Based on 2006 1st quarter results, Federal posted record single quarter and single month highs since its founding 52 years ago. Combined shipment from Federal and its Jiang Xi factory (JFT) in China totaled 1.7 million tires in Q1 2006. Alone in March, 670,000 tires were delivered – a record high month for Federal Corporation.

Both factories, Taiwan and China, set new monthly record highs. Especially worth noting is the phenomenal growth in our Jiang Xi, China factory. JFT shipped 1.51m tires in 2004, and 2.34m in 2005. We expect JFT to deliver close to 5m tires this year.

Federal expects to see continued strong capacity increases and production output for the next five years – namely coming from planned new machinery in our JFT China factory, where there is still a lot of room for growth. Growth potential in our Taiwan plant is not to be neglected either, as we continue to upgrade facility. Capacity utilization rates have constantly been at or near 100% in both plants. We project to ship 3.5m units from the Federal Taiwan in 2006, compared to 3.3m in 2005. Combined shipment from our two locations is projected to be 8.5m units this year.