10th February 2006 - Federal-Mogul Reports Fourth Quarter and Full Year 2005 Results

Federal-Mogul Corporation today reported its financial results for the three and twelve-month periods ended December 31, 2005.

Financial Summary (in millions)

Federal-Mogul reported net sales of $1,487 million for the quarter ended December 31, 2005. Compared to the fourth quarter 2004, sales decreased $61 million, of which $48 million is due to unfavorable foreign currency. For the year ended December 31, 2005, net sales increased by $112 million to $6,286 million when compared to the same period of 2004, of which $33 million is due to favorable foreign currency.

Gross margin for the three and twelve-month periods ended December 31, 2005, when compared to the same periods of 2004, decreased by $37 million and $136 million, respectively. Increased pension costs adversely affected gross margin for the three and twelve-month periods ended December 31, 2005 by $14 million and $57 million, respectively. Although remaining high, raw material costs for the three months ended December 31, 2005 were comparable with those of the same period in 2004, but $41 million higher for the full year. Gross margins for both the three and twelve-month periods ended December 31, 2005 were further impacted by unfavorable movements in foreign currencies of $12 million and $13 million, respectively. Both the three and twelve-month periods ended December 31, 2005 were affected by other factors, primarily volume and product mix. Management continues to identify and implement cost reduction and pricing strategies to mitigate the impact of these adverse factors.

Selling, general and administrative expenses for the three and twelve-month periods ended December 31, 2005, when compared to the same periods of 2004, decreased by $47 million and $66 million, respectively.

Federal-Mogul reported a loss from continuing operations before income taxes for the three-month period ended December 31, 2005 of $146 million, an improvement of $63 million from the same period of 2004. For the twelve-month period ended December 31, 2005, the Company reported a loss from continuing operations before income taxes of $203 million compared with $189 million for the same period of 2004. In addition to those same factors affecting gross margin, results from continuing operations for the fourth quarter and full year were impacted by reduced selling, general and administrative expenses, reduced charges related to asset impairments, increased costs associated with the Company's Chapter 11 proceedings, the non-recurrence of an insurance gain recorded during 2004, and higher average interest rates.

Management believes that Operational EBITDA most closely approximates the cash flow associated with the operational earnings of the Company and uses Operational EBITDA to measure the 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 $153 million and $554 million for the three and twelve-month periods ended December 31, 2005, respectively. When compared to the same period of 2004, Operational EBITDA decreased by $33 million and $79 million, respectively. The non recurrence of an insurance gain recorded in the fourth quarter of 2004, combined with increased pension expense, reduced Operational EBITDA compared to 2004 by $61 million and $114 million for the quarter and year ended December 31, 2005, respectively. These adverse factors and the impact of increased raw materials costs were partially offset by improvements of $28 million and $76 million for the quarter and full-year, respectively. A reconciliation of Operational EBITDA to the Company's loss from continuing operations before income taxes for the three and twelve-months ended December 31, 2005 has been provided.

Combining cash provided from operating activities with cash used by investing activities, the Company has generated positive cash inflows of $158 million for the year ended December 31, 2005, compared with $239 million for the comparable period of 2004.

"Net sales for 2005 have increased year-over-year despite challenging market conditions," said Chairman, President and Chief Executive Officer Jose Maria Alapont. "Industry challenges, such as increased pension costs, raw material cost inflation and higher interest rates, have impacted our financial performance. We are continuing diligently to implement our global profitable growth strategy to better serve our customers with leading technology and world-class products, while restructuring our operations based upon best cost and lean principles."

About Federal-Mogul

Federal-Mogul is a global supplier of automotive components, systems and modules serving the world's original equipment manufacturers and the global 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.

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 report to the SEC on Form 10-K, which may be revised or supplemented in subsequent reports to the SEC on Forms 10-Q and 8-K. Such factors include, among others, the cost and timing of implementing restructuring actions, the results of the Chapter 11 and Administration proceedings, 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 certain global and regional economic conditions. Federal-Mogul does not intend or assume any obligation to update any forward-looking statement to reflect events or circumstances after the date of this press release.

Source: Federal-Mogul Press Release