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, 2003
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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THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR HOURLY EMPLOYEES
TABLE OF CONTENTS
PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of December 31,
2003 and 2002 2
Statement of Changes in Net Assets Available for Benefits for the Year
Ended December 31, 2003 3
Notes to Financial Statements 4-8
SUPPLEMENTAL SCHEDULE:
Form 5500, Schedule H, Part IV, Line 4i--Schedule of Assets
(Held at End of Year) as of December 31, 2003 9
Supplemental schedules not listed have been omitted due to the absence of
conditions under which they are required.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Participants of
The Tenneco Automotive Employee Stock Ownership Plan for Hourly Employees:
We have audited the accompanying statements of net assets available for benefits
of The Tenneco Automotive Employee Stock Ownership Plan for Hourly Employees
(the "Plan") as of December 31, 2003 and 2002 and the related statement of
changes in net assets available for benefits for the year ended December 31,
2003. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (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, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31, 2003
and 2002, and the changes in net assets available for benefits for the year
ended December 31, 2003 in conformity with accounting principles generally
accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule of
assets (held at end of year) as of December 31, 2003 is presented for the
purpose 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 schedule is the responsibility of
the Plan's management. Such schedule has been subjected to the auditing
procedures applied in our audit of the basic 2003 financial statements and, in
our opinion, is fairly stated in all material respects when considered in
relation to the basic financial statements taken as a whole.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
June 22, 2004
THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR HOURLY EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2003 AND 2002
2003 2002
ASSETS:
Participant-directed investments (Note 3) $66,367,276 $49,335,836
Nonparticipant-directed investments (Note 4) 14,624,445 9,490,507
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Total investments 80,991,721 58,826,343
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Receivables:
Employer contributions 34,038 -
Participant contributions 15,751 -
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Total receivables 49,789 -
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Total assets 81,041,510 58,826,343
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LIABILITIES:
Accrued administrative expenses 34,000 30,000
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Total liabilities 34,000 30,000
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NET ASSETS AVAILABLE FOR BENEFITS $81,007,510 $58,796,343
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See notes to financial statements.
- 2 -
THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR HOURLY EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2003
ADDITIONS:
Contributions:
Participant contributions $ 7,173,020
Employer contributions 2,981,680
Rollovers 31,335
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Total contributions 10,186,035
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Investment income:
Net appreciation in fair value of investments (Note 3) 15,861,976
Dividend 96,800
Interest 342,065
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Net investment income 16,300,841
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Total additions 26,486,876
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DEDUCTIONS:
Benefits paid to participants 4,236,935
Administrative expenses 38,314
Transfers out of Plan (Note 2) 460
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Total deductions 4,275,709
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INCREASE IN NET ASSETS 22,211,167
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 58,796,343
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End of year $81,007,510
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See notes to financial statements.
- 3 -
THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS AS OF
DECEMBER 31, 2003 AND 2002, AND FOR THE
YEAR ENDED DECEMBER 31, 2003
1. DESCRIPTION OF THE PLAN
The following description of The Tenneco Automotive Employee Stock
Ownership Plan for Hourly Employees (the "Plan") is provided for general
information purposes only. Participants should refer to the Plan Document
for more complete information.
GENERAL--The Plan is a defined contribution plan covering substantially
all hourly employees of Tenneco Automotive Inc. (the "Company"). The
Company controls and manages the operation and administration of the Plan.
Putnam Fiduciary Trust Company serves as the trustee of the Plan. The Plan
is subject to the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA").
ELIGIBILITY--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. Certain union employees are
subject to different eligibility provisions, as defined in the Plan
Document.
CONTRIBUTIONS--An employee is automatically enrolled in the Plan upon
completion of the eligibility requirements at a pretax contribution rate
of two percent of pretax annual compensation, as defined in the Plan
Document, subject to certain Internal Revenue Code limitations, unless the
employee elects to waive automatic enrollment prior to the effective date.
Participants can elect to increase the pretax deferral rate, subject to
certain Internal Revenue Code limitations, from two percent up to 50
percent, in any whole percentage, at any time.
The Company's matching contribution is 50 percent of the participant's
contributions, not to exceed eight percent of the participant's base
compensation. Certain union employees are not eligible for the Company's
matching contribution, as defined in the Plan Document. Additional amounts
may be contributed at the discretion of the Company. No such additional
discretionary contributions were made for the year ended December 31,
2003. Participants may also rollover amounts from other qualified plans.
Effective January 1, 2002, Company matching contributions are made in
cash. Prior to January 1, 2002, Company matching contributions were made
in the Company's common stock to the Tenneco Automotive Inc. Common Stock
Fund. All Company matching contributions of Company common stock and the
related earnings/losses 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.
PARTICIPANT ACCOUNTS--Individual accounts are maintained for each Plan
participant. Each participant's account is credited with the participant's
contribution, the Company's matching contribution, and allocations of
Company discretionary contributions and Plan earnings, and charged with
withdrawals and an allocation of Plan losses and administrative expenses.
Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit
that can be provided from the participant's vested account.
- 4 -
INVESTMENTS--Participants direct the investment of their contributions and
the Company's matching contributions into various investment options
offered by the Plan. The Plan currently offers participants the option to
invest their contribution into the following funds: Putnam Money Market
Fund, Putnam Bond Index Fund, Lord Abbett Mid Cap Value Fund, PIMCO Total
Return Fund, Putnam Equity Income Fund, The George Putnam Fund of Boston,
Fidelity Growth Company Fund, Fidelity Low-Priced Stock Fund, BBH
Inflation Index Securities Fund, MSIF Mid Cap Growth Portfolio, MSIF Small
Company Growth Portfolio, Putnam Retirement Ready Maturity Fund, Putnam
Retirement Ready 2010, Putnam Retirement Ready 2015, Putnam Retirement
Ready 2020, Putnam Retirement Ready 2025, Putnam Retirement Ready 2030,
Putnam Retirement Ready 2035, Putnam Retirement Ready 2040, Putnam
Retirement Ready 2045, Putnam Income Fund, Putnam Intermediate US
Government Income Fund, Putnam International Equity Fund, Putnam New
Opportunities Fund, Putnam Research Fund, Putnam S&P 500 Index Fund,
Tenneco Automotive Inc. Common Stock Fund.
Shares of Pactiv Corporation common stock are held by the Plan in a
separate fund due to a transfer of participant account balances from
another defined contribution plan in 2000, however, the fund is no longer
an investment option for participants and direct contributions or fund
transfers are not allowed.
VESTING--Participants are vested immediately in both their contributions
plus actual earnings thereon and the Company's matching contribution
portion of their accounts.
PARTICIPANT LOANS--Active participants and certain other individuals who
have not had a loan during the previous three months may borrow from their
accounts up to a maximum of $50,000 less their highest outstanding loan
balance in the previous 12 months or 50 percent of their account balance,
whichever is less. Each participant may have only one loan outstanding any
time, with a term not to exceed 54 months and the amount of the loan may
not be less than $1,000. The loans are secured by the balance in the
participant's account and bear interest at rates equal to the prime rate
as reported in The Wall Street Journal (ranging from 4.00% to 9.50% at
December 31, 2003). Principal and interest is paid ratably through payroll
deductions.
TERMINATION OF PARTICIPATION--On termination of service due to death,
disability, retirement, or termination of employment, a participant may
elect either to receive a lump-sum amount equal to the value of the
participant's vested interest in his or her account, or maintain the
account, if the participant's account is more than $5,000. If the
participant's account is less than $5,000, the participant may receive a
lump-sum amount or rollover the amount to another qualified plan or IRA.
At December 31, 2003 and 2002, amounts owed to participants whose service
has been terminated were $241,183 and $363,017, respectively, for accounts
with balances less than $5,000.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING--The accompanying financial statements have been
prepared in accordance with accounting principles generally accepted in
the United States of America.
USE OF ESTIMATES--The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires Plan management to make estimates and assumptions that
affect the reported amounts of net assets available for benefits and
changes therein. Actual results could differ from those estimates. The
Plan utilizes various investment instruments. Investment securities, in
general, are exposed to various risks, such as interest rate, credit, and
overall market volatility. Due to the level of risk associated with
certain investment securities, it is reasonably possible that changes in
the values of investment securities will occur in the near term and that
such changes could materially affect the amounts reported in the financial
statements.
- 5 -
INVESTMENT VALUATION AND INCOME RECOGNITION--Quoted market prices are used
to determine the fair value of the Plan's investments, when available.
Shares of registered investment companies and common/collective trusts are
valued at the net asset value of share held by the Plan at year-end.
Participant loans are valued at the outstanding loan balances.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded
on the ex-dividend date.
Management fees and operating expenses charged to the Plan for investments
in registered investment companies sponsored by the Company's trustee,
Putnam Fiduciary Trust Company, are deducted from income earned on a daily
basis and are not separately reflected. Consequently, these management
fees and operating expenses are reflected as a reduction of net
appreciation (depreciation) in the fair market value of investments for
such investments.
ADMINISTRATIVE EXPENSES--Administrative expenses of the Plan are paid by
the Plan as provided in the Plan Document.
PAYMENT OF BENEFITS--Benefit payments to participants, including deemed
distributions of participant loans, are recorded upon distribution. The
amount allocated to accounts of persons who have elected to withdraw from
the Plan but have not yet been paid were $241,183 and $363,017 at December
31, 2003 and 2002, respectively. The amount of deemed distributions of
participant loans in default at year-end but not yet paid were $81,771 and
$32,944 at December 31, 2003 and 2002, respectively.
TRANSFERS--The Company also sponsors an employee stock ownership plan for
salaried employees. If employees change hourly or salaried status during
the year, their account balances are transferred into the corresponding
plan. For the year ended December 31, 2003, plan transfers to the salaried
plan were $28,157 and plan transfers received from the salaried plan were
$27,697.
3. INVESTMENTS
The Plan's investments that represented five percent or more of the Plan's
net assets available for benefits as of December 31, 2003 and 2002, are as
follows:
2003 2002
Fidelity Growth Company Fund $10,235,863 $ 6,444,058
Putnam Money Market Fund 13,790,208 11,228,926
Putnam New Opportunities Fund 5,121,987 3,363,407
Putnam S&P 500 Index Fund 11,601,888 8,306,486
Putnam Bond Index Fund 7,957,457 7,547,417
Tenneco Automotive Inc. common stock * 16,729,756 11,094,795
* Partially nonparticipant-directed.
- 6 -
During 2003, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
in value by $15,861,976 during the year ended December 31, 2003, as
follows:
Registered investment companies $ 4,975,773
Common/collective trusts 2,897,103
Pactiv Corporation common stock 161,286
Tenneco Automotive Inc. common stock 7,827,814
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Net appreciation in fair value of investments $ 15,861,976
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4. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments
is as follows as of December 31, 2003 and 2002, and for the year ended
December 31, 2003:
2003 2002
Net Assets:
Tenneco Automotive Inc. common stock $ 14,624,445 $9,490,507
YEAR ENDED
DECEMBER 31, 2003
Changes in Net Assets:
Net appreciation in fair value of investments $6,122,185
Benefits paid to participants (680,276)
Administrative expenses (1,098)
Transfers to participant-directed investments (306,873)
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$5,133,938
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5. RELATED-PARTY TRANSACTIONS
Certain Plan investments are shares of registered investment companies and
common/collective trusts managed by Putnam Fiduciary Trust Company. Putnam
Fiduciary Trust Company is the trustee as defined by the Plan and,
therefore, these transactions qualify as party-in-interest transactions.
Fees paid by the Plan for investment management services were included as
a reduction of the return earned on each of these funds.
At December 31, 2003 and 2002, the Plan held 2,500,711 and 2,746,236
shares, respectively, of common stock of Tenneco Automotive Inc., the
sponsoring employer, with a cost basis of $10,459,275 and $14,139,248,
respectively.
6. PLAN TERMINATION
Although it has not expressed any intention to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions set forth in ERISA. 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 participant accounts pro
rata on the basis of their respective balances.
- 7 -
7. FEDERAL INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated April 30, 2002, that the Plan and related trust, as then
designed, was in accordance with the applicable sections of the Internal
Revenue Code. Although the Plan has been amended since receiving the
determination letter, the Plan administrator and the Plan's tax counsel
believe that the Plan is currently designed and being operated in
compliance with the applicable requirements of the Internal Revenue Code
and is tax-exempt. Therefore, no provision for income taxes has been
included in the Plan's financial statements.
8. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to Form 5500:
2003 2002
Net assets available for benefits per the
financial statements $81,007,510 $58,796,343
Deemed distributions of participant loans (81,771) (32,944)
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Net assets available for benefits per
Form 5500 $80,925,739 $58,763,399
=========== ===========
The following is a reconciliation of changes in net assets available for
benefits per the financial statements at December 31, 2003 to Form 5500:
Benefits paid to participants per the financial
statements $4,236,935
Add: Deemed distributions of participant loans at
December 31, 2003 81,771
Less: Deemed distributions of participant loans at
December 31, 2002 (32,944)
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Benefits paid to participants per Form 5500 $4,285,762
==========
******
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THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR HOURLY EMPLOYEES
FORM 5500, SCHEDULE H, PART IV, LINE 4i--
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2003
FAIR
COST VALUE
INVESTMENTS:
Common/collective trusts:
*Putnam Bond Index Fund ** $ 7,957,457
*Putnam S&P 500 Index Fund ** 11,601,888
*Putnam Retirement Ready Maturity Fund ** 652
*Putnam Retirement Ready 2010 Fund ** 258,497
*Putnam Retirement Ready 2015 Fund ** 462,360
*Putnam Retirement Ready 2020 Fund ** 406,052
*Putnam Retirement Ready 2025 Fund ** 389,172
*Putnam Retirement Ready 2030 Fund ** 343,570
*Putnam Retirement Ready 2035 Fund ** 119,253
*Putnam Retirement Ready 2040 Fund ** 36,837
*Putnam Retirement Ready 2045 Fund ** 99,251
Common stock:
Pactiv Corporation ** 2,178,882
*Tenneco Automotive Inc. $10,459,275 16,729,756
Non interest bearing cash ** 9,354
Registered investment companies:
Fidelity Growth Company Fund ** 10,235,863
Fidelity Low-Priced Stock Fund ** 945,580
Lord Abbett Mid Cap Value Fund ** 663,461
MSIF Inc. Small Company Growth ** 330,631
MSIF Mid Cap Growth Value Fund ** 212,136
PIMCO Total Return Fund ** 88,118
BBH Inflation Index Securities Fund ** 229,372
*Putnam Intermediate US Government Income Fund ** 27,512
*Putnam Equity Income Fund ** 342,488
*Putnam International Equity Fund ** 574,448
*Putnam Money Market Fund ** 13,790,208
*Putnam New Opportunities Fund ** 5,121,987
*Putnam Research Fund ** 146,126
*The George Putnam Fund of Boston ** 1,940,407
*Putnam Income Fund ** 67,715
*Participant loans (maturing 2004 to 2008 at
interest rates of 4.00% to 9.50%) ** 5,682,688
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TOTAL $10,459,275 $80,991,721
=========== ===========
* Party-in-interest.
** Cost information is not required for participant-directed investments.
- 9 -
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: June 28, 2004 /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 Deloitte & Touche LLP