EXHIBIT 99.1
Federal-Mogul Reports First Quarter 2007 Results
SOUTHFIELD, Mich.--(BUSINESS WIRE)--April 19, 2007--Federal-Mogul
Corporation (OTCBB:FDMLQ) today reported its financial results for the
three months ended March 31, 2007.
Financial Summary (in millions)
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Three Months Ended
March 31
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2007 2006
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Net sales $1,717 $1,600
Gross margin 308 285
Selling, general and administrative expense 207 228
Earnings (loss) before income taxes 36 (39)
Income tax expense (31) (29)
Net earnings (loss) 5 (68)
Operational EBITDA(a) 199 146
(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 income of $5 million for the quarter
ended March 31, 2007, compared to a net loss of $68 million for the
first quarter of 2006. This result reflects a 7% increase in sales,
improved gross margin, reduced selling, general and administrative
expenses, and reduced impairment and restructuring charges.
Federal-Mogul reported net sales of $1,717 million for the quarter
ended March 31, 2007, an increase of $117 million, or 7%, compared to
the first quarter of 2006. The most significant factors impacting
sales were increased volumes of $39 million, the May 2006 acquisition
of Federal-Mogul Goetze India ("FMG") which increased sales by $32
million, and favorable foreign currency of $60 million.
Gross margin for the quarter increased by $23 million over the
first quarter of 2006. Improvements in gross margin resulted from a
combination of the October 2006 settlement of the U.K. pension plans,
increased volumes, favorable foreign currency, and productivity in
excess of labor and benefits inflation. These favorable impacts were
partially offset by customer pricing and increased raw materials
costs.
Selling, general and administrative ("SG&A") expense for the
quarter improved by $21 million over the first quarter of 2006.
Reductions in SG&A resulted from a combination of the settlement of
the U.K. pension plans, and cost reduction actions in excess of labor
and benefits inflation. These favorable impacts were partially offset
by increased SG&A from the acquisition of FMG and adverse foreign
currency.
Federal-Mogul reported net earnings before income taxes for the
three months ended March 31, 2007 of $36 million, compared to a net
loss before income taxes of $39 million for the same period of 2006.
The impact of improved gross margin and reduced selling, general and
administrative expenses contributed a combined $44 million to the
improved results, with reduced restructuring and impairment charges
contributing an additional $30 million to net earnings.
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 $199 million, an
improvement of $53 million compared to 2006, largely due to the
improvements reported within gross margin and reduced SG&A expenses. A
reconciliation of Operational EBITDA to the Company's earnings before
income taxes for the three months ended March 31, 2007 has been
provided.
Combining cash provided from operating activities with cash used
by investing activities, the Company generated positive cash inflows
of $12 million for the quarter ended March 31, 2007, compared to $31
million for the comparable period of 2006, reflecting the impact of
increased capital expenditures of $24 million.
"We are focused on the implementation of our strategy to achieve
sustainable global profitable growth, providing our valued customers
worldwide leading products, services and technologies at competitive
cost," said Chairman, President and Chief Executive Officer Jose Maria
Alapont. "Our improved operational performance during the first
quarter is the result of our drive toward those strategic goals and
the dedication of our employees."
About Federal-Mogul
Federal-Mogul Corporation is a leading global supplier, serving
the world's foremost original equipment manufacturers of automotive,
light commercial, heavy-duty, agricultural, marine, rail, aerospace,
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 global profitable
growth strategy, creating value and satisfaction for its customers,
employees and stakeholders. Federal-Mogul was founded in Detroit in
1899. The Company is headquartered in Southfield, Michigan, and
employs 45,000 people in 34 countries. 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.
FEDERAL-MOGUL CORPORATION
STATEMENTS OF OPERATIONS
(Millions of Dollars, Except Share and Per Share Data)
(Unaudited)
Three Months Ended
March 31
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2007 2006
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Net sales $1,716.5 $1,600.3
Cost of products sold 1,408.7 1,315.3
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Gross margin 307.8 285.0
Selling, general and administrative expenses 206.9 227.5
Adjustment of long-lived assets to fair value 0.3 20.1
Interest expense, net 50.0 39.0
Chapter 11 and U.K. Administration related
reorganization expenses 13.6 21.1
Equity earnings of unconsolidated affiliates (7.9) (9.4)
Restructuring expense, net 16.1 25.8
Other income, net (6.8) (0.3)
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Income (loss) before income taxes 35.6 (38.8)
Income tax expense 31.1 29.6
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Net income (loss) $ 4.5 $ (68.4)
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Basic and diluted income (loss) per common
share:
- -----------------------------------------------
-------- --------
Net income (loss) per common share $ 0.05 $ (0.77)
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Weighted average shares outstanding (in
millions) 89.6 89.1
FEDERAL-MOGUL CORPORATION
BALANCE SHEETS
(Millions of Dollars)
(Unaudited)
March 31 December 31
2007 2006
-------------- --------------
Current assets:
Cash and equivalents $ 324.0 $ 359.3
Accounts receivable, net 1,142.4 992.6
Inventories, net 903.2 892.6
Prepaid expenses and other current
assets 262.8 248.2
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Total current assets 2,632.4 2,492.7
Property, plant and equipment, net 2,053.2 2,078.6
Goodwill and indefinite-lived
intangible assets 1,207.1 1,205.3
Definite-lived intangible assets, net 251.1 254.3
Asbestos-related insurance recoverable 860.1 859.0
Other noncurrent assets 269.6 289.2
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$ 7,273.5 $ 7,179.1
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Current liabilities:
Short-term debt, including current
portion of long-term debt $ 496.1 $ 482.1
Accounts payable 541.8 488.0
Accrued liabilities 490.9 435.0
Current portion of postemployment
benefit liability 66.9 67.9
Other accrued liabilities 149.0 181.7
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Total current liabilities 1,744.7 1,654.7
Liabilities subject to compromise 5,814.3 5,813.4
Long-term debt 26.4 26.7
Postemployment benefits 1,099.3 1,111.1
Deferred income taxes 55.6 81.8
Other accrued liabilities 167.7 185.1
Minority interest in consolidated
affiliates 54.2 54.2
Shareholders' deficit:
Series C ESOP preferred stock 28.0 28.0
Common stock 445.3 445.3
Additional paid-in capital 2,161.3 2,160.2
Accumulated deficit (4,133.3) (4,151.7)
Accumulated other comprehensive loss (190.0) (229.7)
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Total shareholders' deficit (1,688.7) (1,747.9)
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$ 7,273.5 $ 7,179.1
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FEDERAL-MOGUL CORPORATION
STATEMENTS OF CASH FLOWS
(Millions of Dollars)
(Unaudited)
Three Months Ended
March 31
------------------
2007 2006
-------- --------
Cash provided from (used by) operating activities
Net income (loss) $ 4.5 $ (68.4)
Adjustments to reconcile net loss to net cash
(used by) provided from operating activities:
Depreciation and amortization 83.9 78.8
Adjustment of long-lived assets to fair value 0.3 20.1
Change in postemployment benefits, including
pensions (16.5) 34.9
Changes in deferred taxes (1.8) (6.3)
Changes in operating assets and liabilities:
Accounts receivable (143.9) (81.0)
Inventories (5.8) (29.5)
Accounts payable 43.8 57.4
Other assets and liabilities 85.4 48.7
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Net cash provided from operating activities 49.9 54.7
Cash provided from (used by) investing activities
Expenditures for property, plant and equipment (54.7) (30.7)
Proceeds from the sale of property, plant and
equipment 16.9 2.7
Proceeds from sale of business - 4.0
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Net cash used by investing activities (37.8) (24.0)
Cash provided from (used by) financing activities
Proceeds from borrowings on DIP credit facility 90.0 124.7
Principal payments on DIP credit facility (88.1) (153.0)
Net change in short-term debt 9.4 (0.7)
Net change in restricted cash - (1.0)
Principal payment in other long-term debt (1.2) (0.6)
Proceeds from factoring arrangements (58.7) -
Debt issuance fees (0.3) -
-------- --------
Net cash used by financing activities (48.9) (30.6)
Effect of foreign currency exchange rate
fluctuations on cash 1.5 8.3
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(Decrease) increase in cash and equivalents (35.3) 8.4
Cash and equivalents at beginning of period 359.3 387.2
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Cash and equivalents at end of period $ 324.0 $ 395.6
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FEDERAL-MOGUL CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
(Millions of Dollars)
(Unaudited)
Three Months Ended
March 31
-------------------
2007 2006
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Income (loss) before income taxes $ 35.6 $ (38.8)
Depreciation and amortization 83.9 78.8
Chapter 11 and Administration related
reorganization expenses 13.6 21.1
Interest expense, net 50.0 39.0
Adjustment of assets to fair value 0.3 20.1
Restructuring expense, net 16.1 25.8
Other (0.1) (0.4)
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Operational EBITDA $ 199.4 $ 145.6
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CONTACT: Federal-Mogul Corporation
Jennifer Rass, 248-354-7502
jennifer.rass@federalmogul.com
OR
Marie Remboulis, 248-354-9809