48x 0.59x(1)
<FN>
- ----------------
(1) In 1991, Chrysler's earnings were not sufficient to cover fixed charges.
The coverage deficiency was $897 million.
</TABLE>
The Company Consolidated. The ratios of earnings to fixed charges have
been computed by dividing earnings before taxes on income and fixed charges by
fixed charges. Fixed charges consist of interest, amortization of debt discount
and expense, and rentals. Rentals included in fixed charges are the portion of
total rent expense representative of the interest factor (deemed to be
one-third).
Chrysler Consolidated. For purposes of computing the ratios of earnings
to fixed charges, earnings are determined by adding back fixed charges to
earnings (loss) from continuing operations (including equity in net earnings of
unconsolidated subsidiaries) before taxes on income and excluding undistributed
earnings from less than 50% owned affiliates. Fixed charges consist of interest
expense, credit line commitment fees and the interest portion of rent expense.
USE OF PROCEEDS
Unless otherwise provided in the applicable Prospectus Supplement, the
net proceeds to be received by the Company from the sale of the Debt Securities
and Warrants and the exercise of Warrants will be added to its general
corporate funds and may be used to repay long-term or short-term borrowings and
for other general corporate purposes. If the Company elects at the time of the
issuance of Debt Securities or Warrants to make different or more specific use
of proceeds other than as set forth herein, such use will be described in the
Prospectus Supplement.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities set forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Debt Securities so offered will be
described in the Prospectus Supplement relating to such Debt Securities.
The Debt Securities are to be issued under an Indenture dated as of
February 15, 1988, as amended (the "Indenture"), between the Company and
Manufacturers Hanover Trust Company, which has been succeeded by United States
Trust Company of New York as successor Trustee (the "Trustee"). The Indenture
is incorporated by reference as an exhibit to the Registration Statement. The
following summary of certain provisions of the Indenture does not purport to be
complete and is qualified in its entirety by reference to the provisions of the
Indenture. Numerical references in parentheses below are to sections of the
Indenture. Wherever particular sections or defined terms of the Indenture are
referred to, it is intended that such sections or defined terms shall be
incorporated herein by reference.
General
Debt Securities and Warrants offered by this Prospectus will be limited
to an aggregate initial public offering price of approximately $7,364,000,850
or the equivalent thereof in one or more foreign currencies or composite
currencies. The Indenture provides that Debt Securities in an unlimited amount
may be issued thereunder from time to time in one or more series. (Section 301)
The Securities will rank pari passu in right of payment with all existing
and future unsecured and unsubordinated indebtedness of the Company.
Reference is hereby made to the Prospectus Supplement relating to the
particular series of Debt Securities offered thereby for the terms of such Debt
Securities, including, where applicable: (i) the designation, aggregate
principal amount, currency or currencies and denominations of such Debt
Securities; (ii) the price (expressed as a percentage of the aggregate
principal amount thereof) at which such Debt Securities will be issued; (iii)
the date or dates on which such Debt Securities will mature; (iv) the currency
or currencies in which such Debt Securities are being sold and in which the
principal of and any interest on such Debt Securities will be payable, whether
the holder of any such Debt Securities may elect the currency in which payments
thereon are to be made and, if so, the manner of such election; (v) the rate or
rates (which may be fixed or variable) per annum at which such Debt Securities
will bear interest; (vi) the date from which such interest on such Debt
Securities will accrue, the dates on which such interest will be payable and
the date on which payment of such interest will commence; (vii) the dates on
which and the price or prices at which such Debt Securities will, pursuant to
any mandatory sinking fund provision, or may, pursuant to any optional
redemption or required repayment provisions, be redeemed or repaid and the
other terms and provisions of any such optional redemption or required
repayment; (viii) whether such Debt Securities are to be issuable as Registered
Securities, Bearer Securities or both and the terms upon which any Bearer
Securities of such series may be exchanged for Registered Securities of such
series; (ix) whether such Debt Securities are to be issued in whole or in part
in the form of one or more Global Securities and, if so, the identity of the
Depositary for such Global Security or Securities; (x) any special provisions
for the payment of additional amounts with respect to such Debt Securities;
(xi) if a temporary Global Security is to be issued with respect to such
series, whether any interest thereon payable on an interest payment date prior
to the issuance of a permanent Global Security or definitive Bearer Securities
will be credited to the account of the persons entitled thereto on such
interest payment date; (xii) if a temporary Global Security is to be issued
with respect to such series, the terms upon which interests in such temporary
Global Security may be exchanged for interests in a permanent Global Security
or for definitive Debt Securities of the series and the terms upon which
interests in a permanent Global Security, if any, may be exchanged for
definitive Debt Securities of the series; (xiii) any additional restrictive
covenants included for the benefit of holders of such Debt Securities; (xiv)
additional Events of Default provided with respect to such Debt Securities; and
(xv) the terms of any Warrants offered together with such Debt Securities.
The Debt Securities may be issuable as Registered Securities, Bearer
Securities or both. Debt Securities of a series may be issuable in whole or in
part in the form of one or more Global Securities, as described below under
"Global Securities." Unless the Prospectus Supplement relating thereto
specifies otherwise, Registered Securities denominated in U.S. dollars will be
issued only in denominations of $1,000 or any integral multiple thereof and
Bearer Securities denominated in U.S. dollars will be issued only in the
denomination of $5,000. See, however, "Limitations on Issuance of Bearer
Securities and Bearer Warrants" below. One or more Global Securities may be
issued in a denomination or aggregate denominations equal to the aggregate
principal amount of Outstanding Debt Securities of the series to be represented
by such Global Security or Securities. The Prospectus Supplement relating to a
series of Debt Securities denominated in a foreign or composite currency will
specify the denomination thereof. No service charge will be made for any
transfer or exchange of Debt Securities, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. (Sections 302 and 305)
At the option of the Holder upon request confirmed in writing, and
subject to the terms of the applicable Indenture, Bearer Securities (with all
unmatured coupons, except as provided below) of any series will be
exchangeable into an equal aggregate principal amount of Registered Securities
(if the Debt Securities of such series are issuable as Registered Securities)
or Bearer Securities of the same series (with the same interest rate and
maturity date), but no Bearer Security will be delivered in or to the United
States, and Registered Securities of any series (other than a Global Security,
except as set forth below) will be exchangeable into an equal aggregate
principal amount of Registered Securities of the same series (with the same
interest rate and maturity date) of different authorized denominations. If a
Holder surrenders Bearer Securities in exchange for Registered Securities
between a Regular Record Date or, in certain circumstances, a Special Record
Date, and the relevant interest payment date, such Holder will not be required
to surrender the coupon relating to such interest payment date. Registered
Securities may not be exchanged for Bearer Securities. (Section 305)
Debt Securities may be presented for exchange, and Registered Securities
(other than a Global Security) may be presented for transfer (with the form of
transfer endorsed thereon duly executed), at the office of any transfer agent
or at the office of the Security Registrar, without service charge and upon
payment of any taxes and other governmental charges as described in the
applicable Indenture. (Section 305) Bearer Securities will be transferable by
delivery.
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a discount below their stated
principal amount. Federal income tax consequences and other special
considerations applicable to any such Original Issue Discount Securities will
be described in the Prospectus Supplement relating thereto. "Original Issue
Discount Securities" means any Debt Securities that provide for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof upon the occurrence of an Event of Default
and the continuation thereof. (Section 101)
Global Securities
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a depositary (the "Depositary") identified in the Prospectus Supplement
relating to such series. Global Securities may be issued in either registered
or bearer form and in either temporary or permanent form. Unless and until it
is exchanged in whole or in part for Debt Securities in definitive form, a
Global Security may not be transferred except as a whole by the Depositary for
such Global Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor of such Depositary or a nominee
of such successor. (Sections 303 and 305)
The specific terms of the depositary arrangement with respect to any Debt
Securities of a series will be described in the Prospectus Supplement relating
to such series. The Company anticipates that the following provisions will
apply to all depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such Global
Security to the accounts of institutions that have accounts with such
Depositary ("participants"). The accounts to be credited shall be designated by
the underwriters of such Debt Securities or by the Company, if such Debt
Securities are offered and sold directly by the Company. Ownership of
beneficial interests in a Global Security will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests in such Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by participants or
persons that hold through participants. The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
owner of such Global Security, such Depositary or such nominee, as the case may
be, will be considered the sole owner or holder of the Debt Securities
represented by such Global Security for all purposes under the Indenture
governing such Debt Securities. Except as set forth below, owners of beneficial
interests in a Global Security will not be entitled to have Debt Securities of
the series represented by such Global Security registered in their names, will
not receive or be entitled to receive physical delivery of Debt Securities of
such series in definitive form and will not be considered the owners or holders
thereof under the Indenture.
Subject to the restrictions discussed under "Limitations on Issuance of
Bearer Securities and Bearer Warrants" below, principal, premium, if any, and
interest payments on Debt Securities registered in the name of or held by a
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner or the holder of the Global Security
representing such Debt Securities. None of the Company, the Trustee for such
Debt Securities, any Paying Agent or the Security Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in a Global Security for such Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company expects that the Depositary for Debt Securities of a series,
upon receipt of any payment of principal, premium or interest in respect of a
permanent Global Security, will credit immediately participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Security as shown on the records of such
Depositary. The Company also expects that payments by participants to owners of
beneficial interests in such Global Security held through such participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
participants. Receipt by owners of beneficial interests in a temporary Global
Security of payments in respect of such temporary Global Security will be
subject to the restrictions discussed under "Limitations on Issuance of Bearer
Securities and Bearer Warrants" below.
If a Depositary for Debt Securities of a series is at any time unwilling
or unable to continue as depositary and a successor depositary is not appointed
by the Company within ninety days, the Company will issue Debt Securities of
such series in definitive form in exchange for all of the Global Securities
representing the Debt Securities of such series. In addition, the Company may
at any time and in its sole discretion determine not to have any Debt
Securities of a series represented by one or more Global Securities and, in
such event, will issue Debt Securities of such series in definitive form in
exchange for all of the Global Securities representing such Debt Securities.
Further, if the Company so specifies with respect to the Debt Securities of a
series, an owner of a beneficial interest in a Global Security representing
Debt Securities of such series may, on terms acceptable to the Company and the
Depositary for such Global Security, receive Debt Securities of such series in
definitive form. In any such instance, an owner of a beneficial interest in a
Global Security will be entitled to physical delivery in definitive form of
Debt Securities of the series represented by such Global Security equal in
principal amount to such beneficial interest and to have such Debt Securities
registered in its name (if the Debt Securities of such series are issuable as
Registered Securities). Debt Securities of such series so issued in definitive
form will be issued (a) as Registered Securities in denominations, unless
otherwise specified by the Company, of $1,000 and integral multiples thereof if
the Debt Securities of such series are issuable as Registered Securities, (b)
as Bearer Securities in the denomination, unless otherwise specified by the
Company, of $5,000 if the Debt Securities of such series are issuable as Bearer
Securities or (c) as either Registered or Bearer Securities, if the Debt
Securities of such series are issuable in either form. (Section 305) See,
however, "Limitations on Issuance of Bearer Securities and Bearer Warrants"
below for a description of certain restrictions on the issuance of a Bearer
Security in definitive form in exchange for an interest in a Global Security.
Payment and Paying Agents
Payment of principal of and premium, if any, and interest on Bearer
Securities will be payable in the currency designated in the Prospectus
Supplement, subject to any applicable laws and regulations, at such paying
agencies outside the United States as the Company may appoint from time to
time. Any such payment may be made by a check in the designated currency. No
payment with respect to any Bearer Securities will be made at the Corporate
Trust Office of the Trustee or any other paying agency maintained by the
Company in the United States nor will any such payment be made by transfer to
an account, or by mail to an address, in the United States. Notwithstanding the
foregoing, payments of principal of and premium, if any, and interest on Bearer
Securities will be made in U.S. dollars at the Corporate Trust Office of the
Trustee in The City of New York if payment of the full amount thereof at all
paying agencies outside the United States is illegal or effectively precluded
by exchange controls or other similar restrictions. (Section 1002)
Payment of principal of and premium, if any, on Registered Securities
will be made in the designated currency against surrender of such Registered
Securities at the Corporate Trust Office of the Paying Agent in The City of New
York. Unless otherwise indicated in the Prospectus Supplement, payment of any
installment of interest on Registered Securities will be made to the person in
whose name such Debt Security is registered at the close of business on the
regular record date for such interest. Unless otherwise indicated in the
Prospectus Supplement, payments of such interest will be made at the Corporate
Trust Office of the Paying Agent in The City of New York, or by a check in the
designated currency mailed to each Holder at such Holder's registered address.
(Sections 307 and 1001)
The paying agents outside the United States initially appointed by the
Company for a series of Debt Securities will be named in the Prospectus
Supplement. The Company may terminate the appointment of any of the paying
agents from time to time, except that the Company will maintain at least one
paying agent in The City of New York for payments with respect to Registered
Securities and at least one paying agent in a city in Europe so long as any
Bearer Securities are outstanding where Bearer Securities may be presented for
payment and may be surrendered for exchange, provided that so long as any
series of Debt Securities is listed on The International Stock Exchange of the
United Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange or
any other stock exchange located outside the United States and such stock
exchange shall so require, the Company will maintain a paying agent in London
or Luxembourg or any other required city located outside the United States, as
the case may be, for such series of Debt Securities. (Section 1002)
All moneys paid by the Company to a paying agent for the payment of
principal of or premium, if any, or interest on any Debt Security that remains
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable may be repaid to the Company and the Holder
of such Debt Security or any coupon appertaining thereto will thereafter look
only to the Company for payment thereof. (Section 1003)
Covenants
The Indenture imposes the following restrictive covenants on the Company.
Limitation on Liens. The Company will not subject its assets or assets
of a Restricted Subsidiary to liens without securing the Debt Securities
equally and ratably with other indebtedness for borrowed money so secured
except for (1) liens securing exports to or marketing of goods in foreign
countries other than Canada, (2) liens on receivables payable in foreign
currencies to secure borrowings in foreign countries other than Canada, (3)
deposits in connection with public obligations or legal proceedings, (4) liens
securing intercompany indebtedness, (5) purchase money mortgages on fixed
assets hereafter acquired by the Company or any of its Restricted Subsidiaries
for use in the Finance Business or the Finance-Related Insurance Business,
liens on such property at the time of its acquisition or liens on fixed assets
used in the Finance Business or the Finance-Related Insurance Business existing
when a company becomes a Subsidiary, and (6) renewals of the foregoing.
(Section 1004) The term "Restricted Subsidiary" means any Subsidiary of the
Company engaged in the Finance Business or in the Finance-Related Insurance
Business other than Subsidiaries that are organized or conduct a major portion
of their business outside the United States, Puerto Rico or Canada. The term
"Subsidiary" means a corporation a majority of the outstanding voting stock of
which is owned, directly or indirectly, by the Company. (Section 101)
Limitation on Dividends. Cash dividends on or acquisitions for value of
capital stock of the Company subsequent to December 31, 1984 are limited to the
sum of (i) consolidated net income of the Company and its consolidated
Subsidiaries calculated in accordance with generally accepted accounting
principles and (ii) net proceeds from cash sales of or cash contributions to
capital stock, subsequent to December 31, 1984. Substantially concurrent
acquisitions of capital stock out of the net proceeds of sales of capital stock
are excluded. (Section 1005)
Restricted Subsidiary Stock and Debt. The Company will not, and will not
permit any Subsidiary to, sell or otherwise dispose of any shares of stock or
indebtedness for borrowed money of any Restricted Subsidiary except to the
Company or to a Restricted Subsidiary unless simultaneously therewith all
shares of stock and such indebtedness of such Restricted Subsidiary at the time
owned by the Company and all Subsidiaries are sold or transferred. The Company
will not permit any Restricted Subsidiary to issue, sell or dispose of, except
to the Company or to a Restricted Subsidiary, (i) any preferred stock, except
to any holders of the stock of such Restricted Subsidiary in the exercise of a
pre-emptive right to subscribe to such preferred stock, or (ii) any other class
of stock except on the condition that the proportionate amount of shares of
stock of such class and of the total number of shares of stock of such
Restricted Subsidiary held by persons other than the Company and its Restricted
Subsidiaries shall not be increased and except for directors' qualifying
shares. (Sections 1007 and 1008)
Modification of the Indentures
The Indenture permits the Company and the Trustee, with the consent of
the holders of not less than 66-2/3% in principal amount of the Debt Securities
at the time outstanding thereunder and affected thereby, to execute a
supplemental indenture modifying the Indenture or the rights of the holders of
such Debt Securities and any related coupons, provided that no such
modification shall, without the consent of the holder of each Debt Security
affected thereby, (i) change the maturity of any Debt Security or coupon, or
reduce the principal amount thereof, or reduce the rate or change the time of
payment of interest thereon, or change any Place of Payment or change the coin
or currency in which a Debt Security or coupon is payable or affect the right
of any holder to institute suit for the enforcement of payment in accordance
with the foregoing, or (ii) reduce the aforesaid percentage of Debt Securities,
the consent of the holders of which is required for any such modification.
(Section 902)
The Indenture contains provisions for convening meetings of the Holders
of Debt Securities of a series if Debt Securities of that series are issuable
in whole or in part as Bearer Securities. (Section 1401) A meeting may be
called at any time by the Trustee, or upon the request of the Company or the
Holders of at least 10% in principal amount of the outstanding Debt Securities
of such series, in any such case upon notice given in accordance with the
Indenture. (Section 1402) The quorum at any meeting called to adopt a
resolution, and at any reconvened meeting, will be persons holding or
representing a majority in principal amount of the outstanding Debt Securities
of a series; provided, however, that if any action is to be taken at such
meeting with respect to a consent or waiver which may be given by the Holders
of not less than 66-2/3% in principal amount of the outstanding Debt Securities
of a series, the persons holding or representing 66-2/3% in principal amount of
the outstanding Debt Securities of such series will constitute a quorum.
(Section 1404) Except as limited by the proviso in the preceding paragraph, any
resolution presented at a meeting or adjourned meeting at which a quorum is
present may be adopted by the affirmative vote of the Holders of a majority in
principal amount of the outstanding Debt Securities of that series; provided,
however, that, except as limited by the proviso in the preceding paragraph, any
resolution with respect to any consent or waiver that may be given by the
Holders of not less than 66-2/3% in principal amount of the outstanding Debt
Securities of a series may be adopted at a meeting or an adjourned meeting at
which a quorum is present only by the affirmative vote of 66-2/3% in principal
amount of the outstanding Debt Securities of that series; and provided further
that, except as limited by the proviso in the preceding paragraph, any
resolution with respect to any demand, consent, waiver or other action that may
be made, given or taken by the Holders of a specified percentage, which is less
than a majority, in principal amount of outstanding Debt Securities of a series
may be adopted at a meeting or adjourned meeting at which a quorum is present
by the affirmative vote of the Holders of such specified percentage in
principal amount of the outstanding Debt Securities of that series.
Any resolution passed or decision taken at any meeting of Holders of Debt
Securities of any series duly held in accordance with the Indenture will be
binding on all Holders of Debt Securities of that series and the related
coupons.
Events of Default
The Indenture provides that the following shall constitute Events of
Default with respect to any series of Debt Securities thereunder: (i) default
in payment of principal of or premium, if any, on any Debt Security of such
series when due; (ii) default for 30 days in payment of interest on any Debt
Security of such series when due; (iii) default in the deposit of any sinking
fund payment on any Debt Security of such series when due; (iv) default in
performance of any other covenant in such Indenture, continued for 30 days
after written notice thereof by the Trustee thereunder or the holders of 25% in
principal amount of the Debt Securities of such series at the time outstanding;
(v) default resulting in acceleration of maturity of any other indebtedness of
the Company or any Restricted Subsidiary provided that such acceleration has
not been rescinded or annulled within 10 days of written notice; and (vi)
certain events of bankruptcy, insolvency or reorganization. (Section 501) The
Company is required to file with each Trustee annually an Officers' Certificate
as to the absence of certain defaults under the terms of the Indenture.
(Section 1010)
The Indenture provides that if an Event of Default specified therein
shall occur and be continuing, either the Trustee or the holders of 25% in
principal amount of the Debt Securities of such series then outstanding may
declare the principal of all such Debt Securities (or in the case of Original
Issue Discount Securities, such portion of the principal amount thereof as may
be specified in the terms thereof) to be due and payable. (Section 502) In
certain cases, the holders of a majority in principal amount of the outstanding
Debt Securities of any series may on behalf of the holders of all such Debt
Securities and any related coupons waive any past default or event of default
except a default not theretofore cured in payment of the principal of or
premium, if any, or interest on any of the Debt Securities of such series and
any related coupons. (Sections 502 and 513)
The Indenture contains a provision entitling the Trustee, subject to the
duty of such Trustee during default to act with the required standard of care,
to be indemnified by the holders of the Debt Securities of any series or any
related coupons before proceeding to exercise any right or power under the
Indenture with respect to such series at the request of such holders. (Section
603) The Indenture provides that no holder of any Debt Securities of any series
or any related coupons may institute any proceeding, judicial or otherwise, to
enforce the Indenture except in the case of failure of the Trustee, for 60
days, to act after it is given notice of default, a request to enforce the
Indenture by the holders of not less than 25% in aggregate principal amount of
the then outstanding Debt Securities of such series and an offer of reasonable
indemnity to such Trustee. (Section 507) This provision will not prevent any
holder of Debt Securities or any related coupons from enforcing payment of the
principal thereof and premium, if any, and interest thereon at the respective
due dates thereof. (Section 508) The holders of a majority in aggregate
principal amount of the Debt Securities of any series then outstanding may
direct the time, method and place of conducting any proceedings for any remedy
available to the Trustee or exercising any trust or power conferred on it with
respect to the Debt Securities of such series. However, the Trustee may refuse
to follow any direction that conflicts with law or the Indenture or which would
be unjustly prejudicial to holders not joining therein. (Section 512)
The Indenture provides that the Trustee thereunder will, within 90 days
after the occurrence of a default with respect to any series of Debt Securities
thereunder known to it, give to the holders of the Debt Securities of such
series notice of such default if not cured or waived; but, except in the case
of a default in the payment of principal of (or premium, if any), or interest
on, any Debt Securities, the Trustee shall be protected in withholding such
notice if it determines in good faith that the withholding of such notice is in
the interests of the holders of such Debt Securities. (Section 602)
Defeasance
The Company may terminate certain of its obligations under the Indenture
with respect to Debt Securities of any series, including its obligations to
comply with the covenants described under the heading "Restrictive Covenants"
above, with respect to the Debt Securities of such series, on the terms and
subject to the conditions contained in the Indenture, by depositing in trust
with the Trustee money or Government Obligations sufficient to pay the
principal of and interest on the Debt Securities of such series to maturity.
Such deposit and termination is conditioned upon the Company's delivery of (a)
an opinion of nationally recognized independent counsel that the holders of the
Debt Securities of such series will have no federal income tax consequences as
a result of such deposit and termination, (b) an officer's certificate and (c)
if the Debt Securities of such series are then listed on the New York Stock
Exchange, an opinion of counsel that the Debt Securities of such series will
not be delisted as a result of the exercise of this option. Such termination
will not relieve the Company of its obligation to pay when due the principal of
or interest on the Debt Securities of such series if the Debt Securities of
such series are not paid from the money or Government Obligations held by the
Trustee for the payment thereof. (Section 1301)
Concerning the Trustee
The Trustee is also trustee under indentures dated as of June 15, 1984
and September 15, 1986 between it and the Company.
DESCRIPTION OF WARRANTS
The following description of the terms of the Warrants sets forth certain
general terms and provisions of the Warrants to which any Prospectus Supplement
may relate. The particular terms of the Warrants offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply
to the Warrants so offered will be described in the Prospectus Supplement
relating to such Warrants.
Warrants may be offered independently or together with any series of Debt
Securities offered by a Prospectus Supplement and may be attached to or
separate from such Debt Securities. Each series of Warrants will be issued
under a separate warrant agreement ("Warrant Agreement") to be entered into
between the Company and a bank or trust company, as Warrant Agent (the "Warrant
Agent"), all as set forth in the Prospectus Supplement relating to such series
of Warrants. The Warrant Agent will act solely as the agent of the Company in
connection with the certificates for the Warrants (the "Warrant Certificates")
of such series and will not assume any obligation or relationship of agency or
trust for or with any holders of Warrant Certificates or beneficial owners of
Warrants. Copies of the forms of Warrant Agreements, including the forms of
Warrant Certificates, are filed as an exhibit to the Registration Statement to
which this Prospectus pertains. The following summaries of certain provisions
of the forms of Warrant Agreements and Warrant Certificates do not purport to
be complete and are subject to, and are qualified in their entirety by
reference to, all the provisions of the Warrant Agreements and the Warrant
Certificates. Numerical references in parentheses below are to sections of the
Warrant Agreements. Wherever particular sections or defined terms of the
Warrant Agreement are referred to, it is intended that such sections or defined
items shall be incorporated herein by reference.
General
Reference is hereby made to the Prospectus Supplement relating to the
particular series of Warrants, if any, offered thereby for the terms of such
Warrants, including, where applicable: (i) the offering price; (ii) the
currency or currencies in which such Warrants are being offered; (iii) the
designation, aggregate principal amount, currency or currencies, denominations
and terms of the series of Debt Securities purchasable upon exercise of such
Warrants; (iv) the designation and terms of the series of Debt Securities with
which such Warrants are being offered and the number of such Warrants being
offered with each such Debt Security; (v) the date on and after which such
Warrants and the related series of Debt Securities will be transferable
separately; (vi) the principal amount of the series of Debt Securities
purchasable upon exercise of each such Warrant and the price at which and
currency or currencies in which such principal amount of Debt Securities of
such series may be purchased upon such exercise; (vii) the date on which the
right to exercise such Warrants shall commence and the date (the "Expiration
Date") on which such right shall expire; (viii) whether such Warrants are to be
issuable as Bearer Warrants and the terms upon which any Bearer Warrants of
such series may be exchanged for Registered Warrants of such series; (ix)
federal income tax consequences; and (x) any other terms of such Warrants.
Warrant Certificates of each series will be issuable as Registered
Warrants and may be issuable as Bearer Warrants. At the option of the holder
upon request confirmed in writing, and subject to the terms of the relevant
Warrant Agreement, Bearer Warrants of any series will be exchangeable into
Registered Warrants or Bearer Warrants of the same series representing in the
aggregate the number of Warrants surrendered for exchange, and Registered
Warrants of any series will be exchangeable into Registered Warrants of the
same series representing in the aggregate the number of Warrants surrendered
for exchange. Warrant Certificates may be presented for exchange, and
Registered Warrants may be presented for transfer (with the form of transfer
endorsed thereon duly executed), at the corporate trust office of the Warrant
Agent for such series of Warrants (or any other office indicated in the
Prospectus Supplement relating to such series of Warrants) without service
charge and upon payment of any taxes and other governmental charges as
described in the relevant Warrant Agreement. Such transfer or exchange will be
effected when the Warrant Agent for such series of Warrants is satisfied with
the documents of title and identity of the person making the request. Bearer
Warrants will be transferable by delivery. (Section 4.01) Prior to the exercise
of their Warrants, holders of Warrants will not have any of the rights of
holders of the series of Debt Securities purchasable upon such exercise,
including the right to receive payments of principal of, premium, if any, or
interest, if any, on the series of Debt Securities purchasable upon such
exercise, or to enforce any of the covenants in the Indenture. (Section 3.01)
Exercise of Warrants
Each Warrant will entitle the holder thereof to purchase such principal
amount of the related series of Debt Securities at such exercise price as shall
in each case be set forth in, or calculable as set forth in, the Prospectus
Supplement relating to such Warrant. Warrants of a series may be exercised at
the corporate trust office of the Warrant Agent for such series of Warrants (or
any other office indicated in the Prospectus Supplement relating to such series
of Warrants) at any time prior to 5:00 P.M., New York City time, on the
Expiration Date set forth in the Prospectus Supplement relating to such series
of Warrants. After the close of business on the Expiration Date relating to
such series of Warrants (or such later date to which such Expiration Date may
be extended by the Company), unexercised Warrants of such series will become
void. (Sections 2.02 and 2.03)
Warrants of a series may be exercised by delivery to the appropriate
Warrant Agent of payment, as provided in the Prospectus Supplement relating to
such series of Warrants, of the amount required to purchase the principal
amount of the series of Debt Securities purchasable upon such exercise,
together with certain information as set forth on the reverse side of the
Warrant Certificate evidencing such Warrants and, in the case of Bearer
Warrants, compliance with the procedures specified in the applicable Prospectus
Supplement. Such Warrants will be deemed to have been exercised upon receipt of
the exercise price, subject to the receipt within five business days of such
Warrant Certificate. Upon receipt of such payment and such Warrant Certificate,
properly completed and duly executed, at the corporate trust office of the
appropriate Warrant Agent (or any other office indicated in the Prospectus
Supplement relating to such series of Warrants), the Company will, as soon as
practicable, issue and deliver the principal amount of the series of Debt
Securities purchasable upon such exercise. Registered Securities will be issued
and delivered upon exercise of Registered Warrants. At the option of the holder
of any Bearer Warrants, Registered Securities or Bearer Securities will be
issued and delivered upon exercise of such Bearer Warrants. If fewer than all
of the Warrants represented by a Registered Warrant are exercised, a new
Registered Warrant will be issued and delivered for the remaining amount of
Warrants. If fewer than all the Warrants represented by a Bearer Warrant are
exercised, at the option of the holder thereof, a new Registered Warrant or
Bearer Warrant will be issued and delivered for the remaining amount of
Warrants. (Section 2.03)
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES AND BEARER WARRANTS
In compliance with United Stated federal tax laws and regulations
regarding the distribution of debt securities in bearer form, Bearer Securities
and Bearer Warrants may not, in connection with their original issuance, be
offered, sold, resold or delivered in the United States or to United States
persons (as defined below) other than to offices located outside the United
States of certain United States financial institutions that agree in writing to
comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the
Internal Revenue Code of 1986 (the "Code") and the regulations thereunder, and
any underwriters, agents and dealers participating in the offering of Bearer
Securities or Bearer Warrants will agree that they will not offer any Bearer
Securities or Bearer Warrants for sale or resale in the United States or to
United States persons (other than the financial institutions described above)
or deliver Bearer Securities or Bearer Warrants within the United States. In
addition, any such underwriters, agents and dealers will agree to send
confirmations to each purchaser of a Bearer Security or Bearer Warrant
confirming that such purchaser represents that it is not a United States person
or is a financial institution described above and, if such person is a dealer,
that it will send similar confirmations to purchasers from it. Bearer
Securities will bear a legend substantially to the following effect: "Any
United States person who holds this obligation will be subject to limitations
under the United States income tax laws, including the limitations provided in
Sections 165(j) and 1287(a) of the Internal Revenue Code."
Generally, for United States federal income tax purposes, any United
States person who holds a Bearer Security will not be allowed to deduct any
loss sustained on the sale, exchange, redemption or other disposition of such
Bearer Security and will be taxed at ordinary income rates on any gain (which
might otherwise be characterized as capital gain) recognized on such sale,
exchange, redemption or disposition.
As used herein, "United States" mean the United States of America
(including the States and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction, and "United States
person" means an individual who is a citizen or resident of the United States,
a corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, or any estate
or trust the income of which is subject to United States federal income
taxation regardless of its source.
Pending the availability of a permanent Global Security or definitive
Bearer Securities, as the case may be, Debt Securities that are issuable as
Bearer Securities may initially be represented by a single temporary Global
Security, with or without interest coupons, each to be deposited with a
depositary in London for Morgan Guaranty Trust Company of New York, Brussels
Office, as operator of the Euroclear System ("Euroclear") and Centrale de
Livraisons de Valeurs Mobilieres, S.A. ("CEDEL S.A.") for credit to the
designated accounts against certifications to the effect described below.
Following the availability of a permanent Global Security or definitive forms
of Bearer Securities and subject to any further limitations described in the
applicable Prospectus Supplement, the temporary Global Security will be
exchangeable for a permanent Global Security or for definitive Bearer
Securities, respectively, only upon certification that an interest in such
permanent Global Security or such definitive Bearer Securities is not being
acquired by or on behalf of a United States person or, if a beneficial interest
in such a Bearer Security is being acquired by or on behalf of a United States
person, that such United States person is a financial institution described
above; provided, however, that no definitive Bearer Security will be issued if
the Company has reason to know that such certificate is false. No definitive
Bearer Security will be delivered in or to the United States. If so specified
in the applicable Prospectus Supplement, interest in respect of any portion of
the temporary Global Security payable in respect of an Interest Payment Date
prior to the issuance of a permanent Global Security or definitive Bearer
Securities of any series will be paid to each of Euroclear and CEDEL S.A. with
respect to the portion of the temporary Global Security held for its account.
Each of Euroclear and CEDEL S.A. will undertake in such circumstances to credit
such interest received by it in respect of the temporary Global Security to the
respective accounts for which it holds the temporary Global Security only upon
receipt in each case of (i) certification that as of the relevant interest
payment date the portion of the temporary Global Security on which such
interest is to be so credited is not beneficially owned by a United States
person or any person who has purchased its interest in the temporary Global
Security for resale to any United States person or (ii) if a beneficial
interest in the portion of the temporary Global Security on which such interest
is to be so credited is beneficially owned by a United States person or any
person who has purchased its interest in the temporary Global Security for
resale to any United States person, certification that such United States
person is a financial institution described above.
Bearer Warrants will be issued only on receipt of a certification that
the Bearer Warrant in question is not being acquired by or on behalf of a
United States person or, if a beneficial interest in such Bearer Warrant is
being acquired by or on behalf of a United States person, that such United
States person is a financial institution described above.
PLAN OF DISTRIBUTION
The Company may offer and sell Debt Securities and Warrants, separately
or together, to or through underwriters, acting as principals for their own
accounts and/or as agents, and also may offer and sell Debt Securities and
Warrants, separately or together, directly to dealers or other purchasers. Any
such Debt Securities and Warrants may be offered and sold upon their original
issuance or, if so indicated in the Prospectus Supplement, in connection with a
remarketing upon their purchase by or on behalf of the Company, whether in
accordance with a redemption or repayment pursuant to their terms, in the open
market or otherwise. Any underwriter and/or agent will be identified and the
terms of its agreement with the Company and its compensation will be described
in the Prospectus Supplement. Only underwriters named in the Prospectus
Supplement are deemed to be underwriters in connection with the Debt Securities
or Warrants offered thereby.
Debt Securities and Warrants, separately or together, also may be offered
and sold, if so indicated in the Prospectus Supplement, in connection with a
remarketing upon their purchase, in accordance with a redemption or repayment
pursuant to their terms, by one or more firms ("remarketing firms") acting as
principals for their own accounts or as agents for the Company. Any remarketing
firm will be identified and the terms of its agreement, if any, with the
Company and its compensation will be described in the Prospectus Supplement.
Remarketing firms may be deemed to be underwriters in connection with the Debt
Securities and Warrants remarketed thereby.
The distribution of the Debt Securities and Warrants may be effected from
time to time in one or more transactions at a fixed price or prices, which may
be changed, or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.
In connection with the sale of Debt Securities and Warrants, dealers may
receive compensation from the Company or from purchasers of Debt Securities or
Warrants for whom they may act as agents, in the form of discounts, concessions
or commissions. The dealers that participate in the distribution of Debt
Securities or Warrants may be deemed to be underwriters and any discounts or
commissions received by them and any profit on the resale of Debt Securities or
Warrants by them may be deemed to be underwriting discounts and commissions
under the Act. Any such compensation will be described in the Prospectus
Supplement.
Under agreements that may be entered into with the Company, underwriters,
dealers, agents and remarketing firms may be entitled to indemnification by the
Company against certain liabilities, including liabilities under the Act.
Underwriters, dealers, agents and remarketing firms may be customers of, engage
in transactions with, or perform services for the Company in the ordinary
course of business.
If so indicated in the Prospectus Supplement, the Company will authorize
dealers or other persons acting as the Company's agents to solicit offers by
certain institutions to purchase Debt Securities or Warrants from the Company
pursuant to contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will not be subject to any conditions except that (i)
the purchase of the Debt Securities or Warrants shall not at the time of
delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject, and (ii) if the series of Debt Securities or Warrants
being sold to such institutions are also being sold to underwriters, the
Company shall have sold to such underwriters the Debt Securities or Warrants
not sold for delayed delivery. The dealers and such other persons will not have
any responsibility in respect of the validity of performance of such contracts.
Each underwriter, dealer, agent and remarketing firm participating in the
distribution of any Debt Securities that are issuable as Bearer Securities will
agree that it will not offer, sell or deliver, directly or indirectly, Bearer
Securities in the United States or to United States persons (other than
qualifying financial institutions) in connection with the original issuance of
such Debt Securities.
For as long as Part III of The Companies Act 1985 remains in force in
relation to the Debt Securities or the Warrants, as the case may be, neither
the Debt Securities nor the Warrants may be offered or sold in the United
Kingdom, by means of this Prospectus, any Prospectus Supplement or any other
document, other than to persons whose ordinary business it is to buy or sell
shares or debentures (whether as principal or agent) or in circumstances which
do not constitute an offer to the public within the meaning of The Companies
Act 1985. All applicable provisions of The Financial Services Act 1986 must be
complied with in respect of anything done or to be done in relation to the Debt
Securities or the Warrants in, from or otherwise involving the United Kingdom.
Furthermore, each underwriter, dealer, agent and remarketing firm participating
in the distribution of Debt Securities or Warrants will agree that it will only
issue or pass on to any person in the United Kingdom any document received by
it in connection with the issue of such Debt Securities or Warrants if that
person is of a kind described in Article 9(3) of The Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1988. Once the provisions
of Part V of The Financial Services Act 1986 come into force in relation to the
Debt Securities or the Warrants, no advertisement may be issued in the United
Kingdom offering the Debt Securities or the Warrants, as the case may be, in
circumstances which would require (for the avoidance of any contravention of
those provisions) a prospectus to have been delivered to the Registrar of
Companies.
LEGAL MATTERS
The validity of the Debt Securities and Warrants offered hereby will be
passed upon for the Company by Allan L. Ronquillo, Esq., Vice President and
General Counsel of the Company, and for any underwriters and agents by Brown &
Wood, New York, New York. Mr. Ronquillo will rely as to all matters of New York
law on the opinion of Brown & Wood, and Brown & Wood will rely as to all
matters of Michigan law on the opinion of Mr. Ronquillo. Mr. Ronquillo holds
795 shares of Chrysler's common stock and options to purchase 18,920 shares of
Chrysler's common stock. Brown & Wood may from time to time render legal
services to the Company and its affiliates.
EXPERTS
The consolidated financial statements and the related financial statement
schedule of the Company as of December 31, 1995 and 1994 and for each of the
three years in the period ended December 31, 1995 incorporated in this
prospectus by reference from the Company's Annual Report on Form 10-K for the
year ended December 31, 1995, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports, which are incorporated herein
by reference, and have been so incorporated in reliance upon the reports of
such firm given upon their authority as experts in accounting and auditing.
<PAGE>
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No dealer, salesman or any other
person has been authorized to give
any information, or to make any
representations, other than those
contained in this Prospectus
Supplement or the Prospectus, in
connection with the offer $300,000,000
contained in this Prospectus
Supplement and the Prospectus,
and, if given or made, such
information or representations
must not be relied upon as having
been authorized by the Company or
any Underwriter. Neither the
delivery of this Prospectus
Supplement and the Prospectus nor Chrysler Financial Corporation
any sale made hereunder and
thereunder shall under any
circumstances create an
implication that there has been no
change in the affairs of the
Company since the date hereof. 5-7/8% Notes due 2001
This Prospectus Supplement and the
Prospectus are not an offer to
sell or a solicitation of an offer
to buy any security in any
jurisdiction in which it is
unlawful to make such an offer or
solicitation.
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TABLE OF CONTENTS PROSPECTUS SUPPLEMENT
Page -----------------------
Prospectus Supplement
Description of Notes............ S-2
Underwriting.................... S-3
Prospectus
Available Information........... 2
Incorporation of Certain
Documents by Reference........ 2
Chrysler Financial Corporation.. 3
Chrysler Financial Corporation
Selected Consolidated
Financial Data................ 5 Bear, Stearns & Co. Inc.
Information Concerning Chrysler J.P. Morgan Securities Inc.
Corporation................... 8
Ratio of Earnings to Fixed
Charges....................... 11
Use of Proceeds................. 12
Description of Debt Securities.. 12
Description of Warrants......... 18
Limitations of Issuance
of Bearer Securities and
Bearer Warrants............... 20
Plan of Distribution............ 21
Legal Matters................... 23
Experts......................... 23 January 25, 1996
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