Chrysler 2015 Annual Report Download - page 21

2015 | ANNUAL REPORT 21
We may not be able to realize anticipated benefits from acquisitions that we may undertake, and challenges
associated with strategic alliances may have an adverse impact on our results of operations.
We may engage in acquisitions or enter into, expand or exit from strategic alliances which could involve risks that may
prevent us from realizing the expected benefits of the transactions or achieving our strategic objectives. Such risks
could include:
technological and product synergies, economies of scale and cost reductions not occurring as expected;
unexpected liabilities;
incompatibility in processes or systems;
unexpected changes in laws or regulations;
inability to retain key employees;
inability to source certain products;
increased financing costs and inability to fund such costs;
significant costs associated with terminating or modifying alliances; and
problems in retaining customers and integrating operations, services, personnel, and customer bases.
If problems or issues were to arise among the parties to one or more strategic alliances for managerial, financial or
other reasons, or if such strategic alliances or other relationships were terminated, our product lines, businesses,
financial position and results of operations could be adversely affected.
There can be no assurance that we will be able to offset the earnings power lost as a result of the Ferrari separation.
In January 2016, we completed the previously announced separation of Ferrari N.V., which was intended to, among
other things, strengthen our capital base. The separation consisted primarily of the October 2015 initial public offering
of 10 percent of the common shares of Ferrari N.V. and the January 2016 transaction in which holders of our common
shares and mandatory convertible securities received our remaining 80 percent interest in Ferrari N.V. The initial
public offering and spin-off will in the aggregate ultimately have a positive €1.5 billion impact on ourNet industrial debt.
However, Ferrari N.V. contributed approximately €2.6 billion in revenue and €444 million in EBIT in 2015, and is now
accounted for as a discontinued operation. If the improvement in our capital position resulting from the separation
of Ferrari N.V. is not sufficient to offset the related loss of revenue and EBIT, we could experience a material adverse
impact on our results of operations and financial condition.
Failure to maintain adequate financial and management processes and controls could lead to errors in our financial
reporting, which could harm our business reputation and cause a default under certain covenants in our credit
agreements and other debt.
We continuously monitor and evaluate changes in our internal controls over financial reporting. In support of
our drive toward common global systems, we have extended our finance, procurement, and capital project and
investment management systems to new areas of operations. As appropriate, we continue to modify the design and
documentation of internal control processes and procedures relating to the new systems to simplify and automate
many of our previous processes. Our management believes that the implementation of these systems will continue
to improve and enhance internal controls over financial reporting. If we fail to maintain adequate financial and
management processes and controls, however, it could lead to errors in our financial reporting, which could harm our
business reputation and cause a default under certain covenants in our credit agreements and other debt.
In addition, if we do not maintain adequate financial and management personnel, processes and controls, we may
not be able to accurately report our financial performance on a timely basis, which could cause a default under certain
covenants in the indentures governing certain of our public indebtedness, and other credit agreements.