<PAGE> 1
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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 JUNE 30, 1995, 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 382,436,427 shares of common stock outstanding as of
June 30, 1995.
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<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............................................................ 6-10
Part II. OTHER INFORMATION
Item 1. Legal Proceedings........................................................ 10-11
Item 4. Submission of Matters to a Vote of Security Holders...................... 12
Item 5. Other Information........................................................ 13-15
Item 6. Exhibits and Reports on Form 8-K......................................... 16
Signature Page..................................................................... 17
Exhibit Index...................................................................... 18
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ------------------
1995 1994 1995 1994
------- ------- ------- -------
(IN MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C>
Sales of manufactured products.......................... $11,653 $12,369 $24,482 $24,920
Finance and insurance income............................ 408 332 788 676
Other income............................................ 455 383 859 712
------- ------- ------- -------
TOTAL REVENUES..................................... 12,516 13,084 26,129 26,308
------- ------- ------- -------
Costs, other than items below........................... 9,817 9,375 20,333 18,981
Depreciation of property and equipment.................. 268 232 539 509
Amortization of special tools........................... 322 276 614 506
Selling and administrative expenses..................... 1,076 997 2,084 1,952
Pension expense......................................... 95 158 200 335
Nonpension postretirement benefit expense............... 198 204 404 407
Interest expense........................................ 270 249 515 482
Special plant provision (Note 8)........................ 232 -- 232 --
------- ------- ------- -------
TOTAL EXPENSES..................................... 12,278 11,491 24,921 23,172
------- ------- ------- -------
EARNINGS BEFORE INCOME TAXES....................... 238 1,593 1,208 3,136
Provision for income taxes.............................. 103 637 481 1,242
------- ------- ------- -------
NET EARNINGS....................................... $ 135 $ 956 $ 727 $ 1,894
Preferred stock dividends............................... 3 20 17 40
------- ------- ------- -------
NET EARNINGS ON COMMON STOCK....................... $ 132 $ 936 $ 710 $ 1,854
======= ======= ======= =======
(IN DOLLARS OR MILLIONS OF SHARES)
PRIMARY EARNINGS PER COMMON SHARE....................... $ 0.35 $ 2.61 $ 1.92 $ 5.16
======= ======= ======= =======
Average common and dilutive equivalent shares
outstanding........................................... 378.7 359.1 370.7 359.6
FULLY DILUTED EARNINGS PER COMMON SHARE................. $ 0.34 $ 2.35 $ 1.81 $ 4.64
======= ======= ======= =======
Average common and dilutive equivalent shares
outstanding........................................... 390.2 407.5 400.8 407.9
DIVIDENDS DECLARED PER COMMON SHARE..................... $ 0.50 $ 0.25 $ 0.90 $ 0.45
</TABLE>
See notes to consolidated financial statements.
1
<PAGE> 4
ITEM 1. FINANCIAL STATEMENTS -- CONTINUED
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
1995 1994
----------- ---------------------------
JUNE 30 DECEMBER 31 JUNE 30
----------- ------------ -----------
(UNAUDITED) (UNAUDITED)
(IN MILLIONS OF DOLLARS)
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents....................................... $ 4,008 $ 5,145 $ 5,654
Marketable securities........................................... 3,828 3,226 1,212
Accounts receivable -- trade and other.......................... 2,189 1,695 1,915
Inventories (Note 2)............................................ 3,680 3,356 3,430
Prepaid taxes, pension and other expenses....................... 950 1,330 693
Finance receivables, retained interests in sold receivables and
other related amounts......................................... 12,496 12,433 11,401
Property and equipment.......................................... 11,637 11,073 9,942
Special tools................................................... 3,449 3,643 3,378
Intangible assets............................................... 2,124 2,162 4,276
Deferred tax assets............................................. 343 395 1,559
Other assets.................................................... 5,343 5,081 2,642
----------- ------------ -----------
TOTAL ASSETS.............................................. $50,047 $ 49,539 $46,102
=========== ============ ===========
LIABILITIES:
Accounts payable................................................ $ 7,739 $ 7,826 $ 7,190
Short-term debt................................................. 3,689 4,645 3,781
Payments due within one year on long-term debt.................. 1,472 811 1,110
Accrued liabilities and expenses................................ 5,725 5,582 4,891
Long-term debt.................................................. 8,119 7,650 7,361
Accrued noncurrent employee benefits............................ 8,941 8,595 9,659
Other noncurrent liabilities.................................... 3,852 3,736 3,606
----------- ------------ -----------
TOTAL LIABILITIES......................................... 39,537 38,845 37,598
----------- ------------ -----------
SHAREHOLDERS' EQUITY: (shares in millions)
(Notes 5, 6 and 7)
Preferred stock -- $1 per share par value; authorized 20.0
shares; Series A Convertible Preferred Stock; issued and
outstanding: 1995 and 1994 -- 0.3 and 1.7 shares, respectively
(aggregate liquidation preference $128 million and $863
million, respectively)........................................ * 2 2
Common stock -- $1 per share par value; authorized 1,000.0
shares; issued: 1995 and 1994 -- 404.9 shares and 364.1
shares, respectively.......................................... 405 364 364
Additional paid-in capital...................................... 5,503 5,536 5,532
Retained earnings............................................... 5,414 5,006 2,834
Treasury stock -- at cost: 1995 -- 22.5 shares; 1994 -- 9.0 and
9.9 shares, respectively...................................... (812) (214) (228)
----------- ------------ -----------
TOTAL SHAREHOLDERS' EQUITY................................ 10,510 10,694 8,504
----------- ------------ -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................ $50,047 $ 49,539 $46,102
=========== ============ ===========
</TABLE>
- -------------------------
* Less than $1 million
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 SIX MONTHS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
-------- -------
(IN MILLIONS OF
DOLLARS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings............................................................. $ 727 $ 1,894
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization.......................................... 1,153 1,015
Special plant provision (Note 8)....................................... 232 --
Provision for credit losses............................................ 189 90
Deferred income taxes.................................................. 111 659
Change in receivables.................................................. 1,196 (581)
Change in inventories.................................................. (325) 160
Change in prepaid expenses and other assets............................ (185) 81
Change in accounts payable and accrued and other liabilities........... 579 81
Other.................................................................. 140 44
-------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES......................... 3,817 3,443
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities..................................... (3,195) (1,857)
Sales and maturities of marketable securities.......................... 2,640 1,680
Finance receivables acquired........................................... (12,291) (9,577)
Finance receivables collected.......................................... 2,834 2,050
Proceeds from sales of finance receivables............................. 7,288 6,702
Expenditures for property and equipment................................ (1,415) (1,117)
Expenditures for special tools......................................... (431) (438)
Other.................................................................. 367 112
-------- -------
NET CASH USED IN INVESTING ACTIVITIES............................. (4,203) (2,445)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in short-term debt (less than 90-day maturities)................ (956) 484
Proceeds from long-term borrowings..................................... 1,833 703
Payments on long-term borrowings....................................... (714) (393)
Repurchase of common stock (Note 6).................................... (608) --
Dividends paid......................................................... (322) (182)
Other.................................................................. 16 4
-------- -------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES............... (751) 616
-------- -------
Change in cash and cash equivalents...................................... (1,137) 1,614
Cash and cash equivalents at beginning of period......................... 5,145 4,040
-------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD............................... $ 4,008 $ 5,654
======== =======
</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 and six months ended June 30, 1995 and 1994
reflect all adjustments, consisting of only normal and recurring items, 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 and six
months ended June 30, 1995 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, 1994. Amounts for 1994 have been reclassified to conform with
current period classifications.
NOTE 2. INVENTORIES
Inventories, summarized by major classification, were as follows:
<TABLE>
<CAPTION>
1995 1994
------- -----------------------
JUNE 30 DECEMBER 31 JUNE 30
-------- ------------ -------
(IN MILLIONS OF DOLLARS)
<S> <C> <C> <C>
Finished products, including service parts...................... $1,197 $1,145 $ 993
Raw materials, finished production parts and supplies........... 1,410 1,223 1,143
Vehicles held for short-term lease.............................. 1,073 988 1,294
------ ------------ ------
TOTAL...................................................... $3,680 $3,356 $3,430
====== ========== ======
</TABLE>
NOTE 3. CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1995, Chrysler adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for Impairment
of a Loan" and SFAS No. 118, "Accounting by Creditors for Impairment of a Loan
- -- Income Recognition and Disclosures." These new accounting standards require
creditors to evaluate the collectibility of both contractual interest and
principal of receivables when evaluating the need for a loss accrual. The
implementation of these new accounting standards did not have a material impact
on Chrysler's consolidated operating results or financial position.
NOTE 4. SALES OF AUTOMOTIVE ASSETS AND INVESTMENTS
Chrysler sold its wiring harness operations and certain of its soft trim
operations in the first and second quarters of 1994, respectively, and entered
into long-term supply agreements with each of the purchasers. Aggregate net
proceeds from the sales and the supply agreements were $315 million. The related
pretax gains of $254 million were deferred and are being recognized over the
periods of the respective supply agreements.
NOTE 5. PREFERRED STOCK CONVERSION AND SUPPLEMENTARY EARNINGS PER SHARE DATA
During the second quarter and the first six months of 1995, holders of the
Series A Convertible Preferred Stock converted 699,575 and 1,469,172 shares,
respectively, of preferred stock into 19.4 and 40.8 million shares of common
stock, respectively. Primary earnings per common share for the second quarter
and the first six months of 1995 were calculated based upon a weighted average
of common shares outstanding which included the additional shares from the
preferred stock conversions. If all of the preferred stock conversions had
occurred on January 1, 1995, primary earnings per common share for the first six
months of 1995 would have been $1.83.
4
<PAGE> 7
ITEM 1. FINANCIAL STATEMENTS -- CONTINUED
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE 6. COMMON STOCK REPURCHASE
In December 1994, Chrysler's Board of Directors approved a $1 billion
common stock repurchase program, subject to market and business conditions.
During the second quarter and the first six months of 1995, Chrysler repurchased
5.5 and 14.1 million shares, respectively, of its common stock under this
program at a cost of $239 and $608 million, respectively.
NOTE 7. TRACINDA CORPORATION TENDER OFFER
On April 12, 1995, Tracinda Corporation ("Tracinda"), which owned
approximately 10 percent of the outstanding common stock of Chrysler, sent
Chrysler a letter proposing to acquire the remaining 90 percent of Chrysler's
common stock at $55 per share. After a thorough and careful review, Chrysler's
Board of Directors unanimously rejected the leveraged buy-out proposal. Tracinda
formally withdrew its $55 per share offer on May 31, 1995. On June 27, 1995,
Tracinda commenced a cash tender offer for up to 14 million shares of Chrysler
common stock at a price of $50 per share. Due to the small percentage of shares
sought by Tracinda, Chrysler's Board of Directors has determined not to take a
position with respect to the tender offer.
NOTE 8. SPECIAL PLANT PROVISION
The results of operations for the second quarter of 1995 include a $232
million provision for costs associated with planned production changes at
Chrysler's Newark assembly plant. The plant will end production of Chrysler's
LeBaron convertibles in July 1995. In addition, Newark production of the
Chrysler Concorde and Dodge Intrepid will be reduced to one shift in August 1995
and will end prior to production of a new vehicle in the fall of 1997. The
provision includes the recognition of supplemental unemployment benefits, job
security benefits and other related employee costs, and the write-down of
certain equipment and tooling.
5
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the consolidated financial statements and notes thereto.
FINANCIAL REVIEW
Chrysler reported earnings before income taxes of $238 million for the
second quarter of 1995, compared with $1,593 million for the second quarter of
1994. For the first six months of 1995, Chrysler reported earnings before income
taxes of $1,208 million, compared with $3,136 million for the first six months
of 1994. Pretax earnings for the second quarter and first six months of 1995
include a $232 million charge for costs associated with planned production
changes at Chrysler's Newark assembly plant. Net earnings for the second quarter
of 1995 were $135 million, or $0.35 per common share, compared with $956
million, or $2.61 per common share for the second quarter of 1994. Net earnings
for the six months ended June 30, 1995 were $727 million or $1.92 per common
share, compared with $1,894 million or $5.16 per common share for the comparable
1994 period. Net earnings for the second quarter and first six months of 1995
were reduced by $143 million as a result of the Newark assembly plant charge.
The lower operating results in the second quarter and first six months of
1995 compared with the corresponding periods of 1994 resulted primarily from
lower minivan production and costs associated with the model changeover and
launch of Chrysler's all-new minivans, the charge related to the Newark assembly
plant, higher incentives and material costs, costs associated with the voluntary
minivan owner service action, a lower mix of higher-margin vehicles, and lower
factory unit sales in Mexico. Lower minivan production and costs associated with
the model changeover and launch of the all-new minivans will continue into the
third quarter of 1995. In addition, Chrysler expects higher incentives and
material costs, a lower mix of higher-margin vehicles, and lower factory unit
sales in Mexico in the third quarter of 1995 as compared with the third quarter
of 1994. Pretax earnings for the first quarter and first six months of 1995
include a charge of $115 million for the voluntary minivan owner service action.
Chrysler's worldwide factory car and truck sales for the three and six
months ended June 30, 1995 were 635,151 and 1,349,916 units, respectively, a
decrease of 67,651 and 93,484 units from the second quarter and first six months
of 1994, respectively. Minivan factory units sales for the second quarter and
first six months of 1995 were 117,963 and 262,910 units, respectively, a
decrease of 59,637 and 92,417 units from the comparable 1994 periods. The
decline in minivan factory units sales was primarily attributable to the model
changeover and launch of Chrysler's all-new minivans. Combined U.S. and Canadian
dealers' days supply of vehicle inventory was 45 days at June 30, 1995, as
compared with 69 days at December 31, 1994 and 45 days at June 30, 1994.
Chrysler's revenues and results of operations are principally derived from
the U.S. and Canada automotive marketplace. In the second quarter of 1995, U.S.
and Canada vehicle industry retail sales, on a Seasonally Adjusted Annual Rate
basis, were 15.8 million cars and trucks, compared to 16.4 million units for the
second quarter of 1994, a decrease of 4 percent. This decrease is primarily due
to a slowdown in economic growth and higher interest rates, which resulted in
Chrysler increasing retail incentives in the first half of 1995 and lowering
total year 1995 planned production.
Chrysler's U.S. and Canada combined retail car and truck market share for
the three and six months ended June 30, 1995 decreased compared with the
corresponding 1994 periods. Increases in car market share
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS -- CONTINUED
were offset by decreases in truck market share in the second quarter and first
six months of 1995, as shown in the following table:
<TABLE>
<CAPTION>
SECOND QUARTER SIX MONTHS
---------------------------------- --------------------------------------
INCREASE/ INCREASE/
1995 1994 (DECREASE) 1995 1994 (DECREASE)
------- ------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
U.S. Retail Market(1):
Car sales......................... 228,183 234,299 (6,116) 442,219 448,281 (6,062)
Car market share.................. 9.7% 9.5% 0.2% 10.1% 9.6% 0.5%
Truck sales....................... 384,104 396,438 (12,334) 694,648 747,671 (53,023)
Truck market share................ 21.9% 22.9% (1.0)% 21.1% 23.1% (2.0)%
Combined car and truck sales...... 612,287 630,737 (18,450) 1,136,867 1,195,952 (59,085)
Combined car and truck market
share........................... 14.9% 15.0% (0.1)% 14.8% 15.1% (0.3)%
U.S. and Canada Retail Market(1):
Combined car and truck sales...... 680,505 709,158 (28,653) 1,253,637 1,334,453 (80,816)
Combined car and truck market
share........................... 15.2% 15.4% (0.2)% 15.1% 15.6% (0.5)%
</TABLE>
- -------------------------
(1) All retail sale and market share data include fleet sales.
Chrysler's U.S. car market share increased in the second quarter and first
six months of 1995 primarily as a result of increased sales of Chrysler's
mid-size sedans and coupes. The decrease in Chrysler's U.S. truck market share
for the three and six months ended June 30, 1995 was primarily the result of
decreases in retail minivan sales of 17,147 and 51,274, respectively.
Chrysler vehicles manufactured and sold in Mexico during the second quarter
and first six months of 1995 were 4,300 and 10,100 units, respectively, a
decrease of 13,900 and 32,500 units from the corresponding 1994 periods,
respectively. The impact of the lower sales in Mexico during the second quarter
and first six months of 1995 was partially offset by increased sales of, and
higher profits on, vehicles manufactured in Mexico and exported to other
markets. The devaluation of the peso and the continuing economic uncertainties
in Mexico will continue to negatively impact Chrysler's operating results and
financial position for the remainder of 1995.
Pretax earnings of Chrysler Financial Corporation ("CFC") for the second
quarter of 1995 and 1994 were $127 million and $69 million, respectively. For
the six months ended June 30, 1995, CFC's pretax earnings were $236 million
compared with $144 million for the first six months of 1994. The improved
results in the second quarter and first six months of 1995 compared with the
corresponding 1994 periods were primarily the result of higher levels of
automotive financing and lower bank costs. CFC's net earnings for the second
quarter of 1995 and 1994 were $86 million and $44 million, respectively. CFC's
net earnings for the six months ended June 30, 1995 and 1994 were $155 million
and $91 million, respectively.
7
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS -- CONTINUED
COMPARISON OF SELECTED ELEMENTS OF REVENUES AND EXPENSES
Chrysler's total revenues for the second quarter and first six months of
1995 and 1994 were as follows:
<TABLE>
<CAPTION>
SECOND QUARTER SIX MONTHS
-------------------------------- --------------------------------
INCREASE/ INCREASE/
1995 1994 (DECREASE) 1995 1994 (DECREASE)
------- ------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sales of manufactured products...... $11,653 $12,369 (6)% $24,482 $24,920 (2)%
Finance and insurance income........ 408 332 23% 788 676 17%
Other income........................ 455 383 19% 859 712 21%
------- ------- ------- -------
Total revenues................. $12,516 $13,084 (4)% $26,129 $26,308 (1)%
======= ======= ======= =======
</TABLE>
The decrease in sales of manufactured products in the second quarter of
1995 as compared with the second quarter of 1994 primarily reflects a 10 percent
decrease in factory unit sales partially offset by an increase in average
revenue per unit, net of sales incentives, from $17,676 to $18,198. The decrease
in sales of manufactured products in the first six months of 1995 as compared
with the first six months of 1994 primarily reflects a 6 percent decrease in
factory unit sales partially offset by an increase in average revenue per unit,
net of sales incentives, from $17,236 to $17,964.
The increase in finance and insurance income for the three and six months
ended June 30, 1995 as compared with the corresponding 1994 periods was
primarily attributable to higher levels of automotive financing volume. Total
automotive financing volume in the second quarter and first six months of 1995
was $21.4 billion and $41.9 billion, respectively, compared with $17.9 billion
and $35.0 billion for the corresponding 1994 periods.
The increase in other income for the three and six months ended June 30,
1995 as compared with the corresponding periods in 1994 was principally due to
increased interest income resulting from higher cash, cash equivalents and
marketable securities balances and higher interest rates.
Chrysler's total expenses for the second quarter and first six months of
1995 and 1994 were as follows:
<TABLE>
<CAPTION>
SECOND QUARTER SIX MONTHS
-------------------------------- --------------------------------
INCREASE/ INCREASE/
1995 1994 (DECREASE) 1995 1994 (DECREASE)
------- ------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Costs, other than items below....... $ 9,817 $ 9,375 5% $20,333 $18,981 7%
Depreciation of property and
equipment......................... 268 232 16% 539 509 6%
Amortization of special tools....... 322 276 17% 614 506 21%
Selling and administrative
expenses.......................... 1,076 997 8% 2,084 1,952 7%
Pension expense..................... 95 158 (40)% 200 335 (40)%
Nonpension postretirement benefit
expense........................... 198 204 (3)% 404 407 (1)%
Interest expense.................... 270 249 8% 515 482 7%
Special plant provision............. 232 -- -- 232 -- --
------- ------- ------- -------
Total expenses................. $12,278 $11,491 7% $24,921 $23,172 8%
======= ======= ======= =======
</TABLE>
Costs, other than items below increased in the second quarter and first six
months of 1995, as compared with the corresponding 1994 periods, primarily as a
result of increased product costs and costs associated with the changeover and
launch of Chrysler's all-new minivans, partially offset by the effect of a
decrease in factory unit sales of 10 percent and 6 percent, respectively. The
increase in product costs for the second quarter and first six months of 1995
resulted primarily from higher material and warranty costs and increased product
content. In addition, Costs, other than items below for the six months ended
June 30, 1995 includes a charge of $115 million related to the voluntary minivan
owner service action. Costs, other than items below were 84
8
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS -- CONTINUED
percent and 83 percent of sales of manufactured products for the respective
three and six month periods ended June 30, 1995, compared with 76 percent for
both the three and six month periods ended June 30, 1994.
Depreciation of property and equipment for the second quarter and first six
months of 1995 increased as compared with the corresponding 1994 periods
primarily as a result of higher investments in, and modernization of, property
and equipment.
Special tooling amortization increased in the second quarter and first six
months of 1995 as compared with the corresponding 1994 periods primarily as a
result of production of Chrysler's all-new minivan and mid-size sedan products.
The increase in selling and administrative expenses for the second quarter
and first six months of 1995, as compared with the corresponding 1994 periods,
was principally due to increased advertising related to Chrysler's all-new
sedans and mid-size coupes.
Pension expense decreased for the three and six months ended June 30, 1995
as compared to the corresponding 1994 periods, due to improved funding of the
pension plans and an increase in the discount rate used to determine pension
expense.
The increase in interest expense for the three and six months ended June
30, 1995 was primarily due to higher average CFC borrowings, partially offset by
the effect of automotive debt repayments. CFC's average effective cost of
borrowings was 8.3 percent and 8.1 percent in the second quarter and first six
months of 1995, respectively, compared with 8.4 percent in both the
corresponding periods of 1994. This improvement in the average effective
borrowing costs reflects lower bank facility costs.
LIQUIDITY AND CAPITAL RESOURCES
Chrysler's combined cash, cash equivalents and marketable securities
totaled $7.8 billion at June 30, 1995 (including $988 million held by CFC),
compared with $8.4 billion at December 31, 1994. The decrease in the first six
months of 1995 was the result of capital expenditures, profit-based employee
payments, debt repayments, common stock repurchases and dividend payments,
largely offset by cash generated by operating activities.
In December 1994, Chrysler's Board of Directors approved a $1 billion
common stock repurchase program, subject to market and business conditions.
During the second quarter and the first six months of 1995, Chrysler repurchased
5.5 and 14.1 million shares, respectively, of its common stock under this
program at a cost of $239 and $608 million, respectively. During the second
quarter and the first six months of 1995, holders of the Series A Convertible
Preferred Stock converted 699,575 and 1,469,172 shares, respectively, of
preferred stock into 19.4 and 40.8 million shares of common stock, respectively.
In the second quarter of 1995, Chrysler increased its quarterly common
dividend from $0.40 to $0.50 per common share.
At June 30, 1995, Chrysler (excluding CFC), had debt maturities totaling
$226 million through 1997. During the first six months of 1995, Chrysler
redeemed $300 million of its 13% Debentures Due 1997 and repaid $170 million of
other debt. At June 30, 1995, Chrysler had a $1.7 billion revolving credit
agreement which expires in July 1999. At June 30, 1995, none of the commitment
was drawn upon. Chrysler believes that cash from operations and its cash
position will be sufficient to enable it to meet its capital expenditure, debt
maturity, common stock repurchase and other funding requirements.
Receivable sales continued to be a significant source of funding for CFC,
which realized $3.2 billion of net proceeds from the sale of automotive retail
receivables in the first six months of 1995, compared with $3.5 billion of net
proceeds in the first six months of 1994. In addition, securitization of
wholesale receivables
9
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS -- CONTINUED
provided funding for CFC which aggregated $7.3 billion and $4.5 billion at June
30, 1995 and 1994, respectively.
During the second quarter of 1995, CFC replaced its existing U.S. and
Canadian revolving credit and receivable sales agreements with new revolving
credit facilities totaling $8.0 billion. At June 30, 1995, no amounts were
outstanding under CFC's revolving credit facilities.
At June 30, 1995, CFC had contractual debt maturities of $4.4 billion
during the remainder of 1995 (including $3.4 billion of short-term notes), $1.6
billion in 1996 and $1.7 billion in 1997. CFC believes that cash provided by
operations, receivable sales, access to term debt markets, and issuance of
commercial paper will provide sufficient liquidity to meet its funding
requirements.
NEW ACCOUNTING STANDARD
In March 1995, the Financial Accounting Standards Board issued Statement of
Accounting Standards 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 of. 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 identifiable intangibles to be disposed of be reported at the lower
of carrying amount or fair value less cost to sell. Chrysler has not determined
the impact that the adoption of this accounting standard will have on its
consolidated operating results or financial position. Chrysler will adopt this
accounting standard on or before January 1, 1996, as required.
REVIEW BY INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP, Chrysler's independent public accountants, performed
a review of the financial statements for the three and six months ended June 30,
1995 and 1994 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 LLP did not express an
opinion on the aforementioned data. Refer to the Independent Accountants' Report
included at Exhibit 15A.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
OTHER MATTERS
In December 1990 and January 1991, eight class action lawsuits were
commenced by separate plaintiffs against Chrysler and certain of its directors
in the Court of Chancery of the State of Delaware for New Castle County,
Delaware. The Complaints in these suits are very similar and allege that the
directors breached their fiduciary duties to stockholders by amending Chrysler's
Share Purchase Rights Plan in a manner designed to entrench themselves in office
and to impair the right of stockholders to avail themselves of offers to
purchase their shares by an acquiror not favored by management. The Complaints
ask for (a) certification of the class, (b) rescission of and an injunction
against implementation of the Rights Plan amendments, (c) an order that Chrysler
cooperate with Kirk Kerkorian, the holder of 9.8% of Chrysler's common stock at
the time the complaints were filed, and take steps to enhance its attractiveness
as a merger/acquisition candidate, and (d) damages and costs. On January 9,
1991, the eight suits were consolidated into one. On January 28, 1991,
10
<PAGE> 13
ITEM 1. LEGAL PROCEEDINGS -- CONTINUED
Chrysler filed an Answer and Affirmative Defenses in the consolidated case. On
March 7, 1991, the parties agreed to allow an Amended Complaint to be filed
which purports to assert a derivative claim brought on behalf of Chrysler, in
addition to class action claims as originally filed. In this regard, the Amended
Complaint alleges injury to Chrysler as a direct result of violations of
fiduciary duties by the individual defendants. On July 25, 1991, Chrysler filed
a motion to dismiss the consolidated lawsuit. On July 27, 1992, the Court
entered a memorandum opinion dismissing the complaint as to all claims for
relief other than rescission. Chrysler later filed a Motion for Reargument which
was denied on August 11, 1992. On June 6, 1995, Chrysler entered into a
Memorandum of Understanding which contemplates settlement of the litigation. The
Memorandum is subject to several conditions, including satisfactory completion
of discovery as to the fairness of the proposed settlement, and the settlement
itself is subject to Court approval. The Memorandum also contemplates that the
settlement, if approved, will consist of Chrysler's recent action further
amending its Rights Plan.
In April 1995, thirty four class action lawsuits were commenced by separate
plaintiffs against Chrysler, certain of its current and former directors and, in
some cases, Tracinda, a holding company wholly owned by Mr. Kerkorian and the
beneficial owner of approximately 9.41% of the outstanding common stock of
Chrysler as of June 30, 1995, and its affiliates, in the Court of Chancery of
the State of Delaware for New Castle County, Delaware. The Complaints in these
suits fall into two general categories: (a) those which allege that the
directors breached their fiduciary duties to stockholders by failing to
negotiate with Tracinda, regarding its proposal to acquire all of the
outstanding stock of Chrysler not then owned by it; and (b) those which allege
that the directors breached their fiduciary duties to stockholders by
contemplating, planning and/or effecting Tracinda's proposal at a time when the
market price of Chrysler's stock was depressed and did not reflect its true
value. The Complaints in the former category ask for, among other things, (a) an
injunction or an order obligating the Board of Directors to undertake an
evaluation of alternatives, including measures with respect to the Company's
Rights Plan, designed to maximize shareholder value, (b) a declaration that the
defendants have breached their fiduciary duties to the plaintiffs, (c)
compensatory damages and interest, and (d) costs and fees. The Complaints in the
latter category ask for, among other things, (a) a declaration that the
transaction proposed by Tracinda is unfair, unjust and inequitable, (b) an
injunction against implementation of the transaction proposed by Tracinda and
any improper device which impedes maximization of shareholder value, (c) damages
and interest, (d) costs and fees, and (e) such other relief as may be just and
proper. Four of these actions have subsequently been dismissed without prejudice
by the plaintiffs.
11
<PAGE> 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders of Chrysler Corporation was held on May
18, 1995.
(c) At the meeting, the following matters were submitted to a vote of the
stockholders of Chrysler Corporation:
(1) the election of the following nominees as directors of Chrysler
Corporation. The vote with respect to each nominee was as follows:
<TABLE>
<CAPTION>
NOMINEE FOR WITHHELD
---------------------------------------------------- ----------- ---------
<S> <C> <C>
Lilyan H. Affinito.................................. 327,577,744 6,780,932
Robert E. Allen..................................... 327,732,190 6,626,486
Joseph E. Antonini.................................. 325,859,741 8,498,935
Joseph A. Califano, Jr.............................. 327,185,076 7,173,600
Thomas G. Denomme................................... 327,761,319 6,597,357
Robert J. Eaton..................................... 327,724,066 6,634,610
Earl G. Graves...................................... 327,630,951 6,727,725
Kent Kresa.......................................... 327,836,762 6,521,914
Robert J. Lanigan................................... 327,787,151 6,571,525
Robert A. Lutz...................................... 327,743,357 6,615,319
Peter A. Magowan.................................... 327,781,971 6,576,705
Malcolm T. Stamper.................................. 327,750,039 6,608,637
Lynton R. Wilson.................................... 327,748,942 6,609,734
</TABLE>
(2) a recommendation of the Board of Directors that the stockholders
appoint the firm of Deloitte and Touche LLP as independent accountants
to audit the books, records and accounts of Chrysler Corporation for
the year 1995. The vote on this matter was as follows:
<TABLE>
<CAPTION>
BROKER
FOR AGAINST ABSTAIN NON-VOTES
- ----------- --------- --------- ----------
<S> <C> <C> <C>
331,994,705 1,611,011 1,672,295 0
</TABLE>
(3) a proposal by a stockholder requesting that the Board of Directors take
the necessary steps to provide for cumulative voting in the election of
directors. The vote on this matter was as follows:
<TABLE>
<CAPTION>
BROKER
FOR AGAINST ABSTAIN NON-VOTES
- ----------- --------- --------- ----------
<S> <C> <C> <C>
42,591,744 180,864,032 33,131,610 78,690,566
</TABLE>
(4) a proposal by a stockholder requesting that the Board of Directors
institute an Executive Compensation Review and prepare a report
available to shareholders by October 1995 describing the results of
their review and any recommended changes in practice. The vote on this
matter was as follows:
<TABLE>
<CAPTION>
BROKER
FOR AGAINST ABSTAIN NON-VOTES
- ----------- --------- --------- ----------
<S> <C> <C> <C>
23,084,144 214,290,166 19,213,081 78,690,567
</TABLE>
(5) a proposal by a stockholder requesting that the Board of Directors take
the necessary steps to limit each director's compensation to 1,000
shares of Chrysler common stock each year. The vote on this matter was
as follows:
<TABLE>
<CAPTION>
BROKER
FOR AGAINST ABSTAIN NON-VOTES
- ----------- --------- --------- ----------
<S> <C> <C> <C>
32,126,341 206,970,121 17,492,002 78,689,488
</TABLE>
12
<PAGE> 15
ITEM 5. OTHER INFORMATION
SUPPLEMENTAL INFORMATION
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
STATEMENT OF EARNINGS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ------------------
1995 1994 1995 1994
------- ------- ------- -------
(IN MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C>
Sales of manufactured products.......................... $11,776 $12,587 $24,721 $25,221
Equity in earnings of unconsolidated subsidiaries and
affiliates............................................ 132 54 229 104
Interest and other income............................... 125 77 246 132
------- ------- ------- -------
TOTAL REVENUES..................................... 12,033 12,718 25,196 25,457
------- ------- ------- -------
Costs, other than items below........................... 9,736 9,413 20,165 18,931
Depreciation of property and equipment.................. 252 214 506 469
Amortization of special tools........................... 322 276 614 506
Selling and administrative expenses..................... 912 800 1,764 1,564
Pension expense......................................... 93 156 196 331
Nonpension postretirement benefit expense............... 196 203 400 405
Interest expense........................................ 52 63 111 115
Special plant provision................................. 232 -- 232 --
------- ------- ------- -------
TOTAL EXPENSES..................................... 11,795 11,125 23,988 22,321
------- ------- ------- -------
EARNINGS BEFORE INCOME TAXES....................... 238 1,593 1,208 3,136
Provision for income taxes.............................. 103 637 481 1,242
------- ------- ------- -------
NET EARNINGS....................................... $ 135 $ 956 $ 727 $ 1,894
======= ======= ======= =======
</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." Due to the
fact that 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.
13
<PAGE> 16
ITEM 5. OTHER INFORMATION -- CONTINUED
SUPPLEMENTAL INFORMATION
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------- -----------------------
JUNE 30 DECEMBER 31 JUNE 30
------- ------------ -------
(IN MILLIONS OF DOLLARS)
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents............................................. $ 3,781 $ 4,972 $ 5,479
Marketable securities................................................. 3,071 2,643 873
Accounts receivable -- trade and other................................ 680 459 1,109
Inventories........................................................... 2,882 2,645 2,395
Prepaid taxes, pension and other expenses............................. 885 1,272 632
Property and equipment................................................ 10,845 10,347 9,275
Special tools......................................................... 3,449 3,643 3,378
Investments in and advances to unconsolidated subsidiaries and
affiliated companies................................................ 3,692 3,642 3,705
Intangible assets..................................................... 1,754 1,781 3,841
Deferred tax assets................................................... 1,822 1,951 3,046
Other assets.......................................................... 5,019 4,722 2,090
------- ------------ -------
TOTAL ASSETS...................................................... $37,880 $ 38,077 $35,823
======== ============ ========
LIABILITIES:
Accounts payable...................................................... $ 7,234 $ 7,403 $ 6,695
Short-term debt....................................................... 140 140 134
Payments due within one year on long-term debt........................ 27 187 543
Accrued liabilities and expenses...................................... 5,458 5,333 4,646
Long-term debt........................................................ 1,797 2,097 2,119
Accrued noncurrent employee benefits.................................. 8,882 8,547 9,606
Other noncurrent liabilities.......................................... 3,832 3,676 3,576
------- ------------ -------
TOTAL LIABILITIES................................................. 27,370 27,383 27,319
------- ------------ -------
SHAREHOLDERS' EQUITY: (shares in millions)
Preferred stock -- $1 per share par value; authorized 20.0 shares;
Series A Convertible Preferred Stock; issued and outstanding: 1995
and 1994 -- 0.3 and 1.7 shares, respectively (aggregate liquidation
preference -- $128 million and $863 million, respectively).......... * 2 2
Common stock -- $1 per share par value; authorized 1,000.0 shares;
issued: 1995 and 1994 -- 404.9 shares and 364.1 shares,
respectively........................................................ 405 364 364
Additional paid-in capital............................................ 5,503 5,536 5,532
Retained earnings..................................................... 5,414 5,006 2,834
Treasury stock -- at cost: 1995 -- 22.5 shares; 1994 -- 9.0 and 9.9
shares, respectively................................................ (812) (214) (228)
------- ------------ -------
TOTAL SHAREHOLDERS' EQUITY........................................ 10,510 10,694 8,504
------- ------------ -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........................ $37,880 $ 38,077 $35,823
======== ============ ========
</TABLE>
- -------------------------
* Less than $1 million
This Supplemental Information, "Chrysler (with CFC and Car Rental
Operations on an Equity Basis)," reflects the financial position of Chrysler
with its investments in CFC and the Car Rental Operations accounted for on an
equity basis rather than as consolidated subsidiaries. This Supplemental
Information does not purport to present financial position in accordance with
generally accepted accounting principles because it does not comply with SFAS
No. 94, "Consolidation of All Majority-Owned Subsidiaries." The financial
covenant contained in Chrysler's revolving credit facility is based on this
Supplemental Information. In addition, because the operations of CFC and the Car
Rental Operations are different in nature than Chrysler's manufacturing
operations, management believes that this disaggregated financial data enhances
an understanding of the consolidated financial statements.
14
<PAGE> 17
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 SIX MONTHS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
------- -------
(IN MILLIONS OF
DOLLARS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings.............................................................. $ 727 $ 1,894
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization........................................... 1,120 975
Special plant provision................................................. 232 --
Equity in earnings of unconsolidated subsidiaries and affiliates........ (229) (104)
Deferred income taxes................................................... 111 659
Change in accounts receivable........................................... (222) (305)
Change in inventories................................................... (238) 49
Change in prepaid expenses and other assets............................. (183) 14
Change in accounts payable and accrued and other liabilities............ 661 181
Dividends received from affiliate....................................... 142 --
Other................................................................... 162 72
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES.......................... 2,283 3,435
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities...................................... (2,111) (1,071)
Sales and maturities of marketable securities........................... 1,708 896
Expenditures for property and equipment................................. (1,251) (1,031)
Expenditures for special tools.......................................... (431) (438)
Other................................................................... (4) 80
------- -------
NET CASH USED IN INVESTING ACTIVITIES.............................. (2,089) (1,564)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in short-term debt (less than 90-day maturities)................. -- 34
Proceeds from long-term borrowings...................................... -- 1
Payments on long-term borrowings........................................ (470) (26)
Repurchase of common stock.............................................. (608) --
Dividends paid.......................................................... (322) (182)
Other................................................................... 15 4
------- -------
NET CASH USED IN FINANCING ACTIVITIES.............................. (1,385) (169)
------- -------
Change in cash and cash equivalents....................................... (1,191) 1,702
Cash and cash equivalents at beginning of period.......................... 4,972 3,777
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD................................ $ 3,781 $ 5,479
======= =======
</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." Due to the fact that 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.
15
<PAGE> 18
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 June
30, 1995.
16
<PAGE> 19
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: July 18, 1995 By J. D. Donlon, III
--------------------------------------
J. D. Donlon, III
Vice President and Controller
(Chief Accounting Officer)
17
<PAGE> 20
EXHIBIT INDEX
FOR QUARTERLY REPORT ON FORM 10-Q FOR THE
QUARTERLY PERIOD ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
EXHIBIT
- -------
<S> <C>
10-B-1 Copy of Chrysler Corporation Incentive Compensation Plan, as amended and in effect
on and after May 31, 1995 (Filed with this report.)
10-B-4 Copy of Chrysler Corporation Discretionary Incentive Compensation Plan as in effect
on and after May 31, 1995 (Filed with this report.)
10-B-5 Copy of Chrysler Corporation Long-Term Incentive Plan, as amended and in effect on
and after May 31, 1995 (Filed with this report.)
11 Statement regarding computation of earnings per common share (Filed with this
report.)
15A Letter, dated July 14, 1995, re unaudited interim information (Filed with this
report.)
15B Letter, dated July 17, 1995, re unaudited interim information (Filed with this
report.)
27 Financial Data Schedule for the six months ended June 30, 1995 (Filed with this
report.)
</TABLE>
18
<PAGE> 1
EXHIBIT 10-B-1
CHRYSLER CORPORATION
INCENTIVE COMPENSATION PLAN
Effective January 1, 1970
(As Amended Through May 31, 1995)
1. PURPOSE
The purpose of the Chrysler Corporation Incentive Compensation Plan (below
called the Plan or this Plan) is to encourage the continued and energetic
efforts of officers and key salaried employees (below called collectively
Employees) of Chrysler Corporation (below called Chrysler) and its subsidiaries
(Chrysler and its subsidiaries collectively below called the Corporation) on
behalf of the Corporation by enabling them to share in the profits of the
Corporation, in accordance with the resolution adopted by the Stockholders of
Chrysler at their Annual Meeting on April 16, 1929, as they amended it at their
Annual Meeting on April 17, 1956, and at their Special Meeting on April 16,
1963, and at their Annual Meetings on April 15, 1969, April 18, 1972, June 7,
1984, May 20, 1993 and May 19, 1994, and as it may be further amended from time
to time (below called the Stockholders' Resolution).
2. INCENTIVE COMPENSATION COMMITTEE
The Board of Directors of Chrysler (below called the Board) shall appoint
not less than three Directors of Chrysler, none of whom shall be entitled to
receive funds or securities pursuant to any Incentive Plan (as defined in the
Stockholders' Resolution) of Chrysler, to be an Incentive Compensation Committee
(below called the Committee) to administer this Plan. All of the members of the
Committee shall be "disinterested persons" (which term as used herein shall have
the meaning ascribed to it in Rule 16b-3 under the Securities Exchange Act of
1934, or in any amendment thereof in effect at the relevant time). The Committee
may designate a Secretary, one or more Assistant Secretaries and an
Administrator, none of whom need be Directors of Chrysler. Subject to the
provisions of this Plan, the Committee shall have authority, in its discretion,
to prescribe, amend, and rescind rules and regulations relating to this Plan.
3. INCENTIVE COMPENSATION FUND
For each fiscal year the Board shall authorize and approve the amount to be
provided out of the earnings of the Corporation for such fiscal year for
purposes of this Plan and the Chrysler Corporation Long-Term Incentive Plan
(below called the Long-Term Plan, this Plan and the Long-Term Plan collectively
below called the Plans), not to exceed the amount permitted by the Stockholders'
Resolution, and shall authorize and direct the proper officers of the
Corporation (a) to set aside such amount and to add to it (b) any amount
authorized and approved by the Board for any prior fiscal year but not
previously awarded and (c) any amount awarded for any prior fiscal year that has
been forfeited. The sum of all such amounts (or such part thereof as the Board
may determine should be made available for awards for any fiscal year) shall be
the Incentive Compensation Fund for that fiscal year (below called the Fund).
Any part of such sum that the Board determines shall not be made available for
awards for any fiscal year shall be carried forward and may be awarded in a
subsequent fiscal year.
4. ELIGIBILITY
The Committee, in its sole and absolute discretion, shall have full power
to determine by salary, salary grade, salary band, classification, or otherwise,
the Employees (including those who have retired or died or have been granted a
leave of absence or were laid off during the year) who shall be eligible for
consideration to participate in the Plans in any year, except that the Committee
may not determine as eligible for consideration to participate in the Plans any
Employee who was eligible at any time in that year to participate in any other
Incentive Plan of the Corporation as defined in the Stockholders' Resolution.
Employees shall not be ineligible for consideration to participate in the Plans
by reason of their eligibility to participate in any Performance
<PAGE> 2
Award Plan or in any Savings and Investment Plan, both as defined in the
Stockholders' Resolution, or in any Stock Option Plan, or any Performance Award
Plan adopted under any Stock Option Plan, of Chrysler or any of its subsidiaries
or in any successor plan or programs adopted to replace any such plan or
programs.
5. SELECTING PARTICIPANTS AND DETERMINING AWARDS
Each year the Committee, in accordance with such rules as it may prescribe,
shall:
(a) select from the Employees eligible for consideration to
participate in the Plans those Employees who are to participate for that
year;
(b) award under this Plan to certain of the Employees so selected
(below called Participant) such share of the Fund as the Committee shall
determine (below called an Award); provided, however, that the maximum
amount of such share that may be awarded to a Participant for any year
shall not exceed a dollar amount equal to two hundred percent (200%) of the
Participant's base salary as approved at the time the Performance Goals (as
defined below) for that year are established; and
(c) award under the Long-Term Plan to certain of the Employees so
selected, in accordance with the terms of the Long-Term Plan, such share of
the Fund as the Committee shall determine.
An Employee may receive an Award under this Plan and an award under the
Long-Term Plan in the same year.
The Committee shall have full and final authority in performing these
duties, but shall report to the Board the share of the Fund awarded to each
Employee under this Plan and under the Long-Term Plan, expressed in dollar
amounts and/or percentage of base salary or performance share awards or award
units or otherwise, as the Committee shall determine.
Notwithstanding anything else contained in this Plan to the contrary, if
any Award is intended at the time of grant to be other performance based
compensation within the meaning of Section 162(m)(4)(C) of the Internal Revenue
Code of 1986, as the same may be amended from time to time (the "Code"), to the
extent required to so qualify any Award hereunder, the Committee shall not be
entitled to exercise any discretion otherwise authorized under this Plan with
respect to such Award if the ability to exercise such discretion (as opposed to
the exercise of such discretion) would cause such Award to fail to qualify as
other performance based compensation.
6. TARGET AWARDS
A Target Award for each Participant will be established each fiscal year by
the Committee. Each Target Award will be expressed as a percent (not in excess
of 160%) of the Participant's base salary, or the average base salary or
midpoint of the salary range of a class of Employees. An Employee who first
becomes eligible for an Award, and is selected as a Participant, after the
beginning of a given year will have his or her Target Award established on a pro
rata basis for the number of months he or she is eligible during such year.
7. CORPORATE PERFORMANCE GOALS
The Committee will establish one or more performance goals ("Performance
Goals") consisting of such criteria and for the accomplishment of such corporate
objectives as the Committee may designate prior to the beginning of each award
year relating to the following: quality, customer satisfaction, profitability,
net margin as a percentage of revenue, return on sales, return on capital,
breakeven, productivity, and/or debt to capitalization. However, the Committee
shall have the discretion to change and/or add goals and to modify the
objectives designated in relation to previously established goals.
8. CORPORATE PERFORMANCE EVALUATION
After the end of each year, the Committee will determine the percentage of
attainment of each Performance Goal established for that year. Target Award
amounts will then be adjusted by multiplying the Target Award amounts by the
corporate performance percentage. For purposes of the above calculation, (a) a
2
<PAGE> 3
corporate performance percentage of less than 25% will result in no Awards being
paid, and (b) a corporate performance percentage in excess of 125% will result
in Target Award amounts being adjusted by 125%.
9. PAYING AND EARNING OUT OF AWARDS UNDER THIS PLAN
Awards under this Plan shall be paid to Participants in one lump sum,
unless the Committee, in its discretion, determines that an Award shall be paid
in installments.
A Participant will have earned out under this Plan an Award payable in one
lump sum, or the first installment of an Award payable in installments, if his
or her employment with the Corporation has been continuous (a) up to the date of
payment of the Award payable in one lump sum, or of the first installment of the
Award payable in installments, as the case may be, or (b) up to the date of the
Participant's retirement or death if he or she should retire or die before the
date of such payment, or (c) up to the date the Participant was granted a leave
of absence if such leave of absence was granted before the date of such payment,
or (d) up to the date the Participant was laid off if he was laid off before the
date of such payment. A Participant will have earned out a subsequent
installment if his or her employment with the Corporation has been continuous up
to and including (a) the December 31 immediately preceding the date the
installment is payable, or (b) the date of the Participant's death if he or she
should die before such December 31, or (c) such date as the Corporation may
determine under all other circumstances.
A Participant whose employment with the Corporation is terminated other
than by death will not thereafter earn out under this Plan any installment of an
Award payable in installments unless the Corporation expressly consents in
writing to waive the condition of continuous employment with the Corporation,
and the Participant thereafter will earn out each installment only if up to and
including the December 31 immediately preceding the date the installment is
payable the Participant neither (a) takes other employment or renders services
to others without the written consent of the Corporation, nor (b) conducts
himself or herself in a manner adversely affecting the Corporation, the
determination by the Committee that a Participant has so conducted himself or
herself to be final and conclusive.
Any installment which a Participant fails to earn out under this Plan shall
be forfeited and included in the Fund for a subsequent year as provided in
paragraph 3.
Nothing in this Plan shall prevent the Corporation from discharging or
requesting the resignation of any Participant.
An Award payable in one lump sum, or the first installment of an Award
payable in installments, shall be paid to the Participant on such date as the
Committee shall determine, and if the Participant complies with the conditions
for earning out a subsequent installment, it shall be paid to him or her on such
date in the year in which it is payable as the Committee shall determine.
Any lump sum payment or installment earned out under this Plan and payable
to a Participant who is deceased shall be paid to his or her legal
representative in such manner and at such time as it would have been paid to the
Participant were he or she then alive and in the employ of the Corporation.
10. FORM OF PAYMENTS UNDER THIS PLAN
The Committee in its sole and absolute discretion shall determine for any
year whether under this Plan the lump sum payment or the installment of any
Awards payable in that year shall be paid in cash or in shares of Chrysler
stock, or partly in cash and partly in shares of Chrysler stock, the shares to
be shares held by the Corporation in its treasury or purchased by the
Corporation in the market for distributing in place of cash, the shares to be
valued for this purpose in accordance with the Stockholders' Resolution, with
cash in place of fractional shares.
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11. DEFERRAL OF PAYMENT
A Participant may voluntarily elect to defer receipt of payment under this
Plan of all or any part of an Award payable in one lump sum or of any
installment of an Award payable in installments upon such terms and conditions
as the Committee may prescribe.
12. COSTS
All costs of administering the Plans shall be borne by the Corporation and
shall not be charged against the Fund.
13. PAYMENTS UPON A CHANGE IN CONTROL
Notwithstanding any other provisions hereof, if a "Change in Control" (as
defined in paragraph 13(D) hereof) of Chrysler shall occur, the following shall
be paid, in cash, no later than the tenth day following such Change in Control:
(a) all unpaid installments of an Award payable in installments pursuant to
paragraph 9 of this Plan, (b) all voluntary deferrals made by a Participant
pursuant to paragraph 11 of this Plan (other than deferrals made into the
Chrysler Corporation Salaried Employees Savings Plan and the Chrysler
Corporation Salaried Employees Supplemental Savings Plan, which deferrals will
be governed by the terms of such plans), (c) all unpaid Awards made (including
any made pursuant to paragraph 13(C) hereof) for any completed fiscal year which
preceded the Change in Control, and (d) "Change in Control Awards" (as
determined pursuant to paragraph 13(A) hereof).
A. CHANGE IN CONTROL AWARDS. Upon a Change in Control of Chrysler, each
Employee (below called a "Change in Control Participant") eligible pursuant to
paragraph 4 hereof for consideration to participate in the Plans for the fiscal
year in which the Change in Control occurs (the "Change in Control Year") shall
be paid a cash award, in a lump sum (the "Change in Control Award").
The tentative Change in Control Award of each Change in Control Participant
to whom an Award was made for the last fiscal year immediately preceding the
Change in Control for which Awards (including Awards, if any, made pursuant to
paragraph 13(C) hereof) were made generally (the "Base Year") shall be
determined by multiplying the "Change in Control Fund" (calculated in accordance
with paragraph 13(B) hereof) by a fraction, the numerator of which shall be the
amount of the Award of such Change in Control Participant for the Base Year, and
the denominator of which shall be the aggregate amount of Awards made for the
Base Year. A tentative Change in Control Award for each Change in Control
Participant to whom an Award was not made for the Base Year shall also be
determined and shall be comparable to the tentative Change in Control Awards of
similarly situated (in terms of the criteria employed by the Committee to
determine participation under paragraph 4 hereof, such as salary, salary grade
or classification) Change in Control Participants to whom Awards were made for
the Base Year.
The actual Change in Control Award of each Change in Control Participant
shall then be determined by multiplying the Change in Control Fund by a
fraction, the numerator of which shall be his tentative Change in Control Award
and the denominator of which shall be the aggregate tentative Change in Control
Awards.
B. CHANGE IN CONTROL FUND. The Change in Control Fund shall be the sum of
the amounts described in (i) and (ii) below, adjusted by the amount described in
(iii):
(i) the sum (measured immediately prior to a Change in Control) of (x)
any amount authorized and approved by the Board for any fiscal year
completed prior to the Change in Control but not previously awarded from,
or charged against, the Incentive Compensation Fund pursuant to this or any
other plan of the Corporation and (y) any amount awarded from, or charged
against, the Incentive Compensation Fund for any fiscal year completed
prior to the Change in Control that has been forfeited;
(ii) the aggregate amount calculated for the fiscal year in which the
Change in Control occurs, from its inception up to and including the date
of the Change in Control, in the ordinary course of business and based on
the Stockholders' Resolution. The determination (made prior to the Change
in Control) of the Corporation's internal accountants in making any such
calculation shall be conclusive;
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(iii) the "applicable amount" (the sum of (i) and (ii) above) shall be
adjusted as follows: (a) if an additional charge is made against the
Incentive Compensation Fund with respect to Performance Shares under the
Long-Term Plan upon the occurrence of a Change in Control, the "applicable
amount" shall be reduced by such charge; and (b) if any amount previously
charged against the Incentive Compensation Fund for Performance Shares is
not earned and delivered upon the occurrence of a Change in Control and is
returned to the Incentive Compensation Fund, the "applicable amount" shall
be increased by such returned amount.
C. MAKING AWARDS FOR COMPLETED YEARS. Upon the occurrence of a "Potential
Change in Control" (as defined in paragraph 13(E) hereof), if there is any
completed fiscal year of the Corporation for which the audited financial
statements of the Corporation are available and for which the Board has not yet
determined the Incentive Compensation Fund and/or for which the Committee has
not yet determined the Awards, such determinations and the payments of any
Awards so determined shall be made as soon as reasonably possible.
D. CHANGE IN CONTROL DEFINITION. "Change in Control" shall mean a change in
control of Chrysler, which shall be deemed to have occurred if the conditions
set forth in any one of the following paragraphs shall have been satisfied:
(i) any Person (as defined below) is or becomes the Beneficial Owner
(as defined below) of securities of Chrysler representing 20% or more of
the combined voting power of Chrysler's then outstanding securities (unless
the event causing the 20% threshold to be crossed is an acquisition of
securities directly from Chrysler); or
(ii) during any period of two consecutive years beginning after June
7, 1990, individuals who at the beginning of such period constitute the
Board and any new Director (other than a Director designated by a Person
who has entered into an agreement with Chrysler to effect a transaction
described in paragraph (i), (iii) or (iv) of this Change in Control
definition) whose election or nomination for election was approved by a
vote of at least two-thirds (2/3) of the Directors then still in office who
either were Directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority of the Board; or
(iii) the stockholders of Chrysler approve a merger or consolidation
of Chrysler with any other corporation (other than a merger or
consolidation which would result in the voting securities of Chrysler
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
entity surviving such merger or consolidation), in combination with voting
securities of Chrysler or such surviving entity held by a trustee or other
fiduciary pursuant to any employee benefit plan of Chrysler or such
surviving entity or any subsidiary of Chrysler or such surviving entity, at
least 80% of the combined voting power of the voting securities of Chrysler
or such surviving entity outstanding immediately after such merger or
consolidation); or
(iv) the stockholders of Chrysler approve a plan of complete
liquidation or dissolution of Chrysler or an agreement for the sale or
disposition by Chrysler of all or substantially all Chrysler's assets.
For purposes of the definition of Change in Control in this paragraph
13(D): (a) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as supplemented by Section 13(d)(3) of the Exchange Act, provided,
however, that Person shall not include (i) Chrysler, any subsidiary of
Chrysler or any other Person controlled by Chrysler, (ii) any trustee or
other fiduciary holding securities under any employee benefit plan of
Chrysler or any subsidiary of Chrysler, or (iii) a corporation owned,
directly or indirectly, by the stockholders of Chrysler in substantially
the same proportions as their ownership of securities of Chrysler; and (b)
a Person shall be deemed the "Beneficial Owner" of any securities which
such Person, directly or indirectly, has the right to vote or dispose of or
otherwise has "beneficial ownership" of (within the meaning of Rule 13d-3
under the Exchange Act), including pursuant to any agreement, arrangement
or understanding (whether or not in writing); provided, however, that (i) a
Person shall not be deemed the Beneficial Owner of any security as a result
of an agreement, arrangement or understanding to vote such securities (x)
arising solely from a revocable proxy or consent given in response to a
public proxy or
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<PAGE> 6
consent solicitation made pursuant to, and in accordance with, the Exchange
Act and the applicable rules and regulations thereunder or (y) made in
connection with, or to otherwise participate in, a proxy or consent
solicitation made, or to be made, pursuant to, and in accordance with, the
applicable provisions of the Exchange Act and the applicable rules and
regulations thereunder, in either case described in clause (x) or clause
(y) above, whether or not such agreement, arrangement or understanding is
also then reportable by such Person on Schedule 13D under the Exchange Act
(or any comparable or successor report), and (ii) a Person engaged in
business as an underwriter of securities shall not be deemed to be the
Beneficial Owner of any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.
E. POTENTIAL CHANGE IN CONTROL DEFINITION. A "Potential Change in Control"
shall be deemed to have occurred if the conditions set forth in any one of the
following paragraphs shall have been satisfied:
(i) Chrysler enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control;
(ii) Chrysler or any Person (as defined in paragraph 13(D) hereof)
publicly announces an intention to take or to consider taking actions
which, if consummated, would constitute a Change in Control;
(iii) any Person who is or becomes the Beneficial Owner (as defined in
paragraph 13(D) hereof), directly or indirectly, of securities of Chrysler
representing 10% or more of the combined voting power of Chrysler's then
outstanding securities, increases such Person's beneficial ownership of
such securities by 5% or more over the percentage so owned by such Person
on the date hereof; or
(iv) the Board adopts a resolution to the effect that, for purposes of
this Plan, a Potential Change in Control has occurred.
14. INTERPRETATION
The Board shall have full power and authority to interpret and construe
this Plan and its interpreting and construing of this Plan and acts pursuant to
this Plan in good faith shall be final and conclusive. The Board may correct any
defect or supply any omission or reconcile any inconsistency in such a manner
and to such an extent as it shall find expedient to carry this Plan into effect,
and it shall be the sole and final judge of the expediency. If any such
interpreting or construing shall involve a question of law, the Board may rely
and act upon the opinion of counsel (who may be counsel to Chrysler) on the
question of law.
15. EFFECTIVE PERIOD
The Plan shall become effective, upon approval by the Board, beginning
January 1, 1970, and shall remain in effect until terminated as provided in
Paragraph 16.
16. AMENDMENT AND TERMINATION
At any time the Board may amend, alter or terminate this Plan (consistent
with the Stockholders' Resolution) as the Board shall deem advisable; provided,
however, that the Board may not: (a) without the approval of the holders of a
majority of the shares of Common Stock of Chrysler voting on the matter,
increase the total amount that under the Stockholders' Resolution may be
provided out of the earnings of the Corporation for incentive compensation and
(b) without the approval of the holders of a majority of the shares of Common
Stock of Chrysler issued and outstanding, issue shares of Chrysler stock for
distributing in place of cash; and provided further, however, that terminating
or amending this Plan shall not terminate the right of any Participant to earn
out and thereby become entitled to receive, in the same manner as if this Plan
had not been terminated or amended, any unpaid installment of an Award made to
him under this Plan prior to the terminating or amending of this Plan or any
Retirement Benefit he would become eligible to receive under the Supplemental
Plan by complying with the terms thereof.
Nothing in this Plan shall be interpreted to preclude Chrysler from
granting awards under, or paying compensation outside the parameters of, the
Plan including, without limitation, base salaries, awards under
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any other plan of Chrysler (whether or not approved by stockholders), incentive
compensation (whether or not based on the attainment of pre-established
performance objectives) or retention or other special payments, that is not
deductible for Federal, State or local income tax purposes by reason of Section
162(m) of the Code or otherwise, should the Board or any committee thereof
(including the Committee), whichever is applicable, determine that such action
is in the best interests of Chrysler and its stockholders.
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EXHIBIT 10-B-4
CHRYSLER CORPORATION
DISCRETIONARY INCENTIVE COMPENSATION PLAN
EFFECTIVE DECEMBER 1, 1994
(AS AMENDED THROUGH MAY 31, 1995)
1. PURPOSE
The purpose of the Chrysler Corporation Discretionary Incentive
Compensation Plan (the "Plan") is to encourage the continued and energetic
efforts of officers and key salaried employees ("Employees") of Chrysler
Corporation ("Chrysler") and its subsidiaries (Chrysler and its subsidiaries are
referred to collectively as the "Corporation") on behalf of the Corporation by
enabling them to share in the profits of the Corporation, in accordance with the
resolution adopted by the Stockholders of Chrysler at their Annual Meeting on
April 16, 1929, as amended and as it may be further amended from time to time
(the "Stockholders' Resolution").
2. INCENTIVE COMPENSATION COMMITTEE
The Board of Directors of Chrysler (the "Board") will appoint not less than
three Directors, none of whom will be entitled to receive funds or securities
pursuant to any Incentive Plan (as defined in the Stockholders' Resolution) of
Chrysler, to be an Incentive Compensation Committee (the "Committee") to
administer this Plan. All of the members of the Committee will be "disinterested
persons" (which term as used herein shall have the meaning ascribed to it in
Rule 16b-3 under the Securities Exchange Act of 1934, or in any amendment
thereof in effect at the relevant time). The Committee may designate a
Secretary, one or more Assistant Secretaries and an Administrator, none of whom
need be Directors of Chrysler. The Committee will have authority, in its
discretion, to prescribe, amend, and rescind rules and regulations relating to
this Plan.
3. INCENTIVE COMPENSATION FUND
For each fiscal year the Board will authorize and approve the amount to be
provided out of the earnings of the Corporation for such fiscal year for
purposes of this Plan, the Chrysler Corporation Incentive Compensation Plan, and
the Chrysler Corporation Long-Term Incentive Plan (collectively, the "Plans"),
not to exceed the amount permitted by the Stockholders' Resolution, and will
authorize and direct the proper officers of the Corporation to set aside the
amount and to add to it (a) any amount authorized and approved by the Board for
any prior fiscal year but not previously awarded and (b) any amount awarded for
any prior fiscal year that has been forfeited. The sum of those amounts (or such
part thereof as the Board may determine should be made available for awards for
any fiscal year) will be the Incentive Compensation Fund for that fiscal year
(the "Fund"). Any part of the Fund that the Board determines shall not be made
available for awards for any fiscal year will be carried forward and may be
awarded in a subsequent fiscal year.
4. PARTICIPANTS
The committee, in its sole and absolute discretion, has full power to
determine by salary, salary grade, salary band, classification, or otherwise,
the Employees (including those who have joined the Corporation or retired or
died or have been granted a leave of absence or were laid off during the year)
who may participate in the Plan in any year ("Participants").
5. AWARDS
Each year the Committee may award under this Plan to each Participant such
share of the Fund as the Committee shall determine (below called an Award). The
Award to a Participant may be based on an
<PAGE> 2
assessment of the Participant's individual performance during the year, or on
corporate performance, or both, as the Committee may determine.
The Committee shall have full and final authority in performing these
duties, but shall report to the Board the share of the Fund awarded under this
Plan.
6. PAYING AND EARNING OUT OF AWARDS UNDER THIS PLAN
Awards under this Plan shall be paid to Participants in one lump sum,
unless the Committee, in its discretion, determines that an Award shall be paid
in installments.
A Participant will have earned out under this Plan an Award payable in one
lump sum, or the first installment of an Award payable in installments, if his
or her employment with the Corporation has been continuous (a) up to the date of
payment of the Award payable in one lump sum, or of the first installment of the
Award payable in installments, as the case may be, or (b) up to the date of the
Participant's retirement or death if he or she should retire or die before the
date of such payment, or (c) up to the date the Participant was granted a leave
of absence if such leave of absence was granted before the date of such payment,
or (d) up to the date the Participant was laid off if he or she was laid off
before the date of such payment. A Participant will have earned out a subsequent
installment if his or her employment with the Corporation has been continuous up
to and including (a) the December 31 immediately preceding the date the
installment is payable, or (b) the date of the Participant's death if he or she
should die before such December 31, or (c) such date as the Corporation may
determine under all other circumstances.
A Participant whose employment with the Corporation is terminated other
than by death will not thereafter earn out under this Plan any installment of an
Award payable in installments unless the Corporation expressly consents in
writing to waive the condition of continuous employment with the Corporation,
and the Participant thereafter will earn out each installment only if up to and
including the December 31 immediately preceding the date the installment is
payable the Participant neither (a) takes other employment or renders services
to others without the written consent of the Corporation, nor (b) conducts
himself or herself in a manner adversely affecting the Corporation, the
determination by the Committee that a Participant has so conducted himself or
herself to be final and conclusive.
Any installment which a Participant fails to earn out under this Plan shall
be forfeited and included in the Fund for a subsequent year.
Nothing in this Plan shall prevent the Corporation from discharging or
requesting the resignation of any Participant.
An Award payable in one lump sum, or the first installment of an Award
payable in installments, shall be paid to the Participant on such date as the
Committee shall determine, and if the Participant complies with the conditions
for earning out a subsequent installment, it shall be paid to him or her on such
date in the year in which it is payable as the Committee shall determine.
Any lump sum payment or installment earned out under this Plan and payable
to the Participant who is deceased shall be paid to his or her legal
representative in such manner and at such time as it would have been paid to the
Participant were he or she then alive and in the employ of the Corporation.
7. FORM OF PAYMENTS UNDER THIS PLAN
The Committee in its sole and absolute discretion shall determine for any
year whether under this Plan the lump sum payment or the installment of any
Awards payable in that year shall be paid in cash or in shares of Chrysler
stock, or partly in cash and partly in shares of Chrysler stock, the shares to
be shares held by the Corporation in its treasury or purchased by the
Corporation in the market for distributing in place of cash, the shares to be
valued for this purpose in accordance with the Stockholder's Resolution, with
cash in place of fractional shares.
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8. DEFERRAL OF PAYMENT
A Participant may voluntarily elect to defer receipt of payment under this
Plan of all or any part of an Award payable in one lump sum or of any
installment of an Award payable in installments upon such terms and conditions
as the Committee may prescribe.
9. COSTS
All costs of administering the Plan shall be borne by the Corporation and
shall not be charged against the Fund.
10. PAYMENTS UPON A CHANGE IN CONTROL
Notwithstanding any other provisions hereof, if a "Change in Control" (as
defined in paragraph 10(B) hereof) of Chrysler shall occur, the following shall
be paid, in cash, no later than the tenth day following such Change in Control:
(a) all unpaid installments of an Award payable in installments under this Plan,
(b) all voluntary deferrals made by a Participant under this Plan (except
deferrals made into the Chrysler Corporation Salaried Employees Savings Plan and
the Chrysler Corporation Salaried Employees Supplemental Savings Plan, which
deferrals will be governed by the terms of such Plans), and (c) all unpaid
Awards made (including any made pursuant to paragraph 10(A) hereof) for any
completed fiscal year which preceded the Change in Control.
A. MAKING AWARDS FOR COMPLETED YEARS. Upon the occurrence of a "Potential
Change in Control" (as defined in paragraph 10(C) hereof), if there is any
completed fiscal year of the Corporation for which the audited financial
statements of the Corporation are available and for which the Board has not yet
determined the Incentive Compensation Fund and/or for which the Committee has
not yet determined the Awards, such determinations and the payments of any
Awards so determined shall be made as soon as reasonably possible.
B. CHANGE IN CONTROL DEFINITION. "Change in Control" shall mean a change in
control of Chrysler, which shall be deemed to have occurred if the conditions
set forth in any one of the following paragraphs shall have been satisfied:
(i) any Person (as defined below) is or becomes the Beneficial Owner
(as defined below) of securities of Chrysler representing 20% or more of
the combined voting power of Chrysler's then outstanding securities (unless
the event causing the 20% threshold to be crossed in an acquisition of
securities directly from Chrysler); or
(ii) during any period of two consecutive years beginning after June
7, 1990, individuals who at the beginning of such period constitute the
Board and any new Director (other than a Director designated by a Person
who has entered into an agreement with Chrysler to effect a transaction
described in paragraph (i), (iii) or (iv) of this Change in Control
definition) whose election or nomination for election was approved by a
vote of at least two-thirds (2/3) of the Directors then still in office who
either were Directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority of the Board; or
(iii) the stockholders of Chrysler approve a merger or consolidation
of Chrysler with any other corporation (other than a merger or
consolidation which would result in the voting securities of Chrysler
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
entity surviving such merger or consolidation), in combination with voting
securities of Chrysler or such surviving entity held by a trustee or other
fiduciary pursuant to any employee benefit plan of Chrysler or such
surviving entity or any subsidiary of Chrysler or such surviving entity, at
least 80% of the combined voting power of the voting securities of Chrysler
or such surviving entity outstanding immediately after such merger or
consolidation); or
(iv) the stockholders of Chrysler approve a plan of complete
liquidation or dissolution of Chrysler or an agreement for the sale or
disposition by Chrysler of all or substantially all Chrysler's assets.
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For purposes of the definition of Change in Control in this paragraph
10(B): (a) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as supplemented by Section 13(d)(3) of the Exchange Act, provided, however, that
Person shall not include (i) Chrysler, any subsidiary of Chrysler or any other
Person controlled by Chrysler, (ii) any trustee or other fiduciary holding
securities under any employee benefit plan of Chrysler or any subsidiary of
Chrysler, or (iii) a corporation owned, directly or indirectly, by the
stockholders of Chrysler in substantially the same proportions as their
ownership of securities of Chrysler; and (b) a Person shall be deemed the
"Beneficial Owner" of any securities which such Person, directly or indirectly,
has the right to vote or dispose of or otherwise has "beneficial ownership" of
(within the meaning of Rule 13d-3 under the Exchange Act), including pursuant to
any agreement, arrangement or understanding (whether or not in writing);
provided, however, that (i) a Person shall not be deemed the Beneficial Owner of
any security as a result of an agreement, arrangement or understanding to vote
such securities (x) arising solely from a revocable proxy or consent given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the Exchange Act and the applicable rules and regulations
thereunder or (y) made in connection with, or to otherwise participate in, a
proxy or consent solicitation made, or to be made, pursuant to, and in
accordance with, the applicable provisions of the Exchange Act and the
applicable rules and regulations thereunder, in either case described in clause
(x) or clause (y) above, whether or not such agreement, arrangement or
understanding is also then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report), and (ii) a Person engaged
in business as an underwriter of securities shall not be deemed to be the
Beneficial Owner of any securities acquired through such Person's participation
in good faith in a firm commitment underwriting until the expiration of forty
days after the date of such acquisition.
C. POTENTIAL CHANGE IN CONTROL DEFINITION. A "Potential Change in
Control" shall be deemed to have occurred if the conditions set forth in any one
of the following paragraphs shall be satisfied:
(i) Chrysler enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control;
(ii) Chrysler or any Person (as defined in paragraph 10(B) hereof)
publicly announces an intention to take or to consider taking actions which
if consummated, would constitute a Change in Control:
(iii) any Person who is or becomes the Beneficial Owner (as defined in
paragraph 10(B) hereof), directly or indirectly, of securities of Chrysler
representing 10% or more of the combined voting power of Chrysler's then
outstanding securities, increases such Person's beneficial ownership of
such securities by 5% or more over the percentage so owned by such Person
on the date hereof; or
(iv) the Board adopts a resolution to the effect that, for purposes of
this Plan, a Potential Change in Control has occurred.
11. INTERPRETATION
The Board shall have full power and authority to interpret and construe
this Plan and its interpreting and construing of this Plan and acts pursuant to
this Plan in good faith shall be final and conclusive. The Board may correct any
defect or supply any omission or reconcile any inconsistency in such a manner
and to such an extent as it shall find expedient to carry this Plan into effect,
and it shall be the sole and final judge of the expediency. If any such
interpreting or construing shall involve a question of law, the Board may rely
and act upon the opinion of counsel (who may be counsel to Chrysler) on the
question of law.
12. EFFECTIVE PERIOD
The Plan shall become effective, upon approval by the Board, beginning
December 1, 1994, and shall remain in effect until terminated as provided in
Paragraph 16.
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13. AMENDMENT AND TERMINATION
At any time the Board may amend, alter or terminate this Plan (consistent
with the Stockholders' Resolution) as the Board shall deem advisable; provided,
however, that the Board may not: (a) without the approval of the holders of a
majority of the shares of Common Stock of Chrysler voting on the matter,
increase the total amount that under the Stockholders' Resolution may be
provided out of the earnings of the Corporation for incentive compensation and
(b) without the approval of the holders of a majority of the shares of Common
Stock of Chrysler issued and outstanding, issue shares of Chrysler stock for
distributing in place of cash; and provided further, however, that terminating
or amending this Plan shall not terminate the right of any Participant to earn
out and thereby become entitled to receive, in the same manner as if this Plan
had not been terminated or amended, any unpaid installment of an Award made to
him under this Plan prior to the terminating or amending of this Plan.
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EXHIBIT 10-B-5
(AS AMENDED BY THE BOARD OF DIRECTORS ON MARCH 3, 1994
SUBJECT TO STOCKHOLDER APPROVAL ON MAY 19, 1994)
CHRYSLER CORPORATION
LONG-TERM INCENTIVE PLAN
EFFECTIVE JUNE 11, 1987
(AS AMENDED THROUGH MAY 31, 1995)
1. PURPOSE
The purpose of the Chrysler Corporation Long-Term Incentive Plan (below
called the Plan) is to provide an incentive to the officers and other key
salaried employees (below called collectively Employees) of Chrysler Corporation
(below called Chrysler) and its subsidiaries (Chrysler and its subsidiaries
collectively below called the Corporation) by enabling them to earn shares of
common stock of Chrysler (below called the Chrysler Common Stock) as a reward
for the achievement of long-term goals and objectives of the Corporation, in
accordance with the resolution most recently adopted by the stockholders of
Chrysler at their Annual Meeting on May 19, 1994, amending a resolution
originally adopted on April 16, 1929, as it has been and may be further amended
from time to time (below called the Stockholders' Resolution). All capitalized
terms used below shall have the meanings ascribed to them in Section 3 below.
2. INTEGRATION WITH INCENTIVE COMPENSATION PLAN
This Plan shall be fully integrated with the Incentive Compensation Plan.
The funds for the purchase of Chrysler Common Stock to be awarded as Performance
Shares under this Plan shall be provided out of the earnings of the Corporation
available for incentive compensation under the Incentive Compensation Plan, as
the Board from time to time shall determine. Awards made hereunder shall
complement awards made under the Incentive Compensation Plan as the Committee
shall determine in its sole discretion. An amount equal to 125% of the total
Fair Market Value of Performance Shares granted, on the day they were granted,
shall be charged against the Incentive Compensation Fund (as that term is
defined in the Incentive Compensation Plan). Any amount charged against the
Incentive Compensation Fund for any Performance Shares not earned and delivered
shall be returned to the funds available for incentive compensation under the
Incentive Compensation Plan, and shall be carried forward and may be awarded in
a subsequent fiscal year.
3. DEFINITIONS
"Beneficial Owner" -- with respect to any securities, shall mean any Person
who, directly or indirectly, has the right to vote or dispose of such securities
or otherwise has "beneficial ownership" of such securities (within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), including pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that (i) a Person
shall not be deemed the Beneficial Owner of any security as a result of an
agreement, arrangement or understanding to vote such security (x) arising solely
from a revocable proxy or consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange Act and the
applicable rules and regulations thereunder or (y) made in connection with, or
to otherwise participate in, a proxy or consent solicitation made, or to be
made, pursuant to, and in accordance with, the applicable provisions of the
Exchange Act and the applicable rules and regulations thereunder, in either case
described in clause (x) or clause (y) above, whether or not such agreement,
arrangement or understanding is also then reportable by such Person on Schedule
13D under the Exchange Act (or any comparable or successor report), and (ii) a
Person engaged in business as an underwriter of securities shall not be deemed
to be the Beneficial Owner of any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition."
"Board" means the Board of Directors of Chrysler.
<PAGE> 2
"Change in Control" -- means a change in control of Chrysler, which shall
be deemed to have occurred if the conditions set forth in any one of the
following paragraphs shall have been satisfied:
(a) any Person shall become the Beneficial Owner of securities of
Chrysler representing 20% or more of the combined voting power of
Chrysler's then outstanding securities (unless the event causing the 20%
threshold to be crossed is an acquisition of securities directly from
Chrysler);
(b) during any period of two consecutive years beginning after [June
7, 1990], individuals who at the beginning of such period constitute the
Board of Directors and any new director (other than a director designated
by a Person who has entered into an agreement with Chrysler to effect a
transaction described in paragraph (a), (c) or (d) of this Change in
Control definition) whose election or nomination for election was approved
by a vote of at least two-thirds (2/3) of the Directors then still in
office who either were Directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for
any reason to constitute a majority of the Board; or
(c) the stockholders of Chrysler approve a merger or consolidation of
Chrysler with any other corporation (other than a merger or consolidation
which would result in the voting securities of Chrysler outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the entity
surviving such merger or consolidation), in combination with voting
securities of Chrysler or such surviving entity held by a trustee or other
fiduciary pursuant to any employee benefit plan of Chrysler or such
surviving entity or any subsidiary of Chrysler or such surviving entity, at
least 80% of the combined voting power of the voting securities of Chrysler
or such surviving entity outstanding immediately after such merger or
consolidation); or
(d) the stockholders of Chrysler approve a plan of complete
liquidation or dissolution of Chrysler or an agreement for the sale or
disposition by Chrysler of all or substantially all Chrysler's assets.
"Change in Control Fund" -- with respect to any Performance Cycle, means
the outstanding amount charged against the Fund with respect to such Performance
Cycle immediately prior to the occurrence of a Change in Control, increased by
the sum of the amounts described in "(i)" and "(ii)" below:
(i) the sum of (x) any amount authorized and approved by the Board for
any fiscal year completed prior to the Change in Control but not previously
awarded from, or charged against, the Incentive Compensation Fund pursuant
to this or any other plan of the Corporation, and (y) any amount awarded
from, or charged against, the Incentive Compensation Fund for any fiscal
year completed prior to the Change in Control that has been forfeited;
(ii) the aggregate amount calculated for the fiscal year in which
Change in Control occurs, from its inception up to and including the date
of the Change in Control, in the ordinary course of business and based on
the Stockholders' Resolution. The determinations (made prior to the Change
in Control) of the Corporation's internal accountants in making any such
calculation shall be conclusive.
"Change in Control Value" -- means, with respect to the Performance Shares,
the higher of (i) the Fair Market Value of a share of Chrysler Common Stock on
the relevant valuation date or (ii) the value of a share of Chrysler Common
Stock, determined as follows:
(w) in the case of transactions described in paragraphs (a) or (c) of
the Change in Control definition, the highest per share price paid (the
"Transaction Value") for shares of Chrysler Common Stock in the transaction
constituting the Change in Control,
(x) in the case of a transaction described in paragraph (b) of the
Change in Control definition which occurs in connection with a transaction
described in paragraph (a), (c) or (d) of the Change in Control definition,
the Transaction Value,
(y) in the case of a Change in Control described in paragraph (b) of
the Change in Control definition which does not occur in connection with a
transaction described in paragraph (a), (c) or (d) of the Change in Control
definition, the average of the daily closing prices per share of Chrysler
Common Stock on the New York Stock Exchange, if such shares are traded
thereon, or, if not, such other national
2
<PAGE> 3
securities exchange on which such shares are admitted to trade, or, if
none, the National Association of Securities Dealers Automated Quotation
System if such shares are admitted for quotation thereon, during the thirty
(30) consecutive trading days immediately preceding the Change in Control,
or
(z) in the case of a transaction described in paragraph (d) of the
Change in Control definition, the equivalent of the Transaction Value as
determined by the Committee.
"Committee" -- means the Incentive Compensation Committee of the Board.
"Fair Market Value" -- means for purposes of Performance Shares, the mean
of the high and low trading prices of Chrysler Common Stock on the date on which
it is to be valued hereunder, as reported on the New York Stock Exchange, or if
the Exchange is closed on such day, the next preceding day on which the Exchange
was open for trading.
"Incentive Compensation Plan" -- means the Chrysler Corporation Incentive
Compensation Plan adopted in accordance with the Stockholders' Resolution.
"Participant" -- means an Employee who is selected by the Committee to
receive an award of Performance Shares under the Plan.
"Performance Cycle" or "Cycle" -- means the period of years determined by
the Committee during which the performance of the Corporation is measured for
the purpose of determining the extent to which an award of Performance Shares
has been earned.
"Performance Goals" -- means one or more corporate objectives established
by the Committee for a Performance Cycle, for the purpose of determining the
extent to which Performance Shares which have been contingently awarded for such
Cycle are earned. Such objectives shall relate to: quality, customer
satisfaction, profitability, net margin as a percentage of revenue, return on
sales, return on capital, breakeven, productivity, and/or debt to
capitalization.
"Performance Share" -- means an award expressed as a share of Chrysler
Common Stock contingently awarded under this Plan.
"Person" -- shall have the meaning ascribed to such term in Section 3(a)(9)
of the Exchange Act, as supplemented by Section 13(d)(3) of the Exchange Act,
provided, however, that Person shall not include (i) Chrysler, any subsidiary of
Chrysler or any other Person controlled by Chrysler, (ii) any trustee or other
fiduciary holding securities under any employee benefit plan of Chrysler or any
subsidiary of Chrysler, or (iii) a corporation owned, directly or indirectly, by
the stockholders of Chrysler in substantially the same proportions as their
ownership of securities of Chrysler.
4. INCENTIVE COMPENSATION COMMITTEE
The Board has appointed not less than three Directors of Chrysler to be the
Committee to administer this Plan. All of the members of the Committee are
"disinterested persons" (which term as used herein shall have the meaning
ascribed to it in Rule 16b-3 under the Securities Exchange Act of 1934, or in
any amendment thereof in effect at the relevant time). Subject to the provisions
of this Plan, the Committee shall have authority, in its discretion, to
prescribe, amend, and rescind rules and regulations relating to this Plan.
5. ELIGIBILITY
All Employees who are eligible to participate in the Incentive Compensation
Plan, as determined by the Committee, are eligible to be Participants in this
Plan. The Committee shall have sole and complete authority to determine the
Employees who shall be awarded Performance Shares under this Plan.
6. PERFORMANCE CYCLES
During 1987 the Committee shall establish Performance Cycles for the years
1987, 1987 through 1988 and 1987 through 1989. During each of the years 1988 and
thereafter the Committee may, but shall not be required to, establish a new
Performance Cycle with respect to a future period, which shall not be less than
3
<PAGE> 4
two nor more than five years. The Committee shall have sole and complete
authority to determine the duration of each Performance Cycle. More than one
Performance Cycle may be in effect at any one time, and the duration of one
Performance Cycle may differ from another.
7. PERFORMANCE GOALS
The Committee shall establish one or more Performance Goals for each
Performance Cycle consisting of such criteria and for the accomplishment of such
corporate objectives as the Committee may designate prior to the beginning of
each Performance Cycle. During any Cycle, the Committee may adjust the
Performance Goals for such Cycle as it deems equitable in recognition of unusual
or non-recurring events affecting the Corporation or changes in applicable tax
laws or accounting principles.
8. PERFORMANCE AWARDS
At the commencement of each Performance Cycle the Committee shall (a) award
to each Participant the number of Performance Shares that would be deliverable
to the Participant if the Performance Goals for that Cycle are fully achieved at
a 100% level of performance, which number shall be determined by dividing an
amount (expressed as a percentage -- not to exceed 80% -- of the Participant's
base salary, or the average base salary or midpoint of the salary range of a
class of Participants, at the time of the award) by the then fair market price
of Chrysler Common Stock and (b) establish a range within which greater or
lesser percentages (including a minimum and maximum percentage) of the number of
shares awarded as Performance Shares would be earned based on the actual
performance level attained. The maximum of such range shall not exceed 125% of
the number of shares awarded as Performance Shares.
When a person becomes employed by the Corporation in, or is promoted by the
Corporation to, a position that constitutes him an Employee eligible to
participate in the Plan, the Committee may, in its sole discretion, award to
such person Performance Shares for one or more Performance Cycles commenced and
then in progress.
The Committee may, in its sole discretion, supplement any award previously
made to any Participant, provided that such award has not yet been earned out
and paid; and provided further, that the Committee may not exercise such
discretion to the extent that the ability to exercise such discretion would
cause the Performance Share award to fail to qualify as other performance based
compensation under Section 162(m) of the Internal Revenue Code.
9. PAYMENT OF PERFORMANCE SHARES
The Committee shall determine the percentage of the Performance Shares
which were earned by each Participant with respect to each Performance Cycle.
Such determination shall be made by considering the Corporation's performance in
relation to the Performance Goals established for that Performance Cycle and
deriving therefrom a percentage of attainment of the Performance Goals. Such
percentage (but not more than 125%) multiplied by the number of shares awarded
as Performance Shares to each Participant shall be the number of shares of
Chrysler Common Stock earned and to be delivered to such Participant. Such
shares shall be shares held by the Corporation in its treasury.
A Participant may elect, on or after the date of grant of any award and
before the year in which such award is to be paid, to defer receipt of all or
any portion of the Performance Shares deliverable to such Participant upon
earning such award, subject to the terms and conditions contained in any
applicable deferral or similar plan or arrangement.
10. DIVIDEND EQUIVALENTS
Participants shall be entitled to receive cash payments equivalent to the
dividend payments, if any, made to the owners of Chrysler Common Stock during
the Performance Cycle, on the dates such dividend payments are made. Such
payments are payable from and after the date Performance Shares are awarded
(i.e., during
4
<PAGE> 5
the relevant Performance Cycle) without regard to the attainment of Performance
Goals. Such cash payments equivalent to dividends shall not be charged against
the funds available for incentive compensation.
11. TERMINATION OF EMPLOYMENT
A Participant must be an Employee at the end of a Performance Cycle in
order to be entitled to payment of Performance Shares in respect of such Cycle;
provided, however, that in the event a Participant ceases to be an Employee
prior to the end of that Cycle (a) by reason of death, disability under any
disability plan of the Corporation, or retirement at or after age 65 under a
pension plan of the Corporation, he (or the legal representative of his estate
or his legatees) shall continue to earn, as if he had not ceased to be an
Employee, any Performance Shares awarded to him for that Cycle, or (b) by reason
of layoff, or by reason of retirement before age 65 under a pension plan of the
Corporation, the Committee, in its discretion and after taking into
consideration the performance of such Participant and the performance of the
Corporation during the Cycle, may authorize payment to such Participant with
respect to some or all of the Performance Shares awarded to him for that Cycle.
No award of Performance Shares shall confer upon any Employee any right to
continued employment with the Corporation nor shall it interfere with the right
of the Corporation to terminate the employment of any Employee at any time.
12. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION
Notwithstanding any other provision of this Plan, in the event of any
change in the outstanding Chrysler Common Stock by reason of a stock dividend,
recapitalization, merger, consolidation, split-up, combination or exchange of
shares, and the like, the number and class of shares subject to each outstanding
award of Performance Shares shall be appropriately adjusted by the Board, whose
determination shall be conclusive.
13. CHANGE IN CONTROL
(A) First, subject to Section 13(D) hereof, upon the occurrence of a Change
in Control, any Performance Shares for a completed Performance Cycle which the
Committee has previously determined that a Participant has earned (but with
respect to which no delivery of Chrysler Common Stock has been made) shall be
paid no later than the tenth day following such Change in Control to such
Participant, in cash, in an amount equal to the Change in Control Value of each
such Performance Share multiplied by the number of such Performance Shares
(together with dividend equivalents on such shares calculated pursuant to
Section 10 hereof).
(B) Second, subject to Section 13(D) hereof, upon the occurrence of a
Change in Control, any Performance Shares for a completed Performance Cycle
previously awarded to a Participant who was an Employee (or otherwise entitled
to payment under Section 11 hereof) at the end of such Performance Cycle (but as
to which the Committee has made no determination with respect to the number of
such shares earned by such Participant) shall be deemed earned out, at the
higher of a 100% level of performance or at the highest level of performance
attained in any of the three most recently completed previous Performance
Cycles. The Performance Shares so earned out shall be paid immediately to each
such Participant, in cash, in an amount equal to the Change in Control Value of
each Performance Share multiplied by the number of such shares deemed to have
been earned out (together with dividend equivalents on such shares calculated
pursuant to Section 10 hereof).
(C) Third, subject to Section 13(D) hereof, upon the occurrence of a Change
in Control, a pro rata percentage (determined as provided below) of all
Performance Shares for each outstanding Performance Cycle previously awarded to
a Participant who is an Employee on the date immediately preceding the date of
the Change in Control which have not yet been earned out shall be deemed earned
out, at the higher of a 100% level of performance or at the highest level of
performance attained in any of the three most recently completed Performance
Cycles. The Performance Shares so earned out shall be paid immediately to each
such Participant in cash, in an amount equal to the Change in Control Value of
each Performance Share multiplied by the number of such shares deemed to have
been earned out (together with dividend equivalents on such shares calculated
pursuant to Section 10 hereof).
5
<PAGE> 6
The number of Performance Shares deemed to have been earned out by a
Participant with respect to each outstanding Performance Cycle, upon a Change in
Control, shall be determined by first multiplying the total Performance Shares
awarded to the Participant for such Performance Cycle by a fraction, the
numerator of which shall be the number of complete months in such Performance
Cycle which have elapsed at the date of the Change in Control and the
denominator of which shall be the total number of months in such Performance
Cycle. Next, the number of Performance Shares determined in the first step shall
be multiplied by the applicable percentage level of performance for such
Performance Cycle.
(D) Notwithstanding Sections 13(A), (B) and (C) hereof, the aggregate
amount payable with respect to any Performance Cycle pursuant to this Section 13
shall not exceed such Performance Cycle's Change in Control Fund and, if
necessary, the individual amounts otherwise payable with respect to a particular
Performance Cycle shall be reduced proportionally until the aggregate amount
equals such Performance Cycle's Change in Control Fund.
14. ADMINISTRATIVE COSTS
All costs of administering this Plan shall be borne by the Corporation and
shall not be charged against the funds available for incentive compensation.
15. INTERPRETATION
The Board shall have full power and authority to interpret and construe
this Plan and its interpreting and construing of this Plan and acts pursuant to
this Plan in good faith shall be final and conclusive. The Board may correct any
defect or supply any omission or reconcile any inconsistency in such a manner
and to such an extent as it shall find expedient to carry this Plan into effect,
and it shall be the sole and final judge of expediency. If any such interpreting
or construing shall involve a question of law, the Board may rely and act upon
the opinion of counsel (who may be counsel to Chrysler) on the question of law.
Notwithstanding anything else contained in this Plan to the contrary, if
any award of Performance Shares is intended at the time of grant to be other
performance based compensation within the meaning of Section 162(m)(4)(C) of the
Code, to the extent required to so qualify any award hereunder, the Committee
shall not be entitled to exercise any discretion otherwise authorized under this
Plan with respect to such award if the ability to exercise such discretion (as
opposed to the exercise of such discretion) would cause such award to fail to
qualify as other performance based compensation.
16. EFFECTIVE PERIOD
This Plan shall become effective beginning June 11, 1987, and shall remain
in effect until terminated as provided in Paragraph 17.
17. AMENDMENT AND TERMINATION
At any time the Board may terminate this Plan or make such changes in it
and additions to it (consistent with the Stockholders' Resolution) as the Board
shall deem advisable; provided, however, that the Board may not: (a) without the
approval of the holders of a majority of the shares of Common Stock of Chrysler
voting on the matter, increase the total amount that under the Stockholders'
Resolution may be provided out of the earnings of the Corporation for incentive
compensation and (b) without the approval of the holders of a majority of the
shares of Common Stock of Chrysler issued and outstanding, issue shares of
Chrysler Common Stock for purposes of this Plan; and provided further, however,
that terminating or amending this Plan shall not terminate the right of any
Participant to earn and thereby become entitled to receive, in the same manner
as if this Plan had not been terminated or amended, any unearned Performance
Shares awarded to him under this Plan prior to the terminating or amending of
this Plan.
Nothing in this Plan shall be interpreted to preclude Chrysler from
granting awards under, or paying compensation outside the parameters of, the
Plan including, without limitation, base salaries, awards under any other plan
of Chrysler (whether or not approved by stockholders), incentive compensation
(whether or
6
<PAGE> 7
not based on the attainment of pre-established performance objectives) or
retention or other special payments, that is not deductible for Federal, State
or local income tax purposes by reason of Section 162(m) of the Internal Revenue
Code or otherwise, should the Board or any committee thereof (including the
Committee), whichever is applicable, determine that such action is in the best
interests of Chrysler and its stockholders.
7
<PAGE> 1
EXHIBIT 11
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
EARNINGS PER COMMON SHARE DATA
APB OPINION NO. 15 CALCULATION
<TABLE>
<CAPTION>
PERIOD ENDED JUNE 30,
------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ------------------
1995 1994 1995 1994
------ ------ ------ ------
(IN MILLIONS OF DOLLARS AND SHARES)
<S> <C> <C> <C> <C>
PRIMARY:
Net earnings....................................... $ 135 $ 956 $ 727 $1,894
Preferred stock dividend........................... (3) (20) (17) (40)
------ ------ ------ ------
Earnings attributable to common stock.............. $ 132 $ 936 $ 710 $1,854
====== ====== ====== ======
Weighted average shares outstanding................ 375.1 354.1 367.0 354.0
Shares issued on exercise of dilutive options...... 6.2 10.5 6.5 10.6
Shares purchased with proceeds of options.......... (3.1) (6.0) (3.2) (5.5)
Shares contingently issuable....................... 0.5 0.5 0.4 0.5
------ ------ ------ ------
Shares applicable to primary earnings.............. 378.7 359.1 370.7 359.6
====== ====== ====== ======
FULLY DILUTED:
Net earnings....................................... $ 135 $ 956 $ 727 $1,894
Preferred stock dividend........................... (3) -- -- --
------ ------ ------ ------
Earnings attributable to common stock.............. $ 132 $ 956 $ 727 $1,894
====== ====== ====== ======
Weighted average shares outstanding................ 375.1 354.1 367.0 354.0
Shares issued on exercise of dilutive options...... 12.1 10.5 9.4 10.6
Shares purchased with proceeds of options.......... (8.6) (6.0) (6.0) (5.5)
Shares applicable to convertible preferred stock... 10.7 47.9 29.7 47.9
Shares contingently issuable....................... 0.9 1.0 0.7 0.9
------ ------ ------ ------
Shares applicable to fully diluted earnings........ 390.2 407.5 400.8 407.9
====== ====== ====== ======
<CAPTION>
(IN DOLLARS)
<S> <C> <C> <C> <C>
PER COMMON SHARE DATA:
Primary:
Net earnings per common share................... $ 0.35 $ 2.61 $ 1.92 $ 5.16
====== ====== ====== ======
Fully Diluted:
Net earnings per common share................... $ 0.34 $ 2.35 $ 1.81 $ 4.64
====== ====== ====== ======
</TABLE>
NOTE: Primary earnings per common share amounts were computed by dividing
earnings after deduction of preferred stock dividends by the average
number of common and dilutive equivalent shares 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 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 unless such conversion has
the effect of increasing the earnings per common share amount or
decreasing the loss per common share amount otherwise computed.
<PAGE> 1
--------------------------------------
Suite 900 Telephone: (313) 396-3000
600 Renaissance Center
[DELOITTE & TOUCHE LOGO] Detroit, Michigan 48243-1704
EXHIBIT 15A
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 June 30, 1995 and 1994, and the
related consolidated statements of earnings and cash flows for the three-month
and six-month periods ended June 30, 1995 and 1994. 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, 1994, and the related consolidated
statements of earnings and cash flows for the year then ended (not presented
herein); and in our report dated January 16, 1995, 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, 1994, is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
Detroit, Michigan
July 14, 1995
<PAGE> 1
--------------------------------------
Suite 900 Telephone: (313) 396-3000
600 Renaissance Center
[DELOITTE & TOUCHE LOGO] Detroit, Michigan 48243-1704
EXHIBIT 15B
July 17, 1995
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 June 30, 1995 and 1994, as indicated in our report dated July
14, 1995. 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 June 30, 1995, 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
(Post-Effective and 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
S-8 33-55817 Chrysler Corporation 1991 Stock Compensation Plan
</TABLE>
We also are aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Detroit, Michigan
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 4,008
<SECURITIES> 3,828
<RECEIVABLES> 2,189
<ALLOWANCES> 64
<INVENTORY> 3,680
<CURRENT-ASSETS> 0
<PP&E> 19,263
<DEPRECIATION> 7,626
<TOTAL-ASSETS> 50,047
<CURRENT-LIABILITIES> 0
<BONDS> 8,119
<COMMON> 405
0
0<F2>
<OTHER-SE> 10,105
<TOTAL-LIABILITY-AND-EQUITY> 50,047
<SALES> 24,482
<TOTAL-REVENUES> 26,129
<CGS> 20,333<F1>
<TOTAL-COSTS> 24,921
<OTHER-EXPENSES> 2,084
<LOSS-PROVISION> 12
<INTEREST-EXPENSE> 515
<INCOME-PRETAX> 1,208
<INCOME-TAX> 481
<INCOME-CONTINUING> 727
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 727
<EPS-PRIMARY> 1.92
<EPS-DILUTED> 1.81
<FN>
<F1>Excludes depreciation of property and equipment, amortization of special tools,
pension expense and nonpension postretirement benefit expense.
<F2>less than $1 million
</FN>
</TABLE>
