February 02, 2012 at 08:00 AM EST
Tenneco Reports Record Fourth Quarter and Full-Year 2011 Financial Results

Tenneco Inc (NYSE: TEN) reported record net income of $30 million, or 49-cents per diluted share, compared with a loss of $18 million, or 31-cents per diluted share, in the fourth quarter 2010. On an adjusted basis, net income also increased to $32 million, or 53-cents per diluted share, versus $19 million, or 31-cents per diluted share, a year ago. The tables in the press release reconcile GAAP results to non-GAAP results.

“The double-digit increases in revenues and earnings demonstrate the balance in our growth strategy and set new performance benchmarks for Tenneco,” stated Gregg Sherrill, chairman and CEO. “Our strong position on light vehicle platforms globally, higher aftermarket sales, and technology-driven growth in the commercial vehicle segment, drove the significant revenue gain and delivered earnings growth, EBIT margin improvement, and a stronger financial position.”

Revenue

Total revenue in the quarter was $1.784 billion, up 13% from 2010, representing the company’s highest-ever fourth quarter revenue. Revenue excluding substrate sales and currency was $1.374 billion, a 13% year-over-year increase versus $1.215 billion. Higher OE light vehicle production volumes, incremental revenue from commercial vehicle launches and higher global aftermarket sales all contributed to strong revenue growth in the quarter. Revenue includes a $10 million unfavorable currency impact.

EBIT and EBIT Margin

EBIT (earnings before interest, taxes, and non-controlling interests) increased to $88 million from $62 million in fourth quarter 2010. Adjusted EBIT improved to $89 million, up 31% versus $68 million a year ago. EBIT was driven by stronger OE light vehicle production volumes, the launch and ramp up of new commercial vehicle programs and reduced SG&A costs (related to lower stock-indexed compensation). Partially offsetting these improvements were $9 million in higher year-over-year operational costs in the North American ride control business and $4 million in planned costs associated with expanding manufacturing capabilities and supporting new programs in China. Currency had a $2 million unfavorable impact on EBIT in the fourth quarter.

EBIT as a percent of revenue and EBIT as a percent of value-add revenue (revenue excluding substrate sales) improved year-over-year as noted below.

Q4 2011 Q4 2010
EBIT as a percent of revenue 4.9% 3.9%
EBIT as a percent of value-add revenue 6.5% 5.1%
Adjusted EBIT as a percent of revenue 5.0% 4.3%
Adjusted EBIT as a percent of value-add revenue 6.5% 5.6%

EBIT margin in North America improved on stronger OE production volumes and the benefit from commercial vehicle emission control business. In Europe, EBIT margin also continued to improve, driven by stronger production on light vehicle platforms that Tenneco supplies. In the Asia Pacific segment, volume strength in China was more than offset by planned investments in China and lower OE production in Thailand, resulting in a lower EBIT margin in the fourth quarter.

Adjusted fourth quarter 2011 and 2010 results

(millions except per share amounts) Q4 2011 Q4 2010
Net income Net income (loss)
attributable to attributable to
EBITDA* EBIT Tenneco Inc. Per Share EBITDA* EBIT Tenneco Inc. Per Share
Earnings Measures $ 139 $ 88 $ 30 $ 0.49 $ 115 $ 62 $ (18 ) $ (0.31 )
Adjustments (reflects non-GAAP measures):
Restructuring and related expenses 1 1 - 0.01 4 4 2 0.06
Pension charge - - - - 2 2 2 0.02
Costs related to refinancing - - - - - - 13 0.22
Net tax adjustments - - 2 0.03 - - 20 0.32
Non-GAAP earnings measures $ 140 $ 89 $ 32 $ 0.53 $ 121 $ 68 $ 19 $ 0.31
* EBITDA including noncontrolling interests (EBIT before depreciation and amortization)

Fourth quarter 2011 adjustments:

  • Restructuring and related expenses of $1 million pre-tax, or 1-cent per diluted share;
  • Net tax charges of $2 million, or 3-cents per 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.

Fourth quarter 2010 adjustments:

  • Restructuring and related expenses of $4 million pre-tax, or 6-cents per diluted share;
  • A charge of $2 million pre-tax, or 2-cents per diluted share, related to an actuarial loss for a lump-sum pension payment;
  • Costs of $21 million pre-tax, or 22-cents per diluted share, related to refinancing the company's 8 5/8 percent notes with new 6 7/8 percent notes;
  • Non-cash tax charges of $20 million, or 32-cents per diluted share, primarily related to the impact of recording a valuation allowance against the tax benefit for losses in the U.S. and certain foreign jurisdictions.

Cash

Cash generated by operations in the quarter was $201 million, up from $180 million a year ago, driven by higher year-over-year earnings and effective working capital management.

Capital expenditures in the quarter were $80 million, bringing total 2011 spending to $218 million, or 3% of total revenue, in line with the company’s historical range for capital spending. The fourth quarter increase, versus $63 million in 2010, included investments in programs for light and commercial vehicle customers and to expand manufacturing and engineering capabilities in emerging markets.

FULL-YEAR 2011 RESULTS

Tenneco reported annual revenue of $7.205 billion, up 21% from $5.937 billion in 2010. Excluding substrate sales and the impact of currency, revenue increased 15% to $ 5.364 billion, versus $4.653 billion the prior year. Increased light vehicle production globally, particularly in North America, South America, and China, stronger global aftermarket sales, and OE revenue from commercial vehicle programs all contributed to Tenneco’s record revenues for the year. Commercial and specialty vehicle OE revenue increased to $660 million in 2011.

The company reported net income of $157 million, or $2.55 per diluted share, up from $39 million or 63-cents per diluted share in 2010. Adjusted for the items below, net income rose to a record high of $163 million, or $2.66 per diluted share, versus $96 million, or $1.57 per diluted share a year ago.

For the year, Tenneco reported a record high EBIT of $379 million, compared with $281 million in 2010. Adjusted for the items below, EBIT increased to $398 million, versus $306 million a year ago.

Adjusted 2011 results

(millions except per share amounts) YTD 2011 YTD 2010
Net income Net income
attributable to attributable to
EBITDA EBIT Tenneco Inc. Per Share EBITDA EBIT Tenneco Inc. Per Share
Earnings Measures $ 586 $ 379 $ 157 $ 2.55 $ 497 $ 281 $ 39 $ 0.63
Adjustments (reflects non-GAAP measures):
Restructuring and related expenses 8 8 5 0.09 14 19 12 0.20
Goodwill impairment charge 11 11 7 0.11 - - - -
Pension charges - - - - 6 6 4 0.07
Costs related to refinancing - - 1 0.01 - - 18 0.29
Net tax adjustments - - (7 ) (0.10 ) - - 23 0.38
Non-GAAP earnings measures $ 605 $ 398 $ 163 $ 2.66 $ 517 $ 306 $ 96 $ 1.57

For the full year, Tenneco delivered EBIT margin improvement as noted below.

FY 2011 FY 2010
EBIT as a percent of revenue 5.3% 4.7%
EBIT as a percent of value-add revenue 6.9% 6.0%
Adjusted EBIT as a percent of revenue 5.5% 5.2%
Adjusted EBIT as a percent of value-add revenue 7.2% 6.6%

Cash

For full-year 2011, even with a greater demand on working capital to support higher revenues, the company generated $245 million in cash from operations, compared with $244 million in 2010.

During the year, Tenneco returned value to shareholders by completing the repurchase of 400,000 shares of the company’s outstanding common stock at a cost of $16 million to offset dilution from shares awarded to employees in 2011. As previously announced, for 2012 the board of directors has authorized a repurchase program of up to 600,000 shares.

Debt

At December 31, 2011, Tenneco's debt net of cash was $1.01 billion, compared with $990 million at the end of 2010. The company's earnings improvement and cash generation resulted in an all-time low leverage ratio (net debt to adjusted EBITDA including noncontrolling interests) of 1.7x at December 31, 2011, continued improvement from the leverage ratio of 1.9x at December 31, 2010.

OUTLOOK

Tenneco’s OE revenue growth will be driven by leveraging higher production volumes, the company’s strong position on top-selling platforms, introducing technology on new and existing platforms, and continuing to launch and ramp up significant commercial vehicle emission control programs. In addition to OE growth, the company expects continued solid performance from the company’s aftermarket business on the strength of its market-leading brands.

The company projects the following OE revenues for 2012 and 2013. Compared to estimates provided a year ago for 2012, the following projections account for lower industry light vehicle production forecasts in Europe, a slower ramp-up of commercial vehicle emission control business in China and lower euro exchange rates.

OE Revenue Estimates ($billions)

OE Revenue

2011A

2012 2013
Light vehicle 5.2 5.4 5.9
Commercial vehicle 0.7 1.2 1.9
Total 5.9 6.6 7.8
Substrate % of total OE revenue 28% 29% 30%

Tenneco expects its global original equipment revenue will increase to between $10.0 billion and $11.5 billion by 2016, of which 30% to 35% is expected to be commercial vehicle revenue. Substrate sales are expected to be 32% of OE revenue by 2016.

Additional 2012 Guidance:

Capital expenditures are expected to be $230 million to $250 million
Annual interest expense is expected to be about $105 million
Cash taxes are expected to be approximately $100 million

“While we are mindful of global economic and market conditions, especially production forecasts for Europe, our confidence in driving growth and improving profitability remains unchanged,” said Sherrill. “We continue to benefit from the balance across our operations with a strong presence globally including in fast-growing markets, and across vehicle and market segments. In addition, we are at the beginning of the ramp-up of our commercial vehicle emission control business, which will significantly increase over the next five years.”

For on and off-road commercial vehicles, Tenneco offers a comprehensive suite of diesel aftertreatment technologies, giving customers options in meeting increasingly stringent emissions standards, particularly NOx regulations, which are coming into effect for diesel applications around the world.

“Launch execution, operational performance and effectively converting our top-line growth to steady margin improvement remain priorities for Tenneco. In addition to capitalizing on increasing light vehicle production, margin benefit from our commercial vehicle business will accelerate as these programs continue to ramp up,” added Sherrill. “Across our operations, we are working to deliver greater profitability by leveraging our Tenneco Manufacturing System, taking actions to optimize our footprint globally and staying focused on continuous improvement and process excellence.”

FOURTH QUARTER REPORTING SEGMENTS

NORTH AMERICA

(millions except percents) Q4 11
Revenues
Excluding
Currency &
Q4 11

% Change vs.

Substrate % Change vs.
Revenues

Q4 10

Sales Q4 10
North America Original Equipment
Ride Control $ 146 16 % $ 147 16 %
Emission Control 539 22 % 288 23 %
Total North America Original Equipment 685 21 % 435 21 %
North America Aftermarket
Ride Control 113 4 % 112 3 %
Emission Control 49 25 % 48 23 %
Total North America Aftermarket 162 9 % 160 9 %
Total North America $ 847 18 % $ 595 17 %

  • A 21% increase in OE revenue excluding currency and substrate sales was driven by improving light vehicle production and Tenneco content on strong selling vehicles including the Chevy Malibu, Ford Focus, and the Ford F-150 and Super Duty pick-up trucks. Incremental revenue from commercial vehicle programs including Caterpillar and John Deere also drove the increase.
  • Aftermarket revenue rose on higher sales in both product lines, including the impact of sales to new customers added earlier in the year.
  • EBIT for North American operations increased 70% to $46 million, versus $27 million a year ago. EBIT includes $2 million in unfavorable currency impact.
  • Adjusted EBIT was $47 million, up 52% from $31 million a year ago.
    • Fourth quarter 2011 EBIT includes $1 million in restructuring expense.
    • Fourth quarter 2010 EBIT includes $2 million in restructuring expenses and $2 million for a pension charge.
  • The EBIT increase was driven by higher OE light vehicle production volumes and the benefit from commercial vehicle revenue. These drivers were partially offset by higher year-over-year OE ride control operational costs of $7 million, a sequential improvement versus third quarter. In addition, EBIT was negatively impacted by costs of $2 million incurred to address a ride control issue on one customer platform.

EUROPE, SOUTH AMERICA AND INDIA

(millions except percents) Q4 11
Revenues
Excluding
Currency &
Q4 11 % Change vs. Substrate % Change vs.
Revenues Q4 10 Sales Q4 10
Europe Original Equipment
Ride Control $ 139 15 % $ 139 15 %
Emission Control 359 13 % 244 11 %
Total Europe Original Equipment 498 14 % 383 12 %
Europe Aftermarket
Ride Control 48 7 % 49 9 %
Emission Control 31 (8 %) 32 (4 %)
Total Europe Aftermarket 79 1 % 81 3 %
South America & India 151 1 % 141 13 %
Total Europe, South America & India $ 728 9 % $ 605 11 %
  • Tenneco’s strong platform position including on the Mercedes CLS, Volkswagen Polo, and new Audi A6 in ride control and the Daimler Sprinter, VW Golf, Opel Astra, Ford Focus C-Max and BMW 1-Series and 3-Series in emission control drove Europe OE revenue growth of 12% excluding currency and substrate sales.
  • Higher aftermarket ride control revenues, primarily in Eastern Europe, more than offset declines in emission control revenues due to lower demand in most Western European markets.
  • South America and India revenue, excluding currency and substrate sales, increased 13%, on higher aftermarket sales in South America and higher OE volumes in both regions.
  • EBIT for Europe, South America and India increased 47% to $28 million versus $19 million a year ago and adjusted was $28 million, up from $20 million. Fourth quarter 2010 EBIT includes $1 million in restructuring expense.
  • EBIT improvement was driven by stronger OE production volumes and new light vehicle program launches, partially offset by costs associated with customer downtime in South America and India toward the end of the quarter. EBIT includes $2 million in unfavorable currency impact.

ASIA PACIFIC

(millions except percents) Q4 11
Revenues
Excluding
Currency &
Q4 11 % Change vs. Substrate % Change vs.
Revenues Q4 10 Sales Q4 10
Asia $ 173 9 % $ 141 9 %
Australia 36 (3 %) 33 (6 %)
Total Asia Pacific $ 209 7 % $ 174 6 %
  • Asia revenue was up driven by strong OE production volumes in China, particularly on key VW, Audi, Nissan and FAW platforms.
  • Australia revenue decreased on declining industry production and the slow ramp up on a new model program.
  • Asia Pacific EBIT was $14 million, versus $16 million a year ago. Adjusted EBIT was $14 million, compared with $17 million a year ago, which includes $1 million in restructuring expense.
  • Higher OE volumes in China were more than offset by planned higher year-over-year expenses in China to support new customer programs and new manufacturing facilities. Lower OE production volumes in Thailand due to the flooding also impacted Asia Pacific EBIT. EBIT includes $2 million in favorable currency impact.

Attachment 1

Statements of Income (Loss) – 3 Months

Statements of Income – 12 Months

Balance Sheets
Statements of Cash Flows – 3 Months
Statements of Cash Flows – 12 Months

Attachment 2

Reconciliation of GAAP Net Income to EBITDA including noncontrolling interests – 3 Months
Reconciliation of GAAP to Non-GAAP Earnings Measures – 3 Months
Reconciliation of GAAP Net Income to EBITDA including noncontrolling interests – 12 Months
Reconciliation of GAAP to Non-GAAP Earnings Measures – 12 Months
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures – 3 Months
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures – 12 Months
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures – 3 and 12 Months
Reconciliation of Non-GAAP Measures – Debt Net of Cash/Adjusted EBITDA including noncontrolling interests
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures – Original Equipment and Aftermarket Revenue – 3 and 12 Months
Reconciliation of GAAP Revenue and Earnings to Non-GAAP Revenue and Earnings Measures – 3 and 12 Months

REVENUE ASSUMPTIONS

Revenue estimates in this release are based on OE manufacturers’ programs that have been formally awarded to the company; programs where Tenneco is highly confident that it will be awarded business based on informal customer indications consistent with past practices; Tenneco’s status as supplier for the existing program and its relationship with the customer; and the actual original equipment revenues achieved by the company for each of the last several years compared to the amount of those revenues that the company estimated it would generate at the beginning of each year. These revenue estimates are also based on anticipated vehicle production levels and pricing, including precious metals pricing and the impact of material cost changes. The revenue estimates assume that foreign currency exchange rates will remain constant over the entire period. For a chart showing Tenneco’s revenue estimates, including certain of the assumptions upon which these estimates are based, see the slides accompanying the February 2, 2012 conference call, which will be available on the financial section of the Tenneco website at www.tenneco.com.

CONFERENCE CALL

The company will host a conference call on Thursday, February 2, 2012 at 10:00 a.m. ET. The dial-in number is 800-369-3344 (domestic) or 312-470-7049 (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 February 2, 2012 through March 1, 2012. To access this recording, dial 800-839-3416 (domestic) or 402-998-1103 (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.

2012 ANNUAL MEETING

The Tenneco Board of Directors has scheduled the corporation’s annual meeting of shareholders for Wednesday, May 16, 2012 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 19, 2012.

Tenneco is a $7.2 billion global manufacturing company with headquarters in Lake Forest, Illinois and approximately 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®, Gillet™ 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 our ability to have our products included on top selling vehicles, including any shifts in consumer preferences to other lower margin vehicles, for which we may or may not have supply contracts;

(v) changes in automotive 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 for the applicable program over its life;

(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;

(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, and the impact of changes in and compliance with laws and regulations, including environmental laws and regulations and the adoption of the current mandated timelines for worldwide emissions regulations;

(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 changes to and compliance with laws and regulations 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, 2010.

ATTACHMENT 1
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES

STATEMENTS OF INCOME (LOSS)

Unaudited

THREE MONTHS ENDED DECEMBER 31,
(Millions except per share amounts)
2011 2010
Net sales and operating revenues $ 1,784 $ 1,577
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below) 1,514 (a) 1,325 (c)
Engineering, research and development 31 27
Selling, general and administrative 100 110 (d)
Depreciation and amortization of other intangibles 51 53
Total costs and expenses 1,696 1,515
Loss on sale of receivables (1 ) -
Other income (expense) 1 -
Total other income (expense) - -

Earnings before interest expense, income taxes, and noncontrolling interests

North America

46

(a)

27

(c) (d)

Europe, South America & India 28 19 (c)
Asia Pacific 14 16 (c)
88 62
Interest expense (net of interest capitalized) 27 49 (e)
Earnings before income taxes and noncontrolling interests 61 13
Income tax expense 23 (b) 24 (f)
Net income (loss) 38 (11 )
Less: Net income attributable to noncontrolling interests 8 7
Net income (loss) attributable to Tenneco Inc. $ 30 $ (18 )
Weighted average common shares outstanding:
Basic 59.9 59.5
Diluted 61.4 59.5
Earnings (Loss) per share of common stock:
Basic $ 0.50 $ (0.31 )
Diluted $ 0.49 $ (0.31 )
(a) 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.
(b) 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.
(c) Includes restructuring and related charges of $4 million pre-tax, $2 million after tax or $0.06 per diluted share. The entire amount is recorded in cost of sales. Geographically, $2 million is recorded in North America, $1 million in Europe, South America and India and $1 million in Asia Pacific.
(d) Includes a charge of $2 million pre-tax, $2 million after tax or $0.02 per diluted share related to an actuarial loss for a lump-sum pension payment.
(e) Includes pre-tax expenses of $21 million, $13 million after tax or $0.22 per share for costs related to refinancing activities.
(f) Includes non-cash tax charges of $20 million or $0.32 per diluted share primarily related to the impact of recording a valuation allowance against the tax benefit for losses in the U.S. and certain foreign jurisdictions.

ATTACHMENT 1
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME

Unaudited

TWELVE MONTHS ENDED DECEMBER 31,
(Millions except per share amounts)
2011 2010
Net sales and operating revenues $ 7,205 $ 5,937
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below) 6,037 (a) 4,900 (e)
Goodwill impairment charge 11 (b) -
Engineering, research and development 133 117
Selling, general and administrative 428 417 (f)
Depreciation and amortization of other intangibles 207 216 (e)
Total costs and expenses 6,816 5,650
Loss on sale of receivables (5 ) (3 )
Other income (expense) (5 ) (3 )
Total other income (expense) (10 ) (6 )

Earnings before interest expense, income taxes, and noncontrolling interests

North America 216 (a) 155

(e) (f)

Europe, South America & India 125

(a)

76 (e)
Asia Pacific 38

(a) (b)

50 (e)
379 281
Interest expense (net of interest capitalized) 108 (c) 149 (g)
Earnings before income taxes and noncontrolling interests 271 132
Income tax expense 88 (d) 69 (h)
Net income 183 63
Less: Net income attributable to noncontrolling interests 26 24
Net income attributable to Tenneco Inc. $ 157 $ 39
Weighted average common shares outstanding:
Basic 59.9 59.2
Diluted 61.5 61.0
Earnings per share of common stock:
Basic $ 2.62 $ 0.65
Diluted $ 2.55 $ 0.63
(a) 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.
(b) Represents Goodwill impairment charge recorded in Australia of $11 million pre-tax, $7 million after tax or $0.11 per diluted share.
(c) Includes pre-tax expenses of $1 million, $1 million after tax or $0.01 per share for costs related to refinancing activities.
(d) 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.
(e) Includes restructuring and related charges of $19 million pre-tax, $12 million after tax or $0.20 per diluted share. Of the adjustment $14 million is recorded in cost of sales and $5 million is recorded in depreciation. Geographically, $14 million is recorded in North America, $3 million in Europe, South America and India and $2 million in Asia Pacific.
(f) Includes charges of $6 million pre-tax, $4 million after tax or $0.07 per diluted share related to an actuarial loss for lump-sum pension payments.
(g) Includes pre-tax expenses of $27 million, $18 million after tax or $0.29 per share for costs related to refinancing activities.
(h) Includes tax charges of $23 million or $0.38 per diluted share primarily related to the impact of recording a valuation allowance against the tax benefit for losses in the U.S. and certain foreign jurisdictions partially offset by income generated in lower tax rate jurisdictions.

ATTACHMENT 1
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEETS
(Unaudited)
(Millions)
December 31, 2011 December 31, 2010

Assets

Cash and cash equivalents $ 214 $ 233
Receivables, net 980 (a) 826 (a)
Inventories 592 547
Other current assets 193 184
Investments and other assets 311 327
Plant, property, and equipment, net 1,047 1,050
Total assets $ 3,337 $ 3,167

Liabilities and Shareholders' Equity

Short-term debt $ 66 $ 63
Accounts payable 1,171 1,048
Accrued taxes 44 51
Accrued interest 13 13
Other current liabilities 276 293
Long-term debt 1,158 (b) 1,160 (b)
Deferred income taxes 51 56
Deferred credits and other liabilities 503 436
Redeemable noncontrolling interests 12 12
Tenneco Inc. shareholders' equity - (4 )
Noncontrolling interests 43 39

Total liabilities, redeemable noncontrolling interests and shareholders' equity

$ 3,337 $ 3,167
December 31, 2011 December 31, 2010

(a) Accounts Receivables net of:

Europe - Accounts receivables securitization programs $ 121 $ 91
December 31, 2011 December 31, 2010

(b) Long term debt composed of:

Borrowings against revolving credit facilities $ 24 $ -
Term loan B (Due 2016) 148 149
8.625% subordinated notes (Redeemed January 7, 2011) - 20
8.125% senior notes (Due 2015) 250 250
7.75% senior notes (Due 2018) 225 225
6.875% senior notes (Due 2020) 500 500
Other long term debt 11 16
$ 1,158 $ 1,160

ATTACHMENT 1
Tenneco Inc. and Consolidated Subsidiaries
Statements of Cash Flows
(Unaudited)
(Millions)
Three Months Ended
December 31,
20112010
Operating activities:
Net income (loss) $ 38 $ (11 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities -

Depreciation and amortization of other intangibles 51 53
Stock-based compensation 2 2
Deferred income taxes (2 ) 8
Loss on sale of assets 1 -
Changes in components of working capital-
(Inc.)/dec. in receivables 131 143
(Inc.)/dec. in inventories 21 1
(Inc.)/dec. in prepayments and other current assets 5 21
Inc./(dec.) in payables (15 ) (27 )
Inc./(dec.) in accrued taxes - (1 )
Inc./(dec.) in accrued interest (9 ) (16 )
Inc./(dec.) in other current liabilities (22 ) (14 )
Changes in long-term assets 3 8
Changes in long-term liabilities (10 ) 9
Other 7 4
Net cash provided by operating activities 201 180
Investing activities:
Cash payments for plant, property & equipment (68 ) (46 )
Cash payments for software-related intangible assets (5 ) (1 )
Investments and other - 2
Net cash used by investing activities (73 ) (45 )
Financing activities:
Issuance of long-term debt - 500
Debt issuance costs on long-term debt - (10 )
Retirement of long-term debt (1 ) (481 )
Net inc./(dec.) in bank overdrafts - (10 )

Net inc./(dec.) in revolver borrowings and short-term debt excluding current maturities on long-term debt

(78 ) (93 )
Net cash used by financing activities (79 ) (94 )

Effect of foreign exchange rate changes on cash and cash equivalents

2 8
Increase in cash and cash equivalents 51 49
Cash and cash equivalents, October 1 163 184
Cash and cash equivalents, December 31 $ 214 $ 233
Supplemental Cash Flow Information
Cash paid during the period for interest $ 35 $ 60
Cash paid during the period for income taxes (net of refunds) 27 11
Non-cash Investing and Financing Activities
Period ended balance of payables for plant, property, and equipment $ 35 $ 29

ATTACHMENT 1
Tenneco Inc. and Consolidated Subsidiaries
Statements of Cash Flows
(Unaudited)
(Millions)
Twelve Months Ended
December 31,
20112010
Operating activities:
Net income $ 183 $ 63

Adjustments to reconcile net income to net cash provided by operating activities -

Goodwill impairment charge 11 -
Depreciation and amortization of other intangibles 207 216
Stock-based compensation 8 9
Deferred income taxes (5 ) 4
Loss on sale of assets 4 3
Changes in components of working capital-
(Inc.)/dec. in receivables (183 ) (231 )
(Inc.)/dec. in inventories (64 ) (122 )
(Inc.)/dec. in prepayments and other current assets (13 ) 20
Inc./(dec.) in payables 144 238
Inc./(dec.) in accrued taxes (7 ) 12
Inc./(dec.) in accrued interest - (8 )
Inc./(dec.) in other current liabilities (7 ) 20
Changes in long-term assets 1 12
Changes in long-term liabilities (41 ) 6
Other 7 2
Net cash provided by operating activities 245 244
Investing activities:
Proceeds from sale of assets 4 3
Cash payments for plant, property & equipment (213 ) (151 )
Cash payments for software-related intangible assets (15 ) (12 )
Investments and other - 3
Net cash used by investing activities (224 ) (157 )
Financing activities:
Purchase of common stock under the share repurchase program (16 ) -
Issuance of long-term debt 5 880
Debt issuance costs on long-term debt (1 ) (24 )
Retirement of long-term debt (24 ) (864 )
Net inc./(dec.) in bank overdrafts 3 2

Net inc./(dec.) in revolver borrowings and short-term debt excluding current maturities on long-term debt

30 (10 )
Capital contribution from noncontrolling interest partner 1 -
Purchase of additional noncontrolling equity interest (4 ) -
Distribution to noncontrolling interest partners (20 ) (14 )
Net cash used by financing activities (26 ) (30 )

Effect of foreign exchange rate changes on cash and cash equivalents

(14 ) 9
Increase (Decrease) in cash and cash equivalents (19 ) 66
Cash and cash equivalents, January 1 233 167
Cash and cash equivalents, December 31 $ 214 $ 233
Supplemental Cash Flow Information
Cash paid during the period for interest $ 106 $ 149
Cash paid during the period for income taxes (net of refunds) 85 53
Non-cash Investing and Financing Activities
Period ended balance of payables for plant, property, and equipment $ 35 $ 29

ATTACHMENT 2

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

Unaudited

(Millions)
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
Q4 2010
North Europe, Asia
America SA & India Pacific Total
Net loss attributable to Tenneco Inc. $ (18 )
Net income attributable to noncontrolling interests 7
Net loss (11 )
Income tax expense 24
Interest expense (net of interest capitalized) 49
EBIT, Earnings before interest expense, income taxes and noncontrolling interests (GAAP measure) $ 27 $ 19 $ 16 62
Depreciation and amortization of other intangibles 26 22 5 53
Total EBITDA including noncontrolling interests (2) $ 53 $ 41 $ 21 $ 115
(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 2011 Q4 2010
Net income

Net income (loss)

attributable to attributable to

EBITDA (3)

EBIT Tenneco Inc. Per Share

EBITDA (3)

EBIT Tenneco Inc. Per Share
Earnings Measures $ 139 $ 88 $ 30 $ 0.49 $ 115 $ 62 $ (18 ) $ (0.31 )
Adjustments (reflect non-GAAP measures):
Restructuring and related expenses 1 1 - 0.01 4 4 2 0.06
Pension charge (4) - - - - 2 2 2 0.02
Costs related to refinancing - - - - - - 13 0.22
Net tax adjustments - - 2 0.03 - - 20 0.32
Non-GAAP earnings measures $ 140 $ 89 $ 32 $ 0.53 $ 121 $ 68 $ 19 $ 0.31
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
Q4 2010
North Europe, Asia
America SA & India Pacific Total
EBIT $ 27 19 $ 16 $ 62
Restructuring and related expenses 2 1 1 4
Pension charge (4) 2 - - 2
Adjusted EBIT $ 31 $ 20 $ 17 $ 68
(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 2011 and 2010 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) Includes a charge related to an actuarial loss for a lump-sum pension payment.

ATTACHMENT 2

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

Unaudited

(Millions)
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
YTD 2010
North Europe, Asia
America SA & India Pacific Total
Net income attributable to Tenneco Inc. $ 39
Net income attributable to noncontrolling interests 24
Net income 63
Income tax expense 69
Interest expense (net of interest capitalized) 149
EBIT, Earnings before interest expense, income taxes and noncontrolling interests (GAAP measure) $ 155 $ 76 $ 50 281
Depreciation and amortization of other intangibles 109 86 21 216
Total EBITDA including noncontrolling interests (2) $ 264 $ 162 $ 71 $ 497
(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 2011 YTD 2010
Net income Net income
attributable to attributable to

EBITDA (3)

EBIT Tenneco Inc. Per Share

EBITDA (3)

EBIT Tenneco Inc. Per Share
Earnings Measures $ 586 $ 379 $ 157 $ 2.55 $ 497 $ 281 $ 39 $ 0.63
Adjustments (reflect non-GAAP measures):
Restructuring and related expenses 8 8 5 0.09 14 19 12 0.20
Goodwill impairment charge (4) 11 11 7 0.11 - - - -
Pension charges (5) - - - - 6 6 4 0.07
Costs related to refinancing - - 1 0.01 - - 18 0.29
Net tax adjustments - - (7 ) (0.10 ) - - 23 0.38
Non-GAAP earnings measures $ 605 $ 398 $ 163 $ 2.66 $ 517 $ 306 $ 96 $ 1.57
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 (4) - - 11 11
Adjusted EBIT $ 218 $ 128 $ 52 $ 398
YTD 2010
North Europe, Asia
America SA & India Pacific Total
EBIT $ 155 76 $ 50 $ 281
Restructuring and related expenses 14 3 2 19
Pension charge (5) 6 - - 6
Adjusted EBIT $ 175 $ 79 $ 52 $ 306
(1) Generally Accepted Accounting Principles

(2) Tenneco presents the above reconciliation of GAAP to non-GAAP earnings measures primarily to reflect the results for 2011 and 2010 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 goodwill for Australia.

(5) Includes charges related to an actuarial loss for lump-sum pension payments.

ATTACHMENT 2

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

Unaudited

(Millions)
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 $ (1 ) $ 147 $ - $ 147
Emission Control 539 - 539 251 288
Total North America Original Equipment 685 (1 ) 686 251 435
North America Aftermarket
Ride Control 113 1 112 - 112
Emission Control 49 1 48 - 48
Total North America Aftermarket 162 2 160 - 160
Total North America 847 1 846 251 595
Europe Original Equipment
Ride Control 139 - 139 - 139
Emission Control 359 (5 ) 364 120 244
Total Europe Original Equipment 498 (5 ) 503 120 383
Europe Aftermarket
Ride Control 48 (1 ) 49 - 49
Emission Control 31 (1 ) 32 - 32
Total Europe Aftermarket 79 (2 ) 81 - 81
South America & India 151 (13 ) 164 23 141
Total Europe, South America & India 728 (20 ) 748 143 605
Asia 173 8 165 24 141
Australia 36 1 35 2 33
Total Asia Pacific 209 9 200 26 174
Total Tenneco Inc. $ 1,784 $ (10 ) $ 1,794 $ 420 $ 1,374
Q4 2010
Substrate Revenues
Sales Excluding
Revenues Excluding Currency
Currency Excluding Currency and Substrate
Revenues Impact Currency Impact Sales
North America Original Equipment
Ride Control $ 126 $ - $ 126 $ - $ 126
Emission Control 442 - 442 207 235
Total North America Original Equipment 568 - 568 207 361
North America Aftermarket
Ride Control 108 - 108 - 108
Emission Control 40 - 40 - 40
Total North America Aftermarket 148 - 148 - 148
Total North America 716 - 716 207 509
Europe Original Equipment
Ride Control 122 - 122 - 122
Emission Control 316 - 316 98 218
Total Europe Original Equipment 438 - 438 98 340
Europe Aftermarket
Ride Control 45 - 45 - 45
Emission Control 33 - 33 - 33
Total Europe Aftermarket 78 - 78 - 78
South America & India 150 - 150 25 125
Total Europe, South America & India 666 - 666 123 543
Asia 158 - 158 29 129
Australia 37 - 37 3 34
Total Asia Pacific 195 - 195 32 163
Total Tenneco Inc. $ 1,577 $ - $ 1,577 $ 362 $ 1,215
(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 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 $ 4 $ 604 $ - $ 604
Emission Control 2,085 - 2,085 971 1,114
Total North America Original Equipment 2,693 4 2,689 971 1,718
North America Aftermarket
Ride Control 518 5 513 - 513
Emission Control 203 3 200 - 200
Total North America Aftermarket 721 8 713 - 713
Total North America 3,414 12 3,402 971 2,431
Europe Original Equipment
Ride Control 567 31 536 - 536
Emission Control 1,455 81 1,374 464 910
Total Europe Original Equipment 2,022 112 1,910 464 1,446
Europe Aftermarket
Ride Control 219 12 207 - 207
Emission Control 140 8 132 - 132
Total Europe Aftermarket 359 20 339 - 339
South America & India 632 8 624 102 522
Total Europe, South America & India 3,013 140 2,873 566 2,307
Asia 618 29 589 93 496
Australia 160 20 140 10 130
Total Asia Pacific 778 49 729 103 626
Total Tenneco Inc. $ 7,205 $ 201 $ 7,004 $ 1,640 $ 5,364
YTD 2010
Substrate Revenues
Sales Excluding
Revenues Excluding Currency
Currency Excluding Currency and Substrate
Revenues Impact Currency Impact Sales
North America Original Equipment
Ride Control $ 527 $ - $ 527 $ - $ 527
Emission Control 1,642 - 1,642 739 903
Total North America Original Equipment 2,169 - 2,169 739 1,430
North America Aftermarket
Ride Control 484 - 484 - 484
Emission Control 168 - 168 - 168
Total North America Aftermarket 652 - 652 - 652
Total North America 2,821 - 2,821 739 2,082
Europe Original Equipment
Ride Control 462 - 462 - 462
Emission Control 1,121 - 1,121 351 770
Total Europe Original Equipment 1,583 - 1,583 351 1,232
Europe Aftermarket
Ride Control 190 - 190 - 190
Emission Control 141 - 141 - 141
Total Europe Aftermarket 331 - 331 - 331
South America & India 532 - 532 76 456
Total Europe, South America & India 2,446 - 2,446 427 2,019
Asia 517 - 517 107 410
Australia 153 - 153 11 142
Total Asia Pacific 670 - 670 118 552
Total Tenneco Inc. $ 5,937 $ - $ 5,937 $ 1,284 $ 4,653
(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 IC.
RECONCILIATION OF GAAP REVENUE TO NON-GAAP REVENUE MEASURES

Unaudited

(Millions except percents)
Q4 2011 vs. Q4 2010 $ Change and % Change Increase (Decrease)
Revenues
Excluding
Currency and
Revenues % Change Substrate Sales % Change
North America Original Equipment
Ride Control $ 20 16 % $ 21 16 %
Emission Control 97 22 % 53 23 %
Total North America Original Equipment 117 21 % 74 21 %
North America Aftermarket
Ride Control 5 4 % 4 3 %
Emission Control 9 25 % 8 23 %
Total North America Aftermarket 14 9 % 12 9 %
Total North America 131 18 % 86 17 %
Europe Original Equipment
Ride Control 17 15 % 17 15 %
Emission Control 43 13 % 26 11 %
Total Europe Original Equipment 60 14 % 43 12 %
Europe Aftermarket
Ride Control 3 7 % 4 9 %
Emission Control (2 ) (8 %) (1 ) (4 %)
Total Europe Aftermarket 1 1 % 3 3 %
South America & India 1 1 % 16 13 %
Total Europe, South America & India 62 9 % 62 11 %
Asia 15 9 % 12 9 %
Australia (1 ) (3 %) (1 ) (6 %)
Total Asia Pacific 14 7 % 11 6 %
Total Tenneco Inc. $ 207 13 % $ 159 13 %
YTD Q4 2011 vs. YTD Q4 2010 $ Change and % Change Increase (Decrease)
Revenues
Excluding
Currency and
Revenues % Change Substrate Sales % Change
North America Original Equipment
Ride Control $ 81 15 % $ 77 15 %
Emission Control 443 27 % 211 23 %
Total North America Original Equipment 524 24 % 288 20 %
North America Aftermarket
Ride Control 34 7 % 29 6 %
Emission Control 35 21 % 32 19 %
Total North America Aftermarket 69 11 % 61 9 %
Total North America 593 21 % 349 17 %
Europe Original Equipment
Ride Control 105 23 % 74 16 %
Emission Control 334 30 % 140 18 %
Total Europe Original Equipment 439 28 % 214 17 %
Europe Aftermarket
Ride Control 29 15 % 17 9 %
Emission Control (1 ) (1 %) (9 ) (7 %)
Total Europe Aftermarket 28 8 % 8 2 %
South America & India 100 19 % 66 15 %
Total Europe, South America & India 567 23 % 288 14 %
Asia 101 20 % 86 21 %
Australia 7 5 % (12 ) (9 %)
Total Asia Pacific 108 16 % 74 13 %
Total Tenneco Inc. $ 1,268 21 % $ 711 15 %

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,
2011 2010
Total debt $ 1,224 $ 1,223
Cash and cash equivalents 214 233
Debt net of cash balances (1) $ 1,010 $ 990
Adjusted LTM EBITDA including noncontrolling interests (2) (3) $ 605 $ 517
Ratio of debt net of cash balances to adjusted LTM EBITDA including noncontrolling interests (4) 1.7x 1.9x

(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,
2011 2010
Original equipment revenues $ 1,488 $ 1,298
Aftermarket revenues 296 279
Net sales and operating revenues $ 1,784 $ 1,577
Twelve Months Ended December 31,
2011 2010
Original equipment revenues $ 5,910 $ 4,768
Aftermarket revenues 1,295 1,169
Net sales and operating revenues $ 7,205 $ 5,937
(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 2011 Q4 2010
North Europe, Asia North Europe, Asia
America SA & India Pacific Total America SA & India Pacific Total
Net sales and operating revenues $ 847 $ 728 $ 209 $ 1,784 $ 716 $ 666 $ 195 $ 1,577
Less: Substrate sales 251 142 27 420 207 123 32 362
Value-add revenues $ 596 $ 586 $ 182 $ 1,364 $ 509 $ 543 $ 163 $ 1,215
EBIT $ 46 $ 28 $ 14 $ 88 $ 27 $ 19 $ 16 $ 62
EBIT as a % of revenue 5.4% 3.8% 6.7% 4.9% 3.8% 2.9% 8.2% 3.9%
EBIT as a % of value-add revenue 7.7% 4.8% 7.7% 6.5% 5.3% 3.5% 9.8% 5.1%
Adjusted EBIT $ 47 $ 28 $ 14 $ 89 $ 31 $ 20 $ 17 $ 68
Adjusted EBIT as a % of revenue 5.5% 3.8% 6.7% 5.0% 4.3% 3.0% 8.7% 4.3%
Adjusted EBIT as a % of value-add revenue 7.9% 4.8% 7.7% 6.5% 6.1% 3.7% 10.4% 5.6%
YTD 2011 YTD 2010
North Europe, Asia North Europe, Asia
America SA & India Pacific Total America SA & India Pacific Total
Net sales and operating revenues $ 3,414 $ 3,013 $ 778 $ 7,205 $ 2,821 $ 2,446 $ 670 $ 5,937
Less: Substrate sales 971 597 110 1,678 739 427 118 1,284
Value-add revenues $ 2,443 $ 2,416 $ 668 $ 5,527 $ 2,082 $ 2,019 $ 552 $ 4,653
EBIT $ 216 $ 125 $ 38 $ 379 $ 155 $ 76 $ 50 $ 281
EBIT as a % of revenue 6.3% 4.1% 4.9% 5.3% 5.5% 3.1% 7.5% 4.7%
EBIT as a % of value-add revenue 8.8% 5.2% 5.7% 6.9% 7.4% 3.8% 9.1% 6.0%
Adjusted EBIT $ 218 $ 128 $ 52 $ 398 $ 175 $ 79 $ 52 $ 306
Adjusted EBIT as a % of revenue 6.4% 4.2% 6.7% 5.5% 6.2% 3.2% 7.8% 5.2%
Adjusted EBIT as a % of value-add revenue 8.9% 5.3% 7.8% 7.2% 8.4% 3.9% 9.4% 6.6%
(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.

Contacts:

Tenneco Inc
Media inquiries:
Bill Dawson, 847 482-5807
bdawson@tenneco.com
or
Investor inquiries:
Linae Golla, 847 482-5162
lgolla@tenneco.com
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