Federal-Mogul Holdings Corporation (NASDAQ:FDML) today announced
financial results for the third quarter ended September 30,
2016. Net sales for the third quarter were $1,825 million,
compared to $1,824 million in Q3 2015. Higher OE sales in
both divisions were offset by lower aftermarket sales and $13
million of negative impact from currency exchange rate
fluctuations. For the nine months ended September 30, 2016,
net sales were $5,646 million, a $25 million increase compared with
the prior-year period, despite $80 million of negative impact from
currency exchange rate fluctuations. Gross profit for the
third quarter was $275 million, or 15.1 percent of sales, a nearly
1 percentage point margin improvement compared with Q3 2015, driven
primarily by operational improvements in both divisions. Net
income from continuing operations attributable to Federal-Mogul in
the quarter was $15 million, or $0.09 per share, compared with a
net loss from continuing operations attributable to Federal-Mogul
of $(63) million, or $(0.37) per share, in Q3 2015. Adjusted
net income in Q3 2016 was $26 million, or $0.15 per share.
Operational EBITDA in Q3 2016 was $173 million, compared to $156
million in Q3 2015. The Company ended the third quarter 2016
with liquidity of over $500 million, including cash of $330 million
and $173 million of availability under its primary revolving credit
facility.
Division Results
Powertrain Division
Federal-Mogul’s Powertrain division reported third quarter
revenue of $1,089 million, compared to $1,079 million in the same
prior-year period, driven by an increase in overall sales volume,
specifically strengthened sales in Asia Pacific. The increase
in sales was negatively impacted by $6 million in currency exchange
rate fluctuations.
At constant exchange rates, Q3 2016 sales were up 1.5 percent
over Q3 2015, partially offset by continued production declines in
the commercial vehicle and industrial segments and the impact of
economic conditions in Brazil. Operational EBITDA in Q3 was $104
million or 9.6 percent of revenue, a $7 million improvement
compared to $97 million, or 9 percent of revenue, in Q3 2015.
Through the first nine months of 2016, the Powertrain division
reported revenue of $3,389 million, $5 million higher than the same
period of 2015. The year-over-year comparison was impacted by $43
million of negative currency exchange. In constant dollars, revenue
increased by $48 million or 1.4 percent. Operational EBITDA
for the first nine months of the year was $358 million or 10.6
percent of revenue, compared to $323 million or 9.5 percent of
revenue in the prior year, largely driven by improved operational
performance in material sourcing, manufacturing and overall cost
management.
“Our improved EBITDA during Q3 demonstrates the benefits of the
ongoing operational improvements we’ve made throughout 2016, as we
continue to improve our cost management structure and manufacturing
efficiencies,” said Rainer Jueckstock, Federal-Mogul co-CEO and
CEO, Federal-Mogul Powertrain. “We also benefitted from
continued positive light vehicle production in North America,
Europe and Asia Pacific, particularly China, where light vehicle
production is up over 20 percent compared to Q3 2015. Currency
fluctuation remained a challenge in the third quarter, as did the
decline in commercial vehicle production and the continued economic
conditions in Brazil. However, our sales reflect that we are
continuing to perform in line with the market, despite these
factors.”
Motorparts Division
Federal-Mogul’s Motorparts division reported third quarter
revenue of $797 million, a $20 million, or 2 percent, decrease from
the prior-year period, including $7 million of negative impact from
currency exchange rate fluctuations. North American
aftermarket sales decreased by 5 percent in the quarter, at
constant exchange, representing most of the year-over-year
decline. The primary drivers of this decline were challenging
conditions in the North American commercial vehicle market, lower
export sales from North America, primarily to the Middle East, as
well as some lost business. North American sales benefitted
from $6 million of incremental sales from the Interfil acquisition
in Mexico. Sales in EMEA increased to $294 million from $292
million in the same period last year. Stronger OE volume in
the region was largely offset by lower aftermarket sales in certain
European countries and in the Middle East. Asia Pacific sales
were $64 million compared to $56 million in Q3 2015. A 31
percent increase in OE business, continued growth in the China
aftermarket (up 21 percent), each at constant exchange rates, and
solid performance in the India aftermarket were partially offset by
the planned downsizing of operations in Australia.
In Q3 2016, the Motorparts division recorded Operational EBITDA
of $69 million, or 8.7 percent of revenue, compared to $59 million,
or 7.2 percent of revenue, in Q3 2015. The increase in Operational
EBITDA was largely due to improved operational performance and
commercial actions, partially offset by the impact of lower
volumes.
Through the first nine months of 2016, the Motorparts division
recorded revenue of $2,446 million compared to $2,461 million in
the prior-year period, including $37 million of negative impact
from currency exchange rate fluctuations. EBITDA was $204
million, or 8.3 percent of revenue, in the nine months ending
September 30, 2016 compared to $157 million, or 6.4 percent of
revenue, in the same period last year.
Daniel Ninivaggi, Federal-Mogul co-CEO and CEO, Federal-Mogul
Motorparts, commented, “During the third quarter, we continued to
execute reasonably well despite challenging conditions in our
commercial vehicle segment and generally weak light vehicle
aftermarket demand in our primary markets. Overall, we are
encouraged by the operating performance of the business as we
continue to execute our strategic plan. Key highlights during the
third quarter included the ramp up of our new regional distribution
centers in Belgium and China and our announced plan to open a
distribution center in Hungary in late 2017. We continue to
enhance our distribution footprint to achieve efficiencies and
optimize our supply chain capabilities, while investing in our
online presence, ‘Tech First’ initiatives and globally-recognized
brands. In everything we do, we are focused on delivering
value to our customers through better products, service and field
support.”
Offer from Majority Shareholder
On September 6, 2016, Federal-Mogul Holdings Corporation
(“Company”), American Entertainment Properties Corp., a Delaware
corporation (“AEP”), and IEH FM Holdings LLC, a Delaware limited
liability company (“Merger Sub”), entered into an Agreement and
Plan of Merger (the “Merger Agreement”). Pursuant to the Merger
Agreement, and upon the terms and subject to the conditions
thereof, Merger Sub commenced a cash tender offer (the “Offer”) to
acquire, subject to the terms and conditions of the Merger
Agreement, all of the issued and outstanding shares of the
Company’s common stock, par value $0.01 per share, not already
owned by AEP, Merger Sub, the Company and their respective
affiliates, for a purchase price of $9.25 per share, net to the
seller in cash, without interest, less any applicable tax
withholding.
The Offer will expire at 12:00 midnight, New York City time, on
October 28, 2016 (one minute after 11:59 P.M., New York City Time,
on October 28, 2016), unless extended. Complete terms and
conditions of the Offer are set forth in AEP and Merger Sub’s Offer
to Purchase and Letter of Transmittal and the Company’s
Solicitation/Recommendation Statement on Schedule 14D-9 and other
materials filed with the Securities and Exchange Commission on
September 26, 2016, each as subsequently amended.
Analyst Call
Federal-Mogul will conduct an earnings
conference call and audio webcast on Wednesday, October 26 at 9:30
a.m., EDT. To facilitate rapid connection the morning of the call,
please click here to pre-register.To participate in the call:
Domestic calls: (855) 789-8161International calls: (631)
485-4890Passcode I.D.: 93402073 Further information is available at
www.federalmogul.com/investors.
Reconciliation to GAAP
In addition to GAAP results included within this press release,
the Company has provided certain information which is not
calculated according to GAAP (“non-GAAP”), such as sales at
constant exchange rates, this measure excludes the effect of
currency exchange on current year results; Operational EBITDA; and
Adjusted Net Income. Management uses these non-GAAP measures to
evaluate the operating performance of the Company and its business
segments and to forecast future periods. Management believes
that investors will likewise find these non-GAAP measures useful in
evaluating such performance. Such measures are frequently used by
security analysts, institutional investors and other interested
parties in the evaluation of companies in our industry.
Non-GAAP measures should not be considered in isolation or as a
substitute for our reported results prepared in accordance with
GAAP and, as calculated, may not be comparable to similarly titled
measures of other companies. For a reconciliation of non-GAAP
measures to the most comparable GAAP financial measure, please see
the financial schedules that accompany this release.
Forward-Looking Statements
Statements contained in this press release which are not
historical fact constitute "Forward-Looking Statements."
Actual results may differ materially due to numerous important
factors that are described in Federal-Mogul's most recent annual
report on Form 10-K and subsequent reports on Forms 10-Q and 8-K as
well as the Tender Offer Statement on Schedule TO/Schedule 13E-3
filed by Icahn Enterprises with the SEC and the
Solicitation/Recommendation Statement and Schedule 13E-3 filed by
Federal-Mogul with the SEC. Such factors include, but are not
limited to, the consummation of the acquisition of Federal-Mogul by
Icahn Enterprises, the company’s ability to successfully integrate
and achieve the anticipated synergies from recent acquisitions,
fluctuations in domestic or foreign vehicle production,
fluctuations in the demand for vehicles containing our products,
the company's ability to generate cost savings or manufacturing
efficiencies to offset or exceed contractually or competitively
required price reductions or price reductions to obtain new
business, conditions in the automotive industry, and corresponding
effects and general global and regional economic conditions.
Federal-Mogul does not intend or assume any obligation to update
any forward-looking statements.
About Federal-Mogul
Federal-Mogul Holdings Corporation (NASDAQ:FDML) is a leading
global supplier of products and services to the world’s
manufacturers and servicers of vehicles and equipment in the
automotive, light, medium and heavy-duty commercial, marine, rail,
aerospace, power generation and industrial markets. The company’s
products and services enable improved fuel economy, reduced
emissions and enhanced vehicle safety.
Federal-Mogul operates two independent business divisions, each
with a chief executive officer reporting to Federal-Mogul's Board
of Directors.
Federal-Mogul Powertrain designs and manufactures original
equipment powertrain components and systems protection products for
automotive, heavy-duty, industrial and transport applications.
Federal-Mogul Motorparts sells and distributes a broad portfolio
of products through more than 20 of the world’s most recognized
brands in the global vehicle aftermarket, while also serving
original equipment vehicle manufacturers with products including
braking, wipers and a range of chassis components. The company’s
aftermarket brands include ANCO® wipers; BERU®* ignition systems;
Champion® lighting, spark plugs, wipers and filters; Interfil®
filters; AE®, Fel-Pro®, FP Diesel®, Goetze®, Glyco®, Nüral®, Payen®
and Sealed Power® engine products; MOOG® chassis components; and
Ferodo®, Jurid® and Wagner® brake products and lighting.
Federal-Mogul was founded in Detroit in 1899 and maintains its
worldwide headquarters in Southfield, Michigan. The Company has
more than 53,000 employees globally.
*BERU is a registered trademark of BorgWarner Ludwigsburg
GmbH
For more information, please visit www.federalmogul.com or
contact:
Investor Relations |
|
Media |
Jim Zabriskie |
|
Susan Fisher |
Federal-Mogul Holdings Corporation |
|
Federal-Mogul Holdings Corporation |
+1 (248) 354-8673 |
|
+1 (248) 354-0926 |
FEDERAL-MOGUL HOLDINGS
CORPORATION |
Condensed Consolidated Statements of
Operations (Unaudited) |
(in millions, except per share
amounts) |
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30 |
|
September 30 |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
1,825 |
|
|
$ |
1,824 |
|
|
$ |
5,646 |
|
|
$ |
5,621 |
|
Cost of products
sold |
|
(1,550 |
) |
|
(1,561 |
) |
|
(4,779 |
) |
|
(4,817 |
) |
|
|
|
|
|
|
|
|
|
Gross profit |
|
275 |
|
|
263 |
|
|
867 |
|
|
804 |
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
(203 |
) |
|
(193 |
) |
|
(616 |
) |
|
(596 |
) |
Goodwill and intangible
impairment expense, net |
|
— |
|
|
(56 |
) |
|
(6 |
) |
|
(50 |
) |
Restructuring charges
and asset impairments, net |
|
(8 |
) |
|
(24 |
) |
|
(32 |
) |
|
(67 |
) |
Amortization
expense |
|
(15 |
) |
|
(16 |
) |
|
(44 |
) |
|
(45 |
) |
Other income (expense),
net |
|
3 |
|
|
— |
|
|
15 |
|
|
(3 |
) |
Operating income
(loss) |
|
52 |
|
|
(26 |
) |
|
184 |
|
|
43 |
|
|
|
|
|
|
|
|
|
|
Interest expense,
net |
|
(37 |
) |
|
(36 |
) |
|
(110 |
) |
|
(103 |
) |
Equity earnings of
nonconsolidated affiliates |
|
11 |
|
|
9 |
|
|
44 |
|
|
37 |
|
Income (loss) from
continuing operations before income taxes |
|
26 |
|
|
(53 |
) |
|
118 |
|
|
(23 |
) |
Income tax (expense)
benefit |
|
(10 |
) |
|
(9 |
) |
|
(33 |
) |
|
(32 |
) |
Income
(loss) income from continuing operations |
|
16 |
|
|
(62 |
) |
|
85 |
|
|
(55 |
) |
Gain from discontinued
operations, net of income tax |
|
— |
|
|
— |
|
|
— |
|
|
7 |
|
Net income (loss) |
|
16 |
|
|
(62 |
) |
|
85 |
|
|
(48 |
) |
|
|
|
|
|
|
|
|
|
Net (income)
attributable to noncontrolling interests |
|
(1 |
) |
|
(1 |
) |
|
(4 |
) |
|
(4 |
) |
Net income (loss)
attributable to Federal-Mogul |
|
$ |
15 |
|
|
$ |
(63 |
) |
|
$ |
81 |
|
|
$ |
(52 |
) |
|
|
|
|
|
|
|
|
|
Amounts attributable to
Federal-Mogul: |
|
|
|
|
|
|
|
|
Net income (loss) from
continuing operations |
|
$ |
15 |
|
|
$ |
(63 |
) |
|
$ |
81 |
|
|
$ |
(59 |
) |
Gain from discontinued
operations, net of income tax |
|
— |
|
|
— |
|
|
— |
|
|
7 |
|
Net income (loss) |
|
$ |
15 |
|
|
$ |
(63 |
) |
|
$ |
81 |
|
|
$ |
(52 |
) |
|
|
|
|
|
|
|
|
|
Net income (loss) per
common share attributable to Federal-Mogul |
|
|
|
|
|
|
|
|
Basic and diluted: |
|
|
|
|
|
|
|
|
Net income (loss) from
continuing operations |
|
$ |
0.09 |
|
|
$ |
(0.37 |
) |
|
$ |
0.48 |
|
|
$ |
(0.36 |
) |
Gain from discontinued
operations, net of income tax |
|
— |
|
|
— |
|
|
— |
|
|
0.04 |
|
Net income (loss) |
|
$ |
0.09 |
|
|
$ |
(0.37 |
) |
|
$ |
0.48 |
|
|
$ |
(0.32 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FEDERAL-MOGUL HOLDINGS
CORPORATION |
Condensed Consolidated Balance Sheets
(Unaudited) |
(in millions) |
|
|
|
|
|
|
|
September 30 |
|
December 31 |
|
|
2016 |
|
2015 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
330 |
|
|
$ |
194 |
|
Accounts
receivable, net |
|
1,341 |
|
|
1,374 |
|
Inventories, net |
|
1,339 |
|
|
1,342 |
|
Prepaid
expenses and other current assets |
|
206 |
|
|
188 |
|
Total current
assets |
|
3,216 |
|
|
3,098 |
|
|
|
|
|
|
Property, plant and
equipment, net |
|
2,400 |
|
|
2,353 |
|
Goodwill and other
indefinite-lived intangible assets |
|
907 |
|
|
903 |
|
Definite-lived
intangible assets, net |
|
360 |
|
|
404 |
|
Investments in
nonconsolidated affiliates |
|
275 |
|
|
296 |
|
Other noncurrent
assets |
|
159 |
|
|
174 |
|
TOTAL
ASSETS |
|
$ |
7,317 |
|
|
$ |
7,228 |
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Short-term debt, including current portion of long-term debt |
|
$ |
174 |
|
|
$ |
138 |
|
Accounts
payable |
|
899 |
|
|
901 |
|
Accrued
liabilities |
|
571 |
|
|
582 |
|
Current
portion of pensions and other postemployment benefits
liability |
|
41 |
|
|
40 |
|
Other
current liabilities |
|
145 |
|
|
159 |
|
Total current
liabilities |
|
1,830 |
|
|
1,820 |
|
|
|
|
|
|
Long-term debt |
|
2,937 |
|
|
2,914 |
|
Pensions and other
postemployment benefits liability |
|
1,101 |
|
|
1,123 |
|
Long-term portion of
deferred income taxes |
|
367 |
|
|
367 |
|
Other accrued
liabilities |
|
91 |
|
|
102 |
|
|
|
|
|
|
Shareholders’
equity: |
|
|
|
|
Preferred
stock ($0.01 par value; 90,000,000 authorized shares; none
issued) |
|
— |
|
|
— |
|
Common
stock ($0.01 par value; 450,100,000 authorized shares; 170,636,151
issued shares and 169,040,651 outstanding shares as of September
30, 2016 and December 31, 2015) |
|
2 |
|
|
2 |
|
Additional paid-in capital |
|
2,899 |
|
|
2,899 |
|
Accumulated deficit |
|
(715 |
) |
|
(796 |
) |
Accumulated other comprehensive loss |
|
(1,319 |
) |
|
(1,318 |
) |
Treasury
stock, at cost |
|
(17 |
) |
|
(17 |
) |
Total Federal-Mogul
shareholders’ equity |
|
850 |
|
|
770 |
|
Noncontrolling interests |
|
141 |
|
|
132 |
|
Total shareholders’
equity |
|
991 |
|
|
902 |
|
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
$ |
7,317 |
|
|
$ |
7,228 |
|
|
|
|
|
|
|
|
|
|
FEDERAL-MOGUL HOLDINGS
CORPORATION |
Condensed Consolidated Statements of Cash Flows
(Unaudited) |
(in millions) |
|
|
|
|
|
Nine Months Ended |
|
|
September 30 |
|
|
2016 |
|
2015 |
Cash Provided From
(Used By) Operating Activities |
|
|
|
|
Net income (loss) |
|
$ |
85 |
|
|
$ |
(48 |
) |
Adjustments to
reconcile net income to net cash provided from (used by)
operating activities: |
|
|
|
|
Depreciation and amortization |
|
275 |
|
|
254 |
|
Restructuring charges and asset impairments, net |
|
32 |
|
|
67 |
|
Payments
against restructuring liabilities |
|
(38 |
) |
|
(48 |
) |
Goodwill
and intangible asset impairment expense, net |
|
6 |
|
|
50 |
|
Equity
earnings of nonconsolidated affiliates |
|
(44 |
) |
|
(37 |
) |
Cash
dividends received from nonconsolidated affiliates |
|
71 |
|
|
6 |
|
Change in
pensions and postemployment benefits |
|
(27 |
) |
|
(61 |
) |
Deferred
tax expense (benefit) |
|
4 |
|
|
(4 |
) |
Loss on
sale of equity method investment |
|
— |
|
|
11 |
|
Gain from
discontinued operations |
|
— |
|
|
(7 |
) |
Gain from
sales of property, plant and equipment |
|
(8 |
) |
|
(4 |
) |
Unrealized foreign currency transaction losses |
|
1 |
|
|
— |
|
Changes in operating
assets and liabilities: |
|
|
|
|
Accounts
receivable |
|
45 |
|
|
(80 |
) |
Inventories |
|
20 |
|
|
(175 |
) |
Accounts
payable |
|
8 |
|
|
40 |
|
Other
assets and liabilities |
|
(36 |
) |
|
11 |
|
Net Cash
Provided From (Used by) Operating Activities |
|
394 |
|
|
(25 |
) |
|
|
|
|
|
Cash Provided From
(Used By) Investing Activities |
|
|
|
|
Expenditures for
property, plant and equipment |
|
(283 |
) |
|
(326 |
) |
Payments to acquire
businesses, net of cash acquired |
|
(24 |
) |
|
(365 |
) |
Net proceeds from sale
of equity method investment |
|
— |
|
|
15 |
|
Net proceeds from sales
of property, plant and equipment |
|
12 |
|
|
8 |
|
Transfer of cash
balances upon disposition of operations held for sale |
|
(12 |
) |
|
— |
|
Net proceeds from sale
of shares in consolidated subsidiary |
|
2 |
|
|
— |
|
Capital investment in
nonconsolidated affiliates |
|
(1 |
) |
|
— |
|
Net Cash
Provided From (Used By) Investing Activities |
|
(306 |
) |
|
(668 |
) |
|
|
|
|
|
Cash Provided From
(Used By) Financing Activities |
|
|
|
|
Proceeds from equity
rights offering net of related fees |
|
— |
|
|
250 |
|
Proceeds from
borrowings on revolving lines of credit |
|
350 |
|
|
543 |
|
Payments on revolving
lines of credit |
|
(272 |
) |
|
(208 |
) |
Proceeds from term
loans, net of original issue discount |
|
54 |
|
|
— |
|
Principal payments on
term loans |
|
(74 |
) |
|
(20 |
) |
Decrease in other
long-term debt |
|
— |
|
|
(3 |
) |
Increase in short-term
debt |
|
1 |
|
|
19 |
|
Net remittances on
servicing of factoring arrangements |
|
— |
|
|
(2 |
) |
Net Cash
Provided From (Used By) Financing Activities |
|
59 |
|
|
579 |
|
|
|
|
|
|
Effect of foreign
currency exchange rate fluctuations on cash |
|
(23 |
) |
|
2 |
|
|
|
|
|
|
Cash and equivalents at
beginning of period |
|
194 |
|
|
332 |
|
Cash from operations
held for sale at January 1 |
|
12 |
|
|
— |
|
Increase (decrease) in
cash and equivalents |
|
124 |
|
|
(112 |
) |
Cash and equivalents at
end of period |
|
$ |
330 |
|
|
$ |
220 |
|
|
|
|
|
|
Supplementary
Disclosures: |
|
|
|
|
Non-cash financing and
investing activities: |
|
|
|
|
Change in
accrued property and equipment additions |
|
$ |
(15 |
) |
|
$ |
(12 |
) |
|
|
|
|
|
|
|
|
|
FEDERAL-MOGUL HOLDINGS
CORPORATION |
Reconciliation of Non-GAAP Financial Measures
(Unaudited) |
(In millions) |
|
|
|
|
Reconciliation
of Operational EBITDA to Net Income (loss): |
|
|
|
|
Three Months Ended September 30 |
|
Nine Months Ended September 30 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Powertrain |
$ |
104 |
|
|
$ |
97 |
|
|
$ |
358 |
|
|
$ |
323 |
|
Motorparts |
69 |
|
|
59 |
|
|
204 |
|
|
157 |
|
Total Operational EBITDA |
173 |
|
|
156 |
|
|
562 |
|
|
480 |
|
|
|
|
|
|
|
|
|
Items required to
reconcile Operational EBITDA to EBITDA: |
|
|
|
|
|
|
|
Restructuring charges and asset impairments (a) |
(8 |
) |
|
(24 |
) |
|
(32 |
) |
|
(67 |
) |
Goodwill and
intangible impairment expense, net |
— |
|
|
(56 |
) |
|
(6 |
) |
|
(50 |
) |
Loss on sale
of equity method investment |
— |
|
|
— |
|
|
— |
|
|
(11 |
) |
Financing
charges |
(2 |
) |
|
(3 |
) |
|
(9 |
) |
|
(7 |
) |
Discontinued
operations |
— |
|
|
— |
|
|
— |
|
|
7 |
|
Transaction
related costs |
(2 |
) |
|
(1 |
) |
|
(4 |
) |
|
(7 |
) |
Segmentation
costs |
— |
|
|
(1 |
) |
|
— |
|
|
(3 |
) |
Other
(b) |
(3 |
) |
|
— |
|
|
(8 |
) |
|
(1 |
) |
EBITDA |
158 |
|
|
71 |
|
|
503 |
|
|
341 |
|
|
|
|
|
|
|
|
|
Items required to
reconcile EBITDA to net income (loss): |
|
|
|
|
|
|
|
Depreciation
and amortization |
(95 |
) |
|
(88 |
) |
|
(275 |
) |
|
(254 |
) |
Interest
expense, net |
(37 |
) |
|
(36 |
) |
|
(110 |
) |
|
(103 |
) |
Income tax
(expense) benefit |
(10 |
) |
|
(9 |
) |
|
(33 |
) |
|
(32 |
) |
Net income
(loss) |
$ |
16 |
|
|
$ |
(62 |
) |
|
$ |
85 |
|
|
$ |
(48 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30 |
|
Nine Months Ended September 30 |
Footnotes: |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
(a)
Restructuring charges and asset impairments,
net: |
|
|
|
Restructuring charges
related to severance and other charges, net |
|
$ |
(7 |
) |
|
$ |
(18 |
) |
|
$ |
(28 |
) |
|
$ |
(58 |
) |
Asset impairments,
including impairments related to restructuring activities |
|
(1 |
) |
|
(6 |
) |
|
(4 |
) |
|
(9 |
) |
Total
restructuring charges |
|
(8 |
) |
|
(24 |
) |
|
(32 |
) |
|
(67 |
) |
|
|
|
|
|
|
|
|
|
(b)
Other reconciling items: |
|
|
|
|
|
|
|
|
Non-service cost
components associated with U.S. based funded pension plans |
|
(3 |
) |
|
1 |
|
|
(9 |
) |
|
1 |
|
Stock appreciation
rights |
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
Other |
|
— |
|
|
(1 |
) |
|
1 |
|
|
(3 |
) |
Total other
reconciling items |
|
$ |
(3 |
) |
|
$ |
— |
|
|
$ |
(8 |
) |
|
$ |
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management utilizes Operational EBITDA as the
key performance measure of segment profitability and uses the
measure in its financial and operational decision making processes;
for internal reporting; and for planning and forecasting purposes
to effectively allocate resources. Operational EBITDA is defined as
EBITDA (earnings before interest, taxes, depreciation and
amortization), as adjusted for additional amounts. Examples of
these adjustments include impairment charges related to goodwill,
other long-lived assets and investments; restructuring charges,
certain gains or losses on the settlement/extinguishment of
obligations; and receivable financing charges. During 2015, the
Company modified its definition of Operational EBITDA to adjust for
financing charges related to certain receivable financing programs.
Comparable periods have been adjusted to conform to this
definition.
Operational EBITDA presents a performance
measure exclusive of capital structure and the method by which net
assets were acquired, disposed of, or financed. Management believes
this measure provides additional transparency into its core
operations and is most reflective of the operational profitability
or loss of the Company’s operating segments and reporting units.
The measure also allows management and investors to view operating
trends, perform analytical comparisons and benchmark performance
between periods and among operating segments.
FEDERAL-MOGUL HOLDINGS
CORPORATION |
Reconciliation of Non-GAAP Financial Measures
(Unaudited) |
(In millions) |
|
|
|
|
|
ADJUSTED NET
INCOME |
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30 |
|
September 30 |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
16 |
|
|
$ |
(62 |
) |
|
$ |
85 |
|
|
$ |
(48 |
) |
Restructuring and impairment charges, net |
|
8 |
|
|
80 |
|
|
38 |
|
|
117 |
|
Loss on
sale of equity method investment |
|
— |
|
|
— |
|
|
— |
|
|
11 |
|
Legal
separation and acquisition related costs |
|
2 |
|
|
2 |
|
|
4 |
|
|
10 |
|
Discontinued Operations |
|
— |
|
|
— |
|
|
— |
|
|
(7 |
) |
Net tax
impact on above. |
|
— |
|
|
(2 |
) |
|
(2 |
) |
|
(6 |
) |
Adjusted net
income from continuing operations |
|
$ |
26 |
|
|
$ |
18 |
|
|
$ |
125 |
|
|
$ |
77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income is defined as net income
(loss) less restructuring, impairment charges, loss on
extinguishment of debt, OPEB curtailment gains or losses, gains or
losses on the sales of businesses, costs associated with
acquisitions, legal separation and headquarters relocation, certain
project and integration costs and related tax impact on these
items. Within 2015, we modified our definition of adjusted
net income to remove the exclusion of strategic costs (distribution
footprint initiatives, IS strategic initiatives, other strategic
costs, and integration costs). Prior periods have been
adjusted accordingly. Adjusted net income reported for Q3
2015 was $28 million.
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