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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-9864
TENNECO INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 76-0233548
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
77002
TENNECO BUILDING, HOUSTON, TEXAS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
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 5/8% Notes due 1994; 10% Notes due
1998;
8% Notes due 1999; 10 3/8% Notes due
2000;
9 7/8% Notes due 2001; 7 7/8% Notes due
2002;
10% Debentures due 2008; 9% Debentures
due 2012 ............................. New York Stock Exchange
Preferred Stock, without par value:
$7.40 cumulative series................ New York Stock Exchange
$2.80 Depositary Shares................. New York Stock Exchange
Common Stock, par value $5 per share.... New York, Midwest, Pacific, Toronto,
London, Paris, Frankfurt, Dusseldorf,
Basel, Geneva and Zurich Stock
Exchanges
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
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 [_]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO
THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. [X]
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.
<TABLE>
<CAPTION>
MARKET VALUE HELD
CLASS OF VOTING STOCK AND NUMBER OF SHARES BY NON-
HELD BY NON-AFFILIATES AT FEBRUARY 23, 1994 AFFILIATES*
------------------------------------------- -----------------
<S> <C>
$7.40 Cumulative Preferred Stock, 978,785 shares $ 98,306,718
Common Stock, 169,111,959 shares 9,808,493,622
</TABLE>
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* Based upon the closing sale prices on the Composite Tape for the $7.40
Cumulative Preferred Stock and the Common Stock on February 23, 1994.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES
OF COMMON STOCK, AS OF THE CLOSE OF THE LATEST PRACTICABLE DATE. Common Stock,
par value $5 per share, 169,829,545 shares outstanding as of February 23, 1994.
DOCUMENT INCORPORATED BY REFERENCE:
<TABLE>
<CAPTION>
PART OF THE FORM 10-K
DOCUMENT INTO WHICH INCORPORATED
-------- -----------------------
<S> <C>
Tenneco Inc.'s Definitive Proxy Statement for the Part III
Annual
Meeting of Stockholders to be Held May 10, 1994
</TABLE>
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I
ITEM 1. BUSINESS...................................................... 1
Tenneco Inc............................................................ 1
Contributions of Major Businesses...................................... 1
Natural Gas Pipelines and Marketing.................................... 2
Farm and Construction Equipment........................................ 7
Automotive Parts....................................................... 8
Shipbuilding........................................................... 10
Packaging.............................................................. 11
Chemicals.............................................................. 12
Other.................................................................. 12
Business Strategy...................................................... 13
Environmental Matters.................................................. 13
ITEM 2. PROPERTIES.................................................... 13
ITEM 3. LEGAL PROCEEDINGS............................................. 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........... 16
ITEM 4.1. EXECUTIVE OFFICERS OF THE REGISTRANT.......................... 17
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCK-
HOLDER MATTERS................................................ 19
ITEM 6. SELECTED FINANCIAL DATA....................................... 20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS..................................... 22
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................... 35
Index to Financial Statements of Tenneco Inc. and Consolidated Subsidi-
aries................................................................. 35
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE...................................... 65
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT............ 65
ITEM 11. EXECUTIVE COMPENSATION........................................ 65
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGE-
MENT.......................................................... 65
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................ 65
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K........................................................... 65
Financial Statements Included in Item 8................................ 65
Index to Financial Statements and Schedules Included in Item 14........ 65
Schedules Omitted as Not Required or Inapplicable...................... 65
Reports on Form 8-K.................................................... 76
Exhibits............................................................... 76
</TABLE>
i
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PART I
TENNECO INC.
ITEM 1. BUSINESS.
Tenneco Inc., a Delaware corporation, is a diversified industrial company
conducting all of its operations through its subsidiaries. As used herein,
"Tenneco" refers to Tenneco Inc. and its consolidated subsidiaries.
The major businesses of Tenneco are the transportation and sale of natural
gas; manufacture and sale of farm and construction equipment; manufacture and
sale of automotive exhaust system parts, ride control products and brake
products; construction and repair of ships; manufacture and sale of packaging
materials, cartons, containers and specialty packaging products; and
manufacture and sale of phosphorus chemicals and surfactant products. See
"Business Strategy".
At December 31, 1993, Tenneco had approximately 75,000 employees.
CONTRIBUTIONS OF MAJOR BUSINESSES
Information concerning Tenneco's principal industry segments and geographic
areas is set forth in Note 15 to the Financial Statements of Tenneco Inc. and
Consolidated Subsidiaries. The following tables summarize (i) net sales and
operating revenues from continuing operations, (ii) income (loss) from
continuing operations before interest expense and income taxes and (iii)
capital expenditures of the major business groups of Tenneco for the periods
indicated.
NET SALES AND OPERATING REVENUES FROM CONTINUING OPERATIONS
<TABLE>
<CAPTION>
1993 1992 1991
------------ ------------ ------------
(DOLLAR AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Natural gas pipelines................. $ 2,862 22% $ 2,183 17% $ 2,183 16%
Farm and construction equipment....... 3,748 28 3,829 29 4,449 33
Automotive parts...................... 1,839 14 1,808 14 1,701 13
Shipbuilding.......................... 1,861 14 2,265 17 2,216 17
Packaging............................. 2,042 15 2,078 16 1,934 14
Chemicals............................. 914 7 951 7 916 7
Other................................. 6 -- 39 -- 34 --
Intergroup sales...................... (17) -- (14) -- (14) --
------- --- ------- --- ------- ---
Total............................... $13,255 100% $13,139 100% $13,419 100%
======= === ======= === ======= ===
</TABLE>
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INTEREST EXPENSE AND INCOME
TAXES
<TABLE>
<CAPTION>
1993 1992 1991
------ ------- -------
(MILLIONS)
<S> <C> <C> <C>
Natural gas pipelines................................ $ 411 $ 360 $ 561
Farm and construction equipment...................... 82 (1,180)* (1,079)*
Automotive parts..................................... 215 230 175
Shipbuilding......................................... 225 249 225
Packaging............................................ 139 221 139
Chemicals............................................ 78 72 (70)*
Other................................................ 19 (32) (98)*
------ ------- -------
Total.............................................. $1,169 $ (80) $ (147)
====== ======= =======
</TABLE>
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* Includes restructuring charges of $920 million and $461 million related to
Farm and construction equipment in 1992 and 1991, respectively, and in 1991
$79 million related to Chemicals and $12 million related to Other. For
additional information concerning these charges, see Note 2 to the Financial
Statements of Tenneco Inc. and Consolidated Subsidiaries and Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
1
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CAPITAL EXPENDITURES FOR CONTINUING OPERATIONS
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
(DOLLAR AMOUNTS IN
MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Natural gas pipelines............................. $170 29% $251 44% $278 37%
Farm and construction equipment................... 101 17 60 11 104 14
Automotive parts.................................. 96 17 66 12 84 11
Shipbuilding...................................... 36 6 35 6 64 9
Packaging......................................... 124 21 97 17 127 17
Chemicals......................................... 59 10 58 10 69 9
Other............................................. 1 -- 2 -- 20 3
---- --- ---- --- ---- ---
Total........................................... $587 100% $569 100% $746 100%
==== === ==== === ==== ===
</TABLE>
The interest expense and income taxes from continuing operations which are
not allocated to the major businesses were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
(MILLIONS)
<S> <C> <C> <C>
Interest Expense (net of interest capitalized)............... $460 $527 $559
Income Tax Expense (Benefit)................................. 258 76 (14)
</TABLE>
NATURAL GAS PIPELINES AND MARKETING
Tenneco is engaged in the interstate and intrastate transportation and
marketing of natural gas. Its natural gas operations are conducted by Tenneco
Gas Inc. and other subsidiaries of Tenneco Inc. (collectively, "Tenneco Gas").
Historically, interstate pipeline companies served primarily as merchants of
natural gas, purchasing gas under long-term contracts with numerous producers
and reselling gas to local distribution companies under long-term sales
agreements. Interstate pipelines were not required to transport gas for
customers who did not purchase the gas from the pipeline company.
Commencing in 1984, the Federal Energy Regulatory Commission (the "FERC")
issued a series of orders that have resulted in a major restructuring of the
natural gas transmission industry and its business practices. This
restructuring, coupled with a nationwide excess of deliverable natural gas,
resulted in increased competition for markets and decreased prices for natural
gas, and dramatically increased the ratio that pipelines' transportation
volumes bear to their total throughput. With full implementation of the FERC's
Order No. 636 (discussed below under the caption "Federal Regulation"), most
interstate pipeline companies now serve primarily as gas transporters rather
than gas merchants.
During this period, pipeline customers have turned more and more to marketers
of natural gas to secure natural gas supplies for them, make transportation
arrangements and provide other services. Generally, these gas marketers are not
regulated by the FERC and may be affiliates of regulated interstate pipeline
companies, subject to certain information-sharing restrictions to prevent
unfair competitive advantages. To respond to the changing natural gas industry,
Tenneco Gas, through companies that are not subject to regulation by the FERC,
has been providing natural gas marketing services since 1984. In addition,
Tenneco Gas has started building new business units that are not generally
subject to regulation by the FERC and that Tenneco Gas believes have the
potential to generate higher returns than its regulated businesses. The
principal activities of these business units include development of and
participation in international natural gas pipeline and gas-fired power
generation projects and of domestic gas-fired power generation projects;
establishment of natural gas production financing programs for producers; and
the sale of administrative services.
2
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INTERSTATE PIPELINE OPERATIONS
Tenneco Gas's interstate pipeline operations include the pipeline systems of
Tennessee Gas Pipeline Company ("Tennessee"), Midwestern Gas Transmission
Company ("Midwestern") and East Tennessee Natural Gas Company ("East
Tennessee"), which are engaged in the transportation, storage and, to a limited
extent, sale of natural gas primarily to or for other gas transmission or
distribution companies for resale.
Tennessee's multiple-line system begins in gas-producing regions 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. Midwestern's pipeline system extends from
Portland, Tennessee, to Chicago, and principally serves the Chicago
metropolitan area. East Tennessee's pipeline system serves the states of
Tennessee, Virginia and Georgia.
At December 31, 1993, Tenneco's interstate gas transmission systems included
approximately 16,300 miles of pipeline, gathering lines and sales laterals,
together with related facilities that include 91 compressor stations with an
aggregate of approximately 1.5 million horsepower. These systems also include
underground and above-ground gas storage facilities to permit increased
deliveries of gas during peak demand periods. The total design delivery
capacity of Tenneco's interstate systems at December 31, 1993, was
approximately 4,299 million cubic feet ("MMCF") of gas per day, and
approximately 5,605 MMCF on peak demand days, which includes gas withdrawal
from storage.
Joint Ventures
Tenneco also has interests in several joint ventures formed to own and
operate interstate pipeline systems. These interests include a 50% interest in
Kern River Gas Transmission Company ("Kern River") and a 13.2% interest in
Iroquois Gas Transmission Company ("Iroquois").
Kern River, which owns a 904-mile pipeline system extending from Wyoming to
California with a design capacity of 700 MMCF of gas per day, completed its
second year of operations in 1993. Also in 1993, Kern River implemented Order
No. 636 with no adverse effect to the pipeline's normal business flow.
The 370-mile Iroquois pipeline began initial operation in late 1991 and
became fully operational in January 1992. The pipeline extends from the
Canadian border at Waddington, New York, to Long Island, New York, and, with
additional compression added in 1993, is designed to deliver (directly or
through interconnecting pipelines such as Tennessee) 641 MMCF of gas per day to
local distribution companies and electric generation facilities in six states.
Gas Sales and Transportation Volumes
The following table sets forth the volumes of gas, stated in MMCF, sold and
transported by Tenneco's interstate pipeline systems for the periods shown.
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Sales*......................................... 207,505 233,006 185,185
Transportation*................................ 2,067,541 1,968,331 1,991,735
--------- --------- ---------
Total........................................ 2,275,046 2,201,337 2,176,920
========= ========= =========
</TABLE>
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* These sales and transportation volumes include all natural gas sold or
transported by Tenneco's interstate pipeline companies. The table includes
Tenneco's proportionate share of sales and transportation volumes of the
joint ventures in which it has interests; of the total volumes shown,
165,728 MMCF was attributable to these joint venture interests in 1993,
125,134 MMCF in 1992, and 118,839 MMCF in 1991. Intercompany deliveries of
natural gas have not been eliminated from the table.
3
<PAGE>
Federal Regulation
Tenneco's interstate natural gas pipeline companies are "natural gas
companies" as defined in the Natural Gas Act of 1938, as amended (the "Natural
Gas Act"). As such, these companies are subject to the jurisdiction of the
Department of Energy, including the FERC. Tenneco's interstate pipeline
operations are operated pursuant to certificates of public convenience and
necessity issued under the Natural Gas Act and pursuant to the Natural Gas
Policy Act of 1978. The FERC regulates the interstate transportation and
certain sales of natural gas, including, among other things, rates and charges
allowed natural gas companies, extensions and abandonments of facilities and
service, rates of depreciation and amortization and the accounting system
utilized by the companies.
Prior to the FERC's industry restructuring initiatives in the 1980's,
Tenneco's interstate pipeline companies operated primarily as merchants,
purchasing natural gas under long-term contracts and reselling the gas to
customers, again under long-term contracts. With the FERC mandated conversion
from a primarily merchant to a primarily transportation business, Tennessee's
sales, and hence its purchases of gas for resale, declined precipitously, and
Tennessee incurred significant liability to its producers under its long-term
gas supply contracts, many of which specified prices at above market levels. On
June 25, 1992, the FERC approved a settlement allowing Tennessee to recover
from its customers up to $650 million of excess gas supply costs incurred in
resolving this liability through July 1, 1992 (including take-or-pay costs and
payments to producers to suspend or terminate contracts or to reduce contract
prices to market levels). The settlement also allowed Tennessee to place into
effect, as of July 1, 1992, a Gas Inventory Charge providing a mechanism for
the recovery of these excess gas supply costs until September 1, 1993, the
effective date of Tennessee's implementation of Order No. 636. Tennessee
charged to operating expenses that portion of excess gas supply costs incurred
prior to the implementation of Order No. 636 that it cannot recover from
customers.
In 1992, the FERC issued Order No. 636 which, together with subsequently
issued clarifying Order Nos. 636-A and 636-B (the "FERC Restructuring Orders"),
directed a further sweeping restructuring of the interstate gas pipeline
industry. The FERC Restructuring Orders required pipelines to: "unbundle" their
transportation and storage services from their sales services; increase
pipeline customers' flexibility to change receipt and delivery points under
transportation contracts and to allow release of capacity under those contracts
for use by others; and separate interstate pipeline gas sales organizations
from interstate pipeline transportation and storage business units. Under the
FERC Restructuring Orders, rates for pipeline transportation and storage
generally remain subject to traditional cost-of-service regulation but under a
rate design which is relatively insensitive to throughput and hence less
sensitive to seasonal variation. Sales of natural gas by interstate pipelines
occur pursuant to a blanket sales certificate under which price and other terms
of sale are set by market forces. After a series of FERC orders and compliance
filings, Tennessee implemented its Order No. 636 tariff commencing on September
1, 1993, restructuring its transportation, storage and sales services.
The FERC Restructuring Orders recognized that transition costs, including gas
supply realignment costs, may result from this restructuring and provided
mechanisms for the full recovery of such qualified costs. Pipelines were
encouraged to propose various mechanisms in the restructuring proceedings to
reduce transition costs, including assignment of gas supply contracts and
phasing in of the conversions of the pipeline sales service. The FERC
Restructuring Orders specified that pipelines would be allowed to make special
filings to recover many types of transition costs.
Tennessee has made multiple filings to begin recovery of certain of the
transition costs already paid or obligated to be paid in connection with the
FERC Restructuring Orders. Tennessee's filings request authority to: recover,
through a monthly surcharge, one-time gas supply realignment costs and certain
related costs incurred to date over a twelve-month period; direct-bill
customers for unrecovered gas costs over a twelve-month period; and track and
recover, through an annual surcharge, upstream transportation costs from
customers. The filings were accepted effective September 1, 1993, and made
subject to refund pending review. The FERC will review the recovery of the gas
supply realignment costs and the direct billing of unrecovered gas costs in
hearings set for the fall of 1994. However, Tennessee's filings to recover
production costs related
4
<PAGE>
to its Bastian Bay facilities have been rejected by the FERC based on the
continued use of the gas production from the field; but, the FERC recognized
Tennessee's right to file for the recovery of losses upon disposition of these
assets. Tennessee will seek judicial review of the FERC actions rejecting
recovery of production costs relating to Bastian Bay. Tennessee is confident
that the Bastian Bay costs will ultimately be recovered as transition costs
directly related to Order No. 636, and no FERC order has questioned the
ultimate recoverability of these costs.
The total amount of transition costs that will be incurred by Tennessee will
depend upon: developments in restructuring proceedings involving Tennessee, its
customers and other affected parties; the resolution of pending litigation; and
the terms of multiple negotiations with individual suppliers. Until these
issues are resolved, Tennessee cannot finally determine the ultimate amount of
one-time realignment costs or other related annual costs it will incur, nor the
amounts which will be recovered from customers. Tennessee believes that one-
time realignment costs will not exceed $700 million; at December 31, 1993,
Tennessee had recorded and deferred approximately $120 million of such one-time
costs which are recoverable from its customers. Tennessee believes that other
related annual costs will not exceed $100 million in 1994, decreasing
thereafter over the length of the contracts involved.
The FERC Restructuring Orders will undergo judicial review, clarifications
and formulation of cost recovery details as the restructuring process proceeds.
However, Tennessee believes that it is entitled to full recovery of all
transition costs it will incur. Given the fact that the FERC Restructuring
Orders contemplate complete recovery by pipelines of qualified transition
costs, Tenneco believes that Tennessee's Order No. 636 restructuring (together
with the Order No. 636 restructuring of Tenneco's other interstate pipelines)
will not have a material effect on Tenneco's consolidated financial position or
results of operations.
Competition
The natural gas pipeline industry is experiencing increasing competition in
virtually every aspect of operations, the result of actions by the FERC to
strengthen market forces throughout the industry. In a number of key markets,
Tenneco's interstate pipelines face competitive pressure from other major
pipeline systems, enabling local distribution companies and end users to choose
a supplier or switch suppliers based on the short term price of the gas and the
cost of transportation. Competition between pipelines is particularly intense
in Midwestern's Chicago and Northern Indiana markets, in East Tennessee's
Roanoke, Chattanooga and Atlanta markets, and in Tennessee's supply area,
Louisiana and Texas. Even in other markets, such as Tennessee's New England
market, displacement of load to other pipelines is possible during summer or
other low demand seasons. Tenneco Gas pipelines have frequently been required
to discount their transportation rates to maintain market share.
Gas Supply
With full implementation of Order No. 636, Tennessee's firm sales obligations
requiring maintenance of long-term gas purchase contracts have declined from
over a 1.4 billion dekatherm maximum daily delivery obligation to less than a
200 million dekatherm maximum daily delivery obligation. As discussed above
under the caption "Federal Regulation", Tennessee has attempted to reduce its
natural gas purchase portfolio in line with these requirements through
termination and assignment to third parties. Although Tennessee's requirements
for purchased gas are substantially less than prior to its implementation of
Order No. 636, Tenneco Gas is pursuing the attachment of gas supplies to, and
transportation by others through, Tennessee's system. Current gas supply
activities include development of offshore and onshore pipeline gathering
projects and utilization of production financing programs to spur exploration
and development drilling in areas adjacent to Tennessee's system.
GAS MARKETING AND INTRASTATE PIPELINES
Subsidiaries of Tenneco Energy Resources Corporation ("TERC") buy and sell
natural gas and arrange for shipment of gas purchased and sold. With the
implementation of Order No. 636, the volumes of gas that are purchased and sold
by gas marketers have increased and competition to serve the increased demand
is
5
<PAGE>
intense. Consequently, TERC is focused upon improving its ability to serve as a
major gas marketer and specifically upon the development of natural gas
products and services designed to meet the changing needs of its customers as
the natural gas market continues to become more deregulated.
Through various intrastate pipeline and gathering subsidiaries, Tenneco is
engaged in the intrastate sale and transportation of natural gas in various
states. These subsidiaries include Channel Industries Gas Company, Tenngasco
Gas Supply Company, Tenneco Gas Gathering Company and Creole Gas Pipeline
Corporation. Tenngasco Gas Supply Company also owns an equity interest in Oasis
Pipeline Company, which has 1 Bcf of pipeline capacity from central and west
Texas. As of December 31, 1993, Tenneco owned or had an equity interest in
approximately 2,000 miles of intrastate pipelines and other related facilities.
Tenneco's intrastate pipeline systems are subject to the jurisdiction of state
regulatory authorities and are subject to the jurisdiction of the FERC but only
to a very limited extent.
The following table sets forth the volumes of gas, stated in MMCF, sold by
subsidiaries of TERC and transported by Tenneco's non-jurisdictional pipelines
for the periods indicated:
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Sales................................................ 741,800 494,445 524,052
Transportation....................................... 235,940 168,776 66,041
------- ------- -------
Total.............................................. 977,740 663,221 590,093
======= ======= =======
</TABLE>
TERC is also engaged in the processing of natural gas, including the
processing of gas of third parties, and it also markets natural gas liquids
that are extracted from the gas stream.
On February 11, 1994, TERC announced the sale of original issue stock to
Ruhrgas AG, through a transaction, certain terms of which are to be finalized
by February 1995, resulting in dilution of the Company's ownership in that
subsidiary from 100% to 80%. At the same time, Tenneco Gas entered into an
agreement with the buyer to pursue joint opportunities in the European gas
industry.
TENNECO VENTURES
Tenneco Gas Production Corporation ("TGPC") and Tenneco Ventures Corporation
("Ventures"), subsidiaries of Tennessee, together with certain institutional
investors and partners, invest in oil and gas properties by acquiring interests
in properties or providing financing to producers for exploration and
development. Three institutional investors have agreed to provide up to an
aggregate of $65,000,000 to TGPC for investment in oil and gas properties. TGPC
selects the properties to be acquired and owns at least a 10% interest in each
of the properties. As of December 31, 1993, approximately $25,000,000 of such
amount had been used to acquire interests in oil and gas properties. A majority
of the gas reserves from these properties should be available for sale through
TERC and transportation on the pipeline systems of Tenneco Gas.
6
<PAGE>
FARM AND CONSTRUCTION EQUIPMENT
Case Corporation and other subsidiaries of Tenneco ("Case") manufacture a
full line of farm equipment and light and medium-sized construction equipment.
The Case manufacturing activities are presently carried on at seven plants in
North America (primarily in the Midwest, not including joint ventures) and nine
plants in four foreign countries. At December 31, 1993 Case's products were
sold through approximately 150 company-owned retail outlets and approximately
4,100 independently owned dealer outlets in 50 states and throughout the world.
The principal customers for Case construction equipment are utility companies
and contractors.
RESTRUCTURING OF CASE OPERATIONS
On March 21, 1993, the Board of Directors of Tenneco Inc. adopted a
comprehensive restructuring program for Case (the "Case Restructuring Program")
which resulted in a pre-tax charge of $920 million ($843 million after taxes,
or $5.85 per average common share), all of which was reflected in the 1992 loss
from continuing operations before interest expense and income taxes.
Implementation of the Case Restructuring Program was commenced in 1993, and
various restructuring actions in the Program were completed in 1993 and others
are in process. The Case Restructuring Program is expected to be substantially
completed during 1996.
The Case Restructuring Program is highly complex, and effectively
implementing it continues to be a major undertaking. The specific restructuring
measures were based on management's best business judgment under prevailing
circumstances and on assumptions which may be revised over time and as
circumstances change. Case continues to believe that the successful completion
of the Case Restructuring Program will enhance its operating income and pre-tax
cash flow over 1992 levels by approximately $200 million annually by 1996. For
additional information about Case's restructuring program, see Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 2 to "Notes to the Financial Statements."
OPERATIONS
The following were products manufactured by Case in 1993:
FARM EQUIPMENT CONSTRUCTION EQUIPMENT
-------------- ----------------------
two-wheel and four- excavators
wheel drive farm crawler dozers and loaders
tractors wheel loaders
combines loader/backhoes
cotton pickers rough terrain forklifts
hay and forage skid steer loaders
equipment trenchers
soil conditioning
equipment
crop production
equipment
implements
Case also distributes in North America excavators that are manufactured by a
third party. Case manufactures and distributes equipment primarily under the
names "Case", "Case IH", "Case Poclain" and "Case International."
Case has a 50% interest in a joint venture with Cummins Engine Company, Inc.
("Cummins") to manufacture a line of diesel engines. Case has incorporated
engines produced by this joint venture into virtually all of its product lines.
Cummins sells to others engines manufactured by the joint venture. The Tenneco
Inc. General Employee Benefit Trust holds approximately 8.6% of the outstanding
common stock of Cummins.
Case Ventures Corporation and Hesston Ventures Corporation, a wholly-owned
subsidiary of AGCO Corporation, each own a 50% interest in Hay and Forage
Industries, a joint venture which manufactures
7
<PAGE>
hay and forage equipment at a plant in Hesston, Kansas. Case and AGCO/Hesston
separately market and sell equipment manufactured by the joint venture under
the Case and Hesston brand names, respectively, and through their respective
distribution systems.
The following table sets forth information with respect to sales during the
past three years:
<TABLE>
<CAPTION>
PERCENTAGE OF
SALES
----------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Sales by Product Type
Farm equipment.......................................... 60% 60% 60%
Construction equipment.................................. 40 40 40
--- --- ---
100% 100% 100%
=== === ===
Sales by Geographic Area
United States........................................... 54% 52% 52%
European Community...................................... 24 30 29
Canada.................................................. 11 10 9
Other areas............................................. 11 8 10
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
Case's business is affected by the general level of activity in the
agricultural and construction industries, including the rate of worldwide
agricultural production and demand, levels of total industry capacity, weather
conditions, exchange rates, commodity prices, levels of equipment inventory and
prevailing levels of construction. The farm and construction equipment industry
is characterized by unrelenting global competition and flat to declining
markets. Both United States and international manufacturers of farm and
construction equipment compete on a world-wide basis in such markets.
AUTOMOTIVE PARTS
The principal components of the automotive parts operations of Tenneco are
Walker Manufacturing Company, Monroe Auto Equipment Company and Tenneco Brake.
WALKER MANUFACTURING COMPANY
Walker Manufacturing Company and its affiliates ("Walker") manufacture a
variety of automotive exhaust systems and emission control products. In the
United States, Walker operates nine manufacturing facilities and seven
distribution centers, three of which are located at manufacturing facilities,
and also has two research and development facilities. Walker also operates ten
manufacturing facilities located in Australia, Canada, the United Kingdom,
Mexico, Denmark, Germany, France, Portugal and Sweden.
Walker's products are sold to automotive manufacturers for use as original
equipment and to wholesalers and retailers for resale as replacement equipment.
Sales to the original equipment market are directly dependent on new car sales,
and sales to the replacement market are related to the service life of original
equipment and to the level of maintenance by individual owners of their
automobiles. The service life of exhaust systems has increased in recent years,
resulting in a decline in the exhaust replacement rate.
8
<PAGE>
The following table sets forth information relating to Walker's sales:
<TABLE>
<CAPTION>
PERCENTAGE OF
SALES
----------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
United States Sales
Automotive replacement equipment (primarily exhaust
system parts).......................................... 52% 53% 60%
Automotive original equipment........................... 48 47 40
--- --- ---
100% 100% 100%
=== === ===
Foreign Sales
Automotive replacement equipment........................ 70% 73% 72%
Automotive original equipment........................... 30 27 28
--- --- ---
100% 100% 100%
=== === ===
Total Sales by Geographic Area
United States........................................... 60% 57% 59%
European Community...................................... 23 27 27
Canada.................................................. 12 12 13
Other areas............................................. 5 4 1
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
In addition to the "Walker" line, Walker manufactures and distributes exhaust
systems under a number of other brand names in the United States and foreign
countries.
MONROE AUTO EQUIPMENT COMPANY
Monroe Auto Equipment Company and its affiliates ("Monroe") are engaged
principally in the design, manufacture and distribution of ride control
products. Monroe ride control products consist of hydraulic shock absorbers,
air adjustable shock absorbers, spring assisted shock absorbers, gas charged
shock absorbers, struts, replacement cartridges and electronically adjustable
suspension systems. Monroe manufactures and markets replacement shock absorbers
for virtually all domestic and most foreign makes of automobiles. In addition,
Monroe manufactures and markets shock absorbers and struts for use as original
equipment on passenger cars and trucks, as well as for other uses. Monroe has
five manufacturing facilities in the United States and seven foreign
manufacturing operations in Australia, Belgium, Brazil, Canada, the United
Kingdom and Spain.
The following table sets forth information relating to Monroe's sales:
<TABLE>
<CAPTION>
PERCENTAGE OF
SALES
----------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
United States Sales
Automotive replacement equipment...................... 72% 78% 80%
Automotive original equipment......................... 28 22 20
--- --- ---
100% 100% 100%
=== === ===
Foreign Sales
Automotive replacement equipment...................... 63% 60% 59%
Automotive original equipment......................... 37 40 41
--- --- ---
100% 100% 100%
=== === ===
Total Sales by Geographic Area
United States......................................... 50% 49% 48%
European Community.................................... 29 32 33
Canada................................................ 7 7 10
Other areas........................................... 14 12 9
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
9
<PAGE>
TENNECO BRAKE
Tenneco Brake manufactures brake products for sale in the replacement
equipment market. Its facilities consist of a plant in Cartersville, Georgia,
which produces non-asbestos friction material for car and light truck brakes,
and Tenneco Heavy Duty Brake, a Canadian manufacturer of heavy-duty non-
asbestos friction brakes. Additionally, Tenneco's Brake-Pro Systems Division
operates a distribution network for brake products and provides services to
retail installer specialists.
The automotive parts operations of Tenneco face intense competition from
other manufacturers of automotive equipment.
SHIPBUILDING
Newport News Shipbuilding and Dry Dock Company ("Newport News"), a Tenneco
subsidiary located in Newport News, Virginia, is the largest privately owned
shipbuilding company in the United States. Its primary business is constructing
nuclear-powered submarines and aircraft carriers for the United States Navy.
Newport News also overhauls and repairs Naval and commercial vessels and
refuels nuclear-powered ships. Newport News' shipbuilding facilities are
located on the James River on approximately 475 acres of property which it
owns.
At December 31, 1993, the aggregate amount of Newport News' backlog of work
to be completed was approximately $3.7 billion (substantially all of which is
Navy-related), a decline from the backlog of $4.7 billion as of December 31,
1992. The cuts in naval shipbuilding following the end of the cold war have
continued to put pressure on the Newport News backlog. At December 31, 1993,
Newport News anticipated that it would complete approximately $1.6 billion of
the current backlog by December 31, 1994, and an additional $1.0 billion in
1995. The December 31, 1993, backlog of Newport News included contracts for the
construction of two Nimitz class aircraft carriers and five Los Angeles class
attack submarines. Also included in that backlog is a contract for the
refueling and overhaul of the aircraft carrier Enterprise, and a contract for
the conversion of two Sealift ships. The present backlog extends into 1998.
Subject to new orders, this existing backlog will decline as two submarines per
year, on average, are delivered through 1996, and the aircraft carriers are
delivered in 1995 and 1998.
Newport News has various other contracts for Naval design work and for
industrial projects. As is typical for similar Government contracts, all of
Newport News' contracts with the Navy are unilaterally terminable by the Navy
at its convenience with compensation for work completed and costs incurred.
Newport News is aggressively pursuing new business opportunities and
attempting to expand its business base in light of the declining Naval backlog,
but there is no assurance that it will be able to do so to a material extent.
While the mix of jobs between Naval and commercial work is expected to change
somewhat, the U.S. Navy will continue to be the leading customer of the
shipyard. The shipyard is actively pursuing the design and construction
contract for the next aircraft carrier, CVN 76. Congress has appropriated
through the government's fiscal year 1994 $2.1 billion of the $4.5 billion cost
of this program (which will include approximately $1.4 billion of work to be
performed by other companies). Authorization of the acquisition of CVN 76 by
the U.S. Navy and appropriation of the balance of the cost is anticipated
subsequent to the government's fiscal year 1994. In addition to working toward
authorization of CVN 76, Newport News is pursuing major Naval overhaul and
repair work and foreign military sales. A commercial division is pursuing ship
repair work and new commercial construction opportunities. However, Newport
News has not entered into any contracts for the initial construction of
commercial ships since 1974.
With respect to all Navy work, Newport News faces intense business pressures
in the future because of expected declines in the United States' defense budget
and excess ship building and repair capacity in the United States. Due to
uncertainties as to future defense spending levels and the allocation of
amounts appropriated for such spending to the various defense programs
involved, Tenneco is unable to predict the number or timing of subsequent
contracts for Naval construction or refueling and overhaul which may be
awarded.
10
<PAGE>
Newport News reduced its workforce by approximately 7,000 or 25% between
December 31, 1990 and December 31, 1993.
PACKAGING
Packaging Corporation of America and other Tenneco subsidiaries ("PCA")
manufacture and sell containerboard, paperboard, corrugated shipping
containers, folding cartons, molded fibre products, disposable plastic and
aluminum containers and other related products. Its shipping container products
are used in the packaging of food, paper products, 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 fibre products include
produce and egg packaging, food service items and institutional and consumer
disposable dinnerware. Its disposable plastic and aluminum containers are sold
to the food service, food processing and related industries. In addition to
products bearing the name "Packaging Corporation of America", PCA manufactures
and distributes products under the names "EZ POR", "Packaging Company of
California", "Revere Foil Containers" "Dahlonega Packaging", "Dixie Container,"
"Agri-Pak" and "Pressware International."
The following table sets forth information with respect to PCA's sales during
the past three years:
<TABLE>
<CAPTION>
PERCENTAGE OF
SALES
----------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Sales by Product Type
Corrugated shipping containers and containerboard products. 53% 53% 53%
Disposable plastic and aluminum products................... 22 21 22
Molded fibre products...................................... 9 10 10
Folding cartons............................................ 6 6 6
Recycled paperboard mill products.......................... 4 4 4
Paper stock and other...................................... 6 6 5
--- --- ---
100% 100% 100%
=== === ===
Total Sales by Geographic Area
United States.............................................. 88% 88% 88%
European Community......................................... 7 8 8
Canada..................................................... 2 1 1
Other areas................................................ 3 3 3
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
At December 31, 1993, PCA operated 55 shipping container plants, six carton
plants and 13 corrugated containerboard and paperboard machines at seven mills.
Two of the mills (located in Georgia and Wisconsin), including substantially
all of the equipment associated with both mills, are leased from third parties.
PCA also has eight molded fibre products plants, one pressed paperboard plant,
one lumber plant, five paper stock plants, and 10 disposable plastic and
aluminum container plants. PCA's plants are located primarily in the United
States. Its foreign plants are located in Great Britain, Spain, Canada,
Switzerland and Germany. In the United States, PCA has a 50% ownership interest
in a molded fibre distribution company and in a hardwood chip mill. In
addition, PCA has a 50% ownership interest in a disposable aluminum product
joint venture in Great Britain and a 30% interest in a joint venture in Hungary
that owns a paperboard mill and a carton plant.
The principal raw materials used by PCA in its mill operations are virgin
pulp and reclaimed paper stock. PCA obtains these raw materials from
independent logging contractors, from timberlands owned or controlled by it,
from operation of its reclaimed paper stock collecting and processing plants
and from other sources.
11
<PAGE>
At December 31, 1993, PCA owned 188,000 acres of timberland in Alabama,
Michigan, Mississippi and Tennessee and leased, managed or had cutting rights
on an additional 843,000 acres of timberland in those states and in Florida,
Wisconsin and Georgia. During the years 1993, 1992 and 1991, approximately 22%,
18% and 23%, respectively, of the virgin fibre and timber used by PCA in its
operations was obtained from timberlands controlled by it.
PCA faces intense competition from many other manufacturers and alternative
products of others.
CHEMICALS
Albright & Wilson Limited, a British-based chemical company, and other
Tenneco subsidiaries ("Albright & Wilson"), are engaged in the chemical
business. Albright & Wilson has four manufacturing facilities in the United
Kingdom, four manufacturing facilities in the United States and 23 additional
manufacturing facilities in 12 other countries (Canada, Colombia, Australia,
Italy, France, Spain and six countries in Asia). In the years 1993, 1992 and
1991, approximately 81%, 84% and 86%, respectively, of Albright & Wilson's
sales were made outside the United States.
The principal products of Albright & Wilson are phosphorus chemicals and
surfactants and a range of specialty chemicals for water management, flame
retardants and intermediates for pharmaceuticals and agricultural chemicals.
The following table sets forth sales of Albright & Wilson by product lines for
the periods indicated:
<TABLE>
<CAPTION>
1993 1992* 1991*
---- ----- -----
<S> <C> <C> <C>
Surfactants................................................. 39% 42% 47%
Phosphorus chemicals........................................ 36 37 37
Specialty chemicals......................................... 25 21 16
--- --- ---
Totals.................................................. 100% 100% 100%
=== === ===
</TABLE>
--------
* Sales by Albright & Wilson's pulp chemicals business, which was sold
in 1992 have not been included.
Albright & Wilson has a 50% interest in a joint venture that owns and
operates a purified wet-process phosphoric acid plant in Aurora, North
Carolina, which has largely displaced the use of phosphorus as a feedstock for
phosphoric acid manufactured by Albright & Wilson in North America.
OTHER
Tenneco has several wholly-owned finance subsidiaries which purchase
interest-bearing and noninterest-bearing trade receivables from its operating
subsidiaries. Tenneco Credit Corporation and Tenneco Credit Canada Corp.
purchase retail receivables primarily generated by Case Corporation's retail
sales with the remainder from other Tenneco operating subsidiaries. Funding for
Tenneco Credit Corporation is provided through the private and public debt
markets. Funding for Tenneco Credit Canada Corp. is provided through private
debt markets.
Case Finance Company, Tenneco International Finance Limited and Case Canada
Wholesale Finance Corporation purchase wholesale receivables primarily
generated by the sale or lease of Case farm and construction equipment to its
domestic and foreign dealers. The companies are funded primarily through
private debt markets.
12
<PAGE>
BUSINESS STRATEGY
Since September 1991 the Company has focused on various initiatives and taken
steps designed to strengthen its financial results and improve its financial
flexibility and thereby generate greater returns to its shareholders. Asset
evaluation and redeployment have been and will continue to be important parts
of this strategy. The Company continues to study opportunities for the
strategic repositioning and restructuring of its operations (including through
acquisitions, dispositions, divestitures, spin-offs and joint venture
participation, wholly and partially, of various businesses).
ENVIRONMENTAL MATTERS
Tenneco Inc. estimates that its subsidiaries will make capital expenditures
for environmental matters of approximately $90 million in 1994 and such
expenditures will range from approximately $180 million to $200 million in the
aggregate for the years 1995 through 2005.
For information regarding environmental matters see Item 3, "Legal
Proceedings--Environmental Proceedings" and "--Potential Superfund Liability",
Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Environmental Matters" and Note 16 "Commitments and
Contingencies" in the "Notes to Financial Statements." See also Note 1 "Summary
of Accounting Policies--Environmental Liabilities" in the "Notes to Financial
Statements."
ITEM 2. PROPERTIES.
Reference is made to Item 1 for a description of Tenneco's properties.
Tenneco believes that substantially all of its plants and equipment are, in
general, well maintained and in good operating condition. They are considered
adequate for present needs and as supplemented by planned construction are
expected to remain adequate for the near future.
During 1993, certain Case facilities were underutilized in varying degrees as
their production capabilities exceeded the market demand for construction and
agricultural equipment produced by such facilities. In 1993 Case curtailed
production in an effort to further reduce existing inventory levels. For
additional information concerning restructuring measures affecting facilities,
see Note 2 to the "Notes to Financial Statements."
Tenneco Inc. is of the opinion that its subsidiaries have generally
satisfactory title to the properties owned and used in their respective
businesses, subject to liens for current taxes and easements, restrictions and
other liens which do not materially detract from the value of such property or
the interests therein or the use of such properties in their businesses.
ITEM 3. LEGAL PROCEEDINGS.
(1) Martin Litigation.
On November 19, 1993, the Supreme Court of the State of Louisiana denied a
writ of certiorari which had the effect of affirming the decision of the
Louisiana Court of Appeals holding in the case of Louisiana Intrastate Gas
Corporation v. Martin Intrastate Gas Company, originally brought in the 22nd
Judicial District Court for St. Tammany Parish, Louisiana, on October 25, 1991.
The case involved a dispute between Louisiana Intrastate Gas Corporation
("LIG") and Martin Intrastate Gas Company ("Martin Intrastate"), of which
Kenneth G. Martin is President, as to the nature and extent of Martin
Intrastate's right to compel LIG to purchase natural gas under a 1978 gas
purchase contract entered into by another affiliate of Kenneth G. Martin which
subsequently filed for bankruptcy. The seller's rights under the contract were
later purportedly assigned to Martin Intrastate. The original party seller was
Martin Exploration Company, now a subsidiary of Tennessee. Tenneco's
involvement in the case arose from its agreement to retain certain LIG
liabilities in connection with its sale of LIG in 1989.
In essence, Martin Intrastate originally claimed that it had been validly
assigned all of seller's rights under the contract, that the contract was
"statewide," covering all available gas that Martin Intrastate owned,
13
<PAGE>
controlled or had the right to sell, for its own account or for the account of
others, and that the contract provided for a purchase price of about six times
the current wellhead price.
The Louisiana Court of Appeals held that Martin Exploration Company (the
Tennessee subsidiary) holds the rights to sell gas to LIG under the "statewide"
gas purchase contract. As a result of the denial of writ, the decision of the
Louisiana Court of Appeals is final and nonappealable, and the case has been
concluded without a material adverse effect on the financial condition or
results of operations of Tenneco Inc. and its consolidated subsidiaries.
(2) Environmental Proceedings.
Tennessee is a party in proceedings involving federal and state authorities
regarding the past use by Tennessee of a lubricant containing polychlorinated
biphenyls ("PCBs") in its starting air systems.
On January 13, 1992, the United States Environmental Protection Agency
("EPA") filed an administrative complaint alleging that Tennessee violated the
Toxic Substances Control Act between 1980 and 1990 by engaging in the
unauthorized use and disposal of materials containing PCBs. The complaint
addresses PCB-related activity at 26 compressor stations in five states
(Alabama, Mississippi, Kentucky, Tennessee and Ohio). A civil penalty of
$15,678,000 was sought. Tennessee and the EPA have reached an agreement in
principle under which Tennessee will make a specified payment in full
settlement of civil penalties under the Toxic Substances Control Act arising
from Tennessee's prior use of PCBs at compressor stations throughout its
system. This agreement covers 42 Tennessee compressor stations in nine states
and five EPA regions. The agreement in principle is contingent upon the
completion of Tennessee's negotiations with EPA on the remediation of its
compressor stations in Regions IV, V and VI. With respect to the nine stations
in Regions II and III, EPA has advised Tennessee that it is deferring to the
Pennsylvania and New York environmental agencies to specify the remediation
requirements applicable to Tennessee. Tennessee anticipates that it will soon
reach an agreement with the Pennsylvania Department of Environmental Resources
("PaDER") and will enter into a consent order on remediation at the
Pennsylvania stations (under which Tennessee also agrees to pay a civil penalty
and to make a contribution for environmental projects); meanwhile, Tennessee
will continue its negotiations with the New York Department of Environmental
Conservation on remediation at the New York stations. The agreements with the
EPA and PaDER are expected to be entered into in the first quarter of 1994.
Tenneco believes that the ultimate resolution of this matter will not have a
material adverse effect on the financial condition or results of operations of
Tenneco Inc. and its consolidated subsidiaries. See Note 16 to "Notes to
Financial Statements" for additional information.
In Commonwealth of Kentucky, Natural Resources and Environmental Protection
Cabinet v. Tennessee Gas Pipeline Co. (Franklin County Circuit Court, Docket
No. 88-C1-1531, November 16, 1988), the Kentucky environmental agency alleges
that Tennessee discharged pollutants into the waters of the state without a
permit and seeks an injunction against future discharges and a civil penalty.
Counsel for Tenneco are unable to express an opinion as to its ultimate
outcome.
A subsidiary of Tennessee owns a 13.2% general partnership interest in
Iroquois Gas Transmission System, L.P. ("Iroquois"), which owns an interstate
natural gas pipeline from the Canadian border through the states of New York
and Connecticut to Long Island.
In early 1992, Iroquois was informed by U.S. Attorney's Offices for the
Northern, Southern, and Eastern Districts of New York that a civil
investigation had been initiated to determine whether Iroquois committed civil
environmental violations during construction of the pipeline. In February 1992,
26 alleged violations were identified to Iroquois in writing. In response,
Iroquois denied that such violations had occurred and
14
<PAGE>
asserted that all concerns raised by governmental authorities during
construction had been fully addressed. Iroquois subsequently was informed that
the alleged violations included certain field reports prepared by a
Federal/State Inter-Agency Task Force which surveyed the right-of-way in
connection with the right-of-way restoration program. Iroquois responded to the
appropriate U.S. Attorneys' Offices that none of the matters referenced in
field reports issued to date represent violations of any law or governmental
authorization. As of March 4, 1994, no formal civil demand in connection with
this civil investigation has been made on Iroquois by the federal government.
On December 3, 1993, Iroquois received notification from the Enforcement
Staff of the Federal Energy Regulatory Commission's Office of the General
Counsel ("Enforcement") that Enforcement has commenced a preliminary, non-
public investigation concerning Iroquois' construction of certain of its
pipeline facilities. That office has requested certain information regarding
such construction. In addition, on December 27, 1993, Iroquois received a
similar request for information from the Army Corps of Engineers requesting
certain information regarding permit compliance in connection with certain
aspects of the pipeline's construction. Iroquois is evaluating and responding
to these requests for information. No proceedings have been commenced against
Iroquois in connection with these agency inquiries.
A criminal investigation has been initiated against Iroquois and its
environmental consultant by the U.S. Attorneys' Office for the Northern
District of New York in conjunction with the U.S. Environmental Protection
Agency ("EPA") and the Federal Bureau of Investigation ("FBI"). According to a
press release issued by the FBI in June 1992, areas under investigation include
possible environmental violations, wire fraud, mail fraud and providing false
information or concealment of information from Federal agencies in conjunction
with construction of the pipeline. To date, no criminal charges have been filed
and the Assistant U.S. Attorney in charge of the investigation has stated that
he is not yet ready to meet with Iroquois' attorneys to discuss the specifics
of the matter.
As a general partner, Tennessee's subsidiary may be jointly and severally
liable with the other partners for the liabilities of Iroquois. Tennessee has a
contract to provide gas dispatching as well as post-construction field
operation and maintenance services for the operator of Iroquois, but Tennessee
is not the operator of Iroquois and is not an affiliate of the operator.
Moreover, the foregoing proceedings and investigations have not affected
pipeline operations. Based upon information available to Tenneco at March 4,
1994 concerning the above investigations and proceedings involving Iroquois,
Tenneco believes that neither Tennessee nor any of its subsidiaries is the
target of the investigation described above and that the ultimate resolution of
these matters will not have a material adverse effect on the financial
condition or results of operations of Tenneco Inc. and its consolidated
subsidiaries.
On August 2, 1993, the Department of Justice filed suit against Packaging
Corporation of America ("PCA") in the Federal District Court for the Northern
District of Indiana, alleging that wastewater from PCA's molded fibre products
plant in Griffith, Indiana interfered with or damaged the Town of Griffith's
municipal sewage pumping station on two occasions in 1991 and 1993, resulting
in discharges by the Town of untreated wastewater into a river. PCA has denied
responsibility for the Town's wastewater discharges. The violations alleged by
the Department of Justice could result in the assessment of statutory penalties
in excess of $100,000; however, the Company does not believe that its ultimate
resolution will have a material adverse effect upon its consolidated financial
condition or results of operations.
Pryor Foundry, Inc. ("Pryor") has been advised that the EPA may seek to
impose a fine upon Pryor in connection with discharges of water by its facility
in Pryor, Oklahoma, without the necessary permit. The violations alleged by the
EPA could result in the assessment of statutory penalties in excess of
$100,000; however, the Company does not believe that its ultimate resolution
will have a material adverse effect upon its consolidated financial condition
or results of operations.
(3) Potential Superfund Liability.
At December 31, 1993, Tenneco has been designated as a potentially
responsible party in 70 "Superfund" sites. With respect to its pro rata share
of the remediation costs of certain sites, Tenneco is fully indemnified
15
<PAGE>
by third parties. With respect to certain other sites, Tenneco has sought to
resolve its liability through payments to the other potentially responsible
parties. For the remaining sites, Tenneco has estimated its share of the
remediation costs to be between $12 million and $72 million or 0.4% to 2.3% of
the total remediation costs for those sites and has provided reserves that it
believes are adequate for such costs. Because the clean-up costs are estimates
and are subject to revision as more information becomes available about the
extent of remediation required, Tenneco's estimate of its share of remediation
costs could change. Moreover, liability under the Comprehensive Environmental
Response, Compensation and Liability Act is joint and several, meaning that
Tenneco could be required to pay in excess of its pro rata share of remediation
costs. Tenneco's understanding of the financial strength of other potentially
responsible parties has been considered, where appropriate, in Tenneco's
determination of its estimated liability. Tenneco does not believe that the
costs associated with its current status as a potentially responsible party in
the Superfund sites described above will be material to its financial position
or results of operations.
For additional information concerning environmental matters, see the caption
"Environmental Matters" under Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations", and the caption "Environmental
Matters" under Note 16 to the Financial Statements of Tenneco Inc. and
Consolidated Subsidiaries.
(4) Grand Jury Investigation.
Case Corporation is the subject of a grand jury investigation coordinated by
the United States Customs Service and the United States Attorney's offices in
Milwaukee, Wisconsin, and Chicago, Illinois, concerning possible mislabeling of
parts shipments to Syria and possible improper shipments to Libya and other
countries subject to export restrictions. Case is cooperating fully with the
investigation. Tenneco cannot predict the outcome of this investigation, but
does not believe that it will have a material adverse effect on the financial
position or results of operations of Tenneco Inc. and its consolidated
subsidiaries.
(5) Other Matters.
Tenneco Inc. and its subsidiaries are parties to numerous legal proceedings
arising from their operations. Tenneco Inc. believes that the outcome of these
proceedings, individually and in the aggregate, will have no material effect on
Tenneco's financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders of Tenneco Inc.
during the fourth quarter of the fiscal year ended December 31, 1993.
16
<PAGE>
ITEM 4.1 EXECUTIVE OFFICERS OF THE REGISTRANT.
Set forth below is a list of the executive officers of Tenneco Inc. at March
1, 1994. Each of such officers has served in the capacities indicated below
with Tenneco Inc. (or prior to a corporate reorganization in 1987 with the then
publicly held affiliate of Tenneco Inc. which bore the same name) since the
dates indicated below:
<TABLE>
<CAPTION>
NAME (AND AGE AT DECEMBER 31, 1993) OFFICES HELD* EFFECTIVE DATE OF TERM
- ----------------------------------- ------------- ----------------------
<S> <C> <C>
Michael H. Walsh (51).......... Chairman (on medical leave) May 1992
Director September 1991
Dana G. Mead (57).............. Chief Executive Officer February 1994
Director April 1992
Chairman of the Executive Committee February 1994
Member ex officio of the Compensation February 1994
and Benefits, and Nominating and
Management Development Committees
President May 1992
Member of the Executive Committee May 1992
Member ex officio of the Audit May 1992
Committee
Theodore R. Tetzlaff (49)...... General Counsel July 1992
Robert T. Blakely (52)......... Senior Vice President and Chief July 1981
Financial Officer
Stacy S. Dick (37)............. Senior Vice President--Strategy August 1992
Barry R. Schuman (52).......... Senior Vice President--Human March 1993
Resources
Kenneth D. Allen (54).......... Vice President and Deputy General March 1987
Counsel
Matthew W. Appel (38).......... Vice President--Financial Analysis March 1993
and Planning
John J. Castellani (42)........ Vice President--Government Relations August 1992
James V. Faulkner, Jr. (49).... Vice President--Law May 1993
Arthur H. House (51)........... Vice President--Corporate Affairs June 1992
M. W. Meyer (54)............... Vice President and Deputy General August 1979
Counsel
E. J. Milan (59)............... Vice President and Controller October 1989
Karen R. Osar (44)............. Vice President and Treasurer February 1994
Robert G. Simpson (41)......... Vice President--Tax May 1990
Karl A. Stewart (50)........... Vice President May 1991
Secretary May 1986
Richard L. Wambold (41)........ Vice President--Operations June 1992
Edward J. Campbell (65)........ President--Case Corporation January 1992
S. D. Chesebro' (52)........... Chief Executive Officer--Tenneco Gas February 1994
Inc.
President--Tenneco Gas Inc. June 1990
R. C. Paul (58)................ Managing Director--Albright & Wilson November 1986
Limited
W. R. Phillips, Jr. (62)....... President and Chief Executive January 1992
Officer--Newport News Shipbuilding
and Dry Dock Company
R. A. Snell (52)............... President and Chief Executive September 1993
Officer--Tenneco Automotive, a
Division of Tennessee Gas Pipeline
Company
Paul T. Stecko (49)............ President and Chief Executive December 1993
Officer--Packaging Corporation of
America
</TABLE>
- --------
* Unless otherwise indicated, all offices held are with Tenneco Inc.
17
<PAGE>
Each of the executive officers of Tenneco Inc. has been continuously engaged
in the business of Tenneco Inc., its subsidiaries, affiliates or predecessor
companies during the past five years except that: (i) from 1986 to 1991,
Michael H. Walsh was Chairman and Chief Executive Officer of Union Pacific
Railroad Company; (ii) from 1986 to 1992, Dana G. Mead was employed by
International Paper, last serving in the capacity of Executive Vice President;
(iii) Theodore R. Tetzlaff has been a partner in the law firm of Jenner &
Block, Chicago, for more than five years; (iv) from 1985 to 1992, Stacy S. Dick
was employed by The First Boston Corporation, last serving in the capacity of
Managing Director; (v) from 1980 to 1992, John J. Castellani was employed by
TRW Inc., last serving in the capacity of Vice President of Government
Relations; (vi) from 1988 to 1993, James V. Faulkner, Jr., was employed by
USCPI, Inc., last serving in the capacity of Senior Vice President and General
Counsel; (vii) from 1988 until his employment by Tenneco in 1992, Barry R.
Schuman was employed by Union Pacific Railroad Company, last serving in the
capacity of Vice President of Human Resources; (viii) from 1990 until 1992,
Arthur H. House served as Vice President, Corporate Communications of Aetna
Life & Casualty Company and from 1988 to 1990 as Senior Vice President,
Corporate Affairs of Shawmut National Corporation; (ix) from 1975 to 1994,
Karen R. Osar was employed by J. P. Morgan & Co., Inc., last serving in the
capacity of Managing Director--Corporate Finance Group; (x) from 1983 to 1990,
Robert G. Simpson was employed by Kraft Inc. and Philip Morris Management Co.,
last serving in the capacity of Director of Kraft General Foods Federal Taxes;
and (xi) from 1977 to 1993, Paul T. Stecko was employed by International Paper,
last serving as Vice President and General Manager of Publications Papers,
Bristols and Converting Papers.
Tenneco Inc.'s Board of Directors is divided into three classes of directors
serving staggered three-year terms, with a minimum of eight directors and a
maximum of sixteen directors. At each annual meeting of stockholders,
successors to the directors whose terms expire at such meeting are elected.
Officers are elected at the annual meeting of directors held immediately
following the annual meeting of stockholders.
18
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The outstanding shares of Common Stock, par value $5 per share, of Tenneco
Inc. (the "Common Stock") are listed on the New York, Midwest, Pacific,
Toronto, London, Paris, Frankfurt, Dusseldorf, Basel, Geneva and Zurich Stock
Exchanges.
The following table sets forth the high and low sale prices of Common Stock
during the periods indicated on the New York Stock Exchange Composite
Transactions Tape and dividends paid per share of Common Stock during such
periods:
<TABLE>
<CAPTION>
SALE
PRICES
------------ DIVIDENDS
HIGH LOW PAID
---- ---- ---------
<S> <C> <C> <C>
1992
1st quarter..................................... $40 1/2 $31 1/4 $.40
2nd quarter..................................... 46 35 7/8 .40
3rd quarter..................................... 40 34 3/4 .40
4th quarter..................................... 41 1/4 32 3/4 .40
1993
1st quarter..................................... $48 3/4 $39 1/8 $.40
2nd quarter..................................... 51 1/2 44 1/4 .40
3rd quarter..................................... 54 3/8 48 .40
4th quarter..................................... 55 47 5/8 .40
</TABLE>
The number of holders of Common Stock of record as of February 23, 1994, was
approximately 104,000.
The declaration of dividends on the Company's capital stock is at the
discretion of the Company's Board of Directors. The Board has not adopted a
dividend policy as such; subject to legal and contractual restrictions, its
decisions regarding dividends are based on all considerations which in its
business judgement are relevant at the time, including past and projected
earnings, cash flows, economic, business and securities market conditions and
anticipated developments concerning Tenneco's business and operations. For
additional information concerning the payment of dividends by Tenneco Inc., see
"Years 1993 and 1992 --Holding Company Structure and Ability to Pay Dividends"
in Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Tenneco's cash flow and the consequent ability of Tenneco Inc. to pay any
dividends on the Common Stock is substantially dependent upon Tenneco's
earnings and cash flow available after its debt service and the availability of
such earnings to Tenneco Inc. by way of dividends, distributions, loans and
other advances. The instruments setting forth the rights of the holders of the
Preferred Stock and Junior Preferred Stock contain provisions restricting
Tenneco Inc.'s right to pay dividends and make other distributions on the
Common Stock. Certain of Tenneco Inc.'s subsidiaries have provisions under
financing arrangements and an investment agreement which limit the amount of
dividends that may be paid by them to Tenneco Inc. At December 31, 1993, such
amount was calculated to be $2.6 billion. Tenneco Inc.'s loan agreements do not
impose any restrictions on the right to pay dividends, although certain of such
agreements impose restrictions on borrowings unless specified levels of
consolidated tangible net worth are met at the time.
Under applicable corporate law, dividends may be paid by Tenneco Inc. out of
"surplus" (as defined under the law) or, if there is not a surplus, out of net
profits for the year in which the dividends are declared or the preceding
fiscal year. At December 31, 1993, Tenneco Inc. had surplus of at least $1.7
billion for the payment of dividends, and Tenneco Inc. will also be able to pay
dividends out of any net profits for the current and prior fiscal year.
19
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
(MILLIONS EXCEPT SHARE AMOUNTS)
------------------------------------------------------------------------
1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME
(LOSS) DATA:
Net sales and operating
revenues from
continuing opera-
tions--
Natural gas pipelines. $ 2,862 $ 2,183 $ 2,183 $ 2,460 $ 2,640
Farm and construction
equipment............ 3,748 3,829 4,449 5,396 5,069
Automotive parts...... 1,839 1,808 1,701 1,731 1,779
Shipbuilding.......... 1,861 2,265 2,216 2,113 1,949
Packaging............. 2,042 2,078 1,934 1,476 1,343
Chemicals............. 914 951 916 1,026 991
Other................. 6 39 34 51 92
Intergroup sales...... (17) (14) (14) (14) (13)
----------- ----------- ----------- ----------- -----------
Total................ $ 13,255 $ 13,139 $ 13,419 $ 14,239 $ 13,850
=========== =========== =========== =========== ===========
Income (loss) from con-
tinuing
operations before in-
terest expense and in-
come taxes--
Natural gas pipelines. $ 411 $ 360 $ 561(b) $ 340 $ 325
Farm and construction
equipment............ 82 (1,180)(c) (1,079)(c) 186 228
Automotive parts...... 215 230 175 213 218
Shipbuilding.......... 225 249 225 225 200
Packaging............. 139 221 139 (b) 190 200
Chemicals............. 78 72 (70)(c) 86 65
Other................. 19 (32) (98)(c) 59 30
----------- ----------- ----------- ----------- -----------
Total................ 1,169 (a) (80) (147) 1,299 1,266
Interest expense (net
of interest
capitalized).......... 460 527 559 496 469
Income tax expense
(benefit)............. 258 76 (14) 281 237
----------- ----------- ----------- ----------- -----------
Income (loss) from con-
tinuing
operations............ 451 (683)(d) (692)(d) 522 560
Income (loss) from dis-
continued
operations, net of in-
come tax.............. -- 71 (40) 39 24
Extraordinary loss, net
of income tax......... (25) (12) -- -- --
Cumulative effect of
changes in
accounting principles,
net of
income tax............ -- (699)(e) -- -- --
----------- ----------- ----------- ----------- -----------
Net income (loss)...... 426 (1,323) (732) 561 584
Preferred stock divi-
dends................. 14 16 16 18 18
----------- ----------- ----------- ----------- -----------
Net income (loss) to
common stock.......... $ 412 $ (1,339) $ (748) $ 543 $ 566
=========== =========== =========== =========== ===========
Average number of
shares of common stock
outstanding........... 168,772,852 144,110,151 122,777,910 124,423,036 126,875,681
Earnings (loss) per av-
erage share of common
stock--
Continuing operations. $ 2.59 $ (4.85)(d) $ (5.77)(d) $ 4.06 $ 4.27
Discontinued opera-
tions................ -- .50 (.32) .31 .19
Extraordinary loss.... (.15) (.08) -- -- --
Cumulative effect of
changes in
accounting princi-
ples................. -- (4.86)(e) -- -- --
----------- ----------- ----------- ----------- -----------
Net earnings (loss)... $ 2.44 (f) $ (9.29)(f) $ (6.09) $ 4.37 $ 4.46
=========== =========== =========== =========== ===========
Cash dividends paid per
common share.......... $ 1.60 $ 1.60 $ 2.80 $ 3.12 $ 3.04
</TABLE>
(Table continued on next page)
20
<PAGE>
(Continued from previous page)
<TABLE>
<CAPTION>
(MILLIONS)
-----------------------------------------------------------
1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets........... $ 15,373 $ 16,584 $ 18,696 $ 19,034 $ 17,381
Short-term debt........ 1,274 1,696 2,452 3,816 2,895
Long-term debt......... 4,799 6,400 6,837 5,976 5,573
Minority interest...... 153 165 182 -- --
Preferred stock with
mandatory
redemption provisions. 163 191 194 201 210
Stockholders' equity... 2,601 1,330 2,774 3,367 3,277
STATEMENT OF CASH FLOWS
DATA:
Net cash provided by
operating activities.. $ 1,615 $ 929 $ 950 $ 360 $ 88
Capital expenditures
for continuing
operations............ 587 569 746 803 586
</TABLE>
- --------
Notes: (a) Includes the disposition of a number of assets and investments
including Newport News' Sperry Marine business; several PCA operations;
two wholly-owned pipeline companies, Viking Gas Transmission Company
and Dean Pipeline Company; and facilities and land of two foreign Farm
and construction equipment operations for a gain of $118 million.
(b) For Natural gas pipelines, includes a gain of $265 million related to
the sale of its natural gas liquids business including its interest in
an MTBE plant then under construction. Also, Packaging recorded a gain
of $42 million related to the sale of three short-line railroads.
(c) Includes restructuring charge of $920 million related to Farm and
construction equipment in 1992. Losses in 1992 for the Farm and
construction equipment segment before the restructuring charge were
$260 million. Of the total $552 million restructuring charge recorded
in 1991, $461 million related to Farm and construction equipment, $79
million related to Chemicals and $12 million related to Other. Losses
in 1991 for the Farm and construction equipment segment before the
restructuring charge were $618 million.
(d) Includes after-tax restructuring charge of $843 million, or $5.85 per
average common share, and $480 million, or $3.91 per average common
share, for 1992 and 1991, respectively.
(e) Tenneco elected early adoption of Statement of Financial Accounting
Standards ("FAS") No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions, for its domestic operations and FAS No.
109, Accounting for Income Taxes. Both standards were adopted effective
January 1, 1992, using the cumulative catch-up method. Under FAS No. 106,
Tenneco is required to accrue the estimated costs of retiree benefits
other than pensions (primarily health care benefits and life insurance)
during the employees' active service period. Prior to 1992, Tenneco
expensed the cost of these benefits as medical and insurance claims were
paid. Tenneco expects to adopt the new standard for its non-U.S. plans in
the first quarter of 1995 and estimates that the adoption will reduce
pre-tax income by approximately $20 million. The adoption of FAS No. 109
changed Tenneco's method of accounting for income taxes from the deferred
method to the liability method. The liability method requires the
recognition of deferred tax assets and liabilities for the future tax
consequences of temporary differences between the financial statement
basis and the tax basis of assets and liabilities. The 1992 Statements of
Income (Loss) include an after-tax charge of $699 million or $4.86 per
average common share for the cumulative effect of the accounting changes
consisting of $414 million or $2.88 per share for FAS No. 106 and $285
million or $1.98 per share for FAS No. 109.
(f) Earnings per share of common stock are based on the average number of
shares of common stock and Series A preferred stock (each share of
Series A preferred stock represents two shares of common stock)
outstanding during each period. Because Series A preferred stock
outstanding is included in average common shares outstanding for
purposes of computing earnings per share, the preferred dividends paid
are not deducted from net income (loss) to determine net income (loss)
to common stock. In 1992, 12,000,000 shares of common stock were issued
to the Stock Employee Compensation Trust ("SECT"). Shares of common
stock issued to a related trust are not considered to be outstanding in
the computation of average shares of common stock until the shares are
utilized to fund the obligations for which the trust was established.
At December 31, 1993, the SECT had utilized 2,479,425 of these shares.
Other convertible securities and common stock equivalents outstanding
during each of the five years ended December 31, 1993, 1992, 1991, 1990
and 1989 were not materially dilutive.
21
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
YEARS 1993 AND 1992
RESTRUCTURING PROGRAMS-CASE OPERATIONS
1991 Restructuring Program
During 1991, Tenneco Inc. (the "Company") identified restructuring measures
which resulted in a pre-tax charge of $461 million taken at its farm and
construction equipment segment ("Case"). The 1991 restructuring charge was in
part attributable to aggressive measures taken in September 1991 to respond to
depressed market conditions facing the farm and construction equipment business
and to improve Case's performance. The estimated costs for the program included
$256 million attributable to the elimination of 7,400 jobs; $93 million for
plant closings; and $112 million for the rationalization or discontinuance of
farm and construction equipment product lines (including costs associated with
dealer discounts, other incentive programs and inventory writedowns to net
realizable value). As of December 31, 1993, $63 million of the 1991
restructuring charge remained on the balance sheet as a current liability.
Management believes that this balance is adequate to complete the remaining
actions required under this plan.
While the measures taken at Case since September 1991 under this program
resulted in significant improvements in Case's performance, the worldwide farm
and construction equipment market continued to deteriorate during 1992, and
Tenneco Management and the Board of Directors determined that major structural
and strategic changes were necessary in order to strengthen Case's competitive
position in the global marketplace and to enhance Case's return to a sustained
level of profitability.
1992 Restructuring Program
Consequently, on March 21, 1993, the Board of Directors of Tenneco Inc.
adopted a comprehensive restructuring program for Case (the "Case Restructuring
Program") in order to strengthen Case's competitive position in the global
marketplace and to enhance Case's return to a sustained level of profitability.
Adoption of the Case Restructuring Program resulted in a pre-tax charge of $920
million ($843 million after tax or $5.85 per average common share), all of
which was reflected in the 1992 loss from continuing operations before interest
expense and income taxes.
This restructuring program is expected to be substantially completed during
1996. The program addresses four fundamental issues which were adversely
impacting Case's operating results and the industry at large, which has been
characterized by unrelenting global competition and flat to declining markets
for agricultural and construction equipment:
. Excess Manufacturing Capacity. Continued weakness in markets, from
previous historical levels, particularly for worldwide agricultural
equipment has led to substantial under utilization of Case's component
manufacturing and final assembly capacity.
. Overly Integrated Component Production. Case adopted a program to put in
place new, more cost effective arrangements for selected components that
will reduce investment requirements, provide greater access to industry
technology developments and result in lower per unit costs.
. Unprofitable, Highly-Proliferated Products. Case believes there are
significant advantages to focusing its financial, technical,
manufacturing and marketing resources on those products where it has a
current or potential leadership position and which collectively provide a
solid and sustainable core business.
. Marketing and Distribution Inefficiencies. Case's distribution system
includes both independent dealers and company-owned stores. Case believes
that, in many cases, company-owned stores are not as effective in
marketing its products as its independent dealers. Improvements to the
parts distribution network are expected to improve efficiency and
customer responsiveness.
22
<PAGE>
The pre-tax charge included estimates of $441 million attributable to
rationalizing production of selected components; $161 million for consolidating
and resizing production capacity; $126 million for discontinuing or replacing
unprofitable products; and $192 million for privatization of Case-owned retail
stores, restructuring the parts distribution network and other associated costs
of restructuring.
In 1993, the following restructuring actions were implemented and are at
various stages of completion:
. The Schofield, Wisconsin manufacturing facility, which employed
approximately 425 employees, was closed and production was transferred to
the Case facilities in Fargo, North Dakota and Burlington, Iowa.
. Case closed the Southhaven, Mississippi parts depot which employed
approximately 70 employees. Existing parts depots in Atlanta, Georgia and
Dallas, Texas will serve customers previously served by the Southhaven
facility. During 1992 and 1993, Case outsourced the operations of five
regional depots located in North America where Case employed
approximately 135 people. All of this was done to further improve the
efficiency of the parts distribution network.
. Assembly of combine and cotton picker transmissions was relocated from
Doncaster, England to Racine, Wisconsin. Final assembly of combines and
cotton pickers remains at Case's East Moline, Illinois plant.
. The Meltham, England facility, which manufactured gears and other
selected components, primarily for discontinued products, was sold.
Approximately 90 employees worked at Meltham.
. In February 1994, Case sold its foundry in Pryor, Oklahoma to Grede
Foundries Inc. Grede Foundries Inc. will continue to supply Case with
castings currently produced at the foundry and will retain the
approximately 350 employees at this facility.
. The sale of Case-owned stores continued. At the end of 1993, Case had
approximately 150 company-owned stores as compared to approximately 250
in September 1991.
. The Vitry, France facility, which manufactured gear and shaft components,
was closed and production was transferred to Case's facility in St.
Dizier, France. These components are used primarily in transmissions
manufactured at St. Dizier.
. Plant rationalizations, designed to streamline operations, improve
production flows, and concentrate on core production, progressed at
Case's Hamilton, Ontario plant which manufactures planting/seeding and
tillage equipment, as well as at Case's East Moline, Illinois plant.
. Case announced its intent to cease engine and component production and
close the tractor manufacturing facility in Neuss, Germany following
termination of production of the current Maxxum tractor models, which is
expected to occur by the second quarter of 1996. Case also announced its
intent to close the foundry located in Neuss, Germany during the fourth
quarter of 1994. The terms and conditions related to the closing of the
Neuss facilities are the subject of a compromise of interest and social
plan between Case and the Neuss Works Council which was executed during
the first quarter of 1994. As of December 31, 1993, Case employed
approximately 1,100 people at the Neuss facilities.
. Case announced that production of a number of non-core products would be
discontinued. In 1993, Case ceased production of the W11B and W14 wheel
loaders, the 1085C rubber tire excavator, the "A" family agricultural
tractors, as well as a number of agricultural implements. In addition,
during 1993, Case ceased supplying its dealers with other non-core
products, including the 450C crawler dozer and the 455C crawler loader
and the under 40 horsepower series tractors, all of which were
manufactured for Case by a third party.
As of December 31, 1993, approximately $130 million of the actions necessary
to complete the program had been implemented leaving $790 million to be
implemented over the next three years. Of the remaining
23
<PAGE>
actions to be implemented, $314 million pertain to rationalizing production of
selected components; $152 million pertain to consolidating and resizing
production capacity; $125 million pertain to discontinuing or replacing
unprofitable products; and $199 million pertain to privatization of Case-owned
retail stores, restructuring the parts distribution network and other
associated costs of restructuring.
Total employment was reduced by approximately eight percent during 1993 with
an estimated 1,400 jobs eliminated. Case's worldwide production volumes for
farm and construction equipment during 1993 were three percent lower than in
1992. Inventories at Case and its dealers decreased by $400 million during 1993
and by $1.9 billion since December 1990. This was largely accomplished by
selling $1.9 billion less wholegoods and parts to its dealers than those
dealers sold to their customers. Case intends to continue reducing inventories
during 1994.
The Case Restructuring Program is highly complex, and effectively
implementing it continues to be a major undertaking. While Case is committed to
successfully completing the program, there can be no assurance that the
objectives of the program will be achieved. The specific restructuring measures
and associated estimated costs are based on management's best business judgment
under prevailing circumstances and on assumptions which may be revised over
time and as circumstances change. Case continues to believe that the successful
completion of the restructuring program will enhance its operating income and
pre-tax cash flow over 1992 levels by approximately $200 million annually by
1996.
REVENUES
Revenues for 1993 were $13.26 billion, up slightly from $13.14 billion in
1992. An increase in natural gas pipeline revenues, up $679 million or 31
percent, due to higher gas volumes, was offset by decreased revenues in all
other divisions except automotive parts where revenues were slightly ahead of
1992. Shipbuilding reported a $404 million or 18 percent decrease in revenues
due to a declining backlog as a result of reductions in defense spending.
Revenues for farm and construction equipment were down $81 million or two
percent primarily due to weak construction and agricultural equipment markets
in Europe. Revenues also decreased for packaging, down $36 million or two
percent due to lower commodity prices, and for chemicals, down $37 million or
four percent compared to 1992.
INCOME (LOSS) BEFORE INTEREST EXPENSE AND INCOME TAXES (OPERATING INCOME OR
LOSS)
Operating income for 1993 was $1,169 million, an improvement of $211 million
over 1992, excluding gains of $118 million from 1993 disposition of assets and
investments and the 1992 farm and construction equipment restructuring charge
of $920 million. In 1992, Tenneco recorded a pre-tax restructuring charge of
$920 million ($843 million after tax or $5.85 per average common share) for the
farm and construction equipment group. Reference is made to Note 2
"Restructuring Costs" and Note 4 "Discontinued Operations, Disposition of
Assets, and Extraordinary Loss" in the "Notes to Financial Statements" for
additional information.
Natural gas pipelines operating income for 1993 was $411 million compared
with $360 million in 1992. Revenues increased to $2,862 million in 1993 from
$2,183 million in 1992 due primarily to higher gas volumes as a result of the
acquisition in December 1992 of EnTrade Corporation, a natural gas marketing
firm. Transportation volumes increased due to a return to normal weather and
increased market demand. Partially offsetting these revenue increases were
higher gas purchase costs, higher depreciation relating to capital additions
placed in service in late 1992 and increased pipeline maintenance expenses. The
1993 operating income includes $31 million in gains on asset sales and $34
million from a favorable rate decision that allows collection from customers of
the transition obligation that was established at the time Tenneco adopted
Statement of Financial Accounting Standards ("FAS") No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." These gains were
partially offset by a reserve of $10 million established for gas costs as well
as by litigation settlements related to divested operations and a one-time
expense related to a gas inventory charge.
24
<PAGE>
In 1992, the Federal Energy Regulatory Commission ("FERC") issued Order Nos.
636, 636-A and 636-B (the "FERC Restructuring Orders"). Taken together, the
FERC Restructuring Orders directed a further sweeping restructuring of the
interstate gas pipeline industry. The FERC Restructuring Orders required
pipelines to: "unbundle" their transportation and storage services from their
sales services; increase pipeline customers' flexibility to change receipt and
delivery points under transportation contracts and to allow release of capacity
under those contracts for use by others; and separate interstate pipeline gas
sales organizations from interstate pipeline transportation and storage
business units. Under the FERC Restructuring Orders, rates for pipeline
transportation and storage generally remain subject to traditional cost-of-
service regulation but under a rate design which is relatively insensitive to
throughput and hence less sensitive to seasonal variation. Sales of natural gas
by interstate pipelines occur pursuant to a blanket sales certificate under
which price and other terms of sale are set by market forces. After a series of
FERC orders and compliance filings, Tennessee implemented its Order No. 636
tariff commencing on September 1, 1993, restructuring its transportation,
storage and sales services.
Tennessee has made multiple filings to begin recovery of certain of the
transition costs already paid or obligated to be paid in connection with the
FERC Restructuring Orders. Given the fact that the FERC Restructuring Orders
contemplate complete recovery by pipelines of qualified transition costs,
Tenneco believes that Tennessee's Order No. 636 restructuring (together with
the Order No. 636 restructuring of Tenneco's other interstate pipelines) will
not have a material effect on Tenneco's consolidated financial position or
results of operations.
Reference is made to Note 9 "Federal Energy Regulatory Commission ("FERC")
Regulatory Matters" in "Notes to Financial Statements" for additional
information on the FERC Restructuring Orders and other rate-related matters.
Farm and construction equipment reported operating income of $82 million in
1993, a $342 million improvement over the $260 million operating loss in 1992,
excluding the restructuring charge of $920 million. The $342 million
improvement in 1993 results (excluding the restructuring charge) came despite a
$81 million drop in revenues compared to the prior year. The decreased revenues
were driven by continued weakness in European markets and loss of sales from
products discontinued under the Case restructuring programs. Lower worldwide
sales volumes in 1993 were more than offset by savings in several critical
operating areas. Improved price realization was the major profit driver as Case
continued its value-based pricing strategy of lower discounts and higher
pricing. The company-wide focus on operating cost reductions and manufacturing
performance improvements also contributed to 1993 results.
For the year 1993, Case's retail sales of major (100 horsepower or greater)
agricultural equipment were up 20 percent, in line with the North American
industry. Case also matched the North American construction equipment industry
sales gain of 20 percent for the year. Case's sales in its European markets
were down 13 percent for the year, the result of continued economic weakness
in Europe. The increase in North American sales and a three percent reduction
in worldwide production compared to 1992, resulted in a reduction in the
inventories of Case and its dealers of $400 million in 1993. In 1994, North
American unit sales of farm and construction equipment are expected to be up
slightly while European markets are expected to be down compared to 1993.
Automotive parts operating income for 1993 declined $15 million to $215
million compared with $230 million in 1992, a 7 percent decrease. Revenues were
slightly ahead of 1992. Higher revenues were led by a 15 percent increase in
North American original equipment sales relating to Walker exhaust products and
Monroe ride control products due to increased new car and light truck
production. North American exhaust aftermarket sales were up six percent.
Offsetting the increased revenues were lower revenues in European original
equipment and aftermarkets due to the continuing recession in Europe and lower
sales in the North American ride control aftermarket due to sluggish demand and
stiff price competition. Improvements in 1993 operating income from the higher
North American original equipment market and aftermarket exhaust revenues,
combined with aggressive cost management and quality program initiatives were
more than offset by the effects of the weaker North American ride control
aftermarket conditions, unfavorable foreign exchange rates and the recessionary
conditions in Europe.
25
<PAGE>
Shipbuilding's 1993 operating income was $225 million compared with $249
million in 1992. Revenues decreased $404 million or 18 percent in 1993 due to a
declining backlog resulting from lower defense spending. The 1993 operating
income includes a $15 million gain on the sale of the Sperry Marine business
and a $12 million benefit from the recognition of the recovery of a portion of
the postretirement benefit costs reserve that was established when FAS No. 106
was adopted in 1992. Excluding the gain on the sale of the Sperry Marine
business and the recovery of a portion of the postretirement benefit costs,
operating income decreased from 1992 due to the declining backlog. Partially
offsetting the lower operating income were the effects of several management
initiatives undertaken in 1993 and 1992, which included headcount reductions
and organization changes that improved operating efficiencies. The backlog at
the shipyard at the end of 1993 was $3.7 billion compared with $4.7 billion at
the end of 1992. The 1993 backlog included five Los Angeles class submarines,
two Nimitz class aircraft carriers (John C. Stennis and United States), the
overhaul and refueling contract for the aircraft carrier Enterprise and the
Sealift conversion contract involving two ships. In the absence of new orders,
this existing backlog will decline as two submarines per year, on average, are
delivered through 1996, and the aircraft carriers are delivered in 1995 and
1998. The Enterprise work will be completed in 1994 and the Sealift conversion
ships will be delivered in 1995. Newport News is aggressively pursuing new
business opportunities and attempting to expand its business base in light of
the declining Naval backlog, but there is no assurance that it will be able to
do so to a material extent. While the U.S. Navy will continue to be the leading
customer of the shipyard, the mix of jobs between Navy and commercial work is
expected to change. The shipyard is actively pursuing design and construction
work on the next carrier contract (CVN 76), major overhaul and refueling work
and commercial work.
Packaging ended the year with $139 million in operating income, down from
$221 million in 1992. Revenues decreased only slightly by $36 million or two
percent, as higher containerboard volumes were more than offset by lower
linerboard prices which fell from an average price of approximately $345 per
ton in 1992 to an average price of $295 per ton in 1993. Earnings were
depressed by weak linerboard prices in the commodity business where
profitability fell from $93 million in 1992 to $19 million in 1993. The
specialty businesses ended the year at $120 million in operating income, which
included gains from asset sales partially offset by asset realignment costs of
$29 million, versus operating income of $128 million for 1992, in spite of
extreme pricing pressures in molded fibre and paperboard markets. Offsetting
some of the pricing and market conditions were operating cost reductions and
favorable purchasing initiatives.
Operating income for 1993 for the chemicals segment improved to $78 million
from $72 million in 1992. This increase in earnings was due to higher sales
volumes and margin improvements from cost reduction and productivity programs
partially offset by an unfavorable foreign exchange impact. In local
currencies, sales rose by 9 percent, but were more than offset by the movement
in European currencies against the U.S. dollar. With the exception of the
surfactants business group, whose products go into more economically sensitive
merchandise, all segments achieved higher year-over-year operating income.
Operating income from the phosphates business group rose 36 percent, and
operating income from the specialty chemicals business group increased 63
percent over 1992 levels as both segments were successful in moving downstream
into higher-margin products. Chemicals is emphasizing the development of high
margin specialty products, such as biocides and flame retardants, where growth
prospects are good.
Tenneco's other operations reported operating income of $19 million for 1993,
compared to a loss of $32 million in 1992. The improvement was primarily
attributable to the gain of $39 million from the contribution of Tenneco's
investment in Cummins Engine Company of 3.2 million shares of common stock to
the Case Corporation Pension Plan for Hourly-Paid Employees ("Case Plan") in
December 1993.
INTEREST EXPENSE
Interest incurred declined $72 million, from $536 million in 1992 to $464
million in 1993, due primarily to lower debt levels from the retirement of $1.0
billion in debt with the proceeds of the April 1993 equity offering. Interest
capitalized decreased to $4 million in 1993 from $9 million in 1992 due to
lower levels of major capital projects. Finance charges (interest expense
related to finance subsidiaries classified as an
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operating expense) were $254 million in 1993 versus $364 million in 1992. The
lower expense was due to lower average debt levels primarily due to the
retirement of $1.0 billion of Tenneco's finance subsidiaries' debt with
proceeds from the issuance of lower-cost asset backed securities as well as
lower interest rates.
INCOME TAXES
Income tax expense for 1993 was $258 million versus $76 million reported for
1992. The increased tax expense in 1993 was attributable to higher pre-tax
income and the increase in the U.S. corporate tax rate from 34 percent to 35
percent. Partially offsetting these increases was a $48 million tax benefit
from a tax realignment of Tenneco's operations in Germany and a lower level of
unbenefitted foreign losses. Reference is made to Note 10 "Income Taxes" in the
"Notes to Financial Statements" for additional information.
DISCONTINUED OPERATIONS AND EXTRAORDINARY LOSS
Extraordinary loss for 1993 of $25 million, net of tax benefit of $13
million, or 15 cents per average common share, and for 1992 of $12 million, net
of tax benefit of $6 million, or 8 cents per average common share, were
attributable to redemption premiums related to the prepayment of higher
interest-bearing long-term debt.
Income from discontinued operations in 1992 of $71 million, net of income tax
expense of $46 million, or 50 cents per average common share, was attributable
to the sales of Tenneco's minerals and pulp chemicals businesses. The sales of
these businesses resulted in a $96 million gain, net of $45 million income tax
expense, from the sale of the minerals business, and a $25 million loss from
the sale of the pulp chemicals business (no tax effect). Net income for 1992
from minerals operations was $3 million, net of income tax expense of $3
million, and net loss from pulp chemicals operations was $3 million, net of a
tax benefit of $2 million. Reference is made to Note 4 "Discontinued
Operations, Disposition of Assets, and Extraordinary Loss" in the "Notes to
Financial Statements" for additional information regarding the preceding items.
EARNINGS (LOSS) PER AVERAGE COMMON SHARE
Income from continuing operations for 1993 was $451 million, or $2.59 per
average common share after preferred dividends, compared with a loss from
continuing operations of $683 million, or $4.85 per average common share after
preferred dividends in 1992. Net income to common stock was $412 million, or
$2.44 per average common share in 1993 versus a net loss to common stock of
$1.34 billion, or $9.29 per average common share in the prior year. Included in
the 1993 net income (loss) to common stock was the extraordinary loss of the
$25 million or 15 cents per average common share. Included in 1992 net income
(loss) to common stock was income from discontinued operations of $71 million,
or 50 cents per average common share, the extraordinary loss of $12 million or
8 cents per average common share and the charge of $699 million, or $4.86 per
average common share relating to the cumulative effect of changes in accounting
principles. The 1992 loss from continuing operations of $4.85 per average
common share included an after-tax restructuring charge of $5.85 per average
common share. Preferred stock dividends were $14 million for 1993 and $16
million for 1992.
Average shares outstanding used for the calculation of earnings per average
common share for 1993 were 168.8 million compared to 144.1 million in 1992,
excluding the stock employee compensation trust ("SECT") shares described
below. The increase was primarily attributable to the 23.5 million shares
issued in the April 1993 underwritten public offering and the issuance of
treasury shares and SECT shares to employee benefit plans.
In November 1992, Tenneco established a SECT to fund a portion of its
obligations arising from its various employee compensation and benefit plans.
Tenneco issued 12 million shares of treasury stock to the SECT in exchange for
a promissory note of $432 million. The SECT has a five-year life during which
it will utilize the common stock to satisfy those obligations. The shares of
common stock issued to the SECT are not considered to be outstanding in the
computation of average shares of common stock until the shares of common stock
are utilized to fund the obligations for which the trust was established. In
1993, the SECT
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issued 2.5 million shares of common stock with a market value of $119 million
to fund employee compensation and benefit plans. Reference is made to Note 11
"Common Stock" and to Note 12 "Preferred Stock" in the "Notes to Financial
Statements" for additional information.
HOLDING COMPANY STRUCTURE AND ABILITY TO PAY DIVIDENDS
Tenneco's cash flow and the consequent ability of the Company to pay any
dividends is substantially dependent upon Tenneco's earnings and cash flow
available after its debt service and the availability of such earnings to the
Company by way of dividends, distributions, loans and other advances. Certain
of the Company's subsidiaries have provisions under financing arrangements and
an investment agreement which limit the amount of their retained earnings
available for dividends to the Company. At December 31, 1993, such amount was
calculated to be $2.6 billion. The Company's loan agreements do not impose any
restrictions on the right to pay dividends, although certain of such agreements
impose restrictions on borrowings unless specified levels of consolidated
tangible net worth are met at the time.
Under applicable corporate law, dividends may be paid by the Company out of
"surplus" (as defined under the law) or, if there is not a surplus, out of net
profits for the year in which the dividends are declared or the preceding
fiscal year. At December 31, 1993, the Company has surplus of at least $1.7
billion for the payment of dividends, and the Company will also be able to pay
dividends out of any net profits for the current and prior fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $1,615 million for the year
1993 compared to $929 million for 1992, an increase of $686 million. Excluding
discontinued operations, there was an improvement of $644 million. This
improvement was due primarily to higher income from continuing operations and
the sale of approximately $1.0 billion of Case retail receivables to limited
purpose business trusts, which issued asset backed securities to the public in
1993. Partially offsetting these improvements were increased refunds to
customers in final settlement of the collection of take-or-pay costs. This was
primarily a timing issue since these funds were recovered in 1992 and disbursed
in 1993. The variance of the information reflected in the "Other" category is
due primarily to the reserves established in 1992 for restructuring measures.
The working capital decrease of $439 million for 1993 was due primarily to the
sale of receivables to limited purpose business trusts, which issued asset
backed securities to the public. Partially offsetting the decrease is the
reduction in taxes payable due to higher state tax payments associated with
shipbuilding contract completions and tax deductions associated with the early
funding of the Case Plan through the contribution of Tenneco's investment in
Cummins Engine Company to the pension plan.
Net cash used by investing activities in 1993 was $338 million compared to
$105 million of cash provided in 1992. Net proceeds (expenditures) from the
sale of discontinued operations were $663 million lower in 1993, primarily due
to the sale of Tenneco's minerals and pulp chemicals operations in 1992. This
was partially offset by proceeds from the sale of businesses in 1993 of $266
million, primarily the sales of Dean Pipeline Company and Viking Gas
Transmission Company, shipbuilding's Sperry Marine business, several packaging
operations, and facilities and land of two foreign Case operations.
Reference is made to Note 4 "Discontinued Operations, Disposition of Assets,
and Extraordinary Loss" in the "Notes to Financial Statements" for additional
information on cash provided by these investing activities.
Expenditures for plant, property and equipment from continuing operations for
1993 were $587 million compared to $569 million for 1992. Increased
expenditures for automotive parts ($30 million), farm and construction
equipment ($41 million) and packaging ($27 million) were basically offset by
declines for natural gas pipelines ($81 million). See Note 15 "Segment and
Geographic Area Information" in the "Notes to Financial Statements" for a
complete breakdown of capital expenditures by operating segment.
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Capitalization totaled $8.99 billion at December 31, 1993, a decrease of $792
million from December 31, 1992. The resulting ratio of total debt to
capitalization dropped from 82.8 percent to 67.6 percent. The total debt to
capitalization ratio was 64.0 percent including the market value of the SECT
shares compared to 78.8 percent at December 1992. The major changes in
capitalization were: total debt down $2.02 billion, stockholders' equity up
$1.27 billion and preferred stock down $28 million. The increase in
stockholders' equity was primarily due to the issuance of 23.5 million shares
of common stock in the April 1993 underwritten public offering, the proceeds of
which were used to retire debt and redeem variable rate preferred stock. The
remaining decrease in debt resulted from the issuance of asset backed
securities.
Following issuance of the final order by the FERC approving Tennessee's
partial settlement of its current rate case, Tennessee will be required to make
refunds to its customers related to rates collected since February 1, 1992.
Tennessee estimates these refunds will total approximately $400 million and be
payable in installments over the second and third quarters of 1994.
To minimize the cash flow requirements associated with the implementation of
FERC Restructuring Orders, Tenneco plans to utilize various financing
arrangements to manage the timing between recovery from pipeline customers and
payments for transition costs. The actual cash flows will depend upon
negotiations between Tennessee, its customers and suppliers, and developments
in the restructuring proceedings with the FERC as the FERC Restructuring Orders
undergo clarification and judicial review. Until these issues are resolved,
Tennessee cannot finally determine the ultimate amount of one-time realignment
costs or other related annual costs it will incur, nor the amounts which will
be recovered from customers. Tennessee believes that one-time realignment costs
will not exceed $700 million; at December 31, 1993, Tennessee recorded and
deferred approximately $120 million of such one-time costs which are
recoverable from its customers. Tennessee believes that other related annual
costs will not exceed $100 million in 1994, decreasing thereafter over the
length of the contracts involved. Changes in the structure of the natural gas
industry in an Order No. 636 environment are anticipated to reduce working
capital requirements over the next several years.
In December 1992, Tenneco Inc. entered into a three-year $1.4 billion credit
agreement with banks to replace a $1.8 billion credit agreement which would
otherwise have terminated in February 1993. With this credit agreement, Tenneco
Inc. and its consolidated subsidiaries had, at December 31, 1993, committed
credit agreements with various banks providing for $3.1 billion of borrowing
capacity, of which $654 million expire in 1994. As of December 31, 1993, $63
million of borrowings were outstanding under these facilities and the remaining
$3.0 billion were available for borrowing. Of the remainder available, $525
million was reserved to cover outstanding commercial paper and similar short-
term obligations. The availability of borrowings under Tenneco's credit
agreements and facilities is subject to its ability at the time to meet certain
conditions specified therein which Tenneco believes it currently meets. These
conditions include, among others, compliance with the financial covenants and
ratios required by such agreements, the absence of default under such
agreements and the continued accuracy of the representations and warranties
contained in such agreements (including the absence of any material adverse
changes since the specified dates).
Based upon Tenneco's estimates of anticipated needs and circumstances of
business operations, together with anticipated market conditions, Tenneco
expects adequate sources of funds to be available to finance its future
operations through internally generated funds, the sale of assets, the use of
credit facilities and the issuance of asset backed securities and other long-
term securities. Over the past several years, Tenneco has relied on externally
generated funds to meet substantial portions of its cash requirements.
ENVIRONMENTAL MATTERS
In 1988, Tennessee initiated an internal project to identify and deal with
the presence of polychlorinated biphenyls ("PCBs") at compressor stations
operated by both its interstate and intrastate natural gas pipeline systems.
Tenneco recorded a reserve in September 1991, for estimated future
environmental expense of $260 million. As of December 31, 1993, $64 million has
been charged against the environmental reserve. The remaining reserve of $196
million is reflected on the balance sheet under "Payables--Trade" ($41 million)
and "Deferred Credits and Other Liabilities" ($155 million).
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Tenneco believes that a substantial portion of these costs, which will be
expended over the next five to ten years, will be recovered through rates
charged to customers of its natural gas pipelines. The estimated costs expected
to be recovered, amounting to $230 million, were recorded in 1991 as an asset
($30 million in "Current assets" and $200 million in "Investments and other
assets"). The estimated unrecoverable portion, amounting to $30 million, was
charged against income and reflected in "Operating expenses" in 1991. Tennessee
is currently recovering environmental expenses annually in its rates. A
significant portion of these expenses remains subject to review and refund in
Tennessee's pending rate case. As of December 31, 1993, the asset balance is
$167 million ($37 million in "Current assets" and $130 million in "Investments
and other assets").
On January 13, 1992, the United States Environmental Protection Agency
("EPA") filed an administrative complaint alleging that Tennessee violated the
Toxic Substances Control Act between 1980 and 1990 by engaging in the
unauthorized use and disposal of materials containing PCBs. The complaint
addresses PCB-related activity at 26 compressor stations in five states
(Alabama, Mississippi, Kentucky, Tennessee and Ohio). A civil penalty of
$15,678,000 was sought. Tennessee and the EPA have reached an agreement in
principle under which Tennessee will make a specified payment in full
settlement of civil penalties under the Toxic Substances Control Act arising
from Tennessee's prior use of PCBs at compressor stations throughout its
system. This agreement covers 42 Tennessee compressor stations in nine states
and five EPA regions. The agreement in principle is contingent upon the
completion of Tennessee's negotiations with EPA on the remediation of its
compressor stations in Regions IV, V and VI. With respect to the nine stations
in Regions II and III, EPA has advised Tennessee that it is deferring to the
Pennsylvania and New York environmental agencies to specify the remediation
requirements applicable to Tennessee. Tennessee anticipates that it will soon
reach an agreement with the Pennsylvania Department of Environmental Resources
("PaDER") and will enter into a consent order on remediation at the
Pennsylvania stations (under which Tennessee also agrees to pay a civil penalty
and to make a contribution for environmental projects); meanwhile, Tennessee
will continue its negotiations with the New York Department of Environmental
Conservation on remediation at the New York stations. The agreements with the
EPA and PaDER are expected to be entered into in the first quarter of 1994.
Tenneco believes that the ultimate resolution of this matter will not have a
material adverse effect on the financial condition or results of operations of
Tenneco Inc. and its consolidated subsidiaries. See Note 16 to "Notes to
Financial Statements" for additional information.
In Commonwealth of Kentucky, Natural Resources and Environmental Protection
Cabinet v. Tennessee Gas Pipeline Co. (Franklin County Circuit Court, Docket
No. 88-C1-1531, November 16, 1988), the Kentucky environmental agency alleges
that Tennessee discharged pollutants into the waters of the state without a
permit and seeks an injunction against future discharges and a civil penalty.
Counsel for Tenneco are unable to express an opinion as to its ultimate
outcome.
A subsidiary of Tennessee owns a 13.2% general partnership interest in
Iroquois Gas Transmission System, L.P. ("Iroquois"), which owns an interstate
natural gas pipeline from the Canadian border through the states of New York
and Connecticut to Long Island.
In early 1992, Iroquois was informed by U.S. Attorney's Offices for the
Northern, Southern, and Eastern Districts of New York that a civil
investigation had been initiated to determine whether Iroquois committed civil
environmental violations during construction of the pipeline. In February 1992,
26 alleged violations were identified to Iroquois in writing. In response,
Iroquois denied that such violations had occurred and asserted that all
concerns raised by governmental authorities during construction had been fully
addressed. Iroquois subsequently was informed that the alleged violations
included certain field reports prepared by a Federal/State Inter-Agency Task
Force which surveyed the right-of-way in connection with the right-of-way
restoration program. Iroquois responded to the appropriate U.S. Attorneys'
Offices that none of the matters referenced in field reports issued to date
represent violations of any law or governmental authorization. As of March 4,
1994, no formal civil demand in connection with this civil investigation has
been made on Iroquois by the federal government.
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On December 3, 1993, Iroquois received notification from the Enforcement
Staff of the Federal Energy Regulatory Commission's Office of the General
Counsel ("Enforcement") that Enforcement has commenced a preliminary, non-
public investigation concerning Iroquois' construction of certain of its
pipeline facilities. That office has requested certain information regarding
such construction. In addition, on December 27, 1993, Iroquois received a
similar request for information from the Army Corps of Engineers requesting
certain information regarding permit compliance in connection with certain
aspects of the pipeline's construction. Iroquois is evaluating and responding
to these requests for information. No proceedings have been commenced against
Iroquois in connection with these agency inquiries.
A criminal investigation has been initiated against Iroquois and its
environmental consultant by the U.S. Attorneys' Office for the Northern
District of New York in conjunction with the U.S. Environmental Protection
Agency ("EPA") and the Federal Bureau of Investigation ("FBI"). According to a
press release issued by the FBI in June 1992, areas under investigation include
possible environmental violations, wire fraud, mail fraud and providing false
information or concealment of information from Federal agencies in conjunction
with construction of the pipeline. To date, no criminal charges have been filed
and the Assistant U.S. Attorney in charge of the investigation has stated that
he is not yet ready to meet with Iroquois' attorneys to discuss the specifics
of the matter.
As a general partner, Tennessee's subsidiary may be jointly and severally
liable with the other partners for the liabilities of Iroquois. Tennessee has a
contract to provide gas dispatching as well as post-construction field
operation and maintenance services for the operator of Iroquois, but Tennessee
is not the operator of Iroquois and is not an affiliate of the operator.
Moreover, the foregoing proceedings and investigations have not affected
pipeline operations. Based upon information available to Tenneco at March 4,
1994 concerning the above investigations and proceedings involving Iroquois,
Tenneco believes that neither Tennessee nor any of its subsidiaries is the
target of the investigation described above and that the ultimate resolution of
these matters will not have a material adverse effect on the financial
condition or results of operations of Tenneco Inc. and its consolidated
subsidiaries.
On August 2, 1993, the Department of Justice filed suit against Packaging
Corporation of America ("PCA") in the Federal District Court for the Northern
District of Indiana, alleging that wastewater from PCA's molded fibre products
plant in Griffith, Indiana interfered with or damaged the Town of Griffith's
municipal sewage pumping station on two occasions in 1991 and 1993, resulting
in discharges by the Town of untreated wastewater into a river. PCA has denied
responsibility for the Town's wastewater discharges. The violations alleged by
the Department of Justice could result in the assessment of statutory penalties
in excess of $100,000; however, the Company does not believe that its ultimate
resolution will have a material adverse effect upon its consolidated financial
condition or results of operations.
Pryor Foundry, Inc. ("Pryor") has been advised that the EPA may seek to
impose a fine upon Pryor in connection with discharges of water by its facility
in Pryor, Oklahoma, without the necessary permit. The violations alleged by the
EPA could result in the assessment of statutory penalties in excess of
$100,000; however, the Company does not believe that its ultimate resolution
will have a material adverse effect upon its consolidated financial condition
or results of operations.
At December 31, 1993, Tenneco has been designated as a potentially
responsible party in 70 "Superfund" sites. With respect to its pro rata share
of the remediation costs of certain sites, Tenneco is fully indemnified by
third parties. With respect to certain other sites, Tenneco has sought to
resolve its liability through payments to the other potentially responsible
parties. For the remaining sites, Tenneco has estimated its share of the
remediation costs to be between $12 million and $72 million or 0.4% to 2.3% of
the total remediation costs for those sites and has provided reserves that it
believes are adequate for such costs. Because the clean-up costs are estimates
and are subject to revision as more information becomes available about the
extent of remediation required, Tenneco's estimate of its share of remediation
costs could change. Moreover, liability under the Comprehensive Environmental
Response, Compensation and Liability Act is joint and several, meaning that
Tenneco could be required to pay in excess of its pro rata share of remediation
costs. Tenneco's
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understanding of the financial strength of other potentially responsible
parties has been considered, where appropriate, in Tenneco's determination of
its estimated liability. Tenneco believes that the costs associated with its
current status as a potentially responsible party in the Superfund sites
described above will have no material effect on the financial position or
results of operations of Tenneco Inc. and its consolidated subsidiaries.
OTHER MATTERS
In 1992, the FASB issued FAS No. 112 which requires employers to account for
postemployment benefits for former or inactive employees after employment but
before retirement on the accrual basis rather than the "pay-as-you-go" basis as
at present, for fiscal years beginning after December 15, 1993. Tenneco will
adopt the new standard as a one-time adjustment in the first quarter of 1994.
Implementation of this new accounting method will result in a one-time charge
of approximately $39 million, net of income taxes.
On February 11, 1994, TERC, a subsidiary of the Company, announced the sale
of original issue stock to Ruhrgas AG, through a transaction, certain terms of
which are to be finalized by February 1995, resulting in dilution of the
Company's ownership in that subsidiary from 100% to 80%. At the same time,
Tenneco Gas entered into an agreement with the buyer to pursue joint
opportunities in the European gas industry.
YEARS 1992 AND 1991
REVENUES
Revenues for 1992 were $13.14 billion, down slightly from $13.42 billion in
1991. A decline in farm and construction equipment revenues, down $620 million
due to weak construction and agricultural equipment markets, was substantially
offset by increased revenues in all other divisions except natural gas
pipelines where revenues were even with 1991. Packaging reported a $144 million
increase in revenues driven by higher volumes in all segments. Revenues for
automotive parts were up $107 million mainly due to increased sales in original
equipment markets in North America. Revenues also increased for shipbuilding,
up $49 million, and for chemicals, up $35 million compared to 1991.
INCOME (LOSS) BEFORE INTEREST EXPENSE AND INCOME TAXES (OPERATING INCOME OR
LOSS)
Operating loss for 1992, which included the farm and construction equipment
restructuring charges of $920 million, was $80 million, an improvement of $67
million over 1991. Excluding the restructuring charges in both periods and 1991
assets sales, operating income increased $742 million from 1991 to 1992. In the
1992 results, Tenneco recorded a comprehensive pre-tax restructuring charge of
$920 million ($843 million after taxes or $5.85 per average common share) for
the farm and construction equipment group. Included in the 1991 results was a
$552 million pre-tax restructuring charge ($480 million after taxes or $3.91
per average common share). Also in 1991, assets were sold that resulted in a
pre-tax gain of $307 million. Reference is made to Note 2 "Restructuring Costs"
and Note 4 "Discontinued Operations, Disposition of Assets, and Extraordinary
Loss" in the "Notes to Financial Statements" for additional information
regarding these items.
Natural gas pipelines' operating income for 1992 was $360 million compared
with $296 million in 1991 (excluding a $265 million pre-tax gain on the fourth
quarter 1991 sale of its natural gas liquids business). The 1991 operating
income included a $30 million charge taken in the third quarter to cover future
environmental costs estimated to be unrecoverable through rates, along with
earnings of $19 million related to the natural gas liquids business that was
sold. The improved earnings resulted from increased volumes (including those
attributable to Kern River), higher rates on the pipeline system of Tennessee
and effective cost control programs.
Farm and construction equipment reported a 1992 operating loss of $260
million compared with a $618 million loss in 1991 excluding restructuring
charges of $920 million and $461 million for 1992 and 1991, respectively. The
$358 million improvement in 1992 results (excluding restructuring costs) came
despite a
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$620 million drop in revenues compared to the prior year. The decreased
revenues were driven by lower volumes caused by the declining market
conditions. The improvement in 1992 results was achieved because of the
implementation of a new pricing strategy that resulted in increased operating
margins ($250 million) and lower operating costs. Offsetting these improvements
were lower earnings caused by the decreased sales volumes and severance costs
for health care for early retirees recorded as a result of the adoption of FAS
No. 106.
Operating income for 1992 for automotive parts reached a record $230 million
compared with $175 million in 1991. Both Walker exhaust and Monroe ride control
operations achieved record results. Higher revenues, combined with aggressive
cost management and an intense focus on cost of quality improvement programs,
contributed to the higher 1992 earnings.
Shipbuilding's 1992 operating income was $249 million compared with $225
million in 1991. The 11 percent increase in earnings came from improved
performance in both the submarine construction and the overhaul businesses.
Revenues increased slightly compared to the prior year. The increased earnings
reflect the results of several management initiatives undertaken in 1992 which
included headcount reductions and organizational changes that improved
operating efficiencies, along with a strong focus on operating cost reductions
including cost of quality improvement programs. The backlog at the shipyard at
the end of 1992 was $4.7 billion compared with $6.6 billion at the end of 1991.
Packaging posted operating income of $221 million in 1992, an increase of
$124 million over the prior year (excluding a $42 million pre-tax gain from the
1991 sale of three short-line railroads). Revenues increased $144 million or 7
percent, driven by higher volumes in all businesses, without the benefit of
linerboard price increases in 1992. All packaging businesses contributed to the
record earnings. The improved containerboard earnings were driven by cost
reduction programs and increased productivity in primary mills and container
plants. Higher performance was achieved in the box business by improved
productivity and increased volumes which were up 9 percent, more than twice the
industry's 4.4 percent.
Operating income for 1992 for chemicals improved to $72 million from $9
million in 1991 (excluding a 1991 restructuring charge of $79 million). This
increase in earnings was the direct result of cost reductions and an improved
mix of specialty products and productivity programs. Revenues increased $35
million from last year without the benefit of economic recovery in major
markets around the world.
Tenneco's other operations reported an operating loss of $32 million for
1992, down from a loss of $86 million in 1991 (excluding restructuring charges
of $12 million). The improvement was primarily attributable to a 1991 provision
of $50 million for settlement of litigation.
INTEREST EXPENSE
Interest incurred declined $38 million, from $574 million in 1991 to $536
million in 1992, due primarily to lower debt levels. Interest capitalized
decreased to $9 million in 1992 from $15 million in 1991 due to lower levels of
capital spending. Finance charges (interest expense related to finance
subsidiaries classified as an operating expense) were $364 million in 1992
versus $429 million in 1991. The lower expense was due to lower average debt
levels combined with lower interest rates.
INCOME TAXES
Income tax expense for 1992 was $76 million versus a tax benefit of $14
million reported for 1991. This change was driven by lower pre-tax losses in
1992 compared to 1991. The tax expense for 1992 included a benefit of $77
million related to restructuring, whereas 1991 results included a benefit of
$72 million. Both 1991 and 1992 included pre-tax foreign operating losses for
which no tax benefits were currently available. Such foreign operating losses
may be available to offset future income in the respective foreign
jurisdictions.
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DISCONTINUED OPERATIONS AND EXTRAORDINARY LOSS
Income from discontinued operations in 1992 of $71 million, net of income tax
expense of $46 million, or 50 cents per average common share, was attributable
to the sales of Tenneco's minerals and pulp chemicals businesses. The sales of
these businesses resulted in a $96 million gain, net of $45 million income tax
expense, from the sale of the minerals business, and a $25 million loss from
the sale of the pulp chemicals business (no tax effect). Net income for 1992
from minerals operations was $3 million, net of income tax expense of
$3 million, and net loss from pulp chemicals operation was $3 million, net of a
tax benefit of $2 million. The 1991 loss from discontinued operations of $40
million, net of a tax benefit of $26 million, or 32 cents per average common
share, was attributable to a reserve established for litigation and claims
primarily related to the 1988 sale of Tenneco's oil and gas businesses totaling
$58 million, net of a tax benefit of $31 million, partially offset by net
income from operations of the minerals and pulp chemicals businesses during
1991 of $18 million ($12 million for minerals and $6 million for pulp
chemicals), net of income tax expense of $5 million ($1 million for minerals
and $4 million for pulp chemicals).
Extraordinary loss for 1992 of $12 million, net of tax benefit of $6 million,
or 8 cents per average common share, was attributable to the redemption premium
related to the prepayment of high interest-bearing long-term debt.
Reference is made to Note 4 "Discontinued Operations, Disposition of Assets,
and Extraordinary Loss" in the "Notes to Financial Statements" for additional
information regarding these items.
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1992, Tenneco elected early adoption of FAS No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions, for its
domestic operations and FAS No. 109, Accounting for Income Taxes. Both
standards were adopted using the cumulative catch-up method. As a result of the
adoption of these two statements, the 1992 Statement of Income (Loss) includes
an after-tax charge of $699 million, or $4.86 per average common share, for the
cumulative effect of the accounting changes consisting of $414 million, or
$2.88 per average common share, for FAS No. 106, and $285 million, or $1.98 per
average common share, for FAS No. 109. Reference is made to Note 1 in the
"Summary of Accounting Policies--Changes in Accounting Principles" for further
information.
EARNINGS (LOSS) PER AVERAGE COMMON SHARE
Loss from continuing operations for 1992 was $683 million, or $4.85 per
average common share after preferred dividends, compared with a loss from
continuing operations of $692 million, or $5.77 per average common share after
preferred dividends in 1991. Net loss to common stock was $1.34 billion, or
$9.29 per average common share in 1992 versus a net loss to common stock of
$748 million, or $6.09 per average common share in the prior year. Included in
1992 was income from discontinued operations of $71 million, or 50 cents per
average common share, the extraordinary loss of $12 million, or 8 cents per
average common share, and the charge of $699 million, or $4.86 per average
common share relating to the cumulative effect of changes in accounting
principles. The 1992 loss from continuing operations of $4.85 per average
common share included an after-tax restructuring charge of $5.85 per average
common share and the 1991 loss from continuing operations of $5.77 per share
included an after-tax restructuring charge of $3.91 per average common share.
Loss from discontinued operations in 1991 was $40 million, or 32 cents per
average common share. Preferred stock dividends were $16 million for each of
the years 1992 and 1991.
Average shares outstanding used for the calculation of earnings per average
share for 1992 were 144.1 million compared to 122.8 million in 1991. The
increase was primarily attributable to the December 1991 issuance of 17.9
million Depositary Shares representing 8.9 million shares of Series A preferred
stock. The remaining increase was the result of treasury shares sold in a
public offering to fund employee benefit plans in 1992 along with 1.4 million
treasury shares issued in December 1991 in a public offering.
34
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $929 million for the year 1992
compared to $950 million for 1991, a decrease of $21 million including
discontinued operations. Excluding the discontinued operations, there was an
improvement of $145 million. This improvement was due primarily to a
substantial decrease in long-term notes and receivables partially offset by the
tax payment associated with the completion of long-term shipbuilding contracts.
The decrease in long-term notes and receivables was due to the sale of $552
million of Case retail receivables through an asset backed securitization in
December 1992. The changes in working capital and other were driven by
restructuring charges recorded in both 1992 and 1991. For the year 1992 working
capital decreased $409 million. This was driven by lower receivables and
inventories of farm and construction equipment primarily generated from lower
production levels in 1992 compared to 1991. The $596 million of the adjustments
included in the "Other" category includes $779 million of restructuring
measures, offset by $183 million of miscellaneous non-restructuring items, none
of which is significant. The restructuring charge had no impact on cash flows
in 1992. The $779 million of adjustments included in the "Other" category is
comprised of a $340 million reduction of net property, plant and equipment, a
$39 million reduction of intangibles and other assets, a $24 million adjustment
to other accounts, and the establishment of a $376 million restructuring
reserve included in "Deferred Credits and Other Liabilities" on the Balance
Sheet as disclosed in Note 2 to the Financial Statements.
Net cash provided by investing activities was $105 million for 1992 compared
to cash used of $660 million in 1991. This improvement was due primarily to the
proceeds from the sale of Tenneco's minerals and pulp chemical operations,
lower capital expenditures ($299 million, which includes $122 million from
discontinued operations) and lower expenditures for investments.
Expenditures for plant, property and equipment from continuing operations for
1992 were $569 million compared to $746 million for 1991. This reduction
affected all divisions and was part of Tenneco's continuing restructuring
program initiated in 1991. The major decreases associated with continuing
operations were incurred by farm and construction equipment ($44 million),
packaging ($30 million) and shipbuilding ($29 million).
Capitalization totaled $9.78 billion at year-end 1992 which was down $2.66
billion from year-end 1991. The ratio of total debt to capitalization increased
from 74.7 percent to 82.8 percent. The total debt to capitalization ratio at
year-end 1992, including the market value of the SECT shares, was 78.8 percent.
The major changes in capitalization were a reduction in total debt of $1.19
billion and a decrease in stockholders' equity of $1.44 billion. The decrease
in stockholders' equity was primarily due to the Case Restructuring Program and
the adoption of the changes in accounting principles.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL STATEMENTS OF TENNECO INC.
AND CONSOLIDATED SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of independent public accountants.................................. 37
Statements of income (loss) for each of the three years in the period
ended December 31, 1993.................................................. 38
Balance sheets--December 31, 1993 and 1992................................ 40
Statements of cash flows for each of the three years in the period ended
December 31, 1993........................................................ 42
Statements of changes in stockholders' equity for each of the three years
in the period ended December 31, 1993.................................... 44
Notes to financial statements............................................. 45
</TABLE>
35
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
36
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Tenneco Inc.:
We have audited the accompanying balance sheets of Tenneco Inc. (a Delaware
corporation) and consolidated subsidiaries as of December 31, 1993 and 1992,
and the related statements of income (loss), cash flows and changes in
stockholders' equity for each of the three years in the period ended December
31, 1993. These financial statements and the schedules referred to below are
the responsibility of Tenneco's management. Our responsibility is to express an
opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Tenneco Inc. and consolidated
subsidiaries as of December 31, 1993 and 1992, and the results of their
operations, cash flows and changes in stockholders' equity for each of the
three years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the financial statements, effective January 1,
1992, Tenneco changed its methods of accounting for income taxes and
postretirement benefits other than pensions.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
index to Item 14 relating to Tenneco Inc. and consolidated subsidiaries are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. The
supplemental schedules have been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, fairly
state in all material respects the financial data required to be set forth
therein in relation to the basic financial statements of Tenneco Inc. and
consolidated subsidiaries taken as a whole.
Arthur Andersen & Co.
Houston, Texas
February 14, 1994
37
<PAGE>
STATEMENTS OF INCOME (LOSS)
<TABLE>
<CAPTION>
Tenneco Inc. and Consolidated Subsidiaries
-------------------------------------------
<S> <C> <C> <C>
Years Ended December 31 (Millions Except Share Amounts) 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
Revenues
Net sales and operating revenues-
Natural gas pipelines $ 2,862 $ 2,183 $ 2,183
Farm and construction equipment 3,748 3,829 4,449
Automotive parts 1,839 1,808 1,701
Shipbuilding 1,861 2,265 2,216
Packaging 2,042 2,078 1,934
Chemicals 914 951 916
Other (11) 25 20
- ------------------------------------------------------------------------------------------------------------------------------------
13,255 13,139 13,419
- ------------------------------------------------------------------------------------------------------------------------------------
Other income-
Interest income 277 358 373
Equity in net income-Tenneco Finance - - -
Gain on sale of businesses and assets, net 118 5 303
Other income, net 82 58 47
- ------------------------------------------------------------------------------------------------------------------------------------
13,732 13,560 14,142
- ------------------------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of sales (exclusive of depreciation shown below) 8,296 8,806 9,562
Operating expenses 2,269 1,637 1,573
Selling, general and administrative 1,235 1,361 1,647
Finance charges-Tenneco Finance 254 364 429
Depreciation, depletion and amortization 509 552 526
Restructuring costs - 920 552
- ------------------------------------------------------------------------------------------------------------------------------------
12,563 13,640 14,289
- ------------------------------------------------------------------------------------------------------------------------------------
Income
Income (loss) before interest expense and income taxes 1,169 (80) (147)
Interest expense (net of interest capitalized) 460 527 559
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 709 (607) (706)
Income tax expense (benefit) 258 76 (14)
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations 451 (683) (692)
Income (loss) from discontinued operations, net of income tax - 71 (40)
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before extraordinary loss 451 (612) (732)
Extraordinary loss, net of income tax (25) (12) -
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before cumulative effect of changes
in accounting principles 426 (624) (732)
Cumulative effect of changes in accounting principles,
net of income tax - (699) -
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) 426 (1,323) (732)
Preferred stock dividends 14 16 16
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) to common stock $ 412 $ (1,339) $ (748)
- ------------------------------------------------------------------------------------------------------------------------------------
Per Share
Average number of shares of common stock outstanding 168,772,852 144,110,151 122,777,910
Earnings (loss) per average share of common stock:
Continuing operations $ 2.59 $ (4.85) $ (5.77)
Discontinued operations - .50 (.32)
Extraordinary loss (.15) (.08) -
Cumulative effect of changes in accounting principles - (4.86) -
- ------------------------------------------------------------------------------------------------------------------------------------
$ 2.44 $ (9.29) $ (6.09)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash dividends per share of common stock $ 1.60 $ 1.60 $ 2.80
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements of income (loss).
Reference is made to Note 1 for definitions of "Tenneco Industrial" and "Tenneco
Finance."
38
<PAGE>
<TABLE>
<CAPTION>
Tenneco Industrial Tenneco Finance
- ---------------------------------------------------------------------------------------------------------------------------------
Years Ended December 31 (Millions Except Share Amounts) 1993 1992 1991 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Net sales and operating revenues-
Natural gas pipelines $ 2,862 $ 2,183 $ 2,183 $ - $ - $ -
Farm and construction equipment 3,748 3,829 4,449 - - -
Automotive parts 1,839 1,808 1,701 - - -
Shipbuilding 1,861 2,265 2,216 - - -
Packaging 2,042 2,078 1,934 - - -
Chemicals 914 951 916 - - -
Other (11) 25 20 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
13,255 13,139 13,419 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Other income-
Interest income 46 62 57 494 675 739
Equity in net income-Tenneco Finance 106 132 124 - - -
Gain on sale of businesses and assets, net 118 5 303 - - -
Other income, net 95 67 53 6 6 7
- -----------------------------------------------------------------------------------------------------------------------------------
13,620 13,405 13,956 500 681 746
- -----------------------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of sales (exclusive of depreciation shown below) 8,302 8,811 9,568 - - -
Operating expenses 2,266 1,627 1,558 10 16 17
Selling, general and administrative 1,383 1,542 1,846 10 7 13
Finance charges-Tenneco Finance - - - 275 379 441
Depreciation, depletion and amortization 507 550 524 2 2 2
Restructuring costs - 920 552 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
12,458 13,450 14,048 297 404 473
- -----------------------------------------------------------------------------------------------------------------------------------
Income
Income (loss) before interest expense and income taxes 1,162 (45) (92) 203 277 273
Interest expense (net of interest capitalized) 526 649 689 24 58 74
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 636 (694) (781) 179 219 199
Income tax expense (benefit) 185 (11) (89) 73 87 75
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations 451 (683) (692) 106 132 124
Income (loss) from discontinued operations, net of income tax - 71 (40) - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before extraordinary loss 451 (612) (732) 106 132 124
Extrarodinary loss, net of income tax (25) (12) _ (1) _ _
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before cumulative effect of changes
in accounting principles 426 (624) (732) 105 132 124
Cumulative effect of changes in accounting principles,
net of income tax _ (699) _ _ (6) _
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) 426 (1,323) (732) 105 126 124
Preferred stock dividends 14 16 16 _ _ _
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) to common stock $ 412 $ (1,339) $ (748) $ 105 $ 126 $ 124
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE>
BALANCE SHEETS
<TABLE>
<CAPTION>
Tenneco Inc. and Consolidated Subsidiaries
-------------------------------------------------------------
December 31 (Millions) 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and temporary cash investments $ 218 $ 111
Receivables-
Customer notes and accounts (net) 2,669 3,275
Affiliated companies - -
Gas transportation and exchange 228 342
Other 274 187
Inventories 1,581 1,774
Deferred income taxes 61 175
Prepayments and other 386 419
- ----------------------------------------------------------------------------------------------------------------------------------
5,417 6,283
- ----------------------------------------------------------------------------------------------------------------------------------
Investments and other assets:
Investment in affiliated companies 470 581
Other investments, at cost 58 105
Long-term notes and other receivables (net) 1,961 2,336
Investment in subsidiaries in excess of net assets at
date of acquisition, less amortization 422 434
Deferred income taxes 38 -
Other 1,327 1,133
- ----------------------------------------------------------------------------------------------------------------------------------
4,276 4,589
- ----------------------------------------------------------------------------------------------------------------------------------
Plant, property and equipment, at cost 12,115 12,100
Less-Reserves for depreciation, depletion and amortization 6,435 6,388
- ----------------------------------------------------------------------------------------------------------------------------------
5,680 5,712
- ----------------------------------------------------------------------------------------------------------------------------------
$15,373 $16,584
- ----------------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current liabilities:
Short-term debt (including current maturities on long-term debt) $ 1,274 $ 1,696
Payables-
Trade 1,337 1,405
Affiliated companies - -
Gas transportation and exchange 136 243
Taxes accrued 158 237
Interest accrued 154 201
Restructuring liability 223 298
Natural gas pipeline revenue reservation 291 156
Other 1,337 1,444
- ----------------------------------------------------------------------------------------------------------------------------------
4,910 5,680
- ----------------------------------------------------------------------------------------------------------------------------------
Long-term debt 4,799 6,400
- ----------------------------------------------------------------------------------------------------------------------------------
Deferred income taxes 1,225 1,186
- ----------------------------------------------------------------------------------------------------------------------------------
Deferred credits and other liabilities 1,522 1,632
- ----------------------------------------------------------------------------------------------------------------------------------
Commitments and contingencies
Minority interest 153 165
- ----------------------------------------------------------------------------------------------------------------------------------
Preferred stock with mandatory redemption provisions 163 191
- ----------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Series A preferred stock 9 9
Common stock 870 752
Stock Employee Compensation Trust (common stock held in trust) (499) (488)
Premium on common stock and other capital surplus 3,714 2,637
Cumulative translation adjustments (303) (230)
Retained earnings (accumulated deficit) (980) (1,082)
- ----------------------------------------------------------------------------------------------------------------------------------
2,811 1,598
Less-Shares held as treasury stock, at cost 210 268
- ----------------------------------------------------------------------------------------------------------------------------------
2,601 1,330
- ----------------------------------------------------------------------------------------------------------------------------------
$15,373 $16,584
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
Reference is made to Note 1 for definitions of "Tenneco Industrial" and
"Tenneco Finance."
40
<PAGE>
<TABLE>
<CAPTION>
Tenneco Industrial Tenneco Finance
-------------------------------------------------------------
December 31 (Millions) 1993 1992 1993 1992
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and temporary cash investments $ 213 $ 102 $ 5 $ 9
Receivables-
Customer notes and accounts (net) 561 704 2,098 2,555
Affiliated companies 57 27 371 589
Gas transportation and exchange 228 342 - -
Other 259 153 15 35
Inventories 1,581 1,774 - -
Deferred income taxes 40 165 21 10
Prepayments and other 393 417 3 16
- ----------------------------------------------------------------------------------------------------------------------------------
3,332 3,684 2,513 3,214
- ----------------------------------------------------------------------------------------------------------------------------------
Investments and other assets:
Investment in affiliated companies 1,526 1,545 - -
Other investments, at cost 53 100 5 5
Long-term notes and other receivables (net) 243 187 1,722 2,110
Investment in subsidiaries in excess of net assets at
date of acquisition, less amortization 422 434 - -
Deferred income taxes 38 - - -
Other 1,372 1,158 7 63
- ----------------------------------------------------------------------------------------------------------------------------------
3,654 3,424 1,734 2,178
- ----------------------------------------------------------------------------------------------------------------------------------
Plant, property and equipment, at cost 12,046 12,029 69 71
Less-Reserves for depreciation, depletion and amortization 6,419 6,373 16 15
- ----------------------------------------------------------------------------------------------------------------------------------
5,627 5,656 53 56
- ----------------------------------------------------------------------------------------------------------------------------------
$12,613 $12,764 $ 4,300 $ 5,448
- ----------------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current liabilities:
Short-term debt (including current maturities on long-term debt $ 179 $ 364 $1,382 $1,652
Payables-
Trade 1,334 1,398 3 7
Affiliated companies 129 272 11 23
Gas transportation and exchange 136 243 - -
Taxes accrued 132 208 26 29
Interest accrued 102 132 52 69
Restructuring liability 223 298 - -
Natural gas pipeline revenue reservation 291 156 - -
Other 1,276 1,369 61 75
- ----------------------------------------------------------------------------------------------------------------------------------
3,802 4,440 1,535 1,855
- ----------------------------------------------------------------------------------------------------------------------------------
Long-term debt 3,143 3,825 1,710 2,623
- ----------------------------------------------------------------------------------------------------------------------------------
Deferred income taxes 1,227 1,181 (2) 5
- ----------------------------------------------------------------------------------------------------------------------------------
Deferred credits and other liabilities 1,524 1,632 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
Commitments and contingencies
Minority interest 153 165 - -
- ----------------------------------------------------------------------------------------------------------------------------------
Preferred stock with mandatory redemption provisions 163 191 - -
- ----------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Series A preferred stock 9 9 - -
Common stock 870 752 317 314
Stock Employee Compensation Trust (common stock held in trust) (499) (488) - -
Premium on common stock and other capital surplus 3,714 2,637 268 267
Cumulative translation adjustments (303) (230) (8) (2)
Retained earnings (accumulated deficit) (980) (1,082) 479 385
- ----------------------------------------------------------------------------------------------------------------------------------
2,811 1,598 1,056 964
Less-Shares held as treasury stock, at cost 210 268 - -
- ----------------------------------------------------------------------------------------------------------------------------------
2,601 1,330 1,056 964
- ----------------------------------------------------------------------------------------------------------------------------------
$12,613 $12,764 $4,300 $5,448
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE>
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Tenneco Inc. and Consolidated Subsidiaries
--------------------------------------------
<S> <C> <C> <C>
Years Ended December 31 (Millions) 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
Operating Activities
Income (loss) from continuing operations $ 451 $ (683) $ (692)
Adjustments to reconcile income (loss) from continuing operations
to cash provided by continuing operations-
Depreciation, depletion and amortization 509 552 526
Deferred income taxes 107 (512) (127)
Gain on sale of businesses and assets, net (118) (5) (303)
Changes in components of working capital-
(Increase) decrease in receivables 481 138 625
(Increase) decrease in inventories 103 290 303
(Increase) decrease in prepayments and
other current assets 21 (5) (10)
Increase (decrease) in payables (153) (144) (226)
Increase (decrease) in taxes accrued (56) 26 (5)
Increase (decrease) in interest accrued (46) (19) 48
Increase (decrease) in restructuring liability (76) (94) 446
Increase (decrease) in natural gas pipeline revenue reservation 136 144 -
Increase (decrease) in other current liabilities 29 73 370
(Increase) decrease in long-term notes and receivables 440 580 (29)
Take-or-pay (refunds to customers) recoupments, net (34) 92 127
Other (121) 596 (169)
- -------------------------------------------------------------------------------------------------------------------------------
Cash provided by continuing operations 1,673 1,029 884
Cash provided (used) by discontinued operations (58) (100) 66
- -------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,615 929 950
- -------------------------------------------------------------------------------------------------------------------------------
Investing Activities
Net proceeds (expenditures) related to the sale
of discontinued operations (54) 609 (29)
Proceeds from sale of businesses and assets 266 141 451
Expenditures for plant, property and equipment-
Continuing operations (587) (569) (746)
Discontinued operations - (26) (148)
Acquisitions of businesses (14) (10) (51)
Investments and other 51 (40) (137)
- -------------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities (338) 105 (660)
- -------------------------------------------------------------------------------------------------------------------------------
Financing Activities
Issuance of common, treasury and SECT shares 1,215 318 -
Purchase of common stock (7) (3) (1)
Issuance of Series A preferred stock - - 512
Issuance of equity securities by a subsidiary - - 140
Redemption of preferred stock (30) (6) (10)
Issuance of long-term debt 3 1,075 1,595
Retirement of long-term debt (2,019) (1,206) (704)
Net increase (decrease) in short-term debt
excluding current maturities on long-term debt (21) (1,048) (1,382)
Dividends (common and preferred) (307) (266) (355)
- -------------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities (1,166) (1,136) (205)
- -------------------------------------------------------------------------------------------------------------------------------
Effect of foreign exchange rate changes on cash and temporary
cash investments (4) (18) (1)
- -------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and temporary cash investments $ 107 $ (120) $ 84
Cash and temporary cash investments, January 1 111 231 147
- -------------------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments, December 31 (Note) $ 218 $ 111 $ 231
- -------------------------------------------------------------------------------------------------------------------------------
Cash paid during the year for interest $ 759 $ 926 $ 986
Cash paid during the year for income taxes (net of refunds) $ 349 $ 729 $ 131
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements of cash flows.
Reference is made to Note 1 for definitions of "Tenneco Industrial" and "Tenneco
Finance."
Note: Cash and temporary cash investments include highly liquid investments with
maturity of three months or less at date of purchase.
42
<PAGE>
<TABLE>
<CAPTION>
Tenneco Industrial Tenneco Finance
-----------------------------------------------------------------
Years Ended December 31 (Millions) 1993 1992 1991 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Activities
Income (loss) from continuing operations $ 451 $(683) $(692) $ 106 $ 132 $ 124
Adjustments to reconcile income (loss) from continuing operations
to cash provided by continuing operations-
Depreciation, depletion and amortization 507 550 524 2 2 2
Deferred income taxes 113 (506) (121) (6) (6) (6)
Gain on sale of businesses and assets, net (118) (5) (303) - - -
Changes in components of working capital-
(Increase) decrease in receivables 68 (157) 342 612 406 289
(Increase) decrease in inventories 103 290 256 - - 47
(Increase) decrease in prepayments and
other current assets 13 6 (14) 13 (10) 7
Increase (decrease) in payables (301) (243) (178) (7) 27 (46)
Increase (decrease) in taxes accrued (45) 40 (6) (11) (14) 1
Increase (decrease) in interest accrued (29) 11 25 (17) (30) 23
Increase (decrease) in restructuring liability (76) (94) 446 - - -
Increase (decrease) in natural gas pipeline revenue reservation 136 144 - - - -
Increase (decrease) in other current liabilities 36 47 381 (6) 26 (11)
(Increase) decrease in long-term notes and receivables (1) (2) (7) 405 566 19
Take-or-pay (refunds to customers) recoupments, net (34) 92 127 - - -
Other (150) 627 (247) (30) (52) 4
- -----------------------------------------------------------------------------------------------------------------------------------
Cash provided by continuing operations 673 117 533 1,061 1,047 453
Cash provided (used) by discontinued operations (58) (100) 66 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 615 17 599 1,061 1,047 453
- -----------------------------------------------------------------------------------------------------------------------------------
Investing Activities
Net proceeds (expenditures) related to the sale
of discontinued operations (54) 653 (29) - - -
Proceeds from sale of businesses and assets 266 141 451 - - -
Expenditures for plant, property and equipment-
Continuing operations (587) (569) (746) - - -
Discontinued operations - (26) (148) - - -
Acquisitions of businesses (14) (10) (26) - - (25)
Investments and other (7) (30) (157) 59 (61) (48)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities (396) 159 (655) 59 (61) (73)
- -----------------------------------------------------------------------------------------------------------------------------------
Financing Activities
Issuance of common, treasury and SECT shares 1,215 318 - 9 - -
Purchase of common stock (7) (3) (1) - - -
Issuance of Series A preferred stock - - 512 - - -
Issuance of equity securities by a subsidiary - - 140 - - -
Redemption of preferred stock (30) (6) (10) - - -
Issuance of long-term debt 9 950 702 11 125 895
Retirement of long-term debt (1,264) (721) (104) (785) (492) (611)
Net increase (decrease) in short-term debt
excluding current maturities on long-term debt 277 (545) (708) (348) (519) (648)
Dividends (common and preferred) (307) (266) (355) (8) (105) (51)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities (107) (273) 176 (1,121) (991) (415)
- -----------------------------------------------------------------------------------------------------------------------------------
Effect of foreign exchange rate changes on cash and temporary
cash investments (1) (8) (1) (3) (10) -
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and temporary cash investments $ 111 $(105) $ 119 $ (4) $ (15) $ (35)
Cash and temporary cash investments, January 1 102 207 88 9 24 59
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments, December 31 (Note) $ 213 $ 102 $ 207 $ 5 $ 9 $ 24
- -----------------------------------------------------------------------------------------------------------------------------------
Cash paid during the year for interest $ 596 $ 702 $ 758 $ 316 $ 467 $ 492
Cash paid during the year for income taxes (net of refunds) $ 273 $ 635 $ 87 $ 76 $ 94 $ 44
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Tenneco Inc. and Consolidated Subsidiaries
--------------------------------------------------------------------
Years Ended December 31 1993 1992 1991
-------------------- -------------------- ----------------------
(Millions Except Share Amounts) Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Series A Preferred Stock
Balance January 1 8,935,175 $ 9 8,935,175 $ 9 - $ -
Shares issued - - - - 8,935,175 9
- -----------------------------------------------------------------------------------------------------------------
Balance December 31 8,935,175 9 8,935,175 9 8,935,175 9
- -----------------------------------------------------------------------------------------------------------------
Common Stock
Balance January 1 150,300,224 752 149,831,446 749 149,286,713 747
Issued to retire debt 23,500,000 117 - - - -
Issued pursuant to benefit plans 151,678 1 468,114 3 487,820 2
Other 1,110 - 664 - 56,913 -
- -----------------------------------------------------------------------------------------------------------------
Balance December 31 173,953,012 870 150,300,224 752 149,831,446 749
- -----------------------------------------------------------------------------------------------------------------
Stock Employee Compensation Trust (SECT)
Balance January 1 (488) - -
Establishment of SECT - (432) -
Shares issued 119 - -
Adjustment to market value (130) (56) -
- -----------------------------------------------------------------------------------------------------------------
Balance December 31 (499) (488) -
- -----------------------------------------------------------------------------------------------------------------
Premium on Common Stock and
Other Capital Surplus
Balance January 1 2,637 2,841 2,345
Premium on common stock issued
to retire debt 935 - -
Premium on common stock issued
pursuant to benefit plans 6 15 20
Premium on Series A preferred stock - - 503
Loss on issuance of treasury stock (3) (112) (26)
Loss on shares issued by SECT (6) - -
Cost less market value of treasury
shares issued to SECT - (177) -
Dividends on shares held by SECT 17 5 -
Adjustment of SECT to market value 130 56 -
Deferred compensation related
to the Restricted Stock Plan
(net of amortization) (2) 9 (1)
- -----------------------------------------------------------------------------------------------------------------
Balance December 31 3,714 2,637 2,841
- -----------------------------------------------------------------------------------------------------------------
Cumulative Translation Adjustments
Balance January 1 (230) (24) 52
Translation of foreign currency
statements (78) (236) (91)
Hedges of net investment in foreign
subsidiaries (net of income taxes) 5 30 15
- -----------------------------------------------------------------------------------------------------------------
Balance December 31 (303) (230) (24)
- -----------------------------------------------------------------------------------------------------------------
Retained Earnings (Accumulated Deficit)
Balance January 1 (1,082) 515 1,605
Net income (loss) 426 (1,323) (732)
Dividends-
Preferred stock (11) (13) (13)
Series A preferred stock (50) (51) -
Common stock (260) (207) (342)
Accretion of excess of redemption
value of preferred stock over
fair value at date of issue (3) (3) (3)
- -----------------------------------------------------------------------------------------------------------------
Balance December 31 (980) (1,082) 515
- -----------------------------------------------------------------------------------------------------------------
Less-Common Stock Held
as Treasury Stock, at Cost
Balance January 1 5,323,912 268 25,990,390 1,316 27,301,445 1,382
Shares acquired 234,434 12 150,123 7 90,945 5
Shares issued to SECT - - (12,000,000) (607) - -
Shares issued pursuant to benefit
and dividend reinvestment plans (1,391,511) (70) (8,356,389) (425) (2,000) -
Shares issued for acquisition - - (460,212) (23) - -
Shares issued for litigation settlement - - - - (1,400,000) (71)
- -----------------------------------------------------------------------------------------------------------------
Balance December 31 4,166,835 210 5,323,912 268 25,990,390 1,316
- -----------------------------------------------------------------------------------------------------------------
Total $2,601 $ 1,330 $2,774
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements of changes in stockholders' equity.
44
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Summary of Accounting Policies
Consolidation and Presentation
The financial statements of Tenneco Inc. and consolidated subsidiaries
("Tenneco") include all majority-owned subsidiaries including wholly-owned
finance subsidiaries. Companies in which at least a 20% to a 50% voting interest
is owned are carried at cost plus equity in undistributed earnings since date
of acquisition and cumulative translation adjustments. At December 31, 1993,
equity in undistributed earnings (losses) and cumulative translation adjustments
amounted to $(57) million and $(10) million, respectively; at December 31, 1992,
the corresponding amounts were $(73) million and $(3) million, respectively.
The accompanying financial statements also include, on a separate and
supplemental basis, the combination of Tenneco's industrial companies and
finance companies as follows:
Tenneco Industrial-The financial information captioned "Tenneco Industrial"
reflects the consolidation of all majority-owned subsidiaries except for the
finance subsidiaries. The finance operations have been included using the equity
method of accounting whereby the net income and net assets of these companies
are reflected, respectively, in the income statement caption, "Equity in net
income-Tenneco Finance," and in the balance sheet caption, "Investment in
affiliated companies."
Tenneco Finance-The financial information captioned "Tenneco Finance"
reflects the combination of Tenneco's wholly-owned finance subsidiaries.
All significant intercompany transactions, including activity within and
between the "Tenneco Industrial" and "Tenneco Finance" business units, have been
eliminated.
Environmental Liabilities
Expenditures for ongoing compliance with environmental regulations that
relate to current operations are expensed or capitalized as appropriate.
Expenditures that relate to an existing condition caused by past operations, and
which do not contribute to current or future revenue generation, are expensed.
Liabilities are recorded when environmental assessments indicate that remedial
efforts are probable and the costs can be reasonably estimated. Estimates of the
liability are based upon currently available facts, existing technology, and
presently enacted laws and regulations taking into consideration the likely
effects of inflation and other societal and economic factors. All available
evidence is considered including prior experience in remediation of contaminated
sites, other companies' clean-up experience, and data released by the
Environmental Protection Agency or other organizations. These liabilities are
included in the balance sheet at their undiscounted amounts. Recoveries are
evaluated separately from the liability and, if appropriate, are recorded
separately from the associated liability in the financial statements.
For further information on this subject, reference is made to Note 16,
"Commitments and Contingencies-Environmental Matters" and to Management's
Discussion and Analysis of Financial Condition and Results of Operations.
Depreciation and Amortization
Depreciation of Tenneco's properties is provided on a straight-line basis in
amounts which, in the opinion of management, are adequate to allocate the cost
of properties over their estimated useful lives.
The excess of investment in subsidiaries over net assets at date of
acquisition is being amortized over a 40-year period. Such amortization relative
to continuing operations amounted to $16 million, $14 million and $13 million
for 1993, 1992 and 1991, respectively, and is included in the income statement
caption, "Other income, net."
Revenue Recognition
Newport News Shipbuilding and Dry Dock Company ("Newport News"), a
subsidiary, reports profits on its long-term shipbuilding contracts on the
percentage-of-completion method of accounting, determined on the basis of total
costs incurred to date to estimated final total costs. Losses on contracts are
reported when first estimated. The performance of contracts usually extends over
several years, requiring periodic reviews and revisions of estimated final
contract prices and costs during the term of the contracts. The effect of these
revisions is included in income in the period the revisions are made.
Sales by the Farm and construction equipment segment to independent dealers
are recorded at the time of shipment to those dealers. Sales through company-
owned retail stores are recorded at the time of sale to retail customers. The
Farm and construction equipment segment grants certain sales incentives to
stimulate sales of the farm and construction equipment products to retail
customers. The expense for such incentive programs is recorded at the time of
sale.
Tenneco's other divisions recognize revenue on the accrual method when title
passes to the customer or when the service is performed.
45
<PAGE>
Changes in Accounting Principles
Tenneco elected early adoption of Statement of Financial Accounting Standards
("FAS") No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," for its domestic operations and FAS No. 109, "Accounting for Income
Taxes." Both standards were adopted effective January 1, 1992, using the
cumulative catch-up method.
Under FAS No. 106, Tenneco is required to accrue the estimated costs of
retiree benefits other than pensions (primarily health care benefits and life
insurance) during the employees' active service period. Prior to 1992, Tenneco
expensed the cost of these benefits as medical and insurance claims were paid.
Tenneco expects to adopt the new standard for its non-U.S. plans in the first
quarter of 1995 and estimates that the adoption will reduce pre-tax income by
approximately $20 million.
The adoption of FAS No. 109 changed Tenneco's method of accounting for income
taxes from the deferred method to the liability method. The liability method
requires the recognition of deferred tax assets and liabilities for the future
tax consequences of temporary differences between the financial statement basis
and the tax basis of assets and liabilities.
In 1992, Tenneco recorded an after-tax charge of $699 million or $4.86 per
average common share for the cumulative effect of the accounting changes
consisting of $414 million or $2.88 per share for FAS No. 106 and $285 million
or $1.98 per share for FAS No. 109. Reference is made to Note 10, "Income
Taxes," and Note 13, "Postretirement and Postemployment Benefits," for further
information regarding these changes.
Inventories
At December 31, 1993 and 1992, inventory by major classification was as
follows:
<TABLE>
<CAPTION>
(Millions) 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C>
Finished goods $ 918 $1,080
Work in process 163 155
Long-term contracts in progress, less progress billings 66 113
Raw materials 281 265
Materials and supplies 153 161
- ---------------------------------------------------------------------------
$1,581 $1,774
- ---------------------------------------------------------------------------
</TABLE>
Inventories generally are valued at the lower of cost (determined on the
"first-in, first-out" or "average" methods) or market based on estimated
realizable value.
Notes Receivable
Short-term notes receivable of $1,359 million and $1,921 million were
outstanding at December 31, 1993 and 1992, respectively, of which $1,299 million
and $1,853 million, respectively, related to Tenneco Finance. These notes
receivable are presented net of unearned finance charges of $96 million and $182
million at December 31, 1993 and 1992, respectively, which related principally
to Tenneco Finance. At December 31, 1993 and 1992, unearned finance charges
related to long-term notes and other receivables were $139million and $174
million, respectively, which related principally to Tenneco Finance.
Allowance for Doubtful Accounts and Notes Receivable
At December 31, 1993 and 1992, the allowance for doubtful accounts and notes
receivable was $129 million and $119 million, respectively, of which $42 million
and $49 million, respectively, related to Tenneco Finance.
Restrictions on the Payment of Dividends by Subsidiaries
At December 31, 1993, Tennessee Gas Pipeline Company ("Tennessee") and
Tenneco Credit Corporation ("TCC"), both wholly-owned consolidated subsidiaries,
had retained earnings of $3,150 million and $299 million, respectively, of which
$681 million and $129 million, respectively, were contractually restricted as to
the payment of dividends. The restrictions for Tennessee are contained in
indentures under which certain of its notes and debentures have been issued. The
TCC restrictions are contained in the investment agreement between TCC and
Tenneco Inc. which was entered into in support of various loan agreements of
TCC.
Reference is made to Management's Discussion and Analysis of Financial
Condition and Results of Operations for information regarding the payment of
dividends by Tenneco Inc.
Reclassifications
Prior years' financial statements have been reclassified to conform to 1993
presentations.
46
<PAGE>
2. Restructuring Costs
During 1991, Tenneco identified restructuring measures which resulted in a
pre-tax restructuring charge of $552 million ($480 million after tax or $3.91
per average common share) which was recorded as part of continuing operations.
The charge reflected estimated costs of $287 million attributable to an 8,000
personnel reduction program; $122 million to plant closings; and $143 million
for the rationalization or discontinuance of farm and construction equipment
product lines, including costs associated with dealer discounts, other incentive
programs and inventory writedowns to net realizable value. Of the total pre-tax
charge, $461 million was taken at Tenneco's Farm and construction equipment
segment ("Case").
The 1991 restructuring charge was in part attributable to aggressive measures
taken in September 1991 to respond to depressed market conditions facing the
farm and construction equipment business and to improve Case's performance.
While the measures taken at Case since September 1991 resulted in significant
improvement in Case's performance, the worldwide farm and construction equipment
market continued to deteriorate during 1992, and Tenneco Management and the
Board of Directors determined that major structural and strategic changes were
necessary in order to (1) rationalize certain component production operations to
reduce the fixed cost portion of the manufacturing process; (2) reduce excess
capacity; (3) focus, discontinue or replace unprofitable and noncompetitive
product lines; and (4) restructure and refocus product and component parts
distribution to strengthen Case's competitive position in the global
marketplace.
Consequently, on March 21, 1993, the Board of Directors of Tenneco Inc.
adopted a comprehensive restructuring program for Case. Adoption of this program
resulted in a pre-tax restructuring charge of $920 million ($843 million after
tax, or $5.85 per average common share), all of which was reflected in the 1992
loss from continuing operations before interest expense and income taxes. The
$920 million pre-tax charge was recorded as a $340 million reduction of net
plant, property and equipment, a $55 million reduction of inventory, a $63
million reduction of intangibles and other accounts and a $462 million reserve
for the future cost of implementing the various restructuring actions. Of this
reserve, $86 million was recorded as a current liability and $376 million was
recorded in "Deferred credits and other liabilities."
As of December 31, 1993, approximately $130 million of the actions necessary
to complete the program had been implemented leaving $790 million to be
implemented over the next three years. Of the remaining actions to be
implemented, $259 million pertain to plant, property and equipment, $26 million
pertain to inventories, $58 million pertain to intangibles and other accounts
and $447 million is reflected as a reserve for future costs of implementing
other various restructuring actions. Of this reserve, $144 million is recorded
as a current liability and $303 million is recorded in "Deferred credits and
other liabilities" on the balance sheet as of December 31, 1993. The
restructuring actions taken during 1993 are described in detail in Management's
Discussion and Analysis of Financial Condition and Results of Operations.
In addition, $63 million of the 1991 restructuring charge remained on the
balance sheet as a current liability at December 31, 1993.
The specific restructuring measures were based on management's best business
judgment under prevailing circumstances and on assumptions which may be revised
over time and as circumstances change. The estimated costs associated with such
measures may require further revision in the future.
3. Acquisitions
In January 1991, Georgia-Pacific Corporation ("Georgia-Pacific"), Tenneco and
General Electric Capital Corporation ("GECC"), completed the sale by Georgia-
Pacific (a) to GECC of the buildings, machinery and equipment at two
containerboard mills; (b) to Packaging Corporation of America ("PCA") and other
subsidiaries of Tenneco of the land and certain equipment at such mills, 19
corrugated container plants, two short-line railroads that serve the mills, and
leasehold interests in approximately 100,000 acres of leased timberlands; and
(c) to John Hancock Mutual Life Insurance Company ("John Hancock") and
Metropolitan Life Insurance Company ("Metropolitan Life") of approximately
540,000 acres of fee timberlands. The assets purchased by GECC and the
timberlands purchased by John Hancock and Metropolitan Life have been leased to
PCA. The aggregate price paid to Georgia-Pacific was $727 million. Of that
amount, GECC paid $500 million, John Hancock and Metropolitan Life paid $173
million and PCA and other Tenneco subsidiaries paid an aggregate of $54 million.
The accompanying financial statements for 1991 include $371 million in net sales
from these assets since the date the purchases and lease arrangements were
completed. Reference is made to Note 16, "Commitments and Contingencies-Lease
Commitments," for further information regarding these lease commitments.
47
<PAGE>
4. Discontinued Operations, Disposition of Assets, and Extraordinary Loss
Discontinued Operations
During 1992, Tenneco sold its minerals and pulp chemicals operations for
proceeds of $500 million and $202 million, respectively. The sales of these
discontinued operations resulted in a gain (loss) of $96 million and $(25)
million, net of income tax expense of $45 million and $0, respectively.
Revenues for the minerals discontinued operations were $55 million for 1992
and $124 million for 1991. Net income was $3 million and $12 million, net of
income tax expense of $3 million and $1 million for 1992 and 1991, respectively.
Revenues for the pulp chemicals discontinued operations were $54 million and
$120 million for 1992 and 1991, respectively. Net income (loss) was $(3) million
and $6 million, net of income tax expense (benefit) of $(2) million and $4
million for 1992 and 1991, respectively.
The allocation of interest expense to discontinued operations was based on
the ratio of net assets of discontinued operations to consolidated net assets
plus debt. Interest expense, net of income tax, of $5 million and $10 million
was allocated to the minerals operations and $5 million and $7 million was
allocated to the pulp chemicals operations for 1992 and 1991, respectively.
A loss of $58 million from discontinued operations, net of a $31 million tax
benefit, was recorded in 1991 to reflect additional costs estimated to be
incurred in connection with the sale of Tenneco's oil and gas businesses in
1988. The costs are primarily attributable to (a) the settlement in December
1991 of litigation instituted by approximately 380 employees of Tenneco's former
oil and gas businesses claiming additional compensation and damages as a result
of the sale of such businesses; (b) the excess of presently estimated settlement
costs of additional claims by the purchasers and others arising out of the sales
of such businesses over reserves initially established for such claims; and (c)
a July 1991 decision of a federal appellate court refusing to reconsider a
ruling that lessors under oil and gas leases are entitled to royalty payments on
compression, gathering and other miscellaneous charges collected by natural gas
producers pursuant to Federal Energy Regulatory Commission Order No. 94, against
which royalty payments Tenneco has agreed to indemnify the purchasers of certain
of its oil and gas assets.
Disposition of Assets
During 1993, Tenneco disposed of a number of assets and investments including
its Newport News' Sperry Marine business; several PCA operations; two wholly-
owned pipeline companies, Viking Gas Transmission Company and Dean Pipeline
Company; and facilities and land of two foreign Case operations. The proceeds
from dispositions were $266 million and the pre-tax gain was $118 million.
In 1991, Tenneco sold its natural gas liquids business including its interest
in an MTBE plant under construction in La Porte, Texas, in a transaction valued
at $632 million resulting in a pre-tax gain of $265 million. The terms of the
sale included the assumption by the purchaser of costs associated with the
construction of the MTBE plant. Also, the Company sold three short-line
railroads for a total of $54 million and a pre-tax gain of $42 million.
Extraordinary Loss
In April 1993, Tenneco Inc. issued 23.5 million shares of common stock for
approximately $1.1 billion. The proceeds were used to retire $327 million of
short-term debt, $688 million of long-term debt and $14 million of variable rate
preferred stock. In November 1993, Tenneco retired DM250 million bonds. The
redemption premium related to the retirement of long-term debt resulting from
these two transactions ($25 million, net of income tax benefits of $13 million)
was recorded as an extraordinary loss.
In December 1992, Tenneco deposited cash with a trustee to defease $310
million of its high interest-bearing long-term debt. Accordingly, this amount
was excluded from long-term debt on the balance sheet at December 31, 1992. This
debt was prepaid in January and February 1993. In November 1992, Tenneco also
prepaid $71 million of high interest-bearing long-term debt related to an
investment in a partnership. Tenneco recorded an extraordinary loss of $12
million (net of income tax benefits of $6 million) for the redemption premium
resulting from these transactions.
5. Foreign Operations
At December 31, 1993, 1992 and 1991, and for the years then ended, the
results of operations and combined net assets of foreign subsidiaries were as
follows:
<TABLE>
<CAPTION>
(Millions) 1993 1992 1991
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Net sales and operating revenues $3,721 $4,064 $3,942
Income (loss) from continuing operations 207 (699) (596)
- ----------------------------------------------------------------------
Assets 3,457 4,074 5,345
Liabilities 2,110 2,637 3,461
- ----------------------------------------------------------------------
Net assets $1,347 $1,437 $1,884
- ----------------------------------------------------------------------
</TABLE>
48
<PAGE>
6. Plant, Property and Equipment, At Cost
At December 31, 1993 and 1992, plant, property and equipment, at cost, by
major segment was as follows:
<TABLE>
<CAPTION>
(Millions) 1993 1992
- -------------------------------------------------------
<S> <C> <C>
Natural gas pipelines $ 5,246 $ 5,182
Farm and construction equipment 1,937 2,077
Automotive parts 1,014 963
Shipbuilding 1,527 1,555
Packaging 1,468 1,398
Chemicals 739 708
Other 184 217
- -------------------------------------------------------
$12,115 $12,100
- -------------------------------------------------------
</TABLE>
7. Long-Term Debt, Short-Term Debt and Financing Arrangements
Long-Term Debt
A summary of long-term debt outstanding at December 31, 1993, is set forth in
the following table:
<TABLE>
<CAPTION>
(Millions)
- -------------------------------------------------------------------------------------
<S> <C>
Tenneco Industrial
Tenneco Inc.-
Debentures due 1998 through 2012, average effective interest rate 9.7%
(net of $2 million of unamortized discount) $ 398
Notes due 1994 through 2005, average effective interest rate 9.3%
(net of $4 million of unamortized discount) 1,830
Tennessee Gas Pipeline Company-
Debentures due 2011, effective interest rate 15.1%
(net of $222 million of unamortized discount) 178
Notes due 1995 through 1997, average effective interest rate 10.1%
(net of $11 million of unamortized discount) 805
Other subsidiaries-
Notes due 1994 through 2014, average effective interest rate 5.9%
(net of $20 million of unamortized discount) 82
- -------------------------------------------------------------------------------------
3,293
Less-Current maturities 150
- -------------------------------------------------------------------------------------
3,143
- -------------------------------------------------------------------------------------
Tenneco Finance
Tenneco Credit Corporation-
Senior notes due 1994 through 2001, average effective interest rate 9.4%
(net of $2 million of unamortized discount) 1,248
Medium-term notes due 1994 through 2002, average interest rate 9.3% 74
Subordinated notes due 1998 through 2001, average interest rate 9.9% 92
Case Finance Company-
Notes due 1994 through 1996, average interest rate 5.3% 500
Medium-term notes due 1994 through 1997, average interest rate 9.8% 92
Subordinated notes due 1994 through 1998, average interest rate 5.7% 31
Tenneco International Finance Ltd.-
Notes due 1994 through 1996, average interest rate 5.5% 123
Other subsidiaries-
Notes due 1994 through 2010, average effective interest rate 13.3%
(net of $30 million of unamortized discount) 32
Intercompany debt with Tenneco Industrial 54
- -------------------------------------------------------------------------------------
2,246
Less-Current maturities 536
- -------------------------------------------------------------------------------------
1,710
- -------------------------------------------------------------------------------------
Elimination of intercompany debt (54)
- -------------------------------------------------------------------------------------
$4,799
- -------------------------------------------------------------------------------------
</TABLE>
At December 31, 1993, approximately $272 million of gross plant, property and
equipment was pledged as collateral to secure $34 million principal amount of
long-term debt.
49
<PAGE>
The aggregate maturities and sinking fund requirements applicable to the
issues outstanding at December 31, 1993, are $686 million, $726 million, $660
million, $788 million and $854 million for 1994, 1995, 1996, 1997 and 1998,
respectively.
Short-Term Debt
Information for the year ended December 31, 1993, regarding short-term debt
follows:
<TABLE>
<CAPTION>
Commercial Lines
(Dollars in Millions) Paper of Credit*
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding borrowings at end of year-
Tenneco Industrial $ - $ 29
Tenneco Finance 496 63
- -----------------------------------------------------------------------------------------------------------------------------------
$496 $ 92
- -----------------------------------------------------------------------------------------------------------------------------------
Average interest rate on outstanding borrowings at end of year 4.0% 7.0%
Approximate maximum month-end outstanding borrowings during year $608 $ 470
Approximate average month-end outstanding borrowings during year $501 $ 203
Weighted average interest rate on approximate average month-end
outstanding borrowings during year 4.4% 5.9%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Includes borrowings under both committed and uncommitted lines of credit and
similar arrangements.
Financing Arrangements
As of December 31, 1993, Tenneco and its subsidiaries had arranged total lines
of credit of $3.3 billion, of which $3.1 billion are committed lines of credit
as more fully described below:
<TABLE>
<CAPTION>
Commercial Unused
Committed Lines of Credit(a) Paper Committed
(Millions) Term Commitments Borrowed Available & Other(b) Lines
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tenneco Inc. credit agreements 1994-1995 1,620(c) $ - $1,620 $ 29 $1,591
- -----------------------------------------------------------------------------------------------------------------------------------
Finance subsidiaries Various 1,454(d) 63 1,391 496 895
- -----------------------------------------------------------------------------------------------------------------------------------
$3,074 $63 $3,011 $525 $2,486
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: (a) The credit facilities generally provide for commitment fees on the
unused portion of the total commitment, and most credit facilities also
provide for facility fees on the total commitment.
(b) Includes borrowings under uncommitted lines of credit and similar
arrangements.
(c) Of these lines of credit, $100 million is also available to Tenneco
Finance; also, $100 million expires in 1994.
(d) Of these lines of credit, $654 million expire in 1994.
8. Financial Instruments
The estimated fair values of Tenneco's financial instruments at December 31,
1993 and 1992, were as follows:
<TABLE>
<CAPTION>
1993 1992
-------------- ----------------
CARRYING FAIR Carrying Fair
(Millions) AMOUNT VALUE Amount Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash and temporary cash investments $ 218 $ 218 $ 111 $ 111
- --------------------------------------------------------------------------------------------------------------------------
Receivables (customer and long-term) 4,630 4,630 5,611 5,611
- --------------------------------------------------------------------------------------------------------------------------
Other investments 58 58 105 105
- --------------------------------------------------------------------------------------------------------------------------
Short-term debt (excluding current maturities) 588 588 628 628
- --------------------------------------------------------------------------------------------------------------------------
Long-term debt (including current maturities of $686 and $1,068 million) 5,485 6,328 7,468 8,005
- --------------------------------------------------------------------------------------------------------------------------
Interest rate swaps:
In a net receivable position - 43 - 24
In a net payable position - (78) - (75)
- --------------------------------------------------------------------------------------------------------------------------
Foreign currency contracts (including the net value of currency/interest rate swaps) 10 (3) 22 2
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The following methods and assumptions were used to estimate the fair value of
financial instruments:
Cash and Temporary Cash Investments-Fair value was considered to be the same
as the carrying amount.
Receivables-Tenneco believes that in the aggregate, the carrying amount of
its receivables, both current and non-current, was not materially different from
the fair value of those receivables. Customer notes and accounts receivable are
concentrated in the Farm and construction equipment segment. At December 31,
1993 and 1992, 75% and 77%, respectively, of total customer receivables related
to this business segment.
50
<PAGE>
Other Investments-At December 31, 1993, these investments included preferred
stock ($17 million) in Steerage Corporation (the acquiror of Newport News'
Sperry Marine Business), venture capital investments ($8 million) and several
tracts of undeveloped land ($17 million). At December 31, 1992, these
investments included Tenneco's share of several partnerships established to
develop gas reserves ($41 million), venture capital investments ($12 million)
and several tracts of undeveloped land ($18 million). Because of the nature of
these investments, it was not practicable to estimate their fair value.
Short-Term Debt-Fair value was considered to be the same as the carrying
amount.
Long-Term Debt-The fair value of fixed-rate long-term debt was based on the
market value of debt with similar maturities and interest rates; the carrying
amount of floating rate long-term debt was assumed to approximate its fair
value.
Interest Rate Swaps-The fair value of interest rate swaps was based on the
cost that would have been incurred to buy out those swaps in a loss position and
the consideration that would have been received to terminate those swaps in a
gain position. At December 31, 1993 and 1992, Tenneco was a party to swaps with
a notional value of $810 million and $918 million, respectively, which were in a
net payable position and $775 million for both years which were in a net
receivable position. The differential paid or received on interest rate swap
agreements was recognized as an adjustment to interest expense.
The counterparties to these interest rate swaps are major international
financial institutions. The risk associated with counterparty default on
interest rate swaps is measured as the cost of replacing, at the prevailing
market rates, those contracts in a gain position. In the event of non-
performance by the counterparties, the cost to replace outstanding interest rate
swaps at December 31, 1993 and 1992, would not have been material.
Foreign Currency Contracts-At December 31, 1993 and 1992, Tenneco had entered
into currency/interest rate swaps totaling $133 million and $136 million,
respectively. Additionally, at December 31, 1992, Tenneco had a long-term
foreign debt obligation of $154 million. These instruments hedge certain
translation effects of Tenneco's investment in net assets in certain foreign
countries, primarily Great Britain and Germany. Pursuant to these arrangements,
Tenneco recognized aggregate after-tax translation gains of $5 million, $30
million and $15 million for 1993, 1992 and 1991, respectively, which have been
included in the balance sheet caption "Cumulative translation adjustments."
In the normal course of business, Tenneco and its foreign subsidiaries
routinely enter into various foreign currency purchase and sale contracts to
minimize the transaction effect of exchange rate movements on receivables and
payables denominated in foreign currencies. These contracts generally mature in
one year or less. At December 31, 1993, Tenneco had net purchase contracts
(primarily Belgian Francs, French Francs, Netherlands Guilder, Danish Krone,
Italian Lira and Swedish Krona) with a notional value of $308 million and net
sale contracts (primarily Canadian Dollar, U.S. Dollar and British Pound) with a
notional value of $315 million. At December 31, 1992, Tenneco had net purchase
contracts (primarily the U.S. Dollar, Swedish Krona, Netherlands Guilder,
Italian Lira, British Pound, Danish Krone and Belgian Franc) with a notional
value of $410 million and net sale contracts (primarily the French Franc,
Spanish Peseta, German Mark and Canadian Dollar) with a notional value of $403
million. Based on exchange rates at December 31, 1993 and 1992, the cost of
replacing these contracts in the event of non-performance by the counterparties
would not have been material.
Guarantees-At December 31, 1993 and 1992, Tenneco had guaranteed payment and
performance of approximately $95 million and $100 million, respectively,
primarily with respect to letters of credit and other guarantees supporting
various financing and operating activities.
9. Federal Energy Regulatory Commission ("FERC") Regulatory Matters
On August 1, 1991, Tennessee filed for a general rate increase. On August 31,
1991, the FERC accepted the filing, suspended its effectiveness for the maximum
period of five months pursuant to the normal regulatory process and set the
matter for hearing. With minor modifications, Tennessee's proposed rates were
placed into effect on February 1, 1992, subject to refund. The rates finally
determined under Docket No. RP91-203 will be effective retroactive to February
1, 1992, and will continue until the rates are changed by a filing by Tennessee
or pursuant to a subsequent proceeding convened by the FERC. On June 2, 1993,
Tennessee filed a Stipulation and Agreement that resolved several significant
issues in this rate proceeding and established procedures for resolving the
remaining issues, including the recovery of certain environmental expenditures.
Tennessee is currently collecting these environmental costs in its rates subject
to further review in the rate case and possible refund. Tennessee intends to
pursue full recovery of these costs. The Stipulation and Agreement was approved
by an initial order of the FERC on October 29, 1993, and Tennessee has recorded
a liability which is adequate to cover these refunds. Tennessee anticipates a
final order on the Stipulation and Agreement from the FERC in early 1994,
pursuant to which Tennessee will disburse agreed-upon refunds.
51
<PAGE>
Among the issues confirmed by the Stipulation and Agreement is the ability of
Tennessee to collect from customers, on an accrual basis, the costs of providing
benefits other than pensions to retirees. These costs were previously collected
from customers on a "pay-as-you-go" basis. The Stipulation and Agreement allowed
Tennessee to collect over a 20-year period the transition obligation related to
postretirement benefit costs. Tennessee had previously expensed these amounts
when FAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," was adopted in 1992. As a result of this Stipulation and Agreement,
Tennessee has established a regulatory asset of $34 million and has included the
income effect of this favorable regulatory development in the income statement
caption, "Other income, net."
On June 25, 1992, the FERC approved a settlement allowing Tennessee to recover
from its customers up to $650 million of excess gas supply costs incurred
through July 1,1992, in resolving take-or-pay costs and payments to producers to
suspend or terminate contracts or to reduce contract prices to market levels.
The settlement also allowed Tennessee to place into effect, as of July 1,1992, a
Gas Inventory Charge providing a mechanism for the recovery of these excess gas
supply costs until September 1, 1993, the effective date of Tennessee's
implementation of Order No. 636. Tennessee charged to operating expenses that
portion of excess gas supply costs incurred prior to the implementation of Order
No. 636 that it cannot recover from customers.
On April 8, 1992, the FERC issued Order No. 636 which, together with
subsequently issued clarifying Order Nos. 636-A and 636-B (the "FERC
Restructuring Orders"), directed a further sweeping restructuring of the
interstate gas pipeline industry. The FERC Restructuring Orders required
pipelines to: 1) "unbundle" their transportation and storage services from their
sales services, 2) increase pipeline customers' flexibility to change receipt
and delivery points under transportation contracts and to allow release of
capacity under those contracts for use by others and 3) separate interstate
pipeline gas sales organizations from interstate pipeline transportation and
storage business units. Under the FERC Restructuring Orders, rates for pipeline
transportation and storage generally remain subject to traditional cost-of-
service regulation but under a rate design which is relatively insensitive to
throughput and hence less sensitive to seasonal variation. Sales of natural gas
by interstate pipelines occur pursuant to a blanket sales certificate under
which price and other terms of sale are set by market forces. After a series of
FERC orders and compliance filings, Tennessee implemented its Order No. 636
tariff commencing on September 1, 1993, restructuring its transportation,
storage and sales services.
The FERC Restructuring Orders recognized that transition costs, including gas
supply realignment costs, may result from this restructuring and provided
mechanisms for the full recovery of such qualified costs. Pipelines were
encouraged to propose various mechanisms in the restructuring proceedings to
reduce transition costs, including assignment of gas supply contracts and
phasing in of the conversions of the pipeline sales service. The FERC
Restructuring Orders specified that pipelines would be allowed to make special
filings to recover many types of transition costs.
Tennessee has made multiple filings to begin recovery of certain transition
costs already paid or obligated to be paid in connection with the FERC
Restructuring Orders. Tennessee's filings request
authority to: 1) recover, through a monthly surcharge, one-time gas supply
realignment costs and certain related costs incurred to date over a twelve-month
period, 2) direct-bill customers for unrecovered gas costs over a twelve-month
period and 3) track and recover, through an annual surcharge, upstream
transportation costs from customers. The filings were accepted effective
September 1, 1993, and made subject to refund pending review. Hearings have been
instituted to review the recovery of the gas supply realignment costs and the
direct billing of unrecovered gas costs. Tennessee's filings to recover
production costs related to its Bastian Bay facilities have been rejected by the
FERC based on the continued use of the gas production from the field, however,
the FERC recognized the ability of Tennessee to file for the recovery of losses
upon disposition of these assets. Tennessee will seek appellate review of the
FERC actions. Tennessee is confident that the Bastian Bay costs will ultimately
be recovered as transition costs directly related to Order No. 636, and no FERC
order has questioned the ultimate recoverability of these costs.
The total amount of transition costs that will be incurred by Tennessee will
depend upon: 1) developments in restructuring proceedings involving Tennessee,
its customers and other affected parties, 2) the resolution of pending
litigation and 3) the terms of multiple negotiations with individual suppliers.
Until these issues are resolved, Tennessee cannot finally determine the ultimate
amount of one-time realignment costs or other related annual costs it will
incur, nor the amounts which will be recovered from customers. Tennessee
believes that one-time realignment costs will not exceed $700 million. At
December 31, 1993, Tennessee recorded and deferred approximately $120 million of
such one-time costs which are recoverable from its customers. Tennessee believes
that other related annual costs will not exceed $100 million in 1994, decreasing
thereafter over the length of the contracts involved.
The FERC Restructuring Orders will undergo judicial review, clarifications and
formulation of cost recovery details as the restructuring process proceeds.
However, Tennessee believes that it is entitled to full recovery of all
transition costs it will incur. Given the fact that the FERC Restructuring
Orders contemplate complete recovery by pipelines of qualified transition costs,
Tenneco believes that Tennessee's Order No. 636 restructuring (together with the
Order No. 636 restructuring of Tenneco's other interstate pipelines) will not
have a material effect on Tenneco's consolidated financial position or results
of operations.
52
<PAGE>
10. INCOME TAXES
Effective January 1, 1992, Tenneco changed its method of accounting for income
taxes from the deferred method to the liability method required by FAS No. 109,
"Accounting for Income Taxes" using the cumulative catch-up method. This new
standard requires that a deferred tax be recorded to reflect the tax expense
(benefit) resulting from the recognition of temporary differences. Temporary
differences are differences between the tax basis of assets and liabilities and
their reported amounts in the financial statements that will result in
differences between income for tax purposes and income for financial statement
purposes in future years. No provision has been made for U.S. income taxes on
unremitted earnings of foreign subsidiaries ($1.07 billion at December 31,1993)
since it is the present intention of management to reinvest a major portion of
such unremitted earnings in foreign operations.
The components of income (loss) from continuing operations before income taxes
are as follows:
<TABLE>
<CAPTION>
Years Ended December 31 (Millions) 1993 1992 1991
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S.income (loss) before income taxes $ 502 $ 9 $ (155)
Foreign income (loss) before income taxes 207 (616) (551)
- ----------------------------------------------------------------------------------
Income (loss) before income taxes $ 709 $ (607) $ (706)
- ----------------------------------------------------------------------------------
</TABLE>
Following is an analysis of the components of consolidated income tax expense
(benefit) applicable to continuing operations:
<TABLE>
<CAPTION>
Years Ended December 31 (Millions) 1993 1992 1991
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Current--
U.S. $36 $452 $ 59
State and local 57 70 --
Foreign 59 81 62
- ----------------------------------------------------------------------------------
152 603 121
- ----------------------------------------------------------------------------------
General business credits (U.S.)--
Current (1) (15) (8)
Deferred -- 10 5
- ----------------------------------------------------------------------------------
(1) (5) (3)
- ----------------------------------------------------------------------------------
Deferred--
U.S. 127 (502) (116)
State and local 10 (23) --
Foreign (30) 3 (16)
- ----------------------------------------------------------------------------------
107 (522) (132)
- ----------------------------------------------------------------------------------
Income tax expense (benefit) $258 $ 76 $ (14)
- ----------------------------------------------------------------------------------
</TABLE>
In August 1993, the U.S. federal income tax rate was increased from 34% to
35%, retroactive to January 1,1993. For 1992 and 1991, this rate was 34%.
Following is a reconciliation of income taxes computed at the U.S. federal
income tax rate to the income tax expense (benefit) from continuing operations
reflected in the Statements of Income (Loss):
<TABLE>
<CAPTION>
Years Ended December 31 (Millions) 1993 1992 1991
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax expense (benefit) computed at the U.S.
federal income tax rate $248 $(206) $(240)
Increases (reductions) in income tax
expense resulting from:
Foreign income taxed at different rates
and foreign losses with no tax benefit 5 68 119
Restructuring costs -- 188 116
Effect of recording equity in income of
certain affiliated companies on an
after-tax basis (3) (3) (11)
State and local taxes on income, net of
U.S. federal income tax benefit 43 31 --
U.S. federal income tax rate change 8 -- --
Realization of deferred tax assets
resulting from consolidation
of Tenneco's German operations (37) -- --
Other (6) (2) 2
- ----------------------------------------------------------------------------------
Income tax expense (benefit) $258 $76 $(14)
- ----------------------------------------------------------------------------------
</TABLE>
53
<PAGE>
The components of Tenneco's net deferred tax liability at December 31, 1993
and 1992, were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
(Millions) 1993 1992
- ------------------------------------------------------------------------------
Deferred tax assets--
Net operating loss carry forwards $ 227 $ 258
Restructuring costs 145 251
Postretirement benefits 206 217
Environmental reserve 82 86
Sales returns and allowances reserve 55 58
Bad debt reserve 36 29
Accrued vacation 27 28
Inventory adjustments 17 21
Other 180 127
Valuation allowance (236) (355)
- ------------------------------------------------------------------------------
Total deferred tax asset 739 720
- ------------------------------------------------------------------------------
Deferred tax liabilities--
Tax over book depreciation 832 823
Pension 202 162
Asset related to environmental costs
relative to operations regulated
by the FERC 59 72
Installment sales 39 74
Long-term shipbuilding contracts 91 62
Interest capitalized 28 26
Debt related items 47 31
Book versus tax gains and losses
on asset disposals 293 284
Other 274 197
- ------------------------------------------------------------------------------
Total deferred tax liability 1,865 1,731
- ------------------------------------------------------------------------------
Net deferred tax liability $1,126 $1,011
- ------------------------------------------------------------------------------
</TABLE>
As reflected in the table above, Tenneco had potential tax benefits of $236
million and $355 million which were not recognized in the Statements of Income
(Loss) at December 31, 1993 and 1992, respectively. These benefits resulted
primarily from operating loss carryforwards which are available to reduce future
tax liabilities of certain foreign entities. During 1993, $37 million was
realized as a result of the consolidation of Tenneco's German operations. The
remainder of the change in these tax benefits from 1992 to 1993 resulted from
the reduction in deferred tax assets, primarily related to restructuring.
At December 31, 1993, Tenneco had operating loss carryforwards of $227 million
of which $189 million will carryforward indefinitely while the remaining amounts
expire at various dates from 1994 through 1998.
Prior to adoption of FAS No. 109, Tenneco recorded deferred federal income tax
expense (benefit) based on timing differences in the recognition of revenues and
expenses for tax and financial reporting purposes. A description of the
differences and the related tax effect on continuing operations are as follows:
<TABLE>
<CAPTION>
<S> <C>
Year Ended December 31 (Millions) 1991
- ------------------------------------------------------------------------------
Recognition of income on long-term shipbuilding contracts $ 70
Recognition of income and expense relative to operations
regulated by the FERC (39)
Excess of tax depreciation over book depreciation applicable
to operations not regulated by the FERC 12
Transactions reported on the installment basis for tax purposes (36)
Recognition of expenses relative to employee compensation
and benefit plans (9)
Restructuring costs (50)
Decrease (increase) in other reserves not deductible until paid (50)
Alternative minimum tax (6)
Foreign (10)
Other (14)
- ------------------------------------------------------------------------------
(132)
General business credits utilized 5
- ------------------------------------------------------------------------------
Deferred income tax expense (benefits) $ (127)
- ------------------------------------------------------------------------------
</TABLE>
54
<PAGE>
11. Common Stock
Tenneco Inc. has authorized 350 million shares ($5.00 par value) of common
stock, and 173,953,012 and 150,300,224 shares were issued at December 31, 1993
and 1992, respectively. Tenneco transferred 12,000,000 shares of common stock to
the Stock Employee Compensation Trust when it was established in November 1992.
At December 31, 1993, the Trust held 9,520,575 shares which are included in the
issued shares quoted above. Treasury stock held by Tenneco was 4,166,835 and
5,323,912 shares at the respective dates.
Equity Offering
In April 1993, Tenneco Inc. completed an underwritten public offering of 23.5
million shares of common stock for approximately $1.1 billion. The proceeds were
used to retire $327 million of short-term debt, $688 million of long-term debt
and $14 million of variable rate preferred stock.
Reserved
At December 31, 1993, the shares of Tenneco Inc. common stock reserved for
issuance were as follows:
<TABLE>
<CAPTION>
<S> <C>
Original Issue Shares
- ---------------------------------------------------------------------------
Restricted Stock Plan 387,532
Stock Option Plan 3,252,580
Performance Unit Plan 1,654,494
Conversion of Tenneco 10% Loan Stock through
December 24, 1995 41,903
Conversion of Series A Preferred Stock 17,870,350
Other 8,000
- ---------------------------------------------------------------------------
23,214,859
- ---------------------------------------------------------------------------
Treasury Stock
- ---------------------------------------------------------------------------
Thrift Plan 1,500,000
Dividend Reinvestment Plan 2,112,025
- ---------------------------------------------------------------------------
3,612,025
- ---------------------------------------------------------------------------
</TABLE>
Stock Plans
1994 Tenneco Inc. Stock Ownership Plan--Subject to stockholder approval in
May 1994, Tenneco will adopt the 1994 Tenneco Inc. Stock Ownership Plan
effective as of December 8, 1993. This plan provides Tenneco the latitude to
grant a variety of awards, such as common stock, stock equivalent units,
dividend equivalents, performance units, stock appreciation rights ("SAR's") and
stock options, to officers and key employees of the Tenneco companies. The plan
requires that options and SAR's be granted at not less than the fair market
value of a share of common stock on the grant date. The plan also requires that
no award granted shall vest in less than six months after the grant date. The
Company intends to reserve 8,400,000 shares of common stock for issuance under
this plan, which will terminate December 31, 1998.
1988 Key Employee Restricted Stock Plan--At December 31, 1993, 1,205,029
restricted shares and 101,465 restricted units were outstanding under this plan
at an average price of $47.77 per share. These awards generally require, among
other things, that the employee remain an employee of Tenneco during the
restriction period. This plan will be superseded by the 1994 Tenneco Inc. Stock
Ownership Plan.
Under another arrangement, 250 shares of restricted stock or restricted units
are issued annually to each member of the Board of Directors who is not also an
officer of Tenneco. At December 31, 1993, 7,500 restricted shares and no
restricted units were outstanding under this program at an average price of
$43.92 per share.
Options and Stock Appreciation Rights--Tenneco Inc. has granted stock options
and stock appreciation rights to key employees. The options and SAR's became
exercisable over four years and lapse after ten years from the date of grant.
This plan has been terminated.
55
<PAGE>
The following table reflects the status and activity for all stock options
issued by Tenneco Inc., including those outside the option plan discussed above,
for the periods indicated:
<TABLE>
<CAPTION>
1993 1992 1991
------------------------- ------------------------ ------------------------
Shares Shares Shares
Under Option Under Option Under Option
Stock Options Option Prices Option Prices Option Prices
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year 184,379 $34.94--$53.13 204,395 $34.94--$53.13 240,497 $34.94--$53.13
Granted--Options 75,000 $48.69 -- -- -- --
Exercised--Options 3,942 $34.94--$41.13 125 $40.88 2,763 $34.94--$41.13
--SAR's 68,347 $34.94--$48.38 10,313 $34.94--$41.13 27,614 $36.88--$41.13
Cancelled 2,976 -- 9,578 -- 5,725 --
- -------------------------------------------------------------------------------------------------------------------------
Outstanding, end of year 184,114 $37.25--$53.13 184,379 $34.94--$53.13 204,395 $34.94--$53.13
- -------------------------------------------------------------------------------------------------------------------------
Exercisable at end of year 109,114 $37.25--$53.13 184,379 $34.94--$53.13 204,395 $34.94--$53.13
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
For the years ended December 31, 1993, 1992 and 1991, compensation expense for
these stock plans was not material.
Employee Stock Purchase Plan--On June 1, 1992, Tenneco initiated an Employee
Stock Purchase Plan. The Plan allows U.S. and Canadian Tenneco employees to
purchase Tenneco Inc. common stock at a 15% discount. Each year employees in
the plan may purchase shares with a discounted value not to exceed $21,250.
Tenneco reserved 5,000,000 shares of treasury stock to be issued through this
plan. At December 31, 1993, 659,477 shares had been issued to participants
and the remaining treasury shares are held by the Stock Employee Compensation
Trust (discussed below) for issuance to employees in this plan.
Stock Employee Compensation Trust ("SECT")
In November 1992, Tenneco established a SECT to fund a portion of its
obligations arising from its various employee compensation and benefit plans.
Tenneco issued 12,000,000 shares of treasury stock to the SECT in exchange for a
promissory note of $432 million that bears interest at the rate of 7.8% per
annum. The SECT has a five-year life during which it will utilize the common
stock to satisfy those obligations. At December 31, 1993, 2,479,425 shares had
been utilized.
Shareholder Rights Plan
In 1988, Tenneco Inc. adopted a Shareholder Rights Plan ("the Plan") to deter
coercive takeover tactics and to prevent a potential acquiror from gaining
control of Tenneco without offering a fair price to all Tenneco Inc.
shareholders. Under the Plan, each outstanding share of Tenneco Inc. common
stock received one Purchase Right, exercisable at $130, subject to adjustment.
In the event a person or group acquires 20% or more of the outstanding Tenneco
Inc. common stock other than pursuant to an offer for all shares of such common
stock which is fair and in the best interests of Tenneco Inc. and its
shareholders, or has in the judgment of the Tenneco Inc. Board of Directors
acquired a substantial amount of common stock under certain motives deemed
adverse to Tenneco's best interests, each Purchase Right entitles the holder to
purchase shares of common stock or other securities of Tenneco Inc. or, under
certain circumstances, of the acquiring person, having a value of twice the
exercise price. The Purchase Rights, under certain circumstances, are redeemable
by Tenneco Inc. at a price of $.02 per Purchase Right.
Dividend Reinvestment and Stock Purchase Plan
Under the Tenneco Inc. Dividend Reinvestment and Stock Purchase Plan, holders
of Tenneco Inc. common stock, $7.40 preferred stock, and $2.80 Depositary Shares
may apply their cash dividends and optional cash investments to the purchase of
shares of common stock without incurring a brokerage commission or other service
charge. Tenneco Inc. also offers participants in the plan a 3% discount on
purchases of common stock with their reinvested dividends.
Earnings Per Share
Earnings per share of common stock are based on the average number of shares
of common stock and Series A preferred stock (each share of Series A preferred
stock represents two shares of common stock) outstanding during each period.
Because Series A preferred stock outstanding is included in average common
shares outstanding for purposes of computing earnings per share, the preferred
dividends paid are not deducted from net income (loss) to determine net income
(loss) to common stock. In 1992, 12,000,000 shares of common stock were issued
to the SECT. Shares of common stock issued to a related trust are not considered
to be outstanding in the computation of average shares of common stock
outstanding until the shares are utilized to fund the obligations for which the
trust was established. At December 31, 1993, 2,479,425 shares had been utilized.
Other convertible securities and common stock equivalents outstanding during
each of the three years ended December 31, 1993, 1992 and 1991, were not
materially dilutive.
56
<PAGE>
12. Preferred Stock
At December 31, 1993, Tenneco Inc. had authorized 15,000,000 shares of
preferred stock. In addition, Tenneco Inc. has an authorized class of stock
consisting of 50,000,000 shares of junior preferred stock, without par value,
none of which has been issued. Tenneco has reserved 3,500,000 shares of junior
preferred stock for the Shareholder Rights Plan.
The preferred stock issues outstanding at December 31, 1993, are as follows:
<TABLE>
<CAPTION>
Shares Redemption or Optional
Issued and Conversion Periods Redemption or
----------------------
Issue Outstanding Optional Mandatory Conversion Price
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Series A preferred ($1 stated value) 8,935,175 1994 1994 See following
discussion
$7.40 preferred (no par value) 978,785 1994--1998 1994--1998 $100
$4.50 preferred (no par value) 803,723 1994--1999 1999 $100
- ---------------------------------------------------------------------------------------------------------
10,717,683
- ---------------------------------------------------------------------------------------------------------
</TABLE>
In December 1991, Tenneco issued 17,870,350 Depositary Shares, each
representing one-half of a share of a new series of cumulative preferred stock
designated as Series A preferred stock. This stock ranks prior to Tenneco's
junior preferred stock (when and if issued) and common stock. Each share of the
Series A preferred stock converts automatically into two shares of common stock
on the final conversion date, December 31, 1994, or in connection with certain
other events. In addition, Tenneco has the option to call the Series A preferred
stock, in whole or in part, at any time or from time to time prior to the final
conversion date for conversion into shares of common stock having a value
initially equal to $92.70 (equivalent to $46.35 for each Depositary Share),
reduced by $0.006624 (equivalent to $0.003312 for each Depositary Share) on each
day following the date of issue (computed on the basis of a 360-day year of
twelve 30-day months) to and including October 31, 1994, and equal to $85.50
thereafter (equivalent to $42.75 for each Depositary Share), plus an amount in
cash equal to accrued and unpaid dividends. The Series A preferred stock pays
quarterly dividends on the last day of March, June, September and December at an
annual rate of $5.60 per share.
The $7.40 and $4.50 preferred stock issues have a mandatory redemption value
of $100 per share (an aggregate of $178 million and $208 million at December 31,
1993 and 1992, respectively). Tenneco recorded these preferred stocks at their
fair value at the date of original issue (an aggregate of $250 million) and is
making periodic accretions of the excess of the redemption value over the fair
value at the date of issue. Such accretions are included in the income statement
caption, "Preferred stock dividends" as a reduction of net income to arrive at
net income (loss) to common stock.
During 1993, Tenneco retired the remainder of a variable rate preferred stock
issue at the redemption price of $100 per share, or $17 million.
The aggregate maturities applicable to preferred stock issues outstanding at
December 31, 1993, are $20million for each of the years 1994, 1995, 1996, 1997
and 1998.
In 1991, a French subsidiary issued equity securities that will convert into
Tenneco Inc. preferred stock in 1996. At December 31, 1993, Tenneco has reserved
1.5 million shares of preferred stock for this purpose. These equity securities
are reflected in the balance sheet caption, "Minority interest."
Changes in Preferred Stock with Mandatory Redemption Provisions*
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1993 1992 1991
------------------- ------------------- --------------------
(Millions Except Share Amounts) Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------
Balance January 1 2,084,796 $ 191 2,143,462 $194 2,245,656 $201
Shares redeemed (302,288) (31) (58,666) (6) (102,194) (10)
Accretion of excess of redemption value
over fair value at date of issue -- 3 -- 3 -- 3
- ------------------------------------------------------------------------------------------------------------------
Balance December 31 1,782,508 $ 163 2,084,796 $191 2,143,462 $194
- ------------------------------------------------------------------------------------------------------------------
* For additional information on Series A preferred stock see Statements of Changes in Stockholders' Equity.
</TABLE>
13. Postretirement and Postemployment Benefits
Postretirement Benefits
Tenneco has postretirement health care and life insurance plans which cover
substantially all of its domestic employees. For salaried employees, the plans
cover employees retiring from Tenneco on or after attaining age 55 who have had
at least 10 years service with Tenneco after attaining age 45. The salaried
plans were amended during 1993 to reduce the cost of providing future benefits.
For hourly employees, the postretirement benefit plans generally cover employees
who retire pursuant to one of Tenneco's hourly employee retirement plans. All of
these benefits may be subject to deductibles, copayment provisions and other
limitations, and Tenneco has reserved the right to change these benefits.
57
<PAGE>
Effective January 1, 1992, for its domestic operations, Tenneco adopted FAS
No. 106 which requires employers to account for the cost of these postretirement
benefits on the accrual basis rather than on the "pay-as-you-go" basis which was
Tenneco's previous practice. Tenneco elected to recognize this change in
accounting principle on the cumulative catch-up basis. The effect on 1992 income
of immediately recognizing the transition obligation was as follows:
<TABLE>
<CAPTION>
(Millions Except Per Share Amount)
<S> <C>
- --------------------------------------------------------------------------------
Accumulated postretirement benefit obligation $ 629
Income tax benefit (215)
- --------------------------------------------------------------------------------
Decrease in net income $ 414
- --------------------------------------------------------------------------------
Decrease in earnings per average share of common stock $2.88
- --------------------------------------------------------------------------------
</TABLE>
Tenneco plans to adopt FAS No. 106 for its international operations in the
first quarter of 1995. The estimated pre-tax transition obligation for Tenneco's
international operations is approximately $20 million.
Currently, Tenneco's postretirement benefit plans are not funded. The
obligation of the domestic plans reconciles with amounts recognized on the
balance sheet at December 31, 1993 and 1992, as follows:
<TABLE>
<CAPTION>
(Millions) 1993 1992
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of accumulated postretirement benefit obligation at September 30:
Retirees $ 520 $ 508
Fully eligible active plan participants 73 44
Other active plan participants 131 101
- ----------------------------------------------------------------------------------------------------------
Total accumulated postretirement benefit obligation 724 653
Plan assets at fair value at September 30 - -
- ----------------------------------------------------------------------------------------------------------
Accumulated postretirement benefit obligation in excess of plan assets at September 30 (724) (653)
Claims paid during the fourth quarter 16 -
Unrecognized reduction of prior service obligations resulting from plan amendments (99) -
Unrecognized net loss resulting from plan experience and changes in actuarial assumptions 158 -
- ----------------------------------------------------------------------------------------------------------
Accrued postretirement benefit cost at December 31 $(649) $(653)
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The net periodic postretirement benefit costs from continuing operations for
the years 1993 and 1992 consist of the following components:
<TABLE>
<CAPTION>
(Millions) 1993 1992
- -----------------------------------------------------------------------------
<S> <C> <C>
Service cost for benefits earned during the year $ 12 $ 10
Interest cost on accumulated postretirement benefit obligation 56 52
Net amortization of unrecognized amounts (4) -
- -----------------------------------------------------------------------------
Net periodic postretirement benefit cost $ 64 $ 62
- -----------------------------------------------------------------------------
</TABLE>
A pre-tax loss resulting from curtailments, settlements and special
termination benefits under these plans was $0 and $40 million for 1993 and 1992,
respectively, which related primarily to restructuring at the Farm and
construction equipment segment.
The weighted average assumed health care cost trend rate used in determining
the 1993 accumulated postretirement benefit obligation was 9% in 1993 declining
to 5% in 1997 and remaining at that level thereafter. The weighted average
assumed health care cost trend rate used in determining the 1992 accumulated
postretirement benefit obligation was 12% in 1992 declining to 5% in 1997 and
remaining at that level thereafter.
Increasing the assumed health care cost trend rate by one percentage-point in
each year would increase the accumulated postretirement benefit obligation as of
September 30, 1993, and September 30, 1992, by approximately $47 million and $94
million, respectively, and would increase the aggregate of the service cost and
interest cost components of the net postretirement benefit cost for 1993 and
1992 by approximately $10 million and $11 million, respectively.
The discount rates (which are based on long-term market rates) used in
determining the 1993 and 1992 accumulated postretirement benefit obligations
were 7.50% and 8.75%, respectively.
Postemployment Benefits
Tenneco will adopt FAS No. 112, "Employers' Accounting for Postemployment
Benefits," in the first quarter of 1994. This new accounting rule requires
employers to account for postemployment benefits for former or inactive
employees after employment but before retirement on the accrual basis
rather than the "pay-as-you-go" basis as at present. Tenneco has determined
that implementation of this new rule will reduce 1994 net income by
$39 million which will be reported as the cumulative effect of a
change in accounting principle.
58
<PAGE>
14. Pension Plans
Tenneco has retirement plans which cover substantially all of its employees.
Benefits are based on years of service and, for most salaried employees, on
final average compensation. Tenneco's funding policies are to contribute to the
plans amounts necessary to satisfy the funding requirements of federal laws and
regulations. Plan assets consist principally of listed equity and fixed income
securities.
The funded status of the plans reconciles with amounts recognized on the
balance sheet at December 31, 1993 and 1992, as follows:
<TABLE>
<CAPTION>
Plans in Which Plans in Which
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets All Plans (Note)
-------------- --------------- ----------------
(Millions) 1993 1992 1993 1992 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Actuarial present value of benefits based on service
to date and present pay levels at September 30:
Vested benefit obligation $2,864 $2,023 $ 181 $ 472 $3,045 $2,495
Non-vested benefit obligation 157 59 10 67 167 126
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated benefit obligation 3,021 2,082 191 539 3,212 2,621
Additional amounts related to projected salary increases 336 288 9 8 345 296
- -----------------------------------------------------------------------------------------------------------------------------
Total projected benefit obligation at September 30 3,357 2,370 200 547 3,557 2,917
Plan assets at fair value at September 30 3,531 3,001 84 240 3,615 3,241
- -----------------------------------------------------------------------------------------------------------------------------
Plan assets in excess of (less than) total projected
benefit obligation at September 30 174 631 (116) (307) 58 324
Contributions during the fourth quarter 177 2 2 6 179 8
Unrecognized net (gain) loss resulting from plan
experience and changes in actuarial assumptions 205 (28) 11 50 216 22
Unrecognized prior service obligations
resulting from plan amendments 241 165 10 51 251 216
Remaining unrecognized net obligation (asset)
at initial application (244) (290) 8 23 (236) (267)
Adjustment recorded to recognize minimum liability - - (32) (132) (32) (132)
- -----------------------------------------------------------------------------------------------------------------------------
Prepaid (accrued) pension cost at December 31 $ 553 $ 480 $(117) $(309) $ 436 $ 171
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Assets of one plan may not be utilized to pay benefits of other plans.
In December 1993, Tenneco contributed 3.2 million shares of Cummins Engine
Company, Inc. stock having a fair market value of $168 million to the Case
Corporation Pension Plan for Hourly-Paid Employees ("Case Plan"). In conjunction
with this contribution, active Case salaried employees were transferred (with
associated assets) from the Tenneco Inc. Retirement Plan to the Case Plan, and
Case hourly retirees were transferred (with associated assets) from the Case
Plan to the Tenneco Inc. Retirement Plan. These transactions, which are
reflected in the disclosure information shown above as of December 31, 1993,
resulted in the fair value of the Case Plan assets now exceeding the accumulated
benefit obligation.
Net pension costs from continuing operations for the years 1993, 1992 and 1991
consist of the following components:
<TABLE>
<CAPTION>
(Millions) 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service cost--benefits earned during the year $ 89 $ 84 $ 81
Interest accrued on prior year's projected benefit obligation 251 231 227
Expected return on plan assets--
Actual (return) loss (545) (290) (665)
Unrecognized excess (deficiency)
of actual return over expected return 231 (12) 379
---- ---- ----
(314) (302) (286)
Net amortization of unrecognized amounts (5) (10) (12)
- ----------------------------------------------------------------------------------------------------------------------------------
Net pension costs $ 21 $ 3 $ 10
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Pre-tax gains (losses) resulting from curtailments, settlements and special
termination benefits under these plans were $(37) million, $(46) million and $13
million for 1993, 1992 and 1991, respectively, all of which related primarily to
restructuring at the Farm and construction equipment segment.
The weighted average discount rates (which are based on long-term market
rates) used in determining the 1993, 1992 and 1991 actuarial present value of
the benefit obligations were 7.6%, 8.9% and 9.2%, respectively. The rate of
increase in future compensation was 5.1%, 6.6% and 6.6% for 1993, 1992 and 1991,
respectively. The weighted average expected long-term rate of return on plan
assets was 9.9%, 10.0% and 10.1% for 1993, 1992 and 1991, respectively.
59
<PAGE>
15. Segment and Geographic Area Information
<TABLE>
<CAPTION>
Segment
-------------------------------------------------------------------------------
Natural Farm and Auto- Reclass.
Gas Construction motive Ship- and Consol-
(Millions) Pipelines Equipment Parts building Packaging Chemicals Other Elimination idated
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
At December 31, 1993, and
for the Year Then Ended
Net sales and operating
revenues(a) $2,862 $ 3,748 $1,839 $1,861 $2,042 $ 914 $ (11) $ - $13,255
- ---------------------------------------------------------------------------------------------------------------------------------
Operating profit 425 100 223 238 148 83 26 - 1,243
General corporate
expenses (14) (18) (8) (13) (9) (5) (7) - (74)
- ---------------------------------------------------------------------------------------------------------------------------------
Income before interest
expense and income taxes 411 82 215 225 139 78 19 - 1,169
- ---------------------------------------------------------------------------------------------------------------------------------
Identifiable assets 2,953 6,122 1,086 1,277 1,468 721 1,673 (397) 14,903
Investment in affiliated
companies 307 90 4 - 6 62 1 - 470
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets 3,260 6,212 1,090 1,277 1,474 783 1,674 (397) 15,373
- ---------------------------------------------------------------------------------------------------------------------------------
Depreciation, depletion
and amortization 166 101 55 72 77 33 5 - 509
- ---------------------------------------------------------------------------------------------------------------------------------
Capital expenditures 170 101 96 36 124 59 1 - 587
- ---------------------------------------------------------------------------------------------------------------------------------
At December 31, 1992, and
for the Year Then Ended
Net sales and operating
revenues(a) $2,183 $ 3,829 $1,808 $2,265 $2,078 $ 951 $ 25 $ - $13,139
- ---------------------------------------------------------------------------------------------------------------------------------
Operating profit (loss) 374 (1,160) 237 262 229 78 (23) - (3)
General corporate expenses (14) (20) (7) (13) (8) (6) (9) - (77)
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) before
interest expense and
income taxes 360 (1,180) 230 249 221 72 (32) - (80)
- ---------------------------------------------------------------------------------------------------------------------------------
Identifiable assets 3,117 7,562 1,021 1,469 1,406 718 1,371 (661) 16,003
Investment in affiliated
companies 296 103 1 - 23 61 97 - 581
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets 3,413 7,665 1,022 1,469 1,429 779 1,468 (661) 16,584
- ---------------------------------------------------------------------------------------------------------------------------------
Depreciation, depletion
and amortization 156 154 51 74 73 38 6 - 552
- ---------------------------------------------------------------------------------------------------------------------------------
Capital expenditures for
continuing operations 251 60 66 35 97 58 2 - 569
- ---------------------------------------------------------------------------------------------------------------------------------
At December 31, 1991, and
for the Year Then Ended
Net sales and operating
revenues(a) $2,183 $ 4,449 $1,701 $2,216 $1,934 $ 916 $ 20 $ - $13,419
- ---------------------------------------------------------------------------------------------------------------------------------
Operating profit (loss) 582 (1,051) 185 242 148 (63) (94) - (51)
General corporate expenses (21) (28) (10) (17) (9) (7) (4) - (96)
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) before interest
expense and income taxes 561 (1,079) 175 225 139 (70) (98) - (147)
- ---------------------------------------------------------------------------------------------------------------------------------
Identifiable assets 2,975 9,008 1,043 1,529 1,366 776 1,213 (348) 17,562
Investment in affiliated
companies 249 41 3 - 19 55 100 - 467
Identifiable assets related
to the discontinued
operations of minerals and
pulp chemicals - - - - - 667 - - 667
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets 3,224 9,049 1,046 1,529 1,385 1,498 1,313 (348) 18,696
- ---------------------------------------------------------------------------------------------------------------------------------
Depreciation, depletion
and amortization 134 149 57 72 68 39 7 - 526
- ---------------------------------------------------------------------------------------------------------------------------------
Capital expenditures for
continuing operations 278 104 84 64 127 69 20 - 746
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on following page.
60
<PAGE>
<TABLE>
<CAPTION>
Geographic Area
------------------------------------------- Reclass.
United European Other and Consol-
(Millions) States Canada Community Foreign Elimination idated
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AT DECEMBER 31, 1993, AND FOR THE YEAR THEN ENDED
Net sales and operating revenues:
External(a) $ 9,888 $ 666 $2,211 $490 $ - $13,255
Intergeographic area(b) 484 77 329 28 (918) -
- ------------------------------------------------------------------------------------------------------------------------------
Total 10,372 743 2,540 518 (918) 13,255
- ------------------------------------------------------------------------------------------------------------------------------
Operating profit 1,005 100 69 69 - 1,243
General corporate expenses (70) - (4) - - (74)
- ------------------------------------------------------------------------------------------------------------------------------
Income before interest expense and income taxes 935 100 65 69 - 1,169
- ------------------------------------------------------------------------------------------------------------------------------
Identifiable assets 11,839 792 2,174 482 (384) 14,903
Investment in affiliated companies 429 - 7 34 - 470
- ------------------------------------------------------------------------------------------------------------------------------
Total assets 12,268 792 2,181 516 (384) 15,373
- ------------------------------------------------------------------------------------------------------------------------------
AT DECEMBER 31, 1992, AND FOR THE YEAR THEN ENDED
Net sales and operating revenues:
External(a) $ 9,507 $ 605 $2,599 $428 $ - $13,139
Intergeographic area(b) 436 72 417 32 (957) -
- ------------------------------------------------------------------------------------------------------------------------------
Total 9,943 677 3,016 460 (957) 13,139
- ------------------------------------------------------------------------------------------------------------------------------
Operating profit (loss) 568 67 (666) 28 - (3)
General corporate expenses (72) - (4) (1) (77)
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) before interest expense and
income taxes 496 67 (670) 27 - (80)
- ------------------------------------------------------------------------------------------------------------------------------
Identifiable assets 12,777 790 2,824 455 (843) 16,003
Investment in affiliated companies 521 - 23 37 - 581
- ------------------------------------------------------------------------------------------------------------------------------
Total assets 13,298 790 2,847 492 (843) 16,584
- ------------------------------------------------------------------------------------------------------------------------------
AT DECEMBER 31, 1991, AND FOR THE YEAR THEN ENDED
Net sales and operating revenues:
External(a) $ 9,590 $ 638 $2,751 $440 $ - $13,419
Intergeographic area(b) 427 53 72 30 (582) -
- ------------------------------------------------------------------------------------------------------------------------------
Total 10,017 691 2,823 470 (582) 13,419
- ------------------------------------------------------------------------------------------------------------------------------
Operating profit (loss) 432 (43) (482) 42 - (51)
General corporate expenses (90) (1) (5) - - (96)
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) before interest expense and
income taxes 342 (44) (487) 42 - (147)
- ------------------------------------------------------------------------------------------------------------------------------
Identifiable assets 13,142 929 3,690 484 (683) 17,562
Investment in affiliated companies 417 - 13 37 - 467
Identifiable assets related to discontinued operations 449 218 - - - 667
- ------------------------------------------------------------------------------------------------------------------------------
Total assets 14,008 1,147 3,703 521 (683) 18,696
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: (a) Contracts with U.S. government agencies (primarily shipbuilding
contracts with the U.S. Navy) accounted for $1.9 billion,
$2.4 billion and $2.3 billion for 1993, 1992 and 1991, respectively.
(b) Products are transferred between geographic areas on a basis
intended to reflect as nearly as possible the "market value" of
the products.
Tenneco is engaged in the sale of products for export from the United States.
Such sales are reflected in the table below:
<TABLE>
<CAPTION>
(Millions)
------------------------------
Geographic Area Principal Products 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Canada Farm and construction equipment, exhaust and ride
control systems, natural gas, paperboard products,
molded and pressed pulp goods, corrugated boxes $ 383 $ 349 $ 337
European Community Navigation aids, farm and construction equipment,
molded and pressed pulp goods, paperboard products 135 158 146
Other Foreign Farm and construction equipment, ride control systems,
molded and pressed pulp goods, paperboard products,
corrugated boxes 227 195 193
- -------------------------------------------------------------------------------------------------------------------------------
Total Export Sales $ 745 $ 702 $ 676
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
61
<PAGE>
16. Commitments and Contingencies
Capital Commitments
Tenneco estimates that expenditures aggregating $700 million will be required
after December 31, 1993, to complete facilities and projects authorized at such
date, and substantial commitments have been made in connection therewith.
Purchase Obligations
In connection with the financing commitments of certain joint ventures,
Tenneco has entered into unconditional purchase obligations for products and
services of $197 million ($152 million on a present value basis). Tenneco's
annual obligations under these agreements are $26 million for 1994 and 1995, $25
million for 1996, $23 million for 1997 and $22 million for 1998. Payments under
such obligations, including additional purchases in excess of contractual
obligations, were $31 million, $33 million and $35 million for the years 1993,
1992 and 1991, respectively. In addition, in connection with the Great Plains
coal gasification project (Dakota Gasification Company), Tenneco has contracted
to purchase 30% of the output of the plant's original design capacity for a
remaining period of 16 years.
Lease Commitments
Tenneco holds certain of its facilities and equipment under long-term leases.
The minimum rental commitments under non-cancelable operating leases with lease
terms in excess of one year are $171 million, $150 million, $126 million, $121
million and $118 million for the years 1994, 1995, 1996, 1997 and 1998,
respectively, and $1,084 million for subsequent years. Of these amounts, $78
million for each of the years 1994, 1995 and 1996, $81 million for 1997, $89
million for 1998 and $872 million for subsequent years are lease payment
commitments to GECC, John Hancock and Metropolitan Life for assets purchased
from Georgia-Pacific in January 1991 and leased to Tenneco. Commitments under
capital leases were not significant to the accompanying financial statements.
Total rental expense for continuing operations for the years 1993, 1992 and
1991, was $207 million, $218 million and $215 million, respectively, including
minimum rentals under non-cancelable operating leases of $198 million, $208
million and $206 million for the corresponding periods.
Litigation
On November 19, 1993, the Supreme Court of the State of Louisiana denied a
writ of certiorari which had the effect of affirming the decision of the
Louisiana Court of Appeals holding in the case of Louisiana Intrastate Gas
Corporation v. Martin Intrastate Gas Company, originally brought in the 22nd
Judicial District Court for St. Tammany Parish, Louisiana, on October 25, 1991.
The case involved a dispute between Louisiana Intrastate Gas Corporation ("LIG")
and Martin Intrastate Gas Company ("Martin Intrastate"), of which Kenneth G.
Martin is President, as to the nature and extent of Martin Intrastate's right to
compel LIG to purchase natural gas under a 1978 gas purchase contract entered
into by another affiliate of Kenneth G. Martin which subsequently filed for
bankruptcy. The seller's rights under the contract were later purportedly
assigned to Martin Intrastate. The original party seller was Martin Exploration
Company, now a subsidiary of Tennessee. Tenneco's involvement in the case arose
from its agreement to retain certain LIG liabilities in connection with its sale
of LIG in 1989.
In essence, Martin Intrastate originally claimed that it had been validly
assigned all of seller's rights under the contract, that the contract was
"statewide," covering all available gas that Martin Intrastate owned, controlled
or had the right to sell, for its own account or for the account of others, and
that the contract provided for a purchase price of about six times the current
wellhead price.
The Louisiana Court of Appeals held that Martin Exploration Company, the
Tennessee subsidiary, holds the rights to sell gas to LIG under the "statewide"
gas purchase contract. As a result of the denial of writ, the decision of the
Louisiana Court of Appeals is final and nonappealable, and the case has been
concluded without a material adverse effect on the financial condition or
results of operations of Tenneco Inc. and its consolidated subsidiaries.
Tenneco Inc. and its subsidiaries are parties to numerous other legal
proceedings arising from their operations. Tenneco Inc. believes that the
outcome of these proceedings, individually and in the aggregate, will have no
material effect on the financial position or results of operations of Tenneco
Inc. and its consolidated subsidiaries.
62
<PAGE>
Environmental Matters
In 1988, Tennessee initiated an internal project to identify and deal with
the presence of polychlorinated biphenyls (PCBs) at compressor stations operated
by both its interstate and intrastate natural gas pipeline systems. This
situation arose as a result of the use of a PCB-containing lubricant, purchased
between 1953 and the early 1970's, in air compressors which are used to start
the main gas compressor engines (lubricants containing PCBs were not used in the
main gas compressor engines themselves). The project was subsequently expanded
to include a full screening for the presence of other substances included on the
U.S. Environmental Protection Agency List of Hazardous Substances. Tennessee
conducted the project with frequent contact with federal and state regulatory
agencies, both through informal negotiation and formal entry of consent orders,
in order to assure that site characterization efforts met regulatory
requirements.
At the conclusion of a comprehensive study to estimate remediation costs for
its compressor sites and all other sites on Tennessee's interstate and
intrastate pipeline systems at which listed substances had been identified,
Tenneco recorded a reserve of $260 million for estimated future environmental
expenses including: 1) expected remediation expense and associated onsite,
offsite and groundwater technical studies, 2) legal fees and 3) settlement of
third party and governmental litigation, including civil penalties. Through
December 31, 1993, Tenneco has charged $64 million against this environmental
reserve. Based upon Tennessee's continuing evaluation and experience to date,
Tenneco believes the amount of the reserve is still appropriate. Of the
remaining reserve, $41 million has been recorded on the balance sheet under
"Payables-trade" and $155 million under "Deferred credits and other
liabilities."
Tenneco believes that a substantial portion of these costs, which will be
expended over the next five to ten years, will be recovered through rates
charged to customers of its natural gas pipelines. The estimated costs expected
to be recovered, amounting to $230 million, were recorded in 1991 as an asset
($30 million in "Current assets" and $200 million in "Investments and other
assets"). The estimated unrecoverable portion, amounting to $30 million, was
charged against income and reflected in "Operating expenses" in 1991. Tennessee
is currently recovering environmental expenses annually in its rates. A
significant portion of these expenses remains subject to review and refund in
Tennessee's pending rate case. As of December 31, 1993, the asset balance is
$167 million ($37 million in "Current assets" and $130 million in "Investments
and other assets").
Tenneco believes that its liability insurance policies in effect during the
period in which the environmental issues occurred provide coverage for
remediation costs and related claims. In 1991, the Company commenced litigation
in a Louisiana state court against 26 of its insurance carriers during this
period, seeking recovery of losses which the Company incurred. The issues in
dispute involve determining: 1) whether the presence of PCBs and other
substances at each compressor station constituted a separate occurrence for
purposes of the per-occurrence limits of the policies, 2) the applicability of
the pollution exclusions in certain policies issued after 1971, 3) the
applicability of provisions which exclude the environmental impacts located
solely on the insured's property, 4) whether the term "property damage" in the
policies will cover the cost of compliance with governmental clean-up
directives, 5) the allocation of costs to the various policies in effect during
the period the environmental impact occurred, 6) the applicability of provisions
excluding pollution that is "expected or intended" and 7) the adequacy of notice
of claims to insurance carriers. This environmental insurance coverage
litigation remains pending. Tenneco has completed settlements with five of the
defendants' carriers and believes that the likelihood of recovery against the
remaining defendant carriers is reasonably possible. While it believes its legal
position to be meritorious, Tenneco has not adjusted its environmental reserve
to reflect any insurance recoveries.
Tenneco has identified other sites in its various operating divisions where
environmental remediation expense may be required should there be a change in
ownership, operations or applicable regulations. These possibilities cannot be
predicted or quantified at this time and accordingly, no provision has been
recorded. However, provisions have been made for all instances where it has been
determined that the incurrence of any material remedial expense is reasonably
possible.
63
<PAGE>
17. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
Income
Income (Loss) from Cumulative
Net Sales (Loss) Before Income Discontinued Effect of Changes
and Interest (Loss) from Operations, Extraordinary in Accounting Net
Quarter Operating Expense and Continuing Net of Loss, Net of Principles, Net Income
(Millions) Revenues Income Taxes Operations Income Tax Income Tax(a) of Income Tax (Loss)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1993 1st $ 3,247 $ 274 $ 74 $ - $ - $ - $ 74
2nd 3,482 303 111 - (23) - 88
3rd 3,150 275 116 - (2) - 114
4th 3,376 317 150 - - - 150
- ----------------------------------------------------------------------------------------------------------------------------------
$13,255 $1,169 $ 451 $ - $ (25) $ - $ 426
- ----------------------------------------------------------------------------------------------------------------------------------
1992 1st $ 3,210 $ 207 $ 35 $ (2) $ - $ (699) $ (666)
2nd 3,435 296 50 73 - - 123
3rd 3,180 177 46 - - - 46
4th 3,314 (760)(b) (814)(b) - (12) - (826)(b)
- ----------------------------------------------------------------------------------------------------------------------------------
$13,139 $ (80) $(683) $ 71 $ (12) $ (699) $(1,323)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Earnings (Loss) per Average Share of Common Stock
-----------------------------------------------------------------------------------------------------------------
Cumulative
Effect of Changes Net
Continuing Discontinued Extraordinary in Accounting Income
Quarter Operations(c) Operations Loss(c) Principles(c) (Loss)(c)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993 1st $ .46 $ - $ - $ - $ .46
2nd .63 - (.13) - .50
3rd .64 - (.01) - .63
4th .83 - - - .83
- ----------------------------------------------------------------------------------------------------------------------------------
$ 2.59 $ - $(.15) $ - $ 2.44
- ----------------------------------------------------------------------------------------------------------------------------------
1992 1st $ .22 $(.02) $ - $(4.92) $(4.72)
2nd .32 .52 - - .84
3rd .28 - - - .28
4th (5.55)(b) - (.08) - (5.63)(b)
- ----------------------------------------------------------------------------------------------------------------------------------
$(4.85) $ .50 $(.08) $(4.86) $(9.29)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Represents the redemption premium related to the retirement of long-term
debt.
(b) Includes a pre-tax restructuring charge of $920 million ($843 million after
tax, or $5.85 per average common share).
(c) The sum of the quarters does not equal the total of the respective year's
earnings per share due to the issuance of additional shares throughout
the year.
The preceding notes are an integral part of the foregoing financial statements.
64
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There has been no change in accountants during 1993 or 1992, nor has there
been any disagreement on any matter of accounting principles or practices or
financial disclosure which in either case is required to be reported pursuant
to this Item 9.
PART III
Item 10, "Directors and Executive Officers of the Registrant", Item 11,
"Executive Compensation", Item 12, "Security Ownership of Certain Beneficial
Owners and Management", and Item 13, "Certain Relationships and Related
Transactions", have been omitted from this report inasmuch as Tenneco Inc. will
file with the Securities and Exchange Commission pursuant to Regulation 14A
within 120 days after the end of the fiscal year covered by this report a
definitive Proxy Statement for the Annual Meeting of Stockholders of Tenneco
Inc. to be held on May 10, 1994, at which meeting the stockholders will vote
upon the election of directors. The information under the caption "Election of
Directors" in such Proxy Statement is incorporated herein by reference.
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 Inc. and Consolidated
Subsidiaries" set forth in Item 8, "Financial Statements and Supplementary
Data."
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES INCLUDED IN ITEM 14
<TABLE>
<CAPTION>
PAGE
----
Schedules of Tenneco Inc. and Consolidated Subsidiaries--
<C> <S> <C>
Schedule II --Amounts receivable from related parties and
underwriters, promoters and employees other than related
parties--three years ended
December 31, 1993...................................... 66
Schedule III --Condensed financial information of registrant.......... 67
Schedule V --Plant, property and equipment--three years ended
December 31, 1993...................................... 71
Schedule VI --Accumulated depreciation, depletion and amortization of
plant, property and equipment--three years ended
December 31, 1993...................................... 72
Schedule VIII --Valuation and qualifying accounts--three years ended
December 31, 1993...................................... 73
Schedule IX --Short-term borrowings--three years ended December 31,
1993................................................... 74
Schedule X --Supplementary income statement information--three years
ended December 31, 1993................................ 75
</TABLE>
SCHEDULES OMITTED AS NOT REQUIRED OR INAPPLICABLE
<TABLE>
<C> <S>
Schedule I --Marketable securities--Other investments
Schedule IV --Indebtedness of and to related parties--Not current
Schedule VII --Guarantees of securities of other issuers
Schedule XI --Real estate and accumulated depreciation
Schedule XII --Mortgage loans on real estate
Schedule XIII --Other investments
Schedule XIV --Supplemental Information Concerning Property--
Casualty Insurance Operations
</TABLE>
65
<PAGE>
SCHEDULE II
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES AND
UNDERWRITERS, PROMOTERS AND EMPLOYEES
OTHER THAN RELATED PARTIES
(THOUSANDS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------------------------------------------------------
BALANCE AT BALANCE AT
BEGINNING END OF
NAME OF DEBTOR (NOTE) OF YEAR ADDITIONS DEDUCTIONS YEAR
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year Ended December 31, 1993
Short-term notes receivable--
Loans to employees of Albright &
Wilson Limited................... $2,624 $ 172 $1,660 $1,136
Loan to employee of Case
Corporation...................... 100 -- 100 --
Loans to employees of J. I. Case
Europe, Ltd. .................... 151 136 287 --
Loan to employee of Dixie
Container Corporation ........... 98 -- 98 --
------ ------ ------ ------
$2,973 $ 308 $2,145 $1,136
====== ====== ====== ======
Year Ended December 31, 1992
Short-term notes receivable--
Loans to employees of Albright &
Wilson Limited................... $4,048 $ 161 $1,585 $2,624
Loan to employee of Case
Corporation...................... 100 -- -- 100
Loans to employees of J. I. Case
Europe, Ltd. .................... 299 -- 148 151
Loan to employee of Dixie
Container Corporation............ 98 -- -- 98
------ ------ ------ ------
$4,545 $ 161 $1,733 $2,973
====== ====== ====== ======
Year Ended December 31, 1991
Short-term notes receivable--
Loans to employees of Albright &
Wilson Limited................... $3,482 $2,473 $1,907 $4,048
Loan to employee of Case
Corporation...................... 100 -- -- 100
Loans to employees of J. I. Case
Europe, Ltd. .................... 116 187 4 299
Loan to employee of Dixie
Container Corporation............ 196 -- 98 98
------ ------ ------ ------
$3,894 $2,660 $2,009 $4,545
====== ====== ====== ======
</TABLE>
- --------
Note: Primarily temporary noninterest-bearing home loans.
66
<PAGE>
SCHEDULE III
SCHEDULE III -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT
TENNECO INC.
STATEMENTS OF INCOME (LOSS)
<TABLE>
<CAPTION>
(MILLIONS)
YEARS ENDED
DECEMBER 31,
---------------------
1993 1992 1991
----- ------- -----
<S> <C> <C> <C>
Interest Income......................................... $ 41 $ -- $ --
Other Income (Loss), Net................................ 39 -- (3)
----- ------- -----
80 -- (3)
----- ------- -----
Interest Expense and Other.............................. 294 278 300
----- ------- -----
Loss from Continuing Operations Before Income Taxes and
Equity
in Net Income from Continuing Operations of Affiliated
Companies.............................................. (214) (278) (303)
----- ------- -----
Income Tax Expense (Benefit):
Current................................................ (100) (78) (53)
Deferred............................................... 20 (15) (51)
----- ------- -----
(80) (93) (104)
----- ------- -----
Equity in Net Income (Loss) from Continuing Operations
of Affiliated Companies................................ 585 (498) (493)
----- ------- -----
Income (Loss) from Continuing Operations................ 451 (683) (692)
Income (Loss) from Discontinued Operations, Net of
Income Tax............................................. -- 71 (40)
----- ------- -----
Income (Loss) Before Extraordinary Loss................. 451 (612) (732)
Extraordinary Loss, Net of Income Tax................... (25) (12) --
----- ------- -----
Income (Loss) before Cumulative Effect of Changes in Ac-
counting Principles.................................... 426 (624) (732)
Cumulative Effect of Changes in Accounting Principles,
Net of Income Tax...................................... -- (699) --
----- ------- -----
Net Income (Loss)....................................... 426 (1,323) (732)
Preferred Stock Dividends............................... 14 16 16
----- ------- -----
Net Income (Loss) to Common Stock....................... $ 412 $(1,339) $(748)
===== ======= =====
</TABLE>
(The accompanying notes to financial statements are an integral part of these
statements of income (loss).)
67
<PAGE>
SCHEDULE III
(CONTINUED)
SCHEDULE III -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT
TENNECO INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(MILLIONS)
YEARS ENDED
DECEMBER 31,
-------------------
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
Operating Activities:
Income (loss) from continuing operations................. $ 451 $(683) $(692)
Adjustments to reconcile income (loss) from continuing
operations to
net cash provided (used) by operating activities--
Deferred income taxes.................................. 20 (15) (51)
Undistributed (earnings) losses of affiliated
companies............................................. (585) 619 503
Changes in components of working capital--
(Increase) decrease in receivables.................... 200 (163) (47)
Increase (decrease) in payables....................... (27) 103 28
Increase (decrease) in taxes accrued.................. (19) (8) 24
Increase (decrease) in interest accrued............... (7) 17 25
Increase (decrease) in other current liabilities...... -- (1) 2
Other.................................................. (18) 24 12
----- ----- -----
Net cash provided (used) by operating activities.......... 15 (107) (196)
----- ----- -----
Investing Activities:
Investments and other.................................... (224) (371) 34
----- ----- -----
Financing Activities:
Issuance of common, treasury and SECT shares............. 1,234 318 --
Purchase of common stock................................. (7) (3) (1)
Issuance of Series A preferred stock..................... -- -- 512
Redemption of preferred stock............................ (30) (6) (10)
Issuance of long-term debt--
Note payable to Tenneco France Finance S.A. ............ -- -- 142
Other................................................... -- 888 697
Retirement of long-term debt............................. (256) (5) (2)
Net increase (decrease) in short-term debt excluding
current maturities on long-term debt--
Notes payable to Tennessee Gas Pipeline Company........ (714) (356) (185)
Note payable to Tenneco Credit Corporation............. 99 -- --
Demand note payable to Packaging Corporation of
America............................................... 243 -- --
Other.................................................. (53) (92) (636)
Dividends (common and preferred)......................... (307) (266) (355)
----- ----- -----
Net cash provided by financing activities................. 209 478 162
----- ----- -----
Increase (Decrease) in Cash and Temporary Cash
Investments.............................................. -- -- --
Cash and Temporary Cash Investments, January 1............ -- -- --
----- ----- -----
Cash and Temporary Cash Investments, December 31 (Note)... $ -- $ -- $ --
===== ===== =====
Cash paid during the year for interest.................... $ 304 $ 269 $ 283
Cash paid during the year for income taxes (net of
refunds)................................................. $ 99 $ 567 $ 21
</TABLE>
- --------
Note: Cash and temporary cash investments 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.)
68
<PAGE>
SCHEDULE III
(CONTINUED)
SCHEDULE III -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT
TENNECO INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
(MILLIONS)
DECEMBER 31,
---------------
1993 1992
------ -------
<S> <C> <C>
ASSETS
Current Assets:
Note receivable from Tenneco International Finance Ltd. ..... $ -- $ 209
Accounts receivable--
Affiliated companies........................................ 221 196
Other....................................................... 139 6
------ -------
360 411
------ -------
Investments and Other Assets:
Investment in affiliated companies........................... 5,999 5,567
Other........................................................ 32 34
------ -------
6,031 5,601
------ -------
$6,391 $ 6,012
====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities on long-term debt......................... $ 135 $ 256
Commercial paper............................................. 51 52
Notes payable--
Affiliated companies........................................ -- 32
Other....................................................... 5 25
Interest-bearing notes payable to Tennessee Gas Pipeline Com-
pany........................................................ 205 919
Interest-bearing note payable to Tenneco Credit Corporation.. 99 --
Demand notes payable to Tenneco Corporation.................. 298 298
Demand note payable to Packaging Corporation of America...... 243 --
Accounts payable to affiliated companies..................... 225 427
Taxes accrued--
Current..................................................... -- 19
Deferred.................................................... -- 2
Interest accrued............................................. 60 67
Other........................................................ 3 4
------ -------
1,324 2,101
------ -------
Long-term Debt--
Interest-bearing note payable to Tenneco France Finance S.A.
............................................................ 148 159
Other........................................................ 2,093 2,227
------ -------
2,241 2,386
------ -------
Deferred Income Taxes......................................... 26 --
------ -------
Deferred Credits and Other Liabilities........................ 36 4
------ -------
Preferred Stock............................................... 163 191
------ -------
Stockholders' Equity:
Series A preferred stock..................................... 9 9
Common stock................................................. 870 752
Stock Employee Compensation Trust (common stock held in
trust)...................................................... (499) (488)
Premium on common stock and other capital surplus............ 3,714 2,637
Cumulative translation adjustments........................... (303) (230)
Retained earnings (accumulated deficit)...................... (980) (1,082)
------ -------
2,811 1,598
Less--Shares held as treasury stock, at cost................. 210 268
------ -------
2,601 1,330
------ -------
$6,391 $ 6,012
====== =======
</TABLE>
(The accompanying notes to financial statements are an integral part of these
balance sheets.)
69
<PAGE>
SCHEDULE III
(CONTINUED)
SCHEDULE III -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT
TENNECO INC.
NOTES TO FINANCIAL STATEMENTS
Accounting Policies
The financial statements of Tenneco Inc. should be read in conjunction with
the financial statements of Tenneco Inc. and Consolidated Subsidiaries
presented in this document.
Majority-owned subsidiaries and companies in which at least a 20% voting
interest is owned are carried at cost plus equity in undistributed earnings
since date of acquisition and cumulative translation adjustments. At December
31, 1993, equity in undistributed earnings and cumulative translation
adjustments amounted to $3,692 million and $(280) million, respectively; at
December 31, 1992, the corresponding amounts were $2,961 million and $(199)
million, respectively.
Dividends received from companies accounted for on an equity basis amounted
to none, $121 million and $10 million for 1993, 1992 and 1991, respectively.
Income Taxes
Tenneco Inc.'s pre-tax earnings (losses) from continuing operations
(excluding equity in net income (loss) from continuing operations of affiliated
companies) for the years 1993, 1992 and 1991 are principally domestic. The
differences between the U.S. income tax benefit, reflected in the Statements of
Income (Loss), of $80 million, $93 million and $104 million for the years 1993,
1992 and 1991 and the income tax expense (benefit), computed at the U.S.
federal income tax rates, of $130 million, $(264) million and $(271) million,
respectively, consisted principally of the tax effect of equity in net income
(loss) from continuing operations of affiliated companies.
Long-Term Debt and Current Maturities
The aggregate maturities and sinking fund requirements applicable to the
long-term debt issues outstanding at December 31, 1993, are $135 million, $10
million, $160 million, $19 million and $774 million for 1994, 1995, 1996, 1997
and 1998, respectively.
Financial Instruments
Tenneco Inc. has guaranteed the performance of certain subsidiaries pursuant
to arrangements under which receivables are factored on a nonrecourse basis
with Tenneco Credit Corporation. Also, Tenneco Inc. has agreed to pay to
Tenneco Credit Corporation a service charge to the extent necessary so that the
earnings of Tenneco Credit Corporation and its consolidated subsidiaries
(before fixed charges and income taxes) are not less than 125% of the fixed
charges.
(The above notes are an integral part of the foregoing financial statements.)
70
<PAGE>
SCHEDULE V
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE V -- PLANT, PROPERTY AND EQUIPMENT (NOTE 1)
(MILLIONS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN C COLUMN D COLUMN E COLUMN F COLUMN C
- --------------------------------------------------------------------------------------------------------------------------
OTHER
CHANGES OTHER
ADD CHANGES ADD
BALANCE AT ADDI- RETIRE- (DEDUCT) BALANCE AT ADDI- RETIRE- (DEDUCT) BALANCE AT ADDI-
DECEMBER 31, TIONS MENTS (NOTES 3 DECEMBER 31, TIONS MENTS (NOTES 3, DECEMBER 31, TIONS
CLASSIFICATION 1990 AT COST (NOTE 2) AND 4) 1991 AT COST (NOTE 2) 4, 5 AND 6) 1992 AT COST
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Natural gas
pipelines....... $ 4,817 $278 $141 $ 14 $ 4,968 $251 $ 54 $ 17 $ 5,182 $170
Farm and con-
struction equip-
ment............ 2,522 104 70 (17) 2,539 60 137 (385) 2,077 101
Automotive
parts........... 902 84 20 (3) 963 66 13 (53) 963 96
Shipbuilding.... 1,489 64 15 (2) 1,536 35 16 -- 1,555 36
Packaging....... 1,224 127 27 23 1,347 97 46 -- 1,398 124
Chemicals and
minerals........ 1,424 217 41 (19) 1,581 84 829 (128) 708 59
Other........... 200 20 9 (8) 203 2 10 22 217 1
------- ---- ---- ---- ------- ---- ------ ----- ------- ----
$12,578 $894 $323 $(12) $13,137 $595 $1,105 $(527) $12,100 $587
======= ==== ==== ==== ======= ==== ====== ===== ======= ====
<CAPTION>
COLUMN A COLUMN D COLUMN E COLUMN F
- --------------------------------------------------------------------------------------------------------------------------
OTHER
CHANGES
ADD
RETIRE- (DEDUCT) BALANCE AT
MENTS (NOTES 3 DECEMBER 31,
CLASSIFICATION (NOTE 2) AND 4) 1993
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Natural gas
pipelines....... $137 $ 31 $ 5,246
Farm and con-
struction equip-
ment............ 239 (2) 1,937
Automotive
parts........... 18 (27) 1,014
Shipbuilding.... 63 (1) 1,527
Packaging....... 48 (6) 1,468
Chemicals and
minerals........ 5 (23) 739
Other........... 34 -- 184
-------- -------- ------------
$544 $(28) $12,115
======== ======== ============
</TABLE>
- ----
Notes:
(1) Reference is made to Note 1 to financial statements in Part II for bases
of provision for depreciation and amortization.
(2) Retirements of plant by the Natural gas pipelines group are recorded at
original cost, and retirements of other properties are recorded at cost.
(3) Includes acquired companies at date of acquisition (1991 includes $34
million by the Packaging group and $1 million by the Automotive parts
group, 1992 includes $11 million by the Natural gas pipelines group and
1993 includes $1 million by the Automotive parts group).
(4) Includes FAS No. 52 foreign currency translation changes totaling $(35)
million, $(283) million and $(86) million in 1991, 1992 and 1993,
respectively.
(5) Includes FAS No. 109 accounting principle changes of $70 million in the
Farm and construction equipment group and $12 million in the Packaging
group. See Note 1 to financial statements in Part II for additional
information.
(6) Includes amounts charged to restructuring expense of $(340) million in
the Farm and construction equipment group. See Note 2 to financial
statements in Part II for additional information.
71
<PAGE>
SCHEDULE VI
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PLANT, PROPERTY AND EQUIPMENT (NOTE 1)
(MILLIONS)
<TABLE>
<CAPTION>
==========================================================================================================================
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN C COLUMN D COLUMN E COLUMN F COLUMN C
- --------------------------------------------------------------------------------------------------------------------------
ADDITIONS ADDITIONS OTHER
CHARGED OTHER CHARGED CHANGES ADDITIONS
TO CHANGES TO ADD CHARGED
BALANCE AT COSTS AND ADD BALANCE AT COSTS AND (DEDUCT) BALANCE AT TO
DECEMBER 31, EXPENSES RETIRE- (DEDUCT) DECEMBER 31, EXPENSES RETIRE- (NOTES 3 DECEMBER 31, COSTS AND
DESCRIPTION 1990 (NOTE 2) MENTS (NOTE 3) 1991 (NOTE 2) MENTS AND 4) 1992 EXPENSES
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Natural gas
pipelines....... $3,027 $134 $ 84 $ 1 $3,078 $156 $ 59 $ 6 $3,181 $166
Farm and con-
struction equip-
ment............ 910 149 53 (2) 1,004 154 88 (18) 1,052 101
Automotive
parts........... 421 57 14 (2) 462 51 10 (22) 481 55
Shipbuilding.... 504 72 10 -- 566 74 13 -- 627 72
Packaging....... 529 68 14 (1) 582 73 12 (3) 640 77
Chemicals and
minerals........ 530 63 24 (4) 565 51 220 (61) 335 33
Other........... 61 7 4 (2) 62 6 5 9 72 5
------ ---- ---- ---- ------ ---- ---- ---- ------ ----
$5,982 $550 $203 $(10) $6,319 $565 $407 $(89) $6,388 $509
====== ==== ==== ==== ====== ==== ==== ==== ====== ====
<CAPTION>
COLUMN A COLUMN D COLUMN E COLUMN F
- --------------------------------------------------------------------------------------------------------------------------
OTHER
CHANGES
ADD BALANCE AT
RETIRE- (DEDUCT) DECEMBER 31,
DESCRIPTION MENTS (NOTE 3) 1993
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Natural gas
pipelines....... $134 $ 6 $3,219
Farm and con-
struction equip-
ment............ 172 (17) 964
Automotive
parts........... 14 (24) 498
Shipbuilding.... 39 (1) 659
Packaging....... 32 (2) 683
Chemicals and
minerals........ 4 (11) 353
Other........... 18 -- 59
-------- -------- ------------
$413 $(49) $6,435
======== ======== ============
</TABLE>
- ----
Notes:
(1) Reference is made to Note 1 to financial statements in Part II for bases
of provision for depreciation and amortization.
(2) Includes amounts charged to discontinued operations of $24 million for
1991 and $13 million for 1992 in the Chemicals and minerals group.
(3) Includes FAS No. 52 foreign currency translation changes totaling $(9)
million, $(129) million and $(47) million in 1991, 1992 and 1993,
respectively.
(4) Includes FAS No. 109 accounting principle changes of $27 million in the
Farm and construction equipment group and $2 million in the Packaging
group. See Note 1 to financial statements in Part II for additional
information.
72
<PAGE>
SCHEDULE VIII
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
(MILLIONS)
==============================================================================
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------------------------------------------
ADDITIONS
---------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COSTS AND OTHER DEDUCTIONS AT END
DESCRIPTION OF YEAR EXPENSES ACCOUNTS (NOTE) OF YEAR
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Allowance for Doubtful
Accounts Deducted from
Assets to Which it
Applies:
Year Ended December 31,
1993.................. $119 $48 $ 3 $41 $129
==== === === === ====
Year Ended December 31,
1992.................. $103 $57 $11 $52 $119
==== === === === ====
Year Ended December 31,
1991.................. $ 86 $36 $10 $29 $103
==== === === === ====
</TABLE>
- --------
Note: Uncollectible accounts written off, net of recoveries on accounts
previously written off.
73
<PAGE>
SCHEDULE IX
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE IX -- SHORT-TERM BORROWINGS (NOTE)
(MILLIONS)
<TABLE>
<CAPTION>
======================================================================================
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ---------------------------------------------------------------------------------------
MAXIMUM AVERAGE
WEIGHTED MONTH-END MONTH-END WEIGHTED
AVERAGE AMOUNT AMOUNT AVERAGE
CATEGORY OF BALANCE AT INTEREST RATE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM END OF AT END OF DURING THE DURING THE DURING THE
BORROWINGS YEAR YEAR YEAR YEAR YEAR
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31,
1993
Lines of Credit........ $ 92 7.0% $ 470 $ 203 5.9%
Commercial Paper....... 496 4.0% 608 501 4.4%
Current Maturities on
Long-Term Debt........ 686
------
Total................. $1,274
======
Year Ended December 31,
1992
Lines of Credit........ $ 137 6.6% $1,164 $ 680 7.1%
Commercial Paper....... 491 6.0% 1,018 791 5.4%
Current Maturities on
Long-Term Debt........ 1,068
------
Total................. $1,696
======
Year Ended December 31,
1991
Lines of Credit........ $1,057 6.8% $1,731 $1,027 8.6%
Commercial Paper....... 623 7.4% 2,469 1,932 7.4%
Current Maturities on
Long-Term Debt........ 772
------
Total................. $2,452
======
</TABLE>
- --------
Note: See Note 7 to the financial statements in Part II for additional
information.
74
<PAGE>
SCHEDULE X
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(MILLIONS)
================================================================================
<TABLE>
<CAPTION>
COLUMN A COLUMN B
- -------------------------------------------------------------------------------
CHARGED TO
COSTS AND
EXPENSES
--------------
ITEM 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Maintenance and repairs......................................... $313 $318 $359
==== ==== ====
Taxes, other than payroll and income taxes...................... $133 $249 $190
==== ==== ====
</TABLE>
75
<PAGE>
REPORTS ON FORM 8-K
During the fourth quarter of the fiscal year ended December 31, 1993, Tenneco
Inc. filed with the Securities and Exchange Commission a Current Report on Form
8-K dated November 1, 1993, with respect to the issuing of a press release
regarding the medical condition of Mike Walsh, Chairman and Chief Executive
Officer of Tenneco Inc.
EXHIBITS
The following exhibits are filed with Tenneco Inc.'s Annual Report on Form
10-K for the fiscal year ended December 31, 1993, or incorporated therein by
reference (exhibits designated by an asterisk were filed with the Report; all
other exhibits were incorporated by reference):
<TABLE>
<S> <C>
3(a)(1) --Certificate of Incorporation as amended and supplemented as of December
8, 1987 (Exhibit 3(a) to Form 10-K for the fiscal year ended December 31,
1987, File No. 1-9864).
3(a)(2) --Certificate of Amendment to Certificate of Incorporation dated May 17,
1988 (Exhibit 3(a) to Form 10-Q for the quarter ended June 30, 1988, File
No. 1-9864).
3(a)(3) --Certificate of Designation, Preferences and Rights of Series A
Participating Junior Preferred Stock, dated May 24, 1988 (Exhibit 3(b) to
Form 10-Q for the quarter ended June 30, 1988, File No. 1-9864).
3(a)(4) --Certificate of Retirement of Preferred Stock Redeemed or Purchased dated
February 21, 1989 (Exhibit 3(a)(4) to Form 10-K for the fiscal year ended
December 31, 1988, File No. 1-9864).
3(a)(5) --Certificate of Retirement of Preferred Stock Redeemed or Purchased dated
February 21, 1990 (Exhibit 3(a)(5) to Form 10-K for the fiscal year ended
December 31, 1989, File No. 1-9864).
3(a)(6) --Certificate of Retirement of Preferred Stock Redeemed or Purchased dated
February 21, 1991 (Exhibit 3(a)(6) to Form 10-K for the fiscal year ended
December 31, 1990, File No. 1-9864).
3(a)(7) --Certificate of Designation, Preferences and Rights of Series A
Cumulative Preferred Stock, dated December 19, 1991 (Exhibit 4(b)(7) to
Registration No. 33-45345).
3(a)(8) --Certificate of Retirement of Preferred Stock Redeemed or Purchased dated
February 21, 1992 (Exhibit 3(a)(8) to Form 10-K for the fiscal year ended
December 31, 1991, File No. 1-9864).
3(a)(9) --Certificate of Retirement of Preferred Stock Redeemed or Purchased dated
February 22, 1993 (Exhibit 3(a)(9) to Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-9864).
*3(a)(10) --Certificate of Retirement of Preferred Stock Redeemed or Purchased dated
February 14, 1994.
3(b) --Copy of By-Laws of Tenneco Inc. as amended March 9, 1993 (Exhibit 3(b)
to Form 10-K for the fiscal year ended December 31, 1992, File No. 1-
9864).
4 --Included in Exhibits 3(a) and 3(b).
9 --None.
10(a)(1) --Copy of Tenneco Inc. Board of Directors Deferred Compensation Plan,
amended and restated January 1, 1988 (Exhibit 10(a)(1) to Form 10-K for
the fiscal year ended December 31, 1988, File No. 1-9864).
10(a)(2) --Copy of Tenneco Inc. Executive Incentive Compensation Plan, amended and
restated July 31, 1986 (Exhibit 10(a)(2) to Registration No. 33-17815).
</TABLE>
76
<PAGE>
<TABLE>
<S> <C>
10(a)(3) --Copy of Tenneco Inc. Deferred Compensation Plan, amended and restated
November 1, 1988, together with form of Deferred Compensation Agreement
(Exhibit 10(a)(3) to Form 10-K for the fiscal year ended December 31,
1988, File No. 1-9864).
10(a)(4) --Copy of 1981 Tenneco Inc. Key Employee Stock Option Plan, amended and
restated January 13, 1987 (Exhibit 10(a)(4) to Registration No. 33-
17815).
10(a)(5) --Form of Grant of Incentive Stock Option and Stock Appreciation Rights
issued pursuant to the 1981 Tenneco Inc. Key Employee Stock Option Plan,
revised January 13, 1987 (Exhibit 10(a)(5) to Registration No. 33-17815).
10(a)(6) --Form of Grant of Supplemental Stock Option and Stock Appreciation Rights
issued pursuant to the 1981 Tenneco Inc. Key Employee Stock Option Plan
(Exhibit 10(a)(6) to Registration No. 33-17815).
10(a)(7) --Copy of Tenneco Inc. Key Employee Restricted Stock and Restricted Unit
Plan effective May 10, 1988 (Exhibit 10(a)(8) to Form 10-K for the fiscal
year ended December 31, 1988, File No. 1-9864).
10(a)(8) --Copy of Tenneco Inc. Supplemental Executive Retirement Plan effective
January 1, 1989 (Exhibit 10(a)(9) to Form 10-K for the fiscal year ended
December 31, 1988, File No. 1-9864).
10(a)(9) --Copy of Amendment No. 1 to Tenneco Inc. Supplemental Executive
Retirement Plan (Exhibit 10(a)(9) to Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-9864).
10(a)(10) --Copy of Tenneco Inc. Benefit Equalization Plan (Exhibit 10(a)(10) to
Form 10-K for the fiscal year ended December 31, 1988, File No. 1-9864).
10(a)(11) --Copy of Amendment No. 1 to Tenneco Inc. Benefit Equalization Plan
(Exhibit 10(a)(11) to Form 10-K for the fiscal year ended December 31,
1988, File No. 1-9864).
10(a)(12) --Copy of Tenneco Inc. Board of Directors Restricted Stock and Restricted
Unit Program (Exhibit 10(a)(12) to Form 10-K for the fiscal year ended
December 31, 1990, File No. 1-9864).
*10(a)(13) --Copy of 1994 Tenneco Inc. Stock Ownership Plan.
10(b)(1) --Lease Agreement, Tomahawk, dated as of January 30, 1991, between The
Connecticut National Bank, as Owner Trustee, and Packaging Corporation of
America (Exhibit 10(b)(1) to Form 10-K for the fiscal year ended December
31, 1990, File No. 1-9864).
10(b)(2) --Lease Agreement, Valdosta, dated as of January 30, 1991, between The
Connecticut National Bank, Philip G. Kane, Jr., Frank McDonald, Jr., and
William R. Monroe, as Owner Trustee, and Packaging Corporation of America
(Exhibit 10(b)(2) to Form 10-K for the fiscal year ended December 31,
1990, File No. 1-9864).
10(b)(3) --Timberland Lease dated January 31, 1991, by and between Four States
Timber Venture and Packaging Corporation of America (Exhibit 10(b)(3) to
Form 10-K for the fiscal year ended December 31, 1990, File No. 1-9864).
10(c)(1) --Employment Agreement dated August 6, 1991, between Michael H. Walsh,
Tenneco Inc. and Tenneco Management Company (Exhibit 10(c)(1) to Form 10-
K for the fiscal year ended December 31, 1991, File No. 1-9864).
10(c)(2) --Stock Option Agreement dated August 6, 1991, between Michael H. Walsh
and Tenneco Inc. (Exhibit 10(c)(2) to Form 10-K for the fiscal year ended
December 31, 1991, File No. 1-9864).
</TABLE>
77
<PAGE>
<TABLE>
<S> <C>
*10(c)(3) --Employment Agreement dated June 29, 1992, between Stacy S. Dick and
Tenneco Inc.
*10(c)(4) --Employment Agreement dated March 12, 1992, between Dana G. Mead and
Tenneco Inc.
*10(c)(5) --Employment Agreement dated December 3, 1993, between Paul T. Stecko and
Tenneco Inc.
*10(c)(6) --Employment Agreement dated September 9, 1992, between Theodore R.
Tetzlaff and Tenneco Inc.
*10(c)(7) --Agreement dated March 3, 1994, between Edward J. Campbell and Case
Corporation.
*11 --Computation of Earnings (Loss) Per Share of Common Stock.
*12 --Computation of Ratio of Earnings to Fixed Charges.
13 --None.
16 --None.
18 --None.
*21 --List of Subsidiaries and Affiliates of Tenneco Inc.
22 --None.
*23 --Consent of Arthur Andersen & Co., Independent Public Accountants for
Tenneco Inc.
*24 --Powers of Attorney of the following directors of Tenneco Inc.:
Mark Andrews
W. Michael Blumenthal
M. Kathryn Eickhoff
Peter T. Flawn
Henry U. Harris, Jr.
Belton K. Johnson
John B. McCoy
Joseph J. Sisco
William L. Weiss
27 --Not required.
28 --None.
99 --None.
</TABLE>
UNDERTAKING.
The undersigned, Tenneco Inc., hereby undertakes pursuant to Regulation S-K,
Item 601(b), paragraph (4)(iii), to furnish to the Securities and Exchange
Commission upon request all constituent instruments defining the rights of
holders of long-term debt of Tenneco Inc. and its consolidated subsidiaries not
filed herewith for the reason that the total amount of securities authorized
under any of such instruments does not exceed 10% of the total consolidated
assets of Tenneco Inc. and its consolidated subsidiaries.
78
<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 Inc.
Dana G. Mead
By___________________________________
President and Chief Executive
Officer
Date: March 9, 1994
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Dana G. Mead
- -------------------------------------------
Dana G. Mead Principal Executive
Officer
and Director March 9, 1994
Robert T. Blakely
- -------------------------------------------
Robert T. Blakely Principal Financial and
Accounting Officer March 9, 1994
Mark Andrews, W. Michael Blumenthal,
M. Kathryn Eickhoff, Peter T. Flawn,
Henry U. Harris, Jr., Belton K. Johnson,
John B. McCoy, Joseph J. Sisco,
William L. Weiss
Directors
</TABLE>
By T. R. Tetzlaff March 9, 1994
--------------------------------------
Attorney-in-fact
79
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
EXHIBITS
TO
FORM 10-K
ANNUAL REPORT
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
FOR
TENNECO INC.
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
COMMISSION FILE NO. 1-9864
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
------- ----------------------- ------------
<C> <S> <C>
3(a)(1) --Certificate of Incorporation as amended and *
supplemented as of December 8, 1987 (Exhibit 3(a)
to Form 10-K for the fiscal year ended December 31,
1987, File No. 1-9864).
3(a)(2) --Certificate of Amendment to Certificate of *
Incorporation dated May 17, 1988 (Exhibit 3(a) to
Form 10-Q for the quarter ended June 30, 1988, File
No. 1-9864).
3(a)(3) --Certificate of Designation, Preferences and Rights *
of Series A Participating Junior Preferred Stock,
dated May 24, 1988 (Exhibit 3(b) to Form 10-Q for
the quarter ended June 30, 1988, File No. 1-9864).
3(a)(4) --Certificate of Retirement of Preferred Stock *
Redeemed or Purchased dated February 21, 1989
(Exhibit 3(a)(4) to Form 10-K for the fiscal year
ended December 31, 1988, File No. 1-9864).
3(a)(5) --Certificate of Retirement of Preferred Stock *
Redeemed or Purchased dated February 21, 1990
(Exhibit 3(a)(5) to Form 10-K for the fiscal year
ended December 31, 1989, File No. 1-9864).
3(a)(6) --Certificate of Retirement of Preferred Stock *
Redeemed or Purchased dated February 21, 1991
(Exhibit 3(a)(6) to Form 10-K for the fiscal year
ended December 31, 1990, File No. 1-9864).
3(a)(7) --Certificate of Designation, Preferences and Rights *
of Series A Cumulative Preferred Stock, dated
December 19, 1991 (Exhibit 4(b)(7) to Registration
No. 33-45345).
3(a)(8) --Certificate of Retirement of Preferred Stock *
Redeemed or Purchased dated February 21, 1992
(Exhibit 3(a)(8) to Form 10-K for the fiscal year
ended December 31, 1991, File No. 1-9864).
3(a)(9) --Certificate of Retirement of Preferred Stock *
Redeemed or Purchased dated February 22, 1993
(Exhibit 3(a)(9) to Form 10-K for the fiscal year
ended December 31, 1992, File No. 1-9864).
3(a)(10) --Certificate of Retirement of Preferred Stock
Redeemed or Purchased dated February 14, 1994.
3(b) --Copy of By-Laws of Tenneco Inc. as amended March *
9, 1993 (Exhibit 3(b) to Form 10-K for the fiscal
year ended December 31, 1992, File No. 1-9864).
10(a)(1) --Copy of Tenneco Inc. Board of Directors Deferred *
Compensation Plan, amended and restated January 1,
1988 (Exhibit 10(a)(1) to Form 10-K for the fiscal
year ended December 31, 1988, File No. 1-9864).
10(a)(2) --Copy of Tenneco Inc. Executive Incentive *
Compensation Plan, amended and restated July 31,
1986 (Exhibit 10(a)(2) to Registration No. 33-
17815).
10(a)(3) --Copy of Tenneco Inc. Deferred Compensation Plan, *
amended and restated November 1, 1988, together
with form of Deferred Compensation Agreement
(Exhibit 10(a)(3) to Form 10-K for the fiscal year
ended December 31, 1988, File No. 1-9864).
10(a)(4) --Copy of 1981 Tenneco Inc. Key Employee Stock *
Option Plan, amended and restated January 13, 1987
(Exhibit 10(a)(4) to Registration No. 33-17815).
10(a)(5) --Form of Grant of Incentive Stock Option and Stock *
Appreciation Rights issued pursuant to the 1981
Tenneco Inc. Key Employee Stock Option Plan,
revised January 13, 1987 (Exhibit 10(a)(5) to
Registration No. 33-17815).
</TABLE>
- --------
* Exhibit incorporated by reference.
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
------- ----------------------- ------------
<C> <S> <C>
10(a)(6) --Form of Grant of Supplemental Stock Option and *
Stock Appreciation Rights issued pursuant to the
1981 Tenneco Inc. Key Employee Stock Option Plan
(Exhibit 10(a)(6) to Registration No. 33-17815).
10(a)(7) --Copy of Tenneco Inc. Key Employee Restricted Stock *
and Restricted Unit Plan effective May 10, 1988
(Exhibit 10(a)(8) to Form 10-K for the fiscal year
ended December 31, 1988, File No. 1-9864).
10(a)(8) --Copy of Tenneco Inc. Supplemental Executive *
Retirement Plan effective January 1, 1989 (Exhibit
10(a)(9) to Form 10-K for the fiscal year ended
December 31, 1988, File No. 1-9864).
10(a)(9) --Copy of Amendment No. 1 to Tenneco Inc. *
Supplemental Executive Retirement Plan (Exhibit
10(a)(9) to Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-9864).
10(a)(10) --Copy of Tenneco Inc. Benefit Equalization Plan *
(Exhibit 10(a)(10) to Form 10-K for the fiscal year
ended December 31, 1988, File No. 1-9864).
10(a)(11) --Copy of Amendment No. 1 to Tenneco Inc. Benefit *
Equalization Plan (Exhibit 10(a)(11) to Form 10-K
for the fiscal year ended December 31, 1988, File
No. 1-9864).
10(a)(12) --Copy of Tenneco Inc. Board of Directors Restricted *
Stock and Restricted Unit Program (Exhibit
10(a)(12) to Form 10-K for the fiscal year ended
December 31, 1990, File No. 1-9864).
10(a)(13) --Copy of 1994 Tenneco Inc. Stock Ownership Plan.
10(b)(1) --Lease Agreement, Tomahawk, dated as of January 30, *
1991, between The Connecticut National Bank, as
Owner Trustee, and Packaging Corporation of America
(Exhibit 10(b)(1) to Form 10-K for the fiscal year
ended December 31, 1990, File No. 1-9864).
10(b)(2) --Lease Agreement, Valdosta, dated as of January 30, *
1991, between The Connecticut National Bank, Philip
G. Kane, Jr., Frank McDonald, Jr., and William R.
Monroe, as Owner Trustee, and Packaging Corporation
of America (Exhibit 10(b)(2) to Form 10-K for the
fiscal year ended December 31, 1990, File No. 1-
9864).
10(b)(3) --Timberland Lease dated January 31, 1991, by and *
between Four States Timber Venture and Packaging
Corporation of America (Exhibit 10(b)(3) to Form
10-K for the fiscal year ended December 31, 1990,
File No. 1-9864).
10(c)(1) --Employment Agreement dated August 6, 1991, between *
Michael H. Walsh, Tenneco Inc. and Tenneco
Management Company (Exhibit 10(c)(1) to Form 10-K
for the fiscal year ended December 31, 1991, File
No. 1-9864).
10(c)(2) --Stock Option Agreement dated August 6, 1991, *
between Michael H. Walsh and Tenneco Inc. (Exhibit
10(c)(2) to Form 10-K for the fiscal year ended
December 31, 1991, File No. 1-9864).
10(c)(3) --Employment Agreement dated June 29, 1992, between
Stacy S. Dick and Tenneco Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
------- ----------------------- ------------
<C> <S> <C>
10(c)(4) --Employment Agreement dated March 12, 1992, between
Dana G. Mead and Tenneco Inc.
10(c)(5) --Employment Agreement dated December 3, 1993,
between Paul T. Stecko and Tenneco Inc.
10(c)(6) --Employment Agreement dated September 9, 1992,
between Theodore R. Tetzlaff and Tenneco Inc.
10(c)(7) --Agreement dated March 3, 1994, between Edward J.
Campbell and Case Corporation
11 --Computation of Earnings (Loss) Per Share of Common
Stock.
12 --Computation of Ratio of Earnings to Fixed Charges.
21 --List of Subsidiaries and Affiliates of Tenneco Inc.
23 --Consent of Arthur Andersen & Co., Independent
Public Accountants for Tenneco Inc.
24 --Powers of Attorney of the following directors of
Tenneco Inc.:
Mark Andrews
W. Michael Blumenthal
M. Kathryn Eickhoff
Peter T. Flawn
Henry U. Harris, Jr.
Belton K. Johnson
John B. McCoy
Joseph J. Sisco
William L. Weiss
</TABLE>
<PAGE>
EXHIBIT 3(A)(10)
<PAGE>
TENNECO INC.
CERTIFICATE OF RETIREMENT OF PREFERRED STOCK
REDEEMED OR PURCHASED
____________________________________________
Tenneco Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY as follows:
FIRST: That pursuant to the provisions of Section 160 of the General
Corporation Law of the State of Delaware, and subject to the provisions of its
Certificate of Incorporation, as amended, One Hundred Ninety-Five Thousand Seven
Hundred Sixty-One (195,761) shares of its issued and outstanding $7.40
Cumulative Preferred Stock were purchased and/or redeemed by the corporation and
pursuant to the provisions of Section 243 of the General Corporation Law of the
State of Delaware, such shares of stock have the status of retired shares.
SECOND: That the Certificate of Incorporation of the corporation
prohibits the reissuance of such retired shares of Cumulative Preferred Stock.
THIRD: That pursuant to the provisions of Section 243 of the General
Corporation Law of the State of Delaware, upon this Certificate becoming
effective, the Certificate of Incorporation of the corporation shall be amended
so that the authorized Cumulative Preferred Stock of the corporation shall be
reduced by the aggregate of the shares so retired, to-wit: One Hundred Ninety-
Five Thousand Seven Hundred Sixty-One (195,761) shares.
FOURTH: This Certificate shall become effective on March 1, 1994.
IN WITNESS WHEREOF, said Tenneco Inc. has caused this Certificate to be
signed by E. J. Milan, Vice President and Controller, and attested by James D.
Gaughan, Assistant Secretary, this 14th day of February, 1994.
TENNECO INC.
By: /s/ E. J. MILAN
----------------------------------
E. J. Milan, Vice President
and Controller
ATTEST:
/S/ JAMES D. GAUGHAN
- ------------------------------
James D. Gaughan,
Assistant Secretary
0407
<PAGE>
EXHIBIT 10(A)(13)
<PAGE>
1994 TENNECO INC. STOCK OWNERSHIP PLAN
1. PURPOSE
The purpose of the Plan is to promote the long-term success of the Tenneco
Companies for the benefit of the Company's shareholders by encouraging its
officers and key employees to have meaningful investments in the Company so
that, as stockholders themselves, those individuals will be more likely to
represent the views and interests of other stockholders and by providing
incentives to such officers and key employees for continued service. The
Company believes that the possibility of participation under the Plan will
provide this group of officers and employees an incentive to perform more
effectively and will assist the Company and the Tenneco Companies in attracting
and retaining people of outstanding training, experience and ability.
2. DEFINITIONS
"Authorized Plan Shares" has the meaning set forth in Section 6(a).
"Award" means an award or grant made to a Participant under Section 8.
"Award Agreement" means the agreement provided in connection with an Award
under Section 12.
"Award Date" means the date that an Award is made, as specified in an Award
Agreement.
"Board of Directors" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended, or any successor
legislation.
"Company" means Tenneco Inc.
"Committee" means the Compensation and Benefits Committee of the Board of
Directors, or any successor committee thereto.
"Common Stock" means the Company's common stock, $5 par value per share.
"Covered Employees" shall have the meaning specified in Section 162(m)(3) of
the Code.
"Dividend Equivalent" means an amount equal to the amount of the cash
dividends that are declared and become payable after the Award Date for the
Award to which it relates and on or before the Settlement Date for such Award.
1
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" on any date means the average of the highest and the
lowest sales prices of a share of Common Stock on the Composite Tape for such
date, as reported by the National Quotation Bureau Incorporated; provided that
if (i) no sales of Common Stock are included on the Composite Tape for such
date, or (ii) in the opinion of the Committee, the sales of Common Stock on
such date are insufficient to constitute a representative market, then the Fair
Market Value of a share of Common Stock on such date shall be deemed to be the
average of the highest and lowest prices of a share of Common Stock as reported
on said Composite Tape for the next preceding day on which (x) sales of Common
Stock are included and (y) the circumstances described in this clause (ii) do
not exist.
"ISO" means any Stock Option designated in an Award Agreement as an
"Incentive Stock Option" within the meaning of Section 422 of the Code.
"Non-Qualified Stock Option" means any Stock Option which is not an ISO or a
Qualified Stock Option.
"Option Price" means the purchase price of one share of Common Stock under a
Stock Option.
"Participant" means an employee or officer of a Tenneco Company who has been
selected by the Committee to receive an Award under the Plan.
"Performance Unit" means an Award denominated in cash, the amount of which
may be based on performance of the Participant or of Tenneco Inc. or of any
subsidiary or division thereof.
"Plan" means this 1994 Tenneco Inc. Stock Ownership Plan, as amended from
time to time.
"Qualified Stock Option" means any Stock Option, other than an ISO, which
qualifies for favorable tax treatment under any section or sections of the
Code.
"Reload Stock Option" means a Stock Option (i) which is awarded, either
automatically in accordance with the terms of an Award Agreement in which one
or more other Awards are made or by separate Award, upon the exercise of a
stock option granted under this Plan or otherwise where the option price is
paid by the option holder by delivery of shares of Common Stock on the
Settlement Date for such exercise and (ii) which entitles such holder to
purchase the number of shares so delivered for an Option Price equal to the
Fair Market Value of a share of Common Stock on such Settlement Date.
"Restricted Stock" means shares of Common Stock subject to restrictions and
conditions pursuant to Section 8(c).
2
<PAGE>
"Rule 16b-3" means Regulation (S) 240.16b-3 of the rules and regulations of
the Securities and Exchange Commission promulgated under the Exchange Act, as
such Rule became effective May 1, 1991, as it may be amended after December 8,
1993.
"Settlement Date" means, (i) with respect to any Stock Option that has been
exercised in whole or in part, the date or dates upon which shares of Common
Stock are to be delivered to the Participant and the Option Price therefor
paid, (ii) with respect to any SARs that have been exercised, the date or dates
upon which a cash payment is to be made to the Participant, or in the case of
SARs that are to be settled in shares of Common Stock, the date or dates upon
which such shares are to be delivered to the Participant, (iii) with respect to
Performance Units, the date or dates upon which cash or shares of Common Stock
are to be delivered to the Participant, (iv) with respect to Dividend
Equivalents, the date upon which payment thereof is to be made, and (v) with
respect to Stock Equivalent Units, the date upon which payment thereof is to be
made, in each case, determined in accordance with the terms of the Award
Agreement under which any such Award was made.
"Stock Appreciation Right" or "SAR" means an Award that entitles the
Participant to receive on the Settlement Date an amount equal to the excess of
(i) the Fair Market Value of a share of Common Stock on the date of
exercise of the SAR over
(ii) the Fair Market Value of one share of Common Stock on the Award Date
or any other higher amount specified in the Award Agreement.
"Stock Equivalent Unit" means an Award that entitles the Participant to
receive on the Settlement Date an amount equal to the Fair Market Value of one
share of Common Stock on such date.
"Stock Option" or "Option" means any right to purchase shares of Common Stock
(including a Reload Stock Option) awarded pursuant to Section 8(a).
"Tenneco Company" means the Company, any stock corporation of which a
majority of the capital stock generally entitled to vote for directors is owned
directly or indirectly by the Company, and any other company designated as such
by the Committee, but only during the period of such ownership or designation.
3. TERM
The Plan shall be effective as of December 8, 1993, subject to approval by
the Company's Stockholders, and shall remain in effect through December 31,
1998. After termination of the Plan, no further Awards may be granted other
than Reload Stock Options granted in accordance with Award Agreements existing
as of December 31, 1998, but outstanding Awards shall remain effective in
accordance with their terms and the terms of the Plan.
3
<PAGE>
4. PLAN ADMINISTRATION
(a) The Committee shall be responsible for administering the Plan.
(i) Composition of the Committee. The Committee shall be comprised of two
or more members of the Board of Directors, all of whom shall be
"disinterested persons" as defined in Rule 16b-3 and "outside directors" as
that term is used in Section 162 of the Code and the regulations
promulgated thereunder.
(ii) Powers. The Committee shall have full and exclusive discretionary
power to interpret the Plan and to determine eligibility for benefits and
to adopt such rules, regulations and guidelines for administering the Plan
as the Committee may deem necessary or proper. Such power shall include,
but not be limited to, selecting Award recipients, establishing all Award
terms and conditions and, subject to Section 13, adopting modifications and
amendments to the Plan or any Award Agreement, including without
limitation, any that are necessary to comply with the laws of the countries
in which the Company or its affiliates operate.
(iii) Delegation. The Committee may delegate to one or more of its
members or to one or more agents or advisors such non-discretionary
administrative duties as it may deem advisable, and the Committee or any
person to whom it has delegated duties as aforesaid may employ one or more
persons to render advice with respect to any responsibility the Committee
or such person may have under the Plan.
(b) The Committee may employ attorneys, consultants, accountants and other
persons, and the Committee, the Company and its officers and directors shall be
entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon the Participants, the
Company and all other interested persons. No member of the Committee shall be
personally liable for any action, determination, or interpretation made in good
faith with respect to the Plan or Awards, and all members of the Committee
shall be fully protected by the Company, to the fullest extent permitted by
applicable law, in respect of any such action, determination or interpretation.
5. ELIGIBILITY
Awards will be limited to persons who are officers or key employees of the
Tenneco Companies. In determining the persons to whom Awards shall be made, the
Committee shall, in its discretion, take into account the nature of the
person's duties, past and potential contributions to the success of the Tenneco
Companies and such other factors as the Committee shall deem relevant in
connection with accomplishing the purposes of the Plan. A
4
<PAGE>
director of the Company or a Tenneco Company who is not also an officer or
employee shall not be eligible to receive an Award. A person who has received
an Award or Awards may receive an additional Award or Awards. For purposes of
this Section 5, the terms "employee" and "officer" shall also include any
former employee or former officer of a Tenneco Company eligible to receive a
replacement award as contemplated in the third sentence of Section 8.
6. AUTHORIZED AWARDS; LIMITATIONS
(a) Except for adjustments pursuant to Section 7, the maximum number of
shares of Common Stock that shall be available for issuance under the Plan (the
"Authorized Plan Shares") shall be 8,400,000 (approximately 4.9% of the issued
and outstanding shares of Common Stock on the effective date of the Plan).
(b) Except for adjustments pursuant to Section 7, in no event (i) shall more
than 3.0 million of the Authorized Plan Shares be available for issuance
pursuant to the exercise of ISOs awarded under the Plan; and (ii) shall more
than 2.5 million of the Authorized Plan Shares be available for issuance
pursuant to Restricted Stock Awards.
(c) (i) Determinations as to the number of Authorized Plan Shares that remain
available for issuance under the Plan shall be made in accordance with such
rules or procedures as the Committee shall determine from time to time, which
shall be consistent with the requirements of Rule 16b-3 and such
interpretations thereof as have been made, or may be made from time to time, by
courts of competent jurisdiction or the Securities and Exchange Commission or
the staff of such Commission to the end that all persons subject to Section 16
of the Exchange Act shall be entitled to the fullest extent possible to the
exemption provided by Rule 16b-3.
(ii) If an Award expires unexercised or is forfeited, surrendered, cancelled,
terminated or settled in cash in lieu of Common Stock, the shares of Common
Stock which were theretofore subject (or potentially subject) to such Award may
again be made subject to an Award Agreement; provided, however, that any such
shares subject to a forfeited Award shall not again be made subject to an Award
Agreement to Participants who are subject to Section 16 of the Exchange Act if
any Participant received, directly or indirectly, any of the benefits of
ownership of the securities of the Company underlying such Award, including
without limitation, the receipt of dividend payments but excluding (i) the
right to vote such shares and (ii) the accumulation of dividends or Dividend
Equivalents which also are forfeited.
(d) Common Stock which may be issued under the Plan may be either authorized
and unissued shares, or issued shares which have been reacquired by the Company
and which are being held as treasury shares, or shares held by the Tenneco Inc.
Stock Employee Compensation Trust. No fractional shares of Common Stock shall
be issued under the Plan; provided, however, that cash, in an amount equal to
the Fair Market Value of a fractional share
5
<PAGE>
of Common Stock as of the Settlement Date of the Award, shall be paid in lieu
of any fractional shares in the settlement of Awards payable in shares of
Common Stock.
(e) In no event shall the number of shares of Common Stock subject to Stock
Options plus the number of shares underlying SARs awarded to any one
Participant during the period from December 8, 1993 through December 31, 1998
exceed 10% of the Authorized Plan Shares. In all events, determinations under
the preceding sentence shall be made in a manner which is consistent with Code
Section 162 and the regulations promulgated thereunder.
7. ADJUSTMENTS AND REORGANIZATIONS
The Committee may make such adjustments to Awards granted under the Plan
(including the terms, exercise price and otherwise) as it deems appropriate in
the event of changes that impact the Company, the Company's share price, or
share status, provided that any such actions are consistently and equitably
applied to all affected Participants; provided, that, notwithstanding any other
provision hereof, insofar as any Award is subject to performance goals
established to qualify payments thereunder as "performance-based compensation"
as described in Section 162(m) of the Code, the Committee shall have no power
to adjust such Awards other than (i) negative discretion and (ii) the power to
adjust Awards for corporate transactions, in either case to the extent
permissible under regulations interpreting Code Section 162(m).
In the event of any merger, reorganization, consolidation, recapitalization,
separation, liquidation, stock dividend, extraordinary dividend, spin-off,
split-up, rights offering, share combination, or other change in the corporate
structure of the Company affecting the Common Stock, the number and kind of
shares which may be delivered under the Plan shall be subject to such equitable
adjustment as the Committee, in its sole discretion, may deem appropriate in
order to preserve the benefits or potential benefits to be made available under
the Plan, and the number and kind and price of shares subject to outstanding
Awards and any other terms of outstanding Awards shall be subject to such
equitable adjustment as the Committee, in its sole discretion, may deem
appropriate in order to prevent dilution or enlargement of outstanding Awards.
8. AWARDS
The Committee shall determine the type and amount of any Award to be made to
any Participant; provided, however, that, except as provided in paragraph (g),
no Award granted pursuant to this Plan shall vest in less than six months after
the date the Award is granted. Awards may be granted singly, in combination, or
in tandem. Awards may also be made in combination or in tandem with, in
replacement of, as alternatives to, or as the payment form
6
<PAGE>
for, grants or rights under any other employee benefit or compensation plan of
the Tenneco Companies, including any such employee benefit or compensation plan
of any acquired entity.
(a) Stock Options.
(i) Grants. Stock Options (including Reload Stock Options) granted under
this Plan may be any of the following:
(1) an ISO,
(2) a Non-Qualified Stock Option, or
(3) a Qualified Stock Option.
The Committee may grant any Participant one or more ISOs, Non-Qualified
Stock Options, Qualified Stock Options, or all three types of Stock
Options, in each case with or without SARs or Reload Stock Options or any
other form of Award. Stock Options granted pursuant to this Plan shall be
subject to such additional terms, conditions, or restrictions as may be
provided in the Award Agreement relating to such Stock Option.
(ii) Option Price. The Option Price of a Stock Option shall be not less
than 100% of the Fair Market Value of a share of Common Stock on the Award
Date; provided, however, that in the case of a Stock Option granted
retroactively in tandem with or as a substitution for another Award, the
Option Price shall be not less than 100% of the Fair Market Value of a
share of Common Stock on the date of such other Award; and provided further
that in any case ISOs shall have a price equal to 100% of the Fair Market
Value of a share of Common Stock on the Award Date.
(iii) ISOs. Anything in this Plan to the contrary notwithstanding, no
term of this Plan relating to ISOs shall be interpreted, amended or
altered, nor shall any discretion or authority awarded under the Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code, or,
without the consent of the Participants affected, to disqualify any ISO
under Section 422 of the Code.
An ISO shall not be granted to an individual who, on the date of grant,
owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the employing Tenneco Company or of its parent or
any subsidiary corporation.
The aggregate Fair Market Value, determined on the Award Date, of the
shares of Common Stock or other stock with respect to which one or more
ISOs (or other "incentive stock options," within the meaning of Subsection
(b) of Section 422 of the Code, under all other stock option plans of the
Participant's employing Tenneco Company and its parent and subsidiary
corporations) granted on or after January 1, 1987, that are exercisable for
the first time by the Participant during any particular calendar year shall
not exceed the $100,000 limitation imposed by Section 422(d) of the Code.
7
<PAGE>
(iv) Manner of Payment of Option Price. The Option Price shall be paid in
full at the time of the exercise of the Stock Option and may be paid in any
of the following methods or combinations thereof:
(A) In United States dollars in cash, check, bank draft or money
order payable to the order of the Company;
(B) By the delivery of shares of Common Stock having an aggregate
Fair Market Value on the date of such exercise equal to the Option
Price;
(C) In any other manner that the Committee shall approve, including
without limitation any arrangement that the Committee may establish to
enable Participants to simultaneously exercise Stock Options and sell
the shares of Common Stock acquired thereby and apply the proceeds to
the payment of the Option Price therefor.
(v) Reload Stock Options. The Committee may award Reload Stock Options to
any Participant either in combination with other Awards or in separate
Award Agreements that grant Reload Stock Options upon exercise of
outstanding stock options granted under this Plan or otherwise.
(b) Stock Appreciation Rights.
(i) Grants. The Committee may award any Participant SARs which shall be
subject to such additional terms, conditions, or restrictions as may be
provided in the Award Agreement relating to such SAR Award, including any
limits on aggregate appreciation. SARs may be settled in Common Stock or
cash or both.
(ii) Award Price. The Award Price per share of Common Stock of a SAR
shall be fixed in the Award Agreement and shall be not less than 100% of
the Fair Market Value of a share of Common Stock on the date of the award;
provided, however, that in the case of a SAR awarded retroactively in
tandem with or as a substitution for another Award, the Award Price per
share of a SAR shall be not less than 100% of the Fair Market Value of a
share of Common Stock on the date of such other Award.
(iii) Distribution of SARs. SARs shall be exercisable in accordance with
the conditions and procedures set out in the Award Agreement relating to
such SAR Award.
(c) Restricted Stock. The Committee may award Restricted Stock to any
Participant. Awards of Restricted Stock shall be subject to such conditions and
restrictions as are established by the Committee and set forth in the Award
Agreement, which may include, but are not limited to, continued service with
the Company, achievement of specific business objectives, and other
measurements of individual or business unit or Company performance.
8
<PAGE>
(d) Stock Equivalent Units. The Committee may award Stock Equivalent Units to
any Participant. All or part of any Stock Equivalent Units Award may be subject
to conditions and restrictions established by the Committee, and set forth in
the Award Agreement, which may include, but are not limited to, continued
service with the Company, achievement of specific business objectives, and
other measurements of individual or business unit or Company performance that
may include but shall not be limited to, earnings per share, net profits,
total shareholder return, cash flow, return on shareholders' equity, and
cumulative return on net assets employed. Without limiting the generality of the
foregoing, it is intended that the Committee shall establish performance goals
applicable to Stock Equivalent Units granted to Participants who, in the
judgment of the Committee, may be Covered Employees in such manner as shall
permit it to qualify as "performance-based compensation" as described in Section
162(m)(4)(C) of the Code. It is specifically provided that the material terms of
such performance goals for Participants who, in the judgment of the Committee,
may be Covered Employees, shall, until changed by the Committee with the
approval of the shareholders, be as follows: (i) the business criteria on which
performance goals shall be based shall be the attainment of such target levels
of either earnings or shareholder return as may be specified by the Committee;
and (ii) the maximum number of Stock Equivalent Units which may be granted to
any Participant in any one calendar year shall not exceed 100,000.
(e) Dividend Equivalents. The Committee may provide in any Award Agreement in
which Stock Equivalent Units are awarded that such Stock Equivalent Units may
accrue Dividend Equivalents. In lieu of awarding Dividend Equivalents, the
Committee may provide for automatic awards of additional Stock Equivalent Units
on each date that cash dividends are paid on the Common Stock in an amount
equal to (i) the product of the dividend per share on the Common Stock times
the total number of Stock Equivalent Units then held by the Participant,
divided by (ii) the Fair Market Value of the Common Stock on the dividend
payment date.
(f) Performance Units. Performance Units shall be based on attainment over a
specified period of individual performance targets or on other parameters that
may include but shall not be limited to, earnings per share, total shareholder
return, cash flow, return on shareholders' equity, and cumulative return on net
assets employed. Performance Units may be settled in Common Stock or cash or
both. Without limiting the generality of the foregoing, it is intended that the
Committee shall establish performance goals applicable to Performance Units
granted to Participants who, in the judgment of the Committee, may be Covered
Employees in such a manner as shall permit payments with respect thereto to
qualify as "performance-based compensation" as described in Section 162(m)(4)(C)
of the Code. It is specifically provided that the material terms of such
performance goals for Participants who, in the judgment of the Committee, may be
Covered Employees, shall, until changed by the Committee with the approval of
the shareholders, be as follows: (i) the business criteria on which the
performance goals shall be based shall be the attainment of such target levels
of either earnings per share from continuing operations or total shareholder
return as may be specified by the Committee; and (ii) the maximum amount of
compensation which may be paid to any one Participant with respect to any one
year shall be $2,000,000.
9
<PAGE>
(g) The Committee may also, in its sole discretion, shorten or terminate the
restricted period or waive any other conditions for the lapse of restrictions
with respect to all or any portion of any Award. Notwithstanding the foregoing,
all restricted periods shall terminate and the Awards shall be fully vested
with respect to any Participant upon the Participant's Retirement, death, or
Total Disability, coincident with termination of employment with Tenneco
Companies. For purposes of this Section 8:
"Retirement" means the Participant's termination of employment with the
Tenneco Companies at a time when, under the Tenneco Inc. Retirement Plan or
under any other retirement plan that is maintained by a Tenneco Company and
that is determined by the Committee to be the functional equivalent of the
Tenneco Inc. Retirement Plan, the Participant is eligible to receive an
immediately payable normal retirement benefit, or, if approved by the
Committee, the Participant is eligible to receive an immediately payable early
retirement benefit under such plans; and
"Total Disability" means the permanent inability of the Participant, which is
a result of accident or sickness, to perform such Participant's occupation or
employment for which the Participant is suited by reason of the Participant's
previous training, education and experience and which results in the
termination of the Participant's employment with any Tenneco Company.
9. DIVIDENDS
The Committee may provide in the appropriate Award Agreement that dividends
on Restricted Stock may be paid currently in cash or credited to a
Participant's account for subsequent distribution as determined by the
Committee. The Award Agreement may provide for the reinvestment of dividends
paid on Restricted Stock in shares of Common Stock.
10. DEFERRALS AND SETTLEMENTS
Settlement of Awards may be in the form of cash, Common Stock, other Awards,
or in combinations thereof as the Committee shall determine, and with such
other restrictions as it may impose. The Committee may also require or permit
Participants to defer the issuance or vesting of shares or the settlement of
Awards under such rules and procedures as it may establish under the Plan. The
Committee may also provide that deferred settlements include the payment of, or
crediting of interest on, the deferral amounts or the payment or crediting of
Dividend Equivalents on deferred settlements denominated in shares.
11. TRANSFERABILITY AND BENEFICIARIES
No Awards under the Plan shall be assignable, alienable, saleable or
otherwise transferable other than by will or the laws of descent and
distribution, or pursuant to a qualified
10
<PAGE>
domestic relations order (as defined by the Code) or Title I of the Employee
Retirement Income Security Act, or the rules thereunder unless otherwise
determined by the Committee.
12. AWARD AGREEMENTS
Awards under the Plan shall be evidenced by Award Agreements that set forth
the details, conditions and limitations for each Award, which may include the
term of an Award (except that (i) except as provided in Section 8(g), no Award
shall vest in less than six months after the date the Award is granted and (ii)
in no event shall the term of any ISO exceed a period of ten years from the
date of its grant), the provisions applicable in the event the Participant's
employment terminates, and the Company's authority to unilaterally or
bilaterally amend, modify, suspend, cancel or rescind any Award.
13. AMENDMENTS; COMPLIANCE WITH RULE 16B-3
The Committee may suspend, terminate, or amend the Plan as it deems necessary
or appropriate to better achieve the purposes of the Plan, except that, without
the approval of the Company's shareholders, no such amendment shall be made for
which shareholder approval is necessary to comply with any applicable tax or
regulatory requirement, including for these purposes any approval requirement
which is a prerequisite for exemptive relief under Section 16b of the Exchange
Act.
14. TAX WITHHOLDING
The Company shall have the right to (i) make deductions from any settlement
of an Award made under the Plan, including the delivery or vesting of shares,
or require shares or cash or both be withheld from any Award, in each case in
an amount sufficient to satisfy withholding of any federal, state or local
taxes required by law, or (ii) take such other action as may be necessary or
appropriate to satisfy any such withholding obligations. The Committee may
determine the manner in which such tax withholding may be satisfied, and may
permit shares of Common Stock (rounded up to the next whole number) to be used
to satisfy required tax withholding based on the Fair Market Value of any such
shares of Common Stock, as of the Settlement Date of the applicable Award.
15. OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS
Unless otherwise specifically determined by the Committee, settlements of
Awards received by a Participant under the Plan shall not be deemed a part of
the Participant's regular, recurring compensation for purposes of calculating
payments or benefits from any Company benefit plan, severance program or
severance pay law of any country. Further, the Company may adopt other
compensation programs, plans or arrangements as it deems appropriate or
necessary.
11
<PAGE>
16. UNFUNDED PLAN
Unless otherwise determined by the Committee, the Plan shall be unfunded and
shall not create (or be construed to create) a trust or a separate fund or
funds. The Plan shall not establish any fiduciary relationship between the
Company and any Participant or other person. To the extent any person holds any
rights by virtue of a grant awarded under the Plan, such right (unless
otherwise determined by the Committee) shall be no greater than the right of an
unsecured general creditor of the Company.
17. FUTURE RIGHTS
No person shall have any claim or right to be granted an award under the
Plan, and no Participant shall have any right under the Plan to be retained in
the employment of the Company or its affiliates.
18. GOVERNING LAW
The validity, construction and effect of the Plan, and any actions taken or
relating to the Plan, shall be determined in accordance with the laws of the
State of Delaware and applicable federal law.
19. SUCCESSORS AND ASSIGNS
The Plan shall be binding on all successors and assigns of a Participant,
including, without limitation, the estate of such Participant and the executor,
administrator or trustee of such estate, or any receiver or trustee in
bankruptcy or representative of the Participant's creditors.
20. RIGHTS AS A SHAREHOLDER
Except as otherwise provided in any Award Agreement, a Participant shall have
no rights as a shareholder of the Company until he or she becomes the holder of
record of Common Stock.
12
<PAGE>
EXHIBIT 10(C)(3)
<PAGE>
June 29, 1992
Mr. Stacy Dick
1220 Park Avenue, #2D
New York, NY 10128
Dear Stacy:
On behalf of Tenneco, Inc. ("Tenneco") and Tenneco Management Company
("Company"), I am pleased to offer you the position of Sr. Vice President-
Strategy under the following terms and conditions:
1. Your employment will commence as soon as you can conveniently terminate your
employment with First Boston. You will report to me.
2. The Company will pay you a monthly base salary of $25,000 ($300,000 per
year), which shall be subject to such increases as may from time to time be
approved by the Compensation and Benefits Committee of the Board of Directors
of Tenneco, payable according to the regular pay schedule for salaried
employees. As discussed, effective January 1, 1992, we will adjust your
salary to $27,083 per month ($325,000 per year).
3. You will be a participant in Tenneco's Executive Incentive Compensation Plan
("EIC Plan"). The amount distributed to you under the EIC Plan with respect
to 1992 will be $100,000 and 1993 will be no less than $125,000, payable in
accordance with the terms of the EIC Plan.
4. You will be a participant in Tenneco's Deferred Compensation Plan ("DC
Plan"). The amount awarded to you under the DC Plan with respect to 1992 will
be $15,000, payable in accordance with the terms of the DC Plan.
5. You will be awarded 15,000 restricted shares under Tenneco's Key Employee
Restricted Stock and Restricted Unit Plan, vesting in four years following
date of grant. You will be eligible to vote the stock and receive quarterly
dividends. You will be eligible to receive additional stock grants annually
at the discretion of the Compensation and Benefits Committee of the Board of
Directors.
1
<PAGE>
Mr. Stacy Dick
June 29, 1992
Page 2
6. In consideration of benefits you will forego from your current employer, the
Company will pay you the following upon commencement of your employment.
. $145,000 if First Boston requires you to reimburse them for 40% of your
1991 bonus.
. $290,000 which represents one-half of your estimated accrued 1992 bonus
from First Boston. Should the final amount of the bonus generated and
earned be more or less than the $290,000, we will settle with each other as
is appropriate as soon as the final amount is known.
7. You will receive non-cash compensation and personal benefits comparable to
those currently provided to Tenneco's senior executive officers under
Tenneco's policies in effect at the time hereof, including reimbursement for
the costs of financial, tax and estate planning up to $20,000 per year.
8. We will credit five years of service under our pension effective with your
date of employment, plus you will receive a SERP which covers the incentive
compensation in addition to base salary.
9. The Company will purchase from you your home in New York for a price equal
to the greater of the fair market value determined by an independent
appraiser or your cost for the property.
10. You will be reimbursed for the costs incurred in relocating to the Houston,
Texas area.
11. If the Company terminates your employment other than upon your death,
disability or the material non-performance of your duties, it will pay you a
severance benefit in an amount equal to the sum of one times your base
salary then in effect.
12. You will be provided an annual physical examination. You will also be
provided membership in a country club of your choice and a dining or social
club of your choice related to the performance of your role as Sr. Vice
President.
2
<PAGE>
Mr. Stacy Dick
June 29, 1992
Page 3
13. You will be provided an automobile, including gas, maintenance, and
insurance in accordance with Tenneco company policy.
Materials for the Tenneco Inc. Executive Incentive Plan, Restricted Stock and
Deferred Compensation Plan are being mailed to you. Ken Otto is available to
answer any questions you may have.
Please acknowledge your agreement to these terms by executing a copy of this
letter in the space provided below and returning it to me.
Very truly yours,
Michael H. Walsh
Chairman and
Chief Executive Officer
Agreed:
- --------------------
Stacy Dick
<PAGE>
EXHIBIT 10(C)(4)
<PAGE>
TENNECO LOGO GOES HERE
March 12, 1992
--------------
Mr. Dana G. Mead
27 Strickland Road
Cos Cob, CT 06807
Dear Dana:
On behalf of Tenneco, Inc. ("Tenneco") and Tenneco Management Company
("Company"), I am pleased to offer you the position of President and Chief
Operating Officer under the following terms and conditions:
1. Your employment will commence about April 1, 1992 or upon termination of your
present employment if that occurs earlier. You will report directly to the
Chief Executive Officer. You will serve as Chief Operating Officer and, as of
May 12, 1992, you will become President of Tenneco and Chief Operating
Officer.
2. The Company will pay you a monthly base salary of $47,917 ($575,000 per
year), which shall be subject to such increases as may from time to time be
approved by the Compensation and Benefits Committee of the Board of Directors
of Tenneco, payable according to the regular pay schedule for salaried
employees.
3. You will be a participant in Tenneco's Incentive Compensation Plan ("EIC
Plan"). The amount distributed to you under the EIC Plan with respect to 1992
and 1993 will be no less than $300,000 for each year, payable in accordance
with the terms of the EIC Plan.
4. You will be a participant in Tenneco's Deferred Compensation Plan ("DC
Plan"). The amount awarded to you under the DC Plan with respect to 1992 will
be no less than $60,000, payable in accordance with the terms of the DC Plan.
5. You will be awarded 55,000 restricted shares under Tenneco's Key Employee
Restricted Stock and Restricted Unit Plan, vesting in five years following
date of grant. You will be eligible to vote the stock and receive quarterly
dividends. You will be eligible to receive additional stock grants annually
at the discretion of the Compensation and Benefits Committee of the Board of
Directors. In the event of your termination for any reason, other than death,
disability or retirement, these shares will vest on a prorated basis, at a
minimum, based on the number of months employed during the five year vesting
period. In the event of retirement, death or disability, all shares will be
fully vested regardless of length of service. Early retirement (prior to age
65) will require Board approval for vesting.
<PAGE>
6. You will be nominated for membership on the Tenneco Inc. Board of Directors
at its next meeting on March 10, 1992.
7. In consideration of benefits you will forego from your current employer, the
Company will pay you $1,000,000 upon commencement of your employment.
8. You will receive non-cash compensation and personal benefits comparable to
those currently provided to Tenneco's senior executive officers under
Tenneco's policies in effect at the time hereof, including reimbursement for
the costs of financial, tax and estate planning up to $20,000 per year.
9. Your pension benefits from all defined pension benefit plans (whether
qualified or non-qualified) will at a minimum be equal to an amount to which
you would have been entitled to if your coverage under the International
Paper ("IP") defined benefit plans (whether qualified or non-qualified) in
effect at this time had continued until your separation from service with
Tenneco (less any benefits from such IP Plans). If the Company terminates
your employment for non-performance of your duties prior to age 60, the
Company will guarantee an age 60 retirement (equivalent to that received if
you fully vested at age 60), including your IP past service and bonus
included in the calculation of such benefit. In the event of death while
actively employed, the surviving spouse will receive retirement benefits
under a 50% joint and survivor benefit provision.
Long Term Disability is a separate program which pays 60% of base pay. If
disabled, the retirement plan recognizes the years of disability towards the
individual's accrual in the retirement plan.
10. The Company will purchase from you your homes in Greenwich, Connecticut and
Cape Cod, Massachusetts or Windham, Vermont for a price equal to the greater
of their fair market value determined by an independent appraiser or your
cost for the properties.
11. You will be reimbursed for the costs incurred in relocating to the Houston,
Texas area, including the cost of transporting your boat for normal
temporary living expenses during the duration of the move to Houston and
relocation from the Northeast.
12. If the Company terminates your employment other than upon your death,
disability or the material non-performance of your duties, it will pay you a
severance benefit in an amount equal to the sum of (i) three times your base
salary then in effect and (ii) $300,000. If you resign voluntarily, you will
not be entitled to any severance benefits.
<PAGE>
Mr. Dana G. Mead
March 12, 1992
Page 3
13. You will be provided an annual physical examination. You will also be
provided membership in a country club of your choice and a dining or social
club of your choice related to the performance of your role as President and
Chief Operating Officer.
14. You will be provided an automobile, including gas, maintenance, and
insurance in accordance with Tenneco company policy.
Materials for the Tenneco Inc. Executive Incentive Plan, Restricted Stock and
Deferred Compensation Plan are being mailed to you. Ken Otto is available to
answer any questions you may have.
Please acknowledge your agreement to these terms by executing a copy of this
letter in the space provided below and returning it to me.
Sincerely,
Michael H. Walsh
President and
Chief Executive Officer
Agreed:
- -------------------
Dana G. Mead
3
<PAGE>
EXHIBIT 10(C)(5)
<PAGE>
December 3, 1993
PERSONAL AND CONFIDENTIAL
- -------------------------
Mr. Paul T. Stecko
9469 Plantation Way Lane
Germantown, Tennessee 38139
Dear Paul:
On behalf of Tenneco, I am pleased to offer you the position of President and
Chief Executive Officer of Packaging Corporation of America, under the following
terms and conditions:
1. Your employment will commence on or about December 6, 1993 or upon
termination of your present employment, if that occurs earlier. You will
report to me as President and Chief Operating Officer of Tenneco.
2. You will be paid a base salary of $320,000 a year, which shall be subject to
such increases as may from time to time be approved by the Compensation and
Benefits Committee of the Board of Directors of Tenneco, payable according to
the regular pay schedule for salaried employees.
3. You will be a participant in the Tenneco Executive Incentive Compensation
Plan ("EICP"). The amount distributed to you under the EICP for 1994 will
be no less than $175,000, payable in accordance with the terms of the
EICP.
4. You will be a participant in Tenneco's Deferred Compensation Plan ("DCP").
The amount awarded to you under the DCP with respect to 1994 will be no
less than $22,000, payable in accordance with the terms of the DCP.
5. At the time of your employment, you will be awarded 5,000 restricted shares
under Tenneco's Key Employee Restricted Stock and Restricted Unit Plan,
vesting in one year following the date of the grant, subject to Board
approval. You will be eligible to vote the stock and receive quarterly
dividends. You will be eligible to receive additional restricted stock grants
and stock options annually at the discretion of the Compensation and Benefits
Committee of the Board of Directors. (1994 target award levels for your
position are approximately 5,000 restricted and 16,000 option grants. Annual
awards may be greater or lesser than the target depending on performance.)
1
<PAGE>
Mr. Paul T. Stecko
December 3, 1993
Page 2
6. In consideration of the benefits you will forego from your current employer,
you will be paid $300,000 upon commencement of your employment. You will be
paid an additional signing bonus of $200,000, also payable upon commencement
of your employment.
7. You will receive non-cash compensation and personal benefits comparable to
those currently provided to Tenneco senior executives under Tenneco's policy
in effect at the time hereof, including Health Care, Thrift Plan, Long-Term
Disability, and Life Insurance (the plan provides for coverage of one and
one-half times your salary paid for by the Company, with the option to
purchase at your expense up to five times your salary). You will also be
reimbursed the costs for financial and estate planning up to $20,000 per
year. The Company will purchase from you your home in Memphis for a price
equal to the greater of the fair market value determined by an appraiser, or
your cost for the property which you have indicated is $375,000. You will
also be reimbursed for the costs incurred in relocating to the Chicago area
according to the Company's relocation plan, which includes a payment equal
to one month's salary.
8. You will have four weeks vacation.
9. Your pension benefits from all defined pension benefit plans will, at a
minimum, be equal to an amount to which you would have been entitled if your
coverage under the International Paper ("IP") defined benefit plans in
effect at this time had continued until your separation of service with
Tenneco, less any benefits from such IP plans. Years of service with IP will
count towards satisfaction of early retirement service requirements in the
Tenneco Plan.
10. If your employment is terminated other than for the cause of death,
disability or the gross neglect of your duties, you will be paid a severance
benefit in an amount equal to three times your base salary ($320,000). We
also agree to purchase your Chicago-area home at "fair market value" in the
event you become entitled to this severance benefit. Fair market value will
be determined by the average of two independent appraisals. These two
appraisers will be chosen from a list provided by Tenneco's home purchase
agent in accordance with the Company's Home Purchase Plan. If you resign
2
<PAGE>
Mr. Paul T. Stecko
December 3, 1993
Page 3
voluntarily you will not be entitled to any severance or home purchase plan
benefits.
11. If a change in control of Packaging Corporation of America occurs and your
relationship with Tenneco and the acquiring company is severed, you will be
paid a severance benefit in an amount equal to three times your base salary
($320,000). This severance benefit may be exercised by you at any time
within three years of the date of change of control.
12. You will be provided membership in a country club of your choice related to
the performance of your role as President and Chief Executive Officer.
13. This offer is contingent upon your successful completion of a pre-employment
physical which includes a requisite substance abuse screening.
The materials describing the Tenneco Executive Incentive Compensation Plan,
Restricted Stock, Deferred Compensation and other benefit plans will be mailed
to you. Barry Schuman is available to answer questions you may have.
Please acknowledge your agreement of these terms by executing a copy of this
letter in the space provided below and returning it to me.
Sincerely,
Dana G. Mead
President and Chief Operating Officer
ACKNOWLEDGED AND ACCEPTED:
- --------------------------------
Paul T. Stecko
On this 6th day of December, 1993.
3
<PAGE>
EXHIBIT 10(C)(6)
<PAGE>
September 9, 1992
Mr. Theodore R. Tetzlaff
Jenner & Block
One IBM Plaza
Chicago, IL 60611
Dear Ted,
As you know, on September 1, 1991, you and Jenner & Block were engaged by
Walter W. Sapp, the General Counsel of Tenneco, Inc., to represent Tenneco and
its subsidiaries and affiliates ("Tenneco"). In addition, effective July 1,
1992, the Board of Directors of Tenneco designated you to serve as General
Counsel of Tenneco. I am writing to confirm our understanding of certain terms
concerning Jenner & Block's representation of Tenneco and your service as
General Counsel.
Tenneco's Board of Directors has appointed you General Counsel with the
understanding that during your tenure as General Counsel you will continue to be
a partner of Jenner & Block, to reside in Chicago, and to engage in the practice
of law with that firm. You have agreed to devote whatever time is necessary to
attend to your professional responsibilities as General Counsel of Tenneco, and
Tenneco agrees to pay you $300,000 per year for your service as General Counsel.
Tenneco will pay for your travel to Houston as well as travel and other expenses
you incur on behalf of Tenneco.
As an officer of Tenneco, you are also eligible to participate in those
benefit plans or programs which are generally available to the other senior
officers of Tenneco. It is Tenneco's understanding that Jenner & Block has
agreed that Tenneco may pay this compensation and extend these benefits to you
to be retained for your personal benefit.
You have advised me that during your tenure as General Counsel of Tenneco you
will not receive from Jenner & Block any part of the fees paid by Tenneco to
Jenner & Block, and that Jenner & Block agrees to take appropriate action to
exclude you from participating in the distribution of those fees paid by
Tenneco.
1
<PAGE>
[LOGO OF TENNECO APPEARS HERE]
Mr. Theodore R. Tetzlaff
September 9, 1992
Page Two
Also, Jenner & Block agrees that it will not bill Tenneco for your
professional services rendered after July 1, 1992. It is Tenneco's understanding
that Jenner & Block will render professional services in accordance with the
terms contained in the letter dated April 13, 1992, from Tenneco confirming
Jenner & Block's engagement. Tenneco understands that Jenner & Block will bill
for other members of the firm in accordance with Jenner & Block's regular hourly
rates or as otherwise agreed upon by Jenner & Block and the Deputy General
Counsels of Tenneco or other members of Tenneco's Office of General Counsel
responsible for requesting or monitoring those services.
If I have accurately reflected our understanding, I would appreciate it if you
and Jenner & Block would kindly acknowledge one copy of this letter.
Sincerely,
Dana G. Mead,
President
AGREED:
- --------------------------
Theodore R. Tetzlaff
- --------------------------
Jenner & Block
2
<PAGE>
EXHIBIT 10(C)(7)
<PAGE>
J I Case 700 State Street [LOGO OF TENNECO APPEARS HERE]
A Tenneco Company Racine, Wisconsin 53404
(414) 636-6111
Fax: (414) 636-7625
Dana G. Mead
Chairman and
Chief Executive Officer
March 3, 1994
PERSONAL AND CONFIDENTIAL
Mr. Edward J. Campbell
1A Deepwood Drive
Racine, Wisconsin 53402
Dear Ed:
Subject to the provisions of paragraph 13 below, this letter will serve to
acknowledge the acceptance of your retirement as President of Case Corporation
and its affiliated companies (the "Company"), and as an officer of all Tenneco
Inc. affiliated companies ("Tenneco"), effective March 31, 1994.
It is understood and agreed that this letter will supersede and replace any and
all previous employment or service agreements between you as an individual and
the Company or Tenneco. This letter contains our understanding and agreement and
release (the "Agreement") relating to the payments and obligations which relate
to your retirement, as follows:
1. During the term of your employment with the Company, until your
retirement on March 31, 1994, you will continue to receive a base salary of
$458,000 at the monthly rate of $38,167, less any applicable withholdings. In
addition, you will be entitled to receive the following:
* Special Cash Award -- Upon your retirement and the termination of
employment, you will receive an additional cash award, payable in April,
1994, of $370,983 which is the amount of base salary and company matching
Thrift Plan contributions you would have received had you continued your
current employment and position with the Company from the date of your
retirement until December 31, 1994.
* Supplemental Payments -- In addition to your normal retirement benefits,
the Company will provide a supplemental payment based upon the amount of
your Executive Incentive Compensation Plan awards over the final five years
of your employment with Newport News Shipbuilding or the Company and
assuming your employment had continued until December 31, 1994. Commencing
on the first day of April, 1994, and thereafter on the first day of each
calendar month, the Company shall pay you, as a supplemental payment, an
amount representing the difference between your monthly retirement benefit
<PAGE>
J I Case
A Tenneco Company
Mr. Edward J. Campbell
March 3, 1994
Page 2
under the Tenneco Inc. Retirement Plan and what the benefit under that Plan
would have been if such benefit had included these incentive compensation
amounts received by you in the benefit calculations of the Plan. This
supplemental benefit will be paid to you as a monthly annuity in the same
optional form of payment as you elect under that Plan, unless you choose
another actuarial equivalent form.
* Tenneco Inc. Executive Incentive Compensation Plan -- You will receive a
1994 Executive Incentive Compensation Plan award for this year of $168,000
which is payable on April 1, 1994. There will be no further awards paid to
you under this Plan.
* Tenneco Inc. Restricted Stock -- In consideration of your performance
pursuant to this Agreement, the executive management of Tenneco Inc. will
recommend to the Compensation and Benefits Committee of the Tenneco Inc.
Board of Directors that they grant a restricted stock award to you of
20,000 shares, effective March 8, 1994, which shares will vest and be
awarded upon your retirement from the Company on March 31, 1994. In
addition, all previously granted restricted stock will vest on March 31,
1994, in accordance with the terms of the Plan regarding retirement of
employees.
* Tenneco Inc. Deferred Compensation Plan -- You will receive the full
amount of the $25,000 1994 Deferred Compensation Award that was
communicated to you in December, 1993, and your account balance will
become fully vested on March 31, 1994, the date of your retirement and
termination of employment, and will be distributed to you in accordance
with the terms of the Plan. You will not be granted or receive any
further awards under this Plan.
* Welfare and Qualified Benefits Plans -- As an employee, you will continue
to receive all benefits from Tenneco Inc. sponsored plans for which you are
currently eligible. Upon your retirement from the Company on March 31,
1994, your rights and benefits under the Tenneco Inc. Retirement, Thrift,
and Welfare Plans as well as under the other benefit plans and policies of
Tenneco or the Company will, except as herein otherwise expressly provided,
be governed by the provisions of such plans.
<PAGE>
J I Case
A Tenneco Company
Mr. Edward J. Campbell
March 3, 1994
Page 3
* Financial Planning and Counseling -- You will be entitled to continue your
present participation in the Tenneco Financial Assistance Plan and be
reimbursed by the Company for your expenses for tax and financial planning
services through March 31, 1995, up to a maximum of $20,000 in any one
calendar year.
* Perquisites -- Perquisites to which you are presently entitled (including
an executive physical examination) which are reimbursable by the Company
or Tenneco will continue until the date of your retirement and the
termination of your employment hereunder (March 31, 1994). You shall have
the option to purchase your present Company car prior to your retirement
on March 31, 1994, in accordance with the current Company policy. If by
that time you have not purchased your Company car, it will be returned to
the Company.
2. In addition, during the term of your employment hereunder and thereafter
you agree to be bound by and perform all of the covenants and agreements set
forth herein.
3. In consideration of the payments and other undertakings of the Company or
Tenneco set forth below, it is understood and agreed that, if there shall be any
acts or activities on your part which, in the reasonable judgment of Tenneco,
are in conflict with or opposed to, or which will adversely affect the interest
of Tenneco or the Company, then Tenneco may, in its discretion, after the entry
of an arbitration award adverse to you as contemplated under paragraph 10 below,
discontinue the special payments and benefits provided for herein and you shall
be obligated to reimburse Tenneco for any such payments made to you subsequent
to the activities precluded pursuant to the provisions of this paragraph.
4. You hereby agree, from and after the date hereof, to keep confidential the
terms, conditions, and amounts set forth in this Agreement and to refrain from
disclosing any information relating to this Agreement, or the negotiations
leading up the Agreement. You shall use your best efforts to avoid any
communications which might result in adverse publicity to the Company or
Tenneco.
5. It is further understood and agreed that, during the term of this Agreement
and thereafter, you shall maintain the strictest confidence with respect to any
and all information concerning Tenneco, its business or affairs which was
acquired by you during the course of your employment, except to the extent that
such information is or becomes available to the
<PAGE>
J I Case
A Tenneco Company
Mr. Edward J. Campbell
March 3, 1994
Page 4
general public, and you hereby covenant not to disclose any such information at
any time to any third party without the express written consent of the
undersigned unless you are legally compelled to do so. Should you be served with
legal process seeking to compel you to disclose any such information, you agree
to notify the General Counsel of Tenneco Inc. immediately, in order that the
Company or Tenneco may seek to resist such process if they so choose. You also
hereby agree to hold in strictest confidence information which you obtained or
will obtain while an employee of Tenneco, and thereafter, for the use and sole
benefit of Tenneco. For purposes of this Agreement, the covered information
shall include, but not be limited to, customer lists, product development plans,
operations costs and pricing information, planned introduction of new products,
personnel information, and any know-how relating to the design, manufacture and
marketing of Tenneco or the Company's services or products, including components
and parts thereof.
6. As appropriate, payments under this Agreement will be subject to deduction
on account of federal income, social security, and state income tax and other
withholding which may be applicable.
7. In consideration of the payments and other undertakings of the Company and
Tenneco Management Company set forth in this Agreement, you release the Company
and Tenneco, their directors and officers, employees, agents and representatives
from any and all claims and causes of action, known or unknown, in law or
equity, arising out of or in any way concerned with or relating to your hiring,
continued employment, the termination of your employment or your resignation as
an officer and director of the Company or Tenneco, including but not limited to,
breach of contract, impairment of economic opportunity, infliction of emotional
distress, defamation of reputation, any intentional or negligent tort, brought
by you or anyone else or your behalf, arising or accruing prior to the signing
of this Agreement. This release includes, but is not limited to, claims arising
under 42 U.S.C. sec. 1981, the Age Discrimination in Employment Act of 1967 as
amended (29 U.S.C. sec. 621), Title VII of the Civil Rights Act of 1964 as
amended, (42 U.S.C. sec. 2000e), the Wisconsin Fair Employment Act (Wis. Stat.
sec. 111.31 et seq.), the Texas Human Rights Act, (Tex. Rev. Civ. Stat. Art.
5221 k), the National Labor Relations Act, the Worker Adjustment and Retraining
Notification Act (29 U.S.C. sec. 2101), the Americans with Disabilities Act (42
U.S.C. sec. 12101), any claims for breach of contract, wrongful discharge,
tortious action or inaction of any sort, and any claim under any other
state, local, or federal statute or regulation.
<PAGE>
J I Case
A Tenneco Company
Mr. Edward J. Campbell
March 3, 1994
Page 5
8. You also acknowledge that this Agreement containing this release relating
to claims under the Age Discrimination in Employment Act has been received by
you on March 3, 1994, and you acknowledge that you have been advised in writing
by the Agreement to seek the advice of counsel in considering whether to execute
this Agreement and this release and that you execute the Agreement and release
voluntarily. Further, by accepting the terms set out in this Agreement, you
agree not to sue, or seek any other compensation from Tenneco. You also
understand that you have twenty-one (21) days to consider this Agreement and
this release and should you accept, you will have seven (7) days from the date
of execution to revoke your acceptance. This Agreement and the release will not
become effective or enforceable until this revocation period has expired.
9. In the event of your death before March 31, 1994, the Company shall pay to
such beneficiary as you shall designate, or failing such designation, to your
heirs or legal representative of your estate, in a lump sum, the aggregate
amount of your base salary which you would have thereafter received but for your
death. The amounts from the restricted stock, deferred compensation and cash
award payments, provided for above, and other employee benefits payable in the
event of your death shall be paid in accordance with the provisions of the
applicable Tenneco benefit plans.
10. All disagreements arising out of this Agreement shall be resolved by
arbitration in Houston, Texas. Neither the American Arbitration Association nor
its rules shall be used. Arbitration shall be conducted by a panel of three (3)
arbitrators. Each party shall select an arbitrator within thirty (30) days of
submission of any dispute to arbitration. If an arbitrator timely selected by a
party is unable, for any reason, to serve until the making of the decision and
award, that party may name a successor arbitrator. If either party fails to
designate an arbitrator within the thirty (30) day period, that party's right to
name an arbitrator (or any successor arbitrator) is forfeited and any arbitrator
timely named shall select a second arbitrator. The first two arbitrators shall
then, within thirty (30) days of the selection of the last of them, jointly
select a third arbitrator. If the two arbitrators selected by the parties are
unable to agree upon the selection of a third arbitrator, the third arbitrator
shall be supplied by any court of record that would have jurisdiction of the
controversy but for this arbitration provision. Only the third arbitrator may be
an attorney licensed to practice law. All expenses and fees incurred by the
prevailing party shall be paid by the losing party and all fees and expenses of
the three (3) arbitrators shall be paid by the losing party.
11. If any provision of this Agreement is determined to be invalid as a matter
of law, the other provisions shall not be affected thereby.
<PAGE>
J I Case
A Tenneco Company
Mr. Edward J. Campbell
March 3, 1994
Page 6
12. This Agreement shall be construed under and governed by the laws of the
State of Texas, apart from conflict of laws rules. This Agreement contains the
entire agreement between you and the Company and between you and Tenneco and
shall not be amended except by an agreement in writing, signed by you and a
properly authorized officer of Tenneco.
13. Notwithstanding any provision in this Agreement to the contrary, this
Agreement shall be null and void in the event the Tenneco Inc. Board of
Directors does not grant the Restricted Stock Award in the amount of 20,000
shares of Tenneco Inc. contemplated under the paragraph entitled "Tenneco Inc.
Restricted Stock."
Please signify in the space indicated on this letter your agreement with and
acceptance of the foregoing.
Sincerely,
Dana G. Mead
Agreed and Accepted as of March 3, 1994: /s/ Dana G. Mead
/s/ Edward J. Campbell
- ----------------------
Edward J. Campbell
On this day of March 7, 1994.
cc: Ted Tetzlaff, Director
<PAGE>
Tenneco Inc P.O. Box 2511 [LOGO OF TENNECO APPEARS HERE]
Houston, Texas 77252-2511
Bus: (713) 757-6666
Fax: (713) 757-4542
Theodore R. Tetzlaff
General Counsel
March 7, 1994
Mr. Edward J. Campbell
1A Deepwood Drive
Racine, Wisconsin 53402
Dear Ed:
Case Corporation is a wholly-owned subsidiary of Tenneco Inc. and please be
advised that Tenneco Inc. hereby guarantees the full and faithful performance of
Case Corporation for any legal obligations resulting from the letter of
agreement to you, dated March 3, 1994, signed by Dana G. Mead, Chairman and
Chief Executive Officer of Case Corporation, by which your retirement on March
31, 1994, as President of Case Corporation and its affiliated companies is
acknowledged and certain payments and obligations which relate to your
retirement are specified.
Sincerely,
/s/ T. R. Tetzlaff
CERTIFICATE
I, Karl A. Stewart, do hereby certify that I am the duly elected, qualified
and acting Secretary of Tenneco Inc., a Delaware corporation, and that as such I
certify that Theodore R. Tetzlaff is the duly elected, qualified and acting
General Counsel of Tenneco Inc. and as such has executed the foregoing
Guarantee.
In witness whereof, the undersigned has hereto set forth his hand and affixed
the corporate seal of said Company this 7th day of March, 1994.
/s/ Karl A. Stewart
--------------------------
Karl A. Stewart, Secretary
<PAGE>
EXHIBIT 11
<PAGE>
EXHIBIT 11
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
(MILLIONS EXCEPT SHARE AMOUNTS)
YEARS ENDED DECEMBER 31,
-------------------------------------
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
COMPUTATION FOR STATEMENTS OF INCOME
(LOSS)
Primary Earnings Per Share (average
shares outstanding):
Income (loss) from continuing
operations........................... $ 451 $ (683) $ (692)
Income (loss) from discontinued
operations, net of income tax........ -- 71 (40)
----------- ----------- -----------
Income (loss) before extraordinary
loss................................. 451 (612) (732)
Extraordinary loss, net of income
tax.................................. (25) (12) --
----------- ----------- -----------
Income (loss) before cumulative
effect of changes in accounting
principles........................... 426 (624) (732)
Cumulative effect of changes in
accounting principles, net of income
tax.................................. -- (699) --
----------- ----------- -----------
Net income (loss)..................... 426 (1,323) (732)
Preferred stock dividends............. 14 16 16
----------- ----------- -----------
Net income (loss) to common stock..... $ 412 $ (1,339) $ (748)
=========== =========== ===========
Average shares of common stock
outstanding(a),(b)................... 168,772,852 144,110,151 122,777,910
=========== =========== ===========
Earnings (loss) per average share of
common stock:
Continuing operations............... $ 2.59 $ (4.85) $ (5.77)
Discontinued operations............. -- .50 (.32)
Extraordinary loss.................. (.15) (.08) --
Cumulative effect of changes in
accounting principles.............. -- (4.86) --
----------- ----------- -----------
$ 2.44 $ (9.29) $ (6.09)
=========== =========== ===========
ADDITIONAL COMPUTATIONS(C)
Net income (loss) to common stock, per
above................................. $ 412 $ (1,339) $ (748)
=========== =========== ===========
Primary Earnings Per Share (including
common stock equivalents):
Average shares of common stock
outstanding(a),(b)................... 168,772,852 144,110,151 122,777,910
Incremental common shares applicable
to common stock options based on the
common stock daily average market
price during the year................ 38,171 -- --
----------- ----------- -----------
Average common shares, as adjusted.... 168,811,023 144,110,151 122,777,910
=========== =========== ===========
Earnings (loss) per average share of
common stock (including common
stock equivalents):
Continuing operations............... $ 2.59 $ (4.85) $ (5.77)
Discontinued operations............. -- .50 (.32)
Extraordinary loss.................. (.15) (.08) --
Cumulative effect of changes in
accounting principles.............. -- (4.86) --
----------- ----------- -----------
$ 2.44 $ (9.29) $ (6.09)
=========== =========== ===========
Fully Diluted Earnings Per Share:
Average shares of common stock
outstanding(a),(b)................... 168,772,852 144,110,151 122,777,910
Incremental common shares applicable
to common stock options based on the
more dilutive of the common stock
ending or average market price
during the year...................... 106,901 -- --
Average common shares issuable
assuming conversion of Tenneco Inc.
10% loan stock....................... 42,663 43,467 70,403
----------- ----------- -----------
Average common shares assuming full
dilution............................. 168,922,416 144,153,618 122,848,313
=========== =========== ===========
Fully diluted earnings (loss) per
average share, assuming conversion
of all applicable securities:
Continuing operations............... $ 2.59 $ (4.85) $ (5.77)
Discontinued operations............. -- .50 (.32)
Extraordinary loss.................. (.15) (.08) --
Cumulative effect of changes in
accounting principles.............. -- (4.86) --
----------- ----------- -----------
$ 2.44 $ (9.29) $ (6.09)
=========== =========== ===========
</TABLE>
- -------
Notes:(a) In 1992, 12,000,000 shares of common stock were issued to the Stock
Employee Compensation Trust ("SECT"). Shares of common stock issued
to a related trust are not considered to be outstanding in the
computation of average shares of common stock until the shares are
utilized to fund the obligations for which the trust was
established. At December 31, 1993, the SECT had utilized 2,479,425
of these shares.
(b) Series A preferred stock is converted into common stock under the
Contingent Share method. The above computation includes 8,935,175
shares of Series A preferred stock which were converted into
17,870,350 shares of common stock. The shares were outstanding for
only eight days in 1991. Because of the averaging technique only
391,679 of these average shares were included in the total average
shares of common stock outstanding for 1991.
(c) These calculations are submitted in accordance with Securities and
Exchange Commission requirements although not required by
Accounting Principles Board Opinion No. 15 because they result in
dilution of less than 3%.
<PAGE>
EXHIBIT 12
<PAGE>
EXHIBIT 12
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
COMBINED WITH 50% OWNED UNCONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1993 1992 1991 1990 1989
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Income (loss) from continuing operations.. $ 451 $ (683) $ (692) $ 522 $ 560
Add:
Interest................................. 750 930 1,009 958 906
Portion of rentals representative of
interest
factor.................................. 70 74 72 43 43
Income tax expense (benefit) and other
taxes on income......................... 260 171 25 325 274
Amortization of interest capitalized
applicable to nonutility companies...... 7 6 7 6 6
Interest capitalized applicable to
utility companies....................... 1 2 4 3 1
Undistributed (earnings) losses of
affiliated companies in which less than
a 50% voting interest is owned.......... 1 (4) (7) 1 3
------ ------ ------ ------ ------
Earnings as defined................... $1,540 $ 496 $ 418 $1,858 $1,793
====== ====== ====== ====== ======
Interest.................................. $ 750 $ 930 $1,009 $ 958 $ 906
Interest capitalized...................... 4 11 25 12 8
Portion of rentals representative of
interest factor.......................... 70 74 72 43 43
------ ------ ------ ------ ------
Fixed charges as defined.............. $ 824 $1,015 $1,106 $1,013 $ 957
====== ====== ====== ====== ======
Ratio of earnings to fixed charges........ 1.87 .49 .38 1.83 1.87
====== ====== ====== ====== ======
</TABLE>
For the years ended December 31, 1992 and 1991, earnings were inadequate to
cover fixed charges by $519 million and $688 million, respectively.
<PAGE>
EXHIBIT 21
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1993
TENNECO INC. (Delaware)
Autopartes Walker, S.A. DE C.V. (Mexico)......................... 0.02%
(Tennessee Gas Pipeline Company owns 99.92%; Tenneco Inc.
owns 0.02%; Tenneco Corporation owns 0.02%; Tenneco
International Inc. owns 0.02%; and Monroe Auto
Equipment Company owns 0.02%)
Case Poclain S.A. (France)....................................... 78.4
(Tenneco Inc. owns 83.26%; Tenneco International Inc.
owns 15.51%; and 1.23% is publicly owned.)
J.I. Case SpA (Italy)......................................... 99.99
(Case Poclain S.A. owns 99.99%; and Tenneco Inc. owns 0.01%.)
Poclain Far East, Ltd. (Hong Kong)............................ 100
Poclain Services North America Inc. (Delaware)................ 100
J.I. Case SpA (Italy)............................................ 0.01
(Case Poclain S.A. owns 99.99%; and Tenneco Inc. owns 0.01%.)
Kern County Land Company (Delaware).............................. 100
Case Corporation (Delaware)................................... 100
Case Canada Receivables, Inc. (Ontario)..................... 100
Case Credit Corporation (Delaware).......................... 100
Case Engine Holding Company, Inc. (Delaware)................ 100
Consolidated Diesel Company (North Carolina Partnership).. 50
(Case Engine Holding Company, Inc. owns 50%, as
General Partner; and Cummins Engine Holding
Company, Inc., an unaffiliated company, owns 50%,
as General Partner.)
Consolidated Diesel, Inc. (Delaware)................... 100
Consolidated Diesel of North Carolina, Inc.
(North Carolina)..................................... 100
Case Europe S.A.R.L. (France)............................... 100
Case Finance Company (Wisconsin)............................ 100
Case Irrigation Company (Delaware).......................... 100
Case Receivables, Inc. (Delaware)........................... 100
Case Ventures Corporation (Delaware)........................ 100
Hay & Forage Industries (Kansas General Partnership)...... 50
(Case Ventures Corporation owns 50%, as General
Partner; and Hesston Ventures Corporation, an
unaffiliated company, owns 50%, as General Partner)
Grand Detour Plow Company (Wisconsin)....................... 100
Kase, S.A. De C.V. (Mexico)............................... 100
International Harvester Company (Delaware).................. 100
J. I. Case Argentina, S.A. (Argentina)...................... 100
J. I. Case do Brasil & Cia (Brazilian General Partnership).. 7.98
(Case Corporation owns 7.98%, as General Partner;
Tenneco Canada Inc. owns 87.86%, as General Partner; and
Tenneco International Inc. owns 4.16%, as General Partner)
Case Assets Management Ltda. (Brazil)..................... 100
Brascor Corretora de Seguros, Participacoes e
Servicos S.A. (Brazil).................................. 90
(Case Assets Management Ltda. owns 90%; and PPM
do Brasil Ltda. owns 10%.)
Monroe do Brasil Industria e Comercio Ltda. (Brazil).... 100
Monroe Auto Pecas S.A. (Brazil)....................... 82.71
(Monroe do Brasil Industria e Comercio Ltda.
owns 82.71%; Monroe Auto Equipment Company
owns 2.82%; and Monteiro Aranha S/A, an
unaffiliated company, owns 14.47%.)
Poclain do Brasil S.A. (Brazil)........................... 0.29
(J. I. Case do Brasil & Cia owns 0.29% of Common
Stock and 100% of the Preferred Stock; and
Tenneco International Inc. owns 99.71% of Common Stock)
PPM do Brasil Ltda. (Brazil).......................... 1.4
(Poclain do Brasil S.A. owns 1.4%; and J. I. Case
do Brasil & Cia owns 98.6%.)
Brascor Corretora de Seguros, Participacoes e
Servicos S.A. (Brazil)............................. 10
(PPM do Brasil Ltda. owns 10%; and Case
Assets Management Ltda. owns 90%.)
1
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1993
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Kern County Land Company (continued)
Subsidiaries of Case Corporation (continued)
Subsidiaries of J. I. Case do Brasil & Cia (continued)
PPM do Brasil Ltda. (Brazil)................................. 98.6%
(J. I. Case do Brasil & Cia owns 98.6%; and Poclain do
Brasil S.A. owns 1.4%.)
Brascor Corretora de Seguros, Participacoes e
Servicos S.A. (Brazil)..................................... 10
(PPM do Brasil Ltda. owns 10%; and Case Assets
Management Ltda. owns 90%.)
J. I. Case International, S.A. (Venezuela)..................... 100
J. I. Case Leasing Corporation (Wisconsin)..................... 100
J. I. Case Threshing Machine Company of Wisconsin (Wisconsin).. 100
Marlin Drilling Co., Inc. (Delaware)........................... 100
Bluefin Supply Company (Delaware)............................ 100
Marlin do Brasil Perfuracoes Maritimas Ltda.
(Brazil) (in dissolution).................................. 0.16
(Bluefin Supply Company owns 0.16%; and Marlin
Drilling Co., Inc. owns 99.84%.)
Marlin do Brasil Perfuracoes Maritimas Ltda.
(Brazil) (in dissolution).................................... 99.84
(Marlin Drilling Co., Inc. owns 99.84%; and Bluefin
Supply Company owns 0.16%.)
Pryor Foundry, Inc. (Oklahoma)................................. 100
Steiger Tractor, Inc. (Delaware)............................... 100
Integrated Technical Systems, Inc. (North Dakota)............ 100
Steiger Credit Company (North Dakota)........................ 100
Steiger Credit Canada Ltd. (Canada)........................ 100
Steiger International, Ltd. (Guam)........................... 100
Tenneco Canada Inc. (Ontario).................................. 51.28
(Case Corporation owns 100% of the issued and
outstanding Common Stock, 51.28% of total equity;
and Albright & Wilson Limited owns 100% of the
Class A Stock, 48.72% of total equity.)
982174 Ontario Limited (Ontario)............................. 100
Albright & Wilson Americas Inc. (Canada)..................... 100
Case Canada Wholesale Finance Corporation (Alberta).......... 100
Dunville Mining Company Limited (Newfoundland)............... 100
Electric Reduction Sales Co., Limited (Canada)............... 100
ERCO Industries of Canada Limited (Canada)................... 100
J. I. Case do Brasil & Cia. (Brazilian General
Partnership)................................................. 87.86
(Case Corporation owns 7.98%, as General Partner;
Tenneco Canada Inc. owns 87.86%, as General Partner;
and Tenneco International Inc. owns 4.16%, as
General Partner. The subsidiaries of J. I. Case do
Brasil & Cia are listed on page 1 hereof.)
2
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1993
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Kern County Land Company (continued)
Subsidiaries of Case Corporation (continued)
Subsidiaries of Tenneco Canada Inc. (continued)
<TABLE>
<S> <C>
Tenneco Credit Canada Corp. (Alberta)........................ 100%
Viscosity Oil Company (Illinois)................................. 100
J.I. Case Property Company (Delaware)........................ 100
Viscosity Oil of Canada Ltd. (Alberta)........................... 100
Tenneco West, Inc. (Delaware)........................................ 100
Kern County Land Company, Inc. (California)...................... 100
Tenneco Arizona Property Corporation (Arizona)................... 100
Tenneco Credit Corporation (Delaware).................................... 100
Counce Limited Partnership (Texas Limited Partnership)............... 95
(Tenneco Credit Corporation owns 95%, as Limited Partner;
and Tenneco InterAmerica Inc. owns 5%, as General Partner.)
Counce Finance Corporation (Delaware)............................ 100
TenFac Corporation (Delaware)........................................ 100
Tenneco France Finance S.A. (France)..................................... 99.8
(Tenneco Inc. owns 99.80%; Tenneco International Inc. owns .04%;
Tenneco International Holdings Limited owns .04%; Tenneco
International Finance Limited owns .04%; Tenneco Corporation
owns .04% and Tenneco United Kingdom Holdings Limited owns .04%.)
Tenneco Management Company (Delaware).................................... 100
Tennessee Gas Pipeline Company (Delaware)................................ 100
Albright & Wilson Americas Inc. (Delaware)........................... 100
Albright & Wilson Company (Virginia General Partnership)......... 50
(Albright & Wilson Americas Inc. owns 50%, as General
Partner; and Texasgulf Inc., an unaffiliated company,
owns 50%, as General Partner)
Purified Acid Partners (Virginia General Partnership)........ 58.33
(Albright & Wilson Company, owns 58.33%, as General
Partner; and Olin Corporation, an unaffiliated
company, owns 41.67%, as General Partner.)
Chemrich, Inc. (Louisiana)....................................... 100
Rio Linda Chemical Co., Inc. (Delaware).......................... 100
RLCC Technologies, Inc. (Delaware)............................... 100
Altamont Service Corporation (Delaware).............................. 100
Altamont Gas Transmission Canada Limited (Canada)................ 100
(Altamont Service Corporation is the registered holder
of all of the issued and outstanding shares of Altamont
Gas Transmission Canada Limited, as Trustee for Altamont
Gas Transmission Company, a Joint Venture.)
</TABLE>
3
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1993
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
<TABLE>
<S> <C>
Autopartes Walker, S.A. DE C.V. (Mexico)............................. 99.92%
(Tennessee Gas Pipeline Company owns 99.92%; Tenneco
Inc. owns 0.02%; Tenneco Corporation owns 0.02%; Tenneco
International Inc. owns 0.02%; and Monroe Auto Equipment
Company owns 0.02%)
Border Gas, Inc. (Delaware) (a close corp.).......................... 37.5
(Tennessee Gas Pipeline Company owns 100% of the Class A
Common Stock, 37 1/2% of the total equity, and 37 1/2% total
voting stock; Texas Eastern Transmission Corporation, an
unaffiliated company, owns 100% of the Class B Common
Stock, 27 1/2% of the total equity, and 27 1/2% total voting
stock; El Paso Natural Gas Company, an unaffiliated company,
owns 100% of the Class C Common Stock, 15% of the total equity,
and 15% total voting stock; Transcontinental Gas Pipe
Line Corporation, an unaffiliated company, owns 100% of the Class
D Common Stock, 10% of the total equity, and 10%
total voting stock; Southern Natural Gas Company, an
unaffiliated company, owns 100% of the Class E Common Stock,
6 2/3% of the total equity, and 6 2/3% total voting stock; and
Florida Gas Transmission Company, an unaffiliated company,
owns 100% of the Class F Common Stock, 3 1/3% of the total
equity, and 3 1/3% total voting stock.)
Brake-Pro Systems Inc. (Delaware).................................... 100
East Tennessee Natural Gas Company (Tennessee)....................... 100
Eastern Insurance Company Limited (Bermuda).......................... 100
Energy TRACS, Inc. (Delaware)........................................ 100
Kern River Corporation (Delaware).................................... 100
Kern River Gas Transmission Company (Texas General
Partnership)..................................................... 50
(Kern River Corporation owns 50%, as General Partner;
and Williams Western Pipeline Company, an unaffiliated
company, owns 50%, as General Partner)
Kern River Gas Supply Corporation (Delaware)......................... 50
(Tennessee Gas Pipeline Company owns 50%; and The
Williams Companies, an unaffiliated company, owns 50%.)
Kern River Service Corporation (Delaware)............................ 50
(Tennessee Gas Pipeline Company owns 50%; and The
Williams Companies, an unaffiliated company, owns 50%.)
Land Ventures, Inc. (Delaware)....................................... 100
Midwestern Gas Marketing Company (Delaware).......................... 100
Midwestern Gas Transmission Company (Delaware)....................... 100
Monroe Auto Equipment Company (Delaware)............................. 100
Autopartes Walker, S.A. DE C.V. (Mexico)......................... 0.02
(Tennessee Gas Pipeline Company owns 99.92%; Tenneco Inc.
owns 0.02%; Tenneco Corporation owns 0.02%; Tenneco
International Inc. owns 0.02%; Tenneco International Inc.
owns 0.02%; and Monroe Auto Equipment Company owns 0.02%)
Consorcio Terranova S.A. de C.V. (Mexico)........................ 99
(Monroe Auto Equipment Company owns 99%; and an
unaffiliated company owns 1%)
McPherson Strut Company Inc. (Delaware).......................... 100
Monroe Auto Equipement France, S.A. (France)..................... 100
Monroe Europe Coordination Center N.V. (Belgium)............. 0.1
(S A Tenneco Belgium (J I Case-Monroe-Petro-Tex) N.V.
owns 99.9%; and Monroe Auto Equipement France, S.A.
owns 0.1%)
Monroe Italia S.r.l. (Italy)................................. 15
(Monroe Auto Equipment Company owns 85%: and Monroe
Auto Equipement France, S.A. owns 15%.)
Monroe Packaging N.V. (Belgium).............................. 0.1
(S A Tenneco Belgium (J I Case-Monroe-Petro-Tex)
N.V. owns 99.9%; and Monroe Auto Equipement France,
S.A. owns 0.1%)
</TABLE>
4
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1993
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
Subsidiaries of Monroe Auto Equipment Company (continued)
<TABLE>
<S> <C>
Monroe Auto Pecas S.A. (Brazil)....................................... 2.82%
(Monroe Auto Equipment Company owns 2.82%; Monroe do
Brasil Industria e Comercio Ltda. owns 82.71%; and Monteiro
Aranha S/A, an unaffiliated company, owns 14.47%.)
Monroe Europe (UK) Limited (United Kingdom)........................... 82
(Monroe Auto Equipment Company owns 82%; and S A Tenneco Belgium
(J I Case-Monroe-Petro-Tex) N.V. owns 18%)
Monroe Italia S.r.l. (Italy).......................................... 85
(Monroe Auto Equipment Company owns 85%; and Monroe Auto
Equipement France, S.A. owns 15%.)
Monroe-Mexico S.A. de C.V. (Mexico)................................... 99.99
(Monroe Auto Equipment Company owns 99.99% and Tennessee
Gas Pipeline Company owns 0.01%)
Rancho Industries Europe B.V. (Netherlands)........................... 100
Tenneco Automotive Foreign Sales Corporation Limited (Jamaica)........ 99
(Monroe Auto Equipment Company owns 99%; and Tenneco
Automotive, a Division of Tennessee Gas Pipeline Company,
owns 1%.)
Tenneco Automotive International Sales Corporation (Delaware)
(In Dissolution)...................................................... 100
Tenneco Automotive Japan Ltd. (Japan)................................. 100
Monroe-Mexico S.A. de C.V. (Mexico)....................................... 0.01
(Monroe Auto Equipment Company owns 99.99% and Tennessee
Gas Pipeline Company owns 0.01%)
Mont Belvieu Land Company (Delaware)...................................... 100
New Tenn Company (Delaware)............................................... 100
New Tennessee Gas Pipeline Company (Delaware)............................. 100
S. K. Petroleum Company (Delaware)........................................ 100
Sandbar Petroleum Company (Delaware)...................................... 100
Tenneco Alaska, Inc. (Alaska)............................................. 100
Tenneco-Altamont Corporation (Delaware)................................... 100
Altamont Gas Transmission Company (Delaware Joint Venture)............ 53.34
(Tenneco-Altamont Corporation owns 53 1/3%; Amoco Altamont
Company, an unaffiliated company, owns 33 1/3%; and
Entech Altamont, Inc., an unaffiliated company, owns 13 1/3%.)
Tenneco Argentina Corporation (Delaware).................................. 100
Tenneco Baja Corporation (Delaware)....................................... 100
Tenneco China Trade Inc. (Delaware)....................................... 100
Tenneco Coal Company (Delaware)........................................... 100
Tenneco Communications Corporation (Delaware)............................. 100
Tenneco Corporation (Delaware)............................................ 94.3
(Tennessee Gas Pipeline Company owns 100% of the Common Stock
and Tenneco International Inc. owns 100% of the Second
Preferred Stock)
Autopartes Walker, S.A. DE C.V. (Mexico).............................. 0.02
(Tennessee Gas Pipeline Company owns 99.92%; Tenneco Inc.
owns 0.02%; Tenneco Corporation owns 0.02%; Tenneco
International Inc. owns 0.02%; and Monroe Auto Equipment
Company owns 0.02%)
Channel Industries Gas Company (Delaware)............................. 100
Houston Oil and Minerals Explorations Company (Texas)................. 100
J I Case GmbH (Germany)............................................... 99.97
(Tenneco Corporation owns 99.97%; and Atlas
Bermoegensverwaltung, an unaffiliated company, owns 0.03%.)
Case Bodenverdichtungsgerate Verwaltungs GmbH (Germany)........... 100
Case Bodenverdichtungsgerate GmbH & Co. K.G. (Germany)........ 2
(Case Bodenverdichtungsgerate Verwaltungs GmbH owns
2%; and Tenneco Nederland B.V. owns 98%.)
</TABLE>
5
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1993
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
Subsidiaries of Tenneco Corporation (continued)
Subsidiaries of J. I. Case GmbH (continued)
<TABLE>
<S> <C>
Monroe Auto Equipment GmbH (Germany)............................... 100%
Omni-Pac Ekco GmbH Verpackungsmittel (Germany)..................... 100
PCA Embalajes Espana S.L. (Spain).............................. 1
(Omni-Pac Ekco GmbH Verpackungsmittel owns 1%; and PCA
Verpackungsmittel GmbH owns 99%.)
Omni-Pac GmbH (Germany)............................................ 99
(Tenneco International Inc. owns 1%; and J I Case GmbH owns 99%.)
Omni-Pac ApS (Denmark)......................................... 100
Omni-Pac A.B. (Sweden)......................................... 100
Omni-Pac S.A.R.L. (France)..................................... 3
(Tenneco International Inc. owns 97%; and Omni-Pac GmbH
owns 3%.)
Poclain GmbH (Germany) (non trading)............................... 100
Case Poclain GmbH & Co., K.G. (Germany)........................ 2
(Poclain GmbH owns 2%; and Tenneco Nederland B.V. owns 98%.)
Walker Deutschland GmbH (Germany).................................. 99
(J I Case GmbH owns 99%; and Tenneco Corporation owns 1%.)
LHC Pipeline Company (Delaware)........................................ 100
Petro-Tex Chemical Corporation (Delaware).............................. 100
SWL Security Corp. (Texas)............................................. 100
TGP Corporation (Delaware)............................................. 100
Tenneco Energy Resources Corporation (Delaware)........................ 100
Tenneco Gas Marketing Company (Kentucky)........................... 100
Creole Gas Pipeline Corporation (Louisiana).................... 100
EnTrade Engine Company (Kentucky).............................. 100
EnTrade Pipeline Company (Kentucky)............................ 100
Tenneco Espana S.A. (Spain)............................................ 100
Omni-Pac Embalajes S.A. (Spain).................................... 100
Tenneco France Finance S.A. (France)................................... 0.04
(Tenneco Inc. owns 99.80%; Tenneco International Inc. owns .04%;
Tenneco International Holdings Limited owns .04%; Tenneco
International Finance Limited owns .04%; Tenneco Corporation
owns .04% and Tenneco United Kingdom Holdings Limited owns .04%.)
Tenneco Gas Gathering Company (Delaware)............................... 100
Tenneco Gas Trading Company (Delaware)................................. 100
Tenneco Independent Power I Company (Delaware)......................... 100
Tenneco Independent Power II Company (Delaware)........................ 100
Tenneco Insurance Ventures Inc. (Delaware)............................. 100
Tenneco Inc. (Nevada).................................................. 100
Tenneco InterAmerica Inc. (Delaware)................................... 100
Counce Limited Partnership (Texas Limited Partnership)............. 5
(Tenneco InterAmerica Inc. owns 5%, as General Partner;
and Tenneco Credit Corporation owns 95%, as Limited Partner)
Counce Finance Corporation (Delaware).......................... 100
</TABLE>
6
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1993
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
Subsidiaries of Tenneco Corporation (continued)
Subsidiaries of Tenneco InterAmerica Inc. (continued)
Newport News Shipbuilding and Dry Dock Company (Virginia)........ 100%
Asheville Industries Inc. (North Carolina)..................... 100
Greeneville Industries Inc. (Virginia)......................... 100
The James River Oyster Corporation (Virginia).................. 100
Newport News Industrial Corporation (Virginia)................. 100
Newport News Industrial Corporation of Ohio (Ohio)........... 100
Newport News Reactor Services, Inc. (Virginia)................. 100
Packaging Corporation of America (Delaware)...................... 100
A&E Plastics, Inc. (Delaware).................................. 100
Alcan Ekco Packaging Limited (United Kingdom).................. 50
(Packaging Corporation of America (UK) Limited owns
50%; and British Alcan Aluminium Limited, an unaffiliated
company, owns 50%.)
Alupak A.G. (Switzerland)...................................... 100
American Cellulose Corporation (Delaware)...................... 50
(Packaging Corporation of America owns 50%; and Larry E.
Homan, an unaffiliated individual, owns 50%.)
The Corinth and Counce Railroad Company (Mississippi).......... 100
Nekoosa Packaging MTW Railroad Corporation (Delaware)........ 100
Marinette, Tomahawk & Western Railroad Company
(Wisconsin)................................................ 100
Nekoosa Packaging Valdosta Southern Railroad Corporation
(Delaware).................................................. 100
Valdosta Southern Railroad Company (Florida)............... 100
Dahlonega Packaging Corporation (Delaware)..................... 100
Dixie Container Corporation (Virginia)......................... 100
Dixie Convoy Corporation (North Carolina)...................... 100
EKCO Products, Inc. (Illinois)................................. 100
E-Z Por Corporation (Delaware)................................. 100
PCA Box Company (Delaware)..................................... 100
PCA-Budafok (Kartongyar) Kft. (Hungary)........................ 30
(Packaging Corporation of America owns 30%, as managing
partner; and Papiripari Vallalat, an unaffiliated company,
owns 70%.)
PCA Hydro, Inc. (Delaware)..................................... 100
PCA Tomahawk Corporation (Delaware)............................ 100
PCA Valdosta Corporation (Delaware)............................ 100
PCA Verpackungsmittel GmbH (Germany)........................... 100
PCA Embalajes Espana S.L. (Spain)............................ 99
(PCA Verpackungsmittel GmbH owns 99%; and Omni-Pac Ekco
GmbH Verpackungsmittel owns 1%.)
PCA West Inc. (Delaware)....................................... 100
Coast-Packaging Company (California General Partnership)..... 50
(PCA West Inc. owns 50%, as General Partner; and J. G.
Haddy Sales Company, an unaffiliated company, owns 50%,
as General Partner.)
Packaging Corporation of America (Nevada)...................... 100
Packaging Corporation of America (UK) Limited
(United Kingdom).............................................. 100
Polbeth Packaging Limited (Scotland)......................... 100
Brucefield Plastics Limited (Scotland)..................... 100
Polbeth Packaging (Corby) Limited (Scotland)............... 100
7
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1993
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
Subsidiaries of Tenneco Corporation (continued)
Subsidiaries of Tenneco InterAmerica Inc. (continued)
Subsidiaries of Packaging Corporation of America (continued)
<TABLE>
<S> <C>
Pressware International, Inc. (Delaware)......................... 100%
Revere Foil Containers, Inc. (Delaware).......................... 100
798795 Ontario Limited (Ontario)................................. 100
PCA Canada Inc. (Ontario).................................... 100
Tenneco Minerals Company - California (Delaware)......................... 100
Tenneco Minerals Company - Nevada (Delaware)............................. 100
Tenneco OCS Company, Inc. (Delaware)..................................... 100
Tenneco Oil Company (Delaware)........................................... 100
Tenneco Polymers, Inc. (Delaware)........................................ 100
Tenneco Eastern Realty, Inc. (New Jersey)............................ 100
Tenneco Power Generation Company (Delaware).............................. 100
West Campus Cogeneration Company (Delaware).......................... 100
Tenneco Synfuels Company (Delaware)...................................... 100
Tennessee Overthrust Gas Company (Delaware).............................. 100
Tenngasco Gas Supply Company (Delaware).................................. 100
HT Gathering Company (Texas)......................................... 50
(Tenngasco Gas Supply Company owns 50% of the issued and
outstanding Class A Voting Stock and 20% of the Class B
Nonvoting Stock, 29% of total equity; and Houston Pipe Line
Company, an unaffiliated company, owns 50% of the issued
and outstanding Class A Voting Stock and 80% of the Class B
Nonvoting Stock, 71% of total equity. The voting stock is
split 50%-50%.)
Oasis Pipe Line Company (Delaware)................................... 30
(Tenngasco Gas Supply Company owns 100% of the issued and
outstanding Series B Preference Stock and 30% of the
Common Stock, 30% of total equity; Dow Chemical Company, an
unaffiliated company, owns 100% of the issued and outstanding
Series A Preference Stock and 45% of the Common Stock, 45% of
total equity; and Houston Pipe Line Company, an unaffiliated
company, owns 100% of the issued and outstanding Series C
Preference Stock and 25% of the Common Stock, 25% of
total equity.)
Tenngasco Marketing Corporation (Delaware)............................... 100
Walker Deutschland GmbH (Germany)........................................ 1
(Tenneco Corporation owns 1%; and J I Case GmbH owns 99%.)
Tenneco Delta XII Gas Co., Inc. (Delaware)................................... 100
Tenneco Energy Ltd. (Canada)................................................. 100
Tenneco Foreign Sales Corporation (U.S. Virgin Islands)...................... 100
Tenneco Gas Canada, Ltd. (Ontario)........................................... 100
Tenneco Gas Inc. (Delaware).................................................. 100
Tenneco Gas Transportation Company (Delaware)............................ 100
Tenneco Gas International Inc. (Delaware).................................... 100
Tenneco Gas Louisiana Inc. (Delaware)........................................ 100
Martin Exploration Company (Delaware).................................... 100
Tenneco Gas Processing Company (Delaware).................................... 100
Tenneco Gas Production Corporation (Delaware)................................ 100
Tenneco Gas Properties Inc. (Delaware)....................................... 100
Tenneco Gas Services, Inc. (Delaware)........................................ 100
Tenneco Gas Supply Corporation (Delaware).................................... 100
Tenneco Heavy Duty Brake, Ltd. (Ontario)..................................... 100
</TABLE>
8
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1993
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
<TABLE>
<S> <C>
Tenneco International Inc. (Delaware).................................... 100%
Autopartes Walker, S.A. DE C.V. (Mexico)............................. 0.02
(Tennessee Gas Pipeline Company owns 99.92%; Tenneco Inc.
owns 0.02%; Tenneco Corporation owns 0.02%; Tenneco
International Inc. owns 0.02%; and Monroe Auto Equipment
company owns 0.02%)
Case Poclain S.A. (France)........................................... 14.6
(Tenneco Inc. owns 83.26%; Tenneco International Inc.
owns 15.51%; and 1.23% is publicly owned. The
subsidiaries of Case Poclain S. A. are listed on page
1 hereof)
J I Case (Australia) Pty., Limited (Australia)....................... 99.99
(Tenneco International Inc. owns 99.99%; and an
unaffiliated nominee owns 0.01%)
Case Tractors & Equipment (NZ) Limited (New Zealand)............. 100
J I Case Credit Corporation of Australia Pty. Ltd.
(Australia)...................................................... 100
J. I. Case do Brasil & Cia (Brazilian General Partnership)........... 4.16
(Case Corporation owns 7.98%, as General Partner; Tenneco
Canada Inc. owns 87.86%, as General Partner; and Tenneco
International Inc. owns 4.16%, as General Partner. The
subsidiaries of J. I. Case do Brasil & Cia are listed on
page 1 hereof.)
J I Case S.A. (Spain)................................................ 100
Monroe Australia Pty. Limited (Australia)............................ 100
Walker Australia Pty. Limited (Australia)........................ 100
Wylie Superannuation Pty. Ltd. (Australia)....................... 100
Omni-Pac GmbH (Germany).............................................. 1
(Tenneco International Inc. owns 1%; and J I Case GmbH
owns 99%. The subsidiaries of Omni-Pac GmbH are listed
on page 6 hereof.)
Omni-Pac ApS (Denmark)........................................... 100
Omni-Pac A.B. (Sweden)........................................... 100
Omni-Pac S.A.R.L. (France)....................................... 3
(Omni-Pac GmbH owns 3%; and Tenneco International Inc.
owns 97%.)
Omni-Pac S.A.R.L. (France)........................................... 97
(Tenneco International Inc. owns 97%; and Omni-Pac GmbH
owns 3%.)
Poclain do Brasil S.A. (Brazil)...................................... 99.71
(Tenneco International Inc. owns 99.71% of Common Stock;
and J. I. Case do Brasil & Cia owns 0.29% of Common Stock
and 100% of the Preferred Stock. The subsidiaries of
Poclain do Brasil S. A. are listed on pages 1-2 hereof.)
S. A. Tenneco Belgium (J I Case-Monroe-Petro-Tex) N.V.
(Belgium)............................................................ 100
Borusan Amortisor Imalat Ve Ticaret A.S. (Turkey)................ 50
(S. A. Tenneco Belgium (J I Case-Monroe-Petro-Tex)
N.V. owns 16.7%; Borusan Holding AS, an unaffiliated
company, owns 83.03%; and various unaffiliated
individual stockholders own 0.3%.)
International Harvester Company of Belgium N.V. (Belgium)........ 100
Monroe Europe Coordination Center N.V. (Belgium)................. 99.9
(S A Tenneco Belgium (J I Case-Monroe-Petro-Tex) N.V.
owns 99.9%; and Monroe Auto Equipement France, S.A.
owns 0.1%.)
Monroe Packaging N.V. (Belgium).................................. 99.9
(S A Tenneco Belgium (J I Case-Monroe-Petro-Tex) N.V.
owns 99.9%; and Monroe Auto Equipement France, S.A.
owns 0.1%.)
Tenneco Automotive Trading Company (Delaware)........................ 100
Tenneco Corporation (Delaware)....................................... 5.7
(Tenneco International Inc. owns 100% of the Second
Preferred Stock of Tennessee Gas Pipeline Company and owns
100% of the Common Stock. The Subsidiaries of Tenneco
Corporation are listed beginning on page 5 hereof.)
</TABLE>
9
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1993
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
Subsidiaries of Tenneco International Inc. (continued)
<TABLE>
<S> <C>
Tenneco France Finance S.A. (France).................................... 0.04%
(Tenneco Inc. owns 99.80%; Tenneco International Inc. owns
.04%; Tenneco International Holdings Limited owns .04%;
Tenneco International Finance Limited owns .04%; Tenneco
Corporation owns .04% and Tenneco United Kingdom Holdings
Limited owns .04%.)
Tenneco Holdings B.V. (Netherlands)..................................... 100
Tenneco Holdings Danmark A/S (Denmark).................................. 100
J I Case A/S (Denmark).............................................. 100
Walker Danmark A/S (Denmark)........................................ 100
Walker Inapal Escapes S.A. (Portugal)............................... 95
(Tenneco Holdings Danmark A/S owns 90%; Inapal, Industria
Nacional de Acessorios Para Automoveis, SA owns 9.99%;
and Walker Danmark A/S owns 0.01%.)
Tenneco Nederland B.V. (Netherlands).................................... 100
Case Poclain GmbH & Co., K.G. (Germany)............................. 98
(Poclain GmbH owns 2%; and Tenneco Nederland B.V.
owns 98%.)
Case Bodenverdichtungsgerate GmbH & Co. K.G. (Germany).............. 98
(Case Bodenverdichtungsgerate Verwaltungs GmbH owns 2%;
and Tenneco Nederland B.V. owns 98%.)
Tenneco Norge Inc. (Delaware)........................................... 100
Tenneco Offshore Netherlands Company (Delaware)......................... 100
Tenneco United Kingdom Holdings Limited (Delaware)...................... 100
International Harvester Company of Great Britain Limited
(United Kingdom).................................................... 100
J.I. Case Europe Limited (United Kingdom)........................... 99.03
(Tenneco United Kingdom Holdings Limited owns 99.03% of
Common Stock; and Tenneco International Holdings Limited
owns 0.97% of Common Stock.)
Case Credit Limited (United Kingdom)............................ 100
Omni-Pac U.K. Limited (United Kingdom).............................. 100
Leconfield Packaging Limited (United Kingdom)................... 100
Tenneco Europe Limited (Delaware)................................... 100
Tenneco Asia Limited (United Kingdom)........................... 100
Tenneco France Finance SA (France).................................. 0.04
(Tenneco Inc. owns 99.80%; Tenneco International Inc. owns
.04%; Tenneco International Holdings Limited owns .04%;
Tenneco International Finance Limited owns .04%; Tenneco
Corporation owns .04% and Tenneco United Kingdom
Holdings Limited owns .04%.)
Tenneco International Finance Limited (United Kingdom).............. 100
Case Credits Limited (United Kingdom)........................... 100
Tenneco France Finance S.A. (France)............................ 0.04
(Tenneco Inc. owns 99.80%; Tenneco International
Inc. owns .04%; Tenneco International Holdings
Limited owns .04%; Tenneco International Finance
Limited owns .04%; Tenneco Corporation owns .04%
and Tenneco United Kingdom Holdings Limited
owns .04%.)
Tenneco International Finance B.V. (Netherlands)................ 100
Tenneco International Holdings Limited (United Kingdom)............. 100
Albright & Wilson Limited (United Kingdom)...................... 100
Albright & Wilson A.B. (Sweden)............................. 100
Albright & Wilson A/S (Norway).............................. 100
</TABLE>
10
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1993
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
Subsidiaries of Tenneco International Inc. (continued)
Subsidiaries of Tenneco International Holdings Limited (continued)
Subsidiaries of Albright & Wilson Limited (continued)
<TABLE>
<S> <C>
Albright & Wilson Asia (H.K.) Limited (Hong Kong).................. 100%
Albright & Wilson Asia Pacific Pte. Ltd. (Singapore)............... 100
Albright & Wilson Asia Taiwan Limited (Taiwan)..................... 75
(Albright & Wilson Limited owns 75%; and Mr. Robert Peck,
an unaffiliated individual, owns 25%.)
Albright & Wilson Asia Trading (Malaysia) Sdn Bhd (Malaysia)....... 100
Albright & Wilson ESP Trustees Ltd. (United Kingdom)............... 100
Albright & Wilson Chemicals (Pty), Limited (Australia)............. 100
Albright & Wilson (Australia) Limited (Australia).............. 50
(Albright & Wilson Chemicals (Pty), Limited owns 50%;
and Salim Oleochemicals (SEA) Pty Ltd., an
unaffiliated company, owns 50%.)
Albright & Wilson New Zealand Limited (New Zealand)........ 100
Albright & Wilson Specialities Pty. Ltd. (Australia)........... 100
Albright & Wilson Denmark A/S (Denmark)............................ 100
Albright & Wilson Lavera S.A.R.L. (France)......................... 100
Albright & Wilson Lojingki Sdn Bhd (Malaysia)...................... 50
(Albright & Wilson Limited owns 50%; and Lojingki
Holdings Sdn Bhd, an unaffiliated company, owns 50%)
Albright & Wilson (Malaysia) Sdn Bhd (Malaysia).................... 100
Albright & Wilson (Marchon) Pte. Limited (Singapore)............... 100
Albright & Wilson Oils Sdn Bhd (Malaysia).......................... 100
Albright & Wilson Overseas Ltd. (United Kingdom)................... 100
Albright & Wilson B. V. (Netherlands).......................... 100
Albright & Wilson S.r.l. (Italy)............................... 100
(Albright & Wilson S.r.l. owns 95%; and F. Raimondi,
an unaffiliated individual owns 5%)
Albright & Wilson Castiglione S.r.l. (Italy)............... 100
Albright & Wilson Espana S.A. (Spain)...................... 100
Albright & Wilson Patrica S.r.l. (Italy)................... 100
Albright & Wilson Saint Mihiel S.A. (France)............... 100
Bush Boake Allen Italia SpA (Italy)........................ 50
(Albright & Wilson S.r.l. owns 50%; and Bush
Boake Allen Ltd., an unaffiliated company,
owns 50%)
Marchon Hellas Limited (Greece)............................ 95
(Albright & Wilson S.r.l. owns 95%; and F.
Raimondi, an unaffiliated individual owns 5%)
Polyphosphates, Inc. (Philippines)............................. 40
(Albright & Wilson Overseas Ltd. owns 40%; and Chemical
Industries of the Philippines Inc., an unaffiliated company,
owns 60%.)
Albright & Wilson Produtos Quimicos Ltda. (Brazil)................. 100
Albright Dentifrice Phosphates Sdn Bhd (Malaysia).................. 100
Albright, Morarji and Pandit Limited (India)....................... 39.9
(Albright & Wilson Limited owns 39.9%; and various
unaffiliated stockholders own 60.1%.)
Dai-Ichi Albright Kabushiki Kaisha (Japan)......................... 100
</TABLE>
11
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1993
<TABLE>
<S> <C>
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
Subsidiaries of Tenneco International Inc. (continued)
Subsidiaries of Tenneco United Kingdom Holdings Limited (continued)
Subsidiaries of Tenneco International Holdings Limited (continued)
Subsidiaries of Albright & Wilson Limited (continued)
P. T. Albright & Wilson Manyar (Indonesia)..................... 50%
(Albright & Wilson Limited owns 50%; and various
unaffiliated groups own 50%.)
Proban Ltd. (United Kingdom)................................... 100
Specialty Phosphates (Malaysia) Sdn Bhd (Malaysia)............. 51
(Albright & Wilson Limited owns 51%, and Omichi Seiyaku
Company KK, an unaffiliated company, owns 49%.)
Tenneco Canada Inc. (Ontario).................................. 48.72
(Albright & Wilson Limited owns 100% of the Class A Stock,
48.72% of total equity; and Case Corporation owns 100% of
the issued and outstanding Common Stock, 51.28% of total
equity. The subsidiaries of Tenneco Canada Inc. are listed
on page 2 hereof.)
Tenneco Malros Ltd. (United Kingdom)........................... 100
Tenneco Organics Ltd. (United Kingdom)......................... 100
Case Poclain Limited (United Kingdom).............................. 100
David Brown Tractors Limited (United Kingdom)...................... 100
David Brown Tractors (Belfast) Ltd. (United Kingdom)........... 100
David Brown Tractors (Ireland) Limited (Ireland)............... 100
David Brown Tractors (Retail) Ltd. (United Kingdom)............ 100
A. M. Exports Limited (United Kingdom)..................... 100
Poclain Limited (United Kingdom)........................... 100
Tractorwork Limited (United Kingdom)........................... 100
J I Case Company Limited (United Kingdom).......................... 100
Tenneco France Finance S.A. (France)............................... 0.04
(Tenneco Inc. owns 99.80%; Tenneco International Inc. owns
.04%; Tenneco International Holdings Limited owns .04%;
Tenneco International Finance Limited owns .04%; Tenneco
Corporation owns .04% and Tenneco United Kingdom Holdings
Limited owns .04%.)
Tenneco - Walker (U.K.) Limited (United Kingdom)................... 100
Tenneco West Limited (United Kingdom).............................. 100
Walker UK Ltd. (United Kingdom).................................... 100
J. W. Hartley (Motor Trade) Limited (United Kingdom)........... 100
Thompson and Stammers (Dunmow) Number 5 Limited (United
Kingdom)....................................................... 100
Universaltrac Beteiligungs GmbH (Germany).................................. 100
Walker Europe, Inc. (Delaware)............................................. 100
Walker France S.A. (France)................................................ 100
Walker Norge A/S (Norway).................................................. 100
Walker Sverige A.B. (Sweden)............................................... 100
J I Case Sweden A.B. (Sweden).......................................... 100
Sara Gretes Cafeteria A.B. (Sweden).................................... 50
(Walker Sverige A.B. owns 50%; Ljungby Kommun, an unaffiliated
individual, owns 50%.)
Walker Nord A.B. (Sweden).............................................. 100
</TABLE>
12
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1993
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
<TABLE>
<S> <C>
Tenneco International Marketing & Sourcing, Inc. (Delaware)............ 100%
Tenneco Liquids Corporation (Delaware)................................. 100
Tenneco LNG Inc. (Delaware)............................................ 100
Tenneco MTBE, Inc. (Delaware).......................................... 100
Tenneco Pittsfield Corporation (Delaware).............................. 100
Tenneco Portland Corporation (Delaware)................................ 100
Tenneco Realty, Inc. (Delaware)........................................ 100
TRI Realty, Inc. (Texas)........................................... 100
Tennchase, Inc. (Texas)............................................ 100
Tenneco Shale Oil Company (Delaware)................................... 100
Tenneco SNG Inc. (Delaware)............................................ 100
Tenneco Trinidad LNG, Inc. (Delaware).................................. 100
Tenneco Ventures Corporation (Delaware)................................ 100
TennEcon Services, Inc. (Delaware)..................................... 100
Tennessee Gas Marketing Company (Delaware)............................. 100
Tennessee Gas Transmission Company (Delaware).......................... 100
Tennessee/New England Pipeline Company (Delaware)...................... 100
Tennessee Ozark Gas Company (Delaware)................................. 100
Tennessee Storage Company (Delaware)................................... 100
Tennessee Trailblazer Gas Company (Delaware)........................... 100
Ten Ten Parking Garage Inc. (Delaware)................................. 100
The Fontanelle Corporation (Louisiana)................................. 100
The F and E Oyster Partnership (Louisiana Partnership)............. 64
(The Fontanelle Corporation owns 64%, as General Partner;
and Expedite Oyster, Inc., an unaffiliated company, owns
36% as General Partner.)
The LaChute Corporation (Louisiana).................................... 100
Walker Electronic Mufflers, Inc. (Delaware)............................ 100
Walker Manufacturing Company (Delaware)................................ 100
</TABLE>
13
<PAGE>
EXHIBIT 23
<PAGE>
CONSENT
INDEPENDENT PUBLIC ACCOUNTANTS FOR TENNECO INC.
As independent public accountants, we hereby consent to the incorporation
by reference of our report dated February 14, 1994, included in the Annual
Report of Tenneco Inc. on Form 10-K for the year ended December 31, 1993, into
the following Registration Statements previously filed with the Securities and
Exchange Commission:
<TABLE>
<CAPTION>
Registration No. Form Securities Registered
- ---------------- ---- ---------------------
<S> <C> <C>
2-78521 S-3 Common Stock, par value $5 per
share, of Tenneco Inc.
(formerly Tenneco Holdings,
Inc.) ("Common Stock") issuable
under the Tenneco Inc. Key
Employee Stock Option Plan.
33-18788 S-3 Common Stock of Tenneco Inc.
issuable upon conversion of 10
percent Sterling/Dollar
Convertible Unsecured Loan
Stock 1991/95 of Tennessee Gas
Pipeline Company (formerly
Tenneco Inc.).
33-46579 S-8 5,000,000 shares of Common
Stock of Tenneco Inc. offered
in connection with the Tenneco
Inc. 1992 Employee Stock
Purchase Plan.
33-46643 S-3 2,000,000 shares of Common
Stock of Tenneco Inc. offered
in connection with the Dividend
Reinvestment and Stock Purchase
Plan.
33-47854 S-8 Packaging Corporation of
America 401(k) Savings Plan,
contributions thereunder and
Common Stock of Tenneco Inc.
offered thereunder.
33-47881 S-8 Newport News Shipbuilding
Savings (401(k)) Plan for Union
Eligible Employees,
contributions thereunder and
Common Stock of Tenneco Inc.
offered thereunder.
33-47882 S-8 J. I. Case Company Guaranteed
Sharing Benefits and Tax
Deferred Savings Plan,
contributions thereunder and
Common Stock of Tenneco Inc.
offered thereunder.
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Registration No. Form Securities Registered
- ---------------- ---- ---------------------
<S> <C> <C>
33-47883 S-8 J. I. Case Company Tax Deferred
Savings Plan for Hourly Paid
Employees at the Wichita Plant,
contributions thereunder and
Common Stock of Tenneco Inc.
offered thereunder.
33-50863 S-8 Tenneco Automotive Hourly
Employees Savings Plan,
contributions thereunder and
Common Stock of Tenneco Inc.
offered thereunder.
33-54184 S-3 $500,000,000 aggregate
principal amount of Debt
Securities of Tenneco Inc.
offered pursuant to Rule 415 of
the General Rules and
Regulations under the
Securities Act of 1933, as
amended (of which $400,000,000
has been issued).
33-55622 S-3 2,800,000 shares of Common
Stock of Tenneco Inc. offered
to the trustee of the Tenneco
Inc. General Employee Benefit
Trust.
33-55720 S-3 550,000 shares of Common Stock
of Tenneco Inc. offered in
connection with the merger of
EnTrade Corporation with a
subsidiary of Tenneco Inc.
33-60316 S-8 Tenneco Inc. Thrift Plan,
contributions thereunder and
Common Stock of Tenneco Inc.
offered thereunder.
</TABLE>
ARTHUR ANDERSEN & CO.
Houston, Texas
March 9, 1994
2
<PAGE>
EXHIBIT 24
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1993, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this 9th
day of March, A.D. 1994.
MARK ANDREWS
-------------------------------
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1993, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this 9th
day of March, A.D. 1994.
W. MICHAEL BLUMENTHAL
-------------------------------
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1993, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this 9th
day of March, A.D. 1994.
M. KATHRYN EICKHOFF
-------------------------------
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1993, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this 9th
day of March, A.D. 1994.
PETER T. FLAWN
-------------------------------
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1993, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this 9th
day of March, A.D. 1994.
HENRY U. HARRIS, JR.
-------------------------------
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1993, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this 9th
day of March, A.D. 1994.
BELTON K. JOHNSON
-------------------------------
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1993, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this 9th
day of March, A.D. 1994.
JOHN B. McCOY
-------------------------------
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1993, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this 9th
day of March, A.D. 1994.
JOSEPH J. SISCO
-------------------------------
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1993, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this 9th
day of March, A.D. 1994.
WILLIAM L. WEISS
-------------------------------
