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Federal-Mogul Reports Fourth Quarter Results
SOUTHFIELD, Mich., Feb. 1 /PRNewswire/ -- Federal-Mogul Corporation (NYSE: FMO - news) today announced fourth quarter sales of $1,348 million compared to $1,574 million in 1999. In line with the company's announcement on January 22, Federal-Mogul reported a fourth quarter loss of $(.99) per share from operations versus earnings of $.87 per share from operations in 1999. Excluded from earnings from operations were charges for restructuring and impairment, a tax valuation allowance adjustment and an asbestos liability adjustment in 2000 and integration costs in 1999. Including these items, Federal-Mogul reported a fourth quarter 2000 loss of $(4.80) per share compared to net earnings of $.79 in 1999. Cash flow from operations which includes capital expenditures, restructuring, and asbestos payments was a usage of $160 million.
(Photo: newscom.com )
As previously announced, Federal-Mogul's performance in the fourth quarter was impacted by continued depression of the heavy duty market, volume shortfalls in the North American automotive original equipment market, cessation of quarter-ending aftermarket sales incentives, and foreign exchange.
``We are not pleased with these results and are working aggressively to improve our operating performance,'' said Frank Macher, chief executive officer, who joined the company on January 11, 2001. ``We are intensifying the focused efforts on our six initiatives for operating improvement. These initiatives are aimed at increasing the company's cash flow while dramatically reducing our cost structure and asset base.''
By operating segment, the Americas and Asia reported fourth quarter sales of $899 million compared to $1,032 million in 1999. Europe and Africa reported sales of $449 million compared to $542 million in 1999. By product group, Federal-Mogul's fourth quarter sales were 39% in powertrain; 30% in sealing, visibility and systems protection; and 31% in brakes, chassis, ignition and fuel. The original equipment market represented 55% of the company's global sales with the replacement market accounting for 45% of fourth quarter sales. Excluding exchange impacts, original equipment sales were down by 8% and aftermarket sales were down 9% in the fourth quarter compared to 1999.
For 2000, Federal-Mogul had sales of $6,013 million, compared to $6,488 million in 1999. Federal-Mogul reported earnings per share from operations for the year of $.53 per share versus $4.04 per share in 1999.
Federal-Mogul Hosts Fourth Quarter Conference Call
Federal-Mogul will be hosting a conference call at 1:00 p.m. EST today, February 1, 2001 featuring Frank Macher, chief executive officer, Chip McClure, president and chief operating officer, and Mike Lynch, executive vice president and chief financial officer. To receive the dial in number call 800-289-0579 for domestic callers and 719-457-2550 for international callers and give 651042 as the Federal-Mogul RSVP confirmation code when requested. Please dial into the conference 10-15 minutes prior to 1:00 p.m.
A recording of this call will be available from 3:00 p.m. EST on February 1 through February 7, 2001. To access this recording, dial 719-457-0820 and then enter 651042 for the confirmation code.
Headquartered in Southfield, Michigan, Federal-Mogul is an automotive parts manufacturer providing innovative solutions and systems to global customers in the automotive, light trucks, heavy duty, farm and industrial markets. The company was founded in 1899. For more information on Federal-Mogul, visit the company's web site at federal-mogul.com . Federal-Mogul's press releases are available by fax through Company News On-Call, call 800-758-5804, ext. 306225.
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 ability to implement and achieve the intended results of the strategic initiatives, the cost and timing of implementing restructuring actions, 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.
F E D E R A L - M O G U L C O R P O R A T I O N
S T A T E M E N T S O F O P E R A T I O N S
(Millions of Dollars, Except Per Share Data)
(Unaudited)
Three Months Ended Year Ended
December 31 December 31
2000 1999 2000 1999
Net sales $1,348.4 $1,574.3 $6,013.2 $6,487.5
Cost of products sold 1,113.5 1,169.2 4,595.9 4,709.1
Gross margin 234.9 405.1 1,417.3 1,778.4
Selling, general and
administrative expenses 215.2 210.6 844.6 848.9
Amortization of goodwill and
other intangible assets 29.9 32.8 123.6 127.2
Restructuring charge 58.4 - 135.7 -
Adjustment of assets held
for sale and other long-
lived
assets to fair value 60.8 - 75.4 7.9
Asbestos charge 184.4 - 184.4 -
Integration costs - 10.3 - 46.9
Interest expense 72.7 66.1 289.3 273.5
Interest income (1.2) (1.8) (4.3) (4.6)
International currency
exchange losses (gains) (1.4) (6.2) (0.1) (2.7)
Other expense, net 5.6 3.9 31.0 21.4
Earnings (Loss) Before
Income Taxes,
Extraordinary
Item and Cumulative Effect
of Change in
Accounting Principle (389.5) 89.4 (262.3) 459.9
Income tax expense (benefit) (51.8) 29.2 19.2 180.9
Earnings (Loss) Before
Extraordinary Item and
Cumulative Effect of
Change in
Accounting Principle (337.7) 60.2 (281.5) 279.0
Extraordinary item - loss on
early retirement of debt,
net of applicable income
tax benefit - - - 23.1
Cumulative effect of change
in accounting for costs of
start-up activities, net of
applicable income tax
benefit - - - 12.7
Net Earnings (Loss) $(337.7) $60.2 $(281.5) $243.2
Earnings (Loss) Per Common
Share
Basic
Earnings (loss) before
extraordinary item and
cumulative effect of
change in accounting
principle $(4.80) $0.85 $(4.02) $3.96
Extraordinary item - loss
on early retirement of
debt,
net of applicable income
tax benefit - - - (0.34)
Cumulative effect of change
in accounting for costs of
start-up activities, net
of applicable income tax
benefit - - - (0.18)
Net Earnings (Loss) $(4.80) $0.85 $(4.02) $3.44
Diluted
Earnings (loss) before
extraordinary item and
cumulative effect of
change in accounting
principle $(4.80) $0.79 $(4.02) $3.59
Extraordinary item - loss
on early retirement of
debt,
net of applicable income
tax benefit - - - (0.28)
Cumulative effect of change
in accounting for costs of
start-up activities, net
of applicable income tax
benefit - - - (0.15)
Net Earnings (Loss) $(4.80) $0.79 $(4.02) $3.16
Weighted Average Shares
(Thousands)
Basic 70,463 70,262 70,445 69,787
Diluted 70,463 83,775 70,445 84,206
F E D E R A L - M O G U L C O R P O R A T I O N
B A L A N C E S H E E T S
(Millions of Dollars)
December 31
2000 1999
Assets
Cash and equivalents $107.2 $64.5
Accounts receivable 512.8 514.6
Investment in accounts receivable
securitization 229.1 232.2
Inventories 808.6 883.6
Prepaid expenses and income tax
benefits 479.1 331.6
Total current assets 2,136.8 2,026.5
Property, plant and equipment, net 2,388.8 2,503.7
Goodwill 3,303.1 3,547.8
Other intangible assets 746.4 796.3
Asbestos-related insurance recoverable 771.1 325.9
Other noncurrent assets 1,007.7 745.0
Total Assets $10,353.9 $9,945.2
Liabilities and Shareholders' Equity
Short-term debt, including current
portion of long-term debt $147.8 $190.8
Accounts payable 431.9 621.9
Accrued compensation 157.8 182.9
Restructuring and rationalization
reserves 107.9 46.0
Current portion of asbestos liability 350.0 180.0
Interest payable 94.4 79.0
Other accrued liabilities 414.0 482.0
Total current liabilities 1,703.8 1,782.6
Long-term debt 3,559.7 3,020.0
Long-term portion of asbestos liability 1,461.9 1,335.3
Post employment benefits 637.6 661.9
Other accrued liabilities 709.3 454.9
Minority interest in consolidated
subsidiaries 57.5 40.3
Company-obligated mandatorily
redeemable preferred securities
of subsidiary trust holding solely
convertible subordinated
debentures of the Company 575.0 575.0
Shareholders' equity:
Series C ESOP preferred stock 38.1 41.5
Common stock 352.5 352.1
Additional paid-in capital 1,780.3 1,782.4
Retained earnings (accumulated
deficit) (115.2) 170.3
Unearned ESOP compensation - (7.9)
Accumulated other comprehensive
income (405.8) (262.1)
Other (0.8) (1.1)
Total Shareholders' Equity 1,649.1 2,075.2
Total Liabilities and Shareholders'
Equity $10,353.9 $9,945.2
F E D E R A L - M O G U L C O R P O R A T I O N
S T A T E M E N T O F C A S H F L O W S
(Millions of Dollars)
(Unaudited)
Three Months Ended Year Ended
December 31 December 31
2000 1999 2000 1999
Cash Provided From (Used
By) Operating Activities
Net earnings (loss) $(337.7) $60.2 $(281.5) $243.2
Adjustments to reconcile
net earnings (loss) to
net cash
provided from (used by)
operating activities:
Depreciation and
amortization 87.1 83.1 374.4 354.9
Restructuring charge 58.4 - 135.7 -
Adjustment of assets
held for sale and
other
long-lived assets to
fair value 60.8 - 75.4 7.9
Asbestos charge 184.4 - 184.4 -
Loss on early
retirement of debt - - - 36.6
Cumulative effect of
change in accounting
principle - - - 19.5
Postemployment benefits 4.3 (18.1) (9.1) (18.8)
Decrease (increase) in
accounts receivable 81.0 88.1 38.1 (33.4)
Decrease in inventories 82.5 72.0 40.7 117.2
Increase (decrease) in
accounts payable (63.4) 98.3 (175.4) 149.7
Decrease in current
liabilities and other (87.2) (53.3) (113.6) (55.6)
Payments against
restructuring and
rationalization
reserves (29.4) (6.7) (72.2) (80.6)
Payments against
asbestos liability (116.7) (55.8) (351.4) (178.2)
Net Cash Provided From
(Used By)
Operating Activities (75.9) 267.8 (154.5) 562.4
Cash Provided From (Used
By) Investing Activities
Expenditures for
property, plant and
equipment and
other long-term assets,
net (83.9) (105.1) (313.3) (395.2)
Business acquisitions,
net of cash acquired - (0.5) - (371.2)
Proceeds from sales of
businesses 5.7 15.9 66.6 53.3
Other 5.8 - 2.4 -
Net Cash Used By
Investing Activities (72.4) (89.7) (244.3) (713.1)
Cash Provided From (Used
By) Financing Activities
Issuance of common stock - - - 1.2
Net increase (decrease)
in debt 227.8 (217.9) 517.8 (131.5)
Fees paid for debt
issuance and other
securities (4.6) - (4.6) (25.5)
Sale (repurchase) of
accounts receivable
under securitization (15.2) 43.1 (62.1) 304.3
Dividends (1.0) (0.9) (4.1) (4.3)
Other (7.3) (2.8) (5.5) (6.2)
Net Cash Provided From
(Used By) Financing
Activities 199.7 (178.5) 441.5 138.0
(Increase) Decrease in
Cash and Equivalents 51.4 (0.4) 42.7 (12.7)
Cash and equivalents at
beginning of period 55.8 64.9 64.5 77.2
Cash and Equivalents at
End of Period $107.2 $64.5 $107.2 $64.5
F E D E R A L - M O G U L C O R P O R A T I O N
N E T E A R N I N G S R E C O N C I L A T I O N
(Millions of Dollars, Except Per Share Data)
(Unaudited)
Three Months Ended December 31, 2000
Adjustments
As Restructuring Impairment Tax Asbestos From
Reported Charge Costs Valuation Charge
Allowance Operations
Net sales $1,348.4 $- $- $- $- $1,348.4
Cost of
products
sold 1,113.5 - - - - 1,113.5
Gross
margin 234.9 - - - - 234.9
Selling,
general and
administrative
expenses 215.2 - - - - 215.2
Amortization
of goodwill
and other 29.9 - - - - 29.9
intangible
assets
Restructuring
charge 58.4 (58.4) - - - -
Adjustment
of assets
held for sale
and other long-
lived assets
to fair value 60.8 - (60.8) - - -
Asbestos
charge 184.4 - - - (184.4) -
Interest
expense 72.7 - - - - 72.7
Interest
income (1.2) - - - - (1.2)
International
currency
exchange
losses (1.4) - - - - (1.4)
Other
expense,
net 5.6 - - - - 5.6
Earnings
(Loss)
Before
Income
Taxes (389.5) 58.4 60.8 - 184.4 (85.9)
Income tax
expense
(benefit) (51.8) 20.2 20.5 (60.0) 54.4 (16.7)
Net
Earnings
(Loss) $(337.7) $38.2 $40.3 $60.0 $130.0 $(69.2)
Diluted
Loss Per
Common
Share $(4.80) $0.54 $0.57 $0.86 $1.84 $(0.99)
F E D E R A L - M O G U L C O R P O R A T I O N
N E T E A R N I N G S R E C O N C I L A T I O N
(Millions of Dollars, Except Per Share Data)
(Unaudited)
Year Ended December 31, 2000
Adjustments
As Restructuring Impairment Tax Asbestos From
Reported Charge Costs Valuation Charge
Allowance Operations
Net sales $6,013.2 $- $- $- $- $6,013.2
Cost of
products
sold 4,595.9 - - - - 4,595.9
Gross
margin 1,417.3 - - - - 1,417.3
Selling,
general and
administrative
expenses 844.6 - - - - 844.6
Amortization
of goodwill
and other
intangible
assets 123.6 - - - - 123.6
Restructuring
charge 135.7 (135.7) - - - -
Adjustment
of assets
held for sale
and other
long-lived
assets
to fair value 75.4 - (75.4) - - -
Asbestos
charge 184.4 - - - (184.4) -
Interest
expense 289.3 - - - - 289.3
Interest
income (4.3) - - - - (4.3)
International
currency
exchange
losses (0.1) - - - - (0.1)
Other expense,
net 31.0 - - - - 31.0
Earnings
(Loss)
Before
Income
Taxes (262.3) 135.7 75.4 - 184.4 133.2
Income tax
expense
(benefit) 19.2 46.2 25.6 (60.0) 54.4 85.4
Net
Earnings
(Loss) $(281.5) $89.5 $49.8 $60.0 $130.0 $47.8
Diluted
Earnings
(Loss)
Per Common
Share $(4.02) $1.23 $0.69 $0.83 $1.80 $0.53
SOURCE: Federal-Mogul Corporation
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