<PAGE>

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

         [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
              THE SECURITIES EXCHANGE ACT OF 1934

              For the quarterly period ended March 31, 2004

         [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
              THE SECURITIES EXCHANGE ACT OF 1934

                          COMMISSION FILE NUMBER 1-8831

                               FEDDERS CORPORATION

             (Exact name of registrant as specified in its charter)

                DELAWARE                                 22-2572390
        (State of incorporation)            (I.R.S. Employer Identification No.)

505 MARTINSVILLE ROAD, LIBERTY CORNER, NJ                07938-0813
(Address of principal executive offices)                 (Zip Code)

               REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:

                                 (908) 604-8686

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                 Yes [X] No [ ]

     The registrant has outstanding 27,948,129 shares of Common Stock and
2,493,061 shares of Class B Stock (which is immediately convertible into Common
Stock, on a share-for-share basis) as of April 30, 2004.

================================================================================

<PAGE>

                               FEDDERS CORPORATION

                                      INDEX

<TABLE>
<CAPTION>
                                                                                               PAGE
                                                                                              NUMBER
                                                                                              ------
<S>                                                                                           <C>
PART I   FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
         FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003                                      3

         CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2004, DECEMBER 31, 2003 AND
         MARCH 31, 2003                                                                          4

         CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH
         31, 2004 AND 2003                                                                       5

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        6 - 17

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
         FINANCIAL CONDITION                                                                  18 - 19

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                             20

ITEM 4.  CONTROLS AND PROCEDURES                                                                20

PART II  OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM                                                           21
         8-K                                                                                    21
         SIGNATURE                                                                              22
         CERTIFICATIONS                                                                       23 - 26
</TABLE>

                                       2

<PAGE>

                          PART I FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                               FEDDERS CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                         AND COMPREHENSIVE (LOSS) INCOME

<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED
                                                                           MARCH 31,
                                                                    ----------------------
                                                                      2004         2003
                                                                    ---------    ---------
                                                                          (AMOUNT IN
                                                                       THOUSANDS, EXCEPT
                                                                        PER SHARE DATA)
                                                                          (UNAUDITED)
<S>                                                                 <C>          <C>
Net sales .............................................             $ 123,177    $ 123,354
Costs and expenses:
  Cost of sales .......................................               101,419       95,320
  Selling, general and administrative expense .........                17,050       15,273
                                                                    ---------    ---------
                                                                      118,469      110,593
                                                                    ---------    ---------

Operating income ......................................                 4,708       12,761
Partners' net interest in joint venture results .......                  (291)        (162)
Interest expense, net .................................                 4,943        5,062
Debt extinguishment ...................................                 7,392           --
Other income ..........................................                   357          161
                                                                    ---------    ---------
(Loss) income before income taxes .....................                (7,561)       7,698
(Benefit) provision for income taxes ..................                (2,414)       2,502
                                                                    ---------    ---------
Net (loss) income .....................................                (5,147)       5,196
Preferred stock dividends .............................                 1,005          174
                                                                    ---------    ---------
Net (loss) income applicable to common stockholders....                (6,152)       5,022
Other comprehensive (loss) income:
  Foreign currency translation, net of tax ............                   146          (81)
                                                                    ---------    ---------
Comprehensive (loss) income ...........................             $  (6,006)   $   4,941
                                                                    =========    =========
  (Loss) income per common share:

  Basic/diluted (loss) income per common share ........                 (0.20)        0.17
                                                                    =========    =========
Weighted averages shares:

  Basic ...............................................                30,425       30,170
  Diluted .............................................                30,425       30,176
Dividends per share declared:
  Common Stock ........................................             $   0.030    $   0.030
  Class B Stock .......................................                 0.030        0.030
  Preferred Stock .....................................                 0.538        0.538
</TABLE>

See accompanying notes to the consolidated financial statements

                                       3

<PAGE>

                               FEDDERS CORPORATION

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                           MARCH 31,      DECEMBER 31,       MARCH 31,
                                                                             2004            2003              2003
                                                                          ---------       ------------       ---------
                                                                          (AMOUNTS IN THOUSANDS, EXCEPT PAR VALUE DATA)
                                                                                          (UNAUDITED)
<S>                                                                       <C>             <C>                <C>
                             ASSETS

Current assets:
  Cash and cash equivalents ......................................        $  23,344        $  22,043         $  13,393
  Accounts receivable (net of allowance of $1,983, $2,032
    and $2,370 at March 31, 2004, December 31, 2003 and
    March 31, 2003, respectively) ................................           79,191           29,718            91,826
  Inventories:
    Finished goods ...............................................          133,084          113,659            75,896
    Work-in-process ..............................................            4,006            4,487             4,418
    Raw materials and supplies ...................................           22,452           27,340            32,505
                                                                          ---------        ---------         ---------
  Net inventories ................................................          159,542          145,486           112,819
  Deferred income taxes ..........................................            7,650            7,652             5,579
  Assets held for sale ...........................................            8,564            8,564             8,249
  Other current assets ...........................................           28,123           28,352            22,470
                                                                          ---------        ---------         ---------
Total current assets .............................................          306,414          241,815           254,336
Net property, plant and equipment:
  Land and improvements ..........................................            1,508            1,508             1,508
  Buildings and leasehold improvements ...........................           32,710           31,880            33,693
  Machinery and equipment ........................................          100,673          102,815            96,737
                                                                          ---------        ---------         ---------
  Gross property, plant and equipment ............................          134,891          136,203           131,938
  Less accumulated depreciation ..................................           82,444           81,541            74,620
                                                                          ---------        ---------         ---------
Net property, plant and equipment ................................           52,447           54,662            57,318
Deferred income taxes ............................................            8,224            8,224             2,867
Goodwill .........................................................           78,090           78,630            78,630
Other intangible assets ..........................................            1,438            1,685             1,483
Other assets .....................................................           35,679           31,232            36,253
                                                                          ---------        ---------         ---------
Total assets .....................................................        $ 482,292        $ 416,248         $ 430,887
                                                                          =========        =========         =========

                    LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Short-term notes ...............................................        $  49,352        $  30,446         $  62,694
  Current portion of long-term debt ..............................           24,471            2,779             3,161
  Accounts payable ...............................................           88,107           86,313            74,717
  Income taxes payable ...........................................               --               --             3,490
  Accrued expenses ...............................................           40,763           39,032            41,614
                                                                          ---------        ---------         ---------
Total current liabilities ........................................          202,693          158,570           185,676
Long-term debt ...................................................          159,687          158,965           162,446
Other long-term liabilities ......................................           31,387           31,528            20,710
Partners' net interest in joint venture ..........................            4,248            4,235             4,366
Stockholders' equity:
Preferred Stock, $0.01 par value, 15,000 shares authorized,
 1,870, 675 and 324 issued at March 31, 2004, December 31,
 2003 and March 31, 2003, respectively ...........................               19                7                 3
Common Stock, $0.01 par value, 70,000 shares authorized,
 36,456, 36,444, and 35,934 issued at March 31, 2004,
 December 31, 2003 and March 31, 2003, respectively ..............              365              364               359
Class B Stock, $0.01 par value, 5,000 shares authorized,
 2,493 issued at March 31, 2004, December 31, 2003
 and March 31, 2003, respectively ................................               25               25                25
Additional paid-in capital .......................................          108,847           80,680            68,220
Retained earnings ................................................           16,538           23,603            27,943
Accumulated other comprehensive loss .............................           (1,606)          (1,752)           (1,327)
                                                                          ---------        ---------         ---------
                                                                            124,188          102,927            95,223
Treasury stock, at cost, 8,521, 8,521 and 8,158 shares of
 Common Stock at March 31, 2004, December 31, 2003 and
 March 31, 2003, respectively ....................................          (39,188)         (39,188)          (37,322)
Deferred compensation ............................................             (723)            (789)             (212)
                                                                          ---------        ---------         ---------
Total stockholders' equity .......................................           84,277           62,950            57,689
                                                                          ---------        ---------         ---------
Total liabilities and stockholders' equity .......................        $ 482,292        $ 416,248         $ 430,887
                                                                          =========        =========         =========
</TABLE>

See accompanying notes to the consolidated financial statements

                                       4

<PAGE>

                               FEDDERS CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                               THREE MONTHS ENDED
                                                                                    MARCH 31,
                                                                             ----------------------
                                                                               2004          2003
                                                                             ---------    ---------
                                                                             (AMOUNTS IN THOUSANDS)
                                                                                   (UNAUDITED)
<S>                                                                          <C>          <C>
Cash flows from operating activities:
Net (loss) income ................................................           $  (5,147)   $   5,196
Adjustments to reconcile net loss to net cash used in
  operating activities:
  Depreciation and amortization ..................................               2,356        2,455
  Deferred income taxes ..........................................                   2           28
  Call premium and deferred financing charges ....................               7,392           --
  Partners' net interest in joint venture results ................                 291          162
Changes in operating assets and liabilities:
  Accounts receivable ............................................             (49,473)     (70,200)
  Inventories ....................................................             (14,056)      (9,123)
  Other current assets ...........................................                 229       (3,531)
  Other assets ...................................................                (514)        (800)
  Accounts payable ...............................................               1,794       18,468
  Accrued expenses ...............................................               1,731       11,807
  Income taxes payable ...........................................                  --        2,329
  Other long-term liabilities ....................................                (141)      (1,148)
  Other-- net ....................................................                 491          167
                                                                             ---------    ---------
Net cash used in operating activities ............................             (55,045)     (44,190)
                                                                             ---------    ---------
Cash flows from investing activities:
  Additions to property, plant and equipment .....................              (1,613)      (1,545)
  Disposal of property, plant and equipment ......................                 180           15
  Investment in joint venture ....................................                (132)          --
                                                                             ---------    ---------
Net cash used in investing activities ............................              (1,565)      (1,530)
                                                                             ---------    ---------
Cash flows from financing activities:
  Proceeds from short-term notes .................................              18,906       38,390
  Repayments of long-term debt ...................................                (946)        (389)
  Net proceeds from issuance of 9 7/8% Senior Notes ..............             150,245           --
  Repayment of 9 3/8% Senior Subordinated Notes ..................            (128,150)          --
  Call premium and deferred financing charges ....................              (8,393)          --
  Proceeds from stock options exercised ..........................                  38           --
  Cash dividends .................................................              (1,918)      (1,076)
  Proceeds from stock rights exercised ...........................              28,323           --
  Costs of stock offerings .......................................                (194)        (631)
                                                                             ---------    ---------
Net cash provided by financing activities ........................              57,911       36,294
                                                                             ---------    ---------
Net increase (decrease) in cash and cash equivalents .............               1,301       (9,426)
Cash and cash equivalents at beginning of period .................              22,043       22,819
                                                                             ---------    ---------
Cash and cash equivalents at end of period .......................           $  23,344    $  13,393
                                                                             =========    =========
Supplemental disclosure:

  Interest paid ..................................................           $   5,933    $   4,416
  Income taxes paid ..............................................                  83          137
                                                                             =========    =========
</TABLE>

See accompanying notes to the consolidated financial statements

                                       5

<PAGE>

                               FEDDERS CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
     (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA AND TENDER OFFER
                             CONSIDERATION (NOTE 6))
                                   (UNAUDITED)

1.   BASIS OF PRESENTATION

     The financial information included herein is unaudited and prepared in
accordance with the instructions for Form 10-Q; however, such information
reflects all adjustments, which consist solely of normal recurring adjustments
which are, in the opinion of management, necessary for a fair presentation of
results for the interim periods. Reference should be made to the annual
financial statements, including footnotes thereto, included in Fedders
Corporation's (the "Company") Annual Report on Form 10-K for the fiscal year
ended August 31, 2003. The Company's fiscal year end through the 2003 fiscal
year was August 31. However, on August 26, 2003 the Board of Directors decided
to change the Company's fiscal year end from August 31 to December 31. The
financial statements and notes included herein provide unaudited results of the
Company for the three-month period from January 1, 2004 through March 31, 2004.
The prior unaudited three-month period ended March 31, 2003 has been provided
for comparison purposes.

     The Company's business is seasonal and, consequently, operating results for
the three-month period ending March 31, 2004 are not necessarily indicative of
the results that may be expected for the fiscal year ending December 31, 2004.
Certain reclassifications have been made in prior-year amounts to conform to the
current-year presentation.

2.   STOCK COMPENSATION

     The Company accounts for stock options issued to its employees under the
recognition and measurement principles of APB Opinion 25, "Accounting for Stock
Issued to Employees," and related interpretations. No stock-based employee
compensation cost is reflected in net income, as all options granted have an
exercise price equal to the market value of the underlying Common Stock on the
date of grant. The following table illustrates the effect on net income and
earnings per share if the Company had applied the fair-value recognition
provisions of SFAS No. 123 to stock-based employee compensation.

<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED
                                                                      MARCH 31,
                                                                 ------------------
                                                                  2004        2003
                                                                 -------    -------
<S>                                                              <C>        <C>
(Loss) income applicable to common stockholders-as reported...   $(6,152)   $ 5,022
Deduct: Total stock-based employee compensation expense
  determined under fair-value-based method for all awards,
  net of related tax effects .................................       275         90
                                                                 -------    -------
Pro forma net (loss) income ..................................   $(6,427)   $ 4,932
                                                                 =======    =======
Net (loss) income per common share:
     Basic/diluted -- as reported ............................   $ (0.20)   $  0.17
     Basic/diluted -- pro forma ..............................   $ (0.21)   $  0.16
</TABLE>

3.   ASSET IMPAIRMENT, EMPLOYEE SEVERANCE AND OTHER RESTRUCTURING AND RELATED
CHARGES

     In the fourth quarter of fiscal year 2001, the Company announced a plan to
restructure its existing operations, which included the transfer of a majority
of the Company's room air conditioner production, as well as all production of
dehumidifiers and compressors, from its Illinois, Tennessee and Maryland
facilities to facilities in China in order to lower costs and improve
profitability. The Company's plan resulted in charges for fixed-asset
impairments, employee severance costs, inventory write-downs, and other
restructuring charges directly related to the restructuring plan, including
facility closing costs and lease termination costs. In conjunction with the
restructuring plan, the Company recorded $13,694 of charges in the fourth
quarter of fiscal year 2001.

    The following table displays the activity and balances of the restructuring
reserve account from December 31, 2003 to March 31, 2004.

<TABLE>
<CAPTION>
                                 DECEMBER 31,                                 MARCH 31,
                                    2003                                        2004
                                   BALANCE       ADDITIONS     DEDUCTIONS      BALANCE
                                 ------------    ---------     ----------     ---------
<S>                              <C>             <C>           <C>            <C>
Workforce reductions ....          $  586            --            --          $  586
Facility closing costs...             340            --            --             340
Other costs .............             214            --            --             214
                                   ------          ----         -----          ------
  Total .................          $1,140            --            --          $1,140
                                   ======          ====         =====          ======
</TABLE>

                                       6

<PAGE>

     The remaining balance of $1,140, which consists primarily of workforce
reduction and facility closing costs, is expected to be expended during fiscal
2004. The final amounts will be settled upon the expiration of the period for
workers' compensation claims and completion of facility clean up and waste
removal.

4.   STOCKHOLDERS' EQUITY

     On December 5, 2003, the Company's Board of Directors authorized the
distribution of transferable rights to the Company's Common and Class B
stockholders. Stockholders received one right for every share of Common Stock
and Class B Stock they held as of December 22, 2003. Every 20 rights entitled
the holder to purchase one share of Cumulative Preferred Stock at the
subscription price of $23.70 per share, and carried with it a basic subscription
right and an over-subscription right. As of January 16, 2004, 1,195,092 shares
of Cumulative Preferred Stock had been issued as result of the offering for
gross proceeds of $28.3 million.

5.   EARNINGS PER SHARE

     For the three months ended March 31, 2004 and 2003, net (loss) income per
share was computed using the weighted average number of shares of Common and
Class B stock outstanding, which amounted to 30,425,096 and 30,169,882 shares,
respectively. In the first three months of 2003, stock options included in
computing diluted earnings per share amounted to 5,660 shares. Due to their
anti-dilutive effect, 748,736 options were excluded from the computation of
diluted loss per share for the three months ended March 31, 2004.

6.   LONG-TERM DEBT

     In March 2004, Fedders North America, Inc. ("FNA"), a wholly-owned
subsidiary of the Company, issued $155,000 principal amount of 9 7/8% Senior
Notes due 2014. The Company and all of the continuing subsidiaries of FNA are
guarantors, on a senior basis, of the notes. FNA may redeem the notes on and
after March 1, 2009 for a defined redemption price. The provisions of the notes
limit, among other things, the payment of dividends by the subsidiary.

     On February 6, 2004, FNA commenced a cash tender offer for any and all of
FNA's outstanding 9 3/8% Senior Subordinated Notes due 2007, issued August 24,
1999, and any and all of FNA's outstanding 9 3/8% Senior Subordinated Notes due
2007, issued August 18, 1997 (collectively, the "Notes"). The total
consideration offered in the tender was comprised of the tender offer
consideration and a consent payment. The tender offer consideration was equal to
$1,012.50 per $1,000 principal amount of Notes plus accrued and unpaid interest
from the last interest payment up to, but not including, the settlement date. An
additional consent fee was paid to holders who effectively consented to amend
the Notes, in the amount of $20.00 per $1,000 principal amount of Notes. As of
March 31, 2004, $128.2 million of the Notes were purchased, expenditures of
$7,392 were incurred as a result of the early retirement of debt, consisting of
$4,165 of call premiums and $3,227 for the write-off of associated debt issuance
costs. The balances of the Notes are expected to be redeemed by April 6, 2004
(Note 11).

7.   GOODWILL AND INTANGIBLE ASSETS

     The Company records the excess purchase price of net tangible and
intangible assets acquired over their estimated fair value as goodwill. The
Company adopted the provisions of SFAS 142 "Goodwill and Other Intangible
Assets" ("SFAS 142"), as of September 1, 2002. Under SFAS 142, the Company is
required to test goodwill for impairment at least annually. The Company has
elected to perform its annual test for indications of goodwill impairment as of
September 1 of each year. The Company identifies potential goodwill impairment
by comparing the fair value of a reporting segment with its carrying amount,
including goodwill. The Company determines fair value using a discounted cash
flow and market-multiple approach. If the fair value of a reporting segment
exceeds its carrying amount, goodwill of the reporting segment is not considered
impaired. If the carrying amount of a segment exceeds its fair value, the amount
of goodwill impairment loss, if any, must be measured. The Company measures the
amount of goodwill impairment loss by comparing the implied fair value of
reporting segment goodwill with the carrying amount of that goodwill. If the
carrying amount of the segment goodwill exceeds the implied fair value of
goodwill, an impairment loss is recognized as an operating expense.

                                       7

<PAGE>

     Goodwill and other intangible assets consist of the following:

<TABLE>
<CAPTION>
                                             MARCH 31,         DECEMBER 31,
                                               2004               2003
                                             --------          -----------
<S>                                          <C>               <C>
Goodwill-as reported ................        $ 78,090           $ 78,630
Currency translation adjustment......             540                 --
                                             --------           --------
Goodwill ............................        $ 78,630           $ 78,630
                                             ========           ========
Gross other amortizable intangibles..        $  2,964           $  3,178

Accumulated amortization ............          (1,526)            (1,493)
                                             --------           --------
Other intangible assets .............        $  1,438           $  1,685
                                             ========           ========
</TABLE>

     As of March 31, 2004 and December 31, 2003, the Company had goodwill of
$69,593 and $8,497 reflected in its HVACR and Engineered Products reportable
segments, respectively. Other intangible assets primarily include a right
associated with a joint venture that is being amortized over 20 years.
Amortization expense for the three months ended March 31, 2004 and 2003 is $50
and $47, respectively. Estimated amortization expense for other intangible
assets will be approximately $180 for each of the next five years.

8.   ASSETS HELD FOR SALE

     In connection with a restructuring of the Company's operations in 2001
(Note 3), the Company ceased production at its Walkersville, Maryland facility,
part of the Company's HVACR reportable segment. In December 2002, the Company
began the process of actively marketing the sale of the Walkersville facility.
The Company anticipates the selling price of the facility will exceed its net
book value after consideration of selling expenses associated with marketing the
facility for sale. A vacant property belonging to the Company in Ningbo, China
is also being marketed for sale. The sale of both properties is expected to be
completed no later than June 2004. At March 31, 2004, assets totaling $8,564,
which consist of land, land improvements, buildings and building improvements
have been classified as "Assets Held for Sale" and are no longer being
depreciated in accordance with SFAS 144.

     The following table presents the carrying amount, by asset class, of the
"Assets Held for Sale" at March 31:

<TABLE>
<CAPTION>
                                 2004
                                ------
<S>                             <C>
Land and land improvements...   $2,181
Building, net ...............    4,587
Building improvements, net ..    1,796
                                ------
Assets Held for Sale ........   $8,564
                                ======
</TABLE>

9.   INDUSTRY SEGMENTS

     The Company has two reportable segments: Heating, Ventilation, Air
Conditioning and Refrigeration ("HVACR") and Engineered Products. The Company's
reportable segments were determined based upon several factors, including the
nature of the products provided and markets served. Each reportable segment is
managed separately and includes various operating segments that have been
aggregated due to similar economic characteristics.

     The HVACR segment designs, manufactures and distributes window,
through-the-wall, ductless split and portable room air conditioners, ducted
central air conditioning systems, air cleaners, humidifiers and dehumidifiers.
HVACR products are distributed through a variety of sales channels, including
national retailers, regional retailers, wholesale distributors, catalog supply
houses, private label/OEM, government direct and the Internet.

     The Engineered Products segment designs, manufactures and distributes media
filters, electronic filters, humidifiers, dust collectors, fan filter units, and
solid-state thermoelectric heat pump modules. These products are sold through
manufacturers' representatives, distributors and direct sales to end-users.

                                       8

<PAGE>

SUMMARY OF BUSINESS BY SEGMENT:

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED
                                                           MARCH 31,
                                                    ----------------------
                                                       2004         2003
                                                    ---------    ---------
<S>                                                 <C>          <C>
Net sales:
  HVACR .........................................   $ 112,026    $ 114,929
  Engineered Products ...........................      11,151        8,425
                                                    ---------    ---------
  Net sales .....................................   $ 123,177    $ 123,354
                                                    =========    =========
Income (loss) before interest, taxes and debt
extinguishment:

  HVACR .........................................   $   3,060    $  12,421
  Engineered Products ...........................         555         (593)
                                                    ---------    ---------
  Segment income before interest and taxes ......       3,615       11,828
  Non-allocated income (expenses) ...............       1,159          932
  Debt extinguishment ...........................       7,392           --
  Interest expense, net .........................       4,943        5,062
  (Benefit) provision for income taxes ..........      (2,414)       2,502
                                                    ---------    ---------
  Net (loss) income .............................   $  (5,147)   $   5,196
                                                    =========    =========
</TABLE>

<TABLE>
<CAPTION>
                          MARCH 31,     DECEMBER 31,     MARCH 31,
                            2004           2003            2003
                          --------      -----------      --------
<S>                       <C>           <C>              <C>
Total assets:
HVACR .................   $374,760       $310,646        $340,110
Engineered Products ...     56,342         52,826          54,101
Non-allocated assets...     51,190         52,776          36,676
                          --------       --------        --------
                          $482,292       $416,248        $430,887
                          ========       ========        ========
</TABLE>

10.  GUARANTEES

PRODUCT WARRANTY

     Certain of the Company's products are covered by standard product warranty
plans that extend from 1 to 5 years. In addition, major retailers have consumer
return policies which allow consumers to return product that may be defective in
lieu of field service. Upon return to the Company, these units are inspected,
repaired as required, reboxed and held for future sale as factory reconditioned
products. A portion of those units returned are not repairable. At the time
revenue is recognized, upon shipment, measurements of those sales are reduced by
estimates of the future costs associated with fulfilling warranty obligations
and for the expense associated with repairing or scrapping defective returns.

     The Company uses historical failure and defective return rates, which may
or may not be indicative of future rates. Each quarter, the estimate of warranty
and defective return obligations, including the assumptions about estimated
failure and return rates, is reevaluated.

     The following table displays the activity and balances of the product
warranty liability from December 31, 2003 to March 31, 2004:

<TABLE>
<CAPTION>
                                                          THREE MONTHS
                                                              ENDED
                                                          MARCH 31, 2004
                                                          --------------
<S>                                                       <C>
Warranty balance at December 31, 2003 .............          $ 5,641
Accruals for warranties issued during the period...            3,050
Settlements made during the period ................           (2,126)
                                                             -------
Warranty balance at March 31, 2004 ................          $ 6,565
                                                             =======
</TABLE>

LOAN GUARANTEES

     Guarantees of subsidiary debt by Fedders Corporation (the "Parent") and
subsidiaries consist of the following at March 31, 2004:

          (i) The Parent guarantees the obligations of Fedders North America,
     Inc. ("FNA") under its 9 7/8% Senior Notes due 2014 (the "Notes"). This is
     a guarantee of payment of principal and interest on the Notes that arose in
     connection with the issuance and sale of $155 million in principal amount
     of the Notes. The Parent would be required to perform under the guarantee
     in the event FNA failed to pay principal and interest when due or to
     perform its obligations under the indenture pursuant to which the Notes
     were issued.

                                       9

<PAGE>

          (ii) The Parent and various subsidiaries guarantee the obligations of
     certain subsidiaries under a $100 million working capital line of credit.
     The line of credit bears interest at Libor +2% or the prime rate of
     Wachovia Bank and expires in February 2006. The Parent and guarantor
     subsidiaries would be required to perform under the guaranties in the event
     that the borrowing subsidiaries failed to repay amounts borrowed under the
     line of credit and interest and other charges associated therewith, or
     failed to comply with the provisions of the credit agreement. The
     outstanding loan balance at March 31, 2004 is $20.1 million.

          (iii) The Parent guarantees the obligations of its subsidiary, Melcor
     Corporation, under a $1.3 million New Jersey Economic Development Authority
     Economic Development Bond. The bond bears interest at the rate of 6.6% per
     annum and matures in July 2010. The Parent would be required to perform
     under the guarantee in the event that Melcor fails to pay the principal of
     and interest on the bond or fails to comply with the provisions of the bond
     agreement pursuant to which the bond was issued. The outstanding loan
     balance at March 31, 2004 is $0.8 million.

          (iv) The Parent and Melcor Corporation guarantee the obligations of a
     subsidiary, Eubank Manufacturing Enterprises, Inc., under an equipment
     financing lease in the amount of $3.1 million. The lease bears interest at
     the rate of 7.16% per annum and expires in December 2007. The Parent and
     Melcor Corporation would be required to perform under the guarantee in the
     event Eubank fails to pay rent when due or fails to comply with the
     provisions of the lease agreement. The outstanding loan balance at March
     31, 2004 is $2.0 million.

          (v) The Parent guarantees the obligations of a subsidiary, Eubank
     Manufacturing Enterprises, Inc., under a loan agreement providing for a
     loan of $2.0 million. The loan bears interest at the prime rate of Flag
     Bank and matures in February 2007. The Parent would be required to perform
     under the guarantee in the event Eubank fails to pay the principal of and
     interest on the loan or fails to comply with the provisions of the loan
     agreement. The outstanding loan balance at March 31, 2004 is $0.5 million.

          (vi) The Parent guarantees the obligations of a subsidiary, Fedders
     (Shanghai) Co., Ltd. ("FSC") under a working capital line of credit
     totaling $6.0 million. The line of credit bears interest at the rate of
     Sibor +1.5% per annum and matures at various dates. The Parent would be
     obligated to perform under the guarantee in the event that FSC fails to pay
     the principal of and interest on the loan or fails to comply with the
     provisions of the loan agreement. The outstanding loan balance at March 31,
     2004 is $4.2 million.

          (vii) The Parent guarantees the obligations of a subsidiary, Polenz
     GmbH ("Polenz"), under a Euro 6.0 million working capital line of credit.
     The line of credit bears interest at the rate of Libor +2.5% per annum and
     matures June 2004. The Parent would be obligated to perform under the
     guarantee in the event Polenz fails to pay the principal of and interest on
     the loan or fails to comply with the provisions of the loan agreement.
     There is no outstanding loan balance at March 31, 2004.

          (viii) The Parent guarantees the obligations of a subsidiary, Fedders
     Koppel, Inc. ("FK"), under a Ph peso 320 million term loan. The loan bears
     interest at the rate of Phibor +3% per annum and matures May 2005. The
     Parent would be obligated to perform under the guarantee in the event that
     FK fails to pay the principal of and interest on the loan or fails to
     comply with the provisions of the loan agreement. The outstanding loan
     balance at March 31, 2004 is $1.5 million.

          (ix) The Parent guarantees the obligations of a subsidiary, Eubank
     Manufacturing Enterprises, Inc., under a mortgage agreement providing for a
     loan of $1.0 million. The loan has an interest rate of 4.25% and matures in
     June 2008. The Parent would be required to perform under the guarantee in
     the event Eubank fails to pay the principal of and interest on the loan or
     fails to comply with the provisions of the loan agreement. The outstanding
     loan balance at March 31, 2004 is $0.9 million.

     The Company also provides loan guarantees to two joint ventures which are
not consolidated in the Company's financial statements:

          (i) Fedders International, Inc., ("FI") a subsidiary of the Company,
     guarantees up to 50% of the obligations of a 50%-owned joint venture,
     Universal Comfort Products Pvt., Ltd., ("UCPL"), under a Rupees 230 million
     term loan. The loan bears interest at the rate of State Bank Mid Term Loan
     Rate and matures November 2006. FI would be obligated to perform under the
     guarantee in the event UCPL fails to pay the principal of and interest on
     the loan or fails to comply with the terms of the loan agreement. FI's
     exposure under the guarantee at March 31, 2004 is $2.1 million.

          (ii) Fedders Indoor Air Quality (Suzhou) Co., Ltd., ("FIAQ"), a
     subsidiary of the Company, guarantees up to RMB 5 million of the
     obligations of Xi'an Fedders Dong Fang Air Conditioner Compressor Co.,
     Ltd., ("FDF"), a 50%-owned joint venture of the Company, under a working
     capital line of credit. The line of credit bears interest at the rate set
     by the Peoples Bank of China and matures December 2004. FIAQ would be
     obligated to perform its obligations under the guarantee in the event FDF
     fails to pay the

                                       10

<PAGE>

     principal of and interest on the loan or fails to comply with the
     provisions of the loan agreement. FIAQ's maximum exposure under the
     guarantee is $0.6 million as of March 31, 2004.

11.  SUBSEQUENT EVENTS

     On April 6, 2004, $21.8 million of the remaining balance of the 9 3/8%
Senior Subordinated Notes were redeemed. A call premium of $683 thousand was
incurred as a result of the early retirement of debt.

12.  SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

     Fedders North America, Inc. ("FNA") is a wholly-owned subsidiary of the
Company. FNA and the Parent are the issuer and the guarantor, respectively, of
the $155 million 9 7/8% Senior Notes due 2014. In addition, the subsidiaries of
FNA are also guarantors of the notes.

     The Company's and the subsidiaries' guarantees are full and unconditional.
The following condensed consolidating financial statements present separate
information for FNA and for the Parent and its subsidiaries other than FNA, and
should be read in conjunction with the consolidated financial statements of the
Company.

                                       11

<PAGE>

                               FEDDERS CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
                         AND COMPREHENSIVE (LOSS) INCOME

<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED MARCH 31, 2004
                                                       ----------------------------------------------------------------
                                                        FEDDERS
                                                         NORTH        OTHER                   ELIMINATING     FEDDERS
                                                        AMERICA      FEDDERS     CORPORATE      ENTRIES     CORPORATION
                                                       ---------    ---------    ---------    -----------   -----------
<S>                                                    <C>          <C>          <C>          <C>           <C>
Net sales ..........................................   $ 110,161    $  86,170           --     $ (73,154)    $ 123,177
Cost of sales ......................................      93,517       81,056           --       (73,154)      101,419
Selling, general and administrative expense(a) .....      13,325        4,923    $  (1,198)           --        17,050
                                                       ---------    ---------    ---------     ---------     ---------
Operating income ...................................       3,319          191        1,198            --         4,708
Partners' net interest in joint venture results.....        (216)         (75)          --            --          (291)
Equity income in investment ........................          --           --       (5,945)        5,945            --
Interest expense, net(b) ...........................       4,332          530           81            --         4,943
Debt extinguishment ................................       7,392           --           --            --         7,392
Other income (expense) .............................          83          274           --            --           357
                                                       ---------    ---------    ---------     ---------     ---------
Loss before income taxes ...........................      (8,538)        (140)      (4,828)        5,945        (7,561)
(Benefit) provision for income taxes ...............      (2,776)          43          319            --        (2,414)
                                                       ---------    ---------    ---------     ---------     ---------
Net loss ...........................................      (5,762)        (183)      (5,147)        5,945        (5,147)
Preferred stock dividend ...........................          --           --        1,005            --         1,005
                                                       ---------    ---------    ---------     ---------     ---------
Net loss applicable to common stockholders .........      (5,762)        (183)      (6,152)        5,945        (6,152)
Foreign currency translation, net of tax ...........           6          132          146          (138)          146
                                                       ---------    ---------    ---------     ---------     ---------
Comprehensive loss .................................   $  (5,756)   $     (51)   $  (6,006)    $   5,807     $  (6,006)
                                                       =========    =========    =========     =========     =========
</TABLE>

<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED MARCH 31, 2003
                                                        ----------------------------------------------------------------
                                                         FEDDERS
                                                          NORTH        OTHER                   ELIMINATING     FEDDERS
                                                         AMERICA      FEDDERS     CORPORATE      ENTRIES     CORPORATION
                                                        ---------    ---------    ---------    -----------   -----------
<S>                                                     <C>          <C>          <C>          <C>           <C>
Net sales ...........................................   $ 115,856    $  67,404           --     $ (59,906)    $ 123,354
Cost of sales .......................................      95,132       60,094           --       (59,906)       95,320
Selling, general and administrative expense(a) ......      12,150        4,275    $  (1,152)           --        15,273
                                                        ---------    ---------    ---------     ---------     ---------
Operating income ....................................       8,574        3,035        1,152            --        12,761
Partners' net interest in joint venture results......          --         (162)          --            --          (162)
Equity income in investment .........................          --           --        4,695        (4,695)           --
Interest expense, net (b) ...........................       4,137          638          287            --         5,062
Other income (expense) ..............................          (3)         170           (6)           --           161
                                                        ---------    ---------    ---------     ---------     ---------
Income before income taxes ..........................       4,434        2,405        5,554        (4,695)        7,698
Benefit for income taxes ............................       1,285          859          358            --         2,502
                                                        ---------    ---------    ---------     ---------     ---------
Net income ..........................................       3,149        1,546        5,196        (4,695)        5,196
Preferred Stock dividend ............................          --           --          174            --           174
                                                        ---------    ---------    ---------     ---------     ---------
Net loss applicable to common stockholders ..........       3,149        1,546        5,022        (4,695)        5,022
Foreign currency translation, net of tax ............          92         (346)         (81)          254           (81)
                                                        ---------    ---------    ---------     ---------     ---------
Comprehensive income ................................   $   3,241    $   1,200    $   4,941     $  (4,441)    $   4,941
                                                        =========    =========    =========     =========     =========
</TABLE>

                                       12

<PAGE>

                               FEDDERS CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                     CONDENSED CONSOLIDATING BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                               AS OF  MARCH 31, 2004
                                                    ---------------------------------------------------------------------------
                                                      FEDDERS
                                                       NORTH           OTHER                        ELIMINATING       FEDDERS
                                                      AMERICA         FEDDERS        CORPORATE        ENTRIES       CORPORATION
                                                    -----------     -----------     -----------     -----------     -----------
<S>                                                 <C>             <C>             <C>             <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents ....................    $     7,125     $    13,259     $     2,960              --     $    23,344
  Net accounts receivable ......................         66,780          12,411              --              --          79,191
  Net inventories ..............................        125,206          34,336              --              --         159,542
  Assets held for sale .........................          8,249             315              --              --           8,564
  Other current assets .........................          2,786          21,303          11,684              --          35,773
                                                    -----------     -----------     -----------     -----------     -----------
Total current assets ...........................        210,146          81,624          14,644              --         306,414
Investments in subsidiaries ....................             --              --         (16,736)    $    16,736              --
Net property, plant and equipment ..............         35,813          16,101             533              --          52,447
Goodwill .......................................         62,870          15,220              --              --          78,090
Other intangible assets ........................          1,379              59              --              --           1,438
Other assets ...................................         10,627           2,980          37,319          (7,023)         43,903
                                                    -----------     -----------     -----------     -----------     -----------
Total assets ...................................    $   320,835     $   115,984     $    35,760     $     9,713     $   482,292
                                                    ===========     ===========     ===========     ===========     ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Short-term notes .............................    $    20,113     $    29,239              --              --     $    49,352
  Current portion of long-term debt ............         23,152           1,319              --              --          24,471
  Accounts and income taxes payable ............         17,843          69,400     $       864              --          88,107
  Accrued expenses .............................         24,950           9,440           6,373              --          40,763
                                                    -----------     -----------     -----------     -----------     -----------
Total current liabilities ......................         86,058         109,398           7,237              --         202,693
Long-term debt .................................        157,802           1,885              --              --         159,687
Other long-term liabilities ....................            395          11,976          30,287     $    (7,023)         35,635
Net due to (from) affiliates ...................         87,113          (1,072)        (86,041)             --              --
Stockholders' equity:

  Preferred Stock ..............................             --              --              19              --              19
  Common and Class B Stock .....................              5              --             390              (5)            390
  Additional paid-in capital ...................         20,292          25,542         108,847         (45,834)        108,847
  Retained earnings (deficit) ..................        (29,923)        (31,036)         16,538          60,959          16,538
  Deferred compensation and treasury
     stock .....................................             --              --         (39,911)             --         (39,911)
  Accumulated other comprehensive
     loss ......................................           (907)           (709)         (1,606)          1,616          (1,606)
                                                    -----------     -----------     -----------     -----------     -----------
Total stockholders' equity .....................        (10,533)         (6,203)         84,277          16,736          84,277
                                                    -----------     -----------     -----------     -----------     -----------
Total liabilities and stockholders'
  equity .......................................    $   320,835     $   115,984     $    35,760     $     9,713     $   482,292
                                                    ===========     ===========     ===========     ===========     ===========
</TABLE>

                                       13
<PAGE>

                               FEDDERS CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                     CONDENSED CONSOLIDATING BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                              AS OF DECEMBER 31, 2003
                                                    ---------------------------------------------------------------------------
                                                      FEDDERS
                                                       NORTH           OTHER                        ELIMINATING       FEDDERS
                                                      AMERICA         FEDDERS        CORPORATE        ENTRIES       CORPORATION
                                                    -----------     -----------     -----------     -----------     -----------
<S>                                                 <C>             <C>             <C>             <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents ....................    $    13,657     $     8,386              --              --     $    22,043
  Net accounts receivable ......................         18,646          11,072              --              --          29,718
  Net inventories ..............................        111,587          33,899              --              --         145,486
  Assets held for sale .........................          8,249             315              --              --           8,564
  Other current assets .........................          2,864          23,266     $     9,874     $        --          36,004
                                                    -----------     -----------     -----------     -----------     -----------
Total current assets ...........................        155,003          76,938           9,874              --         241,815
Investments in subsidiaries ....................             --              --         (11,047)         11,047              --
Net property, plant and equipment ..............         38,911          15,160             591              --          54,662
Goodwill .......................................         62,870          15,760              --              --          78,630
Other intangible assets ........................          1,685              --              --              --           1,685
Other assets ...................................          8,035             624          37,820          (7,023)         39,456
                                                    -----------     -----------     -----------     -----------     -----------
Total assets ...................................    $   266,504     $   108,482     $    37,238     $     4,024     $   416,248
                                                    ===========     ===========     ===========     ===========     ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Short-term notes .............................      $      --     $    30,446              --              --     $    30,446
  Current portion of long-term debt ............          1,446           1,331     $         2              --           2,779
  Accounts and income taxes payable ............         27,983          57,084           1,246              --          86,313
  Accrued expenses .............................         21,497           9,492           8,043              --          39,032
                                                    -----------     -----------     -----------     -----------     -----------
Total current liabilities ......................         50,926          98,353           9,291              --         158,570
Long-term debt .................................        157,027           1,938              --              --         158,965
Other long-term liabilities ....................            630          11,630          30,526     $    (7,023)         35,763
Net due to (from) affiliates ...................         62,829           2,700         (65,529)             --              --
Stockholders' equity:
  Preferred Stock ..............................             --              --               7              --               7
  Common and Class B Stock .....................              5              --             389              (5)            389
  Additional paid-in capital ...................         20,292          25,542          80,680         (45,834)         80,680
  Retained earnings (deficit) ..................        (24,292)        (30,840)         23,603          55,132          23,603
  Deferred compensation and treasury
     stock .....................................             --              --         (39,977)             --         (39,977)
  Accumulated other comprehensive
     loss ......................................           (913)           (841)         (1,752)          1,754          (1,752)
                                                    -----------     -----------     -----------     -----------     -----------
Total stockholders' equity .....................         (4,908)         (6,139)         62,950          11,047          62,950
                                                    -----------     -----------     -----------     -----------     -----------
Total liabilities and stockholders'
  equity .......................................    $   266,504     $   108,482     $    37,238     $     4,024     $   416,248
                                                    ===========     ===========     ===========     ===========     ===========
</TABLE>

                                       14
<PAGE>

                               FEDDERS CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                     CONDENSED CONSOLIDATING BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                AS OF MARCH 31, 2003
                                                    ---------------------------------------------------------------------------
                                                      FEDDERS
                                                       NORTH           OTHER                        ELIMINATING       FEDDERS
                                                      AMERICA         FEDDERS        CORPORATE        ENTRIES       CORPORATION
                                                    -----------     -----------     -----------     -----------     -----------
<S>                                                 <C>             <C>             <C>             <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents ....................    $     3,868     $     9,015     $       510              --     $    13,393
  Net accounts receivable ......................         80,766          11,060              --              --          91,826
  Net inventories ..............................         73,664          39,155              --              --         112,819
  Assets held for sale .........................          8,249              --              --              --           8,249
  Other current assets .........................          2,702          17,264           8,083     $        --          28,049
                                                    -----------     -----------     -----------     -----------     -----------
Total current assets ...........................        169,249          76,494           8,593              --         254,336
Investments in subsidiaries ....................             --              --           2,530          (2,530)             --
Net property, plant and equipment ..............         42,295          14,263             760              --          57,318
Goodwill .......................................         62,870          15,760              --              --          78,630
Other intangible assets ........................          1,483              --              --              --           1,483
Other assets ...................................          7,442           4,454          34,247          (7,023)         39,120
                                                    -----------     -----------     -----------     -----------     -----------
Total assets ...................................    $   283,339     $   110,971     $    46,130     $    (9,553)    $   430,887
                                                    ===========     ===========     ===========     ===========     ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Short-term notes .............................             --     $    25,529     $    37,165              --     $    62,694
  Current portion of long-term debt ............    $     1,763           1,382     $        16              --           3,161
  Accounts and income taxes payable ............         21,445          52,061           4,701              --          78,207
  Accrued expenses .............................         27,852           8,297           5,465              --          41,614
                                                    -----------     -----------     -----------     -----------     -----------
Total current liabilities ......................         51,060          87,269          47,347              --         185,676
Long-term debt .................................        159,025           3,376              45              --         162,446
Other long-term liabilities ....................          1,859          11,386          18,854     $    (7,023)         25,076
Net due to (from) affiliates ...................         60,067          17,738         (77,805)             --              --
Stockholders' equity:
  Preferred Stock ..............................             --              --              --              --              --
  Common and Class B Stock .....................              5              --             387              (5)            387
  Additional paid-in capital ...................         20,292          25,542          68,220         (45,834)         68,220
  Retained earnings (deficit) ..................         (9,072)        (32,738)         27,943          41,810          27,943
  Deferred compensation and treasury
     stock .....................................             --              --         (37,534)             --         (37,534)
  Accumulated other comprehensive
     loss ......................................            103          (1,602)         (1,327)          1,499          (1,327)
                                                    -----------     -----------     -----------     -----------     -----------
Total stockholders' equity .....................         11,328          (8,798)         57,689          (2,530)         57,689
                                                    -----------     -----------     -----------     -----------     -----------
Total liabilities and stockholders'
  equity .......................................    $   283,339     $   110,971     $    46,130     $    (9,553)    $   430,887
                                                    ===========     ===========     ===========     ===========     ===========
</TABLE>

                                       15
<PAGE>

                               FEDDERS CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                     FOR THE THREE MONTHS ENDED MARCH 31, 2004
                                                    ---------------------------------------------------------------------------
                                                      FEDDERS
                                                       NORTH           OTHER                        ELIMINATING       FEDDERS
                                                      AMERICA         FEDDERS        CORPORATE        ENTRIES       CORPORATION
                                                    -----------     -----------     -----------     -----------     -----------
<S>                                                 <C>             <C>             <C>             <C>             <C>
Net cash (used in) provided by
  operating activities .........................    $   (63,613)    $    11,196     $    (2,628)             --     $   (55,045)
                                                    -----------     -----------     -----------     -----------     -----------
Net additions to property, plant and
  equipment ....................................           (447)         (1,150)            (16)             --          (1,613)
Disposal of property, plant and
equipment ......................................            180              --              --              --             180
Investment in joint venture ....................             --            (132)             --                            (132)
                                                    -----------     -----------     -----------     -----------     -----------
Net cash (used in) provided by
investing activities............................           (267)         (1,282)            (16)             --          (1,565)
                                                    -----------     -----------     -----------     -----------     -----------
Proceeds (repayments) of short-term notes.......         20,113          (1,207)             --              --          18,906
Net repayments of long-term debt ...............           (882)            (64)             --              --            (946)
Proceeds from stock options exercised ..........             --              --              38              --              38
Cash dividends .................................             --              --          (1,918)             --          (1,918)
Net proceeds from issuance of 9 7/8%
  Senior Notes..................................        150,245              --              --              --         150,245
Repayments of 9 3/8% Senior
Subordinated Notes .............................       (128,150)             --              --              --        (128,150)
Call premium and financing costs................         (8,393)             --              --              --          (8,393)
Costs of stock offerings .......................             --              --            (194)             --            (194)
Proceeds from stock rights offering ............             --              --          28,323              --          28,323
Change in net due to (from) affiliate ..........         24,415          (3,770)        (20,645)             --              --
                                                    -----------     -----------     -----------     -----------     -----------
Net cash provided by (used in) financing
   activities ..................................         57,348          (5,041)          5,604              --          57,911
                                                    -----------     -----------     -----------     -----------     -----------
Net (decrease) increase in cash and
  cash equivalents .............................         (6,532)          4,873           2,960              --           1,301
Cash and cash equivalents at beginning
  of period ....................................         13,657           8,386              --              --          22,043
                                                    -----------     -----------     -----------     -----------     -----------
Cash and cash equivalents at end of
  period .......................................    $     7,125     $    13,259     $     2,960              --     $    23,344
                                                    ===========     ===========     ===========     ===========     ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                     FOR THE THREE MONTHS ENDED MARCH 31, 2003
                                                    ---------------------------------------------------------------------------
                                                      FEDDERS
                                                       NORTH           OTHER                        ELIMINATING       FEDDERS
                                                      AMERICA         FEDDERS        CORPORATE        ENTRIES       CORPORATION
                                                    -----------     -----------     -----------     -----------     -----------
<S>                                                 <C>             <C>             <C>             <C>             <C>
Net cash (used in) provided by operating
  activities ...................................    $   (52,168)    $     8,192     $      (214)             --     $   (44,190)
                                                    -----------     -----------     -----------     -----------     -----------
Net additions to property, plant and
  equipment ....................................         (1,062)           (412)            (71)             --          (1,545)
                                                    -----------     -----------     -----------     -----------     -----------
Disposal of property, plant and equipment.......             15              --              --              --              15
Net cash (used in) provided by investing
  activities ...................................         (1,047)           (412)            (71)             --          (1,530)
                                                    -----------     -----------     -----------     -----------     -----------
Proceeds from short-term notes .................             --           1,225          37,165              --          38,390
Net repayments of long-term debt ...............           (252)           (198)             61              --            (389)
Cash dividends .................................             --              --          (1,076)             --          (1,076)
Preferred Stock exchange offer .................             --              --            (631)             --            (631)
Change in net due to (from) affiliate ..........         39,909          (5,185)        (34,724)             --              --
                                                    -----------     -----------     -----------     -----------     -----------
Net cash provided by (used in)financing
  activities ...................................         39,657          (4,158)            795              --          36,294
                                                    -----------     -----------     -----------     -----------     -----------
Net (decrease) increase in cash and cash
  equivalents ..................................        (13,558)          3,622             510              --          (9,426)
Cash and cash equivalents at beginning of
  period .......................................         17,426           5,393              --              --          22,819
                                                    -----------     -----------     -----------     -----------     -----------
Cash and cash equivalents at end of period .....    $     3,868     $     9,015     $       510              --     $    13,393
                                                    ===========     ===========     ===========     ===========     ===========
</TABLE>

                                       16
<PAGE>

INTERCOMPANY TRANSACTIONS:

     The historical condensed consolidating financial statements presented above
     include the following transactions between the Company and FNA:

          a) The Company charges corporate overhead essentially on a cost basis
          allocated in proportion to sales. Such charges to FNA amounted to
          approximately $4.4 million and $4.6 million for the three months ended
          March 31, 2004 and 2003, respectively.

          b) FNA's interest expense reflects actual interest charges on the 9
          7/8% Senior Notes, 9 3/8% Senior Subordinated Notes, retired in April
          2004, State of Illinois Promissory Note, Trion Industrial Revenue
          Bond, capital lease obligations and a revolving line of credit.

          c) FNA's depreciation and amortization for the three months ended
          March 31, 2004 and 2003 amounted to approximately $2.1 million and
          $1.8 million, respectively. Capital expenditures of FNA amounted to
          $0.4 million and $1.1 million in the three months ended March 31, 2004
          and 2003, respectively.

          d) The Company guarantees FNA's obligations under FNA's revolving
          credit facility.

          e) The Company's stock option plans include FNA's employees.

          f) Certain reclassifications have been made in the prior year to
          conform to the current year presentation.

                                       17
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

     The following is management's discussion and analysis of certain
significant factors which affected the Company's financial position and
operating results during the periods included in the accompanying consolidated
financial statements.

     Fedders Corporation is a leading global producer and marketer of air
treatment products for the residential, commercial and industrial markets. Our
products include room air conditioners, central air conditioners, dehumidifiers,
humidifiers, air cleaners, and thermal technology products. We have two
reportable industry segments: Heating, Ventilation, Air Conditioning and
Refrigeration ("HVACR") and Engineered Products. Both segments operate and sell
products in the global air treatment market. Over the past five years, we have
re-positioned ourselves through globalization and expansion of our product
offerings from serving primarily the $1.3 billion North American market for
window air conditioners to serving the $37.0 billion global air treatment
market. Major markets we are targeting include the global market for central air
conditioning and high growth markets in Asia.

     Due to the current seasonality of our business, we normally report a loss
during the second half of the calendar year, with a majority of shipments and
revenue being derived during the first six months of the calendar year.

     The following table presents our results of operations for the periods
indicated. Results for the three-month periods ended March 31, 2004 and 2003 are
unaudited. On August 26, 2003, the Board of Directors changed the Company's
fiscal year-end from August 31 to December 31.

<TABLE>
<CAPTION>
                                           RESULTS OF OPERATIONS
                                               AS PERCENT OF
                                                 NET SALES
                                           ---------------------
                                            THREE MONTHS ENDED
                                                 MARCH 31,
                                           ---------------------
                                             2004         2003
                                           ---------    --------
<S>                                        <C>          <C>
Gross profit.........................        17.7%        22.7%
Selling, general and administrative          13.8%        12.4%
expense..............................
Operating  income....................         3.9%        10.3%
Net interest expense.................         4.0%         4.1%
Pre-tax (loss) income................        (6.1)%        6.2%
                                             ====         ====
</TABLE>

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2004 VERSUS THE THREE
MONTHS ENDED MARCH 31, 2003.

     Net sales in the three-month period ended March 31, 2004 decreased by 0.2%
to $123.2 million, compared to $123.4 million in the prior-year period. Sales
were affected by a 2.5% decrease to $112.0 million from $114.9 million in the
prior-year period within the HVACR reporting segment due to the timing of sales
of room air conditioners in North America, which were impacted by a major U.S.
customer's change in invoicing terms from FOB China in the prior year, to
delivered to the customer's U.S. distribution centers. The effect of this change
is to shift sales to the second fiscal quarter. Sales in the HVACR segment were
affected positively by growth in sales of residential central air conditioners.
Sales in the Engineered Products reporting segment increased by 33% to $11.2
million from $8.4 million in the prior-year period due primarily to increased
sales of industrial air cleaners in China.

     The gross profit in the period was $21.8 million, or 17.7% of net sales,
compared to $28.0 million, or 22.7% of net sales, in the prior-year period.
Gross profit and margin percentage in the quarter were reduced by transition and
start-up costs related to the final stages of transferring production of high
volume products from the U.S. to China.

     Selling, general and administrative ("SG&A") expenses in the three months
ended March 31, 2004 were $17.1 million, or 13.8% of net sales, compared to
$15.3 million, or 12.4% of net sales, in the prior-year period. SG&A expenses
were slightly higher than prior year as a result of higher selling expenses due
to increased sales activity globally and warehousing costs to support higher
seasonal inventory requirements.

     The operating income in the three months ended March 31, 2004 was $4.7
million, or 3.9% of net sales, compared to an operating income of $12.8 million,
or 10.3% of net sales, in the prior-year period.

     Net interest expense in the three months ended March 31, 2004 was $4.9
million, or 4.0% of net sales, compared to $5.1 million, or 4.1% of net sales,
in the prior-year period and consisted of interest expense on the Company's
long-term debt and interest on short- term working capital loans in Asia and the
U.S. Net interest expense was lower than prior year due to lower short-term
borrowings

                                       18
<PAGE>

during the period.

     A debt extinguishment charge of $7.4 million, which is tax deductible, was
recorded during the period to account for the early retirement of the Company's
ten-year notes and the issuance of new ten-year notes due March 2014. The charge
consisted of $4.2 million of cash and $3.2 million non-cash, un-amortized debt
discount.

     Net loss in the three months ended March 31, 2004 applicable to common
stockholders, which included the debt extinguishment charge, was $6.2 million,
or 20 cents diluted loss per common share, compared to net income in the three
months ended March 31, 2003 applicable to common stockholders of $5.0 million,
or 17 cents diluted earnings per common share. Net loss applicable to common
stockholders in the three months ended March 31, 2004, included the $7.4 million
debt extinguishment charge.

LIQUIDITY AND CAPITAL RESOURCES

     Working capital requirements of the Company are seasonal, with cash
balances peaking in the third quarter of each calendar year and the greatest
utilization of its lines of credit occurring early in the calendar year. Cash on
hand amounted to $23.3 million at March 31, 2004 compared to $13.4 million a
year earlier. Short-term borrowings under the Company's working capital credit
facilities amounted to $49.4 million at March 31, 2004.

     Net cash used in operations for the three months ended March 31, 2004
amounted to $55.0 million, compared to $44.2 million in the prior period. A
build-up in inventory to support seasonal requirements was the main use of cash
during the period. Net inventories at March 31, 2004 were $159.5 million
compared to $145.5 million at December 31, 2003 and $112.8 million at March 31,
2003. Inventories are higher compared to the previous year due to inventory
required to support the expansion of sales of central air conditioners globally
and all products in Asian markets, as well as to meet U.S. retailers' shipment
and warehousing requirements for the 2004 season, and change in invoicing terms
on sales to major U.S. customer.

     Net cash used in investing activities was $1.6 million and consisted of
capital expenditures of $1.6 million primarily to support the expansion of
production capacity in Asia. versus $1.5 million used in investing activities in
the prior-year period.

     Net cash provided by financing activities during the three months ended
March 31, 2004 was $57.9 million and consisted primarily of $18.9 million in
short-term borrowings to support production in Asia, $28.3 million of proceeds
from stock rights exercised offset by $1.9 million of cash dividends and the
repayment of $1.0 million of long-term debt. Net cash provided by financing
activities during the prior-year period was $36.3 million, consisting primarily
of $38.4 million in short-term borrowings to support production in Asia offset
by $1.1 million of cash dividends and the repayment of $0.4 million of long-term
debt.

     The Company declared quarterly dividends of 3 cents on each share of
outstanding Common and Class B Stock and 53.8 cents on each share of outstanding
Preferred Stock in the three months ended March 31, 2004 and the three months
ended March 31, 2003.

     The following summarizes Fedders' contractual cash obligations and
commercial commitments at March 31, 2004, and the effect such obligations are
expected to have on liquidity and cash flows in future periods.

<TABLE>
<CAPTION>
                                                                          PAYMENTS DUE BY PERIOD LESS THAN
                                                    ---------------------------------------------------------------------------
                                                                                                                       AFTER
             CONTRACTUAL OBLIGATION                    TOTAL          1 YEAR         2-3 YEARS       4-5 YEARS        5 YEARS
------------------------------------------------    -----------     -----------     -----------     -----------     -----------
                                                                                (AMOUNTS IN THOUSANDS)
<S>                                                 <C>             <C>             <C>             <C>             <C>
Long-term debt, including current maturities....    $   180,560     $    23,996     $     1,886     $     1,034     $   153,644
Capital lease obligations ......................          3,598             475           1,037           1,000           1,086
Operating leases and contractual
  minimum payments .............................         23,776           5,210           8,118           5,866           4,582
Short-term notes ...............................         49,352          49,352              --              --              --
                                                    -----------     -----------     -----------     -----------     -----------
Total contractual cash
  obligations ..................................    $   257,286     $    79,033     $    11,041     $     7,900     $   159,312
                                                    ===========     ===========     ===========     ===========     ===========
</TABLE>

     From time to time, subsidiaries of the Company may guarantee the debt of
certain unconsolidated joint ventures, up to a maximum of the Company's
ownership percentage in the unconsolidated joint venture. The Company currently
holds no collateral for such guarantees, and has not recorded corresponding
obligations. The Company's subsidiaries would be obligated to perform their
obligations under such guarantees in the event the unconsolidated joint ventures
fail to pay the principal and interest on the loans or fail to comply with the
terms of the loan agreement.

                                       19
<PAGE>

<TABLE>
<CAPTION>
                                                                          PAYMENTS DUE BY PERIOD LESS THAN
                                                    ---------------------------------------------------------------------------
                                                                                                                       AFTER
         OTHER COMMERCIAL COMMITMENTS                  TOTAL          1 YEAR         2-3 YEARS       4-5 YEARS        5 YEARS
------------------------------------------------    -----------     -----------     -----------     -----------     -----------
                                                                                (AMOUNTS IN THOUSANDS)
<S>                                                 <C>             <C>             <C>             <C>             <C>
Guarantee of debt ..............................    $     2,660     $     1,424     $     1,236              --              --
                                                    -----------     -----------     -----------     -----------     -----------
Total commercial commitments ...................    $     2,660     $     1,424     $     1,236              --              --
                                                    -----------     -----------     -----------     -----------     -----------
</TABLE>

     Management believes that the Company's cash, earnings and borrowing
capacity are adequate to meet the demands of its operations and its long-term
credit requirements.

     Forward-looking statements are covered under the "Safe-Harbor" clause of
the Private Securities Litigation Reform Act of 1995. Such statements are based
upon current expectations and assumptions. Actual results could differ
materially from those currently anticipated as a result of known and unknown
risks and uncertainties including, but not limited to, weather and economic,
political, market and industry conditions and reliance on key customers. Such
factors are described in Fedders' SEC filings, including its most recently filed
annual report on Form 10-K. The Company disclaims any obligation to update any
forward-looking statements to incorporate subsequent events.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     None

ITEM 4. CONTROLS AND PROCEDURES

     (a) Evaluation of Disclosure Controls and Procedures. The Company's Chief
Executive Officer and Chief Financial Officer have evaluated the effectiveness
of the Company's disclosure controls and procedures (as such term is defined in
Rules 13a-14 (c) and 15d-14(c) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") as of the end of the period covered by this
quarterly report (the "Evaluation Date"). Based on such evaluation, such
officers have concluded that, as of the Evaluation Date, the Company's
disclosure controls and procedures are effective in alerting them on a timely
basis to material information relating to the Company, including its
consolidated subsidiaries, required to be included in the Company's reports
filed or submitted under the Exchange Act.

     (b) Changes in Internal Controls. During the three-month period ended March
31, 2004, there have not been any significant changes in the Company's internal
controls over financial reporting or in other factors that have materially
affected or are reasonably likely to materially affect the Company's internal
control over financial reporting.

                                       20
<PAGE>

                            PART II OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                          DESCRIPTION
------      ------------------------------------------------------------
<S>         <C>
 31.1       Certifications pursuant to Section 302 of the Sarbanes-Oxley
            Act of 2002.

 31.2       Certifications pursuant to Section 302 of the Sarbanes-Oxley
            Act of 2002.

 32.1       Certifications pursuant to Section 906 of the Sarbanes-Oxley
            Act of 2002.

 32.2       Certifications pursuant to Section 906 of the Sarbanes-Oxley
            Act of 2002.
</TABLE>

(b) Reports on Form 8-K

The Company filed a Report on Form 8-K dated March 12, 2004 covering a press
release issued by the Company on that date.

                                       21
<PAGE>

                                    SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

FEDDERS CORPORATION

By: /s/ MICHAEL GIORDANO
    --------------------
    Executive Vice President,
    Finance and Administration and
    Chief Financial Officer

     Signing both in his capacity as Executive Vice President, Finance and
Administration and Chief Financial Officer and on behalf of the registrant.

May 10, 2004

                                       22