Exhibit 99.1
For immediate release
Contacts: Jane Ostrander
Media Relations
847 482-5607
jane.ostrander@tenneco-automotive.com
Leslie Cleveland Hague
Investor Relations
847 482-5042
lchague@tenneco-automotive.com
TENNECO AUTOMOTIVE REPORTS BETTER THAN EXPECTED THIRD QUARTER RESULTS
- Company reports a net loss of $2 million, or 6-cents per diluted share, on
reduced revenue of $817 million, beating First Call estimates;
- Company improves liquidity and reduces net debt by $111 million in the third
quarter;
- Working capital improves $152 million year-over-year;
- North American and European aftermarket businesses improve profitability.
LAKE FOREST, ILLINOIS, OCTOBER 24, 2001 - Tenneco Automotive (NYSE: TEN)
reported a net loss of $2 million, or 6-cents per diluted share, for the third
quarter versus net income of $5 million, or 15-cents per diluted share, one year
ago. Despite lower earnings, the company continued to successfully generate cash
and reduced its net debt by $111 million in the quarter. Reductions in working
capital contributed $87 million in cash to the third quarter performance. The
quarter end working capital balance, before factoring, improved $152 million
year-over-year, and as a percent of annual sales improved four percentage points
over last year to 10.7 percent. The company had $92 million in cash and zero
borrowings under its $500 million revolving bank credit facility at the end of
the quarter.
"We are encouraged by our cash performance this quarter, and continued
aftermarket margin improvement, particularly in light of difficult market
conditions," said Mark P. Frissora, chairman and CEO, Tenneco Automotive. "Our
entire organization is focused on generating cash in order to reduce debt, which
is our primary goal. Our success in improving working capital and maintaining
rigorous cost and spending reductions is driving these cash results in a down
market."
Results for the third quarter 2001 include a benefit related to a change in the
effective tax rate, which reduced the net loss by $1 million or 3-cents per
share. Results for the third quarter 2000 included charges for a stock option
buy-back, reversal of a reserve for transaction costs related to the 1999
spin-off of Pactiv, and a charge for early retirement of long-term debt, which
in total reduced income by $4 million, or 8-cents per share. Before these items,
the third quarter 2001 loss was $3 million, or 9-cents per diluted share versus
income of $9 million, or 23-cents per diluted share in the third quarter of
2000.
The company's revenue and profitability continued to be impacted during the
quarter by softening volumes, volatile production rates in the North American
original equipment sector, currency fluctuations, and a slumping global economy.
The company reported revenue for the quarter of $817 million, a 6 percent
decline compared with $865 million in the third quarter of 2000. Adjusted for
pass-through sales for catalytic converters, revenue decreased 11 percent.
EBITDA for the quarter, before previously discussed
items, was $75 million compared with $90 million the previous year, a 17 percent
decline. Currency fluctuations, primarily in North America, lowered the
company's earnings for the quarter by $6 million, or 10-cents per share.
"While we are pleased with our ability to control costs in the short-term, we
are even more encouraged by opportunities we are identifying as longer-term
fundamental changes to our manufacturing, distribution, and supply chain
operations," said Frissora. "We are developing initiatives aimed at addressing
standardization and efficiency issues as well as better aligning our
organization with future market needs. This comprehensive evaluation began
earlier this year and, subject to obtaining the necessary approvals, we expect
to implement a company-wide program over the next four years to optimize our
global distribution and manufacturing footprint."
The company reported the following geographical results:
NORTH AMERICA
North American original equipment revenue decreased 6 percent during the quarter
to $295 million versus $315 million in the third quarter of 2000. Excluding
pass-through sales, revenue decreased 15 percent. North American aftermarket
revenue decreased 3 percent to $145 million from $149 million in the previous
year.
North American EBIT declined to $23 million compared with $29 million in the
third quarter of 2000. SGA&E savings and aftermarket pricing increases were more
than
offset by the negative impact of lower volumes, currency fluctuations in Mexico
and Canada, and expenses associated with launching business with a major new
aftermarket customer. Despite slightly lower revenues, the North American
aftermarket continued to improve its profitability, posting a 90 percent
year-over-year operating margin improvement in the third quarter.
EUROPE
The company reported European original equipment revenue of $221 million for the
quarter, a 2 percent increase over third quarter 2000 revenue of $216 million.
Excluding pass-through sales, revenue decreased 7 percent. European aftermarket
revenue declined 15 percent to $81 million versus $95 million in the third
quarter of 2000.
European EBIT was $9 million for the quarter, compared with $14 million reported
in the third quarter of 2000. The results were driven by lower revenues,
currency devaluation, and higher expenses related to engineering for new
platforms, which more than offset SGA&E savings and aftermarket price increases.
Overall, the European aftermarket improved its earnings year-over-year by 43
percent, and its margins by 68 percent.
REST OF WORLD
The company's Australian operations reported revenue of $27 million for the
quarter, down from $33 million reported in the third quarter of 2000. Revenue
for the quarter would have only decreased by $2 million year-over-year if
currency exchange rates had been the same in the third quarter of 2001 as in the
third quarter of 2000.
In South America, the company reported revenue of $32 million, compared with
third quarter 2000 revenue of $42 million. Currency depreciation caused $8
million of this decrease.
Revenue from the company's Asian operations grew to $16 million from $15 million
in the third quarter of 2000, primarily due to an increase in original equipment
volumes in China.
Combined EBIT for Australia, South America, and Asia was $5 million, compared
with the previous year EBIT for the quarter of $8 million. Currency fluctuations
and overall lower volumes resulted in lower earnings for these regions.
Tenneco Automotive was awarded 25 new original equipment contracts in the
quarter, building on its strong global book of business. The company's ride
control and emission control products were also featured on 26 new vehicles
launched during the third quarter. Among these launches, Tenneco Automotive
supplied the exhaust system for the Ford Thunderbird, exhaust components on the
Nissan Frontier extended bed pick-up truck, and shock absorbers on the Ford FX4
Off-Road truck. In the aftermarket business, growth was highlighted by
completion of the initial ride control shipment for Sears and its 1,051 retail
outlets in North America.
"We continue to strengthen our aftermarket and original equipment businesses for
the long-term. At the same time, we are making progress in restructuring our
operations and controlling costs," Frissora said. "Despite these positive steps,
we remain cautious about the remainder of the year and 2002 due to the
uncertainty in the automotive markets worldwide."
The following exhibits provide additional information on Tenneco Automotive's
third quarter 2001 operating results.
The company will host a conference call on October 25, 2001 at 9:00 a.m. EDT.
The dial in number is 888-390-2955 domestic or 1-712-271-0562 international.
Pass code is Tenneco Auto. A recording of this call will be available from 1:00
p.m. EDT on October 25 through November 1, 2001. To access this recording, dial
800-945-7973 domestic or 402-220-3587 international and enter passcode 8400. The
call will also be available on the Tenneco Automotive web site at
www.tenneco-automotive.com
Tenneco Automotive is a $3.5 billion manufacturing company headquartered in Lake
Forest, Ill., with 23,000 employees worldwide. Tenneco Automotive is one of the
world's largest producers and marketers of ride control and exhaust systems and
products, which are sold under the Monroe(R) and Walker(R) global brand names.
Among its products are Sensa-Trac(R) and Monroe(R) Reflex(TM) shocks and struts,
Rancho(R) shock absorbers, Walker(R) Quiet-Flow(TM) mufflers and DynoMax(TM)
performance exhaust products, and Monroe(R) Clevite(TM) vibration control
components.
This press release contains forward-looking statements. Words such as "believe,"
"continues", "remain", "encouraged", "expects" and similar expressions identify
these forward-looking statements. These forward-looking statements are based on
the current expectations of the company (including its subsidiaries). Because
these forward-looking statements involve risks and uncertainties, the company's
plans, actions and actual results could differ materially. Among the factors
that could cause these plans, actions and results to differ materially from
current expectations are: (i) the general political, economic and competitive
conditions in markets and countries where the company and its subsidiaries
operate, including currency fluctuations and other risks associated with
operating in foreign countries; (ii) governmental actions, including the ability
to receive regulatory approvals and the timing of such approvals; (iii) changes
in capital availability or costs, including increases in the company's costs of
borrowing (i.e., interest rate increases); (iv) changes in automotive
manufacturers' production rates and their actual and forecasted requirements for
the company's products, including the company's resultant inability to realize
the sales represented by its awarded book of business; (v) changes in consumer
demand and prices, including decreases in demand for automobiles which include
the company's products, and the potential negative impact on the company's
revenues and margins from such products; (vi) the cost of compliance with
changes in regulations, including environmental regulations; (vii) workforce
factors such as strikes or labor interruptions; (viii) material substitutions
and increases in the costs of raw materials; (ix) the company's ability to
execute restructuring and other cost reduction plans and to realize anticipated
benefits from these plans; (x) the company's ability to develop and profitably
commercialize new products and technologies, and the acceptance of such new
products and technologies by the company's customers; (xii further changes in
the distribution channels for the company's aftermarket products, and further
consolidations among automotive parts customers and suppliers; (xii) changes by
the Financing Accounting Standards Board or other accounting regulatory bodies
of authoritative generally accepted accounting principles or policies; (xiii)
acts of terrorism or war, and the resultant impact on political, social and
economic conditions; (xiv) the timing and occurrence (or non-occurrence) of
transactions and events which may be subject to circumstances beyond the control
of the company and its subsidiaries. The company undertakes no obligation to
update any forward-looking statement to reflect events or circumstances after
the date of this press release.
TENNECO AUTOMOTIVE INC. CONSOLIDATED EARNINGS RESULTS
Unaudited
THREE MONTHS ENDED SEPTEMBER 30,
2001 2000
----- -----
Net sales and operating revenues: $ 817 $ 865 (a)
----- -----
Costs and Expenses
Cost of Sales (exclusive of depreciation shown below) 638 678
Engineering, Research and Development 11 14
Selling, General and Administrative 91 84 (a)
Depreciation and Amortization 39 40
----- -----
Total Costs and Expenses 779 816
====== =====
Other Income (Loss) (1) (2)
====== =====
Operating Income (Loss)
North America 23 29
Europe 9 14
Rest of World 5 8
Other -- (4)
----- -----
37 47
Less:
Interest expense (net of
interest capitalized) 42 46
Income tax expense (benefit) (3) (5)
Minority interest -- --
----- -----
Income (loss) from continuing operations (2) 6
----- -----
Extraordinary loss, net of income tax -- (1)(b)
----- -----
Net income (loss) (2) 5
====== =====
Average common shares outstanding:
Basic 38.1 35.1
====== =====
Diluted 38.2 35.2
====== =====
Earnings (loss) per share of common stock:
Basic-
Continuing operations $(0.06) $0.17
Extraordinary loss -- (0.01)(b)
------ -----
Basic- $(0.06) $0.16
====== =====
Diluted-
Continuing operations $(0.06) $0.16
Extraordinary loss -- (0.01)(b)
------ -----
Diluted- $(0.06) $0.15
====== =====
(a) Pursuant to EITF Issue No. 00-14, Accounting for Certain Sales Incentives,
some incentives that were previously recorded in SG&A are now classified as a
reduction in revenues. Results for 2000 were reclassified accordingly, with net
sales and SG&A each reduced by $5 million with no impact on income.
(b) Loss on early retirement of debt.
TENNECO AUTOMOTIVE INC. CONSOLIDATED EARNINGS RESULTS
Unaudited
NINE MONTHS ENDED SEPTEMBER 30,
2001 2000
------- -------
Net sales and operating revenues: $ 2,606 $ 2,685(d)
======= =======
Costs and Expenses
Cost of Sales (exclusive of depreciation shown below) 2,076(a)(b) 2,062
Engineering, Research and Development 36 44
Selling, General and Administrative 287(a)(c) 301(d)
Depreciation and Amortization 115 116
------- -------
Total Costs and Expenses 2,514 2,523
======= =======
Other Income (Loss) (2) --
======= =======
Operating Income (Loss)
North America 40(a)(b)(c) 103
Europe 39(a)(b)(c) 48
Rest of World 11(a)(b) 15
Other -- (4)
------- -------
90 162
Less:
Interest expense (net of
interest capitalized) 132 139
Income tax expense (benefit) (12) (1)
Minority interest 1 2
------- -------
Income (loss) from continuing operations (31) 22
------- -------
Extraordinary loss, net of income tax -- (1)(e)
------- -------
Net income (loss) (31) 21
======= =======
Average common shares outstanding:
Basic 37.3 34.4
======= =======
Diluted 37.5 34.6
======= =======
Earnings (loss) per share of common
stock:
Basic-
Continuing operations $ (0.83) $ 0.62
Extraordinary loss -- (0.01)(e)
------- -------
Basic- $ (0.83) $ 0.61
======= =======
Diluted-
Continuing operations $ (0.83) $ 0.61
Extraordinary loss -- (0.01)(e)
------- -------
Diluted- $ (0.83) $ 0.60
======= =======
(a) Includes restructuring and other charges of $22 million pre-tax, $17 million
after-tax or $0.44 per share. Of the charge, $10 million is recorded in SG&A and
the remaining $12 million is in cost of sales. Geographically, $18 million is
recorded in North America, $2 million in Europe and $2 million in Rest of World.
(b) Includes environmental charges of $6 million pre-tax, $5 million after-tax
or $0.12 per share. The entire charge is recorded in cost of sales.
Geographically, $5 million is recorded in Europe and $1 million is in North
America.
(c) Includes costs associated with the renegotiation of senior debt of $2
million pre-tax, $2 million after-tax or $0.05 per share. The entire charge is
recorded in SG&A. Geographically, $1 million is recorded in both North America
and Europe.
(d) Pursuant to EITF Issue No. 00-14, Accounting for Certain Sales Incentives,
some incentives that were previously recorded in SG&A are now classified as a
reduction in revenues. Results for 2000 were reclassified accordingly, with net
sales and SG&A each reduced by $15 million with no impact on income.
(e) Loss on early retirement of debt.
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEET
(Unaudited)
(Millions)
SEPTEMBER 30, 2001 DECEMBER 2000
ACTUAL ACTUAL
------------------ -------------
ASSETS
CASH AND TEMPORARY CASH INVESTMENTS 92 35
RECEIVABLES, Net 461 487
INVENTORIES 354 422
OTHER CURRENT ASSETS 168 165
TOTAL CURRENT ASSETS 1,075 1,109
INVESTMENTS AND OTHER ASSETS 775 772
PLANT, PROPERTY, AND EQUIPMENT, NET 949 1,005
------ ------
TOTAL ASSETS $2,799 $2,886
====== ======
LIABILITIES AND SHAREOWNERS' EQUITY
SHORT-TERM DEBT 142 92
ACCOUNTS PAYABLE 464 464
ACCRUED TAXES 16 16
ACCRUED INTEREST 44 35
OTHER CURRENT LIABILITIES 220 202
LONG-TERM DEBT 1,359 1,435
DEFERRED INCOME TAXES 136 144
DEFERRED CREDITS AND OTHER LIABILITIES 161 154
MINORITY INTEREST 15 14
TOTAL SHAREOWNERS' EQUITY 242 330
------ ------
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $2,799 $2,886
====== ======
DEBT TO CAPITALIZATION RATIO 85.4% 81.6%
====== ======
EXTERNAL BASIS
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CASH FLOWS
(Millions)
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------
2001 2000
------- -------
Operating activities:
Income (loss) from continuing operations $ (31) $ 22
Adjustments to reconcile income (loss) from continuing
operations to net cash provided (used) by
operating activities -
Depreciation and amortization 115 116
Deferred income taxes (28) (15)
(Gain)/loss on sale of businesses and assets, net 4 1
Changes in components of working capital -
(Inc.)/dec. in receivables 5 (44)
(Inc.)/dec. in inventories 52 (11)
(Inc.)/dec. in prepayments and other current assets (9) (15)
Inc./(dec.) in payables 7 123
Inc./(dec.) in taxes accrued 2 7
Inc./(dec.) in interest accrued 10 20
Inc./(dec.) in other current liabilities 6 (5)
Other 16 4
----- -----
Net cash provided (used) by operating activities 149 203
----- -----
Investing activities:
Net proceeds from sale of assets 3 7
Expenditures for plant, property & equipment (74) (108)
Acquisition of businesses -- (5)
Investments and other (10) (15)
----- -----
Net cash provided (used) by investing activities (81) (121)
----- -----
Net Cash provided (used) before financing activities - continuing operations 68 82
Financing activities:
Issuance of common and treasury shares 8 13
Proceeds from subsidiary equity issuance -- 1
Issuance of long-term debt -- 1
Retirement of long-term debt (8) (67)
Net inc./(dec.) in short-term debt excluding current
maturities on long-term debt (13) (25)
Dividends (common) -- (5)
Other -- (11)
----- -----
Net cash provided (used) by financing activities (13) (93)
----- -----
Effect of foreign exchange rate changes on cash and
temporary cash investments 2 (5)
----- -----
Inc./(dec.) in cash and temporary cash investments 57 (16)
Cash and temporary cash investments, January 1 35 84
----- -----
Cash and temporary cash investments, September 30 $ 92 $ 68
===== =====
Cash paid during the period for interest $ 121 $ 125
Cash paid during the period for income taxes $ 10 $ 8