SOUTHFIELD, MI -- Federal-Mogul has reported its financial results for the three and six month periods, which ended June 30.

Federal-Mogul reported net sales of $1,632 million for the three month period. Compared with the quarter ended June 30, 2005, sales decreased $33 million largely due to softness in the North American aftermarket. For the six-month period ended June 30, 2006, net sales decreased by $67 million to $3,232 million of which $47 million is due to unfavorable foreign currency.

Gross margin for the three and six month periods, when compared to the same periods of 2005, increased by $12 million and $22 million, respectively. Productivity improvements, net of labor and benefits inflation, more than offset the impact of reduced sales volumes.

Selling, general and administrative expenses for the three and six months, when compared to the same periods of 2005, improved by $8 million and $30 million, respectively.

Federal-Mogul reported income before income taxes of $12 million for the three-month period, consistent with the comparable period of 2005. For the six month period, the company reported a loss before income taxes of $27 million compared to a loss of $9 million for the same period of 2005. For the six month period, the $52 million of improvements in gross margin and selling, general and administrative expenses were more than offset by $72 million for higher average interest rates, restructuring charges and adjustments of assets to fair value.

Company management said it 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 $175 million and $320 million for the three and six month periods, respectively. When compared to the same period of 2005, Operational EBITDA increased by $17 million and $34 million, respectively. A reconciliation of Operational EBITDA to the company's loss before income taxes for the three and six months has been included.

During the quarter, the company invested $31 million for the acquisition of the controlling interest in Goetze India Limited, a pistons and rings manufacturer headquartered in Delhi, India. As a result of this acquisition, the results of Goetze India Limited have been consolidated with those of the company, including net sales and gross margin of $14 million and $2 million, respectively, and total assets of $166 million.

Combining cash provided from operating activities with cash used by investing activities, including the acquisition of Goetze India Limited, the company generated positive cash inflows of $30 million for the six months, compared with $3 million for the comparable period of 2005.

For more information on Federal-Mogul, visit: www.federal-mogul.com.

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