SOUTHFIELD, Mich. -- Federal-Mogul Corp. has announced higher sales and improved financial results in the second quarter of 2011 versus the same period of 2010. The company reported sales of $1.8 billion, a 13 percent increase versus the prior year, or 6 percent in constant dollar terms. Gross margin was $299 million or 16.6 percent of sales, an increase of $25 million compared to the second quarter of 2010. Selling, general and administrative expenses were improved to a record low of 9.6 percent of sales in the quarter. Net income for the second quarter 2011 was $64 million or 64 cents per diluted share, versus $49 million or 49 cents per diluted share in the second quarter of 2010, a 31 percent increase. Operational EBITDA (1) was $200 million or 11.1 percent of sales during the quarter, and cash flow (2) was $22 million, demonstrating the company's strong operating performance and efficient ability to grow above the global vehicle markets.

"Federal-Mogul had a very solid second quarter and continues to perform well, with strongly increasing customer demand for our leading technology and innovation in all vehicle market segments. Sales in the second quarter of 2011 were $1.8 billion, up 13 percent; net income was $64 million, up 31 percent; and EBITDA was $200 million. Once again, our results compare favorably to analysts' expectations," said President and CEO Jose Maria Alapont.

The company's sales growth was driven by market share gains in all original equipment business units combined with higher global original equipment market demand. Federal-Mogul's total sales were $1.8 billion in the second quarter of 2011, an increase of 13 percent, or 6 percent in constant dollars, from $1.6 billion in the second quarter of 2010. The company's original equipment sales increased 23 percent, or 14 percent on a constant dollar basis, with China up 19 percent and India up 28 percent. Original equipment sales represented 66 percent of the company's total sales in the quarter.

Federal-Mogul's aftermarket sales in the second quarter of 2011 declined by 3 percent, or 7 percent on a constant dollar basis, with strong growth in developing markets, led by China up 21 percent and India up 26 percent. Federal-Mogul's rapidly growing aftermarket sales in Europe, China, India and other markets now represent 40 percent of Federal-Mogul's global aftermarket sales.

"Federal-Mogul had solid profit improvement in the second quarter 2011 and implemented additional effective actions this year that enabled the company to fully offset adverse materials cost impact through supplier negotiations, additional operating efficiency and customer price recoveries," said Alapont.

Federal-Mogul's gross margin in the second quarter of 2011 was $299 million, an increase of $25 million versus $274 million in the second quarter of 2010. SG&A expenses in the second quarter of 2011 were improved to 9.6 percent of sales from 10.6 percent of sales in the second quarter of 2010, an all-time record for the company. The company reported, in the second quarter of 2011, net income of $64 million or 64 cents per diluted share, an increase of 31 percent, up from $49 million or 49 cents earnings per diluted share in the second quarter 2010. Operational EBITDA in the second quarter of 2011 was $200 million or 11.1 percent of sales. The company generated $22 million of positive cash flow during the period.

"Federal-Mogul's products help customers meet and exceed regulatory requirements and vehicle differentiation demands through increased fuel economy, reduced emissions and improved vehicle safety. We continue to introduce new technologies that receive strong customer demand, and our pipeline of innovation and intellectual property is delivering leading, first-to-market solutions," said Alapont.

The company also announced that it has determined, based on its previously announced review of strategic alternatives, that without ruling out other opportunities that may present themselves, it intends at the present time to concentrate primarily on organic growth and strategic acquisitions.

"Federal-Mogul's 2011 sales growth and profitable operating performance continues our strong track record of success," said Alapont. "We have again delivered stronger results and this ongoing improvement will drive us forward throughout 2011 and beyond, thereby enabling Federal-Mogul to continue to generate sustainable global profitable growth."

(1) Operational EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, and certain items such as restructuring and impairment charges, Chapter 11 and U.K. Administration related reorganization expenses, gains or losses on the sales of businesses, expense associated with U.S. based funded pension plans and OPEB curtailment gains or losses.
(2) Cash flow is equal to net cash provided from operating activities less net cash used by investing activities, as set forth on the attached statement of cash flows.