UNITED STATES

                         SECURITIES AND EXCHANGE COMMISSION

                                Washington, DC  20549

                                       FORM 10-Q

                       QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)

                          OF THE SECURITIES EXCHANGE ACT OF 1934


For the Period Ended                 September 30, 1997
                       --------------------------------------------

Commission File Number                     1-1511
                       --------------------------------------------

                          FEDERAL-MOGUL CORPORATION
      -----------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

        Michigan                                   38-0533580
-------------------------                --------------------------
(State or other jurisdiction of          (I.R.S. Employer I.D. No.)
incorporation or organization)

  26555 Northwestern Highway, Southfield, Michigan      48034
-----------------------------------------------------------------
     Address of principal executive offices)         (Zip Code)

                        (248) 354-7700
------------------------------------------------------------------
        (Registrant's telephone number, including area code)

                           Not Applicable
------------------------------------------------------------------
        (Former name, former address and former fiscal year,
                     if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports 
required to be filed by Section 13 or15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months, and (2) has been subject to suchfiling 
requirements for the past 90 days.

               Yes        X                 No
                  ----------------            -----------------

Indicate the number of shares outstanding of each of the issuer's classes of 
common stock, as of the latestpracticable date:

            Common Stock - 40,194,443 shares as of November 7, 1997
<PAGE> 2


                       FORWARD-LOOKING STATEMENTS


INFORMATION CONTAINED OR INCORPORATED IN THIS QUARTERLY REPORT ON
FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS WHICH ARE NOT HISTORICAL 
FACTS AND WHICH INVOLVE CERTAIN RISKSAND UNCERTAINTIES AND, ACCORDINGLY, 
ACTUAL RESULTS EVENTS AND PERFORMANCE COULD DIFFER MATERIALLY FROM 
THOSE CONTEMPLATED BY THESE FORWARD-LOOKING STATEMENTS.

<PAGE> 3

PART I - FINANCIAL INFORMATION
------------------------------

Item 1.  Financial Statements


FEDERAL-MOGUL CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings (Unaudited)
<TABLE>
<CAPTION>
                                Three Months Ended         Nine Months Ended
                                   September 30              September 30
                               --------------------     ----------------------
                                        (As Restated)             (As Restated)
                                 1997        1996          1997        1996
                               --------    --------     ----------  ----------
                               (Millions of Dollars, Except Per Share Amounts)

<S>                            <C>         <C>          <C>         <C> 
Net sales                      $  424.2    $  492.4     $1,391.6    $1,551.9
Cost of products sold             321.4       409.2      1,061.4     1,238.0 
                                -------     -------      -------     -------
   Gross margin                   102.8        83.2        330.2       313.9

Selling, general and 
   administrative expenses         74.0        79.7        225.9       243.7
Adjustment of assets held
   for sale to fair value             -         6.4            -         6.4
Reengineering, severance
   and other related charges          -         5.6            -         5.6
Interest expense                    6.5        11.0         25.3        32.8
Interest income                    (2.4)        (.6)        (4.2)       (2.1)
International currency 
   exchange losses                    -          .7            -         3.0
Other, net                         (2.9)         .3         (1.3)        1.4
                                -------     -------      -------     -------
   Earnings (Loss) Before 
      Income Taxes and 
      Extraordinary Item           27.6       (19.9)        84.5        23.1 

Income taxes                       10.2        (7.3)        24.7         8.6
                                -------     -------      -------     -------
   Net Earnings (Loss) Before
      Extraordinary Item           17.4       (12.6)        59.8        14.5

Extraordinary item - loss on 
   early retirement of debt, 
   net of applicable income 
   tax benefit                        -           -          2.6           -
                                -------     -------      -------     -------
   Net Earnings (Loss)             17.4       (12.6)        57.2        14.5

Preferred stock dividends, 
   net of tax benefits               .6         2.2          4.9         6.6
                                -------     -------      -------     -------
   Net Earnings (Loss)
    Available for Common 
    Shares                     $   16.8    $  (14.8)    $   52.3    $    7.9
                                =======     =======      =======     =======

Earnings (Loss) Per Common 
 Share
   Primary
      Income (loss) before
         extraordinary item       $ .45       $(.41)       $1.52       $ .23
      Extraordinary item - 
         loss on early 
         retirement of debt,
         net of applicable
         income tax benefit           -           -         (.07)          -
                                   ----        ----         ----        ----
      Net Earnings (Loss)         $ .45       $(.41)       $1.45       $ .23
                                   ====        ====         ====        ====
   Fully Diluted
      Income (loss) before 
         extraordinary item       $ .40       $(.41)       $1.39       $ .23
      Extraordinary item - 
         loss on early 
         retirement of debt,
         net of applicable 
         income tax benefit           -           -         (.06)          -
                                   ----        ----         ----        ----
      Net Earnings (Loss)         $ .40       $(.41)       $1.33       $ .23
                                   ====        ====         ====        ====
</TABLE>

See accompanying notes.

<PAGE> 4

FEDERAL-MOGUL CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets 

(Millions of Dollars)
<TABLE>
<CAPTION>
                                                   September 30    December 31,
                                                       1997            1996
                                                   ------------    ------------
                                                   (Unaudited)


Assets
<S>                                                  <C>             <C>
Current Assets:
   Cash and equivalents                              $   20.5        $   33.1 
   Accounts receivable (net of allowance for 
      doubtful accounts of $17.1 million and
      $16.3 million)                                    239.4           231.3 
   Inventories                                          291.9           417.0 
   Prepaid expenses and income tax benefits              92.5            81.5 
                                                      -------         -------
      Total Current Assets                              644.3           762.9 

Property, Plant and Equipment                           312.8           350.3 
Goodwill                                                146.3           154.0 
Other Intangible Assets                                  60.7            63.1
Business Investments and Other Assets                   133.0           124.9 
                                                      -------         -------
      Total Assets                                   $1,297.1        $1,455.2 
                                                      =======         =======

Liabilities and Shareholders' Equity

Current Liabilities:
   Short-term debt                                   $   42.1        $  280.1 
   Accounts payable                                     123.0           142.7 
   Accrued compensation                                  45.9            37.6 
   Other accrued liabilities                            192.4           203.4
                                                      -------         -------
      Total Current Liabilities                         403.4           663.8 

Long-Term Debt                                          278.5           209.6 
Postemployment Benefits                                 199.3           207.1 
Other Accrued Liabilities                                67.9            56.2 
                                                      -------         -------
      Total Liabilities                                 949.1         1,136.7 

Shareholders' Equity:
   Series D preferred stock                                 -            76.6 
   Series C ESOP preferred stock                         49.7            53.1 
   Unearned ESOP compensation                           (25.1)          (28.4)
   Common stock                                         200.3           175.7 
   Additional paid-in capital                           350.7           283.5 
   Accumulated deficit                                 (154.6)         (193.0) 
   Currency translation and other                       (73.0)          (49.0)
                                                      -------         -------
      Total Shareholders' Equity                        348.0           318.5 
                                                      -------         -------
      Total Liabilities and Shareholders' Equity     $1,297.1        $1,455.2
                                                      =======         =======
</TABLE>
 
See accompanying notes.

<PAGE> 5


FEDERAL-MOGUL CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>


                                                             Nine Months Ended
                                                               September 30
                                                           --------------------
                                                             1997        1996
                                                           --------    --------
                                                           (Millions of Dollars)

<S>                                                         <C>        <C>
Cash Provided From (Used By) Operating Activities
   Net earnings                                             $ 57.2     $ 14.5
   Adjustments to reconcile net earnings to net cash
      provided from operating activities
         Depreciation and amortization                        40.7       46.4
         Deferred income taxes                                 5.3        (.7) 
         Postemployment benefits                               1.1        1.8
         (Increase) decrease in accounts receivable          (51.2)       8.3 
         Decrease in inventories                              48.2       33.3
         Increase (decrease) in accounts payable               1.1      (12.4)
         Increase in current liabilities and other            34.9       30.2
         Adjustment of assets held for sale to fair value        -        6.4
         Reengineering, severance and other related charges      -        5.6
         Loss on early retirement of debt                      4.1          -
         Payments against restructuring 
            and reengineering reserves                       (15.9)     (13.2)
                                                             -----      -----
      Net Cash Provided From Operating Activities            125.5      120.2

Cash Provided From (Used By) Investing Activities
   Expenditures for property, plant and equipment            (29.9)     (34.7)
   Proceeds from sale of business investments                 78.7       11.0
   Purchases of business investments                             -        (.3)
                                                             -----      -----
      Net Cash Provided From (Used By) Investing Activities   48.8      (24.0)

Cash Provided From (Used By) Financing Activities
   Issuance of common stock                                   12.0         .4
   Fees for early retirement of debt                          (4.1)         -
   Fees related to issuance of debt                           (9.4)         -
   Net decrease in debt                                     (163.6)     (57.6) 
   Dividends                                                 (18.2)     (19.4)
   Other                                                      (3.6)      (3.4)
                                                             -----      -----
      Net Cash Used By Financing Activities                 (186.9)     (80.0)
                                                             -----      -----

      Increase (Decrease) in Cash and Equivalents            (12.6)      16.2

Cash and Equivalents at Beginning of Period                   33.1       19.4
                                                             -----      -----

      Cash and Equivalents at End of Period                 $ 20.5     $ 35.6 
                                                             =====      =====

</TABLE>

See accompanying notes.

<PAGE> 6

FEDERAL-MOGUL CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 1997


1.  BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have 
been prepared in accordance with generally accepted accounting principles for 
interim financial information and with the instructions to Form 10-Q and 
Article 10 of Regulation S-X.  Accordingly, they do not include all of the 
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 a fair presentation have been included.  Operating results for the three- 
and nine-month periods ended September 30, 1997 are not necessarily indicative 
of the results that may be expected for the year ended December 31, 1997.  
For further information, refer to the consolidated financial statements and 
footnotes thereto included in the Company's annual report on Form 10-K/A for 
the year ended December 31, 1996.

2.   EARNINGS PER COMMON SHARE

The computation of primary earnings per share is based on the weighted average 
number of outstanding common shares during the period plus, when their effect 
is dilutive, common stock equivalents consisting of certain shares subject to 
stock options.  Fully diluted earnings per share additionally assumes the 
conversion of outstanding Series C ESOP and Series D preferred stock and the 
contingent issuance of common stock to satisfy the Series C ESOP preferred 
stock redemption price guarantee when their effect is dilutive.  The number 
of contingent shares used in the fully diluted calculation is based on the 
market price of the common stock on September 30, 1997 and the number of 
preferred shares held by the Employee Stock Ownership Plan (ESOP) that were 
allocated to participants'accounts as of September 30 of each of the 
respective years.  

The primary weighted average number of common and equivalent shares outstanding 
(in thousands) was 37,490 and 36,050 for the three- and nine-month periods 
ended September 30, 1997, and 35,097 and 35,088 for the three- and nine-month 
periods ended September 30, 1996.  The fully diluted weighted average number 
of common and equivalent shares outstanding (in thousands) was 42,016 and 
41,839 for the three- and nine-month periods ended September 30, 1997, and 
35,097 and 35,122 for the three- and nine-month periods ended September 30, 
1996, respectively.  

Net earnings used in the computations of primary earnings per share are reduced 
by preferred stock dividend requirements.  Net earnings used in the computation 
of fully diluted earnings per share are reduced by amounts representing the 
preferred stock dividends when their effect is anti-dilutive and amounts 
representing the additional after-tax contribution that would be necessary to 
meet ESOP debt service requirements under an assumed conversion of the Series C 
ESOP preferred stock when their effect is dilutive.

In February 1997, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share".  SFAS No. 
128 is effective for financial statements issued for periods ending after 
December 15, 1997.  The adoption of SFAS No. 128 would not materially impact 
the results of the earnings per share calculation for the three months and the 
nine months ended September 30, 1997 and 1996 and is not expected to materially 
impact the results of the earnings per share calculation for the year ended 
December 31, 1997.

Quarterly dividends of $.12 per common share were declared for both the first, 
second and third quarters of 1997 and 1996.

3.  INVENTORIES

At September 30, 1997 and December 31, 1996, inventories consisted of the 
following:

                                            1997            1996  
                                           ------          ------

          Finished products                $274.9          $417.0 
          Work-in-process                    21.1            28.0 
          Raw materials                      15.3            20.0 
                                            -----           -----
                                            311.3           465.0 
          Reserve for inventory valuation   (19.4)          (48.0)
                                            -----           -----
                                           $291.9          $417.0
                                            =====           ===== 

The $28.6 million decrease in the reserve for inventory valuation resulted 
primarily from the Company's initiative to dispose of slow moving and obsolete 
inventory that was fully reserved and the sales of certain international retail
and wholesale businesses.  As such, the reduction in the inventory reserves 
related to this initiative did not affect the Company's 1997 earnings.

<PAGE> 7
4.   DEBT

In June 1997, the Company entered into a new $350 million multicurrency
revolving  credit facility agreement with a consortium of international banks
which matures  in June 2002.  This new agreement replaces the exiting U.S. and
European  revolving credit facilities and has similar pricing terms.  The
revolving credit  facility contains restrictive covenants that, among other
matters, require the  Company to maintain certain financial ratios.  As of
September 30, 1997, there  were no borrowings outstanding against the revolving
credit facility.  

In April 1997, the Company issued $125 million of 10-year 8.8% senior notes.

5.   ADJUSTMENT OF ASSETS HELD FOR SALE

The Company received $78.7 million in cash for businesses sold in the first 
nine months of 1997, while the purchasers assumed certain liabilities.  The 
results of operations have been included in the Company's consolidated 
statements of earnings through the date of sale for the following transactions.
  
In January 1997, the Company completed the previously announced sale of its 
heavy wall bearing division in Germany and Brazil to Zollern BHW Gleitlager 
GmbH, a member of Fuerstlich Hohenzollernsche Werke Laucherthal GmbH Co.  

On May 13, 1997, the Company completed the previously announced sale of its 
Australian replacement operations to Automotive Components Limited.

On June 3, 1997, the Company completed the previously announced sale of its 
South African replacement operations.  The Company sold the distribution 
operations to Chariots Holding Limited and the retail operations to Lexshell 16 
Investment Holdings (Proprietary) Limited.

The Company continually reviews and updates its impairment reserves related 
to the divestiture of its remaining retail/wholesale replacement operations 
and adjusts the reserve components to approximate the net fair value of its 
remaining businesses held for sale.  There has been no net effect on the 1997 
statement of earnings related to the above events.

6.  INCOME TAXES

During the second quarter of 1997, the Company recognized an income tax benefit 
of $6.8 million related to the sales of the South African and Australian 
businesses.

7.  EXTRAORDINARY ITEM

During the second quarter of 1997, the Company retired $64.7 million in private 
placement debt.  The early retirement of the debt required a make-whole payment 
of $4.1 million, which was recorded as an extraordinary item of $2.6 million, 
net of the related tax benefit.

8.  REDEMPTION OF SERIES D CONVERTIBLE EXCHANGEABLE PREFERRED STOCK

On August 8, 1997, the Company announced its call for the redemption of all 
its outstanding $3.875 Series D Convertible Exchangeable Preferred Stock.  
Upon calling for redemption, these preferred stockholders elected to convert 
each preferred share into 2.778 shares of common stock.  On August 28, 1997, 
the Company issued 4.4 million shares of common stock in exchange for all of 
the outstanding Series D convertible exchangeable preferred stock.

9.  RESTATEMENT

In August 1997, the Company filed a Form 10-K/A which restated the previously 
issued 1996 financial statements for certain charges recorded in 1996.  The 
restatement did not affect the Company's balance sheet at December 31, 1996.  
The corrections primarily pertained to timing in the recognition of the 
provision for doubtful accounts and customer incentive programs, the 
recognition of vendor rebates and the recognition of certain federal income 
tax credits.  The following summarizes the net effect of these adjustments on 
the three and nine-month periods ended September 30, 1996, in millions:

                                                Three Months    Nine Months
                                                    Ended           Ended
                                                September 30    September 30
                                                    1996            1996  
                                                ------------    ------------

   Earnings (loss) before income taxes:
      As previously reported                       $ (27.4)         $ 14.4
      As restated                                    (19.9)           23.1
   Net earnings (loss):
      As previously reported                         (17.3)            9.1
      As restated                                    (12.6)           14.5
   Earnings (loss) per common share:
      As previously reported                          (.56)            .07
      As restated                                     (.41)            .23
   Accumulated deficit at December 31, 1996:
      As previously reported                        (193.0)         (193.0)
      As restated                                   (193.0)         (193.0)

<PAGE> 8

10.  SUBSEQUENT EVENT

T&N Offer:

On October 16, 1997, the Company announced it had made a cash offer to acquire 
all the outstanding common stock of T&N plc for 260 pence per share.  The offer 
values T&N's share capital at $2.4 billion.  In addition, the Company will 
assume the debt of T&N at closing.  The Company will finance the acquisition 
through a committed bank facility from Chase Manhattan Bank.  The Company's 
intention is to put in place a permanent capital structure of a combination 
of equity and debt financing.  

The offer is subject to various conditions customary in the United Kingdom, 
including acceptances of the offer by T&N shareholders and the receipt of all 
applicable regulatory approvals in the United States and Europe.  As part of 
the acquisition process, certain financing, professional and other related 
fees have been and will continue to be incurred in 1997.  These fees have 
been capitalized as incurred and will be accounted for as direct acquisition 
or financing costs once the transaction closes.  Management fully expects the 
acquisition to close, however, in the event the acquisition is not completed, 
these fees would be charged to expense and would materially impact net earnings 
at that time.  The Company may elect to accelerate payment of certain portions 
of the bank facility which would result in an extraordinary charge due to the 
write-off of the financing cost associated with the early retirement of debt.
    
In addition, as part of financing the 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 will be reflected in the results of operations in the fourth quarter of 
1997.  The option's fair value will exceed its cost if the British pound to 
U.S. dollar exchange rate exceeds $1.667 at its expiration date in the first 
quarter of 1998.  At closing on November 10, 1997, the British pound to U.S. 
dollar exchange rate was $1.697.  

Restricted Stock:

In October 1997, the Company met certain share price performance criteria under 
the 1989 Long-Term Incentive Plan which resulted in the recognition of $5.4 
million in compensation expense related to vesting of restricted stock.

<PAGE> 9

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations


THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 1996 

NET SALES

Sales for the third quarter of 1997 were $424.2 million compared to $492.4 
million in the same 1996 quarter.  North American original equipment sales 
were $108.4 million in the third quarter of 1997 compared to $110.9 million 
in 1996.  Excluding the electrical products and ball bearing operation 
divestitures, North American original equipment sales were up 13.8% largely 
due to continued strong sealing systems and engine bearing product demand.  
International original equipment sales decreased 28.0% to $37.2 million from 
$51.7 million in the same 1996 quarter.  Excluding the sale of the heavy wall 
bearing operations in Germany and Brazil and foreign currency effects, 
International original equipment sales increased 13.2% primarily due to 
continued strong sputter bearing demand.  North American replacement sales 
decreased 2.3% to $177.2 million from $181.3 million in the third quarter 
of 1996.  The decrease was attributable to continued weak demand in engine 
products.  International replacement third quarter 1997 sales were $101.4 
million compared to $148.5 million for the third quarter of 1996.  Excluding 
the effects of exchange and the divestitures in Turkey, Australia and South 
Africa, International replacement sales were up 6.0%.  The increase is 
primarily due to increased demand of suspension and anti-friction bearings in 
Mexico.

COST OF PRODUCTS SOLD

Cost of products sold as a percent of net sales decreased to 75.8% for the 
third quarter of 1997 from 83.1% for the third quarter of 1996.  The decrease 
in cost of products sold as a percent of net sales is attributable to changes 
in accounting estimates related to sales incentive programs and obsolete 
inventory in the third quarter of 1996 as well as productivity improvements, 
cost controls and streamlined operations.  

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

While declining to $74.0 million, selling, general and administrative expenses 
as a percent of net sales increased to 17.4% for the third quarter of 1997 
compared to 16.2% for the same 1996 period.  The increase is attributable to 
additional incentive compensation expense of $1.6 million and compensation 
expense related to the vesting of restricted stock of $3.1 million, both due 
to improved Company performance.  

NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH SIX MONTHS ENDED 
SEPTEMBER 30, 1996 

NET SALES

Sales for the nine-month period ended September 30, 1997 were $1,391.6 million 
compared to $1,551.9 million for the same 1996 period.  North American original 
equipment sales were $337.7 million for the nine-month period ended September 
30, 1997 compared to $341.8 million in 1996.  Excluding the electrical products 
and ball bearing operation divestitures, North American original equipment 
sales were up 15.8% largely due to strong sealing system product demand.  
International original equipment sales decreased 24.1% to $126.2 million for 
the nine-month period ended September 30, 1997 from $166.2 million in the same 
1996 period.  Excluding the sale of the heavy wall bearing operations in 
Germany and Brazil and foreign currency effects, International original 
equipment sales increased 8.9%.  North American replacement sales decreased 
6.8% to $549.2 million from $589.0 million for the nine-month period ended 
September 30, 1996.  The decrease was attributable to softness in the North 
American replacement market, particularly in engine and chassis products.  
International replacement sales for the nine-month period ended September 
30, 1997 were $378.5 million compared to $454.9 million for the same 1996 
period.  Excluding the effects of exchange and the divestitures in Turkey, 
Australia and South Africa, International replacement sales were up 5.8%.

COST OF PRODUCTS SOLD

Cost of products sold as a percent of net sales decreased to 76.3% for the 
nine-month period ended September 30, 1997 from 79.8% for the same 1996 period.
The decrease in cost of products sold as a percent of net sales is attributable 
to changes in estimates of sales in incentive programs and obsolete inventory 
in the third quarter as well as productivity improvements, cost controls and 
streamlined operations.  

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

While declining to $225.9 million, selling, general and administrative
expenses  as a percent of net sales increased to 16.2% for the nine-month
period ended September 30, 1997 compared to 15.7% for the same 1996 period.  
The increase is primarily  attributable to additional incentive compensation 
expense of $1.6 million and  compensation expense related to vesting of 
restricted stock of $3.1 million,  both due to improved Company performance.

<PAGE> 10

ADJUSTMENT OF ASSETS HELD FOR SALE

The Company received $78.7 million in cash for businesses sold in the first 
nine months of 1997, while the purchasers assumed certain liabilities.  The 
results of operations have been included in the Company's consolidated 
statements of earnings through the date of sale for the following transactions.

In January 1997, the Company completed the previously announced sale of its 
heavy wall bearing division in Germany and Brazil to Zollern BHW Gleitlager 
GmbH, a member of Fuerstlich Hohenzollernsche Werke Laucherthal GmbH Co.  

On May 13, 1997, the Company completed the previously announced sale of its 
Australian replacement operations to Automotive Components Limited.

On June 3, 1997, the Company completed the previously announced sale of its 
South African replacement operations.  The Company sold the distribution 
operations to Chariots Holding Limited and the retail operations to Lexshell 16
Investment Holdings (Proprietary) Limited.

The Company continually reviews and updates its impairment reserves related to 
the divestiture of its remaining retail/wholesale replacement operations and 
adjusts the reserve components to approximate the net fair value of its 
remaining businesses held for sale.  There has been no net effect on the 1997 
statement of earnings related to the above events.

INCOME TAXES

During the second quarter of 1997, the Company recognized an income tax benefit 
of $6.8 million related to the sales of the South African and Australian 
businesses during the second quarter.

EXTRAORDINARY ITEM

During the second quarter of 1997, the Company retired $64.7 million in private 
placement debt.  This eliminated 10% coupon debt and potentially restrictive 
covenants and will provide the Company greater financial flexibility.  The 
early retirement of the debt required a make-whole payment of $4.1 million, 
which was recorded as an extraordinary item of $2.6 million, net of the related 
tax benefit.  

LIQUIDITY AND CAPITAL RESOURCES

Cash flow from operations of $125.5 million for the nine-month period
ended  September 30, 1997 increased 4.4% from $120.2 million for the same 1996
period.   The increase in cash flow from operations is due to increased
earnings combined  with decreased inventory levels.  Inventory reduction
increased over the 1996  period due to a decrease in lead times and lot sizes
and an increase in fill  rates in the North American replacement business as
well as reductions in  inventory in the international replacement business. 
The increase in accounts  receivable is primarily due to $32 million of
payments on the accounts  receivable securitization.  

Cash flow from investing activities of $48.8 million for the nine-month
period  ended September 30, 1997 includes $78.7 million of proceeds from the
sales of  the heavy wall bearing division in Germany and Brazil, and 64 retail
stores  and 17 warehouse locations in Turkey, Australia and South Africa.  Cash
flow  from investing activities also includes capital expenditures of $29.9
million  for property, plant and equipment and equipment to implement process
improvements,  information technology and new product introductions.

Cash flow used by financing activities of $186.9 million for the
nine-month  period ended September 30, 1997 reflects a reduction in borrowings
of $163.6  million.  The cash used to reduce borrowings was primarily generated
from  operations and proceeds from the sales of businesses noted above.  In
April  1997, the Company issued $125 million of 10-year 8.8% senior notes. 
Proceeds  from the senior notes were used to pay down the revolving credit
facility.   Also during the nine-month period ended September 30, 1997, the
Company retired  $64.7 million in private placement debt using its revolving
credit facility.   This retirement eliminated 10% coupon debt and potentially
restrictive covenants  and will provide the Company greater financial
flexibility.  The early  retirement of debt required a make-whole payment of
$4.1 million which decreased  cash from financing activities.  Also in the
first quarter of 1997, the Company  entered into a new $100 million accounts
receivable securitization program  which replaced a similar agreement, and in
the second quarter of 1997, the  Company entered into a new 5-year $350 million
revolving credit agreement  which expires in June 2002.

On August 8, 1997, the Company announced its call for the redemption of all 
its outstanding $3.875 Series D Convertible Exchangeable Preferred Stock.  
Upon calling for redemption, these preferred stockholders elected to convert 
each preferred share into 2.778 shares of common stock.  On August 28, 1997, 
the Company issued 4.4 million shares of common stock in exchange for all of 
the outstanding Series D convertible exchangeable preferred stock.

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.

<PAGE> 11

RESTATEMENT

In August 1997, the Company filed a Form 10-K/A which restated the previously 
issued 1996 financial statements for certain charges recorded in 1996.  The 
restatement did not affect the Company's balance sheet at December 31, 1996.  
The corrections primarily pertained to timing in the recognition of the 
provision for doubtful accounts and customer incentive programs, the 
recognition of vendor rebates and the recognition of certain federal income 
tax credits.  The following summarizes the net effect of these adjustments 
on the three and nine-month periods ended September 30, 1996, in millions:

                                                 Three Months     Nine Months
                                                     Ended            Ended
                                                 September 30     September 30
                                                     1996             1996
                                                 ------------     ------------

   Net earnings (loss):
      As previously reported                       $ (17.3)          $  9.1
      As restated                                    (12.6)            14.5
 
SUBSEQUENT EVENT

T&N Offer:

On October 16, 1997, the Company announced it had made a cash offer to acquire 
all the outstanding common stock of T&N plc for 260 pence per share.  The offer 
values T&N's share capital at $2.4 billion.  In addition, the Company will 
assume the debt of T&N at closing.  The Company will finance the acquisition 
through a committed bank facility from Chase Manhattan Bank.  The Company's 
intention is to put in place a permanent capital structure of a combination 
of equity and debt financing.  

The offer is subject to various conditions customary in the United Kingdom, 
including acceptances of the offer by T&N shareholders and the receipt of all 
applicable regulatory approvals in the United States and Europe.  As part of 
the acquisition process, certain financing, professional and other related 
fees have been and will continue to be incurred in 1997.  These fees have 
been capitalized as incurred and will be accounted for as direct acquisition 
or financing costs once the transaction closes.  Management fully expects the 
acquisition to close, however, in the event the acquisition is not completed, 
these fees would be charged to expense and would materially impact net earnings 
at that time.  The Company may elect to accelerate payment of certain portions 
of the bank facility which would result in an extraordinary charge due to the 
write-off of the financing cost associated with the early retirement of debt.

In addition, as part of financing the 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 will be reflected in the results of operations in the fourth quarter of 
1997.  The option's fair value will exceed its cost if the British pound to 
U.S. dollar exchange rate exceeds $1.667 at its expiration date in the first 
quarter of 1998.  At closing on November 10, 1997, the British pound to U.S. 
dollar exchange rate was $1.697.  

Restricted Stock:

In October 1997, the Company met certain share price performance criteria under 
the 1989 Long-Term Incentive Plan which resulted in the recognition of $5.4 
million in compensation expense related to vesting of restricted stock.

<PAGE> 12

PART II - OTHER INFORMATION
---------------------------
Item 1.  Legal Proceedings

         On August 30, 1995, Zeller Corporation, an auto parts supplier, filed 
         a lawsuit against the Company and Neapco, Inc. in the United States 
         District Court for the Northern District of Ohio, Western Division, 
         seeking damages for alleged violations of federal antitrust laws and 
         certain state laws.  On June 25, 1996, the judge dismissed the federal 
         antitrust law claims.  Zeller has appealed the dismissal to the United 
         States Court of Appeals for the Sixth Circuit.  After consulting with 
         counsel for the Company, management believes that the case will be 
         dismissed on appeal.

Item 5.  Other

         On October 16, 1997, Federal-Mogul and T&N plc announced they had 
         agreed to the terms of a recommended cash offer by Federal-Mogul 
         of 260 pence per share for the entire issued share capital of T&N.  
         The offer values T&N's issued share capital at $2.4 billion.  In 
         addition, Federal-Mogul may or may not refinance the existing debt 
         of T&N at closing.  Federal-Mogul indicated that the acquisition of 
         T&N would:

         - create a highly competitive Tier I automotive supplier worldwide;
         - expand its manufactured product portfolio to offer systems and 
           modules;
         - enhance Federal-Mogul's position as a supplier of engine and 
           transmission products worldwide;
         - reinforce Federal-Mogul's ability to provide a high quality service 
           to both its original equipment and aftermarket customers;
         - extend Federal-Mogul's international reach and accelerate its 
           worldwide aftermarket growth;
         - create an organization which builds on the strength of the 
           leadership, expertise and working practices of both companies 
           to further improve efficiencies.
         
         The Offer is subject to various conditions customary in the
         United  Kingdom, including acceptances of the Offer by T&N
         shareholders and the receipt of all applicable regulatory
         approvals in the United States and in Europe.

         Federal-Mogul will fund the transaction through a bridge facility 
         provided by The Chase Manhattan Bank.  Federal-Mogul's intention is to 
         put in place a permanent capital structure that reflects its financial 
         goals.  Permanent financing will be an appropriate combination of 
         equity and debt.

Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits:

              11.1  Statement Re Computation of Per Share Earnings for the 
                    three months ended September 30, 1997.

              11.2  Statement Re Computation of Per Share Earnings for the 
                    nine months ended September 30, 1997.

              27    Financial Data Schedule

         (b)  Reports on Form 8-K:

              No reports on Form 8-K were filed by the Company during the 
              three months ended September 30, 1997.  


                               SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the 
undersigned, thereunto duly authorized.

                       FEDERAL-MOGUL CORPORATION

                 By:       (Thomas W. Ryan)
                      ---------------------------
                            THOMAS W. RYAN
                       Senior Vice President and
                        Chief Financial Officer

                 By:       (Kenneth P. Slaby)
                      ---------------------------
                            KENNETH P. SLABY
                    Vice President and Controller and
                         Chief Accounting Officer

Dated:  November 12, 1997