TENNECO AUTOMOTIVE SIGNIFICANTLY IMPROVES OPERATING RESULTS
o Fourth quarter EBIT up 27 percent -- adjusted EBIT up 51 percent
o Full year net income before accounting change down 12 percent --
adjusted full year net income up 184 percent
o Year-end debt net of cash balances at $1.285 billion
o Wins more than $900 million in new business in 2003
Lake Forest, Illinois, January 27, 2004 -- Tenneco Automotive (NYSE: TEN)
announced today that the company reported a fourth quarter net loss of $2
million, or 4-cents per diluted share, compared with fourth quarter 2002 net
income of $9 million, or 21-cents per diluted share. The company reported full
year 2003 net income of $27 million, or 65-cents per diluted share, compared
with net income before an accounting change in 2002 of $31 million, or 74-cents
per diluted share.
"When you consider our quarter-over-quarter results on an operational basis,
excluding certain items, our strong cash and earnings performance in the quarter
helped us deliver our best operational year since becoming a stand-alone
company," said Mark P. Frissora, chairman and CEO, Tenneco Automotive.
Adjusted for the items described below, fourth quarter 2003 net income was $2
million, or 6-cents per diluted share, versus a loss of $7 million, or 17-cents
per diluted share, in the fourth quarter of 2002. Adjusted for the items
described below, full year 2003 net income was $23 million, or 55-cents per
diluted share, a 162 percent increase in earnings per share compared with 2002
adjusted net income of $8 million, or 21-cents per diluted share. See the tables
that reconcile GAAP results to non-GAAP results, which are in attachment 2 to
the press release.
ADJUSTMENTS TO REPORTED FOURTH QUARTER 2003 RESULTS ARE:
o expenses of $9 million pre-tax, $6 million after-tax, or 13-cents per
share, associated with refinancing of the company's senior debt;
o restructuring expenses of $1 million pre-tax, $1 million after-tax, or
2-cents per share;
o a benefit of $3 million, or 5-cents per share, related to a foreign
tax adjustment.
ADJUSTMENTS TO REPORTED FOURTH QUARTER 2002 RESULTS ARE:
o net benefits of $16 million after-tax, or 38-cents per share, for
adjustments to restructuring costs and taxes.
ADJUSTMENTS TO REPORTED FULL YEAR 2003 RESULTS ARE:
o restructuring and related expenses of $8 million pre-tax, $5 million
after-tax, or 13-cents per share;
o expenses of $12 million pre-tax, $8 million after-tax, or 18-cents per
share, due to debt refinancing;
o a benefit of $17 million, or 41-cents per share, related to several
tax adjustments.
1
ADJUSTMENTS TO REPORTED FULL YEAR 2002 RESULTS ARE:
o a net benefit of $23 million after-tax, or 53-cents per share, due to
restructuring and related activities; costs associated with the
amendment of the senior debt agreement; a gain on the sale of a
facility; and a benefit related to several tax adjustments.
"We improved in every region and I am especially pleased with the turnaround in
our European original equipment operations," said Frissora. "Europe also took
the lead in winning significant new ride and emissions control business. We were
awarded more than $900 million in new business in 2003 for OE platforms expected
to begin production in 2004 through 2007. We are also encouraged by some
strengthening in the North America aftermarket where revenue grew
quarter-over-quarter for the first time since the second quarter of 2002."
FOURTH QUARTER PERFORMANCE
The company's fourth quarter 2003 results benefited from higher volumes,
improved manufacturing efficiencies and favorable currency exchange rates.
However, results were negatively impacted by $4 million in higher interest
expense on the company's debt refinancing.
Fourth quarter revenue was $933 million, compared with $846 million in fourth
quarter 2002, a 10 percent increase. Adjusted for $86 million in favorable
currency, revenue was slightly up quarter-over-quarter.
The company's reported EBIT (earnings before interest, taxes, and minority
interest) increased 27 percent to $40 million in the fourth quarter, compared
with $31 million in fourth quarter 2002. Adjusted for certain items described
above (see attachment 2), EBIT was $41 million, a 51 percent increase compared
with fourth quarter 2002 adjusted EBIT of $27 million. The company generated $76
million in cash flow before financing activities during the quarter, largely
driven by $68 million in cash from working capital improvements.
Reported EBIT before depreciation and amortization expense (EBITDA) was $83
million for the quarter, an 18 percent increase compared with $71 million in
fourth quarter 2002. Adjusted for certain items described above (see attachment
2), fourth quarter EBITDA was $84 million, a 28 percent increase versus adjusted
fourth quarter 2002 EBITDA of $67 million.
The Company decreased its SGA&E (selling, general, administrative and
engineering) expense to 11.3 percent of sales in the quarter compared with 11.6
percent in fourth quarter 2002. The higher margin aftermarket continues to
represent a smaller percentage of revenues and gross margin. Gross margin was
20.2 percent in the quarter, compared with 20.0 percent reported in fourth
quarter 2002. Without the benefits of an income adjustment related to
restructuring costs, fourth quarter 2002 gross margin would have been 19.7
percent.
The company operated well within the requirements of its bank debt covenants in
the quarter. At December 31, the leverage ratio was 4.17, below the maximum
limit of 5.00;
2
the fixed charge coverage ratio was 1.87, exceeding the minimum required ratio
of 1.00; and the interest coverage ratio was 3.04, exceeding the minimum
required ratio of 1.95.
FULL YEAR PERFORMANCE
The company reported 2003 revenue of $3.8 billion, a 9 percent increase over
2002. Adjusted for the impact of favorable currency, revenue increased 1
percent.
Full year reported EBIT was $176 million, a 4 percent increase compared with
2002 EBIT of $169 million. Adjusted for certain items, 2003 EBIT was $184
million, compared with adjusted 2002 EBIT of $162 million. For the full year,
Tenneco Automotive reported net cash before financing activities of $154
million, up 90 percent from a year ago. The company strengthened its financial
position in 2003, ending the year with cash balances of $145 million and total
debt at $1.430 billion, or debt net of cash balances of $1.285 billion, the
lowest level since becoming a stand-alone company.
Tenneco Automotive reported EBITDA for the full year of $339 million, an
increase from $313 million reported in 2002. EBITDA was $347 million adjusted
for certain items described above (see attachment 2), compared with 2002
adjusted EBITDA of $306 million.
The company reported SGA&E for the year of 11.4 percent of sales, meeting its
2003 goal of maintaining SGA&E expense at less than 12 percent of sales. Gross
margin for 2003 was 20.5 percent versus 20.9 percent in 2002. The decline was
driven by a lower percentage of sales generated by the higher margin aftermarket
business. The company also achieved its Project Genesis restructuring goals for
the year, generating $29 million in savings. Manufacturing improvements driven
by the company's Six Sigma initiative generated an additional $27 million in
savings in 2003.
FOURTH QUARTER - NORTH AMERICA
o North American original equipment revenue was $347 million for the
quarter versus $338 million in fourth quarter 2002. Excluding the
impact of lower pass-through catalytic converter sales, revenue was
$270 million, up 2 percent versus a market decline of almost one
percent. Higher ride control volumes drove the increase.
o North American aftermarket revenue was $99 million, up 12 percent
versus fourth quarter 2002 revenue of $88 million. The increase was
driven by an 11 percent increase in ride control sales and a 14
percent increase in emissions control sales.
o Reported EBIT for North American operations was $22 million compared
with $21 million reported in the fourth quarter of 2002. Adjusted for
$1 million in restructuring related expenses, EBIT in fourth quarter
2003 was $23 million, versus EBIT of $21 million in the same period
one year ago. The EBIT improvement was driven by higher volumes,
improved manufacturing efficiency and cost control measures.
3
FOURTH QUARTER - EUROPE
o European original equipment revenue increased to $290 million from
$253 million in fourth quarter 2002. Before the impact of favorable
currency and pass-through catalytic converter sales, revenue was $193
million, down less than one percent and even with the market decline.
A 33 percent increase in OE ride control volumes offset a 12 percent
decline in emissions control volumes, adjusted for currency and
pass-through sales.
o European aftermarket revenue was $76 million compared with $70 million
in fourth quarter 2002. Excluding the impact of favorable currency,
revenue was $62 million. The revenue decline was the result of
continued market softness in both ride and emissions control.
o Reported European EBIT was $7 million compared with reported fourth
quarter 2002 EBIT of $3 million, or zero adjusted for a net benefit of
$3 million for a favorable adjustment in the estimate to complete
Project Genesis restructuring, net of restructuring related expenses.
Favorable currency, higher OE ride control volumes, improved
manufacturing efficiencies and tight cost controls drove the EBIT
improvement.
FOURTH QUARTER - REST OF WORLD
o The company's Australian operations increased revenue to $45 million
from $33 million in the fourth quarter 2002. Revenue increased
2 percent to $34 million, excluding the impact of favorable currency.
The revenue gain was driven by higher OE volumes.
o Revenue from Asian operations increased to $43 million from $39
million in fourth quarter 2002, primarily driven by growing OE
revenues in China.
o The company reported revenue from South American operations of $33
million, a 33 percent increase over fourth quarter 2002 revenue of $25
million. Revenue was impacted by $5 million in favorable currency and
higher OE volumes, primarily in Brazil.
o Reported combined EBIT for Asia, South America and Australia was $11
million in the fourth quarter versus $7 million in the fourth quarter
of 2002. The improvement in reported EBIT was due to manufacturing
efficiencies, increased volumes and favorable currency exchange rates.
Fourth quarter 2002 results include a net benefit of $1 million for an
adjustment in the estimate to complete Project Genesis.
2004 OUTLOOK
In 2004, the company will maintain its emphasis on aggressive cost management,
top-line growth and cash generation to further reduce its debt. The company's
long-term goals include reducing SGA&E expense to 10 percent of sales; improving
gross margin to 22 percent of sales; and generating at least $100 million in new
business annually. For 2004, the company also anticipates generating an
additional $30 million in cash from working capital improvements.
"Our strategy is to capitalize on growth opportunities with advanced
technologies and in new markets, such as China and Eastern Europe, while
continuing our intense focus on cost management and manufacturing improvement
initiatives," said Frissora. "In the aftermarket, we expect to grow with new
products and in categories beyond our
4
traditional product lines, while continuing to size our European aftermarket
business to the market."
The company anticipates that its original equipment book of business in 2004 and
2005 will be about $75 million and $315 million higher, respectively, than the
2003 book of business. Before pass-through catalytic converter sales, the book
of business is expected to be about $45 million and $270 million higher than
2003 in 2004 and 2005, respectively. These revenue estimates are based on
original equipment manufacturers' programs that have been formally awarded to
the company as well as programs where the company is highly confident that it
will be awarded business based on informal customer indications, Tenneco
Automotive's status as a supplier on the existing program, and the relationship
with the customer.
Attachment 1 to this press release provides additional information on Tenneco
Automotive's fourth quarter and full year 2003 results.
CONFERENCE CALL INFORMATION
The company will host a conference call on January 27, 2004 at 10:30 a.m. EST.
The dial-in number is 888 394-4822 domestic or 773 756-4631 international. The
passcode is Tenneco Auto. The call will be available on the financial section of
the Tenneco Automotive web site at www.tenneco-automotive.com. A copy of this
press release is available on the financial and news sections of the Tenneco
Automotive web site. A recording of this call will be available one hour
following completion of the call on January 27, 2004 through February 3, 2004.
To access this recording, dial 800 679-9662 domestic or 402 220-0283
international.
2004 ANNUAL MEETING
The Tenneco Automotive board of directors has scheduled the corporation's annual
meeting of shareholders for Tuesday, May 11, 2004 at 10:00 a.m. CDT. The meeting
will be held at the corporate headquarters, 500 North Field Drive, Lake Forest,
Illinois. The record date for shareholders to vote at the meeting is March 19,
2004.
Tenneco Automotive is a $3.8 billion manufacturing company with headquarters in
Lake Forest, Illinois and approximately 19,600 employees worldwide. Tenneco
Automotive is one of the world's largest producers and marketers of ride control
and exhaust systems and products, which are sold under the Monroe(R) and
Walker(R) global brand names. Among its products are Sensa-Trac(R) and Monroe
Reflex(R) shocks and struts, Rancho(R) shock absorbers, Walker(R) Quiet-Flow(R)
mufflers and DynoMax(R) performance exhaust products, and Monroe(R) Clevite(R)
vibration control components.
This press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Words such as "will,"
"improving," "generating," "goals," "strategy," "continuing," "expect,"
"expected," "anticipates," "estimates," and similar expressions identify
forward-looking statements. These forward-looking statements are based on the
current expectations of the company (including its subsidiaries). Because these
forward-looking
5
statements involve risks and uncertainties, the company's plans, actions and
actual results could differ materially. Among the factors that could cause these
plans, actions and results to differ materially from current expectations are:
(i) the general political, economic and competitive conditions in markets and
countries where the company and its subsidiaries operate, including the strength
of other currencies relative to the U.S. dollar and currency fluctuations and
other risks associated with operating in foreign countries; (ii) governmental
actions, including the ability to receive regulatory approvals and the timing of
such approvals; (iii) changes in capital availability or costs, including
increases in the company's costs of borrowing (i.e., interest rate increases),
the amount of the company's debt, the ability of the company to access capital
markets and the credit ratings of the company's debt; (iv) changes in automotive
manufacturers' production rates and their actual and forecasted requirements for
the company's products, including the overall highly competitive nature of the
automotive parts industry, and the company's resultant inability to realize the
sales represented by its book of business which is based on original equipment
manufacturers' programs that have been formally awarded as well as programs
where the company is highly confident that it will be awarded business based on
informal customer indications, the company's status as a supplier on the
existing program, and the relationship with the customer, and anticipated
pricing for the applicable program over its life, and is subject to increases or
decreases due to changes in customer requirements, customer and consumer
preferences, and the number of vehicles actually produced by customers; (v) the
cyclical nature of the global vehicular industry, including the performance of
the global aftermarket sector, and changes in consumer demand and prices,
including longer product lives of automobile parts and the cyclicality of
automotive production and sales of automobiles which include the company's
products, and the potential negative impact on the company's revenues and
margins from such products; (vi) the cost and outcome of existing and any future
legal proceedings, and compliance with changes in regulations, including
environmental regulations; (vii) workforce factors such as strikes or labor
interruptions; (viii) material substitutions and increases in the costs of raw
materials; (ix) the company's continued success in cost reduction and cash
management programs and its ability to execute restructuring and other cost
reduction plans and to realize anticipated benefits from these plans; (x) the
company's ability to develop and profitably commercialize new products and
technologies, and the acceptance of such new products and technologies by the
company's customers and the market; (xi) further changes in the distribution
channels for the company's aftermarket products, further consolidations among
automotive parts customers and suppliers, and product warranty costs; (xii)
changes by the Financing Accounting Standards Board or other accounting
regulatory bodies of authoritative generally accepted accounting principles or
policies; (xiii) acts of war, riots or terrorism, including, but not limited to
the events taking place in the Middle East, the current military action in Iraq
and the continuing war on terrorism, as well as actions taken or to be taken by
the United States or other governments as a result of further acts or threats of
terrorism, and the impact of these acts on economic, financial and social
conditions in the countries where we operate and (xiv) the timing and occurrence
(or non-occurrence) of transactions and events which may be subject to
circumstances beyond the control of the company and its subsidiaries. The
company undertakes no obligation to update any forward-looking statement to
reflect events or circumstances after the date of this press release. Additional
information regarding these risk factors and uncertainties is detailed from time
to time in the company's SEC filings, including but not limited to its report on
Form 10-K for the year ended December 31, 2002. Further information can be found
on the company's web site at www.tenneco-automotive.com.
6
Attachment 1
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME (LOSS)
Unaudited
THREE MONTHS ENDED DECEMBER 31,
(Millions except share and per share amounts)
2003 2002
--------------- --------------
Net sales and operating revenues: $ 933 $ 846
=============== ===============
Costs and Expenses
Cost of Sales (exclusive of depreciation shown below) 745 (a) 677 (d) (e)
Engineering, Research and Development 17 18
Selling, General and Administrative 88 80 (e)
Depreciation and Amortization of Other Intangibles 43 40
--------------- ---------------
Total Costs and Expenses 893 815
=============== ---------------
Loss on sale of assets -- (1)
Loss on sale of receivables (1) --
Other Income (Loss) 1 1
--------------- ---------------
Total Other Income (Loss) -- --
--------------- ---------------
Income (Loss) before Interest Expense,
Income Taxes, and Minority Interest
North America 22 (a) 21 (d) (e)
Europe 7 3 (d) (e)
Other 11 7 (e)
--------------- ---------------
40 31
Less:
Interest expense (net of
interest capitalized) 46 (b) 33
Income tax expense (benefit) (5)(c) (13)(f)
Minority interest 1 2
--------------- ---------------
Net income (loss) $ (2) $ 9
=============== ===============
Average common shares outstanding:
Basic 40.7 39.9
=============== ===============
Diluted 42.4 41.7
=============== ===============
Earnings (loss) per share of common stock:
Basic- $ (0.04) $ 0.22
=============== ===============
Diluted- $ (0.04) $ 0.21
=============== ===============
(a) Includes restructuring related charges of $1 million pre-tax, $1 million
after-tax or $0.02 per share. The entire charge is recorded in cost of sales.
Geographically all of the charge is recorded in North America.
(b) Includes a pre-tax expense of $9 million, $6 million after-tax or $.13 per
share related to debt issuance costs that were deferred on the senior debt
refinanced in December 2003.
(c) Includes a $3 million or $.05 per share tax benefit related to a foreign tax
adjustment.
(d) Includes restructuring related charges of $5 million pre-tax, $3 million
after-tax or $0.07 per share. The entire charge is recorded in cost of sales.
Geographically, $2 million is recorded in North America and $3 million in
Europe.
(e) Includes a favorable adjustment to the estimated costs to complete Project
Genesis of $9 million pre-tax, $8 million after tax or $0.19 per share. Of the
adjustment $2 million is recorded in SG&A and the remaining $7 million is in
cost of sales. Geographically, $2 million is recorded in North America, $6
million in Europe and $1 million in Other.
(f) Includes tax adjustments of $11 million or $.26 per share related to an
adjustment in taxes based on filed tax returns and a tax rate change in Belgium.
ATTACHMENT 1
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME (LOSS)
Unaudited
TWELVE MONTHS ENDED DECEMBER 31,
(Millions except share and per share amounts)
2003 2002
--------------- ---------------
Net sales and operating revenues: $ 3,766 $ 3,459
=============== ===============
Costs and Expenses
Cost of Sales (exclusive of depreciation shown below) 2,994 (a) 2,735 (d) (e)
Engineering, Research and Development 67 67
Selling, General and Administrative 364 351 (e) (f)
Depreciation and Amortization of Other Intangibles 163 144
--------------- ---------------
Total Costs and Expenses 3,588 3,297
=============== ===============
Gain on sale of assets -- 10 (g)
Loss on sale of receivables (2) (2)
Other Income (Loss) -- (1)
--------------- ---------------
Total Other Income (Loss) (2) 7
--------------- ---------------
Income (Loss) before Interest Expense,
Income Taxes, and Minority Interest
North America 131 (a) 129 (d) (e) (f)
Europe 14 (a) 18 (d) (e) (f) (g)
Other 31 22 (e)
--------------- ---------------
176 169
Less:
Interest expense (net of
interest capitalized) 149 (b) 141
Income tax expense (benefit) (6)(c) (7)(h)
Minority interest 6 4
--------------- ---------------
Income (loss) before Cumulative Effect of
Change in Accounting Principle 27 31
--------------- ---------------
Cumulative Effect of Change in Accounting
Principle, net of income tax -- (218)
--------------- ---------------
Net income (loss) $ 27 $ (187)
=============== ===============
Average common shares outstanding:
Basic 40.4 39.8
=============== ===============
Diluted 41.8 41.7
=============== ===============
Earnings (loss) per share of common stock:
Basic-
Before Cumulative Effect of Change in Accounting Principle $ 0.67 $ 0.78
Cumulative Effect of Change in Accounting Principle -- (5.48)
--------------- ---------------
$ 0.67 $ (4.70)
=============== ===============
Diluted-
Before Cumulative Effect of Change in Accounting Principle $ 0.65 $ 0.74
Cumulative Effect of Change in Accounting Principle -- (5.48)
--------------- ---------------
$ 0.65 $ (4.74)
=============== ===============
(a) Includes restructuring and related charges of $8 million pre-tax, $5 million
after-tax or $0.13 per share. The entire charge is recorded in cost of sales.
Geographically, $4 million is recorded in North America and $4 million in
Europe.
(b) Includes pre-tax expenses of $12 million, $8 million after-tax or $.18 per
share related to debt issuance costs that were deferred on the senior debt paid
down with the proceeds of the 2003 debt refinancings.
(c) Includes a $17 million or $.41 per share tax benefit related to the
resolution of several tax issues.
(d) Includes restructuring and restructuring related charges of $11 million
pre-tax, $6 million after-tax or $0.16 per share. The entire charge is recorded
in cost of sales. Geographically, $5 million is recorded in North America and $6
million in Europe.
(e) Includes a favorable adjustment to the estimated costs to complete Project
Genesis of $9 million pre-tax, $8 million after tax or $0.19 per share. Of the
adjustment $2 million is recorded in SG&A and the remaining $7 million is in
cost of sales. Geographically, $2 million is recorded in North America, $6
million in Europe and $1 million in Other.
(f) Includes costs associated with the amendment of the senior debt agreement of
$2 million pre-tax, $1 million after-tax or $0.03 per share. The entire charge
is recorded in SG&A. Geographically, $1 million is recorded in both North
America and Europe.
(g) Includes a gain on the sale of a UK facility of $11 million pre-tax, $5
million after-tax or $0.13 per share. Geographically, all of the gain is
recorded in Europe.
(h) Includes a $17 million or $.40 per share tax benefit related to the
resolution of several tax issues.
ATTACHMENT 1
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEET
(Unaudited)
(Millions)
December 31, 2003 December 31, 2002
-------------------- --------------------
Assets
Cash and Temporary Cash Investments $ 145 $ 54
Receivables, Net 442 409
Inventories 343 352
Other Current Assets 175 151
Investments and Other Assets 597 512
Plant, Property, and Equipment, Net 1,111 1,026
-------------------- --------------------
Total Assets $ 2,813 $ 2,504
==================== ====================
Liabilities and Shareowners' Equity
Short-Term Debt $ 20 $ 228
Accounts Payable 621 505
Accrued Taxes 19 40
Accrued Interest 42 23
Other Current Liabilities 191 220
Long-Term Debt 1,410 1,217
Deferred Income Taxes 119 103
Deferred Credits and Other Liabilities 310 243
Minority Interest 23 19
Total Shareholders' Equity 58 (94)
-------------------- --------------------
Total Liabilities and Shareholders' Equity $ 2,813 $ 2,504
==================== ====================
ATTACHMENT 1
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CASH FLOWS
(UNAUDITED)
(Millions)
TWELVE MONTHS ENDED
DECEMBER 31,
-----------------------------------------
2003 2002
------------------ ------------------
Operating activities:
Net income (loss) before cumulative effect of change in accounting
principle, net of tax $ 27 $ 31
Adjustments to reconcile income (loss)
to net cash provided (used) by operating activities -
Depreciation and amortization 163 144
Deferred income taxes (29) (39)
(Gain)/loss on sale of businesses and assets, net 2 (8)
Changes in components of working capital -
(Inc.)/dec. in receivables 13 9
(Inc.)/dec. in inventories 55 --
(Inc.)/dec. in prepayments and other current assets (1) 6
Inc./(dec.) in payables 52 56
Inc./(dec.) in taxes accrued (30) 3
Inc./(dec.) in interest accrued 19 (2)
Inc./(dec.) in other current liabilities (30) (5)
Other 40 (7)
------------------ ------------------
Net cash provided (used) by operating activities 281 188
Investing activities:
Net proceeds from sale of assets 8 24
Expenditures for plant, property & equipment (130) (138)
Investments and other (5) 7
------------------ ------------------
Net cash provided (used) by investing activities (127) (107)
------------------ ------------------
Net Cash provided (used) before financing activities 154 81
Financing activities:
Proceeds from capital contributions 1 --
Issuance of long-term debt 891 3
Debt issuance costs on long-term debt (27) --
Retirement of long-term debt (791) (123)
Net inc./(dec.) in short-term debt excluding current
maturities on long-term debt (121) 47
Other (2) --
------------------ ------------------
Net cash provided (used) by financing activities (49) (73)
------------------ ------------------
Effect of foreign exchange rate changes on cash and
temporary cash investments (14) (7)
------------------ ------------------
Inc./(dec.) in cash and temporary cash investments 91 1
Cash and temporary cash investments, January 1 54 53
------------------ ------------------
Cash and temporary cash investments, December 31 $ 145 $ 54
================== ==================
Cash paid during the period for interest $ 115 $ 145
Cash paid during the period for income taxes $ 46 $ 27
Non-cash Investing and Financing Activities
Obligation for long-term capital lease $ -- $ (3)
ATTACHMENT 2
TENNECO AUTOMOTIVE
RECONCILIATION OF GAAP(1) NET INCOME TO EBITDA
Unaudited
Q4 2003
-------------------------------------------------------
North Rest of
America Europe World Total
---------- ---------- ---------- ----------
Net income (loss) (GAAP Measure) $ -- $ -- $ -- $ (2)
Minority interest -- -- -- 1
Income tax expense (benefit) -- -- -- (5)
Interest expense (net of interest capitalized) -- -- -- 46
----------
EBIT, Income/(loss) before interest expense, income
taxes and minority interest (GAAP measure) 22 7 11 40
Depreciation and amortization of other intangibles 23 16 4 43
---------- ---------- ---------- ----------
Total EBITDA(2) $ 45 $ 23 $ 15 $ 83
========== ========== ========== ==========
Q4 2002
--------------------------------------------------------
North Rest of
America Europe World Total
---------- ---------- ---------- ----------
Net income (loss) (GAAP Measure) $ -- $ -- $ -- $ 9
Minority interest -- -- -- 2
Income tax expense (benefit) -- -- -- (13)
Interest expense (net of interest capitalized) -- -- -- 33
----------
EBIT, Income/(loss) before interest expense, income
taxes and minority interest (GAAP measure) 21 3 7 31
Depreciation and amortization 23 13 4 40
---------- ---------- ---------- ----------
Total EBITDA $ 44 $ 16 $ 11 $ 71
========== ========== ========== ==========
(1) Generally Accepted Accounting Principles
(2) EBITDA represents income before cumulative effect of change in accounting
principle, interest expense, income taxes, minority interest and depreciation
and amortization. EBITDA is not a calculation based upon generally accepted
accounting principles. The amounts included in the EBITDA calculation, however,
are derived from amounts included in the historical statements of income data.
In addition, EBITDA should not be considered as an alternative to net income or
operating income as an indicator of the company's operating performance, or as
an alternative to operating cash flows as a measure of liquidity. Tenneco
Automotive has presented EBITDA because it regularly reviews EBITDA as a measure
of the company's ability to incur and service debt. In addition, Tenneco
Automotive believes its debt holders utilize and analyze our EBITDA for similar
purposes. Tenneco Automotive also believes EBITDA assists investors in comparing
a company's performance on a consistent basis without regard to depreciation and
amortization, which can vary significantly depending upon many factors. However,
the EBITDA measure presented may not always be comparable to similarly titled
measures reported by other companies due to differences in the components of the
calculation.
ATTACHMENT 2
TENNECO AUTOMOTIVE
RECONCILIATION OF GAAP(1) TO NON-GAAP EARNINGS MEASURES(2)
Unaudited
Q4 2003 Q4 2002
------------------------------------------- ---------------------------------------------
EBITDA(3) EBIT Net Income Per Share EBITDA(3) EBIT Net Income Per Share
-------- -------- ---------- --------- --------- -------- ------------ ---------
Earnings Measures before Cumulative
Effect of Change in Accounting
Principle $ 83 $ 40 $ (2) $ (0.04) $ 71 $ 31 $ 9 $ 0.21
Adjustments (reflects non-GAAP measures):
Restructuring and restructuring
related expenses 1 1 1 0.02 (4) (4) (5) (0.12)
Tax settlement adjustments -- -- (3) (0.05) -- -- (11) (0.26)
Debt issuance cost write off -- -- 6 0.13 -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Non-GAAP earnings measure $ 84 $ 41 $ 2 $ 0.06 $ 67 $ 27 $ (7) $ (0.17)
======== ======== ======== ======== ======== ======== ======== ========
Q4 2003
-------------------------------------
North Rest of
America Europe World Total
------- ------- ------- -------
EBIT $ 22 $ 7 $ 11 $ 40
Restructuring and restructuring related expenses 1 -- -- 1
------- ------- ------- -------
Adjusted EBIT $ 23 $ 7 $ 11 $ 41
======= ======= ======= =======
Q4 2002
-------------------------------------
North Rest of
America Europe World Total
------- ------- ------- -------
EBIT $ 21 $ 3 $ 7 $ 31
Restructuring and restructuring related expenses -- (3) (1) (4)
------- ------- ------- -------
Adjusted EBIT $ 21 $ -- $ 6 $ 27
======= ======= ======= =======
Cost of Gross Gross
Gross Margin Revenues Sales Margin Margin %
- ------------ -------- ------- ------- --------
Reported Q4 2002 $ 846 $ 677 $ 169 20.0%
Net benefit of restructuring related expense adjustment -- 2 (2)
------- ------- -------
Adjusted Q4 2002 $ 846 $ 679 $ 167 19.7%
======= ======= =======
(1) Generally Accepted Accounting Principles
(2) Tenneco Automotive presents the above reconciliation of GAAP to non-GAAP
earnings measures in order to reflect the results for the fourth quarters of
2003 and 2002 in a manner that allows a better understanding of the results of
operational activities separate from the financial impact of decisions made for
the long-term benefit of the company. Adjustments similar to the ones reflected
above have been recorded in earlier periods, and similar types of adjustments
can reasonably be expected to be recorded in future periods. Using only the
non-GAAP earnings measures to analyze earnings would have material limitations
because its calculation is based on the subjective determinations of management
regarding the nature and classification of events and circumstances that
investors may find material. Management compensates for these limitations by
utilizing both GAAP and non-GAAP earnings measures reflected above to understand
and analyze the results of the business. The company believes investors find the
non-GAAP information helpful in understanding the ongoing performance of
operations separate from items that may have a disproportionate positive or
negative impact on the company's financial results in any particular period.
(3) See Reconciliation of GAAP Net Income to EBITDA on previous page. EBITDA
represents income before cumulative effect of change in accounting principle,
interest expense, income taxes, minority interest and depreciation and
amortization. EBITDA is not a calculation based upon generally accepted
accounting principles. The amounts included in the EBITDA calculation, however,
are derived from amounts included in the historical statements of income data.
In addition, EBITDA should not be considered as an alternative to net income or
operating income as an indicator of the company's operating performance, or as
an alternative to operating cash flows as a measure of liquidity. Tenneco
Automotive has presented EBITDA because it regularly reviews EBITDA as a measure
of the company's ability to incur and service debt. In addition, Tenneco
Automotive believes its debt holders utilize and analyze our EBITDA for similar
purposes. Tenneco Automotive also believes EBITDA assists investors in comparing
a company's performance on a consistent basis without regard to depreciation and
amortization, which can vary significantly depending upon many factors. However,
the EBITDA measure presented may not always be comparable to similarly titled
measures reported by other companies due to differences in the components of the
calculation.
ATTACHMENT 2
TENNECO AUTOMOTIVE
RECONCILIATION OF GAAP(1) NET INCOME TO EBITDA
Unaudited
YTD 2003
-----------------------------------------------
North Rest of
America Europe World Total
---------- ---------- ---------- ----------
Net income (loss) (GAAP Measure) $ -- $ -- $ -- $ 27
Cumulative effect of change in accounting principle, net of income tax -- -- -- --
Minority interest -- -- -- 6
Income tax expense (benefit) -- -- -- (6)
Interest expense (net of interest capitalized) -- -- -- 149
----------
EBIT, Income/(loss) before interest expense, income
taxes and minority interest (GAAP measure) 131 14 31 176
Depreciation and amortization of other intangibles 91 59 13 163
---------- ---------- ---------- ----------
Total EBITDA(2) $ 222 $ 73 $ 44 $ 339
========== ========== ========== ==========
YTD 2002
----------------------------------------------
North Rest of
America Europe World Total
---------- ---------- ---------- ----------
Net income (loss) (GAAP Measure) $ -- $ -- $ -- $ (187)
Cumulative effect of change in accounting principle, net of income tax -- -- -- 218
Minority interest -- -- -- 4
Income tax expense (benefit) -- -- -- (7)
Interest expense (net of interest capitalized) -- -- -- 141
----------
EBIT, Income/(loss) before interest expense, income
taxes and minority interest (GAAP measure) 129 18 22 169
Depreciation and amortization 88 43 13 144
---------- ---------- ---------- ----------
Total EBITDA $ 217 $ 61 $ 35 $ 313
========== ========== ========== ==========
(1) Generally Accepted Accounting Principles
(2) EBITDA represents income before cumulative effect of change in accounting
principle, interest expense, income taxes, minority interest and depreciation
and amortization. EBITDA is not a calculation based upon generally accepted
accounting principles. The amounts included in the EBITDA calculation, however,
are derived from amounts included in the historical statements of income data.
In addition, EBITDA should not be considered as an alternative to net income or
operating income as an indicator of the company's operating performance, or as
an alternative to operating cash flows as a measure of liquidity. Tenneco
Automotive has presented EBITDA because it regularly reviews EBITDA as a measure
of the company's ability to incur and service debt. In addition, Tenneco
Automotive believes its debt holders utilize and analyze our EBITDA for similar
purposes. Tenneco Automotive also believes EBITDA assists investors in comparing
a company's performance on a consistent basis without regard to depreciation and
amortization, which can vary significantly depending upon many factors. However,
the EBITDA measure presented may not always be comparable to similarly titled
measures reported by other companies due to differences in the components of the
calculation.
ATTACHMENT 2
TENNECO AUTOMOTIVE
RECONCILIATION OF GAAP(1) TO NON-GAAP EARNINGS MEASURES(2)
Unaudited
YTD 2003 YTD 2002
----------------------------------------- -----------------------------------------
EBITDA(3) EBIT Net Income Per Share EBITDA(3) EBIT Net Income Per Share
--------- ---- ---------- --------- --------- ---- ---------- ---------
Earnings Measures before Cumulative Effect of
Change in Accounting Principle $ 339 $ 176 $ 27 $ 0.65 $ 313 $ 169 $ 31 $ 0.74
Adjustments (reflects non-GAAP measures):
Restructuring and restructuring related
expenses 8 8 5 0.13 2 2 (2) (0.03)
Tax settlement adjustments - - (17) (0.41) - - (17) (0.40)
Debt issuance cost write off - - 8 0.18 - - - -
Gain on sale of York facility - - - - (11) (11) (5) (0.13)
Amendment fee - - - - 2 2 1 0.03
------ ------ ------ ------ ------ ------ ------ ------
Non-GAAP earnings measure $ 347 $ 184 $ 23 $ 0.55 $ 306 $ 162 $ 8 $ 0.21
====== ====== ====== ====== ====== ====== ====== ======
YTD 2003
----------------------------------------
North Rest of
America Europe World Total
------- ------ ----- -----
EBIT $ 131 $ 14 $ 31 $ 176
Restructuring and restructuring related expenses 4 4 - 8
------ ------ ------ ------
Adjusted EBIT $ 135 $ 18 $ 31 $ 184
====== ====== ====== ======
YTD 2002
----------------------------------------
North Rest of
America Europe World Total
------- ------ ----- -----
EBIT $ 129 $ 18 $ 22 $ 169
Restructuring and restructuring related expenses 3 - (1) 2
Gain on sale of York facility - (11) - (11)
Amendment fee 1 1 - 2
------ ------ ------ ------
Adjusted EBIT $ 133 $ 8 $ 21 $ 162
====== ====== ====== ======
(1) Generally Accepted Accounting Principles
(2) Tenneco Automotive presents the above reconciliation of GAAP to non-GAAP
earnings measures in order to reflect the results for the years of 2003 and 2002
in a manner that allows a better understanding of the results of operational
activities separate from the financial impact of decisions made for the
long-term benefit of the company. Adjustments similar to the ones reflected
above have been recorded in earlier periods, and similar types of adjustments
can reasonably be expected to be recorded in future periods. Using only the
non-GAAP earnings measures to analyze earnings would have material limitations
because its calculation is based on the subjective determinations of management
regarding the nature and classification of events and circumstances that
investors may find material. Management compensates for these limitations by
utilizing both GAAP and non-GAAP earnings measures reflected above to understand
and analyze the results of the business. The company believes investors find the
non-GAAP information helpful in understanding the ongoing performance of
operations separate from items that may have a disproportionate positive or
negative impact on the company's financial results in any particular period.
(3) See Reconciliation of GAAP Net Income to EBITDA on previous page. EBITDA
represents income before cumulative effect of change in accounting principle,
interest expense, income taxes, minority interest and depreciation and
amortization. EBITDA is not a calculation based upon generally accepted
accounting principles. The amounts included in the EBITDA calculation, however,
are derived from amounts included in the historical statements of income data.
In addition, EBITDA should not be considered as an alternative to net income or
operating income as an indicator of the company's operating performance, or as
an alternative to operating cash flows as a measure of liquidity. Tenneco
Automotive has presented EBITDA because it regularly reviews EBITDA as a measure
of the company's ability to incur and service debt. In addition, Tenneco
Automotive believes its debt holders utilize and analyze our EBITDA for similar
purposes. Tenneco Automotive also believes EBITDA assists investors in comparing
a company's performance on a consistent basis without regard to depreciation and
amortization, which can vary significantly depending upon many factors. However,
the EBITDA measure presented may not always be comparable to similarly titled
measures reported by other companies due to differences in the components of the
calculation.
ATTACHMENT 2
TENNECO AUTOMOTIVE
RECONCILIATION OF GAAP REVENUES TO NON-GAAP REVENUE MEASURE
Unaudited
Q4 2003
-----------------------------------------------------------------------------
Pass-through Revenues
Sales Excluding
Revenues Excluding Currency
Currency Excluding Currency and Pass-through
Revenues Impact Currency Impact Sales
------------ ------------ ------------- -------------- ------------------
North America Aftermarket
Ride Control $ 63 $ - $ 63 $ - $ 63
Exhaust 36 - 36 - 36
---------- ---------- ---------- ---------- ----------
Total North America Aftermarket 99 - 99 - 99
North America Original Equipment
Ride Control 106 - 106 - 106
Exhaust 241 8 233 77 156
---------- ---------- ---------- ---------- ----------
Total North America Original Equipment 347 8 339 77 262
Total North America 446 8 438 77 361
Europe Aftermarket
Ride Control 37 7 30 - 30
Exhaust 39 7 32 - 32
---------- ---------- ---------- ---------- ----------
Total Europe Aftermarket 76 14 62 - 62
Europe Original Equipment
Ride Control 79 12 67 - 67
Exhaust 211 35 176 50 126
---------- ---------- ---------- ---------- ----------
Total Europe Original Equipment 290 47 243 50 193
Total Europe 366 61 305 50 255
Asia 43 1 42 15 27
South America 33 5 28 3 25
Australia 45 11 34 4 30
---------- ---------- ---------- ---------- ----------
Total Rest of World 121 17 104 22 82
Total Tenneco Automotive $ 933 $ 86 $ 847 $ 149 $ 698
========== ========== ========== ========== ==========
Q4 2002
-----------------------------------------------------------------------------
Pass-through Revenues
Sales Excluding
Revenues Excluding Currency
Currency Excluding Currency and Pass-through
Revenues Impact Currency Impact Sales
------------ ------------ ------------- -------------- ------------------
North America Aftermarket
Ride Control $ 56 $ - $ 56 $ - $ 56
Exhaust 32 - 32 - 32
---------- ---------- ---------- ---------- ----------
Total North America Aftermarket 88 - 88 - 88
North America Original Equipment
Ride Control 95 - 95 - 95
Exhaust 243 - 243 74 169
---------- ---------- ---------- ---------- ----------
Total North America Original Equipment 338 - 338 74 264
Total North America 426 - 426 74 352
Europe Aftermarket
Ride Control 31 - 31 - 31
Exhaust 39 - 39 - 39
---------- ---------- ---------- ---------- ----------
Total Europe Aftermarket 70 - 70 - 70
Europe Original Equipment
Ride Control 51 - 51 - 51
Exhaust 202 - 202 58 144
---------- ---------- ---------- ---------- ----------
Total Europe Original Equipment 253 - 253 58 195
Total Europe 323 - 323 58 265
Asia 39 - 39 9 30
South America 25 - 25 3 22
Australia 33 - 33 2 31
---------- ---------- ---------- ---------- ----------
Total Rest of World 97 - 97 14 83
Total Tenneco Automotive $ 846 $ - $ 846 $ 146 $ 700
========== ========== ========== ========== ==========
Tenneco Automotive presents the above reconciliation of revenues in order to
reflect the trend in the company's sales, in various product lines and
geographical regions, separately from the effects of doing business in
currencies other than the U.S. dollar. Additionally, pass-through catalytic
converter sales include precious metals pricing, which may be volatile. While
Tenneco Automotive's original equipment customers assume the risk of this
volatility, it impacts reported revenue. Excluding pass-through catalytic
converter sales removes this impact. Tenneco Automotive uses this information to
analyze the trend in revenues before these factors. Tenneco Automotive believes
investors find this information useful in understanding period to period
comparisons in the company's revenues
ATTACHMENT 2
TENNECO AUTOMOTIVE
RECONCILIATION OF GAAP REVENUES TO NON-GAAP REVENUE MEASURE
Unaudited
Year Ended December 31, 2003
-----------------------------------------------------------------------------
Pass-through Revenues
Sales Excluding
Revenues Excluding Currency
Currency Excluding Currency and Pass-through
Revenues Impact Currency Impact Sales
------------ ------------ ------------- -------------- ------------------
North America Aftermarket
Ride Control $ 303 $ - $ 303 $ - $ 303
Exhaust 163 - 163 - 163
---------- ---------- ---------- ---------- ----------
Total North America Aftermarket 466 - 466 - 466
North America Original Equipment
Ride Control 442 - 442 - 442
Exhaust 972 18 954 306 648
---------- ---------- ---------- ---------- ----------
Total North America Original Equipment 1,414 18 1,396 306 1,090
Total North America 1,880 18 1,862 306 1,556
Europe Aftermarket
Ride Control 170 30 140 - 140
Exhaust 176 30 146 - 146
---------- ---------- ---------- ---------- ----------
Total Europe Aftermarket 346 60 286 - 286
Europe Original Equipment
Ride Control 265 40 225 - 225
Exhaust 832 132 700 216 484
---------- ---------- ---------- ---------- ----------
Total Europe Original Equipment 1,097 172 925 216 709
Total Europe 1,443 232 1,211 216 995
Asia 161 1 160 57 103
South America 119 (2) 121 12 109
Australia 163 31 132 15 117
---------- ---------- ---------- ---------- ----------
Total Rest of World 443 30 413 84 329
Total Tenneco Automotive $ 3,766 $ 280 $ 3,486 $ 606 $ 2,880
========== ========== ========== ========== ==========
Year Ended December 31, 2002
-----------------------------------------------------------------------------
Pass-through Revenues
Sales Excluding
Revenues Excluding Currency
Currency Excluding Currency and Pass-through
Revenues Impact Currency Impact Sales
------------ ------------ ------------- -------------- ------------------
North America Aftermarket
Ride Control $ 312 $ - $ 312 $ - $ 312
Exhaust 179 - 179 - 179
---------- ---------- ---------- ---------- ----------
Total North America Aftermarket 491 - 491 - 491
North America Original Equipment
Ride Control 410 - 410 - 410
Exhaust 997 - 997 323 674
---------- ---------- ---------- ---------- ----------
Total North America Original Equipment 1,407 - 1,407 323 1,084
Total North America 1,898 - 1,898 323 1,575
Europe Aftermarket
Ride Control 142 - 142 - 142
Exhaust 169 - 169 - 169
---------- ---------- ---------- ---------- ----------
Total Europe Aftermarket 311 - 311 - 311
Europe Original Equipment
Ride Control 187 - 187 - 187
Exhaust 723 - 723 218 505
---------- ---------- ---------- ---------- ----------
Total Europe Original Equipment 910 - 910 218 692
Total Europe 1,221 - 1,221 218 1,003
Asia 116 - 116 35 81
South America 103 - 103 10 93
Australia 121 - 121 6 115
---------- ---------- ---------- ---------- ----------
Total Rest of World 340 - 340 51 289
Total Tenneco Automotive $ 3,459 $ - $ 3,459 $ 592 $ 2,867
========== ========== ========== ========== ==========
Tenneco Automotive presents the above reconciliation of revenues in order to
reflect the trend in the company's sales, in various product lines and
geographical regions, separately from the effects of doing business in
currencies other than the U.S. dollar. Additionally, pass-through catalytic
converter sales include precious metals pricing, which may be volatile. While
Tenneco Automotive's original equipment customers assume the risk of this
volatility, it impacts reported revenue. Excluding pass-through catalytic
converter sales removes this impact. Tenneco Automotive uses this information to
analyze the trend in revenues before these factors. Tenneco Automotive believes
investors find this information useful in understanding period to period
comparisons in the company's revenues