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Tenneco Reports Fourth Quarter And Full-Year 2012 Financial Results

BY Business Wire | 01/31/13 - 08:00 AM EST

Stock quotes in this article: TEN

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CONFERENCE CALL

The company will host a conference call on Thursday, January 31, 2013 at 9:00 a.m. ET. The dial-in number is 888-946-9420 (domestic) or 312-470-7418 (international). The passcode is TENNECO. The call and accompanying slides will be available on the financial section of the Tenneco web site at www.tenneco.com. A recording of the call will be available one hour following completion of the call on January 31, 2013, through February 28, 2013. To access this recording, dial 800-756-3941 (domestic) or 203-369-3592 (international). The purpose of the call is to discuss the company’s operations for the quarter, as well as other matters that may impact the company’s outlook. A copy of the press release is available on the financial and news sections of the Tenneco web site.

ANNUAL MEETING

The Tenneco Board of Directors has scheduled the corporation’s annual meeting of shareholders for Wednesday, May 15, 2013 at 10:00 a.m. CT. The meeting will be held at the corporate headquarters, 500 North Field Drive, Lake Forest, Illinois. The record date for shareholders eligible to vote at the meeting is March 18, 2013.

Tenneco is a $7.4 billion global manufacturing company with headquarters in Lake Forest, Illinois and more than 24,000 employees worldwide. Tenneco is one of the world’s largest designers, manufacturers and marketers of emission control and ride control products and systems for automotive and commercial vehicle original equipment markets and the aftermarket. Tenneco markets its products principally under the Monroe®, Walker® and Clevite®Elastomer brand names.

This press release contains forward-looking statements. Words such as “may,” “expects,” “anticipate,” ”projects,” “will,” and “outlook” and similar expressions identify forward-looking statements. These forward-looking statements are based on the current expectations of the company (including its subsidiaries). Because these forward-looking statements involve risks and uncertainties, the company's plans, actions and actual results could differ materially. Among the factors that could cause these plans, actions and results to differ materially from current expectations are:

(i) general economic, business and market conditions;

(ii) the company’s ability to source and procure needed materials, components and other products and services in accordance with customer demand and at competitive prices;

(iii) changes in capital availability or costs, including increases in the company's costs of borrowing (i.e., interest rate increases), the amount of the company's debt, the ability of the company to access capital markets at favorable rates, and the credit ratings of the company’s debt;

(iv) changes in consumer demand, prices and the company’s ability to have our products included on top selling vehicles, including any shifts in consumer preferences to lower margin vehicles, for which we may or may not have supply arrangements;

(v) changes in automotive and commercial vehicle manufacturers' production rates and their actual and forecasted requirements for the company's products such as the significant production cuts during recent years by automotive manufacturers in response to difficult economic conditions;

(vi) the overall highly competitive nature of the automobile and commercial vehicle parts industries, and any resultant inability to realize the sales represented by the company’s awarded book of business which is based on anticipated pricing and volumes over the life of the applicable program;

(vii) the loss of any of our large original equipment manufacturer (“OEM”) customers (on whom we depend for a substantial portion of our revenues), or the loss of market shares by these customers if we are unable to achieve increased sales to other OEMs or any change in customer demand due to delays in the adoption or enforcement of worldwide emissions regulations;

(viii) workforce factors such as strikes or labor interruptions;

(ix) increases in the costs of raw materials, including the company’s ability to successfully reduce the impact of any such cost increases through materials substitutions, cost reduction initiatives, customer recovery and other methods;

(x) the negative impact of higher fuel prices on transportation and logistics costs, raw material costs and discretionary purchases of vehicles or aftermarket products;

(xi) the cyclical nature of the global vehicular industry, including the performance of the global aftermarket sector and longer product lives of automobile parts;

(xii) the company's continued success in cost reduction and cash management programs and its ability to execute restructuring and other cost reduction plans and to realize anticipated benefits from these plans;

(xiii) product warranty costs;

(xiv) the cost and outcome of existing and any future legal proceedings;

(xv) economic, exchange rate and political conditions in the countries where we operate or sell our products;

(xvi) the company's ability to develop and profitably commercialize new products and technologies, and the acceptance of such new products and technologies by the company's customers and the market;

(xvii) changes by the Financial Accounting Standards Board or other accounting regulatory bodies to authoritative generally accepted accounting principles or policies;

(xviii) changes in accounting estimates and assumptions, including changes based on additional information;

(xix) governmental actions, including the ability to receive regulatory approvals and the timing of such approvals, as well as the impact of the enforcement of, changes to or compliance with laws and regulations, including those pertaining to environmental concerns, pensions or other regulated activities;

(xx) natural disasters, acts of war and/or terrorism and the impact of these occurrences or acts on economic, financial, industrial and social condition, including, without limitation, with respect to supply chains and customer demand in the countries where the company operates; and

(xxi) the timing and occurrence (or non-occurrence) of transactions and events which may be subject to circumstances beyond the control of the company and its subsidiaries.

The company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this press release. Additional information regarding these risk factors and uncertainties is detailed from time to time in the company's SEC filings, including but not limited to its report on Form 10-K for the year ended December 31, 2011.


ATTACHMENT 1
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
Unaudited
THREE MONTHS ENDED DECEMBER 31,
(Millions except per share amounts)


	2012				2011
Net sales and operating revenues	$	1,753			$	1,784

Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		1,474		(a)		1,514		(d)
Engineering, research and development		32				31
Selling, general and administrative		106				100
Depreciation and amortization of other intangibles		57		(b)		51
Total costs and expenses		1,669				1,696

Loss on sale of receivables		(1	)			(1	)
Other income (expense)		1				1
Total other income (expense)		-				-


Earnings before interest expense, income taxes, and noncontrolling interests
North America		54		(a)		46		(d)
Europe, South America & India		9		(a) (b)		28
Asia Pacific		21				14
		84				88

Interest expense (net of interest capitalized)		21				27
Earnings before income taxes and noncontrolling interests		63				61

Income tax expense		22		(c)		23		(e)
Net income		41				38

Less: Net income attributable to noncontrolling interests		8				8
Net income attributable to Tenneco Inc.	$	33			$	30


Weighted average common shares outstanding:
Basic		60.0				59.9
Diluted		61.1				61.4

Earnings per share of common stock:
Basic	$	0.55			$	0.50
Diluted	$	0.54			$	0.49

(a) Includes restructuring and related charges of $3 million pre-tax, $2 million after tax or $0.04 per diluted share, which is recorded in cost of sales. Geographically, $1 million is recorded in North America and $2 million in Europe, South America and India.

(b) Includes an asset impairment charge of $7 million or $0.11 per diluted share related to the European ride control business.

(c) Includes net tax benefits of $2 million or $0.03 per diluted share primarily related to recording adjustments to prior year estimates.

(d) Includes restructuring and related charges of $1 million pre-tax, less than $1 million after tax or $0.01 per diluted share, which is recorded in cost of sales in North America.

(e) Includes net tax charges of $2 million or $0.03 per diluted share primarily related to recording a valuation allowance against the foreign losses and withholding taxes on foreign dividends, mostly offset by adjustments to prior year estimates.

ATTACHMENT 1
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
Unaudited
TWELVE MONTHS ENDED DECEMBER 31,
(Millions except per share amounts)

	2012				2011
Net sales and operating revenues	$	7,363			$	7,205

Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		6,170		(a)		6,037		(f)
Goodwill impairment charge		-				11		(g)
Engineering, research and development		126				133
Selling, general and administrative		427		(a) (c)		428
Depreciation and amortization of other intangibles		205		(b)		207
Total costs and expenses		6,928				6,816

Loss on sale of receivables		(4	)			(5	)
Other income (expense)		(3	)			(5	)
Total other income (expense)		(7	)			(10	)

Earnings before interest expense, income taxes, and noncontrolling interests
North America		288		(a) (c)		216		(f)
Europe, South America & India		71		(a) (b)		125		(f)
Asia Pacific		69				38		(f) (g)
		428				379

Interest expense (net of interest capitalized)		105		(d)		108		(h)
Earnings before income taxes and noncontrolling interests		323				271

Income tax expense		19		(e)		88		(i)
Net income		304				183

Less: Net income attributable to noncontrolling interests		29				26
Net income attributable to Tenneco Inc.	$	275			$	157


Weighted average common shares outstanding:
Basic		60.0				59.9
Diluted		61.1				61.5

Earnings per share of common stock:
Basic	$	4.58			$	2.62
Diluted	$	4.50			$	2.55

(a) Includes restructuring and related charges of $13 million pre-tax, $8 million after tax or $0.14 per diluted share. Of the adjustment $10 million is recorded in cost of sales and $3 million is recorded in selling, general and administrative expenses. Geographically, $1 million is recorded in North America and $12 million in Europe, South America and India.

(b) Includes an asset impairment charge of $7 million or $0.11 per diluted share related to the European ride control business.

(c) Includes a benefit of $5 million pre-tax, $3 million after tax or 5-cents per diluted share, from property recoveries related to transactions originated by The Pullman Company before being acquired by Tenneco in 1996.

(d) Includes pre-tax expenses of $18 million, $12 million after tax or $0.19 per share for costs related to refinancing activities.

(e) Includes net tax benefits of $96 million or $1.57 per diluted share primarily related to the reversal of the tax valuation allowance on the company’s U.S. net operating loss position and recording a tax valuation allowance in Spain for tax credits that may not be utilized due to tax losses there.

(f) Includes restructuring and related charges of $8 million pre-tax, $5 million after tax or $0.09 per diluted share, which is recorded in cost of sales. Geographically, $2 million is recorded in North America, $3 million in Europe, South America and India and $3 million in Asia Pacific.

(g) Represents Goodwill impairment charge recorded in Australia of $11 million pre-tax, $7 million after tax or $0.11 per diluted share.

(h) Includes pre-tax expenses of $1 million, $1 million after tax or $0.01 per share for costs related to refinancing activities.

(i) Includes net tax benefits of $7 million or $0.10 per diluted share primarily related to U.S. taxable income with no associated tax expense due to the company's net operating loss carryforward and adjustments to prior years' tax estimates, partially offset by the impact of recording a valuation allowance against the tax benefit for losses in certain foreign jurisdictions.

ATTACHMENT 1
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEETS
(Unaudited)
(Millions)

			December 31, 2012			December 31, 2011

Assets

		Cash and cash equivalents	$	223		$	214

		Receivables, net		986	(a)		980	(a)

		Inventories		667			592

		Other current assets		244			193

		Investments and other assets		364			311

		Plant, property, and equipment, net		1,122			1,047

		Total assets	$	3,606		$	3,337




Liabilities and Shareholders' Equity

		Short-term debt	$	113		$	66

		Accounts payable		1,186			1,171

		Accrued taxes		50			44

		Accrued interest		10			13

		Other current liabilities		280			276

		Long-term debt		1,067	(b)		1,158	(b)

		Deferred income taxes		27			51

		Deferred credits and other liabilities		567			503

		Redeemable noncontrolling interests		15			12

		Tenneco Inc. shareholders' equity		246			-

		Noncontrolling interests		45			43

		Total liabilities, redeemable noncontrolling interests and shareholders' equity	$	3,606		$	3,337



			December 31, 2012			December 31, 2011
(a)	Accounts Receivables net of:
		Europe - Accounts receivables securitization programs	$	95		$	121

			December 31, 2012			December 31, 2011
(b)	Long term debt composed of:
		Borrowings against revolving credit facilities	$	92		$	24
		Term loan A (Due 2017)		241			-
		Term loan B (Due 2016)		-			148
		8.125% senior notes (Due 2015)		-			250
		7.75% senior notes (Due 2018)		225			225
		6.875% senior notes (Due 2020)		500			500
		Other long term debt		9			11

			$	1,067		$	1,158

ATTACHMENT 1
Tenneco Inc. and Consolidated Subsidiaries
Statements of Cash Flows
(Unaudited)
(Millions)

	Three Months Ended
	December 31,
	2012			2011

Operating activities:
Net income	$	41		$	38
Adjustments to reconcile net income to net cash provided by operating activities -
Depreciation and amortization of other intangibles		57			51
Stock-based compensation		2			2
Deferred income taxes		29			(2	)
Loss on sale of assets		1			1
Changes in components of working capital-
(Inc.)/dec. in receivables		148			131
(Inc.)/dec. in inventories		9			21
(Inc.)/dec. in prepayments and other current assets		19			5
Inc./(dec.) in payables		(24	)		(15	)
Inc./(dec.) in accrued taxes		(30	)		-
Inc./(dec.) in accrued interest		(4	)		(9	)
Inc./(dec.) in other current liabilities		(5	)		(22	)
Changes in long-term assets		(2	)		3
Changes in long-term liabilities		3			(10	)
Other		-			7
Net cash provided by operating activities		244			201

Investing activities:
Proceeds from sale of assets		1			-
Cash payments for plant, property & equipment		(61	)		(68	)
Cash payments for software-related intangible assets		(3	)		(5	)
Net cash used by investing activities		(63	)		(73	)

Financing activities:
Retirement of long-term debt		(5	)		(1	)
Net inc./(dec.) in bank overdrafts		3			-
Net inc./(dec.) in revolver borrowings and short-term debt excluding current maturities on long-term debt and short-term borrowings secured by accounts receivable		(150	)		(78	)
Net inc./(dec.) in short-term debt secured by accounts receivable		(10	)		-
Distribution to noncontrolling interest partners		(2	)		-
Net cash used by financing activities		(164	)		(79	)

Effect of foreign exchange rate changes on cash and cash equivalents		(1	)		2

Increase in cash and cash equivalents		16			51
Cash and cash equivalents, October 1		207			163
Cash and cash equivalents, December 31	$	223		$	214

Supplemental Cash Flow Information
Cash paid during the period for interest (net of interest capitalized)	$	25		$	35
Cash paid during the period for income taxes (net of refunds)		26			27

Non-cash Investing and Financing Activities
Period ended balance of payables for plant, property, and equipment	$	42		$	35

ATTACHMENT 1
Tenneco Inc. and Consolidated Subsidiaries
Statements of Cash Flows
(Unaudited)
(Millions)

	Twelve Months Ended
	December 31,
	2012			2011

Operating activities:
Net income		304			183
Adjustments to reconcile net income to net cash provided by operating activities -
Goodwill impairment charge		-			11
Depreciation and amortization of other intangibles		205			207
Stock-based compensation		11			8
Deferred income taxes		(65	)		(5	)
Loss on sale of assets		4			4
Changes in components of working capital-
(Inc.)/dec. in receivables		(9	)		(183	)
(Inc.)/dec. in inventories		(72	)		(64	)
(Inc.)/dec. in prepayments and other current assets		(21	)		(13	)
Inc./(dec.) in payables		12			144
Inc./(dec.) in accrued taxes		7			(7	)
Inc./(dec.) in accrued interest		(3	)		-
Inc./(dec.) in other current liabilities		10			(7	)
Changes in long-term assets		14			1
Changes in long-term liabilities		(32	)		(41	)
Other		5			7
Net cash provided by operating activities		370			245

Investing activities:
Proceeds from sale of assets		3			4
Cash payments for plant, property & equipment		(256	)		(213	)
Cash payments for software-related intangible assets		(13	)		(15	)
Cash payment for net assets purchased		(7	)		-
Net cash used by investing activities		(273	)		(224	)

Financing activities:
Purchase of common stock under the share repurchase program		(18	)		(16	)
Issuance of long-term debt		250			5
Debt issuance costs on long-term debt		(13	)		(1	)
Retirement of long-term debt		(411	)		(24	)
Net inc./(dec.) in bank overdrafts		5			3
Net inc./(dec.) in revolver borrowings and short-term debt excluding current maturities on long-term debt and short-term borrowings secured by accounts receivable		67			30
Net inc./(dec.) in short-term debt secured by accounts receivable		50			-
Capital contribution from noncontrolling interest partner		5			1
Purchase of additional noncontrolling equity interest		-			(4	)
Distribution to noncontrolling interest partners		(29	)		(20	)
Net cash used by financing activities		(94	)		(26	)

Effect of foreign exchange rate changes on cash and cash equivalents		6			(14	)

Increase (Decrease) in cash and cash equivalents		9			(19	)
Cash and cash equivalents, January 1		214			233
Cash and cash equivalents, December 31	$	223		$	214

Supplemental Cash Flow Information
Cash paid during the period for interest (net of interest capitalized)	$	100		$	106
Cash paid during the period for income taxes (net of refunds)		80			85

Non-cash Investing and Financing Activities
Period ended balance of payables for plant, property, and equipment	$	42		$	35

ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP ⁽¹⁾ NET INCOME TO EBITDA INCLUDING NONCONTROLLING INTERESTS ⁽²⁾
Unaudited
(Millions)

	Q4 2012
	North		Europe,		Asia
	America		SA & India		Pacific		Total
Net income attributable to Tenneco Inc.							$	33

Net income attributable to noncontrolling interests								8

Net income								41

Income tax expense								22

Interest expense (net of interest capitalized)								21

EBIT, Earnings before interest expense, income taxes and noncontrolling interests (GAAP measure)	$	54	$	9	$	21		84

Depreciation and amortization of other intangibles		24		27		6		57

Total EBITDA including noncontrolling interests ⁽²⁾	$	78	$	36	$	27	$	141


	Q4 2011
	North		Europe,		Asia
	America		SA & India		Pacific		Total
Net income attributable to Tenneco Inc.							$	30

Net income attributable to noncontrolling interests								8

Net income								38

Income tax expense								23

Interest expense (net of interest capitalized)								27

EBIT, Earnings before interest expense, income taxes and noncontrolling interests (GAAP measure)	$	46	$	28	$	14		88

Depreciation and amortization of other intangibles		24		21		6		51

Total EBITDA including noncontrolling interests ⁽²⁾	$	70	$	49	$	20	$	139

⁽¹⁾ Generally Accepted Accounting Principles

⁽²⁾ EBITDA including noncontrolling interests represents income before interest expense, income taxes, noncontrolling interests and depreciation and amortization. EBITDA including noncontrolling interests is not a calculation based upon generally accepted accounting principles. The amounts included in the EBITDA including noncontrolling interests calculation, however, are derived from amounts included in the historical statements of income data. In addition, EBITDA including noncontrolling interests should not be considered as an alternative to net income (loss) attributable to Tenneco Inc. or operating income as an indicator of the company's operating performance, or as an alternative to operating cash flows as a measure of liquidity. Tenneco has presented EBITDA including noncontrolling interests because it regularly reviews EBITDA including noncontrolling interests as a measure of the company's performance. In addition, Tenneco believes its investors utilize and analyze our EBITDA including noncontrolling interests for similar purposes. Tenneco also believes EBITDA including noncontrolling interests assists investors in comparing a company's performance on a consistent basis without regard to depreciation and amortization, which can vary significantly depending upon many factors. However, the EBITDA including noncontrolling interests measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.

ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP ⁽¹⁾ TO NON-GAAP EARNINGS MEASURES ⁽²⁾
Unaudited
(Millions except per share amounts)

	Q4 2012										Q4 2011
					Net income										Net income
					attributable to										attributable to
	EBITDA ⁽³⁾		EBIT		Tenneco Inc.			Per Share			EBITDA ⁽³⁾		EBIT		Tenneco Inc.		Per Share
Earnings Measures	$	141	$	84	$	33		$	0.54		$	139	$	88	$	30	$	0.49

Adjustments (reflect non-GAAP measures):
Restructuring and related expenses		3		3		2			0.04			1		1		-		0.01
Asset impairment charge ⁽⁴⁾		-		7		7			0.11			-		-		-		-
Net tax adjustments		-		-		(2	)		(0.03	)		-		-		2		0.03

Non-GAAP earnings measures	$	144	$	94	$	40		$	0.66		$	140	$	89	$	32	$	0.53


											Q4 2012
											North		Europe,		Asia
											America		SA & India		Pacific		Total
EBIT											$	54	$	9	$	21	$	84
Restructuring and related expenses												1		2		-		3
Asset impairment charge ⁽⁴⁾												-		7		-		7
Adjusted EBIT											$	55	$	18	$	21	$	94


											Q4 2011
											North		Europe,		Asia
											America		SA & India		Pacific		Total
EBIT											$	46		28	$	14	$	88
Restructuring and related expenses												1		-		-		1
Adjusted EBIT											$	47	$	28	$	14	$	89

⁽¹⁾ Generally Accepted Accounting Principles

⁽²⁾ Tenneco presents the above reconciliation of GAAP to non-GAAP earnings measures primarily to reflect the results for the fourth quarters of 2012 and 2011 in a manner that allows a better understanding of the results of operational activities separate from the financial impact of decisions made for the long-term benefit of the company and other items impacting comparability between the periods. Adjustments similar to the ones reflected above have been recorded in earlier periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. Using only the non-GAAP earnings measures to analyze earnings would have material limitations because its calculation is based on the subjective determinations of management regarding the nature and classification of events and circumstances that investors may find material. Management compensates for these limitations by utilizing both GAAP and non-GAAP earnings measures reflected above to understand and analyze the results of the business. The company believes investors find the non-GAAP information helpful in understanding the ongoing performance of operations separate from items that may have a disproportionate positive or negative impact on the company's financial results in any particular period.

⁽³⁾EBITDA including noncontrolling interests represents income before interest expense, income taxes, noncontrolling interests and depreciation and amortization. EBITDA including noncontrolling interests is not a calculation based upon generally accepted accounting principles. The amounts included in the EBITDA including noncontrolling interests calculation, however, are derived from amounts included in the historical statements of income data. In addition, EBITDA including noncontrolling interests should not be considered as an alternative to net income (loss) attributable to Tenneco Inc. or operating income as an indicator of the company's operating performance, or as an alternative to operating cash flows as a measure of liquidity. Tenneco has presented EBITDA including noncontrolling interests because it regularly reviews EBITDA including noncontrolling interests as a measure of the company's performance. In addition, Tenneco believes its investors utilize and analyze our EBITDA including noncontrolling interests for similar purposes. Tenneco also believes EBITDA including noncontrolling interests assists investors in comparing a company's performance on a consistent basis without regard to depreciation and amortization, which can vary significantly depending upon many factors. However, the EBITDA including noncontrolling interests measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.

⁽⁴⁾ Non-cash asset impairment charge related to the European ride control business.

ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP ⁽¹⁾ NET INCOME TO EBITDA INCLUDING NONCONTROLLING INTERESTS ⁽²⁾
Unaudited
(Millions)

	YTD 2012
	North	Europe,	Asia
	America	SA & India	Pacific	Total
Net income attributable to Tenneco Inc.				$ 275

Net income attributable to noncontrolling interests				29

Net income				304

Income tax expense				19

Interest expense (net of interest capitalized)				105

EBIT, Earnings before interest expense, income taxes and noncontrolling interests (GAAP measure)	$ 288	$ 71	$ 69	428

Depreciation and amortization of other intangibles	91	89	25	205

Total EBITDA including noncontrolling interests ⁽²⁾	$ 379	$ 160	$ 94	$ 633


	YTD 2011
	North	Europe,	Asia
	America	SA & India	Pacific	Total
Net income attributable to Tenneco Inc.				$ 157

Net income attributable to noncontrolling interests				26

Net income				183

Income tax expense				88

Interest expense (net of interest capitalized)				108

EBIT, Earnings before interest expense, income taxes and noncontrolling interests (GAAP measure)	$ 216	$ 125	$ 38	379

Depreciation and amortization of other intangibles	95	88	24	207

Total EBITDA including noncontrolling interests ⁽²⁾	$ 311	$ 213	$ 62	$ 586

⁽¹⁾ Generally Accepted Accounting Principles

⁽²⁾EBITDA including noncontrolling interests represents income before interest expense, income taxes, noncontrolling interests and depreciation and amortization. EBITDA including noncontrolling interests is not a calculation based upon generally accepted accounting principles. The amounts included in the EBITDA including noncontrolling interests calculation, however, are derived from amounts included in the historical statements of income data. In addition, EBITDA including noncontrolling interests should not be considered as an alternative to net income (loss) attributable to Tenneco Inc. or operating income as an indicator of the company's operating performance, or as an alternative to operating cash flows as a measure of liquidity. Tenneco has presented EBITDA including noncontrolling interests because it regularly reviews EBITDA including noncontrolling interests as a measure of the company's performance. In addition, Tenneco believes its investors utilize and analyze our EBITDA including noncontrolling interests for similar purposes. Tenneco also believes EBITDA including noncontrolling interests assists investors in comparing a company's performance on a consistent basis without regard to depreciation and amortization, which can vary significantly depending upon many factors. However, the EBITDA including noncontrolling interests measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.

ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP ⁽¹⁾ TO NON-GAAP EARNINGS MEASURES ⁽²⁾
Unaudited
(Millions except per share amounts)

	YTD 2012												YTD 2011
							Net income											Net income
							attributable to											attributable to
	EBITDA ⁽³⁾			EBIT			Tenneco Inc.			Per Share			EBITDA ⁽³⁾			EBIT		Tenneco Inc.			Per Share
Earnings Measures	$	633		$	428		$	275		$	4.50		$	586		$	379	$	157		$	2.55

Adjustments (reflect non-GAAP measures):
Restructuring and related expenses		13			13			8			0.14			8			8		5			0.09
Asset impairment charge ⁽⁴⁾		-			7			7			0.11			-			-		-			-
Pullman recoveries ⁽⁵⁾		(5	)		(5	)		(3	)		(0.05	)		-			-		-			-
Goodwill impairment charge ⁽⁶⁾		-			-			-			-			11			11		7			0.11
Costs related to refinancing		-			-			12			0.19			-			-		1			0.01
Net tax adjustments		-			-			(96	)		(1.57	)		-			-		(7	)		(0.10	)

Non-GAAP earnings measures	$	641		$	443		$	203		$	3.32		$	605		$	398	$	163		$	2.66


													YTD 2012
													North			Europe,		Asia
													America			SA & India		Pacific			Total
EBIT													$	288		$	71	$	69		$	428
Restructuring and related expenses														1			12		-			13
Asset impairment charge ⁽⁴⁾														-			7		-			7
Pullman recoveries ⁽⁵⁾														(5	)		-		-			(5	)
Adjusted EBIT													$	284		$	90	$	69		$	443


													YTD 2011
													North			Europe,		Asia
													America			SA & India		Pacific			Total
EBIT													$	216			125	$	38		$	379
Restructuring and related expenses														2			3		3			8
Goodwill impairment charge ⁽⁶⁾														-			-		11			11
Adjusted EBIT													$	218		$	128	$	52		$	398

⁽¹⁾ Generally Accepted Accounting Principles

⁽²⁾ Tenneco presents the above reconciliation of GAAP to non-GAAP earnings measures primarily to reflect the results for 2012 and 2011 in a manner that allows a better understanding of the results of operational activities separate from the financial impact of decisions made for the long-term benefit of the company and other items impacting comparability between the periods. Adjustments similar to the ones reflected above have been recorded in earlier periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. Using only the non-GAAP earnings measures to analyze earnings would have material limitations because its calculation is based on the subjective determinations of management regarding the nature and classification of events and circumstances that investors may find material. Management compensates for these limitations by utilizing both GAAP and non-GAAP earnings measures reflected above to understand and analyze the results of the business. The company believes investors find the non-GAAP information helpful in understanding the ongoing performance of operations separate from items that may have a disproportionate positive or negative impact on the company's financial results in any particular period.

⁽⁴⁾ Non-cash asset impairment charge related to the European ride control business.

⁽⁵⁾ Benefit from property recoveries related to transactions originated by the Pullman company before being acquired by Tenneco in 1996.

⁽⁶⁾ Non-cash asset impairment charge related to goodwill for Australia.

ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP ⁽¹⁾ REVENUE TO NON-GAAP REVENUE MEASURES ⁽²⁾
Unaudited
(Millions)

	Q4 2012
								Substrate		Revenues
								Sales		Excluding
						Revenues		Excluding		Currency
			Currency			Excluding		Currency		and Substrate
	Revenues		Impact			Currency		Impact		Sales
North America Original Equipment
Ride Control	$	156	$	1		$	155	$	-	$	155
Emission Control		526		-			526		224		302
Total North America Original Equipment		682		1			681		224		457

North America Aftermarket
Ride Control		116		-			116		-		116
Emission Control		48		-			48		-		48
Total North America Aftermarket		164		-			164		-		164

Total North America		846		1			845		224		621

Europe Original Equipment
Ride Control		115		(4	)		119		-		119
Emission Control		338		(12	)		350		125		225
Total Europe Original Equipment		453		(16	)		469		125		344

Europe Aftermarket
Ride Control		47		(1	)		48		-		48
Emission Control		25		(1	)		26		-		26
Total Europe Aftermarket		72		(2	)		74		-		74

South America & India		141		(18	)		159		21		138

Total Europe, South America & India		666		(36	)		702		146		556

Asia		206		4			202		21		181

Australia		35		-			35		3		32

Total Asia Pacific		241		4			237		24		213

Total Tenneco Inc.	$	1,753	$	(31	)	$	1,784	$	394	$	1,390


	Q4 2011
								Substrate		Revenues
								Sales		Excluding
						Revenues		Excluding		Currency
			Currency			Excluding		Currency		and Substrate
	Revenues		Impact			Currency		Impact		Sales
North America Original Equipment
Ride Control	$	146	$	-		$	146	$	-	$	146
Emission Control		539		-			539		251		288
Total North America Original Equipment		685		-			685		251		434

North America Aftermarket
Ride Control		113		-			113		-		113
Emission Control		49		-			49		-		49
Total North America Aftermarket		162		-			162		-		162

Total North America		847		-			847		251		596

Europe Original Equipment
Ride Control		139		-			139		-		139
Emission Control		359		-			359		120		239
Total Europe Original Equipment		498		-			498		120		378

Europe Aftermarket
Ride Control		48		-			48		-		48
Emission Control		31		-			31		-		31
Total Europe Aftermarket		79		-			79		-		79

South America & India		151		-			151		22		129

Total Europe, South America & India		728		-			728		142		586

Asia		173		-			173		25		148

Australia		36		-			36		2		34

Total Asia Pacific		209		-			209		27		182

Total Tenneco Inc.	$	1,784	$	-		$	1,784	$	420	$	1,364

⁽¹⁾ Generally Accepted Accounting Principles

⁽²⁾Tenneco presents the above reconciliation of revenues in order to reflect the trend in the company's sales, in various product lines and geographical regions, separately from the effects of doing business in currencies other than the U.S. dollar. Additionally, substrate sales include precious metals pricing, which may be volatile. Substrate sales occur when, at the direction of its OE customers, Tenneco purchases catalytic converters or components thereof from suppliers, uses them in its manufacturing processes and sells them as part of the completed system. While Tenneco original equipment customers assume the risk of this volatility, it impacts reported revenue. Excluding substrate sales removes this impact. Tenneco uses this information to analyze the trend in revenues before these factors. Tenneco believes investors find this information useful in understanding period to period comparisons in the company's revenues.

ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP ⁽¹⁾ REVENUE TO NON-GAAP REVENUE MEASURES ⁽²⁾
Unaudited
(Millions)

	YTD 2012
								Substrate		Revenues
								Sales		Excluding
						Revenues		Excluding		Currency
			Currency			Excluding		Currency		and Substrate
	Revenues		Impact			Currency		Impact		Sales
North America Original Equipment
Ride Control	$	660	$	(1	)	$	661	$	-	$	661
Emission Control		2,297		-			2,297		997		1,300
Total North America Original Equipment		2,957		(1	)		2,958		997		1,961

North America Aftermarket
Ride Control		553		1			552		-		552
Emission Control		209		-			209		-		209
Total North America Aftermarket		762		1			761		-		761

Total North America		3,719		-			3,719		997		2,722

Europe Original Equipment
Ride Control		496		(43	)		539		-		539
Emission Control		1,398		(125	)		1,523		534		989
Total Europe Original Equipment		1,894		(168	)		2,062		534		1,528

Europe Aftermarket
Ride Control		197		(20	)		217		-		217
Emission Control		106		(9	)		115		-		115
Total Europe Aftermarket		303		(29	)		332		-		332

South America & India		570		(89	)		659		89		570

Total Europe, South America & India		2,767		(286	)		3,053		623		2,430

Asia		724		2			722		80		642

Australia		153		(2	)		155		11		144

Total Asia Pacific		877		-			877		91		786

Total Tenneco Inc.	$	7,363	$	(286	)	$	7,649	$	1,711	$	5,938


	YTD 2011
								Substrate		Revenues
								Sales		Excluding
						Revenues		Excluding		Currency
			Currency			Excluding		Currency		and Substrate
	Revenues		Impact			Currency		Impact		Sales
North America Original Equipment
Ride Control	$	608	$	-		$	608	$	-	$	608
Emission Control		2,085		-			2,085		971		1,114
Total North America Original Equipment		2,693		-			2,693		971		1,722

North America Aftermarket
Ride Control		518		-			518		-		518
Emission Control		203		-			203		-		203
Total North America Aftermarket		721		-			721		-		721

Total North America		3,414		-			3,414		971		2,443

Europe Original Equipment
Ride Control		567		-			567		-		567
Emission Control		1,455		-			1,455		494		961
Total Europe Original Equipment		2,022		-			2,022		494		1,528

Europe Aftermarket
Ride Control		219		-			219		-		219
Emission Control		140		-			140		-		140
Total Europe Aftermarket		359		-			359		-		359

South America & India		632		-			632		103		529

Total Europe, South America & India		3,013		-			3,013		597		2,416

Asia		618		-			618		98		520

Australia		160		-			160		12		148

Total Asia Pacific		778		-			778		110		668

Total Tenneco Inc.	$	7,205	$	-		$	7,205	$	1,678	$	5,527

⁽¹⁾ Generally Accepted Accounting Principles

ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP REVENUE TO NON-GAAP REVENUE MEASURES
Unaudited
(Millions except percents)

	Q4 2012 vs. Q4 2011 $ Change and % Change Increase (Decrease)
						Revenues
						Excluding
						Currency and
	Revenues			% Change		Substrate Sales			% Change
North America Original Equipment
Ride Control	$	10		7	%	$	9		6	%
Emission Control		(13	)	(2	%)		14		5	%
Total North America Original Equipment		(3	)	0	%		23		5	%

North America Aftermarket
Ride Control		3		3	%		3		3	%
Emission Control		(1	)	(2	%)		(1	)	(2	%)
Total North America Aftermarket		2		1	%		2		1	%

Total North America		(1	)	0	%		25		4	%

Europe Original Equipment
Ride Control		(24	)	(17	%)		(20	)	(14	%)
Emission Control		(21	)	(6	%)		(14	)	(6	%)
Total Europe Original Equipment		(45	)	(9	%)		(34	)	(9	%)

Europe Aftermarket
Ride Control		(1	)	(2	%)		-		0	%
Emission Control		(6	)	(19	%)		(5	)	(16	%)
Total Europe Aftermarket		(7	)	(9	%)		(5	)	(6	%)

South America & India		(10	)	(7	%)		9		7	%

Total Europe, South America & India		(62	)	(9	%)		(30	)	(5	%)

Asia		33		19	%		33		22	%

Australia		(1	)	(3	%)		(2	)	(6	%)

Total Asia Pacific		32		15	%		31		17	%

Total Tenneco Inc.	$	(31	)	(2	%)	$	26		2	%



	YTD Q4 2012 vs. YTD Q4 2011 $ Change and % Change Increase (Decrease)
						Revenues
						Excluding
						Currency and
	Revenues			% Change		Substrate Sales			% Change
North America Original Equipment
Ride Control	$	52		9	%	$	53		9	%
Emission Control		212		10	%		186		17	%
Total North America Original Equipment		264		10	%		239		14	%

North America Aftermarket
Ride Control		35		7	%		34		7	%
Emission Control		6		3	%		6		3	%
Total North America Aftermarket		41		6	%		40		6	%

Total North America		305		9	%		279		11	%

Europe Original Equipment
Ride Control		(71	)	(13	%)		(28	)	(5	%)
Emission Control		(57	)	(4	%)		28		3	%
Total Europe Original Equipment		(128	)	(6	%)		-		0	%

Europe Aftermarket
Ride Control		(22	)	(10	%)		(2	)	(1	%)
Emission Control		(34	)	(24	%)		(25	)	(18	%)
Total Europe Aftermarket		(56	)	(16	%)		(27	)	(8	%)

South America & India		(62	)	(10	%)		41		8	%

Total Europe, South America & India		(246	)	(8	%)		14		1	%

Asia		106		17	%		122		23	%

Australia		(7	)	(4	%)		(4	)	(3	%)

Total Asia Pacific		99		13	%		118		18	%

Total Tenneco Inc.	$	158		2	%	$	411		7	%

ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF NON-GAAP MEASURES
Debt net of cash / Adjusted LTM EBITDA including noncontrolling interests
Unaudited
(Millions except ratios)

	Quarter Ended December 31,

	2012		2011

Total debt	$	1,180	$	1,224

Cash and cash equivalents		223		214

Debt net of cash balances ⁽¹⁾	$	957	$	1,010


Adjusted LTM EBITDA including noncontrolling interests ^{(2) (3)}	$	641	$	605

Ratio of debt net of cash balances to adjusted LTM EBITDA including noncontrolling interests ⁽⁴⁾	1.5x		1.7x

⁽¹⁾Tenneco presents debt net of cash balances because management believes it is a useful measure of Tenneco's credit position and progress toward reducing leverage. The calculation is limited in that the company may not always be able to use cash to repay debt on a dollar-for- dollar basis.

⁽²⁾EBITDA including noncontrolling interests represents income before interest expense, income taxes, noncontrolling interests and depreciation and amortization. EBITDA including noncontrolling interests is not a calculation based upon generally accepted accounting principles. The amounts included in the EBITDA including noncontrolling interests calculation, however, are derived from amounts included in the historical statements of income data. In addition, EBITDA including noncontrolling interests should not be considered as an alternative to net income (loss) attributable to Tenneco Inc. or operating income as an indicator of the company's operating performance, or as an alternative to operating cash flows as a measure of liquidity. Tenneco has presented EBITDA including noncontrolling interests because it regularly reviews EBITDA including noncontrolling interests as a measure of the company's performance. In addition, Tenneco believes its investors utilize and analyze our EBITDA including noncontrolling interests for similar purposes. Tenneco also believes EBITDA including noncontrolling interests assists investors in comparing a company's performance on a consistent basis without regard to depreciation and amortization, which can vary significantly depending upon many factors. However, the EBITDA including noncontrolling interests measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.

⁽³⁾Adjusted EBITDA including noncontrolling interests is presented in order to reflect the results in a manner that allows a better understanding of operational activities separate from the financial impact of decisions made for the long term benefit of the company and other items impacting comparability between the periods. Similar adjustments to EBITDA including noncontrolling interests have been recorded in earlier periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. The company believes investors find the non-GAAP information helpful in understanding the ongoing performance of operations separate from items that may have a disproportionate positive or negative impact on the company's financial results in any particular period.

⁽⁴⁾Tenneco presents the above reconciliation of the ratio of debt net of cash to annual adjusted EBITDA including noncontrolling interests to show trends that investors may find useful in understanding the company's ability to service its debt. For purposes of this calculation, annual adjusted EBITDA including noncontrolling interests is used as an indicator of the company's performance and debt net of cash is presented as an indicator of our credit position and progress toward reducing our financial leverage. This reconciliation is provided as supplemental information and not intended to replace the company's existing covenant ratios or any other financial measures that investors may find useful in describing the company's financial position. See notes (1), (2) and (3) for a description of the limitations of using debt net of cash, EBITDA including noncontrolling interests and adjusted EBITDA including noncontrolling interests.

ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP ⁽¹⁾ REVENUE TO NON-GAAP REVENUE MEASURES
Unaudited
(Millions)

	Three Months Ended December 31,

	2012		2011

Original equipment revenues	$	1,470	$	1,488

Aftermarket revenues		283		296

Net sales and operating revenues	$	1,753	$	1,784


	Twelve Months Ended December 31,

	2012		2011

Original equipment revenues	$	6,101	$	5,910

Aftermarket revenues		1,262		1,295

Net sales and operating revenues	$	7,363	$	7,205

⁽¹⁾ Generally Accepted Accounting Principles

ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP ⁽¹⁾ REVENUE AND EARNINGS TO NON-GAAP REVENUE AND EARNINGS MEASURES ⁽²⁾
Unaudited
(Millions except percents)

	Q4 2012												Q4 2011
	North			Europe,			Asia						North			Europe,			Asia
	America			SA & India			Pacific			Total			America			SA & India			Pacific			Total
Net sales and operating revenues	$	846		$	666		$	241		$	1,753		$	847		$	728		$	209		$	1,784

Less: Substrate sales		224			141			24			389			251			142			27			420

Value-add revenues	$	622		$	525		$	217		$	1,364		$	596		$	586		$	182		$	1,364

EBIT	$	54		$	9		$	21		$	84		$	46		$	28		$	14		$	88

EBIT as a % of revenue		6.4	%		1.4	%		8.7	%		4.8	%		5.4	%		3.8	%		6.7	%		4.9	%
EBIT as a % of value-add revenue		8.7	%		1.7	%		9.7	%		6.2	%		7.7	%		4.8	%		7.7	%		6.5	%

Adjusted EBIT	$	55		$	18		$	21		$	94		$	47		$	28		$	14		$	89

Adjusted EBIT as a % of revenue		6.5	%		2.7	%		8.7	%		5.4	%		5.5	%		3.8	%		6.7	%		5.0	%
Adjusted EBIT as a % of value-add revenue		8.8	%		3.4	%		9.7	%		6.9	%		7.9	%		4.8	%		7.7	%		6.5	%


	YTD 2012												YTD 2011
	North			Europe,			Asia						North			Europe,			Asia
	America			SA & India			Pacific			Total			America			SA & India			Pacific			Total
Net sales and operating revenues	$	3,719		$	2,767		$	877		$	7,363		$	3,414		$	3,013		$	778		$	7,205

Less: Substrate sales		997			570			93			1,660			971			597			110			1,678

Value-add revenues	$	2,722		$	2,197		$	784		$	5,703		$	2,443		$	2,416		$	668		$	5,527

EBIT	$	288		$	71		$	69		$	428		$	216		$	125		$	38		$	379

EBIT as a % of revenue		7.7	%		2.6	%		7.9	%		5.8	%		6.3	%		4.1	%		4.9	%		5.3	%
EBIT as a % of value-add revenue		10.6	%		3.2	%		8.8	%		7.5	%		8.8	%		5.2	%		5.7	%		6.9	%

Adjusted EBIT	$	284		$	90		$	69		$	443		$	218		$	128		$	52		$	398

Adjusted EBIT as a % of revenue		7.6	%		3.3	%		7.9	%		6.0	%		6.4	%		4.2	%		6.7	%		5.5	%
Adjusted EBIT as a % of value-add revenue		10.4	%		4.1	%		8.8	%		7.8	%		8.9	%		5.3	%		7.8	%		7.2	%

⁽¹⁾ Generally Accepted Accounting Principles

⁽²⁾Tenneco presents the above reconciliation of revenues in order to reflect value-add revenues. Substrate sales include precious metals pricing, which may be volatile. Substrate sales occur when, at the direction of its OE customers, Tenneco purchases catalytic converters or components thereof from suppliers, uses them in its manufacturing processes and sells them as part of the completed system. While Tenneco original equipment customers assume the risk of this volatility, it impacts reported revenue. Excluding substrate sales removes this impact. Further, presenting EBIT as a percent of value-add revenue assists investors in evaluating our company's operational performance without the impact of such substrate sales.

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