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. The condensed consolidating financial information of the Guarantor Subsidiaries should be read in conjunction 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 . The purchase price allocation for the Öhlins Acquisition is preliminary and subject to finalization. The Company's current estimates and assumptions may change as a result. See Note 3, Acquisitions and Divestitures for additional information. Distributions There are no significant restrictions on the ability of the Guarantor Subsidiaries to make distributions. STATEMENT OF COMPREHENSIVE INCOME (LOSS) Three Months Ended September 30, 2019 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated Revenues Net sales and operating revenues: External $ 1,603 $ 2,716 $ — $ — $ 4,319 Affiliated companies 241 279 — (520 ) — 1,844 2,995 — (520 ) 4,319 Costs and expenses Cost of sales 1,558 2,615 — (520 ) 3,653 Selling, general, and administrative 172 76 1 — 249 Depreciation and amortization 54 110 1 — 165 Engineering, research, and development 33 45 — — 78 Restructuring charges, asset impairments, and other 13 30 — — 43 Goodwill impairment charge 9 — — — 9 1,839 2,876 2 (520 ) 4,197 Other expense (income) Non-service postretirement benefit costs — 2 — — 2 Equity in (income) losses of nonconsolidated affiliates, net of tax (1 ) — — — (1 ) Other (income) expense, net (33 ) 6 — — (27 ) (34 ) 8 — — (26 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies 39 111 (2 ) — 148 Interest expense: External, net of interest capitalized 25 — 54 — 79 Affiliated companies, net of interest income (6 ) (13 ) 19 — — Earnings (loss) before income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies 20 124 (75 ) — 69 Income tax expense (benefit) 5 (3 ) (11 ) — (9 ) Equity in net income (loss) from affiliated companies 124 — 134 (258 ) — Net income (loss) 139 127 70 (258 ) 78 Less: Net income (loss) attributable to noncontrolling interests — 8 — — 8 Net income (loss) attributable to Tenneco Inc. $ 139 $ 119 $ 70 $ (258 ) $ 70 Comprehensive income (loss) attributable to Tenneco Inc. $ 135 $ 5 $ (2 ) $ (140 ) $ (2 ) STATEMENT OF COMPREHENSIVE INCOME (LOSS) Three Months Ended September 30, 2018 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated Revenues Net sales and operating revenues: External $ 990 $ 1,381 $ — $ — $ 2,371 Affiliated companies 145 152 — (297 ) — 1,135 1,533 — (297 ) 2,371 Costs and expenses Cost of sales 960 1,339 — (297 ) 2,002 Selling, general, and administrative 113 25 — — 138 Depreciation and amortization 24 36 — — 60 Engineering, research, and development 20 19 — — 39 Restructuring charges, asset impairments, and other 2 14 — — 16 1,119 1,433 — (297 ) 2,255 Other expense (income) Non-service postretirement benefit costs 3 1 — — 4 Other (income) expense, net (35 ) 29 — 6 — (32 ) 30 — 6 4 Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies 48 70 — (6 ) 112 Interest expense: External, net of interest capitalized 10 4 10 — 24 Affiliated companies, net of interest income (5 ) — 5 — — Earnings (loss) before income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies 43 66 (15 ) (6 ) 88 Income tax (benefit) expense 12 10 — — 22 Equity in net income (loss) from affiliated companies 37 — 72 (109 ) — Net income (loss) 68 56 57 (115 ) 66 Less: Net income (loss) attributable to noncontrolling interests — 9 — — 9 Net income (loss) attributable to Tenneco Inc. $ 68 $ 47 $ 57 $ (115 ) $ 57 Comprehensive income (loss) attributable to Tenneco Inc. $ 68 $ 47 $ 33 $ (115 ) $ 33 Nine Months Ended September 30, 2019 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated Revenues Net sales and operating revenues: External $ 4,984 $ 8,323 $ — $ — $ 13,307 Affiliated companies 694 843 — (1,537 ) — 5,678 9,166 — (1,537 ) 13,307 Costs and expenses Cost of sales 4,852 7,995 — (1,537 ) 11,310 Selling, general, and administrative 498 354 1 — 853 Depreciation and amortization 218 284 1 — 503 Engineering, research, and development 102 146 — — 248 Restructuring charges, asset impairments, and other 64 64 — — 128 Goodwill impairment charge 42 27 — — 69 5,776 8,870 2 (1,537 ) 13,111 Other expense (income) Non-service postretirement benefit costs (1 ) 9 — — 8 Equity in losses of nonconsolidated affiliates, net of tax (3 ) (31 ) — — (34 ) Other (income) expense, net (10 ) (33 ) — — (43 ) (14 ) (55 ) — — (69 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies (84 ) 351 (2 ) — 265 Interest expense: External, net of interest capitalized 30 17 195 — 242 Affiliated companies, net of interest income (20 ) 6 14 — — Earnings (loss) before income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies (94 ) 328 (211 ) — 23 Income tax expense (benefit) (13 ) 54 (36 ) — 5 Equity in net income (loss) from affiliated companies 196 — 154 (350 ) — Net income (loss) 115 274 (21 ) (350 ) 18 Less: Net income (loss) attributable to noncontrolling interests — 39 — — 39 Net income (loss) attributable to Tenneco Inc. $ 115 $ 235 $ (21 ) $ (350 ) $ (21 ) Comprehensive income (loss) attributable to Tenneco Inc. $ 118 $ 133 $ (81 ) $ (251 ) $ (81 ) Nine Months Ended September 30, 2018 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated Revenues Net sales and operating revenues: External $ 3,050 $ 4,435 $ — $ — $ 7,485 Affiliated companies 402 464 — (866 ) — 3,452 4,899 — (866 ) 7,485 Costs and expenses Cost of sales 2,951 4,244 — (866 ) 6,329 Selling, general, and administrative 268 175 — — 443 Depreciation and amortization 71 109 — — 180 Engineering, research, and development 57 61 — — 118 Restructuring charges, asset impairments, and other 5 52 — — 57 3,352 4,641 — (866 ) 7,127 Other expense (income) Non-service postretirement benefit costs 9 1 — — 10 Other (income) expense, net (11 ) (2 ) — 16 3 (2 ) (1 ) — 16 13 Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies 102 259 — (16 ) 345 Interest expense: External, net of interest capitalized 30 10 29 — 69 Affiliated companies, net of interest income (12 ) — 12 — — Earnings (loss) before income taxes, noncontrolling interests and equity in net income (loss) from affiliated companies 84 249 (41 ) (16 ) 276 Income tax (benefit) expense 11 62 — — 73 Equity in net income (loss) from affiliated companies 122 — 205 (327 ) — Net income (loss) 195 187 164 (343 ) 203 Less: Net income (loss) attributable to noncontrolling interests — 39 — — 39 Net income (loss) attributable to Tenneco Inc. $ 195 $ 148 $ 164 $ (343 ) $ 164 Comprehensive income (loss) attributable to Tenneco Inc. $ 195 $ 148 $ 74 $ (343 ) $ 74 BALANCE SHEETS September 30, 2019 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated ASSETS Current assets: Cash and cash equivalents $ 201 $ 188 $ — $ — $ 389 Restricted cash — 6 — — 6 Receivables, net 893 1,860 — — 2,753 Inventories, net 940 1,197 — — 2,137 Prepayments and other current assets 156 417 30 — 603 Total current assets 2,190 3,668 30 — 5,888 Property, plant and equipment, net 1,148 2,335 8 — 3,491 Investment in affiliated companies 1,615 — 5,203 (6,818 ) — Long-term receivables, net 9 1 — — 10 Goodwill 497 305 — — 802 Intangibles, net 1,033 545 — — 1,578 Investments in nonconsolidated affiliates 43 462 — — 505 Deferred income taxes 321 236 13 — 570 Other assets 150 375 14 — 539 Total assets $ 7,006 $ 7,927 $ 5,268 $ (6,818 ) $ 13,383 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term debt, including current maturities of long-term debt $ 1 $ 160 $ — $ — $ 161 Accounts payable 882 1,765 4 — 2,651 Accrued compensation and employee benefits 93 285 — — 378 Accrued income taxes — 57 — — 57 Accrued expenses and other current liabilities 436 556 50 — 1,042 Total current liabilities 1,412 2,823 54 — 4,289 Long-term debt 229 9 5,170 — 5,408 Intercompany due to (due from) 1,830 (200 ) (1,630 ) — — Deferred income taxes — 104 — — 104 Pension, postretirement benefits and other liabilities 768 806 32 — 1,606 Commitments and contingencies Total liabilities 4,239 3,542 3,626 — 11,407 Redeemable noncontrolling interests — 139 — — 139 Tenneco Inc. shareholders’ equity 2,767 4,051 1,642 (6,818 ) 1,642 Noncontrolling interests — 195 — — 195 Total equity 2,767 4,246 1,642 (6,818 ) 1,837 Total liabilities, redeemable noncontrolling interests and equity $ 7,006 $ 7,927 $ 5,268 $ (6,818 ) $ 13,383 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 Nine Months Ended September 30, 2019 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated Operating Activities Net cash provided (used) by operating activities $ 137 $ 45 $ (115 ) $ (3 ) $ 64 Investing Activities Proceeds from sale of assets 2 6 — — 8 Net proceeds from sale of business 6 16 — — 22 Cash payments for property, plant and equipment (166 ) (375 ) — — (541 ) Acquisition of business, net of cash acquired — (158 ) — — — (158 ) Proceeds from deferred purchase price of factored receivables — 203 — — 203 Other 3 (4 ) 1 — — Net cash provided (used) by investing activities (155 ) (312 ) 1 — (466 ) Financing Activities Proceeds from term loans and notes — 171 — — 171 Repayment of term loans and notes — (201 ) (77 ) — (278 ) Borrowings on revolving lines of credit 6,119 171 514 — 6,804 Payments on revolving lines of credit (5,890 ) (144 ) (514 ) — (6,548 ) Issuance (repurchase) of common shares — — (2 ) — (2 ) Cash dividends — — (20 ) — (20 ) Decrease in bank overdrafts — (12 ) — — (12 ) Net increase (decrease) in short-term borrowings secured by accounts receivable — (3 ) — — (3 ) Other 1 — — — 1 Distribution to noncontrolling interests partners — (20 ) — — (20 ) Intercompany dividends and net (decrease) increase in intercompany obligations (340 ) 128 209 3 — Net cash provided (used) by financing activities (110 ) 90 110 3 93 Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash — 2 — — 2 Increase (decrease) in cash, cash equivalents and restricted cash (128 ) (175 ) (4 ) — (307 ) Cash, cash equivalents and restricted cash, January 1 329 369 4 — 702 Cash, cash equivalents and restricted cash, September 30 $ 201 $ 194 $ — $ — $ 395 STATEMENT OF CASH FLOWS Nine Months Ended September 30, 2018 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated Operating Activities Net cash provided by (used in) operating activities $ 179 $ (122 ) $ (8 ) $ (12 ) $ 37 Investing Activities Proceeds from sale of assets 1 5 — — 6 Cash payments for property, plant and equipment (98 ) (157 ) — — (255 ) Proceeds from deferred purchase price of factored receivables — 102 — — 102 Other (2 ) — — — (2 ) Net cash used in investing activities (99 ) (50 ) — — (149 ) Financing Activities Proceeds from term loans and notes — 12 — — 12 Repayments of term loans and notes (14 ) (21 ) — — (35 ) Borrowings on revolving lines of credit 3,537 56 458 — 4,051 Payments on revolving lines of credit (3,575 ) (56 ) (443 ) — (4,074 ) Issuance (repurchase) of common shares — — (2 ) — (2 ) Cash dividends — — (39 ) — (39 ) Net increase (decrease) in bank overdrafts — (5 ) — — (5 ) Net increase (decrease) in short-term borrowings secured by accounts receivable — 150 — — 150 Other (2 ) — — — (2 ) Distribution to noncontrolling interests partners — (44 ) — — (44 ) Intercompany dividends and net (decrease) increase in intercompany obligations (28 ) (18 ) 34 12 — Net cash (used in) provided by financing activities (82 ) 74 8 12 12 Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash — (15 ) — — (15 ) Increase (decrease) in cash, cash equivalents and restricted cash (2 ) (113 ) — — (115 ) Cash, cash equivalents and restricted cash, January 1 7 311 — — 318 Cash, cash equivalents and restricted cash, September 30 $ 5 $ 198 $ — $ — $ 203 |