-----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, QzYecc9gq5FnMpBM6968zbdtfqKyeLTpu8iO7wte3PNNSP5tAAb9efCJkuGmGEyd 4eJaZelzvhyCkoTnQ+UEhg== 0000950137-04-005681.txt : 20040720 0000950137-04-005681.hdr.sgml : 20040720 20040720083051 ACCESSION NUMBER: 0000950137-04-005681 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040720 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040720 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: 04921031 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 c86875e8vk.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): JULY 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 Description Number 99.1 Press Release, dated July 20, 2004, announcing Tenneco Automotive's second 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 July 20, 2004, Tenneco Automotive announced its results of operations for the second quarter of 2004. A copy of the press release announcing the company's second 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: July 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 July 20, 2004, announcing Tenneco Automotive's second quarter 2004 results of operations. EX-99.1 2 c86875exv99w1.txt PRESS RELEASE EXHIBIT 99.1 news release [TENNECO AUTOMOTIVE LOGO] Contacts: Jane Ostrander Leslie Hunziker Media Relations Investor Relations 847-482-5607 847-482-5042 jane.ostrander@tenneco-automotive.com leslie.hunziker@tenneco-automotive.com TENNECO AUTOMOTIVE REPORTS RECORD REVENUE AND EARNINGS o HIGHEST EVER QUARTERLY REVENUE OF $1.114 BILLION o RECORD QUARTERLY NET INCOME AND EPS OF $30 MILLION, OR 69-CENTS PER SHARE o RECORD LOW DEBT NET OF CASH BALANCES AT $1.253 BILLION o EUROPEAN EBIT IMPROVES 27 PERCENT; ADJUSTED EUROPEAN EBIT UP 55 PERCENT Lake Forest, Illinois, July 20, 2004 - Tenneco Automotive (NYSE: TEN) announced today that the company reported a 25 percent increase in net income and a 19 percent increase in earnings per diluted share with second quarter net income of $30 million, or 69-cents per diluted share, versus net income of $24 million, or 58-cents per diluted share, in the second quarter of 2003. The company reported a 15 percent improvement in EBIT (earnings before interest, taxes, and minority interest) to $76 million over second quarter 2003 EBIT of $67 million. EBITDA (EBIT before depreciation and amortization) in the quarter increased 12 percent to $120 million compared with $108 million a year earlier. (See the table that reconciles EBITDA in attachment 2 to the press release.) Adjusted for the items described below, second quarter 2004 net income improved 55 percent to $31 million and earnings per share was up 43 percent to 70-cents per diluted share. Second quarter EBIT was up 24 percent to $84 million and EBITDA improved 17 percent to $128 million. ADJUSTED SECOND QUARTER 2004 AND 2003 RESULTS:
Q2 2004 Q2 2003 ----------------------------------------- ------------------------------------------ EBITDA EBIT Net Income Per Share EBITDA EBIT Net Income Per Share ------ ----- ---------- --------- ------ ---- ---------- --------- Earnings Measures $120 $ 76 $ 30 $0.69 $108 $ 67 $ 24 $0.58 Adjustments: - Restructuring and restructuring related expenses 5 5 3 0.07 1 1 1 0.03 - New Aftermarket customer changeover costs 2 2 1 0.02 -- -- -- -- - Consulting fees indexed to stock price 1 1 1 0.01 -- -- -- -- - Debt issuance cost write off -- -- -- -- -- -- 3 0.07 - Tax adjustments -- -- (4) (0.09) -- -- (8) (0.19) ---- ---- ---- ----- ---- ---- ---- ----- Non-GAAP earnings measures $128 $ 84 $ 31 $0.70 $109 $ 68 $ 20 $0.49 ==== ==== ==== ===== ==== ==== ==== =====
Additional information regarding Non-GAAP financial results, including a reconciliation of EBITDA and a reconciliation of other Non-GAAP earnings measures are included in the tables that appear in attachment 2 to this press release. SECOND QUARTER 2004 ADJUSTMENTS: o Restructuring related expenses of $5 million pre-tax, or 7-cents per diluted share; o Expenses of $2 million pre-tax, or 2-cents per diluted share, associated with continuing changeover costs for a new aftermarket customer acquired in the first quarter; o Expenses of $1 million pre-tax, or 1-cent per diluted share, for consulting fees indexed to the stock price based on a 1999 agreement for implementing EVA(R); o A tax benefit of $4 million, or 9-cents per diluted share. -more- SECOND QUARTER 2003 ADJUSTMENTS: o Restructuring related expenses of $1 million pre-tax, or 3-cents per diluted share; o Expenses of $5 million pre-tax, or 7-cents per diluted share, related to the write-off of debt issuance costs; o Tax benefits of $8 million, or 19-cents per diluted share. "Our strategies for top-line growth, cash generation and aggressive cost management continue to prove effective as we posted another solid quarter with strong revenues and improved operational performance," said Mark P. Frissora, chairman and CEO, Tenneco Automotive. "We are well-positioned with the flexibility to adapt quickly to changing market conditions. Going forward, we will continue to benefit from our strong geographical balance, highly variable cost structure and more efficient manufacturing operations." The company reported its highest ever quarterly revenue of $1.114 billion compared with $998 million in second quarter 2003, driven by higher volumes on top-selling vehicle platforms worldwide and strengthening aftermarket sales in North America and South America. Favorable currency exchange rates benefited revenue by $27 million. Tenneco Automotive was awarded approximately $495 million in new business, over the life of the contracts, in the second quarter for OE platforms expected to begin production in 2006-2007 and approximately $5 million annualized in new aftermarket business. The new business includes one of the company's largest ever contracts to supply the full diesel exhaust system on a major pick-up truck platform in North America. The company's cost management activities and operational efficiency programs continued to generate savings in the second quarter. SGA&E (selling, general, administrative and engineering) expense decreased to 10.7 percent of sales, versus 11.0 percent one year ago, on track toward an annual goal of less than 11.5 percent of sales. Six Sigma initiatives generated $7 million in savings and the company realized $3 million in savings from Project Genesis restructuring activities. The company's gross margin in the quarter was 21.5 percent, versus 21.9 percent one year ago. Excluding restructuring related expenses, gross margin was flat year-over-year. Gross margin in the quarter was also impacted by a shifting business mix as the company's global OE growth outpaced higher margin aftermarket growth. A record low net debt of $1.253 billion was driven by improved cash flow performance in the quarter. Cash balances were $166 million at quarter-end and total debt was $1.419 billion. Tenneco Automotive outperformed the requirements of its bank debt covenants in the quarter. At June 30, the leverage ratio was 3.78, below the maximum limit of 5.00; the fixed charge coverage ratio was 2.04, exceeding the minimum required ratio of 1.10; and the interest coverage ratio was 3.15, exceeding the minimum coverage ratio of 2.00. NORTH AMERICA o North American original equipment revenue was $379 million, up 4 percent compared with $365 million in second quarter 2003. The company outperformed the market's flat production rate due to its strong position on better-selling platforms and higher heavy-duty truck volumes. 2 o North American aftermarket revenue was $144 million, a 7 percent increase versus $136 million in second quarter 2003. An 11 percent improvement in ride control sales drove the increase and offset a 3 percent decline in exhaust sales. o EBIT for North American operations was $50 million, flat with second quarter 2003. Excluding the items below, EBIT increased 6 percent, driven by manufacturing efficiencies and cost savings. o Second quarter 2004 EBIT results include $1 million in restructuring costs, $2 million for an aftermarket customer changeover costs, and $1 million associated with stock price indexed consulting fees. EUROPE o European original equipment revenue was $343 million in the quarter, a 20 percent increase over second quarter 2003 revenue of $286 million. Excluding $18 million in favorable currency, revenue was up 14 percent compared with one year ago. The launch of new ride control platforms and higher exhaust volumes drove the increase. o European aftermarket revenue was $103 million, flat with second quarter 2003. Excluding the impact of favorable currency, revenue was $99 million. The decrease was due to lower sales in both product lines. o European EBIT was $14 million, including $1 million in favorable currency, compared with second quarter 2003 EBIT of $11 million. Excluding the items below, EBIT increased 55 percent to $18 million, versus $12 million one year ago. The improvement was driven by OE volume increases, manufacturing efficiencies and lower overhead costs. o Second quarter 2004 EBIT results include $4 million in restructuring related expenses. Second quarter 2003 EBIT results include $1 million in restructuring related expenses. REST OF WORLD o Revenue from Asian operations increased 47 percent to $58 million from $40 million in second quarter 2003, primarily driven by a 58 percent increase in China OE revenues. o Revenue from South America operations was $36 million, a 22 percent increase versus $29 million in second quarter 2003. The increase was the result of higher OE volumes and stronger aftermarket sales. o Australian operations generated revenue of $51 million, a 27 percent increase compared with $40 million a year earlier. Excluding the impact of $4 million in favorable currency, revenue increased 15 percent, due to higher OE volumes and stronger aftermarket sales. o Reported combined EBIT for Asia, South America and Australia was $12 million versus $7 million in second quarter 2003, primarily driven by higher OE volumes. "Despite some market uncertainties, we are cautiously optimistic that our improving performance will continue over the second half of 2004 due to our geographical balance, strong position on top-selling vehicles globally, upcoming new platform launches and strong foothold in growing markets such as China and commercial vehicles," said Frissora. "Our intense focus on reducing discretionary spending, improving operational efficiency and leveraging our global supply chain management system should also help counter any changes in the marketplace." Attachment 1 to this press release provides additional information on Tenneco Automotive's second quarter results: Statement of Income - 3 months Statement of Income - 6 months Balance Sheet Statements of Cash Flow 3 Attachment 2 Reconciliation of GAAP Net Income to EBITDA - 3 months Reconciliation of GAAP to Non-GAAP Earnings Measures - 3 months Reconciliation of GAAP Net Income to EBITDA - 6 months Reconciliation of GAAP to Non-GAAP Earnings Measures - 6 months Reconciliation of GAAP Revenues to Non-GAAP Revenue Measure - 3 months Reconciliation of GAAP Revenues to Non-GAAP Revenue Measure - 6 months CONFERENCE CALL The company will host a conference call on July 20, 2004 at 10:30 a.m. EDT. The dial-in number is 888-455-9642 (domestic) or 210-839-8504 (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 completion of the call on July 20, 2004 through July 27, 2004. To access this recording, dial 800-297-0768 (domestic) or 402-220-3822 (international). THE COMPANY 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 "will," "should," "continue" 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 4 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. ### 5 ATTACHMENT 1 TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES STATEMENTS OF INCOME Unaudited --------- THREE MONTHS ENDED JUNE 30, (Millions except share and per share amounts)
2004 2003 ------- ----------- Net sales and operating revenues: $ 1,114 (a) $ 998 ======= =========== Costs and Expenses Cost of Sales (exclusive of depreciation shown below) 874 (b) 779 (e) Engineering, Research and Development 19 13 Selling, General and Administrative 100 (c) 97 Depreciation and Amortization of Other Intangibles 44 41 ------- ----------- Total Costs and Expenses 1,037 930 ======= =========== Loss on sale of receivables (1) (1) ------- ----------- Total Other Income (Loss) (1) (1) ------- ----------- Income before Interest Expense, Income Taxes, and Minority Interest North America 50 (a)(b)(c) 49 Europe 14 (b) 11 (e) Other 12 7 ------- ----------- 76 67 Less: Interest expense (net of interest capitalized) 34 38 (f) Income tax expense (benefit) 10 (d) 3 (g) Minority interest 2 2 ------- ----------- Net income $ 30 $ 24 ======= =========== Average common shares outstanding: Basic 41.5 40.4 ======= =========== Diluted 44.2 41.3 ======= =========== Earnings per share of common stock: Basic $ 0.73 $ 0.59 ======= =========== Diluted $ 0.69 $ 0.58 ======= ===========
(a) Includes continuing changeover costs for a new aftermarket customer acquired in the first quarter of $2 million pre-tax, $1 million after-tax or $0.02 per share. The entire cost is recorded in Sales. 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. The entire charge is recorded in cost of sales. Geographically, $1 million is recorded in North America and $4 million in Europe. (c) Includes consulting fees indexed to stock price of $1 million pre-tax, $1 million after-tax or $0.01 per share. The entire charge is recorded in SG&A. Geographically the entire charge is recorded in North America. (d) Includes a $4 million or $0.09 per share tax benefit related to the resolution of outstanding tax issues. (e) Includes restructuring and restructuring related charges of $1 million pre-tax, $1 million after-tax or $0.03 per share. The entire charge is recorded in cost of sales. Geographically all of the charge is recorded in Europe. (f) Includes a pre-tax expense of $5 million, $3 million after-tax or $0.07 per share related to debt issuance costs that were deferred on the senior debt we paid down with the proceeds of the June 2003 $350 million bond offering. (g) Includes an $8 million or $0.19 per share tax benefit related to the resolution of outstanding tax issues. ATTACHMENT 1 TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES STATEMENTS OF INCOME Unaudited --------- SIX MONTHS ENDED JUNE 30, (Millions except share and per share amounts)
2004 2003 ------- ------- Net sales and operating revenues: $ 2,148 (a) $ 1,919 ======= ======= Costs and Expenses Cost of Sales (exclusive of depreciation shown below) 1,704 (b) 1,522 (e) Engineering, Research and Development 36 32 Selling, General and Administrative 209 (a)(b)(c) 185 Depreciation and Amortization of Other Intangibles 89 80 ------- ------- Total Costs and Expenses 2,038 1,819 ======= ======= Loss on sale of receivables (1) (1) Other Income (Loss) - (1) ------- ------- Total Other Income (Loss) (1) (2) ------- ------- Income before Interest Expense, Income Taxes, and Minority Interest North America 80 (a)(b)(c) 77 (e) Europe 11 (b)(c) 10 (e) Other 18 (c) 11 ------- ------- 109 98 Less: Interest expense (net of interest capitalized) 69 69 (f) Income tax expense (benefit) 9 (d) 1 (g) Minority interest 3 3 ------- ------- Net income $ 28 $ 25 ======= ======= Average common shares outstanding: Basic 41.1 40.2 ======= ======= Diluted 43.8 41.1 ======= ======= Earnings per share of common stock: Basic $ 0.69 $ 0.61 ======= ======= Diluted $ 0.65 $ 0.60 ======= =======
(a) Includes changeover costs for a new aftermarket customer acquired in the first quarter of $8 million pre-tax, $5 million after-tax or $0.11 per share. Of the adjustment $6 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 $10 million pre-tax, $6 million after tax or $0.14 per share. Of the adjustment $2 million is recorded in SG&A and the remaining $8 million is in cost of sales. Geographically, $3 million is recorded in North America and $7 million in Europe. (c) Includes consulting fees indexed to stock price of $4 million pre-tax, $3 million after-tax or $0.06 per share. The entire charge is recorded in SG&A. Geographically $2 million of the charge is recorded in North America, $1 million in Europe and $1 million in Other. (d) Includes a $5 million or $0.11 per share tax benefit related to the resolution of outstanding tax issues. (e) Includes restructuring and restructuring related charges of $6 million pre-tax, $3 million after-tax or $0.09 per share. The entire charge is recorded in cost of sales. Geographically, $3 million is recorded in North America and $3 million in Europe. (f) Includes a pre-tax expense of $5 million, $3 million after-tax or $0.07 per share related to debt issuance costs that were deferred on the senior debt we paid down with the proceeds of the June 2003 $350 million bond offering. (g) Includes an $11 million or $0.26 per share tax benefit related to the resolution of outstanding tax issues. ATTACHMENT 1 TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES BALANCE SHEET (Unaudited) (Millions)
June 30, 2004 December 31, 2003 ------------- ----------------- Assets Cash and Cash Equivalents $ 166 $ 145 Receivables, Net 550 442 Inventories 352 343 Other Current Assets 202 175 Investments and Other Assets 594 579 Plant, Property, and Equipment, Net 1,059 1,111 ------ ------ Total Assets $2,923 $2,795 ====== ====== Liabilities and Shareholders' Equity Short-Term Debt $ 20 $ 20 Accounts Payable 669 621 Accrued Taxes 30 19 Accrued Interest 39 42 Other Current Liabilities 239 191 Long-Term Debt 1,399 1,410 Deferred Income Taxes 124 119 Deferred Credits and Other Liabilities 307 292 Minority Interest 23 23 Total Shareholders' Equity 73 58 ------ ------ Total Liabilities and Shareholders' Equity $2,923 $2,795 ====== ======
ATTACHMENT 1 TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES STATEMENT OF CASH FLOWS (UNAUDITED) (Millions)
SIX MONTHS ENDED JUNE 30, ------------------ 2004 2003 ------ ------- Operating activities: Net income $ 28 $ 25 Adjustments to reconcile income to net cash provided by operating activities - Depreciation and amortization 89 80 Deferred income taxes (5) (10) Changes in components of working capital - (Inc.)/dec. in receivables (113) (87) (Inc.)/dec. in inventories (16) 24 (Inc.)/dec. in prepayments and other current assets (27) (1) Inc./(dec.) in payables 60 30 Inc./(dec.) in taxes accrued 13 (19) Inc./(dec.) in interest accrued (2) (5) Inc./(dec.) in other current liabilities 24 (19) Other 8 10 ----- ----- Net cash provided by operating activities 59 28 Investing activities: Net proceeds from sale of assets 11 3 Expenditures for plant, property & equipment (54) (54) Investments and other (2) (2) ----- ----- Net cash used by investing activities (45) (53) ----- ----- Net cash provided (used) before financing activities 14 (25) Financing activities: Issuance of common shares 4 - Proceeds from capital contributions - 1 Issuance of long-term debt - 350 Debt issuance costs on long-term debt - (12) Retirement of long-term debt (4) (276) Net inc./(dec.) in short-term debt excluding current maturities on long-term debt 1 (25) Other 2 (1) ----- ----- Net cash provided by financing activities 3 37 ----- ----- Effect of foreign exchange rate changes on cash and temporary cash investments 4 (8) ----- ----- Inc./(dec.) in cash and temporary cash investments 21 4 Cash and temporary cash investments, January 1 145 54 ----- ----- Cash and temporary cash investments, June 30 $ 166 $ 58 ===== ===== Cash paid during the period for interest $ 74 $ 67 Cash paid during the period for income taxes $ 7 $ 30
ATTACHMENT 2 TENNECO AUTOMOTIVE RECONCILIATION OF GAAP(1) NET INCOME TO EBITDA Unaudited ---------
Q2 2004 --------------------------------------- North Rest of America Europe World Total -------- ------ ------- ------- Net income $ - $ - $ - $ 30 Minority interest - - - 2 Income tax expense (benefit) - - - 10 Interest expense (net of interest capitalized) - - - 34 ------- EBIT, Income before interest expense, income taxes and minority interest (GAAP measure) 50 14 12 76 Depreciation and amortization of other intangibles 24 16 4 44 ------- ------ ------- ------- Total EBITDA(2) $ 74 $ 30 $ 16 $ 120 ======= ====== ======= ======= Q2 2003 --------------------------------------- North Rest of America Europe World Total ------- ------ ------- ------- Net income $ - $ - $ - $ 24 Minority interest - - - 2 Income tax expense (benefit) - - - 3 Interest expense (net of interest capitalized) - - - 38 ------- EBIT, Income before interest expense, income taxes and minority interest (GAAP measure) 49 11 7 67 Depreciation and amortization 24 14 3 41 ------- ------ ------- ------- Total EBITDA $ 73 $ 25 $ 10 $ 108 ======= ====== ======= =======
(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 ---------
Q2 2004 Q2 2003 -------------------------------------- ---------------------------------------- EBITDA(3) EBIT Net Income Per Share EBITDA(3) EBIT Net Income Per Share --------- ----- ---------- --------- --------- ---- ---------- --------- Earnings Measures $ 120 $ 76 $ 30 $ 0.69 $ 108 $ 67 $ 24 $ 0.58 Adjustments (reflects non-GAAP measures): Restructuring and restructuring related expenses 5 5 3 0.07 1 1 1 0.03 New Aftermarket customer changeover costs 2 2 1 0.02 - - - - Consulting fees indexed to stock price 1 1 1 0.01 - - - - Tax adjustments - - (4) (0.09) - - (8) (0.19) Debt issuance cost write off - - - - - - 3 0.07 ----- ---- ---- ------ ----- ---- ---- ------ Non-GAAP earnings measures $ 128 $ 84 $ 31 $ 0.70 $ 109 $ 68 $ 20 $ 0.49 ===== ==== ==== ====== ===== ==== ==== ====== Q2 2004 -------------------------------------- North Rest of America Europe World Total ------- ------ ------- ------ EBIT $ 50 $ 14 $ 12 $ 76 Restructuring and restructuring related expenses 1 4 - 5 New Aftermarket customer changeover costs 2 - - 2 Consulting fees indexed to stock price 1 - - 1 ----- ---- ---- ------ Adjusted EBIT $ 54 $ 18 $ 12 $ 84 ===== ==== ==== ====== Q2 2003 -------------------------------------- North Rest of America Europe World Total ------- ------ ------- ------ EBIT $ 49 $ 11 $ 7 $ 67 Restructuring and restructuring related expenses - 1 - 1 ----- ---- ---- ------ Adjusted EBIT $ 49 $ 12 $ 7 $ 68 ===== ==== ==== ======
(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 second 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(1) NET INCOME TO EBITDA Unaudited ---------
YTD 2004 -------------------------------------- North Rest of America Europe World Total ------- ------ ------- ----- Net income $ - $ - $ - $ 28 Minority interest - - - 3 Income tax expense (benefit) - - - 9 Interest expense (net of interest capitalized) - - - 69 ---- EBIT, Income before interest expense, income taxes and minority interest (GAAP measure) 80 11 18 109 Depreciation and amortization of other intangibles 48 33 8 89 ---- ---- ---- ---- Total EBITDA(2) $128 $ 44 $ 26 $198 ==== ==== ==== ==== YTD 2003 -------------------------------------- North Rest of America Europe World Total ------- ------ ------- ----- Net income $ - $ - $ - $ 25 Minority interest - - - 3 Income tax expense (benefit) - - - 1 Interest expense (net of interest capitalized) - - - 69 ---- EBIT, Income before interest expense, income taxes and minority interest (GAAP measure) 77 10 11 98 Depreciation and amortization 46 28 6 80 ---- ---- ---- ---- Total EBITDA $123 $ 38 $ 17 $178 ==== ==== ==== ====
(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 ---------
YTD 2004 YTD 2003 -------------------------------------- --------------------------------------- EBITDA(3) EBIT Net Income Per Share EBITDA(3) EBIT Net Income Per Share --------- ---- ---------- --------- --------- ---- ---------- --------- Earnings Measures $198 $109 $ 28 $0.65 $178 $ 98 $ 25 $0.60 Adjustments (reflects non-GAAP measures): Restructuring and restructuring related expenses 10 10 6 0.14 6 6 3 0.09 New Aftermarket customer changeover costs 8 8 5 0.11 - - - - Consulting fees indexed to stock price 4 4 3 0.06 - - - - Tax adjustments - - (5) (0.11) - - (11) (0.26) Debt issuance cost write off - - - - - - 3 0.07 ---- ---- ---- ----- ---- ---- ---- ----- Non-GAAP earnings measures $220 $131 $ 37 $0.85 $184 $104 $ 20 $0.50 ==== ==== ==== ===== ==== ==== ==== ===== YTD 2004 --------------------------------------- North Rest of America Europe World Total -------- ------ ------- ------ EBIT $ 80 $ 11 $ 18 $ 109 Restructuring and restructuring related expenses 3 7 - 10 New Aftermarket customer changeover costs 8 - - 8 Consulting fees indexed to stock price 2 1 1 4 ---- ---- ---- ----- Adjusted EBIT $ 93 $ 19 $ 19 $ 131 ==== ==== ==== ===== YTD 2003 --------------------------------------- North Rest of America Europe World Total ------- ------ ------ ----- EBIT $ 77 $ 10 $ 11 $ 98 Restructuring and restructuring related expenses 3 3 - 6 ---- ---- ---- ----- Adjusted EBIT $ 80 $ 13 $ 11 $ 104 ==== ==== ==== =====
(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 six months 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 final particular period. (3)See Reconciliation of GAAP Net Income to EBITDA on previous page. 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 tilted 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 ---------
Q2 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 $ 100 $ - $ 100 $ - $ 100 Exhaust 44 - 44 - 44 ------ ------ ------ ------ ------ Total North America Aftermarket 144 - 144 - 144 North America Original Equipment Ride Control 120 - 120 - 120 Exhaust 259 1 258 84 174 ------ ------ ------ ------ ------ Total North America Original Equipment 379 1 378 84 294 Total North America 523 1 522 84 438 Europe Aftermarket Ride Control 51 2 49 - 49 Exhaust 52 2 50 - 50 ------ ------ ------ ------ ------ Total Europe Aftermarket 103 4 99 - 99 Europe Original Equipment Ride Control 91 4 87 - 87 Exhaust 252 14 238 81 157 ------ ------ ------ ------ ------ Total Europe Original Equipment 343 18 325 81 244 Total Europe 446 22 424 81 343 Asia 58 1 57 20 37 South America 36 (1) 37 3 34 Australia 51 4 47 4 43 ------ ------ ------ ------ ------ Total Rest of World 145 4 141 27 114 Total Tenneco Automotive $1,114 $ 27 $1,087 $ 192 $ 895 ====== ====== ====== ====== ====== Q2 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 $ 90 $ - $ 90 $ - $ 90 Exhaust 46 - 46 - 46 ----- --- ----- ----- ----- Total North America Aftermarket 136 - 136 - 136 North America Original Equipment Ride Control 118 - 118 - 118 Exhaust 247 - 247 75 172 ----- --- ----- ----- ----- Total North America Original Equipment 365 - 365 75 290 Total North America 501 - 501 75 426 Europe Aftermarket Ride Control 53 - 53 - 53 Exhaust 49 - 49 - 49 ----- --- ----- ----- ----- Total Europe Aftermarket 102 - 102 - 102 Europe Original Equipment Ride Control 64 - 64 - 64 Exhaust 222 - 222 73 149 ----- --- ----- ----- ----- Total Europe Original Equipment 286 - 286 73 213 Total Europe 388 - 388 73 315 Asia 40 - 40 14 26 South America 29 - 29 3 26 Australia 40 - 40 4 36 ----- --- ----- ----- ----- Total Rest of World 109 - 109 21 88 Total Tenneco Automotive $ 998 $ - $ 998 $ 169 $ 829 ===== === ===== ===== =====
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. ATTACHMENT 2 TENNECO AUTOMOTIVE RECONCILIATION OF GAAP REVENUES TO NON-GAAP REVENUE MEASURE Unaudited ---------
Six Months Ended June 30, 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 $ 185 $ - $ 185 $ - $ 185 Exhaust 81 - 81 - 81 ------- ---- ------- ----- ------- Total North America Aftermarket 266 - 266 - 266 North America Original Equipment Ride Control 238 - 238 - 238 Exhaust 522 6 516 172 344 ------- ---- ------- ----- ------- Total North America Original Equipment 760 6 754 172 582 Total North America 1,026 6 1,020 172 848 Europe Aftermarket Ride Control 89 6 83 - 83 Exhaust 94 8 86 - 86 ------- ---- ------- ----- ------- Total Europe Aftermarket 183 14 169 - 169 Europe Original Equipment Ride Control 176 14 162 - 162 Exhaust 495 35 460 158 302 ------- ---- ------- ----- ------- Total Europe Original Equipment 671 49 622 158 464 Total Europe 854 63 791 158 633 Asia 97 1 96 33 63 South America 71 3 68 7 61 Australia 100 16 84 8 76 ------- ---- ------- ----- ------- Total Rest of World 268 20 248 48 200 Total Tenneco Automotive $ 2,148 $ 89 $ 2,059 $ 378 $ 1,681 ======= ==== ======= ===== ======= Six Months Ended June 30, 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 $ 162 $ - $ 162 $ - $ 162 Exhaust 82 - 82 - 82 ------- ---- ------- ----- ------ Total North America Aftermarket 244 - 244 - 244 North America Original Equipment Ride Control 234 - 234 - 234 Exhaust 504 - 504 162 342 ------- ---- ------- ----- ----- Total North America Original Equipment 738 - 738 162 576 Total North America 982 - 982 162 820 Europe Aftermarket Ride Control 88 - 88 - 88 Exhaust 90 - 90 - 90 ------- ---- ------- ----- ------ Total Europe Aftermarket 178 - 178 - 178 Europe Original Equipment Ride Control 121 - 121 - 121 Exhaust 434 - 434 147 287 ------- ---- ------- ----- ----- Total Europe Original Equipment 555 - 555 147 408 Total Europe 733 - 733 147 586 Asia 76 - 76 27 49 South America 55 - 55 5 50 Australia 73 - 73 7 66 ------- ---- ------- ----- ----- Total Rest of World 204 - 204 39 165 Total Tenneco Automotive $ 1,919 $ - $ 1,919 $ 348 $ 1,571 ======= ==== ======= ===== =======
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-----