UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
x | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2008
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period From to
Commission File Number 001-34029
A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
FEDERAL-MOGUL CORPORATION
401(K) INVESTMENT PROGRAM
B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
Federal-Mogul Corporation, 26555 Northwestern Highway, Southfield, MI 48033
401(k) INVESTMENT PROGRAM
TABLE OF CONTENTS
| Page Number | ||
| 1 | ||
Financial Statements | ||
Statements of Net Assets Available for Plan Benefits as of December 31, 2008 and 2007 | 2 | |
| 3 | ||
| 4-16 | ||
Supplemental Schedule for the year ended December 31, 2008 | ||
Schedule H, Line 4i – Schedule of Assets (Held at End of Year) | 17 | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Plan Design Committee
Federal-Mogul Corporation
We have audited the accompanying statements of net assets available for plan benefits of the Federal-Mogul Corporation 401(k) Investment Program as of December 31, 2008 and 2007, and the related statements of changes in net assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan at December 31, 2008 and 2007, and the changes in its net assets available for plan benefits for the years then ended, in conformity with US generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2008 is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
Detroit, Michigan
June 19, 2009
401(k) Investment Program
Statements of Net Assets Available for Plan Benefits
| December 31 | ||||||
| 2008 | 2007 | |||||
Assets | ||||||
Receivables: | ||||||
Company contributions | $ | 33,932 | $ | — | ||
Participant contributions | 195,480 | — | ||||
Participant loan interest | 4,212 | — | ||||
Federal-Mogul Corporation warrants | — | 756,237 | ||||
Total receivables | 233,624 | 756,237 | ||||
Participant loans in Master Trust (See Note 7) | 6,298,120 | 6,450,594 | ||||
Investments in Master Trust at fair value (See Note 7) | 283,025,078 | 386,620,763 | ||||
Total assets | 289,556,822 | 393,827,594 | ||||
Liabilities | ||||||
Forfeited accounts owed to the Company (See Note 1) | 7,800 | 8,486 | ||||
Net assets at fair value | 289,549,022 | 393,819,108 | ||||
Adjustments from fair value to contract value for fully benefit-responsive investment contracts | 3,736,974 | 688,425 | ||||
Net assets available for plan benefits | $ | 293,285,996 | $ | 394,507,533 | ||
See accompanying notes to financial statements.
2
401(k) Investment Program
Statements of Changes in Net Assets Available for Plan Benefits
| Years Ended December 31 | ||||||||
| 2008 | 2007 | |||||||
Additions | ||||||||
Dividends and interest | $ | 19,039,684 | $ | 26,736,505 | ||||
Participant contributions | 22,021,604 | 22,642,065 | ||||||
Company contributions | 3,667,375 | 3,792,156 | ||||||
Total additions | 44,728,663 | 53,170,726 | ||||||
Deductions | ||||||||
Benefits paid to participants | 42,525,934 | 43,373,608 | ||||||
Administrative expenses | 42,971 | 49,902 | ||||||
Portion of Company contribution account forfeited upon withdrawal of participants (see Note 1) | 137,437 | 148,741 | ||||||
Total deductions | 42,706,342 | 43,572,251 | ||||||
Net realized/unrealized depreciation in fair value of investments in Master Trust (See Note 7) | (114,419,208 | ) | (3,359,931 | ) | ||||
Net transfer from other Company investment programs | 11,175,350 | 302,208 | ||||||
Net increase/(decrease) | (101,221,537 | ) | 6,540,752 | |||||
Net assets available for plan benefits at beginning of year | 394,507,533 | 387,966,781 | ||||||
Net assets available for plan benefits at end of year | $ | 293,285,996 | $ | 394,507,533 | ||||
See accompanying notes to financial statements.
3
401(k) Investment Program
Notes to Financial Statements
December 31, 2008
1. | Description of the Plan |
Federal-Mogul Corporation (the “Company”) sponsors the Federal-Mogul Corporation 401(k) Investment Program (the “Plan”). The following description of the Plan provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
General
The Plan is a defined contribution plan subject to the Employee Retirement Income Security Act (ERISA). All salaried and certain hourly employees of the Company and its subsidiaries who are paid in the United States are eligible to participate in the Plan. This provides eligible participants the opportunity to make voluntary pre-tax, after-tax and Roth contributions to the Plan.
The Company’s Emergence from Chapter 11 Proceeding
The predecessor to Federal-Mogul Corporation, (the “Predecessor Company”) and all of its then-existing wholly-owned United States subsidiaries (the “U.S. Subsidiaries”) filed voluntary petitions on October 1, 2001 for reorganization under Chapter 11 of Title 11 of the United States Code the “Bankruptcy Code”) with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). On October 1, 2001, certain of the Predecessor Company’s United Kingdom subsidiaries (together with the U.S. Subsidiaries, the “Debtors”) filed voluntary petitions for reorganization under the Bankruptcy Code with the Bankruptcy Court. On November 8, 2007, the Bankruptcy Court entered an Order (the “Confirmation Order”) confirming the Fourth Amended Joint Plan of Reorganization for Debtors and Debtors-in-Possession (as Modified) (the “Plan of Reorganization”) and entered Findings of Fact and Conclusions of Law regarding the Plan (the “Findings of Fact and Conclusions of Law”). On November 14, 2007, the United States District Court for the District of Delaware entered an order affirming the Confirmation Order and adopting the Findings of Fact and Conclusions of Law. On December 27, 2007, the Plan of Reorganization became effective in accordance with its terms (the “Effective Date”). On the Effective Date, the Predecessor Company merged with and into New Federal-Mogul Corporation whereupon (i) the separate corporate existence of the Predecessor Company ceased, (ii) New Federal-Mogul Corporation became the surviving corporation and continues to be governed by the laws of the State of Delaware and (iii) New Federal-Mogul Corporation was renamed “Federal-Mogul Corporation” (also referred to as “Federal-Mogul” or the “Company”).
The Company’s Plan of Reorganization
The Plan of Reorganization provides for distributions of cash and/or securities to be made to holders of pre-Petition Date claims against the Debtors as well as certain claims that arose during the pendency of the Chapter 11 cases of the Debtors. Certain key provisions of the Plan of Reorganization which affect the Plan, include the following:
• | On the Effective Date, a total of 3,914,758 shares of common stock of the Predecessor Company held in the Master Trust were cancelled. |
• | 295,674 Federal-Mogul Corporation warrants (the “Warrants”) were issued to the Master Trust, at a conversion ratio of 0.0755280 Warrants for each share of Predecessor Company common stock held in the Master Trust as of the Effective Date. Each Warrant provides the right to purchase a share of Class A Common Stock of the Company at an exercise price equal to $45.815. If not exercised, the Warrants will expire on December 27, 2014. |
• | The Plan of Reorganization provides the Plan will continue in existence. |
4
Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2008
1. | Description of the Plan (continued) |
Plan Merger
In January 2008, Federal-Mogul Corporation Salaried Employees’ Investment Program (the “SEIP”), which had assets consisting of 66,455 Warrants and a receivable in the Lawsuit Settlement referred to below, was merged into the Plan.
The SEIP Lawsuit Settlement
On September 22, 2003, a class action lawsuit was filed in the United State District Court for the Southern District of Illinois and later transferred to the United States District Court of the Eastern District of Michigan (the “Court”) alleging that certain of the Predecessor Company officers, directors, and employees, Comerica Bank and State Street Bank and Trust Company, as Trustees, and the Plan, breached their fiduciary duty to SEIP participants whose benefit was invested or maintained investments in the Common Stock Fund and/or Preferred Stock at any time between July 1, 1999 and October 30, 2002. Effective July 12, 2007, settlement of this lawsuit was approved by the Court. A Settlement Fund was established that included a cash amount of $12,750,000 (the “Cash Amount”), as well as an unsecured claim in the amount of $3 million (the “Sherrill Allowed Claim”) under the Plan of Reorganization. Counsel for the plaintiff class sold the Sherrill Allowed Claim for $2.7 million. No damages were claimed from the SEIP. The Cash Amount and proceeds from the sale of the Sherrill Allowed Claim, together with interest earnings on the Cash Amount, are being held in an interest-bearing escrow account (the “Settlement Fund”). The Court has approved certain disbursements from the Settlement Fund, including attorney fees of 28% of the Settlement Fund, $310,000 of Class Counsel costs and expenses, taxes and tax-related expenses incurred in connection with the settlement, costs associated with providing notice to the Settlement Class participants, and a total of $40,000 in incentive payments to Class Representatives.
The assets remaining in the Settlement Fund after approved disbursements are referred to as the Net Proceeds. The Class Action Settlement Agreement provides that the Net Proceeds will be disbursed to the Master Trust (as defined below) for the Plan on behalf of the SEIP. In 2008, Net Proceeds of $10,903,696 were disbursed to the Master Trust of the Plan and are included in “Net transfer from other Company investment programs” in the Statements of Changes in Net Assets Available for Plan Benefits. The Net Proceeds were then credited to accounts of the Settlement Class participants in accordance with the Court approved Plan of Allocation. No proceeds remain at December 31, 2008.
Independent Fiduciary
Fiduciary Counselors Inc., as an independent fiduciary, managed the Plan’s investment in the Predecessor Company common stock (the “Common Stock”) until December 27, 2007 when all the Predecessor Company Common Stock was cancelled as called for under the Plan of Reorganization.
Named Fiduciary
Effective December 27, 2007, the Company hired U.S. Trust, which is part of Bank of America, National Association’s Special Fiduciary Services, as the named fiduciary and investment manager for the assets of the Plan that consist of the Warrants, and any Class A Common Stock acquired upon the exercise of the Warrants, within the Plan. The independent fiduciary has the authority to continue, restrict or terminate these investments within the Plan.
Effective June 1, 2009, Evercore Trust Company replaced U.S. Trust as the named fiduciary and investment manager as the result of the sale of the Bank of America, National Association’s Special Fiduciary Services business to Evercore LP.
5
Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2008
1. | Description of the Plan (continued) |
Master Trust
Assets of this Plan, and another Company plan, are administered under the terms of a trust agreement (the “Master Trust”) between the Company and Fidelity Management Trust Company (the “Trustee”). The agreement provides, among other things, that the Trustee safekeeps all investments, and accounts for all investments, receipts, disbursements, benefit payments, and other transactions. Plan net assets, net investment income and gains and losses are not allocated from the Master Trust, but are tracked separately for the Plan by Fidelity.
Contributions & Vesting
Upon employment, employees are immediately eligible to participate in the Plan. The Company matching contribution is equal to 25% on the first 8% of eligible compensation, based on employee pretax and aftertax contributions to the Plan. Participants are immediately vested in their contributions plus earnings thereon. Vesting in the Company’s matching contribution portion of their accounts plus earnings thereon is based on years of vesting service as follows:
Years of Vesting Service | % of Vesting in Company Contribution | |
1 | 0% | |
2 | 25% | |
3 | 50% | |
4 | 75% | |
5 | 100% |
Full vesting also occurs upon death, total and permanent disability, or retirement at designated ages. In addition, special-vesting provisions will become effective if the Plan is determined to be “top-heavy,” pursuant to the Internal Revenue Code.
Forfeitures
Company contributions which are not vested at the time of a participant’s withdrawal from the Plan are forfeited and are applied as a reduction of future Company contributions.
If the individual is re-employed within 60 months of his/her severance of employment and repays the full amount previously distributed to him/her from the Company contribution account and otherwise qualifies for reinstatement in the Plan, the amount of the forfeitures is re-credited to his/her account in the reinstatement year.
Participant Accounts
Each participant’s account is credited with the participant’s contribution, Company’s contribution, if applicable, and Plan earnings. The benefit to which a participant is entitled is the benefit that can be provided not in excess of the participant’s vested account balance. Administrative expenses related to loan administration, disbursements, sale of Common Stock, or participation in the Brokerage Account are paid directly from the corresponding participant’s Plan account.
6
Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2008
1. | Description of the Plan (continued) |
Investment Options
The Plan provides for the following participant directed investment options:
AMCAP Fund – Class R4 | Fidelity Freedom 2035 Fund | |
Brokerage Account | Fidelity Freedom 2040 Fund | |
Columbia Acorn Fund – Class Z | Fidelity Freedom 2045 Fund | |
Dimensional Emerging Markets Fund | Fidelity Freedom 2050 Fund | |
Dodge & Cox Stock Fund | Fidelity Freedom Income Fund | |
Dreyfus Mid Cap Index Fund | Fidelity Low-Priced Stock Fund | |
Dreyfus Small Cap Stock Index Fund | Fidelity Managed Income Portfolio II (“MIP II”) | |
Fidelity Diversified International Fund | Fidelity Mid Cap Stock Fund | |
Fidelity Dividend Growth Fund | Fidelity U.S. Bond Index Fund | |
Fidelity Freedom 2000 Fund | PIMCO Foreign Bond Fund | |
Fidelity Freedom 2005 Fund | PIMCO Total Return Bond Fund | |
Fidelity Freedom 2010 Fund | Royce Opportunity Fund | |
Fidelity Freedom 2015 Fund | Spartan International Index Fund | |
Fidelity Freedom 2020 Fund | Spartan U.S. Equity Index Fund | |
Fidelity Freedom 2025 Fund | T. Rowe Price Mid Cap Growth Fund | |
Fidelity Freedom 2030 Fund | The Oakmark Select Fund |
Participant Loans
The Plan allows participants to borrow from their account under certain plan conditions. The maximum amount of a participant’s borrowings shall not exceed $50,000 over a 12 month period and is limited to the lower of 50% of the participant’s vested account balance or 90% of the participant’s employee contribution accounts. No borrowings shall be permitted for amounts under $1,000. Loans for the purchase of a primary residence can be for a 15-year duration. All other borrowings shall be paid back in equal payments through payroll deductions not to exceed four-and-one-half years. The rate of interest for the loans is equal to the Prime Rate as published in The Wall Street Journal on the last business day of each month plus 1%. The rate in effect at the time the loan is taken will be fixed for the duration of the loan.
Payment of Benefits / Withdrawals
In the event of retirement (as defined by the Plan agreement), death, total and permanent disability, termination of employment (as defined by the Plan agreement), or attainment of age 59 1/2, the vested balances in the participant’s accounts may be distributed to the participant or the participant’s beneficiary in either a lump-sum distribution or periodic installments.
7
Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2008
2. | Basis of Presentation and Summary of Significant Accounting Policies |
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Plan’s management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Valuation
Effective January 1, 2008, the Plan adopted Financial Accounting Standards Board (“FASB”) Statement No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under SFAS 157 are described below:
Level 1 | Inputs to the valuation methodology are unadjusted quoted prices for identical assets of liabilities in active markets that the Plan has the ability to access. | |
Level 2 | Inputs to the valuation methodology include: | |
• Quoted prices for similar assets or liabilities in active markets; | ||
• Quoted prices for identical or similar assets or liabilities in inactive markets; | ||
• Inputs other than quoted prices that are observable for the asset or liability; | ||
• Inputs that are derived principally from or corroborated by observable market data by correlation or other means. | ||
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. | ||
Level 3 | Inputs to the valuation methodology are unobservable and significant to the fair value measurement. | |
The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
The aggregate value by input level as of December 31, 2008 for the Plan’s assets, as well as a reconciliation of assets for which significant unobservable inputs (Level 3) were used in determining value, is included in the section of Fair Value Hierarchy (Note 7).
Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in methodologies used at December 31, 2008 and 2007.
The Plan’s investments are stated at fair value except for the fully benefit-responsive investment contracts within the Fidelity Managed Income Portfolio II (MIP II), which are valued at contract value in accordance with the FASB issued FASB Staff Position AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans (the “FSP”). Quoted market prices are used to value investments. Shares of mutual funds are valued at the net asset value of shares held by the Plan at year-end. Participant loans are valued at their outstanding balances, which approximate fair value.
8
Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2008
2. | Basis of Presentation and Summary of Significant Accounting Polices (continued) |
Valuation (continued)
The Plan invests in investment contracts through a common collective trust (MIP II). MIP II is stated at fair value in the Plan’s Statement of Net Assets Available for Plan Benefits with a corresponding adjustment to reflect these investments at contract value, because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. As provided in the FSP, an investment contract is generally permitted to be valued at contract value, rather than fair value, to the extent it is fully benefit-responsive. The fair value of the Plan’s interest in MIP II is based on information reported by the issuer of the common collective trust at year-end. The contract value of MIP II is equal to principal balance plus accrued interest.
Investment Transactions and Income Recognition
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
Payment of Benefits
Benefits are recorded when paid.
Administrative Expenses
Expenses incurred in the operation of the Plan are paid by the Plan unless paid by the Company or the Participants. No expenses are paid from the trust unless such payment is permitted by law. Participants may incur administrative expenses related to loan administration, disbursements, sale of Federal-Mogul Corporation Common Stock, or participation in the Brokerage Account. Administrative expenses related to these transactions are paid directly from the corresponding participant’s Plan account.
3. | Party-In-Interest Transaction |
Fees incurred for legal and other services rendered by parties-in-interest were paid by the Company on behalf of the Plan.
4. | Plan Termination |
Although it has not expressed any intent to do so, the Company has the right, under the Plan document to terminate the Plan, subject to the provisions of ERISA. In the event the Plan is terminated or partially terminated, the Company shall determine the share of each participant affected thereby and all accounts shall fully vest. The Funds shall then be distributed to the participants and no portion of the funds shall be returned to the Company.
5. | Risks and Uncertainties |
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities could occur in the future and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for plan benefits.
9
Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2008
6. | Income Tax Status |
The Plan has received a determination letter from the Internal Revenue Service dated December 15, 2003, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the “Code”) and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the Internal Revenue Service, the Plan has been amended. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, as amended, is qualified and the related trust is tax exempt.
10
Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2008
7. | Investments in Master Trust |
Net Assets of Master Trust
The Plan’s investments were held in the Master Trust. The Plan held approximately a 59% and 60% share in the Master Trust at December 31, 2008 and 2007, respectively.
| December 31, 2008 | December 31, 2007 | |||||
Assets | ||||||
Receivables: | ||||||
Company contributions | $ | 141,590 | $ | 37,749 | ||
Participant contributions | 376,651 | — | ||||
Participant loan interest | 25,095 | — | ||||
Federal-Mogul Corporation warrants | — | 1,404,450 | ||||
Total receivables | 543,336 | 1,442,199 | ||||
Participant loans | 17,542,075 | 17,689,042 | ||||
Investments: | ||||||
AMCAP Fund - Class R4 | 2,444,770 | 3,856,426 | ||||
Brokerage Account | 5,126,896 | 7,215,805 | ||||
Columbia Acorn Fund - Class Z | 5,387,930 | 9,540,603 | ||||
Dimensional Emerging Markets Fund | 7,150,956 | 15,478,054 | ||||
Dodge & Cox Stock Fund | 9,627,880 | 18,286,268 | ||||
Dreyfus Mid Cap Index Fund | 1,741,563 | 2,795,091 | ||||
Dreyfus Small Cap Stock Index Fund | 1,402,405 | 1,837,635 | ||||
Federal-Mogul Corporation Warrants | 50,526 | — | ||||
Fidelity Diversified International Fund | 25,348,691 | 50,895,389 | ||||
Fidelity Dividend Growth Fund | 54,148,445 | 104,656,104 | ||||
Fidelity Freedom 2000 Fund | 757,980 | 583,037 | ||||
Fidelity Freedom 2005 Fund | 709,331 | 235,142 | ||||
Fidelity Freedom 2010 Fund | 4,056,228 | 4,759,109 | ||||
Fidelity Freedom 2015 Fund | 4,106,425 | 4,954,489 | ||||
Fidelity Freedom 2020 Fund | 4,135,497 | 5,340,514 | ||||
Fidelity Freedom 2025 Fund | 4,052,633 | 5,387,042 | ||||
Fidelity Freedom 2030 Fund | 2,953,382 | 4,189,775 | ||||
Fidelity Freedom 2035 Fund | 2,264,120 | 3,059,467 | ||||
Fidelity Freedom 2040 Fund | 3,813,191 | 6,028,937 | ||||
Fidelity Freedom 2045 Fund | 534,543 | 95,267 | ||||
Fidelity Freedom 2050 Fund | 526,480 | 166,680 | ||||
Fidelity Freedom Income Fund | 766,946 | 461,973 | ||||
Fidelity Low-Priced Stock Fund | 32,838,018 | 57,194,226 | ||||
Fidelity Managed Income Portfolio II (MIP II) | 173,552,427 | 176,033,365 | ||||
Fidelity Mid Cap Stock Fund | 23,879,848 | 50,397,520 | ||||
Fidelity U.S. Bond Index Fund | 5,621,467 | 4,042,917 | ||||
PIMCO Foreign Bond Fund | 1,669,245 | 1,427,517 | ||||
PIMCO Total Return Bond Fund | 81,303,625 | 77,643,087 | ||||
Royce Opportunity Fund | 3,034,455 | 6,067,132 | ||||
Spartan International Index Fund | 1,706,588 | 3,366,826 | ||||
Spartan U.S. Equity Index Fund | 2,248,749 | 3,590,305 | ||||
T. Rowe Price Mid Cap Growth Fund | 3,944,044 | 6,830,251 | ||||
The Oakmark Select Fund | 2,179,125 | 3,614,813 | ||||
Investments in Master Trust at fair value | 473,084,409 | 640,030,766 | ||||
Total assets in Master Trust | 491,169,820 | 659,162,007 | ||||
Liabilities | ||||||
Forfeited accounts owed to the Company | 40,775 | 36,397 | ||||
Employer match owed to the Company | — | 369 | ||||
Total liabilities | 40,775 | 36,766 | ||||
Total net assets of the Master Trust at fair value | 491,129,045 | 659,125,241 | ||||
Adjustments from fair value to contract value for fully benefit-responsive investment contracts | 7,042,822 | 1,334,621 | ||||
Total net assets of the Master Trust | $ | 498,171,867 | $ | 660,459,862 | ||
11
Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2008
7. | Investments in Master Trust (continued) |
Investment Income
During the years ended December 31, 2008 and 2007, the Master Trust had net investment income of $32,102,584 and $43,978,159, respectively, and had net realized and unrealized depreciation in the fair value of investments of $174,819,784 and $5,138,010 during the years ended December 31, 2008 and 2007, respectively, as follows:
| Net Investment Income for the Year Ended December 31, 2008 | Net Realized and Unrealized Appreciation/ (Depreciation) in Fair Value for the Year Ended December 31, 2008 | ||||||
AMCAP Fund - Class 4 | $ | 136,195 | $ | (1,611,305 | ) | ||
Brokerage Account | — | (2,370,536 | ) | ||||
Columbia Acorn Fund - Class Z | 206,486 | (3,746,248 | ) | ||||
Dimensional Emerging Markets | 392,488 | (7,812,497 | ) | ||||
Dodge & Cox Stock Fund | 768,727 | (8,477,892 | ) | ||||
Dreyfus Mid Cap Index Fund | 120,434 | (1,156,986 | ) | ||||
Dreyfus Small Cap Stock Index Fund | 117,248 | (691,029 | ) | ||||
Federal-Mogul Corporation Warrants | — | (1,452,442 | ) | ||||
Fidelity Diversified International Fund | 361,876 | (22,654,267 | ) | ||||
Fidelity Dividend Growth Fund | 4,655,108 | (47,625,555 | ) | ||||
Fidelity Freedom 2000 Fund | 47,469 | (183,008 | ) | ||||
Fidelity Freedom 2005 Fund | 42,063 | (222,621 | ) | ||||
Fidelity Freedom 2010 Fund | 303,430 | (1,739,904 | ) | ||||
Fidelity Freedom 2015 Fund | 276,600 | (1,910,213 | ) | ||||
Fidelity Freedom 2020 Fund | 313,338 | (2,226,318 | ) | ||||
Fidelity Freedom 2025 Fund | 294,398 | (2,348,335 | ) | ||||
Fidelity Freedom 2030 Fund | 241,199 | (1,939,576 | ) | ||||
Fidelity Freedom 2035 Fund | 160,276 | (1,435,429 | ) | ||||
Fidelity Freedom 2040 Fund | 322,947 | (2,852,362 | ) | ||||
Fidelity Freedom 2045 Fund | 16,072 | (146,570 | ) | ||||
Fidelity Freedom 2050 Fund | 18,057 | (182,149 | ) | ||||
Fidelity Freedom Income Fund | 40,365 | (148,267 | ) | ||||
Fidelity Low-Priced Stock Fund | 5,588,021 | (25,161,607 | ) | ||||
Fidelity Managed Income Portfolio II (MIP II) | 7,073,265 | — | |||||
Fidelity Mid-Cap Stock Fund | 501,867 | (22,201,859 | ) | ||||
Fidelity U.S. Bond Index Fund | 233,028 | (43,769 | ) | ||||
PIMCO Foreign Bond Fund | 161,497 | (231,306 | ) | ||||
PIMCO Total Return Bond Fund | 7,770,014 | (4,344,437 | ) | ||||
Royce Opportunity Fund | 198,524 | (2,859,652 | ) | ||||
Spartan International Index Fund | 57,924 | (1,269,692 | ) | ||||
Spartan U.S. Equity Index Fund | 72,786 | (1,552,009 | ) | ||||
T. Rowe Price Mid-Cap Growth Fund | 222,184 | (2,934,257 | ) | ||||
The Oakmark Select Fund | 33,829 | (1,287,687 | ) | ||||
| 30,747,715 | (174,819,784 | ) | |||||
Participant loans | 1,354,869 | — | |||||
| $ | 32,102,584 | $ | (174,819,784 | ) | |||
12
Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2008
7. | Investments in Master Trust (continued) |
Investment Income (continued)
| Net Investment Income for the Year Ended December 31, 2007 | Net Realized and Unrealized Appreciation/ (Depreciation) in Fair Value for the Year Ended December 31, 2007 | ||||||
AMCAP Fund—Class R4 | $ | 240,068 | $ | (14,734 | ) | ||
Brokerage Account | — | 657,308 | |||||
Columbia Acorn Fund—Class Z | 727,582 | (59,187 | ) | ||||
Dimensional Emerging Markets Fund | 803,905 | 2,528,177 | |||||
Dodge & Cox Stock Fund | 1,910,329 | (1,900,870 | ) | ||||
Dreyfus Mid Cap Index Fund | 274,323 | (78,368 | ) | ||||
Dreyfus Small Cap Stock Index Fund | 168,409 | (189,583 | ) | ||||
Federal-Mogul Corporation Common Stock | — | (554,099 | ) | ||||
Fidelity Diversified International Fund | 3,650,363 | 3,624,606 | |||||
Fidelity Dividend Growth Fund | 9,092,975 | (7,539,209 | ) | ||||
Fidelity Freedom 2000 Fund | 30,477 | (9,164 | ) | ||||
Fidelity Freedom 2005 Fund | 13,351 | 4,131 | |||||
Fidelity Freedom 2010 Fund | 269,459 | 43,958 | |||||
Fidelity Freedom 2015 Fund | 240,716 | 59,451 | |||||
Fidelity Freedom 2020 Fund | 312,761 | 54,732 | |||||
Fidelity Freedom 2025 Fund | 241,464 | 99,457 | |||||
Fidelity Freedom 2030 Fund | 217,172 | 75,545 | |||||
Fidelity Freedom 2035 Fund | 154,618 | 92,056 | |||||
Fidelity Freedom 2040 Fund | 350,791 | 105,873 | |||||
Fidelity Freedom 2045 Fund | 2,117 | (2,560 | ) | ||||
Fidelity Freedom 2050 Fund | 3,310 | (5,581 | ) | ||||
Fidelity Freedom Income Fund | 25,387 | (8,187 | ) | ||||
Fidelity Low-Priced Stock Fund | 5,094,470 | (2,978,199 | ) | ||||
Fidelity Managed Income Portfolio II (MIP II) | 8,379,434 | (2,580 | ) | ||||
Fidelity Mid-Cap Stock Fund | 4,036,968 | 123,502 | |||||
Fidelity U.S. Bond Index Fund | 169,208 | 16,378 | |||||
PIMCO Foreign Bond Fund | 45,618 | 6,405 | |||||
PIMCO Total Return Bond Fund | 4,139,657 | 2,201,423 | |||||
Royce Opportunity Fund | 870,317 | (999,190 | ) | ||||
Spartan International Index Fund | 105,888 | 188,794 | |||||
Spartan U.S. Equity Index Fund | 67,979 | 115,982 | |||||
T. Rowe Price Mid-Cap Growth Fund | 568,480 | 259,572 | |||||
The Oakmark Select Fund | 432,130 | (1,053,849 | ) | ||||
| 42,639,726 | (5,138,010 | ) | |||||
Participant loans | 1,338,433 | — | |||||
| $ | 43,978,159 | $ | (5,138,010 | ) | |||
13
Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2008
7. | Investments in Master Trust (continued) |
Fair Value Hierarchy
The following is a summary of the inputs used, as of December 31, 2008, involving the Master Trust’s assets carried at fair value. The inputs or methodology used for valuing assets may not be an indication of the risk associated with investing in those assets. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Valuation section in Note 2.
| Assets at Fair Value as of December 31, 2008 | ||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||
Investments in Master Trust | ||||||||||||
Mutual Funds | $ | 294,354,560 | $ | — | $ | — | $ | 294,354,560 | ||||
Brokerage Account | 5,126,896 | — | — | 5,126,896 | ||||||||
MIP II | — | 173,552,427 | — | 173,552,427 | ||||||||
Federal-Mogul Corporation Warrants | 50,526 | — | — | 50,526 | ||||||||
Total Investments in Master Trust at fair value | $ | 299,531,982 | $ | 173,552,427 | $ | — | $ | 473,084,409 | ||||
Participant loans in Master Trust at fair value | $ | — | $ | — | $ | 17,542,075 | $ | 17,542,075 | ||||
The table below sets forth a summary of changes in the fair value of the Plan’s level 3 assets for the year ended December 31, 2008.
| Year Ended December 31, 2008 | ||||
Level 3 assets—Participant loans in Master Trust: | ||||
Balance, beginning of year | $ | 17,689,042 | ||
Loan originations and repayments (net) | (146,967 | ) | ||
Balance, end of year | $ | 17,542,075 | ||
14
Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2008
7. | Investments in Master Trust (continued) |
Changes in the Fair Value of Net Assets
The changes in the fair value of net assets of the Master Trust for the years ended December 31, 2008 and 2007 are summarized as follows:
| Years Ended December 31 | ||||||||
| 2008 | 2007 | |||||||
Additions | ||||||||
Dividends and interest | $ | 32,102,584 | $ | 43,978,159 | ||||
Participant contributions | 32,742,576 | 34,256,903 | ||||||
Company contributions | 8,412,703 | 8,686,592 | ||||||
Total additions | 73,257,863 | 86,921,654 | ||||||
Deductions | ||||||||
Benefits paid to participants | 71,222,892 | 77,297,005 | ||||||
Administrative expenses | 170,210 | 184,569 | ||||||
Portion of Company contribution account forfeited upon withdrawal of participants | 367,532 | 485,226 | ||||||
Total deductions | 71,760,634 | 77,966,800 | ||||||
Net realized/unrealized depreciation in fair value of investments | (174,819,784 | ) | (5,138,010 | ) | ||||
Transfers of assets from the Federal-Mogul Corporation Salaried Employees’ Investment Program | 11,034,560 | — | ||||||
Net increase/(decrease) | (162,287,995 | ) | 3,816,844 | |||||
Net assets available for plan benefits at beginning of year | 660,459,862 | 656,643,018 | ||||||
Net assets available for plan benefits at end of year | $ | 498,171,867 | $ | 660,459,862 | ||||
15
Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2008
8. | Differences between Financial Statements and Form 5500 |
The following is a reconciliation of net assets available for plan benefits per the financial statements to the Form 5500:
| December 31 | ||||||
| 2008 | 2007 | |||||
Net assets available for plan benefits per the financial statements | $ | 293,285,996 | $ | 394,507,533 | ||
Minus: Adjustments from fair value to contract value for fully benefit-responsive investment contracts | 3,736,974 | 688,425 | ||||
Net assets available for plan benefits per the Form 5500 | $ | 289,549,022 | $ | 393,819,108 | ||
The following is a reconciliation of net investment gain from master trust investment accounts per the financial statements to the Form 5500:
| Year Ended December 31 | ||||||||
| 2008 | 2007 | |||||||
Dividends and interest per the financial statements | $ | 19,039,684 | $ | 26,736,505 | ||||
Minus: Interest from participant loans | 491,403 | 479,701 | ||||||
Dividends and interest from master trust investment accounts per the financial statements | 18,548,281 | 26,256,804 | ||||||
Plus: Net realized/unrealized depreciation from master trust investment accounts | (114,419,208 | ) | (3,359,931 | ) | ||||
Net investment gain/(loss) from master trust investment accounts per the financial statements | (95,870,927 | ) | 22,896,873 | |||||
Minus: Changes in adjustments from fair value to contract value for fully benefit-responsive investment contracts | 3,048,549 | (440,572 | ) | |||||
Net investment gain/(loss) from master trust investment accounts per the Form 5500 | $ | (98,919,476 | ) | $ | 23,337,445 | |||
16
401(k) Investment Program
EIN: 20-8350090 Plan Number 140
Schedule H, Line 4i
Schedule of Assets (Held at End of Year)
December 31, 2008
Identity of Issue, Borrower, | Description of Investment including Maturity Date, | Historical Cost | Current Value | |||||
Participants * | Loans at various terms and interest rates (5% - 10.5%) | $ | — | $ | 6,298,120 | |||
There were no investment assets reportable as acquired and disposed of during the year.
* | Party-in-interest |
17
Signature
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
Federal-Mogul Corporation 401(k) Investment Program | ||
(Name of Plan) | ||
By: | /s/ Alan Haughie | |
Alan Haughie | ||
Vice President, Controller and Chief Accounting Officer | ||
Federal-Mogul Corporation | ||
Date: June 19, 2009
