federal mogul 9E16462A-2277-45CF-98D1-FD0F18782C97_Q408_Presentation

Federal-Mogul Corporation
Q4 and 2008 Financial Results
Conference Call
February 24, 2009

Strictly Confidential

Today’s Presenters

Jeff Kaminski
José Maria Alapont
Senior Vice President and
President and
Chief Financial Officer
Chief Executive Officer

February 24, 2009
Federal-Mogul Corporation 2008 Financial Results Public
2

Safe Harbor Statement
Statements contained in this presentation, which are not
historical fact, constitute quot;Forward-Looking Statements.quot;
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, Federal-Mogul’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 presentation.

February 24, 2009
3

Agenda
Opening Remarks / Business Summary
José Maria Alapont
President and Chief Executive Officer

Q4 and Full Year Financial Review
Jeff Kaminski
Senior Vice President and
Chief Financial Officer

Closing Remarks

Q&A

February 24, 2009
4

Q4 Highlights
• Quarterly sales of $1.3 billion versus $1.7 billion in Q4 2007. The 25% reduction is due to
the unprecedented macro-economic and automotive market and downturn

• Gross margin of $183 million, or 13.9% of sales, compared to $275 million, or 15.7% of
sales in Q4 2007

• Reduced total SG&A cost by $40 million during Q4 versus prior year

• Operational EBITDA of $114 million or 8.7% of sales versus $186 million or 10.5% in Q4
2007

• Restructuring charge of $118 million as part of Federal-Mogul’s global restructuring
program announced during the second half of 2008

• Non-cash, intangible assets impairment of $451 million due to the global economic
downturn

• Net loss of $530 million driven by intangible assets impairment and restructuring charges

• Adjusted net loss of $24 million in Q4 2008 compared to an adjusted net income of $11
million in Q4 2007

• Positive cash flow of $180 million versus negative cash flow of $(193) million in Q4 2007

February 24, 2009
5

2008 Highlights
• Sales of $6.9 billion versus $6.9 billion in 2007 demonstrating record first half
performance and continued actions to gain market share in 2008
• Gross margin of $1.12 billion, or 16.4% of sales, compared to $1.19 billion, or 17.1% of
sales in 2007
• Reduced total SG&A cost by $72 million before the impact of exchange. SG&A of
11.3% of sales, compared to 12% of sales in 2007
• Operational EBITDA of $754 million or 11% versus $763 million or 11% of sales in 2007
• Restructuring charge of $132 million as part of Federal-Mogul’s global restructuring
program
• Non-cash, intangible assets impairment of $451 million due to global economic
downturn
• Net loss of $468 million driven by intangible assets impairment and restructuring
charges
• Adjusted net income of $113 million in 2008 versus adjusted net income of $75 million in
2007
• Positive cash flow of $321 million versus negative cash flow of $(228) million in 2007

February 24, 2009
6

Driving the Future While
Crossing the Desert
• Federal-Mogul is facing the challenge of crossing the desert of this
downturn with efficient action plans, urgency, strength and relentless
execution
• Federal-Mogul reported stable 2008 sales, solid operating margins
and EBITDA, with strong cash flow as a result of aggressive actions
to reduce Q4 operating costs by 23%, in line with the market
downturn
• We put in place a global restructuring and cost reduction plan
including the consolidation of our five business segments into four
with further streamlining of operating and support staffs

February 24, 2009
7

Driving the Future While
Crossing the Desert
• Federal-Mogul is managing the market challenge by reinforcing our
strategy with a stronger drive in key performance areas:
– Global OE/OES market share growth
– Increasing global Aftermarket sales and services
– Variable cost company model
• We are positioned to capitalize on acquisition opportunities with our
strong liquidity and no financial maintenance covenants
• Federal-Mogul remains fully committed to its sustainable global
profitable growth strategy through the market’s downturn

February 24, 2009
8

Strong Financial Performance
($ millions) Sales EBITDA
$6,914 $6,866
$7,000 $763 $754
$800
$6,326
$6,286
$624
$6,000 $554

$5,000 $400

$4,000

$3,000 $0
2005 2006 2007 2008 2005 2006 2007 2008

SG&A Free Cash Flow
$1,000
$393
$387
$884 $400
15%
$900 $848 $333
$828 $319
$774 $300
$800 13%

$200
$700
11%
$100
$600

$500 9% $0
2005 2006 2007 2008
2005 2006 2007 2008
SG&A as a % of Sales Free cash flow = EBITDA less capital expenditures and cash restructuring payments

February 24, 2009
9

Full Year Sales by Region
($ billions)

2007 2008

$6.9 billion $6.9 billion

Europe Europe
$3.1
US & $3.2
US &
Canada
Canada
$2.9
$2.7
46%
42% 40% 46%

12% 14%

ROW ROW
$.9 $1.0

February 24, 2009
10

Federal-Mogul Global OE and
Aftermarket Advantages

• Federal-Mogul’s OE and Aftermarket business model with 62% OE and
38% Aftermarket in 2008 minimizes revenue fluctuation

• Efficient Federal-Mogul capacity utilization to flex with OE and
Aftermarket customer requirements

• Premium Brands, OE Replacement and Entry Level products provide
single source coverage for all global customers

• Leading technology and innovation together with knowledge from
mechanics/installers used to develop world-class OE and
Aftermarket designs for easy installation, repair and maintenance

• Federal-Mogul is a leader in offering new full product ranges to the
worldwide Aftermarket

February 24, 2009
11

Vehicle Utilization

Average Vehicle Age - U.S. Average Vehicle Age - Global
10.0
10.0
9.5
9.5
8.84 8.91
8.62 8.69 8.77
9.0
9.0 8.62
8.41 8.49
8.50
8.29
8.35
8.5
8.5 8.09
8.01
7.92
7.83 7.69
8.0
8.0 7.71
7.65
7.62
7.60
7.40
7.5
7.5
7.0
7.0
6.36
6.5
6.5
6.0
6.0
5.5
5.5
5.0
5.0
2000 2002 2004 2006 2008 2010 2000 2002 2004 2006 2008 2010
Actual Forecast Forecast
Actual
Forecast
Actual

Federal-Mogul’s global aftermarket business is well positioned considering
current financial and automotive market dynamics, increasing average age
of vehicles on the road and resulting repair activity.
Source: RL Polk, F-M Estimates

February 24, 2009
12

Financing and Capital Structure
• $3.5 billion long-term debt facility
– Low interest costs
– Minimal annual debt amortization until after 2013
– No financial maintenance covenants
– Provides flexibility to deploy capital globally

• More than $1.3 billion of available liquidity
as of December 31, 2008

• $1.2 billion in interest rate swaps reduces exposure to
LIBOR volatility

February 24, 2009
13

Debt Maturity Profile

Debt Maturity Profile as of December 31, 2008

$3,000.0
$2,500.0
$2,000.0
Millions

$1,500.0
$1,000.0
$500.0
$-
2009 2010 2011 2012 2013 Thereafter
Tranche B term loan Tranche C term loan Other, primarily non-U.S. debt

February 24, 2009
14

Strategic Acquisitions
• We are evaluating potential acquisitions to enhance technology
portfolio, expand footprint, increase market share and strengthen
revenue diversification while meeting financial requirements

• 2008/2009 economic conditions bring new realism in the marketplace
for acquisition opportunities

• Federal-Mogul Recent M&A Activity :
– Increased DongShuh China equity from 50% to 75.5%
– Acquired Shanghai Compound Material Co. 60% ownership
– Increased F-M Goetze India equity from 57% to 74.9%
– Acquired 64% ownership in F-M Bearing India Ltd.
– Established F-M Naberezhnye Chelny controlled JV in Russia

February 24, 2009
15

Global Cost Reduction & Restructuring
• Federal-Mogul has implemented global programs to restructure
operating capacity, streamline SG&A, reduce materials consumption,
purchased services and discretionary spending

• During 2008 Federal-Mogul implemented or announced planned
restructuring actions including:
– Workforce reduction of 26% since July 2008
– Manufacturing plant and distribution center closures
– Global capacity flexing to adjust to market downturn
– Shortened work weeks and modified shift patterns with no premiums
– Streamlining SG&A and support staffs
– Anticipated cost of the restructuring programs is $160 million

• Recorded restructuring charge of $132 million in 2008

February 24, 2009
16

Global Cost Reduction & Restructuring
• The consolidation of our five business segments into four
includes the following benefits:
– Federal-Mogul structure closer to customers and markets served
– Better coordination of product engineering and manufacturing
competencies across business units
– Reduction in operating and functional staffs required to support
product lines within business units
– Facilitates realignment of business structure in corporate, regional
and product groups to further optimize SG&A throughout the
company

February 24, 2009
17

Portfolio and
Reporting Segments

Powertrain Energy (PTE)
Automotive and industrial pistons,
rings, pins, liners, valvetrain and ignition

Powertrain Sealing
and Bearings (PTSB)
Dynamic and bonded seals, hot and
static gaskets, bearings & bushings,
industrial bearings, heat shields
and transmission components

Vehicle Safety and
Protection (VSP)
Brake disc pads, linings and components,
halfblocks, wipers, lighting, chassis
components, system protection and
flexible shields

Global Aftermarket (GA)
Full range portfolio of leading aftermarket
products for global automotive, commercial
vehicle and industrial replacement markets

Green typeface signifies product groups realigned

February 24, 2009
18

Safety and Quality Excellence
in Products and Services

Quality Performance
Safety Incident Rate
Annual Injuries per 200,000 Hours Worked Parts Per Million (PPM)

29
2.0

1.5 21
1.4
17
1.0
9

2005 2006 2007 2008 2005 2006 2007 2008

Federal-Mogul is World-class in Safety and Quality Performance

February 24, 2009
19

Global Manufacturing
Capacity by Region
All periods stated at 2008 exchange rate to $US

2008
2003 2005

Europe
Europe Europe
45%
50% 44%
N. America
N. America
N. America
31%
40%Best
40%
Best
Cost
Best Cost
Best 11%
Cost
Cost 25%
15%
10%

February 24, 2009
20

Global Supply Base Optimization
Best Cost Country Sourcing – Direct Materials
($ millions)

40%
36%
$800 33%
35%
$700 $805
27% 30%
$690
$600 23%

% of Spend
25%
$500 $553
20%
$400 $455
15%
$300
10%
$200
5%
$100
$0 0%
2005 2006 2007 2008

February 24, 2009
21

2008 Federal-Mogul Highlights
• Federal-Mogul reported in 2008 solid sales performance of $6.9 billion, in line with
2007, despite downturn in Q4
• Proactive restructuring and aggressive cost reductions in line with lower sales,
preserving operating performance with gross margin of $1.1 billion or 16.4% of sales
• Reduced total SG&A expense by $72 million excluding unfavorable impact of exchange
of $18 million. Continued implementation of measures to reorganize company
structure for further savings
• Maintained solid operational EBITDA of $754 million or 11 percent of sales, in spite of
Q4 market decline
• Net loss of $468 million impacted by intangible assets impairment of $451 million and
restructuring charges of $132 million in response to macro-economic and automotive
market downturn
• Adjusted net income of $113 million in 2008 versus adjusted net income of $75 million
in 2007
• Cash flow is a Federal-Mogul strength with $321 million in 2008 versus cash outflow of
$(228) million in 2007

February 24, 2009
22

Q4 Financial Results
Jeff Kaminski, CFO

Strictly Confidential

Q4 Financial Results *
($ millions)
2008 As Adjusted 2007 As Adjusted Adjusted
Reported 2008 Reported 2007 B/(W)
Adjustments Adjustments

Net sales $ 1,319 $ - $ 1,319 $ 1,749 $ - $ 1,749 $ (430)
Gross margin 183 - 183 275 - 275 (92)
pct. of sales 13.9% 13.9% 15.7% 15.7% (1.8) pts
SG&A (161) - (161) (201) - (201) 40
pct. of sales -12.2% -12.2% -11.5% -11.5% (0.7) pts

Interest expense, net (43) - (43) (47) - (47) 4
Amortization expense (19) - (19) (5) - (5) (14)
Chapter 11 expense (2) - (2) (24) - (24) 22
Joint venture equity earnings 3 - 3 10 - 10 (7)
Restructuring charges (118) 118 - (9) 9 - -
Impairment charges (451) 451 - (54) 54 - -
Bankruptcy Emergence gains - - - 1,717 (1,717) - -
Other income (expense), net 26 - 26 14 - 14 12
(Loss) income before income taxes (583) 569 $ (13) 1,676 (1,654) 22 (35)
Income tax (expense) benefit 53 (64) $ (11) (286) 275 (11) -
Net (loss) income $ (530) $ 505 $ (24) $ 1,390 $ (1,379) $ 11 (35)

*Includes a reconciliation of “As Reported” and “Adjusted” results

February 24, 2009
24

Q4 Operational EBITDA
Reconciliation
($ millions)

2008 2007
Net (loss) income - As Reported $ (530) $ 1,390
Restructuring charges 118 9
Impairment charges 451 54
Bankruptcy Emergence gains - (1,717)
Income tax (expense) benefit on adjustments (64) 275
Adjusted net (loss) income $ (24) $ 11

Chapter 11 related reorganization costs 2 24
Interest expense, net 43 47
Income tax expense 11 11
Depreciation and amortization 84 92
Other (2) (0)
Operational EBITDA $ 114 $ 186

February 24, 2009
25

Q4 EBITDA Bridge
2007 – 2008
($ millions)
Volume &
Mix
$(172)
$186

$69 $(22)
$0 $114

PPV Exchange
Q4 2007 Q4 2008
& Other
Market
$35
EBITDA EBITDA
Share
Gains
Sales Productivity Sales
$18
$1,749 $1,319
Pricing

Sales Δ (429) $69 $35 $5 $(110)

February 24, 2009
26

Full Year and Q4 Results
Powertrain Energy (PTE)
($ millions)
Sales 2008 2007 B/(W) Gross Margin 2008 2007 B/(W)
Full Year $ 2,085 $ 2,054 $ 31 $ 279 $ 258 $ 21
Full Year *
+2%
pct change pct of sales 13.4% 12.5% 0.8 pts

$ 359 $ 541 $ (182) $ 27 $ 67 $ (40)
Q4 Q4
-34%
pct change pct of sales 7.6% 12.3% (4.8) pts

Full Year
Full Year
• Volume/mix $(28) million
• US/Canada down (6)%, Europe up 1%, ROW
up 16% • Higher productivity and lower depreciation $74
• Reduced market volumes • Material prices and customer pricing $(23)
million
• Continued market share gains in all regions
• Exchange impact $(2)
• $81m favorable exchange
Q4
Q4
• US/Canada down (21)%, Europe down (39)%,
ROW down (19)% • Higher productivity and lower depreciation $25
million
• Reduced market volumes
• Material prices and customer pricing $(6) million
• Continued market share gains in all regions
• Exchange $(4) million
• Includes $(49) million of exchange impact
* Gross Margin adjusted to exclude the one-time, fresh-start inventory adjustment.

February 24, 2009
27

Powertrain Sealing and Bearings (PTSB)
($ millions)
Full Year $ 1,047 $ 1,055 $ (8) $ 70 $ 54 $ 16
Full Year *
-1%

$ 189 $ 264 $ (75) $ (8) $ 6 $ (14)
Q4 Q4
-28%
pct change pct of sales -4.4% 2.2% (6.7) pts

Full Year
Full Year
• US/Canada down (15)%, Europe up 8%, ROW
• Customer pricing $27 million
up 10%
• Higher productivity and lower depreciation $27
• Reduced market volumes in the Americas and million
Europe and a slight increase in ROW
• Material prices $(2) million
• Includes $35 million favorable exchange impact
• Exchange $4 million
Q4
Q4
ROW down (17)% • Customer pricing $16 million
• Higher productivity and lower depreciation $1
million


February 24, 2009
28

Vehicle Safety and Protection (VSP)
($ millions)

Full Year $ 717 $ 793 $ (76) $ 176 $ 192 $ (16)
Full Year *
-10%

$ 123 $ 195 $ (72) $ 23 $ 43 $ (20)
Q4 Q4
-37%

Full Year Full Year
ROW up 17% • Customer pricing $(4) million
• Reduced market volumes • Higher productivity and lower depreciation $51
million
• Includes $32 million favorable exchange
impact
• Exchange $4 million favorable impact
Q4 Q4
ROW down (29)% in Q4 • Higher productivity / lower depreciation $17 million
• Reduced market volumes • Material prices $(9) million
• Includes $(14) million of exchange impact • Exchange $(2) million


February 24, 2009
29

Automotive Products (AP)
($ millions)
Full Year $ 379 $ 334 $ 45 $ 83 $ 73 $ 10
Full Year *
+13%

$ 77 $ 90 $ (13) $ 18 $ 20 $ (2)
Q4 Q4
-14%

Full Year Full Year
• US/Canada up 12%, Europe up 18%, ROW up
13% • Customer pricing $1 million
• Reduced market volumes in the Americas and • Higher productivity and lower depreciation $30
ROW, a slight increase in market volumes in million
Europe
• Market share gains in the Americas and Europe
• Exchange impact of $2 million
Q4 Q4
ROW down (31)% • Customer pricing $1 million
• Reduced market volumes • Higher productivity / lower depreciation $8million
• Market share gains in the Americas and ROW

February 24, 2009
30

Global Aftermarket (GA)
($ millions)
Full Year $ 2,637 $ 2,678 $ (41) $ 575 $ 611 $ (36)
Full Year *
-2%

$ 571 $ 659 $ (88) $ 120 $ 140 $ (20)
Q4 Q4
-13%

Full Year
Full Year
ROW up 8%
• Product mix $(35) million
• Market share gains in Americas and Europe
• Material prices, productivity $4 million
Q4 Q4
• US/Canada down (9)%, Europe down (27)%, • Volume/mix $(27) million
ROW down (9)%
• Product mix $(9) million
• Market share gains in Americas and Europe
• Material prices, productivity $5 million

February 24, 2009
31

Full Year Financial Results*
($ millions)
2008 As Adjusted 2007 As Adjusted Adjusted
Reported 2008 Reported 2007 B/(W)
Adjustments Adjustments

Net sales $ 6,866 $ - $ 6,866 $ 6,914 $ 6,914 $ (48)
Gross margin 1,124 68 1,192 1,185 - 1,185 7
pct. of sales 16.4% 17.4% 17.1% 17.1% 0.2 pts
SG&A (774) - (774) (828) - (828) 54
pct. of sales -11.3% -11.3% -12.0% -12.0% 0.7 pts

Interest expense, net (180) - (180) (199) - (199) 19
Amortization expense (76) - (76) (19) - (19) (57)
Chapter 11 expense (17) - (17) (81) - (81) 64
Joint venture equity earnings 24 - 24 38 - 38 (14)
Restructuring charges (132) 132 - (48) 48 - -
Impairment charges (451) 451 - (61) 61 - -
Bankruptcy Emergence gains - - - 1,717 (1,717) - -
Other income (expense), net 34 - 34 41 - 41 (7)
(Loss) income before income taxes (449) 652 202 1,744 (1,608) 136 66
Income tax (expense) benefit (19) (71) (90) (332) 270 (62) (28)
Net (loss) income $ (468) $ 581 $ 113 $ 1,413 $ (1,338) $ 75 $ 38

*Includes a reconciliation of “As Reported” and “Adjusted” results

February 24, 2009
32

Full Year
Operational EBITDA Reconciliation
($ millions)

2008 2007
Net (loss) income - As Reported $ (468) $ 1,413
Fresh-start valuation charge 68 -
Restructuring charges 132 48
Income tax (expense) benefit on adjustments (71) 270
Adjusted net income $ 113 $ 75

Chapter 11 related reorganization costs 17 81
Interest expense, net 180 199
Income tax expense 90 62
Other 5 (7)
Operational EBITDA $ 754 $ 763

February 24, 2009
33

Full Year EBITDA Bridge
2007-2008
($ millions)

$763 $(282) $43 $754
$(27)
$134

Exchange
PPV
& Other
$43
$80
2007 2008
Productivity
EBITDA EBITDA
Pricing

2007 2008
Volume & Market
Sales Sales
Mix Share
$6,914 $6,866
Gains

Sales Δ $(604) $285 $43 $228

February 24, 2009
34

Full Year Cash Flow
($ millions)
2008 2007
Net (loss) income $ (468) $ 1,413
Payments from (to) U.S. Asbestos Trust 225 (140)
Other Emergence related payments (23) (176)
Changes in operating assets and liabilities:
Accounts receivable 90 (47)
Inventories 122 15
Accounts payable (61) 124
Other assets and liabilities (58) 149
Cash Provided From Operating Activities $ 627 $ 35
Expenditures for property, plant and equipment (320) (310)
Other investing 14 47
Cash Used By Investing Activities $ (306) $ (263)
Cash Provided From (Used By) Operating and Investing $ 321 $ (228)
Activities
Cash Provided From Financing Activities $ 197 $ 265
Effect of foreign currency exchange rate fluctuations on cash (55) 29
Increase in cash and equivalents $ 462 $ 66
Cash and equivalents at beginning of year 425 359
Cash and equivalents at end of year $ 888 $ 425

February 24, 2009
35

2008 Financial Summary
• Sales of $6.9 billion versus $6.9 billion in 2007 demonstrating record first half
performance and continued actions to gain market share in 2008
• Gross margin of $1.1 billion, or 16.4% of sales
• Reduced total SG&A cost by $72 million before the impact of exchange.
SG&A of 11.3% of sales, compared to 12% of sales in 2007
• Operational EBITDA of $754 million or 11%
• Restructuring charge of $132 million as part of Federal-Mogul’s global
restructuring program
• Adjusted net income of $113 million in 2008 versus adjusted net income of
$75 million in 2007
• Positive cash flow of $321 million versus negative cash flow of $(228) million
in 2007

February 24, 2009
36

The Challenge of Driving
Sustainable Global Profitable Growth
• Federal-Mogul successfully adapting to compete in
difficult market downturn
• Well-positioned to simultaneously support OE and
Aftermarket customer requirements and trends
• Continued migration to best cost sourcing and
manufacturing structure
• World-class safety and quality performance
• Strong market, customer and product diversification is a
Federal-Mogul strength with no single customer
representing more than 6% of sales
• Leading technology and innovation to improve fuel
economy, reduce emissions, enable alternative energies
and improve vehicle safety
• Capital structure and liquidity to pursue Global
Sustainable Profitable Growth

February 24, 2009
37

Thank You
Investor Relations Contact:
David Pouliot (248) 354-7967

Media Relations Contact:
Steve Gaut Confidential
(248) 354-7826
Strictly

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