þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 76-0515284 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
500 North Field Drive, Lake Forest, Illinois | 60045 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer þ | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company ¨ | |||
(Do not check if a smaller reporting company) |
Page | ||
Part I — Financial Information | ||
Item 1. | ||
Tenneco Inc. and Consolidated Subsidiaries — | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II — Other Information | ||
Item 1. | Legal Proceedings | * |
Item 1A. | ||
Item 2. | ||
Item 3. | Defaults Upon Senior Securities | * |
Item 4. | Mine Safety Disclosures | * |
Item 5. | Other Information | * |
Item 6. |
* | No response to this item is included herein for the reason that it is inapplicable or the answer to such item is negative. |
• | general economic, business and market conditions; |
• | our ability to source and procure needed materials, components and other products and services in accordance with customer demand and at competitive prices; |
• | changes in capital availability or costs, including increases in our cost of borrowing (i.e., interest rate increases), the amount of our debt, our ability to access capital markets at favorable rates, and the credit ratings of our debt; |
• | changes in consumer demand, prices and our ability to have our products included on top selling vehicles, including any shifts in consumer preferences away from light trucks, which tend to be higher margin products for our customers and us, to other lower margin vehicles, for which we may or may not have supply arrangements; |
• | changes in consumer demand for our automotive, commercial or aftermarket products, or changes in automotive and commercial vehicle manufacturers’ production rates and their actual and forecasted requirements for our products, due to difficult economic conditions, such as the prolonged recession in Europe; |
• | the overall highly competitive nature of the automobile and commercial vehicle parts industries, and any resultant inability to realize the sales represented by our awarded book of business (which is based on anticipated pricing and volumes over the life of the applicable program); |
• | the loss of any of our large original equipment manufacturer (“OEM”) customers (on whom we depend for a substantial portion of our revenues), or the loss of market shares by these customers if we are unable to achieve increased sales to other OEMs or any change in customer demand due to delays in the adoption or enforcement of worldwide emissions regulations; |
• | our ability to successfully execute cash management and other cost reduction plans, including our current European cost reduction initiatives, and to realize anticipated benefits from these plans; |
• | industrywide strikes, labor disruptions at our facilities or any labor or other economic disruptions at any of our significant customers or suppliers or any of our customers’ other suppliers; |
• | increases in the costs of raw materials, including our ability to successfully reduce the impact of any such cost increases through materials substitutions, cost reduction initiatives, customer recovery and other methods; |
• | the negative impact of higher fuel prices on transportation and logistics costs, raw material costs and discretionary purchases of vehicles or aftermarket products; |
• | the cyclical nature of the global vehicle industry, including the performance of the global aftermarket sector and the impact of vehicle parts’ longer product lives; |
• | costs related to product warranties and other customer satisfaction actions; |
• | the cost and outcome of existing and any future claims or legal proceedings, including, but not limited to, claims or proceedings against us or our customers relating to product performance, product safety or intellectual property rights; |
• | the failure or breach of our information technology systems, including the consequences of any misappropriation, exposure or corruption of sensitive information stored on such systems and the interruption to our business that such failure or breach may cause; |
• | the impact of consolidation among vehicle parts suppliers and customers on our ability to compete; |
• | changes in distribution channels or competitive conditions in the markets and countries where we operate, including the impact of changes in distribution channels for aftermarket products on our ability to increase or maintain aftermarket sales; |
• | economic, exchange rate and political conditions in the countries where we operate or sell our products; |
• | customer acceptance of new products; |
• | new technologies that reduce the demand for certain of our products or otherwise render them obsolete; |
• | our ability to introduce new products and technologies that satisfy customers' needs in a timely fashion; |
• | our ability to realize our business strategy of improving operating performance; |
• | our ability to successfully integrate any acquisitions that we complete and effectively manage our joint ventures and other third-party relationships; |
• | changes by the Financial Accounting Standards Board or the Securities and Exchange Commission of authoritative generally accepted accounting principles or policies; |
• | changes in accounting estimates and assumptions, including changes based on additional information; |
• | any changes by the International Organization for Standardization (ISO) or other such committees in their certification protocols for processes and products, which may have the effect of delaying or hindering our ability to bring new products to market; |
• | the impact of changes in and compliance with laws and regulations, including: environmental laws and regulations, which may result in our incurrence of environmental liabilities in excess of the amount reserved; and any changes to the timing of the funding requirements for our pension and other postretirement benefit liabilities; |
• | the potential impairment in the carrying value of our long-lived assets and goodwill or our deferred tax assets; |
• | potential volatility in our effective tax rate; |
• | natural disasters, such as the 2011 earthquake in Japan and flooding in Thailand, and any resultant disruptions in the supply or production of goods or services to us or by us or in demand by our customers; |
• | acts of war and/or terrorism, as well as actions taken or to be taken by the United States and 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 |
• | the timing and occurrence (or non-occurrence) of other transactions, events and circumstances which may be beyond our control. |
/s/ PricewaterhouseCoopers LLP |
Milwaukee, Wisconsin |
August 6, 2013 |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||
(Millions Except Share and Per Share Amounts) | |||||||||||||||
Revenues | |||||||||||||||
Net sales and operating revenues | $ | 2,067 | $ | 1,920 | $ | 3,970 | $ | 3,832 | |||||||
Costs and expenses | |||||||||||||||
Cost of sales (exclusive of depreciation and amortization shown below) | 1,736 | 1,595 | 3,340 | 3,202 | |||||||||||
Engineering, research, and development | 33 | 28 | 68 | 66 | |||||||||||
Selling, general, and administrative | 106 | 109 | 225 | 227 | |||||||||||
Depreciation and amortization of other intangibles | 50 | 50 | 100 | 99 | |||||||||||
1,925 | 1,782 | 3,733 | 3,594 | ||||||||||||
Other expense | |||||||||||||||
Loss on sale of receivables | (1 | ) | (1 | ) | (2 | ) | (2 | ) | |||||||
Other | — | — | (1 | ) | (3 | ) | |||||||||
(1 | ) | (1 | ) | (3 | ) | (5 | ) | ||||||||
Earnings before interest expense, income taxes, and noncontrolling interests | 141 | 137 | 234 | 233 | |||||||||||
Interest expense (net of interest capitalized of $1 million in both of the three months ended June 30, 2013 and 2012, respectively, and $2 million in both of the six months ended June 30, 2013 and 2012, respectively) | 20 | 21 | 40 | 63 | |||||||||||
Earnings before income taxes and noncontrolling interests | 121 | 116 | 194 | 170 | |||||||||||
Income tax expense | 47 | 21 | 59 | 39 | |||||||||||
Net income | 74 | 95 | 135 | 131 | |||||||||||
Less: Net income attributable to noncontrolling interests | 11 | 8 | 18 | 14 | |||||||||||
Net income attributable to Tenneco Inc. | $ | 63 | $ | 87 | $ | 117 | $ | 117 | |||||||
Earnings per share | |||||||||||||||
Weighted average shares of common stock outstanding — | |||||||||||||||
Basic | 60,542,361 | 59,992,055 | 60,424,540 | 60,067,205 | |||||||||||
Diluted | 61,724,124 | 61,260,871 | 61,532,550 | 61,470,513 | |||||||||||
Basic earnings per share of common stock | $ | 1.04 | $ | 1.45 | 1.94 | 1.95 | |||||||||
Diluted earnings per share of common stock | $ | 1.02 | $ | 1.42 | 1.91 | 1.90 |
For the Three Months Ended June 30, 2013 | |||||||||||||||||||||||
Tenneco Inc. | Noncontrolling Interests | Total | |||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) | Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) | Comprehensive Income (Loss) | ||||||||||||||||||
(Millions) | |||||||||||||||||||||||
Net Income | $ | 63 | $ | 11 | $ | 74 | |||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||
Cumulative Translation Adjustment | |||||||||||||||||||||||
Balance April 1 | $ | (50 | ) | $ | 5 | $ | (45 | ) | |||||||||||||||
Translation of foreign currency statements | (24 | ) | (24 | ) | — | — | (24 | ) | (24 | ) | |||||||||||||
Balance June 30 | (74 | ) | 5 | (69 | ) | ||||||||||||||||||
Additional Liability for Pension and Postretirement Benefits | |||||||||||||||||||||||
Balance April 1 | (380 | ) | — | (380 | ) | ||||||||||||||||||
Additional Liability for Pension and Postretirement Benefits, net of tax | 6 | 6 | 6 | 6 | |||||||||||||||||||
Balance June 30 | (374 | ) | — | (374 | ) | ||||||||||||||||||
Balance June 30 | $ | (448 | ) | $ | 5 | $ | (443 | ) | |||||||||||||||
Other Comprehensive Loss | (18 | ) | — | (18 | ) | ||||||||||||||||||
Comprehensive Income | $ | 45 | $ | 11 | $ | 56 |
For the Three Months Ended June 30, 2012 | |||||||||||||||||||||||
Tenneco Inc. | Noncontrolling Interests | Total | |||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Comprehensive Income | Accumulated Other Comprehensive Income (Loss) | Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) | Comprehensive Income | ||||||||||||||||||
(Millions) | |||||||||||||||||||||||
Net Income | $ | 87 | $ | 8 | $ | 95 | |||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||
Cumulative Translation Adjustment | |||||||||||||||||||||||
Balance April 1 | $ | (4 | ) | $ | 3 | $ | (1 | ) | |||||||||||||||
Translation of foreign currency statements | (43 | ) | (43 | ) | 1 | 1 | (42 | ) | (42 | ) | |||||||||||||
Balance June 30 | (47 | ) | 4 | (43 | ) | ||||||||||||||||||
Additional Liability for Pension and Postretirement Benefits | |||||||||||||||||||||||
Balance April 1 | (349 | ) | — | (349 | ) | ||||||||||||||||||
Additional Liability for Pension and Postretirement Benefits, net of tax | 5 | 5 | 5 | 5 | |||||||||||||||||||
Balance June 30 | (344 | ) | — | (344 | ) | ||||||||||||||||||
Balance June 30 | $ | (391 | ) | $ | 4 | $ | (387 | ) | |||||||||||||||
Other Comprehensive Income (Loss) | (38 | ) | 1 | (37 | ) | ||||||||||||||||||
Comprehensive Income | $ | 49 | $ | 9 | $ | 58 |
For the Six Months Ended June 30, 2013 | |||||||||||||||||||||||
Tenneco Inc. | Noncontrolling Interests | Total | |||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) | Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) | Comprehensive Income (Loss) | ||||||||||||||||||
(Millions) | |||||||||||||||||||||||
Net Income | $ | 117 | $ | 18 | $ | 135 | |||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||
Cumulative Translation Adjustment | |||||||||||||||||||||||
Balance January 1 | $ | (24 | ) | $ | 5 | $ | (19 | ) | |||||||||||||||
Translation of foreign currency statements | (50 | ) | (50 | ) | — | — | (50 | ) | (50 | ) | |||||||||||||
Balance June 30 | (74 | ) | 5 | (69 | ) | ||||||||||||||||||
Additional Liability for Pension and Postretirement Benefits | |||||||||||||||||||||||
Balance January 1 | (384 | ) | — | (384 | ) | ||||||||||||||||||
Additional Liability for Pension and Postretirement Benefits, net of tax | 10 | 10 | 10 | 10 | |||||||||||||||||||
Balance June 30 | (374 | ) | — | (374 | ) | ||||||||||||||||||
Balance June 30 | $ | (448 | ) | $ | 5 | $ | (443 | ) | |||||||||||||||
Other Comprehensive Income | (40 | ) | — | (40 | ) | ||||||||||||||||||
Comprehensive Income | $ | 77 | $ | 18 | $ | 95 |
For the Six Months Ended June 30, 2012 | |||||||||||||||||||||||
Tenneco Inc. | Noncontrolling Interests | Total | |||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) | Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) | Comprehensive Income (Loss) | ||||||||||||||||||
(Millions) | |||||||||||||||||||||||
Net Income | $ | 117 | $ | 14 | $ | 131 | |||||||||||||||||
Accumulated Other Comprehensive Income | |||||||||||||||||||||||
Cumulative Translation Adjustment | |||||||||||||||||||||||
Balance January 1 | $ | (30 | ) | $ | 4 | $ | (26 | ) | |||||||||||||||
Translation of foreign currency statements | (17 | ) | (17 | ) | — | — | (17 | ) | (17 | ) | |||||||||||||
Balance June 30 | (47 | ) | 4 | (43 | ) | ||||||||||||||||||
Additional Liability for Pension and Postretirement Benefits | |||||||||||||||||||||||
Balance January 1 | (352 | ) | — | (352 | ) | ||||||||||||||||||
Additional Liability for Pension and Postretirement Benefits, net of tax | 8 | 8 | 8 | 8 | |||||||||||||||||||
Balance June 30 | (344 | ) | — | (344 | ) | ||||||||||||||||||
Balance June 30 | $ | (391 | ) | $ | 4 | $ | (387 | ) | |||||||||||||||
Other Comprehensive Loss | (9 | ) | — | (9 | ) | ||||||||||||||||||
Comprehensive Income | $ | 108 | $ | 14 | $ | 122 |
June 30, 2013 | December 31, 2012 | ||||||
(Millions) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 235 | $ | 223 | |||
Restricted cash | 5 | — | |||||
Receivables — | |||||||
Customer notes and accounts, net | 1,196 | 966 | |||||
Other | 22 | 20 | |||||
Inventories — | |||||||
Finished goods | 271 | 273 | |||||
Work in process | 206 | 207 | |||||
Raw materials | 138 | 133 | |||||
Materials and supplies | 54 | 54 | |||||
Deferred income taxes | 72 | 72 | |||||
Prepayments and other | 248 | 176 | |||||
Total current assets | 2,447 | 2,124 | |||||
Other assets: | |||||||
Long-term receivables, net | 8 | 4 | |||||
Goodwill | 70 | 72 | |||||
Intangibles, net | 32 | 35 | |||||
Deferred income taxes | 151 | 116 | |||||
Other | 121 | 135 | |||||
382 | 362 | ||||||
Plant, property, and equipment, at cost | 3,333 | 3,365 | |||||
Less — Accumulated depreciation and amortization | (2,223 | ) | (2,243 | ) | |||
1,110 | 1,122 | ||||||
Total Assets | $ | 3,939 | $ | 3,608 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt (including current maturities of long-term debt) | $ | 120 | $ | 113 | |||
Trade payables | 1,339 | 1,186 | |||||
Accrued taxes | 36 | 50 | |||||
Accrued interest | 9 | 10 | |||||
Accrued liabilities | 246 | 239 | |||||
Other | 44 | 51 | |||||
Total current liabilities | 1,794 | 1,649 | |||||
Long-term debt | 1,158 | 1,067 | |||||
Deferred income taxes | 26 | 27 | |||||
Postretirement benefits | 374 | 407 | |||||
Deferred credits and other liabilities | 194 | 152 | |||||
Commitments and contingencies | |||||||
Total liabilities | 3,546 | 3,302 | |||||
Redeemable noncontrolling interests | 13 | 15 | |||||
Tenneco Inc. Shareholders’ equity: | |||||||
Common stock | 1 | 1 | |||||
Premium on common stock and other capital surplus | 3,049 | 3,031 | |||||
Accumulated other comprehensive loss | (448 | ) | (408 | ) | |||
Retained earnings (accumulated deficit) | (1,987 | ) | (2,104 | ) | |||
615 | 520 | ||||||
Less — Shares held as treasury stock, at cost | 276 | 274 | |||||
Total Tenneco Inc. shareholders’ equity | 339 | 246 | |||||
Noncontrolling interests | 41 | 45 | |||||
Total equity | 380 | 291 | |||||
Total liabilities, redeemable noncontrolling interests and equity | $ | 3,939 | $ | 3,608 |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||
(Millions) | |||||||||||||||
Net income | $ | 74 | $ | 95 | $ | 135 | $ | 131 | |||||||
Adjustments to reconcile net income to cash provided by operating activities — | |||||||||||||||
Depreciation and amortization of other intangibles | 50 | 50 | 100 | 99 | |||||||||||
Deferred income taxes | 21 | (2 | ) | 16 | (7 | ) | |||||||||
Stock-based compensation | 2 | 3 | 7 | 7 | |||||||||||
Loss on sale of assets | 2 | 1 | 2 | 2 | |||||||||||
Changes in components of working capital — | |||||||||||||||
(Increase) decrease in receivables | (77 | ) | (31 | ) | (253 | ) | (212 | ) | |||||||
(Increase) decrease in inventories | 22 | (7 | ) | (18 | ) | (83 | ) | ||||||||
(Increase) decrease in prepayments and other current assets | (32 | ) | (23 | ) | (81 | ) | (39 | ) | |||||||
Increase (decrease) in payables | 72 | (2 | ) | 149 | 86 | ||||||||||
Increase (decrease) in accrued taxes | (8 | ) | 17 | (13 | ) | 18 | |||||||||
Increase (decrease) in accrued interest | (4 | ) | (4 | ) | — | (4 | ) | ||||||||
Increase (decrease) in other current liabilities | 15 | 2 | 7 | 15 | |||||||||||
Changes in long-term assets | 3 | 1 | 3 | 9 | |||||||||||
Changes in long-term liabilities | (10 | ) | (17 | ) | (20 | ) | (22 | ) | |||||||
Other | 3 | 3 | 7 | 1 | |||||||||||
Net cash provided by operating activities | 133 | 86 | 41 | 1 | |||||||||||
Investing Activities | |||||||||||||||
Proceeds from the sale of assets | — | — | 2 | 1 | |||||||||||
Cash payments for plant, property, and equipment | (54 | ) | (60 | ) | (124 | ) | (125 | ) | |||||||
Cash payments for software related intangible assets | (6 | ) | (3 | ) | (12 | ) | (7 | ) | |||||||
Changes in restricted cash | 4 | — | (5 | ) | — | ||||||||||
Net cash (used) by investing activities | (56 | ) | (63 | ) | (139 | ) | (131 | ) | |||||||
Financing Activities | |||||||||||||||
Issuance of common shares | 12 | — | 13 | — | |||||||||||
Retirement of long-term debt | (3 | ) | (22 | ) | (8 | ) | (403 | ) | |||||||
Issuance of long-term debt | — | — | — | 250 | |||||||||||
Debt issuance cost of long-term debt | — | (1 | ) | — | (13 | ) | |||||||||
Purchase of common stock under the share repurchase program | (2 | ) | (18 | ) | (2 | ) | (18 | ) | |||||||
Increase (decrease) in bank overdrafts | 44 | (2 | ) | 35 | — | ||||||||||
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt | (84 | ) | 3 | 107 | 236 | ||||||||||
Net increase in short-term borrowings secured by accounts receivable | — | 30 | — | 60 | |||||||||||
Capital contribution from noncontrolling interest partner | — | 1 | — | 1 | |||||||||||
Distributions to noncontrolling interest partners | (23 | ) | (18 | ) | (23 | ) | (18 | ) | |||||||
Net cash provided (used) by financing activities | (56 | ) | (27 | ) | 122 | 95 | |||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | (19 | ) | (8 | ) | (12 | ) | 2 | ||||||||
Increase (decrease) in cash and cash equivalents | 2 | (12 | ) | 12 | (33 | ) | |||||||||
Cash and cash equivalents, April 1 and January 1, respectively | 233 | 193 | 223 | 214 | |||||||||||
Cash and cash equivalents, June 30 | $ | 235 | $ | 181 | $ | 235 | $ | 181 | |||||||
Supplemental Cash Flow Information | |||||||||||||||
Cash paid during the period for interest | $ | 23 | $ | 24 | $ | 39 | $ | 59 | |||||||
Cash paid during the period for income taxes (net of refunds) | 46 | 19 | 71 | 36 | |||||||||||
Non-cash Investing and Financing Activities | |||||||||||||||
Period end balance of trade payables for plant, property, and equipment | $ | 24 | $ | 30 | $ | 24 | $ | 30 |
Six Months Ended June 30, | |||||||||||||
2013 | 2012 | ||||||||||||
Shares | Amount | Shares | Amount | ||||||||||
(Millions Except Share Amounts) | |||||||||||||
Tenneco Inc. Shareholders: | |||||||||||||
Common Stock | |||||||||||||
Balance January 1 | 62,789,382 | $ | 1 | 62,101,335 | $ | 1 | |||||||
Issued pursuant to benefit plans | 156,357 | — | 152,705 | — | |||||||||
Stock options exercised | 491,064 | — | 115,016 | — | |||||||||
Balance June 30 | 63,436,803 | 1 | 62,369,056 | 1 | |||||||||
Premium on Common Stock and Other Capital Surplus | |||||||||||||
Balance January 1 | 3,031 | 3,016 | |||||||||||
Premium on common stock issued pursuant to benefit plans | 18 | 6 | |||||||||||
Balance June 30 | 3,049 | 3,022 | |||||||||||
Accumulated Other Comprehensive Loss | |||||||||||||
Balance January 1 | (408 | ) | (382 | ) | |||||||||
Other comprehensive income (loss) | (40 | ) | (9 | ) | |||||||||
Balance June 30 | (448 | ) | (391 | ) | |||||||||
Retained Earnings (Accumulated Deficit) | |||||||||||||
Balance January 1 | (2,104 | ) | (2,379 | ) | |||||||||
Net income attributable to Tenneco Inc. | 117 | 117 | |||||||||||
Balance June 30 | (1,987 | ) | (2,262 | ) | |||||||||
Less — Common Stock Held as Treasury Stock, at Cost | |||||||||||||
Balance January 1 | 2,294,692 | 274 | 1,694,692 | 256 | |||||||||
Purchase of common stock through stock repurchase program | 45,000 | 2 | 600,000 | 18 | |||||||||
Balance June 30 | 2,339,692 | 276 | 2,294,692 | 274 | |||||||||
Total Tenneco Inc. shareholders’ equity | $ | 339 | $ | 96 | |||||||||
Noncontrolling Interests: | |||||||||||||
Balance January 1 | $ | 45 | $ | 43 | |||||||||
Net income | 12 | 10 | |||||||||||
Other comprehensive income (loss) | (1 | ) | 1 | ||||||||||
Dividends declared | (15 | ) | (17 | ) | |||||||||
Balance June 30 | $ | 41 | $ | 37 | |||||||||
Total equity | $ | 380 | $ | 133 |
(1) | Consolidation and Presentation |
(2) | Financial Instruments |
June 30, 2013 | December 31, 2012 | ||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
(Millions) | |||||||||||||||
Long-term debt (including current maturities) | $ | 1,160 | $ | 1,217 | $ | 1,070 | $ | 1,136 | |||||||
Instruments with off-balance sheet risk: | |||||||||||||||
Foreign exchange forward contracts: | |||||||||||||||
Asset derivative contracts | — | — | 1 | 1 |
Fair Value of Derivative Instruments | |||||||||||||||||||||
June 30, 2013 | December 31, 2012 | ||||||||||||||||||||
Asset Derivatives | Liability Derivatives | Total | Asset Derivatives | Liability Derivatives | Total | ||||||||||||||||
(Millions) | |||||||||||||||||||||
Foreign exchange forward contracts | $— | $— | $— | $1 | $— | $1 |
June 30, 2013 | December 31, 2012 | ||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||
(Millions) | |||||||||||||||
Financial Assets: | |||||||||||||||
Foreign exchange forward contracts | n/a | $ | — | n/a | n/a | $ | 1 | n/a |
Level 1 | — | Quoted prices in active markets for identical assets or liabilities. |
Level 2 | — | Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. |
Level 3 | — | Unobservable inputs based on our own assumptions. |
Notional Amount in Foreign Currency | |||
(Millions) | |||
Australian dollars | —Purchase | 3 | |
—Sell | (2 | ) | |
British pounds | —Purchase | 8 | |
European euro | —Sell | (8 | ) |
South African rand | —Purchase | 103 | |
Japanese yen | —Purchase | 159 | |
—Sell | (790 | ) | |
U.S. dollars | —Purchase | 13 | |
—Sell | (17 | ) | |
Other | —Purchase | 1 | |
—Sell | (2 | ) |
(3) | Long-Term Debt and Financing Arrangements |
Quarter Ended | |||||||||||
March 31, 2013 | June 30, 2013 | ||||||||||
Required | Actual | Required | Actual | ||||||||
Leverage Ratio (maximum) | 3.50 | 1.98 | 3.50 | 1.79 | |||||||
Interest Coverage Ratio (minimum) | 2.55 | 8.39 | 2.55 | 8.74 |
(4) | Income Taxes |
• | Future reversals of existing taxable temporary differences; |
• | Taxable income or loss, based on recent results, exclusive of reversing temporary differences and carryforwards; |
• | Tax-planning strategies; and |
• | Taxable income in prior carryback years if carryback is permitted under the relevant tax law. |
(5) | Accounts Receivable Securitization |
(6) | Restructuring and Other Charges |
December 31, 2012 Restructuring Reserve | 2013 Expenses | 2013 Cash Payments | June 30, 2013 Restructuring Reserve | ||||||||||||
(Millions) | |||||||||||||||
Employee Severance and Termination Benefits | $— | $11 | ($6 | ) | $5 |
(7) | Environmental Matters, Litigation and Product Warranties |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
(Millions) | |||||||
Beginning Balance January 1, | $ | 23 | $ | 26 | |||
Accruals related to product warranties | 6 | 7 | |||||
Reductions for payments made | (9 | ) | (9 | ) | |||
Ending Balance June 30, | $ | 20 | $ | 24 |
(8) | Earnings Per Share |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||
(Millions Except Share and Per Share Amounts) | |||||||||||||||
Basic earnings per share — | |||||||||||||||
Net income attributable to Tenneco Inc. | $ | 63 | $ | 87 | $ | 117 | $ | 117 | |||||||
Weighted Average shares of common stock outstanding | 60,542,361 | 59,992,055 | 60,424,540 | 60,067,205 | |||||||||||
Earnings per share of common stock | $ | 1.04 | $ | 1.45 | $ | 1.94 | $ | 1.95 | |||||||
Diluted earnings per share — | |||||||||||||||
Net income attributable to Tenneco Inc. | $ | 63 | $ | 87 | $ | 117 | $ | 117 | |||||||
Weighted Average shares of common stock outstanding | 60,542,361 | 59,992,055 | 60,424,540 | 60,067,205 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
Restricted stock | 170,950 | 109,722 | 157,551 | 139,995 | |||||||||||
Stock options | 1,010,813 | 1,159,094 | 950,459 | 1,263,313 | |||||||||||
Weighted Average shares of common stock outstanding including dilutive securities | 61,724,124 | 61,260,871 | 61,532,550 | 61,470,513 | |||||||||||
Earnings per share of common stock | $ | 1.02 | $ | 1.42 | $ | 1.91 | $ | 1.90 |
(9) | Common Stock |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Stock Options Granted | |||||||
Weighted average grant date fair value, per share | $ | 19.84 | $ | 17.35 | |||
Weighted average assumptions used: | |||||||
Expected volatility | 66.4 | % | 73.5 | % | |||
Expected lives | 4.9 | 4.7 | |||||
Risk-free interest rates | 0.7 | % | 0.8 | % | |||
Dividend yields | — | % | — | % |
Six Months Ended June 30, 2013 | ||||||||||||
Shares Under Option | Weighted Avg. Exercise Prices | Weighted Avg. Remaining Life in Years | Aggregate Intrinsic Value | |||||||||
(Millions) | ||||||||||||
Outstanding Stock Options | ||||||||||||
Outstanding, January 1, 2013 | 2,447,475 | $ | 20.14 | 4.1 | $ | 29 | ||||||
Granted | 311,539 | 36.29 | ||||||||||
Canceled | (7,225 | ) | 11.73 | |||||||||
Forfeited | (14,920 | ) | 14.59 | |||||||||
Exercised | (82,622 | ) | 19.96 | 1 | ||||||||
Outstanding, March 31, 2013 | 2,654,247 | $ | 22.12 | 4.3 | $ | 41 | ||||||
Granted | 388 | 38.90 | ||||||||||
Forfeited | (450 | ) | 21.81 | |||||||||
Exercised | (393,442 | ) | 22.53 | 7 | ||||||||
Outstanding, June 30, 2013 | 2,260,743 | 22.06 | 4.7 | 44 | ||||||||
Six Months Ended June 30, 2013 | ||||||
Shares | Weighted Avg. Grant Date Fair Value | |||||
Nonvested Restricted Shares | ||||||
Nonvested balance at January 1, 2013 | 348,918 | $ | 31.69 | |||
Granted | 204,731 | 36.28 | ||||
Vested | (154,160 | ) | 29.54 | |||
Forfeited | — | — | ||||
Nonvested balance at March 31, 2013 | 399,489 | $ | 34.88 | |||
Granted | 226 | 38.90 | ||||
Vested | (15,289 | ) | 35.40 | |||
Forfeited | — | — | ||||
Nonvested balance at June 30, 2013 | 384,426 | 34.86 |
(10) | Pension Plans, Postretirement and Other Employee Benefits |
Three Months Ended June 30, | |||||||||||||||||||||||
Pension | Postretirement | ||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||
US | Foreign | US | Foreign | US | US | ||||||||||||||||||
(Millions) | |||||||||||||||||||||||
Service cost — benefits earned during the period | $ | 1 | $ | 3 | $ | — | $ | 2 | $ | — | $ | — | |||||||||||
Interest cost | 4 | 4 | 5 | 5 | 2 | 1 | |||||||||||||||||
Expected return on plan assets | (6 | ) | (5 | ) | (6 | ) | (6 | ) | — | — | |||||||||||||
Net amortization: | |||||||||||||||||||||||
Actuarial loss | 3 | 3 | 2 | 2 | 1 | 2 | |||||||||||||||||
Prior service cost (credit) | — | 1 | — | 1 | (2 | ) | (2 | ) | |||||||||||||||
Net pension and postretirement costs | $ | 2 | $ | 6 | $ | 1 | $ | 4 | $ | 1 | $ | 1 |
Six Months Ended June 30, | |||||||||||||||||||||||
Pension | Postretirement | ||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||
US | Foreign | US | Foreign | US | US | ||||||||||||||||||
(Millions) | |||||||||||||||||||||||
Service cost — benefits earned during the period | $ | 1 | $ | 5 | $ | — | $ | 4 | $ | — | $ | — | |||||||||||
Interest cost | 9 | 8 | 10 | 9 | 3 | 3 | |||||||||||||||||
Expected return on plan assets | (11 | ) | (10 | ) | (11 | ) | (11 | ) | — | — | |||||||||||||
Net amortization: | |||||||||||||||||||||||
Actuarial loss | 5 | 6 | 4 | 4 | 2 | 3 | |||||||||||||||||
Prior service cost (credit) | — | 1 | — | 1 | (3 | ) | (3 | ) | |||||||||||||||
Net pension and postretirement costs | $ | 4 | $ | 10 | $ | 3 | $ | 7 | $ | 2 | $ | 3 |
Three Months Ended June 30, | |||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||
Before-Tax Amount | Tax Benefit | Net-of-Tax Amount | Before- Tax Amount | Tax Benefit | Net-of-Tax Amount | ||||||||||||||||||
(Millions) | |||||||||||||||||||||||
Defined benefit pension and postretirement plans: | |||||||||||||||||||||||
Amortization of prior service cost included in net periodic pension and postretirement cost | $ | (1 | ) | $ | — | $ | (1 | ) | $ | (1 | ) | $ | — | $ | (1 | ) | |||||||
Amortization of actuarial loss included in net periodic pension and postretirement cost | 7 | — | 7 | 6 | — | 6 | |||||||||||||||||
Other comprehensive income – pension benefits | $ | 6 | $ | — | $ | 6 | $ | 5 | $ | — | $ | 5 |
Six Months Ended June 30, | |||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||
Before-Tax Amount | Tax Benefit | Net-of-Tax Amount | Before- Tax Amount | Tax Benefit | Net-of-Tax Amount | ||||||||||||||||||
(Millions) | |||||||||||||||||||||||
Defined benefit pension and postretirement plans: | |||||||||||||||||||||||
Amortization of prior service cost included in net periodic pension and postretirement cost | $ | (2 | ) | $ | — | $ | (2 | ) | $ | (2 | ) | $ | — | $ | (2 | ) | |||||||
Amortization of actuarial loss included in net periodic pension and postretirement cost | 13 | (1 | ) | 12 | 11 | (1 | ) | 10 | |||||||||||||||
Other comprehensive income – pension benefits | $ | 11 | $ | (1 | ) | $ | 10 | $ | 9 | $ | (1 | ) | $ | 8 |
(11) | New Accounting Pronouncements |
(12) | Segment Information |
Clean Air Division | Ride Performance Division | ||||||||||||||||||||||||||||||||||
North America | Europe, South America & India | Asia Pacific | North America | Europe, South America & India | Asia Pacific | Other | Reclass & Elims | Total | |||||||||||||||||||||||||||
(Millions) | |||||||||||||||||||||||||||||||||||
At June 30, 2013 and for the Three Months Ended June 30, 2013 | |||||||||||||||||||||||||||||||||||
Revenues from external customers | $ | 687 | $ | 516 | $ | 203 | $ | 324 | $ | 281 | $ | 56 | $ | — | $ | — | $ | 2,067 | |||||||||||||||||
Intersegment revenues | 1 | 26 | — | 3 | 9 | 8 | — | (47 | ) | — | |||||||||||||||||||||||||
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests | 68 | 18 | 21 | 36 | 14 | 6 | (22 | ) | — | 141 | |||||||||||||||||||||||||
Total assets | 1,099 | 869 | 451 | 682 | 593 | 208 | — | 37 | 3,939 | ||||||||||||||||||||||||||
At June 30, 2012 and for the Three Months Ended June 30, 2012 | |||||||||||||||||||||||||||||||||||
Revenues from external customers | 671 | 434 | 169 | 325 | 276 | 45 | — | — | 1,920 | ||||||||||||||||||||||||||
Intersegment revenues | 1 | 29 | — | 3 | 14 | 8 | — | (55 | ) | — | |||||||||||||||||||||||||
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests | 57 | 20 | 18 | 37 | 16 | 2 | (13 | ) | — | 137 | |||||||||||||||||||||||||
Total assets | 1,021 | 804 | 384 | 595 | 604 | 190 | — | 29 | 3,627 | ||||||||||||||||||||||||||
At June 30, 2013 and for the Six Months Ended June 30, 2013 | |||||||||||||||||||||||||||||||||||
Revenues from external customers | $ | 1,333 | $ | 983 | $ | 386 | $ | 631 | $ | 533 | $ | 104 | $ | — | $ | — | $ | 3,970 | |||||||||||||||||
Intersegment revenues | 2 | 57 | — | 5 | 21 | 15 | — | (100 | ) | — | |||||||||||||||||||||||||
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests | 117 | 29 | 36 | 61 | 24 | 10 | (43 | ) | — | 234 | |||||||||||||||||||||||||
Total assets | 1,099 | 869 | 451 | 682 | 593 | 208 | — | 37 | 3,939 | ||||||||||||||||||||||||||
At June 30, 2012 and for the Six Months Ended June 30, 2012 | |||||||||||||||||||||||||||||||||||
Revenues from external customers | 1,340 | 894 | 325 | 642 | 548 | 83 | — | — | 3,832 | ||||||||||||||||||||||||||
Intersegment revenues | 5 | 59 | — | 5 | 28 | 16 | — | (113 | ) | — | |||||||||||||||||||||||||
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests | 105 | 36 | 30 | 72 | 26 | — | (36 | ) | — | 233 | |||||||||||||||||||||||||
Total assets | 1,021 | 804 | 384 | 595 | 604 | 190 | — | 29 | 3,627 |
(13) | Supplemental Guarantor Condensed Consolidating Financial Statements |
For the Three Months Ended June 30, 2013 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
Revenues | |||||||||||||||||||
Net sales and operating revenues — | |||||||||||||||||||
External | $ | 904 | $ | 1,163 | $ | — | $ | — | $ | 2,067 | |||||||||
Affiliated companies | 92 | 141 | — | (233 | ) | — | |||||||||||||
996 | 1,304 | — | (233 | ) | 2,067 | ||||||||||||||
Costs and expenses | |||||||||||||||||||
Cost of sales (exclusive of depreciation and amortization shown below) | 776 | 1,192 | — | (232 | ) | 1,736 | |||||||||||||
Engineering, research, and development | 14 | 19 | — | — | 33 | ||||||||||||||
Selling, general, and administrative | 45 | 60 | 1 | — | 106 | ||||||||||||||
Depreciation and amortization of other intangibles | 19 | 31 | — | — | 50 | ||||||||||||||
854 | 1,302 | 1 | (232 | ) | 1,925 | ||||||||||||||
Other income (expense) | |||||||||||||||||||
Loss on sale of receivables | — | (1 | ) | — | — | (1 | ) | ||||||||||||
Other income (loss) | 34 | 5 | — | (39 | ) | — | |||||||||||||
34 | 4 | — | (39 | ) | (1 | ) | |||||||||||||
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies | 176 | 6 | (1 | ) | (40 | ) | 141 | ||||||||||||
Interest expense — | |||||||||||||||||||
External (net of interest capitalized) | (1 | ) | 1 | 20 | — | 20 | |||||||||||||
Affiliated companies (net of interest income) | 18 | (18 | ) | — | — | — | |||||||||||||
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies | 159 | 23 | (21 | ) | (40 | ) | 121 | ||||||||||||
Income tax expense | 40 | 7 | — | — | 47 | ||||||||||||||
Equity in net income (loss) from affiliated companies | 2 | — | 84 | (86 | ) | — | |||||||||||||
Net Income | 121 | 16 | 63 | (126 | ) | 74 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | 11 | — | — | 11 | ||||||||||||||
Net income (loss) attributable to Tenneco Inc. | $ | 121 | $ | 5 | $ | 63 | $ | (126 | ) | $ | 63 | ||||||||
Comprehensive income (loss) attributable to Tenneco Inc. | $ | 126 | $ | (18 | ) | $ | 63 | $ | (126 | ) | $ | 45 |
For the Three Months Ended June 30, 2012 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
Revenues | |||||||||||||||||||
Net sales and operating revenues — | |||||||||||||||||||
External | $ | 897 | $ | 1,023 | $ | — | $ | — | $ | 1,920 | |||||||||
Affiliated companies | 45 | 145 | — | (190 | ) | — | |||||||||||||
942 | 1,168 | — | (190 | ) | 1,920 | ||||||||||||||
Costs and expenses | |||||||||||||||||||
Cost of sales (exclusive of depreciation and amortization shown below) | 771 | 1,014 | — | (190 | ) | 1,595 | |||||||||||||
Engineering, research, and development | 12 | 16 | — | — | 28 | ||||||||||||||
Selling, general, and administrative | 38 | 70 | 1 | — | 109 | ||||||||||||||
Depreciation and amortization of other intangibles | 18 | 32 | — | — | 50 | ||||||||||||||
839 | 1,132 | 1 | (190 | ) | 1,782 | ||||||||||||||
Other income (expense) | |||||||||||||||||||
Loss on sale of receivables | — | (1 | ) | — | — | (1 | ) | ||||||||||||
Other income (expense) | 43 | (4 | ) | — | (39 | ) | — | ||||||||||||
43 | (5 | ) | — | (39 | ) | (1 | ) | ||||||||||||
Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies | 146 | 31 | (1 | ) | (39 | ) | 137 | ||||||||||||
Interest expense — | |||||||||||||||||||
External (net of interest capitalized) | — | 1 | 20 | — | 21 | ||||||||||||||
Affiliated companies (net of interest income) | 58 | (23 | ) | (35 | ) | — | — | ||||||||||||
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies | 88 | 53 | 14 | (39 | ) | 116 | |||||||||||||
Income tax expense | 5 | 16 | — | — | 21 | ||||||||||||||
Equity in net income (loss) from affiliated companies | 29 | — | 73 | (102 | ) | — | |||||||||||||
Net income (loss) | 112 | 37 | 87 | (141 | ) | 95 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | 8 | — | — | 8 | ||||||||||||||
Net income (loss) attributable to Tenneco Inc. | $ | 112 | $ | 29 | $ | 87 | $ | (141 | ) | $ | 87 | ||||||||
Comprehensive income (loss) attributable to Tenneco Inc. | $ | 102 | $ | 1 | $ | 87 | $ | (141 | ) | $ | 49 |
For the Six Months Ended June 30, 2013 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
Revenues | |||||||||||||||||||
Net sales and operating revenues — | |||||||||||||||||||
External | $ | 1,756 | $ | 2,214 | $ | — | $ | — | $ | 3,970 | |||||||||
Affiliated companies | 171 | 291 | — | (462 | ) | — | |||||||||||||
1,927 | 2,505 | — | (462 | ) | 3,970 | ||||||||||||||
Costs and expenses | |||||||||||||||||||
Cost of sales (exclusive of depreciation and amortization shown below) | 1,518 | 2,283 | — | (461 | ) | 3,340 | |||||||||||||
Goodwill impairment charge | — | — | — | — | — | ||||||||||||||
Engineering, research, and development | 29 | 39 | — | — | 68 | ||||||||||||||
Selling, general, and administrative | 98 | 124 | 3 | — | 225 | ||||||||||||||
Depreciation and amortization of other intangibles | 38 | 62 | — | — | 100 | ||||||||||||||
1,683 | 2,508 | 3 | (461 | ) | 3,733 | ||||||||||||||
Other income (expense) | |||||||||||||||||||
Loss on sale of receivables | — | (2 | ) | — | — | (2 | ) | ||||||||||||
Other income (expense) | 33 | 5 | — | (39 | ) | (1 | ) | ||||||||||||
33 | 3 | — | (39 | ) | (3 | ) | |||||||||||||
Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies | 277 | — | (3 | ) | (40 | ) | 234 | ||||||||||||
Interest expense — | |||||||||||||||||||
External (net of interest capitalized) | (1 | ) | 2 | 39 | — | 40 | |||||||||||||
Affiliated companies (net of interest income) | 36 | (37 | ) | 1 | — | — | |||||||||||||
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies | 242 | 35 | (43 | ) | (40 | ) | 194 | ||||||||||||
Income tax expense | 46 | 13 | — | — | 59 | ||||||||||||||
Equity in net income (loss) from affiliated companies | (3 | ) | — | 160 | (157 | ) | — | ||||||||||||
Net income (loss) | 193 | 22 | 117 | (197 | ) | 135 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | 18 | — | — | 18 | ||||||||||||||
Net income (loss) attributable to Tenneco Inc. | $ | 193 | $ | 4 | $ | 117 | $ | (197 | ) | $ | 117 | ||||||||
Comprehensive income (loss) attributable to Tenneco Inc. | $ | 193 | $ | (36 | ) | $ | 117 | $ | (197 | ) | $ | 77 |
For the Six Months Ended June 30, 2012 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
Revenues | |||||||||||||||||||
Net sales and operating revenues — | |||||||||||||||||||
External | $ | 1,787 | $ | 2,045 | $ | — | $ | — | $ | 3,832 | |||||||||
Affiliated companies | 96 | 297 | — | (393 | ) | — | |||||||||||||
1,883 | 2,342 | — | (393 | ) | 3,832 | ||||||||||||||
Costs and expenses | |||||||||||||||||||
Cost of sales (exclusive of depreciation and amortization shown below) | 1,618 | 1,977 | — | (393 | ) | 3,202 | |||||||||||||
Goodwill impairment charge | — | — | — | — | — | ||||||||||||||
Engineering, research, and development | 28 | 38 | — | — | 66 | ||||||||||||||
Selling, general, and administrative | 77 | 147 | 3 | — | 227 | ||||||||||||||
Depreciation and amortization of other intangibles | 36 | 63 | — | — | 99 | ||||||||||||||
1,759 | 2,225 | 3 | (393 | ) | 3,594 | ||||||||||||||
Other income (expense) | |||||||||||||||||||
Loss on sale of receivables | — | (2 | ) | — | — | (2 | ) | ||||||||||||
Other income (expense) | 46 | (10 | ) | — | (39 | ) | (3 | ) | |||||||||||
46 | (12 | ) | — | (39 | ) | (5 | ) | ||||||||||||
Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies | 170 | 105 | (3 | ) | (39 | ) | 233 | ||||||||||||
Interest expense — | |||||||||||||||||||
External (net of interest capitalized) | — | 2 | 61 | — | 63 | ||||||||||||||
Affiliated companies (net of interest income) | 112 | (42 | ) | (70 | ) | — | — | ||||||||||||
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies | 58 | 145 | 6 | (39 | ) | 170 | |||||||||||||
Income tax expense | 7 | 32 | — | — | 39 | ||||||||||||||
Equity in net income (loss) from affiliated companies | 97 | — | 111 | (208 | ) | — | |||||||||||||
Net income (loss) | 148 | 113 | 117 | (247 | ) | 131 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | 14 | — | — | 14 | ||||||||||||||
Net income (loss) attributable to Tenneco Inc. | $ | 148 | $ | 99 | $ | 117 | $ | (247 | ) | $ | 117 | ||||||||
Comprehensive income (loss) attributable to Tenneco Inc. | $ | 145 | $ | 93 | $ | 117 | $ | (247 | ) | $ | 108 |
June 30, 2013 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
ASSETS | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 1 | $ | 234 | $ | — | $ | — | $ | 235 | |||||||||
Restricted cash | — | 5 | — | — | 5 | ||||||||||||||
Receivables, net | 488 | 1,227 | 30 | (527 | ) | 1,218 | |||||||||||||
Inventories | 273 | 396 | — | — | 669 | ||||||||||||||
Deferred income taxes | 90 | — | 6 | (24 | ) | 72 | |||||||||||||
Prepayments and other | 39 | 209 | — | — | 248 | ||||||||||||||
Total current assets | 891 | 2,071 | 36 | (551 | ) | 2,447 | |||||||||||||
Other assets: | |||||||||||||||||||
Investment in affiliated companies | 518 | — | 870 | (1,388 | ) | — | |||||||||||||
Notes and advances receivable from affiliates | 960 | 5,768 | 4,660 | (11,388 | ) | — | |||||||||||||
Long-term receivables, net | 6 | 2 | — | — | 8 | ||||||||||||||
Goodwill | 21 | 48 | — | 1 | 70 | ||||||||||||||
Intangibles, net | 15 | 17 | — | — | 32 | ||||||||||||||
Deferred income taxes | 116 | 11 | 24 | — | 151 | ||||||||||||||
Other | 48 | 48 | 26 | (1 | ) | 121 | |||||||||||||
1,684 | 5,894 | 5,580 | (12,776 | ) | 382 | ||||||||||||||
Plant, property, and equipment, at cost | 1,129 | 2,204 | — | — | 3,333 | ||||||||||||||
Less — Accumulated depreciation and amortization | (781 | ) | (1,442 | ) | — | — | (2,223 | ) | |||||||||||
348 | 762 | — | — | 1,110 | |||||||||||||||
Total assets | $ | 2,923 | $ | 8,727 | $ | 5,616 | $ | (13,327 | ) | $ | 3,939 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Short-term debt (including current maturities of long-term debt) | |||||||||||||||||||
Short-term debt — non-affiliated | $ | — | $ | 120 | $ | — | $ | — | $ | 120 | |||||||||
Short-term debt — affiliated | 62 | 262 | 9 | (333 | ) | — | |||||||||||||
Trade payables | 522 | 975 | — | (158 | ) | 1,339 | |||||||||||||
Accrued taxes | 12 | 23 | 1 | — | 36 | ||||||||||||||
Other | 120 | 230 | 9 | (60 | ) | 299 | |||||||||||||
Total current liabilities | 716 | 1,610 | 19 | (551 | ) | 1,794 | |||||||||||||
Long-term debt — non-affiliated | — | 8 | 1,150 | — | 1,158 | ||||||||||||||
Long-term debt — affiliated | 1,515 | 5,806 | 4,067 | (11,388 | ) | — | |||||||||||||
Deferred income taxes | — | 26 | — | — | 26 | ||||||||||||||
Postretirement benefits and other liabilities | 467 | 98 | — | 3 | 568 | ||||||||||||||
Commitments and contingencies | |||||||||||||||||||
Total liabilities | 2,698 | 7,548 | 5,236 | (11,936 | ) | 3,546 | |||||||||||||
Redeemable noncontrolling interests | — | 13 | — | — | 13 | ||||||||||||||
Tenneco Inc. shareholders’ equity | 225 | 1,125 | 380 | (1,391 | ) | 339 | |||||||||||||
Noncontrolling interests | — | 41 | — | — | 41 | ||||||||||||||
Total equity | 225 | 1,166 | 380 | (1,391 | ) | 380 | |||||||||||||
Total liabilities, redeemable noncontrolling interests and equity | $ | 2,923 | $ | 8,727 | $ | 5,616 | $ | (13,327 | ) | $ | 3,939 |
December 31, 2012 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
ASSETS | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 4 | $ | 219 | $ | — | $ | — | $ | 223 | |||||||||
Receivables, net | 341 | 1,268 | 30 | (653 | ) | 986 | |||||||||||||
Inventories | 278 | 389 | — | — | 667 | ||||||||||||||
Deferred income taxes | 91 | — | 6 | (25 | ) | 72 | |||||||||||||
Prepayments and other | 28 | 148 | — | — | 176 | ||||||||||||||
Total current assets | 742 | 2,024 | 36 | (678 | ) | 2,124 | |||||||||||||
Other assets: | |||||||||||||||||||
Investment in affiliated companies | 551 | — | 717 | (1,268 | ) | — | |||||||||||||
Notes and advances receivable from affiliates | 957 | 4,495 | 4,594 | (10,046 | ) | — | |||||||||||||
Long-term receivables, net | 2 | 2 | — | — | 4 | ||||||||||||||
Goodwill | 21 | 51 | — | — | 72 | ||||||||||||||
Intangibles, net | 18 | 17 | — | — | 35 | ||||||||||||||
Deferred income taxes | 55 | 1 | 60 | — | 116 | ||||||||||||||
Other | 31 | 75 | 29 | — | 135 | ||||||||||||||
1,635 | 4,641 | 5,400 | (11,314 | ) | 362 | ||||||||||||||
Plant, property, and equipment, at cost | 1,098 | 2,267 | — | — | 3,365 | ||||||||||||||
Less — Accumulated depreciation and amortization | (763 | ) | (1,480 | ) | — | — | (2,243 | ) | |||||||||||
335 | 787 | — | — | 1,122 | |||||||||||||||
Total assets | $ | 2,712 | $ | 7,452 | $ | 5,436 | $ | (11,992 | ) | $ | 3,608 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Short-term debt (including current maturities of long-term debt) | |||||||||||||||||||
Short-term debt — non-affiliated | $ | — | $ | 112 | $ | 1 | $ | — | $ | 113 | |||||||||
Short-term debt — affiliated | 250 | 173 | 10 | (433 | ) | — | |||||||||||||
Trade payables | 423 | 954 | — | (191 | ) | 1,186 | |||||||||||||
Accrued taxes | 16 | 34 | — | — | 50 | ||||||||||||||
Other | 135 | 210 | 9 | (54 | ) | 300 | |||||||||||||
Total current liabilities | 824 | 1,483 | 20 | (678 | ) | 1,649 | |||||||||||||
Long-term debt — non-affiliated | — | 8 | 1,059 | — | 1,067 | ||||||||||||||
Long-term debt — affiliated | 1,447 | 4,533 | 4,066 | (10,046 | ) | — | |||||||||||||
Deferred income taxes | — | 27 | — | — | 27 | ||||||||||||||
Postretirement benefits and other liabilities | 438 | 118 | — | 3 | 559 | ||||||||||||||
Commitments and contingencies | |||||||||||||||||||
Total liabilities | 2,709 | 6,169 | 5,145 | (10,721 | ) | 3,302 | |||||||||||||
Redeemable noncontrolling interests | — | 15 | — | — | 15 | ||||||||||||||
Tenneco Inc. shareholders’ equity | 3 | 1,223 | 291 | (1,271 | ) | 246 | |||||||||||||
Noncontrolling interests | — | 45 | — | — | 45 | ||||||||||||||
Total equity | 3 | 1,268 | 291 | (1,271 | ) | 291 | |||||||||||||
Total liabilities, redeemable noncontrolling interests and equity | $ | 2,712 | $ | 7,452 | $ | 5,436 | $ | (11,992 | ) | $ | 3,608 |
Three Months Ended June 30, 2013 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
Operating Activities | |||||||||||||||||||
Net cash provided (used) by operating activities | $ | 87 | $ | 73 | $ | (27 | ) | $ | — | $ | 133 | ||||||||
Investing Activities | |||||||||||||||||||
Proceeds from sale of assets | 1 | (1 | ) | — | — | — | |||||||||||||
Cash payments for plant, property, and equipment | (23 | ) | (31 | ) | — | — | (54 | ) | |||||||||||
Cash payments for software related intangible assets | (6 | ) | — | — | — | (6 | ) | ||||||||||||
Changes in restricted cash | — | 4 | — | — | 4 | ||||||||||||||
Net cash used by investing activities | (28 | ) | (28 | ) | — | — | (56 | ) | |||||||||||
Financing Activities | |||||||||||||||||||
Issuance of common and treasury shares | — | — | 12 | — | 12 | ||||||||||||||
Retirement of long-term debt | — | (1 | ) | (2 | ) | — | (3 | ) | |||||||||||
Purchase of common stock under the share repurchase program | — | — | (2 | ) | — | (2 | ) | ||||||||||||
Increase (decrease) in bank overdrafts | 40 | 4 | — | — | 44 | ||||||||||||||
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables | — | 7 | (91 | ) | — | (84 | ) | ||||||||||||
Intercompany dividends and net increase (decrease) in intercompany obligations | (102 | ) | (8 | ) | 110 | — | — | ||||||||||||
Distributions to noncontrolling interest partners | — | (23 | ) | — | — | (23 | ) | ||||||||||||
Net cash provided (used) by financing activities | (62 | ) | (21 | ) | 27 | — | (56 | ) | |||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | — | (19 | ) | — | — | (19 | ) | ||||||||||||
Increase (decrease) in cash and cash equivalents | (3 | ) | 5 | — | — | 2 | |||||||||||||
Cash and cash equivalents, April 1 | 4 | 229 | — | — | 233 | ||||||||||||||
Cash and cash equivalents, June 30 (Note) | $ | 1 | $ | 234 | $ | — | $ | — | $ | 235 |
Note: | Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase. |
Three Months Ended June 30, 2012 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
Operating Activities | |||||||||||||||||||
Net cash provided (used) by operating activities | $ | 122 | $ | 24 | $ | (60 | ) | $ | — | $ | 86 | ||||||||
Investing Activities | |||||||||||||||||||
Cash payments for plant, property, and equipment | (22 | ) | (38 | ) | — | — | (60 | ) | |||||||||||
Cash payments for software related intangible assets | (1 | ) | (2 | ) | — | — | (3 | ) | |||||||||||
Net cash used by investing activities | (23 | ) | (40 | ) | — | — | (63 | ) | |||||||||||
Financing Activities | |||||||||||||||||||
Retirement of long-term debt | — | (1 | ) | (21 | ) | — | (22 | ) | |||||||||||
Debt issuance cost of long-term debt | — | — | (1 | ) | — | (1 | ) | ||||||||||||
Purchase of common stock under the share repurchase program | — | — | (18 | ) | — | (18 | ) | ||||||||||||
Increase (decrease) in bank overdrafts | — | (2 | ) | — | — | (2 | ) | ||||||||||||
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt | — | 41 | (38 | ) | — | 3 | |||||||||||||
Net increase in short-term borrowings secured by accounts receivable | — | — | 30 | — | 30 | ||||||||||||||
Intercompany dividends and net increase (decrease) in intercompany obligations | (102 | ) | (6 | ) | 108 | — | — | ||||||||||||
Capital contribution from noncontrolling interest partner | — | 1 | — | — | 1 | ||||||||||||||
Distributions to noncontrolling interest partners | — | (18 | ) | — | — | (18 | ) | ||||||||||||
Net cash provided (used) by financing activities | (102 | ) | 15 | 60 | — | (27 | ) | ||||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | — | (8 | ) | — | — | (8 | ) | ||||||||||||
Increase (decrease) in cash and cash equivalents | (3 | ) | (9 | ) | — | — | (12 | ) | |||||||||||
Cash and cash equivalents, April 1 | 3 | 190 | — | — | 193 | ||||||||||||||
Cash and cash equivalents, June 30 (Note) | $ | — | $ | 181 | $ | — | $ | — | $ | 181 |
Note: | Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase. |
Six Months Ended June 30, 2013 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
Operating Activities | |||||||||||||||||||
Net cash provided (used) by operating activities | $ | (15 | ) | $ | 88 | $ | (32 | ) | $ | — | $ | 41 | |||||||
Investing Activities | |||||||||||||||||||
Proceeds from sale of assets | 1 | 1 | — | — | 2 | ||||||||||||||
Cash payments for plant, property, and equipment | (55 | ) | (69 | ) | — | — | (124 | ) | |||||||||||
Cash payments for software related intangible assets | (9 | ) | (3 | ) | — | — | (12 | ) | |||||||||||
Changes in restricted cash | — | (5 | ) | — | — | (5 | ) | ||||||||||||
Net cash used by investing activities | (63 | ) | (76 | ) | — | — | (139 | ) | |||||||||||
Financing Activities | |||||||||||||||||||
Issuance of common and treasury shares | — | — | 13 | — | 13 | ||||||||||||||
Retirement of long-term debt | — | (1 | ) | (7 | ) | — | (8 | ) | |||||||||||
Purchase of common stock under the share repurchase program | — | — | (2 | ) | — | (2 | ) | ||||||||||||
Increase (decrease) in bank overdrafts | 40 | (5 | ) | — | — | 35 | |||||||||||||
Net increase (decrease) in short-term borrowings secured by accounts receivables | — | 10 | 97 | — | 107 | ||||||||||||||
Intercompany dividends and net increase (decrease) in intercompany obligations | 35 | 34 | (69 | ) | — | — | |||||||||||||
Distributions to noncontrolling interest partners | — | (23 | ) | — | — | (23 | ) | ||||||||||||
Net cash provided by financing activities | $ | 75 | $ | 15 | $ | 32 | $ | — | $ | 122 | |||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | — | (12 | ) | — | — | (12 | ) | ||||||||||||
Increase (decrease) in cash and cash equivalents | (3 | ) | 15 | — | — | 12 | |||||||||||||
Cash and cash equivalents, January 1 | 4 | 219 | — | — | 223 | ||||||||||||||
Cash and cash equivalents, June 30 (Note) | $ | 1 | $ | 234 | $ | — | $ | — | $ | 235 |
Note: | Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase. |
Six Months Ended June 30, 2012 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
Operating Activities | |||||||||||||||||||
Net cash provided (used) by operating activities | $ | 124 | $ | 3 | $ | (126 | ) | $ | — | $ | 1 | ||||||||
Investing Activities | |||||||||||||||||||
Proceeds from sale of assets | — | 1 | — | — | 1 | ||||||||||||||
Cash payments for plant, property, and equipment | (47 | ) | (78 | ) | — | — | (125 | ) | |||||||||||
Cash payments for software related intangible assets | (2 | ) | (5 | ) | — | — | (7 | ) | |||||||||||
Net cash used by investing activities | (49 | ) | (82 | ) | — | — | (131 | ) | |||||||||||
Financing Activities | |||||||||||||||||||
Retirement of long-term debt | — | (1 | ) | (402 | ) | — | (403 | ) | |||||||||||
Issuance of long-term debt | — | — | 250 | — | 250 | ||||||||||||||
Debt issuance cost of long-term debt | — | — | (13 | ) | — | (13 | ) | ||||||||||||
Purchase of common stock under the share repurchase program | — | — | (18 | ) | — | (18 | ) | ||||||||||||
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables | — | 68 | 168 | — | 236 | ||||||||||||||
Net increase (decrease) in short-term borrowings secured by accounts receivables | — | — | 60 | — | 60 | ||||||||||||||
Intercompany dividends and net increase (decrease) in intercompany obligations | (76 | ) | (5 | ) | 81 | — | — | ||||||||||||
Capital contribution from noncontrolling interest partners | — | 1 | — | — | 1 | ||||||||||||||
Distributions to noncontrolling interest partners | — | (18 | ) | — | — | (18 | ) | ||||||||||||
Net cash provided (used) by financing activities | (76 | ) | 45 | 126 | — | 95 | |||||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | — | 2 | — | — | 2 | ||||||||||||||
Increase (decrease) in cash and cash equivalents | (1 | ) | (32 | ) | — | — | (33 | ) | |||||||||||
Cash and cash equivalents, January 1 | 1 | 213 | — | — | 214 | ||||||||||||||
Cash and cash equivalents, June 30 (Note) | $ | — | $ | 181 | $ | — | $ | — | $ | 181 |
Note: | Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase. |
Quarter ended June 30, 2012 | $ | 1,595 | |
Volume and mix | 144 | ||
Material | (15 | ) | |
Currency exchange rates | 3 | ||
Restructuring | 1 | ||
Other Costs | 8 | ||
Quarter ended June 30, 2013 | $ | 1,736 |
Six months ended June 30, 2012 | $ | 3,202 | |
Volume and mix | 180 | ||
Material | (35 | ) | |
Currency exchange rates | (25 | ) | |
Restructuring | 3 | ||
Other Costs | 15 | ||
Six months ended June 30, 2013 | $ | 3,340 |
Three Months Ended June 30, 2013 | |||||||||||||||||||
Revenues | Substrate Sales | Value-add Revenues | Currency Impact on Value-add Revenues | Value-add Revenues excluding Currency | |||||||||||||||
(Millions) | |||||||||||||||||||
Clean Air Division | |||||||||||||||||||
North America | $ | 687 | $ | 272 | $ | 415 | $ | — | $ | 415 | |||||||||
Europe, South America & India | 516 | 184 | 332 | (4 | ) | 336 | |||||||||||||
Asia Pacific | 203 | 32 | 171 | 4 | 167 | ||||||||||||||
Total Clean Air Division | 1,406 | 488 | 918 | — | 918 | ||||||||||||||
Ride Performance Division | |||||||||||||||||||
North America | 324 | — | 324 | — | 324 | ||||||||||||||
Europe, South America & India | 281 | — | 281 | (5 | ) | 286 | |||||||||||||
Asia Pacific | 56 | — | 56 | (1 | ) | 57 | |||||||||||||
Total Ride Performance Division | 661 | — | 661 | (6 | ) | 667 | |||||||||||||
Total Tenneco Inc. | $ | 2,067 | $ | 488 | $ | 1,579 | $ | (6 | ) | $ | 1,585 |
Three Months Ended June 30, 2012 | |||||||||||||||||||
Revenues | Substrate Sales | Value-add Revenues | Currency Impact on Value-add Revenues | Value-add Revenues excluding Currency | |||||||||||||||
(Millions) | |||||||||||||||||||
Clean Air Division | |||||||||||||||||||
North America | $ | 671 | $ | 269 | $ | 402 | $ | — | $ | 402 | |||||||||
Europe, South America & India | 434 | 137 | 297 | — | 297 | ||||||||||||||
Asia Pacific | 169 | 23 | 146 | — | 146 | ||||||||||||||
Total Clean Air Division | 1,274 | 429 | 845 | — | 845 | ||||||||||||||
Ride Performance Division | |||||||||||||||||||
North America | 325 | — | 325 | — | 325 | ||||||||||||||
Europe, South America & India | 276 | — | 276 | — | 276 | ||||||||||||||
Asia Pacific | 45 | — | 45 | — | 45 | ||||||||||||||
Total Ride Performance Division | 646 | — | 646 | — | 646 | ||||||||||||||
Total Tenneco Inc. | $ | 1,920 | $ | 429 | $ | 1,491 | $ | — | $ | 1,491 |
Three Months Ended June 30, 2013 Versus Three Months Ended June 30, 2012 Dollar and Percent Increase (Decrease) | |||||||||||||
Revenues | Percent | Value-add Revenues excluding Currency | Percent | ||||||||||
(Millions Except Percent Amounts) | |||||||||||||
Clean Air Division | |||||||||||||
North America | $ | 16 | 2 | % | $ | 13 | 3 | % | |||||
Europe, South America & India | 82 | 19 | % | 39 | 13 | % | |||||||
Asia Pacific | 34 | 20 | % | 21 | 14 | % | |||||||
Total Clean Air Division | 132 | 10 | % | 73 | 9 | % | |||||||
Ride Performance Division | |||||||||||||
North America | (1 | ) | — | % | (1 | ) | — | % | |||||
Europe, South America & India | 5 | 2 | % | 10 | 4 | % | |||||||
Asia Pacific | 11 | 24 | % | 12 | 27 | % | |||||||
Total Ride Performance Division | 15 | 2 | % | 21 | 3 | % | |||||||
Total Tenneco Inc. | $ | 147 | 8 | % | $ | 94 | 6 | % |
Three Months Ended June 30, | |||||||||||
2013 | 2012 | Increase (Decrease) | % Increase (Decrease) | ||||||||
(Number of Vehicles in Thousands) | |||||||||||
North America | 4,221 | 3,986 | 235 | 6 | % | ||||||
Europe | 5,065 | 5,017 | 48 | 1 | % | ||||||
South America | 1,253 | 1,029 | 224 | 22 | % | ||||||
India | 863 | 921 | (58 | ) | (6 | )% | |||||
Total Europe, South America & India | 7,181 | 6,967 | 214 | 3 | % | ||||||
China | 5,020 | 4,513 | 507 | 11 | % | ||||||
Australia | 55 | 56 | (1 | ) | (1 | )% |
Six Months Ended June 30, 2013 | |||||||||||||||||||
Revenues | Substrate Sales | Value-add Revenues | Currency Impact on Value-add Revenues | Value-add Revenues excluding Currency | |||||||||||||||
(Millions) | |||||||||||||||||||
Clean Air Division | |||||||||||||||||||
North America | $ | 1,333 | $ | 532 | $ | 801 | $ | — | $ | 801 | |||||||||
Europe, South America & India | 983 | 353 | 630 | (17 | ) | 647 | |||||||||||||
Asia Pacific | 386 | 57 | 329 | 4 | 325 | ||||||||||||||
Total Clean Air Division | 2,702 | 942 | 1,760 | (13 | ) | 1,773 | |||||||||||||
Ride Performance Division | |||||||||||||||||||
North America | 631 | — | 631 | (1 | ) | 632 | |||||||||||||
Europe, South America & India | 533 | — | 533 | (19 | ) | 552 | |||||||||||||
Asia Pacific | 104 | — | 104 | (1 | ) | 105 | |||||||||||||
Total Ride Performance Division | 1,268 | — | 1,268 | (21 | ) | 1,289 | |||||||||||||
Total Tenneco Inc. | $ | 3,970 | $ | 942 | $ | 3,028 | $ | (34 | ) | $ | 3,062 |
Six Months Ended June 30, 2012 | |||||||||||||||||||
Revenues | Substrate Sales | Value-add Revenues | Currency Impact on Value-add Revenues | Value-add Revenues excluding Currency | |||||||||||||||
(Millions) | |||||||||||||||||||
Clean Air Division | |||||||||||||||||||
North America | $ | 1,340 | $ | 546 | $ | 794 | $ | — | $ | 794 | |||||||||
Europe, South America & India | 894 | 290 | 604 | — | 604 | ||||||||||||||
Asia Pacific | 325 | 49 | 276 | — | 276 | ||||||||||||||
Total Clean Air Division | 2,559 | 885 | 1,674 | — | 1,674 | ||||||||||||||
Ride Performance Division | |||||||||||||||||||
North America | 642 | — | 642 | — | 642 | ||||||||||||||
Europe, South America & India | 548 | — | 548 | — | 548 | ||||||||||||||
Asia Pacific | 83 | — | 83 | — | 83 | ||||||||||||||
Total Ride Performance Division | 1,273 | — | 1,273 | — | 1,273 | ||||||||||||||
Total Tenneco Inc. | $ | 3,832 | $ | 885 | $ | 2,947 | $ | — | $ | 2,947 |
Six Months Ended June 30, 2013 Versus Six Months Ended June 30, 2012 Dollar and Percent Increase (Decrease) | |||||||||||||
Revenues | Percent | Value-add Revenues excluding Currency | Percent | ||||||||||
(Millions Except Percent Amounts) | |||||||||||||
Clean Air Division | |||||||||||||
North America | $ | (7 | ) | (1 | )% | $ | 7 | 1 | % | ||||
Europe, South America & India | 89 | 10 | % | 43 | 7 | % | |||||||
Asia Pacific | 61 | 19 | % | 49 | 18 | % | |||||||
Total Clean Air Division | 143 | 6 | % | 99 | 6 | % | |||||||
Ride Performance Division | |||||||||||||
North America | (11 | ) | (2 | )% | (10 | ) | (2 | )% | |||||
Europe, South America & India | (15 | ) | (3 | )% | 4 | 1 | % | ||||||
Asia Pacific | 21 | 25 | % | 22 | 27 | % | |||||||
Total Ride Performance Division | (5 | ) | — | % | 16 | 1 | % | ||||||
Total Tenneco Inc. | $ | 138 | 4 | % | $ | 115 | 4 | % |
Six Months Ended June 30, | |||||||||||
2013 | 2012 | Increase (Decrease) | % Increase (Decrease) | ||||||||
(Number of Vehicles in Thousands) | |||||||||||
North America | 8,233 | 7,951 | 282 | 4 | % | ||||||
Europe | 9,885 | 10,271 | (386 | ) | (4 | )% | |||||
South America | 2,275 | 1,983 | 292 | 15 | % | ||||||
India | 1,874 | 1,998 | (124 | ) | (6 | )% | |||||
Total Europe, South America & India | 14,034 | 14,252 | (218 | ) | (2 | )% | |||||
China | 10,130 | 8,994 | 1,136 | 13 | % | ||||||
Australia | 119 | 113 | 6 | 5 | % |
Three Months Ended June 30, | Change | ||||||||||
2013 | 2012 | ||||||||||
(Millions) | |||||||||||
Clean Air Division | |||||||||||
North America | $ | 68 | $ | 57 | $ | 11 | |||||
Europe, South America & India | 18 | 20 | (2 | ) | |||||||
Asia Pacific | 21 | 18 | 3 | ||||||||
Total Clean Air Division | 107 | 95 | 12 | ||||||||
Ride Performance Division | |||||||||||
North America | 36 | 37 | (1 | ) | |||||||
Europe, South America & India | 14 | 16 | (2 | ) | |||||||
Asia Pacific | 6 | 2 | 4 | ||||||||
Total Ride Performance Division | 56 | 55 | 1 | ||||||||
Other | (22 | ) | (13 | ) | (9 | ) | |||||
Total Tenneco Inc. | $ | 141 | $ | 137 | $ | 4 |
Three Months Ended June 30, | |||||||
2013 | 2012 | ||||||
(Millions) | |||||||
Clean Air Division | |||||||
Europe, South America & India | |||||||
Restructuring and related expenses | $ | 3 | $ | 1 | |||
Total Clear Air Division | $ | 3 | $ | 1 | |||
Ride Performance Division | |||||||
Europe, South America & India | |||||||
Restructuring and related expenses | 1 | 1 | |||||
Asia Pacific | |||||||
Restructuring and related expenses | 1 | $ | — | ||||
Total Ride Performance Division | $ | 2 | $ | 1 | |||
Other | |||||||
Restructuring and related expenses | $ | 2 | $ | — |
Three Months Ended June 30, | |||||
2013 | 2012 | ||||
Clean Air Division | |||||
North America | 10 | % | 8 | % | |
Europe, South America & India | 3 | % | 5 | % | |
Asia Pacific | 10 | % | 11 | % | |
Total Clean Air Division | 8 | % | 7 | % | |
Ride Performance Division | |||||
North America | 11 | % | 11 | % | |
Europe, South America & India | 5 | % | 6 | % | |
Asia Pacific | 11 | % | 4 | % | |
Total Ride Performance Division | 8 | % | 9 | % | |
Total Tenneco Inc. | 7 | % | 7 | % |
Six Months Ended June 30, | Change | ||||||||||
2013 | 2012 | ||||||||||
(Millions) | |||||||||||
Clean Air Division | |||||||||||
North America | $ | 117 | $ | 105 | $ | 12 | |||||
Europe, South America & India | 29 | 36 | (7 | ) | |||||||
Asia Pacific | 36 | 30 | 6 | ||||||||
Total Clean Air Division | 182 | 171 | 11 | ||||||||
Ride Performance Division | |||||||||||
North America | 61 | 72 | (11 | ) | |||||||
Europe, South America & India | 24 | 26 | (2 | ) | |||||||
Asia Pacific | 10 | — | 10 | ||||||||
Total Ride Performance Division | 95 | 98 | (3 | ) | |||||||
Other | (43 | ) | (36 | ) | (7 | ) | |||||
Total Tenneco Inc. | $ | 234 | $ | 233 | $ | 1 |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
(Millions) | |||||||
Clean Air Division | |||||||
Europe, South America & India | |||||||
Restructuring and related expenses | $ | 4 | $ | 1 | |||
Asia Pacific | |||||||
Restructuring and related expenses | 2 | — | |||||
Total Clean Air Division | $ | 6 | $ | 1 | |||
Ride Performance Division | |||||||
Europe, South America & India | |||||||
Restructuring and related expenses | 2 | 2 | |||||
Asia Pacific | |||||||
Restructuring and related expenses | 1 | — | |||||
Total Ride Performance Division | $ | 3 | $ | 2 | |||
Other | |||||||
Restructuring and related expenses | $ | 2 | $ | — |
Six Months Ended June 30, | |||||
2013 | 2012 | ||||
Clean Air Division | |||||
North America | 9 | % | 8 | % | |
Europe, South America & India | 3 | % | 4 | % | |
Asia Pacific | 9 | % | 9 | % | |
Total Clean Air Division | 7 | % | 7 | % | |
Ride Performance Division | |||||
North America | 10 | % | 11 | % | |
Europe, South America & India | 5 | % | 5 | % | |
Asia Pacific | 10 | % | — | % | |
Total Ride Performance Division | 7 | % | 8 | % | |
Total Tenneco Inc. | 6 | % | 6 | % |
• | Future reversals of existing taxable temporary differences; |
• | Taxable income or loss, based on recent results, exclusive of reversing temporary differences and carryforwards; |
• | Tax-planning strategies; and |
• | Taxable income in prior carryback years if carryback is permitted under the relevant tax law. |
December 31, 2012 Restructuring Reserve | 2013 Expenses | 2013 Cash Payments | June 30, 2013 Restructuring Reserve | ||||||||
(Millions) | |||||||||||
Employee Severance and Termination Benefits | $ | — | 11 | (6) | $ | 5 |
Three Months Ended June 30, | |||||||
2013 | 2012 | ||||||
(Millions) | |||||||
Cash provided (used) by: | |||||||
Operating activities | $ | 133 | $ | 86 | |||
Investing activities | (56 | ) | (63 | ) | |||
Financing activities | (56 | ) | (27 | ) |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
(Millions) | |||||||
Cash provided (used) by: | |||||||
Operating activities | $ | 41 | $ | 1 | |||
Investing activities | (139 | ) | (131 | ) | |||
Financing activities | 122 | 95 |
• | Future reversals of existing taxable temporary differences; |
• | Taxable income or loss, based on recent results, exclusive of reversing temporary differences and carryforwards; |
• | Tax-planning strategies; and |
• | Taxable income in prior carryback years if carryback is permitted under the relevant tax law. |
June 30, 2013 | December 31, 2012 | % Change | ||||||||
(Millions) | ||||||||||
Short-term debt and maturities classified as current | $ | 120 | $ | 113 | 6 | % | ||||
Long-term debt | 1,158 | 1,067 | 9 | |||||||
Total debt | 1,278 | 1,180 | 8 | |||||||
Total redeemable noncontrolling interests | 13 | 15 | (13 | ) | ||||||
Total noncontrolling interests | 41 | 45 | (9 | ) | ||||||
Tenneco Inc. shareholders’ equity | 339 | 246 | 38 | |||||||
Total equity | 380 | 291 | 31 | |||||||
Total capitalization | $ | 1,671 | $ | 1,486 | 12 |
Quarter Ended | |||||||||||
March 31, 2013 | June 30, 2013 | ||||||||||
Required | Actual | Required | Actual | ||||||||
Leverage Ratio (maximum) | 3.50 | 1.98 | 3.50 | 1.79 | |||||||
Interest Coverage Ratio (minimum) | 2.55 | 8.39 | 2.55 | 8.74 |
Pro forma Consolidated Leverage Ratio | Aggregate Senior Note Maximum Amount | ||
(Millions) | |||
Greater than or equal to 3.0x | $ | 20 | |
Greater than or equal to 2.5x | $ | 100 | |
Greater than or equal to 2.0x | $ | 200 | |
Less than 2.0x | no limit |
June 30, 2013 | |||
Notional Amount in Foreign Currency | |||
(Millions) | |||
Australian dollars | —Purchase | 3 | |
—Sell | (2 | ) | |
British pounds | —Purchase | 8 | |
European euro | —Sell | (8 | ) |
South African rand | —Purchase | 103 | |
Japanese yen | —Purchase | 159 | |
—Sell | (790 | ) | |
U.S. dollars | —Purchase | 13 | |
—Sell | (17 | ) | |
Other | —Purchase | 1 | |
—Sell | (2 | ) |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
(Millions) | |||||||
Beginning Balance January 1, | $ | 23 | $ | 26 | |||
Accruals related to product warranties | 6 | 7 | |||||
Reductions for payments made | (9 | ) | (9 | ) | |||
Ending Balance June 30, | $ | 20 | $ | 24 |
Period | Total Number of Shares Purchased | Average Price Paid | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares That May Yet be Purchased Under These Plans or Programs | ||||||||
April 2013 | — | $ | — | — | 550,000 | |||||||
May 2013 | 96 | $ | 38.60 | — | 550,000 | |||||||
June 2013 | 55,979 | $ | 42.91 | 45,000 | 505,000 | |||||||
Total | 56,075 | $ | 42.91 | 45,000 | 505,000 |
TENNECO INC. | ||
By: | /S/ KENNETH R. TRAMMELL | |
Kenneth R. Trammell | ||
Executive Vice President and Chief Financial Officer |
Exhibit Number | Description | |
10.1 | Amended and Restated Tenneco Inc. 2006 Long-Term Incentive Plan (incorporated by reference to Appendix A of the Company's Proxy Statement on Schedule 14A, filed with the Securities and Exchange Commission on April 3, 2013, File No. 1-12387). | |
10.2 | Form of Restricted Stock Award Agreement for Employees (incorporated herein by reference to Exhibit 10.3 to the registrant's Current Report on Form 8-K dated May 21, 2013, File No. 1-12387). | |
10.3 | Form of Stock Option Award Agreement for Employees (incorporated herein by reference to Exhibit 10.4 to the registrant's Current Report on Form 8-K dated May 21, 2013, File No. 1-12387). | |
10.4 | Amendment No. 4 to SLOT Receivables Purchase Agreement, dated May 22, 2013 (incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated May 28, 2013, File No. 1-12387). | |
*10.5 | — | Tenneco Inc. Excess Benefit Plan (as Amended and Restated Effective as of January 1, 2013). |
*10.6 | — | Tenneco Inc. Deferred Compensation Plan (as Amended and Restated Effective as of August 1, 2013). |
*10.7 | — | Tenneco Inc. Incentive Deferral Plan (as Amended and Restated Effective as of August 1, 2013). |
*12 | — | Computation of Ratio of Earnings to Fixed Charges. |
*15.1 | — | Letter of PricewaterhouseCoopers LLP regarding interim financial information. |
*31.1 | — | Certification of Gregg M. Sherrill under Section 302 of the Sarbanes-Oxley Act of 2002. |
*31.2 | — | Certification of Kenneth R. Trammell under Section 302 of the Sarbanes-Oxley Act of 2002. |
*32.1 | — | Certification of Gregg M. Sherrill and Kenneth R. Trammell under Section 906 of the Sarbanes-Oxley Act of 2002. |
*101.INS | — | XBRL Instance Document. |
*101.SCH | — | XBRL Taxonomy Extension Schema Document. |
*101.CAL | — | XBRL Taxonomy Extension Calculation Linkbase Document. |
*101.DEF | — | XBRL Taxonomy Extension Definition Linkbase Document. |
*101.LAB | — | XBRL Taxonomy Extension Label Linkbase Document. |
*101.PRE | — | XBRL Taxonomy Extension Presentation Linkbase Document. |
* | Filed herewith. |
(a) | Participant Contributions. Participants are not required or permitted to make any contributions under the Plan. |
(b) | Employer Bonus Contributions. Each Employer shall make contributions to the Plan for each Plan Year (“Employer Bonus Contributions”) on behalf of each of its employees who is a Participant for such Plan Year who was paid a bonus (or who would have been paid a bonus but for a deferral election related to such bonus) under, or calculated and paid substantially in accordance with the terms of, the Tenneco Automotive Value Added (TAVA) Plan (the “Bonus”) from the Employer for such Plan Year. The amount of the Employer Bonus Contribution made by an Employer for any Plan Year on behalf of any Participant shall be equal to (i) the Company Retirement Contribution percentage that applies to such Participant for such Plan Year under the 401(k) Plan (determined as of the first day of the Plan Year without regard to any changes in such percentage during the Plan Year), multiplied by (ii) the Bonus. Employer Bonus Contributions shall be credited to the applicable Participants’ Accounts in accordance with subsection 4.1. |
(c) | Employer Retirement Contributions. Each Employer shall make contributions to the Plan for each Plan Year (“Employer Retirement Contributions”) on behalf of each of its employees who is a Participant in the Plan for such Plan Year and whose Company Retirement Contributions under the 401(k) Plan for such Plan Year are limited for such Plan Year by the limitations of section 401(a)(17) of the Code. The amount of Employer Retirement Contribution made by any Employer for any Plan Year on behalf of any Participant shall be equal to (i) the Company Retirement Contribution percentage that applies to such Participant for such Plan Year under the 401(k) Plan (determined as of the first day of the Plan Year without regard to any changes in such percentage during the Plan Year), multiplied by (ii) the Participant’s Compensation (as defined in the 401(k) Plan, but without regard to the limitations of section 401(a)(17) of the Code)) for such Plan Year in excess of the limitations of section 401(a)(17) of the Code for such Plan Year. Employer Retirement Contributions shall be credited to the applicable Participants’ Accounts in accordance with subsection 4.1. |
(d) | Employer Matching Contributions. Each Employer shall make contributions to the Plan for each Plan Year (“Employer Matching Contributions”) on behalf of each of its employees who is a Participant in the Plan for such Plan Year, who has made the maximum permitted salary deferrals to the 401(k) Plan for such Plan Year, who is employed by the Employer on the last day of the Plan Year and whose Matching Company Contributions under the 401(k) Plan for such Plan Year are limited for such Plan Year by the limitations of section 401(a)(17) of the Code. The amount of Employer Matching Contribution made by any Employer |
(a) | first, charge to the Account balance the amount of any distributions under the Plan with respect to that Account that have not previously been charged; |
(b) | next, credit to the Account balance the amount of Employer Deferred Contributions made on behalf of the Participant in accordance with Section 3 since the preceding Accounting Date; and |
(c) | finally, adjust the Account balance for the applicable investment return in accordance with subsection 4.2. |
(a) | Amounts credited to a Participant’s Account in accordance with subsection 4.1 shall be adjusted as of each Accounting Date to reflect the value of an investment equal to the Participant’s Account balance in one or more assumed investments that the Administrative Committee offers from time to time and communicated to Participants (the “Investment Funds”), and which the Participant directs the Administrative Committee to use for purposes of adjusting his Account. Such amount shall be determined without regard to taxes that would be payable with respect to any such Investment Fund, but will be adjusted for any investment management or similar fee that is customarily paid with respect to the Investment Fund. |
(b) | To the extent permitted by the Administrative Committee, the Participant may elect to have different portions of his Account balance for any period adjusted on the basis of different Investment Funds and any election by a Participant with respect to an Investment Fund shall be subject to such rules and regulations established from time to time by the Administrative Committee. |
(c) | Notwithstanding the election by Participants of certain investments in specified Investment Funds and the adjustment of their Accounts based on such investment elections, the Plan does not require, and no trust or other instrument that may be maintained in connection with the Plan shall require, that any assets or amounts which are set aside in trust or otherwise for the purpose of paying Plan benefits shall actually be invested in the investment alternatives selected by Participants. |
(d) | Any change in the Participant’s investment direction shall be made in accordance with rules established by the Administrative Committee, shall apply prospectively only and shall be implemented as soon as practicable after the direction is received by the Administrative Committee. |
(a) | A Participant’s “Termination Date” shall mean the date on which his employment with the Employers and Related Companies terminates for any reason. Whether a Participant has had a termination of employment shall be interpreted and administered in all respects in accordance with section 409A of the Code and applicable regulations issued thereunder. |
(b) | A Participant’s Years of Service shall be equal to the number of Years of Service credited to him under the 401(k) Plan for purposes of vesting; provided, however, that if a Participant is not a participant in the 401(k) Plan, his Years of Service shall be determined in accordance with the foregoing, as if he were a participant in the 401(k) Plan. |
1. | Purpose |
2. | Adoption and Administration |
3. | Eligibility |
4. | Election to Defer |
(a) | A Participant may elect in writing to defer receipt of all or a specified portion of his or her bonuses or incentive compensation to be received during a calendar year (“Deferral Election”); provided, however, that any election by a Participant who is subject to the reporting and short swing profits liability provisions of Section 16 of the Securities and Exchange Act of 1934, as amended, including an election relating to the form of distribution or to defer income into a “Tenneco stock index account” pursuant to Section 6 of the Plan, shall not be effective until such election and the transactions contemplated |
(b) | Prior to the freezing of the Plan effective as of December 31, 2004, Directors who were not employees of the Company (hereinafter referred to as “Outside Directors”) received as part of their compensation for service on the Company’s Board of Directors a portion of their annual retainer fee in the form of credits deferred subject to the terms of this Plan in the Tenneco stock index account with stock settlement. As of the Effective Date, Participants who received credits to the Tenneco stock index account as an Outside Director may change the investment election pursuant to Section 6. |
(c) | Except as provided in this Section 4(c), a Deferral Election must be made prior to September 30 of the calendar year in which the bonus, incentive compensation or retainer fee will be awarded. A Participant must make a separate Deferral Election with respect to each calendar year of participation in the Plan. A new Participant in the Plan shall have 30 days following his or her notification by the Committee of his or her eligibility to participate in the Plan to make a Deferral Election with respect to bonus or incentive compensation to be awarded within that calendar year. |
(d) | As specified by the Participant in a Deferral Election, the period of deferral shall be until the Participant dies, terminates employment or service with the Company, or until a specific date selected by the Participant in the Deferral Election. |
5. | Establishment of Deferred Compensation Account |
6. | Adjustments to Deferred Amounts |
(a) | The prime rate of interest as reported by JP Morgan Chase Bank at the first day of each calendar month. |
(b) | Tenneco stock index account — the amount of deferral will be invested in the Tenneco stock equivalent unit account. Any investment in this account will be measured solely by the performance of the Company’s common stock (including dividends that will be reinvested). Amounts credited to this account will be settled either in cash or, if the Company so elects, shares of the Company's common stock and will be offered under the Company's principle equity incentive plan then in effect. |
(c) | The return under certain investment funds chosen by the Company from time to time in its sole discretion, which shall be communicated to the Participants. |
7. | Payment of Deferred Amounts |
(a) | Except as otherwise provided in subsection (b) below, a Participant’s Deferred Amount shall be paid, or commence to be paid, to the Participant, or the Participant’s beneficiary, as soon as practicable after: |
(iii) | the date specified in the applicable Deferral Election made by the Participant. |
(b) | The Participant may elect to receive payment of the balance of his or her Deferred Compensation Account either (i) in a lump sum upon termination or (ii) in a single payment at a specified date prior to termination or (iii) in a number of post termination annual installments, not to exceed five, as the Participant shall elect The distribution election must be made at least one year before the Deferred Amount is payable and must be approved by the Committee. If no election is made, a lump sum payment will be made upon the Participant’s termination. |
8. | Participant Reports |
9. | Transferability of Interests |
10. | Amendment, Suspension and Termination |
11. | Unfunded Obligation |
12. | No Right to Employment or Other Benefits |
13. | Dispute Resolution |
1. | Purpose |
2. | Adoption and Administration |
3. | Eligibility |
4. | Elections to Defer--Participants |
5. | Elections to Defer--Outside Directors |
6. | Establishment of Deferred Compensation Account |
7. | Adjustments to Deferred Compensation Accounts |
(a) | The prime rate of interest as reported by JPMorgan Chase Bank at the first day of each calendar month. |
(b) | Tenneco stock index account — the amount of deferral will be invested in the Tenneco stock equivalent unit account. Any investment in this account will be measured solely by the performance of the Company’s common stock (including dividends that will be reinvested). Amounts credited to this account will be settled either in cash or, if the Company so elects, shares of the Company’s common stock and will be offered under the Company’s principal equity incentive plan then in effect. |
(c) | The return under certain investment funds chosen by the Company from time to time in its sole discretion, which shall be communicated to the Participants and Outside Directors. |
8. | Time and Form of Payment |
(i) | the date specified for in-service distribution in the applicable Deferral Election made by the Participant, if any. |
(b) | An Outside Director’s Deferred Compensation Account, as adjusted pursuant to Section 7, shall be settled within 60 days after the Outside Director’s separation from service with the Company. For purposes of the Plan, the term “separation from service” shall mean a “separation from service” under Code Section 409A. |
(c) | Notwithstanding Section 8(a), with respect to any Participant who is a “specified employee” under Code Section 409A, payment of such Participant’s Deferred Amount upon a termination of employment shall be delayed until the earlier to occur of the Participant’s death or the date that is six months and one day following the Participant’s termination of employment. For purposes of the Plan, the terms “terminated employment,” “termination of employment,” “separation from service,” and variations thereof, as used in the Plan, are intended to mean a termination of employment that constitutes a “separation from service” under Code Section 409A. |
(d) | A Participant may elect (a “Distribution Change Election”) to delay the specified date in-service distribution of all or a portion of any Deferred Amount credited to such Participant’s Deferred Compensation Account for a given calendar year to a subsequent time, provided that the Distribution Change Election is filed with the Company at least 12 months before the date the in-service payment is otherwise scheduled to be paid. A Distribution Change Election that is filed in accordance with the preceding sentence shall not be effective until at least 12 months after it is filed with the Committee and shall defer payment of such Deferred Amount for at least five years from the date payment would otherwise have been made (but no later than the Participant’s termination of employment, except as otherwise provided in subsection (c) above). A Participant’s Distribution Change Election shall be irrevocable when filed with the Committee. A Participant may not make more than one Distribution Change Election with respect to any Deferred Amount credited to such Participant’s Deferred Compensation Account for a given calendar year. |
9. | Reports |
10. | Transferability of Interests |
11. | Amendment, Suspension and Termination |
12. | Unfunded Obligation |
13. | No Right to Employment or Other Benefits |
14. | Dispute Resolution |
15. | Code Section 409A |
(a) | Except as otherwise permitted under Code Section 409A and the guidance and Treasury regulations issued thereunder, the time or schedule of any payment or amount scheduled to be paid pursuant to the Plan may not be accelerated. |
(b) | The Plan and the benefits provided hereunder are intended to comply with Code Section 409A to the extent applicable thereto. Notwithstanding any other provision of the Plan to the contrary, the Plan shall be interpreted and construed consistent with this intent. Notwithstanding the foregoing, the Company shall not be required to assume any increased economic burden in connection therewith. Although the Company and the Committee intend to administer the Plan so that it will comply with the requirements of Code Section 409A, neither the Company nor the Committee represents or warrants that the Plan will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law. Neither the Company, its subsidiaries, nor their respective directors, officers, employees or advisers shall be liable to any Participant or Outside Director (or any other individual claiming a benefit through a Participant or Outside Director) for any tax, interest, or penalties the Participant or Outside Director may owe as a result of participation in the Plan, and the Company and its subsidiaries shall have no obligation to indemnify or otherwise protect any Participant or Outside Director from the obligation to pay any taxes pursuant to Code Section 409A. |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
(Millions) | |||||||
Net income attributable to Tenneco Inc. | $ | 117 | $ | 117 | |||
Add: | |||||||
Interest expense | 39 | 63 | |||||
Portion of rental representative of the interest factor | 10 | 9 | |||||
Income tax expense | 59 | 39 | |||||
Noncontrolling interests | 18 | 14 | |||||
Amortization of interest capitalized | 2 | 2 | |||||
Undistributed (earnings) losses of affiliated companies in which less | |||||||
than a 50% voting interest is owned | — | 1 | |||||
Earnings as defined | $ | 245 | $ | 245 | |||
Interest expense | 39 | 63 | |||||
Interest capitalized | 2 | 2 | |||||
Portion of rentals representative of the interest factor | 10 | 9 | |||||
Fixed charges as defined | $ | 51 | $ | 74 | |||
Ratio of earnings to fixed charges | 4.80 | 3.31 |
1. | I have reviewed this quarterly report on Form 10-Q of Tenneco Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of the registrant’s internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ | GREGG M. SHERRILL | |
Gregg M. Sherrill | ||
Chairman and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Tenneco Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of the registrant’s internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ | KENNETH R. TRAMMELL | |
Kenneth R. Trammell | ||
Executive Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ | GREGG M. SHERRILL |
Gregg M. Sherrill | |
Chief Executive Officer | |
/s/ | KENNETH R. TRAMMELL |
Kenneth R. Trammell | |
Chief Financial Officer |
Pension Plans, Postretirement and Other Employee Benefits
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Jun. 30, 2013
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension Plans, Postretirement and Other Employee Benefits | Pension Plans, Postretirement and Other Employee Benefits Net periodic pension costs and postretirement benefit costs consist of the following components:
For the six months ended June 30, 2013, we made pension contributions of $12 million and $15 million for our domestic and foreign pension plans, respectively. Based on current actuarial estimates, we believe we will be required to contribute approximately $32 million for the remainder of 2013. Pension contributions beyond 2013 will be required, but those amounts will vary based upon many factors including, for example, the performance of our pension fund investments during 2013. We made postretirement contributions of approximately $4 million during the first six months of 2013. Based on current actuarial estimates, we believe we will be required to contribute approximately $5 million for the remainder of 2013. The assets of some of our pension plans are invested in trusts that permit commingling of the assets of more than one employee benefit plan for investment and administrative purposes. Each of the plans participating in the trust has interests in the net assets of the underlying investment pools of the trusts. The investments for all our pension plans are recorded at estimated fair value, in compliance with the accounting guidance on fair value measurement. Amounts recognized for pension and postretirement benefits in other comprehensive income for the three and six month periods ended June 30, 2013 and 2012 include the following components:
Effective January 1, 2012, the Tenneco Employee Stock Ownership Plan for Hourly Employees and the Tenneco Employee Stock Ownership Plan for Salaried Employees were merged into one plan called the Tenneco 401(k) Retirement Savings Plan (the “Retirement Savings Plan”). The Retirement Savings Plan has been designed to adopt a Safe-Harbor approach approved by the Internal Revenue Service and which will provide for increased company matching contributions at lower percentages of employee deferrals. The company matching contribution has changed from 50 percent on the first eight percent of employee contributions to 100 percent on the first three percent and 50 percent on the next two percent of employee contributions effective January 1, 2012. |
Long-Term Debt and Financing Arrangements
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Jun. 30, 2013
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt and Financing Arrangements | Long-Term Debt and Financing Arrangements Our financing arrangements are primarily provided by a committed senior secured financing arrangement with a syndicate of banks and other financial institutions. The arrangement is secured by substantially all our domestic assets and pledges of up to 66 percent of the stock of certain first-tier foreign subsidiaries, as well as guarantees by our material domestic subsidiaries. On March 22, 2012, we completed an amendment and restatement of our senior credit facility by increasing the amount and extending the maturity date of our revolving credit facility and adding a new $250 million Tranche A Term Facility. The amended and restated facility replaces our former $556 million revolving credit facility, $148 million Tranche B Term Facility and $130 million Tranche B-1 letter of credit/revolving loan facility. The proceeds from this refinancing transaction were used to repay our $148 million Tranche B Term Facility and, as described below, to fund the purchase and redemption of our $250 million 8.125 percent senior notes due in 2015. As of June 30, 2013, the senior credit facility provides us with a total revolving credit facility size of $850 million and had a $234 million balance outstanding under the Tranche A Term Facility, both of which will mature on March 22, 2017. Funds may be borrowed, repaid and re-borrowed under the revolving credit facility without premium or penalty. The revolving credit facility is reflected as debt on our balance sheet only if we borrow money under this facility or if we use the facility to make payments for letters of credit. Outstanding letters of credit reduce our availability to enter into revolving loans under the facility. We are required to make quarterly principal payments under the Tranche A Term Facility of $3.1 million through March 31, 2014, $6.3 million beginning June 30, 2014 through March 31, 2015, $9.4 million beginning June 30, 2015 through March 31, 2016, $12.5 million beginning June 30, 2016 through December 31, 2016 and a final payment of $125 million is due on March 22, 2017. The financial ratios required under the amended and restated senior credit facility, and the actual ratios we achieved for the two quarters of 2013, are as follows:
The senior credit facility includes a maximum leverage ratio covenant of 3.50 through March 22, 2017 and a minimum interest coverage ratio of 2.55 through December 31, 2013 and 2.75 thereafter, through March 22, 2017. On March 8, 2012, we announced a cash tender offer to purchase our outstanding $250 million 8.125 percent senior notes due in 2015 and a solicitation of consents to certain proposed amendments to the indenture governing these notes. We received tenders and consents representing $232 million aggregate principal amount of the notes and, on March 22, 2012, we purchased the tendered notes at a price of 104.44 percent of the principal amount (which includes a consent payment of three percent of the principal amount), plus accrued and unpaid interest, and amended the related indenture. On April 6, 2012, we redeemed all remaining outstanding $18 million aggregate principal amount of senior notes that were not purchased pursuant to the tender offer at a price of 104.06 percent of the principal amount, plus accrued and unpaid interest. The additional liquidity provided by the new $850 million revolving credit facility and the new $250 million Tranche A Term Facility was used to fund the total cost of the tender offer and redemption, including all related fees and expenses. We recorded $17 million of pre-tax charges in March 2012 related to the refinancing of our senior credit facility, the repurchase and redemption of $232 million aggregate principal amount of our 8.125 percent senior notes due in 2015 and the write-off of deferred debt issuance costs relating to these senior notes. We recorded an additional $1 million of pre-tax charges during the second quarter of 2012 relating to the redemption of the remaining $18 million aggregate principal amount of our 8.125 percent senior notes which occurred in April 2012. At June 30, 2013, of the $850 million available under the revolving credit facility, we had unused borrowing capacity of $621 million with $190 million in outstanding borrowings and $39 million in outstanding letters of credit. The $190 million in outstanding borrowings under the revolving credit facility reflected a banking error on the last day of the second quarter of 2013 that reduced the revolver borrowings and increased bank overdrafts by $40 million. Without this our debt balance would have been $40 million higher. As of June 30, 2013, our outstanding debt also included $234 million related to our Tranche A Term Facility which is subject to quarterly principal payments as described above through March 22, 2017, $225 million of 7.75 percent senior notes due August 15, 2018, $500 million of 6.875 percent senior notes due December 15, 2020, and $130 million of other debt. |
Environmental Matters, Litigation and Product Warranties (Tables)
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Jun. 30, 2013
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Environmental Matters, Litigation and Product Warranties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warranty Accrual Rollforward | Below is a table that shows the activity in the warranty accrual accounts:
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Supplemental Guarantor Condensed Consolidating Financial Statements - Additional Information (Detail)
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6 Months Ended |
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Jun. 30, 2013
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Ownership percentage of existing and future material domestic owned subsidiaries | 100.00% |
New Accounting Pronouncements
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6 Months Ended |
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Jun. 30, 2013
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New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In July 2013, the Financial Accounting Standards Board (“FASB”) issued an amendment to provide explicit guidance on financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, similar tax loss, or tax credit carryforward exists. The objective of the amendment is to eliminate the diversity in practice in the presentation of unrecognized tax benefits in those instances. This amendment is effective for reporting periods beginning after December 15, 2013. We will adopt this amendment on January 1, 2014. Adoption of the amendment is not expected to have a material impact on our consolidated financial statements. In April 2013, the FASB issued an amendment to clarify when an entity should apply the liquidation basis of accounting and to provide principles for the measurement of assets and liabilities under the liquidation basis of accounting, as well as any required disclosures. The amendment applies to all entities that issue financial statements that are presented in conformity with U.S. GAAP except investment companies that are regulated under the Investment Company Act of 1940. This amendment is effective for reporting periods beginning after December 15, 2013. Adoption of the amendment will not have any impact on our consolidated financial statements. In February 2013, the FASB issued an amendment to resolve the diversity in practice about whether Subtopic 810-10, Consolidation-Overall, or Subtopic 830-30, Foreign Currency Matters-Translation of Financial Statements, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part of all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real state or conveyance of oil and gas mineral rights) within a foreign entity. In addition, the amendments resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. This amendment is effective for reporting periods beginning after December 15, 2013. Adoption of the amendment will not have any impact on our consolidated financial statements. In February 2013, the FASB issued an amendment to the accounting guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement amount its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance in this amendment also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. This amendment is effective for reporting periods beginning after December 15, 2013. Adoption of the amendment will not have any impact on our consolidated financial statements. In February 2013, the FASB issued an amendment to the accounting guidance to improve the transparency of reporting amounts reclassified out of other comprehensive income. Other comprehensive income (loss) includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. This amendment does not change the current requirements for reporting net income or other comprehensive income in the financial statements. All of the information that this amendment requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. This new amendment requires presentation either on the face of the statement where net income is presented or in the notes, the effects of significant amounts reclassified out of accumulated other comprehensive income, and that the reclassified amounts be cross-referenced to the other disclosures required under U.S. GAAP. This amendment was effective for reporting periods beginning after December 15, 2012. This amendment has not had a material impact on our condensed consolidated financial statements. In December 2011, the FASB issued an amendment relating to the disclosure about offsetting assets and liabilities. This amendment requires disclosure to provide information to help reconcile differences in the offsetting requirements under U.S. GAAP and International Financial Reporting Standards ("IFRS"). A reporting entity will be required to disclose (1) the gross amount of recognized assets and liabilities, (2) the amounts offset to determine the net amounts presented in the statement of financial position, (3) the net amounts presented in the statement of financial position, (4) the amounts subject to an enforceable master netting arrangement or similar agreement not otherwise included in (2), and (5) the net amount after deducting the amounts in (4) and (3). This amendment was effective for a reporting entity’s interim and annual periods beginning on or after January 1, 2013. Following issuance of this amendment, considerable concerns were raised regarding the broad scope of this amendment. In response to the concerns, in January, 2013, the FASB issued a new amendment revising the scope of the disclosure requirements to apply only to derivatives, repurchase agreements and reverse repurchase agreements, and security borrowing and lending transactions subject to a master netting arrangement or similar agreement. As a result of this new amendment the disclosure about offsetting assets and liabilities did not have any impact to our consolidated financial statements. |
Assumptions Used for Calculating Fair Values of Stock Option Awards (Detail) (USD $)
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Jun. 30, 2013
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Jun. 30, 2012
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Stock Options Granted | ||
Weighted average grant date fair value, per share | $ 19.84 | $ 17.35 |
Weighted average assumptions used: | ||
Expected volatility | 66.40% | 73.50% |
Expected lives | 4 years 10 months 24 days | 4 years 8 months 12 days |
Risk-free interest rates | 0.70% | 0.80% |
Dividend yields | 0.00% | 0.00% |
Financial Ratios under Senior Credit Facility (Detail)
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Jun. 30, 2013
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Mar. 31, 2013
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Required [Member]
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Financial Ratios Under Senior Credit Facility [Line Items] | ||
Leverage Ratio (maximum) | 3.5 | 3.5 |
Interest Coverage Ratio (minimum) | 2.55 | 2.55 |
Actual [Member]
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Financial Ratios Under Senior Credit Facility [Line Items] | ||
Leverage Ratio (maximum) | 1.79 | 1.98 |
Interest Coverage Ratio (minimum) | 8.74 | 8.39 |
Pension Plans, Postretirement and Other Employee Benefits (Tables)
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Cost | Net periodic pension costs and postretirement benefit costs consist of the following components:
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Amounts Recognized for Pension and Postretirement Benefits in Other Comprehensive Income | Amounts recognized for pension and postretirement benefits in other comprehensive income for the three and six month periods ended June 30, 2013 and 2012 include the following components:
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Common Stock (Tables)
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Jun. 30, 2013
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assumptions Used for Calculating Fair Values of Stock Option Awards | The fair value of share-based awards is determined at the time the awards are granted which is generally in January of each year, and requires judgment in estimating employee and market behavior.
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Stock Options Status and Activity | Stock Options — The following table reflects the status and activity for all options to purchase common stock for the period indicated:
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Nonvested Restricted Shares | Restricted Stock — The following table reflects the status for all nonvested restricted shares for the period indicated:
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Earnings Per Share - Additional Information (Detail)
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6 Months Ended | |
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Jun. 30, 2013
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Jun. 30, 2012
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Earnings Per Share [Abstract] | ||
Anti-dilutive stock options | 830,486 | 524,701 |
Fair Value of Financial Assets on Recurring Basis (Detail) (Level 2 [Member], Foreign Exchange Forward Contracts [Member], Fair Value, Measurements, Recurring [Member], USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Level 2 [Member] | Foreign Exchange Forward Contracts [Member] | Fair Value, Measurements, Recurring [Member]
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Financial Assets: | ||
Foreign exchange forward contracts | $ 0 | $ 1 |
Carrying and Estimated Fair Value (Detail) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Instruments with off-balance sheet risk: | ||
Asset derivative contracts | $ 0 | $ 1 |
Carrying Amount [Member]
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Carrying and estimated fair value | ||
Long-term debt (including current maturities) | 1,160 | 1,070 |
Instruments with off-balance sheet risk: | ||
Asset derivative contracts | 0 | 1 |
Fair Value [Member]
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Carrying and estimated fair value | ||
Long-term debt (including current maturities) | 1,217 | 1,136 |
Instruments with off-balance sheet risk: | ||
Asset derivative contracts | $ 0 | $ 1 |
Earnings Per Share (Tables)
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Jun. 30, 2013
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Earnings Per Share of Common Stock | Earnings per share of common stock outstanding were computed as follows:
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Consolidation and Presentation
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6 Months Ended |
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Jun. 30, 2013
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation and Presentation | Consolidation and Presentation As you read the accompanying financial statements you should also read our Annual Report on Form 10-K for the year ended December 31, 2012. In our opinion, the accompanying unaudited financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly Tenneco Inc.’s results of operations, comprehensive income, financial position, cash flows, and changes in shareholders’ equity for the periods indicated. We have prepared the unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (U.S. GAAP) for annual financial statements. Our condensed consolidated financial statements include all majority-owned subsidiaries. We carry investments in 20 percent to 50 percent owned companies in which the Company does not have a controlling interest, as equity method investments, at cost plus equity in undistributed earnings since the date of acquisition and cumulative translation adjustments. We have eliminated all intercompany transactions. We have evaluated all significant subsequent events for any impact on these financial statements through the date they were issued. |
Income Taxes
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Jun. 30, 2013
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Income Tax Disclosure [Abstract] | |||||||||||||||||
Income Taxes | Income Taxes We reported income tax expenses of $47 million and $21 million in the three month periods ended June 30, 2013 and 2012, respectively, and $59 million and $39 million in the six month periods ended June 30, 2013 and 2012, respectively. The tax expense recorded in the first six months of 2013 includes a net tax benefit of $13 million for tax adjustments primarily related to recognizing a U.S. tax benefit for foreign taxes. The U.S. tax benefit for foreign taxes is driven by our ability to claim a U.S. foreign tax credit beginning in 2013. The U.S. foreign tax credit regime provides for a credit against U.S. taxes otherwise payable for foreign taxes paid with regard to dividends, interest and royalties paid to us in the U.S. In 2008, given our historical losses in the U.S., we concluded that our ability to fully utilize our federal and state net operating loss ("NOL") carryforward was limited. As a result, we recorded a valuation allowance against all of our U.S. deferred tax assets except for our tax planning strategies which had not yet been implemented and which did not depend upon generating future taxable income. Prior to the reversal of the valuation allowance in the third quarter of 2012, we carried a deferred tax asset in the U.S. of $90 million relating to the expected utilization of the federal and state NOL. The recording of a valuation allowance did not impact the amount of the NOL that would be available for federal and state income tax purposes in future periods. In the third quarter of 2012, we reversed the tax valuation allowance against our net deferred tax assets in the U.S. based on operating improvements we had made, the outlook for light and commercial vehicle production in the U.S. and the positive impact this should have on our U.S. operations. The net income impact of the tax valuation allowance release in the U.S was a tax benefit of approximately $81 million. Our federal NOL at December 31, 2012 totaled $190 million and expires beginning in tax years ending in 2022 through 2030. The state NOLs expire in various tax years through 2032. Valuation allowances are established in certain foreign jurisdictions for deferred tax assets based on a “more likely than not” standard. The ability to realize deferred tax assets depends on our ability to generate sufficient taxable income within the carryforward periods provided for in the tax law for each tax jurisdiction. We have considered the following possible sources of taxable income when assessing the realization of our deferred tax assets:
The valuation allowances recorded against deferred tax assets generated by taxable losses in Spain and certain other foreign jurisdictions will impact our provision for income taxes until the valuation allowances are released. Our provision for income taxes will include no tax benefit for losses incurred and no tax expense with respect to income generated in these jurisdictions until the respective valuation allowance is eliminated. |
Financial Instruments
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Financial Instruments The carrying and estimated fair values of our financial instruments by class at June 30, 2013 and December 31, 2012 were as follows:
Asset and Liability Instruments — The fair value of cash and cash equivalents, short and long-term receivables, accounts payable, and short-term debt was considered to be the same as or was not determined to be materially different from the carrying amount. Long-term Debt — The fair value of our public fixed rate senior notes is based on quoted market prices (level 1). The fair value of our private borrowings under our senior credit facility and other long-term debt instruments is based on the market value of debt with similar maturities, interest rates and risk characteristics (level 2). The fair value of our level 1 debt, as classified in the fair value hierarchy, was $782 million and $790 million at June 30, 2013 and December 31, 2012, respectively. We have classified $425 million and $334 million as level 2 in the fair value hierarchy at June 30, 2013 and December 31, 2012, respectively, since we utilize valuation inputs that are observable both directly and indirectly. We classified the remaining $10 million and $12 million, consisting of foreign subsidiary debt, as level 3 in the fair value hierarchy at June 30, 2013 and December 31, 2012, respectively. Foreign Exchange Forward Contracts — We use derivative financial instruments, principally foreign currency forward purchase and sales contracts with terms of less than one year, to hedge our exposure to changes in foreign currency exchange rates. Our primary exposure to changes in foreign currency rates results from intercompany loans made between affiliates to minimize the need for borrowings from third parties. Additionally, we enter into foreign currency forward purchase and sale contracts to mitigate our exposure to changes in exchange rates on certain intercompany and third-party trade receivables and payables. We manage counter-party credit risk by entering into derivative financial instruments with major financial institutions that can be expected to fully perform under the terms of such agreements. We do not enter into derivative financial instruments for speculative purposes. The fair value of our foreign currency forward contracts is based on an internally developed model which incorporates observable inputs including quoted spot rates, forward exchange rates and discounted future expected cash flows utilizing market interest rates with similar quality and maturity characteristics. We record the change in fair value of these foreign exchange forward contracts as part of currency gains (losses) within cost of sales in the condensed consolidated statements of income. The fair value of foreign exchange forward contracts are recorded in prepayments and other current assets or other current liabilities in the condensed consolidated balance sheet. The fair value of our foreign exchange forward contracts, presented on a gross basis at June 30, 2013 and December 31, 2012, respectively, was as follows:
The fair value of our recurring financial assets at June 30, 2013 and December 31, 2012, respectively, are as follows:
The fair value hierarchy definition prioritizes the inputs used in measuring fair value into the following levels:
The following table summarizes by major currency the notional amounts for foreign currency forward purchase and sale contracts as of June 30, 2013 (all of which mature in 2013):
Guarantees —We have from time to time issued guarantees for the performance of obligations by some of our subsidiaries, and some of our subsidiaries have guaranteed our debt. All of our existing and future material domestic wholly-owned subsidiaries fully and unconditionally guarantee our senior credit facility and our senior notes on a joint and several basis. The arrangement for the senior credit facility is also secured by first-priority liens on substantially all our domestic assets and pledges of up to 66 percent of the stock of certain first-tier foreign subsidiaries. No assets or capital stock of our direct or indirect subsidiaries secure our senior notes. For additional information, refer to Note 13 of our condensed consolidated financial statements, where we present the Supplemental Guarantor Condensed Consolidating Financial Statements. We have two performance guarantee agreements in the U.K. between Tenneco Management Europe Limited (“TMEL”) and the two Walker Group Retirement Plans, the Walker Group Employee Benefit Plan and the Walker Group Executive Retirement Benefit Plan (the “Walker Plans”), whereby TMEL will guarantee the payment of all current and future pension contributions in event of a payment default by the sponsoring or participating employers of the Walker Plans. As a result of our decision to enter into these performance guarantee agreements, the levy due to the U.K. Pension Protection Fund was reduced. The Walker Plans are comprised of employees from Tenneco Walker (U.K.) Limited and our Futaba-Tenneco U.K. joint venture. Employer contributions are funded by both Tenneco Walker (U.K.) Limited, as the sponsoring employer and Futaba-Tenneco U.K., as a participating employer. The performance guarantee agreements are expected to remain in effect until all pension obligations for the Walker Plans’ sponsoring and participating employers have been satisfied. The maximum amount payable for these pension performance guarantees is approximately $32 million as of June 30, 2013 which is determined by taking 105 percent of the liability of the Walker Plans calculated under section 179 of the U.K. Pension Act of 2004 offset by plan assets. We did not record an additional liability for this performance guarantee since Tenneco Walker (U.K.) Limited, as the sponsoring employer of the Walker Plans, already recognizes 100 percent of the pension obligation calculated based on U.S. GAAP, for all of the Walker Plans’ participating employers on its balance sheet, which was $5 million and $7 million at June 30, 2013 and December 31, 2012, respectively. At June 30, 2013, all pension contributions under the Walker Plans were current for all of the Walker Plans’ sponsoring and participating employers. In June 2011, we entered into an indemnity agreement between TMEL and Futaba Industrial Co. Ltd. which requires Futaba to indemnify TMEL for any cost, loss or liability which TMEL may incur under the performance guarantee agreements relating to the Futaba-Tenneco U.K. joint venture. The maximum amount reimbursable by Futaba to TMEL under this indemnity agreement is equal to the amount incurred by TMEL under the performance guarantee agreements multiplied by Futaba’s shareholder ownership percentage of the Futaba-Tenneco U.K. joint venture. At June 30, 2013, the maximum amount reimbursable by Futaba to TMEL is approximately $6 million. We have issued guarantees through letters of credit in connection with some obligations of our affiliates. As of June 30, 2013, we have guaranteed $39 million in letters of credit to support some of our subsidiaries’ insurance arrangements, foreign employee benefit programs, environmental remediation activities and cash management and capital requirements. Negotiable Financial Instruments — One of our European subsidiaries receives payment from one of its Original Equipment (OE) customers whereby the accounts receivable are satisfied through the delivery of negotiable financial instruments. We may collect these financial instruments before their maturity date by either selling them at a discount or using them to satisfy accounts receivable that have previously been sold to a European bank. Any of these financial instruments which are not sold are classified as other current assets. The amount of these financial instruments that was collected before their maturity date and sold at a discount totaled $6 million at both June 30, 2013 and December 31, 2012. No negotiable financial instruments were held by our European subsidiary as of June 30, 2013 or December 31, 2012. In certain instances, several of our Chinese subsidiaries receive payment from OE customers and satisfy vendor payments through the receipt and delivery of negotiable financial instruments. Financial instruments used to satisfy vendor payables and not redeemed totaled $18 million and $12 million at June 30, 2013 and December 31, 2012, respectively, and were classified as notes payable. Financial instruments received from OE customers and not redeemed totaled $16 million and $8 million at June 30, 2013 and December 31, 2012, respectively. We classify financial instruments received from our OE customers as other current assets if issued by a financial institution of our customers or as customer notes and accounts, net if issued by our customer. We classified $16 million and $8 million in other current assets at June 30, 2013 and December 31, 2012, respectively. Some of our Chinese subsidiaries that issue their own negotiable financial instruments to pay vendors are required to maintain a cash balance if they exceed certain credit limits with the financial institution that guarantees those financial instruments. A restricted cash balance was not required at those Chinese subsidiaries at June 30, 2013 or December 31, 2012. The negotiable financial instruments received by one of our European subsidiaries and some of our Chinese subsidiaries are checks drawn by our OE customers and guaranteed by their banks that are payable at a future date. The use of these instruments for payment follows local commercial practice. Because negotiable financial instruments are financial obligations of our customers and are guaranteed by our customers’ banks, we believe they represent a lower financial risk than the outstanding accounts receivable that they satisfy which are not guaranteed by a bank. Restricted Cash - Two of our Australian subsidiaries have arranged for $5 million in guarantees to be issued by a financial institution to support some of our subsidiaries' insurance arrangements and foreign employee benefit programs. These guarantees were supported by a cash deposit with the financial institution which has been classified as restricted cash on the Tenneco Inc. consolidated balance sheet at June 30, 2013. |
Segment Information (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | The following table summarizes certain Tenneco Inc. segment information:
|
Fair Value of Long Term Debt - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Level 1 [Member]
|
||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of long term debt | $ 782 | $ 790 |
Level 2 [Member]
|
||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of long term debt | 425 | 334 |
Level 3 [Member]
|
||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of long term debt | $ 10 | $ 12 |
Long-Term Debt and Financing Arrangements - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 3 Months Ended | 3 Months Ended | 1 Months Ended | 3 Months Ended | 3 Months Ended | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Mar. 22, 2012
Expiration of former revolving credit Agreement due 2014 [Member]
|
Mar. 22, 2012
Expiration Of Tranche B Term Facility [Member]
|
Mar. 22, 2012
Expiration of Tranche B-1 letter of credit and revolving loan facilities [Member]
|
Jun. 30, 2013
Tranche A Term Facility due March 22, 2017 [Member]
|
Mar. 22, 2012
Tranche A Term Facility due March 22, 2017 [Member]
|
Mar. 08, 2012
Tranche A Term Facility due March 22, 2017 [Member]
|
Jun. 30, 2013
Tranche A Term Facility due March 22, 2017 [Member]
June 30, 2012 through March 31, 2014 [Member]
|
Jun. 30, 2013
Tranche A Term Facility due March 22, 2017 [Member]
June 30, 2014 through March 31, 2015 [Member]
|
Jun. 30, 2013
Tranche A Term Facility due March 22, 2017 [Member]
June 30, 2015 through March 31, 2016 [Member]
|
Jun. 30, 2013
Tranche A Term Facility due March 22, 2017 [Member]
June 30, 2016 through December 31, 2016 [Member]
|
Jun. 30, 2013
Tranche A Term Facility due March 22, 2017 [Member]
Due on March 22, 2017 [Member]
|
Jun. 30, 2013
Revolving Credit Facility (Member)
|
Apr. 30, 2012
8 1/8 percent senior notes due in 2015 [Member]
|
Mar. 22, 2012
8 1/8 percent senior notes due in 2015 [Member]
|
Jun. 30, 2012
8 1/8 percent senior notes due in 2015 [Member]
|
Apr. 06, 2012
8 1/8 percent senior notes due in 2015 [Member]
|
Mar. 30, 2012
8 1/8 percent senior notes due in 2015 [Member]
|
Mar. 08, 2012
8 1/8 percent senior notes due in 2015 [Member]
|
Jun. 30, 2013
Letter of Credit (Member)
|
Jun. 30, 2013
7 3/4 percent senior notes due August 15, 2018 [Member]
|
Jun. 30, 2013
6 7/8 percent senior notes due Dec 15, 2020 [Member]
|
Jun. 30, 2013
Other Debt [Member]
|
|
Long Term Debt And Other Financing Arrangement [Line Items] | |||||||||||||||||||||||
Maximum percentage of stock of certain first-tier foreign subsidiaries pledged to secure senior credit facility | 66.00% | ||||||||||||||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 556 | $ 148 | $ 130 | $ 234 | $ 250 | $ 250 | $ 850 | $ 250 | |||||||||||||||
Line of Credit Facility, Maturity Date | Mar. 22, 2017 | Mar. 22, 2012 | |||||||||||||||||||||
Repayment of term loan | 3.1 | 6.3 | 9.4 | 12.5 | 125.0 | ||||||||||||||||||
Interest coverage ratio (minimum) effective from March 31, 2014 through March 22, 2017 | 2.75 | ||||||||||||||||||||||
Leverage Ratio Required (Maximum) for future quarters | 3.50 | ||||||||||||||||||||||
Interest coverage required (minimum) September 30, 2012 through December 31, 2013 | 2.55 | ||||||||||||||||||||||
Amount of debt offered for exchange by the company | 250 | ||||||||||||||||||||||
Amount of debt tendered for exchange by the holders | 232 | ||||||||||||||||||||||
Debt instrument redemption price as percentage of principal amount prior quarter | 104.44% | ||||||||||||||||||||||
Debt instrument consent payment as percentage of principal amount | 3.00% | ||||||||||||||||||||||
Amount of debt tendered for exchange by the holders on April 6, 2012 | 18 | ||||||||||||||||||||||
Debt instrument redemption price as percentage of principal amount current quarter | 104.06% | ||||||||||||||||||||||
Expenses related to redemption | 17 | 1 | |||||||||||||||||||||
Senior notes rate | 8.125% | 7.75% | 6.875% | ||||||||||||||||||||
Unused Borrowing Capacity | 621 | ||||||||||||||||||||||
Outstanding borrowings in senior secured credit facility | 190 | ||||||||||||||||||||||
Bank Overdrafts | 40 | ||||||||||||||||||||||
Line of credit facility letters of credit outstanding | 39 | ||||||||||||||||||||||
Unsecured debt | $ 225 | $ 500 | $ 130 |
Segment Information Segment Information Textuals (Details)
|
6 Months Ended |
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Jun. 30, 2013
operating_segment
product_segment
geographic_segment
|
|
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Number of product segments | 2 |
Number of operating segments | 6 |