<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
COMMISSION FILE NO. 0-15095
TENNECO CREDIT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 76-0010368
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
TENNECO BUILDING, HOUSTON, TEXAS 77002
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 757-2131
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -----------------------
<S> <C>
9 3/4% Notes due 1994 New York Stock Exchange
9% Notes due 1995 New York Stock Exchange
9 1/4% Notes due 1996 New York Stock Exchange
10 1/8% Notes due 1997 New York Stock Exchange
9 5/8% Notes due 2001 New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, par value $5.00 per share
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of filing.
None
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the close of the latest practicable date.
Common Stock par value $5 per share 200 Shares as of March 29, 1994
TENNECO CREDIT CORPORATION MEETS THE CONDITIONS OF GENERAL INSTRUCTION
J(1)(A) AND (B) TO THE FORM 10-K AND IS THEREFORE FILING THIS REPORT WITH A
REDUCED DISCLOSURE FORMAT AS PERMITTED BY SUCH INSTRUCTION.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PART I.
<C> <S> <C>
Item 1. Business.................................................... 1
Item 2. Properties.................................................. 6
Item 3. Legal Proceedings........................................... 6
Item 4. Submission of Matters to a Vote of Security Holders......... *
PART II.
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters........................................ 7
Item 6. Selected Financial Data..................................... *
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 7
Item 8. Financial Statements and Supplementary Data................. 9
Index to Financial Statements of Tenneco Credit Corporation
and Consolidated Subsidiaries............................ 9
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure................................... 21
PART III.
Item 10. Directors and Executive Officers of the Registrant.......... *
Item 11. Executive Compensation...................................... *
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................. *
Item 13. Certain Relationships and Related Transactions.............. *
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K........................................................ 21
Financial Statements Included in Item 8..................... 21
Index to Financial Statements and Schedules Included in Item
14......................................................... 21
Schedules Omitted as Not Required or Inapplicable........... 21
Reports on Form 8-K......................................... 23
Exhibits.................................................... 23
</TABLE>
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* No response to this item is included herein for the reason that no response
is required pursuant to the reduced disclosure format permitted by General
Instruction J to Form 10-K.
i
<PAGE>
PART I
ITEM 1. BUSINESS.
Tenneco Credit Corporation (the "Company") was incorporated in 1981 under the
laws of the State of Delaware and commenced operations on October 1, 1984. All
of the issued and outstanding capital stock of the Company is owned by Tenneco
Inc. The business of the Company relates primarily to financing, on a
nonrecourse basis, receivables of Tenneco Inc. and its subsidiaries.
The Company's headquarters are located at 1010 Milam, Houston, Texas 77002.
The Company has no employees, and employees of Tenneco Management Company, a
subsidiary of Tenneco Inc., render all services to the Company which are
necessary for the conduct of its operations.
PURCHASE OF RECEIVABLES
The Company has entered into an agreement (the "Operating Agreement") with
several subsidiaries of Tenneco Inc. ("Tenneco Subsidiaries") pursuant to which
the Company buys trade receivables generated by the Tenneco Subsidiaries from
the sale of goods or services. Each Tenneco Subsidiary, as the Company's agent,
makes all collections and services the receivables sold by it to the Company.
The Company also may purchase receivables and other assets from subsidiaries of
Tenneco Inc. on terms different from those set forth in the Operating
Agreement.
Under the Operating Agreement, the Company purchases trade receivables from
the Tenneco Subsidiaries at a purchase price equal to the trade account
balances being acquired less a discount agreed by the Company and the Tenneco
Subsidiaries at the time of sale. The average yield for 1993 on retail
receivables purchased from Case Corporation ("Case") was 11.4% down from 11.8%
in both 1992 and 1991. The discount rate charged on pipeline and other short-
term receivables ranged from 5.75% to 6.5% during 1993 and from 6.5% to 8.5%
during 1992. Sales of receivables to the Company under the Operating Agreement
are without recourse to the selling Tenneco Subsidiaries.
Case sells all of its domestic retail receivables to the Company. These
receivables arise from sales by stores owned by Case and sales through
independent dealers. As an incentive to dealers to assist in assuring the
collectibility of their receivables, the purchase price discount includes an
amount for possible losses that may arise from their receivables. This portion
of the discount becomes payable to the dealers as their receivables are
collected and is recorded by the Company as a dealers' reserve. Any loss
arising from the uncollectibility of a dealer's receivables is charged against
this dealer's reserve; any excess losses would be recorded as a loss by the
Company.
Generally, trade accounts receivable purchased from Case pursuant to the
Operating Agreement have original maturities ranging from 24 months to 60
months. As of December 31, 1993, the weighted average remaining life to
maturity of trade accounts receivable purchased from Case was approximately 22
months. Substantially all of the trade accounts receivable purchased from other
Tenneco Subsidiaries pursuant to the Operating Agreement have an original
maturity of approximately one month. The Operating Agreement does not restrict
the maturities of receivables which may be purchased by the Company.
1
<PAGE>
As of December 31, 1993, and December 31, 1992, the Company held trade notes
and accounts receivable which it had purchased from Tenneco Subsidiaries as
follows:
<TABLE>
<CAPTION>
(THOUSANDS)
DECEMBER 31,
---------------------
1993 1992
---------- ----------
<S> <C> <C>
Gross Receivables
Case.................................................... $1,768,353 $2,309,829
Pipeline................................................ 236,786 217,132
Other................................................... 114,404 81,932
---------- ----------
Subtotal.............................................. 2,119,543 2,608,893
Less: Unearned Finance Charges
Case.................................................... 222,061 351,255
Pipeline................................................ 888 2,263
Other................................................... 1,569 1,408
---------- ----------
Subtotal.............................................. 224,518 354,926
Less: Allowance for Doubtful Accounts--Case............... 34,863 48,523
---------- ----------
Net Receivables....................................... $1,860,162 $2,205,444
========== ==========
</TABLE>
See Note 3 to the Financial Statements of Tenneco Credit Corporation and
Consolidated Subsidiaries for an analysis of the maturities of the trade notes
and accounts receivable held by the Company on December 31, 1993.
In addition to purchasing receivables under the Operating Agreement, the
Company has acquired, and may acquire in the future, long-term receivables of
subsidiaries of Tenneco Inc. As of December 31, 1993, the Company held $121
million of such receivables. Purchases of long-term receivables are not made
pursuant to the Operating Agreement, and the terms of such purchases are
negotiated on an arm's length basis by the Company and the seller at the time
of purchase.
TENNECO SUBSIDIARIES
As of December 31, 1993, the Company held trade notes and accounts receivable
purchased under the Operating Agreement from 12 Tenneco Subsidiaries. The
information below is provided with respect to those Tenneco Subsidiaries from
which the Company expects to purchase a substantial amount of trade
receivables.
Case and other subsidiaries of Tenneco Inc. manufacture a full line of farm
equipment and light- and medium-sized construction equipment. The business of
Case is affected by the general level of activity in the agricultural and
construction industries, including the rate of worldwide agricultural
production and demand, levels of total industry capacity, weather conditions,
exchange rates, commodity prices, levels of equipment inventory and prevailing
levels of construction. The markets for farm and construction equipment are
highly competitive. Both United States and international manufacturers of farm
and construction equipment compete on a worldwide basis in such markets. This
could affect the level of trade receivables generated by Case.
Tenneco Inc. announced on March 22, 1993, that its Board of Directors adopted
a major restructuring program to be implemented at Case. The restructuring
program includes rationalizing the production of selected components,
consolidating and resizing production capacity and privatization of Case-owned
retail stores and restructuring the parts distribution network. Adoption of the
restructuring program resulted in a pre-tax charge of $920 million ($843
million after taxes), which was reflected in the 1992 loss from continuing
operations. Implementation of the restructuring was commenced in 1993, and
various restructuring actions in the program were completed in 1993 and others
are in process. The restructuring program is expected to be substantially
completed by the end of 1996. Case has advised the Company that the
restructuring program will not have a material adverse effect on the volume of
trade receivables generated by Case in the future.
2
<PAGE>
Tennessee Gas Pipeline Company ("Tennessee") and other subsidiaries of
Tenneco Inc. transport gas for, or sell gas to, primarily transmission and
distribution companies. Its multiple-line interstate natural gas transmission
system begins in the gas-producing areas of Texas and Louisiana, including the
continental shelf of the Gulf of Mexico, and extends into the northeastern
section of the United States, including the New York City and Boston
metropolitan areas.
Packaging Corporation of America ("Packaging") and other subsidiaries of
Tenneco Inc. manufacture and sell paperboard, corrugated shipping containers,
folding cartons, molded fibre products, disposable plastic and aluminum
containers and other related products. Its shipping container products are used
in the packaging of food, paper products, rubber and plastics, automotive
products and point of purchase displays. Its folding cartons are used in the
packaging of soap and detergent, food products and a wide range of other
consumer goods. Uses for its molded fibre products include produce and egg
packaging, food service items and institutional and consumer disposable
dinnerware. Its disposable plastic and aluminum containers are sold to the food
service, food processing and related industries.
OTHER INVESTMENTS
The Company owns a 95% interest in a limited partnership which owns a
multifuel boiler which is leased to Packaging for use in its paper mill at
Counce, Tennessee, pursuant to an agreement designed to return to the Company
its investment and a return on investment during the term of the lease.
RELATIONSHIP WITH TENNECO INC.
The Company's business is substantially dependent upon the level of
operations conducted by the Tenneco Subsidiaries. Accordingly, lower levels of
sales from such operations could result in a reduction in the level of finance
operations of the Company.
The agreements described below have been entered into by or among Tenneco
Inc., the Company and the Tenneco Subsidiaries and relate to the operations of
the Company. These agreements, which are governed by New York law, are
enforceable by holders of the Unaffiliated Debt (as defined in the Investment
Agreement described below). The following statements are summaries of certain
provisions contained in such agreements, copies of which are filed as exhibits
to this annual report. They do not purport to be complete statements of all the
terms and provisions of such agreements, and reference is made to such
agreements for full and complete statements of such terms and provisions.
Operating Agreement
The Operating Agreement, as amended and restated as of June 15, 1988,
provides that purchases from the Tenneco Subsidiaries of notes and accounts
receivable owed to the Tenneco Subsidiaries by third parties will be made by
the Company at a purchase price equal to the amount of such receivables less a
discount determined by the parties at the time of the sale. Under the Operating
Agreement, the selling Tenneco Subsidiaries are required to collect the
receivables on behalf of the Company and remit the proceeds to it promptly
after collection. From time to time, additional subsidiaries of Tenneco Inc.
may become parties to the Operating Agreement and begin selling receivables to
the Company.
The Operating Agreement contains representations and warranties of the
Tenneco Subsidiaries to the effect that (i) the amount of receivables purchased
will be true and correct at the time of purchase; (ii) at the time of
assignment, each receivable will be recorded on the books of the selling
Tenneco Subsidiary as an account receivable and will represent a valid and
legally enforceable obligation of a person incurred in connection with the sale
or lease of a product or service; (iii) each assignment of receivables to the
Company will vest in the Company the right, title and interest in and to such
receivables and the proceeds of collection therefrom free and clear from claims
of third persons; (iv) at the time of assignment, beneficial ownership of such
assigned receivable will not have been conveyed to any other person; (v) the
receivables assigned to the
3
<PAGE>
Company will be free and clear of all liens and encumbrances and will not be
subject to any setoff or counterclaim, except as provided by law; (vi) each
receivable assigned to the Company will conform with any and all applicable
laws and governmental rules and regulations; and (vii) all obligations to be
performed by or on behalf of the selling Tenneco Subsidiary in connection with
such receivables will have been or will be promptly fulfilled. Each Tenneco
Subsidiary has agreed to indemnify the Company for any loss which it sustains
as a result of any breach of a representation or warranty. Although each
Tenneco Subsidiary has made the foregoing representations, it has not warranted
the ultimate collectibility of receivables which it sells to the Company. These
representations and warranties do not apply to sales of receivables by Tenneco
Subsidiaries which are sold outside of the Operating Agreement.
Performance Agreement
Tenneco Inc. has agreed, pursuant to a Performance Agreement dated as of June
15, 1988 (the "Performance Agreement"), to guarantee to the Company the due and
punctual performance of the obligations of each of the Tenneco Subsidiaries
under the Operating Agreement when and as the same shall become due and payable
or performable. The obligations of Tenneco Inc. under the Performance Agreement
are continuing, absolute and unconditional and are not subject to any defense
which might otherwise be available to the selling Tenneco Subsidiary.
Tennessee entered into a Performance Agreement dated as of June 14, 1988,
which is substantially identical to the Performance Agreement of Tenneco Inc.
except that Tennessee guarantees only the obligations of Sellers which are
subsidiaries of Tennessee.
Investment Agreement
Tenneco Inc. and the Company have entered into an Investment Agreement dated
as of June 15, 1988 (the "Investment Agreement"). The principal provisions of
the Investment Agreement are set forth below.
The Investment Agreement contains definitions of certain terms used in the
Investment Agreement, including the following:
"Affiliated Debt" means Debt owed to Tenneco Inc. or any affiliate of
Tenneco Inc.
"Debt" means any obligation of the Company or a subsidiary of the Company
which in accordance with generally accepted accounting principles would be
recorded as a liability on a consolidated balance sheet of the Company and
its subsidiaries as of the date that Debt is to be determined.
"Fixed Charges" means for any period the aggregate interest expense
(whether or not capitalized) of the Company and its subsidiaries for such
period including, without limitation, the following:
(i) the portion of any obligation under capital leases allocable to
interest expense in accordance with generally accepted accounting
principles,
(ii) the portion of any debt discount that shall be amortized in such
period in accordance with generally accepted accounting principles, and
(iii) all amounts (other than amounts described in clauses (i) or
(ii) above) accrued in accordance with generally accepted accounting
principles (whether or not capitalized) by the Company or its
subsidiaries for such period in respect of Debt.
Notwithstanding the foregoing, no amounts which are applicable to the
payment of the principal amount of Debt shall be included in the
determination of Fixed Charges.
"Senior Debt" means Unaffiliated Debt for money borrowed which is not
Subordinated Debt.
4
<PAGE>
"Subordinated Debt" means any of the following:
(i) Unaffiliated Debt which is subordinate in right of payment to
Senior Debt and inferior to Senior Debt with respect to the general
assets of the Company,
(ii) Affiliated Debt.
"Unaffiliated Debt" means all Debt for money borrowed other than
Affiliated Debt (Unaffiliated Debt may be either Senior Debt or
Subordinated Debt).
The principal covenants in the Investment Agreement are as follows:
(i) Tenneco Inc. will at all times directly or indirectly own and hold
legal and beneficial interest in and to all of the outstanding shares of
capital stock of the Company having the right to vote for the election of
members of the Company's Board of Directors.
(ii) Tenneco Inc. will not, directly or indirectly, sell, exchange,
transfer, pledge or in any way encumber or otherwise dispose of any such
shares of stock so long as the Company has outstanding any Unaffiliated
Debt.
(iii) All of the Company's Affiliated Debt will be subordinate and
inferior to the following in the manner and to the extent provided below:
(a) all Senior Debt, and
(b) all Unaffiliated Debt which is Subordinated Debt.
In the event of any distribution, division or application, partial or
complete, voluntary or involuntary, by operation of law or otherwise, of
all or any part of the assets of the Company, or the proceeds thereof, to
creditors of the Company, or by reason of any execution, sale,
receivership, insolvency or bankruptcy proceedings or other proceedings for
the reorganization or readjustment of the Company or its debts or
properties, then in any such event Senior Debt is preferred in payment over
any Subordinated Debt, and when Senior Debt has been paid and satisfied in
full, then all other Unaffiliated Debt which is Subordinated Debt is
preferred in payment over all Affiliated Debt, and such Unaffiliated Debt
which is Subordinated Debt will first be paid and satisfied in full (pari
passu unless a different order or priority of payment is established by any
applicable provisions thereof or by any instruments whereunder any
Unaffiliated Debt which is Subordinated Debt is issued) before any payments
or distribution of any kind or character, whether in cash, property or
securities (other than in securities the payment of which is subordinated
to said Unaffiliated Debt which is Subordinated Debt to the same extent as
herein provided), will be made on or in respect of any such Affiliated
Debt. During the continuance of any payment default on Unaffiliated Debt,
no payment may be made on or with respect to any Affiliated Debt. No
payment may be made on any Affiliated Debt if such payment would constitute
a default under the terms of any Unaffiliated Debt.
(iv) At all times when the Company incurs Unaffiliated Debt it will own
assets in an amount at least equivalent to 125% of the aggregate amount to
Senior Debt outstanding after giving effect to the issuance of such
Unaffiliated Debt.
(v) At no time while any Unaffiliated Debt is outstanding will the
Company sell, lease, transfer or otherwise dispose of any of its assets,
other than in the ordinary course of its business, if immediately after
such disposition its assets would be less than 125% of the aggregate amount
of Senior Debt outstanding.
(vi) While the Company has outstanding any Unaffiliated Debt, Tenneco
Inc. or affiliates of Tenneco Inc. will maintain an investment in the
Company (i.e., the aggregate of Affiliated Debt and stockholder's equity)
so that the sum of such investment and Unaffiliated Debt which is
Subordinated Debt is at least equal to 20% of the sum of the Company's
total obligations for debt and stockholder's equity.
5
<PAGE>
(vii) The Company will not declare or pay any dividends or make any
distributions upon any of its capital stock (other than stock dividends),
and neither the Company nor any subsidiaries of the Company will directly
or indirectly apply any of their assets toward the redemption, retirement,
purchase or other acquisition of capital stock of the Company or any such
subsidiary if, immediately after giving effect to any such action, the
Company would be unable to meet any of its requirements for the payment of
principal of, or interest or premium, if any, on, Unaffiliated Debt.
(viii) Tenneco Inc. will pay to the Company a service charge for each
month during the term of the Investment Agreement equal to the amount, if
any, by which the cumulative earnings of the Company and its consolidated
subsidiaries for the period from the beginning of the calendar year to the
end of such month, before deduction of Fixed Charges and income taxes (but
including in earnings all such service charges previously paid by Tenneco
Inc. for such year) are less than 125% of the Fixed Charges.
The Company and Tennessee also are parties to an investment agreement which
enures to the benefit of holders of Unaffiliated Debt (as defined in that
agreement) outstanding on January 14, 1987, and the Company, Tennessee and
Tenneco Inc. are parties to another agreement which enures to the holders of
Unaffiliated Debt issued after January 14, 1987, and prior to June 14, 1988,
and certain holders of Unaffiliated Debt outstanding on January 14, 1987. The
principal differences between the two agreements are that (i) under the former
agreement the definition of "Debt" does not include obligations of subsidiaries
of the Company and (ii) the definition of "Fixed Charges" in the former
agreement is limited to that which is charged as an expense on the Company's
income statement.
Amendments
The Operating Agreement, Performance Agreement and Investment Agreement may
each be amended or modified at any time by the parties thereto; provided, that
(i) no amendment or modification which adversely affects the rights of holders
of Senior Debt or Subordinated Debt, other than Affiliated Debt, outstanding at
the time of execution thereof shall be binding on or in any manner become
effective with respect to such Senior Debt or Subordinated Debt at the time
outstanding except with the prior written consent of (a) the holders of not
less than 66 2/3% in principal amount of the Senior Debt at the time
outstanding if such holders would be adversely affected thereby and (b) the
holders of not less than 66 2/3% in principal amount of the Subordinated Debt,
other than Affiliated Debt, at the time outstanding if such holders would be
adversely affected thereby.
ITEM 2. PROPERTIES.
The Company believes that the multifuel boiler leased to Packaging is well
maintained and in good operating condition. This boiler is subject to a
mortgage and other security interests which secure indebtedness assumed by a
subsidiary of the Company in connection with the acquisition of the boiler.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Item 4, "Submission of Matters to a Vote of Security Holders", has been
omitted from this report pursuant to the reduced disclosure format permitted by
General Instruction J to Form 10-K.
6
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
All of the capital stock of the Company is owned by Tenneco Inc. and,
therefore, there is no trading market for such securities. See Note 1 to the
Financial Statements of Tenneco Credit Corporation and Consolidated
Subsidiaries. The Company paid no dividends in 1993. During 1992, the Company
declared and paid $45,000,000 in dividends. During 1991, the Company declared
and paid $10,000,000 in dividends. The Company may pay additional dividends to
Tenneco Inc. from time to time depending upon the profitability, liquidity and
capital requirements of the Company. See "Relationship with Tenneco Inc.--
Investment Agreement" under Item 1 for information concerning restrictions on
the Company's ability to pay dividends.
ITEM 6. SELECTED FINANCIAL DATA.
Item 6, "Selected Financial Data", has been omitted from this report pursuant
to the reduced disclosure format permitted by General Instruction J to Form 10-
K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Pursuant to paragraph (2)(a) of General Instruction J to Form 10-K, the
following analysis explains the reasons for material changes in the amount of
revenue and expense items between 1993, 1992 and 1991.
Revenues
The Company and its consolidated subsidiaries reported total revenues of $232
million in 1993, down 30% or $98 million from 1992 and down 29% or $96 million
from 1991. This decrease is attributable to a decrease in Case retail
receivables due to the sale of $395 million and $439 million net book value of
certain retail farm and construction equipment receivables to limited purpose
business trusts, which utilized the receivables as collateral for the issuance
of asset backed securities to the public in May 1993 and November 1993,
respectively. Additional sales of retail receivables are expected to be made in
the future. See "Other Income" for additional information.
Presented below are the percentages of revenues from the various sources for
the years ended December 31:
<TABLE>
<CAPTION>
REVENUES
----------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Case.................................................... 82% 83% 76%
Pipeline................................................ 7 4 11
Other................................................... 6 8 7
--- --- ---
Total From Accounts Receivable........................ 95 95 94
Rental and Other Income................................. 2 2 2
Notes Receivable........................................ 3 3 4
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
Revenues generated by the purchase of Case receivables include finance
charges earned on trade and other receivables and earned on third party trade
receivables. The average yield on Case retail receivables for 1993 was 11.4%
down from 11.8% in both 1992 and 1991. The decrease in pipeline revenues is a
result of the collection of take-or-pay receivables. Discount rates charged on
pipeline and other short-term receivables purchased ranged from 5.75% to 6.5%
during 1993 as compared to ranges of 6.5% to 8.5% and 8.5% to 10.3% for 1992
and 1991, respectively.
7
<PAGE>
The Company's only leasing activity is the multifuel boiler facility leased
to Packaging. Leasing activities provided $6 million of revenues in each of the
years 1993, 1992, and 1991.
Under an Investment Agreement between the Company and Tenneco Inc., the
Company is to receive a service charge from Tenneco Inc. for each month equal
to the amount, if any, by which the cumulative earnings of the Company for the
period from the beginning of the calendar year to the end of such month, before
deduction of fixed charges and federal income taxes, are less than 125% of the
Company's fixed charges.
Expenses
During 1993, interest expense totaled $160 million representing a decrease of
$47 million or 23% and a decrease of $61 million or 27% over 1992 and 1991,
respectively. The decrease resulted from lower average total debt outstanding
in 1993. The average interest rate for 1993 was 9.0% compared to 8.9% in 1992
and 8.8% in 1991. The higher average interest rate in 1993 was due to the
maturity of lower interest long-term debt.
Other Income
In May 1993 and November 1993, the Company received proceeds of $420 million
and $461 million, respectively, from the sale of certain retail farm and
construction equipment receivables to limited purpose business trusts, which
utilized the receivables as collateral for the issuance of asset backed
securities to the public. The net book value of the receivables sold was $395
million and $439 million and accordingly, the Company recognized a pre-tax gain
of $23 million and $20 million in May 1993 and November 1993, respectively, due
to the sale. In addition, the Company recognized a gain of $6 million from the
sale of trade receivables to Asset Securitization Cooperative Corporation.
These receivables originated with Tenneco Inc.'s packaging, automotive parts
and natural gas subsidiaries.
Net Income
Net income for 1993 of $70 million represented a decrease of 22% from 1992
net income of $90 million and a 9% increase over 1991 net income of $64
million. The decrease in net income from 1992 to 1993 was primarily
attributable to decreased revenues due to the lower levels of Case retail
receivables. This revenue decline was partially offset by lower interest
expense and higher gains on the receivables sales.
Assets
The Company had total assets of $2,238 million at December 31, 1993, compared
to $2,539 million at December 31, 1992. The 12% decrease from year-end 1992 is
due primarily to the sale of $834 million net book value of Case retail
receivables.
As of December 31, 1993, the Company held net trade notes and accounts
receivable totaling $1,860 million, which made up 83% of the Company's total
assets. This compares to $2,205 million or 87% of assets as of December 31,
1992. Details of these receivables are shown as follows:
<TABLE>
<CAPTION>
NET TRADE NOTES AND
ACCOUNTS RECEIVABLES
-------------------------
DECEMBER 31, DECEMBER 31,
1993 1992
------------ ------------
<S> <C> <C>
Case............................................ 81% 87%
Pipeline........................................ 13 9
Other........................................... 6 4
--- ---
100% 100%
=== ===
</TABLE>
8
<PAGE>
Case net trade notes and accounts receivable are $399 million lower at
December 31, 1993, compared to December 31, 1992, due to the sale of certain
retail farm and construction equipment receivables to limited purpose business
trusts.
The Company held $106 million of notes receivable from non-affiliated
companies at December 31, 1993, down from $154 million held at December 31,
1992. Long-term receivables from non-affiliated companies represented 5% of the
Company's total assets at December 31, 1993.
At December 31, 1993, the Company had $53 million invested in a multifuel
boiler leased to Packaging. The leased facility represented 2% of the Company's
total assets at December 31, 1993.
CAPITALIZATION AND CAPITAL RESOURCES
Pursuant to the Investment Agreement, Tenneco Inc. is required to maintain an
investment in the Company as necessary to assure that at all times the sum of
the Company's subordinated debt plus stockholder's equity will be at least
equal to 20% of the Company's total debt plus stockholder's equity.
The Company's capital requirements have been financed through the issuance of
commercial paper, publicly and privately placed medium-term notes, senior
public debt and bank loans, subordinated debt, and advances and equity capital
from Tenneco Inc. plus earnings retained in the business.
The Company's total capitalization was $2,170 million at December 31, 1993,
and was $2,444 million at December 31, 1992. The components of capitalization
at such dates are set forth in the following table:
<TABLE>
<CAPTION>
CAPITALIZATION
-------------------------
DECEMBER 31, DECEMBER 31,
1993 1992
------------ ------------
<S> <C> <C>
Commercial Paper................................ 11% 5%
Medium-Term Senior Notes........................ 4 6
Long-Term Senior Debt........................... 59 68
Subordinated Debt............................... 4 4
Stockholder's Equity............................ 22 17
--- ---
100% 100%
=== ===
</TABLE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL STATEMENTS OF TENNECO CREDIT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of independent public accountants.................................. 10
Balance sheet--December 31, 1993 and 1992................................. 11
Statement of income for each of the three years in the period ended
December 31, 1993........................................................ 12
Statement of cash flows for each of the three years in the period ended
December 31, 1993........................................................ 13
Statement of changes in stockholder's equity for each of the three years
in the period ended December 31, 1993.................................... 14
Notes to financial statements............................................. 15
</TABLE>
9
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Tenneco Credit Corporation:
We have audited the accompanying balance sheets of Tenneco Credit Corporation
(a Delaware corporation and a wholly-owned subsidiary of Tenneco Inc.) and
consolidated subsidiaries as of December 31, 1993 and 1992, and the related
statements of income, cash flows and changes in stockholder's equity for each
of the three years in the period ended December 31, 1993. These financial
statements and the schedule referred to below are the responsibility of Tenneco
Credit Corporation's management. Our responsibility is to express an opinion on
these financial statements and schedule 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 financial position of Tenneco Credit Corporation and
consolidated subsidiaries as of December 31, 1993 and 1992, and the results of
their operations, cash flows and changes in stockholder's equity for each of
the three years in the period ended December 31, 1993, in conformity with
generally accepted accounting principles.
As discussed in Note 2 to the financial statements, effective January 1,
1992, Tenneco Credit Corporation changed its method of accounting for income
taxes.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
index to Item 14 relating to Tenneco Credit Corporation and consolidated
subsidiaries is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
The supplemental schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements of Tenneco Credit
Corporation and consolidated subsidiaries taken as a whole.
Arthur Andersen & Co.
Houston, Texas
February 14, 1994
10
<PAGE>
TENNECO CREDIT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEET
(THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
ASSETS 1993 1992
------ ---------- ----------
<S> <C> <C>
Notes and accounts receivable purchased from affiliates:
Customers.............................................. $2,024,575 $2,554,101
Affiliated companies................................... 94,968 54,792
---------- ----------
2,119,543 2,608,893
Less--Unearned finance charges........................... 224,518 354,926
Allowance for doubtful receivables.................... 34,863 48,523
---------- ----------
1,860,162 2,205,444
---------- ----------
Notes receivable:
Non-affiliated companies, including $8,067 and $7,177,
due within one year of the respective dates........... 105,829 154,197
Affiliated companies................................... 110,085 75,313
---------- ----------
215,914 229,510
---------- ----------
Equipment under operating leases (at cost), less
accumulated depreciation of $16,257 and $14,269 at the
respective dates........................................ 53,349 55,337
---------- ----------
Other assets:
Cash................................................... 4 13
Accounts receivable from affiliates.................... 1,730 1,228
Interest receivable and other.......................... 106,667 47,165
---------- ----------
108,401 48,406
---------- ----------
$2,237,826 $2,538,697
========== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
<S> <C> <C>
Commercial paper......................................... $ 240,938 $ 129,764
Senior notes............................................. 1,353,593 1,807,458
Subordinated notes....................................... 92,100 92,100
Accounts payable to affiliates........................... 4,449 26,140
Dealers' reserves........................................ 18,148 9,673
Accrued interest......................................... 43,625 51,557
Deferred income taxes.................................... 1,171 7,795
---------- ----------
1,754,024 2,124,487
---------- ----------
Stockholder's equity:
Common stock, par value $5 per share, authorized,
issued and outstanding 200 shares..................... 1 1
Capital surplus........................................ 185,228 185,228
Retained earnings...................................... 298,573 228,981
---------- ----------
483,802 414,210
---------- ----------
$2,237,826 $2,538,697
========== ==========
</TABLE>
(The accompanying notes to financial statements are an integral part
of this balance sheet.)
11
<PAGE>
TENNECO CREDIT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF INCOME
(THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
REVENUES:
Earned finance charges and interest--
Affiliated companies........................... $106,669 $136,469 $117,423
Other.......................................... 120,012 188,282 204,175
Rental income from affiliated company............ 5,728 5,728 5,728
Other............................................ -- -- 1,539
-------- -------- --------
Total revenues................................. 232,409 330,479 328,865
-------- -------- --------
EXPENSES:
Interest--
Commercial paper............................... 4,643 7,260 22,634
Senior notes................................... 138,384 155,658 165,563
Subordinated notes............................. 9,071 17,567 21,244
Commitment fees and other...................... 8,225 26,709 11,634
-------- -------- --------
160,323 207,194 221,075
Depreciation and amortization.................... 1,988 1,988 1,988
Operating and administrative..................... 3,361 3,559 3,538
-------- -------- --------
Total expenses................................. 165,672 212,741 226,601
-------- -------- --------
OTHER INCOME--Gain on sale of receivables.......... 48,757 30,741 --
-------- -------- --------
INCOME BEFORE INCOME TAXES......................... 115,494 148,479 102,264
INCOME TAXES....................................... 45,902 57,486 37,947
-------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE.............................. 69,592 90,993 64,317
-------- -------- --------
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING FOR
INCOME TAXES...................................... -- (1,249) --
-------- -------- --------
NET INCOME......................................... $ 69,592 $ 89,744 $ 64,317
======== ======== ========
</TABLE>
(The accompanying notes to financial statements are an integral part
of this statement of income.)
12
<PAGE>
TENNECO CREDIT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CASH FLOWS
(THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1993 1992 1991
-------- -------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Income before cumulative effect of a change in
accounting principle......................... $ 69,592 $ 90,993 $ 64,317
Adjustments to reconcile to cash provided from
operating activities:
Depreciation and amortization............... 1,988 1,988 1,988
Deferred income taxes....................... (6,624) (2,350) (3,943)
Decrease in notes and accounts receivable
purchased from affiliates, net............. 345,282 363,507 156,454
Change in accounts payable to and receivable
from affiliates............................ (22,194) 22,414 (5,264)
Increase (decrease) in accrued interest..... (7,932) (7,573) 6,293
Increase (decrease) in dealers' reserve..... 8,475 (3,657) (5,642)
Change in other assets and other, net....... (92,750) 21,164 2,151
-------- -------- ---------
CASH PROVIDED FROM OPERATING ACTIVITIES......... 295,837 486,486 216,354
-------- -------- ---------
INVESTING ACTIVITIES:
Collections on long-term notes receivable..... 48,368 23,042 19,173
Purchase of long-term notes receivable........ -- (138,428) (22,389)
-------- -------- ---------
CASH PROVIDED FROM (USED IN) INVESTING
ACTIVITIES..................................... 48,368 (115,386) (3,216)
-------- -------- ---------
FINANCING ACTIVITIES:
Senior notes issued........................... -- 10,000 250,000
Subordinated notes issued..................... -- -- 92,100
Increase (decrease) in commercial paper....... 111,174 71,973 (340,156)
(Repayment) proceeds from short-term bank
debt......................................... -- (210,000) 210,000
Retirement of senior and subordinated notes... (455,388) (198,525) (416,219)
Dividends paid................................ -- (45,000) (10,000)
-------- -------- ---------
CASH USED IN FINANCING ACTIVITIES............... (344,214) (371,552) (214,275)
-------- -------- ---------
INCREASE (DECREASE) IN CASH..................... (9) (452) (1,137)
BEGINNING CASH BALANCE.......................... 13 465 1,602
-------- -------- ---------
ENDING CASH BALANCE............................. $ 4 $ 13 $ 465
======== ======== =========
CASH PAID DURING THE YEAR FOR:
Interest...................................... $168,255 $214,767 $ 214,782
Income taxes.................................. $ 52,526 $ 59,836 $ 41,890
</TABLE>
(The accompanying notes to financial statements are an integral part
of this statement of cash flows.)
13
<PAGE>
TENNECO CREDIT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
(THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
COMMON STOCK:
Balance beginning and end of year................ $ 1 $ 1 $ 1
-------- -------- --------
CAPITAL SURPLUS:
Balance beginning and end of year................ 185,228 185,228 185,228
-------- -------- --------
RETAINED EARNINGS:
Balance beginning of year........................ 228,981 184,237 129,920
Net income..................................... 69,592 89,744 64,317
Cash dividends................................. -- (45,000) (10,000)
-------- -------- --------
Balance end of year.............................. 298,573 228,981 184,237
-------- -------- --------
Total.......................................... $483,802 $414,210 $369,466
======== ======== ========
</TABLE>
(The accompanying notes to financial statements are an integral part
of this statement of changes in stockholder's equity.)
14
<PAGE>
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(1) CONTROL AND SUMMARY OF ACCOUNTING POLICIES
Control
All of the outstanding common stock of Tenneco Credit Corporation is owned by
Tenneco Inc. Tenneco Credit Corporation and consolidated subsidiaries ("TCC" or
the "Company") are thus members of an operating group under the control of
Tenneco Inc. As such, TCC engages in transactions characteristic of group
administration and operation with other members of the group. The primary
purpose of TCC is to finance, on a nonrecourse basis, receivables of Tenneco
Inc. and its subsidiaries.
Consolidation
The consolidated financial statements include the accounts of Tenneco Credit
Corporation, its majority-owned subsidiaries, Counce Limited Partnership and
subsidiary, and its wholly-owned subsidiary, TenFac Corporation. Counce Limited
Partnership was organized to construct a multifuel steam boiler and turbine
generator facility for lease to Packaging Corporation of America ("Packaging"),
an indirect wholly-owned subsidiary of Tenneco Inc. TenFac Corporation was
organized to purchase inventory acquired by Packaging in a 1991 acquisition.
All significant intercompany items have been eliminated in consolidation.
Revenue Recognition
Finance charges earned from affiliates on trade and other receivables
purchased in 1993, 1992 and 1991 were approximately $107 million, $136 million
and $117 million, respectively. Finance charges on these receivables are
charged by TCC to these affiliates at mutually agreed amounts based on current
rates of interest. In addition, finance charges and interest earned from third
parties on trade receivables purchased from affiliates totaled approximately
$120 million, $188 million and $204 million in 1993, 1992 and 1991,
respectively. Rates charged on pipeline and other short-term receivables
purchased ranged from 5.75% to 6.5% during 1993 as compared to ranges of 6.5%
to 8.5% and 8.5% to 10.3% for 1992 and 1991, respectively. The average yield on
Case retail receivables for 1993 was 11.4%, down from 11.8% in both 1992 and
1991.
Revenue from the operating lease is recognized monthly on a pro rata basis
over the terms of the related contract.
Related Party Transactions
The Company has entered into an agreement (the "Operating Agreement") with
several subsidiaries of Tenneco Inc. ("Tenneco Subsidiaries") pursuant to which
the Company buys trade receivables generated by the Tenneco Subsidiaries from
the sale of goods and services. Each Tenneco Subsidiary, as the Company's
agent, makes all collections and services the receivables sold by it to the
Company. The Company also may purchase receivables and other assets from
Tenneco Subsidiaries on terms different from those set forth in the Operating
Agreement. Receivables purchased from affiliates at December 31, 1993 and 1992,
totaled $2.1 billion and $2.6 billion, respectively.
Reclassification
Certain reclassifications have been made to prior year amounts to conform
with the current year's presentation.
15
<PAGE>
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(2) INCOME TAXES
TCC and its parent Tenneco Inc., together with certain of their respective
subsidiaries which are owned 80% or more, have entered into an agreement to
file a consolidated federal income tax return. Such agreement provides, among
other things, that (1) each company in a taxable income position will be
currently charged with an amount equivalent to its federal income tax computed
on a separate return basis and (2) each company in a tax loss position will be
currently reimbursed to the extent its deductions and tax credits are utilized
in the consolidated return.
Effective January 1, 1992, TCC changed its method of accounting for income
taxes from the deferred method to the liability method required by Statement of
Financial Accounting Standards (FAS) No. 109, "Accounting for Income Taxes"
using the cumulative catch-up method. This new standard requires that a
deferred tax be recorded to reflect the tax expense (benefit) resulting from
the recognition of temporary differences. Temporary differences are differences
between the tax basis of assets and liabilities and their reported amounts in
the financial statements that will result in differences between income for tax
purposes and income for financial statement purposes in future years.
The components of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
(THOUSANDS)
YEAR ENDED DECEMBER 31,
-------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Current--
Federal....................................... $43,696 $51,551 $36,132
State......................................... 8,830 8,285 5,758
------- ------- -------
52,526 59,836 41,890
Deferred--
Federal....................................... (7,616) (4,809) (3,943)
State......................................... 992 2,459 --
------- ------- -------
(6,624) (2,350) (3,943)
------- ------- -------
Total....................................... $45,902 $57,486 $37,947
======= ======= =======
</TABLE>
The difference between income tax expense and the amount computed by applying
the statutory federal income tax rate to income before income taxes is
primarily due to state income taxes of $6 million and $7 million in 1993 and
1992, respectively, net of federal income tax benefit.
The components of net deferred tax liability at December 31, 1993 and 1992,
were as follows:
<TABLE>
<CAPTION>
(THOUSANDS)
1993 1992
------- -------
<S> <C> <C>
Deferred tax assets--
Dealer reserves........................................ $18,470 $11,900
Bad debt reserve....................................... 770 748
Debt related items..................................... 46 97
Deferred tax liabilities--
Tax over book depreciation............................. 17,817 16,320
State taxes............................................ 2,243 2,459
Other.................................................. 397 1,761
------- -------
Net deferred tax liability............................... $ 1,171 $ 7,795
======= =======
</TABLE>
16
<PAGE>
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Prior to adoption of FAS No. 109, TCC recorded deferred federal income tax
expense (benefit) based on timing differences in the recognition of revenues
and expenses for tax and financial reporting purposes. A description of the
differences and the related tax effect on operations for the year ended
December 31, 1991 are, as follows (in thousands):
<TABLE>
<CAPTION>
1991
-------
<S> <C>
Excess of tax depreciation over book
depreciation................................... $ 4
Difference in dealers' reserve not deductible
until paid..................................... (3,784)
Other........................................... (163)
-------
$(3,943)
=======
</TABLE>
(3) NOTES AND ACCOUNTS RECEIVABLE PURCHASED FROM AFFILIATES
Contractual maturities of notes and accounts receivable purchased from
affiliates as of December 31, 1993, are as follows:
<TABLE>
<CAPTION>
(THOUSANDS)
TOTAL CASE PIPELINE OTHER
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
Years Ending December 31:
1994........................... $1,024,147 $ 672,957 $236,786 $114,404
1995........................... 446,439 446,439 -- --
1996........................... 349,337 349,337 -- --
1997........................... 192,005 192,005 -- --
1998........................... 107,615 107,615 -- --
---------- ---------- -------- --------
$2,119,543 $1,768,353 $236,786 $114,404
========== ========== ======== ========
</TABLE>
During 1993 and 1992, TCC received proceeds of $881 million and $552 million,
respectively, from the sale of certain retail farm and construction equipment
receivables to a limited purpose business trust, which utilized the notes as
collateral for the issuance of asset backed securities to the public. The net
book value of the receivables sold was $834 million and $519 million for 1993
and 1992, respectively, and accordingly, TCC recognized pre-tax gains on the
transactions of $43 million and $31 million for 1993 and 1992, respectively.
Additional sales of retail receivables are expected to be made in the future.
In addition, the Company recognized a gain of $6 million from the sale of trade
receivables to Asset Securitization Cooperative Corporation. These receivables
originated with Tenneco Inc.'s packaging, automotive and natural gas
subsidiaries.
(4) COMMERCIAL PAPER AND LINES OF CREDIT
TCC sells commercial paper on a short-term unsecured basis. Information
regarding commercial paper follows:
<TABLE>
<CAPTION>
(THOUSANDS)
DECEMBER 31,
1993
------------
<S> <C>
Outstanding borrowings at end of year.......................... $240,938
Average interest rate on outstanding borrowings at end of year. 3.68%
Approximate maximum month-end outstanding borrowings during the
year.......................................................... $243,327
Approximate average month-end outstanding borrowings during the
year.......................................................... $120,976
Weighted average interest rate on approximate average month-end
outstanding borrowings during the year........................ 3.64%
</TABLE>
17
<PAGE>
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
At December 31, 1993, TCC had available total lines of credit of $480 million
with various non-U.S. banks which are available for periods up to twenty-four
months. Borrowings are available as either domestic loans or as Eurodollar
loans. The agreements provide for commitment fee rates (from 1/20 of 1% to 1/8
of 1%) on the unused portion of the total commitment. At December 31, 1993, TCC
had no amounts outstanding under the lines of credit.
(5) SENIOR AND SUBORDINATED DEBT
A summary of Senior and Subordinated Debt outstanding is set forth in the
following tabulation (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
1993
------------
<S> <C>
Senior Notes--
Tenneco Credit Corporation:
Medium-term notes due 1994 through 1997, average interest rate
9.34%........................................................ $ 73,650
8.38% Notes due 1997 (net of $99 unamortized discount)........ 249,901
9.75% Notes due 1994.......................................... 250,000
9% Notes due 1995 (net of $250 unamortized discount).......... 199,750
9.25% Notes due 1996 (net of $227 unamortized discount)....... 149,773
10.13% Notes due 1997 (net of $315 unamortized discount)...... 149,685
9.63% Notes due 2001 (net of $823 unamortized discount)....... 249,177
Counce Finance Corporation:
13% Notes due 2000............................................ 23,040
Zero coupon notes, due 2010 discounted to yield 13.50%........ 38,283
Less unamortized discount..................................... (29,666)
----------
Total Senior Notes.......................................... 1,353,593
Subordinated Notes--
Tenneco Credit Corporation:
Medium-term notes due 1998 through 2001, average interest rate
9.90%........................................................ 92,100
----------
$1,445,693
==========
</TABLE>
At December 31, 1993, approximately $70 million of gross equipment under
lease was pledged as collateral to secure $32 million of senior notes.
The aggregate maturities applicable to the notes outstanding at December 31,
1993, are $503 million, $239 million, $158 million, $176 million and $73
million for 1994, 1995, 1996, 1997 and 1998, respectively.
On February 28, 1994, Tenneco Credit Corporation redeemed all of its issued
and outstanding 8 3/8% notes due February 1, 1997.
18
<PAGE>
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(6) EQUIPMENT UNDER OPERATING LEASES TO AFFILIATES
At December 31, 1993, Counce Limited Partnership had a long-term operating
lease with Packaging, covering equipment with a net book value of $53 million.
The lease requires Packaging to pay all operating, maintenance and insurance
costs. The aggregate minimum future annual rentals under the operating lease at
December 31, 1993, are as follows:
<TABLE>
<CAPTION>
(THOUSANDS)
<S> <C>
1994.......................................................... $ 5,728
1995.......................................................... 5,728
1996.......................................................... 5,728
1997.......................................................... 5,728
1998.......................................................... 5,728
Thereafter.................................................... 68,741
-------
$97,381
=======
</TABLE>
Depreciation of the equipment under lease is provided on a straight-line
basis in amounts which, in the opinion of management, are adequate to allocate
the cost of the property over its estimated useful life.
(7) FINANCIAL INSTRUMENTS
In accordance with the requirements of FAS No. 107, the estimated fair values
of TCC's financial instruments at December 31, 1993, were estimated as follows:
<TABLE>
<CAPTION>
(THOUSANDS)
CARRYING
AMOUNT FAIR VALUE
---------- ----------
<S> <C> <C>
Receivables (Customer, Notes and Interest).......... $2,132,258 $2,260,135
Commercial Paper.................................... 240,938 240,938
Senior and Subordinated Notes....................... 1,445,693 1,612,261
</TABLE>
The following methods and assumptions were used to estimate the fair value of
financial instruments:
Receivables--TCC believes that in the aggregate, the carrying amount of its
receivables, both current and non-current, was not materially different from
the fair value of those receivables. Customer notes and accounts receivable
purchased from affiliates are concentrated in the farm and construction
business. At December 31, 1993, the receivables related to the farm and
construction business represented 81% of the total customer notes and accounts
receivable purchased from affiliates.
Commercial Paper--Fair value was considered to be the same as the carrying
amount.
Senior and Subordinated Notes--The fair value of fixed-rate long-term debt
was based on the market value of debt with similar maturities and interest
rates; the carrying amount of floating rate long-term debt was assumed to
approximate its fair value.
(8) COVENANTS UNDER INVESTMENT AGREEMENT
Under the terms of the Investment Agreement between TCC and Tenneco Inc., the
companies have agreed, among other terms, that:
(a) Tenneco Inc. will own, directly or indirectly, all the outstanding
shares of TCC stock.
19
<PAGE>
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(b) TCC's consolidated assets must equal at least 125% of all
consolidated "senior debt" (commercial paper and senior notes) outstanding.
(c) TCC will not declare or pay any dividends or make any capital
distributions if such action would render TCC unable to meet any of its
requirements for the payment of principal of, or interest or premium, if
any, on unaffiliated debt.
(d) Tenneco Inc.'s investment in TCC (either directly or through its
subsidiary companies) and subordinated debt must equal at least 20% of
TCC's total consolidated debt plus stockholder's equity.
(e) Tenneco Inc. will pay to TCC a service charge for each month during
the term of the Investment Agreement equal to the amount, if any, by which
the cumulative consolidated earnings of TCC and its consolidated
subsidiaries for the period from the beginning of the calendar year to the
end of such month, before deduction of fixed charges (interest expense) and
income taxes (but including in earnings all such service charges previously
paid by Tenneco Inc. for such year) are less than 125% of the fixed
charges.
TCC was in compliance with these covenants as of December 31, 1993, 1992 and
1991.
(9) QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
(THOUSANDS)
--------------------------------------------------
INCOME BEFORE CUMULATIVE
CUMULATIVE EFFECT OF
EFFECT OF A A CHANGE
CHANGE IN IN
INTEREST ACCOUNTING ACCOUNTING NET
REVENUES EXPENSE PRINCIPLE PRINCIPLE INCOME
-------- -------- ------------- ---------- -------
<S> <C> <C> <C> <C> <C>
1993
1st................. $ 64,375 $ 42,048 $14,197 $ -- $14,197
2nd................. 58,417 41,188 23,553 -- 23,553
3rd................. 59,019 39,162 12,130 -- 12,130
4th................. 50,598 37,925 19,712 -- 19,712
-------- -------- ------- ------ -------
$232,409 $160,323 $69,592 $ -- $69,592
======== ======== ======= ====== =======
1992
1st................. $ 90,826 $ 53,602 $22,467 $1,249 $21,218
2nd................. 86,774 52,748 20,642 -- 20,642
3rd................. 81,870 50,932 18,197 -- 18,197
4th................. 71,009 49,912 29,687 -- 29,687
-------- -------- ------- ------ -------
$330,479 $207,194 $90,993 $1,249 $89,744
======== ======== ======= ====== =======
</TABLE>
(The above notes are an integral part of the foregoing financial statements.)
20
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has been no change in accountants during 1993 or 1992, nor has there
been any disagreement on any matter of accounting principles or practices or
financial disclosure which in either case is required to be reported pursuant
to this Item 9.
PART III.
Item 10, "Directors and Executive Officers of the Registrant", Item 11,
"Executive Compensation", Item 12, "Security Ownership of Certain Beneficial
Owners and Management", and Item 13, "Certain Relationships and Related
Transactions", have been omitted from this report pursuant to the reduced
disclosure format permitted by General Instruction J to Form 10-K.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
FINANCIAL STATEMENTS INCLUDED IN ITEM 8
See "Index to Financial Statements of Tenneco Credit Corporation and
Consolidated Subsidiaries" set forth in Item 8, "Financial Statements and
Supplementary Data."
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES INCLUDED IN ITEM 14
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
SCHEDULES OF TENNECO CREDIT CORPORATION
AND CONSOLIDATED SUBSIDIARIES--
Schedule IX --Short-term borrowings--three years ended December
31, 1993............................................. 22
SCHEDULES OMITTED AS NOT REQUIRED OR INAPPLICABLE
Schedule I --Marketable securities--Other investments
Schedule II --Amounts receivable from related parties,
underwriters, promoters, and employees other than
related parties
Schedule III --Condensed financial information of registrant
Schedule IV --Indebtedness of and to related parties--Not current
Schedule V --Plant, property and equipment
Schedule VI --Accumulated depreciation, depletion and amortization
of plant, property and equipment
Schedule VII --Guarantees of securities of other issuers
Schedule VIII --Valuation and qualifying accounts
Schedule X --Supplementary income statement information
Schedule XI --Real estate and accumulated depreciation
Schedule XII --Mortgage loans on real estate
Schedule XIII --Other investments
Schedule XIV --Supplemental Information Concerning Property--
Casualty Insurance Operations
</TABLE>
21
<PAGE>
SCHEDULE IX
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
SCHEDULE IX--SHORT-TERM BORROWINGS (NOTE)
(THOUSANDS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
MONTH-END MONTH-END AVERAGE
WEIGHTED AMOUNT AMOUNT INTEREST
BALANCE AVERAGE OUTSTANDING OUTSTANDING RATE
CATEGORY OF AT END INTEREST DURING THE DURING THE DURING THE
SHORT-TERM BORROWINGS OF YEAR RATE YEAR YEAR YEAR
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31,
1993
Commercial Paper....... $240,938 3.68% $243,327 $120,976 3.64%
Year Ended December 31,
1992
Commercial Paper....... $129,764 4.44% $288,350 $167,731 4.49%
Notes Payable--Non-
U.S. ................. -- -- $240,000 $169,200 4.50%
Year Ended December 31,
1991
Commercial Paper....... $ 57,791 5.81% $446,383 $321,636 6.27%
Notes Payable--Non
U.S. ................. $210,000 5.33% $430,000 $242,500 6.06%
</TABLE>
- --------
NOTE: See Note 4 to the financial statements for additional information.
22
<PAGE>
REPORTS ON FORM 8-K
No Reports on Form 8-K have been filed with the Securities and Exchange
Commission during the last quarter of the period covered by this Report.
EXHIBITS
All exhibits not incorporated by reference to a prior filing are designated
by an asterisk; all exhibits not so designated are incorporated herein by
reference to a prior filing as indicated.
<TABLE>
<C> <S>
3(a) --Certificate of Incorporation of Tenneco Credit Corporation dated
August 6, 1981 (Exhibit 3(a) to Form 10 Registration Statement of
Tenneco Credit Corporation, File No. 0-15095).
3(b) --By-Laws of Tenneco Credit Corporation, amended as of March 1,
1987 (Exhibit 3(b) to Form 10-K of Tenneco Credit Corporation for
the fiscal year ended December 31, 1989, File No. 0-15095).
4(a) --Included in Exhibits 3(a) and 3(b).
4(b)(1) --Indenture between Tenneco Credit Corporation and The Chase
Manhattan Bank (National Association) dated as of January 15, 1987
(Exhibit 4(b) to Form 10-K of Tenneco Credit Corporation for the
fiscal year ended December 31, 1986, File No. 0-15095).
4(b)(2) --First Supplemental Indenture between Tenneco Credit Corporation
and The Chase Manhattan Bank (National Association) dated as of
January 16, 1987 (Exhibit 4(c) to Form 10-K of Tenneco Credit
Corporation for the fiscal year ended December 31, 1986, File No.
0-15095).
4(b)(3) --Second Supplemental Indenture between Tenneco Credit Corporation
and The Chase Manhattan Bank (National Association) dated as of
February 1, 1987 (Exhibit 4(d) to Form 10-K of Tenneco Credit
Corporation for the fiscal year ended December 31, 1986, File No.
0-15095).
4(b)(4) --Third Supplemental Indenture between Tenneco Credit Corporation
and The Chase Manhattan Bank (National Association) dated as of
August 1, 1987 (Exhibit 4(e) to Form 10-K of Tenneco Credit
Corporation for the fiscal year ended December 31, 1987, File No.
0-15095).
4(b)(5) --Fourth Supplemental Indenture between Tenneco Credit Corporation
and The Chase Manhattan Bank (National Association) dated as of
June 15, 1988 (Exhibit 4(b)(5) to Form 10-K of Tenneco Credit
Corporation for the fiscal year ended December 31, 1988, File No.
0-15095).
4(b)(6) --Fifth Supplemental Indenture between Tenneco Credit Corporation
and The Chase Manhattan Bank (National Association) dated as of
June 28, 1988 (Exhibit 4(c) to Form 8-K of Tenneco Credit
Corporation dated June 28, 1988, File No. 0-15095).
4(b)(7) --Sixth Supplemental Indenture between Tenneco Credit Corporation
and The Chase Manhattan Bank (National Association) dated as of
July 15, 1989 (Exhibit 4(b)(7) to Form 10-K of Tenneco Credit
Corporation for the fiscal year ended December 31, 1989, File No.
0-15095).
4(b)(8) --Seventh Supplemental Indenture between Tenneco Credit Corporation
and The Chase Manhattan Bank (National Association) dated as of
August 16, 1989 (Exhibit 4(b)(8) to Form 10-K of Tenneco Credit
Corporation for the fiscal year ended December 31, 1989, File No.
0-15095).
4(b)(9) --Eighth Supplemental Indenture between Tenneco Credit Corporation
and The Chase Manhattan Bank (National Association) dated as of
November 1, 1989 (Exhibit 4(b)(9) to Form 10-K of Tenneco Credit
Corporation for the fiscal year ended December 31, 1989, File No.
0-15095).
4(b)(10) --Ninth Supplemental Indenture between Tenneco Credit Corporation
and The Chase Manhattan Bank (National Association) dated as of
December 1, 1990 (Exhibit 4(b) to Form 8-K of Tenneco Credit
Corporation dated December 4, 1990, File No. 0-15095).
</TABLE>
23
<PAGE>
<TABLE>
<C> <S>
4(c)(1) --Indenture between Tenneco Credit Corporation and The First
National Bank of Boston dated as of June 15, 1988 (Exhibit 4(c)(1)
to Form 10-K of Tenneco Credit Corporation for the fiscal year
ended December 31, 1988, File No. 0-15095).
4(c)(2) --First Supplemental Indenture between Tenneco Credit Corporation
and The First National Bank of Boston dated as of June 15, 1988
(Exhibit 4(d) to Form 8-K of Tenneco Credit Corporation dated June
28, 1988, File No. 0-15095).
9 --None.
10(a) --Operating Agreement between Tenneco Credit Corporation and various
subsidiaries of Tenneco Inc. as amended and restated as of June 15,
1988 (Exhibit l0(a) to Form 10-K of Tenneco Credit Corporation for
the fiscal year ended December 31, 1988, File No. 0-15095).
10(b) --Investment Agreement among Tenneco Credit Corporation, Tennessee
Gas Pipeline Company and Tenneco Inc. amended and restated as of
November 1, 1988 (Exhibit l0(b) to Form 10-K of Tenneco Credit
Corporation for the fiscal year ended December 31, 1988, File No.
0-15095).
10(c) --Performance Agreement of Tennessee Gas Pipeline Company as amended
and restated as of June 14, 1988 (Exhibit l0(c) to Form 10-K of
Tenneco Credit Corporation for the fiscal year ended December 31,
1988, File No. 0-15095) .
10(d) --Investment Agreement between Tenneco Credit Corporation and
Tennessee Gas Pipeline Company (formerly Tenneco Inc.) dated as of
October 15, 1984; together with an amendment thereto dated January
14, 1987 (Exhibit l0(d) to Form 8 of Tenneco Credit Corporation
dated January 14, 1987, File No. 0-15095).
10(e) --Investment Agreement between Tenneco Credit Corporation and
Tenneco Inc. dated as of June 15, 1988 (Exhibit l0(e) to Form 10-K
of Tenneco Credit Corporation for the fiscal year ended December
31, 1988, File No. 0-15095).
10(f) --Performance Agreement dated as of June 15, 1988 from Tenneco Inc.
(Exhibit l0(f) to Form 10-K of Tenneco Credit Corporation for the
fiscal year ended December 31, 1988, File No. 0-15095).
11 --None.
*12 --Statement re computation of ratio of earnings to fixed charges.
13 --None.
16 --None.
18 --None.
21 --Omitted pursuant to the reduced disclosure format permitted by
General Instruction J to Form 10-K.
22 --None.
23 --None.
24 --None.
27 --Not required.
28 --None.
99 --None.
</TABLE>
24
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Tenneco Credit Corporation
Robert T. Blakely
By___________________________________
Robert T. Blakely
President
Date: March 31, 1994
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Robert T. Blakely March 31, 1994
- ------------------------------------
Robert T. Blakely Principal Executive Officer
and Director
E. J. Milan March 31, 1994
- ------------------------------------
E. J. Milan Principal Financial and
Accounting Officer and
Director
Karen R. Osar March 31, 1994
- ------------------------------------
Karen R. Osar Director
</TABLE>
25
<PAGE>
EXHIBIT 12
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
TOTAL ENTERPRISE BASIS
(THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Income before cumulative effect of a change in
accounting principle............................... $ 69,592 $ 90,993 $ 64,317
Add:
Interest expense.................................. 160,323 207,194 221,075
Income taxes...................................... 45,902 57,486 37,947
-------- -------- --------
Earnings as defined............................. $275,817 $355,673 $323,339
======== ======== ========
Fixed charges--interest expense..................... $160,323 $207,194 $221,075
======== ======== ========
Ratio of earnings to fixed charges.................. 1.72 1.72 1.46
======== ======== ========
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
*3(a) --Certificate of Incorporation of Tenneco Credit Corporation dated
August 6, 1981 (Exhibit 3(a) to Form 10 Registration Statement of
Tenneco Credit Corporation, File No. 0-15095).
*3(b) --By-Laws of Tenneco Credit Corporation, amended as of March 1,
1987 (Exhibit 3(b) to Form 10-K of Tenneco Credit Corporation for
the fiscal year ended December 31, 1989, File No. 0-15095).
*4(b)(1) --Indenture between Tenneco Credit Corporation and The Chase
Manhattan Bank (National Association) dated as of January 15,
1987 (Exhibit 4(b) to Form 10-K of Tenneco Credit Corporation for
the fiscal year ended December 31, 1986, File No. 0-15095).
*4(b)(2) --First Supplemental Indenture between Tenneco Credit Corporation
and The Chase Manhattan Bank (National Association) dated as of
January 16, 1987 (Exhibit 4(c) to Form 10-K of Tenneco Credit
Corporation for the fiscal year ended December 31, 1986, File No.
0-15095).
*4(b)(3) --Second Supplemental Indenture between Tenneco Credit Corporation
and The Chase Manhattan Bank (National Association) dated as of
February 1, 1987 (Exhibit 4(d) to Form 10-K of Tenneco Credit
Corporation for the fiscal year ended December 31, 1986, File No.
0-15095).
*4(b)(4) --Third Supplemental Indenture between Tenneco Credit Corporation
and The Chase Manhattan Bank (National Association) dated as of
August 1, 1987 (Exhibit 4(e) to Form 10-K of Tenneco Credit
Corporation for the fiscal year ended December 31, 1987, File No.
0-15095).
*4(b)(5) --Fourth Supplemental Indenture between Tenneco Credit Corporation
and The Chase Manhattan Bank (National Association) dated as of
June 15, 1988 (Exhibit 4(b)(5) to Form 10-K of Tenneco Credit
Corporation for the fiscal year ended December 31, 1988, File No.
0-15095).
*4(b)(6) --Fifth Supplemental Indenture between Tenneco Credit Corporation
and The Chase Manhattan Bank (National Association) dated as of
June 28, 1988 (Exhibit 4(c) to Form 8-K of Tenneco Credit
Corporation dated June 28, 1988, File No. 0-15095).
*4(b)(7) --Sixth Supplemental Indenture between Tenneco Credit Corporation
and The Chase Manhattan Bank (National Association) dated as of
July 15, 1989 (Exhibit 4(b)(7) to Form 10-K of Tenneco Credit
Corporation for the fiscal year ended December 31, 1989, File No.
0-15095).
*4(b)(8) --Seventh Supplemental Indenture between Tenneco Credit
Corporation and The Chase Manhattan Bank (National Association)
dated as of August 16, 1989 (Exhibit 4(b)(8) to Form 10-K of
Tenneco Credit Corporation for the fiscal year ended December 31,
1989, File No. 0-15095).
*4(b)(9) --Eighth Supplemental Indenture between Tenneco Credit Corporation
and The Chase Manhattan Bank (National Association) dated as of
November 1, 1989 (Exhibit 4(b)(9) to Form 10-K of Tenneco Credit
Corporation for the fiscal year ended December 31, 1989, File No.
0-15095).
*4(b)(10) --Ninth Supplemental Indenture between Tenneco Credit Corporation
and The Chase Manhattan Bank (National Association) dated as of
December 1, 1990 (Exhibit 4(b) to Form 8-K of Tenneco Credit
Corporation dated December 4, 1990, File No. 0-15095).
</TABLE>
- --------
* Exhibit incorporated by reference.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
*4(c)(1) --Indenture between Tenneco Credit Corporation and The First
National Bank of Boston dated as of June 15, 1988 (Exhibit 4(c)(1)
to Form 10-K of Tenneco Credit Corporation for the fiscal year
ended December 31, 1988, File No. 0-15095).
*4(c)(2) --First Supplemental Indenture between Tenneco Credit Corporation
and The First National Bank of Boston dated as of June 15, 1988
(Exhibit 4(d) to Form 8-K of Tenneco Credit Corporation dated June
28, 1988, File No. 0-15095).
*10(a) --Operating Agreement between Tenneco Credit Corporation and
various subsidiaries of Tenneco Inc. as amended and restated as of
June 15, 1988 (Exhibit l0(a) to Form 10-K of Tenneco Credit
Corporation for the fiscal year ended December 31, 1988, File No.
0-15095).
*10(b) --Investment Agreement among Tenneco Credit Corporation, Tennessee
Gas Pipeline Company and Tenneco Inc. amended and restated as of
November 1, 1988 (Exhibit l0(b) to Form 10-K of Tenneco Credit
Corporation for the fiscal year ended December 31, 1988, File No.
0-15095).
*10(c) --Performance Agreement of Tennessee Gas Pipeline Company as
amended and restated as of June 14, 1988 (Exhibit l0(c) to Form
10-K of Tenneco Credit Corporation for the fiscal year ended
December 31, 1988, File No. 0-15095) .
*10(d) --Investment Agreement between Tenneco Credit Corporation and
Tennessee Gas Pipeline Company (formerly Tenneco Inc.) dated as of
October 15, 1984; together with an amendment thereto dated January
14, 1987 (Exhibit l0(d) to Form 8 of Tenneco Credit Corporation
dated January 14, 1987, File No. 0-15095).
*10(e) --Investment Agreement between Tenneco Credit Corporation and
Tenneco Inc. dated as of June 15, 1988 (Exhibit l0(e) to Form 10-K
of Tenneco Credit Corporation for the fiscal year ended December
31, 1988, File No. 0-15095).
*10(f) --Performance Agreement dated as of June 15, 1988 from Tenneco Inc.
(Exhibit l0(f) to Form 10-K of Tenneco Credit Corporation for the
fiscal year ended December 31, 1988, File No. 0-15095).
12 --Statement re computation of ratio of earnings to fixed charges.
</TABLE>
- --------
* Exhibit incorporated by reference.
<PAGE>
EXHIBIT 12
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
TOTAL ENTERPRISE BASIS
(THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Income before cumulative effect of a change in
accounting principle............................... $ 69,592 $ 90,993 $ 64,317
Add:
Interest expense.................................. 160,323 207,194 221,075
Income taxes...................................... 45,902 57,486 37,947
-------- -------- --------
Earnings as defined............................. $275,817 $355,673 $323,339
======== ======== ========
Fixed charges--interest expense..................... $160,323 $207,194 $221,075
======== ======== ========
Ratio of earnings to fixed charges.................. 1.72 1.72 1.46
======== ======== ========
</TABLE>
