Tenneco Reports Fourth Quarter and Full-Year 2012 Financial Results
Highest-ever full-year revenue of $7.4 billion
Record net income and EPS for Q4 and full year
Record fourth quarter cash from operations up $43 million to $244
million
Record low full-year leverage ratio of 1.5x
LAKE FOREST, Ill.--(BUSINESS WIRE)--
Tenneco Inc. (NYSE: TEN) reported fourth quarter net income of $33
million, or 54-cents per diluted share, compared with net income of $30
million, or 49-cents per diluted share a year ago. On an adjusted basis,
net income rose to $40 million, or 66-cents per diluted share, compared
with $32 million, or 53-cents per diluted share, a year ago.
EBIT (earnings before interest, taxes and noncontrolling interests) was
$84 million versus $88 million in the fourth quarter 2011. Adjusted EBIT
was $94 million versus $89 million. The benefit from incremental new
light vehicle platforms and higher light vehicle volumes, and
effectively controlling operational costs drove the company’s
highest-ever fourth quarter adjusted EBIT.
These results include $5 million in fourth quarter expense, representing
6-cents per diluted share, for deferred and long-term compensation
indexed to the company’s stock price which rose 25% during the quarter.
“Despite volume weakness late in the year, we recorded our
highest-ever annual revenue and continued to deliver year-over-year
adjusted EBIT margin improvement in the fourth quarter and the full
year,” stated Gregg Sherrill, chairman and CEO, Tenneco. “Our focus on
operational excellence drove our earnings improvement as we effectively
converted on light vehicle revenues in North America and China, and
benefitted from strong execution on the launch of commercial vehicle
programs. I’m also pleased with the strong cash generation driven by
higher earnings and effective working capital management.”
Adjusted Fourth Quarter 2012 and 2011 Results
(millions except per share amounts)
Q4 2012
Q4 2011
Net income
Net income
attributable to
attributable to
EBITDA*
EBIT
Tenneco Inc.
Per Share
EBITDA*
EBIT
Tenneco Inc.
Per Share
Earnings Measures
$
141
$
84
$
33
$
0.54
$
139
$
88
$
30
$
0.49
Adjustments (reflects non-GAAP measures):
Restructuring and related expenses
3
3
2
0.04
1
1
-
0.01
Asset impairment charge
-
7
7
0.11
-
-
-
-
Net tax adjustments
-
-
(2
)
(0.03
)
-
-
2
0.03
Non-GAAP earnings measures
$
144
$
94
$
40
$
0.66
$
140
$
89
$
32
$
0.53
* EBITDA including noncontrolling interests (EBIT before
depreciation and amortization)
In addition to the items set forth above, the tables at the end of
this press release reconcile GAAP to non-GAAP results.
Fourth Quarter 2012 Adjustments
Restructuring and related charges of $3 million before tax, or 4-cents
per diluted share.
Non-cash asset impairment charge of $7 million, or 11-cents per
diluted share, related to the European ride control business.
Tax adjustments of $2 million, or 3-cents per diluted share, due to
adjustments of prior year estimates.
Fourth Quarter 2011 Adjustments
Restructuring and related charges of $1 million before tax, or 1-cent
per diluted share.
Tax adjustments of $2 million, or 3-cents per diluted share primarily
related to recording a valuation allowance against the foreign losses
and withholding taxes on foreign dividends, mostly offset by
adjustments to prior year estimates.
Revenue
Total revenue in the quarter was $1.753 billion compared with $1.784
billion in fourth quarter 2011. Revenue excluding substrate sales and
currency increased 2% to $1.390 billion versus $1.364 billion a year
ago. The increase was driven by strong light vehicle volumes in North
America and China and slightly higher North American aftermarket sales,
which offset declines in Europe OE volumes and aftermarket sales.
Currency had an unfavorable impact of $31 million in the quarter.
EBIT Margin
For the quarter, the company reported the following EBIT as a percent of
revenue and EBIT as a percent of value-add revenue (revenue excluding
substrate sales).
Q4 2012
Q4 2011
EBIT as a percent of revenue
4.8%
4.9%
EBIT as a percent of value-add revenue
6.2%
6.5%
Adjusted EBIT as a percent of revenue
5.4%
5.0%
Adjusted EBIT as a percent of value-add revenue
6.9%
6.5%
Cash
Cash generated from operations was $244 million, up from $201 million a
year ago, driven by higher earnings and effective working capital
management.
Capital expenditures in the quarter were $77 million versus $80 million
a year ago, primarily to support customer programs and growth in China
and the North America emission control business.
FULL-YEAR 2012 RESULTS
Tenneco reported total annual revenue of $7.363 billion, up from $7.205
billion in 2011. Excluding substrate sales and the impact of currency,
revenue increased 7% to $5.938 billion versus $5.527 billion the prior
year. Higher light vehicle production in North America, China and India,
strong aftermarket sales in North America, and incremental revenue from
commercial vehicle business drove record-high revenue despite lower OE
volumes and aftermarket sales in Europe and South America. Total OE
commercial and specialty vehicle revenue increased 22% year-over-year to
$804 million.
The company reported net income of $275 million, or $4.50 per diluted
share, compared with net income of $157 million, or $2.55 per diluted
share a year ago. Adjusted for the items in the table below, net income
rose to $203 million, or $3.32 per diluted share, compared with $163
million, or $2.66 per diluted share, a year ago.
For the year, Tenneco EBIT increased to $428 million from $379 million
in 2011. Adjusted for the items below, EBIT was up 11% to $443 million
versus $398 million a year ago. Earnings were driven by managing
operational costs on higher year-over-year OE light vehicle volumes,
efficient execution on the launch of commercial vehicle programs, and
higher North American aftermarket volumes.
Adjusted 2012 and 2011 Results
(millions except per share amounts)
2012
2011
Net income
Net income
attributable to
attributable to
EBITDA*
EBIT
Tenneco Inc.
Per Share
EBITDA*
EBIT
Tenneco Inc.
Per Share
Earnings Measures
$
633
$
428
$
275
$
4.50
$
586
$
379
$
157
$
2.55
Adjustments (reflects non-GAAP measures):
Restructuring and related expenses
13
13
8
0.14
8
8
5
0.09
Asset impairment charge
-
7
7
0.11
-
-
-
-
Pullman recoveries
(5
)
(5
)
(3
)
(0.05
)
-
-
-
-
Goodwill impairment charge
-
-
-
-
11
11
7
0.11
Costs related to refinancing
-
-
12
0.19
-
-
1
0.01
Net tax adjustments
-
-
(96
)
(1.57
)
-
-
(7
)
(0.10
)
Non-GAAP earnings measures
$
641
$
443
$
203
$
3.32
$
605
$
398
$
163
$
2.66
* EBITDA including noncontrolling interests (EBIT before
depreciation and amortization)
In addition to the items set forth above, the tables at the end of
this press release reconcile GAAP to non-GAAP results.
For the full year, the company reported the following EBIT as a percent
of revenue and EBIT as a percent of value-add revenue (revenue excluding
substrate sales).
2012
2011
EBIT as a percent of revenue
5.8%
5.3%
EBIT as a percent of value-add revenue
7.5%
6.9%
Adjusted EBIT as a percent of revenue
6.0%
5.5%
Adjusted EBIT as a percent of value-add revenue
7.8%
7.2%
Cash
For the full year 2012, the company generated $370 million in cash from
operations compared with $245 million in 2011, driven by higher earnings
and $54 million in working capital improvement. Total capital spending
for the full year was $263 million.
During the year, Tenneco completed a stock buyback plan, repurchasing
600,000 shares of its outstanding common stock for $18 million to offset
dilution from shares issued to employees in 2012.
Debt
At December 31, 2012, Tenneco’s debt net of cash was $957 million,
compared with $1.01 billion at the end of 2011. The company’s continued
earnings improvement and strong cash generation resulted in a new
all-time low net debt to adjusted EBITDA ratio of 1.5x.
Fourth quarter reporting segments
NORTH AMERICA
(millions except percents)
Q4 12
Revenues
Excluding
Currency &
Q4 12
% Change vs.
Substrate
% Change vs.
Revenues
Q4 11
Sales
Q4 11
North America Original Equipment
Ride Control
$
156
7
%
$
155
6
%
Emission Control
526
(2
%)
302
5
%
Total North America Original Equipment
682
0
%
457
5
%
North America Aftermarket
Ride Control
116
3
%
116
3
%
Emission Control
48
(2
%)
48
(2
%)
Total North America Aftermarket
164
1
%
164
1
%
Total North America
$
846
0
%
$
621
4
%
North America EBIT increased to $54 million from $46 million one year
ago. On an adjusted basis, EBIT rose 17% to $55 million from $47
million. EBIT performance was driven by leveraging volumes in both OE
businesses, higher aftermarket sales, and effectively controlling
operational costs.
EUROPE, SOUTH AMERICA, INDIA
(millions except percents)
Q4 12
Revenues
Excluding
Currency &
Q4 12
% Change vs.
Substrate
% Change vs.
Revenues
Q4 11
Sales
Q4 11
Europe Original Equipment
Ride Control
$
115
(17
%)
$
119
(14
%)
Emission Control
338
(6
%)
225
(6
%)
Total Europe Original Equipment
453
(9
%)
344
(9
%)
Europe Aftermarket
Ride Control
47
(2
%)
48
0
%
Emission Control
25
(19
%)
26
(16
%)
Total Europe Aftermarket
72
(9
%)
74
(6
%)
South America & India
141
(7
%)
138
7
%
Total Europe, South America & India
$
666
(9
%)
$
556
(5
%)
EBIT for Europe, South America and India for the quarter was $9 million
versus $28 million a year ago. Adjusted for restructuring and asset
impairment charges, EBIT was $18 million versus $28 million. The
adjusted EBIT decrease was driven by unfavorable currency of $4 million,
a 7% decline in Europe OE light vehicle production, significantly lower
aftermarket sales in Europe and the impact from underutilized capacity
due to low industry production volumes.
ASIA PACIFIC
(millions except percents)
Q4 12
Revenues
Excluding
Currency &
Q4 12
% Change vs.
Substrate
% Change vs.
Revenues
Q4 11
Sales
Q4 11
Asia
$
206
19
%
$
181
22
%
Australia
35
(3
%)
32
(6
%)
Total Asia Pacific
$
241
15
%
$
213
17
%
Reported and adjusted EBIT for Asia Pacific rose 50% to $21 million
compared with $14 million in 2011. EBIT was driven by higher China OE
volumes, Tenneco’s strong position on top-selling platforms and improved
manufacturing efficiency with the ramp up at new plants. Higher OE
volumes in Thailand and the benefit of restructuring and operating
improvements in Australia also contributed to year-over-year EBIT
improvement.
Outlook
The company will provide its annual guidance and outlook for 2013 on
February 14 during its previously announced investor and analyst meeting
in New York. Chairman and Chief Executive Officer, Gregg Sherrill, Chief
Operating Officer, Hari Nair, Chief Financial Officer, Ken Trammell, and
other members of the global management team will review the company’s
strategy, discuss business operations, and provide guidance including
revenue, capital expenditures, interest expense and cash taxes.
Based on IHS Automotive forecasts for first quarter 2013, Tenneco
anticipates global OE light vehicle production volumes will be slightly
lower, down 2% year-over-year. North America is expected to be down 2%,
Europe down 10%, India down 12%, China up 8% and South America up 5%.
Tenneco also expects that commercial vehicle volumes will be lower
year-over-year in the first quarter, as Power Systems Research is
forecasting a 17% decline in North America class 4-7 production, and the
company expects no improvement in the emissions regulated off-road
market, Tenneco’s largest commercial vehicle business.
The aftermarket business in the first quarter is expected to be
essentially flat year-over-year in North America, with the European
aftermarket remaining weak due to ongoing macroeconomic conditions
throughout the region.
Given the lower global OE light vehicle production and continued
weakness in commercial vehicle markets, Tenneco anticipates its total
revenue in the first quarter will be down slightly year-over-year.
Tenneco continues to take actions to address the ongoing challenges in
Europe. In the third quarter, the company announced plans to close an
aftermarket facility in Vittaryd, Sweden, and today, the company is
announcing its intention to make additional fixed cost reductions in
Europe. Including the Vittaryd closure, the company plans to reduce
structural costs in Europe by $60 million annually, and anticipates
related costs of approximately $120 million. Tenneco expects that most
of the expense will be recorded in late 2013 and 2014, and that the
company will reach a full savings run rate in 2016.
The company continues to expand its OE business with leading
manufacturers worldwide with a full light vehicle launch schedule for
the first quarter. Tenneco announced that it will supply Mahindra with
diesel aftertreatment systems for on-road heavy duty trucks in India,
and was selected by Scania to provide off-road diesel aftertreatment
systems for vehicles in Europe. This is in addition to the previously
announced Scania on-road business.
“While global macroeconomic conditions remain fragile and will pressure
production volumes in the first quarter, I’m pleased with how we’re
managing through this uncertainty, particularly the challenging economic
conditions in Europe, and continuing to win and launch new business and
drive operational excellence,” added Sherrill. “Tenneco has excellent
growth opportunities ahead with our outstanding position on light
vehicle platforms globally, our excellent footprint in the world’s
fastest-growing markets, and a strong book of business with commercial
vehicle customers which we will capitalize on as industry production
cycles recover.”
Attachment 1
Statements of Income – 3 Months
Statements of Income – 12 Months
Balance Sheets
Statements of Cash Flows – 3 Months
Statements of Cash Flows – 12 Months
Attachment 2
Reconciliation of GAAP Net Income to EBITDA including noncontrolling
interests – 3 Months
Reconciliation of GAAP to Non-GAAP Earnings Measures – 3 Months
Reconciliation of GAAP Net Income to EBITDA including noncontrolling
interests – 12 Months
Reconciliation of GAAP to Non-GAAP Earnings Measures – 12 Months
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures – 3
Months
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures – 12
Months
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures – 3
Months and 12 Months
Reconciliation of Non-GAAP Measures – Debt Net of Cash/Adjusted LTM
EBITDA including noncontrolling interests
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures –
Original Equipment and Aftermarket Revenue – 3 Months and 12 Months
Reconciliation of GAAP Revenue and Earnings to Non-GAAP Revenue and
Earnings Measures – 3 Months and 12 Months
CONFERENCE CALL
The company will host a conference call on Thursday, January 31, 2013 at
9:00 a.m. ET. The dial-in number is 888-946-9420 (domestic) or
312-470-7418 (international). The passcode is TENNECO. The call and
accompanying slides will be available on the financial section of the
Tenneco web site at www.tenneco.com.
A recording of the call will be available one hour following completion
of the call on January 31, 2013, through February 28, 2013. To access
this recording, dial 800-756-3941 (domestic) or 203-369-3592
(international). The purpose of the call is to discuss the company’s
operations for the 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 web site.
ANNUAL MEETING
The Tenneco Board of Directors has scheduled the corporation’s annual
meeting of shareholders for Wednesday, May 15, 2013 at 10:00 a.m. CT.
The meeting will be held at the corporate headquarters, 500 North Field
Drive, Lake Forest, Illinois. The record date for shareholders eligible
to vote at the meeting is March 18, 2013.
Tenneco is a $7.4 billion global manufacturing company with headquarters
in Lake Forest, Illinois and more than 24,000 employees worldwide.
Tenneco is one of the world’s largest designers, manufacturers and
marketers of emission control and ride control products and systems for
automotive and commercial vehicle original equipment markets and the
aftermarket. Tenneco markets its products principally under the Monroe®,
Walker® and Clevite®Elastomer brand names.
This press release contains forward-looking statements.Words
such as “may,” “expects,” “anticipate,” ”projects,” “will,” and
“outlook” 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) general economic, business and market conditions;
(ii) the company’s ability to source and procure needed materials,
components and other products and services in accordance with customer
demand and at competitive prices;
(iii) 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 at favorable rates, and the credit ratings of the
company’s debt;
(iv) changes in consumer demand, prices and the company’s ability to
have our products included on top selling vehicles, including any shifts
in consumer preferences to lower margin vehicles, for which we may or
may not have supply arrangements;
(v) changes in automotive and commercial vehicle manufacturers'
production rates and their actual and forecasted requirements for the
company's products such as the significant production cuts during recent
years by automotive manufacturers in response to difficult economic
conditions;
(vi) the overall highly competitive nature of the automobile and
commercial vehicle parts industries, and any resultant inability to
realize the sales represented by the company’s awarded book of business
which is based on anticipated pricing and volumes over the life of the
applicable program;
(vii) the loss of any of our large original equipment manufacturer
(“OEM”) customers (on whom we depend for a substantial portion of our
revenues), or the loss of market shares by these customers if we are
unable to achieve increased sales to other OEMs or any change in
customer demand due to delays in the adoption or enforcement of
worldwide emissions regulations;
(viii) workforce factors such as strikes or labor interruptions;
(ix)increases in the costs of raw materials, including the
company’s ability to successfully reduce the impact of any such cost
increases through materials substitutions, cost reduction initiatives,
customer recovery and other methods;
(x) the negative impact of higher fuel prices on transportation and
logistics costs, raw material costs and discretionary purchases of
vehicles or aftermarket products;
(xi) the cyclical nature of the global vehicular industry, including
the performance of the global aftermarket sector and longer product
lives of automobile parts;
(xii) 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;
(xiii) product warranty costs;
(xiv) the cost and outcome of existing and any future legal
proceedings;
(xv) economic, exchange rate and political conditions in the
countries where we operate or sell our products;
(xvi) 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;
(xvii) changes by the Financial Accounting Standards Board or other
accounting regulatory bodies to authoritative generally accepted
accounting principles or policies;
(xviii) changes in accounting estimates and assumptions, including
changes based on additional information;
(xix) governmental actions, including the ability to receive
regulatory approvals and the timing of such approvals, as well as the
impact of the enforcement of, changes to or compliance with laws and
regulations, including those pertaining to environmental concerns,
pensions or other regulated activities;
(xx) natural disasters, acts of war and/or terrorism and the impact
of these occurrences or acts on economic, financial, industrialand
social condition, including, without limitation, with respect to supply
chains and customer demand in the countries where the company operates;
and
(xxi) 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, 2011.
ATTACHMENT 1
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
Unaudited
THREE MONTHS ENDED DECEMBER 31,
(Millions except per share amounts)
2012
2011
Net sales and operating revenues
$
1,753
$
1,784
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown
below)
1,474
(a)
1,514
(d)
Engineering, research and development
32
31
Selling, general and administrative
106
100
Depreciation and amortization of other intangibles
57
(b)
51
Total costs and expenses
1,669
1,696
Loss on sale of receivables
(1
)
(1
)
Other income (expense)
1
1
Total other income (expense)
-
-
Earnings before interest expense, income taxes, and noncontrolling
interests
North America
54
(a)
46
(d)
Europe, South America & India
9
(a) (b)
28
Asia Pacific
21
14
84
88
Interest expense (net of interest capitalized)
21
27
Earnings before income taxes and noncontrolling interests
63
61
Income tax expense
22
(c)
23
(e)
Net income
41
38
Less: Net income attributable to noncontrolling interests
8
8
Net income attributable to Tenneco Inc.
$
33
$
30
Weighted average common shares outstanding:
Basic
60.0
59.9
Diluted
61.1
61.4
Earnings per share of common stock:
Basic
$
0.55
$
0.50
Diluted
$
0.54
$
0.49
(a) Includes restructuring and related charges of $3 million
pre-tax, $2 million after tax or $0.04 per diluted share, which is
recorded in cost of sales. Geographically, $1 million is recorded
in North America and $2 million in Europe, South America and India.
(b) Includes an asset impairment charge of $7 million or $0.11 per
diluted share related to the European ride control business.
(c) Includes net tax benefits of $2 million or $0.03 per diluted
share primarily related to recording adjustments to prior year
estimates.
(d) Includes restructuring and related charges of $1 million
pre-tax, less than $1 million after tax or $0.01 per diluted share,
which is recorded in cost of sales in North America.
(e) Includes net tax charges of $2 million or $0.03 per diluted
share primarily related to recording a valuation allowance against
the foreign losses and withholding taxes on foreign dividends,
mostly offset by adjustments to prior year estimates.
ATTACHMENT 1
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
Unaudited
TWELVE MONTHS ENDED DECEMBER 31,
(Millions except per share amounts)
2012
2011
Net sales and operating revenues
$
7,363
$
7,205
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown
below)
6,170
(a)
6,037
(f)
Goodwill impairment charge
-
11
(g)
Engineering, research and development
126
133
Selling, general and administrative
427
(a) (c)
428
Depreciation and amortization of other intangibles
205
(b)
207
Total costs and expenses
6,928
6,816
Loss on sale of receivables
(4
)
(5
)
Other income (expense)
(3
)
(5
)
Total other income (expense)
(7
)
(10
)
Earnings before interest expense, income taxes, and noncontrolling
interests
North America
288
(a) (c)
216
(f)
Europe, South America & India
71
(a) (b)
125
(f)
Asia Pacific
69
38
(f) (g)
428
379
Interest expense (net of interest capitalized)
105
(d)
108
(h)
Earnings before income taxes and noncontrolling interests
323
271
Income tax expense
19
(e)
88
(i)
Net income
304
183
Less: Net income attributable to noncontrolling interests
29
26
Net income attributable to Tenneco Inc.
$
275
$
157
Weighted average common shares outstanding:
Basic
60.0
59.9
Diluted
61.1
61.5
Earnings per share of common stock:
Basic
$
4.58
$
2.62
Diluted
$
4.50
$
2.55
(a) Includes restructuring and related charges of $13 million
pre-tax, $8 million after tax or $0.14 per diluted share. Of the
adjustment $10 million is recorded in cost of sales and $3 million
is recorded in selling, general and administrative expenses.
Geographically, $1 million is recorded in North America and $12
million in Europe, South America and India.
(b) Includes an asset impairment charge of $7 million or $0.11 per
diluted share related to the European ride control business.
(c) Includes a benefit of $5 million pre-tax, $3 million after tax
or 5-cents per diluted share, from property recoveries related to
transactions originated by The Pullman Company before being acquired
by Tenneco in 1996.
(d) Includes pre-tax expenses of $18 million, $12 million after tax
or $0.19 per share for costs related to refinancing activities.
(e) Includes net tax benefits of $96 million or $1.57 per diluted
share primarily related to the reversal of the tax valuation
allowance on the company’s U.S. net operating loss position and
recording a tax valuation allowance in Spain for tax credits that
may not be utilized due to tax losses there.
(f) Includes restructuring and related charges of $8 million
pre-tax, $5 million after tax or $0.09 per diluted share, which is
recorded in cost of sales. Geographically, $2 million is recorded in
North America, $3 million in Europe, South America and India and $3
million in Asia Pacific.
(g) Represents Goodwill impairment charge recorded in Australia of
$11 million pre-tax, $7 million after tax or $0.11 per diluted share.
(h) Includes pre-tax expenses of $1 million, $1 million after tax or
$0.01 per share for costs related to refinancing activities.
(i) Includes net tax benefits of $7 million or $0.10 per diluted
share primarily related to U.S. taxable income with no associated
tax expense due to the company's net operating loss carryforward and
adjustments to prior years' tax estimates, partially offset by the
impact of recording a valuation allowance against the tax benefit
for losses in certain foreign jurisdictions.
ATTACHMENT 1
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEETS
(Unaudited)
(Millions)
December 31, 2012
December 31, 2011
Assets
Cash and cash equivalents
$
223
$
214
Receivables, net
986
(a)
980
(a)
Inventories
667
592
Other current assets
244
193
Investments and other assets
364
311
Plant, property, and equipment, net
1,122
1,047
Total assets
$
3,606
$
3,337
Liabilities and Shareholders' Equity
Short-term debt
$
113
$
66
Accounts payable
1,186
1,171
Accrued taxes
50
44
Accrued interest
10
13
Other current liabilities
280
276
Long-term debt
1,067
(b)
1,158
(b)
Deferred income taxes
27
51
Deferred credits and other liabilities
567
503
Redeemable noncontrolling interests
15
12
Tenneco Inc. shareholders' equity
246
-
Noncontrolling interests
45
43
Total liabilities, redeemable noncontrolling interests and
shareholders' equity
$
3,606
$
3,337
December 31, 2012
December 31, 2011
(a)
Accounts Receivables net of:
Europe - Accounts receivables securitization programs
$
95
$
121
December 31, 2012
December 31, 2011
(b)
Long term debt composed of:
Borrowings against revolving credit facilities
$
92
$
24
Term loan A (Due 2017)
241
-
Term loan B (Due 2016)
-
148
8.125% senior notes (Due 2015)
-
250
7.75% senior notes (Due 2018)
225
225
6.875% senior notes (Due 2020)
500
500
Other long term debt
9
11
$
1,067
$
1,158
ATTACHMENT 1
Tenneco Inc. and Consolidated Subsidiaries
Statements of Cash Flows
(Unaudited)
(Millions)
Three Months Ended
December 31,
2012
2011
Operating activities:
Net income
$
41
$
38
Adjustments to reconcile net income to net cash provided by
operating activities -
Depreciation and amortization of other intangibles
57
51
Stock-based compensation
2
2
Deferred income taxes
29
(2
)
Loss on sale of assets
1
1
Changes in components of working capital-
(Inc.)/dec. in receivables
148
131
(Inc.)/dec. in inventories
9
21
(Inc.)/dec. in prepayments and other current assets
19
5
Inc./(dec.) in payables
(24
)
(15
)
Inc./(dec.) in accrued taxes
(30
)
-
Inc./(dec.) in accrued interest
(4
)
(9
)
Inc./(dec.) in other current liabilities
(5
)
(22
)
Changes in long-term assets
(2
)
3
Changes in long-term liabilities
3
(10
)
Other
-
7
Net cash provided by operating activities
244
201
Investing activities:
Proceeds from sale of assets
1
-
Cash payments for plant, property & equipment
(61
)
(68
)
Cash payments for software-related intangible assets
(3
)
(5
)
Net cash used by investing activities
(63
)
(73
)
Financing activities:
Retirement of long-term debt
(5
)
(1
)
Net inc./(dec.) in bank overdrafts
3
-
Net inc./(dec.) in revolver borrowings and short-term debt
excluding current maturities on long-term debt and short-term
borrowings secured by accounts receivable
(150
)
(78
)
Net inc./(dec.) in short-term debt secured by accounts receivable
(10
)
-
Distribution to noncontrolling interest partners
(2
)
-
Net cash used by financing activities
(164
)
(79
)
Effect of foreign exchange rate changes on cash and cash
equivalents
(1
)
2
Increase in cash and cash equivalents
16
51
Cash and cash equivalents, October 1
207
163
Cash and cash equivalents, December 31
$
223
$
214
Supplemental Cash Flow Information
Cash paid during the period for interest (net of interest
capitalized)
$
25
$
35
Cash paid during the period for income taxes (net of refunds)
26
27
Non-cash Investing and Financing Activities
Period ended balance of payables for plant, property, and equipment
$
42
$
35
ATTACHMENT 1
Tenneco Inc. and Consolidated Subsidiaries
Statements of Cash Flows
(Unaudited)
(Millions)
Twelve Months Ended
December 31,
2012
2011
Operating activities:
Net income
304
183
Adjustments to reconcile net income to net cash provided by
operating activities -
Goodwill impairment charge
-
11
Depreciation and amortization of other intangibles
205
207
Stock-based compensation
11
8
Deferred income taxes
(65
)
(5
)
Loss on sale of assets
4
4
Changes in components of working capital-
(Inc.)/dec. in receivables
(9
)
(183
)
(Inc.)/dec. in inventories
(72
)
(64
)
(Inc.)/dec. in prepayments and other current assets
(21
)
(13
)
Inc./(dec.) in payables
12
144
Inc./(dec.) in accrued taxes
7
(7
)
Inc./(dec.) in accrued interest
(3
)
-
Inc./(dec.) in other current liabilities
10
(7
)
Changes in long-term assets
14
1
Changes in long-term liabilities
(32
)
(41
)
Other
5
7
Net cash provided by operating activities
370
245
Investing activities:
Proceeds from sale of assets
3
4
Cash payments for plant, property & equipment
(256
)
(213
)
Cash payments for software-related intangible assets
(13
)
(15
)
Cash payment for net assets purchased
(7
)
-
Net cash used by investing activities
(273
)
(224
)
Financing activities:
Purchase of common stock under the share repurchase program
(18
)
(16
)
Issuance of long-term debt
250
5
Debt issuance costs on long-term debt
(13
)
(1
)
Retirement of long-term debt
(411
)
(24
)
Net inc./(dec.) in bank overdrafts
5
3
Net inc./(dec.) in revolver borrowings and short-term debt
excluding current maturities on long-term debt and short-term
borrowings secured by accounts receivable
67
30
Net inc./(dec.) in short-term debt secured by accounts receivable
50
-
Capital contribution from noncontrolling interest partner
5
1
Purchase of additional noncontrolling equity interest
-
(4
)
Distribution to noncontrolling interest partners
(29
)
(20
)
Net cash used by financing activities
(94
)
(26
)
Effect of foreign exchange rate changes on cash and cash
equivalents
6
(14
)
Increase (Decrease) in cash and cash equivalents
9
(19
)
Cash and cash equivalents, January 1
214
233
Cash and cash equivalents, December 31
$
223
$
214
Supplemental Cash Flow Information
Cash paid during the period for interest (net of interest
capitalized)
$
100
$
106
Cash paid during the period for income taxes (net of refunds)
80
85
Non-cash Investing and Financing Activities
Period ended balance of payables for plant, property, and equipment
$
42
$
35
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP(1) NET INCOME TO EBITDA INCLUDING
NONCONTROLLING INTERESTS (2)
Unaudited
(Millions)
Q4 2012
North
Europe,
Asia
America
SA & India
Pacific
Total
Net income attributable to Tenneco Inc.
$
33
Net income attributable to noncontrolling interests
8
Net income
41
Income tax expense
22
Interest expense (net of interest capitalized)
21
EBIT, Earnings before interest expense, income taxes and
noncontrolling interests (GAAP measure)
$
54
$
9
$
21
84
Depreciation and amortization of other intangibles
24
27
6
57
Total EBITDA including noncontrolling interests (2)
$
78
$
36
$
27
$
141
Q4 2011
North
Europe,
Asia
America
SA & India
Pacific
Total
Net income attributable to Tenneco Inc.
$
30
Net income attributable to noncontrolling interests
8
Net income
38
Income tax expense
23
Interest expense (net of interest capitalized)
27
EBIT, Earnings before interest expense, income taxes and
noncontrolling interests (GAAP measure)
$
46
$
28
$
14
88
Depreciation and amortization of other intangibles
24
21
6
51
Total EBITDA including noncontrolling interests (2)
$
70
$
49
$
20
$
139
(1) Generally Accepted Accounting Principles
(2) EBITDA including noncontrolling interests
represents income before interest expense, income taxes,
noncontrolling interests and depreciation and
amortization. EBITDA including noncontrolling interests is not a
calculation based upon generally accepted accounting
principles. The amounts included in the EBITDA including
noncontrolling interests calculation, however, are derived from
amounts included in the historical statements of income data. In
addition, EBITDA including noncontrolling interests should not be
considered as an alternative to net income (loss) attributable to
Tenneco Inc. 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 has presented EBITDA
including noncontrolling interests because it regularly reviews
EBITDA including noncontrolling interests as a measure of the
company's performance. In addition, Tenneco believes its
investors utilize and analyze our EBITDA including noncontrolling
interests for similar purposes. Tenneco also believes EBITDA
including noncontrolling interests 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 including
noncontrolling interests 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 INC.
RECONCILIATION OF GAAP(1) TO NON-GAAP EARNINGS MEASURES(2)
Unaudited
(Millions except per share amounts)
Q4 2012
Q4 2011
Net income
Net income
attributable to
attributable to
EBITDA (3)
EBIT
Tenneco Inc.
Per Share
EBITDA (3)
EBIT
Tenneco Inc.
Per Share
Earnings Measures
$
141
$
84
$
33
$
0.54
$
139
$
88
$
30
$
0.49
Adjustments (reflect non-GAAP measures):
Restructuring and related expenses
3
3
2
0.04
1
1
-
0.01
Asset impairment charge (4)
-
7
7
0.11
-
-
-
-
Net tax adjustments
-
-
(2
)
(0.03
)
-
-
2
0.03
Non-GAAP earnings measures
$
144
$
94
$
40
$
0.66
$
140
$
89
$
32
$
0.53
Q4 2012
North
Europe,
Asia
America
SA & India
Pacific
Total
EBIT
$
54
$
9
$
21
$
84
Restructuring and related expenses
1
2
-
3
Asset impairment charge (4)
-
7
-
7
Adjusted EBIT
$
55
$
18
$
21
$
94
Q4 2011
North
Europe,
Asia
America
SA & India
Pacific
Total
EBIT
$
46
28
$
14
$
88
Restructuring and related expenses
1
-
-
1
Adjusted EBIT
$
47
$
28
$
14
$
89
(1) Generally Accepted Accounting Principles
(2) Tenneco presents the above reconciliation of GAAP to
non-GAAP earnings measures primarily to reflect the results for the
fourth quarters of 2012 and 2011 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 and other items impacting comparability between the
periods. 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.
(3) EBITDA including noncontrolling interests represents
income before interest expense, income taxes, noncontrolling
interests and depreciation and amortization. EBITDA including
noncontrolling interests is not a calculation based upon generally
accepted accounting principles. The amounts included in the EBITDA
including noncontrolling interests calculation, however, are derived
from amounts included in the historical statements of income data.
In addition, EBITDA including noncontrolling interests should not be
considered as an alternative to net income (loss) attributable to
Tenneco Inc. 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 has presented EBITDA including
noncontrolling interests because it regularly reviews EBITDA
including noncontrolling interests as a measure of the company's
performance. In addition, Tenneco believes its investors utilize and
analyze our EBITDA including noncontrolling interests for similar
purposes. Tenneco also believes EBITDA including noncontrolling
interests 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 including noncontrolling interests measure presented may
not always be comparable to similarly titled measures reported by
other companies due to differences in the components of the
calculation.
(4) Non-cash asset impairment charge related to the
European ride control business.
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP(1) NET INCOME TO EBITDA INCLUDING
NONCONTROLLING INTERESTS (2)
Unaudited
(Millions)
YTD 2012
North
Europe,
Asia
America
SA & India
Pacific
Total
Net income attributable to Tenneco Inc.
$ 275
Net income attributable to noncontrolling interests
29
Net income
304
Income tax expense
19
Interest expense (net of interest capitalized)
105
EBIT, Earnings before interest expense, income taxes and
noncontrolling interests (GAAP measure)
$ 288
$ 71
$ 69
428
Depreciation and amortization of other intangibles
91
89
25
205
Total EBITDA including noncontrolling interests (2)
$ 379
$ 160
$ 94
$ 633
YTD 2011
North
Europe,
Asia
America
SA & India
Pacific
Total
Net income attributable to Tenneco Inc.
$ 157
Net income attributable to noncontrolling interests
26
Net income
183
Income tax expense
88
Interest expense (net of interest capitalized)
108
EBIT, Earnings before interest expense, income taxes and
noncontrolling interests (GAAP measure)
$ 216
$ 125
$ 38
379
Depreciation and amortization of other intangibles
95
88
24
207
Total EBITDA including noncontrolling interests (2)
$ 311
$ 213
$ 62
$ 586
(1) Generally Accepted Accounting Principles
(2) EBITDA including noncontrolling interests represents
income before interest expense, income taxes, noncontrolling
interests and depreciation and amortization. EBITDA including
noncontrolling interests is not a calculation based upon generally
accepted accounting principles. The amounts included in the EBITDA
including noncontrolling interests calculation, however, are derived
from amounts included in the historical statements of income data.
In addition, EBITDA including noncontrolling interests should not be
considered as an alternative to net income (loss) attributable to
Tenneco Inc. 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 has presented EBITDA including
noncontrolling interests because it regularly reviews EBITDA
including noncontrolling interests as a measure of the company's
performance. In addition, Tenneco believes its investors utilize and
analyze our EBITDA including noncontrolling interests for similar
purposes. Tenneco also believes EBITDA including noncontrolling
interests 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 including noncontrolling interests 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 INC.
RECONCILIATION OF GAAP(1) TO NON-GAAP EARNINGS MEASURES(2)
Unaudited
(Millions except per share amounts)
YTD 2012
YTD 2011
Net income
Net income
attributable to
attributable to
EBITDA (3)
EBIT
Tenneco Inc.
Per Share
EBITDA (3)
EBIT
Tenneco Inc.
Per Share
Earnings Measures
$
633
$
428
$
275
$
4.50
$
586
$
379
$
157
$
2.55
Adjustments (reflect non-GAAP measures):
Restructuring and related expenses
13
13
8
0.14
8
8
5
0.09
Asset impairment charge (4)
-
7
7
0.11
-
-
-
-
Pullman recoveries (5)
(5
)
(5
)
(3
)
(0.05
)
-
-
-
-
Goodwill impairment charge (6)
-
-
-
-
11
11
7
0.11
Costs related to refinancing
-
-
12
0.19
-
-
1
0.01
Net tax adjustments
-
-
(96
)
(1.57
)
-
-
(7
)
(0.10
)
Non-GAAP earnings measures
$
641
$
443
$
203
$
3.32
$
605
$
398
$
163
$
2.66
YTD 2012
North
Europe,
Asia
America
SA & India
Pacific
Total
EBIT
$
288
$
71
$
69
$
428
Restructuring and related expenses
1
12
-
13
Asset impairment charge (4)
-
7
-
7
Pullman recoveries (5)
(5
)
-
-
(5
)
Adjusted EBIT
$
284
$
90
$
69
$
443
YTD 2011
North
Europe,
Asia
America
SA & India
Pacific
Total
EBIT
$
216
125
$
38
$
379
Restructuring and related expenses
2
3
3
8
Goodwill impairment charge (6)
-
-
11
11
Adjusted EBIT
$
218
$
128
$
52
$
398
(1) Generally Accepted Accounting Principles
(2) Tenneco presents the above reconciliation of GAAP to
non-GAAP earnings measures primarily to reflect the results for 2012
and 2011 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 and other
items impacting comparability between the periods. 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.
(3) EBITDA including noncontrolling interests represents
income before interest expense, income taxes, noncontrolling
interests and depreciation and amortization. EBITDA including
noncontrolling interests is not a calculation based upon generally
accepted accounting principles. The amounts included in the EBITDA
including noncontrolling interests calculation, however, are derived
from amounts included in the historical statements of income data.
In addition, EBITDA including noncontrolling interests should not be
considered as an alternative to net income (loss) attributable to
Tenneco Inc. 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 has presented EBITDA including
noncontrolling interests because it regularly reviews EBITDA
including noncontrolling interests as a measure of the company's
performance. In addition, Tenneco believes its investors utilize and
analyze our EBITDA including noncontrolling interests for similar
purposes. Tenneco also believes EBITDA including noncontrolling
interests 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 including noncontrolling interests measure presented may
not always be comparable to similarly titled measures reported by
other companies due to differences in the components of the
calculation.
(4) Non-cash asset impairment charge related to the
European ride control business.
(5) Benefit from property recoveries related to
transactions originated by the Pullman company before being
acquired by Tenneco in 1996.
(6) Non-cash asset impairment charge related to
goodwill for Australia.
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP (1) REVENUE TO NON-GAAP REVENUE
MEASURES (2)
Unaudited
(Millions)
Q4 2012
Substrate
Revenues
Sales
Excluding
Revenues
Excluding
Currency
Currency
Excluding
Currency
and Substrate
Revenues
Impact
Currency
Impact
Sales
North America Original Equipment
Ride Control
$
156
$
1
$
155
$
-
$
155
Emission Control
526
-
526
224
302
Total North America Original Equipment
682
1
681
224
457
North America Aftermarket
Ride Control
116
-
116
-
116
Emission Control
48
-
48
-
48
Total North America Aftermarket
164
-
164
-
164
Total North America
846
1
845
224
621
Europe Original Equipment
Ride Control
115
(4
)
119
-
119
Emission Control
338
(12
)
350
125
225
Total Europe Original Equipment
453
(16
)
469
125
344
Europe Aftermarket
Ride Control
47
(1
)
48
-
48
Emission Control
25
(1
)
26
-
26
Total Europe Aftermarket
72
(2
)
74
-
74
South America & India
141
(18
)
159
21
138
Total Europe, South America & India
666
(36
)
702
146
556
Asia
206
4
202
21
181
Australia
35
-
35
3
32
Total Asia Pacific
241
4
237
24
213
Total Tenneco Inc.
$
1,753
$
(31
)
$
1,784
$
394
$
1,390
Q4 2011
Substrate
Revenues
Sales
Excluding
Revenues
Excluding
Currency
Currency
Excluding
Currency
and Substrate
Revenues
Impact
Currency
Impact
Sales
North America Original Equipment
Ride Control
$
146
$
-
$
146
$
-
$
146
Emission Control
539
-
539
251
288
Total North America Original Equipment
685
-
685
251
434
North America Aftermarket
Ride Control
113
-
113
-
113
Emission Control
49
-
49
-
49
Total North America Aftermarket
162
-
162
-
162
Total North America
847
-
847
251
596
Europe Original Equipment
Ride Control
139
-
139
-
139
Emission Control
359
-
359
120
239
Total Europe Original Equipment
498
-
498
120
378
Europe Aftermarket
Ride Control
48
-
48
-
48
Emission Control
31
-
31
-
31
Total Europe Aftermarket
79
-
79
-
79
South America & India
151
-
151
22
129
Total Europe, South America & India
728
-
728
142
586
Asia
173
-
173
25
148
Australia
36
-
36
2
34
Total Asia Pacific
209
-
209
27
182
Total Tenneco Inc.
$
1,784
$
-
$
1,784
$
420
$
1,364
(1) Generally Accepted Accounting Principles
(2) Tenneco 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, substrate sales include precious metals pricing, which
may be volatile. Substrate sales occur when, at the direction of its
OE customers, Tenneco purchases catalytic converters or components
thereof from suppliers, uses them in its manufacturing processes and
sells them as part of the completed system. While Tenneco original
equipment customers assume the risk of this volatility, it impacts
reported revenue. Excluding substrate sales removes this impact.
Tenneco uses this information to analyze the trend in revenues
before these factors. Tenneco believes investors find this
information useful in understanding period to period comparisons in
the company's revenues.
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP (1) REVENUE TO NON-GAAP REVENUE
MEASURES (2)
Unaudited
(Millions)
YTD 2012
Substrate
Revenues
Sales
Excluding
Revenues
Excluding
Currency
Currency
Excluding
Currency
and Substrate
Revenues
Impact
Currency
Impact
Sales
North America Original Equipment
Ride Control
$
660
$
(1
)
$
661
$
-
$
661
Emission Control
2,297
-
2,297
997
1,300
Total North America Original Equipment
2,957
(1
)
2,958
997
1,961
North America Aftermarket
Ride Control
553
1
552
-
552
Emission Control
209
-
209
-
209
Total North America Aftermarket
762
1
761
-
761
Total North America
3,719
-
3,719
997
2,722
Europe Original Equipment
Ride Control
496
(43
)
539
-
539
Emission Control
1,398
(125
)
1,523
534
989
Total Europe Original Equipment
1,894
(168
)
2,062
534
1,528
Europe Aftermarket
Ride Control
197
(20
)
217
-
217
Emission Control
106
(9
)
115
-
115
Total Europe Aftermarket
303
(29
)
332
-
332
South America & India
570
(89
)
659
89
570
Total Europe, South America & India
2,767
(286
)
3,053
623
2,430
Asia
724
2
722
80
642
Australia
153
(2
)
155
11
144
Total Asia Pacific
877
-
877
91
786
Total Tenneco Inc.
$
7,363
$
(286
)
$
7,649
$
1,711
$
5,938
YTD 2011
Substrate
Revenues
Sales
Excluding
Revenues
Excluding
Currency
Currency
Excluding
Currency
and Substrate
Revenues
Impact
Currency
Impact
Sales
North America Original Equipment
Ride Control
$
608
$
-
$
608
$
-
$
608
Emission Control
2,085
-
2,085
971
1,114
Total North America Original Equipment
2,693
-
2,693
971
1,722
North America Aftermarket
Ride Control
518
-
518
-
518
Emission Control
203
-
203
-
203
Total North America Aftermarket
721
-
721
-
721
Total North America
3,414
-
3,414
971
2,443
Europe Original Equipment
Ride Control
567
-
567
-
567
Emission Control
1,455
-
1,455
494
961
Total Europe Original Equipment
2,022
-
2,022
494
1,528
Europe Aftermarket
Ride Control
219
-
219
-
219
Emission Control
140
-
140
-
140
Total Europe Aftermarket
359
-
359
-
359
South America & India
632
-
632
103
529
Total Europe, South America & India
3,013
-
3,013
597
2,416
Asia
618
-
618
98
520
Australia
160
-
160
12
148
Total Asia Pacific
778
-
778
110
668
Total Tenneco Inc.
$
7,205
$
-
$
7,205
$
1,678
$
5,527
(1) Generally Accepted Accounting Principles
(2) Tenneco 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, substrate sales include precious metals pricing, which
may be volatile. Substrate sales occur when, at the direction of its
OE customers, Tenneco purchases catalytic converters or components
thereof from suppliers, uses them in its manufacturing processes and
sells them as part of the completed system. While Tenneco original
equipment customers assume the risk of this volatility, it impacts
reported revenue. Excluding substrate sales removes this impact.
Tenneco uses this information to analyze the trend in revenues
before these factors. Tenneco believes investors find this
information useful in understanding period to period comparisons in
the company's revenues.
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP REVENUE TO NON-GAAP REVENUE MEASURES
Unaudited
(Millions except percents)
Q4 2012 vs. Q4 2011 $ Change and % Change Increase (Decrease)
Revenues
Excluding
Currency and
Revenues
% Change
Substrate Sales
% Change
North America Original Equipment
Ride Control
$
10
7
%
$
9
6
%
Emission Control
(13
)
(2
%)
14
5
%
Total North America Original Equipment
(3
)
0
%
23
5
%
North America Aftermarket
Ride Control
3
3
%
3
3
%
Emission Control
(1
)
(2
%)
(1
)
(2
%)
Total North America Aftermarket
2
1
%
2
1
%
Total North America
(1
)
0
%
25
4
%
Europe Original Equipment
Ride Control
(24
)
(17
%)
(20
)
(14
%)
Emission Control
(21
)
(6
%)
(14
)
(6
%)
Total Europe Original Equipment
(45
)
(9
%)
(34
)
(9
%)
Europe Aftermarket
Ride Control
(1
)
(2
%)
-
0
%
Emission Control
(6
)
(19
%)
(5
)
(16
%)
Total Europe Aftermarket
(7
)
(9
%)
(5
)
(6
%)
South America & India
(10
)
(7
%)
9
7
%
Total Europe, South America & India
(62
)
(9
%)
(30
)
(5
%)
Asia
33
19
%
33
22
%
Australia
(1
)
(3
%)
(2
)
(6
%)
Total Asia Pacific
32
15
%
31
17
%
Total Tenneco Inc.
$
(31
)
(2
%)
$
26
2
%
YTD Q4 2012 vs. YTD Q4 2011 $ Change and % Change Increase (Decrease)
Revenues
Excluding
Currency and
Revenues
% Change
Substrate Sales
% Change
North America Original Equipment
Ride Control
$
52
9
%
$
53
9
%
Emission Control
212
10
%
186
17
%
Total North America Original Equipment
264
10
%
239
14
%
North America Aftermarket
Ride Control
35
7
%
34
7
%
Emission Control
6
3
%
6
3
%
Total North America Aftermarket
41
6
%
40
6
%
Total North America
305
9
%
279
11
%
Europe Original Equipment
Ride Control
(71
)
(13
%)
(28
)
(5
%)
Emission Control
(57
)
(4
%)
28
3
%
Total Europe Original Equipment
(128
)
(6
%)
-
0
%
Europe Aftermarket
Ride Control
(22
)
(10
%)
(2
)
(1
%)
Emission Control
(34
)
(24
%)
(25
)
(18
%)
Total Europe Aftermarket
(56
)
(16
%)
(27
)
(8
%)
South America & India
(62
)
(10
%)
41
8
%
Total Europe, South America & India
(246
)
(8
%)
14
1
%
Asia
106
17
%
122
23
%
Australia
(7
)
(4
%)
(4
)
(3
%)
Total Asia Pacific
99
13
%
118
18
%
Total Tenneco Inc.
$
158
2
%
$
411
7
%
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF NON-GAAP MEASURES
Debt net of cash / Adjusted LTM EBITDA including noncontrolling
interests
Unaudited
(Millions except ratios)
Quarter Ended December 31,
2012
2011
Total debt
$
1,180
$
1,224
Cash and cash equivalents
223
214
Debt net of cash balances (1)
$
957
$
1,010
Adjusted LTM EBITDA including noncontrolling interests (2) (3)
$
641
$
605
Ratio of debt net of cash balances to adjusted LTM EBITDA including
noncontrolling interests (4)
1.5x
1.7x
(1) Tenneco presents debt net of cash balances because
management believes it is a useful measure of Tenneco's credit
position and progress toward reducing leverage. The calculation is
limited in that the company may not always be able to use cash to
repay debt on a dollar-for- dollar basis.
(2) EBITDA including noncontrolling interests represents
income before interest expense, income taxes, noncontrolling
interests and depreciation and amortization. EBITDA including
noncontrolling interests is not a calculation based upon generally
accepted accounting principles. The amounts included in the EBITDA
including noncontrolling interests calculation, however, are derived
from amounts included in the historical statements of income data.
In addition, EBITDA including noncontrolling interests should not be
considered as an alternative to net income (loss) attributable to
Tenneco Inc. 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 has presented EBITDA including
noncontrolling interests because it regularly reviews EBITDA
including noncontrolling interests as a measure of the company's
performance. In addition, Tenneco believes its investors utilize and
analyze our EBITDA including noncontrolling interests for similar
purposes. Tenneco also believes EBITDA including noncontrolling
interests 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 including noncontrolling interests measure presented may
not always be comparable to similarly titled measures reported by
other companies due to differences in the components of the
calculation.
(3) Adjusted EBITDA including noncontrolling interests is
presented in order to reflect the results in a manner that allows a
better understanding of operational activities separate from the
financial impact of decisions made for the long term benefit of the
company and other items impacting comparability between the periods.
Similar adjustments to EBITDA including noncontrolling interests
have been recorded in earlier periods, and similar types of
adjustments can reasonably be expected to be recorded in future
periods. 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.
(4) Tenneco presents the above reconciliation of the
ratio of debt net of cash to annual adjusted EBITDA including
noncontrolling interests to show trends that investors may find
useful in understanding the company's ability to service its debt.
For purposes of this calculation, annual adjusted EBITDA including
noncontrolling interests is used as an indicator of the company's
performance and debt net of cash is presented as an indicator of our
credit position and progress toward reducing our financial leverage.
This reconciliation is provided as supplemental information and not
intended to replace the company's existing covenant ratios or any
other financial measures that investors may find useful in
describing the company's financial position. See notes (1), (2) and
(3) for a description of the limitations of using debt net of cash,
EBITDA including noncontrolling interests and adjusted EBITDA
including noncontrolling interests.
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP (1) REVENUE TO NON-GAAP REVENUE
MEASURES
Unaudited
(Millions)
Three Months Ended December 31,
2012
2011
Original equipment revenues
$
1,470
$
1,488
Aftermarket revenues
283
296
Net sales and operating revenues
$
1,753
$
1,784
Twelve Months Ended December 31,
2012
2011
Original equipment revenues
$
6,101
$
5,910
Aftermarket revenues
1,262
1,295
Net sales and operating revenues
$
7,363
$
7,205
(1) Generally Accepted Accounting Principles
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP (1) REVENUE AND EARNINGS TO
NON-GAAP REVENUE AND EARNINGS MEASURES (2)
Unaudited
(Millions except percents)
Q4 2012
Q4 2011
North
Europe,
Asia
North
Europe,
Asia
America
SA & India
Pacific
Total
America
SA & India
Pacific
Total
Net sales and operating revenues
$
846
$
666
$
241
$
1,753
$
847
$
728
$
209
$
1,784
Less: Substrate sales
224
141
24
389
251
142
27
420
Value-add revenues
$
622
$
525
$
217
$
1,364
$
596
$
586
$
182
$
1,364
EBIT
$
54
$
9
$
21
$
84
$
46
$
28
$
14
$
88
EBIT as a % of revenue
6.4
%
1.4
%
8.7
%
4.8
%
5.4
%
3.8
%
6.7
%
4.9
%
EBIT as a % of value-add revenue
8.7
%
1.7
%
9.7
%
6.2
%
7.7
%
4.8
%
7.7
%
6.5
%
Adjusted EBIT
$
55
$
18
$
21
$
94
$
47
$
28
$
14
$
89
Adjusted EBIT as a % of revenue
6.5
%
2.7
%
8.7
%
5.4
%
5.5
%
3.8
%
6.7
%
5.0
%
Adjusted EBIT as a % of value-add revenue
8.8
%
3.4
%
9.7
%
6.9
%
7.9
%
4.8
%
7.7
%
6.5
%
YTD 2012
YTD 2011
North
Europe,
Asia
North
Europe,
Asia
America
SA & India
Pacific
Total
America
SA & India
Pacific
Total
Net sales and operating revenues
$
3,719
$
2,767
$
877
$
7,363
$
3,414
$
3,013
$
778
$
7,205
Less: Substrate sales
997
570
93
1,660
971
597
110
1,678
Value-add revenues
$
2,722
$
2,197
$
784
$
5,703
$
2,443
$
2,416
$
668
$
5,527
EBIT
$
288
$
71
$
69
$
428
$
216
$
125
$
38
$
379
EBIT as a % of revenue
7.7
%
2.6
%
7.9
%
5.8
%
6.3
%
4.1
%
4.9
%
5.3
%
EBIT as a % of value-add revenue
10.6
%
3.2
%
8.8
%
7.5
%
8.8
%
5.2
%
5.7
%
6.9
%
Adjusted EBIT
$
284
$
90
$
69
$
443
$
218
$
128
$
52
$
398
Adjusted EBIT as a % of revenue
7.6
%
3.3
%
7.9
%
6.0
%
6.4
%
4.2
%
6.7
%
5.5
%
Adjusted EBIT as a % of value-add revenue
10.4
%
4.1
%
8.8
%
7.8
%
8.9
%
5.3
%
7.8
%
7.2
%
(1) Generally Accepted Accounting Principles
(2) Tenneco presents the above reconciliation of
revenues in order to reflect value-add revenues. Substrate sales
include precious metals pricing, which may be volatile. Substrate
sales occur when, at the direction of its OE customers, Tenneco
purchases catalytic converters or components thereof from
suppliers, uses them in its manufacturing processes and sells them
as part of the completed system. While Tenneco original equipment
customers assume the risk of this volatility, it impacts reported
revenue. Excluding substrate sales removes this impact. Further,
presenting EBIT as a percent of value-add revenue assists
investors in evaluating our company's operational performance
without the impact of such substrate sales.
Press Release $TEN Tenneco Inc.
LAKE FOREST, Ill.--(BUSINESS WIRE)-- Tenneco Inc. (NYSE: TEN) reported fourth quarter net income of $33 million, or 54-cents per diluted share, compared with net income of $30 million, or 49-cents per diluted share a year ago. On an adjusted basis, net income rose to $40 million, or 66-cents per diluted share, compared with $32 million, or 53-cents per diluted share, a year ago.
EBIT (earnings before interest, taxes and noncontrolling interests) was $84 million versus $88 million in the fourth quarter 2011. Adjusted EBIT was $94 million versus $89 million. The benefit from incremental new light vehicle platforms and higher light vehicle volumes, and effectively controlling operational costs drove the company’s highest-ever fourth quarter adjusted EBIT.
These results include $5 million in fourth quarter expense, representing 6-cents per diluted share, for deferred and long-term compensation indexed to the company’s stock price which rose 25% during the quarter.
“Despite volume weakness late in the year, we recorded our highest-ever annual revenue and continued to deliver year-over-year adjusted EBIT margin improvement in the fourth quarter and the full year,” stated Gregg Sherrill, chairman and CEO, Tenneco. “Our focus on operational excellence drove our earnings improvement as we effectively converted on light vehicle revenues in North America and China, and benefitted from strong execution on the launch of commercial vehicle programs. I’m also pleased with the strong cash generation driven by higher earnings and effective working capital management.”
Adjusted Fourth Quarter 2012 and 2011 Results
In addition to the items set forth above, the tables at the end of this press release reconcile GAAP to non-GAAP results.
Fourth Quarter 2012 Adjustments
Fourth Quarter 2011 Adjustments
Revenue
Total revenue in the quarter was $1.753 billion compared with $1.784 billion in fourth quarter 2011. Revenue excluding substrate sales and currency increased 2% to $1.390 billion versus $1.364 billion a year ago. The increase was driven by strong light vehicle volumes in North America and China and slightly higher North American aftermarket sales, which offset declines in Europe OE volumes and aftermarket sales. Currency had an unfavorable impact of $31 million in the quarter.
EBIT Margin
For the quarter, the company reported the following EBIT as a percent of revenue and EBIT as a percent of value-add revenue (revenue excluding substrate sales).
Cash
Cash generated from operations was $244 million, up from $201 million a year ago, driven by higher earnings and effective working capital management.
Capital expenditures in the quarter were $77 million versus $80 million a year ago, primarily to support customer programs and growth in China and the North America emission control business.
FULL-YEAR 2012 RESULTS
Tenneco reported total annual revenue of $7.363 billion, up from $7.205 billion in 2011. Excluding substrate sales and the impact of currency, revenue increased 7% to $5.938 billion versus $5.527 billion the prior year. Higher light vehicle production in North America, China and India, strong aftermarket sales in North America, and incremental revenue from commercial vehicle business drove record-high revenue despite lower OE volumes and aftermarket sales in Europe and South America. Total OE commercial and specialty vehicle revenue increased 22% year-over-year to $804 million.
The company reported net income of $275 million, or $4.50 per diluted share, compared with net income of $157 million, or $2.55 per diluted share a year ago. Adjusted for the items in the table below, net income rose to $203 million, or $3.32 per diluted share, compared with $163 million, or $2.66 per diluted share, a year ago.
For the year, Tenneco EBIT increased to $428 million from $379 million in 2011. Adjusted for the items below, EBIT was up 11% to $443 million versus $398 million a year ago. Earnings were driven by managing operational costs on higher year-over-year OE light vehicle volumes, efficient execution on the launch of commercial vehicle programs, and higher North American aftermarket volumes.
Adjusted 2012 and 2011 Results
In addition to the items set forth above, the tables at the end of this press release reconcile GAAP to non-GAAP results.
For the full year, the company reported the following EBIT as a percent of revenue and EBIT as a percent of value-add revenue (revenue excluding substrate sales).
Cash
For the full year 2012, the company generated $370 million in cash from operations compared with $245 million in 2011, driven by higher earnings and $54 million in working capital improvement. Total capital spending for the full year was $263 million.
During the year, Tenneco completed a stock buyback plan, repurchasing 600,000 shares of its outstanding common stock for $18 million to offset dilution from shares issued to employees in 2012.
Debt
At December 31, 2012, Tenneco’s debt net of cash was $957 million, compared with $1.01 billion at the end of 2011. The company’s continued earnings improvement and strong cash generation resulted in a new all-time low net debt to adjusted EBITDA ratio of 1.5x.
Fourth quarter reporting segments
NORTH AMERICA
North America EBIT increased to $54 million from $46 million one year ago. On an adjusted basis, EBIT rose 17% to $55 million from $47 million. EBIT performance was driven by leveraging volumes in both OE businesses, higher aftermarket sales, and effectively controlling operational costs.
EUROPE, SOUTH AMERICA, INDIA
EBIT for Europe, South America and India for the quarter was $9 million versus $28 million a year ago. Adjusted for restructuring and asset impairment charges, EBIT was $18 million versus $28 million. The adjusted EBIT decrease was driven by unfavorable currency of $4 million, a 7% decline in Europe OE light vehicle production, significantly lower aftermarket sales in Europe and the impact from underutilized capacity due to low industry production volumes.
ASIA PACIFIC
% Change vs.
Q4 11
Reported and adjusted EBIT for Asia Pacific rose 50% to $21 million compared with $14 million in 2011. EBIT was driven by higher China OE volumes, Tenneco’s strong position on top-selling platforms and improved manufacturing efficiency with the ramp up at new plants. Higher OE volumes in Thailand and the benefit of restructuring and operating improvements in Australia also contributed to year-over-year EBIT improvement.
Outlook
The company will provide its annual guidance and outlook for 2013 on February 14 during its previously announced investor and analyst meeting in New York. Chairman and Chief Executive Officer, Gregg Sherrill, Chief Operating Officer, Hari Nair, Chief Financial Officer, Ken Trammell, and other members of the global management team will review the company’s strategy, discuss business operations, and provide guidance including revenue, capital expenditures, interest expense and cash taxes.
Based on IHS Automotive forecasts for first quarter 2013, Tenneco anticipates global OE light vehicle production volumes will be slightly lower, down 2% year-over-year. North America is expected to be down 2%, Europe down 10%, India down 12%, China up 8% and South America up 5%. Tenneco also expects that commercial vehicle volumes will be lower year-over-year in the first quarter, as Power Systems Research is forecasting a 17% decline in North America class 4-7 production, and the company expects no improvement in the emissions regulated off-road market, Tenneco’s largest commercial vehicle business.
The aftermarket business in the first quarter is expected to be essentially flat year-over-year in North America, with the European aftermarket remaining weak due to ongoing macroeconomic conditions throughout the region.
Given the lower global OE light vehicle production and continued weakness in commercial vehicle markets, Tenneco anticipates its total revenue in the first quarter will be down slightly year-over-year.
Tenneco continues to take actions to address the ongoing challenges in Europe. In the third quarter, the company announced plans to close an aftermarket facility in Vittaryd, Sweden, and today, the company is announcing its intention to make additional fixed cost reductions in Europe. Including the Vittaryd closure, the company plans to reduce structural costs in Europe by $60 million annually, and anticipates related costs of approximately $120 million. Tenneco expects that most of the expense will be recorded in late 2013 and 2014, and that the company will reach a full savings run rate in 2016.
The company continues to expand its OE business with leading manufacturers worldwide with a full light vehicle launch schedule for the first quarter. Tenneco announced that it will supply Mahindra with diesel aftertreatment systems for on-road heavy duty trucks in India, and was selected by Scania to provide off-road diesel aftertreatment systems for vehicles in Europe. This is in addition to the previously announced Scania on-road business.
“While global macroeconomic conditions remain fragile and will pressure production volumes in the first quarter, I’m pleased with how we’re managing through this uncertainty, particularly the challenging economic conditions in Europe, and continuing to win and launch new business and drive operational excellence,” added Sherrill. “Tenneco has excellent growth opportunities ahead with our outstanding position on light vehicle platforms globally, our excellent footprint in the world’s fastest-growing markets, and a strong book of business with commercial vehicle customers which we will capitalize on as industry production cycles recover.”
Attachment 1
Attachment 2
CONFERENCE CALL
The company will host a conference call on Thursday, January 31, 2013 at 9:00 a.m. ET. The dial-in number is 888-946-9420 (domestic) or 312-470-7418 (international). The passcode is TENNECO. The call and accompanying slides will be available on the financial section of the Tenneco web site at www.tenneco.com. A recording of the call will be available one hour following completion of the call on January 31, 2013, through February 28, 2013. To access this recording, dial 800-756-3941 (domestic) or 203-369-3592 (international). The purpose of the call is to discuss the company’s operations for the 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 web site.
ANNUAL MEETING
The Tenneco Board of Directors has scheduled the corporation’s annual meeting of shareholders for Wednesday, May 15, 2013 at 10:00 a.m. CT. The meeting will be held at the corporate headquarters, 500 North Field Drive, Lake Forest, Illinois. The record date for shareholders eligible to vote at the meeting is March 18, 2013.
Tenneco is a $7.4 billion global manufacturing company with headquarters in Lake Forest, Illinois and more than 24,000 employees worldwide. Tenneco is one of the world’s largest designers, manufacturers and marketers of emission control and ride control products and systems for automotive and commercial vehicle original equipment markets and the aftermarket. Tenneco markets its products principally under the Monroe®, Walker® and Clevite®Elastomer brand names.
This press release contains forward-looking statements. Words such as “may,” “expects,” “anticipate,” ”projects,” “will,” and “outlook” 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) general economic, business and market conditions;
(ii) the company’s ability to source and procure needed materials, components and other products and services in accordance with customer demand and at competitive prices;
(iii) 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 at favorable rates, and the credit ratings of the company’s debt;
(iv) changes in consumer demand, prices and the company’s ability to have our products included on top selling vehicles, including any shifts in consumer preferences to lower margin vehicles, for which we may or may not have supply arrangements;
(v) changes in automotive and commercial vehicle manufacturers' production rates and their actual and forecasted requirements for the company's products such as the significant production cuts during recent years by automotive manufacturers in response to difficult economic conditions;
(vi) the overall highly competitive nature of the automobile and commercial vehicle parts industries, and any resultant inability to realize the sales represented by the company’s awarded book of business which is based on anticipated pricing and volumes over the life of the applicable program;
(vii) the loss of any of our large original equipment manufacturer (“OEM”) customers (on whom we depend for a substantial portion of our revenues), or the loss of market shares by these customers if we are unable to achieve increased sales to other OEMs or any change in customer demand due to delays in the adoption or enforcement of worldwide emissions regulations;
(viii) workforce factors such as strikes or labor interruptions;
(ix) increases in the costs of raw materials, including the company’s ability to successfully reduce the impact of any such cost increases through materials substitutions, cost reduction initiatives, customer recovery and other methods;
(x) the negative impact of higher fuel prices on transportation and logistics costs, raw material costs and discretionary purchases of vehicles or aftermarket products;
(xi) the cyclical nature of the global vehicular industry, including the performance of the global aftermarket sector and longer product lives of automobile parts;
(xii) 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;
(xiii) product warranty costs;
(xiv) the cost and outcome of existing and any future legal proceedings;
(xv) economic, exchange rate and political conditions in the countries where we operate or sell our products;
(xvi) 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;
(xvii) changes by the Financial Accounting Standards Board or other accounting regulatory bodies to authoritative generally accepted accounting principles or policies;
(xviii) changes in accounting estimates and assumptions, including changes based on additional information;
(xix) governmental actions, including the ability to receive regulatory approvals and the timing of such approvals, as well as the impact of the enforcement of, changes to or compliance with laws and regulations, including those pertaining to environmental concerns, pensions or other regulated activities;
(xx) natural disasters, acts of war and/or terrorism and the impact of these occurrences or acts on economic, financial, industrial and social condition, including, without limitation, with respect to supply chains and customer demand in the countries where the company operates; and
(xxi) 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, 2011.
Unaudited
(a)
Earnings before interest expense, income taxes, and noncontrolling interests
(a) Includes restructuring and related charges of $3 million pre-tax, $2 million after tax or $0.04 per diluted share, which is recorded in cost of sales. Geographically, $1 million is recorded in North America and $2 million in Europe, South America and India.
Unaudited
Earnings before interest expense, income taxes, and noncontrolling interests
Total liabilities, redeemable noncontrolling interests and shareholders' equity
Adjustments to reconcile net income to net cash provided by operating activities -
Net inc./(dec.) in revolver borrowings and short-term debt excluding current maturities on long-term debt and short-term borrowings secured by accounts receivable
Effect of foreign exchange rate changes on cash and cash equivalents
Adjustments to reconcile net income to net cash provided by operating activities -
Net inc./(dec.) in revolver borrowings and short-term debt excluding current maturities on long-term debt and short-term borrowings secured by accounts receivable
Effect of foreign exchange rate changes on cash and cash equivalents
ATTACHMENT 2
Unaudited
(2) EBITDA including noncontrolling interests represents income before interest expense, income taxes, noncontrolling interests and depreciation and amortization. EBITDA including noncontrolling interests is not a calculation based upon generally accepted accounting principles. The amounts included in the EBITDA including noncontrolling interests calculation, however, are derived from amounts included in the historical statements of income data. In addition, EBITDA including noncontrolling interests should not be considered as an alternative to net income (loss) attributable to Tenneco Inc. 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 has presented EBITDA including noncontrolling interests because it regularly reviews EBITDA including noncontrolling interests as a measure of the company's performance. In addition, Tenneco believes its investors utilize and analyze our EBITDA including noncontrolling interests for similar purposes. Tenneco also believes EBITDA including noncontrolling interests 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 including noncontrolling interests 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
Unaudited
EBITDA (3)
EBITDA (3)
(4) Non-cash asset impairment charge related to the European ride control business.
ATTACHMENT 2
Unaudited
ATTACHMENT 2
Unaudited
EBITDA (3)
EBITDA (3)
(4) Non-cash asset impairment charge related to the European ride control business.
(5) Benefit from property recoveries related to transactions originated by the Pullman company before being acquired by Tenneco in 1996.
(6) Non-cash asset impairment charge related to goodwill for Australia.
ATTACHMENT 2
RECONCILIATION OF GAAP (1) REVENUE TO NON-GAAP REVENUE MEASURES (2)
Unaudited
ATTACHMENT 2
Unaudited
ATTACHMENT 2
TENNECO INC.
Unaudited
North America Aftermarket
Europe Original Equipment
Europe Aftermarket
North America Aftermarket
Total North America
Europe Original Equipment
Europe Aftermarket
ATTACHMENT 2
Unaudited
ATTACHMENT 2
Unaudited
ATTACHMENT 2
Unaudited
(2) Tenneco presents the above reconciliation of revenues in order to reflect value-add revenues. Substrate sales include precious metals pricing, which may be volatile. Substrate sales occur when, at the direction of its OE customers, Tenneco purchases catalytic converters or components thereof from suppliers, uses them in its manufacturing processes and sells them as part of the completed system. While Tenneco original equipment customers assume the risk of this volatility, it impacts reported revenue. Excluding substrate sales removes this impact. Further, presenting EBIT as a percent of value-add revenue assists investors in evaluating our company's operational performance without the impact of such substrate sales.
Tenneco Inc.
Media inquiries
Bill Dawson, 847 482-5807
bdawson@tenneco.com
or
Investor inquiries
Linae Golla, 847 482-5162
lgolla@tenneco.com
Source: Tenneco Inc.