SOUTHFIELD, Mich. — Federal-Mogul Corp. has reported record second quarter sales of $2 billion and an eighth consecutive quarter of year-over-year increased sales combined with a sharp rise in quarterly net income to $90 million.

Sales for the three-month period ending June 30 were a record $1,995 million, an increase of 13 percent, compared to $1,763 million for the same period a year ago. Federal-Mogul reported a gross margin of $396 million or 19.8 percent of sales, compared to $322 million or 18.3 percent of sales, representing an increase of $74 million, or 23 percent over the prior year. Federal-Mogul’s Operational EBITDA was $257 million or 12.9 percent of sales, compared to $212 million or 12 percent of sales during the same period in 2007, representing an increase of $45 million or 21 percent. The company recorded net income of $90 million or earnings per share of 90 cents, up from $4 million in second quarter 2007.

"We experienced another record sales quarter with strong earnings performance. We have anticipated and reacted to changing market conditions including a market downturn in mature automotive markets. We implemented numerous successful actions to offset macro-economic factors and benefited from our strong market, customer and product diversification," said Jose Maria Alapont, Federal-Mogul president and chief executive officer.

"Federal-Mogul’s global market presence and customer base is well diversified. We serve over 250 vehicle platforms and over 700 vehicle powertrain programs. No single customer represents more than six percent of our global revenue and over 60 percent of our revenue is generated from sales outside the United States and Canada. Further, we have a significant global aftermarket business with well recognized leading brands and we generate over 10 percent of our revenue from a global commercial and industrial customer base. This diversification strengthens our performance and compensates for market and customer volatility," Alapont continued.

Federal-Mogul reported sales of $1,995 million for the three-month period, up from $1,763 million in the same period of 2007. Sales increased by $232 million or 13 percent and were positively impacted by favorable foreign exchange of $125 million. The company has reported year-over-year quarterly sales increases for eight consecutive quarters as a result of expanding sales to customers in Europe, Asia and South America.

Gross margin for the quarter was $396 million or 19.8 percent of sales, as compared to $322 million or 18.3 percent of sales during the same period a year ago, an increase of 23 percent or $74 million. The automotive market has faced decreasing regional production volumes, rising energy prices, inflationary raw material costs and other economic challenges. The company effectively offset the impact of these and other macro-economic factors through profitable incremental revenue from new business contracts and improved productivity from operations. Gross margin was also favorably impacted by reduced depreciation and foreign exchange.

Selling, General and Administrative (SG&A) expenses were reduced to 10.6 percent of sales during the quarter, compared to 12.1 percent of sales in the same period of 2007. The company realized a reduction in SG&A expense despite an adverse foreign exchange impact of $11 million.

Federal-Mogul’s Operational EBITDA for the second quarter was $257 million, a 21 percent or $45 million increase, compared to $212 million during the same period in 2007.

Net income was $90 million in the second quarter 2008, with earnings per share of 90 cents, compared to $4 million of net income in second quarter 2007.

The company said it continued to make progress executing its sustainable global profitable growth strategy by growing in emerging markets and strengthening its presence in mature markets. The company achieved 50 percent growth in sales to customers in BRIC (Brazil, Russia, India and China) markets during the quarter. The company recently completed the successful launch of a new powertrain component plant in Araras, Brazil, and launched its new portfolio of wipers and brake pads in the Russian market.

Federal-Mogul reported sales of $3,854 million for the six-month period ending June 30, an increase of $374 million or 11 percent versus $3,480 million for the same period in 2007.

Gross margin increased to $662 million in the first half of 2008 versus $630 million in 2007, despite a non-cash charge of $68 million recorded in the first quarter of 2008 relating to re-valuation of inventory, as required by fresh-start reporting.

Operational EBITDA increased 12 percent, or $50 million, to $462 million in the first half of 2008, as compared to $412 million in the same period the prior year.

Adjusted net income rose $112 million to $121 million or 3.1 percent of sales during the first half of 2008, versus $9 million in the first half of 2007.

The company recorded strong operating cash flow of $116 million in the first half of 2008, which compares to $79 million in the same period of 2007.

"Federal-Mogul’s results demonstrate the solid foundation we have put in place through our sustainable global profitable growth strategy. Global customer, regional and product portfolio diversification, together with leading product technologies and brands, development in best cost locations and strong commitment to customer service differentiate Federal-Mogul and contribute to our strong performance in this challenging market environment," Alapont said.

For more information about Federal-Mogul, visit: www.federalmogul.com.