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 PURSUANT 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
EMPLOYEE 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
FEDERAL-MOGUL CORPORATION
EMPLOYEE INVESTMENT PROGRAM
TABLE OF CONTENTS
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 Employee Investment Program as of December 31, 2003 and 2002, and the related statements of changes in net assets available for 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. 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 years then ended, 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 |
1
Federal-Mogul Corporation
Employee Investment Program
Statement of Net Assets Available for Plan Benefits
| | | | | | |
| | | December 31
|
| | | 2003
| | 2002
|
Assets | | | | | | |
Receivables: | | | | | | |
Participant loans | | $ | 9,959,442 | | $ | 9,129,209 |
Company contributions | | | 66,087 | | | — |
Participant contributions | | | 181,672 | | | — |
Participant loan interest | | | 9,781 | | | — |
| | |
|
| |
|
|
Total Receivables | | | 10,216,982 | | | 9,129,209 |
| | | | | | | |
Investments in Master Trust (See Note 6) | | | 215,698,640 | | | 190,617,758 |
| | | | | | | |
Transfer due from other Company investment program | | | — | | | 35,213 |
| | |
|
| |
|
|
Total Assets | | | 225,915,622 | | | 199,782,180 |
| | |
Liabilities | | | | | | |
Forfeited accounts owed to the Company (See Note 1) | | | 134,239 | | | — |
| | |
|
| |
|
|
Net Assets Available for Plan Benefits | | $ | 225,781,383 | | $ | 199,782,180 |
| | |
|
| |
|
|
See notes to financial statements
2
Federal-Mogul Corporation
Employee Investment Program
Statement of Changes in Net Assets Available for Plan Benefits
| | | | | | | |
| | | Years Ended December 31
| |
| | | 2003
| | 2002
| |
Additions | | | | | | | |
Dividends and interest | | $ | 7,747,208 | | $ | 7,739,616 | |
Participant contributions | | | 13,502,523 | | | 15,237,880 | |
Company matching contributions | | | 1,337,838 | | | 879,940 | |
Company pension contributions | | | 3,388,747 | | | 3,419,086 | |
| | |
|
| |
|
|
|
Total Additions | | | 25,976,316 | | | 27,276,522 | |
| | |
Deductions | | | | | | | |
Benefits paid to participants | | | 22,587,482 | | | 29,226,652 | |
Other | | | 585,466 | | | (402,541 | ) |
| | |
|
| |
|
|
|
Total Deductions | | | 23,172,948 | | | 28,824,111 | |
| | |
Net realized/unrealized appreciation/(depreciation) in fair value of investments in Master Trust (See Note 6) | | | 19,529,167 | | | (23,220,906 | ) |
Net transfers from/(to) other Company investment programs | | | 3,666,668 | | | (1,345,901 | ) |
| | |
|
| |
|
|
|
Net increase/(decrease) | | | 25,999,203 | | | (26,114,396 | ) |
| | |
Net assets available for plan benefits at beginning of year | | | 199,782,180 | | | 225,896,576 | |
| | |
|
| |
|
|
|
Net Assets Available for Plan Benefits at End of Year | | $ | 225,781,383 | | $ | 199,782,180 | |
| | |
|
| |
|
|
|
See notes to financial statements
3
Federal-Mogul Corporation
Employee 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 Employee Investment Program (the “Plan”). On January 1, 2002, the Plan was amended and restated in its entirety. 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 which provides eligible hourly employees of the Company with a program for making voluntary pre-tax and after-tax contributions. Substantially all domestic hourly 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).
On March 31, 2003, and May 6, 2003 the Plan received assets from other Company investment programs, the Bentley-Harris Manufacturing Company Local 390 Employees 401(k) Plan and the Supermet Independent Employee 401(k) Plan, respectively. On June 30, 2003 assets were transferred to the Plan from the Metal Leve, Inc. 401(k) Plan, another Company investment program. On December 3, 2003 the Plan also received assets from the AE Goetze Sparta “A” 401(k) Plan and the AE Goetze Sparta “B” 401(k) plan, both investment programs of the Company.
On December 6, 2002, the Plan transferred all plan assets from The State Street Bank and Trust (the “Predecessor Trustee”) to Fidelity Management Trust Company (the “Trustee”).
On October 30, 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 United States Bankruptcy Court for the District of Delaware approved the Company’s motion to continue to operate the Plan.
Master Trust
The Plan invests 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 the Trustee. The Master Trust agreement provides, among other things, that the Trustee safekeeps all investments, and keeps account for all investments, receipts, and disbursements, benefit payments, and other transactions.
4
Federal-Mogul Corporation
Employee Investment Program
Notes to Financial Statements
December 31, 2003 and 2002
| 1. | Descriptions of the Plan (continued) |
Eligibility, Contributions & Vesting
Effective November 2001, Company matching contributions for all hourly employees not covered under a collective bargaining agreement were suspended. For all hourly employees that are covered under a collective bargaining agreement, Company matching contributions continued as specified in the respective labor agreements. Plan provisions for the various business operations follow:
| | | | | | | | | | | | | | |
Location Name:
| | Allentown, PA
| | Athens, AL
| | Avilla, IN
| | Berkeley, MO
| | Blacksburg, VA
| | Boaz, AL
| | Boyertown, PA
|
| Union/Non-Union | | Non-Union | | Non-Union | | Non-Union | | Union | | Union | | Non-Union | | Union |
Company match (% of participant contribution) | | 50% | | 50% | | 50% | | N/A | | N/A | | 50% | | N/A |
| | | | | | | |
Match is currently suspended | | Yes | | Yes | | Yes | | N/A | | N/A | | Yes | | N/A |
| | | | | | | |
Matching amount (% of participant compensation) | | 8% | | 8% | | 8% | | N/A | | N/A | | 8% | | N/A |
| | | | | | | |
Pension contribution per hour | | $0.46 | | N/A | | $0.32-$0.70 | | $0.55 | | N/A | | $0.40-$0.56 | | $0.75-$0.95 |
| | | | | | | |
Vesting Schedule | | | | | | | | | | | | | | |
Years of Service | | | | | | | | | | | | | | |
less than 2 | | 0% | | 0% | | 0% | | 0% | | N/A | | 0% | | 0% |
less than 3 | | 25% | | 25% | | 25% | | 25% | | N/A | | 25% | | 25% |
less than 4 | | 50% | | 50% | | 50% | | 50% | | N/A | | 50% | | 50% |
less than 5 | | 75% | | 75% | | 75% | | 75% | | N/A | | 75% | | 75% |
5 or more | | 100% | | 100% | | 100% | | 100% | | N/A | | 100% | | 100% |
| | | | | | | |
Eligibility to participate | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | 90 days | | A.S.A.P. | | A.S.A.P. |
Eligibility for Company match | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | N/A | | N/A | | A.S.A.P. | | N/A |
Eligibility for pension contribution | | A.S.A.P. | | N/A | | A.S.A.P. | | A.S.A.P. | | N/A | | A.S.A.P. | | A.S.A.P. |
| | | | | | | |
Location Name:
| | Brighton, MA
| | Burlington, IA
| | Cambridge, OH
| | Chicago, IL
| | Dayton, OH
| | Dumas, AK
| | El Paso, TX
|
| Union/Non-Union | | Non-Union | | Union | | Union | | Union | | Union | | Non-Union | | Non-Union |
Company match (% of participant contribution) | | 50% | | N/A | | N/A | | N/A | | 50% | | 50% | | 50% |
| | | | | | | |
Match is currently suspended | | Yes | | N/A | | N/A | | N/A | | No | | Yes | | Yes |
| | | | | | | |
Matching amount (% of participant compensation) | | 8% | | N/A | | N/A | | N/A | | 8% | | 8% | | 8% |
| | | | | | | |
Pension contribution per hour | | $0.34-$0.60 | | N/A | | N/A | | $0.40-$0.75 | | N/A | | $0.30-$0.49 | | N/A |
| | | | | | | |
Vesting Schedule | | | | | | | | | | | | | | |
Years of Service | | | | | | | | | | | | | | |
less than 2 | | 0% | | N/A | | N/A | | 0% | | 0% | | 0% | | 0% |
less than 3 | | 25% | | N/A | | N/A | | 25% | | 25% | | 25% | | 25% |
less than 4 | | 50% | | N/A | | N/A | | 50% | | 50% | | 50% | | 50% |
less than 5 | | 75% | | N/A | | N/A | | 75% | | 75% | | 75% | | 75% |
5 or more | | 100% | | N/A | | N/A | | 100% | | 100% | | 100% | | 100% |
| | | | | | | |
Eligibility to participate | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | 90 days | | A.S.A.P. | | A.S.A.P. |
Eligibility for Company match | | A.S.A.P. | | N/A | | N/A | | N/A | | 90 days | | A.S.A.P. | | A.S.A.P. |
Eligibility for pension contribution | | A.S.A.P. | | N/A | | N/A | | A.S.A.P. | | N/A | | A.S.A.P. | | N/A |
5
Federal-Mogul Corporation
Employee Investment Program
Notes to Financial Statements
December 31, 2003 and 2002
| 1. | Descriptions of the Plan (continued) |
Eligibility, Contributions & Vesting
| | | | | | | | | | | | | | |
Location Name:
| | El Paso,
TX (SPG)
| | Exton, PA
| | Flowery
Branch,
GA
| | Frankfort, IN
| | Glasgow, KY
| | Gordonsville, TN
| | Grand
Haven, MI
|
| Union/Non-Union | | Non-Union | | Union | | Non-Union | | Union | | Non-Union | | Non-Union | | Non-Union |
| | | | | | | |
Company match (% of participant contribution) | | 50% | | 50% | | 50% | | 50% | | 50% | | 50% | | 50% |
| | | | | | | |
Match is currently suspended | | Yes | | No | | Yes | | No | | Yes | | Yes | | Yes |
| | | | | | | |
Matching amount (% of participant compensation) | | 8% | | 6% | | 8% | | 8% | | 8% | | 8% | | 8% |
| | | | | | | |
Pension contribution per hour | | N/A | | N/A | | N/A | | N/A | | $0.20-$0.45 | | N/A | | N/A |
| | | | | | | |
Vesting Schedule | | | | | | | | | | | | | | |
Years of Service | | | | | | | | | | | | | | |
less than 2 | | 0% | | 0% | | 0% | | 0% | | 0% | | 0% | | 0% |
less than 3 | | 25% | | 0% | | 25% | | 0% | | 25% | | 25% | | 25% |
less than 4 | | 50% | | 100% | | 50% | | 0% | | 50% | | 50% | | 50% |
less than 5 | | 75% | | 100% | | 75% | | 0% | | 75% | | 75% | | 75% |
5 or more | | 100% | | 100% | | 100% | | 100% | | 100% | | 100% | | 100% |
| | | | | | | |
Eligibility to participate | | A.S.A.P. | | 90 days | | A.S.A.P. | | 60 days | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. |
Eligibility for Company match | | A.S.A.P. | | 90 days | | A.S.A.P. | | 60 days | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. |
Eligibility for pension contribution | | N/A | | N/A | | N/A | | N/A | | A.S.A.P. | | N/A | | N/A |
| | | | | | | |
Location Name:
| | Greenville,
MI Local
2017
| | Greenville,
MI Local
1158
| | Greenville,
MI Non-
Union
| | Hampton, VA
| | LaGrange, GA
| | Lake City, MN
| | Logansport,
IN
|
| Union/Non-Union | | Union | | Union | | Non-Union | | Non-Union | | Non-Union | | Union | | Union |
Company match (% of participant contribution) | | 50% | | 50% | | 50% | | 50% | | 50% | | 20% | | 50% |
| | | | | | | |
Match is currently suspended | | No | | No | | Yes | | Yes | | Yes | | No | | Yes |
| | | | | | | |
Matching amount (% of participant compensation) | | 8% | | 8% | | 8% | | 8% | | 8% | | 6% | | 8% |
| | | | | | | |
Pension contribution per hour | | $0.25 | | $0.35 | | N/A | | $0.35-$0.60 | | N/A | | $0.32-$0.82 | | N/A |
| | | | | | | |
Vesting Schedule | | | | | | | | | | | | | | |
Years of Service | | | | | | | | | | | | | | |
less than 2 | | 0% | | 0% | | 0% | | 0% | | 0% | | 0% | | 0% |
less than 3 | | 25% | | 25% | | 25% | | 25% | | 25% | | 25% | | 25% |
less than 4 | | 50% | | 50% | | 50% | | 50% | | 50% | | 50% | | 50% |
less than 5 | | 75% | | 75% | | 75% | | 75% | | 75% | | 75% | | 75% |
5 or more | | 100% | | 100% | | 100% | | 100% | | 100% | | 100% | | 100% |
| | | | | | | |
Eligibility to participate | | 90 days | | 60 days | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | 90 days |
Eligibility for Company match | | 1 year | | 1 year | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | 1 year |
Eligibility for pension contribution | | 90 days | | 60 days | | N/A | | A.S.A.P. | | N/A | | A.S.A.P. | | N/A |
6
Federal-Mogul Corporation
Employee Investment Program
Notes to Financial Statements
December 31, 2003 and 2002
| 1. | Descriptions of the Plan (continued) |
Eligibility, Contributions & Vesting
| | | | | | | | | | | | | | |
Location Name:
| | Malden, MO
| | Manitowoc, WI
| | Maryville, MO
| | Maysville, KY
| | Michigan City, IN
| | Orangeburg,
SC Friction
| | Orangeburg,
SC Pistons
|
| Union/Non-Union | | Union | | Non-Union | | Non-Union | | Non-Union | | Non-Union | | Non-Union | | Union |
| | | | | | | |
Company match (% of participant contribution) | | N/A | | 50% | | 50% | | 50% | | 50% | | 50% | | 50% |
| | | | | | | |
Match is currently suspended | | N/A | | Yes | | Yes | | Yes | | Yes | | Yes | | No |
| | | | | | | |
Matching amount (% of participant compensation) | | N/A | | 8% | | 8% | | 8% | | 8% | | 8% | | 8% |
| | | | | | | |
Pension contribution per hour | | N/A | | N/A | | $0.42-$0.49 | | N/A | | $0.42-$0.75 | | $0.30-$0.40 | | N/A |
| | | | | | | |
Vesting Schedule | | | | | | | | | | | | | | |
Years of Service | | | | | | | | | | | | | | |
less than 2 | | N/A | | 0% | | 0% | | 0% | | 0% | | 0% | | 0% |
less than 3 | | N/A | | 25% | | 25% | | 25% | | 25% | | 25% | | 25% |
less than 4 | | N/A | | 50% | | 50% | | 50% | | 50% | | 50% | | 50% |
less than 5 | | N/A | | 75% | | 75% | | 75% | | 75% | | 75% | | 75% |
5 or more | | N/A | | 100% | | 100% | | 100% | | 100% | | 100% | | 100% |
| | | | | | | |
Eligibility to participate | | 90 days | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | 90 days |
Eligibility for Company match | | N/A | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | 90 days |
Eligibility for pension contribution | | N/A | | N/A | | A.S.A.P. | | N/A | | A.S.A.P. | | A.S.A.P. | | N/A |
| | | | | | | |
Location Name:
| | Orland, IN
| | Scottsville, KY
| | Sevierville, TN
| | Skokie, Il
| | Smithville, TN
Distribution
| | Smithville,
TN Friction
| | Solon, OH
|
| Union/Non-Union | | Non-Union | | Non-Union | | Non-Union | | Non-Union | | Non-Union | | Non-Union | | Non-Union |
| | | | | | | |
Company match (% of participant contribution) | | 50% | | 50% | | 50% | | 50% | | 50% | | 50% | | 50% |
| | | | | | | |
Match is currently suspended | | Yes | | Yes | | Yes | | Yes | | Yes | | Yes | | Yes |
| | | | | | | |
Matching amount (% of participant compensation) | | 8% | | 8% | | 8% | | 8% | | 8% | | 8% | | 8% |
| | | | | | | |
Pension contribution per hour | | N/A | | $0.20-$0.24 | | $0.38-$0.59 | | N/A | | $0.37 | | N/A | | $0.24-$0.28 |
| | | | | | | |
Vesting Schedule | | | | | | | | | | | | | | |
Years of Service | | | | | | | | | | | | | | |
less than 2 | | 0% | | 0% | | 0% | | 0% | | 0% | | 0% | | 0% |
less than 3 | | 25% | | 25% | | 25% | | 25% | | 25% | | 25% | | 25% |
less than 4 | | 50% | | 50% | | 50% | | 50% | | 50% | | 50% | | 50% |
less than 5 | | 75% | | 75% | | 75% | | 75% | | 75% | | 75% | | 75% |
5 or more | | 100% | | 100% | | 100% | | 100% | | 100% | | 100% | | 100% |
| | | | | | | |
Eligibility to participate | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. |
Eligibility for Company match | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. |
Eligibility for pension contribution | | N/A | | A.S.A.P. | | A.S.A.P. | | N/A | | A.S.A.P. | | N/A | | A.S.A.P. |
7
Federal-Mogul Corporation
Employee Investment Program
Notes to Financial Statements
December 31, 2003 and 2002
| 1. | Descriptions of the Plan (continued) |
Eligibility, Contributions & Vesting
| | | | | | | | | | | | |
Location Name:
| | South Bend, IN
| | Sparta, TN
| | St. Johns, MI
| | Summerton, SC
| | Sumter, SC
| | Tullahoma, TN
|
| Union/Non-Union | | Non-Union | | Non-Union | | Union | | Non-Union | | Non-Union | | Non-Union |
| | | | | | |
Company match (% of participant contribution) | | 50% | | 50% | | 25% | | 50% | | 50% | | 50% |
| | | | | | |
Match is currently suspended | | Yes | | Yes | | No | | Yes | | Yes | | Yes |
| | | | | | |
Matching amount (% of participant compensation) | | 8% | | 8% | | 6% | | 8% | | 8% | | 8% |
| | | | | | |
Pension contribution per hour | | N/A | | $0.41-$0.64 | | $0.10 | | N/A | | N/A | | $0.39-$0.58 |
| | | | | | |
Vesting Schedule | | | | | | | | | | | | |
Years of Service | | | | | | | | | | | | |
less than 2 | | 0% | | 0% | | 0% | | 0% | | 0% | | 0% |
less than 3 | | 25% | | 25% | | 0% | | 25% | | 25% | | 25% |
less than 4 | | 50% | | 50% | | 0% | | 50% | | 50% | | 50% |
less than 5 | | 75% | | 75% | | 0% | | 75% | | 75% | | 75% |
5 or more | | 100% | | 100% | | 100% | | 100% | | 100% | | 100% |
| | | | | | |
Eligibility to participate | | A.S.A.P. | | A.S.A.P. | | 90 days | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. |
Eligibility for Company match | | A.S.A.P. | | A.S.A.P. | | 90 days | | A.S.A.P. | | A.S.A.P. | | A.S.A.P. |
Eligibility for pension contribution | | N/A | | A.S.A.P. | | 90 days | | N/A | | N/A | | A.S.A.P. |
| | | | | | |
Location Name:
| | Van Wert, OH
| | Waupun, WI
| | Weston, FL
| | Winchester, VA
| | All others
| | |
| Union/Non-Union | | Union | | Non-Union | | Non-Union | | Union | | Non-Union | | |
| | | | | | |
Company match (% of participant contribution) | | 50% | | 50% | | 50% | | 25% | | 50% | | |
| | | | | | |
Match is currently suspended | | No | | Yes | | Yes | | No | | Yes | | |
| | | | | | |
Matching amount (% of participant compensation) | | 8% | | 8% | | 8% | | 6% | | 8% | | |
| | | | | | |
Pension contribution per hour | | N/A | | N/A | | N/A | | N/A | | N/A | | |
| | | | | | |
Vesting Schedule | | | | | | | | | | | | |
Years of Service | | | | | | | | | | | | |
less than 2 | | 0% | | 0% | | 0% | | 0% | | 0% | | |
less than 3 | | 25% | | 25% | | 25% | | 25% | | 25% | | |
less than 4 | | 50% | | 50% | | 50% | | 50% | | 50% | | |
less than 5 | | 75% | | 75% | | 75% | | 75% | | 75% | | |
5 or more | | 100% | | 100% | | 100% | | 100% | | 100% | | |
| | | | | | |
Eligibility to participate | | 90 days | | A.S.A.P. | | A.S.A.P. | | 90 days | | A.S.A.P. | | |
Eligibility for Company match | | 90 days | | A.S.A.P. | | A.S.A.P. | | 90 days | | A.S.A.P. | | |
Eligibility for pension contribution | | N/A | | N/A | | N/A | | N/A | | N/A | | |
| “A.S.A.P.” | indicates as soon as adminstratively possible |
| “N/A” | indicates not applicable |
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.
8
Federal-Mogul Corporation
Employee Investment Program
Notes to Financial Statements
December 31, 2003 and 2002
| 1. | Description of the Plan (continued) |
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 forfeiture 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 |
| | • | 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 |
| | • | Spartan U.S. Equity Index Fund |
| | • | Dreyfus Small Cap Stock Index Fund |
| | • | Columbia Acorn Fund—Class Z |
| | • | T. Rowe Price Mid-Cap Growth Fund |
| | • | Dreyfus Mid-Cap Index Fund |
| | • | Spartan International Index Fund |
| | • | GMO Emerging Countries Fund |
| | • | Federal-Mogul Common Stock (closed to new investments) |
Effective August 31, 2001, employees were not permitted to make additional investments in Federal-Mogul Common Stock.
9
Federal-Mogul Corporation
Employee 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 values, 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 Transactions |
Certain Plan investments were held by the Master Trust administered by the Predecessor Trustee. There were no shares of common stock of the Company purchased during 2003 or 2002 by the Trust.
Fees incurred for legal and other services rendered by parties-in-interest were paid by the Company on behalf of the Plan.
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.
10
Federal-Mogul Corporation
Employee Investment Program
Notes to Financial Statements
December 31, 2003 and 2002
The Plan has received a determination letter from the Internal Revenue Service dated April 8, 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 43% share in the Master Trust at both December 31, 2003 and 2002.
The fair value of net assets of the trusts were as follows:
| | | | | | |
| | | December 31
|
| | | 2003
| | 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 |
| | |
|
| |
|
|
11
Federal-Mogul Corporation
Employee 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 held at Fidelity had net 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 | |
| | |
|
| |
|
|
|
12
Federal-Mogul Corporation
Employee 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 | ) |
| | |
|
|
| |
|
|
|
13
Federal-Mogul Corporation
Employee Investment Program
Notes to Financial Statements
December 31, 2003 and 2002
| 6. | Investments in Master Trust (continued) |
During the period from January 1, 2002 through December 6, 2002, the Master Trust, held at The State Street Bank and Trust, had net investment income of $13,472,206 and had net realized and unrealized depreciation in the fair value of investments of $54,571,024.
| | | | | | | | |
Period from January 1, 2002 through December 6, 2002
| | Net Investment Income/(Loss) During
Period
| | | Net Realized and
Unrealized Appreciation/
(Depreciation) in
Fair Value During
Period
| |
Stable Value Fund | | $ | 9,222,171 | | | $ | — | |
Bond Fund | | | 2,908,064 | | | | 2,568,029 | |
Large Cap Equity Fund | | | (53,881 | ) | | | (25,556,869 | ) |
Mid Cap Equity Fund | | | 46,264 | | | | (15,031,567 | ) |
Small Cap Equity Fund | | | 282,818 | | | | (7,854,486 | ) |
International Fund | | | (7,787 | ) | | | (3,050,536 | ) |
Brokerage Account | | | — | | | | (876,233 | ) |
Federal-Mogul Common Stock Fund | | | (4,055 | ) | | | (4,769,362 | ) |
| | |
|
|
| |
|
|
|
| | | | 12,393,594 | | | | (54,571,024 | ) |
| | |
Loan Fund | | | 1,078,612 | | | | — | |
| | |
|
|
| |
|
|
|
| | | $ | 13,472,206 | | | $ | (54,571,024 | ) |
| | |
|
|
| |
|
|
|
14
Federal-Mogul Corporation
Employee 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 | |
| | |
|
| |
|
|
|
15
Federal-Mogul Corporation
Employee 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 by the Predecessor Trustee for the period from January 1, 2002 through December 6, 2002.
| | | | |
| | | Period from January 1,
2002 through
December 6, 2002
| |
Additions | | | | |
Dividends and interest | | $ | 13,472,206 | |
Participant contributions | | | 32,107,883 | |
Company contributions | | | 4,344,434 | |
| | |
|
|
|
Total Additions | | | 49,924,523 | |
Deductions | | | | |
Benefits paid to participants | | | 54,517,082 | |
Portion of Company match account forfeited upon withdrawal of members | | | 266,059 | |
| | |
|
|
|
Total Deductions | | | 54,783,141 | |
Net realized/unrealized depreciation in fair value of investments | | | (54,571,024 | ) |
Transfers to successor Trustee | | | (467,618,880 | ) |
| | |
|
|
|
Net decrease | | | (527,048,522 | ) |
| | |
|
|
|
Net assets available for plan benefits at beginning of year | | | 527,048,522 | |
| | |
|
|
|
Net assets of Master Trust at end of period | | $ | — | |
| | |
|
|
|
Effective January 1, 2004 the Company reinstated employer matching contributions to the Plan.
16
Federal-Mogul Corporation
Employee Investment Program
EIN: 38-0533580 Plan Number 104
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, Lessor or Similar Party
| | Description of Investment including Maturity Date,
Interest, Collateral, Par or Maturity Value
| | Current Value
|
Participant Loans | | various terms and interest rates | | $9,959,442 |
| | | | |
|
| | | | | $9,959,442 |
| | | | |
|
There were no investment assets reportable as acquired and disposed of during the year.
17
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, The Federal-Mogul Corporation Employee 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 |
18
