2. SAFE HARBOR
The foregoing presentation contains forward-looking statements that involve risks and uncertainties which could cause the
company’s plans, actions and results to differ materially from its current expectations. Such risks and uncertainties include, but
are not limited to, the following: (i) the general political, economic and competitive conditions in markets and countries where
the company operates, including currency fluctuations; (ii) governmental actions, including the ability to receive regulatory
approvals and the timing of such approvals; (iii) changes in capital availability or costs, including increases in the company’s
costs of borrowing, the amount of the company’s debt, the ability of the company to access capital markets and the credit
ratings of the company’s debt; (iv) changes in automotive manufacturers’ production rates and their actual and forecasted
requirements for the company’s products; (v) the overall highly competitive nature of the automotive parts industry; (vi) the
company’s ability to realize the sales represented by its book of business which is based on a number of factors, including, but
not limited to, the original equipment manufacturers’ programs that have been formally awarded as well as programs where the
company is highly confident that it will be awarded business based on informal customer indications, the company’s status as a
supplier on the existing program, and the relationship with the customer, and anticipated pricing for the applicable program over
its life; (vii) the cyclical nature of the global vehicular industry, including the performance of the global aftermarket sector;
(viii) the cost and outcome of existing and any future legal proceedings, and compliance with changes in regulations;
(ix) workforce factors such as strikes or labor interruptions; (x) material substitutions and increases in the costs of raw
materials; (xi) the company’s continued success in cost reduction and cash management programs; (xii) the company’s ability
to develop and profitably commercialize new products and technologies, and the acceptance of such new products and
technologies by the company’s customers and the market; (xiii) further changes in the distribution channels for the company’s
aftermarket products, further consolidations among automotive parts customers and suppliers, and product warranty costs;
(xiv) changes by the Financing Accounting Standards Board or other accounting regulatory
bodies of authoritative generally accepted accounting principles or policies; (xv) acts of
war, riots or terrorism, including, but not limited to the events taking place in the Middle
East; and (xvi) the timing and occurrence (or non-occurrence) of transactions and
events which may be subject to circumstances beyond the control of the company.
4815-CORP-11/08 (2)
2
3. GLOBAL SUPPLIER OF EMISSION
AND RIDE CONTROL SYSTEMS
Revenues (Millions) $4,708 $4,619
Total Emission Control/
68/32 70/30
Ride Control Balance
Original Equipment/
81/19 82/18
Aftermarket Balance
“EBIT” is income before interest expense, taxes and minority interest.
4815-CORP-11/08 (3)
3
4. LEADING MARKET POSITIONS – 2007
Regions/
Market Position *
Product Category Key Competitors in market-share order
North America #1 EMCON Technologies, Faurecia
Original Equipment
Emission Control Europe #1 Faurecia, Eberspächer, EMCON Technologies
North America #1 Delphi, Hitachi, ZF Sachs
Original Equipment
Ride Control Europe #2 ZF Sachs, KYB, Delphi
North America #1 IMCO, AP Exhaust Products
Aftermarket
Emission Control Europe** #1 Klarius Group, Bosal
North America #1 KYB, ArvinMeritor
Aftermarket
Ride Control Europe ** #1 ZF Sachs, KYB
* Tenneco Estimates
** Excludes OE Service
4815-CORP-11/08 (4)
4
5. BALANCED CUSTOMER MIX
Top Customers as a % of 2007 Total Revenues
4815-CORP-11/08 (5)
5
6. PLATFORM MIX
EC - Emission Control RC - Ride Control EL - Elastomers
4815-CORP-11/08 (6)
6
7. FINANCIAL PERFORMANCE – YTD SEPTEMBER 30, 2008
$ Millions, Except as Noted
YTD Sept. YTD Sept. % Change
B/(W)
2008 2007
Value-added Revenue $3,513 $3,386 3.8%
Substrate Sales $1,195 $1,233 (3.1%)
Total Gross Margin $701 $750 (6.5%)
Adjusted SGA&E (% of Total Sales) 8.1% 8.2% 1.2%
Adjusted EBITDA* $333 $371 (10.2%)
Adjusted EBIT $165 $221 (25.3%)
Adjusted EPS ($) $0.92 $1.48 (37.8%)
Cash Flow from Operations $34 ($41) NM
Net Debt/Adjusted EBITDA* (LTM) 3.1 2.9 (6.9%)
* Including minority interest. See reconciliation of GAAP adjustments beginning on slide 31.
4815-CORP-11/08 (7)
7
8. RESPONSE TO CURRENT ECONOMIC CONDITIONS
Restructuring actions
– Eliminating 1,100 jobs worldwide (600 hourly; 500 salaried),
closing four NA plants and restructuring another
– Latest initiatives will generate about $64 million in annual savings;
payback period less than one year
– $40 million in Q4:08 of which $35 million is cash
– $20 million in charges throughout 2009, $9 million cash
YTD global workforce reduced by about 10%, including 1,150
employees laid off earlier in 2008
Lower production levels reducing cash required for receivables
and inventories; focused on efficiency through DSO, DOH, DPO
Strategies being employed to minimize capital spending
4815-CORP-11/08 (8)
8
9. STRATEGIC INITIATIVES
• Emissions technologies for environmental mandates
• Adjacent markets for new revenue opportunities
• Advanced technology for ride-control
performance and safety
• Asia for rapid growth
• Growth OEMs for enhanced customer mix
• Aftermarket service products for incremental sales
• Low-cost country strategy
• Shrink asset base with Lean/Six Sigma
• Optimize global footprint
• Target net debt / adjusted EBITDA* ratio of 2.0x
• Capitalize on EVA discipline
* Including minority interest.
4815-CORP-11/08 (9)
9
10. GLOBAL OE REVENUE PROJECTION
• Global light-vehicle production CAGR of 3%
• Market share expansion
• Emissions technologies for environmental mandates
• Adjacent markets for new revenue opportunities
• Advanced technology for ride-control performance
and safety
• Asia for rapid growth
• Growth OEMs for enhanced customer mix
4815-CORP-11/08 (10)
10
11. MARKET DRIVEN GROWTH OPPORTUNITIES
Emissions Technologies for Environmental Mandates CVS - Commercial Vehicle Systems
* Phased in
LVS - Light Vehicle Systems
** Estimated date
4815-CORP-11/08 (11)
11
12. MARKET DRIVEN GROWTH OPPORTUNITIES
Capitalizing on Stricter LVS/CVS Emission Regulations; Data Excludes Off-Road Vehicles
• MECA chart represents total engine-based and aftertreatment emission content
• Aftertreatment represents approximately 70% of the growth generated over the 15-year period
• Aftertreatment estimated CAGR of 7.2% and 8.2% for the base and alternative scenarios,
respectively
• MECA’s alternative diesel scenario driven by volatile oil prices and global warming concerns
4815-CORP-11/08 (12)
12
13. NON-ROAD DIESEL EQUIPMENT
OEMs – ElectroMotive Division,
Two major markets
GE, Cummins, MAN, Caterpillar, Penta
- Construction
- Agriculture, Forestry, Mining
Competitors: No aftertreatment
Construction OEMs – Caterpillar, incumbents
Komatsu, Volvo, Hitachi, CNH, Terex,
2008 – 1st legislation to require retrofit
Deere, Liebherr-International, Kobe
to existing engines – DPF – Tiers 0-2
Steel, Ingersoll-Rand, and JCB
2013 – California; 2015 – Tier 4 Federal
AG OEMs – Deere & Company, CNH
Global, AGCO, Kubota, Yanmar, CLAAS,
Without regulations, L&M vessels
Iseki, Same Deutz-Fahr, and Caterpillar
would account for about 35% of
mobile pollution by 2020
Competitors: No OE aftertreatment
incumbents, only niche retrofit
suppliers
Regulations: 2011-2014 for U.S.,
Japan, Europe
4815-CORP-11/08 (13)
13
15. ADVANCED TECHNOLOGY FOR SAFETY RATINGS
Full Suite of Ride Control Technologies “One Stop Shop”
• Silent block bushings
• Shock Absorbers
• Struts • Torque Rods
• CES - Computerized Electronic
• Spring Eye bushings
Suspension
• Coil and Leaf Springs • Gripper stabilizer bar assemblies
• Cab shock absorbers
• Engine mounts
• Seat shock absorbers
• Self-Lubricated elastomers
• Heavy Duty Truck & Train Shocks
• Top mounts • Power steering isolators
• Spring and shock/strut modules
• Fluid-damped elastomers
• Corner modules
• Suspension links
• Axle modules
• Performance Aftermarket Suspension • Suspension bushings
• Kinetic passive stability systems
4815-CORP-11/08 (15)
15
16. ADVANCED TECHNOLOGY FOR SAFETY RATINGS
Computerized Electronic Suspension
• Awarded models:
- Volvo S60, V70, XC70, S80;
Damping Response Response to
- Audi A6, Allroad;
Range Time (avg) Electronic Failure Cost
- Ford S-Max, Galaxy, Mondeo
10
Tenneco
High Tuneable 100% - Mercedes C-Class
milliseconds
CES
- Volkswagen Passat
15
ZF-Sachs
- Three additional European OEM
Medium Tuneable 100%
milliseconds
CDC
platforms
Bilstein 30
Medium Fixed – Hard 100%
• Selling price about $90 vs. $12
milliseconds
DampTronic
for standard shock
Delphi 6
High No 150%
milliseconds
MagneRide
• Goal: expand Tenneco market
share four times by 2011
4815-CORP-11/08 (16)
16
17. EMERGING BRIC ECONOMIES:
A SIGNIFICANT LONG-TERM OPPORTUNITY
* CAGR Source: Global Insight, World Car Industry Production Forecast, Sept. 2008
4815-CORP-11/08 (17)
17
18. TARGET GROWING OEMs
Growth OEMs Enhance Customer Mix
Expanding presence with Japanese OEMs
- Won $200MM in annualized new business in 2007
• Platforms launching between 2008-2010
- 20% of new business in BRIC countries
Japanese OEMs = 17% of 2007 NAOE
revenues; 11% of global OE revenues
Strong platforms and new launches
are driving growth
4815-CORP-11/08 (18)
18
19. GLOBAL OE REVENUE PROJECTION
11-13% CAGR 2007-2012
Growth plan reflects:
Oct. ‘08 global production forecast * for 2012 LVS & CVS virtually
unchanged from Jan. ‘08 forecast
– Assumes economic recovery prior to 2011
Adjacent markets for new revenue opportunities
– Commercial Vehicle on-highway and off-road more than 50% of projected growth
– Driven by global diesel emission regulations
– Global off-road business with Caterpillar and other OEMs
• Off-road = construction, agriculture, mining, forestry
New customers and vehicle-fleet growth in BRIC economies
Advanced technology and added content to meet emission
regulations
New platforms for electronic shocks
Expanded business with growth OEMs
* Global Insight
4815-CORP-11/08 (19)
19
20. INTRODUCE NEW AFTERMARKET PRODUCTS
Aftermarket Delivers Excellent Profitability and Cash Generation
Leadership in the replacement-parts market reflects strong
global brands, new product lines and efficient distribution
capabilities
- Key to this segment’s growth:
• Capitalizing on OE/aftermarket synergies
• Standardizing components to consolidate manufacturing
• Introducing premium replacement parts from products developed for the OE market
• Increasing our value with the automakers by using aftermarket intelligence to develop
improved original-equipment products
Adding more frequently replaced
service parts, like Monroe brake pads,
to portfolio
4815-CORP-11/08 (20)
20
22. LOW-COST COUNTRY STRATEGY
Manufacturing
• Low-cost countries
- China - S. America
- Thailand
• Eastern Europe –
- India - E. Europe
- Mexico
- Taiwan Poland, Czech Republic, Russia
• Low-cost sourcing: direct materials,
indirect materials, capital, tooling
• Asia Pacific –
• Low-cost sourcing introduced for
China, India, Thailand, S. Korea
global programs
• Global sourcing teams embedded in
low-cost countries
• North America – Mexico
Engineering
• Poland (2)
• China
4815-CORP-11/08 (22)
22
23. TARGET INVESTMENT-GRADE
NET DEBT/ADJUSTED EBITDA* RATIO OF 2.0X
$ in Millions
See reconciliation of GAAP adjustments beginning on slide 31.
* Including minority interest.
4815-CORP-
11/08 (23)
23
24. CONSERVATIVE DEBT PROFILE
Substantial room on debt covenant ratios
Nov. 2007: expanded cap on factoring receivables
to $250 million
Sept. 2008: expanded global capacity of securitized
receivables to $310 million
First significant debt maturity 2010 of $54 million
(Term Loan A amortization payment)
4815-CORP-11/08 (24)
24
26. DEBT COVENANT COMPLIANCE –
SEPT. 30, 2008
Leverage ratio (tightest covenant)
– Result: 3.27x
– Test: no more than 4.00x
Interest coverage ratio
– Result: 4.08x
– Test: maintain above 2.10x
Cushions against tightest covenants:
– EBITDA (including minority interest) is $79mm
– Debt is $318mm
No ratings triggers or net worth tests in covenants
4815-CORP-11/08 (26)
26
27. GENERATING CASH FLOW
Minimizing capital spending
Prioritizing engineering projects
Optimizing operations for near- and long-term outlook
– Flex operations to lower production levels
– Reduce variable and fixed costs
– Reduce SG&A expenses
– Focus on working capital efficiency
4815-CORP-11/08 (27)
27
28. INVESTMENT HIGHLIGHTS
Advanced technology leadership
Well positioned for technology-driven growth
Balanced mix of customers, geographies, markets, products, platforms
Leading Tier 1 OE supplier positioned on top selling platforms
No. 1 aftermarket supplier driven by leading brands
Demonstrated commitment to balance sheet strength and
financial stability
Experienced management team
4815-CORP-11/08 (28)
28
29. GLOBAL OE REVENUE ESTIMATE
Tenneco’s global OE revenue estimate is based on original equipment manufacturers’ programs that have
been formally awarded to the company; programs where the company is highly confident that it will be
awarded business based on informal customer indications consistent with past practices, Tenneco’s status
as supplier for the existing program and its relationship with the customer; and the actual original
equipment revenues achieved by the company for each of the last several years compared to the amount of
those revenues that the company estimated it would generate at the beginning of each year. The company’s
revenue estimate is subject to increase or decrease due to changes in customer requirements, customer
and consumer preferences, and the number of vehicles actually produced by the company’s customers.
The company’s revenue estimate is as of January 2008 and the company does not intend to update the
estimate due to these changes. In addition, the company’s revenue estimate is based on its anticipated
pricing for each applicable program over its life. However, the company is under continuing pricing
pressures from its OE customers. The company does not intend to update the amounts shown above for any
price changes. Finally, for the company’s foreign operations, its revenue estimate assumes a fixed foreign
currency value. This value is used to translate foreign business to the US dollar. Currency in the company’s
foreign operations is subject to fluctuation based on the economic conditions in each of its foreign
operations. The company does not intend to update its revenue estimate due to these fluctuations.
See “Cautionary Statement for Purposes of the ‘Safe Harbor’ Provisions of the Private Securities Litigation
Reform Act of 1995” and “Risk Factors” in the company’s Annual Report on Form 10-K for the year ended
December 31, 2007 for additional information regarding the company’s revenue estimate.
4815-CORP-11/08 (29)
29
30. FINANCIAL RESULTS DISCLAIMER
• Use of Non-GAAP Financial Information
In addition to the results reported in accordance with accounting principles generally accepted in
the United States (“GAAP”) included in this presentation, the company has provided information
regarding certain non-GAAP financial measures. These measures include Income Before Interest
Expense, Income Taxes, Minority Interest and Depreciation and Amortization (“EBITDA*”), Working
Capital, Net Debt, Adjusted EBITDA*, Adjusted Selling, General, Administrative and Engineering
Expense (“Adjusted SGA&E”), Adjusted Income Before Interest Expense, Income Taxes and
Minority Interest (“Adjusted EBIT”), Adjusted Net Income and Adjusted Earnings Per Share.
Reconciliations of these non-GAAP financial measures to the comparable GAAP measure are
included in this presentation.
* Including minority interest.
4815-CORP-11/08 (30)
30
31. RECONCILIATION OF NON-GAAP RESULTS
EBITDA*
Sept. Sept.
YTD 08 YTD 07 2007 2006 2005 2004 2003 2002 2001 2000
Net income (loss) $ (117) $ 67 $ (5) $ 49 $ 56 $ 9 $ 25 $(189 ) $ (131) $ (41)
Cumulative effect of change - - - - - - - 218 - -
in accounting principle,
net of income tax
Minority interest 8 8 10 6 2 4 6 4 1 2
Income tax expense (benefit) 163 22 83 5 26 (21) (6) (6) 50 (27)
Interest expense
(net of interest capitalized) 88 112 164 136 133 178 146 140 170 188
EBIT, income before interest
expense, income taxes &
minority interest (GAAP measure) 142 209 252 196 217 170 171 167 90 122
Depreciation & amortization
of other intangibles 168 150 205 184 177 177 163 144 153 151
Total EBITDA* $ 310 $ 359 $ 457 $ 380 $ 394 $ 347 $ 334 $ 311 $ 243 $ 273
EBITDA* represents income before interest expense, income taxes, minority interest and depreciation and amortization. EBITDA* is not a calculation based upon generally accepted
accounting principles. The amounts included in the EBITDA* calculation, however, are derived from amounts included in the historical statements of income. In addition, EBITDA*
should not be considered as an alternative to net income or operating income as an indicator of the company’s operating performance, or as an alternative to operating cash flows as
a measure of liquidity. Tenneco has presented EBITDA* because it regularly reviews EBITDA* as a measure of the company’s performance. In addition, Tenneco believes that its
security holders utilize and analyze its EBITDA* for similar purposes. Tenneco also believes EBITDA* assists investors in comparing a company’s performance on a consistent basis
without regard to depreciation and amortization, which can vary significantly depending upon many factors. However, the EBITDA* measure presented may not always be
comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.
* Including minority interest.
4815-CORP-11/08 (31)
31
32. FINANCIAL ACCOMPLISHMENTS –
RECONCILIATION OF NON-GAAP RESULTS
$ Millions
Total Revenue, Unaudited
Sept. YTD Sept. YTD
2008 2007 2007 2006
Total Revenue $ 4,708 $ 4,619 $ 6,184 $ 4,682
Substrate Sales $ 1,195 $ 1,233 $ 1,673 $ 927
Value-added Revenue $ 3,513 $ 3,386 $ 4,511 $ 3,755
(1) Generally Accepted Accounting Principles
(2) Tenneco presents the above reconciliation of GAAP to non-GAAP revenue measures primarily to reflect the results for the full years 2006 and 2007 in a manner that allows
a better understanding of our operational results compared to our value-added revenue by excluding the impact of substrate sales, which generally carry lower margins.
4815-CORP-11/08 (32)
32
33. FINANCIAL ACCOMPLISHMENTS – YTD SEPTEMBER 30, 2008
RECONCILIATION OF NON-GAAP RESULTS
$ Millions,
EBITDA* EPS
SGA&E EBIT Net Income
Unaudited Sept. YTD Sept. YTD Sept. YTD Sept. YTD Sept. YTD Sept. YTD Sept. YTD Sept. YTD Sept. YTD Sept. YTD
2008 2007 2008 2007 2008 2007 2008 2007 2008 2007
Financial
Measures $393 $386 $310 $359 $142 $209 $(117) $67 $(2.53) $1.42
Adjustments
(reflect non-GAAP (1)
measures):
Restructuring
and restructuring
related expenses (7) (1) 16 7 16 7 11 5 0.23 0.11
Aftermarket
changeover costs (7) (5) 7 5 7 5 4 3 0.09 0.06
Charges related to
refinancing activities – – – – – – – 4 – 0.07
Tax adjustments – – – – – – 146 (8) 3.13 (0.18)
Non-GAAP financial
$379 $380 $333 $371 $165 $221 $44 $71 $0.92 $1.48
measures(2)
(1) Generally Accepted Accounting Principles
(2) Tenneco presents the above reconciliation of GAAP to non-GAAP earnings measures primarily to reflect the results for the first nine months of 2008 and 2007 in a manner that allows
a better understanding of the results of operational activities separate from the financial impact of decisions made for the long-term benefit of the company. Adjustments similar
to the ones reflected above have been recorded in earlier periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. Using only the
non-GAAP earnings measures to analyze earnings would have material limitations because its calculation is based on the subjective determinations of management regarding the
nature and classification of events and circumstances that investors may find material. Management compensates for these limitations by utilizing both GAAP and non-GAAP
earnings measures reflected above to understand and analyze the results of the business. The company believes investors find the non-GAAP information helpful in understanding
the ongoing performance of operations separate from items that may have a disproportionate positive or negative impact on the company’s financial results in any particular period.
The company plans to continue making this adjustment for the remainder of 2008 to enhance investors’ understanding of the comparability between 2008 and 2007 results.
* Including minority interest.
4815-CORP-11/08 (33)
33
34. ADJUSTED EBITDA*
RECONCILIATION OF NON-GAAP RESULTS
Sept. Sept.
$ Millions, Unaudited
YTD 08 YTD 07 2007 2006 2005 2004 2003 2002 2001 2000
Financial measures $ 310 $ 359 $ 457 $ 380 $ 394 $ 347 $ 334 $ 311 $ 243 $ 273
Adjustments (reflect
non-GAAP(1) measures):
Restructuring & restructuring
related expenses 16 7 25 27 12 40 8 2 51 61
New aftermarket customer
changeover costs 7 5 5 6 10 8 - - - -
Reserve for receivables
from former affiliate - - - 3 - - - - - -
Change to defined
contribution pension plan - - - (7 ) - - - - - -
Consulting fees indexed
to stock price - - - - - 4 - - - -
Gain on sale of York - - - - - - - (11) - -
Other non-operational items - - - - - - - 2 4 4
Non-GAAP financial
measures (2) $ 333 $ 371 $ 487 $ 409 $ 416 $ 399 $ 342 $ 304 $ 298 $ 338
(1) Generally Accepted Accounting Principles
(2) Tenneco presents the above reconciliation of non-GAAP results in order to reflect the results for full years 2000, 2001, 2002, 2003, 2004, 2005, 2006 and 2007, and first nine months of 2008
and 2007 in a manner that allows a better understanding of the results of operational activities separate from the financial impact of decisions made for the long-term benefit of the company.
Adjustments similar to the ones reflected above have been recorded in earlier periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. Using
only the non-GAAP earnings measure to analyze earnings would have material limitations because its calculation is based on the subjective determinations of management regarding the
nature and classification of events and circumstances that investors may find material. Management compensates for these limitations by utilizing both GAAP and non-GAAP earnings measures
reflected above to understand and analyze the results of the business. The company believes investors find the non-GAAP information helpful in understanding the ongoing performance of
operations separate from items that may have a disproportionate positive or negative impact on the company’s financial results in any particular period.
* Including minority interest.
4815-CORP-11/08 (34)
34
35. NET DEBT / ADJUSTED EBITDA*
RECONCILIATION OF NON-GAAP RESULTS
$ Millions, Unaudited
Sept. Sept.
YTD 08 YTD 07 2007 2006 2005 2004 2003 2002 2001 2000
Total debt $1,524 $1,536 $1,374 $1,385 $1,383 $1,421 $1,430 $1,445 $1,515 $1,527
Cash and
cash equivalents 127 203 188 202 141 214 145 54 53 35
Debt net of
cash balances 1,397 1,333 1,186 1,183 1,242 1,207 1,285 1,391 1,462 1,492
Adjusted EBITDA* $ 449(1) $ 460(1) $ 487 $ 409 $ 416 $ 399 $ 342 $ 304 $ 298 $ 338
Ratio of net debt to
adjusted EBITDA* 3.1x (1) 2.9x (1) 2.4x 2.9x 3.0x 3.0x 3.8x 4.6x 4.9x 4.4x
Note: We present debt net of cash balances because management believes it is a useful measure of our credit position and progress toward
reducing leverage. The calculation is limited in that we may not always be able to use cash to repay debt on a dollar-for-dollar basis.
(1) Last-twelve-months calculated.
* Including minority interest.
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