<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 11-K
------------------------
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-12387
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
TENNECO THRIFT PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
TENNECO INC.
1275 KING STREET
GREENWICH, CONNECTICUT 06831
================================================================================
<PAGE> 2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Tenneco Benefits Committee:
We have audited the accompanying statements of net assets available for plan
benefits of the Tenneco Thrift Plan as of December 31, 1997 and 1996, and the
related statement of changes in net assets available for plan benefits for the
year ended December 31, 1997. These financial statements and the schedules
referred to below are the responsibility of the Tenneco Benefits Committee. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Tenneco
Thrift Plan as of December 31, 1997 and 1996, and the changes in net assets
available for plan benefits for the year ended December 31, 1997, in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes as of December 31, 1997, included as Schedule I,
reportable transactions -- series of transactions for the year ended December
31, 1997, included as Schedule II, and reportable transactions -- single
transactions for the year ended December 31, 1997, included as Schedule III, are
presented for purposes of additional analysis and are not a required part of the
basic financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
have been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Houston, Texas
June 15, 1998
2
<PAGE> 3
TENNECO THRIFT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
ASSETS:
Investments--
Corporate securities--
Tenneco Inc. common stock............................ $114,659,139 $ 316,969,191
El Paso Natural Gas Company common stock............. 12,370,862 32,182,638
Newport News Shipbuilding Inc. common stock.......... 9,793,554 20,557,371
------------ --------------
136,823,555 369,709,200
Collective trust funds--
BZW Barclays Equity Index Fund....................... 44,326,926 75,787,788
BZW Barclays U.S. Debt Market Index Fund............. 6,277,275 14,091,620
------------ --------------
50,604,201 89,879,408
Registered investment companies--
Fidelity Growth Company Fund......................... 51,842,749 118,404,041
INVESCO Value Trust Total Return Fund................ 12,086,577 9,334,811
Putnam New Opportunities Fund........................ 23,249,618 55,365,566
Templeton Foreign Fund............................... 8,060,909 11,906,314
------------ --------------
95,239,853 195,010,732
U.S. Treasury notes.................................... 6,010,320 102,593,340
BASIC Agreement on U.S. Treasury notes................. (8,557) (619,267)
Nations Cash Reserves.................................. 96,295,832 319,522,676
Guaranteed investment contract......................... 221,242 --
Participant loans receivable........................... 9,098,108 36,479,042
------------ --------------
Total investments................................. 394,284,554 1,112,575,131
------------ --------------
Receivables--
Employees' contributions............................... 687,351 1,377,863
Employers' contributions............................... 599,077 1,302,516
Accrued interest....................................... 701,953 2,822,003
------------ --------------
1,988,381 5,502,382
Cash...................................................... 59 7,805
------------ --------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS...................... $396,272,994 $1,118,085,318
============ ==============
</TABLE>
The accompanying notes to financial statements are an integral part of these
financial statements.
3
<PAGE> 4
TENNECO THRIFT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of year... $1,118,085,318
--------------
ADD:
Dividends --
Tenneco Inc............................................ 3,349,034
Other corporate securities............................. 373,209
Registered investment companies........................ 6,933,603
Interest.................................................. 6,598,893
--------------
17,254,739
Net appreciation in fair value of investments............. 7,846,716
--------------
Net investment income........................... 25,101,455
Contributions --
Employees.............................................. 22,356,415
Employers.............................................. 20,025,767
Rollovers.............................................. 2,260,903
--------------
44,643,085
Repayment of loan interest................................ 631,154
Transfers from other plans (Note 7)....................... 24,081,550
--------------
Total additions................................. 94,457,244
--------------
DEDUCT:
Withdrawals............................................... 58,142,961
Administrative expenses................................... 828,146
Transfers to other plans (Note 6)......................... 757,298,461
--------------
Total deductions................................ 816,269,568
--------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of year......... $ 396,272,994
==============
</TABLE>
The accompanying notes to financial statements are an integral part of this
financial statement.
4
<PAGE> 5
TENNECO THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
1. DESCRIPTION OF THE THRIFT PLAN:
The following description of the Tenneco Thrift Plan (the Thrift Plan) provides
only general information. Participants should refer to the Thrift Plan document
for a more complete description of the Thrift Plan's provisions.
GENERAL
The Thrift Plan is a defined contribution plan subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
The Thrift Plan covers eligible employees of Tenneco Inc. and its subsidiaries
(collectively, the Employers) that have adopted the Thrift Plan.
CONTRIBUTIONS
Eligible employees electing to participate in the Thrift Plan may make salary
deferral contributions by payroll deduction of not less than 4 percent nor
greater than 8 percent of their base salary, with such contributions limited to
$9,500 for 1997. The Employers contribute on behalf of the participant an amount
up to the participant's contribution according to the following percentages of
the participant's base salary, based on the number of years of participation in
the Thrift Plan: 4 percent-through three years; 5 percent-over three through
five years; 6 percent-over five through seven years; and 8 percent-over seven
years. The participant immediately vests in Employers' contributions.
Employers' contributions are made in the form of Tenneco Inc. common stock. The
Employers' matching contributions and the related earnings made after January 1,
1993, must remain in the form of Tenneco Inc. common stock until the participant
reaches age 55 or terminates employment and requests a total distribution.
VESTING
All participants are 100 percent vested in their entire account balance in the
Thrift Plan.
WITHDRAWALS AND PARTICIPANT LOANS
Upon retirement or other termination of employment, the participant may receive
the value of his account as a lump-sum distribution. A participant who has
attained age 55 may request an in-service withdrawal. If a participant has not
attained age 59 1/2, he may elect to withdraw all or part of his account
balance, reduced by the portion of his account balance attributable to salary
deferral contributions. A participant who has not attained age 55 may request an
in-service withdrawal of his employee contributions made prior to April 1, 1984,
and any Employers' matching contributions credited to his account prior to
January 1, 1993. Plan equity as of December 31, 1997 and 1996, includes amounts
pending distribution to participants of $415,429 and $1,176,181, respectively.
Amounts pending distribution to participants as of December 31, 1996, did not
include transfers to the Newport News and El Paso plans (see Note 6).
Active participants and certain other individuals who have not had a loan during
the previous three months may obtain a loan with a term not to exceed 54 months
from his account. The borrower may have only one loan outstanding at any time,
and the amount of the loan may not be less than $1,000 and shall not exceed the
lesser of (a) $50,000 or (b) one-half the borrower's account balance. Loans bear
interest at a rate commensurate with prevailing rates. The current interest rate
for new loans was 7.75 percent as of December 31, 1997 and 1996. Loan principal
and interest repayments are made through payroll deductions.
5
<PAGE> 6
ADMINISTRATION
The Thrift Plan is administered by the Tenneco Benefits Committee (the
Committee). NationsBank of Texas, N.A. (the Trustee), was the trustee of the
Thrift Plan Trust (the Trust) prior to February 1, 1998. During 1997, the
Defined Contribution Division of NationsBank of Texas, N.A., was purchased by
Bankers Trust Company. Effective February 1, 1998, the Thrift Plan transferred
all assets to Bankers Trust Company.
2. SUMMARY OF ACCOUNTING POLICIES:
BASIS OF ACCOUNTING
The financial statements of the Thrift Plan are presented on the accrual basis
of accounting. The investments of the Thrift Plan are reported at quoted market
value except for the BASIC Agreement on U.S. Treasury notes whose market value
is based upon the difference between the quoted market value of the U.S.
Treasury notes and the amortized cost of the related securities. The guaranteed
investment contract is carried at contract value which approximates fair value.
Participant loans receivable are reported at cost which approximates fair value.
EARNINGS
Individual participants' accounts are credited daily with investment earnings
and losses for each investment option in the ratio that the participant's
account balance bears to all account balances.
EXPENSES
Substantially all administrative expenses are paid by the Thrift Plan. These
expenses include record-keeping, audit and Trustee fees.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to use estimates and
assumptions that affect the accompanying financial statements and disclosures.
Actual results could differ from those estimates.
3. INVESTMENT OPTIONS:
Participants may invest salary deferral contributions credited to their accounts
in one or more of the following:
Tenneco Inc. Common Stock
BZW Barclays Equity Index Fund -- Fund seeks to earn high returns by
investing in a broad array of established U.S. companies.
BZW Barclays U.S. Debt Market Index Fund -- Fund seeks to earn moderate
returns with a moderate level of risk by investing in a diversified
portfolio of high-quality U.S. Government, corporate, mortgage-backed and
asset-backed bonds.
Fidelity Growth Company Fund -- Fund seeks capital appreciation by
investing primarily in common stock and securities convertible into common
stock of those companies believed to have above-average growth.
INVESCO Value Trust Total Return Fund -- Fund seeks reasonably consistent
total returns over a variety of market cycles by investing in a combination
of equity securities and fixed income securities.
Putnam New Opportunities Fund -- Fund seeks to achieve long-term capital
appreciation primarily through common stock investments in companies in
economic sectors with above-average prospects for growth.
Templeton Foreign Fund -- Fund invests in stocks and debt obligations of
companies and governments outside the U.S.
6
<PAGE> 7
Money Market Fund -- Invests in Nations Cash Reserves, which seeks to
preserve principal value and maintain a high degree of liquidity while
providing current income. The fund also invests in U.S. Treasury securities
(see Note 4) and holds the guaranteed investment contract, which is frozen
to new participation.
Shares of Newport News Shipbuilding Inc. (Newport News) common stock, received
through a 1996 distribution to shareholders, and El Paso Natural Gas Company (El
Paso) common stock, received through a 1996 merger transaction, are held in
separate funds; however, participants cannot direct contributions or fund
transfers to these funds. Interest and dividends earned by these funds are
transferred to the Money Market Fund.
See Exhibits 1 and 2 for individual fund information.
4. BASIC AGREEMENT:
Effective November 24, 1993, the Thrift Plan entered into the Benefit Accessible
Securities Investment Contract (BASIC) Master Agreement (BASIC Agreement) with
Bankers Trust Company (Delaware) in order to increase the rate of return of the
Money Market Fund (formerly Time Deposits). Under the BASIC Agreement, monies
are invested in U.S. Treasury securities (the Securities) with original
maturities ranging from approximately 11 months to 37 months. The BASIC
Agreement provides that, in the event of liquidation required to pay
withdrawals, the Securities will be sold to Bankers Trust Company at face value
adjusted for any unamortized premium/discount and BASIC Agreement fee. As a
result, the Thrift Plan is generally protected from declines in the market value
of the Securities and relinquishes the benefits of appreciation in their market
value.
As consideration for the BASIC Agreement, the Thrift Plan is required to pay an
initial fee to Bankers Trust Company; such fee is being amortized over the term
of the Securities. As of December 31, 1997 and 1996, the BASIC Agreement had an
amortized cost of $545 and $73,125 and a market value of $(8,557) and
$(619,267), respectively.
5. FEDERAL INCOME TAXES:
The Thrift Plan obtained its latest determination letter on August 19, 1996, in
which the Internal Revenue Service stated that the Thrift Plan, as then
designed, was in compliance with the applicable requirements of the Internal
Revenue Code. The Thrift Plan has been amended since receiving the determination
letter. However, the Thrift Plan administrator believes that the Thrift Plan is
currently designed and being operated in compliance with the applicable
requirements of the Internal Revenue Code. Therefore, the Thrift Plan
administrator believes that the Thrift Plan was qualified and the related trust
was tax-exempt as of the financial statement date.
A participant is not subject to federal income tax on matching Employer
contributions, salary deferral contributions or earnings on such participant's
account balance until distributed.
6. TRANSFERS TO OTHER PLANS:
In conjunction with the distribution discussed in Note 3, the participation of
Newport News employees in the Thrift Plan ceased and their Thrift Plan account
balances, totaling approximately $523,000,000, were transferred in January 1997
to a new plan established by Newport News.
In conjunction with the merger discussed in Note 3, the participation of
employees transferring to El Paso in the Thrift Plan ceased and their Thrift
Plan account balances, totaling approximately $234,000,000, were transferred in
January 1997 to an existing plan of El Paso.
7. TRANSFERS FROM OTHER PLANS:
Effective August 1, 1997, the salaried employees of The Pullman Company either
who were actively employed on August 1, 1997, or who were not actively employed
but maintained an account balance under the Pullman
7
<PAGE> 8
Employee Investment Plan (the Pullman Plan) became eligible to participate in
the Thrift Plan and the Pullman Plan was merged into the Thrift Plan. In
conjunction with the merger, the Thrift Plan received approximately $19,000,000
from Fidelity Trust Management Company, the Pullman Plan trustee.
In addition, effective August 1, 1997, the account balances of the salaried
participants of the Tenneco Packaging Inc. 401(k) Savings Plan (the Packaging
Plan) were merged into the Thrift Plan. In conjunction with the merger, the
Thrift Plan received approximately $5,000,000 from Norwest, the Packaging Plan
trustee.
8. TERMINATION OF THE THRIFT PLAN:
Although the participating Employers intend to continue the Thrift Plan
indefinitely, they reserve the right to terminate the Thrift Plan or withdraw
from participation in the Thrift Plan. Any assets which are not allocated to the
accounts of participants upon the complete termination of the Thrift Plan, or
complete discontinuance of contributions, will be allocated among all of the
participants' accounts pro rata on the basis of their respective balances.
8
<PAGE> 9
EXHIBIT 1
TENNECO THRIFT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PARTICIPANT-DIRECTED INVESTMENTS
-----------------------------------------------------------------------
BZW BZW BARCLAYS FIDELITY INVESCO
TENNECO INC. BARCLAYS U.S. DEBT GROWTH VALUE TRUST
COMMON EQUITY INDEX MARKET INDEX COMPANY TOTAL RETURN
STOCK FUND FUND FUND FUND
------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at market value --
Corporate securities --
Tenneco Inc. common stock................. $61,357,748 $ -- $ -- $ -- $ --
El Paso Natural Gas Company common
stock................................... -- -- -- -- --
Newport News Shipbuilding Inc. common
stock................................... -- -- -- -- --
----------- ----------- ---------- ----------- -----------
61,357,748 -- -- -- --
Collective trust funds --
BZW Barclays Equity Index Fund............ -- 44,326,926 -- -- --
BZW Barclays U.S. Debt Market Index
Fund.................................... -- -- 6,277,275 -- --
----------- ----------- ---------- ----------- -----------
-- 44,326,926 6,277,275 -- --
Registered investment companies --
Fidelity Growth Company Fund.............. -- -- -- 51,842,749 --
INVESCO Value Trust Total Return Fund..... -- -- -- -- 12,086,577
Putnam New Opportunities Fund............. -- -- -- -- --
Templeton Foreign Fund.................... -- -- -- -- --
----------- ----------- ---------- ----------- -----------
-- -- -- 51,842,749 12,086,577
U.S. Treasury note......................... -- -- -- -- --
BASIC Agreement on U.S. Treasury note...... -- -- -- -- --
Nations Cash Reserves...................... 2,091,502 -- -- -- --
Guaranteed investment contract............. -- -- -- -- --
Participant loans receivable............... -- -- -- -- --
----------- ----------- ---------- ----------- -----------
Total investments....................... 63,449,250 44,326,926 6,277,275 51,842,749 12,086,577
----------- ----------- ---------- ----------- -----------
Receivables --
Employees' contributions................... 124,354 101,275 16,709 145,033 30,997
Employers' contributions................... -- -- -- -- --
Accrued interest........................... 8,185 1,945 185 2,521 3,607
----------- ----------- ---------- ----------- -----------
132,539 103,220 16,894 147,554 34,604
Cash......................................... -- 37 22 -- --
OPTION TRANSFERS RECEIVABLE (PAYABLE)......... 112,735 (2,312) (23,151) 23,057 15,221
----------- ----------- ---------- ----------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS........ $63,694,524 $44,427,871 $6,271,040 $52,013,360 $12,136,402
=========== =========== ========== =========== ===========
<CAPTION>
PARTICIPANT-DIRECTED INVESTMENTS
------------------------------------------------------
PUTNAM
NEW TEMPLETON MONEY
OPPORTUNITIES FOREIGN MARKET PARTICIPANT
FUND FUND FUND LOANS
------------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at market value --
Corporate securities --
Tenneco Inc. common stock................. $ -- $ -- $ -- $ --
El Paso Natural Gas Company common
stock................................... -- -- -- --
Newport News Shipbuilding Inc. common
stock................................... -- -- -- --
----------- ---------- ----------- ----------
-- -- -- --
Collective trust funds --
BZW Barclays Equity Index Fund............ -- -- -- --
BZW Barclays U.S. Debt Market Index
Fund.................................... -- -- -- --
----------- ---------- ----------- ----------
-- -- -- --
Registered investment companies --
Fidelity Growth Company Fund.............. -- -- -- --
INVESCO Value Trust Total Return Fund..... -- -- -- --
Putnam New Opportunities Fund............. 23,249,618 -- -- --
Templeton Foreign Fund.................... -- 8,060,909 -- --
----------- ---------- ----------- ----------
23,249,618 8,060,909 -- --
U.S. Treasury note......................... -- -- 6,010,320 --
BASIC Agreement on U.S. Treasury note...... -- -- (8,557) --
Nations Cash Reserves...................... -- -- 91,536,551 --
Guaranteed investment contract............. -- -- 221,242 --
Participant loans receivable............... -- -- -- 9,098,108
----------- ---------- ----------- ----------
Total investments....................... 23,249,618 8,060,909 97,759,556 9,098,108
----------- ---------- ----------- ----------
Receivables --
Employees' contributions................... 79,530 28,059 161,394 --
Employers' contributions................... -- -- -- --
Accrued interest........................... 1,477 623 598,354 --
----------- ---------- ----------- ----------
81,007 28,682 759,748 --
Cash......................................... -- -- -- --
OPTION TRANSFERS RECEIVABLE (PAYABLE)......... (22,509) (39,639) 46,555 (87,901)
----------- ---------- ----------- ----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS........ $23,308,116 $8,049,952 $98,565,859 $9,010,207
=========== ========== =========== ==========
<CAPTION>
NONPARTICIPANT-DIRECTED INVESTMENTS
-----------------------------------------------------
EL PASO NEWPORT NEWS
TENNECO INC. NATURAL GAS SHIPBUILDING
COMMON COMPANY INC. CLEARING
STOCK COMMON STOCK COMMON STOCK ACCOUNT TOTAL
------------ ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at market value --
Corporate securities --
Tenneco Inc. common stock................. $53,301,391 $ -- $ -- $ -- $114,659,139
El Paso Natural Gas Company common
stock................................... -- 12,370,862 -- -- 12,370,862
Newport News Shipbuilding Inc. common
stock................................... -- -- 9,793,554 -- 9,793,554
----------- ----------- ---------- -------- ------------
53,301,391 12,370,862 9,793,554 -- 136,823,555
Collective trust funds --
BZW Barclays Equity Index Fund............ -- -- -- -- 44,326,926
BZW Barclays U.S. Debt Market Index
Fund.................................... -- -- -- -- 6,277,275
----------- ----------- ---------- -------- ------------
-- -- -- -- 50,604,201
Registered investment companies --
Fidelity Growth Company Fund.............. -- -- -- -- 51,842,749
INVESCO Value Trust Total Return Fund..... -- -- -- -- 12,086,577
Putnam New Opportunities Fund............. -- -- -- -- 23,249,618
Templeton Foreign Fund.................... -- -- -- -- 8,060,909
----------- ----------- ---------- -------- ------------
-- -- -- -- 95,239,853
U.S. Treasury note......................... -- -- -- -- 6,010,320
BASIC Agreement on U.S. Treasury note...... -- -- -- -- (8,557)
Nations Cash Reserves...................... 1,816,885 233,873 190,601 426,420 96,295,832
Guaranteed investment contract............. -- -- -- -- 221,242
Participant loans receivable............... -- -- -- -- 9,098,108
----------- ----------- ---------- -------- ------------
Total investments....................... 55,118,276 12,604,735 9,984,155 426,420 394,284,554
----------- ----------- ---------- -------- ------------
Receivables --
Employees' contributions................... -- -- -- -- 687,351
Employers' contributions................... 599,077 -- -- -- 599,077
Accrued interest........................... 10,248 69,871 776 4,161 701,953
----------- ----------- ---------- -------- ------------
609,325 69,871 776 4,161 1,988,381
Cash......................................... -- -- -- -- 59
OPTION TRANSFERS RECEIVABLE (PAYABLE)......... 19,895 (74,138) (4,632) 36,819 --
----------- ----------- ---------- -------- ------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS........ $55,747,496 $12,600,468 $9,980,299 $467,400 $396,272,994
=========== =========== ========== ======== ============
</TABLE>
This exhibit is an integral part of the accompanying financial statements.
9
<PAGE> 10
EXHIBIT 1
CONTINUED
TENNECO THRIFT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PARTICIPANT-DIRECTED INVESTMENTS
------------------------------------------------------------------------
BZW BZW BARCLAYS FIDELITY INVESCO
TENNECO INC. BARCLAYS U.S. DEBT GROWTH VALUE TRUST
COMMON EQUITY INDEX MARKET INDEX COMPANY TOTAL RETURN
STOCK FUND FUND FUND FUND
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at market value --
Corporate securities --
Tenneco Inc. common stock.............. $177,195,021 $ -- $ -- $ -- $ --
El Paso Natural Gas Company common
stock................................ -- -- -- -- --
Newport News Shipbuilding Inc. common
stock................................ -- -- -- -- --
------------ ----------- ----------- ------------ ----------
177,195,021 -- -- -- --
Collective trust funds --
BZW Barclays Equity Index Fund......... -- 75,787,788 -- -- --
BZW Barclays U.S. Debt Market Index
Fund................................. -- -- 14,091,620 -- --
------------ ----------- ----------- ------------ ----------
-- 75,787,788 14,091,620 -- --
Registered investment companies --
Fidelity Growth Company Fund........... -- -- -- 118,404,041 --
INVESCO Value Trust Total Return
Fund................................. -- -- -- -- 9,334,811
Putnam New Opportunities Fund.......... -- -- -- -- --
Templeton Foreign Fund................. -- -- -- -- --
------------ ----------- ----------- ------------ ----------
-- -- -- 118,404,041 9,334,811
U.S. Treasury notes..................... -- -- -- -- --
BASIC Agreement on U.S. Treasury
notes.................................. -- -- -- -- --
Nations Cash Reserves................... 3,854,941 -- -- -- --
Participant loans receivable............ -- -- -- -- --
------------ ----------- ----------- ------------ ----------
Total investments.................... 181,049,962 75,787,788 14,091,620 118,404,041 9,334,811
------------ ----------- ----------- ------------ ----------
Receivables --
Employees' contributions................ 193,496 123,193 29,132 244,340 28,522
Employers' contributions................ -- -- -- -- --
Accrued interest........................ 14,489 -- -- -- 14,862
------------ ----------- ----------- ------------ ----------
207,985 123,193 29,132 244,340 43,384
Cash...................................... -- 14 14 -- --
OPTION TRANSFERS RECEIVABLE (PAYABLE)...... (62,626) 76,514 (6,850) 94,039 26,685
------------ ----------- ----------- ------------ ----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS..... $181,195,321 $75,987,509 $14,113,916 $118,742,420 $9,404,880
============ =========== =========== ============ ==========
<CAPTION>
PARTICIPANT-DIRECTED INVESTMENTS
--------------------------------------------------------
PUTNAM
NEW TEMPLETON MONEY
OPPORTUNITIES FOREIGN MARKET PARTICIPANT
FUND FUND FUND LOANS
------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at market value --
Corporate securities --
Tenneco Inc. common stock.............. $ -- $ -- $ -- $ --
El Paso Natural Gas Company common
stock................................ -- -- -- --
Newport News Shipbuilding Inc. common
stock................................ -- -- -- --
----------- ----------- ------------ -----------
-- -- -- --
Collective trust funds --
BZW Barclays Equity Index Fund......... -- -- -- --
BZW Barclays U.S. Debt Market Index
Fund................................. -- -- -- --
----------- ----------- ------------ -----------
-- -- -- --
Registered investment companies --
Fidelity Growth Company Fund........... -- -- -- --
INVESCO Value Trust Total Return
Fund................................. -- -- -- --
Putnam New Opportunities Fund.......... 55,365,566 -- -- --
Templeton Foreign Fund................. -- 11,906,314 -- --
----------- ----------- ------------ -----------
55,365,566 11,906,314 -- --
U.S. Treasury notes..................... -- -- 102,593,340 --
BASIC Agreement on U.S. Treasury
notes.................................. -- -- (619,267) --
Nations Cash Reserves................... -- -- 309,860,733 --
Participant loans receivable............ -- -- -- 36,479,042
----------- ----------- ------------ -----------
Total investments.................... 55,365,566 11,906,314 411,834,806 36,479,042
----------- ----------- ------------ -----------
Receivables --
Employees' contributions................ 172,729 30,414 556,037 --
Employers' contributions................ -- -- -- --
Accrued interest........................ -- -- 2,691,203 76,040
----------- ----------- ------------ -----------
172,729 30,414 3,247,240 76,040
Cash...................................... -- -- -- --
OPTION TRANSFERS RECEIVABLE (PAYABLE)...... 296,181 97,188 (224,232) (420,581)
----------- ----------- ------------ -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS..... $55,834,476 $12,033,916 $414,857,814 $36,134,501
=========== =========== ============ ===========
<CAPTION>
NONPARTICIPANT-DIRECTED INVESTMENTS
-------------------------------------------------------
EL PASO NEWPORT NEWS
TENNECO INC. NATURAL GAS SHIPBUILDING
COMMON COMPANY INC. CLEARING
STOCK COMMON STOCK COMMON STOCK ACCOUNT TOTAL
------------ ------------ ------------ ---------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at market value --
Corporate securities --
Tenneco Inc. common stock.............. $139,774,170 $ -- $ -- $ -- $ 316,969,191
El Paso Natural Gas Company common
stock................................ -- 32,182,638 -- -- 32,182,638
Newport News Shipbuilding Inc. common
stock................................ -- -- 20,557,371 -- 20,557,371
------------ ----------- ----------- ---------- --------------
139,774,170 32,182,638 20,557,371 -- 369,709,200
Collective trust funds --
BZW Barclays Equity Index Fund......... -- -- -- -- 75,787,788
BZW Barclays U.S. Debt Market Index
Fund................................. -- -- -- -- 14,091,620
------------ ----------- ----------- ---------- --------------
-- -- -- -- 89,879,408
Registered investment companies --
Fidelity Growth Company Fund........... -- -- -- -- 118,404,041
INVESCO Value Trust Total Return
Fund................................. -- -- -- -- 9,334,811
Putnam New Opportunities Fund.......... -- -- -- -- 55,365,566
Templeton Foreign Fund................. -- -- -- -- 11,906,314
------------ ----------- ----------- ---------- --------------
-- -- -- -- 195,010,732
U.S. Treasury notes..................... -- -- -- -- 102,593,340
BASIC Agreement on U.S. Treasury
notes.................................. -- -- -- -- (619,267)
Nations Cash Reserves................... 3,040,837 841,798 543,181 1,381,186 319,522,676
Participant loans receivable............ -- -- -- -- 36,479,042
------------ ----------- ----------- ---------- --------------
Total investments.................... 142,815,007 33,024,436 21,100,552 1,381,186 1,112,575,131
------------ ----------- ----------- ---------- --------------
Receivables --
Employees' contributions................ -- -- -- -- 1,377,863
Employers' contributions................ 1,302,516 -- -- -- 1,302,516
Accrued interest........................ 11,430 2,336 1,639 10,004 2,822,003
------------ ----------- ----------- ---------- --------------
1,313,946 2,336 1,639 10,004 5,502,382
Cash...................................... -- -- -- 7,777 7,805
OPTION TRANSFERS RECEIVABLE (PAYABLE)...... -- (51,314) (82,310) 257,306 --
------------ ----------- ----------- ---------- --------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS..... $144,128,953 $32,975,458 $21,019,881 $1,656,273 $1,118,085,318
============ =========== =========== ========== ==============
</TABLE>
This exhibit is an integral part of the accompanying financial statements.
10
<PAGE> 11
EXHIBIT 2
TENNECO THRIFT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND
INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PARTICIPANT-DIRECTED INVESTMENTS
----------------------------------------------------------------------------------------
BZW BARCLAYS FIDELITY INVESCO PUTNAM
TENNECO INC. BZW BARCLAYS U.S. DEBT GROWTH VALUE TRUST NEW
COMMON EQUITY INDEX MARKET INDEX COMPANY TOTAL RETURN OPPORTUNITIES
STOCK FUND FUND FUND FUND FUND
------------ ------------ ------------ -------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, beginning of
year........................ $181,195,321 $75,987,509 $14,113,916 $118,742,420 $ 9,404,880 $55,834,476
------------ ----------- ----------- ------------ ----------- -----------
ADD:
Dividends --
Tenneco Inc. common
stock................... 1,868,276 -- -- -- -- --
Other corporate
securities.............. -- -- -- -- -- --
Registered investment
companies............... -- -- -- 5,067,634 425,750 516,448
Interest.................... 66,178 -- -- -- -- --
------------ ----------- ----------- ------------ ----------- -----------
1,934,454 -- -- 5,067,634 425,750 516,448
Net appreciation
(depreciation) in fair
value of investments...... (8,964,765) 9,770,707 445,550 2,994,413 1,083,221 3,307,246
------------ ----------- ----------- ------------ ----------- -----------
Net investment income
(loss)................. (7,030,311) 9,770,707 445,550 8,062,047 1,508,971 3,823,694
Contributions --
Employees................. 3,919,872 2,982,615 591,879 4,844,456 980,676 3,313,451
Employers................. -- -- -- -- -- --
Rollovers................. 264,681 348,757 74,925 470,837 231,311 442,853
------------ ----------- ----------- ------------ ----------- -----------
Total contributions..... 4,184,553 3,331,372 666,804 5,315,293 1,211,987 3,756,304
Repayment of loan
interest.................. 117,462 43,951 5,141 66,478 10,908 39,076
Transfers from other plans
(Note 7).................. 269,620 5,471,291 -- 2,821,841 4,199,343 828,463
------------ ----------- ----------- ------------ ----------- -----------
Total additions......... (2,458,676) 18,617,321 1,117,495 16,265,659 6,931,209 8,447,537
------------ ----------- ----------- ------------ ----------- -----------
DEDUCT:
Withdrawals................. 7,670,260 4,323,720 517,050 6,466,658 1,070,167 2,085,360
Administrative expenses..... -- -- -- -- -- --
Transfers to other plans
(Note 6).................. 105,564,627 49,963,577 9,446,821 77,633,829 5,432,604 37,322,369
------------ ----------- ----------- ------------ ----------- -----------
Total deductions........ 113,234,887 54,287,297 9,963,871 84,100,487 6,502,771 39,407,729
OPTION TRANSFERS............. (1,807,234) 4,110,338 1,003,500 1,105,768 2,303,084 (1,566,168)
------------ ----------- ----------- ------------ ----------- -----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, end of year....... $ 63,694,524 $44,427,871 $ 6,271,040 $ 52,013,360 $12,136,402 $23,308,116
============ =========== =========== ============ =========== ===========
<CAPTION>
PARTICIPANT-DIRECTED INVESTMENTS NONPARTICIPANT-DIRECTED INVESTMENTS
---------------------------------------- ------------------------------------------------------
EL PASO NEWPORT NEWS
NATURAL GAS SHIPBUILDING
TEMPLETON MONEY TENNECO INC. COMPANY INC.
FOREIGN MARKET PARTICIPANT COMMON COMMON COMMON CLEARING
FUND FUND LOANS STOCK STOCK STOCK ACCOUNT
--------- ------ ----------- ------------ ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, beginning of
year........................ $12,033,916 $414,857,814 $36,134,501 $144,128,953 $32,975,458 $21,019,881 $1,656,273
----------- ------------ ----------- ------------ ----------- ----------- ----------
ADD:
Dividends --
Tenneco Inc. common
stock................... -- -- -- 1,480,758 -- -- --
Other corporate
securities.............. -- -- -- -- 300,986 72,223 --
Registered investment
companies............... 923,771 -- -- -- -- -- --
Interest.................... -- 6,394,743 -- 57,922 -- -- 80,050
----------- ------------ ----------- ------------ ----------- ----------- ----------
923,771 6,394,743 -- 1,538,680 300,986 72,223 80,050
Net appreciation
(depreciation) in fair
value of investments...... (720,468) -- -- (8,098,730) 2,997,145 5,032,397 --
----------- ------------ ----------- ------------ ----------- ----------- ----------
Net investment income
(loss)................. 203,303 6,394,743 -- (6,560,050) 3,298,131 5,104,620 80,050
Contributions --
Employees................. 1,032,008 4,691,458 -- -- -- -- --
Employers................. -- -- -- 20,025,767 -- -- --
Rollovers................. 152,425 275,114 -- -- -- -- --
----------- ------------ ----------- ------------ ----------- ----------- ----------
Total contributions..... 1,184,433 4,966,572 -- 20,025,767 -- -- --
Repayment of loan
interest.................. 13,911 176,102 -- 158,125 -- -- --
Transfers from other plans
(Note 7).................. 217,030 10,035,127 183,054 -- 31,124 24,657 --
----------- ------------ ----------- ------------ ----------- ----------- ----------
Total additions......... 1,618,677 21,572,544 183,054 13,623,842 3,329,255 5,129,277 80,050
----------- ------------ ----------- ------------ ----------- ----------- ----------
DEDUCT:
Withdrawals................. 438,686 26,664,550 769,538 5,872,472 1,386,523 877,977 --
Administrative expenses..... -- -- -- -- -- -- 828,146
Transfers to other plans
(Note 6).................. 7,444,874 306,970,408 27,881,794 95,605,152 20,323,328 13,709,078 --
----------- ------------ ----------- ------------ ----------- ----------- ----------
Total deductions........ 7,883,560 333,634,958 28,651,332 101,477,624 21,709,851 14,587,055 828,146
OPTION TRANSFERS............. 2,280,919 (4,229,541) 1,343,984 (527,675) (1,994,394) (1,581,804) (440,777)
----------- ------------ ----------- ------------ ----------- ----------- ----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, end of year....... $ 8,049,952 $ 98,565,859 $ 9,010,207 $ 55,747,496 $12,600,468 $ 9,980,299 $ 467,400
=========== ============ =========== ============ =========== =========== ==========
<CAPTION>
TOTAL
-----
<S> <C>
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, beginning of
year........................ $1,118,085,318
--------------
ADD:
Dividends --
Tenneco Inc. common
stock................... 3,349,034
Other corporate
securities.............. 373,209
Registered investment
companies............... 6,933,603
Interest.................... 6,598,893
--------------
17,254,739
Net appreciation
(depreciation) in fair
value of investments...... 7,846,716
--------------
Net investment income
(loss)................. 25,101,455
Contributions --
Employees................. 22,356,415
Employers................. 20,025,767
Rollovers................. 2,260,903
--------------
Total contributions..... 44,643,085
Repayment of loan
interest.................. 631,154
Transfers from other plans
(Note 7).................. 24,081,550
--------------
Total additions......... 94,457,244
--------------
DEDUCT:
Withdrawals................. 58,142,961
Administrative expenses..... 828,146
Transfers to other plans
(Note 6).................. 757,298,461
--------------
Total deductions........ 816,269,568
OPTION TRANSFERS............. --
--------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, end of year....... $ 396,272,994
==============
</TABLE>
This exhibit is an integral part of the accompanying financial statements.
11
<PAGE> 12
SCHEDULE I
TENNECO THRIFT PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES OR CURRENT
IDENTITY OF ISSUE DESCRIPTION OF ASSET FACE VALUE COST VALUE
----------------- -------------------- ---------- ---- -------
<S> <C> <C> <C> <C>
CORPORATE SECURITIES:
Tenneco Inc.*........................ Tenneco Inc. common stock 2,902,763 $118,356,016 $114,659,139
El Paso Natural Gas Company.......... El Paso Natural Gas
Company common stock 186,028 7,531,032 12,370,862
Newport News Shipbuilding Inc........ Newport News Shipbuilding
Inc. common stock 384,997 5,517,279 9,793,554
------------ ------------
Total corporate
securities 131,404,327 136,823,555
------------ ------------
COLLECTIVE TRUST FUNDS:
BZW Barclays Global Investors........ BZW Barclays Equity Index
Fund 1,695,548 32,495,724 44,326,926
BZW Barclays Global Investors........ BZW Barclays U.S. Debt
Market Index Fund 483,563 5,698,167 6,277,275
------------ ------------
Total collective trust
funds 38,193,891 50,604,201
------------ ------------
REGISTERED INVESTMENT COMPANIES:
Fidelity Investments Institutional
Services Co........................ Fidelity Growth Company
Fund 1,196,739 43,469,206 51,842,749
INVESCO Funds Group, Inc............. INVESCO Value Trust Total
Return Fund 415,489 11,019,344 12,086,577
Putnam Management Company............ Putnam New Opportunities
Fund 477,896 20,452,848 23,249,618
Franklin Templeton................... Templeton Foreign Fund 810,142 8,593,099 8,060,909
------------ ------------
Total registered
investment companies 83,534,497 95,239,853
------------ ------------
U.S. TREASURY NOTE:
U.S. Government...................... U.S. Treasury note,
7.250%, due February 15,
1998 $6,000,000 6,042,656 6,010,320
------------ ------------
Total U.S. Treasury note 6,042,656 6,010,320
------------ ------------
BASIC AGREEMENT:
Bankers Trust Company................ BASIC Agreement on U.S.
Treasury note, 7.250%, due
February 15, 1998 -- 545 (8,557)
------------ ------------
Total BASIC Agreement 545 (8,557)
------------ ------------
MONEY MARKET FUND:
NationsBank of Texas, N.A.*.......... Nations Cash Reserves 96,295,832 96,295,832 96,295,832
------------ ------------
Total money market fund 96,295,832 96,295,832
------------ ------------
GUARANTEED INVESTMENT CONTRACT:
Aurora National Life Insurance....... Guaranteed investment
contract (dated August 1,
1997, at 5.61%, due
September 3, 1998) 221,242 221,242 221,242
------------ ------------
Total guaranteed
investment contract 221,242 221,242
------------ ------------
TENNECO INC. THRIFT PLAN*.............. Participant loans
receivable (interest rates
ranging from 6% to 10%) 9,098,108 9,098,108 9,098,108
------------ ------------
Total assets held for
investment purposes $364,791,098 $394,284,554
============ ============
</TABLE>
- -------------------------
*Indicated party in interest.
12
<PAGE> 13
SCHEDULE II
TENNECO THRIFT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS -- SERIES OF TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
COSTS OF
IN-KIND COSTS OF IN-KIND ASSETS
IDENTITY OF PURCHASE EXCHANGES SELLING OF ASSETS EXCHANGES EXCHANGED
PARTY INVOLVED DESCRIPTION PRICE(a)(c) IN(c) PRICE(b)(c) SOLD OUT(c) OUT
-------------- ----------- ----------- --------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Tenneco Inc.......... Tenneco Inc. $ 9,728,303 $23,132,389 $ 14,989,563 $ 12,787,118 $203,117,686 $182,800,887
common stock
BZW Barclays Global
Investors........... BZW Barclays 14,636,589 -- 21,511,003 17,947,632 34,357,155 29,186,618
Equity Index Fund
Fidelity Investments
Institutional
Services Co. ....... Fidelity Growth 17,615,823 -- 9,537,699 7,102,647 77,633,829 62,646,441
Company Fund
NationsBank of Texas,
N.A................. Nations Cash 225,472,804 -- 448,699,648 448,699,648 -- --
Reserves
<CAPTION>
IDENTITY OF NET
PARTY INVOLVED GAIN(LOSS)
-------------- ----------
<S> <C>
Tenneco Inc.......... $22,519,244
BZW Barclays Global
Investors........... 8,733,908
Fidelity Investments
Institutional
Services Co. ....... 17,422,440
NationsBank of Texas,
N.A................. --
</TABLE>
- -------------------------
(a) Purchase price includes expenses incurred in connection with transactions
(i.e., commissions, transfer fees, etc.).
(b) Selling price is net of expenses incurred in connection with transactions.
(c) Current value of asset on transaction date is equal to the purchase/selling
price and in-kind exchanges in/out.
NOTE: This schedule is a listing of series of transactions in the same
security which exceed 5 percent of the market value of the Tenneco
Thrift Plan assets held on January 1, 1997. The Trustee initiates and
consummates all investment transactions at the direction of the
participants.
13
<PAGE> 14
SCHEDULE III
TENNECO THRIFT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS -- SINGLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
COST OF
PURCHASE IN-KIND SELLING COST IN-KIND ASSETS
IDENTITY OF PRICE EXCHANGES PRICE OF ASSETS EXCHANGES EXCHANGED
PARTY INVOLVED DESCRIPTION (a)(c) IN(c) (b)(c) SOLD OUT(c) OUT
-------------- ----------- -------- --------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Tenneco Inc............ Tenneco Inc.
common stock $-- $-- $ -- $ -- $125,694,568 $112,712,876
Tenneco Inc............ Tenneco Inc.
common stock -- -- -- -- 71,255,896 64,066,289
Fidelity Investment
Institutional
Services Co. ........ Fidelity Growth
Company Fund -- -- -- -- 57,647,934 46,304,796
NationsBank of
Texas, N.A........... Nations Cash
Reserves -- -- 213,079,882 213,079,882 -- --
NationsBank of
Texas, N.A........... Nations Cash
Reserves -- -- 93,833,911 93,833,911 -- --
<CAPTION>
NET
IDENTITY OF GAIN
PARTY INVOLVED (LOSS)
-------------- ------
<S> <C>
Tenneco Inc............
$12,981,692
Tenneco Inc............
7,189,607
Fidelity Investment
Institutional
Services Co. ........
11,343,138
NationsBank of
Texas, N.A...........
--
NationsBank of
Texas, N.A...........
--
</TABLE>
- -------------------------
(a) Purchase price includes expenses incurred in connection with transactions
(i.e., commissions, transfer fees, etc.).
(b) Selling price is net of expenses incurred in connection with transactions.
(c) Current value of asset on transaction date is equal to the purchase/selling
price and in-kind exchanges in/out.
NOTE: This schedule is a listing of single transactions which exceed 5
percent of the market value of the Tenneco Thrift Plan assets held on
January 1, 1997. The Trustee initiates and consummates all investment
transactions at the direction of the participants.
14
<PAGE> 15
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Tenneco Benefits Committee has duly caused this annual report to be signed
on its behalf by the undersigned hereunto duly authorized.
TENNECO THRIFT PLAN
<TABLE>
<S> <C>
Date: June 26, 1998 By: /s/ DANA G. MEAD
---------------------------------------------
Dana G. Mead
Chairman of the Tenneco
Benefits Committee
</TABLE>
<PAGE> 16
INDEX TO EXHIBIT
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -------
<S> <C>
23 --Consent of Independent Public Accountants
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated June 15, 1998, included in this Annual Report on
Form 11-K for the year ended December 31, 1997, into the previously filed Form
S-8 Registration Statements of the Tenneco Thrift Plan (File Nos. 333-17487,
333-27281, 333-30933 and 333-48777).
ARTHUR ANDERSEN LLP
Houston, Texas
June 26, 1998
