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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 11-K
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD __________ TO __________
COMMISSION FILE NUMBER 1-12387
A. Full title of the plan and address of the plan, if different from that
of the issuer named below:
THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR SALARIED EMPLOYEES
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
TENNECO AUTOMOTIVE INC.
500 NORTH FIELD DRIVE
LAKE FOREST, IL 60045
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Tenneco Automotive Inc. Benefits Committee:
We have audited the accompanying statements of net assets available for plan
benefits of THE TENNECO AUTOMOTIVE EMPLOYEE STOCK OWNERSHIP PLAN FOR SALARIED
EMPLOYEES as of December 31, 2001 and 2000, and the related statement of changes
in net assets available for plan benefits for the year ended December 31, 2001.
These financial statements and the supplemental schedule referred to below are
the responsibility of the Tenneco Automotive Inc. Benefits Committee. Our
responsibility is to express an opinion on these financial statements and
supplemental schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits 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 net assets available for plan benefits of The Tenneco
Automotive Employee Stock Ownership Plan for Salaried Employees as of December
31, 2001 and 2000, and the changes in net assets available for plan benefits for
the year ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) as of December 31, 2001, included as Schedule I, is presented
for purposes of additional analysis and is not a required part of the basic
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
Chicago, Illinois
May 31, 2002
THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 2001 AND 2000
2001 2000
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ASSETS:
Investments, at fair value-
Corporate securities-
Pactiv Corporation common stock $ 14,591,308 $ 13,384,361
Tenneco Automotive Inc. common stock 8,112,979 5,581,011
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22,704,287 18,965,372
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Collective trust funds-
Barclays Global Investors Equity Index Fund T 14,443,134 18,432,984
Barclays Global Investors U.S. Debt Market Index Fund K
2,604,856 1,995,138
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17,047,990 20,428,122
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Registered investment companies-
Fidelity Growth Company Fund 23,388,891 35,820,390
Fidelity Low Priced Stock Fund 1,045,630 --
INVESCO Total Return Fund 2,930,929 3,113,216
Putnam New Opportunities Fund 7,682,991 12,551,084
Templeton Foreign Fund 2,181,764 2,491,171
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37,230,205 53,975,861
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Nations Cash Reserves 29,642,286 33,467,829
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Bankers Trust Pyramid Directed Account Cash Fund 1,272,623 1,097,034
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Participant loans receivable 1,833,882 2,748,114
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Total investments 109,731,273 130,682,332
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Receivables-
Employee contributions 271,390 309,036
Employer contributions 348,619 269,886
Accrued interest and dividends 59,883 192,679
Due from broker -- 184,536
Other -- 47,519
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Total receivables 679,892 1,003,656
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Total assets 110,411,165 131,685,988
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LIABILITIES:
Due to broker (50,052) (369,315)
Administrative expenses (200,208) (82,920)
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Total liabilities (250,260) (452,235)
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NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 110,160,905 $ 131,233,753
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The accompanying notes to financial statements
are an integral part of these financial statements.
THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR SALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2001
ADDITIONS:
Dividends $ 336,245
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Interest 1,304,252
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Repayment of loan interest 178,293
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Net appreciation (depreciation) in fair value of investments-
Corporate securities 1,987,058
Collective trust funds (1,958,542)
Registered investment companies (13,280,279)
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Total net depreciation in fair value of
investments (13,251,763)
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Net investment loss (11,432,973)
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Contributions-
Employee 7,509,546
Employer 4,793,938
Rollover 159,715
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Total contributions 12,463,199
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Transfer from The Tenneco Automotive Employee Stock Ownership Plan
for Hourly Employees 172,592
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Total additions 1,202,818
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DEDUCTIONS:
Benefits paid to participants (21,424,251)
Administrative expenses (851,415)
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Total deductions (22,275,666)
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NET DECREASE (21,072,848)
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NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 131,233,753
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End of year $ 110,160,905
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The accompanying notes to financial statements
are an integral part of this financial statement.
THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE
DECEMBER 31, 2001 AND 2000
1. DESCRIPTION OF THE TENNECO AUTOMOTIVE EMPLOYEE STOCK OWNERSHIP PLAN FOR
SALARIED EMPLOYEES
The following description of The Tenneco Automotive Employee Stock
Ownership Plan for Salaried Employees (the "Plan") provides only general
information. Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan established by Tenneco Automotive
Inc. (the "Company") on February 1, 2000. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
Effective February 1, 2000, Tenneco Automotive Inc. employees who were
participants in the Pactiv Corporation Thrift Plan (the "Pactiv Plan") had
their participant account balances transferred to the Plan.
ELIGIBILITY AND CONTRIBUTIONS
Salaried employees are eligible to participate in the Plan the first day
of the month following the Company's receipt of an application for
enrollment or two complete calendar months of employment provided the
employee has not waived automatic enrollment.
Any employee who was enrolled in the Pactiv Plan as of January 1, 2000,
and who continued to be an active employee of the Company was
automatically enrolled in the Plan effective February 1, 2000.
An employee is automatically enrolled in the Plan upon completion of the
eligibility requirements at a pretax contribution rate of 4% of
compensation, unless the employee elects to waive automatic enrollment
prior to the effective date. Participants can elect to increase the pretax
deferral rate from 4% up to 16%, in any whole percentage, at any time.
Total pretax contributions were limited to $10,500 for 2001 and 2000.
Effective January 1, 2001, the Company's matching contribution was reduced
to 75% (previously 100%) of the participant's deferral contributions not
to exceed 8% of the participant's compensation. The Company may also make
discretionary contributions to participants' accounts.
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Company contributions are made in the Company's common stock. The
Company's contributions and the related earnings/losses must remain in the
form of the Company's common stock until the participant reaches age 55 or
terminates employment and requests a total distribution.
INVESTMENT OPTIONS
Each participant has the right upon enrollment to select the funds in
which the balance in the participant's account, excluding Company
contributions, will be invested. During 2001, participants can invest in
Company common stock, two collective trust funds, five registered
investment companies and a money market fund.
Shares of Pactiv Corporation common stock, transferred from the Pactiv
Plan are held in a separate fund; however, participants cannot direct
contributions or fund transfers to this fund.
VESTING
All participants are 100% vested in their entire account balance in the
Plan.
WITHDRAWALS AND PARTICIPANT LOANS
Upon retirement or other termination of employment, the participant may
receive the value of his account as a lump-sum distribution. A participant
who has attained the age of 55 may elect to make an in-service withdrawal
of the Company's matching account. In-service withdrawals of deferral
contributions may be made by participants who have attained age 59 1/2.
Active participants and certain other individuals who have not had a loan
during the previous three months may obtain a loan with a term not to
exceed 54 months from his account. The borrower may have only one loan
outstanding at any time, and the amount of the loan may not be less than
$1,000 and shall not exceed the lesser of (a) $50,000 or (b) one-half the
borrower's account balance. The loan interest rate is equal to The Wall
Street Journal prime rate. Loan principal and interest repayments are made
through payroll deductions.
ADMINISTRATION
The Plan is administered by the Tenneco Automotive Inc. Benefits Committee
(the "Committee"). Bankers Trust Company served as trustee through January
1, 2002. Effective January 2, 2002, Putnam Fiduciary Trust Company serves
as the trustee.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are presented on the accrual basis of
accounting. The investments of the Plan are generally reported at quoted
market value. Collective trust funds are valued by reference to published
market data, as available, of the underlying assets. Participant loans
receivable are reported at cost which approximates fair value.
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EARNINGS
Individual participants' accounts are credited daily with investment
earnings and losses. Investment earnings and losses are credited based
upon the number of units held in an individual participant's account and
the fair value per unit based upon the net asset value or share price of
the underlying securities at the close of business each day.
EXPENSES
Substantially all administrative expenses are paid by the Plan. These
expenses include record-keeping, audit and trustee fees.
USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States requires management to
use estimates and assumptions that affect the accompanying financial
statements and disclosures. Actual results could differ from those
estimates.
3. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets relating to the nonparticipant-directed
investments (i.e., the Company's matching contributions) is as follows as
of December 31, 2001 and 2000:
2001 2000
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Tenneco Automotive Inc. common stock $ 6,013,015 $ 4,343,812
Bankers Trust Pyramid Directed Account Cash Fund
139,792 87,313
Employer's contribution receivable 348,619 269,886
Due to broker -- (8,119)
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Net assets $ 6,501,426 $ 4,692,892
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The significant components of the change in net assets relating to the
nonparticipant-directed investments for the year ended December 31, 2001,
are as follows:
Interest and dividends $ 6,317
Net depreciation in fair value of corporate securities (2,439,270)
Employer contributions 4,793,938
Net interfund transfers 229,685
Benefits paid to participants (796,950)
Transfer from The Tenneco Automotive Employee
Stock Ownership Plan for Hourly Employees 14,814
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Increase in net assets $ 1,808,534
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4. RISKS AND UNCERTAINTIES
The Plan provides for investment in corporate securities, collective trust
funds, registered investment companies and money market funds. Investment
securities, in general, are
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exposed to various risks, such as interest rate, credit and overall market
volatility risk. Due to the level of risk associated with certain
investment securities, it is reasonably possible that changes in the value
of investment securities will occur in the near term.
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for Plan
benefits per the financial statements to the Form 5500 as of December 31,
2000:
Net assets available for Plan benefits per the
financial statements $ 131,233,753
Less- Amounts allocated to withdrawing
participants at December 31, 2000 (176,681)
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Net assets available for Plan benefits per the
Form 5500 $ 131,057,072
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The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the year ended December 31,
2001:
Benefits paid per the financial statements $ 21,424,251
Less- Amounts allocated to withdrawing participants at
December 31, 2000 (176,681)
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Benefits paid per the Form 5500 $ 21,247,570
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Amounts allocated to withdrawing participants are recorded on the Form
5500 for benefits paid that have been processed and approved for payment
prior to December 31, but not paid as of that date.
6. FEDERAL INCOME TAXES
The Internal Revenue Service issued a determination letter dated April 30,
2002, stating that the Plan was designed in accordance with applicable
Internal Revenue Code of 1986, as amended (the "Code"), requirements as of
that date. However, the Plan administrator believes that the Plan is
currently designed and is being operated in compliance with the applicable
requirements of the Code. Therefore, the Plan administrator believes that
the Plan was qualified and the related trust was tax-exempt as of the
financial statement dates.
7. TERMINATION OF THE PLAN
Although the Company intends to continue the Plan indefinitely, they
reserve the right to terminate the Plan. Any assets which are not
allocated to the accounts of participants upon the complete termination of
the Plan, or complete discontinuance of contributions, will be allocated
among all of the participants' accounts pro rata on the basis of their
respective balances.
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8. PARTY IN INTEREST
The Plan invests in shares of the Bankers Trust Pyramid Directed Account
Cash Fund which is managed by Bankers Trust Company. Bankers Trust Company
was the trustee during 2001 and, therefore, these transactions qualify as
party-in-interest transactions.
The Plan also invests in shares of Tenneco Automotive Inc. common stock.
Tenneco Automotive Inc. is the Plan's sponsor and, therefore, these
transactions qualify as party-in-interest transactions.
9. SUBSEQUENT EVENT
Effective January 1, 2002, the Company's matching contribution was reduced
to 50% of the participant's deferral contributions not to exceed 8% of the
participant's compensation. Company contributions made on or after this
date will be made in cash.
All Company contributions (and related earnings) made prior to January 1,
2002, will remain in the form of the Company's common stock until the
participant reaches age 55 or terminates employment and requests a total
distribution.
SCHEDULE I
THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR SALARIED EMPLOYEES
SCHEDULE H, LINE 4i--SCHEDULE OF ASSETS
(HELD AT END OF YEAR)
AS OF DECEMBER 31, 2001
CURRENT
IDENTITY OF ISSUE DESCRIPTION OF ASSET COST VALUE
---------------------------------------- -------------------------------------------- ------------ -------------
Pactiv Corporation Pactiv Corporation common stock ** $ 14,591,308
Tenneco Automotive Inc.* Tenneco Automotive Inc. common stock $32,659,907 8,112,979
Barclays Global Investors Barclays Global Investors Equity Index
Fund T ** 14,443,134
Barclays Global Investors Barclays Global Investors U.S. Debt
Market Index Fund K ** 2,604,856
Fidelity Investment Institutional
Services Co. Fidelity Growth Company Fund ** 23,388,891
Fidelity Investment Institutional
Services Co. Fidelity Low Priced Stock Fund ** 1,045,630
INVESCO Funds Group, Inc. INVESCO Total Return Fund ** 2,930,929
Putnam Management Company Putnam New Opportunities Fund ** 7,682,991
Franklin Templeton Templeton Foreign Fund ** 2,181,764
Bank of America , N.A. Nations Cash Reserves ** 29,642,286
Bankers Trust Company* Bankers Trust Pyramid Directed Account
Cash Fund 1,272,623 1,272,623
The Tenneco Automotive Employee Stock
Ownership Plan for Salaried Participant loans receivable (interest
Employees* rates ranging from 4.75% to 9.50%) ** 1,833,882
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Total assets (held
at end of year) $109,731,273
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*Indicated party-in-interest.
**Cost omitted for participant-directed investments.
The accompanying notes are an integral part of this schedule.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities and Exchange Act of
1934, the Tenneco Automotive Inc. Benefits Committee has duly caused this annual
report to be signed on its behalf by the undersigned hereunder duly authorized.
THE TENNECO AUTOMOTIVE EMPLOYEE
STOCK OWNERSHIP PLAN FOR SALARIED
EMPLOYEES
Date: May 31, 2002 /s/ RICHARD P. SCHNEIDER
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RICHARD P. SCHNEIDER
CHAIRMAN OF TENNECO AUTOMOTIVE INC.
BENEFITS COMMITTEE
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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23.1 Consent of Independent Public Accountants
99.1 Representation regarding Arthur Andersen LLP