þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 76-0515284 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
500 North Field Drive, Lake Forest, Illinois | 60045 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer þ | Accelerated filer ¨ | |
Non-accelerated filer ¨ | Smaller reporting company ¨ | |
Emerging growth company ¨ |
Title of each class | Trading Symbol | Name of each exchange on which registered |
Class A Voting Common Stock, par value $0.01 per share | TEN | New York Stock Exchange |
Page | ||
Part I — Financial Information | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II — Other Information | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | Defaults Upon Senior Securities | * |
Item 4. | Mine Safety Disclosures | * |
Item 5. | Other Information | * |
Item 6. |
* | No response to this item is included herein for the reason that it is inapplicable or the answer to such item is negative. |
• | general economic, business and market conditions; |
• | our ability to source and procure needed materials, components and other products and services in accordance with customer demand and at competitive prices; |
• | the cost and outcome of existing and any future claims, legal proceedings or investigations, including, but not limited to, any of the foregoing arising in connection with the ongoing global antitrust investigation, product performance, product safety or intellectual property rights; |
• | changes in consumer demand, prices and our ability to have our products included on top selling vehicles, including any shifts in consumer preferences away from historically higher margin products for our customers and us, to other lower margin vehicles, for which we may or may not have supply arrangements, and the cyclical nature of the global vehicle industry, including the performance of the global aftermarket sector; |
• | changes in consumer demand for our OE or aftermarket products, or changes in automotive and commercial vehicle manufacturers’ production rates and their actual and forecasted requirements for our products, due to difficult economic conditions and/or regulatory or legal changes affecting internal combustion engines and/or aftermarket products; |
• | our dependence on certain large customers, including the loss of any of our large original equipment manufacturer (“OE”) customers (on whom we depend for a substantial portion of our revenues), or the loss of market shares by these customers if we are unable to achieve increased sales to other OE customers or any change in customer demand due to delays in the adoption or enforcement of worldwide emissions regulations; |
• | new technologies that reduce the demand for certain of our products or otherwise render them obsolete; |
• | our ability to introduce new products and technologies that satisfy customers' needs in a timely fashion; |
• | the overall highly competitive nature of the automotive and commercial vehicle parts industries, and any resultant inability to realize the sales represented by our awarded book of business (which is based on anticipated pricing and volumes over the life of the applicable program); |
• | changes in capital availability or costs, including increases in our cost of borrowing (i.e., interest rate increases), the amount of our debt, our ability to access capital markets at favorable rates, and the credit ratings of our debt; |
• | our ability to comply with the covenants contained in our debt instruments; |
• | our working capital requirements; |
• | our ability to successfully execute cash management and other cost reduction plans, and to realize the anticipated benefits from these plans; |
• | risks inherent in operating a multi-national company, including economic conditions, such as currency exchange and inflation rates, and political conditions in the countries where we operate or sell our products, adverse changes in trade agreements, tariffs, immigration policies, political stability, and tax and other laws, and potential disruptions of production and supply; |
• | increasing competition from lower cost, private-label products; |
• | damage to the reputation of one or more of our leading brands; |
• | the effect of improvements in automotive parts on aftermarket demand for some of our products; |
• | industrywide strikes, labor disruptions at our facilities or any labor or other economic disruptions at any of our significant customers or suppliers or any of our customers’ other suppliers; |
• | developments relating to our intellectual property, including our ability to changes in technology; |
• | costs related to product warranties and other customer satisfaction actions; |
• | the failure or breach of our information technology systems, including the consequences of any misappropriation, exposure or corruption of sensitive information stored on such systems and the interruption to our business that such failure or breach may cause; |
• | the effect of consolidation among vehicle parts suppliers and customers on our ability to compete in the highly competitive automotive and commercial vehicle supplier industry; |
• | changes in distribution channels or competitive conditions in the markets and countries where we operate; |
• | the evolution towards autonomous vehicles and car and ride sharing; |
• | customer acceptance of new products; |
• | our ability to successfully integrate, and benefit from, any acquisitions that we complete; |
• | our ability to effectively manage our joint ventures and other third-party relationships; |
• | the potential impairment in the carrying value of our long-lived assets, goodwill, other intangible assets or our deferred tax assets; |
• | the negative effect of fuel price volatility on transportation and logistics costs, raw material costs, discretionary purchases of vehicles or aftermarket products and demand for off-highway equipment; |
• | increases in the costs of raw materials or components, including our ability to successfully reduce the effect of any such cost increases through materials substitutions, cost reduction initiatives, customer recovery and other methods; |
• | changes by the Financial Accounting Standards Board or the Securities and Exchange Commission of authoritative generally accepted accounting principles or policies; |
• | changes in accounting estimates and assumptions, including changes based on additional information; |
• | any changes by the International Organization for Standardization (ISO) or other such committees in their certification protocols for processes and products, which may have the effect of delaying or hindering our ability to bring new products to market; |
• | the effect of the extensive, increasing and changing laws and regulations to which we are subject, including environmental laws and regulations, which may result in our incurrence of environmental liabilities in excess of the amount reserved or increased costs or loss of revenues relating to products subject to changing regulation; |
• | potential volatility in our effective tax rate; |
• | disasters, such as fires, earthquakes and flooding, and any resultant disruptions in the supply or production of goods or services to us or by us, in demand by our customers or in the operation of our system, disaster recovery capabilities or business continuity capabilities; |
• | acts of war and/or terrorism, as well as actions taken or to be taken by the United States and other governments as a result of further acts or threats of terrorism, and the effect of these acts on economic, financial and social conditions in the countries where we operate; |
• | pension obligations and other postretirement benefits; |
• | our hedging activities to address commodity price fluctuations; and |
• | the timing and occurrence (or non-occurrence) of other transactions, events and circumstances which may be beyond our control. |
• | the risk that the benefits of the acquisition of Federal-Mogul, including synergies, may not be fully realized or may take longer to realize than expected; |
• | the risk that the acquisition of Federal-Mogul may not advance our business strategy; |
• | the risk that we may experience difficulty integrating or separating employees or operations; |
• | the risk that the transaction may have an adverse effect on existing arrangements with us, including those related to transition, manufacturing and supply services and tax matters, our ability to retain and hire key personnel or our ability to maintain relationships with customers, suppliers or other business partners; |
• | the risk that the company may not complete a separation of its powertrain technology business and its aftermarket and ride performance business (or achieve some or all of the anticipated benefits of such a separation); |
• | the risk that the combined company and each separate company following the spin-off will underperform relative to our expectations; |
• | the ongoing transaction costs and risk that we may incur greater costs following the spin-off; and |
• | the risk that the spin-off is determined to be a taxable transaction. |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Revenues | |||||||
Net sales and operating revenues | $ | 4,484 | $ | 2,581 | |||
Costs and expenses | |||||||
Cost of sales | 3,864 | 2,193 | |||||
Selling, general, and administrative | 316 | 151 | |||||
Depreciation and amortization | 169 | 60 | |||||
Engineering, research, and development | 92 | 40 | |||||
Restructuring charges and asset impairments | 24 | 12 | |||||
Goodwill impairment charge | 60 | — | |||||
4,525 | 2,456 | ||||||
Other expense (income) | |||||||
Non-service pension and other postretirement benefit costs (credits) | 2 | 3 | |||||
Equity in (earnings) losses of nonconsolidated affiliates, net of tax | (16 | ) | — | ||||
Other expense (income), net | (3 | ) | — | ||||
(17 | ) | 3 | |||||
Earnings (loss) before interest expense, income taxes, and noncontrolling interests | (24 | ) | 122 | ||||
Interest expense | 81 | 23 | |||||
Earnings (loss) before income taxes and noncontrolling interests | (105 | ) | 99 | ||||
Income tax expense (benefit) | — | 25 | |||||
Net income (loss) | (105 | ) | 74 | ||||
Less: Net income (loss) attributable to noncontrolling interests | 12 | 14 | |||||
Net income (loss) attributable to Tenneco Inc. | $ | (117 | ) | $ | 60 | ||
Earnings (loss) per share | |||||||
Basic earnings (loss) per share: | |||||||
Earnings (loss) per share | $ | (1.44 | ) | $ | 1.17 | ||
Weighted average shares outstanding | 80,874,637 | 51,211,643 | |||||
Diluted earnings (loss) per share: | |||||||
Earnings (loss) per share | $ | (1.44 | ) | $ | 1.17 | ||
Weighted average shares outstanding | 80,874,637 | 51,501,643 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net income (loss) | $ | (105 | ) | $ | 74 | ||
Other comprehensive income (loss) — net of tax | |||||||
Foreign currency translation adjustment | 35 | 27 | |||||
Cash flow hedges | 4 | — | |||||
Defined benefit plans | 1 | 3 | |||||
40 | 30 | ||||||
Comprehensive income (loss) | (65 | ) | 104 | ||||
Less: Comprehensive income (loss) attributable to noncontrolling interests | 18 | 22 | |||||
Comprehensive income (loss) attributable to common shareholders | $ | (83 | ) | $ | 82 |
March 31, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 357 | $ | 697 | |||
Restricted cash | 6 | 5 | |||||
Receivables: | |||||||
Customer notes and accounts, net | 2,738 | 2,487 | |||||
Other | 105 | 85 | |||||
Inventories | 2,266 | 2,245 | |||||
Prepayments and other current assets | 555 | 590 | |||||
Total current assets | 6,027 | 6,109 | |||||
Property, plant and equipment, net | 3,519 | 3,501 | |||||
Long-term receivables, net | 9 | 10 | |||||
Goodwill | 791 | 869 | |||||
Intangibles, net | 1,687 | 1,519 | |||||
Investments in nonconsolidated affiliates | 528 | 544 | |||||
Deferred income taxes | 471 | 467 | |||||
Other assets | 584 | 213 | |||||
Total assets | $ | 13,616 | $ | 13,232 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt, including current maturities of long-term debt | $ | 159 | $ | 153 | |||
Accounts payable | 2,861 | 2,759 | |||||
Accrued compensation and employee benefits | 363 | 343 | |||||
Accrued income taxes | 30 | 64 | |||||
Accrued expenses and other current liabilities | 994 | 1,001 | |||||
Total current liabilities | 4,407 | 4,320 | |||||
Long-term debt | 5,417 | 5,340 | |||||
Deferred income taxes | 110 | 88 | |||||
Pension and postretirement benefits | 1,138 | 1,167 | |||||
Deferred credits and other liabilities | 564 | 263 | |||||
Commitments and contingencies (Note 13) | |||||||
Total liabilities | 11,636 | 11,178 | |||||
Redeemable noncontrolling interests | 153 | 138 | |||||
Tenneco Inc. shareholders’ equity: | |||||||
Preferred stock — $0.01 par value; none issued | — | — | |||||
Class A voting stock — $0.01 par value; shares issued: March 31, 2019 — 71,750,146 and December 31, 2018 — 71,675,379 | 1 | 1 | |||||
Class B non-voting convertible stock — $0.01 par value; shares issued: March 31, 2019 — 23,793,669 and December 31, 2018 — 23,793,669 | — | — | |||||
Additional paid-in capital | 4,365 | 4,360 | |||||
Accumulated other comprehensive loss | (658 | ) | (692 | ) | |||
Accumulated deficit | (1,150 | ) | (1,013 | ) | |||
2,558 | 2,656 | ||||||
Shares held as treasury stock — at cost: March 31, 2019 and December 31, 2018 — 14,592,888 shares | (930 | ) | (930 | ) | |||
Total Tenneco Inc. shareholders’ equity | 1,628 | 1,726 | |||||
Noncontrolling interests | 199 | 190 | |||||
Total equity | 1,827 | 1,916 | |||||
Total liabilities, redeemable noncontrolling interests and equity | $ | 13,616 | $ | 13,232 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Operating Activities | |||||||
Net income (loss) | $ | (105 | ) | $ | 74 | ||
Adjustments to reconcile net income (loss) to cash provided (used) by operating activities: | |||||||
Goodwill impairment charge | 60 | — | |||||
Depreciation and amortization | 169 | 60 | |||||
Deferred income taxes | (8 | ) | (1 | ) | |||
Stock-based compensation | 7 | 5 | |||||
Restructuring charges and asset impairments, net of cash paid | (14 | ) | (4 | ) | |||
Change in pension and other postretirement benefit plans | (17 | ) | — | ||||
Equity in earnings of nonconsolidated affiliates | (16 | ) | — | ||||
Cash dividends received from nonconsolidated affiliates | 15 | — | |||||
Changes in operating assets and liabilities: | |||||||
Receivables | (312 | ) | (221 | ) | |||
Inventories | 11 | (32 | ) | ||||
Payables and accrued expenses | 157 | 185 | |||||
Accrued interest and income taxes | (38 | ) | (4 | ) | |||
Other assets and liabilities | (59 | ) | (62 | ) | |||
Net cash provided (used) by operating activities | (150 | ) | — | ||||
Investing Activities | |||||||
Proceeds from sale of assets | 1 | 2 | |||||
Net proceeds from sale of business | 22 | — | |||||
Cash payments for property, plant, and equipment | (210 | ) | (89 | ) | |||
Acquisition of business, net of cash acquired | (158 | ) | — | ||||
Proceeds from deferred purchase price of factored receivables | 60 | 34 | |||||
Other | 2 | — | |||||
Net cash used by investing activities | (283 | ) | (53 | ) | |||
Financing Activities | |||||||
Proceeds from term loans and notes | 28 | 6 | |||||
Repayments of term loans and notes | (64 | ) | (13 | ) | |||
Borrowings on revolving lines of credit | 2,119 | 1,267 | |||||
Payments on revolving lines of credit | (1,981 | ) | (1,189 | ) | |||
Issuance (repurchase) of common shares | (2 | ) | (2 | ) | |||
Cash dividends | (20 | ) | (13 | ) | |||
Net increase (decrease) in bank overdrafts | (1 | ) | (4 | ) | |||
Other | (3 | ) | (30 | ) | |||
Distributions to noncontrolling interest partners | (1 | ) | — | ||||
Net cash provided (used) by financing activities | 75 | 22 | |||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | 19 | 3 | |||||
Decrease in cash, cash equivalents and restricted cash | (339 | ) | (28 | ) | |||
Cash, cash equivalents and restricted cash, beginning of period | 702 | 318 | |||||
Cash, cash equivalents and restricted cash, end of period | $ | 363 | $ | 290 | |||
Supplemental Cash Flow Information | |||||||
Cash paid during the period for interest | $ | 74 | $ | 23 | |||
Cash paid during the period for income taxes, net of refunds | $ | 43 | $ | 25 | |||
Non-cash Investing Activities | |||||||
Period end balance of accounts payable for property, plant, and equipment | $ | 101 | $ | 55 | |||
Deferred purchase price of receivables factored in the period | $ | 58 | $ | 37 |
Tenneco Inc. Shareholders' equity | |||||||||||||||||||||||||||||||
$0.01 Par Value Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Tenneco Inc. Shareholders' Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||
Balance as of December 31, 2018 | $ | 1 | $ | (930 | ) | $ | 4,360 | $ | (1,013 | ) | $ | (692 | ) | $ | 1,726 | $ | 190 | $ | 1,916 | ||||||||||||
Net income (loss) | — | — | — | (117 | ) | — | (117 | ) | 7 | (110 | ) | ||||||||||||||||||||
Other comprehensive income (loss)—net of tax: | |||||||||||||||||||||||||||||||
Foreign currency translation adjustments | 29 | 29 | 4 | 33 | |||||||||||||||||||||||||||
Derivatives | 4 | 4 | — | 4 | |||||||||||||||||||||||||||
Defined benefit plans | 1 | 1 | — | 1 | |||||||||||||||||||||||||||
Comprehensive income (loss) | (83 | ) | 11 | (72 | ) | ||||||||||||||||||||||||||
Common stock issued | — | — | 5 | — | — | 5 | — | 5 | |||||||||||||||||||||||
Cash dividends ($0.25 per share) | — | — | — | (20 | ) | — | (20 | ) | — | (20 | ) | ||||||||||||||||||||
Purchase accounting measurement period adjustment | — | — | — | — | — | — | (1 | ) | (1 | ) | |||||||||||||||||||||
Distributions declared to noncontrolling interests | — | — | — | — | — | — | (1 | ) | (1 | ) | |||||||||||||||||||||
Balance as of March 31, 2019 | $ | 1 | $ | (930 | ) | $ | 4,365 | $ | (1,150 | ) | $ | (658 | ) | $ | 1,628 | $ | 199 | $ | 1,827 |
Tenneco Inc. Shareholders' equity | |||||||||||||||||||||||||||||||
$0.01 Par Value Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Tenneco Inc. Shareholders' Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||
Balance as of December 31, 2017 | $ | 1 | $ | (930 | ) | $ | 3,112 | $ | (1,009 | ) | $ | (538 | ) | $ | 636 | $ | 46 | $ | 682 | ||||||||||||
Net Income (loss) | — | — | — | 60 | — | 60 | 7 | 67 | |||||||||||||||||||||||
Other comprehensive income (loss)—net of tax: | |||||||||||||||||||||||||||||||
Foreign currency translation adjustments | 19 | 19 | 7 | 26 | |||||||||||||||||||||||||||
Defined benefit plans | 3 | 3 | — | 3 | |||||||||||||||||||||||||||
Comprehensive income (loss) | 82 | 14 | 96 | ||||||||||||||||||||||||||||
Adjustments to adopt new accounting standards | — | — | — | (1 | ) | — | (1 | ) | — | (1 | ) | ||||||||||||||||||||
Common stock issued | — | — | 3 | — | — | 3 | — | 3 | |||||||||||||||||||||||
Cash dividends ($0.25 per share) | — | — | — | (13 | ) | — | (13 | ) | — | (13 | ) | ||||||||||||||||||||
Balance as of March 31, 2018 | $ | 1 | $ | (930 | ) | $ | 3,115 | $ | (963 | ) | $ | (516 | ) | $ | 707 | $ | 60 | $ | 767 |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
Balance at beginning of period | $ | 138 | $ | 42 | |||
Net income (loss) attributable to redeemable noncontrolling interests | 5 | 7 | |||||
Other comprehensive income (loss) | 2 | 1 | |||||
Acquisition and other | 16 | — | |||||
Purchase accounting measurement period adjustment | (8 | ) | — | ||||
Balance at end of period | $ | 153 | $ | 50 |
Three months ended March 31, | |||||
2019 | 2018 | ||||
Weighted average shares of common stock outstanding | 80,874,637 | 51,211,643 | |||
Effect of dilutive securities: | |||||
Restricted stock, PSUs and RSUs | — | 216,351 | |||
Stock options | — | 73,649 | |||
Dilutive shares outstanding | 80,874,637 | 51,501,643 |
Three Months Ended March 31, 2018 | ||||||||||||||||||||
As Reported | Reclasses | As Reclassified | Revisions | As Revised | ||||||||||||||||
Condensed consolidated statement of income (loss) | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Net sales and operating revenues | $ | 2,574 | $ | — | $ | 2,574 | $ | 7 | $ | 2,581 | ||||||||||
Costs and expenses | ||||||||||||||||||||
Cost of sales | 2,198 | (9 | ) | 2,189 | 4 | 2,193 | ||||||||||||||
Selling, general, and administrative | 153 | (2 | ) | 151 | — | 151 | ||||||||||||||
Depreciation and amortization | 59 | — | 59 | 1 | 60 | |||||||||||||||
Engineering, research, and development | 41 | (1 | ) | 40 | — | 40 | ||||||||||||||
Restructuring charges and asset impairments | — | 12 | 12 | — | 12 | |||||||||||||||
2,451 | — | 2,451 | 5 | 2,456 | ||||||||||||||||
Other expense (income) | ||||||||||||||||||||
Loss on sale of receivables | 3 | (3 | ) | — | — | — | ||||||||||||||
Non-service pension and other postretirement benefit costs (credits) | — | 3 | 3 | — | 3 | |||||||||||||||
Other expense (income), net | 3 | (3 | ) | — | — | — | ||||||||||||||
6 | (3 | ) | 3 | — | 3 | |||||||||||||||
Earnings (loss) before interest expense, income taxes, and noncontrolling interests | 117 | 3 | 120 | 2 | 122 | |||||||||||||||
Interest expense | 20 | 3 | 23 | — | 23 | |||||||||||||||
Earnings (loss) before income taxes and noncontrolling interests | 97 | — | 97 | 2 | 99 | |||||||||||||||
Income tax expense (benefit) | 25 | 25 | — | 25 | ||||||||||||||||
Net income (loss) | 72 | — | 72 | 2 | 74 | |||||||||||||||
Less: Net income (loss) attributable to noncontrolling interests | 14 | 14 | — | 14 | ||||||||||||||||
Net income (loss) attributable to Tenneco Inc. | $ | 58 | $ | — | $ | 58 | $ | 2 | $ | 60 | ||||||||||
Earnings (loss) per share | ||||||||||||||||||||
Basic earnings (loss) per share of common stock | $ | 1.13 | $ | — | $ | 1.13 | $ | 0.04 | $ | 1.17 | ||||||||||
Diluted earnings (loss) per share of common stock | $ | 1.13 | $ | — | $ | 1.13 | $ | 0.04 | $ | 1.17 |
Three Months Ended March 31, 2018 | ||||||||||||||||||||
As Reported | Reclasses | As Reclassified | Revisions | As Revised | ||||||||||||||||
Condensed consolidated statement of comprehensive income (loss) | ||||||||||||||||||||
Net income (loss) | $ | 72 | $ | — | $ | 72 | $ | 2 | $ | 74 | ||||||||||
Other comprehensive income (loss)—net of tax | ||||||||||||||||||||
Foreign currency translation adjustment | 27 | — | 27 | — | 27 | |||||||||||||||
Defined benefit plans | 3 | — | 3 | — | 3 | |||||||||||||||
30 | — | 30 | — | 30 | ||||||||||||||||
Comprehensive income (loss) | 102 | — | 102 | 2 | 104 | |||||||||||||||
Less: Comprehensive income (loss) attributable to noncontrolling interests | 22 | — | 22 | — | 22 | |||||||||||||||
Comprehensive income (loss) attributable to common shareholders | $ | 80 | $ | — | $ | 80 | $ | 2 | $ | 82 |
Three Months Ended March 31, 2018 | ||||||||||||||||||||
As Reported | Reclasses | As Reclassified | Revisions | As Revised | ||||||||||||||||
Condensed consolidated statements of cash flow | ||||||||||||||||||||
Operating Activities | ||||||||||||||||||||
Net income (loss) | $ | 72 | $ | — | $ | 72 | $ | 2 | $ | 74 | ||||||||||
Net cash provided by (used by) operating activities | — | — | — | — | — | |||||||||||||||
Investing Activities | ||||||||||||||||||||
Net cash used by investing activities | (53 | ) | — | (53 | ) | — | (53 | ) | ||||||||||||
Financing Activities | ||||||||||||||||||||
Proceeds from term loans and notes | — | — | — | 6 | 6 | |||||||||||||||
Repayments of term loans and notes | — | (6 | ) | (6 | ) | (7 | ) | (13 | ) | |||||||||||
Retirement of long-term debt | (6 | ) | 6 | — | — | — | ||||||||||||||
Borrowings on revolving lines of credit | — | — | — | 1,267 | 1,267 | |||||||||||||||
Payments on revolving lines of credit | — | — | — | (1,189 | ) | (1,189 | ) | |||||||||||||
Net increase (decrease) in revolver borrowings | 77 | — | 77 | (77 | ) | — | ||||||||||||||
Issuance (repurchase) of common shares | (2 | ) | — | (2 | ) | — | (2 | ) | ||||||||||||
Cash dividends | (13 | ) | — | (13 | ) | — | (13 | ) | ||||||||||||
Net increase (decrease) in bank overdrafts | (4 | ) | — | (4 | ) | — | (4 | ) | ||||||||||||
Net increase (decrease) in short-term borrowings secured by accounts receivable | (30 | ) | 30 | — | — | — | ||||||||||||||
Other | — | (30 | ) | (30 | ) | — | (30 | ) | ||||||||||||
Net cash provided by (used by) financing activities | 22 | — | 22 | — | 22 | |||||||||||||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | 3 | — | 3 | — | 3 | |||||||||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | (28 | ) | — | (28 | ) | — | (28 | ) | ||||||||||||
Cash, cash equivalents and restricted cash, beginning of period | 318 | — | 318 | — | 318 | |||||||||||||||
Cash, cash equivalents and restricted cash, end of period | $ | 290 | $ | — | $ | 290 | $ | — | $ | 290 |
Three Months Ended March 31, 2018 | ||||||||||||
As Reported | Revisions | As Revised | ||||||||||
Condensed consolidated statements of changes in shareholders' equity | ||||||||||||
Accumulated Deficit | ||||||||||||
Balance January 1 | $ | (946 | ) | $ | (63 | ) | $ | (1,009 | ) | |||
Net income (loss) attributable to Tenneco Inc. | 58 | 2 | 60 | |||||||||
Cash dividends declared | (13 | ) | — | (13 | ) | |||||||
Adjustments to adopt new accounting standards | (1 | ) | — | (1 | ) | |||||||
Balance March 31 | $ | (902 | ) | $ | (61 | ) | $ | (963 | ) | |||
Accumulated Other Comprehensive Income (loss) | ||||||||||||
Balance January 1 | $ | (541 | ) | $ | 3 | $ | (538 | ) | ||||
Other comprehensive income (loss)—net of tax: | ||||||||||||
Foreign currency translation adjustment | 19 | — | 19 | |||||||||
Defined benefit plans | 3 | — | 3 | |||||||||
Balance March 31 | $ | (519 | ) | $ | 3 | $ | (516 | ) | ||||
Total Tenneco Inc. Shareholders' Equity | ||||||||||||
Balance January 1 | $ | 696 | $ | (60 | ) | $ | 636 | |||||
Net income (loss) attributable to Tenneco Inc. | 58 | 2 | 60 | |||||||||
Other comprehensive income (loss)—net of tax: | ||||||||||||
Foreign currency translation adjustment | 19 | — | 19 | |||||||||
Defined benefit plans | 3 | — | 3 | |||||||||
Comprehensive income (loss) | 80 | 2 | 82 | |||||||||
Adjustments to adopt new accounting standards | (1 | ) | — | (1 | ) | |||||||
Cash dividends | (13 | ) | — | (13 | ) | |||||||
Common Stock Issued | 3 | — | 3 | |||||||||
Balance March 31 | $ | 765 | $ | (58 | ) | $ | 707 | |||||
Total Equity | ||||||||||||
Balance January 1 | $ | 742 | $ | (60 | ) | $ | 682 | |||||
Net income (loss) | 65 | 2 | 67 | |||||||||
Other comprehensive income (loss)—net of tax: | ||||||||||||
Foreign currency translation adjustment | 26 | — | 26 | |||||||||
Defined benefit plans | 3 | — | 3 | |||||||||
Comprehensive income (loss) | 94 | 2 | 96 | |||||||||
Common Stock Issued | 3 | — | 3 | |||||||||
Cash dividends | (13 | ) | — | (13 | ) | |||||||
Adjustments to adopt new accounting standards | (1 | ) | — | (1 | ) | |||||||
Balance March 31 | $ | 825 | $ | (58 | ) | $ | 767 |
Cash, cash equivalents and restricted cash | $ | 4 | |
Customer notes and accounts receivable | 19 | ||
Inventories | 31 | ||
Prepayments and other current assets | 2 | ||
Property, plant, and equipment | 8 | ||
Goodwill | 28 | ||
Intangibles | 135 | ||
Other assets | 9 | ||
Total assets acquired | 236 | ||
Short-term debt, including current maturities of long-term debt | 10 | ||
Accounts payable | 11 | ||
Accrued compensation and employee benefits | 12 | ||
Deferred income taxes | 18 | ||
Deferred credits and other liabilities | 6 | ||
Total liabilities assumed | 57 | ||
Redeemable noncontrolling interest | 17 | ||
Net assets acquired | $ | 162 |
Estimated Fair Value | Weighted-Average Useful Lives | ||||
Definite-lived intangible assets: | |||||
Customer platforms and relationships | $ | 39 | 10 years | ||
Technology rights | 41 | 10 years | |||
Total definite-lived intangible assets | 80 | ||||
Indefinite-lived intangible assets: | |||||
Trade names and trademarks | 55 | ||||
Total | $ | 135 |
Initial Allocation | Adjustments | Revised Allocation | |||||||||
Cash, cash equivalents and restricted cash | $ | 277 | $ | — | $ | 277 | |||||
Customer notes and accounts receivable | 1,258 | — | 1,258 | ||||||||
Other receivables | 62 | — | 62 | ||||||||
Inventories | 1,551 | — | 1,551 | ||||||||
Prepayments and other current assets | 198 | — | 198 | ||||||||
Property, plant and equipment | 1,711 | (28 | ) | 1,683 | |||||||
Long-term receivables | 48 | — | 48 | ||||||||
Goodwill | 825 | (46 | ) | 779 | |||||||
Intangibles | 1,530 | 71 | 1,601 | ||||||||
Investments in nonconsolidated affiliates | 528 | (15 | ) | 513 | |||||||
Deferred income taxes | 166 | — | 166 | ||||||||
Other assets | 55 | — | 55 | ||||||||
Total assets acquired | 8,209 | (18 | ) | 8,191 | |||||||
Short-term debt, including current maturities of long-term debt | 130 | — | 130 | ||||||||
Accounts payable | 957 | — | 957 | ||||||||
Accrued compensation and employee benefits | 231 | — | 231 | ||||||||
Accrued income taxes | 49 | — | 49 | ||||||||
Accrued expenses and other current liabilities | 522 | — | 522 | ||||||||
Long-term debt | 1,315 | — | 1,315 | ||||||||
Deferred income taxes | 56 | — | 56 | ||||||||
Pension and postretirement benefits | 879 | — | 879 | ||||||||
Deferred credits and other liabilities | 124 | (9 | ) | 115 | |||||||
Total liabilities assumed | 4,263 | (9 | ) | 4,254 | |||||||
Redeemable noncontrolling interests | 96 | (8 | ) | 88 | |||||||
Noncontrolling interests | 143 | (1 | ) | 142 | |||||||
Net assets and noncontrolling interests acquired | $ | 3,707 | $ | — | $ | 3,707 |
Estimated Fair Value | Weighted-Average Useful Lives | ||||
Definite-lived intangible assets: | |||||
Customer platforms and relationships | $ | 978 | 10 years | ||
Technology rights | 68 | 10 years | |||
Packaged kits know-how | 54 | 10 years | |||
Catalogs | 40 | 10 years | |||
Licensing agreements | 64 | 4.5 years | |||
Land use rights | 30 | 42.8 years | |||
Total definite-lived intangible assets | 1,234 | 10.5 years | |||
Indefinite-lived intangible assets: | |||||
Trade names and trademarks | 367 | ||||
Total | $ | 1,601 |
For the Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net sales and operating revenues | $ | 4,484 | $ | 4,680 | |||
Earnings (loss) before income taxes and noncontrolling interests | $ | 30 | $ | 226 | |||
Net income (loss) attributable to Tenneco Inc. | $ | (70 | ) | $ | 93 | ||
Basic earnings (loss) per share of common stock | $ | (0.87 | ) | $ | 1.16 | ||
Diluted earnings (loss) per share of common stock | $ | (0.87 | ) | $ | 1.16 |
March 31, 2019 | December 31, 2018 | ||||||
Assets | |||||||
Inventories | $ | 3 | $ | 33 | |||
Other current assets | — | 5 | |||||
Long-lived assets | 1 | 23 | |||||
Total assets held for sale | $ | 4 | $ | 61 | |||
Liabilities | |||||||
Accounts payable | $ | 2 | $ | 21 | |||
Accrued liabilities | — | 7 | |||||
Other liabilities | 1 | 11 | |||||
Total liabilities held for sale | $ | 3 | $ | 39 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Clean Air | $ | 5 | $ | 1 | |||
Powertrain | 1 | — | |||||
Ride Performance | 13 | 8 | |||||
Motorparts | 4 | 3 | |||||
Corporate | 1 | — | |||||
$ | 24 | $ | 12 |
• | The Company incurred $5 million in restructuring and related costs related to the accelerated move of the Beijing Ride Performance plant. The Company anticipates the move to be completed by the second quarter of 2019. |
• | In October 2018, the Company announced a plan to close its Ride Performance plants in Owen Sound, Ontario and Hartwell, Georgia as part of an initiative to realign its manufacturing footprint, to enhance operational efficiency, and respond to changing market conditions and capacity requirements. The Company expects to complete the closure of the two facilities in the second quarter of 2020. The Company recorded charges of $6 million during the first quarter of 2019. |
• | The Company incurred $6 million in restructuring and related costs related to a restructuring plan designed to achieve a portion of the synergies the Company anticipates achieving in connection with the Federal-Mogul Acquisition. Pursuant to the plan, the Company will reduce its headcount globally across all segments. The Company began implementing headcount reductions in January 2019 and these actions will continue throughout 2019. The Federal-Mogul Acquisition is discussed further in Note 3, Acquisitions and Divestitures. |
• | The Company incurred $3 million restructuring and related costs related to the closing of its Clean Air plant in Rennes, France. The Company anticipates the closure to be completed by the end of 2019. |
• | The Company incurred an additional $4 million in restructuring and related costs for cost improvement initiatives at various other operations around the world. |
• | The Company incurred $7 million in restructuring and related costs related to the accelerated move of the Beijing Ride Performance plant. |
• | The Company incurred an additional $5 million in restructuring and related costs for cost improvement initiatives at various other operations around the world. |
Three months ended March 31, 2019 | |||||||||||||||||||||||||||
Reportable Segments | |||||||||||||||||||||||||||
Clean Air | Powertrain | Ride Performance | Motorparts | Total Reportable Segments | Corporate | Total | |||||||||||||||||||||
Balance at beginning of period | $ | 17 | $ | 15 | $ | 25 | $ | 43 | $ | 100 | $ | 3 | $ | 103 | |||||||||||||
Provisions | 5 | 1 | 13 | 4 | 23 | 1 | 24 | ||||||||||||||||||||
Payments | (6 | ) | (3 | ) | (13 | ) | (14 | ) | (36 | ) | (2 | ) | (38 | ) | |||||||||||||
Balance at end of period | $ | 16 | $ | 13 | $ | 25 | $ | 33 | $ | 87 | $ | 2 | $ | 89 |
Three months ended March 31, 2018 | |||||||||||||||||||||||||||
Reportable Segments | |||||||||||||||||||||||||||
Clean Air | Powertrain | Ride Performance | Motorparts | Total Reportable Segments | Corporate | Total | |||||||||||||||||||||
Balance at beginning of period | $ | 14 | $ | — | $ | 7 | $ | 4 | $ | 25 | $ | — | $ | 25 | |||||||||||||
Provisions | 1 | — | 8 | 3 | 12 | — | 12 | ||||||||||||||||||||
Payments | (5 | ) | — | (9 | ) | (2 | ) | (16 | ) | — | (16 | ) | |||||||||||||||
Balance at end of period | $ | 10 | $ | — | $ | 6 | $ | 5 | $ | 21 | $ | — | $ | 21 |
Three months ended March 31, 2019 | Three months ended March 31, 2018 | ||||||||||||||||||||||
Employee Costs | Facility Closure and Other Costs | Total | Employee Costs | Facility Closure and Other Costs | Total | ||||||||||||||||||
Balance at beginning of period | $ | 98 | $ | 5 | $ | 103 | $ | 19 | $ | 6 | $ | 25 | |||||||||||
Provisions | 11 | 13 | 24 | 10 | 2 | 12 | |||||||||||||||||
Payments | (25 | ) | (13 | ) | (38 | ) | (13 | ) | (3 | ) | (16 | ) | |||||||||||
Balance at end of period | $ | 84 | $ | 5 | $ | 89 | $ | 16 | $ | 5 | $ | 21 |
March 31, 2019 | December 31, 2018 | ||||||
Finished goods | $ | 1,181 | $ | 1,116 | |||
Work in process | 526 | 562 | |||||
Raw materials | 450 | 457 | |||||
Materials and supplies | 109 | 110 | |||||
$ | 2,266 | $ | 2,245 |
Three Months Ended March 31, 2019 | |||||||||||||||||||
Clean Air | Powertrain | Ride Performance | Motorparts | Total | |||||||||||||||
Gross carrying amount at beginning of period | $ | 22 | $ | 388 | $ | 210 | $ | 611 | $ | 1,231 | |||||||||
Measurement period adjustments | — | 21 | — | (67 | ) | (46 | ) | ||||||||||||
Acquisitions | — | — | 28 | — | 28 | ||||||||||||||
Gross carrying amount at end of period | 22 | 409 | 238 | 544 | 1,213 | ||||||||||||||
Accumulated impairment loss at beginning of period | — | — | (143 | ) | (219 | ) | (362 | ) | |||||||||||
Impairment | — | — | (60 | ) | — | (60 | ) | ||||||||||||
Accumulated impairment loss at end of period | — | — | (203 | ) | (219 | ) | (422 | ) | |||||||||||
Net carrying value at end of period | $ | 22 | $ | 409 | $ | 35 | $ | 325 | $ | 791 |
Fair value exceeds | ||||||
carrying value | Goodwill | |||||
Reporting units 1-6 | < 15% | $ | 354 | |||
Reporting units 7-9 | > 15% | 437 | ||||
$ | 791 |
March 31, 2019 | December 31, 2018 | ||||||||||||||||||||||||
Useful Lives | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | |||||||||||||||||||
Definite-lived intangible assets: | |||||||||||||||||||||||||
Customer relationships and platforms | 10 years | $ | 1,019 | $ | (50 | ) | $ | 969 | $ | 964 | $ | (24 | ) | $ | 940 | ||||||||||
Customer contract | 10 years | 8 | (6 | ) | 2 | 8 | (5 | ) | 3 | ||||||||||||||||
Patents | 10 to 17 years | 1 | (1 | ) | — | 1 | (1 | ) | — | ||||||||||||||||
Technology rights | 10 to 30 years | 135 | (28 | ) | 107 | 98 | (27 | ) | 71 | ||||||||||||||||
Packaged kits know-how | 10 years | 54 | (3 | ) | 51 | 36 | (1 | ) | 35 | ||||||||||||||||
Catalogs | 10 years | 40 | (2 | ) | 38 | — | — | — | |||||||||||||||||
Licensing agreements | 3 to 5 years | 63 | (7 | ) | 56 | 66 | (3 | ) | 63 | ||||||||||||||||
Land use rights | 28 to 46 years | 45 | (2 | ) | 43 | 44 | (2 | ) | 42 | ||||||||||||||||
1,365 | (99 | ) | 1,266 | 1,217 | (63 | ) | 1,154 | ||||||||||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||||||||||
Trade names and trademarks | 421 | — | 421 | 365 | — | 365 | |||||||||||||||||||
Total | $ | 1,786 | $ | (99 | ) | $ | 1,687 | $ | 1,582 | $ | (63 | ) | $ | 1,519 |
2019 | 2020 | 2021 | 2022 | 2023 | 2024 and thereafter | Total | ||||||||||||||||||||||
Expected amortization expense | $ | 106 | $ | 140 | $ | 139 | $ | 134 | $ | 131 | $ | 616 | $ | 1,266 |
March 31, 2019 | December 31, 2018 | ||||
Anqing TP Goetze Piston Ring Company Limited (China) | 35.7 | % | 35.7 | % | |
Anqing TP Powder Metallurgy Co., Ltd (China) | 20.0 | % | 20.0 | % | |
Dongsuh Federal-Mogul Industrial Co. Ltd. (Korea) | 50.0 | % | 50.0 | % | |
Farloc Argentina SAIC Y F (Argentina) | 23.9 | % | 23.9 | % | |
Federal-Mogul Powertrain Otomotiv A.S. (Turkey) | 50.0 | % | 50.0 | % | |
Federal-Mogul TP Liner Europe Otomotiv Ltd. Sti. (Turkey) | 25.0 | % | 25.0 | % | |
Federal-Mogul TP Liners, Inc. (USA) | 46.0 | % | 46.0 | % | |
Frenos Hidraulicos Automotrices, S.A. de C.V. (Mexico) | 49.0 | % | 49.0 | % | |
JURID do Brasil Sistemas Automotivos Ltda. (Brazil) | 19.9 | % | 19.9 | % | |
KB Autosys Co., Ltd. (Korea) | 33.6 | % | 33.6 | % | |
Montagewerk Abgastechnik Emden GmbH (Germany) | 50.0 | % | 50.0 | % |
March 31, 2019 | December 31, 2018 | ||||||
Investments in nonconsolidated affiliates | $ | 528 | $ | 544 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Equity earnings (losses) of nonconsolidated affiliates, net of tax | $ | 16 | $ | — | |||
Cash dividends received from nonconsolidated affiliates | $ | 15 | $ | — |
Three Months ended March 31, 2019 | |||||||||||||||
Statements of Income | Otomotiv A.S. | Anqing TP Goetze | Other | Total | |||||||||||
Sales | $ | 91 | $ | 39 | $ | 125 | $ | 255 | |||||||
Gross profit | $ | 21 | $ | 16 | $ | 23 | $ | 60 | |||||||
Income from continuing operations | $ | 19 | $ | 11 | $ | 13 | $ | 43 | |||||||
Net income | $ | 18 | $ | 9 | $ | 11 | $ | 38 |
Notional Amount | |||
Long positions | $ | (33 | ) |
Short positions | $ | 33 |
Carrying Value | |||||||||
Balance sheet classification | March 31, 2019 | December 31, 2018 | |||||||
Commodity price hedge contracts designated as cash flow hedges | Prepayments and other current assets | $ | 2 | $ | — | ||||
Commodity price hedge contracts designated as cash flow hedges | Accrued expenses and other current liabilities | $ | — | $ | 2 | ||||
Foreign currency borrowings designated as net investment hedges | Long-term debt | $ | 862 | $ | 863 |
Amount of gain (loss) recognized in accumulated OCI or OCL (effective portion): | Three months ended March 31, 2019 | |||
Commodity price hedge contracts designated as cash flow hedges | $ | 4 | ||
Foreign currency borrowings designated as net investment hedges | $ | (19 | ) |
Level 1 | — | Quoted prices in active markets for identical assets or liabilities. |
Level 2 | — | Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. |
Level 3 | — | Unobservable inputs based on our own assumptions. |
March 31, 2019 | December 31, 2018 | ||||||||||||||||
Fair value hierarchy | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
Derivative instruments: | |||||||||||||||||
Equity swap agreement | Level 2 | $ | 3 | $ | 3 | $ | 4 | $ | 4 | ||||||||
Commodity contracts | Level 2 | $ | 2 | $ | 2 | $ | (2 | ) | $ | (2 | ) |
March 31, 2019 | December 31, 2018 | ||||||||||||||||
Fair value hierarchy | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
Long-term debt (including current maturities): | |||||||||||||||||
Term loans and senior notes | Level 2 | $ | 5,386 | $ | 5,285 | $ | 5,307 | $ | 5,218 |
March 31, 2019 | December 31, 2018 | ||||||||||||||
Principal | Carrying Amount (1) | Principal | Carrying Amount (1) | ||||||||||||
Credit Facilities | |||||||||||||||
Revolver Borrowings | |||||||||||||||
Due 2023 | $ | 132 | $ | 132 | $ | — | $ | — | |||||||
Term Loans | |||||||||||||||
LIBOR plus 1.75% Term Loan A due 2019 through 2023 | 1,679 | 1,670 | 1,700 | 1,691 | |||||||||||
LIBOR plus 2.75% Term Loan B due 2019 through 2025 | 1,696 | 1,628 | 1,700 | 1,629 | |||||||||||
Senior Unsecured Notes | |||||||||||||||
$225 million of 5.375% Senior Notes due 2024 | 225 | 222 | 225 | 222 | |||||||||||
$500 million of 5.000% Senior Notes due 2026 | 500 | 493 | 500 | 493 | |||||||||||
Senior Secured Notes | |||||||||||||||
415 million 4.875% Euro Fixed Rate Notes due 2022 | 466 | 483 | 476 | 496 | |||||||||||
300 million of Euribor plus 4.875% Euro Floating Rate Notes due 2024 | 337 | 341 | 344 | 349 | |||||||||||
350 million of 5.000% Euro Fixed Rate Notes due 2024 | 393 | 417 | 401 | 427 | |||||||||||
Other debt, primarily foreign instruments | 105 | 104 | 108 | 106 | |||||||||||
5,490 | 5,413 | ||||||||||||||
Less - maturities classified as current | 73 | 73 | |||||||||||||
Total long-term debt | $ | 5,417 | $ | 5,340 |
Credit Facilities as of March 31, 2019 | |||||
Term | Available(b) | ||||
(in billions) | |||||
Tenneco Inc. revolving credit facility (a) | 2023 | $ | 1.3 | ||
Tenneco Inc. Term Loan A | 2023 | — | |||
Tenneco Inc. Term Loan B | 2025 | — | |||
Subsidiaries’ credit agreements | 2018-2028 | 0.1 | |||
$ | 1.4 |
(a) | The Company is required to pay commitment fees under the revolving credit facility on the unused portion of the total commitment. |
(b) | Letters of credit reduce the available borrowings under the revolving credit facility, as of March 31, 2019 the revolving credit facility had $20 million in letters of credit outstanding. |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
Amortization of debt issuance fees | $ | 5 | $ | 1 |
March 31, 2019 | December 31, 2018 | ||||||
Borrowings on securitization programs | $ | 3 | $ | 6 |
March 31, 2019 | December 31, 2018 | ||||||
(in billions) | |||||||
Accounts receivable outstanding and derecognized | $ | 1.1 | $ | 1.0 |
March 31, 2019 | December 31, 2018 | ||||||
Deferred purchase price receivable | $ | 58 | $ | 154 |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
(in billions) | |||||||
Proceeds from factoring qualifying as sales | $ | 1.2 | $ | 0.8 |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
Financing charges on sale of receivables(a) | $ | 8 | $ | 3 | |||
(a) Amount is included in "Interest expense" in the condensed consolidated statements of income (loss). |
Three Months Ended March 31, | |||||||||||||||||||||||
Pension | Other Postretirement Benefits | ||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||
U.S. | Non-U.S. | U.S. | Non-U.S. | 2019 | 2018 | ||||||||||||||||||
Service cost | $ | 1 | $ | 6 | $ | — | $ | 3 | $ | — | $ | — | |||||||||||
Interest cost | 13 | 7 | 3 | 3 | 3 | 2 | |||||||||||||||||
Expected return on plan assets | (17 | ) | (5 | ) | (4 | ) | (5 | ) | — | — | |||||||||||||
Net amortization: | |||||||||||||||||||||||
Actuarial loss | 1 | 1 | 1 | 2 | 1 | 1 | |||||||||||||||||
Prior service cost (credit) | — | — | — | — | (2 | ) | — | ||||||||||||||||
Net pension and postretirement costs (credits) | $ | (2 | ) | $ | 9 | $ | — | $ | 3 | $ | 2 | $ | 3 |
March 31, 2019 | December 31, 2018 | ||||||
Accrued expenses and other current liabilities | $ | 10 | $ | 12 | |||
Deferred credits and other liabilities | 29 | 28 | |||||
$ | 39 | $ | 40 |
2019 | 2020 | 2021 | 2022 | 2023 | 2024 and thereafter | ||||||||||||||||||
Expected payments | $ | 8 | $ | 6 | $ | 3 | $ | 2 | $ | 2 | $ | 17 |
March 31, 2019 | December 31, 2018 | ||||||
Accrued expenses and other current liabilities | $ | 3 | $ | 3 | |||
Deferred credits and other liabilities | 12 | 12 | |||||
$ | 15 | $ | 15 |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
Balance at beginning of period | $ | 45 | $ | 26 | |||
Accruals related to product warranties | 5 | 6 | |||||
Reductions for payments made | (2 | ) | (3 | ) | |||
Foreign currency | — | — | |||||
Balance at end of period | $ | 48 | $ | 29 |
Three months ended March 31, 2019 | |||
Operating lease cost | $ | 33 | |
Short-term lease expense | 1 | ||
Variable lease cost | 8 | ||
Total lease cost | $ | 42 |
Three months ended March 31, 2019 | |||
Cash paid for amounts included in the measurement of lease liabilities | |||
Operating cash flows from operating leases | $ | 41 |
March 31, 2019 | |||
Operating leases | |||
Operating lease right-of-use assets (a) | $ | 362 | |
Other current liabilities (b) | $ | 101 | |
Other long-term liabilities (c) | 256 | ||
Total operating lease liabilities | $ | 357 | |
Finance leases | |||
Property, plant and equipment, gross | $ | 2 | |
Accumulated depreciation | — | ||
Total finance lease right-of-use assets | $ | 2 | |
Other current liabilities (b) | $ | 1 | |
Other long-term liabilities (c) | 1 | ||
Total finance lease liabilities | $ | 2 | |
(a) Included in "Other assets" in the condensed consolidated balance sheets. | |||
(b) Included in "Accrued expenses and other current liabilities" in the condensed consolidated balance sheets. | |||
(c) Included in "Deferred credits and other liabilities" in the condensed consolidated balance sheets. |
March 31, 2019 | ||||
Weighted average remaining lease term | Weighted average discount rate | |||
Operating leases | 5.29 years | 4.26 | % | |
Finance leases | 3.23 years | 4.85 | % |
Year ending December 31 | Operating leases | Finance leases | |||||
2019 (excluding the three months ended March 31, 2019) | $ | 85 | $ | 1 | |||
2020 | 91 | 1 | |||||
2021 | 69 | — | |||||
2022 | 48 | — | |||||
2023 | 34 | — | |||||
Thereafter | 55 | — | |||||
Total future undiscounted lease payments | 382 | 2 | |||||
Less imputed interest | (25 | ) | — | ||||
Total reported lease liability | $ | 357 | $ | 2 |
2019 | $ | 120 | |
2020 | 100 | ||
2021 | 86 | ||
2022 | 68 | ||
2023 | 56 | ||
Beyond 2023 | 53 | ||
$ | 483 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Cash-settled share-based compensation expense (benefit) | $ | (1 | ) | $ | (1 | ) | |
Share-settled share-based compensation expense (benefit) | 7 | 5 | |||||
$ | 6 | $ | 4 |
Restricted Stock | Share-Settled RSUs | PSUs | ||||||||||||||||||
Shares | Weighted Avg. Grant Date Fair Value | Units | Weighted Avg. Grant Date Fair Value | Units | Weighted Avg. Grant Date Fair Value | |||||||||||||||
Nonvested Restricted Shares | ||||||||||||||||||||
Nonvested balance at beginning of period | 178,550 | $ | 55.46 | 440,403 | $ | 47.99 | 227,049 | $ | 49.18 | |||||||||||
Granted | 34,009 | 34.66 | 856,808 | 34.25 | 628,990 | 24.77 | ||||||||||||||
Vested | (166,444 | ) | 49.86 | (83,109 | ) | 55.00 | — | — | ||||||||||||
Forfeited | (1,262 | ) | 61.61 | (17,772 | ) | 42.82 | (15,065 | ) | 50.75 | |||||||||||
Nonvested balance at end of period | 44,853 | $ | 62.49 | 1,196,330 | $ | 38.22 | 840,974 | $ | 34.44 |
Class A Common Stock | Class B Common Stock | |||||||
Three Months March 31 | Three Months March 31 | |||||||
2019 | 2018 | 2019 | ||||||
Shares issued at beginning of period | 71,675,379 | 66,033,509 | 23,793,669 | |||||
Issuance (repurchased) pursuant to benefit plans | 120,622 | (15,906 | ) | — | ||||
Restricted stock forfeited and withheld for taxes | (54,293 | ) | (5,108 | ) | — | |||
Stock options exercised | 8,438 | 4,779 | — | |||||
Shares issued at end of period | 71,750,146 | 66,017,274 | 23,793,669 | |||||
Treasury stock | 14,592,888 | 14,592,888 | — | |||||
Total shares outstanding | 57,157,258 | 51,424,386 | 23,793,669 |
Three Months Ended March 31 | |||||||
2019 | 2018 | ||||||
Foreign currency translation adjustments and other | |||||||
Balance at beginning of period | $ | (395 | ) | $ | (263 | ) | |
Other comprehensive income (loss) before reclassifications adjustments | 27 | 19 | |||||
Reclassification from other comprehensive income (loss) | — | — | |||||
Other comprehensive income (loss) | (368 | ) | (244 | ) | |||
Income tax provision (benefit) | 2 | — | |||||
Balance at end of period | $ | (366 | ) | $ | (244 | ) | |
Pensions and other postretirement benefits | |||||||
Balance at beginning of period | $ | (297 | ) | $ | (275 | ) | |
Other comprehensive income (loss) before reclassifications | — | — | |||||
Reclassification from other comprehensive income (loss) | 1 | 4 | |||||
Other comprehensive income (loss) | (296 | ) | (271 | ) | |||
Income tax provision (benefit) | — | (1 | ) | ||||
Balance at end of period | $ | (296 | ) | $ | (272 | ) | |
Cash flow hedge instruments | |||||||
Balance at beginning of period | $ | — | $ | — | |||
Other comprehensive income (loss) before reclassifications | 4 | — | |||||
Reclassification from other comprehensive income (loss) | — | — | |||||
Other comprehensive income (loss) | 4 | — | |||||
Income tax provision (benefit) | — | — | |||||
Balance at end of period | $ | 4 | $ | — | |||
Other comprehensive income (loss) attributable to noncontrolling interests | $ | 6 | $ | 8 |
Reportable Segments | |||||||||||||||||||||||||||||||
Clean Air | Powertrain | Ride Performance | Motorparts | Total | Corporate | Reclass & Elims | Total | ||||||||||||||||||||||||
For the Three Months Ended March 31, 2019 | |||||||||||||||||||||||||||||||
Revenues from external customers | $ | 1,779 | $ | 1,175 | $ | 733 | $ | 797 | $ | 4,484 | $ | — | $ | — | $ | 4,484 | |||||||||||||||
Intersegment revenues | $ | — | $ | 46 | $ | 46 | $ | 11 | $ | 103 | $ | — | $ | (103 | ) | $ | — | ||||||||||||||
EBITDA, including noncontrolling interests | $ | 131 | $ | 113 | $ | (45 | ) | $ | 45 | $ | 244 | $ | (99 | ) | $ | — | $ | 145 | |||||||||||||
For the Three Months Ended March 31, 2018 | |||||||||||||||||||||||||||||||
Revenues from external customers | $ | 1,756 | $ | — | $ | 513 | $ | 312 | $ | 2,581 | $ | — | $ | — | $ | 2,581 | |||||||||||||||
Intersegment revenues | $ | — | $ | — | $ | 6 | $ | — | $ | 6 | $ | — | $ | (6 | ) | $ | — | ||||||||||||||
EBITDA, including noncontrolling interests | $ | 157 | $ | — | $ | 24 | $ | 45 | $ | 226 | $ | (44 | ) | $ | — | $ | 182 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
EBITDA including noncontrolling interests by Segments: | |||||||
Clean Air | $ | 131 | $ | 157 | |||
Powertrain | 113 | — | |||||
Ride Performance | (45 | ) | 24 | ||||
Motorparts | 45 | 45 | |||||
Corporate | (99 | ) | (44 | ) | |||
Total EBITDA including noncontrolling interests | 145 | 182 | |||||
Less: Depreciation and amortization | (169 | ) | (60 | ) | |||
Earnings (loss) before interest expense, income taxes, and noncontrolling interests | (24 | ) | 122 | ||||
Less: Interest expense | (81 | ) | (23 | ) | |||
Less: Income tax expense (benefit) | — | (25 | ) | ||||
Net income (loss) | $ | (105 | ) | $ | 74 |
Reportable Segments | |||||||||||||||||||
By Customer Type | Clean Air | Powertrain | Ride Performance | Motorparts | Total | ||||||||||||||
Three Months Ended March 31, 2019 | |||||||||||||||||||
OE - Substrate | $ | 706 | $ | — | $ | — | $ | — | $ | 706 | |||||||||
OE - Value add | 1,073 | 1,175 | 733 | — | 2,981 | ||||||||||||||
Aftermarket | — | — | — | 797 | 797 | ||||||||||||||
Total | $ | 1,779 | $ | 1,175 | $ | 733 | $ | 797 | $ | 4,484 | |||||||||
Three Months Ended March 31, 2018 | |||||||||||||||||||
OE - Substrate | $ | 652 | $ | — | $ | — | $ | — | $ | 652 | |||||||||
OE - Value add | 1,104 | — | 513 | — | 1,617 | ||||||||||||||
Aftermarket | — | — | — | 312 | 312 | ||||||||||||||
Total | $ | 1,756 | $ | — | $ | 513 | $ | 312 | $ | 2,581 |
Reportable Segments | |||||||||||||||||||
By Geography | Clean Air | Powertrain | Ride Performance | Motorparts | Total | ||||||||||||||
Three Months Ended March 31, 2019 | |||||||||||||||||||
North America | $ | 793 | $ | 405 | $ | 232 | $ | 507 | $ | 1,937 | |||||||||
Europe, Middle East and Africa | 641 | 575 | 378 | 237 | 1,831 | ||||||||||||||
Rest of world | 345 | 195 | 123 | 53 | 716 | ||||||||||||||
Total | $ | 1,779 | $ | 1,175 | $ | 733 | $ | 797 | $ | 4,484 | |||||||||
Three Months Ended March 31, 2018 | |||||||||||||||||||
North America | $ | 768 | $ | — | $ | 180 | $ | 188 | $ | 1,136 | |||||||||
Europe, Middle East and Africa | 657 | — | 225 | 108 | 990 | ||||||||||||||
Rest of world | 331 | — | 108 | 16 | 455 | ||||||||||||||
Total | $ | 1,756 | $ | — | $ | 513 | $ | 312 | $ | 2,581 |
Three Months Ended March 31, 2019 | |||||||||||
Net Sales | Purchases | Royalty and Other Income | |||||||||
Icahn Automotive Group LLC | $ | 43 | $ | — | $ | 1 | |||||
PSC Metals, Inc. | $ | 1 | $ | — | $ | — | |||||
Anqing TP Goetze Piston Ring Company Limited | $ | — | $ | 14 | $ | — | |||||
Anqing TP Powder Metallurgy Company Limited | $ | — | $ | 1 | $ | — | |||||
Dongsuh Federal-Mogul Industrial Co., Ltd. | $ | 1 | $ | 2 | $ | — | |||||
Federal-Mogul Powertrain Otomotiv A.S. | $ | 27 | $ | 55 | $ | 1 | |||||
Federal-Mogul TP Liner Europe Otomotiv Ltd. Sti. | $ | — | $ | 3 | $ | — | |||||
Federal-Mogul Izmit Piston ve Pim Uretim Tesisleri A.S. | $ | 1 | $ | 4 | $ | — | |||||
Federal-Mogul TP Liners, Inc. | $ | 4 | $ | — | $ | — | |||||
Montagewerk Abgastechnik Emden GmbH | $ | 2 | $ | — | $ | — |
March 31, 2019 | December 31, 2018 | ||||||||||||||
Receivables | Payables and accruals | Receivables | Payables and accruals | ||||||||||||
Icahn Automotive Group LLC | $ | 59 | $ | 1 | $ | 60 | $ | 12 | |||||||
Anqing TP Goetze Piston Ring Company Limited | $ | 1 | $ | 16 | $ | 1 | $ | 22 | |||||||
Anqing TP Powder Metallurgy Company Limited | $ | — | $ | 1 | $ | 1 | $ | 1 | |||||||
Dongsuh Federal-Mogul Industrial Co., Ltd. | $ | 1 | $ | 2 | $ | 1 | $ | 2 | |||||||
Federal-Mogul Powertrain Otomotiv A.S. | $ | 16 | $ | 27 | $ | 9 | $ | 16 | |||||||
Federal-Mogul TP Liner Europe Otomotiv Ltd. Sti. | $ | — | $ | 1 | $ | — | $ | 1 | |||||||
Federal-Mogul Izmit Piston ve Pim Uretim Tesisleri A.S. | $ | — | $ | 3 | $ | — | $ | — | |||||||
Federal-Mogul TP Liners, Inc. | $ | 2 | $ | 8 | $ | 2 | $ | 7 | |||||||
Montagewerk Abgastechnik Emden GmbH | $ | — | $ | 1 | $ | — | $ | — |
Three Months Ended March 31, 2019 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | 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 | ) |
Three Months Ended March 31, 2018 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | 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 |
March 31, 2019 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | 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 |
December 31, 2018 | ||||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | 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 |
Three Months Ended March 31, 2019 | ||||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | 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 |
Three Months Ended March 31, 2018 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | 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 |
• | an increase in selling, general, and administrative costs of $27 million related to acquisition and spin related costs and an increase of $8 million in cost reduction initiatives, partially offset by a favorable effect of foreign currency exchange of $7 million; |
• | an increase in restructuring charges of $12 million related to higher costs for facility closure and other costs; |
• | a goodwill impairment charge of $60 million as a result of our change in operating segments; and |
• | an increase in interest expense and other financing charges of $58 million. |
• | an increase in equity earnings in nonconsolidated affiliates of $16 million, which was the result of the Federal-Mogul Acquisition, and |
• | a reduction in income tax expense of $25 million. |
2019 vs. 2018 | ||||||||||||||
Three Months Ended March 31 | Increase / (Decrease) | |||||||||||||
2019 | 2018 | $ Change | % Change (1) | |||||||||||
(millions, except percent, share, and per share amounts) | ||||||||||||||
Revenues | ||||||||||||||
Net sales and operating revenues | $ | 4,484 | $ | 2,581 | $ | 1,903 | 74 | % | ||||||
Costs and expenses | ||||||||||||||
Cost of sales | 3,864 | 2,193 | 1,671 | 76 | % | |||||||||
Selling, general, and administrative | 316 | 151 | 165 | 109 | % | |||||||||
Depreciation and amortization | 169 | 60 | 109 | 182 | % | |||||||||
Engineering, research, and development | 92 | 40 | 52 | 130 | % | |||||||||
Restructuring charges and asset impairments | 24 | 12 | 12 | 100 | % | |||||||||
Goodwill impairment charge | 60 | — | 60 | n/m | ||||||||||
4,525 | 2,456 | 2,069 | 84 | % | ||||||||||
Other expense (income) | ||||||||||||||
Non-service pension and other postretirement benefit costs (credits) | 2 | 3 | (1 | ) | (33 | )% | ||||||||
Equity in (earnings) losses of nonconsolidated affiliates, net of tax | (16 | ) | — | (16 | ) | n/m | ||||||||
Other expense (income), net | (3 | ) | — | (3 | ) | n/m | ||||||||
(17 | ) | 3 | (20 | ) | n/m | |||||||||
Earnings (loss) before interest expense, income taxes, and noncontrolling interests | (24 | ) | 122 | (146 | ) | (120 | )% | |||||||
Interest expense | 81 | 23 | 58 | 252 | % | |||||||||
Earnings (loss) before income taxes and noncontrolling interests | (105 | ) | 99 | (204 | ) | (206 | )% | |||||||
Income tax expense (benefit) | — | 25 | (25 | ) | (100 | )% | ||||||||
Net income (loss) | (105 | ) | 74 | (179 | ) | (242 | )% | |||||||
Less: Net income (loss) attributable to noncontrolling interests | 12 | 14 | (2 | ) | (14 | )% | ||||||||
Net income (loss) attributable to Tenneco Inc. | $ | (117 | ) | $ | 60 | $ | (177 | ) | (295 | )% | ||||
Earnings (loss) per share | ||||||||||||||
Basic earnings (loss) per share: | ||||||||||||||
Earnings (loss) per share | $ | (1.44 | ) | $ | 1.17 | $ | (2.61 | ) | ||||||
Weighted average shares outstanding | 80,874,637 | 51,211,643 | 29,662,994 | |||||||||||
Diluted earnings (loss) per share: | ||||||||||||||
Earnings (loss) per share | $ | (1.44 | ) | $ | 1.17 | $ | (2.61 | ) | ||||||
Weighted average shares outstanding | 80,874,637 | 51,501,643 | 29,372,994 |
Three-months ended March 31, 2018 | $ | 2,581 | |
Acquisitions | 1,935 | ||
Drivers in the change of organic revenues: | |||
Volume and mix | 89 | ||
Currency exchange rates | (127 | ) | |
Others | 6 | ||
Three-months ended March 31, 2019 | $ | 4,484 |
Three-months ended March 31, 2018 | $ | 2,193 | |
Acquisitions | 1,633 | ||
Drivers in the change of organic cost of sales: | |||
Volume and mix | 92 | ||
Material | 7 | ||
Currency exchange rates | (101 | ) | |
Other costs | 40 | ||
Three-months ended March 31, 2019 | $ | 3,864 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Total EBITDA including noncontrolling interests | $ | 145 | $ | 182 | |||
Depreciation and amortization | 169 | 60 | |||||
Earnings (loss) before interest expense, income taxes, and noncontrolling interests | (24 | ) | 122 | ||||
Less: Interest expense | 81 | 23 | |||||
Less: Income tax expense (benefit) | — | 25 | |||||
Net income (loss) | (105 | ) | 74 | ||||
Net Income (loss) attributable to noncontrolling interests | 12 | 14 | |||||
Net income (loss) attributable to Tenneco Inc. | $ | (117 | ) | $ | 60 |
Segment Revenue | |||||||||||||||||||||||||||||||||||||||
New Tenneco | DRiV | ||||||||||||||||||||||||||||||||||||||
Clean Air | Powertrain | Ride Performance | Motorparts | Total Revenues | |||||||||||||||||||||||||||||||||||
Three months ended March 31, | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||
Revenues | $ | 1,779 | $ | 1,756 | $ | 1,175 | $ | — | $ | 733 | $ | 513 | $ | 797 | $ | 312 | $ | 4,484 | $ | 2,581 | |||||||||||||||||||
Value-add revenues | 1,073 | 1,104 | 1,175 | — | 733 | 513 | 797 | 312 | $ | 3,778 | $ | 1,929 | |||||||||||||||||||||||||||
Currency effect on value-add revenue | (51 | ) | — | — | — | (31 | ) | — | (18 | ) | — | (100 | ) | — | |||||||||||||||||||||||||
Value-add revenue excluding currency | $ | 1,124 | $ | 1,104 | $ | 1,175 | $ | — | $ | 764 | $ | 513 | $ | 815 | $ | 312 | $ | 3,878 | $ | 1,929 | |||||||||||||||||||
Substrate sales | $ | 706 | $ | 652 | $ | 706 | $ | 652 | |||||||||||||||||||||||||||||||
Effect of Acquisitions | $ | 1,175 | $ | 244 | $ | 516 | $ | 1,935 |
Three Months Ended March 31, | |||||||||||
2019 | 2018 | 2019 vs 2018 | |||||||||
EBITDA including noncontrolling interests by Segments: | |||||||||||
Clean Air | $ | 131 | $ | 157 | $ | (26 | ) | ||||
Powertrain | 113 | — | 113 | ||||||||
Ride Performance | (45 | ) | 24 | (69 | ) | ||||||
Motorparts | 45 | 45 | — | ||||||||
Corporate | (99 | ) | (44 | ) | (55 | ) | |||||
Total EBITDA including noncontrolling interests (1) | $ | 145 | $ | 182 | $ | (37 | ) |
Reportable Segments | |||||||||||||||||||||||||||||||
Clean Air | Powertrain | Ride Performance | Motorparts | Total | Corporate | Reclass & Elims | Total | ||||||||||||||||||||||||
Three Months Ended March 31, 2019 | |||||||||||||||||||||||||||||||
Costs to achieve synergies (1) | $ | 1 | $ | — | $ | 3 | $ | 3 | $ | 7 | $ | — | $ | — | $ | 7 | |||||||||||||||
Restructuring and related expenses | 4 | 1 | 10 | 1 | 16 | 1 | — | 17 | |||||||||||||||||||||||
Cost reduction initiatives (2) | — | — | — | — | — | 8 | — | 8 | |||||||||||||||||||||||
Acquisition and expected spin costs (3) | — | — | — | — | — | 40 | — | 40 | |||||||||||||||||||||||
Process harmonization(4) | 4 | — | — | 5 | 9 | — | — | 9 | |||||||||||||||||||||||
Purchase accounting adjustments (5) | — | 2 | 3 | 36 | 41 | — | — | 41 | |||||||||||||||||||||||
Goodwill impairment charge (6) | — | — | 60 | — | 60 | — | — | 60 | |||||||||||||||||||||||
Total adjustments | $ | 9 | $ | 3 | $ | 76 | $ | 45 | $ | 133 | $ | 49 | $ | — | $ | 182 |
Reportable Segments | |||||||||||||||||||||||||||||||
Clean Air | Powertrain | Ride Performance | Motorparts | Total | Corporate | Reclass & Elims | Total | ||||||||||||||||||||||||
Three Months Ended March 31, 2018 | |||||||||||||||||||||||||||||||
Restructuring and related expenses | $ | 1 | $ | — | $ | 9 | $ | 2 | $ | 12 | $ | — | $ | — | $ | 12 | |||||||||||||||
Warranty charge (7) | — | — | 5 | — | 5 | — | — | 5 | |||||||||||||||||||||||
Acquisition and expected spin costs (3) | — | — | — | — | — | 13 | — | 13 | |||||||||||||||||||||||
Total adjustments | $ | 1 | $ | — | $ | 14 | $ | 2 | $ | 17 | $ | 13 | $ | — | $ | 30 |
Credit Facilities as of March 31, 2019 | |||||
Term | Available(b) | ||||
Tenneco Inc. revolving credit facility (a) | 2023 | $ | 1.3 | ||
Tenneco Inc. Term Loan A | 2023 | — | |||
Tenneco Inc. Term Loan B | 2025 | — | |||
Subsidiaries’ credit agreements | 2018-2028 | 0.1 | |||
$ | 1.4 |
(a) | We are required to pay commitment fees under the revolving credit facility on the unused portion of the total commitment. |
(b) | Letters of credit reduce the available borrowings under the revolving credit facility, as of March 31, 2019 the revolving credit facility had $20 million in letters of credit outstanding. |
March 31, 2019 | December 31, 2018 | |||||||
Borrowings on securitization programs | $ | 3 | $ | 6 |
March 31, 2019 | December 31, 2018 | ||||||
Accounts receivable outstanding and derecognized | $ | 1.1 | $ | 1.0 |
March 31, 2019 | December 31, 2018 | ||||||
Deferred purchase price receivable | $ | 58 | $ | 154 |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
Proceeds from factoring qualifying as sales | $ | 1.2 | $ | 0.8 |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
Financing charges on sale of receivables(a) | $ | 8 | $ | 3 | |||
(a) Amount is included in "Interest expense" in the condensed consolidated statements of income (loss). |
Three Months Ended March 31 | |||||||
2019 | 2018 | ||||||
Operational cash flow before changes in operating assets and liabilities | $ | 91 | $ | 134 | |||
Changes in operating assets and liabilities: | |||||||
Receivables | (312 | ) | (221 | ) | |||
Inventories | 11 | (32 | ) | ||||
Payables and accrued expenses | 157 | 185 | |||||
Accrued interest and income taxes | (38 | ) | (4 | ) | |||
Other assets and liabilities | (59 | ) | (62 | ) | |||
Total change in operating assets and liabilities | (241 | ) | (134 | ) | |||
Net cash provided (used) by operating activities | $ | (150 | ) | $ | — |
• | cash flows used by the operations of the Federal-Mogul Acquisition, of approximately $139 million; and |
• | a decrease in cash flows due to unfavorable performance and changes in working capital items of $13 million (excluding the Federal-Mogul Acquisition). |
Three Months Ended March 31 | |||||||
2019 | 2018 | ||||||
Proceeds from sale of assets | $ | 1 | $ | 2 | |||
Net proceeds from sale of business | 22 | — | |||||
Cash payments for property, plant, and equipment | (210 | ) | (89 | ) | |||
Acquisition of business, net of cash acquired | (158 | ) | — | ||||
Proceeds from deferred purchase price of factored receivables | 60 | 34 | |||||
Other | 2 | — | |||||
Net cash used by investing activities | $ | (283 | ) | $ | (53 | ) |
Three Months Ended March 31 | |||||||
2019 | 2018 | ||||||
Proceeds from term loans and notes | $ | 28 | $ | 6 | |||
Repayments of term loans and notes | (64 | ) | (13 | ) | |||
Borrowings on revolving lines of credit | 2,119 | 1,267 | |||||
Payments on revolving lines of credit | (1,981 | ) | (1,189 | ) | |||
Issuance (repurchase) of common shares | (2 | ) | (2 | ) | |||
Cash dividends | (20 | ) | (13 | ) | |||
Net increase (decrease) in bank overdrafts | (1 | ) | (4 | ) | |||
Other | (3 | ) | (30 | ) | |||
Distributions to noncontrolling interest partners | (1 | ) | — | ||||
Net cash provided (used) by financing activities | $ | 75 | $ | 22 |
Notional Amount | |||
Long position | $ | (33 | ) |
Short position | $ | 33 |
Period | Total Number of Shares Purchased (1) | Average Price Paid | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Value of Shares That May Yet be Purchased Under These Plans or Programs (Millions) | |||||||||
January 2019 | 26,731 | $ | 31.55 | — | $ | 231 | |||||||
February 2019 | 25,005 | 34.78 | — | 231 | |||||||||
March 2019 | 718 | 34.33 | — | 231 | |||||||||
Total | 52,454 | $ | 33.12 | — | $ | 231 |
(1) | Shares withheld upon vesting of restricted stock and share settled restricted stock units in the first quarter of 2019. |
Exhibit Number | Description | |
*31.1 | — | Certification of Brian J. Kesseler under Section 302 of the Sarbanes-Oxley Act of 2002. |
*31.2 | Certification of Roger J. Wood under Section 302 of the Sarbanes-Oxley Act of 2002. | |
*31.3 | — | Certification of Jason M. Hollar under Section 302 of the Sarbanes-Oxley Act of 2002. |
*32.1 | — | Certification of Brian J. Kesseler, Roger J. Wood and Jason M. Hollar under Section 906 of the Sarbanes-Oxley Act of 2002. |
*101.INS | — | XBRL Instance Document. |
*101.SCH | — | XBRL Taxonomy Extension Schema Document. |
*101.CAL | — | XBRL Taxonomy Extension Calculation Linkbase Document. |
*101.DEF | — | XBRL Taxonomy Extension Definition Linkbase Document. |
*101.LAB | — | XBRL Taxonomy Extension Label Linkbase Document. |
*101.PRE | — | XBRL Taxonomy Extension Presentation Linkbase Document. |
* | Filed herewith. |
TENNECO INC. | ||
By: | /S/ JASON M. HOLLAR | |
Jason M. Hollar | ||
Executive Vice President and Chief Financial Officer (on behalf of the Registrant) | ||
TENNECO INC. | |
By: | /s/ JOHN S. PATOUHAS |
John S. Patouhas | |
Vice President and Chief Accounting Officer (principal accounting officer) | |
1. | I have reviewed this quarterly report on Form 10-Q of Tenneco Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of the registrant’s internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ | BRIAN J. KESSELER | |
Brian J. Kesseler | ||
Co-Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Tenneco Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of the registrant’s internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ | ROGER J. WOOD | |
Roger J. Wood | ||
Co-Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Tenneco Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of the registrant’s internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ | JASON M. HOLLAR | |
Jason M. Hollar | ||
Executive Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ BRIAN J. KESSELER | |
Brian J. Kesseler | |
Co-Chief Executive Officer | |
/s/ ROGER J. WOOD | |
Roger J. Wood | |
Co-Chief Executive Officer | |
/s/ JASON M. HOLLAR | |
Jason M. Hollar | |
Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
May 07, 2019 |
|
Document Information [Line Items] | ||
Entity Registrant Name | TENNECO INC | |
Entity Central Index Key | 0001024725 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Class A | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 57,124,067 | |
Class B | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 23,793,669 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ (105) | $ 74 |
Other comprehensive income (loss) — net of tax | ||
Foreign currency translation adjustment | 35 | 27 |
Cash flow hedges | 4 | 0 |
Defined benefit plans | 1 | 3 |
Other comprehensive income (loss) — net of tax | 40 | 30 |
Comprehensive income (loss) | (65) | 104 |
Less: Comprehensive income (loss) attributable to noncontrolling interests | 18 | 22 |
Comprehensive income (loss) attributable to common shareholders | $ (83) | $ 82 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Treasury shares (in shares) | 14,592,888 | 14,592,888 |
Class A | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued (in shares) | 71,750,146 | 71,675,379 |
Treasury shares (in shares) | 14,592,888 | |
Class B | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued (in shares) | 23,793,669 | 23,793,669 |
Treasury shares (in shares) | 0 |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Statement of Stockholders' Equity [Abstract] | ||
Cash dividends (in dollars per share) | $ 0.25 | $ 0.25 |
Description of Business |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | 1. Description of Business Tenneco Inc. ("Tenneco" or "the Company") was formed under the laws of Delaware in 1996. Tenneco designs, manufactures, and sells products and services for light vehicle, commercial truck, off-highway, industrial, and aftermarket customers. The Company is one of the world's leading manufacturers of clean air, powertrain, and ride performance products and systems, and serves both original equipment manufacturers ("OEM") and replacement markets worldwide. On January 10, 2019, the Company completed the acquisition of a 90.5% ownership interest in Öhlins Intressenter AB (“Öhlins”, the "Öhlins Acquisition"), a Swedish technology company that develops premium suspension systems and components for the automotive and motorsport industries. On October 1, 2018, the Company completed the acquisition of a 100% ownership interest in Federal-Mogul LLC ("Federal-Mogul Acquisition," and together with the Öhlins Acquisition, the "Acquisitions"), a global supplier of technology and innovation in vehicle and industrial products for fuel economy, emissions reductions, and safety systems. |
Summary of Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation — Interim Financial Statements Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. These statements include all adjustments (consisting of normal recurring adjustments) management believes are necessary to fairly state the results of operations, comprehensive income, financial position, changes in shareholders' equity, and cash flows. The Company's management believes the disclosures are adequate to make the information presented not misleading when read in conjunction with the audited consolidated financial statements and the notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the Securities and Exchange Commission on March 18, 2019. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. The Company expects to separate its businesses to form two new, independent publicly traded companies, an Aftermarket and Ride Performance company ("DRiV") and a new Powertrain Technology company ("New Tenneco"). The Company has revised its timing target for the separation of the business and now expects the DRiV spinoff to occur mid-2020. In preparation for the spinoff, the Company began to manage and report its DRiV businesses through two new operating segments, in the first quarter of 2019, as compared to the three operating segments it had previously reported. The DRiV operating segments consist of Motorparts and Ride Performance. The new Motorparts operating segment consists of the previously reported Aftermarket operating segment as well as the aftermarket portion of the previously reported Motorparts operating segment. The Ride Performance operating segment consists of the previously reported Ride Performance operating segment as well as the OE Braking business that was included in the previously reported Motorparts operating segment. As such, prior period operating segment results and related disclosures have been conformed to reflect the Company's current operating segments. The future New Tenneco consists of two existing operating segments, Powertrain and Clean Air. See Note 17, Segment Information. Redeemable Noncontrolling Interests — The Company has noncontrolling interests with redemption features. These redemption features could require the Company to make an offer to purchase the noncontrolling interests at fair value in the event of a change in control of Tenneco Inc. or certain of its subsidiaries. The redemption of these redeemable noncontrolling interests is not solely within the Company's control. Accordingly, these noncontrolling interests are presented in the temporary equity section of the Company's condensed consolidated balance sheets. The Company does not believe it is probable the redemption features related to these noncontrolling interest securities will be triggered, as a change in control event is generally not probable until it occurs, except as discussed in Note 3, Acquisitions and Divestitures for the redeemable noncontrolling interests from the Acquisitions. The following is a rollforward of activities in the Company's redeemable noncontrolling interests for the three months ended March 31, 2019 and 2018:
The Company recorded a decrease to the redeemable noncontrolling interests of $8 million from the Federal-Mogul Acquisition, as a result of adjustments made in the measurement period to the preliminary purchase price allocation. The purchase price allocations for the Acquisitions are 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. Earnings (loss) per share: Basic earnings (loss) per share is calculated by dividing net earnings (loss) by the weighted average shares outstanding during the period. Diluted earnings (loss) per share reflects the weighted average effect of all potentially dilutive securities from the date of issuance. Actual weighted average shares outstanding used in calculating earnings (loss) per share were:
For the three months ended March 31, 2019 and 2018, the calculation of diluted earnings (loss) per share excluded 1,714,950 and 174 of share-based awards. The effect of including these securities in the calculation of diluted earnings (loss) per share would have been anti-dilutive. Revision of Previously Issued Financial Statements The Company identified an error in the accounting for certain costs capitalized into inventory that did not constitute inventoriable costs in its historical financial statements. The Company also revised for other immaterial errors related to various line items. As a result, certain amounts in the condensed consolidated financial statements have been revised for the three months ended March 31, 2018. These revisions were not material to the previously issued financial statements and are presented in the tables below. Reclassifications: Certain amounts in the prior years have been aggregated or disaggregated to conform to current year presentation. These reclassifications have no effect on previously reported earnings before income taxes and noncontrolling interests or net income, other comprehensive income (loss), current or total assets, current or total liabilities, and the cash provided (used) by operating, investing or financing activities within the condensed consolidated financial statements. The following tables present the effect of these reclassifications and revisions for the condensed consolidated financial statement line items adjusted in the affected periods included within this quarterly report:
New Accounting Pronouncements Adoption of New Accounting Standards Comprehensive income — In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220). The amendments in this update allow a reclassification from accumulated other comprehensive income (loss) to accumulated deficit for stranded tax effects resulting from the Tax Cuts and Jobs Act ("TCJA"). The Company has elected not to adopt the optional reclassification. Leases — In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update supersedes the lease requirements in Topic 840, Leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flow arising from a lease. For public business entities, the standard is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods. The Company adopted this update on January 1, 2019 using the modified retrospective method without the recasting of comparative periods’ financial information, as permitted by the transition guidance. The Company adopted the package of practical expedients that allows companies to not reassess and will carry forward historical conclusions related to contracts that contain leases, existing lease classification, and initial direct costs. It elected the land easements practical expedient allowing the Company not to reassess whether existing or expired land easements not accounted for as leases under previous guidance are or contain leases under the new guidance. It also did not adopt the hindsight practical expedient and has also made an accounting policy election to exempt leases with an initial term of twelve months or less from balance sheet recognition. Instead, short-term leases will be expensed over the lease term. As a part of the implementation efforts, the Company reviewed its internal control structure and modified and augmented, as necessary. Adoption of the new standard resulted in the recording of additional lease assets and lease liabilities of $387 million and $383 million, and a reduction of favorable lease intangibles of $4 million as of January 1, 2019. The standard did not materially affect the Company's condensed consolidated financial position or results of operations and had no effect on cash flows. See Note 14, Leases. Accounting Standards Issued But Not Yet Adopted Intangibles — In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The amendments in this update are effective for interim and annual periods for the Company beginning on January 1, 2020, with early adoption permitted. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the potential effect of this new guidance on its financial statements. Retirement benefits — In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20). The amendments in this update remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. The amendments in this update are effective for fiscal years ending after December 15, 2020 with early adoption permitted. The Company is currently evaluating the potential effect of this new guidance on its financial statements. Fair value measurements — In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820). The new guidance modifies disclosure requirements related to fair value measurement. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Implementation on a prospective or retrospective basis varies by specific disclosure requirement. Early adoption is permitted. The standard also allows for early adoption of any removed or modified disclosures upon issuance of this ASU while delaying adoption of the additional disclosures until their effective date. The Company is currently evaluating the potential effect of this new guidance on its financial statements. |
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Acquisitions and Divestitures | ring the three months ended March 31, 2019, the Company made measurement period adjustments based on further evaluation of available information to facts and circumstances that existed as of the acquisition date. The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the acquisition date and the measurement period adjustments made during the three months ended March 31, 2019:
The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the fair value of property, plant and equipment; intangible assets; unconsolidated affiliates; deferred income tax assets and liabilities; redeemable noncontrolling interests; and noncontrolling interests. Goodwill of $409 million was allocated to the Powertrain segment, $315 million was allocated to the Motorparts segment, and $55 million was allocated to the Ride Performance segment. The goodwill consists of the Company's expected future economic benefits that will arise from expected future product sales and synergies from combining Federal-Mogul with its existing portfolio of products. None of the goodwill is deductible for tax purposes. Other intangible assets acquired include the following:
The Company recorded a $152 million step-up of inventory to its fair value as of the acquisition date based on the preliminary valuation and recognized $41 million as a non-cash charge to cost of goods sold during the three months ended March 31, 2019 related to the amortization of this step-up, as the acquired inventory was sold. The Company recognized $105 million as a non-cash charge to cost of goods sold during the year ended December 31, 2018 and expects to recognize the remaining amortization of the inventory step-up during 2019. In addition, the Company acquired $83 million in redeemable noncontrolling interests related to a subsidiary from the Federal-Mogul Acquisition. The Company initiated the process to make a tender offer for the shares it does not own due to the change in control in accordance with local regulations triggered by the acquisition. It is probable these shares will become redeemable during 2019 under the tender offer at a price that is representative of fair value and as a result, the noncontrolling interest is presented in the temporary equity section of the Company’s condensed consolidated balance sheets. The carrying amount for this redeemable noncontrolling interest represents its current redemption value at March 31, 2019. The Company's condensed consolidated statements of income (loss) for the three months ended March 31, 2019 included net sales and operating revenues of $1,906 million and net loss of $39 million associated with the operating results of Federal-Mogul. Pro Forma Results The following table summarizes, on a pro forma basis, the combined results of operations of the Company and the Federal-Mogul Acquisition, and the related financing, if the transaction had occurred as of January 1, 2017. The pro forma results are not necessarily indicative of either the actual consolidated results had the Federal-Mogul Acquisition occurred on January 1, 2017 or of future consolidated operating results.
These pro forma amounts have been calculated after applying the Company's accounting policies and the results presented above primarily reflect: (i) depreciation adjustments relating to fair value adjustments to property, plant, and equipment; (ii) amortization adjustments relating to fair value estimates of intangible assets; (iii) incremental interest expense, net on assumed indebtedness, the new credit facility, debt issuance costs, and fair value adjustments to debt; and (iv) cost of goods sold adjustments relating to fair value adjustments to inventory. Pro forma adjustments described above have been tax affected using the Company's effective rate during the respective periods. Assets Held for Sale On March 1, 2019, the Company sold its wipers business in the Motorparts segment for a sale price of $29 million, subject to adjustment based on terms of the sale agreement. Proceeds from the sale were $22 million, subject to customary working capital adjustments. Certain assets and liabilities of the business are still classified as held for sale within the condensed consolidated balance sheet as of March 31, 2019 and are expected to transfer in the second half of 2019. The related assets and liabilities were classified as held for sale as of March 31, 2019 and December 31, 2018:
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Restructuring Charges and Asset Impairments, Net |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges and Asset Impairments, Net | structuring and Other Charges The Company's restructuring activities are undertaken as necessary to execute management's strategy and streamline operations, consolidate and take advantage of available capacity and resources, and ultimately achieve net cost reductions. Restructuring activities include efforts to integrate and rationalize the Company's businesses and to relocate operations to best cost locations. The Company's restructuring charges consist primarily of employee costs (principally severance and/or termination benefits), and facility closure and other costs. For the three months ended March 31, 2019 and 2018, restructuring charges, net and asset impairments by segment are as follows:
During the three months ended March 31, 2019, the Company incurred charges for the following items:
During the three months ended March 31, 2018, the Company incurred charges for the following items:
Restructuring Reserve Rollforward Amounts related to activities that were charges to restructuring reserves, including costs incurred to support future structural cost reductions, by reportable segments are as follows:
The following table provides a summary of the Company's restructuring liabilities and related activity for each type of exit costs:
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Inventories |
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | 5. Inventories At March 31, 2019 and December 31, 2018, inventory consists of the following:
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Goodwill and Other Intangible Assets—Net |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets—Net | 6. Goodwill and Other Intangible Assets At March 31, 2019 and December 31, 2018, goodwill consists of the following:
The Öhlins Acquisition resulted in $28 million of goodwill which was included in the Ride Performance segment. During the three months ended March 31, 2019, the Company made adjustments in the measurement period to the preliminary purchase price allocation for the Federal-Mogul Acquisition which affected the amount of goodwill recognized and a net reduction of $46 million was recorded. The purchase price allocations for the Acquisitions are 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. During the three months ended March 31, 2019, the Company performed a review of potential triggering events, including, among other items, its market capitalization levels and the reorganization of its reporting structure, and concluded no events indicated (other than the reorganization of its reporting structure) it was more likely than not the fair values of its reporting units had declined to below their carrying values at March 31, 2019. If the Company’s market capitalization remains depressed for a sustained period of time or declines further, and if such a decline becomes indicative the fair value of the Company’s reporting units have declined to below their carrying values, an interim goodwill impairment test may need to be performed in future periods and may result in a material non-cash goodwill impairment charge. As noted above, the Company reorganized the reporting structure of its Aftermarket, Ride Performance, and Motorparts segments and the underlying reporting units within those segments. The Company reassigned assets and liabilities (excluding goodwill) to the reporting units affected. Goodwill was then reassigned to the reporting units using a relative fair value approach based on the fair value of the elements transferred and the fair value of the elements remaining within the original reporting units. The Company tested goodwill for impairment on a pre-reorganization basis and determined there was no impairment for the affected reporting units. The Company also performed an impairment analysis on a post-reorganization basis and determined $60 million of goodwill was impaired for two reporting units within its Ride Performance segment, one of which was a full impairment of the goodwill. Reporting Units The Company has nine reporting units that have goodwill at March 31, 2019. The following table categorizes the Company’s goodwill by reporting unit according to the level of excess between the reporting unit’s fair value and carrying value giving effect to the first quarter impairment charges:
At March 31, 2019 and December 31, 2018, the Company's intangible assets consist of the following:
The Company recorded definite-lived and indefinite-lived intangible assets of $135 million as a result of the Öhlins Acquisition. During the three months ended March 31, 2019, the Company made adjustments in the measurement period to the preliminary purchase price allocation for the Federal-Mogul Acquisition which affected the amount of definite-lived and indefinite-lived intangible assets recognized and a net increase of $71 million was recorded. The purchase price allocations for the Acquisitions are 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. During the three months ended March 31, 2019 and 2018, amortization expense was $35 million and less than $1 million which is included in "Depreciation and amortization" within the condensed consolidated statements of income (loss). The expected future amortization expense for the Company's definite-lived intangible assets is as follows:
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Investment in Nonconsolidated Affiliates |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Nonconsolidated Affiliates | 7. Investment in Nonconsolidated Affiliates The Company has investments in several nonconsolidated affiliates, which are primarily located in China, Korea, Turkey, and the U.S. The Company generally equates control to ownership percentage whereby investments more than 50% owned are consolidated. The Company's ownership interest in affiliates accounted for under the equity method is as follows:
The Company's investments in its nonconsolidated affiliates at March 31, 2019 and December 31, 2018 are:
The following table represents the activity from the Company's investments in its nonconsolidated affiliates for the three months ended March 31, 2019 and 2018:
During the three months ended March 31, 2019, the Company made adjustments in the measurement period to the preliminary purchase price allocation for the Federal-Mogul Acquisition which resulted in a reduction to the fair value of its investments in nonconsolidated affiliates of $15 million. The purchase price allocation is preliminary and subject to the finalization. The Company's current estimates and assumptions may change as more information becomes available. See Note 3, Acquisitions and Divestitures for additional information. The following tables present summarized aggregated financial information of the Company's nonconsolidated affiliates for the three months ended March 31, 2019. The amounts represent 100% of the interest in the nonconsolidated affiliates and not the Company's proportionate share:
See Note 18, Related Party Transactions for additional information on balances and transactions with equity method investments. |
Derivatives and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Hedging Activities | 8. Derivatives and Hedging Activities The Company is exposed to market risk, such as fluctuations in foreign currency exchange rates, commodity prices, equity compensation liabilities, and changes in interest rates, which may result in cash flow risks. For exposures not offset within its operations, the Company enters into various derivative transactions pursuant to its risk management policies, which prohibit holding or issuing derivative financial instruments for speculative purposes. Designation of derivative instruments is performed on a transaction basis to support hedge accounting. The changes in fair value of these hedging instruments are offset in part or in whole by corresponding changes in the fair value or cash flows of the underlying exposures being hedged. The Company assesses the initial and ongoing effectiveness of its hedging relationships in accordance with its documented policy. Market Risks Foreign Currency Risk — The Company manufactures and sells its products in North America, South America, Asia, Europe, and Africa. As a result, the Company's financial results could be significantly affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets in which the Company manufactures and sells its products. The Company generally tries to use natural hedges within its foreign currency activities, including the matching of revenues and costs, to minimize foreign currency risk. Where natural hedges are not in place, the Company considers managing certain aspects of its foreign currency activities and larger transactions through the use of foreign currency options or forward contracts. Principal currencies hedged have historically included the U.S. dollar, euro, British pound, Polish zloty, Mexican peso, and Canadian dollar. Concentrations of Credit Risk — Financial instruments including cash equivalents and derivative contracts expose the Company to counterparty credit risk for non-performance. The Company's counterparties for cash equivalents and derivative contracts are banks and financial institutions that meet the Company's requirement of high credit standing. The Company's counterparties for derivative contracts are substantial investment and commercial banks with significant experience using such derivatives. The Company manages its credit risk through policies requiring minimum credit standing and limiting credit exposure to any one counterparty and through monitoring counterparty credit risks. The Company's concentration of credit risk related to derivative contracts at March 31, 2019 and 2018 is not material. Other — The Company presents its derivative positions and any related material collateral under master netting agreements on a net basis. For derivatives designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness. Unrealized gains and losses associated with ineffective hedges, determined using the hypothetical derivative method, are recognized in "Cost of sales" in the condensed consolidated statements of income (loss). Derivative gains and losses included in accumulated other comprehensive income (loss) for effective hedges are reclassified into operations upon recognition of the hedged transaction. Derivative gains and losses associated with undesignated hedges are recognized in "Cost of sales" in the condensed consolidated statements of income (loss). Derivative Instruments Foreign Currency Forward Contracts — The Company enters into foreign currency forward purchase and sale contracts to mitigate its exposure to changes in exchange rates on certain intercompany and third-party trade receivables and payables. In managing its foreign currency exposures, the Company identifies and aggregates existing offsetting positions and then hedges residual exposures through third-party derivative contracts. The gains or losses on these contracts is recognized in "Cost of sales" in the condensed consolidated statements of income (loss). The fair value of foreign currency forward contracts are recorded in "Prepayments and other current assets" or "Accrued expenses and other current liabilities" in the condensed consolidated balance sheets. The fair value of the Company's foreign currency forward contracts was a net asset position of less than $1 million at March 31, 2019 and December 31, 2018. The following table summarizes by position the notional amounts for foreign currency forward contracts as of March 31, 2019 (all of which mature in 2019):
Cash-Settled Share Swap Transactions — In 2017, the Company entered into an equity swap agreement. The Company selectively uses cash-settled share swaps to reduce market risk associated with its deferred compensation liabilities. These equity deferred compensation liabilities increase as the Company's stock price increases and decrease as the Company's stock price decreases. In contrast, the value of the swap agreement moves in the opposite direction of these liabilities, allowing the Company to fix a portion of the liabilities at a stated amount. As of March 31, 2019, the Company had hedged its deferred compensation liability related to approximately 250,000 common share equivalents. The fair value of the equity swap agreement is recorded in "Prepayments and other current assets" in the condensed consolidated balance sheets. The fair value of the Company's equity swap agreement was a net asset position of $3 million at March 31, 2019 and $4 million at December 31, 2018. Hedging Instruments Cash Flow Hedges — Commodity Price Risk — The Company’s production processes are dependent upon the supply of certain raw materials that are exposed to price fluctuations on the open market. The primary purpose of the Company’s commodity price forward contract activity is to manage the volatility associated with forecasted purchases for up to eighteen months in the future. The Company monitors its commodity price risk exposures regularly to maximize the overall effectiveness of its commodity forward contracts. Principal raw materials hedged include copper, tin, and zinc. In certain instances within this program, foreign currency forwards may be used in order to match critical terms for commodity exposure. The Company has designated these contracts as cash flow hedging instruments. The Company records unrecognized gains and losses in other comprehensive income (loss) (“OCI or OCL”) and makes regular reclassifying adjustments into “Cost of sales” within the condensed consolidated statements of income (loss) when the underlying hedged transaction is recognized in earnings. The Company had commodity derivatives outstanding with an equivalent notional amount of $26 million as of March 31, 2019 and $27 million as of December 31, 2018. Substantially all of the commodity price hedge contracts mature within one year. Net Investment Hedge — Foreign Currency Borrowings — The Company has foreign currency denominated debt, €769 million of which was designated as a net investment hedge in certain foreign subsidiaries and affiliates of the Company. Changes to its carrying value are included in shareholders' equity in the foreign currency translation component of OCL and offset against the translation adjustment on the underlying net assets of those foreign subsidiaries and affiliates, which are also recorded in OCL. The Company’s debt instruments are discussed further in Note 10, Debt and Other Financing Arrangements. The following table is a summary of the carrying value of derivative and non-derivative instruments designated as hedges as of March 31, 2019:
The following table represents the effects before reclassification into net income of derivative and non-derivative instruments designated as hedges in accumulated other comprehensive income (loss) as of March 31, 2019:
The Company estimates $4 million included in accumulated OCI or OCL as of March 31, 2019 will be reclassified into earnings within the following 12 months. |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | three-level valuation hierarchy, based upon observable and unobservable inputs, is used for fair value measurements. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions based on the best evidence available. A financial instrument’s categorization within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy definition prioritizes the inputs used in measuring fair value into the following levels:
Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents assets and liabilities included in the Company's condensed consolidated balance sheets as of March 31, 2019 and December 31, 2018 that are recognized at fair value on a recurring basis, and indicate the fair value hierarchy utilized to determine such fair value:
Cash-Settled Share Swap Transactions — The fair value of the equity swap agreement is recorded in "Prepayments and other current assets" in the condensed consolidated balance sheets. Commodity Contracts — The Company calculates the fair value of its commodity contracts and foreign currency contracts using quoted commodity forward rates and quoted currency forward rates, to calculate forward values, and then discounts the forward values. The discount rates for all derivative contracts are based on quoted bank deposit rates. The fair value of the Company's foreign currency forward contracts was a net asset position of less than $1 million at March 31, 2019 and December 31, 2018. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis In addition to items measured at fair value on a recurring basis, assets may be measured at fair value on a nonrecurring basis. These assets include long-lived assets and intangible assets which may be written down to fair value as a result of impairment. The Company has determined the fair value measurements related to each of these rely primarily on Company-specific inputs and the Company's assumptions about the use of the assets, as observable inputs are not available (level 3). To determine the fair value of long-lived asset groups, the Company utilizes discounted cash flows expected to be generated by the long-lived asset group. The Company evaluates the carrying value of its goodwill and indefinite-lived intangible assets for impairment annually in the fourth quarter of each year. These fair value measurements require the Company to make significant assumptions and estimates about the extent and timing of future cash flows, discount rates, and growth rates, which are subject to a high degree of uncertainty. The Company believes the assumptions and estimates used to determine the estimated fair value are reasonable, but different assumptions could materially affect the estimated fair value. During the three months ended March 31, 2019, the Company reorganized its reporting structure of its Aftermarket, Ride Performance, and Motorparts segments and the underlying reporting units within those segments. The Company tested goodwill for impairment on a pre-reorganization basis and determined there was no impairment for the affected reporting units. The Company also performed an impairment analysis on a post-reorganization basis and determined $60 million of goodwill was impaired for two reporting units within its Ride Performance segment, one of which was a full impairment of the goodwill. See Note 6, Goodwill and Other Intangible Assets. Financial Instruments Not Carried at Fair Value Estimated fair values of the Company's outstanding debt were:
The fair value of the Company's public senior notes and private borrowings under its senior credit facility is based on observable inputs, and its borrowings on the revolving credit facility approximate fair value. The Company also had $104 million and $106 million at March 31, 2019 and December 31, 2018 in other debt whose carrying value approximates fair value, which consists primarily of foreign debt with maturities of one year or less. Assets and Liabilities Not Carried at Fair Value The carrying value of cash and cash equivalents, restricted cash, short and long-term receivables, accounts payable, and short-term debt approximates fair value. |
Debt and Other Financing Arrangements |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt and Financing Arrangements | -Term Debt A summary of our long-term debt obligations at March 31, 2019 and December 31, 2018 is set forth in the following table:
(1) Carrying amount is net of unamortized debt issuance costs and debt discounts or premiums. Total unamortized debt issuance costs were $86 million and $90 million as of March 31, 2019 and December 31, 2018. Total unamortized debt (premium) discount, net was $(45) million and $(49) million as of March 31, 2019 and December 31, 2018. Term Loans On October 1, 2018, the Company entered into a new credit agreement with JPMorgan Chase Bank, N.A., as administrative agent and other lenders (the "New Credit Facility") in connection with the Federal-Mogul Acquisition. The New Credit Facility provides $4.9 billion of total debt financing, consisting of a five-year $1.5 billion revolving credit facility, a five-year $1.7 billion term loan A facility ("Term Loan A") and a seven-year $1.7 billion term loan B facility ("Term Loan B"). The effective interest rate on the Term Loan A was 4.396% and 6.031% on Term Loan B. Senior Notes The Company has outstanding 5.375% senior unsecured notes due December 15, 2024 ("2024 Senior Notes") and 5.000% senior unsecured notes due July 15, 2026 ("2026 Senior Notes" and together with the 2024 Senior Notes, the "Senior Unsecured Notes"). The Company has outstanding 5.000% euro denominated fixed rate notes which are due July 15, 2024 ("5.000% Euro Fixed Rate Notes"), 4.875% euro denominated fixed rate notes due April 15, 2022 ("4.875% Euro Fixed Rate Notes"), and floating rate notes due April 15, 2024 ("Euro Floating Rate Notes", together with the 5.000% Euro Fixed Rate Notes and the 4.875% Euro Fixed Notes, the "Senior Secured Notes"). The Company had availability on its credit facilities as of March 31, 2019 as follows:
Interest expense associated with the amortization of the debt issuance costs and original issue discounts recognized in the Company's condensed consolidated statements of income (loss) consist of the following:
Included in the table above, is the amortization of debt issuance costs on the revolver, which are $21 million at March 31, 2019 and are recorded in "Prepayments and other current assets" in the condensed consolidated balance sheets. In addition, there was a $3 million reduction to interest expense during the three months ended March 31, 2019 related to the accretion of the debt premium on the Senior Secured Notes. New Credit Facility — Other Terms and Conditions — The New Credit Facility also contains two financial maintenance covenants for the revolving credit facility and the Term Loan A facility including a requirement to have a consolidated net leverage ratio (as defined in the New Credit Facility) as of the end of each fiscal quarter of not greater than 4.0 to 1 through September 30, 2019, 3.75 to 1 through September 30, 2020 and 3.5 to 1 thereafter; and a requirement to maintain a consolidated interest coverage ratio (as defined in the New Credit Facility) for any period of four consecutive fiscal quarters of not less than 2.75 to 1. Senior Unsecured Notes and Senior Secured Notes — Other Terms and Conditions — The Senior Unsecured Notes and Senior Secured Notes contain covenants that will, among other things, limit the Company's ability to create liens and enter into sale and leaseback transactions. In addition, the Senior Secured Notes and 2024 Senior Unsecured Notes also require that, as a condition precedent to incurring certain types of indebtedness not otherwise permitted, the Company's consolidated fixed charge coverage ratio, as calculated on a pro forma basis, be greater than 2.00, as well as containing restrictions on its operations, including limitations on: (i) incurring additional indebtedness; (ii) paying dividends; (iii) distributions and stock repurchases; (iv) investments; (v) asset sales and (vi) mergers and consolidations. Subject to limited exceptions, all of the Company's existing and future material domestic wholly owned subsidiaries fully and unconditionally guarantee its Senior Unsecured Notes and Senior Secured Notes on a joint and several basis. There are no significant restrictions on the ability of the subsidiaries that have guaranteed the Company's Senior Notes to make distributions to the Company. As of March 31, 2019, the Company was in compliance with all of its financial covenants. Accounts Receivable Securitization and Factoring On-Balance Sheet Arrangements — The Company has securitization programs for some of its accounts receivable, with limited recourse provisions. Borrowings on these securitization programs, which are recorded in short-term debt, at March 31, 2019 and December 31, 2018 are as follows:
Off-Balance Sheet Arrangements — In the Company's European and U.S. accounts receivable factoring programs, accounts receivables are transferred in their entirety to the acquiring entities and are accounted for as a sale. The fair value of assets received as proceeds in exchange for the transfer of accounts receivable under these factoring programs approximates the fair value of such receivables. Certain programs in Europe have deferred purchase price arrangements with the banks. The Company is the servicer of the receivables under some of these arrangements and is responsible for performing all accounts receivable administration functions. Where the Company receives a fee to service and monitor these transferred accounts receivables, such fees are sufficient to offset the costs and as such, a servicing asset or liability is not recorded as a result of such activities. In the U.S and Canada, the Company participates in supply chain financing programs with certain of the Company's aftermarket customers through a drafting program. The amounts outstanding for these factoring and drafting arrangements as of March 31, 2019 and December 31, 2018 are as follows:
The deferred purchase price receivable as of March 31, 2019 and December 31, 2018 is as follows:
Proceeds from the factoring of accounts receivable qualifying as sales are as follows:
Financing charges associated with the factoring of receivables are as follows:
If the Company were not able to factor receivables or sell drafts under either of these programs, its borrowings under its revolving credit agreement might increase. These programs provide the Company with access to cash at costs that are generally favorable to alternative sources of financing and allow the Company to reduce borrowings under its revolving credit agreement. |
Pension Plans, Postretirement and Other Employee Benefits |
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension Plans, Postretirement and Other Employee Benefits | 11. Pension Plans, Postretirement and Other Employee Benefits The Company sponsors several defined benefit pension plans ("Pension Benefits") and health care and life insurance benefits ("Other Postretirement Benefits", or "OPEB") for certain employees and retirees around the world. Components of net periodic benefit cost (credit) for the three months ended March 31, 2019 and 2018 are as follows:
Long-term Rate of Return The weighted-average long-term rate of return on assets for the U.S. pension plans in determining 2019 annual net periodic pension costs (credits) is 6.25%. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | 13. Commitments and Contingencies Environmental Matters The Company is subject to a variety of environmental and pollution control laws and regulations in all jurisdictions in which it operates. The Company has been notified by the U.S. Environmental Protection Agency, other national environmental agencies, and various provincial and state agencies it may be a potentially responsible party (“PRP”) under such laws for the cost of remediating hazardous substances pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") and other national and state or provincial environmental laws. PRP designation typically requires the funding of site investigations and subsequent remedial activities. Many of the sites that are likely to be the costliest to remediate are often current or former commercial waste disposal facilities to which numerous companies sent wastes. Despite the potential joint and several liability which might be imposed on the Company under CERCLA and some of the other laws pertaining to these sites, its share of the total waste sent to these sites generally has been small. The Company believes its exposure for liability at these sites is not material. On a global basis, the Company has also identified certain other present and former properties at which it may be responsible for cleaning up or addressing environmental contamination, in some cases as a result of contractual commitments and/or federal or state environmental laws. The Company is seeking to resolve its responsibilities for those sites for which a claim has been received. The Company expenses or capitalizes, as appropriate, expenditures for ongoing compliance with environmental regulations. As of March 31, 2019, the Company has an obligation to remediate or contribute towards the remediation of certain sites, including the sites discussed above at which it may be a PRP. The Company maintains the aggregated estimated share of environmental remediation costs for all these sites on a discounted basis in the condensed consolidated balance sheets as follows:
For those locations where the liability was discounted, the weighted average discount rate used was 1.7% and 2.9% at March 31, 2019 and December 31, 2018. The Company's expected payments of environmental remediation costs for non-indemnified locations are estimated to be approximately:
Based on information known to the Company from site investigations and the professional judgment of consultants, the Company has established reserves it believes are adequate for these costs. Although the Company believes these estimates of remediation costs are reasonable and are based on the latest available information, the costs are estimates, difficult to quantify based on the complexity of the issues, and are subject to revision as more information becomes available about the extent of remediation required. At some sites, the Company expects other parties will contribute to the remediation costs. In addition, certain environmental statutes provide the Company's liability could be joint and several, meaning the Company could be required to pay amounts in excess of its share of remediation costs. The financial strength of the other PRPs at these sites has been considered, where appropriate, in the determination of the estimated liability. The Company does not believe any potential costs associated with its current status as a PRP, or as a liable party at the other locations referenced herein, will be material to its annual consolidated financial position, results of operations, or liquidity. Asset Retirement Obligations The Company’s primary asset retirement obligations ("ARO") activities relate to the removal of hazardous building materials at its facilities. The Company records an ARO at fair value upon initial recognition when the amount is probable and can be reasonably estimated. ARO fair values are determined based on the Company’s determination of what a third party would charge to perform the remediation activities, generally using a present value technique. The Company maintains ARO liabilities in the condensed consolidated balance sheets as follows:
Antitrust Investigations and Litigation On March 25, 2014, representatives of the European Commission (EC) were at Tenneco GmbH's Edenkoben, Germany administrative facility to gather information in connection with an ongoing global antitrust investigation concerning multiple automotive suppliers. On the same date, the Company also received a related subpoena from the U.S. Department of Justice (“DOJ”). On November 5, 2014, the DOJ granted conditional leniency to Tenneco, its subsidiaries and its 50% affiliates as of such date ("2014 Tenneco Entities") pursuant to an agreement the Company entered into under the Antitrust Division's Corporate Leniency Policy. This agreement provides important benefits to the 2014 Tenneco Entities in exchange for the Company's self-reporting of matters to the DOJ and its continuing full cooperation with the DOJ's resulting investigation. For example, the DOJ will not bring any criminal antitrust prosecution against the 2014 Tenneco Entities, nor seek any criminal fines or penalties, in connection with the matters the Company reported to the DOJ. Additionally, there are limits on the liability of the 2014 Tenneco Entities related to any follow-on civil antitrust litigation in the United States. The limits include single rather than treble damages, as well as relief from joint and several antitrust liability with other relevant civil antitrust action defendants. These limits are subject to the Company satisfying the DOJ and any court presiding over such follow-on civil litigation. On April 27, 2017, the Company received notification from the EC that it has administratively closed its global antitrust inquiry regarding the production, assembly, and supply of complete exhaust systems. No charges against the Company or any other competitor were initiated at any time and the EC inquiry is now closed. Certain other competition agencies are also investigating possible violations of antitrust laws relating to products supplied by the Company and its subsidiaries, including Federal-Mogul. The Company has cooperated and continues to cooperate fully with all of these antitrust investigations, and take other actions to minimize its potential exposure. The Company and certain of its competitors are also currently defendants in civil putative class action litigation, and are subject to similar claims filed by other plaintiffs, in the United States and Canada. More related lawsuits may be filed, including in other jurisdictions. Plaintiffs in these cases generally allege that defendants have engaged in anticompetitive conduct, in violation of federal and state laws, relating to the sale of automotive exhaust systems or components thereof. Plaintiffs seek to recover, on behalf of themselves and various purported classes of purchasers, injunctive relief, damages and attorneys’ fees. However, as explained above, because the DOJ granted conditional leniency to the 2014 Tenneco Entities, the Company's civil liability in U.S. follow-on actions with respect to these entities is limited to single damages and the Company will not be jointly and severally liable with the other defendants, provided that the Company has satisfied its obligations under the DOJ leniency agreement and approval is granted by the presiding court. Typically, exposure for follow-on actions in Canada is less than the exposure for U.S. follow-on actions. Following the EC’s decision to administratively close its antitrust inquiry into exhaust systems in 2017, receipt by the 2014 Tenneco Entities of conditional leniency from the DOJ and discussions during the third quarter of 2017 following the appointment of a special settlement master in the civil putative class action cases pending against the Company and/or certain of its competitors in the United States, the Company continues to vigorously defend itself and/or take actions to minimize its potential exposure to matters pertaining to the global antitrust investigation, including engaging in settlement discussions when it is in the best interests of the Company and its stockholders. For example, in October 2017, the Company settled an administrative action brought by Brazil's competition authority for an amount that was not material. In December 2018, the Company settled a separate administrative action brought by Brazil’s competition authority against a Federal-Mogul subsidiary, also for an amount that was not material. Additionally, in February 2018, the Company settled civil putative class action litigation in the United States brought by classes of direct purchasers, end-payors and auto dealers. No other classes of plaintiffs have brought claims against the Company in the United States. Based upon those earlier developments, including settlement discussions, The Company established a reserve of $132 million in its second quarter 2017 financial results for settlement costs that were probable, reasonably estimable, and expected to be necessary to resolve its antitrust matters globally, which primarily involves the resolution of civil suits and related claims. Of the $132 million reserve that was established, $79 million was paid through March 31, 2019 resulting in a remaining reserve of $53 million as of March 31, 2019, which is recorded in accrued expenses and other current liabilities in the Company's condensed consolidated balance sheets. While the Company, including its Federal-Mogul subsidiaries, continues to cooperate with certain competition agencies investigating possible violations of antitrust laws relating to products supplied by the Company, and the Company may be subject to other civil lawsuits and/or related claims, no amount of this reserve is attributable to matters with the DOJ or the EC, and no such amount is expected based on current information. The Company's reserve for its antitrust matters is based upon all currently available information and an assessment of the probability of events for those matters where the Company can make a reasonable estimate of the costs to resolve such outstanding matters. The Company's estimate involves significant judgment, given the number, variety and potential outcomes of actual and potential claims, the uncertainty of future rulings and approvals by a court or other authority, the behavior or incentives of adverse parties or regulatory authorities, and other factors outside of its control. As a result, the Company's reserve may change from time to time, and actual costs may vary. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on current information, the Company does not expect that any such change in the reserve will have a material adverse effect on the Company's annual condensed consolidated financial position, results of operations or liquidity. Other Legal Proceedings, Claims and Investigations For many years the Company has been and continues to be subject to lawsuits initiated by claimants alleging health problems as a result of exposure to asbestos. The Company's current docket of active and inactive cases is less than 500 cases in the United States and less than 50 in Europe. With respect to the claims filed in the United States, the substantial majority of the claims are related to alleged exposure to asbestos in the Company's line of Walker® exhaust automotive products although a significant number of those claims appear also to involve occupational exposures sustained in industries other than automotive. A small number of claims have been asserted against one of the Company's subsidiaries by railroad workers alleging exposure to asbestos products in railroad cars. The Company believes, based on scientific and other evidence, it is unlikely that U.S. claimants were exposed to asbestos by the Company's former products and that, in any event, they would not be at increased risk of asbestos-related disease based on their work with these products. Further, many of these cases involve numerous defendants, with the number in some cases exceeding 100 defendants from a variety of industries. Additionally, in many cases the plaintiffs either do not specify any, or specify the jurisdictional minimum, dollar amount for damages. With respect to the claims filed in Europe, the substantial majority relate to occupational exposure claims brought by current and former employees of Federal-Mogul facilities in France and amounts paid out were not material. A small number of occupational exposure claims have also been asserted against Federal-Mogul entities in Italy and Spain. As major asbestos manufacturers and/or users continue to go out of business or file for bankruptcy, the Company may experience an increased number of these claims. The Company vigorously defends itself against these claims as part of its ordinary course of business. In future periods, the Company could be subject to cash costs or charges to earnings if any of these matters are resolved unfavorably to the Company. To date, with respect to claims that have proceeded sufficiently through the judicial process, the Company has regularly achieved favorable resolutions. Accordingly, the Company presently believes that these asbestos-related claims will not have a material adverse effect on the Company's condensed consolidated financial position, results of operations or liquidity. The Company is also from time to time involved in other legal proceedings, claims or investigations. Some of these matters involve allegations of damages against the Company relating to environmental liabilities (including toxic tort, property damage and remediation), intellectual property matters (including patent, trademark and copyright infringement, and licensing disputes), personal injury claims (including injuries due to product failure, design or warning issues, and other product liability related matters), taxes, unclaimed property, employment matters, and commercial or contractual disputes, sometimes related to acquisitions or divestitures. Additionally, some of these matters involve allegations relating to legal compliance. While the Company vigorously defends itself against all of these legal proceedings, claims and investigations and take other actions to minimize its potential exposure, in future periods, the Company could be subject to cash costs or charges to earnings if any of these matters are resolved on unfavorable terms. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on current information, including the Company's assessment of the merits of the particular claim, except as described above under "Antitrust Investigations", the Company does expect the legal proceedings, claims or investigations currently pending against it will have any material adverse effect on its condensed consolidated financial position, results of operations or liquidity. Warranty Matters The Company provides warranties on some of its products. The warranty terms vary but range from one year up to limited lifetime warranties on some of its premium aftermarket products. Provisions for estimated expenses related to product warranty are made at the time products are sold or when specific warranty issues are identified with the Company's products. These estimates are established using historical information about the nature, frequency, and average cost of warranty claims. The Company believes the warranty reserve is appropriate; however, actual claims incurred could differ from the original estimates, requiring adjustments to the reserve. The reserve is included in both current and long-term liabilities on the condensed consolidated balance sheets. Below is a table that shows the activity in the warranty accrual accounts:
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Income Tax Disclosure [Abstract] | |
Income Taxes | 12. Income Taxes For interim tax reporting, the Company estimates its annual effective tax rate and applies it to year-to-date ordinary income. Jurisdictions where no tax benefit can be recognized due to a valuation allowance are excluded from the estimated annual effective tax rate. The effect of including these jurisdictions on the quarterly effective rate calculation could result in a higher or lower effective tax rate during a particular quarter due to the mix and timing of actual earnings versus annual projections. The tax effects of certain items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they occur. The Company recognized no income tax expense for the three months ended March 31, 2019 and $25 million in the three months ended March 31, 2018. The tax expense recorded in the three months ended March 31, 2019 included a tax benefit of $2 million relating to changes in the toll tax as discussed below. On December 22, 2017, the Tax Cuts and Jobs Act ("TCJA") was enacted into U.S. law, which, among other provisions, lowered the corporate income tax rate effective January 1, 2018 from 35% to 21%, and implemented significant changes with respect to U.S. tax treatment of earnings originating from outside the U.S. Many of the provisions of TCJA are subject to regulatory interpretation and U.S. state conforming enactments. The Internal Revenue Service (IRS) issued final regulations, effective on February 5, 2019, which provided additional guidance to assist taxpayers in computing the toll tax. Based on the final regulations a $2 million discrete benefit was recorded in income tax expense the three months ended March 31, 2019. The Company evaluates its deferred tax assets quarterly to determine if valuation allowances are required or should be adjusted. This assessment considers, among other matters, the nature, frequency and amount of recent losses, the duration of statutory carryforward periods, and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified. If recent operational improvements continue in our foreign subsidiaries or if certain restructuring steps are completed as part of the Federal-Mogul Acquisition and anticipated spin-off of DRiV, the Company believes it is reasonably possible sufficient positive evidence may be available to release all, or a portion, of its valuation allowance in the next twelve months in certain jurisdictions. This may result in a one-time tax benefit of up to $51 million, primarily related to Spain, China and Czech Republic. The Company believes it is reasonably possible up to $11 million in unrecognized tax benefits related to the expiration of foreign statute of limitations and the conclusion of income tax examinations may be recognized within the next twelve months. |
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Leases | 14. Leases The Company has operating and finance leases for real estate and equipment. Generally, the leases have remaining terms of one month to ten years. Leases with an initial term of 12 months or less which do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. In addition, some leases include options to terminate the lease. The Company generally negotiates these termination clauses in anticipation of any changes in market conditions; however, because a termination option requires approval from management, the Company assumes the majority of its termination options will not be exercised when determining the lease term. The Company has elected the practical expedient to not separate non-lease components from the lease components to which they relate, and instead account for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes. Accordingly, all costs associated with a lease contract are accounted for as lease cost. Lease expense is recorded in operating expenses in the results of operations. Some leasing arrangements require variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance and tax payments. The variable portion of lease payments is not included in the computation of the right of use assets or lease liabilities. Rather, variable payments, other than those dependent upon a market index or rate, are expensed when the obligation for those payments is incurred and are included in lease expense in the results of operations. The Company does not include significant restrictions or covenants in our lease agreements, and residual value guarantees are generally not included within our operating leases. The components of lease cost were as follows:
Other information related to leases was as follows:
Supplemental balance sheet information related to leases was as follows:
Maturities of lease liabilities under non-cancellable leases as of March 31, 2019 were as follows:
Future minimum operating lease payments at December 31, 2018 are as follows:
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Leases | 14. Leases The Company has operating and finance leases for real estate and equipment. Generally, the leases have remaining terms of one month to ten years. Leases with an initial term of 12 months or less which do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. In addition, some leases include options to terminate the lease. The Company generally negotiates these termination clauses in anticipation of any changes in market conditions; however, because a termination option requires approval from management, the Company assumes the majority of its termination options will not be exercised when determining the lease term. The Company has elected the practical expedient to not separate non-lease components from the lease components to which they relate, and instead account for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes. Accordingly, all costs associated with a lease contract are accounted for as lease cost. Lease expense is recorded in operating expenses in the results of operations. Some leasing arrangements require variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance and tax payments. The variable portion of lease payments is not included in the computation of the right of use assets or lease liabilities. Rather, variable payments, other than those dependent upon a market index or rate, are expensed when the obligation for those payments is incurred and are included in lease expense in the results of operations. The Company does not include significant restrictions or covenants in our lease agreements, and residual value guarantees are generally not included within our operating leases. The components of lease cost were as follows:
Other information related to leases was as follows:
Supplemental balance sheet information related to leases was as follows:
Maturities of lease liabilities under non-cancellable leases as of March 31, 2019 were as follows:
Future minimum operating lease payments at December 31, 2018 are as follows:
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Share-Based Compensation |
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Share-Based Compensation | 15. Share-Based Compensation Share-Based Compensation Expense The total share-based compensation expense was as follows:
Cash-Settled Awards Prior to 2018, the Company has granted restricted stock units ("RSUs") and long-term performance units ("LTPUs") to certain key employees that are payable in cash. These awards are classified as liabilities and are valued based on the fair value of the award at the grant date and are remeasured at each reporting date until settlement with compensation expense being recognized in proportion to the completed requisite period up until date of settlement. At March 31, 2019, the LTPUs outstanding included a three-year grant for 2017-2019 payable in the first quarter of 2020. As of March 31, 2019, $1 million of total unrecognized compensation costs is expected to be recognized on the cash-settled awards over a weighted-average period of less than 1 year. Share-Settled Awards The Company has granted restricted stock to its directors and certain key employees as well as RSUs and PSUs that are payable in common stock to certain key employees. These awards are settled in shares upon vesting and recognized in equity based on their fair value. The following table reflects the status for all nonvested restricted shares, share-settled RSUs, and PSUs for the period indicated:
As of March 31, 2019, approximately $63 million of total unrecognized compensation costs is expected to be recognized on the share-settled awards over a weighted-average period of approximately 3 years. |
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Stockholders' Equity | 16. Shareholders' Equity Common Stock Outstanding The Company has authorized 175,000,000 shares and 135,000,000 shares ($0.01 par value) of Class A Common Stock at March 31, 2019 and 2018. The Company has authorized 25,000,000 shares ($0.01 par value) of Class B Common Stock at March 31, 2019. Total common stock outstanding and changes in common stock issued are as follows:
Preferred Stock The Company had 50,000,000 shares of preferred stock ($0.01 par value) authorized at both March 31, 2019 and 2018. No shares of preferred stock were issued or outstanding at those dates. Accumulated Other Comprehensive Income (Loss) The following represents the Company's changes in accumulated other comprehensive income (loss) by component, net of tax for the three months ended March 31, 2019 and 2018:
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | 17. Segment Information The Company expects to separate its businesses to form two new, independent publicly traded companies and now expects the DRiV spinoff to occur mid-2020.As such, the Company began to manage and report its DRiV businesses through two new operating segments, in the first quarter of 2019, as compared to the three operating segments it had previously reported. The DRiV operating segments consist of Motorparts and Ride Performance. The new Motorparts operating segment consists of the previously reported Aftermarket operating segment as well as the aftermarket portion of the previously reported Motorparts operating segment. The Ride Performance operating segment consists of the previously reported Ride Performance operating segment as well as the OE Braking business that was included in the previously reported Motorparts operating segment. As such, prior period operating segment results have been conformed to reflect the Company's current operating segments. The future New Tenneco consists of two existing operating segments, Powertrain and Clean Air. Costs related to other business activities, primarily corporate headquarter functions, are disclosed separately from the four operating segments as "Corporate." Management uses EBITDA including noncontrolling interests as the key performance measure of segment profitability and uses the measure in its financial and operational decision making processes, for internal reporting, and for planning and forecasting purposes to effectively allocate resources. EBITDA including noncontrolling interests is defined as earnings before interest expense, income taxes, noncontrolling interests, and depreciation and amortization. Segment assets are not presented as it is not a measure reviewed by the Chief Operating Decision Maker in allocating resources and assessing performance. EBITDA including noncontrolling interests should not be considered a substitute for results prepared in accordance with US GAAP and should not be considered an alternative to net income, which is the most directly comparable financial measure to EBITDA including noncontrolling interests that is in accordance with US GAAP. EBITDA including noncontrolling interests, as determined and measured by the Company, should not be compared to similarly titled measures reported by other companies. The following table summarizes certain of the Company's segment information:
Segment EBITDA including noncontrolling interests and the reconciliation to earnings before interest expense, income taxes, and noncontrolling interests are as follow:
Revenue from contracts with customers is disaggregated by customer type and geography, as it depicts the nature and amount of the Company’s revenue that is aligned with the Company's key growth strategies. In the following tables, revenue is disaggregated accordingly:
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Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | 18. Related Party Transactions Amounts presented as Icahn Automotive Group LLC represent the Company's activity with Auto Plus and Pep Boys. See Note 7, Investment in Nonconsolidated Affiliates, for further information for companies within the tables below that represent equity method investments. The following table is a summary of the net sales, purchases, and royalty and other income from related parties for the three months ended March 31, 2019:
During the three months ended March 31, 2018, the Company had sales to Montagewerk Abgastechnik Emden GmbH of $4 million. The following table is a summary of amounts due to and from the Company's related parties as of March 31, 2019 and December 31, 2018:
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Supplemental Guarantor Condensed Consolidating Financial Statements |
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Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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)
STATEMENT OF COMPREHENSIVE INCOME (LOSS)
BALANCE SHEETS
BALANCE SHEETS
STATEMENT OF CASH FLOWS
STATEMENT OF CASH FLOWS
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Summary of Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation — Interim Financial Statements Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. These statements include all adjustments (consisting of normal recurring adjustments) management believes are necessary to fairly state the results of operations, comprehensive income, financial position, changes in shareholders' equity, and cash flows. The Company's management believes the disclosures are adequate to make the information presented not misleading when read in conjunction with the audited consolidated financial statements and the notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the Securities and Exchange Commission on March 18, 2019. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. The Company expects to separate its businesses to form two new, independent publicly traded companies, an Aftermarket and Ride Performance company ("DRiV") and a new Powertrain Technology company ("New Tenneco"). The Company has revised its timing target for the separation of the business and now expects the DRiV spinoff to occur mid-2020. In preparation for the spinoff, the Company began to manage and report its DRiV businesses through two new operating segments, in the first quarter of 2019, as compared to the three operating segments it had previously reported. The DRiV operating segments consist of Motorparts and Ride Performance. The new Motorparts operating segment consists of the previously reported Aftermarket operating segment as well as the aftermarket portion of the previously reported Motorparts operating segment. The Ride Performance operating segment consists of the previously reported Ride Performance operating segment as well as the OE Braking business that was included in the previously reported Motorparts operating segment. As such, prior period operating segment results and related disclosures have been conformed to reflect the Company's current operating segments. The future New Tenneco consists of two existing operating segments, Powertrain and Clean Air. See Note 17, Segment Information. |
Redeemable Noncontrolling Interests | Redeemable Noncontrolling Interests — The Company has noncontrolling interests with redemption features. These redemption features could require the Company to make an offer to purchase the noncontrolling interests at fair value in the event of a change in control of Tenneco Inc. or certain of its subsidiaries. The redemption of these redeemable noncontrolling interests is not solely within the Company's control. Accordingly, these noncontrolling interests are presented in the temporary equity section of the Company's condensed consolidated balance sheets. The Company does not believe it is probable the redemption features related to these noncontrolling interest securities will be triggered, as a change in control event is generally not probable until it occurs, except as discussed in |
Earnings (loss) per share | Earnings (loss) per share: Basic earnings (loss) per share is calculated by dividing net earnings (loss) by the weighted average shares outstanding during the period. Diluted earnings (loss) per share reflects the weighted average effect of all potentially dilutive securities from the date of issuance. |
Reclassifications | Reclassifications: Certain amounts in the prior years have been aggregated or disaggregated to conform to current year presentation. These reclassifications have no effect on previously reported earnings before income taxes and noncontrolling interests or net income, other comprehensive income (loss), current or total assets, current or total liabilities, and the cash provided (used) by operating, investing or financing activities within the condensed consolidated financial statements. |
New Accounting Pronouncements | New Accounting Pronouncements Adoption of New Accounting Standards Comprehensive income — In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220). The amendments in this update allow a reclassification from accumulated other comprehensive income (loss) to accumulated deficit for stranded tax effects resulting from the Tax Cuts and Jobs Act ("TCJA"). The Company has elected not to adopt the optional reclassification. Leases — In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update supersedes the lease requirements in Topic 840, Leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flow arising from a lease. For public business entities, the standard is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods. The Company adopted this update on January 1, 2019 using the modified retrospective method without the recasting of comparative periods’ financial information, as permitted by the transition guidance. The Company adopted the package of practical expedients that allows companies to not reassess and will carry forward historical conclusions related to contracts that contain leases, existing lease classification, and initial direct costs. It elected the land easements practical expedient allowing the Company not to reassess whether existing or expired land easements not accounted for as leases under previous guidance are or contain leases under the new guidance. It also did not adopt the hindsight practical expedient and has also made an accounting policy election to exempt leases with an initial term of twelve months or less from balance sheet recognition. Instead, short-term leases will be expensed over the lease term. As a part of the implementation efforts, the Company reviewed its internal control structure and modified and augmented, as necessary. Adoption of the new standard resulted in the recording of additional lease assets and lease liabilities of $387 million and $383 million, and a reduction of favorable lease intangibles of $4 million as of January 1, 2019. The standard did not materially affect the Company's condensed consolidated financial position or results of operations and had no effect on cash flows. See Note 14, Leases. Accounting Standards Issued But Not Yet Adopted Intangibles — In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The amendments in this update are effective for interim and annual periods for the Company beginning on January 1, 2020, with early adoption permitted. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the potential effect of this new guidance on its financial statements. Retirement benefits — In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20). The amendments in this update remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. The amendments in this update are effective for fiscal years ending after December 15, 2020 with early adoption permitted. The Company is currently evaluating the potential effect of this new guidance on its financial statements. Fair value measurements — In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820). The new guidance modifies disclosure requirements related to fair value measurement. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Implementation on a prospective or retrospective basis varies by specific disclosure requirement. Early adoption is permitted. The standard also allows for early adoption of any removed or modified disclosures upon issuance of this ASU while delaying adoption of the additional disclosures until their effective date. The Company is currently evaluating the potential effect of this new guidance on its financial statements. |
Summary of Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable Noncontrolling Interests | The following is a rollforward of activities in the Company's redeemable noncontrolling interests for the three months ended March 31, 2019 and 2018:
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Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Actual weighted average shares outstanding used in calculating earnings (loss) per share were:
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Schedule of Error Corrections and Prior Period Adjustments | The following tables present the effect of these reclassifications and revisions for the condensed consolidated financial statement line items adjusted in the affected periods included within this quarterly report:
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Acquisitions and Divestitures (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the acquisition date:
The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the acquisition date and the measurement period adjustments made during the three months ended March 31, 2019:
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Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination | Other intangible assets acquired include the following:
Other intangible assets acquired include the following:
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Pro Forma Information | The following table summarizes, on a pro forma basis, the combined results of operations of the Company and the Federal-Mogul Acquisition, and the related financing, if the transaction had occurred as of January 1, 2017. The pro forma results are not necessarily indicative of either the actual consolidated results had the Federal-Mogul Acquisition occurred on January 1, 2017 or of future consolidated operating results.
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Disposal Groups, Including Discontinued Operations | The related assets and liabilities were classified as held for sale as of March 31, 2019 and December 31, 2018:
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Restructuring Charges and Asset Impairments, Net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring | For the three months ended March 31, 2019 and 2018, restructuring charges, net and asset impairments by segment are as follows:
Amounts related to activities that were charges to restructuring reserves, including costs incurred to support future structural cost reductions, by reportable segments are as follows:
The following table provides a summary of the Company's restructuring liabilities and related activity for each type of exit costs:
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Inventories (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | At March 31, 2019 and December 31, 2018, inventory consists of the following:
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Goodwill and Other Intangible Assets—Net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The following table categorizes the Company’s goodwill by reporting unit according to the level of excess between the reporting unit’s fair value and carrying value giving effect to the first quarter impairment charges:
At March 31, 2019 and December 31, 2018, goodwill consists of the following:
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Schedule of Indefinite-Lived Intangible Assets | At March 31, 2019 and December 31, 2018, the Company's intangible assets consist of the following:
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Schedule of Finite-Lived Intangible Assets | At March 31, 2019 and December 31, 2018, the Company's intangible assets consist of the following:
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Finite-lived Intangible Assets Amortization Expense | The expected future amortization expense for the Company's definite-lived intangible assets is as follows:
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Investment in Nonconsolidated Affiliates (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments | The following tables present summarized aggregated financial information of the Company's nonconsolidated affiliates for the three months ended March 31, 2019. The amounts represent 100% of the interest in the nonconsolidated affiliates and not the Company's proportionate share:
The Company's ownership interest in affiliates accounted for under the equity method is as follows:
The Company's investments in its nonconsolidated affiliates at March 31, 2019 and December 31, 2018 are:
The following table represents the activity from the Company's investments in its nonconsolidated affiliates for the three months ended March 31, 2019 and 2018:
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Derivatives and Hedging Activities (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summarization for Foreign Currency Forward Purchase and Sale Contracts | The following table summarizes by position the notional amounts for foreign currency forward contracts as of March 31, 2019 (all of which mature in 2019):
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Schedule of Derivative Instruments | The following table is a summary of the carrying value of derivative and non-derivative instruments designated as hedges as of March 31, 2019:
The following table represents the effects before reclassification into net income of derivative and non-derivative instruments designated as hedges in accumulated other comprehensive income (loss) as of March 31, 2019:
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Fair Value of Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying and Estimated Fair Value | Estimated fair values of the Company's outstanding debt were:
The following table presents assets and liabilities included in the Company's condensed consolidated balance sheets as of March 31, 2019 and December 31, 2018 that are recognized at fair value on a recurring basis, and indicate the fair value hierarchy utilized to determine such fair value:
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Debt and Other Financing Arrangements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Long-term Debt Obligations | A summary of our long-term debt obligations at March 31, 2019 and December 31, 2018 is set forth in the following table:
(1) Carrying amount is net of unamortized debt issuance costs and debt discounts or premiums. Total unamortized debt issuance costs were $86 million and $90 million as of March 31, 2019 and December 31, 2018. Total unamortized debt (premium) discount, net was $(45) million and $(49) million as of March 31, 2019 and December 31, 2018. |
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Financing Arrangements | The Company had availability on its credit facilities as of March 31, 2019 as follows:
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Schedule of Gain (Loss) on Securitizations or Asset-backed Financing Arrangements of Financial Assets Accounted for as Sale [Table Text Block] | The amounts outstanding for these factoring and drafting arrangements as of March 31, 2019 and December 31, 2018 are as follows:
The deferred purchase price receivable as of March 31, 2019 and December 31, 2018 is as follows:
Proceeds from the factoring of accounts receivable qualifying as sales are as follows:
Financing charges associated with the factoring of receivables are as follows:
The Company has securitization programs for some of its accounts receivable, with limited recourse provisions. Borrowings on these securitization programs, which are recorded in short-term debt, at March 31, 2019 and December 31, 2018 are as follows:
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Pension Plans, Postretirement and Other Employee Benefits (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Cost | Components of net periodic benefit cost (credit) for the three months ended March 31, 2019 and 2018 are as follows:
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Commitments and Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Environmental Loss Contingencies | The Company maintains the aggregated estimated share of environmental remediation costs for all these sites on a discounted basis in the condensed consolidated balance sheets as follows:
The Company's expected payments of environmental remediation costs for non-indemnified locations are estimated to be approximately:
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Schedule of Asset Retirement Obligations | The Company maintains ARO liabilities in the condensed consolidated balance sheets as follows:
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Warranty Accrual Table | Below is a table that shows the activity in the warranty accrual accounts:
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Leases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease costs | The components of lease cost were as follows:
Other information related to leases was as follows:
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Assets and Liabilities | Supplemental balance sheet information related to leases was as follows:
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Operating lease liabilities | Maturities of lease liabilities under non-cancellable leases as of March 31, 2019 were as follows:
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Finance lease liabilities | Maturities of lease liabilities under non-cancellable leases as of March 31, 2019 were as follows:
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Schedule of Future Minimum Payments Due | Future minimum operating lease payments at December 31, 2018 are as follows:
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Share-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation | The total share-based compensation expense was as follows:
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Nonvested Restricted Shares | The following table reflects the status for all nonvested restricted shares, share-settled RSUs, and PSUs for the period indicated:
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Stockholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock by Class | Total common stock outstanding and changes in common stock issued are as follows:
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Schedule of AOCI | The following represents the Company's changes in accumulated other comprehensive income (loss) by component, net of tax for the three months ended March 31, 2019 and 2018:
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | The following table summarizes certain of the Company's segment information:
Segment EBITDA including noncontrolling interests and the reconciliation to earnings before interest expense, income taxes, and noncontrolling interests are as follow:
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Disaggregation of Revenue | Revenue from contracts with customers is disaggregated by customer type and geography, as it depicts the nature and amount of the Company’s revenue that is aligned with the Company's key growth strategies. In the following tables, revenue is disaggregated accordingly:
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Related Party Transactions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | The following table is a summary of amounts due to and from the Company's related parties as of March 31, 2019 and December 31, 2018:
The following table is a summary of the net sales, purchases, and royalty and other income from related parties for the three months ended March 31, 2019:
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Supplemental Guarantor Condensed Consolidating Financial Statements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statement of Comprehensive Income (Loss) | STATEMENT OF COMPREHENSIVE INCOME (LOSS)
STATEMENT OF COMPREHENSIVE INCOME (LOSS)
|
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Balance Sheet | BALANCE SHEETS
BALANCE SHEETS
|
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Statement of Cash Flows | STATEMENT OF CASH FLOWS
STATEMENT OF CASH FLOWS
|
Description of Business - Additional Information (Details) |
Mar. 31, 2019 |
Jan. 10, 2019 |
Oct. 01, 2018 |
---|---|---|---|
Öhlins Intressenter AB | |||
Business Acquisition [Line Items] | |||
Percentage of business acquired | 90.50% | 90.50% | |
Federal-Mogul | |||
Business Acquisition [Line Items] | |||
Percentage of business acquired | 100.00% |
Summary of Accounting Policies - Redeemable Non Controlling Interest (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Redeemable Noncontrolling Interest [Roll Forward] | ||
Balance at beginning of period | $ 138 | $ 42 |
Net income (loss) attributable to redeemable noncontrolling interests | 5 | 7 |
Other comprehensive income (loss) | 2 | 1 |
Acquisition and other | 16 | 0 |
Purchase accounting measurement period adjustment | (8) | 0 |
Balance at end of period | $ 153 | $ 50 |
Summary of Accounting Policies - Additional Information (Details) $ in Millions |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2019
USD ($)
Segment
|
Mar. 31, 2018
USD ($)
Segment
|
Dec. 31, 2019
Segment
|
Jan. 01, 2019
USD ($)
|
|
Redeemable Noncontrolling Interest [Line Items] | ||||
Number of operating segments | Segment | 2 | 3 | ||
Purchase accounting measurement period adjustment | $ 8 | $ 0 | ||
ROU asset | 362 | |||
Lease liability | 357 | |||
Federal-Mogul | ||||
Redeemable Noncontrolling Interest [Line Items] | ||||
Purchase accounting measurement period adjustment | $ 8 | |||
ASU 2016-02 | ||||
Redeemable Noncontrolling Interest [Line Items] | ||||
ROU asset | $ 387 | |||
Lease liability | 383 | |||
Reduction in favorable leases | $ 4 | |||
Forecast | ||||
Redeemable Noncontrolling Interest [Line Items] | ||||
Number of operating segments | Segment | 2 |
Summary of Accounting Policies - Earnings Per Share (Details) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Weighted average shares of common stock outstanding (in shares) | 80,874,637 | 51,211,643 |
Dilutive shares outstanding (in shares) | 80,874,637 | 51,501,643 |
Anti-dilutive shares (in shares) | 1,714,950 | 174 |
Restricted stock, PSUs and RSUs | ||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Effect of dilutive securities (in shares) | 0 | 216,351 |
Stock options | ||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Effect of dilutive securities (in shares) | 0 | 73,649 |
Acquisitions and Divestitures - Öhlins Intressenter AB (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Jan. 10, 2019 |
Dec. 31, 2018 |
|
Business Acquisition [Line Items] | |||
Goodwill | $ 791 | $ 869 | |
Öhlins Intressenter AB | |||
Business Acquisition [Line Items] | |||
Percentage of business acquired | 90.50% | 90.50% | |
Total consideration | $ 162 | ||
Redeemable noncontrolling interests | 17 | ||
Goodwill | 28 | ||
Step up of inventory | 5 | ||
Non-cash charge for inventory step-up | $ 2 | ||
K Öhlin Holding AB | Öhlins Intressenter AB | |||
Business Acquisition [Line Items] | |||
Ownership percentage | 9.50% |
Acquisitions and Divestitures - Acquisition of Federal-Mogul (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Oct. 01, 2018 |
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Business Acquisition [Line Items] | |||
Goodwill | $ 1,213 | $ 1,231 | |
Federal-Mogul | |||
Business Acquisition [Line Items] | |||
Step up of inventory | $ 152 | ||
Non-cash charge for inventory step-up | 41 | ||
Redeemable noncontrolling interests | $ 96 | 88 | |
Revenue since acquisition | 1,906 | ||
Net loss since acquisition | 39 | ||
Subsidiary Of Federal-Mogul | |||
Business Acquisition [Line Items] | |||
Redeemable noncontrolling interests | 83 | ||
Powertrain | |||
Business Acquisition [Line Items] | |||
Goodwill | 409 | 388 | |
Powertrain | Federal-Mogul | |||
Business Acquisition [Line Items] | |||
Goodwill | 409 | ||
Motorparts | |||
Business Acquisition [Line Items] | |||
Goodwill | 544 | 611 | |
Motorparts | Federal-Mogul | |||
Business Acquisition [Line Items] | |||
Goodwill | 315 | ||
Ride Performance | |||
Business Acquisition [Line Items] | |||
Goodwill | 238 | $ 210 | |
Ride Performance | Federal-Mogul | |||
Business Acquisition [Line Items] | |||
Goodwill | $ 55 |
Acquisitions and Divestitures - Pro Forma (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Business Combinations [Abstract] | ||
Net sales and operating revenues | $ 4,484 | $ 4,680 |
Earnings (loss) before income taxes and noncontrolling interests | 30 | 226 |
Net income (loss) attributable to Tenneco Inc. | $ (70) | $ 93 |
Basic earnings (loss) per share of common stock (in dollars per share) | $ (0.87) | $ 1.16 |
Diluted earnings (loss) per share of common stock (in dollars per share) | $ (0.87) | $ 1.16 |
Acquisitions and Divestitures - Assets Held For Sale (Details) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 01, 2019 |
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Proceeds from sale of assets | $ 1 | $ 2 | ||
Held-for-sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Inventories | 3 | $ 33 | ||
Other current assets | 0 | 5 | ||
Long-lived assets | 1 | 23 | ||
Total assets held for sale | 4 | 61 | ||
Accounts payable | 2 | 21 | ||
Accrued liabilities | 0 | 7 | ||
Other liabilities | 1 | 11 | ||
Total liabilities held for sale | $ 3 | $ 39 | ||
Motorsports Certain Assets and Liabilities | Held-for-sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Sale price | $ 29 | |||
Proceeds from sale of assets | $ 22 |
Restructuring Charges and Asset Impairments, Net - Incurred Costs (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges and asset impairments | $ 24 | $ 12 |
Clean Air | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges and asset impairments | 5 | 1 |
Powertrain | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges and asset impairments | 1 | 0 |
Ride Performance | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges and asset impairments | 13 | 8 |
Motorparts | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges and asset impairments | 4 | 3 |
Corporate | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges and asset impairments | $ 1 | $ 0 |
Restructuring Charges and Asset Impairments, Net - Additional Information (Details) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Jan. 29, 2019
USD ($)
|
Mar. 31, 2019
USD ($)
facility
|
Mar. 31, 2018
USD ($)
|
|
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Charges | $ 6 | $ 24 | $ 12 |
Beijing, China | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 5 | 7 | |
Facility Closure and Other Costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Charges | $ 13 | 2 | |
Facility Closure and Other Costs | Owen Sound, Ontario and Hartwell, Georgia | |||
Restructuring Cost and Reserve [Line Items] | |||
Number of facilities expected to close in 2020 | facility | 2 | ||
Restructuring Charges | $ 6 | ||
Facility Closure and Other Costs | France | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 3 | ||
Cost Improvement Initiatives | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | $ 4 | $ 5 |
Inventories (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished goods | $ 1,181 | $ 1,116 |
Work in process | 526 | 562 |
Raw materials | 450 | 457 |
Materials and supplies | 109 | 110 |
Total inventories | $ 2,266 | $ 2,245 |
Goodwill and Other Intangible Assets—Net - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
Oct. 01, 2018 |
|
Goodwill [Line Items] | ||||
Goodwill | $ 791 | $ 869 | ||
Goodwill impairment charge | 60 | $ 0 | ||
Intangibles, net | 1,266 | $ 1,154 | ||
Amortization of intangible assets | 35 | $ 1 | ||
Ride Performance | ||||
Goodwill [Line Items] | ||||
Goodwill | 35 | |||
Goodwill impairment charge | 60 | |||
Öhlins Intressenter AB | ||||
Goodwill [Line Items] | ||||
Goodwill | 28 | |||
Intangibles | 135 | |||
Federal-Mogul | ||||
Goodwill [Line Items] | ||||
Goodwill | 779 | $ 825 | ||
Intangibles | 1,601 | $ 1,530 | ||
Intangibles, net | 71 | |||
Adjustments | Federal-Mogul | ||||
Goodwill [Line Items] | ||||
Goodwill | (46) | |||
Intangibles | $ 71 |
Goodwill and Other Intangible Assets—Net - Reporting Unit Goodwill (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Goodwill [Line Items] | ||
Goodwill | $ 791 | $ 869 |
Reporting units 1-6 | ||
Goodwill [Line Items] | ||
Fair value exceeds carrying value percentage | 15.00% | |
Goodwill | $ 354 | |
Reporting units 7-9 | ||
Goodwill [Line Items] | ||
Fair value exceeds carrying value percentage | 15.00% | |
Goodwill | $ 437 |
Goodwill and Other Intangible Assets—Net - Amortization (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2019 | $ 106 | |
2020 | 140 | |
2021 | 139 | |
2022 | 134 | |
2023 | 131 | |
2024 and thereafter | 616 | |
Net Carrying Value | $ 1,266 | $ 1,154 |
Investment in Nonconsolidated Affiliates - Summarized Financial Data (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Schedule of Equity Method Investments [Line Items] | |
Sales | $ 255 |
Gross profit | 60 |
Income from continuing operations | 43 |
Net income | 38 |
Otomotiv A.S. | |
Schedule of Equity Method Investments [Line Items] | |
Sales | 91 |
Gross profit | 21 |
Income from continuing operations | 19 |
Net income | 18 |
Anqing TP Goetze | |
Schedule of Equity Method Investments [Line Items] | |
Sales | 39 |
Gross profit | 16 |
Income from continuing operations | 11 |
Net income | 9 |
Other | |
Schedule of Equity Method Investments [Line Items] | |
Sales | 125 |
Gross profit | 23 |
Income from continuing operations | 13 |
Net income | $ 11 |
Derivatives and Hedging Activities - Additional Information (Details) shares in Thousands, € in Millions, $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019
USD ($)
shares
|
Mar. 31, 2019
EUR (€)
shares
|
Dec. 31, 2018
USD ($)
|
|
Financial Instruments [Line Items] | |||
Long-term debt | $ 5,417 | $ 5,340 | |
Net derivative losses to be reclassified within twelve months | 4 | ||
Foreign Exchange Forward | |||
Financial Instruments [Line Items] | |||
Derivative asset | $ 1 | 1 | |
Equity swap agreement | |||
Financial Instruments [Line Items] | |||
Notional amount | shares | 250 | 250 | |
Net asset position fair value | $ 3 | 4 | |
Commodity contracts | |||
Financial Instruments [Line Items] | |||
Notional amount | $ 26 | $ 27 | |
Net Investment Hedging | |||
Financial Instruments [Line Items] | |||
Long-term debt | € | € 769 |
Fair Value of Financial Instruments - Carrying and Estimated Fair Value (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Foreign Exchange Forward | ||
Carrying And Estimated Fair Value [Line Items] | ||
Derivative asset | $ 1 | $ 1 |
Level 2 | Carrying Amount | Equity swap agreement | ||
Carrying And Estimated Fair Value [Line Items] | ||
Derivative asset | 3 | 4 |
Level 2 | Carrying Amount | Commodity contracts | ||
Carrying And Estimated Fair Value [Line Items] | ||
Derivative asset | 2 | |
Derivative liability | (2) | |
Level 2 | Fair Value | Equity swap agreement | ||
Carrying And Estimated Fair Value [Line Items] | ||
Derivative asset | 3 | 4 |
Level 2 | Fair Value | Commodity contracts | ||
Carrying And Estimated Fair Value [Line Items] | ||
Derivative asset | $ 2 | |
Derivative liability | $ (2) |
Derivatives and Hedging Activities - Summarization for Foreign Currency Forward Purchase and Sale Contracts (Details) - Foreign Exchange Forward $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Long | |
Notional amount | $ (33) |
Short | |
Notional amount | $ (33) |
Fair Value of Financial Instruments - Fair Value of Long Term Debt (Details) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019
USD ($)
reporting_unit
|
Mar. 31, 2018
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Number of reporting units | reporting_unit | 2 | ||
Goodwill impairment charge | $ 60 | $ 0 | |
Carrying Amount | 5,490 | $ 5,413 | |
Term loans and senior notes | Carrying Amount | Level 2 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of long term debt | 5,386 | 5,307 | |
Term loans and senior notes | Fair Value | Level 2 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of long term debt | 5,285 | 5,218 | |
Other Debt | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Carrying Amount | 104 | $ 106 | |
Ride Performance | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Goodwill impairment charge | $ 60 |
Debt and Other Financing Arrangements - Term Loans (Details) - USD ($) $ in Billions |
Oct. 01, 2018 |
Mar. 31, 2019 |
---|---|---|
Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Borrowing capacity | $ 4.9 | |
Revolving Credit Facility | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Borrowing capacity | $ 1.5 | |
Debt term | 5 years | |
Term Loan A Facility | Term Loan | ||
Line of Credit Facility [Line Items] | ||
Borrowing capacity | $ 1.7 | |
Debt term | 5 years | |
Effective rate | 4.396% | |
Term Loan B Facility | Term Loan | ||
Line of Credit Facility [Line Items] | ||
Borrowing capacity | $ 1.7 | |
Debt term | 7 years | |
Effective rate | 6.031% |
Debt and Other Financing Arrangements - Senior Notes (Details) - Senior Notes |
Mar. 31, 2019 |
---|---|
5 3/8% Senior Notes due 2024 | |
Debt Instrument [Line Items] | |
Stated rate | 5.375% |
5.000% Senior Notes due 2026 | |
Debt Instrument [Line Items] | |
Stated rate | 5.00% |
5.000% Euro Fixed Rate Notes due 2024 | |
Debt Instrument [Line Items] | |
Stated rate | 5.00% |
4.875% Euro Fixed Rate Notes due 2022 | |
Debt Instrument [Line Items] | |
Stated rate | 4.875% |
4.875% Euro Fixed Rate Notes due 2024 | |
Debt Instrument [Line Items] | |
Stated rate | 4.875% |
Debt and Other Financing Arrangements - Financing Arrangements (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Debt Instrument [Line Items] | |
Available | $ 1,400 |
Letters of Credit | 20 |
Tenneco Inc. revolving credit agreement | |
Debt Instrument [Line Items] | |
Available | 1,300 |
Tenneco Inc. Term Loan A | |
Debt Instrument [Line Items] | |
Available | 0 |
Tenneco Inc. Term Loan B | |
Debt Instrument [Line Items] | |
Available | 0 |
Subsidiaries’ credit agreements | |
Debt Instrument [Line Items] | |
Available | $ 100 |
Debt and Other Financing Arrangements - Interest Expense (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Interest Expense | ||
Debt Instrument [Line Items] | ||
Amortization of debt issuance fees | $ 5 | $ 1 |
Prepayments and other current assets | ||
Debt Instrument [Line Items] | ||
Amortization of debt issuance fees | 21 | |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Accretion of debt premium | $ 3 |
Debt and Other Financing Arrangements - Senior Credit Facility (Details) - Line of Credit |
3 Months Ended | |
---|---|---|
Oct. 01, 2018 |
Mar. 31, 2019
covenant
|
|
Debt Instrument [Line Items] | ||
Number of covenants | 2 | |
Consolidated fixed charge coverage ratio | 2.00 | |
Debt Covenant, Term 1 | ||
Debt Instrument [Line Items] | ||
Consolidated net leverage ratio | 4.0 | |
Debt Covenant, Term 2 | ||
Debt Instrument [Line Items] | ||
Consolidated net leverage ratio | 3.75 | |
Debt Covenant, Term 3 | ||
Debt Instrument [Line Items] | ||
Consolidated net leverage ratio | 3.5 | |
Debt Covenant, Term 4 | ||
Debt Instrument [Line Items] | ||
Consolidated net leverage ratio | 2.75 |
Debt and Other Financing Arrangements - Accounts Receivable Securitization (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Debt Instrument [Line Items] | |||
Accounts receivable outstanding and derecognized | $ 1,100 | $ 1,000 | |
Deferred purchase price receivable | 58 | 154 | |
Proceeds from factoring qualifying as sales | 1,200 | $ 800 | |
Financing charges on sale of receivables | 0 | ||
Accounts Receivable Securitization Programs [Member] | |||
Debt Instrument [Line Items] | |||
Borrowings on securitization programs | 3 | $ 6 | |
Interest Expense | |||
Debt Instrument [Line Items] | |||
Financing charges on sale of receivables | $ 8 | $ 3 |
Pension Plans, Postretirement and Other Employee Benefits - Additional Information (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
U.S. | Pension | |
Pension Plans, Postretirement and Other Employee Benefits [Line Items] | |
Long-term rate of return | 6.25% |
Income Taxes - Additional Information (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Tax Contingency [Line Items] | ||
Income tax expense (benefit) | $ 0 | $ 25,000,000 |
Income tax benefit related to toll tax | 2,000,000 | |
Reasonably possible change in unrecognized tax benefits | 11,000,000 | |
Spain, China, and Czech Republic | ||
Income Tax Contingency [Line Items] | ||
One time tax benefit | $ 51,000,000 |
Commitments and Contingencies - Environmental Matters (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Portion of environmental remediation costs recorded in other current liabilities | $ 10 | $ 12 |
Portion of environmental remediation costs recorded in deferred credits and other liabilities | 29 | 28 |
Environmental remediation accrual, discounted basis | $ 39 | $ 40 |
Weighted average discount rate | 1.70% | 2.90% |
Expected payments of environmental remediation costs, 2019 | $ 8 | |
Expected payments of environmental remediation costs, 2020 | 6 | |
Expected payments of environmental remediation costs, 2021 | 3 | |
Expected payments of environmental remediation costs, 2022 | 2 | |
Expected payments of environmental remediation costs, 2023 | 2 | |
Expected payments of environmental remediation costs, thereafter | $ 17 |
Commitments and Contingencies - Asset Retirement Obligations (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Loss Contingencies [Line Items] | ||
Asset retirement obligation | $ 15 | $ 15 |
Accrued expenses and other current liabilities | ||
Loss Contingencies [Line Items] | ||
Asset retirement obligation | 3 | 3 |
Deferred credits and other liabilities | ||
Loss Contingencies [Line Items] | ||
Asset retirement obligation | $ 12 | $ 12 |
Commitments and Contingencies - Other Legal Proceedings, Claims and Investigations (Details) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Mar. 31, 2019
USD ($)
|
Sep. 30, 2015
LegalMatter
defendent
|
Jun. 30, 2017
USD ($)
|
|
Loss Contingencies [Line Items] | |||
Estimated liability | $ | $ 53 | $ 132 | |
Payments for settlement | $ | $ 79 | ||
Number of defendants in many asbestos related cases | defendent | 100 | ||
United States | |||
Loss Contingencies [Line Items] | |||
Current docket of active and inactive cases nationwide relating to alleged exposure to asbestos from our product categories | LegalMatter | 500 | ||
Europe | |||
Loss Contingencies [Line Items] | |||
Current docket of active and inactive cases nationwide relating to alleged exposure to asbestos from our product categories | LegalMatter | 50 | ||
Minimum | |||
Loss Contingencies [Line Items] | |||
Warranty term | 1 year |
Commitments and Contingencies - Warranty Accrual Table (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Beginning balance | $ 45 | $ 26 |
Accruals related to product warranties | 5 | 6 |
Reductions for payments made | (2) | (3) |
Foreign currency | 0 | 0 |
Ending balance | $ 48 | $ 29 |
Leases (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms | 1 month |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms | 10 years |
Leases - Lease Costs (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Leases [Abstract] | |
Operating lease cost | $ 33 |
Short-term lease expense | 1 |
Variable lease cost | 8 |
Total lease cost | 42 |
Operating cash flows from operating leases | $ 41 |
Weighted average remaining lease term, operating lease | 5 years 3 months 15 days |
Weighted average remaining lease term, finance lease | 3 years 2 months 23 days |
Weighted average discount rate, operating lease | 4.26% |
Weighted average discount rate, finance lease | 4.85% |
Leases - Supplemental Balance Sheet Information (Details) $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
Operating lease right-of-use assets | $ 362 |
Other current liabilities | 101 |
Other long-term liabilities | 256 |
Total operating lease liabilities | 357 |
Property, plant and equipment, gross | 2 |
Accumulated depreciation | 0 |
Total finance lease right-of-use assets | 2 |
Other current liabilities | 1 |
Other long-term liabilities | 1 |
Total finance lease liabilities | $ 2 |
Leases - Maturity Schedules (Details) $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Operating leases | |
2019 (excluding the three months ended March 31, 2019) | $ 85 |
2020 | 91 |
2021 | 69 |
2022 | 48 |
2023 | 34 |
Thereafter | 55 |
Total future undiscounted lease payments | 382 |
Less imputed interest | (25) |
Total reported lease liability | 357 |
Finance leases | |
2019 (excluding the three months ended March 31, 2019) | 1 |
2020 | 1 |
2021 | 0 |
2022 | 0 |
2023 | 0 |
Thereafter | 0 |
Total future undiscounted lease payments | 2 |
Less imputed interest | 0 |
Total reported lease liability | $ 2 |
Leases - Future Minimum Payments (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Leases [Abstract] | |
2019 | $ 120 |
2020 | 100 |
2021 | 86 |
2022 | 68 |
2023 | 56 |
Beyond 2023 | 53 |
Total | $ 483 |
Share-Based Compensation - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Compensation expense | $ 6 | $ 4 |
Unrecognized compensation costs | $ 1 | |
Unrecognized compensation costs, not yet recognized | 1 year | |
Cash-settled | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Compensation expense | $ (1) | (1) |
Share-settled | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Compensation expense | 7 | $ 5 |
Unrecognized compensation costs | $ 63 | |
Unrecognized compensation costs, not yet recognized | 3 years |
Segment Information - Additional Information (Details) - Segment |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2019 |
|
Segment Reporting Information [Line Items] | |||
Number of operating segments | 2 | 3 | |
Forecast | |||
Segment Reporting Information [Line Items] | |||
Number of operating segments | 2 |
Supplemental Guarantor Condensed Consolidating Financial Statements - Additional Information (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Condensed Financial Information Disclosure [Abstract] | |
Ownership percentage of existing and future material domestic owned subsidiaries | 100.00% |
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