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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
CURRENT REPORT
x | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2003
OR
¨ | TRANSITION REPORT PURSANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 1-1511
FEDERAL-MOGUL CORPORATION
401(k) INVESTMENT PROGRAM
26555 Northwestern Highway
Southfield, MI 48034
(248) 354-7700
The Plan holds shares of common stock (without par value) of
Federal-Mogul Corporation
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FEDERAL-MOGUL CORPORATION
401(k) INVESTMENT PROGRAM
Page Number | ||
Report of Independent Registered Public Accounting Firm | 1 | |
Financial Statements | ||
Statement of Net Assets Available for Plan Benefits as of December 31, 2003 and 2002 | 2 | |
3 | ||
4-10 | ||
Supplemental Schedule for the year ended December 31, 2003 | ||
Schedule H, Line 4I – Schedule of Assets Held at End of Year | 11 |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Retirement Programs 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, 2003 and 2002, and the related statements of changes in net assets available for benefits for the year ended December 31, 2003 and for the period from November 25, 2002 through December 31, 2002. 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as 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 benefits of the Plan at December 31, 2003 and 2002, and the changes in its net assets available for benefits for the year ended December 31, 2003 and for the period from November 25, 2002 through December 31, 2002, in conformity with U.S. 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, 2003 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 14, 2004
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401(k) Investment Program
Statement of Net Assets Available for Plan Benefits
December 31 | ||||||
2003 | 2002 | |||||
Assets | ||||||
Receivables: | ||||||
Participant loans | $ | 5,437,652 | $ | 5,766,420 | ||
Participant contributions | 549,668 | — | ||||
Participant loan interest | 12,190 | — | ||||
Total Receivables | 5,999,510 | 5,766,420 | ||||
Investments in Master Trust (See Note 6) | 299,209,737 | 258,938,867 | ||||
Total Assets | 305,209,247 | 264,705,287 | ||||
Liabilities | ||||||
Forfeited accounts owed to the Company (See Note 1) | 232,433 | 170,559 | ||||
Net Assets Available for Plan Benefits | $ | 304,976,814 | $ | 264,534,728 | ||
See notes to financial statements
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401(k) Investment Program
Statement of Changes in Net Assets Available for Plan Benefits
Year Ended December 31 , 2003 | Period from November 25, 2002 through December 31, 2002 | ||||||
Additions | |||||||
Dividends and interest | $ | 9,014,583 | $ | 2,344,994 | |||
Participant contributions | 20,479,047 | 1,833,144 | |||||
Total Additions | 29,493,630 | 4,178,138 | |||||
Deductions | |||||||
Benefits paid to participants | 23,353,692 | 971,126 | |||||
Administrative expenses | 36,018 | — | |||||
Portion of Company contribution account forfeited upon withdrawal of members (see Note 1) | 65,373 | 33,959 | |||||
Total Deductions | 23,455,083 | 1,005,085 | |||||
Net realized/unrealized appreciation/(depreciation) in fair value of investments in Master Trust (See Note 6) | 33,702,995 | (5,752,289 | ) | ||||
Transfer from other Company investment program | 700,544 | 267,113,964 | |||||
Net increase | 40,442,086 | 264,534,728 | |||||
Net assets available for plan benefits at beginning of period | 264,534,728 | — | |||||
Net Assets Available for Plan Benefits at End of Period | $ | 304,976,814 | $ | 264,534,728 | |||
See notes to financial statements
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401(k) Investment Program
Notes to Financial Statements
December 31, 2003 and 2002
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 Company adopted the Plan on November 25, 2002. The Plan is a defined contribution plan which provides eligible salaried employees of the Company with a program for making voluntary pre-tax and after-tax contributions. All domestic salaried employees of the Company and subsidiaries are eligible to participate in the Plan. It is subject to the provisions of the Employee Retirement Income Security Act (ERISA).
In 2002, the Company appointed Fiduciary Counselors Inc. as the independent fiduciary to manage the Plan’s investment in the Company’s Common Stock (“Common Stock”). In its role as an independent fiduciary, Fiduciary Counselors Inc. has the authority to continue, restrict, or terminate the investment of Common Stock within the Plan.
On October 1, 2001, the Company filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (the “U.S. Restructuring”).
Master Trust
The Plan invests participant directed contributions in a master trust. The Plan’s assets are administered under the terms of the master 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 keeps account for all investments, receipts, disbursements, benefit payments, and other transactions.
During 2002, the Plan received assets from the Company’s Salaried Employees’ Investment Program (the “Predecessor Plan”). The assets of the Predecessor Plan were administered under the terms of a master trust agreement between the Company and The State Street Bank and Trust through the date of the asset transfer.
Contributions & Vesting
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.
During 2002 and 2003, Company matching contributions were suspended.
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Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2003 and 2002
1. | Description of the Plan (continued) |
Forfeitures
Account balances which are not vested at the time of a participant’s withdrawal from the Plan are forfeited and will be applied as a reduction of discretionary 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.
Investment Options
The Plan provides for 24 investment options which includes the following funds:
• | Fidelity Asset Manager Fund |
• | Fidelity Asset Manager: Growth Fund |
• | Fidelity Asset Manager: Income Fund |
• | Stable Value Fund |
• | PIMCO Total Return Bond Fund |
• | Fidelity Low-Priced Stock Fund |
• | Fidelity Dividend Growth Fund |
• | Fidelity Mid-Cap Stock Fund |
• | Fidelity Diversified International Fund |
• | Fidelity U.S. Bond Index Fund |
• | PIMCO Foreign Bond Fund |
• | Spartan U.S. Equity Index Fund |
• | Dreyfus Small Cap Stock Index Fund |
• | Columbia Acorn Fund - Class Z |
• | T. Rowe Price Mid-Cap Growth Fund |
• | The Oakmark Select Fund |
• | Dodge & Cox Stock Fund |
• | Royce Opportunity Fund |
• | AMCAP Fund – Class R4 |
• | Dreyfus Mid-Cap Index Fund |
• | Spartan International Index Fund |
• | GMO Emerging Countries Fund |
• | Federal-Mogul Common Stock (closed to new investments) |
• | Brokerage Account |
Employees were not permitted to make additional investments in Federal-Mogul Common Stock during 2003 and 2002.
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Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2003 and 2002
1. | Description of the Plan (continued) |
Participant Loans Receivable
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.
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 will be distributed to the participant or the participant’s beneficiary in either a lump-sum distribution, or periodic installments.
2. | Significant Accounting Policies |
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of accounting.
Investment Valuation and Income Recognition
Investments in all the investment funds, except the Stable Value Fund, are valued at quoted market prices. The Stable Value Fund is valued at fair market value as determined by Fidelity Management Trust Company. The Participant Loans are valued at their outstanding balances, which approximate fair value.
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 Trust unless paid by the Company or the Participants. No expenses are paid from the trust unless such payment is permitted by law.
Reclassification
Certain amounts in the 2002 financial statements have been reclassified to conform to the 2003 method of presentation.
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 member and no portion of the funds shall be returned to the Company.
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Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2003 and 2002
5. | 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. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The plan administrator believes that the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt.
6. | Investments in Master Trust |
The Plan’s investments were held by the Master Trust administered by the Trustee, Fidelity Trust Management Company at December 31, 2003 and 2002. The Plan held approximately a 57% share in the Master Trust at both December 31, 2003 and 2002.
The fair value of net assets of the Master Trust were as follows:
December 31, 2003 | December 31, 2002 | |||||
Assets | ||||||
Receivables: | ||||||
Participant loans | $ | 15,397,094 | $ | 14,895,629 | ||
Company contributions | 66,087 | — | ||||
Participant contributions | 731,340 | — | ||||
Participant loan interest | 21,971 | — | ||||
Total Receivables | 16,216,492 | 14,895,629 | ||||
Investments: | ||||||
Fidelity Asset Manager Fund | 1,341,885 | 229,250 | ||||
Fidelity Asset Manager: Growth Fund | 998,469 | 24,328 | ||||
Fidelity Asset Manager: Income Fund | 1,652,794 | 41,353 | ||||
Stable Value Fund | 187,033,710 | 186,718,689 | ||||
PIMCO Total Return Bond Fund | 77,273,447 | 81,305,816 | ||||
Fidelity Low-Priced Stock Fund | 42,984,795 | 29,455,113 | ||||
Fidelity Dividend Growth Fund | 113,595,714 | 96,068,926 | ||||
Fidelity Mid-Cap Stock Fund | 40,026,942 | 30,793,427 | ||||
Fidelity Diversified International Fund | 24,160,137 | 16,832,133 | ||||
Fidelity U.S. Bond Index Fund | 2,211,874 | 1,874,661 | ||||
PIMCO Foreign Bond Fund | 415,198 | 47,187 | ||||
Spartan U.S. Equity Index Fund | 1,629,796 | 48,144 | ||||
Dreyfus Small Cap Stock Index Fund | 485,436 | 59,979 | ||||
Columbia Acorn Fund - Class Z | 1,463,747 | 95,137 | ||||
T. Rowe Price Mid-Cap Growth Fund | 1,532,778 | 113,601 | ||||
The Oakmark Select Fund | 2,877,617 | 259,405 | ||||
Dodge & Cox Stock Fund | 3,693,706 | 214,662 | ||||
Royce Opportunity Fund | 1,904,552 | 29,989 | ||||
AMCAP Fund - Class R4 | 1,114,004 | 68,112 | ||||
Dreyfus Mid Cap Index Fund | 776,644 | 167,960 | ||||
Spartan International Index Fund | 165,731 | 16,207 | ||||
GMO Emerging Countries Fund | 934,372 | 18,263 | ||||
Federal-Mogul Common Stock | 1,611,080 | 2,157,673 | ||||
Brokerage Account | 5,023,949 | 2,916,610 | ||||
Total investments of the Master Trust | 514,908,377 | 449,556,625 | ||||
Total assets of the Master Trust | 531,124,869 | 464,452,254 | ||||
Liabilities | ||||||
Forfeited accounts owed to the Company | 366,672 | — | ||||
Total net assets of the Master Trust | $ | 530,758,197 | $ | 464,452,254 | ||
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Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2003 and 2002
6. | Investments in Master Trust (continued) |
During the year ended December 31, 2003 and the period from November 25, 2002 through December 31, 2002, the Master Trust had investment income of $16,761,791 and $4,113,560, respectively, and had net realized and unrealized appreciation/(depreciation) in the fair value of investments of $53,232,162 and $(9,156,975), respectively, as follows:
Net Investment Income for the Year Ended December 31, 2003 | Net Realized and Unrealized Appreciation/ (Depreciation) in Fair Value for the Year Ended December 31, 2003 | ||||||
Fidelity Asset Manager Fund | $ | 18,852 | $ | 111,811 | |||
Fidelity Asset Manager: Growth Fund | 19,594 | 67,523 | |||||
Fidelity Asset Manager: Income Fund | 20,769 | 89,195 | |||||
Stable Value Fund | 9,644,402 | — | |||||
PIMCO Total Return Bond Fund | 3,782,764 | 326,675 | |||||
Fidelity Low-Priced Stock Fund | 557,885 | 11,579,448 | |||||
Fidelity Dividend Growth Fund | 911,957 | 20,701,219 | |||||
Fidelity Mid-Cap Stock Fund | 166,111 | 9,748,083 | |||||
Fidelity Diversified International Fund | 295,291 | 6,842,418 | |||||
Fidelity U.S. Bond Index Fund | 135,554 | (10,447 | ) | ||||
PIMCO Foreign Bond Fund | 19,309 | (10,461 | ) | ||||
Spartan U.S. Equity Index Fund | 14,714 | 261,620 | |||||
Dreyfus Small Cap Stock Index Fund | 1,211 | 63,506 | |||||
Columbia Acorn Fund - Class Z | 1,139 | 244,270 | |||||
T. Rowe Price Mid-Cap Growth Fund | — | 217,538 | |||||
The Oakmark Select Fund | 8,581 | 356,646 | |||||
Dodge & Cox Stock Fund | 60,019 | 590,827 | |||||
Royce Opportunity Fund | 76,381 | 311,174 | |||||
AMCAP Fund - Class R4 | 388 | 149,642 | |||||
Dreyfus Mid Cap Index Fund | 6,875 | 109,302 | |||||
Spartan International Index Fund | 2,949 | 26,459 | |||||
GMO Emerging Countries Fund | 19,356 | 113,304 | |||||
Federal-Mogul Common Stock | — | (23,099 | ) | ||||
Brokerage Account | — | 1,365,509 | |||||
15,764,101 | 53,232,162 | ||||||
Participant loans | 997,690 | — | |||||
$ | 16,761,791 | $ | 53,232,162 | ||||
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Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2003 and 2002
6. | Investments in Master Trust (continued) |
Period from November 25, 2002 through December 31, 2002 | Net Investment Income / (Loss) During Period | Net Realized and Unrealized (Depreciation) in Fair Value During Period | ||||||
Fidelity Asset Manager Fund | $ | 2,092 | $ | (4,488 | ) | |||
Fidelity Asset Manager: Growth Fund | 679 | (1,224 | ) | |||||
Fidelity Asset Manager: Income Fund | 88 | (240 | ) | |||||
Stable Value Fund | 681,796 | — | ||||||
PIMCO Total Return Bond Fund | 2,768,140 | (1,513,624 | ) | |||||
Fidelity Low-Priced Stock Fund | (20 | ) | (640,680 | ) | ||||
Fidelity Dividend Growth Fund | 386,619 | (4,394,352 | ) | |||||
Fidelity Mid-Cap Stock Fund | 370 | (1,049,405 | ) | |||||
Fidelity Diversified International Fund | 126,606 | (77,066 | ) | |||||
Fidelity U.S. Bond Index Fund | 21,743 | (106 | ) | |||||
PIMCO Foreign Bond Fund | 458 | (153 | ) | |||||
Spartan U.S. Equity Index Fund | 10 | (264 | ) | |||||
Dreyfus Small Cap Stock Index Fund | 6 | (866 | ) | |||||
Columbia Acorn Fund - Class Z | — | (786 | ) | |||||
T. Rowe Price Mid-Cap Growth Fund | — | (1,138 | ) | |||||
The Oakmark Select Fund | — | (3,276 | ) | |||||
Dodge & Cox Stock Fund | 1,724 | (2,445 | ) | |||||
Royce Opportunity Fund | — | (117 | ) | |||||
AMCAP Fund - Class R4 | 1 | (975 | ) | |||||
Dreyfus Mid Cap Index Fund | 3,097 | (4,755 | ) | |||||
Spartan International Index Fund | 73 | (10 | ) | |||||
GMO Emerging Countries Fund | — | (410 | ) | |||||
Federal-Mogul Common Stock | 66 | (1,194,641 | ) | |||||
Brokerage Account | — | (265,954 | ) | |||||
3,993,548 | (9,156,975 | ) | ||||||
Participant loans | 120,012 | — | ||||||
$ | 4,113,560 | $ | (9,156,975 | ) | ||||
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Federal-Mogul Corporation
401(k) Investment Program
Notes to Financial Statements
December 31, 2003 and 2002
6. | Investments in Master Trust (continued) |
The changes in the fair value of net assets of the Master Trust, held at Fidelity Trust Management Company for the year ended December 31, 2003 and the period from November 25, 2002 through December 31, 2002 are summarized as follows:
Year Ended December 31, 2003 | Period from November 25, 2002 through December 31, 2002 | ||||||
Additions | |||||||
Dividends and interest | $ | 16,761,791 | $ | 4,113,560 | |||
Participant contributions | 33,975,380 | 3,441,642 | |||||
Company contributions | 4,732,775 | 591,830 | |||||
Total Additions | 55,469,946 | 8,147,032 | |||||
Deductions | |||||||
Benefits paid to participants | 45,941,174 | 2,156,683 | |||||
Administrative expenses | 107,680 | — | |||||
Portion of Company contribution account forfeited upon withdrawal of members | 714,523 | — | |||||
Total Deductions | 46,763,377 | 2,156,683 | |||||
Net realized/unrealized appreciation/(depreciation) in fair value of investments | 53,232,162 | (9,156,975 | ) | ||||
Transfers from other Company investment programs | 4,367,212 | — | |||||
Transfers from predecessor Trustee | — | 467,618,880 | |||||
Net increase | 66,305,943 | 464,452,254 | |||||
Net assets available for plan benefits at beginning of period | 464,452,254 | — | |||||
Net assets of Master Trust at end of period | $ | 530,758,197 | $ | 464,452,254 | |||
7. | Subsequent Event |
Effective January 1, 2004, the Company reinstated the employer matching contributions to the plan.
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401(k) Investment Program
EIN: 38-0533580 Plan Number 140
Schedule H, Line 4i
Schedule of Assets (Held at End of Year)
December 31, 2003
The following is a Schedule of Assets Held outside of the Master Trust:
Identity of Issue, Borrower, | Description of Investment including Maturity | Current Value | |||
Participant Loans | various terms and interest rates | $ | 5,437,652 | ||
$ | 5,437,652 | ||||
There were no investment assets reportable as acquired and disposed of during the year.
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Signature
Pursuant to the requirement of the Securities Exchange Act of 1934, The Federal-Mogul Corporation 401(k) Investment Program has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: June 28, 2004
By: | /S/ DAVID A. BOZYNSKI | |
David A. Bozynski Retirement Programs Committee, Chairman |
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