Tenneco Automotive Reports Third Quarter Results
Company Reduces Total Debt
-- Company reports net income of $3 million, or 9-cents per diluted share -- Original Equipment business improves gross margin performance -- Company lowers total debt by $93 million -- Working capital improvements generate $87 million in cash
LAKE FOREST, Ill., Oct. 21 -- Tenneco Automotive announced today that the company reported net income of $3 million, or 9-cents per diluted share, in the third quarter of 2003, versus net income of $5 million, or 13-cents per diluted share in the third quarter of 2002. The company generated $103 million in cash flow before financing activities, which reduced bank and bond debt to $1.404 billion. The company's strong cash performance in the quarter was primarily driven by $87 million in cash from working capital improvements, including reductions in receivables and inventory, and a 15 percent decrease in capital spending year-over-year.
"We are pleased with our performance in generating cash and continuing to pay down debt. We ended the quarter with borrowings under our revolving credit facility at zero and our bank and bond debt at the lowest level since becoming a stand-alone company," said Mark P. Frissora, chairman and CEO, Tenneco Automotive.
The company reported revenue of $915 million for the quarter versus $856 million in the third quarter 2002.
EBIT (earnings before interest, taxes, and minority interest) was $39 million in the quarter, down $1 million compared with third quarter 2002. EBIT before depreciation and amortization (EBITDA) was $79 million for the quarter, versus third quarter 2002 EBITDA of $75 million. See the table entitled, "Reconciliation of GAAP Results to non-GAAP Results," which is attachment 2 to the press release for more information about EBITDA and other non-GAAP results in this press release.
The third quarter 2003 results include pre-tax restructuring related expenses of $1 million, or 2-cents per diluted share, and a $3 million, or 9-cents per diluted share, tax benefit related to adjusting tax accounts to reflect the 2002 tax returns filed in the third quarter. In addition, the company reduced inventory balances by $17 million, primarily in the European aftermarket, which decreased the quarter's EBIT by $4 million. This EBIT decrease was the result of inventory absorption costs - fixed manufacturing costs that the company continued to incur in spite of the lower production levels necessary to drive inventory down. Because of the lower production levels, a greater portion of the fixed manufacturing costs were recognized in the income statement rather than allocated to inventory balances.
The third quarter 2002 results include pre-tax restructuring related expenses of $3 million, or 4-cents per diluted share, and a $2 million, or 6-cents per diluted share, tax benefit as a result of a change in the effective tax rate.
The company's total gross margin for the quarter was 20.5 percent versus 21.1 percent one year ago. Gross margin performance was negatively impacted by lower global aftermarket sales and the higher absorption costs associated with inventory reductions, which together more than offset improved gross margins in the company's original equipment business. Compared to one year ago, the gross margin for the European original equipment business improved nearly two percentage points and nearly one percentage point in the North American original equipment business.
The original equipment business gross margin improvement reflects cost savings generated by the company's focus on integrating its operations and improving manufacturing and distribution efficiency worldwide. In addition to Lean initiatives and global supply chain improvements, Six Sigma programs generated $6 million in savings during the quarter and Project Genesis, a global restructuring program, generated $5 million in incremental savings.
"We have a more variable cost structure in place to help offset some of the volume softness that we're seeing in our markets worldwide. However, we must continue to control costs and implement processes to improve our operating efficiency," said Frissora. "The global aftermarket continues to pull down our overall performance. We are continuing to adjust our manufacturing footprint and reduce capacity to help offset the tough market conditions. We are also pursuing opportunities to expand into new aftermarket product categories."
Tenneco Automotive again outperformed the requirements of its bank debt covenants. At September 30, the leverage ratio was 4.30, below the maximum limit of 5.25; the fixed charge coverage ratio was 1.47, exceeding the minimum required ratio of 0.95; and the interest coverage ratio was 2.55, exceeding the minimum required ratio of 1.80.
NORTH AMERICA
-- North American original equipment revenue was $329 million for the
quarter versus $337 million in third quarter 2002. Revenue was down
2 percent, versus an estimated market decline of 5 percent. Excluding
the impact of lower pass-through catalytic converter sales, revenue was
flat.
-- North American aftermarket revenue was $123 million versus $129 million
one year ago. The decline was primarily due to a 9 percent decline in
exhaust sales.
-- EBIT for North American operations was $32 million compared with
$36 million in the third quarter of 2002. The EBIT decline was the
result of lower volumes and higher marketing costs in the aftermarket
business, which were partially offset by improved manufacturing
efficiency in the original equipment operations. Third quarter 2002
EBIT included $1 million in restructuring related expenses.
EUROPE
-- European original equipment revenue increased to $253 million from
$219 million in third quarter 2002. Before the impact of favorable
currency and pass-through catalytic converter sales, revenue was
$167 million, versus third quarter 2002 revenue of $163 million
excluding pass-through sales. Significant year-over-year reductions in
OE exhaust volumes impacted revenue and partially offset OE ride
control volume increases on new platforms.
-- European aftermarket revenue was $92 million compared with $86 million
in third quarter 2002. Excluding the impact of currency, revenue was
$78 million. The revenue decline was largely the result of a
14 percent decline in aftermarket exhaust sales, adjusted for currency.
-- European EBIT was a loss of $2 million compared with a loss of
$1 million the previous year. Favorable currency exchange rates
benefited third quarter 2003 EBIT by $1 million. The company's
European original equipment business posted year-over-year earnings
improvement. However, absorption costs of $4 million for reducing
inventories and restructuring related expenses of $1 million as well as
the continuing aftermarket volume decline drove down overall earnings
performance. Earnings were also negatively impacted by higher
depreciation costs of $5 million associated with the opening of a new
facility in Eastern Europe and the appreciating Euro. Third quarter
2002 EBIT included $2 million in restructuring related expenses.
REST OF WORLD
-- The company's Australian operations increased revenue to $45 million
from $31 million in third quarter 2002. Excluding the favorable impact
of currency, revenue was $36 million. The increase was fueled by
higher pass-through catalytic converter sales and strong volumes on
existing platforms.
-- Increased OE volumes in China and Thailand, including higher exhaust
pass-through volumes in China, continue to drive revenue growth in
Asia. Revenue from Asian operations was $42 million versus $30 million
in third quarter 2002.
-- In South America, the company reported revenue of $31 million, a
31 percent increase over the third quarter 2002 revenue. Excluding the
impact of favorable currency exchange rates, revenue was up 22 percent.
-- Combined EBIT for Asia, South America and Australia was $9 million in
the third quarter 2003, compared with $5 million in the third quarter
of 2002. Higher revenue, favorable currency exchange rates and
manufacturing efficiencies drove the improvement.
Attachment 1 to this press release provides additional information on Tenneco Automotive's third quarter 2003 results.
CONFERENCE CALL INFORMATION
The company will host a conference call on October 21, 2003 at 10:30 a.m. EDT. The dial-in number is 800 779-7694 domestic or 630 395-0023 international. The passcode is Tenneco Auto. The call will be available on the financial section of the Tenneco Automotive web site at www.tenneco-automotive.com . A copy of this press release, which includes in the attachments financial information to be discussed on this call, is available on the financial and news sections of the Tenneco Automotive web site at www.tenneco-automotive.com . A recording of this call will be available one hour following the completion of the call on October 21, 2003 through October 28, 2003. To access this recording, dial 800 839-8559 domestic or 402 998-1013 international and enter passcode 8400.
Tenneco Automotive is a $3.5 billion manufacturing company with headquarters in Lake Forest, Illinois and approximately 19,600 employees worldwide. Tenneco Automotive is one of the world's largest producers and marketers of ride control and exhaust systems and products, which are sold under the Monroe(R) and Walker(R) global brand names. Among its products are Sensa-Trac(R) and Monroe Reflex(R) shocks and struts, Rancho(R) shock absorbers, Walker(R) Quiet-Flow(R) mufflers and DynoMax(R) performance exhaust products, and Monroe(R) Clevite(R) vibration control components.
This press release contains forward-looking statements. Words such as "continue", "must", "pursuing", "implement" 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) the general political, economic and competitive conditions in markets and countries where the company and its subsidiaries operate, including currency fluctuations and other risks associated with operating in foreign countries; (ii) governmental actions, including the ability to receive regulatory approvals and the timing of such approvals; (iii) changes in capital availability or costs, including increases in the company's costs of borrowing (i.e., interest rate increases); (iv) changes in automotive manufacturers' production rates and their actual and forecasted requirements for the company's products, including the company's resultant inability to realize the sales represented by its awarded book of business and the overall highly competitive nature of the automotive parts industry; (v) 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; (vi) the cost of compliance with changes in regulations, including environmental regulations; (vii) workforce factors such as strikes or labor interruptions; (viii) material substitutions and increases in the costs of raw materials; (ix) the company's ability to execute restructuring and other cost reduction plans and to realize anticipated benefits from these plans; (x) the company's ability to develop and profitably commercialize new products and technologies, and the acceptance of such new products and technologies by the company's customers; (xi) further changes in the distribution channels for the company's aftermarket products, further consolidations among automotive parts customers and suppliers, and product warranty costs; (xii) changes by the Financing Accounting Standards Board or other accounting regulatory bodies of authoritative generally accepted accounting principles or policies; (xiii) acts of war, riots or terrorism, including, but not limited to the events taking place in the Middle East, the current military action in Iraq and the continuing war on terrorism, as well as actions taken or to be taken by the United States or other governments as a result of further acts or threats of terrorism, and the impact of these acts on economic, financial and social conditions in the countries where we operate and (xiv) the timing and occurrence (or non-occurrence) of transactions and events which may be subject to circumstances beyond the control of the company and its subsidiaries. The company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this press release. Additional information regarding these risk factors and uncertainties is detailed from time to time in the company's SEC filings, including but not limited to its report on Form 10-K for the year ended December 31, 2002. Further information can be found on the company's web site at www.tenneco-automotive.com .
ATTACHMENT 1
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME (LOSS)
Unaudited
NINE MONTHS ENDED SEPTEMBER 30,
(Millions except share and per share amounts)
2003 2002
Net sales and operating revenues: $2,834 $2,613
Costs and Expenses
Cost of Sales (exclusive of
depreciation shown below) 2,249 (a) 2,058 (d)
Engineering, Research and
Development 50 49
Selling, General and
Administrative 276 271 (e)
Depreciation and Amortization of
Other Intangibles 120 104
Total Costs and Expenses 2,695 2,482
Gain on sale of assets - 11 (f)
Loss on sale of receivables (1) (2)
Other Income (Loss) (1) (2)
Total Other Income (Loss) (2) 7
Income before Interest Expense,
Income Taxes, and Minority Interest
North America 109 (a) 108 (d) (e)
Europe 8 (a) 15 (d) (e) (f)
Other 20 15
137 138
Less:
Interest expense (net of
interest capitalized) 105 (b) 108
Income tax expense (benefit) (1)(c) 6 (g)
Minority interest 5 2
Income before Cumulative Effect of
Change in Accounting Principle 28 22
Cumulative Effect of Change in
Accounting Principle, net of
income tax - (218)
Net income (loss) $28 $(196)
Average common shares outstanding:
Basic 40.3 39.8
Diluted 41.5 41.7
Earnings (loss) per share of common
stock:
Basic-
Before Cumulative Effect of
Change in Accounting
Principle $0.71 $0.56
Cumulative Effect of Change in
Accounting Principle - (5.48)
$0.71 $(4.92)
Diluted-
Before Cumulative Effect of
Change in Accounting
Principle $0.69 $0.53
Cumulative Effect of Change in
Accounting Principle - (5.48)
$0.69 $(4.95)
(a) Includes restructuring and restructuring related charges of
$7 million pre-tax, $4 million after-tax or $0.11 per share. The
entire charge is recorded in cost of sales. Geographically,
$3 million is recorded in North America and $4 million in Europe.
(b) Includes a pre-tax expense of $5 million, $3 million after-tax or
$.07 per share related to debt issuance costs that were deferred on
the senior debt we paid down with the proceeds of the $350 million
bond offering.
(c) Includes a $14 million or $.36 per share tax benefit related to the
resolution of several tax issues.
(d) Includes restructuring and restructuring related charges of
$6 million pre-tax, $3 million after-tax or $0.08 per share. The
entire charge is recorded in cost of sales. Geographically,
$3 million is recorded in both North America and Europe.
(e) Includes costs associated with the amendment of the senior debt
agreement of $2 million pre-tax, $1 million after-tax or $0.03 per
share. The entire charge is recorded in SG&A. Geographically,
$1 million is recorded in both North America and Europe.
(f) Includes a gain on the sale of a UK facility of $11 million pre-tax,
$5 million after-tax or $0.13 per share. Geographically, all of the
gain is recorded in Europe.
(g) Includes a $6 million or $.17 per share tax benefit related to the
resolution of several tax issues.
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME (LOSS)
Unaudited
THREE MONTHS ENDED SEPTEMBER 30,
(Millions except share and per share amounts)
2003 2002
Net sales and operating revenues: $915 $856
Costs and Expenses
Cost of Sales (exclusive of
depreciation shown below) 727 (a) 675 (c)
Engineering, Research and
Development 18 18
Selling, General and
Administrative 91 85
Depreciation and Amortization of
Other Intangibles 40 35
Total Costs and Expenses 876 813
Loss on sale of receivables (1) (1)
Other Income (Loss) 1 (2)
Total Other Income (Loss) - (3)
Income (Loss) before Interest
Expense, Income Taxes, and
Minority Interest
North America 32 36 (c)
Europe (2)(a) (1)(c)
Other 9 5
39 40
Less:
Interest expense (net of
interest capitalized) 36 36
Income tax expense (benefit) (2)(b) (2)(d)
Minority interest 2 1
Net income $3 $5
Average common shares outstanding:
Basic 40.6 39.8
Diluted 42.2 42.0
Earnings (loss) per share of common
stock:
Basic- $0.10 $0.13
Diluted- $0.09 $0.13
(a) Includes restructuring related charges of $1 million pre-tax,
$1 million after-tax or $0.02 per share. The entire charge is
recorded in cost of sales. Geographically all of the charge is
recorded in Europe.
(b) Includes a $3 million or $.09 per share tax benefit related to the
resolution of outstanding tax issues.
(c) Includes restructuring and other charges of $3 million pre-tax,
$2 million after-tax or $0.04 per share. The entire charge is
recorded in cost of sales. Geographically, $1 million is recorded in
North America and $2 million in Europe.
(d) Includes a $2 million or $.06 per share tax benefit related to a
change in the estimated effective tax rate.
TENNECO AUTOMOTIVE INC. AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEET
(Unaudited)
(Millions)
September 30, December 31,
2003 2002
Assets
Cash and Temporary Cash
Investments $63 $54
Receivables, Net 484 409
Inventories 338 352
Other Current Assets 160 151
Investments and Other Assets 537 512
Plant, Property, and Equipment,
Net 1,067 1,026
Total Assets $2,649 $2,504
Liabilities and Shareowners' Equity
Short-Term Debt $18 $228
Accounts Payable 569 505
Accrued Taxes 43 40
Accrued Interest 41 23
Other Current Liabilities 216 220
Long-Term Debt 1,386 1,217
Deferred Income Taxes 71 103
Deferred Credits and Other
Liabilities 267 243
Minority Interest 21 19
Total Shareholders' Equity 17 (94)
Total Liabilities and
Shareholders' Equity $2,649 $2,504
Tenneco Automotive Inc. and Consolidated Subsidiaries
Statement of Cash Flows
(Unaudited)
(Millions)
Nine Months Ended
September 30,
2003 2002
Operating activities:
Net income (loss) before cumulative
effect of change in accounting
principle, net of tax $28 $22
Adjustments to reconcile income
(loss) to net cash provided
(used) by operating activities -
Depreciation and amortization 120 104
Deferred income taxes (18) (17)
(Gain)/loss on sale of businesses
and assets, net 1 (9)
Changes in components of working
capital -
(Inc.)/dec. in receivables (47) (25)
(Inc.)/dec. in inventories 43 11
(Inc.)/dec. in prepayments and
other current assets 3 (20)
Inc./(dec.) in payables 31 76
Inc./(dec.) in taxes accrued (24) 3
Inc./(dec.) in interest accrued 19 14
Inc./(dec.) in other current
liabilities (15) 10
Other 21 (1)
Net cash provided (used) by operating
activities 162 168
Investing activities:
Net proceeds from sale of assets 4 20
Expenditures for plant, property & equipment (83) (86)
Investments and other (5) 10
Net cash provided (used) by investing activities (84) (56)
Net Cash provided (used) before financing
activities 78 112
Financing activities:
Proceeds from capital contributions 1 -
Issuance of long-term debt 350 1
Debt issuance costs on long-term debt (13) -
Retirement of long-term debt (277) (89)
Net inc./(dec.) in short-term debt excluding
current maturities on long-term debt (119) (22)
Other (1) -
Net cash provided (used) by financing activities (59) (110)
Effect of foreign exchange rate changes on cash
and temporary cash investments (10) (9)
Inc./(dec.) in cash and temporary cash investments 9 (7)
Cash and temporary cash investments, January 1 54 53
Cash and temporary cash investments, September 30 $63 $46
Cash paid during the period for interest $79 $94
Cash paid during the period for income taxes $41 $22
ATTACHMENT 2
TENNECO AUTOMOTIVE
RECONCILIATION OF GAAP(A) RESULTS TO NON-GAAP RESULTS
Unaudited
Q3 2003 Q3 2002
Amount Per Share Amount Per Share
Net Income (GAAP measure) $3 $0.09 $5 $0.13
After tax adjustments (reflects non-
GAAP measures):
Restructuring and restructuring
related expenses 1 0.02 2 0.04
Tax return to accrual adjustment (3) (0.09) - -
Effective tax rate change - - (2) (0.06)
Non-GAAP earnings measure(B) $1 $0.02 $5 $0.11
Q3 2003
North Rest of
America Europe World Total
Net income (loss) $3
Minority interest 2
Income tax expense (benefit) (2)
Interest expense (net of interest
capitalized) 36
Income(loss) before interest expense,
income taxes and minority interest
(GAAP measure) $32 $(2) $9 39
Depreciation and amortization of
other intangibles 22 15 3 40
Total EBITDA(C) $54 $13 $12 $79
Q3 2002
North Rest of
America Europe World Total
Net income (loss) $5
Minority interest 1
Income tax expense (benefit) (2)
Interest expense (net of interest
capitalized) 36
Income(loss) before interest expense,
income taxes and minority interest
(GAAP measure) $36 $(1) $5 40
Depreciation and amortization 22 10 3 35
Total EBITDA(C) $58 $9 $8 $75
(A) Generally Accepted Accounting Principles
(B) Tenneco Automotive presents the above reconciliation of GAAP to non-
GAAP results in order to reflect the results for the third quarters
of 2003 and 2002 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 measure to analyze earnings would have material limitations
because its calculation is based on the subjective determinations of
management regarding the nature and classification of events and
circumstances that investors may find material. Management
compensates for these limitations by utilizing both GAAP and non-GAAP
earnings measures reflected above to understand and analyze the
results of the business. The company believes investors find the
non-GAAP information helpful in understanding the ongoing performance
of operations separate from items that may have a disproportionate
positive or negative impact on the company's financial results in any
particular period.
(C) EBITDA represents net income before interest expense, income taxes,
minority interest and depreciation and amortization. EBITDA is not a
calculation based upon generally accepted accounting principles. The
amounts included in the EBITDA calculation, however, are derived from
amounts included in the historical statements of income data. In
addition, EBITDA should not be considered as an alternative to net
income or operating income as an indicator of the company's operating
performance, or as an alternative to operating cash flows as a measure
of liquidity. Tenneco Automotive has presented EBITDA because it
regularly reviews EBITDA as a measure of the company's ability to
incur and service debt. In addition, Tenneco Automotive believes its
debt holders utilize and analyze our EBITDA for similar purposes.
Tenneco Automotive also believes EBITDA assists investors in comparing
a company's performance on a consistent basis without regard to
depreciation and amortization, which can vary significantly depending
upon many factors. However, the EBITDA measure presented may not
always be comparable to similarly titled measures reported by other
companies due to differences in the components of the calculation.
TENNECO AUTOMOTIVE
RECONCILIATION OF GAAP(A) RESULTS TO NON-GAAP RESULTS
Unaudited
YTD 2003 YTD 2002
Amount Per Share Amount Per Share
Net Income before Cumulative Effect
of Change in Accounting Principle
(GAAP measure) $28 $0.69 $22 $0.53
After tax adjustments (reflects non-
GAAP measures):
Restructuring and restructuring
related expenses 4 0.11 3 0.08
Tax adjustments (14) (0.36) (6) (0.17)
Debt issuance cost write off 3 0.07 - -
Gain on sale of York facility - - (5) (0.13)
Amendment fee - - 1 0.03
Non-GAAP earnings measure(B) $21 $0.51 $15 $0.34
YTD 2003
North Rest of
America Europe World Total
Net income (loss) $28
Minority interest 5
Income tax expense (benefit) (1)
Interest expense (net of interest
capitalized) 105
Income(loss) before interest expense,
income taxes and minority interest
(GAAP measure) $109 $8 $20 137
Depreciation and amortization of
other intangibles 68 43 9 120
Total EBITDA(C) $177 $51 $29 $257
YTD 2002
North Rest of
America Europe World Total
Net income (loss) $(196)
Cumulative effect of change in
accounting principle, net of income
tax 218
Minority interest 2
Income tax expense (benefit) 6
Interest expense (net of interest
capitalized) 108
Income(loss) before interest expense,
income taxes and minority interest
(GAAP measure) $108 $15 $15 138
Depreciation and amortization 65 30 9 104
Total EBITDA(C) $173 $45 $24 $242
(A) Generally Accepted Accounting Principles
(B) Tenneco Automotive presents the above reconciliation of GAAP to non-
GAAP results in order to reflect the results for the first nine months
of 2003 and 2002 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 measure to analyze earnings would have material limitations
because its calculation is based on the subjective determinations of
management regarding the nature and classification of events and
circumstances that investors may find material. Management
compensates for these limitations by utilizing both GAAP and non-GAAP
earnings measures reflected above to understand and analyze the
results of the business. The company believes investors find the
non-GAAP information helpful in understanding the ongoing performance
of operations separate from items that may have a disproportionate
positive or negative impact on the company's financial results in any
particular period.
(C) EBITDA represents net income before cumulative effect of change in
accounting principle, interest expense, income taxes, minority
interest and depreciation and amortization. EBITDA is not a
calculation based upon generally accepted accounting principles. The
amounts included in the EBITDA calculation, however, are derived from
amounts included in the historical statements of income data. In
addition, EBITDA should not be considered as an alternative to net
income or operating income as an indicator of the company's operating
performance, or as an alternative to operating cash flows as a measure
of liquidity. Tenneco Automotive has presented EBITDA because it
regularly reviews EBITDA as a measure of the company's ability to
incur and service debt. In addition, Tenneco Automotive believes its
debt holders utilize and analyze our EBITDA for similar purposes.
Tenneco Automotive also believes EBITDA assists investors in comparing
a company's performance on a consistent basis without regard to
depreciation and amortization, which can vary significantly depending
upon many factors. However, the EBITDA measure presented may not
always be comparable to similarly titled measures reported by other
companies due to differences in the components of the calculation.
TENNECO AUTOMOTIVE
RECONCILIATION OF GAAP RESULTS TO NON-GAAP RESULTS
Unaudited
Q3 2003
Revenues
Pass- Excluding
through Currency
Sales and
Revenues Excluding Pass-
Currency Excluding Currency through
Revenues Impact Currency Impact Sales
North America
Aftermarket
Ride Control $78 $- $78 $- $78
Exhaust 45 - 45 - 45
Total North America
Aftermarket 123 - 123 - 123
North America Original
Equipment
Ride Control 102 - 102 - 102
Exhaust 227 5 222 67 155
Total North America
Original Equipment 329 5 324 67 257
Total North America 452 5 447 67 380
Europe Aftermarket
Ride Control 45 7 38 - 38
Exhaust 47 7 40 - 40
Total Europe Aftermarket 92 14 78 - 78
Europe Original Equipment
Ride Control 65 8 57 - 57
Exhaust 188 26 162 52 110
Total Europe
Original Equipment 253 34 219 52 167
Total Europe 345 48 297 52 245
Asia 42 - 42 15 27
South America 31 2 29 4 25
Australia 45 9 36 4 32
Total Rest of World 118 11 107 23 84
Total Tenneco Automotive $915 $64 $851 $142 $709
Q3 2002
Revenues
Pass- Excluding
through Currency
Sales and
Revenues Excluding Pass-
Currency Excluding Currency through
Revenues Impact Currency Impact Sales
North America
Aftermarket
Ride Control $80 $- $80 $- $80
Exhaust 49 - 49 - 49
Total North America
Aftermarket 129 - 129 - 129
North America Original
Equipment
Ride Control 101 - 101 - 101
Exhaust 236 - 236 74 162
Total North America
Original Equipment 337 - 337 74 263
Total North America 466 - 466 74 392
Europe Aftermarket
Ride Control 39 - 39 - 39
Exhaust 47 - 47 - 47
Total Europe Aftermarket 86 - 86 - 86
Europe Original Equipment
Ride Control 46 - 46 - 46
Exhaust 173 - 173 56 117
Total Europe
Original Equipment 219 - 219 56 163
Total Europe 305 - 305 56 249
Asia 30 - 30 9 21
South America 24 - 24 2 22
Australia 31 - 31 2 29
Total Rest of World 85 - 85 13 72
Total Tenneco Automotive $856 $- $856 $143 $713
Tenneco Automotive presents the above reconciliation of revenues in
order to reflect the trend in the company's sales, in various product
lines and geographical regions, separately from the effects of doing
business in currencies other than the U.S. dollar. Additionally,
pass-through catalytic converter sales include precious metals pricing,
which may be volatile. While Tenneco Automotive's original equipment
customers assume the risk of this volatility, it impacts reported
revenue. Excluding pass-through catalytic converter sales removes this
impact. Tenneco Automotive uses this information to analyze the trend
in revenues before these factors. Tenneco Automotive believes investors
find this information useful in understanding period to period
comparisons in the company's revenues.
TENNECO AUTOMOTIVE
RECONCILIATION OF GAAP RESULTS TO NON-GAAP RESULTS
Unaudited
Nine Months Ended September 30, 2003
Revenues
Pass- Excluding
through Currency
Sales and
Revenues Excluding Pass-
Currency Excluding Currency through
Revenues Impact Currency Impact Sales
North America
Aftermarket
Ride Control $240 $- $240 $- $240
Exhaust 127 - 127 - 127
Total North America
Aftermarket 367 - 367 - 367
North America Original
Equipment
Ride Control 336 - 336 - 336
Exhaust 731 10 721 229 492
Total North America
Original Equipment 1,067 10 1,057 229 828
Total North America 1,434 10 1,424 229 1,195
Europe Aftermarket
Ride Control 133 23 110 - 110
Exhaust 137 23 114 - 114
Total Europe Aftermarket 270 46 224 - 224
Europe Original Equipment
Ride Control 186 28 158 - 158
Exhaust 622 97 525 166 359
Total Europe
Original Equipment 808 125 683 166 517
Total Europe 1,078 171 907 166 741
Asia 118 - 118 42 76
South America 86 (7) 93 9 84
Australia 118 20 98 11 87
Total Rest of World 322 13 309 62 247
Total Tenneco Automotive $2,834 $194 $2,640 $457 $2,183
Nine Months Ended September 30, 2002
Revenues
Pass- Excluding
through Currency
Sales and
Revenues Excluding Pass-
Currency Excluding Currency through
Revenues Impact Currency Impact Sales
North America
Aftermarket
Ride Control $256 $- $256 $- $256
Exhaust 147 - 147 - 147
Total North America
Aftermarket 403 - 403 - 403
North America Original
Equipment
Ride Control 315 - 315 - 315
Exhaust 754 - 754 249 505
Total North America
Original Equipment 1,069 - 1,069 249 820
Total North America 1,472 - 1,472 249 1,223
Europe Aftermarket
Ride Control 111 - 111 - 111
Exhaust 130 - 130 - 130
Total Europe Aftermarket 241 - 241 - 241
Europe Original Equipment
Ride Control 136 - 136 - 136
Exhaust 521 - 521 160 361
Total Europe
Original Equipment 657 - 657 160 497
Total Europe 898 - 898 160 738
Asia 77 - 77 26 51
South America 78 - 78 7 71
Australia 88 - 88 4 84
Total Rest of World 243 - 243 37 206
Total Tenneco Automotive $2,613 $- $2,613 $446 $2,167
Tenneco Automotive presents the above reconciliation of revenues in
order to reflect the trend in the company's sales, in various product
lines and geographical regions, separately from the effects of doing
business in currencies other than the U.S. dollar. Additionally,
pass-through catalytic converter sales include precious metals pricing,
which may be volatile. While Tenneco Automotive's original equipment
customers assume the risk of this volatility, it impacts reported
revenue. Excluding pass-through catalytic converter sales removes this
impact. Tenneco Automotive uses this information to analyze the trend
in revenues before these factors. Tenneco Automotive believes investors
find this information useful in understanding period to period
comparisons in the company's revenues.