FEDERAL MOGUL CORP, 424B5, 1998-06-23

FEDERAL MOGUL CORP
424B5, 1998-06-23
MOTOR VEHICLE PARTS & ACCESSORIES

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS +
+SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY +
+NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH +
+OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR +
+QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

FILED PURSUANT TO RULE NO. 424(b)(5)
REGISTRATION NO. 333-50413

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED JUNE 15, 1998

PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED . , 1998)
$1,000,000,000

$ . . % NOTES DUE .
$ . . % NOTES DUE .
$ . . % NOTES DUE .

The . % Notes due . (the " . Notes"), the . % Notes due . (the " .
Notes") and the . % Notes due . (the " . Notes" and, together with the .
Notes and the . Notes, the "Notes") are being offered (the "Offering") by
Federal-Mogul Corporation ("Federal-Mogul" or the "Company"). Interest on the
Notes is payable semiannually in arrears on June 30 and December 31 of each
year, commencing December 31, 1998.

The Notes will be redeemable at the option of the Company, in whole at any
time or in part from time to time, at a redemption price equal to the greater
of (i) 100% of the principal amount of the Notes of such series to be redeemed
or (ii) the sum of the present values of the Remaining Scheduled Payments (as
hereinafter defined) discounted at the Treasury Rate (as hereinafter defined)
plus . basis points in the case of the . Notes, . basis points in the
case of the . Notes and . basis points in the case of the . Notes, plus,
in the case of each of clause (i) and (ii), accrued interest to the date of
redemption. See "Description of Notes--Optional Redemption." The Notes will
also be redeemable in whole, but not in part, at the principal amount thereof,
together with accrued interest to the date fixed for redemption, at any time if
certain events occur involving United States withholding taxes. See
"Description of Notes--Tax Redemption." The Notes will not be subject to any
sinking fund.
(Continued on following page)
SEE "RISK FACTORS" BEGINNING ON PAGE S-12 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE NOTES OFFERED
HEREBY.

-------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH
IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) THE COMPANY(3)
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Per . Note............................... . % . % . %
- ---------------------------------------------------------------------------------
Total...................................... $ $ $
- ---------------------------------------------------------------------------------
Per . Note............................... . % . % . %
- ---------------------------------------------------------------------------------
Total...................................... $ $ $
- ---------------------------------------------------------------------------------
Per . Note............................... . % . % . %
- ---------------------------------------------------------------------------------
Total...................................... $ $ $
</TABLE>
- --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from . .
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting estimated expenses of $ . payable by the Company.

-------------

The Notes are offered by the Underwriters (as hereinafter defined) subject to
prior sale when, as and if issued by the Company and accepted by the
Underwriters and subject to certain other conditions. The Underwriters reserve
the right to withdraw, cancel or modify such offer and to reject any orders in
whole or in part. It is expected that delivery of the Notes will be made in
book entry form to or through the facilities of the Depository Trust Company,
New York, New York (the "Depositary"), Cedel Bank, societe anonyme ("Cedel")
and Euroclear System ("Euroclear"), on or about . , 1998 against payment
therefor in immediately available funds.
-------------

CHASE SECURITIES INC. BEAR, STEARNS & CO. INC.
CREDIT SUISSE FIRST BOSTON
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
BNY CAPITAL MARKETS, INC.
BANCAMERICA ROBERTSON STEPHENS
CREDIT LYONNAIS SECURITIES (USA) INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
FIRST UNION CAPITAL MARKETS SCOTIA CAPITAL MARKETS

The date of this Prospectus Supplement is . , 1998.
<PAGE>

(Continued from previous page)

Each series of the Notes will be represented by one or more Global Notes (as
hereinafter defined) registered in the name of a nominee of the Depositary.
Beneficial interests in the Global Notes will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary
and its participants, including the U.S. Depositaries for Cedel and Euroclear.
Except as described herein, Notes in definitive form will not be issued. The
Notes will trade in the Depositary's Same-Day Funds Settlement System until
maturity, and secondary market trading activity for the Notes will, therefore,
settle in immediately available funds. All payments of principal and interest
will be made by Federal-Mogul in immediately available funds. See "Description
of Notes--Book-Entry, Delivery and Form" and "--Global Clearance and
Settlement Procedures."

Application will be made to the Luxembourg Stock Exchange (the "Exchange") for
permission to deal in, and for listing of, the Notes on such Exchange.

----------------

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICES OF THE NOTES INCLUDING
OVER-ALLOTMENT, STABILIZING TRANSACTIONS AND SYNDICATE SHORT COVERING
TRANSACTIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

S-2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and the consolidated Financial
Statements (as hereinafter defined) appearing elsewhere in this Prospectus
Supplement and the accompanying Prospectus or incorporated herein or therein by
reference. See "Presentation of Financial Information." Prospective investors
should carefully consider the matters discussed under the caption "Risk
Factors."

FEDERAL-MOGUL CORPORATION

Federal-Mogul is a leading global manufacturer and distributor of a broad
range of vehicular components for automobiles and light trucks, heavy duty
trucks, farm and construction vehicles and industrial products. Such components
include powertrain systems components (primarily bearings, rings and pistons),
sealing systems components (dynamic seals and gaskets) and general products
(primarily camshafts, friction products, sintered products and systems
protection products). Federal-Mogul markets its products to many of the world's
major original equipment ("OE") manufacturers. Federal-Mogul also manufactures
and supplies its products and related parts to the aftermarket relating to each
of these categories of equipment. Among Federal-Mogul's largest customers are
Caterpillar, Chrysler, Cummins, Ford, General Motors, Mercedes-Benz, NAPA,
Peugeot and Volkswagen/Audi (in alphabetical order).

In connection with its growth strategy, on March 6, 1998 Federal-Mogul
acquired T&N plc ("T&N"), a U.K. based supplier of engine and transmission
products, for total consideration of approximately (Pounds)1.46 billion ($2.42
billion, converted at a blended exchange rate of 1 pound sterling to 1.6510
U.S. dollars). T&N manufactures and supplies high technology engineered
automotive components and industrial materials including pistons, friction
products, bearings, systems protection, camshafts and sealing products. On
February 24, 1998, Federal-Mogul acquired Fel-Pro Incorporated and certain
affiliated entities, which constitute the operating businesses of the Fel-Pro
group of companies ("Fel-Pro"), a privately-owned automotive parts
manufacturer, for total consideration of approximately $717 million. Fel-Pro is
a premier gasket manufacturer for the North American aftermarket and OE heavy
duty market. See "T&N and Fel-Pro Acquisitions."

Federal-Mogul currently operates facilities at over 240 locations in 24
countries. On a pro forma basis adjusted for the acquisitions of T&N and Fel-
Pro, Federal-Mogul's total sales for 1997 were $4.8 billion. See "Unaudited Pro
Forma Financial Data."

S-3
<PAGE>

The following charts set forth Federal-Mogul's net sales by customer group,
geographic region and manufacturing division as a percentage of total net sales
for the year ended December 31, 1997, on a pro forma basis.

[Charts setting forth net sales by customer group, geographic region and
manufacturing division for the year ended December 31, 1997]

BUSINESS STRATEGY

The Company believes its recent restructuring program, which refocused the
Company on its core competency of manufacturing, and the acquisitions of T&N
and Fel-Pro, which expanded the Company's product base and geographic reach,
significantly enhanced its position within the automobile, truck and other
vehicular components markets. The Company believes that opportunities exist to
continue its growth and further enhance its market presence through the
following initiatives:

. Systems Approach. The breadth of the Company's manufacturing
capabilities and product offerings enable it to be one of a small number
of manufacturers with the ability to seal entire engine, transmission
and axle systems and to be a single source supplier of engine and
sealing components. In addition, Federal-Mogul is committed to becoming
a provider of complete engine and transmission modules for its OE
customers. The Company believes that OE manufacturers of automobiles,
trucks and other vehicles are increasingly seeking to reduce the number
of suppliers from which they source parts and to develop relationships
with suppliers that can offer integrated systems and modules in order to
lower production costs, increase quality, provide better technology and
shorten product development cycles. The T&N and Fel-Pro acquisitions,
which expanded the Company's gasket, cast aluminum piston, large bearing
and sealing product lines and added product lines for articulated
pistons, cylinder liners and piston rings, are major steps toward
Federal-Mogul's strategic goal of developing global engine and sealing
systems for its OE customers.

. Continue Focus on New Product Innovation. The Company's expertise in
engineering and research and development has made Federal-Mogul a leader
in virtually all of the product segments in which it competes. The
Company utilizes the latest technologies, processes and materials to
solve problems for customers and to bring new, innovative products to
market. The Company has special competencies in alloy development,
customized materials formulations, surface technology, advanced modeling
and testing and systems engineering. These capabilities allow the
Company to reduce production costs and to develop products that are more
durable and exhibit better interaction with surrounding components.
These innovative products better serve OE customers and aid brand
development, resulting in a higher margin product mix.

S-4
<PAGE>

. Extend Global Manufacturing Reach. The Company is committed to extending
its manufacturing capabilities worldwide in response to the global
expansion of its OE manufacturing customers. The acquisitions of T&N and
Fel-Pro have substantially increased the Company's manufacturing
presence, particularly in North America and Europe. Management believes
expansion of manufacturing operations to follow the expansion of OE
manufacturers into Latin America, Eastern Europe and Asia provides
significant growth opportunities for the Company in the future.

. Pursue Strategic Acquisitions. The vehicular engine and sealing
component industry is large and highly fragmented. The Company believes
that as OE manufacturers continue to outsource and reduce the number of
suppliers, opportunities will exist for further consolidation within
this industry. The Company believes that, through its established
presence in these markets and its strong relationships with OE
manufacturers worldwide, the Company is in a favorable position to
capitalize on future industry consolidation. The Company's management
has substantial experience in completing and integrating acquisitions
within the automobile parts industry and believes that this experience
will help it select and pursue acquisition opportunities that can
enhance the Company's product base, expand its global manufacturing
operations and further capitalize on the Company's aftermarket
distribution network and technological resources.

. Expand Aftermarket Presence. Approximately 48% of the Company's 1997
sales, on a pro forma basis, were generated from the aftermarket. The
Company believes that opportunities exist to further leverage its broad
product offerings, reputation for new product innovation and presence
within the OE market to increase its penetration of the worldwide
aftermarket. In addition, the Company believes that its ability to sell
products developed for the OE market to aftermarket customers reduces
the impact of adverse changes in demand for new vehicles.

. EVA Focus. In 1997, the Company adopted Economic Value Added (EVA(R)) as
its primary financial measurement and incentive compensation metric. EVA
is equal to net operating profits after economic taxes and a charge for
capital invested in the Company, which is equal to the product of the
total capital invested in the Company and the weighted average cost of
capital for the Company's target blend of debt and equity. The Company's
management has placed significant emphasis on improving the Company's
financial performance and achieving various operating efficiencies
through technical development, manufacturing, marketing and
administrative rationalization in connection with this effort. The
Company's EVA improved significantly in 1997 due primarily to improved
operating margins (4.9% in 1996 and 7.7% in 1997) combined with $166
million of cash flow from continuing operations (net of expenditures for
property, plant and equipment) in 1997. EVA is also being applied to the
integration of T&N and Fel-Pro to optimize synergies and cost savings.
As the Company continues to expand both its product base and its
geographic scope, management will evaluate investments and acquisitions
based on both EVA and strategic importance. In addition, the Company
currently determines compensation for certain top managers using an EVA
based system and expects to increase the number of managers
participating in its EVA based compensation system to over 200 in 1999.

* * *

Federal-Mogul is a Michigan corporation with its principal executive offices
located at 26555 Northwestern Highway, Southfield, Michigan 48034. The
telephone number of those offices is (248) 354-7700.

S-5
<PAGE>

THE OFFERING

Issuer................................ Federal-Mogul Corporation

Securities Offered.................... $ . of . % Notes due . (the " .
Notes")

$ . of . % Notes due . (the " .
Notes")

Maturity.............................. The . Notes will mature on June 30,
. , the . Notes will mature on June
30, . , and the . Notes will mature
on June 30, . .

Interest Payment Dates................ Interest on the Notes is payable
semiannually on each June 30 and
December 31 of each year commencing
December 31, 1998.

Optional Redemption................... The Notes will be redeemable, at the
option of the Company, in whole at any
time or in part from time to time, at a
redemption price equal to the greater
of (i) 100% of the principal amount of
the Notes to be redeemed or (ii) the
sum of the present values of the
Remaining Scheduled Payments discounted
at the Treasury Rate plus . basis
points in the case of the . Notes,
. basis points in the case of the .
Notes and . basis points in the case
of the . Notes, plus, in the case of
each of clause (i) and (ii), accrued
interest to the date of redemption. See
"Description of Notes--Optional
Redemption."

Sinking Fund.......................... None.

Ranking............................... The Notes are unsecured obligations of
the Company, ranking pari passu with
other unsubordinated, unsecured
indebtedness of the Company, and
ranking senior in right of payment to
any future subordinated indebtedness of
the Company. Indebtedness incurred
under the Senior Credit Agreement (as
hereinafter defined) and certain other
indebtedness of the Company are secured
by pledges of all or a portion of the
stock of certain of the Company's
subsidiaries and certain intercompany
indebtedness. The Notes will not have
the benefit of such pledges and the
Indenture (as hereinafter defined) does
not contain any restriction upon
indebtedness, whether secured or
unsecured, that the Company and its
subsidiaries may incur in the future.
Secured creditors of the Company will
have a claim on the assets which secure
the obligation of the Company prior to
any claims of holders of the Notes
against such assets.

S-6
<PAGE>

Certain Covenants..................... The Indenture governing the Notes will
contain covenants which impose, among
other things, limitations on the
creation of liens and limitations on
sale and lease-back transactions. See
"Description of Notes--Certain
Covenants."

Use of Proceeds.......................
The Company will use the net proceeds
of the Offering to prepay certain
indebtedness of Federal-Mogul, which
was incurred to finance the
acquisitions of T&N and Fel-Pro. See
"Use of Proceeds."

Additional Amounts; Tax Redemption.... The Company will pay as additional
interest to a holder of a Note that is
a Non-U.S. Holder (as hereinafter
defined) such amounts as may be
necessary so that every net payment on
such Note, after deduction or
withholding for certain United States
taxes, will not be less than the amount
provided in such Note to be then due
and payable, subject to customary
exceptions. If the Company is required
to pay any such additional interest,
the Notes may be redeemed in whole, but
not in part, at any time upon prior
notice at the principal amount thereof,
together with accrued interest to the
date fixed for redemption.

Listing............................... Luxembourg Stock Exchange.

Risk Factors.......................... For a discussion of certain risks that
should be considered by prospective
investors before investing in the Notes
offered hereby, see "Risk Factors."

S-7
<PAGE>

SUMMARY FINANCIAL DATA

The following summary historical financial information is derived from, and
should be read in conjunction with, the Federal-Mogul Financial Statements (as
hereinafter defined), T&N Financial Statements (as hereinafter defined) and
Fel-Pro Financial Statements (as hereinafter defined), and the summary
unaudited pro forma financial information is derived from, and should be read
in conjunction with, the "Unaudited Pro Forma Financial Data," all of which are
included elsewhere in this Prospectus Supplement. See "Presentation of
Financial Information." The Federal-Mogul Audited Financial Statements (as
hereinafter defined) were audited by Ernst & Young LLP. The T&N Financial
Statements were audited by KPMG Audit Plc. The Fel-Pro Financial Statements
were audited by Ernst & Young LLP. The Federal-Mogul Unaudited Interim
Financial Statements (as hereinafter defined) are unaudited but, in the opinion
of management, reflect all adjustments necessary for a fair presentation of
such information. Subsequent to the dates in respect of which the data below
are given, on June 10, 1998, Federal-Mogul completed the sale of 10,537,093
shares of its Common Stock in an underwritten public offering. Net proceeds to
Federal-Mogul from that offering, after deducting estimated underwriting
discounts and offering expenses, were approximately $592.3 million. See "June
1998 Common Stock Offering."

FEDERAL-MOGUL

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
YEAR ENDED DECEMBER 31, (UNAUDITED)
------------------------------------- ----------------------
1997 1996 1995 1998(1) 1997
--------- --------- --------- --------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales............... $ 1,806.6 $2 ,032.7 $ 1,999.8 $ 658.0 $ 485.6
Costs and expenses...... (1,703.7)(2) (2,258.0)(3) (2,000.7)(4) (650.6)(5) (461.1)
Other expense........... (3.4) (3.4) (2.4) (5.8) (2.0)
Income tax (expense)
benefit................ (27.5) 22.4 (2.5) (8.8) (8.6)
--------- --------- --------- --------- --------
Net earnings (loss)
before extraordinary
item................... 72.0 (206.3) (5.8) (7.2) 13.9
Extraordinary item --
loss on early
retirement of debt, net
of applicable income
tax benefit............ (2.6) -- -- -- --
--------- --------- --------- --------- --------
Net earnings (loss)..... $ 69.4 $ (206.3) $ (5.8) $ (7.2) $ 13.9
========= ========= ========= ========= ========
COMMON SHARE SUMMARY
(DILUTED):
Average shares and
equivalents outstanding
(in thousands)......... 41,854 34,659 34,642 40,114 37,159
Earnings (loss) per
share:
Before extraordinary
item................. $ 1.67 $ (6.20) $ (0.42) $ (0.20) $ 0.32
Extraordinary item --
loss on early
retirement of debt,
net of applicable
income tax benefit... (0.06) -- -- -- --
--------- --------- --------- --------- --------
Net earnings (loss) per
share.................. $ 1.61 $ (6.20) $ (0.42) $ (0.20) $ 0.32
========= ========= ========= ========= ========
Dividends declared per
share.................. $ 0.48 $ 0.48 $ 0.48 $ 0.12 $ 0.12
========= ========= ========= ========= ========
CONSOLIDATED BALANCE
SHEET DATA:
Total assets............ $ 1,802.1 $ 1,455.2 $ 1,701.1 $ 7,398.7 $1,419.7
Short-term debt(6)...... 28.6 280.1 111.9 837.8 258.7
Long-term debt.......... 273.1 209.6 481.5 2,273.7 206.9
Shareholder's equity.... 369.3 318.5 550.3 586.0 310.2
OTHER FINANCIAL
INFORMATION:
Cash provided from (used
by) operating
activities............. $ 215.7 $ 149.0 $ (34.7) $ 82.7 $ 28.1
Cash provided from (used
by) investing
activities............. (5.5) (12.5) (109.4) (2,586.5) 2.0
Cash provided from (used
by) financing
activities............. 298.1 (122.8) 138.5 2,063.9 (30.2)
EBITDA(7)............... 194.5 97.9 163.6 82.7 46.3
Expenditures for
property, plant,
equipment and other
long term assets....... 49.7 54.2 78.5 19.5 8.4
Depreciation and
amortization expense... 52.8 63.7 61.0 29.8 14.0
</TABLE>

S-8
<PAGE>

- --------
(1) Reflects first time consolidation of T&N and Fel-Pro as of March 6, 1998
and February 24, 1998, respectively.
(2) Includes $1.1 million for a net restructuring credit, a $2.4 million charge
for an adjustment of assets held for sale to fair value and other long
lived assets, a $1.6 million credit for reengineering and other related
charges, and a $10.5 million net charge related to the British pound
currency option.
(3) Includes $57.6 million for a restructuring charge, $151.3 million for
adjustment of assets held for sale to fair value and other long lived
assets and $11.4 million relating to reengineering and other related
charges.
(4) Includes $26.9 million for restructuring charges, $51.8 million for
adjustment of assets held for sale to fair value and other long lived
assets and $13.9 million relating to reengineering and other related
charges.
(5) Includes $18.6 million for a purchased in-process research and development
charge, $10.5 million for restructuring charges, $20.0 million for
adjustment of assets held for sale to fair value and other long-lived
assets, and a $13.3 million net gain on British pound currency option and
forward contract.
(6) Includes current maturities of long-term debt.
(7) "EBITDA" represents the sum of income before interest expense and income
taxes, plus depreciation and amortization as well as nonrecurring charges
including gains on the sale of businesses, restructuring and reengineering
charges, adjustments of assets held for sale to fair value and other long
lived assets, the net effect of British pound currency options and forward
contracts, and purchased in-process research and development charge. EBITDA
should not be construed as a substitute for income from operations, net
income or cash flow from operating activities, for the purpose of analyzing
Federal-Mogul's operating performance, financial position and cash flows.
EBITDA measures are calculated differently by other companies. As such, the
EBITDA measures presented may not be comparable to other similarly titled
measures of other companies. The Company has presented EBITDA because it is
commonly used by investors to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service debt.

T&N
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------------------
1997 1996
T&N HISTORICAL IN U.K. GAAP --------------- ---------------
(POUNDS STERLING IN MILLIONS)
<S> <C> <C>
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
DATA:
Total turnover excluding associated
undertakings............................. (Pounds)1,799.1 (Pounds)1,956.0
Cost of sales............................. (1,293.5) (1,418.3)
Other operating expenses.................. (331.6) (370.3)
Other, net................................ 11.2 (560.2)(1)
Tax on profit (loss) on ordinary
activities............................... (62.8) (8.0)
--------------- ---------------
Profit/(loss) attributable to
shareholders............................. (Pounds) 122.4 (Pounds) (400.8)
=============== ===============
CONSOLIDATED BALANCE SHEET DATA:
Total assets.............................. (Pounds)1,576.2 (Pounds)1,558.3
Borrowings due within one year............ 103.7 77.2
Borrowings due after more than one year... 285.4 260.2
Equity shareholders' funds at end of year. 191.4 118.3
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------------------
1997 1996
T&N UNAUDITED PRO FORMA IN U.S. GAAP(1)(2) --------------- ---------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................. $ 2,948.4 $ 3,055.4
Costs and expenses........................ (2,698.7) (4,058.6)(3)
Income tax (expense) benefit.............. (159.3) 278.5
--------------- ---------------
Net earnings (loss)....................... $ 90.4 $ (724.7)
=============== ===============
CONSOLIDATED BALANCE SHEET DATA:
Total assets.............................. $ 3,120.1 $ 3,299.5
Short-term debt........................... 125.4 68.1
Long-term debt............................ 469.5 445.2
Shareholders' equity...................... 466.5 456.1
OTHER FINANCIAL INFORMATION:
Cash flow provided from (used by)
operating activities..................... $ 268.8 $ 115.6
Cash flow provided from (used by)
investing activities..................... (116.7) (211.8)
Cash flow provided from (used by)
financing activities..................... (125.0) 80.1
EBITDA(4)................................. 439.2 399.1
Expenditures for property, plant,
equipment and other long term assets..... 170.9 179.2
Depreciation and amortization expense..... 167.6 161.9
</TABLE>

(see footnotes on the following page)

S-9
<PAGE>

- --------
(1) The T&N historical financial statements were prepared in accordance with
U.K. GAAP, which differs in certain significant respects from U.S. GAAP
(see Note 29 to the T&N Financial Statements). The following table
reconciles the T&N profit/(loss) attributable to shareholders as reported
under U.K. GAAP to net earnings/(loss) as stated under U.S. GAAP:
<TABLE>
<CAPTION>
1997 1996
------------- --------------
(IN MILLIONS)
<S> <C> <C>
Profit/(loss) attributable to shareholders as
reported under U.K. GAAP--stated in pound
sterling.................................... (Pounds)122.4 (Pounds)(400.8)
Converted to U.S. dollars.................... $ 201.4 $ (628.4)
U.S. GAAP adjustments (in U.S. dollars):
Amortization of goodwill................... (11.2) (5.3)
Amortization of patents.................... (2.6) (2.5)
Deferred taxation--full provision.......... (67.1) 158.7
Tax effect of other U.S. GAAP reconciling
items..................................... 3.0 121.8
Pension costs.............................. (11.5) (23.7)
Asbestos provision discount................ (0.8) (355.9)
Depreciation on fixed asset revaluations... 9.5 9.7
Carrying value of investments.............. (31.6) --
Other...................................... 2.1 2.0
Minority interests......................... (0.8) (1.1)
------------- --------------
Net earnings (loss) under U.S. GAAP.......... $ 90.4 $ (724.7)
============= ==============
</TABLE>
(2) Operating results and balance sheet data for 1997 have been translated at a
rate of 1.6453 U.S. dollars to 1 pound sterling and 1.6451 U.S. dollars to
1 pound sterling, respectively. Operating results and balance sheet data
for 1996 have been translated at a rate of 1.5680 U.S. dollars to 1 pound
sterling and 1.7110 U.S. dollars to 1 pound sterling, respectively.
(3) Includes charge for asbestos-related costs of (Pounds)515 million under
U.K. GAAP and $1.164 billion under U.S. GAAP.
(4) "EBITDA" represents the sum of income before interest expense and income
taxes, plus depreciation and amortization as well as nonrecurring charges
including gains on the sale of businesses, the cost and gains associated
with options over shares of Kolbenschmidt AG, asbestos related costs and
bid costs. EBITDA should not be construed as a substitute for income from
operations, net income or cash flow from operating activities, for the
purpose of analyzing T&N's operating performance, financial position and
cash flows. EBITDA measures are calculated differently by other companies.
As such, the EBITDA measures presented may not be comparable to other
similarly titled measures of other companies. The Company has presented
EBITDA because it is commonly used by investors to analyze and compare
companies on the basis of operating performance and to determine a
company's ability to service debt.

FEL-PRO
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 28, DECEMBER 29,
1997 1996
------------ ------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................................ $ 489.3 $ 448.0
Costs and expenses................................... (442.3) (408.7)
Income tax expense................................... (25.5) (6.9)
------- -------
Net earnings......................................... $ 21.5 $ 32.4
======= =======
CONSOLIDATED BALANCE SHEET DATA:
Total assets......................................... $ 270.1 $ 261.8
Short-term debt...................................... -- --
Long-term debt....................................... -- --
Shareholder's equity................................. 139.9 151.8
OTHER FINANCIAL INFORMATION:
Cash provided from (used by) operating activities.... $ 51.7 $ 31.1
Cash provided from (used by) investing activities.... (18.5) (30.6)
Cash provided from (used by) financing activities.... (33.2) (0.5)
EBITDA(1)............................................ 58.4 50.5
Expenditures for property, plant, equipment and other
long term assets.................................... 18.3 14.1
Depreciation and amortization expense................ 11.5 11.3
</TABLE>
- --------
(1) "EBITDA" represents the sum of income before income taxes, plus
depreciation and amortization. EBITDA should not be construed as a
substitute for income from operations, net income or cash flow from
operating activities, for the purpose of analyzing Fel-Pro's operating
performance, financial position and cash flows. EBITDA measures are
calculated differently by other companies. As such, the EBITDA measures
presented may not be comparable to other similarly titled measures of other
companies. The Company has presented EBITDA because it is commonly used by
investors to analyze and compare companies on the basis of operating
performance and to determine a company's ability to service debt.

S-10
<PAGE>

SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following table sets forth certain unaudited pro forma financial data for
Federal-Mogul for the year ended December 31, 1997 and for the three-month
period ended March 31, 1998, which are presented to reflect the pro forma
effect of the T&N and Fel-Pro acquisitions as if they had occurred at the
beginning of each period presented. The unaudited pro forma balance sheet as of
December 31, 1997 has been prepared to illustrate the effect of the
acquisitions of T&N and Fel-Pro as if it had occurred on such date. The
unaudited pro forma financial information is presented for illustrative
purposes only and is not necessarily indicative of the financial position or
results of operations which may occur in the future or that would have occurred
had the acquisitions of T&N and Fel-Pro been consummated on the dates
indicated, nor are they necessarily indicative of Federal-Mogul's future
results of operations or financial position. The summary unaudited pro forma
financial information below should be read in conjunction with the information
set forth under the caption "Unaudited Pro Forma Financial Data," the Federal-
Mogul Audited Financial Statements, the T&N Financial Statements and the Fel-
Pro Financial Statements included elsewhere in this Prospectus Supplement.
Subsequent to the dates in respect of which the data below are given, on June
10, 1998, Federal-Mogul completed the sale of 10,537,093 shares of its Common
Stock in an underwritten public offering. Net proceeds to Federal-Mogul from
that offering, after deducting estimated underwriting discounts and offering
expenses, were approximately $592.3 million. See "June 1998 Common Stock
Offering."

<TABLE>
<CAPTION>
PRO FORMA
COMBINED YEAR PRO FORMA COMBINED
ENDED THREE MONTHS ENDED
DECEMBER 31, 1997 MARCH 31, 1998
----------------- ------------------
(DOLLARS IN MILLIONS, EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................. $4,824.0 $1,193.6
Costs and expenses........................ 4,791.8 1,208.6
Income tax expense........................ 93.5 1.5
-------- --------
Net loss before extraordinary items and
nonrecurring charges(1)(2)............... $ (61.3) $ (16.5)
======== ========
COMMON SHARE SUMMARY (DILUTED):
Average shares and equivalents outstanding
(in thousands)........................... 36,647 40,104
Loss per share before extraordinary item
and nonrecurring charges(2)(3)........... $ (2.16) $ (0.44)
BALANCE SHEET DATA:
Total assets.............................. $6,885.6 $7,398.7 (4)
Total debt................................ 2,606.2 3,111.5 (4)
Shareholders' equity...................... 549.2 576.4
OTHER FINANCIAL INFORMATION:
EBITDA(5)................................. $ 558.7 $ 108.5
Expenditures for property, plant,
equipment and other long term assets..... 238.9 49.5
Depreciation and amortization expense..... 296.8 62.8
</TABLE>
- --------
(1) As a result of the use of proceeds from the offering of Common Stock
Federal-Mogul completed on June 10, 1998, Federal-Mogul will recognize an
extraordinary loss (net of tax) of approximately $5.4 million from the
early extinguishment of debt. See "June 1998 Common Stock Offering." As a
result of the use of proceeds from the Offering, Federal-Mogul expects to
recognize an extraordinary loss (net of tax) of approximately $7.7 million
from the early extinguishment of debt.
(2) The unaudited pro forma statements of operations include only the results
of ongoing operations and exclude such impacts as extraordinary items,
items relating to the acquisitions and synergies and expected cost savings
associated with the integration of the acquisitions. See Note m to the
"Unaudited Pro Forma Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
(3) Loss per share as calculated for the pro forma combined entity includes an
increase to the net loss of $17.8 million and $1.2 million in preferred
dividend requirements for the years ended December 31, 1997 and March 31,
1998, respectively.
(4) Amounts represent actual balances at March 31, 1998.
(5) "EBITDA" represents the sum of income before interest expense and income
taxes, plus depreciation and amortization as well as nonrecurring charges
including gains on the sale of businesses, restructuring and reengineering
charges, adjustments of assets held for sale to fair value and other long
lived assets, the net effect of British pound currency options and forward
contracts, gains associated with options over shares in Kolbenschmidt AG,
asbestos related costs and bid costs. EBITDA should not be construed as a
substitute for income from operations, net income or cash flow operating
activities, for the purpose of analyzing Federal-Mogul's operating
performance, financial position and cash flows. EBITDA measures are
calculated differently by other companies. As such, the EBITDA measures
presented may not be comparable to other similarly titled measures of other
companies. The Company has presented EBITDA because it is commonly used by
investors to analyze and compare companies on the basis of operating
performance and to determine a company's ability to service debt.

S-11
<PAGE>

RISK FACTORS

Prospective purchasers of Notes offered hereby should carefully review the
information contained elsewhere in this Prospectus Supplement and the
accompanying Prospectus or incorporated by reference herein and therein and
should particularly consider the following matters.

EFFECT OF SUBSTANTIAL LEVERAGE

As a result of its acquisitions of T&N and Fel-Pro, Federal-Mogul is
substantially leveraged. As of March 31, 1998, Federal-Mogul had total debt of
$3,111.5 million (total long-term debt of $2,273.7 million and total short-
term debt of $837.8 million), $575 million in preferred securities of
affiliates and shareholders' equity of $586.0 million, producing a total
capitalization of $4,272.5 million, so that total debt as a percentage of
total capitalization was 72.8% and total long-term debt as a percentage of
total capitalization was approximately 53.2%. In June 1998 the Company repaid
$500 million of short-term debt and $92.3 million of long-term debt with the
proceeds of an offering of Federal-Mogul's Common Stock. See "June 1998 Common
Stock Offering," "Capitalization" and "Description of Certain Indebtedness."
Federal-Mogul may also incur substantial additional indebtedness in the
future, including, without limitation, in connection with any future
acquisitions, although its ability to do so is restricted by the Senior Credit
Agreement. See "Description of Certain Indebtedness." Federal-Mogul intends to
use the proceeds of the Offering to refinance indebtedness incurred under the
Senior Credit Agreement. See "Use of Proceeds."

Federal-Mogul's leverage may have important consequences to holders of the
Notes, including: (i) limiting Federal-Mogul's ability to obtain additional
financing to fund future working capital requirements, capital expenditures,
debt service requirements, acquisitions or other general corporate
requirements; (ii) requiring a substantial portion of Federal-Mogul's cash
flow from operations to be dedicated to payment of principal and interest on
its indebtedness, thereby reducing the funds available for operations and
future business opportunities; (iii) placing Federal-Mogul at a competitive
disadvantage to companies with which it competes that may be less leveraged;
and (iv) increasing Federal-Mogul's vulnerability to adverse economic and
industry conditions. In addition, since certain of Federal-Mogul's borrowings
are at variable rates of interest, Federal-Mogul will be vulnerable to
increases in interest rates, which could have a material adverse effect on
Federal-Mogul's results of operations, liquidity and financial condition.
Federal-Mogul's ability to make scheduled payments of the principal of, to pay
interest on or to refinance its indebtedness depends on its future
performance, which to a certain extent is subject to economic, financial,
competitive and other factors beyond its control. There can be no assurance
that Federal-Mogul's business will continue to generate cash flow from
operations in the future sufficient to service its debt and make necessary
capital expenditures. If unable to generate such cash flow, Federal-Mogul may
be required to adopt one or more alternatives, such as reducing or delaying
planned expansion, selling assets, restructuring debt or obtaining additional
equity capital. There can be no assurance that any of these strategies could
be effected on satisfactory terms or without substantial additional expense
for Federal-Mogul. These and other factors could have a material adverse
effect on the results of operations, liquidity and financial condition of
Federal-Mogul and on the marketability, price and future value of the Notes.

The Senior Credit Agreement imposes financial and other restrictions on
Federal-Mogul, including limitations on the incurrence of debt and on Federal-
Mogul's ability to dispose of assets. The Senior Credit Agreement also
requires Federal-Mogul to make periodic payments in respect of interest and
outstanding principal, including from material disposals, "excess cash flow"
and the proceeds of certain issuances of capital stock or indebtedness, and to
maintain compliance with certain financial ratios and minimum net worth tests.
See "Description of Certain Indebtedness." There can be no assurance that
these requirements will be met in the future. Failure to achieve compliance
would result in a default under the Senior Credit Agreement and could lead to
acceleration of the related debt and the acceleration of debt under other
instruments evidencing indebtedness that contain cross-acceleration or cross-
default provisions. In such a case, there can be no assurance that Federal-
Mogul would be able to refinance or otherwise repay such indebtedness.

The information set forth under the caption "Unaudited Pro Forma Financial
Data" has been based on certain assumptions as to the estimated proceeds of
the divestitures of the T&N Bearings Business (as hereinafter

S-12
<PAGE>

defined). Such proceeds will be used to reduce Federal-Mogul's indebtedness.
There can be no assurance that the actual proceeds received from the
divestitures will fall within the range utilized in making the pro forma
calculations.

INTEGRATION OF THE BUSINESSES OF T&N AND FEL-PRO

The acquisitions of T&N and Fel-Pro substantially increased the size and
complexity of Federal-Mogul's operations and have created the need for
Federal-Mogul to integrate three businesses that have previously operated
independently. There can be no assurance that Federal-Mogul will not encounter
difficulties in integrating T&N's and Fel-Pro's operations with its own or
that the expected benefits will be realized from such integration. Any
material delays or unexpected costs incurred in connection with such
integration could have a material adverse effect on Federal-Mogul and its
results of operations, liquidity and financial condition. Furthermore, there
can be no assurance that the operations, management and personnel of Federal-
Mogul, T&N and Fel-Pro will be compatible. Among the factors considered by
Federal-Mogul in connection with the acquisitions of T&N and Fel-Pro were the
opportunities for synergies expected to be achieved. However, there can be no
assurance that Federal-Mogul will achieve the desired levels of synergies when
anticipated or at all. Failure to achieve the desired levels of synergies
could have a material adverse effect on the business, results of operations,
liquidity and financial condition of Federal-Mogul.

In addition, Federal-Mogul has announced that it intends, in connection with
its targeted synergies, to incur restructuring charges and related costs of
$205 million, which is moderately less than the annual level of synergy
benefits anticipated in the year 2000. See "T&N and Fel-Pro Acquisitions." No
assurance can be given that such costs will not be substantially greater than
this amount or that achieving such synergies will be possible without
additional cost or charges to earnings in future periods. Any such charges
could have a material adverse effect on the business, results of operations,
liquidity and financial condition of Federal-Mogul.

In connection with securing regulatory approvals for the acquisition of T&N,
Federal-Mogul agreed with the U.S. Federal Trade Commission (the "FTC") to
divest T&N's thinwall and dry bearings (polymer bearings) operations (the "T&N
Bearings Business"). See "Business--Reorganization" and "Unaudited Pro Forma
Financial Data." The purchaser of the T&N Bearings Business will become a
direct competitor of Federal-Mogul.

T&N'S ASBESTOS LIABILITY

T&N and certain of its subsidiaries are among many defendants named in a
large number of court actions brought in the United States, and a smaller
number of claims brought in the United Kingdom, relating to alleged asbestos-
related diseases resulting from exposure to asbestos or products containing
asbestos. T&N is also one of many defendants named in a small number of U.S.
property damage claims. T&N has incurred significant charges to income in
connection with settling claims and the establishment of reserves for asbestos
liabilities and has obtained insurance coverage for certain asbestos
liabilities. See "Business--Legal Proceedings," "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Federal-Mogul--
Three Months Ended March 31, 1998 Compared with Three Months Ended March 31,
1997--Asbestos Liability and Legal Proceedings" and "--T&N--Asbestos." No
assurance can be given that T&N will not be subject to material additional
liabilities and significant additional litigation relating to asbestos that
would result in significant additional charges not covered by reserves or
insurance. Any such liabilities or litigation could have a material adverse
effect on Federal-Mogul's results of operations, business, liquidity and
financial condition.

ACQUISITION STRATEGY

One of Federal-Mogul's principal business strategies is to expand its core
competencies in manufacturing and distribution through acquisitions of
companies that Federal-Mogul identifies as complementary to its existing
businesses and capable of achieving satisfactory rates of return. Federal-
Mogul is usually engaged in various stages of evaluation of potential
acquisition candidates. Currently Federal-Mogul is in the preliminary stages
of pursuing one or more potential acquisitions, at least one of which would be
material if consummated. Any such

S-13
<PAGE>

acquisition would be paid for through the incurrence of a significant amount
of additional debt, the issuance of a significant amount of capital stock or
both. If Federal-Mogul determines that any one or more of these potential
acquisitions or other transactions would meet its criteria and may be
accomplished on appropriate terms, it expects to act to attempt to consummate
them as quickly as possible. There can be no assurance that any of the
discussions in which Federal-Mogul is currently engaged will result in the
completion of any acquisitions, that Federal-Mogul will in the future succeed
in locating or acquiring appropriate companies on attractive terms or that
Federal-Mogul will be successful in integrating acquired companies or
realizing desired benefits of such acquisitions.

Federal-Mogul believes that successful implementation of this strategy will
require significant capital expenditures which it might not be able to fund
from its cash from operations. Therefore, Federal-Mogul may be required to
borrow money or otherwise obtain financing for future acquisitions. Increased
leverage of Federal-Mogul may have important consequences to holders of the
Notes. See "--Effect of Substantial Leverage." If Federal-Mogul is unable to
procure suitable financing, it may be unable to complete desired acquisitions.

CYCLICAL NATURE OF AUTOMOTIVE INDUSTRY

Federal-Mogul's principal operations are directly related to domestic and
foreign automotive vehicle production. Automobile sales and production are
cyclical and can be affected by the strength of a country's general economy.
In addition, automobile production and sales can be affected by labor
relations issues, regulatory requirements, trade agreements and other factors.
A decline in automotive sales and production would likely affect not only
sales to OE customers but also sales to aftermarket customers and could result
in a decline in Federal-Mogul's results of operations or a deterioration in
Federal-Mogul's financial condition. If demand changes and Federal-Mogul fails
to respond accordingly, its results of operations could be adversely affected
in any given quarter. In addition, technical improvements in automotive
component designs may adversely affect aftermarket demand.

INTERNATIONAL OPERATIONS

Federal-Mogul has manufacturing and distribution facilities located in many
countries, principally in North America, Europe and Latin America. The
acquisition of T&N significantly increased the portion of Federal-Mogul's
business located outside the United States. International operations are
subject to certain risks inherent in doing business abroad, including exposure
to local economic conditions, expropriation and nationalization, currency
exchange rate fluctuations and currency controls, and export and import
restrictions. The likelihood of such occurrences and their potential effect on
Federal-Mogul vary from country to country and are unpredictable.

FOREIGN CURRENCY TRANSLATION AND TRANSACTION RISK

The financial condition and results of operations of certain Federal-Mogul
operating entities are reported in various foreign currencies (principally
pounds sterling, German marks, and to a lesser extent South African rand and
French francs, among others) and then translated into U.S. dollars at the
applicable exchange rate for inclusion in Federal-Mogul's financial
statements. As a result, the appreciation of the dollar against these foreign
currencies will have a negative impact on the reported sales and operating
margin of T&N and other subsidiaries, as consolidated into Federal-Mogul (and
conversely, the depreciation of the dollar against these foreign currencies
will have a positive impact). See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Federal-Mogul--Year Ended
December 31, 1997 Compared with Year Ended December 31, 1996 and Year Ended
December 31, 1996 Compared with Year Ended December 31, 1995--Foreign Currency
and Commodity Contracts."

In addition, Federal-Mogul incurs currency transaction risk whenever it or
one of its foreign subsidiaries enters into either a purchase or sales
transaction using a different currency than the relevant entity's functional
currency. Currency transaction risk is reduced by matching revenues and costs
with the same currency. Given the volatility of currency exchange rates, there
can be no assurance that Federal-Mogul will be able to effectively manage its
currency transaction risks or that any volatility in currency exchange rates
will not have a material adverse effect on Federal-Mogul's financial condition
or results of operations.

S-14
<PAGE>

COMPETITION

The global vehicular parts business is highly competitive. Federal-Mogul
competes with many of its customers that produce their own components as well
as with independent manufacturers and distributors of components in the United
States and abroad. Certain of the Company's competitors have significantly
greater financial and other resources than the Company. The inability of the
Company to successfully respond to changing competitive conditions could
adversely affect demand for the Company's products.

ABSENCE OF TRADING MARKET FOR THE NOTES

Prior to this Offering, there has been no trading market for the Notes.
Although the Underwriters have advised Federal-Mogul that they currently
intend to make a market in the Notes, they are not obligated to do so and may
discontinue such market making at any time without notice. There can be no
assurance that any market for the Notes will develop or, if one does develop,
that it will be maintained. If an active market for the Notes fails to develop
or be sustained, the trading price of such Notes could be materially adversely
affected.

S-15
<PAGE>

FORWARD-LOOKING STATEMENTS

Certain statements contained or incorporated in this Prospectus Supplement
and the accompanying Prospectus which are not statements of historical fact
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 (the "Act"). Such statements are made
in good faith by Federal-Mogul pursuant to the "safe harbor" provisions of the
Act.

Forward-looking statements include financial projections and estimates and
statements regarding plans, objectives and expectations of Federal-Mogul and
its management, including, without limitation, plans to integrate the
businesses of T&N and Fel-Pro into Federal-Mogul, plans to address computer
software issues related to the approach of the year 2000, estimated proceeds
of planned dispositions and the effects of such dispositions on Federal-
Mogul's balance sheet and statement of operations, and the scope and effect of
T&N's asbestos liability. Such matters are discussed under the captions "Risk
Factors," "T&N and Fel-Pro Acquisitions," "Business," "Summary Unaudited Pro
Forma Financial Information," "Unaudited Pro Forma Financial Data" and
elsewhere in this Prospectus Supplement, the accompanying Prospectus or in the
information incorporated by reference herein or therein.

Forward-looking statements may involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Federal-Mogul to differ materially from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such risks, uncertainties and other factors
include, without limitation, those relating to the combination of Federal-
Mogul's business with those of T&N and Fel-Pro and the anticipated synergies
and operating efficiencies and restructuring charges in connection therewith,
conditions in the automotive components industry, certain global and regional
economic conditions and other factors detailed herein and from time to time in
the documents incorporated by reference herein. Moreover, Federal-Mogul's
plans, objectives and intentions are subject to change based on these and
other factors (some of which are beyond Federal-Mogul's control). Some of the
factors that may cause such material differences are set forth herein under
the caption "Risk Factors."

S-16
<PAGE>

USE OF PROCEEDS

The net proceeds to Federal-Mogul from the sale of the Notes offered hereby
are estimated to be $982.7 million, after deducting the estimated underwriting
discounts and offering expenses, estimated at $17.3 million.

Federal-Mogul intends (i) to apply net proceeds of the Offering to prepay
the entire outstanding $830.7 million principal amount of the Interim Loans
(as hereinafter defined), and (ii) to apply any remaining balance of the net
proceeds to repay ratably the Tranche A Loans (as hereinafter defined) and the
Tranche B Loans (as hereinafter defined) (though lenders under the Tranche B
Loans may elect not to be repaid, in which case funds which would have been
used for such repayment shall be applied to repayment of the Tranche A Loans).
The Interim Loans, Tranche A Loans and Tranche B Loans bear interest at a
floating rate based upon, at Federal-Mogul's option, either (i) the higher of
the prime rate of The Chase Manhattan Bank ("Chase") and 0.5% in excess of the
overnight federal funds rate, plus (in each case) a margin of 1.0% for the
Interim Loans and Tranche A Loans and 1.25% for Tranche B Loans, or (ii) the
average of the offering rates of banks in the London interbank eurodollar
market for U.S. dollar deposits plus a margin of 2.0% for the Interim Loans
and Tranche A Loans and 2.25% for Tranche B Loans. After repayment of the
Interim Loans the applicable margins will depend upon Federal-Mogul's
consolidated leverage ratio. The Interim Loans are scheduled to mature on
September 12, 1999, the Tranche A Loans have a final maturity of December 31,
2003 and the Tranche B Loans have a final maturity of December 31, 2005.
Amounts borrowed under the Interim Loans, the Tranche A Loans and the Tranche
B Loans were used as part of the financing of the acquisition of T&N and the
refinancing of the acquisition of Fel-Pro. See "T&N and Fel-Pro Acquisitions--
Financing of the Acquisitions" and "Description of Certain Indebtedness."

EXCHANGE RATES

The following table sets forth, for the periods and dates indicated, certain
information concerning the noon buying rate in New York City for cable
transfers in pounds sterling, as certified for customs purposes by the Federal
Reserve Bank of New York (the "Noon Buying Rate") for pounds sterling
expressed in U.S. dollars per (Pounds)1.00. On May 12, 1998, the Noon Buying
Rate was (Pounds)1.00=$1.6347.

<TABLE>
<CAPTION>
CALENDAR PERIOD HIGH LOW AVERAGE(1) PERIOD END
- --------------- ----- ----- ---------- ----------
<S> <C> <C> <C> <C>
1998, through May 12.......................... $1.69 $1.61 $1.66 $1.63
1997.......................................... $1.71 $1.49 $1.60 $1.64
1996.......................................... $1.62 $1.50 $1.57 $1.53
1995.......................................... $1.64 $1.46 $1.57 $1.62
1994.......................................... $1.59 $1.46 $1.50 $1.49
1993.......................................... $2.00 $1.42 $1.68 $1.51
</TABLE>
- --------
(1)The average of the Noon Buying Rates on the last business day of each month
during the relevant period.

JUNE 1998 COMMON STOCK OFFERING

On June 10, 1998, Federal-Mogul completed the sale of 10,537,093 shares of
its Common Stock in an underwritten public offering (including 825,000 shares
that were sold upon exercise of an over-allotment option that had been granted
to the underwriters of that offering). Net proceeds to Federal-Mogul from the
offering were used to prepay the entire outstanding $500 million principal
amount of the Senior Subordinated Loans (as hereinafter defined) and to reduce
the outstanding balance of the Interim Loans by $92.3 million. See
"Description of Certain Indebtedness." As a result of these repayments,
Federal-Mogul will recognize an extraordinary loss (net of tax) of
approximately $5.4 million from the early extinguishment of debt. Certain
holders of Federal-Mogul Series E Mandatory Exchangeable Preferred Stock
converted 422,581.4 shares of such stock into 2,112,907 shares of Federal-
Mogul Common Stock and sold such shares in a secondary offering (including the
related over-allotment option) conducted concurrently with Federal-Mogul's
primary offering of Common Stock; Federal-Mogul did not receive any proceeds
from the sale of such shares.

S-17
<PAGE>

T&N AND FEL-PRO ACQUISITIONS

As part of its strategy to expand its core competencies in manufacturing and
distribution, Federal-Mogul acquired T&N and Fel-Pro, two other significant
automotive parts manufacturers and distributors, in March and February 1998,
respectively.

THE T&N ACQUISITION

On March 6, 1998, Federal-Mogul acquired T&N for total consideration of
approximately (Pounds)1.46 billion ($2.42 billion, converted at a blended
exchange rate of 1 pound sterling to 1.6510 U.S. dollars). T&N, headquartered
in Manchester, England, manufactures and supplies high technology engineered
automotive components and industrial materials. In 1997, T&N had sales of
approximately (Pounds)1.80 billion ($2.96 billion) with about 80% of such
sales relating to the world automotive industry. At the time of its
acquisition, T&N's major product lines consisted of piston products, bearings,
friction products, composites and camshafts (incorporating sintered products)
and sealing products and it was active in both the original equipment and the
aftermarket markets. T&N operated in approximately 200 locations in 24
countries, employed over 28,000 people worldwide and served customers in more
than 150 countries. T&N's assets included technical centers in the U.K. and
Germany and North America.

In connection with securing regulatory approvals for the acquisition of T&N,
Federal-Mogul agreed with the FTC to divest the T&N Bearings Business. See
"Business--Reorganization" and "Unaudited Pro Forma Financial Data." The T&N
Bearings Business accounted for approximately $393.1 million of T&N's 1997
revenues and employed approximately 4,000 people.

THE FEL-PRO ACQUISITION

On February 24, 1998, Federal-Mogul acquired Fel-Pro, a group of privately-
owned automotive parts manufacturers headquartered in Skokie, Illinois. The
total consideration paid for Fel-Pro was approximately $717 million, which
included 1,030,325.6 shares of Federal-Mogul Series E Mandatory Exchangeable
Preferred Stock with an imputed value of $225 million and approximately $492
million in cash.

Fel-Pro is a leading gaskets manufacturer for the North American aftermarket
and OE heavy duty market. In 1997, Fel-Pro had sales of approximately $500
million. At the time of its acquisition, Fel-Pro's primary product lines
consisted of gaskets, heavy duty diesel engine products, diesel products, high
performance gaskets and other equipment and chemical products. Fel-Pro's
gasket sales for 1997 were approximately $350 million and included a full
range of automotive, heavy duty, marine and performance gaskets. Fel-Pro had
more than 2,700 employees in 16 locations. Its gasket facilities are located
in Illinois, Michigan, Canada and Mexico. Federal-Mogul is in the process of
reselling Fel-Pro's chemical manufacturing operations (representing
approximately $32.8 million of Fel-Pro's 1997 net sales and $2.6 million of
Fel-Pro's 1997 net income). Excluding intercompany items, net assets of Fel-
Pro Chemical were $12.2 million as of December 31, 1997.

STRATEGIC RATIONALE FOR THE ACQUISITIONS

The principal benefits to Federal-Mogul from the acquisitions of T&N and
Fel-Pro are as follows:

. Establishing Federal-Mogul as a highly competitive first tier worldwide
automotive supplier.

. Expanding Federal-Mogul's manufactured product portfolio to offer
complete systems and modules.

. Enhancing Federal-Mogul's position as a global supplier of engine and
transmission parts.

. Reinforcing Federal-Mogul's ability to provide high quality service to
both its original equipment and aftermarket customers.

. Extending Federal-Mogul's international presence and accelerating its
worldwide aftermarket growth.

S-18
<PAGE>

Federal-Mogul expects significant synergies and operating efficiencies to be
achieved as a result of the acquisitions of T&N and Fel-Pro. Federal-Mogul has
announced that it intends, in connection with its targeted synergies, to incur
restructuring charges and related costs of $205 million, which is moderately
less than the annual level of synergy benefits anticipated in the year 2000.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations."

FINANCING OF THE ACQUISITIONS

The acquisition of T&N was funded primarily through a $2.75 billion floating
rate Senior Credit Agreement (consisting of a $2.35 billion term loan facility
and a $400 million revolving loan facility) and a $500 million floating rate
Senior Subordinated Credit Agreement (as hereinafter defined). The senior term
loan facility was reduced to $2.275 billion effective as of March 11, 1998.
The entire amount of the senior term loan facility, as well as the entire
amount of the senior subordinated credit facility, have been drawn down. These
credit facilities also refinanced Federal-Mogul's $350 million indebtedness
under a revolving credit facility (which had been used to finance the
acquisition of Fel-Pro) and $150 million of other indebtedness incurred in the
acquisition of Fel-Pro. The net proceeds to Federal-Mogul from the Common
Stock offering were used to prepay the entire outstanding principal amount of
the Senior Subordinated Loans ($500 million) and $92.3 million of the Interim
Loans (the outstanding principal balance of which is $830.7 million at June
11, 1998). The proceeds of the Offering will be used to repay the balance of
the Interim Loans and other loans incurred under the Senior Credit Agreement.
See "Use of Proceeds" and "Description of Certain Indebtedness."

Additional funds for the acquisition of T&N were obtained through the sale
in December 1997 of 11,500,000 7% Trust Convertible Preferred Securities
(generating gross proceeds of $575 million) by Federal-Mogul Financing Trust,
a subsidiary of Federal-Mogul which invested the net proceeds of that offering
in 7% Convertible Junior Subordinated Debentures of Federal-Mogul. See
"Description of Capital Stock--Trust Preferred Securities." Federal-Mogul also
issued 1,030,325.6 shares of Series E Mandatory Exchangeable Preferred Stock,
with an imputed value of $225 million, as partial consideration for the
acquisition of Fel-Pro.

S-19
<PAGE>

CAPITALIZATION

The following table sets forth the consolidated capitalization of Federal-
Mogul at March 31, 1998, and as adjusted to reflect (i) the Common Stock
offering and; (ii) the Offering of Notes by Federal-Mogul and, in both cases,
the application of the net proceeds thereof to repay indebtedness.

<TABLE>
<CAPTION>
MARCH 31, 1998
---------------------------------------
AS ADJUSTED AS ADJUSTED
FOR COMMON STOCK FOR OFFERING
ACTUAL OFFERING(1) OF NOTES(2)
-------- ---------------- ------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Short-term debt:
Subordinated notes................... $ 500.0 $ -- $ --
Other short-term debt(3)............. 337.8 337.8 337.8
-------- -------- --------
Total short-term debt.............. 837.8 337.8 337.8
-------- -------- --------
Long-term debt:
Revolving credit facility............ $ 55.0 $ 55.0 $ 55.0
Medium-term notes.................... 125.0 125.0 125.0
Senior notes......................... 125.0 125.0 125.0
ESOP obligation...................... 15.2 15.2 15.2
Senior loans......................... 1,879.7 1,787.4 804.7
. Notes............................. -- -- .
. Notes............................. -- -- .
. Notes............................. -- -- .
Other................................ 73.8 73.8 73.8
-------- -------- --------
Total long-term debt(4)............ 2,273.7 2,181.4 2,198.7
Minority interest-preferred securities
of affiliate(5)....................... 575.0 575.0 575.0
Shareholders' equity:
Series C ESOP Convertible Preferred
Stock............................... 48.1 48.1 48.1
Series E Mandatory Exchangeable
Preferred Stock..................... 225.0 146.4 146.4
Common Stock......................... 202.4 202.5 202.5
Additional paid-in capital........... 327.3 998.1 998.1
Accumulated deficit(6)(7)(8)......... (130.8) (130.8) (130.8)
Unearned ESOP compensation........... (21.7) (21.7) (21.7)
Accumulated other comprehensive
income.............................. (61.5) (61.5) (61.5)
Other................................ (2.8) (2.8) (2.8)
-------- -------- --------
Total shareholders' equity......... 586.0 1,178.3 1,178.3
-------- -------- --------
Total capitalization................... $4,272.5 $4,272.5 $4,289.8
======== ======== ========
</TABLE>
- --------
(1) To reflect the consolidated capitalization as adjusted for the Common
Stock offering and the application of the net proceeds therefrom.
(2) To reflect the consolidated capitalization as adjusted for the Common
Stock offering and the Offering of Notes and, in both cases, the
application of the net proceeds therefrom to repay indebtedness.
(3) Other short-term debt includes current maturities of long-term debt.
(4) Less current maturities included in short-term debt.
(5) This consists of Federal-Mogul-obligated 7% Trust Convertible Preferred
Securities of Federal-Mogul Financing Trust. Substantially all of the
assets of Federal-Mogul Financing Trust consist of the 7% Convertible
Junior Subordinated Debentures of Federal-Mogul.
(6) Does not include an extraordinary loss (net of tax) of approximately $19
million resulting from a contractual penalty incurred in April 1998 in
connection with the prepayment of T&N private placement debt.
(7) Excludes the extraordinary loss (net of tax) from the early retirement of
debt of approximately $5.4 million resulting from the use of proceeds of
the Common Stock offering.
(8) Excludes the extraordinary loss (net of tax) from the early retirement of
debt of approximately $7.7 million resulting from the use of proceeds of
the Offering.

S-20
<PAGE>

UNAUDITED PRO FORMA FINANCIAL DATA

Federal-Mogul completed its cash offer to acquire T&N on March 6, 1998. The
acquisition has been accounted for using the purchase method of accounting.
The total consideration paid of approximately (Pounds)1.46 billion ($2.42
billion, converted at a blended exchange rate of 1 pound sterling to 1.6510
U.S. dollars) was funded primarily through a $2.75 billion floating rate
Senior Credit Agreement (consisting of a $2.35 billion (reduced to $2.275
billion effective as of March 11, 1998) term loan facility, $1.8 billion of
which was drawn down, and a $400 million revolving loan facility) and a $500
million floating rate Senior Subordinated Credit Agreement (the full amount of
which was drawn down), each from a syndicate led by Chase. These credit
facilities also refinanced the borrowings used to finance the cash portion of
the purchase price for Fel-Pro. Additional funds for the acquisition of T&N
were obtained through the December 1997 sale of 7% Trust Convertible Preferred
Securities (generating gross proceeds of $575 million) by Federal-Mogul
Financing Trust, a subsidiary of the Company. Subsequent to the dates in
respect of which the data below are given, on June 10, 1998, Federal-Mogul
completed the sale of 10,537,093 shares of its Common Stock in an underwritten
public offering. Net proceeds to Federal-Mogul from that offering, after
deducting estimated underwriting discounts and offering expenses, were
approximately $592.3 million. See "June 1998 Common Stock Offering."

Federal-Mogul completed the acquisition of Fel-Pro, for approximately $717
million, on February 24, 1998. The acquisition has been accounted for using
the purchase method of accounting. The purchase price consists of 1,030,325.6
shares of newly issued Series E Stock (exchangeable into 5,151,628 shares of
Common Stock) with an imputed value of $225 million and $492 million in cash.
The cash was provided through an existing revolving credit facility provided
by a syndicate led by Chase and three short-term loans, each in the amount of
$50 million, from Chase, ABN Amro Bank NV and First Chicago NBD Bank,
respectively.

The estimated cost of the acquisitions of Fel-Pro and T&N are computed as
follows:

<TABLE>
<CAPTION>
FEL-
PRO T&N
------ --------
(DOLLARS
IN MILLIONS)
<S> <C> <C> <C>
Cash................................................. $491.8 $2,434.2
Series E Mandatory Exchangeable Preferred Stock...... 225.0 --
Expected proceeds from exercisable options........... -- (52.6)
Direct transaction costs............................. .9 29.3
------ --------
Estimated acquisition cost........................... $717.7 $2,410.9
====== ========
</TABLE>

The pro forma preliminary allocations of the purchase price of the
acquisitions of Fel-Pro and T&N are expected to be as follows:

<TABLE>
<CAPTION>
FEL-
PRO T&N
------ --------
(DOLLARS
IN MILLIONS)
<S> <C> <C> <C>
Current assets..................................... $173.1 $1,087.6
Liabilities assumed(1)............................. (133.1) (3,143.9)
Property, plant and equipment...................... 110.2 1,055.4
Identifiable intangible assets..................... 16.7 315.7
Other noncurrent assets............................ 31.4 525.9
Purchased research and development................. -- 18.6
Goodwill........................................... 519.4 1,990.7
Estimated fair value of T&N Bearings Business (see
below)............................................ -- 560.9
------ --------
Total.......................................... $717.7 $2,410.9
====== ========
</TABLE>
- --------
(1) Includes an increase of $329 million to adjust the acquired asbestos
liability to estimated fair value and an increase of $124 million to
adjust the acquired income tax liability in relation to the anticipated
gain on the sale of the T&N Bearings Business.

S-21
<PAGE>

Federal-Mogul has separately identified the estimated effect of the
divestiture of the T&N Bearings Business in the unaudited pro forma statement
of operations and balance sheet. The estimated net cash flows from operations
of the T&N Bearings Business from March 6, 1998 to the date of sale, the
interest expense on debt incurred during this period and the proceeds from the
sale will be accounted for as adjustments to the purchase price of T&N.
Proceeds are estimated to be between $500 and $650 million, calculated using
multiples of earnings similar to recent automotive industry transactions. An
amount within the low end of this range has been used in the pro forma
financial information. There can be no assurance that the actual proceeds
received from the disposition will fall within the estimated range.

The unaudited pro forma statement of operations for the year ended December
31, 1997, has been prepared to illustrate the effect of the acquisitions of
T&N and Fel-Pro as if they had occurred on January 1, 1997. The unaudited pro
forma statement of operations includes only the results of ongoing operations
and excludes such impacts as extraordinary items, items relating to the
acquisitions and synergies and expected cost savings associated with the
integration of the acquisitions. The unaudited pro forma balance sheet as of
December 31, 1997, has been prepared to illustrate the effect of the
acquisitions of T&N and Fel-Pro as if they had occurred on that date. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Overview."

The unaudited pro forma financial information gives effect to the
acquisition transactions using the purchase method of accounting. The pro
forma adjustments are described in the accompanying notes to the unaudited pro
forma financial information and are based upon preliminary available
information and upon certain assumptions made by management of Federal-Mogul.
Accordingly, the pro forma adjustments reflected in the unaudited pro forma
financial information are preliminary and subject to revision. Such revision
could be material.

The unaudited pro forma financial information is presented for illustrative
purposes only and is not necessarily indicative of the financial position or
results of operations which may occur in the future or that would have
occurred had the acquisitions of T&N and Fel-Pro been consummated on the dates
indicated, nor are they necessarily indicative of Federal-Mogul's future
results of operations or financial position. The unaudited pro forma financial
information should be read in conjunction with the audited consolidated
financial statements of Federal-Mogul, as well as the audited financial
statements of the acquired companies.

S-22
<PAGE>

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

(YEAR ENDED DECEMBER 31, 1997)

<TABLE>
<CAPTION>
FEDERAL- DISPOSITION OF T&N FEL-PRO
MOGUL T&N FEL-PRO T&N BEARINGS PRO FORMA PRO FORMA PRO FORMA
HISTORICAL HISTORICAL HISTORICAL BUSINESS ADJUSTMENTS ADJUSTMENTS COMBINED
---------- ---------- ---------- -------------- ----------- ----------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Sales................... $1,806.6 $2,948.4 $489.3 $(393.1)(a) $ (15.3)(b) $(11.9)(i) $4,824.0
Cost of products sold... 1,381.8 2,187.6 268.5 (295.4)(a) (0.9)(c) (6.9)(j) 3,534.7
-------- -------- ------ ------- ------- ------ --------
Gross margin............ 424.8 760.8 220.8 (97.7) (14.4) (5.0) 1,289.3
Selling general and
administrative
expenses............... 286.2 500.3 173.8 (46.1)(a) 58.9 (d) 13.0 (k) 986.1
Restructuring charges
(credits).............. (1.1) -- -- -- -- -- (1.1)
Reengineering and other
related charges
(benefits)............. (1.6) -- -- -- -- -- (1.6)
Adjustment of assets
held for sale to fair
value.................. 2.4 -- -- -- -- -- 2.4
Interest expense........ 32.0 60.5 -- (16.9)(a) 148.5 (e) 38.2 (l) 262.3
Interest income......... (7.1) (17.9) -- 2.3 (a) 13.7 (f) -- (9.0)
International currency
exchange losses........ 0.6 4.4 -- (0.3)(a) -- -- 4.7
British pound currency
option, net............ 10.5 -- -- -- -- -- 10.5
Gain on sale of
Kolbenschmidt AG share
purchase options....... -- (21.7) -- -- -- -- (21.7)
Other (income) expense,
net.................... 3.4 (14.5) -- (1.3)(a) 36.9 (g) -- 24.5
-------- -------- ------ ------- ------- ------ --------
Earnings before income
taxes, extraordinary
item and nonrecurring
charges.............. 99.5 249.7 47.0 (35.4) (272.4) (56.2) 32.2
Income tax expense
(benefit).............. 27.5 159.3 25.5 (9.4)(a) (85.2)(h) (24.2)(m) 93.5
-------- -------- ------ ------- ------- ------ --------
Net earnings (loss)
before extraordinary
item and nonrecurring
charges.............. $ 72.0 $ 90.4 $ 21.5 $ (26.0) $(187.2) $(32.0) $ (61.3)
======== ======== ====== ======= ======= ====== ========
Earnings (loss) per com-
mon share:
Basic................. $ 1.81 $ (2.16)
Diluted............... $ 1.67 $ (2.16)
Weighted average shares
outstanding (thou-
sands):
Basic................. 36,647 36,647
======== ========
Diluted............... 41,854 36,647
======== ========
</TABLE>

NOTES TO THE UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
(DOLLARS IN MILLIONS UNLESS OTHERWISE NOTED)

RELATING TO THE DIVESTITURE OF THE T&N BEARINGS BUSINESS:

(a) To eliminate the historical statement of operations of the T&N Bearings
Business.

RELATING TO THE PURCHASE OF T&N:

(b) To eliminate intercompany sales between Federal-Mogul and T&N.

<TABLE>
<S> <C>
Increase in depreciation expense relating to the adjustment of
property, plant and equipment acquired to estimated fair value
(to be depreciated over an average period of 14 years)........... $ 5.4
Elimination of intercompany cost of products sold between Federal-
Mogul and T&N.................................................... (15.3)
Elimination of profit in ending inventory on intercompany sales
between Federal-Mogul and T&N.................................... 0.8
Increase in pension expense--elimination of amortization of de-
ferred gain...................................................... 8.7
Decrease in postretirement benefits expense--elimination of
amortization of deferred loss.................................... (0.5)
-----
$(0.9)
=====
</TABLE>

S-23
<PAGE>

(d) To reflect the net effect of the following adjustments:

<TABLE>
<S> <C>
Amortization of additional goodwill resulting from the purchase
of T&N (to be amortized over a period of 40 years)............. $ 43.0
Amortization of other identifiable intangible assets acquired to
estimated fair value (to be amortized over periods from 10 to
24 years)...................................................... 15.9
-------
$ 58.9
=======

(e) To reflect the net effect of the following adjustments:

Increase in interest expense relating to the net debt incurred
for the net purchase of T&N (see unaudited pro forma balance
sheet footnote 1).............................................. $ 148.2
Reduction in historical interest expense of T&N relating to the
elimination of historical outstanding debt..................... (23.4)
Amortization of debt issuance costs (to be amortized over a
period of 12 to 96 months)..................................... 23.7
-------
$ 148.5
=======

(f) To reflect the net effect of the following adjustments:

Reduction in interest income as a result of the use of existing
cash balances of Federal-Mogul to finance a portion of the T&N
transaction.................................................... $ 2.2
Reduction in interest income as a result of the use of existing
cash balances of T&N........................................... 11.5
-------
$ 13.7
=======

(g) To record an additional eleven months of minority interest-preferred
securities of affiliates expense.

(h) To record the income tax effects of the statement of operations adjustments.

RELATING TO THE PURCHASE OF FEL-PRO:

(i) To eliminate intercompany sales between Federal-Mogul and Fel-Pro

(j) To reflect the net effect of the following adjustments:

Increase in depreciation expense relating to the adjustment of
property, plant and equipment acquired to estimated fair value
(to be depreciated over an average period of 10 years)......... $ 3.0
Elimination of intercompany cost of products sold between
Federal-Mogul and Fel-Pro...................................... (11.9)
Elimination of profit in ending inventory on intercompany sales
between Federal-Mogul and
Fel-Pro........................................................ 0.6
Increase in postretirement benefits expense--elimination of
amortization of deferred loss.................................. 1.4
-------
$ (6.9)
=======

(k) To record the amortization of goodwill resulting from the purchase of Fel-
Pro (to be amortized over a period of 40 years)

(l) To record interest expense relating to the debt incurred for the purchase of
Fel-Pro

(m) To record the income tax effects of the statement of operations adjustments

The unaudited pro forma statement of operations discloses the income (loss)
from continuing operations before nonrecurring charges directly attributable to
the transactions. The following nonrecurring charges were not considered in the
unaudited pro forma statement of operations:
Penalty for early retirement of private placement debt of T&N. $ 25.0
Estimated purchased research and development costs............ 18.6
Adjustment of inventory to estimated fair value............... 11.0
-------
$ 54.6
=======

Loss per share as calculated for the pro forma combined entity:

Net earnings before extraordinary item and non-recurring
charges...................................................... $ (61.3)
Less: Series C preferred dividend requirement................. (2.4)
Less: Series D preferred dividend requirement................. (3.1)
Less: Series E preferred dividend requirement................. (12.3)
-------
Net earnings available to common shareholders before
extraordinary item and non-recurring charges................... $ (79.1)
=======
Weighted average common shares outstanding...................... 36,647
=======
Loss per share--basic and diluted............................... $ (2.16)
=======
</TABLE>

S-24
<PAGE>

UNAUDITED PRO FORMA BALANCE SHEET

(DECEMBER 31, 1997)

<TABLE>
<CAPTION>
DISPOSITION
FEDERAL- OF T&N FEL-PRO
MOGUL T&N FEL-PRO T&N BEARINGS PRO FORMA PRO FORMA PRO FORMA
HISTORICAL HISTORICAL HISTORICAL BUSINESS ADJUSTMENTS ADJUSTMENTS COMBINED
---------- ---------- ---------- ------------ ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and equivalents.... $ 541.4 $ 319.2 $ -- $ (38.0)(28) $ (765.3)(1) $ (0.9)(15) $ 56.4
Accounts receivable..... 158.9 458.8 83.4 (49.4)(28) (2.6)(2) (4.2)(16) 645.0
Investment in accounts
receivable
securitization......... 48.7 -- -- -- -- -- 48.7
Inventories............. 277.0 365.1 61.0 (42.3)(28) 10.2 (3) 23.4 (17) 694.4
Prepaid expenses and
income tax benefits.... 113.2 58.2 4.7 (5.8)(28) 10.7 (4) 2.2 (18) 183.1
-------- -------- ------ -------- -------- ------ --------
Total current
assets............. 1,139.2 1,201.3 149.1 (135.5) (747.0) 20.5 1,627.6
Property, plant and
equipment.............. 313.9 1,089.5 80.6 (109.4)(28) 75.4 (5) 29.6 (19) 1,479.6
Goodwill................ 143.8 342.2 -- (66.8)(28) 1,715.0 (6) 519.4 (20) 2,653.6
Other intangible assets. 48.4 17.9 16.7 -- 297.8 (7) -- 380.8
Business investments and
other assets........... 156.8 469.2 23.7 (74.9)(28) 161.5 (8) 7.7 (21) 744.0
-------- -------- ------ -------- -------- ------ --------
Total assets........ $1,802.1 $3,120.1 $270.1 $ (386.6) $1,502.7 $577.2 $6,885.6
======== ======== ====== ======== ======== ====== ========
Short-term debt......... $ 28.6 $ 125.4 $ -- $ (0.5)(28) $ -- $ -- $ 153.5
Accounts payable........ 102.3 326.3 22.7 (38.5)(28) (2.6)(2) (2.0)(22) 408.2
Accrued compensation.... 36.8 57.6 24.1 (10.9)(28) -- -- 107.6
Accrued customer
incentives............. 22.4 -- 10.5 -- -- -- 32.9
Restructuring reserves.. 31.5 -- -- -- 150.0 (9) 15.0 (23) 196.5
Current portion of
asbestos liability..... -- 101.3 -- -- -- -- 101.3
Other accrued
liabilities............ 108.0 305.3 19.4 (22.0)(28) -- -- 410.7
-------- -------- ------ -------- -------- ------ --------
Total current
liabilities........ 329.6 915.9 76.7 (71.9) 147.4 13.0 1,410.7
Long-term debt.......... 273.1 469.5 -- (2.1)(28) 1,220.4 (1) 491.8 (15) 2,452.7
Postemployment benefits. 190.9 223.7 46.8 (12.3)(28) 6.4 (10) (18.0)(24) 437.5
Noncurrent portion of
asbestos liability..... -- 948.7 -- 329.0 (11) -- 1,277.7
Other accrued
liabilities............ 64.2 53.8 6.6 (43.5)(28) 53.7 (12) 6.0 (25) 140.8
-------- -------- ------ -------- -------- ------ --------
Total liabilities... 857.8 2,611.6 130.1 (129.8) 1,756.9 492.8 5,719.4
Minority interest-
preferred securities of
affiliates............. 575.0 -- -- -- -- -- 575.0
Minority interest,
other.................. -- 42.0 -- -- -- -- 42.0
Series C ESOP preferred
stock.................. 49.0 -- -- -- -- -- 49.0
Series E preferred
stock.................. -- -- -- 225.0 (26) 225.0
Common stock............ 201.0 361.1 -- -- (361.1)(13) -- 201.0
Additional paid-in
capital................ 332.6 4.4 -- -- (4.4)(13) -- 332.6
Retained earnings
(Accumulated deficit),
currency translation
and other.............. (191.5) 101.0 140.0 (256.8)(28) 111.3 (14) (140.6)(27) (236.6)
Unearned ESOP
compensation........... (21.8) -- -- -- -- -- (21.8)
-------- -------- ------ -------- -------- ------ --------
Total equity........ 369.3 466.5 140.0 (256.8) (254.2) 84.4 549.2
-------- -------- ------ -------- -------- ------ --------
$1,802.1 $3,120.1 $270.1 $ (386.6) $1,502.7 $577.2 $6,885.6
======== ======== ====== ======== ======== ====== ========
</TABLE>

See accompanying notes to Unaudited Pro Forma Balance Sheet.

S-25
<PAGE>

NOTES TO THE UNAUDITED PRO FORMA BALANCE SHEET
(DOLLARS IN MILLIONS UNLESS OTHERWISE NOTED)

RELATING TO THE PURCHASE OF T&N:

(1) To reflect the net effect of the following adjustments:
<TABLE>
<CAPTION>
CASH DEBT
-------- --------
<S> <C> <C>
Proceeds from the issuance of debt................... $2,300.0 $2,300.0
Acquisition of T&N shares............................ (2,434.2) --
Payoff of existing T&N debt.......................... (469.5) (469.5)
Cash used from T&N asbestos fund to pay down debt.... (130.0) (130.0)
Proceeds from the exercise of T&N stock options at
close............................................... 52.6 --
Estimated proceeds from sale of the T&N Bearings
Business............................................ 560.9 --
Pay down debt and other liabilities using proceeds
from sale of the T&N Bearings Business.............. (560.9) (436.6)
Proceeds from sale of Kolbenschmidt AG share purchase
options............................................. 43.5 --
Pay down debt using proceeds from sale of
Kolbenschmidt AG share purchase options............. (43.5) (43.5)
Debt issuance costs.................................. (32.2)
Other fees........................................... (27.0)
Penalty for early retirement of private placement
debt of T&N......................................... (25.0)
-------- --------
$ (765.3) $1,220.4
======== ========
</TABLE>

(2) To eliminate intercompany accounts receivable and accounts payable
between Federal-Mogul and T&N

(3) To reflect the net effect of the following adjustments:
<TABLE>
<S> <C>
Adjustment of inventories acquired to estimated fair value......... $11.0
Elimination of intercompany profit in ending inventory............. (0.8)
-----
$10.2
=====
</TABLE>

(4) To record the current deferred income tax effects of the balance sheet
adjustments

(5) To adjust property, plant and equipment acquired to estimated fair value

(6) To record estimated acquired goodwill as the excess of the preliminary
purchase price paid and estimated costs incurred relating to the
acquisition over the estimated fair value of identifiable net assets
acquired

(7) To adjust other identifiable intangible assets acquired to estimated fair
value

(8) To reflect the net effect of the following adjustments:
<TABLE>
<S> <C>
Adjustment of pension assets acquired to estimated fair value.... $131.6
Debt issuance costs.............................................. 32.2
Other............................................................ (2.3)
------
$161.5
======
</TABLE>

(9) To provide for estimated severance and exit costs relating to T&N

(10) To adjust postemployment benefit liabilities acquired to estimated fair
value

(11) To record estimated fair value of the acquired asbestos liability

(12) To reflect the net effect of the following adjustments:
<TABLE>
<S> <C>
Estimated fair value of reserves for returns, allowances and
environmental..................................................... $41.3
Adjustment of the noncurrent deferred income tax asset for pro
forma balance sheet adjustments................................... 12.4
-----
$53.7
=====
</TABLE>

(13) To eliminate the historical common stock and additional paid in capital
of T&N

(14) To reflect the net effect of the following adjustments:
<TABLE>
<S> <C>
Elimination of historical retained earnings of T&N, net of the
T&N Bearings Business........................................... $155.6
Penalty for early retirement of private placement debt of T&N.... (25.0)
Estimated purchased research and development costs............... (18.6)
Elimination of the profit in ending inventory on intercompany
sales between Federal-Mogul and T&N............................. (0.7)
------
$111.3
======
</TABLE>

S-26
<PAGE>

RELATING TO THE PURCHASE OF FEL-PRO:

(15) To reflect the net effect of the following adjustments:
<TABLE>
<CAPTION>
CASH DEBT
------ ------
<S> <C> <C>
Proceeds from the issuance of debt........................ $491.8 $491.8
Acquisition of Fel-Pro.................................... (491.8) --
Other fees................................................ (.9) --
------ ------
$ (.9) $491.8
====== ======
</TABLE>

(16) To reflect the net effect of the following adjustments:
<TABLE>
<S> <C>
Elimination of intercompany accounts receivable.................... $(2.0)
Increase in allowance for doubtful accounts........................ (2.2)
-----
$(4.2)
=====
</TABLE>

(17) To reflect the net effect of the following adjustments:
<TABLE>
<S> <C>
Adjustment of inventories acquired to estimated fair value......... $24.0
Elimination of intercompany profit in ending inventory............. (0.6)
-----
$23.4
=====
</TABLE>

(18) To record the current deferred income tax effects of the balance sheet
adjustments

(19) To adjust property, plant and equipment acquired to estimated fair value

(20) To record estimated acquired goodwill as the excess of the preliminary
purchase price paid and estimated costs incurred relating to the
acquisition over the estimated fair value of identifiable net assets
acquired

(21) To record the noncurrent deferred income tax effects of the balance sheet
adjustments

(22) To eliminate intercompany accounts payable between Federal-Mogul and Fel-
Pro

(23) To provide for estimated severance and exit costs relating to Fel-Pro

(24) To adjust postemployment benefits acquired to estimated fair value

(25) To record the estimated fair value reserves for returns, allowances and
environmental

(26) To record the issuance of Series E Mandatory Exchangeable Preferred
Stock, exchangeable into Common Stock, to the former owners of Fel-Pro

(27) To reflect the net effect of the following adjustments:
<TABLE>
<S> <C>
Elimination of the historical equity of Fel-Pro................. $(140.0)
Elimination of intercompany profit in ending inventory.......... (.6)
-------
$(140.6)
=======
</TABLE>

RELATING TO THE DIVESTITURE OF THE T&N BEARINGS BUSINESS:

(28) To eliminate the historical balance sheet of the T&N Bearings Business.
The estimated effects of the sale of the T&N Bearings Business are
located in the T&N pro forma adjustments.

S-27
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA--FEDERAL-MOGUL

The following selected historical consolidated financial information of
Federal-Mogul with respect to each year in the three-year period ended
December 31, 1997 is derived from the Federal-Mogul Audited Financial
Statements. Such consolidated financial statements have been audited by Ernst
& Young LLP, independent certified public accountants. The unaudited financial
information for the three-month periods ended March 31, 1998 and 1997 have
been derived from the Federal-Mogul Unaudited Financial Statements. The
Federal-Mogul Unaudited Financial Statements are unaudited, but in the opinion
of management, reflect all adjustments necessary for a fair presentation of
such information. The selected consolidated financial information provided
below should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Federal-Mogul" and the
consolidated financial statements of Federal-Mogul and the notes thereto
included elsewhere in this Prospectus Supplement. Subsequent to the dates in
respect of which the data below are given, on June 10, 1998, Federal-Mogul
completed the sale of 10,537,093 shares of its Common Stock in an underwritten
public offering. Net proceeds to Federal-Mogul from that offering, after
deducting estimated underwriting discounts and offering expenses, were
approximately $592.3 million. See "June 1998 Common Stock Offering."
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
YEAR ENDED DECEMBER 31, (UNAUDITED)
---------------------------- -------------------
1997 1996 1995 1998(1) 1997
-------- -------- -------- --------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Net sales............... $1,806.6 $2,032.7 $1,999.8 $ 658.0 $ 485.6
Costs of products sold.. 1,381.8 1,660.5 1,602.2 496.7 373.5
-------- -------- -------- --------- --------
Gross margin............ 424.8 372.2 397.6 161.3 112.1
Selling, general and
administrative
expenses............... (286.2) (333.8) (299.3) (108.2) (78.4)
Purchased in-process
research and
development charge..... -- -- -- (18.6) --
Gain on sales of
businesses............. -- -- 24.0 -- --
Restructuring (charges)
credits................ 1.1 (57.6) (26.9) (10.5) --
Reengineering and other
related (charges)
credits................ 1.6 (11.4) (13.9) -- --
Adjustment of assets
held for sale to fair
value and
other long lived
assets................. (2.4) (151.3) (51.8) (20.0) --
Interest expense........ (32.0) (42.6) (37.3) (15.5) (9.8)
Interest income......... 7.1 2.9 9.6 6.7 0.7
International currency
exchange losses........ (0.6) (3.7) (2.9) (1.1) (0.1)
British pound currency
option and foreign
contract, net.......... (10.5) -- -- 13.3 --
Other expense, net...... (3.4) (3.4) (2.4) (5.8) (2.0)
-------- -------- -------- --------- --------
Earnings (Loss)
before income taxes
and extraordinary
item................ 99.5 (228.7) (3.3) 1.6 22.5
Income tax expense
(benefit).............. 27.5 (22.4) 2.5 8.8 8.6
-------- -------- -------- --------- --------
Net Earnings (Loss)
before extraordinary
item................ 72.0 (206.3) (5.8) (7.2) 13.9
======== ======== ======== ========= ========
Extraordinary item--loss
on early retirement of
debt, net of applicable
income tax benefit..... (2.6) -- -- -- --
-------- -------- -------- --------- --------
Net Earnings (Loss).. 69.4 (206.3) (5.8) (7.2) 13.9
Preferred dividends..... 5.5 8.7 8.9 0.8 2.1
-------- -------- -------- --------- --------
Net Earnings (Loss)
Available to Common
Shareholders........ $ 63.9 $ (215.0) $ (14.7) $ (8.0) $ 11.8
======== ======== ======== ========= ========
Dividends declared per
share.................. $ 0.48 $ 0.48 $ 0.48 $ 0.12 $ 0.12
======== ======== ======== ========= ========
COMMON SHARE SUMMARY
(DILUTED):
Income (loss) before
extraordinary item..... $ 1.67 $ (6.20) $ (.42) $ (.20) $ .32
Extraordinary item...... (0.6) -- -- -- --
-------- -------- -------- --------- --------
Net Earnings (Loss)
Per Common Share.... $ 1.61 $ (6.20) $ (.42) $ (.20) $ .32
======== ======== ======== ========= ========
CONSOLIDATED BALANCE
SHEET DATA:
Total assets............ $1,802.1 $1,455.2 $1,701.1 $ 7,398.7 $1,419.7
Short-term debt (2)..... 28.6 280.1 111.9 837.8 258.7
Long-term debt.......... 273.1 209.6 481.5 2,273.7 206.9
Shareholders' equity.... 369.3 318.5 550.3 586.0 310.2
OTHER FINANCIAL
INFORMATION:
Cash provided from (used
by) operating
activities............. $ 215.7 $ 149.0 $ (34.7) $ 82.7 $ 28.1
Cash provided from (used
by) investing
activities............. (5.5) (12.5) (109.4) (2,586.5) 2.0
Cash provided from (used
by) financing
activities............. 298.1 (122.8) 138.5 2,063.9 (30.2)
EBITDA(3)............... 194.5 97.9 163.6 82.7 46.3
Expenditures for
property, plant,
equipment and other
long term assets....... 49.7 54.2 78.5 19.5 8.4
Depreciation and
amortization expense... 52.8 63.7 61.0 29.8 14.0
</TABLE>
- -------
(1) Reflects first time consolidation of T&N and Fel-Pro as of March 6, 1998
and February 24, 1998, respectively.
(2) Includes current maturities of long-term debt.
(3) "EBITDA" represents the sum of income before interest expense and income
taxes, plus depreciation and amortization as well as nonrecurring charges
including gains on the sale of businesses, restructuring and reengineering
charges, adjustments of assets held for sale to fair value and other long
lived assets, the net effect of British pound currency options and forward
contract, and purchased in-process research and development charge. EBITDA
should not be construed as a substitute for income from operations, net
income or cash flow from operating activities, for the purpose of
analyzing Federal-Mogul's operating performance, financial position and
cash flows. EBITDA measures are calculated differently by other companies.
As such, the EBITDA measures presented may not be comparable to other
similarly titled measures of other companies. The Company has presented
EBITDA because it is commonly used by investors to analyze and compare
companies on the basis of operating performance and to determine a
company's ability to service debt.

S-28
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA--T&N

The following selected historical consolidated financial information of T&N
with respect to each year in the two-year period ended December 31, 1997 is
derived from the T&N Financial Statements. The T&N Financial Statements have
been audited by KPMG Audit Plc, independent certified public accountants, and
are stated in accordance with U.K. GAAP. The selected consolidated financial
information provided below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations--T&N"
and the T&N Financial Statements included elsewhere in this Prospectus
Supplement.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996
T&N HISTORICAL IN U.K. GAAP --------------- ---------------
(POUNDS STERLING IN MILLIONS)
<S> <C> <C>
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
DATA:
Total turnover excluding associated
undertakings............................. (Pounds)1,799.1 (Pounds)1,956.0
Cost of sales............................. (1,293.5) (1,418.3)
Other operating expenses.................. (331.6) (370.3)
Other, net................................ 11.2 (560.2)(1)
Tax on profit (loss) on ordinary
activities............................... (62.8) (8.0)
--------------- ---------------
Profit/(loss) attributable to
shareholders............................. (Pounds) 122.4 (Pounds) (400.8)
=============== ===============
CONSOLIDATED BALANCE SHEET DATA:
Total assets.............................. (Pounds)1,576.2 (Pounds)1,558.3
Borrowings due within one year............ 103.7 77.2
Borrowings due after more than one year... 285.4 260.2
Equity shareholders' funds at end of year. 191.4 118.3
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996
T&N PRO FORMA IN U.S. GAAP(2)(3) --------------- ---------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................. $ 2,948.4 $ 3,055.4
Costs and expenses........................ (2,698.7) (4,058.6)(1)
Income tax (expense) benefit.............. (159.3) 278.5
--------------- ---------------
Net earnings (loss)....................... $ 90.4 $ (724.7)
=============== ===============
CONSOLIDATED BALANCE SHEET DATA:
Total assets.............................. $ 3,120.1 $ 3,299.5
Short-term debt........................... 125.4 68.1
Long-term debt............................ 469.5 445.2
Shareholders' equity...................... 466.5 456.1
OTHER FINANCIAL INFORMATION:
Cash flow provided from (used by)
operating activities..................... $ 268.8 $ 115.6
Cash flow provided from (used by)
investing activities..................... (116.7) (211.8)
Cash flow provided from (used by)
financing activities..................... (125.0) 80.1
EBITDA(4)................................. 439.2 399.1
Expenditures for property, plant,
equipment and other long term assets..... 170.9 179.2
Depreciation and amortization expense..... 167.6 161.9
</TABLE>

S-29
<PAGE>

- --------
(1) Includes charge for asbestos related costs of (Pounds)515 million under
U.K. GAAP and $1.164 billion under U.S. GAAP.
(2) The T&N historical financial statements were prepared in accordance with
U.K. GAAP, which differs in certain significant respects from U.S. GAAP
(see Note 29 to the T&N Financial Statements). The following table
reconciles the T&N profit/loss attributable to shareholders as reported
under U.K. GAAP to net earnings/loss as stated under U.S. GAAP:

<TABLE>
<CAPTION>
1997 1996
------------- --------------
(IN MILLIONS)
<S> <C> <C>
Profit/(loss) attributable to shareholders
as reported under U.K. GAAP--stated in
pound sterling............................. (Pounds)122.4 (Pounds)(400.8)
Converted to U.S. dollars................... $ 201.4 $ (628.4)
U.S. GAAP adjustments (in U.S. dollars):
Amortization of goodwill................... (11.2) (5.3)
Amortization--of patents................... (2.6) (2.5)
Deferred taxation--full provision.......... (67.1) 158.7
Tax effect of other U.S. GAAP reconciling
items..................................... 3.0 121.8
Pension costs.............................. (11.5) (23.7)
Asbestos provision discount................ (0.8) (355.9)
Depreciation on fixed asset revaluations... 9.5 9.7
Carrying value of investments.............. (31.6) --
Other...................................... 2.1 2.0
Minority interests......................... (0.8) (1.1)
------------- --------------
Net earnings (loss)......................... $ 90.4 $ (724.7)
============= ==============
</TABLE>
(3) Operating results and balance sheet data for 1997 have been translated at
a rate of 1.6453 U.S. dollars to 1 pound sterling, and 1.6451 U.S. dollars
to 1 pound sterling, respectively. Operating results and balance sheet
data for 1996 have been translated at a rate of 1.5680 U.S. dollars to 1
pound sterling and 1.1710 U.S. dollars to 1 pound sterling, respectively.
(4) "EBITDA" represents the sum of income before interest expense and income
taxes, plus depreciation and amortization as well as nonrecurring charges
including gains on the sale of businesses, the cost and gains associated
with options over shares of Kolbenschmidt AG, asbestos related costs and
bid costs. EBITDA should not be construed as a substitute for income from
operations, net income or cash flow operating activities, for the purpose
of analyzing T&N's operating performance, financial position and cash
flows. EBITDA measures are calculated differently by other companies. As
such, the EBITDA measures presented may not be comparable to other
similarly titled measures of other companies. The Company has presented
EBITDA because it is commonly used by investors to analyze and compare
companies on the basis of operating performance and to determine a
company's ability to service debt.

S-30
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA--FEL-PRO

The following selected historical consolidated financial information of Fel-
Pro with respect to the years ended December 28, 1997 and December 29, 1996 is
derived from the Fel-Pro Financial Statements. The Fel-Pro Financial
Statements have been audited by Ernst & Young LLP, independent certified
public accountants. The selected consolidated financial information provided
below should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Fel-Pro" and the Fel-Pro
Financial Statements included elsewhere in this Prospectus Supplement.

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 28, DECEMBER 29,
1997 1996
------------ ------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................................ $ 489.3 $ 448.0
Costs and expenses................................... (442.3) (408.7)
Income tax (expense) benefit......................... (25.5) (6.9)
------- -------
Net earnings......................................... $ 21.5 $ 32.4
======= =======
CONSOLIDATED BALANCE SHEET DATA:
Total assets......................................... $ 270.1 $ 261.8
Short-term debt...................................... -- --
Long-term debt....................................... -- --
Shareholder's equity................................. 139.9 151.8
OTHER FINANCIAL INFORMATION:
Cash provided from (used by) operating activities.... $ 51.7 $ 31.1
Cash provided from (used by) investing activities.... (18.5) (30.6)
Cash provided from (used by) financing activities.... (33.2) (0.5)
EBITDA(1)............................................ 58.4 50.5
Expenditures for property, plant, equipment and other
long term assets.................................... 18.3 14.1
Depreciation and amortization expense................ 11.5 11.3
</TABLE>
- --------
(1) "EBITDA" represents the sum of income before income taxes, plus
depreciation and amortization. EBITDA should not be construed as a
substitute for income from operations, net income or cash flow from
operating activities, for the purpose of analyzing Fel-Pro's operating
performance, financial position and cash flows. EBITDA measures are
calculated differently by other companies. As such, the EBITDA measures
presented may not be comparable to other similarly titled measures of
other companies. The Company has presented EBITDA because it is commonly
used by investors to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service
debt.

S-31
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

OVERVIEW

Federal-Mogul is a leading global manufacturer and distributor of a broad
range of vehicular components for automobiles and light trucks, heavy duty
trucks, farm and construction vehicles and industrial products. The Company's
principal customers include many of the world's major original equipment
manufacturers of such vehicles and industrial products. The Company also
manufactures and supplies its products and related parts to the aftermarket.

The Company, which had traditionally focused on the manufacture and
distribution of engine bearings and sealing systems, in 1990 began to add
retail auto stores in various domestic and international locations. These
geographically-dispersed stores proved burdensome to manage and resulted in
substantial operating losses. In the fourth quarter of 1996, Federal-Mogul
underwent a change of management, following which the Company initiated a
significant restructuring program designed to refocus the Company on its core
competency of manufacturing. As part of such restructuring, Federal-Mogul took
the following actions: (i) closed international aftermarket distribution
centers in Malaysia and Singapore; (ii) divested 72 international retail
aftermarket operations and sold or restructured 25 wholesale aftermarket
operations; (iii) closed its Leiters Ford, Indiana manufacturing facility and
consolidated its lighting products operations in Juarez, Mexico; (iv)
consolidated certain of its North American warehouse facilities; (v)
consolidated its customer support functions previously housed in Phoenix,
Arizona into the Company's Southfield headquarters; (vi) consolidated its
European aftermarket management functions in Geneva, Switzerland into the
Wiesbaden, Germany manufacturing headquarters; and (vii) streamlined certain
of its administrative and operational staff functions worldwide. In addition,
by the end of the first quarter of 1998, the Company expects to have
successfully exited all of its retail businesses, except for Puerto Rico where
the Company continues to seek a buyer.

In connection with the restructuring, Federal-Mogul also began to pursue a
growth strategy of acquiring complementary manufacturing companies that
enhance Federal-Mogul's product base, expand its global manufacturing
operations and provide opportunities to capitalize on Federal-Mogul's
aftermarket distribution network and technological resources.

On March 6, 1998, Federal-Mogul completed its cash offer to acquire all
outstanding common stock of T&N for 260 pence per share. On February 24, 1998,
Federal-Mogul acquired all the equity interests of Fel-Pro. See "T&N and Fel-
Pro Acquisitions."

The Company also acquired Bimet S.A. ("Bimet") during the first quarter of
1998 and increased its ownership in Federal-Mogul/Bruss Sealing Systems
("Summerton") and KFM Bearing Co., Ltd. ("KFM"), as well as divesting its
minority interest in G. Bruss GmbH & Co. KG ("Bruss"). See notes 2 and 7 to
the "Federal-Mogul Unaudited Interim Financial Statements."

The consolidated statement of operations for the three months ended March
31, 1998 includes the operating results of T&N and Fel-Pro from their
respective acquisition dates. Operating results for the T&N Bearings Business
and Fel-Pro chemical business (which includes amortization expense for
goodwill allocated to the businesses and interest expense relating to the
holding costs of the businesses) have been excluded from the condensed
consolidated statement of operations for the three months ended March 31,
1998.

S-32
<PAGE>

FEDERAL-MOGUL

THREE MONTHS ENDED MARCH 31, 1998 COMPARED WITH
THREE MONTHS ENDED MARCH 31, 1997

THE FOLLOWING IS BASED ON TEXT INCLUDED IN FEDERAL-MOGUL'S QUARTERLY REPORT ON
FORM 10-Q FILED IN RESPECT OF THE THREE-MONTH PERIOD ENDED MARCH 31, 1998 AND
SPEAKS AS OF THAT DATE.

RESULTS OF OPERATIONS

Following the acquisitions of T&N and Fel-Pro, Federal-Mogul's integrated
operations are being reorganized to realize synergies and effectively
coordinate operations. Operations will be conducted through three
manufacturing operating units corresponding to major product areas: Powertrain
Systems, Sealing Systems and General Products. The major product categories in
Powertrain Systems include engine bearings and piston products. Sealing
Systems includes dynamic seals and gaskets. General Products include
camshafts, friction products, sintered products, systems protection products
and a number of smaller product lines. The Worldwide Aftermarket organization
is responsible for the Company's global aftermarket sales, marketing and
distribution.

Net Sales

Sales for the first quarter of 1998 were $658.0 million compared to $485.6
million in the same 1997 quarter. The 35.5% increase in net sales is primarily
attributable to the acquisitions of T&N and Fel-Pro, the results of which were
included from their respective dates of acquisition. Excluding the impact of
T&N and Fel-Pro acquisitions and the impact of previously divested retail
aftermarket businesses, net sales decreased 2.3%.

Powertrain Systems sales were $279.0 million for the first quarter of 1998
compared to $209.2 million for the same 1997 quarter. Approximately $84
million of the 33.4% increase related to sales of T&N. Excluding the
acquisition of T&N and powertrain products previously sold through the
divested retail aftermarket businesses, sales were relatively flat compared to
1997.

Sealing Systems sales were $163.3 million in the first quarter of 1998
compared to $83.8 million in the first quarter of 1997. Approximately $20
million of the 94.9% increase related to sales of T&N and approximately $52
million related to sales of Fel-Pro. Excluding the acquisitions of T&N and
Fel-Pro and sealing products previously sold through the divested retail
aftermarket businesses, sales increased 9.7% due to strong heavy duty and
industrial sales.

General Products sales were $215.7 million in the first quarter of 1998
compared to $192.6 million in 1997. Approximately $69 million of the 12.0%
increase related to sales of T&N. Excluding the acquisitions of T&N and
general products previously sold through the divested retail aftermarket
businesses, sales decreased 10.2% primarily due to continuing softness in the
North American aftermarket business.

Cost of Products Sold

Cost of products sold as a percent of net sales decreased to 75.5% for the
first quarter of 1998 from 76.9% for the same 1997 quarter. Excluding the
effect of a $10.9 million charge in the first quarter of 1998 associated with
the purchase accounting write-up of acquired inventory to fair value and the
subsequent sale of this inventory at the higher cost, as well as a $3.5
million write-down of inventory associated with the Puerto Rico retail
aftermarket to be divested, cost of products sold as a percent of sales
decreased to 73.3%. Management attributes this decrease to productivity
improvements, cost controls, streamlined operations, the divestiture of
underperforming assets and the acquisitions previously discussed.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses as a percent of net
sales increased to 14.9% for the first quarter of 1998 compared to 15.6% for
the first quarter of 1997. The decrease is primarily attributable to the
benefits of prior restructuring actions and the divestiture of retail
aftermarket businesses, slightly offset by a $1.1 million charge related to
Year 2000 costs.

S-33
<PAGE>

Amortization Expense

Amortization expense in the first quarter of 1998 was $10.1 million compared
to $2.5 million for the first quarter of 1997. The increase in amortization
expense was attributable to the expense related to the increase in goodwill
and other intangible assets associated with the T&N and Fel-Pro acquisitions.

Purchased In-Process Research and Development Charge

The Company recognized an $18.6 million charge in the first quarter of 1998
associated with the estimated fair value of in-process research and
development costs allocated in purchase accounting to a portion of the total
consideration paid.

Restructuring Charges

During the first quarter of 1998, the Company recognized a $10.5 million
restructuring charge related to operations in place prior to the acquisitions
of T&N and Fel-Pro. The restructuring charge included $10.2 million and $0.3
million for severance and exit costs, respectively. Employee severance costs
result from planned terminations in various business operations of the
Company. The severance costs were based on the estimated levels that will be
paid to the affected employees pursuant to the Company's workforce reduction
policies and certain foreign governmental regulations. The Company anticipates
that the actions related to the first quarter 1998 restructuring plan will be
completed primarily within one year.

Rationalization of Acquired Businesses

In connection with the previously discussed acquisitions, the Company
recognized approximately $151 million in reserves related to the
rationalization and integration of acquired businesses. The rationalization
reserves provide for approximately $125 million and $26 million in severance
and exit costs, respectively.

The components of the integration plan include: closure of four
manufacturing facilities worldwide; relocation of highly manual manufacturing
product lines to lower cost regions or more suitable locations; consolidation
of overlapping manufacturing, technical and sales facilities and joint
ventures; closure of two aftermarket central warehouses and five in-country
warehouses; consolidation of aftermarket marketing and customer support
functions; and streamlining of administrative, sales, marketing and product
engineering staffs worldwide. An anticipated result of the integration plan
and the restructuring will be a reduction of approximately 4,200 full-time
employees.

In addition to the $10.5 million restructuring charge and the $151 million
rationalization reserve, the Company expects to incur additional expenses of
approximately $43 million necessary to complete the integration of the
acquired companies. The anticipated annual synergy associated with the
restructuring, rationalization and integration is expected to be moderately in
excess of these costs in the year 2000.

Adjustment of Assets Held for Sale to Fair Value

In addition to the T&N Bearings Business and chemical businesses held for
sale, during the first quarter of 1998 the Company decided to sell its
subsidiary, Bertolotti Pietro e Figli, S.r.l. ("Bertolotti"), conducting
aftermarket operations in Italy. The carrying value of Bertolotti's assets
have been reduced to its fair value based on estimates of selling values less
costs to sell, calculated using multiples of earnings similar to recent
automotive industry transactions in Italy. The Company recognized a $20.0
million first quarter charge primarily associated with the write-down of
Bertolotti's assets to the estimated fair value. The Company expects to
complete the sale of Bertolotti within one year.

As part of its 1996 restructuring plan, the Company continued to close or
sell certain retail aftermarket operations during the first quarter of 1998.
As of March 31, 1998, retail aftermarket operations that continue to be held
for sale include those in Puerto Rico. Net cash proceeds received for those
retail aftermarket locations sold in the first quarter approximated $2
million. No gain or loss was recognized on the dispositions of those retail
aftermarket locations, as the related assets had been previously adjusted to
fair value.

S-34
<PAGE>

Interest Expense

Interest expense in the first quarter of 1998 was $15.5 million compared to
$9.8 million for the first quarter of 1997. The increase in interest expense
is attributable to the interest expense related to the financing of the T&N
and Fel-Pro acquisitions slightly offset by reduced preacquisition debt levels
as compared to the first quarter of 1997.

Net Gain on British Pound Currency Option and Forward Contract

In the fourth quarter of 1997, in anticipation of the then pending T&N
acquisition, the Company purchased a British pound currency option for $28.1
million with a notional amount of $2.5 billion. In January 1998, the Company
settled the option and recognized a loss of $17.3 million.

Also in January 1998, in anticipation of the then pending T&N acquisition,
the Company entered into a forward contract to purchase (Pounds)1.5 billion
for a notional amount of approximately $2.45 billion. As a result of favorable
exchange fluctuations in the British pound/U.S. dollar exchange rate
experienced during the contract period, the Company recognized a $30.6 million
gain.

The Company entered into the above transactions to effectively serve as
economic hedges for the purchase of T&N. Such transactions, however, do not
qualify for "hedge accounting" under U.S. GAAP, and therefore the loss on the
British pound currency option and the gain on the British pound forward
contract are reflected in the statement of operations caption "Net gain on
British pound currency option and forward contract."

Income Tax Expense

During the first quarter of 1998, the Company recognized charges for
adjustment of assets held for sale to fair value and purchased research and
development and recognized a net gain on the British pound currency option and
forward contract. These transactions resulted in a pre-tax net charge of $25.3
million. The net income tax benefit related to these transactions totaled $2.1
million.

Pro Forma Results

The following unaudited pro forma financial information for the three months
ended March 31, 1998 and 1997 assume the T&N and Fel-Pro acquisitions occurred
as of the beginning of the respective periods, after giving effect to certain
adjustments, including the amortization of intangible assets, interest expense
on acquisition debt, divestitures of the T&N Bearings Business and Fel-Pro
chemical business and income tax effects. The pro forma results (in millions
of dollars, except per share data) have been prepared for comparative purposes
only and are not necessarily indicative of the results of operations which may
occur in the future or that would have occurred had the acquisitions of T&N
and Fel-Pro been consummated on the dates indicated, nor are they necessarily
indicative of the Company's future results of operations.

<TABLE>
<CAPTION>
UNAUDITED PRO
FORMA FINANCIAL
INFORMATION THREE
MONTHS ENDED
MARCH 31,
------------------
1998 1997
-------- --------
<S> <C> <C>
Net sales............................................ $1,193.6 $1,247.9
Net loss............................................. $ (16.5) $ (7.0)
Loss per share....................................... $ (0.44) $ (0.28)
Loss per share assuming dilution..................... $ (0.44) $ (0.28)
</TABLE>

The unaudited pro forma financial information for the three months ended
March 31, 1998 include charges for adjustment of assets held for sale to fair
value, restructuring, the effect of the previously described purchase
accounting write-up of acquired inventory to fair value and writedown of
inventory associated with the Puerto Rico retail aftermarket business to be
divested, and certain other charges. Also included in the 1998 unaudited

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<PAGE>

pro forma financial information were the recognized net gain on the British
pound currency option and forward contract and the gain on the Bruss
divestiture. The net after tax effect of these transactions was a charge of
approximately $19 million ($0.48 per diluted share).

The $18.6 million charge for purchased in-process research and development
has been excluded from the 1998 unaudited pro forma financial information.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow Provided from Operating Activities

Cash flow provided from operating activities was $82.7 million for the first
quarter of 1998. Cash flow was generated primarily from a decrease in
inventories of $36.8 million and net earnings adjusted for the non-cash
charges of depreciation and amortization, purchased in-process research and
development, restructuring and adjustment of assets held for sale to fair
value. Partially offsetting these items was an increase in accounts receivable
of $57.1 million.

Cash Flow used by Investing Activities

Cash flow used by investing activities was $2,586.5 million and was
primarily related to the acquisitions of T&N, Fel-Pro, Bimet and the increase
in ownership of Summerton and KFM partially reduced by the sale of the
Company's interest in Bruss. Partially offsetting the acquisitions, the
Company received proceeds from the sale of options which were acquired with
the acquisition of T&N. In addition, capital expenditures of $19.5 million
were made for property, plant and equipment to implement process improvements,
information technology and new product introductions. Capital expenditures are
anticipated to be approximately $235 million in 1998, primarily for enhanced
manufacturing capabilities and process improvements.

Cash Flow Provided from Financing Activities

Cash flow provided from financing activities was $2,063.9 million for the
first quarter of 1998 primarily from the increase in debt related to the
acquisitions of T&N and Fel-Pro detailed below, partially offset by the
related debt issuance fees of $33.3 million.

In connection with the Company's effort to put into place a permanent
capital structure with an appropriate combination of debt and equity to
partially replace the Senior Credit Agreement and Senior Subordinated Credit
Agreement debt, the Company on April 17, 1998 filed a registration statement
with the Securities and Exchange Commission for the offering from time to time
of up to an aggregate $2.5 billion of debt or equity securities (including
shares of Common Stock registered for the account of the Selling
Shareholders).

In addition to the Offerings, the Company is also evaluating the possibility
of issuing debt securities pursuant to such registration statement, all or a
significant portion of the net proceeds of which the Company would use to
refinance certain additional indebtedness of the Company. There can be no
assurance that any such offering of equity or debt securities will be
consummated. The accelerated payment, if any, of certain portions of the
Senior Credit Agreement and Senior Subordinated Credit Agreement debt would
result in a significant extraordinary charge due to the write-off of the
issuance costs associated with the early retirement of debt. The total
unamortized issuance costs related to the Senior Credit Agreement and Senior
Subordinated Credit Agreement were approximately $56 million at March 31,
1998.

In connection with the Fel-Pro acquisition the Company paid approximately
$492 million cash which was provided through an existing revolving credit
facility and three short-term loans and issued 1,030,325.6 shares of Federal-
Mogul Series E Stock with an imputed value of $225 million. The shares of
Series E Stock are exchangeable into shares of Common Stock at a rate of five
shares of Common Stock per share of Series E Stock and pay dividends of $.12
per quarter per common stock equivalent. The Series E Stock are required to be
exchanged no later than February 24, 1999, subject to certain conditions.

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<PAGE>

The Company believes that cash flow from operations, together with
borrowings available under the Company's revolving credit facility, will
continue to be sufficient to meet its ongoing working capital requirements.

Foreign Currency and Commodity Contracts

The financial condition and results of operations of certain of the
Company's operating entities are reported in various foreign currencies
(principally pounds sterling, German marks, and to a lesser extent South
African rand and French francs, among others) and then translated into U.S.
dollars at the applicable exchange rate for inclusion in the Company's
financial statements. As a result, the appreciation of the dollar against
these foreign currencies will have a negative impact on the reported sales and
operating margin of T&N and other subsidiaries as consolidated into the
Company. Conversely, the depreciation of the dollar against these foreign
currencies will have a positive impact.

In addition, the Company incurs currency transaction risk whenever it or one
of its foreign subsidiaries enters into either a purchase or sales transaction
using a different currency than the relevant entity's functional currency.
Currency transaction risk is reduced by matching revenues and costs with the
same currency. Given the volatility of currency exchange rates, there can be
no assurance that the Company will be able to effectively manage its currency
transaction risks or that any volatility in currency exchange rates will not
have a material adverse effect on the Company's financial condition or results
of operations.

ASBESTOS LIABILITY AND LEGAL PROCEEDINGS

T&N Asbestos

As of March 31, 1998, the Company has provided $1.351 billion as its
estimate for future costs related to resolving asbestos claims. In the United
States, T&N plc and two of T&N plc's U.S. subsidiaries are among many
defendants named in numerous court actions alleging personal injury resulting
from exposure to asbestos or asbestos-containing products. T&N is also subject
to asbestos-disease litigation, to a lesser extent, in the United Kingdom and
to property damage litigation based upon asbestos in the United States.
Because of the slow onset of asbestos-related diseases, management anticipates
that similar claims will be made in the future. It is not known how many such
claims may be made nor the expenditure which may arise therefrom. T&N has
appointed the Center for Claims Resolution ("CCR") as its exclusive
representative in relation to all asbestos-related personal injury claims made
against the T&N Companies in the United States.

Prior to its acquisition, T&N secured a 500 million pounds sterling
(approximately $838 million at the March 31, 1998 exchange rate of 1 pound
sterling to 1.6758 U.S. dollars) layer of insurance which will be triggered
should the aggregate number of claims notified after June 30, 1996, where the
exposure occurred prior to that date, exceed 690 million pounds sterling
(approximately $1,156 million at the March 31, 1998 exchange rate). At March
31, 1998 the Company has recorded reserves for incurred but not reported
claims up to the insurance level, which is 690 million pounds sterling.

While management believes that estimated reserves, which have not been
reduced by any potential insurance proceeds, are appropriate for anticipated
losses arising from T&N's asbestos related claims, no assurance can be given
that T&N will not be subject to material additional liabilities and
significant additional litigation relating to asbestos. Any such liabilities
or litigation could have a material adverse effect on the Company's results of
operations, business, liquidity and financial condition.

Federal-Mogul and Fel-Pro Asbestos

Federal-Mogul Corporation also is one of a large number of defendants in a
number of lawsuits brought by claimants alleging injury due to exposure to
asbestos. In addition, Fel-Pro has been named as a defendant in approximately
18,000 product liability cases involving asbestos, primarily involving gasket
or packing products

S-37
<PAGE>

sold to ship owners. The Company is defending all such claims vigorously and
believes that it and Fel-Pro have substantial defenses to liability and
adequate insurance coverage for defense and indemnity costs (though Fel-Pro
has agreed with its insurers to pay 20% of defense costs, in exchange for the
right to a significant role in decisions regarding litigation). While the
outcome of litigation can't be predicted with certainty, management believes
that asbestos claims pending against Federal-Mogul Corporation and Fel-Pro as
of March 31, 1998 will not have a material effect on the Company's financial
position. No related reserves, or payments, have been provided, or paid to
date, related to asbestos claims pending against Federal-Mogul Corporation and
Fel-Pro.

Other

The Company is involved in various other legal actions and claims, directly
and through its subsidiaries (including T&N and Fel-Pro). After taking into
consideration legal counsel's evaluation of such actions, management is of the
opinion that its outcomes are not reasonably likely to have a material adverse
affect on the Company's financial position, operating results, or cash flows.

OTHER MATTERS

New Dividend Policy

Dividends on the Common Stock of the Company are payable at the discretion
of the Company's Board of Directors. Historically, quarterly dividends had
been 12 cents per share. The Board of Directors has recently reduced the
quarterly dividend and has declared a cash dividend payable in the second
quarter of 1998 in the amount of one-quarter cent per share of Common Stock.
The Company, consistent with its growth strategy, presently intends to retain
future earnings in the business and therefore anticipates paying dividends at
a comparable level in the foreseeable future.

Effect of Accounting Pronouncements

In 1997, the Financial Accounting Standards Board issued Statement No. 130
("SFAS No. 130") "Reporting Comprehensive Income." SFAS No. 130 establishes
standards for the reporting and display of comprehensive income and its
components in a full set of general purpose financial statements. The Company
adopted Statement 130 as of January 1, 1998. The adoption of this statement
had no impact on Federal Mogul's net earnings (loss) or shareholders' equity.
SFAS No. 130 requires foreign currency translation adjustments and unrealized
gains or losses on investments and derivative instruments to be included in
other comprehensive income. Prior to the adoption of SFAS No. 130 these items
were reported as a component of shareholders' equity.

Total comprehensive income (loss), net of the related estimated tax, was
$(4.6) million and $5.3 million for the three months ended March 31, 1998 and
1997, respectively.

Subsequent Event

In April 1998, the Company retired $251 million in private placement debt
assumed in connection with the acquisition of T&N. The early retirement of the
debt required a make whole payment of approximately $27 million, which will be
recognized as an extraordinary loss in the second quarter of 1998 of
approximately $19 million, net of the related tax benefit.

S-38
<PAGE>

YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996 AND
YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1995

THE FOLLOWING IS BASED ON TEXT INCLUDED IN FEDERAL-MOGUL'S ANNUAL
REPORT ON FORM 10-K FILED IN RESPECT OF THE YEAR ENDED DECEMBER 31,
1997 AND SPEAKS AS OF THAT DATE.

RESULTS OF OPERATIONS

Net Sales

Consolidated net sales decreased 11.1% in 1997, primarily due to the
divestiture of certain international retail and wholesale operations, the sale
of the heavy wall bearings operations in Brazil and Germany, the sale of the
United States ball bearing business and continued softness in the North
American aftermarket business. These decreases were partially offset by
certain volume increases primarily in the original equipment business.

Original equipment and aftermarket sales were:

<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Original Equipment:
Americas........................................... $ 451.4 $ 449.1 $ 465.4
International...................................... 170.3 219.5 222.7
Aftermarket:
United States and Canada........................... 699.1 759.8 780.8
International...................................... 485.8 604.3 530.9
-------- -------- --------
Total sales...................................... $1,806.6 $2,032.7 $1,999.8
======== ======== ========
</TABLE>

Original equipment business sales in the Americas were flat in 1997 as
compared to 1996. However, excluding the effect of the Company's divestitures
of its electrical products business in September 1996 and its United States
ball bearing operations in November 1996, net sales increased 15.7% in 1997
compared to 1996. Management attributes this increase primarily to strong 1997
sales in its sealing products division. Sales decreased in 1996 as compared to
1995 due to the sale of the Precision Forged Products Division in April 1995
and the 1996 sales of the electrical products business and the United States
ball bearings manufacturing operations, offset slightly by the acquisition of
Seal Technology Systems Limited in September 1995. Excluding the effect of
these acquisitions and divestitures, sales increased 2.7% in 1996.

International original equipment business sales decreased in 1997 as
compared to 1996 due to the effects of exchange rate fluctuations and the
divestiture of the heavy wall bearing operations in Germany and Brazil
completed on January 2, 1997. Excluding the effects of exchange rate
fluctuations and the divestiture, sales increased 11.7%. Management attributes
this increase to strong customer demand for sputter bearings and Glycodur
material products. In 1996, sales decreased as compared to 1995 due to the
Company's decision to exit some conventional engine bearing business that did
not meet appropriate profitability levels.

North American aftermarket sales decreased in 1997 as compared to 1996 due
to continued weak sales in engine products. Sales decreased in 1996 as
compared to 1995 primarily due to the elimination of special extended payment
terms.

International aftermarket business sales in 1997 as compared to 1996
decreased primarily due to the effects of foreign exchange fluctuations and
the 1997 divestitures of operations in Turkey, Australia, South Africa and
Chile. Excluding the effects of exchange and 1997 divestitures, sales were
essentially flat. In 1996, sales increased as compared to 1995 due to the full
year impact of the acquisitions of Bertolotti in June 1995 and Centropiezas in
September 1995, and to a lesser extent, volume and pricing increases in
Mexico, increased sales volume in Australia and new local operations in
Brazil. These increases were partially offset by $21 million resulting from
the devaluation of the South African rand and a decrease in Venezuela due to a
recession.

S-39
<PAGE>

Original equipment sales as a percentage of total sales of the Company
increased to 34.4% in 1997 from 32.8% in 1996, with a corresponding decrease
in aftermarket sales. This shift in 1997 reflects the Company's pursuit and
implementation of its strategy to focus on manufacturing and distribution, as
demonstrated by the previously discussed 1997 divestitures and planned
acquisitions. Previously, as the Company was implementing its retail growth
strategy, original equipment sales as a percentage of total sales of the
Company decreased to 32.8% in 1996 from 34.4% in 1995, with a corresponding
increase in aftermarket sales.

Cost of Products Sold

Cost of products sold as a percent of net sales decreased to 76.5% in 1997
compared to 81.7% for 1996. The decrease is primarily due to the 1997
divestitures of less profitable operations and productivity improvements in
the North American aftermarket and the Americas original equipment business.
In addition, a portion of the 1997 decrease is attributable to 1996 third and
fourth quarter charges incurred of $8 million for customer incentive programs
and $13 million for excess and obsolete inventory. See "--Changes in
Accounting Estimates."

Cost of products sold as a percent of net sales increased to 81.7% in 1996
compared to 80.2% in 1995. The increase is primarily attributable to 1996
third and fourth quarter charges incurred of $8 million for customer incentive
programs and $13 million for excess and obsolete inventory. See "--Changes in
Accounting Estimates."

Selling, General and Administrative Expenses

SG&A expenses as a percent of net sales decreased to 15.8% for 1997 compared
to 16.4% for 1996. In contrast, SG&A expenses as a percent of net sales
increased to 16.4% for 1996 compared to 15.0% for 1995. The 1997 decrease and
1996 increase in SG&A as a percent of net sales is primarily attributable to
bad debt expense, customer incentive programs and environmental and legal
matters (see "--Changes in Accounting Estimates" of $3 million for bad debt
expense, $8 million for customer incentive programs and $9 million for
environmental and legal matters) incurred in the third and fourth quarters of
1996. In addition, the 1996 increase was partially due to higher SG&A costs in
the international aftermarket business.

Changes in Accounting Estimates

In 1996, the Company made certain changes in accounting estimates totaling
$51 million in the third and fourth quarters attributable to 1996 events and
new information becoming available. The changes in accounting estimates
included the following:

Customer Incentive Programs: The increase in the provision for customer
incentive programs of $18 million resulted from contractual changes
implemented primarily in the third and fourth quarters of 1996 with certain
customers, new sales programs, additional customer participation in these
programs and current experience with these programs.

Excess and Obsolete Inventory: Business volume growth remained below
expectations in 1996, principally in the third and fourth quarters, causing a
build up of certain inventories beyond anticipated demand. In addition, the
Company's strategic initiative to focus on its manufacturing business and
divest its retail and certain aftermarket businesses and the sale of the U.S.
ball bearings operations in the fourth quarter adversely affected the utility
of the North American aftermarket business inventory. As a result, the Company
recorded an additional $13 million provision for excess and obsolete
inventory.

Bad Debts: The increase in the bad debt provision of $3 million was
principally attributable to the deterioration of account balances of numerous
low volume customers and termination of business with certain North American
aftermarket customers during 1996.

Environmental and Legal Matters: The environmental and legal provision was
increased by $9 million due to the completion of environmental studies and
related analyses, new issues arising and changes in the status of other legal
matters.

S-40
<PAGE>

Other: The remaining $8 million of changes in accounting estimates is
comprised of $1 million for changes in the workers' compensation reserve based
on worsening experience in outstanding claims in certain older policy years,
$3 million for interest capitalization, $2 million to adjust estimates of
inventoriable costs and $2 million for other items.

Sales of Businesses

During 1997, the Company received $73.6 million in net cash proceeds from
the sale of its aftermarket operations in South Africa, Australia and Chile,
and its heavy wall bearing operations in Germany and Brazil.

During 1996, the Company received $42.0 million in net cash proceeds from
the sale of its United States ball bearings and electrical products
manufacturing operations.

Except for the sale of the electrical products manufacturing operations,
sales of businesses in 1997 and 1996 relate to assets previously adjusted to
fair value. See "--Adjustment of Assets Held for Sale to Fair Value and Other
Long Lived Assets." Accordingly, no gain or loss was recognized on the date of
sale related to these transactions. In addition, no gain or loss was
recognized related to the sale of the electrical products manufacturing
operations.

During 1995, the Company sold its equity interest in Westwind Air Bearings,
Limited, recognizing a pretax gain of $16.2 million and its Precision Forged
Products Division for a pretax gain of $7.8 million.

Restructuring Charges

Primarily as a result of the amendments to the 1996 restructuring plan,
described previously in this section, the Company's 1997 operating results
were increased by $23.1 million for the reversal of previously recognized 1996
and 1995 restructuring charges. Offsetting this reversal is a $22.0 million
charge for new 1997 restructuring programs. The net impact on 1997 operations,
as a result of the restructuring activities, was a credit of $1.1 million. The
1997 charge includes $3.1 million for exiting certain European aftermarket
product lines and the related employment reductions, $6.8 million for
termination of certain European administrative and support personnel, $7.5
million for additional exit and severance costs related to the Puerto Rican
retail operations, $2.6 million for consolidation and reconfiguration of the
North American aftermarket service branch network and $2.0 million for other
actions. The Company anticipates that the actions related to the 1997
restructuring plan will be complete by the end of 1998, and that most of the
severance and exit costs will be paid in 1998.

In the fourth quarter of 1996, the Company recognized a restructuring charge
of $57.6 million for costs associated with employee severance, exit and
consolidation costs for 132 international retail operations and 30 wholesale
aftermarket operations, rationalization of European manufacturing operations,
consolidation of lighting products, consolidation or closure of certain North
American warehouse facilities, consolidation of customer support functions in
the United States and streamlining of administrative and operational staff
functions worldwide. The charge consists of $22.7 million for the sale of 132
international retail aftermarket and 30 wholesale aftermarket operations,
$14.7 million for corporate employee severance costs, $7.7 million for the
rationalization of European manufacturing operations, $5.3 million for
consolidation or closure of certain North American warehouse facilities, $2.8
million for consolidation of customer support functions in the United States,
$2.5 million for closure of the Leiters Ford facility and $1.9 million for
other miscellaneous actions, including the consolidation of the European
aftermarket management function into the European manufacturing headquarters.
The Company's 1997 progress and actual implementation of the 1996
restructuring plan resulted in 1997 operating results being increased by $20.8
million for severance and $1.4 million of exit and consolidation costs being
reversed. The Company expects to pay out most of the remaining 1996 severance
and exit costs in 1998.

Results of operations in the second and fourth quarters of 1995 include
restructuring charges of $6.1 million and $20.8 million, respectively. These
charges were comprised of $20.1 million for employee severance and $6.8

S-41
<PAGE>

million for exit costs and consolidation of certain facilities. The workforce
reductions and consolidation of facilities were completed as of December 31,
1996. Operating results for 1997 were increased by $0.9 million relating to
1995 exit costs being reversed. The Company expects to pay out the remaining
1995 exit costs in 1998.

Reengineering and Other Related Charges

Operating results for 1997 include a credit of $1.6 million relating to 1996
reengineering and other related charges being reversed.

In 1996, the Company initiated an extensive effort to strategically review
its businesses and focus on its competencies manufacturing, engineering and
distribution. As a result of this process, the Company recognized a charge of
$11.4 million for professional fees and personnel costs related to the
strategic review of the Company and changes in management and related costs.

In 1995, the Company recognized a charge of $13.9 million for reengineering
and other costs. These costs included $7.0 million for professional fees and
personnel costs, and $6.9 million primarily for certain other non-recurring
costs relating to brand consolidation at the customer level of the Company's
Federal-Mogul(R), TRW(R) and Sealed Power(R) branded engine parts.

Adjustment of Assets Held for Sale to Fair Value and Other Long Lived Assets

The Company continually reviews all components of its businesses for
possible improvement of future profitability through acquisition, divestiture,
reengineering or restructuring. The Company also continually reviews and
updates its impairment reserves related to the divestiture of its remaining
international retail aftermarket operations and adjusts the reserve components
to approximate their net fair value.

In the fourth quarter of 1997, the Company recognized a charge of $2.4
million to write-down certain long lived assets to fair value. As of December
31, 1997, assets held for sale primarily include retail aftermarket operations
in Puerto Rico, Ecuador, Venezuela and Panama. By the end of the first quarter
of 1998, the Company expects to have successfully exited all of its retail
aftermarket businesses, except for Puerto Rico where the Company continues to
seek a buyer.

During 1996, management designed a restructuring plan to aggressively
improve the Company's cost structure, streamline operations and divest the
Company of underperforming assets. As part of this plan, the Company decided
to sell 132 international retail aftermarket operations, sell or restructure
30 wholesale aftermarket operations and consolidate a North American
manufacturing operation. The carrying value of assets held for sale was
reduced to fair value based on estimates of selling values less costs to sell.
Selling values used to determine the fair value of assets held for sale were
determined using market prices (i.e., valuation multiples) of comparable
companies from other 1996 transactions. The resulting adjustment of $148.5
million to reduce assets held for sale to fair value was recorded in the
fourth quarter of 1996. As previously described in this section, the Company
made significant progress related to the implementation of the 1996
restructuring plan. Also in 1996, based upon the final sale, the Company
recognized an additional writedown of $2.8 million to the net asset value of
the United States ball bearings operations. In 1995, the Company decided to
sell the ball bearings operations and reduced the carrying value by $17.0
million to record assets held for sale at fair value.

In 1995, the Company also decided to sell its heavy wall bearing operations
in Germany and Brazil. The Company estimated the fair value of the businesses
held for sale based on discussions with prospective buyers, adjusted for
selling costs. The Company reduced its carrying value by $17 million to record
assets held for sale at fair value. The heavy wall bearing operations were
sold in January 1997 for net proceeds of $8.9 million, which approximated the
carrying value of the assets at December 31, 1996.

In addition, in 1995, the Company reduced the carrying value of certain
other impaired long-lived assets by $17.8 million to record them at fair
value. No further fair value adjustments were recorded for these assets in
1996 or 1997.

S-42
<PAGE>

Net sales for all assets held for sale and adjusted to fair value
approximated $114 million, $335 million, and $322 million in 1997, 1996 and
1995, respectively. Net sales for the remaining retail aftermarket operations
held for sale at December 31, 1997 approximated $44 million, $48 million and
$22 million in 1997, 1996 and 1995, respectively.

Interest Expense

Interest expense decreased $10.6 million in 1997 to $32.0 million. The
decrease was primarily due to a $188 million reduction of debt which resulted
from improvements in working capital and the sale of the South African and
Australian businesses. Although the Company decreased its debt by $104 million
from 1995 to 1996, interest expense increased $5.3 million in 1996 primarily
due to a higher average debt level than in 1995. Excluding the U.S. and
European revolving credit facilities, which were classified as short-term debt
during 1996 and as long-term debt during 1995, the weighted average interest
rate for short-term debt increased to 10.9% for 1996 from 9.5% for 1995. The
interest rate on the U.S. and European revolving credit facilities at December
31, 1996 and 1995 was 6.1% and 6.2%, respectively.

Income Taxes

At December 31, 1997, the Company had deferred tax assets, net of a $44.4
million valuation allowance, of $140.5 million and deferred tax liabilities of
$75.9 million.

The net deferred tax asset of $64.6 million included the tax benefits of
$58.2 million related to the Company's postretirement benefit obligation at
December 31, 1997. The Company expects to realize the benefits associated with
this obligation over a period of 35 to 40 years.

The difference between the 1997 effective income tax rate and the statutory
tax rate is principally due to utilization of losses on foreign investment and
an income tax benefit related to the sales of the South African and Australian
businesses (refer also to Note 16 of the Consolidated Financial Statements).

LIQUIDITY AND CAPITAL RESOURCES

Cash flow from operations of $215.7 million in 1997 increased significantly
during 1997 primarily due to increased earnings. The Company also reduced
inventory from operations by $59.9 million in 1997. Inventory reductions in
the North American aftermarket business were primarily responsible for the
decrease. The decrease in North America aftermarket inventory is attributable
to reduced lead times while still maintaining availability of products and
modifying safety stock levels.

Cash flow used by investing activities of $5.5 million in 1997 include $28.1
million for the British pound currency option, described later in this
section, and $2.4 million for other professional fees paid in anticipation of
the T&N acquisition. In addition, cash flows used by investing activities
include the receipt of $73.6 million in net proceeds from the 1997
divestitures.

Cash flow from 1997 financing activities were $298.1 million, an increase of
$420.9 million from 1996. The following events were primarily responsible for
the net increase for 1997:

Issuance of Preferred Securities of Affiliate: In December 1997, the
Company's financing trust completed a $575 million private issuance of
11,500,000 shares of 7% Trust Convertible Preferred Securities. The
convertible preferred securities are redeemable at the Company's option, in
whole or in part, on or after December 6, 2000. All outstanding convertible
securities are required to be redeemed no later than December 1, 2027.

Issuance of Senior Notes: In April 1997, the Company issued a fully
subscribed $125 million debt offering of ten year 8.8% senior notes. Proceeds
from the offering were used to reduce the Company's short-term debt and the
early extinguishment of the private placement debt.

S-43
<PAGE>

Extinguishment of Private Placement Debt: In the second quarter of 1997, the
Company retired $64.7 million in private placement debt. The early retirement
of this debt eliminated high coupon debt and potentially restrictive covenants
giving the Company greater financial flexibility in the future. In addition,
the early retirement of this debt involved a make whole payment that resulted
in a $4.1 million pretax ($2.6 million after tax) extraordinary loss.

Accounts Receivable Securitization: During 1997, the Company replaced an
existing accounts receivable securitization program with a new program which
provides up to $100 million of financing. On an ongoing basis, the Company
sells certain accounts receivable to a subsidiary of the Company, which then
sells such receivables, without recourse, to a master trust. Amounts sold
under this arrangement were $63.2 million as of December 31, 1997, and have
been excluded from the balance sheet. During 1997, cash payments totaling
$31.8 million were made to the master trust related to the Company's accounts
receivable securitization. These cash payments effectively increased the
Company's investment in the accounts receivable securitization.

Multicurrency Revolver: In June 1997, the Company entered into a new $350
million multicurrency revolving credit facility with a consortium of
international banks which matures in June 2002. The multicurrency revolving
credit facility replaced the existing U.S. and European revolving credit
facilities. The multicurrency revolving credit facility contains restrictive
covenants that, among other matters, require the Company to maintain certain
financial ratios. As of December 31, 1997, there were no borrowings
outstanding against the multicurrency revolving credit facility.

In December 1997, the Company entered into a $3.25 billion committed bank
facility with a reputable financial institution related to the T&N
acquisition. The facility provides for up to $2.75 billion of senior debt and
up to $500 million of subordinated debt. Because this facility was contingent
upon the acquisition of T&N, no amounts were outstanding as of December 31,
1997. Certain fees relating to this facility have been incurred and paid as of
December 31, 1997.

The Company believes that cash flow from operations will continue to be
sufficient to meet its ongoing working capital requirements.

ENVIRONMENTAL MATTERS

The Company is a party to lawsuits filed in various jurisdictions alleging
claims pursuant to the Comprehensive Environmental Response Compensation and
Liability Act of 1980 ("CERCLA") or other state or federal environmental laws.
In addition, the Company has been notified by the Environmental Protection
Agency and various state agencies that it may be a potentially responsible
party ("PRP") for the cost of cleaning up certain other hazardous waste
storage or disposal facilities pursuant to CERCLA and other federal and state
environmental laws. PRP designation requires the funding of site
investigations and subsequent remedial activities. Although these laws could
impose joint and several liability upon each party at any site, the potential
exposure is expected to be limited because at all sites other companies,
generally including many large, solvent public companies, have been named as
PRPs. In addition, the Company has identified certain present and former
properties at which it may be responsible for cleaning up environmental
contamination.

The Company is actively seeking to resolve these matters. Although difficult
to quantify based on the complexity of the issues, the Company has accrued the
estimated cost associated with such matters based upon current available
information from site investigations and consultants. The environmental and
legal reserve was approximately $11 million at December 31, 1997 and $12
million at December 31, 1996. Management believes that such accruals will be
adequate to cover the Company's estimated liability for its exposure in
respect of such matters.

FOREIGN CURRENCY AND COMMODITY CONTRACTS

In connection with the T&N acquisition, the Company purchased for $28.1
million a foreign currency option with a notional amount of $2.5 billion to
cap the effect of potential unfavorable fluctuations in the British pound/U.S.
dollar exchange rate. The cost of the option and its change in fair value has
been reflected in the results of operations in the fourth quarter of 1997. At
December 31, 1997 the Company has recognized a net loss on this transaction of
$10.5 million.

S-44
<PAGE>

The Company is subject to exposure to market risks from changes in foreign
exchange rates and raw material price fluctuations, derivative financial
instruments are utilized by the Company to reduce those risks. Except for the
British pound currency option discussed above, the Company does not hold or
issue derivative financial instruments for trading purposes.

Other than the British pound currency option discussed above, the Company
does not have foreign exchange forward or currency option contracts
outstanding at December 31, 1997.

In the first quarter of 1998, the Company settled the British pound currency
option, resulting in a pretax loss of $17.3 million. Also in the first quarter
of 1998, the Company entered into a forward contract to purchase 1.5 billion
British pounds for a notional amount approximating $2.45 billion. The forward
contract expires in the first quarter of 1998.

OTHER MATTERS

Conversion of Series D Convertible Exchangeable Preferred Stock

In August 1997, the Company announced a call for the redemption of all its
outstanding $3.875 Series D Convertible Exchangeable Preferred Stock. These
preferred shareholders elected to convert each preferred share into 2.778
shares of Common Stock. The Company issued 4.4 million shares of Common Stock
in exchange for all of the outstanding Series D convertible exchangeable
preferred stock.

Year 2000 Costs

The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. The Company has
established a team that has completed an awareness program and assessment
project to address the Year 2000 issue. In addition, the Board of Directors
has received status reports related to the Company's progress in addressing
the Year 2000 issue. The Company has determined that it will be required to
modify or replace portions of its software so that its computer systems will
properly utilize dates beyond December 31, 1999. The Company has initiated
remediation, and is implementing the action plan to address the Year 2000
issue. The Company presently believes that with modifications to existing
software and conversions to new software, the Year 2000 issue can be
mitigated. However, if such modifications and conversions are not made, or are
not completed timely, the Year 2000 issue could have a material impact on the
operations of the Company.

The Company has initiated formal communications with a substantial majority
of its significant suppliers and large customers to determine their plans to
address the Year 2000 issue. While the Company expects a successful resolution
of all issues, there can be no guarantee that the systems of other companies
on which the Company's systems rely will be converted in a timely manner, or
that a failure to convert by a supplier or customer, or a conversion that is
incompatible with the Company's systems, would not have a material adverse
effect on the Company. The Company has determined it has no exposure to
contingencies related to the Year 2000 issue for the products it has sold.

The Company has contracts in place with external resources and has allocated
internal resources to reprogram or replace, and test the software for Year
2000 modifications. The Company plans to complete the Year 2000 project within
one year. The total cost of the Year 2000 project is estimated to be $17
million and is being funded through operating cash flows. Of the total project
cost, approximately $11 million is attributable to the purchase of new
software which will be capitalized. The remaining $6 million represents
maintenance and repair of existing systems and will be expensed as incurred.
The Company expects a substantial majority of the costs will be incurred in
1998, and any remaining costs incurred in 1999 are expected to be immaterial.
As of December 31, 1997, the Company had incurred and expensed approximately
$0.7 million related to the completed awareness program and assessment project
and the implementation of their remediation plan.

The costs of the project and the date which the Company plans to complete
the Year 2000 modifications are based on management's best estimates, which
were derived utilizing numerous assumptions of future events

S-45
<PAGE>

including the continued availability of certain resources, third party
modification plans and other factors. However, there can be no guarantee that
these estimates will be achieved and actual results could differ materially
from those plans. Specific factors that might cause such material differences
include, but are not limited to, the availability and cost of personnel
trained in this area, the ability to locate and correct all relevant computer
codes and similar uncertainties.

As a result of the Company's due diligence related to the T&N acquisition
and the Fel-Pro acquisition, the Company expects costs to address the Year
2000 issue for Fel-Pro to be immaterial, and T&N costs for repair and
maintenance of existing systems are expected to approximate $8 million.

Divestiture of Minority Interest

In February 1998, the Company announced the divestiture of its minority
interest in G. Bruss GmBH & Co. KG, a German manufacturer of seals and
gaskets. As part of the divestiture agreement, the Company increased their
ownership to 100% in the Summerton, South Carolina gasket business. The
Company also received cash and recognized a gain as a result of these
transactions. The gain recognized is not expected to be significant to 1998
first quarter operating results.

Customer Reorganization

On February 2, 1998, APS Holding Corporation ("APS"), filed for
reorganization protection under Chapter 11 of the United States Bankruptcy
Code. As of the date of the Chapter 11 filing, the Company's total receivables
with APS approximated $10 million. APS has received a capital line of credit
from a reputable financial institution and is continuing business operations.
The Company continues to do business with APS on a cash in advance basis.
Although difficult to quantify based upon the uncertainty of the financial
condition of APS, the Company believes that net uncollectible receivables, if
any, from APS will be immaterial.

In addition, APS is a customer of Fel-Pro. The Company believes that the
allowance established by Fel-Pro prior to the acquisition of Fel-Pro related
to receivables from APS is adequate to cover any uncollectible amounts.

Effect of Accounting Pronouncements

In 1997, the Financial Accounting Standards Board issued Statement No. 130,
Reporting Comprehensive Income. This Statement establishes standards for the
reporting and display of comprehensive income and its components in a full set
of general purpose financial statements. Statement 130 is effective for fiscal
years beginning after December 15, 1997. Beginning in 1998, the Company will
provide the information relating to comprehensive income to conform to the
Statement 130 requirements.

Also in 1997, the Financial Accounting Standards Board issued Statement No.
131, Disclosures about Segments of an Enterprise and Related Information. The
statement supersedes Financial Accounting Standards Board Statement No. 14 and
establishes standards for the way public business enterprises report selected
information about operating segments in annual reports and interim financial
reports issued to shareholders. Statement 131 is effective for fiscal years
beginning after December 15, 1997. For the year ended 1998, the Company will
provide financial and descriptive information about its reportable operating
segments to conform to the Statement 131 requirements. Management plans to
report the requirements of Statement 131 for the following operating segments:
Sealing Systems, Powertrain Systems and General Products.

S-46
<PAGE>

T&N

YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996
AND YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1995

On March 6, 1998, Federal-Mogul completed its cash offer to acquire all
outstanding common stock of T&N for 260 pence per share. Total consideration
paid was (Pounds)1.4636 billion ($2.4164 billion, converted at a blended
exchange rate of 1 pound sterling to 1.6510 U.S. dollars). In connection with
securing regulatory approvals for the acquisition of T&N, Federal Mogul agreed
subsequently to divest certain assets, consisting principally of T&N's
thinwall and dry bearings (polymer bearings) operations. See "Business--
Reorganization." These assets are a subset of the operations T&N included in
its bearings product group and the discussion below of such product group does
not, therefore, directly correspond to the assets to be divested (which are
referred to elsewhere in this Prospectus Supplement as the "T&N Bearings
Business").

The following discussion is based upon the T&N Financial Statements included
elsewhere in this Prospectus Supplement, which have been prepared in
conformance with U.K. GAAP. U.K. GAAP differ in certain significant respects
from U.S. GAAP. The significant differences between U.S. GAAP and U.K. GAAP as
they relate to T&N are summarized in Note 29 to the T&N Financial Statements.

RESULTS OF OPERATIONS

Turnover (Net Sales)

T&N's consolidated turnover excluding associated undertakings (hereinafter
referred to as net sales) decreased by 8.0% in 1997. The 1997 decrease was
primarily due to the effects of adverse foreign exchange fluctuations, 1997
divestitures and the full year impact of 1996 divestitures. These decreases
were partially offset by the 1997 acquisition of Metal Leve, Inc., which
expanded T&N's product offerings in piston-related products, and certain
volume improvements for continuing businesses. Excluding 1997 acquisitions
(which added (Pounds)30 million to 1997 net sales) and the impact of
divestitures, 1997 net sales decreased 4.4% as compared to 1996.

The primary source of the foreign exchange fluctuation impact on T&N in 1997
was the continued appreciation of the pound sterling in relation to other
European currencies (and, to a lesser extent, the U.S. dollar) through the
year. This appreciation resulted in an adverse currency translation effect
upon overseas earnings and erosion of margins on exports billed in foreign
currency. These effects were partially offset by reduced expense for materials
imported into the U.K. Excluding the effects of (Pounds)153 million in adverse
foreign currency fluctuations and acquisitions, net sales from continuing
operations increased by approximately 4.0%.

Net sales by market were:

<TABLE>
<CAPTION>
1997 1996 1995
--------------- --------------- ---------------
(POUNDS STERLING IN MILLIONS)
<S> <C> <C> <C>
Light vehicle original
equipment............... (Pounds) 731.2 (Pounds) 772.9 (Pounds) 756.6
Automotive aftermarket... 497.1 529.4 480.1
Industrial and heavy duty
original equipment...... 570.8 653.7 854.8
--------------- --------------- ---------------
(Pounds)1,799.1 (Pounds)1,956.0 (Pounds)2,091.5
=============== =============== ===============
</TABLE>

Net sales by product group (as these were configured prior to Federal-
Mogul's acquisition of T&N) were:

<TABLE>
<CAPTION>
1997 1996 1995
--------------- --------------- ---------------
(POUNDS STERLING IN MILLIONS)
<S> <C> <C> <C>
Bearings................. (Pounds) 329.6 (Pounds) 333.1 (Pounds) 342.5
Sealing products......... 195.1 216.0 227.0
Friction products........ 293.9 309.5 319.0
Piston products.......... 572.8 574.7 559.6
Composites and camshafts. 372.9 381.1 328.9
--------------- --------------- ---------------
Continuing operations.... 1,764.3 1,814.4 1,777.0
Discontinued operations.. 34.8 141.6 314.5
--------------- --------------- ---------------
(Pounds)1,799.1 (Pounds)1,956.0 (Pounds)2,091.5
=============== =============== ===============
</TABLE>

S-47
<PAGE>

Decreases in sealing products net sales were primarily attributable to
German and French businesses. Piston products net sales, which declined by
0.3% in 1997 as compared with 1996, were affected by the acquisition of Metal
Leve, Inc. (excluding that acquisition, piston products net sales from
continuing operations decreased 5.2%).

During 1997, 1996 and 1995, T&N divested certain non-core businesses with
net sales of (Pounds)34.8 million, (Pounds)141.6 million and (Pounds)314.5
million. These divestitures included the disposition of T&N's entire
construction materials and engineering products business.

Net sales for businesses divested by product group were:

<TABLE>
<CAPTION>
DISCONTINUED OPERATIONS
----------------------------------------
1997 1996 1995
------------ ------------- -------------
(POUNDS STERLING IN MILLIONS)
<S> <C> <C> <C>
Sealing products................ (Pounds)12.1 (Pounds) 49.8 (Pounds) 49.6
Friction products............... 12.5 18.6 10.9
Composites and camshafts........ 10.2 18.9 170.8
Construction materials and
engineering.................... -- 54.3 83.2
------------ ------------- -------------
(Pounds)34.8 (Pounds)141.6 (Pounds)314.5
============ ============= =============
</TABLE>

Cost of Sales

Cost of sales as a percentage of net sales was 71.8%, 72.5% and 72.1% for
1997, 1996 and 1995, respectively. The 1997 acquisition and 1997 and 1996
divestitures had an immaterial impact on cost of sales as a percentage of net
sales. Excluding the impact of 1995 divestitures, cost of sales as a
percentage of net sales was 71.3% in 1995.

Federal-Mogul Bid Related Costs

T&N incurred (Pounds)10 million of costs in 1997 related to the acquisition
bid by Federal-Mogul. These fees were primarily for professional services
provided with respect to the offer to purchase the entire outstanding share
capital of T&N.

Other Operating Expenses

Significant components of other operating expenses were:

<TABLE>
<CAPTION>
1997 1996 1995
------------- ------------- -------------
(POUNDS STERLING IN MILLIONS)
<S> <C> <C> <C>
Selling and distribution
costs........................ (Pounds)148.8 (Pounds)168.6 (Pounds)173.5
Administrative expenses....... 130.7 148.7 144.0
Research & development........ 52.1 53.0 52.2
------------- ------------- -------------
(Pounds)331.6 (Pounds)370.3 (Pounds)369.7
============= ============= =============
</TABLE>

Selling and distribution costs as a percentage of net sales were 8.3%, 8.6%
and 8.3% for 1997, 1996 and 1995, respectively. Administrative expenses as a
percentage of net sales were 7.3%, 7.6% and 6.9% for 1997, 1996 and 1995,
respectively. The 1997 acquisition and 1997, 1996 and 1995 divestitures impact
on selling and distribution costs as a percentage of net sales and
administrative expenses as a percentage of net sales were immaterial.

Research and development costs as a percentage of net sales were 2.9%, 2.7%
and 2.5% for 1997, 1996 and 1995, respectively, and reflect T&N's continuing
commitment to investment in innovation and technology.

S-48
<PAGE>

ASBESTOS

In the U.S., T&N plc and two of its U.S. subsidiaries (the "T&N Companies")
are among many defendants named in numerous court actions alleging personal
injury resulting from exposure to asbestos or asbestos-containing products.
T&N plc is also, to a lesser extent, subject to asbestos-disease litigation in
the U.K. and to property damage litigation in the U.S. Because of the slow
onset of asbestos-related diseases, management anticipates that similar claims
will be made in the future. It is not known how many such claims may be made
nor the expenditure which may arise therefrom. See "Risk Factors--T&N's
Asbestos Liability."

In 1996, T&N secured a (Pounds)500 million layer of insurance which will be
triggered should the aggregate cost to resolve claims notified after June 30,
1996, where the exposure occurred prior to that date (incurred but not
reported, or "IBNR," claims), exceed (Pounds)690 million. For additional
information regarding asbestos-related liabilities and reserves, see the Pro
Forma Financial Statements and Notes 19 and 28 to the T&N Financial
Statements.

Asbestos Charges Recognized in 1996 and 1997

T&N recognized a charge to establish provisions for IBNR claims for the year
ended December 31, 1996 in the amount of (Pounds)323 million ((Pounds)550
million on an undiscounted basis); T&N also recognized a second charge in the
amount of (Pounds)50 million related to the risk that U.S. courts would reject
a class action settlement to which the T&N Companies were party (in Georgine
et al v. Amchem et al). This settlement was ultimately rejected by the U.S.
Supreme Court in 1997 and some increase in new IBNR claims filed has resulted.
T&N also recognized a (Pounds)50 million charge in 1996 for claims notified
and outstanding as of June 30, 1996. In addition, T&N recorded the (Pounds)92
million cost of the (Pounds)500 million layer of insurance in 1996, and the
premium was paid in 1997. T&N recognized no additional provisions relating to
asbestos in 1997.

Asbestos-Related Payments in 1996 and 1997

T&N paid (Pounds)149.4 million for asbestos-related claims, including the
(Pounds)92 million insurance premium, during 1997 and (Pounds)64.8 million in
1996.

RELEASE OF PROVISION/(PROVISION AGAINST) FIXED ASSET INVESTMENTS:
KOLBENSCHMIDT COSTS

In March 1995, T&N entered into option arrangements for 1,345,452 shares of
Kolbenschmidt AG ("KS"), which represented approximately 49% of the
outstanding share capital of KS. In 1995, T&N recognized a charge of
(Pounds)19.5 million related to the creation of provisions relating to the
reduction of the value of fixed asset investments (the Kolbenschmidt options).

In 1996, KS issued nine shares for each share already outstanding such that
the option arrangements increased to 13,454,520 shares. In December 1996,
options over 6,727,260 shares expired and T&N recognized a (Pounds)23.4
million related charge.

In 1997, Commerzbank subsequently sold the KS shares and, subject to the
option arrangement, T&N received part of the proceeds and recognized a gain of
(Pounds)13.2 million, accordingly. In addition, T&N received an offer to
purchase its remaining interest in KS, and, as a result, T&N recognized in
1997 an additional (Pounds)19.2 million gain (the sale of such remaining
interest occurred in March 1998). (See Note 4 to the T&N Financial
Statements.)

NET INTEREST PAYABLE AND SIMILAR CHARGES - GROUP

Net interest payable and similar charges - group (hereinafter referred to as
interest expense or interest income) was (Pounds)28.4 million in 1997 as
compared to (Pounds)26.8 million in 1996.

S-49
<PAGE>

Gross interest expense was (Pounds)39.3 million in 1997 as compared to
(Pounds)32.5 million in 1996. The 1997 increase of (Pounds)6.8 million in
gross interest expense is primarily attributable to higher interest rates,
partially offset by lower average borrowings arising from continued
improvements in working capital. In addition, 1997 gross interest expense
includes (Pounds)2.5 million for the amortization of T&N's discounted asbestos
provision.

Gross interest income was (Pounds)10.9 million in 1997 as compared to
(Pounds)5.7 million in 1996. The 1997 increase was primarily attributable to
earnings on funds reserved for asbestos liabilities.

Net interest expense in 1996 decreased (Pounds)9.0 million as compared to
1995. The 1996 decrease was primarily due to lower debt levels and interest
rates as compared with 1995.

TAX ON PROFIT/(LOSS) ON ORDINARY ACTIVITIES (INCOME TAXES)

Income tax expense was (Pounds)62.8 million in 1997 resulting in an
effective tax rate of 33.0% compared with the statutory U.K. corporation tax
of 31.5%. The difference between the effective tax rate and U.K. corporation
rate is attributable to a number of factors, none of which are material.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating activities (including asbestos) were (Pounds)111.4
million in 1997 as compared to (Pounds)215.7 million in 1996. The 1997
decrease is primarily attributable to the strong sales performance and the
increase in orders for 1998 shipment in the fourth quarter of 1997 which
limited T&N's ability to reduce debtors (accounts receivable) and stocks
(inventory) as compared to the 1996 reductions.

Capital expenditures in 1997 were (Pounds)103.9 million compared to
(Pounds)114.3 million in 1996. The 1997 decrease is primarily attributable to
the disposal of certain businesses and foreign currency fluctuations.

Proceeds from business disposals were (Pounds)75.7 million in 1997 compared
to (Pounds)74.8 million in 1996.

T&N paid (Pounds)32.6 million in 1997 for the acquisition of businesses. The
most significant acquisition in 1997 was that of Metal Leve, Inc., a
manufacturer of articulated pistons based in the United States.

LEGAL MATTERS

In addition to the asbestos litigation, T&N is engaged in various actions
arising in the ordinary course of its business. Management is of the opinion
that the outcome of these matters will not have a material adverse effect on
T&N's financial condition.

FOREIGN CURRENCY AND COMMODITY CONTRACTS

T&N was subject to exposure to market risks from changes in foreign exchange
rates and raw material price fluctuations. Derivative financial instruments
were utilized by T&N to reduce those risks. T&N does not hold or issue
derivative financial instruments for trading purposes.

OTHER MATTERS - YEAR 2000 COSTS

T&N has established a Year 2000 steering group to coordinate and address the
Year 2000 issue. Awareness and assessment stages have been completed. T&N is
currently implementing its action plan with a target completion date of
September 1998. Total costs for repair and maintenance of existing systems are
expected to approximate (Pounds)5 million ($8 million).

S-50
<PAGE>

FEL-PRO

YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996
AND YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1995

On January 9, 1998, Fel-Pro's owners signed an agreement to sell the Fel-Pro
group, consisting of Fel-Pro Inc., certain operating businesses and holding
companies affiliated with Fel-Pro Inc. and certain real estate owned by Fel-
Pro Inc. or its affiliates to Federal-Mogul. The transaction closed on
February 24, 1998, at which time Federal-Mogul acquired all equity interests
in the specified Fel-Pro entities for approximately $717 million, which
included 1,030,325.6 shares of Series E Stock (as hereinafter defined) with an
imputed value of $225 million and approximately $492 million in cash. Federal-
Mogul is in the process of reselling the chemical manufacturing operations
acquired with Fel-Pro (representing approximately $32.8 million of Fel-Pro's
1997 net sales and $2.6 million of Fel-Pro's 1997 net income).

RESULTS OF OPERATIONS

Net Sales

Fel-Pro's consolidated net sales increased 9.2% in 1997 as compared to 1996,
primarily due to volume increases from new and existing customers in the
aftermarket business. Consolidated net sales increased 15.5% in 1996 as
compared to 1995 primarily due to volume increases from new and existing
customers in the aftermarket business, as well as the acquisition of TCI, a
high performance transmission and torque converter manufacturer in December of
1995 and the acquisition of Korody-Colyer ("KC") in October of 1995 for $12.3
million and $7.1 million, respectively. Excluding the effect of the
acquisitions of TCI and KC, Fel-Pro's net sales increased 6.4% in 1995.

Original equipment and aftermarket sales of Fel-Pro were:

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
(DOLLARS IN
MILLIONS)
<S> <C> <C> <C>
Original Equipment:
Americas................................................. $ 94.6 $ 88.4 $ 85.8
Aftermarket:
United States and Canada................................. 299.8 282.9 246.4
International............................................ 94.9 76.6 55.5
------ ------ ------
Total sales............................................ $489.3 $447.9 $387.7
====== ====== ======
</TABLE>

Original equipment sales increased 7.0% in 1997 as compared to 1996 due to
volume increases of gaskets for the heavy duty market partially offset by
volume decreases in the automotive market related to the end of certain
products' life cycles. Fel-Pro's original equipment sales increased 3.0% in
1996 as compared to 1995.

Aftermarket sales in the United States and Canada increased 6.0% in 1997 as
compared to 1996 primarily due to new customer business. Sales increased 14.8%
in 1996 as compared to 1995 due to the following: (i) volume increases from
new and existing customers; (ii) the December 1995 acquisition of TCI; and
(iii) the full year impact of the October 1995 acquisition of KC.

Excluding the effect of the 1995 acquisitions, Fel-Pro's aftermarket sales
in the United States and Canada increased 7.8% in 1996.

International aftermarket sales increased 23.9% in 1997 as compared to 1996
primarily due to volume increases in heavy duty diesel engine parts.
International aftermarket sales increased 38.0% in 1996 as compared to 1995
primarily due to volume increases in heavy duty engine parts which included
the full year impact of the October 1995 KC acquisition. Excluding the effect
of the acquisition, international aftermarket sales increased 22.7% in 1996.

Cost of Goods Sold

Cost of goods sold as a percent of net sales was flat in 1997 at 54.8% as
compared to 1996. Cost of goods sold as a percent of net sales decreased to
54.8% in 1996 compared to 56.0% in 1995. The decrease is primarily
attributable to cost reductions and productivity improvement efforts.

S-51
<PAGE>

Operating Expenses

Operating expenses as a percentage of net sales decreased to 35.5% in 1997
compared to 36.4% in 1996. The 1997 decrease is primarily attributable to Fel-
Pro's increases in sales volume exceeding the corresponding increase in
variable operating expenses. Operating expenses as a percentage of net sales
were relatively flat in 1996 as compared to 1995.

Income Taxes

Fel-Pro's $15.7 million deferred tax assets at December 29, 1996 were
written off in 1997 due to the conversion from C corporation status to
Subchapter S corporation status of its principal operating company effective
1997.

The difference between Fel-Pro's effective income tax rate and the statutory
tax rate is also due to the conversion of Fel-Pro's principal operating
company from C corporation status to Subchapter S corporation status in 1997.
In 1997, upon conversion of the principal operating company (Felt Products
Mfg. Co. and subsidiaries) to Subchapter S corporation status and in addition
to writing off the deferred tax assets, Fel-Pro recognized $7.4 million of
expense associated with LIFO recapture taxes.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow from operations of $51.7 million in 1997 increased significantly
during 1997 primarily due to the write-off of $16.8 million in deferred taxes
and an $11.3 million improvement in accounts receivable over the prior year.

Cash flow used by investing activities of $18.5 million in 1997 include $3.5
million for the September purchase of certain operating assets of Biwax
Corporation. Capital expenditures were $18.3 million in 1997, primarily for
enhanced manufacturing capabilities and process improvements. Partially
offsetting these outflows were $3.9 million related to proceeds from available
for sale marketable securities.

Cash flows used by 1997 financing activities were $33.2 million, a decrease
of $32.7 million from 1996. The 1997 decrease was primarily due to lower
amounts provided to fund Fel-Pro's affiliates.

LEGAL MATTERS

Fel-Pro is engaged in various legal actions arising in the ordinary course
of its business. Management, after taking into consideration legal counsel's
evaluation of such actions, is of the opinion that it has adequate legal
defenses or insurance coverage and that the outcome of these matters will not
have a material adverse effect on Fel-Pro's financial position.

OTHER MATTERS

Year 2000 Costs

Fel-Pro is presently implementing an enterprise resource planning system
using Oracle software. This system is expected to be Year 2000 compliant. This
project was undertaken in late 1996 recognizing that information will be a key
driver for growth in the 21st century and that business needs are changing.
The system solution provides the ability to handle multiple product lines,
currencies, businesses, and locations. The existing mainframe systems lack
functionality and flexibility in addition to being incompatible with the Year
2000. The total project is expected to be completed by February 1999. The
expected cost related to Fel-Pro's Year 2000 project is immaterial.

Customer Bankruptcy Reorganization

On February 2, 1998, APS filed for reorganization protection under Chapter
11 of the United States Bankruptcy Code.

Fel-Pro believes that the allowance established related to receivables from
APS is adequate to cover any uncollectible amounts.

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<PAGE>

DESCRIPTION OF CERTAIN INDEBTEDNESS

In connection with the acquisitions of T&N and Fel-Pro, Federal-Mogul
entered into a $2.75 billion floating rate senior credit agreement (the
"Senior Credit Agreement") (consisting of a $2.35 billion term loan facility,
which was reduced to $2.275 billion effective as of March 11, 1998 and a $400
million revolving loan facility) and a $500 million floating rate senior
subordinated credit agreement (the "Senior Subordinated Credit Agreement" and,
together with the Senior Credit Agreement, the "Credit Agreements"), each with
Chase as agent and as lender. The entire amount of the senior term loan
facility and the entire amount of the senior subordinated credit facility were
drawn down. It is anticipated that the net proceeds from the Offering will be
used to prepay the entire outstanding principal amount of the Interim Loans,
with the balance of the net proceeds used to repay ratably the Tranche A Loans
and the Tranche B Loans (though lenders under the Tranche B Loans may elect
not to be repaid, in which case funds which would have been used for such
repayment shall be applied to repayment of the Tranche A Loans). The Senior
Credit Agreement has been syndicated to other lenders. These credit facilities
have replaced a revolving credit facility that provided for loans in an amount
of up to $350 million outstanding at any time and refinanced the outstanding
balance under such facility ($350 million, which was used to finance the
acquisition of Fel-Pro) and other indebtedness incurred in the acquisition of
Fel-Pro in the amount of $150 million. See "T&N and Fel-Pro Acquisitions--
Financing of the Acquisitions." On June 10, 1998, Federal-Mogul completed its
sale of 10,537,093 shares of its Common Stock in an underwritten public
offering. Net proceeds to Federal-Mogul from that offering were used to prepay
the entire outstanding $500 million principal amount of the Senior
Subordinated Loans and to reduce the outstanding balance of the Interim Loans
by $92.3 million. See "June 1998 Common Stock Offering."

The Senior Credit Facility

Under the Senior Credit Agreement, Federal-Mogul (i) has borrowed $2.275
billion in term loans (the "Term Loans") to (a) finance the acquisition of
T&N, (b) refinance existing indebtedness of T&N, (c) pay fees and expenses
incurred in connection with the acquisition of T&N and the Credit Agreements
and (d) refinance indebtedness incurred in the acquisition of Fel-Pro and (ii)
may borrow up to $400 million outstanding at any time in revolving credit
loans (the "Revolving Credit Loans") to be used (a) to pay fees and expenses
incurred under the Senior Credit Agreement and (b) for working capital and
other general corporate purposes.

The Term Loans are divided into three tranches: (i) interim loans (the
"Interim Loans") in the aggregate amount of $925 million maturing September
12, 1999, (ii) Tranche A loans (the "Tranche A Loans") in the aggregate amount
of $600 million maturing on December 31, 2003, which are to be repaid in 20
quarterly installments commencing March 31, 1999, the amount of each quarterly
installment being $19 million in 1999 and 2000, $30 million in 2001 and $41
million in 2002 and 2003; and (iii) Tranche B loans (the "Tranche B Loans") in
the aggregate amount of $750 million maturing on December 31, 2005, which are
to be repaid in 28 quarterly installments commencing March 31, 1999, the
amount of each quarterly installment being $1.25 million during the period
from 1999 to 2003, inclusive, $75 million in 2004 and $106.25 million in 2005.

Revolving Credit Loans are to be available for a period of six years
commencing on March 12, 1998 (the "Closing Date"). Up to $120 million of
Revolving Credit Loans may be borrowed in currencies other than U.S. dollars.

Indebtedness under the Senior Credit Agreement bears interest at a floating
rate based upon, at Federal-Mogul's option, either (i) the higher of the prime
rate of Chase and 0.5% in excess of the overnight federal funds rate ("Base
Rate"), plus (in each case) a margin of 0.5% for Revolving Credit Loans, 1.0%
for the Interim Loans and Tranche A Loans and 1.25% for Tranche B Loans, or
(ii) the average of the offering rates of banks in the London interbank
eurodollar market for U.S. dollar deposits ("Eurodollar Rate") plus a margin
of 1.5% for Revolving Credit Loans, 2.0% for the Interim Loans and Tranche A
Loans and 2.25% for Tranche B Loans. After repayment of the Interim Loans the
applicable margins will depend upon Federal-Mogul's consolidated leverage
ratio: (i) in the case of Base Rate loans the applicable margin will vary
between 0% and 0.5% for Revolving Credit Loans, 0.0% and 1.0% for Tranche A
Loans and 0.5% and 1.25% for Tranche B Loans, and

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<PAGE>

(ii) in the case of Eurodollar Rate loans the applicable margin will vary
between 0.75% and 1.5% for Revolving Credit Loans, 1.0% and 2% for Tranche A
Loans and 1.5% and 2.25% for Tranche B Loans.

Federal-Mogul and its U.S. subsidiaries have pledged 100% (or, in the case
of the stock of certain foreign subsidiaries, 65%) of the capital stock of
their subsidiaries and certain intercompany loans to secure Term Loans and
Revolving Credit Loans. Part of such collateral also secures certain existing
public debt of Federal-Mogul and certain other indebtedness, and all such
collateral will be released when Federal-Mogul has obtained investment grade
ratings for its debt or met a certain leverage ratio. In addition, Federal-
Mogul and its U.S. subsidiaries have guaranteed the Term Loans and Revolving
Credit Loans and certain other indebtedness. The stock of certain other
subsidiaries of Federal-Mogul may be pledged in the future to secure the Term
Loans and the Revolving Credit Loans and other indebtedness and one or more of
such other subsidiaries may also in the future guarantee such indebtedness.

The Senior Subordinated Credit Facility

Under the Senior Subordinated Credit Agreement, Federal-Mogul borrowed $500
million (the "Senior Subordinated Loans") (i) to finance the acquisition of
T&N, (ii) to pay fees and expenses in connection with the acquisition of T&N
and the financing thereof and (iii) to refinance indebtedness incurred in the
acquisition of Fel-Pro. The Senior Subordinated Loans were paid in full with
the net proceeds to Federal-Mogul from its Common Stock offering on June 10,
1998. See "June 1998 Common Stock Offering."

Certain Covenants

The Senior Credit Agreement contains certain covenants that restrict or
limit Federal-Mogul from taking various actions, including, subject to
specified exceptions, (i) the granting of additional liens, (ii) the
incurrence of additional indebtedness, (iii) the granting of additional
guarantees, (iv) mergers, acquisitions and other fundamental corporate
changes, (v) the sale of assets, (vi) the payment of dividends and other
restricted payments, (vii) the making of investments, (viii) optional
prepayments of certain debt and the modification of debt instruments, (ix)
entering into sale and leaseback transactions, (x) the imposition of
restrictions on any subsidiary's ability to make payments, loans or advances
to Federal-Mogul, (xi) entering into a new debt agreement with more
restrictive covenants and (xii) transactions with affiliates. The Senior
Credit Agreement also contains certain financial covenants that require
Federal-Mogul to meet and maintain certain financial tests and minimum ratios,
including a minimum cash flow coverage ratio, a minimum consolidated leverage
ratio and a minimum consolidated net worth test. After payment of the Interim
Loans Federal-Mogul may elect to have a different set of covenants apply to
the Senior Credit Agreement, which will require lower leverage but otherwise
will be less restrictive. Prior to payment of the Interim Loans and the
election by Federal-Mogul of alternative covenants, the Senior Credit
Agreement prohibits, payment of dividends on Federal-Mogul Common Stock in
excess of the rate of $0.12 per quarter.

Repayments and Refinancing

The Senior Credit Agreement requires mandatory repayments with some or all
of the net proceeds received upon the occurrence of certain events, including
issuances by Federal-Mogul of capital stock, the incurrence by Federal-Mogul
of certain debt and certain sales of assets. The Senior Credit Agreement also
requires mandatory prepayment from "excess cash flow." The "asset sale" and
"excess cash flow" (each as defined in the Senior Credit Agreement) prepayment
requirements in the Senior Credit Agreement cease to be applicable when
certain leverage tests are met.

Pursuant to these requirements it is anticipated that the net proceeds of
the Offering will be used to prepay the entire outstanding principal amount of
the Interim Loans ($830.7 million), with the balance of the net proceeds used
to repay ratably the Tranche A Loans and the Tranche B Loans (though lenders
under the Tranche B Loans may elect not to be repaid, in which case funds
which would have been used for such repayment shall be applied to repayment of
the Tranche A Loans).

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<PAGE>

Federal-Mogul has the option to prepay without premium at any time the Term
Loans and the Revolving Credit Loans.

Events of Default

The Senior Credit Agreement contains customary events of default, including
nonpayment of principal, interest or fees, violation of covenants, inaccuracy
of representations or warranties in any material respect, cross acceleration
and cross default to certain other indebtedness, bankruptcy, noncompliance
with certain provisions of ERISA, material judgments, failure of the
collateral documents or subordination provisions, and change of control. The
occurrence of any of such events could result in acceleration of Federal-
Mogul's obligations under the Senior Credit Agreement and foreclosure on
collateral securing the Term Loans and Revolving Credit Loans.

Fees

Federal-Mogul has paid a facility fee on the used and unused portion of each
lender's commitment to make Revolving Credit Loans at the rate of 0.5% per
annum prior to repayment of the Interim Loans and at the rate of 0.25% to 0.5%
per annum thereafter, depending on Federal-Mogul's leverage ratio. In
addition, Federal-Mogul has paid customary fees to Chase on the Closing Date
and reimbursed customary expenses in connection with the Senior Credit
Agreement and the Senior Subordinated Credit Agreement.

S-55
<PAGE>

BUSINESS

For purposes of this section of the Prospectus Supplement ("Business"),
references to "Federal-Mogul" or the "Company" include operations acquired in
the acquisitions of T&N and Fel-Pro and statistics have been prepared on a pro
forma basis, giving effect to the acquisitions of T&N and Fel-Pro and the
disposition of the T&N Bearings Business as if they had occurred on January 1,
1997, unless otherwise noted. See "Unaudited Pro Forma Financial Data."

OVERVIEW

Federal-Mogul is a leading global manufacturer and distributor of a broad
range of vehicular components for automobiles and light trucks, heavy duty
trucks, farm and construction vehicles and industrial products. Such
components include powertrain systems components (primarily bearings, rings
and pistons), sealing systems components (dynamic seals and gaskets) and
general products (primarily camshafts, friction products, sintered products
and systems protection products). Federal-Mogul markets its products to many
of the world's major OE manufacturers. Federal-Mogul also manufactures and
supplies its products and related parts to the aftermarket relating to each of
these categories of equipment.

Founded in 1899, Federal-Mogul traditionally focused on the manufacture and
distribution of engine bearings and sealing systems. From 1990 through 1996,
Federal-Mogul pursued a strategy of opening retail auto stores in various
domestic and international locations. These geographically-dispersed stores
proved burdensome to manage and resulted in substantial operating losses. In
the fourth quarter of 1996, Federal-Mogul underwent a change of management,
following which the Company initiated a significant restructuring program
designed to refocus the Company on its core competency of manufacturing. As
part of such restructuring, Federal-Mogul took the following actions: (i)
closed international aftermarket distribution centers in Malaysia and
Singapore; (ii) divested 72 international retail aftermarket operations and
sold or restructured 25 wholesale aftermarket operations; (iii) closed its
Leiters Ford, Indiana manufacturing facility and consolidated its lighting
products operations in Juarez, Mexico; (iv) consolidated certain of its North
American warehouse facilities; (v) consolidated its customer support functions
previously housed in Phoenix, Arizona into the Company's Southfield
headquarters; (vi) consolidated its European aftermarket management functions
in Geneva, Switzerland into the Wiesbaden, Germany manufacturing headquarters;
and (vii) streamlined certain of its administrative and operational staff
functions worldwide. In addition, by the end of the first quarter of 1998, the
Company expects to have successfully exited all of its retail businesses,
except for Puerto Rico where the Company continues to seek a buyer. Federal-
Mogul also began to pursue a growth strategy of acquiring complementary
manufacturing companies that enhance the Company's product base, expand its
global manufacturing operations and provide opportunities to capitalize on the
Company's aftermarket distribution network and technological resources.

In connection with its growth strategy, on March 6, 1998 Federal-Mogul
acquired T&N, a U.K. based supplier of engine and transmission products, for
total consideration of approximately (Pounds)1.46 billion ($2.42 billion
(converted at a blended exchange rate of 1 pound sterling to 1.6510 U.S.
dollars). T&N manufactures and supplies high technology engineered automotive
components and industrial materials including pistons, friction products,
bearings, systems protection, camshafts and sealing products. On February 24,
1998, Federal-Mogul acquired Fel-Pro, a privately-owned automotive parts
manufacturer, for total consideration of approximately $717 million. Fel-Pro
is a premier gasket manufacturer for the North American aftermarket and OE
heavy duty market. See "T&N and Fel-Pro Acquisitions."

Federal-Mogul currently operates facilities at over 240 locations in 24
countries. On a pro forma basis (giving effect to the acquisitions of T&N and
Fel-Pro and the disposition of the T&N Bearings Business as if they had
occurred on January 1, 1997), Federal-Mogul's total sales for 1997 were $4.8
billion.

S-56
<PAGE>

The following charts set forth Federal-Mogul's net sales by customer group,
geographic region and manufacturing division as a percentage of total net
sales for the year ended December 31, 1997, on a pro forma basis.

[Charts setting forth net sales by customer group, geographic region and
manufacturing division for the year ended December 31, 1997]

Among Federal-Mogul's largest customers are Caterpillar, Chrysler, Cummins,
Ford, General Motors, Mercedes-Benz, NAPA, Peugeot and Volkswagen/Audi (in
alphabetical order).

BUSINESS STRATEGY

Systems Approach

The breadth of the Company's manufacturing capabilities and product
offerings enable it to be one of a small number of manufacturers with the
ability to seal entire engine, transmission and axle systems and to be a
single source supplier of engine and sealing components. In addition, Federal-
Mogul is committed to becoming a provider of a complete engine and
transmission modules for its OE customers. The Company believes that OE
manufacturers of automobiles, trucks and other vehicles are increasingly
seeking to reduce the number of suppliers from which they source parts and to
develop relationships with suppliers that can offer integrated systems and
modules in order to lower production costs, increase quality, provide better
technology and shorten product development cycles. The T&N and Fel-Pro
acquisitions, which expanded the Company's gasket, cast aluminum piston, large
bearing and sealing product lines and added product lines for articulated
pistons, cylinder liners and piston rings, are major steps toward Federal-
Mogul's strategic goal of developing global engine and sealing systems for its
OE customers.

Continue Focus on New Product Innovation

The Company's expertise in engineering and research and development has made
Federal-Mogul a leader in virtually all of the products segments in which it
competes. The Company utilizes the latest technologies, processes and
materials to solve problems for customers and to bring new, innovative
products to market. The Company has special competencies in alloy development,
customized materials formulations, surface technology, advanced modeling and
testing and systems engineering. These capabilities allow the Company to
reduce production costs and to develop products that are more durable and
exhibit better interaction with surrounding components. These innovative
products better serve OE customers and aid brand development, resulting in a
higher margin product mix.

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<PAGE>

Extend Global Manufacturing Reach

The Company is committed to extending its manufacturing capabilities
worldwide in response to the global expansion of its OE manufacturing
customers. The acquisition of T&N and Fel-Pro have substantially increased the
Company's manufacturing presence, particularly in North America and Europe.
Management believes expansion of manufacturing operations to follow the
expansion of OE manufacturers into Latin America, Eastern Europe and Asia
provides significant growth opportunities for the Company in the future.

Pursue Strategic Acquisitions

The vehicular engine and sealing component industry is large and highly
fragmented. The Company believes that as OE manufacturers continue to
outsource and reduce the number of suppliers, opportunities will exist for
further consolidation within industry. The Company believes that, through its
established presence in these markets and its strong relationships with OE
manufacturers worldwide, the Company is in a favorable position to capitalize
on future industry consolidation. The Company's management has substantial
experience in completing and integrating acquisitions within the automobile
parts industry and believes that this experience will help it select and
pursue acquisition opportunities that can enhance the Company's product base,
expand its global manufacturing operations and further capitalize on the
Company's aftermarket distribution network and technological resources.

Expand Aftermarket Presence

Approximately 48% of the Company's 1997 sales, on a pro forma basis, were
generated from the aftermarket. The Company believes that opportunities exist
to further leverage its broad product offerings, reputation for new product
innovation and presence within the OE market to increase its penetration of
the worldwide aftermarket. In addition, the Company believes that its ability
to sell products developed for the OE market to aftermarket customers reduces
the impact of adverse changes in demand for new vehicles.

EVA Focus

In 1997, the Company adopted Economic Value Added (EVA(R)) as its primary
financial measurement and incentive compensation metric. EVA is equal to net
operating profits after economic taxes and a charge for capital invested in
the Company, which is equal to the product of the total capital invested in
the Company and the weighted average cost of capital for the Company's target
blend of debt and equity. The Company's management has placed significant
emphasis on improving the Company's financial performance and achieving
various operating efficiencies through technical development, manufacturing,
marketing and administrative rationalization in connection with this effort.
The Company's EVA improved significantly in 1997 due primarily to improved
operating margins (4.9% in 1996 and 7.7% in 1997) combined with $166 million
of cash flow from continuing operations (net of expenditures for property,
plant and equipment) in 1997. EVA is also being applied to the integration of
T&N and Fel-Pro to optimize synergies and cost savings. As the Company
continues to expand both its product base and its geographic scope, management
will evaluate investments and acquisitions based on both EVA and strategic
importance. In addition, the Company currently determines compensation for
certain top managers using an EVA based system and expects to increase the
number of managers participating in its EVA based compensation system to over
200 in 1999.

REORGANIZATION

Following the acquisitions of T&N and Fel-Pro, Federal-Mogul's integrated
operations are being reorganized to realize synergies and effectively
coordinate operations. Operations will be conducted through three
manufacturing operating units corresponding to major product areas: Powertrain
Systems, Sealing Systems and General Products. The major product categories in
Powertrain Systems include engine bearings and piston products. Sealing
Systems includes dynamic seals and gaskets. General Products include
camshafts, friction products, sintered products, systems protection products
and a number of smaller product lines. The Worldwide Aftermarket organization
is responsible for Federal-Mogul's global aftermarket sales, marketing and
distribution.

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<PAGE>

The components of Federal-Mogul's plan for integrating operations acquired
with T&N and Fel-Pro include: closure of four manufacturing facilities
worldwide; relocation of highly manual manufacturing product lines to lower
cost regions or more suitable locations; consolidation of overlapping
manufacturing, technical and sales facilities and joint ventures; closure of
two aftermarket central warehouses and five in-country warehouses;
consolidation of aftermarket marketing and customer support functions; and
streamlining of administrative, sales, marketing and product engineering
staffs worldwide. An anticipated result of the integration plan and the
restructuring is a reduction of approximately 4,200 employees.

In connection with securing regulatory approvals for the acquisition of T&N,
Federal-Mogul executed an Agreement Containing Consent Order with the FTC on
February 27, 1998. Pursuant to this agreement Federal-Mogul must divest the
T&N Bearings Business, consisting principally of T&N's thinwall and dry
bearings (polymer bearings) operations, within six months after the FTC
declares the consent order final and must provide for independent management
of those assets pending such divestiture. The agreement stipulates that the
T&N Bearings Business is to be maintained as a viable, independent competitor
of Federal-Mogul and that Federal-Mogul shall not attempt to direct the
activities of, or exercise control over, the T&N Bearings Business or have
contact with the T&N Bearings Business outside of normal business activities.
The T&N Bearings Business accounted for approximately $393.1 million of T&N's
1997 revenues and employed approximately 4,000 people. Certain pro forma
information related to the disposition of the T&N Bearings Business is set
forth under the caption "Unaudited Pro Forma Financial Data." In addition,
T&N's North American aftermarket business is being held separately (on an
interim basis) as an independent business pursuant to the Agreement Containing
Consent Order.

MANUFACTURING DIVISIONS

Federal-Mogul has three manufacturing divisions as follows:

<TABLE>
<CAPTION>
% OF
MANUFACTURING 1997
DIVISION PRODUCT SALES BRAND NAMES APPLICATION

<S> <C> <C> <C> <C>
Powertrain Engine Bearings, Bushings, Washers Federal-Mogul(R), Glyco(R), automotive, light truck,
Systems and Large Bearings 40.0% AE Goetze(R) and Sterling(R) heavy duty, industrial,
($1.9 billion of Pistons and Piston Pins 33.0% marine, agricultural,
consolidated Rings and Liners 27.0% power generation and
sales ------ small air-cooled engine
in 1997)
100.0%

Sealing Systems Dynamic Seals 30.0% National(R), Mather(R), STS(R), automotive, light truck,
($1.1 billion of Gaskets 70.0% Redi-Seal(R), Redi-Sleeve(R), heavy duty truck,
consolidated ------ Unipiston(R), Engine Seal(R), Fel- agricultural, off-highway,
sales in 1997) Pro(R), Payen(R) and McCord(R) marine, railroad, high
performance and
industrial
100.0%

General Products Camshafts 13.0% Weyburn-Bartel(R), Weyburn- vehicular and industrial
($1.2 billion of Friction Products 42.0% Lydmet(R), Brico(R), Sintertech(R),
consolidated Sintered Products 17.0% Bentley-Harris(R), Silverton(R),
sales in Systems Protection Products 9.0% FHE(R), Connoisseur Auto
1997)(1) Other General Products 19.0% Air Conditioning(R), Carter(R)
------ and Signal-Stat(R)
100.0%
</TABLE>
- -------
(1) Excluding approximately $600 million of sourced aftermarket product.

POWERTRAIN SYSTEMS

Federal-Mogul's Powertrain Systems products are used in automotive, light
truck, heavy duty, industrial, marine, agricultural, power generation and
small air-cooled engine applications. The Powertrain Systems (not including
the T&N Bearings Business to be divested) accounted for $1.9 billion of
Federal-Mogul's 1997 pro forma consolidated sales, of which 41% were in North
America, 52% were in Europe and 7% were in the rest of the world. In 1997,

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<PAGE>

Powertrain Systems unit's five largest customers by sales volume were
Caterpillar, Cummins, Ford, General Motors and Volkswagen/Audi (in
alphabetical order). Approximately 68% of the sales in 1997 for Powertrain
Systems were to OE customers while 32% were to aftermarket customers.

Federal-Mogul's Powertrain Systems operations combine large bearings and
piston products operations acquired in the T&N acquisition with pre-existing
powertrain assets of Federal-Mogul, primarily bearings operations. The
addition of T&N greatly expanded Federal-Mogul's presence in cast aluminum
pistons and large bearings as well as adding four additional product lines,
articulated pistons, piston rings, cylinder liners and piston pins. The
Company's Powertrain Systems maintains 57 manufacturing locations in 16
countries. (T&N's other Powertrain Systems operations--thinwall bearings and
dry bearings--are to be divested for regulatory reasons and are held
separately, in the interim, see "--Reorganization.")

Engine Bearings, Bushings, Washers and Large Bearings. Engine bearings,
bushings, washers and large bearings accounted for approximately 40% of the
sales for Powertrain Systems. Federal-Mogul manufactures thin wall engine
bearings, bushings and washers for original equipment and aftermarket sales.
These products include bimetallic and trimetallic journal bearings (main,
connecting rod, thrust and tilting pad), bimetallic and trimetallic bushings
and washers, valve plates, labyrinth seals, dry bearings and sputter bearings.
Federal-Mogul's large bearings products--heavy wall bearings, rotating plant
bearings and structural products--are sold only to OE customers. Engine
bearings, bushings, washers and large bearings are sold under the brand names
Federal-Mogul(R) and Glyco(R).

Pistons and Piston Pins. Pistons and piston pins accounted for approximately
33% of the sales for Powertrain Systems. Federal-Mogul designs and
manufactures cast aluminum pistons for all gasoline and diesel engine
applications, articulated aluminum body/steel crown pistons for heavy duty
diesel applications, piston rings for all classes of internal combustion
engines, cylinder liners in cast iron for new generation aluminum block
engines and piston pins from steel. The addition of T&N has significantly
expanded the technology, scope and range of pistons offered by Federal-Mogul,
most notably in the OE market. The T&N acquisition has also added piston rings
and a wide range of high strength steel piston pins (also known as wrist pins
or gudgeon pins) to the Federal-Mogul product line. Pistons and piston rings
are sold under the brand names AE Goetze(R) and Sterling(R).

Rings and Liners. Rings and liners accounted for approximately 27% of the
sales for Powertrain Systems. Federal-Mogul manufactures a wide range of cast
iron or steel rings, plasma, chrome and CKS coatings and wet, dry and cast
liners. Federal-Mogul now designs and manufactures a wide range of cast iron
and steel piston rings. With the addition of T&N and Fel-Pro, Federal-Mogul
added cylinder liners to its product line. Rings and liners are marketed under
the brand name AE Goetze(R).

SEALING SYSTEMS

Federal-Mogul's Sealing Systems products are used in automotive, light
truck, heavy duty diesel, agricultural, off-highway, marine, railroad, high
performance and industrial applications. Sealing Systems accounted for $1.1
billion of Federal-Mogul's 1997 consolidated sales, of which 66% were in North
America, 23% were in Europe and 11% were in the rest of the world. In 1997,
this division's five largest customers by sales volume were Chrysler, Cummins,
Fiat, Ford and General Motors (in alphabetical order). Approximately 47% of
the sales in 1997 for Sealing Systems division were to OE customers while 53%
were to aftermarket customers.

Federal-Mogul's Sealing Systems operations combine the gaskets operations
acquired in the T&N and Fel-Pro acquisitions with the pre-existing Federal-
Mogul dynamic seals business. The acquisitions of T&N and Fel-Pro have made
Federal-Mogul one of a select number of manufacturers with the ability to seal
entire engines, transmission and axle systems. The Company's Sealing Systems
maintains 23 manufacturing locations in 12 countries.

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<PAGE>

Dynamic Seals. Dynamic seals accounted for approximately 30% of the sales
for Sealing Systems division. Federal-Mogul manufactures a line of dynamic
seals consisting of oil seals (for engine, transmissions and axles),
crankshaft seal carrier assemblies, valve stem seals, air conditioning
compressor seals, bonded pistons for transmissions, 24-hour made-to-order oil
seals, wear sleeves for shaft sealing surface repair and truck hub seals.
These products are marketed under the brand names National(R), Mather(R),
STS(R), Redi-Seal(R), Redi-Sleeve(R) and Unipiston(R).

Gaskets. Gaskets accounted for approximately 70% of the sales for Sealing
Systems. Federal-Mogul utilizes a wide range of material technologies to
manufacture a full range of gasket types, including cylinder head gaskets in
multi-layer steel, graphite, edge molded metal plate and other composites,
valve and rocker cover gaskets, intake and exhaust manifold gaskets and
miscellaneous gaskets in steel, composite, elastomeric and spiral wound.
Federal-Mogul also offers a complete line of repair kits for professional
installers under the brand name of Fel-Pro(R). Federal-Mogul established a
strong presence in the heavy duty OE market for gaskets (including, primarily,
gaskets for light and heavy duty diesel engines) through its acquisition of
Fel-Pro. While Fel-Pro's market share of automotive OE gaskets was more
limited, T&N's Sealing Products division has a stronger presence in the
automotive OE market, adding balance to Federal-Mogul's overall OE gasket
activities.

GENERAL PRODUCTS

Federal-Mogul's General Products includes four primary product lines, which
were primarily acquired with T&N: camshafts, friction products, sintered
products and systems protection products. In addition, General Products
includes a number of smaller product lines, some of which (fuel systems
components and lighting products) pre-date the acquisition of T&N and others
of which (heat transfer products and textiles) were acquired with T&N.
Products Federal-Mogul sources from other manufacturers, which are not related
to Powertrain Systems and Sealing Systems, are included in General Products
and distributed by Worldwide Aftermarkets.

Products manufactured by Federal-Mogul's General Products accounted for $1.2
billion of Federal-Mogul's 1997 consolidated sales (excluding $600 million of
sourced aftermarket product). Approximately 34% of the unit's manufactured
sales were in North America, 57% were in Europe and 9% were in the rest of the
world. In 1997, General Products' five largest customers by sales volume were
Ford, General Motors, LucasVarity, Peugeot and Renault (in alphabetical
order). Approximately 64% of the sales in 1997 for General Products of
products it manufactures were to OE customers while 36% were to aftermarket
customers. The Company's General Products maintains 53 manufacturing locations
in 17 countries.

Camshafts. Camshafts accounted for approximately 13% of Federal-Mogul
manufactured products sales for General Products. Federal-Mogul casts,
machines and assembles camshafts primarily for the automotive market. These
products are marketed under the brand names Weyburn-Bartel(R) and Weyburn-
Lydmet(R).

Friction Products. Friction products accounted for approximately 42% of
Federal-Mogul manufactured products sales for General Products. Federal-Mogul
manufactures disc brake pads, drum brakes and brake linings for the automotive
and commercial vehicle sector. These products are marketed under the brand
name Ferodo(R) and are sold primarily in Europe.

Sintered Products. Sintered products accounted for approximately 17% of
Federal-Mogul manufactured products sales for General Products. Federal-Mogul
utilizes advanced powder metallurgy techniques for the manufacture of a wide
range of automotive components including valve guides, valve seat inserts, ABS
sensor rings and other transmission components, together with engine
components, principally pulleys, gears and sprockets. These products are
marketed under the brand names Brico(R) and Sintertech(R), solely to OE
customers.

Systems Protection Products. Systems protection products accounted for
approximately 9% of Federal-Mogul manufactured products sales for General
Products. Federal-Mogul manufactures a wide variety of

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products used for automotive under body and under hood protection from heat,
noise, abrasion and stone impingement. Most of these products are based on
braided, knitted and non-woven fabrics. Products based on the same
technologies are sold in the electrical, white goods and aerospace industries.
These products are marketed under the brand name Bentley-Harris(R), solely to
OE customers, and are sold primarily in North America.

Other General Products. Other general products--primarily consisting of heat
transfer products, fuel system components and lighting products--accounted for
approximately 19% of Federal-Mogul manufactured products sales for General
Products. Federal-Mogul is in the process of reselling the chemical
manufacturing operations acquired with Fel-Pro (representing approximately
$32.8 million of Fel-Pro's 1997 net sales and $2.6 million of Fel-Pro's 1997
net income). The primary components of other general products are:

. heat transfer products (engine cooling radiators in both aluminum and
copper brass construction and heater, ventilator and air conditioning
units for automotive in-cab use) manufactured in South Africa for sale
in the South African market and for global export under the brand names
Silverton(R), FHE(R) and Connoisseur Auto Air Conditioning(R);

. fuel system components (a full line of fuel pumps including mechanical
fuel pumps, diesel lift pumps, electric fuel pumps, electric fuel
modules and hanger assemblies) marketed in North America, under the
brand name Carter(R); and

. lighting products (clearance marker lamps, front, side and rear signal
lamps, stop, tail and turn lights, emergency lighting, turn signal
switches, auxiliary lighting and back-up lamps) marketed under the brand
name Signal-Stat(R).

WORLDWIDE AFTERMARKET

Federal-Mogul's North American distribution centers in Jacksonville,
Alabama, LaGrange, Indiana, and Maysville, Kentucky (the "Distribution
Centers"), served as the core of Federal-Mogul's domestic aftermarket
distribution network prior to the acquisitions of T&N and Fel-Pro. Products
are shipped from these Distribution Centers to service centers in the United
States and Canada. For Latin American sales, products are shipped through a
facility in Weston, Florida to two international regional distribution centers
and 15 Latin American branches. For European sales, products are shipped
through Federal-Mogul's facility in Kontich, Belgium.

T&N and Fel-Pro each brought with them developed aftermarket operations
duplicating, in part, Federal-Mogul's existing capabilities. T&N was, at the
time of its acquisition, the world's largest supplier of engine parts to the
independent aftermarket, as measured by revenues (with approximately 80% of
the parts distributed having been produced by T&N). Fel-Pro also brought
significant aftermarket penetration with it, built on the substantial brand
loyalty its gasket lines have acquired through a history of technological
innovations, merchandising and marketing, which have differentiated them in
the market, particularly among professional installers. Management thus
believes that aftermarket distribution provides significant opportunities for
realization of synergies.

T&N's aftermarket distribution system at the time of the acquisition
included 36 major distribution centers and sales offices utilizing over 1,600
employees worldwide to distribute over 200,000 component parts of 5,000 engine
models via its AE and Goetze marketing networks. The Company's Worldwide
Aftermarket includes 118 distribution facilities in 19 countries.

Fel-Pro's domestic aftermarket business, focused primarily on gaskets,
primarily distributed from a state-of- the-art facility inside its Skokie,
Illinois plant, using a highly automated, virtually paperless process.

CUSTOMERS

Among Federal-Mogul's largest customers are Caterpillar, Chrysler, Cummins,
Ford, General Motors, Mercedes-Benz, NAPA, Peugeot and Volkswagen/Audi (in
alphabetical order).

Original Equipment. Federal-Mogul's OE customers consist primarily of
automotive and heavy duty vehicle customers, as well as farm and industrial
equipment manufacturers, agricultural, off-highway, marine, railroad, high
performance and industrial applications. Federal-Mogul has well-established
relationships with substantially

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all major North American and European automotive OE manufacturers, some pre-
existing and others resulting from the acquisitions of T&N and Fel-Pro.
Management believes there are additional system opportunities with OE
manufacturers in the Asia-Pacific and Latin American regions. In addition,
management believes that the acquisitions of T&N and Fel-Pro have positioned
Federal-Mogul to take advantage of developing OE customer demand for single
supplier systems and modules in the future, particularly in light of Federal-
Mogul's global reach and capabilities. See "--Strategy."

Aftermarket. Federal-Mogul's domestic and international customers include
independent warehouse distributors who redistribute products to local parts
suppliers called "jobbers," industrial bearing distributors, distributors of
heavy duty vehicular parts, engine rebuilders and retail parts stores. The
breadth of Federal-Mogul's product lines, together with the strength of its
brand names and sales force, are central to Federal-Mogul's aftermarket
operations.

RESEARCH AND DEVELOPMENT

Federal-Mogul maintains technical centers in Europe and North America to
develop and provide advanced materials, products and manufacturing processes
for all of its manufacturing units, including facilities acquired with T&N and
Fel-Pro. Federal-Mogul's expertise in engineering, research and development
ensures that the latest technologies, processes and materials are considered
in solving problems for customers and bringing new, innovative product to
market. Federal-Mogul provides its customers with real-time engineering
capabilities and design development in their home countries. In recognition of
the importance of technology throughout its operations, following the
acquisitions, Federal-Mogul created the post of Vice President--Technology to
coordinate technological activities throughout its operations.

The acquisitions of T&N and Fel-Pro provided Federal-Mogul with substantial
additional technological expertise. In particular, the newly acquired
technical centers in the United Kingdom and the United States bring a new
depth of capability in materials development, surface engineering,
computational analysis, engine testing and systems engineering. Recent
achievements of these centers include development of advanced piston alloys,
novel bearing coatings, brake pads for motor sport applications, engine
structure modelling to predict gasket performance and test techniques for
measurement of bore distortion in running engines.

The Fel-Pro acquisition brought substantial research operations focusing on
gaskets and their manufacture, including complete material, application design
and process development capabilities and a dedicated design/engineering staff
of over 100 employees. Recent technology innovations pioneered by Fel-Pro
include PermaDry Plus(R), multi-layered steel head gaskets, noise and
vibration dampening devices and rubber edge molded gaskets. In the past, Fel-
Pro has introduced several product innovations including Fel-Coprene(R),
Print-O-Seal(R) and Perma-Torque Blue(R), which have become market standards
in the gasket aftermarket.

Technological activities are conducted at facilities Federal-Mogul acquired
from T&N including, in particular, its central technical center at Cawston,
England, its facility at Burscheid, Germany and its technical center at
Plymouth, Michigan, and at Fel-Pro's facilities in Skokie, Illinois, as well
as at Federal-Mogul's major pre-existing technological centers, in Ann Arbor,
Michigan, Logansport, Indiana, Malden, Missouri, and Wiesbaden, Germany. Each
of Federal-Mogul's operating units is engaged in various engineering, research
and development efforts working side by side with customers to develop custom
solutions unique to their needs.

Total expenditures for research and development activities, on a pro forma
basis, were approximately $102.8 million in 1997, $101.6 million in 1996 and
$99.8 million in 1995.

SUPPLIERS

Federal-Mogul sells its manufactured parts as well as parts manufactured by
other manufacturers to the aftermarket. In 1997, only one outside supplier of
Federal-Mogul provided products that accounted for more than 5% of Federal-
Mogul's net sales. This supplier provided products accounting for
significantly less than 10% of Federal-Mogul's net sales, pursuant to a long-
term contract.

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Federal-Mogul does not normally experience supply shortages of raw
materials. Certain of Federal-Mogul's relationships with its long-term
suppliers are contractual.

In connection with the acquisition of the automotive aftermarket business of
TRW, Inc. ("TRW") in 1992, Federal-Mogul and TRW entered into a Supply
Agreement for an initial term of 15 years (the "Supply Period"), pursuant to
which TRW agreed to supply Federal-Mogul with parts manufactured by TRW and
distributed by Federal-Mogul. During the first five years of the Supply Period
(the "Exclusive Period"), Federal-Mogul is an exclusive distributor of such
TRW parts and thereafter will be a nonexclusive distributor for the remaining
term of the Supply Agreement, subject to certain exceptions. Thereafter, both
the Exclusive Period and the Supply Period are automatically renewable for
one-year periods and are terminable upon one year's notice by either party.

LEGAL PROCEEDINGS

T&N Asbestos

In the United States, Federal-Mogul's subsidiary T&N plc and two of T&N
plc's U.S. subsidiaries ("the T&N Companies") are among many defendants named
in numerous court actions alleging personal injury resulting from exposure to
asbestos or asbestos-containing products. T&N plc is also subject to asbestos-
disease litigation, to a lesser extent, in the UK and to property damage
litigation based upon asbestos in the United States. Because of the slow onset
of asbestos-related diseases, management anticipates that similar claims will
be made in the future. It is not known how many such claims may be made nor
the expenditure which may arise therefrom. T&N has appointed the Center for
Claims Resolution ("CCR") as its exclusive representative in relation to all
asbestos-related personal injury claims made against the T&N Companies in the
United States. As of March 31, 1998, the Company has provided $1.351 billion
as its estimate for future costs to resolve asbestos claims.

Prior to its acquisition by Federal-Mogul, T&N secured, by payment of a
premium of (Pounds)92 million, a (Pounds)500 million layer of insurance cover
which will be triggered should the aggregate number of claims notified after
June 30, 1996, where the exposure occurred prior to that date ("IBNR claims"),
exceed (Pounds)690 million. At March 31, 1998, Federal-Mogul has recorded
reserves for IBNR claims up to the insurance level, which is (Pounds)690
million. For discussion of asbestos-related liabilities and reserves, see
Notes 19 and 28 to the T&N Financial Statements and "Management's Discussion
and Analysis of Financial Condition and Results of Operations--T&N--Asbestos."

While management believes that estimated reserves, which have not been
reduced by any potential insurance proceeds, coupled with T&N's asbestos-
related claims insurance policy, are appropriate for anticipated losses
arising from T&N's asbestos related claims, no assurance can be given that T&N
will not be subject to material additional liabilities and significant
additional litigation relating to asbestos. Any such liabilities or litigation
could have a material adverse effect on Federal-Mogul's results of operations,
business, liquidity and financial condition. See "Risk Factors--T&N's Asbestos
Liability."

Federal-Mogul and Fel-Pro Asbestos

Federal-Mogul also is one of a large number of defendants in a number of
lawsuits brought by claimants alleging injury due to exposure to asbestos. In
addition, Fel-Pro has been named as a defendant in approximately 18,000
product liability cases involving asbestos, primarily involving gasket or
packing products sold to ship owners. Federal-Mogul is defending all such
claims vigorously and believes that it and Fel-Pro have substantial defenses
to liability and adequate insurance coverage for defense costs (though Fel-Pro
has agreed with its insurers to pay approximately 20% of defense costs, in
exchange for the right to a significant role in decisions regarding the
litigation). While the outcome of litigation cannot be predicted with
certainty, after consulting with

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the office of Federal-Mogul's general counsel, management believes that
asbestos claims pending against Federal-Mogul and Fel-Pro as of March 31, 1998
will not have a material effect on Federal-Mogul's financial position.

Other

Federal-Mogul is involved in various other legal actions and claims,
directly and through its subsidiaries (including T&N and Fel-Pro). After
taking into consideration legal counsel's evaluation of such actions,
management is of the opinion that their outcomes are not reasonably likely to
have a material adverse effect on Federal-Mogul's financial position operating
results or cash flow.

For information respecting lawsuits concerning environmental matters to
which Federal-Mogul is a party, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Federal-Mogul--Environmental
Matters."

EMPLOYEE RELATIONS

On March 31, 1998, Federal-Mogul had approximately 45,000 full-time
employees (including the T&N Bearings Business), of whom approximately 17,500
were employed in the United States. Approximately 13,700 of these employees
work for operations predating the acquisitions of T&N and Fel-Pro,
approximately 28,600 work for operations acquired with T&N and approximately
3,100 work for operations acquired with Fel-Pro. An anticipated result of the
integration plan and restructuring relating to the acquisitions of T&N and
Fel-Pro is a reduction of approximately 4,200 employees.

Approximately 40% of Federal-Mogul's United States employees are represented
by six unions. Approximately 55% of Federal-Mogul's foreign employees are
represented by various unions. Each of Federal-Mogul's unionized manufacturing
facilities has its own contract with its own expiration date and, as a result,
no contract expiration date affects more than one facility. Federal-Mogul
believes its labor relations to be good.

ENVIRONMENTAL REGULATIONS

Federal-Mogul's operations, in common with those of industry generally, are
subject to numerous existing and proposed laws and governmental regulations
designed to protect the environment, particularly regarding plant wastes and
emissions and solid waste disposal. Capital expenditures for property, plant
and equipment for environment control activities did not have a material
impact on Federal-Mogul's financial position or results of operations in 1997
and are not expected to have a material impact on Federal-Mogul's financial
position or results of operations in 1998 or 1999.

BACKLOG

The majority of Federal-Mogul's products are not on a backlog status. They
are produced from readily available materials and have a relatively short
manufacturing cycle. For products supplied by outside suppliers, Federal-Mogul
generally purchases products from more than one source. Federal-Mogul expects
to be capable of handling the anticipated 1998 sales volumes.

PATENTS AND LICENSES

Federal-Mogul is committed to protecting its technology investments and
market share through an active and growing international patent portfolio.
Federal-Mogul's patent portfolio is composed of a large number of foreign and
U.S. patents and pending patent applications which relate to a wide variety of
products and processes. In the aggregate, Federal-Mogul's international patent
portfolio is of material importance to its business; however, Federal-Mogul
does not consider any international patent or group of international patents
relating to a particular product or process to be of material importance when
judged from the standpoint of the business as a whole.

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COMPETITION

The global vehicular parts business is highly competitive. Federal-Mogul
competes with many of its customers that produce their own components as well
as with independent manufacturers and distributors of component parts in the
United States and abroad. In general, competition for such sales is based on
price, product quality, customer service and the breadth of products offered
by a given supplier. Federal-Mogul has attempted to meet these competitive
challenges through more efficiently integrating its manufacturing and
distribution operations, expanding its product coverage within its core
businesses, and expanding its worldwide distribution network.

PROPERTIES

Federal-Mogul conducts its business from its World Headquarters complex in
Southfield, Michigan, which is leased pursuant to a sale/leaseback
arrangement. At March 31, 1998, Federal-Mogul had over 120 manufacturing
facilities with in excess of 16 million square feet (approximately 80% of
which were owned and 20% were leased) and over 100 aftermarket facilities with
in excess of 3.5 million square feet (approximately 10% of which were owned
and 90% were leased). Over half of the manufacturing facilities (by square
footage) were in Europe and approximately one third were in North America.
Over 85% of aftermarket facilities (by square footage) were in North America,
with a strong majority of the remainder in Europe. Federal-Mogul also had
other facilities (primarily research and office only sites) accounting for
approximately 800,000 square feet.

All owned and leased properties are well maintained and equipped for the
purposes for which they are used. Federal-Mogul believes that its facilities
are suitable and adequate for the operations involved. In the case of leased
properties, Federal-Mogul believes that the leases could be renewed or
comparable facilities could be obtained without materially affecting
operations.

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MANAGEMENT

The following tables set forth the name, age and position of the executive
officers and the directors, respectively of Federal-Mogul.

<TABLE>
<CAPTION>
EXECUTIVE OFFICER AGE POSITION
----------------- --- --------
<S> <C> <C>
Chairman, Chief Executive Officer and
Richard A. Snell........... 56 President
Executive Vice President--Powertrain
Alan C. Johnson............ 49 Systems
Executive Vice President--Worldwide
Paul R. Lederer............ 58 Aftermarket
Executive Vice President and Chief
Thomas W. Ryan............. 50 Financial Officer
Wilhelm A. Schmelzer....... 57 Executive Vice President--Sealing Systems
Frank Tomes................ 55 Executive Vice President--General Products
Senior Vice President, General Counsel and
Edward W. Gray, Jr......... 51 Secretary
Alan R. Begg............... 43 Vice President--Technology
David A. Bozynski.......... 43 Vice President and Treasurer
Charles B. Grant........... 53 Vice President--Corporate Development
Richard P. Randazzo........ 54 Vice President--Human Resources
Kenneth P. Slaby........... 46 Vice President and Controller
James J. Zamoyski.......... 51 Vice President--Strategic Planning
<CAPTION>
DIRECTOR AGE
-------- ---
<S> <C> <C>
Richard A. Snell........... 56
John J. Fannon............. 64
Roderick M. Hills.......... 67
Paul S. Lewis.............. 61
Antonio Madero............. 60
Robert S. Miller........... 56
John C. Pope............... 49
H. Michael Sekyra.......... 56
Sir Geoffrey Whalen........ 62
</TABLE>

Mr. Snell has served as Chairman of the Board, Chief Executive Officer and
President and a director of Federal-Mogul since November 1996. He also serves
as Chairman of the Executive and Finance Committee and as a member of the
Pension Committee. Mr. Snell was previously employed by Tenneco, Inc., from
November 1987 to November 1996, most recently having served as President and
Chief Executive Officer of Tenneco Automotive from September 1993 until he was
employed by Federal-Mogul. Mr. Snell is also a member of the Board of
Directors of Schneider National, Inc.

Mr. Begg has served as Vice President--Technology since February 1998. Prior
to this position, Mr. Begg served as Managing Director of T&N Technology and
was a member of the T&N Management Committee from 1993 to February 1998,
General Manager, Sales Director and Business Manager at BP Metal Composites
from 1991 to 1993, and Senior Research Scientist and Project Leader for
advance engineering materials development at BP Research Center from 1983 to
1988.

Mr. Bozynski has served as Vice President and Treasurer since May 1996.
Prior thereto, Mr. Bozynski was employed by Unisys Corporation as Vice
President and Assistant Treasurer from October 1994 to April 1996, Vice
President--Line of Business Finance from April 1993 to September 1993, and
Vice President--Corporate Business Analysis from March 1992 to April 1993.

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Mr. Fannon has served as a director of Federal-Mogul since 1986. He is
Chairman of the Compensation Committee and a member of the Pension and the
Nominating Committees. Mr. Fannon retired in 1997 as Vice Chairman of Simpson
Paper Company, a privately held global forest products company with annual
sales exceeding $1 billion, a position that he held since 1993. From 1980
until 1993, Mr. Fannon served as President of Simpson Paper. Previously, he
was Vice President of Marketing for Simpson Paper. He also serves as a
director of Simpson Paper and Seton Medical Center.

Mr. Grant has served as Vice President--Corporate Development since December
1992. Prior to this position, Mr. Grant served as Vice President and
Controller of Federal-Mogul from May 1988 to December 1992, Vice President of
Finance, Vice President--Controller and Controller of the Fastening Systems
Group of Huck Manufacturing, and Audit Manager at Ernst & Young.

Mr. Gray has served as Senior Vice President, General Counsel and Secretary
since March 1998. Prior to this position, Mr. Gray was the managing partner
for the Washington D.C. office of Fitch, Even, Tabin, and Flannery from April
1994 to 1998, a founding partner of Gray, Blount & Associates, LLP from 1993
to 1998 and at R.R. Donnelley & Sons Company from 1986 to May 1993, where his
most recent position was Vice President--Information Services.

Mr. Hills has served as director of Federal-Mogul since 1977. He is Chairman
of the Nominating Committee and a member of the Audit, Executive and Finance,
and Pension Committees. In January 1987, Mr. Hills was named Managing
Director-Chairman of The Manchester Group Ltd., and has continued to manage
that business, which is now conducted under the name of Hills Enterprises,
Ltd. From May 1989 until June 1995, he also served successively as a partner
of and/or a consultant to the law firms of Donovan Leisure Rogovin Huge &
Schiller, Shea & Gould, and Mudge Rose Guthrie Alexander & Ferndon. Mr. Hills
is a member of the Board of Directors of Waste Management, Inc. and Oak
Industries, Inc.

Mr. Johnson has served as Executive Vice President--Powertrain Systems since
February 1998. Mr. Johnson has been with Federal-Mogul since 1970, serving as
Executive Vice President responsible for Federal-Mogul's Worldwide
manufacturing and international aftermarket operations from January 1997 to
February 1998, President--Operations from January 1995 to January 1997, Vice
President and President--Powertrain Operations--Americas from 1993 to January
1995 and Vice President and General Manager--Oil Seal Operations from 1992.

Mr. Lewis has served as director of Federal-Mogul since May 1998. Mr. Lewis
joined Tate & Lyle plc as Group Finance Director in June 1988 and became
Deputy Chairman of the Group in March 1993. He served on the Executive
Committee and various other board and committees with the Group. He joined the
Board of Dairy Crest Group as a non-executive Director in August 1993. On
December 1, 1995 Mr. Lewis joined the Board of T&N plc as a non-executive
Director. Mr. Lewis served on the Listing Policy Committee of the London Stock
Exchange until 1996 and is a Governor of Stratford School, East London and a
member of the Finance Committee of London First.

Mr. Lederer has served as Executive Vice President--Worldwide Aftermarket
since February 1998. Prior to this position, Mr. Lederer was President and
Chief Operating Officer of Fel-Pro, Incorporated. Prior to joining Fel-Pro, he
was a consultant to several automotive parts companies while serving on the
Board of Directors of Ozark/O'Reilly Automotive, Fullerton Metals and Trans-
Pro Corporation. Mr. Lederer has also served as Executive Vice President of
Stant, Chairman and Chief Executive of Epicor Industries, Incorporated,
President--Automotive Group, Group Vice President--Operations and General
Manager-Edelmann Durson at Parker Hanifin, and Executive Vice President of E.
Edelmann & Company.

Mr. Madero has served as director of Federal-Mogul since February 1994. He
is a member of the Audit, Nominating and Compensation Committees. Mr. Madero
founded SANLUIS Corporacion S. A. de C.V.

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("Sanluis") and has served as its Chairman of the Board and Chief Executive
Officer since 1979. Sanluis is a Mexican holding company with interests in
gold, silver, mining and auto parts. Mr. Madero is also a member of the Boards
of Directors of Cydsa S.A., of Cydsa, S.A. de C.V., Grupo Embotelladoras
Unidas, S.A. de C.V., Alfa, S.A. de C.V., Grupo Industrial Saltillo, S.A. de
C.V., Fondo Opcion, S.A. de C.V., Grupo Industrial Durango, S.A. de C.V., G.
Accion S.A., Grupo Financier Banamex Accival S.A., Seguros Comercial America,
S.A., Grupo Posadas, S.A. de C.V., Banca Quadrum, S.A. de C.V., Banca Chase
(Mexico) S.A., Deere and Company and a member of the International Advisory
Committee of The Chase Manhattan Bank.

Mr. Miller has served as a Director of Federal-Mogul since 1993. He is the
Chairman of the Pension Committee and a member of the Audit and Nominating
Committees. From September until November 1996 he served as Acting Chief
Executive Officer of Federal-Mogul. Mr. Miller is Chairman of the Board and
Chief Executive Officer of Waste Management, Inc. Since 1993, Mr. Miller has
served as Vice President and Treasurer, and as a director, of Moore Mill and
Lumber Company, a privately held timber business in Oregon. In April 1995, he
was named Chairman of the Board of Directors of Morrison Knudsen Corporation,
a position he held until September 1996, when he became its Vice Chairman of
the Board. In addition to Waste Management and Morrison Knudsen, Mr. Miller
also serves as a member of the Board of Directors of Fluke Corporation, Pope &
Talbot, Inc. and Symantec Corp.

Mr. Pope has served as a director of Federal-Mogul since 1987. He is
Chairman of the Audit Committee and a member of the Compensation, Executive
and Finance, and Nominating Committees. Mr. Pope was President, Chief
Operating Officer and Director of UAL Corporation and United Air Lines from
May 1992 until July 1994. Mr. Pope was named Chairman of the Board of
MotivePower Industries, Inc. in 1995. Mr. Pope is a member of the Board of
Directors of Dollar Thrifty Automotive Group, Inc., Lamalie Associates, Inc.,
Medaphis Corporation, MotivePower Industries, Inc., Wallace Computer Services,
Inc. and Waste Management, Inc.

Mr. Randazzo has served as Vice President--Human Resources since January
1997. Prior thereto, Mr. Randazzo served as Senior Vice President--Human
Resources of Nextel Communications, Inc. from December 1994 to December 1996,
Senior Vice President--Human Resources--Americas Region of Asea Brown Boveri,
Inc. from December 1990 to December 1994, and various positions at Xerox
Corporation, including Vice President of Human Resources and the U.S.
Marketing Group.

Mr. Ryan has served as Executive Vice President since March 1998 and as
Chief Financial Officer since February 1997. Mr. Ryan joined Federal-Mogul in
February 1997 as Senior Vice President and Chief Financial Officer. Mr. Ryan
was Chief Financial Officer of Tenneco Automotive, a division of Tenneco, Inc.
from January 1995 to February 1997, and Vice President, Treasurer and
Controller of A.O. Smith Corporation from March 1985 to January 1995.

Mr. Schmelzer has served as Executive Vice President--Sealing Systems since
February 1998. Since joining Federal-Mogul in 1969, Mr. Schmelzer has served
as Vice President and Group Executive--Engine and Transmission Products from
April 1995 to February 1998, Vice President and Group Executive--Engine and
Transmission Products Europe from January 1992 to April 1995, General
Manager--Engine and Transmission Products--Americas from 1989 to 1991 and
General Manager of Manufacturing Operations in Spain and Mexico from 1987 to
1989. Mr. Schmelzer represents Federal-Mogul as Chairman of Supervisory Boards
at Federal-Mogul S.A., France and Federal-Mogul S.p.A., Italy. He has been an
Advisory Board member of Arkwright International Ltd. since May 1995.

Dr. Sekyra has served as a director of Federal-Mogul since 1991. He is a
member of the Compensation, Nominating, and Pension Committees. Dr. Sekyra, a
native of Austria, is Chairman and Chief Executive Officer of C.H. CHEM, a.s.,
the largest chemical company in the Czech Republic. He is also Chairman of
Bohler Uddeholm, one of the world's leading companies in tool and speed steel.
Dr. Sekyra holds a number of board positions in banking and industrial
enterprises.

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Mr. Slaby has served as Vice President and Controller since April 1996.
Prior thereto, Mr. Slaby held various positions at General Electric Company
for 23 years, including Manager--Financial Operation for the global silicones
business from November 1990 to April 1996, Manager--Financial Operation with
GE Aircraft Electronics from March 1987 to November 1990, and Manager Finance
Section at GE Aircraft Electronics Systems Department from July 1985 to March
1987.

Mr. Tomes has served as Executive Vice President--General Products since
February 1998. Prior to this position, Mr. Tomes served as Chief Executive--
Composites and Camshafts Group of T&N plc from January 1996 to February 1998.
Prior to that he was Chief Executive of T&N's Industrial Products and
Materials Group.

Sir Geoffrey Whalen has served as director of Federal-Mogul since May 1998.
Between 1984 and 1995, Sir Whalen was Managing Director, and from 1990 Deputy
Chairman of Peugeot Talbot Motor Company plc. in the United Kingdom (now known
as Peugeot). In January 1995, he retired from full-time employment with
Peugeot. Sir Geoffrey Whalen is currently a director of Peugeot Motor Company
plc; Conventry Building Society; Hills Precision Components Ltd.; Camden
Motors Ltd.; Caradon plc, and Hall Engineering Holdings plc. Sir Geoffrey
Whalen has also been active in the Society of Motor Manufacturers & Traders,
the Trade Association representing vehicle and component makers in the United
Kingdom where he was President 1988-1990 and 1993-1994 and is currently Deputy
President.

Mr. Zamoyski has served as Vice President--Strategic Planning since June
1997. Prior to this position, Mr. Zamoyski served as Vice President and
General Manager from April 1995 to June 1997, Worldwide Aftermarket
Operation--International from November 1993 to April 1996, and General
Manager, Worldwide Aftermarket--Distribution and Logistics from August 1991 to
November 1993.

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DESCRIPTION OF THE NOTES

The following description of the particular terms of the Notes offered
hereby (referred to in the accompanying Prospectus as "Senior Debt
Securities") supplements, and to the extent inconsistent therewith supersedes,
the description of the general terms and provisions of Notes set forth in the
accompanying Prospectus, to which description reference is hereby made.

GENERAL

The Notes are to be issued under an Indenture (as amended or supplemented
from time to time, the "Indenture") (referred to in the accompanying
Prospectus as "Senior Indenture") among the Company, the Guarantors and The
Bank of New York, as trustee (the "Trustee"). The following summary of certain
provisions of the Indenture does not purport to be complete and is subject to
and is qualified in its entirety by reference to all provisions of the
Indenture, including the definitions of certain terms therein and those terms
that are made a part thereof by reference to the Trust Indenture Act of 1939,
as amended. Capitalized terms not otherwise defined herein shall have the
meanings given to them in the accompanying Prospectus or the Indenture.

Principal and interest on the Notes will be payable, the transfer of the
Notes will be registrable, and the Notes may be presented for exchange, at the
office or agency of the Company maintained for such purpose (which initially
will be at the corporate trust office of the Trustee located at 101 Barclay
Street, New York, New York 10286). So long as the Notes are represented by
Global Notes, the interest payable on the Notes will be paid to Cede & Co.,
the nominee of the Depositary, or its registered assigns as the registered
owner of such Global Notes, by wire transfer of immediately available funds on
each applicable interest payment date. If any of the Notes are no longer
represented by a Global Note, payment of interest may, at the option of the
Company, be made by check mailed to the address of the person entitled
thereto. No service charge will be made for any transfer or exchange of Notes,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.

The . Notes, . Notes and . Notes each constitute a "Series" for
purposes of the Indenture.

CERTAIN TERMS OF THE . NOTES

The . Notes will be limited to $ . aggregate principal amount and will
mature on June 30, . . The . Notes will be unsecured obligations of the
Company and will be issued in denominations of $1,000 and integral multiples
of $1,000. The . Notes will bear interest at a rate of . % from the date of
original issuance, payable on June 30 and December 31 of each year, commencing
December 31, 1998, to the persons in whose name the . Notes are registered
on the preceding June 15 and December 15, respectively. The . Notes will not
be entitled to the benefit of any sinking fund.

CERTAIN TERMS OF THE . NOTES

The . Notes will be limited to $ . aggregate principal amount and will
mature on June 30, . . The . Notes will be unsecured obligations of the
Company and will be issued in denominations of $1,000 and integral multiples
of $1,000. The Notes will bear interest at a rate of . % from the date of
original issuance, payable on June 30 and December 31 of each year, commencing
December 31, 1998, to the persons in whose name the Notes are registered on
the preceding June 15 and December 15, respectively. The . Notes will not be
entitled to the benefit of any sinking fund.

CERTAIN TERMS OF THE . NOTES

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OPTIONAL REDEMPTION

The Notes will be redeemable, at the option of the Company, in whole at any
time or in part from time to time, on at least 30 days but not more than 60
days prior notice mailed to the registered address of each holder of Notes, at
a redemption price equal to the greater of (i) 100% of the principal amount of
the Notes to be redeemed or (ii) the sum of the present values of the
Remaining Scheduled Payments discounted, on a semiannual basis (assuming a
360-day year consisting of twelve 30 day months), at the Treasury Rate plus
. basis points in the case of the . Notes, . basis points in the case of
the . Notes and . basis points in the case of the . Notes, plus, in the
case of each of clause (i) and (ii) above, accrued interest to the date of
redemption.

"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity (computed as of the
second business day immediately preceding such redemption date) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.

"Comparable Treasury Issue" means the fixed rate United States Treasury
security selected by an Independent Investment Banker as having a maturity
most comparable to the remaining term of the . Notes, the . Notes or the
. Notes, as the case may be (and which are not callable prior to maturity)
to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practices, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
. Notes, the . Notes or the . Notes, as the case may be. "Independent
Investment Banker" means one of the Reference Treasury Dealers appointed by
the Company.

"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for
U.S. Government Securities" or (ii) if such release (or any successor release)
is not published or does not contain such prices on such business day, (A) the
average of the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest or lowest of such Reference Treasury Dealer
Quotations, or (B) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations. "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the Trustee
by such Reference Treasury Dealer at 3:30 p.m., New York City time on the
third business day preceding such redemption date.

"Reference Treasury Dealer" means each of Chase Securities Inc., Bear,
Stearns & Co. Inc., Credit Suisse First Boston, Merrill Lynch & Co., Morgan
Stanley Dean Witter, BNY Capital Markets, Inc. Bank of New York Securities and
BancAmerica Robertson Stephens and their respective successors; provided,
however, that if any of the foregoing shall cease (either directly or through
an affiliate) to be a primary U.S. Government securities dealer in New York
City (a "Primary Treasury Dealer"), the Company may substitute therefor
another nationally recognized investment banking firm that is a Primary
Treasury Dealer.

"Remaining Scheduled Payments" means, with respect to each Note to be
redeemed, the remaining scheduled payments of the principal thereof and
interest thereon that would be due after the related redemption date but for
such redemption; provided, however, that, if such redemption date is not an
interest payment date with respect to such Note, the amount of the next
succeeding scheduled interest payment thereon will be reduced by the amount of
interest accrued thereon to such redemption date.

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On and after the redemption date, interest will cease to accrue on the Notes
or any portion thereof called for redemption. On or before the redemption
date, the Company shall deposit with a paying agent (or the Trustee) money
sufficient to pay the redemption price of and accrued interest on the Notes to
be redeemed on such date. If less than all of the . Notes, the . Notes or
the . Notes are to be redeemed, the Notes to be redeemed shall be selected
by the Trustee by such method as the Trustee shall deem fair and appropriate.

TAX REDEMPTION

The Notes may be redeemed at the option of the Company in whole, but not in
part, at any time, on giving not less than 30 nor more than 60 days' notice
(which notice shall be irrevocable), at the principal amount thereof, together
with accrued interest to the date fixed for redemption, if the Company has or
will become obligated to pay additional interest on the Notes as described
under "Payment of Additional Amounts" as a result of any change in, or
amendment to, the laws (or any regulations or rulings promulgated thereunder)
of the United States or any political subdivision or taxing authority thereof
or therein, or any change in the application or official interpretation of
such laws, regulations or rulings, which change or amendment becomes effective
on or after the date of this Prospectus Supplement, and such obligation cannot
be avoided by the Company taking reasonable measures available to it, provided
that no such notice of redemption shall be given earlier than 90 days prior to
the earliest date on which the Company would be obliged to pay such additional
interest were a payment in respect of the Notes then due.

PAYMENT OF ADDITIONAL AMOUNTS

The Company will, subject to the exceptions and limitations set forth below,
pay as additional interest to the holder of a Note that is a Non-U.S. Holder
(as hereinafter defined) such amounts as may be necessary so that every net
payment on such Note, after deduction or withholding for or on account of any
present or future tax, assessment or other governmental charge imposed upon or
as a result of such payment by the United States (or any political subdivision
or taxing authority thereof or therein), will not be less than the amount
provided in such Note to be then due and payable. However, the Company will
not be required to make any such payment of additional interest for or on
account of:

(a)any tax, assessment or other governmental charge that would not have
been imposed but for (i) the existence of any present or former connection
between such holder (or between a fiduciary, settlor or beneficiary of, or
a person holding a power over, such holder, if such holder is an estate or
a trust, or a member or shareholder of such holder, if such holder is a
partnership or a corporation) and the United States, including, without
limitation, such holder (or such fiduciary, settlor, beneficiary, person
holding a power, member or shareholder) being or having been a citizen or
resident thereof or being or having been engaged in trade or business or
present therein or having or having had a permanent establishment therein
or (ii) such holder's past or present status as a personal holding company,
foreign personal holding company or private foundation or other tax-exempt
organization with respect to the United States or as a corporation that
accumulates earnings to avoid United States federal income tax;

(b)any estate, inheritance, gift, sales, transfer or personal property
tax or any similar tax, assessment or other governmental charge;

(c)any tax, assessment or other governmental charge that would not have
been imposed but for the presentation by the holder of a Note for payment
more than 15 days after the date on which such payment became due and
payable or on which payment thereof was duly provided for, whichever occurs
later;

(d)any tax, assessment or other governmental charge that is payable
otherwise than by deduction or withholding from a payment on a Note;

(e)any tax, assessment or other governmental charge required to be
deducted or withheld by any paying agent from a payment on a Note, if such
payment can be made without such deduction or withholding by any other
paying agent;

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(f)any tax, assessment or other governmental charge that would not have
been imposed but for a failure to comply with any applicable certification,
documentation, information or other reporting requirement concerning the
nationality, residence, identity or connection with the United States of
the holder or beneficial owner of a Note if, without regard to any tax
treaty, such compliance is required by statute or regulation of the United
States as a precondition to relief or exemption from such tax, assessment
or other governmental charge; or

(g)any tax, assessment or other governmental charge imposed on a holder
that actually or constructively owns 10 percent or more of the combined
voting power of all classes of stock of the Company or that is a controlled
foreign corporation related to the Company through stock ownership;

nor shall such additional interest be paid with respect to a payment on a Note
to a holder that is a fiduciary or partnership or other than the sole
beneficial owner of such payment to the extent a beneficiary or settlor with
respect to such fiduciary or a member of such partnership or a beneficial
owner would not have been entitled to the additional interest had such
beneficiary, settlor, member or beneficial owner been the holder of such Note.

RANKING

The Notes are unsecured obligations of the Company, ranking pari passu with
other unsubordinated, unsecured indebtedness of the Company, and ranking
senior in right of payment to any future subordinated indebtedness of the
Company.

Indebtedness incurred under the Senior Credit Agreement and certain other
indebtedness of the Company are secured by pledges of all or a portion of the
stock of certain of the Company's subsidiaries and certain intercompany
indebtedness. The Notes will not have the benefit of such pledges and the
Indenture does not contain any restriction upon indebtedness, whether secured
or unsecured, that the Company and its subsidiaries may incur in the future.
The total amount of such secured indebtedness as of May 29, 1998 is $3,046.6
million. Secured creditors of the Company will have a claim on the assets
which secure the obligation of the Company prior to any claims of holder of
the Notes against such assets.

THE GUARANTEES

Each of certain subsidiaries of the Company (the "Guarantors") will
irrevocably and unconditionally guarantee on a joint and several basis the
punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all of the Company's obligations under the Indenture and the
Notes, including its obligations to pay principal, premium, if any, and
interest with respect to the Notes. Each of the Guarantees shall be a
guarantee of payment and not of collection. The obligations of each Guarantor
under its guarantee (each a "Guarantee") are limited to the maximum amount
which, after giving effect to all other contingent and fixed liabilities of
such Guarantor and after giving effect to any collections from or payments
made by or on behalf of any other Guarantor in respect of the obligations of
such other Guarantor under its Guarantee can be guaranteed by such Guarantor
without resulting in the obligations of such Guarantor under its Guarantee
constituting a fraudulent conveyance or fraudulent transfer under applicable
federal or state law. Notwithstanding the foregoing, there is a risk that the
Guarantees will involve a fraudulent conveyance or transfer, and thus will be
unenforceable.

The Guarantors on the date of the Indenture will be Federal-Mogul Dutch
Holdings Inc., Federal-Mogul Global Inc., Federal-Mogul U.K. Holdings Inc.,
Carter Automotive Company, Inc., Federal Mogul Venture Corporation, Federal-
Mogul World Wide, Inc., Federal-Mogul Global Properties, Inc., Felt Products
Mfg. Co., Fel-Pro Management Co. and Fel-Pro Chemical Products L.P. The first
three named Guarantors are holding companies whose sole assets are stock of
subsidiaries or intercompany debt. The net book value of each of the other
Guarantors is less than $10 million per Guarantor, except for Fel-Pro Chemical
Products L.P., which had a net book value of approximately $40 million at
March 31, 1998 and is in the process of being sold. The Guarantees are thus
not expected to be of significant value to the holders of the Notes, and
Federal-Mogul does not believe that separate financial information or other
information in respect of the Guarantors would be material to purchasers of
Notes. The Indenture will provide that each subsidiary of the Company that
becomes a guarantor

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under the Senior Credit Agreement, as amended (or any other credit agreement
renewing, refunding, replacing, restating, refinancing or extending the Senior
Credit Agreement), after the date of the Indenture will become a Guarantor.

In the event a subsidiary that is a Guarantor ceases to be a guarantor under
the Senior Credit Agreement, as amended (or other credit agreement as
described above), such subsidiary will also cease to be a Guarantor, whether
or not a Default or Event of Default is then outstanding. A subsidiary may
cease to be a Guarantor upon sale or other disposal of such subsidiary or
otherwise. The Company is not restricted from selling or otherwise disposing
of any of the Guarantors.

It is anticipated each Guarantor will also guarantee certain other
indebtedness including the Company's $125,000,000 8.8% Senior Notes due 2007
and $125,000,000 aggregate principal amount of Medium-term Notes (collectively
the "Existing Notes"). Certain guarantors of the indebtedness issued under the
Senior Credit Agreement or represented by the Existing Notes, have secured
these guarantees of other indebtedness.

The Indenture provides that if the Notes are defeased in accordance with the
terms of the Indenture, including pursuant to a covenant defeasance, then the
Guarantors shall be released and discharged of their obligations under the
Guarantees.

CERTAIN COVENANTS OF THE COMPANY

The following restrictions apply to the Notes.

Limitation on Liens. So long as the Notes shall be Outstanding, the Company
will not create or assume, and will not permit any Restricted Subsidiary to
create or assume, any notes, bonds, debentures or other similar evidences of
Indebtedness secured by any mortgage, pledge, security interest or lien (any
such mortgage, pledge, security interest or lien being referred to herein as a
"Mortgage" or "Mortgages") of or upon any Principal Property owned by the
Company or by any Restricted Subsidiary or on shares of capital stock or
evidence of Indebtedness of any Restricted Subsidiary, whether owned at the
date of the Indenture or thereafter acquired, without making effective
provision, and the Company in such case will make or cause to be made
effective provision, whereby all Notes (together with, if the Company shall so
determine, any other Indebtedness of the Company or such Restricted
Subsidiary, whether then existing or thereafter created which is not
subordinated to the Notes) shall be secured by such a Mortgage equally and
ratably with (or prior to) any and all other Indebtedness thereby secured, so
long as such Indebtedness shall be so secured; provided, however, that the
foregoing shall not apply to any of the following:

(i) Mortgages on any Principal Property, shares of stock of Indebtedness
of any corporation existing at the time such corporation becomes a
Subsidiary;

(ii) Mortgages on any Principal Property, shares of stock or Indebtedness
acquired, constructed or improved by the Company or any Restricted
Subsidiary after the date of the Indenture which are created or assumed
prior to, or contemporaneously with, such acquisition, construction or
improvement or within 365 days after the acquisition, completion of
construction or improvement or commencement of commercial operation of such
property, to secure or provide for the payment of all or any part of the
purchase price or the cost of such construction or improvement thereof, or,
in addition to Mortgages contemplated by clause (iii) below, Mortgages on
any Principal Property, shares of stock or Indebtedness existing at the
time of acquisition thereof (including acquisition through merger or
consolidation);

(iii) Mortgages on any Principal Property or shares of stock or
Indebtedness acquired from a corporation which is merged with or into the
Company or a Restricted Subsidiary;

(iv) Mortgages on any Principal Property, shares of stock or Indebtedness
to secure Indebtedness to the Company or to a Restricted Subsidiary;

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(v) Mortgages on any Principal Property, shares of stock or Indebtedness
in favor of the United States of America or any State thereof or The
Commonwealth of Puerto Rico, or any department, agency or instrumentality
or political subdivision of the United States of America or any State
thereof or The Commonwealth of Puerto Rico, to secure partial, progress,
advance or other payments, or to secure any Indebtedness incurred for the
purpose of financing all or any part of the cost of acquiring, constructing
or improving any Principal Property, shares of stock or Indebtedness
subject to such Mortgages (including Mortgages incurred in connection with
pollution control, industrial revenue, Title XI maritime financings or
similar financings), or other Mortgages in connection with the issuance of
tax-exempt industrial revenue bonds;

(vi) Mortgages existing as of the date of the Indenture;

(vii) Mortgages for taxes, assessments or other government charges, the
validity of which is being contested in good faith by appropriate
proceedings and materialmen's, mechanics' and other like Mortgages, or
deposits to obtain the release of such Mortgages;

(viii) Mortgages created or deposits made to secure the payment of
workers' compensation claims or the performance of, or in connection with,
tenders, bids, leases, public or statutory obligations, surety and appeal
bonds, contracts, performance and return-of-money bonds or to secure (or in
lieu of) surety or appeal bonds and Mortgages made in the ordinary course
of business for similar purposes; and

(ix) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Mortgage referred to
in the foregoing clauses (i) to (viii), inclusive; provided, however, that
such extension, renewal or replacement shall be limited to all or a part of
the property, shares of stock or Indebtedness which secured the Mortgage so
extended, renewed or replaced (plus improvements on such property).

Notwithstanding the foregoing, the Company or any Restricted Subsidiary may
create or assume Mortgages in addition to those permitted by the immediately
preceding paragraph, and renew, extend or create such Mortgages, provided,
that at the time of such creation, assumption, renewal or replacement, and
after giving effect thereto, the aggregate amount of all Indebtedness so
secured by such a Mortgage as provided above (not including Indebtedness
excluded as provided in clauses (i) through (ix) of the immediately preceding
paragraph), plus all Attributable Debt of the Company and its Restricted
Subsidiaries in respect of Sale and Lease-Back Transactions (as hereinafter
defined) which would not be permitted by either clause (i) or (ii) of the
first paragraph under "--Limitation on Sale and Lease-Back Transactions,"
would not exceed 20% of Consolidated Assets. (Section 1009)

Limitation on Sale and Lease-Back Transactions. So long as the Notes shall
be Outstanding, the Company will not, nor will it permit any Restricted
Subsidiary to, enter into any arrangement with any Person (other than the
Company or any Restricted Subsidiary) providing for the leasing by the Company
or a Restricted Subsidiary of any Principal Property owned by the Company or
such Restricted Subsidiary (except for leases for a term of not more than
three years), which property has been or is to be sold or transferred by the
Company or such Restricted Subsidiary to such person on the security of such
Principal Property more than 365 days after the acquisition thereof or the
completion of construction and commencement of full operation thereof (a "Sale
and Lease-Back Transaction"), unless either (i) the Company or such Restricted
Subsidiary would be entitled pursuant to such lien covenants to incur
Indebtedness secured by a Mortgage on the Principal Property to be leased back
equal in amount to the Attributable Debt with respect to such Sale and Lease-
Back Transaction without equally and ratably securing the Notes, or (ii) the
Company shall, and in any such case the Company covenants that it will, apply
or cause to be applied an amount equal to the greater of the net proceeds or
the fair value (as determined by the Board of Directors of the Company) of the
property so sold to the purchase of Principal Property or to the retirement
(other than any mandatory retirement), within 365 days of the effective date
of any such Sale and Lease-Back Transaction, of Notes or other Funded
Indebtedness; provided, however, that any such retirement of Notes shall be
made in accordance with the Indenture; and provided, further, that the amount
to be applied to such retirement of Notes or other Funded Indebtedness shall
be reduced by an amount equal to the sum of (a) an amount equal to the
principal amount of any Notes delivered within 365 days after the effective
date of such Sale and Lease-Back Transaction to the Trustee for retirement and
cancellation, and (b)

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the principal amount of other Funded Indebtedness voluntarily retired by the
Company within such 365-day period, excluding, in each case, retirements
pursuant to mandatory sinking fund or prepayment provisions and payments at
Maturity.

Notwithstanding the foregoing,

(i) the Company or any Restricted Subsidiary may enter into Sale and
Lease-Back Transactions in addition to any permitted by the immediately
preceding paragraph and without any obligation to retire any Notes or other
Indebtedness; provided, that at the time of entering into such Sale and
Lease-Back Transaction and after giving effect thereto, Attributable Debt
resulting from such Sale and Lease-Back Transaction, plus the aggregate
amount of all Indebtedness secured by a Mortgage (not including
Indebtedness excluded as provided in clauses (i) through (ix) under "--
Limitation on Liens"), does not exceed 20% of Consolidated Assets; and

(ii) the Company or any Restricted Subsidiary may, at any time, enter
into a Sale and Lease-Back Transaction with respect to any or all of the
following properties: its plant located in Mooresville, Indiana and its
Precision Forged Products Division facilities located in Gallipolis, Ohio;
Plymouth, Michigan; and Romulus, Michigan. (Section 1010)

CERTAIN DEFINITIONS

"Attributable Debt," when used in connection with a Sale and Lease-Back
Transaction, shall mean, as of any particular time, the lesser of (i) the fair
value (as determined by the Board of Directors) of the property subject to
such arrangement and (ii) the then present value (computed by discounting at
the Composite Rate) of the obligation of a lessee for net rental payments
during the remaining term of any lease in respect of such property (including
any period for which such lease has been extended or may, at the option of the
lessor, be extended). The terms "net rental payments" under any lease for any
period shall mean the sum of the rental payments required to be paid in such
period by the lessee thereunder, not including, however, any amounts required
to be paid by such lessee (whether or not designated as rental or additional
rental) on account of maintenance and repairs, insurance, taxes, assessments,
water rates or similar charges required to be paid by such lessee thereunder
or any amounts required to be paid by such lessee thereunder contingent upon
the amount of sales, maintenance and repairs, insurance, taxes, assessments,
water rates or similar charges.

"Consolidated Assets" means the Company's assets, determined in accordance
with GAAP and consolidated for financial reporting purposes in accordance with
GAAP, such assets to be valued at book value.

"Funded Indebtedness" means all Indebtedness of the Company and its
Restricted Subsidiaries maturing by its terms more than one year after, or
which is renewable or extendable at the option of the Company for a period
ending more than one year after, the date as of which Funded Indebtedness is
being determined.

"GAAP" means such accounting principles as are generally accepted in the
United States at the date of the Indenture.

"Indebtedness" means, without duplication, (i) all obligations in respect of
borrowed money or for the deferred purchase or acquisition price of property
(including all types of real, personal, tangible, intangible or mixed
property) or services (excluding trade accounts payable, deferred taxes and
accrued liabilities which arise in the ordinary course of business) which are,
in accordance with GAAP, includible as a liability on a balance sheet
consolidated for financial reporting purposes in accordance with GAAP, (ii)
all amounts representing the capitalization of rental obligations in
accordance with GAAP, and (iii) all Contingent Obligations with respect to the
foregoing; for purposes of clause (iii), "Contingent Obligation" means, as to
any Person, any obligation of such Person guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations
("primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (a) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (1) for the purchase or payment of
any such primary obligation or (2) to maintain working capital

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or equity capital of the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor, (c) to purchase property, securities
or services primarily for the purpose of assuring the beneficiary of any such
primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the
beneficiary of such primary obligation against loss in respect thereof;
provided, however, that the term "Contingent Obligation" shall not include the
endorsement of instruments for deposit or collection in the ordinary course of
business. The term "Contingent Obligation" shall also include the liability of
a general partner in respect of the primary obligations of a partnership in
which it is a general partner. The amount of any Contingent Obligation of a
Person shall be deemed to be an amount equal to the principal amount of the
primary obligation in respect to which such Contingent Obligation is made.

"Principal Property" shall mean the principal manufacturing facilities owned
by the Company or a Restricted Subsidiary located in the United States, except
such as the Board of Directors, in its good faith opinion, reasonably
determines is not significant to the business, financial condition and
earnings of the Company and its consolidated Subsidiaries taken as a whole, as
evidenced by a Board resolution, and except for (i) any and all personal
property including, without limitation, (a) motor vehicles and other rolling
stock, and (b) office furnishings and equipment and information and electronic
data processing equipment, (ii) any property financed through obligations
issued by state, territory or possession of the United States, or any
political subdivision or instrumentality of the foregoing, or (iii) any real
property held for development or sale.

"Restricted Subsidiary" means any consolidated Subsidiary that owns any
Principal Property.

"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock which
ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.

DEFEASANCE AND COVENANT DEFEASANCE

The defeasance provisions described in the accompanying Prospectus under
"Description of Debt Securities--Defeasance and Covenant Defeasance" shall
apply to the Notes and to the restrictive covenants described herein under "--
Certain Covenants."

BOOK-ENTRY, DELIVERY AND FORM

Each series of Notes will be issued in the form of one or more fully
registered Global Notes (the "Global Notes") which will be deposited with, or
on behalf of, the Depositary and registered in the name of Cede & Co., the
Depositary's nominee. Beneficial interests in the Global Notes will be
represented through book-entry accounts of financial institutions acting on
behalf of beneficial owners as direct and indirect participants in the
Depositary. Investors may elect to hold interests in the Global Notes through
either the Depositary (in the United States) or Cedel or Morgan Guaranty Trust
Company of New York, Brussels Office, as operator of the Euroclear (in Europe)
if they are participants of such systems, or indirectly through organizations
which are participants in such systems. Cedel and Euroclear will hold
interests on behalf of their participants through customers' securities
accounts in Cedel's and Euroclear's names on the books of their respective
depositaries, which in turn will hold such interests in customers' securities
accounts in the depositaries' names on the books of the Depositary. Citibank,
N.A. will act as depositary for Cedel and Chase, will act as depositary for
Euroclear (in such capacities, the "U.S. Depositaries"). Beneficial interests
in the Global Notes will be held in denominations of $1,000 and integral
multiples thereof. Except as set forth below, the Global Notes may be
transferred, in whole and not in part, only to another nominee of the
Depositary or to a successor of the Depositary or its nominee. Except as
described herein, Notes in definitive form will not be issued.

Cedel advises that it is incorporated under the laws of Luxembourg as a
professional depositary. Cedel holds securities for its participating
organizations ("Cedel Participants") and facilitates the clearance and
settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Cedel provides to
Cedel

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Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
countries. As a professional depositary, Cedel is subject to regulation by the
Luxembourg Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations and may include the Underwriters. Indirect access to Cedel is
also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Cedel
Participant either directly or indirectly.

Distributions with respect to each series Notes held beneficially through
Cedel will be credited to cash accounts of Cedel Participants in accordance
with its rules and procedures, to the extent received by the U.S. Depositary
for Cedel.

Euroclear advises that it was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk for lack of simultaneous transfers of
securities and cash, Euroclear includes various other services, including
securities lending and borrowing and interfaces with domestic markets in
several countries. Euroclear is operated by the Brussels, Belgium office of
Morgan Guaranty Trust Company of New York (the "Euroclear Operator"), under
contract with Euro-clear Clearance Systems S.C., a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the Underwriters. Indirect access to Euroclear is also
available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.

The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.

Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions
govern transfers of securities and cash within Euroclear, withdrawals of
securities and cash from Euroclear, and receipts of payments with respect to
securities in Euroclear. All securities in Euroclear are held on a fungible
basis without attribution of specific certificates to specific securities
clearance accounts. The Euroclear Operator acts under the Terms and Conditions
only on behalf of the Euroclear Participants, and has no record of or
relationship with persons holding through Euroclear Participants.

Distributions with respect to each series of Notes held beneficially through
Euroclear will be credited to the cash accounts of Euroclear Participants in
accordance with the Terms and Conditions, to the extent received by the U.S.
Depositary for Euroclear. In the event definitive Notes are issued, the
Company will appoint a paying agent and transfer agent in Luxembourg.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES

Initial settlement for the Notes will be made in immediately available
funds. Secondary market trading between DTC Participants will occur in the
ordinary way in accordance with Depositary rules and will be settled in
immediately available funds using the Depositary's Same-Day Funds Settlement
System. Secondary market trading between Cedel Participants and/or Euroclear
Participants will occur in the ordinary way in accordance with the applicable
rules and operating procedures of Cedel and Euroclear and will be settled
using the procedures applicable to conventional eurobonds in immediately
available funds.

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Cross-market transfers between persons holding directly or indirectly
through the Depositary on the one hand, and directly or indirectly through
Cedel or Euroclear Participants, on the other, will be effected in the
Depositary in accordance with the Depositary rules on behalf of the relevant
European international clearing system by its U.S. Depositary; however, such
cross-market transactions will require delivery of instructions to the
relevant European international clearing system by the counterparty in such
system in accordance with its rules and procedures and within its established
deadlines (European time). The relevant European international clearing system
will, if the transaction meets its settlement requirements, deliver
instructions to its U.S. Depositary to take action to effect final settlement
on its behalf by delivering or receiving Notes in the Depositary, and making
or receiving payment in accordance with normal procedures for same-day funds
settlement applicable to the Depositary. Cedel Participants and Euroclear
Participants may not deliver instructions directly to their respective U.S.
Depositaries.

Because of time-zone differences, credits of Notes received in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during subsequent securities settlement processing and dated the business day
following the Depositary settlement date. Such credits or any transactions in
such Notes settled during such processing will be reported to the relevant
Euroclear or Cedel Participants on such business day. Cash received in Cedel
or Euroclear as a result of sales of Notes settled by or through a Cedel
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the Depositary settlement date but will be available in the
relevant Cedel or Euroclear cash account only as of the business day following
settlement in the Depositary.

Although the Depositary, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Notes among participants of the
Depositary, Cedel and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued at
any time.

GOVERNING LAW

The Notes and the Indenture will be governed by and construed in accordance
with the laws of the State of New York.

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CERTAIN UNITED STATES TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS

The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of Notes
by a person that is not a "United States person" for United States federal
income tax purposes (a "Non-U.S. Holder"). For this purpose, a "United States
person" is a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, an estate the income of
which is subject to United States federal income taxation regardless of its
source or a trust if (i) a U.S. court is able to exercise primary supervision
over the trust's administration and (ii) one or more United States persons
have the authority to control all of the trust's substantial decisions. The
discussion does not consider specific facts and circumstances that may be
relevant to a particular Non-U.S. Holder's tax position. Accordingly, each
Non-U.S. Holder is urged to consult its own tax advisor with respect to the
United States tax consequences of the ownership and disposition of Notes, as
well as any tax consequences that may arise under the laws of any state,
municipality, foreign country or other taxing jurisdiction.

INCOME AND ESTATE TAX

Under current United States federal income and estate tax law:

(a) payments of principal and interest on a Note that is beneficially owned
by a Non-U.S. Holder will not be subject to withholding of United States
federal income tax, provided that, with respect to payments of interest, (i)
the holder does not actually or constructively own 10 percent or more of the
combined voting power of all classes of stock of the Company and is not a
controlled foreign corporation related to the Company through stock ownership
and (ii) the beneficial owner provides a statement signed under penalties of
perjury that includes its name and address and certifies that it is a Non-U.S.
Holder in compliance with applicable requirements (or, with respect to
payments made after December 31, 1999, satisfies certain documentary evidence
requirements for establishing that it is a Non-U.S. Holder);

(b) a holder of a Note that is a Non-U.S. Holder will not be subject to
United States federal income tax on gain realized on the sale, exchange or
redemption of a Note, unless (i) such gain is effectively connected with the
conduct by the holder of a trade or business in the United States or (ii) in
the case of gain realized by an individual holder, the holder is present in
the United States for 183 days or more in the taxable year of the sale and
either (A) such gain or income is attributable to an office or other fixed
place of business maintained in the United States by such holder or (B) such
holder has a tax home in the United States;

(c) a Note will not be subject to United States federal estate tax as a
result of the death of a holder who is not a citizen or resident of the United
States at the time of death, provided that such holder did not at the time of
death actually or constructively own 10 percent or more of the combined voting
power of all classes of stock of the Company and, at the time of such holder's
death, payments of interest on such Note would not have been effectively
connected with the conduct by such holder of a trade or business in the United
States.

INFORMATION REPORTING AND BACKUP WITHHOLDING

Payments on a Note beneficially owned by a Non-U.S. Holder will not be
subject to United States information reporting requirements and backup
withholding tax will not apply to such payments if the statement described in
clause (a) above is duly provided.

Information reporting requirements and backup withholding tax will not apply
to any payment of the proceeds of the sale of a Note effected outside the
United States by a foreign office of a foreign "broker" (as defined in
applicable Treasury regulations), provided that such broker (i) derives less
than 50% of its gross income for certain periods from the conduct of a trade
or business in the United States, (ii) is not a controlled foreign corporation
for United States federal income tax purposes and (iii) with respect to sales
effected after December 31, 1999, is not a foreign partnership that, at any
time during its taxable year, is 50 percent or more

S-81
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(by income or capital interest) owned by U.S. persons or is engaged in the
conduct of a U.S. trade or business. Payment of the proceeds of the sale of a
Note effected outside the United States by a foreign office of any other
broker will not be subject to backup withholding tax, but will be subject to
information reporting requirements unless such broker has documentary evidence
in its records that the beneficial owner is a Non-U.S. Holder and certain
other conditions are met, or the beneficial owner otherwise establishes an
exemption. Payment of the proceeds of a sale of a Note by the United States
office of a broker will be subject to information reporting requirements and
backup withholding tax unless the beneficial owner certifies its non-U.S.
status under penalties of perjury or otherwise establishes an exemption.

With respect to payments made after December 31, 1999, for purposes of
applying the rules set forth under this heading "Certain United States Tax
Consequences to Non-United States Holders" to a foreign entity that is treated
as fiscally transparent (e.g., a partnership) for U.S. federal income tax
purposes, the beneficial owner means each of the ultimate beneficial owners of
the entity.

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UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement"), the Company has agreed to sell to each of
Chase Securities Inc.; Bear, Stearns & Co. Inc.; Credit Suisse First Boston
Corporation; Merrill Lynch, Pierce, Fenner & Smith Incorporated; Morgan
Stanley & Co. Incorporated; BNY Capital Markets, Inc.; BancAmerica Robertson
Stephens; Credit Lyonnais Securities (USA) Inc.; First Chicago Capital
Markets, Inc.; First Union Capital Markets, a division of Wheat First
Securities, Inc.; and Scotia Capital Markets (USA) Inc. (the "Underwriters"),
and the Underwriters have severally agreed to purchase the principal amount of
the . Notes, the . Notes and the . Notes set forth opposite their names
below. In the Underwriting Agreement the Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all the Notes offered
hereby if any of the Notes are purchased.

<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT AMOUNT AMOUNT
UNDERWRITERS OF . NOTES OF . NOTES OF . NOTES
------------ ------------ ------------- ------------
<S> <C> <C> <C>
Chase Securities Inc............. $ $ $
Bear, Stearns & Co. Inc. ........
Credit Suisse First Boston
Corporation.....................
Merrill Lynch, Pierce, Fenner &
Smith Incorporated..............
Morgan Stanley & Co.
Incorporated....................
BNY Capital Markets, Inc.........
BancAmerica Robertson Stephens...
Credit Lyonnais Securities (USA)
Inc.............................
First Chicago Capital Markets,
Inc.............................
First Union Capital Markets, a
division of Wheat First
Securities, Inc.................
Scotia Capital Markets (USA)
Inc. ...........................
---- ---- ----
Total............................ $ $ $
==== ==== ====
</TABLE>

The Underwriters have advised the Company that they propose initially to
offer the Notes to the public at the public offering price set forth on the
cover page of this Prospectus Supplement and to certain dealers at such price
less a concession not in excess of . % of the principal amount of the .
Notes, . % of the principal amount of the . Notes and . % of the principal
amount of . Notes. The Underwriters may allow, and such dealers may reallow,
a discount not in excess of . % of the principal amount of each series of
Notes. After the initial public offering, the public offering price,
concession and discount may be changed.

The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that the Underwriters intend
to make a market in the Notes, but they are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be
given as to the existence or liquidity of a trading market for the Notes.

Settlement for the Notes will be made in immediately available funds and all
secondary trading in the Notes will settle in immediately available funds. See
"Description of the Notes."

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.

In connection with the offering of the Notes, Chase Securities Inc., on
behalf of the Underwriters, may engage in overallotment, stabilizing
transactions and syndicate covering transactions in accordance with Regulation
M under the Securities Exchange Act of 1934, as amended. Overallotment
involves sales in excess of the offering size, which creates a short position
for the Underwriters. Stabilizing transactions involve bids to purchase the
Notes in the open market for the purpose of pegging, fixing or maintaining the
price of the Notes. Syndicate covering transactions involve purchases of the
Notes in the open market after the distribution has been

S-83
<PAGE>

completed in order to cover short positions. Such stabilizing transactions and
syndicate covering transactions may cause the price of the Notes to be higher
than it would otherwise be in the absence of such transactions. Such
activities, if commenced, may be discontinued at any time.

The Underwriters and their affiliates have engaged from time to time and may
in the future engage in various general financing and banking transactions
with, or provide financial advisory services to, the Company and its
affiliates. Pursuant to Rule 2710(c)(8) of the National Association of
Securities Dealers, Inc. ("NASD"), if more than 10% of the net proceeds of a
public offering of securities, not including underwriting compensation, are
intended to be paid to members of the NASD or affiliated or associated persons
that are participating in the distribution of the offering, the yield at which
a debt issue is distributed to the public must be no higher than that
recommended by a "qualified independent underwriter," pursuant to the
requirements of Rule 2720(c)(3) of the NASD. The Company intends to use a
substantial portion of the net proceeds of the Offering to prepay the entire
outstanding principal amount of the Interim Loans, with the balance of the net
proceeds used to repay ratably the Tranche A Loans and the Tranche B Loans. In
connection with such loans the Chase Manhattan Bank, an affiliate of Chase
Securities Inc., serves as agent and lender and the Underwriters, other than
Bear, Stearns & Co. ("Bear, Stearns"), are lenders. Accordingly, the
Underwriters, other than Bear, Stearns, are expected to receive in the
aggregate more than 10% of the net proceeds of the Offering. Bear, Stearns has
agreed to act as the qualified independent underwriter in connection with the
Offering. The yield of the Notes as set forth on the cover of this Prospectus
Supplement will not be higher than that recommended by Bear, Stearns.
Moreover, Bear, Stearns, as a qualified independent underwriter in connection
with the Offering of the Notes, has performed due diligence investigation, and
reviewed and participated in the preparation of this Prospectus Supplement.
See "Use of Proceeds" and "Description of Certain Indebtedness."

GENERAL INFORMATION

Application will be made to list the Notes on the Luxembourg Stock Exchange.
In connection with the listing application, the Articles of Incorporation and
the By laws of the Company and a legal notice relating to the issuance of the
Notes will be deposited prior to listing with Greffier en Chef du Tribunal
d'Arrondissement de et a Luxembourg, where copies thereof may be obtained upon
request. Copies of the above documents together with this Prospectus
Supplement, the accompanying Prospectus, the Indenture and the Company's
current Annual and Quarterly Reports, as well as all future Annual Reports and
Quarterly Reports, so long as any of the Notes are outstanding, will be made
available for inspection at the main office of in Luxembourg.
will act as intermediary between the Luxembourg Stock Exchange
and the Company and the holders of the Notes. In addition, copies of the
Annual Reports and Quarterly Reports of the Company may be obtained free of
charge at such office.

Other than as disclosed or contemplated herein or in the documents
incorporated herein by reference, there has been no material adverse change in
the financial position of the Company since . , 1998.

Except as otherwise disclosed, neither the Company nor any of its
subsidiaries is involved in litigation, arbitration, or administrative
proceedings relating to claims or amounts that are material in the context of
the issue of the Notes and the Company is not aware of any such litigation,
arbitration, or administrative proceedings pending or threatened.

The Company accepts responsibility for the information contained in this
Prospectus Supplement and accompanying Prospectus.

Resolutions relating to the issue and sale of the Notes were adopted by the
Board of Directors of the Company on May 20, 1998.

The . Notes have been assigned Euroclear and Cedel Common Code No. . ,
International Security Identification Number (ISIN) . and CUSIP No. . , the
. Notes have been assigned Euroclear and Cedel Common Code No. . ,
International Security Identification Number (ISIN) . and CUSIP No. . and
the . Notes have been assigned Euroclear and Cedel Common Code No. . ,
International Security Identification Number (ISIN) . and CUSIP No. . .

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This Prospectus Supplement and accompanying Prospectus, together with the
documents incorporated by reference herein, will be available free of charge
at the office of .

Notices to holders of the Notes will be published in Authorized Newspapers
in The City of New York, London, and, so long as the Notes are listed on the
Luxembourg Stock Exchange, in Luxembourg. It is expected that publication will
be made in The City of New York in The Wall Street Journal, in London in the
Financial Times and in Luxembourg in the Luxemburger Wort. Any such notice
shall be deemed to have been given on the date of such publication or, if
published more than once, on the date of the first such publication.

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<PAGE>

PRESENTATION OF FINANCIAL INFORMATION

All references herein to "U.S. dollar," "dollar" or "$" are to the lawful
currency of the United States of America, and all references herein to
"pounds," "pounds sterling," "(Pounds)," "pence" or "p" are to the lawful
currency of the United Kingdom. T&N, a subsidiary of Federal-Mogul, has
published its consolidated financial statements in pounds sterling. Solely for
the convenience of the reader, this Prospectus Supplement and the accompanying
Prospectus contain translations of certain amounts in pounds sterling into
U.S. dollars at specified rates. No representation is made that the pounds
sterling amounts actually represent such U.S. dollar amounts or could be
converted into U.S. dollars at those or any other rates. For informational
purposes only, the Noon Buying Rate on May 12 1998 was $1.6347 = (Pounds)1.00.
See "Exchange Rates" for historical information regarding the Noon Buying
Rate.

Federal-Mogul acquired T&N on March 6, 1998 and acquired Fel-Pro on February
24, 1998. See "T&N and Fel-Pro Acquisitions." The financial information
relating to Federal-Mogul set forth in this Prospectus Supplement and the
accompanying Prospectus (i) to the extent it relates to the years ended
December 31, 1995, 1996 and 1997, or is stated at those dates, has been
derived from Federal-Mogul's audited consolidated financial statements of and
for the years ended December 31, 1995, 1996 and 1997 included in Federal-
Mogul's Annual Report on Form 10-K and included elsewhere in this Prospectus
Supplement (the "Federal-Mogul Audited Financial Statements") and (ii) to the
extent it relates to the three-month periods ended March 31, 1997 and 1998, or
is stated at those dates, has been derived from Federal-Mogul's unaudited
interim consolidated financial statements of and for the three-month periods
ended March 31, 1997 and 1998 (which includes the results of operations and
cash flows of T&N and Fel-Pro from March 6, 1998 and February 24, 1998,
respectively) included in Federal-Mogul's Quarterly Report on Form 10-Q and
included elsewhere in this Prospectus Supplement (the "Federal-Mogul Unaudited
Interim Financial Statements" and, together with the Federal-Mogul Audited
Financial Statements, the "Federal-Mogul Financial Statements"). The financial
information relating to T&N for the years ended December 31, 1996 and 1997 set
forth in this Prospectus Supplement and the accompanying Prospectus has been
derived from the audited consolidated financial statements of T&N included
elsewhere in this Prospectus Supplement (the "T&N Financial Statements") and
the financial information relating to Fel-Pro set forth in this Prospectus
Supplement and the accompanying Prospectus has been derived from the audited
consolidated financial statements of Fel-Pro for the years ended December 28,
1997 and December 29, 1996 included elsewhere in this Prospectus Supplement
(the "Fel-Pro Financial Statements" and, together with the Federal-Mogul
Financial Statements and the T&N Financial Statements, the "Financial
Statements"). The T&N Financial Statements have been prepared in accordance
with generally accepted accounting principles in the United Kingdom ("U.K.
GAAP"), which differ in certain significant respects from generally accepted
accounting principles in the United States ("U.S. GAAP"). The significant
differences between U.S. GAAP and U.K. GAAP as they relate to T&N are
summarized in Note 29 to the T&N Financial Statements.

LEGAL MATTERS

The validity of the Notes and Guarantees being offered hereby will be passed
upon for Federal-Mogul by David M. Sherbin, Esq., Associate General Counsel of
Federal-Mogul. Mr. Sherbin owns and holds options to purchase approximately
1,550 shares of Common Stock of Federal-Mogul. Certain legal matters in
connection with the Offering will be passed upon for Federal-Mogul by Cleary,
Gottlieb, Steen & Hamilton, New York, New York, and for the Underwriters by
Sidley & Austin, Chicago, Illinois and Sachnoff & Weaver Ltd., Chicago,
Illinois.

EXPERTS

The Federal-Mogul Audited Financial Statements contained herein have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon included therein and contained herein. Such consolidated
financial statements audited by Ernst & Young LLP are contained herein in
reliance on such reports given upon the authority of such firm as experts in
accounting and auditing.

S-86
<PAGE>

The Fel-Pro Financial Statements contained herein have been audited by Ernst
& Young LLP, independent auditors, as set forth in their report thereon
included therein and contained herein. Such financial statements audited by
Ernst & Young LLP are contained herein in reliance on such report given upon
the authority of such firm as experts in accounting and auditing.

The T&N Financial Statements contained herein have been audited by KPMG Audit
Plc, independent auditors, as set forth in their reports thereon included
therein and contained herein. Such consolidated financial statements audited by
KPMG Audit Plc are included herein in reliance on their report given on their
authority as experts in accounting and auditing.

S-87
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 15, 1998

PROSPECTUS

$2,500,000,000

FEDERAL-MOGUL CORPORATION

DEBT SECURITIES, PREFERRED STOCK AND COMMON STOCK

Federal-Mogul Corporation, a Michigan corporation ("Federal-Mogul" or the
"Company"), may offer and sell from time to time, in one or more series, (i)
its debt securities, consisting of debentures, notes and/or other evidences of
indebtedness representing unsecured obligations of Federal-Mogul (the "Debt
Securities"), (ii) shares of its preferred stock, no par value per share
("Preferred Stock"), and (iii) shares of its common stock, without par value
("Common Stock"). The Selling Shareholders (as defined herein) may offer and
sell Common Stock as provided for in an accompanying supplement to this
Prospectus. See "Plan of Distribution." Debt Securities, Preferred Stock and
Common Stock are herein collectively referred to as the "Securities."

Certain specific terms of the particular Securities in respect of which this
Prospectus is being delivered will be set forth in an accompanying supplement
to this Prospectus (the "Prospectus Supplement"), which will describe, without
limitation and where applicable, the following: (i) in the case of Debt
Securities, the specific designation, aggregate principal amount, ranking as
senior or subordinated Debt Securities, denomination, maturity, premium, if
any, interest rate (which may be fixed or variable), method of calculating
interest, if any, place or places where principal of, premium, if any, and
interest, if any, on such Debt Securities will be payable, the currencies or
currency units in which principal of, premium, if any, and interest, if any, on
such Debt Securities will be payable, any terms of redemption or conversion,
any sinking fund provisions, the purchase price, any listing on a securities
exchange, any right of Federal-Mogul to defer payment of interest on the Debt
Securities and the maximum length of such deferral period and other special
terms; (ii) in the case of Preferred Stock, the specific designation and
liquidation preference per share and number of shares offered, the purchase
price, dividend rate (which may be fixed or variable), method of calculating
payment of dividends, if any, place or places where dividends on such Preferred
Stock will be payable, any terms of redemption, dates on which dividends shall
be payable and dates from which dividends shall accrue, any listing on a
securities exchange, voting and other rights, including conversion or exchange
rights, if any, and other special terms; and (iii) in the case of Common Stock,
the number of shares offered, the initial offering price, market price and
dividend information.

The offering price to the public of the Securities will be limited to U.S.
$2,500,000,000 in the aggregate (or its equivalent (based on the applicable
exchange rate at the time of issue), if Securities are offered for
consideration denominated in one or more foreign currencies or currency units
as shall be designated by Federal-Mogul). The Debt Securities may be
denominated in United States dollars or, at the option of Federal-Mogul if so
specified in the applicable Prospectus Supplement, in one or more foreign
currencies or currency units. The Debt Securities may be issued in registered
form or bearer form, or both. If so specified in the applicable Prospectus
Supplement, Securities of one or more classes or series may be issued in whole
or in part in the form of one or more temporary or permanent global securities.

The Common Stock is listed on the New York Stock Exchange under the trading
symbol "FMO."

The Securities may be sold to or through underwriters, through dealers or
agents or directly to purchasers. See "Plan of Distribution." The names of any
underwriters, dealers or agents involved in the sale of the Securities in
respect of which this Prospectus is being delivered and any applicable fee,
commission or discount arrangements with them will be set forth in a Prospectus
Supplement. See "Plan of Distribution" for possible indemnification
arrangements for dealers, underwriters and agents.

The Selling Shareholders will receive the net proceeds from the sale of
shares of Common Stock by the Selling Shareholders and will pay all
underwriting discounts, selling commissions and transfer taxes, if any,
applicable to any such sale. Federal-Mogul is responsible for payment of all
other expenses incident to the registration of the shares of Common Stock. The
Selling Shareholders and any broker-dealers, agents or underwriters that
participate in the distribution of the Common Stock sold by the Selling
Shareholders may be deemed "underwriters" within the meaning of the Securities
Act, and any commission received by them and any profit on the resale of the
shares of Common Stock purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. See "Plan of Distribution"
for a description of certain indemnification arrangements.

This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this Prospectus is . , 1998.
<PAGE>

AVAILABLE INFORMATION

Federal-Mogul is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The Registration
Statement on Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act of which this Prospectus
forms a part, as well as such reports, proxy statements and other information
filed by Federal-Mogul with the Commission, can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices in Chicago, Citicorp Center, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661-2511, and in New York, 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material
can be obtained by mail from the Public Reference Section of the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates and such material is contained on the worldwide web site
maintained by the Commission at http://www.sec.gov. Reports, proxy statements
and other information concerning Federal-Mogul can be inspected at the offices
of the New York Stock Exchange, Inc. (the "NYSE"), 20 Broad Street, New York,
New York 10005.

Federal-Mogul has filed the Registration Statement with the Commission in
Washington, D.C. with respect to the Securities offered hereby. This
Prospectus constitutes a part of the Registration Statement and does not
contain all the information set forth therein, certain portions of which have
been omitted as permitted by the rules and regulations of the Commission. Any
statements contained herein concerning the provisions of any contract or other
document are not necessarily complete and, in each instance, reference is made
to the copy of such contract or other document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference. For further
information regarding Federal-Mogul and the securities offered hereby,
reference is made to the Registration Statement and to the exhibits thereto.

2
<PAGE>

THE COMPANY

Federal-Mogul is a leading global manufacturer and distributor of a broad
range of vehicular components for automobiles and light trucks, heavy duty
trucks, farm and construction vehicles and industrial products. Such
components include powertrain systems components (primarily bearings, rings
and pistons), sealing system components (dynamic seals and gaskets) and
general products (primarily friction products, sintered products, camshafts
and systems protection products). Federal-Mogul markets its products to many
of the world's major original equipment ("OE") manufacturers. Federal-Mogul
also manufactures and supplies its products and related parts to the
aftermarket relating to each of these categories of equipment.

In connection with its growth strategy, on March 6, 1998 Federal-Mogul
acquired T&N plc ("T&N"), a U.K. based supplier of engine and transmission
products, for total consideration of approximately (Pounds)1.46 billion ($2.42
billion, converted at a blended exchange rate of 1.6510 U.S. dollars to 1
pound sterling). T&N manufactures and supplies high technology engineered
automotive components and industrial materials including pistons, friction
products, bearings, systems protection, camshafts and sealing products. On
February 24, 1998, Federal-Mogul acquired Fel-Pro, Incorporated and certain
affiliated entities ("Fel-Pro"), a privately-owned automotive parts
manufacturer, for total consideration of approximately $717 million. Fel-Pro
is a premier gasket manufacturer for the North American aftermarket and OE
heavy duty market.

Federal-Mogul operates facilities at over 240 manufacturing locations in 24
countries. On a pro forma basis (giving effect to the acquisitions of T&N and
Fel-Pro and the disposition of T&N thinwall and drywall and dry bearings
(polymer bearings) operations ("T&N Bearings Business") as if they had
occurred on January 1, 1997), Federal-Mogul's total sales for 1997 were $4.8
billion.

3
<PAGE>

RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS

The following table sets forth Federal-Mogul's ratios of earnings to fixed
charges and earnings to combined fixed charges and preferred stock dividends
for each year in the five-year period ended December 31, 1997 and the three-
month period ended March 31, 1998.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
THREE MONTHS --------------------------------
ENDED MARCH 31, 1998 1997 1996 1995 1994 1993
-------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Combined Fixed Charges
and Preferred Stock
Dividends(1): 1.1x 2.9x N/A(2) N/A(3) 3.1x 2.2x
</TABLE>
- --------
(1) Federal-Mogul guarantees the debt of the Federal-Mogul Employee Stock
Ownership Plan ("ESOP"); the fixed charges of the ESOP are not included in
the above calculations.
(2) Not applicable as 1996 earnings were inadequate to cover fixed charges by
$173.0 million.
(3) Not applicable as 1995 earnings were inadequate to cover fixed charges by
$53.4 million.

The ratio of earnings to fixed charges has been computed by dividing
earnings by fixed charges. The ratio of earnings to combined fixed charges and
preferred stock dividends has been computed by dividing earnings by the sum of
fixed charges and preferred stock dividend requirements. Earnings consist of
income before income taxes plus fixed charges excluding capitalized interest.
Fixed charges consist of interest on all indebtedness, amortization of debt
issuance costs and the portion of rental expense representative of interest.

USE OF PROCEEDS

Unless otherwise indicated in the accompanying Prospectus Supplement, the
net proceeds received by Federal-Mogul from the sale of the Securities offered
hereby are expected to be used for general corporate purposes. Any specific
allocation of the proceeds to a particular purpose that has been made at the
date of any Prospectus Supplement will be described therein. Federal-Mogul
will not receive any proceeds from the sale of shares of Common Stock by any
Selling Shareholder.

DESCRIPTION OF DEBT SECURITIES

The Debt Securities offered hereby, consisting of notes, debentures and
other evidences of indebtedness, are to be issued in one or more series
constituting either senior Debt Securities ("Senior Debt Securities") or
subordinated Debt Securities ("Subordinated Debt Securities"). Unless
otherwise specified in the applicable Prospectus Supplement, the Debt
Securities will be issued pursuant to indentures described below (as
applicable, the "Senior Indenture" or the "Subordinated Indenture," each, an
"Indenture" and, together, the "Indentures"), in each case between Federal-
Mogul and the trustee identified therein (the "Trustee"), the forms of which
have been filed as exhibits to the Registration Statement of which this
Prospectus forms a part. Except for the subordination provisions of the
Subordinated Indenture, for which there are no counterparts in the Senior
Indenture, the provisions of the Subordinated Indenture are substantially
identical in substance to the provisions of the Senior Indenture that bear the
same section numbers.

4
<PAGE>

The statements herein relating to the Debt Securities and the following
summaries of certain general provisions of the Indentures do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the Indentures (as they may be amended or
supplemented from time to time), including the definitions therein of certain
terms capitalized in this Prospectus. All article and section references
appearing herein are to articles and sections of the applicable Indenture and
whenever particular Sections or defined terms of the Indentures (as they may
be amended or supplemented from time to time) are referred to herein or in a
Prospectus Supplement, such Sections or defined terms are incorporated herein
or therein by reference.

GENERAL

The Debt Securities will be unsecured obligations of Federal-Mogul. The
Indentures do not limit the aggregate amount of Debt Securities which may be
issued thereunder, nor do they limit the incurrence or issuance of other
secured or unsecured debt of Federal-Mogul. The Debt Securities issued under
the Senior Indenture will be unsecured and will rank pari passu with all other
unsecured and unsubordinated obligations of Federal-Mogul. The Debt Securities
issued under the Subordinated Indenture will be subordinate and junior in
right of payment, to the extent and in the manner set forth in the
Subordinated Indenture, to all Senior Indebtedness of Federal-Mogul. See "--
Subordination under the Subordinated Indenture."

Reference is made to the applicable Prospectus Supplement which will
accompany this Prospectus for a description of the specific series of Debt
Securities being offered thereby, including, but not limited to, the
following: (1) the title of such Debt Securities, including whether the Debt
Securities are Senior Debt Securities or Subordinated Debt Securities and
whether such Debt Securities will be issued under the Senior Indenture, the
Subordinated Indenture or other indenture set forth in the Prospectus
Supplement; (2) any limit upon the aggregate principal amount of such Debt
Securities; (3) the date or dates on which the principal of and premium, if
any, on such Debt Securities is payable or the method of determining such date
or dates; (4) the rate or rates (which may be fixed or variable) at which such
Debt Securities will bear interest, if any, or the method of calculating such
rate or rates of interest, the date or dates from such interest will accrue or
the method by which such date or dates will be determined, the date or dates
on which interest, if any, will be payable and the record date or dates
therefor; (5) the place or places where principal of, premium, if any, and
interest, if any, on such Debt Securities will be payable; (6) the right, if
any, of Federal-Mogul to defer payment of interest on Debt Securities and the
maximum length of any such deferral period; (7) the period or periods within
which, the price or prices at which, the currency or currencies (including
currency unit or units) in which, and the other terms and conditions upon
which, such Debt Securities may be redeemed or otherwise purchased, in whole
or in part, at the option of Federal-Mogul; (8) the obligation, if any, and
the limitations, if any, on Federal-Mogul to redeem or purchase such Debt
Securities pursuant to any sinking fund or analogous provisions or upon the
happening of a specified event or at the option of a Holder thereof or at
Federal-Mogul's option or otherwise, or to apply any purchases of such Debt
Securities to any such redemption, and, if any, the period or periods within
which, the price or prices at which, the application of purchases to
redemptions, and the other terms and conditions upon which such Debt
Securities shall be redeemed or purchased, in whole or in part; (9) the
denominations in which such Debt Securities are authorized to be issued; (10)
the currency or currencies (including currency unit or units) in which
principal of, premium, if any, and interest, if any, on such Debt Securities
will be payable, or in which such Debt Securities will be denominated and
whether Federal-Mogul or the holders of any such Debt Securities may elect to
receive payments in respect of such Debt Securities in a currency or currency
unit other than that in which such Debt Securities are stated to be payable;
(11) if other than the principal amount thereof, the portion of the principal
amount of such Debt Securities which will be payable upon declaration of the
acceleration of the maturity thereof or the method by which such portion shall
be determined; (12) the person to whom any interest on any such Debt Security
shall be payable if other than the person in whose name such Debt Security is
registered on the applicable record date; (13) any addition to, or
modification or deletion of, any Event of Default or any covenant of Federal-
Mogul specified in the Indenture with respect to such Debt Securities; (14)
the

5
<PAGE>

application, if any, of such means of defeasance or covenant defeasance as may
be specified for such Debt Securities; (15) whether such Debt Securities are
to be issued in whole or in part in the form of one or more temporary or
permanent global securities and, if so, the identity of the depositary for
such global security or securities; (16) whether the Debt Securities of the
series are convertible into Common Stock or Preferred Stock, and, if so, the
class or series of capital stock of Federal-Mogul into which such Debt
Securities are convertible and the terms and conditions upon which such
conversion will be effected; and (17) any other special terms pertaining to
such Debt Securities. Unless otherwise specified in the applicable Prospectus
Supplement, the Debt Securities will not be listed on any securities exchange.
(Section 3.1.)

Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities will be issued in fully-registered form without coupons. Where Debt
Securities of any series are issued in bearer form, the special restrictions
and considerations, including special offering restrictions and special United
States Federal income tax considerations, applicable to any such Debt
Securities and to payment on and transfer and exchange of such Debt Securities
will be described in the applicable Prospectus Supplement. Bearer Debt
Securities will be transferable by delivery. (Section 3.5.)

Debt Securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate which at the time
of issuance is below market rates. Certain United States Federal income tax
consequences and special considerations applicable to any such Debt
Securities, or to Debt Securities issued at par that are treated as having
been issued at a discount, will be described in the applicable Prospectus
Supplement.

If the purchase price of any of the Debt Securities is payable in one or
more foreign currencies or currency units or if any Debt Securities are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any Debt Securities is
payable in one or more foreign currencies or currency units, or by reference
to commodity prices, equity indices or other factors, the restrictions,
elections, certain United States Federal income tax considerations, specific
terms and other information with respect to such issue of Debt Securities and
such foreign currency or currency units or commodity prices, equity indices or
other factors will be set forth in the applicable Prospectus Supplement. In
general, holders of such series of Debt Securities may receive a principal
amount on any principal payment date, or a payment of premium, if any, on any
premium payment date or a payment of interest on any interest payment date,
that is greater than or less than the amount of principal, premium, if any, or
interest, if any, otherwise payable on such dates, depending on the value on
such dates of the applicable currency, commodity, equity index or other
factor.

GUARANTEES

Each Prospectus Supplement will describe, as to the Debt Securities to which
it relates, any guarantees for the benefit of such Debt Securities, which may
be granted by one or more of the following direct and indirect subsidiaries of
the Company: Federal-Mogul Dutch Holdings Inc., Federal-Mogul Global Inc.,
Federal-Mogul U.K. Holdings Inc., Carter Automotive Company, Federal Mogul
Venture Corporation, Federal-Mogul World Wide, Inc., Federal-Mogul Global
Properties, Inc., Felt Products Mfg. Co., Fel-Pro Management Co. and Fel-Pro
Chemical Products, L.P. The first three named Guarantors are holding companies
whose sole assets are stock of subsidiaries or intercompany debt. The net book
value of each of the other Guarantors is less than $10 million per Guarantor,
except for Fel-Pro Chemical Products, L.P., which had a net book value of
approximately $40 million at March 31, 1998 and is in the process of being
sold. The Guarantees are thus not expected to be of significant value to the
holders of the Debt Securities, and Federal-Mogul does not believe that
separate financial information or other information in respect of the
Guarantors would be material to purchasers of Debt Securities. Each Prospectus
Supplement will specify which of these entities will provide guarantees in
connection with any series of notes. Each such Prospectus Supplement will also
describe any provisions regarding release or addition of guarantors of
obligations under such Debt Securities.

PAYMENT, REGISTRATION, TRANSFER AND EXCHANGE

Unless otherwise provided in the applicable Prospectus Supplement, payments
in respect of the Debt Securities will be made in the designated currency at
the office or agency of Federal-Mogul maintained for that purpose as Federal-
Mogul may designate from time to time, except that, at the option of Federal-
Mogul, interest

6
<PAGE>

payments, if any, on Debt Securities in registered form may be made (i) by
check mailed to the address of the person entitled thereto as specified in the
Register or (ii) at Federal-Mogul's expense, by wire transfer to an account
maintained by the person entitled thereto as specified in the Register.
(Sections 3.7(a) and 9.2.) Unless otherwise indicated in the applicable
Prospectus Supplement, payment of any installment of interest on Debt
Securities in registered form will be made to the person in whose name such
Debt Security is registered at the close of business on the regular record
date for such interest. (Section 3.7(a).)

Payment in respect of Debt Securities in bearer form will be made in the
currency and in the manner designated in the Prospectus Supplement, subject to
any applicable laws and regulations, at such paying agencies outside the
United States as Federal-Mogul may appoint from time to time. The paying
agents outside the United States initially appointed by Federal-Mogul for a
series of Debt Securities will be named in the Prospectus Supplement. Federal-
Mogul may at any time designate additional paying agents or rescind the
designation of any paying agents, except that, if Debt Securities of a series
are issuable as Registered Securities, Federal-Mogul will be required to
maintain at least one paying agent in each Place of Payment for such series
and, if Debt Securities of a series are issuable as Bearer Securities,
Federal-Mogul will be required to maintain a paying agent in a Place of
Payment outside the United States where Debt Securities of such series and any
coupons appertaining thereto may be presented and surrendered for payment.
(Section 9.2.)

Unless otherwise provided in the applicable Prospectus Supplement, Debt
Securities in registered form will be transferable or exchangeable at the
agency of Federal-Mogul maintained for such purpose as designated by Federal-
Mogul from time to time. (Sections 3.5 and 9.2.) Debt Securities may be
transferred or exchanged without service charge, other than any tax or other
governmental charge imposed in connection therewith. (Section 3.5.)

GLOBAL DEBT SECURITIES

Unless otherwise specified in the applicable Prospectus Supplement, the Debt
Securities of a series may be issued in whole or in part in the form of one or
more fully registered global securities (a "Registered Global Security") that
will be deposited with a depositary (the "Depositary") or with a nominee for
the Depositary identified in the applicable Prospectus Supplement. In such a
case, one or more Registered Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding Debt Securities of the series to be
represented by such Registered Global Security or Securities. (Section 3.3.)
Unless and until it is exchanged in whole or in part for Debt Securities in
definitive certificated form, a Registered Global Security may not be
transferred except as a whole by the Depositary for such Registered Global
Security to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by such Depositary or
any such nominee to a successor Depositary for such series or a nominee of
such successor Depositary and except in the circumstances described in the
applicable Prospectus Supplement. (Section 3.5.)

The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Registered Global
Security will be described in the applicable Prospectus Supplement. Unless
otherwise specified in the applicable Prospectus Supplement, Federal-Mogul
expects that the following provisions will apply to such depositary
arrangements.

Ownership of beneficial interests in a Registered Global Security will be
limited to participants or persons that may hold interests through
participants (as such term is defined below). Upon the issuance of any
Registered Global Security, and the deposit of such Registered Global Security
with or on behalf of the Depositary for such Registered Global Security, the
Depositary will credit, on its book-entry registration and transfer system,
the respective principal amounts of the Debt Securities represented by such
Registered Global Security to the accounts of institutions ("participants")
that have accounts with the Depositary or its nominee. The accounts to be
credited will be designated by the underwriters or agents engaging in the
distribution of such Debt Securities or by Federal-Mogul, if such Debt
Securities are offered and sold directly by Federal-Mogul. Ownership of
beneficial interests by participants in such Registered Global Security will
be shown on, and the transfer of such

7
<PAGE>

beneficial interests will be effected only through, records maintained by the
Depositary for such Registered Global Security or by its nominee. Ownership of
beneficial interests in such Registered Global Security by persons that hold
through participants will be shown on, and the transfer of such beneficial
interests within such participants will be effected only through, records
maintained by such participants. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
certificated form. The foregoing limitations and such laws may impair the
ability to transfer beneficial interests in such Registered Global Security.

So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder
of the Debt Securities represented by such Registered Global Security for all
purposes under the applicable Indenture. Unless otherwise specified in the
applicable Prospectus Supplement and except as specified below, owners of
beneficial interests in such Registered Global Security will not be entitled
to have Debt Securities of the series represented by such Registered Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of Debt Securities of such series in certificated form and
will not be considered the holders thereof for any purposes under the relevant
Indenture. (Section 3.8.) Accordingly, each person owning a beneficial
interest in such Registered Global Security must rely on the procedures of the
Depositary and, if such person is not a participant, on the procedures of the
participant through which such person owns its interest, to exercise any
rights of a holder under the relevant Indenture. The Depositary may grant
proxies and otherwise authorize participants to give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
which a holder is entitled to give or take under the relevant Indenture.
Federal-Mogul understands that, under existing industry practices, if Federal-
Mogul requests any action of holders or if any owner of a beneficial interest
in such Registered Global Security desires to give any notice or take any
action which a holder is entitled to give or take under the relevant
Indenture, the Depositary would authorize the participants to give such notice
or take such action, and such participants would authorize beneficial owners
owning through such participants to give such notice or take such action or
would otherwise act upon the instructions of beneficial owners owning through
them.

Unless otherwise specified in the applicable Prospectus Supplement, payments
with respect to principal, premium, if any, and interest, if any, on Debt
Securities represented by a Registered Global Security registered in the name
of a Depositary or its nominee will be made to such Depositary or its nominee,
as the case may be, as the registered owner of such Registered Global
Security. (Section 3.8.)

Federal-Mogul expects that the Depositary for any Debt Securities
represented by a Registered Global Security, upon receipt of any payment of
principal, premium or interest, will immediately credit participants' accounts
with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Registered Global Security as shown
on the records of such Depositary. Federal-Mogul also expects that payments by
participants to owners of beneficial interests in such Registered Global
Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with the securities
held for the accounts of customers registered in "street names," and will be
the responsibility of such participants. None of Federal-Mogul, the respective
Trustees or any agent of Federal-Mogul or the respective Trustees shall have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Registered
Global Security, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests. (Section 3.8.)

Unless otherwise specified in the applicable Prospectus Supplement, if the
Depositary for any Debt Securities represented by a Registered Global Security
is at any time unwilling or unable to continue as Depositary or ceases to be a
clearing agency registered under the Exchange Act and any other applicable
statute or regulation and a duly registered successor Depositary is not
appointed by Federal-Mogul within 90 days, Federal-Mogul will issue such Debt
Securities in definitive certificated form in exchange for such Registered
Global Security. In addition, Federal-Mogul may at any time in its sole
discretion determine not to have any of the Debt Securities of a series
represented by one or more Registered Global Securities and, in such event,
will

8
<PAGE>

issue Debt Securities of such series in definitive certificated form in
exchange for all of the Registered Global Security or Securities representing
such Debt Securities. (Section 3.5.)

The Debt Securities of a series may also be issued in whole or in part in
the form of one or more bearer global securities (a "Bearer Global Security")
that will be deposited with a depositary, or with a nominee for such
depositary, identified in the applicable Prospectus Supplement. Any such
Bearer Global Security may be issued in temporary or permanent form. (Section
3.4.) The specific terms and procedures, including the specific terms of the
depositary arrangement, with respect to any portion of a series of Debt
Securities to be represented by one or more Bearer Global Securities will be
described in the applicable Prospectus Supplement.

CONSOLIDATION, MERGER OR SALE BY FEDERAL-MOGUL

Unless otherwise specified in the applicable Prospectus Supplement, Federal-
Mogul shall not consolidate with or merge into any other corporation or
transfer or lease all or substantially all of its assets, unless: (i) the
corporation formed by such consolidation or into which Federal-Mogul is merged
or the corporation which acquires its assets is organized in the United
States; (ii) the corporation formed by such consolidation or into which
Federal-Mogul is merged or which acquires Federal-Mogul's assets expressly
assumes all of the obligations of Federal-Mogul under each Indenture; (iii)
immediately after giving effect to such transaction, no Default (as
hereinafter defined) or Event of Default exists; and (iv) if, as a result of
such transaction, properties or assets of Federal-Mogul would become subject
to an encumbrance which would not be permitted by the terms of any series of
Debt Securities, Federal-Mogul or the successor corporation, as the case may
be, shall take such steps as are necessary to secure such Debt Securities
equally and ratably with all indebtedness secured thereunder. Upon any such
consolidation, merger or sale, the successor corporation formed by such
consolidation, or into which Federal-Mogul is merged or to which such sale is
made, shall succeed to, and be substituted for Federal-Mogul under each
Indenture. (Section 7.1.)

EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT

Each Indenture provides that, if an Event of Default specified therein
occurs with respect to the Debt Securities of any series and is continuing,
the Trustee for such series or the holders of at least 25% in aggregate
principal amount of all of the outstanding Debt Securities of that series, by
written notice to Federal-Mogul (and to the Trustee for such series, if notice
is given by such holders of Debt Securities), may declare the principal of
(or, if the Debt Securities of that series are Original Issue Discount
Securities or Indexed Securities, such portion of the original principal
amount specified in the Prospectus Supplement) and accrued interest, if any,
on all the Debt Securities of that series to be due and payable (provided,
with respect to any Debt Securities issued under the Subordinated Indenture,
that the payment of principal, premium, if any, and interest, if any, on such
Debt Securities shall remain subordinated to the extent provided in Article 12
of the Subordinated Indenture). (Section 5.2.)

Unless otherwise specified in the applicable Prospectus Supplement, Events
of Default with respect to Debt Securities of any series are defined in each
Indenture as being: (a) default for 30 days in payment of any interest on any
Debt Security of that series or any coupon appertaining thereto or any
additional amount payable with respect to Debt Securities of such series as
specified in the applicable Prospectus Supplement when due and payable; (b)
default in payment of principal, or premium, if any, at maturity or on
redemption or otherwise, or in the making of a mandatory sinking fund payment
of any Debt Securities of that series when due; (c) default for 60 days after
notice to Federal-Mogul by the Trustee for such series, or to Federal-Mogul
and the Trustee for such series by the holders of at least 25% in aggregate
principal amount of the Debt Securities of such series then outstanding, in
the performance of any covenant with respect to the Debt Securities of that
series; (d) with respect to the Senior Indenture, default with respect to
other indebtedness of Federal-Mogul for borrowed money in an aggregate
principal amount of at least $25 million, which default shall constitute a
failure to pay any portion of the principal when due and payable after the
expiration of an applicable grace period with respect thereto or shall result
in an acceleration thereof and such acceleration is not rescinded or annulled
or such debt shall not be paid in full within 30 days after the written notice
thereof to Federal-Mogul by the Trustee or to Federal-Mogul

9
<PAGE>

and the Trustee by the holders of 25% in aggregate principal amount of the
Debt Securities of such series then outstanding, provided that such Event of
Default will be remedied, cured or waived if such default under such other
agreement is remedied, cured or waived; and (e) certain events of bankruptcy,
insolvency or reorganization of Federal-Mogul. (Section 5.1.) The definition
of "Event of Default" in each Indenture specifically excludes a default under
a secured debt under which the obligee has recourse (exclusive of recourse for
ancillary matters such as environmental indemnities, misapplication of funds,
costs of enforcement, etc.) only to the collateral pledged for repayment, and
where the fair market value of such collateral does not exceed two percent of
Total Assets (as defined in the Indenture) at the time of the default. Events
of Default with respect to a specified series of Debt Securities may be added
to the Indenture and, if so added, will be described in the applicable
Prospectus Supplement. (Sections 3.1 and 5.1(7).)

Each Indenture provides that the Trustee will, if it is known to a
Responsible Officer of the Trustee, within 90 days after the occurrence of a
Default with respect to the Debt Securities of any series, give to the holders
of the Debt Securities of that series notice of all Defaults known to it
unless such Default shall have been cured or waived; provided, that except in
the case of a Default in payment on the Debt Securities of that series, the
Trustee may withhold the notice if and so long as the board of directors, the
executive committee or a committee of its Responsible Officers in good faith
determines that withholding such notice is in the interests of the holders of
the Debt Securities of that series. (Section 6.6.) "Default" means any event
which is, or after notice or passage of time or both, would be, an Event of
Default. (Section 1.1.)

Each Indenture provides that the holders of a majority in aggregate
principal amount of the Debt Securities of each series affected (with each
such series voting as a class) may, subject to certain limited conditions,
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee for such series, or exercising any trust or power
conferred on such Trustee. (Section 5.8.)

Each Indenture includes a covenant that Federal-Mogul will file annually
with the Trustee a certificate as to Federal-Mogul's compliance with all
conditions and covenants of such Indenture. (Section 9.6.)

The holders of a majority in aggregate principal amount of any series of
Debt Securities then outstanding by notice to the Trustee for such series may
waive, on behalf of the holders of all Debt Securities of such series, any
past Default or Event of Default with respect to that series and its
consequences except a Default or Event of Default in the payment of the
principal of, premium, if any, or interest, if any, on any Debt Security of
such series, or except in respect of an Event of Default resulting from the
breach of a covenant or provision of either Indenture which, pursuant to the
applicable Indenture, cannot be amended or modified without the consent of the
holders of each outstanding Debt Security of such series affected. (Section
5.7.)

OPTION TO DEFER INTEREST PAYMENTS

If provided in the applicable Prospectus Supplement, Federal-Mogul shall
have the right at any time and from time to time during the term of the series
of Debt Securities to defer the payment of interest for such number of
consecutive interest payment periods as may be specified in the applicable
Prospectus Supplement (each, an "Extension Period"), subject to the terms,
conditions and covenants, if any, specified in such Prospectus Supplement,
provided that such Extension Period may not extend beyond the stated maturity
of the Debt Securities. Certain material United States Federal income tax
consequences and special considerations applicable to any such Debt Securities
will be described in the applicable Prospectus Supplement.

Unless otherwise specified in the applicable Prospectus Supplement, at the
end of such Extension Period, Federal-Mogul shall pay all interest then
accrued and unpaid together with interest thereon compounded semiannually at
the rate specified for the Debt Securities to the extent permitted by
applicable law ("Compound Interest"); provided, that during any such Extension
Period, (a) Federal-Mogul shall not declare or pay dividends on, make
distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of capital stock of Federal-Mogul in connection with
the satisfaction by Federal-Mogul of its obligations under any employee or
agent benefit plans

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or the satisfaction by Federal-Mogul of its obligations pursuant to any
contract or security outstanding on the date of such event requiring Federal-
Mogul to purchase capital stock of Federal-Mogul, (ii) as a result of a
reclassification of Federal-Mogul's capital stock or the exchange or
conversion of one class or series of Federal-Mogul's capital stock for another
class or series of Federal-Mogul's capital stock, (iii) the purchase of
fractional interests in shares of Federal-Mogul's capital stock pursuant to
the conversion of exchange provisions of such capital stock or the security
being conversed or exchanged, (iv) dividends or distributions in capital stock
of Federal-Mogul (or rights to acquire capital stock) or repurchases or
redemptions of capital stock solely from the issuance or exchange of capital
stock or (v) redemptions or repurchases of any rights outstanding under a
shareholder rights plan), (b) Federal-Mogul shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by Federal-Mogul that rank junior to the Debt
Securities, and (c) Federal-Mogul shall not make any guarantee payments with
respect to the foregoing. Prior to the termination of any such Extension
Period, Federal-Mogul may further defer payments of interest by extending the
interest payment period; provided, however, that, such Extension Period,
including all such previous and further extensions, may not extend beyond the
maturity of the Debt Securities. Upon the termination of any Extension Period
and the payment of all amounts then due, Federal-Mogul may commence a new
Extension Period, subject to the terms set forth in this section. No interest
during an Extension Period, except at the end thereof, shall be due and
payable, but Federal-Mogul may prepay at any time all or any portion of the
interest accrued during an Extension Period. Federal-Mogul has no present
intention of exercising its right to defer payments of interest by extending
the interest payment period on the Debt Securities. Federal-Mogul shall give
the holders of the Debt Securities notice of its selection of such Extension
Period ten Business Days prior to the earlier of (i) the Interest Payment Date
or (ii) the date upon which Federal-Mogul is required to give notice to the
New York Stock Exchange (or other applicable self-regulatory organization) or
to holders of the Debt Securities of the record or payment date of such
related interest payment.

MODIFICATION OF THE INDENTURES

Unless otherwise specified in the applicable Prospectus Supplement, each
Indenture contains provisions permitting Federal-Mogul and the Trustee to
enter into one or more supplemental indentures without the consent of the
holders of any of the Debt Securities in order (i) to evidence the succession
of another corporation to Federal-Mogul and the assumption of the covenants
and obligations of Federal-Mogul by a successor to Federal-Mogul; (ii) to add
to the covenants of Federal-Mogul or to surrender any right or power of
Federal-Mogul; (iii) to add additional Events of Default with respect to any
series of Debt Securities; (iv) to add or change any provisions to such extent
as necessary to facilitate the issuance of Debt Securities in bearer form or
to facilitate the issuance of Debt Securities in global form; (v) to add,
change or eliminate any provision affecting only Debt Securities not yet
issued; (vi) to secure the Debt Securities; (vii) to establish the form or
terms of Debt Securities; (viii) to evidence and provide for successor
Trustees; (ix) if allowed without penalty under applicable laws and
regulations, to permit payment in respect of Debt Securities in bearer form in
the United States; (x) to correct any defect or supplement any inconsistent
provisions or to make any other provisions with respect to matters or
questions arising under such Indenture, provided that such action does not
adversely affect the interests of the holders of Debt Securities of any
series; or (xi) to cure any ambiguity or correct any mistake. The Subordinated
Indenture also permits Federal-Mogul and the Trustee thereunder to enter into
such supplemental indentures to modify the subordination provisions contained
in the Subordinated Debenture except in a manner adverse to any outstanding
Debt Securities. (Section 8.1.)

Unless otherwise specified in the applicable Prospectus Supplement, each
Indenture also contains provisions permitting Federal-Mogul and the Trustee,
with the consent of the holders of a majority in aggregate principal amount of
the outstanding Debt Securities affected by such supplemental indenture (with
the Debt Securities of each series voting as a class), to execute supplemental
indentures adding any provisions to or changing or eliminating any of the
provisions of such Indenture or any supplemental indenture or modifying the
rights of the holders of Debt Securities of such series, except that, without
the consent of the holder of each Debt Security so affected, no such
supplemental indenture may: (i) change the time for payment of principal or
premium, if any, or interest, if any, on any Debt Security; (ii) reduce the
principal of, or the rate of interest, or premium, if any,

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on any Debt Security, or change the manner in which the amount of any of the
foregoing is determined; (iii) reduce the amount of premium, if any, payable
upon the redemption of any Debt Security; (iv) reduce the amount of principal
payable upon acceleration of the maturity of any Original Issue Discount
Security or Indexed Security; (v) impair the right to institute suit for the
enforcement of any payment on or with respect to any Debt Security; (vi)
reduce the percentage in principal amount of the outstanding Debt Securities
affected thereby, the consent of whose holders is required for modification or
amendment of such Indenture or for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults; (viii) change
the obligation of Federal-Mogul to maintain an office or agency in the places
and for the purposes specified in such Indenture; (ix) modify the provisions
relating to the subordination of outstanding Debt Securities of any series in
a manner adverse to the holders thereof; or (x) modify the provisions relating
to waiver of certain defaults or any of the foregoing provisions. (Section
8.2.)

SUBORDINATION UNDER THE SUBORDINATED INDENTURE

The Subordinated Indenture provides that any Subordinated Debt Securities
issued thereunder are subordinate and junior in right of payment to all Senior
Indebtedness to the extent provided in the Subordinated Indenture. (Section
12.1 of the Subordinated Indenture.) The Subordinated Indenture defines the
term "Senior Indebtedness" as: (i) all indebtedness of Federal-Mogul, whether
outstanding on the date of the Subordinated Indenture or thereafter created,
incurred or assumed, that is for money borrowed, or evidenced by a note or
similar instrument given in connection with the acquisition of any business,
properties or assets, including securities; (ii) any indebtedness of others of
the kinds described in the preceding clause (i) for the payment of which
Federal-Mogul is responsible or liable as guarantor or otherwise; and (iii)
amendments, renewals, extensions and refundings of any such indebtedness. The
Senior Indebtedness shall continue to be Senior Indebtedness and entitled to
the benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of the Senior Indebtedness or extension or
renewal of the Senior Indebtedness. Senior Indebtedness does not include (A)
any indebtedness of Federal-Mogul to any of its subsidiaries, (B) indebtedness
incurred for the purchase of goods or materials or for services obtained in
the ordinary course of business, and (C) any indebtedness which by its terms
is expressly made pari passu with or subordinated to the Subordinated Debt
Securities. (Section 12.2 of the Subordinated Indenture.)

If (i) Federal-Mogul defaults in the payment of any principal, or premium,
if any, or interest, if any, on any Senior Indebtedness when the same becomes
due and payable, whether at maturity or at a date fixed for prepayment or
declaration or otherwise or (ii) an event of default occurs with respect to
any Senior Indebtedness permitting the holders thereof to accelerate the
maturity thereof and written notice of such event of default (requesting that
payments on Subordinated Debt Securities cease) is given to Federal-Mogul by
the holders of Senior Indebtedness, then unless and until such default in
payment or event of default shall have been cured or waived or shall have
ceased to exist, no direct or indirect payment (in cash, property or
securities, by set-off or otherwise) shall be made or agreed to be made on
account of the Subordinated Debt Securities or interest thereon or in respect
of any repayment, redemption, retirement, purchase or other acquisition of
Subordinated Debt Securities. (Section 12.4 of the Subordinated Indenture.)

In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to Federal-Mogul, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding-up of Federal-Mogul, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by Federal-Mogul for the benefit of creditors, or (iv)
any other marshalling of the assets of Federal-Mogul, all Senior Indebtedness
(including, without limitation, interest accruing after the commencement of
any such proceeding, assignment or marshalling of assets) shall first be paid
in full before any payment or distribution, whether in cash, securities or
other property, shall be made by Federal-Mogul on account of Subordinated Debt
Securities. In any such event, any payment or distribution, whether in cash,
securities or other property (other than securities of Federal-Mogul or any
other corporation provided for by a plan of reorganization or readjustment,
the payment of which is subordinate, at least to the extent provided in the
subordination provisions of the Subordinated Indenture with

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respect to the indebtedness evidenced by Subordinated Debt Securities, to the
payment of all Senior Indebtedness at the time outstanding and to any
securities issued in respect thereof under any such plan of reorganization or
readjustment), which would otherwise (but for the subordination provisions) be
payable or deliverable in respect of Subordinated Debt Securities (including
any such payment or distribution which may be payable or deliverable by reason
of the payment of any other indebtedness of Federal-Mogul being subordinated
to the payment of Subordinated Debt Securities) shall be paid or delivered
directly to the holders of Senior Indebtedness, or to their representative or
trustee, in accordance with the priorities then existing among such holders
until all Senior Indebtedness shall have been paid in full. (Section 12.3 of
the Subordinated Indenture.) No present or future holder of any Senior
Indebtedness shall be prejudiced in the right to enforce subordination of the
indebtedness evidenced by Subordinated Debt Securities by any act or failure
to act on the part of Federal-Mogul. (Section 12.9 of the Subordinated
Indenture.)

Senior Indebtedness shall not be deemed to have been paid in full unless the
holders thereof shall have received cash, securities or other property equal
to the amount of such Senior Indebtedness then outstanding. After all Senior
Indebtedness has been paid in full and until the Subordinated Debt Securities
are paid in full, the holders of Subordinated Debt Securities shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
distributions applicable to the Senior Indebtedness to the extent that
distributions otherwise payable to the holders of Subordinated Debt Securities
have been applied to the payment of Senior Indebtedness, and such payments or
distributions received by any holder of Subordinated Debt Securities, by
reason of such subrogation, of cash, securities or other property which
otherwise would be paid or distributed to the holders of Senior Indebtedness,
shall, as between Federal-Mogul and its creditors other than the holders of
Senior Indebtedness, on the one hand, and the holders of Subordinated Debt
Securities, on the other, be deemed to be a payment by Federal-Mogul on
account of Senior Indebtedness, and not on account of Subordinated Debt
Securities. (Section 12.7 of the Subordinated Indenture.)

The Subordinated Indenture provides that the foregoing subordination
provisions, insofar as they relate to any particular issue of Subordinated
Debt Securities, may be changed prior to such issuance. Any such change would
be described in the applicable Prospectus Supplement relating to such
Subordinated Debt Securities.

DEFEASANCE AND COVENANT DEFEASANCE

If indicated in the applicable Prospectus Supplement, Federal-Mogul may
elect either (i) to defease and be discharged from any and all obligations
with respect to the Debt Securities of or within any series (except as
otherwise provided in the relevant Indenture) ("defeasance") or (ii) to be
released from its obligations with respect to certain covenants applicable to
the Debt Securities of or within any series ("covenant defeasance"), upon the
deposit with the relevant Trustee (or other qualifying trustee), in trust for
such purpose, of money and/or Government Obligations which through the payment
of principal and interest in accordance with their terms will provide money in
an amount sufficient, without reinvestment, to pay the principal of and any
premium or interest on such Debt Securities to Maturity or redemption, as the
case may be, and any mandatory sinking fund or analogous payments thereon. As
a condition to defeasance or covenant defeasance, Federal-Mogul must deliver
to the Trustee an Opinion of Counsel to the effect that the Holders of such
Debt Securities will not recognize income, gain or loss for United States
Federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to United States Federal income tax on the same
amounts and in the same manner and at the same times as would have been the
case if such deposit, defeasance and discharge had not occurred. Such Opinion
of Counsel, in the case of defeasance under clause (i) above, must refer to
and be based upon a ruling of the Internal Revenue Service or a change in
applicable Federal income tax law occurring after the date of the relevant
Indenture. (Article 4.) If indicated in the applicable Prospectus Supplement,
in addition to obligations of the United States or an agency or
instrumentality thereof, Government Obligations may include obligations of the
government or an agency or instrumentality of the government issuing the
currency or currency unit in which Debt Securities of such series are payable.
(Section 3.1.)

In addition, with respect to the Subordinated Indenture, in order to be
discharged, no event or condition shall exist that, pursuant to certain
provisions described under "--Subordination under the Subordinated

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Indenture" above, would prevent Federal-Mogul from making payments of
principal of (and premium, if any) and interest, if any, on Subordinated Debt
Securities at the date of the irrevocable deposit referred to above. (Section
4.6(i) of the Subordinated Indenture.)

Federal-Mogul may exercise its defeasance option with respect to such Debt
Securities notwithstanding its prior exercise of its covenant defeasance
option. If Federal-Mogul exercises its defeasance option, payment of such Debt
Securities may not be accelerated because of an Event of Default. (Section
4.4.) If Federal-Mogul exercises its covenant defeasance option, payment of
such Debt Securities may not be accelerated by reason of a Default or an Event
of Default with respect to the covenants to which such covenant defeasance is
applicable. However, if such acceleration were to occur by reason of another
Event of Default, the realizable value at the acceleration date of the money
and Government Obligations in the defeasance trust could be less than the
principal and interest then due on such Debt Securities, in that the required
deposit in the defeasance trust is based upon scheduled cash flow rather than
market value, which will vary depending upon interest rates and other factors.

THE TRUSTEES

Unless otherwise specified in the applicable Prospectus Supplement, The Bank
of New York will be the Trustee under the Senior Indenture and under the
Subordinated Indenture. Federal-Mogul may also maintain banking and other
commercial relationships with each of the Trustees and their affiliates in the
ordinary course of business.

DESCRIPTION OF PREFERRED STOCK AND COMMON STOCK

In general, the classes of authorized capital stock are afforded preferences
with respect to dividends and liquidation rights in the order listed above.
The Board of Directors of Federal-Mogul is empowered, without approval of the
shareholders, to cause the Preferred Stock to be issued in one or more series,
with the numbers of shares of each series and the rights, preferences and
limitations of each series to be determined by it including, without
limitation, the dividend rights, conversion rights, redemption rights and
liquidation preferences, if any, of any wholly unissued series of Preferred
Stock (or of the entire class of Preferred Stock if none of such shares have
been issued), the number of shares constituting each such series and the terms
and conditions of the issue thereof. The descriptions set forth below do not
purport to be complete and are qualified in their entirety by reference to the
Restated Articles of Incorporation.

The Prospectus Supplement relating to an offering of Common Stock will
describe terms relevant thereto, including the number of shares offered, the
initial offering price, market price and dividend information.

PREFERRED STOCK

The applicable Prospectus Supplement will describe the following terms of
any Preferred Stock in respect of which this Prospectus is being delivered (to
the extent applicable to such Preferred Stock): (i) the specific designation,
number of shares, seniority and purchase price; (ii) any liquidation
preference per share; (iii) any date of maturity; (iv) any redemption,
repayment or sinking fund provisions; (v) any dividend rate or rates (which
may be fixed or variable) and the dates on which any such dividends will be
payable and the dates from which such dividends shall accrue (or the method by
which such rates or dates will be determined); (vi) any voting rights; (vii)
if other than the currency of the United States of America, the currency or
currencies, including composite currencies, in which such Preferred Stock is
denominated and/or in which payments will or may be payable; (viii) the method
by which amounts in respect of such Preferred Stock may be calculated and any
commodities, currencies or indices, or value, rate or price, relevant to such
calculation; (ix) whether the Preferred Stock is convertible or exchangeable
and, if so, the securities or rights into which such Preferred Stock is
convertible or exchangeable (which may include other Preferred Stock, Debt
Securities, Common Stock or other securities or rights of Federal-Mogul
(including rights to receive payment in cash or securities based on the value,

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rate or price of one or more specified commodities, currencies or indices) or
a combination of the foregoing), and the terms and conditions upon which such
conversions or exchanges will be effected, including the initial conversion or
exchange prices or rates, the conversion or exchange period and any other
related provisions; (x) the place or places where dividends and other payments
on the Preferred Stock will be payable; and (xi) any additional dividend,
liquidation, redemption and other rights, preferences, privileges, limitations
and restrictions.

All shares of Preferred Stock offered hereby, or issuable upon conversion,
exchange or exercise of Securities, will, when issued, be fully paid and non-
assessable.

COMMON STOCK

The holders of Common Stock are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefor. The holders of Common Stock are entitled to one vote per
share on all matters submitted to a vote of shareholders and do not have
cumulative voting rights. Holders of Common Stock are entitled to receive,
upon any liquidation of Federal-Mogul, all remaining assets available for
distribution to shareholders after satisfaction of Federal-Mogul's liabilities
and the preferential rights of any preferred stock that may then be issued and
outstanding. All shares of Common Stock offered hereby, or issuable upon
conversion, exchange or exercise of Securities, will, when issued, be fully
paid and non-assessable. The Common Stock is listed on the NYSE. The holders
of Common Stock have no preemptive, conversion or redemption rights. The
registrar and transfer agent for the Common Stock is The Bank of New York.

CERTAIN PROVISIONS

The Restated Articles of Incorporation and Bylaws of Federal-Mogul and the
Rights Agreement contain provisions, summarized below, that could have the
effect of delaying, deterring or preventing a change of control of Federal-
Mogul. This summary does not purport to be complete and is subject to, and
qualified in its entirety by, the provisions of the Restated Articles of
Incorporation and Bylaws and the Rights Agreement.

Federal-Mogul's Articles of Incorporation

Federal-Mogul's Restated Articles of Incorporation provide that the approval
of a business combination (as hereinafter defined) requires (in addition to
any other vote that may be required) the affirmative vote of at least a
majority of the outstanding shares of preferred stock entitled to vote thereon
and Common Stock, voting as a single class. In addition, (a) where the
Restated Articles of Incorporation require the approval of the holder of the
preferred stock or one or more series thereof considered as a separate class,
such business combination shall also require the affirmative vote of at least
a majority of the outstanding shares of the preferred stock of such series
thereof considered as a separate class that are not owned by an Interested
Shareholder (as hereinafter defined) and (b) where applicable law requires
that a transaction be approved by any class or series of Federal-Mogul's stock
or any combination thereof considered as a single class, such transaction
shall also require the affirmative vote of at least a majority of the shares
of each such class or series or combination considered as a single class that
are not owned by the Interested Shareholder.

The voting requirements set forth in the previous paragraph shall not apply
to any business combination if (a) Federal-Mogul's Board of Directors includes
at least one member who was a duly elected and acting member of the Board of
Directors (each being a "Disinterested Director") prior to the time the
Interested Shareholder involved became an Interested Shareholder and such
business combination has been approved by a majority of the Disinterested
Directors and by a majority of the entire Board of Directors, (b) the
aggregate amount of the cash and the fair market value of consideration other
than cash to be received per share by holders of Common Stock in such business
combination shall be at least equal to the Specified Price (as hereinafter
defined) or (c) such business combination has been unanimously approved by the
Board of Directors and the Board has, in the faithful exercise of its
fiduciary duties to the holders of Common Stock, unanimously and expressly
determined that the aggregate amount of the cash and the fair market value of
the consideration other than cash to be received

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<PAGE>

per share by holders of Common Stock in such business combination, although
less than the Specified Price, is nonetheless fair to all holders of Common
Stock.

As used above:

"business combination" means (a) any merger or consolidation of Federal-
Mogul and any subsidiary with or into any Interested Shareholder or any
corporation which after such merger or consolidation would be an affiliate
of an Interested Shareholder, (b) any sale lease exchange, mortgage,
pledge, transfer or other disposition to any Interested Shareholder or its
affiliate of assets of Federal-Mogul or any subsidiary having a fair market
value of $1 million or more (except in the ordinary course of business and
on an arm's-length basis), (c) the issuance or transfer by Federal-Mogul or
any subsidiary (in one transaction or a series of related transactions) of
any securities of Federal-Mogul or a subsidiary to any Interested
Shareholder or its affiliate for cash, securities or property having a fair
market value of $1 million or more, (d) the adoption of any plan or
proposal for the liquidation or dissolution of Federal-Mogul as a result of
which any Interested Shareholder or its affiliate would receive any assets
of Federal-Mogul other than cash or (e) any reclassification of securities
(including any reverse stock split) or recapitalization of Federal-Mogul or
merger or consolidation of Federal-Mogul with any subsidiary or any similar
transaction (whether or not with an Interested Shareholder) which has the
effect, directly or indirectly, of increasing the proportion of outstanding
shares of any equity security of Federal-Mogul or a subsidiary directly
owned by an Interested Shareholder or its affiliate.

"Interested Shareholder" means a person who on the record date for
determining the shareholders entitled to vote on a business combination is
(a) the beneficial owner of 10% or more of the outstanding shares of Common
Stock, (b) an affiliate of Federal-Mogul and within two years prior to such
record date beneficially owned 10% or more of the then outstanding shares
of Common Stock or (c) an assignee or other successor to any shares of
capital stock of Federal-Mogul which were within two years prior thereto
beneficially owned by an Interested Shareholder and such assignment or
succession shall have occurred in one or more transactions not involving a
public offering.

"Specified Price" means the highest of (a) the highest per share price
paid or agreed to be paid by such Interested Shareholder to acquire
beneficial ownership of any shares of Common Stock within the two-year
period prior to the consummation of the business combination; (b) the per
share book value of the Common Stock at the end of the fiscal month
immediately preceding the consummation of such business combination; and
(c) if the Common Stock of the Interested Shareholder is publicly traded,
the price per share equal to the earnings per share of Common Stock for the
four full consecutive fiscal quarters immediately preceding the record date
for solicitation of votes on such business combination (or, if votes are
not solicited on such business combination, immediately preceding the
consummation of such business combination) multiplied by the ratio (if any)
of the highest published sale price of the Interested Shareholder's common
stock during its four fiscal quarters immediately preceding such date, to
the earnings per share of common stock of the Interested Shareholder for
such four fiscal quarters.

Federal-Mogul's Bylaws

Federal-Mogul's Bylaws contain provisions that govern nominations of
directors by shareholders and presentation of business by shareholders for
consideration at the annual meeting of shareholders. Generally, a shareholder
must give notice of such nomination or business within 60 to 90 days prior to
such meeting, giving specified information as to the shareholder and as to the
person nominated and the business proposed to be brought before the meeting.

Preferred Share Purchase Rights

In 1988, Federal-Mogul's Board of Directors authorized the distribution of
one Preferred Share Purchase Right (a "Right") for each outstanding share of
Common Stock. Each Right entitles the holder thereof to buy

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one-half of one one-hundredth of a share of Series B Junior Participating
Preferred Stock at a price of $70.00. The Rights are governed by the Rights
Agreement.

As distributed, the Rights trade together with the Common Stock. They may be
exercised or traded separately only after the earlier to occur of: (i) 10 days
following a public announcement that a person or group of persons has obtained
the right to acquire 10% or more of the outstanding Common Stock (20% in the
case of certain institutional investors), or (ii) 10 business days (or such
later date as may be determined by action of the Board of Directors) following
the commencement or announcement of an intent to make a tender offer or
exchange offer which would result in beneficial ownership by a person or group
of persons of 10% or more of the outstanding Common Stock. If the acquiring
person or group of persons acquires 10% or more of the Common Stock, each
Right (other than those held by the acquirer) will entitle its holder to
purchase, at the Right's exercise price, shares of Common Stock having a
market value of twice the Right's exercise price. Additionally, if Federal-
Mogul is acquired in a merger or other business combination, each Right (other
than those held by the surviving or acquiring company) will entitle its holder
to purchase, at the Right's exercise price, shares of the acquiring company's
stock (or Common Stock of Federal-Mogul if it is the surviving corporation)
having a market value of twice the Right's exercise price.

Rights may be redeemed at the option of the Board of Directors for $0.005
per Right at any time before a person or group or persons acquires 10% or more
of Federal-Mogul's Common Stock. The Board may amend the Rights at any time
without shareholder approval. The Rights will expire by their terms on
November 14, 1998.

The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire Federal-
Mogul in a manner that causes the Rights to become exercisable. Federal-Mogul
believes, however, that the Rights would neither affect any prospective
offeror willing to negotiate with the Board of Directors of Federal-Mogul nor
interfere with any merger or other business combination approved by the Board
of Directors.

17
<PAGE>

SELLING SHAREHOLDERS

The following table sets forth certain information concerning the beneficial
ownership of Common Stock held by the Selling Shareholders, as of May 12,
1998. As of such date, none of the Selling Shareholders holds greater than 1%
of the shares of the Company's outstanding Common Stock.

<TABLE>
<CAPTION>
NUMBER OF
SHARES BENEFICIALLY
OWNED AS OF
NAME MAY 12, 1998(1)
---- -------------------
<S> <C>
Robert J. Morris Revocable Trust UAD 2/16/83................ 69,075
Ellen J. Morris............................................. 97,353
Bruce E. Morris............................................. 113,287
Richard A. Morris Business Trust............................ 85,927
Morris 1992 Gift Trust for Ellen UAD 12/10/92............... 16,116
Morris 1992 Gift Trust for Bruce UAD 12/10/92............... 16,116
Morris 1992 Gift Trust for Richard UAD 12/10/92............. 16,116
Robert J. Morris Trust UAD 7/26/65.......................... 90,986
Morris Meridian Trust for Ellen UAD 3/1/96.................. 41,442
Morris Meridian Trust for Richard UAD 3/1/96................ 41,442
Elliot Lehman Trust 5/87.................................... 57,930
Frances M. Lehman Trust 5/87................................ 99,372
E. Lehman 15 Year Income Trust.............................. 3,178
F. Lehman 15 Year Income Trust.............................. 4,104
Kenneth A. Lehman 1996 E. Family Trust 6/96................. 3,213
Kenneth A. Lehman 1996 F. Family Trust 6/96................. 3,213
Paul Lehman 1996 E. Family Trust 6/96....................... 3,213
Paul Lehman 1996 F. Family Trust 6/96....................... 3,213
Kay L. Schlozman 1996 E. Family Trust 6/96.................. 3,213
Kay L. Schlozman 1996 F. Family Trust 6/96.................. 3,213
Kenneth A. Lehman........................................... 106,407
Lucy G. Lehman.............................................. 11,405
Paul A. Lehman.............................................. 98,514
Kenneth A. Lehman 1992 E Family Trust 12/92................. 121,016
Paul A. Lehman 1992 E Family Trust 12/92.................... 121,016
Kay Lehman 1992 E Family Trust 12/92........................ 121,016
Ronna Stamm................................................. 5,973
Kay Schlozman Children's Trust 12/82........................ 7,690
Schlozman Family Gift Trust 9/85............................ 14,456
Kay L. Schlozman 1997 Children's Trust 11/97................ 3,845
Daniel A. Schlozman Trust #1 12/81.......................... 61,265
Daniel A. Schlozman Trust #2 12/81.......................... 61,264
Schlozman 1994 Gift Trust for Julia......................... 5,922
Sylvia M. Radov............................................. 134,413
Lewis C. Weinberg Irrevocable Trust 8/76.................... 54,994
DAW Family Trust 9/85....................................... 45,382
Daniel C. Weinberg Revocable Trust 7/97..................... 72,382
Carol Jung.................................................. 35,685
Kessler 1996 Gift for David................................. 1,323
Kessler 1996 Gift Trust for Daniel.......................... 1,438
DCW Family Trust 9/85....................................... 123,028
Lewis Weinberg Grandchildrens Gift Trust 12/82 Keith........ 11,788
Keith A. Kessler............................................ 23,921
Lewis Weinberg Grandchildrens Gift Trust 12/82 Arthur....... 11,788
</TABLE>

18
<PAGE>

<TABLE>
<CAPTION>
NUMBER OF
SHARES BENEFICIALLY
OWNED AS OF
NAME MAY 12, 1998(1)
---- -------------------
<S> <C>
Arthur J. Kessler........................................... 33,025
Lewis Weinberg Grandchildrens Gift Trust 12/82 Eric......... 11,788
Eric J. Kessler Irrevocable Trust 12/77..................... 33,025
Lewis Weinberg Grandchildrens Gift Trust 12/82 Mindy........ 29,872
SMR-DAW Childrens Gift Trust for Mindy 12/82................ 6,319
Lewis Weinberg Grandchildrens Gift Trust 12/82 Brian........ 29,872
SMR-DAW Childrens Gift Trust for Brian 12/82................ 6,319
Sylvia MGP Trust for Daniel 06/96........................... 97,893
Weinberg 1992 Gift Trust for Daniel......................... 41,954
Sylvia 1992 Gift Trust for Barbara.......................... 102,185
Sylvia 1992 Gift Trust for David............................ 102,185
Sylvia 1992 Gift Trust for Daniel........................... 102,185
LCW-DCW Family Gift Trust 9/85.............................. 25,894
SMR-DCW Family Gift Trust 9/85.............................. 26,463
Lewis Weinberg Grandchildrens Gift Trust--Zachary........... 20,438
Zachary D. Weinberg Irrevocable Trust 12/81................. 3,144
Abigail Weinberg Trust 2/90................................. 21,825
Abigail Weinberg Annual Gift Trust 12/91.................... 1,757
Sylvia MGP Trust for David 6/96............................. 97,893
Sylvia MGP Trust for Barbara 6/96........................... 97,893
H&M Realty Corporation...................................... 216,584
McCormick Investments, Inc.................................. 81
McCormick Investments, LP................................... 7,926
</TABLE>
- --------
(1) Assumes conversion of Series E Stock.

The Selling Shareholders may from time to time offer and sell pursuant to
this Prospectus and a Prospectus Supplement providing therefor, shares of
Common Stock held by such Selling Shareholders.

The shares of Common Stock that may be offered and sold by the Selling
Shareholders will be acquired by such Selling Shareholders through conversion
of Series E Stock received as part of the consideration received by them in
the Federal-Mogul acquisition of Fel-Pro. Pursuant to the Registration Rights
Agreement among Federal-Mogul and the Selling Shareholders. Federal-Mogul
shall bear all expenses incident to Federal-Mogul's performance of or
compliance with the Registration Rights Agreement, except that the Selling
Shareholders will pay all underwriting discounts and commissions relating to
their shares of Common Stock, brokerage fees, transfer taxes, and the fees and
expenses of any counsel, accountants or other representatives retained by the
Selling Shareholders, if any. The Selling Shareholders will be indemnified by
Federal-Mogul against certain liabilities, including certain liabilities under
the Securities Act, or will be entitled to contribution in connection
therewith.

19
<PAGE>

PLAN OF DISTRIBUTION

Federal-Mogul may sell any of the Securities being offered hereby in any one
or more of the following ways from time to time: (i) through agents; (ii) to
or through underwriters; (iii) through dealers; or (iv) directly to
purchasers.

The Prospectus Supplement with respect to the Securities will set forth the
terms of the offering of the Securities, including the name or names of any
underwriters, dealers or agents; the purchase price of the Securities and the
proceeds to Federal-Mogul from such sale; any underwriting discounts and
commissions or agency fees and other items constituting underwriters' or
agents' compensation; any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers and any securities
exchange on which such Securities may be listed. Any initial public offering
price, discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.

The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.

Offers to purchase Securities may be solicited by agents designated by
Federal-Mogul from time to time. Any such agent involved in the offer or sale
of the Securities in respect of which this Prospectus is delivered will be
named, and any commissions payable by Federal-Mogul to such agent will be set
forth, in the applicable Prospectus Supplement. Unless otherwise indicated in
such Prospectus Supplement, any such agent will be acting on a reasonable best
efforts basis for the period of its appointment. Any such agent may be deemed
to be an underwriter, as that term is defined in the Securities Act of 1933,
of the Securities so offered and sold.

If Securities are sold by means of an underwritten offering, Federal-Mogul
will execute an underwriting agreement with an underwriter or underwriters at
the time an agreement for such sale is reached, and the names of the specific
managing underwriter or underwriters, as well as any other underwriters, and
the terms of the transaction, including commissions, discounts and any other
compensation of the underwriters and dealers, if any, will be set forth in the
Prospectus Supplement which will be used by the underwriters to make resales
of the Securities in respect of which this Prospectus is delivered to the
public. If underwriters are utilized in the sale of the Securities in respect
of which this Prospectus is delivered, the Securities will be acquired by the
underwriters for their own account and may be resold from time to time in one
or more transactions, including negotiated transactions, at fixed public
offering prices or at varying prices determined by the underwriter at the time
of sale. Securities may be offered to the public either through underwriting
syndicates represented by managing underwriters or directly by the managing
underwriters. If any underwriter or underwriters are utilized in the sale of
the Securities, unless otherwise indicated in the Prospectus Supplement, the
underwriting agreement will provide that the obligations of the underwriters
are subject to certain conditions precedent and that the underwriters with
respect to a sale of Securities will be obligated to purchase all such
Securities of a series if any are purchased.

If a dealer is utilized in the sales of the Securities in respect of which
this Prospectus is delivered, Federal-Mogul will sell such Securities to the
dealer as principal. The dealer may then resell such Securities to the public
at varying prices to be determined by such dealer at the time of resale. Any
such dealer may be deemed to be an underwriter, as such term is defined in the
Securities Act, of the Securities so offered and sold. The name of the dealer
and the terms of the transaction will be set forth in the Prospectus
Supplement relating thereto.

Offers to purchase Securities may be solicited directly by Federal-Mogul and
the sale thereof may be made by Federal-Mogul directly to institutional
investors or others, who may be deemed to be underwriters within the meaning
of the Securities Act with respect to any resale thereof. The terms of any
such sales will be described in the Prospectus Supplement relating thereto.

Agents, underwriters and dealers may be entitled under relevant agreements
to indemnification or contribution by Federal-Mogul against certain
liabilities, including liabilities under the Securities Act.

20
<PAGE>

Agents, underwriters and dealers may be customers of, engage in transactions
with, or perform services for, Federal-Mogul and its subsidiaries in the
ordinary course of business.

Securities may also be offered and sold, if so indicated in the applicable
Prospectus Supplement, in connection with a remarketing upon their purchase,
in accordance with a redemption or repayment pursuant to their terms, or
otherwise, by one or more firms ("remarketing firms"), acting as principals
for their own accounts or as agents for Federal-Mogul. Any remarketing firm
will be identified and the terms of its agreement, if any, with its
compensation will be described in the applicable Prospectus Supplement.
Remarketing firms may be deemed to be underwriters, as such term is defined in
the Securities Act, in connection with the Securities remarketed thereby.
Remarketing firms may be entitled under agreements which may be entered into
with Federal-Mogul to indemnification or contribution by Federal-Mogul against
certain civil liabilities, including liabilities under the Securities Act, and
may be customers of, engage in transactions with or perform services for
Federal-Mogul and its subsidiaries in the ordinary course of business.

If so indicated in the applicable Prospectus Supplement, Federal-Mogul may
authorize agents, underwriters or dealers to solicit offers by certain types
of institutions to purchase Securities from Federal-Mogul at the public
offering prices set forth in the applicable Prospectus Supplement pursuant to
delayed delivery contracts ("Contracts") providing for payment and delivery on
a specified date or dates in the future. A commission indicated in the
applicable Prospectus Supplement will be paid to underwriters, dealers and
agents soliciting purchases of Securities pursuant to Contracts accepted by
Federal-Mogul.

The Selling Shareholders have informed the Company that, unless otherwise
specified in a Prospectus Supplement, they intend to dispose of their shares
of Common Stock offered hereby (the "Shares") through underwriters and that
they will execute an underwriting agreement with an underwriter or
underwriters at the time an agreement for such sale is reached. The names of
the specific managing underwriter or underwriters, as well as any other
underwriters, and the terms of the transaction, including commissions,
discounts and any other compensation of the underwriters and dealers, if any,
will be set forth in the Prospectus Supplement which will be used by the
underwriters to make resales of the Shares in respect of which this Prospectus
is delivered to the public. The Shares will be acquired by the underwriters
for their own account and may be resold from time to time in one or more
transactions, including negotiated transactions, at fixed public offering
prices or at varying prices determined by the underwriter at the time of sale.
Shares may be offered to the public either through underwriting syndicates
represented by managing underwriters or directly by the managing underwriters.
Unless otherwise indicated in the Prospectus Supplement, the underwriting
agreement will provide that the obligations of the underwriters are subject to
certain conditions precedent and that the underwriters with respect to a sale
of Shares will be obligated to purchase all such Shares if any are purchased.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

Federal-Mogul has filed with the Commission, pursuant to Section 13 of the
Exchange Act:

1. Federal-Mogul's Annual Report on Form 10-K for the year ended December
31, 1997;

2. Federal-Mogul's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998;

3. Federal-Mogul's Current Reports on Form 8-K filed on January 13, 1998,
March 11, 1998, March 23, 1998, April 7, 1998, April 17, 1998, May 14, 1998
and June 11, 1998; and

4. Federal-Mogul's Proxy Statement for the 1998 Annual Shareholders'
Meeting, filed on April 21, 1998.

All documents filed by Federal-Mogul with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering made hereby shall be
deemed to be incorporated by reference into this Prospectus and made a part
hereof from the date of filing of such documents, except that the information
required by Item 402 (i), (k) and (l) of Regulation S-K under the Securities
Act and included in any such document is not incorporated herein. Any
statement contained

21
<PAGE>

in this Prospectus or in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained herein or therein
or in a subsequently filed document, that also is or is deemed to be
incorporated by reference herein or therein, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.

THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (NOT INCLUDING EXHIBITS TO SUCH
DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN
SUCH DOCUMENTS) ARE AVAILABLE WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST
DIRECTED TO: EDWARD W. GRAY, JR., ESQ., SENIOR VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY, FEDERAL-MOGUL CORPORATION, 26555 NORTHWESTERN HIGHWAY,
SOUTHFIELD, MICHIGAN 48034 (TELEPHONE: (248) 354-7700).

LEGAL MATTERS

Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of Securities being offered hereby will be passed upon for Federal-
Mogul by David M. Sherbin, Esq., Associate General Counsel of Federal-Mogul.
Mr. Sherbin owns and holds options to purchase approximately 1,550 shares of
Common Stock of Federal-Mogul.

EXPERTS

The consolidated financial statements and schedule of Federal-Mogul as of
December 31, 1997 and for each of the three years in the period ended December
31, 1997 incorporated by reference herein have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon included
therein and incorporated herein by reference. Such consolidated financial
statements and schedule audited by Ernst & Young LLP are incorporated herein
by reference in reliance on such reports given upon the authority of such firm
as experts in accounting and auditing.

The consolidated financial statements of T&N as of December 31, 1997 and for
each of the three years in the period ended December 31, 1997 incorporated by
reference herein have been audited by KPMG Audit Plc, independent auditors, as
set forth in their reports thereon included therein and incorporated herein by
reference. Such consolidated financial statements audited by KPMG Audit Plc
are incorporated herein by reference in reliance on their report given on
their authority as experts in accounting and auditing.

The financial statements of Fel-Pro as of December 28, 1997 and December 29,
1996 for each of the three years in the period ended December 28, 1997
incorporated by reference herein have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon included therein
and incorporated by reference herein. Such financial statements audited by
Ernst & Young LLP are incorporated herein by reference in reliance on such
report given upon the authority of such firm as experts in accounting and
auditing.

22
<PAGE>

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- -------------------------------------------------------------------------------
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus Supplement and the Prospectus in
connection with the offer contained in this Prospectus Supplement and the
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or the Underwriters.
Neither the delivery of this Prospectus Supplement and the Prospectus, nor any
sale made hereunder shall under any circumstances create an implication that
there has been no change in the affairs of the Company since the date hereof.
This Prospectus Supplement and the Prospectus do not constitute any offer or
solicitation by anyone in any jurisdiction in which such offer or solicitation
is not authorized or in which the person making such offer or solicitation is
not qualified to do so or to anyone to whom it is unlawful to make such offer
or solicitation.

----------------

TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT
<TABLE>
<S> <C>
Prospectus Summary........................................................ S-3
Risk Factors.............................................................. S-12
Forward-Looking Statements................................................ S-16
Use of Proceeds........................................................... S-17
Exchange Rates............................................................ S-17
June 1998 Common Stock Offering........................................... S-17
T&N and Fel-Pro Acquisitions.............................................. S-18
Capitalization............................................................ S-20
Unaudited Pro Forma Financial Data........................................ S-21
Selected Consolidated Financial Data--Federal-Mogul....................... S-28
Selected Consolidated Financial Data--T&N................................. S-29
Selected Consolidated Financial Data--Fel-Pro............................. S-31
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... S-32
Description of Certain Indebtedness....................................... S-53
Business.................................................................. S-56
Management................................................................ S-67
Description of the Notes.................................................. S-71
Certain United States Tax Consequences to Non-United States Holders....... S-81
Underwriting.............................................................. S-83
General Information....................................................... S-84
Presentation of Financial Information..................................... S-86
Legal Matters............................................................. S-86
Experts................................................................... S-86
PROSPECTUS
Available Information..................................................... 2
The Company............................................................... 3
Ratio Of Earnings To Fixed Charges And Ratio Of Earnings To Combined Fixed
Charges And Preferred Stock Dividends.................................... 4
Use of Proceeds........................................................... 4
Description of Debt Securities............................................ 4
Description of Preferred Stock and Common Stock........................... 14
Selling Shareholders...................................................... 18
Plan of Distribution...................................................... 20
Incorporation of Certain Information by Reference......................... 21
Legal Matters............................................................. 22
Experts................................................................... 22
FINANCIAL STATEMENTS
Index to Financial Statements............................................. F-1
</TABLE>

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LOGO

$1,000,000,000

$ . % NOTES DUE .

------------------------

PROSPECTUS SUPPLEMENT

------------------------

CHASE SECURITIES INC.
BEAR, STEARNS & CO. INC.
CREDIT SUISSE FIRST BOSTON
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
BNY CAPITAL MARKETS, INC.
BANCAMERICA ROBERTSON STEPHENS
CREDIT LYONNAIS SECURITIES (USA) INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
FIRST UNION CAPITAL MARKETS
SCOTIA CAPITAL MARKETS

Dated . , 1998

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