21st October 2005 - Federal-Mogul Reports Third Quarter 2005 Results

Federal-Mogul Corporation reported on 21 October 2005 its financial results for the three and nine-month periods ended September 30, 2005.

Financial Summary (in millions)

Federal-Mogul reported net sales of $1,500 million for the three-month period ended September 30, 2005, consistent with the comparable period of 2004. For the nine-month period ended September 30, 2005, net sales increased by $173 million, or 4%, to $4,799 million when compared to the same period of 2004, of which $82 million is due to favorable foreign currency.

Gross margin for the three and nine-month periods ended September 30, 2005, when compared to the same periods of 2004, decreased by $49 million and $99 million, respectively. Increased pension costs adversely affected gross margin for the three and nine month periods ended September 30, 2005 by $14 million and $43 million, respectively. While raw material costs for the three months ended September 30, 2005 were comparable with those of the same period in 2004, raw material cost inflation reduced gross margin for the nine months ended September 30, 2005 by $40 million. Both the three and nine month periods ended September 30, 2005 were further impacted by other factors, primarily unfavorable volume and product mix. Management continues to identify and implement cost reduction and pricing strategies to mitigate the impact of these adverse factors.

Federal-Mogul reported a loss from continuing operations before income taxes for the three-month period ended September 30, 2005 of $48 million compared with earnings from continuing operations before income taxes of $6 million for the same period of 2004. For the nine-month period ended September 30, 2005, the Company reported a loss from continuing operations before income taxes of $56 million, a decrease of $78 million from the same period of 2004. In addition to those same factors affecting gross margin, the year over year declines in results from continuing operations are primarily attributable to the impact of higher average interest rates, and the non-recurrence of a one-time gain recorded against Chapter 11 costs during third quarter of 2004, partially offset by reduced selling, general and administrative expenses.

Management believes that Operational EBITDA provides useful information as it most closely approximates the cash flow associated with the operational earnings of the Company. Additionally, management uses Operational EBITDA to measure the profitability performance of its operations. Operational EBITDA is defined to include discontinued operations and exclude impairment charges, Chapter 11 and Administration expenses, restructuring costs, income tax expense, interest expense, depreciation and amortization.

The Company reported Operational EBITDA of $115 million and $401 million for the three and nine month periods ended September 30, 2005, respectively. When compared to the same period of 2004, Operational EBITDA decreased by $21 million and $46 million, respectively, including $17 million and $53 million of increased pension expense, respectively. A reconciliation of Operational EBITDA to the Company's loss from continuing operations before income taxes for the three and nine-months ended September 30, 2005 has been provided.

Combining cash provided from operating activities with cash used by investing activities, the Company has generated positive cash inflows of $47 million for the nine months ended September 30, 2005, compared with $83 million for the comparable period of 2004.

"While our year-over-year net sales increased, several industry-wide challenges, such as increased pension expense, the continued high cost of raw materials, and higher interest rates, impacted our financial performance," said Chairman, President and Chief Executive Officer Jose Maria Alapont. "We continue to drive our global profitable growth strategies, focusing on excellence in customer service and advancing our leading technology at the most competitive cost."

About Federal-Mogul

Federal-Mogul is a global supplier of automotive components, sub-systems, modules and systems serving the world's original equipment manufacturers and the aftermarket. The company utilizes its engineering and materials expertise, proprietary technology, manufacturing skill, distribution flexibility and marketing power to deliver products, brands and services of value to its customers. Federal-Mogul is focused on global profitable growth to create value for and bring greater satisfaction to its customers, employees, and stakeholders.

Headquartered in Southfield, Michigan, Federal-Mogul was founded in Detroit in 1899. On October 1, 2001, Federal-Mogul decided to separate its asbestos liabilities from its true operating potential by voluntarily filing for financial restructuring under Chapter 11 of the Bankruptcy Code in the United States and Administration in the United Kingdom. For more information on Federal-Mogul, visit the Company's Web site at http://www.federal-mogul.com.

Source: Federal-Mogul Press Release