<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, 1994
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% 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 latest practicable date.
Common Stock, par value $5 per share 200 Shares as of March 27, 1995
TENNECO CREDIT CORPORATION MEETS THE CONDITIONS OF GENERAL INSTRUCTION
J(1)(A) AND (B) TO 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................................... 22
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........................................................ 22
Financial Statements Included in Item 8..................... 22
Index to Financial Statements and Schedules Included in Item
14......................................................... 22
Schedules Omitted as Not Required or Inapplicable........... 22
Reports on Form 8-K......................................... 23
Exhibits.................................................... 23
</TABLE>
--------
* 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 that 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 1994 on retail
receivables purchased from Case Corporation ("Case") was 10.1%, down from 11.4%
in 1993. The discount rate charged on pipeline and other short-term receivables
ranged from 5.75% to 8.75% during 1994 and from 5.75% to 6.50% during 1993.
Sales of receivables to the Company under the Operating Agreement are without
recourse to the selling Tenneco Subsidiaries.
Prior to June 1994, Case sold all of its domestic retail receivables to the
Company. Those receivables arose 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 included
an amount for possible losses that may arise from their receivables. This
portion of the discount became payable to the dealers as their receivables were
collected and was recorded by the Company as a dealers' reserve. Any loss
arising from the uncollectibility of a dealer's receivables was charged against
this dealer's reserve; any excess losses were recorded as a loss by the
Company.
Prior to June 30, 1994, Case and its subsidiaries were wholly-owned
subsidiaries of Tenneco Inc. On June 23, 1994, pursuant to a Reorganization
Agreement dated as of that date (the "Reorganization Agreement"), Case acquired
the business and assets of the farm and construction equipment business of
Tenneco Inc. and subsidiaries (such acquisition being referred to hereinafter
as the "Reorganization"). As a result of the Reorganization, Tenneco Inc. and
certain of its subsidiaries owned 100% of the outstanding common stock of Case
and (subject to a legally binding commitment to sell) 100% of Case's Series A
Cumulative Convertible Preferred Stock. In June, November and December 1994,
Tenneco Inc. and certain of its subsidiaries sold an aggregate of approximately
56% of the outstanding shares of Case in two underwritten public offerings.
Also in June 1994, the subsidiaries of Tenneco Inc. that owned the Series A
Cumulative Convertible Preferred Stock sold such shares to unaffiliated
investors by means of a private offering.
As part of the Reorganization, the Company retained ownership of
approximately $1.2 billion of Case's United States retail receivables and
related debt existing at the time of the Reorganization that is not redeemable
prior to maturity. Since the Reorganization, United States retail finance
activity has been conducted by Case's newly formed United States finance
subsidiary. Case services the retail receivables
1
<PAGE>
retained by the Company, for which it receives a monthly servicing fee based on
the amount of net receivables outstanding at the beginning of each month. At
December 31, 1994, approximately $879 million of the Case retail receivables
remained outstanding. It is estimated that the Case receivables retained by the
Company will be substantially liquidated by 1999.
Generally, trade accounts receivable purchased from Case pursuant to the
Operating Agreement had original maturities ranging from 24 months to 60
months. As of December 31, 1994, the weighted average remaining life to
maturity of trade accounts receivable purchased from Case was approximately 22
months. Most of the trade accounts receivable purchased from other Tenneco
Subsidiaries pursuant to the Operating Agreement have an original maturity of
30 to 60 days. The Operating Agreement does not restrict the maturities of
receivables that may be purchased by the Company.
As of December 31, 1994, and December 31, 1993, the Company held trade notes
and accounts receivable that it had purchased from Tenneco Subsidiaries as
follows:
<TABLE>
<CAPTION>
(THOUSANDS)
DECEMBER 31,
---------------------
1994 1993
---------- ----------
<S> <C> <C>
Gross Receivables
Case.................................................... $ 882,817 $1,768,353
Pipeline................................................ 259,911 236,786
Other................................................... 383,875 114,404
---------- ----------
Subtotal.............................................. 1,526,603 2,119,543
Less: Unearned Finance Charges
Case.................................................... 134,955 222,061
Pipeline................................................ 1,158 888
Other................................................... 1,387 1,569
---------- ----------
Subtotal.............................................. 137,500 224,518
Less: Allowance for Doubtful Accounts--Case............... 9,554 34,863
---------- ----------
Net Receivables....................................... $1,379,549 $1,860,162
========== ==========
</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, 1994.
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, 1994, the Company held $67
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, 1994, the Company held trade notes and accounts receivable
purchased under the Operating Agreement from twelve Tenneco Subsidiaries. The
information below is provided with respect to those Tenneco Subsidiaries from
which the Company has purchased or expects to purchase a substantial amount of
trade receivables.
Case and its subsidiaries manufacture a full line of farm equipment and
light- and medium-sized construction equipment. Prior to June 30, 1994, Case
and its subsidiaries were wholly-owned subsidiaries of Tenneco Inc. See
"Purchase of Receivables" above. As part of the Reorganization, the Company
retained ownership of approximately $1.2 billion of Case's United States retail
receivables and related debt existing at
2
<PAGE>
the time of the Reorganization that is not redeemable prior to maturity. Since
the Reorganization, United States retail finance activity has been conducted by
Case's newly formed United States finance subsidiary. At December 31, 1994,
approximately $879 million of the Case retail receivables remained outstanding.
It is estimated that the Case receivables retained by the Company will be
substantially liquidated by 1999.
The principal business operations of Tenneco Automotive and its affiliates
are Walker Manufacturing Company and Monroe Auto Equipment Company. Walker
Manufacturing Company and its affiliates ("Walker") manufacture a variety of
automotive exhaust systems and emission control products. Walker's products are
sold to automotive manufacturers for use as original equipment and to
wholesalers and retailers for sale as replacement equipment. Monroe Auto
Equipment Company and its affiliates are engaged principally in the design,
manufacture and distribution of original equipment and replacement ride control
products.
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 containerboard, paperboard, corrugated
shipping containers, folding cartons, disposable plastic and aluminum
containers, molded fiber products and other related products. Its shipping
container products are used in the packaging of food, paper products, metal
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
fiber products include produce and egg packaging, food service items and
institutional and consumer disposable dinnerware, as well as a wide range of
other consumer and industrial goods. Its disposable plastic and aluminum
containers are sold to the food service, food processing and related
industries.
OTHER INVESTMENTS
The Company owns a 95% limited partner interest in a partnership that owns a
multifuel boiler that 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. See "Purchase of Receivables" above.
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 are summaries of certain provisions
contained in such agreements, copies of which are filed as exhibits to this
annual report. Such summaries do not purport to be complete descriptions of all
the terms and provisions of such agreements, and reference is made to such
agreements for the complete terms and provisions thereof.
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
3
<PAGE>
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 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 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 that 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 that it sells to the Company. These representations and warranties
do not apply to sales of receivables by Tenneco Subsidiaries that 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
that might otherwise be available to the selling Tenneco Subsidiary.
Tennessee entered into a Performance Agreement dated as of June 14, 1988,
that is substantially identical to the Performance Agreement of Tenneco Inc.
except that Tennessee guarantees only the obligations of sellers that 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,
4
<PAGE>
(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.
"Subordinated Debt" means 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, and
(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 of
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
5
<PAGE>
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.
(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.
A service charge of $234,000 was paid by Tenneco Inc. for the month of
January 1994. No service charge was required for the months prior to or
following January 1994.
The Company and Tennessee also are parties to an investment agreement that
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 that enures to the benefit of
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 that 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 1994 and 1993. During 1992, the
Company declared and paid $45 million 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 1994, 1993 and 1992.
Revenues
The Company and its consolidated subsidiaries reported total revenues of $160
million in 1994, down 31% or $73 million from 1993 and down 52% or $171 million
from 1992. This decrease is attributable to a decrease in Case retail
receivables due to the sale of $395 million, $439 million and $530 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, November
1993 and February 1994, respectively. 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
----------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Case.................................................... 65% 82% 83%
Pipeline................................................ 10 7 4
Other................................................... 18 6 8
--- --- ---
Total From Accounts Receivable........................ 93 95 95
Rental and Other Income................................. 4 2 2
Notes Receivable........................................ 3 3 3
--- --- ---
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 1994 was 10.1%,
down from 11.4% in 1993 and 11.8% in 1992. Discount rates charged on pipeline
and other short-term receivables purchased ranged from 5.75% to 8.75% during
1994 as compared to ranges of 5.75% to 6.50% and 6.50% to 8.50% for 1993 and
1992, respectively.
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 1994, 1993 and 1992.
7
<PAGE>
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. A service charge of $234,000 was paid by Tenneco Inc.
for the month of January 1994. No service charge was required for the months
prior to or following January 1994.
Subsequent to the Case reorganization, the Case retail financing activities
have been conducted by Case's newly formed United States finance subsidiary. As
the Company no longer purchases Case retail receivables future revenues and
income will continue to decline as the remaining retail receivable balance is
collected. See Note 2 of the Notes to Financial Statements.
Expenses
During 1994, interest expense totaled $117 million representing a decrease of
$43 million or 27% and a decrease of $90 million or 43% over 1993 and 1992,
respectively. The decrease resulted from lower average total debt outstanding
in 1994. The average interest rate for 1994 was 9.8% compared to 9.0% in 1993
and 8.9% in 1992. The higher average interest rate in 1994 was due to the
maturity of lower interest long-term debt. The increase in operating and
administrative costs during 1994 was primarily attributable to service fees
paid to Case related to the Case retail receivables retained by the Company.
Other Income
In May 1993, November 1993 and February 1994, the Company received net
proceeds of $418 million, $459 million and $555 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, $439 million and $530 million and
accordingly, the Company recognized a pre-tax gain of $23 million, $20 million
and $25 million in May 1993, November 1993 and February 1994, respectively, due
to these sales. In addition, the Company recognized a gain of $6 million and $1
million from the sale of trade receivables to Asset Securitization Cooperative
Corporation in 1993 and 1994, respectively. These receivables originated with
Tenneco Inc.'s packaging, automotive parts and natural gas subsidiaries.
Net Income
Net income for 1994 of $41 million represented a decrease of 41% from 1993
net income of $70 million and a 54% decrease from 1992 net income of $90
million. The decrease in net income from 1993 to 1994 was primarily
attributable to decreased revenues due to the lower levels of Case retail
receivables and lower gains on the receivable sales. See "Other Income" above.
This revenue decline was partially offset by lower interest expense.
Assets
The Company had total assets of $1,516 million at December 31, 1994, compared
to $2,238 million at December 31, 1993. The 32% decrease from year-end 1993 is
due primarily to the sale of $530 million net book value of Case retail
receivables. The proceeds from this sale were primarily utilized to retire
debt.
As of December 31, 1994, the Company held net trade notes and accounts
receivable purchased from affiliates totaling $1,380 million, which made up 91%
of the Company's total assets. This compares to $1,860 million or 83% of assets
as of December 31, 1993. Details of these receivables are shown as follows:
<TABLE>
<CAPTION>
NET TRADE NOTES AND
ACCOUNTS RECEIVABLE
-------------------------
DECEMBER 31, DECEMBER 31,
1994 1993
------------ ------------
<S> <C> <C>
Case............................................ 53% 81%
Pipeline........................................ 19 13
Other........................................... 28 6
--- ---
100% 100%
=== ===
</TABLE>
8
<PAGE>
Case net trade notes and accounts receivable are $773 million lower at
December 31, 1994, compared to December 31, 1993, primarily due to the sale of
certain retail farm and construction equipment receivables to limited purpose
business trusts.
The Company held $67 million of notes receivable from non-affiliated
companies at December 31, 1994, down from $106 million held at December 31,
1993. Long-term receivables from non-affiliated companies represented 4% of the
Company's total assets at December 31, 1994.
At December 31, 1994, the Company had a $51 million net investment in a
multifuel boiler leased to Packaging. The leased facility represented 3% of the
Company's total assets at December 31, 1994.
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 $1,469 million at December 31, 1994,
and was $2,170 million at December 31, 1993. The components of capitalization
at such dates are set forth in the following table:
<TABLE>
<CAPTION>
CAPITALIZATION
-------------------------
DECEMBER 31, DECEMBER 31,
1994 1993
------------ ------------
<S> <C> <C>
Commercial Paper................................ --% 11%
Medium-Term Senior Notes........................ 3 4
Long-Term Senior Debt........................... 55 59
Subordinated Debt............................... 6 4
Stockholder's Equity............................ 36 22
--- ---
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 sheets--December 31, 1994 and 1993................................ 11
Statements of income for each of the three years in the period ended
December 31, 1994........................................................ 12
Statements of cash flows for each of the three years in the period ended
December 31, 1994........................................................ 13
Statements of changes in stockholder's equity for each of the three years
in the period ended December 31, 1994.................................... 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, 1994 and 1993, 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, 1994. These financial
statements are the responsibility of Tenneco Credit Corporation's management.
Our responsibility is to express an opinion on these financial statements 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, 1994 and 1993, 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, 1994, in conformity with
generally accepted accounting principles.
As discussed in Note 3 to the financial statements, effective January 1,
1992, Tenneco Credit Corporation changed its method of accounting for income
taxes.
ARTHUR ANDERSEN LLP
Houston, Texas
February 16, 1995
10
<PAGE>
TENNECO CREDIT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEETS
(THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
ASSETS 1994 1993
------ ---------- ----------
<S> <C> <C>
Notes and accounts receivable purchased from affiliates:
Customers.............................................. $1,522,862 $2,024,575
Affiliated companies................................... 3,741 94,968
---------- ----------
1,526,603 2,119,543
Less--Unearned finance charges........................... 137,500 224,518
Allowance for doubtful receivables.................... 9,554 34,863
---------- ----------
1,379,549 1,860,162
---------- ----------
Notes receivable:
Non-affiliated companies, including $4,917 and $8,067,
due within one year of the respective dates........... 67,156 105,829
Affiliated companies................................... -- 110,085
---------- ----------
67,156 215,914
---------- ----------
Equipment under operating leases (at cost), less
accumulated depreciation of $18,246 and $16,257 at the
respective dates........................................ 51,360 53,349
---------- ----------
Other assets:
Cash................................................... 332 4
Accounts receivable from affiliates.................... 1,193 1,730
Interest receivable and other.......................... 16,466 106,667
---------- ----------
17,991 108,401
---------- ----------
$1,516,056 $2,237,826
========== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
<S> <C> <C>
Commercial paper......................................... $ -- $ 240,938
Senior notes............................................. 852,008 1,353,593
Subordinated notes....................................... 92,100 92,100
Accounts payable to affiliates........................... 7,834 4,449
Dealers' reserves........................................ -- 18,148
Accrued interest......................................... 24,613 43,625
Deferred income taxes.................................... 14,304 1,171
---------- ----------
990,859 1,754,024
---------- ----------
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...................................... 339,968 298,573
---------- ----------
525,197 483,802
---------- ----------
$1,516,056 $2,237,826
========== ==========
</TABLE>
(The accompanying notes to financial statements are an integral part
of these balance sheets.)
11
<PAGE>
TENNECO CREDIT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
(THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
REVENUES:
Earned finance charges and interest.............. $154,161 $226,681 $324,751
Rental income from affiliated company............ 5,728 5,728 5,728
-------- -------- --------
Total revenues................................. 159,889 232,409 330,479
-------- -------- --------
EXPENSES:
Interest--
Commercial paper............................... 3,391 4,643 7,260
Senior notes................................... 100,371 138,384 155,658
Subordinated notes............................. 9,098 9,071 17,567
Commitment fees and other...................... 4,497 8,225 26,709
-------- -------- --------
117,357 160,323 207,194
Depreciation and amortization.................... 1,989 1,988 1,988
Operating and administrative..................... 11,413 3,361 3,559
-------- -------- --------
Total expenses................................. 130,759 165,672 212,741
-------- -------- --------
OTHER INCOME--Net gain on sale of receivables...... 35,235 48,757 30,741
-------- -------- --------
INCOME BEFORE INCOME TAXES......................... 64,365 115,494 148,479
INCOME TAXES....................................... 22,970 45,902 57,486
-------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE.............................. 41,395 69,592 90,993
-------- -------- --------
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING FOR
INCOME TAXES...................................... -- -- (1,249)
-------- -------- --------
NET INCOME......................................... $41,395 $ 69,592 $ 89,744
======== ======== ========
</TABLE>
(The accompanying notes to financial statements are an integral part
of these statements of income.)
12
<PAGE>
TENNECO CREDIT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Income before cumulative effect of a change in
accounting principle.......................... $ 41,395 $ 69,592 $ 90,993
Adjustments to reconcile to net cash provided
from operating activities:
Depreciation and amortization................ 1,989 1,988 1,988
Deferred income taxes........................ 4,068 (6,624) (2,350)
Decrease in notes and accounts receivable
purchased from affiliates, net.............. 506,513 345,282 363,507
Change in accounts payable to and receivable
from affiliates............................. 3,922 (22,194) 22,414
Decrease in accrued interest................. (19,012) (7,932) (7,573)
Increase (decrease) in dealers' reserve...... (18,148) 8,475 (3,657)
(Increase) decrease in notes receivable from
affiliated companies........................ 93,250 (34,772) (75,313)
Change in other assets and other, net........ 91,827 (57,978) 96,477
-------- -------- --------
NET CASH PROVIDED FROM OPERATING ACTIVITIES...... 705,804 295,837 486,486
-------- -------- --------
INVESTING ACTIVITIES:
Collections on long-term notes receivable...... 38,930 48,368 23,042
Purchase of long-term notes receivable......... (146) -- (138,428)
-------- -------- --------
NET CASH PROVIDED FROM (USED IN) INVESTING
ACTIVITIES...................................... 38,784 48,368 (115,386)
-------- -------- --------
FINANCING ACTIVITIES:
Senior notes issued............................ -- -- 10,000
Increase (decrease) in commercial paper........ (240,938) 111,174 71,973
Repayment of short-term bank debt.............. -- -- (210,000)
Retirement of senior and subordinated notes.... (503,322) (455,388) (198,525)
Dividends paid................................. -- -- (45,000)
-------- -------- --------
NET CASH USED IN FINANCING ACTIVITIES............ (744,260) (344,214) (371,552)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH.................. 328 (9) (452)
BEGINNING CASH BALANCE........................... 4 13 465
-------- -------- --------
ENDING CASH BALANCE.............................. $ 332 $ 4 $ 13
======== ======== ========
CASH PAID DURING THE YEAR FOR:
Interest....................................... $136,369 $168,255 $214,767
Income taxes................................... $ 20,525 $ 52,526 $ 59,836
</TABLE>
(The accompanying notes to financial statements are an integral part
of these statements of cash flows.)
13
<PAGE>
TENNECO CREDIT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1994 1993 1992
-------- -------- --------
<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......................... 298,573 228,981 184,237
Net income...................................... 41,395 69,592 89,744
Cash dividends.................................. -- -- (45,000)
-------- -------- --------
Balance end of year............................... 339,968 298,573 228,981
-------- -------- --------
Total........................................... $525,197 $483,802 $414,210
======== ======== ========
</TABLE>
(The accompanying notes to financial statements are an integral part
of these statements 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.
All significant intercompany items have been eliminated in consolidation.
Revenue Recognition
Finance charges are recognized as income on the accrual method in the period
in which they are earned. Finance charges earned on trade and other receivables
purchased in 1994, 1993 and 1992 were approximately $154 million, $227 million
and $325 million, respectively. Finance charges on the receivables from
affiliates are charged by TCC to these affiliates at mutually agreed amounts
based on current rates of interest. Rates charged on pipeline and other short-
term receivables purchased ranged from 5.75% to 8.75% during 1994 as compared
to ranges of 5.75% to 6.50% and 6.50% to 8.50% for 1993 and 1992, respectively.
The average yield on Case retail receivables for 1994 was 10.1%, down from
11.4% in 1993 and 11.8% in 1992.
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, 1994 and 1993,
totaled $1.5 billion and $2.1 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) REORGANIZATION OF CASE FINANCING ACTIVITIES
Prior to June 1994, Case sold all of its domestic retail receivables to the
Company. Those receivables arose 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 included
an amount for possible losses that may arise from their receivables. This
portion of the discount became payable to the dealers as their receivables were
collected and was recorded by the Company as a dealers' reserve. Any loss
arising from the uncollectibility of a dealer's receivables was charged against
this dealer's reserve; any excess losses were recorded as a loss by the
Company.
On June 23, 1994, pursuant to a reorganization agreement dated as of that
date, Case acquired the business and assets of the farm and construction
equipment business of Tenneco Inc. and subsidiaries (such acquisition being
referred to hereinafter as the "Reorganization"). Subsequently, Tenneco Inc.
and certain of its subsidiaries sold an aggregate of approximately 56% of the
outstanding shares of Case common stock in two public offerings. As part of the
Reorganization, the Company retained ownership of approximately $1.2 billion of
Case's United States retail receivables and related debt existing at the time
of the Reorganization that is not redeemable prior to maturity. The Company
also sold Case-related notes and accounts receivable of approximately $395
million back to Case. Since the Reorganization, United States retail finance
activity has been conducted by Case's newly formed United States finance
subsidiary. Case continues to service the retail receivables retained by the
Company, for which it receives a monthly servicing fee based on the amount of
net receivables outstanding at the beginning of each month. At December 31,
1994, approximately $879 million of the Case retail receivables remained
outstanding. It is estimated that the Case receivables retained by the Company
will be substantially liquidated by 1999.
As a result of the Reorganization and subsequent public offering of Case
common stock, the applicable dealers' reserve was transferred to Case. In
addition, due to Case's use of its finance subsidiary to conduct retail finance
activity, the Company no longer purchases Case receivables. Consequently, the
Company's revenues and interest expense will decline as the existing Case
receivables are collected and the associated debt is retired. The reduction in
receivables and debt will also reduce the Company's future net income.
(3) 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 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.
16
<PAGE>
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The components of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
(THOUSANDS)
YEARS ENDED DECEMBER
31,
-------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Current--
Federal....................................... $14,618 $43,696 $51,551
State......................................... 4,284 8,830 8,285
------- ------- -------
18,902 52,526 59,836
Deferred--
Federal....................................... 6,680 (7,616) (4,809)
State......................................... (2,612) 992 2,459
------- ------- -------
4,068 (6,624) (2,350)
------- ------- -------
Total....................................... $22,970 $45,902 $57,486
======= ======= =======
</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 $1 million, $6 million and $7 million in
1994, 1993 and 1992, respectively, net of federal income tax benefit.
The components of net deferred tax liability at December 31, 1994 and 1993,
were as follows:
<TABLE>
<CAPTION>
(THOUSANDS)
1994 1993
------- -------
<S> <C> <C>
Deferred tax assets--
Dealer reserves........................................ $ -- $ 8,285
Bad debt reserve....................................... 3,344 10,955
Debt related items..................................... -- 46
State taxes............................................ 369 --
Deferred tax liabilities--
Tax over book depreciation............................. 17,547 17,817
State taxes............................................ -- 2,243
Other.................................................. 470 397
------- -------
Net deferred tax liability............................... $14,304 $ 1,171
======= =======
</TABLE>
(4) NOTES AND ACCOUNTS RECEIVABLE PURCHASED FROM AFFILIATES
Contractual maturities of notes and accounts receivable purchased from
affiliates as of December 31, 1994, are as follows:
<TABLE>
<CAPTION>
(THOUSANDS)
TOTAL CASE PIPELINE OTHER
---------- -------- -------- --------
<S> <C> <C> <C> <C>
Years Ending December 31:
1995............................. $ 931,656 $287,870 $259,911 $383,875
1996............................. 248,688 248,688 -- --
1997............................. 198,112 198,112 -- --
1998............................. 115,611 115,611 -- --
1999............................. 32,035 32,035 -- --
Thereafter....................... 501 501 -- --
---------- -------- -------- --------
$1,526,603 $882,817 $259,911 $383,875
========== ======== ======== ========
</TABLE>
17
<PAGE>
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
During 1994 and 1993, TCC received net proceeds of $555 million and $877
million, respectively, from the sale of certain retail farm and construction
equipment receivables to limited purpose business trusts, 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 $530 million and $834 million
for 1994 and 1993, respectively, and accordingly, TCC recognized pre-tax gains
on the transactions of $25 million and $43 million for 1994 and 1993,
respectively. In addition, the Company recognized a gain of $1 million and $6
million from the sale of trade receivables to Asset Securitization Cooperative
Corporation in 1994 and 1993, respectively. These receivables originated with
Tenneco Inc.'s packaging, automotive and natural gas subsidiaries.
(5) 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, DECEMBER 31,
1994 1993
------------ ------------
<S> <C> <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....................... $148,700 $243,327
Approximate average month-end outstanding
borrowings during the year....................... $ 41,892 $120,976
Weighted average interest rate on approximate
average month-end outstanding borrowings during
the year......................................... 4.17% 3.64%
</TABLE>
TCC has available total lines of credit of $400 million with various banks
which are committed through November 1999. Borrowings are available as either
domestic loans or as Eurodollar loans. The agreements provide for facility fees
of 0.1875% on the entire amount of the commitment. At December 31, 1994, TCC
had no amounts outstanding under the lines of credit.
18
<PAGE>
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(6) 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, DECEMBER 31,
1994 1993
------------ ------------
<S> <C> <C>
Senior Notes--
Tenneco Credit Corporation:
Medium-term notes due 1995 through 2002, average
interest rate 9.35%............................. $ 73,150 $ 73,650
8.38% Notes due 1997 (net of $99 unamortized
discount in 1993) .............................. -- 249,901
9.75% Notes due 1994............................. -- 250,000
9% Notes due 1995 (net of $83 and $250
unamortized discount, respectively)............. 199,917 199,750
9.25% Notes due 1996 (net of $147 and $227
unamortized discount, respectively)............. 149,853 149,773
10.13% Notes due 1997 (net of $235 and $315
unamortized discount, respectively)............. 149,765 149,685
9.63% Notes due 2001 (net of $714 and $823
unamortized discount, respectively)............. 249,286 249,177
Counce Finance Corporation:
13% Notes due 1995 through 2000.................. 20,218 23,040
Zero coupon notes, due 2010 discounted to yield
13.50%.......................................... 38,283 38,283
Less: unamortized discount....................... (28,464) (29,666)
-------- ----------
Total Senior Notes............................. 852,008 1,353,593
Subordinated Notes--
Tenneco Credit Corporation:
Medium-term notes due 1998 through 2001, average
interest rate 9.90%............................. 92,100 92,100
-------- ----------
$944,108 $1,445,693
======== ==========
</TABLE>
At December 31, 1994, approximately $51 million net book value of equipment
under lease was pledged as collateral to secure $30 million of senior notes.
The aggregate maturities applicable to the notes outstanding at December 31,
1994, are $239 million, $158 million, $176 million, $73 million and $4 million
for 1995, 1996, 1997, 1998 and 1999, respectively.
On February 28, 1994, TCC redeemed all of its issued and outstanding 8.38%
notes due February 1, 1997.
19
<PAGE>
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(7) EQUIPMENT UNDER OPERATING LEASES TO AFFILIATES
At December 31, 1994, Counce Limited Partnership had a long-term operating
lease with Packaging, covering equipment with a net book value of $51 million.
The lease requires Packaging to pay all operating, maintenance and insurance
costs. The aggregate minimum future annual rentals receivable under the
operating lease at December 31, 1994, are as follows:
<TABLE>
<CAPTION>
(THOUSANDS)
<S> <C>
1995.......................................................... $ 5,728
1996.......................................................... 5,728
1997.......................................................... 5,728
1998.......................................................... 5,728
1999.......................................................... 5,728
Thereafter.................................................... 63,012
-------
$91,652
=======
</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.
(8) FINANCIAL INSTRUMENTS
In accordance with the requirements of FAS No. 107, the estimated fair values
of TCC's financial instruments at December 31, 1994, were estimated as follows:
<TABLE>
<CAPTION>
(THOUSANDS)
1994 1993
--------------------- ---------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Receivables (Customer, Notes
and Interest).............. $1,590,148 $1,548,415 $2,132,258 $2,260,135
Senior and Subordinated
Notes...................... 944,108 980,779 1,445,693 1,612,261
Commercial Paper............ -- -- 240,938 240,938
</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. The fair value of the current receivables
was considered to be the same as the carrying amount. Fair value of the long-
term receivables was based on the market value of receivables with similar
maturities and interest rates. Customer notes and accounts receivable purchased
from affiliates are concentrated in the farm and construction business. At
December 31, 1994, the receivables related to the farm and construction
business represented 53% of the total customer notes and accounts receivable
purchased from affiliates.
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.
Commercial Paper--Fair value was considered to be the same as the carrying
amount.
20
<PAGE>
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(9) 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.
(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. A service charge of $234,000 was paid by Tenneco Inc. for the
month of January 1994. No service charge was required for the months prior
to or following January 1994.
TCC was in compliance with these covenants during the years ended and as of
December 31, 1994, 1993 and 1992.
(10) QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
(THOUSANDS)
-------------------------
INTEREST NET
REVENUES EXPENSE INCOME
-------- -------- -------
<S> <C> <C> <C>
1994
1st........................................... $ 41,058 $ 35,826 $17,923
2nd........................................... 44,934 31,562 8,255
3rd........................................... 37,833 26,385 8,070
4th........................................... 36,064 23,584 7,147
-------- -------- -------
$159,889 $117,357 $41,395
======== ======== =======
1993
1st........................................... $ 64,375 $ 42,048 $14,197
2nd........................................... 58,417 41,188 23,553
3rd........................................... 59,019 39,162 12,130
4th........................................... 50,598 37,925 19,712
-------- -------- -------
$232,409 $160,323 $69,592
======== ======== =======
</TABLE>
(The above notes are an integral part of the foregoing financial statements.)
21
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has been no change in accountants during 1994 or 1993, 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>
<C> <S> <C>
SCHEDULES OMITTED AS NOT REQUIRED OR INAPPLICABLE
Schedule I --Condensed financial information of registrant
Schedule II --Valuation and qualifying accounts--three years ended
December 31, 1994
Schedule III --Real estate and accumulated depreciation
Schedule IV --Mortgage loans on real estate
Schedule V --Supplemental information concerning property--casualty
insurance operations
</TABLE>
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 --Financial data schedule.
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 29, 1995
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 29, 1995
------------------------------------
Robert T. Blakely Principal Executive Officer
and Director
E. J. Milan March 29, 1995
------------------------------------
E. J. Milan Principal Financial and
Accounting Officer and
Director
Karen R. Osar March 29, 1995
------------------------------------
Karen R. Osar Director
</TABLE>
25
<PAGE>
EXHIBIT 12
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Income before cumulative effect of a change in
accounting principle............................... $ 41,395 $ 69,592 $ 90,993
Add:
Interest expense.................................. 117,357 160,323 207,194
Income taxes...................................... 22,970 45,902 57,486
-------- -------- --------
Earnings as defined............................. $181,722 $275,817 $355,673
======== ======== ========
Fixed charges--interest expense..................... $117,357 $160,323 $207,194
======== ======== ========
Ratio of earnings to fixed charges.................. 1.55 1.72 1.72
======== ======== ========
</TABLE>
<PAGE>
EXHIBIT INDEX
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>
<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(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).
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).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
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 --Financial data schedule.
28 --None.
99 --None.
</TABLE>
<PAGE>
EXHIBIT 12
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Income before cumulative effect of a change in
accounting principle............................... $ 41,395 $ 69,592 $ 90,993
Add:
Interest expense.................................. 117,357 160,323 207,194
Income taxes...................................... 22,970 45,902 57,486
-------- -------- --------
Earnings as defined............................. $181,722 $275,817 $355,673
======== ======== ========
Fixed charges--interest expense..................... $117,357 $160,323 $207,194
======== ======== ========
Ratio of earnings to fixed charges.................. 1.55 1.72 1.72
======== ======== ========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the Tenneco Credit Corporation and Consolidated Subsidiaries Financial
Statements and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 332
<SECURITIES> 0
<RECEIVABLES> 1,385,362
<ALLOWANCES> (9,554)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 69,606
<DEPRECIATION> (18,246)
<TOTAL-ASSETS> 1,516,056
<CURRENT-LIABILITIES> 0
<BONDS> 944,108
<COMMON> 1
0
0
<OTHER-SE> 525,196
<TOTAL-LIABILITY-AND-EQUITY> 1,516,056
<SALES> 0
<TOTAL-REVENUES> 159,889
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 13,402
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 117,357
<INCOME-PRETAX> 64,365
<INCOME-TAX> 22,970
<INCOME-CONTINUING> 41,395
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,395
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
