19th July 2006 - Federal-Mogul Reports Second Quarter 2006 Results

Federal-Mogul Corporation today reported its financial results for the three and six month periods ended June 30, 2006.

(a) Operational EBITDA is a non-GAAP measure defined to include discontinued operations and exclude impairment charges, Chapter 11 and U.K. Administration expenses, restructuring costs, income tax expense, interest expense, depreciation and amortization

Federal-Mogul reported net sales of $1,632 million for the three month period ended June 30, 2006. Compared with the quarter ended June 30, 2005, sales decreased $33 million largely due to softness in the North American aftermarket. For the six-month period ended June 30, 2006, net sales decreased by $67 million to $3,232 million of which $47 million is due to unfavorable foreign currency.

Gross margin for the three and six month periods ended June 30, 2006, when compared to the same periods of 2005, increased by $12 million and $22 million, respectively. Productivity improvements, net of labor and benefits inflation, more than offset the impact of reduced sales volumes.

Selling, general and administrative expenses for the three and six months ended June 30, 2006, when compared to the same periods of 2005, improved by $8 million and $30 million, respectively.

Federal-Mogul reported income before income taxes for the three-month period ended June 30, 2006 of $12 million, consistent with the comparable period of 2005. For the six month period ended June 30, 2006, the Company reported a loss before income taxes of $27 million compared to a loss of $9 million for the same period of 2005. For the six month period ended June, 30, 2006, the $52 million of improvements in gross margin and selling, general and administrative expenses were more than offset by $72 million for higher average interest rates, restructuring charges and adjustments of assets to fair value.

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 U.K. Administration expenses, restructuring costs, income tax expense, interest expense, depreciation and amortization.

The Company reported Operational EBITDA of $175 million and $320 million for the three and six month periods ended June 30, 2006, respectively. When compared to the same period of 2005, Operational EBITDA increased by $17 million and $34 million, respectively. A reconciliation of Operational EBITDA to the Company's loss before income taxes for the three and six months ended June 30, 2006 has been included.

During the quarter ended June 30, 2006, the Company invested $31 million for the acquisition of the controlling interest in Goetze India Limited, a pistons and rings manufacturer headquartered in Delhi, India. As a result of this acquisition, the results of Goetze India Limited have been consolidated with those of the Company, including net sales and gross margin of $14 million and $2 million, respectively, and total assets of $166 million.

Combining cash provided from operating activities with cash used by investing activities, including the acquisition of Goetze India Limited, the Company generated positive cash inflows of $30 million for the six months ended June 30, 2006, compared with $3 million for the comparable period of 2005.

"The Company remains committed to its global profitable growth strategy," said Chairman, President and Chief Executive Officer Jose Maria Alapont. "Our recent acquisition and our successful restructuring efforts are important activities supporting this strategy and expanding our capability to provide innovative and quality products at the most competitive cost."

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 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 U.K. 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