Financial Overview

(in million USD)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	Rate of change (%)	Factors
Sales	6,786	6,444	5.3	1)
EBITDA	587	488	20.3	-
Powertrain
Sales	4,173	3,926	6.3	2)
Vehicle Components Solutions
Sales	2,935	2,853	2.9	3)

Factors
1) Overall
-Consolidated net sales increased 5.3% (USD 342 million) year-on-year, with a favorable foreign currency impact of USD 24 million, sales directly related to the acquisition of the spark plug business from BorgWarner, Inc. of USD 43 million, sales from the European distribution agreement for ignition products of USD 112 million and sales organically increased by USD 163 million.

2) Powertrain
-Sales increased 6.3% (USD 247 million) year-on-year, of which USD 43 million of this increase resulted from the acquisition of the spark plug business from BorgWarner, Inc. External sales volumes increased by USD 202 million. This was driven by an increase in sales in North America of 10%, an increase in ROW (Rest of World) of 12% and an increase in Europe of 1% year-on-year.

3) Vehicle Components Solutions
-Sales decreased 2.9% (USD 82 million) year-on-year including USD 112 million from the European distribution agreement for ignition products. The organic external sales volumes change was therefore a decrease of USD 39 million. This was driven by a decline in North America of 3%, a decline in ROW (Rest of World) of 11%, and an increase in Europe of 4% year-on-year.

Divestitures

-The Company's Powertrain Segment announced that it has entered a definitive agreement to sell its connecting rod and camshaft business to JD Norman Industries, Inc. headquartered in the U.S. with an effective date of June 28, 2013. The sale involves the Company's sole connecting rod machining plant, located in Windsor, Canada and only camshaft foundry, located in Lydney, United Kingdom. (From a press release on July 1, 2013)

-The Company announced that the Company's fuel system business has been divested to Carter Fuel Systems, LLC. This business's product offering includes fuel delivery modules, fuel pumps, hanger assemblies, and vapor separators, which are sold to light vehicle aftermarket customers and heavy-duty, off-road vehicle, and marine OEMs. (From the Company's release on September 30, 2013)

Acquisitions

-The Company announced that its foreign subsidiary, Federal-Mogul Investments, B.V., entered into a definitive agreement to purchase the DZV Bearings Company, a privately held business located in Dimitrovgrad, Russia. The transaction is expected to close by year-end of 2013, or early in the first quarter of 2014. DZV is a manufacturer of engine bearings, bushings and thrust washers. It serves several Russian original equipment commercial vehicle and industrial engine manufacturers. The company employs 375 associates. Federal-Mogul's Powertrain unit today operates in Russia a plant in Naberezhnye Chelny producing pistons, piston rings and liners and a plant in Togliatti producing pistons. (From a press release on December 2, 2013)

Contracts

-The Company announced that it has secured contracts with three global vehicle manufacturers to supply low- or zero-copper brake pads for light vehicle platforms beginning in model year 2014, resulting in more than one million vehicles equipped with the Company's Eco-Friction pads by 2015. Product engineering for Eco-Friction pads is conducted at the Company's technical facilities in the U.S., Europe and Asia. The Eco-Friction pads are manufactured at several locations around the world. (From a press release on September 16, 2013)

Increase production

-The Company expects to produce more than 70 million IROX polymer-coated engine bearings annually beginning in 2016. In North America within the next 3 years, 30% of the new engines assembled will feature IROX bearings, with applications for both light- and heavy-duty vehicles. Engineering for IROX is conducted at the Company's technical facilities in Wiesbaden, Germany and Plymouth, Michigan, U.S.A. and manufactured at several global locations. In less than three years, IROX bearings have launched with four OEMs. (From a press release on April 25, 2013)

R&D Expenditure

(in million USD)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011
Overall	173	173	166
% of Sales	2.5	2.7	2.5

Number of R&D Facilities

(As of December 31, 2013)

	U.S. and Canada	Europe	Rest of World
Technical centers	9	5	2

<USA>
-Plymouth, Michigan; Skokie, Illinois; Ann Arbor, Michigan; and Exton, Pennsylvania.

<Outside USA>
-Germany: Burscheid, Nuremberg, Wiesbaden, Bad Camberg
-UK: Chapel
-France: Crepy
-China: Shanghai
-India: Bangalore
-Japan: Yokohama

Product Developments

Harness protection sleeve
-The Company's Powertrain Segment has developed a versatile new harness protection sleeve called FastWrap. This product's high density weave construction delivers multiple benefits, including abrasion resistance, flexibility and ease of application. The fabric, a combination of polyester monofilament and multifilament yarns, is rated up to 150 degrees Celsius and is resistant to all normal engine fluids. FastWrap covers all wire bundle diameter from 8mm to 40mm with just three product sizes, accommodating automotive, heavy-duty and off-highway applications. This product has already been released by a major European vehicle manufacture. Pilot scale manufacturing is currently underway with series production scheduled for later 2013. (From a press release on October 28, 2013)

Piston
-The Company's Powertrain Segment is introducing a new Elastothermic piston, designed for next-generation downsized gasoline engines. It allows vehicle manufacturers to further increase power density and compression ratios without compromising refinement or durability. The new piston combines the low mass and low friction benefits of its advanced Elastoval gasoline piston architecture with an improved cooling gallery design located higher in the crown of the piston. The new design decreases crown temperature, reducing the risk of detonation, or "knocking", in hotter, higher pressure engines. Vehicle manufacturers in Asia, North America and Europe are developing engines with the new piston design that was developed in the Company's R&D-center in Nuremberg, Germany. Production is scheduled to start during 2013. (From a press release on July 30, 2013)

Piston ring
-The Company's Powertrain Segment has developed a new piston ring coating called DuroGlide for gasoline engines and both light and heavy-duty diesel engine applications. In testing, DuroGlide-coated piston rings have shown the highest durability of any piston ring coating type and contribute fuel economy savings up to 1.5 percent, equivalent to a CO2 reduction of up to 3 g/km for a light vehicle, depending upon the engine application. It contains diamond-structured carbon in a higher concentration than has been previously achieved (around 50%), giving exceptional hardness and wear resistance. DuroGlide can be used throughout the ring pack on all known piston ring materials made of cast iron or steel. Developed in Burscheid, Germany, where production will commence during 2014, DuroGlide will be introduced in several engine projects for gasoline and diesel engine applications. (From a press release on May 21, 2013)

Capital Expenditures

(in million USD)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011
Powertrain	276	278	259
Vehicle Components Solutions	86	86	68
Corporate	13	16	14
Discontinued operations	5	7	7
Total	380	387	348

Investments Outside USA

<China>
-Federal-Mogul Shanghai Bearing and Federal-Mogul Shanghai Compound Material Co., Ltd., which are joint-venture companies between HUAYU Automotive Systems Company Limited and Federal-Mogul, broke ground for their new plant at the Zhoupu district in Shanghai Pudong on December 12, 2012. Huayu and Federal-Mogul are investing CNY 380 million in the new facility to be constructed on 42,000 square meters of land. The plant will consolidate the two joint ventures' operations, which include production of bearings, bushes, thrust washers and other engine components. The new, integrated joint venture will have 10 bearing production lines in total instead of the current 6. In addition, it will introduce an environmentally friendly IrOx coating line from overseas to further improve its bearing production capacity. By December 2014, the two joint ventures will transfer their production lines to the new plant, which is expected to be completed by November 2013. Federal-Mogul Shanghai Bearing has increased its sales by an average of 30% each year over the past three years. (From news releases issued by multiple sources on January 14, 2013)