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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 FROM _________ 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 HOURLY 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 Benefits Committee:
We have audited the accompanying statements of net assets available for plan
benefits of THE TENNECO AUTOMOTIVE EMPLOYEE STOCK OWNERSHIP PLAN FOR HOURLY
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 schedules 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 schedules 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 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 net assets available for plan benefits of The Tenneco
Automotive Employee Stock Ownership Plan for Hourly 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 schedules of assets
(held at end of year) as of December 31, 2001, included as Schedule I, and
reportable transactions for the year ended December 31, 2001, included as
Schedule II, are presented for purposes of additional analysis and are not a
required part of the basic financial statements but are 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. These supplemental schedules have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, are 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 HOURLY 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 $ 2,242,535 $ 2,109,517
Tenneco Automotive Inc. common stock 5,851,856 3,854,631
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8,094,391 5,964,148
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Collective trust funds-
Barclays Global Investors Equity Index Fund T 9,543,888 10,953,457
Barclays Global Investors U.S. Debt Market Index Fund K 5,941,032 4,978,706
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15,484,920 15,932,163
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Registered investment companies-
Fidelity Growth Company Fund 8,324,859 11,348,571
Fidelity Low Priced Stock Fund 146,119 --
INVESCO Total Return Fund 1,371,836 1,344,694
Putnam New Opportunities Fund 4,049,875 5,557,031
Templeton Foreign Fund 365,279 348,093
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14,257,968 18,598,389
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Nations Cash Reserves 8,137,453 6,245,828
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Bankers Trust Pyramid Directed Account Cash Fund 587,316 744,989
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Participant loans 3,779,354 3,371,824
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Total investments 50,341,402 50,857,341
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Receivables-
Employee contributions 125,708 142,489
Employer contributions 262,867 261,643
Accrued interest and dividends 20,536 42,277
Due from broker -- 63,372
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Total receivables 409,111 509,781
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Total assets 50,750,513 51,367,122
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LIABILITIES:
Due to broker (13,488) (81,660)
Administration expenses payable (286,570) (260,696)
Due to The Tenneco Automotive Employee Stock Ownership Plan for
Salaried Employees -- (39,867)
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Total liabilities (300,058) (382,223)
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NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 50,450,455 $ 50,984,899
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The accompanying notes are an integral part of these financial statements.
THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR HOURLY EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2001
ADDITIONS:
Dividends $ 112,441
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Interest 301,088
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Repayment of loan interest 289,584
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Net depreciation in fair value of investments-
Corporate securities (1,315,279)
Collective trust funds (864,835)
Registered investment companies (4,921,317)
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Total net depreciation in fair value of investments (7,101,431)
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Net investment loss (6,398,318)
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Contributions-
Employee 7,180,204
Employer 4,534,869
Rollover 168,024
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Total contributions 11,883,097
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Total additions 5,484,779
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DEDUCTIONS:
Benefits paid to participants (4,582,244)
Administrative expenses (1,264,387)
Transfer to The Tenneco Automotive Employee Stock Ownership Plan for Salaried
Employees (172,592)
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Total deductions (6,019,223)
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NET DECREASE (534,444)
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 50,984,899
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End of year $ 50,450,455
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The accompanying notes are an integral part of this financial statement.
THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 2001 AND 2000
1. DESCRIPTION OF THE PLAN
The following description of The Tenneco Automotive Employee Stock
Ownership Plan for Hourly 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 for Hourly Employees
(the "Pactiv Plan") had their participant account balances transferred to
the Plan.
ELIGIBILITY AND CONTRIBUTIONS
Hourly 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 2% 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 2% 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.
Certain union hourly employees have adopted the Plan and are subject to
different eligibility and contribution provisions, as described in the
Special Appendix I of the Plan document.
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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 age 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 $ 5,128,831 $ 3,607,711
Bankers Trust Pyramid Directed Account Cash Fund
127,059 86,245
Employer contribution receivable 262,867 261,643
Due to broker -- (4,214)
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$ 5,518,757 $ 3,951,385
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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:
Investment income-
Interest and dividends $ 5,039
Net depreciation in fair value of corporate securities (2,175,997)
Employer contributions 4,534,869
Net interfund transfers (170,675)
Benefits paid to participants (611,050)
Transfer to The Tenneco Automotive Employee Stock
Ownership Plan for Salaried Employees (14,814)
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Increase in net assets $ 1,567,372
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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 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 $ 50,984,899
Less- Amounts allocated to withdrawing
participants (86,440)
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Net assets available for Plan benefits per the
Form 5500 $ 50,898,459
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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 $ 4,582,244
Less- Amounts allocated to withdrawing
participants at December 31, 2000 (86,440)
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Benefits paid per the Form 5500 $ 4,495,804
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Amounts allocated to withdrawing participants are recorded on the Form
5500 for withdrawals 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. 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 HOURLY EMPLOYEES
SCHEDULE H, LINE 4i--SCHEDULE OF ASSETS
(HELD AT END OF YEAR)
DECEMBER 31, 2001
CURRENT
IDENTITY OF ISSUE DESCRIPTION OF ASSET COST VALUE
---------------------------------------- ------------------------------------------- -------------- ------------
Pactiv Corporation Pactiv Corporation common stock
** $ 2,242,535
Tenneco Automotive Inc.* Tenneco Automotive Inc. common stock $15,377,374 5,851,856
Barclays Global Investors Barclays Global Investors Equity Index
Fund T ** 9,543,888
Barclays Global Investors Barclays Global Investors U.S. Debt
Market Index Fund K ** 5,941,032
Fidelity Investment Institutional
Services Co. Fidelity Growth Company Fund ** 8,324,859
Fidelity Investment Institutional
Services Co. Fidelity Low Priced Stock Fund ** 146,119
INVESCO Funds Group, Inc. INVESCO Total Return Fund ** 1,371,836
Putnam Management Company Putnam New Opportunities Fund ** 4,049,875
Franklin Templeton Templeton Foreign Fund ** 365,279
Bank of America, N.A. Nations Cash Reserves ** 8,137,453
Bankers Trust Company* Bankers Trust Pyramid Directed Account
Cash Fund 587,316 587,316
The Tenneco Automotive Participant loans receivable
Employee Stock Ownership (interest rates ranging from
Plan for Hourly Employees* 4.75% to 9.50%) ** 3,779,354
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Total assets (held at
end of year) $50,341,402
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*Indicated party-in-interest.
**Cost omitted for participant-directed investments.
The accompanying notes are an integral part of this schedule.
SCHEDULE II
THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR HOURLY EMPLOYEES
SCHEDULE H, LINE 4j--SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
COSTS OF
IN-KIND IN-KIND ASSETS
IDENTITY OF PARTY INVOLVED/ PURCHASE EXCHANGES SELLING COST OF EXCHANGES EXCHANGED NET
DESCRIPTION OF INVESTMENT PRICE (a)(c) IN (c) PRICE (b)(c) ASSETS SOLD OUT (c) OUT GAIN (LOSS)
--------------------------- -------------- ----------- ------------ ------------- ----------- --------- -----------
SERIES:
Tenneco Automotive Inc.-
Tenneco Automotive Inc.
common stock $1,020,941 $4,533,645 $1,453,115 $3,556,172 $15,657 $26,582 $(2,113,982)
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(a) Purchase price equals cost of asset and includes expenses incurred in
connection with transactions (i.e., commissions, transfer fees, etc.)
(b) Selling price is net of expenses incurred in connection with
transactions.
(c) Current value of asset on transaction date is equal to the
purchase/selling price and in-kind exchanges in/out.
NOTE: This schedule is a listing of series of transactions (for
nonparticipant-directed investments) in the same security which
exceeds 5% of the market value of the Plan as of the beginning of
the year.
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 HOURLY 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