FEDERAL
MOGUL News & Information
Corporate Communications
Contact: Kimberly A. Welch, media, 248-354-1916
Janet Halpin, investors, 248-354-8847
Federal-Mogul Announces Pre-Tax Profit from Operations of $13 million
for Third Quarter 2002
Southfield, Michigan, November 7, 2002...Federal-Mogul
Corporation (OTC Bulletin Board:FDMLQ) today reported third quarter
2002 sales of $1,345 million up four percent compared to $1,289
million in 2001. Pre-tax profit from operations was $13 million
compared to a loss of $87 million in third quarter 2001. Operating
results for third quarter 2002 and 2001 exclude restructuring and
impairment charges, Chapter 11 and Administration related expenses,
and net losses from divestitures. In addition, for the third quarter
of 2001, operating results exclude tax valuation allowances and gains
on debt-to-equity swaps.
Including the above items, in the third quarter 2002
Federal-Mogul reported a net loss of $73 million or $.89 per share,
compared to a net loss of $810 million or $10.31 per share in 2001.
"We remain on target with our operational improvements and we are
achieving our productivity goals as demonstrated by our improved
operating margin," said Frank Macher, chairman and chief executive
officer. "We are strengthening our future competitive advantage
through our investment today in new technology centers both in
Yokohama, Japan and Plymouth, Michigan. Our customers are responding
very favorably to the new products we have recently launched, such as
our ThermoQuiet(TM) brake pads, which were recently announced as a
2003 PACE Product Innovation Award finalist. I'm very excited about
the products we have currently under development."
Third quarter 2002 cash flow from operations, net of capital
expenditures, was a usage of $18 million compared to a usage of
$231 million for third quarter 2001. By geographic region, total third
quarter 2002 sales were: 61 percent, or $820 million, in North
America; 37 percent or $504 million, in Europe; and two percent or
$21 million in the Asia Pacific region.
- more -
- 2 -
Sales of original equipment parts totaled 56 percent of the
company's third quarter 2002 sales or $747 million compared with $677
million in 2001. Original equipment volume was up significantly in global
Friction Products and Pistons. By geographic region, third quarter 2002
original equipment sales were 49 percent in Europe, 48 percent in North
America and three percent in the Asia Pacific region.
Sales of replacement parts to aftermarket customers totaled 44
percent of the company's third quarter 2002 sales or $598 million compared
with $612 million in 2001. Softness in the North American aftermarket,
especially in seasonal products impacted negatively due to the mild and
dry weather, accounted for most of the shortfall. By geographic region,
third quarter 2002 aftermarket sales were 77 percent in North America and
23 percent in Europe.
Federal-Mogul is a global supplier of automotive components,
sub-systems, modules and systems serving the world's original equipment
manufacturers and the aftermarket. The company utilizes its engineering
and materials expertise, proprietary technology, manufacturing skill,
distribution flexibility and marketing power to deliver products, brands
and services of value to its customers. Federal-Mogul is focused on the
globalization of its teams, products and processes to bring greater
opportunities for its customers and employees, and value to its
constituents.
Headquartered in Southfield, Michigan, Federal-Mogul was founded in
Detroit in 1899 and today employs 49,000 people in 24 countries. On
October 1, 2001, Federal-Mogul decided to separate its asbestos
liabilities from its true operating potential by voluntarily filing for
financial restructuring in Bankruptcy Court in the United States and
Administration in the United Kingdom. For more information on
Federal-Mogul, visit the company's web site at
http://www.federal-mogul.com.
# # #
Information in this press release contains forward-looking statements, which are
not historical facts and involve risks and uncertainties. Actual results, events
and performance could differ materially from those contemplated by these
forward-looking statements including, without limitation, the cost and timing of
implementing restructuring actions, the effect of the Chapter 11 voluntary
reorganization filing by the company and certain U.S. subsidiaries and the joint
filing for Chapter 11 and Administration by the company's U.K. subsidiaries,
conditions in the automotive components industry, certain global and regional
economic conditions, and other factors detailed from time to time in the
company's filings with the Securities and Exchange Commission. Federal-Mogul
undertakes no obligation to update any forward-looking statement to reflect
events or circumstances after the date of this press release.
FEDERAL-MOGUL CORPORATION
STATEMENTS OF OPERATIONS
(Millions of Dollars, Except Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- ---------------------
2002 2001 2002 2001
-------- -------- --------- --------
Net sales $1,345.2 $1,288.8 $ 4,133.6 $4,164.9
Cost of products sold 1,095.5 1,052.2 3,331.3 3,326.0
-------- -------- --------- --------
Gross margin 249.7 236.6 802.3 838.9
Selling, general and administrative expenses 206.4 211.9 623.6 642.4
Amortization of goodwill and other intangible assets 2.7 29.2 9.8 89.4
Restructuring charge 17.0 6.1 28.0 38.0
Adjustment of assets held for sale and other long-lived
assets to fair value 24.6 496.6 27.2 497.3
Interest expense, net 29.8 71.4 90.0 235.2
Chapter 11 and Administration related reorganization expenses 33.4 13.7 76.4 14.4
Gain on early extinguishment of debt - (47.1) - (72.2)
Other (income) expense, net (0.2) 86.6 (14.0) 65.3
-------- -------- --------- --------
Loss Before Income Taxes and Cumulative Effect
of Change in Accounting Principle (64.0) (631.8) (38.7) (670.9)
Income tax expense 9.3 178.3 59.8 218.9
-------- -------- --------- --------
Loss Before Cumulative Effect of Change
in Accounting Principle (73.3) (810.1) (98.5) (889.8)
Cumulative effect of change in accounting for goodwill
and other intangible assets, net of applicable
income tax benefit - - 1,428.4 -
-------- -------- --------- --------
Net Loss $ (73.3) $ (810.1) $(1,526.9) $ (889.8)
======== ======== ========= ========
Loss Per Common Share:
Basic and Diluted
Loss before cumulative effect of change
in accounting principle $ (0.89) $ (10.31) $ (1.19) $ (12.13)
Cumulative effect of change in accounting for
goodwill and other intangible assets, net of
applicable income tax benefit - - 17.34 -
-------- -------- --------- --------
Loss Available for Common Shareholders $ (0.89) $ (10.31) $ (18.53) $ (12.13)
======== ======== ========= ========
Weighted Average Shares (Thousands)
Basic and Diluted 82,446 78,652 82,392 73,502
FEDERAL-MOGUL CORPORATION
BALANCE SHEETS
(Millions of Dollars)
(Unaudited)
September 30 December 31
2002 2001
------------ -----------
Assets
Cash and equivalents $ 339.3 $ 346.9
Accounts receivable 1,042.7 944.8
Inventories 792.5 721.9
Deferred taxes 68.9 55.4
Prepaid expenses and income tax benefits 189.5 177.6
--------- ---------
Total current assets 2,432.9 2,246.6
Property, plant and equipment 2,196.9 2,163.7
Goodwill 1,427.6 2,738.9
Other intangible assets 483.2 624.7
Asbestos-related insurance recoverable 763.1 723.2
Other noncurrent assets 505.6 556.1
--------- ---------
Total Assets $ 7,809.3 $ 9,053.2
========= =========
Liabilities and Shareholders' Equity (Deficit)
Short-term debt, including current portion of long-term debt $ 27.8 $ 24.9
Accounts payable 319.1 299.5
Accrued compensation 243.5 193.9
Restructuring and rationalization reserves 86.1 81.1
Other accrued liabilities 457.1 382.9
--------- ---------
Total current liabilities 1,133.6 982.3
Long-term debt 254.3 266.7
Postemployment benefits 844.4 819.8
Other accrued liabilities 212.7 258.5
Minority interest in consolidated subsidiaries 46.2 50.3
Liabilities subject to compromise 6,274.1 6,256.6
Shareholders' equity (deficit):
Series C ESOP preferred stock 28.0 28.0
Common stock 412.8 411.9
Additional paid-in capital 1,853.3 1,844.6
Accumulated deficit (2,641.9) (1,115.0)
Accumulated other comprehensive loss (608.0) (750.1)
Other (0.2) (0.4)
--------- ---------
Total Shareholders' Equity (Deficit) (956.0) 419.0
--------- ---------
Total Liabilities and Shareholders' Equity (Deficit) $ 7,809.3 $ 9,053.2
========= =========
FEDERAL-MOGUL CORPORATION
STATEMENTS OF CASH FLOWS
(Millions of Dollars)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
------------------- ------------------
2002 2001 2002 2001
------- ------- -------- -------
Cash Provided From (Used By) Operating Activities
Net loss $ (73.3) $(810.1) $(1,526.9) $(889.8)
Adjustments to reconcile net loss to net cash
provided from (used by) operating activities:
Depreciation and amortization 70.1 94.8 206.9 285.9
Gain on early extinguishment of debt -- (47.1) -- (72.2)
Restructuring charge 17.0 6.1 28.0 38.0
Chapter 11 and Administration related reorganization
expenses 33.4 13.7 76.4 14.4
Adjustment of assets held for sale and other
long-lived assets to fair value 24.6 496.6 27.2 497.3
(Gain) loss on sale of businesses 1.8 75.1 (4.7) 37.5
Cumulative effect of change in accounting principle -- -- 1,464.5 --
Postemployment benefits, including pensions 19.5 (0.5) 58.5 (1.5)
Change in deferred taxes 13.5 156.1 (21.1) 264.2
(Increase) decrease in accounts receivable 55.4 60.0 (67.1) 71.4
(Increase) decrease in inventories (12.7) (1.6) (60.9) 33.1
Increase (decrease) in accounts payable (5.0) (53.1) 16.2 (35.3)
Change in other assets and other liabilities (31.3) (62.4) 76.5 (119.4)
Payments against restructuring and
rationalization reserves (9.2) (12.6) (27.0) (50.1)
Payments of Chapter 11 and Administration costs (21.5) (13.7) (57.7) (14.4)
Payments against asbestos liability -- (48.5) -- (219.2)
------- ------ --------- -------
Net Cash Provided From (Used By) Operating Activities 82.3 (147.2) 188.8 (160.1)
Cash Provided From (Used By) Investing Activities
Expenditures for property, plant and equipment and
other long-term assets (100.9) (84.1) (228.1) (232.2)
Proceeds from the sale of property, plant and equipment -- -- -- 19.0
Proceeds from sale of businesses 3.7 86.6 25.5 241.8
Business acquisitions, net of cash acquired -- (18.8) -- (18.8)
------- ------ --------- -------
Net Cash Provided From (Used By) Investing Activities (97.2) (16.3) (202.6) 9.8
Cash Provided From (Used By) Financing Activities
Proceeds from the issuance of long-term debt 1.0 319.6 2.5 666.4
Principal payments on long-term debt (0.2) (36.3) (2.1) (171.8)
Principal payments on DIP credit facility (3.9) -- (10.0) --
Increase (decrease) in short-term debt 10.8 (46.1) 3.3 (71.4)
Fees paid for debt issuance and other securities -- -- -- (18.5)
(Repurchase) sale of accounts receivable
under securitization -- 40.0 -- (89.6)
Dividends -- (0.4) -- (1.9)
Other -- (6.8) -- (9.0)
------- ------ --------- -------
Net Cash Provided From (Used By) Financing Activities 7.7 270.0 (6.3) 304.2
------- ------ --------- -------
Effect of Foreign Currency Exchange Rate Fluctuations On Cash (4.0) 3.3 12.5 2.1
------- ------ --------- -------
Increase (decrease) in Cash and Equivalents (11.2) 109.8 (7.6) 156.0
Cash and equivalents at beginning of period 350.5 153.4 346.9 107.2
------- ------ --------- --------
Cash and Equivalents at End of Period $ 339.3 $263.2 $ 339.3 $ 263.2
======= ====== ========= ========
FEDERAL-MOGUL CORPORATION
NET EARNINGS RECONCILIATION
(Millions of Dollars, Except Per Share Data)
(Unaudited)
Three Months Ended September 30, 2002
-------------------------------------------------------------------
Adjustments
-----------
Restructuring/ Chapter 11 (Gain)/
From Impairment Related Loss from As
Operations Charge Items Divestitures Reported
---------- -------------- ---------- ------------ --------
Net sales $ 1,345.2 $ - $ - $ - $1,345.2
Cost of products sold 1,095.5 - - - 1,095.5
---------- -------------- ---------- ------------ --------
Gross margin 249.7 - - - 249.7
Selling, general and administrative
expenses 206.4 - - - 206.4
Amortization of goodwill and other
intangible assets 2.7 - - - 2.7
Restructuring charge - 17.0 - - 17.0
Adjustment of assets held for sale and
other long-lived assets to fair value - 24.6 - - 24.6
Interest expense, net 29.8 - - - 29.8
Chapter 11 and Administration related
reorganization expenses - - 33.4 - 33.4
Other income, net (2.1) - - 1.9 (0.2)
---------- -------------- ---------- ------------ --------
Earnings (Loss) Before Income Taxes 12.9 (41.6) (33.4) (1.9) (64.0)
Income tax expense (benefit) 16.7 (4.7) (2.7) - 9.3
---------- -------------- ---------- ------------ --------
Net Loss $ (3.8) $ (36.9) $ (30.7) $ (1.9) $ (73.3)
========== ============== ========== ============ ========
Basic Loss Per Common Share $ (0.05) $ (0.45) $ (0.37) $ (0.02) $ (0.89)
========== ============== ========== ============ ========
FEDERAL-MOGUL CORPORATION
NET EARNINGS RECONCILIATION
(Millions of Dollars, Except Per Share Data)
(Unaudited)
Nine Months ended September 30, 2002
----------------------------------------------------------------------------------------------
Adjustments
----------------------------------------------------------------------
Cumulative
Restructuring/ Chapter 11 (Gain)/ Effect of Change Tax
From Impairment Related Loss from in Accounting Valuation As
Operations Charge Items Divestitures Principle Allowance Reported
---------- -------------- ---------- ------------ ---------------- --------- ---------
Net sales $ 4,133.6 $ - $ - $ - $ - $ - $ 4,133.6
Cost of products sold 3,331.3 - - - - - 3,331.3
---------- -------------- ---------- ------------ ---------------- --------- --------
Gross margin 802.3 - - - - - 802.3
Selling, general and administrative
expenses 623.6 - - - - - 623.6
Amortization of goodwill and other
intangible assets 9.8 - - - - - 9.8
Restructuring charge - 28.0 - - - - 28.0
Adjustment of assets held for sale
and other long-lived assets to fair
value - 27.2 - - - - 27.2
Interest expense, net 90.0 - - - - - 90.0
Chapter 11 and Administration
related reorganization expenses - - 76.4 - - - 76.4
Other income, net (9.3) - - (4.7) - - (14.0)
---------- -------------- ---------- ----------- ---------------- --------- --------
Earnings (Loss) Before Income
Taxes and Cumulative Effect of
Change in Accounting Principle 88.2 (55.2) (76.4) 4.7 - - (38.7)
Income tax expense (benefit) 51.6 (9.2) (5.9) - - 23.3 59.8
---------- -------------- ---------- ----------- ---------------- --------- --------
Earnings (Loss) Before Cumulative
Effect of Change in Accounting
Principle 36.6 (46.0) (70.5) 4.7 - (23.3) (98.5)
Cumulative effect of change in
accounting for goodwill and other
intangible assets, net of
applicable income tax benefit - - - - 1,428.4 - 1,428.4
---------- -------------- ---------- ---------- ---------------- --------- --------
Net Earnings (Loss) $ 36.6 $ (46.0) $ (70.5) $ 4.7 $ (1,428.4) $ (23.3) $(1,526.9)
========== ============== ========== =========== ================ ========= =========
Basic Earnings (Loss) Per $ 0.44 $ (0.56) $ (0.85) $ 0.06 $ (17.34) $ (0.28) $ (18.53)
Common Share ========== ============== ========== =========== ================ ========= =========