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, 2001
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
EMPLOYEES' 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
EMPLOYEES' INVESTMENT PROGRAM
TABLE OF CONTENTS
Page Number
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Report of Independent Auditors
Financial Statements of the Years Ended December 31, 2001 and 2000
Statement of Net Assets Available for Plan Benefits 1
Statement of Changes in Net Assets Available for Plan Benefits 2
Notes to Financial Statements 3-10
REPORT OF INDEPENDENT AUDITORS
Retirement Programs Committee
Federal-Mogul Corporation
We have audited the accompanying statements of net assets available for plan
benefits of the Federal-Mogul Corporation Employees' Investment Program as of
December 31, 2001 and 2000, 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 auditing standards generally accepted
in the 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, 2001 and 2000, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
/s/ Ernst & Young LLP
Detroit, MI
June 26, 2002
FEDERAL-MOGUL CORPORATION
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
EMPLOYEES' INVESTMENT PROGRAM
December 31
2001 2000
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ASSETS
Investments in master trust (See Note 6) $ 226,316,125 $ 268,783,873
Contribution receivable from Federal-Mogul Corporation 13,553 12,182
Transfers receivable from other FMC investment programs - 8,215,626
------------- -------------
Total Assets 226,329,678 277,011,681
LIABILITIES
Accrued Expenses 2,884 600
Forfeited accounts owed to FMC (See Note 1) 430,218 1,117,670
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Total Liabilities 433,102 1,118,270
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NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 225,896,576 $ 275,893,411
============= =============
See notes to financial statements
1
FEDERAL-MOGUL CORPORATION
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
EMPLOYEES' INVESTMENT PROGRAM
December 31
2001 2000
------------ ------------
Additions
Dividends and Interest $ 5,092,621 $ 14,170,309
Contributions:
Participants 16,978,217 15,984,653
Federal-Mogul Corporation 8,973,063 10,440,677
------------- ------------
Total Additions 31,043,901 40,595,639
Deductions
Benefits paid to participants 37,173,597 25,598,865
Portion of company match account forfeited upon
withdrawal of members (See Note 3) (687,452) 1,039,720
------------- ------------
Total Deductions 36,486,145 26,638,585
Net Transfers (to)/from other FMC investment programs (23,993,531) 95,924,115
Net unrealized depreciation in fair value of
investments in Master Trust (See Note 6) (20,561,060) (30,328,498)
------------- -------------
Net increase (49,996,835) 79,552,671
Net assets available for plan benefits at beginning of year 275,893,411 196,340,740
------------- -------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 225,896,576 $ 275,893,411
============= =============
See notes to financial statements
2
Federal-Mogul Corporation
Employees' Investment Program
Notes to Financial Statements
December 31, 2001 and 2000
1. Description of the Plan
The following description of the Federal-Mogul Corporation Employees' Investment
Program (the "Plan") provides only general information. Participants should
refer to the Plan agreement for a more complete description of the Plan's
provisions.
During 2001 and 2000, the Plan had net transfers to and from other investment
programs of Federal-Mogul Corporation (the "Company"). The assets transferred to
another investment program are administered under the terms of the Master Trust.
General
The Plan is a defined contribution plan which provides eligible hourly employees
of the Company with a program for making voluntary pretax 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 October 1, 2001, Federal-Mogul Corporation 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 Federal-Mogul's motion to
continue the Plan.
Master Trust
The Plan invests in a single master trust through a master trust agreement with
The State Street Bank (the "Trustee"). The 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.
3
1. Description of the Plan (continued)
Contributions & Vesting
During the 2001 Plan year, the Company suspended its matching contributions to
the Plan. Company contributions that were made during the Plan year were made
with the Company common stock until August 1, 2001. After that date, Company
contributions were in cash and subsequently invested in accordance with the
Participant's investment election until the contributions were suspended on
November 1, 2001.
Allentown Avilla Blacksburg Berkeley Boaz Boston
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1. Company Match
(% of participant contribution) 50% 50% N/A 50% 50% 50%
2. Matching Amount
(% of participant compensation) 4% 4% N/A 4% 4% 4%
3. Maximum Contribution
(% of participant compensation) 20% 20% 20% 20% 20% 20%
4. Pension Contribution Yes Yes No Yes Yes Yes
5. Vesting Schedule of Company Contributions
Years of Service
----------------
less than 2 0% 0% N/A 0% 0% 0%
less than 3 25% 25% N/A 25% 25% 25%
less than 4 50% 50% N/A 50% 50% 50%
less than 5 75% 75% N/A 75% 75% 75%
5 or more 100% 100% N/A 100% 100% 100%
6. Eligibility to participate Immediately Immediately 90 days Immediately Immediately Immediately
Eligibility for company match Immediately Immediately N/A Immediately Immediately Immediately
Boyertown Chicago-Kedzie Dumas Frankfort Franklin Pk.
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1. Company Match
(% of participant contribution) 50% 50% 50% 50% 50%
2. Matching Amount
(% of participant compensation) 4% 4% 4% 4% 4%
3. Maximum Contribution
(% of participant compensation) 20% 20% 20% 20% 20%
4. Pension Contribution Yes Yes Yes Yes Yes
5. Vesting Schedule of Company Contributions
Years of Service
----------------
less than 2 0% 0% 0% 0% 0%
less than 3 25% 25% 25% 0% 25%
less than 4 50% 50% 50% 0% 50%
less than 5 75% 75% 75% 0% 75%
5 or more 100% 100% 100% 100% 100%
6. Eligibility to participate Immediately Immediately Immediately 60 days Immediately
Eligibility for company match Immediately Immediately Immediately 60 days Immediately
Glasgow Greenville Hampton Logansport
---------------------------------------------
1. Company Match
(% of participant contribution) 50% 50% 50% 50%
2. Matching Amount
(% of participant compensation) 4% 4% 4% 4%
3. Maximum Contribution
(% of participant compensation) 20% 20% 20% 20%
4. Pension Contribution Yes Yes Yes Yes
5. Vesting Schedule of Company Contributions
Years of Service
----------------
less than 2 0% 0% 0% 0%
less than 3 25% 25% 25% 25%
less than 4 50% 50% 50% 50%
less than 5 75% 75% 75% 75%
5 or more 100% 100% 100% 100%
90 days 90 days
6. Eligibility to participate Immediately 1 year of Immediately 1 year of
Eligibility for company match Immediately service Immediately service
Maryville Michigan City Milan Orangeburg Pontotoc Salisbury
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1. Company Match
(% of participant contribution) 50% 50% 50% 50% 50% 50%
2. Matching Amount
(% of participant compensation) 4% 4% 4% 4% 4% 4%
3. Maximum Contribution
(% of participant compensation) 20% 20% 20% 20% 20% 20%
4. Pension Contribution Yes Yes No Yes Yes Yes
5. Vesting Schedule of Company Contributions
Years of Service
----------------
less than 2 0% 0% 0% 0% 0% 0%
less than 3 25% 25% 25% 25% 25% 25%
less than 4 50% 50% 50% 50% 50% 50%
less than 5 75% 75% 75% 75% 75% 75%
5 or more 100% 100% 100% 100% 100% 100%
90 days
6. Eligibility to participate Immediately Immediately 1 year of Immediately Immediately Immediately
Eligibility for company match Immediately Immediately service Immediately Immediately Immediately
Scottsville Sevierville Smithville(DC) Solon Sparta
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1. Company Match
(% of participant contribution) 50% 50% 50% 50% 50%
2. Matching Amount
(% of participant compensation) 4% 4% 4% 4% 4%
3. Maximum Contribution
(% of participant compensation) 20% 20% 20% 20% 20%
4. Pension Contribution Yes Yes Yes Yes Yes
5. Vesting Schedule of Company Contributions
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%
6. Eligibility to participate Immediately Immediately Immediately Immediately Immediately
Eligibility for company match Immediately Immediately Immediately Immediately Immediately
St. Johns Tullahoma Van Wert All Others
--------------------------------------------
1. Company Match
(% of participant contribution) N/A 50% 50% 50%
2. Matching Amount
(% of participant compensation) N/A 4% 4% 4%
3. Maximum Contribution
(% of participant compensation) 20% 20% 20% 20%
4. Pension Contribution Yes Yes No Yes
5. Vesting Schedule of Company Contributions
Years of Service
----------------
less than 2 0% 0% 0% 0%
less than 3 0% 25% 25% 25%
less than 4 0% 50% 50% 50%
less than 5 0% 75% 75% 75%
5 or more 100% 100% 100% 100%
6. Eligibility to participate 90 days Immediately 90 days Immediate
Eligibility for company match 90 days Immediately 60 days Immediate
Full vesting also occurs upon death, 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.
4
Participant Accounts
Each participant's account is credited with the participant's contribution and
allocations of (a) the Company's contribution and (b) Plan earnings, and charged
with an allocation of certain administrative expenses. These administrative
expenses, paid by participants, are netted against the net asset value of the
investment fund. Allocations are based on participant earnings or account
balances, as defined. The benefit to which a participant is entitled is the
benefit that can be provided from the participant's vested account.
Forfeitures
Shares of Federal-Mogul Corporation common stock which are not vested at the
time of a participant's withdrawal from the Plan are forfeited and are applied
as a reduction of required 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.
Investment Options
The Plan provides for eight investment options which includes the Stable Value
Fund, Bond Fund, Large Cap Equity Fund, Mid Cap Equity Fund, Small Cap Equity
Fund, International Fund, Brokerage Account and common stock of the Company.
Effective August 31, 2001, employees are no longer permitted to make additional
investments in the common stock of the Company.
Participant Loans Receivable
The Plan allows participants to borrow from their account upon written request
and 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 given 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, 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, an annual or more frequent installment.
2. Significant Account 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 the Federal-Mogul Corporation common stock, Bond Fund, Large Cap
Equity Fund, Mid Cap Equity Fund, Small Cap Equity Fund, International Fund, and
Brokerage Account are valued at quoted market prices. The Stable Value Fund is
valued at fair market value as estimated by State Street Bank and Trust. The
Stable Value Fund value represents contributions plus interest, less
administrative expenses.
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.
5
2. Significant Account Policies (continued)
Payment of Benefits
Benefits are recorded when paid
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.
3. Party-In-Interest Transactions
Certain of the Plan's investments are held by a consolidated master trust (the
"Trust") administered by the Trustee. During the years ended December 31, 2001
and December 31, 2000, the Trust purchased 4,761,400 and 6,094,700 shares of
common stock of the Company for a total cost of $15,167,371 and $37,289,450
respectively.
Fees incurred for legal and other services rendered by parties-in-interest were
based on customary and reasonable rates for such services and were paid by the
Company on behalf of the Plan. Forfeited shares which have not been applied as a
reduction of contributions at year-end are reflected as a liability to the
Company and will be applied to reduce future Company contributions.
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.
5. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
dated October 25, 1996, 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. The Plan has applied for but has not received a new
determination letter from the Internal Revenue Service. However, the plan
administrator believes the Plan is qualified and, therefore, the related trust
is exempt from taxation.
6
6. Investments in Master Trust
Certain of the Plan's investments are held by the Master Trust administered by
the Trustee. At December 31, 2001 and 2000 the Plan holds a 43% share and a 49%
share, respectively, of the master trust.
The fair value of net assets of the Trust were as follows at December 31:
2001 2000
------------ ------------
Investments:
Stable Value Fund $182,773,036 $165,864,120
Bond Fund 67,659,149 53,026,996
Large Cap Equity Fund 133,046,949 169,359,732
Mid Cap Equity Fund 47,728,564 42,785,461
Small Cap Equity Fund 36,370,757 36,365,908
International Fund 19,807,345 24,152,206
Brokerage Account 4,187,402 3,330,673
Federal-Mogul Common Stock Fund* 9,496,339 20,959,983
Cooper Common Stock Fund 10,064,994 23,536,290
Cooper Cameron Stock Fund 495,659 1,376,367
Loan Fund 15,913,221 15,857,386
------------ ------------
Total Investments 527,543,415 556,615,122
Receivable from FMC 13,553 12,182
Participant loans receivable - 8,265,352
------------ ------------
Total Assets 527,556,968 564,892,656
Forfeited accounts owed to FMC 501,723 1,165,969
Accrued Expenses 6,723 2,262
------------ ------------
Total Liabilities 508,446 1,168,231
------------ ------------
NET ASSETS OF THE MASTER TRUST $527,048,522 $563,724,425
============ ============
* non-participant directed
7
6. Investments in Master Trust (continued)
During the year ended December 31, 2001 and December 2000, the Trust had
investment income amounting to $11,382,946 and $28,827,266, respectively, and
had realized and unrealized depreciation in the fair value of investments of
$54,490,583 and $100,823,005, respectively as follows:
Net Realized and
Unrealized
Appreciation
Net Investment (Depreciation) in
Income/(Loss) During Fair Value During
Year Ended December 31, 2001 Year Year
- ---------------------------- -------------------- -----------------
Stable Value Fund $10,167,394 $ -
Bond Fund 1,424,910 3,242,783
Large Cap Equity Fund (1,146,951) (19,476,153)
Mid Cap Equity Fund (24,817) (6,114,022)
Small Cap Equity Fund 2,459 (2,056,137)
International Fund 283,221 (3,834,169)
Brokerage Account (1,221,329) -
Federal Mogul Common Stock Fund (353) (22,714,707)
Cooper Common Stock Fund 535,013 (3,092,578)
Cooper Cameron Stock Fund (188) (445,600)
Loan Fund 1,363,587 -
----------- -------------
$11,382,946 $ (54,490,583)
Year Ended December 31, 2000
- ----------------------------
Stable Value Fund
Bond Fund $ 8,916,371 $ 3,093
Large Cap Equity Fund 950,760 3,439,582
Mid Cap Equity Fund 2,684,403 (21,225,615)
Small Cap Equity Fund 6,710,914 (4,090,229)
International Fund 9,903,083 (9,396,897)
Brokerage Account 2,193,248 (4,594,137)
Federal Mogul Common Stock Fund (1,538,061) -
Cooper Common Stock Fund (1,680,430) (68,754,551)
Cooper Cameron Stock Fund (690,524) 3,567,699
Loan Fund 249,246 228,050
1,128,256 -
----------- -------------
$28,827,266 $(100,823,005)
8
6. Investments in Master Trust (continued)
The changes in the fair value of net assets of the consolidated master trust for
the years ended December 31, 2001, and December 31, 2000 are summarized as
follows:
Year Ended Year Ended
December 31, December 31,
2001 2000
------------- -------------
Additions:
Dividends/interest income $ 11,382,946 $ 28,827,266
Contributions from participating employees 40,109,084 42,434,605
Contributions from FMC 15,349,300 16,228,250
------------ ------------
Total Additions 66,841,330 87,490,121
Deductions:
Benefits paid to participants 80,879,046 75,032,579
Portion of company match account forfeited upon withdrawal of members (664,246) 1,057,192
------------ ------------
Total Deductions 80,214,800 76,089,771
Net realized & unrealized depreciation in fair value of investments (54,490,583) (100,823,005)
Transfers from other FMC investment programs 31,188,150 97,998,701
------------ ------------
NET INCREASE/(DECREASE) (36,675,903) 8,576,046
------------ ------------
Net assets available for plan benefits at beginning of year 563,724,425 555,148,379
------------ ------------
NET ASSETS OF MASTER TRUST AT END OF PERIOD $527,048,522 $563,724,425
============ ============
9
7. Nonparticipant-Directed Investments
Information about Plan net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed investments is as follows:
December 31,
2001 2000
----------------- -----------------
Net Assets:
FMC Common Stock $ 3,671,065 $ 7,571,439
----------- -----------
$ 3,671,065 $ 7,571,439
=========== ===========
Changes in Net Assets: Year Ended Year Ended
December 31, 2001 December 31, 2000
----------------- -----------------
Contributions $ 4,336,561 $ 7,159,192
Dividends and interest - 41,163
Net depreciation (7,641,052) (20,133,615)
Benefits paid to participants (701,200) (797,105)
Forfeitures (38,330) (14,169)
Transfers from participant-directed investments 2,547,191
Transfers to another FMC investment program (2,440,519) 7,386,539
----------- -----------
$(3,937,349) $(6,357,995)
=========== ===========
10