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How To Move Beyond Your Core Business

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Tenneco NAAM Business Situation

1. Exhaust systems & shocks/struts have relatively low service interval rates: #3/#6 rankSource: AAIA

1) Engine tune-ups – 33.5%

2) Brake jobs – 21.7%

3) Exhaust system job – 6.6%

4) Radiator/Cooling Flush – 5.1%

5) Ignition Wire – 4.6%

6) Shocks & Struts – 3.6%

7) Fuel Injection – 2.2%

2. Shock/Strut market stagnant/declining due to better quality original equipment driving lower service replacement rates for aftermarket shocks.Source: IMR

3. Exhaust market declining due to better quality original equipment – i.e. aluminum to stainless steel exhaust systems.Source: IMR

North American Aftermarket Business Profile:• Sales: ~$500MM• Core businesses: Ride Control & Emission Control - #1 brands • Brands: Monroe Shocks & Struts, Walker Exhaust• 15% of total corporate revenue, balance – original equipment parts

3.3%

2.8%2.9%

2.5%2.6%

2.4%

2.6%

2.4%2.2%

2.1%2.0%

1.8%1.7%

1.6%

1.4%1.3%

1.2%

1.0% 1.0%0.9%

1.2%1.2% 1.2%

1.3%1.4%

1.6%

1.8%

2.1%

0.0%

1.0%

2.0%

3.0%

4.0%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Shock Absorbers (actual) Struts (actual)

6.06.6

7.48.0

9.210.7

11.8

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Tenneco NAAM Business Actions #1

Dirt and Mud have a hard time sticking – for a clean/shine that

really last Black waxes highly rated by Consumer Reports Black Waxes were “best sellers” at key customers Ion Car Polish – next generation polish – repels dirt/mud

Non-greasy shine Unique 2-sided wipe

Tire Shine – No sling vs. competition Wheel Cleaner – Spray On, Hose Off “Best Sellers” at key customers

Protect and coats critical engine

parts for better gas mileage

Fuel Cleaners help improve fuel flow efficiency Engine Treatment help protect critical engine parts

Spray on, wipe off Formula similar to wheel clr. Carpet Clr. was best seller

Spot Free Shine Helps keep car cleaner longer “Best Sellers” at key customers

Licensed Product Opportunity with DuPont & Motorsports DuPont wanted a new licensee to help re-enter Car Care market adjacent to their paint line. NASCAR “Free” access to Jeff Gordon & 24 Car as an endorser in marketing communications Tenneco had independently developed new “best in class” formulations in a water-based format Identified/developed new “wear shield” friction modifier for performance chemical products

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Tenneco NAAM Business Actions #2

Brakes Parts – attractive category #2 service item behind engine tune-ups Very large/growing market – Friction: $1.1B++ All brake components (i.e. rotors, calipers) - $2.2BSource: IMR/Frost & Sullivan

Market not heavily concentrated – top 3 brands only account for 60% of sales

Top 3 brands at the time were weak: - Wagner: owned by Federal Mogul: No innovation - Raybestos: Sold by Dana to Affinia – restructuring - Bendix: Owned by Honeywell – tried to sell business to Wagner. No investment.

Monroe equity extension beyond Shocks - logical and easy to understand

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2.

3.

Brakes Pads/Shoes

64 62

5761 62

65 63 6263

$938 $939$865

$950 $969$1,029

$1,130$1,123$1,126

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$0

$200

$400

$600

$800

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$1,400

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New Category Opportunity: Brakes

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Tenneco NAAM Business Actions #2

PREMIUM PRICE POINT

Part Numbers: 642

Applications: Mid 60’s - 2010; Pass Car, Lt. Truck SUV, Med-Duty, some heavy duty

Formulation Type: Semi Metallic

Attributes: Hardware in box (e.g. Wire Wear Sensors, Noise Reduction Kits, Rubber coated shims, Lube)

Part Numbers: 391

Applications: Mid 60’s - 2010; Pass Car, Lt. Truck, SUV

Formulation Type: Ceramic/Non Asbestos Organic blends

Attributes: Hardware in box (e.g. Wire Wear Sensors, Noise Reduction Kits, Rubber coated shims, Lube)

Monroe premium brake pads were first OE replacement application - engineered product – including all the hardware in box to do job right

Post Launch - Brake Packaging Structure & Line Graphic Change

Before: After:

1) Original Packaging Design: 1000+ SKU’s spread among two friction types – Semi Metallic (DX) & Ceramics (CX)

Product packed in very expensive and non-customer friendly vacuum form “skin tight” configuration

2) Packout & Design Changes: Shifted to easy to remove and simpler shrink wrap design

Consolidated dual friction type design into one product line look – similar to competitive packaging designs

Savings: ~$300M/yr.

Tenneco NAAM Business Actions #2

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Tenneco NAAM Business ResultsDuPont Car Care: Introduced 17 new products that generated over $5MM+ in annualized sales.

Obtained distribution in 15,000+ retail outlets: Mass Merchants/Home Centers & Automotive retailers.

Sold Tenneco/DuPont into brand new customers: Wal-Mart, Wal-Mart-Mexico, Lowe’s, Target and Auto-Zone.

Spray Wax, Tire Shine & Wheel Cleaner – top 10 best selling SKU’s in NPD; Wax received #5 rating out of 28 total waxes tested in 6/’06 Consumer Reports test.

Monroe Brakes: Achieved $20MM in sales with 100+ new customers against entrenched competitors.

Developed “best practice” new product development process resulting in $500M in new brake pad SKU’s including a new brake shoe line in just two years.

Grew margins and supply chain effectiveness – in house manufacturing program vs. third party suppliers. Reduced product cost by 25% and increased margin % by +8.3 ppts.