<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)............ February 2, 1996
TENNECO INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-9864 76-0233548
- -------------------------------------------------------------------------------
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
Tenneco Building, Houston, Texas 77002
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 757-2131
<PAGE>
Item 5. Other Events
On February 5, 1996, Tenneco Inc. distributed a letter, dated February 2,
1996, from Dana G. Mead, its Chairman and Chief Executive Officer, to its
stockholders regarding Tenneco's businesses.
Item 7. Financial Statements and Exhibits.
99(a) - Letter to Shareowners, dated February 2, 1996, from Dana G. Mead,
Chairman and Chief Executive Officer of Tenneco Inc., regarding
Tenneco's businesses.
99(b) - Press release issued January 30, 1996, regarding, among other
matters, earnings of Tenneco Inc. for the year ended December 31,
1995.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TENNECO INC.
Registrant
/s/ M. W. Meyer
By__________________________________
M. W. Meyer, Vice President and
Deputy General Counsel
DATE: February 6, 1996
<PAGE>
EXHIBIT 99(a)
DANA G. MEAD TENNECO
Chairman and 1010 Milam
Chief Executive Officer PO Box 2511
Houston, Texas 77252 2511
Tel 713 757 1111
[LOGO OF TENNECO INC. APPEARS HERE]
February 2, 1996
Dear Shareowner:
A few days ago Tenneco announced results for the fourth quarter and for all
of 1995. Your company earned $4.16 per share in 1995, up 19 percent from $3.49
last year. Our net income of $735 million was the highest since 1988 when the
oil company was sold; excluding that sale, the highest since 1981. Our
Packaging and Automotive divisions both posted record years in operating income
and revenues. The bottom line -- we are continuing to transform and grow value
in your company. I've attached the entire press release. Since it will be
several weeks before you receive the Annual Report, I wanted to give you a quick
update on Tenneco's future direction and our plans for building even more value
in Tenneco in 1996 and beyond.
Looking to 1996 we anticipate that our revenues will grow to nearly $11
billion, up 20 percent, and all of our businesses will show substantially
improved income. We have succeeded in creating improved value in each of our
companies, as we said we would. We now have a credible set of strategic options
available to us to realize more of that value, as we said we would. We are
positioned to act once again -- and you can count on further strategic action
soon. This commitment to early action is not a sea change in our strategy -- it
affirms the success of our strategy, which has enabled us to accelerate our
timetable for capturing value for you.
For two years we have been deliberately refining specific strategic actions
and working to create the legal, financial and organizational flexibility to
enable Tenneco to maximize shareowner value. We intend to act on a broad range
of options: spin-offs -- sales -- public offerings -- mergers -- joint ventures
and acquisitions until we are satisfied that our strategic mix and corporate
structure indeed maximize value. These actions may include one, two or all of
our businesses.
To put such actions in perspective it's useful to look back and consider
our progress. In the autumn of 1991 Tenneco was a company in crisis. Case
Corporation, our largest subsidiary at that time, was losing $1 billion a year
including restructuring charges and burdened by $3 billion of inventory,
bleeding the company's available cash. Albright & Wilson was barely breaking
even in the highly volatile specialty chemicals business. Newport News
Shipbuilding had no commercial business, did not have the new $3 billion carrier
contract, had no frigate program and was facing the complete loss of the future
submarine program. Half of Tenneco's revenues were from cyclical businesses.
Our consolidated debt was over 80 percent of capital. The company's value had
fallen to $3.9 billion by late 1991. When the current management team arrived,
we faced a huge challenge, but acting on your behalf, our shareowners, we
managed to regain the confidence of the investment community, debt rating
agencies, our banks, customers and employees.
<PAGE>
In late 1991, we set upon a three part strategy -- stop the decline,
restore our businesses and Tenneco to consistent profitability and lastly, to
build value in our businesses by virtue of performance, thereby creating options
to grow shareholder value going forward. Our strategy is working. We have
recorded four consecutive years of substantial growth in earnings per share. We
have paid off $6 billion of debt, and our industrial debt ratio hit 44 percent
in the third quarter last year, the lowest in a decade. We are generating cash
even as we reinvest $800 million a year in our businesses. We increased the
dividend by 12.5 percent. We have repurchased $646 million of Tenneco stock and
we are in the process of buying back 2.5 million more shares. Revenues from
cyclical businesses are now less than a third of our sales. In 1995 we created
$246 million of economic value added (EVA) in your company. The company's
market value has grown to $8.9 billion, up over $5 billion in a little over four
years.
We have moved aggressively on our strategy. I assumed the additional task
of Chairman and CEO of Case Corporation in the fall of 1992. Three months later
we launched a dramatic $920 million restructuring that led to what some
observers have called "the most dramatic industrial turnaround of the decade."
This was not the slash and burn, sell and forget strategy now in vogue -- this
was the fundamental rebuilding of a major American company -- a highly
successful one with an impressive payback for your restructuring investment.
Just seven months after the Case public stock offering in 1994, we sold Albright
& Wilson on the London Exchange receiving over $800 million for a company that
earned only $9 million in 1991. By the time we sell the remaining 21 percent of
Case stock we own, we will have realized over $4 billion in benefits -- value
created from a company we could not sell for $1 plus its debt four years
earlier.
The $2.3 billion in proceeds from Case, A&W and other small non-core
dispositions have been invested in less cyclical, higher-margin, faster-growing
parts of our Packaging, Automotive and non-regulated Energy divisions. We have
also used the money to continue to purchase Tenneco shares -- $700 million worth
by mid-1996. The largest of our acquisitions has been the purchase of Mobil
Plastics division in late 1995 -- a terrific addition which was accretive to
earnings from the start, contributing $15 million to our 1995 results in only
six weeks.
In business strategy and transformation, as in history, the past is
prologue. Our past success is a strong platform for the future. Looking ahead,
we must accelerate our efforts for realizing value for you and building value in
our stock price. I am not satisfied that all we have accomplished and all the
value we have created have been adequately reflected in the market value of
Tenneco stock. An analyst recently called Tenneco "A powerful unappreciated
restructuring story." I will not be complacent about seeking appreciation, and
I will continue to insist that our management intensity and operational
performance yield the results that you deserve as owners of Tenneco.
I appreciate your support. We work to earn and to keep it. Our overriding
goal is to build and achieve shareowner value. Our interests are aligned with
yours; our compensation is keyed to the performance of Tenneco stock. We will
do all we can to continue our progress and to merit the decision you have made
to own Tenneco. I hope you will retain and add to your stake in your company.
Sincerely,
[SIGNATURE APPEARS HERE]
<PAGE>
EXHIBIT 99(b)
news release
[LOGO OF TENNECO INC. APPEARS HERE]
MEDIA CONTACT: Thomas C. Hayes (713) 757-5843
TENNECO REPORTS 19 PERCENT INCREASE
IN EPS FROM CONTINUING OPERATIONS FOR 1995
. EARNINGS PER SHARE FROM CONTINUING OPERATIONS IN 1995 INCREASED 19
PERCENT TO $4.16 FROM $3.49 IN 1994.
. NET INCOME IN 1995 ROSE 80 PERCENT TO $735 MILLION FROM $408 MILLION,
INCLUDING DISCONTINUED OPERATIONS IN 1994.
. OPERATING MARGINS IN 1995 IMPROVED 36 PERCENT TO 15.4 PERCENT, FROM
11.3 PERCENT IN 1994.
. EPS FROM CONTINUING OPERATIONS WAS $1.05 IN THE FOURTH QUARTER.
EXCLUDING SPECIAL ITEMS, FOURTH QUARTER EPS FROM CONTINUING OPERATIONS
INCREASED 11 PERCENT TO $1.00, COMPARED WITH 90 CENTS A YEAR AGO.
. IN THE FOURTH QUARTER, TENNECO'S FOUR BUSINESS GROUPS EACH REPORTED
HIGHER QUARTER OVER QUARTER REVENUES. THE AGGREGATE INCREASE WAS 16
PERCENT, EXCLUDING CASE REVENUES.
. FOURTEEN MILLION SHARES OF TENNECO COMMON STOCK WERE REPURCHASED SINCE
DECEMBER 1994, REDUCING OUTSTANDING SHARES BY 8 PERCENT.
HOUSTON, January 30, 1996 -- Tenneco today reported earnings per share from
continuing operations increased 19 percent in 1995 to $4.16, from $3.49 in 1994,
with two of its four divisions, Tenneco Packaging and Tenneco Automotive,
posting a record year in operating income and revenues. Tenneco Packaging's
operating income was more than double the level of 1994.
"The 1995 economy was uneven for our businesses, and challenging at times,
but we exceeded our EPS goal for the third consecutive year," said Dana G. Mead,
chairman and chief executive officer. "Redeployment actions contributed to
dramatic margin improvement, with operating margins rising 36 percent to 15.4
percent in 1995, from 11.3 percent in 1994. By continuing to grow our earnings
per share strongly through the business cycle, we intend to meet the tough
shareowner value objectives we have set for ourselves."
-more-
<PAGE>
2
"With 11 acquisitions during 1995, as well as plant expansions and facility
upgrades, Tenneco Packaging is now the fourth largest packaging company in the
United States and the largest of Tenneco's four operating divisions," Mead said.
"It has leadership positions in most of its key market segments. Packaging also
is much less cyclical than a year ago, with almost half of its revenues in 1996
expected to come from the specialty business." In 1994, the paperboard business
generated 70 percent of revenues for Tenneco Packaging, which is based in
Evanston, Ill.
Tenneco Automotive, based in Deerfield, Ill., achieved record revenues for
the second consecutive year, with the Gillet Group, acquired in Europe late in
1994, contributing $346 million in 1995 revenues. Gillet, Europe's leading
manufacturer of original equipment exhaust systems, includes all major European
auto manufacturers among its customers.
"International expansion is a key growth strategy for each Tenneco
business and Tenneco Automotive continues to lead the way," Mead said. "In
1995, the division generated half of its revenues outside North America for the
first time ever, further reducing its exposure to the economic cycle in North
America."
FOURTH QUARTER EPS INCREASED 11 PERCENT, EXCLUDING SPECIAL ITEMS
Excluding special items, Tenneco earnings per share from continuing
operations for the fourth quarter increased 11 percent to $1.00, from 90 cents
in the year-ago period. Special items included sales of assets and investments,
and charges for restructurings as well as regulatory and legal matters. The
increase in earnings per share is attributable to higher operating income
contributions from Packaging, Automotive and Energy, lower interest expense and
a reduction in income taxes resulting from the realization of capital loss
benefits. [Note: Details of the special items are included in the sections
reporting results of each operating division as well as a table attached to this
news release.]
-more-
<PAGE>
3
Earnings per share from continuing operations, including special items,
were $1.05, compared with $1.14 in the comparable quarter a year ago. Income
from continuing operations was $183 million in the quarter, compared with $209
million in 1994. For the year, income from continuing operations was $735
million, compared with $641 million in 1994.
Net income in the fourth quarter was $183 million, compared with $32
million in the year-ago quarter, which included discontinued operations of
Albright & Wilson and Tenneco Automotive's brakes business. Net income for the
full year in 1995 was $735 million, compared with $408 million in 1994 on the
same basis.
Tenneco's fourth quarter revenues rose 16 percent, excluding Case, to $2.4
billion. All four of Tenneco's businesses recorded higher revenues, quarter
over quarter, in the fourth quarter. Twenty-five percent of the revenue
increase in the quarter came from internal growth of existing business
operations and the remainder from recent Tenneco acquisitions.
Excluding special items and Case, operating income for the fourth quarter
of 1995 was $281 million, compared with $276 million in the same quarter a year
ago.
For the full year, Tenneco revenues were $8.9 billion compared with $12.2
billion for 1994. Excluding Case, revenues increased 7 percent during the year.
Also excluding special items and Case, operating income increased 19 percent, to
$1.206 billion, from $1.012 billion.
Interest expense and taxes for 1995 amounted to $612 million, compared
with $708 million in the prior year. In the fourth quarter, interest expense
and taxes were $111 million, compared with $136 million in the year-ago quarter.
Taxes were reduced by capital loss benefits that were realized as a result of
asset sales.
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<PAGE>
4
PROGRESS IN A FUNDAMENTAL TRANSFORMATION
Tenneco raised more than $2.3 billion in the 18 months ending December 31,
1995, primarily from three public offerings of Case Corporation shares and from
the public offering of the former Tenneco chemicals division, Albright & Wilson,
on the London Stock Exchange.
During the same period Tenneco committed or invested $2.3 billion in
acquisitions and joint ventures and invested $646 million in stock repurchase
programs.
In the fourth quarter, this included the acquisition of Mobil Corporation's
plastics division for $1.27 billion, as well as six smaller acquisitions in
packaging and automotive parts. For the full year, Tenneco announced a total of
18 acquisitions and 4 joint ventures supporting Tenneco's growth in higher-
margin, faster-growing, less cyclical businesses.
In December, the board of directors approved a 12.5 percent increase in the
quarterly dividend on common stock to 45 cents per share, the first dividend
increase on Tenneco common stock since July 1990.
TAKING OUT FAILURE COSTS -- AND FINDING MORE TO ELIMINATE
Tenneco took $295 million of failure costs out of its operations during
1995. "Even as we eliminated failure costs, our teams became better at
identifying costs that were previously unrecognized and created even more
opportunities for future savings," Mead said. "We ended the year with failure
costs representing less than 14 percent of total revenues, and our objective now
is to take out an additional $1 billion through 2000. That is expected to
generate more than $400 million in operating income during that period."
Mead also announced today a new companywide program to reduce working
capital by 50 percent during the next three years, or by more than $800 million
including a reduction of more than $200 million in 1996.
-more-
<PAGE>
5
Tenneco Business Services, established as a separate division in mid-year
to improve the efficiency of administrative support functions across all
business divisions, achieved $30 million in cost reductions for the year. As a
result of these programs, operating income is expected to improve by
approximately $80 million annually in 1998.
Tenneco announced in September a reduction in the size of its headquarters
staff, with related annual savings estimated at more than $15 million when
completed by year-end. The program will reduce the headquarters staff to
approximately 170 persons, down 85 percent from early 1991.
DIVISIONAL ANALYSIS
TENNECO PACKAGING
Tenneco Packaging reported fourth quarter operating income of $105 million,
excluding restructuring charges of $30 million for molded fiber and aluminum
foil packaging operations, compared with $82 million in the fourth quarter of
1994. Revenues in the quarter increased $165 million, to $769 million,
including $106 million resulting from the acquisition in mid-November of the
plastics division of Mobil Corporation.
Before special items, 1995 operating income increased 113 percent to
$446 million. Including special items, Tenneco Packaging reported record
operating income of $430 million, an increase of 106 percent over 1994.
Revenues increased 26 percent, to $2.8 billion, as Packaging achieved record
productivity in a strong market.
In the paperboard packaging business, the full year operating income was
$385 million, excluding a pretax gain of $14 million on the sale of a mill in
Sylva, N.C., compared with $139 million in 1994.
For the full year, specialty packaging earned $61 million, excluding the
restructuring charge, compared with $70 million in 1994. The plastics division
of Mobil Corporation, acquired in mid-November, contributed $15 million to
operating income.
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<PAGE>
6
Specialty revenues increased 26 percent to $824 million in 1995, with Mobil
Plastics contributing $106 million. Margins remained under pressure because of
a 20-percent increase in raw material costs in 1995. The major contributors to
the increase were higher prices for polystyrene, aluminum and old newspaper.
However, these prices declined significantly during the second half of the year
and are expected to remain at their current, lower levels.
In addition to Mobil Plastics, Tenneco Packaging also acquired the plastics
packaging operations of the Delyn Group plc in the United Kingdom during the
fourth quarter. In combination with the earlier acquisition of Penlea Plastics,
also in Britain, Tenneco Packaging is now the largest producer of thermoformed
plastics for food packaging in the United Kingdom.
Tenneco Packaging also completed three acquisitions in the paperboard
business during the quarter, bringing the total number of paperboard
acquisitions in 1995 to eight. Four of the eight paperboard acquisitions
involved enhanced graphics, in keeping with a strategy to reduce Tenneco's
exposure to volatility in containerboard pricing.
Revenues from enhanced graphics and displays doubled during the year, and
now comprise 15 percent of paperboard sales.
TENNECO ENERGY
Operating income was $104 million in the quarter, compared with $124
million in the year-earlier period. Revenues were $552 million, compared with
$531 million, the first increase since Tenneco's regulated gas pipelines began
phasing out gas sales with FERC Order 636.
Adjusted for special items, operating income in the fourth quarter was
$102 million, compared with $101 million in the year-ago quarter. Special items
in 1995 included a $28 million charge for estimated regulatory and legal
settlement costs and a $30 million pretax gain on the sale of the investment in
Kern River pipeline. The 1994 quarter included a pretax gain of $23 million on
the sale of 20 percent of TERC.
-more-
<PAGE>
7
Excluding special items, full year operating income was $340 million in
1995, compared with $381 million in 1994. In addition to the fourth quarter
adjustments, 1995 included a $7 million pretax loss on the sale of Tennessee
Ozark pipeline and a $2 million charge for a legal settlement, while 1994
included an $11 million gain for a contract settlement.
For the year, including special items, operating income was $333 million,
compared with $415 million in 1994. Revenues declined to $1.9 billion, from
$2.4 billion in 1994.
The decline in operating income was primarily due to changes related to
operating under FERC Order 636 and to depressed natural gas prices and higher
international development costs in the nonregulated business. Tenneco Energy's
earnings improved from the first to the second half of the year as capital
redeployed to nonregulated businesses began contributing earnings and regulated
pipeline profit margins improved.
At year-end, the division agreed to sell its 50 percent interest in the
Kern River pipeline to The Williams Companies for $206 million. This occurred
shortly after the Federal Trade Commission challenged the intended sale of the
property to Questar. The subsequent sale to Williams enabled Tenneco Energy to
retain about $10 million in operating income accrued from Kern River operations
since the initial sale was announced in September.
Investment in the nonregulated businesses accelerated in 1995. The
Ventures unit participated in drilling 60 wells with 29 successes. The
drilling program, plus the acquisition of a major interest in a Gulf Coast gas
field, added nearly 50 billion cubic feet of net reserves.
The acquisition of ARK Energy's 50 percent interest in two 100-megawatt
power plants in Florida was completed during the fourth quarter and additional
international investments were announced.
-more-
<PAGE>
8
Building on a major presence in Australia and Asia established since late
1994, Tenneco Energy announced significant investments in a soon-to-be-
constructed power plant and a gas field in Indonesia. Tenneco Energy was named
technical advisor for China's first major onshore gas pipeline, a 560-mile
project. Construction is scheduled to begin in a few months. In Taiwan, a
strategic alliance was formed with the Chinese Petroleum Corporation to develop
projects in Taiwan and North America.
TENNECO AUTOMOTIVE
Fourth quarter operating income was $45 million, compared with $22 million
in the year-earlier period. Excluding special items, the comparison is $45
million, compared with $39 million in the year-ago period. The 1994 quarter
included a $17 million charge for plant consolidations. Revenues were $616
million for the quarter, compared with $468 million in the same period a year
ago. The Gillet Group, acquired in November, 1994, contributed $96 million in
revenues in the quarter.
For the year, excluding special items, operating income was $250 million in
1995, compared with $245 million in 1994. Special items included a $10 million
charge largely related to a new process, hydroforming. Hydroforming is a
liquid, high-pressure way to make metal parts with bends and shapes not
available with traditional manufacturing technology. Other special items
included $22 million for plant consolidations and closings in 1994. Including
these items, operating income was $240 million, compared with $223 million in
1994.
Revenues set a record for the second consecutive year, at $2.5 billion for
the year, compared with $2.0 billion in 1994.
The 1995 performance was driven by strong original equipment exhaust sales
in North America and strong results in both ride control and exhaust products in
the original equipment and replacement markets in Europe. The number of product
launches for 1996 vehicles was more than twice the usual level, which strained
plant capabilities and adversely affected 1995 earnings. New volumes are
expected to contribute significantly to 1996 profitability as product launches
return to normal.
-more-
<PAGE>
9
The North American aftermarket, weakest in a decade during 1995, is expected
to return to more normal levels of business activity in 1996.
Four 1995 acquisition agreements, with businesses in Spain, the Czech
Republic, Australia and the United States, are expected to generate more than
$100 million in sales during 1996. In combination with Gillet and Products for
Power, acquired by Tenneco Automotive late in 1994, the new businesses are
expected to contribute more than $35 million to operating income in 1996.
Also, joint ventures in India and China, as well as distribution agreements
in Japan, were announced during the year, further increasing penetration into
global markets. The sale of Monroe and Rancho brand shock absorbers in Japan
through 5,000 Toyota dealerships and 1,000 to 2,000 gasoline service stations of
Japan Energy Corporation began last autumn, a few months after completion of the
U.S.-Japan Trade Agreement.
Product extensions for Sensa-Trac shock absorbers were introduced that will
cover European vehicles sold in the United States as well as pick-up trucks,
sport utility vehicles and vans. In the exhaust business, Tenneco Automotive's
$20 million investment in hydroforming makes it possible to produce more complex
product configurations at production-line speed for the Ford Taurus, with other
customers now interested in the new capability.
NEWPORT NEWS SHIPBUILDING
Newport News Shipbuilding's operating income in the quarter was $35
million, compared with $47 million in the fourth quarter last year. Excluding a
charge of $4 million related to staff reductions, operating income in the fourth
quarter of 1995 was $39 million. Revenues were $466 million, compared with $462
million a year earlier.
For the full year, operating income was $184 million, excluding $24 million
in charges related to headcount reductions and costs related to entering highly
competitive international commercial markets. This compared with 1994 income of
$200 million.
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<PAGE>
10
Revenues were flat, at $1.8 billion, in 1994 and 1995. The year-end backlog
was $4.6 billion.
The shipyard made major progress toward being designated one of two
suppliers for the Navy's $71 billion new attack submarine program. Congress has
now agreed to a two-yard program and appropriated funds to Newport News for
design work on the new class of submarines. In developing commercial business
during 1995, Newport News began construction on the first of two Double Eagle
product tankers and added two more to the backlog. The shipyard also concluded
contractual arrangements for another order of five ships. This contract is
contingent on approval of a government loan guarantee.
In November, the shipyard delivered the aircraft carrier John C. Stennis
more than seven months ahead of schedule, having cut more than one million labor
hours in production costs through improved manufacturing processes and quality
programs.
Late in 1995, Newport News teamed with Litton, Lockheed Martin and the
National Steel and Shipbuilding Company to bid on a contract to design,
construct and support an amphibious assault vessel called LPD-17. The Navy
expects to award a contract for this 12-ship, $6 billion program in mid-summer
1996.
Newport News Shipbuilding will actively pursue fast frigate business in
1996. The United Arab Emirates is expected to postpone until mid-1996
announcement of its award of a contract to build as many as four fast frigates
at $300 million to $400 million per ship. Besides the UAE, Newport News is
discussing the sale of at least 16 additional ships worldwide.
Year-end headcount was about 18,200, down nine percent from a year earlier
and down 37 percent from the peak of 29,000 employees in 1990. It is projected
to decline by approximately 1,500 in 1996.
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<PAGE>
11
One of the shipyard's goals is to continue improving its global
competitiveness. In its $70 million computer-integrated, steel fabrication
project, the shipyard intends to reduce the labor hours required to fabricate a
ton of steel by 50 percent when the project is completed in 1997. In addition,
Newport News is entering a phase in its strategy this year, with an increased
focus on speed. The strategy will dramatically reduce cycle times for ship
design and production.
Tenneco (NYSE:TEN) is a major diversified industrial corporation based in
Houston with 1995 sales of $8.9 billion.
The company has significant business interests in automotive parts (Tenneco
Automotive), natural gas transportation and marketing (Tenneco Energy),
packaging (Tenneco Packaging) and ship design, construction and repair (Newport
News Shipbuilding). Tenneco also owns approximately 21 percent of Case
Corporation, a manufacturer of agricultural and construction equipment.
# # #
<PAGE>
12
TENNECO DIVISION EARNINGS RESULTS (MILLIONS)
<TABLE>
<CAPTION>
UNAUDITED
FOURTH QUARTER
1995 1994
-------- --------
<S> <C> <C>
Net Sales and Operating
Revenues:
Automotive $ 616 $ 468
Energy 552 531
Packaging 769 604
Shipbuilding 466 462
Farm & Construction Equipment (a) - 755
Other (1) (2)
------- -------
$2,402 $2,818
======= =======
Operating Income:
Automotive $ 45 $ 22
Energy 104 124
Packaging 75 82
Shipbuilding 35 47
Farm & Construction Equipment (a) 16 61
Other 24 27
------- -------
$ 299 $ 363
======= =======
TOTAL YEAR
1995 1994
-------- --------
Net Sales and Operating
Revenues:
Automotive $2,479 $ 1,989
Energy 1,916 2,378
Packaging 2,752 2,184
Shipbuilding 1,756 1,753
Farm & Construction Equipment (a) - 3,881
Other (4) (11)
------- -------
$8,899 $12,174
======= =======
Operating Income:
Automotive $ 240 $ 223
Energy 333 415
Packaging 430 209
Shipbuilding 160 200
Farm & Construction Equipment (a) 110 326
Other 96 6
------- -------
$1,369 $ 1,379
======= =======
</TABLE>
(a) Following public offerings in June and November of 1994, Tenneco's ownership
in Case Corporation was reduced to approximately 44%; after a third public
offering in August 1995, Tenneco's ownership was approximately 21%. Subsequent
to November 1994, Case is reflected in Tenneco's financial statements using the
equity method of accounting. Therefore in 1995, Case's revenues are not included
with Tenneco's, and Tenneco's equity in Case's net income is included in
operating income.
<PAGE>
13
TENNECO CONSOLIDATED EARNINGS RESULTS
<TABLE>
<CAPTION>
UNAUDITED
FOURTH QUARTER (a)
1995 1994
--------------- ---------------
<S> <C> <C>
Net sales and operating revenues $ 2,402,000,000 $ 2,818,000,000
=============== ===============
Operating income $ 299,000,000 $ 363,000,000
Less:
Interest expense (net of
interest capitalized) 90,000,000 $ 101,000,000
Income tax expense 21,000,000 35,000,000
Minority interest 5,000,000 18,000,000
--------------- ---------------
Income from continuing
operations 183,000,000 209,000,000
Loss from discontinued
operations(b) -- (177,000,000)
--------------- ---------------
Net income 183,000,000 32,000,000
Preferred stock dividends 4,000,000 3,000,000
--------------- ---------------
Net income to common
stock $ 179,000,000 $ 29,000,000
=============== ===============
Average common shares
outstanding 171,500,000 181,100,000
=============== ===============
Earnings (loss) per average common
share:
Continuing operations $ 1.05 $ 1.14
Discontinued operations(b) -- (0.98)
--------------- ---------------
$ 1.05 $ 0.16
=============== ===============
</TABLE>
(a) See Note (a) on "Tenneco Division Earnings Results."
(b) Includes the discontinued operations of the chemicals business.
<PAGE>
14
TENNECO CONSOLIDATED EARNINGS RESULTS
<TABLE>
<CAPTION>
UNAUDITED
TOTAL YEAR(a)
1995 1994
--------------- ---------------
<S> <C> <C>
Net sales and operating revenues $ 8,899,000,000 $12,174,000,000
=============== ===============
Operating income $ 1,369,000,000 $ 1,379,000,000
Less:
Interest expense (net of
interest capitalized) 339,000,000 407,000,000
Income tax expense 273,000,000 301,000,000
Minority interest 22,000,000 30,000,000
--------------- ---------------
Income from continuing
operations 735,000,000 641,000,000
Loss from discontinued
operations(b) -- (189,000,000)
Extraordinary loss, net
of income tax(c) -- (5,000,000)
Cumulative effect of change
in accounting principle(d) -- (39,000,000)
--------------- ---------------
Net income 735,000,000 408,000,000
Preferred stock dividends 12,000,000 12,000,000
--------------- ---------------
Net income to common
stock $ 723,000,000 $ 396,000,000
=============== ===============
Average common shares
outstanding 174,000,000 180,100,000
=============== ===============
Earnings (loss) per average common
share:
Continuing operations $ 4.16 $ 3.49
Discontinued operations(b) -- (1.04)
Extraordinary loss(c) -- (0.03)
Cumulative effect of change in
accounting principle(d) -- (0.22)
--------------- ---------------
$ 4.16 $ 2.20
=============== ===============
</TABLE>
(a) See Note (a) on "Tenneco Division Earnings Results."
(b) Includes the discontinued operations of the chemicals business and brake
business.
(c) Penalty for the early retirement of debt.
(d) Reflects a charge for Postemployment Benefits.
<PAGE>
15
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEET
(MILLIONS)
<TABLE>
<CAPTION>
UNAUDITED
DEC. 31 DEC. 31
1995 1994
------- -------
<S> <C> <C>
Assets
Current Assets $ 3,582 $ 3,895
Investments and Other Assets 3,550 3,420
Plant, Property and
Equipment, net 6,319 5,227
------- -------
Total $13,451 $12,542
======= =======
Liabilities and Shareowners' Equity
Short-term Debt $ 908 $ 545
Other Current Liabilities 2,928 2,509
Long-term Debt 3,751 3,570
Deferred Income Taxes 962 1,459
Deferred Credits and Other Liabilities 1,304 1,092
Minority Interest 320 320
Preferred Stock 130 147
Shareowners' Equity 3,148 2,900
------- -------
Total $13,451 $12,542
======= =======
</TABLE>
<PAGE>
16
TENECO
STATEMENT OF INCOME FROM OPERATIONS WITH SPECIAL ITEMS
FOURTH QUARTER 1995
(MILLIONS EXCEPT EPS)
<TABLE>
<CAPTION>
SPECIAL ITEMS
-----------------------------------------------------------
ENERGY SALE CASE PACKAGING NNS TOTAL
ONGOING REG/LEGAL OF NOTE MOLDED 1996 SPECIAL
EARNINGS PER SHARE OPERATIONS RESERVE KERN SALE RESTR. HEADCOUNT ITEMS TOTAL
---------- --------- ------ ------ --------- --------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Energy $102 ($28) $30 - - - $2 $104
Automotive 45 - - - - - - 45
Packaging 105 - - - (30) - (30) 75
Shipbuilding 39 - - - - (4) (4) 35
Case 16 - - - - - - 16
Other (10) - - 34 - - 34 24
---------- --------- ------ ------ --------- --------- ------- -----
Operating Income 297 (28) 30 34 (30) (4) 2 299
Interest 90 - - - - - - 90
Taxes 27 (8) 12 2 (11) (1) (6) 21
Minority Interest 5 - - - - - - 5
---------- --------- ------ ------ --------- --------- ------- -----
Net Income $175 ($20) $18 $32 ($19) ($3) $8 $183
========== ========= ====== ====== ========= ========= ======= =====
Avg. Shares
Outstanding 171.5 171.5 171.5 171.5 171.5 171.5 171.5 171.5
Earnings Per Share $1.00 ($0.11) $0.11 $0.18 ($0.11) ($0.02) $0.05 $1.05
========== ========= ====== ====== ========= ========= ======= =====
</TABLE>
<PAGE>
17
TENNECO
STATEMENT OF INCOME FROM OPERATIONS WITH SPECIAL ITEMS
FULL YEAR 1995
(MILLIONS EXCEPT EPS)
<TABLE>
<CAPTION>
SPECIAL ITEMS
------------------------------------------------------------------------------------------------
ENERGY AUTO CASE CASE SALE PACKAGING NNS SYLVA ENERGY NNS NOTE/
ONGOING REG/LEGAL START-UP NNS STOCK NOTE OF MOLDED 1996 MILL OZARK ELETSON LAND
OPERATIONS RESERVE COSTS RESTR. GAIN SALE KERN RESTR. HEADCOUNT GAIN SALE START-UP WRITE-OFF
---------- --------- -------- ------ ----- ---- ---- --------- --------- ----- ------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Energy $340 ($30) - - - - $30 - - - ($7) - -
Automotive 250 - (10) - - - - - - - - - -
Packaging 446 - - - - - - (30) - 14 - - -
Shipbuilding 184 - - (6) - - - - (4) - - (14) -
Case 110 - - - - - - - - - - - -
Other (14) - - - 101 34 - - - - - - (25)
---------- --------- -------- ------ ----- ---- ---- --------- --------- ----- ------ -------- ---------
Operating Income 1,316 (30) (10) (6) 101 34 30 (30) (4) 14 (7) (14) (25)
Interest 339 - - - - - - - - - - - -
Taxes 288 (9) (4) (2) - 2 12 (11) (1) 5 (2) (5) -
Minority Interest 22 - - - - - - - - - - - -
---------- --------- -------- ------ ----- ---- ---- --------- --------- ----- ------ -------- ---------
Net Income $667 ($21) ($6) ($4) $101 $32 $18 ($19) ($3) $9 ($5) ($9) ($25)
========== ========= ======== ====== ===== ==== ==== ========= ========= ===== ====== ======== =========
Ave. Shares
Outstanding 174.0 174.0 174.0 174.0 174.0 174.0 174.0 174.0 174.0 174.0 174.0 174.0 174.0
Earnings Per Share $3.76 ($0.12) ($0.03) ($0.02) $0.58 $0.18 $0.11 ($0.11) ($0.02) $0.05 ($0.03) ($0.05) ($0.14)
========== ========= ======== ====== ===== ==== ==== ========= ========= ===== ====== ======== =========
</TABLE>
<TABLE>
<CAPTION>
TOTAL
SPECIAL
ITEMS TOTAL
------- -----
<S> <C> <C>
Energy ($7) $333
Automotive (10) 240
Packaging (16) 430
Shipbuilding (24) 160
Case - 110
Other 110 96
------- -----
Operating Income 53 1,369
Interest - 339
Taxes (15) 273
Minority Interest - 22
------- -----
Net Income $68 $735
======= =====
Ave. Shares
Outstanding 174.0 174.0
Earnings Per Share $0.40 $4.16
======= =====
</TABLE>
