11-K 1 d11k.htm FORM 11-K Form 11-K
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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 11-K

 

CURRENT REPORT

 

x ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2004

 

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to                     

 

Commission file number: 1-1511

 

FEDERAL-MOGUL CORPORATION

EMPLOYEES’ INVESTMENT PROGRAM

26555 Northwestern Highway

Southfield, MI 48034

(248) 354-7700

 

The Plan holds shares of common stock (without par value) of

Federal-Mogul Corporation

 

Table of Contents

FEDERAL-MOGUL CORPORATION

EMPLOYEE INVESTMENT PROGRAM

 

TABLE OF CONTENTS

 

     Page
Number

Report of Independent Registered Public Accounting Firm

    1

Financial Statements

     

Statement of Net Assets Available for Plan Benefits as of December 31, 2004 and 2003

    2

Statement of Changes in Net Assets Available for Plan Benefits for the years ended December 31, 2004 and 2003

    3

Notes to Financial Statements

   4-15

Supplemental Schedule for the year ended December 31, 2004

     

Schedule H, Line 4I – Schedule of Assets Held at End of Year

   16

 

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Retirement Programs Committee

Federal-Mogul Corporation

 

We have audited the accompanying statements of net assets available for plan benefits of the Federal-Mogul Corporation Employee Investment Program as of December 31, 2004 and 2003, and the related statements of changes in net assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan at December 31, 2004 and 2003, and the changes in its net assets available for plan benefits for the years then ended, in conformity with U.S. generally accepted accounting principles.

 

Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2004 is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.

 

/s/ Ernst & Young LLP

 

Detroit, Michigan

June 17, 2005

 

Table of Contents

 

Federal-Mogul Corporation

Employee Investment Program

Statement of Net Assets Available for Plan Benefits

 

     December 31
     2004
    2003

Assets

              

Receivables:

              

Participant loans

    $ 10,799,723    $ 9,959,442

Company contributions

      101,358      66,087

Participant contributions

      194,662      181,672

Participant loan interest

      9,841      9,781
    
  

Total Receivables

      11,105,584      10,216,982

Investments in Master Trust (See Note 6)

      230,956,374      215,698,640
    
  

Total Assets

      242,061,958      225,915,622
    
  

Liabilities

              

Forfeited accounts owed to the Company (See Note 1)

      323,878      134,239
    
  

Net Assets Available for Plan Benefits

    $ 241,738,080    $ 225,781,383
    
  

 

See notes to financial statements

 

2

Table of Contents

 

Federal-Mogul Corporation

Employee Investment Program

Statement of Changes in Net Assets Available for Plan Benefits

 

     Years Ended December 31
     2004
     2003

Additions

               

Dividends and interest

    $ 8,837,700     $ 7,747,208

Participant contributions

      13,747,149       13,502,523

Company contributions

      3,079,558       1,337,838

Company pension contributions

      3,251,874       3,388,747
    
 

Total Additions

      28,916,281       25,976,316

Deductions

               

Benefits paid to participants

      20,686,184       22,587,482

Administrative expenses

      102,730       71,662

Portion of Company contribution account forfeited upon withdrawal of members (See Note 1)

      325,884       513,804
    
 

Total Deductions

      21,114,798       23,172,948

Net realized/unrealized appreciation in fair value of investments in Master Trust (See Note 6)

      8,681,398       19,529,167

Net transfers (to)/from other Company investment programs

      (526,184 )     3,666,668
    
 

Net increase .

      15,956,697       25,999,203

Net assets available for plan benefits at beginning of year

      225,781,383       199,782,180
    
 

Net Assets Available for Plan Benefits at End of Year

    $ 241,738,080     $ 225,781,383
    
 

 

See notes to financial statements

 

3

Table of Contents

 

Federal-Mogul Corporation

Employee Investment Program

Notes to Financial Statements

December 31, 2004 and 2003

 

1. Description of the Plan

 

Federal-Mogul Corporation (the “Company”) sponsors the Federal-Mogul Corporation Employee Investment Program (the “Plan”). The following description of the Plan provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.

 

General

 

The Plan is a defined contribution plan which provides eligible hourly employees of the Company with a program for making voluntary pre-tax and after-tax contributions. Substantially all domestic hourly employees of the Company and subsidiaries are eligible to participate in the Plan. It is subject to the provisions of the Employee Retirement Income Security Act (ERISA).

 

On March 31, 2003, and May 6, 2003 the Plan received assets from other Company investment programs, the Bentley-Harris Manufacturing Company Local 390 Employees 401(k) Plan and the Supermet Independent Employee 401(k) Plan, respectively. On June 30, 2003 assets were transferred to the Plan from the Metal Leve, Inc. 401(k) Plan, another Company investment program. On December 3, 2003 the Plan also received assets from the AE Goetze Sparta “A” 401(k) Plan and the AE Goetze Sparta “B” 401(k) plan, both investment programs of the Company.

 

Fiduciary Counselors Inc., as the independent fiduciary, manages the Plan’s investment in the Federal-Mogul Corporation Common Stock (“Common Stock”). In its role as an independent fiduciary, Fiduciary Counselors Inc. has the authority to continue, restrict, or terminate the investment of Common Stock within the Plan.

 

On October 1, 2001, the Company filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. The United States Bankruptcy Court for the District of Delaware approved the Company’s motion to continue to operate the Plan. There is substantial doubt about the ability of the Company to continue as a going concern.

 

Master Trust

 

The Plan invests in a master trust. The Plan’s assets are administered under the terms of the master trust agreement (the “Master Trust”) between the Company and the Fidelity Management Trust Company (the “Trustee”). The agreement provides, among other things, that the Trustee safekeeps all investments, and keeps account for all investments, receipts, and disbursements, benefit payments, and other transactions.

 

4

Table of Contents

Federal-Mogul Corporation

Employee Investment Program

Notes to Financial Statements

December 31, 2004 and 2003

 

1. Description of the Plan (continued)

 

Eligibility, Contributions & Vesting

 

Company matching contributions were reinstated January 1, 2004 for hourly participants not covered under a collective bargaining agreement. During 2003, hourly employees not covered under a collective bargaining agreement were not eligible to receive Company matching contributions. For all hourly employees that were covered under a collective bargaining agreement during 2003, Company matching contributions were made as specified in the respective collective bargaining agreements. Plan provisions for the various business operations follow:

 

Location Name:

    Allentown, PA
     Athens, AL
     Avilla, IN
     Berkeley, MO
     Blacksburg, VA
     Boaz, AL
     Boyertown, PA
  

Union/Non-Union

      Non-Union     Non-Union       Non-Union       Union       Union       Non-Union       Union  

Company match

                                                       

(% of participant contribution)

      25 %   25 %     25 %     N/A       N/A       25 %     N/A  

Matching amount

                                                       

(% of participant compensation)

      8 %   8 %     8 %     N/A       N/A       8 %     N/A  

Pension contribution per hour

    $ 0.46     N/A     $ 0.32-$0.70     $ 0.55       N/A     $ 0.40-$0.56     $ 0.90-$1.05  

Vesting Schedule

                                                       

Years of Service

                                                       

less than 2

      0 %   0 %     0 %     0 %     N/A       0 %     0 %

less than 3

      25 %   25 %     25 %     25 %     N/A       25 %     25 %

less than 4

      50 %   50 %     50 %     50 %     N/A       50 %     50 %

less than 5

      75 %   75 %     75 %     75 %     N/A       75 %     75 %

5 or more

      100 %   100 %     100 %     100 %     N/A       100 %     100 %

Eligibility to participate

      A.S.A.P.     A.S.A.P.       A.S.A.P.       A.S.A.P.       90 days       A.S.A.P.       A.S.A.P.  

Eligibility for Company match

      A.S.A.P.     A.S.A.P.       A.S.A.P.       N/A       N/A       A.S.A.P.       N/A  

Eligibility for pension contribution

      A.S.A.P.     N/A       A.S.A.P.       A.S.A.P.       N/A       A.S.A.P.       A.S.A.P.  

Location Name:

    Burlington,
IA
     Cambridge, OH
     Chicago, IL
     Dayton, OH
     Dumas, AK
     El Paso,
TX
     El Paso, TX (SPG)
  

Union/Non-Union

      Union     Union       Union       Union       Non-Union       Non-Union       Non-Union  

Company match

                                                       

(% of participant contribution)

      N/A     N/A       N/A       50 %     25 %     25 %     25 %

Matching amount

                                                       

(% of participant compensation)

      N/A     N/A       N/A       8 %     8 %     8 %     8 %

Pension contribution per hour

      N/A     N/A     $ 0.40-$0.75       N/A     $ 0.30-$0.49       N/A       N/A  

Vesting Schedule

                                                       

Years of Service

                                                       

less than 2

      N/A     N/A       0 %     0 %     0 %     0 %     0 %

less than 3

      N/A     N/A       25 %     25 %     25 %     25 %     25 %

less than 4

      N/A     N/A       50 %     50 %     50 %     50 %     50 %

less than 5

      N/A     N/A       75 %     75 %     75 %     75 %     75 %

5 or more

      N/A     N/A       100 %     100 %     100 %     100 %     100 %

Eligibility to participate

      A.S.A.P.     A.S.A.P.       A.S.A.P.       90 days       A.S.A.P.       A.S.A.P.       A.S.A.P.  

Eligibility for Company match

      N/A     N/A       N/A       90 days       A.S.A.P.       A.S.A.P.       A.S.A.P.  

Eligibility for pension contribution

      N/A     N/A       A.S.A.P.       N/A       A.S.A.P.       N/A       N/A  

 

5

Table of Contents

Fedral-Mogul Corporation

Employee Investment Program

Notes to Financial Statements

December 31, 2004 and 2003

 

1. Description of the Plan (continued)

 

Eligibility, Contributions & Vesting

 

Location Name:

    Exton, PA
     Frankfort, IN
     Glasgow, KY
     Gordonsville, TN
     Greenville, MI Local
2017
     Greenville, MI Local
1158
     Greenville, MI
Non-Union
  

Union/Non-Union

    Union     Union       Non-Union     Non-Union       Union       Union     Non-Union  

Company match

                                                 

(% of participant contribution)

    50 %   50 %     25 %   25 %     25%-50 %     25%-50 %   25 %

Matching amount

                                                 

(% of participant compensation)

    6 %   8 %     8 %   8 %     8 %     8 %   8 %

Pension contribution per hour

    N/A     $264/ year of
service		  
 		   $ 0.20-$0.45     N/A     $ 0.25     $ 0.35     N/A  

Vesting Schedule

                                                 

Years of Service

                                                 

less than 2

    0 %   0 %     0 %   0 %     0 %     0 %   0 %

less than 3

    0 %   25 %     25 %   25 %     25 %     25 %   25 %

less than 4

    100 %   50 %     50 %   50 %     50 %     50 %   50 %

less than 5

    100 %   75 %     75 %   75 %     75 %     75 %   75 %

5 or more

    100 %   100 %     100 %   100 %     100 %     100 %   100 %

Eligibility to participate

    90 days     60 days       A.S.A.P.     A.S.A.P.       90 days       60 days     A.S.A.P.  

Eligibility for Company match

    90 days     60 days       A.S.A.P.     A.S.A.P.       1 year       1 year     A.S.A.P.  

Eligibility for pension contribution

    N/A     N/A       A.S.A.P.     N/A       90 days       60 days     N/A  

Location Name:

    LaGrange, GA
     Lake City,
MN
     Logansport, IN
     Malden, MO
     Manitowoc, WI
     Maryville, MO
     Maysville, KY
  

Union/Non-Union

    Non-Union     Union       Union     Union       Non-Union       Non-Union     Non-Union  

Company match

                                                 

(% of participant contribution)

    25 %   20 %     50 %   50 %     25 %     25 %   25 %

Matching amount

                                                 

(% of participant compensation)

    8 %   6 %     8 %   8 %     8 %     8 %   8 %

Pension contribution per hour

    N/A     $0.30-
$0.80		  
 		     N/A     N/A       N/A       $0.42-$0.49     N/A  

Vesting Schedule

                                                 

Years of Service

                                                 

less than 2

    0 %   0 %     0 %   0 %     0 %     0 %   0 %

less than 3

    25 %   25 %     25 %   25 %     25 %     25 %   25 %

less than 4

    50 %   50 %     50 %   50 %     50 %     50 %   50 %

less than 5

    75 %   75 %     75 %   75 %     75 %     75 %   75 %

5 or more

    100 %   100 %     100 %   100 %     100 %     100 %   100 %

Eligibility to participate

    A.S.A.P.     A.S.A.P.       90 days     90 days       A.S.A.P.       A.S.A.P.     A.S.A.P.  

Eligibility for Company
match

    A.S.A.P.     A.S.A.P.       1 year     90 days       A.S.A.P.       A.S.A.P.     A.S.A.P.  

Eligibility for pension
contribution

    N/A     A.S.A.P.       N/A     N/A       N/A       A.S.A.P.     N/A  

 

6

Table of Contents

Federal-Mogul Corporation

Employee Investment Program

Notes to Financial Statements

December 31, 2004 and 2003

 

1. Description of the Plan (continued)

 

Eligibility, Contributions & Vesting

 

Location Name:

    Michigan City, IN
     Orangeburg, SC
Friction
     Orangeburg, SC
Pistons
     Scottsville,
KY
     Skokie, I1
     Smithville, TN
Friction
     Smyrna,
TN
Distribution
  

Union/Non-Union

      Non-Union       Non-Union     Union       Non-Union       Non-Union     Non-Union       Non-Union  

Company match

                                                     

(% of participant contribution)

      25 %     25 %   50 %     25 %     25 %   25 %     25 %

Matching amount

                                                     

(% of participant compensation)

      8 %     8 %   8 %     8 %     8 %   8 %     8 %

Pension contribution per hour

    $ 0.42-$0.75     $ 0.30-$0.40     N/A     $ 0.20-$0.24       N/A     N/A     $ 0.37  

Vesting Schedule

                                                     

Years of Service

                                                     

less than 2

      0 %     0 %   0 %     0 %     0 %   0 %     0 %

less than 3

      25 %     25 %   25 %     25 %     25 %   25 %     25 %

less than 4

      50 %     50 %   50 %     50 %     50 %   50 %     50 %

less than 5

      75 %     75 %   75 %     75 %     75 %   75 %     75 %

5 or more

      100 %     100 %   100 %     100 %     100 %   100 %     100 %

Eligibility to participate

      A.S.A.P.       A.S.A.P.     90 days       A.S.A.P.       A.S.A.P.     A.S.A.P.       A.S.A.P.  

Eligibility for Company match

      A.S.A.P.       A.S.A.P.     90 days       A.S.A.P.       A.S.A.P.     A.S.A.P.       A.S.A.P.  

Eligibility for pension contribution

      A.S.A.P.       A.S.A.P.     N/A       A.S.A.P.       N/A     N/A       A.S.A.P.  

Location Name:

    South Bend, IN
     Sparta, MI A
     Sparta, MI B
     Sparta, TN
     St. Johns,
MI
     Summerton, SC
     Sumter, SC
  

Union/Non-Union

      Non-Union       Union     Union       Non-Union       Union     Non-Union       Non-Union  

Company match

                                                     

(% of participant contribution)

      25 %     N/A     50 %     25 %     25 %   25 %     25 %

Matching amount

                                                     

(% of participant compensation)

      8 %     N/A     8 %     8 %     6 %   8 %     8 %

Pension contribution per hour

      N/A       N/A     N/A     $ 0.41-$0.64     $ 0.10     N/A       N/A  

Vesting Schedule

                                                     

Years of Service

                                                     

less than 2

      0 %     N/A     0 %     0 %     0 %   0 %     0 %

less than 3

      25 %     N/A     25 %     25 %     0 %   25 %     25 %

less than 4

      50 %     N/A     50 %     50 %     0 %   50 %     50 %

less than 5

      75 %     N/A     75 %     75 %     0 %   75 %     75 %

5 or more

      100 %     N/A     100 %     100 %     100 %   100 %     100 %

Eligibility to participate

      A.S.A.P.       N/A     90 days       A.S.A.P.       90 days     A.S.A.P.       A.S.A.P.  

Eligibility for Company match

      A.S.A.P.       N/A     90 days       A.S.A.P.       90 days     A.S.A.P.       A.S.A.P.  

Eligibility for pension contribution

      N/A       N/A     N/A       A.S.A.P.       90 days     N/A       N/A  

 

7

Table of Contents

Federal-Mogul Corporation

Employee Investment Program

Notes to Financial Statements

December 31, 2004 and 2003

 

1. Description of the Plan (continued)

 

Eligibility, Contributions & Vesting

 

Location Name:

    Sunrise, FL
     Van Wert, OH
     Waupun, WI
     Winchester, VA
  

Union/Non-Union

    Non-Union     Union     Non-Union     Union  

Company match

                         

(% of participant contribution)

    25 %   50 %   25 %   25 %

Matching amount

                         

(% of participant compensation)

    8 %   8 %   8 %   6 %

Pension contribution per hour

    N/A     N/A     N/A     N/A  

Vesting Schedule

                         

Years of Service

                         

less than 2

    0 %   0 %   0 %   0 %

less than 3

    25 %   25 %   25 %   25 %

less than 4

    50 %   50 %   50 %   50 %

less than 5

    75 %   75 %   75 %   75 %

5 or more

    100 %   100 %   100 %   100 %

Eligibility to participate

    A.S.A.P.     90 days     A.S.A.P.     90 days  

Eligibility for Company match

    A.S.A.P.     90 days     A.S.A.P.     90 days  

Eligibility for pension contribution

    N/A     N/A     N/A     N/A  

 

“A.S.A.P.” indicates as soon as administratively possible

 

“N/A” indicates not applicable

 

Full vesting also occurs upon death, total and permanent disability, or attainment of age 55 with five years of service. In addition, special vesting provisions will become effective if the Plan is determined to be “top-heavy” pursuant to the Internal Revenue Code.

 

Participants are immediately vested in their contributions plus earnings thereon.

 

8

Table of Contents

Federal-Mogul Corporation

Employee Investment Program

Notes to Financial Statements

December 31, 2004 and 2003

 

1. Description of the Plan (continued)

 

Forfeitures

 

Company contributions which are not vested at the time of a participant’s withdrawal from the Plan are forfeited and are applied as a reduction of future Company contributions.

 

If the individual is re-employed within 60 months of his/her severance of employment and repays the full amount previously distributed to him/her from the Company contribution account and otherwise qualifies for reinstatement in the Plan, the amount of the forfeiture is re-credited to his/her account in the reinstatement year.

 

Participant Accounts

 

Each participant’s account is credited with the participant’s contribution, Company’s contribution, if applicable, and Plan earnings. The benefit to which a participant is entitled is the benefit that can be provided not in excess of the participant’s vested account balance.

 

Investment Options

 

The Plan provides for 25 investment options which includes the following funds:

 

  •   Fidelity Asset Manager Fund

 

  •   Fidelity Asset Manager: Growth Fund

 

  •   Fidelity Asset Manager: Income Fund

 

  •   Stable Value Fund

 

  •   PIMCO Total Return Bond Fund

 

  •   Fidelity Low-Priced Stock Fund

 

  •   Fidelity Dividend Growth Fund

 

  •   Fidelity Mid-Cap Stock Fund

 

  •   Fidelity Diversified International Fund

 

  •   Fidelity U.S. Bond Index Fund

 

  •   PIMCO Foreign Bond Fund

 

  •   Spartan U.S. Equity Index Fund

 

  •   Dreyfus Small Cap Stock Index Fund

 

  •   Columbia Acorn Fund - Class Z

 

  •   T. Rowe Price Mid-Cap Growth Fund

 

  •   The Oakmark Select Fund

 

  •   Dodge & Cox Stock Fund

 

  •   Royce Opportunity Fund

 

  •   AMCAP Fund – Class R4

 

  •   Dreyfus Mid-Cap Index Fund

 

  •   Spartan International Index Fund

 

  •   GMO Emerging Countries Fund (closed as an investment option as of December 31, 2004)

 

  •   Dimensional Emerging Markets Fund

 

  •   Federal-Mogul Common Stock

(closed to new investments)

 

  •   Brokerage Account

 

Employees were not permitted to make additional investments in Federal-Mogul Corporation Common Stock during 2004 and 2003.

 

9

Table of Contents

Federal-Mogul Corporation

Employee Investment Program

Notes to Financial Statements

December 31, 2004 and 2003

 

1. Description of the Plan (continued)

 

Participant Loans Receivable

 

The Plan allows participants to borrow from their account under certain plan conditions. The maximum amount of a participant’s borrowings shall not exceed $50,000 over a 12 month period and is limited to the lower of 50% of the participant’s vested account balance or 90% of the participant’s employee contribution accounts. No borrowings shall be permitted for amounts under $1,000. Loans for the purchase of a primary residence can be for a 15-year duration. All other borrowings shall be paid back in equal payments through payroll deductions not to exceed four-and-one-half years.

 

Payment of Benefits / Withdrawals

 

In the event of retirement (as defined by the Plan agreement), death, total and permanent disability, termination of employment (as defined by the Plan agreement), or attainment of age 59 1/2, the vested balances in the participant’s accounts will be distributed to the participant or the participant’s beneficiary in either a lump-sum distribution, or periodic installments.

 

2. Significant Accounting Policies

 

Basis of Accounting

 

The financial statements of the Plan are prepared under the accrual method of accounting.

 

Investment Valuation and Income Recognition

 

Investments in all the investment funds, except the Stable Value Fund, are valued at quoted market prices. The Stable Value Fund is valued at fair market value as determined by Fidelity Management Trust Company. The Participant Loans are valued at their outstanding values, which approximate fair value.

 

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

 

Payment of Benefits

 

Benefits are recorded when paid.

 

Administrative Expenses

 

Expenses incurred in the operation of the Plan are paid by the Plan unless paid by the Company or the Participants. No expenses are paid from the trust unless such payment is permitted by law. Participants may incur administrative expenses related to loan administration, disbursements, sale of Federal-Mogul Corporation Common Stock, or participation in the Brokerage Account. Administrative expenses related to these transactions are paid directly from the corresponding participant’s Plan account.

 

Reclassification

 

Certain amounts in the 2003 financial statements have been reclassified to conform to the 2004 method of presentation.

 

3. Party-In-Interest Transactions

 

Fees incurred for legal and other services rendered by parties-in-interest were paid by the Company on behalf of the Plan.

 

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Table of Contents

Federal-Mogul Corporation

Employee Investment Program

Notes to Financial Statements

December 31, 2004 and 2003

 

4. Plan Termination

 

Although it has not expressed any intent to do so, the Company has the right, under the Plan document, to terminate the

Plan, subject to the provisions of ERISA. In the event the Plan is terminated or partially terminated, the Company shall determine the share of each participant affected thereby and all accounts shall fully vest. The funds shall then be distributed to the member and no portion of the funds shall be returned to the Company.

 

5. Income Tax Status

 

The Plan has received a determination letter from the Internal Revenue Service dated April 8, 2003, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the “Code”) and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the Internal Revenue Service, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The plan administrator believes that the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt.

 

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Table of Contents

Federal-Mogul Corporation

Employee Investment Program

Notes to Financial Statements

December 31, 2004 and 2003

 

6. Investments in Master Trust

 

The Plan’s investments were held by the Master Trust administered by the Trustee, at December 31, 2004 and 2003. The Plan held approximately a 42% and a 43% share in the Master Trust at December 31, 2004 and 2003, respectively.

 

The fair value of net assets of the Master Trust were as follows:

 

     December 31
     2004
    2003

Assets

              

Receivables:

              

Participant loans

    $ 17,107,757    $ 15,397,094

Company contributions

      226,014      66,087

Participant contributions

      843,915      731,340

Participant loan interest

      22,811      21,971
    
  

Total Receivables

      18,200,497      16,216,492

Investments:

              

Fidelity Asset Manager Fund

      2,022,824      1,341,885

Fidelity Asset Manager: Growth Fund

      1,313,406      998,469

Fidelity Asset Manager: Income Fund

      4,330,904      1,652,794

Stable Value Fund

      191,212,615      187,033,710

PIMCO Total Return Bond Fund

      77,960,172      77,273,447

Fidelity Low-Priced Stock Fund

      54,225,740      42,984,795

Fidelity Dividend Growth Fund

      113,194,374      113,595,714

Fidelity Mid-Cap Stock Fund

      41,098,994      40,026,942

Fidelity Diversified International Fund

      30,564,549      24,160,137

Fidelity U.S. Bond Index Fund

      2,412,689      2,211,874

PIMCO Foreign Bond Fund

      550,013      415,198

Spartan U.S. Equity Index Fund

      2,123,764      1,629,796

Dreyfus Small Cap Stock Index Fund

      1,100,135      485,436

Columbia Acorn Fund - Class Z

      4,474,482      1,463,747

T. Rowe Price Mid-Cap Growth Fund

      3,475,463      1,532,778

The Oakmark Select Fund

      3,984,273      2,877,617

Dodge & Cox Stock Fund

      8,710,525      3,693,706

Royce Opportunity Fund

      4,564,421      1,904,552

AMCAP Fund - Class R4

      2,168,960      1,114,004

Dreyfus Mid Cap Index Fund

      1,434,221      776,644

Spartan International Index Fund

      451,175      165,731

GMO Emerging Countries Fund

      —        934,372

Dimensional Emerging Markets

      2,209,641      —  

Federal-Mogul Corporation Common Stock

      2,234,598      1,611,080

Brokerage Account

      5,653,281      5,023,949
    
  

Total investments of the Master Trust

      561,471,219      514,908,377

Total assets of the Master Trust

      579,671,716      531,124,869

Liabilities

              

Forfeited accounts owed to the Company

      389,653      366,672
    
  

Total net assets of the Master Trust

    $ 579,282,063    $ 530,758,197
    
  

 

12

Table of Contents

Federal-Mogul Corporation

Employee Investment Program

Notes to Financial Statements

December 31, 2004 and 2003

 

6. Investments in Master Trust (continued)

 

During the years ended December 31, 2004 and 2003, the Master Trust had net investment income of $20,309,163 and $16,761,791, respectively, and had net realized and unrealized appreciation in the fair value of investments of $24,114,503 and $53,232,162, respectively, as follows:

 

     Net Investment
Income
for the Year Ended
December 31, 2004
   

Net Realized and
Unrealized

Appreciation/(Depreciation)

in Fair Value

for the Year Ended

December 31, 2004

  

Fidelity Asset Manager Fund

    $ 43,302    $ 60,432  

Fidelity Asset Manager: Growth Fund

      27,685      44,563  

Fidelity Asset Manager: Income Fund

      67,190      151,255  

Stable Value Fund

      9,367,627      —    

PIMCO Total Return Bond Fund

      3,942,436      (279,116 )

Fidelity Low-Priced Stock Fund

      2,828,934      6,961,570  

Fidelity Dividend Growth Fund

      1,551,883      4,789,781  

Fidelity Mid-Cap Stock Fund

      124,472      3,298,741  

Fidelity Diversified International Fund

      221,990      4,707,711  

Fidelity U.S. Bond Index Fund

      103,533      (9,848 )

PIMCO Foreign Bond Fund

      26,656      2,141  

Spartan U.S. Equity Index Fund

      35,053      160,197  

Dreyfus Small Cap Stock Index Fund

      31,163      121,628  

Columbia Acorn Fund - Class Z

      147,056      476,886  

T. Rowe Price Mid-Cap Growth Fund

      60,929      419,181  

The Oakmark Select Fund

      29,173      312,373  

Dodge & Cox Stock Fund

      311,472      875,902  

Royce Opportunity Fund

      289,121      259,719  

AMCAP Fund - Class R4

      15,408      149,715  

Dreyfus Mid Cap Index Fund

      47,173      129,726  

Spartan International Index Fund

      8,560      52,892  

GMO Emerging Countries Fund

      100,857      (218,061 )

Dimensional Emerging Markets Fund

      20,729      432,672  

Federal-Mogul Corporation Common Stock

      —        889,380  

Brokerage Account

      —        325,063  
    
  
       19,402,402      24,114,503  

Participant loans

      906,761      —    
    
  
     $ 20,309,163    $ 24,114,503  
    
  

 

13

Table of Contents

Federal-Mogul Corporation

Employee Investment Program

Notes to Financial Statements

December 31, 2004 and 2003

 

6. Investments in Master Trust (continued)

 

    

Net Investment
Income

for the Year Ended

December 31, 2003

   

Net Realized and
Unrealized

Appreciation/(Depreciation)

in Fair Value

for the Year Ended

December 31, 2003

  

Fidelity Asset Manager Fund

    $ 18,852    $ 111,811  

Fidelity Asset Manager: Growth Fund

      19,594      67,523  

Fidelity Asset Manager: Income Fund

      20,769      89,195  

Stable Value Fund

      9,644,402      —    

PIMCO Total Return Bond Fund

      3,782,764      326,675  

Fidelity Low-Priced Stock Fund

      557,885      11,579,448  

Fidelity Dividend Growth Fund

      911,957      20,701,219  

Fidelity Mid-Cap Stock Fund

      166,111      9,748,083  

Fidelity Diversified International Fund

      295,291      6,842,418  

Fidelity U.S. Bond Index Fund

      135,554      (10,447 )

PIMCO Foreign Bond Fund

      19,309      (10,461 )

Spartan U.S. Equity Index Fund

      14,714      261,620  

Dreyfus Small Cap Stock Index Fund

      1,211      63,506  

Columbia Acorn Fund - Class Z

      1,139      244,270  

T. Rowe Price Mid-Cap Growth Fund

      —        217,538  

The Oakmark Select Fund

      8,581      356,646  

Dodge & Cox Stock Fund

      60,019      590,827  

Royce Opportunity Fund

      76,381      311,174  

AMCAP Fund - Class R4

      388      149,642  

Dreyfus Mid Cap Index Fund

      6,875      109,302  

Spartan International Index Fund

      2,949      26,459  

GMO Emerging Countries Fund

      19,356      113,304  

Federal-Mogul Corporation Common Stock

      —        (23,099 )

Brokerage Account

      —        1,365,509  
    
  
       15,764,101      53,232,162  

Participant loans

      997,690      —    
    
  
     $ 16,761,791    $ 53,232,162  
    
  

 

14

Table of Contents

Federal-Mogul Corporation

Employee Investment Program

Notes to Financial Statements

December 31, 2004 and 2003

 

6. Investments in Master Trust (continued)

 

The changes in the fair value of net assets of the Master Trust for the years ended December 31, 2004 and 2003 are summarized as follows:

 

     Years Ended December 31
     2004
    2003

Additions

              

Dividends and interest

    $ 20,309,163    $ 16,761,791

Participant contributions

      35,529,933      33,975,380

Company contributions

      10,306,117      4,732,775
    
  

Total Additions

      66,145,213      55,469,946

Deductions

              

Benefits paid to participants

      41,201,904      45,941,174

Administrative expenses

      140,013      107,680

Portion of Company contribution account forfeited upon withdrawal of members

      393,933      714,523
    
  

Total Deductions

      41,735,850      46,763,377

Net realized/unrealized appreciation in fair value of investments

      24,114,503      53,232,162

Transfers from other Company investment programs

      —        4,367,212
    
  

Net increase

      48,523,866      66,305,943
    
  

Net assets available for plan benefits at beginning of year

      530,758,197      464,452,254
    
  

Net assets of Master Trust at end of year

    $ 579,282,063    $ 530,758,197
    
  

 

On June 4, 2004, the Third Amended Joint Plan of Reorganization (the “Plan of Reorganization”) for the Company and the other U.S. and U.K. Debtors was filed with the Bankruptcy Court. The Plan of Reorganization was jointly proposed by the Company, the Unsecured Creditors Committee, the Asbestos Claimants Committee, the Future Asbestos Claimants Representative, the Agent for the Prepetition Bank Lenders and the Equity Security Holders Committee (collectively referred to as the “Plan Proponents”).

 

The Plan of Reorganization provides that asbestos personal injury claimants, both present and future, will be permanently channeled to a trust or series of trusts established pursuant to Section 524(g) of the Bankruptcy Code, thereby protecting Federal-Mogul and its affiliates in the Chapter 11 Cases from existing and future asbestos liability. Although certain issues remain to be resolved, the Plan of Reorganization provides that all currently outstanding stock of Federal-Mogul will be cancelled, and 50.1% of newly authorized and issued common stock of reorganized Federal-Mogul will be distributed to the asbestos trusts, and 49.9% of the newly authorized and issued common stock will be distributed pro rata to the noteholders. If the Bankruptcy Court finds that the classes of holders of common stock of Federal-Mogul have voted in favor of the Plan of Reorganization, the holders of currently outstanding common stock of Federal-Mogul will receive warrants that may be used to purchase shares of reorganized Federal-Mogul at a predetermined exercise price.

 

15

Table of Contents

Federal-Mogul Corporation

Employee Investment Program

EIN: 38-0533580 Plan Number 104

Schedule H, Line 4i

 

Schedule of Assets (Held at End of Year)

 

December 31, 2004

 

The following is a Schedule of Assets Held outside of the Master Trust:

 

Identity of Issue, Borrower,
Lessor or Similar Party

   

Description of Investment including Maturity Date,
Interest, Collateral, Par or Maturity Value

    Current Value

Participants

   

Loans at various terms and interest rates

    $ 10,799,723
         
          $ 10,799,723
         

 

There were no investment assets reportable as acquired and disposed of during the year.

 

16