Federal-Mogul Reports Record $.96 First Quarter

Earnings Per Share from Operations Southfield, Mich. (PROTEXT) - - Earnings per share from operations at $.96, excluding special charges. - $7 Million of economic value added. - First quarter sales hit new record high of $1,642 million. - Seasonal accounts receivable increase of $146 million contributed to cash usage from operations after capital expenditures of $66 million. - Gordon Ulsh appointed President and Chief Operating Officer. - Announced acquisition plan for Alcan Nural. Federal-Mogul Corporation (NYSE: FMO) today announced solid financial results for the ninth consecutive quarter. "I'm very proud of the total team effort behind these results," said Dick Snell, chairman and chief executive officer. "We are successfully consolidating our acquisitions because we have a very good, robust integration process. With this disciplined process, we will continue to grow the company through acquisitions to expand our systems and global capabilities as required by our customers." In response to the company's expanded operations, Federal- Mogul appointed Gordon A. Ulsh, president and chief operating officer on February 24. On the acquisition front, the company announced the acquisition agreement of Alcan Nural, a German piston company, and completed the acquisition of Tri-Way Machine and Camshaft Machine in January. "Federal-Mogul is on schedule to deliver in the short term without compromising our long-term growth objectives," said Snell. "We are successfully operating at an accelerated pace to remain the industry leader in our sectors." First Quarter Results Federal-Mogul's first quarter revenues increased 150% to $1,642 million compared to $658 million in 1998. For the first quarter, the company's earnings increased 159% to $75 million or $.96 per share from operations, compared to $29 million or $.63 per share in 1998. Earnings per share from operations exclude integration costs and special charges. Including these items, the company reported earnings of $26 million or $.38 per share. As previously disclosed, the non-operating charges include $13 million for an accounting change related to start-up activities, $23 million related to the early extinguishment of debt incurred for acquisitions, and $11 million for inventory charges related to the Cooper acquisition. In addition, the company incurred $10 million in integration costs. The company used $66 million of cash for operations primarily due to an expected first quarter seasonal increase in customer accounts receivable of $146 million. Cash from operations is after capital expenditures and before integration and restructuring payments. Federal-Mogul was awarded the 1998 Hard Parts Vendor of the Year Award from Advance Auto Parts for all products, including Fel-Pro(R) gaskets and Ferodo(R) brakes. Federal-Mogul was also awarded the 1998 Performance Vendor of the Year Award from O'Reilly Auto Parts. O'Reilly's carries 90 percent of all Federal-Mogul product lines including bearings, seals, fuel pumps, Fel- Pro(R) gaskets, Moog(R)chassis products, Precision(R) universal joints, Champion(R) spark plugs and Signal-Stat(R) lighting products. Powertrain Systems Powertrain Systems reported first quarter sales of $643 million compared to $272 million in 1998. In new business awards, Federal-Mogul received the engine bearing business for General Motors' 2.2L and 2.4L engines. Federal-Mogul's Powertrain Systems' facilities in Bradford and Sunderland, England, have been awarded the 1998 Best Supplier Award from Nissan UK. Powertrain's Blacksburg, Virginia, facility was awarded the Master Quality Award from General Motors. Blacksburg supplies GM with steel-backed (bi- metallic) engine bearings. Powertrain Systems has also received the 1998 Outstanding Installer Promotion Award from Auto Value, for superior marketing support for Champion(R) spark plugs. In addition, Powertrain's Greenville and Manitowoc facilities received Excellent Delivery Performance and Certificate of Achievement-Quality awards from Toyota Motor Manufacturing, North America. The Lake City, Minnesota, facility received Partner Supplier status from John Deere. Sealing Systems Sealing Systems reported first quarter sales of $356 million compared to $163 million in 1998. Federal-Mogul's Sealing Systems' Skokie, Illinois, facility has also been awarded the Excellent Delivery Performance Award and the Certificate of Achievement - Quality Award from Toyota Motor Manufacturing, North America. Sealing Systems' Frankfort, Indiana, facility received a Gold Pentastar Award from DaimlerChrysler for excellence in quality and delivery. General Products General Products reported first quarter sales of $643 million compared to $209 million in 1998. In new business, Federal-Mogul Friction Products was awarded from DaimlerChrysler the front disk and rear drums for the Chrysler BR 1500 pick-up truck. Friction Products was also awarded front and rear disks for Ford Motor Company's Excursion vehicle. Federal-Mogul will supply Outboard Marine Corporation with pulse-driven fuel pumps for application as fuel injection lift pumps on their outboard engines and fuel vapor separator/electric fuel pump modules for application on their outboard engines, utilizing FICHT(R) fuel injection. DaimlerChrysler awarded Federal-Mogul Camshafts a contract for the supply of assembled camshafts for its new 3.7L V6 engine. Federal-Mogul's General Products facility in Waupun, Wisconsin, received a Gold Pentastar award from DaimlerChrysler in recognition for outstanding achievement in quality, delivery and warranty. General Motors awarded Federal-Mogul Sintered Products its Supplier of the Year award for its supply of power metal valve seats and valve guides. Second Quarter Dividend on Common Stock Federal-Mogul's Board of Directors declared the regular quarterly dividend of $.0025 cents a share on the common stock of the company. Second quarter common stock dividends are payable June 10, 1999 to shareowners of record at the close of the business May 31, 1999. Headquartered in Southfield, Michigan, Federal-Mogul is an automotive parts manufacturer providing innovative solutions and systems to global customers in the automotive, light trucks, heavy duty, farm and industrial markets. The company was founded in 1899. For more information on Federal- Mogul, visit the company's web site at http://www.federal-mogul.com. Federal- Mogul's press releases are available by fax through Company News On-Call, call 800-758-5804, ext. 306225. Information in this press release contains forward-looking statements which are not historical facts and involve risk and uncertainties. Actual results, events and performance could differ materially from those contemplated by these forward- looking statements including, without limitations, the company's ability to effectively divest certain assets, the cost and timing of implementing restructuring actions, the combination of the businesses of Federal-Mogul, T & N, and Fel-Pro, conditions in the automotive components industry, certain global and regional economic conditions and other factors discussed in this press release and those detailed from time to time in the company's filings with the Securities and Exchange Commission. Federal- Mogul undertakes no obligation to update any forward looking statement to reflect events or circumstances after the date of this press release. F E D E R A L - M O G U L C O R P O R A T I O N S T A T E M E N T S O F O P E R A T I O N S (Millions of Dollars, Except Per Share Data) (Unaudited) Three Months Ended March 31 1999 1998 Net sales $1,642.2 $658.0 Cost of products sold 1,192.7 496.7 Gross margin 449.5 161.3 Selling, general and administrative expenses 222.5 98.1 Amortization 32.8 8.9 Purchased in-process research and development charge - 18.6 Restructuring charge - 10.5 Adjustment of assets held for sale and other long-lived assets to fair value - 20.0 Integration costs 10.1 - Interest expense 70.9 16.5 Interest income (1.0) (6.7) International currency exchange losses 2.3 1.1 Net gain on British pound currency option and forward contract - (13.3) Other expense, net 5.3 6.0 Earnings Before Income Taxes, Extraordinary Item and Cumulative Effect of Change in Accounting Principle 106.6 1.6 Income tax expense 45.2 8.8 Net Earnings (Loss) Before Extraordinary Item and Cumulative Effect of Change in Accounting Principle 61.4 (7.2) Extraordinary item - loss on early retirement of debt, net of applicable income tax benefit 23.1 - Cumulative effect of change in accounting for costs of start-up activities, net of applicable income tax benefit 12.7 - Net Earnings (Loss) $25.6 $(7.2) Earnings (Loss) Per Common Share Basic Earnings (loss) before extraordinary item and cumulative effect of change in accounting principle $ .89 $(.20) Extraordinary item - loss on early retirement of debt, net of applicable income tax benefit (.34) - Cumulative effect of change in accounting for costs of start-up activities, net of applicable income tax benefit (.19) - Net Earnings (Loss) $ .36 $(.20) Diluted Earnings (loss) before extraordinary item and cumulative effect of change in accounting principle $ .80 $(.20) Extraordinary item - loss on early retirement of debt, net of applicable income tax benefit (.27) - Cumulative effect of change in accounting for costs of start-up activities, net of applicable income tax benefit (.15) - Net Earnings (Loss) $ .38 $(.20) Weighted Average Shares (Thousands) Basic 68,375 40,114 Diluted 83,724 40,114 F E D E R A L - M O G U L C O R P O R A T I O N B A L A N C E S H E E T S (Millions of Dollars) (Unaudited) March 31 December 31 1999 1998 Assets Cash and equivalents $85.7 $77.2 Accounts receivable 1,057.0 1,025.0 Investment in accounts receivable securitization 140.2 91.1 Inventories 1,008.2 1,068.6 Prepaid expenses and income tax benefits 262.8 337.7 Total current assets 2,553.9 2,599.6 Property, plant and equipment 2,395.7 2,477.5 Goodwill 3,503.2 3,398.4 Other intangible assets 862.1 886.4 Other noncurrent assets 549.6 578.2 Total Assets $9,864.5 $9,940.1 Liabilities and Shareholders' Equity Short-term debt, including current portion of long-term debt $196.1 $211.0 Accounts payable 478.0 498.4 Accrued compensation 193.3 200.3 Restructuring and rationalization reserves 147.9 178.9 Current portion of asbestos liability 125.0 125.0 Income taxes payable 115.7 142.2 Other accrued liabilities 564.3 673.7 Total current liabilities 1,820.3 2,029.5 Long-term debt 3,396.7 3,130.7 Long-term portion of asbestos liability 1,136.4 1,176.7 Postemployment benefits 664.5 677.0 Other accrued liabilities 346.7 327.0 Minority interest in consolidated subsidiaries 36.5 38.0 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely convertible subordinated debentures of the Company 575.0 575.0 Shareholders' equity: Series C ESOP preferred stock 43.3 44.4 Series E preferred stock - 132.7 Common stock 352.0 336.8 Additional paid-in capital 1,780.3 1,665.8 Accumulated deficit (44.3) (69.9) Unearned ESOP compensation (15.1) (15.1) Accumulated other comprehensive income (225.7) (106.0) Other (2.1) (2.5) Total Shareholders' Equity 1,888.4 1,986.2 Total Liabilities and Shareholders' Equity $9,864.5 $9,940.1 F E D E R A L - M O G U L C O R P O R A T I O N C A S H F L O W S (Millions of Dollars) (Unaudited) Three Months Ended March 31 1999 1998 Cash Provided From (Used By) Operating Activities Net earnings (loss) $25.6 $(7.2) Adjustments to reconcile net earnings (loss) to net cash provided from (used by) operating activities: Depreciation and amortization 88.8 29.8 Purchased in-process research and development charge - 18.6 Restructuring charge - 10.5 Adjustment of assets held for sale and other long-lived assets to fair value - 20.0 Loss on early retirement of debt 23.1 - Cumulative effect of change in accounting principle 12.7 - Postemployment benefits 8.0 (0.1) Increase in accounts receivable (146.1) (57.1) Decrease in inventories 14.1 36.8 Increase (decrease) in accounts payable (1.8) 22.0 Increase in current liabilities and other 7.0 19.3 Payments against restructuring and rationalization reserves (31.0) (4.5) Payments against asbestos liability (32.3) (5.4) Net Cash Provided From (Used By) Operating Activities (31.9) 82.7 Cash Provided From (Used By) Investing Activities Expenditures for property, plant and equipment and other long-term assets (75.2) (19.5) Proceeds from sale of business investments 5.9 49.3 Proceeds from sale of options - 39.5 Business acquisitions, net of cash acquired (112.9) 655.8) Net Cash Used By Investing Activities (182.2) ,586.5) Cash Provided From (Used By) Financing Activities Issuance of common stock 0.1 7.4 Net increase in debt 239.0 111.7 Fees paid for debt issuance and other securities (25.5) (33.3) Investment in accounts receivable securitization 12.4 (9.6) Dividends (1.6) (5.4) Other (1.8) (6.9) Net Cash Provided From Financing Activities 222.6 063.9 Increase (Decrease) in Cash and Equivalents 8.5 439.9) Cash and equivalents at beginning of period 77.2 541.4 Cash and Equivalents at End of Period $85.7 $101.5 FEDERAL - MOGUL CORPORATION OPERATIONS BY SEGMENT QUARTER ENDED MARCH 31, 1999 ($ Millions) Net Sales: Powertrain Systems $643 Sealing Systems 356 General Products 643 Divested Activities - Total $1,642 % of Sales Operational EBIT: * Powertrain Systems $78 12.2% Sealing Systems 58 16.2% General Products 72 11.2% Divested Activities - Total $208 12.7% Reconciliation: Total Segment Operational EBIT $208 Net interest, and other financing (80) Acquisition Related Costs (21) Earnings before income taxes, extraordinary item and accounting change $107 Capital Expenditures: Powertrain Systems $33 Sealing Systems 13 General Products 29 Divested Activities - Total $75 Depreciation and Amortization: Powertrain Systems $42 Sealing Systems 16 General Products 31 Divested Activities - Total $89 * Operational EBIT is defined as Operational Earnings before certain nonrecurring items (such as certain purchase accounting adjustments and integration costs associated with new acquisitions), interest and income taxes. ots Original Text Service: Federal-Mogul Corporation Internet: http://www.newsaktuell.de Contact: Kimberly A. Welch of Federal-Mogul (USA) 248-354-1916 Company News On-Call: http://www.prnewswire.com/comp/306225.html or Fax: (USA) 800- 758-5804, ext. 306225 Web site: http://www.federal-mogul.com Subscribers please note that material bearing the slug "PROTEXT" is not part of CTK's news service and is not to be published under the "CTK" slug. Protext is a commercial service providing distribution of press releases from clients, who are identified in the text of Protext reports and who bear full responsibility for their contents. PROTEXT