NEWS RELEASE [TENNECO AUTOMOTIVE LOGO]
EXHIBIT 99.1
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
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TENNECO AUTOMOTIVE REPORTS HIGHER EARNINGS AND SUBSTANTIAL DEBT
REDUCTION IN SECOND QUARTER 2002
- - Reports EPS of 45-cents for 2Q 2002 versus 6-cents for 2Q 2001
- - Reduces total debt $86 million on stronger cash flow
- - Improves working capital, before factoring, by $171 million year-over-year
- - Increases North American profitability 76 percent
- - Wins $127 million in new business globally
LAKE FOREST, ILLINOIS, JULY 23, 2002 - Tenneco Automotive (NYSE: TEN) today
announced that the company continues to improve performance with reported net
income of $19 million, or 45-cents per diluted share, for the second quarter
2002 compared with net income of $2 million, or 6-cents per diluted share during
the second quarter 2001. The company generated $89 million in positive cash flow
before financing activities during the quarter, a $72 million cash flow
improvement versus second quarter 2001. This strong cash performance allowed the
company to decrease its total debt by $86 million during the quarter and by $94
million year to date. Global original equipment customers awarded Tenneco
Automotive $127 million in new business through 2005 during the quarter.
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The second quarter 2002 results include a one-time pre-tax benefit of $11
million, or 13-cents per diluted share, for the sale of the company's previously
closed York, U.K. facility and a pre-tax non-accruable restructuring expense of
$2 million, or 2-cents per diluted share. The second quarter 2001 results
include pre-tax restructuring costs of $10 million, or 20-cents per diluted
share.
"We are making solid progress on improving our operating fundamentals as well as
in the important area of cash management. Our cash performance this quarter was
outstanding, which helps us address our top financial objective of lowering the
debt load since becoming an independent company," said Mark P. Frissora,
chairman and CEO, Tenneco Automotive. "Our North American businesses led the way
this quarter, driven by increased volumes, a strengthening aftermarket ride
control mix and improved manufacturing efficiency."
The company reported revenue for the quarter of $948 million, compared with $925
million in the second quarter of 2001, a 2 percent increase. Reported EBITDA for
the quarter was $106 million, compared with $86 million the previous year.
Working capital in the second quarter, before factoring, improved $171 million
year-over-year, or as a percent of sales, from 13.3 percent to 8.8 percent.
Through the first six months of 2002, the company generated $59 million in cash
flow from working capital, exceeding its 2002 goal of $50 million. Adjusted for
restructuring costs, the company recorded gross margin of 21.8 percent in the
second quarter 2002, unchanged from the same period one year ago. Through the
first six months of 2002, the company has improved its gross margin, adjusted
for restructuring costs, by nearly one percentage point. The company's SGA&E, as
a percent of sales, in the second quarter was also unchanged year-over-year at
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11.6 percent. Excluding restructuring costs, SGA&E was relatively flat through
the first half of 2002 as well. The company outperformed its bank covenant test
ratios in the second quarter by an even larger margin than it achieved in the
first quarter of 2002.
"Our financial results were impacted this quarter by lower original equipment
and aftermarket volumes in Europe," said Frissora. "We are taking aggressive
steps to align our operations and cost structure with changing market
conditions. We are focused on putting the right engineering and manufacturing
processes in place to improve efficiency and flexibility throughout our
operations in order to help counter soft industry conditions in Europe."
NORTH AMERICA
North American original equipment (OE) revenue increased 12 percent during the
quarter to $391 million versus $350 million in the second quarter of 2001.
Excluding catalytic converter pass-through sales, revenue increased 9 percent.
North American aftermarket revenue increased four percent to $148 million from
$143 million one year ago.
North American EBIT increased to $53 million from $20 million in the second
quarter of 2001. Stronger OE volumes, an increasing premium aftermarket ride
control mix, aftermarket pricing increases and significantly improved
manufacturing through lean initiatives helped drive this performance. North
American EBIT results include approximately $1 million in incremental new
customer changeover costs year-over-year and $1 million in restructuring costs.
North American EBIT in second quarter 2001 included $10 million in restructuring
costs. Excluding restructuring costs, the company's North American profitability
improved 76 percent year-over-year.
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EUROPE
The company reported European original equipment revenue of $231 million for the
quarter, an 11 percent decrease compared with second quarter 2001 revenue of
$259 million. The favorable impact on sales of stronger currency was fully
offset by lower precious metal prices in the company's catalytic converter
pass-through sales. The company's European aftermarket revenue increased to $90
million, versus $88 million one year ago. Excluding the impact of currency,
aftermarket sales were down 6 percent year-over-year, primarily due to the
impact of longer-lasting stainless steel OE exhaust products.
European EBIT was $11 million for the quarter, compared with $22 million
reported in the second quarter of 2001. Lower OE and aftermarket volumes, OE
launch delays and costly start-up issues on some exhaust platforms impacted
European profitability. Results include an $11 million gain from the sale of a
previously closed U.K. facility, a $1 million increase in reserves for recently
identified warranty issues and $1 million in restructuring costs.
REST OF WORLD
The company's operations in Australia, Asia and South America improved
profitability on essentially flat year-over-year revenues. The Australian
operations reported revenue of $31 million for the quarter, compared with $27
million in the second quarter of 2001. In South America, the company reported
revenue of $28 million, compared with $37 million one year ago. Revenue from the
company's Asian operations was $29 million, versus $21 million in the second
quarter of 2001.
Combined EBIT for Australia, South America and Asia was $7 million compared with
$5 million one year ago. Tighter cost management and improved operational
performance in South America, coupled
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with stronger OE demand in Australia more than offset the impact of a two-week
strike at our Australian OE exhaust plant and worsening economic conditions in
Brazil and Argentina.
The attachments provide additional information on Tenneco Automotive's second
quarter 2002 operating results.
CONFERENCE CALL INFORMATION
The company will host a conference call today, July 23, 2002, at 10:30 a.m. EDT.
The dial-in number is 877-546-1568 domestic or 630-395-0035 international.
Passcode is Tenneco Auto. A recording of this call will be available one hour
following the completion of the call on July 23 through July 30, 2002. To access
this recording, dial 888-562-7210 domestic or 402-220-6026 international and
enter passcode 8400. The call will also be available on the Tenneco Automotive
web site at www.tenneco-automotive.com
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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(R) performance exhaust products, and Monroe(R) Clevite(TM) vibration
control components.
This press release contains forward-looking statements. Words such as "taking",
"focused", "goal", "expect", "anticipate", "should", "believe", "plan",
"remain", "confident", "continue" and similar expressions identify
forward-looking statements. These forward-looking statements are based on the
current expectations of the company (including its subsidiaries). Because these
forward-looking 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
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for automobiles which include the company's products, and the potential negative
impact on the company's revenues and margins from such products; (vi) the cost
of compliance with changes in regulations, including environmental regulations;
(vii) workforce factors such as strikes or labor interruptions; (viii) material
substitutions and increases in the costs of raw materials; (ix) the company's
ability to execute restructuring and other cost reduction plans and to realize
anticipated benefits from these plans; (x) the company's ability to develop and
profitably commercialize new products and technologies, and the acceptance of
such new products and technologies by the company's customers; (xi) further
changes in the distribution channels for the company's aftermarket products, and
further consolidations among automotive parts customers and suppliers; (xii)
changes by the Financing Accounting Standards Board or other accounting
regulatory bodies of authoritative generally accepted accounting principles or
policies; (xiii) acts of war or terrorism and the impact of these acts on
economic, financial and social conditions in the countries where we operate and
(xiv) the timing and occurrence (or non-occurrence) of transactions and events
which may be subject to circumstances beyond the control of the company and its
subsidiaries. The company undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date of this press
release.
###
TENNECO AUTOMOTIVE INC. CONSOLIDATED EARNINGS RESULTS
Unaudited
---------
SIX MONTHS ENDED JUNE 30,
2002 2001
--------- ---------
Net sales and operating revenues: $ 1,757 1,789
========= =========
Costs and Expenses
Cost of Sales (exclusive of depreciation shown below) 1,383 (a) 1,438 (e)(f)
Engineering, Research and Development 22 25
Selling, General and Administrative 195 (b) 196 (e)(g)
Depreciation and Amortization 69 76
--------- ---------
Total Costs and Expenses 1,669 1,735
========= =========
Gain (Loss) on sale of assets 11 (c) -
Gain (Loss) on sale of receivables (1) (3)
Other Income (Loss) - 2
--------- ---------
Total Other Income 10 (1)
--------- ---------
Operating Income (Loss)
North America 72 (a)(b) 17 (e)(f)
Europe 16 (a)(b)(c) 30 (e)(f)(g)
Rest of World 10 6 (e)(g)
--------- ---------
98 53
Less:
Interest expense (net of
interest capitalized) 72 90
Income tax expense (benefit) 8 (d) (9)
Minority interest 1 1
--------- ---------
Net income (loss) $17 (29)
========= =========
Average common shares outstanding:
Basic 39.7 37.0
========= =========
Diluted 41.4 37.2
========= =========
Earnings (loss) per share of common stock:
--------- ---------
Basic- $ 0.42 $ (0.77)
========= =========
Diluted- $ 0.41 $ (0.77)
========= =========
(a) Includes restructuring related costs of $3 million pre-tax, $2 million
after-tax or $0.04 per share. All of the costs are recorded in cost of sales.
Geographically, $2 million is recorded in North America and $1 million in
Europe.
(b) Includes costs associated with the renegotiation of senior debt of $2
million pre-tax, $1 million after-tax or $0.03 per share. The entire charge is
recorded in SG&A. Geographically, $1 million is recorded in both North America
and Europe.
(c) Includes a gain on the sale of a UK facility of $11 million pre-tax, $5
million after-tax or $0.13 per share. Geographically, the entire gain is
recorded in Europe.
(d) Includes a $4 million or $.10 per share tax benefit related to
lower-than-expected costs for withholding taxes. The lower cost of tax
withholding for the fourth quarter 2001 tax repatriation transaction resulted
from an amendment in the bank agreement allowing a more efficient transaction to
be completed.
(e) Includes restructuring and other charges of $22 million pre-tax, $17 million
after-tax or $0.44 per share. Of the charges, $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.
(f) 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.
(g) 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 Europe and Rest
of World.
TENNECO AUTOMOTIVE INC. CONSOLIDATED EARNINGS RESULTS
Unaudited
---------
THREE MONTHS ENDED JUNE 30,
2002 2001
------------ ----------
Net sales and operating revenues: 948 925
============ ==========
Costs and Expenses
Cost of Sales (exclusive of depreciation shown below) 743 (a) 732 (c)
Engineering, Research and Development 12 12
Selling, General and Administrative 98 95
Depreciation and Amortization 35 39
------------ ----------
Total Costs and Expenses 888 878
============ ==========
Gain (Loss) on sale of assets 11 (b) -
Gain (Loss) on sale of receivables - (1)
Other Income (Loss) - 1
------------ ----------
Total Other Income 11 -
------------ ----------
Operating Income (Loss)
North America 53 (a) 20 (c)
Europe 11 (a)(b) 22
Rest of World 7 5
------------ ----------
71 47
Less:
Interest expense (net of
interest capitalized) 36 43
Income tax expense (benefit) 16 1
Minority interest - 1
------------ ----------
Net income (loss) 19 2
============ ==========
Average common shares outstanding:
Basic 40 37
============ ==========
Diluted 42 38
============ ==========
Earnings (loss) per share of common stock:
Basic-
Continuing operations $ 0.48 0.06
============ ==========
Diluted-
Continuing operations $ 0.45 0.06
============ ==========
(a) Includes restructuring related costs of $2 million pre-tax, $1 million
after-tax or $0.02 per share. All of the costs are recorded in cost of sales.
Geographically, $1 million is recorded in both North America and Europe.
(b) Includes a gain on the sale of a UK facility of $11 million pre-tax, $5
million after-tax or $0.13 per share. Geographically, all of the gain is
recorded in Europe.
(c) Includes restructuring and related costs of $10 million pre-tax, $8 million
after-tax or $0.20 per share. The costs are recorded in cost of sales.
Geographically, the $10 million is recorded in North America.
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
Balance Sheet
(Unaudited)
(Millions)
JUNE 30, 2002 DECEMBER 2001
ACTUAL ACTUAL
------------- -------------
ASSETS
CASH AND TEMPORARY CASH INVESTMENTS 52 53
RECEIVABLES, Net 457 395
INVENTORIES 333 326
OTHER CURRENT ASSETS 182 167
TOTAL CURRENT ASSETS 1,024 941
INVESTMENTS AND OTHER ASSETS 759 773
PLANT, PROPERTY, AND EQUIPMENT, NET 982 967
------ ------
TOTAL ASSETS $2,765 $2,681
====== ======
LIABILITIES AND SHAREOWNERS' EQUITY
SHORT-TERM DEBT $ 144 $ 191
ACCOUNTS PAYABLE 500 401
ACCRUED TAXES 40 35
ACCRUED INTEREST 26 25
OTHER CURRENT LIABILITIES 249 224
LONG-TERM DEBT 1,277 1,324
DEFERRED INCOME TAXES 184 166
DEFERRED CREDITS AND OTHER LIABILITIES 219 226
MINORITY INTEREST 16 15
TOTAL SHAREOWNERS' EQUITY 110 74
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TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $2,765 $2,681
====== ======
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CASH FLOWS
(Millions)
SIX MONTHS ENDED 2002
JUNE 30, OVER/
---------------- (UNDER)
2002 2001 2001
----- ----- -----
Operating activities:
Income (loss) from continuing operations $ 17 $ (29) $ 46
Adjustments to reconcile income (loss) from continuing
operations to net cash provided (used) by
operating activities -
Depreciation and amortization 69 76 (7)
Deferred income taxes (8) (23) 15
(Gain)/loss on sale of businesses and assets, net (9) 3 (12)
Changes in components of working capital -
(Inc.)/dec. in receivables (50) (61) 11
(Inc.)/dec. in inventories 9 28 (19)
(Inc.)/dec. in prepayments and other current assets (4) (20) 16
Inc./(dec.) in payables 76 15 61
Inc./(dec.) in taxes accrued 2 1 1
Inc./(dec.) in interest accrued -- (4) 4
Inc./(dec.) in other current liabilities 26 12 14
Other (4) 8 (12)
----- ----- -----
Net cash provided (used) by operating activities 124 6 118
----- ----- -----
Investing activities:
Net proceeds from sale of assets 19 3 16
Expenditures for plant, property & equipment (52) (47) (5)
Investments and other 12 (4) 16
----- ----- -----
Net cash provided (used) by investing activities (21) (48) 27
----- ----- -----
Net Cash provided (used) before financing activities 103 (42) 145
Financing activities:
Issuance of common and treasury shares -- 5 (5)
Retirement of long-term debt (25) (8) (17)
Net inc./(dec.) in short-term debt excluding current
maturities on long-term debt (71) 76 (147)
----- ----- -----
Net cash provided (used) by financing activities (96) 73 (169)
----- ----- -----
Effect of foreign exchange rate changes on cash and
temporary cash investments (8) 4 (12)
----- ----- -----
Inc./(dec.) in cash and temporary cash investments (1) 35 (36)
Cash and temporary cash investments, January 1 53 35 18
----- ----- -----
Cash and temporary cash investments, June 30 $ 52 $ 70 $ (18)
===== ===== =====
Cash paid during the period for interest $ 72 $ 93
Cash paid during the period for income taxes $ 16 $ 19