Restructuring charges and Chapter 11 related costs caused Federal Mogul to post a Q4 loss virtually unchanged on the previous year. For the fourth quarter 2002, Federal-Mogul reported a net loss of $113 million, compared to a net loss of $112 million in the same quarter of 2001.
Excluding charges for restructuring activities, asset impairments, losses from divestitures of businesses and Chapter 11 and Administration-related expenses, Federal-Mogul reported a net loss from operations of $17 million in the fourth quarter 2002 compared with a net loss from operations of $23 million for the same period last year.
For the full year, Federal-Mogul posted sales of $5,422 million, compared to full year 2001 sales of $5,457 million. The full year net loss was $1,629 million for 2002, compared to a net loss in 2001 of $1,002 million. The full year net loss reported for 2002 included a $1,418 million charge for a cumulative effect of change in accounting from the adoption of Statement of Financial Accounting Standard No. 142 (FAS 142)
Excluding charges for restructuring, impairment, gains and losses on sales of businesses, and Chapter 11 and Administration-related expenses, Federal- Mogul reported full-year 2002 earnings before income taxes and cumulative effect of change in accounting principle of $100 million compared to a loss of $178 million in 2001.
The company said that operating results in 2002 showed gains over the prior year due to productivity improvements, but these improvements were offset by ‘significant increases in pension costs’.
As part of the company’s efforts to reduce costs, Federal-Mogul’s global employment decreased four percent in 2002 to 47,000 employees.
“From an operations standpoint, our efforts in 2002 have resulted in profitability improvements and productivity increases. We are using all of our resources, both human and capital, to improve and grow our operations for the future. In addition, our announced plan to acquire Honeywell‘s global Bendix friction-materials business to grow one of our core product lines further signifies the exciting future we have ahead of us,” said Frank Macher, chairman and chief executive officer.
“Our recently announced agreement in principle with our major U.S. creditors on a consensual Plan of Reorganization is evidence we are on-track to successfully emerge from Chapter 11 this year with a viable capital structure and operations free from asbestos liability. We will emerge as a stronger Federal-Mogul ready to capitalise on our sustainable competitive advantage in both product and process technologies.”
Sales of original equipment (OE) parts amounted to 55 percent of the company’s full year sales. Full year 2002 original equipment sales were $2,999 million, compared to $2,915 million in 2001. Sales of replacement parts to aftermarket customers were 45 percent of the company’s 2002 sales. Full year 2002 aftermarket sales were $2,423 million compared to $2,542 million in 2001.