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________________________________________________________________________
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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, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-15095
TENNECO CREDIT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 76-0010368
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Tenneco Building, Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 757-2131
Securities registered pursuant to Section 12(b) of the Act:
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<CAPTION>
Name of Each Exchange
Title of Each Class on which Registered
<S> <C>
9 1/4% Notes due 1996; 10 1/8% Notes due 1997;
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 outstanding as of March 13, 1996.
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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________________________________________________________________________
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TABLE OF CONTENTS
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Page
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PART I
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....................................... 6
Item 6. Selected Financial Data..................................... *
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 6
Item 8. Financial Statements and Supplementary Data................. 10
Index to Financial Statements of Tenneco Credit
Corporation and Consolidated Subsidiaries............... 10
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 23
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................................................. 23
Financial Statements Included in Item 8..................... 23
Index to Financial Statements and Schedules Included in
Item 14................................................... 23
Schedules Omitted as Not Required or Inapplicable........... 23
Reports on Form 8-K......................................... 24
Exhibits.................................................... 24
</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.
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PART I
TENNECO CREDIT CORPORATION
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 ("Tenneco").
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 subsidiaries of Tenneco Inc. ("Tenneco Subsidiaries") pursuant to
which it buys trade receivables generated by the Tenneco Subsidiaries from
the sale of goods or services. Each Tenneco Subsidiary, as the Company's
agent, makes collections of, and otherwise services, receivables sold by
it to the Company. Tenneco Inc., the parent of the Company, has entered
into a Performance Agreement for the benefit of the Company in which it
agreed to cause the Tenneco Subsidiaries to perform their obligations
under the Operating Agreement. Additionally, pursuant to an Investment
Agreement between the Company and Tenneco Inc., Tenneco Inc. agreed to
provide financial support to the Company if the Company does not satisfy
certain financial tests. For additional information concerning these
agreements, see "Relationship with Tenneco Inc.--Performance Agreement"
and "--Investment Agreement." Because a significant amount of the long-
term debt owed by the Company will mature after the maturity of a
significant amount of the long-term receivables held by the Company, the
Company believes that it will be necessary for Tenneco Inc. to provide
financial support, under the provisions of the contractual agreements, in
future periods.
The Company has also purchased from time to time receivables and other
assets from subsidiaries of Tenneco Inc. on terms different from those set
forth in the Operating Agreement.
Prior to June 1994, Case Corporation ("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 to the extent of the reserve; any losses in excess
of the dealer's reserve are recorded as a loss by the Company. During the
years 1991 through 1995, there were no credit losses recorded by the
Company in excess of the dealer's reserve.
Prior to June 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, Case acquired the business
and assets of the farm and construction equipment business of Tenneco (the
"Reorganization") and Tenneco Inc. and certain of its subsidiaries
acquired all 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. Subsequent to the Reorganization, Tenneco
Inc. and its subsidiaries sold an aggregate of approximately 79% of the
outstanding shares of Case in an initial public offering and two secondary
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 in a private offering. In March 1996,
Tenneco Inc. and its subsidiaries sold all their remaining Case shares.
1<PAGE>
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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 United States finance
subsidiary. Case services 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,
1995, approximately $509 million of the retail receivables related to Case
remained outstanding.
Under the Operating Agreement, the Company purchases trade receivables
at prices agreed to by it and the Tenneco Subsidiaries at the time of
sale. The purchase prices have historically been primarily as follows:
Case. The purchase prices for Case retail receivables were set at
levels intended to provide an appropriate market yield to the
Company above the Company's cost of funds. The average yield for
1995 on retail receivables purchased from Case was 10.4%, up from
10.1% in 1994.
Other Tenneco Subsidiaries. The face amount of the trade
receivables purchased less a discount based upon the prime rate plus
25 basis points. The discount rate charged on short-term trade
receivables purchased from Tenneco ranged from 8.75% to 9.25% during
1995 and from 5.75% to 8.75% during 1994.
Maturities of receivables purchased by the Company, which are not
restricted by the Operating Agreement, are primarily as follows:
Case. Retail receivables purchased from Case generally had
original maturities ranging from 24 months to 60 months. As of
December 31, 1995, the weighted average remaining life to maturity
of retail receivables purchased from Case was approximately 28
months. The Case receivables retained by the Company will be
substantially liquidated by 1999.
Other Tenneco Subsidiaries. Most trade accounts receivable
purchased from other Tenneco Subsidiaries mature in 30 to 60 days.
As stated above, the Company believes that it will be necessary for
Tenneco Inc. to provide financial support, under the provisions of the
contractual agreements, in future periods.
Sales of receivables to the Company under the Operating Agreement are
without recourse to the selling Tenneco Subsidiaries. Reference is made
to the caption "Tenneco Subsidiaries and Case" for a discussion of the
businesses which generate the trade receivables purchased by the Company.
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As of December 31, 1995, and December 31, 1994, the Company held the
following trade notes and accounts receivable generated by (i) Case and
(ii) Tenneco business segments:
<TABLE>
<CAPTION>
(Thousands)
December 31,
-----------------------
1995 1994
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<S> <C> <C>
Gross Receivables
Case........................................ $ 509,480 $ 882,817
Energy...................................... 121,954 259,911
Packaging................................... 69,488 208,630
Automotive.................................. 74,277 175,245
---------- ----------
Subtotal.................................. 775,199 1,526,603
Less: Unearned Finance Charges
Case........................................ 63,188 134,955
Energy...................................... 586 1,158
Packaging................................... 365 815
Automotive.................................. 266 572
---------- ----------
Subtotal.................................. 64,405 137,500
Less: Allowance for Doubtful Accounts--Case.. 7,991 9,554
---------- ----------
Net Receivables............................. $ 702,803 $1,379,549
========== ==========
</TABLE>
See Note 4 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, 1995.
See also the "Outlook" section of Item 7. "Management's Discussion and
Analysis of Financial Condition and Results of Operations," for a
discussion of the Company's assessment of its viability following the
liquidation of substantially all of the Case retail receivables in 1999.
In addition to purchasing trade receivables under the Operating
Agreement, the Company has acquired, and may acquire in the future,
various long-term receivables from non-affiliated companies. Purchases of
these long-term receivables are negotiated on an arm's length basis by the
Company and the seller at the time of purchase.
Tenneco Subsidiaries and Case
As of December 31, 1995, the Company held trade notes and accounts
receivable purchased under the Operating Agreement from eleven Tenneco
Subsidiaries, including subsidiaries in Tenneco's Energy, Automotive and
Packaging divisions. 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 accounts and notes receivable.
The principal business operations of Tenneco's Automotive division 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.
Tenneco's Energy division principally consists of Tennessee Gas
Pipeline Company ("Tennessee") and other subsidiaries who 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.
3<PAGE>
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Tenneco's Packaging division is involved in the manufacture and sale of
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.
During 1995, Tenneco's Packaging division acquired the plastics division
of Mobil Corporation. The plastics business is the largest North American
producer of polyethylene and polystyrene consumer and food service
packaging products. Subsequent to the acquisition, certain receivables of
the plastics business have been purchased by the Company under the terms
of the Operating Agreement.
Case and its subsidiaries, which are no longer subsidiaries of the
Company, 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 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 United States finance subsidiary.
Other Investments
The Company owns a 95% limited partner interest in a partnership that
owns a multifuel boiler that is leased to Tenneco 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. The remaining 5% interest in this partnership is owned
by Tenneco InterAmerica Inc., an indirect wholly-owned subsidiary of
Tenneco Inc., which is also the general partner of this partnership.
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 determined by the parties at the time of the
sale. Historically, the discount rate has been based on the prevailing
prime rate at the time of sale plus 25 basis points. 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
4<PAGE>
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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.
Investment Agreement
Tenneco Inc. and the Company have entered into an Investment Agreement
dated as of June 15, 1988, pursuant to which Tenneco Inc. agreed to own,
directly or indirectly, all of the capital stock of the Company having the
right to vote for directors so long as the Company has any debt
outstanding that is held by persons other than Tenneco Inc. or any of its
affiliates ("Unaffiliated Debt"). Tenneco Inc. has also agreed to
maintain an investment in the Company (either in the form of subordinated
debt or stockholder's equity) at least equal to 20% of the sum of the
Company's debt and stockholder's equity and to pay with respect to each
month a fee to the Company 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 interest, other fixed charges and income taxes
are less than 25% of interest and other fixed charges. Under the
Investment Agreement, the Company will not sell or otherwise dispose of
its assets (other than in the ordinary course of business) or incur any
Unaffiliated Debt unless after such disposition or incurrence the Company
will own assets in an amount at least equal to 125% of the Unaffiliated
Debt (other than debt that is expressly subordinated). Furthermore, the
Company will not declare or pay any dividends or make any distribution
with respect to its capital stock if the Company would thereafter be
unable to pay the principle of, or interest or premium, if any, on the
Unaffiliated Debt.
A service charge of $234,000 was paid by Tenneco Inc. for the month of
January 1994. No service charge was required for any months prior to or
following January 1994.
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.
5<PAGE>
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Relationship with Tennessee
Tennessee is a party to a Performance Agreement and an Investment
Agreement that are substantially identical to the Performance Agreement
and Investment Agreement of Tenneco Inc. These agreements were originally
entered into in 1984 at the time the Company commenced operations (at
which time Tennessee was the parent of the Company). The original
Performance Agreement of Tennessee has been modified so that Tennessee's
obligations only relate to the Tenneco Subsidiaries that are also
subsidiaries of Tennessee, and the original Investment Agreement was
amended so that it enured to the benefit of holders of Unaffiliated Debt
outstanding on January 14, 1987. The Company, Tenneco Inc. and Tennessee
are also parties to an Investment 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 Investment
Agreements to which Tennessee is a party relate to technical differences
in the definitions of debt and fixed charges.
ITEM 2. Properties.
The Company believes that the multifuel boiler leased to Tenneco
Packaging Inc. 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.
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. During 1995, the Company declared and paid $300 million in
dividends. The Company paid no dividends in 1994 and 1993. The Company
may pay additional dividends to Tenneco Inc. from time to time depending
upon the profitability, liquidity and capital and contractual 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 1995 and 1994.
6<PAGE>
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Revenues
Tenneco Credit Corporation and its consolidated subsidiaries (the
"Company") reported total revenues of $134.1 million for 1995, down $25.8
million or 16% from 1994. The decrease is primarily attributable to the
continuing liquidation of retail receivables related to Case.
Presented below are the percentages of revenues from the various sources
for the years ended December 31:
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<CAPTION>
Revenues
1995 1994
<S> <C> <C>
Case............................... 44% 65%
Energy............................. 14 10
Packaging.......................... 12 7
Automotive......................... 11 7
Other.............................. 4 4
----- -----
Total from Accounts Receivable... 85 93
Rental............................. 4 4
Notes Receivable................... 11 3
----- -----
100% 100%
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</TABLE>
The average yield on Case Corporation ("Case") retail receivables for
1995 was 10.4% compared to 10.1% for 1994. The discount rate charged on
short-term trade receivables purchased from subsidiaries of Tenneco Inc.
ranged from 8.75% to 9.25% during 1995 compared to ranges of 5.75% to
8.75% in 1994.
The Company's only leasing activity is the multifuel boiler facility
leased to Tenneco Packaging Inc., an affiliate of the Company. Leasing
activities provided $5.7 million of revenues in each of the years 1995 and
1994.
Interest income from notes receivable increased $9.4 million during 1995
compared to 1994 primarily due to the purchase of the Case Corporation
subordinated note receivable from Tenneco Inc. in July 1995. The note was
subsequently sold to Tenneco Equipment Corporation, a subsidiary of
Tenneco Inc., in December 1995. See Note 4 in Notes to Financial
Statements for additional information.
Under an Investment Agreement dated June 15, 1988, between the Company
and Tenneco Inc. (the "Investment Agreement"), 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, as defined therein. A service charge of
$234,000 was paid by Tenneco Inc. for the month of January 1994. No
service charge was required for any months prior or subsequent to January
1994.
Subsequent to the Case reorganization in June 1994, the Case retail
financing activities have been conducted by Case's 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 receivables balance is collected. See Note 2 in Notes to Financial
Statements for additional information.
Expenses
Interest expense of $86.3 million for 1995 represented a decrease of 26%
or $31.0 million from 1994. This decrease resulted from lower levels of
long-term and short-term debt. The average interest rate was 10.1% and
9.8% for 1995 and 1994, respectively. Operating and administrative
expenses increased $1.1 million primarily due to fees paid to Case to
service Case retail receivables retained by the Company (See Note 2 in
Notes to Financial Statements for additional information).
7<PAGE>
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Other Income (Loss)
Other income (loss) for 1995 principally consists of a $1.3 million
loss, recorded in December 1995, to reserve for a doubtful note receivable
from a third party. During 1994, the Company received net proceeds of
$555 million 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 $530
million and accordingly, the Company recognized a pre-tax gain of $25
million in February 1994 due to the sale. In addition, the Company
recognized a gain on the sale of dealer owned rental yard receivables to
Case in 1994.
Net Income
Net income for 1995 was $21.5 million, a decrease of $19.9 million or
48% compared with 1994. The decrease is primarily attributable to lower
revenues from Case retail receivables and lower income from sale of
receivables offset by decreased interest expense and income taxes.
Assets
The Company had total assets of $1,000.3 million at December 31, 1995,
compared to $1,516.1 million at December 31, 1994. The 34% decrease from
year-end 1994 was due primarily to the continuing liquidation of the Case
retail receivables (See Notes 2 and 4 in Notes to Financial Statements for
additional information).
As of December 31, 1995, the Company held net trade notes and accounts
receivable purchased from affiliates totaling $702.8 million, which
accounted for 70% of the Company's total assets. This compares to
$1,379.5 million, or 91%, of assets as of December 31, 1994. Details of
these receivables are shown as follows:
<TABLE>
<CAPTION>
Net Trade Notes and
Accounts Receivable
--------------------------
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
Case................................. 62% 53%
Energy............................... 17 19
Packaging............................ 10 15
Automotive........................... 11 13
--- ---
100% 100%
=== ===
</TABLE>
Case net trade notes and accounts receivable are $300 million lower at
December 31, 1995, compared to December 31, 1994, primarily due to the
continuing liquidation of the Case retail receivables.
Net notes receivable from non-affiliated companies was zero at December
31, 1995, down from $67.2 million at December 31, 1994. The decrease from
1994 was primarily due to the pre-payment of a long-term note from a third
party. In addition, the Company established a loss provision for its
remaining $1.3 million in notes receivable from non-affiliated companies.
Notes receivable from affiliated companies was $25 million at December 31,
1995, which was attributable to borrowings under a credit facility provided
by the Company to an affiliate. See Note 4 in the Financial Statements
for additional information.
At December 31, 1995, the Company had a $49 million net investment in a
multifuel boiler leased to Tenneco Packaging Inc., an indirect, wholly-
owned subsidiary of Tenneco Inc. The leased facility represented 5% of
the Company's total assets at December 31, 1995.
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.
8<PAGE>
<PAGE>
Subsequent to December 31, 1995, substantially all of the proceeds from
the maturity of the Company's temporary cash investments at year-end 1995
was loaned to its parent, Tenneco Inc.
The Company's capital requirements have been financed through the
issuance of commercial paper, short-term bank loans and advances and
equity capital from Tenneco Inc. plus earnings retained in the business.
The Company's total capitalization was $956.8 million at December 31,
1995, and $1,469.3 million at December 31, 1994. The components of
capitalization at such dates are set forth in the following table:
<TABLE>
<CAPTION>
Capitalization
--------------------------
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
Medium-Term Senior Notes............. 4% 5%
Long-Term Senior Debt................ 60 53
Subordinated Debt.................... 10 6
Stockholder's Equity................. 26 36
--- ---
100% 100%
=== ===
</TABLE>
Outlook
As previously discussed, the Case retail receivables have a weighted
average remaining life to maturity of approximately 28 months and will be
substantially liquidated by 1999. However, a significant portion of the
Company's Senior Debt matures in the year 2001. Following is an analysis
of the maturities of the Company's trade receivable portfolio (including
rentals receivable under the operating leases) compared to the maturities
of its total debt portfolio:
<TABLE>
<CAPTION>
Receivable Debt
Maturities Maturities Difference
---------- ---------- ----------
<S> <C> <C> <C>
1996......... $ 487,916 $ 157,626 $ 330,290
1997......... 173,042 175,510 (2,468)
1998......... 104,130 72,730 31,400
1999......... 32,687 3,588 29,099
2000......... 6,064 4,838 1,226
Thereafter... 57,284 292,964 (235,680)
---------- ---------- ----------
$ 861,123 $ 707,256 $ 153,867
========== ========== ==========
</TABLE>
Pursuant to the Investment Agreement, Tenneco Inc. is required to cause
the Company's consolidated assets to be at least equal to 125% of all its
consolidated Senior Debt outstanding. Further, Tenneco Inc. is required
to pay the Company a monthly service charge equal to the amount by which
pre-interest, pre-tax earnings are less than 125% of fixed charges, as
defined. Because a significant amount of the long-term debt owed by the
Company will mature after the maturity of a significant amount of the
long-term trade receivables held by the Company, the Company believes that
it will be necessary for Tenneco Inc. to provide financial support, under the
provisions of this contractual agreement, in future periods. The Company
also is contractually restricted from declaring or paying dividends or
making any other capital distributions if such action would render the
Company unable to meet its debt service obligations on unaffiliated debt.
As a result, the Company believes that the continuing liquidation of the
Case retail receivable portfolio will not impact the Company's ability to
meet the maturities of its debt portfolio which are due after these
receivables are substantially liquidated.
On an ongoing basis, the Company expects that the scope of its
operations will be substantially reduced as the Case retail receivables
are liquidated. As a result, earnings, assets and total capitalization
are expected to continue to decrease throughout the foreseeable future.
9<PAGE>
<PAGE>
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.......................... 11
Balance sheets--December 31, 1995 and 1994........................ 12
Statements of income for each of the three years in the
period ended December 31, 1995.................................. 13
Statements of cash flows for each of the three years in the
period ended December 31, 1995.................................. 14
Statements of changes in stockholder's equity for each of the
three years in the period ended December 31, 1995............... 15
Notes to financial statements..................................... 16
</TABLE>
10<PAGE>
<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, 1995 and
1994, 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, 1995. 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, 1995 and
1994, 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, 1995, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Houston, Texas
February 8, 1996
11<PAGE>
<PAGE>
TENNECO CREDIT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEETS
(Thousands Except Share Amounts)
<TABLE>
<CAPTION>
December 31,
----------------------
1995 1994
ASSETS ---------- ----------
------
<S> <C> <C>
Notes and accounts receivable purchased from affiliates:
Customers............................................. $ 775,199 $1,522,862
Affiliated companies.................................. -- 3,741
---------- ----------
775,199 1,526,603
Less--Unearned finance charges........................... 64,405 137,500
Allowance for doubtful receivables................ 7,991 9,554
---------- ----------
702,803 1,379,549
---------- ----------
Notes receivable:
Non-affiliated companies, including $0 and
$4,917, due within one year at the respective dates.. 1,267 67,156
Affiliated companies.................................. 25,000 --
---------- ----------
26,267 67,156
Less--Allowance for doubtful note receivable.......... 1,267 --
---------- ----------
25,000 67,156
---------- ----------
Equipment under operating leases (at cost), less
accumulated depreciation of $20,234 and $18,246 at the
respective dates........................................ 49,372 51,360
---------- ----------
Other assets:
Cash and cash equivalents............................. 211,610 332
Accounts receivable from affiliates................... 2,716 1,193
Interest receivable and other......................... 8,840 16,466
---------- ----------
223,166 17,991
---------- ----------
$1,000,341 $1,516,056
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Senior notes.......................................... $ 615,156 $ 852,008
Subordinated notes.................................... 92,100 92,100
Accounts payable to affiliates........................ 11,960 7,834
Accrued interest...................................... 16,712 24,613
Deferred income taxes................................. 14,843 14,304
---------- ----------
750,771 990,859
---------- ----------
Stockholder's equity:
Common stock, par value $5 per share, authorized,
issued and outstanding 200 shares.................. 1 1
Capital surplus..................................... 188,128 185,228
Retained earnings................................... 61,441 339,968
---------- ----------
249,570 525,197
---------- ----------
$1,000,341 $1,516,056
========== ==========
</TABLE>
(The accompanying notes to financial statements are an
integral part of these balance sheets.)
12<PAGE>
<PAGE>
TENNECO CREDIT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
(Thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
REVENUES:
Earned finance charges and interest.......... $128,325 $154,161 $226,681
Rental income from affiliated company........ 5,728 5,728 5,728
-------- -------- --------
Total revenues............................. 134,053 159,889 232,409
-------- -------- --------
EXPENSES:
Interest--
Commercial paper........................... 926 3,391 4,643
Senior notes............................... 71,854 100,371 138,384
Subordinated notes......................... 9,164 9,098 9,071
Commitment fees and other.................. 1,224 3,194 5,625
Affiliated companies....................... 3,167 1,303 2,600
-------- -------- --------
86,335 117,357 160,323
Depreciation and amortization................ 1,988 1,989 1,988
Operating and administrative................. 12,510 11,413 3,361
-------- -------- --------
Total expenses............................... 100,833 130,759 165,672
-------- -------- --------
OTHER INCOME (LOSS)............................ (1,228) 35,235 48,757
-------- -------- --------
INCOME BEFORE INCOME TAXES..................... 31,992 64,365 115,494
INCOME TAXES................................... 10,519 22,970 45,902
-------- -------- --------
NET INCOME..................................... $ 21,473 $ 41,395 $ 69,592
======== ======== ========
</TABLE>
(The accompanying notes to financial statements are an
integral part of these statements of income.)
13<PAGE>
<PAGE>
TENNECO CREDIT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(Thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.................................. $ 21,473 $ 41,395 $ 69,592
Adjustments to reconcile to net cash
provided from operating activities:
Depreciation and amortization............. 1,988 1,989 1,988
Deferred income taxes..................... 539 4,068 (6,624)
(Increase) decrease in notes and accounts
receivable purchased from affiliates,
net..................................... 676,746 506,513 345,282
Change in accounts payable to and
receivable from affiliates.............. (1,981) 3,922 (22,194)
Increase (decrease) in accrued interest... (7,901) (19,012) (7,932)
Increase (decrease) in dealers' reserve... -- (18,148) 8,475
(Increase) decrease in notes receivable
from affiliated companies............... (25,000) 93,250 (34,772)
Change in other assets and other, net..... 15,200 91,827 (57,978)
-------- -------- --------
NET CASH PROVIDED FROM OPERATING ACTIVITIES... 681,064 705,804 295,837
-------- -------- --------
INVESTING ACTIVITIES:
Collections on long-term notes receivable... 65,889 38,930 48,368
Purchase of long-term notes receivable...... -- (146) --
-------- -------- --------
NET CASH PROVIDED FROM INVESTING ACTIVITIES... 65,889 38,784 48,368
-------- -------- --------
FINANCING ACTIVITIES:
Capital contribution from (distribution to)
affiliate, net............................. 2,900 -- --
Increase (decrease) in commercial paper..... -- (240,938) 111,174
Retirement of senior and subordinated notes. (238,575) (503,322)(455,388)
Dividends paid.............................. (300,000) -- --
--------- -------- --------
NET CASH USED IN FINANCING ACTIVITIES......... (535,675) (744,260)(344,214)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS.................................. 211,278 328 (9)
BEGINNING CASH AND CASH EQUIVALENTS BALANCE... 332 4 13
-------- -------- --------
ENDING CASH AND CASH EQUIVALENTS BALANCE...... $211,610 $ 332 $ 4
======== ======== ========
CASH PAID DURING THE YEAR FOR:
Interest.................................... $ 91,069 $136,369 $168,255
Income taxes................................ $ 8,838 $ 20,525 $ 52,526
</TABLE>
Note: Cash and cash equivalents include highly liquid investments with a
maturity of three months or less at date of purchase.
(The accompanying notes to financial statements are an
integral part of these statements of cash flows.)
14<PAGE>
<PAGE>
TENNECO CREDIT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(Thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
COMMON STOCK:
Balance beginning and end of year............ $ 1 $ 1 $ 1
-------- -------- --------
CAPITAL SURPLUS:
Balance beginning of year.................... 185,228 185,228 185,228
Capital contribution from (distribution
to) affiliate, net........................ 2,900 -- --
-------- -------- --------
Balance end of year.......................... 188,128 185,228 185,228
-------- -------- --------
RETAINED EARNINGS:
Balance beginning of year.................... 339,968 298,573 228,981
Net income................................. 21,473 41,395 69,592
Cash dividends............................. (300,000) -- --
-------- -------- --------
Balance end of year.......................... 61,441 339,968 298,573
-------- -------- --------
Total...................................... $249,570 $525,197 $483,802
======== ======== ========
</TABLE>
(The accompanying notes to financial statements are
an integral part of these statements of changes
in stockholder's equity.)
15<PAGE>
<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 Tenneco
Packaging Inc., 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 purchased trade
and other receivables in 1995, 1994 and 1993 were approximately $128
million, $154 million and $227 million, respectively. Finance charges on
the trade receivables purchased from affiliates are charged by TCC to
these affiliates at mutually agreed amounts. Historically, the discount
rate has been based upon the prevailing prime rate plus 25 basis points.
Rates charged on short-term trade receivables purchased from subsidiaries
of Tenneco Inc. ranged from 8.75% to 9.25% during 1995 as compared to
ranges of 5.75% to 8.75% and 5.75% to 6.50% for 1994 and 1993,
respectively. The average yield on Case Corporation ("Case") retail
receivables for 1995 was 10.4%, up from 10.1% in 1994 and down from 11.4%
in 1993.
Revenue from the operating lease covering the boiler facility 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. Gross receivables
purchased from affiliates at December 31, 1995 and 1994, totaled $.8
billion and $1.5 billion, respectively.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions in determining the reported amounts of the Company's assets,
liabilities, revenues and expenses. The Company's financial statements
include estimates regarding the collectibility of its accounts and notes
receivable and the useful life of its equipment under operating lease.
These estimates could change in future periods depending upon new facts
or circumstances.
16<PAGE>
<PAGE>
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Reclassification
Certain reclassifications have been made to prior year amounts to
conform with the current year's presentation.
(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 to the
extent of the reserve; any losses in excess of the dealer's reserve are
recorded as a loss by the Company. During the years 1991 through 1995,
there were no credit losses recorded by the Company in excess of the
dealer's reserve.
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 (the
"Reorganization") and Tenneco Inc. and certain of its subsidiaries
acquired all of the outstanding common stock of Case. Subsequent to the
Reorganization, Tenneco Inc. and certain of its subsidiaries have sold an
aggregate of approximately 79% of the outstanding shares of Case in an
initial public offering and two secondary 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 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, 1995, approximately $509 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 (See Note 4).
As a result of the Reorganization and subsequent initial 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.
17<PAGE>
<PAGE>
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(3) INCOME TAXES
TCC and Tenneco Inc., together with certain of their respective
subsidiaries which are owned 80% or more, have entered into an agreement
to file a consolidated U.S. federal income tax return. Such agreement
provides, among other things, that (i) 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 (ii) 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.
The Company utilizes the liability method of accounting for income taxes
whereby it recognizes deferred tax assets and liabilities for the future
tax consequences of temporary differences between the tax basis of assets
and liabilities and their reported amounts in the financial statements.
The Company's pre-tax income is principally domestic and subject to
taxation under U.S. federal and applicable state jurisdictions.
The components of total income tax expense are as follows:
<TABLE>
<CAPTION>
(Thousands)
Years Ended December 31,
----------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Current--
Federal................................ $ 9,218 $14,618 $43,696
State.................................. 762 4,284 8,830
------- ------- -------
9,980 18,902 52,526
------- ------- -------
Deferred--
Federal................................ (669) 6,680 (7,616)
State.................................. 1,208 (2,612) 992
------- ------- -------
539 4,068 (6,624)
------- ------- -------
Total.............................. $10,519 $22,970 $45,902
======= ======= =======
</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, $1 million and
$6 million in 1995, 1994 and 1993, respectively, net of federal income tax
benefit. In addition, 1995 income tax expense was reduced by a revision
to estimated federal income taxes provided in 1994.
The components of net deferred tax liability at December 31, 1995 and
1994, were as follows:
<TABLE>
<CAPTION>
(Thousands)
1995 1994
------- -------
<S> <C> <C>
Deferred tax assets--
Bad debt reserve......................... $ 3,286 $ 3,344
State taxes.............................. -- 369
Deferred tax liabilities--
Tax over book depreciation............... 16,886 17,547
State taxes.............................. 839 --
Other.................................... 404 470
------- -------
Net deferred tax liability................. $14,843 $14,304
======= =======
</TABLE>
18<PAGE>
<PAGE>
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(4) NOTES AND ACCOUNTS RECEIVABLE
Contractual maturities of notes and accounts receivable purchased from
affiliates as of December 31, 1995, are as follows:
<TABLE>
<CAPTION>
(Thousands)
TOTAL CASE ENERGY PACKAGING AUTOMOTIVE
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year Ending
December 31:
1996............ $ 482,188 $ 216,469 $ 121,954 $ 69,488 $ 74,277
1997............ 167,314 167,314 -- -- --
1998............ 98,402 98,402 -- -- --
1999............ 26,959 26,959 -- -- --
2000............ 336 336 -- -- --
---------- ---------- ---------- ---------- ----------
$ 775,199 $ 509,480 $ 121,954 $ 69,488 $ 74,277
========== ========== ========== ========== ==========
</TABLE>
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 parts and energy subsidiaries. The gains on sale of
receivables were recorded in "Other income (loss)" in the Statements of
Income.
In July 1995, the Company purchased the Case Corporation 10 1/2%
Subordinated Note (the "Subordinated Note") at fair market value from
Tenneco Inc., its parent, for $310.8 million in cash. The Company
recorded this receivable at Tenneco Inc.'s historical cost of $279.7
million. The $31.1 million premium paid on the note is included in the
Statement of Changes in Stockholder's Equity caption "Capital contribution
from (distribution to) affiliate, net." In December 1995, the Company
sold the Subordinated Note to a subsidiary of Tenneco Inc. for $326
million in cash. At the date of sale, the Company's carrying value for
the Subordinated Note was $292 million, and the difference between the
cash proceeds and carrying value is also included in the Statement of
Changes in Stockholder's Equity caption "Capital contribution from
(distribution to) affiliate, net."
During 1995, gross notes receivable from non-affiliated companies
decreased $66 million, principally due to the pre-payment of a long-term
note by a third party.
Tenneco International Holding Corp. ("TIHC"), an indirect subsidiary of
Tenneco Inc., has arranged a $50 million committed line of credit with the
Company to provide short-term financing which provides for borrowings at
various market rates. At December 31, 1995, the Company had made loans of
$25 million to TIHC related to this line of credit.
19<PAGE>
<PAGE>
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(5) COMMERCIAL PAPER AND LINES OF CREDIT
TCC sells commercial paper on a short-term unsecured basis. Information
regarding commercial paper as of and for the years ended December 31, 1995
and 1994 follows:
<TABLE>
<CAPTION>
(Thousands)
1995 1994
------------ ------------
<S> <C> <C>
Outstanding borrowings at end of year............ $ -- $ --
Weighted average interest rate on outstanding
borrowings at end of year....................... -- --
Approximate maximum month-end outstanding
borrowings during the year...................... $156,833 $148,700
Approximate average month-end outstanding
borrowings during the year...................... $ 25,557 $ 41,892
Weighted average interest rate on approximate
average month-end outstanding borrowings
during the year................................. 6.17% 4.17%
</TABLE>
TCC also 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, 1995, TCC had no amounts outstanding under
these lines of credit.
(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,
1995 1994
----------- -----------
<S> <C> <C>
Senior Notes--
Tenneco Credit Corporation:
Medium-term notes due 1996 through 2002,
average interest rate 8.97%................. $ 37,600 $ 73,150
9% Notes due 1995 (net of $83 unamortized
discount in 1994)........................... -- 199,917
9.25% Notes due 1996 (net of $67 and $147
unamortized discount, respectively)......... 149,933 149,853
10.13% Notes due 1997 (net of $154 and $235
unamortized discount, respectively)......... 149,846 149,765
9.63% Notes due 2001 (net of $606 and $714
unamortized discount, respectively)......... 249,394 249,286
Counce Finance Corporation:
13% Notes due 1996 through 2000.............. 17,193 20,218
Zero coupon notes, due 2010 discounted to
yield 13.50%................................ 38,283 38,283
Less: unamortized discount................... (27,093) (28,464)
---------- ----------
Total Senior Notes......................... 615,156 852,008
Subordinated Notes--
Tenneco Credit Corporation:
Medium-term notes due 1998 through 2001,
average interest rate 9.90%................. 92,100 92,100
---------- ----------
$ 707,256 $ 944,108
========== ==========
</TABLE>
At December 31, 1995, approximately $49 million net book value of
equipment under lease was pledged as collateral to secure $28 million of
senior notes.
20<PAGE>
<PAGE>
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The aggregate maturities applicable to the notes outstanding at December
31, 1995, are $158 million, $176 million, $73 million, $4 million and $5
million for 1996, 1997, 1998, 1999 and 2000, respectively.
(7) EQUIPMENT UNDER OPERATING LEASE TO AFFILIATES
At December 31, 1995, Counce Limited Partnership had a long-term
operating lease with Tenneco Packaging Inc., covering equipment with a net
book value of $49 million. The lease requires Tenneco Packaging Inc. to
pay all operating, maintenance and insurance costs. The aggregate minimum
future annual rentals receivable under the operating lease at December 31,
1995, are as follows:
<TABLE>
<CAPTION>
(Thousands)
<S> <C>
1996............................................. $ 5,728
1997............................................. 5,728
1998............................................. 5,728
1999............................................. 5,728
2000............................................. 5,728
Thereafter....................................... 57,284
-------
$85,924
=======
</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
The estimated fair values of TCC's financial instruments at December 31,
1995 and 1994, were estimated as follows:
<TABLE>
<CAPTION>
(Thousands)
1995 1994
-------------------- --------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Cash and Cash Equivalents...... $ 211,610 $ 211,610 $ 332 $ 332
Receivables (Customer and
Notes)........................ 702,803 785,032 1,446,705 1,548,285
Senior and Subordinated Notes.. 707,256 794,077 944,108 980,779
</TABLE>
The following methods and assumptions were used to estimate the fair
value of financial instruments:
Cash and Cash Equivalents--The fair value of cash and other cash
investments was considered to be the same as or was not determined to be
materially different from the carrying amount.
Receivables--TCC believes that in the aggregate, the carrying amount of
its trade receivables, purchased from Tenneco Subsidiaries, was not
materially different from the fair value of those receivables. 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 62% in the farm and
construction business, 17% in energy businesses, 11% in automotive parts
businesses and 10% in packaging businesses.
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.
21<PAGE>
<PAGE>
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(9) 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 any months prior to or following January 1994.
Because a significant amount of the long-term debt owed by the Company
will mature after the maturity of a significant amount of the long-term
trade receivables held by the Company, the Company believes that it will
be necessary for Tenneco Inc. to provide financial support, under the
provisions of the Investment Agreement, in future periods. The Company
was in compliance with these covenants during the years ended and as of
December 31, 1995, 1994 and 1993.
(10) QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
(Thousands)
--------------------------------
Interest Net
Revenues Expense Income
-------- -------- --------
<S> <C> <C> <C>
1995
1st............................ $ 35,324 $ 22,534 $ 5,229
2nd............................ 34,875 22,547 5,234
3rd............................ 31,639 21,878 4,445
4th............................ 32,215 19,376 6,565
-------- -------- --------
$134,053 $ 86,335 $ 21,473
======== ======== ========
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
======== ======== ========
</TABLE>
____________
Note: See Notes 2 and 4 for items affecting comparability between the
quarters presented above.
(The above notes are an integral part of the
foregoing financial statements.)
22<PAGE>
<PAGE>
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
There has been no change in accountants during 1995 or 1994, 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
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, 1995
Schedule III -- Real estate and accumulated depreciation
Schedule IV -- Mortgage loans on real estate
Schedule V -- Supplemental information concerning property--casualty
insurance operations
23<PAGE>
<PAGE>
REPORTS ON FORM 8-K
During the fourth quarter of the fiscal year ended December 31, 1995,
the Company did not file with the Securities and Exchange Commission any
Current Reports on Form 8-K.
EXHIBITS
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>
<S> <C>
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).
</TABLE>
24<PAGE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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).
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 10(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 10(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 10(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 10(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 10(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 10(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>
25<PAGE>
<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
By Robert T. Blakely
Robert T. Blakely
President
Date: March 13, 1996
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 Principal Executive Officer March 13, 1996
Robert T. Blakely and Director
Mark A. McCollum Vice President and March 13, 1996
Mark A. McCollum Controller
Karen R. Osar
Karen R. Osar Director March 13, 1996
</TABLE>
26<PAGE>
<PAGE>
EXHIBIT INDEX
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
------- ------------------------
<S> <C>
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).
/TABLE
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<S> <C>
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).
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 10(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 10(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 10(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 10(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 10(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 10(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>
<PAGE>
Exhibit 12
TENNECO CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(THOUSANDS)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net income................................. $ 21,473 $ 41,395 $ 69,592
Add:
Interest expense....................... 86,335 117,357 160,323
Income taxes........................... 10,519 22,970 45,902
-------- -------- --------
Earnings as defined................. $118,327 $181,722 $275,817
======== ======== ========
Fixed charges--interest expense............ $ 86,335 $117,357 $160,323
======== ======== ========
Ratio of earnings to fixed charges......... 1.37 1.55 1.72
======== ======== ========
</TABLE>
<TABLE> <S> <C>
<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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 211,610
<SECURITIES> 0
<RECEIVABLES> 710,794
<ALLOWANCES> (7,991)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 69,606
<DEPRECIATION> (20,234)
<TOTAL-ASSETS> 1,000,341
<CURRENT-LIABILITIES> 0
<BONDS> 707,256
0
0
<COMMON> 1
<OTHER-SE> 249,569
<TOTAL-LIABILITY-AND-EQUITY> 1,000,341
<SALES> 0
<TOTAL-REVENUES> 134,053
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 14,498
<LOSS-PROVISION> 1,396
<INTEREST-EXPENSE> 86,335
<INCOME-PRETAX> 31,992
<INCOME-TAX> 10,519
<INCOME-CONTINUING> 21,473
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,473
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
