DSkippy

http://www.pr-inside.com/fitch-downg...to-r577644.htm

Not to give the doom and gloomers fodder, but this does speak to how Chrysler's perceived evasiveness or clandestine approach of releasing production details, etc. This could be life and death for them, and they are really trying not to botch it.

[quote]Fitch Downgrades Chrysler's IDR to 'B'; Outlook Negative

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© Business Wire 2008
2008-05-07 21:37:10 -

- Fitch Ratings has downgraded the Issuer Default Rating (IDR) of Chrysler LLC to 'B' from 'B+', with a Negative Rating Outlook. Fitch has also downgraded the senior secured bank facilities as listed below, based on the downgrade of the IDR and Fitch's recovery rating methodology. The downgrade reflects the decline in unit volumes and revenues resulting from weak economic
conditions, modest share losses, certain strategic initiatives, and the effect of these factors on the company's operating performance. Chrysler's restructuring efforts remain on track, and liquidity is expected to remain adequate over the near term to fund restructuring costs and operating losses through a period of economic weakness.

Since 2000, Chrysler's market share losses have been more moderate than at Ford and GM, requiring fewer reductions in assembly capacity and the associated fixed costs. In a stable revenue environment, this would allow cost reductions to flow more quickly to the bottom line. However, the severe impact of weakening economic conditions has made this more challenging, and has extended the timeline projected for a potential reversion to positive cashflow. The steep decline in 2008 unit sales also results from strategic initiatives undertaken at Chrysler following its management changes, including reduced fleet sales, product eliminations and inventory reductions, steps that are viewed positively for the company's long-term prospects.

Unit volumes in 2008 and into 2009 will be aided by the new Dodge and Chrysler minivan offerings, the Dodge Journey crossover, the low-volume Dodge Challenger, as well as the fall launch of the redesigned Dodge Ram pickup. Several products at the smaller end of Chrysler's lineup, including the Dodge Caliber and Jeep Patriot, have supported unit volumes as consumers migrate to smaller, fuel-efficient vehicles. On a consolidated basis, however, these factors will be more than offset by weakness in the larger end of the company's product portfolio -- the effect of a depressed residential construction market on Chrysler's key pickup lineup, high gas prices, and the impact of general economic conditions on industry sales. Chrysler's efforts to sharply curtail fleet sales and to convert its sales/production strategy to a 'demand-pull' model from a 'production-push' model will further affect sales declines in 2008. International sales, representing approximately 10% of production, are likely to continue to grow at double-digit rates, providing modest support to consolidated sales and capacity utilization.

Chrysler's cash flow will remain negative in 2008, due to capital investments, restructuring costs and other one-time items. The company is realizing substantial reductions to its fixed-cost structure, the bulk of which have resulted from salaried and hourly headcount reductions. Variable purchasing, material and other efficiencies have been more difficult to realize as rising commodity costs have offset other progress. Cost reductions and the new UAW contract have positioned the company to moderate operating losses during the current economic weakness, but a return to positive free cash flow is likely to require continued execution on the company's cost reduction efforts and a stabilization in market share and industry sales. Chrysler also faces pending CAW contract negotiations.

Liquidity levels (supported by incremental debt from a delayed-draw term loan and a $1.6 billion n

MGDMike

What I got out of this was that this was a "near time" assesment of the company.. doesn't seem so gloomy to me. Just a company trying to turn itself around.

lear4406

I would guess a better basis for how the company is doing, would be at the end of this year. That will tell if the measures put in place are working or if deeper cuts are needed. I hope to see it all turn around. But I'm a very positve person. Keep on the sunny side

davecpa

i guess a "B" is better than a D-. But it seems the info we get is always about history because the future is still to be written. We all know the economy has slowed in the last 6 months blah blah blah.... But regardless of what any financial analysis writes... the proof is in the pudding, and we will have to just wait and see how chrysler does.