Exhibit 99
Contact: Kimberly A. Welch, media, 248-354-1916
Janet Halpin, investors, 248-354-8847
FOR IMMEDIATE RELEASE
Federal-Mogul Reports Fourth Quarter and Full Year 2002 Results
- ---------------------------------------------------------------
Southfield, Michigan, February 13, 2003 Federal-Mogul Corporation (OTC
Bulletin Board: FDMLQ) today reported its financial results for the fourth
quarter and full year of 2002. Fourth quarter 2002 sales were $1,289 million,
compared to $1,292 million for the same period last year. For the fourth quarter
2002, Federal-Mogul reported a net loss of $113 million, compared to a net loss
of $112 million in 2001. Excluding charges for restructuring activities, asset
impairments, losses from divestitures of businesses and Chapter 11 and
Administration-related expenses, Federal-Mogul reported a net loss from
operations of $17 million in the fourth quarter 2002 compared with a net loss
from operations of $23 million for the same period last year. Fourth quarter
2002 net cash provided from operating activities was $68 million.
For the full year, Federal-Mogul posted sales of $5,422 million, compared
to full year 2001 sales of $5,457 million. The full year net loss was $1,629
million for 2002, compared to a net loss in 2001 of $1,002 million. The full
year net loss reported for 2002 included a $1,418 million charge for a
cumulative effect of change in accounting from the adoption of Statement of
Financial Accounting Standard No. 142 (FAS 142). Full year 2002 net cash
provided from operating activities was $257 million.
Excluding charges for restructuring, impairment, gains and losses on sales
of businesses, and Chapter 11 and Administration-related expenses, Federal-Mogul
reported full-year 2002 earnings before income taxes and cumulative effect of
change in accounting principle of $100 million compared to a loss of $178
million in 2001. The loss reported in 2002 excludes amortization of goodwill and
certain other intangible assets as a result of the adoption of FAS 142. Also
excluded is a portion of interest expense on pre-petition debt as a result of
the restructuring proceedings. Excluding the aforementioned items, operating
results in 2002 showed gains over the prior year due to productivity
improvements. These improvements were offset by significant increases in pension
costs.
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Due to the market performance of the company's pension plans' investments
over the past several years, Federal-Mogul contributed $26 million to its United
States pension plan. Federal-Mogul has a schedule of contributions to pay
approximately one million British pounds per month in 2003 in the United
Kingdom. Funding strategies are currently under review for its U.S. plan.
As part of the company's ongoing efforts to reduce its cost structure,
Federal-Mogul's global employment decreased four percent in 2002 to 47,000
employees.
"From an operations standpoint, our efforts in 2002 have resulted in
profitability improvements and productivity increases. We are using all of our
resources, both human and capital, to improve and grow our operations for the
future. In addition, our announced plan to acquire Honeywell's global Bendix
friction-materials business to grow one of our core product lines further
signifies the exciting future we have ahead of us," said Frank Macher, chairman
and chief executive officer. "Our recently announced agreement in principle with
our major U.S. creditors on a consensual Plan of Reorganization is evidence we
are on-track to successfully emerge from Chapter 11 this year with a viable
capital structure and operations free from asbestos liability. We will emerge as
a stronger Federal-Mogul ready to capitalize on our sustainable competitive
advantage in both product and process technologies."
Aftermarket Sales
- -----------------
Sales of replacement parts to aftermarket customers totaled 45 percent of
the company's 2002 sales. Full year 2002 aftermarket sales were $2,423 million
compared to $2,542 million in 2001. Excluding divestitures and the effects of
movement in foreign exchange, sales decreased by two percent. By geographic
region, 2002 sales were 77 percent in the Americas and 23 percent in Europe and
Africa. Fourth quarter 2002 aftermarket sales were $563 million, compared to
$602 million for fourth quarter 2001. Excluding divestitures and the effects of
movement in foreign exchange, sales decreased by seven percent.
"We are pleased with our performance in this difficult market as we have
been able to increase share through the strength of our brands and new product
introductions," said Macher. "Our revolutionary one-piece Wagner(R)
ThermoQuiet(TM) premium disc brake pads have exceeded customer expectations, and
we are very proud of this product's recognition as a PACE Award finalist for
significant innovation."
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Federal-Mogul earned several notable honors from customers for its 2002
performance, being named Supplier of the Year for the second consecutive year by
Aftermarket Auto Parts Alliance, and Sales and Service Vendor of the Year by
O'Reilly Auto Parts. In addition, Federal-Mogul was recognized with brand
marketing awards including 18 Global Design Awards, the most ever won in a
single year, from Aftermarket Business magazine.
Original Equipment Sales
- ------------------------
Sales of original equipment (OE) parts totaled 55 percent of the company's
full year sales. Full year 2002 original equipment sales were $2,999 million,
compared to $2,915 million in 2001. Excluding divestitures and the effects of
movement in foreign exchange, sales increased by three percent. By geographic
region, 2002 sales were 48 percent in the Americas, 49 percent in Europe and
Africa, and three percent in the rest of the world. Fourth quarter 2002 sales
were $726 million, compared to $690 million in 2001. Excluding divestitures and
the effects of movement in foreign exchange, sales were essentially flat.
Full year original equipment sales for the global Friction product line
were $374 million, compared to $339 million in 2001. Excluding the effects of
movement in foreign exchange, sales increased by eight percent. By geographic
region, 2002 Friction OE sales were 36 percent in the Americas and 64 percent in
Europe and Africa and the rest of the world. In the fourth quarter, Friction OE
sales were $96 million, up 16 percent compared to fourth quarter 2001 sales
excluding the effects of movement in foreign exchange.
Full year original equipment sales for the global powertrain product lines
of Bearings, Pistons, Piston Rings and Liners, and Sintered Valve Train and
Transmission Products were $1,747 million, compared to $1,712 million in 2001.
Excluding divestitures and the effects of movement in foreign exchange, sales
increased by three percent. By geographic region, 2002 sales of the powertrain
OE products were 37 percent in North America, 62 percent in Europe and one
percent in the rest of the world. In the fourth quarter, powertrain OE sales
were $425 million, compared to $406 million in 2001. Excluding divestitures and
the effects of movement in foreign exchange, sales were flat.
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Full year original equipment sales for the global product lines of Sealing
Systems and Systems Protection were $639 million, compared to $630 million in
2001. Excluding the effects of movement in foreign exchange, sales were flat. By
geographic region, 2002 Sealing Systems and Systems Protection OE sales were 74
percent in North America, 25 percent in Europe and Africa, and one percent in
the rest of the world. In the fourth quarter, Sealing Systems and Systems
Protection OE sales were $150 million, compared to $146 million in 2001.
Excluding the effects of movement in foreign exchange, sales increased one
percent.
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 47,000 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 under
Chapter 11 of the Bankruptcy Code 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.
# # #
Statements contained in this press release, which are not historical fact,
constitute "Forward-Looking Statements." Actual results may differ materially
due to numerous important factors that are described in Federal-Mogul's most
recent report to the SEC on Form 10-K, which may be revised or supplemented in
subsequent reports to the SEC on Forms 10-Q and 8-K. Such factors include, among
others, the cost and timing of implementing restructuring actions, the results
of the Chapter 11 and Administration proceedings, the Company's ability to
generate cost savings or manufacturing efficiencies to offset or exceed
contractually or competitively required price reductions or price reductions to
obtain new business, conditions in the automotive industry, and certain global
and regional economic conditions. Federal-Mogul does not intend or assume any
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 Year Ended
December 31 December 31
------------------ -------------------
2002 2001 2002 2001
-------- -------- -------- ---------
Net sales $1,288.8 $1,292.1 $ 5,422.4 $ 5,457.0
Cost of products sold 1,049.0 1,055.8 4,380.3 4,381.7
-------- -------- --------- ---------
Gross margin 239.8 236.3 1,042.1 1,075.3
Selling, general and administrative expenses 202.7 197.5 826.3 840.0
Amortization of goodwill and other intangible assets 4.3 25.9 14.1 115.3
Restructuring charge 15.3 - 43.3 38.0
Adjustment of assets held for sale and other long-lived
assets to fair value 43.0 47.8 70.2 545.1
Interest expense, net 32.8 39.6 122.8 274.8
Chapter 11 and Administration related reorganization expenses 31.0 42.9 107.4 57.3
Gain on early extinguishment of debt - - - (72.2)
Other (income) expense, net (7.8) (6.3) (21.8) 59.0
-------- -------- -------- ---------
Loss Before Income Taxes and Cumulative Effect
of Change in Accounting Principle (81.5) (111.1) (120.2) (782.0)
Income tax expense 31.0 0.6 90.8 219.5
-------- -------- --------- ---------
Loss Before Cumulative Effect of Change
in Accounting Principle (112.5) (111.7) (211.0) (1,001.5)
Cumulative effect of change in accounting for goodwill
and other intangible assets, net of applicable
income tax benefit - - 1,417.9 -
-------- -------- -------- ---------
Net Loss $ (112.5) $ (111.7) $(1,628.9) $(1,001.5)
-------- -------- --------- ---------
Loss Per Common Share:
Basic and Diluted
Loss before cumulative effect of change
in accounting principle $ (1.33) $ (1.37) $ (2.54) $ (13.27)
Cumulative effect of change in accounting for
goodwill and other intangible assets, net of
applicable income tax benefit - - 17.08 -
-------- ----- ----- ------
Loss Available for Common Shareholders $ (1.33) $ (1.37) $ (19.62) $ (13.27)
======== ======== ========= =========
Weighted Average Shares (Thousands)
Basic and Diluted 84,886 81,803 83,022 75,598
FEDERAL-MOGUL CORPORATION
BALANCE SHEETS
(Millions of Dollars)
(Unaudited)
December 31
----------------------
2002 2001
---------- ---------
Assets
Cash and equivalents $ 395.1 $ 346.9
Accounts receivable 954.0 944.8
Inventories 800.1 721.9
Deferred taxes 35.4 55.4
Prepaid expenses and income tax benefits 174.5 177.6
--------- ---------
Total current assets 2,359.1 2,246.6
Property, plant and equipment 2,273.0 2,163.7
Goodwill 1,401.0 2,738.9
Other intangible assets 515.8 624.7
Asbestos-related insurance recoverable 780.6 723.2
Prepaid pension costs 361.5 354.5
Other noncurrent assets 222.3 201.6
--------- ---------
Total Assets $ 7,913.3 $ 9,053.2
--------- ---------
Liabilities and Shareholders' Equity (Deficit)
Short-term debt, including current portion of long-term debt $ 346.1 $ 24.9
Accounts payable 318.9 299.5
Accrued compensation 242.1 193.9
Restructuring and rationalization reserves 90.8 81.1
Accrued taxes 93.6 47.2
Other accrued liabilities 332.3 335.7
--------- ---------
Total current liabilities 1,423.8 982.3
Liabilities subject to compromise 6,057.3 6,256.6
Long-term debt 14.3 266.7
Postemployment benefits 1,541.2 819.8
Long-term portion of deferred income taxes 52.4 96.5
Other accrued liabilities 186.3 162.0
Minority interest in consolidated subsidiaries 45.7 50.3
Shareholders' equity (deficit):
Series C ESOP preferred stock 28.0 28.0
Common stock 435.6 411.9
Additional paid-in capital 2,060.5 1,844.6
Accumulated deficit (2,743.9) (1,115.0)
Accumulated other comprehensive loss (1,187.8) (750.1)
Other (0.1) (0.4)
--------- ---------
Total Shareholders' Equity (Deficit) (1,407.7) 419.0
--------- ---------
Total Liabilities and Shareholders' Equity (Deficit) $ 7,913.3 $ 9,053.2
--------- ---------
FEDERAL-MOGUL CORPORATION
STATEMENTS OF CASH FLOWS
(Millions of Dollars)
(Unaudited)
Three Months
Ended Year Ended
December 31 December 31
--------------- ----------------
2002 2001 2002 2001
---- ---- ---- ----
Cash Provided From (Used By) Operating Activities
Net loss $(112.5) $ (111.7) $(1,628.9) $(1,001.5)
Adjustments to reconcile net loss to net cash provided from
(used by) operating activities:
Depreciation and amortization 70.2 87.8 277.1 373.7
Gain on early extinguishment of debt - - - (72.2)
Restructuring charge 15.3 - 43.3 38.0
Chapter 11 and Administration related reorganization expenses 31.0 42.9 107.4 57.3
Adjustment of assets held for sale and other
long-lived assets to fair value 43.0 47.8 70.2 545.1
(Gain) loss on sale of businesses 3.6 (1.2) (1.1) 36.3
Cumulative effect of change in accounting principle - - 1,464.5 -
Change in postemployment benefits, including pensions 27.9 9.9 111.7 39.5
Payments into pension plans (28.9) (6.6) (35.2) (20.9)
Change in deferred taxes (38.1) (44.9) (59.2) 219.2
Decrease in accounts receivable 111.2 45.0 44.1 116.4
(Increase) decrease in inventories 14.1 7.1 (46.8) 40.2
Increase (decrease) in accounts payable (9.8) 117.9 6.4 82.6
Change in other assets and other liabilities 13.2 24.5 60.1 (111.6)
Payments against restructuring and
rationalization reserves (26.1) (11.9) (53.1) (62.0)
Payments of Chapter 11 and Administration costs (46.4) (14.0) (104.0) (28.4)
Payments against asbestos liability, net of insurance receipts - 3.3 - (215.9)
------- -------- --------- ---------
Net Cash Provided From Operating Activities 67.7 195.9 256.5 35.8
Cash Provided From (Used By) Investing Activities
Expenditures for property, plant and equipment and
other long-term assets (111.0) (81.6) (339.1) (313.8)
Proceeds from the sale of property, plant and equipment - - - 19.0
Proceeds from sale of businesses 9.1 1.0 34.6 242.8
Business acquisitions, net of cash acquired - - - (18.8)
------- -------- --------- ---------
Net Cash Used By Investing Activities (101.9) (80.6) (304.5) (70.8)
Cash Provided From (Used By) Financing Activities
Proceeds from the issuance of long-term debt 4.1 0.8 6.6 667.2
Principal payments on long-term debt (0.3) - (2.4) (171.8)
Borrowings from DIP credit facility 75.0 250.0 75.0 250.0
Principal payments on DIP credit facility (0.3) - (10.3) -
Increase (decrease) in short-term debt 3.2 7.3 6.5 (64.1)
Fees paid for debt issuance and other securities - (19.5) - (38.0)
Repurchase of accounts receivable under securitization - (258.5) - (348.1)
Other - (8.8) - (26.2)
------- -------- --------- ---------
Net Cash Provided From (Used By) Financing Activities 81.7 (28.7) 75.4 269.0
------- -------- --------- ---------
Effect of Foreign Currency Exchange Rate Fluctuations On Cash 8.3 (2.9) 20.8 5.7
------- -------- --------- ---------
Increase in Cash and Equivalents 55.8 83.7 48.2 239.7
Cash and equivalents at beginning of period 339.3 263.2 346.9 107.2
------- -------- --------- ---------
Cash and Equivalents at End of Period $ 395.1 $ 346.9 $ 395.1 $ 346.9
======= ======== ========= =========
FEDERAL-MOGUL CORPORATION
NET EARNINGS RECONCILIATION
(Millions of Dollars, Except Per Share Data)
(Unaudited)
Three Months Ended December 31, 2002
----------------------------------------------------------------------
Adjustments
---------------------------------------------------
Restructing Chapter 11 (Gain)/ Tax
From Impairment Related Loss from Valuation As
Operations Charge Items Divestitures Allowance Reported
---------- ----------- ---------- ------------ --------- ---------
Net sales $ 1,288.8 $ - $ - $ - $ - $ 1,288.8
Cost of products sold 1,049.0 - - - - 1,049.0
---------- ---------- ---------- ---------- --------- ---------
Gross margin 239.8 - - - - 239.8
Selling, general and administrative
expenses 202.7 - - - - 202.7
Amortization of goodwill and other
intangible assets 4.3 - - - - 4.3
Restructuring charge - 15.3 - - - 15.3
Adjustment of assets held for sale and
other long-lived assets to fair value - 43.0 - - - 43.0
Interest expense, net 32.8 - - - - 32.8
Chapter 11 and Administration related
reorganization expenses - - 31.0 - - 31.0
Other (income) expense, net (11.4) - - 3.6 - (7.8)
---------- ---------- --------- ---------- --------- ---------
Earnings (Loss) Before Income Taxes 11.4 (58.3) (31.0) (3.6) - (81.5)
Income tax expense (benefit) 28.6 (13.2) (5.1) (0.3) 21.0 31.0
---------- ---------- --------- ---------- --------- ---------
Net Loss $ (17.2) $ (45.1) $ (25.9) $ (3.3) (21.0) $ (112.5)
========== ========= ========= ========== ========= =========
Basic Loss Per Common Share $ (0.20) $ (0.53) $ (0.31) $ (0.04) (0.25) $ (1.33)
========== ========== ========= ========== ========= =========
FEDERAL-MOGUL CORPORATION
NET EARNINGS RECONCILIATION
(Millions of Dollars, Except Per Share Data)
(Unaudited)
Year Ended December 31, 2002
--------------------------------------------------------------------------------------------
Adjustments
-------------------------------------------------------------------
Cummulative
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 $ 5,422.4 $ - $ - $ - $ - $ - $ 5,422.4
Cost of products sold 4,380.3 - - - - - 4,380.3
---------- ------------- ---------- ------------ ---------------- --------- ---------
Gross margin 1,042.1 - - - - - 1,042.1
Selling, general and administrative
expenses 826.3 - - - - - 826.3
Amortization of goodwill and other
intangible assets 14.1 - - - - - 14.1
Restructuring charge - 43.3 - - - - 43.3
Adjustment of assets held for sale and
other long-lived assets to fair value - 70.2 - - - - 70.2
Interest expense, net 122.8 - - - - - 122.8
Chapter 11 and Administration related
reorganization expenses - - 107.4 - - - 107.4
Other income, net (20.7) - - (1.1) - - (21.8)
---------- ------------- ---------- ------------ ---------------- --------- --------
Earnings (Loss) Before Income Taxes
and Cumulative Effect of Change
in Accounting Principle 99.6 (113.5) (107.4) 1.1 - - (120.2)
Income tax expense (benefit) 79.9 (22.4) (10.9) (0.3) - 44.5 90.8
---------- ------------- ---------- ------------ ---------------- --------- ---------
Earnings (Loss) Before Cumulative
Effect of Change in Accounting
Principle 19.7 (91.1) (96.5) 1.4 - (44.5) (211.0)
Cumulative effect of change in
accounting for goodwill and other
intangible assets, net of applicable
income tax benefit - - - - 1,417.9 - 1,417.9
---------- ------------- ---------- ------------ ---------------- --------- ---------
Net Earnings (Loss) $ 19.7 $ (91.1) $ (96.5) $ 1.4 $ (1,417.9) $ (44.5) $(1,628.9)
---------- ------------- ---------- ------------ ---------------- --------- ---------
Basic Earnings (Loss) Per Common
Share $ 0.24 $ (1.10) $ (1.16) $ 0.02 $ (17.08) $ (0.54) $ (19.62)
---------- ------------- ---------- ------------ ---------------- --------- ---------
FEDERAL-MOGUL CORPORATION
NET EARNINGS RECONCILIATION
(Millions of Dollars, Except Per Share Data)
(Unaudited)
Three Months Ended December 31, 2001
---------------------------------------------------------------
Adjustments
----------------------------------------
Chapter 11
From Impairment Related As
Operations Charge Items Divestitures Reported
---------- ---------- ---------- ------------ --------
Net sales $ 1,292.1 $ - $ - $ - $1,292.1
Cost of products sold 1,055.8 - - - 1,055.8
---------- ---------- ---------- ------------ --------
Gross margin 236.3 - - - 236.3
Selling, general and administrative
expenses 197.5 - - - 197.5
Amortization of goodwill and other
intangible assets 25.9 - - - 25.9
Adjustment of assets held for sale and
other long-lived assets to fair value - 47.8 - - 47.8
Interest expense, net 39.6 - - - 39.6
Chapter 11 and Administration related
reorganization expenses - - 42.9 - 42.9
Other income, net (5.1) - - (1.2) (6.3)
---------- ---------- ---------- ------------ --------
Earnings (Loss) Before Income Taxes (21.6) (47.8) (42.9) 1.2 (111.1)
Income tax expense (benefit) 1.3 4.7 (1.8) (3.6) 0.6
---------- ---------- ---------- ------------ --------
Net Earnings (Loss) $ (22.9)$ (52.5) $ (41.1) $ 4.8 $ (111.7)
========== ========== ========== ============ ========
Basic Earnings (Loss) Per Common Share $ (0.28) $ (0.64) $ (0.50) $ 0.05 $ (1.37)
========== ========== ========== ============ ========
FEDERAL-MOGUL CORPORATION
NET EARNINGS RECONCILIATION
(Millions of Dollars Except Per Share Data)
(Unaudited)
Year Ended December 31, 2001
---------------------------------------------------------------------------------------
Adjustments
-------------------------------------------------------------------
Restructuring/ Chapter 11 Tax
From Impairment Related Gain on Debt Valuation As
Operations Charge Items Divestitures Exchanges Allowance Reported
---------- -------------- ---------- ------------ ------------ --------- ---------
Net sales $ 5,457.0 $ - $ - $ - $ - $ - $ 5,457.0
Cost of products sold 4,381.7 - - - - - 4,381.7
---------- -------------- ---------- ---------- ------------ ---------- ---------
Gross margin 1,075.3 - - - - - 1,075.3
Selling, general and administrative
expenses 840.0 - - - - - 840.0
Amortization of goodwill and other
intangible assets 115.3 - - - - - 115.3
Restructuring charge - 38.0 - - - - 38.0
Adjustment of assets held for sale and
other long-lived assets to fair value - 545.1 - - - - 545.1
Interest expense, net 274.8 - - - - - 274.8
Chapter 11 and Administration related
reorganization expenses - - 57.3 - - - 57.3
Gain on early extinguishment of debt - - - - (72.2) - (72.2)
Other expense, net 22.7 - - 36.3 - - 59.0
---------- -------------- ---------- ---------- ------------ ---------- ---------
Loss Before Income Taxes and
Extraordinary item (177.5) (583.1) (57.3) (36.3) 72.2 - (782.0)
Income tax expense (benefit) 32.0 (39.1) (1.8) 42.6 8.8 177.0 219.5
---------- -------------- ---------- ---------- ------------ ---------- ---------
Net Earnings (Loss) $ (209.5) $ (544.0) $ (55.5) $ (78.9) $ 63.4 $ (177.0) $(1,001.5)
---------- -------------- ---------- ---------- ------------ ---------- ---------
Basic Earnings (Loss) Per Common
Share $ (2.80) $ (7.20) $ (0.73) $ (1.04) $ 0.84 $ (2.34) $ (13.27)
---------- -------------- ---------- ---------- ------------ ---------- ---------