Chrysler Reports 1997 Results
23 January 1998
Chrysler Reports 1997 Results
AUBURN HILLS, Mich., Jan. 23 -- Chrysler Corporation
today announced calendar-year 1997 net earnings of $2.805 billion,
or $4.15 per common share ($4.09 per diluted common share), compared to
calendar-year 1996 net earnings of $3.529 billion, or $4.83 per common share
($4.74 per diluted common share). Fourth-quarter 1997 net earnings were
$852 million, or $1.30 per common share ($1.28 per diluted common share),
compared to fourth-quarter 1996 net earnings of $807 million, or $1.14 per
common share ($1.12 per diluted common share).
Net earnings for 1997 were Chrysler's third-best year ever and net
earnings for fourth-quarter 1997 were Chrysler's third-best fourth-quarter
ever.
Calendar-year 1997 pretax earnings were $4.557 billion, compared to
calendar-year 1996 pretax earnings of $6.092 billion. Fourth-quarter 1997
pretax earnings were $1.316 billion, compared to fourth-quarter 1996 pretax
earnings of $1.591 billion.
In December 1997, Chrysler completed an initial public offering (IPO) of
the common stock of its subsidiary, Dollar Thrifty Automotive Group, Inc.
(Dollar/Thrifty) for net proceeds of $387 million. The IPO resulted in a
pretax and after-tax gain of $73 million. The gain is being deferred and
recognized over the remaining term of vehicle supply agreements between
Chrysler and Dollar/Thrifty, which end in 2001. In addition, fourth-quarter
1997 net earnings include the recognition of $60 million ($97 million pretax)
of previously deferred profits from the sale of vehicles by Chrysler to
Dollar/Thrifty.
(See additional information in "Special Items" section.)
"Coming off record earnings last year, we knew 1996 would be a tough act
to follow. But, despite a costly 29-day strike and the most ambitious multi-
vehicle launch in Chrysler's history, our 1997 results were very good thanks
to the dedication and hard work by our people," said Robert J. Eaton, Chairman
and CEO.
"In 1997, we introduced three all-new products -- Dodge Durango, Dodge
Intrepid and Chrysler Concorde -- two significant new models -- Dodge Ram Quad
Cab and 5.9 Liter Jeep(R) Grand Cherokee Limited, and major updates to the Ram
Van and Ram Wagon," said Eaton. "And with the availability of our new
Chrysler 300M and Chrysler LHS at mid-year, we are well positioned for 1998.
"Once again, we are delighted with the recognition our products have
received this year, garnering more than 53 awards worldwide, including Car &
Driver's 'Ten Best' (Dodge Intrepid), 4 Wheel & Off-Road's '4x4 of the Year'
(Jeep Grand Cherokee 5.9 Limited) and Four Wheeler's 'Sport-Utility Vehicle of
the Year' (Dodge Durango)," he said.
"And our products are also being enthusiastically received in the
marketplace -- record retail sales in November and December gave us our
second-best annual U.S. sales ever," Eaton said. "Demand is strong for the
new Dodge Durango and we expect the all-new 1998 Dodge Intrepid and Chrysler
Concorde to bolster the passenger car side of our business.
"It is especially gratifying that our international sales continue to
grow, despite the fluctuation of exchange rates and the economic turmoil in
many Asian countries," he said.
"We remain focused on improving quality. Five Chrysler vehicles top their
classes in the 1997 Strategic Vision Total Quality Survey, three earned 'best
in class' awards in J. D. Power's 'APEAL' survey and, in the J.D. Power
Initial Quality Study (IQS), we had a very respectable 20 percent improvement
-- the best in our history," said Eaton.
"As proud as we are of our successes, we know we are not where we need to
be, given the competitive environment in which we operate. We are committed
to continuous improvement in all aspects of our business," he said.
"We returned solid value to our shareholders in 1997, with $3.2 billion
in share repurchases and dividends. We also announced an additional $2
billion repurchase program to be completed by the end of 1998, subject to
market and general economic conditions," said Eaton.
"With lower interest rates, inflation and oil prices, and consumer
confidence at an all-time high, the outlook for 1998 is positive, in spite of
the competitive marketplace," said Eaton. "We believe Chrysler remains well
positioned to compete and succeed in the global marketplace."
Separately, Chrysler announced that investors will be able to purchase
Chrysler common stock at reduced commissions through The DirectSERVICE(TM)
Investment Program, sponsored by First Chicago Trust Company of New York.
Based on 1997 U.S. pretax earnings, Chrysler expects to issue profit
sharing payments averaging $4,600 to the Company's U.S. hourly employees,
compared to $7,900 in 1996.
OTHER 1997 RESULTS
-- Total revenues were $61.1 billion for 1997 compared to 1996 record
total revenues of $61.4 billion.
-- Net earnings as a percent of total revenues decreased to 4.6 percent in
1997, compared to 5.7 percent in 1996.
-- Chrysler's worldwide factory vehicle shipments in 1997 were 2,886,981
compared with 2,958,800 in 1996.
-- Chrysler's combined U.S. and Canadian retail (including fleet) vehicle
sales in 1997 were 823,822 cars and 1,736,128 trucks and minivans,
compared with 919,414 cars and 1,770,926 trucks and minivans in 1996.
Combined U.S. and Canadian retail (including fleet) car and truck
market share for 1997 was 15.1 percent, down 1.0 percentage point from
1996.
-- International retail sales grew to 237,060 units for calendar-year
1997, a 7 percent increase over 222,042 units in 1996.
-- Chrysler completed a $2 billion common stock buyback in 1997. Since
beginning its common stock repurchase program in 1995, Chrysler has
repurchased 175 million shares of its common stock at a cost of
$5.2 billion.
-- Standard & Poor's, Fitch Investors Service and Duff & Phelps upgraded
Chrysler's long-term debt rating from "A-" to "A".
-- In February 1997, Chrysler sold $500 million of 7.45% Debentures due
2097 and $600 million of 7.45% Debentures due 2027 for net proceeds of
$485 million and $592 million, respectively. In July 1997, Chrysler
sold $500 million of 7.40% Debentures due 2097 for net proceeds of
$495 million.
-- In August 1997, Chrysler extinguished its $267 million 10.95%
Debentures due 2017 and $245 million 10.40% Notes due 1999 for $529
million.
-- Chrysler Financial Corporation reported record calendar-year 1997 net
earnings of $419 million, an improvement of $43 million over calendar-
year 1996 net earnings of $376 million.
SPECIAL ITEMS
In addition to the fourth-quarter 1997 impact of the IPO of
Dollar/Thrifty, calendar-year 1997 net earnings also reflected the unfavorable
impact of a 29-day strike which reduced earnings by an estimated $364 million
($590 million pretax) after considering partial recovery of production losses
from the strike and included a $25 million charge ($41 million pretax) for
costs related to the decision to discontinue Chrysler's Eagle brand at the end
of the 1998 model year.
Net earnings for fourth-quarter 1996 included an extraordinary after-tax
loss of $191 million related to the retirement of $550 million of debt and
charges of $51 million ($77 million pretax) for the write-down of Chrysler's
investment in Pentastar Electronics, $31 million ($50 million pretax) for lump
sum retiree pension costs associated with the 1996 UAW contract and $6 million
($9 million pretax) for a voluntary early retirement program initiated in
third-quarter 1996.
In addition to the fourth-quarter 1996 special items, calendar-year 1996
net earnings also included a $100 million charge ($65 million pretax) for the
write-down of Chrysler's investment in Thrifty Rent-A-Car System, a $55
million third-quarter charge ($88 million pretax) for costs associated with
the voluntary early retirement program, and an $87 million gain ($101 million
pretax) related to the sale of Electrospace Systems and Chrysler Technologies
Airborne Systems.
4th Qtr '97 4th Qtr '96 1997 1996
Total Revenues (Billions) $17.5 $16.2 $61.1 $61.4
Pretax Earnings
Excluding Special Items
(Millions) $1,219 $1,727 $5,091 $6,280
Special Items (Millions) 97 (136) (534) (188)
Pretax Earnings
Including Special Items
(Millions) $1,316 $1,591 $4,557 $6,092
Net Earnings
Excluding Special Items
(Millions) $792 $1,086 $3,134 $3,876
Special Items (Millions) 60 (279) (329) (347)
Net Earnings
Including Special Items
(Millions) $852 $807 $2,805 $3,529
Net Earnings Per Common
Share (EPS)*
Excluding Special Items
Basic $1.21 $1.53 $4.64 $5.30
Diluted $1.19 $1.51 $4.57 $5.21
EPS Including
Special Items*
Basic $1.30 $1.14 $4.15 $4.83
Diluted $1.28 $1.12 $4.09 $4.74
* All prior periods have been restated to reflect the adoption of
Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings per
Share." SFAS No. 128 replaced the presentation of primary EPS and fully
diluted EPS with a presentation of basic EPS and diluted EPS, respectively.
Basic EPS excludes potential share dilution and is computed based on the
weighted-average number of common shares outstanding for the period; diluted
EPS reflects the potential dilution of securities that could share in the
earnings. The adoption of this new accounting standard did not have a
material effect on Chrysler's reported EPS amounts.
4th Qtr '97 4th Qtr '96 1997 1996
Dividends Declared
per Common Share $0.40 $0.40 $1.60 $1.40
Worldwide Factory Shipments 761,933 753,326 2,886,981 2,958,800
Retail Unit (incl. fleet) Sales
U.S. and Canada
Combined 623,107 626,879 2,559,950 2,690,340
Car, Truck Market Share
U.S. and Canada
Combined 15.3% 16.1% 15.1% 16.1%
Average U.S. Retail
Incentives per Vehicle $1,185 $660 $1,010 $655
Cash, Cash Equivalents,
and Marketable Securities
at End of Period (Millions)
Consolidated -- -- $7,848 $7,752
Automotive -- -- $7,075 $6,947
Shares Used to Calculate
EPS (Millions)*
Basic 654.3 708.5 675.5 730.3
Diluted 663.3 721.1 685.3 743.8
Shares of Common Stock
Outstanding at End of
Period (Millions) -- -- 648.4 702.6
* All prior periods have been restated to reflect the adoption of
Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings per
Share." SFAS No. 128 replaced the presentation of primary EPS and fully
diluted EPS with a presentation of basic EPS and diluted EPS, respectively.
Basic EPS excludes potential share dilution and is computed based on the
weighted-average number of common shares outstanding for the period;
diluted EPS reflects the potential dilution of securities that could share in
the earnings. The adoption of this new accounting standard did not have a
material effect on Chrysler's reported EPS amounts.
SOURCE Chrysler Corporation