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 SOUTHFIELD, Mich., Oct. 20 /PRNewswire/ -- Federal-Mogul Corporation (NYSE: FMO) today reported net earnings of $10 million or $.26 per share, a 160 percent improvement over the $.10 per share reported in the same 1992 period. Sales for the 1993 third quarter were $370 million, 24 percent more than the same period in 1992.
 "Our operating earnings for the third quarter increased 124 percent over the same quarter in 1992," said Chairman and Chief Executive Officer Dennis J. Gormley. "The global aftermarket contributed significantly to this improvement as a result of last year's acquisition of TRW's aftermarket business and current cost reduction efforts.
 "For the 1993 third quarter, earnings growth from domestic original equipment business and productivity improvements were, for the most part, offset by declining original equipment activity in Europe," he continued. "Significant steps have been taken to reduce operating expenses in Europe."
 Earnings for the nine months ended Sept. 30, 1993 were $32.8 million or $.97 per share, including a $.17 gain on the sale of the company's former subsidiary, Federal-Mogul Westwind Air Bearings Limited. Earnings for the same 1992 period, before the cumulative effect of the FAS 106 accounting change, were $8 million or $.25 per share. Sales for the first nine months of 1993 were nearly $1.2 billion compared to $905.8 million for the same 1992 period.
 "North American original equipment sales continued to gradually improve, particularly in the month of September," he explained. "The largest increases were in domestic oil seals and engine bearings. This sales growth reflects continued improvement in the North American auto and light truck build on a year-to-year basis."
 Included in the 1993 third quarter is a favorable income tax adjustment of $.8 million or $.02 per share, reflecting the impact of the new U.S. corporate tax rate on Federal-Mogul's deferred tax benefits.
 Headquartered in Southfield, Federal-Mogul is a global distributor and manufacturer of a broad range of precision parts primarily for automobiles, light trucks, heavy trucks, and farm and construction vehicles. The company serves both the aftermarket and the original equipment market providing quality products -- as they are needed -- to customers around the world. Federal-Mogul operates 32 plants, more than 70 distribution centers and four major research centers worldwide.
 Condensed Operating Results
 (Millions of dollars, except per share data)
 Periods Ended Quarter Ended Nine Months
 Sept. 30, 1993 1992(A) 1993 1992(A)
 Net sales $370.0 $297.8 $1,182.3 $905.8
 Cost of products sold 295.2 250.4 949.8 759.2
 Selling, distribution and
 administrative expenses 55.5 38.8 169.2 117.7
 Operating earnings 19.3 8.6 63.3 28.9
 Other income (expense):
 Amortization of intangible
 assets (1.1) (.5) (5.4) (1.6)
 Interest expense (5.9) (5.7) (20.2) (20.5)
 Interest income 1.8 2.0 5.4 5.4
 Sale of business investments -- -- 4.9 --
 International currency
 exchange losses (1.9) (1.6) (3.7) (3.6)
 Other, net .7 1.9 3.5 6.2
 Earnings before income taxes
 and cumulative effect of
 accounting change 12.9 4.7 47.8 14.8
 Income taxes 2.9 1.7 15.0 6.8
 Earnings before cumulative
 effect of accounting change 10.0 3.0 32.8 8.0
 Cumulative effect of change
 in accounting for
 postretirement benefits,
 net of income taxes -- -- -- (88.1)
 Net earnings $10.0 $3.0 $32.8 $(80.1)
 Earnings per common share
 Earnings (before cumulative
 effect of accounting
 change in 1992) $.26 $.10 $.97 $.25
 Cumulative effect of
 accounting change -- -- -- (3.93)
 $.26 $.10 $.97 $(3.68)
 Average number of common
 shares (in thousands) 29,505 22,392 26,572 22,397
 (A) 1992 operating results were restated from amounts previously reported to reflect adoption of Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions."
 Condensed Balance Sheet
 (Millions of dollars)
 9/30/93 12/31/92
 Current assets:
 Cash and equivalents $17.5 $19.1
 Accounts receivable 170.0 171.8
 Inventories 268.7 267.4
 Income tax benefits and prepaid expenses 19.7 29.2
 Total current assets 475.9 487.5
 Property, plant and equipment 390.4 390.7
 Business investments and other assets 236.0 221.3
 Total assets $1,102.3 $1,099.5
 Liabilities and Shareholders' Equity
 Current liabilities:
 Short-term debt $33.9 $69.4
 Accounts payable 81.2 76.0
 Accrued compensation 35.8 28.4
 Other accrued liabilities 97.9 91.5
 Total current liabilities 248.8 265.3
 Long-term debt 230.9 350.6
 Post-retirement benefits other than
 pensions 149.8 143.3
 Pension and other liabilities 79.7 82.1
 Deferred income taxes 20.4 27.3
 Total liabilities 729.6 868.6
 Shareholders' equity:
 Series D convertible preferred stock 76.6 76.6
 Series C ESOP preferred stock 60.9 60.9
 Unearned ESOP compensation and other (49.3) (51.6)
 Common stock 147.0 111.9
 Additional paid-in capital 114.7 19.3
 Retained earnings 41.7 30.2
 Currency translation (18.9) (16.4)
 Total shareholders' equity 327.7 230.9
 Total liabilities & shareholders'
 equity $1,102.3 $1,099.5
 Condensed Cash Flows
 (Millions of dollars)
 Nine months ended Sept. 30 1993 1992
 Cash provided from operating activities $27.7 $30.3
 Cash provided from (used by) investing
 Expenditures for property, plant & equipment (35.0) (23.4)
 Proceeds from sale of business investments 25.2 --
 Business investments (5.0) --
 Other (2.7) (.9)
 Net cash used by investing activities (17.5) (24.3)
 Cash provided from (used by) financing activities:
 Proceeds from issuance of common stock 118.6 .4
 Proceeds from issuance of Series D
 preferred stock -- 77.0
 Net decrease in debt (153.3) (83.9)
 Sale of accounts receivable 39.6 54.1
 Dividends paid to common shareholders (9.7) (8.1)
 Dividends paid to preferred shareholders (7.0) (3.1)
 Net cash from (used by) financing activities (11.8) 36.4
 Increase (decrease) in cash & equivalents (1.6) 42.4
 Cash and equivalents at beginning of period 19.1 44.6
 Cash and equivalents at end of period $17.5 $87.0
 Notes to condensed financial statements:
 1. Acquisition of Business
 On Sept. 16, 1993, Federal-Mogul announced that it will acquire Sealed Power Replacement, a division of SPX Corporation (SPX) that distributes engine and chassis components to the North American automotive aftermarket. In conjunction with the acquisition, Federal- Mogul and SPX will enter into a long-term trademark agreement making Federal-Mogul the distributor of engine and chassis parts sold under the Sealed Power and Speed-Pro brand names in North America. The acquisition, valued at approximately $150 million, is expected to close by Oct. 29, 1993. The company will initially finance this transaction through a combination of cash on hand and bank debt.
 2. Sale of Business Investment and Related Matters
 In September and October 1993, the company announced a series of actions designed to strengthen operations and enhance shareholder value, including the sale of the company's investment in Taiho Kogyo Co., Ltd., and the consolidation of the company's lighting and electrical and fuel systems operating unites to promote manufacturing and administrative efficiencies. The net effect of actions taken in the third quarter of 1993 was insignificant to the results of operations for the quarter.
 3. Earnings Per Share
 The computation of earnings per share is based on the weighted average number of outstanding common shares and common stock equivalents during the respective periods, and was therefore impacted by the issuance of 6,750,000 shares of common stock in April 1993. Net earnings used in the computations of earnings per share are reduced by preferred stock dividend requirements.
 -0- 10/20/93
 /CONTACT: Lonnie Ross of Federal-Mogul Corporation, 313-354-9934/

CO: Federal-Mogul Corporation ST: Michigan IN: AUT SU: ERN

LD-CK -- NY011 -- 4404 10/20/93 09:07 EDT
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Publication:PR Newswire
Date:Oct 20, 1993

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