<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to __________________
Commission file number: 1-9161
CHRYSLER CORPORATION
- - ------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 38-2673623
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12000 Chrysler Drive, Highland Park, Michigan 48288-0001
- - ---------------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
(313) 956-5741
- - ------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /
The registrant had 354,090,138 shares of common stock outstanding as of March
31, 1994.
<PAGE> 2
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements 1-5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-9
Part II. OTHER INFORMATION
Item 5. Other Information 10-12
Item 6. Exhibits and Reports on Form 8-K 13
Signature Page 14
Exhibit Index 15
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (unaudited)
For the Three Months Ended March 31, 1994 and 1993
(In millions of dollars)
<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Sales of manufactured products $ 12,551 $ 10,238
Finance and insurance income 343 375
Other income 329 291
------------- -------------
TOTAL SALES AND REVENUES 13,223 10,904
------------- -------------
Costs, other than items below 9,606 8,081
Depreciation of property and equipment 276 251
Amortization of special tools 230 215
Selling and administrative expenses 955 771
Pension expense 177 213
Nonpension postretirement benefit expense 203 194
Interest expense 233 299
------------- -------------
TOTAL COSTS AND EXPENSES 11,680 10,024
------------- -------------
EARNINGS BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 1,543 880
Provision for income taxes 605 350
------------- -------------
EARNINGS BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 938 530
Cumulative effect of changes in accounting principles (Note 3) -- (4,966)
------------- -------------
NET EARNINGS (LOSS) $ 938 $ (4,436)
Preferred stock dividends 20 20
------------- -------------
NET EARNINGS (LOSS) ON COMMON STOCK $ 918 $ (4,456)
------------- -------------
------------- -------------
(In dollars or millions of shares)
Primary earnings (loss) per common share:
Earnings before cumulative effect of changes in accounting
principles $ 2.55 $ 1.57
Cumulative effect of changes in accounting principles -- (15.25)
------------- --------------
Net earnings (loss) per common share $ 2.55 (13.68)
------------- --------------
------------- --------------
Average common and dilutive equivalent shares outstanding 360.1 325.6
Fully diluted earnings per common share:
Earnings before cumulative effect of changes in accounting
principles $ 2.30 $ --
Cumulative effect of changes in accounting principles -- --
------------- --------------
Net earnings per common share $ 2.30 $ --
------------- --------------
------------- --------------
Average common and dilutive equivalent shares outstanding 408.3 --
Dividends declared per common share $ 0.20 $ 0.15
</TABLE>
_____________________________
See notes to consolidated financial statements.
1
<PAGE> 4
Item 1. FINANCIAL STATEMENTS - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In millions of dollars)
<TABLE>
<CAPTION>
1994 1993
------------- ------------------------------
March 31 Dec. 31 March 31
------------- ------------- -------------
(unaudited) (unaudited)
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 5,385 $ 4,040 $ 3,861
Marketable securities 1,105 1,055 1,243
Accounts receivable - trade and other 2,780 1,799 2,071
Inventories (Note 2) 3,462 3,629 3,388
Prepaid taxes, pension and other expenses 773 833 691
Finance receivables and retained interests in sold
receivables and other related amounts 10,553 10,208 12,022
Property and equipment 9,417 9,319 8,636
Special tools 3,371 3,455 2,885
Intangible assets 4,304 4,328 4,597
Deferred tax assets 1,879 2,210 2,658
Other assets 2,855 2,954 1,769
------------- ------------ ------------
TOTAL ASSETS $ 45,884 $ 43,830 $ 43,821
------------- ------------ ------------
------------- ------------ ------------
LIABILITIES:
Accounts payable $ 7,320 $ 6,863 $ 6,398
Short-term debt 3,687 3,297 1,902
Payments due within one year on long-term debt 1,196 1,283 1,193
Accrued liabilities and expenses 5,061 4,650 4,726
Long-term debt 7,343 6,871 10,881
Accrued noncurrent employee benefits 10,065 10,613 10,289
Other noncurrent liabilities 3,547 3,417 3,424
------------- ------------ ------------
TOTAL LIABILITIES 38,219 36,994 38,813
------------- ------------ ------------
SHAREHOLDERS' EQUITY: (shares in millions)
Preferred stock - $1 per share par value; authorized
20.0 shares; Series A Convertible Preferred Stock;
issued: 1994 and 1993 - 1.7 shares (aggregate
liquidation preference $863 million) 2 2 2
Common stock - $1 per share par value; authorized
500.0 shares; issued: 1994 and 1993 - 364.1 shares 364 364 364
Additional paid-in capital 5,532 5,533 5,547
Retained earnings (accumulated deficit) 1,996 1,170 (588)
Treasury stock - at cost: 1994 - 10.0 shares;
1993 - 10.4 and 15.0 shares, respectively (229) (233) (317)
------------- ------------ ------------
TOTAL SHAREHOLDERS' EQUITY 7,665 6,836 5,008
------------- ------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 45,884 $ 43,830 $ 43,821
------------- ------------ ------------
------------- ------------ ------------
</TABLE>
_____________________________
See notes to consolidated financial statements.
2
<PAGE> 5
Item 1. FINANCIAL STATEMENTS - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
For the Three Months Ended March 31, 1994 and 1993
(In millions of dollars)
<TABLE>
<CAPTION>
1994 1993
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 938 $ (4,436)
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization 506 466
Provision for credit losses 48 52
Deferred income tax provision 287 273
Cumulative effect of changes in accounting principles -- 4,966
Change in accounts receivable (982) (223)
Change in inventories 144 (298)
Change in prepaid expenses and other assets 18 22
Change in accounts payable and accrued and other liabilities 514 (599)
Other 7 14
----------- ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,480 237
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (1,097) (1,823)
Sales and maturities of marketable securities 1,038 1,872
Finance receivables acquired (4,401) (4,237)
Finance receivables collected 1,081 1,106
Proceeds from sales of finance receivables 2,926 2,010
Proceeds from sales of nonautomotive assets -- 2,267
Expenditures for property and equipment (435) (245)
Expenditures for special tools (148) (204)
Other 215 178
----------- ------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (821) 924
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in short-term debt (less than 90-day maturities) 390 1,122
Proceeds under revolving lines of credit and long-term borrowings 610 2,175
Payments on revolving lines of credit and long-term borrowings (226) (4,874)
Proceeds from issuance of common stock, net of expenses -- 1,952
Dividends paid (91) (64)
Other 3 32
----------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 686 343
----------- ------------
Change in cash and cash equivalents 1,345 1,504
Cash and cash equivalents at beginning of period 4,040 2,357
----------- ------------
Cash and cash equivalents at end of period $ 5,385 $ 3,861
----------- ------------
----------- ------------
</TABLE>
_____________________________
See notes to consolidated financial statements.
3
<PAGE> 6
Item 1. FINANCIAL STATEMENTS - Continued
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Consolidation and Financial Statement Presentation
The consolidated financial statements of Chrysler Corporation and its
consolidated subsidiaries ("Chrysler") include the accounts of all significant
majority-owned subsidiaries and entities. Intercompany accounts and
transactions have been eliminated in consolidation. The unaudited consolidated
financial statements of Chrysler for the three months ended March 31, 1994 and
1993 reflect all adjustments, consisting of only normal and recurring items
(with the exception of the items discussed in Note 3), which are, in the
opinion of management, necessary to present a fair statement of the results for
the interim periods. The operating results for the three months ended March
31, 1994 are not necessarily indicative of the results of operations for the
entire year. Reference should be made to the consolidated financial statements
included in the Annual Report on Form 10-K for the year ended December 31,
1993. Amounts for 1993 have been reclassified to conform with current period
classifications.
Note 2. Inventories
Inventories, summarized by major classification, were as follows:
<TABLE>
<CAPTION>
1994 1993
--------------- ------------------------------
March 31 Dec. 31 March 31
--------------- ------------- ------------
(In millions of dollars)
<S> <C> <C> <C>
Finished products, including service parts $ 1,013 $ 1,016 $ 1,127
Raw materials, finished production parts and supplies 1,138 1,177 1,115
Vehicles held for short-term lease 1,311 1,436 1,146
----------- ----------- -----------
TOTAL $ 3,462 $ 3,629 $ 3,388
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Note 3. Changes in Accounting Principles
Certain Investments in Debt and Equity Securities
Effective January 1, 1994, Chrysler adopted Statement of Financial Accounting
Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." This new accounting standard specifies the accounting and
reporting requirements for changes in the fair values of investments in debt
and equity securities which have readily determinable fair values.
Under SFAS No. 115, these debt and equity securities are categorized into one
of the following categories--trading, available-for-sale and held-to-maturity.
Trading securities and available-for-sale securities are carried at their fair
values. Changes in the fair value of trading securities are included in
earnings immediately. Changes in the fair value of available-for-sale
securities are recorded as a component of shareholders' equity until realized.
Held-to-maturity securities are carried at cost adjusted for amortized premium
or discount.
At January 1, 1994, Chrysler had investments in securities accounted for in
accordance with SFAS No. 115 with an aggregate carrying value of $4.7 billion,
consisting primarily of commercial paper, federal government agency securities
and corporate debt. Substantially all of these securities are categorized as
available-for-sale, and have maturities within one year. Adoption of this
accounting standard did not have a material effect on Chrysler's financial
statements at January 1, 1994.
4
<PAGE> 7
Item 1. FINANCIAL STATEMENTS - Continued
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
Note 3. Changes in Accounting Principles - Continued
Nonpension Postretirement Benefits
Effective January 1, 1993, Chrysler adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," which requires the
accrual of such benefits during the years the employees provide services. The
adoption of this accounting standard resulted in an after-tax charge of $4.68
billion, or $14.38 per common share. This one-time charge represented the
immediate recognition of the SFAS No. 106 transition obligation of $7.44
billion, partially offset by $2.76 billion of estimated tax benefits. The SFAS
No. 106 transition obligation was the aggregate amount that would have been
accrued in the years prior to the adoption of SFAS No. 106, had this standard
been in effect for those years. Implementation of SFAS No. 106 did not
increase Chrysler's cash expenditures for nonpension postretirement benefits.
Postemployment Benefits
Effective January 1, 1993, Chrysler adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." This accounting standard requires the
accrual of benefits provided to former or inactive employees after employment
but prior to retirement. Adoption of this accounting standard resulted in the
recognition of an after-tax charge of $283 million, or $0.87 per common share.
Adoption of SFAS No. 112 did not increase Chrysler's cash expenditures for
postemployment benefits. Previously reported results for the three months
ended March 31, 1993 have been restated to reflect the adoption of SFAS No. 112
effective January 1, 1993.
Impaired Loans
In May 1993, the Financial Accounting Standards Board issued SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan," effective for fiscal years
beginning after December 15, 1994. This new accounting standard requires
creditors to evaluate the collectibility of both contractual interest and
principal of receivables when evaluating the need for a loss accrual. Chrysler
has not determined the impact that the adoption of this accounting standard
will have on its consolidated operating results or financial position.
Chrysler plans to adopt this standard on or before January 1, 1995, as
required.
Note 4. Sales of Automotive Assets and Investments
During the first quarter of 1994, Chrysler sold the wiring harness operations
of its Acustar division, and entered into a long-term supply agreement with the
purchaser. Aggregate net proceeds from the sale and the supply agreement were
approximately $225 million. The related pretax gain of approximately $196
million has been deferred and will be recognized over the five-year term of the
supply agreement.
5
<PAGE> 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL REVIEW
Chrysler Corporation and its consolidated subsidiaries ("Chrysler") reported
earnings before income taxes and the cumulative effect of changes in accounting
principles of $1.5 billion for the first quarter of 1994, compared with $880
million for the first quarter of 1993. The substantial improvement in
operating results in the first quarter of 1994 over the first quarter of 1993
resulted from an increase in sales volume and pricing actions, including lower
per unit sales incentives, partially offset by increased advertising and
employee costs. Chrysler's worldwide factory car and truck sales for the three
months ended March 31, 1994 were 740,598 units, a 15 percent increase from the
first quarter of 1993. Combined U.S. and Canadian dealers' days supply of
vehicle inventory decreased to 50 days at March 31, 1994 from 63 days at
December 31, 1993 and 64 days at March 31, 1993.
Net earnings for the first quarter of 1994 were $938 million, or $2.55 per
common share, compared with a net loss of $4.4 billion, or $13.68 per common
share, in the first quarter of 1993. The net loss for the first quarter of
1993 resulted from a charge of $4.7 billion, or $14.38 per common share, for
the cumulative effect of a change in accounting principle related to the
adoption of Statement of Financial Accounting Standards ("SFAS") No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions." First
quarter 1993 results also included a charge of $283 million, or $0.87 per
common share, for the cumulative effect of a change in accounting principle
relating to the adoption of SFAS No. 112, "Employers' Accounting for
Postemployment Benefits."
In the first quarter of 1994, North American vehicle industry retail sales,
on a Seasonally Adjusted Annual Rate basis, were 17.2 million cars and trucks,
compared to 14.7 million units for the first quarter of 1993, an increase of 17
percent. Chrysler's U.S. and Canada combined retail car and truck market share
for the three months ended March 31, 1994 remained level with the three months
ended March 31, 1993, as an increase in truck market share was offset by a
decrease in car market share, as shown in the following table:
<TABLE>
<CAPTION>
First Quarter
--------------------------------
Inc./
1994 1993 (Dec.)
-------- -------- ---------
<S> <C> <C> <C>
U.S. Retail Market Share (1):
Car 9.8% 10.5% (0.7)%
Truck 23.2% 22.4% 0.8 %
Combined U.S. Car and Truck 15.3% 15.2% 0.1 %
U.S. and Canada Combined Retail Market Share (1) 15.7% 15.7% --
</TABLE>
_____________________________
(1) All market share data include fleet sales.
Although the number of Chrysler cars sold in the U.S. retail market
increased approximately 8 percent in the first quarter of 1994 as compared to
the first quarter of 1993, Chrysler's U.S. retail car market share declined.
The increase in U.S. truck market share for the three months reflects increased
sales in the full-size pickup truck and sport-utility market segments,
resulting from the introduction of Chrysler's all-new Dodge Ram pickup truck in
1993 and the continued success of Jeep vehicles.
The earnings of Chrysler Financial Corporation ("CFC") before income
taxes and the cumulative effect of changes in accounting principles for the
first quarter of 1994 were $75 million, compared to $50 million in the first
quarter of 1993. The increase in first quarter 1994 operating results compared
to the first quarter of 1993 was primarily the result of higher levels of
automotive financing. CFC reported net earnings of $47 million and $7 million
for the first quarter of 1994 and 1993, respectively. CFC's net earnings for
the first quarter of 1993 included charges totaling $30 million for the
adoptions of SFAS No. 106 and SFAS No. 112.
6
<PAGE> 9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - Continued
FINANCIAL REVIEW - Continued
Chrysler is primarily a North American automotive company. During the
first quarter of 1994, North American automobile industry sales increased as
the economic recovery continued. Chrysler experienced sales growth consistent
with the North American automobile industry. In response to this continued
economic recovery, Chrysler revised its product development and productive
asset acquisition plans to increase its production capacity by approximately
500,000 units per year by 1996. These planned capacity expansions increased
Chrysler's projected spending for new product development and the acquisition
of productive assets, and could result in the hiring of up to 6,000 new
employees by the end of 1996.
COMPARISON OF SELECTED ELEMENTS OF REVENUE AND COSTS
Chrysler's total sales and revenues for the three months ended March 31,
1994 and 1993 were as follows:
<TABLE>
<CAPTION>
First Quarter
---------------------------------------
Inc./
1994 1993 (Dec.)
----------- ----------- ----------
(In millions of dollars)
<S> <C> <C> <C>
Sales of manufactured products $ 12,551 $ 10,238 23 %
Finance and insurance income 343 375 (9)%
Other income 329 291 13 %
----------- -----------
Total sales and revenues $ 13,223 $ 10,904 21 %
----------- -----------
----------- -----------
</TABLE>
The increase in sales of manufactured products in the first quarter of
1994 primarily reflects a 15 percent increase in the factory unit sales to
740,598 in the first quarter of 1994, and an increase in the average revenue per
unit, net of sales incentives, from $16,006 in the first quarter of 1993 to
$16,823 in the first quarter of 1994. The increase in average revenue per unit
in 1994 was largely due to an improved mix of higher-priced, full-size pickup
trucks and pricing actions, including lower per unit sales incentives.
The decreased finance and insurance income in the first quarter of 1994
as compared to the first quarter of 1993 was primarily the result of reduced
nonautomotive financing revenue, resulting from sales and liquidations of
nonautomotive financing operations during 1993. Total automotive financing
volume in the first quarter of 1994 and 1993 was $17.1 billion and $14.1
billion, respectively. Financing support provided in the U.S. by CFC for new
Chrysler vehicle retail deliveries (including fleet) and wholesale vehicle sales
to dealers and the number of vehicles financed during the three months ended
March 31, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
First Quarter
---------------------
1994 1993
--------- ---------
<S> <C> <C>
U.S. Penetration:
Retail 24 % 23 %
Wholesale 71 % 71 %
Number of New Chrysler Vehicles Financed in the U.S. (in thousands):
Retail 137 111
Wholesale 423 377
</TABLE>
7
<PAGE> 10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - Continued
COMPARISON OF SELECTED ELEMENTS OF REVENUE AND COSTS - Continued
Total costs and expenses for the first quarter of 1994 and 1993 were as
follows:
<TABLE>
<CAPTION>
First Quarter
---------------------------------------
Inc./
1994 1993 (Dec.)
------------ ---------- ----------
(In millions of dollars)
<S> <C> <C> <C>
Costs, other than items below $ 9,606 $ 8,081 19 %
Depreciation of property and equipment 276 251 10 %
Amortization of special tools 230 215 7 %
Selling and administrative expenses 955 771 24 %
Pension expense 177 213 (17)%
Nonpension postretirement benefit expense 203 194 5 %
Interest expense 233 299 (22)%
---------- -----------
Total costs and expenses $ 11,680 $ 10,024 17 %
---------- -----------
---------- -----------
</TABLE>
Costs, other than items below increased in the first quarter of 1994
primarily as a result of the 15 percent increase in factory unit sales, and
sales of an increased proportion of higher-priced products, primarily full-size
pickup trucks. Costs, other than items below were 77 percent and 79 percent of
sales of manufactured products for the three months ended March 31, 1994 and
1993, respectively. This decrease was primarily attributable to improved
capacity utilization and an increased mix of higher-margin full-size pickup
trucks.
The increase in depreciation of property and equipment for the three
months ended March 31, 1994, as compared to the corresponding 1993 period is the
result of Chrysler's facility modernization program and related obsolescence
costs for certain renovated facilities, partially offset by lower depreciation
at CFC reflecting the sales of CFC's nonautomotive operations.
Special tooling amortization increased in the first quarter of 1994
compared with the first quarter of 1993 as tooling amortization associated with
current models exceeded the tooling amortization associated with previously
discontinued models.
The increase in selling and administrative expenses for the first
quarter of 1994, as compared to the first quarter of 1993, primarily resulted
from increased advertising expenses related to the introduction of the Dodge
and Plymouth Neon, and increased employee costs.
Pension expense decreased for the three months ended March 31, 1994 as
compared to the corresponding period of 1993 due to the improved funding of the
plans (including the $3.5 billion in contributions made in 1993) and the cost of
early retirement programs in the first quarter of 1993. These decreases were
partially offset by the reduction in the discount rate used to measure the
projected benefit obligation and scheduled increases in benefits included in the
1993 national contracts with Chrysler's principal collective bargaining units.
Nonpension postretirement benefit expense increased in 1994 due to the
decrease in the discount rate used to measure the accumulated nonpension
postretirement benefit obligation.
The decrease in interest expense for 1994 was primarily due to lower
average borrowings. The reduced average borrowings resulted from CFC's first
quarter 1993 sales of its nonautomotive financing operations and higher levels
of sold receivables, and Chrysler's early redemption of $769 million of its
outstanding debt in the fourth quarter of 1993. CFC's average effective cost of
borrowings decreased to 8.4 percent in the first quarter of 1994 from 8.8
percent in the first quarter of 1993. This decrease primarily reflects the
repayment of bank borrowings and increased use of lower cost commercial paper.
8
<PAGE> 11
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - Continued
LIQUIDITY AND CAPITAL RESOURCES
Chrysler's combined cash, cash equivalents and marketable securities
totaled $6.5 billion at March 31, 1994 (including $554 million held by CFC), an
increase of $1.4 billion from December 31, 1993. The increase in the first
quarter of 1994 was the result of cash generated by operating activities and
issuances of debt by CFC, partially offset by pension contributions and capital
expenditures. Chrysler believes that cash from operations and its cash
position will be sufficient to enable it to meet its funding requirements.
During the first quarter of 1994, Chrysler revised its near-term new
product development and productive asset acquisition plans to include various
actions intended to increase the capacity at several of its facilities.
Chrysler currently expects to spend approximately $21 billion in the 1994 to
1998 period for new product development and the acquisition of productive
assets.
Chrysler's projected pension benefit obligation in excess of plan assets
was $2.2 billion at December 31, 1993. Chrysler contributed $684 million to
the pension fund in the first quarter of 1994. Chrysler's objective is to
fully fund its pension obligation by the end of 1995. At March 31, 1994,
Chrysler (excluding CFC), had debt maturities of $422 million remaining in
1994, $287 million in 1995, and $42 million in 1996.
Chrysler's ability to market its products successfully depends
significantly on the availability of inventory financing for its dealers and,
to a lesser extent, the availability of financing for retail and fleet
purchasers of its products, both of which CFC provides.
Receivable sales continued to be a cost-effective source of funding for
CFC, which realized $1.7 billion of net proceeds from the sale of retail
receivables in the first quarter of 1994, compared to $1.3 billion in the first
quarter of 1993. In addition, CFC's revolving wholesale receivable sale
arrangements provided funding which aggregated $4.6 billion and $4.4 billion at
March 31, 1994 and 1993, respectively.
At March 31, 1994, CFC had U.S. and Canadian credit facilities totaling
$5.2 billion and receivable sale agreements totaling $2.9 billion. At March
31, 1994, none of CFC's U.S. and Canadian credit facilities or receivable sale
agreements were utilized. In April 1994, CFC began the process of negotiating
the early replacement of its U.S. and Canadian revolving credit facilities and
receivable sale agreements.
At March 31, 1994, CFC had debt maturities of $4.2 billion during the
remainder of 1994 (including $3.1 billion of commercial paper), $625 million in
1995, and $1.1 billion in 1996. CFC believes that cash provided by operations,
receivable sales, access to term debt markets, and issuance of commercial paper
will be sufficient to enable CFC to meet its funding requirements.
NEW ACCOUNTING STANDARD
In May 1993, the Financial Accounting Standards Board issued SFAS No.
114, "Accounting by Creditors for Impairment of a Loan," effective for fiscal
years beginning after December 15, 1994. This new accounting standard requires
creditors to evaluate the collectibility of both contractual interest and
principal when evaluating the need for a loss accrual. Chrysler has not
determined the impact that the adoption of this accounting standard will have
on its consolidated operating results or financial position. Chrysler plans to
adopt this standard on or before January 1, 1995, as required.
REVIEW BY INDEPENDENT ACCOUNTANTS
Deloitte & Touche, Chrysler's independent public accountants, performed a
review of the financial statements for the three months ended March 31, 1994
and 1993 in accordance with the standards for such reviews established by the
American Institute of Certified Public Accountants. The review did not
constitute an audit, and accordingly, Deloitte & Touche did not express an
opinion on the aforementioned data. Refer to the Independent Accountants'
Report included at Exhibit 15A.
9
<PAGE> 12
PART II. OTHER INFORMATION
Item 5. OTHER INFORMATION SUPPLEMENTAL INFORMATION
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
STATEMENT OF EARNINGS (unaudited)
For the Three Months Ended March 31, 1994 and 1993
(In millions of dollars)
<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Sales of manufactured products $ 12,634 $ 10,434
Equity in earnings of unconsolidated subsidiaries and affiliates 50 22
Other income 5 2
------------- -------------
TOTAL SALES AND REVENUES 12,689 10,458
------------- -------------
Costs, other than items below 9,518 8,100
Depreciation of property and equipment 255 217
Amortization of special tools 230 215
Selling and administrative expenses 764 592
Pension expense 175 211
Nonpension postretirement benefit expense 202 193
Interest expense 2 50
------------- -------------
TOTAL COSTS AND EXPENSES 11,146 9,578
------------- -------------
EARNINGS BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 1,543 880
Provision for income taxes 605 350
------------- -------------
EARNINGS BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 938 530
Cumulative effect of changes in accounting principles -- (4,966)
------------- -------------
NET EARNINGS (LOSS) $ 938 $ (4,436)
Preferred stock dividends 20 20
------------- -------------
NET EARNINGS (LOSS) ON COMMON STOCK $ 918 $ (4,456)
------------- -------------
------------- -------------
</TABLE>
This Supplemental Information, "Chrysler (with CFC and Car Rental Operations on
an Equity Basis)," reflects the results of operations of Chrysler with its
investments in Chrysler Financial Corporation ("CFC") and its investments in
short-term vehicle rental subsidiaries (the "Car Rental Operations") accounted
for on an equity basis rather than as consolidated subsidiaries. This
Supplemental Information does not purport to present results of operations in
accordance with generally accepted accounting principles because it does not
comply with Statement of Financial Accounting Standards ("SFAS") No. 94,
"Consolidation of All Majority-Owned Subsidiaries." The financial covenants
contained in certain of Chrysler's credit facilities are based on this
Supplemental Information. In addition, because the operations of CFC and the
Car Rental Operations are different in nature than Chrysler's manufacturing
operations, management believes that this disaggregated financial data enhances
an understanding of the consolidated financial statements.
10
<PAGE> 13
Item 5. OTHER INFORMATION - Continued
SUPPLEMENTAL INFORMATION
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
BALANCE SHEET (unaudited)
(In millions of dollars)
<TABLE>
<CAPTION>
1994 1993
------------- ------------------------------
March 31 Dec. 31 March 31
------------- ------------- --------------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 5,185 $ 3,777 $ 3,505
Marketable securities 751 707 902
Accounts receivable - trade and other 959 805 1,298
Inventories 2,416 2,483 2,515
Prepaid taxes, pension and other expenses 680 713 505
Property and equipment 8,921 8,820 8,112
Special tools 3,371 3,455 2,885
Investments in and advances to unconsolidated subsidiaries
and affiliated companies 3,688 3,685 3,734
Intangible assets 3,864 3,882 4,122
Deferred tax assets 3,363 3,642 4,115
Other assets 2,089 2,051 521
------------- ------------- --------------
TOTAL ASSETS $ 35,287 $ 34,020 32,214
------------- ------------- --------------
------------- ------------- --------------
LIABILITIES:
Accounts payable $ 6,592 $ 6,074 $ 5,632
Short-term debt 103 100 106
Payments due within one year on long-term debt 547 399 58
Accrued liabilities and expenses 4,785 4,422 4,414
Long-term debt 2,124 2,281 3,434
Accrued noncurrent employee benefits 10,013 10,562 10,242
Other noncurrent liabilities 3,458 3,346 3,320
------------- ------------- --------------
TOTAL LIABILITIES 27,622 27,184 27,206
------------- ------------- --------------
SHAREHOLDERS' EQUITY: (shares in millions)
Preferred stock - $1 per share par value; authorized
20.0 shares; Series A Convertible Preferred Stock;
issued: 1994 and 1993 - 1.7 shares (aggregate
liquidation preference - $863 million) 2 2 2
Common stock - $1 per share par value; authorized
500.0 shares; issued: 1994 and 1993 - 364.1 shares 364 364 364
Additional paid-in capital 5,532 5,533 5,547
Retained earnings (accumulated deficit) 1,996 1,170 (588)
Treasury stock - at cost: 1994 - 10.0 shares;
1993 - 10.4 and 15.0 shares, respectively (229) (233) (317)
------------- ------------- --------------
TOTAL SHAREHOLDERS' EQUITY 7,665 6,836 5,008
------------- ------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 35,287 $ 34,020 32,214
------------- ------------- --------------
------------- ------------- --------------
</TABLE>
This Supplemental Information, "Chrysler (with CFC and Car Rental Operations on
an Equity Basis)," reflects the financial position of Chrysler with its
investments in CFC and the Car Rental Operations accounted for on an equity
basis rather than as consolidated subsidiaries. This Supplemental Information
does not purport to present financial position in accordance with generally
accepted accounting principles because it does not comply with SFAS No. 94,
"Consolidation of All Majority-Owned Subsidiaries." The financial covenants
contained in certain of Chrysler's credit facilities are based on this
Supplemental Information. In addition, because the operations of CFC and the
Car Rental Operations are different in nature than Chrysler's manufacturing
operations, management believes that this disaggregated financial data enhances
an understanding of the consolidated financial statements.
11
<PAGE> 14
Item 5. OTHER INFORMATION - Continued
SUPPLEMENTAL INFORMATION
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
STATEMENT OF CASH FLOWS (unaudited)
For the Three Months Ended March 31, 1994 and 1993
(In millions of dollars)
<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 938 $ (4,436)
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization 485 432
Equity in earnings of unconsolidated subsidiaries and affiliates (50) (22)
Deferred income tax provision 287 273
Cumulative effect of changes in accounting principles -- 4,966
Change in accounts receivable (155) (362)
Change in inventories 44 (185)
Change in prepaid expenses and other assets (7) 83
Change in accounts payable and accrued and other liabilities 531 (559)
Other 27 28
------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,100 218
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (685) (1,256)
Sales and maturities of marketable securities 634 1,313
Expenditures for property and equipment (426) (242)
Expenditures for special tools (148) (204)
Other 29 (64)
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (596) (453)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in short-term debt (less than 90-day maturities) 3 20
Proceeds under revolving lines of credit and long-term borrowings 1 10
Payments on revolving lines of credit and long-term borrowings (12) (218)
Proceeds from issuance of common stock, net of expenses -- 1,952
Dividends paid (91) (64)
Other 3 31
------------- -------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (96) 1,731
------------- -------------
Change in cash and cash equivalents 1,408 1,496
Cash and cash equivalents at beginning of period 3,777 2,009
------------- -------------
Cash and cash equivalents at end of period $ 5,185 $ 3,505
------------- -------------
------------- -------------
</TABLE>
This Supplemental Information, "Chrysler (with CFC and Car Rental Operations on
an Equity Basis)," reflects the cash flows of Chrysler with its investments in
CFC and the Car Rental Operations accounted for on an equity basis rather than
as consolidated subsidiaries. This Supplemental Information does not purport
to present cash flows in accordance with generally accepted accounting
principles because it does not comply with SFAS No. 94, "Consolidation of All
Majority-Owned Subsidiaries." The financial covenants contained in certain of
Chrysler's credit facilities are based on this Supplemental Information. In
addition, because the operations of CFC and the Car Rental Operations are
different in nature than Chrysler's manufacturing operations, management
believes that this disaggregated financial data enhances an understanding of
the consolidated financial statements.
12
<PAGE> 15
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits filed with this Report are listed in the Exhibit Index
which immediately precedes such exhibits.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the three months
ended March 31, 1994.
13
<PAGE> 16
CONFORMED
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHRYSLER CORPORATION
----------------------
(Registrant)
Date: April 29, 1994 By J. D. Donlon, III
-----------------
J. D. Donlon, III
Vice President and Controller
(Chief Accounting Officer)
14
<PAGE> 17
EXHIBIT INDEX
For Quarterly Report on Form 10-Q for the
Quarterly Period Ended March 31, 1994
Exhibit
11 Statement regarding computation of earnings per common share.
(Filed with this report.)
15A Letter, dated April 19, 1994, re unaudited interim information.
(Filed with this report.)
15B Letter, dated April 29, 1994, re unaudited interim information.
(Filed with this report.)
15
<PAGE> 1
EXHIBIT 11
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
Earnings Per Common Share Data
APB Opinion No. 15 Calculation
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1994 1993
------------- -------------
(In millions of dollars and shares)
<S> <C> <C>
Primary:
Net earnings (loss) $ 938 $(4,436)
Preferred stock dividend (20) (20)
------------- -------------
Earnings (loss) attributable to common stock $ 918 $(4,456)
------------- -------------
------------- -------------
Weighted average shares outstanding 354.0 325.6
Shares issued on exercise of dilutive options 10.7 -
Shares purchased with proceeds of options (5.1) -
Shares contingently issuable 0.5 -
------------- -------------
Shares applicable to primary earnings (loss) 360.1 325.6
------------- -------------
------------- -------------
Fully Diluted:
Net earnings $ 938 $ -
Preferred stock dividend - -
------------- -------------
Earnings attributable to common stock $ 938 $ -
------------- -------------
------------- -------------
Weighted average shares outstanding 354.0 -
Shares issued on exercise of dilutive options 10.7 -
Shares purchased with proceeds of options (5.1) -
Shares applicable to convertible preferred stock 47.9 -
Shares contingently issuable 0.8 -
------------- -------------
Shares applicable to fully diluted earnings 408.3 -
------------- -------------
------------- -------------
Per Common Share Data: (In dollars)
Primary:
Earnings before cumulative effect of changes in accounting
principles $ 2.55 $ 1.57
Cumulative effect of changes in accounting principles - (15.25)
------------- -------------
Net earnings (loss) per common share $ 2.55 $(13.68)
------------- -------------
------------- -------------
Fully Diluted:
Earnings before cumulative effect of changes in accounting
principles $ 2.30 $ -
Cumulative effect of changes in accounting principles - -
------------- -------------
Net earnings per common share $ 2.30 $ -
------------- -------------
------------- -------------
</TABLE>
Note: Earnings (loss) per common share amounts were computed by dividing
earnings (loss) after deduction of preferred stock dividends by the
average number of common and dilutive equivalent shares outstanding. In
the first quarter of 1994, fully diluted per common share amounts assume
conversion of the convertible preferred stock, the elimination of the
related preferred stock dividend requirement, and the issuance of common
stock for all other potentially dilutive equivalents outstanding.
Computations of primary earnings per common share exclude the effect of
common stock equivalents and shares contingently issuable for any period
in which their inclusion would have the effect of increasing the earnings
per common share amount or decreasing the loss per common share amount
otherwise computed. Fully diluted per common share amounts are not
applicable for loss periods.
<PAGE> 1
EXHIBIT 15A
CONFORMED
INDEPENDENT ACCOUNTANTS' REPORT
Shareholders and Board of Directors
Chrysler Corporation
Highland Park, Michigan
We have reviewed the accompanying consolidated balance sheet of
Chrysler Corporation and consolidated subsidiaries as of March 31, 1994 and
1993, and the related consolidated statements of earnings and cash flows for
the three-month periods ended March 31, 1994 and 1993. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Chrysler Corporation and
consolidated subsidiaries as of December 31, 1993, and the related consolidated
statements of earnings and cash flows for the year then ended (not presented
herein); and in our report dated January 18, 1994, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 1993, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
DELOITTE & TOUCHE
Detroit, Michigan
April 19, 1994
<PAGE> 1
EXHIBIT 15B
CONFORMED
April 29, 1994
Chrysler Corporation
12000 Chrysler Drive
Highland Park, Michigan
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of Chrysler Corporation and consolidated subsidiaries for
the periods ended March 31, 1994 and 1993, as indicated by our report dated
April 19, 1994; because we did not perform an audit, we expressed no opinion on
that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended March 31, 1994, is
incorporated by reference in the following Registration Statements:
<TABLE>
<CAPTION>
Registration
Form Statement No. Description
- - ---------- --------------- ------------------------------------------------------------------
<S> <C> <C>
S-8 33-5588 Chrysler Salaried Employees' Savings Plan
S-8 33-6117 Chrysler Corporation Stock Option Plan
S-3 33-13739 Chrysler Corporation Common Stock deliverable to Selling stockholder named therein
S-3 33-15716 Chrysler Corporation Common Stock deliverable to Selling stockholders named therein
S-8 33-15544 Chrysler Corporation Common Stock deliverable pursuant to the 1972 and
(Post-Effective 1980 American Motors Corporation Stock Option Plans
Amendment No. 1)
S-3 33-15849 Chrysler Corporation Debt Securities
S-3 33-22233 Chrysler Corporation Common Stock deliverable to Selling stockholders named therein
S-3 33-39688 Chrysler Corporation Common Stock deliverable to Selling stockholders named therein
S-8 33-47986 Chrysler Corporation 1991 Stock Compensation Plan
S-3 33-59294 Chrysler Corporation Common Stock deliverable to Selling stockholders named therein
</TABLE>
We are also aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE
Detroit, Michigan
