Financials (10-K)

Part II – Item 6. Selected Financial Data


Item 6. Selected Financial Data

The following data should be read in conjunction with Item 7 — “Management’s Discussion and Analysis of Financial Condition and Operations” and our consolidated financial statements in Item 8 — “Financial Statements and Supplementary Data.” These items include discussions of factors affecting comparability of the information shown below..

 TENNECO INC. AND CONSOLIDATED SUBSIDIARIES SELECTED CONSOLIDATED FINANCIAL DATA

Year Ended December 31,   2011(a)     2010     2009(b)     2008(c)     2007  
(Millions Except Share and Per Share Amounts)
Statements of Income (Loss) Data:                                        
Net sales and operating revenues —                                        
North America   $ 3,426     $ 2,832     $ 2,099     $ 2,641     $ 2,910  
Europe, South America and India     3,169       2,594       2,209       2,983       3,135  
Asia Pacific     804       698       525       543       560  
Intergroup sales     (194 )     (187 )     (184 )     (251 )     (421 )
    $ 7,205     $ 5,937     $ 4,649     $ 5,916     $ 6,184  
Earning (loss) before interest expense, income taxes, and noncontrolling interests                                        
North America   $ 216     $ 155     $ 42     $ (107 )   $ 120  
Europe, South America and India     125       76       20       85       99  
Asia Pacific     38       50       30       19       33  
Total     379       281       92       (3 )     252  
Interest expense (net of interest capitalized)     108       149       133       113       164  
Income tax expense     88       69       13       289       83  
Net income (loss)     183       63       (54 )     (405 )     5  
Less: Net income attributable to noncontrolling interests     26       24       19       10       10  
Net income (loss) attributable to Tenneco, Inc.   $ 157     $ 39     $ (73 )   $ (415 )   $ (5 )
Weighted average shares of common
stock outstanding —
                                       
Basic     59,884,139       59,208,103       48,572,463       46,406,095       45,809,730  
Diluted     61,520,160       60,998,694       48,572,463       46,406,095       45,809,730  
Basic earnings (loss) per share of common stock   $ 2.62     $ 0.65     $ (1.50 )   $ (8.95 )   $ (0.11 )
Diluted earnings (loss) per share of common stock   $ 2.55     $ 0.63     $ (1.50 )   $ (8.95 )   $ (0.11 )
 

Years Ended December 31,   2011     2010     2009     2008     2007  
(Millions Except Ratio and Percent Amounts)
Balance Sheet Data (at year end):                                        
Total assets   $ 3,337     $ 3,167     $ 2,841     $ 2,828     $ 3,590  
Short-term debt     66       63       75       49       46  
Long-term debt     1,158       1,160       1,145       1,402       1,328  
Redeemable noncontrolling interests     12       12       7       7       6  
Total Tenneco Inc. shareholders' equity           (4 )     (21 )     (251 )     400  
Noncontrolling interests     43       39       32       24       25  
Total equity     43       35       11       (227 )     425  
Statement of Cash Flows Data:                                        
Net cash provided by operating activities   $ 245     $ 244     $ 241     $ 160     $ 158  
Net cash used by investing activities     (224 )     (157 )     (119 )     (261 )     (202 )
Net cash used by financing activities     (26 )     (30 )     (87 )     58       (10 )
Cash payments for plant, property and equipment     (213 )     (151 )     (120 )     (233 )     (177 )
Other Data:                                        
EBITDA including noncontrolling interests(d)   $ 586     $ 497     $ 313     $ 219     $ 457  
Ratio of EBITDA including noncontrolling interests to interest expense     5.43       3.34       2.35       1.94       2.79  
Ratio of net debt
(total debt less cash and cash equivalents) to EBITDA including noncontrolling interests(e)
    1.72       1.99       3.36       6.05       2.60  
Ratio of earnings to fixed charges(f)     3.10       1.79                   1.46  

NOTE:Our consolidated financial statements for the three years ended December 31, 2011, which are discussed in the following notes, are included
in this Form 10-K under Item 8.

(a)

During the third quarter of 2011, we recorded a goodwill impairment charge of $11 million related to our Australian reporting unit within the Asia Pacific segment.

(b)

We incurred no direct economic loss from the bankruptcy filing of Chrysler and General Motors plants in North America during the second and third quarters of 2009. In this regard, we collected substantially all of our pre-petition receivables from Chrysler Group LLC and Chrysler Group LLC has assumed substantially all of the contracts which we had with Chrysler LLC. We collected substantially all of our pre-petition receivables from General Motors Company and General Motors Company has assumed substantially all of the contracts which we had with General Motors Corporation. However, the vehicle production shutdowns at Chrysler and significant reductions in vehicle production volumes at General Motors plants in North America during the second quarter of 2009 that coincided with their bankruptcies did cause Tenneco’s revenue from those two customers in North America to decline to $123 million in the second quarter of 2009, down from $242 million in the second quarter of 2008. We believe that General Motors and Chrysler were able to meet any unmet demand for their vehicles resulting from their production volume reductions in the second quarter of 2009 during the second half of 2009 after they exited their respective bankruptcy proceedings. Accordingly, for the entire 2009 calendar year, we consider the vehicle production volume reductions at Chrysler and General Motors to have been primarily driven by the same severe deterioration in overall economic conditions that caused substantially all of our original equipment customers in North America to significantly reduce production volumes in response to lower purchases of new vehicles.

(c)

During the fourth quarter of 2008, we recorded a goodwill impairment charge of $114 million related to our North American Original Equipment Ride Control reporting unit whose carrying value exceeded the estimated fair value. In addition, during the second half of 2008, we recorded tax expense of $190 million related to establishing a valuation allowance against our net deferred tax assets in the U.S.

(d)

EBITDA including noncontrolling interests is a non-GAAP measure defined as net income before extraordinary items, cumulative effect of changes in accounting principle, interest expense, income taxes, depreciation and amortization and noncontrolling interests. We use EBITDA including noncontrolling interests, together with GAAP measures, to evaluate and compare our operating performance on a consistent basis between time periods and with other companies that compete in our markets but which may have different capital structures and tax positions, which can have an impact on the comparability of interest expense, noncontrolling interests and tax expense. We also believe that using this measure allows us to understand and compare operating performance both with and without depreciation expense, which can vary based on several factors. We believe EBITDA including noncontrolling interests is useful to our investors and other parties for these same reasons.

EBITDA including noncontrolling interests should not be used as a substitute for net income or for net cash provided by operating activities prepared in accordance with GAAP. It should also be noted that EBITDA including noncontrolling interests may not be comparable to similarly titled measures used by other companies and, furthermore, that it excludes expenditures for debt financing, taxes and future capital requirements that are essential to our ongoing business operations. For these reasons, EBITDA including noncontrolling interests is of value to management and investors only as a supplement to, and not in lieu of, GAAP results. EBITDA including noncontrolling interests are derived from the statements of income (loss) as follows:

Year Ended December 31,   2011     2010     2009     2008     2007  
(Millions)      
Net income (loss)   $ 157     $ 39     $ (73 )   $ (415 )   $ (5 )
Noncontrolling interests     26       24       19       10       10  
Income tax expense     88       69       13       289       83  
Interest expense, net of interest capitalized     108       149       133       113       164  
Depreciation and amortization of other intangibles     207       216       221       222       205  
Total EBITDA including noncontrolling interests   $ 586     $ 497     $ 313     $ 219     $ 457  

(e)

We present the ratio of net debt (total debt less cash and cash equivalents) to EBITDA including noncontrolling interests because management believes it is a useful measure of Tenneco’s credit position and progress toward reducing leverage. The calculation is limited in that we may not always be able to use cash to repay debt on a dollar-for-dollar basis.

(f)

For purposes of computing this ratio, earnings generally consist of income before income taxes and fixed charges excluding capitalized interest. Fixed charges consist of interest expense, the portion of rental expense considered representative of the interest factor and capitalized interest. Earnings were insufficient to cover fixed charges by $39 million and $121 million for the years ended December 31, 2009 and 2008, respectively. See Exhibit 12 to this Form 10-K for the calculation of this ratio.