Exhibit 99.1
Federal-Mogul Reports Second Quarter 2007 Results
SOUTHFIELD, Mich.--(BUSINESS WIRE)--July 16, 2007--Federal-Mogul
Corporation (OTCBB:FDMLQ) today reported its financial results for the
three and six month periods ended June 30, 2007.
Financial Summary (in millions)
- ----------------------------------
Three Months Ended Six Months Ended
June 30 June 30
------------------ -----------------
2007 2006 2007 2006
--------- -------- -------- --------
Net sales $1,763 $1,632 $3,480 $3,232
Gross margin 322 304 630 589
Selling, general and
administrative expenses 213 218 420 446
Income (loss) before income taxes 25 12 61 (27)
Income tax expense 21 29 52 58
Net earnings (loss) 4 (17) 9 (85)
Operational EBITDA(a) 212 175 412 320
(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 $4 million for the quarter
ended June 30, 2007, compared to a net loss of $17 million for the
second quarter of 2006. For the six months ended June 30, 2007, the
company reported net income of $9 million, compared to a net loss of
$85 million for the comparable period of 2006. These results reflect
an 8% increase in sales, improved gross margin and reduced selling,
general and administrative expenses.
Federal-Mogul reported net sales of $1,763 million for the quarter
ended June 30, 2007, an increase of $131 million, or 8%, compared to
the second quarter of 2006. The most significant factors impacting
sales were increased volumes of $77 million and favorable foreign
currency of $56 million. For the six-month period ended June 30, 2007,
net sales increased by $248 million to $3,480 million, of which $119
million is due to increased volumes, $51 million is due to the May
2006 acquisition of Federal-Mogul Goetze India ("FMG") and $116
million is due to favorable foreign currency. These favorable impacts
were partially offset by customer pricing.
Gross margin for the three and six months ended June 30, 2007
increased by $18 million and $41 million, respectively, over the
comparable periods of 2006. Improvements in gross margin resulted from
a combination of the October 2006 settlement of the U.K. pension
plans, productivity in excess of labor and benefits inflation,
increased volumes, and favorable foreign currency. These favorable
impacts were partially offset by increased raw materials costs and
customer pricing.
Selling, general and administrative ("SG&A") expense for the three
and six months ended June 30, 2007 improved by $5 million and $26
million, respectively, when compared to the comparable periods of
2006. Reductions in SG&A resulted from a combination of cost reduction
actions in excess of labor and benefits inflation, and the settlement
of the U.K. pension plans. These favorable impacts were partially
offset by increased SG&A from the acquisition of FMG and adverse
foreign currency.
Federal-Mogul reported income before income taxes for the
three-month period ended June 30, 2007 of $25 million, an improvement
of $13 million over the comparable period of 2006. For the six month
period ended June 30, 2007, the Company's income before income taxes
improved by $88 million compared to the same period of 2006, largely
derived from the $67 million of improvements in gross margin and
selling, general and administrative expenses, and $30 million in
reduced impairment and restructuring charges.
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 for the three and six
months ended June 30, 2007 of $212 million and $412 million,
respectively, representing improvements of $37 million and $92
million, respectively, over the comparable periods of 2006. This
improvement is 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 June 30, 2007 has been provided.
Combining cash provided from operating activities with cash used
by investing activities, the Company generated positive cash inflows
of $79 million for the six months ended June 30, 2007, compared with
$30 million for the comparable period of 2006.
"Federal-Mogul remains fully committed to exiting from Chapter 11,
while wholly dedicated to our strategy for sustainable global
profitable growth, providing our valued customers with service
excellence, quality products, leading technology and innovation at
competitive cost," said Chairman, President and Chief Executive
Officer Jose Maria Alapont. "The results achieved during the first
half of 2007 reflect the Company's commitment to consistently improve
our operational performance."
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 35 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.
Note to Editors: There should be an accent symbol over the "e" in
"Jose" above.
FEDERAL-MOGUL CORPORATION
STATEMENTS OF OPERATIONS
(Millions of Dollars, Except Share and Per Share Data)
Three Months Ended Six Months Ended
June 30 June 30
------------------- -------------------
2007 2006 2007 2006
-------- --------- -------- ---------
Net sales $1,763.4 $1,631.6 $3,479.9 $3,231.9
Cost of products sold 1,441.0 1,327.4 2,849.7 2,642.7
-------- --------- -------- ---------
Gross margin 322.4 304.2 630.2 589.2
Selling, general and
administrative expenses 212.7 218.4 419.6 445.9
Adjustment of long-lived
assets to fair value 3.2 1.1 3.5 21.2
Interest expense, net 51.9 44.3 101.9 83.3
Chapter 11 and
Administration related
reorganization expenses 27.6 20.8 41.2 41.9
Equity earnings of
unconsolidated affiliates (10.1) (7.7) (18.0) (17.1)
Restructuring expense, net 13.5 16.5 29.6 42.3
Other income, net (1.5) (1.0) (8.3) (1.3)
-------- --------- -------- ---------
Income (loss) before income
taxes 25.1 11.8 60.7 (27.0)
Income tax expense 21.2 28.6 52.2 58.2
-------- --------- -------- ---------
Net income (loss) $ 3.9 $ (16.8) $ 8.5 $ (85.2)
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Net income (loss) per
common share $ 0.04 $ (0.19) $ 0.10 $ (0.96)
======== ========= ======== =========
Weighted average shares
outstanding (in millions) 89.7 89.1 89.4 89.1
FEDERAL-MOGUL CORPORATION
BALANCE SHEETS
(Millions of Dollars)
(Unaudited)
June 30 December 31
2007 2006
----------- -----------
Current assets:
Cash and equivalents $ 378.1 $ 359.3
Accounts receivable, net 1,167.7 992.6
Inventories, net 905.8 892.6
Prepaid expenses and other current assets 291.4 248.2
--------- ---------
Total current assets 2,743.0 2,492.7
Property, plant and equipment, net 2,055.5 2,078.6
Goodwill and indefinite-lived intangible
assets 1,219.7 1,205.3
Definite-lived intangible assets, net 254.1 254.3
Asbestos-related insurance recoverable 873.7 859.0
Other noncurrent assets 262.5 289.2
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$ 7,408.5 $ 7,179.1
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Current liabilities:
Short-term debt, including current portion
of long-term debt $ 820.2 $ 482.1
Accounts payable 618.4 488.0
Accrued liabilities 514.2 435.0
Current portion of postemployment benefit
liability 67.0 67.9
Other accrued liabilities 147.1 181.7
--------- ---------
Total current liabilities 2,166.9 1,654.7
Liabilities subject to compromise 5,455.5 5,813.4
Long-term debt 22.8 26.7
Postemployment benefits 1,094.6 1,111.1
Deferred income taxes 84.2 81.8
Other accrued liabilities 159.6 185.1
Minority interest in consolidated affiliates 40.1 54.2
Shareholders' deficit:
Series C ESOP preferred stock 28.0 28.0
Common stock 449.3 445.3
Additional paid-in capital 2,199.4 2,160.2
Accumulated deficit (4,129.4) (4,151.7)
Accumulated other comprehensive loss (162.5) (229.7)
--------- ---------
Total shareholders' deficit (1,615.2) (1,747.9)
--------- ---------
$ 7,408.5 $ 7,179.1
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FEDERAL-MOGUL CORPORATION
STATEMENTS OF CASH FLOWS
(Millions of Dollars)
(Unaudited)
Six Months Ended
June 30
----------------
2007 2006
------- -------
Cash provided from (used by) operating activities
Net income (loss) $ 8.5 $ (85.2)
Adjustments to reconcile net income (loss) to net
cash provided from (used by) operating activities:
Depreciation and amortization 172.1 159.4
Adjustment of long-lived assets to fair value 3.5 21.2
Change in postemployment benefits, including
pensions (27.1) 67.4
Changes in deferred taxes 3.8 (7.4)
Changes in operating assets and liabilities:
Accounts receivable (157.8) (80.7)
Inventories 0.9 (58.6)
Accounts payable 106.5 72.3
Other assets and liabilities 75.1 46.3
------- -------
Net cash provided from operating activities 185.5 134.7
Cash provided from (used by) investing activities
Expenditures for property, plant and equipment (132.0) (80.6)
Proceeds from the sale of property, plant and
equipment 18.1 2.7
Proceeds from sale of business - 4.0
Proceeds from sale of investment 13.8 -
Payments to acquire minority interests (6.8) -
Payments to acquire business - (30.5)
------- -------
Net cash used by investing activities (106.9) (104.4)
Cash provided from (used by) financing activities
Proceeds from borrowings on DIP credit facility 550.0 164.3
Principal payments on DIP credit facility (228.1) (198.0)
Net change in short-term debt 8.7 0.3
Net change in restricted cash - (26.9)
Principal payment on other long-term debt (5.8) (1.0)
Payments on factoring arrangements (58.9) -
Repayment of pre-petition Tranche C debt (330.0) -
Debt refinance fees (0.3) -
------- -------
Net cash used by financing activities (64.4) (61.3)
Effect of foreign currency exchange rate
fluctuations on cash 4.6 47.9
------- -------
Increase in cash and equivalents 18.8 16.9
Cash and equivalents at beginning of period 359.3 387.2
------- -------
Cash and equivalents at end of period $ 378.1 $ 404.1
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FEDERAL-MOGUL CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
(Millions of Dollars)
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
2007 2006 2007 2006
--------- ------- ------- -------
Income (loss) before income taxes $ 25.1 $ 11.8 $ 60.7 $ (27.0)
Depreciation and amortization 88.2 80.6 172.1 159.4
Chapter 11 and Administration
related reorganization expenses 27.6 20.8 41.2 41.9
Interest expense, net 51.9 44.3 101.9 83.3
Adjustment of assets to fair
value 3.2 1.1 3.5 21.2
Restructuring expense, net 13.5 16.5 29.6 42.3
Other 2.8 (0.4) 2.7 (0.9)
--------- ------- ------- -------
Operational EBITDA $ 212.3 $ 174.7 $ 411.7 $ 320.2
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CONTACT: Federal-Mogul Corporation
Marie Remboulis, 248-354-9809