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news release [TENNECO AUTOMOTIVE LOGO]
Contacts: Jane Ostrander Leslie Hunziker
Media Relations Investor Relations
847 482-5607 847 482-5042
jane.ostrander@tenneco-automotive.com leslie.hunziker@tenneco-automotive.com
TENNECO AUTOMOTIVE REPORTS RECORD FIRST QUARTER REVENUES
AND NET INCOME
o Twelfth consecutive quarter of year-over-year revenue growth
o Net income of $7 million; EPS of 16-cents versus year earlier loss
o EBIT up 35%; EBITDA up 16%
Lake Forest, Illinois, April 21, 2005 -- Tenneco Automotive (NYSE:
TEN) reported improved first quarter net income of $7 million, or
16-cents per diluted share, compared with a net loss of $2 million, or
5-cents per diluted share in first quarter 2004. The company improved
net income despite North American OE production cuts and higher steel
prices globally. Adjusted for the items below, first quarter net
income increased to $9 million, or 20-cents per diluted share, versus
$6 million, or 15-cents per diluted share a year ago.
EBIT (earnings before interest, taxes, and minority interest)
increased 35 percent year-over-year to $44 million compared with $33
million in first quarter 2004. EBITDA (EBIT before depreciation and
amortization) was $90 million versus $78 million a year ago. Adjusted
EBIT was $47 million, flat year-over-year, and the company reported
its 13th consecutive quarter of year-over-year improved adjusted
EBITDA at $93 million, up from $92 million a year ago. See the tables
attached to the press release, which reconcile GAAP results to
non-GAAP results.
ADJUSTED FIRST QUARTER 2004 AND 2005 RESULTS:
Q1 2005 Q1 2004
--------------------------------- -----------------------------------
Net Per Net Per
EBITDA EBIT Income Share EDITDA EBIT Income Share
------ ---- ------ ----- ------ ---- ------ -----
Earnings Measures $90 $44 $ 7 $0.16 $78 $33 $(2) $(0.05)
Adjustments (reflects non-GAAP measures):
Restructuring and restructuring related expenses 3 3 2 0.04 5 5 3 0.07
New Aftermarket customer changeover costs - - - - 6 6 3 0.08
Consulting fees indexed to stock price - - - - 3 3 2 0.05
--- --- --- ----- --- --- --- ------
Non-GAAP earnings measures $93 $47 $ 9 $0.20 $92 $47 $ 6 $ 0.15
=== === === ===== === === === ======
- More -
-2-
FIRST QUARTER 2005 ADJUSTMENTS:
o Restructuring and restructuring related expenses of $3 million pre-tax, or
4-cents per diluted share.
FIRST QUARTER 2004 ADJUSTMENTS:
o Restructuring and restructuring related costs of $5 million pre-tax, or
7-cents per diluted share;
o Expenses of $6 million pre-tax, or 8-cents per diluted share, associated
with changeover costs for a new aftermarket customer;
o Expenses of $3 million pre-tax, or 5-cents per diluted share, related to
consulting fees indexed to the stock price based on a 1999 agreement for
implementing EVA(R), a shareholder value improvement initiative.
"We are pleased with our performance this quarter, especially in light of
tough market conditions with slowing OE production in North America and the
ongoing high cost of steel worldwide," said Mark P. Frissora, chairman and
CEO, Tenneco Automotive. "New incremental OE business in North America and
Europe and our strong aftermarket presence globally, combined with a
diverse OE customer base, a favorable platform mix and our geographical
balance, helped us counter these negative market conditions."
Tenneco Automotive reported its twelfth consecutive quarter of
year-over-year revenue growth with $1.106 billion in the quarter, compared
with $1.033 billion in first quarter 2004. Favorable currency exchange
rates benefited revenue by $37 million. Incremental new OE business; higher
heavy duty and specialty vehicle volumes; strong Japanese OE transplant
business (21% of North America OE sales); and improved North America
aftermarket sales drove the increase.
The company's gross margin in the quarter was 19.3%, compared with 19.7% a
year ago. Restructuring impacted gross margin by 0.1 percentage point in
the quarter and 0.3 percentage point in first quarter 2004. This year,
higher net steel costs also had a 0.8 percentage point impact, more than
accounting for the year-over-year decline in gross margin.
Steel cost increases for the first quarter, net of other material cost
savings and recovery from OE and aftermarket customers, were $9 million.
The company still expects its total 2005 steel cost increases, net of other
material cost savings and recovery from customers, will be between $30
million and $50 million.
Sales, General, Administrative and Engineering (SGA&E) expense in the
quarter was 11.0% of sales, including 0.1 percentage point for
restructuring versus 12.2% a year ago, which includes 0.7 percentage point
for restructuring, costs related to a new aftermarket customer and
consulting fees indexed to the stock price.
Operating cash outflow in the quarter was $99 million versus a $13 million
inflow in the first quarter 2004. The change was driven by seasonal
inventory growth, primarily to support stronger aftermarket sales globally;
the impact from the discontinuation of Ford Motor Company's and
DaimlerChysler's advance payment programs; and a days payable outstanding
-3-
performance of 74 days, in-line with the company's historical average over
the last two years of 74 days, versus a record 81 days payable outstanding
in first quarter 2004.
"This was a particularly heavy cash use quarter due to our typical higher
working capital use in the first quarter as well as higher use of operating
cash to support stronger revenue growth. Additionally, we used $40 million
in cash to reduce our long-term debt, as well as another $11 million to
acquire the exhaust operations of Gabilan Manufacturing. We believe these
two decisions, which reduced our financing costs and completed an accretive
acquisition that also resulted in acquiring 100% of Harley Davidson's
exhaust business, will deliver short and long-term benefits for
shareholders," Frissora said. "Generating cash to pay down debt remains our
number one priority and we will continue our intense focus on working
capital reductions."
Cash performance in the quarter resulted in cash balances of $68 million at
quarter-end and debt net of cash balances of $1.340 billion. Total debt was
$1.408 billion versus $1.426 billion a year ago.
The company outperformed its bank debt covenants in the quarter. At March
31, the leverage ratio was 3.52, below the maximum limit of 4.75; the fixed
charge ratio was 1.86, exceeding the required ratio of 1.10; and the
interest coverage ratio was 2.84, exceeding the minimum coverage ratio of
2.0.
The company also announced that it has been notified by General Motors that
GM's current advanced payment program will terminate during the second
quarter. At March 31, 2005, that program had reduced the company's
receivables by $74 million. Tenneco Automotive believes the GM decision
will have minimal impact on its liquidity given that Tenneco Automotive
expanded its borrowing facilities by $55 million during the first quarter.
NORTH AMERICA
o North American original equipment revenue decreased to $375 million versus
$381 million in first quarter 2004. Excluding the impact of currency and
catalytic converter pass-through sales, revenue was up 4% (Tables to this
press release reconcile GAAP revenues to revenues adjusted for catalytic
converter pass-through sales and currency). A favorable platform mix, new
platform launches and strong heavy duty ride control volumes helped offset
production declines on key vehicle platforms.
o North American aftermarket revenue was $130 million, versus $122 million in
first quarter 2004. The increase was driven by new business, stronger unit
sales and higher pricing in both product lines.
o EBIT for North American operations was $37 million, versus $30 million a
year ago. Adjusted first quarter 2005 EBIT was $39 million, flat
year-over-year. The company's intensified efforts to control costs, improve
manufacturing efficiencies and generate savings from restructuring
initiatives as well as stronger volumes helped offset higher steel costs.
o First quarter 2005 EBIT results include $2 million in restructuring and
restructuring related costs. First quarter 2004 EBIT results include $9
million in costs related to the adjustments described above.
-4-
EUROPE AND SOUTH AMERICA
o European original equipment revenue was $386 million versus $328 million a
year ago. Adjusted for favorable currency and catalytic converter
pass-through sales, revenue increased 11%. The increase was driven by
record ride control revenues and the company's position on top-selling
vehicles.
o European aftermarket revenue was $82 million (which includes $4 million in
favorable currency) versus $80 million a year ago. Exhaust sales outpaced
an 8% industry decline due to market share gains and price increases, but
were more than offset by slowing ride control sales.
o South American operations generated $44 million in revenue compared with
$34 million in first quarter 2004. Adjusted for favorable currency,
revenues increased 22% driven by higher OE and aftermarket sales.
o EBIT for European and South American operations significantly improved to
$5 million versus breakeven for the same period one year ago. Adjusted EBIT
also improved to $6 million from $4 million in the first quarter 2004.
Record OE ride control volumes, stronger OE production rates overall and
more efficient aftermarket operations drove the improvement.
o First quarter 2005 EBIT adjustments include $1 million in restructuring and
restructuring related costs. First quarter 2004 EBIT includes $4 million in
costs related to the adjustments described above.
ASIA PACIFIC
o Revenue from Asian operations was $42 million, up from $39 million in first
quarter 2004. Stronger ride control and exhaust sales in India and stronger
exhaust sales in Thailand more than offset a 6% revenue decline in China
due to weakened market conditions.
o Australian revenue was $47 million versus $49 million a year ago. Soft OE
sales as a result of an OE customer's start-up issues were partially offset
by new ride control springs business.
o EBIT for the Asia Pacific operations was $2 million versus $3 million, or
$4 million on an adjusted basis, in first quarter 2004. The decline was
driven by a drop in China's profitability due to lower volumes combined
with higher costs associated with the company's plans for a new technical
center to support its OE business and to establish a stronger aftermarket
presence.
o First quarter 2004 EBIT includes $1 million in costs related to the
adjustments described above.
"While we are not immune to production changes in North America or other
market uncertainties, we have plans in place to adjust our operations to
respond to changing market conditions," Frissora said. "We believe our
product, market and global diversity will help us counter current and
future market challenges."
The company also announced that it elected to change its accounting for
inventory valuation in North America from Last In/First Out (LIFO) to First
In/First Out (FIFO). The change, which did not have any impact on the
company's results of operations, will drive greater global consistency in
accounting methodologies and improve administrative efficiency. The balance
sheet has been restated to reverse LIFO reserves and related deferred tax
effects.
Attachment 1 to this press release provides additional information on
Tenneco Automotive's first quarter 2005 results:
Statements of Income (Loss) -- 3 Months
Balance Sheets
-5-
Statements of Cash Flow
Attachment 2:
Reconciliation of GAAP Net Income to EBITDA -- 3 Months
Reconciliation of GAAP to Non-GAAP Earnings Measures -- 3 Months
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures -- 3 Months
CONFERENCE CALL
The company will host a conference call on Thursday, April 21, 2005 at
10:30 am EDT. The dial-in number is 888 395-1810 domestic or 210 234-8003
international. The passcode is Tenneco Auto. The call and accompanying
slides will be available on the financial section of the Tenneco Automotive
web site at www.tenneco-automotive.com. A recording of the call will be
available one hour following completion of the call on April 21, 2005
through May 21, 2005. To access this recording, dial 866 395-9178 or 203
369-0502 international. The purpose of the call is to discuss the company's
operations for the last fiscal quarter, as well as other matters that may
impact the company's outlook. A copy of the press release is available on
the financial and news sections of the Tenneco Automotive web site.
2005 ANNUAL MEETING
Tenneco Automotive's annual meeting of shareholders will be on Tuesday, May
10, 2005 at 10:00 a.m. CDT. The meeting will be held at the corporate
headquarters, 500 North Field Drive, Lake Forest, Illinois.
Tenneco Automotive is a $4.2 billion manufacturing company with
headquarters in Lake Forest, Illinois and approximately 18,400 employees
worldwide. Tenneco Automotive is one of the world's largest designers,
manufacturers and marketers of emission control and ride control products
and systems for the automotive original equipment market and the
aftermarket. Tenneco Automotive markets its products principally under the
Monroe(R), Walker(R), Gillet(R) and Clevite(R)Elastomer 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, Dynomax(R)
performance exhaust products, and Clevite(R)Elastomer noise, vibration and
harshness control components.
This press release contains forward-looking statements. Words such as
"continue," "will," "expects," "believe," "plans," 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) changes in
automotive manufacturers' production rates and their actual and forecasted
requirements for the company's products, including the overall highly
competitive nature of the automotive parts industry, and the company's
resultant inability to realize the sales represented by its awarded book of
business which is based on anticipated pricing for the applicable program
over its life, and is subject to increases or decreases due to changes in
customer requirements, customer and consumer preferences, and the number of
vehicles actually produced by customers; (ii) increases in the costs of raw
materials, including
-6-
the company's ability to successfully reduce the impact of any such cost
increases through materials substitutions, cost reduction initiatives and
other methods; (iii) the cyclical nature of the global vehicular industry,
including the performance of the global aftermarket sector, and 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; (iv) the company's
continued success in cost reduction and cash management programs and its
ability to execute restructuring and other cost reduction plans and to
realize anticipated benefits from these plans; (v) the general political,
economic and competitive conditions in markets and countries where the
company and its subsidiaries operate, including the strength of other
currencies relative to the U.S. dollar and currency fluctuations and other
risks associated with operating in foreign countries; (vi) governmental
actions, including the ability to receive regulatory approvals and the
timing of such approvals; (vii) changes in capital availability or costs,
including increases in the company's costs of borrowing (i.e., interest
rate increases), the amount of the company's debt, the ability of the
company to access capital markets and the credit ratings of the company's
debt; (viii) the cost and outcome of existing and any future legal
proceedings, and compliance with changes in regulations, including
environmental regulations; (ix) workforce factors such as strikes or labor
interruptions; (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 and the market; (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 Financial
Accounting Standards Board or other accounting regulatory bodies to
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 report on Form 10-K for the year
ended December 31, 2004. Further information can be found on the company's
web site at www.tenneco-automotive.com.
###
ATTACHMENT 1
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME (LOSS)
Unaudited
THREE MONTHS ENDED MARCH 31,
(Millions except share and per share amounts)
2005 2004
-------------- --------------
Net sales and operating revenues $ 1,106 $ 1,033 (b)
============== ==============
Costs and Expenses
Cost of Sales (exclusive of depreciation shown below) 893 (a) 829 (c)
Engineering, Research and Development 24 17
Selling, General and Administrative 98 (a) 109 (b) (c) (d)
Depreciation and Amortization of Other Intangibles 46 45
-------------- --------------
Total Costs and Expenses 1,061 1,000
============== ==============
Other Loss (1) -
Income before Interest Expense,
Income Taxes, and Minority Interest
North America 37 (a) 30 (b) (c) (d)
Europe & South America 5 (a) - (c) (d)
Asia Pacific 2 3 (d)
-------------- --------------
44 33
Less:
Interest expense (net of
interest capitalized) 32 35
Income tax expense (benefit) 4 (1)
Minority interest 1 1
-------------- --------------
Net Income (Loss) 7 (2)
-------------- --------------
Average common shares outstanding:
Basic 42.7 40.9
============== ==============
Diluted 45.0 43.5
============== ==============
Earnings (loss) per share of common stock:
Basic $ 0.17 $ (0.05)
============== ==============
Diluted $ 0.16 $ (0.05)
============== ==============
(a) Includes restructuring and restructuring related charges of $3 million
pre-tax, $2 million after tax or $0.04 per share. Of the adjustment $2 million
is recorded in cost of sales and the remaining $1 million is in SG&A.
Geographically, $2 million is recorded in North America and $1 million in
Europe.
(b) Includes changeover costs for a new aftermarket customer of $6 million
pre-tax, $3 million after-tax or $0.08 per share. Of the adjustment $4 million
is recorded in Sales and $2 million is recorded in SG&A. Geographically all of
the charge is recorded in North America.
(c) Includes restructuring and restructuring related charges of $5 million
pre-tax, $3 million after tax or $0.07 per share. Of the adjustment $2 million
is recorded in SG&A and the remaining $3 million is in cost of sales.
Geographically, $2 million is recorded in North America and $3 million in
Europe.
(d) Consulting fees indexed to stock price of $3 million pre-tax, $2 million
after-tax or $0.05 per share. The entire charge is recorded in SG&A.
Geographically $1 million of the charge is recorded in North America, Europe and
Asia Pacific respectively.
ATTACHMENT 1
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEETS
(Unaudited)
(Millions)
Restated
March 31, 2005 December 31, 2004
----------------- -----------------
Assets
Cash and Cash Equivalents $ 68 $ 214
Receivables, Net 556 (a) 488 (a)
Inventories 432 396
Other Current Assets 212 194
Investments and Other Assets 694 693
Plant, Property, and Equipment, Net 1,095 1,134
---------------- -----------------
Total Assets $ 3,057 $ 3,119
================ =================
Liabilities and Shareholders' Equity
Short-Term Debt $ 48 $ 19
Accounts Payable 704 696
Accrued Taxes 25 24
Accrued Interest 32 35
Other Current Liabilities 250 273
Long-Term Debt 1,360 (b) 1,401 (b)
Deferred Income Taxes 125 126
Deferred Credits and Other Liabilities 353 362
Minority Interest 25 24
Total Shareholders' Equity 135 159
---------------- -----------------
Total Liabilities and Shareholders' Equity $ 3,057 $ 3,119
================ =================
(a) Accounts Receivables net of: March 31, 2005 December 31, 2004
---------------- -----------------
Accounts Receivable securitization programs $ 147 $ 124
Receivables collected under advance payment programs $ 74 $ 132
(b) Long term debt composed of: March 31, 2005 December 31, 2004
---------------- -----------------
Term loan B (Due 2010) $ 356 $ 392
10.25% senior notes (Due 2013) 490 490
8.625% subordinated notes (Due 2014) 500 500
Other long term debt 14 19
---------------- -----------------
$ 1,360 $ 1,401
================ =================
ATTACHMENT 1
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Millions)
THREE MONTHS ENDED
MARCH 31,
---------------------------
2005 2004
-------- -------
Operating activities:
Net income $ 7 $ (2)
Adjustments to reconcile income (loss)
to net cash provided (used) by operating activities -
Depreciation and amortization of other intangibles 46 45
Deferred income taxes (4) (9)
Changes in components of working capital (net of acquisition) -
(Inc.)/dec. in receivables (78) (70)
(Inc.)/dec. in inventories (43) (27)
(Inc.)/dec. in prepayments and other current assets (23) (26)
Inc./(dec.) in payables 18 79
Inc./(dec.) in taxes accrued -- 5
Inc./(dec.) in interest accrued (3) (2)
Inc./(dec.) in other current liabilities (8) 15
Other (11) 5
-------- -------
Net cash provided by operating activities (99) 13
Investing activities:
Net proceeds from sale of assets 1 11
Expenditures for plant, property & equipment (32) (25)
Acquisition of business (11) --
Investments and other 3 (1)
-------- -------
Net cash used by investing activities (39) (15)
-------- -------
Financing activities:
Issuance of common shares 2 3
Retirement of long-term debt (41) (2)
Net inc./(dec.) in short-term debt excluding current
maturities on long-term debt 33 (2)
Other 1 1
-------- -------
Net cash used by financing activities (5) --
-------- -------
Effect of foreign exchange rate changes on cash and
cash equivalents (3) 6
-------- -------
Inc./(dec.) in cash and cash equivalents (146) 4
Cash and cash equivalents, January 1 214 145
-------- -------
Cash and cash equivalents, March 31 $ 68 $ 149
======== =======
Cash paid during the period for interest $ 31 $ 37
Cash paid during the period for income taxes $ 7 $ 3
ATTACHMENT 2
TENNECO AUTOMOTIVE
RECONCILIATION OF GAAP(a) NET INCOME (LOSS) TO EBITDA
Unaudited
Q1 2005
------------------------------------------------------------
North Europe Asia
America & SA Pacific Total
------- -------- ------- ----------
Net income $ 7
Minority interest 1
Income tax expense (benefit) 4
Interest expense (net of interest capitalized) 32
----------
EBIT, Income before interest expense, income
taxes and minority interest (GAAP measure) $ 37 $ 5 $ 2 44
Depreciation and amortization of other intangibles 23 20 3 46
------- -------- ------- ----------
Total EBITDA(b) $ 60 $ 25 $ 5 $ 90
======= ======== ======= ==========
Q1 2004
------------------------------------------------------------
North Europe Asia
America & SA Pacific Total
------- -------- ------- ----------
Net income (loss) $ (2)
Minority interest 1
Income tax expense (benefit) (1)
Interest expense (net of interest capitalized) 35
----------
EBIT, Income before interest expense, income
taxes and minority interest (GAAP measure) $ 30 $ - $ 3 33
Depreciation and amortization of other intangibles 24 17 4 45
------- -------- ------- ----------
Total EBITDA $ 54 $ 17 $ 7 $ 78
======= ======== ======= ==========
(a) Generally Accepted Accounting Principles
(b) EBITDA represents income before 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 performance. 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(a) TO NON-GAAP EARNINGS MEASURES(b)
Unaudited
Q1 2005 Q1 2004
--------------------------------------- --------------------------------------
EBITDA (c) EBIT Net Income Per Share EBITDA (c) EBIT Net Income Per Share
---------- ------- ---------- --------- ---------- ----- ---------- ---------
Earnings Measures $ 90 $ 44 $ 7 $ 0.16 $ 78 $ 33 $ (2) $ (0.05)
Adjustments (reflects non-GAAP measures):
Restructuring and restructuring related expenses 3 3 2 0.04 5 5 3 0.07
New Aftermarket customer changeover costs - - - - 6 6 3 0.08
Consulting fees indexed to stock price - - - - 3 3 2 0.05
-------- ------- ------ --------- ------ ----- ------- --------
Non-GAAP earnings measures $ 93 $ 47 $ 9 $ 0.20 $ 92 $ 47 $ 6 $ 0.15
======== ======= ====== ========= ====== ===== ======= ========
Q1 2005
------------------------------------------------------
North Europe Asia
America & SA Pacific Total
------------- ---------- ------------ -------------
EBIT $ 37 $ 5 $ 2 $ 44
Restructuring and restructuring related expenses 2 1 - 3
-------- ------- -------- ---------
Adjusted EBIT $ 39 $ 6 $ 2 $ 47
======== ======= ======== =========
Q1 2004
------------------------------------------------------
North Europe Asia
America & SA Pacific Total
------------- ---------- ------------ -------------
EBIT $ 30 - $ 3 $ 33
Restructuring and restructuring related expenses 2 3 - 5
New Aftermarket customer changeover costs 6 - - 6
Consulting fees indexed to stock price 1 1 1 3
------- ------ ------ --------
Adjusted EBIT $ 39 $ 4 $ 4 $ 47
======= ====== ====== ========
(a) Generally Accepted Accounting Principles
(b) Tenneco Automotive presents the above reconciliation of GAAP to non-GAAP
earnings measures in order to reflect the results for the first quarters of 2005
and 2004 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. Using only the
non-GAAP earnings measures to analyze earnings would have material limitations
because its calculation is based on the subjective determinations of management
regarding the nature and classification of events and circumstances that
investors may find material. Management compensates for these limitations by
utilizing both GAAP and non-GAAP earnings measures reflected above to understand
and analyze the results of the business. The company believes investors find the
non-GAAP information helpful in understanding the ongoing performance of
operations separate from items that may have a disproportionate positive or
negative impact on the company's financial results in any particular period.
(c) EBITDA represents income before 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 performance. 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 REVENUE TO NON-GAAP REVENUE MEASURES
Unaudited
Q1 2005
-----------------------------------------------------------------------------------
Pass-through Revenues
Sales Excluding
Revenues Excluding Currency
Currency Excluding Currency and Pass-through
Revenues Impact Currency Impact Sales
------------ ----------- ------------- ---------------- ---------------------
North America Aftermarket
Ride Control $ 91 $ -- $ 91 $ -- $ 91
Exhaust 39 -- 39 -- 39
------ ------ ------ ------ ------
Total North America Aftermarket 130 -- 130 -- 130
North America Original Equipment
Ride Control 127 -- 127 -- 127
Exhaust 248 2 246 67 179
------ ------ ------ ------ ------
Total North America Original Equipment 375 2 373 67 306
Total North America 505 2 503 67 436
Europe Aftermarket
Ride Control 37 2 35 -- 35
Exhaust 45 2 43 -- 43
------ ------ ------ ------ ------
Total Europe Aftermarket 82 4 78 -- 78
Europe Original Equipment
Ride Control 109 11 98 -- 98
Exhaust 277 16 261 80 181
------ ------ ------ ------ ------
Total Europe Original Equipment 386 27 359 80 279
South America 44 3 41 4 37
Total Europe & South America 512 34 478 84 394
Asia 42 -- 42 13 29
Australia 47 1 46 4 42
------ ------ ------ ------ ------
Total Asia Pacific 89 1 88 17 71
Total Tenneco Automotive $1,106 $ 37 $1,069 $ 168 $ 901
====== ====== ====== ====== ======
Q1 2004
-----------------------------------------------------------------------------------
Revenues
Excluding
Revenues Currency
Currency Excluding Pass-through and Pass-through
Revenues Impact Currency Sales Sales
------------ ----------- ------------- ---------------- ---------------------
North America Aftermarket
Ride Control $ 85 $-- $ 85 $ -- $ 85
Exhaust 37 -- 37 -- 37
------ --- ------ ------ ------
Total North America Aftermarket 122 -- 122 -- 122
North America Original Equipment
Ride Control 118 -- 118 -- 118
Exhaust 263 -- 263 88 175
------ --- ------ ------ ------
Total North America Original Equipment 381 -- 381 88 293
Total North America 503 -- 503 88 415
Europe Aftermarket
Ride Control 38 -- 38 -- 38
Exhaust 42 -- 42 -- 42
------ --- ------ ------ ------
Total Europe Aftermarket 80 -- 80 -- 80
Europe Original Equipment
Ride Control 85 -- 85 -- 85
Exhaust 243 -- 243 77 166
------ --- ------ ------ ------
Total Europe Original Equipment 328 -- 328 77 251
South America 34 -- 34 4 30
Total Europe & South America 442 -- 442 81 361
Asia 39 -- 39 13 26
Australia 49 -- 49 4 45
------ --- ------ ------ ------
Total Asia Pacific 88 -- 88 17 71
Total Tenneco Automotive $1,033 $-- $1,033 $ 186 $ 847
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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.