-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Mg/ExXn3jIz8AolkQbLEC/aaOt5RujVcxYExfUUCfsGJYUvwv0CnlCm0DPkHfgcq 4vHmjhP0ZvcwT05l7EJszw== 0000950134-04-005505.txt : 20040420 0000950134-04-005505.hdr.sgml : 20040420 20040420060419 ACCESSION NUMBER: 0000950134-04-005505 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040420 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040420 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TENNECO AUTOMOTIVE INC CENTRAL INDEX KEY: 0001024725 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 760515284 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12387 FILM NUMBER: 04741643 BUSINESS ADDRESS: STREET 1: 500 NORTH FIELD DRIVE CITY: LAKE FOREST STATE: IL ZIP: 60045 BUSINESS PHONE: 847-482-50 MAIL ADDRESS: STREET 1: 500 N FIELD DR STREET 2: ROOM T 2560B CITY: LAKE FOREST STATE: IL ZIP: 60045 FORMER COMPANY: FORMER CONFORMED NAME: NEW TENNECO INC DATE OF NAME CHANGE: 19961011 8-K 1 c84614be8vk.txt CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): APRIL 20, 2004 TENNECO AUTOMOTIVE INC. (Exact Name of Registrant as Specified in Charter) DELAWARE 1-12387 76-0515284 (State or Other Jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification No.) 500 NORTH FIELD DRIVE, LAKE FOREST, ILLINOIS 60045 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (847) 482-5000 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit Number Description ------ ------------------------------------------------------------- 99.1 Press Release, dated April 20, 2004, announcing Tenneco Automotive's first quarter 2004 results of operations.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. The following information, including the exhibit described below, shall not be deemed "filed" hereunder for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. On April 20, 2004, Tenneco Automotive announced its results of operations for the first quarter of 2004. A copy of the press release announcing the company's first quarter 2004 results is furnished as Exhibit 99.1 to this Form 8-K report and is incorporated herein by reference. SIGNATURES 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 hereunto duly authorized. TENNECO AUTOMOTIVE INC. Date: April 20, 2004 By: /s/ KENNETH R. TRAMMELL ----------------------------------- Kenneth R. Trammell Senior Vice President and Chief Financial Officer EXHIBIT INDEX
Exhibit Number Description ------ ------------------------------------------------------------- 99.1 Press Release, dated April 20, 2004, announcing Tenneco Automotive's first quarter 2004 results of operations.
EX-99.1 3 c84614bexv99w1.txt PRESS RELEASE EXHIBIT 99.1 TENNECO AUTOMOTIVE GROWS REVENUE AND IMPROVES OPERATIONAL PROFIT o Record quarterly revenue of $1.03 billion o First quarter EBIT up 5 percent -- adjusted EBIT up 33 percent o Adjusted EPS improves significantly o Record low debt net of cash balances of $1.277 billion at quarter-end Lake Forest, Illinois, April 20, 2004 - Tenneco Automotive (NYSE: TEN) announced today that the company reported a first quarter 2004 net loss of $2 million, or 5-cents per share, compared with net income of $1 million, or 2-cents per diluted share, in the first quarter of 2003. The company's reported EBIT (earnings before interest, taxes, and minority interest) increased 5 percent to $33 million versus $31 million in first quarter 2003. EBITDA (EBIT before depreciation and amortization expense) increased to $78 million compared with $70 million in first quarter 2003. (See the table that reconciles EBITDA in attachment 2 to the press release.) Adjusted for the items described below, first quarter 2004 net income was $6 million, or 15-cents per diluted share, versus 1-cent per diluted share in first quarter 2003, and first quarter 2004 EBIT was $47 million compared to $36 million in first quarter 2003. ADJUSTED FIRST QUARTER 2004 AND 2003 RESULTS:
Q1-2004 Q1-2003 ----------------------------------------- ----------------------------------------- EBIT NET INCOME PER SHARE EBIT NET INCOME PER SHARE ---------- ---------- ---------- ---------- ---------- ---------- GAAP earnings measures $ 33 $ (2) $ (0.05) $ 31 $ 1 $ 0.02 Adjustments: Restructuring/ restructuring related expenses 5 3 0.07 5 2 0.07 Tax settlement adjustment -- -- -- -- (3) (0.08) New Aftermarket customer changeover costs 6 3 0.08 -- -- -- Consulting fees indexed to stock price 3 2 0.05 -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- Non-GAAP earnings measures $ 47 $ 6 $ 0.15 $ 36 $ -- $ 0.01 ========== ========== ========== ========== ========== ==========
Additional information regarding Non GAAP financial results, including a reconciliation to GAAP results is included in the tables which appear as Attachment 2 to this press release. 1 FIRST QUARTER 2004 ADJUSTMENTS: o Restructuring and restructuring related costs of $5 million pre-tax, $3 million after-tax, or 7-cents per diluted share; o Expenses of $6 million pre-tax, $3 million after-tax, or 8-cents per diluted share, associated with the changeover costs for a major new aftermarket customer; o Expenses of $3 million pre-tax, $2 million after-tax, or 5-cents per diluted share, related to consulting fees indexed to the stock price based on a 1999 agreement for implementing EVA(R), a shareholder value improvement initiative. FIRST QUARTER 2003 ADJUSTMENTS: o Restructuring and restructuring related costs of $5 million pre-tax, $2 million after-tax, or 7-cents per diluted share; o Tax benefit of $3 million, or 8-cents per diluted share. "We continue to build momentum toward achieving our long-term objectives as evidenced by our strong revenue generation of more than $1 billion in the quarter and a 33 percent improvement in operating income on an adjusted basis," said Mark P. Frissora, chairman and CEO, Tenneco Automotive. "We are aggressively pursuing growth opportunities globally while maintaining our relentless focus on cost management and operational efficiency improvements." Interest expense in the first quarter 2004 was $4 million higher than the same period one year ago as a result of the debt refinancing initiatives the company implemented in 2003. The 2003 debt refinancing initiatives improved the company's financial flexibility by providing a committed long-term source of liquidity and extending nearly all of its debt maturities to 2009 and beyond. Cash flow before financing activities was a use of $2 million in the quarter compared with cash inflow of $10 million in the first quarter of 2003. Cash used for working capital was an outflow of $26 million in the quarter as a result of higher receivables related to sales volumes and higher inventory levels due to new customers and seasonal inventory builds in anticipation of the aftermarket summer selling period. This outflow was partially offset by $11 million in proceeds from the sale of the company's facility in Birmingham, U.K. Cash flow performance resulted in end of quarter cash balances of $149 million and total debt of $1.426 billion, or debt net of cash balances of $1.277 billion. Tenneco Automotive outperformed the requirements of its bank debt covenants in the quarter. At March 31, the leverage ratio was 3.97, below the maximum limit of 5.00; the fixed charge coverage ratio was 1.76, exceeding the minimum required ratio of 1.10; and the interest coverage ratio was 2.77, exceeding the minimum coverage ratio of 2.00. The company reported record high quarterly revenue of $1.03 billion, up 12 percent compared with $921 million in first quarter 2003. Favorable currency exchange rates benefited revenue by $62 million in the quarter. Excluding the impact of favorable currency, revenue was up 5 percent. The company's operational improvement initiatives continued to generate savings. Six Sigma programs generated $5 million in savings toward a 2004 goal of $20 million and the company realized $6 million in incremental savings from restructuring activities including $2 million from Project Genesis restructuring. The company's gross margin in the quarter was 19.7 percent, an increase over first quarter 2003 gross margin of 19.3 percent. "Our original equipment revenue in both North America and Europe outpaced market production as we continue to benefit from our position on top-selling vehicle platforms globally and our established presence with Japanese original equipment manufacturers," said Frissora. "Our results continue to be negatively impacted by the European aftermarket business. However, I am encouraged with the strengthening in our North American aftermarket business, where we launched significant new ride control business this quarter and where we have seen six consecutive months of improvement in the exhaust segment." NORTH AMERICA o North American original equipment revenue was $381 million, up 2 percent compared with $373 million in first quarter 2003 and versus a market production decline of 1 percent. Excluding the impact of currency and catalytic converter pass-through sales, revenue was up 1 percent. The company's strong position on high volume OE models drove the increase. 2 o North American aftermarket revenue was $122 million, up 13 percent compared with first quarter 2003 revenue of $108 million. The increase was primarily the result of a 19 percent increase in ride control sales, largely driven by new customers as well as sales of the company's new car care appearance products. o EBIT for North American operations was $30 million versus $28 million in first quarter 2003. The EBIT increase was due to strong OE and aftermarket volumes and improved manufacturing efficiencies. o First quarter 2004 EBIT results include $2 million in restructuring and restructuring related costs; $6 million related to changeover costs with a new aftermarket customer (the company anticipates up to $3 million in additional changeover costs through the end of 2004); and a $1 million expense for consulting fees indexed to the stock price based on a 1999 agreement. First quarter 2003 EBIT results include $3 million in restructuring and restructuring related expenses. o Excluding the above items, first quarter 2004 North America adjusted EBIT was $39 million, versus adjusted 2003 EBIT of $31 million. EUROPE o European original equipment revenue increased 22 percent to $328 million, versus $269 million in first quarter 2003, despite a 1 percent market decline in light vehicle production. Excluding catalytic converter pass-through sales and the impact of favorable currency exchange rates, revenue increased 13 percent. o The company's European aftermarket revenue was $80 million compared with $76 million in first quarter 2003. Excluding the favorable currency impact, revenue was down 8 percent. Continued lower demand for exhaust products and softer ride control sales negatively impacted European aftermarket results. o European EBIT was a loss of $3 million compared with a first quarter 2003 loss of $1 million. Aftermarket volume declines and overcapacity in the aftermarket exhaust segment more than offset the benefit of higher OE ride control volumes, manufacturing efficiencies and tight spending controls. Europe's operational improvement was also negatively impacted by pull-forward pricing adjustments made for two OE customers; higher aftermarket promotional costs; higher depreciation expenses related to five new just-in-time (JIT) manufacturing facilities opened within the past year; and higher stock-based compensation costs, which when combined, totaled $6 million. First quarter 2004 EBIT benefited from $1 million of favorable currency translation. o First quarter 2004 European EBIT results include $3 million in restructuring and restructuring related costs; and a $1 million expense for consulting fees indexed to the stock price based on a 1999 agreement. First quarter 2003 EBIT results include $2 million in restructuring and restructuring related expenses. o Excluding the above items and not adjusted for currency, European EBIT was flat year-over-year at $1 million. REST OF WORLD o Revenue from Asian operations increased to $39 million from $36 million in the first quarter of last year. The increase was driven by strong OE exhaust volumes in China. o In South America, revenue grew to $35 million compared with $26 million in first quarter 2003. Improved OE sales and favorable currency drove the increase. Excluding the impact of favorable currency, revenue increased 18 percent. o Australian operations reported an increase in revenue to $49 million from $33 million in first quarter 2003, driven by strong OE volumes and favorable currency. Excluding the impact of favorable currency, revenue increased 14 percent. o Reported combined EBIT for Asia, South America and Australia was $6 million versus $4 million in first quarter 2003. The increase was the result of strong OE volumes in all regions and favorable currency in South America and Australia. o First quarter EBIT 2004 results include a $1 million expense for consulting fees indexed to the stock price based on a 1999 agreement; and $1 million in favorable currency. 3 o Excluding the above item and not adjusted for currency, adjusted EBIT for Asia, South America and Australia was $7 million versus $4 million in first quarter 2003. Attachment 1 to this press release provides additional information on Tenneco Automotive's first quarter results. CONFERENCE CALL The company will host a conference call on April 20, 2004 at 10:30 a.m. EDT. The dial-in number is 888 730-9138 (domestic) or 630 395-0019 (international). The passcode is Tenneco Auto. The call will be available on the financial section of the Tenneco Automotive web site at www.tenneco-automotive.com. A copy of the press release is available on the financial and news sections of the Tenneco Automotive web site. A recording of this call will be available one hour following the completion of the call on April 20, 2004 through April 27, 2004. To access this recording, dial 888 568-0399 (domestic) or 420 530-7938 (international). 2004 ANNUAL MEETING Tenneco Automotive's annual meeting of shareholders will be on Tuesday, May 11, 2004 at 10:00 a.m. CDT. The meeting will be held at the corporate headquarters, 500 North Field Drive, Lake Forest, Illinois. Tenneco Automotive is a $3.8 billion manufacturing company with headquarters in Lake Forest, Illinois and approximately 19,200 employees worldwide. Tenneco Automotive is one of the world's largest designers, manufacturers and marketers of emission control and ride control products and systems for the automotive original equipment market and the aftermarket. Tenneco Automotive markets its products principally under the Monroe(R), Walker(R), Gillet(R) and Clevite(R)Elastomer brand names. Among its products are Sensa-Trac(R) and Monroe Reflex(R) shocks and struts, Rancho(R) shock absorbers, Walker(R) Quiet-Flow(R) mufflers, Dynomax(R) performance exhaust products, and Clevite(R)Elastomer noise, vibration and harshness control components. This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "continue," "achieving," "pursuing" and similar expressions identify forward-looking statements. These forward-looking statements are based on the current expectations of the company (including its subsidiaries). Because these forward-looking statements involve risks and uncertainties, the company's plans, actions and actual results could differ materially. Among the factors that could cause these plans, actions and results to differ materially from current expectations are: (i) the general political, economic and competitive conditions in markets and countries where the company and its subsidiaries operate, including the strength of other currencies relative to the U.S. dollar and currency fluctuations and other risks associated with operating in foreign countries; (ii) governmental actions, including the ability to receive regulatory approvals and the timing of such approvals; (iii) changes in capital availability or costs, including increases in the company's costs of borrowing (i.e., interest rate increases), the amount of the company's debt, the ability of the company to access capital markets and the credit ratings of the company's debt; (iv) changes in automotive manufacturers' production rates and their actual and forecasted requirements for the company's products, including the overall highly competitive nature of the automotive parts industry, and the company's resultant inability to realize the sales represented by its awarded book of business which is based on anticipated pricing for the applicable program over its life, and is subject to increases or decreases due to changes in customer requirements, customer and consumer preferences, and the number of vehicles actually produced by customers; (v) the cyclical nature of the global vehicular industry, including the performance of the global aftermarket sector, and changes in consumer demand and prices, including longer product lives of automobile parts and the cyclicality of automotive production and sales of automobiles which include the company's products, and the potential negative impact on the company's revenues and margins from such products; (vi) the cost and outcome of existing and any future legal proceedings, and compliance with changes in regulations, including environmental regulations; (vii) workforce factors such as strikes or labor interruptions; (viii) material substitutions and increases in the costs of raw materials; (ix) the company's continued success in cost reduction and cash management programs and its ability to execute restructuring and other cost reduction plans and to realize anticipated benefits from these plans; (x) the company's ability to develop and profitably commercialize new products and technologies, and the acceptance of such new products and technologies by the company's customers and the market; (xi) further changes in the distribution channels for the company's aftermarket products, further consolidations among automotive parts customers and suppliers, and product warranty costs; (xii) changes by the Financing Accounting Standards Board or other accounting regulatory bodies of authoritative generally accepted accounting principles or policies; (xiii) acts of war, riots or terrorism, including, but not limited to the events taking place in the Middle East, the current military action in Iraq and the continuing war on terrorism, as well as actions taken or to be taken by the United States or other governments as a result of further acts or threats of terrorism, and the impact of these acts on economic, financial and social conditions in the countries where we operate and (xiv) the timing and occurrence (or non-occurrence) of transactions and events which may be subject to circumstances beyond the control of the company and its subsidiaries. The company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this press release. Additional information regarding these risk factors and uncertainties is detailed from time to time in the company's SEC filings, including but not limited to its report on Form 10-K for the year ended December 31, 2003. Further information can be found on the company's web site at www.tenneco-automotive.com. 4 ATTACHMENT 1 TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES STATEMENTS OF INCOME (LOSS) Unaudited THREE MONTHS ENDED MARCH 31, (Millions except share and per share amounts)
2004 2003 ---------- ---------- Net sales and operating revenues $ 1,034(a) $ 921 ========== ========== Costs and Expenses Cost of Sales (exclusive of depreciation shown below) 830(b) 743(d) Engineering, Research and Development 17 19 Selling, General and Administrative 109(a)(b)(c) 88 Depreciation and Amortization of Other Intangibles 45 39 Total Costs and Expenses 1,001 889 ========== ========== Other Income (Loss) -- (1) ---------- ---------- Income (Loss) before Interest Expense, Income Taxes, and Minority Interest North America 30(a)(b)(c) 28(d) Europe (3)(b)(c) (1)(d) Other 6(c) 4 ---------- ---------- 33 31 Less: Interest expense (net of interest capitalized) 35 31 Income tax expense (benefit) (1) (2)(e) Minority interest 1 1 ---------- ---------- Net income (loss) $ (2) $ 1 ========== ========== Average common shares outstanding: Basic 40.9 40.1 ========== ========== Diluted 43.5 40.9 ========== ========== Earnings (loss) per share of common stock: Basic $ (0.05) $ 0.02 ========== ========== Diluted $ (0.05) $ 0.02 ========== ==========
- ---------- (a) Includes changeover costs for a new aftermarket customer of $6 million pre-tax, $3 million after-tax or $0.08 per share. Of the adjustment $4 million is recorded in Sales and $2 million is recorded in SG&A. Geographically all of the charge is recorded in North America. (b) Includes restructuring and restructuring related charges of $5 million pre-tax, $3 million after tax or $0.07 per share. Of the adjustment $2 million is recorded in SG&A and the remaining $3 million is in cost of sales. Geographically, $2 million is recorded in North America and $3 million in Europe. (c) Consulting fees indexed to stock price of $3 million pre-tax, $2 million after-tax or $0.05 per share. The entire charge is recorded in SG&A. Geographically $1 million of the charge is recorded in North America, Europe and Other respectively. (d) Includes restructuring related charges of $5 million pre-tax, $2 million after-tax or $0.07 per share. The entire charge is recorded in cost of sales. Geographically, $3 million is recorded in North America and $2 million in Europe. (e) Includes a $3 million or $0.08 per share tax benefit related to the resolution of outstanding tax issues. ATTACHMENT 1 TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES BALANCE SHEET (Unaudited) (Millions)
MARCH 31, 2004 DECEMBER 31, 2003 ------------------ ------------------ Assets Cash and Cash Equivalents $ 149 $ 145 Receivables, Net 512 442 Inventories 367 343 Other Current Assets 203 175 Investments and Other Assets 602 579 Plant, Property, and Equipment, Net 1,079 1,111 ------------------ ------------------ Total Assets $ 2,912 $ 2,795 ================== ================== Liabilities and Shareholders' Equity Short-Term Debt $ 18 $ 20 Accounts Payable 692 621 Accrued Taxes 25 19 Accrued Interest 39 42 Other Current Liabilities 234 191 Long-Term Debt 1,408 1,410 Deferred Income Taxes 125 119 Deferred Credits and Other Liabilities 297 292 Minority Interest 21 23 Total Shareholders' Equity 53 58 ------------------ ------------------ Total Liabilities and Shareholders' Equity $ 2,912 $ 2,795 ================== ==================
ATTACHMENT 1 Tenneco Automotive Inc. and Consolidated Subsidiaries Statement of Cash Flows (Unaudited) (Millions)
THREE MONTHS ENDED MARCH 31, -------------------------- 2004 2003 ---------- ---------- Operating activities: Net income (loss) $ (2) $ 1 Adjustments to reconcile income (loss) to net cash provided (used) by operating activities - Depreciation and amortization 45 39 Deferred income taxes (9) (7) Changes in components of working capital - (Inc.)/dec. in receivables (70) (49) (Inc.)/dec. in inventories (27) (12) (Inc.)/dec. in prepayments and other current assets (26) (6) Inc./(dec.) in payables 79 78 Inc./(dec.) in taxes accrued 5 (4) Inc./(dec.) in interest accrued (2) 11 Inc./(dec.) in other current liabilities 15 (18) Other 5 3 ---------- ---------- Net cash provided (used) by operating activities 13 36 Investing activities: Net proceeds from sale of assets 11 1 Expenditures for plant, property & equipment (25) (26) Investments and other (1) (1) ---------- ---------- Net cash provided (used) by investing activities (15) (26) ---------- ---------- Net cash provided (used) before financing activities (2) 10 Financing activities: Issuance of common and treasury shares 3 -- Retirement of long-term debt (2) (24) Net inc./(dec.) in short-term debt excluding current maturities on long-term debt (2) 21 Other 1 -- ---------- ---------- Net cash provided (used) by financing activities -- (3) ---------- ---------- Effect of foreign exchange rate changes on cash and cash equivalents 6 (3) ---------- ---------- Inc./(dec.) in cash and cash equivalents 4 4 Cash and cash equivalents, January 1 145 54 ---------- ---------- Cash and cash equivalents, March 31 $ 149 $ 58 ========== ========== Cash paid during the period for interest $ 37 $ 20 Cash paid during the period for income taxes $ 3 $ 11
ATTACHMENT 2 TENNECO AUTOMOTIVE RECONCILIATION OF GAAP(1) NET INCOME (LOSS) TO EBITDA Unaudited
Q1 2004 ------------------------------------------------ NORTH AMERICA EUROPE OTHER TOTAL -------- -------- -------- -------- Net income (loss) (GAAP measure) $ (2) Minority interest 1 Income tax expense (benefit) (1) Interest expense (net of interest capitalized) 35 EBIT, Income (loss) before interest expense, income taxes and minority interest (GAAP measure) $ 30 $ (3) $ 6 33 Depreciation and amortization of other intangibles 24 17 4 45 -------- -------- -------- -------- Total EBITDA(2) $ 54 $ 14 $ 10 $ 78 ======== ======== ======== ========
Q1 2003 ------------------------------------------------ NORTH AMERICA EUROPE OTHER TOTAL -------- -------- -------- -------- Net income (loss) (GAAP measure) $ 1 Minority interest 1 Income tax expense (benefit) (2) Interest expense (net of interest capitalized) 31 -------- EBIT, Income (loss) before interest expense, income taxes and minority interest (GAAP measure) $ 28 $ (1) $ 4 $ 31 Depreciation and amortization 22 14 3 39 -------- -------- -------- -------- Total EBITDA $ 50 $ 13 $ 7 $ 70 ======== ======== ======== ========
- ---------- (1) Generally Accepted Accounting Principles (2) EBITDA represents income before interest expense, income taxes, minority interest and depreciation and amortization. EBITDA is not a calculation based upon generally accepted accounting principles. The amounts included in the EBITDA calculation, however, are derived from amounts included in the historical statements of income data. In addition, EBITDA should not be considered as an alternative to net income or operating income as an indicator of the company's operating performance, or as an alternative to operating cash flows as a measure of liquidity. Tenneco Automotive has presented EBITDA because it regularly reviews EBITDA as a measure of the company's performance. In addition, Tenneco Automotive believes its debt holders utilize and analyze our EBITDA for similar purposes. Tenneco Automotive also believes EBITDA assists investors in comparing a company's performance on a consistent basis without regard to depreciation and amortization, which can vary significantly depending upon many factors. However, the EBITDA measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation. ATTACHMENT 2 TENNECO AUTOMOTIVE RECONCILIATION OF GAAP(1) TO NON-GAAP EARNINGS MEASURES(2) Unaudited
Q1 2004 Q1 2003 -------------------------------------------------- -------------------------------------------------- EBITDA(3) EBIT NET INCOME PER SHARE EBITDA(3) EBIT NET INCOME PER SHARE ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Earnings Measures $ 78 $ 33 $ (2) $ (0.05) $ 70 $ 31 $ 1 $ 0.02 Adjustments (reflects non-GAAP measures): Restructuring and restructuring related expenses 5 5 3 0.07 5 5 2 0.07 Tax settlement adjustment -- -- -- -- -- -- (3) (0.08) New Aftermarket customer changeover costs 6 6 3 0.08 -- -- -- -- Consulting fees indexed to stock price 3 3 2 0.05 -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Non-GAAP earnings measure $ 92 $ 47 $ 6 $ 0.15 $ 75 $ 36 $ -- $ 0.01 ========== ========== ========== ========== ========== ========== ========== ==========
Q1 2004 -------------------------------------------------- NORTH AMERICA EUROPE OTHER TOTAL ---------- ---------- ---------- ---------- EBIT $ 30 $ (3) $ 6 $ 33 Restructuring and restructuring related expenses 2 3 -- 5 New Aftermarket customer changeover costs 6 -- -- 6 Consulting fees indexed to stock price 1 1 1 3 ---------- ---------- ---------- ---------- Adjusted EBIT $ 39 $ 1 $ 7 $ 47 ========== ========== ========== ==========
Q1 2003 -------------------------------------------------- NORTH AMERICA EUROPE OTHER TOTAL ---------- ---------- ---------- ---------- EBIT $ 28 $ (1) $ 4 $ 31 Restructuring and restructuring related expenses 3 2 -- 5 ---------- ---------- ---------- ---------- Adjusted EBIT $ 31 $ 1 $ 4 $ 36 ========== ========== ========== ==========
- ---------- (1) Generally Accepted Accounting Principles (2) Tenneco Automotive presents the above reconciliation of GAAP to non-GAAP earnings measures in order to reflect the results for the first quarters of 2004 and 2003 in a manner that allows a better understanding of the results of operational activities separate from the financial impact of decisions made for the long-term benefit of the company. Adjustments similar to the ones reflected above have been recorded in earlier periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. Using only the non-GAAP earnings measures to analyze earnings would have material limitations because its calculation is based on the subjective determinations of management regarding the nature and classification of events and circumstances that investors may find material. Management compensates for these limitations by utilizing both GAAP and non-GAAP earnings measures reflected above to understand and analyze the results of the business. The company believes investors find the non-GAAP information helpful in understanding the ongoing performance of operations separate from items that may have a disproportionate positive or negative impact on the company's financial results in any particular period. (3) EBITDA represents income before interest expense, income taxes, minority interest and depreciation and amortization. EBITDA is not a calculation based upon generally accepted accounting principles. The amounts included in the EBITDA calculation, however, are derived from amounts included in the historical statements of income data. In addition, EBITDA should not be considered as an alternative to net income or operating income as an indicator of the company's operating performance, or as an alternative to operating cash flows as a measure of liquidity. Tenneco Automotive has presented EBITDA because it regularly reviews EBITDA as a measure of the company's performance. In addition, Tenneco Automotive believes its debt holders utilize and analyze our EBITDA for similar purposes. Tenneco Automotive also believes EBITDA assists investors in comparing a company's performance on a consistent basis without regard to depreciation and amortization, which can vary significantly depending upon many factors. However, the EBITDA measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation. ATTACHMENT 2 TENNECO AUTOMOTIVE RECONCILIATION OF GAAP REVENUES TO NON-GAAP REVENUE MEASURE Unaudited
Q1 2004 ---------------------------------------------------------------------------------------------------- PASS-THROUGH REVENUES SALES EXCLUDING REVENUES EXCLUDING CURRENCY CURRENCY EXCLUDING CURRENCY AND PASS-THROUGH REVENUES IMPACT CURRENCY IMPACT SALES ---------------- ---------------- ---------------- ---------------- ---------------- NORTH AMERICA AFTERMARKET RIDE CONTROL $ 85 $ -- $ 85 $ -- $ 85 EXHAUST 37 -- 37 -- 37 ---------------- ---------------- ---------------- ---------------- ---------------- TOTAL NORTH AMERICA AFTERMARKET 122 -- 122 -- 122 NORTH AMERICA ORIGINAL EQUIPMENT RIDE CONTROL 118 -- 118 -- 118 EXHAUST 263 5 258 88 170 ---------------- ---------------- ---------------- ---------------- ---------------- TOTAL NORTH AMERICA ORIGINAL EQUIPMENT 381 5 376 88 288 TOTAL NORTH AMERICA 503 5 498 88 410 EUROPE AFTERMARKET RIDE CONTROL 38 4 34 -- 34 EXHAUST 42 6 36 -- 36 ---------------- ---------------- ---------------- ---------------- ---------------- TOTAL EUROPE AFTERMARKET 80 10 70 -- 70 EUROPE ORIGINAL EQUIPMENT RIDE CONTROL 85 10 75 -- 75 EXHAUST 243 21 222 77 145 ---------------- ---------------- ---------------- ---------------- ---------------- TOTAL EUROPE ORIGINAL EQUIPMENT 328 31 297 77 220 TOTAL EUROPE 408 41 367 77 290 ASIA 39 -- 39 13 26 SOUTH AMERICA 35 4 31 4 27 AUSTRALIA 49 12 37 4 33 ---------------- ---------------- ---------------- ---------------- ---------------- TOTAL OTHER 123 16 107 21 86 TOTAL TENNECO AUTOMOTIVE $ 1,034 $ 62 $ 972 $ 186 $ 786 ================ ================ ================ ================ ================
Q1 2003 ---------------------------------------------------------------------------------------------------- PASS-THROUGH REVENUES SALES EXCLUDING REVENUES EXCLUDING CURRENCY CURRENCY EXCLUDING CURRENCY AND PASS-THROUGH REVENUES IMPACT CURRENCY IMPACT SALES ---------------- ---------------- ---------------- ---------------- ---------------- NORTH AMERICA AFTERMARKET RIDE CONTROL $ 72 $ -- $ 72 $ -- $ 72 EXHAUST 36 -- 36 -- 36 ---------------- ---------------- ---------------- ---------------- ---------------- TOTAL NORTH AMERICA AFTERMARKET 108 -- 108 -- 108 NORTH AMERICA ORIGINAL EQUIPMENT RIDE CONTROL 116 -- 116 -- 116 EXHAUST 257 -- 257 87 170 ---------------- ---------------- ---------------- ---------------- ---------------- TOTAL NORTH AMERICA ORIGINAL EQUIPMENT 373 -- 373 87 286 TOTAL NORTH AMERICA 481 -- 481 87 394 EUROPE AFTERMARKET RIDE CONTROL 35 -- 35 -- 35 EXHAUST 41 -- 41 -- 41 ---------------- ---------------- ---------------- ---------------- ---------------- TOTAL EUROPE AFTERMARKET 76 -- 76 -- 76 EUROPE ORIGINAL EQUIPMENT RIDE CONTROL 57 -- 57 -- 57 EXHAUST 212 -- 212 74 138 ---------------- ---------------- ---------------- ---------------- ---------------- TOTAL EUROPE ORIGINAL EQUIPMENT 269 -- 269 74 195 TOTAL EUROPE 345 -- 345 74 271 ASIA 36 -- 36 13 23 SOUTH AMERICA 26 -- 26 2 24 AUSTRALIA 33 -- 33 3 30 ---------------- ---------------- ---------------- ---------------- ---------------- TOTAL OTHER 95 -- 95 18 77 TOTAL TENNECO AUTOMOTIVE $ 921 $ -- $ 921 $ 179 $ 742 ================ ================ ================ ================ ================
TENNECO AUTOMOTIVE PRESENTS THE ABOVE RECONCILIATION OF REVENUES IN ORDER TO REFLECT THE TREND IN THE COMPANY'S SALES, IN VARIOUS PRODUCT LINES AND GEOGRAPHICAL REGIONS, SEPARATELY FROM THE EFFECTS OF DOING BUSINESS IN CURRENCIES OTHER THAN THE U.S. DOLLAR. ADDITIONALLY, PASS-THROUGH CATALYTIC CONVERTER SALES INCLUDE PRECIOUS METALS PRICING, WHICH MAY BE VOLATILE. WHILE TENNECO AUTOMOTIVE'S ORIGINAL EQUIPMENT CUSTOMERS ASSUME THE RISK OF THIS VOLATILITY, IT IMPACTS REPORTED REVENUE. EXCLUDING PASS-THROUGH CATALYTIC CONVERTER SALES REMOVES THIS IMPACT. TENNECO AUTOMOTIVE USES THIS INFORMATION TO ANALYZE THE TREND IN REVENUES BEFORE THESE FACTORS. TENNECO AUTOMOTIVE BELIEVES INVESTORS FIND THIS INFORMATION USEFUL IN UNDERSTANDING PERIOD TO PERIOD COMPARISONS IN THE COMPANY'S REVENUES. -----END PRIVACY-ENHANCED MESSAGE-----