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, 2000
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
SALARIED EMPLOYEES' INVESTMENT PROGRAM
26555 Northwestern Highway
Southfield, MI 48034
The Plan holds shares of common stock (without par value) of
Federal-Mogul Corporation (see address above).
FEDERAL-MOGUL CORPORATION
SALARIED EMPLOYEES' INVESTMENT PROGRAM
TABLE OF CONTENTS
Page Number
-----------
Report of Independent Auditors
Financial Statements of the Years Ended December 31, 2000 and 1999
Statement of Net Assets Available for Plan Benefits 1
Statement of Changes in Net Assets Available for Plan Benefits 2
Notes to Financial Statements 3-11
Supplemental Schedules for the Year Ended December 31, 2000
Schedule H, Line 4I - Schedule of Assets Held for Investment
Purposes 12
Exhibit 23 - Consent of Ernst & Young LLP
Pursuant to the requirements of the Securities Exchange Act of 1934, The
Federal-Mogul Corporation Salaried Employees' Investment Program has duly caused
this annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
FEDERAL-MOGUL CORPORATION
SALARIED EMPLOYEES' INVESTMENT PROGRAM
By: /s/ David M. Sherbin
----------------------------------------
David M. Sherbin
Vice President, Deputy General
Counsel and Secretary
Dated: June 27, 2001
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 Salaried Employees' Investment Program
as of December 31, 2000 and 1999, 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, 2000 and 1999, 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.
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 for investment purposes at end of year as of December 31, 2000 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, MI
June 22, 2001
FEDERAL-MOGUL CORPORATION
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
SALARIED EMPLOYEES' INVESTMENT PROGRAM
December 31
2000 1999
--------------- ---------------
Assets
Cash equivalents $ 333,696 $ 313,398
Investments in master trust (See Note 7) 287,831,249 356,206,795
Federal-Mogul Corporation (FMC) Common Stock 1,443 12,558
Federal-Mogul Corporation (FMC) Preferred Stock 38,102,610 48,637,362
Participant loans receivable - 2,643,133
Transfers receivable 49,726 -
--------------- ---------------
Total Assets 326,318,724 407,813,246
Liabilities
Accrued Expenses 1,662 11,463
Advance from FMC 322,198 468,437
Forfeited accounts owed to FMC (See Note 1) 48,299 30,827
Senior ESOP Notes (See Note 6) - 7,879,941
--------------- ---------------
Total Liabilities 372,159 8,390,668
--------------- ---------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 325,946,565 $ 399,422,578
=============== ===============
See notes to financial statements
1
FEDERAL-MOGUL CORPORATION
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
SALARIED EMPLOYEES' INVESTMENT PROGRAM
December 31
2000 1999
---------------- ----------------
Additions
Dividends and Interest $ 17,303,860 $ 16,152,835
Contributions:
Participants 26,449,952 16,868,381
Federal-Mogul Corporation 11,463,643 7,560,250
---------------- ----------------
Total Additions 55,217,455 40,581,466
Deductions
Benefits paid to participants 57,968,785 21,133,034
Portion of Company Match Account forfeited upon
withdrawal of members (see Note 3) 17,472 273,876
Interest expense 457,778 973,485
---------------- ----------------
Total Deductions 58,444,035 22,380,395
Transfers from another FMC investment program - 200,154,661
Net unrealized appreciation/(depreciation) in fair value of
assets held outside the Master Trust 245,074 (49,868,642)
Net unrealized depreciation in fair value of
investments in Master Trust (See Note 7) (70,494,507) (30,862,837)
---------------- ----------------
Net increase/(decrease) (73,476,013) 137,624,253
Net assets available for plan benefits at beginning of year 399,422,578 261,798,325
---------------- ----------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 325,946,565 $ 399,422,578
================ ================
See notes to financial statements
2
Federal-Mogul Corporation
Salaried Employees' Investment Program
Notes to Financial Statements
December 31, 2000 and 1999
1. Description of the Plan
The following description of the Federal-Mogul Corporation Salaried 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 1999, the Plan received assets transferred from other investment programs
of Federal-Mogul Corporation (the "Company").
General
The Plan is a defined contribution plan which provides eligible salaried
employees of the Company with a program for making voluntary pre-tax and after-
tax contributions. Substantially all domestic salaried 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).
Master Trust and ESOP Trust
The Plan invests participant directed contributions 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 State Street Bank (the "Trustee")
and Comerica Bank (the "ESOP Trustee"). The agreements provide, among other
things, that the Trustee and ESOP Trustee safekeep all investments, and keep
account for all investments, receipts, and disbursements, benefit payments, and
other transactions.
Contributions & Vesting
Participants are immediately vested in their contributions plus actual earnings
thereon. Company matching contributions are made with Company Series C
convertible preferred stock or common stock. Vesting in the Company's matching
contribution portion of their accounts plus actual earnings thereon is based on
years of continuous service, as follows:
1. Company Match
(% of participant contribution) 50%
2. Matching Amount
(% of participant compensation) 8%
3. Maximum Contribution
(% of participant compensation) 20%
4. Vesting Percent
Years of Service
1 0%
2 25%
3 50%
4 75%
5 100%
5. Eligibility to Participate
Eligibility for employee to contribute Immediate
Eligibility for company match Immediate
3
Contributions & Vesting (continued)
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.
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.
Shares of Federal-Mogul Corporation Series C 7-1/2% convertible preferred stock
which are not vested at the time of a participant's withdrawal from the Plan
become available for allocation to other Plan participants.
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, the Bond Fund, the Large Cap Equity Fund, the Mid Cap Equity Fund, the
Small Cap Equity Fund, the International Fund, the Brokerage Account and 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.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles 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.
4
2. Significant Account Policies (continued)
Investment Valuation and Income Recognition
Investments in Federal-Mogul Corporation common stock, the Bond Fund, the Large
Cap Equity Fund, the Mid Cap Equity Fund, the Small Cap Equity Fund, the
International Fund, and the Brokerage Account are valued at quoted market
prices. Federal-Mogul Corporation Series C 7-1/2% convertible preferred stock
is allocated at the stated value of $63.75 per share and is convertible into two
shares of Federal-Mogul Corporation common stock upon withdrawal from the Plan.
The Preferred Stock Fund is valued at $63.75 or twice the quoted market value of
Federal-Mogul Corporation common stock, whichever is greater. The Stable Value
Fund is valued at fair market value as estimated by LaSalle National 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.
Payment of Benefits
Benefits are recorded when paid.
Reclassifications
Certain amounts in the 1999 financial statements have been reclassified to
conform to the 2000 presentation.
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, 2000
and December 31, 1999, the Master Trust purchased 6,094,700 and 1,443,654 shares
of common stock of Federal-Mogul Corporation for a total cost of $37,289,450 and
$43,585,601 respectively.
Fees incurred for legal, accounting 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, to discontinue its contributions at any time and 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. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Administrator
believes 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 exempt.
6. Senior ESOP Notes
The Employee Stock Ownership Trust issued $61,750,000 of Senior ESOP Notes in a
private placement on February 15, 1989. The Senior ESOP Notes were paid off
fully in November 2000. The notes were payable in semi-annual installments,
including interest at 6.63%.
5
7. Investments in Master Trust & ESOP Trust
Certain of the Plan's investments are held by the Master Trust administered by
the Trustee.
At December 31, 2000 and 1999, the Plan holds a 51% and a 65% share,
respectively, of the consolidated master trust.
The fair value of net assets of the Trust at December 31, 2000 and December 31,
1999 were as follows:
December 31, 2000 December 31, 1999
----------------- -----------------
Investments:
Stable Value Fund $ 165,864,120 $ 166,565,765
Bond Fund 53,026,996 40,420,469
Large Cap Equity Fund 169,359,732 192,112,508
Mid Cap Equity Fund 42,785,461 9,891,731
Small Cap Equity Fund 36,365,908 30,522,675
International Fund 24,152,206 17,081,362
Brokerage Account 3,330,673 1,753,017
Federal-Mogul Common Stock Fund* 20,959,983 56,713,676
Cooper Common Stock Fund 23,536,290 26,926,944
Cooper Cameron Stock Fund 1,376,367 1,430,827
Loan Fund 15,857,386 6,309,030
----------------- -----------------
Total Investments 556,615,122 549,728,004
Receivable from FMC 12,182 -
Transfers receivable from other FMC plans 8,265,352 -
Participant loans receivable - 5,546,787
----------------- -----------------
Total Assets 564,892,656 555,274,791
Forfeited accounts owed to FMC 1,165,969 108,777
Accrued Expenses 2,262 17,635
----------------- -----------------
Total Liabilities 1,168,231 126,412
----------------- -----------------
NET ASSETS OF THE MASTER TRUST $ 563,724,425 $ 555,148,379
================= =================
* non-participant directed
The Company's Series C 7 1/2% convertible preferred stock, financed through a
leveraged Employee Stock Ownership Plan is held by the ESOP Trust, administered
by the ESOP Trustee. These assets represent investments in excess of 5% or more
of the fair value of net assets available for benefits at December 31, 2000 and
December 31, 1999:
December 31, 2000
--------------------------
Preferred Stock:
Federal-Mogul Corporation 597,688 shares $38,102,610
December 31, 1999
--------------------------
Preferred Stock:
Federal-Mogul Corporation 762,939 shares $48,637,362
6
7. Investments in Master Trust & ESOP Trust (continued)
During the year ended December 31, 2000 and December 1999 the Master Trust had
investment income amounting to $28,827,266 and $19,484,720, respectively, and
had realized and unrealized depreciation in the fair value of investments of
($100,823,005) and ($45,152,207) respectively as follows:
Net Realized and
Unrealized
Appreciation
Net Investment (Depreciation) in
Income/(Loss) During Fair Value During
Period Period
----------------------- ------------------------
Year Ended December 31, 2000
- -----------------------------------------------------------------
Stable Value Fund $ 8,916,371 $ 3,093
Bond Fund 950,760 3,439,582
Large Cap Equity Fund 2,684,403 (21,225,615)
Mid Cap Equity Fund 6,710,914 (4,090,229)
Small Cap Equity Fund 9,903,083 (9,396,897)
International Fund 2,193,248 (4,594,137)
Brokerage Account (1,538,061) -
Federal Mogul Common Stock Fund (1,680,430) (68,754,551)
Cooper Common Stock Fund (690,524) 3,567,699
Cooper Cameron Stock Fund 249,246 228,050
Loan Fund 1,128,256 -
----------------------- ------------------------
$ 28,827,266 $ (100,823,005)
Year Ended December 31, 1999
- -----------------------------------------------------------------
Stable Value Fund $ 3,519,893 $ -
Bond Fund 525,602 666,306
Large Cap Equity Fund 6,936,253 11,612,073
Mid Cap Equity Fund 157,266 984,078
Small Cap Equity Fund 3,788,264 2,089,255
International Fund 568,724 3,295,700
Brokerage Account 405,364 -
Federal Mogul Common Stock Fund 2,467,194 (61,195,526)
Cooper Common Stock Fund 220,151 (2,940,791)
Cooper Cameron Stock Fund 461 336,698
Loan Fund 895,548 -
----------------------- ------------------------
$ 19,484,720 $ (45,152,207)
7
7. Investments in Master Trust & ESOP Trust (continued)
The changes in the fair value of net assets of the consolidated master trust for
the years ended December 31, 2000 and December 31, 1999 as summarized as
follows:
December 31, December 31,
2000 1999
----------------------- ------------------------
Additions:
Dividends/interest income $ 28,827,266 $ 19,484,720
Contributions from participating employees 42,434,605 25,412,255
Contributions from Federal-Mogul Corporation 16,228,250 6,844,589
----------------------- ------------------------
Total Additions 87,490,121 51,741,564
Deductions:
Benefits paid to participants 75,032,579 20,331,070
Portion of Company Match Account forfeited upon
withdrawal of members 1,057,192 69,809
----------------------- ------------------------
Total Deductions 76,089,771 20,400,879
Net depreciation in market value of investments (100,823,005) (45,152,207)
Net member transfers to master trust 97,998,701 359,555,779
----------------------- ------------------------
NET INCREASE 8,576,046 345,744,257
Net assets available for plan benefits at beginning of period 555,148,379 209,404,122
----------------------- ------------------------
NET ASSETS OF THE MASTER TRUST AT END OF PERIOD $ 563,724,425 $ 555,148,379
======================= ========================
8
8. Reconciliation of financial statements to Form 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
December 31, 1999
------------------------
Net assets available for benefits per the financial statements $ 399,422,578
Amounts allocated to withdrawing participants (3,959,576)
------------------------
Net assets available for plan benefits per the Form 5500 $ 395,463,002
========================
Amounts allocated to withdrawing participants by fund option is as follows:
December 31, 1999
------------------------
ESOP: Allocated Federal-Mogul preferred stock $ 3,959,576
========================
The following is a reconciliation of benefits per the financial statements to
the Form 5500:
Period ended
December 31, 2000
------------------------
Benefits paid to participants per financial statements $ 57,968,785
Less: Amounts allocated to withdrawing participants at December 31, 1999 (3,959,576)
------------------------
Benefits paid to participants per Form 5500 $ 54,009,209
========================
Period ended
December 31, 1999
------------------------
Benefits paid to participants per financial statements $ 21,123,102
Add: Amounts allocated to withdrawing participants at December 31, 1999 3,959,576
Less: Amounts allocated to withdrawing participants at December 31, 1998 (12,151,209)
------------------------
Benefits paid to participants per Form 5500 $ 12,931,469
========================
9
9. Nonparticipant-directed investments
Information about the net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed investments is as follows:
December 31, 2000
-------------------------------------
Federal-Mogul Federal-Mogul
Common Stock Preferred Stock
Fund Fund
-------------------------------------
Investments at market value
Federal-Mogul Common Stock $ 13,430,036 $ 1,443
Federal-Mogul Preferred Stock:
Allocated to participants - 38,102,610
-------------------------------------
Total Investments 13,430,036 38,104,053
Cash equivalents - 333,696
Interfund receivable 80,863 -
-------------------------------------
Total Assets 13,510,899 38,437,749
Liabilities
Advance from FMC - 322,198
Forfeited accounts owed to FMC 41,020 -
-------------------------------------
Total Liabilities 41,020 322,198
-------------------------------------
Net Assets Available for Plan Benefits $ 13,469,879 $ 38,115,551
=====================================
December 31, 1999
-------------------------------------------------------
Federal-Mogul Fedel-Mogul
Common Stock Preferred Stock Exempt Loan
Fund Fund Fund
-------------------------------------------------------
Assets
Investments at market value
Federal-Mogul Common Stock $ 42,761,680
Federal-Mogul Preferred Stock:
Allocated to participants $ 32,649,372
Unallocated $ 15,987,990
--------------------------------------------------------
Total Investments 42,761,680 32,649,372 15,987,990
Interfund Receivable/(payable) 196,378 10,702,796 (10,702,796)
--------------------------------------------------------
Total Assets 42,958,058 43,352,168 5,285,194
Liabilities
Advance from FMC 142,481
Forfeited accounts owed to FMC 24,203
Senior ESOP Notes 7,879,941
--------------------------------------------------------
Total Liabilities 24,203 - 8,022,422
--------------------------------------------------------
Net Assets (Deficit) Available for Plan Benefits $ 42,933,855 $ 43,352,168 $ (2,737,228)
========================================================
10
9. Nonparticipant-directed investments (continued)
Changes in Net Assets:
Year ended December 31, 2000
-----------------------------------------------------------
Federal-Mogul Federal-Mogul
Common Stock Preferred Stock Exempt Loan
Fund Fund Fund
-----------------------------------------------------------
Additions
Investment income $ 42,843 - $ 2,646,904
Contributions 9,307,798 - 5,676,070
Deductions
Withdrawals (1,838,969) $ (10,609,658)
Forfeitures (17,062) -
Interest expense - - (457,778)
Net appreciation/(depreciation) (50,380,923) 5,373,041 (5,127,968)
Net member transfers between funds 13,422,636 -
Transfers from another FMC investment program (299) -
-----------------------------------------------------------
$ (29,463,976) $ (5,236,617) $ 2,737,228
===========================================================
Year ended December 31, 1999
-----------------------------------------------------------
Federal-Mogul Federal-Mogul
Common Stock Preferred Stock Exempt Loan
Fund Fund Fund
-----------------------------------------------------------
Additions
Investment income $ 1,946,795 $ 3,487,767
Contributions 4,985,483 4,791,172
Deductions
Withdrawals (2,651,191) $ (5,112,092)
Forfeitures (16,561) (239,147)
Interest expense (973,485)
Net appreciation/(depreciation) (48,288,815) (35,837,704) (14,030,937)
Net member transfers between funds 13,431,203 5,136,338 (5,136,338)
Transfers from another FMC investment program 8,627,463
----------------------------------------------------------
$ (21,965,623) $ (36,052,605) $ (11,861,821)
==========================================================
11
Federal-Mogul Corporation
Salaried Employees' Investment Program
EIN: 38-0533580
Schedule H, Line 4i
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 2000
The following is a Schedule of Assets Held for Investment outside of the Master
Trust:
Identity of Issue, Borrower, Description of Investment including Maturity
Lessor or Similar Party Date, Interest, Collateral, Par or Maturity Value Historical Cost Current Value
- ---------------------------------------------------------------------------------------------------------------------------------
Common Stock:
*Federal-Mogul Corporation 624 shares - stated value $5.00 per share $ 12,741 $ 1,443
Preferred Stock:
*Federal-Mogul Corporation 597,688 shares - stated value $63.75 per share 38,102,610 38,102,610
------------------------------------
$ 38,115,351 $ 38,104,053
====================================
There were no investment assets reportable as acquired and disposed of during
the year.
* Indicates party-in-interest to the Plan.
12