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Tenneco Automotive Expects Lower Second Quarter Earnings

1 July 2000

    LAKE FOREST, Ill. - Tenneco Automotive announced it expects 2000 second quarter earnings will be below consensus analysts' estimates. The company expects earnings in the range of $.37 to $.42 per share. However, the company expects to significantly improve operating cash flow year-over-year.

    The lower earnings estimate is due to a number of factors, including softer than anticipated aftermarket sales volumes in North America and Europe. Global aftermarket sales are currently anticipated to be approximately six percent lower than second quarter 1999. The company also is experiencing margin pressure in the North American original equipment business due to recent slower sales in its heavy duty elastomer business and a mix shift to lower margin exhaust platforms launched earlier this year.

    "Like other suppliers, we continue to be impacted by the softness in the worldwide aftermarket business," said Mark Frissora, chairman and CEO, Tenneco Automotive. "While June sales in the North American aftermarket are reflecting a more normal seasonal trend and the percentage of sales of Reflex(R) and Sensa-Trac(R) to total aftermarket sales in this region is up, these positive trends are not enough to offset the weakness in such sales earlier in the quarter. Higher steel costs in Europe, a weak Euro and higher interest rates are also affecting our results."

    "While we're disappointed with today's earnings announcement, we are encouraged by our strengthening operating cash flow position," Frissora said. "We aim to continue this success by aggressively focusing on reducing capital spending, working capital and overhead costs to reduce our debt level as quickly as possible."

    Tenneco Automotive plans to release 2000 second quarter earnings on July 27, 2000.

    Tenneco Automotive is a $3.3 billion manufacturing company headquartered in Lake Forest, Ill., with 24,000 employees worldwide. Tenneco Automotive is one of the world's largest producers and marketers of ride control and exhaust systems and products, which are sold under the Monroe(R) and Walker(R) global brand names. Among its products are Sensa-Trac(R) and Reflex(R) shocks and struts, Rancho(R) shock absorbers, Walker(R) Quiet-Flow(TM) mufflers and DynoMax(TM) performance exhaust products, and Monroe(R) Clevite(TM) vibration control components.