Exhibit 99.1
Federal-Mogul Reports Third Quarter 2007 Results
SOUTHFIELD, Mich.--(BUSINESS WIRE)--Oct. 18, 2007--Federal-Mogul
Corporation (OTCBB:FDMLQ) today reported its financial results for the
three and nine month periods ended September 30, 2007.
Financial Summary (in millions)
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Three Months Ended Nine Months Ended
September 30 September 30
------------------ -----------------
2007 2006 2007 2006
--------- -------- -------- --------
Net sales $1,686 $1,549 $5,165 $4,781
Gross margin 279 262 910 852
Selling, general and
administrative expenses 208 213 627 659
Income (loss) before income taxes 7 (24) 68 (51)
Income tax expense (benefit) (7) (27) 46 32
Net income (loss) 14 3 22 (83)
Operational EBITDA(a) 166 134 578 455
(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 $14 million for the quarter
ended September 30, 2007, compared to net income of $3 million for the
third quarter of 2006. For the nine months ended September 30, 2007,
the Company reported net income of $22 million, compared to a net loss
of $83 million for the comparable period of 2006. The year-to-date
results reflect an 8% increase in sales, improved gross margin and
reduced selling, general and administrative expenses.
Federal-Mogul reported net sales of $1,686 million for the quarter
ended September 30, 2007, an increase of $137 million, or 9%, compared
to the third quarter of 2006. The most significant factors impacting
sales were increased volumes of $91 million and favorable foreign
currency of $62 million. For the nine month period ended September 30,
2007, net sales increased by $384 million to $5,165 million, of which
$210 million is due to increased volumes, $51 million is due to the
May 2006 acquisition of Federal-Mogul Goetze India ("FMG") and $178
million is due to favorable foreign currency. These favorable impacts
were partially offset by customer pricing.
Gross margin for the three and nine months ended September 30,
2007 increased by $17 million and $58 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 costs associated with plant
rationalizations, customer pricing and increased material costs,
including commodity price inflation of $15 million and $50 million for
the three and nine months ended September 30, 2007, respectively.
Selling, general and administrative ("SG&A") expense for the three
and nine months ended September 30, 2007 improved by $5 million and
$32 million, respectively, when compared to the comparable periods of
2006. As a percentage of sales, SG&A expenses were 12.1% for the nine
months ended September 30, 2007, compared to 13.8% for the comparable
period of 2006.
Federal-Mogul reported income before income taxes for the three
month period ended September 30, 2007 of $7 million, an improvement of
$31 million over the comparable period of 2006. For the nine month
period ended September 30, 2007, the Company's income before income
taxes improved by $119 million compared to the same period of 2006,
largely derived from the $90 million of improvements in gross margin
and selling, general and administrative expenses, and $26 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 nine
months ended September 30, 2007, of $166 million and $578 million,
respectively, representing improvements of $32 million and $123
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 and
nine month periods ended September 30, 2007 has been provided.
Combining cash provided from operating activities with cash used
by investing activities, the Company had cash outflows of $35 million
for the nine months ended September 30, 2007, compared with cash
inflows $32 million for the comparable period of 2006. The 2007 change
in free cash flow is largely driven by increased capital expenditures
of $81 million in support of increased global volumes and future new
business, and a voluntary contribution to the Company's U.S. pension
plans of $34 million made in September 2007.
"The Federal-Mogul team is dedicated to our strategy for
sustainable global profitable growth. The results achieved during the
first three quarters of 2007 reflect the Company's commitment to
continuously improve performance while creating value for our
customers through world-class products, services and innovative
technology," said Chairman, President and Chief Executive Officer Jose
Maria Alapont. "We are also hopeful that our Plan of Reorganization
will be confirmed, enabling emergence from Chapter 11."
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 mark over the "e" in
"Jose" above.
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 Share and Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
------------------ ------------------
2007 2006 2007 2006
-------- -------- -------- --------
Net sales $1,685.5 $1,548.6 $5,165.4 $4,780.5
Cost of products sold 1,406.0 1,286.2 4,255.7 3,928.9
-------- -------- -------- --------
Gross margin 279.5 262.4 909.7 851.6
Selling, general and
administrative expenses 207.7 212.7 627.3 658.6
Adjustment of long-lived
assets to fair value 3.5 - 7.0 21.2
Interest expense, net 49.9 44.9 151.7 128.2
Chapter 11 and Administration
related reorganization
expenses 15.3 23.1 56.5 65.0
Equity earnings of
unconsolidated affiliates (9.6) (6.6) (27.6) (23.7)
Restructuring expense, net 9.8 8.8 39.4 51.1
Other expense (income), net (4.4) 3.6 (12.6) 2.3
-------- -------- -------- --------
Income (loss) before income
taxes 7.3 (24.1) 68.0 (51.1)
Income tax expense (benefit) (6.4) (26.7) 45.8 31.5
-------- -------- -------- --------
Net income (loss) $ 13.7 $ 2.6 $ 22.2 $ (82.6)
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Basic and diluted income
(loss) per common share:
- ------------------------------
-------- -------- -------- --------
Net income (loss) per common
share $ 0.15 $ 0.03 $ 0.25 $ (0.92)
======== ======== ======== ========
Diluted Earnings (Loss)
Available for Common
Shareholders $ 0.15 $ 0.03 $ 0.24 (0.92)
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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)
September 30 December 31
2007 2006
------------ -----------
Current assets:
Cash and equivalents $ 366.2 $ 359.3
Accounts receivable, net 1,158.6 992.6
Inventories, net 941.2 892.6
Prepaid expenses and other current assets 323.1 248.2
----------- ----------
Total current assets 2,789.1 2,492.7
Property, plant and equipment, net 2,103.5 2,078.6
Goodwill and indefinite-lived intangible
assets 1,226.2 1,205.3
Definite-lived intangible assets, net 254.0 254.3
Asbestos-related insurance recoverable 879.5 859.0
Other noncurrent assets 282.1 289.2
----------- ----------
$ 7,534.4 $ 7,179.1
=========== ==========
Current liabilities:
Short-term debt, including current portion
of long-term debt $ 915.1 $ 482.1
Accounts payable 568.4 488.0
Accrued liabilities 519.4 435.0
Current portion of postemployment benefit
liability 67.7 67.9
Other accrued liabilities 133.5 181.7
----------- ----------
Total current liabilities 2,204.1 1,654.7
Liabilities subject to compromise 5,462.0 5,813.4
Long-term debt 24.4 26.7
Postemployment benefits 1,058.6 1,111.1
Deferred income taxes 77.3 81.8
Other accrued liabilities 165.5 185.1
Minority interest in consolidated affiliates 39.5 54.2
Shareholders' deficit:
Series C ESOP preferred stock 28.0 28.0
Common stock 449.3 445.3
Additional paid-in capital 2,201.7 2,160.2
Accumulated deficit (4,115.7) (4,151.7)
Accumulated other comprehensive loss (60.3) (229.7)
----------- ----------
Total shareholders' deficit (1,497.0) (1,747.9)
----------- ----------
$ 7,534.4 $ 7,179.1
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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 C A S H F L O W S
(Millions of Dollars)
(Unaudited)
Nine Months Ended
September 30
-----------------
2007 2006
-------- -------
Cash provided from (used by) operating activities
Net income (loss) $ 22.2 $ (82.6)
Adjustments to reconcile net income (loss) to net
cash provided from operating activities:
Depreciation and amortization 261.4 241.3
Adjustment of long-lived assets to fair value 7.0 21.2
Change in postemployment benefits, including
pensions (80.8) 80.0
Changes in deferred taxes (20.5) (7.0)
Changes in operating assets and liabilities:
Accounts receivable (127.6) (20.5)
Inventories (14.3) (58.5)
Accounts payable 56.4 36.3
Other assets and liabilities 34.2 (24.5)
-------- -------
Net cash provided from operating activities 138.0 185.7
Cash provided from (used by) investing activities
Expenditures for property, plant and equipment (220.4) (139.1)
Proceeds from the sale of property, plant and
equipment 26.1 12.2
Proceeds from sale of business 14.0 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 (173.3) (153.4)
Cash provided from (used by) financing activities
Proceeds from borrowings on DIP credit facility 658.8 252.5
Principal payments on DIP credit facility (247.0) (268.0)
Net change in short-term debt 9.0 (14.8)
Net change in restricted cash - 20.6
Principal payment on other long-term debt (5.0) 5.1
Payments on factoring arrangements (55.4) -
Repayment of pre-petition Tranche C debt (330.0) -
Debt refinance fees (0.1) -
-------- -------
Net cash provided from (used by) financing
activities 30.3 (4.6)
Effect of foreign currency exchange rate
fluctuations on cash 11.9 14.1
-------- -------
Increase in cash and equivalents 6.9 41.8
Cash and equivalents at beginning of period 359.3 387.2
-------- -------
Cash and equivalents at end of period $ 366.2 $ 429.0
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F E D E R A L - M O G U L C O R P O R A T I O N
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
(Millions of Dollars)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -----------------
2007 2006 2007 2006
---------- ------ --------- ------
Income (loss) before income
taxes $ 7.3 $(24.1)$ 68.0 $(51.1)
Depreciation and amortization 89.4 81.9 261.4 241.3
Chapter 11 and Administration
related reorganization
expenses 15.3 23.1 56.5 65.0
Interest expense, net 49.9 44.9 151.7 128.2
Adjustment of assets to fair
value 3.5 - 7.0 21.2
Restructuring expense, net 9.8 8.8 39.4 51.1
Gain on sale of business /
divestiture (9.1) - (8.7) (0.3)
Other (0.2) (0.2) 2.2 (0.8)
---------- ------ --------- ------
Operational EBITDA $ 165.9 $134.4 $ 577.5 $454.6
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CONTACT: Federal-Mogul Corporation
Marie Remboulis, 248-354-9809