1. EXECUTION & DISCIPLINE
DRIVE RESULTS
Tenneco Automotive Inc. 2004 Annual Report
29%
FIVE YEARS OF PROGRESS
Increased Revenues by $953 Million
68%
Increased Revenue Per Employee from $136,000 to $229,000
22%
Reduced Debt Net of Cash by $344 Million
145%
Increased Market Capitalization by $439 Million

2. Tenneco Automotive
ORIGINAL EQUIPMENT
Operations 2004 Sales Markets Served Products Brands
Emission $2,287 million Passenger cars Complete exhaust systems
■ ■
Control Light trucks Fabricated manifolds
■ ■
Commercial vehicles Manifold-converter modules
■ ■
Industrial applications Catalytic converters
■ ■
Motorbikes Mufflers and resonators
■ ■
Diesel particulate filter systems
■
NOx abatement systems
■
Exhaust heat exchangers
■
Exhaust isolators & hanging systems
■
Ride Control $931 million Passenger cars Shocks & struts
■ ■
Light trucks Suspension bushings
■ ■
Commercial vehicles Coil, air & leaf springs
■ ■
Golf carts Torque rods
■ ■
Off-road recreational Engine/body mounts
■ ■
Rail cars Suspension modules/systems
■ ■
Control arms/bars/links
■
Cabin dampers
■
Computerized electronic suspension
■
Anti-roll system
■
AFTERMARKET
Operations 2004 Sales Markets Served Products Brands
Emission $365 million Passenger cars Manifolds
■ ■
Control Light trucks Mufflers
■ ■
Commercial vehicles Pipes
■ ■
Performance vehicles Tubing
■ ■
Mounting components
■
Catalytic converters
■
Performance mufflers
■
Ride Control $630 million Passenger cars Shocks
■ ■
Light trucks
■
Struts
■
Commercial vehicles
■
Cartridges
■
Performance vehicles
■
Mounting kits
■
Trailers
■
Performance shocks, struts,
■
filters and brakes
Torque rods
■
Suspension bushings
■
Engine mounts
■
Coil springs
■
Car-appearance products
■
2004 2003 2004 Sales 2004 EBIT*
North America North America
$4,213 $3,766
Revenues (millions)
47% 76%
Emission Control/ Europe and
Europe and
63/37 63/37
Ride Control Balance† South America
South America
13%
44%
Original Equipment/
76/24 75/25
Aftermarket Balance† Asia Pacific Asia Pacific
9% 11%
†percentage of sales
*EBIT is earnings before interest expense,
taxes, and minority interest.

3. Competitors Key Advantages Top Five Customers Top Five Platforms 2004 Market Opportunities
Emission & Ride Control GM Bravada, Envoy, Trailblazer
ArvinMeritor General Motors Additional content due
■
■ ■ ■
to emission regulations
■ Advanced technologies
Faurecia GM Escalade, Silverado,
Ford
■ ■
■
Suburban, Avalanche, Tahoe, Diesel aftertreatment
■
Eberspächer ■ Experienced team
■
Volkswagen
■
Sierra, Yukon Customized sound attenuation
■
Bosal
■ ■ Product/process quality
PSA Peugeot/Citroen
■
Dodge Ram Pickup
■
Demand for diesel/
■
Delphi
■ ■ Global program
DaimlerChrysler
■
PSA Citroen C5, Peugeot 407, hybrid/fuel cell
■
management
Peugeot 608 Emerging markets
■
■ Japanese alliances
GM Opel Vectra, Saab 9-3,
■
Commercial vehicle segment
■
■ Joint ventures in China,
Chevy Malibu, Pontiac G6
India, Thailand, and U.K.
■ Customer relationships
ZF Sachs Ford GM Escalade, Silverado, Vehicle stability/
■ ■ ■ ■
■ Broad product range
Suburban, Avalanche, Tahoe, safety requirements
Delphi Volkswagen
■ ■
■ Full service supplier Sierra, Yukon Modular assembly
■
ArvinMeritor
■
General Motors
■
■ Just-In-Time (JIT) Ford Focus, Mazda 323,
■
New technologies
■
Kayaba
■
DaimlerChrysler
■
assembly Volvo S40
Adjacent markets
■
Magneti Marelli
■
Nissan
■
VW Golf, New Caddy, Seat Altea
■
Electronic technologies
■
DaimlerChrysler Town & Country,
■
Voyager, Caravan
VW Transporter
■
Competitors Key Advantages Top Five Customers Leading Products Market Opportunities
Quiet-Flow3® Mufflers/
Emission & Ride Control
ArvinMeritor NAPA Growing number of vehicles
■
■ ■ ■
Assemblies on the road
■ Brand dominance
OE Service TEMOT Autoteile
■ ■
Dynomax® Ultra-Flo Stainless/ OE Service
■ ■
Bosal ■ Relationships with
■
Automotive Distribution
■
Welded Mufflers/Systems
all major wholesale International (ADI) New technologies
■
Goerlich’s Exhaust
■
distributors/retailers DNX™ performance
■
Systems Advance Auto Parts Emission regulations
■ ■
exhaust systems
■ Global presence
Midas/IPC
■
Independent Motor Trade Performance-product demand
■ ■
SoundFX™ mufflers
■
■ Leading market shares
Factors Association (IFA)
Clean Air™ catalytic converters
■
■ Product innovation
■ Product quality
Reflex® shocks & struts
ArvinMeritor NAPA Growing number of vehicles
■ ■ ■
■
■ Extensive product and
on the road
Kayaba Sensa-Trac® shocks & struts
Advance Auto Parts
■ ■
vehicle coverage ■
OE Service
■
OE Service
■
Rancho® shocks, struts and
O’Reilly Auto Parts
■
■ Targeted marketing ■
New technologies
suspension lift kits ■
programs
ZF Sachs
■
TEMOT Autoteile
■
Unperformed maintenance
Quick Strut™ ■
■ Introduction of ■
Pep Boys
■
service parts Gas-Magnum® shocks Premium mix expansion
■
■
Broader product coverage
DNX™ performance shocks ■
■
and struts Heavy-duty truck penetration
■
Monro-Matic Plus® shocks
■
Safety/installer education
■
DuPont™ car-care line
■
Testing/diagnostic equipment
■
Diverse Customer Base Profile
Top Customers as a % of Total 2004 Revenues
Approx. 18,400
People:
Largest OE Customers Largest AM Customers
Manufacturing &
17.9% 2.0%
General Motors NAPA
71
12.0% 1.3% Just-In-Time Facilities:
Ford Motor Co. TEMOT Autoteile GmbH
10.5% 1.1%
Volkswagen Advance Auto Parts
13
Engineering Centers:
8.0% 1.1%
DaimlerChrysler ADI (Automotive Distribution Int’l)
7.4% 0.6%
PSA Peugeot Citroen O’Reilly Automotive 138
Countries Served:
3.9% 0.5%
Toyota Motor Co. Pep Boys
2.2% 0.4%
Nissan Motor Co. KFE (Kwik-Fit Europe) As of 12.31.04
2.0% 0.4%
Honda Motor Co. Uni-Select

4. >> VISION
PIONEERING GLOBAL IDEAS FOR CLEANER,
QUIETER AND SAFER TRANSPORTATION.
CORPORATE PROFILE
Tenneco Automotive is one of the world’s largest designers, manufacturers and marketers of emission control and
ride control products and systems for the automotive original equipment market and aftermarket. The company became
an independent corporation in 1999, allowing singular focus on strategies to maximize global results.
Tenneco Automotive markets its products principally under the Monroe®, Walker®, Gillet®, and Clevite® Elastomer brand
names. Leading manufacturers worldwide use our products in their vehicles, attracted principally by our groundbreaking
advanced technologies. We are one of the top suppliers to the automotive aftermarket, offering exceptionally strong
brand recognition among consumers and trade personnel.
VALUES
Teamwork Passion and a Sense of Urgency Continuous Improvement
Seamless collaboration A consuming desire to win now Relentless focus on achieving
more with less
Integrity Balance
Being honest, fair and never Promoting a balanced perspective ED
compromising our ethics in everything we do Execution and Discipline
Trust Accountability
Relying on and having faith Accepting responsibility for
in one another our actions
EXECUTION AND DISCIPLINE
Execution and Discipline drive results through detailed planning, follow-through and accountability.
TABLE OF CONTENTS
Gatefold 1 2-4 5 6-8 9-11
Tenneco Financial Chairman’s Operations North Europe &
at a Glance Highlights Letter Review America South America
12-13 14 15 16 17+ Inside Back Cover
Commercial Technology Board of Directors 10K Investor
Asia Pacific
Vehicle & Officers Information

5. Tenneco Automotive 2004 Annual Report
FINANCIAL HIGHLIGHTS
Execution and Discipline has driven notable progress in Tenneco Automotive’s business since we emerged as a separately traded
public company five years ago. The table below summarizes our reported results, which include the costs of achieving this
improvement— namely restructuring, refinancing and similar charges. Adjusting for these items, our operational improvements
were even greater. You can read more information about the charges in Management’s Discussion and Analysis found in our
Form 10-K included in this Annual Report.
2004 2003 2002 2001 2000 1999
(dollars in millions except share and per share data)
Sales $4,213 $3,766 $3,459 $3,364 $3,528 $3,260
Earnings before interest and taxes $÷«171 $÷«176 $÷«169 $÷÷«92 $÷«120 $÷«148
Depreciation and amortization $÷«177 $÷«163 $÷«144 $÷«153 $÷«151 $÷«144
EBITDA* $÷«348 $÷«339 $÷«313 $÷«245 $÷«271 $÷«292
Net income (loss) before
discontinued operations and
changes in accounting principles $÷«÷13 $÷÷«27 $÷÷«31 $÷(130) $÷÷(42) $÷÷(81)
Earnings (loss) per share before
discontinued operations and
changes in accounting principles $÷0.31 $÷0.65 $÷0.74 $«(3.43) $«(1.20) $«(2.42)
Capital expenditures $÷«130 $÷«130 $÷«138 $÷«127 $÷«146 $÷«154
Average diluted shares outstanding 44,180,460 41,767,959 41,667,815 38,001,248 34,906,825 33,656,063
Total debt $1,420 $1,430 $1,445 $1,515 $1,527 $1,634
Cash and cash equivalents $÷«214 $÷«145 $÷÷«54 $÷÷«53 $÷÷«35 $÷÷«84
Debt net of cash balances $1,206 $1,285 $1,391 $1,462 $1,492 $1,550
*EBITDA represents income from continuing operations before cumulative effect of changes in accounting principles, 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 data. In addition, EBITDA
should not be considered as an alternative to net income or operating income as an indicator of our performance, or as an alternative to operating
cash flows as a measure of liquidity. We have reported EBITDA because we believe EBITDA is a measure commonly reported and widely used by
investors and other interested parties as an indicator of a company’s performance. We believe 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 in this document may not always be comparable to similarly titled measures reported by other companies
due to differences in the components of the calculation.
Working Capital†
Revenue Per Employee Debt Net of Cash Balances
$ in thousands $ in millions Percentage of Sales
$229
15.6%
$1,550 $1,492 $1,462
$197 $1,391 $1,285
$176
$1,206
$156
$153
$136 10.1%
6.0%
3.6%
2.1% 0.9%
1999 2000 2001 2002 2003 2004 1999 2000 2001 2002 2003 2004 1999 2000 2001 2002 2003 2004
† See 2004 Form 10-K Item 6 for reconciliation to GAAP reporting measure.
1

6. >> TO OUR SHAREHOLDERS
Over the last five years, we’ve made • Revenues increased 12% in 2004
tremendous headway in improving our to $4.2 billion— our highest ever.
financial position and enhancing operating
• Operating income adjusted for
results, and 2004 was no exception.
certain items increased 21% over
Our team of more than 18,000 employees
2003, representing three years
has steadily transformed this company
of consecutive improvements since
from a struggling, highly leveraged
becoming a stand-alone company.
and newly independent operation to
• Adjusted earnings were our best ever
a profitable, high-tech auto supplier with
at $1.18 per share, which is 115% higher
leading market share positions in every
than the previous year.
region of the world and in each of our
product lines.
• Capital spending was unchanged from
2003 at $130 million despite the
Enhanced Shareholder Value
impact of the higher Euro and the fact
Since becoming a stand-alone company,
that in 2004 we more than doubled
we’ve pursued the same goals of debt
the number of product or platform
reduction and market expansion,
launches implemented.
relying on stringent cost management,
capitalizing on natural growth drivers
• And debt less cash balances ended the
and leveraging alliances and joint
year at a historically low $1.206 billion,
ventures to get us there. Staying the
down 6% from 2003.
course has continued to yield improving
I’ve cited adjusted numbers so that
results. Even in 2004, against a difficult
you can see how our base operations
industry backdrop, we remained
are performing. Of course, an explanation
disciplined in the execution of these
of these adjustments, including
strategies and ultimately delivered
restructuring and other items, can be
outstanding results. Let me put some
found in the Management’s Discussion
numbers to my enthusiasm.
and Analysis of the attached Form 10-K.
Additionally, a reconciliation of the
results is detailed on the inside back
cover of this report.
2

7. Tenneco Automotive 2004 Annual Report
Mark P. Frissora
Chairman, Chief Executive Officer and President
April 2005
In 2004, our liquidity benefited from Positive change. Above all else, we’ve
become an extremely process-oriented
the successful refinancing of our
company. This is a priority for us and
most-expensive 11 5/8% bonds for new
I’m passionate about it. We’ve invested
8 5/8% bonds due 2014. As a result,
in training for every manager in the
we will generate pre-tax interest expense
organization and are now moving that
savings of about $15 million annually.
training down to the shop floor, so that
The market’s view of our strong
everyone is on the same page and equally
operating performance and this
accountable. Process tools like Lean
favorable refinancing transaction was
Manufacturing, Six Sigma, Business
reflected in a 171% increase in the
Operating Systems, 8D analysis—
market capitalization of our stock last
these are what give Tenneco its low-
year. This led to two Automotive News
cost advantage. They allow us to reduce
Shareholder Value Awards, which
our fixed costs, providing greater
recognized Tenneco for delivering
flexibility when we need it, while
the highest shareholder return among
continuing to be competitive for the
automotive suppliers for 2004 and over
benefit of our customers.
the latest three-year period.
Restructurings have been necessary and
Shareholders also benefited from our
effective. We’ve closed excess capacity,
long-standing commitment to corporate
right-sized our workforce and reorganized
governance best practices including
our plants for optimal workflow. This
independence, transparency and
has been an extensive undertaking,
accountability. We will continue to incor-
but the results have made it worthwhile.
porate the same high standards and
We’re benefiting from higher capacity
integrity in every aspect of our business.
utilization, improved manufacturing
The Foundation of Our Success efficiencies and lower overhead costs.
As I think about the exciting opportunities Today we’re a leaner, more streamlined
ahead for Tenneco, I realize that we and more efficient business. There’s still
wouldn’t be in a position to take advan- work to do of course, but we’re much
tage of many of them were it not for the better positioned to capitalize on the
significant amount of change that’s many growth opportunities that are now
taken place over several tough years. ours for the taking.
3

8. Strategic Framework rates in each of the last eight quarters. But for all the progress that we’ve made,
Continuing to diversify our business will we’re really just getting started. We have
On this front, our strategic plan has two
better insulate us during challenging a distinctive mix of leading brands,
primary objectives. First, we’re targeting
automotive cycles. growing channels and strong positions
growth markets where we can take
around the world. We will continue to
advantage of external trends.
Our priority is to grow organically.
focus on areas of high potential, relying
We’ve come a long way in improving our
Examples include:
on our global workforce of talented,
financial position and have no intention
• emerging automotive regions like experienced and motivated people to
of stepping backwards. Where value
China and Eastern Europe; lead us through Execution and Discipline.
can be added through acquisitions, we’ll
• legislation-driven regulations be opportunistic. However, our criteria
for emissions and consumer safety are stringent. Any acquisition must be
concerns— each offer greater accretive and credit neutral. That was
prospects for technology-driven the case with our early-2005 $10 million
companies; acquisition that brought us all of the
exhaust business for Harley-Davidson
• frequently replaced service parts,
Mark P. Frissora
motorcycles. This profitable business
like brakes and filters, in the
generated 2004 revenues of $38 million Chairman, Chief Executive Officer
aftermarket; and
and supports our diversification strategy and President
• new and existing customers with while leveraging our technology April 2005
positive growth trajectories, like the strength. Any future acquisitions must
Japanese and Korean automakers. offer a low-risk way to grow revenues by
enhancing our technical capability in
Second, we’re focused on further
areas like electronics and software for
diversifying our revenue stream
ride control, and air-flow management
through entry into counter-cyclical
or fuel management for emission control.
adjacent markets like commercial and
specialty vehicles. For 2005, our goal is to continue to
pursue opportunities that will make
Diversity of platforms, geography,
Tenneco a stronger company going
customers, markets and product lines
forward, building on the considerable
has been the key to our revenues out-
progress achieved over the last five
performing global market production
years. Our improved performance is
a sign that we’re on the right track.
4

9. Tenneco Automotive 2004 Annual Report
>> EXECUTION & DISCIPLINE
Tenneco Automotive has created a culture based on Execution and Discipline, encouraging behaviors
and practices that drive value creation. This culture is rooted in its people, processes and strategies.
In the following pages, several of Tenneco’s senior leaders talk about the energy, initiative and commitment
that have enabled the company to make sustained progress through Execution and Discipline.
Neal Yanos Brent Bauer Hari Nair Ulrich Mehlmann Josep Fornos Timothy Donovan Lois Boyd Timothy Jackson
Senior Vice Senior Vice Executive Vice Vice President and Vice President and Executive Vice Vice President and Senior Vice
President and President and President, General Manager, General Manager, President and General Manager, President, Global
General Manager, General Manager, Managing Director, Europe Europe General Counsel & Commercial Vehicle Manufacturing and
North America North America Europe and South Original Equipment Original Equipment Managing Director, Systems and Engineering
Ride Control and Original Equipment America Emission Control Ride Control Asia Pacific Global Program
21 years in the
Aftermarket Emission Control Management
20 years in the 21 years in the 22 years in the 6 years in the auto industry
20 years in the 21 years in the auto industry auto industry auto industry auto industry 24 years in the
Joined Tenneco
auto industry auto industry auto industry
Joined Tenneco Joined Tenneco Joined Tenneco Joined Tenneco Automotive in 1999
Joined Tenneco Joined Tenneco Automotive in 1987 Automotive in 2003 Automotive in 2000 Automotive in 1999 Joined Tenneco
Automotive in 1988 Automotive in 1996 Automotive in 1997
5

10. World Headquarters
Emission Control Manufacturing
Ride Control Manufacturing
Emission Control Engineering Center
Ride Control Engineering Center
>> NORTH AMERICA
In terms of culture, our people have
How have North American
operations changed in the last the attitude that it’s their company,
five years? and they’re running it to win. We hold
ourselves accountable for the targets
Brent Bauer, Senior Vice President
we set and expect to achieve them.
and General Manager, North
That’s different from having lots of good
America Original Equipment
ideas, but no accountability for the
Emission Control: We have much
execution of those ideas.
better process disciplines. We have
put in place things like Business Brent: That’s right. That discipline
Operating Systems, where each area of and accountability is part of what’s
the business regularly tracks the vital driven our strong performance over
few metrics they need to drive progress. the last five years. Additionally, we
Today, we employ Lean Manufacturing have outstanding technical resources
and Six Sigma methods to identify and engineering expertise, which gives
opportunities to take waste out of the us a competitive edge. And we’re
system and to increase quality and seeing tremendous leverage today
speed. Processes like these have really as revenues grow and we continue
become ingrained in the business. to reduce fixed costs.
Additionally, the savings we’re getting
How are the new environmental
by sourcing components from low-cost
mandates impacting your business?
countries and working with suppliers
on cost reductions are making us more
Brent: It’s hard to find a competitor
competitive and more profitable.
that stacks up better than Tenneco
on technology. Our customers know
Neal Yanos, Senior Vice President
that we have the products and
and General Manager, North
America Ride Control and capabilities to help them meet the
Aftermarket: Our focus has been stricter mandates. In North America,
legislation like ULEV, SULEV and Tier II
very strategic. We don’t expend
a lot of resources where the likelihood is driving increased exhaust content on
of profitability is low. gas-engine vehicles. And as diesel
engines grow in importance over
the next several years, there will be
6

11. Tenneco Automotive 2004 Annual Report
“ Tenneco is efficient. We provide services
and products with fewer people and
resources than most other big suppliers.
And still, our OE revenues continue to
outperform market production rates.”
Neal Yanos
pollution-control regulations in place relationships to continue to expand.
Execution & Discipline
for that segment too. In 2004, we For example, our award-winning launch
Pep Boys Case History
leveraged the diesel technology of the Lexus RX330 played a big part
developed for our European operations in our winning the Toyota Tundra truck
Success is the product of many years
to win three new light-duty diesel platform in 2004, which is scheduled
of hard work. That was the case with
platforms in North America for the to be a high-volume platform that’s the North American Aftermarket team,
2007 model year. They’re the largest launching in 2006. who pursued Pep Boys for two years,
platforms we’ve ever won— and we won convincing them of the value of the
Why is the aftermarket a good Monroe, Rancho and DNX lines of shocks,
them because we had a better technical
business to be in, and what are your struts and exhaust products. Ultimately,
solution than our competitors.
plans for growth? we signed a long-term contract to supply
Business with the Japanese Pep Boys stores across the United States
Neal: The aftermarket’s a great
automakers in North America and Puerto Rico. Persistence, hard work
business for us. We employ a premium
is another targeted growth area and customer focus paid off.
product strategy, which drives better
for Tenneco. What are you doing
margins; and, we have strong brand
to improve your position with
equity with Monroe and Walker.
these original equipment North American Revenues
Additionally, we’ve been improving
manufacturers (OEMs)? Outperform Market Production
profitability as we capitalize on favor-
Brent: The Japanese automakers are able manufacturing synergies across % change
rapidly gaining share in North America, 4%
our product lines. We’re also benefiting
and we certainly want to be a part of from a stronger top line as sales to 3% 3%
their growth. As a result of a long-term existing customers expand, the exhaust
2%
focus on building relationships with market stabilizes, and we add new
1%
these customers, we’ve been success- customers like Pep Boys for ride control
fully winning new business. In 2004, products, and Wal-Mart and Target for
0%
Japanese OEM business represented our niche DuPont-branded car-care line.
-1%
19% of our total North American original In addition to our leading market shares,
-2%
equipment (OE) revenues. That’s up our sales force, customer support areas,
Q1 Q2 Q3 Q4
from 16% a year earlier. By delivering and engineering and marketing savvy
the highest levels of quality, responsive- give us a clear competitive advantage 2004 Tenneco North American
OE Revenues
ness and execution, we expect these that we can leverage by bringing
2004 North American Light
new, non-core products through our Vehicle Production
distribution channel.
7

12. “ Emission regulations dictate the kind of
product solutions that customers are
looking for. Based on our expertise and
capabilities, in 2004 we won all of the
domestic OEMs’ light-duty diesel business—
our largest platforms ever.”
Brent Bauer
the leverage we get from adding higher-
How has the rising cost of steel
Execution & Discipline margin revenues on top of our efforts
affected your business?
Cambridge Case History to continuously lower our fixed costs is
Neal: In ride control, we use a lot of
significant. Over the long-term, we think
For Toyota, the first launch of a Lexus carbon steel for our shocks and struts
there’s a lot of opportunity, especially as
made in North America was vitally so the substantially higher costs could
we expand the implementation of Lean
important. Our Lexus team of emission- really impact our margins. But our global
control engineers in Canada worked side Manufacturing throughout our plants.
supply chain team has done a great job
by side and used extensive bench-
working with steel suppliers to secure North American auto production
marking with Japanese counterparts
capacity and negotiate the best prices is expected to be flat this year.
to find ways to reduce costs, improve
based on our global purchasing power. Will you continue to outperform
performance and reach quality levels
the market?
And we’re working with all of our cus-
that exceeded Toyota’s world-class
tomers to get price recovery. We’re also
standards. For that, Toyota bestowed Neal: It’s all about the diversity of our
its prestigious Excellence Level Award continuing our focus on cost reduction.
platforms and the markets we serve, and
on our team in Cambridge.
Brent: On the exhaust side, we’re going the strength of the new platforms that
to feel some pressure this year. However, we’re launching. Today, we’re favorably
we’re also negotiating for customer positioned on a large number of the top-
price recovery, and our supply chain selling vehicles. It’s been an advantage.
team has been very strategic, focusing
Brent: The diversity of our customer
on materials substitution, low-cost
base is another advantage. Having
country sourcing and optimizing the sale
Toyota, Honda and Nissan among our
of our global scrap volumes.
top six customers in North America
is really paying off.
What is the North American
operation doing to help improve
margins over time?
Brent: We have a pretty good track
record of improving gross margin in
North America. The formula is simple.
Having differentiated technology allows
us to capture a better return. Moreover,
8

13. Tenneco Automotive 2004 Annual Report
Europe
South Africa
Emission Control Manufacturing
Ride Control Manufacturing
Elastomer Manufacturing
Emission Control Eng. Center
Ride Control Engineering Center
Ride/Emission Control Eng. Center South America
>> EUROPE & SOUTH AMERICA
to the #1 position in the European
How have you transformed European
operations in recent years? market this year.
Hari Nair, Executive Vice Hari: Besides operational improve-
President, Managing Director, ments, we’ve completely transformed the
Europe and South America: Over culture of the organization. The concept
the past five years, we’ve adjusted to of Execution and Discipline is embedded
changes in the marketplace by modifying in the way our people work. It’s about
our profile in terms of manufacturing making people accountable. Employees
capacity and location, customer mix must feel that they can contribute to the
and market share. This was the result best of their abilities. Recognition and
of careful planning and determined celebration of success are key to this.
execution, and leaves us well positioned
The improvement in the OE
to benefit from market opportunities.
operation has been significant.
Ulrich Mehlmann, Vice President How much opportunity is left?
and General Manager, Europe
Ulrich: Quite a bit. On the top line, our
Original Equipment Emission
technological leadership in developing
Control: Also, we’ve made our opera-
diesel products that provide a cost-
tions more process-oriented, improving
effective means for meeting stricter
efficiency and reducing our costs. Equally
emission standards results in greater
important, our innovative technologies
customer satisfaction. That means more
are driving new business growth in
opportunity for Tenneco. In addition, we
emission control as well as our expanded
are looking at adjacent markets, like
presence in the luxury segment.
commercial trucks and specialty vehi-
Josep Fornos, Vice President cles, to generate increased revenues.
and General Manager, Europe Our focus is more pointed than simple
Original Equipment Ride Control: revenue generation. We are driving for
The European OE ride control business profitable growth.
has benefited from a renewed focus.
Based on the incremental new contracts
we’ve won, we should move closer
9

14. “ Customers recognize us as a contributor to their
success and not merely a commodity supplier.
We can manage the entire development spectrum.
Advanced engineering and technology is what
sets us apart.”
Hari Nair
market growth and lower costs in manufactured by AvtoVAZ, and we’ll
Execution & Discipline Eastern Europe. begin supplying exhaust parts for GM’s
Valencia Case History Opel Astra in Poland this year.
What percent of manufacturing
Execution and Discipline was critical is in Eastern Europe? What was your most important
to meeting the simultaneous challenges launch in 2004?
Hari: Approximately 22% of our
of serving new customers, handling
Hari: We had 37 well-executed OE
multiple launches and executing a plant European OE ride control manufacturing
redesign at our emission-control facility capacity is in the east today versus product or platform launches in Europe
in Valencia, Spain in 2004. Launching a low single-digit percentage just last year and all of them were important.
four new platforms—each for a a few years ago. We are continuing These successes helped increase our
different customer—while moving 80% to migrate our emission control capacity OE ride control market share in Europe
of the equipment to improve workflow to Eastern Europe as well. from the #4 position as recently as
was accomplished successfully without
2001 to challenging the leading
Josep: We have been aggressive in
the need for additional resources and
competitor for the top position in 2005.
without disrupting any production for developing opportunities in Eastern
At the same time, we maintained our #1
existing customers. Europe. In 2004, we launched the high-
position* in the European OE emission
volume Ford Focus, a compelling example
control business.
Josep: I agree. Our advanced of our “Go East” strategy. We would
Ulrich: We also made great strides
never have won this ride control
Computerized Electronic Suspension
business without our capacity in Poland in increasing customer satisfaction last
product provides vehicle handling and
and the Czech Republic. year by implementing detailed plans for
safety improvements that customers
meeting and exceeding expectations. As
are willing to pay for. At the same time,
Ulrich: Moreover, we now have full
a result, we had a number of successful
we are reducing costs by increasing
engineering and design capabilities
launches including the BMW 1-Series,
purchases from low-cost countries, out-
for exhaust systems in Eastern Europe.
which represents our move into the
sourcing non-core processes, further
We believe this differentiates us from
higher-volume small-vehicle segment,
reducing inventories and standardizing
most automotive suppliers. And, while
and Porsche’s Boxster and 911, which
more of our products and processes.
Western European automotive produc-
demonstrate our continuing relationship
Hari: The improving South American tion is expected to be flat this year,
with this prestigious nameplate.
we see positive projections in the east
economy and our efficient operations
and are well positioned to capitalize
there also present opportunities for *Market share data in this annual report is based
on 2004 estimated revenues and are compiled
on that expansion. For example, we are
growth. Additionally, we’ll continue to from our knowledge of our relative position
in the market and industry sources. These data
building relationships in Russia with
look at ways to fine-tune our manufac-
are prepared in accordance with what Tenneco
our exhaust contract for the Lada Riva,
turing footprint to take advantage of believes to be standard industry practice.
10

15. Tenneco Automotive 2004 Annual Report
Ulrich Mehlmann Josep Fornos
introduction of longer-lasting stainless
What will drive future revenue growth?
European Revenues Outperform
steel by the OEMs. We’ve also streamlined
Josep: New ride control technologies Market Production Rates
manufacturing operations to reduce
that address comfort and safety such as
costs, including integrating aftermarket % change
CES, our electronic shock, and Kinetic,
and OE production to more efficiently
16%
our anti-roll system offering improved
14%
utilize capacity.
13%
vehicle stability. Also, leveraging our
10%
North American relationships with the Why are European operating margins
Japanese automakers and developing lower than North America’s?
3%
2%
new relationships with Korean OEMs
Hari: Complexity. The total number
as both have expanded their European
-1%
of countries we serve exceeds 90. -2%
market shares.
That means doing business with multiple
Q1 Q2 Q3 Q4
Ulrich: Stricter environmental legal entities, currencies and languages,
requirements will also drive growth. We 2004 Tenneco European OE Revenues
and producing a greater number of
2004 W. Europe Lt. Vehicle Production
anticipate increased value for emission- models and engine variants to meet
control content in both the passenger consumer preferences, which vary by
car and commercial vehicle markets. region. But more than anything else, superior quality. And these are not my
Western European labor costs are signif- words. The most frequent feedback from
What have you done to improve
icantly higher, in part resulting from a our customers is that we flex where
European aftermarket results?
more stringent regulatory environment. others don’t— whether it be in opera-
Hari: We have been making steady tions, design, engineering or logistics,
Ulrich: But we are making progress
improvements, including signing roughly and when a customer faces an issue,
as revenues increase and ongoing
$20 million in incremental business in our reaction speed is second to none.
restructuring initiatives bear fruit.
2004 with customers like Van Heck & Co.,
New OE programs that we’ve launched Ulrich: We place the highest
a major wholesale distributor in the
in lower-cost Eastern Europe are helping importance on providing solutions that
Netherlands. In addition, we adjusted
continue this progress. are tailored to individual customers.
our product mix by eliminating weak-
Hari: By providing solutions and
selling parts. And new products being How does Tenneco stack up
rolled out in 2005, like high-perform- delivering on our promises, we are
against the competition? What
ance brakes and filters under our DNX building credibility, trust and a win-win
differentiates you?
brand, will help to offset the shrinking partnership with our customers.
Josep: A combination of things that add
exhaust segment that resulted from the
up to best-in-class customer service and
11

16. Asia Australia
Emission Control Manufacturing
Ride Control Manufacturing
Emission Control Engineering Center
Ride Control Engineering Center
>> ASIA PACIFIC
for the production of export products
China is expected to become the
world’s second largest automotive and components. As quality improves,
market in terms of sales in three the most likely candidates to handle the
years. Are China’s steps to slow its export volume will be India and China.
booming economy likely to persist Today, virtually all of our production in
and what does that mean for
China is for use in the Chinese market.
Tenneco’s growth?
Another area driving growth will be the
Tim Donovan, Executive Vice
stricter emission standards. Beijing is
President and General Counsel
restricting emissions now in anticipation
& Managing Director, Asia Pacific:
of the 2008 Olympic Games. Shanghai
There is concern that the Chinese
is planning to do the same.
government might try to further limit
Finally, we are positioning ourselves
economic growth this year. As a result,
for the expected consolidation of about
we expect to deliver a modest increase
120 automakers in China today to less
in volume in 2005 as that economy
than 10 that are likely to survive over
sorts itself out. Beyond that, I really
the long haul as global players. Our
do believe China’s growth is going
leading market share in emission control
to be a stair-step versus a straight-line
gives us a competitive advantage as this
trajectory. Regardless, we continue
trend plays out.
to believe that the opportunity is
substantial, given its population size
What are your plans for Thailand
and relatively low level of vehicle
and India?
ownership. Over the long-term, China
Tim: Thailand presents an opportunity
could become Tenneco’s largest market.
for us to manufacture cost-effective
So what will it take to make that emission components for export
happen? throughout the region. In India, we are
upgrading our ride control facility to
Tim: Two important catalysts will be
make products for global export.
greater efficiency in our OE joint-
venture operations and the effective
use of capacity in low-cost countries
12

17. Tenneco Automotive 2004 Annual Report
“ We became the #1 exhaust supplier
in China last year and continue to grow
with that market, diversifying our
customer base through new business.”
Tim Donovan
In Asia there are seven joint What differentiates you from the
Execution & Discipline
competition in Asia?
ventures— five in China and one
Australia Case History
each in Thailand and India. Are there
Tim: Primarily the quality of our
plans to open more? Global customers need global supply
management teams in the region—
teams that work together across conti-
hiring local people that have intimate
Tim: In China we’re in pretty good shape
nents, time zones and cultures with
knowledge of the markets, as well as the
right now with the 2004 addition of a
seamless focus. General Motors was
legal, commercial and regulatory
new JV to service Ford and the recent
looking for an exhaust supplier for one
environment. We supplement this local
partnership with Eberspächer for BMW
of its new models. A Tenneco Australian
orientation by drawing on our global
exhaust business. We currently have
team enlisted their counterparts in North
manufacturing, supply chain and
four exhaust JVs and one ride control
America and the commercial representa-
technological resources. Additionally,
JV in China. Why only one shock plant? tive at our South Africa plant. Operating
our leading-edge technology gives
Shocks are relatively cost-effective to over three continents as a single global
us a competitive advantage.
ship, so having multiple facilities, each crew, the team won incremental new
business worth millions of dollars.
in proximity to the customer, is not as
What are your top priorities for 2005?
important as it is for exhaust facilities.
Of course, we’re always open to new Tim: Expanding and upgrading our ride-
opportunities to expand our business control operations, further diversifying Leveraging Joint Ventures to
in the Asia Pacific region. our customer base through new business, Capitalize on Growth in China
improving processes, and executing
What is the outlook for growth in the Tenneco Revenue
flawless launches. $ millions $125
aftermarket business? $120
What does Tenneco’s culture of
Tim: It’s a very fragmented market
Execution and Discipline mean to you?
right now in China. There’s no clear $80
distribution system for aftermarket like Tim: It means differentiating ourselves
there is in the United States. We’re from the competition by getting the
$43
currently launching a very detailed plan basics right. Best-in-class suppliers like
$30
to leverage our strong Monroe brand Tenneco know that being more process
$14
in China with a goal of capturing a 30% driven allows more opportunities
share of the aftermarket by 2009. for growth. We strive to be disciplined
1999 2000 2001 2002 2003 2004
in the execution of our programs and
processes—and that should give us
an advantage.
13