Supplemental Guarantor Condensed Consolidating Financial Statements | 19. Supplemental Guarantor Condensed Consolidating Financial Statements Basis of Presentation Substantially all of the Company's existing and future material domestic 100% owned subsidiaries (which are referred to as the Guarantor Subsidiaries) fully and unconditionally guarantee its senior notes on a joint and several basis. However, a subsidiary’s guarantee may be released in certain customary circumstances such as a sale of the subsidiary or all or substantially all of its assets in accordance with the indenture applicable to the notes. The Guarantor Subsidiaries are combined in the presentation below. These consolidating financial statements are presented on the equity method. Under this method, the Company's investments are recorded at cost and adjusted for its ownership share of a subsidiary’s cumulative results of operations, capital contributions and distributions, and other equity changes. You should read the condensed consolidating financial information of the Guarantor Subsidiaries in connection with the Company's condensed consolidated financial statements and related notes of which this note is an integral part. The accompanying supplemental guarantor consolidating financial statements have been updated to reflect the revision as described in Note 2, Summary of Significant Accounting Policies . As discussed in Note 3, Acquisitions and Divestitures , the allocation of the purchase price to the assets acquired and liabilities assumed, including the entities to which it is allocated, is preliminary and subject to change during the measurement period. Distributions There are no significant restrictions on the ability of the Guarantor Subsidiaries to make distributions to us. STATEMENT OF COMPREHENSIVE INCOME (LOSS) Three Months Ended March 31, 2019 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated Revenues Net sales and operating revenues: External $ 1,691 $ 2,793 $ — $ — $ 4,484 Affiliated companies 218 281 — (499 ) — 1,909 3,074 — (499 ) 4,484 Costs and expenses Cost of sales 1,676 2,688 (1 ) (499 ) 3,864 Restructuring charges and asset impairments 8 16 — — 24 Goodwill impairment charge 33 27 — — 60 Engineering, research, and development 39 53 — — 92 Selling, general, and administrative 178 135 3 — 316 Depreciation and amortization 83 86 — — 169 2,017 3,005 2 (499 ) 4,525 Other expense (income) Non-service postretirement benefit costs — 2 — — 2 Equity in (earnings) losses of nonconsolidated affiliates, net of tax (1 ) (15 ) — — (16 ) Other (income) expense, net (7 ) 4 — — (3 ) (8 ) (9 ) — — (17 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies (100 ) 78 (2 ) — (24 ) Interest expense: External, net of interest capitalized 11 5 65 — 81 Affiliated companies, net of interest income (8 ) 8 — — — Earnings (loss) before income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies (103 ) 65 (67 ) — (105 ) Income tax expense (benefit) (18 ) 30 (12 ) — — Equity in net income (loss) from affiliated companies 21 — 62 (83 ) — Net income (loss) (64 ) 35 7 (83 ) (105 ) Less: Net income (loss) attributable to noncontrolling interests — 12 — — 12 Net income (loss) attributable to Tenneco Inc. $ (64 ) $ 23 $ 7 $ (83 ) $ (117 ) Comprehensive income (loss) attributable to Tenneco Inc. $ (68 ) $ 61 $ 7 $ (83 ) $ (83 ) STATEMENT OF COMPREHENSIVE INCOME (LOSS) Three Months Ended March 31, 2018 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated Revenues Net sales and operating revenues: External $ 1,032 $ 1,549 $ — $ — $ 2,581 Affiliated companies 123 156 — (279 ) — 1,155 1,705 — (279 ) 2,581 Costs and expenses Cost of sales 1,007 1,465 — (279 ) 2,193 Restructuring charges and asset impairments 1 11 — — 12 Goodwill impairment charge — — — — — Engineering, research, and development 18 22 — — 40 Selling, general, and administrative 73 78 — — 151 Depreciation and amortization 23 37 — — 60 1,122 1,613 — (279 ) 2,456 Other expense (income) Non-service postretirement benefit costs 3 — — — 3 Other (income) expense, net 9 (9 ) — — — 12 (9 ) — — 3 Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies 21 101 — — 122 Interest expense: External, net of interest capitalized 10 3 10 — 23 Affiliated companies, net of interest income (3 ) — 3 — — Earnings (loss) before income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies 14 98 (13 ) — 99 Income tax (benefit) expense 1 24 — — 25 Equity in net income (loss) from affiliated companies 48 — 73 (121 ) — Net income (loss) 61 74 60 (121 ) 74 Less: Net income (loss) attributable to noncontrolling interests — 14 — — 14 Net income (loss) attributable to Tenneco Inc. $ 61 $ 60 $ 60 $ (121 ) $ 60 Comprehensive income (loss) attributable to Tenneco Inc. $ 64 $ 79 $ 60 $ (121 ) $ 82 BALANCE SHEETS March 31, 2019 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated ASSETS Current assets: Cash and cash equivalents $ 143 $ 210 $ 4 $ — $ 357 Restricted cash — 6 — — 6 Receivables, net 1,037 1,806 — — 2,843 Inventories, net 964 1,302 — — 2,266 Prepayments and other current assets 217 311 27 — 555 Total current assets 2,361 3,635 31 — 6,027 Property, plant and equipment, net 1,149 2,361 9 — 3,519 Investment in affiliated companies 1,544 — 4,907 (6,451 ) — Long-term receivables, net 8 1 — — 9 Goodwill 462 329 — — 791 Intangibles, net 1,000 685 2 — 1,687 Investments in nonconsolidated affiliates 43 485 — — 528 Deferred income taxes 252 208 11 — 471 Other assets 205 379 — — 584 Total assets $ 7,024 $ 8,083 $ 4,960 $ (6,451 ) $ 13,616 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term debt, including current maturities of long-term debt $ 14 $ 130 $ 15 $ — $ 159 Accounts payable 996 1,863 2 — 2,861 Accrued compensation and employee benefits 75 288 — — 363 Accrued income taxes (3 ) 33 — — 30 Accrued expenses and other current liabilities 395 550 49 — 994 Total current liabilities 1,477 2,864 66 — 4,407 Long-term debt 133 29 5,255 — 5,417 Intercompany due to (due from) 2,072 (64 ) (2,008 ) — — Deferred income taxes — 110 — — 110 Pension, postretirement benefits and other liabilities 881 802 19 — 1,702 Commitments and contingencies Total liabilities 4,563 3,741 3,332 — 11,636 Redeemable noncontrolling interests — 153 — — 153 Tenneco Inc. shareholders’ equity 2,461 3,990 1,628 (6,451 ) 1,628 Noncontrolling interests — 199 — — 199 Total equity 2,461 4,189 1,628 (6,451 ) 1,827 Total liabilities, redeemable noncontrolling interests and equity $ 7,024 $ 8,083 $ 4,960 $ (6,451 ) $ 13,616 BALANCE SHEETS December 31, 2018 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated ASSETS Current assets: Cash and cash equivalents $ 329 $ 364 $ 4 $ — $ 697 Restricted cash — 5 — — 5 Receivables, net 943 1,629 — — 2,572 Inventories, net 958 1,287 — — 2,245 Prepayments and other current assets 254 311 25 — 590 Total current assets 2,484 3,596 29 — 6,109 Property, plant and equipment, net 1,131 2,361 9 — 3,501 Investment in affiliated companies 1,421 — 4,856 (6,277 ) — Long-term receivables, net 9 1 — — 10 Goodwill 263 383 223 — 869 Intangibles, net 1,007 510 2 — 1,519 Investments in nonconsolidated affiliates 43 501 — — 544 Deferred income taxes 255 200 12 — 467 Other assets 48 180 — (15 ) 213 Total assets $ 6,661 $ 7,732 $ 5,131 $ (6,292 ) $ 13,232 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term debt, including current maturities of long-term debt $ 1 $ 152 $ — $ — $ 153 Accounts payable 858 1,894 7 — 2,759 Accrued compensation and employee benefits 88 255 — — 343 Accrued income taxes — 52 27 (15 ) 64 Accrued expenses and other current liabilities 436 488 77 — 1,001 Total current liabilities 1,383 2,841 — 111 (15 ) 4,320 Long-term debt 3 32 5,305 — 5,340 Intercompany due to (due from) 2,726 (215 ) (2,511 ) — — Deferred income taxes — 88 — — 88 Postretirement benefits and other liabilities 225 705 500 — 1,430 Commitments and contingencies Total liabilities 4,337 3,451 3,405 (15 ) 11,178 Redeemable noncontrolling interests — 138 — — 138 Tenneco Inc. shareholders’ equity 2,324 3,953 1,726 (6,277 ) 1,726 Noncontrolling interests — 190 — — 190 Total equity 2,324 4,143 1,726 (6,277 ) 1,916 Total liabilities, redeemable noncontrolling interests and equity $ 6,661 $ 7,732 $ 5,131 $ (6,292 ) $ 13,232 STATEMENT OF CASH FLOWS Three Months Ended March 31, 2019 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated Operating Activities Net cash provided by (used in) operating activities $ (29 ) $ (75 ) $ (46 ) $ — $ (150 ) Investing Activities Acquisition of business, net of cash acquired — (158 ) — — — (158 ) Proceeds from sale of assets — 1 — — 1 Cash payments for property, plant and equipment (60 ) (150 ) — — (210 ) Net proceeds from sale of business 6 16 — — 22 Other 2 — — — 2 Proceeds from deferred purchase price of factored receivables — 60 — — 60 Net cash used in investing activities (52 ) (231 ) — — (283 ) Financing Activities Cash dividends — — (20 ) — (20 ) Repayment of term loans and notes (1 ) (37 ) (26 ) — (64 ) Proceeds from term loans and notes — 28 — — 28 Issuance (repurchase) of common shares — — (2 ) — (2 ) Decrease in bank overdrafts — (1 ) — — (1 ) Borrowings on revolving lines of credit 1,856 54 209 — 2,119 Payments on revolving lines of credit (1,724 ) (63 ) (194 ) — (1,981 ) Other — (3 ) — — (3 ) Intercompany dividends and net (decrease) increase in intercompany obligations (236 ) 157 79 — — Distribution to noncontrolling interests partners — (1 ) — — (1 ) Net cash (used in) provided by financing activities (105 ) 134 46 — 75 Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash — 19 — — 19 Increase (decrease) in cash, cash equivalents and restricted cash (186 ) (153 ) — — (339 ) Cash, cash equivalents and restricted cash, January 1 329 369 4 — 702 Cash, cash equivalents and restricted cash, March 31 $ 143 $ 216 $ 4 $ — $ 363 STATEMENT OF CASH FLOWS Three Months Ended March 31, 2018 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated Operating Activities Net cash provided by (used in) operating activities $ (27 ) $ 32 $ (5 ) $ — $ — Investing Activities Proceeds from sale of assets — 2 — — 2 Cash payments for property, plant and equipment (40 ) (49 ) — — (89 ) Proceeds from deferred purchase price of factored receivables — 34 — — 34 Net cash used in investing activities (40 ) (13 ) — — (53 ) Financing Activities Proceeds from term loans and notes — 6 — — 6 Repayments of term loans and notes (5 ) (8 ) — — (13 ) Borrowings on revolving lines of credit 1,093 8 166 — 1,267 Payments on revolving lines of credit (1,026 ) (12 ) (151 ) — (1,189 ) Issuance (repurchase) of common shares — — (2 ) — (2 ) Cash dividends — — (13 ) — (13 ) Net increase (decrease) in bank overdrafts — (4 ) — — (4 ) Other — (30 ) — — (30 ) Intercompany dividends and net (decrease) increase in intercompany obligations 3 (7 ) 4 — — Net cash (used in) provided by financing activities 65 (47 ) 4 — 22 Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash — 3 — — 3 Increase (decrease) in cash, cash equivalents and restricted cash (2 ) (25 ) (1 ) — (28 ) Cash, cash equivalents and restricted cash, January 1 7 311 — — 318 Cash, cash equivalents and restricted cash, March 31 $ 5 $ 286 $ (1 ) $ — $ 290 |