1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 8-K/A
Amendment #2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: February 24, 1998
(Date of earliest event reported)
FEDERAL-MOGUL CORPORATION
(Exact name of registrant as specified in its charter)
Michigan
(State or other jurisdiction of incorporation)
1-1511 38-0533580
------ ----------
(Commission File Number) (IRS Employer Identification Number)
26555 Northwestern Highway, Southfield, Michigan 48034
- ------------------------------------------------ --------
(Address of principal executive offices) (Zip Code)
(248) 354-7700
(Registrant's telephone number including area code)
The total number of pages is 13
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On April 7, 1998, the Company amended and restated Item 7 of its reports on
Form 8-K dated February 24, 1998 and March 23, 1998 to include its Unaudited
Pro Forma Financial Information. Subsequent to April 7, 1998 the Company has
finalized appraisals on the acquired fixed assets with regard to valuation and
lives.
Based on the finalized appraisals, the economic lives of certain acquired fixed
assets are greater than the Company's previous estimates. Based on this new
information, the Company currently estimates that depreciation on certain
acquired assets will be approximately $53 million lower than previously
reported in the Company's Form 8-K/A filed April 7, 1998.
The Company has herein updated its Unaudited Pro Forma Financial Information
contained in its current report on Form 8-K/A dated April 7, 1998 in order to
incorporate changes in the useful lives of the assets acquired and related
reduction in depreciation expense which affects various numbers in the Pro
Forma Statement of Operations.
ITEM 7. PRO FORMA FINANCIAL INFORMATION
(b) Unaudited Pro Forma Financial Information
1. Discussion
2. Unaudited Pro Forma Statement of Operations for the year
ended December 31, 1997
3. Unaudited Pro Forma Balance Sheet as of December 31, 1997
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
FEDERAL-MOGUL CORPORATION
By: /s/ Kenneth P. Slaby
----------------------------------
Kenneth P. Slaby
Title: Vice President and Controller
Dated: June 24, 1998
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Item 7(b) Unaudited Pro Forma Financial Information
As previously reported in the Company's Form 8-K filed March 11, 1998, the
Company completed the acquisition of Fel-Pro, Incorporated and certain
affiliated entities (Fel-Pro) for $716.8 million on February 24, 1998. Fel-Pro
is a leading manufacturer of gaskets and seals headquartered in Skokie,
Illinois. The acquisition has been accounted for using the purchase method of
accounting. The purchase price consists of 1,030,325.6 shares of newly issued
Series E Mandatory Exchangeable Preferred Stock (exchangeable into 5,151,628
shares of common stock) with an imputed value of $225 million and $491.8
million in cash. The cash was provided through an existing revolving credit
facility provided by a syndicate led by The Chase Manhattan Bank and three
short-term loans, each in the amount of $50 million, from The Chase Manhattan
Bank, ABN Amro Bank NV and First Chicago NBD Bank, respectively.
Also, as previously reported in the Company's Form 8-K filed March 23, 1998, the
Company completed its cash offer announced October 16, 1997 to acquire all the
outstanding common stock of T&N plc (T&N) for 260 pence per share on March 6,
1998. T&N, based in Manchester, England, manufactures and supplies high
technology engineered automotive components and industrial materials including
pistons, piston rings, friction products, bearings, composites, camshafts and
sealing products. The acquisition has been accounted for using the purchase
method of accounting. The purchase price of approximately $2,434.2 million was
funded primarily through a $2.75 billion floating rate Senior Credit Agreement
(consisting of a $2.35 billion term loan facility, $1.8 billion of which was
drawn down, and a $400 million revolving loan facility) and a $500 million
floating rate Senior Subordinated Credit Agreement (the full amount of which was
drawn down), each from a syndicate led by The Chase Manhattan Bank. These credit
facilities also refinanced the borrowings used to finance the cash portion of
the purchase price for Fel-Pro. Additional funds for the acquisition of T&N were
obtained through the December 1997 sale of 7% Trust Convertible Preferred
Securities (generating gross proceeds of $575 million) by Federal-Mogul
Financing Trust, a subsidiary of the Company. The Company intends to put into
place a permanent capital structure with an appropriate combination of debt and
equity which will partially replace the Senior Credit Agreement and Senior
Subordinated Credit Agreement debt.
The estimated cost of the acquisitions of Fel-Pro and T&N are computed as
follows:
(in millions)
Fel-Pro T&N
------------------ ----------------
Cash $491.8 $2,434.2
Series E Mandatory Exchangeable Preferred Stock 225.0 -
Expected proceeds from exercisable options - (52.6)
Direct transaction costs .9 29.3
------------------ ----------------
Estimated acquisition cost $717.7 $2,410.9
================== ================
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The pro forma preliminary allocations of the purchase price of the acquisitions
of Fel-Pro and T&N are expected to be as follows:
(in millions)
Fel-Pro T&N
------------------ ----------------
Current assets $ 173.1 $ 1,087.6
Liabilities assumed* (133.1) (3,143.9)
Property, plant and equipment 110.2 1,055.4
Identifiable intangible assets 16.7 315.7
Other noncurrent assets 31.4 525.9
Purchased research and development - 18.6
Goodwill 519.4 1,990.7
Estimated fair value of Bearings Business (see below) - 560.9
------- --------
Total $ 717.7 $2,410.9
======= ========
* Includes an increase of $329 million ot adjust the acquired asbestos liability
to estimated fair value and an increase of $124 million to adjust the acquired
income tax liability in relation to the anticipated gain on the sale of the
Bearings Business.
In connection with securing regulatory approvals for the acquisition of T&N, the
Company executed an Agreement Containing Consent Order with the Federal Trade
Commission on February 27, 1998. Pursuant to this agreement the Company must
divest of certain assets of T&N within eight months from the date of the
consent order and must provide for independent management of those assets
pending such divestiture. The assets to be divested consist principally of T&N's
thinwall and dry bearings (polymer bearings) operations (the Bearings
Business). The agreement stipulates that the Bearings Business is to be
maintained as a viable, independent competitor of the Company and that the
Company shall not attempt to direct the activities of, or exercise control over,
the Bearings Business or have contact with the Bearings Business outside of
normal business activities.
The Company has separately identified the estimated effect of the divestiture
of the Bearings Business in the unaudited pro forma statement of operations and
balance sheet. The estimated net cash flows from operations of the Bearings
Business from March 6, 1998 to the date of sale, the interest expense on debt
incurred during this period and the proceeds from the sale will be accounted for
as adjustments to the purchase price of T&N. Proceeds are estimated to be
between $500 and $650 million, calculated using multiples of earnings similar
to recent automotive industry transactions. An amount within the low end of this
range has been used in the pro forma financial information. There can be no
assurance that the actual proceeds received from the disposition will fall
within the estimated range.
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The unaudited pro forma statement of operations for the year ended December 31,
1997 has been prepared to illustrate the effect of the acquisitions of T&N and
Fel-Pro as if they had occurred on January 1, 1997. The unaudited pro forma
statement of operations includes only the results of ongoing operations and
excludes such impacts as extraordinary items, one-time items relating to the
acquisitions and synergies and expected cost savings associated with the
integration of the acquisitions. The unaudited pro forma balance sheet as of
December 31, 1997 has been prepared to illustrate the effect of the acquisitions
of T&N and Fel-Pro as if they had occurred on that date.
The unaudited pro forma financial information gives effect to the acquisition
transactions using the purchase method of accounting. The pro forma adjustments
are described in the accompanying notes to the unaudited pro forma financial
information and are based upon preliminary available information and upon
certain assumptions made by management. Accordingly, certain pro forma
adjustments reflected in the unaudited pro forma financial information are
preliminary and subject to revision. Such revision could be material.
The unaudited pro forma financial information is presented for illustrative
purposes only and is not necessarily indicative of the financial position or
results of operations which may occur in the future or that would have occurred
had the acquisitions of T&N and Fel-Pro been consummated on the dates indicated,
nor are they necessarily indicative of the Company's future results of
operations or financial position. The unaudited pro forma financial information
should be read in conjunction with the audited consolidated financial statements
of the Company, as well as the audited financial statements of the acquired
companies.
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UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
DISPOSITION
FEDERAL- OF
MOGUL T&N FEL-PRO BEARINGS
HISTORICAL HISTORICAL HISTORICAL BUSINESS
------------- ------------- ------------- ---------------
Sales $ 1,806.6 $ 2,948.4 $ 489.3 $ (393.1) (a)
Cost of products sold 1,381.8 2,187.6 268.5 (295.4) (a)
------------ ------------ ------------ -------------
Gross margin 424.8 760.8 220.8 (97.7)
Selling general and administrative expenses 286.2 500.3 173.8 (46.1) (a)
Restructuring charges (credits) (1.1) - - -
Reengineering and other related charges (benefits) (1.6) - - -
Adjustment of assets held for sale to fair value 2.4 - - -
Interest expense 32.0 60.5 - (16.9) (a)
Interest income (7.1) (17.9) - 2.3 (a)
International currency exchange losses 0.6 4.4 - (0.3) (a)
British pound currency option, net 10.5 - - -
Gain on sale of Kolbenschmidt AG share purchase options - (21.7) - -
Other (income) expense, net 3.4 (14.5) - (1.3) (a)
------------ ------------ ------------ -------------
Earnings before income taxes, extraordinary item
and nonrecurring charges 99.5 249.7 47.0 (35.4)
Income tax expense (benefit) 27.5 159.3 25.5 (9.4) (a)
------------ ------------ ------------ -------------
Net earnings (loss) before extraordinary item
and nonrecurring charges $ 72.0 $ 90.4 $ 21.5 $ (26.0)
============ ============ ============ =============
Earnings (loss) per common share:
Basic $ 1.81
Diluted $ 1.67
Weighted average shares outstanding (thousands):
Basic 36,647
============
Diluted 41,854
============
T&N FEL-PRO
PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS COMBINED
---------------- ---------------- --------------
Sales $ (15.3) (b) $ (11.9) (i) $ 4,824.0
Cost of products sold (53.2) (c) (6.9) (j) 3,482.4
----------- ------------- ------------
Gross margin (37.9) (5.0) 1,341.6
Selling general and administrative expenses 58.9 (d) 13.0 (k) 986.1
Restructuring charges (credits) - - (1.1)
Reengineering and other related charges (benefits) - - (1.6)
Adjustment of assets held for sale to fair value - - 2.4
Interest expense 148.5 (e) 38.2 (l) 262.3
Interest income 13.7 (f) - (9.0)
International currency exchange losses - - 4.7
British pound currency option, net - - 10.5
Gain on sale of Kolbenschmidt AG share purchase options - - (21.7)
Other (income) expense, net 36.9 (g) - 24.5
----------- ------------- ------------
Earnings before income taxes, extraordinary item
and nonrecurring charges (220.1) (56.2) 84.5
Income tax expense (benefit) (67.4) (h) (24.2) (m) 111.3
----------- ------------- ------------
Net earnings (loss) before extraordinary item
and nonrecurring charges $ (152.7) $ (32.0) $ (26.8)
=========== ============= ============
Earnings (loss) per common share:
Basic $ (1.22)
Diluted $ (1.22)
Weighted average shares outstanding (thousands):
Basic 36,647
============
Diluted 47,006
============
See accompanying notes to Unaudited Pro Forma Statement of Operations.
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Notes to the Unaudited Pro Forma Statement of Operations
(in millions unless otherwise noted)
Relating to the divestiture of the Bearings Business:
(a) To eliminate the historical statement of operations of the Bearings
Business.
Relating to the purchase of T&N:
(b) To eliminate intercompany sales between the Company and T&N.
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Notes to the Unaudited Pro Forma Statement of Operations
(in millions unless otherwise noted)
(c) To reflect the net effect of the following adjustments:
Net decrease in depreciation expense relating to the adjustment of
property, plant and equipment acquired to estimated fair
value and the extension of the estimated useful lives (to be depreciated
over an average period of 10 years) $ (46.9)
Elimination of intercompany cost of products sold between the Company and T&N (15.3)
Elimination of profit in ending inventory on intercompany sales between the
Company and T&N 0.8
Increase in pension expense - elimination of amortization of deferred gain 8.7
Decrease in postretirement benefits expense - elimination of amortization of
deferred loss (0.5)
-------
$ (53.2)
=======
(d) To reflect the net effect of the following adjustments:
Amortization of additional goodwill resulting from the purchase of T&N
(to be amortized over a period of 40 years) $ 43.0
Amortization of other identifiable intangible assets acquired to
estimated fair value (to be amortized over periods from 10 to 24
years) 15.9
-------
$ 58.9
=======
(e) To reflect the net effect of the following adjustments:
Increase in interest expense relating to the net debt incurred for the net
purchase of T&N (see unaudited pro forma balance sheet footnote 1) $ 148.2
Reduction in historical interest expense of T&N relating to the elimination
of historical outstanding debt (23.4)
Amortization of debt issuance costs (to be amortized over a period
of 12 to 96 months) 23.7
-------
$ 148.5
=======
(f) To reflect the net effect of the following adjustments:
Reduction in interest income as a result of the use of existing cash balances
of the Company to finance a portion of the T&N transaction $ 2.2
Reduction in interest income as a result of the use of existing
cash balances of T&N 11.5
-------
$ 13.7
=======
(g) To record an additional eleven months of minority interest-preferred
securities of affiliates expense.
(h) To record the income tax effects of the statement of operations
adjustments.
Relating to the purchase of Fel-Pro:
(i) To eliminate intercompany sales between the Company and Fel-Pro
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Notes to the Unaudited Pro Forma Statement of Operations
(in millions unless otherwise noted)
(j) To reflect the net effect of the following adjustments:
Increase in depreciation expense relating to the adjustment of property,
plant and equipment acquired to estimated fair value (to be depreciated
over an average period of 10 years) $ 3.0
Elimination of intercompany cost of products sold between the Company and
Fel-Pro (11.9)
Elimination of profit in ending inventory on intercompany sales between the
Company and Fel-Pro 0.6
Increase in postretirement benefits expense - elimination of amortization of 1.4
deferred loss --------
$ (6.9)
========
(k) To record the amortization of goodwill resulting from the purchase of
Fel-Pro (to be amortized over a period of 40 years)
(l) To record interest expense relating to the debt incurred for the purchase
of Fel-Pro
(m) To record the income tax effects of the statement of operations
adjustments
The unaudited pro forma statement of operations discloses the income (loss) from
continuing operations before nonrecurring charges directly attributable to the
transactions. The following nonrecurring charges were not considered in the
unaudited pro forma statement of operations:
Penalty for early retirement of private placement debt of T&N $25.0
Estimated purchased research and development costs 18.6
Adjustment of inventory to estimated fair value 4.0
-----
$54.6
=====
Loss per share as calculated for the pro forma combined entity:
Net earnings before extraordinary item and non-recurring charges $ (26.8)
Less: Series C preferred dividend requirement (2.4)
Less: Series D preferred dividend requirement (3.1)
Less: Series E preferred dividend requirement (12.3)
-------
Net earnings available to common shareholders before extraordinary
item and non-recurring charges $ (44.6)
=======
Weighted average common shares outstanding 36,647
=======
Loss per share - basic and diluted $ (1.22)
=======
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Unaudited Pro Forma Balance Sheet
December 31, 1997
FEDERAL- T&N
MOGUL T&N FEL-PRO PRO FORMA
HISTORICAL HISTORICAL HISTORICAL ADJUSTMENTS
-------------- --------------- -------------- ------------------
Cash and equivalents $ 541.4 $ 319.2 $ - $ (765.3) (1)
Accounts receivable 158.9 458.8 83.4 (2.6) (2)
Investment in accounts receivable securitization 48.7 - - -
Inventories 277.0 365.1 61.0 10.2 (3)
Prepaid expenses and income tax benefits 113.2 58.2 4.7 10.7 (4)
--------- --------- ------- ---------
Total current assets 1,139.2 1,201.3 149.1 (747.0)
Property, plant and equipment 313.9 1,089.5 80.6 75.4 (5)
Goodwill 143.8 342.2 - 1,715.0 (6)
Other intangible assets 48.4 17.9 16.7 297.8 (7)
Business investments and other assets 156.8 469.2 23.7 161.5 (8)
--------- --------- ------- ---------
Total Assets $ 1,802.1 $ 3,120.1 $ 270.1 $ 1,502.7
========= ========= ======= =========
Short-term debt $ 28.6 $ 125.4 $ - $ -
Accounts payable 102.3 326.3 22.7 (2.6) (2)
Accrued compensation 36.8 57.6 24.1 -
Accrued customer incentives 22.4 - 10.5 -
Restructuring reserves 31.5 - - 150.0 (9)
Current portion of asbestos liability - 101.3 - -
Other accrued liabilities 108.0 305.3 19.4 -
--------- --------- ------- ---------
Total current liabilities 329.6 915.9 76.7 147.4
Long-term debt 273.1 469.5 - 1,220.4 (1)
Postemployment benefits 190.9 223.7 46.8 6.4 (10)
Noncurrent portion of asbestos liability - 948.7 329.0 (11)
Other accrued liabilities 64.2 53.8 6.6 53.7 (12)
--------- --------- ------- ---------
Total liabilities 857.8 2,611.6 130.1 1,756.9
Minority interest-preferred securities of affiliates 575.0 - - -
Minority interest, other - 42.0 - -
Series C ESOP preferred stock 49.0 - - -
Series E preferred stock - -
Common stock 201.0 361.1 - (361.1) (13)
Additional paid-in capital 332.6 4.4 - (4.4) (13)
Retained earnings (Accumulated deficit),
currency translation and other (191.5) 101.0 140.0 111.3 (14)
Unearned ESOP compensation (21.8) - - -
- -
--------- --------- ------- ---------
Total equity 369.3 466.5 140.0 (254.2)
--------- --------- ------- ---------
$ 1,802.1 $ 3,120.1 $ 270.1 $ 1,502.7
========= ========= ======= =========
FEL-PRO DISPOSITION
PRO FORMA OF BEARINGS PRO FORMA
ADJUSTMENTS BUSINESS COMBINED
----------------- ----------------- ----------------
Cash and equivalents $ (0.9) (15) $ (38.0) (28) $ 56.4
Accounts receivable (4.2) (16) (49.4) (28) 645.0
Investment in accounts receivable securitization - - 48.7
Inventories 23.4 (17) (42.3) (28) 694.4
Prepaid expenses and income tax benefits 2.2 (18) (5.8) (28) 183.1
------- -------- ---------
Total current assets 20.5 (135.5) 1,627.6
Property, plant and equipment 29.6 (19) (109.4) (28) 1,479.6
Goodwill 519.4 (20) (66.8) (28) 2,653.6
Other intangible assets - - 380.8
Business investments and other assets 7.7 (21) (74.9) (28) 744.0
------- -------- ---------
Total Assets $ 577.2 $ (386.6) $ 6,885.6
======= ======== =========
Short-term debt $ - $ (0.5) (28) $ 153.5
Accounts payable (2.0) (22) (38.5) (28) 408.2
Accrued compensation - (10.9) (28) 107.6
Accrued customer incentives - - 32.9
Restructuring reserves 15.0 (23) - 196.5
Current portion of asbestos liability - - 101.3
Other accrued liabilities - (22.0) (28) 410.7
------- -------- ---------
Total current liabilities 13.0 (71.9) 1,410.7
Long-term debt 491.8 (15) (2.1) (28) 2,452.7
Postemployment benefits (18.0) (24) (12.3) (28) 437.5
Noncurrent portion of asbestos liability - - 1,277.7
Other accrued liabilities 6.0 (25) (43.5) (28) 140.8
------- -------- ---------
Total liabilities 492.8 (129.8) 5,719.4
Minority interest-preferred securities of affiliates - - 575.0
Minority interest, other - - 42.0
Series C ESOP preferred stock - - 49.0
Series E preferred stock 225.0 (26) 225.0
Common stock - - 201.0
Additional paid-in capital - - 332.6
Retained earnings (Accumulated deficit),
currency translation and other (140.6) (27) (256.8) (236.6)
Unearned ESOP compensation - - (21.8)
-
------- -------- ---------
Total equity 84.4 (256.8) 549.2
------- -------- ---------
$ 577.2 $ (386.6) $ 6,885.6
======= ======== =========
See accompanying notes to Unaudited Pro Forma Balance Sheet.
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Notes to the Unaudited Pro Forma Balance Sheet
(in millions unless otherwise noted)
Relating to the purchase of T&N:
(1) To reflect the net effect of the following adjustments:
Cash Debt
------------- -------------
Proceeds from the issuance of debt $ 2,300.0 $2,300.0
Acquisition of T&N shares (2,434.2) -
Payoff of existing T&N debt (469.5) (469.5)
Cash used from T&N asbestos fund to pay down debt (130.0) (130.0)
Proceeds from the exercise of T&N stock options
at close 52.6 -
Estimated proceeds from sale of the Bearings Business 560.9 -
Pay down debt and other liabilities using proceeds from sale
of the Bearings Business (560.9) (436.6)
Proceeds from sale of KolbenSchmidt AG share
purchase options 43.5 -
Pay down debt using proceeds from sale of Kolben Schmidt AG
share purchase options (43.5) (43.5)
Debt issuance costs (32.2)
-
Other fees (27.0)
-
Penalty for early retirement of private placement debt
of T&N (25.0)
-
========= ========
$ (765.3) $1,220.4
========= ========
(2) To eliminate intercompany accounts receivable and accounts payable
between the Company and T&N
(3) To reflect the net effect of the following adjustments:
Adjustment of inventories acquired to estimated fair value $11.0
Elimination of intercompany profit in ending inventory (0.8)
-----
$10.2
=====
(4) To record the current deferred income tax effects of the balance sheet
adjustments
(5) To adjust property, plant and equipment acquired to estimated fair
value
(6) To record estimated acquired goodwill as the excess of the preliminary
purchase price paid and estimated costs incurred relating to the
acquisition over the estimated fair value of identifiable net assets
acquired
(7) To adjust other identifiable intangible assets acquired to estimated
fair value
(8) To reflect the net effect of the following adjustments:
Adjustment of pension assets acquired to estimated fair value $ 131.6
Debt issuance costs 32.2
Other (2.3)
------
$161.5
======
(9) To provide for estimated severance and exit costs relating to T&N
11
12
Notes to the Unaudited Pro Forma Balance Sheet
(in millions unless otherwise noted)
(10) To adjust postemployment benefit liabilities acquired to estimated
fair value
(11) To record estimated fair value of the acquired asbestos liability
(12) To reflect the net effect of the following adjustments:
Estimated fair value of reserves for returns, allowances and environmental $ 41.3
Adjustment of the noncurrent deferred income tax asset for pro forma balance sheet
adjustments 12.4
-------
$ 53.7
=======
(13) To eliminate the historical common stock and additional paid in capital
of T&N
(14) To reflect the net effect of the following adjustments:
Elimination of historical retained earnings of T&N, net of the Bearings Business $ 155.6
Penalty for early retirement of private placement debt of T&N (25.0)
Estimated purchased research and development costs (18.6)
Elimation of the profit in ending inventory on intercompany sales between
the Company and T&N (0.7)
-------
$ 111.3
=======
Relating to the purchase of Fel-Pro:
(15) To reflect the net effect of the following adjustments:
Cash Debt
------------- -------------
Proceeds from the issuance of debt $491.8 $491.8
Acquisition of Fel-Pro (491.8) -
Other fees (.9) -
====== ======
$ (.9) $491.8
====== ======
(16) To reflect the net effect of the following adjustments:
Elimination of intercompany accounts receivable $(2.0)
Increase in allowance for doubtful accounts (2.2)
-----
$(4.2)
=====
(17) To reflect the net effect of the following adjustments:
Adjustment of inventories acquired to estimated fair value $24.0
Elimination of intercompany profit in ending inventory (0.6)
-----
$23.4
=====
(18) To record the current deferred income tax effects of the balance sheet
adjustments
(19) To adjust property, plant and equipment acquired to estimated fair
value
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Notes to the Unaudited Pro Forma Balance Sheet
(in millions unless otherwise noted)
(20) To record estimated acquired goodwill as the excess of the preliminary
purchase price paid and estimated costs incurred relating to the
acquisition over the estimated fair value of identifiable net assets
acquired
(21) To record the noncurrent deferred income tax effects of the balance
sheet adjustments
(22) To eliminate intercompany accounts payable between the Company and
Fel-Pro
(23) To provide for estimated severance and exit costs relating to Fel-Pro
(24) To adjust postemployment benefits acquired to estimated fair value
(25) To record the estimated fair value reserves for returns, allowances
and environmental
(26) To record the issuance of Series E Mandatory Exchangeable Preferred
Stock, exchangeable into common stock, to the former owners of Fel-Pro
(27) To reflect the net effect of the following adjustments:
Elimination of the historical equity of Fel-Pro $(140.0)
Elimination of intercompany profit in ending inventory (.6)
-------
$(140.6)
=======
Relating to the divestiture of the Bearings Business:
(28) To eliminate the historical balance sheet of the Bearings Business.
The estimated effects of the sale of the Bearings Business are located
in the T&N pro forma adjustments.
13