Federal-Mogul Announces Record 1999 Results
2 February 2000
Federal-Mogul Announces Record 1999 Results
SOUTHFIELD, Mich., Feb. 2 -- Federal-Mogul Corporation
today announced 1999 financial results with record earnings from
operations of $4.08 per share, a 52 percent increase from the $2.69 per share
in 1998. Earnings per share from operations exclude integration costs and
extraordinary and other non-recurring items. Including these items, Federal-
Mogul earned $3.20 per share compared to $.96 in 1998.
For 1999, Federal-Mogul had record sales of $6,488 million, compared to
$4,469 million in 1998. The company generated $167 million in free cash flow
from operations in 1999, an improvement of $100 million over 1998.
"We are pleased to have achieved the best year-over-year earnings
improvement in our industry," said Dick Snell, chairman and chief executive
officer. "Our people have put forth an outstanding effort in 1999 and are
implementing operational excellence actions for 2000 focused on delighting our
customers, being the low-cost producer and reducing our invested capital
base."
Federal-Mogul's fourth quarter revenues increased to $1,574 million from
$1,476 million in 1998. The company earned $70 million or $.90 per share from
operations in the fourth quarter of 1999 compared to $51 million or $.78 in
1998. Including integration costs and extraordinary items, earnings per share
rose to $.83 compared to $.48 in the fourth quarter of 1998.
Fourth quarter sales by operating group had Powertrain Systems reporting
sales of $626 million; Sealing Systems / Visibility / Systems Protection
Products reported sales of $459 million; and Brake / Chassis / Ignition / Fuel
reported sales of $489 million.
Federal-Mogul Hosts Fourth Quarter Conference Call
Federal-Mogul will be hosting a conference call to discuss the company's
fourth quarter earnings at 1 p.m. EST today, February 2, 2000. To receive the
dial in number call 719-457-2550 and give 868662 as the Federal-Mogul
confirmation code when requested. Please dial into the conference 10 minutes
prior to 1 p.m.
A recording of this call will be available from 5 p.m. EST on February 2
through February 7, 2000. To access this recording, dial 719-457-0820 and
then enter 868662 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 http://www.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
under the private Securities Litigation Reform Act of 1995. Actual results,
events and performance may differ materially from those expressed or implied
in these statements, such as the cost of implementing restructuring actions,
conditions in the automotive components industry and other factors discussed
in the company's 1998 Annual Report on Form 10-K and other filings with the
Securities and Exchange Commission.
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
1999 1998 1999 1998
Net sales $1,574.3 $1,475.5 $6,487.5 $4,468.7
Cost of products sold 1,165.9 1,068.6 4,705.8 3,290.2
Gross margin 408.4 406.9 1,781.7 1,178.5
Selling, general and
administrative expenses 210.7 209.7 849.0 640.8
Amortization of goodwill and
other intangible assets 30.8 29.9 125.2 83.8
Purchased in-process research
and development charge - - - 18.6
Restructuring charge - 3.4 - 7.3
Adjustment of assets held for sale
and other long-lived assets
to fair value - - 7.9 19.0
Integration costs 10.3 8.7 46.9 22.4
Interest expense 66.1 88.4 273.5 204.0
Interest income (1.8) (1.0) (4.6) (10.6)
International currency
exchange losses (gains) (6.2) (0.6) (2.7) 4.7
Net gain on British pound
currency option and
forward contract - - - (13.3)
Other expense, net 3.9 1.3 21.4 16.3
Earnings Before Income
Taxes, Extraordinary
Items and Cumulative
Effect of Change in
Accounting Principle 94.6 67.1 465.1 185.5
Income tax expense 31.3 31.0 183.0 93.6
Net Earnings Before
Extraordinary Items
and Cumulative Effect
of Change in Accounting
Principle 63.3 36.1 282.1 91.9
Extraordinary items - loss on
early retirement of debt,
net of applicable income
tax benefits - 6.9 23.1 38.2
Cumulative effect of change
in accounting for costs of
start up activities, net of
applicable income tax benefit - - 12.7 -
Net Earnings $63.3 $29.2 $246.3 $53.7
Earnings Per Common Share
Basic
Earnings before extraordinary
items and cumulative
effect of change in
accounting principle $ .89 $ .63 $4.02 $1.84
Extraordinary items -
loss on early retirement
of debt, net of applicable
income tax benefits - (.12) (.34) (.80)
Cumulative effect of
change in accounting
for costs of start up
activities, net of
applicable income
tax benefit - - (.18) -
Net Earnings $ .89 $ .51 $3.50 $1.04
Diluted
Earnings before extraordinary
items and cumulative effect
of change in accounting
principle $ .83 $ .58 $3.63 $1.67
Extraordinary items -
loss on early retirement
of debt, net of applicable
income tax benefits - (.10) (.28) (.71)
Cumulative effect of
change in accounting for
costs of start up
activities, net of
applicable income
tax benefit - - (.15) -
Net Earnings $ .83 $ .48 $3.20 $ .96
Weighted Average
Shares (Thousands)
Basic 70,262 55,674 69,787 48,107
Diluted 83,654 72,257 84,085 53,748
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
1999 1998
Assets
Cash and equivalents $64.5 $77.2
Accounts receivable 514.6 1,025.0
Investment in accounts receivable securitization 232.2 91.1
Inventories 883.6 1,068.6
Prepaid expenses and income tax benefits 331.6 337.7
Total current assets 2,026.5 2,599.6
Property, plant and equipment 2,507.0 2,477.5
Goodwill 3,546.3 3,398.4
Other intangible assets 801.6 886.4
Asbestos-related insurance recoverable 325.9 -
Other noncurrent assets 740.5 578.2
Total Assets $9,947.8 $9,940.1
Liabilities and Shareholders' Equity
Short-term debt, including current
portion of long-term debt $190.8 $211.0
Accounts payable 621.9 498.4
Accrued compensation 182.9 200.3
Restructuring and rationalization reserves 46.0 178.9
Current portion of asbestos liability 180.0 125.0
Income taxes payable 72.7 142.2
Other accrued liabilities 488.7 673.7
Total current liabilities 1,783.0 2,029.5
Long-term debt 3,020.0 3,130.7
Long-term portion of asbestos liability 1,335.3 1,176.7
Postemployment benefits 649.8 660.9
Other accrued liabilities 458.3 343.1
Minority interest in consolidated subsidiaries 40.3 38.0
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 41.5 44.4
Series E preferred stock - 132.7
Common stock 352.1 336.8
Additional paid-in capital 1,782.4 1,665.8
Retained earnings (accumulated deficit) 173.4 (69.9)
Unearned ESOP compensation (7.9) (15.1)
Accumulated other comprehensive income (254.3) (106.0)
Other (1.1) (2.5)
Total Shareholders' Equity 2,086.1 1,986.2
Total Liabilities and Shareholders' Equity $9,947.8 $9,940.1
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
1999 1998 1999 1998
Cash Provided From (Used By) Operating Activities
Net earnings $63.3 $29.2 $246.3 $53.7
Adjustments to reconcile net earnings to net
cash provided from operating activities:
Depreciation and
amortization 77.9 78.8 349.7 228.0
Purchased in-process research and
development
charge - - - 18.6
Restructuring charge - 3.4 - 7.3
Adjustment of assets held for sale
and other long-lived assets to
fair value - - 7.9 19.0
Vesting restricted
stock - - - 0.7
Loss on early retirement
of debt - 11.0 36.6 58.1
Cumulative effect of change in accounting
principle - - 19.5 -
Postemployment
benefits (18.1) 15.9 (18.8) 10.9
(Increase) decrease in accounts
receivable 88.1 63.2 (33.4) 37.5
Decrease in
inventories 72.0 8.9 117.2 55.9
Increase in accounts
payable 98.3 12.8 149.7 5.4
(Decrease) increase in current
liabilities and
other (51.2) (52.9) (53.5) 8.1
Net gain on British pound currency option
and forward
contract - - - (10.5)
Payments against restructuring
and rationalization
reserves (6.7) (42.3) (80.6) (78.0)
Payments against asbestos
liability (55.8) (30.4) (178.2) (89.2)
Net Cash Provided From Operating
Activities 267.8 97.6 562.4 325.5
Cash Provided From (Used By) Investing Activities
Expenditures for property, plant and equipment
and other long-term
assets (105.1) (99.4) (395.2) (228.5)
Proceeds from sale of business
investments 15.9 - 53.3 53.4
Proceeds from sale of
options - - - 39.1
Business acquisitions, net of
cash acquired (0.5) (1,495.0) (371.2) (4,225.2)
Net Cash Used By Investing
Activities (89.7) (1,594.4) (713.1) (4,361.2)
Cash Provided From (Used By) Financing Activities
Issuance of common
stock - 780.7 1.2 1,382.2
Net increase (decrease)
in debt (217.9) 703.4 (131.5) 2,270.4
Fees paid for debt issuance and
other securities - (21.3) (25.5) (76.6)
Fees for early retirement
of debt - - - (27.4)
Investment in accounts receivable
securitization 43.1 12.2 304.3 42.6
Dividends (0.9) (2.6) (4.3) (10.4)
Other (2.8) (0.7) (6.2) (9.3)
Net Cash Provided From (Used By)
Financing
Activities (178.5) 1,471.7 138.0 3,571.5
Decrease in Cash and
Equivalents (.4) (25.1) (12.7) (464.2)
Cash and equivalents at beginning
of period 64.9 102.3 77.2 541.4
Cash and Equivalents at
End of Period $64.5 $77.2 $64.5 $77.2
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 I A T I O N
(Millions of Dollars, Except Per Share Data)
(Unaudited)
Three Months Ended December 31, 1999
Adjustments
As Integration From
Reported Costs Operations
Net sales $1,574.3 $ - $1,574.3
Cost of products sold 1,165.9 - 1,165.9
Gross margin 408.4 - 408.4
Selling, general and
administrative expenses 210.7 - 210.7
Amortization of goodwill and
other intangible assets 30.8 - 30.8
Integration costs 10.3 (10.3) -
Interest expense 66.1 - 66.1
Interest income (1.8) - (1.8)
International currency
exchange losses (6.2) - (6.2)
Other expense, net 3.9 - 3.9
Earnings Before Income Taxes 94.6 10.3 104.9
Income tax expense 31.3 3.8 35.1
Net Earnings $ 63.3 $ 6.5 $ 69.8
Diluted Earnings Per Common
Share $.83 $.07 $.90