FEDERAL MOGUL CORP, 424B2, 1998-12-16

FEDERAL MOGUL CORP
424B2, 1998-12-16
MOTOR VEHICLE PARTS & ACCESSORIES

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<PAGE>

Filed Pursuant to Rule 424(b)(2)
Registration Number 333-67805
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JUNE 25, 1998)

14,000,000 SHARES

[LOGO OF FEDERAL MOGUL APPEARS HERE]

COMMON STOCK

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

This is an offering of 14,000,000 shares of Common Stock, without par value,
of Federal-Mogul Corporation.

The U.S. underwriters will offer 12,000,000 shares in the United States and
Canada and the international underwriters will offer 2,000,000 shares outside
the United States and Canada. This is a firm commitment underwriting.

The last reported sale price of the Common Stock, which is listed on the New
York Stock Exchange under the symbol "FMO", on December 14, 1998, was $56
15/16 per share. See "Price Range of Common Stock and Dividends."

INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE S-15 TO READ ABOUT CERTAIN RISKS THAT INVESTORS SHOULD
CONSIDER BEFORE BUYING SHARES OF THE COMMON STOCK.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- ------------
<S> <C> <C>
Public offering price................................... $56.938 $797,125,000
Underwriting discount................................... $ 1.623 $ 22,718,063
Proceeds to Federal-Mogul Corporation................... $55.315 $774,406,937
</TABLE>

The U.S. underwriters may, under certain circumstances, purchase up to an
additional 1,800,000 shares of Common Stock at the public offering price less
the underwriting discount, solely to cover over-allotments. The international
underwriters may similarly purchase up to an additional 300,000 shares.

The underwriters expect to deliver the shares against payment in New York,
New York on December 18, 1998.

BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
SCHRODER & CO. INC.

The date of this Prospectus Supplement is December 14, 1998.
<PAGE>

SUMMARY

This summary may not contain all the information that may be important in
deciding whether to purchase Common Stock. If you are considering purchasing
Common Stock you should carefully review the information contained in this
Prospectus Supplement, the accompanying Prospectus and the documents to which
they refer before you make an investment decision. Federal-Mogul Corporation is
referred to in this Prospectus Supplement and in the accompanying Prospectus as
"Federal-Mogul" and "the Company."

FEDERAL-MOGUL CORPORATION

Federal-Mogul is a leading global manufacturer and distributor of a broad
range of engine components, other vehicular components and related products.
The Company's products are primarily used in the manufacture and maintenance
of:

. automobiles and light trucks

. heavy duty trucks

. farm and construction vehicles and

. industrial equipment.

Federal-Mogul's products include:

POWERTRAIN SYSTEM COMPONENTS, which are internal engine components, directly
involved in creating a vehicle's movement. These components consist primarily
of engine bearings, bushings, pistons, piston pins, rings, liners and ignition.

SEALING SYSTEM COMPONENTS, which provide for the encapsulation of fluids and
gases from the engine, transmission and axle and also prevent external objects
from entering the systems. They consist of dynamic seals (which are found
between components that move in relation to one another) and gaskets (which are
located between components that are static in relation to one another).

BRAKES AND FRICTION PRODUCTS, which are used primarily for vehicular brake
systems. The acquisition of Cooper Automotive substantially expanded Federal-
Mogul's existing brakes and friction business and management anticipates
establishing brakes and friction products (previously administered together
with the products listed under "general products") as a separate manufacturing
operating unit.

GENERAL PRODUCTS, which consist of Federal-Mogul's remaining product lines,
primarily camshafts, sintered products (which are engine components made from
powdered metal), chassis components and systems protection products (which are
used for shielding against heat, noise, abrasion and stone impingement).

Federal-Mogul markets its products to many of the world's major manufacturers
of new vehicles ("original equipment manufacturers"). Federal-Mogul also
manufactures and supplies its products and related parts to aftermarket
customers (purchasers of replacement parts) for each category of equipment
described above. Among Federal-Mogul's largest customers are BMW, Caterpillar,
Cummins, DaimlerChrysler, Fiat, Ford, General Motors, LucasVarity, NAPA,
Peugeot, Renault and Volkswagen/Audi (in alphabetical order).

S-3
<PAGE>

designed to refocus the Company on its core competency of manufacturing. As
part of its restructuring, Federal-Mogul closed or sold substantially all of
its retail operations. 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 plc ("T&N"), a U.K.-based supplier of engine and transmission
products, for a total purchase price of approximately (Pounds)1.46 billion
($2.41 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 original
equipment heavy duty market. See "Recent Acquisitions."

RECENT DEVELOPMENTS

On October 9, 1998, the Company acquired the automotive division of Cooper
Industries, Inc. ("Cooper Automotive") for $1.9 billion (the "Cooper
Acquisition"), excluding fees and expenses. Cooper Automotive, comprised of the
Cooper Automotive and the Moog divisions of Cooper Industries, Inc., is a
premier provider of leading brand name automotive products to the aftermarket
and original equipment market. Cooper Automotive manufactures and distributes
brake and friction products, chassis, ignition products and lighting and wiper
products under well-known brand names including Champion, Moog, Abex, Wagner
and Zanxx. Among Cooper Automotive's largest customers are AutoValue, Carquest,
DaimlerChrysler, Ford, Fiat, General Motors and NAPA (in alphabetical order).
Cooper Automotive had revenues in 1997 of $1.9 billion.

Following the Cooper Acquisition, Federal-Mogul operates facilities at over
300 locations in 24 countries. On a pro forma basis adjusted for the
acquisitions of T&N, Fel-Pro and Cooper Automotive and the dispositions of the
T&N Bearings Business and the Fel-Pro Chemical Business (each as defined
below), as if they had occurred on January 1, 1997, Federal-Mogul's total sales
for 1997 were $6.6 billion. More detailed information regarding the Cooper
Acquisition and its effect upon the Company is found under the captions
"Unaudited Pro Forma Financial Data: T&N, Fel-Pro and Cooper Automotive" and
"Recent Acquisitions," and in Annex I to this Prospectus Supplement.

On October 27, 1998, Federal-Mogul entered into an agreement to sell T&N's
thinwall and dry bearings (polymer bearings) operations (the "T&N Bearings
Business") and certain other engine hard part assets to Dana Corporation for a
purchase price of $430 million. Completion of the sale is subject to regulatory
approval and is expected to occur by the end of 1998.

S-4
<PAGE>

The following charts set forth Federal-Mogul's net sales by market segment,
geographic region and manufacturing division as a percentage of total net sales
for the year ended December 31, 1997 on two differing pro forma bases. The
charts on the left reflect the Company's composition after giving effect to (i)
the T&N and Fel-Pro acquisitions (ii) the sale of the T&N Bearings Business and
(iii) the sale by Federal-Mogul in July 1998 of Fel-Pro Chemical Products, L.P.
("Fel-Pro Chemical Business"), as if each had occurred on January 1, 1997. The
charts on the right reflect the Company's composition after giving effect to
the Cooper Acquisition (as well as the events given effect in the charts on the
left), as if each had occurred on January 1, 1997.

Federal-Mogul
1997 Net Sales by Market Segment
Pre-Cooper Automotive(1) Post-Cooper Automotive(2)

[PIE CHART APPEARS HERE] [PIE CHART APPEARS HERE]

52% Original Equipment 45% Original Equipment
48% Aftermarket 55% Aftermarket

Federal-Mogul
1997 Net Sales by Geographic Region
Pre-Cooper Automotive(1) Post-Cooper Automotive(2)

[PIE CHART APPEARS HERE] [PIE CHART APPEARS HERE]

49% North America 57% North America
11% Rest of World 10% Rest of World
40% Europe 33% Europe

Federal-Mogul
1997 Net Sales by Manufacturing Division
Pre-Cooper Automotive(1) Post-Cooper Automotive(2)

[PIE CHART APPEARS HERE] [PIE CHART APPEARS HERE]

38% General Products 37% Powertrain Systems
22% Sealing Systems 16% Brakes & Friction
40% Powertrain Systems 28% General Products
19% Sealing Systems

(1) Pro forma for the acquisitions of T&N and Fel-Pro and the dispositions of
the T&N Bearings Business and the Fel-Pro Chemical Business.
(2) Pro forma for the acquisitions of T&N, Fel-Pro and Cooper Automotive and the
dispositions of the T&N Bearings Business and the Fel-Pro Chemical Business.

S-5
<PAGE>

BUSINESS STRATEGY

Federal-Mogul's recent restructuring program and the acquisitions which
followed focused the Company on its core competency of manufacturing and
expanded the Company's product base, geographic reach and market penetration.
Key elements of the Company's strategy for continuing this focused growth and
further enhancing its market presence are as follows:

. Systems Approach. Due to its broad manufacturing capabilities and product
offerings, Federal-Mogul is one of a small number of manufacturers with
the ability to seal entire engine, transmission and axle systems and to
act as a single-source supplier of engine and sealing components. In
addition, Federal-Mogul is committed to becoming a provider of complete
engine modules for its original equipment customers. The Company believes
that original equipment 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 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. These acquisitions are major steps toward Federal-
Mogul's strategic goal of developing global engine and sealing systems
for its original equipment customers. The Cooper Acquisition expands the
Company's friction and brake components, ignition and lighting product
lines and adds to the Company's system capabilities primarily in the
brake/friction, lighting and ignition areas.

. Continue Focus on New Product Innovation. The Company's expertise in
engineering and research and development has made it 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 original equipment customers and aid brand
development, resulting in a higher margin product mix.

. Extend Global Manufacturing Reach. The Company intends to extend its
manufacturing capabilities worldwide in response to the global expansion
of its original equipment manufacturing customers. The acquisitions of
T&N, Fel-Pro and Cooper Automotive substantially increased the Company's
manufacturing presence, particularly in North America and Europe.
Management believes expansion of manufacturing operations to follow the
expansion of original equipment 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
original equipment 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 original
equipment 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 adjusted for the acquisitions of T&N and Fel-
Pro, were generated from the aftermarket. The Company

S-6
<PAGE>

believes that opportunities exist to further leverage its broad product
offerings and to increase its penetration of the worldwide aftermarket. In
addition, the Company believes that its ability to sell products developed
for the original equipment market to aftermarket customers reduces the
impact of adverse changes in demand for new vehicles. The Cooper
Acquisition substantially expands the Company's presence in the worldwide
aftermarket. On a pro forma basis, giving effect to the acquisitions of
T&N, Fel-Pro and Cooper Automotive and the dispositions of the T&N
Bearings Business and the Fel-Pro Chemical Business as if they had
occurred on January 1, 1997, approximately 55% of the Company's 1997 sales
were generated from the aftermarket.

. EVA Focus. In 1997, Federal-Mogul adopted Economic Value Added (EVA(R))
as its primary system for evaluating financial performance (for purposes
including planning, internal resource allocation and, to an increasing
extent, determining incentive compensation). EVA is based upon comparison
of the cost of capital with the return on such capital. EVA is equal to
net operating profits after economic taxes less a charge for capital
invested in the Company. This charge is equal to the product of the total
capital invested in the Company and the targeted weighted average cost of
capital. In connection with this effort, the Company's management places
significant emphasis on improving the Company's financial performance and
achieving various operating efficiencies through technical development,
manufacturing, marketing and administrative rationalization. The
Company's EVA improved significantly in 1997 due primarily to improved
operating margins (which margins rose from 4.9% in 1996 to 7.7% in 1997)
combined with $166 million of cash flow from continuing operations (net
of expenditures for property, plant and equipment) in 1997. The Company
is also applying EVA to the integration of T&N, Fel-Pro and Cooper
Automotive 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
Company's main telephone number is (248) 354-7700.

S-7
<PAGE>

THE OFFERINGS

Common Stock Offered (1)..
14,000,000 shares. The U.S. Underwriters are
offering 12,000,000 of these shares initially in
the United States and Canada (the "U.S. Offering").
The International Managers are offering 2,000,000
of these shares initially in a concurrent
international offering outside the United States
and Canada (the "International Offering"; the U.S.
Offering and the International Offering are
together referred to as the "Offerings"). See
"Underwriting."

Common Stock to be
Outstanding after the 70,362,595 shares
Offerings (1) (2)........

Use of Proceeds........... Federal-Mogul will use the proceeds of the
Offerings to prepay certain indebtedness incurred
to finance the acquisition of Cooper Automotive.
See "Use of Proceeds."

NYSE Symbol...............
FMO

Risk Factors.............. Prospective investors should read and consider the
discussion of certain risks of investing in the
Common Stock which begins on page S-15. See "Risk
Factors."
- --------
(1) Assumes no exercise of the Underwriters' over-allotment options granted by
the Company to the U.S. Underwriters for up to an additional 1,800,000
shares and to the International Managers for up to an additional 300,000
shares. See "Underwriters."
(2) Includes 3,038,721 shares issuable upon the exchange of the Company's
Series E Mandatory Exchangeable Preferred Stock ("Series E Stock"), which
are mandatorily exchangeable on February 24, 1999. Does not include: (i)
1,844,100 shares issuable upon exercise of outstanding options under
Federal-Mogul's various stock option and incentive stock plans as of
November 11, 1998, (ii) 3,710,637 additional shares reserved for issuance
upon exercise of options not yet granted under those option plans and (iii)
11,165,049 shares reserved for issuance in connection with the Company's
7.0% Trust Convertible Preferred Securities.

S-8
<PAGE>

SUMMARY HISTORICAL FINANCIAL DATA

The following table presents summary historical financial information for
Federal-Mogul, T&N, Fel-Pro and Cooper Automotive for the periods indicated.
This summary historical financial data is taken from financial statements and
notes filed with the Securities and Exchange Commission (and, in the case of
financial data concerning Cooper Automotive, also reprinted in Annex I of this
Prospectus Supplement), as described under "Presentation of Financial
Information." Because the information in this table is only a summary and does
not provide all of the information contained in the related financial
statements, prospective investors in the Common Stock should read this table
together with "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the financial statements and other information which
Federal-Mogul has filed with the Securities and Exchange Commission. See
"Available Information."

FEDERAL-MOGUL

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
YEAR ENDED DECEMBER 31, (UNAUDITED)
------------------------------------- ----------------------
1997 1996 1995 1998(1) 1997
--------- --------- --------- --------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Net sales............... $ 1,806.6 $ 2,032.7 $ 1,999.8 $ 2,993.2 $1,391.6
Costs and expenses...... (1,703.7)(2) (2,258.0)(3) (2,000.7)(4) (2,860.2)(5) (1,308.4)
Other income/(expense).. (3.4) (3.4) (2.4) (14.6) 1.3
Income tax (expense)
benefit................ (27.5) 22.4 (2.5) (62.6) (24.7)
--------- --------- --------- --------- --------
Net earnings (loss)
before extraordinary
item................... 72.0 (206.3) (5.8) 55.8 59.8
Extraordinary item--loss
on early retirement of
debt, net of applicable
income tax benefit..... (2.6) -- -- (31.3) (2.6)
--------- --------- --------- --------- --------
Net earnings (loss)..... $ 69.4 $ (206.3) $ (5.8) $ 24.5 $ 57.2
========= ========= ========= ========= ========
COMMON SHARE SUMMARY
(DILUTED):
Earnings (loss) per
share:
Before extraordinary
item.................. $ 1.67 $ (6.20) $ (0.42) $ 1.06 $ 1.39
Extraordinary item--
loss on early
retirement of debt,
net of applicable
income tax benefit.... (0.06) -- -- (0.61) (0.06)
--------- --------- --------- --------- --------
Net earnings (loss) per
share.................. $ 1.61 $ (6.20) $ (0.42) $ 0.45 $ 1.33
========= ========= ========= ========= ========
Dividends declared per
share.................. $ 0.48 $ 0.48 $ 0.48 $ 0.125 $ 0.36
========= ========= ========= ========= ========
Average shares and
equivalents outstanding
(in thousands)(6)...... 41,854 34,659 34,642 51,272 41,839
CONSOLIDATED BALANCE
SHEET DATA:
Total assets............ $ 1,802.1 $ 1,455.2 $ 1,701.1 $ 7,417.4 --
Short-term debt(7)...... 28.6 280.1 111.9 170.9 --
Long-term debt.......... 273.1 209.6 481.5 2,426.0 --
Shareholders' equity.... 369.3 318.5 550.3 1,205.6 --
OTHER FINANCIAL
INFORMATION:
Cash provided from (used
by) operating
activities............. $ 215.7 $ 149.0 $ (34.7) $ 228.1 $ 156.9
Cash provided from (used
by) investing
activities............. (5.5) (12.5) (109.4) (2,766.8) 48.8
Cash provided from (used
by) financing
activities............. 298.1 (122.8) 138.5 2,099.6 (218.3)
EBITDA(8)............... 190.8 95.0 154.0 419.9 146.3
Expenditures for
property, plant,
equipment and other
long term assets....... 49.7 54.2 78.5 129.1 29.9
Depreciation and
amortization expense... 52.8 63.7 61.0 149.2 40.7
</TABLE>
Footnotes on following page

S-9
<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, $3.9 million for net restructuring charges, $19.0 million of
charges 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) On June 10, 1998, Federal-Mogul completed a primary offering of 10,537,093
shares of Common Stock. Federal-Mogul used the net proceeds therefrom,
which approximated $592.3 million, to repay outstanding debt incurred for
financing the T&N acquisition. In addition, 422,581 shares of the Series E
stock were converted to 2,112,907 shares of common stock and were sold in a
secondary offering by the holders thereof (collectively, the "June Equity
Offering").
(7) Includes current maturities of long-term debt.
(8) "EBITDA" represents the sum of income before interest income and expense,
expense associated with the Company-obligated mandatatorily redeemable
preferred securities of subsidiary trust holding solely convertible
subordinated debentures of the Company, income taxes and extraordinary
items, plus depreciation and amortization as well as nonrecurring items
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 option 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.
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(2)(3) --------------- ---------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
CONSOLIDATED 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)................................. 421.3 390.2
Expenditures for property, plant,
equipment and other long term assets..... 170.9 179.2
Depreciation and amortization expense..... 167.6 161.9
</TABLE>
Footnotes on following page

S-10
<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, which can be found in
Federal-Mogul's Form 8-K filed on April 7, 1998). 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>
YEAR ENDED
DECEMBER 31,
-----------------------------
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>
(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 1.7110 U.S. dollars to 1 pound sterling, respectively.
(4) "EBITDA" represents the sum of income before interest income and expense
and income taxes, plus depreciation and amortization as well as
nonrecurring items 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.

S-11
<PAGE>

FEL-PRO
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------
DECEMBER 28, DECEMBER 29,
1997 1996
------------ ------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
CONSOLIDATED 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....................................... -- --
Shareholders' 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.

<TABLE>
COOPER AUTOMOTIVE
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, (UNAUDITED)
----------------------- --------------------
1997 1996 1998 1997
--------- --------- --------- ---------
(DOLLARS IN (DOLLARS IN
MILLIONS) MILLIONS)
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenues..................... $ 1,873.2 $ 1,903.2 $ 1,400.8 $ 1,423.8
Costs and expenses........... (1,738.9)(1) (1,813.4)(1) (1,238.4) (1,320.6)
Other expense................ (14.4) (13.2) (7.1) (9.2)
Income tax expense........... (54.3) (49.1) (64.4) (42.5)
--------- --------- --------- ---------
Net earnings................. $ 65.6 $ 27.5 $ 90.9 $ 51.5
========= ========= ========= =========
CONSOLIDATED BALANCE SHEET
DATA:
Total assets................. $ 2,619.6 $ 2,659.2 $ 2,705.3 $ --
Short-term debt(2)........... 35.5 6.1 2.9 --
Long-term debt............... 3.6 7.1 1.6 --
Net assets................... 1,804.6 1,849.6 1,954.3 --
OTHER FINANCIAL INFORMATION:
Cash provided from (used by)
operating activities........ $ 157.5 $ 173.6 $ 104.8 $ 107.9
Cash provided from (used by)
investing activities........ (95.4) (132.6) (40.6) (68.7)
Cash provided from (used by)
financing activities........ (66.5) (38.3) (37.0) (27.0)
EBITDA(3).................... 274.5 280.4 228.1 211.9
Expenditures for property,
plant, equipment and other
long-term assets............ 78.4 87.1 43.7 58.7
Depreciation and amortization
expense..................... 97.6 101.1 72.4 73.7
</TABLE>
- --------
(1) Includes nonrecurring charges of $55.9 million and $102.0 million for 1997
and 1996, respectively. See Note 3 to the Cooper Automotive Financial
Statements in Annex I of this Prospectus Supplement.
(2) Includes current maturities of long-term debt.
(3) "EBITDA" represents the sum of income before interest income and expense
and income taxes, plus depreciation and amortization, as well as
nonrecurring items. 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 Cooper Automotive'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-12
<PAGE>

SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA

The following table presents summary pro forma financial information for the
periods indicated and on September 30, 1998, prepared on the following bases:
(i) as adjusted to give effect to the acquisitions of T&N and Fel-Pro, the
dispositions of the T&N Bearings Business and the Fel-Pro Chemical Business,
and the June Equity Offering, as if they had occurred at the beginning of each
period for which information is presented and on September 30, 1998, and (ii)
as adjusted for the factors in clause (i), and as further adjusted to give
effect to the Cooper Acquisition and the Offerings as if they had occurred at
the beginning of each period for which information is presented and on
September 30, 1998. This summary pro forma financial data is taken from the
"Unaudited Pro Forma Financial Data" included elsewhere in this Prospectus
Supplement.

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 that would have occurred had the relevant events happened
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 does not include expected synergies, cost benefits and
related restructuring charges in connection with the acquisitions of T&N, Fel-
Pro and Cooper Automotive. Because the information in this table is only a
summary and does not provide all of the information contained in the related
financial statements, prospective investors in the Common Stock should read
this table together with "Unaudited Pro Forma Financial Data" herein and the
financial statements and other information which Federal-Mogul has filed with
the Securities and Exchange Commission. See "Available Information."

The unaudited pro forma financial information gives effect to the
acquisitions 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.

<TABLE>
<CAPTION>
PRO FORMA COMBINED FOR
T&N AND FEL-PRO ACQUISITIONS,
THE DISPOSITIONS OF THE T&N PRO FORMA COMBINED AS
BEARINGS BUSINESS AND THE FEL- FURTHER ADJUSTED FOR
PRO CHEMICAL BUSINESS, AND THE JUNE THE COOPER ACQUISITION
EQUITY OFFERING AND FOR THE OFFERINGS(1)
----------------------------------- -----------------------------------
NINE MONTHS ENDED NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
DECEMBER 31, 1997 1998 DECEMBER 31, 1997 1998
----------------- ----------------- ----------------- -----------------
(DOLLARS IN MILLIONS, (DOLLARS IN MILLIONS,
EXCEPT PER SHARE AMOUNTS) EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales............... $ 4,791.1 $ 3,528.8 $ 6,644.7 $ 4,919.7
Costs and expenses...... (4,657.4) (3,400.4) (6,482.3) (4,709.6)
Income tax expense...... (130.4) (62.7) (150.4) (95.5)
--------- --------- --------- ---------
Net earnings before
extraordinary items and
nonrecurring
charges(2)............. $ 3.3 $ 65.7 $ 12.0 $ 114.6
========= ========= ========= =========
COMMON SHARE SUMMARY
(DILUTED):
Earnings (loss) per
share before
extraordinary item and
nonrecurring
charges(3)............. $ (0.08) $ 1.09 $ 0.08 $ 1.56
========= ========= ========= =========
Average shares and
equivalents outstanding
(in thousands)......... 49,300 58,600 64,000 72,600
BALANCE SHEET DATA:
Total assets............ NA $ 7,417.4 NA $10,110.5
Total debt.............. NA 2,596.9 NA 3,752.8
Shareholders' equity.... NA 1,205.6 NA 1,974.2
OTHER FINANCIAL
INFORMATION:
EBITDA(4)............... $ 592.6 $ 464.9 $ 870.2 $ 690.9
Expenditures for
property, plant,
equipment and other
long-term assets....... 238.5 159.9 316.9 203.6
Depreciation and
amortization expense... 245.4 174.9 337.6 244.0
</TABLE>

Footnotes on following page

S-13
<PAGE>

- --------
(1) Summary pro forma financial information is as adjusted to give effect to
the following: (i) the acquisitions of T&N and Fel-Pro, the dispositions of
the T&N Bearings Business and the Fel-Pro Chemical Business, and the June
Equity Offering, (ii) the Cooper Acquisition, and (iii) the sale by the
Company of 14.0 million shares of Common Stock in the Offerings at a
purchase price of $56 15/16 per share, in each case as if these events had
each occurred at the beginning of each period for which information is
presented and on September 30, 1998. See "Use of Proceeds."
(2) The unaudited pro forma statements of operations include only the results
of ongoing operations and exclude such impacts as extraordinary items,
nonrecurring items relating directly to the acquisitions, synergies and
expected cost benefits associated with the integration of the acquisitions.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Recent Acquisitions."
(3) Earnings (loss) per share as calculated for the pro forma combined entity
includes a decrease to net earnings of $7.0 million and $2.7 million in
preferred dividend requirements for the year ended December 31, 1997 and
the nine months ended September 30, 1998, respectively.
(4) "EBITDA" represents the sum of income before interest income and expense,
expense associated with the Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding solely convertible
subordinated debentures of the Company, income taxes and extraordinary
items, plus depreciation and amortization as well as nonrecurring items
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 option and forward
contract, gains associated with options over shares in Kolbenschmidt AG,
bid costs and nonrecurring charges of Cooper Automotive. 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-14
<PAGE>

RISK FACTORS

An investment in Common Stock involves various risks. If you are considering
purchasing Common Stock, you should carefully review the information contained
in this Prospectus Supplement, the accompanying Prospectus and the documents
to which they refer. You should particularly consider the following factors:

EFFECT OF SUBSTANTIAL LEVERAGE

Federal-Mogul incurred a significant amount of debt when it purchased T&N,
Fel-Pro and Cooper Automotive. The Company will use the net proceeds of the
Offerings to repay a portion of this debt, but the Company will continue to be
highly leveraged. The following chart contains important financial statistics
as of September 30, 1998, adjusted to account for the Cooper Acquisition as if
it had been completed by that date:

<TABLE>
<S> <C>
Total short-term debt............... $ 173.8 million
Total long-term debt................ $4,352.6 million
Total debt............................ $4,526.4 million
Company-obligated mandatorily
redeemable preferred securities of
subsidiary trust holding solely
convertible subordinated debentures
of the Company..................... $ 575.0 million
Minority interest in consolidated
subsidiaries....................... $ 62.4 million
Shareholders' equity................ $1,205.6 million
Total capitalization.................. $6,369.4 million
</TABLE>

This means that as of September 30, 1998, accounting for the Cooper
Acquisition as if it had been completed by that date:

. the Company's ratio of debt to total capitalization was 71%; and

. the Company's ratio of long-term debt to total capitalization was 68%.

Federal-Mogul intends to use the net proceeds of the Offerings to repay
approximately $773.6 million of its existing bank debt ($889.7 million if the
Underwriters' overallotment options are exercised in full). In addition,
Federal-Mogul has signed an agreement to sell the T&N Bearings Business for
$430 million. The Company will use the proceeds received from this sale, after
deducting taxes, to repay indebtedness. However, because the sale has not yet
been completed, the Company cannot be certain of the net proceeds it will
receive.

Federal-Mogul's leverage may have important consequences to holders of the
Common Stock. For example, it could:

. limit 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;

. require Federal-Mogul to use a substantial portion of its cash flow
from operations to pay principal and interest on its indebtedness,
which reduces the funds the Company will have available to finance
operations and future business opportunities;

. place Federal-Mogul at a competitive disadvantage to those of its
competitors that may be less leveraged; and

. increase Federal-Mogul's vulnerability to adverse economic and industry
conditions.

In addition, since certain of Federal-Mogul's debt is at variable rates of
interest, Federal-Mogul will be vulnerable to increases in interest rates.
Increases in interest rates could have a material adverse effect on Federal-
Mogul's operations, liquidity and financial condition. Federal-Mogul's ability
to make scheduled principal and interest payments on its indebtedness and its
ability to refinance its indebtedness depend on the Company's future
performance. This performance is, to a certain extent, subject to economic,
financial, competitive and other factors beyond Federal-Mogul's control.

S-15
<PAGE>

It is possible that in the future Federal-Mogul's business may not continue
to generate sufficient cash flow from operations to service its debt and make
necessary capital expenditures. If this occurs, 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 is no certainty that any of these strategies could be
implemented 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 Common
Stock.

The Credit Agreements (as hereinafter defined) limit Federal-Mogul's ability
to incur additional debt and to dispose of assets. The Credit Agreements also
require Federal-Mogul to make interest and principal payments and payments
from material disposals, from "excess cash flow" and from the proceeds of
certain issuances of capital stock or debt. The Company must also comply with
certain financial ratios and minimum net worth tests. See "Description of
Certain Indebtedness." There is no certainty that these requirements will be
met in the future. If Federal-Mogul does not comply with these requirements,
the resulting default under the Credit Agreements could lead to acceleration
of the related debt. Other indebtedness that contain cross-acceleration or
cross-default provisions could also be accelerated. In such a case, Federal-
Mogul might not be able to refinance or otherwise repay such indebtedness.

Federal-Mogul may also incur substantial debt in the future, although its
ability to do so is restricted by the Credit Agreements. For more information
regarding the Company's debt and capitalization, see "Capitalization" and
"Description of Certain Indebtedness."

INTEGRATION OF BUSINESSES

Federal-Mogul's business grew in size and complexity due to the acquisitions
of T&N, Fel-Pro and Cooper Automotive. Federal-Mogul must integrate
operations, management and personnel of four businesses that previously
operated independently and may encounter difficulties completing this
integration. Any material delays or unexpected costs the Company incurs in
connection with the integration process could have a material adverse effect
on Federal-Mogul and its results of operations, liquidity and financial
condition.

SYNERGY AND VALUATION OF CERTAIN ACQUIRED ASSETS AND LIABILITIES

Federal-Mogul analyzed possible economic synergies it hoped to realize as a
result of the acquisitions of T&N, Fel-Pro and Cooper Automotive. It is
possible that Federal-Mogul will not achieve the desired levels of synergies.
If the Company fails to achieve its desired levels of synergies, it could have
a material adverse effect on the business, results of operations, liquidity
and financial condition of Federal-Mogul.

Federal-Mogul has announced that it intends to incur restructuring charges
and related costs of $195 million in connection with synergies targeted for
the T&N and Fel-Pro acquisitions. Of this amount, $54 million will be
recognized as expense as incurred and $141 million was recorded as a direct
cost of the acquisitions. This is moderately less than the annual level of
synergy benefits anticipated from those acquisitions in the year 2000. See
"Recent Acquisitions." In connection with the Cooper Acquisition, Federal-
Mogul expects to incur restructuring charges and related costs of $126
million. Of this amount, $38 million will be recognized as expense as incurred
and $88 million was recorded as a direct cost of the acquisition. See Annex I
to this Prospectus Supplement. It is possible that such costs will be
substantially greater than these amounts or that achieving such synergies will
require additional costs or charges to earnings in future periods. In
connection with the acquisitions of T&N, Fel-Pro and Cooper Automotive, the
Company is performing valuations of certain acquired assets and liabilities.
The unaudited pro forma financial information is based upon preliminary
available information and upon certain assumptions made by management of
Federal-Mogul. As a result, the financial information may be materially
revised as new information becomes available. Any such cost or charges could
have a material adverse effect on the business, results of operations,
liquidity and financial condition 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. Prior to and including 1996, T&N

S-16
<PAGE>

incurred significant charges to income in connection with settling claims,
establishing reserves for asbestos liabilities and obtaining insurance
coverage for certain asbestos liabilities. 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 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. In
connection with the T&N acquisition, Federal-Mogul recorded reserves for IBNR
claims up to the self-retention amount of T&N's IBNR insurance policies. In
addition, the Company has provided reserves for claims notified before June
30, 1996. As of September 30, 1998, the Company has provided $1.292 billion as
its estimate for future costs related to resolving asbestos claims. For a more
detailed description of T&N's asbestos liabilities and the financial impact of
these liabilities on the Company, see "Business--Legal Proceedings,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Federal-Mogul--Asbestos Liability and Legal Proceedings" "--T&N--
Asbestos" and Notes 19 and 28 to the T&N Financial Statements (found in the
Company's Form 8-K filed on April 7, 1998). Although T&N has carefully
projected its future asbestos liability, the assumptions underlying such
projections continuously change and it is therefore not possible to project
with certainty the number of such claims that may be made nor the expenditure
which may arise therefrom. T&N may be subject to material additional
liabilities and significant additional litigation relating to asbestos that
would result in 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 acquire
businesses in order to expand its manufacturing and distribution capabilities.
Federal-Mogul intends to acquire companies that it believes complement its
existing business and will achieve satisfactory rates of return. Federal-Mogul
is usually engaged in various stages of evaluating potential acquisition
candidates, and the Company expects to complete as quickly as possible any
acquisition that it believes meets its criteria. Federal-Mogul may not succeed
in completing each potential acquisition and may not in the future succeed in
locating and acquiring appropriate companies on attractive terms, integrating
acquired companies or realizing desired benefits of such acquisitions.

Federal-Mogul believes that it will require significant capital expenditures
to successfully implement its acquisition strategy, which it might not be able
to fund from its cash from operations. Therefore, Federal-Mogul may borrow
money or otherwise obtain financing for future acquisitions. Holders of the
Common Stock may be affected by Federal-Mogul's incurrence of additional debt.
See "--Effect of Substantial Leverage." If Federal-Mogul is unable to obtain
suitable financing, it may be unable to complete future acquisitions.

CYCLICAL NATURE OF AUTOMOTIVE INDUSTRY

Federal-Mogul's principal operations are directly related to automobile
sales and production in the United States and abroad. 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, regulatory requirements, trade agreements and other
factors. A decline in automotive sales and production would likely affect not
only sales to original equipment customers (purchasers of new automobiles) but
also sales to aftermarket customers (purchasers of replacement parts) 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 appropriately, its results of operations could
be adversely affected. In addition, technical improvements in automotive
component designs may adversely affect aftermarket demand.

INTERNATIONAL OPERATIONS

Federal-Mogul has manufacturing and distribution facilities 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, though the Cooper Acquisition will
partially offset this effect. International operations are subject to certain
risks including (i) exposure to local economic conditions, (ii) exposure to
local political conditions (including the risk of seizure of assets by foreign
governments), (iii) currency exchange rate fluctuations and currency controls
and (iv) export and import restrictions. The likelihood of such occurrences
and their potential effect on Federal-Mogul are unpredictable and vary from
country to country.

S-17
<PAGE>

FOREIGN CURRENCY RISK

Certain Federal-Mogul operating entities report their financial condition
and results of operations in various foreign currencies (including pounds
sterling, German marks and, to a lesser extent South African rand and French
francs). Federal-Mogul translates the reported amounts into U.S. dollars at
the applicable exchange rates in preparing its consolidated financial
statements. As a result, the fluctuating value of the dollar against these
foreign currencies will affect reported sales and operating margin of T&N and
other subsidiaries, as consolidated into Federal-Mogul. 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 is exposed to a risk of loss from changes in
foreign exchange rates whenever Federal-Mogul or one of its foreign
subsidiaries enters into a purchase or sales transaction using a currency that
is not its normal currency. While the Company reduces such risks by matching
revenues and costs with the same currency, changes in currency exchange rates
could have a material adverse effect on Federal-Mogul's financial condition or
results of operations.

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. If the Company is
unable to respond successfully to changing competitive conditions demand for
its products may decline.

FORWARD-LOOKING STATEMENTS

Some of the statements contained or incorporated in this Prospectus
Supplement and the accompanying Prospectus discuss future expectations,
contain projections of results of operations or financial condition or state
other "forward-looking" information. Forward-looking information in this
Prospectus Supplement and the accompanying Prospectus includes information
regarding:

. plans to integrate the businesses of T&N, Fel-Pro and Cooper Automotive
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.

Important factors and risks that may cause actual results to differ from
projections include, for example:

. those relating to the combination of Federal-Mogul's business with
those of T&N, Fel-Pro and Cooper Automotive;

. the anticipated synergies, cost benefits, operating efficiencies,
restructuring charges and related costs in connection with those
acquisitions;

. conditions in the automotive components industry;

. certain global and regional economic conditions; and

. other factors which may be described in the Company's future filings
with the Securities and Exchange Commission.

S-18
<PAGE>

USE OF PROCEEDS

The net proceeds to Federal-Mogul from the sale of the 14.0 million shares
of Common Stock offered in the Offerings are estimated to be $773.6 million
($889.7 million if the Underwriters' over-allotment options are exercised in
full). This assumes a public offering price of $56 15/16 per share, after
deducting the estimated underwriting discount and offering expenses, estimated
at $23.6 million ($27.0 million if the Underwriters' over-allotment options
are exercised in full).

Federal-Mogul intends to use the net proceeds of the Offerings to prepay a
portion of the New Interim Loans (as defined below), the outstanding principal
balance of which is $1.55 billion. The New Interim Loans currently 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
1.25% or (ii) the average of the offering rates of certain banks in the London
interbank eurodollar market for U.S. dollar deposits plus a margin of 2.25%.
The New Interim Loans are scheduled to mature on April 9, 2000. Amounts
borrowed under the New Interim Loans were used as part of the financing of the
acquisition of Cooper Automotive. See "Recent 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 December 14, 1998, the Noon
Buying Rate was (Pounds)1.00=$1.6885.

<TABLE>
<CAPTION>
CALENDAR PERIOD HIGH LOW AVERAGE(1) PERIOD END
- --------------- ----- ----- ---------- ----------
<S> <C> <C> <C> <C>
1998, through December 14, 1998............... $1.72 $1.61 $1.66 $1.69
1997.......................................... $1.70 $1.58 $1.64 $1.64
1996.......................................... $1.71 $1.49 $1.57 $1.71
1995.......................................... $1.64 $1.53 $1.58 $1.55
1994.......................................... $1.64 $1.46 $1.54 $1.57
1993.......................................... $1.59 $1.42 $1.50 $1.48
</TABLE>
- --------
(1) The average of the Noon Buying Rates on the last business day of each
month during the relevant period.

S-19
<PAGE>

RECENT ACQUISITIONS

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

THE COOPER ACQUISITION

On October 9, 1998, the Company acquired Cooper Automotive for a total
purchase price of $1.9 billion. The Company incurred approximately $25 million
of fees and expenses (consisting of $19.5 million of debt financing costs and
$5.5 million of direct transaction costs) in connection with the Cooper
Acquisition.

Cooper Automotive consists of the Cooper Automotive Division (the Champion
spark plug group of companies) and the Moog Automotive Division of Cooper
Industries, Inc. Cooper Automotive is a premier provider of leading brand name
automotive products to the aftermarket and original equipment ("OE") market.
Cooper Automotive manufactures and distributes brake and friction products,
chassis products, ignition products, lighting and wiper products under well-
known brand names including Champion, Moog, Abex, Wagner and Zanxx. Among
Cooper Automotive's largest customers are AutoValue, Carquest,
DaimlerChrysler, Ford, Fiat, General Motors and NAPA (in alphabetical order).
Cooper Automotive had sales in 1997 of $1.9 billion.

A DESCRIPTION OF THE COOPER ACQUISITION, A DESCRIPTION OF COOPER
AUTOMOTIVE'S BUSINESS AND FINANCIAL INFORMATION REGARDING COOPER AUTOMOTIVE IS
INCLUDED IN THIS PROSPECTUS SUPPLEMENT AS ANNEX I.

THE T&N ACQUISITION

On March 6, 1998, Federal-Mogul acquired T&N for total consideration of
approximately (Pounds)1.46 billion ($2.41 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. 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: T&N, Fel-Pro and Cooper Automotive." The
T&N Bearings Business accounted for approximately $393.1 million of T&N's 1997
revenues and employed approximately 4,000 people.

On October 27, 1998, Federal-Mogul entered into an agreement to sell the T&N
Bearings Business and certain other engine hard part assets to Dana
Corporation for a purchase price of $430 million. Completion of the sale is
subject to regulatory approval and is expected to occur by the end of 1998.

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 ("Series E 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. Federal-Mogul has since resold the
Fel-Pro Chemical Business (representing approximately $32.8 million of Fel-
Pro's 1997 net sales and $2.6 million of Fel-Pro's 1997 net income).

STRATEGIC RATIONALE FOR THE ACQUISITIONS

The principal benefits to Federal-Mogul from the acquisitions of T&N, Fel-Pro
and Cooper Automotive 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.

S-20
<PAGE>

. 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.

. Broadening Federal-Mogul's brake/friction and ignition system
capabilities.

SYNERGIES AND COST BENEFITS

Federal-Mogul expects significant pre-tax synergies and cost benefits to be
achieved as a result of the acquisitions of T&N, Fel-Pro and Cooper
Automotive. Federal-Mogul has announced that it intends, in connection with
its targeted synergies, to incur various restructuring charges and related
costs. The Company currently anticipates realizing approximate pre-tax
synergies and cost benefits and funding approximate restructuring charges and
related costs in connection with these acquisitions as follows.

PRE-TAX SYNERGIES AND COST BENEFITS
(IN MILLIONS OF DOLLARS)

<TABLE>
<CAPTION>
1998 1999 2000
------- ------- -------
<S> <C> <C> <C>
T&N and Fel Pro $ 51.0 $ 182.0 $ 235.0
Cooper Automotive -- 94.0 154.0
------- ------- -------
$ 51.0 $ 276.0 $ 389.0

RESTRUCTURING CHARGES AND RELATED COSTS(1)
(IN MILLIONS OF DOLLARS)

<CAPTION>
1998 1999 2000
------- ------- -------
<S> <C> <C> <C>
T&N and Fel Pro(2) $ 94.0 $ 101.0 $ --
Cooper Automotive(3) 10.0 116.0 --
------- ------- -------
$ 104.0 $ 217.0 --
</TABLE>

The foregoing information relating to synergies, cost benefits,
restructuring charges and related costs constitute forward-looking statements
and should be read in conjunction with the information set forth under the
caption "Risk Factors--Synergy and Valuation of Certain Acquired Assets and
Liabilities" and "Forward-Looking Statements."

- --------
(1) Represents estimated cash outflows.
(2) Of the total restructuring charges and related costs for the T&N and Fel-
Pro acquisitions, $54 million is to be recognized as expense when incurred
and $141 million was recognized as a direct cost of the acquisitions.
(3) Of the total restructuring charges and related costs for the Cooper
Acquisition, $38 million is to be recognized as expense when incurred and
$88 million was recognized as a direct cost of the acquisition.

FINANCING OF THE ACQUISITIONS

The acquisition of T&N was funded primarily through a $2.75 billion floating
rate 1997 Credit Agreement (as hereinafter defined) (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, were 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. Federal-Mogul used the
proceeds of the sale of shares of its Common Stock in an underwritten public
offering in June 1998 as well as the proceeds from the issuance of notes in
the principal amount of $1 billion in June 1998, to prepay the entire
outstanding $500 million principal amount of the loans under the Senior
Subordinated Credit Agreement and a portion of the outstanding principal
amount under the 1997 Credit Agreement ($1,076.8 million). See "Description of
Certain Indebtedness."

S-21
<PAGE>

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 Stock, with an imputed value of $225
million, as partial consideration for the acquisition of Fel-Pro.

The acquisition of Cooper Automotive was funded primarily through a $1.95
billion floating rate Term Loan Agreement (as hereinafter defined) and a $200
million 364-day floating rate Revolving Credit Agreement (as hereinafter
defined). The proceeds of the Offerings will be used to repay a portion of the
loans incurred under the Term Loan Agreement in connection with the Cooper
Acquisition. See "Use of Proceeds" and "Description of Certain Indebtedness."

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

Federal-Mogul Common Stock is listed on the NYSE under the symbol "FMO."

The following table sets forth the reported high and low sale prices per
share for the Common Stock on the New York Stock Exchange Composite Tape and
the cash dividends declared on the Common Stock for such periods:

<TABLE>
<CAPTION>
PRICE RANGE
----------------- DIVIDENDS PER
HIGH LOW COMMON SHARE
------- ------- -------------
<S> <C> <C> <C>
1996
First Quarter................................. $20 7/8 $17 3/8 $.12
Second Quarter................................ 19 7/8 17 7/8 .12
Third Quarter................................. 22 1/2 16 1/4 .12
Fourth Quarter................................ 24 1/2 20 3/8 .12
1997
First Quarter................................. 26 3/4 21 5/8 .12
Second Quarter................................ 36 3/8 24 1/2 .12
Third Quarter................................. 39 15/16 32 3/4 .12
Fourth Quarter................................ 47 5/8 36 3/4 .12
1998
First Quarter................................. 54 3/8 39 3/4 .12
Second Quarter................................ 69 1/4 52 5/8 .0025
Third Quarter................................. 72 46 5/8 .0025
Fourth Quarter (through December 14, 1998).... 63 33 .0025(1)
</TABLE>
- --------
(1) Declared but not yet paid.

On December 14, 1998, the reported last sale price of the Common Stock on
the NYSE was $56 15/16 per share. On that date, there were approximately 8,600
shareholders of record of Common Stock.

Dividends on the Common Stock of Federal-Mogul are payable at the discretion
of Federal-Mogul's Board of Directors out of funds legally available therefor.
The Board of Directors has declared a cash dividend payable in the fourth
quarter of 1998 in the amount of $.0025 per share of Common Stock. The record
date for this dividend was November 27, 1998. Common Stock sold in the
Offerings will not entitle holders to receive this dividend. Management
presently intends to retain future earnings for working capital, in accordance
with Federal-Mogul's growth strategy, and therefore anticipates paying
dividends at a comparable level in the foreseeable future. In addition, the
Credit Agreements contain certain limits upon dividends. See "Description of
Certain Indebtedness."

S-22
<PAGE>

CAPITALIZATION

The following table sets forth the consolidated capitalization of Federal-
Mogul at September 30, 1998 on (i) an actual basis, (ii) an as adjusted basis
for the Cooper Acquisition and (iii) a further adjusted basis for the
Offerings. Other than as indicated, there has been no material change to the
information set forth in this capitalization table between September 30, 1998
and the date hereof.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
------------------------------------------
AS ADJUSTED FOR AS ADJUSTED
ACTUAL COOPER ACQUISITION FOR OFFERINGS
-------- ------------------ -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Short-term debt:(1) $ 170.9 $ 173.8 $ 173.8
-------- --------- --------
Long-term debt:
Cooper bank financing............ $ -- $ 1,925.0 $1,151.4
T&N and Fel-Pro bank financing... 1,098.8 1,098.8 1,098.8
7.5% Notes due 2004.............. 249.5 249.5 249.5
7.75% Notes due 2006............. 399.9 399.9 399.9
8.8% Notes due 2007.............. 124.7 124.7 124.7
7.875% Notes due 2010............ 349.2 349.2 349.2
Medium-term notes due 1999
through 2005.................... 125.0 125.0 125.0
ESOP obligation.................. 11.6 11.6 11.6
Other............................ 67.3 68.9 68.9
-------- --------- --------
Total long-term debt(2)........ 2,426.0 4,352.6 3,579.0
-------- --------- --------
Minority interest in consolidated
subsidiaries...................... 60.6 62.4 62.4
Company-obligated mandatorily
redeemable preferred securities of
subsidiary trust holding solely
convertible subordinated
debentures of the Company(3)...... 575.0 575.0 575.0
Shareholders' equity:
Series C ESOP Convertible
Preferred Stock................. 45.2 45.2 45.2
Series E Preferred Stock......... 132.7 132.7 132.7
Common Stock..................... 266.1 266.1 336.1
Additional paid-in capital....... 953.4 953.4 1,657.0
Accumulated deficit.............. (99.1) (99.1) (104.1)(4)
Unearned ESOP compensation....... (18.1) (18.1) (18.1)
Accumulated other comprehensive
income.......................... (68.3) (68.3) (68.3)
Other............................ (6.3) (6.3) (6.3)
-------- --------- --------
Total shareholders' equity..... 1,205.6 1,205.6 1,974.2
-------- --------- --------
Total capitalization......... $4,438.1 $ 6,369.4 $6,364.4
======== ========= ========
</TABLE>
- --------
(1) Includes current maturities of long-term debt.
(2) Less current maturities of long-term debt.
(3) 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.
(4) Includes the extraordinary loss (net of tax) of approximately $5.0 million
resulting from the early retirement of debt from the use of proceeds of
the Offerings.

S-23
<PAGE>

UNAUDITED PRO FORMA FINANCIAL DATA: T&N, FEL-PRO AND COOPER AUTOMOTIVE*

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 ($2.41
billion, converted at a blended exchange rate of 1 pound sterling to 1.6510
U.S. dollars) was funded primarily through the $2.75 billion floating rate
1997 Credit Agreement (consisting of a $2.35 billion (reduced to $2.275
billion effective as of March 11, 1998) term loan facility and a $400 million
revolving loan facility) and a $500 million floating rate Senior Subordinated
Credit Agreement, 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.

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. Portions of the debt incurred in financing the acquisitions of
T&N and Fel-Pro have since been re-financed. See "Description of Certain
Indebtedness."

On June 10, 1998, Federal-Mogul completed a primary offering of 10,537,093
shares of Common Stock. Federal-Mogul used the net proceeds therefrom of
$592.3 million to repay outstanding debt incurred for financing the T&N
acquisition. In addition, 422,581 shares of the Series E Stock were converted
to 2,112,907 shares of common stock and were sold in a secondary offering by
the holders thereof (collectively, the "June Equity Offering").

On October 9, 1998, Federal-Mogul acquired Cooper Automotive for a total
purchase price of $1.9 billion, excluding fees and expenses. The acquisition
has been accounted for using the purchase method of accounting. The purchase
price was funded from borrowings under the Company's Credit Agreements.

The estimated cost of the acquisition of Cooper Automotive is computed as
follows:

<TABLE>
<CAPTION>
COOPER
AUTOMOTIVE
----------
(DOLLARS
IN
MILLIONS)
<S> <C>
Cash........................................................... $1,900.0
Direct transaction costs....................................... 5.5
--------
Estimated acquisition cost..................................... $1,905.5
========
</TABLE>

The pro forma preliminary allocation of the purchase price of the
acquisition of Cooper Automotive is expected to be as follows:

<TABLE>
<CAPTION>
COOPER
AUTOMOTIVE
----------
(DOLLARS IN
MILLIONS)
<S> <C> <C> <C>
Current assets........................................ $1,047.7
Liabilities assumed................................... (806.2)
Property, plant and
equipment............................................ 630.3
Identifiable intangible
assets............................................... 185.2
Goodwill.............................................. 848.5
--------
Total................................................. $1,905.5
========
</TABLE>
- --------
* Additional information regarding the Cooper Acquisition and its effect upon
the Company is found in Annex I to this Prospectus Supplement.

S-24
<PAGE>

The net assets of the T&N Bearings Business have been recorded at their fair
value based on estimates of selling values less costs to sell. Previously, the
Company had estimated proceeds to be between $500 and $650 million calculated
using multiples of earnings similar to recent automotive industry transactions
considering both the ability to conduct an orderly disposition and the
requirements of the FTC Consent Order. An amount within the low end of this
range was originally used to record the net assets with estimated after-tax
proceeds of approximately $400 million. At September 30, 1998, the proceeds
were estimated to be approximately $430 million, based on indications of
interest received from interested parties, with estimated after-tax proceeds
of approximately $372 million and excluding the net working capital impact.
Subsequently, the Company reached an agreement to sell the T&N Bearings
Business and proceeds are expected to approximate estimates used at September
30, 1998. See "Recent Developments." The Company's investment in the T&N
Bearings Business is included in the balance sheet caption "Acquired
businesses to be divested."

In addition, Federal-Mogul held the Fel-Pro Chemical Business acquired in
the Fel-Pro transaction for sale. Federal-Mogul has separately identified the
estimated effect of the divestiture of the Fel-Pro Chemical Business in the
unaudited pro forma statements of operations. In July 1998, Federal-Mogul sold
the Fel-Pro Chemical Business for approximately $60 million. The net cash
flows from operations of the Fel-Pro Chemical Business, the interest expense
on debt incurred during the holding period and proceeds from the sale were
accounted for as adjustments to the purchase price of Fel-Pro.

The unaudited pro forma statements of operations for the year ended December
31, 1997 and the nine months ended September 30, 1998, have been prepared to
illustrate the effect of the acquisitions of T&N, Fel-Pro and Cooper
Automotive, the dispositions of the T&N Bearings Business and the Fel-Pro
Chemical Business and the June Equity Offering and the Offerings, as if they
had occurred on the first day of each period. The unaudited pro forma
statements of operations include only the results of ongoing operations and
exclude such impacts as extraordinary items, nonrecurring items directly
relating to the acquisitions, expected synergies and expected cost benefits
associated with the integration of the acquisitions. The unaudited pro forma
balance sheet as of September 30, 1998, has been prepared to illustrate the
effect of the acquisition of Cooper Automotive and the Offerings as if they
had occurred on that date.

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 that would have occurred had the acquisitions of T&N,
Fel-Pro or Cooper Automotive, the dispositions of the T&N Bearings Business or
Fel-Pro Chemical Business, or the June Equity Offering or the Offerings 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-25
<PAGE>

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS: T&N, FEL-PRO AND COOPER AUTOMOTIVE

YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

FEDERAL- T&N DISPOSITION OF
MOGUL HISTORICAL FEL-PRO T&N BEARINGS
HISTORICAL U.S. GAAP HISTORICAL BUSINESS
---------- ---------- ---------- --------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Sales..................... $ 1,806.6 $ 2,948.4 $ 489.3 $ (393.1)(a)
Cost of products sold..... 1,381.8 2,187.6 268.5 (295.4)(a)
--------- --------- ------- --------
Gross margin.............. 424.8 760.8 220.8 (97.7)
Selling general and
administrative expenses.. 276.0 486.4 171.8 (46.1)(a)
Amortization.............. 10.2 13.9 2.0 --
Restructuring charges
(credits)................ (1.1) -- -- --
Reengineering and other
related charges
(benefits)............... (1.6) -- -- --
Nonrecurring charges...... -- -- -- --
Adjustment of assets held
for sale to fair value... 2.4 -- -- --
Interest expense.......... 32.0 60.5 -- (16.9)(a)
Interest income........... (7.1) (17.9) -- 2.3 (a)
International currency
exchange losses.......... 0.6 4.4 -- (0.3)(a)
British pound currency
option, net.............. 10.5 -- -- --
Gain on sale of
Kolbenschmidt AG share
purchase options......... -- (21.7) -- --
Other (income) expense,
net...................... 3.4 (14.5) -- (1.3)(a)
--------- --------- ------- --------
Earnings before income
taxes, extraordinary
item and nonrecurring
charges................. 99.5 249.7 47.0 (35.4)
Income tax expense
(benefit)................ 27.5 159.3 25.5 (9.4)(a)
--------- --------- ------- --------
Net earnings (loss)
before extraordinary
item and nonrecurring
charges................. $ 72.0 $ 90.4 $ 21.5 $ (26.0)
========= ========= ======= ========
Earnings (loss) per common
share:
Basic.................... $ 1.81
Diluted.................. $ 1.67
Weighted average shares
outstanding (thousands):
Basic.................... 36,647
=========
Diluted.................. 41,854
=========
</TABLE>

See accompanying notes to Unaudited Pro Forma Statement of Operations: T&N,
Fel-Pro and Cooper Automotive.

S-26
<PAGE>

<TABLE>
<CAPTION>
PRO FORMA
DISPOSITION COMBINED COOPER PRO FORMA
OF FEL-PRO T&N FEL-PRO JUNE (WITHOUT COOPER AUTOMOTIVE COMBINED PROPOSED
CHEMICAL PRO FORMA PRO FORMA EQUITY OFFERING COOPER AUTOMOTIVE PRO FORMA (WITH COOPER OFFERING
BUSINESS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS AUTOMOTIVE) HISTORICAL ADJUSTMENTS AUTOMOTIVE) ADJUSTMENTS
- ----------- ----------- ----------- --------------- ----------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(32.9)(b) $ (15.3)(c) $(11.9)(k) $ -- $4,791.1 $1,873.2 $ (19.6)(r) $6,644.7 $ --
(16.8)(b) 8.4 (d) (6.9)(l) -- 3,527.2 1,294.4 (28.6)(s) 4,793.0 --
------- ------- ------ ----- -------- -------- ------- -------- -----
(16.1) (23.7) (5.0) -- 1,263.9 578.8 9.0 1,851.7 --
(13.0)(b) (61.6)(e) -- -- 813.5 354.8 -- 1,168.3 --
(0.4)(b) 59.1 (f) 12.6 (m) -- 97.4 32.7 0.5 (t) 130.6 --
-- -- -- -- (1.1) -- -- (1.1) --
-- -- -- -- (1.6) -- -- (1.6) --
-- -- -- -- -- 55.9 -- 55.9 --
-- -- -- -- 2.4 -- -- 2.4 --
-- 147.4 (g) 33.6 (n) (46.0)(p) 210.6 1.1 161.6 (u) 373.3 (61.9)(w)
-- 13.7 (h) -- -- (9.0) -- -- (9.0) --
-- -- -- -- 4.7 -- -- 4.7 --
-- -- -- -- 10.5 -- -- 10.5 --
-- -- -- -- (21.7) -- -- (21.7) --
-- 36.9 (i) -- -- 24.5 14.4 -- 38.9 --
------- ------- ------ ----- -------- -------- ------- -------- -----
(2.7) (219.2) (51.2) 46.0 133.7 119.9 (153.1) 100.5 61.9
-- (67.0)(j) (22.5)(o) 17.0 (q) 130.4 54.3 (57.2)(v) 127.5 22.9 (x)
------- ------- ------ ----- -------- -------- ------- -------- -----
$ (2.7) $(152.2) $(28.7) $29.0 $ 3.3 $ 65.6 $ (95.9) $ (27.0) $39.0
======= ======= ====== ===== ======== ======== ======= ======== =====
$ (0.08)(y) $ (0.69)(y)
$ (0.08)(y) $ (0.69)(y)
49,300 49,300
======== ========
49,300 49,300
======== ========
<CAPTION>
DISPOSITION
OF FEL-PRO AS ADJUSTED
CHEMICAL FOR THE
BUSINESS OFFERINGS
- ----------- -----------
<S> <C>
$(32.9)(b) $6,644.7
(16.8)(b) 4,793.0
- -------------- --------------
(16.1) 1,851.7
(13.0)(b) 1,168.3
(0.4)(b) 130.6
-- (1.1)
-- (1.6)
-- 55.9
-- 2.4
-- 311.4
-- (9.0)
-- 4.7
-- 10.5
-- (21.7)
-- 38.9
- -------------- --------------
(2.7) 162.4
-- 150.4
- -------------- --------------
$ (2.7) $ 12.0
============== ==============
$ 0.08 (y)
$ 0.08 (y)
63,300
==============
64,000
==============
</TABLE>

See accompanying notes to Unaudited Pro Forma Statement of Operations: T&N,
Fel-Pro and Cooper Automotive.

S-27
<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

S-28
<PAGE>

NOTES TO THE UNAUDITED PRO FORMA STATEMENT OF OPERATIONS: T&N, FEL-PRO AND
COOPER AUTOMOTIVE

FOR THE YEAR ENDED DECEMBER 31, 1997

(DOLLARS IN MILLIONS UNLESS OTHERWISE NOTED)

RELATING TO THE DIVESTITURE OF THE T&N BEARINGS BUSINESS AND FEL-PRO CHEMICAL
BUSINESS:

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

(b)To eliminate the historical statement of operations of the Fel-Pro Chemical
Business

RELATING TO THE PURCHASE OF T&N:

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

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

<TABLE>
<S> <C>
Decrease in depreciation expense relating to the adjustment of
property, plant and equipment acquired to estimated fair value ... $ (46.9)
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 deferred gain.......... 8.7
Decrease in postretirement benefits expense--elimination of
deferred loss..................................................... (0.5)
Reclassification of certain distribution costs of T&N from selling,
general and administrative expenses to cost of products sold...... 61.6
-------
$ 8.4
=======

(e) To reflect the reclassification of certain distribution costs of T&N from
selling, general and administrative expenses to cost of products sold

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

Amortization of additional goodwill resulting from the purchase of
T&N............................................................... $ 42.3
Amortization of other identifiable intangible assets acquired to
estimated fair value.............................................. 16.8
-------
$ 59.1
=======

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

Increase in interest expense relating to the net debt incurred for
the purchase of T&N............................................... $ 153.2
Reduction in historical interest expense of T&N relating to the
elimination of historical outstanding long-term debt.............. (23.4)
Amortization of debt issuance costs................................ 17.6
-------
$ 147.4
=======

(h) 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
=======
</TABLE>

(i) To reflect an additional eleven months of expense associated with the
Company-obligated mandatorily redeemable preferred securities of
subsidiary trust holding solely convertible debentures of the Company

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

S-29
<PAGE>

NOTES TO THE UNAUDITED PRO FORMA STATEMENT OF OPERATIONS: T&N, FEL-PRO AND
COOPER AUTOMOTIVE

FOR THE YEAR ENDED DECEMBER 31, 1997

(DOLLARS IN MILLIONS UNLESS OTHERWISE NOTED)

RELATING TO THE PURCHASE OF FEL-PRO:

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

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

<TABLE>
<S> <C>
Increase in depreciation expense relating to the adjustment of
property, plant and equipment acquired to estimated fair value ... $ 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
deferred loss..................................................... 1.4
------
$ (6.9)
======
</TABLE>

(m) To reflect the amortization of goodwill resulting from the purchase of
Fel-Pro

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

(o) To reflect the income tax effects of the statement of operations
adjustments

RELATING TO THE JUNE EQUITY OFFERING:

(p) To reflect a decrease in interest expense as a result of the proceeds from
the June Equity Offering and related reduction of debt

(q) To reflect the income tax effect of the statement of operations adjustment

RELATING TO THE PURCHASE OF COOPER AUTOMOTIVE:

(r) To eliminate intercompany sales between Federal-Mogul and Cooper
Automotive

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

<TABLE>
<S> <C>
Decrease in depreciation expense relating to the adjustment of
property, plant and equipment acquired to estimated fair value...... $ (5.9)
Elimination of intercompany cost of products sold between Federal-
Mogul and Cooper Automotive......................................... (19.6)
Elimination of profit in ending inventory on intercompany sales
between Federal-Mogul and Cooper Automotive......................... 2.9
Decrease in pension expense--elimination of deferred loss............ (11.4)
Increase in postretirement benefits expense--elimination of deferred
gain................................................................ 5.4
------
$(28.6)
</TABLE>

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

<TABLE>
<S> <C>
Decrease in amortization expense of goodwill resulting from the
purchase of Cooper Automotive....................................... $(11.5)
Amortization of other identifiable assets acquired to estimated fair
value............................................................... 12.0
------
$ 0.5
======
</TABLE>

(u) To reflect the effect of the following adjustments:

<TABLE>
<S> <C>
Increase in interest expense relating to the debt incurred for the
purchase of Cooper Automotive........................................ $154.0
Amortization of debt issuance costs................................... 7.6
------
$161.6
======
</TABLE>

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

S-30
<PAGE>

NOTES TO THE UNAUDITED PRO FORMA STATEMENT OF OPERATIONS: T&N, FEL-PRO AND
COOPER AUTOMOTIVE

FOR THE YEAR ENDED DECEMBER 31, 1997

(DOLLARS IN MILLIONS UNLESS OTHERWISE NOTED)

RELATING TO THE PROPOSED OFFERINGS:

(w) To reflect the effect of anticipated net proceeds approximating $773.6
million from the proposed Offerings used to pay off a portion of the debt
incurred in connection with the Cooper Automotive acquisition

(x) To reflect the income tax effects of the statement of operations
adjustments

(y) Earnings (loss) per share as calculated for the pro forma statement of
operations adjustments:

<TABLE>
<CAPTION>
PRO FORMA PRO FORMA AS ADJUSTED
COMBINED (WITHOUT COMBINED (WITH FOR THE
COOPER AUTOMOTIVE) COOPER AUTOMOTIVE) OFFERINGS
------------------ ------------------ -----------
<S> <C> <C> <C>
Net earnings (loss) before
extraordinary item and non-
recurring charges.......... $ 3.3 $(27.0) $ 12.0
Less: Series C preferred
dividend requirement....... (2.4) (2.4) (2.4)
Less: Series D preferred
dividend requirement....... (3.1) (3.1) (3.1)
Less: Series E preferred
dividend requirement....... (1.5) (1.5) (1.5)
------ ------ ------
Net earnings (loss)
available to common
shareholders before
extraordinary and non-
recurring charges--basic
and diluted................ $ (3.7) $(34.0) $ 5.0
Denominator for basic
earnings (loss) per share--
weighted average shares
outstanding (in thousands). 49,300 49,300 63,300
Denominator for diluted
earnings (loss) per share--
weighted average shares
outstanding (in thousands). 49,300 49,300 64,000
Basic earnings (loss) per
share...................... $(0.08) $(0.69) $ 0.08
====== ====== ======
Diluted earnings (loss) per
share...................... $(0.08) $(0.69) $ 0.08
====== ====== ======
</TABLE>

The unaudited pro forma statement of operations discloses net income from
continuing operations before non-recurring charges directly attributable to
the transactions. The following non-recurring charges were not considered and
have been excluded from the unaudited pro forma statement of operations:

<TABLE>
<S> <C>
Estimated purchased in-process research and development costs........... $18.6
Adjustment of inventory to estimated fair value--T&N.................... 11.0
Adjustment of inventory to estimated fair value--Cooper Automotive...... 22.0
-----
$51.6
=====
</TABLE>

S-31
<PAGE>

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS: T&N, FEL-PRO AND COOPER AUTOMOTIVE

NINE MONTHS ENDED SEPTEMBER 30, 1998(A)

(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

FEDERAL- T&N DISPOSITION OF T&N
MOGUL HISTORICAL FEL-PRO FEL-PRO PRO FORMA
HISTORICAL U.S. GAAP HISTORICAL CHEMICAL BUSINESS ADJUSTMENTS
---------- ---------- ---------- ----------------- -----------
<S> <C> <C> <C> <C> <C>
Sales................... $2,993.2 $468.3 (b) $ 78.0 (c) $(5.7)(d) $(3.0)(e)
Cost of products sold... 2,221.6 358.8 (b) 47.6 (c) (3.2)(d) 1.3 (f)
-------- ------ ------ ----- -----
Gross margin............ 771.6 109.5 30.4 (2.5) (4.3)
Selling, general and
administrative
expenses............... 431.1 78.2 (b) 30.0 (c) (1.5)(d) (10.6)(g)
Amortization............ 60.4 2.3 (b) -- -- 10.6 (h)
Purchased in-process
research and
development charge..... 18.6 -- -- -- (18.6)(i)
Restructuring charges... 3.9 -- -- -- --
Adjustment of assets
held for sale to fair
value.................. 19.0 -- -- -- --
Integration costs....... 13.7 -- -- -- --
Interest expense........ 107.4 8.4 (b) -- -- 28.3 (j)
Interest income......... (7.5) (1.2)(b) -- -- 7.1 (k)
International currency
exchange (gains)
losses................. 5.3 -- -- -- --
Net gain on British
pound currency option
and forward contract... (13.3) -- -- -- --
Other (income) expense,
net.................... 14.6 6.2 (b) 56.1 (c) (1.7)(d) --
-------- ------ ------ ----- -----
Net earnings (loss)
before income taxes and
extraordinary item..... 118.4 15.6 (55.7) 0.7 (21.1)
Income tax expense
(benefit).............. 62.6 6.4 (b) -- -- (11.9)(l)
-------- ------ ------ ----- -----
Net Earnings Before
Extraordinary Item..... $ 55.8 $ 9.2 $(55.7) $ 0.7 $(9.2)
======== ====== ====== ===== =====
Earnings per common
share:
Basic................... $ 1.17
========
Diluted................. $ 1.06
========
Weighted average shares
outstanding
(thousands):
Basic................... 45,600
Diluted................. 51,300
</TABLE>

See accompanying notes to Unaudited Statement of Operations: T&N, Fel-Pro and
Cooper Automotive.

S-32
<PAGE>

<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
COMBINED COOPER COMBINED
FEL-PRO JUNE (WITHOUT COOPER AUTOMOTIVE (WITH PROPOSED AS ADJUSTED
PRO FORMA EQUITY OFFERING COOPER AUTOMOTIVE PRO FORMA COOPER OFFERING FOR THE
ADJUSTMENTS ADJUSTMENTS AUTOMOTIVE) HISTORICAL ADJUSTMENTS AUTOMOTIVE) ADJUSTMENTS OFFERINGS
- ----------- --------------- ----------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$(2.0)(m) -- $3,528.8 $1,400.8 $ (9.9)(u) $4,919.7 $ -- $4,919.7
(1.5)(n) -- 2,624.6 953.6 (11.3)(v) 3,566.9 -- 3,566.9
----- ------ -------- -------- ------ -------- ----- --------
(0.5) -- 904.2 447.2 1.4 1,352.8 -- 1,352.8
-- -- 527.2 259.7 -- 786.9 -- 786.9
2.0 (o) -- 75.3 24.7 0.2 (w) 100.2 -- 100.2
-- -- -- -- -- -- -- --
-- -- 3.9 -- -- 3.9 -- 3.9
-- -- 19.0 -- -- 19.0 -- 19.0
-- -- 13.7 -- -- 13.7 -- 13.7
5.6 (p) $(20.3)(s) 129.4 0.4 121.2 (x) 251.0 (46.4)(z) 204.6
-- -- (1.6) -- -- (1.6) -- (1.6)
-- -- 5.3 -- -- 5.3 -- 5.3
-- -- (13.3) -- -- (13.3) -- (13.3)
(58.3)(q) -- 16.9 7.1 -- 24.0 -- 24.0
----- ------ -------- -------- ------ -------- ----- --------
50.2 20.3 128.4 155.3 (120.0) 163.7 46.4 210.1
(1.9)(r) 7.5 (t) 62.7 64.4 (48.8)(y) 78.3 17.2 (aa) 95.5
----- ------ -------- -------- ------ -------- ----- --------
$52.1 $ 12.8 $ 65.7 $ 90.9 $(71.2) $ 85.4 $29.2 $ 114.6
===== ====== ======== ======== ====== ======== ===== ========
$ 1.19 (bb) $ 1.56 (bb) $ 1.67 (bb)
======== ======== ========
$ 1.09 (bb) $ 1.43 (bb) $ 1.56 (bb)
======== ======== ========
53,100 53,100 67,100
======== ======== ========
58,600 58,600 72,600
======== ======== ========
</TABLE>

See accompanying notes to Unaudited Pro Forma Statement of Operations: T&N,
Fel-Pro and Cooper Automotive.

S-33
<PAGE>

NOTES TO THE UNAUDITED PRO FORMA STATEMENT OF OPERATIONS: T&N, FEL-PRO AND
COOPER AUTOMOTIVE

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998

(DOLLARS IN MILLIONS UNLESS OTHERWISE NOTED)

RELATING TO THE HISTORICAL OPERATIONS OF T&N AND FEL-PRO AND THE DISPOSITIONS
OF THE T&N BEARINGS BUSINESS AND FEL-PRO CHEMICAL BUSINESS:

(a) The headings in the table above differ from those found in the equivalent
table for the year ended December 31, 1997 in that the heading
"Disposition of T&N Bearings Business" is omitted. In connection with the
FTC consent order, the T&N Bearings Business operating results have been
excluded from Federal-Mogul's results of operations.

(b) To reflect historical operations of T&N (U.S. GAAP) for the period of
January 1, 1998 through the date of acquisition

(c)To reflect historical operations of Fel-Pro for the period of January 1,
1998 through the date of acquisition

(d)To eliminate the historical statement of operations of the Fel-Pro Chemical
Business

RELATING TO THE PURCHASE OF T&N:

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

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

<TABLE>
<S> <C>
Decrease in depreciation expense relating to the adjustment of
property, plant and equipment to estimated fair value.............. $(7.8)
Elimination of intercompany cost of products sold between Federal-
Mogul and T&N...................................................... (3.0)
Increase in pension expense--elimination of deferred gain........... 1.5
Reclassification of certain distribution costs of T&N from selling,
general and administrative expenses to cost of products sold....... 10.6
-----
$ 1.3
=====
</TABLE>

(g) To reflect the reclassification of certain distribution costs of T&N from
selling, general and administrative expenses to cost of products sold

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

<TABLE>
<S> <C>
Amortization of additional goodwill resulting from the purchase of
T&N ................................................................ $ 7.6
Amortization of other identifiable intangible assets acquired to
estimated fair value ............................................... 3.0
-----
$10.6
=====
</TABLE>

(i) To eliminate the purchased in-process research and development charge
incurred in the acquisition of T&N

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

<TABLE>
<S> <C>
Increase in interest expense related to the debt incurred for the
purchase T&N....................................................... $29.3
Reduction in historical interest expense of T&N relating to the
elimination of historical long-term debt........................... (4.0)
Amortization of debt issuance costs ................................ 3.0
-----
$28.3
=====
</TABLE>

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

<TABLE>
<S> <C>
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.......................................................... $5.1
Reduction of interest income as a result of the use of existing cash
balances of T&N during the first quarter of 1998..................... 2.0
----
$7.1
====
</TABLE>

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

S-34
<PAGE>

NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS: T&N, FEL-PRO AND COOPER
AUTOMOTIVE

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

RELATING TO THE PURCHASE OF FEL-PRO:

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

<TABLE>
<S> <C>
(n)To reflect the net effect of the following adjustments:
</TABLE>

<TABLE>
<S> <C>
Increase in depreciation expense relating to the adjustment of
property, plant and equipment to estimated fair value.............. $ 0.5
Elimination of intercompany cost of products sold between Federal-
Mogul and Fel-Pro.................................................. (2.0)
-------
$ (1.5)
=======
(o)To reflect the amortization of goodwill resulting from the purchase
of Fel-Pro
(p)To reflect interest expense relating to the debt incurred for the
purchase of Fel-Pro
(q)To reverse historical other expenses for Fel-Pro related to
approximately $56 million of executive bonuses, and
approximately $2 million of other nonrecurring costs, both of
which related to the sale of the business
(r)To record the income tax effects of the statement of operations
adjustments
RELATING TO THE JUNE EQUITY OFFERING:
(s)To reflect the decrease in interest expense and related debt for
the period January 1, 1998 to June 10, 1998 associated with the
June Equity Offering
(t)To reflect the income tax effect of the statement of operations
adjustment
RELATING TO THE PURCHASE OF COOPER AUTOMOTIVE:
(u)To eliminate intercompany sales between Federal-Mogul and Cooper
Automotive
(v)To reflect the net effect of the following adjustments:
Decrease in depreciation expense relating to the adjustment of
property plant and equipment to estimated fair value............... $ (3.5)
Elimination of intercompany cost of products sold between Federal-
Mogul and Cooper Automotive........................................ (9.9)
Elimination of profit in ending inventory on intercompany sales
between Federal-Mogul and Cooper Automotive........................ 1.0
Decrease in pension expense--elimination of deferred loss........... (3.0)
Increase in postretirement benefits expense--elimination of deferred
gain............................................................... 4.1
-------
$ (11.3)
=======
(w)To reflect the net effect of the following adjustments:
Decrease in amortization of goodwill resulting from the purchase of
Cooper Automotive.................................................. $ (8.8)
Amortization of other identifiable assets acquired to estimated fair
value.............................................................. 9.0
-------
$ 0.2
=======
(x)To reflect the effect of the following adjustments:
Increase in interest expense relating to the net debt incurred
relating to purchase of Cooper Automotive.......................... $ 115.5
Amortization of debt issuance costs................................. 5.7
-------
$ 121.2
=======
(y)To reflect the income tax effects of the statement of operations
adjustments
RELATING TO THE PROPOSED OFFERINGS:
(z)To reflect the effect of anticipated net proceeds approximating
$773.6 million from the proposed offering used to pay off a
portion of the debt incurred in connection with the Cooper
Automotive acquisition
(aa)To reflect the income tax effects of the statement of operations
adjustments
</TABLE>

S-35
<PAGE>

NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS: T&N, FEL-PRO AND COOPER
AUTOMOTIVE

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PRO FORMA PRO FORMA AS ADJUSTED
COMBINED (WITHOUT COMBINED (WITH FOR THE
COOPER AUTOMOTIVE) COOPER AUTOMOTIVE) OFFERINGS
------------------ ------------------ -----------
<S> <C> <C> <C> <C>
(bb) Earnings per share
as calculated for the
pro forma combined
entity:
Net earnings available
to common shareholders
before extraordinary
item and nonrecurring
charge--basic......... $ 65.7 $ 85.4 $ 114.6
Add: Series C preferred
dividend requirement.. (1.7) (1.7) (1.7)
Add: Series E preferred
dividend requirement.. (1.0) (1.0) (1.0)
------- ------- -------
Net earnings before
extraordinary item and
non recurring
charges--basic........ $ 63.0 $ 82.7 $ 111.9
Add: Series C preferred
dividend requirement.. 1.7 1.7 1.7
Add: Series E preferred
dividend requirement.. 1.0 1.0 1.0
Less: Additional ESOP
requirement........... (1.6) (1.6) (1.6)
------- ------- -------
Net earnings available
to common shareholders
before extraordinary
item and nonrecurring
charge-diluted ....... $ 64.1 $ 83.8 $ 113.0
======= ======= =======
Denominator for basic
earnings per share--
weighted average
shares outstanding (in
thousands)............ 53,100 53,100 67,100
======= ======= =======
Denominator for diluted
earnings per share--
weighted average
shares outstanding (in
thousands)............ 58,600 58,600 72,600
======= ======= =======
Earnings per share--
basic................. $ 1.19 $ 1.56 $ 1.67
Earnings per share--
diluted............... $ 1.09 $ 1.43 $ 1.56
The unaudited pro forma statement of operations discloses the earnings
from continuing operations before nonrecurring charges directly
attributable to the transactions. The following nonrecurring charge was
not considered and has been excluded from the unaudited proforma
statement of operations:
Adjustment of inventory
to estimated fair
value--Cooper
Automotive............ $ 22.0
=======
</TABLE>

S-36
<PAGE>

UNAUDITED PRO FORMA BALANCE SHEET: COOPER AUTOMOTIVE

SEPTEMBER 30, 1998

(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
HISTORICAL COOPER PRO FORMA
-------------------- AUTOMOTIVE COMBINED PROPOSED
FEDERAL- COOPER PRO FORMA (WITH COOPER OFFERINGS
MOGUL AUTOMOTIVE ADJUSTMENTS AUTOMOTIVE) ADJUSTMENTS COMBINED
-------- ---------- ----------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Cash and equivalents.... $ 102.3 $ 28.7 $ -- $ 131.0 $ -- $ 131.0
Accounts receivable..... 645.0 410.3 -- 1,055.3 -- 1,055.3
Investment in accounts
receivable
securitization......... 119.2 -- -- 119.2 -- 119.2
Inventories............. 653.7 440.6 56.0 (a) 1,150.3 -- 1,150.3
Prepaid expenses and
income tax benefits.... 248.0 80.7 31.4 (b) 360.1 (5.0)(k) 355.1
Acquired businesses to
be divested............ 372.0 -- -- 372.0 -- 372.0
-------- -------- -------- --------- ------ ---------
Total current
assets............. 2,140.2 960.3 87.4 3,187.9 (5.0) 3.182.9
Property, plant and
equipment.............. 1,605.0 509.9 120.4 (c) 2,235.3 -- 2,235.3
Goodwill................ 2,620.4 1,109.8 (261.3)(d) 3,468.9 -- 3,468.9
Other intangible assets. 451.9 5.0 180.2 (e) 637.1 -- 637.1
Business investments and
other assets........... 599.9 120.3 (133.9)(f) 586.3 -- 586.3
-------- -------- -------- --------- ------ ---------
Total assets........ $7,417.4 $2,705.3 $ (7.2) $10,115.5 $ (5.0) $10,110.5
======== ======== ======== ========= ====== =========
Short-term debt,
including current
portion of long-term
debt................... $ 170.9 $ 2.9 $ -- $ 173.8 $ -- $ 173.8
Accounts payable........ 335.4 173.4 -- 508.8 -- 508.8
Accrued compensation.... 189.8 53.6 243.4 -- 243.4
Restructuring and
rationalization........ 166.1 26.7 88.0 (g) 280.8 -- 280.8
Current portion of
asbestos liability..... 100.0 -- -- 100.0 -- 100.0
Other accrued
liabilities............ 466.9 122.3 -- 589.2 -- 589.2
-------- -------- -------- --------- ------ ---------
Total current
liabilities........ 1,429.1 378.9 88.0 1,896.0 -- 1,896.0
Long-term debt.......... 2,426.0 1.6 1,925.0 (h) 4,352.6 (773.6)(l) 3,579.0
Long-term portion of
asbestos liability..... 1,194.8 -- -- 1,194.8 -- 1,194.8
Postemployment benefits. 445.1 308.6 (65.9)(i) 687.8 -- 687.8
Other accrued
liabilities............ 81.2 60.1 -- 141.3 -- 141.3
Minority interest in
consolidated
subsidiaries........... 60.6 1.8 -- 62.4 -- 62.4
Company-obligated
mandatorily redeemable
preferred securities of
subsidiary trust
holding solely
convertible
subordinated debentures
of the Company......... 575.0 -- -- 575.0 -- 575.0
Shareholders' equity:
Series C ESOP
preferred stock...... 45.2 -- -- 45.2 -- 45.2
Series E preferred
stock................ 132.7 -- -- 132.7 -- 132.7
Common stock.......... 266.1 -- -- 266.1 70.0 (l) 336.1
Additional paid-in
capital.............. 953.4 -- -- 953.4 703.6 (l) 1,657.0
Retained earnings
(accumulated
deficit)............. (99.1) -- -- (99.1) (5.0)(k) (104.1)
Unearned ESOP
compensation......... (18.1) -- -- (18.1) -- (18.1)
Accumulated other
comprehensive income. (68.3) -- -- (68.3) -- (68.3)
Other................. (6.3) -- -- (6.3) -- (6.3)
Net assets............ -- 1,954.3 (1,954.3)(j) -- -- --
-------- -------- -------- --------- ------ ---------
Total shareholders'
equity............. 1,205.6 1,954.3 (1,954.3) 1,205.6 768.6 1,974.2
-------- -------- -------- --------- ------ ---------
Total Liabilities
and Shareholders'
Equity............. $7,417.4 $2,705.3 $ (7.2) $10,115.5 $ (5.0) $10,110.5
======== ======== ======== ========= ====== =========
</TABLE>

See accompanying notes to Unaudited Pro Forma Balance Sheet: Cooper Automotive

S-37
<PAGE>

NOTES TO UNAUDITED PRO FORMA SEPTEMBER 30, 1998 BALANCE SHEET: COOPER
AUTOMOTIVE
(DOLLARS IN MILLIONS)

(a)To adjust inventory acquired to estimated fair value

<TABLE>
<S> <C>
To record debt issuance cost........................................ $ 19.5
To record deferred tax asset........................................ 11.9
------
$ 31.4
======
</TABLE>
(b)

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

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

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

(f) To adjust the noncurrent deferred taxes
(g) To provide for estimated severance and exit costs relating to Cooper
Automotive

(h) To reflect the issuance of debt in connection with the acquisition

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

(j) To eliminate historical equity of Cooper Automotive

(k) To reflect the extraordinary loss (net of tax) resulting from the early
retirement of debt from the use of proceeds of the Offerings

(l) To reflect the use of proceeds of the Offerings

**The Company has made preliminary estimates of the fair values of fixed
assets, intangible assets and research, development in-process, and
postemployment benefits liabilities based upon the relative difference between
book values and fair values of previous acquisitions. The Company will have
valuations for such amounts completed by appraisers. The result of the
appraiser's valuations could differ materially from these estimates made by
the Company. The research and development in-process charge is not currently
determinable. However, the Company does not expect the charge, if any, to be
in excess of $10 million.

S-38
<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 nine-month periods ended September 30, 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
incorporated by reference herein.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
YEAR ENDED DECEMBER 31, (UNAUDITED)
---------------------------- ------------------
1997 1996 1995 1998(1) 1997
-------- -------- -------- -------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net sales.................... $1,806.6 $2,032.7 $1,999.8 $2,993.2 $1,391.6
Costs of products sold....... 1,381.8 1,660.5 1,602.2 2,221.6 1,061.4
-------- -------- -------- -------- --------
Gross margin................. 424.8 372.2 397.6 771.6 330.2
Selling, general and
administrative expenses..... (286.2) (333.8) (299.3) (491.5) (225.9)
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) (3.9) --
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) (19.0) --
Integration costs............ -- -- -- (13.7) --
Interest expense............. (32.0) (42.6) (37.3) (107.4) (25.3)
Interest income.............. 7.1 2.9 9.6 7.5 4.2
International currency
exchange losses............. (0.6) (3.7) (2.9) (5.3) --
British pound currency option
and foreign contract, net... (10.5) -- -- 13.3 --
Other expense, net(2)........ (3.4) (3.4) (2.4) (14.6) 1.3
-------- -------- -------- -------- --------
Earnings (Loss) before income
taxes and extraordinary
item........................ 99.5 (228.7) (3.3) 118.4 84.5
Income tax expense (benefit). 27.5 (22.4) 2.5 62.6 24.7
-------- -------- -------- -------- --------
Net Earnings (Loss) before
extraordinary item.......... $ 72.0 $ (206.3) $ (5.8) $ 55.8 $ 59.8
-------- -------- -------- -------- --------
Extraordinary item--loss on
early retirement of debt,
net of applicable income tax
benefit..................... (2.6) -- -- (31.3) (2.6)
-------- -------- -------- -------- --------
Net Earnings (Loss).......... 69.4 (206.3) (5.8) 24.5 57.2
Preferred dividends.......... 5.5 8.7 8.9 2.7 4.9
-------- -------- -------- -------- --------
Net Earnings (Loss) Available
to Common Shareholders...... $ 63.9 $ (215.0) $ (14.7) $ 21.8 $ 52.3
======== ======== ======== ======== ========
Dividends declared per share. $ 0.48 $ 0.48 $ 0.48 $ .125 $ .36
======== ======== ======== ======== ========
COMMON SHARE SUMMARY
(DILUTED):
Income (loss) before
extraordinary item.......... $ 1.67 $ (6.20) $ (0.42) $ 1.06 $ 1.39
Extraordinary item........... (0.06) -- -- (0.61) (0.06)
-------- -------- -------- -------- --------
Net Earnings (Loss) Per
Common Share................ $ 1.61 $ (6.20) $ (0.42) $ 0.45 $ 1.33
======== ======== ======== ======== ========
</TABLE>
- --------
* On October 9, 1998 the Company acquired the automotive division of Cooper
Industries, Inc. for $1.9 billion, excluding fees and expenses. INFORMATION
REGARDING THE COOPER ACQUISITION AND ITS EFFECT UPON THE COMPANY IS FOUND
IN ANNEX I TO THIS PROSPECTUS SUPPLEMENT AND IS NOT REFLECTED IN THIS
SECTION.
Footnotes on following page

S-39
<PAGE>

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30,
YEAR ENDED DECEMBER 31, (UNAUDITED)
---------------------------- -----------------
1997 1996 1995 1998(1) 1997
-------- -------- -------- -------- -------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET
DATA:
Total assets.................. $1,802.1 $1,455.2 $1,701.1 $7,417.4 $--
Short-term debt(3)............ 28.6 280.1 111.9 170.9 --
Long-term debt................ 273.1 209.6 481.5 2,426.0 --
Shareholders' equity.......... 369.3 318.5 550.3 1,205.6 --
OTHER FINANCIAL INFORMATION:
Cash provided from (used by)
operating activities......... $ 215.7 $ 149.0 $ (34.7) $ 228.1 $ 156.9
Cash provided from (used by)
investing activities......... (5.5) (12.5) (109.4) (2,766.8) 48.8
Cash provided from (used by)
financing activities......... 298.1 (122.8) 138.5 2,099.6 (218.3)
EBITDA(4)..................... 190.8 95.0 154.0 419.9 146.3
Expenditures for property,
plant, equipment and other
long-term assets............. 49.7 54.2 78.5 129.1 29.9
Depreciation and amortization
expense...................... 52.8 63.7 61.0 149.2 40.7
</TABLE>
- --------
(1) Reflects first time consolidation of T&N and Fel-Pro as of March 6, 1998
and February 24, 1998, respectively.
(2) Other expense, net includes $3.4 million and $30.2 million of expense
associated with Company-obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely convertible subordinated
debentures of the Company for the year ended December 31, 1997 and the
nine months ended September 30, 1998, respectively.
(3) Includes current maturities of long-term debt.
(4) "EBITDA" represents the sum of income before interest income and expense,
expense associated with the minority interest-preferred securities of
affiliates, income taxes and extraordinary items, plus depreciation and
amortization as well as nonrecurring items 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 option 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-40
<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 incorporated by reference herein.

T&N HISTORICAL IN U.K. GAAP

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996
--------------- ---------------
(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
</TABLE>

T&N PRO FORMA IN U.S. GAAP(2)(3)

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------
1997 1996
-------- --------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
CONSOLIDATED 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)............................................... 421.3 390.2
Expenditures for property, plant, equipment and other
long term assets....................................... 170.9 179.2
Depreciation and amortization expense................... 167.6 161.9
</TABLE>
Footnotes on following page

S-41
<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>
YEAR ENDED
DECEMBER 31,
-----------------------------
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 1.7110 U.S. dollars to 1 pound sterling, respectively.
(4) "EBITDA" represents the sum of income before interest income and expense
and income taxes, plus depreciation and amortization as well as
nonrecurring items 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-42
<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 incorporated by reference herein.

<TABLE>
<CAPTION>
YEAR ENDED
-------------------------
DECEMBER 28, DECEMBER 29,
1997 1996
------------ ------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
CONSOLIDATED 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....................................... -- --
Shareholders' 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-43
<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 OE 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 94 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. By June 30,
1998, the Company had divested substantially all of its retail assets.

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 "Recent
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") and selling the Fel-Pro
Chemical Business, which was acquired as part of Fel-Pro.

The consolidated statement of operations for the nine months ended September
30, 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 the 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 nine months ended September 30,
1998.
- --------
*On October 9, 1998 the Company acquired Cooper Automotive for $1.9 billion,
excluding fees and expenses. INFORMATION REGARDING THE COOPER ACQUISITION
AND ITS EFFECT UPON THE COMPANY IS FOUND IN ANNEX I TO THIS PROSPECTUS
SUPPLEMENT AND IS NOT REFLECTED IN THIS SECTION.

S-44
<PAGE>

FEDERAL-MOGUL

THE FOLLOWING IS BASED ON TEXT INCLUDED IN FEDERAL-MOGUL'S QUARTERLY REPORT
ON FORM 10-Q FILED IN RESPECT OF THE NINE-MONTH PERIOD ENDED SEPTEMBER 30,
1998 AND SPEAKS AS OF THAT DATE.

NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1997

RESULTS OF OPERATIONS

Net Sales

Sales for the nine months ended September 30, 1998 were $2,993.2 million
compared to $1,391.6 million for the same 1997 period. The 115.1% 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 the T&N and Fel-Pro acquisitions and the impact of
previously divested retail aftermarket businesses, net sales decreased 4.2%.

Powertrain Systems sales were $1,269.4 million for the nine months ended
September 30, 1998 compared to $608.2 million for the same 1997 period.
Approximately $694 million of the 108.7% 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 decreased 2.2%. The
decrease in sales is attributable to effects from the General Motors strike as
well as softness in the North American aftermarket business.

Sealing Systems sales were $663.4 million for the nine months ended
September 30, 1998 compared to $238.5 million in the same 1997 period.
Approximately $135 million of the 178.2% increase related to sales of T&N and
approximately $278 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 5.4% due to strong
heavy duty and industrial sales as well as strong third quarter volume in both
North and South American aftermarket businesses.

General Products sales were $1,060.4 million for the nine months ended
September 30, 1998 compared to $544.9 million in 1997. Approximately $617
million of the 94.6% 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 11.2% 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 74.2% for the
nine months ended September 30, 1998 from 76.3% for the same 1997 period.
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 $6.4 million write-down of inventory, primarily related to the liquidation
of the Puerto Rican retail assets, cost of products sold as a percent of sales
decreased to 73.6%. 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 percent of net
sales decreased to 14.4% for the nine months ended September 30, 1998 compared
to 15.7% for the same 1997 period. The decrease is primarily attributable to
the benefits of prior restructuring actions, the divestiture of retail
aftermarket businesses and the realization of combined efficiencies from the
acquisitions previously discussed slightly offset by an approximately $4
million increase related to Year 2000 costs.

S-45
<PAGE>

Amortization Expense

Amortization expense for the nine months ended September 30, 1998 was $60.4
million compared to $7.9 million for the nine months ended September 30, 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.

During the third quarter of 1998, the Company recognized a $6.6 million
restructuring credit for the reversal of a restructuring charge recorded in
the fourth quarter of 1997. The restructuring credit primarily related to the
exit of retail operations in Puerto Rico.

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 certain
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.

Adjustment of Assets Held for Sale to Fair Value

In addition to the T&N Bearings Business and the Fel-Pro Chemical Business
held for sale, during 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.

In the second quarter, the Company recognized a $1.0 million benefit
associated with the adjustment of the assets of Chile to its estimated fair
value.

S-46
<PAGE>

As part of its 1996 restructuring plan, the Company continued to close or
sell certain retail aftermarket operations during 1998. As of September 30,
1998, the Company has sold or closed substantially all its retail aftermarket
operations. Net cash proceeds received for those retail aftermarket locations
sold in the nine months ended September 30, 1998 approximated $7 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.

Integration Costs

In the nine months ended September 30, 1998, the Company incurred $13.7
million in expenses directly related to the integration of the T&N and Fel-Pro
acquisitions previously discussed. In addition, the Company expects to incur
additional expenses of approximately $24 million necessary to complete the
integration of the acquired companies during the fourth quarter of 1998 and
throughout 1999.

Anticipated Synergy

The Company anticipates its annual synergies in the year 2000 to be
moderately in excess of the previously discussed $10.5 million restructuring,
$151 million rationalization and $38 million of expected integration costs.

Net Interest Expense

Interest expense for the nine months ended September 30, 1998 was $107.4
million compared to $25.3 million for the same 1997 period. 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 nine months ended September 30,
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 1.5 billion pounds
sterling 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 nine months ended September 30, 1998, the Company recognized
charges for adjustment of assets held for sale to fair value and purchased in-
process 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 $24.3 million. The net income tax benefit related to
these transactions totaled $2.1 million. In addition, due to the acquisitions
of T&N and Fel-Pro, the Company recognized approximately $28 million in non-
deductible goodwill amortization expense.

S-47
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow Provided from Operating Activities

Cash flow provided from operating activities was $228.1 million for the nine
months ended September 30, 1998. Cash flow was generated primarily from a
decrease in inventories of $47.0 million, an increase in other accrued
liabilities of $51.4 million and net earnings adjusted for the loss on early
retirement of debt and 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 $25.7 million, payments against the
asbestos liability of $58.8 million and payments against restructuring,
reengineering and rationalization reserves of $35.7 million.

Cash Flow Used by Investing Activities

Cash flow used by investing activities was $2,766.8 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 G. Bruss GmbH & Co. KG and the sale of certain retail
aftermarket locations. 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 $129.1 million were
made for property, plant and equipment to implement process improvements,
information technology and new product introductions. Capital expenditures are
anticipated not to exceed $200 million in 1998, primarily for enhanced
manufacturing capabilities and process improvements.

Cash Flow Provided from Financing Activities

Cash flow provided from financing activities was $2,099.6 million for the
nine months ended September 30, 1998 primarily from the increase in debt
related to the acquisitions of T&N and Fel-Pro and the issuance of common
stock detailed below, partially offset by the related debt issuance fees of
$55.3 million and fees paid for the early retirement of debt of $27.4 million.

On April 17, 1998, in connection with the Company's efforts to put into
place a permanent capital structure, the Company filed a shelf Registration
Statement on Form S-3 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 certain securityholders).

On June 6, 1998, the Company issued 12,650,000 shares of common stock under
such registration statement, including 2.1 million shares which were converted
from Series E Stock. The net proceeds from the sale of the common stock of
$592 million was used to prepay the entire outstanding principal amount under
the Senior Subordinated Credit Agreement and partially repay the Senior Credit
Agreement.

In addition, under the above shelf registration statement, the Company
issued $1.0 billion of bonds on June 25, 1998. The bonds have maturities
ranging from 6 to 12 years, a weighted average yield of 7.76% and a weighted
average coupon of 7.73%. The net proceeds were used to reduce floating rate
bank debt.

As of September 30, 1998, the Company had $1.1 billion outstanding related
to the Senior Credit Agreement with maturities ranging from March of 1999
through the year 2005 and a weighted-average interest rate of 7.9%. Over 60%
of the maturities occur after the year 2003.

In addition, the Company funded a portion of the T&N acquisition through the
December 1997 sale of 11.5 million shares of 7% Company-obligated mandatorily
redeemable preferred securities of subsidiary trust holding solely convertible
subordinated debentures of the Company (generating gross proceeds of $575
million) by Federal-Mogul Financing Trust, a subsidiary of the Company.

The early retirement of the Senior Subordinated Credit Agreement and the
partial repayment of the Senior Credit Agreement, as well as the early
retirement in April 1998 of $251 million in private placement debt

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<PAGE>

assumed in connection with the acquisition of T&N, resulted in a $47.1 million
pretax ($31.3 million after tax) extraordinary loss in the second quarter of
1998.

In connection with the Fel-Pro acquisition, the Company issued 1,030,325.6
million shares Series E Stock with an imputed value of $225 million. The
shares of Series E Stock are exchangeable into shares of the Company's common
stock at a rate of five shares of common stock per share of Series E Stock.
Subsequently, in June 1998, in conjunction with the common stock offering, the
Company converted 422,581 shares of Series E Stock into 2.1 million shares of
common stock. The remaining 607,745 million shares of Series E Stock are
required to be exchanged into shares of the Company's common stock no later
than February 24, 1999, subject to certain conditions and such shares are paid
quarterly dividends at a rate of $0.12 per common stock equivalent.

The Company has pledged the capital stock of its U.S. subsidiaries, 65% of
capital stock of certain foreign subsidiaries and certain intercompany loans
to secure the senior debt of the Company. In addition, certain U.S.
subsidiaries of the Company have guaranteed the senior debt.

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 international T&N operations and other international
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 international 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.

OTHER MATTERS

New Dividend Policy

Dividends on the capital stock of the Company are payable at the discretion
of the Company's Board of Directors. Historically, quarterly dividends had
been $.12 per share. In May 1998, the Board of Directors reduced the quarterly
dividend and subsequently declared a cash dividend payable in the second and
third quarters of 1998 in the amount of $.0025 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.

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 including information technology ("IT")
and non-IT systems. 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

S-49
<PAGE>

software so that its computer systems will properly utilize dates beyond
December 31, 1999. The Company has initiated remediation and testing, and is
implementing the action plan to address the Year 2000 issue and estimates that
the majority of testing will be completed by the end of the first quarter of
1999. A number of independent third party assessments have been performed and
others are planned. 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 cause production interruptions
that could have a material impact on the operations of the Company. The Company
has initiated development of contingency plans and will continue to do so
throughout the program.

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 $25
million and is being funded through operating cash flows. These estimates have
been verified by independent third party assessment. Of the total project
cost, approximately $11 million is attributable to the purchase of new
software which will be capitalized. The remaining $14 million represents
maintenance and repair of existing systems and will be expensed as incurred.
The Company expects a majority of the costs will be incurred in 1998. As of
September 30, 1998, the Company had incurred and expensed approximately $5
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 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.

Euro Conversion

On January 1, 1999, certain member countries of the European Union are
scheduled to irrevocably fix the conversion rates between their national
currencies and a common currency, the "euro", which will become their legal
currency on that date. The participating countries' former national currencies
will continue to exist as denominations of the euro between January 1, 1999
and January 1, 2002. The Company has established a steering committee that is
currently evaluating the business implications of conversion to the euro,
including the need to adapt internal systems to accommodate euro-denominated
transactions. The acquisition of T&N has provided the Company with a strong
knowledge base in which to assist with the conversion. While the Company is
still in various stages of assessment and implementation, the Company does not
expect the conversion to the euro to have a material effect on its financial
condition or results of operations.

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

S-50
<PAGE>

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, net of the related estimated tax, was $47.1
million and $15.0 million for the three months ended September 30, 1998 and
1997, respectively, and $22.9 million and $42.4 million for the nine months
ended September 30, 1998 and 1997, respectively.

In June 1998, the Financial Accounting Standards Board issued Statement No.
133, Accounting for Derivative Instruments and Hedging Activities, which is
required to be adopted in years beginning after June 15, 1999. The Company
currently makes minimal use of derivatives. Management does not anticipate,
under current circumstances, that the adoption of the new Statement will have
a significant effect on earnings or the financial position of the Company.

SUBSEQUENT EVENTS

Cooper Acquisition

On October 9, 1998, the Company acquired Cooper Automotive, headquartered in
St. Louis, Missouri, with net sales of approximately $1.9 billion for
approximately $1.9 billion cash. See Annex I to this Prospectus Supplement.

In connection with the acquisition of Cooper Automotive, the Company entered
into a $1.95 billion floating rate senior credit agreement with The Chase
Manhattan Bank as agent and a syndicate of lenders. The senior-credit
agreement consists of $1.55 billion in interim loans which will mature on
April 9, 2000 and $400 million of Tranche C Loans which will be repaid in 29
consecutive quarterly installments beginning September 30, 1999.

Announced Sale of T&N Bearings Business

On October 27, 1998, the Company announced that it had entered into an
agreement to sell the T&N Bearing Business to Dana Corporation. The Company
expects to receive proceeds of approximately $430 million and an additional
$13 million of net proceeds from the collection of accounts receivable related
to the sold businesses. The sale of these businesses is in connection with the
Consent Order with the Federal Trade Commission and undertakings with the
governments of the United Kingdom, France and Germany to divest thinwall
bearings, polymer bearings and North American thinwall bearings aftermarket
segments and is subject to regulatory approvals, which are expected in the
fourth quarter of 1998.

Announced Acquisition of Tri-Way

On October 6, 1998, the Company entered into an agreement to acquire Tri-Way
Machine Limited, a privately-owned manufacturer of machines and machining
systems for the world's metal cutting industry headquartered in Windsor,
Ontario, Canada with sales of approximately $35 million.

Revolving Credit Agreement

In October 1998, the Company entered into a $200 million 364-day floating
rate revolving credit agreement with the Chase Manhattan Bank as agent and a
syndicate of lenders.

S-51
<PAGE>

ASBESTOS LIABILITY AND LEGAL PROCEEDINGS

T&N Asbestos

As of September 30, 1998, the Company has provided $1.292 billion as its
estimate for future costs related to resolving asbestos claims. In the United
States, the Company'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 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. Although T&N has carefully projected its future
asbestos liability, the assumptions underlying such projections continuously
change and it is therefore not possible to project with certainty the number
of such claims may be made nor the expenditure which may arise therefrom. T&N
has appointed the Center for Claims Resolution ("CCR"), a not-for-profit
coalition of former asbestos producers and sellers, as its 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 (Pounds)500 million (approximately
$837 million at the September 30, 1998 exchange rate of $1.6742 to 1 pound
sterling) layer of insurance which will be triggered should the aggregate
amount of claims filed after June 30, 1996, where the exposure occurred prior
to that date, exceed (Pounds)690 million (approximately $1,155 million at the
September 30, 1998 exchange rate). At September 30, 1998 the Company has
recorded reserves approximating the insurance level for such claims.

While management believes that reserves 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 in amounts in excess of the reserves recorded by the Company and
the additional (Pounds)500 million of insurance coverage could have a material
adverse effect on the Company's results of operations, business, liquidity and
financial condition.

Federal-Mogul and Fel-Pro Asbestos

The Company 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 a large number of product
liability cases involving asbestos, primarily involving gasket or packing
products 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. While the
outcome of litigation cannot be predicted with certainty, management believes
that asbestos claims pending against Federal-Mogul Corporation and Fel-Pro as
of September 30, 1998 will not have a material effect on the Company's
financial position. At September 30, 1998, approximately $3 million in related
reserves has been provided 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.

S-52
<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-53
<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.

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<PAGE>

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.

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

S-55
<PAGE>

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
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 core 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 of 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,

S-56
<PAGE>

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.

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

S-57
<PAGE>

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 8.8% senior notes due April 2007.
Proceeds from the offering were used to reduce the Company's short-term debt
and the early extinguishment of the private placement debt.

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

S-58
<PAGE>

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.

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.

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.

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 Offering Memorandum as the "T&N Bearings
Business").

S-59
<PAGE>

The following discussion is based upon the T&N Financial Statements
incorporated herein by reference, 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. (The T&N
Financial Statements may be found in the Company's Form 8-K filed April 7,
1998).

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>

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.

S-60
<PAGE>

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.

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."

S-61
<PAGE>

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
(which are found in the Company's Form 8-K filed April 7, 1998).

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,
which may be found in the Company's Form 8-K filed April 7, 1998.)

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.

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.

S-62
<PAGE>

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.

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 recently sold 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

S-63
<PAGE>

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.

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.

S-64
<PAGE>

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

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.

S-65
<PAGE>

DESCRIPTION OF CERTAIN INDEBTEDNESS

1997 CREDIT AGREEMENT

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 "1997
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"),
each with Chase as agent and a syndicate of lenders. The entire amount of the
senior term loan facility and the entire amount of the senior subordinated
credit facility were drawn down. The senior term loan facility consisted of
(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; and (iii) Tranche B loans
(the "Tranche B Loans" and, together with the Interim Loans and the Tranche A
Loans, the "1997 Term Loans") in the aggregate amount of $750 million.
Federal-Mogul used the proceeds of the sale of 10,537,093 shares of its Common
Stock in an underwritten public offering in June 1998 as well as the proceeds
from the issuance of notes in the principal amount of $1 billion, in June
1998, to prepay the entire outstanding $500 million principal amount of the
loans under the Senior Subordinated Credit Agreement and the outstanding $925
million principal amount of the Interim Loans as well as to reduce the
outstanding balances of the Tranche A Loans and the Tranche B Loans by $144.4
million and $7.3 million, respectively.

The Tranche A Loans mature on December 31, 2003 and 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. The Tranche B Loans mature on December 31, 2005 and
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.
As of June 30, 1998, the outstanding principal amounts of the Tranche A Loans
and the Tranche B Loans were $455.6 million and $742.7 million, respectively.

Under the 1997 Credit Agreement, Federal-Mogul may borrow up to an aggregate
amount of $400 million outstanding at any time in revolving credit loans (the
"1997 Revolving Credit Loans"), which are available for working capital and
other general corporate purposes for a period of six years commencing March
12, 1998. Up to $120 million of Revolving Credit Loans may be borrowed in
currencies other than U.S. dollars.

Indebtedness under the 1997 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, or (ii) the average of the offering
rates of certain banks in the London interbank eurodollar market for U.S.
dollar deposits ("Eurodollar Rate"), plus a margin. The applicable margins
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 1997
Revolving Credit Loans, 0.0% and 1.0% for Tranche A Loans and 0.5% and 1.25%
for Tranche B Loans, and (ii) in the case of Eurodollar Rate loans, the
applicable margin will vary between 0.75% and 1.5% for 1997 Revolving Credit
Loans, 1.0% and 2% for Tranche A Loans and 1.5% and 2.25% for Tranche B Loans.

Collateral and Guarantees

Federal-Mogul, its U.S. subsidiaries and certain of its foreign subsidiaries
have pledged or are in the process of pledging 100% (or, in the case of the
stock of certain foreign subsidiaries, 65%) of the capital stock of certain of
their subsidiaries and certain intercompany loans to secure the 1997 Term
Loans and 1997 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, the U.S. subsidiaries and certain foreign subsidiaries of Federal-
Mogul have guaranteed the 1997 Term Loans and 1997 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 1997 Term Loans and
the 1997 Revolving Credit Loans and other indebtedness, and one or more of
such other subsidiaries may also in the future guarantee such indebtedness.

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<PAGE>

Certain Covenants

The 1997 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 1997 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.
Federal-Mogul may elect to have a different set of covenants apply to the 1997
Credit Agreement, which will require lower leverage but otherwise will be less
restrictive. Prior to the election by Federal-Mogul of alternative covenants,
the 1997 Credit Agreement prohibits payment of dividends on Federal Mogul
Common Stock in excess of the rate of $0.12 per quarter.

Events of Default

The 1997 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 1997 Credit Agreement and foreclosure on
collateral securing the 1997 Term Loans and 1997 Revolving Credit Loans.

Fees

Federal-Mogul is currently paying a facility fee on the used and unused
portion of each lender's commitment to make 1997 Revolving Credit Loans at the
rate of 0.25% to 0.5% per annum, depending on Federal-Mogul's leverage ratio.
In addition, Federal-Mogul paid customary fees to Chase and reimbursed
customary expenses in connection with the closing of the 1997 Credit Agreement
and the Senior Subordinated Credit Agreement.

1998 TERM LOAN AGREEMENT AND 1998 364-DAY REVOLVING CREDIT AGREEMENT

In connection with its acquisition of Cooper Automotive, Federal-Mogul has
entered into (i) a $1.95 billion floating rate senior credit agreement (the
"Term Loan Agreement"), consisting of a senior term loan facility, and (ii) a
$200 million 364-day floating rate revolving credit agreement (the "Revolving
Credit Agreement," together with the Term Loan Agreement, the "1998 Credit
Agreements" and, together with the 1997 Credit Agreement, the "Credit
Agreements"), each with Chase as agent and a syndicate of lenders. The senior
term loan facility consists of (i) interim loans (the "New Interim Loans") in
the aggregate amount of $1.55 billion, and (ii) Tranche C loans (the "Tranche
C Loans" and, together with the New Interim Loans, the "1998 Term Loans") in
the aggregate amount of $400 million.

Under the Term Loan Agreement, the New Interim Loans will mature April 9,
2000 and are to be payable in full on that date. The Tranche C Loans will
mature September 30, 2006 and are to be repaid in 29 consecutive quarterly
installments commencing September 30, 1999, the first 28 of which shall be
equal to $250,000 and the final installment of which shall be equal to $393
million.

Under the Revolving Credit Agreement, Federal-Mogul may borrow up to an
aggregate amount of $200 million outstanding at any time in revolving credit
loans (the "1998 Revolving Credit Loans"), which will be available for working
capital and other general corporate purposes for a period of 364 days
commencing October 9, 1998.

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<PAGE>

Indebtedness under the 1998 Credit Agreements bears interest at a floating
rate based upon, at Federal-Mogul's option, either (i) the Base Rate, plus a
margin of 1.25% for the New Interim Loans, a margin of 1.75% for the Tranche C
Loans, and a margin based on Federal-Mogul's consolidated leverage ratio for
the 1998 Revolving Credit Loans, or (ii) the Eurodollar Rate, plus a margin of
2.25% for the New Interim Loans, a margin of 2.75% for the Tranche C Loans,
and a margin based on Federal-Mogul's consolidated leverage ratio for the 1998
Revolving Credit Loans. In the case of the 1998 Revolving Credit Loans: (i)
for Base Rate loans, the applicable margin will vary between 0% and 0.5%, and
(ii) for Eurodollar Rate loans, the applicable margin will vary between 0.75%
and 1.5%.

Collateral and Guarantees, Covenants and Events of Default

Indebtedness under the 1998 Credit Agreements is secured by the same
collateral and guaranteed by the same subsidiaries as applicable to the 1997
Credit Agreement. The 1998 Credit Agreements also have the same covenants and
events of default as the 1997 Credit Agreement.

Fees

Federal-Mogul is currently paying a facility fee on the used and unused
portion of each lender's commitment to make 1998 Revolving Credit Loans at the
rate of 0.25% and 0.5% per annum, depending on Federal-Mogul's leverage ratio.
In addition, Federal-Mogul paid customary fees to Chase and reimbursed
customary expenses in connection with the closing of the 1998 Credit
Agreements.

REPAYMENTS AND REFINANCING

The 1997 Credit Agreement and the Term Loan Agreement require 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, certain sales of assets and the
existence of "excess cash flow." The "asset sale" and "excess cash flow" (each
as defined in the 1997 Credit Agreement and the Term Loan Agreement)
prepayment requirements cease to be applicable when certain leverage tests are
met.

Pursuant to these requirements, it is anticipated that the net proceeds from
the Offerings will be used to prepay a portion of the New Interim Loans.

Federal-Mogul has the option to prepay without premium at any time the 1997
Term Loans, the 1998 Term Loans, the 1997 Revolving Credit Loans and the 1998
Revolving Credit Loans.

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<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 AND THE FEL-PRO CHEMICAL BUSINESS AS
IF THEY HAD OCCURRED ON JANUARY 1, 1997, UNLESS OTHERWISE NOTED. SEE
"UNAUDITED PRO FORMA FINANCIAL DATA: T&N, FEL-PRO AND COOPER AUTOMOTIVE."

OVERVIEW

. automobiles and light trucks

. heavy duty trucks

. farm and construction vehicles, and

. industrial equipment.

Federal-Mogul's products include:

POWERTRAIN SYSTEM COMPONENTS, which are internal engine components directly
involved in creating a vehicle's movement. These components consist primarily
of engine bearings, bushings, pistons, piston pins, rings, liners and
ignition.

SEALING SYSTEM COMPONENTS, which provide for the encapsulation of fluids and
gases from the engine, transmission and axle and also prevent external objects
from entering the systems. They consist of dynamic seals (which are found
between components that move in relation to one another) and gaskets (which
are located between components that are static in relation to one another).

Federal-Mogul markets its products to many of the world's major
manufacturers of new vehicles ("OE manufacturers".) Federal-Mogul also
manufactures and supplies its products and related parts to aftermarket
customers (purchasers of replacement parts) for each category of equipment
described above. Among Federal-Mogul's largest customers are BMW, Caterpillar,
Cummins, DaimlerChrysler, Fiat, Ford, General Motors, LucasVarity, NAPA,
Peugeot, Renault and Volkswagen/Audi (in alphabetical order).

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 parts 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
- --------
*On October 9, 1998 the Company acquired Cooper Automotive for $1.9 billion,
excluding fees and expenses. INFORMATION REGARDING THE COOPER ACQUISITION
AND ITS EFFECT UPON THE COMPANY IS FOUND IN ANNEX I TO THIS PROSPECTUS
SUPPLEMENT, AND IS NOT REFLECTED IN THIS SECTION.

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<PAGE>

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 94 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 June 30, 1998, the
Company had exited substantially all of its retail businesses. 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 ($2.41 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 "Recent 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.

Among Federal-Mogul's largest customers are BMW, Caterpillar, Cummins,
DaimlerChrysler, Fiat, Ford, General Motors, LucasVarity, NAPA, Peugeot,
Renault and Volkswagen/Audi (in alphabetical order).

BUSINESS STRATEGY

Systems Approach

Due to its broad manufacturing capabilities and product offerings, Federal-
Mogul is one of a small number of manufacturers with the ability to seal
entire engine, transmission and axle systems and to act as a single-source
supplier of engine and sealing components. In addition, Federal-Mogul is
committed to becoming a provider of complete engine 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,

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<PAGE>

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.

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 the 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 were generated from the
aftermarket. The Company believes that opportunities exist to further leverage
its broad product offerings and 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, Federal-Mogul adopted Economic Value Added (EVA(R)) as its primary
system for evaluating financial performance (for purposes including planning,
internal resource allocation and, to an increasing extent, determination of
incentive compensation). EVA is based upon comparison of the cost of capital
with the return on such capital. EVA is equal to net operating profits after
economic taxes less a charge for capital invested in the Company. This charge
for capital is equal to the product of the total capital invested in the
Company and the targeted weighted average cost of capital. In connection with
this effort, 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. The Company's EVA improved significantly in
1997 due primarily to improved operating margins (which margins rose from 4.9%
in 1996 to 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.

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<PAGE>

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.

The components of Federal-Mogul's plan for integrating operations acquired
with T&N and Fel-Pro include: closure of several 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
selected aftermarket central warehouses and selected 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 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: T&N, Fel-Pro and Cooper Automotive." 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.

On October 27, 1998, Federal-Mogul entered into an agreement to sell the T&N
Bearings Business and certain other engine hard part assets to Dana
Corporation for a purchase price of $430 million. Completion of the sale is
subject to regulation approval and is expected to occur by the end of 1998.

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<PAGE>

MANUFACTURING DIVISIONS

Federal-Mogul has three manufacturing divisions as follows:

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

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

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

General Products Camshafts 13.0% Weyburn-Bartel(R), Wey- vehicular and industrial
($1.2 billion of Friction Products 42.0% burn-Lydmet(R), Brico(R),
consolidated Sintered Products 17.0% Sintertech(R), Bentley-
sales in 1997)(1) Systems Protection Harris(R), Silverton(R),
Products 9.0% FHE(R), Connoisseur
Other General Auto Air Conditioning(R),
Products 19.0% 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 consolidated sales, of which 41% were in North America,
52% were in Europe and 7% were in the rest of the world. In 1997, 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

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<PAGE>

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, transmissions and axle systems. The Company's Sealing Systems
maintains 23 manufacturing locations in 12 countries.

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 engines, 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.

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<PAGE>

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 Aftermarket.

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 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

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. 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 BMW, Caterpillar, Cummins,
DaimlerChrysler, Fiat, Ford, General Motors, LucasVarity, NAPA, Peugeot,
Renault 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 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
"--Business 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

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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 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.

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. Upon completion of the Cooper Acquisition,
Federal-Mogul's distributorship relationship with TRW will become non-
exclusive, except in Europe where Federal-Mogul will remain TRW's exclusive
distributor. After the Supply Period, the Supply Agreement will be
automatically renewed for one year periods unless terminated 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

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<PAGE>

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. Although T&N has carefully
projected its future asbestos liability, the assumptions underlying such
projections continuously change and it is therefore not possible to project
with any certainty the number of such claims that may be made nor the
expenditure which may arise therefrom. T&N has appointed the Center for Claims
Resolution ("CCR"), a not-for-profit coalition of former asbestos producers
and sellers, as its representative in relation to all asbestos-related
personal injury claims made against the T&N Companies in the United States.

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. In connection with the T&N acquisition, Federal-
Mogul recorded reserves for IBNR claims up to the self-retention amount of
T&N's IBNR insurance policies. In addition, the Company has provided reserves
for claims notified prior to June 30, 1996 claims. As of September 30, 1998,
the Company has provided $1.292 billion as its estimate for future costs
related to resolving asbestos claims. For discussion of asbestos-related
liabilities and reserves, see Notes 19 and 28 to the T&N Financial Statements
(found in the Company's Form 8-K filed on April 7, 1998,) and "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
T&N--Asbestos."

While management believes that estimated reserves 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 a large number of product
liability cases involving asbestos, primarily involving gasket or packing
products sold to shipowners. 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 the office of Federal-Mogul's general
counsel, management believes that asbestos claims pending against Federal-
Mogul and Fel-Pro as of September 30, 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 September 30, 1998, Federal-Mogul had approximately 41,500 full-time
employees (including the T&N Bearings Business), of whom approximately 15,600
were employed in the United States. Approximately 13,300 of these employees
work for operations predating the acquisitions of T&N and Fel-Pro,
approximately 25,400 work for operations acquired with T&N and approximately
2,800 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.

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<PAGE>

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.

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 September 30, 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>
Richard A. Snell...... 57 Chairman, Chief Executive Officer and President
Alan C. Johnson....... 50 Executive Vice President--Powertrain Systems
Thomas W. Ryan........ 51 Executive Vice President and Chief Financial Officer
Wilhelm A. Schmelzer.. 58 Executive Vice President--Sealing Systems
Frank Tomes........... 55 Executive Vice President--General Products
Gordon A. Ulsh........ 52 Executive Vice President--Worldwide Aftermarket
Edward W. Gray, Jr.... 52 Senior Vice President, General Counsel and Secretary
Alan R. Begg.......... 44 Vice President--Technology
David A. Bozynski..... 44 Vice President and Treasurer
Charles B. Grant...... 53 Vice President--Corporate Development
Richard P. Randazzo... 54 Vice President--Human Resources
Kenneth P. Slaby...... 47 Vice President and Controller
James J. Zamoyski..... 51 Vice President--Strategic Planning
<CAPTION>
DIRECTOR AGE
-------- ---
<S> <C> <C>
Richard A. Snell...... 57
John J. Fannon........ 64
Roderick M. Hills..... 67
Paul S. Lewis......... 61
Antonio Madero........ 61
Robert S. Miller...... 56
John C. Pope.......... 49
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. 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. ("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

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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.

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.

Mr. Ulsh has served as Executive Vice President--Worldwide Aftermarket since
October 1998. Prior to this position, Mr. Ulsh served as Executive Vice
President of Operations for the automotive products segment of Cooper
Industries, Inc. He previously served in a number of positions at Cooper
Automotive including President of the Cooper Automotive Division, Vice
President of Operations, North America for Cooper Automotive and prior to that
Vice President and General Manager of Wagner Lighting. Mr. Ulsh joined Wagner
Brake and Lighting as Vice President of Operations in 1984, following 16 years
in various manufacturing and engineering management positions at Ford Motor
Company.

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<PAGE>

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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PRINCIPAL SHAREHOLDERS

The following table sets forth certain information concerning the beneficial
ownership of Common Stock held by shareholders known by the Company (based on
filings with the Securities and Exchange Commission) to beneficially own in
excess of five percent of the outstanding Common Stock as of November 15,
1998. In accordance with regulations promulgated by the Securities and
Exchange Commission, the Table reflects for each beneficial owner the
conversion of convertible securities (convertible within 60 days after
November 15, 1998) owned by such beneficial owners, but, in determining the
percentage ownership of such person, does not assume the conversion of
convertible securities owned by any other person.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
PRIOR TO THE OFFERINGS
------------------------------
NAME AND ADDRESS NUMBER OF
OF BENEFICIAL HOLDER SHARES PERCENT(1)
-------------------- ---------------- -------------
<S> <C> <C>
Tiger Management Corporation
101 Park Avenue, 48th Floor
New York, NY 10178-0002........................ 10,030,000 18.8%
Janus Capital Corporation
100 Fillmore Street
Denver, CO 80206............................... 7,300,000 13.7%
The Capital Group Companies, Inc.
33 South Hope Street
Los Angeles, CA 90071.......................... 4,185,000 7.8%
Merrill Lynch Asset Management
800 Scudders Mill Road
Plainsboro, NJ 08536........................... 3,470,000 6.5%
</TABLE>
- --------
(1) Percentages are calculated based on outstanding shares of Common Stock as
of November 11, 1998, of 53,323,874 shares (and do not include (i) shares
issuable upon the exchange of the Company's Series E Stock or conversion
of the Company's Series C Stock, (ii) shares reserved for issuance upon
exercise of outstanding options and (iii) shares reserved for issuance in
connection with the Company's 7.0% Trust Convertible Preferred
Securities).

S-84
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The following statements are summaries of certain provisions of Federal-
Mogul's Restated Articles of Incorporation (the "Articles of Incorporation")
and Bylaws and of the Rights Agreement, dated as of November 3, 1988, as
amended, between Federal-Mogul and The Bank of New York, as Rights Agent (the
"Rights Agreement"). Such summaries do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all of the
provisions of the Restated Articles of Incorporation, the Bylaws and the
Rights Agreement, including definitions therein of certain terms.

AUTHORIZED CAPITAL STOCK

Federal-Mogul's authorized capital stock consists of 5,000,000 shares of
preferred stock, which is issuable in series, and 260,000,000 shares of Common
Stock. At November 11, 1998, Federal-Mogul had outstanding 739,279 shares of
Series C ESOP Convertible Preferred Stock, 607,744.2 shares of Series E
Mandatorily Convertible Preferred Stock and 53,323,874 shares of Common Stock.
At November 11, 1998, of 1,500,000 shares of Common Stock authorized in 1984
under Federal-Mogul's incentive stock plans, no shares remained issuable; of
2,300,000 shares authorized in 1989, an aggregate of 371,942 shares remained
issuable; and of 1,300,000 shares authorized in 1997 and 2,900,000 shares
authorized in 1998, an aggregate of 3,338,695 shares remained issuable. See
"--Incentive Stock Plans."

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. The outstanding shares of Common Stock are, and the Shares
offered hereby will be, fully paid and nonassessable. 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.

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 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.

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.

S-85
<PAGE>

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 April
30, 1999.

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.

SERIES C ESOP CONVERTIBLE PREFERRED STOCK

In February 1989, Federal-Mogul established an Employee Stock Ownership Plan
(the "ESOP") and issued 1,000,000 shares of Series C ESOP Convertible
Preferred Stock ("Series C Stock") to the ESOP, of which 762,939 shares were
outstanding at March 31, 1998. Such shares bear a dividend of $4.78125 per
share per annum, subject to certain adjustments. The shares of Series C ESOP
Convertible Preferred Stock are convertible into shares of Common Stock at a
rate of two shares of Common Stock per share, subject to adjustment. The
Series C Stock may be issued only to a trustee acting on behalf of an employee
stock ownership plan or other employee benefit plan of Federal-Mogul and will
be automatically converted into shares of Common Stock in the event of any
transfer to a person other than such trustee. Such Series C Stock shares
provide for a liquidation preference of $63.75 per share plus accrued and
unpaid dividends. The Series C Stock is redeemable, in whole or in part, at
the option of Federal-Mogul at a redemption price per share currently equal to
100.75% of the liquidation preference, declining to 100% of the liquidation
preference on and after January 1, 1999, plus, in each case, accrued and
unpaid dividends. Holders of the Series C Stock have full voting rights and
generally vote together with the Common Stock as one class. Each share of the
Series C Stock has such number of votes as equals the number of shares of
Common Stock into which such share could be converted on the record date for
determining the shareholders entitled to vote, or currently two votes per
share. The shares of the Series C Stock are entitled to vote separately on
certain matters. The shares of the Series C Stock are not subject to any
sinking fund provisions and have no preemptive rights. The shares of the
Series C Stock rank senior to Common Stock as to the payment of dividends and
distribution of assets on liquidation, dissolution and winding up of Federal-
Mogul.

In the event that Federal-Mogul is unable to pay dividends on the Series C
Stock, Federal-Mogul is required, pursuant to the terms of the ESOP, to make a
contribution to the ESOP to satisfy the then current debt service requirements
of the ESOP Note (which obligation is fully reflected in long-term debt on
Federal-Mogul's balance sheet). See "Capitalization."

SERIES E MANDATORY EXCHANGEABLE PREFERRED STOCK

On February 24, 1998, Federal-Mogul issued 1,030,325.6 shares of Series E
Stock to holders of equity interests in the Fel-Pro entities as partial
compensation for the acquisition thereof. 422,581.4 shares of Series E Stock
were converted into 2,112,907 shares of Common Stock for inclusion in the June
Equity Offering, resulting in a reduction in the number of shares of Series E
Stock outstanding to 607,744.2 shares.

The shares of Series E Stock are mandatorily exchangeable into shares of
Common Stock at a rate of five shares of Common Stock for each share of Series
E Stock (currently representing an aggregate of 3,038,701 shares of Common
Stock), subject to adjustment, upon the earlier of: (i) the fifteenth day
after holders of two-thirds of the outstanding Series E Stock have requested
such exchange, (ii) the effective date of a registration statement filed at
the request of holders of a majority of the Series E Stock pursuant to the
registration rights agreement Federal-Mogul executed for the benefit of
holders of Series E Stock and (iii) February 24, 1999.

S-86
<PAGE>

Shares of Series E Stock bear a fully cumulative dividend of $2.40 per share
per annum, payable quarterly in arrears, subject to increase to $14.35 per
share per annum if shares of Series E Stock remain outstanding after February
24, 1999, increasing by $2.05 each month thereafter to $26.65 per share per
annum as of August 24, 1999, subject to certain adjustments. Holders of the
Series E Stock have no voting rights through February 24, 1999, after which
they have full voting rights and generally vote together with the Common Stock
as one class, each share of the Series E Stock having such number of votes as
equals the number of shares of Common Stock into which such share could be
converted on the record date for determining the shareholders entitled to
vote, currently five votes per share. The shares of the Series E Stock are not
subject to any sinking fund or redemptive provisions and have no preemptive
rights. The shares of the Series E Stock rank senior to Common Stock as to the
payment of dividends and in parity to Common Stock as to distribution of
assets on liquidation, dissolution and winding up of Federal-Mogul.

The holders of a majority of the Common Shares into which the Series E Stock
is convertible or has been converted may, upon no more than three occasions,
request registration of all or part of such shares of Common Stock at any time
after January 1, 1999. Such rights terminate at any point at which there are
fewer than 3,000,000 shares of Common Stock eligible for such registration and
such shares may be sold without restriction pursuant to Rule 144(k) under the
Securities Act of 1933. The holders initiating the demand registration may
elect whether the offering of the relevant shares upon registration shall be
in the form of a firm commitment underwritten offering or otherwise (subject
to certain restrictions, such as a determination by the underwriter of an
offering that inclusion of the requested shares would adversely affect the
marketability of the Common Stock).

CERTAIN PROVISIONS

The 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 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 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 or 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

S-87
<PAGE>

that the aggregate amount of the cash and the fair market value of the
consideration other than cash to be received 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.

S-88
<PAGE>

INCENTIVE STOCK PLANS

Federal-Mogul's shareholders adopted Stock Option Plans in 1976 and 1984 and
a Performance Incentive Stock Plan in 1989, and the holders of Common Stock
and Series C Stock approved an Amended and Restated 1997 Long Term Incentive
Plan (the "1997 Long Term Incentive Plan") in 1998. These plans provide
generally for granting options to purchase shares of the Common Stock.
Restricted shares may be awarded under both the 1989 Plan and the 1997 Long
Term Incentive Plan, entitling holders to all the rights of Common Stock
shareholders, subject to certain transfer restrictions or forfeitures. Options
entitle employees and nonemployee directors to purchase shares at an exercise
price not less than 100% of the fair market value of the shares on the grant
date.

The 1989 Performance Incentive Stock Plan and the 1997 Long Term Incentive
Plan additionally provide for the granting of performance unit awards
("PUA's") to eligible employees. These awards may be granted in the form of
Common Stock or units, the value of which are based on the market value of the
Common Stock. PUA's must relate to certain performance criteria established by
the Compensation Committee of the Board of Directors and are awarded on terms
and conditions fixed by the Committee on the date of grant. At November 11,
1998, 91,500 PUA's had been granted and 88,100 were outstanding.

TRUST PREFERRED SECURITIES

In December 1997, Federal-Mogul's wholly-owned financing trust ("Affiliate")
completed a $575 million private issue of 11.5 million shares of 7.0% Trust
Convertible Preferred Securities ("TCP Securities") with a liquidation value
of $50 per convertible security. The net proceeds from the TCP Securities were
used to purchase an equal amount of 7.0% Convertible Junior Subordinated
Debentures ("Debentures") of Federal-Mogul. The TCP Securities represent an
undivided interest in the Affiliate's assets, with a liquidation preference of
$50 per security. Distribution on the TCP Securities are cumulative and will
be paid quarterly in arrears at an annual rate of 7.0%, and are included in
the consolidated statement of operations as a component of Other Expense, Net.
The Company has the option to defer payment of the distributions for an
extension period of up to 20 consecutive quarters.

The TCP Securities are convertible, at the option of the holder, into
Federal-Mogul Common Stock at an initial conversion rate of .9709 shares of
Common Stock per TCP Security (an aggregate of 11,165,049 shares of Common
Stock), subject to adjustment in certain circumstances. The TCP Securities and
the Debentures will be redeemable, at the option of Federal-Mogul, on or after
December 6, 2000 at a Redemption Price, expressed as a percentage of principal
which is added to accrued and unpaid interest. The Redemption Price range is
from 104.9% on December 6, 2000 to 100.0% after December 1, 2007. All
outstanding TCP Securities and Debentures are required to be redeemed by
December 1, 2027. At November 11, 1998, 11,500,000 Convertible Preferred
Securities were outstanding.

S-89
<PAGE>

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 Common
Stock by a person that, for United States federal income tax purposes, is a
nonresident alien individual or foreign corporation (a "non-U.S. holder"). 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 Common
Stock, as well as any tax consequences that may arise under the laws of any
state, municipality, foreign country or other taxing jurisdiction.

DIVIDENDS

Dividends paid to a non-U.S. holder of Common Stock ordinarily will be
subject to withholding of United States federal income tax at a 30 percent
rate, or at a lower rate under an applicable income tax treaty that provides
for a reduced rate of withholding. However, if the dividends are effectively
connected with the conduct by the holder of a trade or business within the
United States, then the dividends will be exempt from the withholding tax
described above and instead will be subject to United States federal income
tax on a net income basis.

GAIN ON DISPOSITION OF COMMON STOCK

A non-U.S. holder generally will not be subject to United States federal
income tax in respect of gain realized on a disposition of Common Stock,
provided that (a) the gain is not effectively connected with a trade or
business conducted by the non-U.S. holder in the United States and (b) in the
case of a non-U.S. holder who is an individual and who holds the Common Stock
as a capital asset, such holder is present in the United States for less than
183 days in the taxable year of the sale and other conditions are met and (c)
the Company is not nor has been a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code at any time
within the shorter of the five-year period ending on the date of disposition
or the non-U.S. holder's holding period and certain other conditions are met.
The Company does not believe that it is, or is likely to become, a "United
States real property holding corporation."

FEDERAL ESTATE TAXES

Common Stock owned or treated as being owned by a non-U.S. holder at the
time of death will be included in such holder's gross estate for United States
federal estate tax purposes, unless an applicable estate tax treaty provides
otherwise.

U.S. INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING TAX

U.S. information reporting requirements and backup withholding tax will not
apply to dividends paid on Common Stock to a non-U.S. holder at an address
outside the United States, except that with respect to payments made after
December 31, 1999, a non-U.S. holder will be entitled to such an exemption
only if it provides a Form W-8 (or satisfies certain documentary evidence
requirements for establishing that it is a non-United States person) or
otherwise establishes an exemption. As a general matter, information reporting
and backup withholding also will not apply to a payment of the proceeds of a
sale of Common Stock effected outside the United States by a foreign office of
a foreign broker. However, information reporting requirements (but not backup
withholding) will apply to a payment of the proceeds of a sale of Common Stock
effected outside the United States by a foreign office of a broker if the
broker (i) is a U.S. person, (ii) derives 50 percent or more of its gross
income for certain periods from the conduct of a trade or business in the
United States, (iii) is a "controlled foreign corporation" as to the United
States or (iv) with respect to payments made after December 31, 1999, a
foreign partnership that, at any time during its taxable year is 50% or more
(by income or capital interest) owned by U.S. persons or is engaged in the
conduct of a U.S. trade or business, unless the broker has documentary
evidence in its records that the holder is a non-U.S. holder and certain
conditions are met, or the holder otherwise establishes an exemption. Payment
by a United States office of a broker of the proceeds of a sale of Common
Stock will be subject to both backup withholding and information reporting
unless the holder certifies its non-United States status under penalties of
perjury or otherwise establishes an exemption.

S-90
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the United States Purchase Agreement
(the "U.S. Purchase Agreement"), the Underwriters named below (the "U.S.
Underwriters") who are represented by Bear, Stearns & Co. Inc. ("Bear
Stearns"), Donaldson, Lufkin & Jenrette Securities Corporation, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and
Schroder & Co. Inc., and concurrently with the sale of 2,000,000 shares of
Common Stock to the International Managers (as hereinafter defined), have
severally agreed to purchase from Federal-Mogul, the respective number of
shares of Common Stock set forth opposite their names below:

<TABLE>
<CAPTION>
NUMBER
U.S. UNDERWRITERS OF SHARES
----------------- ----------
<S> <C>
Bear, Stearns & Co. Inc. ...................................... 1,928,000
Donaldson, Lufkin & Jenrette Securities Corporation............ 1,708,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................... 1,708,000
Morgan Stanley & Co. Incorporated.............................. 1,708,000
Schroder & Co. Inc. ........................................... 1,708,000
BancBoston Robertson Stephens.................................. 120,000
BT Alex. Brown Incorporated.................................... 120,000
Chase Securities Inc. ......................................... 120,000
CIBC Oppenheimer Corp. ........................................ 120,000
Credit Suisse First Boston Corporation......................... 120,000
Credit Lyonnais Securities (USA) Inc. ......................... 120,000
Dresdner Kleinwort Benson North America LLC.................... 120,000
A.G. Edwards & Sons, Inc. ..................................... 120,000
First Chicago Capital Markets, Inc. ........................... 120,000
ING Baring Furman Selz LLC..................................... 120,000
Lehman Brothers Inc. .......................................... 120,000
NationsBanc Montgomery Securities LLC.......................... 120,000
Nesbitt Burns Securities Inc. ................................. 120,000
Roney Capital Markets,
A Division of First Chicago Capital Markets, Inc. ............ 120,000
Salomon Smith Barney Inc. ..................................... 120,000
Scotia Capital Markets (USA) Inc. ............................. 120,000
SG Cowen Securities Corporation................................ 120,000
Warburg Dillon Read LLC........................................ 120,000
Wheat First Securities, Inc. .................................. 120,000
Axiom Capital Management, Inc. ................................ 60,000
Blaylock & Partners, L.P. ..................................... 60,000
BNY Capital Markets, Inc. ..................................... 60,000
Chatsworth Securities LLC...................................... 60,000
First of Michigan Corporation.................................. 60,000
Gabelli & Company, Inc. ....................................... 60,000
Gruntal & Co., L.L.C. ......................................... 60,000
HSBC Securities, Inc. ......................................... 60,000
Interstate/Johnson Lane Corporation............................ 60,000
Jefferies & Company............................................ 60,000
Josephthal & Co. Inc. ......................................... 60,000
McDonald & Company Securities, Inc. ........................... 60,000
Fifth Third/The Ohio Company................................... 60,000
Raymond James & Associates, Inc. .............................. 60,000
Utendahl Capital Partners, L.P. ............................... 60,000
Wit Capital Corporation........................................ 60,000
----------
Total.......................................................... 12,000,000
==========
</TABLE>

S-91
<PAGE>

Federal-Mogul has also entered into an International Purchase Agreement (the
"International Purchase Agreement" and, together with the U.S. Purchase
Agreement, the "Purchase Agreements") with certain underwriters outside the
United States and Canada (the "International Managers" and, together with the
U.S. Underwriters, the "Underwriters"). Subject to the terms and conditions
set forth in the International Purchase Agreement, and concurrently with the
sale of 12,000,000 shares of Common Stock to the U.S. Underwriters pursuant to
the U.S. Purchase Agreement, Federal-Mogul has agreed to sell to the
International Managers, and the International Managers severally have agreed
to purchase, an aggregate of 2,000,000 shares of Common Stock. The offering
price per share and the total underwriting discount per share are identical
under the U.S. Purchase Agreement and the International Purchase Agreement.

In each Purchase Agreement, the several U.S. Underwriters and the several
International Managers, respectively, have agreed, subject to the terms and
conditions set forth in such Purchase Agreement, to purchase all of the shares
of Common Stock being sold pursuant to such Purchase Agreement if any of such
shares of Common Stock being sold pursuant to such Purchase Agreement are
purchased. Under certain circumstances, the commitments of non-defaulting U.S.
Underwriters or International Managers (as the case may be) may be increased.
The sale of Common Stock to the U.S. Underwriters is conditioned upon the sale
of shares of Common Stock to the International Managers, and vice versa.

The U.S. Underwriters and the International Managers have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") that provides for
the coordination of their activities. Pursuant to the Intersyndicate
Agreement, the Underwriters are permitted to sell shares of Common Stock to
each other for purposes of resale at the public offering price set forth on
the cover page of this Prospectus Supplement, less an amount not greater than
the selling concession. Under the terms of the Intersyndicate Agreement, the
U.S. Underwriters and any dealer to whom they sell shares of Common Stock will
not offer to sell or sell shares of Common Stock to persons who are non-U.S.
or non-Canadian persons or to persons they believe intend to resell to persons
who are non-U.S. or non-Canadian persons, and the International Managers and
any dealer to whom they sell shares of Common Stock will not offer to sell or
sell shares of Common Stock to U.S. persons or Canadian persons or to persons
they believe intend to resell to U.S. persons or Canadian persons, except, in
each case, for transactions pursuant to the Intersyndicate Agreement.

The U.S. Underwriters have advised Federal-Mogul that the U.S. Underwriters
propose initially to offer the shares of Common Stock 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 $0.973 per share of Common Stock. The U.S. Underwriters may allow,
and such dealers may reallow, a discount not in excess of $0.10 per share of
Common Stock on sales to certain other dealers. After the public offering, the
public offering price, concession and discount may be changed.

Federal-Mogul has granted an option to the U.S. Underwriters, exercisable
during the 30-day period after the date of this Prospectus Supplement, to
purchase up to an additional 1,800,000 shares of Common Stock at the public
offering price set forth on the cover page hereof, less the underwriting
discount. The U.S. Underwriters may exercise this option only to cover over-
allotments, if any, made on the sale of shares of Common Stock offered hereby.
To the extent that the U.S. Underwriters exercise this option, each U.S.
Underwriter will be obligated, subject to certain conditions, to purchase
approximately the number of additional shares of Common Stock proportionate to
such U.S. Underwriters' initial amount reflected in the foregoing table.
Federal-Mogul has also granted an option to the International Managers,
exercisable during the 30-day period after the date of this Prospectus
Supplement, to purchase up to an additional 300,000 shares of Common Stock to
cover over-allotments, if any, on terms similar to those granted to the U.S.
Underwriters.

Federal-Mogul and certain of its executive officers have agreed that, except
under certain circumstances (including issuances of securities in connection
with acquisitions), they will not, directly or indirectly, for a period of 90
days following the date of the Prospectus Supplement, except with the prior
consent of Bear Stearns, on behalf of the Underwriters, sell, offer to sell,
grant any option for the sale of, or otherwise dispose of, any Common Stock,
except that Federal-Mogul may issue Common Stock or options for shares of
Common Stock issued pursuant to or sold in connection with any employee
benefit plan.

S-92
<PAGE>

In order to facilitate the Offerings, certain persons participating in the
Offerings may engage in transactions that stabilize, maintain or otherwise
affect the price of the Common Stock during and after the Offerings.
Specifically, the U.S. Underwriters may over-allot or otherwise create a short
position in the Common Stock for their own account by selling more shares of
Common Stock than have been sold to them by Federal-Mogul. The U.S.
Underwriters may elect to cover any such short position by purchasing shares
of Common Stock in the open market or by exercising the over-allotment option
granted to the U.S. Underwriters. In addition, such persons may stabilize or
maintain the price of the Common Stock by bidding for or purchasing shares of
Common Stock in the open market and may impose penalty bids, under which
selling concessions allowed to syndicate members or other broker-dealers
participating in the Offerings are reclaimed if shares previously distributed
in the Offerings are repurchased in connection with stabilization transactions
or otherwise. The effect of these transactions may be to stabilize or maintain
the market price of the Common Stock at a level above that which might
otherwise prevail in the open market. The imposition of a penalty bid may also
affect the price of the Common Stock to the extent that it discourages resales
thereof. No representation is made as to the magnitude or effect of any such
stabilization or other transactions. Such transactions, if commenced, may be
discontinued at any time.

Certain of the U.S. Underwriters and their affiliates engage from time to
time in various general financing and banking transactions with, or provide
financial advisory services to, Federal-Mogul and its affiliates. Certain
affiliates of the U.S. Underwriters and the International Managers are lenders
under the Credit Agreements. Thus affiliates of certain of the U.S.
Underwriters and the International Managers will receive in the aggregate
proceeds from the Offerings in excess of 10% of the net proceeds of the
Offerings. Accordingly, the Offerings are being made in compliance with Rule
2710(c)(8) of the National Association of Securities Dealers, Inc. See "Use of
Proceeds."

Federal-Mogul has agreed to indemnify the U.S. Underwriters and the
International Managers, against certain liabilities, including liabilities
under the Securities Act.

Federal-Mogul estimates that it will spend approximately $850,000 for
printing, legal and accounting fees, and other expenses of the Offerings.

S-93
<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 contains
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 December 14, 1998 was $1.6885 = (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 "Recent Acquisitions." The financial information relating to
Federal-Mogul set forth in this Offering Memorandum (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 incorporated
herein reference (the "Federal-Mogul Audited Financial Statements") and (ii)
to the extent it relates to the nine-month periods ended September 30, 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 nine-month
periods ended September 30, 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 incorporated herein reference (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 in
this Offering Memorandum has been derived from the audited consolidated
financial statements of T&N incorporated herein reference (the "T&N Financial
Statements") and the financial information relating to Fel-Pro set forth in
this Offering Memorandum has been derived from the audited consolidated
financial statements of Fel-Pro for the years ended December 28, 1997 and
December 29, 1996 incorporated herein reference (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.

On October 9, 1998, the Company acquired Cooper Automotive for $1.9 billion,
excluding fees and expenses. A DESCRIPTION OF THE COOPER ACQUISITION, A
DESCRIPTION OF COOPER AUTOMOTIVE'S BUSINESS, AND FINANCIAL INFORMATION
REGARDING COOPER AUTOMOTIVE IS INCLUDED IN THIS PROSPECTUS SUPPLEMENT AS
ANNEX I.

AVAILABLE INFORMATION

Federal-Mogul is subject to the periodic reporting and other financial
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").
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.

S-94
<PAGE>

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
September 30, 1998;

3. Federal-Mogul's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998;

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

5. 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, June 11, 1998, June 24, 1998, September 10, 1998, October 23, 1998
and November 24, 1998; and
6. 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 Supplement and prior to the termination of the offering made hereby
shall be deemed to be incorporated by reference into this Prospectus
Supplement 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 in this Prospectus Supplement
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
Supplement to the extent that a statement contained herein or in a
subsequently filed document, that also is or is deemed to be incorporated by
reference herein, 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 Supplement.

This Prospectus Supplement 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

The validity of the Common Stock 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 incorporated herein by
reference 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 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 Fel-Pro Financial Statements incorporated herein by reference have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. 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.

S-95
<PAGE>

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

S-96
<PAGE>

ANNEX I: THE COOPER ACQUISITION

On October 9, 1998, the Company acquired the automotive division of Cooper
Industries, Inc. ("Cooper Automotive") for a total purchase price of $1.9
billion (the "Cooper Acquisition"). The Company also incurred approximately $25
million of fees and expenses (including $19.5 million of debt financing costs
and $5.5 million of direct transaction costs) in connection with the Cooper
Acquisition.*

BUSINESS

Cooper Automotive, comprised of the Cooper Automotive division (the Champion
spark plug group of companies) and the Moog Automotive division of Cooper
Industries, Inc., is a premier provider of leading brand name automotive
products to the aftermarket and OE market. Cooper Automotive manufactures and
distributes brake and friction products, chassis, ignition products, lighting
and wiper products under well-known brand names including Champion(R), Moog(R),
Anco(R), Abex(R), Wagner(R) and Zanxx(R). Among Cooper Automotive's largest
customers are AutoValue, Carquest, DaimlerChrysler, Ford, Fiat, General Motors
and NAPA (in alphabetical order).

Cooper Automotive had 1997 revenues of $1.9 billion and operating earnings of
$177 million before nonrecurring charges. The following charts set forth Cooper
Automotive's sales by market segment, geographic region and manufacturing
division as a percentage of total sales for the year ended December 31, 1997.

Cooper Automotive
1997 Revenues by
Market Segment

[PIE CHART APPEARS HERE]

74% Aftermarket
26% O.E.

Cooper Automotive
1997 Revenues by
Geographic Region

[PIE CHART APPEARS HERE]

8% Rest of World
15% Europe
77% North America

Cooper Automotive
1997 Revenues by
Manufacturing Division

[PIE CHART APPEARS HERE]

29% Brake & Friction
10% Wiper
5% Wire
26% Ignition
16% Lighting
14% Chassis

Friction and Brake Hard Parts

Cooper Automotive manufactures and distributes Abex(R) friction material and
Wagner(R) brake components including master and wheel cylinders, calipers,
brake lines and hoses, drums, rotors and miscellaneous hardware and cables.
Abex(R) is the friction manufacturing unit that directly supplies the OE market
and the Wagner(R) unit with friction needs. As a result, the Wagner(R) unit is
a full line friction and brake hard part supplier to the aftermarket.

The Cooper Automotive friction material business complements Federal-Mogul's
existing Ferodo friction business. Ferodo is a leader in the European friction
market and Abex(R) is a leader in the U.S. friction market. The Wagner(R) brake
hard parts business provides Federal-Mogul with a manufacturing base for
expanding sales of entire brake system packages to customers in both the OE
market and aftermarket.

The Abex, Wagner and Ferodo businesses generated sales in excess of $1
billion in 1997. Federal-Mogul anticipates establishing a separate friction and
brake operating unit following the Cooper Acquisition.

Lighting

Cooper Automotive manufactures and distributes a variety of lighting
products. Under the Wagner(R) brand "bumper-to-bumper" lighting is provided to
both the OE market and aftermarket. This includes sealed beams, halogen
capsules, lighting modules for front and rear trim, and interior lighting. The
Blazer(R) brand is focused on
- --------
* PRO FORMA FINANCIAL DATA RELATING TO COOPER AUTOMOTIVE IS FOUND UNDER THE
CAPTION "UNAUDITED PRO FORMA FINANCIAL DATA: T&N, FEL-PRO AND COOPER
AUTOMOTIVE" IN THIS PROSPECTUS SUPPLEMENT.

I-1
<PAGE>

fog-type lights. The Wagner(R)/Blazer(R) unit is a leader in the North
American automotive lighting aftermarket. Zanxx(R) is a leader in the OE
market for connectors, sockets and switches for automotive lighting.

Federal-Mogul supplies the heavy duty truck and trailer market with DOT-
regulated lighting under its Signal-Stat brand. The combination of the
Federal-Mogul and Cooper Automotive lighting businesses provides the Company
with the capability to offer total vehicular industry lighting system packages
to both the OE market and aftermarket.

Chassis Parts

Cooper Automotive manufactures and distributes Moog(R) steering and
suspension products and Precision(R) universal joints. Federal-Mogul currently
distributes purchased aftermarket chassis parts. The Cooper Acquisition will
establish Federal-Mogul as a basic manufacturer of chassis parts. Moog(R) and
Precision(R) maintain a leadership position in the North American aftermarket
with their "problem solver" applications for the installer.

Cooper Automotive's chassis parts business enhances Federal-Mogul's growth
opportunities in the retail automotive parts market while allowing it to
maintain its strong position with wholesaler distributors. The growth of the
sport utility vehicle ("SUV") segment has also increased demand for
replacement chassis parts due to heavier vehicle weight, a greater number of
traditional chassis parts per vehicle and increased wear out rates.

The expansion of Federal-Mogul's chassis product offering, coupled with
Federal-Mogul's wheel-end offering (anti-friction bearings and seals) and the
complete brake system offering will enable Federal-Mogul to provide a one-stop
shopping source for undercar parts to customers in the aftermarket.

Ignition

Cooper Automotive manufacturers and distributes spark plugs, diesel glow
plugs, ignition coils and wire and cable sets. Most of these products are sold
by Cooper Automotive under the widely-recognized Champion(R) brand name, with
some aftermarket wire and cable sold under the Belden(R) and PowerPath(R)
brand names. In addition to maintaining a significant presence in the
automotive ignition parts market, Cooper Automotive generates significant
revenues from sales of ignition-type products for aviation-related
applications.

The Cooper Automotive ignition product line complements Federal-Mogul's
powertrain capabilities, thereby enhancing the Company's ability to capitalize
on opportunities presented by engine management and environmental regulations
that place a premium on ignitability, heat and gas control. Federal-Mogul's
focus on ignition and powertrain components and systems provides it with
opportunities to benefit from the increased demand for cleaner and more
efficient engines.

Wiper Blades

Cooper Automotive manufactures and distributes wiper arms and blades in the
North American and European aftermarket under the Anco(R) brand name. Federal-
Mogul believes that demand for wiper arms and blades has been favorably
impacted in recent years from the need for a third arm/blade on SUVs and new
arm/blades that can conform to changes in car slope design. Federal-Mogul
believes that the addition of a wiper arms/blade product line with strong
retail brand name recognition can facilitate its ability to expand retail
sales of its other products, such as gaskets, friction and certain suspension
components. The Anco(R) brand also enjoys a significant position among OE
manufacturers, which may enhance the Company's ability to market complete
wiper systems.

STRATEGIC RATIONALE AND SYNERGIES

The Cooper Acquisition is expected to further the Company's strategic
objective of expanding manufactured product lines to engineered systems and
modules and accelerating the Company's worldwide growth. Cooper Automotive
brings additional leading brand names, new strategically compatible product
lines, additional customers and enhanced distribution channel penetration. The
Cooper Acquisition also broadens the Company's

I-2
<PAGE>

brake and friction and lighting product lines as well as adds ignition
products and wiper blades to its range. Also, the combination of Federal-
Mogul's wheel end bearing and seal business with chassis and brake system
products offers customers the potential of a single consolidated vendor base
for undervehicle parts.

Management believes that significant benefits result from the ability to
penetrate its existing customer base for distribution of Cooper Automotive
products. In particular, the Company's relationships with OE manufacturers,
heavy duty equipment and international customers represent opportunities for
expansion of the market for Cooper Automotive products.

Management also believes that integration of the Company's operations with
those of Cooper Automotive will provide significant opportunities for
synergies and cost savings. The Company currently anticipates pre-tax synergy
and cost benefits of approximately $94 million in 1999; $154 million in 2000;
and $161 million in 2001. In connection with realization of synergies, at
closing Federal-Mogul recorded $88 million in pre-tax reserves for severance
and exit costs, in addition to certain purchase accounting valuation
adjustments, and expects to incur $23 million in integration costs over the
subsequent 18 months. Specific cost savings targeted by management to realize
synergies from the Cooper Acquisition include:

Manufacturing. Consolidation of the friction products operations,
combining Cooper Automotive's EIS(R), Wagner(R) and Abex(R) operations with
Federal-Mogul's Ferodo(R) operations to rationalize manufacturing sites,
transfer assembly labor to expanding lower cost facilities and reduce
headcount.

Sales and Marketing. Consolidation and streamlining of the combined sales
and marketing personnel to take advantage of overlaps and economies of
scale.

Distribution, Sourcing and Administration. Consolidation of the
aftermarket company based distribution network, transfer from "buy" to
"make" sourcing and consolidation of both the administration and
headquarters of Cooper Automotive located in St. Louis, Missouri to
Federal-Mogul's Southfield, Michigan, headquarters.

THE COMBINED COMPANY

On a pro forma basis (after giving effect to the Cooper Acquisition, the
acquisitions of T&N and Fel-Pro and the disposition of the T&N Bearings
Business and the Fel-Pro Chemical Business, as if they had occurred on January
1, 1997), Federal-Mogul's total sales for 1997 were $6.6 billion and its net
earnings before extraordinary item, non-recurring charges and the Offerings
adjustments was $12.0 million.

Consummation of the Cooper Acquisition substantially expands the Company's
brakes and friction business and management anticipates establishing brakes
and friction as a separate manufacturing operating unit.

I-3
<PAGE>

The following charts set forth Federal-Mogul's net sales by market segment,
geographic region and manufacturing division as a percentage of total net
sales for the year ended December 31, 1997 on two differing pro forma bases.
The charts on the left reflect the Company's composition after giving effect
to the T&N and Fel-Pro acquisitions and the disposition of the T&N Bearings
Business and the Fel-Pro Chemical Business as if they had occurred on January
1, 1997. The charts on the right reflect the Company's composition after
giving effect to the Cooper Acquisition as well as the T&N and Fel-Pro
acquisitions and the disposition of the T&N Bearings Business and the Fel-Pro
Chemical Business as if all had occurred on January 1, 1997.

Federal-Mogul
1997 Net Sales by Market Segment
Pre-Cooper Automotive(1) Post-Cooper Automotive(2)

[PIE CHART APPEARS HERE] [PIE CHART APPEARS HERE]

52% Original Equipment 45% Original Equipment
48% Aftermarket 55% Aftermarket

Federal-Mogul
1997 Net Sales by Geographic Region
Pre-Cooper Automotive(1) Post-Cooper Automotive(2)

[PIE CHART APPEARS HERE] [PIE CHART APPEARS HERE]

49% North America 57% North America
11% Rest of World 10% Rest of World
40% Europe 33% Europe

Federal-Mogul
1997 Net Sales by Manufacturing Division
Pre-Cooper Automotive(1) Post-Cooper Automotive(2)

[PIE CHART APPEARS HERE] [PIE CHART APPEARS HERE]

38% General Products 37% Powertrain Systems
22% Sealing Systems 16% Brakes & Friction
40% Powertrain Systems 28% General Products
19% Sealing Systems

I-4
<PAGE>

SELECTED FINANCIAL DATA FOR COOPER AUTOMOTIVE

The following selected historical consolidated financial information of
Cooper Automotive with respect to each year in the three-year period ended
December 31, 1997 is derived from the Cooper Automotive Audited Financial
Statements. Such consolidated financial statements have been audited by Ernst
& Young LLP, independent certified public accountants. The unaudited financial
information for the nine-month period ended September 30, 1998 and 1997 has
been derived from the Cooper Automotive Unaudited Financial Statements. The
Cooper Automotive Unaudited Financial Statements are unaudited, but in the
opinion of management, reflect all adjustments necessary for fair presentation
of such information. The selected consolidated financial information provided
below should be read in conjunction with "Management's Discussion and
Analysis--Cooper Automotive" and consolidated financial statements of Cooper
Automotive and the Notes thereto included in this Annex I.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
YEAR ENDED DECEMBER 31, (UNAUDITED)
---------------------------- --------------------
1997 1996 1995 1998 1997
-------- -------- -------- --------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................... $1,873.2 $1,903.2 $1,758.8 $ 1,400.8 $ 1,423.8
Cost of sales.............. 1,294.4 1,316.9 1,215.9 953.6 985.2
Selling and administrative
expenses.................. 354.8 360.2 326.1 259.7 266.7
Goodwill amortization...... 32.7 33.6 32.9 24.7 24.5
Nonrecurring charges....... 55.9 102.0 -- -- 43.4
Other expense, net......... 14.4 13.2 13.2 7.1 9.2
Interest expense........... 1.1 0.7 1.3 0.4 0.8
-------- -------- -------- --------- ---------
Income before income
taxes................... 119.9 76.6 169.4 155.3 94.0
Income taxes............... 54.3 49.1 79.1 64.4 42.5
-------- -------- -------- --------- ---------
Net income............... $ 65.6 $ 27.5 $ 90.3 $ 90.9 $ 51.5
======== ======== ======== ========= =========
CONSOLIDATED BALANCE SHEET
DATA:
Total assets............... $2,619.6 $2,659.2 NA $ 2,705.3 NA
Short-term debt(1)......... 35.5 6.1 NA 2.9 NA
Long-term debt............. 3.6 7.1 NA 1.6 NA
Net assets................. 1,804.6 1,849.6 NA 1,954.3 NA
OTHER FINANCIAL
INFORMATION:
Cash provided from (used
by) operating activities.. $ 157.5 $ 173.6 $ 188.9 $ 104.8 $ 107.9
Cash provided from (used
by) investing activities.. (95.4) (132.6) (87.7) (40.6) (68.7)
Cash provided from (used
by) financing activities.. (66.5) (38.3) (108.8) (37.0) (27.0)
EBITDA(2).................. 274.5 280.4 269.8 228.1 211.9
Expenditures for property,
plant, equipment and other
long-term assets.......... 78.4 87.1 85.7 43.7 58.7
Depreciation and
amortization expense...... 97.6 101.1 99.1 72.4 73.7
</TABLE>
- --------
(1) Includes current maturities of long-term debt.
(2) "EBITDA" represents the sum of income before interest income and expense,
income taxes and extraordinary items, plus depreciation and amortization
as well as nonrecurring items. EBITDA should not be construed as a
substitute for income from operations, net income or cash flow operating
activities, for the purpose of analyzing Cooper Automotive'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.

I-5
<PAGE>

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

The information and discussion that follows should be read in conjunction
with the Combined Financial Statements of Cooper Automotive and related notes
thereto (the "Cooper Automotive Financial Statements"), appearing elsewhere in
Annex I of this Prospectus Supplement.

OVERVIEW

Over the last two years, Cooper Automotive has been engaged in a review and
evaluation of its operations and as a result has recorded adjustments to the
carrying value of assets and accruals for projects to which management is
committed. During early 1998, Cooper Automotive completed the exit of
remanufacturing activities and all product lines included in the temperature
control business. The temperature control businesses were exchanged for the
brake products business owned by Standard Motor Products ("SMP"), and the
other remanufacturing businesses were sold for $4 million. During 1997,
adjustments to the carrying value of the assets were recorded and no further
adjustments were necessary upon completion of the transactions disposing of
the businesses. On an annual basis, the revenues for the SMP brake products
business of approximately $150 million are expected to exceed the revenues of
the disposed businesses. Incremental earnings are anticipated in 1998 from the
higher-margin brake business and as consolidation activities are completed
during 1998. However, the temperature control business was a seasonal business
with a majority of the sales occurring in the second and third quarter of each
year. Therefore, during 1998, the exchange resulted in lower revenues in the
second and third quarter and is expected to result in higher revenues in the
fourth quarter.

NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1997

RESULTS OF OPERATIONS

Revenues

Revenues for the first nine months of 1998 totaled $1,400.8 million, a 2%
decrease from the $1,423.8 million in the first nine months of 1997.
Acquisitions and divestitures had a nominal effect on revenues. Increased
sales to worldwide original equipment manufacturers and improved steering and
suspension sales were more than offset by weak domestic aftermarket demand in
most product lines. The net impact of the exchange of Cooper Automotive's
temperature control business for the brake business of Standard Motor Products
("SMP Exchange") resulted in lower revenues during the period as a result of
disruption in the marketplace during the transition and the seasonal nature of
the temperature control business which typically had relatively strong second
and third quarter sales each year. Also, revenues were affected by the
bankruptcy of a large customer in the first quarter of 1998. The customer was
converted to a cash basis during the first quarter of 1998, significantly
reducing sales volume compared to 1997. Ongoing market consolidation continued
to impact revenues through pricing pressure and other competitive conditions.

Cost of Sales

Cost of sales as a percentage of revenues improved to 68.1% during the first
nine months of 1998 from 69.2% in 1997. The improvement was the result of the
swap of Cooper Automotive's lower margin temperature control product line for
the brake products business of SMP. Also contributing to the lower cost of
sales percentage was the favorable effect on product mix from increased sales
of friction products to the OE market and the heavy-duty aftermarket, which
carries a higher margin.

Selling and Administrative Expenses

Selling and administrative expense as a percentage of revenues decreased to
18.5% during the first nine months of 1998 compared to 18.7% during the first
nine months of 1997. Actual selling and administrative expenses were reduced
in 1998 reflecting the benefits of certain sales and marketing restructuring,
reduced spending for advertising, promotions and customer changeover costs.

I-6
<PAGE>

Goodwill Amortization

Amortization of goodwill was $24.7 million and $24.5 million, respectively,
for the first nine months of 1998 and the first nine months of 1997,
reflective of the absence of significant acquisitions.

Nonrecurring Charges

During the first nine months of 1997, Cooper Automotive recorded charges of
$43.4 million including adjustments to the carrying value of assets of $27.6
million and accruals of continuing obligations for replaced information
systems and facility consolidations.

Other Expense, net

Other expense, net, decreased $2.1 million during the first nine months of
1998 compared to the same period in 1997, primarily due to a decrease in the
actuarial expense for post-retirement benefits other than pensions.

Interest Expense

Interest expense decreased $0.4 million during the first nine months of 1998
compared to the first nine months of 1997, primarily due to lower levels of
outstanding debt.

Income Tax Expense

The effective tax rate decreased to 41.5% in 1998 from 45.2% in 1997. The
decrease was primarily attributable to the increase in income in 1998 reducing
the impact of nondeductible goodwill on the effective tax rate. Net income
increased 76.5% to $90.9 million during the first nine months of 1998 from
$51.5 million in 1997. The increase was due to the nonrecurring charges in
1997 and the lower effective tax rate in 1998.

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

Revenues

Revenues decreased $30.0 million to $1.87 billion in 1997, a decrease of
1.6% from 1996 revenues of $1.90 billion. Excluding acquisitions, revenues
declined $41.7 million, or 2.2%. Sales to OE manufacturers improved in 1997
with the increased production levels of vehicles containing Cooper Automotive
products. Sales in the aftermarket were hampered by weak demand in most
product lines. Temperature control product sales and remanufactured product
lines declined primarily due to competitive price pressures. Wiper volume
declined significantly in the first half of 1997 as mild weather patterns
impacted winter-related products. In addition, the public announcement of the
SMP Exchange contributed to a significant reduction in temperature control
product sales. Revenues increased $144.4 million to $1.90 billion in 1996, an
increase of 8.2% over 1995 revenues of $1.76 billion. Cooper Automotive's
acquisitions accounted for $55.3 million of the increase in revenues. Harsh
winter weather and lean distributor inventories boosted domestic aftermarket
demand for wiper blades and ignition products in early 1996. New customers for
lighting products, partial recovery from the 1995 economic downturn in Mexico
and the increased placement of products on new vehicles and additional light
vehicle production also increased revenues in 1996 compared to 1995. Partially
offsetting these increases was a decline in sales of temperature control
products as a result of a mild summer, a decline in domestic sales of heavy
duty brake components as a result of decreases in OE production and lower
European aftermarket sales influenced by weak economic conditions.

Cost of Sales

Cost of sales as a percentage of revenues improved slightly in 1997 to 69.1%
from 69.2% in 1996. The improvement reflects the impact of the write-down of
brake assets and other actions to reduce manufacturing

I-7
<PAGE>

costs, partially offset by the unfavorable effect on product mix of lower
sales to the aftermarket, which carry a higher margin. Cost of sales as a
percentage of revenues increased slightly in 1996 to 69.2% compared to 69.1%
in 1995. The slightly higher percentage reflects the unfavorable effect on
product mix from lower sales of higher margin heavy-duty brake components and
lower aftermarket sales in Europe.

Selling and Administrative Expense

Selling and administrative expense remained flat as a percentage of 1997 and
1996 revenues at 18.9%, despite the reduction in revenues, reflecting efforts
to control costs and the benefits from restructuring certain sales, marketing
and distribution activities. Selling and administrative expenses as a
percentage of revenues increased to 18.9% in 1996 from 18.5% in 1995. The
increase resulted from higher advertising, promotion and customer changeover
costs in 1996.

Goodwill Amortization

Goodwill amortization declined to $32.7 million in 1997 from $33.6 million
in 1996, primarily as a result of the write-down in 1996 of goodwill related
to certain Wagner brake product lines. Goodwill amortization increased to
$33.6 million in 1996 from $32.9 million in 1995 primarily as a result of the
February 1996 acquisition of Blazer International Corp.

Nonrecurring Charges

During 1997, Cooper Automotive recorded charges of $55.9 million including
adjustments to the carrying value of assets of $30.6 million, accruals of
continuing obligations for replaced information systems and facility
consolidations of $12.8 million and an increase in the accrual for doubtful
accounts for the bankruptcy of a large customer of $12.5 million. During 1996,
Cooper Automotive initiated a strategic review of most of its businesses and
recorded an $85.3 million asset write-down and a $16.7 million in charges
primarily related to facility closings and consolidations. A majority of the
consolidations were announced prior to the end of each year. Cash expenditures
related to the payout of accrued severance and other expenditures related to
the committed consolidations in the following year are not significant.

Other Expense

Other expense, net, in 1997 increased $1.2 million compared to 1996. The
decrease of $1.0 million in the actuarial expense for post-retirement benefits
other than pensions was more than offset by increases in miscellaneous other
expenses. Other expense, net, in 1996 and 1995 were similar amounts with the
increase in 1996 of $0.7 million in actuarial expense for post-retirement
benefits offset by an increase in other income.

Interest Expense

Interest expense increased $0.4 million in 1997 compared to 1996 and
decreased $0.6 million in 1996 as compared to 1995. The increase in 1997 was
primarily attributable to higher levels of short-term debt at international
locations, partially offset by decreases in industrial development bonds. The
decrease in 1996 versus 1995 is primarily due to lower levels of outstanding
debt.

Income Tax Expense

The effective tax rate decreased from 64.1% in 1996 to 45.3% in 1997. The
1996 rate was higher than normal due to the asset write-down which included
the write-off of nondeductible goodwill. Excluding the impact of this write-
down, the effective rate was 48.0%. The decrease in the effective rate from
48.0% in 1996 to 45.3% in 1997 was primarily attributable to the increase in
income in 1997 reducing the impact of nondeductible goodwill on the effective
tax rate.

I-8
<PAGE>

Net Income

Net income in 1997 increased to $65.6 million from $27.5 million in 1996.
The increase was due to lower nonrecurring charges in 1997. The effective tax
rate increased to 64.1% in 1996 from 46.7% in 1995, primarily due to the
write-down of goodwill that was nondeductible for income tax purposes. Net
income in 1996 decreased to $27.5 million from $90.3 million in 1995,
primarily due to the nonrecurring charges in 1996.

LIQUIDITY AND CAPITAL RESOURCES

Operating Working Capital (For purposes of this discussion, operating working
capital is defined as receivables and inventories less accounts payable)

During the first nine months of 1998, operating working capital increased
$31.6 million. A $27.5 million increase in receivables was the primary reason
for the higher operating working capital.

In 1997, operating working capital decreased $1.2 million as a result of a
$29.5 million decrease in accounts receivable, a $12.6 million increase in
inventories and a $15.7 million decrease in accounts payable. The decrease in
accounts receivable reflects the lower sales in the fourth quarter of 1997
compared to 1996 and an increase in the allowance for doubtful accounts in
1997 for a major customer who filed for bankruptcy in the first quarter of
1998. The increase in inventories relates to a build up in inventories to
support customer service during the implementation of integrated business
systems during 1997 and 1998 at one of Cooper Automotive's divisions. In 1996,
operating working capital increased $8.3 million as a result of an increase in
accounts receivable of $28.8 million, a decrease in inventory of $1.8 million
and an increase in accounts payable of $18.7 million. The increase in accounts
receivable reflects higher sales in the fourth quarter of 1996 compared to
1995 and an increase in days receivables were outstanding in 1996.

Cash Flow Provided from Operating Activities

During the first nine months of 1998, net cash provided by operating
activities totaled $104.8 million. These funds were primarily used to finance
$43.7 million of capital expenditures and net financing activities of $36.9
million. During the first nine months of 1997, net cash provided by operating
activities of $107.9 million was used to finance capital expenditures of $58.7
million, a small acquisition of $12.2 million and net financing activities of
$26.8 million.

Net cash provided by operating activities during the year ended December 31,
1997 totaled $157.5 million. These funds were used to finance net cash
outflows for acquisitions of $20.1 million and capital expenditures of $78.4
million. Net cash provided by operating activities during the year ended
December 31, 1996 totaled $173.6 million. The cash generated from operating
activities was utilized to finance acquisitions of $55.4 million and capital
expenditures of $87.1 million. Net cash flows provided by operating activities
during the year ended December 31, 1995 totaled $188.9 million. This cash flow
was used to fund acquisitions of $8.9 million and capital expenditures of
$85.7 million.

In connection with accounting for business combinations utilizing the
purchase accounting method, Cooper Automotive records, to the extent
appropriate, accruals for the costs of closing duplicate facilities, severing
redundant personnel and integrating the acquired business into existing Cooper
Automotive operations. Cash flow from operating activities for each of the
three years in the periods ended December 31, 1997, is reduced by the amounts
expended on the various accruals established in connection with each
acquisition. At December 31, 1997, Cooper Automotive had accruals totaling
$19.8 million related to these activities. Cooper Automotive spent $7.1
million in the first nine months of 1998 and $4.4 million, $20.7 million and
$39.1 million in 1997, 1996 and 1995, respectively. Spending for the balance
of 1998 and future years is not expected to be at the 1995 and 1996 levels, as
most of the major projects related to earlier acquisitions have been completed
and recent acquisitions do not involve significant restructuring activities.

I-9
<PAGE>

For purposes of Cooper Automotive's historical financial statements,
identifiable debt was allocated to Cooper Automotive during each period with
all of Cooper Automotive's combined positive or negative cash flows being
treated as cash transferred to or from Cooper. The specifically identifiable
industrial revenue bonds (the "IRB") of $1.5 million at September 30, 1998 and
$3.5 million and $7.0 million at December 31, 1997 and 1996, respectively, and
specifically identifiable international debt was assigned to Cooper
Automotive. Cooper Automotive also has international short-term borrowing
facilities under which $35.5 million and $6.1 million was outstanding at
December 31, 1997 and 1996, respectively. The outstanding balance of the
international short-term borrowings at September 30, 1998 was $2.5 million.

Capital Expenditures and Commitments

Capital expenditures on projects to reduce product costs, improve product
quality, increase manufacturing efficiency and operating flexibility, or
expand product capacity were $43.7 million during the first nine months of
1998, $78.4 million in 1997, $87.1 million in 1996 and $85.7 million in 1995.
Projected capital expenditures for 1998 are anticipated to approximate 1997
expenditures. The 1998 anticipated capital spending represents approximately
41% for various cost-reduction and capacity-maintenance projects, including
machinery and equipment modernization and enhancement and computer hardware
and software projects, 35% for capacity expansion, 7% related to environmental
matters and 17% for other items.

Foreign Currency Risk

Cooper Automotive uses forward foreign currency exchange contracts to reduce
the risk associated with changes in the exchange rates for firm commitments
and anticipated sales or purchases where a product is manufactured or
purchased in one country and sold or consumed in the manufacturing process in
another country. Cooper Automotive's policy is to hedge firm commitments to
eliminate this risk if natural hedges do not exist. Anticipated sales or
purchases are hedged at the discretion of the operating business.
Substantially all of Cooper Automotive's forward contracts expire within one
year. At December 31, 1997, insignificant amounts of anticipated sales and
purchases were hedged. Management believes that the effects of currency
movements on the respective underlying hedged transactions offset any gain or
loss on forward exchange contracts.

COOPER ASBESTOS LIABILITY

Companies within Cooper Automotive are among a large number of defendants in
a number of lawsuits brought by claimants alleging injury due to exposure to
asbestos. Federal-Mogul believes the relevant entities have substantial
defenses to liability and adequate insurance coverage for defense and
indemnity. While the outcome of litigation cannot be predicted with certainty,
management believes that asbestos claims pending against companies within
Cooper Automotive as of September 30, 1998 will not have a material effect on
Federal-Mogul's financial position.

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. Cooper Automotive
has established teams that have completed awareness programs and assessment
projects to address the Year 2000 issue including information technology
("IT") and non-IT systems. Cooper Automotive's Moog Division is implementing
new enterprise systems, and the Cooper Automotive Division is revising or
upgrading existing software so that its computer systems will properly utilize
dates beyond December 31, 1999. Cooper Automotive presently believes that with
modifications to existing software and conversion to new software and systems,
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 cause production interruptions that could have a material impact on the
operations of Cooper Automotive.

Cooper Automotive 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 Cooper Automotive

I-10
<PAGE>

expects a successful resolution of all issues, there can be no guarantee that
the systems of other companies on which the Cooper Automotive 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 Cooper
Automotive's systems, would not have a material adverse effect on Cooper
Automotive. Cooper has determined it has no exposure to contingencies related
to the Year 2000 issue for products it has sold.

Cooper Automotive has contracts in place with external resources and has
allocated internal resources to reprogram or replace and test the software and
systems for Year 2000 modifications. Cooper Automotive's management believes
that, at December 31, 1997, the business was greater than fifty percent
complete in its efforts to convert software or install systems that are Year
2000 compliant. While most efforts are anticipated to be completed by the end
of 1998, it is likely that certain efforts will be delayed into early 1999.
The total cost of the Year 2000 project is estimated to be approximately $41
million and is being funded through operating cash flows. Of the total project
cost, approximately $36 million is attributable to the purchase of new
software and systems which will be capitalized. The remaining $5 million
represents maintenance and repair of existing systems and will be expensed as
incurred. Cooper Automotive expects the majority of the costs will be in 1998,
and any remaining costs incurred in 1999 to be immaterial. As of September 30,
1998, Cooper Automotive had incurred and expensed the substantial majority of
the $5 million estimated costs related to the completed awareness program and
assessment project and the implementation of the remediation plan.

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

I-11
<PAGE>

INDEX TO COOPER AUTOMOTIVE
FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors.......................................... I-13
Combined Income Statements for the three years ended December 31, 1997.. I-14
Combined Balance Sheets as of December 31, 1997 and 1996................ I-15
Combined Statements of Cash Flows for the three years ended December 31,
1997................................................................... I-16
Notes to Combined Financial Statements.................................. I-17
Unaudited Combined Income Statements for the Nine Months Ended September
30, 1998 and 1997...................................................... I-31
Unaudited Combined Balance Sheet as of September 30, 1998............... I-32
Unaudited Combined Statements of Cash Flows for the Nine Months Ended
September 30, 1998 and 1997............................................ I-33
Notes to Unaudited Combined Financial Statements........................ I-34
</TABLE>

I-12
<PAGE>

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Cooper Industries, Inc.

We have audited the accompanying combined balance sheets of the Cooper
Automotive and Moog Automotive Divisions (the "Automotive Divisions") of
Cooper Industries, Inc. (the "Company") as of December 31, 1997 and 1996, and
the related combined income statements and statements of cash flows for each
of the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of the Automotive
Divisions at December 31, 1997 and 1996, and the combined results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.

/s/ Ernst & Young LLP

Houston, Texas
October 1, 1998

I-13
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

COMBINED INCOME STATEMENTS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1997 1996 1995
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues............................................ $1,873.2 $1,903.2 $1,758.8
Cost of sales....................................... 1,294.4 1,316.9 1,215.9
Selling and administrative expenses................. 354.8 360.2 326.1
Goodwill amortization............................... 32.7 33.6 32.9
Nonrecurring charges................................ 55.9 102.0 --
Other expense, net.................................. 14.4 13.2 13.2
Interest expense.................................... 1.1 0.7 1.3
-------- -------- --------
Income before income taxes........................ 119.9 76.6 169.4
Income taxes........................................ 54.3 49.1 79.1
-------- -------- --------
Net income........................................ $ 65.6 $ 27.5 $ 90.3
======== ======== ========
</TABLE>

The Notes to Combined Financial Statements are an integral part of these
statements.

I-14
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1996
-------- --------
(IN MILLIONS)
<S> <C> <C>
ASSETS
Cash and cash equivalents.................................... $ 1.5 $ 3.3
Receivables (net of allowance for doubtful accounts of $17.1
million and $5.7 million)................................... 382.8 412.3
Inventories.................................................. 434.5 421.9
Deferred income taxes........................................ 58.0 43.7
Other........................................................ 27.5 30.2
-------- --------
Total current assets....................................... 904.3 911.4
-------- --------
Property, plant and equipment, less accumulated depreciation. 525.5 533.3
Intangibles, less accumulated amortization................... 1,110.3 1,138.5
Deferred income taxes and other assets....................... 79.5 76.0
-------- --------
Total assets............................................... $2,619.6 $2,659.2
======== ========
LIABILITIES AND NET ASSETS
Short-term debt, including current portion of long-term debt. $ 35.5 $ 6.1
Accounts payable............................................. 171.4 187.1
Accrued liabilities.......................................... 222.7 219.0
Accrued income taxes......................................... 2.0 7.5
-------- --------
Total current liabilities.................................. 431.6 419.7
-------- --------
Long-term debt............................................... 3.6 7.1
Postretirement benefits other than pensions.................. 316.1 319.0
Other long-term liabilities.................................. 63.7 63.8
Net assets................................................... 1,804.6 1,849.6
-------- --------
$2,619.6 $2,659.2
======== ========
</TABLE>

The Notes to Combined Financial Statements are an integral part of these
statements.

I-15
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
---------------------
1997 1996 1995
----- ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income........................................... $65.6 $ 27.5 $ 90.3
Adjustments to reconcile to net cash provided by
operating activities:
Depreciation expense................................. 64.9 67.5 66.2
Goodwill amortization................................ 32.7 33.6 32.9
Deferred income taxes................................ (9.4) 2.3 50.5
Nonrecurring asset write-down (1).................... 43.1 85.3 --
Changes in assets and liabilities: (2)
Receivables........................................ 9.3 (20.7) 2.0
Inventories........................................ (19.9) 7.6 23.5
Accounts payable and accrued liabilities........... (27.7) (15.4) (46.7)
Accrued income taxes............................... (4.7) 13.6 (6.3)
Other assets and liabilities, net.................. 3.6 (27.7) (23.5)
----- ------ ------
Net cash provided by operating activities........ 157.5 173.6 188.9
----- ------ ------
Cash flows from investing activities:
Cash paid for acquired businesses.................... (20.1) (55.4) (8.9)
Capital expenditures................................. (78.4) (87.1) (85.7)
Proceeds from sales of property, plant and equipment. 3.1 9.9 6.9
----- ------ ------
Net cash used in investing activities............ (95.4) (132.6) (87.7)
----- ------ ------
Cash flows from financing activities:
Net short-term borrowings (repayments)............... 30.6 0.5 (3.6)
Repayments of long-term debt......................... (3.5) (1.4) (6.5)
Transfers to Cooper Industries, Inc.................. (93.6) (37.4) (98.7)
----- ------ ------
Net cash used in financing activities............ (66.5) (38.3) (108.8)
----- ------ ------
Effect of exchange rate changes on cash and cash
equivalents........................................... 2.6 (1.0) 1.7
----- ------ ------
Increase (decrease) in cash and cash equivalents....... (1.8) 1.7 (5.9)
Cash and cash equivalents, beginning of year..... 3.3 1.6 7.5
----- ------ ------
Cash and cash equivalents, end of year........... $ 1.5 $ 3.3 $ 1.6
===== ====== ======
</TABLE>
- --------
(1) Includes $12.5 million allowance for doubtful accounts in 1997 for a
customer who filed for reorganization under Chapter 11 of the U.S.
Bankruptcy Code in the first quarter of 1998.
(2) Net of the effects of acquisitions, divestitures and translation.

The Notes to Combined Financial Statements are an integral part of these
statements. See Note 18 for information on noncash investing and financing
activities.

I-16
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 1: AUTOMOTIVE DIVISIONS

The accompanying financial statements reflect a combination of the assets,
liabilities and operations of the Cooper Automotive and Moog Automotive
Divisions (the "Automotive Divisions") of Cooper Industries, Inc. ("Cooper").
Historically, the Automotive Divisions have been included in the consolidated
financial statements of Cooper on a divisional basis. The divisional basis
includes separate operating units in the United States and separate legal
entities or separate operating units of a holding company in international
locations. The business units that comprise the Automotive Divisions
(including the Automotive Divisions' headquarters) operate with complete
financial and operations staff on a decentralized basis. Cooper provides
certain centralized services for employee benefits administration, cash
management, risk management, legal services, public relations, domestic tax
reporting and internal and external audit. Cooper bills the Automotive
Divisions for all direct costs incurred on behalf of the Automotive Divisions.
General corporate, accounting, tax, legal and other administrative costs that
are not directly attributable to the operations of the Automotive Divisions
have been allocated based on a ratio of the Automotive Divisions' revenues to
Cooper's consolidated revenues. Management believes that this allocation
method provides the Automotive Divisions with a reasonable amount of such
expenses.

The accompanying combined financial statements include the accounts of the
Automotive Divisions as described above. These statements are presented as if
the Automotive Divisions had existed as an entity separate from its parent,
Cooper, during the period presented and include the assets, liabilities,
revenues and expenses that are directly related to the Automotive Divisions'
operations. Because all of the Automotive Divisions' domestic results and, in
certain cases, foreign results were included in the consolidated financial
statements of Cooper on a divisional basis, there are no separate meaningful
historical equity accounts for the Automotive Divisions.

In addition to the domestic debt related to industrial revenue bonds, the
Automotive Divisions' separate international debt and related interest expense
have been included in the combined financial statements. Because the
Automotive Divisions are fully integrated into Cooper's worldwide cash
management system, all of their cash requirements are provided by Cooper and
any excess cash generated by the Automotive Divisions is transferred to
Cooper.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Combination: The combined financial statements include the
accounts of the Cooper Automotive and Moog Automotive Divisions of Cooper,
which comprised Cooper's Automotive Products Segment. All transactions between
the two divisions have been eliminated. Affiliated companies are accounted for
on the equity method where the Automotive Divisions own more than 20% but less
than 50% of the affiliate unless significant economic, political or
contractual considerations indicate that the cost method is appropriate.

Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Cash Equivalents: For purposes of the combined statements of cash flows, all
investments purchased with original maturities of three months or less are
considered cash equivalents.

I-17
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

Inventories: Inventories are carried at cost or, if lower, net realizable
value. Cost is determined using the first-in, first-out (FIFO) method.

Property, Plant and Equipment: Property, plant and equipment are stated at
cost. Depreciation is provided over the estimated useful lives of the related
assets using primarily the straight-line method. This method is applied to
group asset accounts, which in general have the following lives: buildings --
10 to 40 years; machinery and equipment -- 3 to 20 years; and tooling, dies,
patterns and other -- 5 to 10 years.

Intangibles: Intangibles consist primarily of goodwill related to purchase
acquisitions. Goodwill is being amortized over 40 years from the respective
acquisition dates. The carrying value of goodwill is reviewed at the lowest
level feasible whenever there are indications that the goodwill may be
impaired. If this review indicates that goodwill will not be recoverable, as
determined based on undiscounted cash flows over the remaining amortization
periods, the carrying value of the goodwill will be reduced by the estimated
shortfall in discounted cash flows.

Derivative Financial Instruments: On a recurring basis, foreign currency
forward exchange contracts and commodity contracts are entered into to reduce
risks of adverse changes in foreign exchange rates and commodity prices. All
contracts are hedges of actual or anticipated transactions with the gain or
loss on the contract recognized in the same period and in the same category of
income or expense as the underlying hedged transaction. The Automotive
Divisions do not enter into speculative derivative transactions or hedges of
anticipated transactions unless there is a high probability the transactions
will occur. Due to the short term of contracts and a restrictive policy,
contract terminations or anticipated transactions that do not occur are rare
and insignificant events that are accounted for through income in the period
they occur.

NOTE 3: NONRECURRING CHARGES

During 1997, the Automotive Divisions incurred charges of $43.4 million
($26.5 million after income taxes) for actions management committed to during
the period after concluding an evaluation of certain sales, marketing and
distribution activities and information systems relating to year 2000
compliance efforts. The 1997 charges include adjustments to the carrying value
of assets of $30.6 million and accruals for obligations for replaced systems
and facility consolidations of $12.8 million. Nonrecurring charges in 1997
also include $12.5 million ($7.6 million after income taxes) related to a
customer that filed bankruptcy subsequent to December 31, 1997.

The Automotive Divisions have begun a consolidation of certain sales,
marketing and distribution activities. Adjustments to the carrying value of
assets and accruals were recorded for projects committed to by management.
Severance and certain other costs related to projects committed to by
management are not expensed until the affected employees are notified. A
majority of the consolidations have been announced and such costs were accrued
and expensed during 1997. The remaining committed but unannounced
consolidations are not anticipated to result in significant additional
expenses.

During 1997, Cooper began negotiations with Standard Motor Products, Inc.
("SMP") to exchange the Moog Automotive Division's temperature control
business for the brake products business owned by SMP. The 1997 nonrecurring
charge includes adjustments to the carrying value of the assets of the Moog
Automotive Division's remanufacturing businesses, including a portion of the
temperature control business, which were in the process of being divested.
Effective March 28, 1998, the Automotive Divisions completed the exchange of
the automotive temperature control business for the brake products business of
Standard Motor Products. For accounting purposes, the exchange transaction is
recorded as the sale of the Automotive Divisions' temperature control business
and the purchase of the Standard Motor Products' brake business. The fair
market values of the temperature control business assets were equal to the net
book value of the assets after the write-down of the

I-18
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

assets in 1997. The acquisition cost of the brake business assets was
approximately $81 million, subject to adjustment based on the actual book
value of certain assets at the acquisition date. In February 1998, the
Automotive Divisions also completed the sale of the constant velocity joint
remanufacturing business for approximately $4 million.

During 1997, the Automotive Divisions also assessed the impact of existing
system capabilities to function at the turn of the century. The Moog
Automotive Division is implementing new enterprise systems, and the Cooper
Automotive division is revising or upgrading existing software to be year 2000
compliant. The Moog Division began the rollout of new enterprise-wide software
in 1997 and anticipates completion of the rollout in 1998. Where possible,
businesses have abandoned homegrown or highly customized applications and
purchased year 2000 compliant replacements or upgrades. In some situations,
operations within a business abandoned existing software and migrated to
consolidated hardware and software that is year 2000 compliant. The Automotive
Divisions recorded a $15.1 million charge in 1997 primarily related to the
adjustment in the carrying value of abandoned hardware and software. While
depreciation and amortization are reduced by the effect of the write-down,
depreciation and amortization of new systems and equipment, as well as
expenses incurred to revise current software to be year 2000 compliant, and
implementation costs of new systems, are likely to exceed the reduction in
depreciation and amortization in most future periods.

During the third quarter of 1996, the Automotive Divisions completed a
strategic review of their brake business, resulting in a write-down of
approximately 21% of the long-lived assets of the business. The Wagner brake
product lines, acquired as part of the McGraw-Edison acquisition in 1985, were
subjected to intense competitive pricing and anticipated profitability
improvements during 1996 were not being realized. As a result of the review of
the Wagner brake products, the Automotive Divisions replaced Wagner technology
with technology acquired in the 1994 acquisition of Abex Friction Products.
Based on the strategic review, the Automotive Divisions concluded that the
projected undiscounted cash flows of certain Wagner product lines would not
recover the carrying value of the long-lived assets and goodwill associated
with these product lines. Accordingly, the Automotive Divisions recorded an
$85.3 million write-down ($64.4 million net of income taxes), including $31.5
million in goodwill, in 1996. The write-down reduced depreciation and
amortization costs by approximately $3.6 million, net of tax, in 1997. The
Automotive Divisions have incurred expenses executing the revised brake
strategy, which have offset some of the benefit of the reduced depreciation
and amortization in 1997.

During 1996, the Automotive Divisions initiated a strategic review of most
of their businesses. As a result of those actions, the Automotive Divisions
incurred nonrecurring charges of $16.7 million ($10.2 million net of income
taxes) during 1996 primarily related to costs incurred on facility closings
and consolidations. The Automotive Divisions anticipate future cost savings
from the facility closings and consolidations; however, the amounts are not
quantifiable with any degree of accuracy. The nonrecurring charges of $16.7
million have an insignificant effect on future earnings, and expenditures
beyond 1996 were insignificant.

NOTE 4: ACQUISITIONS AND DIVESTITURES

The Automotive Divisions completed two product-line acquisitions in 1997 and
1996 and one small product-line acquisition in 1995. The 1997 acquisitions had
an aggregate cost of $20.1 million and $14.0 million of goodwill was recorded,
on a preliminary basis, with respect to the acquisitions. The total cost of
the 1996 acquisitions was approximately $54.1 million and $36.1 million of
goodwill was recorded with respect to the acquisitions. The 1995 product-line
acquisition had a cost of $10.1 million. A total of $1.4 million of goodwill
was recorded with respect to the acquisition.

The acquisitions have been accounted for as purchases and the results of the
acquisitions are included in the combined income statements since the
respective acquisition dates.

I-19
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 5: INVENTORIES

<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1997 1996
------ ------
(IN MILLIONS)
<S> <C> <C>
Raw materials............................................. $103.2 $101.2
Work-in-process........................................... 61.1 56.4
Finished goods............................................ 282.5 272.2
Perishable tooling and supplies........................... 35.9 34.7
------ ------
482.7 464.5
Inventory valuation allowances............................ (48.2) (42.6)
------ ------
Net inventories....................................... $434.5 $421.9
====== ======
</TABLE>

NOTE 6: PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLES

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1996
-------- --------
(IN MILLIONS)
<S> <C> <C>
Property, plant and equipment:
Land and land improvements.......................... $ 21.6 $ 22.1
Buildings........................................... 195.0 189.3
Machinery and equipment............................. 488.3 446.9
Tooling, dies and patterns.......................... 57.7 47.5
All other........................................... 80.7 102.0
Construction in progress............................ 55.3 35.5
-------- --------
898.6 843.3
Accumulated depreciation............................ (373.1) (310.0)
-------- --------
$ 525.5 $ 533.3
======== ========
Intangibles:
Goodwill............................................ $1,316.2 $1,317.2
Other............................................... 5.7 3.0
-------- --------
1,321.9 1,320.2
Accumulated amortization............................ (211.6) (181.7)
-------- --------
$1,110.3 $1,138.5
======== ========
</TABLE>

NOTE 7: ACCRUED LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1997 1996
------ ------
(IN MILLIONS)
<S> <C> <C>
Salaries, wages and employee benefit plans................. $ 51.1 $ 59.7
Commissions and customer incentives........................ 49.6 51.9
Facility integration of acquired businesses................ 19.8 23.5
Product and environmental liability accruals............... 11.7 16.6
Other (individual items less than 5% of total current
liabilities).............................................. 90.5 67.3
------ ------
$222.7 $219.0
====== ======
</TABLE>

I-20
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

At December 31, 1997, the Automotive Divisions had accruals of $.9 million
with respect to potential product liability claims and $24.8 million with
respect to potential environmental liabilities, including $14.0 million
classified as a long-term liability, based on the Automotive Divisions'
current estimate of the most likely amount of losses that it believes will be
incurred.

The product liability accrual consists of $.3 million of known claims with
respect to ongoing operations, $.2 million of known claims for previously
divested operations and $.4 million which represents an estimate of claims
that have been incurred but not yet reported. While the Automotive Divisions
are generally self-insured with respect to product liability claims, the
Automotive Divisions have insurance coverage for individual 1997 claims above
$3.0 million. Insurance levels have varied from year to year.

Environmental remediation costs are accrued based on estimates of known
environmental remediation exposures. Such accruals are adjusted as information
develops or circumstances change. The environmental liability accrual includes
$13.5 million related to sites owned by the Automotive Divisions and $11.3
million for retained environmental liabilities related to sites previously
owned by the Automotive Divisions and third-party sites where the Automotive
Divisions were a contributor. Third-party sites usually involve multiple
contributors where the Automotive Divisions' liability will be determined
based on an estimate of the Automotive Divisions' proportionate responsibility
for the total cleanup. The amounts actually accrued for such sites are based
on these estimates as well as an assessment of the financial capacity of the
other potentially responsible parties.

It has been the Automotive Divisions' consistent practice to include the
entire product liability accrual and a significant portion of the
environmental liability accrual as current liabilities, although only
approximately 10-20% of the balance classified as current will be spent on an
annual basis. The annual effect on earnings for product liability is
essentially equal to the amounts disbursed. In the case of environmental
liability, the annual expense is considerably smaller than the disbursements,
since the vast majority of the Automotive Divisions' environmental liability
has been recorded in connection with acquired companies. The change in the
accrual balances from year to year reflects the effect of acquisitions and
divestitures as well as normal expensing and funding.

The Automotive Divisions have not utilized any form of discounting in
establishing its product or environmental liability accruals. While both
product liability and environmental liability accruals involve estimates that
can have wide ranges of potential liability, the Automotive Divisions have
taken a proactive approach and have managed the costs in both of these areas
over the years. The Automotive Divisions do not believe that the nature of
their products, production processes, or materials or other factors involved
in the manufacturing process subject the Automotive Divisions to unusual risks
or exposures for product or environmental liability. The Automotive Divisions'
greatest exposure to inaccuracy in their estimates is with respect to the
constantly changing definitions of what constitutes an environmental liability
or an acceptable level of cleanup.

In connection with acquisitions accounted for using the purchase method of
accounting, the Automotive Divisions record, to the extent appropriate,
accruals for the costs of closing duplicate facilities, severing redundant
personnel and integrating the acquired business into existing operations of
the Automotive Divisions. Significant accruals include plant shut-down and
realignment costs, and facility relocations, and aggregated $19.8 million and
$23.5 million at December 31, 1997 and 1996, respectively.

Amounts expended totaled $4.4 million, $20.7 million and $39.1 million in
1997, 1996 and 1995, respectively. The spending related primarily to
downsizing and consolidating international facilities in Mexico, Venezuela,
Belgium and the United Kingdom totaling $7.4 million and $29.8 million in 1996
and 1995, respectively.

I-21
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 8: LONG-TERM DEBT AND OTHER BORROWING ARRANGEMENTS

<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1997 1996
------ ------
(IN MILLIONS)
<S> <C> <C>
LIBOR + 0.4% industrial revenue bond, due 2019............. $ 3.5 $ 3.5
Variable industrial revenue bond, due 2010................. -- 3.5
Other...................................................... .1 .1
------ ------
Long-term debt............................................. $ 3.6 $ 7.1
====== ======
</TABLE>

Cooper's cash and indebtedness is managed on a worldwide basis from the
Cooper corporate office in Houston, Texas. The majority of the cash provided
by or used by a particular division, including the Automotive Divisions is
provided through this consolidated cash and debt management system. As a
result, the amount of cash or debt historically related to the Automotive
Divisions is not determinable. For purposes of the Automotive Divisions'
historical financial statements, identifiable debt was allocated to the
Automotive Divisions during each year with all of the Automotive Divisions'
positive or negative cash flows being treated as cash transferred to or from
Cooper. The specifically identifiable industrial revenue bonds (the "IRB") and
specifically identifiable international debt was assigned to the Automotive
Divisions. The Automotive Divisions also have international short-term
borrowing facilities under which $35.5 million and $6.1 million was
outstanding at December 31, 1997 and 1996, respectively. In January 1998,
$23.0 million of the December 31, 1997 international short-term borrowings
amount was repaid.

The industrial revenue bond principal is payable at maturity in 2019. The
future net minimum lease payments under capital leases and obligations under
noncancelable operating leases are not significant.

For purposes of the Automotive Divisions' historical financial statements,
interest expense has been computed using the actual interest rate with respect
to the IRB and international short-term borrowings. Total interest related to
long-term debt and short-term debt paid during 1997, 1996 and 1995 was $1.1
million, $.8 million and $1.4 million, respectively.

NOTE 9: NET ASSETS

Changes in net assets during the three years ended December 31, 1997 were as
follows:

<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C>
Balance at December 31, 1994............................... $1,894.3
Minimum pension liability adjustment, net of tax......... (6.2)
Translation adjustment, net of tax....................... (18.3)
Free cash flow transferred to Cooper..................... (98.7)
Net income............................................... 90.3
--------
Balance at December 31, 1995............................... 1,861.4
Minimum pension liability adjustment, net of tax......... (.5)
Translation adjustment, net of tax....................... (1.4)
Free cash flow transferred to Cooper..................... (37.4)
Net income............................................... 27.5
--------
Balance at December 31, 1996............................... 1,849.6
Minimum pension liability adjustment, net of tax......... 4.0
Translation adjustment, net of tax....................... (21.0)
Free cash flow transferred to Cooper..................... (93.6)
Net income............................................... 65.6
--------
Balance at December 31, 1997............................... $1,804.6
========
</TABLE>

Intercompany transactions are principally cash transfers between the
Automotive Divisions and Cooper.

I-22
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 10: COOPER STOCK OPTIONS AND EMPLOYEE STOCK PURCHASE PLAN

Under Cooper stock option plans, key employees of the Automotive Divisions
were granted options to purchase Cooper Common stock at no less than 100% of
the market price on the date the option is granted. Options generally become
exercisable ratably over a three-year period commencing one year from the date
of grant and have a maximum term of ten years. The plans also provide for the
granting of performance-based stock awards to certain key executives.

Participants in the Cooper Employee Stock Purchase Plan receive an option to
purchase Cooper Common stock at a price that is the lesser of 90% of the
market value on the offering date or 100% of the market value on the purchase
date. On September 8, 1997, a total of 169,878 shares were sold to employees
of the Automotive Divisions at $35.33 per share. At December 31, 1997,
subscriptions from employees of the Automotive Divisions for the purchase of
220,860 shares of Cooper Common stock were outstanding at $45.68 per share or,
if lower, the average market price on September 10, 1999, which is the
purchase date.

Cooper follows the intrinsic value method of accounting for stock options
and performance-based stock awards as prescribed by Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. Accordingly, no compensation expense is recognized in the
Automotive Divisions' combined income statements under Cooper's stock option
plans or Employee Stock Purchase Plan.

I-23
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 11: INCOME TAXES

Income taxes summarized below are provided as if the Automotive Divisions
were filing a separate tax return.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
---------------------
1997 1996 1995
------ ----- ------
(IN MILLIONS,
EXCEPT FOR
PERCENTAGES)
<S> <C> <C> <C>
Components of income before income taxes:
U.S. operations.................................. $100.4 $41.0 $140.0
Foreign operations............................... 19.5 35.6 29.4
------ ----- ------
Income before income taxes....................... $119.9 $76.6 $169.4
====== ===== ======
Components of income tax expense:
Current:
U.S. Federal................................... $ 41.6 $19.3 $ 17.1
U.S. state and local........................... 11.0 6.0 6.2
Foreign........................................ 11.1 21.5 5.3
------ ----- ------
63.7 46.8 28.6
------ ----- ------
Deferred:
U.S. Federal................................... (8.0) 6.5 37.9
U.S. state and local........................... (1.0) 1.9 6.8
Foreign........................................ (.4) (6.1) 5.8
------ ----- ------
(9.4) 2.3 50.5
------ ----- ------
Income tax expense............................. $ 54.3 $49.1 $ 79.1
====== ===== ======
Effective tax rate reconciliation:
U.S. Federal statutory rate...................... 35.0% 35.0% 35.0%
State and local income taxes..................... 4.4 3.5 4.0
Foreign statutory rate differential.............. (1.0) (2.7) (1.3)
Nondeductible goodwill........................... 8.9 13.8 9.2
Automotive asset goodwill write-down............. -- 16.1 --
Foreign Sales Corporation........................ (.6) (1.2) (.5)
Tax credits...................................... (1.3) (.3) --
Other............................................ (.1) (.1) .3
------ ----- ------
Effective tax rate............................... 45.3% 64.1% 46.7%
====== ===== ======
Total income taxes paid...................... $ 40.7 $53.4 $ 67.0
====== ===== ======
</TABLE>

The Automotive Divisions pay taxes to, and receive refunds from Cooper which
in turn pays or receives the taxes from the various taxing authorities.

I-24
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1997 1996
------- ------
(IN MILLIONS)
<S> <C> <C>
Components of deferred tax liabilities and assets:
Deferred tax liabilities:
Property, plant and equipment and intangibles....... $ (91.0) $(82.0)
Inventories......................................... (3.9) (4.2)
Employee medical program funding.................... (2.5) (4.0)
Employee stock ownership plan....................... (3.9) (5.6)
Pension plans....................................... (3.5) (3.3)
------- ------
Total deferred tax liabilities.................... (104.8) (99.1)
------- ------
Deferred tax assets:
Postretirement benefits other than pensions......... 124.0 125.1
Accrued liabilities................................. 75.2 60.4
Minimum pension liability........................... 11.5 14.2
Net operating loss carryforwards.................... 6.6 5.2
Other............................................... 14.5 1.7
------- ------
Total deferred tax assets......................... 231.8 206.6
------- ------
Valuation allowances.................................. (6.6) (5.2)
------- ------
Net deferred tax assets........................... $ 120.4 $102.3
======= ======
</TABLE>

U.S. income taxes have not been provided on $83.0 million of cumulative
undistributed earnings of certain non-U.S. subsidiaries at December 31, 1997.
The Automotive Divisions intend to indefinitely reinvest these earnings in
operations outside the United States.

NOTE 12: PENSION PLANS

As part of Cooper, employees of the Automotive Divisions participate in
numerous pension plans covering substantially all domestic employees and
pension and similar arrangements in accordance with local customs covering
employees at foreign locations. The assets of the various domestic and foreign
plans are maintained in various trusts and consist primarily of equity and
fixed-income securities. Funding policies range from five to thirty years.
Pension benefits for salaried employees are generally based upon career
earnings. Benefits for hourly employees are generally based on a dollar unit,
multiplied by years of service. The amount of expense and the funded status
with respect to the defined benefit pension plans of the Automotive Divisions,
exclusive of the Cooper Salaried Employee Benefit Plan, is set forth in the
table below. In addition, most U.S. salaried employees of the Automotive
Divisions participate in the Cooper Salaried Employee Benefit Plan. The amount
of expense allocated to the Automotive Divisions for this plan was $.7
million, $1.7 million and $2.9 million for the years ended December 31, 1997,
1996 and 1995, respectively. During 1997, 1996 and 1995, the Automotive
Divisions' expense with respect to domestic and foreign defined contribution
plans (primarily related to various groups of hourly employees) amounted to
$5.4 million, $4.4 million and $4.0 million, respectively. The Automotive
Divisions' aggregate pension expense amounted to $13.8 million, $14.3 million
and $14.9 million during 1997, 1996 and 1995, respectively.

I-25
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1997 1996 1995
------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C>
Components of defined benefit plan net pension
expense:
Service cost--benefits earned during the year.... $ 4.3 $ 4.0 $ 3.8
Interest cost on projected benefit obligation.... 19.4 18.9 18.5
Actual return on assets.......................... (27.4) (19.2) (19.0)
Net amortization and deferral.................... 11.4 4.5 4.7
------- ------- -------
Net pension expense............................ $ 7.7 $ 8.2 $ 8.0
======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED BENEFITS
ACCUMULATED BENEFITS EXCEED ASSETS
---------------------- ----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Funded status of the plans at
December 31:
Actuarial present value of:
Vested benefit obligation.... $ (18.6) $ (49.6) $ (226.4) $ (185.5)
========== ========== ========== ==========
Accumulated benefit
obligation.................. $ (18.6) $ (49.6) $ (251.2) $ (206.7)
========== ========== ========== ==========
Projected benefit obligation. $ (21.0) $ (56.5) $ (257.7) $ (206.7)
Plan assets at fair value...... 21.9 57.5 212.4 161.3
---------- ---------- ---------- ----------
Projected benefit obligation
less than (in excess of) plan
assets........................ .9 1.0 (45.3) (45.4)
Unrecognized net loss.......... .1 11.2 48.0 35.5
Unrecognized net (asset)
obligation from adoption date. -- -- .1 .1
Unrecognized prior service
cost.......................... -- .1 5.1 2.3
Adjustment required to
recognize minimum liability... -- -- (33.8) (37.8)
---------- ---------- ---------- ----------
Pension asset (liability) at
end of year................... $ 1.0 $ 12.3 $ (25.9) $ (45.3)
========== ========== ========== ==========
</TABLE>

<TABLE>
<CAPTION>
1997 1996
---------------------- --------------------------
DOMESTIC INTERNATIONAL DOMESTIC INTERNATIONAL
-------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Actuarial assumptions used:
Discount rate.............. 7 1/2% 6-7 1/4% 7 1/2% 7-8 1/4%
Rate of compensation
increase.................. 4 3/4% 4 1/2-6% 4 3/4-5% 5-6%
Expected long-term rate of
return on assets.......... 8 1/2% 7 1/2-9 3/4% 8 1/2-8 3/4% 7 1/2-10%
</TABLE>

NOTE 13: POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

As part of Cooper, benefits provided to employees of the Automotive
Divisions under various postretirement plans other than pensions, all of which
are unfunded, include retiree medical care, dental care, prescriptions and
life insurance, with medical care accounting for approximately 90% of the
total. While the Automotive Divisions have numerous plans, primarily resulting
from extensive acquisition activity, the vast majority of the annual expense
is related to employees who are already retired. In fact, as a result of
actions taken starting in 1989, virtually no active salaried employees
continue to earn retiree medical benefits, and the number of active hourly
employees earning such benefits has been greatly diminished. Additionally, the
Automotive Divisions continue to amend their various plans to provide for
appropriate levels of cost sharing and other cost-control measures.

I-26
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

The components of post-retirement benefit costs, which is included in other
expense, net on the combined income statement, and the accrued post-retirement
benefit liability are presented below.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------
1997 1996 1995
----- ----- -----
(IN MILLIONS)
<S> <C> <C> <C>
Components of postretirement benefit cost:
Service cost--benefits earned during the year........... $ .1 $ .1 $ .2
Interest cost on accumulated postretirement benefit
obligation............................................. 17.7 17.2 20.2
Net amortization and deferral........................... (5.4) (3.9) (7.7)
----- ----- -----
Postretirement benefit cost........................... $12.4 $13.4 $12.7
===== ===== =====
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1997 1996
------ ------
(IN MILLIONS)
<S> <C> <C>
Amounts recognized in the combined balance sheets:
Accumulated postretirement benefit obligation (APBO):
Retirees..................................................... $213.2 $260.6
Employees eligible to retire................................. 13.5 5.0
Other employees.............................................. 8.5 3.0
------ ------
235.2 268.6
Unrecognized prior service costs................................. 7.8 9.8
Unrecognized net gain............................................ 73.1 40.6
------ ------
Accrued postretirement benefit liability................... $316.1 $319.0
====== ======
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------
1997 1996
------------------ --------------------
(IN MILLIONS, EXCEPT PERCENTAGES)
<S> <C> <C>
Actuarial assumptions:
Discount rate...................... 6.75% 7.23%
Ensuing year to 2002 health care
cost trend rate................... 11% ratable to 5.5% 11.5% ratable to 5.5%
Effect of 1% change in health care
cost trend rate:
Increase in APBO................... $19.9 $23.3
Increase in expense................ $ 1.6 $ 1.5
</TABLE>

NOTE 14: COOPER EMPLOYEE SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLANS

All full-time domestic employees of the Automotive Divisions, except for
certain bargaining unit employees, are eligible to participate in the Cooper
Savings Plan ("CO-SAV"). Under the terms of the Plan, employee savings
deferrals are partially matched with contributions of Cooper Common stock
consisting of either an allocation of shares in Cooper's Employee Stock
Ownership Plan ("ESOP") or new shares issued to the ESOP.

The Automotive Divisions' compensation expense with respect to the CO-SAV
plan and the ESOP was $5.8 million, $6.9 million and $6.6 million in 1997,
1996 and 1995, respectively.

NOTE 15: RELATED PARTY TRANSACTIONS

For purposes of the combined financial statements, the intercompany account
between the Automotive Divisions and Cooper has been included as an element of
the Automotive Divisions' net assets. All free cash flows and cash
requirements of the Automotive Divisions are considered to be transferred to
or provided by Cooper and are included in this intercompany account.

I-27
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

The Automotive Divisions sell on third party terms small amounts of
Automotive Divisions' products to Cooper. The amounts involved are
insignificant to the Automotive Divisions.

NOTE 16: DOMESTIC AND INTERNATIONAL OPERATIONS

The Automotive Divisions operate in a single business segment, Automotive
Products. The Automotive Divisions manufacture and distribute spark plugs,
wiper blades, lamps, brake friction materials and other products for use by
the automotive aftermarket and in automobile assemblies. In addition, the
Automotive Divisions manufacture and distribute suspension, steering driveline
and brake system components and material for the automotive aftermarket. No
single customer accounted for 10% or more of combined revenues in 1997, 1996
or 1995.

Transfers between domestic and international operations, principally
inventory transfers, are designed to charge the receiving organization at
third-party arms-length prices that are generally sufficient to recover
manufacturing costs and provide a reasonable return. Export sales to
unaffiliated customers included in domestic sales were $113.3 million, $90.7
million and $85.2 million in 1997, 1996 and 1995, respectively. Of total
export sales, approximately 18% in 1997, 25% in 1996 and 23% in 1995 were to
Asia, Africa, Australia and the Middle East; 39% in 1997, 34% in 1996 and 35%
in 1995 were to Canada and Europe; 43% in 1997, 41% in 1996 and 42% in 1995
were to Latin America.

Domestic and international financial information was as follows:

<TABLE>
<CAPTION>
REVENUES OPERATING EARNINGS IDENTIFIABLE ASSETS
---------------------------- --------------------- ----------------------------
YEAR ENDED DECEMBER
YEAR ENDED DECEMBER 31, 31, DECEMBER 31,
---------------------------- --------------------- ----------------------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
-------- -------- -------- ------ ----- ------ -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Domestic(1)............. $1,464.1 $1,519.3 $1,391.9 $102.6 $41.8 $140.4 $1,996.2 $2,037.2 $2,039.2
-------- -------- -------- ------ ----- ------ -------- -------- --------
International: (1)
Europe................. $ 281.2 $ 293.9 $ 277.1 $ 4.3 $14.2 $ 18.7 $ 443.6 $ 476.4 $ 460.6
Other.................. 179.3 220.6 207.8 15.8 21.1 12.0 282.5 234.7 231.1
-------- -------- -------- ------ ----- ------ -------- -------- --------
Subtotal International. 460.5 514.5 484.9 20.1 35.3 30.7 726.1 711.1 691.7
Eliminations:
Transfers to
International......... (48.1) (86.5) (80.0) (17.8) (23.6) (26.8)
Transfers to Domestic.. (3.3) (44.1) (38.0) (82.5) (65.5) (39.6)
Other.................. (1.7) .1 (.5) (4.5) (2.6) (1.9)
-------- -------- -------- ------ ----- ------ -------- -------- --------
$1,873.2 $1,903.2 $1,758.8 121.0 77.2 170.6 2,617.5 2,656.6 2,662.6
======== ======== ========
Interest expense........ (1.1) (.6) (1.2)
------ ----- ------
Combined income before
income taxes........... $119.9 $76.6 $169.4
====== ===== ======
Investment in uncombined
affiliates............. 2.1 2.6 2.4
-------- -------- --------
Combined assets......... $2,619.6 $2,659.2 $2,665.0
======== ======== ========
</TABLE>
- --------
(1) The 1997 Domestic, Europe and Other operating earnings amounts include
nonrecurring expenses of $43.4 million, $6.7 million and $5.8 million,
respectively. The 1996 Domestic operating earnings amount includes
nonrecurring expenses of $102.0 million.

I-28
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 17: OFF-BALANCE-SHEET RISK, CONCENTRATIONS OF CREDIT RISK AND FAIR VALUE
OF FINANCIAL INSTRUMENTS, INCLUDING DERIVATIVES

As a result of having sales and purchases and other transactions denominated
in currencies other than the functional currencies used by the Automotive
Divisions' businesses, the Automotive Divisions are exposed to the effect of
foreign exchange rate fluctuations on their cash flows and earnings. To the
extent possible, the Automotive Divisions utilize natural hedges to minimize
the effect on cash flows of fluctuating foreign currencies. When natural
hedges are not sufficient, it is the Automotive Divisions' policy to enter
into forward foreign exchange contracts to hedge all significant transactions
for periods consistent with the terms of the underlying transactions. The
Automotive Divisions do not engage in speculative transactions. While forward
contracts affect the Automotive Divisions' results of operations, they do so
only in connection with the underlying transactions. Gains and losses on these
contracts offset losses and gains on the transactions being hedged. The volume
of forward activity engaged in by the Automotive Divisions from year to year
fluctuates in proportion to the level of worldwide cross-border transactions,
and contracts generally have maturities that do not exceed one year. The table
below summarizes, by currency, the contractual amounts of the Automotive
Divisions' forward exchange contracts at December 31, 1997 and 1996.

<TABLE>
<CAPTION>
DECEMBER
31,
----------
1997 1996
---- -----
(IN
MILLIONS)
<S> <C> <C>
Canadian Dollar................................................ $-- $37.8
British Pound Sterling......................................... .8 3.2
Swiss Francs................................................... 2.2 --
German Deutschemark............................................ .1 1.4
Japanese Yen................................................... 1.4 .4
Other.......................................................... .2 1.4
---- -----
$4.7 $44.2
==== =====
</TABLE>

In the normal course of business, the Automotive Divisions have letters of
credit, performance bonds and other guarantees that are not reflected in the
combined balance sheets. In the past, no significant claims have been made
against these financial instruments. Management believes the likelihood of
performance under these instruments is minimal and expects no material losses
to occur in connection with these instruments. The Automotive Divisions' other
off-balance-sheet risks are not material.

Concentrations of Credit Risk

The Automotive Divisions grant credit to their customers, which are
primarily in the automotive industry. Credit risk with respect to trade
receivables is generally diversified due to the large number of entities
comprising the Automotive Divisions' customer base and their dispersion across
many different countries. The Automotive Divisions perform periodic credit
evaluations of their customers and generally do not require collateral.

During the first quarter of 1998, a large customer of the Automotive
Divisions filed for reorganization under Chapter 11 of the U.S. Bankruptcy
Code. The Automotive Divisions had receivables from the customer of
approximately $12.5 million at the time of the filing and accrued a $12.5
million allowance for doubtful accounts in the December 31, 1997 combined
income statement.

Fair Value of Financial Instruments

The Automotive Divisions' financial instruments consist primarily of cash
and cash equivalents, trade receivables, trade payables, debt instruments and
foreign currency forward contracts. The book values of cash and cash
equivalents, trade receivables and trade payables are considered to be
representative of their respective

I-29
<PAGE>

fair values. The Automotive Divisions had approximately $39.1 million and
$13.2 million of debt instruments at December 31, 1997 and 1996, respectively.
The book value of these instruments was approximately equal to fair value at
December 31, 1997 and 1996. Based on year-end exchange rates and the various
maturity dates of the foreign currency forward contracts, the Automotive
Divisions estimate that the contract value is representative of the fair value
of these items at December 31, 1997 and 1996.

NOTE 18: SUMMARY OF NONCASH INVESTING AND FINANCING ACTIVITIES

The following noncash transactions have been excluded from the combined
statements of cash flows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
---------------------
1997 1996 1995
------ ------ -----
(IN MILLIONS)
<S> <C> <C> <C>
Assets acquired and liabilities assumed or incurred
from the acquisition of businesses:
Fair value of assets acquired........................ $ 27.0 $ 65.5 $15.1
Cash used to acquire businesses, net of cash
acquired............................................ (20.1) (55.4) (8.9)
------ ------ -----
Liabilities assumed or incurred.................... $ 6.9 $ 10.1 $ 6.2
====== ====== =====
</TABLE>

NOTE 19: SUBSEQUENT EVENT

On August 17, 1998, Cooper signed an agreement to sell the Automotive
Divisions to Federal-Mogul Corporation for approximately $1.9 billion.

I-30
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

UNAUDITED COMBINED INCOME STATEMENTS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------
1998 1997
-------- --------
(IN MILLIONS)
<S> <C> <C>
Revenues..................................................... $1,400.8 $1,423.8
Cost of sales................................................ 953.6 985.2
Selling and administrative expenses.......................... 259.7 266.7
Goodwill amortization........................................ 24.7 24.5
Nonrecurring charges......................................... -- 43.4
Other expense, net........................................... 7.1 9.2
Interest expense............................................. 0.4 0.8
-------- --------
Income before income taxes................................. 155.3 94.0
Income taxes................................................. 64.4 42.5
-------- --------
Net income................................................. $ 90.9 $ 51.5
======== ========
</TABLE>

The Notes to Unaudited Combined Financial Statements are an integral part of
these statements.

I-31
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

UNAUDITED COMBINED BALANCE SHEET

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
(IN MILLIONS)
<S> <C> <C>
ASSETS
Cash and cash equivalents........................... $ 28.7 $ 1.5
Receivables (net of allowance for doubtful accounts
of $21.1 million and $17.1 million)................ 410.3 382.8
Inventories......................................... 440.6 434.5
Deferred income taxes............................... 54.8 58.0
Other............................................... 25.9 27.5
-------- --------
Total current assets.............................. 960.3 904.3
-------- --------
Property, plant and equipment, less accumulated
depreciation....................................... 509.9 525.5
Intangibles, less accumulated amortization.......... 1,114.8 1,110.3
Deferred income taxes and other assets.............. 120.3 79.5
-------- --------
Total assets...................................... $2,705.3 $2,619.6
======== ========
LIABILITIES AND NET ASSETS
Short-term debt, including current portion of
long-term debt..................................... $ 2.9 $ 35.5
Accounts payable.................................... 173.4 171.4
Accrued liabilities................................. 191.5 222.7
Accrued income taxes................................ 11.1 2.0
-------- --------
Total current liabilities......................... 378.9 431.6
-------- --------
Long-term debt...................................... 1.6 3.6
Postretirement benefits other than pensions......... 308.6 316.1
Other long-term liabilities......................... 61.9 63.7
Net assets.......................................... 1,954.3 1,804.6
-------- --------
$2,705.3 $2,619.6
======== ========
</TABLE>

The Notes to Unaudited Combined Financial Statements are an integral part of
these statements.

I-32
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

UNAUDITED COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
--------------------
1998 1997
--------- ---------
(IN MILLIONS)
<S> <C> <C>
Cash flows from operating activities:
Net income............................................ $ 90.9 $ 51.5
Adjustments to reconcile to net cash provided by
operating activities:
Depreciation expense.................................. 47.7 49.2
Goodwill amortization................................. 24.7 24.5
Deferred income taxes................................. 22.5 (7.3)
Nonrecurring asset write-down......................... -- 27.6
Changes in assets and liabilities: (1)
Receivables......................................... (28.6) (9.9)
Inventories......................................... (28.8) (22.1)
Accounts payable and accrued liabilities............ (26.9) 7.0
Accrued income taxes................................ 8.8 (8.3)
Other assets and liabilities, net................... (5.5) (7.3)
--------- ---------
Net cash provided by operating activities......... 104.8 107.9
--------- ---------
Cash flows from investing activities:
Cash paid for acquired businesses..................... -- (12.2)
Capital expenditures.................................. (43.7) (58.7)
Investment in Carquest Canada Ltd. preferred stock.... (2.6) --
Proceeds from sale of product line.................... 4.0 --
Proceeds from sales of property, plant and equipment.. 1.7 2.2
--------- ---------
Net cash used in investing activities............. (40.6) (68.7)
--------- ---------
Cash flows from financing activities:
Net borrowings (repayments)........................... (32.4) 37.4
Transfers from (to) Cooper Industries, Inc............ (4.5) (64.2)
--------- ---------
Net cash provided by financing activities......... (36.9) (26.8)
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents............................................ (0.1) (0.2)
--------- ---------
Increase in cash and cash equivalents................... 27.2 12.2
Cash and cash equivalents, beginning of period.......... 1.5 3.3
--------- ---------
Cash and cash equivalents, end of period................ $ 28.7 $ 15.5
========= =========
</TABLE>
- --------
(1) Net of the effects of acquisitions, divestitures and translation.

The Notes to Unaudited Combined Financial Statements are an integral part of
these statements.

I-33
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS

NOTE 1. ACCOUNTING POLICIES

Basis of Presentation--The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with United States
generally accepted accounting principles (US GAAP) for interim financial
information and with instructions to Form 10-Q and Article 10 of Regulation S-
X. Accordingly, they do not include all information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for the fair presentation have been included.
Operating results for the nine-month period ended September 30, 1998 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in this document for the
year ended December 31, 1997.

Recently Issued Accounting Standards--In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Financial Instruments and Hedging Activities ("SFAS
No. 133"). SFAS No. 133 requires that all derivatives be recognized as assets
and liabilities and measured at fair value. The accounting for changes in the
fair value of a derivative depends on the intended use of the derivative and
the resulting designation. The SFAS is effective for fiscal years beginning
after June 15, 1999 and early adoption is permitted. The Automotive Divisions
are currently evaluating the effects of the new standard. The Automotive
Divisions do not anticipate that the new standard will have an impact on net
income. However, the new standard requirement to mark to market certain of the
Automotive Divisions' combined financial instruments utilized to hedge
currency and commodity price risks will result in fluctuations in the fair
value being included as a component of net assets, net of tax. Due to the
Automotive Divisions' policies regarding financial instruments, it is not
likely that the adoption of the new standard will have a material effect on
the Automotive Divisions' Combined Balance Sheets.

NOTE 2. DIVESTITURES

Effective March 28, 1998, the Moog Division completed the exchange of its
automotive temperature control business for the brake products business of
Standard Motor Products. In February 1998, the Moog Division completed the
sale of its constant velocity joint remanufacturing business. For accounting
purposes, the exchange transaction is recorded as the sale of the temperature
control business and the purchase of the Standard Motor Products' brake
business. The fair market value of the temperature control business assets was
equal to the net book value of the brake business assets after the write-down
of the temperature control business assets made in the second quarter of 1997.
The acquisition cost of the brake business assets was approximately $79
million, based on the actual book value of certain assets at the acquisition
date. The constant velocity joint remanufacturing business was sold for
approximately $4 million.

NOTE 3. NONRECURRING INCOME AND EXPENSES

During the second quarter of 1997 the Automotive Divisions incurred a charge
of $33.8 million ($20.6 million after income taxes) for actions management
committed to during the quarter after concluding an evaluation of certain
sales, marketing and distribution activities and information systems relating
to year 2000 compliance efforts. The charge included adjustments to the
carrying value of assets of $27.6 million and accruals for continuing
obligations for replaced systems and facility consolidations of $6.2 million.

The Automotive Divisions began a consolidation of certain sales, marketing
and distribution activities in the second quarter of 1997. Adjustments to the
carrying value of assets and accruals were recorded for projects committed to
by management. Severance and certain other costs are not expensed until the
affected employees are notified even though management has committed to the
projects. During the third quarter, the Automotive Divisions incurred charges
of $9.6 million for additional consolidations, including severance on certain
projects accrued for in the second quarter of 1997. The remaining committed
but unannounced consolidations are not expected to result in significant
additional expenses.

I-34
<PAGE>

AUTOMOTIVE DIVISIONS OF COOPER INDUSTRIES, INC.

NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS--(CONCLUDED)

During the second quarter of 1997, the Automotive Divisions also completed
their initial analysis of the impact of existing system capabilities to
function at the turn of the century. The Moog Division is implementing new
enterprise systems and the Cooper Automotive Division is revising or upgrading
existing software. Where possible, businesses have abandoned home-grown or
highly customized applications with purchased, year 2000 compliant
replacements or upgrades. In some situations, operations within a business
abandoned existing software and migrated to consolidated hardware and software
that is year 2000 compliant. The Automotive Divisions recorded a $11.6 million
charge in the second quarter of 1997 related to the adjustment in the carrying
value of abandoned hardware and software. While depreciation is reduced by the
effect of the write-down, depreciation of new systems, as well as expenses
related to revising current software to be year 2000 compliant and
implementation of new systems, are likely to exceed the reduction in
depreciation in most future periods.

NOTE 4. INVENTORIES

<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
------------------
(IN MILLIONS)
<S> <C>
Raw materials.......................................... $107.5
Work-in-process........................................ 71.2
Finished goods......................................... 282.3
Perishable tooling and supplies........................ 36.4
------
497.4
Inventory valuation allowances......................... (56.8)
------
Net inventories...................................... $440.6
======
</TABLE>

NOTE 5. SUMMARY OF NONCASH INVESTING AND FINANCING ACTIVITIES

The following noncash transactions have been excluded from the combined
statements of cash flows:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, 1997
------------------
(IN MILLIONS)
<S> <C>
Assets acquired and liabilities assumed or incurred
from the acquisition of businesses:
Fair value of assets acquired..................... $16.1
Cash used to acquire business..................... (12.2)
-----
Liabilities assumed or incurred..................... $ 3.9
=====
</TABLE>

I-35
<PAGE>

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 June 25, 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.

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 initiated 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 its restructuring, Federal-Mogul closed or sold substantially all of
its retail operations. 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 plc ("T&N"), a U.K. based supplier of engine and transmission
products, for total consideration of approximately (Pounds)1.46 billion ($2.41
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.

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.

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

10
<PAGE>

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,

11
<PAGE>

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

12
<PAGE>

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

13
<PAGE>

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,

14
<PAGE>

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.

15
<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:

Federal-Mogul's Bylaws

Preferred Share Purchase Rights

16
<PAGE>

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.

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 infor-
mation or to make any representations other than those contained or incorpo-
rated by reference in this Prospectus Supplement and the Prospectus in connec-
tion 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. This Prospectus Supplement and the accompanying Prospectus are not an
offer to sell, nor do they seek such an offer to buy, these securities in any
jurisdiction in which such offer or sale is not permitted.

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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
PROSPECTUS SUPPLEMENT
<S> <C>
Prospectus Summary........................................................ S-3
Risk Factors.............................................................. S-15
Forward-Looking Statements................................................ S-18
Use of Proceeds........................................................... S-19
Exchange Rates............................................................ S-19
Recent Acquisitions....................................................... S-20
Price Range of Common Stock and Dividends................................. S-22
Capitalization............................................................ S-23
Unaudited Pro Forma Financial Data: T&N, Fel-Pro and Cooper Automotive.... S-24
Selected Consolidated Financial Data--Federal-Mogul....................... S-39
Selected Consolidated Financial Data--T&N................................. S-41
Selected Consolidated Financial Data--Fel-Pro............................. S-43
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... S-44
Description of Certain Indebtedness....................................... S-66
Business.................................................................. S-69
Management................................................................ S-80
Principal Shareholders.................................................... S-84
Description of Capital Stock.............................................. S-85
Certain United States Tax Consequences to Non-United States Holders....... S-90
Underwriting.............................................................. S-91
Presentation of Financial Information..................................... S-94
Available Information..................................................... S-94
Incorporation of Certain Information by Reference......................... S-95
Legal Matters............................................................. S-95
Experts................................................................... S-95
Annex I: The Cooper Acquisition
Business................................................................. I-1
Selected Financial Data for Cooper Automotive............................ I-5
Management's Discussion and Analysis of Financial Conditions and Results
of Operations........................................................... I-6
Index to Cooper Automotive Financial Statements.......................... I-12
</TABLE>
<TABLE>
<CAPTION>
PROSPECTUS
<S> <C>
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
</TABLE>

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14,000,000 SHARES

FEDERAL-MOGUL CORPORATION

COMMON STOCK

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PROSPECTUS SUPPLEMENT

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BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
SCHRODER & CO. INC.

December 14, 1998

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