Tenneco Automotive Inc. (ticker: TEN, exchange: New York Stock Exchange) News Release

February 6, 2001

 
TENNECO AUTOMOTIVE ANNOUNCES FOURTH QUARTER AND FULL-YEAR 2000 RESULTS

LAKE FOREST, ILLINOIS, FEBRUARY 6, 2001 - Tenneco Automotive (NYSE: TEN) today reported a fourth quarter 2000 loss from continuing operations of $63 million, or $1.74 per diluted share, which includes restructuring and other charges of $42 million after-tax, or $1.18 per share. The company had a loss from continuing operations of $143 million, or $4.25 per diluted share, for the same period in 1999.

Before charges, the company reported a loss from continuing operations of $21 million, or 56 cents per diluted share, compared with income of $1 million, or 5 cents per diluted share in the fourth quarter of 1999.

"Obviously, we are disappointed with our fourth quarter results. Tough industry conditions in the auto parts sector, coupled with our highly leveraged position, had a significant impact on our performance," said Mark P. Frissora, chairman and CEO, Tenneco Automotive. "We have responded aggressively by implementing global cost reduction initiatives, sharply reducing spending and improving productivity in the face of this industry downturn. We will focus intensely on these efforts as we confront an equally challenging year in 2001."

For the full year 2000, Tenneco Automotive reported a loss from continuing operations of $41 million, or $1.18 per diluted share, compared with a loss from continuing operations of $63 million, or $1.87 per diluted share in 1999. Included in these results are one-time non-operational items taken in the third quarter of 2000, and fourth quarter charges in both years related to restructuring, as well as transaction expenses. Excluding one-time items, income from continuing operations in 2000 was $4 million, or 10 cents per diluted share. Excluding one-time items and assuming the company had incurred the same level of stand-alone and interest costs in 1999 as it did in 2000, income from continuing operations in 1999 would have been $24 million, or 74 cents per share.

"Despite this very difficult operating environment, we reduced working capital and capital spending, and initiated a securitization program for receivables to bring our senior debt level down by $107 million in 2000," said Frissora. "We also generated a $23 million improvement in EVA last year, and improved net cash flow before financing and factoring activities by $61 million."

FOURTH QUARTER RESULTS

Tenneco Automotive reported revenue of $849 million for the fourth quarter 2000, which includes $56 million in pass-through sales for catalytic converters. Excluding the pass- through sales, revenue was slightly down compared with fourth quarter 1999 revenue of $806 million.

Reported EBITDA for the quarter was a loss of $7 million, compared with a loss of $37 million in fourth quarter 1999. Excluding the $61 million in pre-tax charges, EBITDA was $54 million in the quarter compared with $77 million for the same period last year. The company also reported EBIT as a loss of $42 million, compared with a loss of $71 million in fourth quarter 1999. Without charges, EBIT was $19 million compared with $43 million the previous year.

North America

Revenue from the company's North American original equipment business declined, primarily due to light vehicle production cutbacks, and continuing lower heavy-duty ride control and elastomer volumes. North American original equipment revenue was $322 million, including $56 million in pass-through revenue from catalytic converter sales, compared with $301 million in revenue for the fourth quarter of 1999, which did not include pass-through revenue for catalytic converter sales.

Fourth quarter revenue for the North American aftermarket was $123 million, compared with fourth quarter 1999 revenue of $138 million. Revenues were down as a result of further deterioration in the replacement parts market.

Fourth quarter EBIT, before charges, for North American operations was $9 million, compared with $33 million, before charges, the previous year. In the original equipment business, the decrease was largely due to light vehicle production cutbacks, especially in December, and continued depressed heavy-duty ride control and elastomer volumes. On the aftermarket side, depressed industry conditions and higher promotional expenses impacted profitability.

Europe

The company reported fourth quarter 2000 revenue for the European original equipment business of $249 million, a 22 percent increase compared with fourth quarter 1999 revenue of $204 million. Revenue would have increased by 28 percent if exchange rates had been the same in the fourth quarter 2000 as in the fourth quarter of 1999. The increase in revenue was the result of very strong exhaust volumes.

Continued weakness in both ride control and exhaust product lines continued to affect revenue from the European aftermarket business. Revenue for the fourth quarter 2000 was $71 million, a 17 percent decline compared with $86 million in the fourth quarter of 1999. Excluding the currency impact, revenue would have declined by 13 percent.

European EBIT, before charges, for the fourth quarter was $5 million, even with the previous year. The erosion in the aftermarket was offset by strong volumes on the exhaust original equipment side of the business.

Tenneco Automotive reported fourth quarter results in other geographical areas as follows:

Region Revenue Growth (Decline) (year over year)
South America $37 million 12 percent
Australia $29 million (12 percent)
Asia $18 million 64 percent

Combined EBIT, before charges, for South America, Australia, and Asia in the fourth quarter was $5 million, even with EBIT before charges in fourth quarter 1999. Unit volume growth in Brazil, India, and China offset the currency impact and original equipment production cutbacks in Australia.

FULL YEAR RESULTS

For full-year 2000, the company reported an 8 percent increase in revenue to $3.55 billion from $3.28 billion in 1999. Excluding $206 million in pass-through sales for catalytic converters, revenue would have increased by 2 percent.

The company reported EBITDA of $271 million for 2000, compared with $292 million in 1999. Excluding one-time items, EBITDA was $336 in 2000. Excluding one-time items and assuming the company had incurred the same level of stand-alone costs in 1999, EBITDA for 1999 would have been $374 million. Full-year EBIT was $120 million compared with $148 million in 1999. Excluding one-time items, 2000 EBIT was $185 million. EBIT would have been $230 million in 1999 excluding one-time items and assuming the company had incurred the same level of stand-alone costs.

"We are pleased with stronger performances in our European original equipment and emerging markets businesses. Combined, we saw a 72 percent earnings (before-interest and tax) improvement year-over-year," said Frissora.

The attached exhibits provide additional information on Tenneco Automotive’s 2000 and 1999 operating results.

The company will host a conference call on February 6, 2001 at 10:30 a.m. EST. The dial-in number is 800-619-3527 domestic or 1-773-756-4629 international. Passcode is Tenneco Auto. A recording of this call will be available from 1:00 p.m. EST on February 6 through February 13. To access this recording, dial 800-964-4572 domestic or 402-998-1180 international, and enter the passcode 8400. The call will also be available on the Tenneco Automotive web site at www.tenneco-automotive.com.

Tenneco Automotive is a $3.5 billion manufacturing company headquartered in Lake Forest, Ill., with 23,000 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® and Walker ® global brand names. Among its products are Sensa-Trac® and Reflex™ shocks and struts, Rancho® shock absorbers, Walker® Quiet-Flow® mufflers and DynoMax® performance exhaust products, and Monroe® Clevite™ vibration control components.

This press release contains forward-looking statements. Words such as ''working to improve,'' ''will'' 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 integrate operations of acquired businesses quickly and in a cost effective manner; (x) the company's ability to execute restructuring and other cost reduction plans and to realize anticipated benefits from these plans; (xi) 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; (xiii) changes by the Financing Accounting Standards Board or other accounting regulatory bodies of authoritative generally accepted accounting principles or policies; 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. AND CONSOLIDATED SUBSIDIARIES

INCOME STATEMENT

THREE MONTHS ENDED DECEMBER 31, 2000

Unaudited

   

2000

 

1999

Net sales and operating revenues:

 

$849

 

$806

Costs and Expenses

       

Cost of Sales (exclusive of depreciation shown below)

 

$704

 

$615

Engineering, Research and Development

 

14

 

13

Selling, General and Administrative

 

143

 

218

Depreciation and Amortization

 

35

 

34

Total Costs and Expenses

 

896

 

880

Other Income (expense)

 

5

 

3

Operating income (loss) -

       

North America

 

(35)

 

23

Europe

 

(8)

 

(30)

Rest of World

 

1

 

3

Other

 

-

 

(67)

   

(42)

 

(71)

Less:

       

Interest expense (net of interest capitalized)

 

47

 

48

Income tax expense (benefit)

 

(26)

 

22

Minority interest

 

-

 

2

Income (loss) from continuing operations

 

(63)

 

(143)

Income (loss) from discontinued operations, net of income tax

 

-

 

(109)

Extraordinary loss, net of income tax

 

-

 

(11)

Net income (loss)

 

$(63)

 

$(263)

Average common shares outstanding:

       

Basic

 

35.7

 

33.6

Diluted

 

35.9

 

33.8

Earnings (loss) per share of common stock

       

Basic-

       

Continuing operations

 

$(1.74)

 

$(4.25)

Discontinued operations

 

-

 

(3.24)

Extraordinary loss

 

-

 

(0.34)

   

$(1.74)

 

$(7.83)

Diluted-

       

Continuing operations

 

$(1.74)

 

$(4.25)

Discontinued operations

 

-

 

(3.24)

Extraordinary loss

 

-

 

(0.34)

   

$(1.74)

 

$(7.83)

 

 

 

 

 


External Basis

Tenneco Automotive Inc. and Consolidated Subsidiaries

Statement of Cash Flows

Unaudited

(Millions)

 

Twelve Months Ended

 

December 31, 2000

 

2000

 

1999

Operating activities:

     

Income (loss) from continuing operations

$(41)

 

$(63)

Adjustments to reconcile income (loss) from continuing

     

operations to net cash provided (used) by

     

operating activities -

     

Depreciation and amortization

151

 

144

Deferred income taxes

(43)

 

97

(Gain)/loss on sale of businesses and assets, net

(2)

 

6

Changes in components of working capital -

     

(Inc.)/dec. in receivables

61

 

(151)

(Inc.)/dec. in inventories

(29)

 

(23)

(Inc.)/dec. in prepayments and other current assets

(14)

 

14

Inc./(dec.) in payables

141

 

46

Inc./(dec.) in taxes accrued

(4)

 

(43)

Inc./(dec.) in interest accrued

5

 

(7)

Inc./(dec.) in other current liabilities

(4)

 

(11)

Other

13

 

(10)

Cash provided (used) by continuing operations

234

 

(1)

Cash provided (used) by discontinued operations

-

 

(253)

Net cash provided (used) by operating activities

234

 

(254)

Investing activities:

     

Net proceeds from sale of discontinued operations

-

 

303

Net proceeds from sale of assets

26

 

8

Expenditures for plant, property & equipment

(146)

 

(154)

Acquisition of businesses

(5)

 

(36)

Expenditures for plant, property & equipment-discontinued operations

-

 

(1,264)

Investments and other

(32)

 

(45)

Net cash provided (used) by investing activities

(157)

 

(1,188)

Net Cash provided (used) before financing activities - continuing operations

77

 

(228)

Financing activities:

     

Issuance of common and treasury shares

17

 

41

Proceeds from subsidiary equity issuance

1

 

-

Purchase of common stock

-

 

(4)

Issuance of equity securities by subsidiaries

-

 

(408)

Issuance of long-term debt

1

 

3,721

Retirement of long-term debt

(107)

 

(1,410)

Net inc./(dec.) in short-term debt excluding current

     

maturities on long-term debt

(16)

 

(294)

Dividends (common)

(7)

 

(151)

Other

(12)

 

-

Net cash provided (used) by financing activities

(123)

 

1,495

Effect of foreign exchange rate changes on cash and

     

temporary cash investments

(3)

 

2

Inc./(dec.) in cash and temporary cash investments

(49)

 

55

Cash and temporary cash investments, January 1

$84

 

$29

Cash and temporary cash investments, December 31

$35

 

$84

CONTACT: Tenneco Automotive, Media relations
Jane Ostrander, 847/482-5607
jane.ostrander@tenneco-automotive.com

Tenneco Automotive, Investor relations
Leslie Cleveland Hague, 847/482-5042
lchague@tenneco-automotive.com

 


Tenneco Automotive Inc. and Consolidated Subsidiaries

Balance Sheets

(Unaudited)

(Millions)

       

December 2000

 

December 1999

       

Actual

 

Actual

ASSETS

   

RECEIVABLES, Net

 

$487

 

$571

   

INVENTORIES

 

422

 

412

   

OTHER CURRENT ASSETS

 

200

 

218

   

INVESTMENTS AND OTHER ASSETS

 

772

 

705

   

PLANT, PROPERTY, AND EQUIPMENT, NET

 

1,005

 

1,037

   

TOTAL ASSETS

 

$2,886

 

$2,943

LIABILITIES AND SHAREOWNERS' EQUITY

   

SHORT-TERM DEBT

 

$92

 

$56

   

ACCOUNTS PAYABLE

 

464

 

348

   

OTHER CURRENT LIABILITIES

 

253

 

259

   

LONG-TERM DEBT

 

1,435

 

1,578

   

DEFERRED INCOME TAXES

 

144

 

108

   

DEFERRED CREDITS AND OTHER LIABILITIES

 

154

 

156

   

MINORITY INTEREST

 

14

 

16

   

TOTAL STOCKHOLDERS' EQUITY

 

330

 

422

   

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$2,886

 

$2,943

   

DEBT TO CAPITALIZATION RATIO

 

81.6%

 

78.9%

 

TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES

INCOME STATEMENT

TWELVE MONTHS ENDED DECEMBER 31, 2000

Unaudited

 

2000

 

1999

Net sales and operating revenues:

$3,549

 

$3,279

 

     

Costs and Expenses

     

Cost of Sales (exclusive of depreciation shown below)

2,766

 

2,427

Engineering, Research and Development

58

 

52

Selling, General and Administrative

459

 

521

Depreciation and Amortization

151

 

144

Total Costs and Expenses

3,434

 

3,144

Other Income (expense)

5

 

13

Operating income (loss) -

     

North America

68

 

166

Europe

40

 

44

Rest of World

16

 

9

Other

(4)

 

(71)

 

120

 

148

Less:

     

Interest expense (net of interest capitalized)

186

 

106

Income tax expense (benefit)

(27)

 

82

Minority interest

2

 

23

Income (loss) from continuing operations

(41)

 

(63)

Income (loss) from discontinued operations, net of income tax

-

 

(208)

Extraordinary loss, net of income tax

(1)

(a)

(18)

Cumulative effect of changes in accounting principle, net of income tax

-

 

(134)

Net income (loss)

$(42)

 

$(423)

Average common shares outstanding:

     

Basic

34.7

 

33.5

Diluted

34.9

 

33.7

Earnings (loss) per share of common stock

     

Basic-

     

Continuing operations

$(1.18)

 

$(1.87)

Discontinued operations

-

 

(6.23)

Extraordinary loss

(0.02)

(a)

(0.55)

Cumulative effect of changes in accounting principle

-

 

(3.99)

 

$(1.20)

 

$(12.64)

Diluted-

     

Continuing operations

$(1.18)

 

$(1.87)

Discontinued operations

-

 

(6.23)

Extraordinary loss

(0.02)

(a)

(0.55)

Cumulative effect of changes in accounting principle

-

 

(3.99)

 

$(1.20)

 

$(12.64)

(a) Loss on early retirement of debt.

(b) Change in accounting principle related to costs of start-up activities of $102 million or $3.04 per share pursuant to AICPA Statement of Position 98-05 and change in accounting principle related to costs to acquire new aftermarket customer contracts of $32 million or $0.95 per share.

 

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