5th May 2009 - Federal-Mogul Reports Net Loss on Reduced Revenue

Federal-Mogul Corporation today reported its first quarter 2009 financial performance, with sales of $1,238 million. Federal-Mogul's sales in Q1 2009 declined 27 percent on a constant dollar basis, or 33 percent including exchange, versus the same period of the prior year. The company's sales were better than the global automotive production downturn of 39 percent versus Q1 2008, with the U.S. and European markets suffering a 56 percent and 41 percent decline, respectively. The company reported a net loss of $101 million which includes a $38 million restructuring charge as Federal-Mogul continues to align capacity and costs to the current market. Federal-Mogul reported positive Operational EBITDA of $70 million with the earnings impact of reduced sales in the quarter partially offset by a $50 million reduction in the company's cost base versus the same period of 2008.

"Federal-Mogul's financial results for the first quarter of 2009 reflect the global automotive market downturn and its related effects. The company's Q1 2009 revenue declined, although less than the global markets. We continue to aggressively implement right-sizing actions to have the maximum impact on near-term results, while simultaneously protecting the company's business strategy," said Jose Maria Alapont, President and Chief Executive Officer.

The company in Q1 2009 recorded sales of $1,238 million, which is a 27 percent decline on a constant dollar basis, or 33 percent currency-impacted decline, when compared to a Q1 record of $1,859 million for the same period in 2008. This reduced revenue, although better than the global production decline, reflects the severity of the unprecedented global market downturn and the weakness of international currencies compared to the U.S. dollar. When comparing Federal-Mogul sales to global automotive production, the company's market, customer and product diversity together with Federal-Mogul's strong presence in the global aftermarket further mitigated the impact of the market decline in the quarter.

Federal-Mogul continued to implement its variable cost company strategy in Q1 2009 and expects to gain additional momentum with this strategy in subsequent quarters. Federal-Mogul recorded $38 million of restructuring expenses in the quarter as part of comprehensive restructuring plans announced in the second half of 2008. The company recently announced the closure of its Summerton, South Carolina and Dumas, Arkansas facilities and completed numerous actions throughout its global network resulting in the reduction of more than 2,500 operational and staff positions during the quarter. The company's global employment of about 40,000, at the end of Q1 2009, is 20 percent lower than the same period of 2008. Further, Federal-Mogul is in consultation with several of its trade unions and other social partners as it prepares to implement other planned restructuring actions.

The company recorded gross margin of $158 million, or 12.8 percent of sales in the first quarter of 2009. Federal-Mogul implemented numerous actions throughout the company's global operations and functional teams to improve operating performance. Approximately $25 million of cost reductions were achieved through operational productivity and cost management including labor flexing, short work weeks, down weeks, modified shift patterns, elimination of premium shifts and tight control on discretionary spending.

Selling, general and administrative expenses for the quarter were reduced to $184 million, or a $42 million improvement including favorable exchange, partially offset by $17 million non-cash pension expenses recorded in the quarter. This Q1 2009 SG&A expense compares favorably to $209 million for the same period in 2008.

The company recorded positive Operational EBITDA(1) of $70 million during the first three months in 2009 and continues to benefit from aggressive restructuring plans established early in the downturn.

Federal-Mogul reported negative cash flow for Q1 2009 of $(196) million, compared to negative cash flow of $(163) million in Q1 2008 when adjusted for a one-time cash receipt of $225 million in Q1 2008 in connection with the company's emergence from Chapter 11.

"Throughout the downturn, we have continued to support the development of leading technologies and innovation while we adapt our cost base to the current sales environment. We remain committed to our sustainable global profitable growth strategy throughout these challenging times," Alapont said.

(1) Operational EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, and certain items such as restructuring and impairment charges, Chapter 11 related reorganization expenses, gains or losses on the sales of businesses, the impact on gross margin of the fresh-start reporting valuation of inventory, and the non-cash expense relating to U.S. based funded pension plans.

(2) Cash flow is equal to net cash provided by operating activities less net cash used by investing as set forth on the attached statement of cash flows, excluding cash received from the 524g trust and impacts of the Chapter 11 plan of reorganization.

About Federal-Mogul

Federal-Mogul Corporation is a leading global supplier of powertrain and safety technologies, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. The company's leading technology and innovation, lean manufacturing expertise, as well as marketing and distribution deliver world-class products, brands and services with quality excellence at a competitive cost. Federal-Mogul is focused on its sustainable global profitable growth strategy, creating value and satisfaction for its customers, shareholders and employees. Federal-Mogul was founded in Detroit in 1899. The company is headquartered in Southfield, Michigan, and employs nearly 40,000 people in 36 countries.

Source: Federal-Mogul Press Release