Federal-Mogul Reports First Quarter Results
20 April 2000
Federal-Mogul Reports First Quarter Results
SOUTHFIELD, Mich., April 20 Federal-Mogul Corporation
(NYSE: FMO) had first quarter sales of $1,644 million, compared to $1,642
million in 1999. Excluding the effects of foreign currency exchange, first
quarter sales exceeded 1999 by $56 million or 3 percent.
First quarter earnings from operations were $.86 per share, compared to
$.96 per share in 1999. First quarter 2000 earnings per share from operations
exclude previously announced restructuring and impairment charges. After
these charges, reported earnings were $.18 per share. First quarter 1999
earnings per share from operations excluded an accounting change,
extraordinary items, and acquisition and integration costs. After these
charges, Federal-Mogul reported $.38 earnings per share in 1999.
By operating group, Powertrain Systems reported first quarter sales of
$648 million compared to $595 million in 1999; Sealing Systems / Visibility /
Systems Protection Products reported sales of $490 million compared to $488
million in 1999; and Brake / Chassis / Ignition / Fuel reported sales of $506
million compared to $559 million in 1999. Net of foreign exchange, original
equipment business increased by 7 percent from 1999 while aftermarket sales
decreased by 3 percent.
"I'm pleased with the response to our customer initiatives which has
resulted in significant new business and performance awards this quarter,"
said Dick Snell, chairman and chief executive officer.
As expected, the company used $211 million in cash from operations in the
first quarter. This is $104 million more than last year due primarily to the
timing of semi-annual interest payments and to larger asbestos payments.
Federal-Mogul Hosts First Quarter Conference Call
Federal-Mogul will be hosting a conference call to discuss the company's
first quarter earnings at 1 p.m. EDT today, April 20, 2000. To receive the
dial in number call 719-457-2550 and give 405548 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. EDT on April 20
through April 24, 2000. To access this recording, dial 719-457-0820 and then
enter 405548 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,
which are not historical facts and involve risk and uncertainties. Actual
results, events and performance could differ materially from those
contemplated by these forward-looking statements including, without
limitations, 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
March 31
2000 1999
Net sales $1,643.7 $1,642.2
Cost of products sold 1,209.6 1,192.7
Gross margin 434.1 449.5
Selling, general and administrative expenses 211.0 222.5
Amortization of goodwill and other
intangible assets 31.2 32.8
Implementation costs 0.8 -
Restructuring charge 68.7 -
Adjustment of assets held for sale and
other long-lived assets to fair value 10.0 -
Integration costs - 10.1
Interest expense 71.0 70.9
Interest income (1.3) (1.0)
International currency exchange losses 0.6 2.3
Other expense, net 7.6 5.3
Earnings Before Income Taxes,
Extraordinary Item and Cumulative Effect
of Change in Accounting Principle 34.5 106.6
Income tax expense 20.6 45.2
Net Earnings Before Extraordinary Item and
Cumulative Effect of Change in
Accounting Principle 13.9 61.4
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 $13.9 $25.6
Earnings Per Common Share
Basic
Earnings before extraordinary item and
cumulative effect of change in
accounting principle $ .19 $ .89
Extraordinary item - loss on early retirement
of debt, net of applicable income tax benefit - (.34)
Cumulative effect of change in accounting for costs
of start-up activities, net of applicable income
tax benefit - (.19)
Net Earnings $ .19 $ .36
Diluted
Earnings before extraordinary item and cumulative
effect of change in accounting principle $ .18 $ .80
Extraordinary item - loss on early retirement
of debt, net of applicable income tax benefit - (.27)
Cumulative effect of change in accounting for costs
of start-up activities, net of applicable income
tax benefit - (.15)
Net Earnings $ .18 $ .38
Weighted Average Shares (Thousands)
Basic 70,263 68,375
Diluted 72,926 83,724
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)
(Unaudited)
March 31 December 31
2000 1999
Assets
Cash and equivalents $ 72.1 $ 64.5
Accounts receivable 566.1 514.6
Investment in accounts receivable securitization 293.2 232.2
Inventories 899.4 883.6
Prepaid expenses and income tax benefits 333.6 331.6
Total current assets 2,164.4 2,026.5
Property, plant and equipment, net 2,452.0 2,503.7
Goodwill 3,479.4 3,547.8
Other intangible assets 784.9 796.3
Asbestos-related insurance recoverable 325.9 325.9
Other noncurrent assets 667.9 745.0
Total Assets $9,874.5 $9,945.2
Liabilities and Shareholders' Equity
Short-term debt, including current portion
of long-term debt $ 164.7 $ 190.8
Accounts payable 516.8 621.9
Accrued compensation 174.3 182.9
Restructuring and rationalization reserves 100.5 46.0
Current portion of asbestos liability 240.0 180.0
Income taxes payable 72.2 72.3
Other accrued liabilities 365.8 488.7
Total current liabilities 1,634.3 1,782.6
Long-term debt 3,287.1 3,020.0
Long-term portion of asbestos liability 1,198.7 1,335.3
Postemployment benefits 652.4 661.9
Other accrued liabilities 477.4 454.9
Minority interest in consolidated subsidiaries 47.8 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 42.9 41.5
Common stock 352.1 352.1
Additional paid-in capital 1,779.7 1,782.4
Retained earnings 183.2 170.3
Unearned ESOP compensation (7.9) (7.9)
Accumulated other comprehensive income (347.5) (262.1)
Other (0.7) (1.1)
Total Shareholders' Equity 2,001.8 2,075.2
Total Liabilities and Shareholders' Equity $9,874.5 $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
C A S H F L O W S
(Millions of Dollars)
(Unaudited)
Three Months Ended
March 31
2000 1999
Cash Provided From (Used By) Operating Activities
Net earnings $13.9 $25.6
Adjustments to reconcile net earnings to
net cash provided from (used by)
operating activities:
Depreciation and amortization 99.1 88.8
Restructuring charge 68.7 -
Adjustment of assets held for sale
and other long-lived assets to
fair value 10.0 -
Loss on early retirement of debt - 36.6
Cumulative effect of change in
accounting principle - 19.5
Postemployment benefits 1.2 8.0
Increase in accounts receivable (84.8) (146.1)
Decrease (increase) in inventories (31.3) 14.1
Decrease in accounts payable (99.6) (1.8)
Decrease in current liabilities
and other (25.5) (13.3)
Payments against restructuring and
rationalization reserves (14.7) (31.0)
Payments against asbestos liability (75.4) (32.3)
Net Cash Used By Operating Activities (138.4) (31.9)
Cash Provided From (Used By) Investing Activities
Expenditures for property, plant and equipment and
other long-term assets, net (72.8) (75.2)
Business acquisitions,
net of cash acquired - (112.9)
Other 4.7 5.9
Net Cash Used By Investing Activities (68.1) (182.2)
Cash Provided From (Used By) Financing Activities
Issuance of common stock - 0.1
Net increase in debt 244.0 239.0
Fees paid for debt issuance
and other securities - (25.5)
Investment in accounts receivable
securitization (31.0) 12.4
Dividends (1.0) (1.6)
Other 2.1 (1.8)
Net Cash Provided From
Financing Activities 214.1 222.6
Increase in Cash and Equivalents 7.6 8.5
Cash and equivalents at beginning of period 64.5 77.2
Cash and Equivalents at End of Period $72.1 $85.7
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 March 31, 2000
Adjustments
As Restructuring Impairment From
Reported Charge Costs Operations
Net sales $1,643.7 $ - $ - $1,643.7
Cost of products sold 1,209.6 - - 1,209.6
Gross margin 434.1 - - 434.1
Selling, general and
administrative
expenses 211.0 - - 211.0
Amortization of
goodwill and other
intangible assets 31.2 - - 31.2
Implementation costs 0.8 - - 0.8
Restructuring charges 68.7 (68.7) - -
Adjustment of assets
held for sale and other
long-lived assets
to fair value 10.0 - (10.0) -
Interest expense 71.0 - - 71.0
Interest income (1.3) - - (1.3)
International currency
exchange losses 0.6 - - 0.6
Other expense, net 7.6 - - 7.6
Earnings Before
Income Taxes 34.5 68.7 10.0 113.2
Income tax expense 20.6 22.8 3.6 47.0
Net Earnings $13.9 $45.9 $6.4 $66.2
Diluted Earnings Per
Common Share $ .18 $ .60 $ .08 $ .86