ICAHN ENTERPRISES L.P. - FORM 8-K - EX-99.1 - FDML Q3 2012 PRESS RELEASE - October 19, 2012

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EXHIBIT 99.1

Federal-Mogul Corporation Reports Q3 2012 Financial Results
Q3 2012 Summary:
•
Total sales of $1.6 billion, down 2% on a constant dollar basis versus Q3 2011
•
Net loss of $(11) million, due to lower volume, unfavorable exchange, and impairment charges
•
Operational EBITDA of $101 million or 6.3% of sales, down $60 million from $161 million in Q3 2011
•
New Powertrain (PT) and Vehicle Components Solutions (VCS) Segments operational in Q3 2012
•
Closed previously announced acquisition of BERU spark plug business
Southfield, Michigan, October 19, 2012 . . . Federal-Mogul Corporation (NASDAQ:FDML) today announced third quarter 2012 financial results. Total sales were $1.6 billion, down 2% versus Q3 2011, or 8% when including the negative impact of currency exchange. Constant dollar sales in Europe fell by 7% as vehicle production and aftermarket demand decreased due to the overall market downturn. Sales in North America were 2% higher, partially offsetting European market weakness. Federal-Mogul reported a net loss of $(11) million or $(0.11) per diluted share in Q3 2012, versus $34 million or $.34 earnings per diluted share in Q3 2011. The lower income was primarily due to the impact on margins of lower European volumes, combined with adverse regional and product mix. As a result of these factors, Operational EBITDA 1 was $101 million or 6.3% of sales. The company's cash outflow 2 of $192 million includes a $50 million contribution to the U.S.-funded pension plan and a $52 million payment for the BERU spark plug business.
Financial Summary
 
(millions)
Q3 2012
 
 
Q3 2011
 
 
B/(W)
 
Net Sales
 
$
1,602

  
 
 
$
1,732

  
 
 
$
(130
)
 
Gross Margin
 
212

  
 
 
263

  
 
 
(51
)
 
pct. of sales
 
13.2

% 
 
 
15.2

% 
 
 
(2.0
)
 pts
SG&A
 
(176
)
 
 
 
(172
)
 
 
 
(4
)
 
pct. of sales
 
11.0

% 
 
 
9.9

% 
 
 
(1.1
)
 pts
Net (Loss) Income
 
(11
)
 
 
 
34

  
 
 
(45
)
 
attributable to F-M
 
 
 
 
 
 
 
 
 
 
 
Earnings Per Share
 
(0.11
)
 
 
 
0.34

  
 
 
(0.45
)
 
in dollars, diluted EPS
 
 
 
 
 
 
 
 
 
 
 
Operational EBITDA 1
 
101

  
 
 
161

  
 
 
(60
)
 
pct. of sales
 
6.3

% 
 
 
9.3

% 
 
 
(3.0
)
 pts
Cash Flow 2
 
$
(192
)
 
 
 
$
(71
)
 
 
 
$
(121
)
 
Detailed schedules available via a link at the end of this press release

Federal-Mogul recorded a non-cash gain on Other Post-Employment Benefits (OPEB) of $51 million in Q3 2012, and due to the segmentation, the company re-measured and reallocated goodwill and other intangibles resulting in non-cash intangible impairment charges of $36 million. Additionally the company recorded fixed asset impairments of $17 million.
The company had a cash outflow of $(192) million in Q3 2012 reflecting increased working capital to facilitate commercial programs in the aftermarket, the payment of $52 million for the BERU spark plug business and $50 million in pension contributions. The company ended the quarter with $541 million cash and an undrawn revolver of $500 million.
Segmentation
Federal-Mogul began operating with two end-customer focused business segments, each with a chief executive officer reporting to Federal-Mogul's Board of Directors in Q3 2012. Federal-Mogul's Powertrain segment focuses on original


equipment products for automotive, heavy-duty and industrial applications. The Vehicle Components Solutions segment sells and distributes a broad portfolio of products in the global vehicle aftermarket, while also serving original equipment (OE/OES) manufacturers with products including braking, chassis, wipers and other vehicle components. Key statistics for each segment are at the end of this press release.
Powertrain Segment
Federal-Mogul's Powertrain segment had global revenue of $982 million, down 4% in constant dollars, or down 10% including the impact of negative exchange. Powertrain sales were largely flat in North America and Rest of World (ROW), while in Europe revenue fell by 8% as a result of reduced light and commercial vehicle production. The Powertrain segment recorded Operational EBITDA of $52 million or 5.3% of sales, compared to $109 million or 10% of sales in Q3 2011.
“Federal-Mogul had a good quarter in North America, but we are again reacting to challenging market conditions in Europe, where customers are reducing vehicle production in response to weak economic conditions,” said Rainer Jueckstock, co-CEO, Federal-Mogul and CEO Powertrain segment. “We are reducing headcount and production schedules at several sites, while at the same time ensuring that we maintain readiness to respond to improved industry volumes when the European market returns to normal levels,” he said.
Vehicle Components Solutions Segment
Federal-Mogul's Vehicle Components Solutions segment had total revenue of $725 million up 1% on a constant dollar basis, or down 4% including the impact of negative exchange. North American revenue increased by 4%, offsetting a 4% decline in Europe. The softer sales were driven by macroeconomic factors impacting all OE and aftermarket customers in the region. The VCS segment recorded Operational EBITDA of $49 million or 6.8% of sales, compared to $52 million or 6.9% of sales in Q3 2011.
“We are encouraged by stable volumes in North America and are keeping pace in Europe in spite of significant market pressure. We are implementing previously announced restructuring actions to improve our manufacturing footprint in key product areas while simultaneously realigning the organization to increase speed to market,” said Michael Broderick, co-CEO Federal-Mogul and CEO Vehicle Components Solutions Segment.
Segment Performance
 
Q3 2012
PT
 
VCS
 
Elim
 
Total
Revenue
 
$
982

  
 
$
725

  
 
$
(105
)
 
 
$
1,602

EBITDA
 
$
52

  
 
$
49

  
 
$
0

 
 
$
101

 
 
 
 
 
Q3 2011
 
 
 
 
 
 
 
Revenue
 
$
1,089

  
 
$
755

  
 
$
(113
)
 
 
$
1,732

EBITDA
 
$
109

  
 
$
52

  
 
$
0

  
 
$
161

“We have implemented actions to reduce the impact of current European softness and are beginning similar moves to adjust for slower growth rates in other markets,” said Alan Haughie, Federal-Mogul chief financial officer. “We continue to see long term vehicle production rates climbing, although at slower rates than previously forecast. We will strengthen our focus on margin improvement and return on assets as we begin to more fully realize the opportunity to refine our business models in line with the company's segmentation.”
Significant Events in Q3 2012
During the quarter, Federal-Mogul closed the acquisition of the BERU spark plug business with plants located in Chazelles, France and Neuhaus, Germany. The acquired units will add approximately $80 million annualized sales to the Powertrain segment and increase Federal-Mogul's annual spark plug production capacity to more than 350 million spark plugs per year, firmly establishing Federal-Mogul among the largest spark plug manufacturers in the world.
Definitions
1 Management believes that Operational EBITDA provides supplemental information for management and investors to evaluate the operating performance of its business. Management uses, and believes that investors benefit from referring to Operational EBITDA in assessing the Company's operating results, as well as in planning, forecasting and analyzing future


periods as this financial measure approximates the cash flow associated with the operational earnings of the Company. Additionally, Operational EBITDA presents measures of corporate performance exclusive of the Company's capital structure and the method by which assets were acquired and financed.
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, the non-service cost components of the U.S. based funded pension plan and OPEB curtailment gains or losses.
2 Cash flow is equal to net cash provided by operating activities less net cash used by investing activities, as set forth on the attached statement of cash flows.
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, fluctuations in domestic or foreign vehicle production, fluctuations in the demand for vehicles containing our products, 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, the success of the company's segmentation and corresponding effects and general global and regional economic conditions. Federal-Mogul does not intend or assume any obligation to update any forward-looking statements.
 
Segment Demographic Information
Federal-Mogul Powertrain at a Glance
 
Full Year 2011 Sales
$4.3 billion (with inter-segment sales)
Manufacturing Plants
72
Engineering Centers
16
Employees
32,500
Main Product Lines
Pistons, piston rings, cylinder liners, valve seats, valve guides, bearings, spark plugs, bushings,static gaskets and dynamic seals, heat shields, systems protection products
Federal-Mogul Vehicle Component Solutions at a Glance
 
Full Year 2011 Sales
$3.0 billion
Manufacturing Plants
33
Engineering Centers
8
Distribution Centers
19
Employees
12,500
Primary Aftermarket Brands
Abex ® , AE ® , ANCO ® , Beral ® , Champion ® ,
 
FP Diesel ® , Fel-Pro ® , Ferodo ® , Glyco ® , Goetze ® ,
 
MOOG ® , National ® , Nüral ® , Payen ® ,
 
Sealed Power ® , Speed-Pro ® , Wagner ® .
Main Product Lines
Engine and sealing components, braking, wipers, steering and suspension, fluids and chemicals
About Federal-Mogul
Federal-Mogul Corporation designs, engineers, manufactures and distributes technologies to improve fuel economy, reduce emissions and enhance vehicle safety. The company serves the world's foremost original equipment manufacturers of automotive, commercial, aerospace, marine, rail and off-road vehicles; and industrial, agricultural and power-generation equipment. The company also develops and distributes to the aftermarket an extensive product portfolio with more than 20 of the world's most recognized brands, including ANCO ® wiper blades; Champion ® spark plugs, wipers and filters; Fel-Pro ® ,


Goetze ® , Glyco ® and Payen ® engine products; MOOG ® chassis parts; and Ferodo ® and Wagner ® brake products. Federal-Mogul was founded in Detroit in 1899. The company employs 45,000 people in 34 countries, and its worldwide headquarters is in Southfield, Michigan, United States. For more information, please visit www.federalmogul.com .
 
CONTACTS:
  
Jim Burke (248) 354-4530
 
  
David Pouliot (248) 354-7967 for investor questions
 


FEDERAL-MOGUL CORPORATION
Consolidated Statements of Operations (Unaudited)
 
 
Three Months  Ended
September 30
 
Nine Months Ended
September 30
 
2012
 
2011
 
2012
 
2011
 
(Millions of Dollars, Except Per Share Amounts)
Net sales
 
$
1,602

  
 
$
1,732

  
 
$
5,070

  
 
$
5,256

Cost of products sold
 
(1,390
)
 
 
(1,469
)
 
 
(4,327
)
 
 
(4,415
)
 
 
 
 
 
 
 
 
 
 
 
 
Gross margin
 
212

 
 
263

 
 
743

 
 
841

Selling, general and administrative expenses
 
(176
)
 
 
(172
)
 
 
(539
)
 
 
(522
)
OPEB curtailment gain
 
51

 
 
—

 
 
51

 
 
—

Adjustment of assets to fair value
 
(53
)
 
 
—

 
 
(174
)
 
 
(3
)
Interest expense, net
 
(32
)
 
 
(32
)
 
 
(96
)
 
 
(95
)
Amortization expense
 
(12
)
 
 
(12
)
 
 
(36
)
 
 
(36
)
Equity earnings of non-consolidated affiliates
 
6

 
 
7

 
 
28

 
 
27

Restructuring expense, net
 
(5
)
 
 
(3
)
 
 
(19
)
 
 
(4
)
Other expense, net
 
(10
)
 
 
(6
)
 
 
(19
)
 
 
(14
)
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) income before income taxes
 
(19
)
 
 
45

 
 
(61
)
 
 
194

Income tax benefit (expense)
 
8

 
 
(9
)
 
 
27

 
 
(40
)
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
(11
)
 
 
36

 
 
(34
)
 
 
154

Less net income attributable to noncontrolling interests
 
—

 
 
(2
)
 
 
(3
)
 
 
(4
)
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income attributable to Federal-Mogul
 
$
(11
)
 
 
$
34

 
 
$
(37
)
 
 
$
150

 
 
 
 
 
 
 
 
 
 
 
 
(Loss) Income per common share :
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
(0.11
)
 
 
$
0.34

 
 
$
(0.37
)
 
 
$
1.52

 
 
 
 
 
 
 
 
 
 
 
 
Diluted
 
$
(0.11
)
 
 
$
0.34

 
 
$
(0.37
)
 
 
$
1.51

 
 
 
 
 
 
 
 
 
 
 
 
 


FEDERAL-MOGUL CORPORATION
Consolidated Balance Sheets
 
 
(Unaudited)
September  30
2012
 
December 31
2011
 
(Millions of Dollars)
ASSETS
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and equivalents
$
541

  
$
953

Accounts receivable, net
 
1,450

  
 
1,186

Inventories, net
 
1,041

  
 
956

Prepaid expenses and other current assets
 
180

  
 
204

 
 
 
 
 
 
Total current assets
 
3,212

  
 
3,299

Property, plant and equipment, net
 
1,914

  
 
1,855

Goodwill and other indefinite-lived intangible assets
 
1,002

  
 
1,115

Definite-lived intangible assets, net
 
399

  
 
434

Investments in non-consolidated affiliates
 
257

  
 
228

Other noncurrent assets
 
115

 
 
98

 
 
 
 
 
 
 
$
6,899

  
$
7,029

 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Short-term debt, including current portion of long-term debt
$
89

  
$
88

Accounts payable
 
739

  
 
767

Accrued liabilities
 
402

  
 
367

Current portion of postemployment benefits liability
 
43

  
 
43

Other current liabilities
 
161

  
 
165

 
 
 
 
 
 
Total current liabilities
 
1,434

  
 
1,430

Long-term debt
 
2,735

  
 
2,741

Postemployment benefits liability
 
1,175

  
 
1,229

Long-term portion of deferred income taxes
 
383

  
 
434

Other accrued liabilities
 
135

  
 
142

Shareholders' equity:
 
 
 
 
 
Preferred stock ($.01 par value; 90,000,000 authorized shares; none issued)
 
—

  
 
—

Common stock ($.01 par value; 450,100,000 authorized shares; 100,500,000 issued shares; 98,904,500 outstanding shares as of September 30, 2012 and December 31, 2011)
 
1

  
 
1

Additional paid-in capital, including warrants
 
2,150

  
 
2,150

Accumulated deficit
 
(479
)
 
 
(442
)
Accumulated other comprehensive loss
 
(721
)
 
 
(739
)
Treasury stock, at cost
 
(17
)
 
 
(17
)
 
 
 
 
 
 
Total Federal-Mogul shareholders' equity
 
934

  
 
953

 
 
 
 
 
 
Noncontrolling interests
 
103

  
 
100

 
 
 
 
 
 
Total shareholders' equity
 
1,037

  
 
1,053

 
 
 
 
 
 
 
$
6,899

  
$
7,029

 


FEDERAL-MOGUL CORPORATION
Consolidated Statements of Cash Flows (Unaudited)
 
 
Nine Months Ended
September 30
 
2012
 
2011
 
(Millions of Dollars)
Cash Provided From (Used By) Operating Activities
 
 
 
 
 
Net (loss) income
$
(34
)
 
$
154

Adjustments to reconcile net (loss) income to net cash provided from (used by) operating activities:
 
 
 
 
 
Depreciation and amortization
 
212

 
 
212

Adjustment of assets to fair value
 
174

 
 
3

Insurance proceeds related to Thailand flood
 
12

 
 
—

Equity earnings of non-consolidated affiliates
 
(28
)
 
 
(27
)
Cash dividends received from non-consolidated affiliates
 
2

 
 
14

Change in postemployment benefits
 
(62
)
 
 
(30
)
OPEB curtailment gain
 
(51
)
 
 
—

Restructuring expense, net
 
19

 
 
4

Payments against restructuring liabilities
 
(11
)
 
 
(19
)
Deferred tax benefit
 
(62
)
 
 
(3
)
Gain from sales of property, plant and equipment
 
(2
)
 
 
—

Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
 
(256
)
 
 
(132
)
Inventories
 
(68
)
 
 
(171
)
Accounts payable
 
17

 
 
90

Other assets and liabilities
 
62

 
 
29

 
 
 
 
 
 
Net Cash (Used By) Provided From Operating Activities
 
(76
)
 
 
124

Cash Provided From (Used By) Investing Activities
 
 
 
 
 
Expenditures for property, plant and equipment
 
(296
)
 
 
(282
)
Payment to acquire business
 
(52
)
 
 
—

Insurance proceeds related to Thailand flood
 
18

 
 
—

Net proceeds from sales of property, plant, and equipment
 
5

 
 
—

Capital investment in non-consolidated affiliate
 
(2
)
 
 
—

 
 
 
 
 
 
Net Cash Used By Investing Activities
 
(327
)
 
 
(282
)
Cash Provided From (Used By) Financing Activities
 
 
 
 
 
Principal payments on term loans
 
(22
)
 
 
(22
)
Decrease in other long-term debt
 
(1
)
 
 
(3
)
Increase in short-term debt
 
1

 
 
19

Net remittances on servicing of factoring arrangements
 
(4
)
 
 
—

 
 
 
 
 
 
Net Cash Used By Financing Activities
 
(26
)
 
 
(6
)
Effect of foreign currency exchange rate fluctuations on cash
 
17

 
 
(10
)
Decrease in cash and equivalents
 
(412
)
 
 
(174
)
Cash and equivalents at beginning of period
 
953

 
 
1,105

 
 
 
 
 
 
Cash and equivalents at end of period
$
541

 
$
931

 


FEDERAL-MOGUL CORPORATION
Reconciliation of Non-GAAP Financial Measures (Unaudited)
 
 
Three Months  Ended
September 30
 
Nine Months  Ended
September 30
 
2012
 
2011
 
2012
 
2011
 
(Millions of Dollars)
Net (Loss) Income
$
(11
)
 
$
36

 
$
(34
)
 
$
154

Depreciation and amortization
 
72

 
 
73

 
 
212

 
 
212

Interest expense, net
 
32

 
 
32

 
 
96

 
 
95

Adjustments of assets to fair value
 
53

 
 
—

 
 
174

 
 
3

Non-service cost components of U.S. based funded pension plan
 
9

 
 
6

 
 
26

 
 
19

Restructuring expense, net
 
5

 
 
3

 
 
19

 
 
4

OPEB curtailment gain
 
(51
)
 
 
—

 
 
(51
)
 
 
—

Income tax (benefit) expense
 
(8
)
 
 
9

 
 
(27
)
 
 
40

Other
 
—

 
 
2

 
 
3

 
 
3

 
 
 
 
 
 
 
 
 
 
 
 
Operational EBITDA
$
101

 
$
161

 
$
418

 
$
530

 
 
 
 
 
 
 
 
 
 
 
 
Cash Flow
 
 
 
 
 
 
 
 
 
 
 
Net cash (used by) provided from operating activities
$
(69
)
 
$
34

 
$
(76
)
 
$
124

Net cash used by investing activities
 
(123
)
 
 
(105
)
 
 
(327
)
 
 
(282
)
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(192
)
 
$
(71
)
 
$
(403
)
 
$
(158
)
Management believes that Operational EBITDA provides supplemental information for management and investors to evaluate the operating performance of its business. Management uses, and believes that investors benefit from referring to Operational EBITDA in assessing the Company's operating results, as well as in planning, forecasting and analyzing future periods as this financial measure approximates the cash flow associated with the operational earnings of the Company. Additionally, Operational EBITDA presents measures of corporate performance exclusive of the Company's capital structure and the method by which assets were acquired and financed. 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, the non-service cost components of the U.S. based funded pension plan and OPEB curtailment gains or losses.
# # #


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