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. STATEMENT OF COMPREHENSIVE INCOME (LOSS) Three Months Ended June 30, 2019 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated Revenues Net sales and operating revenues: External $ 1,690 $ 2,814 $ — $ — $ 4,504 Affiliated companies 235 283 — (518 ) — 1,925 3,097 — (518 ) 4,504 Costs and expenses Cost of sales 1,618 2,692 1 (518 ) 3,793 Restructuring charges and asset impairments 43 18 — — 61 Engineering, research, and development 30 48 — — 78 Selling, general, and administrative 148 143 (3 ) — 288 Depreciation and amortization 81 88 — — 169 1,920 2,989 (2 ) (518 ) 4,389 Other expense (income) Non-service postretirement benefit costs (1 ) 5 — — 4 Equity in (income) losses of nonconsolidated affiliates, net of tax (1 ) (16 ) — — (17 ) Other (income) expense, net 30 (43 ) — — (13 ) 28 (54 ) — — (26 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies (23 ) 162 2 — 141 Interest expense: External, net of interest capitalized (6 ) 12 76 — 82 Affiliated companies, net of interest income (6 ) 11 (5 ) — — Earnings (loss) before income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies (11 ) 139 (69 ) — 59 Income tax expense (benefit) — 27 (13 ) — 14 Equity in net income (loss) from affiliated companies 93 — 82 (175 ) — Net income (loss) 82 112 26 (175 ) 45 Less: Net income (loss) attributable to noncontrolling interests — 19 — — 19 Net income (loss) attributable to Tenneco Inc. $ 82 $ 93 $ 26 $ (175 ) $ 26 Comprehensive income (loss) attributable to Tenneco Inc. $ 51 $ 67 $ (86 ) $ (28 ) $ 4 STATEMENT OF COMPREHENSIVE INCOME (LOSS) Three Months Ended June 30, 2018 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated Revenues Net sales and operating revenues: External $ 1,028 $ 1,505 $ — $ — $ 2,533 Affiliated companies 134 156 — (290 ) — 1,162 1,661 — (290 ) 2,533 Costs and expenses Cost of sales 984 1,440 — (290 ) 2,134 Restructuring charges and asset impairments 2 27 — — 29 Engineering, research, and development 19 20 — — 39 Selling, general, and administrative 82 72 — — 154 Depreciation and amortization 24 36 — — 60 1,111 1,595 — (290 ) 2,416 Other expense (income) Non-service postretirement benefit costs 3 — — — 3 Other (income) expense, net 15 (22 ) — 10 3 18 (22 ) — 10 6 Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies 33 88 — (10 ) 111 Interest expense: External, net of interest capitalized 10 3 9 — 22 Affiliated companies, net of interest income (4 ) — 4 — — Earnings (loss) before income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies 27 85 (13 ) (10 ) 89 Income tax (benefit) expense (2 ) 28 — — 26 Equity in net income (loss) from affiliated companies 37 — 60 (97 ) — Net income (loss) 66 57 47 (107 ) 63 Less: Net income (loss) attributable to noncontrolling interests — 16 — — 16 Net income (loss) attributable to Tenneco Inc. $ 66 $ 41 $ 47 $ (107 ) $ 47 Comprehensive income (loss) attributable to Tenneco Inc. $ 66 $ 41 $ (41 ) $ (107 ) $ (41 ) Six Months Ended June 30, 2019 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated Revenues Net sales and operating revenues: External $ 3,381 $ 5,607 $ — $ — $ 8,988 Affiliated companies 453 564 — (1,017 ) — 3,834 6,171 — (1,017 ) 8,988 Costs and expenses Cost of sales 3,294 5,380 — (1,017 ) 7,657 Restructuring charges and asset impairments 51 34 — — 85 Goodwill impairment charge 33 27 — — 60 Engineering, research, and development 69 101 — — 170 Selling, general, and administrative 326 278 — — 604 Depreciation and amortization 164 174 — — 338 3,937 5,994 — (1,017 ) 8,914 Other expense (income) Non-service postretirement benefit costs (1 ) 7 — — 6 Equity in losses of nonconsolidated affiliates, net of tax (2 ) (31 ) — — (33 ) Other (income) expense, net 23 (39 ) — — (16 ) 20 (63 ) — — (43 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies (123 ) 240 — — 117 Interest expense: External, net of interest capitalized 5 17 141 — 163 Affiliated companies, net of interest income (14 ) 19 (5 ) — — Earnings (loss) before income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies (114 ) 204 (136 ) — (46 ) Income tax expense (benefit) (18 ) 57 (25 ) — 14 Equity in net income (loss) from affiliated companies 72 — 20 (92 ) — Net income (loss) (24 ) 147 (91 ) (92 ) (60 ) Less: Net income (loss) attributable to noncontrolling interests — 31 — — 31 Net income (loss) attributable to Tenneco Inc. $ (24 ) $ 116 $ (91 ) $ (92 ) $ (91 ) Comprehensive income (loss) attributable to Tenneco Inc. $ (17 ) $ 128 $ (79 ) $ (111 ) $ (79 ) Six Months Ended June 30, 2018 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated Revenues Net sales and operating revenues: External $ 2,060 $ 3,054 $ — $ — $ 5,114 Affiliated companies 257 312 — (569 ) — 2,317 3,366 — (569 ) 5,114 Costs and expenses Cost of sales 1,991 2,905 — (569 ) 4,327 Restructuring charges and asset impairments 3 38 — — 41 Engineering, research, and development 37 42 — — 79 Selling, general, and administrative 155 150 — — 305 Depreciation and amortization 47 73 — — 120 2,233 3,208 — (569 ) 4,872 Other expense (income) Non-service postretirement benefit costs 6 — — — 6 Other (income) expense, net 24 (31 ) — 10 3 30 (31 ) — 10 9 Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies 54 189 — (10 ) 233 Interest expense: External, net of interest capitalized 20 6 19 — 45 Affiliated companies, net of interest income (7 ) — 7 — — Earnings (loss) before income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies 41 183 (26 ) (10 ) 188 Income tax (benefit) expense (1 ) 52 — — 51 Equity in net income (loss) from affiliated companies 85 — 133 (218 ) — Net income (loss) 127 131 107 (228 ) 137 Less: Net income (loss) attributable to noncontrolling interests — 30 — — 30 Net income (loss) attributable to Tenneco Inc. $ 127 $ 101 $ 107 $ (228 ) $ 107 Comprehensive income (loss) attributable to Tenneco Inc. $ 127 $ 101 $ 41 $ (228 ) $ 41 BALANCE SHEETS June 30, 2019 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated ASSETS Current assets: Cash and cash equivalents $ 216 $ 165 $ 3 $ — $ 384 Restricted cash — 6 — — 6 Receivables, net 965 1,882 — — 2,847 Inventories, net 927 1,280 — — 2,207 Prepayments and other current assets 193 329 28 — 550 Total current assets 2,301 3,662 31 — 5,994 Property, plant and equipment, net 1,142 2,418 9 — 3,569 Investment in affiliated companies 1,637 — 5,204 (6,841 ) — Long-term receivables, net 9 1 — — 10 Goodwill 470 329 — — 799 Intangibles, net 971 678 — — 1,649 Investments in nonconsolidated affiliates 42 489 — — 531 Deferred income taxes 256 212 12 — 480 Other assets 150 396 14 — 560 Total assets $ 6,978 $ 8,185 $ 5,270 $ (6,841 ) $ 13,592 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term debt, including current maturities of long-term debt $ 1 $ 154 $ 15 $ — $ 170 Accounts payable 904 1,821 — — 2,725 Accrued compensation and employee benefits 87 304 — — 391 Accrued income taxes — — — — — Accrued expenses and other current liabilities 426 542 56 — 1,024 Total current liabilities 1,418 2,821 71 — 4,310 Long-term debt 250 11 5,247 — 5,508 Intercompany due to (due from) 1,905 (196 ) (1,709 ) — — Deferred income taxes — 110 — — 110 Pension, postretirement benefits and other liabilities 817 835 23 — 1,675 Commitments and contingencies Total liabilities 4,390 3,581 3,632 — 11,603 Redeemable noncontrolling interests — 145 — — 145 Tenneco Inc. shareholders’ equity 2,588 4,253 1,638 (6,841 ) 1,638 Noncontrolling interests — 206 — — 206 Total equity 2,588 4,459 1,638 (6,841 ) 1,844 Total liabilities, redeemable noncontrolling interests and equity $ 6,978 $ 8,185 $ 5,270 $ (6,841 ) $ 13,592 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 Six Months Ended June 30, 2019 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated Operating Activities Net cash provided by (used in) operating activities $ (8 ) $ (2 ) $ (90 ) $ — $ (100 ) Investing Activities Acquisition of business, net of cash acquired — (158 ) — — — (158 ) Proceeds from sale of assets 1 4 — — 5 Cash payments for property, plant and equipment (118 ) (261 ) — — (379 ) Net proceeds from sale of business 6 16 — — 22 Other 1 (2 ) — — (1 ) Proceeds from deferred purchase price of factored receivables — 147 — — 147 Net cash used in investing activities (110 ) (254 ) — — (364 ) Financing Activities Cash dividends — — (20 ) — (20 ) Repayment of term loans and notes — (139 ) (51 ) — (190 ) Proceeds from term loans and notes — 111 — — 111 Issuance (repurchase) of common shares — — (2 ) — (2 ) Decrease in bank overdrafts — (8 ) — — (8 ) Borrowings on revolving lines of credit 4,047 117 361 — 4,525 Payments on revolving lines of credit (3,797 ) (111 ) (346 ) — (4,254 ) Other — (1 ) — — (1 ) Intercompany dividends and net (decrease) increase in intercompany obligations (245 ) 98 147 — — Distribution to noncontrolling interests partners — (20 ) — — (20 ) Net cash (used in) provided by financing activities 5 47 89 — 141 Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash — 11 — — 11 Increase (decrease) in cash, cash equivalents and restricted cash (113 ) (198 ) (1 ) — (312 ) Cash, cash equivalents and restricted cash, January 1 329 369 4 — 702 Cash, cash equivalents and restricted cash, June 30 $ 216 $ 171 $ 3 $ — $ 390 STATEMENT OF CASH FLOWS Six Months Ended June 30, 2018 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated Operating Activities Net cash provided by (used in) operating activities $ 79 $ 13 $ (5 ) $ (9 ) $ 78 Investing Activities Proceeds from sale of assets 1 4 — — 5 Cash payments for property, plant and equipment (77 ) (97 ) — — (174 ) Proceeds from deferred purchase price of factored receivables — 66 — — 66 Other 2 — — — 2 Net cash used in investing activities (74 ) (27 ) — — (101 ) Financing Activities Proceeds from term loans and notes — 9 — — 9 Repayments of term loans and notes (10 ) (18 ) — — (28 ) Borrowings on revolving lines of credit 2,349 45 275 — 2,669 Payments on revolving lines of credit (2,315 ) (38 ) (261 ) — (2,614 ) Issuance (repurchase) of common shares — — (1 ) — (1 ) Cash dividends — — (25 ) — (25 ) Net increase (decrease) in bank overdrafts — (7 ) — — (7 ) Distribution to noncontrolling interests partners — (28 ) — — (28 ) Other (2 ) (20 ) — — (22 ) Intercompany dividends and net (decrease) increase in intercompany obligations (32 ) 6 17 9 — Net cash (used in) provided by financing activities (10 ) (51 ) 5 9 (47 ) Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash — (11 ) — — (11 ) Increase (decrease) in cash, cash equivalents and restricted cash (5 ) (76 ) — — (81 ) Cash, cash equivalents and restricted cash, January 1 7 311 — — 318 Cash, cash equivalents and restricted cash, June 30 $ 2 $ 235 $ — $ — $ 237 |