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News of  September 26, 2000

Federal-Mogul Announces Leadership Change and Reduction In Third Quarter Earnings Estimate 

Southfield, Mich. - Dick Snell Steps Down as Chairman, CEO and President; Outside Director Steve Miller Assumes Interim Chief Executive Officer Role; Outside Director Roderick Hills to Conduct Search for Replacement 

Federal-Mogul Corporation announced that, by mutual agreement, Richard A. Snell, 59, has stepped down as chairman, chief executive officer and president, effective immediately. Roderick M. Hills, a Federal-Mogul director since 1977 and chairman of the Governance and Nominating Committee, will coordinate the search for a new chief executive officer including the review of internal candidates. Robert S. (Steve) Miller, Jr., a Federal-Mogul Director since 1993, will serve as chairman and interim chief executive officer during the transition. 

"Notwithstanding recent financial results, the board recognizes we are a company of good dedicated people, serving customers with high quality products and services," said Hills. "Our immediate efforts will be to improve our operational execution to take advantage of these fundamental strengths." 

Federal-Mogul expects to report lower than anticipated earnings for its third quarter period ending September 30, 2000. Based on the company's current projections, earnings per share for the quarter are expected to be approximately breakeven. The company expects fourth quarter operating earnings to be modestly improved from these levels. Regarding expected cash flows, the company expects asbestos payments to exceed $310 million for the year. These payments are either reserved or are covered by insurance and will have no impact on earnings. Along with the earnings shortfall and working capital changes, cash usage is now expected to be in excess of $200 million for the year. 

The projected earnings shortfall is attributable to continued weakening of European currencies against the dollar, significant softening of the heavy- duty market, continued weakness of the North American aftermarket and failure to fully achieve planned efficiencies.

Federal-Mogul intends to release actual third quarter earnings on October 19, 2000. 

(September 19, 2000)

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