Chrysler Files for IPO

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Chrysler filed for an IPO today. It is one of the few major car companies in the world that is not public. Chrysler emerged from Chapter 11 three years ago, and is now controlled by Fiat. Chrysler has done remarkably well in U.S. sales since leaving bankruptcy. However, one of the drawbacks of its business is that it has almost no presence in China or much of the developing world, which are dominated by General Motors Co. (NYSE: GM), Volkswagen and Toyota Motor Corp. (NYSE: TM). Chrysler also must be concerned that sales of Fiat have plunged because of its presence in the recession-damaged European Union.

In its most recent financial filing:

Chrysler Group LLC net income for the second quarter of 2013 was $507 million, an increase of 16 percent
from $436 million a year ago
 Net revenue for the quarter was $18.0 billion, up 7 percent from a year ago
 Modified Operating Profit  increased 7 percent to $808 million in the second quarter, from $755 million a
year earlier
 Free Cash Flow for the second quarter totaled $91 million; Cash as of June 30, 2013, was $11.9 billion,
comparable with March 31, 2013, and slightly lower than $12.1 billion a year ago
 Net Industrial Debt was $656 million at June 30, 2013, up slightly from $619 million at March 31, 2013, and
$432 million a year ago
 Worldwide vehicle shipments were 660,000 for the quarter, up 5 percent from 630,000 a year ago
 Strong worldwide vehicle sales for the second quarter of 643,000, up 10 percent from a year ago, were driven
primarily by a 17 percent increase in U.S. retail sales
 U.S. market share was 11.4 percent for the second quarter, compared with 11.2 percent a year ago; Chrysler
Group market share was 15.1 percent in Canada, up from 14.5 percent a year ago
 Full-year 2013 Modified Operating Profit and net income guidance revised

August sales:

Best August sales since 2007
 41st-consecutive month of year-over-year sales gains
 Chrysler, Jeep®, Dodge, Ram Truck, and FIAT brands each post sales increases
in August compared with same month a year ago
 FIAT brand records its best sales month since launching the Fiat 500 in the U.S.
in 2011
 Six Chrysler Group vehicles set sales records in August
 Ram Truck brand sales up 29 percent; largest percentage sales gain of any
Chrysler Group brand in August
 All Jeep brand vehicles in production record double-digit percentage increases
 Ram Truck brand named “Most Ideal Popular Brand” in AutoPacific’s 2013 Ideal
Vehicle Awards; Jeep Grand Cherokee and Chrysler Town & Country named
“Most Ideal Mid-Size SUV” and “Most Ideal Minivan” in their respective classes

Among the information revealed in the S-1:

We design, engineer, manufacture, distribute and sell automobiles, which include passenger cars, utility vehicles (which include sport utility and crossover vehicles), minivans, trucks and commercial vans, under the Chrysler, Jeep, Dodge and Ram brands, as well as the SRT performance vehicle designation, and we sell our authentic service parts and accessories under the Mopar brand. We also sell separately-priced service contracts to customers and provide contract manufacturing services to other vehicle manufacturers, primarily Fiat. As part of our industrial alliance with Fiat, or the Fiat-Chrysler Alliance, we also manufacture certain Fiat vehicles in Mexico, which are distributed throughout North America and sold to Fiat for distribution elsewhere in the world. In addition, Fiat manufactures certain Fiat brand vehicles for us, which we sell in select markets. We sell our products through a network of approximately 2,600 dealers in the U.S. and through distributors and dealers around the world. Over the past four years, we have transformed our business through renewed brand focus, a streamlined distribution network, an improved cost structure, new management and dedication to designing and building a broadened portfolio of high quality vehicles. We have established a clear strategy for each of our brands and are reshaping our product lineup in a way that enhances our brands to be highly differentiated and responsive to consumer preferences. As part of this strategy, we have introduced more than 25 new or significantly refreshed vehicles since we began operations in mid-2009. Our vehicles and service parts and accessories are sold primarily in North America. Over the past three years, the U.S. has been the fastest growing developed vehicle market in the world, and we are one of the fastest growing automakers in the U.S., as measured by growth in market share, during that span. In addition, we are devoting increased attention to key emerging markets, such as China, Brazil and India, to drive future growth. For the twelve months ended June 30, 2013, we shipped 2.4 million vehicles worldwide, generating approximately $66.0 billion in net revenue, $1.6 billion in net income and $5.2 billion in Modified EBITDA


Chrysler Group LLC’s governance documents accord, and the stockholders’ agreement that the Company will enter into with each of Fiat and the UAW Retiree Medical Benefits Trust, or the VEBA Trust, immediately prior to the effectiveness of the registration statement of which this prospectus is a part, or the Stockholders’ Agreement, will continue to accord, significant management oversight and governance rights to Fiat as the holder of the majority of our common stock following the consummation of the Company Conversion and this offering. Fiat currently holds a majority ownership interest in us, and has the right to appoint a majority of our board of directors, or the Board, and Fiat will own a majority of our common stock and will have the ability to nominate a majority of the Board following the Company Conversion. As a result, Fiat has the ability to control our management and operations, including with respect to significant corporate transactions such as mergers and acquisitions, asset sales, borrowings, issuances of securities and our dissolution, as well as amendments to our organizational documents. Fiat’s control has been subject only to a requirement in Chrysler Group LLC’s governance documents that the Board and the Company must have the consent of the VEBA Trust to make certain major decisions, if they both adversely and disproportionately affect the VEBA Trust as a member, and that any transaction by Chrysler Group with Fiat in excess of $25 million must be approved by a majority of disinterested members of the Board. Our Stockholders’ Agreement and bylaws will continue such limitations following the Company Conversion. See Description of Capital Stock —Major Decisions. Despite processes we have implemented to guard against conflicts of interest (including such actual or perceived conflicts of interest described below) and to review affiliate transactions, Fiat may take actions or cause the Company to take actions that are not in the best interests of the Company or that disproportionately benefit Fiat as compared to us.