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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, 2004
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 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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THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR SALARIED EMPLOYEES
TABLE OF CONTENTS
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PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of
December 31, 2004 and 2003 2
Statement of Changes in Net Assets Available for Benefits for the
Year Ended December 31, 2004 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, 2004 9
All other schedules required by Section 2520.103-10 of the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974 have been omitted because they are not applicable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Participants of
The Tenneco Automotive Employee Stock Ownership Plan for Salaried Employees:
We have audited the accompanying statements of net assets available for benefits
of The Tenneco Automotive Employee Stock Ownership Plan for Salaried Employees
(the "Plan") as of December 31, 2004 and 2003, and the related statement of
changes in net assets available for benefits for the year ended December 31,
2004. 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 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. The Plan is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Plan's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, 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, 2004
and 2003, and the changes in net assets available for benefits for the year
ended December 31, 2004 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 supplemental schedule of assets (held
at end of year) as of December 31, 2004 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 2004 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.
DELOITTE & TOUCHE LLP
Chicago, Illinois
June 28, 2005
THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2004 AND 2003
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2004 2003
ASSETS:
Participant-directed investments (Note 3) $147,601,296 $126,043,374
Nonparticipant-directed investments (Note 4) 41,165,769 18,413,100
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Total investments 188,767,065 144,456,474
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LIABILITIES:
Accrued administrative expenses 35,750 34,000
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Total liabilities 35,750 34,000
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NET ASSETS AVAILABLE FOR BENEFITS $188,731,315 $144,422,474
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See notes to financial statements.
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THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR SALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2004
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ADDITIONS:
Contributions:
Participant contributions $ 8,743,138
Employer contributions 3,376,416
Rollovers 772,551
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Total contributions 12,892,105
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Investment income:
Net appreciation in fair value of investments (Note 3) 47,444,098
Dividend 1,273,370
Interest 387,059
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Net investment income 49,104,527
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Transfers into Plan, net (Note 2) 78,925
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Total additions 62,075,557
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DEDUCTIONS:
Benefits paid to participants 17,723,366
Administrative expenses 43,350
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Total deductions 17,766,716
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INCREASE IN NET ASSETS 44,308,841
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 144,422,474
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End of year $188,731,315
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See notes to financial statements.
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THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003, AND FOR THE YEAR ENDED DECEMBER 31, 2004
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1. DESCRIPTION OF THE PLAN
The following description of The Tenneco Automotive Employee Stock
Ownership Plan for Salaried 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 salaried 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.
CONTRIBUTIONS--An employee is automatically enrolled in the Plan upon
completion of the eligibility requirements at a pretax contribution rate
of four 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 four 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. Additional amounts may be contributed at the discretion of
the Company. No such additional discretionary contributions were made for
the year ended December 31, 2004. 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 made
prior to January 1, 2002 and the related earnings/losses, 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.
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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, Lord Abbett
Small 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
Limited Duration Government Inc. Fund CL A, Putnam International Equity
Fund, Putnam New Opportunities Fund, Putnam Research Fund, Putnam S&P 500
Index Fund, and 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 only have one loan outstanding at
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, 2004) at the time the loan is made. 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 to maintain the
account, if the participant's account is more than $5,000. A quarterly
installment option is available only to former participants of a merged
plan. If the participant's account is less than $5,000, the participant
may receive a lump-sum amount or roll over the amount to another qualified
plan or IRA. At December 31, 2004 and 2003, amounts owed to participants
whose service has been terminated were $72,706 and $86,240, 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
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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.
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 shares 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 $72,706 and $86,240 at December
31, 2004 and 2003, respectively. There were no deemed distributions of
participant loans in default at year-end.
TRANSFERS--The Company also sponsors an employee stock ownership plan for
hourly employees. If employees change their hourly or salaried status
during the year, their account balances are transferred into the
corresponding plan. For the year ended December 31, 2004, plan transfers
to the hourly plan were $48,235 and plan transfers received from the
hourly plan were $127,160.
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, 2004 and 2003, are as
follows:
2004 2003
Fidelity Growth Company Fund $23,319,716 $21,885,244
Pactiv Corporation common stock 11,421,119 14,173,575
Putnam Money Market Fund 30,385,051 30,568,810
Putnam S&P 500 Index Fund 15,422,344 14,036,594
Tenneco Automotive Inc. common stock* 54,781,945 26,643,060
*Partially nonparticipant-directed.
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During 2004, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
in value as follows
Registered investment companies $ 7,087,433
Common/collective trusts 1,618,759
Pactiv Corporation common stock 533,036
Tenneco Automotive Inc. common stock 38,204,870
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Net appreciation in fair value of investments $47,444,098
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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, 2004 and 2003, and for the year ended
December 31, 2004:
2004 2003
Net assets:
Tenneco Automotive Inc. common stock $41,165,769 $18,413,100
Year Ended
December 31, 2004
Changes in net assets:
Net appreciation in fair value of investments $27,474,332
Benefits paid to participants (3,281,207)
Transfers to participant-directed investments (1,440,456)
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Total $22,752,669
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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, 2004 and 2003, the Plan held 3,177,607 and 3,982,520
shares, respectively, of common stock of Tenneco Automotive Inc., the
sponsoring employer, with a cost basis of $15,104,321 and $16,336,273,
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.
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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, were 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:
2004 2003
Net assets available for benefits per the
financial statements $188,731,315 $144,422,474
Deemed distributions of participant loans (32,412) (26,026)
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Net assets available for benefits per Form 5500 $188,698,903 $144,396,448
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The following is a reconciliation of changes in net assets available for
benefits per the financial statements for the year ended December 31, 2004
to Form 5500:
Benefits paid to participants per the financial statements $17,723,366
Add deemed distributions of participant loans at December 31, 2004 32,412
Less deemed distributions of participant loans at December 31, 2003 (26,026)
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Benefits paid to participants per Form 5500 $17,729,752
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THE TENNECO AUTOMOTIVE EMPLOYEE STOCK
OWNERSHIP PLAN FOR SALARIED EMPLOYEES
FORM 5500, SCHEDULE H, PART IV, LINE 4i--
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2004
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Fair
Cost Value
INVESTMENTS:
Common/collective trusts:
*Putnam Bond Index Fund ** $ 2,821,453
*Putnam S&P 500 Index Fund ** 15,422,344
Common stock:
Pactiv Corporation ** 11,421,119
*Tenneco Automotive Inc. $ 15,104,321 54,781,945
Non-interest-bearing cash ** 230,908
Registered investment companies:
Fidelity Growth Company Fund ** 23,319,716
Fidelity Low-Priced Stock Fund ** 9,183,870
Lord Abbett Mid Cap Value Fund ** 6,988,972
Lord Abbett Small Cap Value Fund ** 2,115,750
MSIF Small Company Growth ** 2,795,869
MSIF Mid Cap Growth Value Fund ** 1,562,684
PIMCO Total Return Fund ** 1,429,666
BBH Inflation Index Securities Fund ** 1,090,156
*Putnam Limited Duration Government Inc. CL A ** 114,578
*Putnam Equity Income Fund ** 2,120,883
*Putnam International Equity Fund ** 4,217,116
*Putnam Money Market Fund ** 30,385,051
*Putnam New Opportunities Fund ** 6,411,229
*Putnam Research Fund ** 508,425
*The George Putnam Fund of Boston ** 3,773,605
*Putnam Income Fund ** 546,703
*Putnam Retirement Ready Maturity Fund ** 126,039
*Putnam Retirement Ready 2010 ** 1,022,110
*Putnam Retirement Ready 2015 ** 1,096,358
*Putnam Retirement Ready 2020 ** 491,273
*Putnam Retirement Ready 2025 ** 896,286
*Putnam Retirement Ready 2030 ** 327,714
*Putnam Retirement Ready 2035 ** 356,843
*Putnam Retirement Ready 2040 ** 179,065
*Putnam Retirement Ready 2045 ** 137,094
*Participant loans (maturing 2004 to 2008 at
interest rates of 4.00% to 9.50%) ** 2,892,241
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TOTAL $15,104,321 $188,767,065
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*Party in interest.
**Cost information is not required for participant-directed investments.
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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: June 29, 2005 /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