Tenneco Reports Second Quarter Earnings
* Reuters is not responsible for the content in this press release.
LAKE FOREST, Ill.--(Business Wire)--
Tenneco Inc. (NYSE:TEN):
-- Reports global revenues of $1.65 billion on strong Europe and
Asia-Pacific sales
-- Combined Europe segment and Asia Pacific EBIT up 10%
year-over-year
-- Expects $10 million in annualized savings from initial
restructuring to address North American industry changes
-- New off-road commercial vehicle business announced
Tenneco Inc. (NYSE:TEN) reported second quarter net income of $13
million, or 26-cents per diluted share, compared with $41 million, or
85-cents per diluted share, in second quarter 2007. Adjusted for the
items below, net income was $34 million, or 71-cents per diluted
share, versus $42 million, or 88-cents per diluted share a year ago.
The tables in this press release reconcile GAAP results to non-GAAP
results.
EBIT (earnings before interest, taxes and minority interest) was
$75 million, versus $103 million a year ago. Solid profit improvements
in the company's Europe and Asia Pacific segments partially offset
lower profitability in North America due to significant industry OE
production cuts and customer changeover costs for new aftermarket
business. Adjusted EBIT was $88 million, compared with $105 million in
second quarter 2007. EBITDA including minority interest (EBIT before
depreciation and amortization) was $132 million versus $153 million
the previous year. Adjusted EBITDA including minority interest was
$145 million compared with $155 million a year ago.
"Our strong performance in Europe, South America and Asia this
quarter partially offset the impact from tough market conditions in
North America, marked by a vehicle mix shift away from light trucks
and SUVs and a 15% decline in industry OE production volumes," said
Gregg Sherrill, chairman and CEO, Tenneco. "We responded quickly to
market changes by aggressively reducing costs across the entire
organization and flexing operations at our North American plants as
quickly as feasible to adjust to declining customer production
schedules."
Adjusted second quarter 2008 and 2007 results:
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Q2 2008 Q2 2007
-------------------------- --------------------------
Net Per Net Per
EBITDA EBIT Income Share EBITDA EBIT Income Share
------ ---- ------- ------ ------ ---- ------- ------
Earnings
Measures $132 $75 $13 $0.26 $153 $103 $41 $0.85
Adjustments
(reflects non-
GAAP measures):
Restructuring
and
restructuring
related
expenses 6 6 4 0.08 2 2 1 0.03
New Aftermarket
customer
changeover
costs 7 7 4 0.09 - - - -
Tax Adjustments - - 13 0.28 - - - -
------ ---- ------- ------ ------ ---- ------- ------
Non-GAAP
earnings
measures $145 $88 $34 $0.71 $155 $105 $42 $0.88
====== ==== ======= ====== ====== ==== ======= ======
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Second quarter 2008 adjustments:
-- Restructuring and related expenses of $6 million pre-tax, or
8-cents per diluted share;
-- Aftermarket customer changeover costs of $7 million pre-tax,
or 9-cents per diluted share related to new aftermarket
business (expenses incurred to replace competitors' products
with Tenneco products);
-- Non-cash tax expense of $13 million, or 28-cents per diluted
share, for tax liabilities related to changes in inter-company
billing arrangements.
Second quarter 2007 adjustments:
-- Restructuring and related expenses of $2 million pre-tax, or
3-cents per diluted share.
Second quarter revenue was $1.651 billion, compared with $1.663
billion a year ago. Substrate sales in the quarter declined to $401
million from $460 million the previous year. Excluding substrate sales
and a currency benefit of $115 million, revenue was $1.161 billion,
down 3% from $1.203 billion in second quarter 2007. The revenue
decline was driven by lower North America OE revenues due to lower
production volumes, a rapid vehicle mix shift and the American Axle
strike, which extended two months into the quarter, all of which was
compounded by strikes at GM plants producing crossover vehicles and
the Chevrolet Malibu.
Cash provided by operations in the quarter was $61 million versus
$67 million a year ago. Cash used for working capital was about the
same year-over-year. A higher level of securitized accounts receivable
in second quarter 2008 offset the impact from lower earnings in the
quarter.
At quarter-end, debt net of cash balances was $1.328 billion,
compared with $1.282 billion at the end of second quarter 2007. Cash
balances were $164 million versus $168 million the prior year. Total
debt was $1.492 billion versus $1.450 billion a year ago. At the end
of the quarter, the ratio of debt net of cash balances to adjusted LTM
(last twelve months) EBITDA including minority interest was 2.8x,
compared with 2.9x at the end of second quarter 2007.
Gross margin in the quarter was 16.2% compared with 17.2% in the
second quarter 2007. The decline was more than driven by the decline
in North America OE production and the mix shift away from light
trucks and SUVs. Gross margin included $3 million in
restructuring-related expenses in the second quarter 2008, compared to
$2 million in second quarter 2007.
Steel costs in the quarter were $17 million higher than one year
ago driven by increasing surcharges for chrome purchases in North
America. The company is addressing these increases with cost
reductions, aftermarket price increases and OE customer recovery
efforts.
SGA&E (selling, general, administrative and engineering) expense
in the quarter was 8.2% of sales versus 8.0% a year ago, as stepped up
cost management actions were offset by $7 million in customer
changeover costs for new business and $3 million for restructuring.
SGA&E as a percent of sales was also impacted by lower than planned
revenue due to the significant drop in North America OE production
including the impact of strikes. The company continued to make the
necessary planned engineering investments globally for future new
business.
NORTH AMERICA
-- OE revenue was $516 million, down from $661 million a year
ago. Excluding substrate sales, revenue was down 18%
year-over-year to $324 million from $395 million. Most of the
revenue decline occurred in the emission control business,
which saw a 23% drop in revenue excluding substrate sales, due
to the significant reduction in customer light truck
production. Ride control revenue declined 8% as the $12
million in passenger car-related revenue generated in June at
the recently acquired Kettering, Ohio ride control operations
partially offset the impact of significantly lower light truck
and SUV production.
-- Aftermarket revenue was up 6% year-over-year to $158 million
from $149 million, primarily driven by $6 million in ride
control and exhaust product sales to new customers. Excluding
favorable currency, revenue was $156 million.
-- EBIT for North America operations was $17 million, compared
with $50 million a year ago. Excluding the impact of
restructuring and aftermarket customer changeover costs for
new business, EBIT was $25 million versus $50 million in
second quarter 2007.
-- The adjusted EBIT decrease was due to the OE vehicle mix shift
and industry production volume declines that significantly
offset the benefit from higher aftermarket sales and lower
SG&A spending. Adjusted EBIT was negatively impacted by:
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-- The lower sales to OE customers due to light truck and SUV
production declines as well as strikes during the quarter.
This also negatively impacted Tenneco's mix. Together,
these factors accounted for a $27 million EBIT decline.
-- Manufacturing absorption driven by significant downward
changes to customer production schedules, which reduced
EBIT by an additional $12 million.
-- Higher depreciation expense of $2 million resulting from
capital expenditures made to support the 2007 emission
control platform launches.
*T
-- Partially offsetting these declines were the positive benefits
of:
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-- Higher aftermarket volumes and 2008 OE platform launches in
both the emission control and ride control businesses,
contributing $9 million in year-over-year EBIT improvement.
-- Focused spending reduction efforts to help counter the
eroding North America industry environment, predominantly
in lower SG&A costs.
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EUROPE, SOUTH AMERICA AND INDIA
-- Europe OE revenue was $578 million, up from $513 million a
year ago. Excluding the impact of substrate sales and
favorable currency, revenue was $370 million, versus $367
million the prior year. The year-over-year revenue comparison
also reflects $7 million less in alloy surcharge cost
recovery, driven by lower nickel prices. The increased revenue
in the quarter included ride control business on vehicles like
the VW Passat and Mercedes C-class - both with CES technology
- and emission control platforms including the BMW 1 and 3
series, Mini and VW Golf.
-- Europe aftermarket revenue was $129 million compared with $124
million a year ago. Excluding the impact of favorable
currency, revenue was $114 million. Lower exhaust product
sales drove down revenue and were the result of overall
exhaust market declines.
-- South America and India revenue increased to $108 million from
$81 million a year ago, driven by strong aftermarket sales and
OE volumes in South America. Excluding substrate sales and
currency, revenue was $82 million up from $70 million.
-- EBIT for Europe, South America and India increased to $48
million, up year-over-year from $45 million. Adjusted for
restructuring in each quarter, EBIT was $51 million, compared
with $47 million the prior year. The increase was driven by OE
volume increases, strong operational improvements and $2
million in favorable currency, which more than offset the
impact from lower Europe aftermarket sales.
ASIA PACIFIC
-- Asia revenue increased 23% to $105 million from $85 million
the prior year. Excluding substrate sales and favorable
currency, revenue was $68 million versus $55 million. The
increase was due to strong OE volumes in China, which drove
China revenue up 23% year-over-year.
-- Australia revenue was up 13% to $57 million from $50 million a
year ago, driven by higher OE production. Excluding substrate
sales and currency, revenue was $47 million versus $43
million.
-- Asia Pacific EBIT was $10 million, up from $8 million a year
ago. Adjusted for $2 million in restructuring costs in second
quarter 2008, EBIT was $12 million, versus $8 million. The
increase was driven by strong OE volumes in China, operational
improvements and $1 million in favorable currency.
OUTLOOK
Tenneco expects ongoing production volatility in the North America
market as its OE customers continue to adjust production schedules to
overall weak vehicle sales and the mix shift away from light trucks
and SUVs. Although Europe economic indicators are weakening, the
company expects overall European production to remain relatively
stable in the third quarter with weakening Western Europe industry
sales continuing to be offset by Eastern Europe. In China, the company
anticipates slowing overall industry growth. Tenneco also expects
global aftermarket conditions to remain flat to slightly down.
Tenneco updates its global original equipment revenue guidance
annually; however, the company announced today that the guidance
provided in its fourth quarter 2007 earnings release is no longer
applicable given the challenging economic conditions facing the
automotive industry in North America and around the world. The company
is not providing a specific update to its 2008 and 2009 guidance due
to the volatility of market conditions in North America and the
uncertainties around customer restructurings and plant shut-downs.
In response to the downturn in North American production, Tenneco
earlier this week implemented initial restructuring initiatives across
its North America OE business units, resulting in the elimination of
about 6% of its salaried staff (about 75 salaried positions) through
voluntary and involuntary severance programs. The company expects
these actions will generate $7 million in annualized savings. In June,
the company eliminated 25 salaried positions within its North American
aftermarket business unit (7% of its aftermarket salaried staff),
which the company expects will result in an additional $3 million in
annualized savings. The company recognized $1 million in restructuring
expense related to these actions in the second quarter and expects an
additional $5 million in restructuring expense in the third quarter.
Tenneco continues to adjust its hourly staff levels at its North
American plants in conjunction with customer production schedules. The
company is also reviewing its longer-term North American capacity
requirements, needing to balance the negative impact of recent light
vehicle customer announcements regarding manufacturing operations
changes and plant closings with Tenneco's capacity needs to
accommodate its fast-growing commercial vehicle business.
"We continue to closely monitor industry conditions on a regional
basis and will take the additional steps necessary to match our
operations to the market," Sherrill said. "In the near term, we are
committed to making the right changes, particularly in North America,
without compromising our long-term growth opportunities."
GROWTH
The company reiterates its expectations to achieve an average
compounded annual OE revenue growth rate of 11% to 13% between 2008
and 2012. Tenneco expects half of this growth to be generated in the
commercial vehicle market with significant new emissions control
business for on-road and off-road applications.
To date, the company has been awarded 37 development or production
contracts globally to supply diesel after-treatment technologies to
meet stricter emissions regulations that take effect in various
regions of the world starting in 2010. These include 21 commercial
vehicle contracts for on-road and off-road (construction and
agriculture) applications; 15 light vehicle contracts; and one
contract to meet locomotive regulations.
Yesterday, the company announced that it is working with
Caterpillar Inc. to develop and produce diesel engine after-treatment
systems for Caterpillar engines. Tenneco's advanced after-treatment
systems, along with Caterpillar's leading engine emissions reduction
technology, will be used globally to meet stricter diesel emissions
regulations that phase in beginning in 2011.
Tenneco continues to win new business in the expanding BRIC
markets and is continuing its strong position in North America
relative to the emissions control requirements for half-ton and
three-quarter ton diesel pick-up trucks.
"Our growth prospects remain robust thanks to our advanced
technology to meet future environmental regulations, which is driving
more emission control business in both the light vehicle and
commercial vehicle segments worldwide," Sherrill said. "Coupled with
our unmatched global manufacturing footprint, which is generating new
ride control and emission control business in the growth economies of
Eastern Europe, as well as Brazil, Russia, India and China, we remain
confident in our projection to grow our global OE revenues at an
average compounded annual growth rate of 11% to 13% over the next five
years."
Attachment 1:
Statements of Income - 3 Months
Statements of Income - 6 Months
Balance Sheets
Statements of Cash Flow - 3 Months
Statements of Cash Flow - 6 Months
Attachment 2:
Reconciliation of GAAP Net Income to EBITDA including minority
interest - 3 Months
Reconciliation of GAAP to Non-GAAP Earnings Measures - 3 Months
Reconciliation of GAAP Net Income to EBITDA including minority
interest - 6 Months
Reconciliation of GAAP to Non-GAAP Earnings Measures - 6 Months
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures - 3
Months
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures - 6
Months
Reconciliation of Non-GAAP Measures - Ratio of Debt Net of Cash to
Adjusted EBITDA including minority interest - LTM
CONFERENCE CALL
The company will host a conference call on Thursday, July 31, 2008
at 11:00 a.m. EDT. The dial-in number is 888-790-1408 (domestic) or
773-756-0157 (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 July 31, 2008.
To access this recording, dial 800-294-0991 (domestic) or 402-220-9753
(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.
Tenneco is a $6.2 billion manufacturing company with headquarters
in Lake Forest, Illinois and approximately 21,000 employees worldwide.
Tenneco is one of the world's largest designers, manufacturers and
marketers of emission control and ride control products and systems
for the automotive original equipment market and the aftermarket.
Tenneco markets its products principally under the Monroe(R),
Walker(R), Gillet(TM) and Clevite(R)Elastomer brand names.
This press release contains forward-looking statements. Words such
as "hopes," "may," "expects," "anticipate," "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) changes in automotive manufacturers' production rates and
their actual and forecasted requirements for the company's products;
(ii) the company's resultant inability to realize the sales
represented by its awarded book of business which is based on
anticipated pricing for the applicable program over its life, and is
subject to increases or decreases due to changes in customer
requirements, customer and consumer preferences, and the number of
vehicles actually produced by customers;
(iii) 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;
(iv) the cyclical nature of the global vehicular industry,
including the performance of the global aftermarket sector, and
changes in consumer demand and prices, including longer product lives
of automobile parts and the cyclicality of automotive production and
sales of automobiles which include the company's products, and the
potential negative impact on the company's revenues and margins from
such products;
(v) 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;
(vi) the general political, economic and competitive conditions in
markets and countries where the company and its subsidiaries operate,
including the strength of other currencies relative to the U.S. dollar
and currency fluctuations and other risks associated with operating in
foreign countries;
(vii) governmental actions, including the ability to receive
regulatory approvals and the timing of such approvals;
(viii) changes in capital availability or costs, including
increases in the company's costs of borrowing (i.e., interest rate
increases), the amount of the company's debt, the ability of the
company to access capital markets and the credit ratings of the
company's debt;
(ix) the cost and outcome of existing and any future legal
proceedings, and compliance with changes in regulations, including
environmental regulations;
(x) workforce factors such as strikes or labor interruptions;
(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 and the market;
(xii) further changes in the distribution channels for the
company's aftermarket products, further consolidations among
automotive parts customers and suppliers, and product warranty costs;
(xiii) changes by the Financial Accounting Standards Board or
other accounting regulatory bodies to authoritative generally accepted
accounting principles or policies;
(xiv) acts of war, riots or terrorism, including, but not limited
to the events taking place in the Middle East, the current military
action in Iraq and the continuing war on terrorism, as well as actions
taken or to be taken by the United States or other governments as a
result of further acts or threats of terrorism, and the impact of
these acts on economic, financial and social conditions in the
countries where the company operates; and
(xv) 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, 2007. Please see "Outlook" under "Management's
Discussion and Analysis of Financial Conditions and Results of
Operations" included in the company's form 10-K for the year ended
December 31, 2007 for information regarding the company's revenue
projection. Further information can be found on the company's web site
at www.tenneco.com.
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ATTACHMENT 1
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
Unaudited
----------------------------------------------------------------------
THREE MONTHS ENDED JUNE 30,
(Millions except per share amounts)
2008 2007
------------ ------------
Net sales and operating revenues $1,651 $1,663
============ ============
Costs and Expenses
Cost of Sales (exclusive of (a) (d)
depreciation shown below) 1,383 1,377
Engineering, Research and
Development 34 29
Selling, General and
Administrative 102 (a) (b) 104
Depreciation and Amortization
of Other Intangibles 57 50
------------ ------------
Total Costs and Expenses 1,576 1,560
============ ============
Loss on sale of receivables (2) (3)
Other Income (Expense) 2 3
------------ ------------
Total Other Income (Expense) - -
------------ ------------
Income before Interest Expense,
Income Taxes, and Minority
Interest
North America 17 (a) (b) 50
Europe, South America & India 48 (a) 45 (d)
Asia Pacific 10 (a) 8
------------ ------------
75 103
Less:
Interest expense (net of
interest capitalized) 33 40
Income tax expense 27 (c) 20
Minority interest 2 2
------------ ------------
Net Income 13 41
------------ ------------
Average common shares outstanding:
Basic 46.4 45.8
============ ============
Diluted 47.7 47.7
============ ============
Earnings per share of common stock:
Basic $0.26 $0.89
============ ============
Diluted $0.26 $0.85
============ ============
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(a) Includes restructuring and restructuring related charges of $6
million pre-tax, $4 million after tax or $0.08 per diluted share. Of
the adjustment $3 million is recorded in cost of sales and $3 million
is recorded in SG&A. Geographically, $1 million is recorded in North
America, $3 million in Europe, South America and India and $2 million
in Asia Pacific.
(b) Includes customer changeover costs of $7 million pre-tax, $4
million after-tax or $0.09 per diluted share.
(c) Includes a $13 million or $0.28 per diluted share charge for tax
adjustments.
(d) Includes restructuring and restructuring related charges of $2
million pre-tax, $1 million after tax or $0.03 per diluted share,
which is recorded in cost of sales in Europe, South America and
India.
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ATTACHMENT 1
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
Unaudited
----------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30,
(Millions except per share amounts)
2008 2007
------------ ------------
Net sales and operating revenues $3,211 $3,063
============ ============
Costs and Expenses
Cost of Sales (exclusive of (a) (d)
depreciation shown below) 2,709 2,556
Engineering, Research and
Development 70 56
Selling, General and (d)
Administrative 207 (a) (b) 199
Depreciation and Amortization of
Other Intangibles 112 98
------------ ------------
Total Costs and Expenses 3,098 2,909
============ ============
Loss on sale of receivables (4) (5)
Other Income (Expense) 5 3
------------ ------------
Total Other Income (Expense) 1 (2)
------------ ------------
Income before Interest Expense,
Income Taxes, and Minority
Interest
North America 26 (a) (b) 80 (d)
Europe, South America & India 73 (a) 58 (d)
Asia Pacific 15 (a) 14
------------ ------------
114 152
Less:
Interest expense (net of (e)
interest capitalized) 58 80
Income tax expense 32 (c) 22
Minority interest 5 4
------------ ------------
Net Income 19 46
------------ ------------
Average common shares outstanding:
Basic 46.3 45.6
============ ============
Diluted 47.7 47.4
============ ============
Earnings per share of common stock:
Basic $0.40 $1.00
============ ============
Diluted $0.39 $0.96
============ ============
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(a) Includes restructuring and restructuring related charges of $10
million pre-tax, $7 million after tax or $0.14 per diluted share. Of
the adjustment $6 million is recorded in cost of sales and $4 million
is recorded in SG&A. Geographically, $2 million is recorded in North
America, $6 million in Europe, South America and India and $2 million
in Asia Pacific.
(b) Includes customer changeover costs of $7 million pre-tax, $4
million after-tax or $0.09 per diluted share.
(c) Includes a $14 million or $0.29 per diluted share charge for tax
adjustments
(d) Includes restructuring and restructuring related charges of $4
million pre-tax, $2 million after tax or $0.06 per diluted share, of
which $3 million is recorded in cost of sales and $1 million is
recorded in SGA&E. Geographically, $1 million is recorded in North
America and $3 million in Europe, South America and India.
(e) Includes a pre-tax expense of $5 million, $4 million after-tax or
$0.07 per diluted share related to the write off of debt issuance
costs from the debt refinancing in March 2007.
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ATTACHMENT 1
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEETS
(Unaudited)
(Millions)
June 30, December 31,
2008 2007
----------- ------------
Assets
Cash and Cash Equivalents $164 $188
Receivables, Net 924 (a) 757 (a)
Inventories 621 539
Other Current Assets 214 157
Investments and Other Assets 725 764
Plant, Property, and
Equipment, Net 1,244 1,185
----------- ------------
Total Assets $3,892 $3,590
=========== ============
Liabilities and Shareholders'
Equity
Short-Term Debt $46 $46
Accounts Payable 1,074 987
Accrued Taxes 50 41
Accrued Interest 21 22
Other Current Liabilities 284 262
Long-Term Debt 1,446 (b) 1,328 (b)
Deferred Income Taxes 78 114
Deferred Credits and Other
Liabilities 370 359
Minority Interest 33 31
Total Shareholders' Equity 490 400
----------- ------------
Total Liabilities and
Shareholders' Equity $3,892 $3,590
=========== ============
June 30, December 31,
2008 2007
----------- ------------
(a) Accounts Receivables net of:
Accounts receivables
securitization programs $216 $157
June 30, December 31,
2008 2007
----------- ------------
(b) Long term debt composed of:
Borrowings against revolving
credit facilities $288 $169
Term loan A (Due 2012) 150 150
10.25% senior notes (Due
2013) 250 251
8.625% subordinated notes
(Due 2014) 500 500
8.125% senior notes (Due
2015) 250 250
Other long term debt 8 8
----------- ------------
$1,446 $1,328
=========== ============
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ATTACHMENT 1
Tenneco Inc. and Consolidated Subsidiaries
Statements of Cash Flows
(Unaudited)
(Millions)
Three Months Ended
June 30,
-------------------------
2008 2007
------------ ------------
Operating activities:
Net income $13 $41
Adjustments to reconcile net income
to net cash provided (used) by operating
activities -
Depreciation and amortization of other
intangibles 57 50
Stock-based compensation 2 2
Deferred income taxes (13) (10)
Loss on sale of assets 3 1
Changes in components of working capital
(net of acquisition)-
(Inc.)/dec. in receivables (61) (111)
(Inc.)/dec. in inventories (4) 3
(Inc.)/dec. in prepayments and other
current assets (22) (13)
Inc./(dec.) in payables 29 91
Inc./(dec.) in taxes accrued 26 -
Inc./(dec.) in interest accrued (10) 2
Inc./(dec.) in other current
liabilities 26 13
Other 15 (2)
------------ ------------
Net cash provided by operating activities 61 67
Investing activities:
Proceeds from sale of assets 1 1
Cash payments for plant, property &
equipment (64) (36)
Cash payments for software-related
intangibles (3) (4)
Acquisition of business (19) -
Investments and other - 1
------------ ------------
Net cash used by investing activities (85) (38)
------------ ------------
Financing activities:
Issuance of common shares - 2
Retirement of long-term debt - (2)
Net inc./(dec.) in revolver borrowings
and short-term debt excluding current
maturities on long-term debt 30 (7)
Distribution to minority interest partners (2) -
Other - (1)
------------ ------------
Net cash provided (used) by financing
activities 28 (8)
------------ ------------
Effect of foreign exchange rate changes on
cash and cash equivalents (1) 11
------------ ------------
Increase in cash and cash equivalents 3 32
Cash and cash equivalents, April 1 161 136
------------ ------------
Cash and cash equivalents, June 30 $164 $168
============ ============
Cash paid during the period for interest $39 $35
Cash paid during the period for income taxes 12 20
Non-cash Investing and Financing Activities
Period ended balance of payables for
plant, property, and equipment $22 $15
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ATTACHMENT 1
Tenneco Inc. and Consolidated Subsidiaries
Statements of Cash Flows
(Unaudited)
(Millions)
Six Months Ended
June 30,
-------------------------
2008 2007
------------ ------------
Operating activities:
Net income $19 $46
Adjustments to reconcile net income to
net cash provided (used) by operating
activities -
Depreciation and amortization of other
intangibles 112 98
Stock-based compensation 5 4
Deferred income taxes (18) (13)
Loss on sale of assets 5 3
Changes in components of working capital
(net of acquisition)-
(Inc.)/dec. in receivables (148) (312)
(Inc.)/dec. in inventories (47) (71)
(Inc.)/dec. in prepayments and other
current assets (40) (24)
Inc./(dec.) in payables 45 241
Inc./(dec.) in taxes accrued 25 (4)
Inc./(dec.) in interest accrued (1) (3)
Inc./(dec.) in other current
liabilities 11 19
Other 26 (10)
------------ ------------
Net cash used by operating activities (6) (26)
Investing activities:
Proceeds from sale of assets 2 1
Cash payments for plant, property &
equipment (127) (75)
Cash payments for software-related
intangibles (8) (11)
Acquisition of business (19) -
Investments and other - 2
------------ ------------
Net cash used by investing activities (152) (83)
------------ ------------
Financing activities:
Issuance of common shares 1 4
Issuance of long-term debt - 150
Debt issuance costs on long-term debt - (6)
Retirement of long-term debt (3) (359)
Net inc./(dec.) in revolver borrowings
and short-term debt excluding current
maturities on long-term debt 121 273
Distribution to minority interest partners (4) (1)
------------ ------------
Net cash provided by financing activities 115 61
------------ ------------
Effect of foreign exchange rate changes on
cash and cash equivalents 19 14
------------ ------------
Decrease in cash and cash equivalents (24) (34)
Cash and cash equivalents, January 1 188 202
------------ ------------
Cash and cash equivalents, June 30 $164 $168
============ ============
Cash paid during the period for interest $61 $77
Cash paid during the period for income taxes 24 28
Non-cash Investing and Financing Activities
Period ended balance of payables for
plant, property, and equipment $22 $15
*T
-0-
*T
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP(1) NET INCOME TO EBITDA(2) BEFORE MINORITY
INTEREST
Unaudited
----------------------------------------------------------------------
Q2 2008
---------------------------------------
North Europe Asia
America & SA Pacific Total
--------- --------- --------- ---------
Net income $13
Minority interest 2
Income tax expense 27
Interest expense (net of
interest capitalized) 33
---------
EBIT, Income before interest
expense, income taxes and
minority interest (GAAP
measure) $17 $48 $10 75
Depreciation and amortization
of other intangibles 27 26 4 57
--------- --------- --------- ---------
Total EBITDA including
minority interest(2) $44 $74 $14 $132
========= ========= ========= =========
Q2 2007
---------------------------------------
North Europe Asia
America & SA Pacific Total
--------- --------- --------- ---------
Net income $41
Minority interest 2
Income tax expense 20
Interest expense (net of
interest capitalized) 40
---------
EBIT, Income before interest
expense, income taxes and
minority interest (GAAP
measure) $50 $45 $8 103
Depreciation and amortization
of other intangibles 25 21 4 50
--------- --------- --------- ---------
Total EBITDA including
minority interest(2) $75 $66 $12 $153
========= ========= ========= =========
*T
-0-
*T
(1) Generally Accepted Accounting Principles
(2) EBITDA including minority interest represents income before
interest expense, income taxes, minority interest and depreciation
and amortization. EBITDA including minority interest is not a
calculation based upon generally accepted accounting principles. The
amounts included in the EBITDA including minority interest
calculation, however, are derived from amounts included in the
historical statements of income data. In addition, EBITDA including
minority interest should not be considered as an alternative to net
income or operating income as an indicator of the company's operating
performance, or as an alternative to operating cash flows as a
measure of liquidity. Tenneco has presented EBITDA including
minority interest because it regularly reviews EBITDA including
minority interest as a measure of the company's performance. In
addition, Tenneco believes its investors utilize and analyze our
EBITDA including minority interest for similar purposes. Tenneco
also believes EBITDA including minority interest 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 minority
interest measure presented may not always be comparable to similarly
titled measures reported by other companies due to differences in the
components of the calculation.
*T
-0-
*T
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP(1) TO NON-GAAP EARNINGS MEASURES(2)
Unaudited
----------------------------------------------------------------------
Q2 2008 Q2 2007
-------------------------- --------------------------
EBITDA Net Per EBITDA Net Per
(3) EBIT Income Share (3) EBIT Income Share
------ ---- ------- ------ ------ ---- ------- ------
Earnings Measures $132 $75 $13 $0.26 $153 $103 $41 $0.85
Adjustments
(reflect non-
GAAP measures):
Restructuring
and
restructuring
related
expenses 6 6 4 0.08 2 2 1 0.03
New aftermarket
customer
changeover
costs (4) 7 7 4 0.09 - - - -
Net tax
adjustments - - 13 0.28 - - - -
------ ---- ------- ------ ------ ---- ------- ------
Non-GAAP earnings
measures $145 $88 $34 $0.71 $155 $105 $42 $0.88
====== ==== ======= ====== ====== ==== ======= ======
Q2 2008
----------------------------
North Europe Asia
America & SA Pacific Total
------- ------ ------- -----
EBIT $17 $48 $10 $75
Restructuring
and
restructuring
related
expenses 1 3 2 6
New
aftermarket
customer
changeover
costs (4) 7 - - 7
------- ------ ------- -----
Adjusted EBIT $25 $51 $12 $88
======= ====== ======= =====
Q2 2007
----------------------------
North Europe Asia
America & SA Pacific Total
------- ------ ------- -----
EBIT $50 45 $8 $103
Restructuring
and
restructuring
related
expenses - 2 - 2
------- ------ ------- -----
Adjusted EBIT $50 $47 $8 $105
======= ====== ======= =====
*T
-0-
*T
(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 second
quarters of 2008 and 2007 in a manner that allows a better
understanding of the results of operational activities separate from
the financial impact of decisions made for the long-term benefit of
the company. Adjustments similar to the ones reflected above have
been recorded in earlier periods, and similar types of adjustments
can reasonably be expected to be recorded in future periods. Using
only the non-GAAP earnings measures to analyze earnings would have
material limitations because its calculation is based on the
subjective determinations of management regarding the nature and
classification of events and circumstances that investors may find
material. Management compensates for these limitations by utilizing
both GAAP and non-GAAP earnings measures reflected above to
understand and analyze the results of the business. The company
believes investors find the non-GAAP information helpful in
understanding the ongoing performance of operations separate from
items that may have a disproportionate positive or negative impact on
the company's financial results in any particular period.
(3) EBITDA including minority interest represents income before
interest expense, income taxes, minority interest and depreciation
and amortization. EBITDA including minority interest is not a
calculation based upon generally accepted accounting principles. The
amounts included in the EBITDA including minority interest
calculation, however, are derived from amounts included in the
historical statements of income data. In addition, EBITDA including
minority interest should not be considered as an alternative to net
income or operating income as an indicator of the company's operating
performance, or as an alternative to operating cash flows as a
measure of liquidity. Tenneco has presented EBITDA including
minority interest because it regularly reviews EBITDA including
minority interest as a measure of the company's performance. In
addition, Tenneco believes its investors utilize and analyze our
EBITDA including minority interest for similar purposes. Tenneco
also believes EBITDA including minority interest 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 minority
interest 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) Represents costs associated with changing new aftermarket
customers from their prior suppliers to an inventory of our products.
Although our aftermarket business regularly incurs changeover costs,
we specifically identify in the table above the changeover costs
that, based on the size or number of customers involved, we believe
are of an unusual nature for the time period in which they were
incurred.
*T
-0-
*T
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP(1) NET INCOME TO EBITDA(2) BEFORE MINORITY
INTEREST
Unaudited
----------------------------------------------------------------------
YTD 2008
---------------------------------------
North Europe Asia
America & SA Pacific Total
--------- --------- --------- ---------
Net income $19
Minority interest 5
Income tax expense 32
Interest expense (net of
interest capitalized) 58
---------
EBIT, Income before interest
expense, income taxes and
minority interest (GAAP
measure) $26 $73 $15 114
Depreciation and amortization
of other intangibles 53 50 9 112
--------- --------- --------- ---------
Total EBITDA including
minority interest(2) $79 $123 $24 $226
========= ========= ========= =========
YTD 2007
---------------------------------------
North Europe Asia
America & SA Pacific Total
--------- --------- --------- ---------
Net income $46
Minority interest 4
Income tax expense 22
Interest expense (net of
interest capitalized) 80
---------
EBIT, Income before interest
expense, income taxes and
minority interest (GAAP
measure) $80 $58 $14 152
Depreciation and amortization
of other intangibles 48 42 8 98
--------- --------- --------- ---------
Total EBITDA including
minority interest(2) $128 $100 $22 $250
========= ========= ========= =========
*T
-0-
*T
(1) Generally Accepted Accounting Principles
(2) EBITDA including minority interest represents income before
interest expense, income taxes, minority interest and depreciation
and amortization. EBITDA including minority interest is not a
calculation based upon generally accepted accounting principles. The
amounts included in the EBITDA including minority interest
calculation, however, are derived from amounts included in the
historical statements of income data. In addition, EBITDA including
minority interest should not be considered as an alternative to net
income or operating income as an indicator of the company's operating
performance, or as an alternative to operating cash flows as a
measure of liquidity. Tenneco has presented EBITDA including
minority interest because it regularly reviews EBITDA including
minority interest as a measure of the company's performance. In
addition, Tenneco believes its investors utilize and analyze our
EBITDA including minority interest for similar purposes. Tenneco
also believes EBITDA including minority interest 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 minority
interest measure presented may not always be comparable to similarly
titled measures reported by other companies due to differences in the
components of the calculation.
*T
-0-
*T
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP(1) TO NON-GAAP EARNINGS MEASURES(2)
Unaudited
----------------------------------------------------------------------
YTD 2008 YTD 2007
-------------------------- --------------------------
EBITDA Net Per EBITDA Net Per
(3) EBIT Income Share (3) EBIT Income Share
------ ---- ------- ------ ------ ---- ------- ------
Earnings
Measures $226 $114 $19 $0.39 $250 $152 $46 $0.96
Adjustments
(reflect non-
GAAP measures):
Restructuring
and
restructuring
related
expenses 10 10 7 0.14 4 4 2 0.06
New
aftermarket
customer
changeover
costs (4) 7 7 4 0.09 - - - -
Charges
related to
refinancing
activities - - - - - - 4 0.07
Tax
Adjustments - - 14 0.29 - - - -
------ ---- ------- ------ ------ ---- ------- ------
Non-GAAP
earnings
measures $243 $131 $44 $0.91 $254 $156 $52 $1.09
====== ==== ======= ====== ====== ==== ======= ======
YTD 2008
----------------------------
North Europe Asia
America & SA Pacific Total
------- ------ ------- -----
EBIT $26 $73 $15 $114
Restructuring and restructuring
related expenses 2 6 2 10
New aftermarket customer
changeover costs (4) 7 - - 7
------- ------ ------- -----
Adjusted EBIT $35 $79 $17 $131
======= ====== ======= =====
YTD 2007
----------------------------
North Europe Asia
America & SA Pacific Total
------- ------ ------- -----
EBIT $80 58 $14 $152
Restructuring and restructuring
related expenses 1 3 - 4
------- ------ ------- -----
Adjusted EBIT $81 $61 $14 $156
======= ====== ======= =====
*T
-0-
*T
(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 first six
months of 2008 and 2007 in a manner that allows a better
understanding of the results of operational activities separate from
the financial impact of decisions made for the long-term benefit of
the company. Adjustments similar to the ones reflected above have
been recorded in earlier periods, and similar types of adjustments
can reasonably be expected to be recorded in future periods. Using
only the non-GAAP earnings measures to analyze earnings would have
material limitations because its calculation is based on the
subjective determinations of management regarding the nature and
classification of events and circumstances that investors may find
material. Management compensates for these limitations by utilizing
both GAAP and non-GAAP earnings measures reflected above to
understand and analyze the results of the business. The company
believes investors find the non-GAAP information helpful in
understanding the ongoing performance of operations separate from
items that may have a disproportionate positive or negative impact on
the company's financial results in any particular period.
(3) EBITDA including minority interest represents income before
interest expense, income taxes, minority interest and depreciation
and amortization. EBITDA including minority interest is not a
calculation based upon generally accepted accounting principles. The
amounts included in the EBITDA including minority interest
calculation, however, are derived from amounts included in the
historical statements of income data. In addition, EBITDA including
minority interest should not be considered as an alternative to net
income or operating income as an indicator of the company's operating
performance, or as an alternative to operating cash flows as a
measure of liquidity. Tenneco has presented EBITDA including
minority interest because it regularly reviews EBITDA including
minority interest as a measure of the company's performance. In
addition, Tenneco believes its investors utilize and analyze our
EBITDA including minority interest for similar purposes. Tenneco
also believes EBITDA including minority interest 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 minority
interest 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) Represents costs associated with changing new aftermarket
customers from their prior suppliers to an inventory of our products.
Although our aftermarket business regularly incurs changeover costs,
we specifically identify in the table above the changeover costs
that, based on the size or number of customers involved, we believe
are of an unusual nature for the time period in which they were
incurred.
*T
-0-
*T
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP REVENUE TO NON-GAAP REVENUE MEASURES (1)
Unaudited
----------------------------------------------------------------------
Q2 2008
--------------------------------------------------
Substrate Revenues
Sales Excluding
Revenues Excluding Currency
and
Currency Excluding Currency Substrate
Revenues Impact Currency Impact Sales
--------- --------- --------- --------- ----------
North America
Original Equipment
Ride Control $121 $- $121 $- $121
Exhaust 395 - 395 192 203
--------- --------- --------- --------- ----------
Total North
America Original
Equipment 516 - 516 192 324
North America
Aftermarket
Ride Control 114 1 113 - 113
Exhaust 44 1 43 - 43
--------- --------- --------- --------- ----------
Total North
America
Aftermarket 158 2 156 - 156
Total North America 674 2 672 192 480
Europe Original
Equipment
Ride Control 131 16 115 - 115
Exhaust 447 54 393 138 255
--------- --------- --------- --------- ----------
Total Europe
Original
Equipment 578 70 508 138 370
Europe Aftermarket
Ride Control 69 8 61 - 61
Exhaust 60 7 53 - 53
--------- --------- --------- --------- ----------
Total Europe
Aftermarket 129 15 114 - 114
South America &
India 108 11 97 15 82
Total Europe, South
America & India 815 96 719 153 566
Asia 105 10 95 27 68
Australia 57 7 50 3 47
--------- --------- --------- --------- ----------
Total Asia Pacific 162 17 145 30 115
Total Tenneco Inc. $1,651 $115 $1,536 $375 $1,161
========= ========= ========= ========= ==========
Q2 2007
--------------------------------------------------
Substrate Revenues
Sales Excluding
Revenues Excluding Currency
Currency Excluding Currency and
Substrate
Revenues Impact Currency Impact Sales
--------- --------- --------- --------- ----------
North America
Original Equipment
Ride Control $132 $- $132 $- $132
Exhaust 529 - 529 266 263
--------- --------- --------- --------- ----------
Total North
America Original
Equipment 661 - 661 266 395
North America
Aftermarket
Ride Control 110 - 110 - 110
Exhaust 39 - 39 - 39
--------- --------- --------- --------- ----------
Total North
America
Aftermarket 149 - 149 - 149
Total North America 810 - 810 266 544
Europe Original
Equipment
Ride Control 107 - 107 - 107
Exhaust 406 - 406 146 260
--------- --------- --------- --------- ----------
Total Europe
Original
Equipment 513 - 513 146 367
Europe Aftermarket
Ride Control 61 - 61 - 61
Exhaust 63 - 63 - 63
--------- --------- --------- --------- ----------
Total Europe
Aftermarket 124 - 124 - 124
South America &
India 81 - 81 11 70
Total Europe, South
America & India 718 - 718 157 561
Asia 85 - 85 30 55
Australia 50 - 50 7 43
--------- --------- --------- --------- ----------
Total Asia Pacific 135 - 135 37 98
Total Tenneco Inc. $1,663 $- $1,663 $460 $1,203
========= ========= ========= ========= ==========
*T
-0-
*T
(1) 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 which the company previously referred to as pass-
through 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.
*T
-0-
*T
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP REVENUE TO NON-GAAP REVENUE MEASURES (1)
Unaudited
----------------------------------------------------------------------
YTD 2008
--------------------------------------------------
Substrate Revenues
Sales Excluding
Revenues Excluding Currency
and
Currency Excluding Currency Substrate
Revenues Impact Currency Impact Sales
--------- --------- --------- --------- ----------
North America
Original Equipment
Ride Control $233 $- $233 $- $233
Exhaust 833 2 831 409 422
--------- --------- --------- --------- ----------
Total North
America Original
Equipment 1,066 2 1,064 409 655
North America
Aftermarket
Ride Control 212 2 210 - 210
Exhaust 79 2 77 - 77
--------- --------- --------- --------- ----------
Total North
America
Aftermarket 291 4 287 - 287
Total North America 1,357 6 1,351 409 942
Europe Original
Equipment
Ride Control 260 33 227 - 227
Exhaust 873 109 764 272 492
--------- --------- --------- --------- ----------
Total Europe
Original
Equipment 1,133 142 991 272 719
Europe Aftermarket
Ride Control 116 14 102 - 102
Exhaust 100 12 88 - 88
--------- --------- --------- --------- ----------
Total Europe
Aftermarket 216 26 190 - 190
South America &
India 202 22 180 28 152
Total Europe, South
America & India 1,551 190 1,361 300 1,061
Asia 195 19 176 54 122
Australia 108 14 94 9 85
--------- --------- --------- --------- ----------
Total Asia Pacific 303 33 270 63 207
Total Tenneco Inc. $3,211 $229 $2,982 $772 $2,210
========= ========= ========= ========= ==========
YTD 2007
--------------------------------------------------
Substrate Revenues
Sales Excluding
Revenues Excluding Currency
and
Currency Excluding Currency Substrate
Revenues Impact Currency Impact Sales
--------- --------- --------- --------- ----------
North America
Original Equipment
Ride Control $265 $- $265 $- $265
Exhaust 905 - 905 432 473
--------- --------- --------- --------- ----------
Total North
America Original
Equipment 1,170 - 1,170 432 738
North America
Aftermarket
Ride Control 208 - 208 - 208
Exhaust 75 - 75 - 75
--------- --------- --------- --------- ----------
Total North
America
Aftermarket 283 - 283 - 283
Total North America 1,453 - 1,453 432 1,021
Europe Original
Equipment
Ride Control 214 - 214 - 214
Exhaust 793 - 793 284 509
--------- --------- --------- --------- ----------
Total Europe
Original
Equipment 1,007 - 1,007 284 723
Europe Aftermarket
Ride Control 100 - 100 - 100
Exhaust 104 - 104 - 104
--------- --------- --------- --------- ----------
Total Europe
Aftermarket 204 - 204 - 204
South America &
India 151 - 151 19 132
Total Europe, South
America & India 1,362 - 1,362 303 1,059
Asia 155 - 155 56 99
Australia 93 - 93 12 81
--------- --------- --------- --------- ----------
Total Asia Pacific 248 - 248 68 180
Total Tenneco Inc. $3,063 $- $3,063 $803 $2,260
========= ========= ========= ========= ==========
*T
-0-
*T
(1) 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 which the company previously referred to as pass-
through 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.
*T
-0-
*T
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF NON-GAAP MEASURES (7)
Debt net of cash / Adjusted EBITDA including minority interest - 12
months
Quarter Ended June 30
-----------------------------
2008 2007
--------- ---------
Total debt $1,492 $1,450
Cash and cash
equivalents 164 168
Debt net of cash
balances (1) 1,328 1,282
Adjusted EBITDA
including minority
interest (2) (3) 476 438
Ratio of net debt
to adjusted EBITDA
including minority
interest (4) 2.8x 2.9x
Q3 07 Q4 07 Q1 08 Q2 08 Q2 08 LTM
--------- --------- --------- --------- ----------
Net income (loss) 21 (72) 6 13 (32)
Minority interest 4 2 3 2 11
Income tax expense - 61 5 27 93
Interest expense
(net of interest
capitalized) 32 52 25 33 142
EBIT, Income before
interest expense,
income taxes and
minority interest
(GAAP measure) 57 43 39 75 214
Depreciation and
amortization of
other intangibles 52 55 55 57 219
Total EBITDA
including minority
interest (2) 109 98 94 132 433
Restructuring and
restructuring
related expenses 3 18 4 6 31
New Aftermarket
customer
changeover costs
(5) 5 - - 7 12
--------- --------- --------- --------- ----------
Total Adjusted
EBITDA including
minority
interest(3) 117 116 98 145 476
========= ========= ========= ========= ==========
Q3 06 Q4 06 Q1 07 Q2 07 Q2 07 LTM
--------- --------- --------- --------- ----------
Net income 7 15 5 41 68
Minority interest 2 2 2 2 8
Income tax expense
(benefit) 4 (12) 2 20 14
Interest expense
(net of interest
capitalized) 30 34 40 40 144
EBIT, Income before
interest expense,
income taxes and
minority interest
(GAAP measure) 43 39 49 103 234
Depreciation and
amortization of
other intangibles 45 48 48 50 191
Total EBITDA
including minority
interest (2) 88 87 97 153 425
Restructuring and
restructuring
related expenses 7 6 2 2 17
New Aftermarket
customer
changeover costs
(5) - - - - -
Pension Curtailment
(6) - (7) - - (7)
Reserve for
receivables from
former affiliate - 3 - - 3
--------- --------- --------- --------- ----------
Total Adjusted
EBITDA including
minority
interest(3) 95 89 99 155 438
========= ========= ========= ========= ==========
*T
-0-
*T
(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 minority interest represents income before
interest expense, income taxes, minority interest and depreciation
and amortization. EBITDA including minority interest is not a
calculation based upon generally accepted accounting principles. The
amounts included in the EBITDA including minority interest
calculation, however, are derived from amounts included in the
historical statements of income data. In addition, EBITDA including
minority interest should not be considered as an alternative to net
income or operating income as an indicator of the company's operating
performance, or as an alternative to operating cash flows as a
measure of liquidity. Tenneco has presented EBITDA including
minority interest because it regularly reviews EBITDA including
minority interest as a measure of the company's performance. In
addition, Tenneco believes its investors utilize and analyze our
EBITDA including minority interest for similar purposes. Tenneco
also believes EBITDA including minority interest 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 minority
interest measure presented may not always be comparable to similarly
titled measures reported by 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 minority interest 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 minority interest 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 minority interest 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 minority interest 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 minority interest and adjusted EBITDA
including minority interest.
(5) Represents costs associated with changing new aftermarket
customers from their prior suppliers to an inventory of our products.
Although our aftermarket business regularly incurs changeover costs,
we specifically identify in the table above those changeover costs
that, based on the size or number of customers involved, we believe
are of an unusual nature for the quarter in which they were incurred.
(6) In August 2006, we announced that we were freezing future accruals
under our U.S. defined benefit pension plans for substantially all
our U.S. salaried and non-union hourly employees effective December
31, 2006. In lieu of those benefits, we are offering additional
benefits under defined contribution plan.
(7) As disclosed in Tenneco's Form 10-K/A filed August 14, 2007,
Tenneco restated its financial results for the years ended December
31, 2004, 2005 and 2006 and for the quarters ended March 31, 2006 and
2007, June 30, 2006 and September 30, 2006. The amounts presented in
this table reflect the results of the restatement.
*T
Tenneco Inc.
Jane Ostrander
Media Relations
847 482-5607
jostrander@tenneco.com
or
Leslie Hunziker
Investor Relations
847 482-5042
lhunziker@tenneco.com
Copyright Business Wire 2008
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