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
TENNECO AUTOMOTIVE REPORTS IMPROVED RESULTS
- Company reports EPS of 2-cents per share, reversing prior year net
loss
- EBIT improves 15 percent to $31 million
- EBITDA improves 14 percent to $70 million
- Revenues increase 14 percent as favorable platform mix helps original
equipment sales outpace market
- Restructuring program realizes $6 million in savings
Lake Forest, Illinois, April 22, 2003 - Tenneco Automotive (NYSE: TEN) announced
today that the company reported net income of $1 million, or 2-cents per share,
in the first quarter of 2003, versus a net loss of $2 million, or 5-cents per
share before the cumulative effect of a change in accounting principle, for the
first quarter of 2002. First Call's analyst consensus estimate for the quarter
was a loss of 4-cents per share. EBIT (income before interest, taxes and
minority interest) improved to $31 million in the quarter, a 15 percent increase
over $27 million the previous year. EBITDA was $70 million for the quarter, a 14
percent improvement over first quarter 2002 EBITDA of $61 million.
The first quarter 2003 results include pre-tax restructuring and restructuring
related costs of $5 million, or 7-cents per share, and a tax benefit from
resolution of outstanding tax issues of $3 million, or 8-cents per share. The
first quarter 2002 results include a pre-tax non-accruable restructuring expense
of $1 million, or one cent per share; pre-tax charges associated with the
company's amendment of its senior debt agreements of $2 million, or 3-cents per
share; and income from a tax benefit of $4 million, or 10-cents per share. (See
the table entitled, "Reconciliation of GAAP Results to non-GAAP Results"
attached to this press release for more information about these adjustments and
other non-GAAP results in this press release.)
1
The company reported revenue of $921 million for the quarter, up 14 percent
versus $809 million in the first quarter of 2002. Favorable currency exchange
rates benefited revenue by $54 million in the quarter. Excluding the impact of
currency, revenue was up 7 percent.
"We are pleased with our results, especially given industry and economic
uncertainties at the beginning of the year. We benefited this quarter from our
strong position on top-selling vehicle platforms as North American OE production
volumes remained strong. We also continue to see steady improvement in our
European original equipment exhaust business where revenues are up
year-over-year, and gross margins improved over last quarter and are now even
with first quarter 2002," said Mark P. Frissora, chairman and CEO, Tenneco
Automotive. "We still face challenges in the global aftermarket and are
aggressively taking costs out of the businesses, including flexing our
operations, while continuing to invest strategically in promoting our products
and premium brands."
The company generated $10 million in positive cash flow before financing
activities during the quarter compared with $14 million in the first quarter of
2002. The company used more cash in the quarter, compared with first quarter
2002, primarily to prepare for platform launches and for seasonal inventory
builds. More aggressive receivables and payables management steps were taken in
the quarter to offset this heavier cash use and to help preserve liquidity given
the uncertainties in the market for the second quarter of 2003. Total bank and
bond debt was $1.443 billion at quarter-end compared with $1.445 billion at the
end of 2002.
Tenneco Automotive again significantly outperformed the requirements of its bank
debt covenants. At March 31, the leverage ratio was 4.35, below the maximum
limit of 5.75; the fixed charge coverage ratio was 1.31, exceeding the minimum
required ratio of 0.80; and the interest coverage ratio was 2.31, exceeding the
minimum required ratio of 1.65.
The company continues to improve its operational efficiency and realized $6
million in savings during the quarter from implementation of its Project Genesis
restructuring program and $6 million in savings from Six Sigma initiatives. The
company's SGA&E (selling, general and administrative expense plus engineering,
research and development expense) as a percent of sales was 11.6 percent, within
management's goal for the year of maintaining this ratio at less than 12
percent.
"We made progress this quarter as our original equipment businesses fueled
top-line growth and we continued to successfully execute our restructuring and
cost-cutting initiatives. We were especially encouraged that our North American
aftermarket business equaled last year's profitability on softer sales," said
Frissora. "Going forward, we're cautiously optimistic about OE revenue growth
given our platform mix and we're launching new products and marketing programs
to help counter industry conditions in the aftermarket. We also remain intensely
focused on generating cash and see solid opportunities to reduce inventories and
improve our working capital performance."
2
NORTH AMERICA
- - Strong OE production and the company's presence on high volume OE
vehicle models drove North American original equipment revenue to $373
million in the quarter, a 9 percent increase over first quarter 2002
revenue of $341 million. Excluding catalytic converter pass-through
sales, revenue increased 12 percent.
- - Original equipment revenue included a 7 percent increase in heavy-duty
revenues versus last year.
- - North American aftermarket revenue was $108 million versus $126 million
one year ago. Sales were negatively impacted by lower consumer
confidence and the continued universal decline in the exhaust market.
Despite the decrease in aftermarket revenue, EBIT for that business was
flat on a year-over-year comparison.
- - EBIT for North American operations was $28 million compared with $19
million in the first quarter of 2002. The 46 percent EBIT improvement
was primarily driven by OE volumes, improved operating efficiency and
continued tight cost controls. EBITDA was $50 million versus $40
million in first quarter 2002.
- - First quarter 2003 EBIT results include $3 million in restructuring and
restructuring related costs. First quarter 2002 EBIT results include $1
million in restructuring related costs and $1 million in charges
associated with the company's amendment of its senior debt agreements.
EUROPE
- - European original equipment revenue increased 30 percent to $269
million from $207 million in the first quarter of 2002. Excluding
catalytic converter pass-through sales and the impact of favorable
currency exchange rates, revenue would have increased 5 percent.
- - The company's European aftermarket revenue increased to $76 million,
versus $65 million one year ago. Excluding the impact of currency,
revenue would have decreased 4 percent.
- - European EBIT was a loss of $1 million, compared with positive EBIT of
$5 million in the first quarter of 2002. EBIT was impacted by a $4
million increase in depreciation and higher aftermarket promotional
costs. EBITDA was $13 million compared with $15 million in first
quarter 2002.
- - First quarter 2003 EBIT results include $2 million in restructuring and
restructuring related costs. First quarter 2002 EBIT results include $1
million in charges associated with the company's amendment of its
senior debt agreements and no restructuring costs.
REST OF WORLD
- - The company's Asian operations reported revenue of $36 million, versus
$18 million one year ago. Revenue growth was primarily driven by strong
China OE volumes and higher pass-through sales.
3
- - In South America, the company reported revenue of $26 million, flat
compared with the previous year. Unfavorable currency exchange rates
negatively impacted revenue by $7 million, which was offset by stronger
OE and aftermarket volumes.
- - The company's Australian operations reported revenue of $33 million for
the quarter, a 27 percent increase over first quarter 2002 revenue of
$26 million. A favorable currency exchange rate impacted revenue by $4
million. Strong OE production offset softer sales in both the ride
control and exhaust segments of the aftermarket.
- - Combined EBIT for Asia, South America and Australia was $4 million,
versus $3 million in the first quarter of 2002. Higher OE volumes in
all the regions were primarily responsible for the increase. Combined
EBITDA for rest of world was $7 million compared with $6 million in
first quarter 2002.
The attachments provide additional information on Tenneco Automotive's first
quarter 2003 results.
CONFERENCE CALL INFORMATION
The company will host a conference call on April 22, 2003 at 9 a.m. Eastern
time. The dial-in number is 888 809-8968 domestic or 630 395-0038 international.
Passcode is Tenneco Auto. The call will be available on the financial section of
the Tenneco Automotive web site at www.tenneco-automotive.com. A copy of this
press release, which includes in the attachments financial information to be
discussed on this call, is also available on the financial and news sections of
the Tenneco Automotive web site at www.tenneco-automotive.com. A recording of
this call will be available one hour following the completion of the call on
April 22 through April 29, 2003. To access this recording, dial 800 454 0157
domestic or 402 220-2123 international and enter passcode 8400.
Tenneco Automotive is a $3.5 billion manufacturing company with headquarters in
Lake Forest, Illinois and approximately 19,600 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
Reflex(R) shocks and struts, Rancho(R) shock absorbers, Walker(R) Quiet-Flow(R)
mufflers and DynoMax(R) performance exhaust products, and Monroe(R) Clevite(R)
vibration control components.
This press release contains forward-looking statements. Words such as "taking",
"focused", "goal", "expect", "anticipate", "should", "believe", "plan",
"remain", "confident", "continue," "will", "may", "can", "intend", "continue",
"estimate" and "seek" 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
4
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 and the overall highly competitive
nature of the automotive parts industry; (v) changes in consumer demand and
prices, including longer product lives of automobile parts and the cyclicality
of automotive production and sales of 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, further
consolidations among automotive parts customers and suppliers, and product
warranty costs; (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, riots or terrorism,
including, but not limited to the events taking place in the Middle East, the
current military action in Iraq and the continuing war on terrorism, as well as
actions taken or to be taken by the United States or other governments as a
result of further acts or threats of terrorism, and the impact of these acts on
economic, financial and social conditions in the countries where the company
operates 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. Additional information regarding these risk factors and
uncertainties is detailed from time to time in the company's SEC filings,
including but not limited to its annual report on Form 10-K for the year ended
December 31, 2002.
###
5
ATTACHMENT 1
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME (LOSS)
THREE MONTHS ENDED MARCH 31,
Unaudited
2003 2002
---- ----
Net sales and operating revenues: $ 921 $ 809
===== ======
Costs and Expenses
Cost of Sales (exclusive of depreciation shown below) 743 (a) 640 (c)
Engineering, Research and Development 19 14
Selling, General and Administrative 88 93 (d)
Depreciation and Amortization of other intangibles 39 34
----- ------
Total Costs and Expenses 889 781
===== ======
Other Income (Loss) (1) (1)
----- ------
Total Other Income (1) (1)
----- ------
Income (Loss) before interest expense, income taxes,
and minority interest
North America 28 (a) 19 (c) (d)
Europe (1)(a) 5 (d)
Other 4 3
----- ------
31 27
Less:
Interest expense (net of
interest capitalized) 31 36
Income tax expense (benefit) (2)(b) (8)(e)
Minority interest 1 1
----- ------
Income (loss) before Cumulative Effect of
Change in Accounting Principle 1 (2)
----- ------
Cumulative Effect of Change in Accounting
Principle, net of income tax -- (218)
----- ------
Net income (loss) $ 1 $ (220)
===== ======
Average common shares outstanding:
Basic 40.1 39.7
===== ======
Diluted 40.9 40.9
===== ======
Earnings (loss) per share of common stock:
Basic-
Before Cumulative Effect of Change in Accounting Principle $0.02 $(0.05)
Cumulative Effect of Change in Accounting Principle -- (5.49)
----- ------
$0.02 $(5.54)
===== ======
Diluted-
Before Cumulative Effect of Change in Accounting Principle $0.02 $(0.05)
Cumulative Effect of Change in Accounting Principle -- (5.49)
----- ------
$0.02 $(5.54)
===== ======
(a) Includes restructuring and restructuring related charges of $5 million
pre-tax, $2 million after-tax or $0.07 per share. The entire charge is recorded
in cost of sales. Geographically, $3 million is recorded in North America and $2
million in Europe.
(b) Includes a $3 million or $.08 per share tax benefit related to the
resolution of outstanding tax issues.
(c) Includes restructuring and other charges of $1 million pre-tax, or $0.01 per
share. The entire charge is recorded in cost of sales. Geographically, $1
million is recorded in North America.
(d) Includes costs associated with the amendment of the senior debt agreement 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.
(e) 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 senior debt agreement allowing a more efficient
transaction to be completed.
ATTACHMENT 1
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEET
(Unaudited)
(Millions)
March 31, 2003 December 31, 2002
-------------- -----------------
Assets
Cash and Temporary Cash Investments $ 58 $ 54
Receivables, Net 466 409
Inventories 373 352
Other Current Assets 162 151
Investments and Other Assets 485 512
Plant, Property, and Equipment, Net 1,038 1,026
------- -------
Total Assets $ 2,582 $ 2,504
======= =======
Liabilities and Shareowners' Equity
Short-Term Debt $ 250 $ 228
Accounts Payable 592 505
Accrued Taxes 29 40
Accrued Interest 33 23
Other Current Liabilities 205 220
Long-Term Debt 1,193 1,217
Deferred Income Taxes 76 103
Deferred Credits and Other Liabilities 252 243
Minority Interest 18 19
Total Shareholders' Equity (66) (94)
------- -------
Total Liabilities and Shareholders' Equity $ 2,582 $ 2,504
======= =======
ATTACHMENT 1
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CASH FLOWS
(Unaudited)
(Millions)
THREE MONTHS ENDED
MARCH 31,
---------------------------------
2003 2002
--------------- ----------------
Operating activities:
Net income (loss) before cumulative effect of change in accounting $ 1 $ (2)
principle, net of tax
Adjustments to reconcile income (loss)
to net cash provided (used) by operating activities -
Depreciation and amortization 39 34
Deferred income taxes (7) (15)
Changes in components of working capital -
(Inc.)/dec. in receivables (49) (53)
(Inc.)/dec. in inventories (12) (2)
(Inc.)/dec. in prepayments and other current assets (6) (9)
Inc./(dec.) in payables 78 58
Inc./(dec.) in taxes accrued (4) (2)
Inc./(dec.) in interest accrued 11 15
Inc./(dec.) in other current liabilities (18) 19
Other 3 (2)
---- ----
Net cash provided by operating activities 36 41
Investing activities:
Net proceeds from sale of assets 1 --
Expenditures for plant, property & equipment (26) (23)
Investments and other (1) (4)
---- ----
Net cash used by investing activities (26) (27)
---- ----
Net cash provided before financing activities 10 14
Financing activities:
Retirement of long-term debt (24) --
Net inc./(dec.) in short-term debt excluding current
maturities on long-term debt 21 (7)
---- ----
Net cash used by financing activities (3) (7)
---- ----
Effect of foreign exchange rate changes on cash and
temporary cash investments (3) (4)
---- ----
Inc./(dec.) in cash and temporary cash investments 4 3
Cash and temporary cash investments, January 1 54 53
---- ----
Cash and temporary cash investments, March 31 $ 58 $ 56
==== ====
Cash paid during the period for interest $ 20 $ 22
Cash paid during the period for income taxes $ 11 $ 9
ATTACHMENT 2
TENNECO AUTOMOTIVE
RECONCILIATION OF GAAP(a) RESULTS TO NON-GAAP RESULTS
Unaudited
Q1 2003 Q1 2002
-------------------------- ------------------------
Amount Per Share Amount Per Share
----------- ------------- ---------- ------------
Net Income before Cumulative Effect of Change in Accounting
Principle (GAAP measure) $ 1 $ 0.02 $ (2) $ (0.05)
After tax adjustments (reflects non-GAAP measures):
Restructuring and restructuring related expenses 2 0.07 - 0.01
Tax settlement adjustment (3) (0.08) - -
Amendment fee - - 1 0.03
Tax repatriation reversal - - (4) (0.10)
----------- ------------- ---------- ------------
Non-GAAP earnings measure(b) $ - $ 0.01 $ (5) $ (0.11)
=========== ============= ========== ============
Q1 2003
----------------------------------------------------
North Rest of
America Europe World Total
----------- ------------- ---------- ------------
Income(loss) before interest expense, income taxes and
minority interest (GAAP measure) 28 (1) 4 31
Depreciation and amortization of other intangibles 22 14 3 39
----------- ------------- ---------- ------------
Total EBITDA(c) 50 13 7 70
=========== ============= ========== ============
Q1 2002
----------------------------------------------------
North Rest of
America Europe World Total
----------- ------------- ---------- ------------
Income(loss) before interest expense, income taxes and
minority interest (GAAP measure) 19 5 3 27
Depreciation and amortization of other intangibles 21 10 3 34
----------- ------------- ---------- ------------
Total EBITDA 40 15 6 61
=========== ============= ========== ============
(a) Generally Accepted Accounting Principles
(b) Tenneco Automotive presents the above reconciliation of GAAP to non-GAAP
results in order to reflect the results for the first quarters of 2003 and
2002 in a manner that allows a better understanding of the results of
operational activities separate from the financial impact of decisions made
for the long-term benefit of the company. Adjustments similar to the ones
reflected above have been recorded in earlier periods, and similar types of
adjustments can reasonably be expected to be recorded in future periods.
However, the management of Tenneco Automotive uses both the GAAP and
non-GAAP measures reflected above to understand and analyze the results of
its business, and believes investors find this information helpful in
understanding the ongoing performance of operations separate from items that
may have a disproportional positive or negative impact on the company's
financial results in any particular period.
(c)EBITDA represents income before cumulative effect of change in accounting
principle, interest expense, income taxes, minority interest and depreciation
and amortization. EBITDA is not a calculation based upon generally accepted
accounting principles. The amounts included in the EBITDA calculation,
however, are derived from amounts included in the historical statements of
income data. In addition, EBITDA should not be considered as an alternative
to net income or operating income as an indicator of the company's operating
performance, or as an alternative to operating cash flows as a measure of
liquidity. Tenneco Automotive has presented EBITDA because it regularly
reviews EBITDA as a measure of the company's ability to incur and service
debt. In addition, Tenneco Automotive believes its debt holders utilize and
analyze our EBITDA for similar purposes. Tenneco Automotive also believes
EBITDA assists investors in comparing a company's performance on a consistent
basis without regard to depreciation and amortization, which can vary
significantly depending upon many factors. However, the EBITDA measure
presented may not always be comparable to similarly titled measures reported
by other companies due to differences in the components of the calculation.
ATTACHMENT 2
TENNECO AUTOMOTIVE
RECONCILIATION OF GAAP RESULTS TO NON-GAAP RESULTS
Unaudited
Q1 2003
-----------------------------------------------------------------------------------
Pass-through Revenues
Sales Excluding
Revenues Excluding Currency
Currency Excluding Currency and Pass-through
Revenues Impact Currency Impact Sales
------------ ------------ ------------- ----------------- ---------------------
North America Aftermarket
Ride Control 72 - 72 - 72
Exhaust 36 - 36 - 36
------------ ------------ ------------- ----------------- ---------------------
Total North America Aftermarket 108 - 108 - 108
North America Original Equipment
Ride Control 116 - 116 - 116
Exhaust 257 - 257 87 170
------------ ------------ ------------- ----------------- ---------------------
Total North America Original Equipment 373 - 373 87 286
Total North America 481 - 481 87 394
Europe Aftermarket
Ride Control 35 6 29 - 29
Exhaust 41 8 33 - 33
------------ ------------ ------------- ----------------- ---------------------
Total Europe Aftermarket 76 14 62 - 62
Europe Original Equipment
Ride Control 57 9 48 - 48
Exhaust 212 34 178 58 120
------------ ------------ ------------- ----------------- ---------------------
Total Europe Original Equipment 269 43 226 58 168
Total Europe 345 57 288 58 230
Asia 36 - 36 13 23
South America 26 (7) 33 2 31
Australia 33 4 29 3 26
------------ ------------ ------------- ----------------- ---------------------
Total Other 95 (3) 98 18 80
Total Tenneco Automotive 921 54 867 163 704
============ ============ ============= ================= =====================
Q1 2002
-----------------------------------------------------------------------------------
Pass-through Revenues
Sales Excluding
Revenues Excluding Currency
Currency Excluding Currency and Pass-through
Revenues Impact Currency Impact Sales
------------ ------------ ------------- ----------------- ---------------------
North America Aftermarket
Ride Control 84 - 84 - 84
Exhaust 42 - 42 - 42
------------ ------------ ------------- ----------------- ---------------------
Total North America Aftermarket 126 - 126 - 126
North America Original Equipment
Ride Control 100 - 100 - 100
Exhaust 241 - 241 85 156
------------ ------------ ------------- ----------------- ---------------------
Total North America Original Equipment 341 - 341 85 256
Total North America 467 - 467 85 382
Europe Aftermarket
Ride Control 28 - 28 - 28
Exhaust 37 - 37 - 37
------------ ------------ ------------- ----------------- ---------------------
Total Europe Aftermarket 65 - 65 - 65
Europe Original Equipment
Ride Control 41 - 41 41
Exhaust 166 - 166 47 119
------------ ------------ ------------- ----------------- ---------------------
Total Europe Original Equipment 207 - 207 47 160
Total Europe 272 - 272 47 225
Asia 18 - 18 5 13
South America 26 - 26 2 24
Australia 26 - 26 1 25
------------ ------------ ------------- ----------------- ---------------------
Total Other 70 - 70 8 62
Total Tenneco Automotive 809 - 809 140 669
============ ============ ============= ================= =====================
Tenneco Automotive presents the above reconciliation of revenues in order to
reflect the trend in the company's sales, in various product lines and
geographical regions, separately from the effects of doing business in
currencies other than the U.S. dollar. Additionally, pass-through catalytic
converter sales include precious metals pricing, which may be volatile. While
Tenneco Automotive's original equipment customers assume the risk of this
volatility, it impacts reported revenue. Excluding pass-through catalytic
converter sales removes this impact. Tenneco Automotive uses this information to
analyze the trend in revenues before these factors. Tenneco Automotive believes
investors find this information useful in understanding period to period
comparisons in the company's revenues.