<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 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 369,075,109 shares of common stock outstanding as of March
31, 1995.
<PAGE> 2
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements 1-4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 5-9
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 5. Other Information 10-12
Item 6. Exhibits and Reports on Form 8-K 13
Signature Page 14
Exhibit Index 15
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (unaudited)
For the Three Months Ended March 31, 1995 and 1994
(In millions of dollars)
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Sales of manufactured products $ 12,829 $ 12,551
Finance and insurance income 380 344
Other income 404 329
----------- -----------
TOTAL REVENUES 13,613 13,224
----------- -----------
Costs, other than items below 10,516 9,606
Depreciation of property and equipment 271 277
Amortization of special tools 292 230
Selling and administrative expenses 1,008 955
Pension expense 105 177
Nonpension postretirement benefit expense 206 203
Interest expense 245 233
----------- -----------
TOTAL EXPENSES 12,643 11,681
----------- -----------
EARNINGS BEFORE INCOME TAXES 970 1,543
Provision for income taxes 378 605
----------- -----------
NET EARNINGS $ 592 $ 938
Preferred stock dividends 14 20
----------- -----------
NET EARNINGS ON COMMON STOCK $ 578 $ 918
=========== ===========
<CAPTION>
(In dollars or millions of shares)
<S> <C> <C>
PRIMARY EARNINGS PER COMMON SHARE $ 1.59 $ 2.55
=========== ===========
Average common and dilutive equivalent shares outstanding 362.5 360.1
FULLY DILUTED EARNINGS PER COMMON SHARE $ 1.46 $ 2.30
=========== ===========
Average common and dilutive equivalent shares outstanding 404.3 408.3
DIVIDENDS DECLARED PER COMMON SHARE $ 0.40 $ 0.20
</TABLE>
See notes to consolidated financial statements.
1
<PAGE> 4
Item 1. FINANCIAL STATEMENTS - CONTINUED
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In millions of dollars)
<TABLE>
<CAPTION>
1995 1994
------------- ------------------------------
March 31 Dec. 31 March 31
------------- ------------- -------------
(unaudited) (unaudited)
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 4,042 $ 5,145 $ 5,385
Marketable securities 4,292 3,226 1,105
Accounts receivable, net - trade and other 1,851 1,695 1,730
Inventories (Note 2) 3,649 3,356 3,462
Prepaid taxes, pension and other expenses 1,191 1,330 773
Finance receivables, retained interests in sold
receivables and other related amounts 13,141 12,433 11,359
Property and equipment 11,302 11,073 9,570
Special tools 3,629 3,643 3,371
Intangible assets 2,141 2,162 4,304
Deferred tax assets 418 395 1,879
Other assets 5,094 5,081 2,720
----------- ----------- -----------
TOTAL ASSETS $ 50,750 $ 49,539 $ 45,658
=========== =========== ===========
LIABILITIES:
Accounts payable $ 7,996 $ 7,826 $ 7,094
Short-term debt 4,437 4,645 3,687
Payments due within one year on long-term debt 760 811 1,196
Accrued liabilities and expenses 5,695 5,582 5,061
Long-term debt 8,642 7,650 7,343
Accrued noncurrent employee benefits 8,800 8,595 10,065
Other noncurrent liabilities 3,597 3,736 3,547
----------- ----------- -----------
TOTAL LIABILITIES 39,927 38,845 37,993
----------- ----------- -----------
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 - 0.9 and 1.7 shares,
respectively (aggregate liquidation preference $478 million
and $863 million, respectively) 1 2 2
Common stock - $1 per share par value; authorized
1,000.0 shares; issued: 1995 and 1994 - 385.4 and 364.1
shares, respectively 385 364 364
Additional paid-in capital 5,540 5,536 5,532
Retained earnings 5,462 5,006 1,996
Treasury stock - at cost: 1995 - 16.4 shares;
1994 - 9.0 and 10.0 shares, respectively (565) (214) (229)
----------- ----------- -----------
TOTAL SHAREHOLDERS' EQUITY 10,823 10,694 7,665
----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 50,750 $ 49,539 $ 45,658
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 5
Item 1. FINANCIAL STATEMENTS - CONTINUED
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
For the Three Months Ended March 31, 1995 and 1994
(In millions of dollars)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 592 $ 938
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization 563 507
Provision for credit losses 88 48
Deferred income taxes 119 287
Change in receivables 334 (889)
Change in inventories (294) 144
Change in prepaid expenses and other assets 44 18
Change in accounts payable and accrued and other liabilities 324 439
Other 74 7
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,844 1,499
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (2,114) (1,097)
Sales and maturities of marketable securities 1,072 1,038
Finance receivables acquired (5,925) (4,383)
Finance receivables collected 1,138 762
Proceeds from sales of finance receivables 3,587 3,326
Expenditures for property and equipment (617) (464)
Expenditures for special tools (245) (148)
Other (73) 126
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (3,177) (840)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in short-term debt (less than 90-day maturities) (208) 390
Proceeds from long-term borrowings 1,470 610
Payments on long-term borrowings (538) (226)
Repurchase of common stock (Note 6) (338) --
Dividends paid (162) (91)
Other 6 3
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 230 686
----------- -----------
Change in cash and cash equivalents
(1,103) 1,345
Cash and cash equivalents at beginning of period 5,145 4,040
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,042 $ 5,385
=========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 6
Item 1. FINANCIAL STATEMENTS - CONTINUED
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. CONSOLIDATION AND FINANCIAL STATEMENT PRESENTATION
The consolidated financial statements of Chrysler Corporation and its
consolidated subsidiaries ("Chrysler") include the accounts of all significant
majority-owned subsidiaries and entities. Intercompany accounts and
transactions have been eliminated in consolidation. The unaudited consolidated
financial statements of Chrysler for the three months ended March 31, 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
months ended March 31, 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
------------- ------------------------------
March 31 Dec. 31 March 31
------------- ------------- -------------
(In millions of dollars)
<S> <C> <C> <C>
Finished products, including service parts $ 1,235 $ 1,145 $ 1,013
Raw materials, finished production parts and supplies 1,344 1,223 1,138
Vehicles held for short-term lease 1,070 988 1,311
----------- ----------- -----------
TOTAL $ 3,649 $ 3,356 $ 3,462
=========== =========== ===========
</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
During the first quarter of 1994, Chrysler sold its wiring harness operations
and entered into a long-term supply agreement with the purchaser. Aggregate
net proceeds from the sale and the supply agreement were $222 million. The
related pretax gain of $196 million was deferred and is being recognized over
the five-year term of the supply agreement.
NOTE 5. PREFERRED STOCK CONVERSION
During the first quarter of 1995, holders of the Series A Convertible Preferred
Stock converted 769,597 shares of Preferred Stock into 21.4 million shares of
common stock.
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 first quarter of 1995, Chrysler repurchased 8.6 million shares of its
common stock under this program at a cost of $369 million (including $31
million in unsettled repurchases).
NOTE 7. SUBSEQUENT EVENT
On April 12, 1995, Tracinda Corporation ("Tracinda"), which owns approximately
10 percent of the outstanding common stock of Chrysler, sent the Company a
letter proposing to acquire the remaining 90 percent of Chrysler's common stock
at $55 per share. Chrysler's Board of Directors stated that the Company is not
for sale and that the letter received from Tracinda would be reviewed by the
Company's Board of Directors and with the Company's financial and legal
advisors.
4
<PAGE> 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL REVIEW
Chrysler reported earnings before income taxes of $970 million for the
first quarter of 1995, compared with $1,543 million for the first quarter of
1994. Net earnings for the first quarter of 1995 were $592 million, or $1.59 per
common share, compared with $938 million, or $2.55 per common share, in the
first quarter of 1994.
The lower operating results in the first quarter of 1995 compared to the
first quarter of 1994 resulted primarily from lost production and costs
associated with the model changeover and launch of Chrysler's all-new minivans,
costs associated with the voluntary minivan owner service action, higher
material costs, a lower mix of higher-margin vehicles, and lower factory unit
sales in Mexico. Production losses and costs associated with the model
changeover and launch of the all-new minivans will continue through the second
quarter of 1995.
Chrysler's worldwide factory car and truck sales for the three months ended
March 31, 1995 were 714,765 units, a 3 percent decrease from the first quarter
of 1994. Combined U.S. and Canadian dealers' days supply of vehicle inventory
was 66 days at March 31, 1995, as compared to 50 days at March 31, 1994.
Chrysler's revenues and results of operations are principally derived from
the U.S. and Canada automotive marketplace. In the first quarter of 1995, U.S.
and Canada vehicle industry retail sales, on a Seasonally Adjusted Annual Rate
basis, were 16.5 million cars and trucks, compared to 17.2 million units for
the first 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 quarter of 1995 and
lowering 1995 planned production. The higher incentives will likely continue
throughout the 1995 model year.
Chrysler's U.S. and Canada combined retail car and truck market share for
the first quarter of 1995 was lower than the first quarter of 1994. Increases
in car market share were offset by decreases in truck market share in the first
quarter of 1995, as shown in the following table:
<TABLE>
<CAPTION>
First Quarter
----------------------------------------------
Increase/
1995 1994 (Decrease)
----------- ----------- ----------
<S> <C> <C> <C>
U.S. Retail Market(1):
Car sales 214,036 213,982 54
Car market share 10.6% 9.8% 0.8%
Truck sales 310,544 351,233 (40,689)
Truck market share 20.2% 23.2% (3.0)%
Combined car and truck sales 524,580 565,215 (40,635)
Combined car and truck market share 14.7% 15.3% (0.6)%
U.S. and Canada Retail Market(1):
Combined car and truck sales 573,132 625,295 (52,163)
Combined car and truck market share 15.0% 15.7% (0.7)%
</TABLE>
______________________
(1) All retail sale and market share data include fleet sales.
Chrysler's U.S. car market share increased in the first quarter of 1995 as
compared to the first quarter of 1994 as a result of increased sales of
Chrysler's midsize sedans and coupes. The decrease in Chrysler's U.S. truck
market share for the first quarter of 1995 as compared to first quarter of 1994
reflects a decline in minivan and Jeep(R) sales, partially offset by an
increase in pickup truck sales. Chrysler's all-new 1996 minivans will be
introduced in the second quarter of 1995.
5
<PAGE> 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
FINANCIAL REVIEW - CONTINUED
Pretax earnings of Chrysler Financial Corporation ("CFC") for the first
quarter of 1995 and 1994 were $109 million and $75 million, respectively. The
improved results in the first quarter of 1995 compared to the first quarter of
1994 were primarily the result of higher levels of automotive financing and
lower bank costs partially offset by continuing interest rate pressure on
automotive consumer lending margins. CFC reported net earnings of $69 million
and $47 million for the first quarter of 1995 and 1994, respectively.
Sales of Chrysler vehicles manufactured in Mexico and exported to the
U.S. and Canada in the first quarter of 1995 increased 5 percent from the first
quarter of 1994, to 35,400 vehicles. Due to the impact of the devaluation of
the peso, vehicles manufactured in Mexico and sold in Mexico decreased to 5,800
units in the first quarter of 1995 from 24,400 units in the first quarter of
1994. The impact of the lower sales in Mexico was partially offset by
increased profits on sales of vehicles manufactured in Mexico and exported to
the U.S. and Canada. Sales in Mexico of vehicles manufactured in the U.S. and
Canada were not significant in the first quarter of 1995 and 1994. Chrysler
cannot predict the extent that the devaluation of the peso and the resulting
uncertainty surrounding the Mexican economic and political environments will
have on its operating results in 1995.
The National Highway Traffic Safety Administration ("NHTSA") conducted
an engineering analysis of the rear liftgate latches on all Chrysler 1984-1994
model year minivans. Although NHTSA has not concluded that the rear liftgate
latches are defective, to alleviate customer concerns, Chrysler announced in
the first quarter of 1995, a voluntary owner service action to replace the rear
liftgate latches on all of its 1984-1994 minivans. Chrysler believes that this
service action will conclude this matter. The estimated pretax cost of the
voluntary owner service action of $115 million is included in first quarter
results.
Chrysler has benefitted from several economic factors over the past few
years, including: (1) continuing economic recoveries and relatively strong
automobile sales in the U.S. and Canada, where Chrysler's sales are
concentrated, (2) a cost advantage in comparison to vehicles manufactured in
Japan (or vehicles containing significant material components manufactured in
Japan) as a result of favorable exchange rates between the Japanese yen and the
U.S. dollar, and (3) a shift in U.S. and Canada consumer preferences toward
trucks, as Chrysler manufactures a higher proportion of trucks to total
vehicles than its principal competitors in the U.S. and Canada. A significant
deterioration of any of these factors could adversely affect Chrysler's
operating results.
COMPARISON OF SELECTED ELEMENTS OF REVENUES AND EXPENSES
Chrysler's total revenues for the three months ended March 31, 1995 and
1994 were as follows:
<TABLE>
<CAPTION>
First Quarter
-----------------------------------
Increase/
1995 1994 (Decrease)
-------- -------- ----------
(In millions of dollars)
<S> <C> <C> <C>
Sales of manufactured products $ 12,829 $ 12,551 2%
Finance and insurance income 380 344 10%
Other income 404 329 23%
-------- --------
Total revenues $ 13,613 $ 13,224 3%
======== ========
</TABLE>
The increase in sales of manufactured products in the first quarter of
1995 primarily reflects an increase in average revenue per unit, net of sales
incentives, from $16,823 in the first quarter of 1994 to $17,758 in the first
quarter of 1995, partially offset by a 3 percent decrease in factory unit sales
in the first quarter of 1995.
The increase in finance and insurance income in the first quarter of
1995, as compared to the first quarter of 1994, was primarily attributable to
higher levels of automotive financing volume. Total automotive financing
volume in the first quarter of 1995 and 1994 was $20.5 billion and $17.1
billion, respectively.
6
<PAGE> 9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
COMPARISON OF SELECTED ELEMENTS OF REVENUES AND EXPENSES - CONTINUED
Financing support provided in the U.S. by CFC for new Chrysler vehicle
retail deliveries (including fleet) and wholesale vehicle sales to dealers and
the number of vehicles financed during the three months ended March 31, 1995 and
1994 were as follows:
<TABLE>
<CAPTION>
First Quarter
---------------------
1995 1994
--------- --------
<S> <C> <C>
U.S. penetration:
Retail 30% 24%
Wholesale 72% 71%
Number of new Chrysler vehicles financed
in the U.S. (in thousands):
Retail 159 137
Wholesale 427 423
</TABLE>
The increase in other income for the three months ended March 31, 1995
as compared to the first quarter of 1994, was principally due to increased
automotive interest income resulting from higher cash, cash equivalents and
marketable securities balances and higher interest rates.
Total expenses for the first quarter of 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
First Quarter
--------------------------------------
Increase/
1995 1994 (Decrease)
----------- ----------- ----------
(In millions of dollars)
<S> <C> <C> <C>
Costs, other than items below $ 10,516 $ 9,606 9%
Depreciation of property and
equipment 271 277 (2)%
Amortization of special tools 292 230 27%
Selling and administrative expenses 1,008 955 6%
Pension expense 105 177 (41)%
Nonpension postretirement
benefit expense 206 203 1%
Interest expense 245 233 5%
---------- ----------
Total expenses $ 12,643 $ 11,681 8%
========== ==========
</TABLE>
Costs, other than items below increased in the first quarter of 1995, as
compared with the first quarter of 1994, primarily as a result of increased
product costs, costs associated with the changeover and launch of Chrysler's
all-new minivans and the voluntary minivan owner service action, partially
offset by the effect of a 3 percent decrease in factory unit sales. The
increase in product costs resulted from higher material costs and increased
product content. Costs, other than items below were 82 percent and 77 percent
of sales of manufactured products for the three months ended March 31, 1995 and
1994, respectively.
Depreciation of property and equipment for the first quarter of 1995
decreased as compared to the first quarter of 1994. Decreases resulting from
the second quarter 1994 revisions to the estimated service lives of certain
classes of property and equipment were partially offset by increases resulting
from Chrysler's facility modernization program.
Special tooling amortization increased in the first quarter of 1995, as
compared with the first quarter of 1994, primarily as a result of the
shortening of the remaining service lives of certain special tools in the
second quarter of 1994.
The increase in selling and administrative expenses for the first quarter
of 1995, as compared to the first quarter of 1994, was principally due to
increased advertising related to the introductions of the all-new sedans,
Chrysler Cirrus/Dodge Stratus and midsize coupes, Chrysler Sebring/Dodge
Avenger.
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 - CONTINUED
Pension expense for the first quarter of 1995 decreased as compared to
the first quarter of 1994 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 first quarter of 1995 was
primarily due to higher average CFC borrowings. CFC's average effective cost
of borrowings was 7.9 percent and 8.4 percent in the first quarter of 1995 and
1994, respectively. This improvement in the average effective borrowing costs
reflects lower bank facility costs and higher levels of commercial paper.
LIQUIDITY AND CAPITAL RESOURCES
Chrysler's combined cash, cash equivalents and marketable securities
totaled $8.3 billion at March 31, 1995 (including $1.0 billion held by CFC), a
slight decrease from December 31, 1994. The decrease in the first quarter of
1995 was the result of profit-based employee payments, capital expenditures,
debt repayments and common stock repurchases, 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 first quarter of 1995, Chrysler repurchased 8.6 million shares of
its common stock under this program at a cost of $369 million (including $31
million in unsettled repurchases). Additionally, in the first quarter of 1995,
holders of the Series A Convertible Preferred Stock converted 769,597 shares of
Preferred Stock into 21.4 million shares of common stock.
At March 31, 1995, Chrysler (excluding CFC), had debt maturities totaling
$95 million through 1997. During the first quarter of 1995, Chrysler redeemed
$300 million of its 13% Debentures Due 1997 and repaid $163 million of other
debt. At March 31, 1995, Chrysler had a $1.7 billion revolving credit
agreement which expires in July 1999. None of the commitment was drawn upon
during the first quarter of 1995. 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.
Chrysler's ability to market its products successfully depends
significantly on the availability of vehicle financing for its dealers and, to
a lesser extent, the availability of financing for retail and fleet customers,
both of which CFC provides.
Receivable sales continued to be a significant source of funding in the
first quarter of 1995 as CFC realized $1.1 billion of net proceeds from the
sale of automotive retail receivables, compared to $1.7 billion of net proceeds
in the first quarter of 1994. In addition, CFC's revolving wholesale
receivable sale arrangements provided funding which aggregated $5.8 billion and
$4.6 billion at March 31, 1995 and 1994, respectively.
At March 31, 1995, CFC had U.S. and Canadian credit facilities totaling
$5.2 billion and receivable sale agreements totaling $1.7 billion. At March
31, 1995, no amounts were outstanding under CFC's U.S. and Canadian revolving
credit or receivable sale agreements. During the first quarter of 1995, CFC
began the process of negotiating the early replacement of its U.S. and Canadian
revolving credit facilities and receivable sale agreements.
At March 31, 1995, CFC had contractual debt maturities of $4.9 billion
during the remainder of 1995 (including $4.1 billion of short-term notes) and
$1.6 billion in 1996. 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.
SUBSEQUENT EVENT
On April 12, 1995, Tracinda Corporation ("Tracinda"), which owns
approximately 10 percent of the outstanding common stock of Chrysler, sent the
Company a letter proposing to acquire the remaining 90 percent of Chrysler's
common stock at $55 per share. Chrysler's Board of Directors stated that the
Company is not for sale and that the letter received from Tracinda would be
reviewed by the Company's Board of Directors and with the Company's financial
and legal advisors.
8
<PAGE> 11
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
LIQUIDITY AND CAPITAL RESOURCES - CONTINUED
REVIEW BY INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP, Chrysler's independent public accountants,
performed a review of the financial statements for the three months ended March
31, 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
The State of Wisconsin filed a lawsuit against Chrysler Outboard
Corporation, a Chrysler subsidiary now known as Beaver Dam Products
Corporation, in February 1995 alleging improper disposal of hazardous waste in
1969. This lawsuit, which seeks unspecified damages, may result in the
imposition of civil penalties in excess of $100,000.
9
<PAGE> 12
Item 5. OTHER INFORMATION
SUPPLEMENTAL INFORMATION
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
STATEMENT OF EARNINGS (unaudited)
For the Three Months Ended March 31, 1995 and 1994
(In millions of dollars)
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Sales of manufactured products $ 12,945 $ 12,634
Equity in earnings of unconsolidated subsidiaries and affiliates 97 50
Interest and other income 121 55
----------- -----------
TOTAL REVENUES 13,163 12,739
----------- -----------
Costs, other than items below 10,429 9,518
Depreciation of property and equipment 254 255
Amortization of special tools 292 230
Selling and administrative expenses 852 764
Pension expense 103 175
Nonpension postretirement benefit expense 204 202
Interest expense 59 52
----------- -----------
TOTAL EXPENSES 12,193 11,196
----------- -----------
EARNINGS BEFORE INCOME TAXES 970 1,543
Provision for income taxes 378 605
----------- -----------
NET EARNINGS $ 592 $ 938
=========== ===========
</TABLE>
This Supplemental Information, "Chrysler (with CFC and Car Rental Operations on
an Equity Basis)," reflects the results of operations of Chrysler with its
investments in Chrysler Financial Corporation ("CFC") and its investments in
short-term vehicle rental subsidiaries (the "Car Rental Operations") accounted
for on an equity basis rather than as consolidated subsidiaries. This
Supplemental Information does not purport to present results of operations in
accordance with generally accepted accounting principles because it does not
comply with Statement of Financial Accounting Standards ("SFAS") No. 94,
"Consolidation of All Majority-Owned Subsidiaries." The financial 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.
10
<PAGE> 13
Item 5. OTHER INFORMATION - CONTINUED
SUPPLEMENTAL INFORMATION
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
BALANCE SHEET (unaudited)
(In millions of dollars)
<TABLE>
<CAPTION>
1995 1994
------------- ------------------------------
March 31 Dec. 31 March 31
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 3,716 $ 4,972 $ 5,185
Marketable securities 3,569 2,643 751
Accounts receivable, net - trade and other 610 459 959
Inventories 2,842 2,645 2,416
Prepaid taxes, pension and other expenses 1,123 1,272 680
Property and equipment 10,584 10,347 8,921
Special tools 3,629 3,643 3,371
Investments in and advances to unconsolidated subsidiaries
and affiliated companies 3,662 3,642 3,688
Intangible assets 1,769 1,781 3,864
Deferred tax assets 1,940 1,951 3,363
Other assets 4,750 4,722 2,089
------------ ------------ ------------
TOTAL ASSETS $ 38,194 $ 38,077 $ 35,287
============ ============ ============
LIABILITIES:
Accounts payable $ 7,569 $ 7,403 $ 6,592
Short-term debt 141 140 103
Payments due within one year on long-term debt 27 187 547
Accrued liabilities and expenses 5,429 5,333 4,785
Long-term debt 1,803 2,097 2,124
Accrued noncurrent employee benefits 8,745 8,547 10,013
Other noncurrent liabilities 3,657 3,676 3,458
------------ ------------ ------------
TOTAL LIABILITIES 27,371 27,383 27,622
------------ ------------ ------------
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 - 0.9 and 1.7 shares,
respectively (aggregate liquidation preference - $478 million
and $863 million, respectively) 1 2 2
Common stock - $1 per share par value; authorized 1,000.0 shares;
issued: 1995 and 1994 - 385.4 and 364.1 shares, respectively 385 364 364
Additional paid-in capital 5,540 5,536 5,532
Retained earnings 5,462 5,006 1,996
Treasury stock - at cost: 1995 - 16.4 shares;
1994 - 9.0 and 10.0 shares, respectively (565) (214) (229)
------------ ------------ ------------
TOTAL SHAREHOLDERS' EQUITY 10,823 10,694 7,665
------------ ------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 38,194 $ 38,077 $ 35,287
============ ============ ============
</TABLE>
This Supplemental Information, "Chrysler (with CFC and Car Rental Operations on
an Equity Basis)," reflects the financial position of Chrysler with its
investments in CFC and the Car Rental Operations accounted for on an equity
basis rather than as consolidated subsidiaries. This Supplemental Information
does not purport to present financial position in accordance with generally
accepted accounting principles because it does not comply with SFAS No. 94,
"Consolidation of All Majority-Owned Subsidiaries." The financial 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.
11
<PAGE> 14
Item 5. OTHER INFORMATION - CONTINUED
SUPPLEMENTAL INFORMATION
CHRYSLER (WITH CFC AND CAR RENTAL OPERATION ON AN EQUITY BASIS)
STATEMENT OF CASH FLOWS (unaudited)
For the Three Months Ended March 31, 1995 and 1994
(In millions of dollars)
<TABLE>
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 592 $ 938
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization 546 485
Equity in earnings of unconsolidated subsidiaries and affiliates (97) (50)
Deferred income taxes 119 287
Change in accounts receivable (147) (155)
Change in inventories (198) 44
Change in prepaid expenses and other assets 44 (7)
Change in accounts payable and accrued and other liabilities 477 531
Other 131 27
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,467 2,100
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (1,645) (685)
Sales and maturities of marketable securities 732 634
Expenditures for property and equipment (565) (426)
Expenditures for special tools (245) (148)
Other (44) 29
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (1,767) (596)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in short-term debt (less than 90-day maturities) 1 3
Proceeds from long-term borrowings -- 1
Payments on long-term borrowings (463) (12)
Repurchase of common stock (338) --
Dividends paid (162) (91)
Other 6 3
----------- -----------
NET CASH USED IN FINANCING ACTIVITIES (956) (96)
----------- -----------
Change in cash and cash equivalents (1,256) 1,408
Cash and cash equivalents at beginning of period 4,972 3,777
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,716 $ 5,185
=========== ===========
</TABLE>
This Supplemental Information, "Chrysler (with CFC and Car Rental Operations on
an Equity Basis)," reflects the cash flows of Chrysler with its investments in
CFC and the Car Rental Operations accounted for on an equity basis rather than
as consolidated subsidiaries. This Supplemental Information does not purport
to present cash flows in accordance with generally accepted accounting
principles because it does not comply with SFAS No. 94, "Consolidation of All
Majority-Owned Subsidiaries." The financial 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.
12
<PAGE> 15
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits filed with this Report are listed in the Exhibit Index
which immediately precedes such exhibits.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the three months ended
March 31, 1995.
13
<PAGE> 16
CONFORMED
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHRYSLER CORPORATION
-----------------------------
(Registrant)
Date: April 13, 1995 By J. D. Donlon, III
------------------------ -----------------------------
J. D. Donlon, III
Vice President and Controller
(Chief Accounting Officer)
14
<PAGE> 17
EXHIBIT INDEX
For Quarterly Report on Form 10-Q for the
Quarterly Period Ended March 31, 1995
EXHIBIT
-------
11 Statement regarding computation of earnings per common share.
(Filed with this report.)
15A Letter, dated April 13, 1995, re unaudited interim information.
(Filed with this report.)
15B Letter, dated April 13, 1995, re unaudited interim information.
(Filed with this report.)
27 Financial Data Schedule for three months ended March 31, 1995
15
<PAGE> 1
EXHIBIT 11
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
EARNINGS PER COMMON SHARE DATA
APB OPINION NO.15 CALCULATION
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1995 1994
------------ ------------
(In millions of dollars
and shares)
<S> <C> <C>
PRIMARY:
- -------
Net earnings $ 592 $ 938
Preferred stock dividend (14) (20)
----------- -----------
Earnings attributable to common stock $ 578 $ 918
=========== ===========
Weighted average shares outstanding 358.9 354.0
Shares issued on exercise of dilutive options 6.8 10.7
Shares purchased with proceeds of options (3.4) (5.1)
Shares contingently issuable 0.2 0.5
----------- -----------
Shares applicable to primary earnings 362.5 360.1
=========== ===========
FULLY DILUTED:
- -------------
Net earnings $ 592 $ 938
Preferred stock dividend - -
----------- -----------
Earnings attributable to common stock $ 592 $ 938
=========== ===========
Weighted average shares outstanding 358.9 354.0
Shares issued on exercise of dilutive options 6.8 10.7
Shares purchased with proceeds of options (3.4) (5.1)
Shares applicable to convertible preferred stock 41.6 47.9
Shares contingently issuable 0.4 0.8
----------- -----------
Shares applicable to fully diluted earnings 404.3 408.3
=========== ===========
<CAPTION>
PER COMMON SHARE DATA: (In dollars)
- ---------------------
<S> <C> <C>
Primary:
Net earnings per common share $ 1.59 $ 2.55
=========== ===========
Fully Diluted:
Net earnings per common share $ 1.46 $ 2.30
=========== ===========
</TABLE>
NOTE: 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. In the first quarter
of 1995, fully diluted per common share amounts assume conversion of the
convertible preferred stock, the elimination of the related preferred
stock dividend requirement, and the issuance of common stock for all
other potentially dilutive equivalents outstanding. Computations of
primary earnings per common share exclude the effect of common stock
equivalents and shares contingently issuable for any year 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.
<PAGE> 1
[DELOITTE & TOUCHE LLP LETTERHEAD]
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 March 31, 1995 and 1994 and the
related consolidated statements of earnings and cash flows for the three-month
periods ended March 31, 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
April 13, 1995
<PAGE> 1
[DELOITTE & TOUCHE LLP LETTERHEAD]
EXHIBIT 15B
April 13, 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 March 31, 1995 and 1994, as indicated in our report dated April
13, 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 March 31, 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
(Post-Effective deliverable pursuant to the 1972 and 1980
Amendment No. 1) American Motors Corporation Stock Option Plans
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
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE CHRYSLER CORPORATION FOR THE QUARTER ENDED
MARCH 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 4,042
<SECURITIES> 4,292
<RECEIVABLES> 1,851
<ALLOWANCES> 60
<INVENTORY> 3,649
<CURRENT-ASSETS> 0
<PP&E> 18,651
<DEPRECIATION> 7,349
<TOTAL-ASSETS> 50,750
<CURRENT-LIABILITIES> 0
<BONDS> 8,642
<COMMON> 385
0
1
<OTHER-SE> 10,437
<TOTAL-LIABILITY-AND-EQUITY> 50,750
<SALES> 12,829
<TOTAL-REVENUES> 13,613
<CGS> 10,516<F1>
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,008
<LOSS-PROVISION> 6
<INTEREST-EXPENSE> 245
<INCOME-PRETAX> 970
<INCOME-TAX> 378
<INCOME-CONTINUING> 592
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 592
<EPS-PRIMARY> 1.59
<EPS-DILUTED> 1.46
<FN>
<F1> Excludes depreciation of property and equipment, amortization of special
tools, pension expense and nonpension postretirement benefit expense.
</FN>
</TABLE>
