-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MuECN2LBGFYvEPXyexf/Yv9AhVEAQcyVCpJ4aPh5KBlVKqZoWLHSckKki6qBVU9p SZFtQfrr2lXQnCiwzV2HCw== 0000034879-96-000004.txt : 19960515 0000034879-96-000004.hdr.sgml : 19960515 ACCESSION NUMBER: 0000034879-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FEDERAL MOGUL CORP CENTRAL INDEX KEY: 0000034879 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 380533580 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01511 FILM NUMBER: 96562883 BUSINESS ADDRESS: STREET 1: 26555 NORTHWESTERN HGWY CITY: SOUTHFIELD STATE: MI ZIP: 48034 BUSINESS PHONE: 3133547700 10-Q 1 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Period Ended March 31, 1996 ---------------------------------------------------- Commission File Number 1-1511 -------------------------------------------------- FEDERAL-MOGUL CORPORATION - -------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Michigan 38-0533580 - ------------------------------- -------------------------- (State or other jurisdiction of (I.R.S. Employer I.D. No.) incorporation or organization) 26555 Northwestern Highway, Southfield, Michigan 48034 - -------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (810) 354-7700 - --------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - -------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---------------- ----------------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Stock - 35,076,486 shares as of May 13, 1996 2 PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements
FEDERAL-MOGUL CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (Unaudited) Three Months Ended March 31, -------------------- 1996 1995 -------- -------- (Millions of Dollars, Except Per Share Amounts) Net sales $ 521.9 $ 524.3 Cost of products sold 409.7 419.9 ------- ------- Gross margin 112.2 104.4 Selling, general and administrative expenses 83.0 72.3 ------- ------- Operating Earnings 29.2 32.1 Other income (expense): Interest expense (11.2) (8.4) Interest income .8 .8 International currency exchange losses (.9) (1.7) Other, net (.9) - ------- ------- Earnings Before Income Taxes 17.0 22.8 Income taxes 6.4 8.6 ------- ------- Net Earnings 10.6 14.2 Preferred stock dividends, net of tax benefits 2.2 2.2 ------- ------- Net Earnings Available for Common Shares $ 8.4 $ 12.0 ======= ======= Earnings Per Common Share Primary $ .24 $ .34 ======= ======= Fully Diluted $ .23 $ .33 ======= ======= See accompanying notes.
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FEDERAL-MOGUL CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) March 31, December 31, 1996 1995 ------------ ------------ (Millions of Dollars) Assets Current Assets: Cash and equivalents $ 39.1 $ 19.4 Accounts receivable 314.0 303.4 Inventories 497.6 507.1 Prepaid expenses and income tax benefits 61.5 55.8 ------- ------- Total Current Assets 912.2 885.7 Property, Plant and Equipment 420.6 426.6 Goodwill 219.5 226.5 Other Intangible Assets 65.1 66.6 Business Investments and Other Assets 109.8 109.0 ------- ------- Total Assets $1,727.2 $1,714.4 ======= ======= Liabilities and Shareholders' Equity Current Liabilities: Short-term debt $ 102.2 $ 111.9 Accounts payable 164.0 172.7 Accrued compensation 41.1 32.3 Other accrued liabilities 116.4 101.9 ------- ------- Total Current Liabilities 423.7 418.8 Long-Term Debt 501.6 481.5 Postemployment Benefits 216.0 213.0 Other Accrued Liabilities 40.9 46.0 ------- ------- Total Liabilities 1,182.2 1,159.3 Shareholders' Equity: Series D preferred stock 76.6 76.6 Series C ESOP preferred stock 56.8 56.8 Unearned ESOP compensation (34.3) (34.3) Common stock 175.4 175.2 Additional paid-in capital 281.2 280.8 Retained earnings 48.6 45.0 Currency translation and other (59.3) (45.0) ------- ------- Total Shareholders' Equity 545.0 555.1 ------- ------- Total Liabilities and Shareholders' Equity $1,727.2 $1,714.4 ======= ======= See accompanying notes.
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FEDERAL-MOGUL CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, -------------------- 1996 1995 -------- -------- (Millions of Dollars) Cash Provided From (Used By) Operating Activities Net earnings $ 10.6 $ 14.2 Adjustments to reconcile net earnings to net cash provided from (used by) operating activities Depreciation and amortization 15.5 15.5 Deferred income taxes (.7) .9 Postemployment benefits 1.4 1.0 Increase in accounts receivable (15.9) (71.1) Decrease (increase) in inventories 3.5 (23.9) Increase in current liabilities and Other 17.7 23.4 Payments against restructuring and reengineering reserves (7.0) (1.1) ----- ----- Net Cash Provided From (Used By) Operating Activities 25.1 (41.1) Cash Provided From (Used By) Investing Activities Expenditures for property, plant and equipment (13.0) (19.6) Payments for rationalization of acquired businesses - (3.7) Purchase of business investments (.3) - Other .3 - ----- ----- Net Cash Used By Investing Activities (13.0) (23.3) Cash Provided From (Used By) Financing Activities Proceeds from issuance of common stock .4 - Expenditures for purchase of common stock - (9.0) Net increase in debt 13.8 77.4 Dividends (5.7) (5.7) Other (.9) 1.2 ----- ----- Net Cash Provided From Financing Activities 7.6 63.9 ----- ----- Increase (Decrease) in Cash and Equivalents 19.7 (.5) Cash and Equivalents at Beginning of Period 19.4 25.0 ----- ----- Cash and Equivalents at End of Period $ 39.1 $ 24.5 ===== ===== See accompanying notes.
5 FEDERAL-MOGUL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) March 31, 1996 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1995. Certain items in the prior period financial statements have been reclassified to conform with the presentation used in 1996. 2. EARNINGS PER COMMON SHARE The computation of primary earnings per share is based on the weighted average number of outstanding common shares during the period plus, when their effect is dilutive, common stock equivalents consisting of certain shares subject to stock options. Fully diluted earnings per share additionally assumes the conversion of outstanding Series C ESOP and Series D preferred stock and the contingent issuance of common stock to satisfy the Series C ESOP preferred stock redemption price guarantee when their effect is dilutive. The number of contingent shares used in the fully diluted calculation is based on the common stock market price on March 29, 1996, and the number of preferred shares held by the Employee Stock Ownership Plan (ESOP) that were allocated to participants' accounts as of March 31 of each of the respective years. The primary weighted average number of common and equivalent shares outstanding (in thousands) was 35,066 for the three-month period ended March 31, 1996 and 34,918 for the three-month period ended March 31, 1995. The fully diluted weighted average number of common and equivalent shares outstanding (in thousands) was 37,464 for the three-month period ended March 31, 1996 and 41,786 for the three-month period ended March 31, 1995. Net earnings used in the computations of primary earnings per share are reduced by preferred stock dividend requirements. Net earnings used in the computation of fully diluted earnings per share are reduced by amounts representing the preferred stock dividends when their effect is antidilutive and amounts representing the additional after-tax contribution that would be necessary to meet ESOP debt service requirements under an assumed conversion of the Series C ESOP preferred stock when their effect is dilutive. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995 Sales for the first quarter of 1996 were $521.9 million compared to $524.3 million in the same 1995 quarter. North American replacement sales decreased 2.5 percent to $195.2 million, from $200.3 million in the first quarter of 1995. The decrease was attributable to the elimination of a sales policy which encouraged customers to place large quantity orders by offering additional discounts and extended payment terms. International replacement sales increased 33.3 percent to $154.9 million from $116.2 million in the first quarter of 1995. Excluding the 1995 acquisitions of Bertolotti in Italy and Centropiezas in Puerto Rico, international replacement sales increased 8.0 percent. North American original equipment sales decreased 23.0 percent to $112.7 million from $146.3 million in the first quarter of 1995. A large percentage of this decrease was attributable to the divestiture of Precision Forged Products Division in April 1995, offset slightly by the acquisition of Sealed Technology Systems in September 1995. Excluding this divestiture and acquisition, sales decreased 12.0 percent over the first quarter of 1995, consistent with North American auto production which included the impact of the General Motors strike. International original equipment sales decreased 4.1 percent to $59.0 million from $61.5 million in the same 1995 quarter. The sales decrease was primarily due to weakness in the engine bearing product line in the French automotive market, particularly at Renault and Peugeot. The Company's operating earnings decreased $2.9 million to $29.2 million when compared to the first quarter of 1995. The operating margin decreased slightly from the first quarter of 1995 to 5.6 percent. The Company attributes this decrease to a $10.7 million increase in selling, general and administrative expenses, primarily due to the shift to international replacement business, which has a higher percentage of selling, general and administrative expenses. Pretax earnings decreased to $17.0 million for the first quarter of 1996 compared to $22.8 million for the same 1995 quarter. The decrease is attributable to additional interest expense due to higher levels of debt. Net earnings were $10.6 million or $.23 per common share on a fully diluted basis in the first quarter of 1996 compared to $14.2 million or $.33 per common share in the first quarter of 1995. LIQUIDITY AND CAPITAL RESOURCES Working capital was impacted by a $15.9 million increase in accounts receivable during the first quarter of 1996 compared to an increase of $71.1 million in 1995. This decline in accounts receivable growth is primarily due to a sales policy change in the North American replacement business. The Company expects that available cash and existing short-term lines of credit will be sufficient to meet its normal operating requirements. Net cash used for investing activities consists primarily of capital expenditures for property, plant and equipment to implement process improvements, information technology and new product introduction. 7 PART II - OTHER INFORMATION - --------------------------- Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits: 11.1 Statement Re Computation of Per Share Earnings for the three months ended March 31, 1996 (filed herewith and incorporated herein by reference). (b) Reports on Form 8-K: No reports on Form 8-K were filed by the Company during the three months ended March 31, 1996. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FEDERAL-MOGUL CORPORATION (Kenneth P. Slaby) By: --------------------------------- KENNETH P. SLABY Vice President and Controller and Chief Accounting Officer Dated: May 14, 1996 EX-11.1 2 STATEMENT 1 EXHIBIT 11.1 - STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
FEDERAL-MOGUL CORPORATION AND SUBSIDIARIES FOR THE THREE MONTHS ENDED PRIMARY FULLY DILUTED -------------- --------------- MARCH 31 1996 1995 1996 1995 - ------------------------------------------ ------ ------ ------ ------ EARNINGS: (In Millions) Net earnings $ 10.6 $ 14.2 $ 10.6 $ 14.2 Series C preferred dividend requirements (.6) (.7) Series D preferred dividend requirements (1.6) (1.5) (1.6) Additional required ESOP contribution (.5) (.5) ----- ----- ----- ----- Net earnings available for common and equivalent shares $ 8.4 $ 12.0 $ 8.5 $ 13.7 ===== ===== ===== ===== WEIGHTED AVERAGE SHARES: (In Millions) Common shares outstanding 35.0 34.9 35.0 34.9 Dilutive stock options outstanding Conversion of Series C preferred stock 1.8 1.8 Contingent issuance of common stock to satisfy the redemption price guarantee .6 .7 Conversion of Series D preferred stock 4.4 ----- ----- ----- ----- Common and equivalent shares outstanding 35.0 34.9 37.4 41.8 ===== ===== ===== ===== PER COMMON AND EQUIVALENT SHARE: Net earnings $ .24 $ .34 $ .23 $ .33 ===== ===== ===== =====
[FN] Amount represents the additional after-tax contribution that would be necessary to meet the ESOP debt service requirements under an assumed conversion of the Series C preferred stock. Calculations consider the March 31, 1996 common stock market price in accordance with Emerging Issues Task Force Abstract No. 89-12. Amount represents the weighted average number of common shares issued assuming conversion of preferred stock outstanding. Amount represents the additional number of common shares that would be issued in order to satisfy the Series C preferred stock redemption price guarantee. This calculation considers only the number of preferred shares held by the ESOP that have been allocated to participants' accounts as of March 31 of the respective years. EX-27 3 ART.5 FDS FOR 1ST QUARTER 10-Q
5 1,000
3-MOS DEC-31-1996 MAR-31-1996 39,100 0 328,000 14,000 497,600 912,200 662,600 242,000 1,727,200 423,700 501,600 175,400 0 133,400 236,200 1,727,200 521,900 521,900 409,700 83,000 1,000 0 11,200 17,000 6,400 10,600 0 0 0 10,600 .24 .23
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