19. Supplemental Guarantor Condensed Consolidating Financial Statements

Basis of Presentation

Substantially all of the Company's existing and future material domestic 100% owned subsidiaries (which are referred to as the Guarantor Subsidiaries) fully and unconditionally guarantee its senior notes on a joint and several basis. However, a subsidiary’s guarantee may be released in certain customary circumstances such as a sale of the subsidiary or all or substantially all of its assets in accordance with the indenture applicable to the notes. The Guarantor Subsidiaries are combined in the presentation below.

These consolidating financial statements are presented on the equity method. Under this method, the Company's investments are recorded at cost and adjusted for its ownership share of a subsidiary’s cumulative results of operations, capital contributions and distributions, and other equity changes. You should read the condensed consolidating financial information of the Guarantor Subsidiaries in connection with the Company's condensed consolidated financial statements and related notes of which this note is an integral part.

The accompanying supplemental guarantor consolidating financial statements have been updated to reflect the revision as described in Note 2, Summary of Significant Accounting Policies.

As discussed in Note 3, Acquisitions and Divestitures, the allocation of the purchase price to the assets acquired and liabilities assumed, including the entities to which it is allocated, is preliminary and subject to change during the measurement period.

Distributions

There are no significant restrictions on the ability of the Guarantor Subsidiaries to make distributions to us.

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Three Months Ended March 31, 2019
	Guarantor 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	)

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	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

BALANCE SHEETS



	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

BALANCE SHEETS



	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

STATEMENT OF CASH FLOWS



	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

STATEMENT OF CASH FLOWS



	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