Federal-Mogul Announces Restructuring Plan
15 March 2000
Federal-Mogul Announces Restructuring Plan
SOUTHFIELD, Mich., March 15 Federal-Mogul Corporation
today announced the details of a restructuring plan designed to
improve Federal-Mogul's cost structure and drive out nonproductive assets.
"We are working to reduce our invested capital base to improve economic
value," said Dick Snell, chairman and chief executive officer. "I am pleased
with the aggressive actions identified by our team."
The components of the restructuring plan include: closure of 22 North
American aftermarket branch warehouses; consolidation of all aftermarket
gasket products into the Skokie, Illinois, distribution facility, resulting in
the closure of the warehouse for the McCord gasket line; seven other major
initiatives involving rationalization of the North and South American
aftermarket operations; consolidation of heavy wall bearings into
McConnelsville, Ohio, resulting in the closure of the Mooresville, Indiana,
manufacturing facility; closure of the seal plant in Milan, Michigan, with
operations consolidated into other facilities; nineteen other manufacturing
rationalization initiatives planned for North and South America; consolidation
of 18 manufacturing and distribution operations in Europe and Asia; and
rationalization of administrative staffs.
Under the plan, Federal-Mogul expects to incur restructuring charges of
approximately $100 million over the next two years and an additional $100
million in incremental expenses and capital expenditures that will be expensed
or capitalized as incurred. As a result of this restructuring plan, the
company may also take a non-cash asset write-down of approximately $35 million
to adjust certain assets to their fair value. The asset write-down and the
restructuring charges are expected to be recognized over the next two years.
The restructuring activities begin in 2000 and will be completed by the
end of 2002. An anticipated result from completion of the restructuring will
be a net reduction of approximately 1,500 people from Federal-Mogul's
worldwide headcount of 50,400.
Federal-Mogul will be hosting a conference call at 11:30 a.m., Eastern
Standard Time (EST), today, March 15, 2000. The dial-in number is
719-457-2601 and the confirmation code is 126306. Please dial into the
conference 15 minutes prior to the 11:30 a.m. start. A recording of this
conference call will be available after 2:30 p.m. EST today through 2:30 p.m.
EST, Friday, March 17, 2000. To access this recording, dial 719-457-0820 and
then enter 126306 for the confirmation code.
For additional information about the restructuring, visit the investors'
section of Federal-Mogul's web site at http://www.federal-mogul.com and select
financial presentations.
Fourth Quarter 1999
Subsequent to its fourth quarter 1999 earnings release and based on a
recent decision reported on February 16, 2000 to not sell the lighting and
wiper businesses, depreciation and amortization expense of $.04 per share will
be reported in fourth quarter 1999 results. Accordingly, earnings from
operations are $.86 per share for the fourth quarter and $4.04 per share for
the full year. Earnings per share from operations exclude integration costs
and extraordinary and other non-recurring items. Including these items,
Federal-Mogul earned $.79 in the fourth quarter and $3.16 per share for the
full year.
Headquartered in Southfield, Michigan, Federal-Mogul is an automotive
parts manufacturer providing innovative solutions and systems to global
customers in the automotive, heavy-duty, small engine and industrial markets.
The company was founded in 1899. Visit the company's web site at
http://www.federal-mogul.com for more information. Federal-Mogul's press
releases are available by fax through Company News On-Call, call 800-758-5804,
ext. 306225.
This press release contains forward-looking statements that involve a
number of risks and uncertainties. Factors that could cause actual results to
differ materially from those reflected in the forward-looking statements are
discussed in the Company's Annual Report on Form 10-K.