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EXHIBIT 99.1
For immediate release
Contacts: Jane Ostrander
Media Relations
847 482-5607
jane.ostrander@tenneco-automotive.com
Leslie Cleveland Hague
Investor Relations
847 482-5042
lchague@tenneco-automotive.com
TENNECO AUTOMOTIVE 2001 SECOND QUARTER RESULTS EXCEED ANALYSTS' EXPECTATIONS
- - Company reports net income of $10 million (excluding restructuring
costs), or 26 cents per diluted share, on reduced revenues of $925 million;
- - Working capital as a percent of sales improves to 13.6 percent from 15.9
percent;
- - SGA&E overhead expense decreases from 13.4 percent to 11.6 percent of
sales;
- - Company sees margin improvements in North American and European aftermarket
businesses.
LAKE FOREST, ILLINOIS, JULY 24, 2001 - Tenneco Automotive (NYSE: TEN) announced
net income of $10 million, or 26-cents per diluted share, for the second quarter
of 2001, compared with net income of $15 million, or 42-cents per share, in the
second quarter of 2000. The results exclude pre-tax restructuring costs of $10
million, or 20-cents per diluted share, primarily related to closing a ride
control production line in North America. Including restructuring charges,
Tenneco Automotive reported second quarter 2001 net income of $2 million, or
6-cents per diluted share.
The company reported revenue for the quarter of $925 million, down 2 percent
compared with $942 million in the second quarter of 2000. Adjusted for
pass-through sales for catalytic converters, revenues declined 9 percent.
EBITDA, before pre-tax restructuring
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costs, for the quarter was $96 million, compared with $105 million the previous
year, a 9 percent decline.
"We are pleased that we exceeded the financial community's expectations, and
with our progress this quarter, particularly in improving cash management and
reducing costs. We are encouraged by working capital improvements and
strengthening margins in the aftermarket in spite of lower sales volumes," said
Mark P. Frissora, chairman and CEO, Tenneco Automotive. "These improvements
reflect our process approach to managing our businesses and our aggressive
efforts to focus on the areas we can control."
The company's revenue and profitability continue to be negatively impacted by
depressed conditions in the North American original equipment and heavy-duty
market, and in the global aftermarket. Currency fluctuations in Europe, South
America, and Australia are also having a negative effect on the company's
financial performance.
"While we saw some positive results this quarter, we remain cautious about the
remainder of the year," Frissora said. "We continue to face uncertainty in the
global economy, including currency translation issues and questions regarding
the level of original equipment sales and production volumes in Europe and North
America. Economists' predictions for a near-term slowdown in Europe, slower than
expected recovery in the U.S. economy, and significant risks in emerging market
economies such as Argentina suggest that Wall Street expectations for the
industry in the second half of the year are too optimistic."
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The company reported the following geographical results:
NORTH AMERICA
North American original equipment revenue declined 6 percent during the quarter
to $350 million versus $373 million in the second quarter of 2000. Excluding
pass-through sales, revenue was down 14 percent. North American aftermarket
revenue decreased 10 percent to $143 million from $159 million in the previous
year.
North American EBIT declined to $30 million compared with $40 million in the
second quarter of 2000. EBIT was primarily impacted by lower production volumes
in the original equipment and heavy-duty businesses, which offset aftermarket
margin improvements due to higher pricing and SGA&E reductions.
EUROPE
The company continues to report increases in European original equipment revenue
with $259 million for the quarter, a 22 percent increase over second quarter
2000 revenues of $213 million. Excluding pass-through sales, revenue increased 4
percent. European aftermarket revenue declined 19 percent to $88 million versus
$109 million in the second quarter of 2000.
European EBIT was $22 million for the quarter, compared with $23 million
reported in the second quarter of 2000. The results were impacted by lower
aftermarket volumes,
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which offset original equipment volume increases, higher aftermarket pricing and
reduced SGA&E.
European currency fluctuations in the second quarter had a negative impact on
the company's results, lowering European revenue by $27 million and European
EBIT by $2 million.
REST OF WORLD
The company's Australian operations reported revenue of $27 million for the
quarter, down from $33 million reported in the second quarter of 2000. Revenue
for the quarter would have only decreased by $2 million year-over-year if
currency exchange rates had been the same in the second quarter of 2001 as in
the second quarter of 2000.
In South America, the company launched several new original equipment programs,
which contributed to revenue of $37 million during the quarter, compared with
second quarter 2000 revenue for the region of $40 million. Currency devaluations
drove this decrease.
Revenue from the company's Asian operations grew 40 percent to $21 million from
$15 million in the second quarter of 2000, driven primarily by growing original
equipment business in China.
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Combined EBIT for Australia, South America, and Asia was $5 million, even with
the previous year. The results were impacted by original equipment volume
increases in South America and China, offset by negative currency issues.
GROWTH INITIATIVES
In addition to following through on its cost reduction and cash flow improvement
plans, Tenneco Automotive continues to strengthen its core businesses, primarily
through leveraging strategic alliance relationships and commercializing the most
promising advanced technologies to grow its original equipment business and
bolster its premium mix position in the aftermarket. Recent examples of this
include winning the Sears ride control business, which will focus on sales of
the premium Monroe Sensa-Trac line at the more than 1,000 Sears Auto Centers and
National Tire and Battery outlets in the United States; capturing new heavy and
medium-duty commercial truck exhaust business in Europe with advanced technology
products that meet Euro IV and Euro V emissions regulations; and pursuing
strategic alliances with Futaba Industrial Co. and Tokico Ltd. to design,
manufacture and market emission control and ride control products and systems,
respectively, for Japan-based original equipment manufacturers' global
platforms.
"We believe we have positioned Tenneco Automotive to more effectively perform
in what continues to be an extremely challenging and volatile environment,"
Frissora said. "We are continuing our efforts to reduce costs, improve
productivity, and optimize our global footprint, while growing the top line and
transforming Tenneco Automotive into a
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more process driven organization. I'm encouraged by the new opportunities our
senior management team is uncovering for improving the future profitability of
this business."
The following exhibits provide additional information on Tenneco Automotive's
second quarter 2001 operating results.
The company will host a conference call on July 24, 2001 at 10:30 a.m. EDT. The
dial in number is 888-942-8132 domestic or 1-212-287-1616 international. Pass
code is Tenneco Auto. A recording of this call will be available from 1:00 p.m.
EDT on July 24 through July 31, 2001. To access this recording, dial
888-568-0440 domestic or 402-530-7973 international and enter passcode 8400. The
call will also be available on Tenneco-Automotive's web site at
www.tenneco-automotive.com.
Tenneco Automotive is a $3.5 billion manufacturing company headquartered in Lake
Forest, Ill., with 23,000 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 Reflex(TM) shocks and struts, Rancho(R)
shock absorbers, Walker(R) Quiet-Flow(TM) mufflers and DynoMax(TM) performance
exhaust products, and Monroe(R) Clevite(TM) vibration control components.
This press release contains forward-looking statements. Words such as "believe",
"continues", "remain", "encouraged" and similar expressions identify these
forward-looking statements. These forward-looking statements are based on the
current expectations of the company (including its subsidiaries). Because these
forward-looking
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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 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); (iv) changes in automotive manufacturers' production rates and
their actual and forecasted requirements for the company's products, including
the company's resultant inability to realize the sales represented by its
awarded book of business; (v) changes in consumer demand and prices, including
decreases in demand for 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 of 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 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; (xi) further changes in the distribution channels for the
company's aftermarket products, and further consolidations among automotive
parts customers and suppliers; (xii) changes by the Financing Accounting
Standards Board or other accounting regulatory bodies of authoritative generally
accepted accounting principles or policies; and (xiii) 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.
###
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TENNECO AUTOMOTIVE INC. CONSOLIDATED EARNINGS RESULTS
Unaudited
THREE MONTHS ENDED JUNE 30,
2001 2000
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Net sales and operating revenues: $ 925 $ 942(b)
====== ======
Costs and Expenses
Cost of Sales (exclusive of depreciation shown below) 732(a) 712
Engineering, Research and Development 12 15
Selling, General and Administrative 95 111(b)
Depreciation and Amortization 39 37
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Total Costs and Expenses 878 875
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Other Income (Loss) - 1
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Operating Income (Loss)
North America 20(a) 40
Europe 22 23
Rest of World 5 5
Other - -
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47 68
Less:
Interest expense (net of
interest capitalized) 43 48
Income tax expense (benefit) 1 5
Minority interest 1 -
------ ------
Net income (loss) 2 15
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Average common shares outstanding:
Basic 37.4 34.4
====== ======
Diluted 37.6 34.6
====== ======
Earnings (loss) per share of common
stock:
Basic- $ 0.06 $ 0.42
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Diluted- $ 0.06 $ 0.42
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(a) Includes restructuring related costs of $10 million pre-tax, $8 million
after-tax or $0.20 per share. The costs are recorded in Cost of Sales.
Geographically, the $10 million is recorded in North America.
(b) Pursuant to EITF Issue No. 00-14, Accounting for Certain Sales Incentives,
some incentives that were previously recorded in SG&A are now classified as a
reduction in revenues. Results for 2000 were reclassified accordingly, with net
sales and SG&A each reduced by $6 million with no impact on income.
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TENNECO AUTOMOTIVE INC. CONSOLIDATED EARNINGS RESULTS
Unaudited
SIX MONTHS ENDED JUNE 30,
2001 2000
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Net sales and operating revenues: $1,789 $1,820(d)
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Costs and Expenses
Cost of Sales (exclusive of depreciation shown below) 1,438(a)(b) 1,384
Engineering, Research and Development 25 30
Selling, General and Administrative 196(a)(c) 217(d)
Depreciation and Amortization 76 76
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Total Costs and Expenses 1,735 1,707
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Other Income (Loss) (1) 2
====== ======
Operating Income (Loss)
North America 17(a)(b)(c) 74
Europe 30(a)(b)(c) 34
Rest of World 6(a)(b) 7
Other - -
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53 115
Less:
Interest expense (net of
interest capitalized) 90 93
Income tax expense (benefit) (9) 4
Minority interest 1 2
------ ------
Net income (loss) $ (29) $ 16
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Average common shares outstanding:
Basic 37.0 34.1
====== ======
Diluted 37.2 34.3
====== ======
Earnings (loss) per share of common
stock:
Basic- $(0.77) $ 0.45
====== ======
Diluted- $(0.77) $ 0.45
====== ======
(a) Includes restructuring and other charges of $22 million pre-tax, $17
million after-tax or $0.44 per share. Of the charge, $10 million is recorded in
SG&A and the remaining $12 million is in cost of sales. Geographically, $18
million is recorded in North America, $2 million in Europe and $2 million in
Rest of World.
(b) Includes environmental charges of $6 million pre-tax, $5 million after-tax
or $0.12 per share. The entire charge is recorded in cost of sales.
Geographically, $5 million is recorded in Europe and $1 million is in North
America.
(c) Includes costs associated with the renegotiation of senior debt of $2
million pre-tax, $2 million after-tax or $0.05 per share. The entire charge is
recorded in SG&A. Geographically, $1 million is recorded in both North America
and Europe.
(d) Pursuant to EITF Issue No. 00-14, Accounting for Certain Sales Incentives,
some incentives that were previously recorded in SG&A are now classified as a
reduction in revenues. Results for 2000 were reclassified accordingly, with net
sales and SG&A each reduced by $10 million with no impact on income.
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Tenneco Automotive Inc. and Consolidated Subsidiaries
Balance Sheet
(Unaudited)
(Millions)
JUNE 30, 2001 DECEMBER 2000
ACTUAL ACTUAL
------------- -------------
ASSETS
CASH AND TEMPORARY CASH INVESTMENTS 70 35
RECEIVABLES, Net 519 487
INVENTORIES 369 422
OTHER CURRENT ASSETS 178 165
TOTAL CURRENT ASSETS 1,136 1,109
INVESTMENTS AND OTHER ASSETS 768 772
PLANT, PROPERTY, AND EQUIPMENT, NET 941 1,005
------ ------
TOTAL ASSETS $2,845 $2,886
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LIABILITIES AND SHAREOWNERS' EQUITY
SHORT-TERM DEBT 208 92
ACCOUNTS PAYABLE 462 464
ACCRUED TAXES 16 16
ACCRUED INTEREST 31 35
OTHER CURRENT LIABILITIES 198 202
LONG-TERM DEBT 1,382 1,435
DEFERRED INCOME TAXES 133 144
DEFERRED CREDITS AND OTHER LIABILITIES 157 154
MINORITY INTEREST 15 14
TOTAL SHAREOWNERS' EQUITY 243 330
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TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $2,845 $2,886
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DEBT TO CAPITALIZATION RATIO 86.0% 81.6%
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EXTERNAL BASIS
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CASH FLOWS
(Millions)
SIX MONTHS ENDED
JUNE 30,
----------------
2001 2000
----- -----
Operating activities:
Income (loss) from continuing operations $ (29) $ 16
Adjustments to reconcile income (loss) from continuing
operations to net cash provided (used) by
operating activities -
Depreciation and amortization 75 76
Deferred income taxes (23) (2)
(Gain)/loss on sale of businesses and assets, net 3 1
Changes in components of working capital -
(Inc.)/dec. in receivables (61) (106)
(Inc.)/dec. in inventories 28 8
(Inc.)/dec. in prepayments and other current assets (20) (8)
Inc./(dec.) in payables 15 95
Inc./(dec.) in taxes accrued 1 (14)
Inc./(dec.) in interest accrued (4) 3
Inc./(dec.) in other current liabilities 12 (12)
Other 9 (5)
----- -----
Net cash provided (used) by operating activities 6 52
----- -----
Investing activities:
Net proceeds from sale of assets 1 5
Expenditures for plant, property & equipment (47) (67)
Investments and other (2) (6)
----- -----
Net cash provided (used) by investing activities (48) (68)
----- -----
Net Cash provided (used) before financing activities - continuing operations (42) (16)
Financing activities:
Issuance of common and treasury shares 5 9
Proceeds from subsidiary equity issuance - 1
Issuance of long-term debt - 1
Retirement of long-term debt (8) (1)
Net inc./(dec.) in short-term debt excluding current
maturities on long-term debt 76 (19)
Dividends (common) - (4)
----- -----
Net cash provided (used) by financing activities 73 (13)
----- -----
Effect of foreign exchange rate changes on cash and
temporary cash investments 4 (4)
----- -----
Inc./(dec.) in cash and temporary cash investments 35 (33)
Cash and temporary cash investments, January 1 35 84
----- -----
Cash and temporary cash investments, June 30 $ 70 $ 51
===== =====
Cash paid during the period for interest $ 93 $ 91
Cash paid during the period for income taxes $ 19 $ 24