- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

------------------------------------

FORM 10-Q

(Mark One)

<Table>

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2001

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
</Table>

Commission File Number 1-12387

TENNECO AUTOMOTIVE INC.
(Exact name of registrant as specified in its charter)

<Table>

DELAWARE 76-0515284
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)

500 NORTH FIELD DRIVE, LAKE FOREST, ILLINOIS 60045
(Address of principal executive offices) (Zip Code)
</Table>

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (847) 482-5000

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.

Common Stock, par value $.01 per share: 38,254,169 shares as of July 31, 2001.

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2

TABLE OF CONTENTS

<Table>
<Caption>
PAGE
----

PART I--FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Tenneco Automotive Inc. and Consolidated Subsidiaries--
Report of Independent Public Accountants............. 4
Statements of Income (Loss).......................... 5
Balance Sheets....................................... 6
Statements of Cash Flows............................. 7
Statements of Changes in Shareholders' Equity........ 8
Statements of Comprehensive Income (Loss)............ 9
Notes to Financial Statements........................ 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 24
Item 3. Quantitative and Qualitative Disclosures About
Market Risk............................................ 38
PART II--OTHER INFORMATION
Item 1. Legal Proceedings................................. *
Item 2. Changes in Securities and Use of Proceeds......... *
Item 3. Defaults Upon Senior Securities................... *
Item 4. Submission of Matters to a Vote of Security
Holders................................................ 39
Item 5. Other Information................................. *
Item 6. Exhibits and Reports on Form 8-K.................. 39
</Table>

- ---------------
* No response to this item is included herein for the reason that it is
inapplicable or the answer to such item is negative.

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Quarterly Report on Form 10-Q contains forward-looking statements
regarding, among other things, our prospects and business strategies. The words
"will," "believes," "should," "plans," "expects," and "estimates," and similar
expressions (and variations thereof), identify these forward-looking statements.
Although we believe that the expectations reflected in these forward-looking
statements are based on reasonable assumptions, these expectations may not prove
to be correct. Because these forward-looking statements are also subject to
risks and uncertainties, actual results may differ materially from the
expectations expressed in the forward-looking statements. Important factors that
could cause actual results to differ materially from the expectations reflected
in the forward-looking statements include:

- general economic, business and market conditions;

- the impact of consolidation among automotive parts suppliers and
customers on our ability to compete;

- operating hazards associated with our business;

- changes in consumer demand and preferences for automobiles and automotive
parts, as well as changes in automobile manufacturers' actual and
forecasted requirements for our products;

- 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;

- cyclicality of automotive production and sales;

- material substitution;

- labor disruptions at our facilities or at any of our significant
customers or suppliers;

2
3

- economic, exchange rate and political conditions in the foreign 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 realize our business strategy of improving operating
performance;

- capital availability or costs, including changes in interest rates,
market perceptions of the industries in which we operate or ratings of
securities;

- changes by the Financial Accounting Standards Board or the Securities and
Exchange Commission of authoritative generally accepted accounting
principles or policies;

- the impact of changes in and compliance with laws and regulations,
including environmental laws and regulations, and environmental
liabilities in excess of the amount reserved; and

- the occurrence or non-occurrence of circumstances beyond our control.

3
4

PART I.

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO TENNECO AUTOMOTIVE INC.:

We have reviewed the consolidated balance sheet of Tenneco Automotive Inc.
and consolidated subsidiaries as of June 30, 2001, and the related consolidated
statements of income and cash flows for the three and six-month periods ended
June 30, 2001. These financial statements are the responsibility of Tenneco
Automotive Inc.'s management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that
should be made to the consolidated financial statements referred to above for
them to be in conformity with accounting principles generally accepted in the
United States.

ARTHUR ANDERSEN LLP

Chicago, Illinois
July 23, 2001

4
5

TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

STATEMENTS OF INCOME (LOSS)
(UNAUDITED)

<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
2001 2000 2001 2000
---- ---- ---- ----
(MILLIONS EXCEPT SHARE AND PER SHARE AMOUNTS)

REVENUES
Net sales and operating revenues........ $ 925 $ 942 $ 1,789 $ 1,820
----------- ----------- ----------- -----------
COSTS AND EXPENSES
Cost of sales (exclusive of depreciation
shown below)......................... 732 712 1,438 1,384
Engineering, research, and
development.......................... 12 15 25 30
Selling, general, and administrative.... 95 111 196 217
Depreciation and amortization........... 39 37 76 76
----------- ----------- ----------- -----------
878 875 1,735 1,707
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE).................... -- 1 (1) 2
----------- ----------- ----------- -----------
INCOME BEFORE INTEREST EXPENSE, INCOME
TAXES, AND MINORITY INTEREST............ 47 68 53 115
Interest expense (net of interest
capitalized)......................... 43 48 90 93
Income tax expense (benefit)............ 1 5 (9) 4
Minority interest....................... 1 -- 1 2
----------- ----------- ----------- -----------
NET INCOME (LOSS)......................... $ 2 $ 15 $ (29) $ 16
=========== =========== =========== ===========
EARNINGS (LOSS) PER SHARE
Average shares of common stock
outstanding--
Basic................................... 37,396,712 34,358,776 36,994,973 34,064,491
Diluted................................. 37,556,085 34,561,073 37,154,129 34,267,133
Basic earnings (loss) per share of common
stock................................... $ .06 $ .42 $ (.77) $ .45
Diluted earnings (loss) per share of
common stock............................ $ .06 $ .42 $ (.77) $ .45
Cash dividends per share of common
stock................................... $ -- $ .05 $ -- $ .10
</Table>

The accompanying notes to financial statements are an integral part of these
statements of income (loss).
5
6

TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

BALANCE SHEETS
(UNAUDITED)

<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
-------- ------------
(MILLIONS)

ASSETS
Current assets:
Cash and temporary cash investments....................... $ 70 $ 35
Receivables--
Customer notes and accounts, net....................... 494 457
Other.................................................. 25 30
Inventories--
Finished goods......................................... 175 197
Work in process........................................ 84 83
Raw materials.......................................... 71 103
Materials and supplies................................. 39 39
Deferred income taxes..................................... 77 76
Prepayments and other..................................... 101 89
------- -------
1,136 1,109
Other assets:
Long-term notes receivable, net........................... 25 24
Goodwill and intangibles, net............................. 447 463
Deferred income taxes..................................... 111 94
Pension assets............................................ 43 41
Other..................................................... 142 150
------- -------
768 772
------- -------
Plant, property, and equipment, at cost..................... 1,797 1,852
Less--Reserves for depreciation and amortization.......... 856 847
------- -------
941 1,005
------- -------
$ 2,845 $ 2,886
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term
debt).................................................. $ 208 $ 92
Trade payables............................................ 462 464
Accrued taxes............................................. 16 16
Accrued interest.......................................... 31 35
Accrued liabilities....................................... 139 134
Other..................................................... 72 68
------- -------
928 809
------- -------
Long-term debt.............................................. 1,382 1,435
------- -------
Deferred income taxes....................................... 133 144
------- -------
Postretirement benefits..................................... 128 128
------- -------
Deferred credits and other liabilities...................... 30 26
------- -------
Commitments and contingencies
Minority interest........................................... 14 14
------- -------
Shareholders' equity:
Common stock.............................................. -- --
Premium on common stock and other capital surplus......... 2,743 2,738
Accumulated other comprehensive income (loss)............. (315) (239)
Retained earnings (accumulated deficit)................... (1,958) (1,929)
------- -------
470 570
Less--Shares held as treasury stock, at cost.............. 240 240
------- -------
230 330
------- -------
$ 2,845 $ 2,886
======= =======
</Table>

The accompanying notes to financial statements are an integral part of these
balance sheets.
6
7

TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

STATEMENTS OF CASH FLOWS
(UNAUDITED)

<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30,
----------------
2001 2000
---- ----
(MILLIONS)

OPERATING ACTIVITIES
Net income (loss)........................................... $(29) $ 16
Adjustments to reconcile income to cash provided (used) by
operating activities
Depreciation and amortization............................. 76 76
Deferred income taxes..................................... (23) (2)
(Gain) loss on sale of assets, net........................ 3 1
Changes in components of working capital--
(Increase) decrease in receivables..................... (61) (106)
(Increase) decrease in inventories..................... 28 8
(Increase) decrease in prepayments and other current
assets................................................ (20) (8)
Increase (decrease) in payables........................ 15 95
Increase (decrease) in accrued taxes................... 1 (14)
Increase (decrease) in accrued interest................ (4) 3
Increase (decrease) in other current liabilities....... 12 (12)
Other..................................................... 8 (5)
---- -----
Net cash provided (used) by operating activities............ 6 52
---- -----
INVESTING ACTIVITIES
Net proceeds from sale of assets............................ 3 5
Expenditures for plant, property, and equipment............. (47) (67)
Investments and other....................................... (4) (6)
---- -----
Net cash provided (used) by investing activities............ (48) (68)
---- -----
NET CASH PROVIDED (USED) BEFORE FINANCING ACTIVITIES........ (42) (16)
FINANCING ACTIVITIES
Issuance of common and treasury stock....................... 5 9
Proceeds from subsidiary equity issued...................... -- 1
Issuance of long-term debt.................................. -- 1
Retirement of long-term debt................................ (8) (1)
Net increase (decrease) in short-term debt excluding current
maturities of 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)
---- -----
Increase (decrease) in cash and temporary cash
investments............................................... 35 (33)
Cash and temporary cash investments, January 1.............. 35 84
---- -----
Cash and temporary cash investments, June 30 (Note)......... $ 70 $ 51
==== =====
Cash paid during the period for interest.................... $ 93 $ 91
Cash paid during the period for income taxes (net of
refunds).................................................. $ 19 $ 24
</Table>

NOTE: Cash and temporary cash investments include highly liquid investments with
a maturity of three months or less at the date of purchase.

The accompanying notes to financial statements are an integral part of these
statements of cash flows.

7
8

TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)

<Table>
<Caption>
SIX MONTHS ENDED JUNE 30,
----------------------------------------------
2001 2000
--------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
(MILLIONS EXCEPT SHARE AMOUNTS)

COMMON STOCK
Balance January 1.................................. 37,797,256 $ -- 34,970,485 $ --
Issued pursuant to benefit plans................. 1,586,742 -- 1,400,880 --
---------- ------- ---------- -------
Balance June 30.................................... 39,383,998 -- 36,371,365 --
========== ==========
PREMIUM ON COMMON STOCK AND OTHER CAPITAL SURPLUS
Balance January 1.................................. 2,738 2,721
Premium on common stock issued pursuant to
benefit plans................................. 5 9
------- -------
Balance June 30.................................... 2,743 2,730
------- -------
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance January 1.................................. (239) (179)
Other comprehensive income (loss)................ (76) (42)
------- -------
Balance June 30.................................... (315) (221)
------- -------
RETAINED EARNINGS (ACCUMULATED DEFICIT)
Balance January 1.................................. (1,929) (1,880)
Net income (loss)................................ (29) 16
Dividends on common stock........................ -- (4)
------- -------
Balance June 30.................................... (1,958) (1,868)
------- -------
LESS--COMMON STOCK HELD AS TREASURY STOCK, AT COST
Balance January 1.................................. 1,298,498 240 1,298,373 240
Shares issued.................................... 5,670 -- -- --
Shares acquired.................................. -- -- 125 --
---------- ------- ---------- -------
Balance June 30.................................... 1,292,828 240 1,298,498 240
========== ------- ========== -------
Total.............................................. $ 230 $ 401
======= =======
</Table>

The accompanying notes to financial statements are an integral part of these
statements of changes in shareholders' equity.
8
9

TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

<Table>
<Caption>
THREE MONTHS ENDED JUNE 30,
-------------------------------------------------------------
2001 2000
----------------------------- -----------------------------
ACCUMULATED ACCUMULATED
OTHER OTHER
COMPREHENSIVE COMPREHENSIVE COMPREHENSIVE COMPREHENSIVE
INCOME INCOME INCOME INCOME
------------- ------------- ------------- -------------
(MILLIONS)

NET INCOME (LOSS)............................. $ 2 $ 15
----- ----
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
CUMULATIVE TRANSLATION ADJUSTMENT
Balance April 1............................. $(291) $(204)
Translation of foreign currency
statements............................. (9) (9) (14) (14)
----- -----
Balance June 30............................. (300) (218)
----- -----
FAIR VALUE OF INTEREST RATE SWAPS............. (13) (13) -- --
ADDITIONAL MINIMUM PENSION LIABILITY
ADJUSTMENT
Balance April 1 and June 30................. (2) (3)
----- -----
Balance June 30............................... $(315) $(221)
===== ----- ===== ----
Other comprehensive income (loss)............. (22) (14)
----- ----
COMPREHENSIVE INCOME (LOSS)................... $ (20) $ 1
===== ====
</Table>

<Table>
<Caption>
SIX MONTHS ENDED JUNE 30,
-------------------------------------------------------------
2001 2000
----------------------------- -----------------------------
ACCUMULATED ACCUMULATED
OTHER OTHER
COMPREHENSIVE COMPREHENSIVE COMPREHENSIVE COMPREHENSIVE
INCOME INCOME INCOME INCOME
------------- ------------- ------------- -------------
(MILLIONS)

NET INCOME (LOSS)............................. $ (29) $ 16
----- ----
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
CUMULATIVE TRANSLATION ADJUSTMENT
Balance January 1........................... $(237) $(176)
Translation of foreign currency
statements............................. (63) (63) (42) (42)
----- -----
Balance June 30............................. (300) (218)
----- -----
FAIR VALUE OF INTEREST RATE SWAPS............. (13) (13) -- --
ADDITIONAL MINIMUM PENSION LIABILITY
ADJUSTMENT
Balance January 1 and June 30............... (2) (3)
----- -----
Balance June 30............................... $(315) $(221)
===== ----- ===== ----
Other comprehensive income (loss)............. (76) (42)
----- ----
COMPREHENSIVE INCOME (LOSS)................... $(105) $(26)
===== ====
</Table>

The accompanying notes to financial statements are an integral part
of these statements of comprehensive income (loss).
9
10

TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

(1) In our opinion, the accompanying unaudited financial statements contain
all adjustments (consisting of normal recurring adjustments) necessary to
present fairly Tenneco's financial position, results of operations, cash flows,
changes in shareholders' equity, and comprehensive income for the periods
indicated. The unaudited interim consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles.

Our consolidated financial statements include all majority-owned
subsidiaries. We carry investments in 20 percent to 50 percent owned companies
at cost plus equity in undistributed earnings and cumulative translation
adjustments from date of acquisition since we have the ability to exert
significant influence over operating and financial policies.

We have reclassified prior year's financial statements where appropriate to
conform to 2001 presentations.

(2) Over the past several years we have adopted plans to restructure
portions of our operations. These plans were approved by the Board of Directors
and were designed to reduce operational and administrative overhead costs
throughout the business. Charges to income related to these plans are recorded
in the period in which the plans are finalized and approved, while actions
necessary to affect these restructuring plans occur over future periods in
accordance with established plans.

We have substantially completed the restructuring actions related to the
1999 plan. The 1999 plan involved closing a ride control manufacturing facility
and an exhaust plant in Europe, closing or downsizing four European aftermarket
distribution centers, closing a North American exhaust manufacturing facility
plus employee reductions of approximately 780. Over 750 employees have been
terminated under the 1999 plan as of June 30, 2001. One European aftermarket
distribution remains open. We will be substantially complete with these
remaining restructuring activities by the end of 2001.

In the fourth quarter of 2000, our Board of Directors approved a
restructuring plan to further reduce administrative and operational overhead
costs. We recorded a pre-tax charge related to the plan of $46 million, $32
million after tax, or $.92 per diluted common share. Within the statement of
income, $13 million of the pre-tax charge is reflected in cost of sales, while
$33 million is included in selling, general, and administrative expenses. The
charge is comprised of $24 million of severance and related costs for salaried
employment reductions worldwide and $22 million for the reduction of
manufacturing and distribution capacity in response to long-term market trends.
The 2000 plan involved closing a North American aftermarket exhaust distribution
facility and ride control manufacturing plant in our Asian market, as well as
the consolidation of some exhaust manufacturing facilities in Europe. In
addition, the plan involves the elimination of up to 700 positions, including
temporary employees. We wrote down the assets at the locations to be closed to
their fair value, less costs to sell. We estimated the market value of buildings
using external real estate appraisals. As a result of the single purpose nature
of the machinery and equipment to be disposed of, fair value was estimated to be
scrap value less costs to dispose in most cases. We do not expect that cash
proceeds on the sale of these assets will be significant. As of June 30, 2001,
approximately 530 employees have been terminated under the 2000 plan primarily
in North America and Europe in sales, engineering and salaried plant.
Additionally, 57 temporary employees have been terminated. All restructuring
actions are being completed in accordance with our established plan. We expect
to complete all restructuring activities related to this plan by the end of the
first quarter of 2002.

Also in the fourth quarter of 2000, we recorded other charges of $15
million, $10 million after tax, or $.29 per diluted common share. These charges
relate to a strategic decision to reduce some of the aftermarket parts we offer
and to relocation expenses incurred associated with the restructuring plans. The
aftermarket parts were written down to their estimated scrap value less costs to
sell.

10
11
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

In the first quarter of 2001, our Board of Directors approved a
restructuring plan in response to increasingly difficult industry conditions. On
January 31, 2001, we announced plans to eliminate up to 405 salaried positions
worldwide. We recorded pre-tax charges related to the restructuring of $11
million, $8 million after tax, or $.21 per diluted common share. Within the
statement of income, $2 million of the pre-tax charge is reflected in cost of
sales, while $9 million is included in selling, general, and administrative
expenses. These charges are comprised of $8 million for severance and related
costs for salaried employment reductions worldwide and $3 million for costs
related to closing a testing facility in North America. As of June 30, 2001, we
have eliminated about 285 positions in connection with this plan. We also
incurred $3 million for other restructuring related costs and expenses such as
relocation and moving costs that could not be accrued as part of the
restructuring reserve. We estimate that we will complete these restructuring
activities no later than the first quarter 2002. All workforce reductions will
be done in compliance with all legal and contractual requirements including
obligations to consult with worker committees, union representatives and others.

In the second quarter of 2001, our Board of Directors approved a separate
restructuring plan related to closing a North American ride control production
line. We recorded pre-tax charges related to the plan of $8 million, $6 million
after tax, or $.16 per diluted common share. Within the statement of income, the
$8 million charge is included in cost of sales. We wrote down assets to their
fair market value, less costs to sell. As a result of the single purpose nature
of the machinery and equipment to be disposed of, fair value was estimated to be
scrap value less costs to dispose in most cases. We do not expect that cash
proceeds on the sale of these assets will be significant. We expect to complete
all restructuring activities related to this plan by the end of 2001.

Amounts related to activities that are part of the restructuring plans are
as follows:

<Table>
<Caption>
DECEMBER 31, 2000 2001 2001 CHARGED TO IMPACT OF JUNE 30, 2001
RESTRUCTURING RESTRUCTURING CASH ASSET EXCHANGE RESTRUCTURING
RESERVE CHARGES PAYMENTS ACCOUNTS RATES RESERVE
----------------- ------------- -------- ---------- --------- -------------

Severance............... $23 $ 8 $(15) $ -- $ (3) $13
Asset Impairment........ -- 9 -- (8) -- 1
Facility exit costs..... 3 2 -- -- (1) 4
--- --- ---- ---- ---- ---
$26 $19 $(15) $ (8) $ (4) $18
=== === ==== ==== ==== ===
</Table>

In addition to these announced actions, we continue to evaluate additional
cost reduction initiatives for 2001 which would require review and approval by
the Board of Directors and could result in additional restructuring charges.
Also, we currently estimate that we will incur about $4 million of expense
during the remainder of 2001 with respect to restructuring-related costs and
expenses that could not be accrued as part of the restructuring reserve.

(3) We are party to various legal proceedings arising from our operations.
We believe that the outcome of these proceedings, individually and in the
aggregate, will have no material adverse effect on our financial position or
results of operations.

An OE customer has cancelled a platform for which we had a contract to
supply a ride control system. We are currently working with the customer to
recover our investment in development costs and related equipment for this
platform, as well as other related claims. We do not believe this will have a
material adverse effect on our financial position or results of operations.

(4) We and some of our subsidiaries and affiliates are parties to
environmental proceedings. We expense or capitalize, as appropriate,
expenditures for ongoing compliance with environmental regulations that relate
to current operations. We expense expenditures that relate to an existing
condition caused by past operations and

11
12
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

that do not contribute to current or future revenue generation. We record
liabilities when environmental assessments indicate that remedial efforts are
probable and the costs can be reasonably estimated. Estimates of the liability
are based upon currently available facts, existing technology, and presently
enacted laws and regulations taking into consideration the likely effects of
inflation and other societal and economic factors. We consider all available
evidence including prior experience in remediation of contaminated sites, other
companies' cleanup experience and data released by the United States
Environmental Protection Agency or other organizations. These estimated
liabilities are subject to revision in future periods based on actual costs or
new information. Where future cash flows are fixed or reliably determinable, we
have discounted the liabilities. All other environmental liabilities are
recorded at their undiscounted amounts. We evaluate recoveries separately from
the liability and, when they are assured, recoveries are recorded and reported
separately from the associated liability in our financial statements.

As of June 30, 2001, we continue to be designated as a potentially
responsible party in four Superfund sites. We have estimated our share of the
remediation costs for these sites to be approximately $1 million in the
aggregate. In addition to the Superfund sites, we may be obligated to remediate
current or former facilities, and we estimate our share of remediation costs at
these facilities to be approximately $24 million. For both the Superfund sites
and the current and former facilities, we have established reserves that we
believe are adequate for these costs. Although we believe our estimates of
remediation costs are reasonable and are based on the latest available
information, the cleanup costs are estimates and are subject to revision as more
information becomes available about the extent of remediation required. At some
sites, we expect that other parties will contribute to the remediation costs. In
addition, at the Superfund sites, the Comprehensive Environmental Response,
Compensation and Liability Act provides that our liability could be joint and
several, meaning that we could be required to pay in excess of our share of
remediation costs. Our understanding of the financial strength of other
potentially responsible parties has been considered, where appropriate, in our
determination of our estimated liability.

As we previously disclosed, we undertook a third-party evaluation of
estimated environmental remediation costs at one of our facilities beginning in
2000. The evaluation was initiated as a result of testing that indicated the
potential underground migration of some contaminants beyond our facility
property. We have completed and analyzed the results of our evaluation of
off-site contamination migration from that facility and as a result we have
increased the environmental remediation reserve we had for this facility by $5
million through a charge to income in the first quarter 2001. We also increased
our estimate of environmental remediation reserves for three other locations by
a total of $1 million in the first quarter of 2001. Additionally, in the first
quarter of 2001, we reached an agreement with a third party to assume
responsibility for remediation of a location at which we previously shared
responsibility. In exchange, we received cash and a note for a total of $4
million, the estimate of the third party's share of the total remediation
liability. We increased our environmental liability estimate for this location
by $4 million as a result. These amounts are reflected in our estimation of
remediation costs described above. We believe that these potential costs, as
well as the costs associated with our current status as a potentially
responsible party in the Superfund sites, or as a liable party at our current or
former facilities, will not be material to our consolidated financial position
or results of operations.

(5) In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement establishes new
accounting and reporting standards requiring that all derivative instruments,
including derivative instruments embedded in other contracts, be recorded in the
balance sheet as either an asset or liability measured at their fair value. The
statement requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement and requires
that a company must formally document, designate, and assess the effective-
12
13
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

ness of transactions that receive hedge accounting treatment. This statement
cannot be applied retroactively and is effective for all fiscal years beginning
after June 15, 2000. We adopted this statement effective January 1, 2001, and it
did not have a significant impact on our financial position or results of
operations.

In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101,"Revenue Recognition." This SAB
provides guidance on the recognition, presentation, and disclosure of revenue in
the financial statements and is effective no later than the fourth quarter of
fiscal years beginning after December 15, 1999. The SAB draws on the existing
accounting rules and defines the basic criteria that must be met before we can
record revenue. The impact of adopting SAB 101 did not have a significant effect
on our results of operations or financial position.

In May 2000, the FASB's Emerging Issues Task Force ("EITF") reached a
consensus on Issue No. 00-14, Accounting for Certain Sales Incentives. This
issue addresses the recognition, measurement, and income statement
classification of various types of sales incentives, including discounts,
coupons, rebates, and free products. Consequently, beginning January 1, 2001, we
classified some incentives that were previously shown in selling, general, and
administrative expense as a reduction in revenues. As a result of the change,
revenue was $7 million lower for the first six months of 2001, with an
offsetting decline in selling, general, and administrative expenses. We have
restated prior year results for comparability, resulting in a reduction in net
sales of $10 million for the six months ended June 30, 2000, with an offsetting
reduction in selling, general, and administrative expense.

In July 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS
No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. SFAS No. 142 changes the accounting for purchased goodwill
from an amortization method to an impairment-only approach. Therefore
amortization of all purchased goodwill, including amortization of goodwill
recorded in past business combinations, will cease upon adoption of SFAS No.
142. SFAS No. 142 is effective for fiscal years beginning after December 15,
2001. Early adoption of the SFAS No. 142 is not permitted nor is retroactive
application to prior period (interim or annual) financial statements. We are
currently evaluating the effect of this statement on our financial position and
results of operations.

In April 2001, the EITF reached a consensus on Issue No. 00-25, Accounting
for Consideration from a Vendor to a Retailer in Connection with the Purchase or
Promotion of the Vendor's Products. This consensus requires that consideration
provided by a vendor to a purchaser of the vendor's products be recognized as a
reduction of sales, except in those instances where an identifiable and
measurable benefit is or will be received by the vendor from the purchaser.
Issue No. 00-25 requires effective with the fourth quarter of 2001 that certain
expenses that historically have been included in selling, general, and
administrative costs be reclassified as deductions from sales. We do not believe
adopting this statement will have a significant impact on our financial position
or results of operations.

(6) We entered into an agreement during the third quarter of 2000 to sell
an interest in some of our trade accounts receivable to a third party. In 2001,
we recognized a loss of $3 million in the first six months on these sales of
trade accounts, representing the discount from book values at which these
receivables were sold to the third party. The discount rate varies based on
funding cost incurred by the third party. The average rate for the six months
ended June 30, 2001, was 6 percent. We retained ownership of the remaining
interest in the pool of receivables not sold to the third party. We valued this
retained interest based on the recoverable value of the receivable pool, which
approximated book value.

13
14
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

(7) Earnings (loss) per share of common stock outstanding were computed as
follows:

Basic Earnings Per Share--
Net income (loss)....................... $ 2 $ 15 $ (29) $ 16
=========== =========== =========== ===========
Average shares of common stock
outstanding.......................... 37,396,712 34,358,776 36,994,973 34,064,491
=========== =========== =========== ===========
Earnings per average share of common
stock................................ $ .06 $ .42 $ (.77) $ .45
=========== =========== =========== ===========
Diluted Earnings Per Share--
Net income (loss)....................... $ 2 $ 15 $ (29) $ 16
=========== =========== =========== ===========
Average shares of common stock
outstanding.......................... 37,396,712 34,358,776 36,994,973 34,064,491
Effect of dilutive securities:
Restricted stock................... -- 43,302 -- 45,741
Stock options...................... -- -- -- --
Performance shares................. 159,373 158,995 159,156 156,901
----------- ----------- ----------- -----------
Average shares of common stock
outstanding including dilutive
securities........................... 37,556,085 34,561,073 37,154,129 34,267,133
=========== =========== =========== ===========
Earnings (loss) per average share of
common stock......................... $ .06 $ .42 $ (.77) $ .45
=========== =========== =========== ===========
</Table>

(8) We are a global manufacturer with two geographic reportable segments:
North America and Europe. Each segment manufactures and distributes ride control
and emission control products primarily for the automotive industry. We have not
aggregated individual operating segments within these reportable segments. We
evaluate segment performance based primarily on income before interest expense,
income taxes, and minority interest. Products are transferred between segments
and geographic areas on a basis intended to reflect as nearly as possible the
"market value" of the products.

14
15
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

The following table summarizes certain Tenneco segment information:

<Table>
<Caption>
SEGMENT
-----------------------------------------------------------
RECLASS
NORTH AMERICA EUROPE OTHER & ELIMS CONSOLIDATED
------------- ------ ----- ------- ------------
(MILLIONS)

FOR THE THREE MONTHS THEN ENDED JUNE 30, 2001
Revenues from external customers.............. $ 493 $347 $ 85 $ -- $ 925
Intersegment revenues......................... 2 12 2 (16) --
Income before interest, income taxes, and
minority interest........................... 20 22 5 -- 47
FOR THE THREE MONTHS THEN ENDED JUNE 30, 2000
Revenues from external customers.............. $ 533 $322 $ 87 $ -- $ 942
Intersegment revenues......................... 2 10 3 (15) --
Income before interest, income taxes, and
minority interest........................... 40 23 5 -- 68
AT JUNE 30, 2001, AND FOR THE SIX MONTHS THEN
ENDED
Revenues from external customers.............. $ 928 $696 $165 $ -- $1,789
Intersegment revenues......................... 5 23 4 (32) --
Income before interest, income taxes, and
minority interest........................... 17 30 6 -- 53
Total Assets.................................. 1,145 955 690 55 2,845
AT JUNE 30, 2000, AND FOR THE SIX MONTHS THEN
ENDED
Revenues from external customers.............. $1,043 $616 $161 $ -- $1,820
Intersegment revenues......................... 5 19 6 (30) --
Income before interest, income taxes, and
minority interest........................... 74 34 7 -- 115
Total Assets.................................. 1,515 974 535 (36) 2,988
</Table>

(9) Supplemental guarantor condensed financial statements are presented
below:

Basis of Presentation

We issued senior subordinated notes due 2009 as a component of a plan to
realign our debt in connection with the 1999 spin-off of our packaging business.
All of our existing and future material domestic wholly-owned subsidiaries (the
"Guarantor Subsidiaries") fully and unconditionally guarantee the notes on a
joint and several basis. We have not presented separate financial statements and
other disclosures concerning each of the Guarantor Subsidiaries because
management has determined that such information is not material to the holders
of the notes. Therefore, the Guarantor Subsidiaries are combined in the
presentation below.

These condensed consolidating financial statements are presented on the
equity method. Under this method our investments are recorded at cost and
adjusted for our ownership share of a subsidiary's cumulative results of
operations, capital contributions and distributions, and other equity changes.
You should read the condensed consolidating financial statements of the
Guarantor Subsidiaries in connection with our consolidated financial statements
and related notes of which this note is an integral part.

Distributions

There are no significant restrictions on the ability of the Guarantor
Subsidiaries to make distributions to us.

15
16
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

STATEMENT OF INCOME (LOSS)

<Table>
<Caption>
FOR THE THREE MONTHS ENDED JUNE 30, 2001
--------------------------------------------------------------------------
TENNECO
AUTOMOTIVE INC.
GUARANTOR NONGUARANTOR (PARENT RECLASS
SUBSIDIARIES SUBSIDIARIES COMPANY) & ELIMS CONSOLIDATED
------------ ------------ --------------- ------- ------------
(MILLIONS)

REVENUES
Net sales and operating revenues--
External....................... $387 $538 $ -- $ -- $925
Affiliated companies........... 15 14 -- (29) --
---- ---- ---- ---- ----
402 552 -- (29) 925
---- ---- ---- ---- ----
COSTS AND EXPENSES
Cost of sales (exclusive of
depreciation shown below)...... 323 438 -- (29) 732
Engineering, research, and
development.................... 6 6 -- -- 12
Selling, general, and
administrative................. 48 47 -- -- 95
Depreciation and amortization..... 21 18 -- -- 39
---- ---- ---- ---- ----
398 509 -- (29) 878
---- ---- ---- ---- ----
OTHER INCOME (EXPENSE).............. 14 (14) -- -- --
INCOME (LOSS) BEFORE INTEREST
EXPENSE, INCOME TAXES, MINORITY
INTEREST, AND EQUITY IN NET INCOME
OF AFFILIATED COMPANIES........... 18 29 -- -- 47
Interest expense--
External (net of interest
capitalized)................. (1) 2 42 -- 43
Affiliated companies (net of
interest income)............. 27 1 (28) -- --
Income tax expense (benefit)...... (10) 11 (2) 2 1
Minority interest................. -- 1 -- -- 1
---- ---- ---- ---- ----
2 14 (12) (2) 2
Equity in net income (loss) of
affiliated companies........... 15 -- 14 (29) --
---- ---- ---- ---- ----
NET INCOME (LOSS)................... $ 17 $ 14 $ 2 $(31) $ 2
==== ==== ==== ==== ====
</Table>

16
17
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

STATEMENT OF INCOME (LOSS)

<Table>
<Caption>
FOR THE THREE MONTHS ENDED JUNE 30, 2000
----------------------------------------------------------------------
TENNECO
AUTOMOTIVE INC.
GUARANTOR NONGUARANTOR (PARENT RECLASS
SUBSIDIARIES SUBSIDIARIES COMPANY) & ELIMS CONSOLIDATED
------------ ------------ --------------- ------- ------------
(MILLIONS)

REVENUES
Net sales and operating revenues--
External.......................... $433 $509 $ -- $ -- $942
Affiliated companies.............. 19 18 -- (37) --
---- ---- ---- ---- ----
452 527 -- (37) 942
---- ---- ---- ---- ----
COSTS AND EXPENSES
Cost of sales (exclusive of
depreciation shown below)......... 349 400 -- (37) 712
Engineering, research, and
development....................... 6 9 -- -- 15
Selling, general, and
administrative.................... 62 49 -- -- 111
Depreciation and amortization........ 19 18 -- -- 37
---- ---- ---- ---- ----
436 476 -- (37) 875
---- ---- ---- ---- ----
OTHER INCOME (EXPENSE)................. (1) 2 -- -- 1
---- ---- ---- ---- ----
INCOME (LOSS) BEFORE INTEREST EXPENSE,
INCOME TAXES, MINORITY INTEREST, AND
EQUITY IN NET INCOME OF AFFILIATED
COMPANIES............................ 15 53 -- -- 68
Interest expense--
External (net of interest
capitalized).................... 1 3 44 -- 48
Affiliated companies (net of
interest income)................ 26 3 (29) -- --
Income tax expense (benefit)......... 4 13 (8) (4) 5
Minority interest.................... -- -- -- --
---- ---- ---- ---- ----
(16) 34 (7) 4 15
Equity in net income (loss) of
affiliated companies.............. 18 -- 22 (40) --
---- ---- ---- ---- ----
NET INCOME (LOSS)...................... $ 2 $ 34 $ 15 $(36) $ 15
==== ==== ==== ==== ====
</Table>

17
18
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

STATEMENT OF INCOME (LOSS)

<Table>
<Caption>
FOR THE SIX MONTHS ENDED JUNE 30, 2001
----------------------------------------------------------------------
TENNECO
AUTOMOTIVE INC.
GUARANTOR NONGUARANTOR (PARENT RECLASS
SUBSIDIARIES SUBSIDIARIES COMPANY) & ELIMS CONSOLIDATED
------------ ------------ --------------- ------- ------------
(MILLIONS)

REVENUES
Net sales and operating revenues--
External.......................... $714 $1,075 $ -- $ -- $1,789
Affiliated companies.............. 33 28 -- (61) --
---- ------ ---- ---- ------
747 1,103 -- (61) 1,789
---- ------ ---- ---- ------
COSTS AND EXPENSES
Cost of sales (exclusive of
depreciation shown below)......... 609 890 -- (61) 1,438
Engineering, research, and
development....................... 12 13 -- -- 25
Selling, general, and
administrative.................... 109 87 -- -- 196
Depreciation and amortization........ 41 35 -- -- 76
---- ------ ---- ---- ------
771 1,025 -- (61) 1,735
---- ------ ---- ---- ------
OTHER INCOME (EXPENSE)................. 20 (21) -- -- (1)
---- ------ ---- ---- ------
INCOME (LOSS) BEFORE INTEREST EXPENSE,
INCOME TAXES, MINORITY INTEREST, AND
EQUITY IN NET INCOME OF AFFILIATED
COMPANIES............................ (4) 57 -- -- 53
Interest expense--
External (net of interest
capitalized).................... (1) 5 86 -- 90
Affiliated companies (net of
interest income)................ 59 2 (61) -- --
Income tax expense (benefit)......... (21) 21 (2) (7) (9)
Minority interest.................... -- 1 -- -- 1
---- ------ ---- ---- ------
(41) 28 (23) 7 (29)
Equity in net income (loss) of
affiliated companies.............. 23 -- (6) (17) --
---- ------ ---- ---- ------
NET INCOME (LOSS)...................... $(18) $ 28 $(29) $(10) $ (29)
==== ====== ==== ==== ======
</Table>

18
19
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

STATEMENT OF INCOME (LOSS)

<Table>
<Caption>
FOR THE SIX MONTHS ENDED JUNE 30, 2000
----------------------------------------------------------------------
TENNECO
AUTOMOTIVE INC.
GUARANTOR NONGUARANTOR (PARENT RECLASS
SUBSIDIARIES SUBSIDIARIES COMPANY) & ELIMS CONSOLIDATED
------------ ------------ --------------- ------- ------------
(MILLIONS)

REVENUES
Net sales and operating revenues--
External.......................... $852 $ 968 $ -- $ -- $1,820
Affiliated companies.............. 38 37 -- (75) --
---- ------ ---- ---- ------
890 1,005 -- (75) 1,820
---- ------ ---- ---- ------
COSTS AND EXPENSES
Cost of sales (exclusive of
depreciation shown below)......... 682 777 -- (75) 1,384
Engineering, research, and
development....................... 14 16 -- -- 30
Selling, general, and
administrative.................... 120 97 -- -- 217
Depreciation and amortization........ 39 37 -- -- 76
---- ------ ---- ---- ------
855 927 -- (75) 1,707
---- ------ ---- ---- ------
OTHER INCOME (EXPENSE)................. -- 2 -- -- 2
---- ------ ---- ---- ------
INCOME (LOSS) BEFORE INTEREST EXPENSE,
INCOME TAXES, MINORITY INTEREST, AND
EQUITY IN NET INCOME OF AFFILIATED
COMPANIES............................ 35 80 -- -- 115
Interest expense--
External (net of interest
capitalized).................... -- 6 87 -- 93
Affiliated companies (net of
interest income)................ 50 6 (56) -- --
Income tax expense (benefit)......... 1 21 (13) (5) 4
Minority interest.................... -- 2 -- -- 2
---- ------ ---- ---- ------
(16) 45 (18) 5 16
Equity in net income (loss) of
affiliated companies.............. 28 -- 34 (62) --
---- ------ ---- ---- ------
NET INCOME (LOSS)...................... $ 12 $ 45 $ 16 $(57) $ 16
==== ====== ==== ==== ======
</Table>

19
20
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

BALANCE SHEET

<Table>
<Caption>
JUNE 30, 2001
----------------------------------------------------------------------
TENNECO
AUTOMOTIVE INC.
GUARANTOR NONGUARANTOR (PARENT RECLASS
SUBSIDIARIES SUBSIDIARIES COMPANY) & ELIMS CONSOLIDATED
------------ ------------ --------------- ------- ------------
(MILLIONS)

ASSETS

Current assets:
Cash and temporary cash
investments...................... $ 9 $ 61 $ -- $ -- $ 70
Receivables......................... 225 397 20 (123) 519
Inventories......................... 136 233 -- -- 369
Deferred income taxes............... 73 4 116 (116) 77
Prepayments and other............... 39 62 -- -- 101
------ ------ ------ ------- ------
482 757 136 (239) 1,136
------ ------ ------ ------- ------
Other assets:
Investment in affiliated
companies........................ 315 -- 2,198 (2,513) --
Notes and advances receivable from
affiliates....................... 2,373 30 3,378 (5,781) --
Long-term notes receivable, net..... 14 11 -- -- 25
Goodwill and intangibles, net....... 316 131 -- -- 447
Deferred income taxes............... 104 7 22 (22) 111
Pension assets...................... 23 20 -- -- 43
Other............................... 58 56 28 -- 142
------ ------ ------ ------- ------
3,203 255 5,626 (8,316) 768
------ ------ ------ ------- ------
Plant, property, and equipment, at
cost................................ 847 950 -- -- 1,797
Less--Reserves for depreciation and
amortization..................... 442 414 -- -- 856
------ ------ ------ ------- ------
405 536 -- -- 941
------ ------ ------ ------- ------
$4,090 $1,548 $5,762 $(8,555) $2,845
====== ====== ====== ======= ======

LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt (including current
maturities of long-term debt):
Short-term
debt--non-affiliated........ $ -- $ 25 $ 183 $ -- $ 208
Short-term debt--affiliated.... 26 -- 10 (36) --
Trade payables...................... 149 399 -- (86) 462
Accrued taxes....................... 53 31 -- (68) 16
Other............................... 118 95 42 (13) 242
------ ------ ------ ------- ------
346 550 235 (203) 928
Long-term debt--non-affiliated........ -- 15 1,367 -- 1,382
Long-term debt--affiliated............ 1,836 13 3,931 (5,780) --
Deferred income taxes................. 153 50 0 (70) 133
Postretirement benefits and other
liabilities......................... 129 12 (1) 18 158
Commitments and contingencies
Minority interest..................... -- 14 -- -- 14
Shareholders' equity.................. 1,626 894 230 (2,520) 230
------ ------ ------ ------- ------
$4,090 $1,548 $5,762 $(8,555) $2,845
====== ====== ====== ======= ======
</Table>

20
21
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

BALANCE SHEET

<Table>
<Caption>
DECEMBER 31, 2000
----------------------------------------------------------------------
TENNECO
AUTOMOTIVE INC.
GUARANTOR NONGUARANTOR (PARENT RECLASS
SUBSIDIARIES SUBSIDIARIES COMPANY) & ELIMS CONSOLIDATED
------------ ------------ --------------- ------- ------------
(MILLIONS)

ASSETS

Current assets:
Cash and temporary cash
investments....................... $ 8 $ 27 $ -- $ -- $ 35
Receivables.......................... 199 379 21 (112) 487
Inventories.......................... 158 264 -- -- 422
Deferred income taxes................ 73 3 -- -- 76
Prepayments and other................ 36 53 -- -- 89
------ ------ ------ ------- ------
474 726 21 (112) 1,109
------ ------ ------ ------- ------
Other assets:
Investment in affiliated companies... 324 -- 2,306 (2,630) --
Notes and advances receivable from
affiliates........................ 2,343 14 3,469 (5,826) --
Long-term notes receivable, net...... 11 13 -- -- 24
Goodwill and intangibles, net........ 321 142 -- -- 463
Deferred income taxes................ 75 18 22 (21) 94
Pension assets....................... 22 19 -- -- 41
Other................................ 65 60 25 -- 150
------ ------ ------ ------- ------
3,161 266 5,822 (8,477) 772
------ ------ ------ ------- ------
Plant, property, and equipment, at
cost................................. 854 998 -- -- 1,852
Less--Reserves for depreciation and
amortization...................... 423 424 -- -- 847
------ ------ ------ ------- ------
431 574 -- -- 1,005
------ ------ ------ ------- ------
$4,066 $1,566 $5,843 $(8,589) $2,886
====== ====== ====== ======= ======

LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt (including current
maturities of long-term debt):
Short-term
debt--non-affiliated......... $ -- $ 28 $ 64 $ -- 92
Short-term debt--affiliated..... -- 1 10 (11) --
Trade payables....................... 179 393 1 (109) 464
Accrued taxes........................ 26 12 -- (22) 16
Other................................ 109 104 33 (9) 237
------ ------ ------ ------- ------
314 538 108 (151) 809
Long-term debt--non-affiliated......... -- 20 1,415 -- 1,435
Long-term debt--affiliated............. 1,753 4 4,069 (5,826) --
Deferred income taxes.................. 159 63 (78) -- 144
Postretirement benefits and other
liabilities.......................... 126 6 (1) 23 154
Commitments and contingencies
Minority interest...................... -- 14 -- -- 14
Shareholders' equity................... 1,714 921 330 (2,635) 330
------ ------ ------ ------- ------
$4,066 $1,566 $5,843 $(8,589) $2,886
====== ====== ====== ======= ======
</Table>

21
22
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

STATEMENT OF CASH FLOWS

<Table>
<Caption>
SIX MONTHS ENDED JUNE 30, 2001
----------------------------------------------------------------------
TENNECO
AUTOMOTIVE INC.
GUARANTOR NONGUARANTOR (PARENT RECLASS
SUBSIDIARIES SUBSIDIARIES COMPANY) & ELIMS CONSOLIDATED
------------ ------------ --------------- ------- ------------
(MILLIONS)

OPERATING ACTIVITIES
Net cash provided (used) by operating
activities........................... $(104) $114 $ (4) $ -- $ 6
----- ---- ---- ------- ----
INVESTING ACTIVITIES
Net proceeds from sale of assets....... 2 1 -- -- 3
Expenditures for plant, property, and
equipment............................ (12) (35) -- -- (47)
Investments and other.................. (3) (1) -- -- (4)
----- ---- ---- ------- ----
Net cash provided (used) by investing
activities........................... (13) (35) -- -- (48)
----- ---- ---- ------- ----
FINANCING ACTIVITIES
Issuance of common and treasury
stock................................ -- -- 5 -- 5
Retirement of long-term debt........... -- (3) (5) -- (8)
Net increase (decrease) in short-term
debt excluding current maturities of
long-term debt....................... -- -- 76 -- 76
Intercompany dividends and net increase
(decrease) in intercompany
obligations.......................... 118 (46) (72) -- --
Dividends (common)..................... -- -- -- -- --
----- ---- ---- ------- ----
Net cash provided (used) by financing
activities........................... 118 (49) 4 -- 73
----- ---- ---- ------- ----
Effect of foreign exchange rate changes
on cash and temporary cash
investments.......................... -- 4 -- -- 4
----- ---- ---- ------- ----
Increase (decrease) in cash and
temporary cash investments........... 1 34 -- -- 35
Cash and temporary cash investments,
January 1............................ 8 27 -- -- 35
----- ---- ---- ------- ----
Cash and temporary cash investments,
June 30 (Note)....................... $ 9 $ 61 $ -- $ -- $ 70
===== ==== ==== ======= ====
</Table>

NOTE: Cash and temporary cash investments include highly liquid investments with
a maturity of three months or less at the date of purchase.

22
23
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

STATEMENT OF CASH FLOWS

<Table>
<Caption>
SIX MONTHS ENDED JUNE 30, 2000
--------------------------------------------------------------------------
TENNECO
AUTOMOTIVE INC.
GUARANTOR NONGUARANTOR (PARENT RECLASS
SUBSIDIARIES SUBSIDIARIES COMPANY) & ELIMS CONSOLIDATED
------------ ------------ --------------- ------- ------------
(MILLIONS)

OPERATING ACTIVITIES
Net cash provided (used) by
operating activities.............. $ 72 $ 10 $(29) $(1) $ 52
---- ---- ---- --- ----
INVESTING ACTIVITIES
Net proceeds from sale of assets.... 3 2 -- -- 5
Expenditures for plant, property,
and equipment..................... (20) (47) -- -- (67)
Investments and other............... (8) 2 -- -- (6)
---- ---- ---- --- ----
Net cash provided (used) by
investing activities.............. (25) (43) -- -- (68)
---- ---- ---- --- ----
FINANCING ACTIVITIES
Issuance of common and treasury
stock............................. -- -- 9 -- 9
Proceeds from subsidiary equity
issue............................. -- 1 -- -- 1
Issuance of long-term debt.......... -- 1 -- -- 1
Retirement of long-term debt........ -- (1) -- -- (1)
Net increase (decrease) in
short-term debt excluding current
maturities of long-term debt...... -- (19) -- -- (19)
Intercompany dividends and net
increase (decrease) in
intercompany obligations.......... (59) 34 24 1 --
Dividends (common).................. -- -- (4) -- (4)
---- ---- ---- --- ----
Net cash provided (used) by
financing activities.............. (59) 16 29 1 (13)
---- ---- ---- --- ----
Effect of foreign exchange rate
changes on cash and temporary cash
investments....................... -- (4) -- -- (4)
---- ---- ---- --- ----
Increase (decrease) in cash and
temporary cash investments........ (12) (21) -- -- (33)
Cash and temporary cash investments,
January 1......................... 28 56 -- -- 84
---- ---- ---- --- ----
Cash and temporary cash investments,
June 30 (Note).................... $ 16 $ 35 $ -- $-- $ 51
==== ==== ==== === ====
</Table>

NOTE:Cash and temporary cash investments include highly liquid investments with
a maturity of three months or less at the date of purchase.

(The preceding notes are an integral part of the foregoing financial
statements.)

23
24

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS FROM OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2000

NET SALES AND OPERATING REVENUES

<Table>
<Caption>
THREE MONTHS
ENDED
JUNE 30,
------------
2001 2000 CHANGE
---- ---- ------
(MILLIONS)

North America............................................... $493 $533 (8)%
Europe...................................................... 347 322 8%
Rest of World............................................... 85 87 (2)%
---- ----
$925 $942 (2)%
==== ====
</Table>

Results for 2000 have been reclassified for comparability to reflect the
reclassification of certain sales incentives. This reclassification is made in
accordance with the provisions of the FASB's Emerging Issues Task Force May 2000
consensus on Issue No. 00-14, Accounting for Certain Sales Incentives. Effective
January 1, 2001, we changed the way we classify some sales incentives in
accordance with the consensus reached by the EITF. The impact of this
reclassification on second quarter 2000 results was a reduction in net sales of
$6 million with an offsetting reduction in selling, general, and administrative
expense.

Our North American revenues decreased $40 million in the second quarter of
2001 compared to last year's second quarter reflecting lower sales generated
from both the original equipment and aftermarket businesses. OE revenues
declined 6 percent to $350 million in the second quarter of this year due to
significant OE production cut backs in both the light and heavy-duty vehicle
segments as vehicle manufacturers adjusted production levels in the face of a
slowing economy. OE ride control revenues were down 15 percent for the quarter.
OE exhaust revenues declined 2 percent which is attributable to a $26 million
decline in volume partially offset by a $21 million increase in catalytic
converter revenues due to increased cost of precious metals that are passed
through to our customers. Lower ride control volumes, especially in our
heavy-duty elastomer business, resulted in the decline in OE ride control
revenues. Aftermarket revenues for North America were $143 million in the second
quarter of 2001, representing a decline of 10 percent compared to the same
period in the prior year. The North American aftermarket continued to be
severely depressed, affecting industry volumes. Aftermarket exhaust revenues
declined 11 percent in the quarter, while our aftermarket ride control revenues
dropped nearly 9 percent compared to a year ago. The volume decline was
partially offset by price increases implemented in the first quarter and early
second quarter.

Our European segment's revenues increased $25 million in the second quarter
of 2001 compared to last year due primarily to a 22 percent increase in OE
revenues, which were $259 million for the quarter. Contributing to the OE
revenue increase were stronger exhaust volumes in both our new and existing
programs, which added $69 million of additional revenue in the quarter. Of that
increase, $39 million came as a result of rising precious metal prices that we
have passed through to our OE customers. The devaluation of European currencies
compared to the U.S. dollar resulted in a reduction in OE revenues of $22
million in the second quarter of this year. Excluding these currency impacts,
European OE revenues would have increased 32 percent in the second quarter of
2001 compared to the second quarter of 2000. European aftermarket sales were $88
million in the quarter compared to $109 million in the prior year. This 19
percent decline resulted from the continued softness of the aftermarket industry
combined with declining exhaust replacement rates due primarily to the
increasing use of longer lasting stainless steel on OE vehicles. Price increases
that relate to our global aftermarket pricing strategy continued to show
favorable results in the second quarter of 2001 contributing some positive
revenue growth and helping to partially offset the impact from lower volumes.
Negatively impacting European aftermarket revenue was the depreciation of
European currencies, which reduced revenues by $4 million.

Revenues from our operations in the rest of the world, specifically South
America, Australia and Asia, decreased $2 million in the quarter primarily due
to $10 million of negative foreign currency adjustments

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25

impacting the quarter's results. Excluding these currency impacts, total
revenues for the rest of the world would have increased 9 percent compared to
the same quarter last year. The impact of foreign currency was $6 million in
South America and $4 million in Australia. This was offset by strong volume
growth in South America and Asia. The South America volume growth is
attributable to several new OE programs. In Asia, OE volumes increased for the
quarter due to new platforms in production at our exhaust manufacturing facility
in Shanghai.

EARNINGS BEFORE INTEREST EXPENSE, INCOME TAXES, AND MINORITY INTEREST ("EBIT")

We reported EBIT of $47 million for the second quarter of 2001, compared to
$68 million for the same quarter last year. Reported results for 2001 include
restructuring and other charges that have an effect on comparability of EBIT
results between the years. To provide enhanced comparability, we have separately
identified these costs and charges by segment in the following table, and will
discuss our results in the following section using a comparison of "2001
Operating Units Results" to the "2000 Reported Results" for each segment.

<Table>
<Caption>
THREE MONTHS ENDED JUNE 30,
--------------------------------------------------
2001 2000
-------------------------------------- --------
RESTRUCTURING OPERATING
REPORTED AND OTHER UNITS REPORTED
RESULTS CHARGES RESULTS RESULTS CHANGE
-------- ------------- --------- -------- ------
(MILLIONS)

North America................................. $20 $10 $30 $40 (25)%
Europe........................................ 22 -- 22 23 (4)%
Rest of World................................. 5 -- 5 5 --%
--- --- --- ---
$47 $10 $57 $68 (16)%
=== === === ===
</Table>

In the preceding table, amounts reported as restructuring and other charges
for 2001 include $8 million related to the second quarter 2001 restructuring
plan and $2 million for other restructuring related costs and expenses such as
relocation and moving costs that could not be accrued as part of the
restructuring reserve. For further details of these costs see the sections
entitled "Restructuring Charges," and "Liquidity and Capital
Resources--Capitalization" later in this Management's Discussion and Analysis.

EBIT for North American operations declined to $30 million in the second
quarter 2001 from $40 million one year ago as weaker sales volumes in our OE
segment impacted earnings in the second quarter. A drop in both the light and
heavy-duty vehicle production volumes and a decline in the higher margin
elastomer business combined to reduce EBIT for the North American OE business by
$6 million. Further contributing to the decline in EBIT in North American OE
operations were unfavorable pricing impacts and volume related operating
inefficiencies. North American aftermarket EBIT was even year over year. Our
aftermarket business was impacted by aftermarket industry weaknesses, which
resulted in lower volumes and reduced EBIT by $7 million. Lower selling,
general, and administrative expenses; cost savings generated from our
restructuring efforts; and price increases offset the negative impacts on
aftermarket EBIT in the quarter.

Our European segment's EBIT was essentially flat in the second quarter of
2001 versus the prior year. Improved performance in the European OE exhaust
business offset a marginal decline in the OE ride control operations. The OE
exhaust business benefited from higher volumes and lower manufacturing costs.
Our European aftermarket operations had mixed results despite continued
weaknesses in the overall industry, as the aftermarket exhaust business had
improved EBIT this quarter while ride control EBIT declined consistent with the
trends in the industry. Lower selling, general and administrative expenses, cost
savings generated from our restructuring efforts and price increases helped
offset the industry weakness. Foreign currency movements in Europe impacted EBIT
by $2 million in the quarter.

EBIT for the company's operations in the rest of the world was even in the
second quarter of 2001 compared to the same quarter one year ago, despite the
impact of foreign currencies devaluation. The foreign currency impact of $1
million, primarily in our Australian operations, was offset by stronger volumes
in our Asia operations largely due to OE exhaust operations in Shanghai.

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26

EBIT AS A PERCENTAGE OF REVENUE

The following table shows EBIT as a percentage of revenue by segment. The
EBIT percentage for the three months ended June 30, 2001 is calculated after
excluding the "restructuring and other charges" described previously.

<Table>
<Caption>
THREE MONTHS ENDED
JUNE 30,
--------------------
2001 2000
---- ----

North America............................................... 6% 8%
Europe...................................................... 6% 7%
Rest of World............................................... 6% 6%
Total Tenneco Automotive............................. 6% 7%
</Table>

In North America, EBIT as a percentage of revenue decreased by 2 percent.
Production cuts by vehicle manufacturers, declines in higher margin elastomer
sales and pricing pressure from vehicle manufacturers contributed to the lower
margins. Volume related operating inefficiencies and lower aftermarket volumes
added to the decline, despite improvements in selling, general, and
administrative expenses and other costs in our North American operations. In
Europe, EBIT margins declined in the second quarter primarily due to lower
margins in our OE exhaust operations. OE exhaust margins are being impacted by
increased precious metals prices that are passed through to our customers. The
impact of precious metals on sales for the quarter was $39 million. Excluding
the impact of precious metals pricing, Europe's EBIT as a percentage of revenues
would have been flat. Our European aftermarket operations had improved margins
due to price increases, lower selling, general and administrative expenses, and
cost savings generated from our restructuring efforts. EBIT as a percentage of
revenue for the rest of the world was even with the prior year. Excluding the
currency impacts, EBIT margin for the rest of the world would have increased to
8 percent in the second quarter 2001. Stronger volumes and improved mix
contributed to these better margins.

INTEREST EXPENSE, NET OF INTEREST CAPITALIZED

We reported interest expense of $43 million for the quarter ended June 30,
2001, compared to $48 million during the same period in 2000. The decrease in
total interest expense is primarily due to lower interest rates on our variable
rate debt. See more detailed explanations on our debt structure in "Liquidity
and Capital Resources--Capitalization" later in this Management's Discussion and
Analysis.

INCOME TAXES

Income taxes were a $1 million for the quarter ended June 30, 2001,
compared to $5 million for the quarter ended June 30, 2000. The effective tax
rate was 25 percent for each of the second quarters of 2001 and 2000.

EARNINGS PER SHARE

We reported earnings per diluted common share of $.06 for the quarter ended
June 30, 2001, compared to $.42 per diluted common share for the same period in
the prior year. Included in results for the second quarter 2001 is the impact of
a restructuring charge and other restructuring related costs. The negative
effect of these costs on earnings per diluted common share was a reduction of
$.20. You should also read Note 7 in the "Notes to Financial Statements" for
more detailed information on earnings per share.

RESTRUCTURING CHARGES

Over the past several years we have adopted plans to restructure portions
of our operations. These plans were approved by the Board of Directors and were
designed to reduce operational and administrative overhead costs throughout the
business. Charges to income related to these plans are recorded in the period in
which the plans are finalized and approved, while actions necessary to affect
these restructuring plans occur over future periods in accordance with
established plans.

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27

In the first quarter of 2001, our Board of Directors approved a
restructuring plan in response to increasingly difficult industry conditions. On
January 31, 2001, we announced plans to eliminate up to 405 salaried positions
worldwide. We recorded pre-tax charges related to the restructuring of $11
million, $8 million after tax, or $.21 per diluted common share. Within the
statement of income, $2 million of the pre-tax charge is reflected in cost of
sales, while $9 million is included in selling, general, and administrative
expenses. These charges are comprised of $8 million for severance and related
costs for salaried employment reductions worldwide and $3 million for costs
related to closing a testing facility in North America. As of June 30, 2001, we
have eliminated about 285 positions in connection with the 2001 plan. We also
incurred $3 million for other restructuring related costs and expenses such as
relocation and moving costs that could not be accrued as part of the
restructuring reserve. We estimate that we will complete these restructuring
activities no later than the first quarter 2002. All workforce reductions will
be done in compliance with all legal and contractual requirements including
obligations to consult with worker committees, union representatives and others.

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28

Amounts related to activities that are part of the restructuring plans are
as follows:

Severance.............. $23 $ 8 $(15) $-- $(3) $13
Asset Impairment....... -- 9 -- (8) -- 1
Facility exit costs.... 3 2 -- -- (1) 4
--- --- ---- --- --- ---
$26 $19 $(15) $(8) $(4) $18
=== === ==== === === ===
</Table>

CHANGES IN ACCOUNTING PRINCIPLES

In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement establishes new
accounting and reporting standards requiring that all derivative instruments,
including derivative instruments embedded in other contracts, be recorded in the
balance sheet as either an asset or liability measured at its fair value. The
statement requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement and requires
that a company must formally document, designate, and assess the effectiveness
of transactions that receive hedge accounting treatment. This statement cannot
be applied retroactively and is effective for all fiscal years beginning after
June 15, 2000. We adopted this statement effective January 1, 2001 and it did
not have a significant impact on our financial position or results of
operations.

In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition." This SAB
provides guidance on the recognition, presentation, and disclosure of revenue in
the financial statements and is effective no later than the fourth quarter of
fiscal years beginning after December 15, 1999. The SAB draws on the existing
accounting rules and defines the basic criteria that must be met before we can
record revenue. The impact of adopting SAB 101 did not have a significant effect
on our results of operations or financial position.

In May 2000, the FASB's Emerging Issues Task Force ("EITF") reached a
consensus on Issue No. 00-14, Accounting for Certain Sales Incentives. This
issue addresses the recognition, measurement, and income statement
classification of various types of sales incentives, including discounts,
coupons, rebates, and free products. Consequently, beginning January 1, 2001, we
classified some incentives that were previously shown in selling, general, and
administrative expense as a reduction in revenues. As a result of the change,
revenue was $6 million lower for the first six months of 2001, with an
offsetting decline in selling, general, and administrative expenses. We have
restated prior year results for comparability, resulting in a reduction in net
sales of $10 million for the six months ended June 30, 2000, with an offsetting
reduction in selling, general, and administrative expense.

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29

(interim or annual) financial statements. We are currently evaluating the effect
of this statement on our financial position and results of operations.

In April 2001, the EITF reached a consensus on Issue No. 00-25, Accounting
for Consideration from a Vendor to a Retailer in Connection with the Purchase or
Promotion of the Vendor's Products. This consensus requires that consideration
provided by a vendor to a purchaser of the vendor's products be recognized as a
reduction of sales, except in those instances where an identifiable and
measurable benefit is or will be received by the vendor from the purchaser.
Issue No. 00-25 requires effective with the fourth quarter of 2001 that certain
expenses that historically have been included in selling, general and
administrative costs be reclassified as deductions from sales. We do not believe
adopting this statement will have a significant impact on our financial position
or results of operations.

RESULTS FROM OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000

NET SALES AND OPERATING REVENUES

<Table>
<Caption>
SIX MONTHS
ENDED
JUNE 30,
----------------
2001 2000 CHANGE
---- ---- ------
(MILLIONS)

North America............................................... $ 928 $1,043 (11)%
Europe...................................................... 696 616 13%
Rest of World............................................... 165 161 2%
------ ------
$1,789 $1,820 (2)%
====== ======
</Table>

Results for 2000 have been reclassified for comparability to reflect the
reclassification of certain sales incentives. This reclassification is made in
accordance with the provisions of the FASB's Emerging Issues Task Force May 2000
consensus on Issue No. 00-14, Accounting for Certain Sales Incentives. Effective
January 1, 2001, we changed the way we classify some sales incentives in
accordance with the consensus reached by the EITF. The impact of this
reclassification on second quarter 2000 results was a reduction in net sales of
$10 million with an offsetting reduction in selling, general, and administrative
expense.

Our North American revenues decreased $115 million in the first six months
of 2001 compared to the same period in the prior year reflecting lower sales
generated from both our original equipment and aftermarket businesses. OE
revenues declined 11 percent to $674 million in the current year due to
significant OE production cut backs in both the light and heavy-duty vehicle
segments as vehicle manufacturers adjusted production levels in the face of a
slowing economy. OE ride control revenues were down 20% for the first half of
2001. OE exhaust revenues declined 7% which is attributable to the $64 million
decline in volume partially offset by the $35 million increase in catalytic
converter revenues due to increased cost of precious metals that are passed
through to our customers. Lower ride control volumes, especially in our
heavy-duty elastomer business, resulted in the decline in OE ride control
revenues. Aftermarket revenues for North America were $254 million in the first
six months of 2001, representing a decline of 12 percent compared to the same
period in the prior year. The North American aftermarket continued to be
severely depressed, affecting industry volumes. Aftermarket exhaust revenues
declined 13 percent in the first six months, while our aftermarket ride control
revenues dropped 11 percent compared to a year ago. Lower volumes accounted for
$27 million of the reduction in aftermarket revenues, while negative price
adjustments that were initiated during 2000 contributed the majority of the rest
of the decline in revenues. We have implemented price increases on some products
in North America that are beginning to offset the impact of price reductions
implemented in 2000.

Our European segment's revenues increased $80 million in the first six
months of 2001 compared to last year due primarily to a 29 percent increase in
OE revenues, which were $415 million for the six months. Contributing to the OE
revenue increase were stronger exhaust volumes in both our new and existing
programs, which added $153 million of additional revenue in the half. Of that
increase, $71 million came as a result of rising precious metal prices that we
have passed through to our OE exhaust customers. The devaluation of European
currencies compared to the U.S. dollar resulted in a reduction in OE revenues of

29
30

$38 million in the first half of this year. Excluding these currency impacts,
European OE revenues would have increased 38 percent in the first half of 2001
compared to the first half of 2000. European aftermarket sales were $162 million
in the six months of this year compared to $201 million in the prior year. This
19 percent decline resulted from the continued softness of the aftermarket
industry combined with declining exhaust replacement rates due primarily to the
increasing use of longer lasting stainless steel. Price increases that relate to
our global aftermarket pricing strategy provided favorable results in the first
half of 2001 contributing some positive revenue growth and helping to partially
offset the impact from lower volumes. Negatively impacting European aftermarket
revenue growth was the depreciation of European currencies, which reduced
revenues by $10 million.

Revenues from our operations in the rest of the world, specifically South
America, Australia and Asia, decreased $4 million in the quarter primarily due
to $19 million of negative foreign currency adjustments impacting the results
for the first six months. Excluding these currency impacts, total revenues for
the rest of the world would have increased 14 percent compared to the same
period last year. The impact of foreign currency was $10 million in South
America and $9 million in Australia. This was offset by strong volume growth in
South America and Asia. The South America volume growth is attributable to
several new OE programs. In Asia, OE volumes increased for the first six months
due to the new platforms in production at our exhaust manufacturing facility in
Shanghai.

EARNINGS BEFORE INTEREST EXPENSE, INCOME TAXES, AND MINORITY INTEREST ("EBIT")

We reported EBIT of $53 million for the first six months of 2001, compared
to $115 million for the same period last year. Reported results for 2001 include
restructuring and other charges that have an effect on comparability of EBIT
results between the years. To provide enhanced comparability, we have separately
identified these costs and charges by segment in the following table, and will
discuss our results in the following section using a comparison of "2001
Operating Units Results" to the "2000 Reported Results" for each segment.

<Table>
<Caption>
SIX MONTHS ENDED JUNE 30,
--------------------------------------------------
2001 2000
-------------------------------------- --------
RESTRUCTURING OPERATING
REPORTED AND OTHER UNITS REPORTED
RESULTS CHARGES RESULTS RESULTS CHANGE
-------- ------------- --------- -------- ------
(MILLIONS)

North America................................. $17 $19 $36 $ 74 (51)%
Europe........................................ 30 8 38 34 12%
Rest of World................................. 6 3 9 7 29%
--- --- --- ----
$53 $30 $83 $115 (28)%
=== === === ====
</Table>

In the preceding table, amounts reported as restructuring and other charges for
2001 include: $19 million related to the 2001 restructuring plans; $3 million
for other restructuring related costs and expenses such as relocation and moving
costs that could not be accrued as part of the restructuring reserve; $6 million
for environmental remediation activity, principally in Europe; and $2 million
related to costs associated with the amendment of certain terms of our senior
credit facility. For further details of these costs see the sections entitled
"Restructuring Charges," and "Liquidity and Capital Resources--Capitalization"
later in this Management's Discussion and Analysis.

EBIT for North American operations declined to $36 million in the first six
months of 2001 from $74 million one year ago as weaker sales volumes in both our
OE and aftermarket segments impacted our earnings in the first half of 2001. A
drop in both the light and heavy-duty vehicle production volumes and a decline
in the higher margin elastomer business combined to reduce EBIT for the North
American OE business by over $15 million. Further contributing to the decline in
EBIT in North American OE operations were unfavorable pricing impacts, volume
related operating inefficiencies, inventory shrinkage, and foreign currency
impacts. The decline in North American aftermarket EBIT was due to aftermarket
industry weaknesses, which affected volumes and bad debt. Lower volumes resulted
in reduced EBIT of $12 million.

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Lower selling, general, and administrative expenses and cost savings generated
from our restructuring efforts of $15 million partially offset the negative
impacts on aftermarket EBIT in the quarter.

Our European segment's EBIT improved 12 percent to $38 million during the
first six months of 2001 versus the prior year. Improved performance in the
European OE exhaust business was the primary driver of these results. The OE
exhaust business benefited from higher volumes, lower manufacturing costs and
savings from restructuring initiatives. Our European aftermarket operations had
mixed results despite continued weaknesses in the overall industry, as the
aftermarket exhaust business had improved EBIT while ride control EBIT declined
consistent with the trends in the industry. Lower selling, general and
administrative expenses, cost savings generated from our restructuring efforts
and price increases helped offset the industry weakness. Foreign currency
movements in Europe impacted EBIT by $3 million in the first six months.

EBIT for the company's operations in the rest of the world increased by $2
million in the first half of 2001 compared to the same period one year ago,
despite the impact from the devaluation of foreign currencies of $1 million
principally in Australia. The improvement was driven by our Asia and South
America operations. In Asia the improvement in EBIT for the first 6 months was
primarily due to stronger volumes in our OE exhaust operations in Shanghai,
while South American operations improvement was driven by increased volumes in
our aftermarket ride control business.

EBIT AS A PERCENTAGE OF REVENUE

The following table shows EBIT as a percentage of revenue by segment. The
EBIT percentage for the six months ended June 30, 2001 is calculated after
excluding the "restructuring and other charges" described previously.

<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30,
--------------------
2001 2000
---- ----

North America............................................... 4% 7%
Europe...................................................... 5% 6%
Rest of World............................................... 5% 4%
Total Tenneco Automotive............................. 5% 6%
</Table>

In North America, EBIT as a percentage of revenue decreased by 3 percent.
Production cuts by vehicle manufacturers, declines in higher margin elastomer
sales and pricing pressure from vehicle manufacturers contributed to the lower
margins. Volume related operating inefficiencies and lower aftermarket volumes
added to the decline, despite improvements in selling, general, and
administrative expenses and other costs in our North American operations. In
Europe, EBIT margins declined in the first six months primarily due to lower
margins in our OE exhaust operations. OE exhaust margins are being impacted by
increased precious metals prices that are passed through to our customers with
marginal EBIT associated. The impact of precious metals on sales for the first
half of this year was $71 million. Excluding the impact of precious metals
pricing, Europe's EBIT as a percentage of revenues would have been flat.
Significant improvements in OE exhaust operations were offset by costs
associated with the Polish ride control plant start-up, reserves for bad debt,
currency impacts and lower aftermarket volumes. EBIT as a percentage of revenue
for the rest of the world grew in the first half of 2001 despite the impact of
foreign currency devaluation. Excluding the currency impacts, EBIT margin for
the rest of the world would have increased to 6 percent. Stronger volumes and
improved mix contributed to these better margins.

INTEREST EXPENSE, NET OF INTEREST CAPITALIZED

We reported interest expense of $90 million during the six months ended
June 30, 2001, compared to $93 million during the same period in 2000. The
decrease in total interest expense is primarily due to lower interest rates on
our variable rate debt. See more detailed explanations on our debt structure in
"Liquidity and Capital Resources--Capitalization" later in this Management's
Discussion and Analysis.

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32

INCOME TAXES

Income taxes were a $9 million benefit at June 30, 2001. For the same
period in 2000, income taxes were $4 million. The effective tax during the six
months ended June 30, 2001 was 25 percent compared to 18 percent for the same
period in 2000. The prior year effective rate benefitted from a strategic
decision to consolidate all of our Mexican operations into one tax entity,
allowing us to utilize additional tax losses.

EARNINGS PER SHARE

We reported a loss in earnings per diluted common share of $.77 for the six
months ended June 30, 2001 compared to a loss of $.84 per diluted common share
for March 31, 2001. In the six months ended June 30, 2000 earnings per diluted
common share were positive at $.45. Included in results for the first half of
2001 are the impacts from charges related to our restructuring plans,
environmental remediation activities and the costs related to the amendment of
certain terms of the senior credit facility. The cumulative negative effect of
these items on earnings per diluted common share was a reduction of $.60 for the
first half of this year. The majority of the impact was comprised of the
restructuring charges taken in the first and second quarters of 2001 and the
environmental costs which negatively impacted earnings per share by $.44 and
$.12, respectively. You should also read Note 7 in the "Notes to Financial
Statements" for more detailed information on earnings per share.

LIQUIDITY AND CAPITAL RESOURCES

CAPITALIZATION

<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
-------- ------------

Short-term debt and current portion of long-term debt....... $ 208 $ 92
Long-term debt.............................................. 1,382 1,435
------ ------
Total debt.................................................. 1,590 1,527
------ ------
Total minority interest..................................... 14 14
Common shareholders' equity................................. 230 330
------ ------
Total capitalization........................................ $1,834 $1,871
====== ======
</Table>

The company's debt to capitalization ratio was 86 percent at June 30, 2001
and 82 percent as of December 31, 2000. The increase in the ratio was
attributable to higher short-term debt outstanding as well as a decline in
shareholders' equity. The year-to-date decline in shareholders' equity results
from both the translation of foreign balance sheets into U.S. dollars, where the
strength of the dollar resulted in translation adjustments of $63 million, and
our recorded net loss of $29 million.

Short-term debt, which includes the current portion of long-term
obligations and borrowings by foreign subsidiaries as well as our revolving
credit facility, increased by $116 million during the first six months of 2001.
This increase resulted from higher borrowings of $75 million during the first
two quarters under our revolving credit facility and a $41 million increase in
the amount of long-term debt that will mature in one year or less. Total
borrowings outstanding under our revolving credit facility were $87 million as
of June 30, 2001, and $12 million as of December 31, 2000. Long-term debt
includes borrowings under financing arrangements entered into to facilitate the
debt realignment described below, approximately $16 million of debt that was not
retired in the cash tender and exchange offers associated with the 1999 spin-off
of our packaging business and other long term obligations such as capitalized
leases.

As part of the realignment of debt that was required in order to complete
the spin-off of the packaging business in 1999, we entered into a $1.55 billion
committed senior secured financing arrangement with a syndicate of banks and
other financial institutions. The company entered into an agreement to amend
this facility on October 20, 2000 to (i) relax the financial covenant ratios
beginning in the fourth quarter of 2000, (ii) exclude up to $80 million of cash
charges and expenses related to cost reduction initiatives from the calculation
of consolidated earnings before interest, taxes, depreciation and amortization
("EBITDA") for our financial ratios through 2001 and (iii) make certain other
technical changes. In exchange for these

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33

amendments, we agreed to certain interest rate increases, lowered our capital
expenditure limits and paid an aggregate fee of about $3 million.

As a result of significant reductions in North American vehicle production
levels announced by our original equipment customers since the fourth quarter of
last year, as well as an accelerated weakening of the global aftermarket, we
entered into a second amendment of our senior credit facility on March 22, 2001.
The second amendment revised the financial covenant ratios we are required to
maintain for each of the fiscal quarters ending in 2001. The second amendment
also reduced the limitation on 2001 capital expenditures from $225 million to
$150 million, and required that net cash proceeds from all significant,
non-ordinary course asset sales be used to prepay the senior term loans. In
exchange for these amendments, we agreed to a 25 basis point increase in
interest rates on the senior term loans and our revolving credit facility and
paid an aggregate fee of about $3 million to consenting lenders. We incurred
legal, advisory and other costs related to the amendment process of
approximately $2 million. The amendment also provides for the continued
availability of the full amount of the $500 million revolving credit facility.
Excluding the $87 million of outstanding borrowings and $55 million of letters
of credit, we had $358 million available for borrowing under the revolving
credit facility at June 30, 2001. Based on our current projections for 2001, we
believe that we will be able to meet the revised financial covenant ratios and
adhere to the limitation on capital expenditures.

The senior secured credit facility, as amended on March 22, 2001, consists
of: (i) a $500 million revolving credit facility with a final maturity date of
November 4, 2005; (ii) a $406 million term loan with a final maturity date of
November 4, 2005; (iii) a $270 million term loan with a final maturity date of
November 4, 2007; and (iv) a $270 million term loan with a final maturity date
of May 4, 2008. A portion of each term loan is payable in quarterly installments
beginning September 30, 2001. Borrowings under the facility bear interest at an
annual rate equal to, at the borrower's option, either (i) the London Interbank
Offering Rate plus a margin of 325 basis points for the revolving credit
facility and the term loan maturing November 4, 2005, 375 basis points for the
term loan maturing November 4, 2007 and 400 basis points for the term loan
maturing May 4, 2008; or (ii) a rate consisting of the greater of the JP Morgan
Chase prime rate or the Federal Funds rate plus 50 basis points, plus a margin
of 225 basis points for the revolving credit facility and the term loan maturing
November 4, 2005, 275 basis points for the term loan maturing November 4, 2007
and 300 basis points for the term loan maturing May 4, 2008. Under the
provisions of the senior credit facility agreement, the interest margins for
borrowings under the revolving credit facility and the term loan maturing
November 4, 2005 may be adjusted based on the consolidated leverage ratio
(consolidated indebtedness divided by consolidated EBITDA as defined in the
senior credit facility agreement) measured at the end of each quarter.

The amended senior credit facility agreement requires that the company
maintain: (i) a consolidated leverage ratio (consolidated indebtedness divided
by consolidated EBITDA) not greater than 6.00 at the end of the first quarter of
2001 and not greater than 6.25, 6.00 and 5.50 at the end of the second, third
and fourth quarters of 2001, respectively: (ii) a consolidated interest coverage
ratio (consolidated EBITDA divided by consolidated cash interest paid) of at
least 1.40 for the first quarter of 2001 and at least 1.35, 1.40 and 1.55 for
the second, third and fourth quarters of 2001, respectively; and (iii) a fixed
charge coverage ratio (consolidated EBITDA less consolidated capital
expenditures, divided by consolidated cash interest paid) greater than .60 for
the first quarter of 2001 and greater than .55, .65 and .80 for the second,
third and fourth quarters of 2001, respectively. As of June 30, 2001 we were in
compliance with the financial covenant ratios required under the amended senior
credit facility.

The senior credit facility agreement also contains restrictions on our
operations that are customary for similar facilities, including limitations on:
(a) incurring additional liens; (b) sale and leaseback transactions; (c)
liquidations and dissolutions (d) incurring additional indebtedness or
guarantees; (e) capital expenditures; (f) dividends; (g) mergers and
consolidations; and (h) prepayments and modifications of subordinated and other
debt instruments. Compliance with these requirements and restrictions is a
condition for any incremental borrowings under the senior credit facility
agreement and failure to meet these requirements enables the lenders to require
repayment of any outstanding loans. As of June 30, 2001, we were in compliance
with these requirements.

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34

The company's outstanding debt also includes $500 million of 11 5/8 percent
Senior Subordinated Notes due 2009. The senior subordinated debt indenture
requires that we, as a condition to incurring certain types of indebtedness not
otherwise permitted, initially maintain an interest coverage ratio of not less
than 2.00. Under the terms of the indenture, the minimum interest coverage ratio
increases to 2.25 beginning on October 15, 2001. The indenture also contains
restrictions on our operations, including limitations on: (1) incurring
additional indebtedness or liens; (2) dividends; (3) distributions and stock
repurchases; (4) investments; and (5) mergers and consolidations. All of our
existing and future material domestic wholly owned subsidiaries fully and
unconditionally guarantee these notes on a joint and several basis. There are no
significant restrictions on the ability of the subsidiaries that have guaranteed
these notes to make distributions to us.

We believe that cash flows from operations, combined with available
borrowing capacity described above and assuming that we maintain compliance with
the financial covenants and other requirements of our loan agreement, will
generally be sufficient to meet our future capital requirements for the
following year. Our ability to meet the financial covenants in 2001 and beyond
depends upon a number of operational and economic factors, many of which are
beyond our control. Factors that could impact our compliance with the financial
covenants include the rate at which consumers continue to buy new vehicles and
the rate at which they continue to repair vehicles already in service.
Persistently lower North American vehicle production levels, further weakening
in the global aftermarket beyond our expectation, or an unanticipated reduction
in vehicle production levels in Europe, could impact our ability to meet our
financial covenant ratios. In the event that we are unable to meet these revised
financial covenants, we would consider several options to meet our cash flow
needs. These options could include further renegotiations with our senior credit
lenders, additional cost reduction or restructuring initiatives, sales of assets
or capital stock, or other alternatives to enhance our financial and operating
position. In order to maintain compliance with financial covenants in our loan
agreements, we currently believe it will be necessary to further amend them
beyond 2001. Should we be required to do so, we believe we can negotiate these
amendments at a reasonable cost.

DIVIDENDS ON COMMON STOCK

During 2000, the company paid quarterly dividends of $.05 per common share.
These dividend payments totaled $3 million for the six months ended June 30,
2000, and $7 million for the entire year. On January 10, 2001, the Company
announced that the Board of Directors had eliminated the quarterly regular
dividend on the company's common stock. The board took the action in response to
current industry conditions, significantly greater than anticipated production
volume reductions by original equipment manufacturers and continued softness in
the global light vehicle aftermarket.

CASH FLOWS

<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30,
--------------------
2001 2000
---- ----

Cash provided (used) by:
Operating activities...................................... $ 6 $52
Investing activities...................................... (48) (68)
Financing activities...................................... 73 (13)
</Table>

OPERATING ACTIVITIES

For the six months ended June 30, 2001 and June 30, 2000 cash provided from
operating activities represented $6 million and $52 million, respectively. Lower
earnings in the first half of 2001 was a key driver of the decreased cash
provided. This was partially offset by our continued focus on working capital
that allowed us to use $5 million less cash on working capital during the first
six months of 2001 compared with the same period in the prior year. Reduced
accounts receivable and inventory balances plus better management of our
payables made a favorable impact on cash flows in the current period compared to
last year. Working capital, adjusted for receivables that were sold as of June
30, 2001, was $84 million lower than it was as of

34
35

June 30, 2000. During the first six months of this year, we increased the size
of the U.S. receivables securitization program by $3 million and our European
program by $8 million.

INVESTING ACTIVITIES

Cash used for investing activities was $20 million lower for the six months
ended June 30, 2001, compared to the same period a year ago due to lower
expenditures for property, plant and equipment. Capital expenditures were $47
million for the six months ended June 30, 2001, down from $67 million in the
first six months of last year.

FINANCING ACTIVITIES

Cash provided by financing activities was $73 million for the first six
months of 2001 compared to $13 million of cash used for the first six months of
2000. The increase in the first half of this year is attributable to greater
short-term borrowings during the period of $76 million. The first half of 2000
includes a $19 million decrease in short-term debt and $4 million of dividend
payments to our common shareholders.

INTEREST RATE RISK

Our financial instruments that are sensitive to market risk for changes in
interest rates are its debt securities. We primarily uses a revolving credit
facility to finance its short-term capital requirements and pay a current market
rate of interest on these borrowings. Longer-term capital requirements were
financed with long-term obligations with original maturity dates ranging from
six to ten years.

Under the terms of the senior credit facility agreement, we were required
to hedge its exposure to floating interest rates within 180 days following the
1999 spin-off of the packaging business so that at least 50 percent of the
long-term debt would be fixed for a period of at least three years. In February
2000, $250 million of floating rate long-term debt was hedged with three-year,
floating to fixed interest rate swaps. In April 2000, an additional $50 million
of floating rate long-term debt was hedged with three-year, floating to fixed
interest rate swaps. The hedges that were executed fully satisfied the interest
rate-hedging requirement of the senior credit facility agreement. These swaps
are accounted for as cash flow hedges, with changes in value recorded as a
component of accumulated comprehensive income on the balance sheet. As of June
30, 2001, $13 million of deferred net losses on derivative instruments has been
accumulated in other comprehensive income. At June 30, 2001, we had
approximately $816 million in long-term debt obligations that have fixed
interest rates and approximately $566 million in long-term debt obligations that
have variable interest rates based on a current market rate of interest.

We estimate that the fair value of the company's long-term debt at June 30,
2001 was about 71 percent of its book value. A one percentage point increase or
decrease in interest rates would increase or decrease the annual interest
expense that is recognized in the income statement and the cash that is paid for
interest costs by about $9 million, or approximately $5 million on an after-tax
basis.

OUTLOOK

In late fourth quarter 2000, several of the company's major North American
original equipment customers began announcing significant reductions in
scheduled vehicle production levels. Based on these reductions, we anticipate
that the North American original equipment manufacturer build rate for light
vehicles in 2001 will be down from 2000 levels in the range of 10 percent to 12
percent and that weaknesses in the heavy-duty truck market will continue through
2001 and into 2002. While we originally expected that the European original
equipment build rate would be approximately 20 million units, expected weakness
in Europe during the second half of 2001 could lower that build rate. The global
aftermarket exhibited a further weakening of demand for replacement parts during
the latter portion of last year. We anticipate that there will be further
declines in the global aftermarket industry in the range of 6 percent to 10
percent in 2001. In addition, we anticipate continuing negative impacts due in
2001 to the uncertain economic outlook in South America and currency translation
in Europe and Australia.

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36

Based on anticipated vehicle production levels our global original
equipment customer book of business has not changed substantially from the
amounts disclosed in our Form 10-Q for the quarter ended March 31, 2001. When we
refer to our book of business, we mean revenues for original equipment
manufacturer programs that have been formally awarded to us as well as programs
which we are highly confident will result in revenues based on either informal
customer indications consistent with past practices and/or our status as
supplier for the existing program and relationship with the customer. This book
of business is subject to increase or decrease due to changes in customer
requirements, customer and consumer preferences, and the number of vehicles
actually produced by our customers. In addition, it is based on our anticipated
pricing for the applicable program over its life. However, we are under
continuing pricing pressure from our OE customers. See "Cautionary Statement for
Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation
Reform Act of 1995".

EURO CONVERSION

The European Monetary Union resulted in the adoption of a common currency,
the "euro," among eleven European nations. The euro is being adopted over a
three-year transition period beginning January 1, 1999. In October 1997, we
established a cross-functional Euro Committee, comprised of representatives of
the Company's operational divisions as well as its corporate offices. That
Committee had two principal objectives: (1) to determine the impact of the euro
on our business operations, and (2) to recommend and facilitate implementation
of those steps necessary to ensure that the company would be fully prepared for
the euro's introduction. As of January 1, 1999, we implemented those euro
conversion procedures that we had determined to be necessary and prudent to
adopt by that date, and we are on track to becoming fully "euro ready" on or
before the conclusion of the three-year euro transition period. We believe that
the costs associated with transitioning to the euro will not be material to our
financial position or results of operations.

ENVIRONMENTAL AND OTHER MATTERS

We and some of our subsidiaries and affiliates are parties to environmental
proceedings. We expense or capitalize, as appropriate, expenditures for ongoing
compliance with environmental regulations that relate to current operations. We
expense expenditures that relate to an existing condition caused by past
operations and that do not contribute to current or future revenue generation.
We record liabilities when environmental assessments indicate that remedial
efforts are probable and the costs can be reasonably estimated. Estimates of the
liability are based upon currently available facts, existing technology, and
presently enacted laws and regulations taking into consideration the likely
effects of inflation and other societal and economic factors. We consider all
available evidence including prior experience in remediation of contaminated
sites, other companies' cleanup experience and data released by the United
States Environmental Protection Agency or other organizations. These estimated
liabilities are subject to revision in future periods based on actual costs or
new information. Where future cash flows are fixed or reliably determinable, we
have discounted the liabilities. All other environmental liabilities are
recorded at their undiscounted amounts. We evaluate recoveries separately from
the liability and, when they are assured, recoveries are recorded and reported
separately from the associated liability in our financial statements.

As of June 30, 2001, the company continues to be designated as a
potentially responsible party in four Superfund sites. We have estimated our
share of the remediation costs for these sites to be approximately $1 million in
the aggregate. In addition to the Superfund sites, we may have the obligation to
remediate current or former facilities, and we estimate our share of remediation
costs at these facilities to be approximately $24 million. For both the
Superfund sites and the current and former facilities, we have established
reserves that we believe are adequate for these costs. Although we believe our
estimates of remediation costs are reasonable and are based on the latest
available information, the cleanup costs are estimates and are subject to
revision, as more information becomes available about the extent of remediation
required. At some sites, we expect that other parties will contribute to the
remediation costs. In addition, at the Superfund sites, the Comprehensive
Environmental Response, Compensation and Liability Act provides that our
liability could be joint and several, meaning that we could be required to pay
in excess of our share of

36
37

remediation costs. Our understanding of the financial strength of other
potentially responsible parties has been considered, where appropriate, in our
determination of our estimated liability.

As we previously disclosed, we undertook a third-party evaluation of
estimated environmental remediation costs at one of our facilities beginning in
2000. The evaluation was initiated as a result of testing that indicated the
potential underground migration of some contaminants beyond our facility
property. We have completed and analyzed the results of our evaluation of
off-site contamination migration from that facility and as a result we have
increased the environmental remediation reserve we had for this facility by $5
million through a charge to income in the first quarter 2001. We also increased
our estimate of environmental remediation reserves for three other locations by
a total of $1 million in the first quarter of 2001. Additionally, in the first
quarter of 2001 we reached an agreement with a third party to assume
responsibility for remediation of a location at which we previously shared
responsibility. In exchange, we received cash and a note for a total of $4
million, the estimate of the third party's share of the total remediation
liability. We increased our environmental liability estimate for this location
by $4 million as a result. These amounts are reflected in our estimation of
remediation costs described above. We believe that these potential costs, as
well as the costs associated with our current status as a potentially
responsible party in the Superfund sites, or as a liable party at our current or
former facilities, will not be material to our consolidated financial position
or results of operations.

EMPLOYEE STOCK OWNERSHIP PLANS

We have established Employee Stock Ownership Plans (401(k) Plans) for the
benefit of our employees. Under the plans, participants may elect to defer up to
16 percent of their salary through contributions to the plan, which are invested
in selected mutual funds or used to buy our common stock. Through December 31,
2000, the company matched qualified employee contributions of up to 8 percent of
the employee's salary with a contribution matching 100 percent of each
employee's contribution. Beginning January 1, 2001 this match was reduced to 75
percent of each employee's contribution up to 8 percent of the employee's
salary. These matching contributions are made in common stock and vest
immediately. We incurred costs for these matching contributions of approximately
$5 million and $7 million for the six months ended June 30, 2001 and 2000,
respectively.

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38

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For information regarding our exposure to interest rate risk, see the
caption entitled "Interest Rate Risk" in "Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations," which is
incorporated herein by reference.

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39

PART II

OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Incorporated herein by reference to "Item 5. Other Information" in our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2001.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits. The exhibits filed with this report are listed on the Exhibit
Index following the signature page of this report, which is incorporated herein
by reference.

(b) Reports on Form 8-K. We filed the following Current Reports on Form 8-K
during the quarter ended June 30, 2001:

Current Report on Form 8-K dated April 24, 2001, including pursuant to Item 5
certain information pertaining to the results of our operations for the first
quarter 2001.

Current Report on Form 8-K dated May 7, 2001, including pursuant to Item 5
certain information pertaining to the company's expectations regarding the
second quarter 2001 results and its outstanding debt.

Current Report on Form 8-K dated May 15, 2001, reporting pursuant to Item 5
certain information regarding changes in the company's key executive officers.

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40

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934,
Tenneco Automotive Inc. has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.

TENNECO AUTOMOTIVE INC.

By: /s/ MARK A. MCCOLLUM
------------------------------------
Mark A. McCollum
Senior Vice President and
Chief Financial Officer

Dated: August 14, 2001

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41

INDEX TO EXHIBITS
TO
QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED JUNE 30, 2001

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
------- -----------

2 -- None.
3.1(a) -- Restated Certificate of Incorporation of the registrant
dated December 11, 1996 (incorporated herein by reference
from Exhibit 3.1(a) of the registrant's Annual Report on
Form 10-K for the year ended December 31, 1997, File No.
1-12387).
3.1(b) -- Certificate of Amendment, dated December 11, 1996
(incorporated herein by reference from Exhibit 3.1(c) of the
registrant's Annual Report on Form 10-K for the year ended
December 31, 1997, File No. 1-12387).
3.1(c) -- Certificate of Ownership and Merger, dated July 8, 1997
(incorporated herein by reference from Exhibit 3.1(d) of the
registrant's Annual Report on Form 10-K for the year ended
December 31, 1997, File No. 1-12387).
3.1(d) -- Certificate of Designation of Series B Junior Participating
Preferred Stock dated September 9, 1998 (incorporated herein
by reference from Exhibit 3.1(d) of the registrant's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998, File No. 1-12387).
3.1(e) -- Certificate of Elimination of the Series A Participating
Junior Preferred Stock of the registrant dated September 11,
1998 (incorporated herein by reference from Exhibit 3.1(e)
of the registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998, File No. 1-12387).
3.1(f) -- Certificate of Amendment to Restated Certificate of
Incorporation of the registrant dated November 5, 1999
(incorporated herein by reference from Exhibit 3.1(f) of the
registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999, File No. 1-12387).
3.1(g) -- Certificate of Amendment to Restated Certificate of
Incorporation of the registrant dated November 5, 1999
(incorporated herein by reference from Exhibit 3.1(g) of the
registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999, File No. 1-12387).
3.1(h) -- Certificate of Ownership and Merger merging Tenneco
Automotive Merger Sub Inc. with and into the registrant,
dated November 5, 1999 (incorporated herein by reference
from Exhibit 3.1(h) of the registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1999, File No.
1-12387).
3.1(i) -- Certificate of Amendment to Restated Certificate of
Incorporation of the registrant dated May 9, 2000
(incorporated herein by reference from Exhibit 3.1(i) of the
registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2000, File No. 1-12387).
3.2(a) -- By-laws of the registrant, as amended March 14, 2000
(incorporated herein by reference from Exhibit 3.2(a) of the
registrant's Annual Report on Form 10-K for the year ended
December 31, 1999, File No. 1-12387).
3.3 -- Certificate of Incorporation of Tenneco Global Holdings Inc.
("Global"), as amended (incorporated herein by reference to
Exhibit 3.3 to the registrant's Registration Statement on
Form S-4, Reg. No. 333-93757).
3.4 -- By-laws of Global (incorporated herein by reference to
Exhibit 3.4 to the registrant's Registration Statement on
Form S-4, Reg. No. 333-93757).
3.5 -- Certificate of Incorporation of TMC Texas Inc. ("TMC")
(incorporated herein by reference to Exhibit 3.5 to the
registrant's Registration Statement on Form S-4, Reg. No.
333-93757).
3.6 -- By-laws of TMC (incorporated herein by reference to Exhibit
3.6 to the registrant's Registration Statement on Form S-4,
Reg. No. 333-93757).
</Table>

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42

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
------- -----------

3.7 -- Amended and Restate Certificate of Incorporation of Tenneco
International Holding Corp. ("TIHC") (incorporated herein by
reference to Exhibit 3.7 to the registrant's Registration
Statement on Form S-4, Reg. No. 333-93757).
3.8 -- Amended and Restated By-laws of TIHC (incorporated herein by
reference to Exhibit 3.8 to the registrant's Registration
Statement on Form S-4, Reg. No. 333-93757).
3.9 -- Certificate of Incorporation of Clevite Industries Inc.
("Clevite"), as amended (incorporated herein by reference to
Exhibit 3.9 to the registrant's Registration Statement on
Form S-4, Reg. No. 333-93757).
3.10 -- By-laws of Clevite (incorporated herein by reference to
Exhibit 3.10 to the registrant's Registration Statement on
Form S-4, Reg. No. 333-93757).
3.11 -- Amended and Restated Certificate of Incorporation of the
Pullman Company ("Pullman") (incorporated herein by
reference to Exhibit 3.11 to the registrant's Registration
Statement on Form S-4, Reg. No. 333-93757).
3.12 -- By-laws of Pullman (incorporated herein by reference to
Exhibit 3.12 to the registrant's Registration Statement on
Form S-4, Reg. No. 333-93757).
3.13 -- Certificate of Incorporation of Tenneco Automotive Operating
Company Inc. ("Operating") (incorporated herein by reference
to Exhibit 3.13 to the registrant's Registration Statement
on Form S-4, Reg. No. 333-93757).
3.14 -- By-laws of Operating (incorporated herein by reference to
Exhibit 3.14 to the registrant's Registration Statement on
Form S-4, Reg. No. 333-93757).
4.1(a) -- Rights Agreement dated as of September 8, 1998, by and
between the registrant and First Chicago Trust Company of
New York, as Rights Agent (incorporated herein by reference
from Exhibit 4.1 of the registrant's Current Report on Form
8-K dated September 24, 1998, File No. 1-12387).
4.1(b) -- Amendment No. 1 to Rights Agreement, dated March 14, 2000,
by and between the registrant and First Chicago Trust
Company of New York, as Rights Agent (incorporated herein by
reference from Exhibit 4.1(b) of the registrant's Annual
Report on Form 10-K for the year ended December 31, 1999,
File No. 1-12387).
4.1(c) -- Amendment No. 2 to Rights Agreement, dated February 5, 2001,
by and between the registrant and First Union National Bank,
as Rights Agent (incorporated herein by reference from
Exhibit 4.1(b) of the registrant's Post-Effective Amendment
No. 3 dated February 26, 2001, to its Registration Statement
on Form 8-A dated September 17, 1998).
4.2(a) -- Indenture, dated as of November 1, 1996, between the
registrant and The Chase Manhattan Bank, as Trustee
(incorporated herein by reference from Exhibit 4.1 of the
registrant's Registration Statement on Form S-4,
Registration No. 333-14003).
4.2(b) -- First Supplemental Indenture dated as of December 11, 1996
to Indenture dated as of November 1, 1996 between registrant
and The Chase Manhattan Bank, as Trustee (incorporated
herein by reference from Exhibit 4.3(b) of the registrant's
Annual Report on Form 10-K for the year ended December 31,
1996, File No. 1-12387).
4.2(c) -- Second Supplemental Indenture dated as of December 11, 1996
to Indenture dated as of November 1, 1996 between the
registrant and The Chase Manhattan Bank, as Trustee
(incorporated herein by reference from Exhibit 4.3(c) of the
registrant's Annual Report on Form 10-K for the year ended
December 31, 1996, File No. 1-12387).
4.2(d) -- Third Supplemental Indenture dated as of December 11, 1996
to Indenture dated as of November 1, 1996 between the
registrant and The Chase Manhattan Bank, as Trustee
(incorporated herein by reference from Exhibit 4.3(d) of the
registrant's Annual Report on Form 10-K for the year ended
December 31, 1996, File No. 1-12387).
</Table>

42
43

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
------- -----------

4.2(e) -- Fourth Supplemental Indenture dated as of December 11, 1996
to Indenture dated as of November 1, 1996 between the
registrant and The Chase Manhattan Bank, as Trustee
(incorporated herein by reference from Exhibit 4.3(e) of the
registrant's Annual Report on Form 10-K for the year ended
December 31, 1996, File No. 1-12387).
4.2(f) -- Fifth Supplemental Indenture dated as of December 11, 1996
to Indenture dated as of November 1, 1996 between the
registrant and The Chase Manhattan Bank, as Trustee
(incorporated herein by reference from Exhibit 4.3(f) of the
registrant's Annual Report on Form 10-K for the year ended
December 31, 1996, File No. 1-12387).
4.2(g) -- Sixth Supplemental Indenture dated as of December 11, 1996
to Indenture dated as of November 1, 1996 between the
registrant and The Chase Manhattan Bank, as Trustee
(incorporated herein by reference from Exhibit 4.3(g) of the
registrant's Annual Report on Form 10-K for the year ended
December 31, 1996, File No. 1-12387).
4.2(h) -- Seventh Supplemental Indenture dated as of December 11, 1996
to Indenture dated as of November 1, 1996 between the
registrant and The Chase Manhattan Bank, as Trustee
(incorporated herein by reference from Exhibit 4.3(h) of the
registrant's Annual Report on Form 10-K for the year ended
December 31, 1996, File No. 1-12387).
4.2(i) -- Eighth Supplemental Indenture, dated as of April 28, 1997,
to Indenture, dated as of November 1, 1996 between the
registrant and The Chase Manhattan Bank, as Trustee
(incorporated herein by reference from Exhibit 4.1 of the
registrant's Current Report on Form 8-K dated April 23,
1997, File No. 1-12387).
4.2(j) -- Ninth Supplemental Indenture, dated as of April 28, 1997, to
Indenture, dated as of November 1, 1996, between the
registrant and The Chase Manhattan Bank, as Trustee
(incorporated herein by reference from Exhibit 4.2 of the
registrant's Current Report on Form 8-K dated April 23,
1997, File No. 1-12387).
4.2(k) -- Tenth Supplemental Indenture, dated as of July 16, 1997, to
Indenture, dated as of November 1, 1996, between the
registrant and The Chase Manhattan Bank, as Trustee
(incorporated herein by reference from Exhibit 4.1 of the
registrant's Current Report on Form 8-K dated June 11, 1997,
File No. 1-12387).
4.2(l) -- Eleventh Supplemental Indenture, dated October 21, 1999, to
Indenture dated November 1, 1996 between The Chase Manhattan
Bank, as Trustee, and the registrant (incorporated herein by
reference from Exhibit 4.2(l) of the registrant's Annual
Report on Form 10-K for the year ended December 31, 1999,
File No. 1-12387).
4.3 -- Specimen stock certificate for Tenneco Automotive Inc.
common stock (incorporated herein by reference from Exhibit
4.3 of the registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1999, File No. 1-12387).
4.4(a) -- Indenture dated October 14, 1999 by and between the
registrant and The Bank of New York, as trustee
(incorporated herein by reference from Exhibit 4.4(a) of the
registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999, File No. 1-12387).
4.4(b) -- Supplemental Indenture dated November 4, 1999 among Tenneco
Automotive Operating Subsidiary Inc. (formerly Tenneco
Automotive Inc.), Tenneco International Holding Corp.,
Tenneco Global Holdings Inc., the Pullman Company and
Clevite Industries Inc. in favor of The Bank of New York, as
trustee (incorporated herein by reference from Exhibit
4.4(b) of the registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1999, File No. 1-12387).
</Table>

43
44

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
------- -----------

4.4(c) -- Subsidiary Guarantee dated as of October 14, 1999 from
Tenneco Automotive Operating Subsidiary Inc. (formerly
Tenneco Automotive Inc.), Tenneco International Holding
Corp., Tenneco Global Holdings Inc., the Pullman Company,
Clevite Industries Inc. and TMC Texas Inc. in favor of The
Bank of New York, as trustee (incorporated herein by
reference to Exhibit 4.4(c) to the registrant's Registration
Statement on Form S-4, Reg. No. 333-93757).
4.5(a) -- Credit Agreement, dated as of September 30, 1999, among the
registrant, the Lenders named therein, Commerzbank and Bank
of America, N.A., Citicorp USA, Inc. and The Chase Manhattan
Bank (incorporated herein by reference from Exhibit 4.5(a)
of the registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999, File No. 1-12387).
4.5(b) -- First Amendment to the Credit Agreement, dated October 20,
2000, among the registrant, The Chase Manhattan Bank and
Citicorp USA, Inc. (incorporated herein by reference from
Exhibit 4.1 to the registrant's Current Report on Form 8-K
dated October 24, 2000, File No. 1-12387).
4.5(c) -- Second Amendment to Credit Agreement, dated as of March 22,
2001, among the registrant, the lenders party thereto and
The Chase Manhattan Bank (incorporated by reference to
Exhibit 4.1 to the registrant's current report on Form 8-K
dated March 22, 2001, File No. 1-12387).
9 -- None.
10.1 -- Distribution Agreement, dated November 1, 1996, by and among
El Paso Tennessee Pipeline Co. (formerly Tenneco Inc.), the
registrant, and Newport News Shipbuilding Inc. (incorporated
herein by reference from Exhibit 2 of the registrant's Form
10, File No. 1-12387).
10.2 -- Amendment No. 1 to Distribution Agreement, dated as of
December 11, 1996, by and among El Paso Tennessee Pipeline
Co. (formerly Tenneco Inc.), the registrant, and Newport
News Shipbuilding Inc. (incorporated herein by reference
from Exhibit 10.2 of the registrant's Annual Report on Form
10-K for the year ended December 31, 1996, File No.
1-12387).
10.3 -- Debt and Cash Allocation Agreement, dated December 11, 1996,
by and among El Paso Tennessee Pipeline Co. (formerly
Tenneco Inc.), the registrant, and Newport News Shipbuilding
Inc. (incorporated herein by reference from Exhibit 10.3 of
the registrant's Annual Report on Form 10-K for the year
ended December 31, 1996, File No. 1-12387).
10.4 -- Benefits Agreement, dated December 11, 1996, by and among El
Paso Tennessee Pipeline Co. (formerly Tenneco Inc.), the
registrant, and Newport News Shipbuilding Inc. (incorporated
herein by reference from Exhibit 10.4 of the registrant's
Annual Report on Form 10-K for the year ended December 31,
1996, File No. 1-12387).
10.5 -- Insurance Agreement, dated December 11, 1996, by and among
El Paso Tennessee Pipeline Co. (formerly Tenneco Inc.), the
registrant, and Newport News Shipbuilding Inc. (incorporated
herein by reference from Exhibit 10.5 of the registrant's
Annual Report on Form 10-K for the year ended December 31,
1996, File No. 1-12387).
10.6 -- Tax Sharing Agreement, dated December 11, 1996, by and among
El Paso Tennessee Pipeline Co. (formerly Tenneco Inc.),
Newport News Shipbuilding Inc., the registrant, and El Paso
Natural Gas Company (incorporated herein by reference from
Exhibit 10.6 of the registrant's Annual Report on Form 10-K
for the year ended December 31, 1996, File No. 1-12387).
10.7 -- First Amendment to Tax Sharing Agreement, dated as of
December 11, 1996, among El Paso Tennessee Pipeline Co.
(formerly Tenneco Inc.), the registrant and Newport News
Shipbuilding Inc. (incorporated herein by reference from
Exhibit 10.7 of the registrant's Annual Report on Form 10-K
for the year ended December 31, 1996, File No. 1-12387).
</Table>

44
45

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.8 -- Tenneco Automotive Inc. Executive Incentive Compensation
Plan (incorporated herein by reference from Exhibit 10.8 of
the registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999, File No. 1-12387).
10.9 -- Tenneco Automotive Inc. Change of Control Severance Benefits
Plan for Key Executives (incorporated herein by reference
from Exhibit 10.13 of the registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1999, File No.
1-12387).
10.10 -- Tenneco Automotive Inc. Stock Ownership Plan (incorporated
herein by reference from Exhibit 10.10 of the registrant's
Registration Statement on Form S-4, Reg. No. 333-93757).
10.11 -- Tenneco Automotive Inc. Key Executive Pension Plan
(incorporated herein by reference from Exhibit 10.15 of the
registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999, File No. 1-12387).
10.12 -- Tenneco Automotive Inc. Deferred Compensation Plan
(incorporated herein by reference from Exhibit 10.16 of the
registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999, File No. 1-12387).
10.13 -- Tenneco Automotive Inc. Supplemental Executive Retirement
Plan (incorporated herein by reference from Exhibit 10.17 of
the registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999, File No. 1-12387).
10.14 -- Release Agreement dated as of October 18, 1999 by and
between Dana G. Mead and Tenneco Management Company and
Modification of Release Agreement dated as of October 18,
1999 among Dana G. Mead, Tenneco Automotive Inc. and Tenneco
Management Company (incorporated herein by reference from
Exhibit 10.18 of the registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1999, File No.
1-12387).
10.15 -- Release Agreement dated as of September 17, 1999 by and
between Robert T. Blakely and Tenneco Management Company and
Modification of Release Agreement dated as of September 17,
1999 among Robert T. Blakely, Tenneco Automotive Inc. and
Tenneco Management Company (incorporated herein by reference
from Exhibit 10.15 to the registrant's Annual Report on Form
10-K for the year ended December 31, 1999, File No.
1-12387).
10.16 -- Agreement, dated as of April 12, 1999, among the registrant,
Tenneco Management Company, Tenneco Packaging Inc. and Paul
T. Stecko (incorporated herein by reference from Exhibit
10.30 of the registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1999, File No. 1-12387).
10.17 -- Human Resources Agreement by and between Tenneco Automotive
Inc. and Tenneco Packaging Inc. dated November 4, 1999
(incorporated herein by reference to Exhibit 99.1 to the
registrant's Current Report on Form 8-K dated November 4,
1999, File No. 1-12387).
10.18 -- Tax Sharing Agreement by and between Tenneco Automotive Inc.
and Tenneco Packaging Inc. dated November 3, 1999
(incorporated herein by reference to Exhibit 99.2 to the
registrant's Current Report on Form 8-K dated November 4,
1999, File No. 1-12387).
10.19 -- Amended and Restated Transition Services Agreement by and
between Tenneco Automotive Inc. and Tenneco Packaging Inc.
dated as of November 4, 1999 (incorporated herein by
reference from Exhibit 10.21 of the registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1999, File No. 1-12387).
10.20 -- Purchase Agreement among Salomon Smith Barney Inc., the
other Initial Purchasers as named therein and Tenneco Inc.
dated October 8, 1999 (incorporated herein by reference from
Exhibit 10.18 of the registrant's Registration Statement on
Form S-4, Reg. No. 333-93757).
</Table>

45
46

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.21 -- Registration Rights Agreement among Tenneco Inc., the
Guarantors named therein, Salomon Smith Barney Inc. and the
other Initial Purchasers named therein dated October 14,
1999 (incorporated herein by reference from Exhibit 10.19 of
the registrant's Registration Statement on Form S-4, Reg.
No. 333-93757).
10.22 -- Assumption Agreement among Tenneco Automotive Operating
Company Inc., Tenneco International Holding Corp., Tenneco
Global Holdings Inc., The Pullman Company, Clevite
Industries Inc., TMC Texas Inc., Salomon Smith Barney Inc.
and the other Initial Purchasers listed in the Purchase
Agreement dated as of November 4, 1999 (incorporated herein
by reference from Exhibit 10.20 of the registrant's
Registration Statement on Form S-4, Reg. No. 333-93757).
10.23 -- Amendment No. 1 to Change in Control Severance Benefits Plan
for Key Executives (incorporated herein by reference from
Exhibit 10.23 to the registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 2000, File No. 1-12387).
10.24 -- Letter Agreement dated July 27, 2000 between the registrant
and Mark P. Frissora (incorporated herein by reference from
Exhibit 10.24 to the registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 2000, File No. 1-12387).
10.25 -- Letter Agreement dated July 27, 2000 between the registrant
and Mark A. McCollum (incorporated herein by reference from
Exhibit 10.25 to the registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 2000, File No. 1-12387).
10.26 -- Letter Agreement dated July 27, 2000 between the registrant
and Richard P. Schneider (incorporated herein by reference
from Exhibit 10.26 to the registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2000, File No.
1-12387).
10.27 -- Letter Agreement dated July 27, 2000 between the registrant
and Richard P. Sloan (incorporated herein by reference from
Exhibit 10.27 to the registrant's report on Form 10-K for
the year ended December 31, 2000, File No. 1-12387).
10.28 -- Letter Agreement dated July 27, 2000 between the registrant
and Timothy R. Donovan (incorporated herein by reference
from Exhibit 10.28 to the registrant's report on Form 10-K
for the year ended December 31, 2000, File No. 1-12387).
10.29 -- Distribution Agreement by and between the registrant and
Tenneco Packaging Inc. dated November 3, 1999 (incorporated
herein by reference to Exhibit 2 to the registrant's Current
Report on Form 8-K dated November 4, 1999, File No.
1-12387).
11 -- None.
*12 -- Computation of Ratio of Earnings to Fixed Charges.
*15 -- Letter Regarding Unaudited Interim Financial Information.
18 -- None.
19 -- None.
22 -- None.
23 -- None.
24 -- None.
99 -- None.
</Table>

- ------------------------

* Filed herewith