<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 SEPTEMBER 30, 1996
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)
<TABLE>
<S> <C>
STATE OF DELAWARE 38-2673623
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 CHRYSLER DRIVE, AUBURN HILLS, MICHIGAN 48326-2766
(Address of principal executive offices) (Zip Code)
</TABLE>
(810) 576-5741
(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 713,533,304 shares of common stock outstanding as of
September 30, 1996.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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............................................................ 6-11
Part II. OTHER INFORMATION
Item 5. Other Information........................................................ 12-14
Item 6. Exhibits and Reports on Form 8-K......................................... 15
Signature Page..................................................................... 16
Exhibit Index...................................................................... 17
</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 NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ ------------------
1996 1995 1996 1995
------- ------- ------- -------
(IN MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C>
Sales of manufactured products.......................... $13,396 $11,184 $42,298 $35,666
Finance and insurance revenues.......................... 436 358 1,316 1,146
Other revenues.......................................... 524 467 1,537 1,326
------- ------- ------- -------
TOTAL REVENUES..................................... 14,356 12,009 45,151 38,138
------- ------- ------- -------
Costs, other than items below........................... 10,975 9,476 33,720 30,041
Depreciation and special tools amortization............. 527 510 1,729 1,663
Selling and administrative expenses..................... 1,108 921 3,415 3,005
Employee retirement benefits............................ 391 302 1,008 906
Interest expense........................................ 244 218 778 733
------- ------- ------- -------
TOTAL EXPENSES..................................... 13,245 11,427 40,650 36,348
------- ------- ------- -------
EARNINGS BEFORE INCOME TAXES AND CUMULATIVE EFFECT
OF A CHANGE IN ACCOUNTING PRINCIPLE.............. 1,111 582 4,501 1,790
Provision for income taxes.............................. 431 228 1,779 709
------- ------- ------- -------
EARNINGS BEFORE CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE............................. 680 354 2,722 1,081
Cumulative effect of a change in accounting principle... -- -- -- (96)
------- ------- ------- -------
NET EARNINGS....................................... $ 680 $ 354 $ 2,722 $ 985
Preferred stock dividends............................... 1 2 3 19
------- ------- ------- -------
NET EARNINGS ON COMMON STOCK....................... $ 679 $ 352 $ 2,719 $ 966
======= ======= ======= =======
<CAPTION>
(IN DOLLARS OR MILLIONS OF SHARES)
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER COMMON SHARE (Note 4):
Earnings before cumulative effect of a change in
accounting principle............................... $ 0.93 $ 0.45 $ 3.65 $ 1.41
Cumulative effect of a change in accounting
principle.......................................... -- -- -- (0.13)
------- ------- ------- -------
Net earnings per common share......................... $ 0.93 $ 0.45 $ 3.65 $ 1.28
======= ======= ======= =======
Average common and dilutive equivalent shares
outstanding........................................... 728.3 774.5 745.6 752.3
FULLY DILUTED EARNINGS
PER COMMON SHARE (Note 4):
Earnings before cumulative effect of a change in
accounting principle............................... $ 0.93 $ 0.45 $ 3.62 $ 1.36
Cumulative effect of a change in accounting
principle.......................................... -- -- -- (0.12)
------- ------- ------- -------
Net earnings per common share......................... $ 0.93 $ 0.45 $ 3.62 $ 1.24
======= ======= ======= =======
Average common and dilutive equivalent shares
outstanding........................................... 732.3 787.3 751.8 796.9
DIVIDENDS DECLARED PER COMMON SHARE..................... $ 0.35 $ 0.25 $ 1.00 $ 0.70
</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>
1996 1995
------------ ---------------------------
SEPTEMBER 30 DECEMBER 31 SEPTEMBER 30
------------ ----------- ------------
(UNAUDITED) (UNAUDITED)
(IN MILLIONS OF DOLLARS)
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents................................ $ 5,599 $ 5,543 $ 4,117
Marketable securities.................................... 3,079 2,582 3,494
-------- ------- --------
Total cash, cash equivalents and marketable
securities........................................ 8,678 8,125 7,611
Accounts receivable -- trade and other................... 2,144 2,003 2,234
Inventories.............................................. 5,552 4,448 4,321
Prepaid pension, taxes and other expenses................ 640 985 915
Finance receivables and retained interests in sold
receivables............................................ 12,593 13,623 12,551
Property and equipment................................... 13,962 12,595 12,115
Special tools............................................ 3,574 3,566 3,487
Intangible assets........................................ 1,878 2,082 2,107
Deferred tax assets...................................... 152 490 439
Other assets............................................. 6,549 5,839 5,726
-------- ------- --------
TOTAL ASSETS........................................ $ 55,722 $53,756 $ 51,506
======== ======= ========
LIABILITIES:
Accounts payable......................................... $ 9,212 $ 8,290 $ 8,393
Short-term debt.......................................... 1,548 2,674 2,911
Payments due within one year on long-term debt........... 3,102 1,661 1,090
Accrued liabilities and expenses......................... 8,399 7,032 6,572
Long-term debt........................................... 8,492 9,858 9,105
Accrued noncurrent employee benefits..................... 9,539 9,217 9,060
Other noncurrent liabilities............................. 4,020 4,065 3,945
-------- ------- --------
TOTAL LIABILITIES................................... 44,312 42,797 41,076
-------- ------- --------
SHAREHOLDERS' EQUITY (Note 4): (shares in millions)
Preferred stock -- $1 per share par value; authorized
20.0 shares; Series A Convertible Preferred Stock;
issued and outstanding: 1996 -- 0.1; 1995 -- 0.1 and
0.2 shares, respectively (aggregate liquidation
preference 1996 -- $26 million; 1995 -- $68 million and
$84 million, respectively)............................. * * *
Common stock -- $1 per share par value; authorized
1,000.0 shares; issued: 1996 -- 821.0; 1995 -- 408.2
shares and 407.4 shares, respectively.................. 821 408 407
Additional paid-in capital............................... 5,118 5,506 5,504
Retained earnings........................................ 8,246 6,280 5,481
Treasury stock -- at cost: 1996 -- 107.5 shares; 1995 --
29.9 and 24.8 shares, respectively..................... (2,775) (1,235) (962)
-------- ------- --------
TOTAL SHAREHOLDERS' EQUITY.......................... 11,410 10,959 10,430
-------- ------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.......... $ 55,722 $53,756 $ 51,506
======== ======= ========
</TABLE>
- -------------------------
* Less than $1 million
See notes to consolidated financial statements.
2
<PAGE> 5
ITEM 1. FINANCIAL STATEMENTS -- CONTINUED
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN MILLIONS OF
DOLLARS)
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES............................ $ 5,856 $ 5,614
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities................................. (2,643) (4,157)
Sales and maturities of marketable securities...................... 3,098 3,937
Finance receivables acquired....................................... (15,974) (18,347)
Finance receivables collected...................................... 3,410 1,817
Proceeds from sales of finance receivables......................... 12,302 14,007
Expenditures for property and equipment............................ (2,725) (2,226)
Expenditures for special tools..................................... (763) (699)
Proceeds from the sale of nonautomotive assets..................... 701 94
Other.............................................................. 189 196
-------- --------
NET CASH USED IN INVESTING ACTIVITIES......................... (2,405) (5,378)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in short-term debt (less than 90-day maturities)............ (1,256) (1,734)
Proceeds from long-term borrowings................................. 1,268 3,104
Payments on long-term borrowings................................... (1,180) (1,377)
Repurchases of common stock........................................ (1,570) (769)
Dividends paid..................................................... (712) (516)
Other.............................................................. 55 28
-------- --------
NET CASH USED IN FINANCING ACTIVITIES......................... (3,395) (1,264)
-------- --------
Change in cash and cash equivalents.................................. 56 (1,028)
Cash and cash equivalents at beginning of period..................... 5,543 5,145
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD........................... $ 5,599 $ 4,117
======== ========
</TABLE>
During the first nine months of 1996, Chrysler Financial Corporation acquired
$1.0 billion of marketable securities in non-cash transactions related to the
securitization of retail receivables.
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 unaudited 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 consolidated financial
statements of Chrysler for the three and nine months ended September 30, 1996
and 1995 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
nine months ended September 30, 1996 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, 1995. Certain amounts for 1995 have been
reclassified to conform with current period classifications.
NOTE 2. INVENTORIES
Inventories, summarized by major classification, were as follows:
<TABLE>
<CAPTION>
1996 1995
------------ ---------------------------
SEPTEMBER 30 DECEMBER 31 SEPTEMBER 30
------------ ----------- ------------
(IN MILLIONS OF DOLLARS)
<S> <C> <C> <C>
Finished products, including service parts............... $1,800 $ 1,232 $1,132
Raw materials, finished production parts and supplies.... 1,351 1,456 1,403
Vehicles held for short-term lease....................... 2,401 1,760 1,786
------ ------ ------
TOTAL............................................... $5,552 $ 4,448 $4,321
====== ====== ======
</TABLE>
NOTE 3. CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1996, Chrysler adopted Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The adoption of
this new accounting standard did not have a material impact on Chrysler's
consolidated operating results or financial position. Also see Note 8.
Effective January 1, 1995, Chrysler changed its accounting treatment for
vehicle sales for which Chrysler conditionally guarantees the minimum resale
value of the vehicles in accordance with the consensus reached on Emerging
Issues Task Force Issue 95-1, "Revenue Recognition on Sales with a Guaranteed
Minimum Resale Value." In accordance with the consensus, these vehicle sales are
accounted for as operating leases with the related revenues and costs deferred
at the time of shipment. A portion of the deferred revenues and costs is
recognized over the corresponding guarantee period, with the remainder
recognized at the end of the guarantee period. The average guarantee period for
these vehicles is approximately nine months. Implementation of this accounting
change resulted in the recognition of an after-tax charge of $96 million, or
$0.13 per common share, for the cumulative effect of this change in accounting
principle. Previously reported results for the nine months ended September 30,
1995 have been restated to reflect the cumulative effect of this accounting
change.
NOTE 4. TWO-FOR-ONE STOCK SPLIT
On May 16, 1996, Chrysler's Board of Directors declared a two-for-one stock
split to be effected in the form of a 100 percent stock dividend which was
distributed on July 15, 1996 to shareholders of record on June 15, 1996. All per
share data and the average common and dilutive equivalent shares outstanding
have been adjusted to reflect this stock split for all periods presented. The
number of common shares issued, outstanding and held in treasury as of September
30, 1996 have been adjusted to reflect this stock split. In addition, the par
value of the new shares issued as a result of the two-for-one stock split has
been transferred from additional paid-in capital to common stock. Additional
paid-in capital, common stock balances, common
4
<PAGE> 7
ITEM 1. FINANCIAL STATEMENTS -- CONTINUED
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
shares issued, outstanding and held in treasury for prior periods have not been
restated for the two-for-one stock split.
NOTE 5. COMMON STOCK REPURCHASES
During the first quarter of 1996, Chrysler's Board of Directors approved an
increase in Chrysler's planned 1996 common stock repurchases from $1 billion to
$2 billion and approved an additional $1 billion of common stock repurchases for
1997. These common stock repurchases are subject to market and general economic
conditions. During the third quarter and first nine months of 1996, Chrysler
repurchased 15.8 million and 51.9 million shares, respectively, of its common
stock at a cost of $452 million and $1,570 million, respectively (including $24
million in unsettled repurchases). Share amounts have been adjusted to reflect
the two-for-one stock split.
NOTE 6. SALE OF NONAUTOMOTIVE ASSETS
On June 14, 1996, Chrysler completed the sale of Electrospace Systems, Inc.
("ESI") and Chrysler Technologies Airborne Systems, Inc. ("CTAS"), for net
proceeds of $476 million. ESI and CTAS were engaged principally in the
manufacture of defense electronics and aircraft modification, respectively, and
represented substantially all of the operations of Chrysler Technologies
Corporation. The sale resulted in a pretax gain of $101 million ($87 million
after taxes) and is included in Costs, other than items below in the
consolidated statement of earnings for the nine months ended September 30, 1996.
During the third quarter of 1996, Chrysler Financial Corporation sold
certain nonautomotive assets for net proceeds of $225 million. The sale resulted
in an immaterial loss.
NOTE 7. PLANT PROVISION
The results of operations for the nine months ended September 30, 1995
include a $263 million provision ($162 million after taxes) for costs associated
with production changes at the Newark assembly plant. The provision reflects the
recognition of supplemental unemployment benefits, job security benefits and
other related employee costs, and the write-down of certain equipment and
tooling. The provision is included in Costs, other than items below in the
consolidated statement of earnings for the nine months ended September 30, 1995.
NOTE 8. LOSS ON ASSETS TO BE SOLD
Consistent with its strategy to focus on its core automotive business, in
the second quarter of 1996, Chrysler committed to a plan of disposal for Thrifty
Rent-A-Car System, Inc. ("Thrifty"). In accordance with SFAS No. 121, a pretax
loss of $65 million ($100 million after taxes) was recognized in the second
quarter of 1996 to write down Thrifty's carrying value to estimated fair value
less cost to sell. Chrysler's estimate of the fair value of Thrifty is based
principally on an analysis of non-binding bids. The pretax loss is included in
Costs, other than items below in the consolidated statement of earnings for the
nine months ended September 30, 1996. The after-tax loss includes the effect of
not being able to claim a tax deduction for the capital loss on Chrysler's
investment in Thrifty. Thrifty's assets and liabilities at September 30, 1996
and its results of operations for the three and nine months ended September 30,
1996 were immaterial to Chrysler's consolidated assets and liabilities and
results of operations, respectively. Chrysler is continuing to negotiate for the
sale of Thrifty and is uncertain when the sale of Thrifty will be completed.
NOTE 9. VOLUNTARY EARLY RETIREMENT PROGRAM
The results of operations for the three and nine months ended September 30,
1996 include an $88 million provision ($55 million after taxes) for costs
associated with a voluntary early retirement program for certain salaried
employees. The provision is included in Employee retirement benefits in the
consolidated statement of earnings for the three and nine months ended September
30, 1996.
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. All per share data has
been adjusted to reflect the two-for-one stock split.
FINANCIAL REVIEW
Chrysler reported earnings before income taxes and the cumulative effect of
a change in accounting principle of $1,111 million for the third quarter of
1996, compared with $582 million for the third quarter of 1995. For the first
nine months of 1996, Chrysler reported earnings before income taxes and the
cumulative effect of a change in accounting principle of $4,501 million,
compared with $1,790 million for the first nine months of 1995. Net earnings for
the third quarter of 1996 were $680 million, or $0.93 per common share, compared
with $354 million, or $0.45 per common share, for the third quarter of 1995. Net
earnings for the first nine months of 1996 were $2,722 million, or $3.65 per
common share, compared with $985 million, or $1.28 per common share, for the
first nine months of 1995.
Earnings for the third quarter and first nine months of 1996 include a
charge of $88 million ($55 million after taxes) for costs associated with a
voluntary early retirement program for certain salaried employees. Earnings for
the first nine months of 1996 also include a gain of $101 million ($87 million
after taxes) from the sale of Electrospace Systems, Inc. ("ESI") and Chrysler
Technologies Airborne Systems, Inc. ("CTAS"), and a charge of $65 million ($100
million after taxes) related to a write-down of Thrifty Rent-A-Car System, Inc.
("Thrifty"). Earnings for the first nine months of 1995 include a $263 million
charge ($162 million after taxes) for costs associated with production changes
at Chrysler's Newark assembly plant and a charge of $115 million ($71 million
after taxes) for a voluntary minivan owner service action. Net earnings for the
first nine months of 1995 include a charge of $96 million, or $0.13 per common
share, for the cumulative effect of a change in accounting principle related to
the consensus reached on Emerging Issues Task Force ("EITF") 95-1, "Revenue
Recognition on Sales with a Guaranteed Minimum Resale Value."
The following table summarizes this information:
<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
-------------- ----------------
1996 1995 1996 1995
------ ---- ------ ------
(IN MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C>
Earnings before income taxes and cumulative effect of a change
in accounting principle..................................... $1,111 $582 $4,501 $1,790
Gain on sale of ESI and CTAS.................................. -- -- (101) --
Thrifty write-down............................................ -- -- 65 --
Newark charge................................................. -- 31 -- 263
Voluntary minivan owner service action........................ -- -- -- 115
Voluntary early retirement program............................ 88 -- 88 --
------ ---- ------ ------
Pretax earnings excluding items above.................... $1,199 $613 $4,553 $2,168
====== ==== ====== ======
</TABLE>
Excluding the items listed above, the improvement in operating results in
the third quarter of 1996 as compared with the third quarter of 1995 resulted
primarily from an increase in vehicle shipments and pricing actions, partially
offset by increased profit-based employee compensation costs. Excluding the
items listed above, the improvement in operating results in the first nine
months of 1996 as compared with the first nine months of 1995 resulted primarily
from an increase in vehicle shipments, pricing actions, and a reduction in
average sales incentives per vehicle, partially offset by increased profit-based
employee compensation costs. The increase in shipments in the third quarter and
first nine months of 1996 was primarily due to increased shipments of minivans
and Dodge Ram pickup trucks. Minivan shipments in the third quarter and first
nine months of 1995 were adversely affected by the changeover and launch of
Chrysler's all-new minivans. The increase in shipments of Dodge Ram pickup
trucks in the third quarter and first nine months of 1996 primarily reflects
production at two additional facilities.
Chrysler's worldwide shipments in the third quarter and first nine months
of 1996 were 650,529 units and 2,205,474 units, respectively, compared with
581,853 units and 1,931,769 units, respectively, in the third quarter and first
nine months of 1995.
Chrysler's revenues and results of operations are principally derived from
the U.S. and Canada automotive marketplaces. In the third quarter of 1996,
retail (including fleet) sales of new cars and trucks in
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS -- CONTINUED
FINANCIAL REVIEW -- CONTINUED
the U.S. and Canada, on a Seasonally Adjusted Annual Rate basis, were 16.5
million units, compared with 16.6 million units for the third quarter of 1995.
Chrysler's U.S. and combined U.S. and Canada retail sales and market share
data for the third quarter and first nine months of 1996 and 1995 were as
follows:
<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
-------------------------------- ------------------------------------
INCREASE/ INCREASE/
1996 1995 (DECREASE) 1996 1995 (DECREASE)
------- ------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
U.S. Retail Market(1):
Car sales....................... 190,451 177,038 13,413 661,717 619,257 42,460
Car market share................ 8.7% 7.9% 0.8% 9.9% 9.3% 0.6%
Truck sales (including
minivans).................... 399,658 328,739 70,919 1,224,284 1,023,387 200,897
Truck market share.............. 23.4% 20.6% 2.8% 23.5% 21.0% 2.5%
Combined car and truck sales.... 590,109 505,777 84,332 1,886,001 1,642,644 243,357
Combined car and truck market
share........................ 15.2% 13.2% 2.0% 15.9% 14.3% 1.6%
U.S. and Canada Retail Market(1):
Combined car and truck sales.... 645,766 560,841 84,925 2,063,461 1,814,478 248,983
Combined car and truck market
share........................ 15.5% 13.6% 1.9% 16.2% 14.6% 1.6%
</TABLE>
- -------------------------
(1) All retail sale and market share data include fleet sales.
Chrysler's U.S. car market share increased in the third quarter and first
nine months of 1996 primarily as a result of increased sales of its midsize
sedans and coupes, including the new Plymouth Breeze and Chrysler Sebring
convertible. The increase in Chrysler's U.S. truck market share for the third
quarter and first nine months of 1996 primarily reflects increased sales of its
Dodge Ram pickup trucks, Jeep(R) sport utility vehicles, and minivans.
Chrysler Financial Corporation ("CFC") reported pretax earnings of $144
million for the third quarter of 1996 as compared with $138 million for the
third quarter of 1995. For the first nine months of 1996, CFC reported pretax
earnings of $453 million as compared with $374 million for the first nine months
of 1995. CFC's net earnings for the third quarter and first nine months of 1996
were $94 million and $293 million, respectively, as compared with $87 million
and $242 million for the third quarter and first nine months of 1995. The
increase in net earnings in the third quarter of 1996 as compared with the third
quarter of 1995 primarily reflects net margin improvements partially offset by
higher operating expenses and provisions for credit losses. The increase in net
earnings for the first nine months of 1996 as compared with the first nine
months of 1995 primarily reflects net margin improvements and higher gains from
increased receivable sales partially offset by an increase in operating
expenses.
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 third quarter and first nine months of
1996 and 1995 were as follows:
<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
-------------------------------- --------------------------------
INCREASE/ INCREASE/
1996 1995 (DECREASE) 1996 1995 (DECREASE)
------- ------- ---------- ------- ------- ----------
(IN MILLIONS OF (IN MILLIONS OF
DOLLARS) DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Sales of manufactured products..... $13,396 $11,184 20% $42,298 $35,666 19%
Finance and insurance revenues..... 436 358 22% 1,316 1,146 15%
Other revenues..................... 524 467 12% 1,537 1,326 16%
------- ------- ------- -------
Total revenues................ $14,356 $12,009 20% $45,151 $38,138 18%
======= ======= ======= =======
</TABLE>
The increase in sales of manufactured products in the third quarter of 1996
as compared with the third quarter of 1995 primarily reflects a 12 percent
increase in vehicle shipments and an increase in average revenue per unit, net
of sales incentives, from $19,110 in the third quarter of 1995 to $20,765 in the
third quarter of 1996. The increase in sales of manufactured products in the
first nine months of 1996 as compared with the first nine months of 1995
primarily reflects a 14 percent increase in vehicle shipments and an increase in
average revenue per unit, net of sales incentives, from $18,309 in the first
nine months of 1995 to $19,243 in the first nine months of 1996. The increase in
average revenue per unit in the third quarter and first nine months of 1996 was
principally due to pricing actions and an increased proportion of truck
shipments to total vehicle shipments.
The increase in finance and insurance revenues for the third quarter and
first nine months of 1996 as compared with the corresponding 1995 periods was
primarily attributable to higher average automotive finance receivables
outstanding and vehicles leased.
The increase in other revenues for the third quarter and first nine months
of 1996 as compared with the corresponding 1995 periods was primarily due to the
recognition of lease revenue in accordance with EITF 95-1.
Chrysler's total expenses for the third quarter and first nine months of
1996 and 1995 were as follows:
<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
--------------------------------- ---------------------------------
INCREASE/ INCREASE/
1996 1995 (DECREASE) 1996 1995 (DECREASE)
------- ------- ---------- ------- ------- ----------
(IN MILLIONS OF (IN MILLIONS OF
DOLLARS) DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Costs, other than items below.... $10,975 $ 9,476 16% $33,720 $30,041 12%
Depreciation and special tools
amortization................... 527 510 3% 1,729 1,663 4%
Selling and administrative
expenses....................... 1,108 921 20% 3,415 3,005 14%
Employee retirement benefits..... 391 302 29% 1,008 906 11%
Interest expense................. 244 218 12% 778 733 6%
------- ------- ------- -------
Total expenses.............. $13,245 $11,427 16% $40,650 $36,348 12%
======= ======= ======= =======
</TABLE>
Costs, other than items below increased in the third quarter and first nine
months of 1996, as compared with the third quarter and first nine months of
1995, primarily as a result of a 12 percent and 14 percent increase in vehicle
shipments, respectively, and an increased proportion of truck shipments to total
vehicle shipments. In addition, Costs, other than items below for the first nine
months of 1995 include a charge of $263 million related to production changes at
the Newark assembly plant and a $115 million charge related to a voluntary
minivan owner service action. Costs, other than items below were 82 percent and
80 percent of sales of manufactured products for the third quarter and first
nine months of 1996, compared with 85 percent and 84 percent, respectively, for
the third quarter and first nine months of 1995, respectively.
Selling and administrative expenses for the third quarter and first nine
months of 1996 increased as compared with the corresponding 1995 periods
primarily as a result of increased profit-based employee compensation costs,
increased advertising expenses, and increased expenses associated with
Chrysler's expanding international activities.
8
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS -- CONTINUED
COMPARISON OF SELECTED ELEMENTS OF REVENUES AND EXPENSES -- CONTINUED
Employee retirement benefits for the third quarter and first nine months of
1996 increased as compared with the corresponding 1995 periods primarily as a
result of costs associated with a voluntary early retirement program for certain
salaried employees in the third quarter of 1996. The cost of this voluntary
early retirement program was $88 million.
During the second quarter of 1996, Chrysler completed the sale of ESI and
CTAS for net proceeds of $476 million. ESI and CTAS were engaged principally in
the manufacture of defense electronics and aircraft modification, respectively,
and represented substantially all of the operations of Chrysler Technologies
Corporation. The sale resulted in a pretax gain of $101 million ($87 million
after taxes) and is included in Costs, other than items below in the
consolidated statement of earnings for the nine months ended September 30, 1996.
Consistent with its strategy to focus on its core automotive business, in
the second quarter of 1996, Chrysler committed to a plan of disposal for
Thrifty. In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," a pretax loss of $65 million ($100 million after
taxes) was recognized in the second quarter of 1996 to write down Thrifty's
carrying value to estimated fair value less cost to sell. Chrysler's estimate of
the fair value of Thrifty is based principally on an analysis of non-binding
bids. The pretax loss is included in Costs, other than items below in the
consolidated statement of earnings for the nine months ended September 30, 1996.
The after-tax loss includes the effect of not being able to claim a tax
deduction for the capital loss on Chrysler's investment in Thrifty. Thrifty's
assets and liabilities at September 30, 1996 and its results of operations for
the three and nine months ended September 30, 1996 were immaterial to Chrysler's
consolidated assets and liabilities and results of operations, respectively.
Chrysler is continuing to negotiate for the sale of Thrifty and is uncertain
when the sale of Thrifty will be completed.
LIQUIDITY AND CAPITAL RESOURCES
Chrysler's combined cash, cash equivalents and marketable securities
totaled $8.7 billion at September 30, 1996 (including $1.2 billion held by CFC
and the Car Rental Operations), compared with $8.1 billion at December 31, 1995
(including $1.2 billion held by CFC and the Car Rental Operations). The increase
in Chrysler's combined cash, cash equivalents and marketable securities in the
first nine months of 1996 was primarily the result of cash generated by
operating activities, marketable securities acquired in a non-cash transaction
related to the securitization of retail receivables, and net proceeds from the
sale of nonautomotive assets, partially offset by capital expenditures, net debt
repayments, common stock repurchases and dividend payments.
During the first quarter of 1996, Chrysler's Board of Directors approved an
increase in Chrysler's planned 1996 common stock repurchases from $1 billion to
$2 billion and approved an additional $1 billion of common stock repurchases for
1997. These common stock repurchases are subject to market and general economic
conditions. During the third quarter and the first nine months of 1996, Chrysler
repurchased 15.8 million and 51.9 million shares, respectively, of its common
stock at a cost of $452 million and $1,570 million, respectively (including $24
million in unsettled repurchases). Share amounts have been adjusted to reflect
the two-for-one stock split.
During the second quarter of 1996, Chrysler increased its quarterly common
dividend from $0.30 to $0.35 per common share. Dividends per common share
amounts have been adjusted to reflect the two-for-one stock split.
At September 30, 1996, Chrysler (excluding CFC) had debt maturities
totaling $316 million through 1998. At September 30, 1996, Chrysler had a $2.4
billion revolving credit agreement which expires in April, 2001. No amounts were
outstanding under the revolving credit agreement during the third quarter of
1996. Chrysler believes that cash from operations and its cash position will be
sufficient 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 $5.9 billion of net proceeds from the sale of automotive retail
receivables in the first nine months of 1996 compared with
9
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS -- CONTINUED
LIQUIDITY AND CAPITAL RESOURCES -- CONTINUED
$4.7 billion of net proceeds in the first nine months of 1995. In addition,
securitization of revolving wholesale account balances provided funding for CFC
which aggregated $5.8 billion and $6.6 billion at September 30, 1996 and 1995,
respectively.
At September 30, 1996, CFC had contractual debt maturities of $2.2 billion
for the remainder of 1996, $2.9 billion in 1997 and $2.6 billion in 1998. CFC's
U.S. and Canadian revolving credit facilities, which total $8 billion, consist
of a $2 billion facility expiring in April, 1997 and a $6 billion facility
expiring in April, 2001. At September 30, 1996, $3 million of this amount was
utilized. CFC believes that cash provided by operations, receivable sales,
access to term debt markets and the issuance of commercial paper will provide
sufficient liquidity to meet its debt maturity and other funding requirements.
At September 30, 1996, Chrysler had a total of approximately 125,000
employees worldwide (113,000 in the U.S. and Canada). In the U.S. and Canada,
approximately 97 percent of Chrysler's hourly employees and 24 percent of its
salaried employees are represented by bargaining units. Of these represented
employees, 97 percent of hourly and 90 percent of salaried employees are
represented by the United Automotive, Aerospace, and Agricultural Implement
Workers of America ("UAW") or the National Automobile, Aerospace and
Agricultural Implement Workers of Canada ("CAW"). On September 29, 1996, the UAW
and Chrysler reached an agreement on a new three-year labor contract. The
contract, which is patterned largely on the agreement reached between the UAW
and the Ford Motor Company, was ratified by the Chrysler-UAW membership. On
September 17, 1996, the CAW and Chrysler reached a new three-year labor
agreement. The contract was subsequently ratified by the Chrysler-CAW
membership. The terms of the new contracts will increase Chrysler's UAW and CAW
labor-related costs from the levels experienced under its previous
collectively-bargained labor agreements.
During the third quarter of 1996, CFC completed the sale of certain
nonautomotive assets for net proceeds of $225 million. During the second quarter
of 1996, Chrysler completed the sale of ESI and CTAS for net proceeds of $476
million.
Chrysler's strategy is to focus on its core automotive business. As part of
this strategy, Chrysler has sold certain assets and businesses which are not
related to its core automotive business, has committed to a plan of disposal for
Thrifty, and is exploring the sale of other such assets and businesses in the
near term.
NEW ACCOUNTING STANDARD
In June 1996, the Financial Accounting Standards Board issued SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities." This Statement is effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after December 31,
1996. Chrysler believes that the implementation of this new accounting standard
will not have a material impact on its consolidated operating results or
financial position. Chrysler will adopt this accounting standard on a
prospective basis on January 1, 1997, as required.
OUTLOOK
The statements contained in this Outlook section are based on management's
current expectations. With the exception of the historical information contained
herein, the statements presented in this Outlook section are forward-looking
statements that involve numerous risks and uncertainties. Actual results may
differ materially.
Chrysler's worldwide vehicle production in the third quarter of 1996 was
630,995 units, an increase of 88,139 units or 16 percent as compared with the
third quarter of 1995. Worldwide vehicle production for the fourth quarter of
1996 is expected to be approximately 706,000 units, an increase of 7,000 units
as compared with the fourth quarter of 1995. This expected production level is
heavily dependent on continued favorable economic conditions in the U.S. and
Canada, where Chrysler's sales are concentrated. A significant weakening of
Chrysler's competitive position or economic conditions in the U.S. and Canada
could result in the lowering of fourth-quarter 1996 planned production.
10
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS -- CONTINUED
OUTLOOK -- CONTINUED
Chrysler's projections for full-year 1996 retail (including fleet) industry
sales for the U.S. and Canada are 15.5 million units and 1.2 million units,
respectively. Full-year 1995 retail (including fleet) industry sales were 15.1
million units and 1.2 million units in the U.S. and Canada, respectively.
Chrysler projects that full-year 1997 retail (including fleet) industry sales
for the U.S. will range from 15.0 million to 15.5 million units and that
full-year 1997 retail (including fleet) industry sales for Canada will range
from 1.1 million to 1.2 million units. Actual levels of industry retail
(including fleet) sales will depend on, among other things, economic conditions
in the U.S. and Canada, as well as the outcome of the on-going industry labor
negotiations. Accordingly, there can be no assurance that Chrysler's estimates
will be accurate.
In addition, Chrysler wishes to caution readers that several factors, as
well as those factors described elsewhere in this discussion, or in other
Securities and Exchange Commission filings, in some cases have affected, and in
the future could affect, Chrysler's actual results and could cause Chrysler's
actual results (for the remainder of 1996 and beyond) to differ materially from
those expressed in any forward-looking statement made by, or on behalf of,
Chrysler. Those factors include: business conditions and growth in the
automotive industry and general economy; changes in consumer debt levels and
interest rates; changes in consumer preferences away from pickup trucks, sport
utility vehicles and minivans; competitive factors, such as domestic and foreign
rival car and truck offerings, sales incentives, acceptance of new products and
price pressures; excess or shortage of manufacturing capacity; risks and
uncertainties associated with Chrysler's expansion into international markets;
and changes in foreign exchange rates and the resulting impact on pricing
strategies of major foreign competitors. Additionally, many of Chrysler's
competitors have larger worldwide sales volumes and greater financial resources,
which may, over time, place Chrysler at a competitive disadvantage in responding
to substantial changes in consumer preferences, government regulations, or
adverse economic conditions in the U.S. and Canada. Finally, the automotive
industry is highly cyclical and the duration of cycles has historically been
difficult to predict.
REVIEW BY INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP, Chrysler's independent public accountants, performed
a review of the financial statements for the three and nine months ended
September 30, 1996 and 1995 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.
11
<PAGE> 14
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
SUPPLEMENTAL INFORMATION
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
STATEMENT OF EARNINGS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------- -------------------
1996 1995 1996 1995
------- ------- ------- -------
(IN MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C>
Sales of manufactured products...................... $13,551 $11,253 $42,828 $35,974
Equity in earnings of unconsolidated subsidiaries
and affiliates.................................... 174 155 431 384
Interest income and other revenues.................. 188 103 562 349
------- ------- ------- -------
TOTAL REVENUES................................. 13,913 11,511 43,821 36,707
------- ------- ------- -------
Costs, other than items below....................... 10,953 9,351 33,661 29,748
Depreciation and special tools amortization......... 496 485 1,637 1,605
Selling and administrative expenses................. 919 764 2,864 2,528
Employee retirement benefits........................ 376 299 981 895
Interest expense.................................... 58 30 177 141
------- ------- ------- -------
TOTAL EXPENSES................................. 12,802 10,929 39,320 34,917
------- ------- ------- -------
EARNINGS BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE... 1,111 582 4,501 1,790
Provision for income taxes.......................... 431 228 1,779 709
------- ------- ------- -------
EARNINGS BEFORE CUMULATIVE EFFECT OF A CHANGE
IN ACCOUNTING PRINCIPLE...................... 680 354 2,722 1,081
Cumulative effect of a change in accounting
principle......................................... -- -- -- (96)
------- ------- ------- -------
NET EARNINGS................................... $ 680 $ 354 $ 2,722 $ 985
======= ======= ======= =======
</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." 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 5. OTHER INFORMATION -- CONTINUED
SUPPLEMENTAL INFORMATION
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------ ---------------------------
SEPTEMBER 30 DECEMBER 31 SEPTEMBER 30
------------ ----------- ------------
(IN MILLIONS OF DOLLARS)
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents................................ $ 5,134 $ 4,980 $ 3,693
Marketable securities.................................... 2,356 1,908 2,714
---------- --------- ----------
Total cash, cash equivalents and marketable securities... 7,490 6,888 6,407
Accounts receivable -- trade and other................... 1,762 816 1,248
Inventories.............................................. 4,568 3,762 3,500
Prepaid pension, taxes and other expenses................ 600 948 849
Property and equipment................................... 12,885 11,717 11,235
Special tools............................................ 3,574 3,566 3,487
Investments in and advances to unconsolidated
subsidiaries and affiliated companies.................. 3,450 3,755 3,695
Intangible assets........................................ 1,510 1,718 1,740
Deferred tax assets...................................... 1,776 1,978 1,898
Other assets............................................. 5,891 5,327 5,339
---------- --------- ----------
TOTAL ASSETS...................................... $ 43,506 $40,475 $ 39,398
========== ========= ==========
LIABILITIES:
Accounts payable......................................... $ 8,468 $ 7,654 $ 7,779
Short-term debt.......................................... 220 140 140
Payments due within one year on long-term debt........... 39 48 42
Accrued liabilities and expenses......................... 8,097 6,741 6,317
Long-term debt........................................... 1,746 1,763 1,771
Accrued noncurrent employee benefits..................... 9,474 9,156 9,000
Other noncurrent liabilities............................. 4,052 4,014 3,919
---------- --------- ----------
TOTAL LIABILITIES................................. 32,096 29,516 28,968
---------- --------- ----------
SHAREHOLDERS' EQUITY: (shares in millions)
Preferred stock -- $1 per share par value; authorized
20.0 shares; Series A Convertible Preferred Stock;
issued and outstanding: 1996 -- 0.1; 1995 -- 0.1 and
0.2 shares, respectively (aggregate liquidation
preference 1996 -- $26 million; 1995 -- $68 million and
$84 million, respectively)............................. * * *
Common stock -- $1 per share par value; authorized
1,000.0 shares; issued: 1996 -- 821.0; 1995 -- 408.2
shares and 407.4 shares, respectively.................. 821 408 407
Additional paid-in capital............................... 5,118 5,506 5,504
Retained earnings........................................ 8,246 6,280 5,481
Treasury stock -- at cost: 1996 -- 107.5 shares; 1995 --
29.9 and 24.8 shares, respectively..................... (2,775) (1,235) (962)
---------- --------- ----------
TOTAL SHAREHOLDERS' EQUITY........................ 11,410 10,959 10,430
---------- --------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........ $ 43,506 $40,475 $ 39,398
========== ========= ==========
</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.
13
<PAGE> 16
ITEM 5. OTHER INFORMATION -- CONTINUED
SUPPLEMENTAL INFORMATION
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------- -------
(IN MILLIONS OF
DOLLARS)
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES................................ $ 5,399 $ 3,136
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities..................................... (1,929) (2,487)
Sales and maturities of marketable securities.......................... 1,452 2,439
Expenditures for property and equipment................................ (2,340) (1,944)
Expenditures for special tools......................................... (763) (699)
Proceeds from the sale of nonautomotive assets......................... 476 --
Other.................................................................. 149 11
------- -------
NET CASH USED IN INVESTING ACTIVITIES............................. (2,955) (2,680)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in short-term debt (less than 90-day maturities)................ (50) --
Proceeds from long-term borrowings..................................... 14 --
Payments on long-term borrowings....................................... (26) (480)
Repurchases of common stock............................................ (1,570) (769)
Dividends paid......................................................... (712) (516)
Other.................................................................. 54 30
------- -------
NET CASH USED IN FINANCING ACTIVITIES............................. (2,290) (1,735)
------- -------
Change in cash and cash equivalents...................................... 154 (1,279)
Cash and cash equivalents at beginning of period......................... 4,980 4,972
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD............................... $ 5,134 $ 3,693
======= =======
</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." 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 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
September 30, 1996.
15
<PAGE> 18
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: October 15, 1996 By J. D. Donlon, III
-------------------------------------
J. D. Donlon, III
Vice President and Controller
(Principal Accounting Officer)
16
<PAGE> 19
EXHIBIT INDEX
FOR QUARTERLY REPORT ON FORM 10-Q FOR THE
QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
EXHIBIT
- -------
<C> <S>
11 Statement regarding computation of earnings per common share (Filed with this
report).
15A Letter, dated October 10, 1996, re unaudited interim information (Filed with this
report).
15B Letter, dated October 10, 1996, re unaudited interim information (Filed with this
report).
27 Financial Data Schedule for the nine months ended September 30, 1996 (Filed with
this report).
</TABLE>
17
<PAGE> 1
EXHIBIT 11
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
EARNINGS PER COMMON SHARE DATA
APB OPINION NO. 15 CALCULATION
<TABLE>
<CAPTION>
PERIOD ENDED SEPTEMBER 30,
---------------------------------------
THREE MONTHS
ENDED NINE MONTHS ENDED
----------------- -----------------
1996 1995 1996 1995
------ ------ ------ ------
(IN MILLIONS OF DOLLARS AND SHARES)
<S> <C> <C> <C> <C>
PRIMARY:
Net earnings............................................ $ 680 $ 354 $2,722 $ 985
Preferred stock dividend................................ (1) (2) (3) (19)
------ ------ ------ ------
Earnings attributable to common stock................... $ 679 $ 352 $2,719 $ 966
====== ====== ====== ======
Weighted average shares outstanding..................... 721.4 765.7 737.5 744.6
Shares issued on exercise of dilutive options........... 29.5 29.4 25.9 18.4
Shares purchased with proceeds of options............... (23.6) (21.6) (18.7) (11.5)
Shares contingently issuable............................ 1.0 1.0 0.9 0.8
------ ------ ------ ------
Shares applicable to primary earnings................... 728.3 774.5 745.6 752.3
====== ====== ====== ======
FULLY DILUTED:
Net earnings............................................ $ 680 $ 354 $2,722 $ 985
Preferred stock dividend................................ -- -- -- --
------ ------ ------ ------
Earnings attributable to common stock................... $ 680 $ 354 $2,722 $ 985
====== ====== ====== ======
Weighted average shares outstanding..................... 721.4 765.7 737.5 744.6
Shares issued on exercise of dilutive options........... 29.5 29.4 25.9 22.4
Shares purchased with proceeds of options............... (23.6) (21.1) (18.2) (15.0)
Shares applicable to convertible preferred stock........ 3.2 11.6 4.9 43.5
Shares contingently issuable............................ 1.8 1.7 1.7 1.4
------ ------ ------ ------
Shares applicable to fully diluted earnings............. 732.3 787.3 751.8 796.9
====== ====== ====== ======
PER COMMON SHARE DATA: (In dollars)
Primary:
Earnings before cumulative effect of a change in
accounting principle............................... $ 0.93 $ 0.45 $ 3.65 $ 1.41
Cumulative effect of a change in accounting
principle.......................................... -- -- -- (0.13)
------ ------ ------ ------
Net earnings per common share......................... $ 0.93 $ 0.45 $ 3.65 $ 1.28
====== ====== ====== ======
Fully Diluted:
Earnings before cumulative effect of a change in
accounting principle............................... $ 0.93 $ 0.45 $ 3.62 $ 1.36
Cumulative effect of a change in accounting
principle.......................................... -- -- -- (0.12)
------ ------ ------ ------
Net earnings per common share......................... $ 0.93 $ 0.45 $ 3.62 $ 1.24
====== ====== ====== ======
</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 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 otherwise computed. All per
share data has been adjusted to reflect the two-for-one stock split.
<PAGE> 1
EXHIBIT 15A
<TABLE>
<S> <C>
Deloitte &
Touche Logo -----------------------------------------------------------
Suite 900 Telephone: (313) 396-3000
600 Renaissance Center
Detroit, Michigan 48243-1704
</TABLE>
INDEPENDENT ACCOUNTANTS' REPORT
Shareholders and Board of Directors
Chrysler Corporation
Auburn Hills, Michigan
We have reviewed the accompanying consolidated balance sheet of Chrysler
Corporation and consolidated subsidiaries as of September 30, 1996 and 1995 and
the related consolidated statements of earnings and condensed cash flows for the
three-month and nine-month periods ended September 30, 1996 and 1995. 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, 1995, and the related consolidated
statements of earnings and cash flows for the year then ended (not presented
herein); and in our report dated January 18, 1996, 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, 1995, is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
Deloitte & Touche Signature
October 10, 1996
Deloitte & Touche International
<PAGE> 1
EXHIBIT 15B
<TABLE>
<S> <C>
Deloitte &
Touche Logo -----------------------------------------------------------
Suite 900 Telephone: (313) 396-3000
600 Renaissance Center
Detroit, Michigan 48243-1704
</TABLE>
October 10, 1996
Chrysler Corporation
1000 Chrysler Drive
Auburn Hills, 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 September 30, 1996 and 1995, as indicated in our report dated
October 10, 1996. 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 September 30, 1996, 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
(Post-Effective 1972 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 Sig
Deloitte & Touche International
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 5,599
<SECURITIES> 3,079
<RECEIVABLES> 2,144
<ALLOWANCES> 71
<INVENTORY> 5,552
<CURRENT-ASSETS> 0
<PP&E> 22,122
<DEPRECIATION> 8,160
<TOTAL-ASSETS> 55,722
<CURRENT-LIABILITIES> 0
<BONDS> 8,492
0
0<F2>
<COMMON> 821
<OTHER-SE> 10,589
<TOTAL-LIABILITY-AND-EQUITY> 55,722
<SALES> 42,298
<TOTAL-REVENUES> 45,151
<CGS> 33,720<F1>
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 21
<INTEREST-EXPENSE> 778
<INCOME-PRETAX> 4,501
<INCOME-TAX> 1,779
<INCOME-CONTINUING> 2,722
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,722
<EPS-PRIMARY> 3.65
<EPS-DILUTED> 3.62
<FN>
<F1>Excludes depreciation and special tools amortization and employee retirement
benefits.
<F2>Less than $1 million.
</FN>
</TABLE>
