<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
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
SALARIED EMPLOYEES' INVESTMENT PROGRAM
26555 Northwestern Highway
Southfield, Michigan 48034
The Plan holds shares of common stock (without par value) of
Federal-Mogul Corporation (see address above).
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Retirement Programs Committee
Federal-Mogul Corporation
We have audited the accompanying statements of net assets available for plan
benefits of the Federal-Mogul Corporation Salaried Employees' Investment Program
as of December 31, 1999 and 1998, and the related statements of changes in net
assets available for 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 auditing standards generally accepted
in the 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. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as 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 benefits of the Plan at
December 31, 1999 and 1998, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
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 for investment purposes at end of year as of December 31, 1999 is presented
for purposes of additional analysis and is not a required part of the financial
statements but are 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, MI
June 26, 2000
<PAGE>
FEDERAL-MOGUL CORPORATION
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
SALARIED EMPLOYEES' INVESTMENT PROGRAM
<TABLE>
<CAPTION>
December 31
1999 1998
------------ ------------
<S> <C> <C>
Assets
Investments in master trust (See Note 7) 356,206,795 170,651,321
Federal-Mogul Corporation (FMC) Preferred Stock 48,637,362 99,271,347
Participant loans receivable 2,643,133 2,966,595
Contribution receivable from FMC -- 4,077,310
------------ ------------
Total Assets 407,487,290 276,966,573
Liabilities
Accrued Expenses 11,463 --
Advance from FMC 142,481 --
Forfeited accounts owed to FMC (See Note 3) 30,827 18,945
Senior ESOP Notes (See Note 6) 7,879,941 15,149,303
------------ ------------
Total Liabilities 8,064,712 15,168,248
------------ ------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $399,422,578 $261,798,325
============ ============
</TABLE>
See notes to financial statements
1
<PAGE>
FEDERAL-MOGUL CORPORATION
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
SALARIED EMPLOYEES' INVESTMENT PROGRAM
<TABLE>
<CAPTION>
December 31
1999 1998
------------- -------------
<S> <C> <C>
Additions
Dividends and Interest $ 16,152,835 $ 8,385,269
Contributions:
Participants 16,868,381 9,660,804
Federal-Mogul Corporation 7,560,250 4,838,064
------------- -------------
Total Additions 40,581,466 22,884,137
Deductions
Benefits paid to participants 21,133,034 16,948,724
Portion of Company Match Account forfeited upon
withdrawal of members (see Note 3) 273,876 328,539
Interest expense 973,485 1,472,507
------------- -------------
Total Deductions 22,380,395 18,749,770
Transfers from another FMC investment program 200,154,661 54,737
Net unrealized appreciation/(depreciation) in fair value of
investments (See Note 7) (80,731,479) 58,603,632
------------- -------------
Net increase 137,624,253 62,792,736
Net assets available for plan benefits at beginning of year 261,798,325 199,005,589
------------- -------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 399,422,578 $ 261,798,325
============= =============
</TABLE>
See notes to financial statements
2
<PAGE>
FEDERAL-MOGUL CORPORATION
SALARIED EMPLOYEES' INVESTMENT PROGRAM
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
1. DESCRIPTION OF THE PLAN
The following description of the Federal-Mogul Corporation Salaried Employees'
Investment Program (the "Plan") provides only general information. Participants
should refer to the Plan agreement for a more complete description of the Plan's
provisions.
During 1999 and 1998, the Plan received assets transferred from other investment
programs of Federal-Mogul Corporation (the "Company")
GENERAL
The Plan is a defined contribution plan which provides eligible salaried
employees of the Company with a program for making voluntary pretax and
after-tax contributions. Substantially all salaried 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).
MASTER TRUST AND ESOP TRUST
The Plan invests participant directed contributions 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 State Street Bank (the "Trustee")
and Comerica Bank (the "ESOP Trustee"). The agreements provide, among other
things, that the Trustee and ESOP Trustee safekeep all investments, and keep
account for all investments, receipts, and disbursements, benefit payments, and
other transactions.
CONTRIBUTIONS & VESTING
Participants are immediately vested in their contributions plus actual earnings
thereon. Company matching contributions are made with Company Series C
convertible preferred stock or common stock. Vesting in the Company's matching
contribution portion of their accounts plus actual earnings thereon is based on
years of continuous service, as follows:
1. Company Match
(% of participant contribution) 50%
2. Matching Amount
(% of participant compensation) 8%
3. Maximum Contribution
(% of participant compensation) 20%
4. Vesting Percent
Years of Service
1 0%
2 25%
3 50%
4 75%
5 100%
5. Eligibility to Participate
Eligibility for employee to contribute Immediate
Eligibility for company match Immediate
3
<PAGE>
CONTRIBUTIONS & VESTING (CONTINUED)
Full vesting also occurs upon death, disability, or retirement at designated
ages. In addition, special-vesting provisions will become effective if the Plan
is determined to be "top-heavy," pursuant to the Internal Revenue Code.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution and
allocations of the (a) the Company's contribution and (b) Plan earnings, and
charged with an allocation of certain administrative expenses. These
administrative expenses paid by participants are netted against the net asset
value of the investment fund. Allocations are based on participant earnings or
account balances, as defined. The benefit to which a participant is entitled is
the benefit that can be provided from the participant's vested account.
FORFEITURES
Shares of Federal-Mogul Corporation common stock which are not vested at the
time of a participant's withdrawal from the Plan are forfeited and are applied
as a reduction of required Company contributions.
Shares of Federal-Mogul Corporation Series C 7-1/2% convertible preferred stock
which are not vested at the time of a participant's withdrawal from the Plan
become available for allocation to other Plan participants.
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.
INVESTMENT OPTIONS
The Plan provides for eight investment options which includes a stable value
fund, a bond fund, a large cap equity fund, a mid cap equity fund, a small cap
equity fund, an international fund, a brokerage account and common stock of the
Company.
PARTICIPANT LOANS RECEIVABLE
The Plan allows participants to borrow from their account upon written request
and 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 given 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, 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, an annual or more frequent installment.
2. SIGNIFICANT ACCOUNT POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual method of
accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Plan's management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
4
<PAGE>
2. SIGNIFICANT ACCOUNT POLICIES (CONTINUED)
INVESTMENT VALUATION AND INCOME RECOGNITION
Investments in Federal-Mogul Corporation common stock, the Bond Fund, the Large
Cap Equity Fund, the Mid Cap Equity Fund, the Small Cap Equity Fund, the
International Fund, and the Brokerage Account are valued at quoted market
prices. Federal-Mogul Corporation Series C 7-1/2% convertible preferred stock is
allocated at the stated value of $63.75 per share and is convertible into two
shares of Federal-Mogul Corporation common stock upon withdrawal from the Plan.
The Preferred Stock Fund is valued at $63.75 or twice the quoted market value of
Federal-Mogul Corporation common stock, whichever is greater. The Stable Value
Fund is valued at fair market value as estimated by LaSalle National Trust. The
Stable Value Fund value represents contributions plus interest, less
administrative expenses.
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.
RECLASSIFICATIONS
Certain amounts in the 1998 financial statements have been reclassified to
conform to the 1999 presentation.
3. PARTY-IN-INTEREST TRANSACTIONS
During the years ended December 31, 1999 and December 31, 1998, the Master Trust
purchased 1,443,654 and 206,232 shares of common stock of Federal-Mogul
Corporation for a total cost of $43,585,601 and $11,179,982 respectively.
Fees incurred for legal, accounting and other services rendered by
parties-in-interest were based on customary and reasonable rates for such
services and were paid by the Company on behalf of the Plan. Forfeited shares
which have not been applied as a reduction of contributions at year-end are
reflected as a liability to the Company and will be applied to reduce future
Company contributions.
4. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right,
under the Plan, to discontinue its contributions at any time and 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 Internal Revenue Service has ruled favorably on the Plan as of October 25,
1996 that the Plan qualifies under section 401 (a) of the Internal Revenue Code
(IRC) and the related trust therefore, is not subject to tax under present
income tax laws. The Plan is required to operate in conformity with the IRC and
the Employee Retirement Income Security Act of 1974 to maintain its
qualification. The Company is not aware of any course of action or series of
events that have occurred that might adversely affect the Plan's qualified
status.
6. SENIOR ESOP NOTES
The Employee Stock Ownership Trust issued $61,750,000 of Senior ESOP Notes in a
private placement on February 15, 1989. The notes are payable in semi-annual
installments through December 21, 2000, including interest at 6.63%. The
preferred stock in the Exempt Loan Fund is pledged against repayment of debt.
Stock is released proportionately as principal and interest payments are made.
The notes are guaranteed by the Company.
5
<PAGE>
7. INVESTMENTS IN MASTER TRUST & ESOP TRUST
Certain of the Plan's investments are held by the Master Trust administered by
the Trustee.
At December 31, 1999 and 1998, the Plan holds a 65% and a 81% share,
respectively, of the consolidated master trust.
The fair value of net assets of the Trust at December 31, 1999 and December 31,
1998 were as follows:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
------------------- -------------------
<S> <C> <C>
Investments:
Stable Value Fund $166,565,765 $ 40,901,369
Bond Fund 40,420,469 8,934,232
Large Cap Equity Fund 192,112,508 47,329,310
Mid Cap Equity Fund 9,891,731 20,717,520
Small Cap Equity Fund 30,522,675 --
International Fund 17,081,362 6,499,520
Brokerage Account 1,753,017 --
Federal-Mogul Common Stock Fund* 56,713,676 84,316,050
Cooper Common Stock Fund 26,926,944 --
Cooper Cameron Stock Fund 1,430,827 --
Loan Fund 6,309,030 --
------------ ------------
Total Investments 549,728,004 208,698,001
Receivable from FMC -- 511,180
Cash Equivalents, including accrued interest -- 304,995
Participant loans receivable 5,546,787 --
------------ ------------
Total Assets 555,274,791 209,514,176
Forfeited accounts owed to FMC 108,777 110,054
Accrued Expenses 17,635 --
------------ ------------
Total Liabilities 126,412 110,054
------------ ------------
NET ASSETS OF THE MASTER TRUST $555,148,379 $209,404,122
============ ============
</TABLE>
* non-participant directed
The Company's Series C 7 1/2% convertible preferred stock, financed through a
leveraged Employee Stock Ownership Plan is held by the ESOP Trust, administered
by the ESOP Trustee. These assets represent investments in excess of 5% or more
of the fair value of net assets available for benefits at December 31, 1999 and
December 31, 1998:
December 31, 1999
-------------------------------
Preferred Stock:
Federal-Mogul Corporation 762,939 shares $48,637,362
December 31, 1998
-------------------------------
Preferred Stock:
Federal-Mogul Corporation 834,213 shares $99,271,347
6
<PAGE>
7. INVESTMENTS IN MASTER TRUST & ESOP TRUST (CONTINUED)
During the year ended December 31, 1999 and December 1998 the Master Trust had
investment income amounting to $19,484,720 and $5,384,652, respectively, and had
realized and unrealized depreciation and appreciation in the fair value of
investments of ($45,152,207) and $33,939,645 respectively as follows:
<TABLE>
<CAPTION>
Net Realized and
Unrealized
Appreciation
Net Investment (Depreciation) in
Income During Fair Value During
Period Period
-------------- -------------------
Year Ended December 31, 1999
-------------------------------
<S> <C> <C>
Stable Value Fund $ 3,519,893 $ --
Bond Fund 525,602 666,306
Large Cap Equity Fund 6,936,253 11,612,073
Mid Cap Equity Fund 157,266 984,078
Small Cap Equity Fund 3,788,264 2,089,255
International Fund 568,724 3,295,700
Brokerage Account 405,364 --
Federal Mogul Common Stock Fund 2,467,194 (61,195,526)
Cooper Common Stock Fund 220,151 (2,940,791)
Cooper Cameron Stock Fund 461 336,698
Loan Fund 895,548 --
------------ ------------
$ 19,484,720 $(45,152,207)
Year Ended December 31, 1998
-------------------------------
Stable Value Fund $ 2,203,445 $ --
Bond Fund 250,989 250,802
Large Cap Equity Fund 1,808,627 2,817,610
Mid Cap Equity Fund 719,194 674,085
International Fund 209,720 436,003
Federal Mogul Common Stock Fund 192,677 29,761,145
------------ ------------
$ 5,384,652 $ 33,939,645
</TABLE>
7
<PAGE>
7. INVESTMENTS IN MASTER TRUST & ESOP TRUST (CONTINUED)
The changes in the fair value of net assets of the consolidated master trust for
the years ended December 31, 1999 and December 31, 1998 as summarized as
follows:
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
------------- -------------
<S> <C> <C>
Additions:
Dividends/interest income $ 19,484,720 $ 5,384,652
Contributions from participating employees 25,412,255 14,462,175
Contributions from Federal-Mogul Corporation 6,844,589 1,400,610
------------- -------------
Total Additions 51,741,564 21,247,437
Deductions:
Members' accounts distributed
upon withdrawal 20,331,070 19,235,493
Portion of company match
account forfeited upon
withdrawal of members 69,809 69,572
------------- -------------
Total Deductions 20,400,879 19,305,065
Net appreciation/(depreciation) in market value of investments (45,152,207) 33,939,645
Net member transfers from master trust 359,555,779 290,496
------------- -------------
NET INCREASE/(DECREASE) 345,744,257 36,172,513
Net assets available for plan benefits at beginning of period 209,404,122 173,231,609
------------- -------------
NET ASSETS OF THE MASTER TRUST AT END OF PERIOD $ 555,148,379 $ 209,404,122
============= =============
</TABLE>
8
<PAGE>
8. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
------------------- -------------------
<S> <C> <C>
Net assets available for benefits per the financial statements $ 399,422,578 $ 261,798,325
Amounts allocated to withdrawing participants (3,959,576) (12,151,209)
------------- -------------
Net assets available for plan benefits per the Form 5500 $ 395,463,002 $ 249,647,116
============= =============
Amounts allocated to withdrawing participants by fund option is as follows:
<CAPTION>
December 31, 1999 December 31, 1998
------------------- -------------------
<S> <C> <C>
ESOP: Allocated Federal-Mogul preferred stock $ 3,959,576 $ 12,151,209
============= =============
</TABLE>
The following is a reconciliation of benefits per the financial statements to
the Form 5500:
<TABLE>
<CAPTION>
Period ended
December 31, 1999
-------------------
<S> <C>
Benefits paid to participants per financial statements $ 21,123,102
Add: Amounts allocated to withdrawing participants at December 31, 1999 3,959,576
Less: Amounts allocated to withdrawing participants at December 31, 1998 (12,151,209)
------------
Benefits paid to participants per Form 5500 $ 12,931,469
============
Period ended
December 31, 1998
-----------------
Benefits paid to participants per financial statements $ 16,948,724
Add: Amounts allocated to withdrawing participants at December 31, 1998 12,151,209
Less: Amounts allocated to withdrawing participants at December 31, 1997 (4,155,193)
------------
Benefits paid to participants per Form 5500 $ 24,944,740
============
</TABLE>
9
<PAGE>
9. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed investments is as follows:
<TABLE>
<CAPTION>
December 31, 1999
-----------------------------------------------------
Federal-Mogul Federal-Mogul
Common Stock Preferred Stock Exempt Loan
Fund Fund Fund
-----------------------------------------------------
<S> <C> <C> <C>
Investments at market value
Federal-Mogul Common Stock $ 42,761,680
Federal-Mogul Preferred Stock:
Allocated to participants $ 32,649,372
Unallocated $ 15,987,990
----------------------------------------------------
Total Investments 42,761,680 32,649,372 15,987,990
Cash equivalents
Interfund Receivable/(payable) 196,378 10,702,796 (10,702,796)
----------------------------------------------------
Total Assets 42,958,058 43,352,168 5,285,194
Liabilities
Advance from FMC 142,481
Forfeited accounts owed to FMC 24,203
Senior ESOP Notes 7,879,941
----------------------------------------------------
Total Liabilities 24,203 - 8,022,422
----------------------------------------------------
Net Assets Available for Plan Benefits $ 42,933,855 $ 43,352,168 $ (2,737,228)
====================================================
<CAPTION>
December 31, 1998
-----------------------------------------------------
Federal-Mogul Federal-Mogul
Common Stock Preferred Stock Exempt Loan
Fund Fund Fund
-----------------------------------------------------
<S> <C> <C> <C>
Assets
Investments at market value
Federal-Mogul Common Stock $ 64,856,413 $ 37,128
Federal-Mogul Preferred Stock:
Allocated to participants $ 69,427,099
Unallocated 29,844,248
----------------------------------------------------
Total Investments 64,856,413 69,427,099 29,881,376
Cash equivalents 62,005 292,884
Receivable from FMC 4,077,310
Interfund Receivable/(payable) 9,977,674 (9,977,674)
----------------------------------------------------
Total Assets 64,918,418 79,404,773 24,273,896
Liabilities
Forfeited accounts owed to FMC 18,940
Senior ESOP Notes 15,149,303
----------------------------------------------------
Total Liabilities 18,940 - 15,149,303
----------------------------------------------------
Net Assets (Deficit) Available for Plan Benefits $ 64,899,478 $ 79,404,773 $ 9,124,593
====================================================
</TABLE>
10
<PAGE>
9. NONPARTICIPANT-DIRECTED INVESTMENTS (CONTINUED)
Changes in Net Assets:
<TABLE>
<CAPTION>
For the year ended December 31, 1999
-----------------------------------------------------
Federal-Mogul Federal-Mogul
Common Stock Preferred Stock Exempt Loan
Fund Fund Fund
-----------------------------------------------------
<S> <C> <C> <C>
Additions
Investment income $ 1,946,795 $ 3,487,767
Contributions 4,985,483 4,791,172
Deductions
Withdrawals (2,651,191) $ (5,112,092)
Forfeitures (16,561) (239,147)
Interest expense (973,485)
Net appreciation/(depreciation) (48,288,815) (35,837,704) (14,030,937)
Net member transfers between funds 13,431,203 5,136,338 (5,136,338)
Transfers from another FMC investment program 8,627,463
---------------------------------------------------
(21,965,623) (36,052,605) (11,861,821)
</TABLE>
11
<PAGE>
FEDERAL-MOGUL CORPORATION
Salaried Employees' Investment Program
EIN: 38-0533580
Schedule H, Line 4i
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
DECEMBER 31, 1999
The following is a Schedule of Assets Held for Investment outside of the Master
Trust:
<TABLE>
<CAPTION>
Identity of Issue, Borrower, Description of Investment including Maturity Date, Historical Cost Current Value
Lessor or Similar Party Interest, Collateral, Par or Maturity Value
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock:
Federal-Mogul Corporation 624 shares - par value $5.00 per share $ 12,741 $ 12,558
Preferred Stock:
Federal-Mogul Corporation 762,939 shares - stated value $63.75 per share 48,637,362 48,637,362
Participant Loans Receivable 9.25% (average interest rate) 2,643,133 2,643,133
------------------------------
$ 51,293,236 $ 51,293,053
==============================
</TABLE>
There were no investment assets reportable as acquired and disposed of during
the year.
12
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, The
Federal-Mogul Corporation Salaried Employees' Investment Program has duly caused
this annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
FEDERAL-MOGUL CORPORATION
SALARIED EMPLOYEES' INVESTMENT PROGRAM
By: /s/ James Zamoyski
--------------------------------
James Zamoyski
Retirement Programs Committee
Dated: June 27, 2000
<PAGE>
EXHIBIT INDEX
Exhibit Number Document
-------------- --------
23 Consent of Ernst & Young (filed herewith and incorporated
herein by reference)
