8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: February 10, 2006

(Date of earliest event reported)

FEDERAL-MOGUL CORPORATION

(Exact Name of Registrant as specified in its Charter)

Michigan

(State or Other Jurisdiction of Incorporation)

1-1511	38-0533580
(Commission File Number)	(IRS Employer Identification Number)

26555 Northwestern Highway, Southfield, Michigan	48034
(Address of Principal Executive Offices)	(Zip Code)

(248) 354-7700

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filings is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

INFORMATION TO BE INCLUDED IN THE REPORT

Item 2.02. Results of Operations and Financial Condition.

On February 10, 2006, Federal-Mogul Corporation issued a press release announcing its earnings for the fourth quarter and full year ended December 31, 2005. A copy of the press release is attached as Exhibit 99.1 to this Current Report.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits.

99.1 Press release dated February 10, 2006.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: February 10, 2006

FEDERAL-MOGUL CORPORATION
By:	/s/    John J. Gasparovic
	Name: John J. Gasparovic Title:   Senior Vice President and             General Counsel

EXHIBIT INDEX

99.1 Press Release dated February 10, 2006.

EX-99.1

Exhibit 99.1

CONTACT: Marie Remboulis – 248/354-9809

Federal-Mogul Reports Fourth Quarter and Full Year 2005 Results

Southfield, Michigan, February 10, 2006…Federal-Mogul Corporation (OTC Bulletin Board: FDMLQ) today reported its financial results for the three and twelve-month periods ended December 31, 2005.

Financial Summary (in millions)

	Three Months Ended December 31						Twelve Months Ended December 31
	2005			2004			2005			2004
Net sales	$	1,487		$	1,548		$	6,286		$	6,174
Gross margin		240			277			1,041			1,177
Selling, general and administrative expenses		192			239			884			950
Loss from continuing operations, before income taxes		(146	)		(209	)		(203	)		(189	)
Adjustment of assets to fair value		(108	)		(240	)		(122	)		(276	)
Gain on involuntary conversion		—			46			—			46

Federal-Mogul reported net sales of $1,487 million for the quarter ended December 31, 2005. Compared to the fourth quarter 2004, sales decreased $61 million, of which $48 million is due to unfavorable foreign currency. For the year ended December 31, 2005, net sales increased by $112 million to $6,286 million when compared to the same period of 2004, of which $33 million is due to favorable foreign currency.

Gross margin for the three and twelve-month periods ended December 31, 2005, when compared to the same periods of 2004, decreased by $37 million and $136 million, respectively. Increased pension costs adversely affected gross margin for the three and twelve-month periods ended December 31, 2005 by $14 million and $57 million, respectively. Although

remaining high, raw material costs for the three months ended December 31, 2005 were comparable with those of the same period in 2004, but $41 million higher for the full year. Gross margins for both the three and twelve-month periods ended December 31, 2005 were further impacted by unfavorable movements in foreign currencies of $12 million and $13 million, respectively. Both the three and twelve-month periods ended December 31, 2005 were affected by other factors, primarily volume and product mix. Management continues to identify and implement cost reduction and pricing strategies to mitigate the impact of these adverse factors.

Selling, general and administrative expenses for the three and twelve-month periods ended December 31, 2005, when compared to the same periods of 2004, decreased by $47 million and $66 million, respectively.

Federal-Mogul reported a loss from continuing operations before income taxes for the three-month period ended December 31, 2005 of $146 million, an improvement of $63 million from the same period of 2004. For the twelve-month period ended December 31, 2005, the Company reported a loss from continuing operations before income taxes of $203 million compared with $189 million for the same period of 2004. In addition to those same factors affecting gross margin, results from continuing operations for the fourth quarter and full year were impacted by reduced selling, general and administrative expenses, reduced charges related to asset impairments, increased costs associated with the Company’s Chapter 11 proceedings, the non-recurrence of an insurance gain recorded during 2004, and higher average interest rates.

Management 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 Administration expenses, restructuring costs, income tax expense, interest expense, depreciation and amortization.

The Company reported Operational EBITDA of $153 million and $554 million for the three and twelve-month periods ended December 31, 2005, respectively. When compared to the same period of 2004, Operational EBITDA decreased by $33 million and $79 million, respectively. The

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non recurrence of an insurance gain recorded in the fourth quarter of 2004, combined with increased pension expense, reduced Operational EBITDA compared to 2004 by $61 million and $114 million for the quarter and year ended December 31, 2005, respectively. These adverse factors and the impact of increased raw materials costs were partially offset by improvements of $28 million and $76 million for the quarter and full-year, respectively. A reconciliation of Operational EBITDA to the Company’s loss from continuing operations before income taxes for the three and twelve-months ended December 31, 2005 has been provided.

Combining cash provided from operating activities with cash used by investing activities, the Company has generated positive cash inflows of $158 million for the year ended December 31, 2005, compared with $239 million for the comparable period of 2004.

“Net sales for 2005 have increased year-over-year despite challenging market conditions,” said Chairman, President and Chief Executive Officer José Maria Alapont. “Industry challenges, such as increased pension costs, raw material cost inflation and higher interest rates, have impacted our financial performance. We are continuing diligently to implement our global profitable growth strategy to better serve our customers with leading technology and world-class products, while restructuring our operations based upon best cost and lean principles.”

About Federal-Mogul

Federal-Mogul is a global supplier of automotive components, systems and modules serving the world’s original equipment manufacturers and the global aftermarket. The company utilizes its engineering and materials expertise, proprietary technology, manufacturing skill, distribution flexibility and marketing power to deliver products, brands and services of value to its customers. Federal-Mogul is focused on global profitable growth to create value for and bring greater satisfaction to its customers, employees, and stakeholders.

Headquartered in Southfield, Michigan, Federal-Mogul was founded in Detroit in 1899. On October 1, 2001, Federal-Mogul decided to separate its asbestos liabilities from its true operating potential by voluntarily filing for financial restructuring under Chapter 11 of the Bankruptcy Code in the United States and Administration in the United Kingdom. For more information on Federal-Mogul, visit the company’s Web site at http://www.federal-mogul.com.

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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, the cost and timing of implementing restructuring actions, the results of the Chapter 11 and Administration proceedings, 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, 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 press release.

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FEDERAL - MOGUL CORPORATION

STATEMENTS OF OPERATIONS

(Millions of Dollars, Except Share and Per Share Data)

(Unaudited)

	Three Months Ended December 31						Twelve Months Ended December 31
	2005			2004			2005			2004
Net sales	$	1,487.0		$	1,548.4		$	6,286.0		$	6,174.1
Cost of products sold		1,247.4			1,271.0			5,245.3			4,996.8
Gross margin		239.6			277.4			1,040.7			1,177.3
Selling, general and administrative expenses		192.0			238.7			883.9			949.7
Adjustment of long-lived assets to fair value		108.4			240.4			121.5			276.4
Interest expense, net		34.5			28.3			131.6			101.5
Chapter 11 and Administration related reorganization expenses		59.1			33.2			138.2			99.7
Equity earnings of unconsolidated affiliates		(7.9	)		(7.6	)		(38.1	)		(36.0	)
Gain on involuntary conversion		—			(46.1	)		—			(46.1	)
Restructuring expense, net		18.4			11.8			30.2			17.5
Other (income) expense, net		(18.5	)		(12.7	)		(23.9	)		4.0
Loss from continuing operations before income taxes		(146.4	)		(208.6	)		(202.7	)		(189.4	)
Income tax expense		58.0			65.9			131.5			136.1
Loss from continuing operations		(204.4	)		(274.5	)		(334.2	)		(325.5	)
Earnings (loss) from discontinued operations, net of income tax benefit		—			4.1			—			(8.5	)
Net Loss	$	(204.4	)	$	(270.4	)	$	(334.2	)	$	(334.0	)
Basic and diluted loss per common share:
Loss from continuing operations	$	(2.29	)	$	(3.12	)	$	(3.75	)	$	(3.73	)
Earnings (loss) from discontinued operations, net of income tax benefit		—			0.05			—			(0.10	)
Net loss per common share	$	(2.29	)	$	(3.07	)	$	(3.75	)	$	(3.83	)
Weighted average shares outstanding (in millions)		89.1			87.8			89.1			87.3

FEDERAL - MOGUL CORPORATION

BALANCE SHEETS

(Millions of Dollars)

	(Unaudited) December 31 2005			December 31 2004
Current assets:
Cash and equivalents	$	387.2		$	700.6
Restricted cash		700.9			—
Accounts receivable, net		1,011.1			1,049.5
Inventories, net		808.1			952.9
Prepaid expenses and other current assets		220.7			230.9
Total current assets		3,128.0			2,933.9
Property, plant and equipment, net		2,003.1			2,363.9
Goodwill and indefinite-lived intangible assets		1,189.5			1,283.7
Definite-lived intangible assets, net		289.6			335.3
Asbestos-related insurance recoverable		777.4			853.8
Prepaid pension costs		112.2			257.4
Other noncurrent assets		235.3			237.2
	$	7,735.1		$	8,265.2
Current liabilities:
Short-term debt, including current portion of long-term debt	$	606.7		$	309.6
Accounts payable		405.0			435.9
Accrued liabilities		536.0			559.7
Other current liabilities		116.9			145.6
Total current liabilities		1,664.6			1,450.8
Liabilities subject to compromise		5,988.8			6,018.5
Long-term debt		8.1			10.1
Postemployment benefits		2,230.8			2,386.8
Deferred income taxes		62.4			102.0
Other accrued liabilities		181.4			190.3
Minority interest in consolidated affiliates		32.0			32.4
Shareholders’ deficit:
Series C ESOP preferred stock		28.0			28.0
Common stock		445.3			445.3
Additional paid-in capital		2,154.6			2,148.0
Accumulated deficit		(3,602.1	)		(3,267.9	)
Accumulated other comprehensive loss		(1,458.8	)		(1,279.1	)
Total shareholders’ deficit		(2,433.0	)		(1,925.7	)
	$	7,735.1		$	8,265.2

FEDERAL - MOGUL CORPORATION

STATEMENTS OF CASH FLOWS

(Millions of Dollars)

(Unaudited)

	Twelve Months Ended December 31
	2005			2004
Cash provided from (used by) operating activities
Net loss	$	(334.2	)	$	(334.0	)
Adjustments to reconcile net loss to net cash (used by) provided from operating activities:
Depreciation and amortization		344.2			335.7
Chapter 11 and Administration related reorganization expenses		138.2			99.7
Payments of Chapter 11 and Administration related reorganization expenses		(141.4	)		(88.8	)
Adjustment of long-lived assets to fair value		121.5			276.4
Change in postemployment benefits, including pensions		167.7			83.4
Changes in deferred taxes		(34.4	)		15.8
Restructuring charges, net		30.2			17.7
Payments against restructuring reserves		(22.3	)		(36.1	)
(Gain) loss on sale of assets and businesses		(24.0	)		3.5
Gain on involuntary conversion		—			(46.1	)
Insurance proceeds on involuntary conversion		—			102.2
Changes in operating assets and liabilities:
Increase in accounts receivable		(16.3	)		(29.1	)
Decrease (increase) in inventories, net of involuntary conversion in 2004		94.2			(122.7	)
(Decrease) increase in accounts payable		(1.1	)		82.3
Changes in other assets and liabilities		(3.9	)		105.6
Net cash provided from operating activities		318.4			465.5
Cash provided from (used by) investing activities
Expenditures for property, plant and equipment		(190.3	)		(267.5	)
Proceeds from the sale of property, plant and equipment		30.1			29.9
Net proceeds from sale of business		—			10.7
Net cash used by investing activities		(160.2	)		(226.9	)
Cash provided from (used by) financing activities
Proceeds from borrowings on DIP credit facility		713.0			357.7
Principal payments on DIP credit facility		(420.0	)		(400.0	)
Increase in short-term debt		7.6			13.4
Net change in restricted cash		(700.9	)		—
Principal payment in other long-term debt		(1.0	)		(2.0	)
Debt issuance fees		(4.3	)		(6.5	)
Net cash provided from (used by) financing activities		(405.6	)		(37.4	)
Effect of foreign currency exchange rate fluctuations on cash		(66.0	)		27.0
(Decrease) increase in cash and equivalents		(313.4	)		228.2
Cash and equivalents at beginning of period		700.6			472.4
Cash and equivalents at end of period	$	387.2		$	700.6

FEDERAL - MOGUL CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURE

(Millions of Dollars)

(Unaudited)

	Three Months Ended December 31						Twelve Months Ended December 31
	2005			2004			2005		2004
Earnings (loss) from continuing operations before income taxes	$	(146.4	)	$	(208.6	)	(202.7	)	$	(189.4	)
Depreciation and amortization		80.6			84.7		344.2			335.7
Chapter 11 and Administration related reorganization expenses		59.1			33.2		138.2			99.7
Interest expense, net		34.5			28.3		131.6			101.5
Adjustment of assets to fair value		108.4			240.4		121.5			276.4
Restructuring expense		18.4			11.8		30.2			17.5
Finalization of 2004 Goodwill Impairment Charge		—			—		(7.7	)		—
Discontinued operations and other		(1.4	)		(3.2	)	(1.4	)		(8.3	)
Operational EBITDA	$	153.2		$	186.6		553.9		$	633.1