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
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
EMPLOYEES' INVESTMENT PROGRAM
TABLE OF CONTENTS
Page Number
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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 3-10
Exhibit 23 - Consent of Ernst & Young LLP
Pursuant to the requirements of the Securities Exchange Act of 1934, The
Federal-Mogul Corporation Employees' Investment Program has duly caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
FEDERAL-MOGUL CORPORATION
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 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.
/s/ Ernst & Young LLP
Detroit, MI
June 22, 2001
FEDERAL-MOGUL CORPORATION
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
EMPLOYEES' INVESTMENT PROGRAM
December 31
2000 1999
--------------------- -----------------------
ASSETS
Investments in master trust (See Note 6) $ 268,783,873 $ 193,521,209
Contribution receivable from FMC 12,182 -
Participant loans receivable - 2,903,654
Transfers receivable from other FMC investment programs 8,215,626 -
--------------------- -----------------------
Total Assets 277,011,681 196,424,863
LIABILITIES
Accrued Expenses 600 6,173
Forfeited accounts owed to FMC (See Note 1) 1,117,670 77,950
--------------------- -----------------------
Total Liabilities 1,118,270 84,123
--------------------- -----------------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 275,893,411 $ 196,340,740
===================== =======================
See notes to financial statements
1
FEDERAL-MOGUL CORPORATION
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
EMPLOYEES' INVESTMENT PROGRAM
December 31
2000 1999
--------------------- -----------------------
Additions
Dividends and Interest $ 14,170,309 $ 6,819,652
Contributions:
Participants 15,984,653 8,543,875
Federal-Mogul Corporation 10,440,677 4,075,511
--------------------- -----------------------
Total Additions 40,595,639 19,439,038
Deductions
Benefits paid to participants 25,598,865 4,310,128
Portion of Company Match Account forfeited upon
withdrawal of members (See Note 2) 1,039,720 35,080
--------------------- -----------------------
Total Deductions 26,638,585 4,345,208
Transfers from another FMC investment program 95,924,115 155,437,677
Net unrealized depreciation in fair value of
investments (See Note 6) (30,328,498) (14,289,371)
--------------------- -----------------------
Net increase 79,552,671 156,242,136
Net assets available for plan benefits at beginning of year 196,340,740 40,098,604
--------------------- -----------------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 275,893,411 $ 196,340,740
===================== =======================
See notes to financial statements
2
Federal-Mogul Corporation
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 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 2000 and 1999, the Plan received assets transferred from other investment
programs of Federal-Mogul Corporation (the "Company") pursuant to plan mergers
occurring during 2000.
General
The Plan is a defined contribution plan which provides eligible hourly employees
of Company with a program for making voluntary pretax and after-tax
contributions. Substantially all domestic hourly employees of the Company and
subsidiaries are eligible to participate in the Plan. It is subject to the
provisions of the Employee Retirement Income Security Act (ERISA).
Master Trust
The Plan invests in a single master trust through a master trust agreement with
The State Street Bank (the "Trustee"). The trust agreement provides, among other
things, that the Trustee, safekeeps all investments, and keeps account for all
investments, receipts, and disbursements, benefit payments, and other
transactions.
3
1. Description of the Plan (continued)
Contributions & Vesting
Allentown Avilla Blacksburg Berkeley Boaz Boston Boyertown
---------------------------------------------------------------------------------------
1. Company Match
(% of participant contribution) 50% 50% N/A 50% 50% 50% 50%
2. Matching Amount
(% of participant compensation) 8% 8% N/A 8% 8% 8% 8%
3. Maximum Contribution
(% of participant compensation) 20% 20% 20% 20% 20% 20% 20%
4. Pension Contribution Yes Yes No Yes Yes Yes Yes
5. Vesting Schedule
Years of Service
----------------
less than 2 0% 0% N/A 0% 0% 0% 0%
less than 3 25% 25% N/A 25% 25% 25% 25%
less than 4 50% 50% N/A 50% 50% 50% 50%
less than 5 75% 75% N/A 75% 75% 75% 75%
5 or more 100% 100% N/A 100% 100% 100% 100%
6. Eligibility to participate Immediately Immediately 90 days Immediately Immediately Immediately Immediately
Eligibility for company match Immediately Immediately N/A Immediately Immediately Immediately Immediately
Chicago-Kedzie Dumas Frankfort Franklin Pk. Glasgow Greenville Hampton Logansport
----------------------------------------------------------------------------------------------
1. Company Match
(% of participant contribution) 50% 50% 50% 50% 50% 50% 50% 50%
2. Matching Amount
(% of participant compensation) 8% 8% 8% 8% 8% 8% 8% 8%
3. Maximum Contribution
(% of participant compensation) 20% 20% 20% 20% 20% 20% 20% 20%
4. Pension Contribution Yes Yes Yes Yes Yes Yes Yes Yes
5. Vesting Schedule
Years of Service
----------------
less than 2 0% 0% 0% 0% 0% 0% 0% 0%
less than 3 25% 25% 0% 25% 25% 25% 25% 25%
less than 4 50% 50% 0% 50% 50% 50% 50% 50%
less than 5 75% 75% 0% 75% 75% 75% 75% 75%
5 or more 100% 100% 100% 100% 100% 100% 100% 100%
90 days 90 days
6. Eligibility to participate Immediately Immediately 60 days Immediately Immediately 1 year of Immediately 1 year of
Eligibility for company match Immediately Immediately 60 days Immediately Immediately service Immediately service
Maryville Michigan City Milan Orangeburg Pontotoc Salisbury Scottsville
---------------------------------------------------------------------------------------
1. Company Match
(% of participant contribution) 50% 50% 50% 50% 50% 50% 50%
2. Matching Amount
(% of participant compensation) 8% 8% 8% 8% 8% 8% 8%
3. Maximum Contribution
(% of participant compensation) 20% 20% 20% 20% 20% 20% 20%
4. Pension Contribution Yes Yes No Yes Yes Yes Yes
5. Vesting Schedule
Years of Service
----------------
less than 2 0% 0% 0% 0% 0% 0% 0%
less than 3 25% 25% 25% 25% 25% 25% 25%
less than 4 50% 50% 50% 50% 50% 50% 50%
less than 5 75% 75% 75% 75% 75% 75% 75%
5 or more 100% 100% 100% 100% 100% 100% 100%
90 days
6. Eligibility to participate Immediately Immediately 1 year of Immediately Immediately Immediately Immediately
Eligibility for company match Immediately Immediately service Immediately Immediately Immediately Immediately
Sevierville Smithville (DC) Solon Sparta St. Johns Tullahoma Van Wert All Others
----------------------------------------------------------------------------------------------
1. Company Match
(% of participant contribution) 50% 50% 50% 50% N/A 50% 50% 50%
2. Matching Amount
(% of participant compensation) 8% 8% 8% 8% N/A 8% 8% 8%
3. Maximum Contribution
(% of participant compensation) 20% 20% 20% 20% 20% 20% 20% 20%
4. Pension Contribution Yes Yes Yes Yes Yes Yes No Yes
5. Vesting Schedule
Years of Service
----------------
less than 2 0% 0% 0% 0% 0% 0% 0% 0%
less than 3 25% 25% 25% 25% 0% 25% 25% 25%
less than 4 50% 50% 50% 50% 0% 50% 50% 50%
less than 5 75% 75% 75% 75% 0% 75% 75% 75%
5 or more 100% 100% 100% 100% 100% 100% 100% 100%
6. Eligibility to participate Immediately Immediately Immediately Immediately 90 days Immediately 90 days Immediate
Eligibility for company match Immediately Immediately Immediately Immediately 90 days Immediately 60 days Immediate
Full vesting also occurs upon death, disability, or retirement at
designated ages. In addition, special vesting provisions will become
effective if the Plan is determined to be "top-heavy," pursuant to the
Internal Code.
4
Participant Accounts
Each participant's account is credited with the participant's contribution and
allocations of (a) the Company's contribution and (b) Plan earnings, and charged
with an allocation of certain administrative expenses. These administrative
expenses, paid by participants, are netted against the net asset value of the
investment fund. Allocations are based on participant earnings or account
balances, as defined. The benefit to which a participant is entitled is the
benefit that can be provided from the participant's vested account.
Forfeitures
Shares of Federal-Mogul Corporation common stock which are not vested at the
time of a participant's withdrawal from the Plan are forfeited and are applied
as a reduction of required Company contributions.
If the individual is re-employed within 60 months of his/her severance of
employment and repays the full amount previously distributed to him/her from the
Company contribution account and otherwise qualifies for reinstatement in the
Plan, the amount of the forfeiture is re-credited to his/her account in the
reinstatement year.
Investment Options
The Plan provides for eight investment options which includes the Stable Value
Fund, 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.
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. 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.
5
2. Significant Account Policies (continued)
Payment of Benefits
Benefits are recorded when paid
Use of Estimates
The preparation of financial statements in conformity with 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.
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 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
6. Investments in Master Trust
Certain of the Plan's investments are held by a the Trust administered by the
Trustee. At December 31, 2000 and 1999 the Plan holds a 49% share and a 35%
share, respectively, of the 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 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
7
6. Investments in Master Trust (continued)
During the year ended December 31, 2000 and December 1999 the 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)
8
6. Investments in Master Trust (continued)
The changes in the fair value of net assets of the consolidated master trust for
the years ended December 31, 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:
Members' accounts distributed upon withdrawal 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)
Transfers from other plans 97,998,701 359,555,779
------------------------- ------------------------
NET INCREASE 8,576,046 345,744,257
------------------------- ------------------------
Net assets available for plan benefits at beginning of year 555,148,379 209,404,122
------------------------- ------------------------
NET ASSETS OF MASTER TRUST AT END OF PERIOD $ 563,724,425 $ 555,148,379
========================= ========================
9
7. Nonparticipant-Directed Investments
Information about Plan net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed investments is as follows:
December 31,
2000 1999
-------------------- ---------------------
Net Assets:
Federal-Mogul Common Stock $ 7,571,439 $ 13,929,434
-------------------- ---------------------
$ 7,571,439 $ 13,929,434
==================== =====================
Changes in Net Assets: Year Ended Year Ended
December 31, 2000 December 31, 1999
-------------------- ---------------------
Contributions $ 7,159,192 $ 3,302,792
Dividends and interest 41,163 630,728
Net appreciation/depreciation (20,133,615) (15,641,672)
Benefits paid to participants (797,105) (918,799)
Forfeitures (14,169) 1,561,143
Transfers from participant-directed
investments 7,386,539 5,545,952
-------------------- ---------------------
$ (6,357,995) $ (5,519,856)
==================== =====================
10