Federal-Mogul Reports Record $.96 First Quarter

Earnings Per Share from Operations Southfield, Mich. (PROTEXT) - - Earnings per share from operations at $.96, excludingspecial charges. - $7 Million of economic value added. - First quarter sales hit new record high of $1,642 million. - Seasonal accounts receivable increase of $146 millioncontributed to cash usage from operations after capitalexpenditures of $66 million. - Gordon Ulsh appointed President and Chief OperatingOfficer. - Announced acquisition plan for Alcan Nural. Federal-Mogul Corporation (NYSE: FMO) today announced solidfinancial results for the ninth consecutive quarter. "I'm very proud of the total team effort behind theseresults," said Dick Snell, chairman and chief executive officer."We are successfully consolidating our acquisitions because wehave a very good, robust integration process. With thisdisciplined process, we will continue to grow the company throughacquisitions to expand our systems and global capabilities asrequired by our customers." In response to the company's expanded operations, Federal-Mogul appointed Gordon A. Ulsh, president and chief operatingofficer on February 24. On the acquisition front, the companyannounced the acquisition agreement of Alcan Nural, a Germanpiston company, and completed the acquisition of Tri-Way Machineand Camshaft Machine in January. "Federal-Mogul is on schedule to deliver in the short termwithout compromising our long-term growth objectives," saidSnell. "We are successfully operating at an accelerated pace toremain 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 firstquarter, the company's earnings increased 159% to $75 million or$.96 per share from operations, compared to $29 million or $.63per share in 1998. Earnings per share from operations excludeintegration costs and special charges. Including these items, thecompany reported earnings of $26 million or $.38 per share. As previously disclosed, the non-operating charges include $13million for an accounting change related to start-up activities,$23 million related to the early extinguishment of debt incurredfor acquisitions, and $11 million for inventory charges relatedto the Cooper acquisition. In addition, the company incurred $10million in integration costs. The company used $66 million of cash for operations primarilydue to an expected first quarter seasonal increase in customeraccounts receivable of $146 million. Cash from operations isafter capital expenditures and before integration andrestructuring payments. Federal-Mogul was awarded the 1998 Hard Parts Vendor of theYear Award from Advance Auto Parts for all products, includingFel-Pro(R) gaskets and Ferodo(R) brakes. Federal-Mogul was alsoawarded the 1998 Performance Vendor of the Year Award fromO'Reilly Auto Parts. O'Reilly's carries 90 percent of allFederal-Mogul product lines including bearings, seals, fuelpumps, 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 $643million compared to $272 million in 1998. In new business awards,Federal-Mogul received the engine bearing business for GeneralMotors' 2.2L and 2.4L engines. Federal-Mogul's Powertrain Systems' facilities in Bradford andSunderland, England, have been awarded the 1998 Best SupplierAward from Nissan UK. Powertrain's Blacksburg, Virginia, facilitywas awarded the Master Quality Award from General Motors.Blacksburg supplies GM with steel-backed (bi- metallic) enginebearings. Powertrain Systems has also received the 1998 OutstandingInstaller Promotion Award from Auto Value, for superior marketingsupport for Champion(R) spark plugs. In addition, Powertrain'sGreenville and Manitowoc facilities received Excellent DeliveryPerformance and Certificate of Achievement-Quality awards fromToyota Motor Manufacturing, North America. The Lake City,Minnesota, facility received Partner Supplier status from JohnDeere. Sealing Systems Sealing Systems reported first quarter sales of $356 millioncompared to $163 million in 1998. Federal-Mogul's Sealing Systems' Skokie, Illinois, facilityhas also been awarded the Excellent Delivery Performance Awardand the Certificate of Achievement - Quality Award from ToyotaMotor Manufacturing, North America. Sealing Systems' Frankfort,Indiana, facility received a Gold Pentastar Award fromDaimlerChrysler for excellence in quality and delivery. General Products General Products reported first quarter sales of $643 millioncompared to $209 million in 1998. In new business, Federal-Mogul Friction Products was awardedfrom DaimlerChrysler the front disk and rear drums for theChrysler BR 1500 pick-up truck. Friction Products was alsoawarded front and rear disks for Ford Motor Company's Excursionvehicle. Federal-Mogul will supply Outboard Marine Corporation withpulse-driven fuel pumps for application as fuel injection liftpumps on their outboard engines and fuel vapor separator/electricfuel pump modules for application on their outboard engines,utilizing FICHT(R) fuel injection. DaimlerChrysler awardedFederal-Mogul Camshafts a contract for the supply of assembledcamshafts for its new 3.7L V6 engine. Federal-Mogul's General Products facility in Waupun,Wisconsin, received a Gold Pentastar award from DaimlerChryslerin recognition for outstanding achievement in quality, deliveryand warranty. General Motors awarded Federal-Mogul SinteredProducts its Supplier of the Year award for its supply of powermetal valve seats and valve guides. Second Quarter Dividend on Common Stock Federal-Mogul's Board of Directors declared the regularquarterly dividend of $.0025 cents a share on the common stock ofthe company. Second quarter common stock dividends are payableJune 10, 1999 to shareowners of record at the close of thebusiness May 31, 1999. Headquartered in Southfield, Michigan, Federal-Mogul is anautomotive parts manufacturer providing innovative solutions andsystems to global customers in the automotive, light trucks,heavy duty, farm and industrial markets. The company was foundedin 1899. For more information on Federal- Mogul, visit thecompany's web site at http://www.federal-mogul.com. Federal-Mogul's press releases are available by fax through Company NewsOn-Call, call 800-758-5804, ext. 306225. Information in this press release contains forward-lookingstatements which are not historical facts and involve risk anduncertainties. Actual results, events and performance coulddiffer materially from those contemplated by these forward-looking statements including, without limitations, the company'sability to effectively divest certain assets, the cost and timingof implementing restructuring actions, the combination of thebusinesses of Federal-Mogul, T & N, and Fel-Pro, conditions inthe automotive components industry, certain global and regionaleconomic conditions and other factors discussed in this pressrelease and those detailed from time to time in the company'sfilings with the Securities and Exchange Commission. Federal-Mogul undertakes no obligation to update any forward lookingstatement to reflect events or circumstances after the date ofthis 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 beforecertain nonrecurring items (such as certain purchase accountingadjustments and integration costs associated with newacquisitions), interest and income taxes. ots Original TextService: Federal-Mogul Corporation Internet:http://www.newsaktuell.de Contact: Kimberly A. Welch ofFederal-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

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