As you read the following review of our financial condition and results of operations, you should also read our condensed consolidated financial statements and related notes beginning on page 4.

Executive Summary

We are one of the world's leading manufacturers of automotive emission control and ride control products and systems. We serve both original equipment (OE) vehicle designers and manufacturers and the repair and replacement markets, or aftermarket, globally through leading brands, including MonroeŽ, RanchoŽ, CleviteŽ Elastomers and Fric Rottm ride control products and WalkerŽ, Fonostm, and Gillettm emission control products. Worldwide we serve more than 37 different original equipment manufacturers, and our products or systems are included on eight of the top 10 passenger car models produced for sale in Europe and eight of the top 10 light truck models produced for sale in North America for 2008. Our aftermarket customers are comprised of full-line and specialty warehouse distributors, retailers, jobbers, installer chains and car dealers. As of December 31, 2008, we operated 83 manufacturing facilities worldwide and employed approximately 21,000 people to service our customers' demands.

Factors that continue to be critical to our success include winning new business awards, managing our overall global manufacturing footprint to ensure proper placement and workforce levels in line with business needs, maintaining competitive wages and benefits, maximizing efficiencies in manufacturing processes and reducing overall costs. In addition, our ability to adapt to key industry trends, such as a shift in consumer preferences to other vehicles in response to higher fuel costs and other economic and social factors, increasing technologically sophisticated content, changing aftermarket distribution channels, increasing environmental standards and extended product life of automotive parts, also play a critical role in our success. Other factors that are critical to our success include adjusting to economic challenges such as increases in the cost of raw materials and our ability to successfully reduce the impact of any such cost increases through material substitutions, cost reduction initiatives and other methods.

The deterioration in the global economy and global credit markets in the past year has negatively impacted global business activity in general, and specifically the automotive industry in which we operate. The market turmoil and tightening of credit, as well as the dramatic decline in the housing market in the United States and Western Europe, have led to a lack of consumer confidence evidenced by a rapid decline in light vehicle purchases in 2008 and the first six months of 2009. Light vehicle production during the first six months of 2009 decreased by 50 percent in North America and 35 percent in Europe as compared to the first six months of 2008. OE production has stabilized and overall the production environment strengthened in the third quarter compared to the second quarter as production began to track more closely to vehicle sales after inventory corrections in the first half of the year. In North America, light vehicle production in the third quarter 2009 was down 21 percent year-over-year. However, the industry built 2.3 million vehicles in the third quarter compared with 1.8 million in the second quarter of this year, a 32 percent increase. In Europe, light vehicle production in the third quarter 2009 was down 15 percent year-over-year. Approximately 4.2 million vehicles were built in the third quarter, down from 4.4 million in the second quarter primarily due to the normal August shut-downs.

In response to current economic conditions, some of our customers have eliminated or are expected to eliminate certain light vehicle models or brands in order to remain or become financially viable. While we do not believe that models eliminated to date will have a significant impact to us, changes in the models produced by our customers or sales of their brands may have an adverse effect on our market share. Additional declines in consumer demand would have a further adverse effect on the financial condition of our OE customers, and on our future results of operations. Continued or further financial difficulties at any of our major customers could have an adverse impact on the level of our future revenues and collection of our receivables from such customers.

Further deterioration in the industry may have an impact on our ability to meet future financial covenants which would require us to enter into negotiations with our senior credit lenders to request additional covenant relief. Such conditions and events may also result in incremental charges related to impairment of goodwill, intangible assets and long-lived assets, and in charges to record an additional valuation allowance against our deferred tax

assets. In addition, a bankruptcy filing by a significant customer could result in a condition of default under our U.S. accounts receivables securitization agreement, terminating future purchases of receivables under that agreement, which would have an adverse effect on our liquidity. See Note 6 of our notes to condensed consolidated financial statements.

In the event that economic conditions diminish our future revenues, we would pursue a range of actions to meet our cash flow needs. Such actions include additional restructuring initiatives and other cost reductions, sales of assets, reductions to working capital and capital spending, issuance of equity and other alternatives to enhance our financial and operating position.

Other than the impact from production shutdowns during the second quarter, we incurred no other economic loss from the bankruptcy filings of Chrysler or General Motors. On April 30, 2009, Chrysler LLC and its U.S. subsidiaries filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. Chrysler formed a new company in partnership with Fiat (Chrysler Group LLC) which, on June 10, 2009, purchased certain assets of Chrysler LLC in a sale under
Section 363 of the Bankruptcy Code (Section 363). We collected substantially all of our pre-petition receivables and Chrysler Group LLC has assumed substantially all of the contracts which we had with Chrysler LLC.

On June 1, 2009, General Motors Corporation and certain of its U.S. subsidiaries filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. On July 10, 2009, a new company, General Motors Company, which is initially owned by the U.S. government, the UAW Retiree Medical Benefits Trust, the Canadian government, the Ontario government and the former bondholders of General Motors Corporation, purchased certain of the assets of General Motors Corporation in a sale under Section 363. We collected substantially all of our pre-petition receivables and General Motors Company has assumed substantially all of the contracts which we had with General Motors Corporation.

In April 2009, we removed both Chrysler LLC and General Motors Corporation from our U.S. accounts receivable securitization program. With respect to certain of our U.S. sales to General Motors Corporation, we participated in the U.S. Treasury Department's Auto Supplier Support program. We have now opted out of that program and both Chrysler Group LLC and General Motors Company have been added back into our U.S. securitization program.

We have a substantial amount of indebtedness. As such, our ability to generate cash - both to fund operations and service our debt - is also a significant area of focus for our company. See "Liquidity and Capital Resources" below for further discussion of cash flows and "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2008.

Total revenues for the third quarter of 2009 were $1,254 million, compared to $1,497 million in the third quarter of 2008. Excluding the impact of currency and substrate sales, revenue was down $71 million or six percent due to lower year-over-year OE vehicle production levels in North America, Europe and Australia. Higher North American aftermarket revenues and stronger production volumes in South America and Asia partially offset these declines.

Gross margin in the third quarter of 2009 was 16.8 percent, up from 13.3 percent in 2008. The improvement, despite higher restructuring and related expenses year-over-year, was driven by our cost reduction efforts, restructuring savings, efficiency improvements, material cost management, lower percentage of substrate revenue and the benefit from a stronger mix between aftermarket and OE revenues as aftermarket revenues typically carry higher gross margins. These improvements were partially offset by lower OE production volumes and manufacturing fixed cost absorption.

Selling, general and administrative expense was up $3 million in the third quarter of 2009, at $90 million, compared to $87 million in the third quarter of 2008. Cost reduction efforts, which included restructuring savings and temporary employee salary reductions and 401(k) match suspension were more than offset by higher year-over-year expense for other compensation related costs and the acquisition of Marzocchi in the third quarter of 2008. The third quarter of 2008 included $3 million in restructuring and related expense. Engineering expense was $27 million and $29 million in the third quarter of 2009 and 2008, respectively. Cost reduction efforts including

temporary employee salary reductions, drove the improvement. Selling, general, administrative and engineering expenses increased to 9.3 percent of revenues from 7.7 percent of revenues in 2008 due to lower year-over-year revenues.

Earnings before interest expense, taxes and noncontrolling interests ("EBIT") was $35 million for the third quarter of 2009 compared to $28 million in the third quarter of 2008. Cost reduction efforts and savings from restructuring activities, along with material cost reductions and the impact of the temporary salary reduction which provided $7 million of savings, more than offset the negative impact from lower OE production volumes and the related manufacturing fixed cost absorption and the unfavorable currency year-over-year impact of $2 million.

Total revenues for the first nine months of 2009 were $3,327 million, compared to $4,708 million for the first nine months of 2008. Excluding the impact of currency and substrate sales, revenue was down $500 million, from $3,513 million to $3,013 million, driven by lower year-over-year OE vehicle production levels in North America, Europe and Australia. Partially offsetting the decline were increased North American aftermarket sales and higher revenues in South America and Asia.

Gross margin in the first three quarters of 2009 was 16.4 percent, up 1.5 percentage points from 14.9 percent in 2008. Cost reduction actions, customer recoveries, manufacturing efficiencies, lower percentage of substrate revenue and the benefit from a stronger mix between OE and aftermarket revenues drove the improvement. These improvements were partially offset by lower OE production volumes and the related manufacturing fixed cost absorption and higher restructuring and related expenses.

Selling, general and administrative expense was down $38 million in the first three quarters of 2009, at $256 million, compared to $294 million in the first three quarters of 2008. Cost reduction efforts, which included restructuring savings, employee furloughs, 401 (k) match suspension and temporary salary reductions drove the improvement. The first nine months of 2009 included $1 million in restructuring and related expense compared to $7 million in aftermarket customer changeover costs and $7 million in restructuring and related expense in the first nine months of 2008. Engineering expense was $72 million and $99 million in the first three quarters of 2009 and 2008, respectively. Cost reduction efforts including engineering cost recoveries, employee furloughs and temporary salary reductions reduced engineering costs. Selling, general, administrative and engineering expenses increased in the first nine months of 2009 to 9.9 percent of revenues from 8.3 percent of revenues in the first nine months of 2008 due to lower year-over-year revenues.

EBIT was $39 million for the first three quarters of 2009, down from $142 million in 2008. Lower OE production volumes in most geographic regions and the related manufacturing fixed cost absorption reduced EBIT by $225 million in addition to $24 million of negative currency year-over-year. We offset over half of this negative impact, primarily through lower selling, general and administrative spending, customer recovery of engineering costs, material cost savings, cost reduction actions, the impact of the temporary salary reduction which provided savings of $14 million and savings from restructuring activities.

Results from Operations

Net Sales and Operating Revenues for the Three Months Ended September 30, 2009 and 2008

The following tables reflect our revenues for the third quarter of 2009 and 2008. We present these reconciliations of revenues in order to reflect the trend in our sales in various product lines and geographic regions separately from the effects of doing business in currencies other than the U.S. dollar. We have not reflected any currency impact in the 2008 table since this is the base period for measuring the effects of currency during 2009 on our operations. We believe investors find this information useful in understanding period-to-period comparisons in our revenues.

Additionally, we show the component of our revenue represented by substrate sales in the following tables. While we generally have primary design, engineering and manufacturing responsibility for OE emission control systems, we do not manufacture substrates. Substrates are porous ceramic filters coated with a catalyst - precious metals such as platinum, palladium and rhodium. These are supplied to us by Tier 2 suppliers and directed by our OE customers. We generally earn a small margin on these components of the system. As the need for more sophisticated emission control solutions increases to meet more stringent environmental regulations, and as we

capture more diesel aftertreatment business, these substrate components have been increasing as a percentage of our revenue. Changes in commodity prices as well as changes in the mix of vehicles produced by our customers as a result of the economic crisis have recently reduced the percentage of our revenue related to substrates. While these substrates dilute our gross margin percentage, they are a necessary component of an emission control system. We view the growth of substrates as a key indicator that our value-add content in an emission control system is moving toward the higher technology hot-end gas and diesel business.

Our value-add content in an emission control system includes designing the system to meet environmental regulations through integration of the substrates into the system, maximizing use of thermal energy to heat up the catalyst quickly, efficiently managing airflow to reduce back pressure as the exhaust stream moves past the catalyst, managing the expansion and contraction of the emission control system components due to temperature extremes experienced by an emission control system, using advanced acoustic engineering tools to design the desired exhaust sound, minimizing the opportunity for the fragile components of the substrate to be damaged when we integrate it into the emission control system and reducing unwanted noise, vibration and harshness transmitted through the emission control system.

We present these substrate sales separately in the following table because we believe investors utilize this information to understand the impact of this portion of our revenues on our overall business and because it removes the impact of potentially volatile precious metals pricing from our revenues. While our original equipment customers generally assume the risk of precious metals pricing volatility, it impacts our reported revenues. Excluding "substrate" catalytic converter and diesel particulate filter sales removes this impact.

                                                              Three Months Ended September 30, 2009
                                                                                          Substrate          Revenues
                                                                                            Sales           Excluding
                                                                          Revenues        Excluding        Currency and
                                                          Currency       Excluding        Currency          Substrate
                                          Revenues         Impact         Currency         Impact             Sales
                                                                           (Millions)

North America Original Equipment
Ride Control                             $      107       $      (1 )    $      108      $         -      $          108
Emission Control                                321               -             321              147                 174

Total North America Original Equipment          428              (1 )           429              147                 282
North America Aftermarket
Ride Control                                    110               -             110                -                 110
Emission Control                                 40              (1 )            41                -                  41

Total North America Aftermarket                 150              (1 )           151                -                 151
Total North America                             578              (2 )           580              147                 433
Europe Original Equipment
Ride Control                                    107              (2 )           109                -                 109
Emission Control                                235             (41 )           276               75                 201

Total Europe Original Equipment                 342             (43 )           385               75                 310
Europe Aftermarket
Ride Control                                     50              (2 )            52                -                  52
Emission Control                                 46              (3 )            49                -                  49

Total Europe Aftermarket                         96              (5 )           101                -                 101
South America & India                           103             (12 )           115               14                 101
Total Europe, South America & India             541             (60 )           601               89                 512
Asia                                            102               -             102               21                  81
Australia                                        33              (1 )            34                2                  32

Total Asia Pacific                              135              (1 )           136               23                 113

Total Tenneco                            $    1,254       $     (63 )    $    1,317      $       259      $        1,058

                                                               Three Months Ended September 30, 2008
                                                                                             Substrate          Revenues
                                                                                               Sales           Excluding
                                                                            Revenues         Excluding        Currency and
                                                           Currency         Excluding        Currency          Substrate
                                          Revenues          Impact          Currency          Impact             Sales
                                                                           (Millions)

North America Original Equipment
Ride Control                             $      139       $         -      $       139      $         -      $          139
Emission Control                                381                 -              381              188                 193

Total North America Original Equipment          520                 -              520              188                 332
North America Aftermarket
Ride Control                                     99                 -               99                -                  99
Emission Control                                 43                 -               43                -                  43

Total North America Aftermarket                 142                 -              142                -                 142
Total North America                             662                 -              662              188                 474
Europe Original Equipment
Ride Control                                    111                 -              111                -                 111
Emission Control                                370                 -              370              135                 235

Total Europe Original Equipment                 481                 -              481              135                 346
Europe Aftermarket
Ride Control                                     59                 -               59                -                  59
Emission Control                                 52                 -               52                -                  52

Total Europe Aftermarket                        111                 -              111                -                 111
South America & India                           115                 -              115               17                  98
Total Europe, South America & India             707                 -              707              152                 555
Asia                                             77                 -               77               24                  53
Australia                                        51                 -               51                4                  47

Total Asia Pacific                              128                 -              128               28                 100

Total Tenneco                            $    1,497       $         -      $     1,497      $       368      $        1,129

Revenues from our North American operations decreased $84 million in the third quarter of 2009 compared to the same period last year. Lower sales from both North American OE business units was partially offset by higher aftermarket revenues. North American OE emission control revenues were down $60 million in the third quarter of 2009; excluding substrate sales, revenues were down $19 million compared to last year. This decrease was mainly due to lower OE production volumes year-over-year. North American OE ride control revenues for the third quarter of 2009 were down $31 million from the prior year, excluding $1 million of unfavorable currency. The decline was also driven by lower OE production volumes. Our total North American OE revenues, excluding substrate sales and currency, decreased 15 percent in the third quarter of 2009 compared to third quarter of 2008. North American light vehicle production decreased 21 percent. Industry Class 8 commercial vehicle production was down 42 percent and industry Class 5-7 commercial vehicle production was down 32 percent in third quarter of 2009 as compared to the previous year's comparable period. Aftermarket revenues for North America were $150 million in the third quarter of 2009, an increase of $8 million compared to the prior year. Excluding $1 million in unfavorable currency, aftermarket revenues were up $9 million driven by stronger ride control volumes and pricing, partially offset by lower emission control volumes. Aftermarket ride control revenues increased 11 percent in the third quarter of 2009 while aftermarket emission control revenues, net of unfavorable currency, decreased seven percent in the third quarter of 2009.

Our European, South American and Indian segment's revenues decreased $166 million, or 23 percent, in the third quarter of 2009 compared to last year. Europe OE emission control revenues of $235 million in the third

quarter of 2009 were down 37 percent as compared to the third quarter of last year. Excluding $41 million of unfavorable currency and a reduction in substrate sales, Europe OE emission control revenues decreased 15 percent from 2008 due to lower OE production volumes. Europe OE ride control revenues of $107 million in the third quarter of 2009 were down three percent year-over-year. Excluding unfavorable currency, ride control revenues decreased by two percent in the 2009 third quarter due to the lower production volumes, partially offset by new ride control launches, including new CES business, and a favorable vehicle mix, weighted toward the A/B segment vehicles, which have been better sellers under the recent government incentive programs. Our total European OE revenues, excluding substrate sales and currency, decreased 10 percent in the third quarter of 2009 compared to the third quarter 2008. The third quarter total European light vehicle industry production was down 15 percent when compared to the third quarter of 2008. European aftermarket revenues decreased 13 percent or $15 million in the third quarter of 2009 compared to last year. When adjusted for unfavorable currency, aftermarket revenues were down nine percent. Excluding the negative $2 million impact of currency, ride control aftermarket revenues were down 10 percent while emission control aftermarket revenues were down seven percent, excluding $3 million in unfavorable currency. The decrease was driven by overall market declines but particularly heavy duty ride control products, and the ride control market in Eastern Europe where economies have been more severely impacted by the economic crisis. South American and Indian revenues were $103 million during the third quarter of 2009, compared to $115 million in the prior year. When unfavorable currency and substrates are excluded, revenue was up $3 million compared to the third quarter of last year. Our South American and Indian operations benefited from improved OE production volumes.

Revenues from our Asia Pacific segment, which includes Australia and Asia, increased $7 million to $135 million in the third quarter of 2009 compared to the same period last year. Excluding the impact of substrate sales and currency, revenues increased to $113 million from $100 million in the prior year. Asian revenues for the third quarter of 2009 were $102 million, up 32 percent from last year. Higher OE production volumes in China were the primary reason for the increase. Excluding substrate sales, Asian revenue increased $28 million when compared with last year. Third quarter revenues for Australia decreased 33 percent to $33 million. Excluding lower substrate sales and $1 million of unfavorable currency, Australian revenue decreased 29 percent due to industry light vehicle production declines.

Net Sales and Operating Revenues for the Nine Months Ended September 30, 2009 and 2008

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