Chrysler 2014 Annual Report Download - page 81

2014 | ANNUAL REPORT 79
Management believes that the funds currently available, in addition to those funds that will be generated from
operating and financing activities, will enable the Group to meet its obligations and fund its businesses including
funding planned investments, working capital needs and fulfilling its obligations to repay its debts in the ordinary
course of business.
Liquidity needs are met primarily through cash generated from operations, including the sale of vehicles, service and
parts to dealers, distributors and other consumers worldwide.
The operating cash management, main funding operations and liquidity investment of the Group, excluding FCA
US, are centrally coordinated by dedicated treasury companies with the objective of ensuring effective and efficient
management of the Group’s funds. The companies raise capital in the financial markets through various funding
sources. See Overview—Industry Overview—Financial Services.
FCA US continues to manage its liquidity independently from the rest of the Group. Intercompany financing from FCA
US to other Group entities is not restricted other than through the application of covenants requiring that transactions
with related parties be conducted at arm’s length terms or be approved by a majority of the “disinterested” members
of the Board of Directors of FCA US. In addition, certain of FCA US’s financing agreements place restrictions on the
distributions which it is permitted to make. In particular, dividend distributions, other than certain exceptions including
certain permitted distributions and distributions with respect to taxes, are generally limited to an amount not to exceed
50.0 percent of cumulative consolidated net income (as defined in the agreements) from January 1, 2012.
FCA has not provided any guarantee, commitment or similar obligation in relation to any of FCA US’s financial
indebtedness, nor has it assumed any kind of obligation or commitment to fund FCA US. However, certain bonds
issued by FCA and its subsidiaries (other than FCA US and its subsidiaries) include covenants which may be affected
by circumstances related to FCA US, in particular there are cross-default clauses which may accelerate repayments in
the event that FCA US fails to pay certain of its debt obligations.
At December 31, 2014 the treasury companies of the Group, excluding FCA US and its subsidiaries, had access to
approximately €3.3 billion of medium/long term committed credit lines expiring beyond 12 months (€3.2 billion at
December 31, 2013), of which €2.1 billion relate to the three year syndicated revolving credit line due in July 2016
which was undrawn at December 31, 2014 and December 31, 2013.
Additionally, the operating entities of the Group, excluding FCA US and its subsidiaries, have access to dedicated
credit facilities in order to fund investments and working capital requirements. In particular the Brazilian companies
have committed credit lines available, mainly in relation to the set-up of our new plant in the State of Pernambuco,
Brazil, with residual maturities after twelve months, to fund scheduled investments, of which approximately €0.9 billion
was undrawn at December 31, 2014 (approximately €1.8 billion was undrawn at December 31, 2013).
FCA US has access to a revolving credit facility of U.S. $1.3 billion (€1.1 billion), maturing in May 2016, or the
Revolving Credit Facility, which was also undrawn at December 31, 2014 and December 31, 2013. See —Total
Available Liquidity below.
The following pages discuss in more detail the principal covenants relating to the Group’s revolving credit facilities and
certain other financing agreements. At December 31, 2014 and at December 31, 2013, the Group was in compliance
with all covenants under its financing agreements.
Long-term liquidity requirements may involve some level of debt refinancing as outstanding debt becomes due or
we are required to make amortization or other principal payments. Although we believe that our current level of total
available liquidity is sufficient to meet our short-term and long-term liquidity requirements, we regularly evaluate
opportunities to improve our liquidity position in order to enhance financial flexibility and to achieve and maintain a
liquidity and capital position consistent with that of our principal competitors.
However, any actual or perceived limitations of our liquidity may limit the ability or willingness of counterparties,
including dealers, consumers, suppliers, lenders and financial service providers, to do business with us, or require us
to restrict additional amounts of cash to provide collateral security for our obligations. Our liquidity levels are subject to
a number of risks and uncertainties, including those described in the Risk Factors section.