-----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, BuacjazTGBPMQdEAa7fIt6aWdaL0WsJuoyhYlGioMq5lUVYMmreTAKAUkYJIO8gB uQ4rTvo7n5nc2uJgXfnqYA== 0000950137-05-008901.txt : 20050721 0000950137-05-008901.hdr.sgml : 20050721 20050721081204 ACCESSION NUMBER: 0000950137-05-008901 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050721 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050721 DATE AS OF CHANGE: 20050721 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: 05964984 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 c96799e8vk.txt CURRENT REPORT UNITED STATES 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 21, 2005 TENNECO AUTOMOTIVE INC. (Exact Name of Registrant as Specified in Charter) Delaware 1-12387 76-0515284 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of Incorporation of incorporation or organization) 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 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On July 21, 2005, Tenneco Automotive announced its second quarter 2005 results of operations. Exhibit 99.1 to this Form 8-K report presents the company's press release, including the company's consolidated statements of income, balance sheets and statements of cash flows for the periods ended June 30, 2004 and 2005, as released by the company on July 21, 2005, and such Exhibit is incorporated herein by reference. Exhibit 99.1 also includes information regarding the company's scheduled conference call to discuss the company's results of operations for the second quarter 2005, as well as other matters that may impact the company's outlook. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit No. Description - ----------- ----------- 99.1 Tenneco Automotive Inc.'s press release dated July 21, 2005.
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 21, 2005 By: /s/ Kenneth R. Trammell ----------------------- Kenneth R. Trammell Senior Vice President and Chief Financial Officer EX-99.1 2 c96799exv99w1.txt PRESS RELEASE . . . news release [TENNECO AUTOMOTIVE LOGO] For immediate release
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 STRONG SECOND QUARTER OPERATING RESULTS o 13th consecutive quarter of year-over-year revenue growth o Strong cash performance offsets loss of customer advance payment program o EBIT and EPS improve year-over-year o Europe and South America EBIT up 43% on 13% revenue gain o 14th consecutive quarter of year-over-year adjusted EBITDA improvement Lake Forest, Illinois, July 21, 2005 - Tenneco Automotive (NYSE: TEN) reported second quarter net income of $33 million, or 71-cents per diluted share, up from net income of $30 million, or 69-cents per diluted share a year ago. Adjusted for the items below, second quarter net income rose to $35 million, or 77-cents per diluted share, compared with $31 million, or 70-cents per diluted share in second quarter 2004. EBIT (earnings before interest, taxes and minority interest) was $83 million compared with $76 million a year ago. EBITDA (EBIT before depreciation and amortization) was $127 million, versus $120 million in second quarter 2004. On an adjusted basis, EBIT was $85 million, up from $84 million a year ago, and the company reported its 14th consecutive quarter of year-over-year improved adjusted EBITDA at $129 million, up from $128 million in second quarter 2004. See the tables attached to the press release, which reconcile GAAP results to non-GAAP results. Adjusted second quarter 2005 and 2004 results:
Q2 2005 Q2 2004 -------------------------------- --------------------------------- Net Per Net Per EBITDA EBIT Income Share EBITDA EBIT Income Share ----- ----- ------ ----- ------ ---- ------ ----- Earnings Measures $127 $ 83 $ 33 $0.71 $120 $ 76 $ 30 $0.69 Adjustments (reflects non-GAAP measures): Restructuring and restructuring related expenses 2 2 1 0.03 5 5 3 0.07 New Aftermarket customer changeover costs -- -- -- -- 2 2 1 0.02 Consulting fees indexed to stock price -- -- -- -- 1 1 1 0.01 Tax adjustments -- -- 1 0.03 -- -- (4) (0.09) ---- ---- ---- ----- ---- ---- ---- ----- Non-GAAP earnings measures $129 $ 85 $ 35 $0.77 $128 $ 84 $ 31 $0.70 ==== ==== ==== ===== ==== ==== ==== =====
-More- -2- Second quarter 2005 adjustments: o Restructuring related expenses of $2 million pre-tax, or 3-cents per diluted share; o Tax expense of $1 million, or 3-cents per diluted share, primarily related to adjusting state tax net operating loss carry forwards. 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 changeover costs for a new aftermarket customer; o Expenses of $1 million pre-tax, or 1-cent per diluted share, for stock price indexed consulting fees; o Tax benefit of $4 million, or 9-cents per diluted share. Despite a $65 million impact from the discontinuation of General Motor's advance payment program, operating cash inflow in the quarter was $28 million, versus a $46 million inflow in the second quarter of 2004. The strong cash performance was driven by inventory reductions and improved accounts payable. At quarter-end, total debt was $1.412 billion, down from $1.419 billion a year ago and debt net of cash was $1.346 billion versus $1.253 billion a year ago. The decrease was primarily the result of the discontinuation of advance payment programs by General Motors, Ford and DaimlerChrysler, which had a $94 million impact on debt. Tenneco Automotive generated its 13th consecutive quarter of year-over-year revenue growth with revenue of $1.180 billion, compared with $1.113 billion a year ago. Favorable currency benefited revenue by $33 million. Total OE revenues were up 7% year-over-year, outpacing a 2% increase in global industry production. Revenue was driven by the company's strong position on top-selling vehicles, continued gains from new OE business in Europe and stronger Japanese OE business in North America. "Our strategies for generating top-line growth and cash continue to be effective despite difficult and volatile market conditions," said Mark P. Frissora, chairman and CEO, Tenneco Automotive. "We are also benefiting from our intense focus on managing costs and improving operational efficiency through Lean and Six Sigma. In addition, our balance in terms of products, markets, customers and vehicle platform mix gives us a competitive edge and continues to drive our progress." The company's gross margin in the quarter was 20.3%, down 1.3 percentage points from a year ago. Higher steel costs, restructuring charges and business mix offset savings and improved efficiencies from Lean manufacturing, Six Sigma programs and other cost reduction initiatives. Total steel cost increases in the second quarter were $35 million, which were largely offset by the company's cost reduction efforts, including SGA&E restructuring savings, material cost savings, Six Sigma program savings of $9 million and Lean manufacturing efficiencies as well as steel cost recovery from OE and aftermarket customers. Based on the company's efforts to offset increased steel costs and trends in the steel market, the company doesn't currently anticipate a significant year-over-year impact on operating results through the remainder of 2005. Sales, General, Administrative and Engineering (SGA&E) expense in the quarter was 9.4% of sales versus 10.7% one year ago. SGA&E improvement was driven by restructuring and tight controls on discretionary spending. -3- The company outperformed its bank debt covenants in the quarter. At June 30, the leverage ratio was 3.41, below the maximum limit of 4.75; the fixed charge ratio was 2.03, exceeding the minimum ratio of 1.10; and the interest coverage ratio was 3.06, exceeding the minimum coverage ratio of 2.0. NORTH AMERICA o North American original equipment revenue was up 3% to $390 million, versus $379 million a year ago. Excluding the impact of currency and catalytic converter pass-through sales, revenue was up 8%, outpacing a 2% industry production decline (Tables to this press release reconcile GAAP revenues to revenues adjusted for catalytic converter pass-through sales and currency). The increase was driven by exhaust business on better selling passenger vehicle and medium truck platforms, stronger commercial vehicle volumes, volume growth on key Japanese OE platforms and specialty market revenue from acquiring the Harley Davidson exhaust business. o North American aftermarket revenue was $146 million, versus $144 million in second quarter 2004. Ride control price increases, driven by higher steel costs, offset lower ride control volumes and exhaust sales. o EBIT for North American operations was $52 million, versus $50 million a year ago. Adjusted second quarter 2005 EBIT was $52 million compared with adjusted EBIT of $54 million in second quarter 2004. The impact of higher steel costs in the quarter more than offset benefits from restructuring and stronger value-added volumes. o Second quarter 2004 EBIT results include $4 million in costs related to the adjustments described above. EUROPE AND SOUTH AMERICA o European original equipment revenue was $382 million, up 12% versus $343 million a year ago. Adjusted for favorable currency, catalytic converter pass-through sales and a change in reporting for a customer contract, revenue was up 13%. Strong ride control volumes and the company's exhaust business on top-selling platforms drove the increase. o European aftermarket revenue was $109 million, up from $103 million in second quarter 2004. Excluding currency, revenue was still up 3%, driven by higher exhaust revenues due to market share gains and price increases. A 10% year-over-year increase in exhaust sales helped offset a decrease in ride control revenue due to lower sales in Southern Europe and the Middle East. o South America operations generated $50 million in revenue versus $35 million a year ago. Excluding the benefit of currency, revenue was up 25%, driven by stronger OE ride and exhaust volumes. o EBIT for European and South American operations was $27 million, up 43% from $17 million in second quarter 2004. Adjusted EBIT in the quarter was $29 million, up from adjusted EBIT of $21 million a year ago. The strong EBIT performance was driven by higher OE and AM exhaust volumes, restructuring savings and manufacturing efficiencies, which more than offset the negative impact of higher steel costs. o Second quarter 2005 EBIT results include $2 million in restructuring related expenses and second quarter 2004 EBIT includes $4 million in restructuring related expenses. ASIA PACIFIC o Revenue from Asia operations was $44 million, versus $58 million a year ago. The decline was due to lower OE volumes in China as a result of government actions to control consumer lending and soft consumer sales at the company's largest customer in China. o Australian revenue was $59 million, compared with $51 million in second quarter 2004. Excluding the impact of currency and pass-through sales, revenue was up 7%, driven by higher volumes on existing OE platforms. -4- o Lower OE volumes in China had a significant impact on Asia Pacific EBIT, which was $4 million, down from $9 million a year ago. YEAR-TO-DATE RESULTS Through the first half of the year, Tenneco Automotive reported net income of $40 million, or 88-cents per diluted share, versus net income of $28 million, or 65-cents per diluted share reported for the first six months of 2004. On an adjusted basis, year-to-date net income was $44 million, or 97-cents per diluted share, versus year-to-date adjusted net income of $37 million, or 85-cents per diluted share. Year-to-date EBIT was $127 million compared with EBIT of $109 million in the first six months of 2004. EBITDA was $217 million versus $198 million a year ago. Adjusted year-to-date 2005 EBIT was $132 million, compared with $131 million a year ago, and adjusted EBITDA was $222 million, versus adjusted EBITDA of $220 million for the same period a year ago. ATTACHMENT 1: Statements of Income - 3 months Statements of Income - 6 months Balance Sheet Statements of Cash Flow ATTACHMENT 2: Reconciliation of GAAP Net Income to EBITDA - 3 months Reconciliation of GAAP to Non-GAAP Earnings Measures - 3 months Reconciliation of GAAP Revenues to Non-GAAP Revenue Measure - 3 months Reconciliation of GAAP Net Income to EBITDA - 6 months Reconciliation of GAAP to Non-GAAP Earnings Measures - 6 months Reconciliation of GAAP Revenue to NON-GAAP Revenue Measures - 6 months CONFERENCE CALL The company will host a conference call on Thursday, July 21, 2005 at 10:30 am EDT. The dial-in number is 800 857-4151 domestic or 210 839-8501 international. The passcode is Tenneco Auto. The call and accompanying slides will be available on the financial section of the Tenneco Automotive web site at www.tenneco-automotive.com. A recording of the call will be available one hour following completion of the call on July 21, 2005. To access this recording, dial 866 457-5512 domestic or 203 369-1285 international. The purpose of the call is to discuss the company's operations for the second quarter, as well as other matters that may impact the company's outlook. A copy of the press release is available on the financial and news sections of the Tenneco Automotive web site. Tenneco Automotive is a $4.2 billion manufacturing company with headquarters in Lake Forest, Illinois and approximately 18,400 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. -5- This press release contains forward-looking statements. Words such as "continue," "will," "expects," "believe," "plans," 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) 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; (ii) increases in the costs of raw materials, including the company's ability to successfully reduce the impact of any such cost increases through materials substitutions, cost reduction initiatives and other methods; (iii) 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; (iv) 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; (v) 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; (vi) governmental actions, including the ability to receive regulatory approvals and the timing of such approvals; (vii) 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; (viii) the cost and outcome of existing and any future legal proceedings, and compliance with changes in regulations, including environmental regulations; (ix) workforce factors such as strikes or labor interruptions; (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 Financial Accounting Standards Board or other accounting regulatory bodies to 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 the company operates 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, 2004. Further information can be found on the company's web site at www.tenneco-automotive.com. ### ATTACHMENT 1 TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES STATEMENTS OF INCOME Unaudited THREE MONTHS ENDED JUNE 30, (Millions except share and per share amounts)
2005 2004 --------- --------- Net sales and operating revenues $ 1,180 $ 1,113(c) ========= ========= Costs and Expenses Cost of Sales (exclusive of depreciation shown below) 941(a) 873(d) Engineering, Research and Development 18 19 Selling, General and Administrative 93 100(e) Depreciation and Amortization of Other Intangibles 44 44 --------- --------- Total Costs and Expenses 1,096 1,036 ========= ========= Loss on sale of receivables (1) (1) --------- --------- Total Other Loss (1) (1) --------- --------- Income before Interest Expense, Income Taxes, and Minority Interest North America 52 50(c)(d)(e) Europe & South America 27(a) 17(d) Asia Pacific 4 9 --------- --------- 83 76 Less: Interest expense (net of interest capitalized) 32 34 Income tax expense 18(b) 10(f) Minority interest -- 2 --------- --------- Net income $ 33 $ 30 ========= ========= Average common shares outstanding: Basic 43.0 41.5 ========= ========= Diluted 45.1 44.2 ========= ========= Earnings per share of common stock: Basic $ 0.75 $ 0.73 ========= ========= Diluted $ 0.71 $ 0.69 ========= =========
(a) Includes restructuring and restructuring related charges of $2 million pre-tax, $1 million after tax or $0.03 per share. The entire $2 million adjustment is recorded in cost of sales and geographically in Europe and South America. (b) Includes a $1 million or $0.03 per share tax expense primarily related to adjusting state tax net operating loss carryforwards. (c) 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. (d) 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 and South America. (e) 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. (f) Includes a $4 million or $0.09 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)
2005 2004 --------- --------- Net sales and operating revenues $ 2,281 $ 2,146(c) ========= ========= Costs and Expenses Cost of Sales (exclusive of depreciation shown below) 1,829(a) 1,702(d) Engineering, Research and Development 42 36 Selling, General and Administrative 191(a) 209(c)(d)(e) Depreciation and Amortization of Other Intangibles 90 89 --------- --------- Total Costs and Expenses 2,152 2,036 ========= ========= Loss on sale of receivables (1) (1) Other Loss (1) -- --------- --------- Total Other Loss (2) (1) --------- --------- Income before Interest Expense, Income Taxes, and Minority Interest North America 89(a) 80(c)(d)(e) Europe & South America 32(a) 17(d)(e) Asia Pacific 6 12(e) --------- --------- 127 109 Less: Interest expense (net of interest capitalized) 64 69 Income tax expense 22(b) 9(f) Minority interest 1 3 --------- --------- Net income $ 40 $ 28 ========= ========= Average common shares outstanding: Basic 42.8 41.1 ========= ========= Diluted 45.0 43.8 ========= ========= Earnings per share of common stock: Basic $ 0.92 $ 0.69 ========= ========= Diluted $ 0.88 $ 0.65 ========= =========
(a) Includes restructuring and restructuring related charges of $5 million pre-tax, $3 million after tax or $0.07 per share. Of the adjustment $4 is recorded in cost of sales and $1 million is in SG&A. Geographically, $2 million is recorded in North America and $3 million in Europe and South America. (b) Includes a $1 million or $0.02 per share tax expense primarily related to adjusting state tax net operating loss carryforwards. (c) 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. (d) 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 in South America. (e) 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 South America and $1 million in Asia Pacific. (f) Includes a $5 million or $0.11 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, 2005 December 31, 2004 ------------- ----------------- Assets Cash and Cash Equivalents $ 66 $ 214 Receivables, Net 662 488 Inventories 404 396 Other Current Assets 203 194 Investments and Other Assets 682 693 Plant, Property, and Equipment, Net 1,050 1,134 ---------- ---------- Total Assets $ 3,067 $ 3,119 ========== ========== Liabilities and Shareholders' Equity Short-Term Debt $ 49 $ 19 Accounts Payable 726 696 Accrued Taxes 39 24 Accrued Interest 37 35 Other Current Liabilities 246 273 Long-Term Debt 1,363 1,401 Deferred Income Taxes 118 126 Deferred Credits and Other Liabilities 338 362 Minority Interest 22 24 Total Shareholders' Equity 129 159 ---------- ---------- Total Liabilities and Shareholders' Equity $ 3,067 $ 3,119 ========== ========== (a) Accounts Receivables net of: June 30, 2005 December 31, 2004 ------------- ----------------- Accounts Receivable securitization programs $ 148 $ 124 Receivables collected under advance payment programs $ 9 $ 132 (b) Long term debt composed of: June 30, 2005 December 31, 2004 ------------- ----------------- Term loan B (Due 2010) $ 356 $ 392 10.25% senior notes (Due 2013) 489 490 8.625% subordinated notes (Due 2014) 500 500 Other long term debt 18 19 ---------- ---------- $ 1,363 $ 1,401 ========== ==========
ATTACHMENT 1 TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES STATEMENTS OF CASH FLOWS (UNAUDITED) (Millions)
SIX MONTHS ENDED JUNE 30, ----------------------- 2005 2004 ------- ------- Operating activities: Net income $ 40 $ 28 Adjustments to reconcile net income to net cash provided (used) by operating activities - Depreciation and amortization of other intangibles 90 89 Deferred income taxes (5) (5) (Gain)/loss on sale of assets, net 1 -- Changes in components of working capital (net of acquisition)- (Inc.)/dec. in receivables (200) (113) (Inc.)/dec. in inventories (33) (16) (Inc.)/dec. in prepayments and other current assets (19) (27) Inc./(dec.) in payables 64 60 Inc./(dec.) in taxes accrued 19 13 Inc./(dec.) in interest accrued 2 (2) Inc./(dec.) in other current liabilities (10) 24 Other (20) 8 ------- ------- Net cash provided (used) by operating activities (71) 59 Investing activities: Net proceeds from sale of assets 3 11 Expenditures for plant, property & equipment (63) (54) Acquisition of business (11) -- Investments and other 2 (2) ------- ------- Net cash used by investing activities (69) (45) ------- ------- Financing activities: Issuance of common shares 4 4 Retirement of long-term debt (42) (4) Net inc./(dec.) in short-term debt excluding current maturities on long-term debt 34 1 Other -- 2 ------- ------- Net cash provided (used) by financing activities (4) 3 ------- ------- Effect of foreign exchange rate changes on cash and cash equivalents (4) 4 ------- ------- Inc./(dec.) in cash and cash equivalents (148) 21 Cash and cash equivalents, January 1 214 145 ------- ------- Cash and cash equivalents, June 30 $ 66 $ 166 ======= ======= Cash paid during the period for interest $ 61 $ 74 Cash paid during the period for income taxes $ 11 $ 7
Attachment 2 TENNECO AUTOMOTIVE RECONCILIATION OF GAAP(1) NET INCOME TO EBITDA Unaudited
Q2 2005 ------------------------------------------------------------ North Europe Asia America & SA Pacific Total --------- --------- --------- --------- Net income $ 33 Income tax expense 18 Interest expense (net of interest capitalized) 32 --------- EBIT, Income before interest expense, income taxes and minority interest (GAAP measure) 52 27 4 83 Depreciation and amortization of other intangibles 23 18 3 44 --------- --------- --------- --------- Total EBITDA(2) $ 75 $ 45 $ 7 $ 127 ========= ========= ========= =========
Q2 2004 ------------------------------------------------------------ North Europe Asia America & SA Pacific Total --------- --------- --------- --------- Net income $ 30 Minority interest 2 Income tax expense 10 Interest expense (net of interest capitalized) 34 ---------- EBIT, Income before interest expense, income taxes and minority interest (GAAP measure) 50 17 9 76 Depreciation and amortization 24 18 2 44 --------- --------- --------- --------- Total EBITDA $ 74 $ 35 $ 11 $ 120 ========== ========= ========= =========
(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 2005 Q2 2004 --------------------------------------------- ------------------------------------------- EBITDA(3) EBIT Net Income Per Share EBITDA(3) EBIT Net Income Per Share --------- ------- ---------- --------- --------- ------- ---------- --------- Earnings Measures $ 127 $ 83 $ 33 $ 0.71 $ 120 $ 76 $ 30 $ 0.69 Adjustments (reflects non-GAAP measures): Restructuring and restructuring related expenses 2 2 1 0.03 5 5 3 0.07 New Aftermarket customer changeover costs -- -- -- -- 2 2 1 0.02 Consulting fees indexed to stock price -- -- -- -- 1 1 1 0.01 Tax adjustments -- -- 1 0.03 -- -- (4) (0.09) ------- ------- ------- ------- ------- ------- ------- ------- Non-GAAP earnings measures $ 129 $ 85 $ 35 $ 0.77 $ 128 $ 84 $ 31 $ 0.70 ======= ======= ======= ======= ======= ======= ======= =======
Q2 2005 ----------------------------------------- North Europe Asia America & SA Pacific Total ------- ------- ------- ------- EBIT $ 52 $ 27 $ 4 $ 83 Restructuring and restructuring related expenses -- 2 -- 2 ------- ------- ------- ------- Adjusted EBIT $ 52 $ 29 $ 4 $ 85 ======= ======= ======= =======
Q2 2004 ----------------------------------------- North Europe Asia America & SA Pacific Total ------- ------- ------- ------- EBIT $ 50 $ 17 $ 9 $ 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 $ 21 $ 9 $ 84 ======= ======= ======= =======
(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 2005 and 2004 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 2005 -------------------------------------------------------- North Europe Asia America & SA Pacific Total -------- -------- -------- -------- Net income $ 40 Minority interest 1 Income tax expense 22 Interest expense (net of interest capitalized) 64 -------- EBIT, Income before interest expense, income taxes and minority interest (GAAP measure) 89 32 6 127 Depreciation and amortization of other intangibles 46 38 6 90 -------- -------- -------- -------- Total EBITDA(2) $ 135 $ 70 $ 12 $ 217 ======== ======== ======== ========
YTD 2004 -------------------------------------------------------- North Europe Asia America & SA Pacific Total -------- -------- -------- -------- Net income $ 28 Minority interest 3 Income tax expense 9 Interest expense (net of interest capitalized) 69 -------- EBIT, Income before interest expense, income taxes and minority interest (GAAP measure) 80 17 12 109 Depreciation and amortization 48 35 6 89 -------- -------- -------- -------- Total EBITDA $ 128 $ 52 $ 18 $ 198 ======== ======== ======== ========
(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 2005 YTD 2004 --------------------------------------------- --------------------------------------------- EBITDA(3) EBIT Net Income Per Share EBITDA(3) EBIT Net Income Per Share --------- ------- ---------- --------- --------- ------- ---------- --------- Earnings Measures $ 217 $ 127 $ 40 $ 0.88 $ 198 $ 109 $ 28 $ 0.65 Adjustments (reflects non-GAAP measures): Restructuring and restructuring related expenses 5 5 3 0.07 10 10 6 0.14 New Aftermarket customer changeover costs -- -- -- -- 8 8 5 0.11 Consulting fees indexed to stock price -- -- -- -- 4 4 3 0.06 Tax adjustments -- -- 1 0.02 -- -- (5) (0.11) ------- ------- ------- ------- ------- ------- ------- ------- Non-GAAP earnings measures $ 222 $ 132 $ 44 $ 0.97 $ 220 $ 131 $ 37 $ 0.85 ======= ======= ======= ======= ======= ======= ======= =======
YTD 2005 ------------------------------------------- North Europe Asia America & SA Pacific Total ------- ------- ------- ------- EBIT $ 89 $ 32 $ 6 $ 127 Restructuring and restructuring related expenses 2 3 -- 5 ------- ------- ------- ------- Adjusted EBIT $ 91 $ 35 $ 6 $ 132 ======= ======= ======= =======
YTD 2004 ------------------------------------------- North Europe Asia America & SA Pacific Total ------- ------- ------- ------- EBIT $ 80 $ 17 $ 12 $ 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 $ 25 $ 13 $ 131 ======= ======= ======= =======
(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 2005 and 2004 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) 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 titled measures reported by other companies due to differences in the components of the calculation. Attachment 2 TENNECO AUTOMOTIVE RECONCILIATION OF GAAP REVENUE TO NON-GAAP REVENUE MEASURES Unaudited
Q2 2005 --------------------------------------------------------------------------- Pass-through Revenues Sales Excluding Revenues Excluding Currency Currency Excluding Currency and Pass-through Revenues Impact Currency Impact Sales --------- --------- --------- ------------ ---------------- North America Aftermarket Ride Control $ 103 $ -- $ 103 $ -- $ 103 Exhaust 43 -- 43 -- 43 ---------- ---------- ---------- ---------- ---------- Total North America Aftermarket 146 -- 146 -- 146 North America Original Equipment Ride Control 131 -- 131 -- 131 Exhaust 259 3 256 68 188 ---------- ---------- ---------- ---------- ---------- Total North America Original Equipment 390 3 387 68 319 Total North America 536 3 533 68 465 Europe Aftermarket Ride Control 51 1 50 -- 50 Exhaust 58 2 56 -- 56 ---------- ---------- ---------- ---------- ---------- Total Europe Aftermarket 109 3 106 -- 106 Europe Original Equipment Ride Control 98(a) 5 93 -- 93(a) Exhaust 284 10 274 85 189 ---------- ---------- ---------- ---------- ---------- Total Europe Original Equipment 382 15 367 85 282 South America 50 7 43 3 40 Total Europe & South America 541 25 516 88 428 Asia 44 1 43 11 32 Australia 59 4 55 5 50 ---------- ---------- ---------- ---------- ---------- Total Asia Pacific 103 5 98 16 82 Total Tenneco Automotive $ 1,180 $ 33 $ 1,147 $ 172 $ 975 ========== ========== ========== ========== ==========
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 -- 259 84 175 ---------- ---------- ---------- ---------- ---------- Total North America Original Equipment 379 -- 379 84 295 Total North America 523 -- 523 84 439 Europe Aftermarket Ride Control 51 -- 51 -- 51 Exhaust 52 -- 52 -- 52 ---------- ---------- ---------- ---------- ---------- Total Europe Aftermarket 103 -- 103 -- 103 Europe Original Equipment Ride Control 91 -- 91 -- 91 Exhaust 252 -- 252 81 171 ---------- ---------- ---------- ---------- ---------- Total Europe Original Equipment 343 -- 343 81 262 South America 35 -- 35 3 32 Total Europe & South America 481 -- 481 84 397 Asia 58 -- 58 20 38 Australia 51 -- 51 4 47 ---------- ---------- ---------- ---------- ---------- Total Asia Pacific 109 -- 109 24 85 Total Tenneco Automotive $ 1,113 $ -- $ 1,113 $ 191 $ 922 ========== ========== ========== ========== ==========
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. (a) Beginning in the second quarter of 2005, Tenneco Automotive changed its accounting for a customer contract in its European OE Ride Control unit. The cost of sales for this contract are now netted against the revenues, reducing reported revenues and cost of sales. In the second quarter of 2004, Tenneco Automotive recorded $15 million in revenues for this contract. Attachment 2 TENNECO AUTOMOTIVE RECONCILIATION OF GAAP REVENUE TO NON-GAAP REVENUE MEASURES Unaudited
Six Months Ended June 30, 2005 --------------------------------------------------------------------------------- Pass-through Revenues Sales Excluding Revenues Excluding Currency Currency Excluding Currency and Pass-through Revenues Impact Currency Impact Sales ------------ ------------ ------------ ------------ ---------------- North America Aftermarket Ride Control $ 194 $ -- $ 194 $ -- $ 194 Exhaust 82 -- 82 -- 82 ------------ ------------ ------------ ------------ ------------ Total North America Aftermarket 276 -- 276 -- 276 North America Original Equipment Ride Control 258 -- 258 -- 258 Exhaust 507 5 502 135 367 ------------ ------------ ------------ ------------ ------------ Total North America Original Equipment 765 5 760 135 625 Total North America 1,041 5 1,036 135 901 Europe Aftermarket Ride Control 88 3 85 -- 85 Exhaust 103 4 99 -- 99 ------------ ------------ ------------ ------------ ------------ Total Europe Aftermarket 191 7 184 -- 184 Europe Original Equipment Ride Control 207(a) 16 191 -- 191(a) Exhaust 556 26 530 160 370 ------------ ------------ ------------ ------------ ------------ Total Europe Original Equipment 763 42 721 160 561 South America 94 10 84 7 77 Total Europe & South America 1,048 59 989 167 822 Asia 86 1 85 24 61 Australia 106 5 101 9 92 ------------ ------------ ------------ ------------ ------------ Total Asia Pacific 192 6 186 33 153 Total Tenneco Automotive $ 2,281 $ 70 $ 2,211 $ 335 $ 1,876 ============ ============ ============ ============ ============
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 -- 522 172 350 ---------- ---------- ---------- ---------- ---------- Total North America Original Equipment 760 -- 760 172 588 Total North America 1,026 -- 1,026 172 854 Europe Aftermarket Ride Control 89 -- 89 -- 89 Exhaust 94 -- 94 -- 94 ---------- ---------- ---------- ---------- ---------- Total Europe Aftermarket 183 -- 183 -- 183 Europe Original Equipment Ride Control 176 -- 176 -- 176 Exhaust 495 -- 495 158 337 ---------- ---------- ---------- ---------- ---------- Total Europe Original Equipment 671 -- 671 158 513 South America 69 -- 69 7 62 Total Europe & South America 923 -- 923 165 758 Asia 97 -- 97 33 64 Australia 100 -- 100 8 92 ---------- ---------- ---------- ---------- ---------- Total Asia Pacific 197 -- 197 41 156 Total Tenneco Automotive $ 2,146 $ -- $ 2,146 $ 378 $ 1,768 ========== ========== ========== ========== ==========
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. (a) Beginning in the second quarter of 2005, Tenneco Automotive changed its accounting for a customer contract in its European OE Ride Control unit. The cost of sales for this contract are now netted against the revenues, reducing reported revenues and cost of sales. In the second quarter of 2004, Tenneco Automotive recorded $15 million in revenues for this contract. -----END PRIVACY-ENHANCED MESSAGE-----