For immediate release
Contacts: Jane Ostrander
Media Relations
847 482-5607
jane.ostrander@tenneco-automotive.com
-------------------------------------
Leslie Hunziker
Investor Relations
847 482-5042
leslie.hunziker@tenneco-automotive.com
--------------------------------------
TENNECO AUTOMOTIVE REPORTS FOURTH QUARTER AND
FULL-YEAR 2001 RESULTS
- - COMPANY REPORTS A NET LOSS OF $8 MILLION, OR 19-CENTS PER DILUTED SHARE
BEFORE RESTRUCTURING CHARGES AND OTHER ITEMS IN THE FOURTH QUARTER
- - STRONGER AFTERMARKET RESULTS HELP COMPANY IMPROVE EBIT 42 PERCENT AND
EBITDA 20 PERCENT ON 10 PERCENT LOWER REVENUES VERSUS FOURTH QUARTER 2000
- - WORKING CAPITAL, BEFORE FACTORING, IMPROVED $162 MILLION IN 2001 OR, AS A
PERCENT OF SALES, FROM 13.3 PERCENT TO 9.2 PERCENT
- - COMPANY TO CLOSE EIGHT FACILITIES AND ELIMINATE 900 POSITIONS THROUGH LEAN
MANUFACTURING AND DISTRIBUTION INITIATIVES GLOBALLY
LAKE FOREST, ILLINOIS, JANUARY 31, 2002 - Tenneco Automotive (NYSE: TEN) today
announced that its fourth quarter 2001 performance improved versus the same
period one year earlier. Before restructuring charges and other items, the
company's EBIT and EBITDA performance grew 42 and 20 percent, respectively, on
10 percent lower revenues, resulting in a 66 percent improvement in earnings per
share compared with fourth quarter 2000. The company reduced its SGA&E costs in
the quarter by $25 million or 21 percent, and improved gross margins by .7
percent to 20.6 percent compared to fourth quarter 2000.
"Our strengthening aftermarket operations in both North America and Europe
helped improve our operating performance and narrow the profitability gap in the
fourth
quarter," said Mark P. Frissora, chairman and CEO of Tenneco Automotive. "This
is particularly significant given the year-over-year volume declines seen across
the industry."
For the full year, the company improved its cash position by reducing its
working capital by $162 million or, as a percent of sales, from 13.3 percent to
9.2 percent. It trimmed its capital expenditures by $19 million to $127 million.
These and other cash management improvements helped the company reduce its
year-end 2001 net indebtedness by $30 million, as compared to the prior
year-end.
"Our progress in reducing our investment in working capital and fixed assets was
very encouraging," Frissora said. "The team's over-performance on cash made a
tremendous difference in this tough market."
FOURTH QUARTER RESULTS
Excluding charges and other items, the company posted a net loss of $8 million,
or 19-cents per diluted share for the fourth quarter 2001, versus a net loss of
$21 million or 56-cents per diluted share, for the same period in 2000.
These fourth quarter 2001 results exclude restructuring charges of $32 million
pre-tax ($31 million after tax), or 81-cents per share; a tax charge of $66
million, or $1.68 per share for repatriating foreign earnings; income of $4
million pre-tax ($2 million after tax), or 6-cents per share, for an adjustment
of environmental reserves related to a charge
taken in the first quarter 2001, and income of $3 million, or 9 cents per share,
for an adjustment in the cost to complete European consolidation activity begun
in 1999. The fourth quarter 2000 results included restructuring and other
charges of $61 million pre-tax ($42 million after tax), or $1.18 per share.
Including these charges and other items, Tenneco Automotive reported a net loss
of $99 million, or $2.53 per diluted share in the fourth quarter 2001, compared
with a net loss of $63 million, or $1.74 per diluted share in the fourth quarter
of 2000.
The company reported revenue for the quarter of $758 million, a 10 percent
decline compared with $843 million in the fourth quarter of 2000. EBITDA for the
quarter, before the previously discussed restructuring charges and other items,
was $65 million, compared with $54 million the previous year, a 20 percent
improvement.
"Clearly, the aggressive steps we have taken to reduce costs and working
capital, improve gross margins and strengthen our customer relationships drove
this progress," Frissora said. "As we maintain our focus on these key areas, we
see significant opportunity to improve our long-term gross margin performance
through the new restructuring efforts we are already implementing."
Tenneco Automotive recorded charges totaling $32 million in the fourth quarter,
primarily related to new restructuring activities it is initiating in North
America and Europe. The company intends to close eight facilities, consolidate
or rearrange and
improve the workflow in 20 others, and move production assets among some of its
plants. These activities are designed to reduce existing over capacity, as well
as improve standardization and efficiency in its global manufacturing,
distribution and logistics operations.
The company expects to substantially complete these actions by the end of the
first quarter of 2003, and anticipates they will generate $11 million in savings
during 2002, and $30 million in annualized savings beginning in 2004.
Up to 900 employees could be impacted by these combined actions in North America
and Europe. The company will carry out all activities, including workforce
reductions, in compliance with all applicable legal and contractual
requirements, including informing and consulting with work councils, union
representatives, and others. The company expects to incur about $15 million of
additional expense during 2002 related to these actions, which could not be
accrued as part of the restructuring reserve. The total cash cost related to
these actions is expected to be approximately $40 million.
"This initiative represents the next step in our ongoing strategy to optimize
our global manufacturing and distribution footprint, and ensure that our
business reflects the changing dynamics of the automotive market," Frissora
said. "We regret the impact it may have on some of our people, but the actions
are necessary to help strengthen our competitiveness and improve our financial
performance over the long term."
Future phases of this initiative, which still need to be finalized, will require
approval by the company's board of directors and will likely require senior
lender approval as well.
The company reported the following geographical results for fourth quarter 2001
before charges and other items:
NORTH AMERICA
North American original equipment revenue decreased 5 percent during the quarter
to $306 million versus $322 million in the fourth quarter of 2000. Excluding
pass-through sales, revenue decreased 11 percent. North American aftermarket
revenue was relatively unchanged versus the previous year at $116 million.
North American EBIT increased to $20 million from $9 million in the fourth
quarter of 2000. Significantly lower SGA&E expenses and improved aftermarket
pricing offset the impact of lower OE revenues. The North American aftermarket
improved its profitability and margins for the third straight quarter in 2001,
posting a 20 percent operating margin improvement versus the fourth quarter
2000.
EUROPE
The company reported European original equipment revenue of $207 million for the
quarter, a 17 percent decrease over fourth quarter 2000 revenue of $249 million.
Excluding pass-through sales, revenue would have decreased 14 percent. European
aftermarket revenue declined 14 percent to $61 million.
European EBIT was breakeven for the quarter, compared with $5 million reported
in the fourth quarter of 2000. The results were driven by lower revenues, which
more than offset SGA&E savings and aftermarket price increases. The European
aftermarket improved its profitability by 53 percent and its margins by six
percent, despite lower revenues.
REST OF WORLD
The company's Australian operations reported revenue of $27 million for the
quarter, down from $29 million reported in the fourth quarter of 2000, primarily
due to the weak Australian dollar and lower aftermarket volumes.
In South America, the company reported revenue of $26 million, compared with
fourth quarter 2000 revenue of $37 million. This decrease was the result of $6
million in currency devaluation and soft original equipment and aftermarket
volumes.
Revenue from the company's Asian operations fell to $15 million from $18 million
in the fourth quarter of 2000, primarily due to original equipment volume
decreases in China.
Combined EBIT for Australia, South America, and Asia increased to $7 million
from $5 million in the fourth quarter 2000. Improved manufacturing efficiency
and reduced SGA&E more than offset lower volumes and currency fluctuations.
FULL YEAR PERFORMANCE
For the full year 2001, Tenneco Automotive reported a net loss of $130 million,
or $3.43 per share, compared with a net loss of $41 million, or $1.18 per share
in 2000. Excluding charges and other items, the company posted a net loss of $18
million or 48-cents per share in 2001, versus income of $4 million or 10-cents
per share in 2000.
Revenues for 2001 were off five percent to $3.36 billion. On an adjusted basis,
2001 revenues were off 10 percent. Before charges and other items, 2001 EBITDA
was $300 million, down 11 percent from $336 million in 2000, and 2001 EBIT
decreased 21 percent to $147 million versus $185 million the previous year.
However, EVA improved $7 million year-over-year driven primarily by significant
working capital improvements.
"Current industry and global economic trends point to yet another challenging
year ahead," Frissora said. "However, we intend to counter these conditions by
remaining aggressively vigilant on the cost side of the business and continuing
to focus on cash flow. We will also look to offset anticipated volume declines
by pursuing new business in our aftermarket business, as well as by continuing
to introduce advanced technology solutions for our OE customers worldwide."
FOURTH QUARTER RESTRUCTURING CHARGES AND OTHER ITEMS
The $32 million restructuring charge recorded in the fourth quarter includes the
following actions:
- - Close 8 facilities and improve efficiency in 20 other facilities by
consolidating and relocating production among plants and rearranging
production flow in other locations. The cost of these actions included in
the restructuring charge is $27 million, which primarily represents
closure, severance, and lease cancellation costs as well as the write down
of assets at the locations to be closed to their realizable value.
- - Complete the rearrangement of one plant in the fourth quarter of 2001 at a
cost of $1 million.
- - Adjust inventory and product strategies in the company's European
aftermarket business. The inventory was written down by $4 million to its
estimated scrap value less cost to sell.
The company adjusted downward by $3 million the expected cost of completing the
consolidation of European distribution centers, an action initiated in 1999. In
addition, the adjustment of environmental reserves related to a first quarter
2001 charge was the result of the company identifying a more cost-effective
environmental remediation technology to use at one of its locations, which
allowed for a $4 million reduction in the expected cost of completing that
remediation.
The $66 million repatriation tax charge will allow the company to manage global
cash resources more effectively, and reduce cash taxes on its foreign entities
in 2002 by approximately $10 million. Because the company has a substantial net
operating loss carryforward in the United States, only between $2 million and $6
million of this charge will be paid in cash.
4Q AND FULL YEAR CONFERENCE CALL INFORMATION
The company will host a conference call on Thursday, January 31, 2002 at 10:30
a.m. EST. The dial-in number is 888 452-9848 domestic or 212 287-1620
international. Passcode is Tenneco Auto. A recording of this call will be
available from 1:00 p.m. EST on January 31 through February 7, 2002. To access
this recording, dial 800 756-0537 domestic or 402 998-0772 international and
enter passcode 8400. The call will also be available on the Tenneco Automotive
web site at www.tenneco-automotive.com
The attachments provide additional information on Tenneco Automotive's fourth
quarter 2001 and full-year operating results.
2002 ANNUAL MEETING SET
The company also announced today that its board of directors has scheduled the
corporation's annual meeting of shareholders for Tuesday, May 14, 2002 at 10:00
a.m. The meeting will be held at the Peabody Hotel, 149 Union Avenue, Memphis,
Tennessee. The record date for shareholders to vote at the meeting is March 22,
2002.
Tenneco Automotive is a $3.4 billion manufacturing company with headquarters in
Lake Forest, Illinois and 21,600 employees worldwide. Tenneco Automotive is one
of the world's largest producers and marketers of ride control and exhaust
systems and products, which are sold under the Monroe(R) and Walker(R) global
brand names. Among its products are Sensa-Trac(R) and Monroe(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 "intends",
"expects", "anticipates", "could", "intend," "will", "remain", 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; and (xiii) the timing and occurrence
(or non-occurrence) of transactions and events which may be subject to
circumstances beyond the control of the company and its subsidiaries. The
company undertakes no obligation to update any forward-looking statement to
reflect events or circumstances after the date of this press release.
###
TENNECO AUTOMOTIVE INC. CONSOLIDATED EARNINGS RESULTS
Unaudited
---------
TWELVE MONTHS ENDED DECEMBER 31,
2001 2000
---------- ----------
Net sales and operating revenues: $ 3,364 $ 3,528 (d)
========== ==========
Costs and Expenses
Cost of Sales (exclusive of depreciation shown below) 2,699 (a)(b) 2,766
Engineering, Research and Development 48 58
Selling, General and Administrative 372 (a)(c) 438 (d)
Depreciation and Amortization 153 151
---------- ----------
Total Costs and Expenses 3,272 3,413
========== ==========
Other Income (Loss) - 5
========== ==========
Operating Income (Loss)
North America 52 (a)(b)(c) 68
Europe 23 (a)(b)(c) 41
Rest of World 17 (a)(b) 11
Other - -
---------- ----------
92 120
Less:
Interest expense (net of
interest capitalized) 170 186
Income tax expense (benefit) 51 (27)
Minority interest 1 2
---------- ----------
Income (loss) from continuing operations (130) (41)
---------- ----------
Extraordinary loss, net of income tax - (1) (e)
---------- ----------
Net income (loss) (130) (42)
========== ==========
Average common shares outstanding:
Basic 37.8 34.7
========== ==========
Diluted 38.0 34.9
========== ==========
Earnings (loss) per share of common stock:
Basic-
Continuing operations $ (3.43) $ (1.18)
Extraordinary loss - (0.02) (e)
---------- ----------
Basic- $ (3.43) $ (1.20)
========== ==========
Diluted-
Continuing operations $ (3.43) $ (1.18)
Extraordinary loss - (0.02) (e)
---------- ----------
Diluted- $ (3.43) $ (1.20)
========== ==========
(a) Includes net restructuring and other charges of $51 million pre-tax, $43
million after-tax or $1.14 per share. Of the charges, $14 million is recorded in
SG&A and the remaining $37 million is in cost of sales. Geographically, $26
million is recorded in North America, $22 million in Europe and $3 million in
Rest of World.
(b) Includes environmental charges of $2 million pre-tax, $2 million after-tax
or $0.04 per share. The entire charge is recorded in cost of sales.
Geographically, $1 million is recorded in both North America and Europe.
(c) Includes costs associated with the renegotiation of senior debt of $2
million pre-tax, $2 million after-tax or $0.04 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 $21 million with no impact on income.
(e) Loss on early retirement of debt.
TENNECO AUTOMOTIVE INC. CONSOLIDATED EARNINGS RESULTS
Unaudited
---------
THREE MONTHS ENDED DECEMBER 31,
2001 2000
----------- -----------
Net sales and operating revenues: $ 758 $ 843 (d)
=========== ===========
Costs and Expenses
Cost of Sales (exclusive of depreciation shown below) 623 (a)(b) 704
Engineering, Research and Development 12 14
Selling, General and Administrative 85 (a) 137 (d)
Depreciation and Amortization 38 35
----------- -----------
Total Costs and Expenses 758 890
=========== ===========
Other Income (Loss) 2 5
=========== ===========
Operating Income (Loss)
North America 12 (35)
Europe (16) (8)
Rest of World 6 1
Other - -
----------- -----------
2 (42)
Less:
Interest expense (net of
interest capitalized) 38 47
Income tax expense (benefit) 63 (c) (26)
Minority interest - -
----------- -----------
Income (loss) from continuing operations (99) (63)
----------- -----------
Extraordinary loss, net of income tax - -
----------- -----------
Net income (loss) (99) (63)
=========== ===========
Average common shares outstanding:
Basic 39.0 35.7
=========== ===========
Diluted 39.2 35.9
=========== ===========
Earnings (loss) per share of common stock:
Basic-
Continuing operations $ (2.53) $ (1.74)
Extraordinary loss - -
----------- -----------
Basic- $ (2.53) $ (1.74)
=========== ===========
Diluted-
Continuing operations $ (2.53) $ (1.74)
Extraordinary loss - -
----------- -----------
Diluted- $ (2.53) $ (1.74)
=========== ===========
(a) Includes net restructuring and other charges of $29 million pre-tax, $28
million after tax or $0.72 per share. Of the charges $4 million is recorded in
SG&A and the remaining $25 million is in cost of sales. Geographically, $8
million is recorded in North America, $20 million in Europe and $1 million in
Rest of World.
(b) Includes income for an adjustment of environmental reserves of $4 million
pre-tax, $2 million after tax or $0.06 per share. The amount is recorded in cost
of sales. Geographically the amount is recorded in Europe.
(c) Includes tax charge for repatriation of earnings from foreign subsidiaries
of $66 million or $1.68 per share.
(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 $6 million with no impact on income.
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
Balance Sheet
(Unaudited)
(Millions)
DECEMBER 31, 2001 DECEMBER 2000
ACTUAL ACTUAL
----------------- -------------
ASSETS
CASH AND TEMPORARY CASH INVESTMENTS $ 53 $ 35
RECEIVABLES, Net 395 487
INVENTORIES 326 422
OTHER CURRENT ASSETS 167 165
INVESTMENTS AND OTHER ASSETS 773 772
PLANT, PROPERTY, AND EQUIPMENT, NET 967 1,005
------ ------
TOTAL ASSETS $2,681 $2,886
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
SHORT-TERM DEBT $ 191 $ 92
ACCOUNTS PAYABLE 401 464
ACCRUED TAXES 35 16
ACCRUED INTEREST 25 35
OTHER CURRENT LIABILITIES 224 202
LONG-TERM DEBT 1,324 1,435
DEFERRED INCOME TAXES 166 144
DEFERRED CREDITS AND OTHER LIABILITIES 226 154
MINORITY INTEREST 15 14
TOTAL SHAREHOLDERS' EQUITY 74 330
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,681 $2,886
====== ======
DEBT TO CAPITALIZATION RATIO 94.5% 81.6%
====== ======
EXTERNAL BASIS
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CASH FLOWS
(Millions)
TWELVE MONTHS ENDED
DECEMBER 31,
-------------------------------------
2001 2000
----------------- ----------------
Operating activities:
Income (loss) from continuing operations $ (130) $ (41)
Adjustments to reconcile income (loss) from continuing
operations to net cash provided (used) by
operating activities -
Depreciation and amortization 153 151
Deferred income taxes 30 (43)
(Gain)/loss on sale of businesses and assets, net 2 (2)
Changes in components of working capital -
(Inc.)/dec. in receivables 64 61
(Inc.)/dec. in inventories 75 (29)
(Inc.)/dec. in prepayments and other current assets (18) (14)
Inc./(dec.) in payables (46) 141
Inc./(dec.) in taxes accrued 2 (4)
Inc./(dec.) in interest accrued (9) 6
Inc./(dec.) in other current liabilities 22 (4)
Other (4) 12
----------------- ----------------
Net cash provided (used) by operating activities 141 234
----------------- ----------------
Investing activities:
Net proceeds from sale of assets 11 26
Expenditures for plant, property & equipment (127) (146)
Acquisition of businesses - (5)
Investments and other (10) (32)
----------------- ----------------
Net cash provided (used) by investing activities (126) (157)
----------------- ----------------
Net Cash provided (used) before financing activities - continuing operations 15 77
Financing activities:
Issuance of common and treasury shares 11 17
Proceeds from subsidiary equity issuance - 1
Issuance of long-term debt - 1
Retirement of long-term debt (57) (107)
Net inc./(dec.) in short-term debt excluding current
maturities on long-term debt 49 (16)
Dividends (common) - (7)
Other - (12)
----------------- ----------------
Net cash provided (used) by financing activities 3 (123)
----------------- ----------------
Effect of foreign exchange rate changes on cash and
temporary cash investments - (3)
----------------- ----------------
Inc./(dec.) in cash and temporary cash investments 18 (49)
Cash and temporary cash investments, January 1 35 84
----------------- ----------------
Cash and temporary cash investments, December 31 $ 53 $ 35
================= ================
Cash paid during the period for interest $ 177 $ 186
Cash paid during the period for income taxes $ 17 $ 18